DESTINI Annual Report 2020

Due to the adverse impact of the pandemic which took a toll on many Malaysian’s wellbeing, the Government announced various economic stimulus which saw an expenditure to a tune of RM305 billion, or about 20% of the country’s Gross Domestic Product (“GDP”) which contracted by 5.6% in 2020, which is the lowest contraction since 1998 which was by 7.4%. In the efforts to break the transmission of the virus, the Government implemented various Movement Control Order’s (MCO) since March 18, 2020. Restrictions on mobility hampered the performance of economic activities which disrupted domestic supply and demand. Although Destini is part in parcel of the Governments’ classification of “essential services”, we were not spared by these disruptions which also meant less activities for the Group. Achievements in 2020 Although the year in review came with many headwinds which predominantly came because of the pandemic, Destini was still able to secure several contracts wins to replenish its order book. In April 2020, Destini’s wholly-owned subsidiary Destini Oil Services Sdn Bhd (“DOS”) was awarded a four-year contract for the provision of tubular equipment and services for JX Nippon Oil & Gas Exploration (Malaysia) Limited’s drilling campaign in Sarawak, Malaysia. Two more awards were secured by the Group in July the same year. A mechanical and electrical systems contract was also awarded to Destini’s wholly-owned subsidiary Destini Engineering Technologies Sdn. Bhd. The contract which was awarded by Wira Syukur (M) Sdn Bhd worth RM17.39 million was to provide such services for the commercial development of GrenePark Village in Semenyih. Meanwhile, Destini’s wholly-owned subsidiary Destini Prima Sdn Bhd (“DPSB”) was awarded a contract to supply non- proprietary aircraft parts for the Royal Malaysian Airforce from the Ministry of Defence (“Mindef”). This contract would allow DPSB and 29 other local companies identified by the ministry to participate in parcels of bidding should RMAF require non-proprietary aircraft parts that has a combined ceiling value of RM121 million. DPSB had also in December receive an award from MinDef for the extension of an existing contract to provide maintenance, repair and overhaul (“MRO”) services and the supply of safety and survival related equipment for the RMAF for an additional RM30.37 million. Destini ended the year with an order book of RM523.50 million with the bulk of it from equal contributions from its Marine and Energy divisions. Financial review Against the backdrop of unprecedented uncertainty, Destini saw its revenue decreased by 36% to RM190.13 million for its financial year period ended December 31, 2020 (“FY2020”) from RM297.74 million in FY2019. The decrease in revenue was due to the slowdown in the Group’s business activities which meant reduced billings in the Group’s four core divisions. On the back of a decreased revenue, Destini’s loss after tax and non-controlling interest (“LATNCI”) narrowed by 23% to RM190.64 million in FY2020 from RM247.82 million in the preceding year’s corresponding period. The lower loss for the year was a result of significant provisions made on business segments which were directly affected from the pandemic and may be exposed to high risks of business sustainability. As mentioned earlier, MCO’s were implemented by the government restricted mobility for many for most of the year 2020. These restrictions created a weak client sentiment and a halt in business activities which caused delays in project execution across the Group as obstruction in the chain supply and services is evident. Destini was not able to execute its projects in hand as scheduledamid theMCO. Nevertheless,wecontinued to incur fixed costs, overheads and operating expenses to ensure all the projects are progressing even though at a slower scale. In addition to the normal operating costs, Destini has to absorb overheads arising from the pandemic and additional costs on industry Standard Operating Procedure (“SOP”) adherence. This translated into margin compression which in turn was insufficient to cover the Group’s overall administrative expenses that saw an increase against the reduction in revenue. In our Operational Review, we will elaborate further on each of the Group’s core divisions financial and operational analysis for a more comprehensive overview. 35 ANNUAL REPORT 2020 DESTINI BERHAD