MISC Annual Report 2019

HAZRIN HASAN Managing Director and CEO, MISC Maritime Services Sdn. Bhd. (MMS) With the stabilisation of oil prices, 2019 was a good year for MMS due to the increased number of vessels we inspected and cargo lifted compared to 2018. There were more activities as the oil majors were comfortable continuing their offshore activities at the current stable oil prices levels. 2019 was also the year where MMS, a relatively new member of the Group and with a young team, was able to fully come together as a cohesive unit and deliver as a service enabler for the MISC Group. We were able to maintain the trust of our customers, with renewed confidence among our main customers and refreshed confidence among our new ones. The areas that we are proud of are our high standards and excellent track record in terms of safety and marine assurance, where we are considered to be the best with our accredited inspectors. That is complemented by our extensive experience in managing and operating ports and terminals in Malaysia including Sungai Udang Port Sdn. Bhd. and Kertih Port Sdn. Bhd. With our proven capabilities along with our own in-house systems, we are able to provide world-class services that entrenches our position as the premium service provider of choice in the industry. In keeping up with the evolving energy marketplace, especially in this era where digitalisation is becoming increasingly pertinent, we have tapped into our in-house capabilities to develop our own systems – VIS and OSVIS – to record, evaluate, and monitor vessel inspection and status of vessel’s compliance. In addition, we developed web-based risk management tools that allow us to provide risk assessment services and ensure high quality safety standards are provided to our charterers as well as ship operators and terminal operators. We are now also in the user acceptance testing stage for a mobile application that our inspectors can use to prepare their reports more efficiently with improved response time, wherever they may be in the world. For the long term, we are looking to improve our secured revenue sources and focus on asset-owning. In addition to the above, we have introduced new revenue streams such as Tanker Management Self Assessment, Offshore Vessel Management Self Assessment and DP Assurance for dynamically positioned vessels. One of the key strategic priorities for MMS in the near term is to enhance our capability and professionalism by getting our people accredited and certified by approval bodies such as OCIMF and International Marine Contractors Association (IMCA) as well as through collaborations with industry partners. We are also looking to expand our customer base beyond PETRONAS and we see the potential for growth beyond Malaysian waters for our port management & maritime services where we are able to provide the whole spectrum of services from maintenance to pilots and loading masters. With everything now in place, our strategic priorities for the long term are the expansion of our existing business, development of new businesses, and capability enhancement Sustainability is an integral component in our business and it has always been our priority to support the Group’s sustainability agenda. In 2019, Board approved our biodiversity programme which focuses on sea turtle conservation where we will partner Universiti Malaysia Terengganu’s Sea Turtle Research Unit in a five-year plan for conservation, research and outreach. This programme is aligned with our Sustainability Environment Pillar to protect marine life. With everything now in place, our strategic priorities for the long term are the expansion of our existing business, development of new businesses and capability enhancement. Our challenge is to create our own opportunities and market our capabilities in the niche industry of port management and maritime services. The element that drives our ambitions in 2020 will be our people who fuel the business with their passion to do everything possible to deliver our services to the highest satisfaction of our customers. HAZRIN HASAN Managing Director and CEO, MISC Maritime Services Sdn. Bhd. (MMS) Key Developments In 2019, new domestic business secured include agreements with Pengerang Integrated Terminal Sdn. Bhd. and Pengerang Terminal 2 Sdn. Bhd. for vessel screening and provision of other marine services at the Pengerang terminals where we expect a significant increase in the number of vessels to be screened by MMS in 2020. The Pengerang terminals serve one of the busiest global shipping lanes and will support the transportation of crude and petrochemical products for the RAPID megaproject. In the long run, it is foreseeable that the terminals will remain busy as strong demand for crude and petrochemical products is expected in the coming years. In Turkmenistan, we performed an Offshore Vessel Inspection Database (OVID) inspection at the request of Caspian Mainport Ltd and signed a Memorandum of Understanding with PETRONAS Carigali (Turkmenistan) Sdn. Bhd. for us to operate its Kiyanli Supply Base, potentially expanding our global footprint. We also secured contracts for the provision of Marine Coordinator services at Yetagun Offshore for PETRONAS Carigali (Hong Kong) Myanmar Ltd, ISPS, Code Marine consultancy services for PETRONAS’ second floating LNG vessel, PFLNG2 and Offtake Tanker Ship Inspection Report (SIRE) vetting services for PETROFAC. Market Review The 2019 oil market stabilised around USD50 to USD70 per barrel and at that price, the demand outlook for the next three years was forecast to remain positive for production and petrochemical products. The price served as a positive indication that provided MMS with a certain degree of business confidence as increased demand for petrochemical products or crude leads to more activity for our clients regionally and globally. Moving Forward The market outlook for MMS remains positive for the near future, based on the promising industry outlook by PETRONAS – for which we are the preferred marine service provider – that expects many of its offshore investment projects in Malaysian waters to come online coupled with an increasing global demand for the petrochemical businesses. The new financial year offers the prospect for us to expand our market footprint domestically and internationally as well as owning some assets to grow our revenue base. Oil price volatility remains an important factor as it determines the business direction of our clients and in turn, the demand for our services. There are development and expansion plans for ports in Malaysia for the next five years that will increase port handling capacity, which is an opportunity for us to provide our services. To boost performance, we are planning to expand our existing business by sustaining the income base through operational excellence, developing new business focusing on third party opportunities and accelerating the expansion of our regional and international footprint. We also intend to pursue new business models that can deliver long term sustainability while enhancing capacity by upgrading the skills of our marine professionals to cater for niche markets and strengthen the organisation. Management Discussion & Analysis Port Management & Maritime Services M A N A G I N G D I R E C T O R A N D C E O ’ S R E M A R K S 123 122 OUR BUSINESS PERFORMANCE MISC BERHAD PEOPLE. PASSION. POSSIBILITIES ANNUAL REPORT 2019