WHAT’S INSIDE 1 2 3 4 5 6 ABOUT US 02 Vision, Mission 03 Core Values 04 Corporate Pro le 05 Worldwide Operation 06 Corporate Information THE YEAR IN BRIEF 07 Financial Highlights 08 Corporate Calendar 10 Sustainability Statement FROM THE BOARD OF DIRECTORS AND KEY SENIOR MANAGEMENT 35 Management Discussion and Analysis 42 Pro le of the Board of Directors 46 Pro le of the Key Senior Management GOVERNANCE 51 Audit Committee 56 Remuneration Committee 59 Nomination Committee 64 Corporate Governance Overview Statement 80 Additional Compliance Information 81 Statement on Risk Management and Internal Control 84 Statement of Directors’ Responsibility FINANCIAL STATEMENTS 85 Audited Financial Statements ADDITIONAL INFORMATION 202 Summary of Signi cant Recurrent Related Party Transactions 204 Top 10 List of Properties 206 Analysis of Shareholdings 209 Notice of Twenty-Second Annual General Meeting 216 Statement Accompanying Notice of Twenty-Second Annual General Meeting Proxy Form
VISION MISSION To accelerate the global energy transition while enhancing value for all our stakeholders. To deliver reliable and competitive solutions to the energy industry with net zero carbon emissions by the year 2026. Wah Seong Corporation Berhad Annual Report 2021 02
“ONLY SUSTAINABLE PROFIT AND GROWTH WILL PERPETUATE OUR BUSINESS AND ENABLE ALL OF THE ABOVE” COMMITTED TO CUSTOMERS We will meet customers’ expectations and deliver our commitment. PASSION We want our people to have passion for our company's vision, energy and growth plans. INTEGRITY We always act with integrity and are professional and accountable while operating in an open and transparent manner. SAFETY We will conduct our operations ensuring no harm to our people and no damage to the environment. INTOLERANT TO WASTE We treat the organization and its resources as if they are our own - with prudence and care. We are always aware and mindful of operating at our most efficient in terms of cost, time and opportunity. PERFORMANCE BASED Everyone in Wasco has the same opportunity to receive awards, career and professional advancement, based on their capabilities and achievement. SOCIALLY RESPONSIBLE We treat everyone with respect and empathy. As we drive towards achieving our company vision, we will not forget the less fortunate. We are socially responsible and place value on being charitable, caring for the environment and supporting our stakeholder communities. CORE VALUES Wah Seong Corporation Berhad Annual Report 2021 03
CORPORATE PROFILE A Rising Global Energy Service Provider Once a medium-sized Malaysian enterprise, Wah Seong Corporation Berhad incorporated on 9 October, 1999 has evolved into an international Oil & Gas and Industrial Services group. Listed on the Main Market of Bursa Malaysia Securities Berhad, we have established footprints in almost 17 countries worldwide. As a globally integrated energy infrastructure group, we have positioned our Oil and Gas Division and Industrial Services Division to be our main strategic business pillars. Our Oil & Gas Division provides world-class specialised pipe coating, corrosion protection services, EPC, fabrication and rental of gas compressors and process equipment, as well as various E&P products and services for the international oil and gas sector. Meanwhile, our Industrial Services Division is involved in renewable energy, agriculture development and infrastructure materials. Through this Division, we have grown to be one of the leading service providers of process equipment in Asia, serving the plantations, oleo-chemical, petrochemical and power generation industries. We are also one of the top distributors of infrastructure and building materials in Malaysia. Seeing no limits to the future, we aim to grow through innovation and productivity to be a world class and profitable, integrated energy infrastructure group. We endeavour to serve the needs of both our internal and external stakeholders by enhancing our corporate values that is driven by our uniqueness and capabilities. Alongside this, we manage both our local and global operations with interests for health, safety and the environment. Fulfilling our corporate responsibility by according the highest priorities to these principles are prerequisites for the success of our business while also demonstrating our commitment to sustainable development and the communities which we serve. Wah Seong Corporation Berhad Annual Report 2021 04
WORLDWIDE OPERATION OIL & GAS RENEWABLE ENERGY INDUSTRIAL TRADING & SERVICES OTHERS A Rising Global Energy Service Provider Wah Seong Corporation Berhad Annual Report 2021 05
Wah Seong Corporation Berhad Annual Report 2021 06 CORPORATE INFORMATION DIRECTORS Dato’ Seri Robert Tan Chung Meng Non-Independent Non-Executive Chairman Chan Cheu Leong Managing Director/Group Chief Executive Officer Giancarlo Maccagno Deputy Managing Director Halim Bin Haji Din Independent Non-Executive Director Tan Sri Professor Lin See Yan Senior Independent Non-Executive Director Tan Jian Hong, Aaron Non-Independent Non-Executive Director Tan Sri Saw Choo Boon Independent Non-Executive Director GROUP COMPANY SECRETARY Woo Ying Pun (MAICSA 7001280) SSM PC No. 201908002179 AUDITORS PricewaterhouseCoopers PLT (LLP0014401 – LCA & AF 1146) Chartered Accountants Level 10, 1 Sentral Jalan Rakyat Kuala Lumpur Sentral 50706 Kuala Lumpur Malaysia SOLICITORS Rahmat Lim & Partners PRINCIPAL BANKERS CIMB Group HSBC Bank Group Malayan Banking Berhad OCBC Bank Group RHB Bank Berhad PRINCIPAL ADVISERS CIMB Investment Bank Berhad RHB Investment Bank Berhad SHARE REGISTRAR Agriteum Share Registration Services Sdn. Bhd. 2nd Floor, Wisma Penang Garden 42 Jalan Sultan Ahmad Shah 10050 Penang Malaysia Tel : 604-228 2321 Fax : 604-227 2391 Email : agriteumshareg@gmail.com REGISTERED OFFICE AND PRINCIPAL PLACE OF BUSINESS Suite 19.01, Level 19 The Gardens North Tower Mid Valley City Lingkaran Syed Putra 59200 Kuala Lumpur Malaysia Tel : 603-2685 6800 Fax : 603-2685 6999 Email : wsc.enquiry@wahseong.com Website : www.wahseong.com STOCK EXCHANGE LISTING Main Market of Bursa Malaysia Securities Berhad DATE OF LISTING 9 July 2002 CATEGORY Sector : Energy Sub-Sector : Energy Infrastructure, Equipment & Services STOCK CODE 5142 STOCK NAME WASEONG COMMITTEE AUDIT COMMITTEE NOMINATION COMMITTEE REMUNERATION COMMITTEE Chairman Halim Bin Haji Din Tan Sri Professor Lin See Yan Tan Sri Saw Choo Boon Member Tan Sri Professor Lin See Yan Halim Bin Haji Din Halim Bin Haji Din Member Tan Jian Hong, Aaron Tan Jian Hong, Aaron Tan Sri Professor Lin See Yan Member Tan Sri Saw Choo Boon Tan Sri Saw Choo Boon
Wah Seong Corporation Berhad Annual Report 2021 07 NET ASSETS PER SHARE (RM) 2017 2018 2019 2020 2021 1.16 1.24 1.27 0.91 0.76 REVENUE (RM’000) 2017 2018 2019 2020 2021 2,492,100 2,961,131 2,514,916 1,409,107 1,429,311 TOTAL ASSETS (RM’000) 2017 2018 2019 2020 2021 3,170,377 2,765,935 2,665,350 2,267,822 2,231,441 FINANCIAL HIGHLIGHTS 2017 2018 2019 2020 2021 OPERATING RESULTS Revenue RM’000 2,492,100 2,961,131 2,514,916 1,409,107 1,429,311 EBITDA/(LBITDA) RM’000 298,286 347,396 212,581 (118,078) 72,356 EBIT/(LBIT) RM’000 156,842 139,341 55,222 (228,879) (67,700) Profit/(Loss) before tax RM’000 122,605 107,088 5,562 (268,024) (100,341) Net profit/(loss) RM’000 114,643 59,862 13,567 (306,702) (111,949) Net profit/(loss) attributable to owners of the Company RM’000 113,021 64,797 24,136 (295,149) (107,484) KEY BALANCE SHEET DATA Total assets RM’000 3,170,377 2,765,935 2,665,350 2,267,822 2,231,441 Paid-up capital RM’000 547,690 547,690 547,690 547,690 547,690 Capital and reserves attributable to owners of the Company RM’000 894,161 955,726 979,946 703,725 588,503 VALUATION Per share Basic earnings/(loss) sen 14.63 8.39 3.13 (38.17) (13.88) Gross dividend - Cash dividend sen - - - 0.40 - - Share dividend sen - - - 0.60 - Net assets RM 1.16 1.24 1.27 0.91 0.76 PROFITABILITY RATIOS Return on total assets % 5 5 2 (10) (3) Return on capital employed % 9 12 4 (26) (9) GEARING RATIO Net debt to capital and reserves attributable to owners of the Company Times 0.75 0.64 0.82 0.91 0.87
Wah Seong Corporation Berhad Annual Report 2021 08 JANUARY 1 January Major subsidiary in Renewable Energy Division, Jutasama Sdn. Bhd. (“JSB”), officially commenced operation at its new office building in Teluk Panglima Garang (“TPG”). 31 January Industrial Trading and Services Division has increased their investment in associate – Spirolite (M) Sendirian Berhad by subscription of 1,610,978 ordinary shares with RM13,500,000. FEBRUARY 22 February Wasco Engineering International Ltd (“WEIL”), an indirect wholly-owned subsidiary of WSC successfully completed the commissioning of New Compressor Station 5 (NCS-5) for Basrah Gas Company (BGC) in the Rumailah fields in Iraq despite the challenges posed by the COVID-19 pandemic. The complete plant was conceptualized, designed and fabricated by our team in Dubai. The plant is designed to capture up to 120 mmscfd of gas from ROO DS5 field which would otherwise be flared. 23 February 4QFY2020 Results Announcement. MARCH 1 March As part of the Environmental, Social and Governance (“ESG”) effort, JSB has completed the installation and commissioning of Rain Harvesting and Water Recycling System with filtration system at the TPG yard. 10 March The start of Wasco’s i-start program. The program has retained the service of DSS-Dupont Sustainable Solutions, to help us in a journey to execute the needed changes, eliminate at-risk behaviors and forge a more favorable safety culture. 17 March WS Engineering & Fabrication Pte Ltd (“WSEF”), an indirect wholly-owned subsidiary of WSC was awarded a contract worth (US$35.9 million) by Fluor Limited for complete fabrication and assembly of pipe rack, process, and structural modules and skids units and testing, pre-commissioning, turnover and load out services for the modules. APRIL 22 April The Indonesian Ministry of Manpower (“MOM”) selected Wasco as a recipient of the prestigious ‘Golden Safety Award’ for achieving exceptional safety performance with 23 million LTI free man-hours and implementing ‘Best in Class Occupational Health and Safety Management System’. 26 April WSEF delivered another multi-build substation project (11x substations) for a gasification (hydrogen and synthesis) facility at Singapore Jurong Island Integrated Manufacturing Complex. MAY 19 May 1QFY2021 Results Announcement. 21 May WSC 21st Annual General Meeting. JUNE 1 June Site development started at the Wasco Coatings Middle East QFZ LLC (“WCME”) site in the Qatar Free Zone (“QFZ”) at Umm Al Houl, with construction of a new Concrete Weight Coating Plant, an associated Batching Plant plus the development of infrastructure to support pipe storage and logistics operations. 2 June WEIL, an indirect wholly-owned subsidiary of WSC was awarded US$39.4 million (equivalent to RM162.4 million) contract by BW Energy Gabon S.A. for the engineering, procurement, construction and installation of oil and gas processing and compression modules for a project in Gabon, Africa. JULY 1 July Securing the INPEX-operated Ichthys Gas Field Development Project Phase 2 from McDermott Australia Pty Ltd on 1 July 2020 for 38km of 8” to 16” clad pipes with 34mm to 68mm thick MLPP coating. This project is located off the northwest coast of Western Australia. 8 July Launch of Wasco’s reforestation initiative – MOU with the Pahang Forestry Department (“JPNP”). 17 July Completed and loaded out ABB E-House Module for ONGC KG=DWN 98/2 Cluster II FPSO Project. This 1,450 tons E-House was fabricated from Wasco’s Batam Yard, Indonesia and recorded 800,000 LTI free man-hours. AUGUST 2 August Syn Tai Hung Trading Sdn. Bhd., an indirect wholly-owned subsidiary of WSC has launched Online Shop Convenience Retail Store at Lazada & Shopee to expand market penetration. 21 August PMT Industries Sdn. Bhd., an indirect wholly-owned subsidiary of WSC has successfully commenced its 500kW solar power generation system. 26 August 2QFY2021 Results Announcement. SEPTEMBER 23 September Successful delivery of Wasco’s first substations to Industrial & Utilities segment (Non O&G) for Yi Chu Substation 150MW Solar PV Power Plant project. CORPORATE CALENDAR
Wah Seong Corporation Berhad Annual Report 2021 09 OCTOBER 1 October Launching of “LogMaster” series by WDG Resources Sdn. Bhd. (“WDG”), an indirect 60%-owned subsidiary of WSC to cater for the plantation and other industries. WCME, Qatar – Concrete Weight Coating equipment for the new facility in Qatar, successfully designed, engineered and supplied by Turn Key Pipeline Services B.V. in The Netherlands, starts site commissioning activities in preparation for NFPS project execution. NOVEMBER 4 November Successful completion and safe load out of M75 Power Generation Module of ONGC KG=DWN 98/2 Cluster II FPSO Project. The 2,640 tons module was the heaviest module in the history of Wasco. 7 November Successful Delivery of Power Generation Module for the ONGC 98/2 Armada Sterling 5 FPSO Project. 12 November Secured Priority Berthing status with Kuantan Port for a period of 3 + 2 years. This arrangement ensures minimum waiting time for all incoming and outgoing shipments thereby reducing demurrage/ detention exposures to all our clients. 17 November Secured two (2) back-to-back projects from Australia, i.e. Barossa GEP Pipeline and Barossa Flowline (awarded 20 Feb 22). This puts Wasco in a good position to secure the Darwin Pipeline Duplication which is the next phase of the Barossa Development. Both projects will be executed in 2022. 22 November 3QFY2021 Results Announcement. 30 November Wasco Coatings UK Ltd., an indirect wholly-owned subsidiary of WSC - Hartlepool plant - First order for the Abigail Project (£500k) was successfully delivered in November 2021. DECEMBER 1 December Launching of “Amphibious Hydraulic Excavator” by WDG of which operate effectively on soft terrain for water mitigation work. This well designed amphibious hydraulic undercarriage has ultra-low ground pressure and unparallel mobility to work on soft terrains and swamp areas. 18 December When the flood struck the area of Shah Alam and Klang in December 2021, the management and staff of Renewable Energy Division performed their social responsibilities in flood rescue and relieve effort. 20 December Signing of the PETRONAS 5 years Price Agreement (“PA”). This PA puts Wasco as the sole coater for all local projects until 31 December 2026. 22 December WCME, Qatar – First CWC PQT successfully completed for the NFPS project, conducted within 7 months from first breaking ground at the new site. CORPORATE CALENDAR
ABOUT THIS REPORT The Company recognises its responsibility to all stakeholders and is committed to reporting its social and environmental performance regularly and transparently. This Sustainability Statement provides an overview of the Company’s sustainability approach and 12-month performance from 1 January to 31 December 2021. It provides insight into how the Company manages its material sustainability risks, issues and opportunities, to create economic, environmental and social value. SUSTAINABILITY STATEMENT Wah Seong Corporation Berhad Annual Report 2021 10
Wah Seong Corporation Berhad Annual Report 2021 11 FRAMEWORK AND STANDARDS This Sustainability Statement follows the Global Reporting Initiative (“GRI”) Standards: Core Option. It is also closely aligned with the recommendations of other sustainability disclosure guidelines, including Bursa Malaysia’s Sustainability Reporting Guide, FTSE4Good Bursa Malaysia ESG Index, the United Nations Sustainable Development Goals (UNSDGs) and the International Organization for Standardisation (ISO) 26000:2010 Guidance on Social Responsibility. SUSTAINABILITY GOVERNANCE Wasco has included Environmental, Social and Governance (ESG) factors as a strategic consideration in the decisionmaking process. Department heads are responsible for identifying, assessing and mitigating current and potential ESG risks. The Board of Directors has the overall responsibility for sustainability and considers ESG matters in the Company’s strategy development. ESG matters that affect value creation are included in the balanced scorecard, which helps set objectives, drive behaviours, measure performance and determine remuneration. The Group CEO heads the Company Sustainability Committee with support from the Investor Relations, Corporate Communications and Sustainability Department (“IRCSD”) and oversees the execution of Wasco’s sustainability strategy in day-to-day operations. The Head of the IRCSD also sits on the Risk Management Committee. Sustainability is on the agenda for these quarterly meetings. The Risk Management Committee regularly updates the Board on the Company’s sustainability performance. REPORTING SCOPE AND BOUNDARIES The committee presented and obtained the Board’s approval for scoping Wah Seong Corporation Berhad (“WSC”) Sustainability Reporting for FY2021 to its oil and gas division “WASCO”, being the single largest business segment of the Company. The scope of the Sustainability Report will cover the entire organisation and its subsidiaries from FY2022 onwards. Wasco reports on an ‘operational control’ basis, focusing on assets, offices and activities where Wasco is the operator and has management control over policies and practices. REPORTING APPROACH This statement summarises the sustainability performance of Wasco’s strategic businesses. In defining the content, Wasco: l Applied the GRI reporting principles of stakeholder inclusiveness, sustainability context, materiality and completeness; and l Considered accuracy, balance, clarity, comparability, reliability and timeliness. Wasco developed the content according to defined material topics following a review of the overall sustainability risks and opportunities determined by macroeconomic analysis, sustainability trends and senior management input. Stakeholders’ views, concerns and key expectations also shaped the materiality assessment. This assessment helped the Board realign the Group’s sustainability strategy while ensuring the transparent coverage of critical topics. Guided by the Malaysian Green Technology and Climate Change Corporation (MGTC), the GHG emission calculations and inventory framework include a boundary review, setting the baseline inventory and reviewing the GHG mitigation plan. SUSTAINABILITY DATA AND DISCLOSURE Wasco has not externally assured the contents of this statement. However, the management and dedicated internal resources reviewed the completeness and accuracy of the data and information. The senior leadership team oversaw the statement’s preparation, assembly and drafting, complementing the significant internal and data-collection resources to ensure accuracy. REPORT FEEDBACK Wasco welcomes your feedback on this report and how to improve its sustainability performance. Please send your comments or questions to Teoh Chuen Seng, Senior Manager ESG at chuenseng.teoh@wascoenergy.com SUSTAINABILITY STATEMENT
Wah Seong Corporation Berhad Annual Report 2021 12 SUSTAINABILITY STATEMENT SUSTAINABILITY ACROSS OUR OPERATIONS Wasco delivers sustainable value for all stakeholders safely, securely and in an environmentally and socially responsible manner by: l Reducing the environmental footprint through the life cycle developments; and l Bringing social and economic benefits for people associated with business operations in line with Wasco’s shared values. Wasco integrates sustainability throughout the business on three levels. Running a safe, efficient and profitable business Meeting expectations and delivering our commitments Sharing benefits wherever we operate and making positive contributions In company operations For our customers With communities SUSTAINABILITY POLICY At Wasco, sustainability is about delivering value for all our stakeholders in a responsible manner, balancing short and long-term interests that integrate economic, environment and social considerations into our business strategy. Wherever possible, we will implement and maintain accredited management systems for corporate sustainability to drive performance and improvement by focusing on our business processes, our culture, and our digital agenda – all underpinned by a strong governance structure. To achieve these goals we will: l Ensure that our safety values remain a top priority, ensuring that nobody gets hurt, there is no damage to property and no harm to the environment. l Generate financial gains aligned to the needs of our stakeholders. l Employ a diverse workforce and provide a work environment where everyone is treated fairly, with respect and can realise their full potential. l Implement actions within our own business and other stakeholders to accelerate the transition to net-zero emissions. l Manage our businesses efficiently through embracing digitalisation and innovation. l Conduct our business in an ethical and transparent manner. l Safeguard human rights within our sphere of influence. l Contribute to the well-being of local communities wherever we operate. l Periodically review our performance and implement appropriate actions for continuous improvement. In implementing this policy, we will support and advance the United Nation’s Sustainable Development Goals focusing our efforts on those that align with our aims in order to make the most impactful contribution. We will engage with our employees, contractors, suppliers, customers and business partners in sharing responsibility for meeting these goals.
Wah Seong Corporation Berhad Annual Report 2021 13 SUSTAINABILITY STATEMENT OUR UNSDG ALIGNMENT The 17 UNSDGs are at the core of the 2030 Agenda for Sustainable Development. The goals intend to end poverty, protect the planet and ensure prosperity for all. Wasco is aligned with the UNSDGs and committed to contributing to this framework to enhance sustainable initiatives. The Group also calls on all its partners across the business to collaborate on achieving these goals. While our activities touch on nine of the seventeen goals, we have identified four UNSDGs that impact our sustainability strategy where we can make the most contributions in these areas. Goals Our Commitment Progress and Achievements l Provide a safe and healthy workplace for our staff and contractors by embracing internationally recognised HSE Management Systems, namely ISO 45001:2018 for Health & Safety and ISO 14001:2015 for the environment. l Achieve Zero Lost-time Incidents (LTI). l All sites in the organisation either have been or are being certified with the ISO 45001:2018 for Health & Safety and ISO 14001:2015 for the Environment. l Implemented in March 2021, Wasco i-Start is an ongoing initiative to enable a safety culture transformation. l Tracking leading and lagging KPIs and taking action for continuous improvement. l Performing periodic inspections, audits and safety observations addresses gaps and prevents incidents. l Safe work procedures are in place. l Establish policies to promote gender equality in recruitment, compensation, training, promotion and work-life balance. l El iminate sexual harassment, violence, discrimination and other harmful practices against women in the workplace. l 13% of Senior Management are female. l Clearly articulating statements on equal opportunity and non-discrimination in the Principles of Business Conduct and Human Rights Statement. l Develop a high performing entrepreneurial culture (culture of curiosity) in the Company where all staff give their best. l Develop leaders at all levels of the Company and create a learning and coaching mindset amongst all staff. l Introduced the MyGoals performance management system. l Quarterly reviews for performance assessment and coaching. l Talent development through regular training and digital learning. l High retention of Senior Management. l Annual per formance apprai sal s for compensation and promotion. l Reduce emissions by improving energy efficiency, transitioning to renewable energy such as solar power and offsetting residual emissions through in-house programmes such as tree planting. l Tracking and reporting of Group greenhouse gas emissions (GHG). • Planted 30,000 out of 160,000 trees as part of a carbon sequestration programme.
Wah Seong Corporation Berhad Annual Report 2021 14 Stakeholder Engagement Long-term business success depends mainly on understanding and addressing stakeholders’ expectations. Wasco engages with various stakeholder groups, including employees, customers, shareholders and investors, regulators and authorities, vendors, suppliers and the media. We continually seek opportunities to speak with stakeholders, understand their viewpoints and talk transparently about the business. The table below summarises Wasco’s approach to stakeholder engagement. Stakeholder Engagement Platform Areas of Interest Our Commitment Employees l Workplace meetings and employee briefings l Intranet and bulletins l Townhall meetings l Employee surveys l MyGoals performance reviews l Equal opportunities l Diversity l Career progression l Benefits and rewards Our employees are key to our innovation-driven culture and we are committed to nurturing their talent. Customers l Quality certification audits l Regulatory site visits and audits l Social media l Official website l Marketing events l Customer satisfaction surveys l Business growth l Risks and challenges l Customer privacy l Targets, quality and delivery We reinvent technology, create new approaches and conceive end-to-end solutions for greater efficiency and capabilities. Shareholders & Investors l Annual and quarterly reports l Annual and quarterly results announcements l Annual General Meeting (“AGM”) l Extraordinary General Meeting (“EGM”) l Announcements on Bursa Malaysia l Investor relations section of the Company’s website l Press release and coverage l Long-term profitability l Sustainability matters l Company’s performance l Compliance We are committed to delivering economic value to our capital providers through a robust financial performance. Regulators & Authorities l Emails/letters l Dialogue with the authorities l Workshops and training organised by the relevant regulatory authorities l Compliance l Reducing the impact of operations We have established sustainability governance to manage risk, ensure compliance and always operate with integrity. Vendors/ Suppliers l Negotiations with vendors/suppliers l Supplier periodical performance evaluation l New vendor evaluation and registration l Fair procurement l Sustainable supply chain management l Long-term relationships We maintain twoway relationships with suppliers who follow our supplier code of conduct. Media l Ongoing engagement sessions and interviews l AGM and EGM l Press release and coverage l Press conference l Company’s performance and outlook l Business risks l Sustainability matters We continue to make the greatest possible difference through transparent and active engagement with media partners and interest groups. SUSTAINABILITY STATEMENT
Wah Seong Corporation Berhad Annual Report 2021 15 SUSTAINABILITY STATEMENT Materiality In 2021, Wasco commissioned an external consultant to conduct a materiality assessment. The Group appointed an impartial, external party to protect the anonymity of the respondents. This assessment is essential to the Company as it responds to the ESG issues, risks and opportunities, seen in emerging global and local trends, fundamental stakeholder interest, industry best-practice and Wasco’s overall corporate context. Stakeholder Groups Participating in the Survey Shareholders and Investors Customers Employees Vendors/ Suppliers Media Regulators and Authorities Communicating our firm position on anti-corruption and anti-bribery to all stakeholders Employees receive a copy of the Employee Handbook, which includes anti-corruption and anti-bribery, upon joining the Company. Each must sign an acknowledgement form and return it to the Human Resources Department. Employees are reminded of our firm opposition to corruption during regular engagement sessions and training via iLearn The anti-corruption policy is also communicated to suppliers, contractors, subcontractors, agents, joint venture companies and third parties. The survey asked stakeholder representatives to rate the importance they placed on 18 areas of sustainability. We asked respondents to indicate how important each criterion was, on a scale of ‘very unimportant’ (1) to ‘very important’ (5). We employed a 5-point Likert Symmetric Scale so respondents could specify their level of agreement with (3) being neutral. We discovered a natural skew in the results as each stakeh ld r group was not represented equally. Unsurprisingly, we received the most responses from our employees and the fewest from Regulators & Authorities and Media. We calculated an average score for all areas withi each stakeholder group to rectify the sample imbalance. An average rating from all eight stakeholder groups was then obtained. We also asked eight embers of our senior management team to complete the survey. Their views represented Wasco.
Wah Seong Corporation Berhad Annual Report 2021 16 The Results Scores over 3 were considered of medium importance. Stakeholder scores ranged from 3.92 to 5.00; Wasco’s between 4.02 and 4.71, indicating that all issues were material to some degree. A material to very material scale was adopted as even the lowest scores fell into the important category. The matrix is presented in the following diagram. Quality Net Zero Aspirations Diversity, equal opportunity & nondiscrimination Cyber Security and Data Protection Economic value creation Safety Employee wellness Client satisfaction Training & development Human rights Waste Water Materials Digitalisation Sustainable Supply Chain R&D and Innovation Community development & hiring Business ethics & compliance Material Material Importance to Stakeholders Relevance to Wasco Very Material Very Material SUSTAINABILITY STATEMENT
Wah Seong Corporation Berhad Annual Report 2021 17 SUSTAINABILITY STATEMENT Economic As a global leading integrated energy group, we take responsibility to power global and local economies seriously. We are a critical part of the world’s energy infrastructure and we believe in lowering barriers to clean, affordable energy for everyone, everywhere. In 2021, our Company generated a direct economic value of RM 870.5 Million in revenue. Our economic impact also extends to our role as a global employer. At the end of 2021, we employed approximately 2,364 employees and offered fair and competitive wages and benefits. Developing a diverse global workforce helps bring innovative and sustainable solutions to the market, which is the future of the energy sector. Supporting Sustainable Economic Growth and Development through Our Operations Wasco has been a leading integrated energy group that operates globally, providing comprehensive technical services primarily to the oil and gas sectors worldwide. Our operations also contribute to the advancement of other industries such as oil and gas, petrochemicals, power generations and marine construction. Pipeline Services l Wasco is a global operator providing a full range of pre-commissioning, commissioning, maintenance and decommissioning services for both onshore and offshore facilities. Our capabilities in pipe manufacturing, pipe coating and offshore corrosion control stems from a collective expertise of our extensive global facilities spanning Asia, West Africa, the Middle East, Europe and the United States. Engineering and Fabrication Services l Wasco provides an all-encompassing solution covering engineering design, procurement, packaging, general fabrication, installation, commissioning as well as operation and maintenance (O&M) services. Participating in Industry Organisations Wasco proactively engages with other leading companies and organisations to help advance standards, share best practices, activate stakeholder and create a sustainable economy. Wasco continues to work with leading organisations, namely the Malaysian Oil & Gas Services Council (MOGSC), the largest national-level independent industry association promoted and driven by the services sector of the Malaysian Oil & Gas Industry. Responsible Procurement Our supply chain includes the supply of goods and services. It encompasses nearly 845 direct suppliers with which we spend around RM298 million per annum. Our direct suppliers are mainly locals, with only 27% being foreign. We strive to improve our supply chain’s social and ethical footprint and work with suppliers that share our values. We expect our suppliers to comply with all applicable laws and demonstrate that they have the attributes set out in our Supplier Code. We recognise the opportunity to positively impact communities by making balanced choices about sourcing the required goods and services for business operations. Our responsible procurement plan focuses on four key areas: l Upholding the ethical treatment of workers l Supporting local businesses l Encouraging participation l Assessing supply chain risk management
Wah Seong Corporation Berhad Annual Report 2021 18 We conduct quantitative and qualitative assessments of all suppliers on our Approved Vendor List every year. Our selection is based on Major and Minor Vendors categories. We examine their performance to mitigate risks and drive improvement during the review. We notify poor performing suppliers and provide corrective action or improvements. The vendor may be suspended or removed from the Approved Vendor List if they do not take the requested action or make the necessary improvements. Wasco updates the Supplier Audit Matrix following the yearly assessment. Integrity, Compliance, Assurance and Reporting Concerns Ensuring integrity and compliance is a foundational element of our culture and a business priority. We set high expectations outlined in our Principles of Business Conduct. One of the Company’s values emphasises acting with integrity and remaining professional and accountable while operating openly and transparently. Anti-Bribery and Corruption Integrity is a fundamental business philosophy and is deeply rooted in the corporate culture. Wasco adopted a zerotolerance approach against all forms of bribery and corruption, such as fraud and illegal kickbacks. Wasco’s Anti-Bribery and Corruption Policy (“ABC Policy”) communicates its comprehensive anti-corruption stand. The ABC Policy evinces a proactive commitment to addressing and mitigating corruption risks, including bribery, fraud and other corrupt acts. Wasco introduced the Anti-Bribery and Corruption Policy as part of its Anti-Bribery Management System (“ABMS”), which aligns with the requirements set out in ISO 37001:2016. Endorsed by the Board of Directors, the ABC fulfils the provisions in the Guidelines on Adequate Procedures to Section 17A (5) of the Malaysian Anti-Corruption Commission Act 2009 (“MACCA”). Coverage of ABC Directors Consultants Employees Agents Vendors Representatives Contractors Tenants Sub-contractors Business associates (including joint venture and consortium partners) Other intermediaries performing works or services, for and on-behalf of Wasco All board members and employees have accepted the Company’s integrity and delivery of the ABC Policy. They have also completed anti-corruption education and training, including bribery. An anti-bribery and corruption eLearning course was held in 2021. Employees found to have been involved in bribery are subject to disciplinary action that can lead to termination. Heads of departments and sections must ensure that all employees adhere to the ABC Policy. The Board of Directors oversees our compliance with anti-corruption policies and compliance, including bribery. Every employee is responsible for preventing and reporting instances of corruption, bribery, suspicious activity or wrongdoing which may lead to bribery using our whistleblowing channels. Wasco received no (RM0) penalties due to ethical conduct breaches such as corruption during the year. A keen understanding of corruption risk exposure is the foundation of an effective anti-corruption compliance programme. Corruption risks, including bribery, are important elements in Wasco’s risk register. This keen understanding helps the Company design effective mitigation strategies and strategically deploy resources to combat potential bribery, corruption and fraud, especially for high-risk operations. SUSTAINABILITY STATEMENT
Wah Seong Corporation Berhad Annual Report 2021 19 All contractors, subcontractors and third parties are subject to corruption and bribery risk assessments and must declare they are not involved in any misconduct or corrupt, unethical and illegal behaviour. Wasco communicates its anti-corruption policy clearly to these intermediaries. The Group also screens new and existing business partners for corruption and bribery, which is part of due diligence in Wasco’s compliance requirements. Business books and records reflect all business dealings accurately and transparently. Wasco introduced monitoring and enforcement procedures to ensure compliance with anti-corruption laws in Malaysia. Wasco did not make any political contributions in 2021 (RM0). No major disciplinary cases were reported for corrupt practices that resulted in employees’ dismissal. We have received zero fines and penalties from the authorities during the recent years and reporting period, which demonstrates the effectiveness of our stringent anti-corruption policies and practices. SUSTAINABILITY STATEMENT Customers Vendors/ Suppliers Regulators and Authorities Communicating our firm position on anti-corruption and anti-bribery to all stakeholders Employees receive a copy of the Employee Handbook, which includes anti-corruption and anti-bribery, upon joining the Company. Each must sign an acknowledgement form and return it to the Human Resources Department. Employees are reminded of our firm opposition to corruption during regular engagement sessions and training via iLearn The anti-corruption policy is also communicated to suppliers, contractors, subcontractors, agents, joint venture companies and third parties. Whistleblowing Wasco’s whistleblowing policy applies to all employees and external parties who have business relationships with the Group. Our Whistleblowing Policy is aligned with the ISO 37001:2016 Clause 8.9 Raising Concern. Individuals raising concerns or reporting possible violations of the Principles of Business Conduct in good faith are: l Protected from any forms of retaliation; and l Treated with the utmost confidentiality. Whistle-blowers are encouraged to raise their concerns with their immediate superior. If this is not possible or appropriate for any reason, they may write to Wasco’s Chief Executive Officer, Giancarlo Maccagno confidentiality. Senior officers have been trained to handle these reports, corruption, bullying, harassment, bribery, financial irregularity and other offences.
Wah Seong Corporation Berhad Annual Report 2021 20 Environmental Wasco’s commitment to practising environmental sustainability is a continuous process. We align our environmental policy and practices with environmental laws and legislations, including strategies to prevent pollution, minimise waste and conserve natural resources where we operate. We received no environmental fines and penalties during the year. Wasco is committed to providing high-quality services that protect and improve the environment. 56% of our site are certified with ISO 14001 Environmental Management System as of 2021. The team works closely with clients, contractors, the community, industry and the State and Federal Governments to establish procedures so staff can positively contribute to innovative and cost-effective environmental outcomes. Continually improve our awareness and management of environmental risks and avoid, reduce and control pollution from our operations Promote the open exchange of environmental information with our customers, suppliers and the community to improve environmental awareness and to obtain feedback on our environmental performance Identify and comply with environmental legislation, regulation and license standards for all our operations and environmentally relevant activities Promote waste minimisation, carbon reduction and energy management within our day-to-day operations Wasco’s Environmental Commitment Energy Management Wasco is committed to addressing energy use and efficiency by: l Adhering to relevant legislation and regulations concerning energy l Training, improving and promoting energy efficiency by implementing effective energy management programmes throughout the organisation l Communicating with employees, government agencies and the community on energy management l Identifying, implementing and developing measurable targets for energy conservation projects l Conserving energy resources through best practices and integrating energy management in business activities Our Group-wide energy consumption for the past three years is presented below. Group Electricity Consumption 2019 2020 2021 2019 2020 2021 7,023,771 11,076,528 14,070,318 0 5,000,000 10,000,000 15,000,000 Electricity (kWh) 3.1 3.65 2.37 0 1 2 3 4 kWh/Man-hours SUSTAINABILITY STATEMENT
Wah Seong Corporation Berhad Annual Report 2021 21 SUSTAINABILITY STATEMENT ENERGY INTENSITY Total energy consumption is a poor measure of efficiency as it does not consider changes in output. Energy intensity, defined as the amount of energy used to produce a given activity level, is a better indicator. Wasco expresses energy efficiency as the amount of power in kilowatt/hours per total man-hours worked. 76,421 217,093 151,121 33.69 71.45 25.45 0 10 20 30 40 50 60 70 80 0 50,000 100,000 150,000 200,000 250,000 2019 2020 2021 Water Intensity ((m3/Man-hours (1,000)) Water Withdrawal (m3) 2,534 2019 2019 2020 2021 2019 2020 2021 2020 2021 2019 2020 2021 6,628 4,880 0 2,000 4,000 6,000 8,000 C02-e Emissions (tonnes) 5,286 8,046 8,719 0 2,000 4,000 6,000 8,000 10,000 C02-e Emissions (tonnes) 7,023,771 11,076,528 14,070,318 0 5,000,000 10,000,000 15,000,000 Electricity (kWh) 3.1 3.65 2.37 0 1 2 3 4 kWh/Man-hours GHG Emissions Management Climate change remains one of the most significant challenges facing society. As a leading energy company, embedding the climate transition in our strategy is key to delivering our purpose. We unequivocally support the United Nations Framework Convention on Climate Change and the Paris Agreement and measures to progressively reduce global emissions, including the aim to limit the world’s temperature increase to 1.5°C above pre-industrial levels. Currently, we are updating our emissions reduction targets to be consistent with a 1.5°C pathway. We aim to achieve netzero Scope 1 and Scope 2 emissions by 2026. Scope Principal Means of Emissions Reduction Initiatives Identified and Implemented Expected Emissions Reduction by 5% Scope 1 Coverage: entire Group (100%) l Stationary combustion l Company-owned vehicles l Refrigerant leakage l Fire suppression l Welding Reducing waste, improving energy efficiency and using lower-carbon fuels l Using natural gas for all burners l Minimising the use of LPG l The “Benef i t of Walking” Campaign encourages personnel to walk instead of using vehicles l Switching off vehicle engines when idle for more than 10 minutes l Opt imi s i ng fue l use by periodical ly maintaining and servicing the plant and equipment l Discontinuing portable CO2 fire extinguishers except for the IT server room, powder booth and internal paint booth l Using Euro 6 standard vehicles, which are energy efficient and limit harmful exhaust emissions l Replacing old vehicles with fuelefficient or electric alternatives l Using arc welding l Recycling 5% per year for five years
Wah Seong Corporation Berhad Annual Report 2021 22 Scope Principal Means of Emissions Reduction Initiatives Identified and Implemented Expected Emissions Reduction by 5% Scope 2 Coverage: entire Group (100%) l Purchased electricity Increasing energy efficiency and using electricity from renewable sources l Energy Saving Awareness Campaign l Using hibernation features for all computers l Instal l ing timers/sensors for l ight ing, ai r condi t ioners, hydraul ic power packs and blowers l Replacing malfunctioning bulbs with LED lights l Installing a solar system l Working from home options 30% Scope 3 Coverage: entire Group (100%) l Business travel l Purchased raw materials and capital goods l Transportation l Water utilised in operations l Waste generated from operation l Company leased vehicles Reducing business travel and engaging with suppliers to reduce their emission Improving efficiency of operations to minimise water consumption and waste generation l Allowing only essential travel l Us i ng t e l e and v i deo conferencing for meetings l Carpooling Our Journey Towards Net Zero Operational Emissions 2012 2013 2014 2019 2021 GHG Gas Emissions verified by Bureau Veritas Capacity building, tracking and reporting of emissions Inclusion of carbon footprint reduction commitment in the Corporate Sustainability Policy Corporate Sustainability reiterates commitment to emissions reduction in line with UNSDG 13 Climate Action Implementation of the Group Emissions Reduction Plan Launching of Operational Net Zero Emissions Plan with target set for 2026 Achieving Operational Net Zero Emissions 2e 8,000 10,000 12,000 14,000 16,000 8,841 8,399 7,979 7,580 7,580 13,940 14,674 SUSTAINABILITY STATEMENT
Wah Seong Corporation Berhad Annual Report 2021 23 SUSTAINABILITY STATEMENT Facts: Nature has received significant attention for its ability to remove carbon dioxide from the atmosphere and store it in the biosphere, such as in soils, grasslands, trees and mangroves, via photosynthesis. It is also a source of carbon dioxide emissions through deforestation, land and ecosystem degradation and agricultural practices. However, the right changes to land management practices can reduce emissions and improve carbon storage. Solutions: Net-zero emissions pledges to protect the climate are coming fast and furious. We rely heavily on planting trees as it is the most significant and cost-effective way to remove CO2 from the atmosphere to tackle the climate crisis. Net-zero proposals count on finding ways for these trees to take up more carbon than they already absorb. Forests Can’t Handle Carbon on Their Own We began our tree planting programme in 2021. According to our calculations, we must plant approximately 113,700 trees to absorb 7,580 CO2e tonnes of residual emissions to achieve operational net-zero emissions by 2026, based on the assumption of 15 trees for one tonne. 2012 2013 2014 2019 2021 GHG Gas Emissions verified by Bureau Veritas Capacity building, tracking and reporting of emissions Inclusion of carbon footprint reduction commitment in the Corporate Sustainability Policy Corporate Sustainability reiterates commitment to emissions reduction in line with UNSDG 13 Climate Action Implementation of the Group Emissions Reduction Plan Launching of Operational Net Zero Emissions Plan with target set for 2026 Achieving Operational Net Zero Emissions 2020 tCO2e Year 2021 - 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 2022 2023 2024 2025 2026 Residual Emissions Trees 8,841 8,399 7,979 7,580 7,580 13,940 14,674
Wah Seong Corporation Berhad Annual Report 2021 24 Managing Climate Change Risks and Opportunities Wasco’s commitment to producing in a way that helps protect people, the environment and the communities where it operates includes mitigating the risks of climate change. We recognise the devastating effects and associated short- and long-term business risks that climate change presents. Wasco has a solid commitment to addressing this issue and avoiding the impact of climate change by improving the efficiency of operations. Our climate change strategy includes working with employees and supply chain partners on energy-saving processes and a complete climate change risk assessment. Our management team, overseen by Mr. Teoh Chuen Seng, Senior Manager ESG devises strategies to manage and minimise our environmental footprint. Progress reports and proposals on energy management, climate change and pollution reduction, supported by financial indicators and Return on Investment (ROI) calculations, are presented to the Board. In 2021, strategic topics included a deep dive on decarbonisation, emerging business models in the electricity transition, resource storage opportunities and emerging climate-related risks. Climate change risk is reviewed explicitly by the Sustainability Committees. Climate-related risks and opportunities are identified, assessed and managed using Wasco’s Risk Management Framework in the same way as all other risks. The Board and senior management consider, review and monitor climaterelated risks and opportunities as part of our strategic planning process, investment decisions, and regular financial and operational performance reviews throughout the year. Wasco has integrated climate-related risk management into the company-wide risk scorecard. It is part of the foundation in formulating our business strategy, deciding on future R&D as well as technology investments. Wasco’s climate risk management process includes mitigation efforts to reduce greenhouse emissions, climate engineering and increasing knowledge of climate systems. In 2021, we invested RM356,000 on: l Mitigating climate change, including planting 30,000 trees in Maran, Pahang; and l Consultancy in reviewing our GHG Baseline Inventory. Inevitably, climate change impacts operating expenses (OPEX) and capital expenditure (CAPEX), which increases product prices. Climate change reduces efficiencies and increases operating costs (OPEX). Capital expenditure (CAPEX) is needed to retrofit existing assets to cope with new climatic conditions. We are committed to addressing the issue of climate change and improving efficiency through adaptation by adopting new and green technology in developments and implementing fuel efficiency measures. Specifically, we have adopted a tracking system for emissions, energy use, water use and waste in our manufacturing. Wasco is an active member of the Malaysian Oil & Gas Services Council (MOGSC) and continues to address climaterelated issues, specifically how it affects the Energy sector. Our role and involvement in this membership include: l Identifying pressing environmental issues in climate change, water and waste; and l Collaborating on solutions that drive improvement within Wasco and its supply chains. We contribute to driving change management through knowledge and information sharing, especially public policy and regulation. The Council also examines various opportunities, such as hydrogen technology. We continue to ensure consistency between our climate change policy and the position we advocate at trade associations of which we are members. When opinions contradict, we respond by identifying gaps and initiating a process that alerts the Company to new areas of good business practice. Consolidation method in carbon footprint calculation Operational Organisational boundary in carbon footprint calculation Accounts for 100% of GHG emissions where Wasco has the authority to implement operational policies Independent verification of operational GHG data Our process in calculating and measuring GHG is guided and verified by the MGTC. SUSTAINABILITY STATEMENT
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