IJM PLANTATIONS BERHAD29th ANNUAL GENERAL MEETING
Friday, 22nd August 2014, Holiday Villa, Subang Jaya
IJM PLANTATIONS BERHAD29th ANNUAL GENERAL MEETING
Friday, 22nd August 2014, Holiday Villa, Subang Jaya
Brief Business Recap (1/3)
OIL PALM PRODUCTS
Oil Palm Tree -> Total crop production-> Crop yield per hectare
OIL PALM ESTATES
Fresh Fruit Bunches (FFB)
Fresh fruit bunch
Fruit
Oil Extraction Rate (OER)
Kernel Extraction Rate (KER)
PALM OIL MILLS
Crude Palm Oil (CPO)
Palm Kernel (PK)
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.
Brief Business Recap (2/3)
OIL PALM SUPPLY-CHAIN
Transportation, Bulking & Shipping
Gentle
Brief Business Recap (3/3)
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.
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
ADOPTING A BALANCED APPROACHTOWARDS PERFORMANCE AND SUSTAINABILITY
Sustainability
Profit People
Planet
PROFITProductivity & Innovations
PLANETCare for Environment
PEOPLEInvestor in People
PEOPLEReturning to Community
PROFITProductivity & Innovations
PLANETCare for Environment
PEOPLEInvestor in People
PEOPLEReturning to Community
Make Meaning, Make Profit
IJMP MANTRA : NURTURING SUSTAINABILITY
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
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
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
HUMAN-SIDE OF PLANTATION IN INDONESIAN OPERATIONSAmenities eg. housing, utilities, clinic, ATM-facility / cadetship training
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
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%
In addition to quality amenities
EDUCATION FOR WORKERS’CHILDRENPurpose-built IJMP education centres for over 500 children
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
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?