DESTINI Annual Report 2019

THE YEAR IN REVIEW On the backdrop of a challenging operating environment in 2019, Destini made commendable progress in assuring its business remains sustainable with several contract wins. During the year in review, Destini secured a contract from the Ministry of Defence Malaysia for the extension of an existing contract to providemaintenance, repair and overhaul (“MRO”) services and supply of safety and survival equipment to RMAF worth RM50.18 million. Further fortifying the Destini’s position as one of the nation’s aircraft safety and survival equipment supplier and MRO service provider, the Group received another letter of extension from the Ministry of Home Affairs to provide its services to the Royal Malaysian Police Airwing for another three years. Following that, the Group’s commercial aviation business also grew its customer base after entering into an aircraft safety equipment maintenance support agreement with Malindo Airways Sdn Bhd and Thai Lion Mentari Co Ltd. In 2019, Destini expanded its scope of services in its commercial aviation business from Technical Line Maintenance to include Ground Handling services which started operations in Sabah. The Group’s foray into Ground Handling has led to a growth in its customer base under commercial aviation. The Group aims of becoming a full- fledged technical and ground handling service operator with coverage in all major airports in Malaysia. Meanwhile, Destini’s oil and gas business remained strong with multiple contracts awarded during the year in review. Several of these contracts are for the provision of tubular running services for Petronas, Shell and Petrofac’s assets in Malaysia and the Gulf of Thailand. This fortifies the Group’s position as a leading tubular running services company in the region. The Group’s major milestone for oil and gas during the year was when it was awarded a PAN Malaysia Umbrella Contract for the Provision of Integrated Well Services for Intervention, Workover and Abandonment for Petroleum Arrangement Contractors (PACs) from Petronas Carigali Sdn Bhd (PCSB). The contract runs on a call-out basis through the issuance of work orders and would expire in 2024, and is negotiable for a further extension. It was a lackluster year for Destini’s land systems business as the Government remains prudent in its transportation spending in 2019. However, despite lower tender counts offered in the market for the Group’s service offerings, Destini managed to clench a contract to supply seven 40-seater passenger busses for the Ministry of Education. In line with the Group’s ongoing efforts to seal its position in the local rail scene, Destini’s wholly-owned subsidiary of Destini Rail Sdn Bhd entered into a Joint Venture and Shareholders Agreement with Lion Pacific Sdn Bhd, and SVPR Consulting Services Sdn Bhd to draw upon the skills, expertise, experience and capabilities of each other in undertaking the business of rail related projects in Malaysia and the region. Meanwhile, although Destini’s marine business did not see anymajor contract secured in shipbuilding, itsmanufacturing business overseas had multiple orders of Self-Propelled Hyperbaric Lifeboats (SPHL) and lifeboats. With an increase in manufacturing sales, the Group also saw continuous MRO services for lifeboats and lifeboat systems locally and abroad. MANAGEMENT DISCUSSION AND ANALYSIS 03 PERFORMANCE DESTINI BERHAD 038