kub annual report 2017 - malaysiastock.biz

WHAT’S

INSIDECORpORATE GOVERNANCE

60 Corporate Governance Overview Statement

77 Statement of Directors’ Responsibility

78 Additional Compliance Information

79 Statement on Risk Management and Internal Control

88 Board Audit Committee Report

FINANCIAl STATEmENTS

92 Financial Statements

OTHER CORpORATE INFORmATION

211 List of Properties

214 Analysis of Shareholdings

HIGHlIGHTS

01 5-Year Group Financial Highlights

02 Economic Value for Shareholders

CORpORATE INFORmATION

03 Corporate Information

04 Corporate Structure

05 Group Directory

07 Profile of Directors

17 Board Committees

18 Senior Management Team

20 Profile of Senior Management

pERFORmANCE REVIEW

25 Message from the Chairman

28 The President/GMD’s Statement and Management Discussion & Analysis

40 KUB in the News

43 Sustainability Statement

INVESTING FOR THE FUTUREWe play a leading role in shaping our future by focusing on our core

businesses, inspiring vibrant ideas, nurturing potential and delivering

excellence in everything we do.

We shall continue to invest in our businesses and human capital in order to

keep ourselves competitive; and ensure our businesses are able to survive

the inevitable tough times. Under the KUB’s expansion strategy, each sector

will be able to boost performance in their individual business, thereby

unlocking value for shareholders.

As part of our sustainability initiatives, KUB malaysia Berhad is reducing the print run of all publication. We encourage you to visit our Annual Report microsite at www.kub.com/annualreport2017. You will have the privilege to download, retrieve and view any pages of the annual report at your convenience. The printed copy of the Annual Report is also available upon request. Kindly please fill in the requisition form and return it to us via post or fax.

ANNUAl REpORT 2017 | 1

5-Year Group Financial Highlights

Rm’000 2013 2014 2015 2016 2017

Revenue 947,856* 626,559* 432,154* 495,772* 599,277

Profit before taxation 5,491* 10,198* 50,303* 32,334* 40,252

Profit for the year 4,942 4,475 9,075 21,542 30,842

Profit attributable to owners of the parent 4,846 2,294 7,854 22,628 32,165

Shareholders’ fund 273,331 269,716 277,153 296,357 324,401

Basic earnings per share (sen) 0.87 0.41 1.41 4.07 5.78

Net assets per share (RM) 0.49 0.48 0.50 0.53 0.58

Dividend per share (sen) - - 0.50 1.0 1.0

Return on equity 2% 1% 3% 8% 10%

Gearing ratio (times) 0.34 0.22 0.21 0.21 0.18

‘13

‘14

‘15

‘16

‘17

‘13

‘14

‘15

‘16

‘17

‘13

‘14

‘15

‘16

‘17

‘13

‘14

‘15

‘16

‘17

REVENUE(RM’000)

NET ASSETS pER SHARE(RM)

BASIC EARNINGS pER SHARE(sen)

pROFIT FOR THE YEAR(RM’000)

947,856*

626,559*

432,154*

495,772*

599,277

0.49

0.48

0.50

0.53

0.58

0.87

0.41

1.41

4.07

5.78

4,942

4,475

9,075

21,542

30,842

*Note: Continuing Operations

2 | KUB mAlAYSIA BERHAD (6022-D)

Economic Value for Shareholders

mARKET CApITAlISATION*

(Rm million)

SHARE pRICE mOVEmENT#

(Rm)

mONTHlY TRADING VOlUmE & SHARE pRICE STATISTICS

300

250

200

150

100

50

0

0.7

0.6

0.5

0.4

0.3

2013 2014 2015 2016 2017 30/3/2018

APR ‘17 MAY ‘17 jUN ‘17 jUL ‘17 AUG ‘17 SEP ‘17 OCT ‘17 NOV ‘17 DEC ‘17 jAN ’18 FEB ’18 MAR ’18

225.4211.5

161.4

222.6 217.0

250.4

* As at 31 December (closing price)

# Closing Price

mONTH Apr ‘17 May ‘17 jun ‘17 jul ‘17 Aug ‘17 Sep ‘17 Oct ‘17 Nov ‘17 Dec ‘17 jan ’18 Feb ’18 Mar ’18

Volume (‘000) 52.04 89.23 49.99 39.84 56.50 31.12 27.50 14.17 13.66 95.94 41.49 90.67

High (RM) 0.625 0.625 0.575 0.530 0.560 0.530 0.500 0.485 0.415 0.545 0.500 0.555

Low (RM) 0.550 0.525 0.480 0.475 0.505 0.475 0.460 0.410 0.370 0.385 0.410 0.425

Closing Price (RM) 0.580 0.555 0.490 0.520 0.520 0.485 0.475 0.420 0.390 0.465 0.485 0.450


Corporate Information

Dato’ Ahmad Ibnihajar(Chairman Independent Non-Executive Director)

Datuk Abdul Rahim mohd Zin(President/Group Managing Director)

Dato’ Ab Rahim Abu Bakar(Senior Independent Non-Executive Director)

Datuk Hj Faisyal Datuk Yusof Hamdain Diego (Non-Independent Non-Executive Director)

Board of Directors

Dato’ Jamelah A.Bakar(Independent Non-Executive Director)

Tunku Alizan Raja muhammad Alias(Non-Independent Non-Executive Director)

Tengku Zahaimi Tuan Hashim(Non-Independent Non-Executive Director)

mohammad Farish Nizar Othman(Independent Non-Executive Director)

Company Secretaries

Sharina Saidon(LS 0006127)

mohd Afendy md Yazim(MAICSA 7056481)

Nani Suryani Ahmad Tajudin(MAICSA 7045699)

Registered Office

KUB malaysia Berhad (6022-D)Level 8-11, Unit 1, Capital 3Oasis Square, Ara Damansarajalan PjU 1A/7A47301 Petaling jayaSelangor Darul Ehsan

Tel : +(603) 7680 9600 (General)Fax : +(603) 7680 9793 (Group Secretarial Division)Fax : +(603) 7680 9610 (General)

Website : www.kub.com

External Auditors

messrs. Deloitte plT (llp0010145-lCA)Chartered Accountants (AF 0080)Level 16, Menara LGB1, jalan Wan KadirTaman Tun Dr. Ismail60000 Kuala Lumpur

Tel : +(603) 7610 8888Fax : +(603) 7726 8986

Stock Exchange listing

Bursa malaysia Securities Berhad (635998-W)Exchange SquareBukit Kewangan50200 Kuala Lumpur

market : Main MarketStock name : KUBStock Code : 6874Sector : Trading/Services

Share Registrar

Symphony Share Registrars Sdn Bhd (378993-D)Level 6, Symphony HousePusat Dagangan Dana 1jalan PjU 1A/4647301 Petaling jayaSelangor Darul Ehsan

Tel : +(603) 7849 0777Fax : +(603) 7841 8151/8152

principal Bankers

malayan Banking BerhadBank pertanian malaysia Berhad (Agrobank)Bank Islam malaysia BerhadAffin Bank Berhad

Datuk Haji mohd Haniff Haji Koslan(Independent Non-Executive Director)

Datuk Wira mohd Hafarizam Harun(Independent Non-Executive Director)(Retired w.e.f. 23 May 2017)

Corporate Structure

40%KUB Berjaya Enviro Sdn Bhd(614497-H)

60%KUB Sepadu Sdn Bhd(392172-H)

66%KUB Maju Mill Sdn Bhd(307838-U)

Agro

100%

KUB Agro Holdings Sdn Bhd(47135-V)

100%

KUB Malua Plantation Sdn Bhd(62716-K)

power

100%

KUB Power Sdn Bhd(236338-P)

property

100%

Peraharta Sdn Bhd(19250-X)

100%

KUB Tower Sdn Bhd(233906-D)

100%A&W (Malaysia) Sdn Bhd(5168-X)

Food Business

100%

Restoran Kualiti Sdn Bhd(477993-A)

100%KFT International (Malaysia) Sdn Bhd(245501-X)

Information and Communications Technology

100%

KUB Telekomunikasi Sdn Bhd(230021-D)

100%

Empirical Systems (M) Sdn Bhd(584218-A)


Energy

100%

KUB Gaz Sdn Bhd (9189-U)

Note: The chart above represents active companies within the Group


profile of Directors

DATO’ AHmAD IBNIHAJAR

Chairman, Independent Non-Executive Director

ACADEmIC/pROFESSIONAl QUAlIFICATION(S)

• BachelorofEconomics(BusinessAdministration),UniversityofMalaya

• FellowoftheCharteredInstituteofLogisticsandTransport,Malaysia

WORKING EXpERIENCE(S)

Dato’ Ahmad Ibnihajar was a Forex Dealer and Portfolio Manager of Malayan Banking Berhad, London from 1976 to 1979 and Branch Manager with Malayan Banking Berhad from 1980 to 1984.

Dato’ Ahmad served as Managing Director of United Traders Securities Sdn Bhd from 1984 to 1991 and Taiping Securities Sdn Bhd in 1996 to 1999, both of which are involved in stockbroking business. Since 1991, he has been the Chairman of Heirs Corporation Sdn Bhd, a property development company. From 1991 to 1993, he was an Executive Director of WM Svene-Nor jV Sdn Bhd.

Dato’ Ahmad was a Director of Bumiputera Technology Venture Capital Sdn Bhd and Managing Director of Bumiputera Technology Venture Capital Management Sdn Bhd from 1996 to 2008. Both Companies are venture capital funds initiated by the Prime Minister’s Office.

From 1999 to 2013, Dato’ Ahmad served as Managing Director of Penang Port Sdn Bhd.

Dato’ Ahmad is the Chairman of Penang Sentral Sdn Bhd and also sits on the boards of several private limited companies principally involved in property development and investment holdings.

Apart from KUB, Dato’ Ahmad is also the Chairman of D’Nonce Technology Berhad, a public company listed on the Main Market of Bursa Malaysia Securities Berhad. He currently sits on the Board of Governors of Universiti Sains Malaysia. From 2001 to 2005, he was the Chairman of Commerce Assurance Berhad. He also held few Directorships of public listed companies namely Malaysian Resources Corporation Berhad from 2000 to 2013 and PWF Consolidated Berhad (now PW Consolidated Berhad) from 1997 to 2004.

DIRECTORSHIp(S)

listed entity• Chairman,D’NonceTechnologyBerhad

Other public companies• None

Others• Chairman,PenangSentralSdnBhd• Directorinvariousprivatelimitedcompanies

ATTENDANCE AT BOARD mEETING IN 2017

• Attendedallnine(9)meetings

malaysian,68, male

Date of Appointment: 27 November 2015

Board Committee membership:• BoardInvestmentCommittee



• Bachelor of Accountancy (Honours), National University ofMalaysia

• Master Degree in Accountancy, University of Glasgow,Scotland

• CharteredAccountant• MemberoftheMalaysianInstituteofAccountants


Datuk Abdul Rahim Mohd Zin is a Chartered Accountant and a Member of the Malaysian Institute of Accountants. He has thirty (30) years experience in various fields particularly in banking and finance, oil and gas, shipbuilding, ship repair, shipping and food and beverage. He has held several positions since graduation, first as a lecturer in accounting and as a finance executive at Shell Malaysia Trading Sdn Bhd.

He started his banking career in 1990 with Bumiputra Merchant Bankers Berhad, with his last held position as the General Manager, Corporate Finance. He was the General Manager, Group Finance of Southern Bank Berhad from 1996 to 1998. He then pursued his career with Amanah Merchant Bank Berhad with last held position as the Senior General Manager, Corporate Finance from 1998 to 2000.

Datuk Abdul Rahim was the Chief Executive Officer of Southern Finance Berhad from 2001 to 2003. He was appointed as the President and Group Managing Director of Bank Pembangunan Malaysia Berhad Group in 2003 until 2007.

Prior to joining KUB, Datuk Abdul Rahim was the Group Chief Executive Officer of Radimax Group Sdn Bhd from 2010 to 2015.

He has held several directorships in shipbuilding, ship repair, shipping and oil and gas related activities namely, Labuan Shipyard and Engineering Sdn Bhd (2011-2015) and from 2003-2007, Global Maritime Ventures Berhad, Global Carriers Berhad and Malaysian Bulk Carriers Berhad.

DIRECTORSHIp

listed entity• None


Others• DirectorofseveralcompanieswithinKUBGroup• Directorinvariousprivatelimitedcompanies




DATUK ABDUl RAHIm mOHD ZIN

President/Group Managing Director

malaysian,54, male

Date of Appointment: 17 August 2015

Board Committee membership:None


DATO’ AB RAHIm ABU BAKAR

Senior Independent Non-Executive Director

malaysian,66, male


Board Committee membership:• BoardInvestmentCommittee(Chairman)• BoardRiskManagementCommittee(Chairman)• BoardAuditCommittee• BoardNominationandRemunerationCommittee• BoardEmployeeShareOptionSchemeCommittee


• Bachelor of Electrical Engineering, NED University ofEngineering and Technology


Dato’ Ab Rahim Abu Bakar’s extensive exposure cover his eighteen (18) years of working experience in EPE Power Corporation Berhad, with his last position as the General Manager of Marketing and Project Division. He has also served several companies in power and oil and gas industries namely Schneider and Arab Malaysian SGB.

Dato’ Ab Rahim is also active in serving various business and Non-Governmental Associations. He was appointed as the President of Persatuan Usahawan Tenaga Malaysia. He has served as President of Bumiputera Manufacturers and Services for five (5) years and as one of the Vice Presidents of National Malay Chamber of Commerce for four (4) years. He was also the President of Pahang State National Malay of Chamber for three (3) years. In sport, he has served as the Deputy President of Pahang Malays Football Association for one (1) term.

Dato’ Ab Rahim is currently the Chief Executive Officer of Nouva ASP (M) Sdn Bhd, a subsidiary of BARTEC Group International and a Consultant in ZTE (Malaysia) Corporation Sdn Bhd. He is also the Chairman of EDMI Meters Sdn Bhd and VITZROTND (M) Sdn Bhd.

Dato’ Ab Rahim has twenty-seven (27) years experience in power engineering, construction and oil and gas industries.

DIRECTORSHIp(S)



Others• DirectorofseveralcompanieswithinKUBGroup• ChiefExecutiveOfficer,NouvaASP(M)SdnBhd(asubsidiary

of BARTEC Group International)• Chairman,EDMIMetersSdnBhd• Chairman,VITZROTND(M)SdnBhd






• Degree in Economics, York University, Toronto, Ontario,Canada

• DiplomainAccountancy,TorontoSchoolofBusiness,Ontario,Canada

• MastersofBusinessAdministrationinShippingandLogistics,Middlesex University, London


Datuk Hj Faisyal Datuk Yusof Hamdain Diego has vast experience in the field of corporate governance, management, property development and construction.

He is currently the Chairman of Suria Capital Holdings Berhad. He is also the Chairman of SCHB Engineering Services Sdn Bhd, a subsidiary of Suria Capital Holdings Berhad. He was appointed by Bursa Malaysia Berhad (‘Bursa Malaysia’) as Governor and member of Yayasan Bursa Malaysia on 14 April 2015.

Datuk Hj Faisyal was a Board Member of Bursa Malaysia from May 2004 until june 2010. During his tenure with Bursa Malaysia, he was the Chairman of Market Participation, Listing and Compensation Committee and a Member of Risk Management, Investment and Advisory Committee. He has been the Executive Chairman of Arus Sutera Sdn Bhd since 1997 and a Director of Perkasa Trading Sdn Bhd (a subsidiary of Sabah Economic Development Corporation) since 1996. He was Treasurer of Dewan Perniagaan Melayu Malaysia (Sabah) from 1997 until 2007 and the Chairman of Yayasan Bumiputera Sabah (wholly-owned by the State Government of Sabah) from September 2010 until September 2012.

DIRECTORSHIp(S)

listed entity• Chairman,SuriaCapitalHoldingsBerhad

Other public companies• Governorandmember,YayasanBursaMalaysia

Others• DirectorofseveralcompanieswithinKUBGroup• ExecutiveChairman,ArusSuteraSdnBhd• Chairman,SCHBEngineeringServicesSdnBhd(asubsidiary

of Suria Capital Holdings Berhad)• Director, Perkasa Trading Sdn Bhd (a subsidiary of Sabah

Economic Development Corporation)


• Attendedeight(8)outofnine(9)meetings

DATUK HJ FAISYAl DATUK YUSOF HAmDAIN DIEGO

Non-Independent Non-Executive Director

malaysian,55, male

Date of Appointment: 18 August 2005(Redesignated as Non-Independent Non-Executive Director on 18 August 2014)

Board Committee membership:• BoardAuditCommittee• BoardRiskManagementCommittee



DATO’ JAmElAH A.BAKAR

Independent Non-Executive Director

malaysian,65, Female


Board Committee membership:• BoardNominationandRemunerationCommittee• BoardInvestmentCommittee• BoardEmployeeShareOptionSchemeCommittee


• AssociateDegreeinPrintingandAdvertising,UnitedStatesofAmerica

• Diploma in Journalism, International Instituteof Journalism,Berlin, Germany


Dato’ jamelah A.Bakar has vast experience in the fields of corporate governance, business, social activities, journalism and politics.

Dato’ jamelah started her early career as a journalist with Utusan Malaysia in early 1970’s. She then moved on to serve Berita Harian in 1977. In 1990, Dato’ jamelah was a representative journalist for Berita Harian in Washington DC to cover the development of the Gulf War. She was also a former editor of ‘Utusan Pengguna’ and Editor-in-Chief for Bahasa Malaysia publication of the Consumer Association of Penang. She was the Vice Chairwoman, Women and Asean Economic Community Business Foundation.

Currently an accomplished entrepreneur, Dato’ jamelah is a Director of Perbadanan Usahawan Nasional Berhad and recently appointed as an Adjunct Professor for Bachelor of Management Programme of Universiti Tun Abdul Razak (UNITAR).

Dato’ jamelah is actively involved in politics where she has been re-elected as the EXCO Member of United Malays National Organisation (‘UMNO’)’s Women Wing for the period 2008 to 2018. Her various involvements in Non-Governmental Organisations include the National Drug Abuse Prevention Association (PEMADAM) where she serves as Chairwoman of Women & Family Development Bureau.

She has also been appointed as a member of the Women’s Advisory Council and Consultative Malaysia effective 24 August 2015 by the Honourable Prime Minister of Malaysia, Dato’ Sri Mohd Najib Tun Abdul Razak.

DIRECTORSHIp(S)


Other public companies• Director,PerbadananUsahawanNasionalBerhad

Others• DirectorofseveralcompanieswithinKUBGroup• EXCO Member, United Malays National Organisation

(‘UMNO’)’s Women Wing (2008-2018) • Chairwoman, Women & Family Development Bureau,

National Drug Abuse Prevention Association (PEMADAM)• Member, Women’s Advisory Council and Consultative

Malaysia






• LLM,UniversityofBristol,UnitedKingdom• LLB(Honours),UniversityofMalaya• AdvocateandSolicitoroftheHighCourtofMalaya(1991)


Tunku Alizan Raja Muhammad Alias holds an LLM from the University of Bristol, United Kingdom and LLB (Honours) from the University of Malaya. In 1991, he was admitted as an Advocate and Solicitor of the High Court of Malaya. In 1999, together with Dato’ Zulkifly Rafique and several other partners formed Messrs. Zul Rafique & Partners. He has twenty-seven (27) years of post-qualification, specialising in the areas of Corporate and Construction Law. He is currently a Partner at Messrs. Zul Rafique & Partners.

Tunku Alizan is the Chairman of Gabungan AQRS Berhad, a public company listed on the Main Market of Bursa Malaysia Securities Berhad. He also holds directorships in various private limited companies.

DIRECTORSHIp(S)

listed entity• Chairman,GabunganAQRSBerhad


Others• DirectorofseveralcompanieswithinKUBGroup• Partner,Messrs.ZulRafique&Partners• Directorinvariousprivatelimitedcompanies



TUNKU AlIZAN RAJA mUHAmmAD AlIAS


malaysian,51, male

Date of Appointment: 16 june 2015

Board Committee membership:• BoardNominationandRemunerationCommittee

(Chairman)• BoardEmployeeShareOptionSchemeCommittee

(Chairman)• BoardInvestmentCommittee



TENGKU ZAHAImI TUAN HASHIm


malaysian,49, male

Date of Appointment: 16 june 2015

Board Committee membership:• BoardNominationandRemunerationCommittee• BoardInvestmentCommittee


• BachelorofScienceinBusinessAdministration,UniversityofTulsa, Oklahoma, USA

• Associate Degree in Computer Information System, MARAScience College, Kuantan

• Professional Certificate in Financial Technical Analysis withDistinction, Open University

• Accredited fullmemberof theSocietyofTechnicalAnalyst,United Kingdom


Tengku Zahaimi Tuan Hashim has vast experience in strategic planning and consulting services at national and international level. Throughout his twenty-seven (27) years of professional services, he has consulted numerous government and international organisations including the Islamic Development Bank in jeddah, Government of Morocco as well as Bahrain. Tengku Zahaimi was appointed as the lead advisor to the Governor of Al-Madinah Al-Munawarah in Saudi Arabia for the Strategic Study Transformation Readiness initiative in 2004.

Tengku Zahaimi started his career in the Information and Communications Technology (‘ICT’) and consulting industry, attached to local and multinational organisations during his early years. He then joined Multimedia Development Corporation and was appointed as the Regional Manager for Middle East and North Africa region based in jeddah, Saudi Arabia. On completion of his overseas assignment in 2006, Tengku Zahaimi was appointed as Special Officer to the former Minister of Science, Technology and Innovation (’MOSTI’) office.

During his tenure at MOSTI, he was credited with the formation of the Malaysian Animation and Creative Content Centre (‘MAC3’) as well as facilitating the ICT developments and policy in the country. Tengku Zahaimi’s last appointment was as Special Officer to the Special Advisor in the Prime Minister’s Department.

He currently sits on the Board of Nur Power Sdn Bhd, Nur Generation Sdn Bhd and Nur Distribution Sdn Bhd, which is an independent power utility company. He is also a Board Member of National Aerospace and Defence Industries Sdn Bhd.

DIRECTORSHIp(S)



Others• DirectorofseveralcompanieswithinKUBGroup• Director,NurPowerSdnBhd• Director,NurGenerationSdnBhd• Director,NurDistributionSdnBhd• Director,NationalAerospaceandDefenceIndustriesSdnBhd


• Attendedeight(8)outofnine(9)meetings




• Bachelor of Accountancy (Honours), International IslamicUniversity of Malaysia

• MemberoftheMalaysianInstituteofAccountants• Member of the Chartered Institute of Management

Accountants


Mohammad Farish Nizar Othman is currently the Director of Corporate Services of Malaysian Technology Development Corporation (‘MTDC’), a wholly-owned subsidiary of Khazanah Nasional Berhad that is involved in commercialisation of public/private sector research results, early stage technology ventures, innovation policy development, incubation space and fund management.

He is a Chartered Accountant attached with Messrs. PricewaterhouseCoopers Kuala Lumpur from 1995 until 2003 and subsequently with Messrs. KPMG Kuala Lumpur, both in the Assurance and Business Advisory practice, covering multiple assignments on various industries.

Mohammad Farish then joined MTDC as the Senior Vice President of Finance and Corporate Services. In 2010 he joined Scomi Engineering Berhad, a public company listed on the Main Market of Bursa Malaysia Securities Berhad, as General Manager of Business Development and Tender Coordination.

He then returned to MTDC in May 2014 as the Director of Advisory and Value Added Services. He holds directorships in various other private limited companies.

DIRECTORSHIp(S)



Others• Directorinvariousprivatelimitedcompanies



mOHAmmAD FARISH NIZAR OTHmAN


malaysian,46, male

Date of Appointment: 27 November 2015

Board Committee membership:• BoardAuditCommittee(Chairman)• BoardRiskManagementCommittee• BoardNominationandRemunerationCommittee• BoardEmployeeShareOptionSchemeCommittee



DATUK HAJI mOHD HANIFF HAJI KOSlAN


malaysian,59, male


Board Committee membership:• BoardInvestmentCommittee• BoardAuditCommittee• BoardRiskManagementCommittee


• International Executive Master of Business Administration,Paris Graduate School of Management, France

• Certified International Project Manager & Fellow, AmericanAcademy of Project Management (‘AAPM’)

• RegisteredBusinessAnalyst&Fellow,AmericanAcademyofFinancial Management (‘AAFM’)


Datuk Haji Mohd Haniff Haji Koslan has vast experience in property development, construction, taxation and business strategies.

Datuk Haji Mohd Haniff began his career as a Tax Assistant at jabatan Hasil Dalam Negeri (now Inland Revenue Board of Malaysia) from 1980 to 1984. He then pursued his career as a Tax Consultant with Messrs. K.K San Liew & Loke from 1984 to 1986 and Messrs. Aidid & Co from 1986 to 1989, both are Chartered Accountants and Public Accountants firms. He then joined Kumpulan KKHM Sdn Bhd as the Executive Director from 1989 to 1997 and Bridgecon Holdings Berhad in 1997 to 1998.

He was appointed as President of Ranhill Corporation Sdn Bhd from 1998 to 2000.

DIRECTORSHIp(S)



Others• DirectorofseveralcompanieswithinKUBGroup• ExecutiveChairman,DorchesterInternationalSdnBhd• ExecutiveChairman,TiraiSutera(M)SdnBhd• ExecutiveChairman,HaniffPropertiesSdnBhd• Director,CorporateStrategic&Development,HSSEngineering

Sdn Bhd• Chairman,DMIASdnBhd





Additional Information

1. Save as disclosed below, none of the Directors has any family relationship with and is not related to any director and/or major shareholder of KUB Malaysia Berhad, nor has any personal interest in any business arrangement involving the Company.

i. Anchorscape Sdn Bhd is the major shareholder of KUB which in turn is a wholly-owned subsidiary of Gaya Edisi Sdn Bhd.

ii. The nominee Directors of Gaya Edisi Sdn Bhd are as follows:• TunkuAlizanRajaMuhammadAlias;and• TengkuZahaimiTuanHashim.

iii. Tunku Alizan Raja Muhammad Alias is a partner at Messrs. Zul Rafique & Partners which renders professional services to the KUB Group in the ordinary course of business.

iv. Tunku Alizan Raja Muhammad Alias has interest in certain related party transactions as disclosed in Note 35(d) to the financial statements.

2. None of the Directors has been convicted for offences within the past five (5) years and public sanction or penalty imposed by the relevant regulatory bodies during the financial year other than traffic offences, if any.

3. The details of Directors’ attendance at Board Meetings held in the financial year ended 31 December 2017 are set out in the profile of Directors from pages 7 to 16 of this Annual Report.

4. The full profiles of the Directors are available online under the Directors’ profile at www.kub.com.



Board Committees

Appointed with effect from (w.e.f.)

BOARD AUDIT COmmITTEE

1. Mohammad Farish Nizar Othman (Chairman) 27/11/2015(Redesignated as Chairman w.e.f 28/08/2017)

2. Dato’ Ab Rahim Abu Bakar 29/06/2015

3. Datuk Hj Faisyal Datuk Yusof Hamdain Diego 27/11/2015

4. Datuk Haji Mohd Haniff Haji Koslan 27/02/2018

BOARD NOmINATION AND REmUNERATION COmmITTEE

1. Tunku Alizan Raja Muhammad Alias (Chairman) 29/06/2015


3. Dato’ jamelah A.Bakar 29/06/2015

4. Tengku Zahaimi Tuan Hashim 27/11/2015

5. Mohammad Farish Nizar Othman 18/08/2017

BOARD RISK mANAGEmENT COmmITTEE

1. Dato’ Ab Rahim Abu Bakar (Chairman) 21/10/2014 (Redesignated as Chairman w.e.f 28/08/2017)

2. Datuk Hj Faisyal Datuk Yusof Hamdain Diego 29/05/2012



BOARD INVESTmENT COmmITTEE

1. Dato’ Ab Rahim Abu Bakar (Chairman) 29/06/2015

2. Dato’ Ahmad Ibnihajar 27/11/2015

3. Dato’ jamelah A.Bakar 21/10/2014

4. Tunku Alizan Raja Muhammad Alias 29/06/2015

5. Tengku Zahaimi Tuan Hashim 29/06/2015


BOARD EmplOYEE SHARE OpTION SCHEmE COmmITTEE

1. Tunku Alizan Raja Muhammad Alias (Chairman) 28/08/2017


3. Dato’ jamelah A.Bakar 27/11/2015 (Redesignated as Member w.e.f 28/08/2017)



Khamsiah Ya’akob

Dr. Badrulhisham mohd Ghazali

mohd Noorkhairi mahmud

Nani Suryani Ahmad Tajudin

Azizul Rahman mohd Basir

Dr. Zaini mohamed Tambah

mohd Afendy md Yazim

Ahmad Fisal Shafie

Senior management Team

From left to right:

1

2

3

1

2

3

4

5

6

7

8

7

8

4

5

6


Datuk Abdul Rahim mohd Zin

Azman Abdullah

Hanie Izawatie Ahmad Kamil

mohamad mazri Zainal Abidin

Samad mohd Shariff

Azizan Ariffin

Ahmed Fairuz Abdul Aziz

Sharina Saidon

9 12

13

1411

10

Senior management Team

9

10

11

1213

14

15

16

15

16


profile of Senior management

DATUK ABDUl RAHIm mOHD ZINPresident/Group Managing Director(As expressed in page 8 of the Profile of Directors)

AHmED FAIRUZ ABDUl AZIZVice President, Group Finance

Nationality Age Gender

Malaysian 40 Male

Date of Appointment4 january 2016 Academic/professional Qualification(s)• BachelorDegreeinAccountingandFinance,LondonSchool

of Economics, United Kingdom• FellowoftheInstituteofCharteredAccountantsinEngland

and Wales • MemberoftheMalaysianInstituteofAccountants

present Directorship(s)listed entity Other public companies•None •None

Working Experience(s)Ahmed Fairuz has more than sixteen (16) years experience in audit, advisory, corporate finance and financial reporting in the services, banking, automotive and property development sectors. He was previously the Group Chief Financial Officer of Naza Corporation Group of Companies. Prior to his appointment with Naza Corporation, he was attached to CIMB Investment Bank Berhad and Messrs. Ernst & Young.

AZmAN ABDUllAHVice President, Group Operations and Strategic Development


Malaysian 42 Male

Date of Appointment15 February 2016 Academic/professional Qualification(s)• BachelorDegreeinAccountingandFinance,Universityof

Warwick, United Kingdom• Associate Member of the Chartered Institute of

Management Accountants, United Kingdom• MemberoftheMalaysianInstituteofAccountants


Working Experience(s)Azman has eighteen (18) years experience in corporate finance, strategic planning, business development, management and operations of medium-size to global companies in diversified industries such as audit, advisory, banking, automotive, ICT and oil and gas in Malaysia and the United Kingdom. He has held senior positions in Proton Holdings Berhad, Mexter Technology Berhad and Group Lotus Plc. Before joining KUB, he was the Chief Executive Officer of CMS Consortium Ecotour Sdn Bhd, the first electric car sharing service provider in Malaysia.

mOHAmAD mAZRI ZAINAl ABIDINVice President/Chief Executive Officer, KUB Power Sdn Bhd


Malaysian 51 Male

Date of Appointment15 May 2014 Academic/professional Qualification(s)• Bachelor Degree in Electrical Engineering, University of

Malaya• MemberofBoardofEngineersMalaysia• MemberofInstitutionofEngineersMalaysia


Working Experience(s)Mohamad Mazri has twenty-seven (27) years experience as an Electrical Engineer with Pengurusan Lebuhraya Berhad in 1991 and later joined ABB (M) Sdn Bhd in 1992. He held various managerial positions from 1994 to 2007 with Malaysian Resources Corporation Berhad, Schneider Electric (M) Sdn Bhd and Muhibbah Engineering Sdn Bhd. He was the General Manager for KUB Power Sdn Bhd from 2007 until 2011 before joining Mahkota Technology Sdn Bhd in mid-2011 as Senior General Manager. After a stint as a consultant with Multi Discovery Sdn Bhd, he re-joined KUB Power Sdn Bhd in 2014.



SAmAD mOHD SHARIFFVice President/Chief Executive Officer,A&W (Malaysia) Sdn Bhd


Singaporean 52 Male

Date of Appointment2 july 2013 Academic/professional Qualification(s)• Advanced Diploma in Business Administration, Thames

Business School, Singapore


Working Experience(s)Samad has more than thirty (30) years experience in sales and operations. He was attached to Singapore Press Holdings Pte Ltd and Amazing Services Pte Ltd as Sales Manager from 1986 to 1991. Samad joined McDonald’s Restaurants Pte Ltd from 1991 to 2005 as business consultant. He was the Director of Operations of Cosmo Restaurants Sdn Bhd from 2008 to 2013.

AHmAD FISAl SHAFIEVice President/Chief Executive Officer, KUB Gaz Sdn Bhd


Malaysian 56 Male

Date of Appointment16 November 2015 Academic/professional Qualification(s)• BachelorDegreeinAccountancy,UniversityofEastAnglia,

United Kingdom


Working Experience(s)Ahmad Fisal has more than thirty (30) years experience in the downstream oil and gas industry, beginning with PETRONAS in 1985, covering international trade operations, risk management, supply and logistics and LPG marketing. He joined KIC Oil & Gas Group of Companies as Group Senior Vice President overseeing terminal operations and marketing

in 2004. He was the Group Chief Operating Officer of Aerotree Defence and Services Sdn Bhd from 2010 to 2011 and the Head of Operations, Maple Icon Sdn Bhd from 2011 to 2014. Ahmad Fisal provided consultancy services for the downstream oil industry before joining KUB.

DR. ZAINI mOHAmED TAmBAHHead, Plantation and Operations, KUB Agro Holdings Sdn Bhd and KUB Sepadu Sdn Bhd


Malaysian 55 Male

Date of Appointment1 March 2017 Academic/professional Qualification(s)• Doctorate in Business Administration, University of

Hertfordshire, United Kingdom• MasterinBusinessAdministration,UniversityofDelaware• DiplomainAgriculture,UniversitiPertanianMalaysia(now

Universiti Putra Malaysia)


Working Experience(s)Dr. Zaini has more than thirty (30) years experience in agriculture and plantation management. He started his employment with RISDA in 1984 as an officer. He then served KPK Bandar Baharu Bhd as General Manager between 1985 to 1992.

Dr. Zaini joined KUB Holdings Berhad in 1994 as an Agriculture Executive before being promoted and assigned to various managerial positions in the company. He was the Head of Business Development and Special Project (Senior Manager) Plantation Operations and Business Development of KUB Agro Holdings Sdn Bhd from 2012 to 2016. After seven (7) months at the Plantation Advisory Unit at KUB Malaysia Berhad, he was appointed to his current position.



mOHD NOORKHAIRI mAHmUDHead, KUB Maju Mill Sdn Bhd


Malaysian 39 Male

Date of Appointment20 june 2016 Academic/professional Qualification(s)• Bachelor Degree in Mechanical Engineering, MARA

University of Technology • Diploma in Mechanical Engineering, Polytechnic of Kota

Bharu, Kelantan


Working Experience(s)Mohd Noorkhairi has thirteen (13) years experience in palm oil industry. He joined Sime Darby Plantation Sdn Bhd in 2005 as Assistant Manager. In 2009, he was attached to Mill Engineering Department, PT Minamas Sime Darby (Indonesia) and assigned to four (4) mills for commissioning and mill improvement until 2011. Mohd Noorkhairi then served as Mill Manager at Tabung Haji Plantations Bhd until 2013. He then joined United Malacca Bhd in Triang, Pahang until june 2016 before joining KUB.

AZIZUl RAHmAN mOHD BASIRVice President/Chief Executive Officer, KUB Telekomunikasi Sdn Bhd


Malaysian 40 Male

Date of Appointment1 june 2017 Academic/professional Qualification(s)• Master of Science (Telecommunications and Networks),

University of Paris, France• Bachelor of Science (Telecommunications and Networks),

University of Paris, France• Diploma in Telecommunications andNetworks,University

of joseph Fourier, Grenoble France• ProjectManagementProfessional–PMPCertified2012• Business Continuity Plan – Associate Business Continuity

Planner–2007


Working Experience(s)Azizul Rahman has over fifteen (15) years working experience in telecommunications and network field. He has held senior positions in areas of sales and business development, risk management, corporate compliance, business process management, business transformation, project management and corporate strategy. Before joining KUB Telekomunikasi, he spent most of his professional career at Telekom Malaysia (‘TM’) Subsidiaries i.e. SOTELGUI in Republic of Guinea, Robi in Bangladesh and webe. He first started as a Software Engineer with his last held position at TM as General Manager, Risk and Corporate Compliance Management.

SHARINA SAIDONHead, Group Secretarial Company Secretary


Malaysian 58 Female

Date of Appointment2 june 2013Appointed as Company Secretary on 14 june 2013 Academic/professional Qualification(s)• LLB(Honours)inBusinessLaw,CityofLondonPolytechnic,

United Kingdom (now London Metropolitan University) • DiplomainLaw,MARAInstituteofTechnology• LicensedCompanySecretary(LS0006127)• AdmittedtotheMalaysianBar


Working Experience(s)Sharina has more than thirty (30) years experience in law, company secretarial and corporate governance. Before joining KUB, Sharina was the General Manager, Legal and Company Secretary with Utusan Melayu (Malaysia) Berhad. Sharina practised law in Kuala Lumpur from 1990 to 1996.



AZIZAN ARIFFINHead, Group Risk and Audit


Malaysian 50 Male

Date of Appointment1 july 2014 Academic/professional Qualification(s)• Bachelor of Accountancy (Honours), International Islamic

University of Malaysia• Chartered Accountant with the Malaysian Institute of

Accountants • Chartered Member of the Institute of Internal Auditors

Malaysia• MemberoftheMalaysianInstituteofManagement• QualifiedRiskAuditor,ProfessionalMemberoftheInstitute

of Enterprise Risk Practitioners


Working Experience(s)Azizan has over twenty (20) years experience in internal audit and risk management. Between 2001 and 2004, he was the Head of Internal Audit with WWE Holdings Berhad before joining KUB in 2004 as Manager, Group Internal Audit. In 2007, Azizan joined NCB Holdings Bhd as the Head of Group Internal Audit. In 2014, he re-joined KUB.

KHAmSIAH YA’AKOBHead, Group Human Capital


Malaysian 57 Female

Date of Appointment9 june 2016 Academic/professional Qualification(s)• Diploma in Human Resource Management, University of

Malaya• Member of the Malaysian Institute of Human Resource

Management


Working Experience(s)Khamsiah has more than thirty-four (34) years of experience in Human Resource in various industries namely telecommunications, transportation, electronic manufacturing, trading and consultancy.

She served Sapura Holdings Sdn Bhd from 1984 until 2003 before joining Naza Motor Trading Sdn Bhd in 2004 as Manager, Human Resource and Administration. Between 2007 and 2013, Khamsiah was the Vice President, Business Process Outsourcing with HR Consulting Sdn Bhd. She joined KUB in 2013 as Manager before assuming her current position.

DR. BADRUlHISHAm mOHD GHAZAlIAssistant Vice President, Strategic Planning and Performance Management


Malaysian 43 Male

Date of Appointment5 May 2016 Academic/professional Qualification(s)• Doctorate in Mechanical Engineering, University of

Adelaide, Australia• Bachelor Degree in Mechanical Engineering (1st Class

Honours), University of Adelaide, Australia


Working Experience(s)Dr. Badrulhisham has over seventeen (17) years experience in corporate and strategic planning, business development management and operations of medium-size to global companies.

He was the Head of Strategic Planning, Proton Edar Sdn Bhd from 2006 to 2008. He later joined Proton Holdings Sdn Bhd as the Head of Export and Group Corporate Strategy between 2008 and 2014. He then moved to CMS Consortium Ecotour Sdn Bhd in 2014 as the Chief Executive Officer. He was a Director/Consultant of Timuraxis Sdn Bhd in 2015 prior to joining KUB.



HANIE IZAWATIE AHmAD KAmIlAssistant Vice President, Group Legal


Malaysian 41 Female

Date of Appointment7 December 2015 Academic/professional Qualification(s)• Bachelor Degree in Law (Honours), MARA University of

Technology• AdmittedtotheMalaysianBar


Working Experience(s)Hanie Izawatie has more than ten (10) years experience as an in-house counsel.

She joined Messrs. Lee Hishammuddin Allen & Gledhill as Legal Associate in 2003. She later moved to AirAsia X Berhad in 2008 as Legal Manager and was promoted as the Head of Legal in 2014.

mOHD AFENDY mD YAZImSenior Manager, Group Secretarialjoint Company Secretary


Malaysian 38 Male

Date of Appointment2 September 2014Appointed as joint Company Secretary on 9 january 2015 Academic/professional Qualification(s)• Bachelor Degree (Honours) in Corporate Administration,

MARA University of Technology• Diploma in Executive Secretaryship, MARA University of

Technology• MemberoftheMalaysianInstituteofCharteredSecretaries

and Administrators• Licensed/CertifiedCompanySecretary• Certified Integrity Officer (Malaysia Anti-Corruption

Commission)


Working Experience(s)Mohd Afendy has thirteen (13) years experience in secretarial practice and corporate governance. He was a Secretarial Executive at Kumpulan Perangsang Selangor Berhad in 2010 and later moved to Kumpulan Hartanah Selangor Berhad as Compliance Officer in 2012. He was the Corporate Secretarial Manager with National Aerospace and Defence Industries Sdn Bhd prior to joining KUB.

NANI SURYANI AHmAD TAJUDINExternal joint Company Secretary


Malaysian 48 Female

Date of Appointment8 September 2015 Academic/professional Qualification(s)• Master of Law Executive (Business Law), International

Islamic University of Malaysia • The InstituteofCharteredSecretariesandAdministrators,

United Kingdom


Working Experience(s)Nani Suryani has more than twenty-five (25) years experience in areas of secretarial and corporate legal practice, compliances and managemet.

Between 2004 and 2006, she was the Manager, Company Secretary of Radicare (M) Sdn Bhd prior to her appointment as the General Manager, Group Secretarial and Legal. Since 2010, she has been the Director, Group Secretarial and Legal for Radimax Group Sdn Bhd.

Additional Information

1. None of the Senior Management/Management has any family relationship with and is not related to any director and/or major shareholders of KUB Malaysia Berhad, nor has any personal interest in any business arrangement involving the Company.

2. None of the Senior Management/Management has been convicted for offences within the past five (5) years and public sanction or penalty imposed by the relevant regulatory bodies during the financial year other than traffic offences, if any.

3. The full profiles of the Senior Management/Management are available online at www.kub.com.

ChairmanThe Group’s revenue increased by 20.9%

Rm599.3million higher than

FY2016: Rm495.8 million

message from the

Dear Shareholder,

On behalf of the Board of Directors of KUB Malaysia Berhad (‘KUB’ or ‘the Group’), I am pleased to report that the Group has pulled through yet another challenging year. Underpinnedbyourfour(4)corevalues–integrity,excellence,teamwork and trust & mutual respect, we delivered a laudable performance for the year and I would like to acknowledge the efforts of team KUB for their hard work and perseverance in achieving these results.

we delivered a lAUDABlE pERFORmANCE FOR THE YEARand i woUld liKe To acKnowledge The eFForTs oF TeaM KUB For Their HARD WORK AND pERSEVERANCE in achieving These resUlTs

“

“

Dato’ Ahmad Ibnihajar Chairman


DElIVERING RESUlTS

The Group has been on a steady growth trajectory for the past three (3) years as we continue to improve our operating performance as well as realise our strategic plans and initiatives.

The Group’s revenue for the financial year ended 31 December 2017 (‘FY2017’) increased by 20.9% to RM599.3 million from RM495.8 million in the financial year ended 31 December 2016 (‘FY2016’), mainly on the back of higher contributions from our energy, agro and food businesses. In FY2017, the Group recorded profit after tax (‘PAT’) of RM30.8 million compared with RM21.5 million in the previous year, representing an increase of 43.3%. The rise in profit was mainly due to operational improvements and the recognition of gain on disposals of the Group’s properties. Our confidence in the progress and performance of the Group led the Board

message from the Chairman

to recommend a first and final single-tier dividend of 1.0 sen per ordinary share, subject to the shareholders’ approval at the forthcoming Annual General Meeting. Further to that, the Board has also declared an interim dividend of 1.0 sen per ordinary

Revenue (RM’000)

947,

856*

626,

559*

432,

154*

495,

772*

599,

277

‘16‘15‘13 ‘14 ‘17

*Note: Continuing Operations

profit for the Year (RM’000)

4,94

2

4,47

5

9,07

5

21,5

42

30,8

42

‘16‘15‘13 ‘14 ‘17

share for the financial year ending 31 December 2018 (‘FY2018’). This brings the total expected dividend payout to 2.0 sen per ordinary share amounting to RM11.2 million, which is the highest dividend payout in a single year to be issued by the Group since 2010.

The Board of Directors of KUB at the Group’s 52nd Annual General Meeting


message from the Chairman

KEY CORpORATE DEVElOpmENTS DRIVING GROWTH

In line with the strategic roadmap laid out by the management in 2015, the Group undertook a couple of corporate exercises during the year under review to strengthen our growth momentum and position the Group for future opportunities. We have successfully executed our strategy to expand our plantation land bank in 2017 with the acquisition of a brownfield oil palm plantation land in Kinabatangan, Sabah for RM100.4 million, bringing the Group’s total plantation land bank to 8,866 hectares. Completed in early FY2018, the land acquisition is expected to generate immediate revenue and contribute positively to the Group’s earnings. Another major development is the Group entering into a memorandum of understanding with Singapore’s Mabanaft Pte Ltd to construct, own and operate a 50,000 metric tonne refrigerated terminal at Westport, Klang. This new plant will strengthen our presence in the Malaysian LPG domestic market as well as provide us the opportunity to become an international LPG player, supplying LPG in the ASEAN region.

UpHOlDING STRONG GOVERNANCE

The Board remains committed to upholding the highest standards of corporate governance as well as robust risk management and internal control measures throughout our organisation. It is our belief that these elements help to ensure sustainable growth, preserve our corporate reputation and strengthen our ability to deliver continued shareholder value. KUB is continuously working to abide by the principles and requirements of the Malaysian Code on Corporate Governance 2017, Corporate

Governance Guide of Bursa Malaysia Securities Berhad (‘Bursa Malaysia’) and the Main Market Listing Requirements. As a testament to our commitment to corporate governance, KUB was recognised at the Minority Shareholder Watchdog Group (‘MSWG’) – ASEANCorporate Governance Recognition 2017 where KUB was ranked number forty-two (42) and eighty-three (83) amongst the top 100 public listed companies in Malaysia for good disclosures (By Rank) and overall corporate governance & performance (By Rank) respectively, which we are truly proud of.

HUmAN CApITAl DEVElOpmENT

The Group views its workforce as an essential part of its overall strategy for business sustainability and therefore, prioritises the continuous development and skills upgrading of our people. We continue to implement various talent development programmes to inculcate leadership qualities, enhance technical and non-technical competencies as well as to facilitate and nurture our employees into high-performing individuals. As part of the Group’s human capital initiatives, we have successfully established an Employee Share Option Scheme (‘ESOS’ or ‘the scheme’) which was approved on 23 May 2017 by our shareholders at the Group’s Extraordinary General Meeting. The scheme was established to retain, motivate and reward employees, as well as to sustain a high employee performance level whilst instilling a sense of loyalty to the Group.

SUSTAINABIlITY Alongside our commitments to our shareholders, the Group strives to ensure sustainable business practices. Our philosophy to operate in a responsible manner from an economic, environmental and social standpoint

has become all the more evident in the programmes and efforts that we undertake. Towards this end, we have implemented various initiatives to integrate sustainability across the value chain of our operations. These include the implementation of a business continuity management (‘BCM’) programme to ensure our capability of anticipating, preventing, responding and recovering from any disruptive incident. Both KUB and its subsidiary KUB Gaz Sdn Bhd have been certified for ISO 22301:2012, a BCM programme, with other subsidiaries within the Group is targeted to be certified in FY2018. In addition to that, and in our effort to provide a safe and conducive working place to the employees, the Group has begun its journey to implement the 5S initiatives in FY2018 and is expected to be certified during the same year. A holistic update on these initiatives are presented in detail under the Sustainability Statement.

AppRECIATION On behalf of the Board of Directors, I would like to thank our shareholders for their steadfast support and unremitting confidence in us, and our partners as well as customers for their invaluable support and cooperation. My gratitude also goes to my fellow Board members for their counsel and insights in steering KUB amidst a challenging business landscape. I wish to also express my sincerest appreciation to YBhg Datuk Wira Mohd Hafarizam Harun, our former Director, who had served us well during his tenure. Last but not least, to our employees and Management at KUB, thank you for your contributions to the Group this past year and we truly appreciate the dedication and concrete efforts in preparing us for our next phase of growth.

The president/GmD’s Statement and management Discussion & Analysis

Dear Shareholder,

I am pleased to inform you that we have been making steady progress in the

implementation of our three (3) year (2016 - 2018) strategic roadmap.

No doubt 2017 was a challenging year for us due to a combination of internal and external factors such as the weakening ringgit, volatility in commodity prices, adverse weather conditions, intense competition and softening consumer sentiment which had impacted the performance of our core sectors. However, the strength of our diversified business operations and the disciplined execution of our strategies particularly in the timely value unlocking of our non-core assets provided us the stability and resilience to weather the storm. We not only managed to sustain our revenue and earnings but in fact recorded a significantly better performance.

We believe that our next phase of growth will be largely dependent on our ability to maximise the utilisation of our current resources efficiently and effectively by making the right investment decisions

Datuk Abdul Rahim mohd ZinPresident/Group Managing Director


2017 also marked the year where we intensified our investment commitments with the ultimate aim of building a strong foundation for our future success. We believe that our next phase of growth will be largely dependent on our ability to maximise the utilisation of our current resources efficiently and effectively by making the right investmentdecisions–hencethetheme of this year’s Annual Report - Investing for the Future.

During the period under review, we expended our resources in various organic growth programmes namely for our Agro (improvement works for our mill, replanting of estates), Energy (construction of a satellite bottling

plant, pipeline extension, purchase of new cylinders and reconditioning and requalification of old cylinders) and Food sectors (increase network footprint). Additionally, we have also rolled-out our inorganic growth blueprint commencing with the expansion of our plantation land bank through a brownfield acquisition in Sabah and setting the scene for a potential large scale investment in a refrigerated Liquefied Petroleum Gas (‘LPG’) terminal with a joint venture partner for the Energy business.

The investments above combined with other future plans are expected to continue well into 2018. It is also important to highlight that not all

these plans and initiatives will generate immediate visible returns to us but is meant to sow the seeds for KUB Malaysia Berhad’s (‘KUB’ or ‘the Group’) business sustainability. We hope you can be patient with us as our goal is to provide long term value growth.

Notwithstanding, you can take comfort that all the strategic plans undertaken or to be undertaken that we will consider our balance sheet strength, capital structure and cash flow management. Any changes to our financial position will require us to reprioritise our capital expenditure plans, review investment decisions and re-optimise the capital structure which will be done proactively.

Some highlights, milestones and achievements in the Financial Year Ended 31 December 2017 (‘FY2017’):


FINANCIAl pERFORmANCE ENHANCED

20.9% increase in revenue to

Rm599.3 million,

highest in three (3) years

43.3% increase in earnings to

Rm30.8 million,

highest since 2009

driven by

ENERGY, AGROand FOOD sectors

INVESTING FOR THE FUTURE

• Acquisitionof1,534hectaresofbrownfieldoilpalmplantationlandinSabah(completedinJanuary

FY2018)

• MillimprovementworksfacilitatedthecommencementofoperationsinJulyFY2017

• Replantingexerciseof204.5hectareswascarriedoutinourKahangestateinKluang,Johor

• ExecutedaMOUwithMabanafttobuildarefrigeratedLPGterminalatWestport

• InvestedinadedicatedpipelineextensionatWestport(completedinJulyFY2017)

• Embarkedonthereconditioningandrequalificationofexistingcylindersaswellaspurchaseofnew

cylinders

• CommencedtheconstructionofasatellitebottlingplantintheKlangValley

• Openedseven(7)outletsduringtheyear

• Remodeledthree(3)outletsinFY2017

ASSET VAlUE UNlOCKING STRATEGY

monetised non-core properties and assetsinSelangor,PerakandPenangamountingto Rm31.6 million



BAlANCE SHEET STRENGTH

Netassetspersharestrengthenedto

Rm0.58Totalassetsfortheyearincreasedto

Rm546.8 millionFinancialleverageremainedhealthy

withnetgearingratioof0.18 times

INCREASED RETURN TO SHAREHOlDERS

Expectedpayoutof 2.0 sen (Rm11.2 million)

OpERATIONAl EXCEllENCE/HUmAN CApITAl INITIATIVES

• Receivedshareholders’approvalon23May2017toestablishanEmployeeShareOptionScheme(‘ESOS’)• ObtainedOHSAS18001:2007ManagementSystemCertificationon3July2017forKUB• EmbarkedonaBusinessContinuityManagement(‘BCM’)Programme-KUBandKUBGazSdnBhdwere

certifiedon10January2018forISO22301:2012,aBCMProgramme• RevampedtheKUBManagementGuidelinestoenhanceaccountabilityandauthoritytoseniormanagement

intandemwiththelatestorganisationstructureoftheGroup• Upgradedourintegratedreportingsystems• Continuedtoprovideconstructivetrainingandcareerdevelopmentopportunitiestoemployees

SEGmENTAl BUSINESS REVIEW

KUB’s revenue and pAT contribution according to sectors are shown in the diagrams below:

SEGmENTAl REVENUE CONTRIBUTION (%) FOR FY2017

ENERGY

ICT

AGRO

FOOD

pROpERTY

pOWER

OTHERS

0.4%

0.3%68.3%

10.2%

10.5%

5.0%

5.3%



FINANCIAl AND OpERATIONAl pERFORmANCE REVIEW

KUB delivered a set of commendable financial results in FY2017 with revenue of RM599.3 million, representing a 20.9% increase from RM495.8 million in the previous year. Meanwhile, profit after tax (‘PAT’) grew by 43.3% to RM30.8 million as compared to RM21.5 million in the Financial Year Ended 31 December 2016 (‘FY2016’) mainly attributable to the operational performances of the Energy, Agro and Food sectors. Our overall financial performance was bolstered by the gain on disposals of non-core properties amounting to RM12.4 million.

Earnings per share for the year stood at 5.78 sen while net assets per share was 58.0 sen as at 31 December 2017. The Group’s market capitalisation came in at RM217.0 million as at 31 December 2017, while our gearing ratio was manageable at 0.18 times (before our plantation acquisition). Our cash position at the year-end declined to RM119.1 million from RM133.9 million largely due to our capital expenditure commitments in the year.

As part of our drive to deliver value to shareholders, the Board proposed dividends of 1.0 sen per share for FY2017. This represents a total payout of RM5.6 million, translating to a 17.4% payout ratio. Additionally, and for the first time in KUB’s history, the Board has also declared an interim dividend of 1.0 sen per ordinary share for the Financial Year Ending 31 December 2018 (‘FY2018’), translating to an additional payout of also RM5.6 million. The interim dividend will be paid in April FY2018.

SEGmENTAl REVENUE COmpARISON (Rm’mIllION)

ICT Energy Agro Food Property Power Others

450

400

350

300

250

200

150

100

50

-

FY2016 : 495.8 FY2017 : 599.3

70.5 32.0 325.2 409.4 39.7 61.1 46.9 62.9 2.6 2.6 10.6 30.0 0.3 1.3

SEGmENTAl pAT COmpARISON (Rm’mIllION)

ICT Energy Agro Food Property Power

Others

30

25

20

15

10

5

0

-5

-10

-15

-20

FY2016 : 21.5 FY2017 : 30.8

5.1 6.3 24.1 19.6 2.0 4.5 2.9 4.0 0.9 1.3 1.9 5.7

(15.4) (10.6)



The Energy division was the main revenue driver for the Group in FY2017, representing 68.3% of the Group’s top-line. The sector registered revenue of RM409.4 million, 25.9% higher than FY2016, largely due to the higher average contract price (‘CP’) of LPG. However, lower overall operating margins -- caused by stiffer competition particularly in the commercial segment -- resulted in an 18.7% reduction in the sector’s PAT, from RM24.1 million to RM19.6 million.

In FY2017, KUB Gaz continued to invest in infrastructure improvements which included the construction of a RM1.8 million dedicated pipeline extension at Westport. The pipeline, which was completed in july FY2017, is aimed at ensuring the stability and efficiency of our LPG supply capacity through increasing berth availability. Since coming into operation, KUB Gaz has managed to reduce demurrage exposure significantly. We also continued to make headway in our operational improvement practices through Health, Safety, Security and

ENERGY SECTOR

Our Energy business involves the importation, bottling, marketing and distribution of LPG under the brand name of Solar Gas, through our wholly-owned subsidiary, KUB Gaz Sdn Bhd (‘KUB Gaz’).

Our LPG supply is mainly imported from the Middle East to our terminal at Westport, Port Klang where the LPG is stored, bottled and delivered to our customers. As one of the few LPG suppliers in Malaysia, we service various customer segments including residential, commercial and industrial operators within Peninsular Malaysia (with greater demand from the central and southern regions) through our network of appointed dealers.

Environment (‘HSSE’) initiatives which involved repairing roads, walls and fences at the terminal plant at Westport and bottling facility in johor.

In an effort to increase our distribution capacity and expand our market base, we initiated the establishment of a satellite bottling plant and warehouse in the Klang Valley. The plant, which is currently under construction, costs approximately RM10.7 million (including additional cylinder assets)

is strategically located at a high-dense residential area to provide us with better geographical reach to our target market base. Depending on the success of this strategy, we plan to establish more satellite plants in the future.

FY2017 also saw KUB Gaz further accelerate its re-branding efforts geared towards strengthening its position in the country’s LPG market. As part of this exercise, we initiated several activities to create brand awareness, including

ENERGY SECTOR KEY HIGHlIGHTS

Initiatives

• Expandingsupplyand

distribution capacity

• Buildingcorevia

vertical integration

• Rationalisingand

expanding market

base

26%increase in revenue

MoU signed with

MabanaftPteLtdfor

the joint development,

ownership and

operationof

RefrigeratedLPG

TerminalatWestport

Investedinapipeline

extensionatWestport

forhigher efficiency in

delivery

Began construction

ofasatellitebottling

plantinKlangValley

to widen distribution

network



provides a framework to identify, control and decrease the risks associated with health and safety within the workplace.

AGRO SECTOR

The Agro-business sector has always been a major contributor to the Group’s revenue, earnings and cash flow for many years. Given the ever increasing global demand for edible oils, this sector will remain as one of our key business segments going forward.

As of FY2017, the sector comprised of four (4) plantation estates located in Kluang, johor and Mukah, Sarawak representing a total area of 7,332 hectares together with a 45 metric tonne/hour palm oil mill operating within to our estate in Mukah.

AGRO SECTOR KEY HIGHlIGHTS

Initiatives

• Improvingproductivity

via yield improvement

• Expandingproduction

capacity

• Improvingextractionrate

and manufacturing cost

revenue grew by

54%PATsurged

125%

FFBoutputincreasedby

18%

Newlyacquired

brownfieldplantationin

sungai Kinabatangan,

sabah will drive the

Group’s earnings

Replanted204.5

hectares, with a plan

to replant 200 hectares

per annum over the next

five(5)years

Mechanisation

intensifiedfor better

efficiency

purchasing new cylinders and improving our existing cylinder appearance. Further to that, as a preventive measure and in order to address perception issues, we invested in the reconditioning and requalification of our old cylinders amounting to RM3.1 million.

The high capital expenditure incurred for the above initiatives which we expect to lead to an improved operational performance would not be possible had it not been for the asset monetisation exercise performed via the disposal of our unproductiveassetsinPenang–namelyinPrai and Georgetown which raised cash amounting to RM12 million. The Prai and Georgetown disposals were completed in FY2017 and the first quarter (‘Q1’) of FY2018 respectively.

While KUB Gaz has a strong customer base in Malaysia, we believe future growth will come from the regional market. Thus, on top of strengthening our current infrastructure, we are also investing in regional expansion. In this respect, the Group is proposing to build a 50,000 metric tonne refrigerated LPG terminal at Westport. In May 2017, KUB signed a memorandum of understanding (‘MoU’) with Singapore’s Mabanaft Pte Ltd for the development of the terminal. This new facility will increase our storage capacity whilst reducing landed costs. It will also provide an opportunity for us to enter the international markets within the region.

In the period under review, KUB Gaz sucessfully obtained the ISO 22301:2012 Certification administered by Cybersecurity Malaysia (under the Business Continuity Management). This means that the Company has a framework in place that outlines an effective response mechanism to safeguard its reputation and brand, as well as the interest of our key stakeholders.

We have also been accredited to OHSAS 18001:2007 Occupational Health and Safety Management Certification, which is an international standard that

The total area for our plantation estates are shown in the table below:

EstateTotal Area

as of FY2017 (hectares)

Johor Sungai Yong Kahang

1,700 956

Sarawak Sungai Buloh Sungai Nape

2,435 2,241

Total 7,332

It was again a mixed year for the sector. Our estates recorded a notable 18.0% year-on-year increase in fresh fruit bunches (‘FFB’) production supported mainly by the newly matured areas at our Sungai Nape estate, successful rehabilitation works at our Sungai Yong and Sungai Buloh estate and overall yield enhancement efforts. The production would have been higher if not for the abnormally high rainfall which led to flooding in certain areas causing damage to main access and field roads and further hampering crop evacuation. In addition, labour shortage also impacted harvesting operations during the year.


FFB pRODUCTION (mETRIC TONNES)

FY2016 FY2017

40,000

35,000

30,000

25,000

20,000

15,000

10,000

5,000

-

FY2016 : 77,120 FY2017 : 91,149

Sungai Yong

Kahang

Sungai Buloh

Sungai Nape

19,727 22,03626,345 33,76314,303 14,48116,745 20,869

Our overall PAT meanwhile improved by 125.0% to RM4.5 million in tandem with the higher topline and lower costs of production for our plantation estates. This improvement was however offset by the significant under-performance of our Mill due to operational challenges and crop quality issues. The management has decided to place a major emphasis in improving the performance and capacity utilisation of the Mill by implementing various initiatives going forward.

On the operational front, we continued to make significant progress in our yield enhancement and cost optimisation efforts. The mechanisation of FFB harvesting and collection has been further intensified with the aim of driving productivity, improving efficiency and cutting labour dependency. We have a number of crawlers and mini-tractors for FFB collection in our peat areas in Mukah. Moving forward, we also plan to introduce at our Mukah estate a Bin System which is integrated with in-field tractors to facilitate crop evacuation and reduce manual intervention.


Following the higher crop production coupled with the strengthening of crude palm oil (‘CPO’) prices and operational commencement of our Mill in Mukah, the sector managed to deliver a 53.9% increase in revenue for FY2017 to RM61.1 million contributing approximately 10.2% of the Group’s total revenue in FY2017.

We are also committed to improve our fertiliser management regime through detailed foliar analyses performed by external agronomists to ascertain nutrient levels in order to determine the optimum fertiliser combination and application required. This will result in significant cost savings and yield improvement going forward.


Apart from the above, the Group is also cognisant and has prioritised the need to address the ageing profile of our oil palms. We have in place a phased and accelerated re-planting roadmap which commenced in FY2017 where 204.5 hectares of our Kahang estate in johor were replanted. The replanting programme will use new cutting-edge planting materials, with advanced hybrid seeds to improve the yield of our oil palm. We plan to replant at least 200 hectares per year over the next five (5) years.

Taking into account the moderating effects of the replanting programme and in order to not only preserve but enhance the sector’s operational performance which the Group considers as a key sector, we decided to embark on a brownfield oil palm plantation acquisition in Kinabatangan, Sabah from Kwantas Plantations Sdn Bhd (‘Kwantas’), a wholly-owned subsidiary of Kwantas Corporation Bhd. The estate, measuring approximately 1,534 hectares, was acquired through our wholly-owned subsidiary, KUB Malua Plantation Sdn Bhd (‘KUB Malua’), for a cash consideration of RM100.4 million.

This acquisition, which is also in line with our overall strategy to increase our plantation landbank, was approved by the shareholders on 2 August 2017 and completed on 3 january 2018. The estate is expected to generate immediate earnings as more than 80% of the plantation is at a high-yield stage and will also have the added effect of reducing the overall age profile of the sector’s estates. With the completion of the acquisition, our plantation land-bank area has also increased to 8,866 hectares.

Finally, the Group has taken active steps to improve the facilities and living conditions for our plantation workers with the construction of new accommodation facilities and at the same time, repairing roads, existing houses and providing access to clean water.


ICT SECTOR

Since 1991, KUB’s Information and Communications Technology (‘ICT’) sector via our fully-owned subsidiary, KUB Telekomunikasi Sdn Bhd (‘KUB Telekomunikasi’) has successfully delivered billion ringgits worth of contracts focusing on telecommunication and transportation industries. Holding licences from the Malaysian Communications and Multimedia Commission (‘MCMC’) as Network Facility Provider (‘NFP’), Network Service Provider (‘NSP’) and Application Service Provider (‘ASP’), the products and services of KUB Telekomunikasi consists of ICT infrastructure solutions, maintenance support & services, ancillary services and supply of telecommunication infra & ICT equipment.

For FY2017, the ICT sector contributed 5.3% of the Group’s total revenue, achieving RM32.0 million for the fiscal year under review. This was 54.6% lower as compared to the previous year due to the absence of high value contracts similar to the Automatic Fare Collection (‘AFC’) system contract and MCMC Telecommunication Tower project completed in FY2016. However, despite the large decrease in revenue, the PAT was marginally higher at RM6.3 million contributed by a gain on disposal of its office building amounting to RM5.9 million.

ICT SECTOR KEY HIGHlIGHTS

Initiatives

• Focusingoncoreexpertiseanddelivery

capacity

• Expandingcustomerbase

• Exploringnewbusinessopportunities

PBTmaintainedatpreviousyear’s

level in spite of revenue decrease

secured three (3) additional contracts

worthatotalofRm26.0 millionasat31December2017

Total outstanding order book

amountingtoRm66.4 millionasat31December2017



The modest ICT revenue for FY2017 was mainly contributed by supply of telecommunication infra, which involves delivery of fibre optic accessories and metal based items to support Telekom Malaysia Berhad’s (‘TM’) High-Speed Broadband (‘HSBB’) rollout amounting to RM20.0 million. As to our core expertise i.e. maintenance support & services, this area contributed a revenue of RM9.9 million mainly from the AFC maintenance contract, servicing fifty-three (53) Keretapi Tanah Melayu Berhad (‘KTMB’) commuter stations and also the network maintenance contract with TM, servicing fibre optic network nationwide.

The ICT sector secured three (3) additional contracts from TM and MCMC amounting to RM26.0 million in FY2017. This included a five (5)-year contract on TM-NOKIA Metro-E BAU maintenance service with a value of RM16.7 million and MCMC Universal Service Provider (‘USP’) telecommunication tower construction amounting to RM6.8 million, which involves the construction of nine (9) units of telecommunication towers. The sector further secured a sizeable contract in january 2018 i.e. the TM-Nokia Network Simplification Initiative (‘NSI’) amounting to RM45.0 million increasing the total current order book at hand to RM106.5 million (Q1 FY2018).

Moving forward, as the broadband service market in Malaysia is undergoing a period of dramatic growth with tremendous increase in data traffic usage, the Group is expected to broaden its business in this sector exploring new income streams leveraging on strategic collaboration in providing telecommunication infrastructure and network maintenance services. This

In FY2017, the ICT sector

contributed5.3%of the Group’s total revenue

will give an opportunity for us to be part of enablers in shaping up the country into a developed nation hence increase our competitive advantage in securing a long-term sustainable recurring business as well as high value contracts to further enhance our business performance.

FOOD SECTOR

Our Food sector is represented by A&W (Malaysia) Sdn Bhd (‘A&W’) which was acquired by the Group in 2001 and is also known as the first established quick-service restaurant (‘QSR’) chain that was brought into Malaysia in 1963. It currently has thirty-six (36) outlets throughout Peninsular Malaysia.

FOOD SECTOR KEY HIGHlIGHTS

Initiatives

• Investinginmoreoutlets

to improve revenue

• Improvingcost

management

• Innovatingmenu

offerings

revenue grew by

34%PATincreased

38%

Opened

seven (7)

additional

outlets

Relocated

non-performing outlets

continued to

invest in

branding and marketing

Added new products

and introduced exciting

promotions


Amidst a challenging year for the Food and Beverage (‘F&B’) industry due to weaker consumer sentiments, the sector chalked up a set of admirable financial results for FY2017 performance. Revenue improved by 34.1% to RM62.9 million in FY2017 from RM46.9 million in FY2016. This was mainly due to the opening of seven (7) additional outlets and improvement in selected existing outlets during the year. PAT surged by 37.9% to RM4.0 million, on the back of stronger revenue, combined with various cost management and supply chain improvement initiatives.

FY2017 saw A&W’s various aggressive digital marketing campaigns aimed at building a stronger customer base and to create brand awareness especially among the younger generation start to bear fruit with the increase in store footfall and transaction counts. The introduction of more innovative menu offerings coupled with attractive limited time offer (‘LTO’) promotions to cater to the discerning tastes of consumers further boosted the number of returning customers to outlets leading to increased sales.

Apart from incurring RM4.2 million for the opening of new outlets with an innovative layout and look, we also invested RM0.8 million to remodel three (3) outlets to provide them with a refreshed image. We were also disciplined in our approach to non-performing outlets and relocated one (1) store from Bandar Puteri Klang to Kota Kemuning. For slow moving outlets in malls, we requested for rental revisions through aggressive negotiations during the year to preserve our bottom line.

Going forward, the sector will continue to focus on its network footprint expansion at strategic locations in Peninsular Malaysia. We intend to open an additional eleven (11) outlets in FY2018. For loss-making outlets, we will attempt to relocate them progressively to locations with high foot traffic and continue to review their operational efficiency and business sustainability.


The Group will also enhance the customer service levels by providing better training to service employees as well as continue to renovate and upgrade existing outlets.

pOWER SECTOR

The principal activities of the Group’s Power sector involves the construction of substations and transmission lines, supplying and installing of electrical infrastructure for private companies and electrical maintenance contracts.

During the year under review, the sector secured an additional contract for works under the TNEC LSS Solar Sepang project amounting to RM8.9 million bringing its total value of projects-in hand as at 31 December 2017 to RM69.2 million.

With the increased number of contracts embarked on and higher progressive revenue recognition during the year, the sector registered revenue and PAT growth of about 183.0% to RM30.0 million and 200.0% to RM5.7 million respectively. Included in the sector’s earnings was a reversal of overprovision of costs relating to projects undertaken in previous years amounting to RM3.0 million.

In our effort to enhance our earnings and competitive edge for this sector, we will explore into shifting our business model to a more sustainable business with recurring incomes such as Energy Management and Energy Efficient Systems, specifically district cooling, rehabilitation and maintenance of existing cooling systems of buildings and the Renewable Energy space, particularly in Co-Generation and Large Scale Solar Photovoltaic power plants.

pOWER SECTOR KEY HIGHlIGHTS

Initiatives• Undertakingmoreprojects• Consideringnewbusinesseswithinthe

sector• Exploringsustainablemodelsthatare

able to generate recurring income

revenue grew by 183%PBTimproved 200%

Contracts in-handamountedtoRm69.2 million asat31December2017



pROpERTY SECTOR

Our subsidiary company, Peraharta Sdn Bhd (‘Peraharta’) is involved in the property management and building maintenance of certain KUB assets, which include Bangunan Wisma Sri Kinta, Wisma KUB Kota Bharu, and seven (7) units of double-storey shop houses; altogether worth approximately RM23.9 million. Peraharta, through a licenced property manager, manages and maintains over 400,000 square feet of commercial and office spaces in Perak, of which 80% of its existing tenants are government agencies.

pROpERTY SECTOR KEY HIGHlIGHTS

Initiatives

• Divestingpropertyassetstosupport

growth of core businesses

• Unlockingvaluefrompropertyportfolio

monetised two (2) parcels

of landinPerakanda3-storeyshop

officeinSelangor

amountingto

Rm5.1 million

For FY2017, the sector recorded a revenue and PAT of RM2.6 million and RM1.3 million respectively, as compared to a revenue and PAT of RM2.6 million and RM0.9 million respectively in FY2016. The sector’s profit in the current year was enhanced by the gain on disposal of two (2) parcels of land in Perak, amounting to RM2.5 million, offset by higher administrative expenses. The disposal is in line with the Group’s strategic plans to unlock the value from our property portfolio. Subsequently, the proceeds will be utilised to fund our plans for our core businesses.

The Group owns a prime piece of land measuring up to 1.05 acres located in the heart of Petaling jaya, Selangor. We are actively looking to collaborate with reputable property developers to develop the land into a potential commercial development. The Development Order for the land has been submitted to the authorities and we are now waiting for the respective approval.

OUTlOOK AND pROSpECTS

As we head into the final year of our three (3)-year roadmap, we will likely face similar challenges and setbacks as we did in FY2017 particularly with the heightened competition in many of our business sectors. Notwithstanding, we expect our performance to remain stable as we leverage on the firm progress we have made in building our core businesses and in the orderly execution of our strategic plans. With this, we should be able to maintain momentum to drive the Group forward in the years ahead.

FY2018willbeabusyyearforusaswebeginthenextphaseofourgrowthstory–especially in ramping-up our core Energy, Agro and ICT sectors. As we amplify our capital requirements to build a strong and sustainable KUB, we are well aware of the funding needs and hence, will also be emphasising our efforts in pre-emptive balance sheet management strategies. This will likely lead to the continued acceleration of our asset monetisation strategy to support our funding needs to ensure that our resources are not strained by our growth plans.

Our Energy sector will remain the leading revenue and earnings contributor to the Group in FY2018. Demand for LPG is expected to remain robust in line with the increasing population and we believe there is still a lot of growth potential in this business. Nonetheless, intense competition and escalating input costs may exert some pressure on the operating margins going forward. With the determined effort to counter these factors through aggressive marketing strategies, improvement in supply chain management specifically in the areas of inventory and dealer management, and our plans to boost distribution capacity by establishing satellite bottling plants, the Group anticipates next year’s performance for the Energy sector to be better.

Our medium-term initiative to establish a refrigerated LPG terminal will likely take shape once the necessary design and financial investment feasibility studies are completed with our jV partner. If all goes according to plan, we target to execute definitive agreements with our jV partner Mabanaft in the fourth quarter of FY2018, with the aim of commencing construction in Q1 FY2019.

For the Agro sector, we expect our performance to be neutral owing to subdued outlook of CPO prices due to the higher palm oil production supply in the market which is predicted to outpace consumption.

On the other hand, and barring adverse weather conditions, we expect FFB production prospects to be potentially encouraging. While our replanting activities are projected to reduce the contribution of our johor estates, an overall uptrend in FY2018 is anticipated from our newly acquired plantation land in Sabah which has a much robust yield and age profile.

Meanwhile for our Mill in Mukah, we will place greater emphasis and attention to ensure it overcomes all its operational challenges and is able to


meet its planned production capacity targets and ideal oil extraction rates.

The ICT and Power sectors will continue to aggressively bid for further sizeable contracts whenever the opportunity arises to enhance our order book and at the same time focus on the execution of existing projects. Both sectors will also actively explore new sources of revenue growth to create more recurring and sustainable income in the future.

A&W will proceed with its expansion plans to open an additional eleven


(11) new outlets in line with the franchise development agreement with our Principal. The Company will carry-on the efforts to improve on its menu offerings, increase revenue through more innovative marketing and promotional activities and expand customer engagement through digital media platforms and reward programmes. In addition, we will monitor the performance of our non-performing stores and relocate them where necessary and at the same time continue with the remodelling efforts for our ‘tired’ outlets. However,

despite our best laid plans, domestic headwinds such as prolonged weak consumer sentiments resulting in reduced consumer spending will likely impact our performance going forward.

Meanwhile, and as highlighted, we expect additional gains from our Property sector arising from our asset unlocking strategy. As usual, the Group will further strengthen the various operational improvement and cost management initiatives that have been carried out since previous years.

ACKNOWlEDGEmENT

As the President/Group Managing Director, I would like to express my deepest gratitude to our valued shareholders for their overwhelming trust and precious support to the Group as we navigate through the challenging and unpredictable global macroeconomic environment.

To our valued business partners, advisers and clients, thank you for your support, loyalty and unrelenting assistance to the Group.

I would also like to take this opportunity to express my appreciation to the Board of Directors for their immense contributions in providing the stewardship, direction and corporate oversight to lead KUB forward, as well as steering the Group’s business trajectory.

Last but not least, I would like to acknowledge our management team and employees for their tireless efforts, contributions and unrelenting commitment throughout the year.


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