INTEGRATED ANNUAL REPORT 2024 70 71 SECTION 6: STRATEGIC REVIEW www.miscgroup.com MISC BERHAD Delivering Our Strategy and Its Progress MISC’S 2024 STRATEGIC PLAN AND PILLARS The MISC 2030 Aspiration is a strategic roadmap designed to drive financial resilience, sustainable growth and environmental stewardship. It aims to: • improve cash flows from operations by 50% from a 2022 baseline (approximately USD1.2 billion); • generate 25% of cash flows from new energy solutions; and • reduce GHG emissions in shipping by 50% from a 2008 baseline. The strategic priorities in 2024 were based on three key pillars: Business Model Transformation, Strategic Partnerships and Client Positioning and Organisational Culture and Behaviour. These priorities reflect MISC’s commitment to strengthening our core business foundation, driving growth in both conventional and new energy markets and reinforcing the Group’s ability to create long-term value for stakeholders in a rapidly changing global landscape. Delivering Our Strategy and Its Progress Strategic Pillars Key Focus Areas Key Achievements in 2024 Business Model Transformation • Unlocking value and de-risking for future growth • Formalised NED division to drive decarbonisation, develop sustainable portfolios and commercialise new energy solutions aligned with MISC 2030 Ambition • Established Marine Services on 1 April 2024 through the successful integration of Eaglestar and MMS for enhanced maritime services • Selective monetisation of assets • Successfully sold three LNGCs: Portovenere, Lerici and Puteri Intan • Project delivery excellence • FPSO Marechal Duque de Caxias achieved first oil and secured final acceptance • Fleet rejuvenation • Secured TCPs for: - Three newbuild LNGCs with QatarEnergy - Two newbuild LNGCs with PLL • Signed long-term in-charters for two newbuild LNG dual-fuel Aframax tankers Strategic Partnerships and Client Positioning • Strategic partnerships and expansion into new energy • Secured TCPs with PTLCL for the world’s first two ammonia dual-fuel Aframax tankers • Entered into a Strategic Collaboration Agreement with PETRONAS to explore the development of integrated shipping and floating solutions for ammonia • MHB secured a second offshore wind project to construct an OSS HVDC platform, as part of TenneT’s 2GW Programme • Signed an MoU with Aker Solutions, PETRONAS Carigali Sdn. Bhd. and Clean Energy Systems Inc for a pilot project using ZEUS technology which utilises advanced oxy-fuel combustion to convert CO₂ into power while capturing and storing emissions Organisational Culture and Behaviour • Embed Generative HSSE Culture in all business aspects • Focus on enterprise culture to future-proof MISC • Completed the Generative Culture Leadership Programme, embedding a strong HSSE culture to reinforce safety practices across all employees • Conducted the HSSE Partners Summit 2024 that was attended by 350 participants from across our business partnership network • Achieved a milestone in organisational engagement with the Organisational Culture Survey 2024, recording a 97% response rate and an 81% engagement score In 2024, MISC made significant strides in advancing its strategic priorities, focusing on transforming its business model, strengthening partnerships, and fostering a future-ready organisation. Business Model Transformation Strategic Partnerships and Client Positioning Organisational Culture and Behaviour • Selective monetisation of assets to unlock value • Fleet rejuvenation for the GAS Business segment and selective investments in dual-fuel assets for the Petroleum & Products segment • Investing in new energy solutions • Collaborating with strategic partners to pursue asset growth and venture into new energy solutions • Shifting focus to high-value clients • Embedding Generative HSSE Culture across the Group • Embarking on a transformation journey focusing on enterprise culture to future-proof MISC In 2024, the maritime industry faced a complex and challenging market environment, shaped by geopolitical tensions and shifting global energy dynamics. Energy security remained a key concern, with sanctions on Russian oil and gas disrupting trade patterns, while conflicts in the Middle East made the Red Sea a high-risk zone for vessels. These factors supported shipping rates through the rerouting of vessels, which drove higher tonne-mile demand. Throughout these challenges, MISC remained focused and prioritised the safety of our crew and assets. Based on recent market trends, investments in renewable energy and storage have surged, surpassing fossil fuel spending. This shift reflects a growing commitment to sustainable energy solutions. At the same time, major oil companies are recalibrating their energy transition strategies to align with evolving market conditions and financial priorities. The adjustments were made to navigate the complex landscape of energy transition, balancing the need for innovation with financial stability and regulatory compliance. Please refer to Our Operating Environment on pages 52 to 59 for more information. Despite these challenges and in response to the evolving industry dynamics, MISC demonstrated strategic resilience by advancing key initiatives aligned with its MISC 2030 Aspiration. To achieve its goal of improving CFO by 50%, MISC successfully delivered the FPSO Marechal Duque de Caxias, securing 22 years of cash flow, and strengthened its LNG fleet with five new LNGC contracts. Progress towards deriving 25% of CFO from new energy solutions was marked by AET’s landmark ammonia dual-fuel Aframax tankers, reinforcing MISC’s progress in the energy transition. Additionally, the Group remained on track to achieve its 50% GHG intensity reduction target, having reduced our GHG intensity by 32% from our 2008 baseline. PROGRESS TOWARDS ACHIEVING MISC 2030 AMBITION Adjusted CFO* (RM million) CFO From New Energy Solutions (RM million) Shipping Fleet GHG Emissions Intensity (gCO₂e/ton-nm) Despite a lower CFO due to higher payments to creditors, the delivery of FPSO Marechal Duque de Caxias and new vessels under construction are set to enhance future cash flow. GHG emissions intensity reduced by 32% as compared to the 2008 baseline, driven by new, higher efficiency vessels, fleet optimisation and operational interventions. In 2024, 5% of the total adjusted CFO was attributed to new energy solutions, supported by key projects in the Marine & Heavy Engineering segment, such as TenneT’s OSS HVDC platform and Kasawari CCS. * This refers to the adjusted CFO which excludes payments for cost relating to turnkey activities for the conversion of an FPSO and incorporates dividends received from Joint Ventures, associate & other investments. ** This amount excludes one-off FSU prepayments. 2024 5,704.0 2023 6,704.6** 2022 5,894.4 2024 284.9 (5%) 2023 199.0 (3%) 8 7 6 4 5 2008 2022 2023 2024 7.65 6.43 5.95 5.20 baseline
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