EXMAR report 2025

4.2 Internal control and risk management systems – assessment 160 4.2.2.2 OPERATIONAL RISKS DESCRIPTION OF RISK POTENTIAL IMPACT LIMITING FACTORS AND CONTROL RISKS ENTAILED IN THE OPERATION OF VESSELS AND OTHER FLOATING ASSETS Safety and environmental accidents. Epidemic diseases. Interruptions caused by mechanical defects, war, terrorism, political actions in various countries, strikes and bad weather. Vessels not meeting certain performance standards. Any such event would harm our reputation as reliable shipping company and would result in increased costs and an increase of the number of off-hire days. The costs of urgent repairs are unpredictable and can be very high. In case performance standards are not met the charterer could withhold a portion of the hire. Our experience within the industry and our safety management system (SMS) including policies and procedures on crewing and training, maintenance, and HSEQ should limit or avoid certain risks inherent in our business. All our vessels and assets are subject to both independent and internal audits and inspections and are covered by adequate insurance. EMPLOYEES Hazardous work environment for seafarers Working in a very hazardous environment can lead to accidents leading to personal injuries of a high severity such as Lost Workday Cases, Permanent Partial Disability, Permanent Total Disability or even fatality Our experience within the industry and our safety management system (SMS) including policies and procedures on crewing and training, maintenance, and HSEQ should limit or avoid certain risks inherent in our business. All our vessels and assets are subject to both independent and internal audits and inspections and are covered by adequate insurance. Adequate housing on board for our crew and for office people relocating The vessel is a seafarer's home for a period of weeks/months. And office people relocating can be for months/years. For living conditions on new build vessels designed and ordered by EXMAR, we surpass the requirements set by the Maritime Labour Convention (MLC). Our commitment extends beyond compliance, involving (former) seagoing staff in the design, and prioritizing the well-being and comfort of our crew with enhanced housing standards at sea (sustainability policy). For office personnel we guide them in the integration in the local country. INCREASED OPERATING EXPENSES Operating expenses and maintenance expenses represent a substantial part of our cost. Operating expenses and drydock capital expenditures depend on a variety of factors which are outside our control and affect the entire shipping industry. Drydocking of vessels can also result in loss of income. In-house ship management for most of the fleet and close supervision of third-party managed assets provides an adequate level of control. The internal maintenance policy is updated and improved on a day-to-day basis with the objective to maintain the highest quality levels, and assets are subjected to both internal and (independent) external inspections in accordance with or exceeding applicable regulatory requirements. In long term and infrastructure projects, the risk is also mitigated by escalating rates or even open-book compensation. FLEET AGE PROFILE As a ship ages class requirements become more stringent and compared to new modern ships the vessel will be less competitive and more expensive to operate. Age restriction can limit deployment opportunities of vessels in certain ports. We must make substantial capital expenditure to maintain the operational capacity of our fleet. These expenditures could vary significantly and can increase because of customer requirements, competitive standards and regulations or organizations standards. The average age of our fleet is monitored, and our strategy includes regular investments in new vessels to keep our fleet competitive. Our in-house ship manager and commercial team have many years of experience to assess the operational and commercial performance. All our vessels are certified by a classification society which is also a requirement for insurance coverage. Inspections of our fleet are carried out on a day-to-day basis at sea or in port. Based on these inspections the continued maintenance plan of each vessel is created, updated and implemented. Especially in gas markets, safety and reliable operations are key so that requirements by our clients (oil/ gas companies) require us to offer vessels in top condition. Risk of age restriction in ports is mitigated by strong charter party terms and impose charterer deployment restrictions. Often, aged shipping units are cheaper in terms of freights and deployed in niche markets with less stringent age limitations. ASSETS UNDER CONSTRUCTION Specific risks apply to our assets under construction and include the solvency of our contractor as well as the timely delivery of the asset in accordance with all specifications and securing all required permits. Failure by the shipyard to construct or deliver our assets under construction or bankruptcy by the shipyard would have a substantial impact on our financial position and our results. In the event the shipyard does not perform, and we are not able to enforce the refund guarantee we might lose all or part of our investment. Additionally, we might fail to comply with our obligations towards the charterer. Advance payments are made to the shipyards, and these payments are secured by refund guarantees and thus backed by strong banks. Progress of the construction and compliance with all technical and regulatory specifications is closely monitored by our technical/ supervision teams on site at the shipyards. Charter contracts linked to newbuilding investments are often made back-to-back, meaning that the risk of late delivery of vessel is covered for by e.g. suitable lay-can provisions.