01 | ABOUT NEXG 02 | OUR LEADERSHIP 03| OUR PERSPECTIVE 04 | SUSTAINABILITY 05 | GOVERNANCE 06 | FINANCIAL STATEMENTS 07 | OTHER INFORMATION Sustainability Statement OUR APPROACH (CONT'D) VENDOR SELECTION & ASSESSMENT LOCAL PROCUREMENT ETHICAL SOURCING Sourcing decisions have a direct bearing on local economic development. The Group gives preference to local suppliers where possible, as it brings practical benefits, such as shorter lead times, lower logistics costs and reduced carbon emissions as compared to long-haul delivery. Procuring locally also supports domestic businesses and job creation in the local communities. Where specialised components or technologies are not available locally, the Group sources from foreign suppliers with relevant expertise and offerings. NexG expects our suppliers to uphold the same standards of ethical conduct we hold ourselves to. This includes a zero-tolerance stance on forced and child labour, fair employment practices and safe working conditions, among others. In the fourth quarter of FY2026, the Group initiated an early-stage Human Rights Risk Assessment ("HRRA") for new and existing suppliers. The HRRA forms part of the Group’s vendor due diligence framework and is currently applied to selected vendors, particularly those providing services involving foreign workers, including security services, office cleaning, and constructionrelated works. The assessment is intended to support compliance with applicable labour and immigration laws, as well as to identify and assess potential human rights risks associated with the employment of foreign workers within the Group’s supply chain. As part of the assessment process, the Group verifies that workers engaged by vendors possess valid travel and employment documentation, including passports and work permits, in accordance with Malaysian legal and regulatory requirements. Where possible, we give preference to products and services with a lower environmental footprint, favouring materials and inputs that contribute to waste reduction and energy efficiency across the product lifecycle. Suppliers are also encouraged to monitor their own sustainability performance and progressively reduce their environmental impact over time. In addition, NexG extends its safety expectations to vendors by communicating our Occupational Safety, Health and Environment ("OSHE") Policy and the "Minimum Standards of Conduct – Safety and Health" clause in NexG’s Code of Business Ethics for Vendors. Suppliers are required to provide a signed declaration of adherence as part of the onboarding process. Moving forward, we are enhancing supply chain oversight and administrative efficiency by consolidating our legacy onboarding documents: the Vendor Registration Form, the Integrity Pact, and the Safety Declaration into a single onboarding framework. Under this streamlined approach, newly registered vendors will execute a unified declaration of adherence to the Group’s integrity and safety standards prior to onboarding, with ongoing compliance enforced via Service Level Agreements ("SLAs"). Once onboarded, vendors are reviewed annually through our External Provider Assessment (“EPA”), a structured rating system covering factors such as delivery, responsiveness, compliance, and reliability. Assessment outcomes are followed up with direct supplier engagement, including on-site briefings where relevant, to ensure continuous improvement. Sustainability STATEMENT (Cont’d) OUR PROGRESS In FY2026, 19.0% of the Group’s total procurement spending was directed towards local suppliers, while 81.0% was spent on foreign suppliers. The decline in the proportion of local spending during the year largely influenced by the nature and volume of projects undertaken during the reporting period. During periods where the Group secures new projects or project extensions, procurement from foreign suppliers may increase, as a significant proportion of key project-related suppliers are based internationally. These typically include raw materials, specialised components, and system-related equipment. In addition, overseas procurement transactions are generally conducted in foreign currencies. As such, fluctuations in foreign exchange rates against the Malaysian Ringgit may also affect the reported proportion of local versus overseas spending, contributing to variations observed during the reporting period. Meanwhile, 85.9% of the Group’s suppliers were local in FY2026, broadly in line with the previous financial year. The Group’s EPA rating held steady at 80.0% for this reporting period, reflecting continued service delivery standards across the Group’s supplier base. 53
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