MISC BERHAD 70 INTEGRATED ANNUAL REPORT 2023 71 www.miscgroup.com STRATEGIC REVIEW SECTION 6 Delivering Our Strategy and Its Focus Delivering Our Strategy In 2023, the global landscape continued to be impacted by geopolitical tensions, which persisted from the previous year. While the Russia-Ukraine war continued, the Middle East conflict intensified in the fourth quarter, further escalating the disruptions to global energy trade and global supply chain. The oil trade landscape has witnessed an increasing share of Russian oil exports flowing into Asia and Europe has pivoted towards importing LNG from alternative sources. In this uncertain market landscape, MISC continued to generate value-driven outcomes by focusing on project delivery and execution, while strengthening its ESG commitments. The Group continued to build its capabilities and strengthen its core operations while focusing on purposeful entry into clean energy business and decarbonising its operations. Our Sustainability Strategy is driven by the considerations of material ESG risks and opportunities that have been embedded into our business plan. It ensures that we deliver on the commitments we have made to our key stakeholders. The strategic priorities in 2023 were based on three key pillars - Selective Investments and Project Delivery Excellence, Pacing Growth to Ensure Sustainability and Strategic Business Review. These Delivering Our Strategy and Its Focus Key Achievements in 2023 * 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. ** Exchange rate (USD to MYR); 2023: 4.56 and 2022: 4.40. MISC 2023 STRATEGY Short-Term Selective Investments and Project Delivery Excellence Strategic Business Review Reassess business portfolio to unlock value Pacing Growth to Ensure Sustainability Decarbonisation Maintaining Financial Discipline Diversifying into new asset classes Project Execution, Delivery & Operational Excellence Long-term contracts Strategic Pillar Key Focus Areas Key Achievements Selective Investments and Project Delivery Excellence Long-term contracts • 25% increase in Cash Flows (CF) from Secured Income • 14% improvement in Cash Flows from Operating Activities Diversifying into new asset classes • Secured a contract for one FSU unit with Pengerang LNG (Two) Sdn.Bhd. Project execution, delivery and operational excellence • Secured delivery for: • AET’s LNG dual-fuel VLCCs, Eagle Ventura and Eagle Vellore. A third LNG dual-fuel VLCC was delivered in early 2024. • GAS Business’s eco-efficient LNGCs - Seri Daya and Seri Damai • Ensured MERO 3 Project meet its construction and delivery targets Pacing Growth to Ensure Sustainability Maintaining financial discipline • Maintained MISC’s position as one of the highest rated shipping companies, holding Moody’s Baa2 and S&P Global Ratings BBB+ Decarbonisation • 24% reduction in fleet average CO2e intensity (compared to 2008 baseline) Strategic Business Review Reassess business portfolio to unlock value • Completed a strategic business review exercise and integrated the strategy into the 2024-2028 business plan • Incubation of NED unit GHG Emissions Intensity 5.84 2023 (gCO2E/t-nm) 6.30 2022 (gCO2E/t-nm) priorities reflect commitment to generate secured and recurring cash flows, pursue sustainable business practices and gradually reshape our business portfolio considering our risk appetite and affordability. During the year, we embarked on a transformative journey involving our marine services business. The integration of Port Management & Maritime Services and Integrated Marine Services under a unified segment, is one of the strategic initiatives under MISC 2030 Aspiration. This synergistic move, driven by the maritime industry’s evolving dynamics and challenges, aims to expand the depth of service offerings and effectively meet our clients’ and partners’ diverse needs. In addition, in advancing our pivot towards the clean energy segment, a New Energy and Decarbonisation (NED) unit was established in 2023 and this initiative has enabled the Group to develop feasible clean solutions for commercialisation. Following a successful incubation period, this unit is poised to evolve into a fully operational business division in 2024. MISC signed a Term Sheet with PETRONAS CCS Ventures and MOL, for the potential incorporation of a joint venture entity to invest in developing LCO2 carriers. Another notable highlight is the AiP from DNV for our innovative FCSU and FCSU-I concept that was jointly developed with SHI. CF from Secured Income 6,446.5 2023 (RM mil) 5,168.4 2022 (RM mil) CFO* 6,536.1 2023 (RM mil) 5,722.0 2022 (RM mil)
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