Navigating the Transition Integrated Annual Report
About Our Report In line with the theme of “Navigating the Transition,” Wasco has evolved into a dynamic integrated energy group, evolving to focus on energy infrastructure and catering to a diverse range of industries. Our comprehensive array of offerings, spanning pipe coating, fabrication, and biomass energy, supports various facets of the industry continuum, actively promoting sustainability and aiding others in expediting their energy transition agendas. The cover of our Annual Report this year features an infinity symbol within our Wasco ecosystem, symbolising our enduring commitment to aligning industry advancements with sustainable practices. It serves as a gateway for stakeholders to gain insight into our thoughtful and strategic approach to energy solutions. This design encapsulates Wasco’s dedication to navigating the dynamic energy landscape with strategic prowess. Beyond visual representation, it embodies our boundless initiatives, adaptability, and substantial contributions to the broader energy transition. Through this theme, our annual report aims to highlight Wasco’s pivotal role in empowering not only our organisation but also driving positive change within the energy sector. Sustainable profit and growth serve as the foundation of our business, enabling us to fulfil our promise of providing world-class solutions to clients. We pride ourselves by pushing boundaries, challenging norms, and integrating cutting-edge technologies and innovation across all our operations. This commitment establishes Wasco as a leading global Energy Solutions Company. Online Version: This report and additional information on Wasco Berhad (“Wasco” or “Group” or “Company”) is available online at our corporate website, wascoenergy.com Feedback: We look forward to receiving and responding to any feedback on this report from our stakeholders. Please channel your feedback or query to: Chief Strategy Officer: 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 E-mail: enquiry.investorrelations@wascoenergy.com
Scope and Boundary This Integrated Annual Report covers the reporting period of 1 January 2023 to 31 December 2023, unless otherwise stated. Information presented relates to the activities of the Group comprising our subsidiaries, joint operations, joint ventures and associates. Forward-Looking Statements This report contains certain forward-looking statements relating to future performance. These statements and forecasts are based on current assumptions and circumstances, which could change, hence involve uncertainty. Various factors could cause actual results to differ materially from those expressed or implied by these forward-looking statements. Our Targeted Readers This is our primary report to stakeholders and is intended to address the information requirements of long-term investors (our equity and preference shareholders and prospective investors). We also present information relevant to the way we create value for other key stakeholders, including our employees, clients, business partners, regulators and communities. Materiality The information presented in this report addresses matters that are most material to our business and stakeholder value. We identify, prioritise and validate our material matters via a three-step materiality assessment. Independent Combined Assurance Statement The credibility of this report is supported by strong governance practices. Assurance for this report is provided by our Board of Directors, supported by external verification by PricewaterhouseCoopers PLT, our auditors for financial information and providers of limited assurance on selected non-financial information.
1OVERVIEW OF WASCO BERHAD 1.1 Our Vision 06 1.2 Our Mission 06 1.3 Our Core Values 07 1.4 Who We Are 08 1.5 Our Global Footprint 10 1.6 Our Corporate Information 12 1.7 Our Value Creation Model 14 22023 Key Highlights 2.1 Financial Highlights 18 2.2 Business Highlights 20 2.3 Event and Conference Highlights 23 3Key Messages 3.1 Chairman & Managing Director/Group Chief Executive Officer’s Statement 28 3.2 Chief Financial Officer’s Review 40 4Our Sustainability Journey 4.1 Chief Strategy Officer’s Statement 46 4.2 About This Report 49 4.3 Sustainability Across Our Operations 52 4.4 Sustainability Governance & Accountability 55 4.5 Materiality Assessment 58 4.6 Economic 62 4.7 Environmental & Climate Change 64 4.8 Social 75 4.9 Three-Year Sustainability Key Performance Data 85 Inside This Report ABOUT OUR REPORT
5Commitment to Governance 5.1 Profile of Board of Directors 94 5.2 Profile of Key Senior Management Team 99 5.3 Corporate Governance at Wasco - Audit Committee 103 - Nomination and Remuneration Committee 108 - Governance, Compliance and Risk Committee 116 - Corporate Governance Overview Statement 122 - Additional Compliance Information 141 - Statement on Risk Management and Internal Control 142 - Statement of Directors’ Responsibility 145 6Financial Statements and Other Information 6.1 Directors’ Report 148 6.2 Statement by Directors 152 6.3 Statutory Declaration 152 6.4 Independent Auditors’ Report 153 6.5 Statements of Financial Position 159 6.6 Statements of Profit or Loss 161 6.7 Statements of Other Comprehensive Income 162 6.8 Consolidated Statement of Changes in Equity 163 6.9 Company Statement of Changes in Equity 165 6.10 Statements of Cash Flows 166 6.11 Notes to the Financial Statement 170 6.12 Summary of Significant Recurrent Related Party Transactions 287 6.13 Top 10 List of Properties 289 6.14 Analysis of Shareholdings 291 6.15 Notice of Twenty-Fourth Annual General Meeting 295 6.16 Statement Accompanying Notice of Twenty-Fourth Annual General Meeting 301 Proxy Form
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Overview of Wasco Berhad Our Vision Our Mission Our Core Values Who We Are Our Global Footprint Our Corporate Information Our Value Creation Model 05 Wasco Berhad
Overview of Wasco Berhad Wasco’s Cultural Beliefs Within Wasco, our values of partnership and commitment are deeply ingrained. These principles are integral to our vision, mission, and operational standards, reflecting the core essence of Wasco Berhad. Our core values are pivotal, shaping our identity within the industries we serve and laying the cultural groundwork that reflects our beliefs, philosophies, and priorities. As part of the Company’s ongoing cultural transformation efforts, designed to align with the next phase of growth in the dynamic landscape of the global energy market, our set of values signifies our pivotal role in crafting a comprehensive and inclusive identity for our people. Simultaneously, these values propel our commitment to delivering value-added solutions for our stakeholders. In response to the evolving energy landscape, our cultural beliefs echo a resolute dedication to the energy transition, seamlessly woven into the fabric of our values. This commitment guides us on the transformative journey towards sustainable energy solutions. As we adapt to the ever-changing dynamics of the global market, our shared values not only reflect past achievements but also chart a course for a future deeply rooted in the principles of partnership, commitment, and proactive engagement in the energy transition. Guided by our vision, we are dedicated to delivering reliable energy solutions and achieving net-zero carbon emissions for scopes 1 and 2 by 2026. Our mission is a resounding call to action, going beyond the typical company role to lead the way in accelerating the global energy transition, creating value for all stakeholders. Our Vision Our Mission To deliver reliable and competitive solutions to the energy industry with net zero carbon emission by the year 2026. To accelerate the global energy transition while enhancing value for all our stakeholders. 06 Integrated Annual Report 2023
Our Core Values Performance Based Committed to Customers Socially Responsible Integrity Intolerant to Waste Safety We will embrace our company's vision, energy and growth plans in a passionate manner. Everyone in Wasco has the same opportunity to receive rewards, career and professional advancement based on their capabilities and achievement. Passion We will meet customers' expectations and deliver on our commitments every time, all the time. We will treat everyone with respect and empathy. We put value on being charitable, caring for the environment and supporting our stakeholder communities. We will always act with integrity and will remain professional and accountable while operating in an open and transparent manner. We are always aware and mindful of operating at our most efficient in terms of cost, time and opportunity. We will conduct our operations in the safest manner possible, ensuring no harm to people and no damage to the environment. Overview of Wasco Berhad Wasco’s values of partnership and commitment are ingrained in our identity, guiding our vision, mission, and operations. As we transform culturally to align with the global energy market’s dynamic landscape, these values shape our inclusive identity and underscore our pivotal role in delivering value-added solutions. Aligned with the evolving energy landscape, our values propel us on a transformative journey toward sustainable energy solutions, reflecting our commitment to adapt to the ever-changing dynamics of the global market. 07 Wasco Berhad
Who We Are An Emerging Global Energy Solutions Provider Since its inception in 1999, Wasco Berhad has emerged as a leading global energy solutions provider, listed on the Main Market of Bursa Malaysia Securities Berhad since 2002. With a diverse workforce exceeding 5,000 employees representing over 40 nationalities, our operations span across 17 countries worldwide. Focused on two strategic business divisions – Energy Solutions Services and Bioenergy Solutions Services – we specialise in delivering tailored services including pipe coating, corrosion protection, Engineering, Procurement, and Construction (EPC), fabrication, and rental of gas compressors and process equipment. Serving the global oil and gas sector, our Bioenergy Solutions Division is committed to renewable energy, agriculture development, and infrastructure materials, catering to industries ranging from plantations to power generation. Beyond financial success, Wasco is driven by a commitment to innovation and productivity, aiming to become a world-class integrated energy infrastructure group. Upholding corporate values rooted in uniqueness and capabilities, we prioritise health, safety, and environmental sustainability in all facets of our operations, demonstrating unwavering dedication to sustainable development and community welfare. Our Path to a Sustainable Future At the forefront of the industry, Wasco is dedicated to significantly reducing operational carbon emissions, with a target of achieving net-zero emissions by 2026. Guided by the United Nations’ Sustainable Development Goals (UNSDGs), we are actively pursuing targeted initiatives to minimise our carbon footprint, ensuring a sustainable future for generations to come. In 2021, we introduced the “Wasco Forest” reforestation programme, a cornerstone of our sustainability efforts aimed at conserving endangered and critically endangered rainforest tree species while contributing to the restoration of forests in Pahang. Targeting species such as Merawan and Meranti, alongside other endangered varieties listed in the 2000 Red List (IUCN 2001), this initiative seamlessly aligns with the UNSDGs, particularly SDG 13 (Climate Action) and SDG 15 (Life on Land), by directly addressing the climate crisis and emphasising the preservation and sustainable use of terrestrial ecosystems. Committed to a CommunityCentric Approach In addition to environmental impact, our sustainability initiatives prioritise community-focused effor ts, supporting SDG 1 (No Poverty) and SDG 10 (Reduced Inequalities). By enhancing livelihoods and creating sustainable economic opportunities within the communities we serve, we aim to reduce inequalities and uplift the lives of those involved in our reforestation efforts. 08 Integrated Annual Report 2023
DELIVERING WORLD-CLASS ENGINEERING & FABRICATION SERVICES FOR THE ENERGY INDUSTRY Comprehensive solutions covering engineering design, procurement, packaging, general fabrication, installation, commissioning, operation and maintenance (O&M) services. DRIVING THE TRANSITION TOWARDS CLEANER ENERGY FUTURE THROUGH END-TO-END BIOMASS ENERGY GENERATION EXCELLENCE Wasco Bioenergy Services Division is the largest fabricator of steam biomass turbines and boilers, serving 70% of the plantation industry. These high-capacity boilers, fueled by biomass waste and natural gas, contribute to eco-friendly solutions. Our Heat Recovery System Generator technology achieves 80%+ efficiency, significantly reducing the carbon footprint for industrial clients. OUR EXPERTISE IN COATING MORE THAN 22,000 KM OF PIPELINES OVER 4 CONTINENTS ACROSS 25 COUNTRIES ’s Pipeline Services Division is renowned for its expertise in pipe coating, pipe manufacturing and corrosion protection solutions. 09 Wasco Berhad
Our Global Footprint With a strong presence in Malaysia, we have successfully expanded our footprint globally across 17 countries worldwide. 10 Integrated Annual Report 2023
KUALA LUMPUR (HQ) I PAHANG I SELANGOR I SABAH Malaysia ENSCHEDE Netherlands DAR ES SALAAM | SOJO BATAM | MEDAN Tanzania Singapore Indonesia JAFZA Dubai BRISBANE China Australia LOUISIANA USA REGINA Canada GUJERAT India Myanmar THISVI Greece DOHA Qatar HARTLEPOOL United Kingdom LIETZOW Germany PADOVA Italy 11 Wasco Berhad
Dato’ Seri Robert Tan Chung Meng Non-Independent Non-Executive Chairman Gian Carlo Maccagno Managing Director/Group Chief Executive Officer Tan Sri Saw Choo Boon Senior Independent Non-Executive Director Datin Wan Daneena Liza Binti Wan Abdul Rahman Independent Non-Executive Director Lily Rozita Binti Mohamad Khairi Independent Non-Executive Director Chan Cheu Leong Non-Independent Non-Executive Director Halim Bin Haji Din Non-Independent Non-Executive Director Tan Sri Professor Lin See Yan Non-Independent Non-Executive Director Tan Jian Hong, Aaron Non-Independent Non-Executive Director 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 HSBC Bank Group Malayan Banking Berhad OCBC Bank Group RHB Bank Berhad PRINCIPAL ADVISERS Maybank Investment Bank Berhad RHB Investment Bank Berhad DIRECTORS Our Corporate Information 12 Integrated Annual Report 2023
The respective Board Committees as stated in the last Annual Report 2022 have since been restructured with effect from 23 May 2023 and the new Committees and their compositions are as detailed below: COMMITTEE AUDIT COMMITTEE NOMINATION & REMUNERATION COMMITTEE GOVERNANCE, COMPLIANCE & RISK COMMITTEE Chairman Datin Wan Daneena Liza Binti Wan Abdul Rahman Tan Sri Saw Choo Boon Lily Rozita Binti Mohamad Khairi Member Halim Bin Haji Din Tan Sri Professor Lin See Yan Tan Sri Professor Lin See Yan Member Tan Sri Saw Choo Boon Lily Rozita Binti Mohamad Khairi Datin Wan Daneena Liza Binti Wan Abdul Rahman SHARE REGISTRAR Tricor Investor & Issuing House Services Sdn. Bhd. Unit 32-01, Level 32, Tower A Vertical Business Suite, Avenue 3, Bangsar South No. 8, Jalan Kerinchi, 59200 Kuala Lumpur Malaysia Tel : 603-2783 9299 Fax : 603-2783 9222 Email : is.enquiry@my.tricorglobal.com REGISTERED OFFICE ADDRESS 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 : enquiry@wascoenergy.com Website : www.wascoenergy.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 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 WASCO Our Corporate Information 13 Wasco Berhad
Our Six Capital Inputs Business Activities 1. Economic Value Creation 2. GHG Emissions 3. Energy Management 4. Water & Wastewater Management 5. Waste & Hazardous Materials Management 6. Human Rights & Community Relations 7. Product Quality 8. Labour Practices 9. Employee Health & Safety 10. Employee Engagement, Diversity & Inclusion 11. Training & Development 12. Product Design & Lifecycle Management 13. Business Model Resilience 14. Supply Chain Management 15. Materials Sourcing & Efficiency 16. Physical Impacts of Climate Change 17. Business Ethics 18. Risk Management Our Materiality Matters Financial Capital Securing funding from capital providers is instrumental in supporting our business operations, augmenting the cash flow derived from both operational and investment sources Human Capital Wasco's unwavering commitment to nurturing a highly skilled regional workforce underscores our dedication to harnessing human capital as a pivotal asset in achieving our corporate objectives Manufactured Capital Our state-of-the-art facilities, strategically positioned around the world, highlight our global reach and expertise Intellectual Capital Our competitive edge in the energy industry is driven by our strong Intellectual capital which encompasses team's expertise and innovation in niche market allowing us to adapt swiftly and lead in the sector Social & Relationship Capital Our commitment transcends stakeholders, encompassing the communities where we operate, fostering collaboration, shared success, and responsible engagement Natural Capital Our commitment to preserving capital drives sustainability. We minimise environmental impact, protect biodiversity, and manage resources responsibly for a sustainable future � Market Capitalisation: USD$1.07 billion � Revenue: RM2,606 million � Profit After Tax & Minority Interest: RM108 million � Order Book: RM3,144 million • Over 4000 employees globally � Workforce comprises more than 36 nationalities � Pipe coating and manufacturing facilities � Strategically located fabrication facilities in SEA and MEA � Expertise in pipe coating manufacturing, spiral welded steel pipes, offshore corrosion control � EPC and fabrication solutions for the energy industry • Leading biomass energy generation technology � Community investment projects � Focus on social well-being of stakeholders � Commitment to carbon neutrality � Environmental stewardship initiatives � Renewable energy mix and tree planting projects Pipe Coating To accelerate the global energy transition while enhancing value for all our stakeholders ______________________ Engineering and Fabrication � EPC and fabrication solutions for the energy industry � Transitioning expertise to renewable energy sector ______________________ Bioenergy � Biomass energy generation � Fabrication of steam biomass turbines and boilers Services Our Vision To deliver reliable and competitive solutions to the energy industry with net zero carbon emissions by the year 2026 ______________________ Our Mission To accelerate the global energy transition while enhancing value for all our stakeholders Our North Star 4 Pillar Objectives Profit Safety People Sustainability Our Value Creation Model 14 Integrated Annual Report 2023
Outcomes SDG Output Stakeholders � Sustained profitability with a PATMI of RM108 million � Strong order book valued at RM3,144 million reflecting future revenue potential � Development and empowerment of a diverse workforce, leveraging over 4000 employees from more than 36 nationalities to drive innovation and business growth � State-of-the-art facilities and equipment that enable the leading manufacturing of spiral welded steel pipes and provision of EPC and fabrication solutions � Proprietary technologies in biomass energy generation and efficient energy systems like High Recovery Steam Generators (HRSG) � Continuous innovation in operational processes and product offerings � Enhanced stakeholder relationships � Increased diversity and representation in leadership roles � Reducing emissions, increasing renewables, tree planting for carbon offset, and using recycled water sources for sustainability Regulators & Governments Communities & NGOs Media Customers Communities & NGOs Media Customers Suppliers & Business Partners Shareholders, Investors & Analysts Customers Suppliers & Business Partners Employees, Management & Board Employees, Management & Board Suppliers & Business Partners Shareholder, Investors & Analysts Suppliers & Business Partners Employees, Management & Board Regulators & Governments Delivering Long-Term Value Achieving net-zero carbon emissions by 2026 to enhance shareholder value and contribute to global energy transition Operational Excellence and Safety Maintaining the highest safety standards and focusing on operational excellence for efficient, reliable project execution Obtain Competitive Advantage Ensuring consistently high-quality products, cost-effective production, customisation options, and scalability Environmental Responsibility � Implementing energy-efficient practices and cleaner technologies to mitigate climate change risks � Increasing the renewable energy mix to reduce carbon footprint Community Engagement and Development � Investing in community development initiatives and generating socio-economic opportunities for sustainable and inclusive growth Stewardship of Natural Resources � Promoting carbon emission mitigation through tree planting � Conserving natural resources and increasing the use of recycled and harvested water sources Our Value Creation Model 15 Wasco Berhad
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2023 Key Highlights Financial Highlights Business Highlights Event and Conference Highlights 17 Wasco Berhad
Financial Highlights 2019 2020 2021 2022 (Represented) 2023 OPERATING RESULTS Revenue RM’000 2,514,916 1,409,107 1,429,311 2,366,081 2,605,688 EBITDA/(LBITDA) RM’000 212,581 (118,078) 72,356 205,720 350,037 Profit/(Loss) before tax RM’000 5,562 (268,024) (100,341) 74,883 218,256 Net profit/(loss) RM’000 13,567 (306,702) (111,949) 43,130 154,828 Net profit/(loss) attributable to owners of the Company RM’000 24,136 (295,149) (107,484) (6,300) 108,402 Basic earnings/(loss) per share sen 3.13 (38.17) (13.88) (0.81) 14.00 Gross dividend per share sen - 1.00 - - - KEY BALANCE SHEET DATA Total assets RM’000 2,665,350 2,267,822 2,231,441 2,713,450 2,946,650 Capital and reserves attributable to owners of the Company RM’000 979,946 703,725 588,503 579,994 704,806 Net assets per share RM 1.27 0.91 0.76 0.75 0.91 PROFITABILITY RATIOS Return on total assets % 2 (10) (3) 4 9 Return on capital employed % 4 (26) (9) 11 24 GEARING RATIO Net debt to capital and reserves attributable to owners of the Company Times 0.82 0.91 0.87 0.79 0.48 18 Integrated Annual Report 2023
2019 2,514,916 2020 1,409,107 2021 Revenue (RM'000) 1,429,311 2022 2,366,081 2023 2,605,688 2019 2,665,350 2020 2,267,822 2021 Total Assets (RM'000) 2,231,441 2022 2,713,450 2023 2,946,650 2019 1.27 2020 0.91 2021 Net Assets Per Share (RM) 0.76 2022 0.75 2023 0.91 Financial Highlights 19 Wasco Berhad
Business Highlights January 29 January Wasco Coatings Middle East QFZ LLC was awarded a major contract encompassing two development phases: North Field East (“NFE”) and North Field South (“NFS”). This project aims to significantly increase Qatar’s LNG production capacity. Wasco Coatings Middle East QFZ LLC will provide FBE anti-corrosion coating and concrete weight coating for over 300 km of pipes, ranging in size from 6 inches to 28 inches, including 38-inch pipes coated entirely in Qatar. The project is expected to be completed by December 2024, bolstering Qatar’s position as a global energy leader. February 10 February Wasco had successfully secured a medium scaled offshore contract to provide >160km pipe coating services to Shell Australia. The Crux project involves the development of the Crux gas field, located in commonwealth marine waters in the northern Browse basin approximately 190km offshore north-west Australia. The project had commenced in October 2023 and coating process is expected to complete by August 2024 and loadout process in March 2025. 15 February Disposal of Leasehold Land by Petro-Pipe Industries (M) Sdn. Bhd. completed. 23 February 4QFY2022 Financial Results Announcement & Analyst Briefing. March 13 March Wasco had successfully secured a multi-million-dollar contract to provide >200km pipe coating services for Sarawak Shell Berhad in Bintulu, Sarawak. The Rosmari-Marjoram project includes a remote offshore platform, onshore gas plant, and an extensive 200+ km sour wet gas offshore pipeline. Phase 1 of the project had commenced in September 2023 and expected to complete by June 2024. 21 March WSIPL Australia Pty Ltd (“WSIPL Australia”) was deregistered on 23 February 2023, as per regulations of the Australian Securities & Investments Commission. WSIPL Australia, incorporated on 10 May 1976, was wholly-owned by Wah Seong International Pte Limited. April 7 April Appointment of Datin Wan Daneena Liza Binti Wan Abdul Rahman as Wasco Berhad’s Independent Non-Executive Director. 12 April Appointment of Ms Lily Rozita Binti Mohamad Khairi as Wasco Berhad’s Independent Non-Executive Director. May 9 May Wasco’s >20km pipe coating services for carbon capture storage project (Porthos) for Nederlandse Gasunie (“NG”). The project is designed to capture carbon dioxide from industrial sites in the port of Rotterdam and transport it to abandoned gas field offshore for storage. The project commenced in November 2023 and coating process is expected to complete by June 2024. 23 May 1QFY2023 Financial Results Announcement and Analyst Briefing. 23 May Establishment of the Governance, Compliance, and Risk Committee, and merger of the Nomination Committee and Remuneration Committee into the Nomination and Remuneration Committee. Redesignation of Encik Halim Bin Haji Din as Wasco Berhad’s Non-Independent Non-Executive Director. Redesignation of Tan Sri Professor Lin See Yan as Wasco Berhad’s Non-Independent Non-Executive Director. Appointment of Tan Sri Saw Choo Boon as Wasco Berhad’s Senior Independent Non-Executive Director. 20 Integrated Annual Report 2023
Business Highlights 30 May Wasco Berhad (formerly known as Wah Seong Corporation Berhad) 23rd Annual General Meeting; proposed name change from Wah Seong Corporation Berhad to Wasco Berhad. 31 May Notice of Registration of New Name issued by the Companies Commission of Malaysia, changing the Company’s name to “Wasco Berhad” with effect from 31 May 2023. June 1 June Appointment of Mr Ramanathan A/L P.R. Singaram as Chief Financial Officer. July 1 July Retirement of Mr Chan Cheu Leong from the position of Managing Director/Group CEO and remains as a NonIndependent Non-Executive Director; Mr Gian Carlo Maccagno succeeded the role as Managing Director/ Group CEO of Wasco Berhad. August 8 August Wasco Thermal Sdn. Bhd. (formerly known as Mackenzie Industries Sdn. Bhd.) was awarded the MUDA paper project which successfully obtained the complete package of an EFB-burning biomass boiler, rated at 50T, along with its fuel feeding system and flue gas emission treatment system. Testing and commissioning concluded in August 2023. 24 August 2QFY2023 Financial Results Announcement & Analyst Briefing. September 29 September Wasco Process Engineering Sdn. Bhd. (formerly known as Jutasama Sdn. Bhd.) delivered reactor weight of 150 ton each, with the thickness of 149mm SA387 Gr.22 CL2 material. The thickest shell plate under Cr-Mo category being fabricated. October 12 October Wasco AgroTech Sdn. Bhd. (formerly known as PMT Industries Sdn. Bhd.) has entered into a Sale and Purchase Agreement with Array Metal (M) Sdn Bhd for the disposal of a piece of freehold land in the District of Klang, Selangor measuring approximately 18,363 square meters under the category of “Perusahaan” together with the office building, factory and structures erected thereon for a total consideration of RM40 million. 24 October WS Engineering & Fabrication Pte. Ltd. (“WSEF”), has been awarded a contract by Schneider Electric France, valued at USD33,889,973 (equivalent to RM161,861,900 based on the exchange rate of USD1.00 to RM4.7761) for the supply of pre-fabricated buildings for a project in Africa (“Contract”). The scope of work of the Contract involves engineering, procurement and construction of pre-fabricated buildings. The work and services of the Contract are expected to be completed within 17 months. November 2 November Wasco Process Engineering Sdn. Bhd. completed and delivered 46 units of PV and HEX to the United States America. Consisting of 14 units oversized equipment which delivered with 2 barges via WPE jetty to Port Klang. The whole fabrication process completed within 8 months. 21 Wasco Berhad
14 November Wasco demonstrated its commitment to community welfare and sustainable development by contributing its inaugural Zakat funds to the Federal Territory Islamic Religious Council’s Zakat Collection Centre. The ceremony, held at the National Palace, featured Dato’ Mohamed Nizam Bin Abdul Razak, Chairman of Yayasan Wasco, representing the Group in presenting the Zakat contribution to His Majesty, the Yang di-Pertuan Agong, Sultan Abdullah Sultan Ahmad Shah. 15 November Wasco was awarded the Rosebank Surf Project (Equinor) project to coat 43.8km of 3LPE & 3LPP coating job in the United Kingdom. Project is expected to commence in July and completed in August 2024. Successful delivery of the M40 E-House Module for an FPSO destined for the Bonaparte Basin in the Timor Sea, offshore Australia. Construction commenced on 25 April 2022, with the first steel cut. This DNV certified E-House includes three distinctive Switchgear rooms, one Transformer Room, one Battery Room, and a rooftop HVAC system (622kW - 2 x 100%). The construction involved extensive ducting routes and integrating an Inergen Package as part of the Fire Suppression System. This comprehensive setup underscores the commitment to precision and excellence in ensuring functionality, safety, and compliance. 28 November 3QFY2023 Financial Results Announcement & Analyst Briefing. December 4 December Wasco AgroTech Sdn. Bhd. first unit RB8 Commissioning for PT Archipelago Timur Abadi. 9 December Wasco AgroTech Sdn. Bhd. second unit RB8 Commissioning for PT PalmaAgrindo Mandiri. 13 December Wasco was awarded the Bindu Project (ExxonMobil) project to coat 63km of 3LPE, 3LPP, and CWC coatings for offshore pipelines in Terengganu. This project is expected to complete by July 2024. 19 December Wasco Thermal Sdn. Bhd. custom-designed a 40T EFB burning biomass boiler, complete with fuel delivery system and flue gas emission control system to suit the business requirement. The successful commissioning of this EPPOR pack project took place in December 2023. 29 December Maple Sunpark Sdn. Bhd. has entered into the Sale and Purchase Agreements with Wasco Thermal Sdn. Bhd. for the sale of properties at a total consideration of RM64.89 million. The sale of properties include two pieces of industrial land in the District of Klang, Selangor, measuring about 18,211 square metres (sq m) and 18,186 sq m in area, respectively, together with a detached factory/warehouse and office building erected thereon. Business Highlights 22 Integrated Annual Report 2023
In 2023, we actively participated in both local and international events. These gatherings provided valuable platforms for exchanging insights and ideas for the progression of our industry. Furthermore, these engagements enhanced our comprehension of effectively addressing future energy demands, thereby broadening our capacity to unlock our full potential. 22-24 June The PD&T and Partners HSE Conference in Kota Kinabalu, Sabah, centered on the theme of “Harnessing the Power of Collaboration” with a focus on sustainability, culture, and technology. Co-hosted and exhibited by Wasco, the event featured Ariesza Noor, Chief Strategy Officer, as a panel speaker, discussing “Survivability or Left Behind –Transformation in an Exponential Era.” Additionally, Vice President, Group HSE, Iqbal Abdullah, and Senior Manager ESG, Teoh Chuen Seng, represented the organisation, contributing to insightful discussions and networking opportunities, aimed at advancing HSE practices and sustainability initiatives. 26-28 June Energy Asia Charting Pathways for a Sustainable Asia held at Kuala Lumpur Convention Center. We participated as a Bronze sponsor of the event and were represented by Chief Financial Officer, Ramanathan Singaram, and Chief Strategy Officer, Ariesza Noor. 4-7 July “One Vision, Infinite Possibilities” series of town halls was held at Wasco’s subsidiaries offices for the Managing Director/Group CEO, Gian Carlo Maccagno to share his vision of a unified Wasco and his 100 days plans. Event and Conference Highlights 23 Wasco Berhad
4-6 October Palmex Indonesia is the only specialised Palm Oil event in Asia that brings together an international congregation of both upstream and downstream palm oil companies. The 12th edition was held in Medan, Indonesia, with Chief Executive Officer, Andrew Wong of Wasco AgroTech and the team. 7-9 November MPOB International Palm Oil Congress and Exhibition (PIPOC) 2023 held at Kuala Lumpur Convention Center. We were exhibitors at the event and Managing Director / Group Chief Executive Officer, Gian Carlo Maccagno and Chief Strategy Officer, Ariesza Noor, Wasco Berhad were present together with Chief Executive Officer, Andrew Wong and Senior Vice President, Chia Kim Har of Wasco AgroTech. PIPOC 2023 brings together the best leaders in all aspects related to the palm oil industry, including planting, processing, managing, and trading, to contribute insights and enrich the discussion for a better, more sustainable future. Event and Conference Highlights 24 Integrated Annual Report 2023
20-21 November We supported the Malaysia Upstream Project Excellence Conference (UPEC) as a Gold Sponsor and were represented by Vice President, Communications & Branding, Juliana Jamaluddin, Vice President Commercial, Raymond Tan and Vice President, Sales, Mak Wing Tak. The two-day conference, held at the Kuala Lumpur Convention Center, serves as the epicentre for connecting, collaboration, and innovation. 6-7 December Annual Group Conference with the theme “Pioneering Progress: Forging a Future of Success.” A gathering of the Group’s top executives to discuss achievements and future strategies. Day 1 focused on progress, while Day 2 featured a panel discussion on “Charting the Green Path: Success through Sustainable Strategies,” moderated by Gian Carlo Maccagno, Wasco Berhad’s MD/Group CEO, with industry leaders -- Lily Rozita Mohamad Khairi (Shell Plc), Datuk Md Arif Mahmood (former Petronas EVP Downstream), and Dr. Renard Siew (Yinson Holdings Berhad). The conference concluded with insights on navigating sustainable success, emphasising resilience and innovation. Wasco is committed to translating these insights into action, fostering collaboration, and pioneering progress in the energy industry with sustainability and innovation at its core. 15 November Wasco showcased its commitment to environmental stewardship at the Pahang State Department of Forestry’s International Forest Day 2023 Exhibition. Against the backdrop of this celebration and the Official Launch of the Rompin District Forest Office by His Majesty, the Yang di-Pertuan Agong, Sultan Abdullah Sultan Ahmad Shah, Wasco highlighted its sustainability efforts, with a focus on the ‘Wasco Forest’ project, marking significant progress with the planting of 160,000 trees towards the net-zero emissions goal. Event and Conference Highlights 25 Wasco Berhad
03 26 Integrated Annual Report 2023
Key Messages Chairman & Managing Director/ Group Chief Executive Officer’s Statement Chief Financial Officer’s Review 27 Wasco Berhad
Chairman and Managing Director/ Group CEO’s Statement Navigating the Transition Our Valued Stakeholders, In the dynamic landscape of the energy sector, we, as leaders of Wasco Berhad (“Wasco” or “Group” or “Company”), recognise the significant paradigm shift facing companies in the energy industry. The global transition towards sustainable energy sources, alongside escalating environmental concerns and regulatory standards, mandates a strategic re-evaluation of conventional business models. To thrive in this transformative era, we must champion innovation, flexibility, and forward-thinking strategies to adeptly navigate the energy transition. Dato’ Seri Robert Tan Chung Meng Gian Carlo Maccagno Revenue RM2.6 billion year-on-year 10.1% Profit After Tax RM154.8 million year-on-year (more than tripled) 100% Profit Before Tax RM218.3 million year-on-year 100% Revenue RM260 billion year-on-year 10.1% Profit After Tax RM154.8 million year-on-year (more than tripled) XX% Profit Before Tax RM217.3 million year-on-year 100% 28 Integrated Annual Report 2023
Aligned with Wasco’s visionary goal of delivering reliable and competitive solutions to the energy sector with net-zero carbon emissions by 2026 for our Scope 1 and Scope 2 emissions, we proudly stand at the forefront of this energy revolution. This strategic narrative delineates key actions and strategies for us to deftly navigate the energy shift towards sustainability while fostering innovation and propelling growth. With a steadfast commitment to our shared vision, bolstered by the support of our dedicated team and the expertise of our Board of Directors, we have successfully integrated, consolidated, and optimised our operations to achieve promising outcomes. By setting clear objectives and fostering collaborative efforts, we have accomplished our first-year milestones as planned. Guided by four fundamental pillars that underpin our corporate philosophy and strategic vision, namely Safety, People, Sustainability, and Profit, we reaffirm our commitment to excellence, innovation, and responsibility in all facets of our business operations. These pillars serve as the cornerstone of Wasco’s vision for the future, encapsulating core values that drive our decisions, actions, and aspirations as an organisation. Last year, we announced the retirement of Chan Cheu Leong and the appointment of Gian Carlo Maccagno as the new Managing Director/Group CEO. This transition in leadership and accompanied by the roll-out of a comprehensive transformation plan marked the beginning of a transformative journey. Significant progress has been achieved across all areas of growth, driven by strategic initiatives aimed at strengthening our core operations, exploring new market opportunities, and enhancing our overall competitiveness. Chairman and Managing Director/ Group CEO’s Statement 29 Wasco Berhad
Creating a Cohesive Wasco As part of our transformation journey, we have realigned and restructured our business into two main segments - energy and bioenergy. This strategic decision aims to enhance focus, streamline operations, and capitalise on emerging opportunities in these sectors. Additionally, we have strategically taken a decision to exit the trading business as it no longer aligned with the aspirations of the group going forward. Moreover, we have disposed non-core assets to optimise our portfolio and strengthen our financial position. Following the name change to Wasco Berhad on 31 May 2023, we intensified efforts to foster unity across our organisation at operational, personnel, and cultural levels. In line with the consolidation rationale, we streamlined support functions such as finance, procurement, contract management, IT, and human resources. Concurrently, we harnessed cross-functional synergies by leveraging our combined resources and cross-selling services while enhancing efficiencies through the sharing of best practices. Crucially, we fostered a new identity among our employees, accompanied by a shared vision, mission, and values. Various initiatives, including brand champion workshops, training sessions, and enhanced onboarding programmes, were undertaken to garner employee buy-in. These efforts were complemented by initiatives aimed at fostering unity, such as the establishment of common communication platforms, internal portals, virtual libraries, and town hall sessions. Chairman and Managing Director/ Group CEO’s Statement 30 Integrated Annual Report 2023
Solid Financial Performance Operationally, 2023 was commendable for us, reflected in a notable financial performance. We achieved a commendable 10.1% growth in revenue to RM2.6 billion and more than tripled profit after tax (“PAT”) to RM154.8 million. Our Energy Services achieved remarkable growth, with a 12.4% year-on-year increase in full-year revenue to RM2.3 billion. This significant expansion was primarily driven by successful contract executions, coupled with commendable financial performance, with profit before tax (“PBT”) surging to RM217.3 million, marking more than 100% increase over the previous year. Our Bioenergy Services recorded respectable performance, with an 8.4% year-on-year increase in revenue to RM288.8 million and a 31.9% increase in PBT to RM48.4 million, despite operating environment challenges. This performance was attributed to increased revenue from biomass energy boiler projects, enhanced industrial boiler sales, and growing demand for steam turbines and agro-tech equipment. Wasco’s solid financial standing was further underscored by a reduction in net gearing to below 0.5 times, positioning the Group in a net cash positive position and significantly improving return on equity to 15%. A more detailed review of our Financial Management Strategy and Performance would be discussed separately in the CFO’s Review on pages 40 to 43 of this Integrated Annual Report. Year-on-Year Revenue by Service Division Energy 0 500 1,000 1,500 2,000 2,500 2022 2,062.3 2,317.8 288.8 RM million 266.6 2023 2022 2023 0 50 100 150 200 250 300 Bioenergy PBT Breakdown by Service Division 96.7 mil 36.7 mil 217.3 mil 48.4 mil RM million Energy Bioenergy Energy Bioenergy 2022 2023 Chairman and Managing Director/ Group CEO’s Statement 31 Wasco Berhad
Our Commitment to Environmental, Social, and Governance Excellence We are proud to highlight the remarkable progress our organisation has made in advancing sustainability initiatives over the past year. Guided by our unwavering commitment to economic resilience, environmental stewardship, social equity, and governance we have achieved significant milestones. • Our efforts have resulted in a notable 20% reduction in greenhouse gas emission intensity compared to 2022 figures, demonstrating our dedication to mitigating climate change. • Our commitment to diversity, equity, and inclusion is reflected in the attainment of 15% female representation within our Senior Management team, showcasing our commitment to fostering an inclusive workplace. • Our dedication to proactive community engagement through education initiatives and infrastructure projects, we made and continue to make a positive impact in the communities we serve. Above achievements among others has resulted in remarkable improvement in our sustainability disclosure scores, underscoring our commitment to transparency and accountability, achieving a score of 4 out of 5 for Bursa Malaysia’s FSTE4Good. As we chart our course forward, we remain steadfast in our commitment to sustainability, recognising its integral role in shaping a brighter and more resilient future for generations to come. For a more detailed explanation on our Sustainability Report refer to pages 44 to 91 of this Integrated Annual Report. Operations Review With a focused approach towards navigating the energy transition, we have strategically realigned our business lines while strengthening core capabilities to offer comprehensive and integrated solutions to our customers. In our pursuit to ascend the value chain, investments in research and development (“R&D”) are prioritised to enhance technological capabilities and expand product offerings. 20% 15% Female Chairman and Managing Director/ Group CEO’s Statement 32 Integrated Annual Report 2023
Energy Services Our Energy Services segment, led by the Pipe Coatings and Engineering & Fabrication Divisions, plays a pivotal role in our operations, boasting a strong presence in Malaysia and a network spanning across 16 countries across five continents. Past global challenges, our focus has been on enhancing operational efficiencies and fostering collaboration among our various country operations. This strategic restructuring aims to fortify our foundations, positioning us to capitalise on economic recoveries within our markets. In 2023, our Energy Services demonstrated robust performance, achieving a revenue milestone of RM2.6 billion. A notable achievement during this period was our successful bid on our first Carbon Capture Pipeline Coating Project. This landmark win signifies a significant leap forward for us, positioning our company to take advantage of industry advancements while actively contributing to a sustainable future. This project underscores our commitment to leading environmental sustainability initiatives within the oil and gas sector, aligning with global efforts to reduce carbon emissions and combat climate change. In 2023, we expanded our offerings to include the supply of pre-fabricated buildings to new markets. Contract wins in this area, such as supplying pre-fabricated buildings for our client Schneider, highlight our commitment to diversification and global outreach, with a strong emphasis on sustainability. These prefabricated buildings offer an environmentally friendly alternative, reducing the carbon footprint associated with traditional construction methods. This strategic expansion aligns perfectly with our dedication to environmental sustainability within the oil and gas sector, further reinforcing our company’s commitment to reducing carbon emissions and addressing climate change challenges. Our expertise and market leadership were reaffirmed by other notable contract wins, including pipeline coating projects such as Rosmari-Marjoram and Crux Pipeline during the year. These successes have significantly contributed to our order book of RM2.9 billion, which is set to be executed in the next six to twelve months. These achievements underscore our reputation for delivering high-quality solutions and our ability to establish partnerships with industry leaders, solidifying our position as a trusted and reliable partner in the oil and gas infrastructure services sector. Operationally, 2023 marked significant progress in the mobilisation of our new coating plant for the East African Crude Oil Pipeline Project (“EACOP Project”), laying a solid foundation for operations to commence in the second quarter of 2024. Additionally, our exemplary performance in the pipe coating project for Qatar’s North Field Production Sustainability (“NFPS”) underscored our commitment to delivering exceptional quality and efficiency, further cementing our reputation as a reliable industry partner. Chairman and Managing Director/ Group CEO’s Statement 33 Wasco Berhad
Another notable achievement in 2023 was the successful execution of our inaugural coating project related to Carbon Capture and Storage (“CCS”), the Porthos Project. This milestone highlights our unwavering dedication to environmental sustainability and innovative solutions. By actively participating in projects geared towards CCS initiatives, we demonstrate a proactive stance in addressing the challenges of climate change while leveraging our expertise in coatings technology. During the year, progress on executing Yinson’s Agogo floating production storage and offloading (“FPSO”) contract remained steady, staying on track for completion in 2024, showcasing our steadfast commitment to meeting project timelines. Simultaneously, our fabrication yard in Batam adeptly managed nine projects concurrently, even amidst undergoing upgrades. Notably, these projects included delivering 13 units of booster compressors for Thai Nippon Steel and Schlumberger’s Monoethylene glycol (“MEG”) PAR (“Pre-Assembled Rack”) and PAU (“Pre-Assembled Unit’s”). This highlights our operational efficiency and capacity for seamless project management. We are pleased to report no health and safety incidents resulting in fatalities during the year for our Energy Services. Our dedication to continuous improvement drives us to prioritise the safety and well-being of our workforce above all else. We achieve this by implementing stringent safety protocols and fostering a culture of safety awareness throughout our organisation. By doing so, we ensure that all our employees are not only protected but also empowered to perform their duties responsibly. For a comprehensive overview of our management of health, safety, and the environment, stakeholders are encouraged to refer to the Sustainability Report included in the Integrated Annual Report on pages 44 to 91. Outlook for Energy Services As leaders in the energy services sector, we recognise the dynamic nature of the global energy industry, which continually evolve in response to various factors, including technological advancements and sustainability imperatives. Within this landscape, businesses specialising in pipeline coating and engineering and fabrication are pivotal players, driving growth and adaptation to industry changes. Pipeline Coating Market Dynamics The Global Process Pipe Coating Market, currently valued at USD 7.5 billion, is projected to reach USD 10.6 billion by 2032, reflecting a steady growth trajectory. This expansion is fuelled by several key factors, including increased investments in infrastructure development, stringent regulatory standards mandating high-performance coatings for environmental protection, and the growing emphasis on sustainability. The rise of CCS projects further amplifies the demand for specialised coatings capable of withstanding corrosive properties, contributing to the overall growth of the pipeline coating market. Moreover, advancements in coating technologies, such as the development of environmentally friendly coatings, are expected to drive innovation and market expansion in the coming years. Engineering and Fabrication Market Scope Our energy services division operates within a growing global market, with the oil and gas infrastructure market valued at USD 714.4 billion in 2023 and is projected to grow at over 6.7% CAGR from 2024 to 2032. This significant growth trajectory is underpinned by various factors, including increasing demand for energy, exploration and production activities in emerging markets, and the need for infrastructure upgrades to support evolving industry requirements. Additionally, the emergence of digitalisation and data analytics is revolutionising engineering and fabrication processes, enabling greater efficiency, cost-effectiveness, and predictive maintenance capabilities. As the industry embraces these technological advancements, opportunities abound for our division to leverage our expertise in engineering design, modular fabrication, and project management to meet the evolving needs of our clients across the globe. Chairman and Managing Director/ Group CEO’s Statement 34 Integrated Annual Report 2023
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