MISC BERHAD 46 INTEGRATED ANNUAL REPORT 2023 47 www.miscgroup.com VALUE WE CREATE SECTION 5 Actions to Enhance Outcomes Key Capitals Key Capitals Outputs/Outcomes Inputs Financial Capital We exercise prudent financial management and capital discipline to fund our operations and growth. Physical Capital Human Capital H Our strategic achievements and values are shaped by our diverse and high-performing workforce. We invest in nurturing innovative and future-ready employees to achieve our strategic goals. • Total Assets of RM65.1 billion • Shareholders’ equity of RM39.3 billion • Cash and cash equivalents of RM7.7 billion • Debt of RM17.5 billion • 31 LNGCs • 6 VLECs • 1 LBV • 2 FSUs • 64 Petroleum and product tankers • 13 Floating assets • Marine and heavy engineering facilities • Maritime training facility • Diverse and inclusive workforce of 10,435 employees from 46 nationalities • 15% of employees are women • RM54.9 million invested in capacity building for employees • 2,235 total new hires (shore employees only) • Majority of our capital is allocated towards operating and maintaining our fleet, ongoing project requirements, new CAPEX investments and purchasing new assets • While CAPEX allocations reduce our financial capital in the short-term, they build our physical capital base for longer term growth • Our long-term customer contracts for newbuild and purchased assets ensure secured income streams, thus growing our financial capital into the future • Investment in digitalisation and innovation initiatives to drive operational and organisational efficiencies has reduced our financial capital in the short-term but will enhance our intellectual capital in the long-term • Our capital mainly consists of our vessel fleet, floating assets, yards and infrastructure. We focus on investments in eco-friendly newbuilds with lower emissions, to provide greener shipping solutions and enhance our natural capital • We are providing customers with an eco-friendly fleet, improved efficiency and safety measures. This enhancement boosts our social and relationship capital • We reduce obsolete physical capital by disposing older assets through green ship recycling initiatives. This positively impacts our natural capital and aligns with energy transition and climate change imperatives for sustainable long-term growth • Our human capital, including capabilities, skills and knowledge, drives our intellectual capital. We invest our financial capital in human capital through talent development programmes and strategic human capital management aligned with our business plans • The short-term reduction of our financial capital to sustain our human capital enables us to strengthen the capabilities of our workforce to respond to clients’ needs and exceed customer expectations, thus building our social and relationship capital in the long-run F P Introduction Trade-offs Our business utilises a diverse portfolio of assets to move energy globally, meeting current and future market demands. We invest in dual-fuel assets and eco-efficient technologies to reduce emissions from our operations, nurturing sustainable business growth and aligning with our MISC 2030 Aspiration and MISC 2050 Vision. 2022 2023 Revenue (RM billion) 13.9 14.3 Profit after tax (RM billion) 1.8 2.0 CFO* (RM billion) 5.7 6.5 Dividend payout (sen per share) 33 36 Moody’s Ratings Baa2 (stable) Baa2 (stable) S&P Global Ratings BBB+ (stable) BBB+ (stable) 2022 2023 LNG transported globally (%) 6% 6% Estimated crude and petroleum products transported globally (MT) 99 134 Vessel availability (%) >99% >99% Vessel utilisation (%) > 99% > 99% Offshore floaters’ uptime performance (%) >95% >90% 2022 2023 Employee attrition rate (%)** 17% 15% Number of employees that completed training** 5,327 6,672 Average total hours of training per employee (hours/person)** 24.0 26.5 Lost Time Injury Frequency (LTIF) 0.08 0.09 Total Recordable Case Frequency (TRCF) 0.14 0.31 ** Shore employees only Social & Relationship Capital Our responsive stakeholder engagements and community support allow us to establish trust and foster meaningful relationships with our communities. Natural Capital In line with our MISC 2030 Aspiration and MISC 2050 Vision, we strive to continuously minimise our environmental impact over the long-term. We are focused on reducing emissions from our operations based on our Sustainability Strategy and strategic roadmap which lays out our journey in achieving our targets. • RM29.6 million invested in ALAM cadet sponsorships • Maritime education scholarships to promote youth development • 247 employees volunteered in the HOTO programme since 2021 • 55 years of experience in the maritime industry • Collaborations on clean energy solutions and decarbonisation initiatives • 16,634,887 megawatt-hours of energy consumption • Reliance on natural resources such as fuel, water and land • Secured stable cash flows from long-term contracts • Prudent management of financial commitments, disciplined in capital allocation and responsible investment • Strove to adopt the highest standards of governance and transparency, including TCFD • Maintained a strong track record of operational excellence • Diversified our portfolio of businesses to mitigate against market volatility and business cyclicality • Initiated decarbonisation efforts across our business and operations • Prioritised employee well-being by fostering psychological safety at the workplace • Encouraged continuous learning, collaboration and a culture of innovation • Facilitated comprehensive retention programmes, including employee engagement activities, immediate recognition and flexible work arrangements • Prioritised health and safety by promoting Generative HSSE culture across our businesses and operations • Rejuvenated ALAM campus to provide students with a conducive learning environment and to foster academic excellence • Continued to cultivate young talents and develop future leaders by providing scholarships in maritime education • Actively engaged employees in various volunteering programmes to positively contribute to communities where we operate • Established an NED unit to drive the decarbonisation pathway and seek new business portfolios • Actively pursued opportunities to commercialise clean energy and decarbonisation concepts and designs • Ongoing development of zero-emission vessels together with other partners under the Castor Initiative • Initiated decarbonisation efforts aligning with our transition plan to ensure that our newbuild vessels are equipped with eco-efficient technologies and energy-efficient solutions • Introduced marine biodiversity conservation initiatives to conserve and rehabilitate marine biodiversity • We invest financial capital in stakeholder engagements conducted by our employees, which impact our human capital through the manhours spent. The expenses associated with engagements reduce short-term financial capital; however, in the long-term they enable growth of social and relationship capital, ensure compliance with legal requirements, pave the way for sustainable future growth and maintain industry reputation • We undertake industry collaborations focusing on zero-emission vessels • Our community-based environmental programmes positively impact our natural capital • The growth of our social and relationship capital ultimately contributes to increasing our financial capital as we maintain and expand our customer base • We invest financial capital to drive our intellectual capital by rejuvenating our fleet with the latest technologies, which improves our natural capital through a lower emission fleet and enhance human capital through new skills while boosting our social and relationship capital from improved customer satisfaction • In the short-term, our financial capital is reduced with investment in technical solutions for floating assets, new technologies for port management, vessel inspections and yard operations. In the long-run, the investment will boost our intellectual capital across our maritime value chain • Our physical capital’s emissions and waste have a negative impact on our natural capital. Towards improving our natural capital and in line with energy transition, climate change and industry decarbonisation, we established MISC’s 2030 Aspiration and commitment towards Net-Zero GHG emissions aligning with the MISC 2050 Vision • Efforts towards improving our natural capital will reduce our financial capital in the shorter term and impact on our human, intellectual and physical capitals. Improvement of natural capital will heighten our social and relationship capital, as MISC commits to a sustainable future We have built a strong foundation of intellectual capital to run our operations and develop new maritime assets to enable us to deliver sustained value and growth. 2022 2023 Number of ALAM cadets sponsored 751 829 Number of sponsored students under the maritime education scholarships 15 13 Number of families within the community engaged in the HOTO programme 6 13 2022 2023 Number of AiPs secured 1 2 Number of accolades received 13 13 Dual-fuel vessels owned 6 8 FSU award 0 1 2022 2023 Major oil spill 1 0 Scope 1 & 2 GHG emissions (million tCO2e) 4.22 4.15 Fleet average CO2e intensity reduction compared to 2008 (%) 17 24 Hazardous waste recycled, reused or recovered (%) 99.1 99.9 SR Intellectual Capital I N * This refers to the adjusted CFO which excludes the payment for costs relating to turnkey activities for MERO 3 Project and the one-off FSU prepayments in 2023.
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