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The Intrapreneur Venture (“IV”) Division was established as one of Kulim’s principal growth thrusts and plays an important role in the Group’s revenue and profit contributions, thus enhancing shareholder’s value.

Under its wings, there are 11 active companies, comprising companies with equity participation by Entrepreneurs,and Corporate Intrapreneurs. The Division is involved in a diverse range of businesses,including support operations for plantations, biofertilizer, agricultural machinery, oil palm nursery, provide training and other related services to OSH as well as IT-related and insurance broking services.

Entrepreneurship is an important factor to spur the growth of IV Division, and it also provides a platform to place the talents of its employees at the centre stage. The related subsidiary companies which are groomed and developed under this scheme have been growing from strength to strength, drawing its energy from the stability in leadership prudent management and good business acumen. Intrapreneur 2.0 programme, for instance, has been introduced since 2016 to propagate a conducive environment for intrapreneurs.

More entrepreneurs and businesses will be developed by the Group and they are expected to contribute positively to the Group’s corporate earnings.

In FY 2018, Kulim’s core IV segment continued to operate in a very dynamic and volatile environment. In this regard, Kulim has been reassessing the performance of its IV companies, whereby companies with potential and profit growth have been nurtured and expanded, while companies that experienced setbacks have either been reviewed, restructured or merged. Viable plans and strategies have also been laid down in tandem with the challenging and ever changing market environment.

FINANCIAL PERFORMANCE

In 2018, the IV Division recorded a revenue of RM47.93 million, a decreased of 14.76% compared with RM56.23 million posted the preceding year. The Division incurred a PBT of RM1.24 million in 2018 from a Loss Before Tax (“LBT”) of RM2.02 million registered previously. Extreme Edge Sdn Bhd (“EESB”) Group was the most profitable company within the Division, generating a PBT of RM2.45 million. The other companies that have recorded a satisfactory performance included Kulim Safety Training and Services Sdn Bhd (“KSTS”), Perfect Synergy Trading Sdn Bhd (“PSTSB”) and Edaran Badang Sdn Bhd (“EBSB”).

CORPORATE DEVELOPMENTS

During the year under review, Kulim undertook a number of measures to strengthen its IV business to provide an operational base that will create value. These measures included, among others, the cessation of loss-making operations or companies, changing the business model of companies, merging and disposing of companies that were under-performing or no-longer fit in the Group’s strategic vision, diversification and outsourcing of certain businesses and activities.

Accordingly, on 30 June 2018, Microwell Bio Solutions Sdn Bhd (“MBSSB”) had ceased its operation and became a dormant company. Beginning 30 June 2018, the business operations of Sovereign Multimedia Resources Sdn Bhd (“SMRSB”), a subsidiary of EESB, were transferred to JCorp and thus ensued the termination of contracts with JCorp. Meanwhile, EESB has acquired Pinnacle Platform Sdn Bhd (“PPSB”) from EPA Management Sdn Bhd (‘’EPA”) effective 1 November 2018.

EXTREME EDGE SDN BHD ("EBSB")


EESB was incorporated in 1 January 2010 and since then, it has set its sight to become a premier information technology solution integrator and business performance enhancer in Malaysia’s competitive Information Communications Technology (“ICT”) business landscape. EESB is a one stop solutions centre which focuses on providing networking and communications,backup and recovery, project management and consultation, managers services of hardware, website design, web application development and business application.

EESB has grown its business by having talented and professional specialists consisting of Software Engineers, Application Consultants, System Analysts, Application Programmers and Administration and Technical Support Engineers. Its other areas of expertise include servicing and maintenance of servers, UPS systems and PCs in addition to project management and consultation services.

For the year under review, EESB Group recorded a revenue of RM13.20 million, a declined of 9.34% as compared to RM14.56 million posted in 2017. The declined was attributed by lower sales contribution from SMRSB due to termination of IT Service Agreement with JCorp and transfer of operations to the latter. However, PPSB brought in contracts and maintenance works which accounted a bulk of the sales in 2018.In terms of PBT, EESB recorded increased of 15.02% to RM2.45 million in 2018, from RM2.13 million posted in the previous year partly due to better control of its operational and administration cost.

EESB adopted a customer-centric business model, working collaboratively with its clients to deliver solutions using methodologies that are user-centred,technology-based and business-driven. This approach appeals to customers by reducing the time and risk associated with designing and rolling-out complete integrated solution. Going forward, EESB aims to strengthen its position as an outstanding specialist of products and services.

KULIM SAFETY TRAINING & SERVICES SDN BHD ("KSTS")


KSTS was incorporated on 1 January 2013 as a subsidiary of Kulim’s wholly owned EPA. Guided by its motto, “Safety Makes a Difference”, KSTS specialises in Occupational, Safety and Health (“OSH”)services, with emphasis on OSH training,human resource development, motivation and quality related field works, and its clientele are now growing. KSTS also provides advisory services on matters related to Occupational, Health and Safety Management Systems (“OHSAS 1800”)and ISO Quality Management Systems.

For the financial year under review, KSTS generated a revenue of RM3.79 million,representing an increased of 10.82% from RM3.42 million posted in 2017. Meanwhile,PBT decreased by 1.27% to RM0.78 million compared with the previous year at RM0.79 million. The company has also extended its customer reach with the setting up of an additional outlet to tap into the fast-developing RAPID project in Pengerang, Johor. It also undertakes auditing and inspection, looking into cases relating to deaths, accidents and dangerous occurrences at the workplace and making recommendations for improvements. Other services provided include health screening(medical surveillance), noise monitoring and gas testing, as well as administering urine and drugs tests.

In order to make KSTS a viable, productive,growing and profitable company, KSTS also provides the services of visiting medical officers and foreign workers’medical screening experts on behalf of the Foreign Workers Medical Examination Monitoring Agency (“FOMEMA”). Going forward, in tandem to KSTS acquisition of Optimum Status Sdn Bhd (“OSSB”), the company will restructure OSSB and will be involved in other business segments,such as environmental and biogas projects. OSSB, which is principally engaged in mechanical, electrical, civil engineering for plant/ mill and downstream business of the palm oil mill industry, project engineering,steel structure, piping works, fabrication,machining, installation and mill upgrade, is deemed the most suitable company to be engaged by our Group for environmental related business ventures.

PERFECT SYNERGY TRADING SDN BHD ("PSTSB")


PSTSB was established on 8 July 2010 as a distributor and supplier of fertilizers and chemicals based in Kota Tinggi Industrial Area, Johor. The company is dedicated to providing efficient and customer friendly services to their clients. Its main clients consist of estates within JCorp Group and the Kulim Group. PSTSB’s products meet the stringent requirements set by the Malaysia Standards Department and are also certified with MS ISO/IEC 17025:2005 under the Malaysia Laboratory Accreditation Scheme (“MLAS”) for assurance of quality.

PSTSB’s revenue in 2018 has decreased by 6.97% to RM8.94 million compared to last year of RM9.61 million. Concurrently, PBT has decreased 37.93% to RM0.54 million compared to the previous year of RM0.87 million. In the near future, PSTSB is involved in business diversification stance to ensure its continuity and sustainability.

EDARAN BADANG SDN BHD ("EBSB")


EBSB is the inventor and manufacturer of a three-wheeler multi-purpose machine,also known as a mechanical buffalo named Badang. It is mainly used for FFB evacuations and other field works such as manuring and mulching. The invention of a multi-purpose three-wheeler has carved a niche for the company in the market.

During the year under review, EBSB registered a 7.83% increased in revenue from RM25.16 million in 2017 to RM27.13 million in 2018. However, the company’s PBT has decreased by 7.5% to RM0.74 million compared to the preceding year of RM0.80 million. The increased in revenue was driven by higher sales and new market expansion in existing markets and fresh inroads in Indonesia. Thus far, EBSB has exported 83 units of Badang to Indonesia.

To further penetrate the local market, EBSB has opened four (4) product distribution centres in Kota Tinggi, Lahad Datu, Bintulu and Kuantan. Apart from the “Badang”machine, the Lahad Datu centre is also thesole distributor in Sabah for a wide range of agricultural equipment bearing the Beluga, Rhyno, Tiger and Lion trademarks imported from Korea.

AGROFOODS


Kulim has built a strong corporate portfolio anchored in three (3) business segments, namely, Plantation, O&G and IV. Nevertheless, the Group continues to explore further investment opportunities in new businesses that are synergistic with our core operations. Hence, our foray into Agrofood meets a two-fold objective:Firstly, in line with our sustainability agenda,it enables us to promote green activities through the recycling of compost and fruit waste to support our feedlot and cattle integration activities. Secondly, it helps to support our partners and outgrowers in building successful ventures, while contributing to the national food security programme at the same time.

During the year under review, Kulim made significant strides in its Agrofood business.Cattle projects generated over RM5.30 million in revenue from the sale of cattle,while our pineapple plantation continued to thrive with a revenue of RM10.60 million.

CATTLE PROJECT


Kulim’s involvement in the Agrofood business was a logical offshoot of its traditional palm oil business. It started with small scale cattle rearing in the oil palm estates as a biological control measure under the weeding programme. This is in line with the Government’s call for estate owners to implement a cattle breeding and rotational grazing programme in compliance with Good Animal Husbandry Practices (“GAHP”). Today, there are over 6,000 heads of cattle grazing on Kulim’s 12 estates.

Feedlot is the other component of Kulim’s cattle-rearing programme, which is currently being run by Kulim Livestock Sdn Bhd (“KLSB”), a wholly-owned subsidiary of Kulim. KLSB is principally involved in the rearing and fattening of cattle for one (1)cycle of four (4) months before they are sold or slaughtered.

The company currently runs its feedlotting programme in three (3) locations, namely, Bukit Nyamuk in Simpang Renggam with 523 heads of cattle, Taman Kekal Pengeluaran Makanan (“TKPM”) in Peta Temalik, Segamat with 295 heads and TKPM Lubuk Bakul in Muar, which involves the coordination with satellite farmers, with 111 heads. Throughout the year, the feedlots housed a total of 929 heads and sold a total of 579 heads. As at 31 December 2018, the total headcount for feedlot segment manage by KLSB was 280 as compared to 653 head recorded in previous year.

In addition to fulfilling KLSB’s own requirement, the napier is also meant for sale to local farmers and for the production of a downstream product, which is napier pellets,for both local and export markets. The project is part of Johor State Government’s proposition, in which JCorp was given the mandate to be actively involved in the socioeconomic development activities within the Segamat district.

Under the Group’s integration segment, the total head count was 6,199 at the end-2018 versus 6,277 heads at end-2017. As at year end-2018, both feedlots and intergration segment had a total population of 6,479 heads, a decreased of 6.51% (2017: 6,930 heads). The decreased in population size was attributed to the sale of culled cows that are no longer productive.

PINEAPPLE BUSINESS




Kulim has been involved in the pineapple industry since 1994 through our MD2 pineapple plantations run by Kulim Pineapple Farm (“KPF”) which are located in Ulu Tiram and Kluang, Johor. As at 31 December 2018, the total planted area of the premium MD2 variety stood at 219.82 hectares.

KPF has embarked on an expansion programme through collaboration with MPIB for the Agropreneur B40 programme. Under this programme, 12 Agropreneur participants from the B40 group will be groomed to develop 48.58 hectares of pineapple plantation beginning August 2018. At the same time, KPF as the “Anchor Company” forthe project was offered a total of 72.88 hectares of land for the programme, making the total project area at Tanah Abang, Mersing, Johor totalling 121.46 hectares. Upon completion of the project, which is targeted by September 2019, the total planted area will be 341.28 hectares.

Marketed under the brand name “Melita”, the MD2 pineapples produced by KPF receives good demand from both local and overseas markets. In 2018, total production of pineapples amounted to 3,208 tonnes, of which 92% were sold domestically while the remainder were exported to countries such as Iran,Lebanon, Dubai and China.

KPF aims to be a cost leader and main producer of MD2 pineapple, promoting Melita as a premium yet affordable brand.In addition to producing premium fruits and suckers, the Group will be focusing on land usage optimisation with a higher density of plants per acre. To add value to the production of fresh fruits,we have also ventured downstream by producing a variety of pineapple-based products which include canned juice, tarts, jam,chips and slices. Our Group will continue to broaden the usage of the pineapple through collaboration with researchers from local universities. Moving forward, KPF is also looking into further area expansion for its pineapple farm through collaboration with other GLCs in the near future.

Kulim is one of the biggest producers of MD2 fresh pineapples in Malaysia for the local as well as export markets in the Middle East, East Asia and Singapore. The company also have a certification of Malaysian Good Agricultural Practice (myGAP 2010-2020) and Seed Certification Scheme (SPBT) developed by the Ministry of Agriculture and Agro-Based Industry, Malaysia.

Melita comes from the Greek word meaning “Sweet as Honey”. For the local market, the company has opened a total of nine(9) Melita kiosks in Johor which located at Ulu Tiram Estate, Galleria @ Kota Raya, KPJ Johor Specialist Hospital, Larkin central and KPJ Puteri Specialist Hospital while MELITA kiosks around the city are located in KPJ Tawakal Specialist Hospital, KPJDamansara Hospital, KPJ Ampang Hospital and KPJ Seremban Hospital.