Integrated Annual Report 2023 INCLUSIVE TRANSITION Contributed by Nur Qalisa Safwa Noor Bayuri from SMK Seksyen 19 through a Yinson x Teach For Malaysia Art Competition on 'Building a Better and Sustainable Future'
YINSON HOLDINGS BERHAD | INTEGRATED ANNUAL REPORT 2023 Yinson Holdings Berhad is pleased to present our Integrated Annual Report for the Financial Year Ended 31 January 2023. This Report reflects our capability and commitment to creating sustainable value for our stakeholders. BASIS OF THIS REPORT This year’s Report aims to highlight the progress of our strategies and value creation journey. We will also discuss the steps we have taken to manage our business risks and opportunities against the external landscape. In clearly mapping out our value creation strategies for all stakeholder groups, we hope that the improvements in disclosures will help our stakeholders make better and more informed decisions pertaining to the Group. SCOPE AND BOUNDARIES The scope of this Report is applicable to Yinson Holdings Berhad (“Yinson”) and its subsidiaries (“the Group”). The Report covers the financial reporting period from 1 February 2022 to 31 January 2023 (“FYE 2023”) unless stated otherwise. REPORTING PRINCIPLES AND FRAMEWORKS The following frameworks and guidelines were taken into account during the compilation of this Report: • International Integrated Reporting Framework (2021) (“<IR> Framework”). • Bursa Malaysia Securities Berhad (“Bursa Securities”) Main Market Listing Requirements (“MMLR”), Sustainability Reporting Guidelines, Sustainability Reporting Toolkit (2nd edition, with the inclusion of Task Force on Climate-Related Financial Disclosures (“TCFD”) guidelines and Corporate Governance Guide (4th edition). • Malaysian Code on Corporate Governance 2021 (“MCCG 2021”). • International Petroleum Industry Environmental Conservation Association’s (“IPIECA”) Oil & Gas Industry Guidance on Voluntary Sustainability Reporting. • Industry best practices where relevant. This Report has been prepared in accordance with the Global Reporting Initiative (“GRI”) Standards 2021. This Report should be read in conjunction with the other reports in Yinson’s annual reporting suite, which consists of: • Integrated Annual Report 2023: Inclusive Transition. • Corporate Governance Report 2023. • Yinson’s Climate Report 2021. • Yinson’s Climate Goals Roadmap 2021. COVER RATIONALE Our Integrated Annual Report cover this year is especially significant for us because it is designed by the future. We collaborated with Teach For Malaysia to organise an art competition in high needs school, SMK Seksyen 19, Shah Alam. The competition presented us with 52 beautiful artworks which captured the students’ visions of a better and sustainable future, profoundly aligning with our transition journey. Our business decisions in FYE 2023 were guided by the mindset of Inclusive Transition. As the global energy landscape changes, we remain steadfast in our quest to provide affordable, reliable and accessible energy to society, so no one gets left behind. Our commitment to creating greater social equity underpins our business model and has guided our bold decisions over the years. Our Inclusive Transition is also driven by the urgent need to address climate issues through affirmative action as we race to preserve our planet for future generations. “I hope my art is able to inspire others to do their part in creating a sustainable future and protecting the planet for future generations like me, so we can enjoy a beautiful and healthy world for generations to come.” Nur Qalisa Safwa Binti Noor Bayuri, Age 14
1 MATERIALITY We have applied the principle of materiality in the areas of disclosure and content of this Report. A topic is considered material if it substantially influences the decision-making process and decisions of the Group and its stakeholders, and these decisions in turn affect our ability to create value over the short, medium and long term. This Report has recognised both qualitative and quantitative matters that are material to our business and strategic objectives as it has considered factors that may impact the decision-making processes of our stakeholders. In managing our stakeholders’ expectations, we reviewed our material matters through a desktop validation against local, regional and global industry peers as well as international reporting frameworks to ensure that our material matters are up to date. We found that our material matters were current and still relevant to our ability to understand and address the environmental, social and governance (“ESG”) issues that affect our business and stakeholders. ASSURANCE We have engaged PricewaterhouseCoopers PLT (“PwC”) as our external auditors, whereby they are responsible for providing an independent opinion on the Group’s Financial Statements and whether these Financial Statements give a true and fair view of FYE 2023’s consolidated financial position, financial performance and cash flows. PwC was also engaged to review the Statement on Risk Management & Internal Control (“SORMIC”) included in this Report, as part of the requirements of Paragraph 15.23 of the Bursa Securities MMLR. In accordance with the Malaysian Institute of Accountants’ Audit and Assurance Practice Guide (AAPG) 3, PwC has performed their limited assurance review without the requirement of forming an opinion on the adequacy and effectiveness of the Group’s risk management and internal control systems. FORWARD-LOOKING STATEMENTS This Report contains certain forward-looking statements with respect to Yinson’s financial position, results, operations and businesses, which we believe to be realistic at the time this Report is issued. These statements may involve risk and uncertainty as they relate to events and depend on circumstances that occur in the future. There are various factors that could cause actual results or developments to differ materially from those expressed or implied by these forward-looking statements. STATEMENT OF THE BOARD OF DIRECTORS Yinson’s Board of Directors (“Board”) acknowledges its responsibility for ensuring the integrity of this Report, which in its opinion addresses all the issues that are material to the Group’s ability to create value and fairly presents the integrated performance of Yinson. The Board has applied its collective mind to the preparation and presentation of this Report and believes that it has been prepared in accordance with the <IR> Framework and addresses all material issues. The Board confirms that it has approved the release of this Report. BASIS OF THIS REPORT Capitals Financial Capital C1 Manufactured Capital C2 Intellectual Capital C3 Human Capital C4 Social & Relationships Capital C5 Natural Capital C6 Stakeholder groups Bankers & lenders S1 Clients S2 Crew S3 Employees S4 Governments & regulatory bodies S5 Industry S6 Investors & shareholders S7 Local communities S8 Partners S9 Vendors & suppliers S10 Material topics Climate Change & GHG Emissions Community Engagement Business Management & Profitability Business Model Innovation Good Corporate Governance Waste & Pollution Management Environmental Stewardship Human Capital Development Operational Health & Safety Human & Labour Rights Client Relationships ME1 MS5 MG1 MG2 MG3 Cybersecurity Digitalisation MG5 MG6 Sustainable Supply Chain Management MG4 ME2 ME3 MS1 MS2 MS3 MS4 Group strategies Build a platform for growth GS5 Empower decision-making GS6 Operationalise ESG GS1 Forefront of innovation & disruption GS2 Create sustainable shareholder value GS3 Tactical financial management GS4 Business units Yinson Production Yinson Renewables Yinson GreenTech YGT Regulus Offshore RO LEGENDS Please refer to the following icons that are used to link our capitals, group strategies, stakeholder groups, business units and material matters. Points to related sections within this Report YP YR
2 COVER RATIONALE BASIS OF THIS REPORT FYE 2023 AT A GLANCE 05 Group Highlights 07 Group Financial Highlights 09 Key Events OUR INVESTMENT CASE 16 Global Presence 18 Key Assets and Strategic Investments 22 Strategic Alliances 23 Our Approach to Sustainability LEADERSHIP MESSAGES 28 Chairman Statement 32 Group CEO Review 42 Financial Review VALUE CREATION AT YINSON 56 Market Landscape 59 Materiality Matters 61 Strategy Review 67 Vision, Mission and Core Values 68 Value Creation Model 72 Risks and Opportunities BUSINESS REVIEW 77 Yinson Production 83 Yinson Renewables 87 Yinson GreenTech 91 Regulus Offshore SUSTAINABILITY REVIEW 94 Environmental Conservation & Protection • Climate Change & Greenhouse Gas Emissions • Waste & Pollution Management • Environmental Stewardship 101 Championing Human Rights & Human Capital Development • Human Capital Development • Operational Health & Safety • Human & Labour Rights • Client Relationships • Community Engagement 113 Embracing Good Corporate Governance • Business Management & Profitability • Business Model Innovation • Good Corporate Governance • Sustainable Supply Chain Management • Cybersecurity • Digitalisation GOVERNANCE 126 Board of Directors 132 Senior Management 138 Corporate Governance Overview Statement 152 Other Compliance Information 154 Statement on Risk Management & Internal Control 162 Report on Audit Committee 165 Statement on Directors’ Responsibility ACCOUNTABILITY 167 Directors’ Report 176 Statement By Directors 176 Statutory Declaration 177 Financial Statements 320 Independent Auditors’ Report 326 Corporate Information 327 Analysis of Shareholdings 330 Analysis of Warrant Holdings 333 List of Properties PERFORMANCE DATA EXTERNAL ASSURANCE REPORT GRI CONTENT INDEX LIST OF ABBREVIATIONS ANNUAL GENERAL MEETING 356 Notice of Annual General Meeting • Form of Proxy INSIDE THIS REPORT YINSON HOLDINGS BERHAD | INTEGRATED ANNUAL REPORT 2023
3 INSIDE THIS REPORT VISIT OUR INTERACTIVE MICROSITE In line with Yinson’s commitment to sustainability and the environment, we are not distributing hardcopies of this Report, except by request. We encourage you to read this Report on our interactive microsite, available at www.ar.yinson.com/2023, and also accessible by scanning this QR code. As a further reflection of our efforts to reduce our paper usage, Yinson will donate the print cost of every hardcopy Annual Report to support a non-profit tree planting civil society organisation in Malaysia dedicated to reforestation and the restoration of biodiversity.
FYE 2023 AT A GLANCE 05 Group Highlights 07 Group Financial Highlights 09 Key Events Areen Soleha Binti Shairul Amir, Age 14
5 GROUP HIGHLIGHTS FYE 2023 AT A GLANCE FINANCIAL PERFORMANCE EBITDA RM1.8 billion PAT RM588 million 12% from FYE 2022 27% from FYE 2022 Basic Earnings Per Share 16.7 sen 53% from FYE 2022 Revenue RM6.3 billion PATAMI RM589 million Core PAT RM741 million 75% from FYE 2022 47% from FYE 2022 39% from FYE 2022 AWARDS AND ACHIEVEMENTS UNGC Malaysia & Brunei Sustainable Performance Awards 2022 Top 25% PLCs in FBM EMAS, 4th consecutive year Pioneer Sustainable Development Action Recognition Winner, Malaysia’s Best Managed Companies, sponsored by Deloitte Private 2nd percentile in both the Energy Services industry and Oil & Gas Equipment sub-industry Best Issuers/Advisers, Issuers of the Year, Corporate; Best in Sustainable Finance, Best Sustainability-linked Sukuk; Best Deals by Country, Best Sustainability-linked Sukuk The Asset Triple A Islamic Finance Awards 2022 ’Most Honored Company’, First place in all 5 categories in the Asia Small & Midcap table, under the Oil & Gas industry category
6 YINSON HOLDINGS BERHAD | INTEGRATED ANNUAL REPORT 2023 GROUP HIGHLIGHTS ZERO Cases of Code of Conduct breaches ZERO Non-compliances with environmental laws & regulations ZERO LTIF 0.14 TRIF WATER AND EFFLUENTS ZERO hydrocarbon spills 11 ppm average oil in slop water content WASTE 225 tonnes reused, recycled or recovered HEALTH & SAFETY TOTAL GHG EMISSIONS 1.77 million tonnes CO2e ESG HIGHLIGHTS CORPORATE SOCIAL RESPONSIBILITY RM1.89 million invested 23 communities impacted REGULAR EMPLOYEE GROWTH 8.89% voluntary employee turnover rate 561 new hires 0.02% Indirect GHG emissions (Scope 2) 2.49% Direct GHG emissions (Scope 1) CARBON EMISSIONS BY SCOPE GOVERNANCE CARBON INTENSITY tonnes CO2e/ RM million 281 kg CO2e/MWh 496 kg CO2e/BOE 30 SOCIAL ENVIRONMENT EMPLOYEES 1,488 regular employees Male 78.5% Female 21.5% 97.49% Other indirect GHG emissions (Scope 3)
7 GROUP FINANCIAL HIGHLIGHTS FYE 2023 AT A GLANCE Financial year ended 31 January 2019 RM million 2020 RM million 2021 RM million 2022 RM million 2023 RM million Revenue 1,035 2,519 4,849 3,607 6,324 Profit before tax 344 331 580 716 855 Profit after Tax and Minority Interests (“PATAMI”) 235 210 315 401 589 Share capital 1,101 1,107 1,126 1,134 2,220 Total equity 3,624 3,774 4,026 4,740 6,458 Number of ordinary shares issued 1,093 1,095 1,100 1,101 3,054 Weighted average number of ordinary shares in issue(c)(d) 1,096 1,079 2,411(g) 2,409(g) 2,707 Total assets 8,083 9,515 11,886 15,205 19,259 Total liabilities 4,459 5,741 7,860 10,465 12,801 Total borrowings 3,150 3,830 6,106 8,758 9,584 Non-recourse borrowings(h) 2,563 2,339 2,985 4,020 3,731 Earnings Before Interest, Tax, Depreciation and Amortisation (“EBITDA”) 801 770 1,236 1,402 1,782 Basic earnings per share (sen)(b)(c)(d) 21.4 19.5 7.3(g) 10.9(g) 16.7 Dividends rate (sen)(c)(d) 6.0 6.0 3.0(g) 3.0(g) 1.0 Net Assets Per Share (RM)(a)(c)(d) 3.31 3.45 1.62(g) 1.91(g) 2.11 Gearing (times): - Total borrowings 0.87 1.01 1.52 1.85 1.48 - Excluding non-recourse borrowings(f)(h) 0.16 0.40 0.78 1.00 0.91 Net Gearing (times) - Total borrowings 0.51 0.63 1.01 1.24 1.23 - Excluding non-recourse borrowings(f)(h) (0.19)(i) 0.01 0.27 0.39 0.65 Adjusted Revenue(e) 1,194 2,672 5,007 3,775 6,381 Adjusted Core EBITDA(e) 897 865 1,533 1,476 1,972 Adjusted Core EBITDA Margin (%)(e) 75.2 32.4 30.6 39.1 30.9 Adjusted Net Debt(e) 1,854 2,475 4,102 5,683 7,778 Adjusted Net Debt/Adjusted Core EBITDA (times)(e) 2.07 2.86 2.68 3.85 3.94 Notes: (a) Computed based on number of ordinary shares issued as at financial year end. (b) Computed based on weighted average number of ordinary shares in issue as at financial year end (excluding treasury shares). (c) Amount restated for FYE 2021. (d) Amount restated for FYE 2022. (e) Adjusted amount/ratio is defined as the Group's relevant financials plus the Group's share of relevant financials of its joint ventures and associates. (f) Computed based on total loans and borrowings of the Group less non-recourse borrowings. (g) Amount adjusted for FYE 2022 and FYE 2021 to reflect the bonus issue of 1 bonus share for 1 existing ordinary share which was completed on 14 April 2022, the bonus element of the rights issue of 2 rights shares for every 5 existing ordinary shares which was completed on 28 June 2022 and distributions declared to holders of perpetual securities in determining the profits attributable to ordinary equity shareholders. Refer to Note 14 to the Financial Statements for further details on the restatement of prior years’ basic earnings per share. (h) Non-recourse borrowings refers to project financing loans where the Group’s guarantee has been released and the lenders are only entitled to loan repayments from cash flows of the projects the loan is financing, and not from any other assets of the Group. (i) Excluding non-recourse borrowings, the Group was in a net cash position of RM703 million as at 31 January 2019.
8 YINSON HOLDINGS BERHAD | INTEGRATED ANNUAL REPORT 2023 GROUP FINANCIAL HIGHLIGHTS 2023 2022 FYE 2021 2020 2019 6,324 3,607 4,849 2,519 1,035 Revenue RM million FYE 2023 2022 2021 2020 2019 855 716 580 331 344 Profit Before Tax RM million FYE 2023 2022 2021 2020 2019 589 401 315 210 235 Profit After Tax and Minority Interests RM million FYE 2023 2022 2021 2020 2019 2.11 1.91 1.62 3.45 3.31 Net Assets Per Share RM Total Borrowings RM million FYE 2023 2022 2021 2020 2019 9,584 8,758 6,106 3,830 3,150 FYE 2023 2022 2021 2020 2019 1,782 1,402 1,236 770 801 Earnings Before Interest, Tax, Depreciation and Amortisation RM million
9 KEY EVENTS 2022 FEB APR MAR Yinson Renewables entered Brazil with acquisition of two late-stage wind development projects. 22 - 23 Updated on the Hydroglyder at Nor-shipping 2022. 4 - 7 Signed firm contracts with Enauta for FPSO Atlanta in Brazil. 21 Signed firm contracts with Petrobras for FPSO Maria Quitéria in Brazil. 7 Won Silver at the 7th Asia Integrated Reporting Awards 2021. 4 Formed joint venture with GTMA to develop and operate chargEV – Malaysia’s largest EV charging network. 18 Provided phonics training and books to host communities in Ghana. 5 Doubled recipients of scholarship programme in Yinson Ghana’s host communities. 12 Joined Offshore Technology Conference Asia 2022. 22 - 25 Awarded the BPAM Bond Market Award 2022 for Top Issuance. 31 FYE 2023 AT A GLANCE
10 YINSON HOLDINGS BERHAD | INTEGRATED ANNUAL REPORT 2023 2022 KEY EVENTS AUG Provided a new canteen for the Apowa Methodist Basic School in Ghana. 3 Supported the rescue and treatment of demoiselle cranes in India and wildlife rescue and release operations in Jawai Bandh Leopard Conservation Reserve. 3 MAY Participated in Offshore Technology Conference Houston 2022. 2 - 5 JUN Named ‘Most Honored Company’ in the 2022 All-Asia Executive Team survey by Institutional Investor. 23 Bagged two awards at Employee Experience Awards 2022 Malaysia. 24 Completion of rights issue, which raised RM1.19 billion and was oversubscribed by 22.31%. 28 Entered into an exclusivity agreement with bp to reserve FPSO Nganhurra for PAJ project in Angola. 29 Received a 12-month extension of charter contract for FPSO PTSC Lam Son. 30 Held grand naming ceremony for FPSO Anna Nery with Sumitomo. 8 Formed a joint venture with Plus Xnergy to develop 250 MW of solar projects. 12 Recognised for sustainability efforts at the Global Good Governance Awards 2022. 18 JUL Accorded ‘Regional – Best Liquidity & Investment Solution’ at The Asset Triple A Treasury, Trade, Sustainable Supply Chain and Risk Management Awards 2022. 6 Held 29th Annual General Meeting. 14 Recognised at Australasian Reporting Awards 2022. 18 Launched EV leasing programme in Malaysia. 21 Partnered with Ghana Education Service to organise inaugural Yinson Reading and Spelling Bee Competition. 22
11 FYE 2023 AT A GLANCE KEY EVENTS AUG Signed MoU with GoCar to provide chargEV solutions and services to GoCar users. 8 Collaborated with Dinamikjaya Motors as EV leasing partners. 16 Signed MoU with Cyberview for the development of Smart Mobility ecosystem. 18 Signed Memorandum of Collaboration with AEON Group to develop Malaysia’s largest retail EV charging network. 29 SEP Recognised as one of Malaysia’s Best Managed Companies 2022 by Deloitte. 6 Entered Indonesian market through acquisition of Inecosolar. 8 Won ‘Best Sustainability Sukuk of the Year’ at the Global Islamic Finance Awards 2022. 14 Participated in One Young World 2022 Manchester Summit. 5 - 8
12 YINSON HOLDINGS BERHAD | INTEGRATED ANNUAL REPORT 2023 KEY EVENTS 2022 Participated in Rio Oil & Gas 2022 in Rio de Janeiro. 26 - 29 27 eMoovit signed MoU with Rapid Bus to collaborate on autonomous electric bus trial at BRT Sunway. 28 Commenced construction of all-electric cargo vessel Hydromover with Goal Zero Consortium partners. 29 Joined the United Nations Global Compact initiative. Supported a local biodiversity programme with Free Tree Society in Kuala Lumpur. 30 OCT SEP Secured USD720 million mini-perm financing for FPSO Maria Quitéria. 6 Launched first phase of EV-friendly Starbucks stores in partnership with Starbucks Malaysia. 18 Won three awards at The Asset Triple A Islamic Finance Awards 2022. 27 Won ‘Highest Return on Equity Over Three Years’ under the Energy Sector category at The Edge Billion Ringgit Club 2022 Awards. 31 OCT Participated in Africa Oil Week 2022 in Cape Town. 3 - 7 NOV Yinson Miri sponsored mooring lines installation at Miri-Sibuti Coral Reefs National Park. 2 Won ‘Best Treasury Transformation Project’ at Adam Smith Awards Asia 2022. 17 Recognised with ‘Industry Excellence Award’ at MSWG-ASEAN Corporate Governance Award 2021. 5
13 FYE 2023 AT A GLANCE KEY EVENTS NOV Participated in Local Content Conference 2022 in Takoradi, Ghana. 22 - 24 Visited SMK Seksyen 19 to receive updates on Teach For Malaysia’s tutoring programme for disadvantaged students, which Yinson has supported since October 2021. 24 Won Gold for the ‘Best Performing Company in the Energy Sector’ at The Edge ESG Awards 2022. 28 DEC Yinson Singapore recognised as one of the ‘Best Companies to Work for in Asia’. 2 DEC Entered into APA for Agogo Project in Angola. 2 Achieved 2nd percentile ranking by Sustainalytics for both the Energy Services industry and the Oil & Gas Equipment sub-industry. 6 Signed MoU with AVEVA to develop fully autonomous and sustainable FPSO solutions. 9 Yinson Kuala Lumpur recognised as one of the ‘Best Companies to Work for in Asia’. 8
14 YINSON HOLDINGS BERHAD | INTEGRATED ANNUAL REPORT 2023 2023 KEY EVENTS MAR Participated in Bursa Malaysia’s inaugural carbon credit auction. 16 Recognised as an ‘ESG Industry Top Rated Company’ by Sustainalytics. 16 Signed joint venture agreement with LHN Group to bring chargEV fast charging hubs and services to Singapore. 29 Won ‘Diversity Champion’ at the LinkedIn Talent Awards 2022. 28 MAR Launched Farosson, a new business unit that provides advisory solutions, investments and asset management. 1 Yinson GreenTech entered into collaboration agreement with Gentari and EV Connection for greater charging infrastructure convenience. 16 FEB Supported Starbucks Malaysia with five EVs for their corporate fleet. Signed firm contracts for FPSO Agogo in Angola. 27 Acquired London Marine Group Limited. 7 Yinson Scholars Programme extended to include undergraduate scholarships. 13 Invested in Zeabuz to develop autonomous solutions for electric marine vessels. 20 Awarded ‘Pioneer Sustainable Development Action Recognition’ at UNGC Malaysia and Brunei Sustainable Performance Awards 2022. 7 2 JAN Successfully completed contract for FPSO Adoon in Nigeria. 11 31 Supported three orphanages in Rivers State, Nigeria. Yinson Ghana commissioned new ICT lab in Apowa. 1 FPSO Anna Nery achieved first oil. 7 MAY APR Signed MoUs with Wilhelmsen Ships Service, OPL Services, Mencast Marine and Zeabuz during Singapore Maritime Week. 25 Officially launched DC and AC chargers at Berjaya Times Square, Kuala Lumpur. 21
OUR INVESTMENT CASE 16 Global Presence 18 Key Assets and Strategic Investments 22 Strategic Alliances 23 Our Approach to Sustainability Alya Maisarah Binti Rajudin, Age 14
16 YINSON HOLDINGS BERHAD | INTEGRATED ANNUAL REPORT 2023 Headquarters and offices Marketing representations Offshore production assets UNITED STATES Houston Marketing representation GLOBAL PRESENCE PERU Renewables Development COLOMBIA Renewables Development BRAZIL Rio de Janeiro Office FPSO Anna Nery FPSO Maria Quitéria* FPSO Atlanta* Renewables Development CHILE Renewables Development UNITED KINGDOM London Office NETHERLANDS The Hague Office ITALY Renewables Development NIGERIA Port Harcourt Office FPSO Adoon Contract ended in January 2023. FPSO Abigail-Joseph GHANA Accra Office FPSO John Agyekum Kufuor
17 GLOBAL PRESENCE Renewables developments and assets * On track for deployment in 2024 # On track for deployment in 2025 OUR INVESTMENT CASE NORWAY Oslo Offshore Operations Headquarters Renewables Headquarters ANGOLA Luanda Office FPSO Agogo# NEW ZEALAND Renewables Development INDONESIA Bali Renewables Development VIETNAM Ho Chi Minh City Marketing representation FPSO PTSC Lam Son FSO PTSC Bien Dong 01 SINGAPORE Offshore Projects Headquarters Green Technologies Headquarters Farosson Headquarters MALAYSIA Kuala Lumpur Global Headquarters Renewables Development Miri Office FPSO Helang INDIA New Delhi Office Rising Bhadla 1 & 2 Solar Plants Nokh Project
18 YINSON HOLDINGS BERHAD | INTEGRATED ANNUAL REPORT 2023 KEY ASSETS AND STRATEGIC INVESTMENTS FPSO ADOON Field : Block OML 123, Nigeria Charterer : Addax Petroleum (subsidiary of Sinopec) Contract ended in January 2023 FPSO JOHN AGYEKUM KUFUOR Field : OCTP Block, Ghana Charterer : ENI FSO PTSC BIEN DONG 01 Field : Block 05-2/05-3, Vietnam Charterer : PTSC (subsidiary of Petrovietnam) Joint venture with PTSC FPSO PTSC LAM SON Field : Block 1-2/97, Vietnam Charterer : PTSC (subsidiary of Petrovietnam) Joint venture with PTSC FPSO HELANG Field : Block SK10, Malaysia Charterer : JX Nippon FPSO ABIGAIL-JOSEPH Field : Block OML 83 & 85, Nigeria Charterer : FIRST E&P OFFSHORE PRODUCTION
19 FPSO ANNA NERY Field : Marlim Field, Brazil Charterer : Petrobras FPSO MARIA QUITÉRIA Field : Jubarte Field, Brazil Charterer : Petrobras Currently under conversion, on schedule for deployment in 2024 FPSO ATLANTA Field : Atlanta Field, Brazil Charterer : Enauta Currently under conversion, on schedule for deployment in 2024 KEY ASSETS AND STRATEGIC INVESTMENTS OUR INVESTMENT CASE Scan the QR code for further details on our offshore production assets, including production capacity, contract durations and orderbook FPSO AGOGO Field : Block 15/06, Angola Charterer : Azule Energy Currently under conversion, on schedule for deployment in 2025
20 YINSON HOLDINGS BERHAD | INTEGRATED ANNUAL REPORT 2023 KEY ASSETS AND STRATEGIC INVESTMENTS NOKH PROJECT Location : Nokh Solar Park, Rajasthan, India Counterparty : NTPC Limited Generation capacity : 190 MW(AC)/285 MWp(DC) RISING BHADLA 1 & 2 SOLAR PLANTS Location : Bhadla Solar Park, Rajasthan, India Counterparty : NTPC Limited Generation capacity : 140 MW(AC)/175 MWp(DC) RENEWABLES OFFSHORE MARINE Scan the QR code for further details on our renewables assets Scan the QR code for further details on our offshore marine assets PTSC HUONG GIANG Vessel type : PSV; DPS-2 YINSON PERWIRA Vessel type : AHTS; DPS-2 PTSC LAM KINH Vessel type : AHTS; DPS-1 YINSON HERMES Vessel type : AHTS; DPS-1
21 GREEN TECHNOLOGIES Marine transport • Electric vessels leasing • Technology-enhanced • Autonomous vessels Digital • Software as a Service • Digital marketplace platform Urban mobility • Electric vehicles leasing • Technology-enhanced • Autonomous vehicles Micromobility • Electric bikes and scooters • Battery swapping stations • Embedded IoT system Charging infra • Charge point operator • Charging hubs • Microgrid and energy storage THE HEART OF OUR BUSINESS IS ELECTRIFICATION OUR R&D PARTNERSHIPS NUS-YGT joint programme for AV buses MPA-SMI grant call for electric vessels Digital twin for electric vessels Cyberview Malaysia living lab and office FCP grant call for 5G plans and development Sandbox and testing for electric vehicles KEY ASSETS AND STRATEGIC INVESTMENTS OUR INVESTMENT CASE Scan the QR code for further details on Yinson GreenTech, including latest news and updates Marine Mobility Hydrofoil system for marine electric vessels Marine battery swapping solutions Autonomous vessel technologies Electric bike battery swapping solutions Autonomous vehicle technologies Autonomous vehicle technologies OUR INVESTED COMPANIES
22 YINSON HOLDINGS BERHAD | INTEGRATED ANNUAL REPORT 2023 STRATEGIC ALLIANCES Throughout the years, Yinson has formed strategic alliances with public and private bodies to share ideas in tackling some of the world’s most pressing and emerging issues. It is through these alliances with like-minded organisations that we are able to leverage our respective expertise and resources to expand our collective influence, bringing powerful solutions for greater impact and value creation. Below are some key examples of the alliances that we are part of. As an active member and appointed director of RenewableUK, we are fully in support of maximising opportunities to accelerate the renewables sector in the UK. We support the TCFD and are aligned with its cause of developing initiatives for better information disclosure that propel companies to better incorporate climaterelated risks and opportunities in their business strategies. We are part of the Business Council of Sustainable Development (BCSD) and we support its efforts in bringing together the business community as a collective voice to advocate for initiatives that benefit various industries and their stakeholders. Yinson is an active member of Norwegian Energy Partners (NORWEP) where we share industry knowledge and expertise to contribute to the growth of the Norwegian energy industry. As a CEO Action Network (CAN) member, Yinson proactively facilitates knowledge-sharing and best practices which contribute to the collective commitment to driving sustainable development in Malaysia. We are a signatory member of the United Nations Global Compact (“UNGC”) Malaysia and Brunei (UNGCMYB) and are aligned with the UNGC’s Ten Principles, further strengthening our commitment to positively impact areas such as human rights, labour, environment and anti-corruption. As an appointed Council Member of the ASEAN Business Advisory Council Malaysia, Yinson actively contributes feedback and guidance for ASEAN economic cooperation and integration. Yinson fully supports the regional effort to strengthen the strategic relationships between the private sector, the government and ASEAN to achieve common prosperity. STRATEGIC ALLIANCES
23 Environmental Conservation & Protection Championing Human Rights & Human Capital Development Embracing Good Corporate Governance SUSTAINABILITY PRINCIPLES OUR APPROACH TO SUSTAINABILITY Sustainability forms our key strategic direction in Yinson. We do this purposefully to align with society’s expectations of us and enhance stakeholders’ value. Our Group-wide Sustainability Policy contains principles that form the foundation of the way we do business and how we interact with the communities where we operate. SUSTAINABILITY VISION We aim to enhance long-term shareholder value with due regard to the environmental, economic, social and governance aspects by being a reliable and adaptable partner to our stakeholders. These principles form the foundation of our ESG practices. While we work to continue to improve affordable and clean energy accessibility, we aim to do so responsibly for the environment and contribute positively to the communities where we operate. To that end, we take proactive steps to prevent pollution, reduce emissions and engage in community development. OUR INVESTMENT CASE
24 YINSON HOLDINGS BERHAD | INTEGRATED ANNUAL REPORT 2023 Yinson is committed to our Climate Goals to achieve carbon neutrality by 2030 and net zero emissions by 2050. Our Climate Goals Roadmap and Climate Report outline the strategy and progress towards achieving our Climate Goals. Moving forward, we will continue to work with our business partners, clients, governments, non-governmental organisations (“NGOs”) and industry associations to implement our sustainability agenda. These principles are underpinned by our Core Values, R.O.A.D.S., and align with the United Nations Sustainable Development Goals (“UN SDGs”). The UN SDGs are an important consideration in determining how we set our sustainability targets in line with society’s expectations. We contribute directly to nine SDGs across our business units and map out our activities accordingly, as highlighted throughout this Report. We advocate for and invite businesses across our value chain to do the same, and encourage their contribution to the broader SDGs. YINSON’S ALIGNMENT WITH THE UN SDGs Human Rights Labour Environment Anti-corruption 1 Businesses should support and respect the protection of internationally proclaimed human rights 2 Make sure that they are not complicit in human rights abuses 3 Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining 4 The elimination of all forms of forced and compulsory labour 5 The effective abolition of child labour 6 The elimination of discrimination in respect of employment and occupation 7 Businesses should support a precautionary approach to environmental challenges 8 Undertake initiatives to promote greater environmental responsibility 9 Encourage the development and diffusion of environmentally friendly technologies 10 Businesses should work against corruption in all its forms, including extortion and bribery OUR APPROACH TO SUSTAINABILITY COMMITMENT TO SUPPORTING THE TEN PRINCIPLES OF THE UN GLOBAL COMPACT Yinson believes that corporate sustainability starts with a company’s value system and a principles-based approach to doing business. This means operating in ways that meet fundamental responsibilities in the areas of human rights, labour, the environment and anti-corruption. By incorporating the Ten Principles of the UNGC into our strategies, policies and procedures, and establishing a culture of integrity, Yinson not only upholds our basic responsibilities to the people and the planet, but also sets the stage for long-term success.
25 OUR APPROACH TO SUSTAINABILITY SUSTAINABILITY GOVERNANCE Yinson has established a sound and efficient governance structure to guide and manage sustainability-related matters as part of its existing corporate governance structure. The success of the governance structure is the result of sustainable leadership from our Board and Senior Management, which collectively form our leadership team. We have Board-level oversight and Management-level responsibility in governing sustainability matters. We constantly engage with our stakeholders, both internally and externally, to identify topics of concern covering economic and ESG aspects. The feedback arising from our stakeholder engagements is used to prioritise focus areas and identify areas of improvement, as demonstrated in our materiality assessments. This helps us to better understand societal concerns and navigate our business through an ever-evolving environment. SUSTAINABILITY GOVERNANCE STRUCTURE IN YINSON Board-level oversight Climate strategy and issues oversight, including coordination at Board level. Oversight of Yinson’s business model transformation towards a low-carbon economy. Management-level responsibility Definition and review of climate strategic plan in which priorities of climate-related metrics are set. Management of climate-related risks and opportunities, including monitoring of action plan towards transition to a low-carbon economy. Sustainability Committee Management Committee cum Risk Management Committee Board of Directors Board Risk and Sustainability Committee OUR INVESTMENT CASE
26 YINSON HOLDINGS BERHAD | INTEGRATED ANNUAL REPORT 2023 OUR APPROACH TO SUSTAINABILITY SUSTAINABILITY FOCUS AREAS Yinson recognises the importance of operationalising sustainability in driving positive change. Our strategy takes into consideration our material matters and is designed to create long-term value for our stakeholders. We have strategically channelled our corporate efforts into the above key sustainability focus areas to drive positive change. Yinson is in the midst of conducting a Group-wide ESG target setting exercise that will be aligned with the following frameworks: • Bursa Malaysia’s Common Sustainability Indicator requirements as per the enhanced sustainability reporting framework. • UNGC Principles. • Selected SDGs. At Yinson, we aspire to be part of the solution towards creating a low-carbon, climate-resilient environment by providing access to affordable, reliable and sustainable energy. We endeavour to work with like-minded partners and stakeholders throughout our value chain to achieve Environmental Conservation & Protection Championing Human Rights & Human Capital Development Embracing Good Corporate Governance We aim to enhance long-term stakeholder value through environmental conservation & protection, championing human rights & human capital development and embracing good corporate governance Climate resilience • Climate-related initiatives • Development of renewables and green technologies businesses • Sustainability data monitoring, reporting and verification Carbon emissions management • R&D on low-carbon solutions to support sustainable strategy Pollution, waste & energy management • Operational eco-efficiency improvement programme Biodiversity • Biodiversity programme Training & development • HR Transformation Plan Operational health & safety • YP HSSEQ Strategy Review • Emergency Response Programme • Safety Culture Transformation Programme (SAYFR) Employee rights & benefits • Human & Labour Rights Due Diligence Programme • Employee health and wellbeing Anti-discrimination • DEI awareness programmes Community development and inclusive growth • Community development and CSR programmes Anti-bribery & anti-corruption, and Sustainability Governance • Ethics and compliance awareness and development programme Supply chain management • Sustainable procurement - ESG supply chain screening Business continuity & performance • Sustainability-linked financial instruments • Group Strategic IT Roadmap YINSON SUSTAINABILITY FRAMEWORK our shared objectives. We advocate for the incorporation of sustainable and emissions-lowering features into the design of our offshore production assets to support and accelerate the energy transition. Yinson Production (“YP”) is working closely with our partners to develop innovations in the offshore energy production space, such as the Zero Emissions FPSO Concept. Since its establishment in 2019, Yinson Renewables (“YR”) has built a strong and growing portfolio of assets across the entire renewables value chain, focusing on the three core regions of Latin America, Europe and the Asia Pacific. We also established Yinson GreenTech (“YGT”) in 2020 as a green technologies solution provider delivering a clean, integrated and technology-enhanced transport ecosystem across land and sea. YGT aims to create a proprietary digital marketplace that provides affordable and accessible techbased low-carbon products and services to help businesses and communities achieve their own net zero ambitions.
LEADERSHIP MESSAGES 28 Chairman Statement 32 Group CEO Review 42 Financial Review Aishah Sofea Binti Isma Fariz, Age 14
28 YINSON HOLDINGS BERHAD | INTEGRATED ANNUAL REPORT 2023 CHAIRMAN STATEMENT Commentary by Mr Lim Han Weng, Group Executive Chairman On behalf of the Board, I am pleased to present Yinson’s Integrated Annual Report 2023. In the financial year under review, we continued to deliver strong and steady financial results, driven by our aim of creating a long-term and sustainable economy that is fair and equitable to all. We can only achieve a sustainable future if it is inclusive. To us, this means that we will anchor our strategic decisions around taking care of those who are most vulnerable and affected by the changes. Recommended final dividend of 1.0 sen per ordinary share for FYE 2023 PAT was RM588 million, an increase of 12.2% over FYE 2022 RM1.19 billion raised through rights issue exercise, oversubscribed by 22.31% USD720 million syndicated loan financing facility secured to finance FPSO Maria Quitéria’s construction Participated in Bursa Malaysia’s inaugural Voluntary Carbon Market
29 LEADERSHIP MESSAGES CHAIRMAN STATEMENT NAVIGATING A YEAR OF RECOVERY 2022 started with the world breaking free from the chains of the pandemic as countries lifted restrictions, embraced endemicity and rebuilt economies. The greater economic activity lifted consumer demand, created supply shortages and drove prices of food, energy and commodities higher, complicated by supply chain disruptions that were still recovering from the effects of the pandemic. The onset of the Russia-Ukraine conflict in February 2022 exacerbated the situation, pushing prices of commodities, energy and food even higher. Oil prices hit a high of USD127 per barrel in March 2022 and remained elevated for the rest of the year. As a result, inflation rose to multi-year highs in many economies, leading to central banks rapidly tightening monetary policy to subdue inflationary pressures. The higher inflation weighed on economic growth prospects, with the International Monetary Fund forecasting global growth of 3.4% in 2022, compared to the 6.0% achieved in 2021. Amid this backdrop, however, global demand for clean, affordable and stable energy continues to grow, which has helped drive expansion in all our business units. The Floating, Production, Storage and Offloading (“FPSO”) market, for example, continues to see strong demand for contractors like Yinson, who have an edge in emissions reduction technologies and a solid track record of on-time delivery and safety and operational performance. The broader effect of elevated energy prices is the acceleration of the energy transition, as more investments pour into developing renewable and alternative sources of energy. This has supported the progress of our renewables pipeline in our core markets of Latin America, the Asia Pacific and Europe. We are pleased that in the financial year under review, we tripled the capacity of our projects under construction and in development. Concurrently, our Green Technologies business charted remarkable growth in the area of electrification as the automotive and marine transport industries decarbonised aggressively. KEY MILESTONES In FYE 2023, we successfully secured financial resources to fund our FPSO projects under construction. In June 2022, our largest rights issue to-date amounted to RM1.19 billion and was oversubscribed by 22.31%. The proceeds from the rights issue fuelled our Group’s growth and expansion plans in the FPSO business and improved our net gearing and financial position. Additionally, in October 2022, we obtained a sixyear USD720 million syndicated loan financing facility from a consortium of local and international banks to finance the ongoing construction of FPSO Maria Quitéria. Then in late 2022, we issued RM360 million of Islamic notes under our Subordinated Perpetual Islamic Notes Programme to refinance existing perpetual bonds. In going to the market thrice during the year, we were encouraged by the strong reception received, despite tighter market liquidity in a rising interest rate environment. This was a clear vote of confidence in Yinson’s abilities to deliver value to our stakeholders and a testament to the effectiveness of our business strategies. STRENGTHENING OUR LEADERSHIP I am very pleased to welcome Puan Fariza binti Ali @ Taib as a Non-Independent Non-Executive Director, effective 31 May 2023. Puan Fariza is the Head of the Real Estate Investment Market Department at the Employees Provident Fund (“EPF”), and previously held the roles of Head of Fixed Income Portfolio and Head of External Fund Management. Her experience in the areas of portfolio management investments and capital markets will prove invaluable to the Group as we navigate the transforming economic landscape and continue to drive growth across our business units. Puan Fariza replaces Puan Rohaya binti Mohammad Yusof, who stepped down from the Board after faithfully serving as Non-Independent Non-Executive Director for over three years. Puan Rohaya’s extensive experience in finance, investments, policy and governance, has greatly strengthened our Board, and her valuable insights have guided us through one of the most pivotal periods of Yinson’s growth. We sincerely thank Puan Rohaya for her contribution and wish her all the best in all her future endeavours. The Group continued to evolve internally to support our business strategies in line with our rapid growth. From late 2022, we strengthened the leadership and key functions of our business units towards facilitating greater decision-making autonomy. This, plus the reorganisation of business activities into their respective business units, will result in stronger governance and decision-making according to the unique needs of each of our businesses and ensure that Yinson can continue building and growing in a sustainable manner. We also made changes at the Senior Management level with the position of the Group Chief Strategy Officer (“Group CSO”) being succeeded by Mr Chai Jia Jun, who was the Director of the Group CEO Office. Mr Daniel Bong, who previously held the position of Group CSO and Head of Group Corporate Advisory, has been appointed as the Chief Executive Officer (“CEO”) of Farosson, our newest business unit headquartered in Singapore. At Farosson, Daniel will spearhead Yinson’s foray into advisory solutions, investments and asset management with a focus on capital recycling activities and sustainable infrastructure investing.
30 YINSON HOLDINGS BERHAD | INTEGRATED ANNUAL REPORT 2023 DELIVERING VALUE In FYE 2023, the Group delivered a strong set of financial results, recording higher revenue of RM6.3 billion (FYE 2022: RM3.6 billion) mainly driven by FPSO Maria Quitéria and FPSO Atlanta, which commenced Engineering, Procurement, Construction, Installation & Commissioning (“EPCIC”) business activities in the current financial year. Correspondingly, PAT was RM588 million, an increase of 12.2% over FYE 2022. We have distributed RM29 million in dividends for FYE 2023, representing 1.0 sen per ordinary share declared for FYE 2023. Including the final dividend of 2.0 sen per ordinary share in respect of FYE 2022 paid in the current financial year, the total distribution to shareholders in FYE 2023 amounted to RM87 million. In addition, we have recommended a final dividend of 1.0 sen per ordinary share for FYE 2023 for shareholders’ approval at the forthcoming 30th Annual General Meeting (“AGM”). GOVERNANCE At Yinson, we continuously strive to improve our corporate governance standards through a strong commitment to ethics and integrity, exercising discipline in our risk management and sustainability practices while enhancing the quality of our disclosures. In the year under review, we updated the Board Charter to recognise the renaming of the Board Risk Management Committee (“BRMC”) to the Board Risk and Sustainability Committee (“BRSC”). This change further institutionalises and reinforces the management and oversight of sustainability in Yinson at Board-level. In the context of anti-bribery and anti-corruption, we enabled self-paced learning on Yinson’s Learning Management System (“LMS”) and translated our Anti-Bribery and Anti-Corruption (“ABAC”) Policy and Procedure Guide and other compliance-related policies and procedures to Portuguese, in line with our growth in Brazil. Additionally, both YHB and YP underwent their first Anti-Bribery Management System (“ABMS”) Surveillance Audit for the ISO 37001:2016 and received commendable feedback on the implementation of the system from Bureau Veritas, the external certification body. From a risk management perspective, we developed the climate risk and unique risk profiles for YGT and YP and appointed Risk Coordinators for key business units. In addition, the risk management database was digitalised to enable a single risk repository system which consolidates the risk data at a single source, with enhanced risk dashboard reporting. Yinson’s commitment to governance best practices has been recognised this year through a range of awards, such as the Industry Excellence Award under the energy sector at the MSWG-ASEAN Corporate Governance Award and two awards at the Global Good Governance Awards for Leadership in Sustainability and Excellence in Green Innovation and Solutions. For our dedication to balanced and transparent reporting, Yinson’s Annual Report won silver at both the Australasian Reporting Awards and the 7th Asia Integrated Reporting Awards. SUSTAINABILITY AT OUR CORE Yinson continues to make significant progress in building the sustainability of our business, aligning our decisionmaking, strategies and actions with our unyielding mission of making inclusive, community-focused ESG decisions. In this context, we are injecting urgency into our climate action. We joined the UNGC as a signatory member, further affirming our commitment to improving our environmental, labour and human rights and anti-corruption performance. Yinson was one of 15 companies to successfully participate in Bursa Malaysia’s inaugural Voluntary Carbon Market. We believe that putting a value on carbon is a step in the right direction for Malaysia as this can spur market players to more effectively manage their carbon footprint. We will continue to support the Voluntary Carbon Market and will participate in the development of its ecosystem. Our sustainability performance has earned us commendable ESG ratings. We were awarded ‘ESG Industry Top Rated Company’ by Sustainalytics, following a significant improvement in our performance in 2022 that placed us in the 2nd percentile of global energy companies. We also achieved a marked improvement in our ratings with FTSE4Good in 2022 to be placed among the top 25% of public listed companies (“PLCs”) on the FBM EMAS. These achievements were accompanied by a number of awards, such as ‘Gold’ at The Edge ESG Awards and ‘Pioneer in Sustainable Development Action’ recognition from UNGC Malaysia and Brunei. During the year under review, we continued to participate in corporate social responsibility (“CSR”) initiatives that empower communities and conserve the environment, guided by the nine SDGs that we align with as a Group. Under the Yinson Scholars Programme in Ghana, which has been ongoing since 2019, we doubled our scholarship recipients from 10 students to 20 students annually in 2022 and extended the programme to include undergraduate scholarships. Since inception, this programme has provided scholarships to 60 Senior High School students and five undergraduate students from low-income families. CHAIRMAN STATEMENT
31 We also built and furnished a new canteen, classroom block and library, organised a reading and spelling competition, conducted teacher training and donated laptops. In doing our part for the environment, we installed mooring lines and buoys at the Miri-Sibuti Coral Reefs National Park, Sarawak, which will prevent damage to coral reefs underwater. Our subsidiary in India, Rising Sun Energy, through a partnership with the Wildlife Trust of India (WTI) saved demoiselle cranes affected by the H5N1 virus and a leopard trapped in a well. In Kuala Lumpur, our employees volunteered in a tree planting activity with the Free Tree Society. These, and many more CSR activities, will continue to be an important part of how we do business. A STRONG, STABLE OUTLOOK As we look ahead, we remain optimistic about the future of our businesses, fuelled by the strong demand for energy. However, we also recognise the various uncertainties that exist in the markets we operate in. That is why we are committed to putting sustainability and ESG front and centre, making them the heart of our decision-making process. By doing so, we believe that we can weather the ups and downs of the energy market while delivering sustained value to our stakeholders. We are proud to be doing our part for the communities and the environment, and we believe that our foundation built on sustainability will continue to set us apart. With a long-term perspective and a commitment to doing what is right, we are confident that we can continue to grow and succeed, while making a positive impact on the world around us. LEADERSHIP MESSAGES The world must achieve net zero to survive; there is no doubt about it. Yet, net zero must not happen without a just and inclusive transition. We cannot let the desire for perfection be an obstacle that prevents us from doing good. As we embark on this journey, especially as a forerunner in this space, we are likely to make some mistakes. However, we are determined to learn from those mistakes and move forward stronger and wiser than ever. As we step forward boldly, we believe we will discover opportunities that could potentially be bigger than any industrial revolution the world has ever seen. We are excited about the opportunities that lie ahead to embrace the energy transition and we will continue to strengthen our rights to win in partnership with many other like-minded stakeholders. ACKNOWLEDGEMENTS In closing, we would like to say thank you to all those who have contributed to our success. Thank you, my fellow Board members for your wisdom and counsel in guiding the Company forward. To our shareholders and investors, we value the trust you have placed in us and remain committed to delivering long-term value. To our clients and partners, we are grateful for the opportunity to work with you. We remain steadfast in delivering on our commitments to the best of our abilities. For the communities where we operate, we recognise the importance of being good corporate citizens and are committed to creating positive environmental, social and economic impacts. And finally, to our employees and their families, we deeply appreciate your hard work and dedication. You are the backbone of our Company, and our success is directly tied to your contributions. We look forward to continuing to work together to achieve our goals. CHAIRMAN STATEMENT
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