CHAIRMAN’S MESSAGE On behalf of the Board, I am pleased to present to you the Integrated Annual Report and Financial Report of MISC Berhad and its subsidiaries (the Group) for the financial year ended 31 December 2022 (FY2022). MISC has come through a year that has been shaped by the VUCA (Volatility, Uncertainty, Complexity and Ambiguity) landscape defining the rapidly changing and complex world we are living in. In this uncertain environment, the Group has been agile, adaptable, and resilient to navigate challenges and seize opportunities as it continues delivering value to shareholders. MISC’s intensified efforts in strengthening our business fundamentals in 2022 have been critical to powering our resilience and expanding our capabilities for new sustainable growth. DATUK ABU HURAIRA ABU YAZID Chairman I am happy to share that MISC has been able to effectively manage both the shorter-term challenges of the pandemic to ensure its business continuity and stability, whilst at the same time focusing on the longer-term trends influencing the Group’s business environment, to redefine the Group’s direction as the world evolves towards a decarbonised future. Dear Valued Shareholders, The global decarbonisation agenda ramped up with the introduction of new maritime regulations. These include the EEXI, CII, the EU ETS and Carbon Tax. Consistent with the economic and environmental forces shaping the world, MISC made a strategic decision that new capex investments will focus on green asset classes, namely dual-fuel and low-carbon emission vessels. Tensions between the USA, China and Russia continued to dominate world headlines in 2022, causing uncertainty and instability which disrupted global economic development and trade. The ongoing conflict between Russia and Ukraine impacted global supply chains, disrupted transportation routes, delayed the delivery of goods and increased volatility in energy markets. The interest rates uptrend during the year, elevated financial costs, with bearish financial markets heralding the risk of a global recession. Concurrently, new opportunities arose as energy transition gathered pace. LNG has become an increasingly important fuel source which can reduce GHG emissions and support the transition to cleaner energy. The production, transportation and use of LNG has lower GHG emissions compared to other fossil fuels. In line with the energy transition and decarbonisation agenda, MISC is pivoting and targeting new potential income sources that come with the wave of demand for renewable energy and waste-to-value solutions. OPERATING ENVIRONMENT FINANCIAL PERFORMANCE BEYOND PERFORMANCE: POWERING OUR RESILIENCE In FY2022, MISC continued to create value for shareholders as it recorded a solid financial performance. MISC’s revenue increased by almost 30% to RM13,867.0 million. The Group recorded a 6% increase in profit before tax of RM1,874.3 million from RM1,774.6 million in FY2021. The Group has maintained its strong cash balance, low credit ratio and stable credit ratings, reflecting its robust financial position. The Board declared a total dividend of 33.0 sen per share in FY2022. This is equivalent to RM1,473.0 million to our valued shareholders, thus maintaining a consistent track record of dividend pay-outs over the past four years. Our Marine & Heavy Engineering arm, MHB, secured a contract from PCSB to undertake EPCIC services for the Kasawari CCS project, off the coast of Sarawak, Malaysia. Once completed, the Kasawari CCS project will be the world’s largest offshore CCS project by volume of CO2 captured and Malaysia’s first CCS project. MHB also secured a contract from Sarawak Shell Berhad (SSB) to undertake EPC services of the offshore platform for the Rosmari-Marjoram gas project which will be primarily powered by renewable energy from solar panels. The contracts that we have secured across the MISC Group are a testament to our diverse capabilities and expertise, and most importantly, our reputation as a trusted partner to global energy players. BEYOND SUSTAINABILITY: DRIVING A SUSTAINABLE FUTURE The MISC Group has always been committed to our role as a responsible member of the global maritime industry. The Group’s approach to sustainability has gone beyond the traditional concept and approach. Our sustainability ethos focuses on integrating our current strategic initiatives with ESG principles to ensure that we execute our business with the goal of generating sustainable value well into the future, or what can be termed as “Sustainability Plus”. Last year, the Group pledged its commitment to achieve NetZero GHG emissions by 2050 and we are firmly focusing on implementing the initiatives that will pave the way to achieve our targets. Our long-range MISC 2050 strategy serves as the roadmap to guide the transition of our business across the Group to thrive in a net-zero and circular economy. Besides lowering the fleet’s emissions, ever-increasing global maritime logistics demands entail us focusing on efficiency through digitalisation and enhancing the safety of people, asset and cargo carried. In addition to supporting the global climate change commitments, MISC’s low-carbon assets also help its customers lower their carbon emissions. As many of our customers are working towards decarbonising their operations and businesses, MISC’s offering of low-carbon asset services and solutions supports in systematically reducing emissions within the entire value chain. MISC’s value creation for the wider community is guided by the MISC Sustainability Strategy 2021 – 2025. We have prioritised biodiversity conservation, education and safety in support of our mission ‘to create a positive difference to the lives of communities’. We are committed to making a positive impact on ocean biodiversity through our Group’s Heart of the Ocean marine biodiversity conservation programme which includes During the year, the MISC Group secured over USD1.1 billion worth of long-term projects in terms of capital expenditure. This will go a long way in powering our resilience to thrive in an evolving marketplace and consistently drive sustainable value creation. In November 2022, MISC together with our consortium partners, NYK, K-Line and CLNG secured long-term charter contracts by QatarEnergy for a total of 12 newbuild LNG carriers. MISC also secured long-term time charter contracts with SRM, a wholly-owned subsidiary of ExxonMobil, for two more LNG carriers, bringing the total number of contracts with SRM to four LNG carriers. Our Petroleum & Product Shipping segment, AET, together with PTT of Thailand also inked a Memorandum of Understanding to develop two zero-emission Aframaxes to be powered by green ammonia, which will be delivered to PTT for long-term charters in Q4 2025 and Q1 2026 respectively. The Offshore Business Unit obtained several contract extensions namely a one-year charter contract extension for FPSO Bunga Kertas to April 2023 as well as staggered contract extensions for FPSO Ruby 2. Key Messages Key Messages 23 22 MISC Berhad Integrated Annual Report 2022
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