33 ANNUAL REPORT 2024 ANTICIPATED AND KNOWN RISKS As with all business organisations, we face diverse risks which may have an effect on our business and our profitability, if they are not managed well. To manage our risks, we have established a Risk Management Framework to identify risks which are material to our business and take active steps to mitigate them so as to minimise the occurrence and impact of such incidents. Some of the key risk areas which we have identified are listed below, together with the mitigating factors which we have taken. Dependency on PETRONAS Licence and PCC In order to be eligible to be a panel contractor and/or participate in tenders issued by PCSB, PACs and oil and gas contractors in Malaysia, we must have a valid PETRONAS licence and meet the SWEC code requirements, details which are contained in Section 6.13 of our IPO prospectus dated 26 March 2024. Leveraging on this licence, we had successfully secured the PCC from PCSB and various other PACs in April 2024 to provide offshore support vessel services in respect of AWBs, AHTS and PSV. Such PCC status is for a period of 3 + 3 years, with the option to extend at PCSB and PACs option. In FYE 2024 and for the foreseeable future, the majority of our Group’s revenue is dependent on us maintaining the PETRONAS licence and our PCC status. In the event if we lose our PETRONAS licence, we will not only lose the PCC but also face restrictions to secure new contracts from PCSB, PACs as well as oil and gas contractors. This could lead to a significant decline in our revenue unless we are able to secure other chartering contracts as replacement. To this end, we strive to ensure full compliance to the PETRONAS licensing requirements and PCC terms and conditions at all times. Nevertheless, should we lose our PETRONAS licence, we may still continue to carry out existing chartering contracts with PCSB, PACs and oil and gas contractors as our PETRONAS licence is a pre-requisite only at the bidding for contract stage and our chartering contracts do not contain provisions for termination solely due to loss of the PETRONAS licence or the PCC. Further, since first quarter of 2025, we have embarked on geographical diversification of our revenue, whereby we have deployed 2 vessels, one each to the Middle East and India, to reduce the dependence on the PETRONAS licence and PCC. Operational cost pressures during off-hire period Off-hire period refers to the period when our own vessels and bareboat chartered vessels are not chartered by any charterer. During this period, we have to incur daily operational costs, such as daily crew costs, berthing fees and marine gas oil expenses. These operational costs directly impact our financial performance, as the vessels do not generate any income during the off-hire periods. To minimise such financial impact, we generally berth the vessels that are expected to remain offhire for more than 1 month at a shipyard or port, allowing us to save on marine gas oil costs by utilising shore electricity supply to power our vessels, as well as to reduce the daily crew costs. Additionally, we strategically schedule repairs and maintenance work, including dry docking, during the off-hire periods to reduce berthing fees. However, there is no guarantee that we will be able to carry out such cost-saving measures effectively and as such, any prolonged off-hire period for our vessels may have a material adverse effect on our financial performance. Short-term charters with risks of delays and/or termination We derive a majority of our revenue from the charter of AWBs, of which we have 9 in our fleet and also charter third-party vessels. Generally, the charter period for AWBs is short-term in nature, typically ranging from 1 to 8 months. Some of the chartering contracts include an option to extend the charter term at our customers’ discretion. As our chartering contracts are not on a long-term basis, there is no assurance that we will be able to consistently secure new chartering contracts through tender or negotiation processes nor our customers will continue to engage our services upon the completion of our existing chartering contracts. MANAGEMENT DISCUSSION AND ANALYSIS (cont’d)
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