Yinson Annual Report 2021

55 ANNUAL REPORT 2021 attributed to an improved shipyard works methodology, topside fabrication savings, reduction in vessel and module transportation and reduction in manpower. China's exemplary management of the Covid-19 pandemic also allowed smooth progress on our fabrications site, which was a significant factor that helped the FPSO Anna Nery project to remain on schedule. BUSINESS DEVELOPMENT AND OUTLOOK Due to the postponement of oil & gas developments in 2020, the number of FPSO awards for 2020 ended at an all-time low. Yinson was not spared, with Aker Energy cancelling the Pecan Project in Q1 FYE 2021 and Petrobras postponing the Parque das Baleias project until FYE 2022 – both projects that we had been hopeful to secure in FYE 2021. During this time, some oil companies revisited and optimised their development strategies to reduce capital expenditure and make projects more financially robust, thereby increasing demand for leased FPSOs compared to owned units. However, most postponed projects have now resumed, and a significant increase in awards are anticipated in FYE 2022 and beyond. This bodes well for Yinson, as the anticipated increase in project awards against the limited number of FPSO contractors may allow us to be more selective and obtain more balanced commercial contracts. We are fortunate that Yinson remained relatively resilient throughout the volatility of the market since the Group’s revenue comes primarily from long-term fixed priced contracts with reputable oil companies. During this uncertain time, we exercised great prudence with our resources, adhered closely to our business strategy and prioritised maintaining the special skillset needed to execute FPSO redeployments. One of the investments we made in FYE 2021 was to sign an exclusive purchase option for OFFSHORE PRODUCTION FPSO Nganhurra, a high spec unit built by Samsung in 2006 owned by Woodside and Mitsui. We believe FPSO Nganhurra to be an excellent fit for several tenders which we are, or expect to be, participating in, thereby increasing our bidding strength and ability to efficiently deliver the project. Having strategically managed our manpower, capital and material resources throughout the downturn in FYE 2021, Yinson is now in a strong position to capitalise on the anticipated FPSO market growth ahead. Our JV company with PTSC, PTSC CRD, received full settlement totalling USD66.3 million for the termination of Ca Rong Do field development in Vietnam, bringing closure for Yinson on this series of events. The contract was initially awarded to PTSC CRD in 2017. However, it was terminated due to a force majeure event in 2018. Once again, as a result of our robust contractual terms, the Group was fully compensated for costs incurred during the project’s initial Engineering, Procurement and Construction stage, and mitigating works. Yinson’s Offshore Production team undertook a strategic development process in FYE 2021 to adapt the Division’s strategy and action plans to align with the Group’s, and capitalise on opportunities presented by the changing external environment. Six priority areas were identified under the key tranches of ‘finance’, ‘operations’ and ‘enablers’; and corresponding initiatives and measures determined. Inputs were sought from all areas of the Division in this strategic development process, as we believe that employee-led strategies are the key to building a sense of ownership for the Division’s success. FLEMMING GRØNNEGAARD CEO Offshore Production OFFSHORE PRODUCTION DIVISION’S PRIORITIES AND OUTCOMES BUSINESS CONTINUITY Continuously enhance safety, quality, compliance and sustainability to maintain business continuity ASSET PORTFOLIO Increase portfolio of profitable assets, creating long-term EBITDA of USD500 million per year FINANCING Improve financing predictability to capitalise on market opportunities PROJECT EXECUTION Execute projects on time and on budget, to support a strong brand reputation OPERATIONAL PERFORMANCE Optimise performance across operations, safeguarding our return on investment HUMAN CAPITAL Value, recognise and develop our employees, creating a great team to be part of FINANCE OPERATIONS ENABLERS