DESTINI Annual Report 2020

(b) Outbreak of coronavirus pandemic As a result of the Covid-19 pandemic outbreak, the Group’s businesses, result of the operation, financial position and cash flows were affected during the financial year with continuing impact iin the current and subsequent periods. This has resulted in a significant decline in revenue in the current financial year and after the reporting date. Beginning in April 2020, the Group had implemented various cost saving measures several strategic initiatives and pursued value-accretive business opportunities including a reduction in various general and administrative costs in response to current market conditions. Further, the management believes that the Group has sufficient cash to meet anticipated cash needs including cash needs for working capital for foreseeable future. The Group has been granted by MITI for its application to continue operations in Malaysia and this has allowed the Group’s business to conditionally operate at varying capacities. At the reporting date, the Group is financially strong with a net current asset and positive shareholders’ fund amounting to RM11,862,883 and RM130,697,476 respectively. Additionally, the Group carries cash and cash equivalents of RM22,120,731 as at 31 December 2020, and has no concerns in the foreseeable future. The Group performed an assessment on the overall impact of the situation on the Group’s operations and financial implications, including the recoverability of the carrying amount of assets and subsequent measurement of assets and liabilities, and concluded that there is no material adverse effect on the financial statements for the financial year ended 31 December 2020, other than property, plant and equipment written off and impairment loss on goodwill as disclosed in Notes 4 and 10 respectively. As the situation is still evolving and the uncertainty of the outcome of the current events, the Group will continuously monitor the impact of COVID-19 on its business operations and its daily activities. The Group will also be taking appropriate and timely measures in minimising the impact of the pandemic on the Group’s operations and financial performance as well as the financial position for the financial year ending 31 December 2021. 41. Subsequent Events (a) Acquisition of subsidiaries On 8 April 2021, Destini Rail Sdn. Bhd., a wholly-owned subsidiary of the Company, incorporated a 70% owned subsidiary company, M Rail Technics Sdn. Bhd., with a cash subscription of RM70,000. (b) Disposal of subsidiaries On 21 April 2021, DSE, a subsidiary company of the company has disposed of 382,500 ordinary shares in THHE Destini Sdn. Bhd. (“TDSB”), an indirect subsidiary of the Company, representing 51% equity interest in TDSB to THHE Fabricators Sdn. Bhd. for a cash consideration of RM121,131. The effect of disposal of TDSB did not have any material effect on the financial results and position of the Group. 42. Capital Management The Group’s management manage its capital is to maintain a strong capital base and safeguard the Group’s ability to continue as a going concern and maintains an optimal capital structure, so as to maximise shareholders value. The management reviews the capital structure by considering the cost of capital and the risks associated with the capital. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. 40. Significant Events (Cont’d) ANNUAL REPORT 2020 DESTINI BERHAD Notes to Financial Statements 195