Corporate governance

Corporate responsibility and social contributions

CGS is committed to corporate social responsibility, with a focus on supporting Saudi Vision 2030 through workforce development and community engagement. Operating in a specialised segment where technical expertise – particularly in refrigeration solutions – is limited, the Group prioritises the development of local capabilities through targeted training and continuous professional development initiatives.

These programmes are designed to support fresh graduates, trainees, and individuals with disabilities, enabling their integration into the workforce and supporting long-term career progression. In parallel, the Group undertakes initiatives aimed at promoting community awareness, environmental responsibility, and broader social well-being.

Through these efforts, the Group contributes to the development of national talent, supports economic participation, and aligns its activities with wider social and economic objectives.

Board declarations and regulatory compliance

The Board of Directors confirms that:

• the Company’s accounting records have been properly maintained;
• the internal control system has been established on a sound basis and implemented effectively; and
• there are no significant doubts regarding the Company’s ability to continue as a going concern.

External auditor’s report reservations: The external auditor issued an unmodified opinion on the Company’s annual financial statements, and the report did not contain any reservations.

Replacement of the external auditor: The Board did not recommend replacing the external auditor before the end of the term for which it was appointed during the year.

Sanctions and penalties: During FY26, the Company was subject to a few penalties imposed by regulatory authorities. Management reviewed each matter and implemented corrective actions where required to address the underlying causes and strengthen compliance procedures. The penalties imposed during the year are summarised below.

No.	Reference	Authority	Description of violation	Violation date	Amount (X)
1.	ENV-2026-002	National Center for Environmental Compliance	Environmental Compliance Violation	7 Jan 2026	2,000
2.	ENV-2025-001	National Center for Environmental Compliance	Environmental Compliance Violation	15 May 2025	10,000
3.	SAF-2025-001	Modon/Civil Defense Requirements	Non-compliance with Civil Defense safety and security requirements	10 Jul 2025	5,000
Total penalties					17,000

Application of corporate governance regulations: The Company applied the provisions of the Corporate Governance Regulations issued by the Capital Market Authority of Saudi Arabia during the year, except for the provisions set out below, together with the reasons for non-implementation.

Article/paragraph no.	Article/paragraph text	Reason for non-implementation
Article 39	The Board shall develop, based on the proposal of the Nomination Committee, the necessary mechanisms to annually assess the performance of the Board, its members and committees and the Executive Management using key performance indicators linked to the extent to which the strategic objectives of the Company have been achieved, the quality of the risk management and the efficiency of the internal control systems, among others, provided that weaknesses and strengths shall be identified and a solution shall be proposed for the same in the best interests of the Company. The procedures of performance assessment shall be in writing and clearly stated and disclosed to the Board members and parties concerned with the assessment. The performance assessment shall entail an assessment of the skills and experiences of the Board, identification of the weaknesses and strengths of the Board and shall attempt to resolve such weaknesses using the available methods, such as nominating competent professional staff able to improve the performance of the Board. The performance assessment shall also entail the assessment of the mechanisms of the Board’s activities in general. The individual assessment of the Board members shall take into account the extent of effective participation of the member and his/her commitment to performing his/her duties and responsibilities, including attending the Board and its committees’ meetings and dedicating adequate time thereof. The Board shall carry out the necessary arrangements to obtain an assessment of its performance from a competent third party every three years. Non-Executive Directors shall carry out a periodic assessment of the performance of the chairman of the Board after getting the opinions of the Executive Directors, without the presence of the chairman of the Board in the discussion on this matter, provided that weaknesses and strengths shall be identified and a solution shall be proposed for the same in the best interests of the Company.	Guiding article, which the Company is in the process of implementing.
Article 67	The Company's Board shall, by resolution therefrom, form a committee to be named the “risk management committee”. Chairman and majority of its members shall be Non-Executive Directors. The members of that committee shall possess an adequate level of knowledge in risk management and finance.	Guiding Article and the Company will apply it as soon as it becomes mandatory.
Article 68	The competences of the Risk Management Committee shall include the following: Developing a strategy and comprehensive policies for risk management that are consistent with the nature and volume of the Company's activities, monitoring their implementation, and reviewing and updating them based on the Company's internal and external changing factors Determining and maintaining an acceptable level of risk that may be faced by the Company and ensuring that the Company does not go beyond such level Ensuring the feasibility of the Company’s continuation, the successful continuity of its activities and determining the risks that threaten its existence during the following twelve (12) months Overseeing the Company’s risk management system and assessing the effectiveness of the systems and mechanisms for determining and monitoring the risks that threaten the Company in order to determine areas of inadequacy therein Regularly reassessing the Company’s ability to take risks and be exposed to such risks (through stress tests as an example) Preparing detailed reports on the exposure to risks and the recommended measures to manage such risks, and presenting them to the Board Providing recommendations to the Board on matters related to risk management Ensuring the availability of adequate resources and systems for risk management Reviewing the organisational structure for risk management and providing recommendations regarding the same before approval by the Board Verifying the independence of the risk management employees from activities that may expose the Company to risk Ensuring that the risk management employees understand the risks threatening the Company and seeking to raise awareness of the culture of risk Reviewing any issues raised by the Audit Committee that may affect the Company’s risk management	Guiding Article and the Company will apply it as soon as it becomes mandatory.
Article 92	If the Board forms a Corporate Governance Committee, it shall assign to it the competences stipulated in Article (94) of these Regulations. Such committee shall oversee any matters relating to the implementation of governance and shall provide the Board with its reports and recommendations at least annually	Guiding Article and the Company will apply it as soon as it becomes mandatory.

Additional financial and structural disclosures

Compliance with SOCPA-approved standards:
The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (IFRS) as endorsed in the Kingdom of Saudi Arabia, together with other standards and pronouncements issued by the Saudi Organization for Chartered and Professional Accountants (SOCPA).

Subsidiaries:
The Group operates through a number of subsidiaries that support its industrial and refrigeration activities across its key markets. Details of its subsidiaries as at the reporting date are presented in Note 1 of the financial statements.

Statutory payments made and outstanding as at 31 March 2026:

Type of fee	FY2025-26		Description
	Paid amount (X)	Outstanding amount as at year-end (X)
VAT	39,457,557	5,015,341
Zakat and income tax	11,108,491	2,816,589
Others	6,415,104	218,770	These include WHT, GOSI, custom duties, and other government fees and regulatory payments

Investments or reserves for employee benefits:
The Company did not maintain any investments or reserves specifically designated for employee benefits during the year.

Treasury shares:
The Company did not hold any treasury shares during the year.