IJM PLANTATIONS BERHAD 29th ANNUAL GENERAL MEETING · with ACGT Sdn Bhd (ACGT) and Genting Green...

FFBCPO

Bulk Products (CPO, PPO) & Industrial

(Oils & Fats)Marketing &

TradingRefining &Processing

Palm Oil Milling & Kernel Crushing

Planting(Immature &

Mature)

Research & Development

UPSTREAM Outside Crop Outside CPO DOWNSTREAM

Branded ProductsOleochem & Other Inds.


OIL PALM SUPPLY-CHAIN

Transportation, Bulking & Shipping

Gentle


OIL PALM PRODUCTIVITY & AGE

REPLANTING

Sigmoid Curve : FFB Yields vs Age Profile

AGM PRESENTATION TODAY

PERFORMANCESNAP-SHOT FYE2014

STRATEGIES FOR HIGHER PERFORMANCE

“Nurturing Sustainability”

QUESTIONS & ANSWERSSESSION

# From MSWG etc.

PERFORMANCE SNAP-SHOT FYE2014

IJMP ESTATES CROP PRODUCTIONFYE14 production and yield impacted by palm biological stress,

replanting in Malaysia with start-up yields in Indonesia

REGION FYE14‘000 mt

FYE13‘000 mt

Variance‘000 mt %

SANDAKAN(Older trees)

174 201 -27 -13

SUGUT (Younger trees)

412 436 -24 -6

MALAYSIA 586 637 -51 -8

INDONESIA(Start-up yields)

144 55 +89 +162

GROUP 730 692 +38 +5.5

IJMP MILLS PALM PRODUCT EXTRACTIONSImprovements in OER & KER extractions in FYE14

OER / KER FYE14 FYE13 Variance %

OER (%)

MALAYSIA 20.8 20.7 +0.1 +0.5

INDONESIA 23.2 22.5 +0.7 +3.1

KER (%)

MALAYSIA 4.8 4.8 0 0

INDONESIA 3.5 3.2 +0.3 +9.4

FYE 14 FYE 13 Variance %

Crop Production(`000 mt )

730 692 +38 +5.5

Revenue(RM millions)

647 486 +161 +33

CPO Price(RM/pmt)

2,348 2,577 -229 -9

Unrealised FOREX(RM millions)

(21) (9) -12 -131

Profit Before Tax(RM millions)

109 157 -48 -30

Nett Profit(RM millions)

89 120 -31 -26

IJMP FYE 2014 FINANCIAL RESULTS

Supply-demandfactors

Biofuel mandates

Climatic factors eg. El Nino

Stock levels

Crude oil prices

Competing edible oils

CPO Producers : Commodity - Price takers NOT price makers

‘BEARS AND BULLS’ ON CPO PRICES

Population Growth

Trans-fat

Hedge-funds

Differentialtax structures

Govt. Policies

Emerging markets

Product development

Macro-Economy

OUTLOOK FOR FYE2015 & BEYOND

1. MALAYSIAEXPECTING RECOVERY IN CROP PRODUCTION

-Sustaining high oil yield >5 mt/ha-Caveat El Nino in 2014

2. INDONESIA

EXPECTING DOUBLING (2x)OF CROP PRODUCTION WITH

IMPROVING YIELDS

3. CPO PRICE

UNFORTUNATELY, CPO PRICE HAS DROPPED TO

~RM2,000 pmt

4. LONG-TERM PLANTO JUMP THE

PERFORMANCE CURVE

STRATEGIES ARE IN PLACE TO SUSTAIN PERFORMANCE

STRATEGIES FOR HIGHER PERFORMANCE

“Nurturing Sustainability”

ADOPTING A BALANCED APPROACHTOWARDS PERFORMANCE AND SUSTAINABILITY

Sustainability

Profit People

Planet

PROFITProductivity & Innovations

PLANETCare for Environment

PEOPLEInvestor in People

PEOPLEReturning to Community





Make Meaning, Make Profit

IJMP MANTRA : NURTURING SUSTAINABILITY

NURTURING SUSTAINABILITY: Profitability


PALM OIL IS STILL A PROFITABILITY BUSINESS

6558

5256

190

161

113

191

215

157

109

0.0

50.0

100.0

150.0

200.0

250.0

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 20140

500

1,000

1,500

2,000

2,500

3,000

3,500

IJMP PBT (FY04 – FY14)PBTRM’mils

CPO Pricepmt

CPO Price (RM/pmt) 1,554 1,500 1,373 1,511 2,544 2,641 2,246 2,760 3,049 2,620 2,385

Mature Area ‘000 18 18 20 23 23 23 24 25 26 28 34

PROF

ITLO

SS

JUMP TO THE NEXT CURVE – GAME CHANGER

Land-bank & Performance

Time

SANDAKAN,SABAHFirst 10,000 ha

INDONESIANext 30,000 ha-40,000 ha

1985 1998 2008/9 2014/15 2020

SUGUT,SABAHNext 20,000 ha

LOCATION OF OPERATIONS & OIL PALM PLANTED AREA

MALAYSIAN OPERATIONS

KEY ENABLER

INDONESIAN OPERATIONS

GAME CHANGER

DRIVERS FORPERFORMANCE

MALAYSIAN OPERATIONSKEY ENABLERSustaining High Productivity

with Cost Effectiveness

IJMP STRATEGY : MALAYSIAN OPERATIONS

MALAYSIAN OPERATIONS : 11 ESTATES & 5 PROCESSING PLANTS

Oil palm trees planted per

hectare of land

PRODUCTIVITY IN IJM PLANTATIONSKEY PERFORMANCE INDICATOR : OIL YIELD

PRODUCTIVITY IN IJM PLANTATIONSOil Yield : Fresh fruit bunches (FFB) per mature area x Oil Extraction Rate (OER)

Average 4 mt of oil per hectare

( Enough for >150 people/ha

45.

2

4.0 4.03.6

4.0 3.9 3.8Malaysia

IJMP (M)

OIL YIELD OF IJM PLANTATIONS BERHAD

Last 6 years, IJMP average 5.4 mt/ha ie. >38% higher that National average

>5

HIGHEST OIL-YIELDING PLANTATION PLCsDesktop research based on latest productivity in 2014

AS OF 1 AUGUST 2014 PERIOD FFB Yield OER Oil Yield(Financial Year) (tonnes/ha) (%) (tonnes/ha)

MALAYSIA 1 IJM PLANTATIONS BHD (M) A - M 25.0 20.8% 5.202 IOI CORPORATION BHD J - J 24.5 20.8% 5.103 UNITED PLANTATIONS BHD (M) J - D 22.4 22.1% 4.954 HAP SENG PLANTATIONS BHD J - D 23.0 21.3% 4.905 KUALA LUMPUR KEPONG BHD O - S 22.5 21.5% 4.836 SIME DARBY BHD J - J 22.5 21.3% 4.787 UNITED MALACCA BHD M - A 21.6 20.7% 4.46

SINGAPORE / INDONESIA8 GOLDEN AGRI-RESOURCES LTD J - D 21.0 22.7% 4.769 FIRST RESOURCES LIMITED J - D 18.7 23.1% 4.3210 KENCANA AGRI LIMITED J - D 16.1 20.2% 3.25

OIL PALM RESEARCH THRUSTOil Palm Breeding & Seed Production, Agronomy Advisory

Integrated Pest Management & Collaborative Research

REPLANTED AREAIMMATURE PALMS

ZERO-BURNREPLANTING

REPLANTING EXCELLENCEZero Burn Replanting of Aging Palms in Sandakan

Using IJM planting material with good replanting practices leading to early and sustained high yields

OLD TREES YOUNG REPLANTS HIGH YIELDS

IJMP Stakeholders Engagement‘Walk with CEO’ – Sept 2013

BUFFALO

WHEELBARROW

MOTORISEDWHEEL

BARROW(SEMUT)

MECHANICALBUFFALO -

(BISONPAYAKING)

ESTATE MECHANISATIONEvaluating time-motion, cost-productivity analysis and managing change

ESTATE MECHANISATIONEnhancing accessibility and improving in-field crop avacuation

WATER RESOURCE MANAGEMENTRisk management in anticipation of prolonged drought in operations

INDONESIAN OPERATIONS

GAME CHANGEROrganic growth, shifting gearto scale up crop production,

operating and constructing new mills

IJMP STRATEGY : INDONESIAN OPERATIONS

INDONESIAN OPERATIONS : 5 PARCELS OF LAND & 1 MILL

PARCEL 1 (PBP)Primabahagia Permai

PARCEL 3 (PTS)Sinergi Agroindustri

PARCEL 4 (PPA)Prima Alumga, Lampung

IPS PALM OIL MILL PARCEL 5 (KBSA)Karya Bakti Sejahtera Agrotama

PARCEL 2 (IPS)Indonesia Plantation Synergy

LANDSCAPE CHANGE IN INDONESIAN OPERATIONS

LAHAN TIDUR JADI KEBUN SAWIT

IPS PALM OIL MILL COMPLEX WITH BIOGAS FACILITY

SITE FOR SECOND PALM OIL MILL IN INDONESIA

HUMAN-SIDE OF PLANTATION IN INDONESIAN OPERATIONSAmenities eg. housing, utilities, clinic, ATM-facility / cadetship training

WATER CATCHMENTS IN INDONESIAN OPERATIONSRisk management in anticipation of prolonged drought

NURTURING SUSTAINABILITY: Environmental Aspects


Zero Burning

Integrated Pest Management (IPM)

Nursery – Drip IrrigationWater Reservoir

Bio‐gas Facility

Bio‐composting

BEST MANAGEMENT PRACTICES (BMPs)Inter-twining BMPs for productivity and care for environment

‘HUNDRED ACRE WOOD’Conservation project in plantation landscape

FOCUS : PLANTS (FLORA) Plant Biodiversity Enhancement With Tree Planting

FOCUS : ANIMALS (FAUNA) Birds Biodiversity in Plantation Landscape

NURTURING SUSTAINABILITY: Social Aspects


WORKERS STAFF EXECUTIVES TOTAL

MALAYSIA 3,166 347 140 3,653

INDONESIA 5,428 721 119 6,268

TOTAL 8,594 1,068 259 9,921

TOTAL PEOPLE ASSET as of 31 March 2014

EMPLOYMENT FOR 10,000Talent Management : Training, Managing Gen-Y, Empowering and Mentorship

0

5

10

15

20

25

30

35

21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 57 59 61 63Age

Staf

f/Exe

cut

GEN -Y1980-1993

(Age 21-34)

BABY BOOMERS

1949-1960(Age 54-65)

GEN -X1961-1979

(Age 35-53)

41% 53%6%

EMPLOYEES ENGAGEMENT & TRAINING IMPETUS

IJM SCHOLARS

In addition to quality amenities

EDUCATION FOR WORKERS’CHILDRENPurpose-built IJMP education centres for over 500 children

PROMOTING LOCAL CULTUREPreserving Sabah Cultural Diversity and Heritage

PROMOTING FAMILY SPIRITThrough sports and other social activities

SPORTS EXCELLENCEHighlight : IJM Plantations was Champion at IJM Games 2014


NURTURING SUSTAINABILITY: Social Aspects

RETURNING TO COMMUNITYFOCUS : Youth Sports Development through Rugby

RETURNING TO COMMUNITYFOCUS : Breast Health Awareness for Public & School-Children

RETURNING TO COMMUNITYPROJECT : Outreach to schools and kampongs in rural Sabah

STAKEHOLDER ENGAGEMENTS Contribution Towards Strengthening Dialogue, Awareness and Goodwill

US soybean visitors, April 2014 MEOA Plantation Fraternity Visit, June 2014

MALAYSIANPALM OILCOUNCIL

COMING SOON

Chef Anis Nabilah

Conservationist Nigel Marven

STAR Switch Up.TV

IJMP IN THE HEADLINES MALAYSIAN INVESTOR RELATIONS AWARDS 2014NOMINATED FOR 7 CATEGORIES;

EMERGED WITH BEST CEO & BEST CFO FOR INVESTOR RELATIONS (MID-CAP)

AGM 2014 : CONCLUDING REMARKS

Returning to

Community

Care for

Environment

Productivity & Innovations

Investor in

People

Balanced approach

QUESTIONS & ANSWERS SESSION

QUESTIONSFROM MSWG

As a price taker in commodity industry, the profitability of the Group is very much dependent on the CPO price. CPO price has been on the

downtrend since FY2012 as reported on page 7 in the Annual Report. In addition, there were significant increase in young mature areas in

the Indonesian operations which incur full fixed plantation maintenance and overhead costs set against start-up crop yields. Profitability for FY14 was also impacted by the unrealised foreign

exchange losses as reported in the Annual Report.

Q1. The Group achieved record revenue of RM646.98 million, up 33% from the previous year’s RM486.28 million. However, the Group pre‐tax profit dropped to RM109.08 million from RM156.61 million due to higher cost of sales and increased finance costs.

What would be the Board’s strategic measures to improve the Group productivity and profitability which are essential to boost its earnings per share, return on total assets and return on equity which had since dropped over the past four financial years?

QUESTIONSFROM MSWG

…Continued…

The Malaysian operations continue to achieve high productivity.

As a strategic measure, the Group remains focused and committed to complete its Indonesian expansion project

towards enhancing shareholders value in the long-term. As at close of FY14, its Indonesian operations had achieved planted area of more than 30,000 Ha. As more areas in the Indonesian operations come into maturity and move into prime age, the

Group’s productivity and profitability are expected to improve in the coming years.

However, anticipated uncertainties in respect of CPO prices and foreign exchange rates would impact the Group’s profitability.

QUESTIONSFROM MSWG

The Group’s unplanted lands in Malaysia and Indonesia as at 31 March 2014 are in the region of 700 hectares and

5,000 hectares respectively.

Q2. Given the Group replanting policy and expansion plan of its plantation are much focused on its Indonesian operations, what are the respective areas of the Group unplanted lands in terms of hectares in Malaysia and Indonesia respectively?

QUESTIONSFROM MSWG

In adhering to the agreements, the Group cannot disclose the terms and conditions of the collaboration. It has been highlighted in the

CEO’s Review of Operations on page 34 and under the Statement and Report on Marketplace on page 53 that the oil palm

biotechnology collaboration involves an oil palm material transfer for marker validation and a high yield biomarker screening project.

As such, the cost to the Group is not significant.

Q3. The CEO’s Review of Operations reported the Group continued collaboration with ACGT Sdn Bhd (ACGT) and Genting Green Tech Sdn Bhd (Genting Green Tech), subsidiaries of Genting Plantations Berhad to undertake research and development (R&D) projects in relation to oil palm biotechnology.

Given the long term nature of the Group continued collaboration with ACGT and Genting Green Tech, how much would the continued collaboration cost the Group and what are the terms and conditions of the arrangement with respect to the share of technology, intellectual capital and commercialisation if any, attributed to the R&D projects?

QUESTIONSFROM MSWG

The Group has only one type of biological asset which is the plantation expenditure and this is disclosed under Note 16.

The basis of preparation of the financial statements is as per page 84 in the Annual Report. Other details are also covered under Property,

Plant and Equipment, Depreciation and also Plantation Expenditure in pages 88 and 89.

Q4. Plantation expenditure of the Group and Company contains biological assets which are stated at cost or revalued amounts and are not amortised. On the other hand, replanting expenditure consists expenses incurred and recognised in the profit or loss for the year.

Could the Board explain the rationale why the biological assets are not identified separately but included in the plantation expenditure as stated under Note 16 to the accounts?

QUESTIONS & ANSWERS SESSION

IJM PLANTATIONS BERHAD 29th ANNUAL GENERAL MEETING · with ACGT Sdn Bhd (ACGT) and Genting Green...

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