KUB Malaysia Berhad Annual Report 2021

The Group Managing Director’s Statement and Management Discussion & Analysis Prospects As the COVID-19 pandemic depressed economic activity around the world, Malaysia has been no exception, suffering a GDP decline of 5.6% in 2020. While negative effects of the pandemic are likely to linger at least into early 2022, and volatile global crude oil prices persist, green shoots of recovery can be seen in the form of increased domestic demand and exports in Q2 of 2021, bolstered by the gradual reopening of the economy and a stabler political situation. The continuing effects of the pandemic are likely to affect our LPG business in particular, with diminished demand amongst commercial market customers in our core Southern region market likely to persist until the opening of the Malaysia-Singapore border. However, our ongoing efforts to modernise the Solar Gas brand, acquire and retain a bigger network of dealers, introduce localised marketing strategies and drive cost and operational efficiency provide optimism that the division will rebound strongly. At the same time, the burgeoning regional market for LPG across South Asia and South East Asia offers interesting growth opportunities which we are exploring and hope to make an announcement in the near future. As our core business which contributes the largest share of revenue to the Group, we are confident that the results of our LPG division initiatives will justify the decision to streamline our capital expenditure plans made since FY2019. Looking at our Agro division, we can expect reduced revenue and profit in the coming years as a consequence of the disposal of our estates in Kluang, Johor, and Malua, Sabah. However, we are optimistic about the potential for increased operational efficiency and productivity as a result of our revamped management approach adopted at our Mukah estates, where cutting-edge planting, nutrition management and precision agriculture technologies will be optimised. Within the ICT division, we will continue to seek sizeable contracts wherever the opportunity arises to enhance our order book while leveraging on our partnership with HFR, Inc. to access new and more lucrative infrastructure development opportunities aligned with next generation technologies such as 5G. With the JENDELA spearheading its drive to make Malaysia a regional leader in digital economy, we believe that the division is well placed to capitalise on future prospects. Recognising the continued threat that the uncertainty of the pandemic presents, we will prioritise pre-emptive balance sheet and effective cash flow management over the coming quarters in order to maintain the sustainability of our businesses. With a single-minded focus reflecting our ongoing drive towards operational efficiency, all investment decisions, capital and operating expenditure plans will be rigorously and regularly reviewed, and we will take steps to re-optimise our capital structure wherever necessary. With all hands on deck, we will emerge from this turbulent period stronger and more resilient, with renewed energy towards capitalising on the many growth opportunities that the new normal will present. DIVIDENDS In appreciation of our shareholders’ undivided support, we are pleased to announce that the Board of Directors has recommended a first and final single tier dividend of 1.5 sen per ordinary shares, subject to the approval of the shareholders at the forthcoming Annual General Meeting of the Company. This will amount to a total payout of RM8.3 million, reflecting a payout ratio of 44% of the core profit (excluding exceptional items) of the Group. Appreciation For their continued faith during these unprecedented times, I would like to express again my sincere gratitude on behalf of the Group to our valued shareholders, and extend a similarly heartfelt note of appreciation to our business partners, advisers and clients for the support and spirit of camaraderie that they provide. I would also like to take this opportunity to offer my appreciation to the Board of Directors for their insights and expert stewardship. In particular, let me extend my personal thanks to our outgoing members of the Board, Dato’ Ab Rahim bin Abu Bakar and Tengku Zahaimi bin Tuan Hashim, and heartily welcome our new Directors, Mr. Kasinathan a/l Tulasi and Mr. Tee Beng Thong. Finally, allow me to extend a personal thanks to our management team and employees for providing the commitment, effort and contributions which form the lifeblood of our Group. Ahmed Fairuz bin Abdul Aziz Group Managing Director 22 KUB MALAYSIA BERHAD