MISC Integrated Annual Report 2020

Introduction / Who We Are / Key Messages / Highlights / Strategic Review //////// MISC Berhad / Integrated Annual Report 2020 46 MISC Berhad / Integrated Annual Report 2020 47 //////// Strategic Review / Highlights / Key Messages / Who We Are / Introduction 2 2 Section Section 2021 – HOPE AND PATIENCE The threat of COVID-19 is here to stay, at least for the greater part of 2021, until globally, nations and the populations of the world achieve a level of herd immunity. We cannot underestimate the far-reaching negative social economic impact that was felt throughout of 2020 that will spill into 2021. Various businesses, large or small have struggled to stay afloat as the shutdown of activities to combat the spread of the virus took its toll. Likewise, global workforces faced the risk of displacement and unemployment, a consequence of business failures and shutdowns. It is hard for most to be positive and optimistic for 2021. While the development and dissemination of vaccines is welcome news indeed, the reality is that it will take time for vaccines to reach the majority of global population before we can safely say that the pandemic is behind us. In a best-case scenario, some normalcy will resume in the second half of 2021, but it will be imbalanced. We therefore have to brace ourselves for persisting headwinds, as the restrictions of COVID-19 will continue till the threat is fully under control. Therefore, how long can one stay patient and persistent? To address the risk of obsolescence of MISC’s present business portfolio and assets in a net zero carbon future, I am excited to share that the Group will be working on a new roadmap to be called MISC2050, a 30-year journey that will map our journey and mission in reimagining the economic and social role of MISC in a carbon-free future come the year 2050. With this 30-year roadmap, we will be guided in the shifting of our present business and asset portfolio that we are all very familiar with today, and transition it to a new portfolio that is relevant and will thrive in this future that we are imagining. Thirty years may be overly long for some as a strategic roadmap as many things many change over the course of the coming years. However, we cannot deny that if we do nothing, 30 years may be too short as well. What matters is that we act now and seize the opportunity to define the undefined future for ourselves. In the meantime, we have launched our 2021-2025 Sustainability Strategy, which represents the next phase of our overall sustainability goals. This new sustainability strategy continues to reinforce our ESG commitments for 2021 until 2025, with our climate commitments stretching further ahead into 2030 and 2050. Some key aspects of the strategy include our commitment towards decarbonisation, promoting the circular economy, health and safety, diversity and inclusion, and last but not least, our values and business ethics. As part of the 2021-2025 Sustainability Strategy, MISC will also be embarking on our Task Force on Climate-related Financial Disclosures (TCFD) journey in 2021, and to implement its recommendations in a phased approach. During the year, we will also participate in the Carbon Disclosure Project (CDP) as part of our efforts to fulfil our commitment to environmental transparency and ascertain our baseline disclosure level. We believe our disclosure to the CDP coupled with our upcoming TCFD journey will provide our stakeholders with a clear understanding of our business readiness for a low-carbon economy. Another major milestone in our Sustainability Strategy is the emphasis on ownership and advocacy of the sustainability agenda throughout the MISC Group. This begins with a strong tone at the top with the Board of Directors, through the Board Governance and Risk Committee (BGRC), providing governance oversight, and cascading down to each business/service unit and subsidiary that will own and drive the implementation of initiatives. Hope is a powerful word and a powerful belief. Hope is an emotion. Hope is a state of mind. As difficult as it may seem, we must all not lose hope. With hope comes motivation to keep on striving and trying. With hope comes the emotional energy to stay patient and committed to our cause and beliefs. In the MISC Family, we remind each other to stay hopeful that better days will come in 2021. We repeat the hope and we encourage each other to not give up. While hope will keep us focused and energised despite the negativity brought about by the weight of a global pandemic, there are also strategic tools and decisions at our disposal that we can take as a Group to safely navigate 2021. With the growth that we have achieved under the MISC2020 strategic initiatives, the Group can afford to take a pause in 2021. We can most certainly afford to be more selective in our pursuit of new growth projects. Even if hypothetically we do not secure any new growth project in 2021, our growth in secured operating cash flow is assured. In total, we had USD3.9 billion of projects under construction as at the end of 2020. When completed and delivered into operations from 2021 into 2024, we will have a total of 19 new vessels and assets entering service for us. In other words, the heavy lifting that we have done in securing new projects the past few years will serve us well in the coming years in terms of growth in operating cash flow. I have touted the tailwinds of past few years that had blown behind us, carrying MISC to many successes on many fronts. Truth be told, we did not anticipate a global pandemic. No one did. Most certainly, with this global pandemic comes the tremendous headwind that will continue to blow hard against anyone in 2021. We can most certainly choose not to sail straight or fight this headwind given that we have done enough the past years. Therefore, we will keep our priorities for the year ahead straightforward. We plan to keep it sweet and simple. In 2021, we will just focus on execution. NOTE OF APPRECIATION I would like to take this opportunity and I can never do it enough, to thank and express my deepest gratitude to everyone in the MISC Family for keeping our flag flying every year, through good times and bad times. Especially through the trying times of 2020. As the saying goes, “When the going gets tough, the tough gets going” – I cannot imagine a more apt description of the fighting spirit of everyone in the Group in 2020 as we weathered the challenges of the past year together. We looked after each other and we kept each other safe, encouraged and motivated. The MISC Group has many heroes and heroines in 2020. Besides those who were instrumental in delivering our successful growth story during the year, we have our very own frontliners i.e. our seafarers who risked COVID-19 infection as they continued to transport cargoes safely and on time. Our frontliners also include our employees and workers at Yes, execution, execution, execution. Execution of all the projects under construction as I have mentioned above. Focus on delivering them into operations and converting into cash generating assets in the coming years. Besides the emphasis on execution excellence, we will also be focusing on the Group’s various internal transformations - these Group-wide transformation exercises will focus on strengthening our processes in finance, procurement and document management. Collectively, they will underpin the digitalisation of our processes that will enable us to be even more data-driven in our day-to-day decision making. This means speed and agility while improving the science in the decision-making process. We will also dedicate the year to rolling out our new sustainability roadmap for the years 2021-2025. We will put in place a well-thought-out execution plan to align the MISC Group with the energy transition and the climate change agenda. And central to this execution plan will be MISC2050. our heavy engineering yard in Johor, Malaysia who remained committed to their mission to deliver the projects they had committed to. Not forgetting, our project teams managing the various newbuildings in South Korea and our employees who managed and manned the ports and terminals. We also have many unsung and invisible heroes and heroines. Silent in their contributions and always never drawing attention to themselves but without them, everything else will not run. These include our ICT teams across the globe who kept all of us in the family connected as lockdowns and restrictions across the world to combat the spread of COVID-19 prohibited us from connecting and interacting in our physical workspaces. Not forgetting the HR teams who continue to look out for the welfare of our people and the finance teams who work tirelessly to ensure we are on top of our payables and receivables and making sure the pay cheques get to our people. From the bottom of my heart, I thank and salute all of you. Indeed, we lived up to what we have said the MISC Group stands for – People, Passion, Possibilities. On behalf of the Group, I would also like to record our sincere appreciation to our valued shareholders, customers and partners for their continuous and steadfast support, trust and belief in MISC. We are deeply indebted to the MISC Board of Directors for their stewardship of the company and wise counsel as we steered through a stormy year. As we step into the year ahead, we reaffirm our commitment to create tangible and meaningful value for our shareholders and stakeholders. Our People will stay the course towards achieving our strategic priorities, as their Passion inspires them to make the most of Possibilities ahead. YEE YANG CHIEN President/Group CEO PRESIDENT/GROUP CEO’S REVIEW