ANNUAL REPORT 2025 099 STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL Risk area Control measures taken to mitigate the 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 collections by the finance department with weekly updates to the senior management as to collections received and incidences of delay. • Timely follow up with the customers on overdue payments and retention sums. • In situations where customers are unable to adhere to the agreed credit terms, reasons for the delay will be considered. If there are sufficient commercial justifications, negotiated settlements which include extensions of time for payments or accepting tangible assets such as properties in lieu of cash payment will be considered when the chances of cash recovery is 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 expenditure requirements, and negotiate with bankers for credit facilities which enable greater flexibility in the Group’s management of financial resources. • Issuance of Sukuk, where necessary, to meet the Group’s funding needs. • Monetisation of assets of slow return, where necessary, in situation where there is good quick turnaround alternative business opportunity. 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 both quality and cost efficiencies are maintained. • Nurture close relationships with customers, sub-contractors and suppliers. • Establish wide range of services and products to diversify product risks and reduce reliance on any particular service or product. • Focus more on technical demanding products and services to create a market niche or speciality. • Pursue joint ventures and development projects with partners whose strengths complement the Group’s capabilities. • Diversify base of customers, sub-contractors and suppliers. • Maintain an in-house IBS design team with the ability to advise and work with clients from the early stage of their projects, i.e. design stage. • Maintain a well-equipped lab to perform the necessary test on raw materials on a timely manner and perform incidental lab test required by clients at minimal charges. Corruption risks • Corruption risks exist across all business sectors, in one form or another, from bribery to extortion and embezzlement to cronyism. Corruption can have serious consequences for businesses’ financial health and reputations, impact the quality of goods and services and it can prevent businesses from achieving maximum efficiency and profitability. The Group is not spared from corruption risks. • Implemented ABAC Policy which sets out the responsibilities of the Group to comply with laws on bribery and corruption and provide guidance to the Directors, employees and business associates on the standard of behaviour to which they must adhere and how to recognise and deal with bribery and corruption issues. • Implemented the Code and Whistle Blowing Policy. • Declaration of actual or potential conflict of interest situations by key senior management and tender award committee. Such personnel shall abstain from decision making where there is actual or potential conflict of interest. • Adopts segregation of duties for job functions. Designated personnel for preparing, verifying and approving each transaction/activity is documented in written procedures. • Provide training on anti-bribery and anti- corruption to Personnel and conduct due diligence procedures on customers, vendors, and employees.
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