121 SUSTAINABILITY REVIEW | DRIVING SUSTAINABLE GROWTH THROUGH GOOD CORPORATE GOVERNANCE Financial risks management Yinson has established and maintained a comprehensive risk management and internal control system that incorporates instruments, organisational structures, and procedures aimed at balancing risk and reward in relation to potential opportunities. An essential component of this system is the adoption and continual refinement of our ERM system, allowing for effective risk management and swift actions to capitalise on opportunities. The ERM model focuses on managing the key risks that could impact our strategic and management objectives, ensuring consistent methodologies and tools are in place to support risk management. Steps that we take to manage our financial risks are include: • Maintain a strong corporate Tax, Treasury and Finance function at both Group and business levels. • Maintain a strong track record of project delivery and operations. • Build strong, long-term financial partnerships. • Invite strategic partners to participate in our projects to manage our overall portfolio mix and maximise shareholder value. • Develop robust business models where stable recurring income is received from asset-leasing contracts. • Structure financing with a long-term vision to enable us to secure funding at a lower cost. • Build a diverse portfolio of projects by growing and developing new businesses. • Hedge against interest rate volatility by entering into floating-to-fixed interest rate swaps and issuing fixed-rate debt securities. Key initiatives undertaken in the year in review include: • The Board established Advisory Boards for Yinson Production, Yinson GreenTech and Yinson Renewables in September 2023 to provide effective oversight of the respective business models. • Targeted risk assessment was conducted for Yinson Production in Brazil, to be updated and reported against on a quarterly basis. • A comprehensive risk re-assessment exercise was conducted for Yinson Renewables and Yinson GreenTech. • In 2024, we established a Business Continuity Management (“BCM”) Framework, for a systematic approach to ensure the continuity of critical business operations. Cash flow and liquidity management Having a solid free and readily available cash position serves as a strong foundation for Yinson’s growth and expansion. Moreover, it allows us to navigate any unforeseen cash requirements with ease. Our cash stems from a combination of cash flows generated from operations, financial capital raised, and loans and borrowings drawn down from pending project deployment. We prioritise the availability of cash to fund our operational requirements based on cash flow projections. Yinson’s Corporate Treasury Policy defines the guidelines for managing our free cash with the objective of preserving capital and maintaining liquidity. This policy sets out the parameters within which we manage our cash resources, enabling us to manage risk effectively and make informed decisions about our financial activities. Our liquidity management strategy includes: • Maintaining an appropriate mix of high-quality liquid investments and adequate cash buffers to meet unexpected cash outflows. • Maintaining 5-year cash flow projections to match the allocation of long-term financial capital with project capital expenditure needs. • Using reasonable assumptions on continuing operations and financing of projects secured, Yinson’s liquidity is sufficient for at least the next 5 years. • Conduct regular stress testing to assess cash flow vulnerability under distressing situations and deploy the necessary action plans. At the same time, we are cognisant of our strengths, which we call Yinson’s Edge, which give us a competitive advantage. Statement on Risk Management & Internal Control, pg 162 - 168. Sustainability commitment Disciplined business and financial management Professional and skilled project management Industry-leading operational expertise Strong business and financial partnerships Agile and innovative mindset Ability to attract and retain top talent YINSON'S EDGE
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