Destini Bhd has identified the renewable energy business and related activities such as solar energy as a viable business and is seeking shareholders’ approval to diversify into the sector.
The company said in a statement that the diversification to venture into renewable energy is in line with its strategy to diversify and create an additional income stream.
Destini secured its first solar project from Indah Water Konsortium Sdn Bhd (IWK) for the engineering, procurement, construction and commissioning (EPCC) of solar photovoltaic (PV) systems at 1,177 IWK sewerage treatment plants across Malaysia in December last year.
The integrated engineering solutions provider anticipates that its new business activities in the renewable energy sector to contribute 25 percent or more of the net profit of the group and/or result in a diversion of more than 25 percent of the net assets of the group towards the aforesaid new business activities moving forward.
“Furthermore, the board anticipates that the renewable energy business segment will largely contribute to the group’s earnings in the future as it will continue to identify and secure additional solar energy projects resulting in further expansion of this business segment in the long term,” it said in a bourse filing.
Destini will seek the approval from its shareholders for the proposed diversification at an upcoming extraordinary general meeting.
According to the group, its wholly-owned Destini Energy Sdn Bhd (DESB) and IWK are in the midst of discussing the terms of the power purchase agreement and lease agreement, expected to be executed by the end of the year.
It added that DESB has not entered into any form of agreement in relation to solar energy projects or services.
“Notwithstanding the proposed diversification, the board intends to continue with the group’s existing principal activities in the same manner and will review the group’s business operations from time to time with the intention to further improve the group’s financial performance,” said Destini.
The company noted that it suffered from a shrinking revenue and it slipped into losses in the financial year ended 31 December 2019 (FY19) and FY20.
Destini posted a net loss of RM247.8 million in FY19 on revenue of RM297.74 million and a net loss of RM190.64 million in FY20. It managed to return to the black in FY21 with a net profit of RM3.08 million.
“Given the competitive nature of the aviation and defence, energy, land systems and marine industries, the group had embarked on cost-cutting measures such as prudent cash flow management, optimisation of current human resources, recruitment of additional staff only when required and enhancement of management expertise to refine its operational efficiency.
“Additionally, the board had also taken steps to improve the group’s delivery time and customer satisfaction to maintain its market presence,” it said.
The group engages in supply, trading and maintenance, repair and overhaul (MRO) services specialising in safety and survival related equipment for the aviation and defence as well as the marine industries.