climate risks assessment DROUGHTS/WATER SCARCITY Timeframes Likelihood Rating (1-5) Severity Rating (1-5) Overall Risk Rating Short Term (2024-2026) 1 1 Very Low Minimal history of water supply disrupঞons affecঞng operaঞons. Exisঞng reserve capacity should provide sufficient buffer to sustain operaঞons during short-term water shortages. Medium Term (2027-2035) 2 1 Low While there is the possibility of increased frequency of water disrupঞon, impacts are sঞll expected to be manageable with business operaঞons largely unaffected. Any delays experienced can be made up with the resumpঞon of normal water supply. Long Term (2036-2050) 3 3 Moderate In the long run, incidents may increase with increased severity in terms of business and operaঞonal disrupঞon. Hence, it is imperaঞve that exisঞng reserve capacity be expanded and reliance on uঞlity supplied water be reduced. Further investments in advanced water-saving measures are recommended for enhanced resilience. TRANSITION RISKS Removal Of Fuel Subsidies, Higher Energy Tariffs And Carbon Tax Exposure Timeframes Likelihood Rating (1-5) Severity Rating (1-5) Overall Risk Rating Short Term (2024-2026) 2 3 Moderate In the short term, changes in government policies and regulaঞons would see increased costs such as increased energy and compliance costs. However, the business model itself would remain largely unaffected. Medium Term (2027-2035) 2 2 Low By the medium term, it is possible that Matrix would have acclimaঞsed to the cumulaঞve effect of regulatory developments, increased energy costs and increased compliance requirements given that these would be industry wide impacts felt by all industry players. Carbon tax, when imposed as prior illustrated would not have a significant financial impact to annual earnings. However, there may be increased costs as the Group looks to ramp up its adaptaঞon strategies such as increase renewable energy use and to achieve full disclosure of its Scope 3 emissions. Long Term (2036-2050) 3 3 Moderate In the long term, regulatory landscapes are expected to evolve further and changes to become more pronounced and complex. This may entail rethinking of specific aspects of the business model, supply chains and more. In June 2024, the Malaysian government withdrew blanket diesel subsidies, resulঞng in a 56% price increase in Peninsular Malaysia, from RM2.2 to RM3.4 per litre. It is expected that petrol costs would also be further raঞonalised consequently leading to higher pump prices for both individual users and businesses. In addiঞon, commencing July 2025, the base electricity tariff in Peninsular Malaysia will be raised by 14.2% to 45.62 sen per kilowa-hour (kWh), along with a new tariff schedule. The change will take place under the three-year Regulatory Period 4 (RP4) that will be effecঞve from January 2025 to December 2027. Under the RP3 2022-2024, the base tariff was set at 39.95 sen/kWh. Based on present fuel consumpঞon for FY2024, the increase in costs for Matrix can be quanঞfied based on the following subsidy reducঞon scenarios: PRESENT CONSUMPTION (LITRES) PRESENT COSTS (RM) 20% REDUCTION IN SUBSIDIES (RM) 50% REDUCTION IN SUBSIDIES (RM) 70% REDUCTION IN SUBSIDIES (RM) 100% REDUCTION IN SUBSIDIES (RM) DIESEL 497,408.57 1,377,822 1,437,511 1,527,044 1,586,733 1,676,267 PETROL 50,064.74 102,633 112,846 128,766 169,019 153,699 TOTAL 547,473.31 1,480,455 1,550,357 1,655,810 1,755,752 1,829,966 105 MATRIX CONCEPTS HOLDINGS BERHAD INTEGRATED ANNUAL REPORT 2025 05 VALUE CREATION STRATEGIC REVIEW
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