138 YINSON HOLDINGS BERHAD OUR CAPITALS FINANCIAL CAPITAL MATERIAL TOPIC: BUSINESS MANAGEMENT & PROFITABILITY DEFINITION OF MATERIAL TOPIC Continued enhancements on processes directly related to business profitability, covering cost management and timely delivery of contracts. IMPACTS S1 S2 S3 S4 S5 S6 S7 S9 S10 GS1 GS3 GS4 WHY IS THIS TOPIC MATERIAL TO US? At Yinson, we manage our business to deliver strong cash flows to fund current operations and fuel growth. We believe that solid liquidity and solvency management are foundational to our business, and must be complemented by proper business planning to realise Yinson’s short, medium and long-term business objectives. Our overarching strategy for managing our Financial Capital guides the management of our financial inputs and outputs towards achieving long-term and sustainable cash flows and profitability. Disciplined and diligent cost management frees up working capital to be channelled into growth opportunities, thereby maximising Yinson’s ability to create value for our stakeholders. RISKS • Lack of business profitability affects a company’s ability to deliver financial returns to shareholders. • Inadequate liquidity and business planning hamper a business’ ability to react to unexpected business downturns and opportunities. • Weak financial positions prevent companies from investing in new growth areas, leading to missed business opportunities. • Unclear pictures of financial positions and business plans lead to poor business decisions. OPPORTUNITIES • Robust financial management leads to sustained returns to stakeholders, inspiring stakeholder confidence. • A sound understanding of the Group’s financial position and its businesses to enable strategic business planning. • Profitability enables the quality of deliverables to be maintained and adequate funds to be allocated for business growth. • A strong financial position is a key enabler for business goals to be achieved. Management approach We are a high growth business operating in the midst of a global movement towards a low-carbon, climate-resilient environment and an ever evolving economic and geopolitical climate. To deliver our vision and strategy, we recognise the need to operate within a resilient financial framework that provides a strong financial position to support our growth plans. Our capital strategy Our capital strategy focuses on equity sell-down, refinancing and re-leveraging, which allows us to augment cash flows to enhance returns of our ongoing investments, thereby accelerating the returns of our Financial Capital to be deployed into new projects. Through the successful deployment of these capital strategies, Yinson has been able to grow our business and fund the capital requirements of our high capital expenditure projects, while continuing to provide our shareholders with stable and sustainable returns. PROJECT LEVEL Equity sell-down at project level to accelerate project equity cash flows and boost project returns REFINANCING Optimise project capital structure and extend debt maturity of stabilised brownfield assets to enhance returns PLATFORM LEVEL Re-leverage order book backlog to velocitise capital On a project level, we have a successful track record of capital raisings. This includes a USD670 million mini perm financing for FPSO Anna Nery raised in 2021, which was used to refinance an existing USD400 million bridge loan received in September 2020. In the same year, we had also successfully refinanced INR5.8 billion of project debts for our Bhadla solar plants, on the back of a strong operational track record. Another example of a successful refinancing exercise was the RM800 million refinancing of FPSO JAK in 2019, which allowed us to enjoy lower interest rates whilst velocitising our future cash flow to be invested into other projects. MF1
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