MISC Annual Report 2017

MISC BERHAD | Annual Report 2017 82 THE SUSTAINABILITY OF OUR BUSINESS The issue of business sustainability has become increasingly prominent and challenging to many companies. Be it the need to cultivate and optimise finite resources, to ensure higher levels of transparency in business dealings amidst an increasingly competitive playing field, or to ensure compliance with stringent and ever-evolving environmental and social legislation – companies are having to implement a host of new measures to future-proof themselves and ensure their sustainable growth. Recognising that business sustainability is essential to our long-term success, MISC made it our top priority and a key business imperative. Since embarking upon an extensive review of our sustainability agenda, we have improved our understanding of sustainability and today, better appreciate how integral it is to the success of our business. The past few years have seen us make significant strides forward in our sustainability journey and sustainability is today embedded in a deeper manner into our strategy and operations. Following a decrease in total borrowings and total equity reported for 2017, the Group’s net debt-to-equity ratio increased marginally to 0.16 times as at 31 December 2017 from 0.15 times as at 31 December 2016. Meanwhile, the Group’s committed capital expenditure stood at RM3,831.7 million as at the end of 2017. Based on our continuous healthy financial position, combined with existing funding facilities and planned funding plans, the Group should be able to fund our committed capital expenditure and growth plans. Given the relatively low net debt/equity ratio, the Group will pursue the optimum capital structure for any capital project or investment. OUR STRATEGIC PRIORITIES Following the introduction of our revitalised Vision and Mission as well as the MISC2020 strategy in 2015, all of these elements are now well entrenched within our corporate culture. Not only are these strategic elements doing their bit to reinforce and sustain MISC’s position in the Oil & Gas sector as a leading provider of energy related maritime solutions and services, they continue to strengthen the bonds within the MISC Group and guide us on our journey to unleash our full potential. To recap, our MISC2020 five-year strategic plan (2016-2020) 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. The finer details of the MISC2020 strategy and its impact on the performance of our core businesses can be found in the MISC2020 Journey section on pages 34 to 35 of this Annual Report. MISC’s Sustainability Strategy was endorsed by the Board in late 2016 and formally rolled out across our organisation in 2017. Running parallel with our Vision and Mission as well as our five-year MISC2020 strategy, our Sustainability Strategy continues to serve as a five-year roadmap that is guiding us further in our conduct as a responsible corporate citizen. With its focus on enhancing our social integrity, improving our environmental stewardship and creating economic value for our stakeholders over the short, medium and long-term, our strategy is divided into six pillars, namely the Customers, Shareholders, Governance & Business Ethics, Employees, Environment and Community pillars. Since its formalisation, today we have a more cohesive, systematic and synergistic platform from which to manage our sustainability commitment and objectives. The year in review saw MISC making good progress across all six sustainability pillars. For instance, on the Environmental front, we successfully embarked on a more structured and strategic approach to manage greenhouse gas emissions and improve the energy efficiency of our fleet by setting specific targets and reduction plans. PRESIDENT/GROUP CEO ’ S REVIEW A 5-YEAR MASTER PLAN TO ACHIEVE SUSTAINABLE PERFORMANCE SUSTAINABLE ROACE (Return on Average Cap i tal Employed) OF MORE THAN 10% BY 2020 Susta i nable level of SECURED PROFIT BY 2020