Wah Seong Corporation Berhad Annual Report 2020

27 ANNUAL REPORT 2020 Discussion of anticipated or known risks that may have a material effect on, among others, the sustainability of the group’s results or operations, financial condition or liquidity The resurgence of COVID-19 cases worldwide and fresh lockdown will negatively impact the global economy, triggering a prolonged economic crisis. This largely remains beyond WASCO’s control. Delays on project awards at final investment decision (“FID”) stage and the lack of funding for project owners remain key risks for the industry. Industry players remain cautious and continue to assess the outlook before committing to further investments. WASCO’s Pipeline Unit and Engineering Services are independent of each other and have different target markets in the oil and gas value chain. This, in itself, is a conscious strategic decision made by WASCO to mitigate the risk of being overly reliant on a specific market. The management team conducted strategy meetings and business strategies reviews during the year to ensure operational sustainability. WASCO continues to hold engagement sessions with customers and partners to identify new opportunities. Steps are also undertaken to pre-qualify WASCO in new markets to establish a competitive presence. The risk related to the COVID-19 outbreak is still closely monitored at each business operation. WASCO has a pandemic preparedness plan as part of its business continuity. Apart from the HSE risk, the Group also recognises risks related to operational and supply disruption by the COVID-19 outbreak. To date, WASCO has implemented several risk mitigation strategies that focus on split working teams and alternative sourcing strategies to minimise the impact of supply disruptions. Early notifications are given to clients should there be material impact on the contractual terms for ongoing secured projects. WASCO places a strong emphasis on HSE. Non- compliance to standards or a major HSE incident in its operations would affect the Group’s business and its reputation. In mitigation of the risk, policies and procedures are established, communicated and implemented at all our operations. Audits and inspections are conducted periodically to ensure compliance. Awareness campaigns and on-going training are conducted and management does safety walkabout regularly at the sites. Target Key Performance Indicators (“KPI”) are also set to create greater accountability. WASCO today is operational in 17 offices and 10 plants/ yards worldwide. The Division’s business could be exposed to the risk of litigation action by customers, vendors and other parties. Such litigation actions may have a material effect on the Company’s result. To mitigate this risk, the Company has a robust system to review contracts and agreements to govern all parties’ contractual obligations. MANAGEMENT DISCUSSION AND ANALYSIS RM577.0 Million Oil & Gas segment revenue 2020 Renewable Energy segment revenue 2020 Industrial Trading & Services segment revenue 2020 RM357.4 Million RM301.1 Million ZERO LTI The Oil & Gas segment recorded 41,850,981 Man-hours without Loss Time Injury in 2020