MISC BERHAD INTEGRATED ANNUAL REPORT 2023 www.miscgroup.com KEY MESSAGES SECTION 3 18 19 Chairman’s Message Chairman’s Message Transitioning to a low-carbon industry requires collaborative efforts to drive sector-wide change. By partnering with like-minded stakeholders including financial institutions who share our aspirations to achieve a lower carbon future, we aim to build a supportive ecosystem that advances environmental objectives while ensuring the economic viability of our operations. The MISC Group secured a Sustainability-Linked USD527 million Senior Secured Term Loan for six VLECs, marking MISC’s first foray into sustainability-linked financing. This 11-year non-recourse loan was recognised as the “Sustainability-Linked Deal of the Year for Asia” by Marine Money. Delivering Value to our Shareholders with Strong Profit Growth Our approach to business at MISC is grounded on the principle of creating sustainable value, for our diverse stakeholders. In FY2023, MISC continued to create value for our shareholders. Dear Stakeholders, In 2023, MISC continued to face a vulnerable landscape with a combined threat of geopolitical conflicts, inflation, energy security and climate crisis. Geopolitical tensions disrupted supply chains and escalated costs, compounded by the rapid energy transition and lingering impacts of the pandemic. Despite these challenges, as a leader in the shipping industry, we have demonstrated our ability to adapt and lead with agility and foresight. Our approach during these uncertain times is to remain steadfast in our performance and delivery. We recognise these challenges as opportunities to emerge as an industry leader in a low-carbon economy, while ensuring that we continue to meet current energy demands. By balancing our core energy business with low-carbon ventures, we strive to forge a path towards a more resilient future, benefitting both our business and the communities we serve. The Dynamic Landscape of 2023 This year, we navigated through a complex landscape shaped by concerns related to climate, conflict, cost and credit – each presenting MISC with unique challenges and opportunities. The ongoing Russia-Ukraine conflict, in particular, has significantly impacted our operations by disrupting supply chains and increasing costs. Recent tensions in the Middle East which triggered the Red Sea crisis, could potentially escalate to other countries in the region and disrupt international shipping routes. These geopolitical developments are also affecting trade and economic stability. We maintained our steer to meet our stakeholders’ commitment with minimal operational disruptions and stability in the face of these global challenges. Concurrently, the climate urgency was evident in the rapid and extensive energy transition, with the maritime sector evolving in tandem. A notable enhancement this year was the establishment of emissions reduction targets by the International Maritime Organization (IMO), aiming for substantial greenhouse gas (GHG) reductions by 2030 and 2040. The global energy transition also rippled into Malaysia, exemplified by the launch of Malaysia’s National Energy Transition Roadmap (NETR). At MISC, we embraced these global and national developments, shaping our GHG emissions reduction target of 50% by 2030 and pursuing Net-Zero emissions by 2050. A major milestone in our decarbonisation journey was the establishment of MISC’s Internal Carbon Pricing (ICP) Framework in 2023. Although this was not mandated by regulation, the ICP Framework underscores our proactive approach to sustainability and our ambition to exceed mere compliance. The economic implications of the operating environment, particularly those associated with the energy transition, require substantial financial commitments to decarbonise the shipping sector. Consistent with the economic and environmental forces shaping the world, MISC will be allocating a portion of our capital expenditure (CAPEX) towards clean energy solutions with the approach of balancing investments in new asset solutions while maintaining our strong credit ratings from S&P and Moody’s. We recorded a profit before tax of RM2,093.7 million (11.7% year-on-year growth). The Board declared a higher total dividend of 36 sen per share compared to 2022. We distributed a larger dividend equivalent of RM1,606.9 million to share our achievements with our shareholders. Our Significant Achievements We successfully delivered two dual-fuel VLCCs in 2023 and another one in early 2024. This marks a significant stride in our journey towards long-term investments in clean energy solutions and MISC’s strong commitment towards our decarbonisation journey. Another significant achievement was the FPSO Marechal Duque de Caxias sail away in February 2024 with no critical non-conformances and a safety record of 28 million man-hours with zero lost time injury (LTI). These accomplishments reflect our capability to continue to execute complex projects and operate effectively towards achieving our strategic business goals. DATUK ABU HURAIRA ABU YAZID Chairman
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