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1
PPB GROUP BERHAD
Final Results Year Ended 31 December 2006
Presented by Koh Mei LeeSenior Manager (Corporate Affairs)
2
Agenda
1. Group Financial Highlights Financial Results for Year 2006 Segmental Information Major Contributors to Group’s Profit Cash & Borrowings
3. Dividend Record for Years 2002 - 2006
4. Share Performance for Year 2006
2. Profit Before Tax for Years 2002 - 2006
3
Agenda
6. Expansion / Future plans
7. Proposed Disposals of PPBOP, PGEO and KOG Introduction – Offers from Wilmar Sale Consideration to PPB Update New Wilmar Group structure Rationale & Benefits Effects of Proposed Disposals on PPB
5. Capital Commitment as at 31 Dec 2006
4
Group Financial Highlights
5
Financial Results
FY2006 FY2005 Change
RM mil RM mil %
Revenue 11,520 10,688 8
Profit from operations 584 517 13
Net profit from investing activities 149 60 148
Share of associates/ JV 140 48 192
Finance costs (33) (16) 106
PBT 840 609 38
Tax (146) (141) 4
PAT 694 468 48
Minority interest (134) (74) 81
Net profit 561 394 42
EPS (sen) 47.3 33.3 42
6
Segmental Information
Sugar & cane7%
Grains trading,flour & feed
milling 8%
Edible oilsrefining & trading
72%
Oil palmplantations
5%
Waste management &
utilities 1%
Film exhibition
1%
Property0.4%
Others5.6%
RevenueTotal RM11.5 billion
7
`
Sugar & cane14%
Grains trading,flour & feed
milling 18%
Edible oilsrefining & trading
25%
Oil palmplantations
34%
Waste management &
utilities 1%
Film exhibition
3%
Property2%
Others3%
Operating profitsTotal RM600 million
Segmental Information
8
Major Contributors to Group Operating Profit
Reason for higher/ lower profits
Sugar & caneHigher raw sugar prices.
Grain trading, flour & feed millingHigher sales.
Edible oils refining & tradingBetter refining margins.
Oil palm plantationsHigher CPO prices.Higher crop production.Average CPO price realized :-
Year 2006 RM 1,465 per tonne
Year 2005 RM1,349 per tonne
91 85
57
110
126
149165
203
0
50
100
150
200
250
Sugar & cane Grainstrading, flour& feed milling
Edible oilsrefining &trading
Oil palmplantations
Y2005 Y2006
RM million
RM6 m (7%)
RM38m (23%)
RM53m (93%)
RM23m (18%)
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Reason for higher/ lower profitsWaste management & utilities Divestment of loss making
subsidiary, Marathon Equipment Asia Pte Ltd.
Film exhibition Stronger performance of
blockbuster films. Contribution from new cineplex.
Property Write-back of development cost in
2005.
Others Livestock (down RM23 million) Chemicals trading &
manufacturing (down RM12million) Packaging (up RM5.4 million)
-6
3
18 19 19
14
65
17
-10
0
10
20
30
40
50
60
70
Wastemanagement
& utilities
Filmexhibition
Property Others
Y2005 Y2006RM million
RM9m (150%)
RM1m (6%)
RM5m (26%)
RM48m (74%)
Major Contributors to Group Operating Profit
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Cash and Borrowings
753
517
150
367
72
763
691
334
357
236Net cash
Cash & deposits
Totalborrowings
LT borrowings
ST borrowings
Y2005 Y2006RM Million
11
Profit Before Tax for
Years 2002 - 2006
12
481
686 710609
840
0
100
200
300
400
500
600
700
800
900
2002 2003 2004 2005 2006
5-year Profit Before Tax
RM Million
Year
13
Dividend Record for
Years 2002 - 2006
14
Dividend Record
Dividend
Per Share
Net
Dividend
Net
DividendPayout ratio
Gross Net Paid/payable Yield Group Company
Year (sen) (sen) (RM Million) (%) (%) (%)
2006
-Interim
-Final
5.05.0
15.015.0
20.020.0
3.63.6
10.9510.95
14.5514.55
42.67842.678
129.812129.812
172.49172.49
2.672.67 30.830.8 103.6103.6
2005 20.0 14.4 170.712 3.5 43.3 115.9
2004 15.0 11.85 140.482 3.5 35.1 75.4
2003 12.5 10.26 100.675 3.1 27.1 72.3
2002 23.25 21.5 210.968 10.9 86.8 97.6
* Final dividend for year 2006 is payable on Thursday, 7 June 2007.
15
Share Performance for
Year 2006
16
Share Performance
0
1
2
3
4
5
6
7
PPB
Shar
e Pr
ice
(RM
)
0
200
400
600
800
1000
1200
1400
Com
posi
te In
dex
PPB Close (Last Trade) KLCI Close (Last Trade)
Y2006
RM4.08 RM4.00
892.85
31 24
3-1-0630-6-06
23-2-07
Year 2006
Closing Price (high) - RM5.45
Closing Price (low) – RM3.86
Market Capitalization as @ 31.12.06 – RM6,460,974,356.00
915
Y2007
RM6.40
1283
RM5.45
29-12-06
1096
17
Capital Commitment as at
31 December 2006
18
Capital Commitment as at 31 Dec 2006
RM 910 million
Capital commitments
RM 568mRM 568m
PPBOP FFM MSM PPB Leisure
Others
RM 13.5mRM 13.5mRM166mRM166mRM 15mRM 15mRM 144mRM 144m RM 3.5mRM 3.5m
PPB Hartabina
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Capital Commitment as at 31 Dec 2006
PPBOPPPBOP FFMFFM MSMMSM
TOTAL = RM568m
PPE & Others
- Malaysia
RM13m
-Sabah 51m
-Sarawak 14m
-Indonesia 115m
Total 193m
Plantation development
-Sabah 50m
-Sarawak 9m
-Indonesia 316m
Total 375m
TOTAL = RM144m
Construction, upgrading & acquisition RM
Flour mill & warehouse project at Kota Kinabalu
40m
Processing plant at West Port 34m
Prai Flour mill project
Upgrading of refinery & expansion of tank farm
15m
20m
Others 35m
Total 144m
TOTAL = RM15m
Upgrading and replacement
RM
Refined sugar silo 6m
Melting & packaging 5m
Others 4m
Total 15m
20
Capital Commitment as at 31 Dec 2006
PPBHartabina
PPBHartabina
PPBLeisure
PPBLeisure
TOTAL = RM166m
RM
New multiplexes & cinema upgrading- Mid Valley - KL Pavilion- Star City - 1 Borneo
61m
Upgrading expenditure
Acquisition of GSC shares
1m
104m
Total 166m
TOTAL = RM13.5m
Construction costs RM
New World Park project in Penang
13.1m
Upgrading expenditure
0.4m
Total 13.5m
21
Expansion / Future Plans
22
Expansion / Future Plans
Sugar• Continue to enhance its packing, logistic and other
operational efficiencies.• Expand its export activities.
Flour and animal feed milling• Continue to expand its business locally and
regionally as well as expanding downstream activities.
Edible oils refining• To explore new opportunities in oleochemical and
biodiesel industries.• To identify other downstream products.
23
Oil palm plantations• Continue the development of its land bank in Indonesia.• Further improve on its mill extraction rates.
Waste management & utilities• Continue to engage in the water and waste projects set
out in the 9th Malaysian Plan.• Continue to explore new markets both locally and
overseas.• Leverage on its strategic partnerships in China for
growth.
Expansion / Future Plans
24
Film exhibition• To expand cinema business in Klang Valley and East
Malaysia.• Continue to explore new multiplex sites.
Property• Development projects at :
Taman Aman – comprising 84 units of bungalow, semi-detached and shop houses.
New World Park, Penang – Phase II comprising of F&B outletsBedong – Housing Project at Taman Sinar Mentari.Whiteaways Arcade at Beach Street & Church Street, Penang –
Restoration of prewar buildings for retail and commercial activities.
Expansion / Future Plans
25
Proposed Disposals of
PPB Oil Palms Berhad,PGEO Group Sdn Bhd, andKuok Oils & Grains Pte Ltd
26
On 14 December 2006, PPB announced that FFM had received a letter of offer from Wilmar stating their intention to acquire the following from FFM: -
In addition, PPBOP, had on even date, received a Notice of Conditional Voluntary Offer from CIMB Investment Bank Berhad , on behalf of Wilmar, to acquire all the ordinary shares of RM1.00 each in PPBOP to be satisfied by the issuance of 2.3 Wilmar Shares for each PPBOP Share.
Introduction – Offers from Wilmar
a) 65.8% equity interest in PGEO for a purchase consideration to be satisfied by the issuance of 287,122,772 Wilmar shares
b) 28% equity interest in KOG for a purchase consideration to be satisfied by the issuance of 305,635,556 Wilmar shares
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* Based on the last traded price of Wilmar Shares on 27 February 2007 of SGD2.61
^ Assuming exchange rate of SGD1.00 = RM2.29
# Representing RM13.75 per PPBOP Share
Equity interest to be
disposed
No. of Wilmar Shares to be
received
Sale consideration
SGD* RM*^
PPBOP 55.6% 569,489,427 1,486,367,404 3,403,781,355#
PGEO 65.8% 287,122,772 749,390,435 1,716,104,096
KOG 28.0% 305,635,556 797,708,801 1,826,753,154
TOTAL 1,162,247,755 3,033,466,640 6,946,638,605
Sale Consideration to PPB
28
The SC (FIC) had on 17 January 2007, advised that it has no objection to Wilmar’s proposed VGO of PPBOP. Equity conditions may be imposed on PPBOP following verification of acceptance.
The PPB Board appointed AmInvestment Bank Berhad as its Adviser to the Proposed Disposals.
The PPB Board had considered the terms and conditions of the Proposed Disposals, and after considering the advise from AmInvestment Bank, had on 24 January 2007 approved the Proposed Disposals and agreed to present it to the Shareholders of PPB at an EGM for their consideration and approval.
An EGM is tentatively scheduled to be held in early April 2007 for the above purpose.
Approvals of other relevant authorities for the Proposed Disposals are still awaited.
Updates
29
PPB will hold approximately 18.2% of the enlarged share capital of the Wilmar Group upon completion of the Proposed Disposals (assuming full acceptances of the VGO by all shareholders of PPBOP).
Enlarged Wilmar Group Structure
PPB KOG Vendors
WHPL ADM Minorities
KOG PGEO PPBOP IPT Assets
Existing Business
WILMAR
19.6%
18.2%12.8%
48.5% 6.7%13.8%
100% 100%65.8% 100%
34.2%
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PPB is expecting to realize a significant amount of gain in its balance sheets from the Proposed Disposals.
As at 27 February 2007 RM Sale consideration 6,946,638,605.00
Market capitalization of PPB
(RM6.00 x 1,185,499,882 shares) 7,112,999,292.00
To unlock the value of PPB’s investments in PPBOP, KOG and PGEO, and venture into an investment with higher expected returns and greater potential for capital appreciation: -
Rationale & Benefits of the Proposed Disposals
31
A. Leading merchandiser and processor of palm and lauric oils in the world
Leading palm and lauric oils refiner in the world with plantations in Malaysia and Indonesia
Leading merchandiser of palm and lauric oils in most major markets in the world (China, India, Africa, Eastern Europe and Middle East)
One of significant palm biodiesel manufacturers (expected to commence in 2007)
Significant increase in production capacities as follows: -
Entry into one of Asia’s largest integrated agribusiness group carrying the entire value chain of the palm oil business: -
Rationale & Benefits of the Proposed Disposals
32
Rationale & Benefits of the Proposed Disposals
(Source: Wilmar’s press conference presentation on 14.12.06)
Activities Wilmar PGEO Combined Group
As at 30 Sep 2006
No. of plants
Capacity (MT p.a.)
No. of plants
Capacity (MT p.a.)
No. of plants
Capacity (MT p.a.)
Refinery – palm & laurics
18 5,339,400 15 4,719,000 33 10,058,400
Palm kernel & Copra rushing
15 1,564,200 14 1,237,500 29 2,801,700
Specialty fats 3 166,320 1 150,480 4 316,800
Biodiesel(All plants under construction)
3 1,050,000 1 100,000 4 1,150,000
Significant increase in production capacities (Indonesia and Malaysia)
33
Rationale & Benefits of the Proposed Disposals
B. Sizeable plantation owner in Indonesia and Malaysia 2nd largest land bank in Malaysia after the proposed Synergy Drive One of the largest oil palm plantation companies in the world in
terms of land bank
Plantation statistics
As at 30 September 2006
Wilmar PPBOP Combined Group
Landbank (ha) 210,000 363,405 573,405573,405
Total planted area (ha) * 64,672 96,114 160,786
Mature area harvested (ha) * 54,844 67,475 122,319
FFB production (tonne) 742,632 1,081,309 1,823,941
Palm oil milling capacity (MTp.a.) 6,690,000 2,275,000 8,965,000
Mill production
Crude palm oil (tonne) 606,562 300,063 906,625
Palm kernel (tonne) 143,196 61,360 204,556(Source: Wilmar’s press conference presentation on 14.12.06)
34
Rationale & Benefits of the Proposed Disposals
C. Dominant presence as merchandiser and processor of edible oils and oilseeds in China
KOG Leading merchandiser of consumer
pack edible oils One of the largest manufacturers
of oleo-chemicals Manufacturing facilities in flour
and feed milling, specialty fats, oil seeds crushing and refining
WHPL & ADM Largest oilseed crusher and edible
oils refiner Leading merchandiser of consumer
pack edible oils One of the largest manufacturers of
oleo-chemicals Manufacturing facilities in flour and
rice milling and specialty fats
Fully integrated group from processing of oilseeds to merchandising of finished agricultural products
Largest oilseed crusher, edible oils refiner, specialty fats and oleo-chemical manufacturer and merchandiser of consumer pack edible oils
(Source: Wilmar’s press conference presentation on 14.12.06)
35
Rationale & Benefits of the Proposed Disposals
Growth opportunities and presence in processing and merchandising of agriculture products in China
A. Significant increase in the production capacities in China in respect of edible oils, oilseeds and grains as follows: -
Activities WHPL KOG Combined Group
As at 30 Sep 2006 No. of plants
Capacity
(MT p.a.)
No. of plants
Capacity
(MT p.a.)
No. of plants
Capacity
(MT p.a.)
Soya bean and oilseeds crushing
11 7,309,500 3 802,000 14 8,111,500
Refinery 17 2,557,500 11 2,399,000 28 4,956,500
Consumer oil packaging
11 1,106,490 10 2,983,200 21 4,089,690
Oleo-chemical 1 120,000 1 116,000 2 236,000
Specialty fats 1 66,000 3 330,000 4 396,000(Source: Wilmar’s press conference presentation on 14.12.06)
36
Rationale & Benefits of the Proposed Disposals
Unified brand identity Unified procurement and logistics activities Lower procurement costs for main cost items, e.g.. Fertilizers Better logistics management/transport efficiencies Human resource optimization Sharing of distribution network Expansion of customer base Common sales and marketing force Extensive consumer pack edible oils distribution network Additional international outlet for its products May utilize milling and refining capacity of Wilmar for its FFB
production
Opportunity to combine palm oil assets and benefit from the synergies arising from the merger
37
Effects of Proposed Disposals on PPB
Will be disclosed in the circular to shareholders,
to be issued at a later date.
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THE END