- 11 - INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF DESTINI BERHAD (CONT’D) Registration No: 200301030845 (633265-K) (Incorporated in Malaysia) Key Audit Matters (Cont’d) Key Audit Matters How we addressed the key audit matters Revenue recognition and contract assets from maintenance, repair and overhaul (“MRO”) contracts (Refer to Note 2, Note 3 and Notes 11 and 12) The Group recognised revenue of RM210,302,254 from MRO contracts with the Ministry of Transport Malaysia, representing approximately 68% of the Group’s revenue for the financial year. Contract assets and trade receivables arising from these contracts amounted to RM59,489,632 and RM75,982,931 respectively as at 30 June 2026. We focused on this area because the determination of the transaction price, including scope omissions and liquidated ascertained damages, the measurement of progress for train sets in progress at the reporting date, and the recoverability of retention sums billable over the warranty period involve significant management judgement and estimation. Our audit procedures included, amongst others, the following: • Read the contracts and evaluated management’s assessment of the timing of satisfaction of performance obligations and the measure of progress against the requirements of MFRS 15; • Sought external confirmation from the customer of omission amounts, hand-back dates, liquidated ascertained damages imposed and the stage of completion of train sets in progress, and performed alternative procedures where confirmation was not received; • Recomputed liquidated ascertained damages based on the contract terms and the customer’s determinations; • Tested subsequent billings and receipts of retention sums against the amounts recognised; and • Assessed the adequacy of the disclosures in the financial statements. INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF DESTINI BERHAD DESTINI BERHAD 124 ANNUAL REPORT 2026
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