KUB Malaysia Berhad Annual Report 2021

Dear Valued Shareholders, The COVID-19 pandemic has cast a long shadow over the world, threatening lives and livelihoods while causing major disruption to global supply chains, amongst many other challenges. In Malaysia, the ongoing uncertainty it has brought about has resulted in depressed demand from both consumer and commercial markets, ongoing logistical challenges and significant delays to the commencement and fulfilment of projects across the business community. While we have certainly not been immune to the negative impacts of the pandemic, this year’s report theme of ‘Building Resilience’ reflects our belief that the actions we have taken over the past eighteen (18) months particularly in disposing of our non-strategic and non-core assets and building balance sheet strength will pay dividends in the long run. Alongside the continued streamlining of our cost structure, we now benefit from improved financial latitude to invest in our core businesses and execute our strategic plans to their fullest potential, thus standing us in good stead for the long run. I welcome you to read the analysis below to gain greater insight into how our respective business divisions have evolved amidst pandemic-related obstacles, and the strategies we have put in place to rebound in the near future. Financial Performance Review The Group has changed its financial year end from 31 December to 30 June. As a result, the 2021 Financial Period (‘FP2021’) and its results disclosed herein refer to the 18-month period from 1 January 2020 to 30 June 2021. In FP2021, the Group delivered revenue of RM584.0 million, with the lion’s share contributed by the business activities of our LPG division (77.2%), followed by the Agro division (14.2%), ICT division (6.6%) and our other sectors of business (2.0%). This split in revenue contribution aligns with that of previous financial years, with the notable decline in our LPG division’s relative revenue contribution caused by various pandemic and market related impediments which are analysed in detail in the division’s report below. Group-wide profit after zakat and tax (‘PAT’) for FP2021 stands at RM158.6 million and is bolstered by exceptional gains from the disposal of our plantation estates in Kluang, Johor under our Agro division totalling RM122.5 million and the disposal of our associate company KUB Berjaya Enviro Sdn Bhd for RM30.5 million. The Group Managing Director’s Statement and Management Discussion & Analysis The monetisation of these has also resulted in a significant increase to our total assets, which has risen to RM643.7 million compared to RM546.3 million at the end of FY2019 mainly as a result of the surge in our cash balance, which now stands at RM423.1 million from RM145.6 million as of end FY2019. Furthermore, our overall debt has been reduced substantially, with our gearing ratio falling from 0.31 to 0.08 times following the disposal of a subsidiary KUB Malua Plantation Sdn Bhd. While the immediate outlook for the future does not offer strong prospects of a rapid uptick in global macroeconomic conditions or local consumer sentiment, we are confident that by reducing our leverage and strengthening our liquidity, we will benefit from enhanced strategic flexibility and a war chest to capitalise on growth opportunities in the new normal. In addition, through pre-emptive balance sheet and stringent cash flow management measures, we are continuing the work begun in FY2019 to achieve more lean and efficient operations, thereby securing the sustainability of our businesses and enhancing our ability to rebound quickly once the pandemic and its effects subside. 16 KUB MALAYSIA BERHAD