Registration No. 200301030845 (633265-K) - 32 - 2. Basis of Preparation (Cont’d) (c) Significant accounting judgements, estimates and assumptions (Cont’d) Revenue from maintenance, repair and overhaul (“MRO”) contracts The MRO services performed by the Group on train sets for the Ministry of Transport Malaysia are performance obligations satisfied over time. Progress is measured using an output method by reference to train sets handed back to and accepted by the customer and, for train sets in progress at the reporting date, the certified stage of completion of the works. Management considers that this method faithfully depicts the transfer of the services to the customer. Determining the lease term of contracts with renewal and termination options - as lessee The Group and the Company determine the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised. The Group and the Company have several lease contracts that include extension and termination options. The Group and the Company apply judgement in evaluating whether it is reasonably certain whether or not to exercise the option to renew or terminate the lease. That is, it considers all relevant factors that create an economic incentive for it to exercise either the renewal or termination. After the commencement date, the Group and the Company reassess the lease term if there is a significant event or change in circumstances that is within its control and affects its ability to exercise or not to exercise the option to renew or to terminate (e.g., construction of significant leasehold improvements or significant customisation to the leased asset). DESTINI BERHAD 145 ANNUAL REPORT 2026
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