44 YINSON HOLDINGS BERHAD | INTEGRATED ANNUAL REPORT 2024 The Group applies Net Gearing Ratio (calculated as ‘Total Loans and Borrowings’ less ‘Cash and Bank Balances plus Money Market Investments’ divided by ‘Total Equity’) as a key indicator to manage its operational funding structure. The ratio increased to 1.66 times in the current financial year as compared to 1.23 times in FYE 2023 due to the Group’s higher leverage on additional loans drawn down to fund project execution needs, which was moderated by the Group’s enhanced total equity position of RM8.0 billion. As at 31 January 2024, RM9.6 billion of loans and borrowings are project financing loans for FPSO JAK, FPSO Helang, FPSO Anna Nery, FPSO Maria Quitéria, Rising Bhadla 1 & 2 Solar Parks and Nokh Solar Park, which are structured to ensure repayment over the course of the assets’ contracted periods. Some key features of Yinson’s project financing loans are as below: • Project financing loans are non-recourse to Yinson once operational with Yinson’s guarantee being released from the project financing loan, which minimises the risk of these loans to Yinson’s liquidity. • Once the project financing loans become non-recourse, the project financing lenders are only entitled to repayment from cash flows of the projects the loan is financing, and not from any other assets of Yinson. • Project financing loans for FPSO JAK, FPSO Helang, Rising Bhadla 1 & 2 Solar Parks and Nokh Solar Park are non-recourse. The project financing loan for FPSO Anna Nery became non-recourse on 22 March 2024. In assessing the Group’s ability to repay its loans and borrowings, the Management refers to the Adjusted Net Debt/Adjusted Core EBITDA ratio. This ratio indicates the number of years’ profits that are needed to cover outstanding loans and borrowings. FYE 2024’s ratio increased to 4.32 times as compared to 3.94 times as at FYE 2023, as the FPSO Maria Quitéria and FPSO Atlanta projects are under construction and FPSO Agogo commenced construction in the current financial year. During the construction phase, this ratio is temporarily elevated as collections from operations have not yet commenced whereas the project financing loan is being drawn to finance the construction. This increase in Adjusted Net Debt/Adjusted Core EBITDA ratio is manageable because project financing loan repayments are only scheduled to commence after first oil. As the Group continues to grow, we will continuously assess and determine the appropriate financing strategy for the Group to ensure an optimal mix of funding of debt and equity markets to support future projects. CLOSING REMARKS As we navigate the dynamic landscape of today’s business environment, I underscore the critical role that adaptability and decisiveness plays in our success. External forces such as economic shifts, technological disruptions and global events can bring about new risks. To adapt to this environment, in 2023, we decentralised our organisation to empower greater decision-making autonomy at business unit-level, while retaining active stewardship at Group. We have invested into building an experienced global finance team and developed robust financial strategies and processes by a continued focus on cross functional and cross business unit collaborations and communications. We have seen success from this exercise, with the strengthening of corporate functions for all our key businesses. Through this, we keep raising the standards of information required to make better business decisions and build greater agility to manage our financial risks and capitalise on opportunities. FYE 2024 13,089 2023 7,778 2022 5,683 2021 4,102 2020 2,475 Adjusted Net Debt (RM million) FYE 2024 4.32 2023 3.94 2022 3.85 2021 2.68 2020 2.86 Adjusted Net Debt/Adjusted Core EBITDA (RM million)
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