32816-Lucy-Group-AR-2025 web ready spreads_FINAL

Risk Management continued

STRATEGIC REPORT

Risk and impact

Mitigation/controls

Risk and impact

Mitigation/controls

7. Regulatory and compliance

9. Safety

Censure from government or regulators for non-compliance with laws and regulation. Failure of internal control process leads to financial losses. Failure to respond to significant changes in legislation or regulations leaves the Group exposed to censure, or obsolete products or services within our portfolio.

Some colleagues work within high-risk industries and travel extensively across the world. Our products are used in the distribution of electricity, which has its own inherent risks to both our employees and members of the public.

The Group has implemented policies and procedures to address compliance risk. We assess all relevant regulatory developments and review our internal processes, policies and training programmes to ensure that we both mitigate risks and meet evolving compliance requirements. Management continues to review and adapt the business model to meet requirements in relevant markets. Group management receives annual assurance on regulatory compliance from all subsidiary management boards. We work with internal and external stakeholders to ensure they abide by our code of conduct, and we complete due diligence over our key external stakeholders. Management continues to monitor political and financial events in key markets and to adjust strategy accordingly. Management constantly reviews the prevailing sanction regimes across the world, and ensures that the Group complies with all relevant sanctions. Management teams are vigilant over input costs and adjust sales pricing as required. Business continuity plans are implemented if any of our facilities become unavailable for a prolonged period. Management teams are working towards opening new markets to diversify risk, and regularly review our longer-term strategy to ensure that our products and services are not precluded from any key markets.

The Group has a health and safety policy, procedures and training in place across all sites. Health and safety experts are employed throughout the Group. Relevant employees are given personal protective equipment (PPE) and other equipment appropriate for their environments. We have engineers that work on third-party sites. They hold the requisite qualifications for their work in potentially dangerous environments, undertake full risk assessments before starting work, and follow the relevant health and safety guidelines. The Board regularly receives and reviews health and safety reports from all businesses, which includes results from audits, near misses and accidents. Near misses and adverse events are monitored to ensure that we continue to improve the safety environment for all stakeholders. We continue to ensure our products comply with relevant safety requirements and provide safe working environments for our employees, customers and the wider public. We assess our subcontractors to ensure that they meet relevant health and safety requirements. Before travelling to high-risk countries, employees undertake risk assessments to manage, mitigate and, where possible, eliminate risks associated with political instability and/or terrorist activity. The Group seeks ways to develop and extend its supplier base to reduce any over-reliance on specific suppliers and to improve competitiveness. The Group works closely with all suppliers to understand potential issues ahead of time to allow us to continue to produce the goods our customers require. Management continues to monitor the political situation across the world and can invoke appropriate contingency plans when necessary.

8. Economic and political instability

Governments are seeking to move away from a globalisation model for a variety of reasons, which has lead to increases in localisation of goods, and increasing barriers to entry into certain markets. Coupled with this, there has been an increase in conflicts across the globe, both in terms of length and numbers of conflicts, which impact upon the ability for global markets to work efficiently. Some conflicts have spread into cyberattacks on key infrastructure and private businesses in attempts to further disrupt supporters of the conflicts.

10. Supply chain

Due to world events over the last few years, the emphasis and customer expectation have shifted within supply chains to resilience and sustainability, along with the continuing focus on value. Global conflicts and political instability may disrupt supply chains. Both geopolitical and sustainability pressures may push businesses in certain jurisdictions to either onshore or ‘friendshore’ supply chains to provide security of delivery and to decarbonise products.

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Lucy Group Ltd Annual Report & Accounts 2025

LUCYGROUP.COM

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