Annual Report 2016
RISK
MANAGEMENT
Sustainability
SUSTAINABILITY
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50
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INPURSUITOF
BUSINESSEXCELLENCE
B
usiness excellence comes hand
in hand with strong corporate
governance and effective risk
management systems. TheGrouphas in
place, an enterprise risk management
frameworkwhich identifies critical and
majorrisksthatcouldimpactitsoperations,
business activity and stakeholders,
assesses the risks in terms of likelihood
and magnitude of consequences and
determinesaneffectivemitigationstrategy.
The framework, implementationactions
and risk tolerance and appetite are
regularlyevaluatedbytheBoardtoensure
relevance inanever-changingoperating
environment,alignmentwith theGroup’s
strategic objectives and safeguardingof
stakeholders’ interests and the Group’s
assets, in order to protect and create
sustainablevalue for stakeholders.
INDUSTRY-RELATED
RISKS
As a manufacturer and provider of
specialisedequipment and services for
the oil and gas industry, the Group is
exposed to theongoing turmoil in theoil
andgas industry today.Theextendedoil
pricedownturnand reducedexploration
andproduction spendingcreatedmuch
instability during 2016.
In lightof thisuncertainty, theGrouphas
takenmeasures to reduce its cost base
and curtail discretionary operational
expenditure for the foreseeable future.
Withsteelbeing themainelement in the
Group’s products, volatility in prices
or delayed delivery of rawmaterials
resulting inextendedcompletion time,
could weigh on the Group’s financial
performance. The Group accounts for
steelpricevolatilitywithin itscontracts
withcustomers,whilemaintainingclose
workingrelationshipswith its long-term
suppliers to ensure prompt delivery of
rawmaterials.
Theslump in theoilmarketalsoresulted
inprojectsbeingdeferredorcancelled,
and diminished appetite for long-term
majorcapitalprojects.While theGroup
has forayed into the less volatile oil
production maintenance segment, we
remainmindful of thecompetition risk
in an already softmarket.
With the support of an experienced
management and a sound balance
sheet, the Group continue to pursue
opportunities for a diversified revenue
stream.
