142 YINSON HOLDINGS BERHAD GOVERNANCE CORPORATE COMPLIANCE The Corporate Compliance function was established to oversee the compliance initiatives, compliance monitoring reviews and reports to the BRSC and Board of Directors. The following subsections describe policy initiatives aimed at strengthening our Corporate Compliance Framework. Compliance Management System Yinson Corporate Compliance function has embarked on an exercise to leverage software solutions across various aspects of its Compliance Framework scope in its day-to-day operations. At this juncture, the Corporate Compliance function is implementing the following Compliance Management System (“CMS”) modules: 1. Independent Whistleblowing Channel. 2. Third-Party Due Diligence. 3. Training Module for External Parties. The CMS initiative was established with the Corporate Compliance function being cognisant of the need to undertake the scope of the Compliance Framework at hand by efficiently utilising available resources (i.e. Corporate Compliance team members available) and leveraging CMS solutions available in the market. With this approach, Corporate Compliance can optimise and find the right balance between available resources and process automation for groupwide implementation. The implemented CMS is also scalable to meet future compliance requirements, optimise the available resources, and provide IT solutions to assist corporate compliance work Group-wide more efficiently. Corporate funding risk Corporate funding risk is a critical consideration for Yinson, given the capital-intensive nature of its FPSO projects and renewable energy ventures. The Company’s ability to secure adequate and cost-effective funding is essential for maintaining financial health, executing growth strategies, and fulfilling its long-term contractual obligations. This risk is heightened by external factors such as fluctuating interest rates, tightening credit markets, and evolving ESG expectations from financiers, which could influence funding availability and terms. To mitigate these risks, Yinson adopts a diversified funding approach, combining equity financing, long-term debt, and green bonds aligned with its sustainability initiatives. Strong relationships with financial institutions, supported by a proven track record of timely debt servicing and project execution, further bolster lender confidence. In addition, Yinson’s disciplined financial management ensures optimal capital allocation and liquidity planning. Country risk Operating in diverse jurisdictions exposes Yinson to political, economic, and regulatory risks that could affect its FPSO and renewable energy projects. Political instability, currency fluctuations, and sudden regulatory changes in host countries can disrupt operations, delay project timelines, or impact financial returns. For instance, offshore oil & gas developments often involve navigating complex regulatory landscapes, while renewable energy projects may face changing subsidy frameworks or landuse restrictions. To mitigate these risks, Yinson adopts a robust country risk management process, which includes in-depth market research and diversification of operational geographies. Engagement with local stakeholders and governments also ensures compliance and fosters strong relationships in host countries. By embedding a proactive approach to country risk management, Yinson safeguards its operations, supports project continuity, and sustains its long-term growth objectives across global markets. Energy transition risk Yinson faced challenges in navigating the global shift towards a low-carbon economy and has proactively implemented measures like the Internal Carbon Pricing pilot programme and explored technologies such as carbon capture and storage (“CCS“). Recent developments in the energy sector indicate a shift in the perceived urgency of energy transition risks. Major oil & gas companies are re-evaluating their commitments to reducing oil & gas output. Concurrently, major financial institutions are reassessing their climate-related obligations in the wake of policy changes of world leaders who have withdrawn from climate action networks such as the Net Zero Banking Alliance. This trend reflects a broader deprioritisation of climate goals within the financial sector, potentially easing external pressures related to the energy transition. Based on these shifts, the current landscape suggests a reduced external impetus for rapid decarbonisation. It would be prudent for Yinson to reassess the classification of the energy transition as a key risk, potentially adjusting it to reflect a moderate level moving forward.
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