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LEVEL 8 BLOCK DKOMPLEKS KELANA CENTRE POINTJALAN SS7/19 KELANA
JAYA47301 PETALING JAYASELANGOR DARUL EHSANMALAYSIATEL: +60 3 7680
9666FAX: +60 3 7680 9669
www.kub.com
KU
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AYSIA
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2006
KUB MALAYSIA BERHAD 6022-D KUB MALAYSIA BERHAD ANNUAL REPORT
2006
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PROFILE OF KUB MALAYSIAKUB MALAYSIA BERHAD IS AN INVESTMENT
HOLDINGCOMPANY, LISTED ON THE MAIN BOARD OF BURSA
MALAYSIASECURITIES BERHAD. KUB MALAYSIA PROVIDES VARIOUSSERVICES
AND PRODUCTS IN THE ICT INDUSTRY AND THE ENERGY SECTOR. WITH THE
LATTER, KUB MALAYSIA IS THE LARGEST INDEPENDENT BOTTLER OF
LIQUEFIEDPETROLEUM GAS (LPG) IN THE COUNTRY.
IN ADDITION TO ICT AND ENERGY, KUB MALAYSIA PLANS TOVENTURE INTO
LUCRATIVE NEW CORE AREAS OF DEFENSE AND FACILITIES MANAGEMENT IN
THE NEAR FUTURE. IN ANAIM TO RECORD FURTHER SUCCESS, IT HAS
IDENTIFIED ANDBEGUN REALIZING ITS CORPORATE BLUEPRINT.
OUR VISIONTO OWN AND DEVELOP BUSINESSES WITH SUSTAINABLE
PROFITSWHICH GENERATE PREMIUM RETURNS TO SHAREHOLDERS
OUR MISSIONTO FOCUS ON CORE COMPETENCIES AND SUSTAIN GROWTH
TO LEVERAGE AND MAXIMIZE SYNERGIES AMONG OURBUSINESSES
TO DEVELOP A CULTURE THAT EMPHASIZES HIGH PERFORMANCE
TO BE A STRATEGIC PARTNER IN NATION BUILDING
TO FULFILL OUR SOCIAL RESPONSIBILITIES IN OUR COMMUNITY
concept & design by CHIMERA SDN BHD
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CONTENTS
CORPORATE002 Notice of 42nd Annual General Meeting003 Statement
Accompanying Notice of
42nd Annual General Meeting004 Group Financial Overview006
Corporate Information008 Corporate Structure010 Organization
Structure012 Board of Directors014 Directors’ Profile018 Senior
Management Team022 Chairman’s Statement030 Chief Executive’s
Operations Review038 Corporate Social Responsibility Report042 In
the News043 Statement on Corporate Governance050 Additional
Compliance Information051 Statement on Internal Control053 Board
Audit Committee Report
FINANCIAL060 Directors’ Report064 Statement by Directors065
Statutory Declaration066 Report of the Auditors068 Balance
Sheets070 Income Statements071 Consolidated Statements of Changes
in Equity072 Statement of Changes in Equity073 Cash Flow
Statements075 Notes to the Financial Statements128 List of
Properties134 Analysis of Shareholding
Proxy form
STRONGERTOGETHER
ANNUAL REPORT 2006KUB MALAYSIA BERHAD
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NOTICE OF 42ND ANNUAL GENERAL MEETING
002003
ANNUAL REPORT 2006KUB MALAYSIA BERHAD
NOTICE IS HEREBY GIVEN THAT THE 42ND ANNUAL GENERAL MEETINGOF
KUB MALAYSIA BERHAD WILL BE HELD AT LAMAN PUTERI, HOTELSINGGAHSANA
PETALING JAYA, PERSIARAN BARAT OFF JALAN SULTAN,46760 PETALING
JAYA, SELANGOR ON THURSDAY, 28 JUNE 2007 AT 10.00 AMFOR THE
FOLLOWING PURPOSES:
Securities Berhad and that such authority shall continuein force
until the conclusion of the next Annual GeneralMeeting of the
Company”Ordinary Resolution 7
8 Proposed Adoption of New Articles of Association of the
Company
“THAT the new Articles of Association of theCompany as set out
in Appendix 1 of the Circular to the Shareholders dated 6 June 2007
be and ishereby approved and adopted”Special Resolution 1
ANY OTHER ORDINARY BUSINESS9 To transact any other ordinary
business of which due
notice shall have been given in accordance with theCompanies
Act, 1965 and/or the Articles of Association.
By order of the Board
Eulis Rachmatiah Iskandar Sastrawidjaja (LS008774)YM Tunku
Alizan Raja Muhammad Alias (BC/T/342)Harnita
Harmain(LS008063)SECRETARIES
Petaling Jaya6 June 2007
NOTES:1 A member of the Company entitled to attend and vote at
the
abovementioned Meeting is entitled to appoint one other person
orpersons, whether a member or not as his/her proxy/proxies to
attendand vote in his/her stead. Where a member appoints two or
moreproxies, the member shall specify the proportion of the
member’sshareholdings to be represented by each proxy.
2 The instrument appointing a proxy shall be in writing under
the hand of the appointer or his/her attorney duly authorized or if
the appointer is a corporation, either under its common seal or
signed under the handof its attorney or by an officer on behalf of
the corporation.
3 The Proxy Forms must be deposited at the office of The
Company’s ShareRegistrar, Symphony Share Registrars Sdn Bhd, Level
26, Menara Multi-Purpose, Capital Square, No 8 Jalan Munshi
Abdullah, 50100 Kuala Lumpurby hand or fax to 03-27212530/31 not
less than twenty four (24) hoursbefore the time for holding the
Meeting or an adjournment thereof.
4 Explanatory Note on Special Business:Ordinary Resolution (7),
if passed, will give the Directors of the Company,from the date of
the above Meeting, authority to issue and allot ordinaryshares from
the unissued capital of the Company being for such purposesas the
Directors consider would be in the interest of the Company.
Thisauthority will, unless revoked or varied by the Company in the
generalmeeting, expire at the next Annual General Meeting.
Special Resolution (1), if passed, will ensure that the Articles
ofAssociation of the Company will be consistent with the provisions
of the Listing Requirements of Bursa Malaysia Securities
Berhad.
AGENDAORDINARY BUSINESS1 To receive the Audited Financial
Statements for the
financial year ended 31 December 2006 together withthe Reports
of the Directors and Auditors thereon.Ordinary Resolution 1
2 To re-elect Dato’ Nordin Baharuddin who retires inaccordance
with Article 97 of the Company’s Articlesof Association, and being
eligible has offered himselffor re-election.Ordinary Resolution
2
3 To accept the retirement of Dato’ Ir. Harun AhmadSaruji who
retires pursuant to Article 97 of theCompany’s Articles of
Association and is not seekingre-election.Ordinary Resolution 3
4 To re-elect Encik Mohd Nazar Samad who retirespursuant to
Article 102 of the Company’s Articles of Association and being
eligible has offered himselffor re-election.Ordinary Resolution
4
5 To approve the Directors’ fees for the financial yearended 31
December 2006.Ordinary Resolution 5
6 To re-appoint Messrs KPMG Desa Megat & Co asAuditors of
the Company and to authorise theDirectors to fix their
remuneration.Ordinary Resolution 6
SPECIAL BUSINESS7 To consider and if thought fit to pass the
following
Ordinary Resolution:
“THAT pursuant to Section 132D of the CompaniesAct,1965 (“Act”)
and subject always to the approvalof the relevant authorities, the
Directors be and arehereby empowered to issue the shares in the
Companyfrom time to time and upon such terms and conditionsand for
such purpose the Directors may deem fitprovided that the aggregate
number of shares issuedpursuant to this resolution does not exceed
10% ofthe issued share capital of the Company for the timebeing and
that the Directors be and also empoweredto obtain the approval for
the listing of and quotationfor the additional shares so issued on
the Bursa Malaysia
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STATEMENT ACCOMPANYING NOTICE OF 42ND ANNUAL GENERAL MEETING
ANNUAL REPORT 2006KUB MALAYSIA BERHAD
1 THE DIRECTORS WHO ARE STANDING FOR RE-ELECTION AT THE 42ND
ANNUAL GENERALMEETING OF THE COMPANY1.1 Director retiring pursuant
to Article 97 of the Company’s Article of Association:
a Dato’ Nordin Baharuddin
1.2 Director retiring pursuant to Article 102 of the Company’s
Article of Association:a Encik Mohd Nazar Samad
Further details of the above Directors seeking for re-election
are set out in the Directors’ profiles, which appear from pages 014
to 017 of this Annual Report.
2 GENERAL MEETINGS HELD IN THE FINANCIAL YEAR ENDED 31 DECEMBER
20062.1 An Extraordinary General Meeting was held on 25 January
2006 at 10.00 am at Dewan Tun Hussein Onn,
Putra World Trade Centre (PWTC), 50480 Kuala Lumpur.
2.2 The 41st Annual General Meeting was held on 29 June 2006 at
10.00 am at Dewan Tun Hussein Onn, Putra World Trade Centre (PWTC),
50480 Kuala Lumpur.
3 BOARD MEETINGS HELD IN THE FINANCIAL YEAR ENDED 31 DECEMBER
2006a A total of fifteen (15) Board Meetings were held during the
financial year ended 31 December 2006 as follows:
NO DATE OF BOARD MEETINGS TIME NO DATE OF BOARD MEETINGS
TIME
1 5 January 2006 10.00 AM 9 19 July 2006 10.00 AM2 20 January
2006 10.00 AM 10 11 August 2006 03.00 PM3 23 February 2006 02.30 PM
11 24 August 2006 10.00 AM4 20 March 2006 03.00 PM 12 4 September
2006 11.00 AM5 20 April 2006 10.00 AM 13 15 September 2006 09.00
AM6 25 April 2006 10.00 AM 14 10 October 2006 11.00 AM7 29 May 2006
09.00 AM 15 9 November 2006 09.00 AM8 21 June 2006 10.00 AM
b Details of Attendance of the Directors at the Board Meetings
for the financial year ended 31 December 2006are as follows:
NAME OF DIRECTORS NO OF MEETINGS ATTENDED
Dato’ Nordin Baharuddin 14/15Datuk Haji Faisyal Yusof Hamdain
Diego 14/15Dato’ Kamilia Ibrahim 13/15Dato’ Ir. Harun Ahmad Saruji
14/15Rosman Abdullah 12/15Raja Ali Raja Othman 14/15Mohammed
Ezzuddeen Mohd Effendi 12/15Omar Haji Ahmad 15/15
All Board Meetings were held at the Board Room, Level 23
KUB.com, Jalan Yap Kwan Seng, 50450 Kuala Lumpurexcept for a
meeting held on 10 October 2006, which was held at Cubic
Electronics Sdn Bhd, No.1 Jalan T.U 43,Taman Tasik Utama, Ayer
Keroh, Melaka.
There is no Director being appointed or resigned during the
financial year ended 31 December 2006.
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GROUP FINANCIAL OVERVIEW
004005
ANNUAL REPORT 2006KUB MALAYSIA BERHAD
5-YEAR FINANCIAL SUMMARYYear ended 31 December 2006
IN RM’000 2006 2005 2004 2003 2002
RESTATED
Continuing OperationsRevenue 765,881 684,077 799,811 625,281
575,691Operating loss (43,063) (28,314) (8,926) (20,819)
(272,843)Loss before tax (43,703) (26,079) (9,979) (20,139)
(274,031)Loss from continuing operations (47,640) (33,912) (16,663)
(27,462) (279,280)
Discontinued OperationsLoss from discontinued operations (4,683)
(4,488) 0 0 0Loss for the Year (52,323) (38,400) (16,663) (27,462)
(279,280)
REVENUE IN RM’000
02 575,691
03 625,281
04 799,811
05 684,077
06 765,881
(272,843) 02
(20,819) 03
(8,926) 04
(28,314) 05
(43,063) 06
OPERATING LOSSIN RM’000
(274,031) 02
(20,139) 03
(9,979) 04
(26,079) 05
(43,703) 06
LOSS BEFORE TAXIN RM’000
-300 -250 -200 -150 -100 -50-300100 200 300 400 500 600 700 800
-250 -200 -150 -100 -50
LOSS FROM CONTINUING OPERATIONSIN RM’000
0 02
0 03
0 04
(4,488) 05
(4,683) 06
(279,280) 02
(27,462) 03
(16,663) 04
(33,912) 05
(47,640) 06
(279,280) 02
(27,462) 03
(16,663) 04
(38,400) 05
(52,323) 06
LOSS FOR THE YEARIN RM’000
-300 -250 -200 -150 -100 -50-5 -4 -3 -2 -1-300 -250 -200 -150
-100 -50
LOSS FROM DISCONTINUED OPERATIONSIN RM’000
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NON-CURRENT ASSET IN RM’000
02 671,532
03 601,517
04 530,360
05 468,824
06 248,574
02 463,425
03 443,544
04 411,714
05 405,077
06 420,508
CURRENT ASSETIN RM’000
100 200 300 400 500 600 700 800
500400300200100
02 377,048
03 380,949
04 442,678
05 481,382
06 601,966100 200 300 400 500 600 700 800
12010080604020
02 118,929
03 107,007
04 98,670
05 109,156
06 46,222
CURRENT LIABILITIESIN RM’000
NON-CURRENT LIABILITIESIN RM’000
SHAREHOLDERS’ EQUITYIN RM’000
02 436,989
03 403,665
04 433,007
05 405,168
06 363,246500400300200100
5-YEAR FINANCIAL RECORDYear ended 31 December 2006
IN RM’000 2006 2005 2004 2003 2002
RESTATED
Non-current asset 248,574 468,824 530,360 601,517 671,532Current
Asset 601,966 481,382 442,678 380,949 377,048Current liabilities
420,508 405,077 411,714 443,544 463,425Non-current liabilities
46,222 109,156 98,670 107,007 118,929Shareholders’ equity 363,246
405,168 433,007 403,655 436,989
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CORPORATEINFORMATION
006007
ANNUAL REPORT 2006KUB MALAYSIA BERHAD
BOARD OF DIRECTORSDato’ Nordin BaharuddinNon-Independent
Non-Executive DirectorCHAIRMAN
Datuk Haji Faisyal Datuk Yusof Hamdain Diego Independent
Non-Executive DirectorDEPUTY CHAIRMAN
Dato’ Kamilia IbrahimNon-Independent Non-Executive
DirectorDIRECTOR
Dato’ Ir. Harun Ahmad SarujiSenior Independent Non-Executive
DirectorDIRECTOR
Rosman AbdullahNon-Independent Non-Executive
DirectorDIRECTOR
Raja Ali Raja OthmanIndependent Non-Executive
DirectorDIRECTOR
Mohamed Ezzuddeen Mohd EffendiIndependent Non-Executive
DirectorDIRECTOR
Omar Haji AhmadIndependent Non-Executive DirectorDIRECTOR
Mohd Nazar Samad Executive DirectorEXECUTIVE DIRECTOR &
CHIEF EXECUTIVE
SECRETARIESEulis Rachmatiah Iskandar Sastrawidjaja (LS008774)YM
Tunku Alizan Raja Muhammad Alias (BC/T/342)Harnita Harmain
(LS008063)
REGISTERED OFFICELevel 8 Block DKompleks Kelana Centre
PointJalan SS7/19 Kelana Jaya47301 Petaling JayaSelangorTel: +60 3
7680 9666Fax: +60 3 7680 9669www.kub.com
SHARE REGISTRARSymphony Share Registrars Sdn Bhd (378993-D)Level
26Menara Multi-PurposeCapital SquareNo 8 Jalan Munshi Abdullah50100
Kuala Lumpur Tel: +60 3 2721 2222Fax: +60 3 2721 2530
AUDITORSMessrs KPMG Desa Megat & Co (Firm No AF0759)Wisma
KPMGJalan DungunDamansara Heights50490 Kuala LumpurTel: +60 3 2095
3388Fax: +60 3 2095 0971
PRINCIPLE BANKERSCIMB Bank BerhadMaybank BerhadAffin Bank
Berhad
STOCK EXCHANGE LISTINGMain Board,Bursa Malaysia Securities
Berhad
STOCK CODEKUB 6784
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CORPORATESTRUCTURE
008009
ANNUAL REPORT 2006KUB MALAYSIA BERHAD
-
STRONGERTOGETHER
KUBMALAYSIABERHAD
INFORMATION &COMMUNICATIONTECHNOLOGY(ICT)
KUB Telekomunikasi Sdn Bhd 100%KUB-Fujitsu Telecommunications
(Malaysia) Sdn Bhd 70%Sphairon Sdn Bhd 49%Tele Dynamics Sdn Bhd
60%
EDUCATION & TRAINING (E&T)
ITTAR Sdn Bhd 100%ITTAR-IPP (PJ) Sdn Bhd 100%ITTAR-ILP (Prai)
Sdn Bhd 100%Academy for Knowledge of Accounting & Leadership
Sdn Bhd (AKAL) 100%
ENERGYSummit Petroleum (Malaysia) Sdn Bhd 100%KUB Power Sdn Bhd
100%Progas Pakistan (Pvt) Ltd 21.2%
PROPERTIES, ENGINEERING & CONSTRUCTION (PEC)
KUB Development Bhd 100%Perbiba Sdn Bhd 100%KUB Realty Sdn Bhd
100%KUB Realty (PJ) Sdn Bhd 100%Peraharta Sdn Bhd 100%Bina Alam
Bersatu Sdn Bhd 55%
FOOD & BEVERAGE (F&B)
A&W (Malaysia) Sdn Bhd 100%A&W Restaurants (Thailand) Co
Ltd 100%KUB Singgahsana (PJ) Sdn Bhd 100%
MANUFACTURING, PLANTATION & CONSUMER PRODUCTS
ManufacturingKUB Tekstil Sdn Bhd 100%Utama Steel Works Sdn Bhd
51%ConsumerPernida Sdn Bhd 100%PlantationKUB Agrotech Sdn Bhd
100%KUB Sepadu Sdn Bhd 60%
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STRONGERTOGETHER
ORGANIZATION STRUCTURE
010011
ANNUAL REPORT 2006KUB MALAYSIA BERHAD
GROUP INTERNAL AUDITCHIEF INTERNAL AUDITOR
GROUP HUMAN CAPITAL DEVELOPMENTGENERAL MANAGER
GROUPFINANCECHIEF FINANCIAL OFFICER
GROUP ITHEAD
GROUP CORPORATEDEVELOPMENT SERVICESGENERAL MANAGER
GROUP CORPORATEAFFAIRS & COMMUNICATIONSHEAD
GROUP LEGAL & SECRETARIALGENERAL MANAGER
GROUPPROJECTMANAGEMENT OFFICEHEAD
GROUPRISKMANAGEMENTHEAD
EXECUTIVEDIRECTOR& CHIEFEXECUTIVE
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BOARD OFDIRECTORS
012013
ANNUAL REPORT 2006KUB MALAYSIA BERHAD
FROM LEFT TO RIGHTDatuk Haji Faisyal Datuk Yusof Hamdain Diego
Independent Non-Executive DirectorDEPUTY CHAIRMAN
Raja Ali Raja OthmanIndependent Non-Executive
DirectorDIRECTOR
Dato’ Ir. Harun Ahmad SarujiSenior Independent Non-Executive
DirectorDIRECTOR
Mohd Nazar Samad Executive DirectorEXECUTIVE DIRECTOR &
CHIEF EXECUTIVE
Rosman AbdullahNon-Independent Non-Executive
DirectorDIRECTOR
Dato’ Kamilia IbrahimNon-Independent Non-Executive
DirectorDIRECTOR
Omar Haji AhmadIndependent Non-Executive DirectorDIRECTOR
Dato’ Nordin BaharuddinNon-Independent Non-Executive
DirectorCHAIRMAN
Mohamed Ezzuddeen Mohd EffendiIndependent Non-Executive
DirectorDIRECTOR
Tunku Alizan Raja Muhammad AliasCOMPANY SECRETARY
Eulis Rachmatiah Iskandar SastrawidjajaCOMPANY SECRETARY
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DIRECTORS’PROFILE
014015
ANNUAL REPORT 2006KUB MALAYSIA BERHAD
DATO’ NORDIN BAHARUDDINNon-Independent Non-Executive
DirectorCHAIRMAN
Chairman of Board Investment CommitteeMember of EXCO
Dato’ Nordin Baharuddin, aged 58, Malaysian, wasappointed to the
Board of KUB Malaysia Berhad on 19 May 2005.
Dato’ Nordin retired as Chairman of Ernst & YoungMalaysia in
2004 after 35 years in the accounting andauditing profession in
Malaysia and overseas. He hasalso retired as Chairman of Syarikat
Prasarana NegaraBerhad on 31 December 2006.
He is a Chartered Accountant of The Malaysian Institute of
Accountant (“MIA”) and a Fellow of the Institute of Chartered
Accountants in England and Wales. He isactive in local professional
accounting bodies through his membership of and serving as
Vice-President of theMalaysian Institute of Certified Public
Accountants, CouncilMember and Co-Chairman of the Public Practice
ReviewCommittee of the MIA and Member of the MalaysianFinancial
Reporting Foundation. Notably, Dato’ Nordin is also a Member of the
Mongolia Institute of Certified
Public Accountants and helped develop the profession inMongolia
as well as provided professional advice to thebanking and corporate
sectors through his participationas Partner in Charge of Ernst
& Young Mongolia. He isalso a member of the Working Group on
CorporateGovernance for the Islamic Financial Services Board.
Currently, Dato’ Nordin is an Independent Non-ExecutiveDirector
of Sarawak Enterprise Corporation Berhad,Scomi Engineering Berhad,
Visdynamics Holding Berhadand Senior Advisor to Citibank Berhad. He
also sits on the Boards of several subsidiary companies of
KUBMalaysia Berhad.
He does not have any family relationship with anyDirector and/or
major shareholder of KUB MalaysiaBerhad. He has never been
convicted of any offenceover the past 10 years and has no conflict
of interestwith KUB Malaysia Berhad.
DATUK HJ FAISYAL DATUK YUSOF HAMDAIN DIEGOIndependent
Non-Executive DirectorDEPUTY CHAIRMAN
Member of EXCO
Datuk Hj Faisyal Datuk Yusof Hamdain Diego, aged 45,Malaysian,
was appointed to the Board of KUB MalaysiaBerhad on 18 August
2005.
He holds a Bachelor of Arts (Honours) degree inEconomics from
York University, Toronto, Canada.
Datuk Hj Faisyal has been the Executive Chairman ofArus Sutera
Sdn Bhd since 1997, Director for PerkasaTrading Sdn Bhd (a SEDCO
subsidiary) since 1996 andTreasurer of the Dewan Perniagaan Melayu
Malaysia(Sabah) since 1997.
He currently sits on the Board of Bursa Malaysia Berhadand the
Boards of several subsidiary companies of KUBMalaysia Berhad.
He does not have any family relationship with anyDirector and/or
major shareholder of KUB MalaysiaBerhad. He has never been
convicted of any offenceover the past 10 years and has no conflict
of interestwith KUB Malaysia Berhad.
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DATO’ KAMILIA IBRAHIMNon-Independent Non-Executive
DirectorDIRECTOR
Chairman of Board Nomination Committee
Dato’ Kamilia Ibrahim, aged 55, Malaysian, wasappointed to the
Board of KUB Malaysia Berhad on 28 April 1997.
She sits on the Boards of several subsidiary companies ofKUB
Malaysia Berhad and the Advisory panel of MaybankEthical Unit
Trust.
Currently, she is the principal partner in her law firm,which
specializes in property, commercial and banking.Politically active,
she has been an elected member ofthe Wanita UMNO National Executive
Council since 1987and heads its Legal Affairs Bureau. She has
served as amember of the National Islamic Council Malaysia
since2000. She was appointed in 2004 as a Commissioner forthe Royal
Commission Enhancing the Operation and theManagement of the Royal
Malaysian Police.
She obtained her LLB and LLM from University Malaya and her
Diploma In Syariah Law & Practice from theInternational Islamic
University of Malaysia (IIUM).
She does not have any family relationship with anyDirector
and/or major shareholder of KUB MalaysiaBerhad. She has never been
convicted of any offenceover the past 10 years and has no conflict
of interestwith KUB Malaysia Berhad.
DATO’ IR. HARUN AHMAD SARUJISenior Independent Non-Executive
DirectorDIRECTOR
Member of Board Audit CommitteeMember of Board Remuneration
Committee
Dato’ Ir. Harun Ahmad Saruji, aged 70, Malaysian, was appointed
to the Board of KUB Malaysia Berhad on 1 January 1993 and also
serves on the Boards of severalsubsidiary companies of KUB Malaysia
Berhad.
He has served the Malaysian Government for 35 yearsand his last
position was as the Chief Executive Officerof the Perak State
Development Corporation (PerbadananKemajuan Negeri Perak), the
leading state agency in thedevelopment and promotion of industries,
new townships,housing estates and commercial centers.
He obtained his Bachelor of Science in Civil Engineeringfrom the
University of Brighton, UK and is a Member ofthe Institute of
Engineers, Malaysia and a ProfessionalEngineer of the Board of
Engineers, Malaysia.
He is currently the Chairman of Perak CorporationBerhad (PCB), a
company listed on the Main Board of Bursa Malaysia Securities
Berhad and also serves as Director in several PCB subsidiaries.
He does not have any family relationship with anyDirector and/or
major shareholder of KUB MalaysiaBerhad. He has never been
convicted of any offenceover the past 10 years and has no conflict
of interest with KUB Malaysia Berhad.
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DIRECTORS’PROFILEcontinued
016017
ANNUAL REPORT 2006KUB MALAYSIA BERHAD
ROSMAN ABDULLAHNon-Independent Non-Executive
DirectorDIRECTOR
Member of Board Audit CommitteeMember of Board Investment
Committee
Rosman Abdullah, aged 40, Malaysian, was appointed to the Board
of KUB Malaysia Berhad on 19 May 2005.
An accountant by profession, Rosman has vastexperience in
corporate and business management,corporate finance, accounting and
auditing. He is a chartered member of the Malaysian Institute
ofAccountants, and a member of the Australian Society of Certified
Practicing Accountants. He holds a Bachelorof Commerce (Accounting)
degree from the AustralianNational University and had attended the
AdvancedManagement Programme at the Oxford University.
Currently, he is the Group Chief Executive Officer of
PECDBerhad, a company listed on the Main Board of BursaMalaysia
Securities Berhad. Previously, he had served as the Executive
Director of Malaysia Airport HoldingsBerhad (MAHB) from 1997 until
2003 and as ExperiencedManager at Arthur Andersen & Co from
1989 to 1997.
On 1 June 2006, his position as Chairman & Director
ofMESDAQ-listed Datascan Berhad has been redesignatedto
non-Independent & non-executive director. He is alsoan
independent director of Kumpulan Fima Berhad andNarra industries
Berhad, companies listed on BursaMalaysia’s Main Board.
He does not have any family relationship with anyDirector and/or
major shareholder of KUB MalaysiaBerhad. He has never been
convicted of any offenceover the past 10 years and has no conflict
of interestwith KUB Malaysia Berhad.
MOHAMED EZZUDDEEN MOHD EFFENDIIndependent Non-Executive
DirectorDIRECTOR
Member of Board Nomination CommitteeChairman of Board
Remuneration Committee
Mohamed Ezzuddeen Mohd Effendi, aged 47, Malaysian,was appointed
to the Board of KUB Malaysia Berhad on18 August 2005.
He holds a Bachelor of Science in Management degreefrom the
University of Dublin, Ireland as well as anAdvanced Diploma in
Marketing Techniques from theCollege of Marketing and Design in
Dublin, Ireland.
Mohamed Ezzuddeen gained vast experience incorporate
restructuring and mergers & acquisitions (M & A) process
during his work in Corporate Affairs at Renong Berhad’s ICT
Division. He was a ManagingDirector of RenCorp Sdn Bhd from 1994 to
1998 and E-Form Resources Sdn Bhd from 1999 to 2000.
Currently he is the Chief Executive Officer of theNational
Development Institute of Research (NADIR).
He does not have any family relationship with anyDirector and/or
major shareholder of KUB MalaysiaBerhad. He has never been
convicted of any offenceover the past 10 years and has no conflict
of interestwith KUB Malaysia Berhad.
-
RAJA ALI RAJA OTHMANIndependent Non-Executive
DirectorDIRECTOR
Member of Board of Investment
Raja Ali Raja Othman, aged 41, Malaysian, was appointedto the
Board of KUB Malaysia Berhad on 18 August 2005.
He is attached to ECM Libra Avenue Securities Sdn Bhd as Deputy
Chief Executive Officer.
Prior to joining ECM Libra Avenue, he was attached tothe global
accountancy firms of Arthur Andersen andErnst & Young for over
14 years where his last positionwas as Executive Director,
Transaction Advisory Services.
He is a Fellow of the Chartered Association of
CertifiedAccountants (FCCA) and a Chartered Accountant withthe
Malaysian Institute of Accountants.
He does not have any family relationship with anyDirector and/or
major shareholder of KUB MalaysiaBerhad. He has never been
convicted of any offenceover the past 10 years and has no conflict
of interestwith KUB Malaysia Berhad.
OMAR HAJI AHMADIndependent Non-Executive DirectorDIRECTOR
Chairman of Board Audit CommitteeMember of Board Nomination
CommitteeMember of Board Remuneration Committee
Omar Hj. Ahmad, aged 41, Malaysian, was appointed tothe Board of
KUB Malaysia on 18 August 2005.
He gained significant hands-on experience in
strategicmanagement, business planning, project management and
corporate finance at leading corporations includingKumpulan Utusan
from 1995 until 2001 and ESSO Production(M) Inc. from 1992 until
1995. A media veteran with morethan 11 years experience, he is
currently the ManagingDirector of Omnicast (M) Sdn Bhd with
principal activities inmedia strategic consultancy, broadcasting
and advertising.
Omar obtained his accounting qualifications from the University
of Newcastle-upon-Tyne UK and ICAEWtrained in London. He has also
attended numerouscourses including INSEAD International
ManagementProgram Hong Kong in year 2000.
He does not have any family relationship with anyDirector and/or
major shareholder of KUB MalaysiaBerhad. He has never been
convicted of any offenceover the past 10 years and has no conflict
of interestwith KUB Malaysia Berhad.
MOHD NAZAR SAMAD Executive DirectorEXECUTIVE DIRECTOR &
CHIEF EXECUTIVE
Chairman of EXCO
Mohd Nazar Samad, aged 50, Malaysian, was appointedto the Board
of KUB Malaysia Berhad on 1 March 2007.
He holds a Diploma in Accountancy from Mara Instituteof
Technology and Bachelor of Science Degree in BusinessAdministration
from Oklahoma City University, USA.
He began his career with Bank Pertanian Malaysia andRakyat First
Merchant Bankers Berhad (1978-1991). In 1992,he joined Cold Storage
Malaysia Berhad as Head of CorporateAffairs and rose subsequently
to the position of GroupChief Executive. In 1996, he joined Krystar
ManagementSdn Bhd, management consulting firm, which establishedthe
Eraman duty free outlets for Malaysia Airports Bhd.
From 1998 to 2002, he was Executive Director and ChiefExecutive
Officer of Buildmax Ltd, a building materialsmanufacturing business
listed on the Johannesburg StockExchange in South Africa, and he
returned to Malaysia in2003 as Chairman and Advisor to Diversatech
(M) Sdn Bhd,a company engaged in the manufacture and sale
ofspecialised agricultural fertilisers.
He does not have any family relationship with anyDirector and/or
major shareholder of KUB MalaysiaBerhad. He has never been
convicted of any offenceover the past 10 years and has no conflict
of interestwith KUB Malaysia Berhad.
-
SITTING FROM LEFT TO RIGHTEulis Rachmatiah Iskandar
SastrawidjajaGENERAL MANAGER/COMPANY SECRETARY
Legal & Secretarial
Mohd Nazar SamadEXECUTIVE DIRECTOR & CHIEF EXECUTIVE
Henry Ho Kien WaiHEAD
Group IT
Norashekin YusofACTING HEAD
Group Corporate Affairs & Communications
Ab Aziz MohamedHEAD OF ICT DIVISION
PRESIDENT
KUB Telekomunikasi Sdn Bhd
Haniza Ros NasaruddinHEAD
Project Management Office
Wan Mohd Nor Wan AhmadHEAD OF ENERGY DIVISION
CHIEF EXECUTIVE OFFICER
Summit Petroleum (Malaysia) Sdn Bhd
STANDING FROM LEFT TO RIGHTWan Ahmad Rudirman Wan RazakGENERAL
MANAGER
Corporate Development Services
Nazrul Hisham Abdul HamidCHIEF INTERNAL AUDITOR
Yan Siew ChingSENIOR MANAGER
Group Finance
Errman Zuhady ZainalGENERAL MANAGER
Human Capital Development
SENIOR MANAGEMENT TEAM
018019
ANNUAL REPORT 2006KUB MALAYSIA BERHAD
-
INTEGRITY
WE SUPPORT THE PEOPLE WE WORK WITH.
WE SERVE OUR CUSTOMERS TO THE BEST OF OUR ABILITIES.
“To thine own self be true, and it must follow, as the night the
day, thou can’t not then be false to any man.”
~ william shakespeare
-
ST
CHAIRMAN STATEMENT
022023
ANNUAL REPORT 2006KUB MALAYSIA BERHAD
-
STRONGERTOGETHER
FINANCIAL YEAR 2006 (FY06) HAS BEEN A CHALLENGING YEAR FOR THE
GROUP, AND WE OWE OUR RESILIENCE TO THESUPPORT OF OUR KEY
STAKEHOLDERS.
ON BEHALF OF THE BOARD, WE WISH TO THANK OUR MANAGEMENT AND
STAFF, WHO HAVE CONTRIBUTED THEIR MAXIMUMABILITIES, CREATIVITY AND
LOYALTYDESPITE CHALLENGING CONDITIONS. WE RECOGNIZE YOUR WORTH AND
WILLCONTINUE TO INVEST IN YOUR PERSONALAND PROFESSIONAL DEVELOPMENT
AS WE WORK HAND-IN-HAND TO CREATE ANORGANIZATION THAT INSPIRES
PRIDE AND EMBODIES DISCIPLINE, INNOVATIONAND ACHIEVEMENT.
Dato’ Nordin BaharuddinCHAIRMAN
Secondly, we wish to thank all our customers and partners for
their support and patronage throughout these years.We are pleased
to have forged invaluable long-term relationships with you and look
forward to working closely withyou and serving you for many years
to come.
Having bitten the bullet through our aggressive asset disposal
and reallocation strategies, we are optimistic that theGroup is on
the right track to improve its operational and financial
performance in achieving our mission to enhanceshareholders’ value
in the years to come.
-
STRONGERTOGETHER
CHAIRMAN STATEMENTcontinued
024025
ANNUAL REPORT 2006KUB MALAYSIA BERHAD
BOARD OF DIRECTORSI wish to record my appreciation to my fellow
Boardmembers for continously providing strategic guidance,support
and essential oversight, particularly in the areas of risk and
control management as well as processimprovements, which are
fundamental in creating anatmosphere of rigorous decision making to
entrenchstakeholder confidence.
I would like to extend my thanks to long-serving directorDato’
Ir Harun Ahmad Saruji, who has decided not tooffer himself for
re-election at the 42nd Annual GeneralMeeting. The Board would also
like to extend its thanksto Encik Izham Yusoff, the former Chief
Executive Officer,for his services to the Group throughout the
period from1 July 2004 to 2 April 2007. We wish them every
successin their future endeavors.
At the same time, I am pleased to welcome Encik Mohd Nazar Samad
as the executive director and chiefexecutive effective 2 April
2007. With this appointment,Encik Nazar is also the chairman of the
ExecutiveCommittee. I am confident that Encik Mohd Nazar will
provide strong leadership, hands on experience and direction for
the Group to pursue its future growthgiven his wealth of experience
in financial services and general management in various sector.
PERFORMANCE REVIEWIn FY06, the Group instituted its Strategic
Blueprint as a platform for long-term growth, which prescribed
fiveStrategic Thrusts namely the immediate divestment ofnon
strategic businesses, identifying certain companiesand assets for
fund raising, the retention and enhancementof selected core
businesses, venturing into new corebusinesses and the
rationalization of capital.
For the year under review, the Group revenue increasedby
approximately 12% to RM765.88 million. The core ICTand Energy
sectors retained their position as the maincontributors to Group
revenue, contributing 47% and 43% respectively.
In line with our Strategic Blueprint and after dueconsideration
and a thorough discussion with our auditors,the Board decided to
adopt a prudent approach in makingcertain provisions in relation to
subsidiaries which havebeen or are in the process of being disposed
off or wound-up resulting in after-tax losses of RM52.32 million
for the FY06.
On a positive note, the continuous efforts to transformthe Group
coupled with the bullish sentiment in theequity market in the
latter half of FY06 and early FY07drove KUB Malaysia’s share price
to a 12-month high of 77 sen during the first quarter of FY07 as
compared to 35 sen in the third quarter of FY06.
-
STRENGTHENING CORPORATE GOVERNANCEGoing forward, we intend to
reinforce the framework and substance of our corporate governance
and ethicssystem by embarking on a new KUB Integrity Plan thatwill
inculcate the four revised Core Values into ourpeople: Integrity,
Teamwork, Trust and Mutual Respect,and Excellence. The KUB
Integrity Plan which wasintroduced in the first quarter of FY07 is
consistent with the objectives of the National Integrity
Planpromoted by the Government, which aims to establish a fully
moral and ethical society whose citizens arestrong in religious
values and imbued with the highestethical moral standards.
Furthermore, to boost stakeholder comfort andconfidence, we will
fortify our existing Risk ManagementProgram and Corporate
Governance Framework toenhance internal risk and control processes
in line with industry best practices. In particular, we intend to
tighten the supervision and monitoring processes as well as the
checks-and-balances embedded in keyfunctions like treasury, finance
and project managementin order to safeguard the interest of
stakeholders andensure the achievement of corporate objectives.
THE KUB INTEGRITY PLANWHICH WAS INTRODUCED INTHE FIRST QUARTER
OF FY07IS CONSISTENT WITH THEOBJECTIVES OF THE NATIONALINTEGRITY
PLAN PROMOTEDBY THE GOVERNMENT, WHICHAIMS TO ESTABLISH A FULLYMORAL
AND ETHICAL SOCIETYWHOSE CITIZENS ARE STRONGIN RELIGIOUS VALUES
ANDIMBUED WITH THE HIGHESTETHICAL MORAL STANDARDS.
ABOVEAt the AGM, the shareholders are given opportunity to ask
theirquestions and seek clarifications on the businesses and
performance of the Group. YBhg Dato’ NordinBaharuddin, Chairman,
attended to questions raised by the shareholderat the 41st AGM.
BELOWSafe, efficient and reliable source of energy for the
people of Pakistan.
-
ST
CHAIRMAN STATEMENTcontinued
026027
ANNUAL REPORT 2006KUB MALAYSIA BERHAD
COMMITTED TO CORPORATE SOCIAL RESPONSIBILITYIn line with the
newly introduced KUB Integrity Plan that promotes strong ethical
values, KUB Malaysia retainsits commitment to its Corporate Social
Responsibility (CSR)Program, which revolves primarily around
promoting andeducating environment’s preservation and
conservation.We are committed to be a good corporate citizen
byensuring all business affairs are guided by the core valuesof our
company. Apart from being a social imperative,our initiatives
through CSR programes improve the qualityof life in communities
where we live and work. This isessential for any organization to
remain viable, vital and accepted in today’s marketplace.
In FY06, we continued to provide both financial aids and our
expertise to the communities in which we work.Among the programs
embarked by the Group were major beach clean-up and education
program targetedto the residents of Perhentian Island, Terengganu
withthe objective of educating them on how to improve theirquality
of life by capitalizing on economic opportunitiesvia sustainable
tourism. We also provided donations in cash and kind to victims of
the Johore floods and to theIJN Foundation, which helps fund the
underprivilegedheart patients.
In FY07, we started our CSR initiative by sponsoring a year’s
supply of milk to baby elephants at the KualaGandah National
Elephant Conservation Centre in Pahang,which helps preserve the
nation’s wildlife heritage and is in line with our environmental
aspirations.
ABOVEEncik Mohamed Ezzuddeen MohdEffendi, Director at the launch
ofKUB Malaysia's Integrity Plan. The KUB Malaysia Integrity Plan is
our way of delivering thegovernment's call and supporting the
efforts towards the establishmentof a nation that is united,
infused by strong moral and ethical values,democratic, liberal,
tolerant, caring,economically just and equitable,progressive and
prosperous.
BELOWThe Group ventured into the businessof providing end-to end
solution inManaged Security Services by inkingstrategic alliances
with global marketleaders namely Cybertrust and Trend Micro,
witnessed by YB DatukDr Awang Adek, Finance Minister II.
THE MALAYSIAN ECONOMYIS EXPECTED TO MAINTAIN ASTEADY GROWTH PATH
IN 2007WITH A 6.0% GDP GROWTH RATEWITH THE GROWTH MOMENTUMSUPPORTED
BY DOMESTIC DEMAND FROM BOTH PRIVATEAND PUBLIC SECTORS.
SOLIDSUPPORT FOR DOMESTICGROWTH IS BELIEVED TO COMEFROM SUSTAINABLE
PRIVATECONSUMPTION, CONTINUEDEXPANSION IN INVESTMENTACTIVITIES AND
THE EFFICIENTIMPLEMENTATION OF THE NINTHMALAYSIA PLAN (9MP)
PROJECTS.
-
STRONGERTOGETHER
PROSPECTSThe Malaysian economy is expected to maintain a
steadygrowth rate in 2007 of 6.0% with the growth momentumsupported
by domestic demand from both private andpublic sectors. Solid
support for domestic growth isbelieved to come from sustainable
private consumption,continued expansion in investment activities
and theefficient implementation of the Ninth Malaysia Plan(9MP)
projects.
In line with the above and in accordance with theGroup’s
Strategic Blueprint, we have identified severalcore areas which are
believed to contribute significantlyto the Group’s earning profile.
The areas identified underthe 9MP will become a catalyst in
generating economicvalues to the Group namely information &
communicationtechnology (ICT), energy, facilities management
andproperty, engineering & construction as well as othernew
growth opportunities.
Going forward, the Group will continue streamlining its
operations and activities. Cost optimization willcontinue to be a
vital element in ensuring operationalefficiency thus improving its
financial performance. The Group will also continuously improve the
businessprocesses and human capital development. This willprovide
the right ingredients to succeed in achieving the Group’s mission
and vision.
Thank you.
Dato’ Nordin BaharuddinCHAIRMAN
-
TEAMWORK
TASKS BECOME EASIER AND PROBLEMS ARE SOLVED FASTER WHEN WE POOL
OUR RESOURCES AND WORK TOGETHER.
“The achievements of an organization are the results of the
combined effort of each individual.”
~ vincent lombardi
-
ST
CHIEF EXECUTIVE’SOPERATION REVIEW
030031
ANNUAL REPORT 2006KUB MALAYSIA BERHAD
-
STRONGERTOGETHER
DURING THE PERIOD UNDER REVIEW, THE GROUP STEADILY IMPLEMENTED
THEKEY STRATEGIC THRUSTS AS OUTLINED IN THE STRATEGIC BLUEPRINT FOR
ITSBUSINESS TRANSFORMATION. AMONG THEEFFORTS UNDERTAKEN IN FY06
WERECONSOLIDATION OF BUSINESS ENTITIES,DISPOSAL OF UNPRODUCTIVE
ASSETS,STREAMLINING OF BUSINESS PROCESSESAND COST OPTIMISATION
ACTIVITIES.
Mohd Nazar SamadEXECUTIVE DIRECTOR& CHIEF EXECUTIVE
Subsequent to the FY06 activities, the Group has identified new
core areas namely Information & CommunicationTechnology (ICT),
Energy, Facilities Management (FM) and Property, Engineering &
Construction (PEC). In addition, the Group is also looking at
embarking on strategic projects and investments that could generate
sustainable goodreturns and synergistic to the existing core
businesses.
FY2006 PERFORMANCE REVIEWDuring the year under review, the Group
disposed off several non-core assets and loss-making companies that
wereexhausting the Group’s earnings profile namely PSC Naval
Dockyard Sdn Bhd, and Computer Forms Malaysia Berhad for a total
consideration of RM29.8 million.
During the period, the Group had also entered into an agreement
with Progas Energy Limited that diluted the equityinterest in
Progas Holdings Limited from 61.9% to 38.2% and accordingly, this
company ceased to be a subsidiary ofthe Group.
The assets disposal initiatives led to freeing up the capital
and resources, which was utilized for debt reduction,capital
reassignment as well as diversifying and boosting revenue streams
in the existing businesses of Information & Communications
Technology (ICT) and Energy through aggressive business development
activities.
On year-on-year basis, the Group revenue increased by 12% from
RM684.08 million to RM765.88 million which wasmainly contributed by
the ICT and Energy businesses.
The ICT division contributed RM359.1 million or 47% of the
Group’s revenue. Despite a competitive environment, the ICT related
businesses successfully registered higher revenue of 13% to
RM359.51 million from RM319.04 millionlast year. The achievement
was primarily due to higher contract value awarded by major clients
like Telekom MalaysiaBerhad (TMB) to the group’s subsidiaries
namely KUB Telekomunikasi Sdn Bhd and KUB-Fujitsu
Telecommunications(Malaysia) Sdn Bhd amounting to a total of
RM73.25 million.
-
CHIEF EXECUTIVE’SOPERATION REVIEWcontinued
032033
ANNUAL REPORT 2006KUB MALAYSIA BERHAD
The ICT division also increased its sales and rental of
electronic imaging products and completed a majorportion of the
RM73.9 million worth of pilot projects forRTM broadcasting
digitalisation. Under telecommunicationsector, we have expanded our
presence regionally, havingventured into supplying and installing
telecommunicationequipment to Bangladesh’s Aktel and Indonesia’s
PTTelkom. In the future, we intend to leverage on
TMB’sinternational operations in order to penetrate
regionalemerging markets.
In the Energy division, the revenues were boosted byimproved
sales and higher market share of domesticLPG. Revenue increased by
33% to RM329.5 million fromRM248.0 million in FY05. Despite intense
competition in LPG market, Summit Petroleum (Malaysia) Sdn
Bhdmanaged to increase its sales tonnage by 16% from 106,328metric
tonne in 2005 to 122,992 metric tonnes in 2006.Revenues were
further boosted by KUB Power Sdn Bhd,driven by the RM90 million
worth of contracts from TenagaNasional Berhad (TNB) for Bukit Tarek
sub-station, a jointventure project with Siemens Sdn Bhd and Kapar
sub-station project worth RM63.0 million and RM28.7
millionrespectively. In an effort to improve its revenue base,
thedivision is exploring and pursuing more contracts fromTNB as
well as other independent power producers.
At the Group level, KUB Malaysia Berhad recorded an after tax
accounting loss of RM52.3 million of whichRM47.6 million was
derived from the existing operationswhilst the remaining RM4.7
million came from thediscontinued operations. The loss was
registered mainlydue to expenses incurred in relation to
subsidiaries whichhave been or in the process of being disposed off
orwound up. Taking these expenses out of this equation,the Group
has reduced its operational loss after tax by 37% from RM33.9
million to RM21.5 million.
As a result of our divestment exercise, the Groupregistered a
net repayment of RM70.4 million debt thusreducing its total
borrowings by 38% from RM197 millionto RM122 million. In terms of
gearing, it represents animprovement of debt ratio from 0.49 times
to 0.34 times.
THIS PAGEYang Berhormat Dato’ Sri Najib TunAbdul Razak and Yang
BerhormatDatuk Azmi Khalid visited our joint-venture landfill
project at Bukit Tagarwith Berjaya Corporation Berhadaccompanied by
Yang BerbahagiaDato’ Nordin Baharuddin and EncikMohd Nazar
Samad.
NEXT PAGEState of the art summit’s bottling plant at Pulau
Indah, Wesport.
The recent completed Bukit Tarek sub-station project for TNB by
KUB Power Sdn Bhd.
-
FY2007 OUTLOOKIn FY06, there have been various aggressive
effortsexecuted in an attempt to improve the overall operationaland
financial position of the Group. This momentum willbe continuously
driven into FY2007 and steer the Group’sdual agenda in finalising
the disposal of non-core assetsand unlocking the value of
unproductive assets vis-à-visnurturing and growing the four newly
refined core areasnamely Information & Communication Technology
(ICT),Energy, Facilities Management and Property, Engineering&
Construction. The Group intends to achieve the objectivethrough
upscaling the business development activitiesand exploring new
strategic investment opportunities.The Group will also be on a
constant look out for othernew areas that could provide sustainable
and good returnon investment as well as providing synergy and added
valueto the Group. All these initiatives will be implementedwhilst
taking into consideration the balance principleof risk management
and long term returns.
In FY07, the Group targeted to complete the disposal of its 100%
stake in KUB Tekstil Sdn Bhd to My-PartnersSolutions Sdn Bhd for
RM15.7 million and Universiti TunAbdul Razak to Yayasan Pendidikan
Tun Abdul Razak for RM45 million cash.
In the ICT sector, the Group will improve its
profitabilitythrough migration from low-margin contractual
servicesto sustainable high-yield services and solutions.
Variousgovernment related and private projects will be
pursuedaggressively as to ensure a steady income to the Group.The
Group will position itself to take advantage of the newsegments in
ICT which was identified under the 9MP andthe MYICMS 886 (Malaysian
Information, Communicationand Multimedia Services Strategy),
particularly in theareas of managed security services (MSS). In
view of this,the Group has ventured into the business of
providingend-to-end solutions in MSS by inking strategic
allianceswith global market leaders namely Cybertrust and
TrendMicro in the first quarter of FY2007. The MSS market
inMalaysia is poised to grow as organisations strive to
protecttheir IT infrastructure and infostructure from
securitythreats and virus attacks.
In order to be less dependent on the telecommunicationsector,
the Group will intensify its effort with specific focuson the new
sources of growth in particular the informationand system security,
digital content development anddigital broadcasting. For these,
collaborative initiativeswill also be undertaken glocally to build
smart andstrategic partnerships to create value added services to
complement and supplement the Group’s foray in ICT sector.
THE GROUP WILL POSITIONITSELF TO TAKE ADVANTAGEOF THE NEW
SEGMENTS INICT WHICH WAS IDENTIFIEDUNDER THE 9MP AND THEMYICMS 886
(MALAYSIANINFORMATION, COMMUNICATIONAND MULTIMEDIA
SERVICESSTRATEGY), PARTICULARLYIN THE AREAS OF MANAGEDSECURITY
SERVICES (MSS).
-
CHIEF EXECUTIVE’SOPERATION REVIEWcontinued
034035
ANNUAL REPORT 2006KUB MALAYSIA BERHAD
The Group’s involvement in the Energy Sector is currentlylimited
to bottling and distribution of domestic cookinggas (LPG) by Summit
Petroleum (Malaysia) Sdn Bhd andconstruction of sub-stations for
TNB by KUB Power Sdn Bhd.Moving forward, the Group will position
itself to becomea significant player in the LPG market by
increasingbottling capabilities, optimising logistic costs,
aggressivemarketing and widening the geographical dealers’
network.The Group aims to play a bigger role in the power
sectorthrough capacity and capability building.
As we move forward, the Group intends to deepen its involvement
in the oil and gas industry via strategicpartnership and
acquisition that would generate immediateand sustainable earnings.
The Group is also looking foropportunities to venture into the
provision of supportservices for the upstream oil and gas
industry.
In addition to the ICT and Energy sectors, the Group hasalso
identified several strategic initiatives to enhance its revenue
base through introduction of facilitiesmanagement as a new core
business and strengtheningthe property, engineering &
construction division. In line with the Government aspiration to
promote cultureof preventive maintenance and biotechnology
industry,the Group plans to venture into the soft side of
facilitiesmanagement such as biotechnology related services as well
as the traditional building maintenance.
Premised on the growth prospects in the emerging wastemanagement
industry, with the implementation of theSolid Waste Management
(SWM) Bill and further guidedby the National Strategic Plan for
Solid Waste Management(NSPSWM), the Group aspires to develop
further thedomain of facilities management by the provision
ofenvironmental related services. By doing so, it will notonly
contribute to the Group’s earnings profile but alsoreinforce the
Group’s position as a player in the valuechain of SWM
hierarchy.
In the areas of property, engineering & construction, the
Group will take advantage of the higher allocation ofinfrastructure
development under the 9MP by reinforcingits capabilities and
capacities to aggressively participatein the industry via Bina Alam
Sdn Bhd which has been an active player thus far.
THIS PAGEYang Berhormat Senator Dato’ HajahSaripah Aminah Haji
Syed Mohamedraised her questions on the performanceof KUB Malaysia
during the Briefingto Senators held at the Parliment on21 December
2006.
Participants at the managed SecurityServices (MSS) Seminar
organized by KUB Malaysia with Cybertrust &Trend Micro. MSS is
KUB Malaysiainitiative to provide security protectionto an
organisation’s informationtechnology infrastructure.
NEXT PAGEKUB Malaysia Berhad’s shareperformance for 2006 &
2007.
AS WE MOVE FORWARD,THE GROUP INTENDS TODEEPEN ITS INVOLVEMENTIN
THE OIL AND GAS INDUSTRYVIA STRATEGIC PARTNERSHIPAND ACQUISITION
THATWOULD GENERATE IMMEDIATEAND SUSTAINABLE EARNINGS.
-
Alongside with the core areas as mentioned earlier,the Group
will continue to explore other strategicbusiness opportunities
pro-actively in the niche andgrowth sector of the economy, the
regional growthcorridors, Private Finance Initiatives (PFIs),
outsourcingprojects and the business spin-off from
government–linked companies (GLCs), which are
synergistic,complementary and supplementary to the Group’score
businesses by leveraging on strategic partnership,mergers and
acquisitions.
Barring any unforeseen circumstances, the Group isconfident that
the initiatives to be undertaken willimprove the business
operations in the near future. In achieving this, the Group will
also invest in thedevelopment of human capital as well as attract
andretain pool of talents. The Group believes that the newly
implemented Integrity Plan will be a vitalplatform to embrace
integrity and establish culture of professionalism which will
contribute to theoperational efficiency and efficacy.
ACKNOWLEDGEMENTSI wish to take this opportunity to thank the
Board of Directors for the undivided and continuous supportextended
to me in ensuring smooth implementation of the corporate
restructuring exercise of KUB MalaysiaBerhad. I believe that this
is a challenging task but yet achievable with the solid support,
wholeheartedcommitment and dedication by the management andstaff.
Given the strong culture of teamwork, I mustthank my predecessor,
Encik Izham Yusoff for forging a management team that has made
progress in the early stage of the restructuring exercise.
Certainly, none of the Group’s initiatives could be achieved
without the continuous support of our shareholders, partners,
business associates andcustomers. The Group pledges to fulfill its
obligation as laid out in the vision and mission, and is committed
to become a focused investment holding company that delivers great
value to its diverse stakeholders.
Thank you
Mohd Nazar SamadEXECUTIVE DIRECTOR & CHIEF EXECUTIVE
9.3.06 31.7.06 30.8.06 29.9.06 31.10.06 30.11.06 29.12.06
31.1.07 21.2.07 28.2.07 30.3.07
500
400
300
200
100
50
150
250
350
450
80
70
60
50
40
35
45
55
65
75
-
TRUST &MUTUALRESPECT
“We confide in our strength, without boasting of it; we respect
that of others, without fearing it.”
~ thomas jefferson
EVERYONE’S OPINION IS VALUED.
EVERYONE’S CONTRIBUTIONIS APPRECIATED.
-
CORPORATE SOCIAL RESPONSIBILITY REPORT
038039
ANNUAL REPORT 2006KUB MALAYSIA BERHAD
SERVING COMMUNITIESAND ENVIRONMENTAS A GOOD CORPORATE CITIZEN,
KUB MALAYSIATAKES ITS COMMITMENT TO CORPORATE SOCIALRESPONSIBILITY
(CSR) VERY SERIOUSLY. GOODCORPORATE CITIZENSHIP IS A CORE VALUE
OFOUR COMPANY AND IS INTEGRAL TO THE WAYWE CONDUCT BUSINESS AROUND
THE REGION.APART FROM TREATING CSR AS A SOCIALIMPERATIVE, WE PLACE
A HIGH PRIORITY ONIMPROVING THE QUALITY OF LIFE AND THEENVIRONMENT
IN COMMUNITIES WHERE WELIVE AND WORK AS THE BASIS TO
REMAININGVIABLE AND VITAL IN TODAY’S MARKET PLACE.
THIS PAGEStudents of Sekolah KebangsaanPulau Perhentian,
Terengganu weretreated with tele-matches after theyhad completed
the cleaning of theirschools and beach cleaning.
NEXT PAGEConstructing a walk-path at KualaGandah’s Public Picnic
Garden waspart of the assignment undertaken by the employees under
the CSRProgram.
Stronger Together to build a gazebofor public use at Kuala
Gandah’sPublic Picnic Garden.
-
Community service is a top priority for KUB Malaysia,since we
interact closely with society. Despite ourlimited resources, we
make a special effort to supportselective philanthropy for
deserving communities andstakeholders, especially in times of
suffering or need.We also extend a helping hand by supporting
employeeinvolvement in community issues and volunteerism,which
enriches both the community and the company.We actively look at
creative ways to support and enrich communities through initiatives
like sponsoringendangered animals, improving the landscape
andproviding environmental education, which are closelyaligned with
our environmental values and core businessesof Energy and
environmental management. We believethat the opportunities for
meaningful interaction withthe community are vast, and the
following are some ofthe opportunities we seized in FY2006 and
early FY2007.
IN TIMES OF NEEDThe devastating floods in Johor destroyed the
lives ofmillions while causing estimated losses of RM2.4
billion,representing 0.45% of the country's 2006 nominal
grossdomestic product. Based on three weeks of flooding,economic
losses alone were estimated at RM1.95 billion.Factoring in costs of
clean-up and reconstruction pushedtotal losses to RM2.4
billion.
A full recovery from flood damage is expected to takebetween
10–15 months. To help alleviate financial woesand assist with
ongoing reconstruction, KUB Malaysiajoined forces with UMNO
Bahagian Mersing led by Deputy Minister of Health, YB Datuk Dr.
Abdul LatiffAhmad to donate a sizeable cash and contributions
inkind to the villagers of Perkampungan Orang Asli TanahAbang,
Mersing, Johor.
HEART TO HEARTThrough our ongoing philanthropy program, KUB
Malaysia made cash contributions to the IJN Foundation, to
helpfinance the costs of treatment for underprivileged
heartpatients. The IJN Foundation’s mandate is to raise fundsto
provide ongoing resources which allow the hospital to purchase
medical equipment and sustain programsthat maintain its position as
a leader in the provision of quality cardiac care in the country
and the region.
WE ACTIVELY LOOK AT CREATIVE WAYS TO SUPPORTAND ENRICH
COMMUNITIESTHROUGH INITIATIVES LIKESPONSORING ENDANGEREDANIMALS,
IMPROVING THELANDSCAPE AND PROVIDINGENVIRONMENTAL EDUCATION, WHICH
ARE CLOSELY ALIGNEDWITH OUR ENVIRONMENTALVALUES AND CORE BUSINESSES
OF ENERGY AND FACILITIESMANAGEMENT.
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CORPORATE SOCIAL RESPONSIBILITY REPORTcontinued
040041
ANNUAL REPORT 2006KUB MALAYSIA BERHAD
CARING PRESENCE50 employees of the KUB Group volunteered to
joinforces with the people and students of Pulau PerhentianBesar to
execute a two-day community programmefocused on education. The
programme was launched by Kuala Besut State Assembly Member and
comprisedcorporate contribution in the form of badly
neededschoolbooks, as well as the cleaning and repainting of
Sekolah Rendah Pulau Perhentian together with 180students. As part
of an environmental campaign, theUNITAR Faculty of Hospitality and
Tourism Managementjoined the group for a beach cleaning exercise
and held a special class demonstration on food preparation forstall
traders of Pulau Perhentian. The students wererewarded in the form
of fun tele-matches.
THE POWER TO CHANGEAs part of our environmental initiatives, KUB
Malaysiaemployees generously volunteered their time to build a
public garden for visitors to the Kuala Gandah NationalElephant
Conservation Centre. Volunteers were dividedinto seven groups to
complete the project that comprisedthe cleaning-up and
rehabilitation of Sungai Gandah,tree-planting (two hundred plants),
as well as theconstruction of three picnic tables, fences, a
gazeboand a walk-way.
The public garden was built on an empty plot of landbelonging to
the Department of Wildlife and NationalParks (DWNP). It has vastly
improved the quality of life for both visitors and the community,
especially the families and children of DWNP staff.
GOT MILK?As part of our environmental commitment, KUB Malaysiais
closely concerned with the preservation of our floraand fauna. In
2005, KUB Malaysia sponsored a year’ssupply of vitamins for the sun
bears kept in captivity in Zoo Negara. In 2007, we continued our
commitmentand leveraged our experience in sponsorship by
sponsoringa year’s supply of milk to a baby elephant named
Siput,which is being looked after at the Kuala Gandah
NationalElephant Conservation Centre.
The Kuala Gandah centre is a base for the ElephantRelocation
Team, which began the elephant translocationprogramme in 1974. The
only one of its kind in Malaysia,the Team is dedicated to locating,
subduing and thentranslocating problem elephants from endangered
habitatswhich are being encroached upon by plantations to
othersuitable habitats throughout Peninsular Malaysia, such asTaman
Negara.
THIS PAGEBaby elephant named ‘SIPUT’ wasgiven a special treat
when she receiveda one year supply of milk sponsored by KUB
Malaysia Berhad.
Students waited anxiously to receive their prizes after the
3-hourtele-matches organized by thecommittee during the CSR project
at Pulau Perhentian, Terengganu.
NEXT PAGETogether with the Kuala Gandah’sElephant Conservatory
officers,employees of the Group cleaned up the river from debris
and branches.Fences were later put-up to ensurepublic safety
especially children who visited the picnic garden.
WE SUBSCRIBE TO THE UNIVERSAL PHILOSOPHY OF CSR, WHICH IS
DEFINEDAS INTEGRATING OPEN ANDTRANSPARENT BUSINESSPRACTICES THAT
ARE BASED ON ETHICAL VALUES AND RESPECT FOR THE
COMMUNITY,EMPLOYEES, THE ENVIRONMENT,SHAREHOLDERS AND OTHER
STAKEHOLDERS INTOCORPORATE STRATEGIESAND DAILY BUSINESS.
-
Over the past 30 years, the 24-man team has helpedprevent the
further decline of the elephant populationby relocating more than
450 wild elephants.
LOOKING FORWARDAt this early stage of CSR adoption, we are
limited byscarce resources and therefore aim largely to
delivervalue through environmental and community projectsthat are
synergistic with our core businesses.
However, we subscribe to the universal philosophy ofCSR, which
is defined as integrating open and transparentbusiness practices
that are based on ethical values andrespect for the community,
employees, the environment,shareholders and other stakeholders into
corporatestrategies and daily business. We understand that CSR is
designed to deliver sustainable value to society atlarge and that a
company that practices sustainablebusiness aligned with the
interests of our stakeholderswill be more efficacious and accepted
in the long run.
Therefore, we pledge in future to examine our strategies and
businesses to see how we can integrate CSR best practices and
deliver more value in a sustainable,long-term manner. As we move
forward, employeeinvolvement and volunteerism will remain high on
our agenda, in line with our core values of integrity,teamwork,
trust, and mutual respect and excellence.Specifically, we will also
further our environmentalethics on a longer-term basis by looking
at greening our products and services as well as our production and
supply chain, particularly in the high-impact core businesses of
Energy and Facilities Management,which incorporates environmental
services.
-
IN THE NEWS
042043
ANNUAL REPORT 2006KUB MALAYSIA BERHAD
29.082006
02.092006
22.022007
19.112006
03.032007
08.012007
06.032007
THE SUN, 29 AUG 2006
KUB CONSIDERS CAPITAL REDUCTION….
KUB Malaysia Bhd is mulling a capitalreduction exercise to
offset lossesaccumulated over the past few years. The proposal was
now being considered as the company was at the tail-end of its
losing years.
NEW STRAITS TIMES, 8 JAN 2007
KUB PUSHES SINGLE DATACENTER CONCEPT FOR GOVT
Conglomerate KUB Malaysia Berhad isexpecting a stronger
information andcommunications technology (ICT) businessover the
next few years. “We want to diversifyour earnings potential,
especially from thetelecommunications sector and
Governmentagencies. Based on the Ninth Malaysia Plan,there are
plenty of ICT initiatives that theGovernment is planning to embark
on toimprove its service delivery and these include the
establishment of data centersfor a number of Ministries.”
BH, 6 MAR 2007
UMUM PELANTIKAN BARU
KUB Malaysia Berhad melantik Mohd Nazar Samad Pengarah Eksekutif
dan Pengerusi Jawatankuasa Eksekutif KUB Malaysia berkuatkuasa 1
Mac lalu.
THE STAR, 22 FEB 2007
KUB VENTURES INTO IT SECURITY
KUB Malaysia Berhad has ventured intomanaged security services
(MSS) for IT, signing memorandum of understanding withUnited States
and Japanese-based principalsCybertrust and Trend Micro. The
partnershipwould make KUB Malaysia the first IT vendor in the
country to roll out end-to-end round-the-clock threat management
services, it claimed.
NEW STRAITS TIMES, 3 MAR 2007
KUB MALAYSIA TO SELL UNITAR TO YAYASAN PINTAR FOR RM45M
KUB Malaysia Berhad has agreed to sell its education and
training business to Yayasan Tun Abdul Razak (Yayasan Pintar)
forRM45 million. KUB Malaysia chief executiveofficer Izham Yusoff
in a statement said thedivestment is part of a move to sharpen the
group’s operations.
THE STAR, 2 SEP 2006
THE TURNAROUND PLAN. THE PLAN APPEARS TO HAVE BORNE FRUIT
WHENKUB POSTED GAINS AFTER SIX YEARS OF LOSSES…..
The turnaround plan met the approval ofMinority Shareholder
Watchdog Group chiefexecutive officer Abdul Wahab Jaafar Sidek,who
opined that KUB could be profitable thisyear, adding that the
blueprint needed to be refined in the future.
UTUSAN MALAYSIA, 19 NOV 2006
UNITAR IBARATUNIVERSITI UMNO...
Pada sesi ucapan penggulungan PerhimpunanAgung UMNO ke-57 Jumaat
lalu, di hadapanpara perwakilan UMNO, Timbalan Presiden parti,Datuk
Seri Najib Tun Razak mengumumkanUMNO mengambil alih semula
Universiti Tun Abdul Razak (UNITARA) daripada KUB Malaysia
Berhad.
-
STATEMENT ONCORPORATE GOVERNANCE
ANNUAL REPORT 2006KUB MALAYSIA BERHAD
KUB Malaysia Berhad Board of Directors (“the Board”) is
committed to the highest standards of corporate
governancethroughout the Group. The Board is accountable to the
Company’s shareholders for good governance and this
statementdescribes how the principles of good governance and the
best practices of the Malaysian Code on Corporate Governance(“the
Code”) enforced by the disclosure requirement of the Bursa Malaysia
Securities Berhad (“BMSB”) listing requirements,are applied by the
Group.
The Board is pleased to disclose the following report on the
application of the principles and compliance with the bestpractices
as set out in the Code.
A THE BOARD OF DIRECTORSThe Board is responsible to lead and
direct the Group in an effective manner and discharged its
responsibilitiesin the manner described below:
1 Board Composition and BalanceAs at the date of this statement,
the Board consists of nine (9) members comprising three (3)
non-independent non-executive Directors, five (5) independent
non-executive Directors and one (1)Executive Director.
The Board is ultimately responsible for the Group’s corporate
governance, strategic direction, overseeingthe investments of the
Company, establishing goals for management and monitoring the
achievement ofthese goals. The Board’s authority is defined and
communicated through KUB Management Guide.
The Directors, collectively bring with them a wide range of
expertise in areas such as finance, business,legal and technical
experience. A brief profile of each Director appears on pages 014
to 017 of this annualreport. The profile indicates the high level
and range of business experience amongst board members which is
essential to manage effectively a business of the size and
complexity of the Group.
The Board composition complies with paragraph 15.02 of the
Listing Requirements of BMSB, which requires a minimum of two (2)
Directors, or one third (1/3) of the Board members, whichever is
the higher, to beindependent Directors.
In order to promote a balance of power and authority, the
offices of Chairman and Executive Director &Chief Executive
have been held separately. The Board is led by the Chairman, Dato’
Nordin Baharuddin andthe executive management is led by Encik Mohd
Nazar Samad, the Executive Director & Chief Executive
whoreplaced the former CEO, Encik Izham Yusoff in April 2007. Dato’
Ir. Harun Ahmad Saruji has been appointedas the senior independent
non-executive Director who is available to shareholders, if they
have concerns thathave not been resolved through the normal channel
of contact with the Chairman or Executive Director &Chief
Executive. The appointment reflected the Board’s commitment to
embrace a complete best practicesas set out pursuant to the Best
Practises Provision AA VII of the Code.
The roles of Chairman and the Executive Director & Chief
Executive are clearly defined in their individualposition
descriptions. The Chairman provides coherent leadership and assumes
the responsibility for theeffective running of the Board, as well
as represents the Board to the shareholders. The Executive Director
& Chief Executive, supported by his team of management, is
responsible for the day-to-day management of the business,
organisational effectiveness as well as implementation of Board’s
policies and decisions.
-
STATEMENT ONCORPORATE GOVERNANCEcontinued
044045
ANNUAL REPORT 2006KUB MALAYSIA BERHAD
2 Board Meetings & AttendanceThe Board is highly dedicated
and has exhibited utmost commitment to the Group, evidenced by its
members’attendance record. During the financial year ended 31
December 2006, fifteen (15) Board meetings were held.The record of
attendance at Board meetings is as follows:
DIRECTORS MEETING ATTENDANCE
Dato’ Nordin Baharuddin 14/15Chairman, non-independent
non-executive DirectorDatuk Hj Faisyal Datuk Yusof Hamdain Diego
14/15Independent non-executive DirectorDato’ Ir Harun Ahmad Saruji
14/15Senior independent non-executive DirectorDato’ Kamilia Ibrahim
13/15Non-independent non-executive Director Rosman Abdullah
12/15Non-independent non-executive DirectorMohamed Ezzuddeen Mohd
Effendi 12/15Independent non-executive DirectorRaja Ali Raja Othman
14/15Independent non-executive DirectorOmar Haji Ahmad
15/15Independent non-executive DirectorMohd Nazar Samad –Executive
Director(Appointed w.e.f. 1 March 2007)
3 Access to and Supply of Quality Information and AdviceAll
relevant papers, which are comprehensive and encompass both
quantitative and qualitative factors, for deliberation by the Board
are circulated in advance to its Directors to facilitate focused
discussion andeffective decision-making process. Members of the
senior management team and professional advisers areinvited into
Board meetings to provide the necessary information and attend to
the Board’s enquiries on relevant issues, enabling the Board to
make informed decisions premised on in-depth knowledge. There is
also a formal procedure sanctioned by the Board of Directors,
whether as a full board or in their individualcapacity, for
Directors to obtain independent professional advice at the
Company’s expense.
A balance of financial and non-financial information is
encapsulated in the papers covering the Group’s
strategies,financial results, overall performance of the Group,
budgets, corporate proposals, major investments, businessdirections
and corporate governance matters for the Board’s deliberation at
the Board meetings.
All Directors have unrestricted access to all relevant
information to discharge their responsibilities, as well asaccess
to the advice and services of three (3) Company Secretaries who are
responsible to ensure that Boardmeeting procedures are observed,
and applicable laws and regulations are complied with.
Board meetings are scheduled in advance at the turn of the new
calendar, allowing the Directors to plan aheadand enter the
calendar year’s meetings into their individual schedules.
-
B BOARD STRUCTURE AND EFFECTIVENESSIn executing its
responsibilities, the Board delegates certain responsibilities to
its Committees as follows:
i Board Audit Committee (“BAC”)ii Board Nomination Committee
(“BNC”)iii Board Remuneration Committee (“BRC”)iv Board Investment
Committee (“BIC”)v Executive Committee (“EXCO”)
All committees have clearly defined terms of reference outlining
their responsibilities and operating procedures.The Chairman of the
various committees will report to the Board the outcome of the
committees meetings.These committees were formed in order to
enhance business and operational efficiency as well as
efficacy.However, the Board retains full responsibilities for the
direction and control of the Company and the Group.
i Board Audit CommitteeExplained on pages 053 to 057 of this
annual report.
ii Board Nomination CommitteeThe Nomination Committee consists
of the following members:
NAME OF MEMBERS
Dato’ Kamilia IbrahimChairman, non-independent non-executive
DirectorMohamed Ezzuddeen Mohd EffendiIndependent non-executive
DirectorOmar Haji AhmadIndependent non-executive Director
During the financial year, the Committee met once with full
attendance.
The Nomination Committee is empowered by the Board to bring to
the Board recommendations as to theappointment of new Directors for
KUB Malaysia Berhad and its subsidiaries.
In addition, the Committee will review the required mix of
skills, experience and other core competencies,which the
non-executive Directors should bring to the Board. The Committee
believes that the Board’scurrent composition possesses the required
mix of skills and core competencies necessary for the
Board’seffective discharge of its duties.
-
STATEMENT ONCORPORATE GOVERNANCEcontinued
046047
ANNUAL REPORT 2006KUB MALAYSIA BERHAD
iii Board Remuneration CommitteeThe Remuneration Committee
consists of the following members:
NAME OF MEMBERS
Mohamed Ezzuddeen Mohd EffendiChairman, Independent
non-executive DirectorDato’ Ir. Harun Ahmad SarujiSenior
independent non-executive DirectorOmar Haji AhmadIndependent
non-executive Director
During the financial year, the Committee met once with full
attendance.
The policy practised on Directors’ remuneration by the
Remuneration Committee is to provide the remuneration package
needed to attract, retain and motivate the Directors of the quality
required to manage the businesses of the Group and to align the
interests of the Directors with those of the shareholders.
The Committee is responsible for recommending to the Board the
remuneration framework for Directors as wellas the remuneration
packages of executive Directors. Nevertheless, it is the ultimate
responsibility of the entireBoard to approve the remuneration of
the Directors. None of the executive Directors participated in any
way indetermining their individual remuneration.
The executive Directors’ remuneration comprises basic salary and
Group’s other customary benefits madeavailable where appropriate.
The non-executive Directors’ remuneration comprises fees and
allowances wherethe determination is balanced with their expected
roles and responsibilities.
iv Board Investment CommitteeThe Investment Committee consists
of the following members:
NAME OF MEMBERS
Dato’ Nordin BaharuddinChairman, non-independent non-executive
DirectorRaja Ali Raja OthmanIndependent non-executive
DirectorRosman AbdullahNon-independent non-executive Director
The Committee met six (6) times during the financial year.
The Committee is responsible to make recommendation to the Board
in relation to the management of Group’sinvestment and divestment
activities.
-
v Executive Committee The Executive Committee consists of the
following members:
NAME OF MEMBERS
Mohd Nazar SamadChairman, Executive Director(Appointed w.e.f. 9
March 2007)Dato’ Nordin BaharuddinNon-independent non-executive
DirectorDatuk Hj Faisyal Datuk Yusof Hamdain DiegoIndependent
non-executive DirectorIzham Yusoff Chief Executive Officer(Resigned
w.e.f. 2 April 2007)Raja Ali Raja OthmanIndependent non-executive
Director(Resigned w.e.f. 13 January 2006)*
* Raja Ali Raja Othman resigned from the Executive Committee but
to the date of this statement, he remainsas a member of the
Board.
The committee met fourteen (14) times during the financial
year.
The EXCO is delegated with such powers to ensure the smooth and
effective running of the Company and their authority is stated in
KUB Management Guide.
APPOINTMENT TO THE BOARD The Board Nomination Committee is
responsible for making recommendations in respect of any
appointment to theBoard. In making the recommendations, the Board
Nomination Committee considers the required blend of skills
andexperience which the Directors should be equipped.
Any new nomination received is put to the full Board for
assessment and endorsement. The appointment of membersis carried
out through a proper selection process, which is consistent with
the Articles of Association of the Company.The Company Secretary
will also ensure that all appointments are properly made, and that
legal and regulatoryobligations are met.
RE-ELECTION OF DIRECTORSIn accordance with the Company’s
Articles of Association, all of the Directors who are appointed by
the Board aresubject to election by shareholders at the first
Annual General Meeting after their appointment and are subject to
re-election once every 3 years.
-
STATEMENT ONCORPORATE GOVERNANCEcontinued
048049
ANNUAL REPORT 2006KUB MALAYSIA BERHAD
CONTINUING PROFESSIONAL DEVELOPMENTAll Directors are encouraged
to acquire appropriate professional development training to enhance
the business acumenand professionalism in discharging their
fiduciary duties to the Company.
Apart from attending the Mandatory Accreditation Programme and
Continuing Educational Programme accredited by BMSB, the Directors
are also equipped with business exposure through visits to
operation sites and familiarisationprogramme.
DIRECTORS’ REMUNERATION The Board Remuneration Committee
recommends to the Board the remuneration package for the Executive
Directorand Chief Executive Officer, which is benchmarked to the
market and information from independent sources on thepackage for
similar position in a select group of comparable companies.
The Board determines fees payable to the non-executive Directors
upon recommendation made by the BoardRemuneration Committee after
considering the rates comparable to other relevant companies, and
such fees aretabled to the shareholders of the Company for
approval.
The aggregate remuneration of Directors are categorised into
appropriate components for the financial year ended 31 December
2006, as follows:
BONUS/ MEETING
IN RM SALARIES ALLOWANCES EXPENSES FEES TOTAL
Executive Directors – – – – –Non-executive Directors –
240,000.00 175,000.00 288,000.00 703,000.00
The number of Directors whose remuneration falls into the
following bands during the financial year ended 31 December2006 are
as follows:
NO OF DIRECTORS EXECUTIVE NON EXECUTIVE
RANGE OF REMUNERATION (RM) DIRECTORS DIRECTORS TOTAL
Below 50,000 – – –50,001 - 100,000 – 6 6100,001 - 150,000 – 1
1150,001 - 200,000 – – –200,001 - 250,000 – 1 1250,001 - 300,000 –
– –Total – 8 8
The Board is of the opinion that, while individual Directors’
remuneration is not disclosed, information provided above,which is
made in accordance with Bursa Malaysia’s Listing Requirements, is
sufficient to provide an understanding andbasis for evaluation of
KUB’s corporate governance.
-
C CONTINUOUS COMMUNICATION WITH SHAREHOLDERSThe Company
communicates with its shareholders and investors primarily through
its Annual General Meeting(AGM), annual report, the quarterly
financial statements and the various disclosures and announcements
madeto BMSB.
At the AGM, the shareholders are given opportunity to ask their
questions and seek clarifications on the businessesand performance
of the Group.
Additionally, shareholders can also have access to information
by accessing the corporate website at www.kub.com.This website is
maintained by the Group and provides up-to-date information to its
shareholders as well asstakeholders at large.
D ACCOUNTABILITY AND AUDIT1 Financial Reporting
The Board aims to provide and present a balanced and meaningful
assessment of the Group’s financialperformance and prospects at the
end of the financial year, primarily through the annual
financialstatements, quarterly announcement to shareholders as well
as Chairman’s statement and review of operations in the annual
report.
The BAC assists the Board in scrutinising information for
disclosure in the reports and the overall quality of the financial
reporting.
2 Directors’ Responsibility Statement (Pursuant to Paragraph
15.27(a) of BMSB Listing Requirement)The Board is accountable for
ensuring that the financial statements present a true and fair view
of the state of affairs of the Group and of the Company as at the
end of the financial year and of their profit or loss and cash
flows for the year then ended. In preparing the financial
statements, the Directors haveensured that applicable approved
accounting standards in Malaysia and the provisions of the
Companies Act, 1965 have been applied.
In preparing the financial statements, the Directors have
selected and applied consistently suitableaccounting policies and
made reasonable and prudent judgements and estimates.
The Directors also have general responsibility for taking such
steps as are reasonably open to them tosafeguard the assets of the
Group and to prevent and detect fraud and other irregularities.
3 Relationship with AuditorsThrough the BAC, the Board maintains
an active, transparent and professional relationship with the
external auditors, Messrs KPMG Desa Megat & Co. The BAC meets
with the external auditors without the presence of management at
least once a year in its aim to establish a transparent and
appropriaterelationship. The BAC report is provided on pages 053 to
057.
4 Internal ControlThe Code requires the Board to maintain a
sound system of internal controls to safeguard
shareholders’investment and the Group’s assets. The Group’s
Statement on Internal Controls pursuant to Paragraph15.27(b) of the
BMSB Listing Requirement is set out on page 051 to 052.
This statement is made in accordance with a resolution of the
Board of Directors dated 28 May 2007.
-
ADDITIONALCOMPLIANCE INFORMATION
050051
ANNUAL REPORT 2006KUB MALAYSIA BERHAD
E ADDITIONAL COMPLIANCE INFORMATIONThe following information is
provided in compliance with Paragraph 9.25 of the Listing
Requirements of BMSB:
a Non-audit feesThe amount of non-audit fees paid to the
External Auditors by the Group for the financial year ended 31
December 2006, amounted to RM 279,400.
b Recurrent Related Party TransactionsThe Company has obtained
professional services from its non-executive Directors and
substantial shareholderduring the year. These services were in
relation to the rental and maintenance of Point of Sales system
andlegal advisory services respectively. The amount was not
significant, since it did not exceed RM 1 million peryear and did
not surpass the 1% of revenue threshold, and thus did not warrant
an announcement.
c Imposition of Sanctions/PenaltiesDuring the financial year, no
sanctions and/or penalties were imposed on the Company, its
subsidiaries,Directors or Management by the relevant regulatory
authority.
d Material ContractsDuring the financial year, there were no
financial contracts entered into by the Company and its
subsidiaries(not being contracts entered into in the ordinary
course of business) involving directors and
substantialshareholders.
e Variation in ResultsThere was a variance of more than 10%
between the audited results of the financial year 2006 and the
unaudited results previously announced due to the Board’s decision
subsequent to the fourth quarterannouncement and audited
adjustments taken upon the completion of the audit for the
financial yearended 31 December 2006. The reconciliation for the
variance is as follows:
IN RM’OOO
Expenses incurred on behalf of subsidiaries which have been or
in the process of being disposed of or wound-up 26,110
Underprovision of tax 3,094Inventory write off 2,937Impairment of
property, plant and equipment 1,155Allowance for doubtful debt
2,381Others (net) (507)Deviation of unaudited and audited results
35,170
f Revaluation Policy on Landed PropertiesThe revaluation policy
on landed properties is as set out in the financial statements.
g Profit GuaranteeThe Company did not give any profit guarantee
during the financial year.
h Share BuybackThere is no share buyback during the financial
year.
i American Depository Receipt (“ADR”) or Global Depository
Receipt (“GDR”)The Company did not sponsor any ADR or GDR programme
during the financial year.
j Options, Warrant or Convertible SecuritiesDuring the financial
year, no options, warrant or convertible securities were issued by
the Company.
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INTRODUCTIONThis statement is made pursuant to the
ListingRequirements of Bursa Malaysia Securities Berhad with regard
to the Group’s compliance with thePrinciples and Best Practices
provisions relating to internal controls as stipulated in the
Malaysian Code on Corporate Governance (the “Code”).
The Board is pleased to present hereinafter the annual update on
the Group’s state of internal controlscoupled with work done during
the year under review.
BOARD RESPONSIBILITYThe Board of Directors affirms that it is
ultimatelyresponsible for the Group’s system on internal
controlthat includes the assurance of its adequacy and integrityat
all times, and its alignment with our businessobjectives. However,
it should be noted that this system is designed to manage rather
than to eliminatethe risks of failure to achieve business
objectives and as such, could only provide reasonable but not
absoluteassurance against material misstatement or loss.
The Board has established a process for identifying,evaluating
and managing significant risks faced by the Group except for the
material joint ventures andassociated companies. The process has
been in placethroughout the year and up to the date of approval
ofthe annual report and financial statements. It has beenreviewed
by the Board and accords with the Statementon Internal Control:
Guidance for Directors for PublicListed Companies (“Internal
Control Guidance”).
ENTERPRISE WIDE RISK MANAGEMENT FRAMEWORKThe Board acknowledges
that the identification and the management of principal risks play
an important and integral part in achieving the Group’s
businessobjectives and the management of its daily operations.
The Board has put in place an enterprise-wide riskmanagement
framework in the Group to ensure anongoing process of identifying,
evaluating, monitoringand managing the significant risk exposures
inherent in its business operation. Subsequently, the
followinginitiatives were reviewed by the BAC and presented to the
Board:
• Streamlining risk management and businessplanning activities
to ensure that controls andmitigation plans for risk management are
built into business plans and budgets of the Group.
• Continuous communication and coordination of risk management
activities in the Group throughrisk forum held on a quarterly basis
throughout the year.
• Implementing the KUB Integrity Plan, which include the
initiative to formulate the Group Codeof Ethics, Introduction of
Whistle-Blowing Policy and review of the respective authority
limits in the KUB Management Guide (KUBMaG).
KEY INTERNAL CONTROL SYSTEM Control StructureThe Board is fully
committed to ensuring that a propercontrol environment is
maintained at the Group. The key elements of the Group’s internal
control system are listed below:
Board CommitteesSpecific Board responsibilities have been
delegated to committees established with formalised and
specificterms of reference, to assist the Board in the executionof
its responsibilities. The following are the
committeesestablished:
• Board Audit Committee (Please refer to page 053 for further
explanation)
• Board Nomination Committee(Please refer to page 045 for
further explanation)
• Board Remuneration Committee(Please refer to page 046 for
further explanation)
• Board Investment Committee(Please refer to page 046 for
further explanation)
• Executive Committee(Please refer to page 047 for further
explanation)
These committees have the authority to examine all matters
within their scope and terms of referenceand report back to the
Board on a periodic basis withtheir recommendations for review or
approval by the Board, where appropriate.
STATEMENT ONINTERNAL CONTROL
ANNUAL REPORT 2006KUB MALAYSIA BERHAD
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052053
ANNUAL REPORT 2006KUB MALAYSIA BERHAD
STATEMENT ONINTERNAL CONTROLcontinued
ORGANISATIONAL STRUCTUREThe Board has put in place a defined
organisationalstructure that is directly aligned to the strategic
andoperational demand of the business. Each operationalunit is
headed by personnel who are fully accountable toensure that the
business activities are implemented withfull compliance with the
Group’s objectives and policies.
POLICIES AND LIMITS OF AUTHORITYThe delegation of
responsibilities to the BoardCommittees and the management as well
as thedelineation of their respective authority limits havebeen
defined in the KUB Management Guide (KUBMaG)and the establishment
of similar authority guides for all the active subsidiaries of the
Group, which have since been reviewed and approved for
implementationby KUB management as well as the respective Boards
ofthe subsidiaries. These policies and limits of authorityare
monitored by the Group Internal Audit Division andguide the
management in its day-to-day operations.
At th