67 VALUE CREATION AT YINSON | TRADE-OFFS TRADE-OFFS Yinson’s strategic approach to managing trade-offs across its six capitals showcases a robust commitment to sustainable growth and long-term value creation. Through careful prioritisation, strategic investments, and strong governance, we effectively navigate the complexities of balancing immediate needs with future goals. This holistic approach ensures that the company meets its current operational requirements while laying a strong foundation for continued success and innovation. TRADE-OFFS HOW WE MANAGE THE TRADE-OFFS Financial Capital Yinson faces a significant trade-off when it comes to maintaining highly liquid assets and bank balances. These reserves boost stakeholder confidence and ensure financial stability. However, this approach can limit our ability to invest in Manufactured, Intellectual, and Human Capitals, which are essential for growth and innovation. Additionally, the focus on delivering key FPSO projects means that major new investments are on hold until these projects start generating cash flow. We maintain a strong order book, now at over USD 22 billion, and making sure we have robust contracts with solid counterparties, ensuring the steady and longer term inflow of cash to the Group. We focus on long-term value creation by being prudent, adjusting the pace and timing of our growth according to market conditions. We also invest in renewables, green technologies, and new business ventures that hold great future potential. This strategy is supported by tactical financial maneuvers, such as strategically reprofiling debt repayments and exploring external capital sources to maintain liquidity. Manufactured Capital The commitment to delivering three FPSO projects presents a trade-off for Yinson. While prioritising these projects ensures future stable income, it also means that other business activities may progress at a slower pace. This focus on FPSO delivery can impact growth plans of other businesses in the short term. We have aligned our business strategy to prioritise the timely delivery of FPSO projects. This ensures that we can capitalise on the current favourable market conditions for FPSOs which will help maximise profitability and improve Financial Capital. This will enable us to grow our Manufactured Capital in future when market conditions are right, as we would have accumulated enough Financial Capital to facilitate this. Intellectual Capital Investing in the R&D of green technologies, and enhancement of corporate governance, cybersecurity, and vendor screening add value to our Intellectual Capital. However, these investments impact Human and Financial Capitals due to the associated costs. Moreover, implementing new technologies, such as carbon capture and advanced digital solutions, requires substantial financial resources, presenting a further trade-off. We leverage partnerships to develop new technologies and innovations surrounding energy infrastructure and digitalisation. Our investments into R&D are also premised on unlocking future revenue streams. Projects like Project Polaris exemplify our commitment to digitalisation and sustainability, optimising asset performance through advanced technology. Continuous improvement of governance systems and comprehensive training programmes ensure business continuity and compliance. Human Capital Expanding the workforce to support Yinson’s growth plans impacts Financial Capital due to increased costs associated with attracting and retaining talent. Additionally, investments in training, learning & development and health and well-being programmes have short-term repercussions on productivity and a consistent use of Financial Capital. Yinson navigates this trade-off by investing in a thriving workplace environment that emphasises culture, diversity, career progression and meaningful work. By benchmarking practices to remain an employer of choice and focusing on high performance, we ensure that we have the right people in place to execute our strategies effectively while managing financial resources prudently. Social & Relationships Capital Maintaining high liquid assets to carry out high-quality stakeholder engagement activities can limit investments in other capitals, such as Manufactured and Intellectual Capitals. Additionally, engaging suppliers and communities in comprehensive ESG initiatives requires resources that could be used for immediate business needs, presenting a trade-off between short-term operational efficiency and long-term relationship building. Yinson manages this trade-off by committing to robust ESG initiatives, including detailed supplier site audits and proactive community engagement programmes. We ensure strong stakeholder relationships through robust stakeholder engagement and open dialogue. By actively encouraging our stakeholders to join us in the energy transition, we build long-term trust. This approach demonstrates that while immediate business needs are important, the benefits of strong Social & Relationships Capital outweigh the short-term resource allocation. Natural Capital Our main business activity as an oil & gas equipment and service provider impacts Natural Capital. We have experienced higher operational activities, in line with shifting market conditions. This has increased our energy consumption, emissions and discharges to the environment. This may impact our ability to achieve our short-term Climate Goals. Yinson remains committed to long-term Climate Goals and are proactively implementing measures to realign our emissions with our projections. Investments in renewable energy projects, green technologies, and low-carbon solutions such as CCS and DAC are key components of this strategy. While it remains a challenge to significantly improve the efficiency of our existing fleet, our new assets are designed to maximise energy efficiency, while lowering emissions through innovative technologies. Yinson continues to maintain a robust environmental management system with stringent standards.
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