MISC BERHAD INTEGRATED ANNUAL REPORT 2025 08 11 09 05 12 SEC 06 STRATEGIC REVIEW 10 07 13 01 02 03 04 62 www.miscgroup.com 63 www.miscgroup.com #deliveringProgress OUR OPERATING ENVIRONMENT OUR OPERATING ENVIRONMENT MEDIUM TO LONG TERM MEDIUM TO LONG TERM ADVANCEMENTS IN TECHNOLOGY AND DIGITALISATION IN THE MARITIME INDUSTRY What Happened in 2025 What Happened in 2025 The energy transition in 2025 continued to exhibit mixed progress across sectors and regions. Global investment in renewable, low-carbon energy and storage continued to rise and reached USD2.3 trillion, reflecting sustained momentum in selected low-carbon technologies. However, investment in fossil fuels declined for the first time since 2020, primarily due to reduced global upstream spending amid softer oil prices and persistently elevated project and service costs. At the same time, the oil and gas sector remained in a complex transitional phase, seeking to sustain near-term profitability from conventional hydrocarbon production while navigating capital discipline pressures and long-term decarbonisation commitments. Against this backdrop, the industry continued navigating an evolving transition landscape, seeking to balance commercial resilience with long-term decarbonisation objectives. During the year, the IMO has decided to develop a comprehensive maritime digitalisation strategy to create a fully interconnected, harmonised and automated global shipping sector. Leveraging technologies such as AI and autonomous navigation, the strategy seeks to integrate vessels and ports, optimise logistics, and reduce GHG emissions. Adoption is planned by the IMO Assembly by the end of 2027. Meanwhile, technology adoption across the maritime industry continued to grow, driven by evolving commercial requirements, regulatory expectations and sustainability objectives. At the same time, research and development in alternative fuels and lower-emissions propulsion systems also progressed, with advancements in alternative-fuelled vessels, wind-assisted propulsion and hybrid energy solutions. USD trillion 4 3 2 1 0 Global Energy Investments 2020 2021 2022 2023 2024 2025 E8 ENERGY TRANSITION E7 Source: International Energy Agency (IEA) Fossil Fuels Renewables, Low-Carbon Energy and Storage Impact: Adoption of digital solutions, on-board technologies and new propulsion systems across the maritime and energy sectors enabled operators to enhance operational efficiency, safety, and data-driven decision-making, while meeting evolving commercial, regulatory, and sustainability expectations. Response: The Group advanced a clear digital roadmap to enhance efficiency and data transparency, accelerating progress towards mature digital capability. Wave 2 of the Finance Transformation Programme was completed, enabling more data-driven decision-making through analytics and process automation. The Group is also embedding digital and AI capabilities into critical business functions, anchored around measurable business value, to enhance operational efficiency and unlock new digital capabilities, accelerating the Group’s progress towards increased digital maturity. Digitalisation is expected to play a larger role in optimising fleet performance and end-to-end logistics, strengthening data transparency and supply chain connectivity while ensuring data privacy and security. Investments in digitalisation, automation, and new energy technologies are expected to accelerate. The convergence of AI, advanced analytics, and smart shipping solutions is expected to support improvements in operational efficiency, compliance, and cybersecurity. Meanwhile, cross-sector collaboration remains important in developing and scaling energy-efficient propulsion systems, and emissions-reduction technologies, given capital intensity, technology risk, and infrastructure constraints. How We Were Impacted and How We Responded What Is the Outlook? M6 M10 M12 R3 R4 R8 R9 Key Capitals: Material Matters: Risks: Strategic Pillars: SP2 SP3 Impact: Transition pathways across new energy solutions continued to evolve unevenly across regions and value chains. The developing nature of technologies, regulatory frameworks and commercial viability required a measured and cautious approach. Response: The Group strengthened collaboration with industry partners and leveraged its expertise to deliver integrated solutions. During the year, we secured Approvals in Principle (AiPs) for an ammonia FPSO concept and an ammonia dual-fuel LR2 tanker, advancing technical readiness for future fuel applications. In early 2026, we further progressed our future fuel capabilities by securing a long-term charter for a dual-fuel ethanol-ready DPST. The Group also made progress in the CCS value chain, forming a joint venture with PETRONAS CCS Ventures and Mitsui O.S.K. Lines during the year, and also secured our first long-term charter for a newbuild LCO₂ carrier with Northern Lights JV DA and Kawasaki Kisen Kaisha Ltd. (K Line) in early 2026. Energy demand is projected to rise, driven by the growing adoption of energy-intensive technologies such as AI and data centres. Nonetheless, the pathway of the energy transition remains uncertain, surrounded by inconsistencies in overall progress, amid ongoing geopolitical volatility. Global investment in renewable energy is expected to remain robust, with average annual spending projected to reach USD2.9 trillion over the next five years, according to BloombergNEF. This growth is largely underpinned by the continued expansion of solar and wind energy, as well as carbon capture and storage initiatives, with China accounting for the majority of investments. Meanwhile, oil and gas are expected to continue playing a meaningful role in the global energy mix through 2050, according to consensus forecasts. How We Were Impacted and How We Responded What Is the Outlook? Key Capitals: Material Matters: Risks: Strategic Pillars: M1 M3 M4 M5 M6 M11 R3 R4 R9 R10 SP2 SP3
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