Yinson Annual Report 2019

Yinson is off to a strong start in 2019, with two new contracts secured within the first quarter of 2019. Guided by our Core Values and business strategy, we expect the Group’s strong performance to be sustained in the financial year ahead. During the period of volatility affecting the oil and gas industry from 2014 to 2017, Yinson focused on building our financial and operational strengths. We studied ways of increasing the resilience of our business strategy so it would be able to weather the challenges in the industry. We sought and forged new business alliances where parties would leverage off each other’s strengths towards achieving our common goals. We knuckled down to deliver the projects that we had at hand ahead of schedule and below budget. We operated prudently, improving our financial strength and bolstering our budget sheet. We thought deeply about our company’s direction – our Vision, Mission and Core Values – and administered a corporate culture emphasis that would empower and align our team, thereby increasing our ability to deliver greater value to our stakeholders. We have seen the efforts put into these initiatives coming to fruition in FYE 2019. In this report I describe the substantial progress achieved across Yinson’s key measures in FYE 2019 as well as some insights to our planning for the future. MARKET CONDITIONS After rising steadily over 18 months, peaking at USD80 in October 2018, oil prices dipped in the last quarter of 2018 to reach a low of USD57.36 in December 2018. The drop, which set prices back to levels last seen in Q4 2017, was due to increasing production and tapering demand in the third and fourth quarter of 2018. Prices have stabilised since then to the low USD60’s, with balance restored through the agreement by OPEC and Russia to cut oil production by 1.2 million barrels per day, thus alleviating concerns on oversupply. It remains to be seen whether OPEC and Russia will maintain their production discipline and what might happen in June, when the current agreement expires. Another crucial factor is whether OPEC will be able to counter balance the high oil production from the Permian Basin in United States, which is expected to generate around 3.9 million barrels per day. However, the market expectations for continued oil demand growth remains steady, despite concerns about slowing demand as a result of weaker global economic growth and tariff disputes. We observe that the FPSOmarket is picking up from the volatility of the last few years of weak prices and enforced capital spending discipline, and believe that the outlook for the FPSOmarket is currently at its best since 2010, when 23 units were ordered.* The Energy Maritime Associates reported that 18 FPSO orders are possible in 2019. Of these, almost 75% are expected to be leased units. There is expectation of healthy activity in Brazil and the African region, with key players opening up bids for FPSOs in the coming year. While the positive sentiments are encouraging, Yinson will continue to keep close tabs on market developments. Nowmore than ever, we will endeavour to manage the uncertainties of the market by adhering closely to our business strategy. Our business strategy allows us to capitalise on our strengths while remaining prudent in our decision-making. We believe that this will strongly position Yinson for sustainable growth in the coming years. *Source: Energy Maritime Associates, Floating Production Systems Quarterly Report (March 2019) 29 Yinson Group Overview Strategy and Sustainability Governance Accountability Annual General Meeting