DESTINI Annual Report 2020

Management Discussion and Analysis Marine • Destini’s marine division recorded a decline in revenue of RM86.85 million in FY2020 from RM172.84 million a year before which resulted in a LATNCI of RM101.19 million from a LATNCI of RM66.12 million in FY2019. • Destini’smarinedivision is the highest contributor to theGroup’s revenue from its shipbuilding projects despite a slowdown in project execution during the year which was due to restrictions from the pandemic. • The fabrication of three Offshore Patrol Vessels (“OPV”) saw a delay from not being able to receive construction materials on time. About 70%of the ship’s construction materials are sourced overseas andmost of the items are shipped fromChina which went through a total lockdown in early 2020. The inability to secure construction materials due to the lockdown disrupted the timing of the project delivery. • Seeing the delays in project execution, Destini requested for an extension of time and the Government had in November 17, 2020 approved an extension of time for the supply, delivery, testing and commissioning of the OPV’s for the Malaysian Maritime Enforcement Agency (“MMEA”) with effect from August 23, 2020 to August 22, 2022. As at December 2020, the OPV project is 74% complete. • However, despite these turbulences, Destini was still able to deliver three airboats and two New Generation Patrol Craft’s (“NGPC”) for the MMEA. • Meanwhile, Destini’s lifeboat manufacturing factory in China had to put its operations at halt from the lockdown in the country. During the year in review, Destini was only able to build 27 lifeboats and 20 davit systems. • Global lockdowns took a toll on the Groups marine operations in which ongoing projects had to go through extensions, which in turn resulted in additional costs for the Group to absorb on top of existing fixed costs for these projects. • In addition to that, Destini’s marine division was unable to replenish its order book because there were no tenders out for bidding. This had further added pressure on administrative expenses which compressed margins for the marine division. • Moving forward, Destini plans on completing its delayed projects as promised to its clients while keeping a close ear on the ground for potentially new opportunities. 37 ANNUAL REPORT 2020 DESTINI BERHAD