MANAGEMENT DISCUSSION AND ANALYSIS (MD&A) ENERGY Building a Stronger Platform for Recovery Financial Performance Energy revenue was at RM11.11 million (FY2025: RM20.67 million), and the segment recorded a LAT of RM2.75 million, compared with a PAT of RM0.93 million in FY2025. FY2026 reflected a period of lower rig-related activity. However, the long-term contracts secured during the year have established a firmer platform for recovery and improved revenue visibility. Operational Performance Destini Oil Services (DOS), a homegrown Tubular Running Services (TRS) specialist with more than two decades of experience, operated through a period of lower rig-related activity across all four quarters. Despite subdued utilisation, the segment continued to invest in its TRS equipment fleet and technical personnel to position itself for higher-margin offshore contracts. In renewable energy, the Group continued to progress the installation of its solar photovoltaic portfolio under the IWK concession. Key Drivers The decline reflected a sustained reduction in rig-related activity, which lowered capacity utilisation and margin realisation. Given the segment's largely fixed cost base, lower activity levels affected profitability throughout the year. However, rig-related activity has since shown signs of improvement and Management’s efforts in building up the segment's equipment and personnel have translated into long-term contract awards extending through 2031. Major Developments • D OS secured a five-year TRS contract from PETRONAS Carigali Sdn. Bhd., running from March 2026 to March 2031, with the contract value determined by work orders. The contract provides a long-term anchor for the segment's revenue visibility and asset utilisation. • O n 16 June 2026, Destini Energy Sdn. Bhd. acquired the entire equity interest in Innopower Energy Sdn .Bhd., which became an indirect wholly-owned subsidiary of the Group. • S ubsequent to the financial year end, DOS accepted a TRS contract from Searah (Malaysia) Sdn. Bhd. for its West Region operations, running from 1 July 2026 to 29 March 2031. The award broadens the segment's customer base and adds call-out volume alongside PETRONAS activities. • Energy accounted for approximately 13.57% of the Group's order book as at 30 June 2026. Outlook The Energy segment enters FY2027 on a firmer footing, underpinned by the five-year PETRONAS Carigali TRS contract, which runs until March 2031 and complemented by the Searah (Malaysia) TRS contract for West Region operations. Management will pursue suitable upstream well services, tubular handling and offshore infrastructure work packages. It will also explore long-term master service agreements with PETRONAS and production sharing contractors, together with opportunities beyond Malaysia alongside PETRONAS Carigali, while diversifying into renewable energy. To fund this growth prudently, the segment will move towards a partnership-led model of joint ventures, consortiums and revenue-sharing arrangements, which will allow it to scale its higher-margin TRS and MRO services without expanding balance sheet debt or taking on heavy fixed costs. DESTINI BERHAD 36 ANNUAL REPORT 2026
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