STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL Risk area Control measures taken to mitigate the risks Credit, financial and liquidity risks • The Group faces the threat of delays in payment by customers for work done which will eventually affect the Group’s cash flow, and heighten the risks of debts becoming unrecoverable • Background check of prospective customers prior to accepting any engagement from such parties. • Close monitoring of collection by the finance department with weekly updates to the senior management as to collection received and incidence of delay. • Timely follow up with the customers on overdue payment and retention sum. • In situations where customer is unable to adhere to the agreed credit terms, reasons for the delay will be examined. If there are sufficient commercial justifications, settlement which include an extension of the time for payments or accepting tangible assets such as properties in lieu of cash payment will be negotiated when recovery of debt in cash in remote. • Avoid over concentration of sales and credit exposure to any customer to prevent over-dependence on any customer. • Actively monitor the Group’s banking facilities to ensure the facilities are sufficient to meet the Group’s working capital and capital expenditures requirement, and negotiate with bankers for credit facilities features which enable greater flexibility in the Group’s financial resources management. • Issuance of Sukuk, where necessary, to meet the Group’s funding needs. Market risks • The Group operates in a competitive environment and failure to compete effectively against its existing competitors and new market entrants will affect its performance • Establish quality control procedures and project tendering guidelines to ensure quality services and products to customers, and cost efficiency. • Nurture close relationship with customers, sub-contractors and suppliers. • Establish wide range of services and products to diversify product risks and reduce reliance on any particular services or products for revenue. • Focus in more technical demanding products and services to create a market niche or speciality. • Bid for projects jointly with parties which have complementary strength to the Group. • Diversify base of customers, sub-contractors and suppliers. Human resource risks • The Group believes its future success largely depends on the Group’s ability to hire, develop, motivate and retain competent employees and key personnel. The Group’s key management team may be difficult to replace as they have been instrumental in the development, growth and success of the Group • Succession planning in human resources. • Competitive remuneration packages to attract, reward, retain and motivate talents. • Appropriate training and development to nurture and groom existing staff force. • Internship program for university students to identify potential talents that the Group can employ. Corruption risks • Corruption risks exist across all business sectors, in one form or another, from bribery to extortion and embezzlement to cronyism. Corruption can have serious consequences for businesses’ financial health and reputations, impact the quality of goods and services and it can prevent businesses from achieving maximum efficiency and profitability. The Group is not spared from corruption risks • Implemented ABC Policy which sets out the responsibilities of the Group to comply with laws against bribery and corruption and provide guidance to the Directors, employees and business associates on standard of behaviour to which they must adhere to and how to recognise and deal with bribery and corruption issues. • Implemented the Code and Whistleblowing Policy. • Declaration of actual or potential conflict of interest situation by key senior management and tender award committee. Such personnel shall abstain from decision making where there is actual or potential conflict of interest situation. • Adopts segregation of duties for job functions. Designated personnel for preparing, verifying and approving each transaction/activity is documented in written procedures. • Provide training on anti-bribery and corruption to the Personnel. Kimlun Corporation Berhad | Registration No. 200901023978 (867077-X) 61
RkJQdWJsaXNoZXIy NDgzMzc=