DESTINI Annual Report 2020

Management Discussion and Analysis Operational review • Destini’s energy division recorded a decline in revenue of RM14.93 million in FY2020 from RM74.26 million a year before. On the back of lower revenue, the division slipped into the red with a LATNCI of RM45.55 million from a PATNCI of RM1.73 million in FY2019. • The reduction in income from this division was due to project deferments from oil majors due to budget constraints and uncertainties in the oil and gas business environment whereby most projects that were slated for execution on 2020 was pushed to 2021 instead. • Project costs was incurred as a preparation for contract mobilization, while decision on deferment by clients were post contract acceptance. The energy division also saw a rise in costs in order to comply with COVID-19 SOP requirements which were added into the equation. The unforeseen business situation has driven the Groups’ energy division to take a big hit during the period under review. • Consequently, the Group embarked on a cost reduction exercise that included staff downsizing within the energy division. However, the impact from staff pay-out during the downsizing exercise is still reflected in the Group’s 2020 accounts. • Although oil and gas price is expected to further rebound in 2021 as demands pick-up from the re-opening of many economies, Destini has taken prudent steps to ensure that its foothold in the energy industry remains significant. • In doing so, the Group re-strategized and shifted its sights to venture into renewable energy. • In October 2020, Destini Oil Services Sdn Bhd was granted an LNG import and shipping license by the Energy Commission of Malaysia. With these licenses in place, the Group intends to embark into importing and supply of LNG to bridge the shortage of power and industrial demand for greener fuel and feedstock in Malaysia. • By having these licenses Destini is able to jump-start in its efforts to realise opportunities within the renewable energy segment as LNG demand is expected to continue its growth and to account for a bigger market share in 2021 in terms of supply for power production. • Our venture into renewable energy also grows in tandem with major economies putting an emphasis on investments in sustainable and renewable energy as the global goal of achieving net-zero emission was made even more urgent by the pandemic which prompted many oil majors to diversify in response. Energy 38 ANNUAL REPORT 2020 DESTINI BERHAD