57 VALUE CREATION AT YINSON | STRATEGY REVIEW #3 Building our ‘war chest’ In recent years, Yinson has gone through a phase of intensive, high CAPEX expansion. With the CAPEX into growth assets in the FPSO business, as well as the introduction of Yinson Renewables, Yinson GreenTech and Farosson into our fold, we acknowledge the need to build a different kind of war chest and capital structure. The strengthened tax, treasury and finance functions for various businesses have worked hard in the period under review to build strong liquidity management strategies that serve to fuel continued growth, buffer against uncertainty, safeguard the company, maintain market confidence and allow greater strategic manoeuvring. In 2023 and to date, the Group has embarked on several initiatives that have allowed us to strategically reprofile our debt repayments. Some notable initiatives include: • August 2023: Yinson Production secured a USD 230 million term loan facility in relation to FPSO Maria Quitéria with Global Infrastructure Partners. • December 2023: Yinson Production closed a corporate loan facility of up to USD 500 million. • March 2024: The Group completed a private placement that raised RM283.2 million to fund our energy transition businesses. • April 2024: Yinson Production placed a USD 500 million senior secured bond issue in the Nordic bond market, which marked our debut in the international capital markets. • April 2024: Yinson Production secured a USD 1.3 billion project financing for FPSO Agogo, a multi-tranche financing with a maturity of up to 10 years post-delivery of the asset. We also completed several other financial exercises that support our transition journey. Our success in this area has allowed us to further free up our free cash flows to bolster growth. These tactical financial strategies increase the attractiveness of our investor proposition as we continue to explore strategic partnerships to further unlock the value of our businesses. #4 Keeping our covenants Yinson’s financing activities, primarily through the drawdown of loans and borrowings, are used to fund our ongoing and new FPSO projects, finance our growth, and strengthen our cash position. Keeping our covenants are absolute requirements when planning and deploying our capital strategies and market activities. This is both a risk management measure and a way to ensure that we are building our businesses on the right capital structure. #5 Safeguarding our credit ratings Our strong credit ratings are an important assurance of our reliability and trustworthiness. Over the years, our strong ratings have instilled investor confidence, opened access to capital at more favourable terms, and provided access to more investment opportunities. Yinson has A1/stable and A+/stable ratings from RAM Ratings and MARC respectively. Both agencies acknowledged Yinson’s strong business profile, underpinned by recurrent sizeable long-term FPSO contracts which are unaffected by crude oil prices. RAM and MARC also noted Yinson’s strong track record of FPSO deliveries and operations. Further expanding and improving our investor ratings to reflect our constantly evolving business outlook and global presence is one of our strategic workstreams. SEIZING OPPORTUNITIES WITHIN KEY MACROECONOMIC TRENDS In response to mounting inflationary pressures and economic recovery, central banks worldwide embarked on a series of interest rate increases to balance growth and price stability. These actions had significant implications on capital availability and valuations and returns on assets, affecting borrowing costs, investment decisions, and overall economic dynamics globally. Here, Yinson’s excellent track record of delivery and operations, prudent financial management and long-standing financial partnerships allowed us to continue securing the capital needed to execute our growth plans and manage our debt profile well. Ongoing geopolitical tensions, triggered by the RussiaUkraine conflict, have led to sanctions, soaring energy prices and recession risks. These contribute to the most complex and severe energy crisis the world has ever seen, with conversations about energy security dominating the world stage. This has led to strong opportunities for the FPSO industry. Yinson’s position as one of the top FPSO providers globally puts us in a favourable position to secure balanced contracts that suit our capabilities and climate commitments. Our activities in renewables, green technologies, and sustainable asset management have also seen an increase in opportunities as the world seeks to diversify its energy sources and build critical infrastructure for clean energy distribution. Cash flows and liquidity, pg 41 - 42; Business Management & Performance, pg 120 - 122.
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