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 37 Management Discussion and Analysis 44 Pro le of the Board of Directors 49 Pro le of the Key Senior Management GOVERNANCE 53 Audit Committee 58 Remuneration Committee 61 Nomination Committee 67 Corporate Governance Overview Statement 83 Additional Compliance Information 84 Statement on Risk Management and Internal Control 87 Statement of Directors’ Responsibility FINANCIAL STATEMENTS 88 Audited Financial Statements ADDITIONAL INFORMATION 206 Summary of Signi cant Recurrent Related Party Transactions 208 Top 10 List of Properties 210 Analysis of Shareholdings 213 Notice of Twenty-Third Annual General Meeting 219 Statement Accompanying Notice of Twenty-Third Annual General Meeting Proxy Form
VISION MISSION To deliver reliable and competitive solutions to the energy industry with net zero carbon emissions by the year 2026. To accelerate the global energy transition while enhancing value for all our stakeholders. Wah Seong Corporation Berhad Annual Report 2022 02
ONLY SUSTAINABLE PROFIT AND GROWTH WILL PERPETUATE OUR BUSINESS AND ENABLE ALL OF THE ABOVE CORE VALUES SAFETY We will conduct our operations in the safest manner possible, ensuring no harm to people and no damage to the environment. INTEGRITY We will always act with integrity and will remain professional and accountable while operating in an open and transparent manner. INTOLERANT TO WASTE We are always aware and mindful of operating at our most efficient in terms of cost, time and opportunity. SOCIALLY RESPONSIBLE We will treat everyone with respect and empathy. We put value on being charitable, caring for the environment and supporting our stakeholder communities. COMMITTED TO CUSTOMERS We will meet customers' expectations and deliver on our commitments every time, all the time. PERFORMANCE BASED Everyone in Wasco has the same opportunity to receive rewards, career and professional advancement based on their capabilities and achievement. PASSION We will embrace our company's vision, energy and growth plans in a passionate manner. Annual Report 2022 Wah Seong Corporation Berhad 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 Energy Solutions Services 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 Energy Solutions Services Division and Industrial Services Division to be our main strategic business pillars. Our Energy Solutions Services 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 2022 04
WORLDWIDE OPERATION ENERGY SOLUTIONS SERVICES RENEWABLE ENERGY INDUSTRIAL TRADING & SERVICES OTHERS A Rising Global Energy Service Provider Annual Report 2022 Wah Seong Corporation Berhad 05
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 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 ADDRESS 59-7, The Boulevard Mid Valley City Lingkaran Syed Putra 59200 Kuala Lumpur Malaysia Tel : 603-2281 2222 Fax : 603- 2281 2265 Email : wsc.enquiry@wahseong.com Website : www.wahseong.com 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 DIRECTORS Dato’ Seri Robert Tan Chung Meng Non-Independent Non-Executive Chairman Chan Cheu Leong Managing Director/ Group Chief Executive Officer Gian Carlo 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 Datin Wan Daneena Liza Binti Wan Abdul Rahman Independent Non-Executive Director (Appointed on 7 April 2023) Lily Rozita Binti Mohamad Khairi Independent Non-Executive Director (Appointed on 12 April 2023) GROUP COMPANY SECRETARY Woo Ying Pun (MAICSA 7001280) SSM Practicing Certificate 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 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 CORPORATE INFORMATION NOTE: The composition of the respective Board Committees above are prior to the publication of this Annual Report and will be subject to changes thereto in due course. Wah Seong Corporation Berhad Annual Report 2022 06
REVENUE (RM’000) 2021 2022 2018 2019 2020 TOTAL ASSETS (RM’000) 2021 2022 2018 2019 2020 NET ASSETS PER SHARE (RM) 2021 2022 2018 2019 2020 2,961,131 2,514,916 1,409,107 1,429,311 2,686,518 2,765,935 2,665,350 2,267,822 2,231,441 2,713,450 1.24 1.27 0.91 0.76 0.75 2018 2019 2020 2021 2022 OPERATING RESULTS Revenue RM’000 2,961,131 2,514,916 1,409,107 1,429,311 2,686,518 EBITDA/(LBITDA) RM’000 347,396 212,581 (118,078) 72,356 216,531 EBIT/(LBIT) RM’000 139,341 55,222 (228,879) (67,700) 123,020 Profit/(Loss) before tax RM’000 107,088 5,562 (268,024) (100,341) 82,021 Net profit/(loss) RM’000 59,862 13,567 (306,702) (111,949) 43,130 Net profit/(loss) attributable to owners of the Company RM’000 64,797 24,136 (295,149) (107,484) (6,300) KEY BALANCE SHEET DATA Total assets RM’000 2,765,935 2,665,350 2,267,822 2,231,441 2,713,450 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’000 955,726 979,946 703,725 588,503 579,994 VALUATION Per share Basic earnings/(loss) sen 8.39 3.13 (38.17) (13.88) (0.81) Gross dividend - Cash dividend sen - - 0.40 - - - Share dividend sen - - 0.60 - - Net assets RM 1.24 1.27 0.91 0.76 0.75 PROFITABILITY RATIOS Return on total assets % 5 2 (10) (3) 5 Return on capital employed % 12 4 (26) (9) 12 GEARING RATIO Net debt to capital and reserves attributable to owners of the Company Times 0.64 0.82 0.91 0.87 0.79 FINANCIAL HIGHLIGHTS Annual Report 2022 Wah Seong Corporation Berhad 07
JANUARY 1 January Wasco Engineering International Ltd (“WEIL”), an indirect wholly-owned subsidiary of WSC had commenced the operations and maintenance (O&M) for 8 compressor stations (30 compressor packages and process equipment) for Basrah Gas Company in Iraq. The scope includes O&M of the equipment, onsite training, support, repair, and upgrades with specific emphasis on hiring and training local talent. 30 January PT. Wasco Engineering International (“PTWEI”), an indirect wholly-owned subsidiary of WSC had delivered another multi build substation project (4 substations) for a large industrial energy project that operates a terminal for the liquefaction, storage, and loading of liquefied natural gas (LNG) in the port of Kitimat, British Columbia, Canada. FEBRUARY 18 February WS Engineering & Fabrication Pte. Ltd. (“WSEF”), an indirect wholly owned subsidiary of WSC, was awarded the second call out order of EPC contract to supply 6 units of booster compressor packages to Thailand. 22 February Wasco ISOAF S.R.L. and Wasco ISOAF TZ Limited, indirect subsidiaries of WSC was awarded US$254,098,391.09 (equivalent to approximately RM1,061,902,586) contract by East African Crude Oil Pipeline (EACOP) Ltd for the provision of line pipe thermal insulation services for the EACOP Project and Feeder Line located between the town of Kabaale in Uganda and the port of Tanga in Tanzania. 24 February 4QFY2021 Results Announcement. MARCH 9 March PTWEI was awarded the first project from the mining industry, an EPC contract to supply 6 substations to a new copper smelter plant in Gresik, East Jaya, Indonesia. 28 March Syn Tai Hung Trading Sdn. Bhd., an indirect wholly-owned subsidiary of WSC has exercised the Put Option for the disposal of its 30% ordinary shareholdings in Spirolite (M) Sendirian Berhad to Lesso Malaysia Holdings Sdn. Bhd. 31 March WEIL completed the delivery of SEPLAT’s - SAPELE Integrated Gas Plant Projects (Supply of Pressure Vessels (10 Nos), Fuel Gas Skid, HM & Propane Fuel Gas Skid, Supply of Stabilized Condensate, Produced Water, High-Pressure and Low-Pressure Flare Knock Out Drum. APRIL 29 April Wasco Engineering Group Limited, an indirect wholly-owned subsidiary of WSC has entered into a Share Sale Agreement with MMA Offshore Asia Pte. Ltd. for the acquisition of 100% equity interests in WEGL Investments Pte. Ltd. (formerly known as MMA Offshore Holdings Pte. Ltd.) and WEGL Offshore Investments Pte. Ltd. (formerly known as MMA Offshore Investments Pte. Ltd.). MAY 23 May 1QFY2022 Results Announcement. 26 May WSC 22nd Annual General Meeting. Jutasama Sdn. Bhd., a wholly-owned subsidiary of WSC has shipped out the world’s largest oil splitting column from its private jetty in Teluk Panglima Garang. The splitter unit was delivered in two pieces and will be assembled on-site. This is one of the core process equipment pieces used in oleochemical plants to separate fatty acids and glycerine from oil. JULY 7 July WEIL completed the delivery, shipyard integration and pre-commissioning of BW Energy’s Mobile Oil Production Unit, BWE MaBoMo. Wasco’s scope included engineering, procurement and fabrication of top side process facility that was included in the overall conversion of a BW Energy’s MODU to an Offshore Installation. The MOPU will accumulate and export hydrocarbon via a subsea insulated export pipeline to the FPSO Adolo for final processing, storage, and cargo offtake. Wasco would also undertake the commissioning, once the offshore drilling is completed. WSC changed its Registered Address from ‘Suite 19.01, Level 19, The Gardens North Tower, Mid Valley City, Lingkaran Syed Putra, 59200 Kuala Lumpur, Wilayah Persekutuan, Malaysia’ to ‘59-7, The Boulevard, Mid Valley City, Lingkaran Syed Putra, 59200 Kuala Lumpur, Wilayah Persekutuan, Malaysia’. AUGUST 25 August 2QFY2022 Results Announcement. SEPTEMBER 16 September WEIL delivered Gas Lift Reciprocating Compressor Module and VFD Package to BW Energy. This 270 tonne GLC with a capacity to process 8MMSCFD of gas will be installed on the Adolo FPSO with the objective of enhancing production of Ruche field in Gabon. CORPORATE CALENDAR Wah Seong Corporation Berhad Annual Report 2022 08
OCTOBER 30 October Wasco Coatings Middle East QFZ LLC, and indirect subsidiary of WSC had achieved 1,000,000 manhours without a Lost Time Incident. NOVEMBER 21 November MISB was awarded an EPCC job to supply, install, and integrate a 90-tonnes-per-hour gas-fired boiler into the existing process system of the largest sugar refinery plant in Malaysia. Once commissioned, the boiler will have one of the largest capacities among sugar refinery boilers in the region for its application. 23 November 3QFY2022 Results Announcement. DECEMBER 1 December Wasco Engineering Group Limited, an indirect whollyowned subsidiary of WSC completed the acquisitions of the fabrication facilities with an upgraded load out capability of receiving ocean going vessels in Batam, Indonesia. 5 December PTWEI celebrated exceptional safety performance with cumulative 30 million LTI free man-hours in Batam, Indonesia. 7 December WSEF was awarded the US$127,089,115 (equivalent to RM557,654,328) contract by Yinson Azalea Production Pte. Ltd. for the supply of certain FPSO topside modules. 21 December Wasco Pipeline services completed the Timi Project with 114,918 man-hours without LTI and was nominated for Shell Malaysia Safety Awards 2022. Wasco Coatings UK Ltd, an indirect wholly-owned subsidiary of WSC had successfully completed the Porthos CCS Project for Gasunie in the Netherlands. The project is of notable importance as the first significant CCS project in North West Europe and cements Wasco’s place as a one stop shop for anti-corrosion, insulation and concrete weight coating in Europe/UK. 31 December Wasco Pipeline services completed the Barossa Gas Export Pipeline. CORPORATE CALENDAR Annual Report 2022 Wah Seong Corporation Berhad 09
SUSTAINABILITY STATEMENT ABOUT THIS STATEMENT The Group 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 Group's sustainability approach and 12-month performance from 1 January to 31 December 2022. It provides insight into how the Group manages its material sustainability risks, issues and opportunities to create economic, environmental and social value. Wah Seong Corporation Berhad Annual Report 2022 10
SUSTAINABILITY STATEMENT 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 Wah Seong Corporation Berhad (“WSC”) has included Environmental, Social and Governance (ESG) factors as a strategic consideration in the decision-making 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 Group’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 Deputy Managing Director heads the Group’s Sustainability Steering Committee with support from the Group Strategy Department and oversees the execution of WSC’s sustainability strategy in day-to-day operations. The Chief Strategy Officer also sits on the Sustainability Steering Committee. Sustainability is on the agenda for these quarterly meetings. REPORTING SCOPE AND BOUNDARIES The scope of the Sustainability Statement for FY2022 covers the entire WSC organization and its subsidiaries. WSC reports on an ‘operational control’ basis, focusing on subsidiaries, assets, offices and activities where WSC is the operator and has management control over policies and practices. REPORTING APPROACH This statement summarises the sustainability performance of WSC Group. In defining the content, WSC: • Applied the GRI reporting principles of stakeholder inclusiveness, sustainability context, materiality and completeness; and • Considered accuracy, balance, clarity, comparability, reliability and timeliness. WSC 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 Group realign its 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 WSC 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 data-collection resources to ensure accuracy. SUSTAINABILITY STATEMENT FEEDBACK WSC welcomes your feedback on this statement and how to improve our sustainability performance. Please send your comments or questions to Teoh Chuen Seng, Senior Manager ESG at chuenseng.teoh@wascoenergy.com. Annual Report 2022 Wah Seong Corporation Berhad 11
SUSTAINABILITY STATEMENT SUSTAINABILITY ACROSS OUR OPERATIONS WSC delivers sustainable value for all stakeholders safely, securely and in a socially responsible manner by: • Reducing the environmental footprint through the life cycle developments; and • Bringing social and economic benefits for people associated with business operations in line with WSC’s shared values. WSC 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 Shareholders and Investors Customers Employees Vendors/ Suppliers Media Regulators and Authorities Conduct business ethically and sustainably Respect human rights throughout operations the extended value chain Adhere to all applicable employment and human rights laws where operations are Align human rights commitment with core values throughout all Abide by international human rights instruments, including the Universal Declaration of Human Rights SUSTAINABILITY POLICY At WSC, sustainability is about delivering value for all our stakeholders in a responsible manner, balancing short and long-term interests that integrates 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; • Ensure that our safety values remain a top priority, ensuring that nobody gets hurt, no damage to property and no harm to the environment. • Generate financial gains aligned to the needs of our stakeholders. • Employ a diverse workforce and provide a work environment where everyone is treated fairly, with respect and can realise their full potential. • Implement actions within our own business and other stakeholders to accelerate the transition to net-zero emissions. • Manage our businesses efficiently through embracing digitalisation and innovation. • Conduct our business in an ethical and transparent manner. • Safeguard human rights within our sphere of influence. • Contribute to the well-being of local communities wherever we operate. • 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 2022 12
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. WSC is aligned with the UNSDGs and committed to contributing to their 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 • Provide a safe and healthy workplace for our employees and contractors by embracing internationally recognised HSE Management Systems, namely ISO 45001:2018 for Health & Safety and ISO 14001:2015 for the environment. • Achieve Zero Lost-time Incidents (LTI). • 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. • On-going implementation of i-Start initiative to enable a safety culture transformation. • Tracking leading and lagging KPIs and taking action for continuous improvement. • Performing periodic inspections, audits, and safety observations which addresses gaps and prevents incidents. • Launched Digital Care Card initiative, digitalising analysis of safety observations and providing insights on potential safety issues. • Establish policies to promote gender equality in recruitment, compensation, training, promotion and work-life balance. • Eliminate sexual harassment, violence, discrimination and other harmful practices against women in the workplace. • 22% of Board of Directors are female.* • Clearly articulating statements on equal opportunity and non-discrimination in the Principles of Business Conduct and Human Rights Statement. * Status as of April 2023. • Develop a high performing entrepreneurial culture (culture of curiosity) in the Company where all employees give their best. • Develop leaders at all levels of the Company and create a learning and coaching mindset amongst all employees. • Talent development through periodic training and digital learning. • High retention of Senior Management. • Annual performance appraisals for compensation and promotion. • 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. • Tracking, analysis and reporting of Group greenhouse gas emissions (GHG) using digital dashboard developed internally. • Completed planting 160,000 trees as part of a carbon sequestration programme. • Subscribed to 500,000 kWH/month Green Energy Tariff by TNB. Annual Report 2022 Wah Seong Corporation Berhad 13
SUSTAINABILITY STATEMENT STAKEHOLDER ENGAGEMENT Long-term business success depends mainly on understanding and addressing stakeholders’ expectations. WSC 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 WSC’s approach to stakeholder engagement. Stakeholder Engagement Platform Areas of Interest Our Commitment Employees • Workplace meetings and employee briefings • Intranet and bulletins • Townhall meetings • Employee surveys • MyGoals performance reviews • Equal opportunities • Diversity • Career progression • Benefits and rewards Our employees are key to our innovation-driven culture and we are committed to nurturing their talent. Customers • Quality Certification Audits • Regulatory Site Visits and Audits • Social Media • Official Website • Marketing Events • Customer Satisfaction Surveys • Business growth • Risks and challenges • Customer privacy • Target, quality and delivery We reinvent technology, create new approaches and conceive end-to-end solutions for greater efficiency and capabilities. Shareholders & Investors • Annual and Quarterly Reports • Annual and Quarterly Results Briefings • Annual General Meeting (“AGM”) • Extraordinary General Meeting (“EGM”) • Announcements on Bursa Malaysia • Investor relations section of the Company’s website • Press release and coverage • Long-term profitability • Sustainability matters • Company’s performance • Compliance We are committed to delivering economic value to our capital providers through a robust financial performance. Regulators & Authorities • Emails/letters • Dialogues with the authorities • Workshops and training organised by the relevant regulatory authorities • Compliance • Reducing the impact on operations We have established sustainability governance to manage risk, ensure compliance and always operate with integrity. Vendors/ Suppliers • Negotiations with vendors/suppliers • Supplier periodical performance evaluation • New vendor evaluation and registration • Fair procurement • Sustainable supply chain management • Long-term relationships We maintain twoway relationships with suppliers who follow our supplier code of conduct. Media • Ongoing engagement sessions and interviews • AGM and EGM • Press release and coverage • Press conference • Company’s performance and outlook • Business risks • Sustainability matters We continue to make the greatest possible difference through transparent and active engagement with media partners and interest groups. Wah Seong Corporation Berhad Annual Report 2022 14
SUSTAINABILITY STATEMENT MATERIALITY WSC 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 Group as it responds to the ESG issues, risks and opportunities seen in emerging global and local trends, fundamental stakeholder interest, industry best-practice and WSC’s overall corporate context. Stakeholder Groups Participating in the Survey meeting expectations and delivering our commitments sharing benefits wherever we operate and making positive contributions For our customers With communities Shareholders and Investors Customers Employees Vendors/ Suppliers Media Regulators and Authorities Conduct business ethically and sustainably Respect human rights throughout operations the extended value chain Adhere to all applicable employment and human rights laws where operations are based Align human rights commitment with core values throughout all operations Abide by international human rights instruments, including the Universal Declaration of Human Rights 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 stakeholder 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 within each stakeholder group to rectify the sample imbalance. An average rating from all eight stakeholder groups was then obtained. We also asked eight members of our senior management team to complete the survey. Their views represented WSC. Annual Report 2022 Wah Seong Corporation Berhad 15
SUSTAINABILITY STATEMENT The Results Scores over 3 were considered of medium importance. Stakeholder scores ranged from 3.92 to 5.00; WSC’s Management 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 WSC Very Material Very Material Wah Seong Corporation Berhad Annual Report 2022 16
SUSTAINABILITY STATEMENT ECONOMIC At WSC, 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 2022, our Group generated a direct economic value of RM2.69 Billion in revenue. Our economic impact also extends to our role as a global employer. At the end of 2022, we employed approximately 3,865 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 The Group operates globally, providing comprehensive technical services primarily to the energy industry worldwide. Our operations also contribute to the advancement of other industries such as marine construction and agro industry. l WSC is a global operator providing a full range of coating services for both onshore and offshore pipelines. 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. l WSC provides an all-encompassing solution covering engineering design, procurement, packaging, general fabrication, installation, commissioning as well as operation and maintenance (O&M) services of offshore and onshore modules. l WSC is a leading process and power generation solution provider with a strong track record servicing various industries across the world. l WSC is a supplier and service provider to regional infrastructure and construction sectors. Our core activities are the distribution of building materials and industrial equipment in Malaysia primarily, while present also in fast growing regional economies such as Myanmar and Cambodia. Engineering and Fabrication Services Renewable Energy Industrial Trading & Services Pipeline Services Participating in Industry Organisations WSC proactively engages with other leading companies and organisations to help advance standards, share best practices, activate stakeholders, and create a sustainable economy. WSC 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 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 Principles of Business Conduct. 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: • Upholding ethical treatment of workers • Supporting local businesses • Encouraging participation • Assessing supply chain risk management We conduct quantitative and qualitative assessments of Suppliers Approved Vendor List. 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. Annual Report 2022 Wah Seong Corporation Berhad 17
SUSTAINABILITY STATEMENT 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. WSC adopted a zerotolerance approach against all forms of bribery and corruption, such as fraud and illegal kickbacks. WSC’s Anti-Bribery and Corruption Policy (“ABC Policy”) communicates its comprehensive anti-corruption stand. The ABC Policy evidences a proactive commitment to addressing and mitigating corruption risks, including bribery, fraud, and other corrupt acts. WSC 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 WSC All board members and employees have accepted the Company’s ABC Policy. They have also completed anti-corruption education and training, including bribery. 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, 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. WSC received no 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 WSC’s risk register. This keen understanding helps the Group design effective mitigation strategies and strategically deploy resources to combat potential bribery, corruption and fraud, especially for high-risk operations. Wah Seong Corporation Berhad Annual Report 2022 18
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 the ABC policy. Each employee must sign and return an acknowledgment form to confirm their understanding of the Company's ABC Policy. Employees are reminded of our firm opposition to corruption via Company communication and training via iLearn. The ABC policy is also communicated to suppliers, contractors, subcontractors, agents, joint venture companies and third parties. 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. WSC 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 WSC’s compliance requirements. Business books and records reflect all business dealings accurately and transparently. WSC introduced monitoring and enforcement procedures to ensure compliance with anti-corruption laws in Malaysia. WSC did not make any political contributions in 2022. 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. Whistleblowing WSC’s whistleblowing policy applies to all employees and external parties who have business relationships with the Group. Our Whistleblowing Policy is aligned with the ISO37001:2016 Clause 8.9 Raising Concern. Individuals raising concerns or reporting possible violations of the Code of Conduct in good faith are: • Protected from any forms of retaliation; and • 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 WSC’s Managing Director, Chan Cheu Leong or AC Chairman confidentially. Senior officers have been trained to handle these reports, corruption, bullying, harassment, bribery, financial irregularity and other offences. Annual Report 2022 Wah Seong Corporation Berhad 19
SUSTAINABILITY STATEMENT ENVIRONMENTAL WSC’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. WSC is committed to providing high-quality services that protect and improve the environment. 56% of our Environmental Management System is ISO14001 certified as of 2022. The team works closely with clients, contractors, the community, industry, and the State and Federal Governments to establish procedures so employees 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 or 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 WSC’s Environmental Commitment Energy Management WSC is committed to addressing energy use and efficiency by: • Adhering to relevant legislation and regulations concerning energy • Training, improving and promoting energy efficiency by implementing effective energy management programmes throughout the organisation • Communicating with employees, government agencies and the community on energy management • Identifying, implementing and developing measurable targets for energy conservation projects • 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. 11,076,528 14,070,318 23,220,485 - 5,000,000 10,000,000 15,000,000 20,000,000 25,000,000 2020 2021 2022* Electricity (kWh) 14,674 13,940 14,000 16,000 Getting to Operational Net Zero Emissions Note: Data for 2022 encompasses all entities in WSC. Data for 2020 and 2021 were scoped to WSC’s Energy Solutions Services Division only. Wah Seong Corporation Berhad Annual Report 2022 20
SUSTAINABILITY STATEMENT GHG Emissions Management Climate change remains one of the most significant challenges facing society. As a leading service provider, embedding the climate transition in our strategy is key to delivering our mission. 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. In an effort to reduce our emissions impact, we are currently updating our emissions reduction targets to be consistent with a 1.5°C pathway. We aim to achieve net-zero 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%) • Stationary combustion • Company-owned vehicles • Refrigerant leakage • Fire suppression • Welding Reducing waste, improving energy efficiency and using lower-carbon fuels • Using natural gas for all burners • Minimising the use of LPG • The “Benefit of Walking” Campaign encourages personnel to walk instead of using vehicles • Switching off vehicle engines when idle for more than 10 minutes • Optimising fuel use by periodically maintaining and servicing the plant and equipment • Discontinuing portable CO2 fire extinguishers except for the IT server room, powder booth and internal paint booth • Using Euro 6 standard vehicles, which are energy efficient and limit harmful exhaust emissions • Phasing out use of diesel fuelled compressors and power generators in all operations • Using arc welding 5% per year for five years Scope 2 Coverage: entire Group (100%) - Purchased electricity Increasing energy efficiency and using electricity from renewable sources • Energy Saving Awareness Campaign • Using hibernation features for all computers • Installing timers/sensors for lighting, air conditioners, hydraulic power packs and blowers • Replacing malfunctioning bulbs with LED lights • Installing solar power system 30% Annual Report 2022 Wah Seong Corporation Berhad 21
SUSTAINABILITY STATEMENT Our Journey Towards Operational Net Zero Emissions l GHG Gas Emissions verified by Bureau Veritas l Capacity building, tracking and reporting of emissions l Inclusion of carbon footprint reduction commitment in the Corporate Sustainability Policy l Corporate Sustainability reiterates commitment on emissions reduction in line with Goal 13 of the UNSDG - Climate Action l Implementation of the Group Emissions Reduction Plan l Launching of Operational Net Zero Emissions Plan with target set for 2026 l Continued implementation of Group’s Emissions Reduction Plan 2012 2013 2014 2019 2021 2022 Forests Can’t Handle Carbon on Their Own 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. In 2022, WSC completed our first tree planting programme which commenced in 2021. According to our calculations using 2020 emissions as baseline, 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 absorbing one tonne of carbon dioxide. 11,076,528 14,070,318 23,220,485 - 5,000,000 10,000,000 15,000,000 20,000,000 25,000,000 2020 2020 2021 2022 2023 2024 2025 2026 2021 2022* Electricity (kWh) 14,674 13,940 8,841 8,399 7,979 7,580 7,580 - 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 tCO2e Year Residual Emission Tree Getting to Operational Net Zero Emissions 14,216 10,000 12,000 14,000 16,000 sions Wah Seong Corporation Berhad Annual Report 2022 22
SUSTAINABILITY STATEMENT Managing Climate Change Risks and Opportunities WSC’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. WSC has a solid commitment to addressing these issues 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 the Chief Strategy Officer, 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 Sustainability Steering Committee. In 2022, strategic topics included a deep dive on decarbonisation, emerging business models in the electricity transition and emerging climate-related risks. Climate change risk is reviewed explicitly by Senior Management. Climate-related risks and opportunities are identified, assessed and managed using WSC’s Risk Management Framework in the same way as all other risks. The Board and senior management consider, review and monitor climate-related risks and opportunities as part of our strategic planning process, investment decisions, and regular financial and operational performance reviews throughout the year. Risk Opportunities Climate change related disclosures and regulations that could impact our regulatory reporting. Effective management of climate change risks results in less wastages and contribute to overall cost savings for the Group. Reallocation of capital to green investments by financial institutions impacts business funding. Positive differentiation in the market for long-term value creation for the benefit of stakeholders. WSC 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. WSC’s climate risk management process includes mitigation efforts to reduce greenhouse emissions from our operations, climate engineering and increasing knowledge of climate systems. In 2022, we invested on: • Mitigating climate change, including planting 130,000 trees in Maran, Pahang; • Third party verification of our GHG Inventory; and • Subscription to TNB’s Green Electricity Tariff (GET) programme. Inevitably, climate change impacts operating expenses (OPEX) and capital expenditure (CAPEX), which increases product prices. Climate change reduces efficiencies and increases OPEX. 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. WSC is an active member of the Malaysian Oil & Gas Services Council (MOGSC) and continues to address climate-related issues, specifically how it affects the Energy sector. Our role and involvement in this membership include: • Identifying pressing environmental issues in climate change, water and waste; and • Collaborating on solutions that drive improvement within WSC 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 Group to new areas of good business practice. Annual Report 2022 Wah Seong Corporation Berhad 23
SUSTAINABILITY STATEMENT Consolidation method in carbon footprint calculation Operational Organisational boundary in carbon footprint calculation Accounts for 100% of GHG emissions where WSC 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. Scope 1 Coverage: entire Group (100%) CO2e emissions from the consumption of fuel were derived from the emission factor published by the IPCC Guidelines for National Greenhouse Gas Inventories. 2020 2021 2022 2023 2024 2025 2026 8,841 8,399 7,979 7,580 7,580 - 2,000 4,000 6,000 8,000 10,000 12,000 14,000 tCO2e Year Residual Emission Tree 6,628 4,880 14,216 - 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 CO2e Emissions (tonnes) 8,046 8,719 11,008 - 2,000 4,000 6,000 8,000 10,000 12,000 CO2e Emissions (tonnes) 2020 2021 2022* 2020 2021 2022* Scope 2 Coverage: entire Group (100%) CO2e emissions from electricity use: l Emissions were derived from specific emission factor published by the relevant national government bodies. 2020 2021 2022 2023 2024 2025 2026 13,940 8,841 8,399 7,979 7,580 7,580 - 2,000 4,000 6,000 8,000 10,000 12,000 14,000 tCO2e Year Residual Emission Tree 6,628 4,880 14,216 - 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 CO2e Emissions (tonnes) 8,046 8,719 11,008 - 2,000 4,000 6,000 8,000 10,000 12,000 CO2e Emissions (tonnes) 2020 2021 2022* 2020 2021 2022* Note: Data for 2022 encompasses all entities in WSC. Data for 2020 and 2021 were scoped to WSC’s Energy Solutions Services Division only. We have considered the effects of decarbonisation on the value of our assets over the short, medium and long term and recognise the importance of considering climate-related impacts and opportunities across our business. WSC’s key strategic priority is the transition to a low-emissions energy sector. We actively monitor the latest global climate change science published by leading international organisations to help assess potential risks and opportunities for our portfolio. We seek to manage our portfolio to be resilient to adapt to a fast-moving energy transition and the increasing expectations of our stakeholders. We are continuously improving how we identify, assess, manage and govern climate-related risks and opportunities for our business. Wah Seong Corporation Berhad Annual Report 2022 24
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