MANAGEMENT DISCUSSION AND ANALYSIS (CONT’D) Operational cost pressures during off-hire period The off-hire period refers to the period when our own or bareboat-chartered vessels are not deployed under any charter. During such periods, we continue to incur daily operating costs, including crew wages, berthing fees and marine gas oil expenses, without generating corresponding revenue. These costs directly impact financial performance, particularly during the monsoon season when vessel utilisation rates are typically lower. To mitigate the financial impact of off-hire periods, we adopt several cost-saving measures. Vessels expected to remain offhire for more than 1 month are generally berthed at shipyards or ports, enabling a reduction in marine gas oil consumption through the use of shore electricity supply where available, as well as lower daily crew costs. Additionally, we strategically schedule repairs and maintenance work including dry docking and special surveys during off-hire periods to optimise resource utilisation and minimise berthing fees. Nevertheless, there is no guarantee that these cost-saving measures can be implemented effectively and as such, any prolonged off-hire period for our vessels may have a material adverse effect on our financial performance. To address this, we continue to focus on improving vessel utilisation including by diversifying our geographical deployment. In FYE 2025, we deployed vessels to the Middle East and India, thereby reducing reliance on domestic contracts and mitigating seasonal downtime. ANTICIPATED AND KNOWN RISKS (CONT’D) Operating in a highly regulated industry with stringent compliance requirements We are operating in a highly regulated industry where we must comply with applicable laws, regulations, rules and directives issued by relevant authorities. In particular, the ship management systems including health, safety and environmental (“HSE”) processes, are subject to audits by the Marine Department of Malaysia and assessments under the Offshore Vessel Management and Self-Assessment (“OVMSA”) framework to ensure regulatory compliance. We are also bound by international conventions and protocols under the International Maritime Organisation (“IMO”), which prescribe measures to prevent ship-sourced pollution, including oil pollution, sewage, garbage disposal and air emissions. To strengthen the compliance framework, we have put in place the following measures: • Conduct annual surveillance audits of the integrated International Organisation for Standardisation (“ISO”) management system (ISO 9001, ISO 14001 and ISO 45001), first obtained in April 2024 and maintained through annual surveillance audits; • Maintain a Governance, Risk and Compliance (“GRC”) function, established in August 2024, to strengthen risk assessment, internal control systems and compliance matters; Short-term charters with risks of delays and/or termination A significant portion of our revenue continues to be derived from the chartering of AWBs, primarily utilising our own fleet, supplemented by third-party vessels. As at 31 December 2025, our fleet comprised 15 own vessels and 3 others managed by us. AWB charter periods are typically short-term, ranging from 1 to 8 months, with certain contracts including extension options at customers’ discretion. Given this short-term nature, there is no assurance of consistently securing new charters through tenders or negotiations, nor that customers will renew services upon contract expiry. Our Group is also exposed to risks of delays or postponements in charter commencements due to unforeseen circumstances or customer requests. Such delays typically lack compensation provisions, leaving vessels idle if insufficient time exists between original and revised start dates to secure alternative charters, resulting in foregone revenue and business opportunities. Additionally, charter contracts may be subject to unilateral customer termination, with compensation available only through negotiation, in line with prevailing industry practice. To mitigate these risks, we have diversified our contract portfolio by securing longer-term charters exceeding 1 year for our geotechnical vessels, barges and AHTS vessels, reducing our Group’s exposure to short-term contract of less than a year. 30 KEYFIELD INTERNATIONAL BERHAD 202001038989 (1395310-M)
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