SECTION 2: OUR STRATEGIC CONTEXT 28 MANAGEMENT DISCUSSION & ANALYSIS KEY RISKS The Group emphasises the importance of its enterprise risk management (“ERM“) and internal control framework in managing and monitoring strategic, operational and financial risks. The Group is also subject to economic, social, political and regulatory risks in the countries where we operate in. Despite these risks or uncertainties, our resilient performance underscores the effectiveness of our risk management approach in proactively addressing challenges and seizing opportunities. In FY2023, we have identified several key risks that could impact our operations and performance. These include foreign exchange and international sales risk, where fluctuations in currency exchange rates may affect export sales, particularly in Singapore. We also face challenges related to inventory and market demand, as we must manage inventory based on shifting consumer preferences and seasonal variations, while also mitigating the risk of potential writedowns. Additionally, we address intellectual property and market integrity risks, stemming from the threats posed by counterfeit goods and parallel imports, which could diminish brand value and market positioning. Moreover, the pandemic and accessibility risk remain pertinent given the potential impact of Covid-19 or similar outbreaks on travel and access to golf facilities, thereby affecting the demand for our products and services. It is worth noting that we also face the potential impact of post-Covid where a surge in travel is observed globally, presenting both opportunities and challenges in navigating the evolving market landscape and spending behaviour. We also acknowledge the supplier concentration risk, as reliance on major suppliers exposes us to potential disruptions due to financial instability, production issues, or supply chain disruptions. Furthermore, the complexities associated with international joint ventures and the challenges of cultural and legal differences present additional risks to our operations. Lastly, in the face of rapid digital transformation, we recognise the IT and digital transformation risks as we strive to establish robust digital infrastructure which comes with substantial investment costs in order to keep pace with industry advancements. Through proactive risk management strategies, we aim to mitigate these risks and ensure the long-term resilience and success of MST Golf. Further details on risks and potential risks the Group is exposed to are listed on Section 5 - Risk Factors of our IPO Prospectus www.mstgolfgroup.com
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