DESTINI Annual Report 2019

Prospects As we step in the year 2020, we are expecting that Destini’s operating environment will face newmajor challenges arising from the Covid-19 outbreak. This pandemic which caught all nations by surprise has inflicted economic disruption across the world as most countries including Malaysia have taken unprecedented control measures to contain the spread of the outbreak. In its efforts to break the transmission of the virus, the Malaysian Government imposed a Movement Control Order (“MCO”) on March 18, 2020 which was in accord to the Prevention and Control of Infectious Diseases Act 1988. Amongst these measures were, Malaysia had to close its borders to foreigners and Malaysians were not allowed to leave the country. This is expected to impacted our commercial aviation business significantly. Destini marine manufacturing business was on hold for about three months as our factory in Nantong, China that produces lifeboats could not operate. In addition to that, with only certain sectors, departments and offices are allowed to operate, many of the Group’s operations were on halt from service and supply disruptions. 03 PERFORMANCE Although the Group’s commercial aviation business may dwindle and oil prices are expected to remain volatile, Destini’s defence related businesses are expected to maintain its performance, but at a slower growth in 2020. This is because the defence sector is an essential service that operations must continue despite an active pandemic. With Malaysia imposing an MCO and various other nations imposing similar control measures, many agencies have revised their forecasts for the year 2020. Bank Negara Malaysia has forecasted that the country’s GDP growth would contract between -2% and 0.5% in 2020 from the projection of 4.9% earlier. The Malaysian Aviation Commission (“MAVCOM”) had also revised its passenger traffic to contract between 36.2% and 38.1% instead of a 4.6% and 5.7% growth in 2020. According to MAVCOM, this translates to between 67.7 million and 69.7 million airline passengers in 2020, a considerable decrease from 2019’s all-time high of 109.2 million passengers. Foreseeing the uncertainties in its operational environment, Destini is concentrating on the consistency and predictability of long-term fundamentals and is steering away from pursuing short-term gains that is anchored around unsustainable business circumstances. MANAGEMENT DISCUSSION AND ANALYSIS DESTINI BERHAD 046