Rail Project Timing. The Mobility segment's earnings are contingent upon the scheduled delivery of train units under rail maintenance programmes awarded principally by the Ministry of Transport and Railway Assets Corporation. Any rescheduling of deliveries or deferral of new awards could therefore affect the timing of revenue recognition for the segment. Destini mitigates this risk through its full-spectrum Level 1 to Level 4 rail MRO capability, completed following the contract award from Railway Assets Corporation after the financial year end. This equips the Group to support an operator's fleet throughout its entire maintenance lifecycle. Its recognition as an Anchor Company under the National Rail Centre of Excellence further aligns the Group with Malaysia's broader agenda to enhance rail track utilisation. International Operating Risks. Destini's Marine segment operates manufacturing and servicing facilities across multiple overseas jurisdictions, including China, Singapore, Australia and the Middle East. This exposes the Group to foreign currency translation movements, local regulatory and operating conditions, and country-specific economic, geopolitical or supply chain disruptions, and these exposures have given rise to translation losses recognised in the Group's translation reserve. While the segment's established certifications and accreditations support its continued operation in these markets, management is evaluating a strategic positioning of the Marine segment to reduce the associated multi-jurisdiction overheads and curtail the Group's exposure to overseas operating risks. Outlook - Reinforce, Reposition & Ready to Rise As the Group sets its sights on FY2027, Destini is well positioned to translate the groundwork of recent years into sustainable growth and value creation. The order book stood at approximately RM1.01 billion as at 30 June 2026, 17.96% higher than a year earlier, with revenue visibility that runs as far out as 2031. The balance sheet remains sound, with net gearing of 0.32 times, while the Group resumed dividends during the year after a gap of almost two decades. On this footing, management is confident of a top-line recovery and improved financial performance in the year ahead. In the coming year, management will prioritise capital discipline, margin quality and sustainable growth. The gains are expected to come from structure rather than pricing: Mobility will remain the Group's core growth platform, with capital prioritised towards rail MRO capability, accreditation, digital technology and selective regional expansion. Budget 2027 reinforces this direction, with a rail restoration programme of over RM3.40 billion to modernise urban rail infrastructure and improve fleet reliability, alongside the acquisition of 42 new train sets for intercity and commuter services, sustaining long-term demand for the maintenance, repair and overhaul services the Group provides. Aviation & Defence should also benefit from the Government's push to localise high-value defence procurement, under which work once held by foreign contractors is expected to move to qualified local players. That shift sits well with Destini's local capabilities and its tender pipeline. Under the same Budget, the Ministry of Defence was allocated RM22.11 billion, comprising RM14.52 billion in operating expenditure and RM7.59 billion in development expenditure, with continued focus on armed forces readiness and the local defence industry. Secured contracts will be delivered on schedule to keep revenue predictable and recurring, supported by tighter cost control and the steady recovery of public sector receivables. Marine’s strategic review will guide decisions on the Group’s future portfolio and resource allocation. The Group plans to grow its Energy business through partnership structures that lift revenue without a matching rise in capital outlay, widen its renewable energy work in support of Malaysia's low-carbon shift, and build out data-driven asset management with Siemens Mobility. Capital will go first to Mobility capability and accreditation, where returns are contracted and visibility is longest, while selective investment and divestment keep refining the portfolio and building long-term shareholder value. With a strengthened foundation, new leadership under Group Managing Director Dato’ Sri Dr. Shahril Bin Mokhtar, and a clear focus on Mobility as its core, Destini moves into FY2027 with conviction. Barring unforeseen circumstances, management expects improved financial performance and a top-line recovery in FY2027, carried by the delivery of secured contracts, and remains committed to returning value to shareholders through capital growth and future dividends. Dato’ Sri Dr. Shahril Bin Mokhtar Group Managing Director Farisan Bin Moktar @ Mokhtar Group Chief Financial Officer Kartayasa Bin Muhammad @ Mamat Group Chief Operating Officer DESTINI BERHAD 41 ANNUAL REPORT 2026
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