SEMBCORP MARINE ENGINEERING GROWTH IN UNPRECEDENTED TIMES ANNUAL REPORT 2020 CONTENTS 2 2020 Highlights 4 Our Integrated Global Platform ENGINEERING 8 SEMBCORP MARINE’S Chairman and CEO’s Joint Report GROWTH IN 16 UNPRECEDENTED TIMES Significant Events, Awards and Accolades The COVID-19 pandemic has brought about a sharper focus on business agility 22 and responsiveness. In the face of waves of Group Financial Review challenges brought on by the pandemic, the Group demonstrated its ability to support its customers across a myriad of operational 28 disruptions. At the same time, we continued Operations Review to execute on several key strategic initiatives to augment the Group’s future and enhance 35 shareholder value. Board of Directors We are actively diversifying into new and existing markets, and expanding our range 40 of sustainable product solutions for clean Senior Management energy, such as offshore wind, electric and hydrogen fuel cells, LNG, nearshore solutions and electrification-ready midwater & harsh 41 environment solutions. Corporate Structure As part of our long-term strategy to successfully compete for new opportunities in the global 42 arena, we are acquiring and developing new Corporate Directory innovations and technologies, and enhancing our production capabilities. Sembcorp Marine is 43 well-positioned to seize exciting opportunities in Shareholders’ Information a dynamic and complex business environment, anytime and anywhere. 45 Investor Relations 49 Corporate Governance 68 Risk Management Sembcorp Marine’s transformation drive inspired the front cover of our Annual Report. As the world pivots towards cleaner, greener and renewable energy, Sembcorp Marine is evolving into a provider 76 of innovative and sustainable solutions for the offshore, marine and Compliance energy industries. We are engineering Sembcorp Marine’s growth in strategic areas of Renewables, Process, Gas, Ocean Living and Advanced Drilling Rigs, represented as radiating blades of a propeller 78 with immense rotational power to take the Group forward in its Our Sustainability strategic transformation. Cover images (clockwise from top): Small Waterplace Area Cylindrical Hull (SWACH) Wind Platforms; Battery-powered Ferries; 80 LNG-Battery Hybrid Tug; Jurong Espadon 3T Drillship; and Circular Financial Statements Hull Midwater and Harsh Environment Solution OUR CORE VALUES CUSTOMER ALIGNMENT Meeting customers’ needs is fundamental to our success. We provide innovative solutions that INTEGRITY are aligned with the INNOVATION We perform our duties changing requirements We believe innovation with honesty, dedication and expectations of our and creativity are essential and respect for customers and build for staying ahead of the confidentiality. We value lasting relationships with competition. We achieve loyalty, trustworthiness them based on trust and industry leadership through and openness as essential shared purpose. constant innovation personal attributes in our in technology and corporate culture. engineering solutions. CUSTOMER ALIGNMENT INTEGRITY INNOVATION SUSTAINABILITY Continuous Growth HEALTH, SAFETY & Supported by ENVIRONMENT QUALITY 8 Core Values TEAMWORK PEOPLE-CENTRIC COMMUNITY RESPONSIBILITY HEALTH, SAFETY QUALITY & ENVIRONMENT We are committed We are committed to to achieving quality promoting a healthy and standards in fulfilling our safe work environment customers’ requirements. for our customers, We uphold Quality as we employees, contractors do in Health, Safety and and the community. We TEAMWORK PEOPLE-CENTRIC Environment. take responsibility for We work together as We respect and value our personal safety and one cohesive team, with every individual in accountability for the mutual trust and respect, our organisation. We safety of others. We also to achieve our collective provide our people with take concrete steps to goals. We embrace opportunities, rewards ensure environmental diversity, foster close and recognition, as well as sustainability. relationships and develop COMMUNITY a conducive environment team spirit through RESPONSIBILITY to enjoy their work and effective communication We view our business realise their potential. and caring for one as an integral part another. of society. We are committed to being a responsible corporate citizen, both locally and globally, by building a caring organisation and contributing to the community. MISSION We are a global company providing innovative and sustainable engineering solutions, products and services to the offshore, marine and energy industries. VISION To be the partner of choice for the offshore, marine and energy industries. CORPORATE PROFILE SEMBCORP MARINE provides innovative engineering solutions to the global offshore, marine and energy industries. Headquartered in Singapore, the Group has close to 60 years of track record in the design and construction of rigs, floaters, offshore platforms and specialised vessels, and in the repair, upgrading and conversion of different types of vessels. Sembcorp Marine’s solutions focus on the following areas: Renewables, Process, Gas, Ocean Living and Advanced Drilling Rigs. Sembcorp Marine’s customers include major energy companies, owners of floating production units, shipping companies and cruise and ferry operators. They are supported by the Group’s commercial units of Rigs & Floaters, Repairs & Upgrades, Offshore Platforms and Specialised Shipbuilding. Sembcorp Marine operates shipyards and other facilities in Singapore, Indonesia, the United Kingdom, Norway and Brazil. RIGS & FLOATERS SPECIALISED SHIPBUILDING REPAIRS & UPGRADES OUR SOLUTIONS, PRODUCTS AND SERVICES ARE SUPPORTED BY 4 COMMERCIAL UNITS Images (from top): Wind Turbine OFFSHORE Installation Vessel, LNG-Battery PLATFORMS Hybrid Tug, Floating Storage Regasification Unit and Jacket Foundations for Offshore Platforms 2020 HIGHLIGHTS SUCCESSFULLY DELIVERED: • 18 projects in LNGC/FSRU/FSU sector (World No. 1) • Wind Farm Jacket Foundations for Hornsea 2 Offshore Wind Farm • Tangguh LNG Modules SECURED EARLY WORKS CONTRACT TO DESIGN, CONSTRUCT AND INSTALL THE MOST POWERFUL OFFSHORE CONVERTER PLATFORM FOR RWE RENEWABLES SIGNED MASTER RESEARCH COLLABORATION AGREEMENT WITH A*STAR TO SET UP JOINT LAB@TBY SUCCESSFULLY TRIALED REMOTE SURVEYS FOR VESSELS WITH BUREAU VERITAS AND NOKIA # Includes asset impairments and provisions of $144 million post-tax ^ Comprises $1.51 billion of projects under execution and $0.31 billion of ongoing Repairs & Upgrades projects with firm deliveries in 2021 GROUP REVENUE $1.51 BILLION NET LOSS $583# MILLION NET ORDER BOOK $1.82^ BILLION SEMBCORP MARINE 4 ANNUAL REPORT 2020 OUR INTEGRATED GLOBAL PLATFORM Sembcorp Marine – One integrated team operating in strategic locations to serve customers globally Sembcorp Marine’s global network includes facilities in Singapore, Indonesia, the United Kingdom, Norway and Brazil. These facilities operate as pooled resources, supporting projects of any scale and complexity for deployment in worldwide locations. SINGAPORE ADMIRALTY PANDAN TUAS BOULEVARD NORWAY UNITED KINGDOM SINGAPORE INDONESIA BRAZIL SEMBCORP MARINE ANNUAL REPORT 2020 5 SINGAPORE ADMIRALTY YARD PANDAN YARD TUAS BOULEVARD YARD INDONESIA KARIMUN ISLAND BATAM ISLAND SEMBMARINE KARIMUN YARD SEMBMARINE BATAM YARD BRAZIL UNITED KINGDOM NORWAY ESPIRITO SANTO LOWESTOFT, SUFFOLK SEMBCORP MARINE TECHNOLOGY COMPANIES SEMBMARINE ARACRUZ YARD SEMBMARINE SLP YARD (Estaleiro Jurong Aracruz) OUR VALUE-ADDING CAPABILITIES Sembcorp Marine’s new 30,000-tonne capacity gantry cranes with 100m hook height at Tuas Boulevard Yard will greatly enhance our value proposition as a one-stop production centre for fabricating, assembling and installing larger, heavier and more complex projects. Mega-structures can be completely integrated before leaving the yard, instead of being transported out in several smaller parts requiring further assembly with incurrence of additional costs and logistics. INTEGRATING SUSTAINABILITY INTO OPERATIONS Solar panels on the roof of our steel fabrication workshop provide clean energy for up to 30% of maximum production capacity. With a capacity of 4.5 MWp, the panels can generate up to 5,000 MWh of clean energy, enough to power some 1,100 four-room flats annually. SUSTAINABLE CAPABILITIES EMBRACING SUSTAINABILITY, INNOVATION, SAFETY, QUALITY AND EFFICIENCY AS PILLARS OF OUR OPERATIONS. A smart and sustainable yard, Sembcorp Marine Tuas Boulevard Yard harnesses the latest technologies and is a hub for test-bedding innovations that enhance safety, quality, time and cost objectives for customers. Equipped with some of the region’s deepest and widest dry docks, and state-of-the-art infrastructure, INTEGRATED our yard is an integrated one-stop facility capable of engineering, construction, integration and the commissioning of innovative solutions for the offshore, SYNERGIES marine and energy industries. CHAIRMAN AND CEO’S JOINT REPORT Sembcorp Marine has demonstrated an ability to“ adapt and reinvent ourselves. We delivered healthy profits consistently before the collapse of oil price in 2015. We believe we have both the resolve and ability to pivot and manage the Group’s strategic transition, to capture new and emerging opportunities from the continuing global transition towards a cleaner energy mix, growing scale and profitability over time. Tan Sri Mohd Wong Weng Sun ” Hassan Marican President & Ceo Tan Sri Mohd Hassan Marican (Chairman) Chairman DEAR FELLOW SHAREHOLDERS, production activities in April with inevitable delays to project