40 01 | ABOUT NEXG 02 | OUR LEADERSHIP 03| OUR PERSPECTIVE 04 | SUSTAINABILITY 05 | GOVERNANCE 06 | FINANCIAL STATEMENTS 07 | OTHER INFORMATION ANNUAL REPORT 2026 Management Discussion AND ANALYSIS (Cont’d) As at 31 March 2026, the Group’s total assets increased significantly to RM638.4 million from RM555.1 million in FY2025, driven primarily by higher investments, receivables and capital raising activities undertaken during the year. Shareholders’ equity strengthened substantially to RM539.8 million compared to RM447.4 million in the preceding financial year. The improvement was mainly attributable to private placement exercises, warrant conversions and ESOS exercises completed during FY2026. During the year, the Company successfully raised additional capital through: • RM121.9 million from exercise of warrants; • RM66.0 million from private placement exercises; and • RM6.6 million from exercise of ESOS options. The strengthened capital base enhances the Group’s financial flexibility to support future investments, infrastructure expansion and strategic growth initiatives. The Group maintained a strong liquidity position during FY2026, with cash and cash equivalents increasing to RM133.1 million as at 31 March 2026 compared to RM75.9 million in FY2025. The Group continued to maintain a relatively conservative gearing profile supported by strong cash reserves and prudent capital management practices. This provides NexG with substantial flexibility to fund future expansion plans, including the proposed RM250 million secure ID production facility and other strategic initiatives. Cash per share also improved in line with the Group’s strengthened cash position and enhanced capital resources. Net cash generated from operating activities remained strong at RM95.0 million for FY2026 compared to RM96.6 million in the previous financial year. The Group’s healthy operating cash flow generation reflects the resilience of its core operations, disciplined working capital management and continued support from recurring government-related contracts. Despite the accounting losses recognised during the year, the Group’s operational cash-generating capability remained intact and continues to support its long-term investment and expansion plans. Capital Structure and Capital Resources Net Gearing, Cash per Share and Liquidity Position Net Operating Cash Flow (“NOCF”) Balance Sheet Highlights as at 31 March 2026 Total Equity Million RM539.8 Net Assets Per Share 14.90 sen Total Assets Million RM638.4 Cash and Cash Equivalents Million RM133.1 FY2026 Return on Equity (”ROE) (15.9%) FY2026 Return on Assets (”ROA) Following the recognition of non-cash fair value losses arising from market valuation adjustments on investments during FY2026, the Group recorded a negative Return on Equity (“ROE”) of approximately 15.9%, compared to a positive 25.9% in FY2025. Similarly, Return on Assets (“ROA”) declined to negative 13.4% from 20.8% in the preceding financial year. The lower returns recorded during the financial year were primarily attributable to the non-cash fair value adjustments recognised during FY2026. Nevertheless, the Group’s underlying operational performance remained resilient, supported by recurring government-related contracts, healthy operating cash flows and a strengthened balance sheet position. Management believes that the major long-term contracts secured during FY2026 will contribute positively to earnings visibility and support improved returns over the medium term. Return on Equity (“ROE”) and Return on Assets (“ROA”) FINANCIAL REVIEW (CONT'D) (13.4%)
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