STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL Risk area Control measures taken to mitigate the risks Environmental, social and governance (“ESG”) risks • The Group faces a variety of ESG-related issues and some of them have the potential to be material and cause financial or reputational damage • Implement the guidance under Environment Management System Certification – ISO 14000:2000 in the Group’s pre-cast operation to minimise the environmental impact. • Continuous monitoring and producing quarterly reports of environment impact of quarry operation. • Social impact assessment of property development project in compliance with the applicable rules and regulations. • Appointment of consultants to advise on material ESG topics and development of materiality matrix. • Implement standard policies and procedures on key operation processes. • Implement Anti-Bribery and Corruption Policy (“ABC Policy”) and internal guidelines thereunder to ensure that the Group’s business is conducted in an ethical manner with integrity and honesty. • Implement the Code of Conduct (“Code”) which sets out the standards which the directors, officers and employees (“Personnel”) of the Group are expected to comply in relation to the affairs of the Group’s businesses when dealing with each other, shareholders and the broader community. This Code focuses on areas of ethical risk, provide guidance to Personnel to help them to recognise and deal with ethical issues, provide mechanisms to report unethical conduct, and help to foster a culture of honesty, integrity and accountability. • Implement Whistleblowing Policy which provides means by which an individual can report through established channels, concerns about unethical behavior, malpractices, illegal acts or failure to comply with regulatory requirements that is taking place/has taken place/may take place in the future, without fear of reprisal or victimisation. • Implement Conflict of Interest (“COI”) Policy and maintain a robust framework consisting of well-defined processes and procedures to ensure that the Group’s interests are safeguarded in a conflict of interest situation. • Engage independent internal audit function to provide reasonable assurance on the effectiveness of the system of internal control within the Group. Risk management process is being audited to provide assurance on the management of risks. Credit 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. 065 Annual Report 2023
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