103 SECTION 4 SUSTAINABILITY JOURNEY INTEGRATED ANNUAL REPORT 2025 Summary of Financial Impacts The high-level financial impact assessment provides an understanding of the nature and direction of our potential financial exposure to these risks. • Transition Risks: The potential financial impacts are primarily driven by shifts in revenue and market demand. Under a rapid transition scenario (SSP1-2.6), our financial exposure is linked to a potential structural decline in revenue from traditional pipeline services. In a slower, more fragmented transition scenario (SSP3-7.0), the financial impacts are more likely to manifest as project margin compression and revenue uncertainty due to geopolitical instability. • Physical Risks: The potential financial impacts from physical risks are highly location-specific. They are primarily driven by the prospect of increased operational costs, such as those from business interruptions, productivity losses due to extreme heat, or the cost of repairing direct damage to assets and inventory from events like flooding. These findings provide a crucial evidence base that will be used to refine our mitigation strategies, inform our capital allocation, and ensure we are building a truly climate-resilient business. Climate-Related Risks and Opportunities The climate scenario analysis identified a range of principal risks and opportunities that could materially affect our business. The key findings are summarised below: Transition risks and opportunities arise from the societal and economic shifts associated with moving to a low-carbon economy. • Opportunities in a Sustainable (1.8°C) Pathway: Under a rapid, coordinated transition, we have identified significant opportunities to leverage our core competencies. Strengthening clean energy regulation, such as Malaysia’s National Energy Transition Roadmap and national hydrogen strategies in Singapore and the UAE, is expected to drive sustained demand for our pipe coating, engineering, fabrication, and EPC services in growth sectors like renewable energy infrastructure, hydrogen, and carbon capture. • Threats in a Sustainable (1.8°C) Pathway: The primary risk in a rapid transition is the potential for increased operational costs due to strengthening climate policy. Our assessment identified that the widespread implementation of carbon pricing mechanisms (such as carbon taxes or Emissions Trading Schemes) represents a “Major” risk. This could directly increase the cost of our more carbon-intensive activities and service lines, potentially impacting project margins and our overall competitiveness if not managed proactively. • Dynamics in a Regional Rivalry (3.6°C) Pathway: In a slower, more fragmented transition, we anticipate sustained near-term demand for our traditional oil and gas services as energy security becomes a key priority for many nations. However, this scenario also presents “Severe” risks related to geopolitical instability and trade protectionism, which could disrupt supply chains, increase cost volatility, and create uncertainty in our project pipeline. Transition Risks and Opportunities Physical risks arise from the direct impacts of a changing climate. Our assessment identified that our principal physical risks are concentrated in specific geographies and are primarily related to extreme heat, water stress, and flooding. • Extreme Heat and Water Stress: Our operations in the Middle East (Doha and Dubai) are most exposed to risks from chronic heat and aridity. Under a high-emissions scenario, these conditions could impact employee health and productivity and affect machinery performance, potentially leading to reduced efficiency and increased maintenance costs. • Flooding: Our operational sites in Southeast Asia, particularly in Malaysia, are exposed to increasing risks from both pluvial (heavy rainfall) and coastal flooding. These events could cause significant operational disruptions, including damage to on-site machinery and inventory, interruptions to transport access, and risks to employee safety. These findings underscore the importance of developing site-specific adaptation and resilience plans, which is a key focus area for our future work. Physical Risks SUSTAINABILITY JOURNEY
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