MISC Annual Report 2019

65 64 OUR VALUE CREATION STORY MISC BERHAD PEOPLE. PASSION. POSSIBILITIES ANNUAL REPORT 2019 Complete/Full Range Offshore Platform EPCIC Services for Offshore & Onshore Construction Comprehensive Marine Repair & Refurbishment Trained seafarers in Eaglestar manage and operate LNG and petroleum vessels ALAM provides maritime education and training to seafarers LNG Asset Solutions and Petroleum & Product Shipping segment transport energy resources for customers - LNG, crude and petroleum products MMS provides port management and maritime services LNG Asset Solutions and Petroleum & Product Shipping segment commission, acquire or in-charter LNG carriers and tankers Offshore Business operates offshore oating solutions Offshore Business provides comprehensive EPCIC solutions, from design to operations and decommissioning of offshore assets How We Create Value FINANCIAL OUTCOMES • Consistent dividend payout of 30 sen per share over the last five years, with a special dividend payout of 3 sen per share for 2019 • Share price increased by 24.6%, market capitalisation increased to USD9.0 billion as at 31 December 2019; total shareholders return of 29.6% • Strongest credit rating in marine transport sector by Moody’s Investors Service and S&P Global Ratings as at 31 December 2019 • Improved net gearing from 0.20 to 0.17 • Higher cash flow from operations which led to 22% increase in cash balance OPERATIONAL OUTCOMES • High vessel availability rate of > 99% for our fleet • Consistently maintained high vessel utilisation of more than 99% • Excellent floating asset performance with uptime of more than 99% • Completed marine repair and maintenance of 77 vessels by Marine & Heavy Engineering segment (2018: 93 vessels) HUMAN CAPITAL OUTCOMES • Developmental opportunities and progression: Enhanced leadership programme and succession planning with more positions filled (2019: 6 positions filled; 2018: 2 positions filled) • RM1.8 billion spent on employee costs, 10% increase from 2018 • Higher TRCF of 0.27 and LTIF of 0.10 recorded (2018: TRCF 0.22; LTIF 0.07) • Maintained consistent safety track record for HSE and welfare (zero work related fatalities) • Competent and skilled workforce including seafarers SOCIAL AND RELATIONSHIP OUTCOMES • Increased customer engagement through various programmes throughout the year • Compliance with regulations and international standards • Established partnership on development of marine biodiversity and capacity building • Contributed to the growth of the nation’s maritime and energy industries through our well established programmes in ALAM that promotes education and awareness amongst the youth • Community investment programmes in fostering a positive difference to communities • Collaboration with industry peers to improve the future of maritime industry ENVIRONMENTAL OUTCOMES • Energy efficiency and carbon emissions: 8% reduction in vessel fuel consumption resulting in avoidance of approximately 300,000 tonnes of total vessel carbon emissions (7% reduction) from a baseline of 2016 • Major spills: Zero incidents of major spills to the environment from all operations since 2013 • Pollution control: Reduction of 27% SOx and 6% NOx intensity across all vessel types through the use of cleaner fuels and emission control systems in 2019 • Natural resources management: Through freshwater generation system onboard our vessels, about 322,000 m 3 freshwater withdrawal from land was avoided in 2019 • Waste management: Hazardous waste from shore based operations were 99% recycled in 2019 INPUTS KEY ACTIVITIES OUTCOMES STAKEHOLDERS TO WHOM WE PROVIDE VALUE CONTRIBUTION TO UNSDG OUTPUTS SHAREHOLDERS FINANCE PROVIDERS ENVIRONMENT CUSTOMERS REGULATORS COMMUNITIES EMPLOYEES Other outcomes and performance can be found in Delivering Our Strategy section on pages 66 to 71. More information on how we engage with our stakeholders can be found on pages 72 to 75. FINANCIAL CAPITAL Our sources of financial capital to run our business and fund our growth comprise internally generated funds and debt financing PHYSICAL CAPITAL Our fleet comprises 29 LNG carriers, 81 petroleum and product tankers, two floating storage units and 14 floating assets We also own marine and heavy engineering facilities, including fabrication yards and dry docks INTELLECTUAL CAPITAL Our intellectual capital includes specialist knowledge and experience in ship operation and management, ship-to-ship transfers, deepwater capabilities, fabrication of complex heavy engineering structures, marine repairs, and operating the only MCV in the world HUMAN CAPITAL We have over 8,800 dedicated, high performing and specialised personnel at sea and shore which we leverage on to steer our business and operate our ships and facilities efficiently and safely SOCIAL & RELATIONSHIP CAPITAL We develop strategic partnerships and trusted relationships with our key customers, suppliers, governments, regulators and industry bodies NATURAL CAPITAL Our vessels rely heavily on fuel and water for their operations Energy resources transported in 2019: LNG Asset Solutions segment - transported 7% of world’s LNG Petroleum & Product Shipping segment - transported an estimated 125 million tonnes of crude, petroleum products and chemicals to global customers Provision of a range of quality services and solutions: Integrated marine services from Eaglestar Port management and maritime services from MMS Offshore solutions from Offshore Business Marine and heavy engineering services from MHB Crude oil processing and storage in 2019: Offshore Business - processed and stored an estimated 26% of Malaysia’s crude oil production Highly trained and qualified seafarers Maritime education and training from ALAM POSITIVE OUTPUTS NEGATIVE OUTPUTS Environment 4.25 million tonnes of GHG emissions 740,542 m 3 freshwater withdrawal (for non-shipping activities) The above are some of the key activities of the Group. For further details on the activities and key developments of the businesses, please refer to Our Core Businesses & Activities on pages 42 to 45 and Management Discussion & Analysis on pages 88 to 157.