MISC Integrated Annual Report 2020

Introduction / Who We Are / Key Messages / Highlights / Strategic Review //////// MISC Berhad / Integrated Annual Report 2020 40 MISC Berhad / Integrated Annual Report 2020 41 //////// Strategic Review / Highlights / Key Messages / Who We Are / Introduction 2 2 Section Section REFLECTIONS OF 2020 As I reflected on my thoughts of past years, I recall describing 2018 as a chaotic year, with volatility not seen since the great global financial crisis of 2007-2008. In that year, oil prices began to stabilise and new investments in the oil and gas industry began to pick up after the oil price crash of 2014. I believed in the tailwind that carried the MISC Group in 2018. And we had growth successes (USD900 million of new growth investments) despite difficult business conditions. 2018 was also the year that we declared the Group was ready to step up its presence in the international arena and compete against the very best in the global sectors that we are in. Unfortunately, 2019 was not any better than 2018. Economic and political conflicts dominated headlines even more than ever and the year was equally, if not more, volatile than 2018. However, the tailwind that carried us in 2018 continued to support us. In 2019, we were able to secure up to USD1.1 billion of new investment in assets with long-term secured income streams once the assets are operationalised. Then came 2020. Who would have thought the world would be battling a global pandemic? A threat to humanity, and a threat that does not discriminate, regardless of background, race, ethnic origin and faith. Although cross-border economic tensions such as trade wars and sanctions and political differences between nations were still raging on from past years, all these took a back seat as COVID-19 seized the headlines. A well-known Malay proverb “sudah jatuh, ditimpa tangga” best described 2020. In my feeble attempt to translate to English, this proverb describes a state of perpetual misfortune and bad luck. Consistent challenging economic and geopolitical conditions have already made it tricky and risky for many global companies and businesses, year in year out. Throw in a virtual shutdown of global economic activities and trade due to the necessary lockdowns and restrictions required to combat the spread of the virus, it is the ultimate misfortune and bad luck. And yes, the world saw another collapse in oil price at the beginning of 2020, when not even a decade has passed since the last collapse in 2014. Need I say more on how challenging 2020 was? Yet, in perhaps the most challenging year that the MISC Group has had to face in the history of its existence, we continued to thrive and achieve success in our quest for growth. Yes, tremendous success – in 2020, we achieved our best annual growth in the worst of economic climates and circumstances. In 2020, we delivered new investments in growth assets amounting to USD2.8 billion, the highest we have ever achieved in a year. And we made good our commitment to step up our international presence and to compete against the best in the industry. Nothing can better showcase this successful journey than the award of the Mero 3 FPSO project by Petróleo Brasileiro S.A. (Petrobras) to MISC in August 2020. It has to be said that our march towards securing the Mero 3 FPSO project has been in the making for three years. Three years of unwavering belief that we could find success despite not having the track record in bidding for such a large-scale deepwater project and three years of hard work and painstaking efforts by the team to develop our execution capabilities and capacities. Besides the Mero 3 FPSO project, we are also proud of our breakthrough into the global ethane trade when we purchased six new very large ethane carriers (VLECs) in July 2020. These six VLECs will also be committed to long-term time charter party (TCP) agreements with Zhejiang Satellite Petrochemical Co. Ltd. (STL) as charterer of the vessels. Prior to these six VLECs, there are only eight other VLECs operating globally and once our six new VLECs come into service, MISC will be the largest transporter of ethane in the world. PRESIDENT/GROUP CEO’S REVIEW Dear Valued Shareholders, 2020 will be remembered as the year that the world was brought to its knees by a single common global threat. An invisible enemy that does not discriminate its victims but threatens all that are in its way. We know this enemy as the global pandemic, COVID-19. The word ‘challenging’ does not come close to describing the economic calamity and havoc the global pandemic has caused. ‘Catastrophe’ is perhaps a more apt word. As I write this, the threat of COVID-19 is still present, but we all hope that this damaging threat will be in our rear-view mirror by the end of 2021. As ironic as it may sound, and against a backdrop whereby global business communities struggled to survive, the MISC Group had its best year in terms of growth. “ “ Our Best Growth in the Worst Conditions