Integrated Annual Report 2021

As for Marine Repair and Conversion, we plan to develop our internal capability by increasing our berthing facilities to optimise the number of vessels at our docks, explore suitable technology and digitalisation initiatives to increase operational efficiency, and further boost our ability to secure high-value projects such as marine engine and propulsion systems and develop our capability in the area of new generation vessels. Our focus in the Plant Turnaround & Shutdown Maintenance segment is to explore opportunities in the non oil-and-gas sector for power plants and oleochemical plants to diversify our revenue streams. Focusing on project excellence for the PETRONAS TA4MS contract is a key priority in order to strengthen our industry reputation and track record. Modular and serial fabrication is an area we plan to diversify into by leveraging on MHB’s capability. Our focus is to secure onshore module projects, establish our footprint in the wind farm market and explore other opportunities in serial fabrication and light engineering by optimising the utilisation of our current assets and manpower for fabrication jobs in the non oil-and-gas sector. We will continue focusing on energy transition opportunities, namely offshore wind farms by leveraging on our partnership with Smulders. We are also exploring other upcoming opportunities in energy transition such as CCUS and onshore modular opportunities in hydrogen and ammonia production plants. Invested in digitalisation to drive efficiency We leverage on digitalisation and automation to obtain operational efficiency and cost savings. We deployed 4D modelling that enables visualisation of the entire chain of construction activities throughout the project lifetime. Towards achieving better marine-repair project monitoring and tracking, we developed and deployed a Digital Daily Work Checklist system. Additionally, we embarked on our Finance Transformation Programme to reinvent our supply chain management (SCM) processes, which includes Coupa’s e-procurement platform and procure-to-pay (P2P) among others, with the aim of achieving a ‘single source of truth’. Digitalisation initiatives in 2021 • 4D modelling • Digital Daily Work Checklist system • Embarked on Finance Transformation Programme Installed solar panels with the capacity to generate 10,000-MWh of clean energy MHB Solar Energy Programme - single largest fabrication yard in Southeast Asia In 2021, MHB installed 18,720 solar photovoltaic (PV) panels which has the potential to generate 8.3-MWp. The system spans close to 41,000 m2 (440,496 sq ft) and powers eight buildings in the yard. Collectively, the solar panels can generate an estimated 10,000-MWh of clean energy each year for MMHE West, the single largest fabrication yard in Southeast Asia. We estimate a reduction of 6,286 tonnes of CO2 annually or 132,000 tonnes over the 21-year agreement with PETRONAS. MOVING FORWARD Moving into 2022, we expect the pandemic to persist into the year, and potentially new variants of concern (VOC) to surface. This could impact regional economic recovery, depending on new waves of COVID-19 infections and measures imposed by national governments to contain the spread. Towards the end of 2021, the new Omicron variant infections had already impacted oil demand recovery. These uncertainties will most likely result in major oil internationals to continue with their prudent approach in capital investment. Our focus for the year ahead is to drive our long-term business growth within our core businesses and continue building our in-house capability and strengths. In the area of Heavy Engineering Fabrication, we will continue to build our internal capability to be competent and competitive through a number of focused initiatives. These include selectively pursuing bids as an EPCIC subcontractor and explore partnerships towards being recognised as the main EPCIC contractor, enhance and mobilise our critical core team we had established in front-end engineering verification, T&I and HUC and increase internal and in-house capability for pre-fabrication services and specialised scopes. We have identified the redevelopment of our East Yard for offshore wind farm and/or modularised onshore projects as one of our key priorities for 2022. This will enable us to offer more cost-efficient and better-value services to our clients and give us further headroom to take on more projects without compromising on our current project execution. Maintained social responsibility initiatives to give back to society In 2021, MHB adopted Sekolah Menengah Dato’ Penggawa Timur and held several environmental awareness initiatives throughout the year. This programme focused on air, water, waste management and other environmental activities. In addition, MHB provided donation contributions to local communities in forms of essential items and cash for: • MHB Cares – Flood Relief e-Donation Drive • MHB Cares – Donation to Needy Residents • MHB Cares – COVID-19 Relief • Contribution for the impacted workers during Movement Control Order 3.0 • Invested in new technology to increase fabrication efficiency • Conducted feasibility study to invest in blasting and painting workshop for offshore wind farms • Established core team for full EPCIC scope of works MARINE & HEAVY ENGINEERING BUSINESS REVIEW Enhanced our in-house capability A key area of focus in 2021 was enhancing our in-house capability and capacity to offer clients a stronger value proposition in the years to come. Within the Heavy Engineering segment, we increased our fabrication efficiency by investing in new technology for our welding machines and other related equipment for in-house tubular fabrication. In order to support our venture into offshore wind farms, we conducted and completed a feasibility study to invest in a new blasting and painting workshop. We also laid the foundations to develop our capability for full EPCIC scope of works by establishing our core team for front-end engineering verification, transportation and installation (T&I) and hook-up and commissioning (HUC). MISC Berhad 150 Integrated Annual Report 2021 MISC Berhad Integrated Annual Report 2021 151