34 KEYFIELD INTERNATIONAL BERHAD 202001038989 (1395310-M) ANTICIPATED AND KNOWN RISKS (CONT’D) Short-term charters with risks of delays and/or termination (Cont’d) Additionally, we may be subject to risks of delays or postponements in the commencement of a chartering contract due to unforeseen circumstances or on a customer’s request, for which there is no provision for any compensation clause. The vessel will have to remain idle if we cannot secure another chartering contract in time, or if the time between the original commencement date and postponed commencement date is too short to undertake another chartering contract. Hence, any delays could result in a loss of business opportunity for us, consequently leading to a loss in potential revenue. The chartering contract may also be subject to unilateral termination by our customer, which may or may not result in a compensation sum payable to us, depending on our negotiation with the customer, which is a practice adopted in our industry. To mitigate this risk, we have obtained long-term charter contracts with periods of more than 1 year for geotechnical vessel, barge and both our AHTS, reducing our Group’s exposure to short term contracts of less than 1 year. Operating in a highly regulated industry with stringent compliance requirements We are operating in a highly regulated industry where we are required to comply with laws, regulations, rules and directives from relevant authorities. In particular, we are subject to audits for our ship management system, including health, safety and environmental (“HSE”) management and processes, which are carried out by the Marine Department Malaysia and as part of the Offshore Vessel Management and Self-Assessment requirements to ensure our regulatory compliance. We are also required to adhere to the relevant environmental conventions, protocols and regulatory framework under the International Maritime Organisation, which outlines a range of regulations to prevent pollution from ships, including rules on oil pollution, sewage, garbage disposal and air pollution. To strengthen our compliance efforts, we have put in place several measures and initiatives, amongst others, which include: - • Annual surveillance audits on our International Organisation for Standardisation (“ISO”) integrated management system, including ISO 9001, ISO 14001 and ISO 45001 certifications which were obtained in April 2024; • Establishment of a governance, risk management and compliance ("GRC") function in August 2024 to undertake risk assessment and enhance our Group's risk management, internal control system and compliance matters; • Implementation of an emergency response plan to ensure timely and effective handling of any disaster and/or emergency incident; • Training provided to our crew members on environmental management and pollution prevention; • Proper handling, storage, disposal and recording of scheduled waste by our dedicated competent Quality, Health, Safety and Environmental (“QHSE”) personnel; and • Installation of nitrogen oxides-certified diesel engines onboard vessels to achieve international emission standards. Compliance with such conventions, protocols, laws and regulations may require significant expenditures, potentially increasing our operational costs and impacting our financial performance. Nevertheless, failure to comply with any relevant laws and regulations may result in financial penalties, administrative or legal proceedings against us including the termination or suspension of our business activities. MANAGEMENT DISCUSSION AND ANALYSIS (cont’d)
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