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 decrease in the demand for oil and gas poses a risk to WASCO’s business as it directly affects its customers and could also impact our future projects. Nevertheless, the Group have adapted by expanding its services to cater to industries that are not reliant on fossil fuels, and have invested in enhancing its capabilities to serve these industries. The pandemic and the war in Ukraine caused disruptions in the supply chain, leading to delays and increased costs for supplies and equipment. To address this challenge, the Management conducted a comprehensive risk assessment exercise by identifying critical suppliers and potential vulnerabilities. Close partnerships were established with suppliers to ensure they had robust business continuity plans in place, and their progress was closely monitored. Alternative sourcing options were also explored to diversify the supply chain and reduce reliance on high risk suppliers. Additionally, strong collaboration between suppliers and the sales teams were established to improve understanding on pricing trends and indices, which allowed for price adjustment formulas to be adopted and passing on the costs to customers. As part of its business strategy, WASCO has also taken proactive measures to negotiate improved payment terms with both customers and suppliers with the goal to maintain a positive cash flow for all our projects. To ensure that WASCO is well positioned to capitalize on emerging opportunities, additional financing lines were secured and the Management continues to explore additional trade financing options. The additional financing solutions will also provide WASCO with the resources necessary to pursue strategic initiatives in a timely and agile manner. This flexibility will allow WASCO to drive long-term value for our stakeholders. WASCO is dedicated to fostering a safety culture, protecting our workforce, and minimizing our environmental impact, and we will continue to pursue these goals as we grow and evolve as an organization. Since its launch in May 2021, the WASCO i-START program has continued to drive notable improvements in our safety culture. The program has yielded measurable gains, including heightened safety awareness, enhanced hazard recognition, increased risk sensitivity, and improved insights gleaned from safety observations. We are happy of the progress we have made thus far, and we remain steadfast in our commitment to promoting a safety-first culture and continuously enhancing our HSE performance. Discussion on expectation of future results The global shift towards low carbon and clean energy presents a significant opportunity for WASCO. With the increasing demand for natural gas as a cleaner alternative to coal and oil, WASCO’s focus on gas development projects has positioned the company well to capitalize on this trend. RM1.70 billion Energy Solutions Services segment revenue 2022 RM482.37 million Renewable Energy segment revenue 2022 RM320.44 million Industrial Trading & Services segment revenue 2022 ZERO LTI WASCO recorded 56,276,184 Man-hours without Loss Time Injury in 2022 MANAGEMENT DISCUSSION AND ANALYSIS Wah Seong Corporation Berhad Annual Report 2022 40
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