Managing Director's Statement

Dear Shareholders,

The financial year ended 31 December 2025 marks a significant and progressive milestone in the journey of Fibromat (M) Berhad ("Fibromat" or "the Group"). Over the years, the Group has evolved with clear and deliberate strategic focus, strengthening its project execution depth, specialised engineering capabilities and manufacturing competencies, while remaining firmly anchored to its core expertise in geotechnical and erosion control solutions.

Since our incorporation on 16 August 1999, Fibromat has dedicated more than two decades to advancing erosion control and geotechnical engineering solutions in Malaysia. Throughout this journey, the Group has continued to promote the use of environmentally responsible and sustainable ("green") solutions in relevant slope protection, soil stabilisation and ground improvement applications. This long-standing commitment continues to support the Group's execution of geotechnical and erosion control works across its project portfolio.

During the year under review, Fibromat achieved a key corporate milestone with its successful transfer from the LEAP Market of Bursa Securities, where the Group was first listed in 2019, to the ACE Market of Bursa Malaysia in 2025. This transition reflects the Group's continued progression in operational scale, financial discipline and corporate governance, and positions Fibromat on a stronger capital market platform to support its next phase of sustainable growth.

Operational Performance

Throughout the financial year, Management remained focused on execution reliability, operational efficiency and disciplined order book replenishment. Fibromat operates as an execution-driven geotechnical solutions provider, covering product manufacturing, supply, engineering support and installation services.

This integrated operating model enables the Group to maintain closer control over quality assurance, cost management and project delivery timelines, which are critical success factors within the infrastructure and ground engineering sector. Our machinery-intensive platform remains a key operational differentiator, supported by structured preventive maintenance programmes, disciplined spare parts planning and continuous technical capability enhancement to safeguard fleet readiness and minimise operational disruptions.

During the year, the Group further strengthened its manufacturing and supply chain capabilities to reinforce the benefits of vertical integration. These initiatives remain particularly important in the current operating environment, where cost discipline, delivery certainty and product reliability remain key competitive considerations.

Importantly, the Group's more than 20 years of specialised industry experience in erosion control and geotechnical solutions, with a strong emphasis on environmentally sustainable methodologies, continues to support Fibromat's execution confidence across diverse project environments, including highways, infrastructure corridors, land development and environmentally sensitive areas.

The Group's organisational capacity has also expanded in line with its growing operational scale following the ACE Market listing. Total workforce strength increased from 88 personnel as disclosed in the Prospectus to 201 personnel as at 31 December 2025. This expansion primarily reflects the Group's efforts to strengthen project execution depth, technical capabilities and operational support functions to meet the demands of a larger order book and expanding business activities. Management remains mindful of maintaining productivity discipline and continues to align manpower growth with project pipeline visibility and operational requirements.

Expansion of Vertically Integrated PVD Platform

During the financial year under review, the Group undertook a strategic capacity expansion within its Design and Installation segment through the progressive establishment of an in-house Prefabricated Vertical Drain ("PVD") installation capability. This initiative strengthens the Group's ability to deliver ground improvement works more efficiently while enhancing service integration within its existing project execution activities.

As part of this initiative, Fibromat invested in five units of hydraulic excavators amounting to RM3.19 million, which are currently undergoing utilisation ramp-up. This investment was funded from the utilisation of proceeds raised pursuant to the Group's listing exercise, in line with the intended deployment towards machinery acquisition and capacity enhancement.

Concurrently, to operationalise a fully integrated PVD installation team, the Group further acquired additional hydraulic excavator machinery equipped with stitchers totalling RM8.24 million, together with other specialised PVD-related equipment amounting to RM0.77 million. In aggregate, the Group committed approximately RM12.41 million towards the establishment of its in-house PVD installation capability.

This strategic investment strengthens Fibromat's vertical integration across the PVD value chain, from in-house manufacturing through to on-site installation, thereby enhancing execution control, margin retention and operational responsiveness within the Design and Installation segment. The Board views this development as an important step in reinforcing the Group's technical delivery platform and long-term competitiveness in the ground improvement sector.

Financial Performance and Order Book Position

The financial year ended 31 December 2025 marked an important year of delivery for Fibromat following its successful transfer to the ACE Market of Bursa Malaysia. The Group recorded a solid set of financial results, underpinned by steady project execution, improving operational scale and sustained demand across its manufacturing, trading, and design and installation activities.

For FY2025, the Group achieved revenue of RM113.48 million and profit after tax of RM16.39 million, reflecting the continued strength of the Group's core engineering and project delivery capabilities. Gross profit margin improved to 30%, supported by favourable project mix, operational efficiency and disciplined cost management. Overall, the Board is encouraged by the Group's ability to translate its growing order pipeline into strong earnings performance during the year.

A key indicator of the Group's earnings visibility remains its unbilled order book. As at 31 December 2025, Fibromat's total order book stood at approximately RM358.62 million across 74 projects, providing strong revenue visibility into FY2026 and beyond.

The Design and Installation segment remained a major contributor to the Group's order book, supported by geotechnical and erosion control works amounting to RM45.36 million across 54 projects. Within this segment, hydroseeding and soil nailing works formed the largest components, reflecting sustained demand for slope protection, ground stabilisation and infrastructure resilience solutions.

The Group's road works activities also continued to contribute significantly, with the CSR A2 package amounting to RM265.20 million. This project continues to progress in accordance with the planned work schedule and represents a significant earnings driver over the medium term.

Meanwhile, the Group's Prefabricated Vertical Drain ("PVD") activities, which form part of the Design and Installation segment, recorded RM48.06 million across 19 projects, demonstrating continued traction in ground improvement works, particularly in infrastructure and earthworks-related developments.

The diversified composition of the order book across geotechnical solutions, road infrastructure and PVD works provides the Group with a balanced earnings base and reduces concentration risk across any single project category.

Looking ahead, supported by a resilient order book, active tender pipeline and continued alignment with national infrastructure priorities, the Board remains cautiously optimistic on the Group's prospects. Management will continue to focus on disciplined project execution, margin preservation and prudent capital management to ensure that Fibromat is well positioned to sustain its growth trajectory and deliver long-term value to shareholders.

Environmental, Social and Governance ("ESG")

Sustainability is firmly embedded within Fibromat's long term strategic agenda and is progressively integrated into the way the Group evaluates risk, allocates capital and executes its operations. As a provider of erosion control and geosynthetic engineering solutions that directly support environmental protection and infrastructure resilience, the Group recognises both the responsibility and the opportunity to contribute meaningfully to sustainable development outcomes.

During the financial year under review, Fibromat continued to strengthen the institutionalisation of ESG practices across the organisation. Guided by our structured sustainability framework anchored on the Economic, Environmental, Social and Governance pillars, the Group is progressively embedding sustainability considerations into strategic planning, operational discipline and performance monitoring.

Environmental Responsibility and Climate Alignment

Fibromat's core business activities, including soil stabilisation, slope protection and coastal reinforcement, play a direct role in mitigating land degradation and enhancing climate resilience. As infrastructure development continues to advance across our operating markets, the Group remains focused on delivering engineering solutions that are durable, resource efficient and aligned with environmental protection objectives.

In parallel, the Group has continued to enhance visibility over its environmental footprint. During the year, Management monitored key environmental indicators, including energy consumption, greenhouse gas emissions and water usage, in line with Bursa Malaysia's Common Sustainability Indicators. The Group also commenced phased adoption efforts towards the IFRS Sustainability Disclosure Standards, namely IFRS S1 and IFRS S2, representing an important step towards strengthening the quality, consistency and global comparability of our sustainability disclosures.

While we acknowledge that our ESG reporting maturity remains at a developing stage, the Board and Management are committed to progressively strengthening climate related risk integration, data governance and internal reporting capabilities in line with evolving regulatory and investor expectations.

Human Capital and Workplace Sustainability

The Group's continued growth is underpinned by the capability, safety and engagement of its workforce. Given the technical and machinery intensive nature of the Group's operations, Fibromat maintains a disciplined focus on occupational health and safety governance.

I am pleased to report that the Group recorded zero work related fatalities and zero lost time incidents in FY2025. This outcome reflects the effectiveness of our structured Occupational Health and Safety framework, ongoing safety training initiatives and site level safety discipline. The Board and Management remain steadfast in reinforcing a strong safety culture as the Group expands its operational footprint.

In the area of talent sustainability, Fibromat continues to invest in structured training, performance management and employee engagement initiatives to support workforce capability and retention. While employee turnover increased during the year in tandem with business expansion, Management has intensified its focus on strengthening organisational depth, succession planning and employee value proposition to support sustainable execution capacity over the medium to long term.

Beyond the workplace, the Group remains committed to contributing positively to the communities in which it operates. During FY2025, Fibromat supported selected educational and community initiatives, reinforcing our commitment to maintaining a responsible social licence to operate. Over time, the Group intends to further formalise its community investment approach to enhance impact measurement and alignment with broader sustainability priorities.

Governance Excellence and Ethical Conduct

Strong governance discipline remains fundamental to Fibromat's long term credibility as a listed issuer. The Board, supported by the Audit and Risk Management Committee, continues to exercise active oversight over risk management framework, internal controls system and the integrity of sustainability related disclosures.

The Group maintains a zero tolerance stance towards bribery and corruption, supported by its Code of Conduct, Anti-Bribery and Corruption Policy and Whistleblowing framework. During the financial year, Fibromat recorded no confirmed incidents of corruption or substantiated data privacy breaches, underscoring the robustness of our governance controls and ethical culture.

Notwithstanding this, the Group remains forward looking in strengthening its governance architecture, particularly in the areas of corruption risk assessment coverage, cybersecurity resilience and supply chain oversight, in line with the expectations of an evolving listed environment.

The Road Ahead

FY2025 represents an important baseline year in Fibromat's structured ESG journey. While the Group has established a sound governance and reporting foundation, the next phase will focus on deepening integration, enhancing measurement sophistication and sharpening accountability across the organisation.

Key priorities moving forward include the progressive formalisation of sustainability governance structures, continued enhancement of climate related disclosures in line with the National Sustainability Reporting Framework roadmap, strengthening of workforce sustainability initiatives and the advancement of responsible supply chain practices.

The Board and Management remain committed to ensuring that Fibromat's growth trajectory is supported by disciplined governance, responsible environmental stewardship and strong social foundations. The Group believes this balanced approach will position Fibromat to deliver resilient, sustainable and long term value for shareholders and stakeholders alike.

As the Group advances into its next phase of growth following the ACE Market listing, the Board and Management remain firmly focused on disciplined execution, prudent capital management and the continued strengthening of our technical and operational capabilities. While the operating environment is expected to remain competitive and subject to macroeconomic uncertainties, the Group believes it is well positioned to leverage its integrated platform, growing order book and expanding execution capacity to pursue sustainable long-term growth.

On behalf of the Board and Management, I would like to extend our sincere appreciation to our valued shareholders, customers, business partners, bankers, consultants and regulatory authorities for their continued trust and support throughout the year.

I would also like to record my deepest gratitude to the management team and all employees across the Group for their dedication, resilience and professionalism in delivering another year of meaningful progress for Fibromat. Their collective commitment remains fundamental to the Group's continued advancement.

We remain committed to executing our strategies with discipline and to delivering resilient and sustainable value to our shareholders and stakeholders in the years ahead.

Thank you.