INSIDE. 60 Corporate Governance Overview Statement. 77 Statement of Directors Responsibility. 78 Additional Compliance Information

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2 WHAT S INSIDE Highlights 01 5-Year Group Financial Highlights 02 Economic Value for Shareholders Corporate Governance 60 Corporate Governance Overview Statement 77 Statement of Directors Responsibility 78 Additional Compliance Information 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 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 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 FUTURE We 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.

3 ANNUAL REPORT Year Group Financial Highlights Revenue (RM 000) Profit for the year (RM 000) ,856* 13 4, ,559* 14 4, ,154* 15 9, ,772* 16 21, , ,842 Net assets per share (RM) Basic earnings per share (sen) RM 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, , , , ,401 Basic earnings per share (sen) Net assets per share (RM) Dividend per share (sen) Return on equity 2% 1% 3% 8% 10% Gearing ratio (times) *Note: Continuing Operations

4 2 KUB MALAYSIA BERHAD (6022-D) Economic Value for Shareholders MARKET CAPITALISATION* (RM million) /3/2018 * As at 31 December (closing price) SHARE PRICE MOVEMENT # (RM) APR 17 may 17 jun 17 jul 17 aug 17 sep 17 oct 17 nov 17 dec 17 jan 18 feb 18 Mar 18 # Closing Price MONTHLY TRADING VOLUME & SHARE PRICE STATISTICS 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) High (RM) Low (RM) Closing Price (RM)

5 ANNUAL REPORT Corporate Information Board of Directors 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) 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) 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) Company Secretaries Sharina Saidon (LS ) Mohd Afendy Md Yazim (MAICSA ) Nani Suryani Ahmad Tajudin (MAICSA ) Registered Office KUB Malaysia Berhad (6022-D) Level 8-11, Unit 1, Capital 3 Oasis Square, Ara Damansara Jalan PJU 1A/7A Petaling Jaya Selangor Darul Ehsan Tel : +(603) (General) Fax : +(603) (Group Secretarial Division) Fax : +(603) (General) Website : External Auditors Messrs. Deloitte PLT (LLP LCA) Chartered Accountants (AF 0080) Level 16, Menara LGB 1, Jalan Wan Kadir Taman Tun Dr. Ismail Kuala Lumpur Tel : +(603) Fax : +(603) Stock Exchange Listing Bursa Malaysia Securities Berhad ( W) Exchange Square Bukit Kewangan Kuala Lumpur Market : Main Market Stock name : KUB Stock Code : 6874 Sector : Trading/Services Share Registrar Symphony Share Registrars Sdn Bhd ( D) Level 6, Symphony House Pusat Dagangan Dana 1 Jalan PJU 1A/ Petaling Jaya Selangor Darul Ehsan Tel : +(603) Fax : +(603) /8152 Principal Bankers Malayan Banking Berhad Bank Pertanian Malaysia Berhad (Agrobank) Bank Islam Malaysia Berhad Affin Bank Berhad

6 4 KUB MALAYSIA BERHAD (6022-D) Corporate Structure Agro 100% KUB Agro Holdings Sdn Bhd (47135-V) 60% KUB Sepadu Sdn Bhd ( H) 66% KUB Maju Mill Sdn Bhd ( U) 100% KUB Malua Plantation Sdn Bhd (62716-K) Energy 100% KUB Gaz Sdn Bhd (9189-U) Food Business 100% Restoran Kualiti Sdn Bhd ( A) 100% A&W (Malaysia) Sdn Bhd (5168-X) Power 100% KUB Power Sdn Bhd ( P) Information and Communications Technology 100% KUB Telekomunikasi Sdn Bhd ( D) 40% Property 100% Peraharta Sdn Bhd (19250-X) 100% KUB Tower Sdn Bhd ( D) KUB Berjaya Enviro Sdn Bhd ( H) 100% 100% KFT International (Malaysia) Sdn Bhd ( X) Empirical Systems (M) Sdn Bhd ( A) Note: The chart above represents active companies within the Group

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9 ANNUAL REPORT Profile of Directors ACADEMIC/PROFESSIONAL QUALIFICATION(S) Bachelor of Economics (Business Administration), University of Malaya Fellow of the Chartered Institute of Logistics and Transport, 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 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 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. DATO AHMAD IBNIHAJAR Chairman, Independent Non-Executive Director 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 DIRECTORSHIP(S) Malaysian, 68, Male Date of Appointment: 27 November 2015 Board Committee Membership: Board Investment Committee Listed entity Chairman, D Nonce Technology Berhad Other public companies None Others Chairman, Penang Sentral Sdn Bhd Director in various private limited companies ATTENDANCE AT BOARD MEETING IN 2017 Attended all nine (9) meetings

10 8 KUB MALAYSIA BERHAD (6022-D) Profile of Directors ACADEMIC/PROFESSIONAL QUALIFICATION(S) Bachelor of Accountancy (Honours), National University of Malaysia Master Degree in Accountancy, University of Glasgow, Scotland Chartered Accountant Member of the Malaysian Institute of Accountants WORKING EXPERIENCE(S) 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 He then pursued his career with Amanah Merchant Bank Berhad with last held position as the Senior General Manager, Corporate Finance from 1998 to Datuk Abdul Rahim was the Chief Executive Officer of Southern Finance Berhad from 2001 to He was appointed as the President and Group Managing Director of Bank Pembangunan Malaysia Berhad Group in 2003 until Prior to joining KUB, Datuk Abdul Rahim was the Group Chief Executive Officer of Radimax Group Sdn Bhd from 2010 to DATUK ABDUL RAHIM MOHD ZIN President/Group Managing Director He has held several directorships in shipbuilding, ship repair, shipping and oil and gas related activities namely, Labuan Shipyard and Engineering Sdn Bhd ( ) and from , Global Maritime Ventures Berhad, Global Carriers Berhad and Malaysian Bulk Carriers Berhad. DIRECTORSHIP Listed entity None Other public companies None Malaysian, 54, Male Date of Appointment: 17 August 2015 Board Committee Membership: None Others Director of several companies within KUB Group Director in various private limited companies ATTENDANCE AT BOARD MEETING IN 2017 Attended all nine (9) meetings

11 ANNUAL REPORT Profile of Directors ACADEMIC/PROFESSIONAL QUALIFICATION(S) Bachelor of Electrical Engineering, NED University of Engineering and Technology WORKING EXPERIENCE(S) 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) Listed entity None DATO AB RAHIM ABU BAKAR Senior Independent Non-Executive Director Other public companies None Others Director of several companies within KUB Group Chief Executive Officer, Nouva ASP (M) Sdn Bhd (a subsidiary of BARTEC Group International) Chairman, EDMI Meters Sdn Bhd Chairman, VITZROTND (M) Sdn Bhd Malaysian, 66, Male Date of Appointment: 5 August 2013 ATTENDANCE AT BOARD MEETING IN 2017 Attended all nine (9) meetings Board Committee Membership: Board Investment Committee (Chairman) Board Risk Management Committee (Chairman) Board Audit Committee Board Nomination and Remuneration Committee Board Employee Share Option Scheme Committee

12 10 KUB MALAYSIA BERHAD (6022-D) Profile of Directors ACADEMIC/PROFESSIONAL QUALIFICATION(S) Degree in Economics, York University, Toronto, Ontario, Canada Diploma in Accountancy, Toronto School of Business, Ontario, Canada Masters of Business Administration in Shipping and Logistics, Middlesex University, London WORKING EXPERIENCE(S) 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 Datuk Hj Faisyal was a Board Member of Bursa Malaysia from May 2004 until June 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 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 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) DIRECTORSHIP(S) Listed entity Chairman, Suria Capital Holdings Berhad Other public companies Governor and member, Yayasan Bursa Malaysia Others Director of several companies within KUB Group Executive Chairman, Arus Sutera Sdn Bhd Chairman, SCHB Engineering Services Sdn Bhd (a subsidiary of Suria Capital Holdings Berhad) Director, Perkasa Trading Sdn Bhd (a subsidiary of Sabah Economic Development Corporation) ATTENDANCE AT BOARD MEETING IN 2017 Attended eight (8) out of nine (9) meetings Board Committee Membership: Board Audit Committee Board Risk Management Committee

13 ANNUAL REPORT Profile of Directors ACADEMIC/PROFESSIONAL QUALIFICATION(S) Associate Degree in Printing and Advertising, United States of America Diploma in Journalism, International Institute of Journalism, Berlin, Germany WORKING EXPERIENCE(S) 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 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 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. DATO JAMELAH A.BAKAR Independent Non-Executive Director 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) Listed entity None Other public companies Director, Perbadanan Usahawan Nasional Berhad Malaysian, 65, Female Date of Appointment: 5 August 2013 Board Committee Membership: Board Nomination and Remuneration Committee Board Investment Committee Board Employee Share Option Scheme Committee Others Director of several companies within KUB Group EXCO Member, United Malays National Organisation ( UMNO ) s Women Wing ( ) Chairwoman, Women & Family Development Bureau, National Drug Abuse Prevention Association (PEMADAM) Member, Women s Advisory Council and Consultative Malaysia ATTENDANCE AT BOARD MEETING IN 2017 Attended all nine (9) meetings

14 12 KUB MALAYSIA BERHAD (6022-D) Profile of Directors ACADEMIC/PROFESSIONAL QUALIFICATION(S) LLM, University of Bristol, United Kingdom LLB (Honours), University of Malaya Advocate and Solicitor of the High Court of Malaya (1991) WORKING EXPERIENCE(S) 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, Gabungan AQRS Berhad Other public companies None Others Director of several companies within KUB Group Partner, Messrs. Zul Rafique & Partners Director in various private limited companies TUNKU ALIZAN RAJA MUHAMMAD ALIAS ATTENDANCE AT BOARD MEETING IN 2017 Attended all nine (9) meetings Non-Independent Non-Executive Director Malaysian, 51, Male Date of Appointment: 16 June 2015 Board Committee Membership: Board Nomination and Remuneration Committee (Chairman) Board Employee Share Option Scheme Committee (Chairman) Board Investment Committee

15 ANNUAL REPORT Profile of Directors ACADEMIC/PROFESSIONAL QUALIFICATION(S) Bachelor of Science in Business Administration, University of Tulsa, Oklahoma, USA Associate Degree in Computer Information System, MARA Science College, Kuantan Professional Certificate in Financial Technical Analysis with Distinction, Open University Accredited full member of the Society of Technical Analyst, United Kingdom WORKING EXPERIENCE(S) 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 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. TENGKU ZAHAIMI TUAN HASHIM Non-Independent Non-Executive Director Malaysian, 49, Male Date of Appointment: 16 June 2015 Board Committee Membership: Board Nomination and Remuneration Committee Board Investment Committee 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) Listed entity None Other public companies None Others Director of several companies within KUB Group Director, Nur Power Sdn Bhd Director, Nur Generation Sdn Bhd Director, Nur Distribution Sdn Bhd Director, National Aerospace and Defence Industries Sdn Bhd ATTENDANCE AT BOARD MEETING IN 2017 Attended eight (8) out of nine (9) meetings

16 14 KUB MALAYSIA BERHAD (6022-D) Profile of Directors ACADEMIC/PROFESSIONAL QUALIFICATION(S) Bachelor of Accountancy (Honours), International Islamic University of Malaysia Member of the Malaysian Institute of Accountants Member of the Chartered Institute of Management Accountants WORKING EXPERIENCE(S) 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) Listed entity None MOHAMMAD FARISH NIZAR OTHMAN Independent Non-Executive Director Other public companies None Others Director in various private limited companies ATTENDANCE AT BOARD MEETING IN 2017 Attended all nine (9) meetings Malaysian, 46, Male Date of Appointment: 27 November 2015 Board Committee Membership: Board Audit Committee (Chairman) Board Risk Management Committee Board Nomination and Remuneration Committee Board Employee Share Option Scheme Committee

17 ANNUAL REPORT Profile of Directors ACADEMIC/PROFESSIONAL QUALIFICATION(S) International Executive Master of Business Administration, Paris Graduate School of Management, France Certified International Project Manager & Fellow, American Academy of Project Management ( AAPM ) Registered Business Analyst & Fellow, American Academy of Financial Management ( AAFM ) WORKING EXPERIENCE(S) 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 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 He was appointed as President of Ranhill Corporation Sdn Bhd from 1998 to DIRECTORSHIP(S) Listed entity None Other public companies None DATUK HAJI MOHD HANIFF HAJI KOSLAN Independent Non-Executive Director Others Director of several companies within KUB Group Executive Chairman, Dorchester International Sdn Bhd Executive Chairman, Tirai Sutera (M) Sdn Bhd Executive Chairman, Haniff Properties Sdn Bhd Director, Corporate Strategic & Development, HSS Engineering Sdn Bhd Chairman, DMIA Sdn Bhd ATTENDANCE AT BOARD MEETING IN 2017 Attended all nine (9) meetings Malaysian, 59, Male Date of Appointment: 25 August 2016 Board Committee Membership: Board Investment Committee Board Audit Committee Board Risk Management Committee

18 16 KUB MALAYSIA BERHAD (6022-D) Profile of Directors 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: Tunku Alizan Raja Muhammad Alias; and Tengku Zahaimi Tuan Hashim. 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

19 ANNUAL REPORT 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/ Datuk Hj Faisyal Datuk Yusof Hamdain Diego 27/11/ Datuk Haji Mohd Haniff Haji Koslan 27/02/2018 BOARD NOMINATION AND REMUNERATION COMMITTEE 1. Tunku Alizan Raja Muhammad Alias (Chairman) 29/06/ Dato Ab Rahim Abu Bakar 29/06/ Dato Jamelah A.Bakar 29/06/ Tengku Zahaimi Tuan Hashim 27/11/ 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/ Mohammad Farish Nizar Othman 27/11/ Datuk Haji Mohd Haniff Haji Koslan 27/02/2018 BOARD INVESTMENT COMMITTEE 1. Dato Ab Rahim Abu Bakar (Chairman) 29/06/ Dato Ahmad Ibnihajar 27/11/ Dato Jamelah A.Bakar 21/10/ Tunku Alizan Raja Muhammad Alias 29/06/ Tengku Zahaimi Tuan Hashim 29/06/ Datuk Haji Mohd Haniff Haji Koslan 07/10/2016 BOARD EMPLOYEE SHARE OPTION SCHEME COMMITTEE 1. Tunku Alizan Raja Muhammad Alias (Chairman) 28/08/ Dato Ab Rahim Abu Bakar 21/10/ Dato Jamelah A.Bakar 27/11/2015 (Redesignated as Member w.e.f 28/08/2017) 4. Mohammad Farish Nizar Othman 30/05/2016

20 18 KUB MALAYSIA BERHAD (6022-D) Senior Management Team From left to right: 1 Khamsiah Ya akob 4 Nani Suryani Ahmad Tajudin 7 Mohd Afendy Md Yazim 2 Dr. Badrulhisham Mohd Ghazali 5 Azizul Rahman Mohd Basir 8 Ahmad Fisal Shafie 3 Mohd Noorkhairi Mahmud 6 Dr. Zaini Mohamed Tambah

21 ANNUAL REPORT Senior Management Team Datuk Abdul Rahim Mohd Zin 12 Mohamad Mazri Zainal Abidin 15 Ahmed Fairuz Abdul Aziz 10 Azman Abdullah 13 Samad Mohd Shariff 16 Sharina Saidon 11 Hanie Izawatie Ahmad Kamil 14 Azizan Ariffin

22 20 KUB MALAYSIA BERHAD (6022-D) Profile of Senior Management Datuk Abdul Rahim mohd zin President/Group Managing Director (As expressed in page 8 of the Profile of Directors) Ahmed Fairuz Abdul Aziz Vice President, Group Finance Nationality Age Gender Malaysian 40 Male Date of Appointment 4 January 2016 Academic/Professional Qualification(s) Bachelor Degree in Accounting and Finance, London School of Economics, United Kingdom Fellow of the Institute of Chartered Accountants in England and Wales Member of the Malaysian Institute of Accountants 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 Abdullah Vice President, Group Operations and Strategic Development Nationality Age Gender Malaysian 42 Male Date of Appointment 15 February 2016 Academic/Professional Qualification(s) Bachelor Degree in Accounting and Finance, University of Warwick, United Kingdom Associate Member of the Chartered Institute of Management Accountants, United Kingdom Member of the Malaysian Institute of Accountants Present Directorship(s) Listed entity Other public companies None None 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 Abidin Vice President/Chief Executive Officer, KUB Power Sdn Bhd Nationality Age Gender Malaysian 51 Male Date of Appointment 15 May 2014 Academic/Professional Qualification(s) Bachelor Degree in Electrical Engineering, University of Malaya Member of Board of Engineers Malaysia Member of Institution of Engineers Malaysia Present Directorship(s) Listed entity Other public companies None None 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 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 as Senior General Manager. After a stint as a consultant with Multi Discovery Sdn Bhd, he re-joined KUB Power Sdn Bhd in 2014.

23 ANNUAL REPORT Profile of Senior Management Samad Mohd Shariff Vice President/Chief Executive Officer, A&W (Malaysia) Sdn Bhd Nationality Age Gender Singaporean 52 Male Date of Appointment 2 July 2013 Academic/Professional Qualification(s) Advanced Diploma in Business Administration, Thames Business School, Singapore Present Directorship(s) Listed entity Other public companies None None 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 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 Ahmad Fisal Shafie Vice President/Chief Executive Officer, KUB Gaz Sdn Bhd Nationality Age Gender Malaysian 56 Male Date of Appointment 16 November 2015 Academic/Professional Qualification(s) Bachelor Degree in Accountancy, University of East Anglia, United Kingdom Present Directorship(s) Listed entity Other public companies None None in 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 Ahmad Fisal provided consultancy services for the downstream oil industry before joining KUB. Dr. Zaini Mohamed Tambah Head, Plantation and Operations, KUB Agro Holdings Sdn Bhd and KUB Sepadu Sdn Bhd Nationality Age Gender Malaysian 55 Male Date of Appointment 1 March 2017 Academic/Professional Qualification(s) Doctorate in Business Administration, University of Hertfordshire, United Kingdom Master in Business Administration, University of Delaware Diploma in Agriculture, Universiti Pertanian Malaysia (now Universiti Putra Malaysia) Present Directorship(s) Listed entity Other public companies None None 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 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 After seven (7) months at the Plantation Advisory Unit at KUB Malaysia Berhad, he was appointed to his current position. 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

24 22 KUB MALAYSIA BERHAD (6022-D) Profile of Senior Management Mohd Noorkhairi Mahmud Head, KUB Maju Mill Sdn Bhd Nationality Age Gender Malaysian 39 Male Date of Appointment 20 June 2016 Academic/Professional Qualification(s) Bachelor Degree in Mechanical Engineering, MARA University of Technology Diploma in Mechanical Engineering, Polytechnic of Kota Bharu, Kelantan Present Directorship(s) Listed entity Other public companies None None 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 Mohd Noorkhairi then served as Mill Manager at Tabung Haji Plantations Bhd until He then joined United Malacca Bhd in Triang, Pahang until June 2016 before joining KUB. Azizul Rahman Mohd Basir Vice President/Chief Executive Officer, KUB Telekomunikasi Sdn Bhd Nationality Age Gender Malaysian 40 Male Date of Appointment 1 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 and Networks, University of Joseph Fourier, Grenoble France Project Management Professional PMP Certified 2012 Business Continuity Plan Associate Business Continuity Planner 2007 Present Directorship(s) Listed entity Other public companies None None 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 Saidon Head, Group Secretarial Company Secretary Nationality Age Gender Malaysian 58 Female Date of Appointment 2 June 2013 Appointed as Company Secretary on 14 June 2013 Academic/Professional Qualification(s) LLB (Honours) in Business Law, City of London Polytechnic, United Kingdom (now London Metropolitan University) Diploma in Law, MARA Institute of Technology Licensed Company Secretary (LS ) Admitted to the Malaysian Bar Present Directorship(s) Listed entity Other public companies None None 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.

25 ANNUAL REPORT Profile of Senior Management Azizan Ariffin Head, Group Risk and Audit Nationality Age Gender Malaysian 50 Male Date of Appointment 1 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 Member of the Malaysian Institute of Management Qualified Risk Auditor, Professional Member of the Institute of Enterprise Risk Practitioners Present Directorship(s) Listed entity Other public companies None None 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 akob Head, Group Human Capital Nationality Age Gender Malaysian 57 Female Date of Appointment 9 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 Ghazali Assistant Vice President, Strategic Planning and Performance Management Nationality Age Gender Malaysian 43 Male Date of Appointment 5 May 2016 Academic/Professional Qualification(s) Doctorate in Mechanical Engineering, University of Adelaide, Australia Bachelor Degree in Mechanical Engineering (1 st Class Honours), University of Adelaide, Australia Present Directorship(s) Listed entity Other public companies None None 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 He later joined Proton Holdings Sdn Bhd as the Head of Export and Group Corporate Strategy between 2008 and 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. Present Directorship(s) Listed entity Other public companies None None

26 24 KUB MALAYSIA BERHAD (6022-D) Profile of Senior Management Hanie Izawatie Ahmad Kamil Assistant Vice President, Group Legal Nationality Age Gender Malaysian 41 Female Date of Appointment 7 December 2015 Academic/Professional Qualification(s) Bachelor Degree in Law (Honours), MARA University of Technology Admitted to the Malaysian Bar Present Directorship(s) Listed entity Other public companies None None 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 She later moved to AirAsia X Berhad in 2008 as Legal Manager and was promoted as the Head of Legal in Mohd Afendy Md Yazim Senior Manager, Group Secretarial Joint Company Secretary Nationality Age Gender Malaysian 38 Male Date of Appointment 2 September 2014 Appointed 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 Member of the Malaysian Institute of Chartered Secretaries and Administrators Licensed/Certified Company Secretary Certified Integrity Officer (Malaysia Anti-Corruption Commission) Present Directorship(s) Listed entity Other public companies None None 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 He was the Corporate Secretarial Manager with National Aerospace and Defence Industries Sdn Bhd prior to joining KUB. Nani Suryani Ahmad Tajudin External Joint Company Secretary Nationality Age Gender Malaysian 48 Female Date of Appointment 8 September 2015 Academic/Professional Qualification(s) Master of Law Executive (Business Law), International Islamic University of Malaysia The Institute of Chartered Secretaries and Administrators, United Kingdom Present Directorship(s) Listed entity Other public companies None None 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

27 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 Dato Ahmad Ibnihajar Chairman Message from the Chairman Dear Shareholder, The Group s revenue increased by 20.9% RM599.3 million higher than FY2016: RM495.8 million 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. Underpinned by our four (4) core values 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.

28 26 KUB MALAYSIA BERHAD (6022-D) Message from the Chairman The Board of Directors of KUB at the Group s 52 nd Annual General Meeting 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 to recommend a first and final singletier 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, *Note: Continuing Operations 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 Profit for the Year (RM 000) 4,942 4,475 9,075 21,542 30,

29 ANNUAL REPORT 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 ) ASEAN Corporate 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 highperforming 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.

30 The President/GMD s Statement and Management Discussion & Analysis 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 Zin President/Group Managing Director Dear Shareholder, I am pleased to inform you that we have been making steady progress in the implementation of our three (3) year ( ) 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.

31 ANNUAL REPORT The President/GMD s Statement and Management Discussion & Analysis 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 investment decisions hence the theme 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 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 Investing for the Future Driven by Energy, Agro and Food sectors Executed a MOU with Mabanaft to build a refrigerated LPG terminal at Westport Invested in a dedicated pipeline extension at Westport (completed in July FY2017) Embarked on the reconditioning and requalification of existing cylinders as well as purchase of new cylinders Commenced the construction of a satellite bottling plant in the Klang Valley Acquisition of 1,534 hectares of brownfield oil palm plantation land in Sabah (completed in January FY2018) Mill improvement works facilitated the commencement of operations in July FY2017 Replanting exercise of hectares was carried out in our Kahang estate in Kluang, Johor Opened seven (7) outlets during the year Remodeled three (3) outlets in FY2017 Asset Value Unlocking Strategy Monetised non-core properties and assets in Selangor, Perak and Penang amounting to RM31.6 million

32 30 KUB MALAYSIA BERHAD (6022-D) The President/GMD s Statement and Management Discussion & Analysis Balance Sheet Strength Net assets per share strengthened to RM0.58 Total assets for the year increased to RM546.8 million increased Return to Shareholders Financial leverage remained healthy with net gearing ratio of 0.18 times Expected payout of 2.0 sen (RM11.2 million) Operational Excellence/Human Capital Initiatives Received shareholders approval on 23 May 2017 to establish an Employee Share Option Scheme ( ESOS ) Obtained OHSAS 18001:2007 Management System Certification on 3 July 2017 for KUB Embarked on a Business Continuity Management ( BCM ) Programme - KUB and KUB Gaz Sdn Bhd were certified on 10 January 2018 for ISO 22301:2012, a BCM Programme Revamped the KUB Management Guidelines to enhance accountability and authority to senior management in tandem with the latest organisation structure of the Group Upgraded our integrated reporting systems Continued to provide constructive training and career development opportunities to employees SEGMENTAL BUSINESS REVIEW KUB s revenue and PAT contribution according to sectors are shown in the diagrams below: SEGMENTAL REVENUE CONTRIBUTION (%) FOR FY2017 Energy 5.3% ICT 10.2% Agro Food Property Power 0.4% 0.3% 10.5% 5.0% 68.3% Others

33 ANNUAL REPORT The President/GMD s Statement and Management Discussion & Analysis Segmental Revenue Comparison (Rm million) FY2016 : FY2017 : ICT Energy Agro Food Property Power Others Segmental Pat Comparison (RM MILLION) FY2016 : 21.5 FY2017 : ICT Energy Agro Food Property Power Others (15.4) (10.6) 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 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.

34 32 KUB MALAYSIA BERHAD (6022-D) The President/GMD s Statement and Management Discussion & Analysis 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. ENERGY SECTOR KEY HIGHLIGHTS Initiatives Expanding supply and distribution capacity Building core via vertical integration Rationalising and expanding market base 26% increase in revenue MOU signed with Mabanaft Pte Ltd for the joint development, ownership and operation of Refrigerated LPG Terminal at Westport Invested in a pipeline extension at Westport for higher efficiency in delivery Began construction of a satellite bottling plant in Klang Valley to widen distribution network The Energy division was the main revenue driver for the Group in FY2017, representing 68.3% of the Group s topline. 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 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

35 ANNUAL REPORT The President/GMD s Statement and Management Discussion & Analysis 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 unproductive assets in Penang namely in Prai 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 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. Initiatives Improving productivity via yield improvement Expanding production capacity Improving extraction rate and manufacturing cost Newly acquired brownfield plantation in Sungai Kinabatangan, Sabah will drive the Group s earnings The total area for our plantation estates are shown in the table below: Estate Johor Sungai Yong Kahang Sarawak Sungai Buloh Sungai Nape agro SECTOR KEY HIGHLIGHTS Revenue grew by 54% PAT surged 125% Replanted hectares, with a plan to replant 200 hectares per annum over the next five (5) years Total Area as of FY2017 (hectares) 1, ,435 2,241 Total 7,332 FFB output increased by 18% Mechanisation intensified for better efficiency 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.

36 34 KUB MALAYSIA BERHAD (6022-D) The President/GMD s Statement and Management Discussion & Analysis 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. FFB Production (metric tonnes) FY2016 : 77,120 FY2017 : 91,149 40,000 35,000 19,727 14,303 26,345 16,745 22,036 14,481 33,763 20,869 30,000 25,000 20,000 15,000 Sungai Yong Kahang Sungai Buloh Sungai Nape 10,000 5,000 - FY2016 FY2017 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. 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.

37 ANNUAL REPORT The President/GMD s Statement and Management Discussion & Analysis 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 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. 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. ICT sector KEY HIGHLIGHTS 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 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. Initiatives Focusing on core expertise and delivery capacity Expanding customer base Exploring new business opportunities Secured three (3) additional contracts worth a total of RM26.0 million as at 31 December 2017 PBT maintained at previous year s level in spite of revenue decrease Total outstanding order book amounting to RM66.4 million as at 31 December 2017 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. 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.

38 36 KUB MALAYSIA BERHAD (6022-D) The President/GMD s Statement and Management Discussion & Analysis 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 fiftythree (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). 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 quickservice restaurant ( QSR ) chain that was brought into Malaysia in It currently has thirty-six (36) outlets throughout Peninsular Malaysia. Initiatives Investing in more outlets to improve revenue Improving cost management Innovating menu offerings Relocated non-performing outlets food SECTOR KEY HIGHLIGHTS Revenue grew by 34% PAT increased 38% Continued to invest in branding and marketing Opened seven (7) additional outlets Added new products and introduced exciting promotions 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 contributed 5.3% of the Group s total revenue

39 ANNUAL REPORT The President/GMD s Statement and Management Discussion & Analysis 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 nonperforming 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. 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. Initiatives Undertaking more projects Considering new businesses within the sector Exploring sustainable models that are able to generate recurring income power sector KEY HIGHLIGHTS Revenue grew by 183% PBT improved 200% Contracts in-hand amounted to RM69.2 million as at 31 December 2017 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. 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.

40 38 KUB MALAYSIA BERHAD (6022-D) The President/GMD s Statement and Management Discussion & Analysis 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 doublestorey 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. Initiatives Divesting property assets to support growth of core businesses Unlocking value from property portfolio property sector KEY HIGHLIGHTS Monetised two (2) parcels of land in Perak and a 3-storey shop office in Selangor amounting to 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. FY2018 will be a busy year for us as we begin the next phase of our growth story 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

41 ANNUAL REPORT The President/GMD s Statement and Management Discussion & Analysis 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 nonperforming 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.

42 40 KUB MALAYSIA BERHAD (6022-D) KUB in the news

43 ANNUAL REPORT KUB in the news