Dear Shareholders,

On behalf of the Board, it is my honour to present CB Industrial Product Holding Berhad's ("CBIP" or "Company'') annual report and audited financial statements for the financial year ended 31 December 2017.

2017 In Review

Tan-Sri-Datuk-DrThe Group achieved an encouraging revenue of RM704.1 million, profit before taxation of RM97.2 million and profit attributable to owners of the Company of RM51.4 million for financial year 2017.

The total revenue for financial year 2017 increased by 21.8% when compared to the financial year 2016. Even though the revenue had increased but the profit before taxation and profit attributable to owners of the Company decreased by 29.1 % and 49.7% respectively. This is mainly due to the losses on foreign exchange and currency translation differences for foreign operations of RM22.0 million and RM16.8 million respectively. Our core profit attributable to owners of the Company for financial year 2017 stands at RM51.4 million as comparedwith RM102.2 million for financial year 2016.

Our palm oil equipment and engineering segment achieved a revenue of RM366.2 million and profit before taxation of RM78. 7 million for financial year 2017. The decrease in profit before taxation was largely due to the foreign exchange losses. The financial year 2017 was an exceedingly challenging year but nevertheless our order book remain healthy and closed at RM426 million as at 31 December 2017, marginally higher than the previous financial year.Our special purpose vehicles segment achieved a revenue of RM327.8 million and profit before taxation of RM35.8 million for financial year 2017 which represent a year-on-year increase of 107.0% and 36.0% respectively. The profitability of this segment did not increase in tandem despite a strong growth in revenue mainly due to lower margin of a project that undermined by unfavourable foreign exchange during the financial year. With an order book of RM130 million, this segment is targeted to grow in the future as it continues to expand its vehicles portfolio to cater for the market's need not only in Malaysia but also with a plan to expand its business in the overseas market.

Our plantation and milling segment posted a loss of RM10.2 million for financial year 2017 as compared with losses of RM7.6 million for financial year 2016. This segment was still incurring losses because the age profile of the palm trees are relatively young, thereby generating low revenue. The set up and operating costs will continue to be incurred by this segment until maturity of the palm trees. Our first palm oil mill for this segment has been scheduled to be completed by end of 2018.

Our plantation associates and joint venture registered a strong growth for financial year 2017 and our share of results improved year-on-year by 42.5% to RM 12.9 million, mainly due to increase in prices and production of palm products. As the palm trees in these companies are mostly mature, the future performance is dependent on their yield and future prices of palm products.

As our Group's performance were affected by the state of the Malaysian economy, we quote below an extract from Bank Negara Malaysia's 2017 report.

"During 2017, the Malaysian economy recorded a growth of 5.9% (2016: 4.2%). Headline inflation moderated to 3.5% in 4Q 2017 (3Q 2017: 3.6%) due mainly to lower inflation in the housing, water, electricity and gas and transport categories. Growth is expected to remain favourable in 2018, with domestic demand continuing to be the key driver of growth. The expected faster expansion in global growth would continue to benefit Malaysia's exports, with positive spill-overs to the domestic economic activity. Headline inflation is expected to moderate in 2018, reflecting a smaller contribution from global cost factors and a stronger ringgit compared to 2017. Upward pressures from the robust demand condition will be contained by continued spare capacity in the labour market and on-going investment for capacity expansion. The trajectory for headline inflation, however, will remain dependent on the trend of global oil prices, which remains highly uncertain."

(Bank Negara Malaysia, 14 February 2018)

In our palm oil equipment and engineering segment, we will continue to focus on growing our order book and increasing our clientele base. In view of the technological advantage of our Modipalm Continuous Sterilization palm oil mills as well as our track record of excellent deliveries, we will continue to, not only expand existing business relationships but also to develop new clientele base with the hope of achieving a sustainable growth path. We will also continue to invest in research and development, as the management is slowly progressing towards the commercialization of the "zero discharge" technology, a new innovation in the field of waste management for palm oil mills.

In our special purpose vehicles segment, the management remains cautiously optimistic of securing more new supply and delivery contracts through active marketing of new products across new geographical markets. We will continue to build on our capabilities to grow our special purpose vehicles segment.

In our plantation and milling segment, with a land bank of approximately 32,000 hectares, whereby 11,574 hectares have been planted in totality, the management remains committed to improve the plantation development based on our plan to drive our Group's long term growth.

Corporate Exercises

We announced on 28 July 2017 that Avecpalm Marketing Resources Sdn. Bhd. ("AMR"), a 80%-owned subsidiary of CBIP has entered into a Sale and Purchase Agreement with Beebull Engineering Sdn. Bhd. to acquire a parcel of freehold land held under Garan 58844 Lot 64258 Mukim Damansara Daerah Petaling measuring approximately 2215 square metres together with a factory unit erected thereon, for a total cash consideration of RM8 million. The acquisition will enable AMR and CBIPH Group to expand its existing business activities as well as to take up more business opportunities.

We announced on 29 May 2017 that the disposal of shares in PT Gumas Alam Subur, PT Kurun Sumber Rezeki and PT Manyangan Jaya has been completed following the fulfilment of conditions precedent and the receipt of the Final Phase Payment from the buyer on 26 May 2017.

We announced on 4 May 2017, CB Industrial Product Sdn. Bhd. ("CBIPSB"), a wholly - owned subsidiary of the Company had incorporated a new subsidiary in Republic of Guatemala, Modipalma Latin America, Sociedad Anonima ("Modipalma"), and had subscribed for the 99.6% of the issued and paid-up capital of Modipalma, representing 548 shares of GTQ100.00 each for a total cash consideration of GTQ54,800 which equivalent to RM32,272. After the exercise, Modipalma shall become a subsidiary of CBIPSB.

Upholding Shareholders' Value

In line with our practice of distributing cash dividends amounting to a target 30% of the profit after taxation attributable to owner of the parents, the Board have declared a total adjusted cash dividend payout of 6 sens for the financial year ended 31 December 2017, despite a weaker growth environment. We will continue to explore sustainable growth strategies to further enhance our shareholders' value.

A word of Appreciation

I wish to take this opportunity to express my heartfelt gratitude and appreciation to our Board of Directors, the management team and our employees for their dedicated, unwavering support.

Last but not least, I would like to thank our shareholders, customers, vendors and other stakeholders, who have placed their faith in us since our humble beginnings until today.

TAN SRI DATUK DR. YUSOF BIN BASIRAN
INDEPENDENT
NON-EXECUTIVE CHAIRMAN