Britain Palm Oil Ltd - nbpol.com.pg

New Britain Palm Oil Ltd


Preliminary Results FY2013

February 2014

Facilities on New Britain


Plantations

Land bank 134,600 ha

c.80,000 hectares of NBPOL managed oil palm

plantations

More than 42,500 mature hectares cultivated

by smallholders supplying NBPOL

All plantations (including smallholders) covered

by the same RSPO certificate

Milling and Refining

12 oil mills in Group

2 refineries

Special fractionation plant completed for

Ferrero

Bakery fats plant in the UK Infrastructure

c.80,000 tonnes / oil storage capacity

Trucking transport fleet

Housing

Two methane capture facilities

Export terminals

Seeds

NBPOL is one of the world’s largest

private seed producers

Highly respected plant breeding

research and development

Important for success of wider business

Cattle

9,282 hectares of cattle grazing land

Integrated with the palm oil plantation

>20,000 head of cattle

RAIL

1 sugar mill

1 ethanol plant

7,718 hectares sugar cane

Introduction NBPOL Today

5

Revenue contribution

Palm Oil Sales

Seed Sales

Cattle Production

Sugar Sales

•


SOLOMON ISLANDS

NEW IRELAND Main area of

NBPOL operation 37,000 hectares oil palm

PAPUANEWGUINEA Lae •

RAIL

- acquired in Oct 2008 11,500 hectares oil palm 7,700 hectares sugar cane 8,888 hectares pasture

•

KPOL, Milne Bay

- acquired in April 2010 10,700 hectares oil palm

•

KPOL, Higaturu


GPPOL


• KPOL, Poliamba

- acquired in April 2010 5,600 hectares oil palm Kimbe

NEWBRITAIN

New Britain Oils

Commissioned in March 2010, the first fully segregated and traceable sustainable palm oil refinery in the UK. Bakery fats plant now operational

•

c. 80,000 total hectares of managed

oil palm plantations

An additional c.42,500 hectares

cultivated by smallholders

Orangerie Bay Plantations

- acquired in July 2012

c. 5,350 hectares to be planted

with oil palm

Introduction NBPOL Locations

6


Challenging period for the Group

Profitability compared to FY2012 impacted by several principal factors:

• Lower average selling prices for crude palm oil and palm kernel oil

• Lower production mainly due to heavy rainfall early in the year, the Group’s accelerated replanting of over 6,500Ha of aged

palms at Kula plantations during 2012 and 2013, and biological yield declines in the second half of the year

• Net foreign exchange losses of US$17.5m comprised primarily of non-cash currency adjustments on the Group’s USD

denominated loans

Significant investment in prior years enabled the Group to scale back its capex programme in FY2013 to reflect market conditions

Cash generation remained solid enabling a 16.6% reduction in overall Group gearing

Devaluation of the PNG Kina by approximately 17% during the year reduced cash costs of production

Introduction Preliminary Results FY2013

7

Highlights - 2013 New Britain Palm Oil Ltd

Year Ended 31 December 2013 2012

FFB processed (tonnes) 2,085,670 2,273,081

CPO / PKO produced (tonnes) 507,856 545,207

Average CPO price achieved ($ / tonne) 868 1,062

Revenue ($m) 558.7 677.0

EBITDA* ($m) 96.8 162.1

Profit Before Tax* ($m) 17.3 81.6

Profit Before Tax* ($m)

(excl. non-cash FX losses on USD loans) 40.5 72.5

Earnings Per Share* (US¢) 7.4 36.0

*Excluding IAS 41 adjustments. Note: 2013 figures unaudited. 8


Highlights - 2013

Processed 1,496,146 tonnes of FFB from Group estates (2012: 1,588,486)

Processed 589,524 tonnes of FFB from smallholders (2012: 684,594), representing 28.3% of total Group FFB processed

(2012: 30.2%)

Palm product extraction rates decreased to 27.50% (2012: 27.59%)

Crude palm oil extraction rate decreased to 22.15% (2012: 22.35%)

New kernel crushing plants at the KPOL sites contributed to Group PKO production of 45,796 tonnes, an increase of 22.9%

on 2012

Seed sales of 6.9m seeds, a decrease of 53.4% on 2012

Sugar revenues of US$46.0m, a decrease of 17.7% on 2012

The Liverpool refinery recorded strong EBITDA growth year-on-year driven by gross margin expansion and sales volume

increase

Continued progress on Group’s cost optimisation and efficiency review, achieving the targeted circa $35m of year-on-year

savings

Total Group borrowings decreased 16.6% to US$272.6m (2012: US$326.7m)

Interim dividend of $0.10 per share was paid in November 2013

9

300

400

500

600

700

800

900

1000

600

700

800

900

1000

1100

1200

1300

1400

1500

1600

NB

PO

.LN

(p

)

CIF

Pri

ces

(US$

/MT)

CPO CIF (US$/MT) CPKO CIF (US$/MT) NBPO.LN (GBP)


Price Performance NBPOL share price, CPO, PKO

Global palm oil prices traded in a range between US$800 and

US$900/tonne for most of 2013, averaging $853 versus $1,001

for 2012

• Palm prices started the year negatively reflecting the

overhang of palm oil stocks in Malaysia and Indonesia

• Some improvement was seen during the first half of the

year as stock levels decreased, but the price retraced to a

low of $785/tonne as Malaysia and Indonesia entered

their peak production period

• Prices ended the year on a positive note reaching a high

of $935/tonne in November following a sharp reduction in

inventory levels and strong demand, driven partly by

biodiesel usage

A similar trend was seen in PKO prices for most of the year

• PKO prices averaged US$900/tonne in 2013 (versus

US$1,108/tonne in 2012)

• PKO averaged a premium of 5% over CPO during 2013

PKO and other lauric oil prices increased significantly late in 2013,

driven primarily by the expected supply concerns following

typhoon Haiyan in the Philippines (a major producer of coconut oil)

CPO is currently trading around US$930/tonne, while PKO is

trading around US$1,300/tonne

NBPOL Share Price and Palm Product Prices

Palm Oil vs. Soyoil; PKO vs. CNO

Source: Bloomberg, Reuters

-200

-100

0

100

200

300

400

US$

/MT

SBO FOB Arg - RBD Olein spread CNO-PKO CIF RDM

10

85.6 61.6

120.0

120.0

49.1

41.9

47.0

35.9

25.0

13.2

0

50

100

150

200

250

300

350

2012 2013

Long Term Debt - amortising Long Term Debt - non-amortising Short Term Financing - Liverpool RAMU Short Term Trade Finance


Balance Sheet - 2013

Total Debt: US$272.6m

Total Debt: US$326.7m

(USDm)

Reduction in total borrowings during 2013

11

£(10.00)

£-

£10.00

£20.00

£30.00

£40.00

£50.00

0%

50%

100%

150%

200%

250%

Q4'10 Q1'11 Q2'11 Q3'11 Q4'11 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13 Q4'13


EBITDA positive and strong EBITDA growth year-on-year,

driven by gross margin expansion and sales volume

increase

Continued growth in packed customer numbers

A second deodoriser was successfully installed and

commissioned during the first half of the year, increasing

nameplate capacity to 300,000 MT per annum

Significant further upside potential on the bakery products

business

• In-house test bakery opened to ensure our

products meet exacting customer requirements

• New products have also been successfully

developed

Liverpool Refinery Quarterly % Volume Increase (versus Q3 2010)

KEY FACTS

The first palm oil provider able to guarantee fully

traceable, sustainable palm oil direct from the

plantation to the EU consumer

Key contracts with well known UK and EU brands

Captures greater margin share for NBPOL

World’s first dedicated sustainable bakery

foodstuffs production facility operational since

2012

Liverpool Refinery Rolling 12 Month EBITDA/MT

Source: Unaudited management figures

New Britain Oils Liverpool Refinery

12


Corporate Events

NBPOL entered into a ground-breaking agreement with Olenex C.V. (a joint venture between Archer Daniels Midland Company (“ADM”)

and Wilmar) to supply ADM and Wilmar with fully traceable, certified sustainable palm oil (refer to slide 23 for further details)

The Group entered into a joint venture with SIPEF N.V. and BioSing to develop high yielding F1 hybrid oil palms

• JV aims to achieve significant yield and productivity enhancements for the palm oil industry

• An F1 hybrid variety is the first generation offspring of two distinctly different and genetically uniform parents, each with identical

sets of chromosomes

• This breeding technology has the potential to at least double conventional palm oil yields per unit of area (based both on the

historic yields achieved by other F1 hybrid crops such as corn (maize), and on oil palm's estimated physiological yield potential)

13


Background

In July 2013, Kulim (Malaysia) Berhad ("Kulim"), NBPOL's largest shareholder, launched an unsolicited conditional partial cash offer

for up to 20% of the issued shares of NBPOL at a price of GBP 5.50 per share (PGK 19.36)

If fully accepted, the Offer would have resulted in Kulim’s shareholding increasing from 48.97% to 68.97%

The NBPOL Board established an independent board committee to assess the merits of the Offer

The Independent Directors of NBPOL formed the view that the negative aspects of the Offer outweighed any advantages which the

Offer provided. Accordingly, the Independent Directors of NBPOL recommended to shareholders that the Offer be rejected

The PNG Minister for Trade, Commerce and Industry subsequently introduced an amendment to the PNG Takeovers Code

enabling the PNG Securities Commission to prevent the takeover of a Code company where it is deemed contrary to PNG’s

national interests

The Securities Commission exercised these new powers to issue orders preventing Kulim from proceeding with the Offer and the

Offer lapsed following the dismissal of a court application by Kulim to revoke the orders

Update

No further discussions have been held between Kulim and the Board with respect to the Offer or any future offer for the company

The Board remains committed to ensuring that proper standards of corporate governance and investor protection are adhered to

• An additional Independent Non-Executive Director, Mr Ernie Gangloff, was added to the Board earlier this year

Following the lapse of the Offer, NBPOL initiated discussions with the PNG Government to seek to address the uncertainty created

by the changes to PNG Takeovers Code

• The PNG Government has acknowledged the potential for the new rules to discourage foreign investment in PNG and we

understand that it is intending to release guidelines on the application of the new rules in the near future

Corporate Events Kulim Partial Offer

14


Outlook

While palm oil inventories remain relatively tight, ample supply of other vegetable oils (particularly soybean oil) is expected to limit

any upward movement of palm oil prices in the near term

• At the end of 2013 the Group had forward sales of c. 76,000 tonnes of 2014 CPO production made at an average price of

$922/tonne (as at 21 February 2014 forward sales were c. 121,000 tonnes at an average of $933/tonne)

Expectation of normalised FFB collection, production and extraction in 2014

• FFB production in January/February 2014 is ahead of 2013 despite another wet start to the year

Work to commence at Orangerie Bay on site infrastructure and the nursery in 2014

Significant cost base reductions achieved through management initiatives and the circa 17% devaluation of the PNG Kina in 2013

should further contribute to improved operating margins this year

15


Strategic Update NBPOL – A Leader in Sustainable & Traceable Palm Oil

9.0%

10.0%

11.0%

12.0%

13.0%

14.0%

15.0%

2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14

Major Vegetable Oil Palm Oil

1,200,000

1,400,000

1,600,000

1,800,000

2,000,000

2,200,000

2,400,000

2,600,000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec


World vegetable oil stocks remained relatively flat during

the 2012/13 marketing year

• Marginal increase of 2.6% to 17.94 million tonnes

(versus 17.49 million tonnes in 2011/12)

• Stocks-to-use ratio decreased slightly from

11.44% to 11.35%

According to MPOB, Malaysian palm oil inventories

tightened significantly during 2013

• Stocks decreased 24.3% Y-o-Y to close at 1.99

million tonnes (versus a record 2.63 million

tonnes in 2012)

• Reduction driven by strong export demand

(+3.1%) and low imports (-60.1%)

• Increase in exports of Malaysian palm oil to China

(+5.6%) and the EU (+5.2%)

• January 2014 closing stocks were 1.94 million

tonnes (-24.5% Y-o-Y)

While GAPKI does not publish official statistics for the

Indonesian palm oil industry, it is estimated that closing

stocks in Indonesia decreased during 2013, ending the

year at c. 2 million tonnes (Source: Bloomberg survey)

• January 2014 closing stocks estimated at 1.86

million tonnes

Global Vegetable Oil and Palm Oil Stocks-to-Use Ratio

Malaysian Palm Oil Ending Stocks

Source: USDA, MPOB

Global Vegetable Oil Market Overview

2012

2009

2011

2013

2010

USDA Forecast

(updated Feb 2014)

17

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

-

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

2006 2007 2008 2009 2010 2011 2012 2013

Mature Ha ('000) (LHS) Y-o-Y Growth % (RHS)


Production growth in the major palm oil producing

countries was lower than market expectations

• Malaysia recorded record CPO production of

19.1 million tonnes in 2013, representing a

modest +2.3% growth Y-o-Y, driven primarily

by new areas coming into production in

Sarawak

• Indonesian production for 2013 estimated at

c. 26 million tonnes (-1.9% Y-o-Y), the first

yearly decrease in production since 1998

(Source: GAPKI, Bloomberg)

• Clear biological yield reduction across the

SEA region due to yield cycle factors – may

continue into 2014

Heavy supply of alternative vegetable oils during

2013

• Negatively impacted prices during the year:

soyoil (-20.0%), rapeoil (-19.4%) and sunoil

(-24.1%)

• CPO discount to SBO narrowed from

approximately US$300/tonne to

US$60/tonne during 2013

Limited expansion of planted area in major PO

producing countries

CPO, SBO and Rapeseed Prices (US$/MT)

Growth in Mature Hectarage – Malaysia and Indonesia

Source: MPOB, GAPKI, broker research

Global Vegetable Oil Market Production / Supply

Malaysia

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

2006 2007 2008 2009 2010 2011 2012 2013

Mature Ha ('000) (LHS) Y-o-Y Growth % (RHS)

Indonesia

700

800

900

1000

1100

1200

1300

CPO CIF RDM SBO DEGUM FOB EX-MILL EU RAPEOIL FOB EX-MILL DUTCH/EU

18

0

20

40

60

80

100

120

140

160

180

0

1

2

3

4

5

6

7

8

9

00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13

To

tal

veg

oil

co

ns

um

pti

on

(M

T, m

)

Y-o

n-Y

ch

an

ge in

co

ns

um

pti

on

(M

T, m

)

Y-on-Y change F&F use Y-on-Y change in Industrial use

Total Consumption (MT, m)

-

100

200

300

400

500

600

700

800

900

1,000

2006 2007 2008 2009 2010 2011 2012 2013

Malaysia Indonesia


Demand growth remained strong in 2013 according to USDA

figures (2012/13 marketing year)

• Palm oil consumption growth was 6.9%

• Total vegetable oil consumption growth was 3.4%,

driven by growth in both Food & Feed and Industrial use

Structural shift in incremental demand for palm oil

• Local consumption in Malaysia and Indonesia

increasingly important

• Y-o-Y import growth from EU (+10.6%), India (+11.2%)

and US (+24.5%) remains healthy, though some data

suggests China demand has stagnated

Biodiesel usage is expected to grow significantly

• Estimated that Indonesia’s B10 mandate is equivalent to

5-7% of global CPO production

In November 2013 the US FDA made a preliminary

determination that partially hydrogenated oils (e.g. PH soyoil) –

a major source of trans fat in American diets – is no longer

"generally recognized as safe“

Outlook for palm oil demand remains robust with the

strengthening global economy and mandatory biodiesel

implementation by the world’s two biggest PO producers

Indonesia and Malaysia’s Biodiesel Consumption (‘000 MT)

Vegetable Oil Consumption

Source: USDA, broker research

Global Vegetable Oil Market Consumption / Demand

19

-

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013


Accelerated replanting programme in the Kula estates has been

substantially completed resulting in a higher than usual level of

immature oil palm hectarage across the Group

• Around 13.5% of planted area is currently immature

• Approximately 25% of the acquired KPOL mature

hectarage (circa 6,500 hectares) has been replanted

since 2011

The Group also has approximately 11,000 Ha of cultivatable

land under lease which will be developed over the next few

years

• Much of the sustainability and environmental work has

been completed at Orangerie Bay (including the Social

Impact Assessment, Environmental Impact Assessment

and the High Conservation Value assessment)

• Planning underway to improve road access and establish

a nursery in 2014

At ‘steady-state’ the Group’s current land bank should see

approximately 86,000 Ha of mature oil palm in production, an

increase of c. 25% from today’s level

In addition, the Group is currently exploring a number of other

opportunities within PNG and the broader South East Asian

region to significantly expand the Group’s land bank

NBPOL Production Outlook Hectarage

Group Estates – Total Planted Oil Palm (Ha)

Group Estates – Utilisation of Plantable Area Palm Oil (Ha)

66,746 69,067

73,000 77,000

11,597 10,817 9,000 7,000

12,000 11,000 9,000

7,000

-

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

2012 2013 2014 2015

Mature Immature Cultivatable Land

20

-

500,000

1,000,000

1,500,000

2,000,000

2,500,000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013


Production in 2012 and 2013 was negatively impacted by

exceptionally heavy rainfall, lower mature hectarage and

biological yield declines in the second half of 2013

• Smallholder production was particularly impacted in

2013, down c.14% year-on-year

• Lower palm prices disincentivise smallholders from

harvesting fruit

• Smallholders are typically more exposed to biological

yield cycles due to lower fertiliser application

Expectation of normalised FFB collection, production and

extraction in 2014

Subject to favourable weather conditions in 2014, the Group is

targeting:

• FFB production (Group estates and smallholders) in the

range of 2.25 million – 2.40 million MT

• CPO extraction rate of 22.15 – 22.55%

Assuming the above FFB and OER targets are achieved (at

midpoints), the Group expects CPO and PKO production of

approximately 565,000 MT in 2014

NBPOL Production Outlook FFB and Oil Production

FFB Production (MT)

CPO and PKO Production

-

100,000

200,000

300,000

400,000

500,000

600,000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

21


NBPOL Cost of Production Outlook

Group’s cost optimisation and efficiency review achieved a circa

$35m year-on-year saving

• Most of these cost savings should be maintained on an

ongoing basis

NBPOL’s fertiliser supply for 2014 was 100% contracted in October

2013

• Global fertiliser prices fell significantly during the first three

quarters of 2013, with some recovery seen late in the year

• NBPOL’s fertiliser costs in 2014 should be c. 10% per MT

lower year-on-year

• Fertiliser costs constitute approximately 15-20% of the

Group’s cash cost of production (excluding the cost of

purchasing smallholder FFB)

During 2013 the PNG Kina depreciated by c. 17% against the USD

• Assuming the Kina remains at current levels, the full effects of

the Kina depreciation will be seen in 2014 due the lag effect

on the P&L

• Kina denominated costs (such as labour costs) constitute

approximately 40% of the Group’s cost base

• Non-cash currency adjustments on the Group’s USD loans

and debtors was US$23.2m in 2013

Freight and fuel costs (approximately 25-30% of the Group’s cost

base) are expected to remain relatively flat in 2014

250

300

350

400

450

500

550

Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13

MOP DAP Urea

-23.7%

-15.9%

-16.1%

Fertiliser Prices (USD/MT)

Source: World Bank / Indexmundi

PGK denominated

costs (e.g. labour)

40%

Fertiliser 20%

Freight & Fuel 30%

Other 10%

Cost Analysis (approximate cash cost excluding FFB purchases)

22

Hamburg

Brake

Rotterdam

Liverpool

London

Papua New Guinea


New Britain Oils Olenex Supply Agreement

Olenex: Access to a Powerful Marketing Platform in Europe

Olenex C.V. was established in 2012 for the sale

and marketing of refined vegetable oils and fats in

the EEA and Switzerland

Agreement will ensure unprecedented supply chain

co-operation and offer the widest range of palm oil

fractions and locations in Europe to date

Covers the supply of oil to Wilmar's Brake facility in

Germany, as well as the supply of oil from NBPOL’s

Liverpool refinery to ADM's Pura Food operations in

London

Oil production from these facilities, as well as from

ADM's operations in Hamburg, will be marketed and

sold by Olenex throughout Europe

The arrangement is extremely positive for capacity

utilisation and continued volume growth at the

Liverpool refinery

NBPOL entered into a ground-breaking agreement with Olenex C.V. (a joint venture between ADM and Wilmar) to supply ADM

and Wilmar with fully traceable, certified sustainable palm oil

23


Sustainable Agriculture Our Approach: Sustaining People, Planet and Prosperity

Corporate and Product Integrity

RSPO certification and responsible supply

chains

Traceability

Transparency and anti-corruption

Report on Social, Labour and Environmental

Performance

Building 100% segregated, traceable and certified sustainable supply chains is core to our business philosophy

Sustainability certification is not a ‘cost of doing business’ – rather a way to differentiate our business in a commoditised industry

and satisfy customer requirements

NBPOL has a long history of industry leadership and innovation in sustainable palm oil

Active engagement with all stakeholder groups: employees, customary landowners, smallholders, community groups,

customers/consumer groups, investors, Governments, NGOs

Committed to achieving tangible objectives, not just policies – a ‘Principle-to-Practice’ approach

Partnerships with Communities

Free, Prior and Informed Consent (FPIC) of

indigenous peoples and local communities

Food security

Effective conflict resolution

Social conditions

Workers’ rights

Support of palm oil smallholders

Environmental Responsibility

Breaking the link between palm oil expansion

and deforestation

Greenhouse gas (GHG) accountability

Protect and conserve wildlife

Pesticides use minimisation and chemical

fertiliser

Water accountability

GMOs prohibition

Peat land planting prohibition

NBPOL APPROACH TO SUSTAINABLE AGRICULTURE

24


Sustainable Agriculture NBPOL supply chain

A unique supply chain – fully integrated and low cost…

…delivering 100% segregated, traceable and certified sustainable food ingredients

25


Sustainable Agriculture Raising the bar for palm oil sustainability

In 2013 NBPOL became a founding member of the Palm Oil

Innovation Group (POIG) , an initiative supported by organisations

such as Greenpeace, WWF and Rainforest Action Network

POIG has developed a Charter which builds on and goes beyond the

RSPO certification scheme

• POIG’s main aim is to break the link between responsible

palm oil and deforestation

Amongst other things, the POIG Charter includes:

• a complete ban on peat development

• a requirement for strengthened community engagement

• the implementation of high carbon stock approaches

• a requirement for full traceability in the supply chain

The POIG Charter also requires members to publish regular

sustainability and carbon reports

NBPOL is committed to completing trial audits against the POIG

Charter on all sites by year end 2014

PALM OIL INNOVATION GROUP (POIG)

If there is one lesson we have learned in our journey to RSPO certification, it is the value of stakeholder

engagement at all levels of operations

26


Sustainable Agriculture Leadership in forest protection and disclosure

Launched the Group’s new Forest Policy in June 2013

• Group commitment to low carbon stock planting

• Seeks to provide for a balance between deforestation and the right to

social development through NBPOL’s ‘One Hour Principle’

• Policy endorsed by Greenpeace

NBPOL actively seeks grasslands and low carbon areas for new development

Partnership with The Forest Trust to assess and define High Carbon Stock forest

areas within Group plantations

For the second consecutive year, NBPOL was named sector leader for

agricultural products in the CDP’s 2013 annual forest footprint benchmark

• The CDP forest programme is an investor-led initiative mapping

companies’ exposure to and policies on deforestation.

2012 2013

THE ONE HOUR PRINCIPLE

A Community Needs Assessment that

uses three pillars of socially

responsible development based on

NBPOL’s own research as to what

can be achieved with investment in

rural development

The three pillars are based on The

One Hour Principle:

1. Access to 20 litres of tap fed

potable water within one

hour’s walk

2. Access to a medical health

post within one hour’s walk

3. Access to a primary school

within one hour’s walk

The three social pillars will be

considered in the HCS land use

decision making process for new

developments, to ensure NBPOL is

meeting community needs while not

causing deforestation

27


Sustainable Agriculture Carbon reduction

No burn policy (since 1967) and no planting on peat land

Detailed strategy to reduce the Group’s carbon footprint and

achieve the ‘Zero Net GHG Emissions’ commitment

Active planting on grasslands and scrub (net sequestration)

• Oil palm sequesters carbon from the environment

and locks it up in the biomass of trunk, fruit bunches

and fronds

• Total standing carbon contained in palm trees in

West New Britain is calculated to be 80.31 tonnes of

carbon per hectare at 21 years

• On average, oil palms in West New Britain add 4.06

tonnes of carbon per hectare per year producing a

time averaged sequestration rate of 14.89 t CO2eq

/ha/year

Two methane capture projects have been commissioned

and further internal power generation capacity is in

preliminary development stages

NBPOL also operates a 5MW biomass power plant at

Kumbango reducing diesel requirements at this site by ~1

million litres p.a.

Methane Capture

Carbon Analysis: Sources of emissions at NBPOL

Land clearing 66%

Planting on peat 0.4%

Palm Oil Mill Effluent

26%

Nitrogenous fertiliser

3%

Mature fertiliser transport

3%

Fuel in transport

1% Mill diesel use

0.6%

28


Sustainable Agriculture Partnerships with communities

Free, Prior and Informed Consent (FPIC) of indigenous peoples and local

communities

• Majority of the Group’s land bank is secured via lease-lease-back

arrangements

• FPIC process typically takes 2-5 years

Social conditions

• Housing provided for approximately 80,000 local people (employees

and family members)

• Group operates 6 health centres and 53 clinics with 130 health staff

• Initiatives to reduce HIV and malaria

Support of palm oil smallholders

• Important component of the Group’s total FFB production (~30%)

• Smallholders provided with seedlings, tools and fertilizer

Workers’ rights

Food security

Effective conflict resolution

Human rights charter

29

-50,000

50,000

150,000

250,000

350,000

450,000

2010 2011 2012 2013

CPO PKO Refined


Sustainable Agriculture Consumer trends

NBPOL has long believed in the commercial benefits of positioning

the company as a responsible producer of sustainable palm oil

We have invested heavily over the years in developing a fully

integrated supply chain delivering 100% segregated, traceable and

certified sustainable palm oil products and food ingredients

The sustainability movement in the global palm oil industry has

generated significant momentum in recent times

• Retailers taking the issue particularly seriously (for many their

2015 deadlines are looming)

• Increasing concern about the need to go beyond RSPO and

make “deforestation-free” claims

NBPOL is now well positioned to proactively work with global food

manufacturers and other customers to achieve their stated

sustainability goals/commitments

Global demand for CSPO continues to grow, albeit from a low base

Both RSPO and CPET data suggest that customers are moving away

from GreenPalm certificates to physical oil supply

NBPO’s own sales data shows a clear trend towards physical CSPO

(though at this stage Mass Balance rather than Segregated)

• The Group’s ability to deliver certified sustainable oil to its

customers is worth a significant amount per year in

incremental revenue

-

1,000,000

2,000,000

3,000,000

4,000,000

2009 2010 2011 2012 2013

Segregation and Mass Balance Book & Claim (GreenPalm Certificates)

-

50,000

100,000

150,000

200,000

2009 2010 2011 2012

Segregation and Mass Balance Book & Claim (GreenPalm Certificates)

GLOBAL CSPO Sales (MT)

Source: RSPO

Source: CPET

UK CSPO Imports (MT)

NBPOL CSPO Sales Exports (MT)

+19% Y-o-Y

+58% Y-o-Y

+50% Y-o-Y

+18% Y-o-Y

+104% Y-o-Y

+3% Y-o-Y

+21% Y-o-Y

-17% Y-o-Y

+28.7% Y-o-Y

+70.6% Y-o-Y

+45.4% Y-o-Y

30


Appendix


First palm oil company to include all of its smallholders in the RSPO

certification process

NBPOL was instrumental in developing the Roundtable on Sustainable Palm

Oil and continues to play a pivotal role as an executive board member

For the second consecutive year, NBPOL was named sector leader for

agricultural products in the CDP’s 2013 annual forest footprint benchmark

World Economic Forum (WEF) identified NBPOL as one of 16 global

sustainability champions of 2011 and in 2012 invited NBPOL to join the Global

Agenda Council on Biodiversity and Natural Capital

In 2011 NBPO published its inaugural Carbon Footprint Report outlining its

“zero net carbon emissions” commitment (the first ever LCA Carbon report in

the industry)

NBPOL was named the 2013 inaugural Good Citizen by the PNG Department

of Labor & Industrial Relations

Agricultural Products


Food and Staples Retailing

Sainsbury’s Supermarkets Ltd

General Retailers

Marks and Spencer plc

Media

British Sky Broadcasting

Oil & Gas

Greenergy International Ltd.

Packaged Foods & Meats

Marfrig Group and Unilever

Paper & Forest Products

Mondi PLC

Personal & Household Products

L’Oréal

Textiles, Apparel & Luxury Goods

PrimeAsia Leather Corporation

Travel & Leisure

British Airways

Utilities

Drax Group

Forest Footprint Disclosure – Leaders by Sector

Sustainable Agriculture Achievements

2012 2013

“[NBPO] has developed new ways to

engage small farmers, who provide one-

third of the company’s supply. These close

ties have not only helped to reduce

poverty, but also enabled the company to

develop one of the world’s first fully

traceable palm oil supply chains.”

World Economic Forum, September 2011

“NBPOL is unquestionably one of the

forerunners in the RSPO and can serve as

a positive example for other plantation

companies.”

World Wide Fund for Nature (WWF), 2009

32


NBOL is an established player in biscuits, confectionary, ready

meals, fish & chip trade, industrial bakery sectors

Strong mix of grades available: palm / olein / stearin / palm-mid-

fraction / PKO

Broad range of proven product categories: bulk oils / bulk blends

(with or without liquid oils) / boxed products for manufacturers /

boxed and extruded industrial margarines

Opportunities to extend our reach into Eire & mainland Europe for

packed products from Liverpool

Example foods converted :

• morning goods

• pastries

• cakes

• croutons

• Christmas puddings

• pet food

• dairy food

• ice cream

New Britain Oils Liverpool Refinery

• icings

• garlic bread

• cereal bars

• caramel

• roast potatoes

• Yorkshire puddings

• sweets

33


Special Projects: Ramu Irrigation Project

Located in Ramu Valley where oil

palm production is impacted by a

pronounced dry season from May to

October and areas of low water

holding capability

Project was commenced in 2009 to

assess the feasibility of oil palm

irrigation in the area

First oil palm irrigation system in

PNG and possibly the largest

irrigation system in the Asia Pacific

region

440km of piping, 3 multistage turbine

pumps and 38,000 sprinklers

installed

At peak times the project is irrigating

24 hours per day, 7 days per week,

pumping c.400 million litres of water

per week

1st Phase covers 620 Ha; 2nd Phase

a further 500 Ha (subject to results)

Potential to ‘unlock’ significant

grassland areas in Ramu Valley

Grassland and pasture available for planting in the Ramu Valley, significant expansion potential

Irrigation pump station Specialised automatic cleaning filters 38,000 sprinklers installed

34

February 2014

Disclaimer

This document, which is personal to the recipient (“Recipient”), has been prepared by New Britain Palm Oil Limited (the “Company”). This document does not constitute

or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for any securities, nor shall any part of it nor the fact of its

distribution form part of or be relied on in connection with any contract or investment decision relating thereto, nor does it constitute a recommendation regarding the

securities of the Company or any other entity. Prospective investors are required to make their own independent investigations and appraisals before taking any

investment decision. In making this document available to the Recipient the Company is not agreeing to take or refrain from taking any action in future or to undertake, or

cease to undertake, any activity. Any recipient who is in any doubt about the matters referred to herein should take advice from an authorised person specialising in

advising on matters of this kind.

No representation or warranty, express or implied, is given by or on behalf of the Company or any of such persons’ directors, officers or employees or any other person as

to the accuracy, fairness of the presentation, completeness of the information or opinions contained in this document. No liability whatsoever is accepted by the Company

or any of such persons’ members, directors, officers or employees nor any other person for any loss howsoever arising, directly or indirectly, from any use of such

information or opinions or otherwise arising in connection therewith.

This document may not be reproduced, copied, redistributed or passed on, directly or indirectly, whether in hard copy or by email, to any other person or published, in

whole or in part, for any purpose. This presentation is not directed to, or intended for distribution to or use by, any person or entity that is a citizen or resident of, or located

in, any locality, state, country or any jurisdiction where such distribution or use would be contrary to law or regulation or which would require any registration or licensing

within such jurisdiction.

Neither this document nor any copy of it may be taken or transmitted into the United States of America, its territories or possessions or distributed, directly or indirectly, in

the United States of America, its territories or possessions where to do so would contravene any law or regulation which would require any registration or licensing within

such jurisdiction. Neither this document nor any copy of it may be taken or transmitted into Canada, Australia or Japan or to Canadian, Australian or Japanese persons or

to any securities analyst or other person in any of those jurisdictions. Any failure to comply with this restriction may constitute a violation of United States, Canadian,

Australian or Japanese securities law. The distribution of this document in other jurisdictions may be restricted by law and persons into whose possession this document

comes should inform themselves about, and observe, any such restrictions.

Certain statements, beliefs and opinions in this document are forward-looking, which include all statements other than statements of historical facts, including, without

limitation, any statements preceded by, followed by or including the words “targets,” “believes,” “expects,” “aims,” “intends,” “may,” “anticipates,” “would,” “could” or similar

expressions or the negative thereof. These statements reflect the Company’s or, as appropriate, the Company’s directors’ current expectations and projections about

future events. By their nature, forward-looking statements involve a number of risks, uncertainties and assumptions that could cause actual results or events to differ

materially from those expressed or implied by the forward-looking statements. These risks, uncertainties and assumptions could adversely affect the outcome and

financial effects of the plans and events described herein. Such forward-looking statements are based on numerous assumptions regarding present and future business

strategies. Forward-looking statements contained in this document regarding past trends or activities should not be taken as a representation that such trends or activities

will continue in the future. The Company does not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information,

future events or otherwise. You should not place undue reliance on forward looking statements, which speak only as of the date of this document.

35

Phone: +44 (0)20 7472 5936

www.nbpol.com.pg


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