43 CORPORATE GOVERNANCE ENRA GROUP BERHAD ANNUAL REPORT 2023 c. Tender, quotation and proposal management The preparation and timely management of tenders, quotations and proposals to meet prospective clients’ requirements whilst taking into account the right pricing structure is important to the Group. The following processes and parameters have been put in place to ensure that the Group’s order books remain healthy. They cover the general approach undertaken when bidding for job project opportunities. i. General process and considerations • An asset-light approach (involving minimal upfront cost) where possible. • Ensuring that the opportunity is within the ambit of Management’s expertise and/or that it is sufficiently managed by existing management/promoters (i.e., in situations where an ongoing/operating business or company acquisition is pursued). • Preliminary desktop research and assessment on the industry involving the opportunity (case-by-case basis depending on the type of opportunity). • Where Management has very basic knowledge of the industry, external advisors shall be consulted (e.g., industry experts, tax consultants, regulators etc.). • Detailed financial projections to be prepared with assistance from the Group Finance Department on financing, accounting and tax issues. If the opportunity is viable, Group Commercial or the head of the subsidiary overseeing it shall formally propose and seek EXCO’s approval to pursue the opportunity further. Subject to prospective clients’ requirements and approvals, the involvement of potential business partners and the expertise, financial position and track record that they contribute, are considered for such opportunities. ii. Proper assessment of prospective clients’ 4Cs is important for the sake of business sustainability. The 4Cs are: • Character – reputation, integrity, ability and willingness to contribute financially; • Credentials – proven track record; • Capabilities – present and potential skillsets; and • Connections – for referral and to generate recurring revenue. d. Ensuring Project Continuity i. PCML contract at Yetagun, Myanmar Our ship Ratu ENRA was served with a Writ of Summons in Action in Rem and Warrant of Arrest by PTCMS and was held on Port Dickson water for a period of more than three months from 27 May 2022 to 5 September 2022 due to an on-going arbitration. ENRA opted for an out-of-court settlement with PT CMS due to the urgency to deploy Ratu ENRA to the secured project with GPM in ensuring continuous income flow to the Group. The net impact from the settlement is as follows; • Total impact on the profit and loss from the settlement – RM10.15 million. • Total revenue for the nine-month contract of approximately RM30.13mil (US$24K @ (183+96) @ MYR:USD of RM4.5) from the contract with GPM. • New BBC contract with 7Seas, a company incorporated in the United Arab Emirates that could generate revenue at a minimum of approximately RM41.0 mil over five years with a mutual option to extend it further for another five years. The contract period will commence right after the contract with GPM ends. Sustainability Report (Cont’d)
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