CONTENTS
01 18 54 101 Corporate Management Sustainability Financial Information Discussion and Report Statements Analysis
02 18 56 101 Vision, Mission and Overview of Group’s Sustainability Financial Statements Culture Statement Business and Commitment and 192 Operations Policy Core Values List of Properties 21 04 57 193 Malaysian Palm Oil Group Key Financial Sustainability Analysis of Supply and Demand Highlights Governance Shareholdings Outlook for 2021 Statement of Value 65 197 24 Added & Distribution Productivity and Notice of Annual Key Financial and Innovations General Meeting 05 Operational Risks Location of Operations Affecting the Group 72 Form of Proxy Performance 06 Care for Environment Group Corporate 25 84 Structure Financial Review of Operations Investor in People 07 Group Organisation 27 94 Chart Operational Review Returning to Community 08 32 Board of Directors & 5-Year Group 98 Secretary Plantation Statistics GRI Content Index 10 34 Profile of Board of Corporate Governance Directors & Secretary Overview Statement 16 42 Profile of Key Senior Audit Committee Management Report 17 47 Overview of the Statement on Risk Business Activities Management and Internal Control NURTURING SUSTAINABILITY 01 ANNUAL REPORT 2021
CORPORATE INFORMATION
HEAD OFFICE SHARE REGISTRAR
Wisma IJM Plantations Tricor Investor & Issuing House Lot 1, Jalan Bandar Utama Services Sdn Bhd Mile 6, Jalan Utara Unit 32-01, Level 32, Tower A 90000 Sandakan Vertical Business Suite Sabah, Malaysia Avenue 3, Bangsar South Tel : +6089 667 721 No. 8, Jalan Kerinchi Fax : +6089 667 728 59200 Kuala Lumpur E-mail : [email protected] Malaysia Website : www.ijmplantations.com Tel : +603 2783 9299 Fax : +603 2783 9222 REGISTERED OFFICE E-mail : [email protected] Website : www.tricorglobal.com 2nd Floor, Wisma IJM Jalan Yong Shook Lin STOCK EXCHANGE LISTING 46050 Petaling Jaya Selangor Darul Ehsan Main Market of Bursa Malaysia Malaysia Securities Berhad Tel : +603 7985 8288 since 2 July 2003 Fax : +603 7952 1200 BMSB Code : 2216 E-mail : [email protected] Reuters Code : IJMP.KL Website : www.ijm.com Bloomberg Code : IJMP MK
AUDITORS PRINCIPAL BANKERS
PricewaterhouseCoopers PLT 1. Malayan Banking Berhad (LLP0014401-LCA & AF: 1146) 2. United Overseas Bank (Malaysia) Berhad Chartered Accountants 3. Oversea-Chinese Banking Corporation Level 10, 1 Sentral Limited Jalan Rakyat 4. CIMB Bank Berhad Kuala Lumpur Sentral 5. PT. Bank Mandiri (Persero), Tbk 50706 Kuala Lumpur 6. PT. Bank Danamon, Tbk Malaysia 7. PT. Bank CIMB Niaga, Tbk Tel : +603 2173 1188 8. United Overseas Bank Limited Fax : +603 2173 1288 9. Sumitomo Mitsui Banking Corporation Website : www.pwc.com/my/en.html
www.ijmplantations.com/report.php 02 IJM PLANTATIONS BERHAD
VISION To be a leading regional plantation group
MISSION To uphold the highest standards of performance in our plantations and agri-businesses
CULTURE We strive to:
1 Uphold the highest standards of 3 Ensure the standard of our professionalism and exemplary agricultural and milling practices corporate governance to is of quality that matches or maximise the benefits for all exceeds others in the industry; stakeholders; 4 Create a conducive environment 2 Respect the different cultures, for team spirit among our gender, religion, human rights employees to work towards a and dignity of our stakeholders; unified workforce; and
5 Be a responsible and respected corporate citizen with concerns for social, safety, health and environmental issues. NURTURING SUSTAINABILITY 03 ANNUAL REPORT 2021 CORE VALUES
At IJMP, we are guided by a set of core values in everything we do. These core values form an integral part of our corporate culture which is geared towards sustainable development. TEAMWORK
These values, with the acronym “I-TIC” are We work, collaborate and INTEGRITY, TEAMWORK, succeed in unity, believing INNOVATION and CUSTOMER FOCUS. and trusting each other in pursuing our shared goals. We embrace a philosophy of openness in acknowledging differences of opinions, cultures and contributions among all team members, treating all with respect.
INTEGRITY
We act with professionalism in everything we do and with everyone we deal with, always delivering on our promise.
CUSTOMER FOCUS
We place our customers at the heart of everything we do, constantly delivering at the right time with quality and great attitude. INNOVATION We deliver customers’ expectations with the IJM We believe in continuous improvements, exploring Mark of Excellence. new ideas and promoting creative thinking. We commit passionately to excel at all we do, constantly striving to push the limits and surpass standards of excellence. 04 IJM PLANTATIONS BERHAD GROUP KEY FINANCIAL HIGHLIGHTS
REVENUE PROFIT/(LOSS) BEFORE TAX OPERATING PROFIT EARNINGS BEFORE INTEREST, (RM Million) (RM Million) (RM Million) TAX, DEPRECIATION & AMORTISATION (EBITDA) (RM Million)
(50.47) 935.69 739.13 272.13 290.06 10.14 407.32 122.66 • 2021 • 2020
STATEMENT OF VALUE ADDED & DISTRIBUTION 31.3.2021 31.3.2020 RM’000 RM’000 VALUE ADDED Revenue 935,693 739,133 - Purchases of goods & services (355,045) (439,338) Total value added 580,648 299,795
DISTRIBUTION To employees 141,950 154,547 - Employee benefits expense To governments - Income tax expense 57,122 22,507 - Sabah sales tax 28,667 21,632 - MPOB cess and windfall levy 3,556 1,820 To providers of capital - Dividends 17,612^ 17,612* - Finance costs - Interest expense 17,427 22,687 - Net foreign exchange differences on borrowings - 37,717 - Non-controlling interests 9,924 (9,556) Retained for future reinvestment & growth 304,390 30,829 580,648 299,795
Reconciliation Profit/(Loss) for the year 205,083 (63,423) Add : Depreciation & amortisation 116,919 111,864 Finance costs - Interest expense 17,427 22,687 - Net foreign exchange differences on borrowings - 37,717 Employee benefits expense 141,950 154,547 Income tax expense 57,122 22,507 Sabah sales tax 28,667 21,632 MPOB cess and windfall levy 3,556 1,820 Non-controlling interests 9,924 (9,556) Total value added 580,648 299,795
Value added is a measure of wealth add created. The above statement shows the Group’s value added for 2021 and 2020 and its distribution by way of payments to employees, goverments and capital providers, with the balance retained in the Group for future reinvestment and growth. ^ Dividends in respect of financial year ended 31 March 2020 were paid on 18 August 2020. * Dividends in respect of financial year ended 31 March 2019 were paid on 17 July 2019. NURTURING SUSTAINABILITY 05 ANNUAL REPORT 2021 LOCATION OF OPERATIONS
19
18 16 KOTA KINABALU 34 17 15 14 12 13 SANDAKAN 33 BELURAN 11 1 2 TELUPID 9 4 3 5 10 8 7 6
SABAH LAHAD DATU TAWAU
TARAKAN
TANJUNG 20 21 SELOR 22 32
EAST
PALEMBANG KALIMANTAN 28 26 23 36 24 27 25 30 31 35
SUMATRA 29 SANGATTA
BANDAR LAMPUNG SAMARINDA
Plantation Services
3 Minat Teguh Estate 26 Multi Estate 1 Wisma IJM Plantations 5 Sijas Estate 27 IPS Estate 10 Quality, Training and Research Centre 6 Desa Talisai South Estate 28 KBSA Estate 13 Sugut Training Centre 8 Desa Talisai North Estate 29 Alumga Estate 36 Kutim Training Centre 9 Meliau Estate 11 Sungai Sabang Estate 14 Berakan Maju Estate PROCESSING CONSERVATION 15 Excellent Challenger I Estate 2 IJMEO Kernel Crushing Plant 16 Excellent Challenger II Estate 4 Minat Teguh Palm Oil Mill 33 Hundred-Acre Wood (Malaysia) 17 Rakanan Jaya South Estate 7 Desa Talisai Palm Oil Mill 34 Secret Garden (Malaysia) 19 Rakanan Jaya North Estate 12 Sabang Palm Oil Mill I 35 Hundred-Acre Wood (Indonesia) 20 Bahagia Estate 18 Sabang Palm Oil Mill II 21 Prima Estate 30 IPS Palm Oil Mill & Kernel Crushing Plant 22 Permai Estate 31 Sinergi Palm Oil Mill 23 Pertama Estate 32 Prima Palm Oil Mill 24 Belidan Estate 25 Manubar Estate 06 IJM PLANTATIONS BERHAD GROUP CORPORATE STRUCTURE AS AT 31 MARCH 2021
INVESTMENT Plantation PROCESSING OTHERS HOLDING
100% 100% 100% 100% Gunaria Sdn Bhd Berakan Maju IJM Edible Oils Ratus Sempurna Sdn Bhd Sdn Bhd Sdn Bhd Property holding 100% Excellent Challenger 100% (M) Sdn Bhd IJM Biofuel Sdn Bhd 100% Dormant Rakanan Jaya Sdn Bhd 100% Akrab Perkasa 95% Sdn Bhd PT Karya Bakti Sejahtera Dormant Agrotama 100% 95% Desa Talisai Palm Oil PT Sinergi Agro Industri Mill Sdn Bhd Dormant 100% Dynasive Enterprise 100% Sdn Bhd Sabang Mills Sdn Bhd 95% Dormant PT Prima Alumga 100% 100% Sijas Plantations Minat Teguh Sdn Bhd Sdn Bhd Dormant 95% PT Primabahagia Permai 100% Desa Talisai 90% Sdn Bhd PT Indonesia Dormant Plantation Synergy 20% PT Perindustrian Sawit Sinergi Refining of palm products, kernel crushing and manufacturing of oleochemicals*
* The construction of the plant is in progress and operation has not commenced NURTURING SUSTAINABILITY 07 ANNUAL REPORT 2021 GROUP ORGANISATION CHART
BOARD OF DIRECTORS
SECURITIES NOMINATION & AUDIT COMPANY & OPTIONS REMUNERATION COMMITTEE SECRETARY COMMITTEE COMMITTEE
• Risk Management Committee • Internal Audit
CFO & EXECUTIVE CEO & DIRECTOR, MANAGING CEO DIRECTOR INDONESIAN OPERATIONS
GROUP OPERATIONS OPERATIONS SUPPORT AND PROJECT SERVICES TEAM
• Estates • Agri Management • Estates • Processing Services • Processing • Commodity Selling & Outside Crop • Finance, IT & Accounts • Human Resource • Land & Legal • Purchasing & Administration • Research, Training & Development 08 IJM PLANTATIONS BERHAD BOARD OF DIRECTORS & SECRETARY
2 JOSEPH TEK CHOON YEE Chief Executive Officer & Managing Director
Malaysian | Age 55 | Male
1 PUSHPANATHAN A/L S. A. KANAGARAYAR Independent Non-Executive Chairman
Malaysian | Age 69 | Male
3 PURUSHOTHAMAN A/L KUMARAN • Chief Financial Officer & Executive Director • Chief Executive Officer (Indonesia)
Malaysian | Age 59 | Male NURTURING SUSTAINABILITY 09 ANNUAL REPORT 2021
4 5 FATIMAH BINTI MERICAN SHIRLEY GOH Senior Independent Independent Non-Executive Director Non-Executive Director Malaysian | Age 62 | Female Malaysian | Age 67 | Female
6 DATUK DR. CHOO YUEN MAY PJN, DSPN, KMN Independent Non-Executive Director
Malaysian | Age 65 | Female
7 8 VELAYUTHAN A/L LIEW HAU SENG TAN KIM SONG Non-Executive Director Non-Executive Director Malaysian | Age 55 | Male Malaysian | Age 67 | Male
9 Ng Yoke Kian Company Secretary
Malaysian | Age 53 | Female 10 IJM PLANTATIONS BERHAD PROFILE OF BOARD OF DIRECTORS & SECRETARY
DATE APPOINTED/WORKING EXPERIENCE 1 Mr Pushpanathan was appointed as an Independent Non-Executive Director of IJM Plantations Berhad on 12 November 2012, and Independent PUSHPANATHAN Non-Executive Chairman on 17 June 2019. A/L S. A. He has more than 39 years of experience in providing advisory, accounting and KANAGARAYAR audit services in the role of a partner-adviser for a large number of clients Independent Non-Executive based in Malaysia and internationally (both private and public corporations) Chairman in a variety of industries. He was also involved in share valuations of corporations, mergers and acquisitions, restructurings, takeovers, flotations, Malaysian | Age 69 | Male investigations and tax planning.
Board Committee His past appointments and/or working experience were as follows:- Membership(s) • Partner, Messrs Ernst & Young (1983 - 2009) • Audit Committee (Member) • Chairman, Adjudication and/or Organising Committees, National Annual • Nomination & Corporate Report Awards (2003 - 2009) Remuneration Committee • Chairman, MICPA’s Financial Statements Review Committee and (Member) Project Chairman, the Insurance Standards Working Group of Malaysian Accounting Standards Board (“MASB”) on Financial Reporting Standard 4 ACADEMIC/PROFESSIONAL (2003 - 2007) QUALIFICATION • Member, International Federation of Accountants’ Developing Nations Permanent Taskforce (2004 - 2005) • Member of the Institute of • Board Member, MASB (2009 - 2015) Chartered Accountants of • Honorary Secretary, Financial Reporting Foundation (2010 - 2015) Scotland • President, MICPA (2012 - 2014) • Member of the Malaysian • Council Member, MIA (2012 - 2014) Institute of Certified Public • Chairman, Listing Committee of Bursa Malaysia Berhad (2016 -2020) Accountants (“MICPA”) • Member of the Malaysian Present Directorship(s) Institute of Acountants Listed Companies (“MIA”) • Bursa Malaysia Berhad • IJM Corporation Berhad
Other Public Companies • Asian Institute of Finance Berhad (In Members’ Voluntary Winding-Up) • Sun Life Malaysia Assurance Berhad • MICPA • Malaysian Community & Education Foundation
Other Current PositionS Held • Council Member and EXCO Member, MICPA • Chairman, Malaysian Financial Reporting Standard (“MFRS”) Applications & Implementation Committee of MASB • Project Chairman, the Insurance Standards Working Group of MASB on MFRS 17 • Trustee, WWF-Malaysia NURTURING SUSTAINABILITY 11 ANNUAL REPORT 2021
DATE APPOINTED/WORKING EXPERIENCE 2 Mr Joseph Tek was appointed the Chief Executive Officer & Managing Director of IJM Plantations Berhad (“IJMP”) on 23 May 2010. JOSEPH TEK CHOON He joined IJMP in September 2004 to head the research, training and YEE development activities of the Group, and was appointed an Alternate Director on 22 May 2008 and Executive Director on 19 October 2008 besides being Chief Executive Officer & the General Manager – Plantations (Sabah). He was then redesignated to Managing Director the position of Chief Operating Officer & Executive Director on 18 May 2009. Malaysian | Age 55 | Male His other past appointments and/or working experience were as follows:- Board Committee • Plant Breeder (Ebor Research), Sime Darby Plantations Sdn Bhd Membership(s) (1991 - 1997) • Securities & Options • R&D Manager, Sime Darby Plantations Sdn Bhd (1997- 2000) Committee (Member) • Manager-Agritech Business, Sime Aerogreen Sdn Bhd and Sime Gardentech Sdn Bhd (2000 - 2001) • Head of R&D, Malaysian Palm Oil Association (“MPOA”) (2001 - 2004) ACADEMIC/PROFESSIONAL • Vice-Chairman, MPOA Environment Working Committee (2004 - 2005) QUALIFICATION • Member, Criteria Working Group for the Roundtable on Sustainable Palm • Bachelor of Science (First Oil (RSPO) (2005 - 2006) Class Honours), Universiti • Council Member, Malaysian Oil Scientists’ and Technologists’ Association Kebangsaan Malaysia (MOSTA) (2006 - 2007) • Master of Philosophy (Plant • Member, Programme Advisory Committee (PAC) of the Malaysian Palm Breeding), Cambridge Oil Board (“MPOB”) (2011 - 2013) University, England • President, Malaysian Estate Owners’ Association (“MEOA”) (2015 - 2018) • ASEAN Senior Management Development Programme, Present Directorship(s) Harvard Business School Listed Companies Other Public Companies • Nil • Nil
Other Current PositionS Held • Board Member, MPOB • Council Member, MEOA • Member of Board of Governors, Montfort Youth Training Centre (MYTC), Sabah
DATE APPOINTED/WORKING EXPERIENCE 3 Mr Puru Kumaran was appointed the Chief Financial Officer & Executive Director of IJM Plantations Berhad (“IJMP”) on 23 May 2010. He was also PURUSHOTHAMAN A/L appointed the Chief Executive Officer for the Group’s Indonesian operations KUMARAN on 1 January 2016. • Chief Financial Officer & His past appointments in IJMP were as follows:- Executive Director • Financial Controller (1 January 2004 – 31 December 2006) • Chief Executive Officer • General Manager - Corporate Affairs & Finance (1 January 2007 – 22 May (Indonesia) 2010) Malaysian | Age 59 | Male Prior to joining IJMP, he was with Unilever Group for over 14 years, serving Board Committee various finance and commercial positions in Malaysia, England and Indonesia. Membership(s) His last post was as Commercial Director of its plantation operations in • Nil Malaysia. Present Directorship(s) ACADEMIC/PROFESSIONAL Listed Companies Other Public Companies QUALIFICATION • Nil • Nil • Bachelor of Accounting (Honours), University of Other Current Position Held Malaya • Member, Malaysian Financial Reporting Standard Applications & • Master of Business Implementation Committee of MASB Administration, Anglia Polytechnic University, Cambridge, England • Member of the Malaysian Institute of Accountants 12 IJM PLANTATIONS BERHAD PROFILE OF BOARD OF DIRECTORS & SECRETARY
DATE APPOINTED/WORKING EXPERIENCE 4 Puan Fatimah was appointed as an Independent Non-Executive Director of IJM Plantations Berhad on 1 November 2017, and subsequently re-designated as Senior Independent Non-Executive Director on 1 September 2019. FATIMAH BINTI She started her career as an analyst in Esso Malaysia Berhad (“Esso”) MERICAN (a company formerly listed on the Bursa Malaysia Securities Berhad) Senior Independent since 1977, and thereafter worked for ExxonMobil group of companies Non-Executive Director (“ExxonMobil Group”) (after the merger between Exxon and Mobil) in Malaysian | Age 67 | Female managing global teams to support all of ExxonMobil’s downstream and chemical IT applications. From 2008 to 2014, she was responsible for Board Committee finance related activities of ExxonMobil’s subsidiaries in Malaysia. She has Membership(s) vast experience in management and information technology, having worked locally, regionally and globally. • Audit Committee (Member) • Nomination & Her other past appointments and/or working experience were as follows:- Remuneration Committee • Executive Director, Esso (December 2008 - March 2012) (Chairman) • Vice President and Director, ExxonMobil Exploration and Production Malaysia Inc. (December 2008 - March 2014) ACADEMIC/PROFESSIONAL • Chairperson, Human Capital Council, Malaysian International Chamber of QUALIFICATION Commerce and Industry (2012 to 2014) • Member, Panel of Women Entrepreneurs, SME Corp (2014 - 2015) • Higher National Diploma • Member, Merdeka Award Education and Community Category Nomination in Computer Studies, Committee (2014 - 2017) University of Westminster (formerly known as Puan Fatimah is also a Certified NLP Coach from The American Board of Polytechnic of Central Neuro-Linguistic Programming, a mentor of the Women in Leadership London) Malaysia program which is run jointly with TalentCorp Malaysia and the Institute of Chartered Accountants, England and Wales (ICAEW), and the Group Coach of the Women in Leadership Malaysia.
Present Directorship(s) Listed Companies Other Public Companies • Paramount Corporation Berhad • United Overseas Bank (Malaysia) Berhad
Other Current Position Held • Nil
DATE APPOINTED/WORKING EXPERIENCE 5 Ms Shirley was appointed as an Independent Non-Executive Director of IJM Plantations Berhad on 22 September 2020. SHIRLEY GOH She retired from PricewaterhouseCoopers Malaysia at the end of June 2020 Independent Non-Executive after 41 years including 24 years as a partner. During her stay in the firm, she Director was a long serving member of the Assurance Executive Team and was elected Malaysian | Age 62 | Female by the Partners to the Oversight Board in 2016, which she chaired for 4 years up to June 2020.
Board Committee Ms Shirley has over 40 years of experience in providing audit and business Membership(s) advisory services to a diverse range of clients, which include local enterprises • Audit Committee and conglomerates as well as multinational companies in Malaysia. She has (Chairman) also worked with clients with large overseas operations in countries such as China, India, Singapore, Vietnam and Indonesia. In recent years, she has also undertaken many advisory assignments which include advising her clients ACADEMIC/PROFESSIONAL on listing requirements including Initial Public Offers (IPOs) on local and QUALIFICATION overseas Exchanges, fund raising exercises, mergers and acquisitions and • Member of the Malaysian other corporate restructuring activities. Institute of Certified Public Accountants (MICPA) Present Directorship(s) • Member of the Malaysian Listed Companies Other Public Companies Institute of Accountants • UEM Edgenta Berhad • Nil (MIA) Other Current Position Held • Nil NURTURING SUSTAINABILITY 13 ANNUAL REPORT 2021
DATE APPOINTED/WORKING EXPERIENCE 6 Datuk Dr. Choo was appointed as an Independent Non-Executive Director of IJM Plantations Berhad (“IJMP”) on 1 November 2016. DATUK DR. CHOO YUEN She was the Director-General of Malaysian Palm Oil Board (“MPOB”) prior to MAY her appointment as Director of IJMP. She started her career as a lecturer at University Sains Malaysia for 2.5 years before joining the Palm Oil Research PJN, DSPN, KMN Institute of Malaysia (“PORIM”) as a Research Officer in 1982. Independent Non-Executive Director Her other past appointments and/or working experience were as follows:- Malaysian | Age 65 | Female • Board member, MPOB (2010-2016) • Chairman, Institute of Malaysian Plantation and Commodities (IMPAC) Board Committee (2010-2016) Membership(s) • Chairman, Palm Oil Research and Technical Service Institute of MPOB • Audit Committee (Member) (PORTSIM) Board (2010-2016) • Securities & Options • Founding member, Board of Trustees, Malaysian Palm Oil Certification Committee (Chairman) Council (MPOCC) (2015-2016) • Member, Council for Palm Oil Producing Countries (CPOPC) (2015-2016) ACADEMIC/PROFESSIONAL • Board of Trustee, Malaysian Palm Oil Council (2010-2016) QUALIFICATION • Director, Felda Global Ventures Plantations Sdn Bhd (2012-2013) • Past President, International Society for Fats Research (ISF) (2015-2016) • Bachelor of Science, University of Waikato, New • Chairperson, Codex Committee on Fats and Oils (2011-2016) Zealand • Honorary Distinguished Researcher, Chinese Academy of Tropical • Master of Science with Agricultural Sciences, People’s Republic of China (2016-2020) Honours, University of • Chairperson, Sub-Working Group on Palm Oil (SWGPO) Bilateral Waikato, New Zealand Cooperation on Commodities between Malaysia-Indonesia (2011-2016) • Doctor of Philosophy in • Chairperson, Malaysia-Netherlands Sub-Committee on Oil Palm Chemistry, University of (2015-2016) Malaya • Editor-In-Chief, Journal of Oil Palm Research (2010-2016) • Executive Master of Business Administration, Her vision and passion for science is reflected by the fact that she is an inventor Asian Institute of of 71 patents and has authored and co-authored more than 950 scholarly Management, Philippines articles. Several of the patents have been successfully commercialised, the • Honorary Doctorate of most significant being the carotene rich red palm oil, tocotrienol and carotene Science, University of South concentrates, and biodiesel technologies. Wales, United Kingdom • Fellow of Academy of She has been honoured with more than 100 international and national Sciences Malaysia (FASc), scientific and invention awards. Among them are the prestigious The Knight Fellow of ASEAN Academy of the International Order or Merit of Inventors awarded by the International of Engineering and Federation of Inventors Association (IFIA) in 2009, the Most Outstanding Technology (FAAET), Fellow Malaysian Women Award in conjunction with the International Women’s Day of Malaysian Institute of Celebration 2011, the WIPO (World Intellectual Property Organization) Gold Chemistry (FMIC), Fellow of Medal for the Best Women Inventor in 1994 and 2003, and the Merdeka Award Malaysian Oil Scientists’ & in 2014. Technologists’ Association (FMOSTA), Fellow of Present Directorship(s) Malaysian Scientific Listed Companies Other Public Companies Association (FMSA) and • Nil • Nil Fellow of Incorporated Society of Planters (FISP) Other Current PositionS Held • Vice President, Malaysian Invention & Design Society (MINDS) • Council Member, Malaysian Estate Owners’ Association (MEOA) • Council Member, Malaysian Oil Scientists’ and Technologists’ Association (MOSTA) • Life Member, Malaysian Women’s Institute of Management 14 IJM PLANTATIONS BERHAD PROFILE OF BOARD OF DIRECTORS & SECRETARY
DATE APPOINTED/WORKING EXPERIENCE 7 Mr Velayuthan a/l Tan Kim Song was appointed as a Non-Executive Director of IJM Plantations Berhad (“IJMP”) on 7 April 2021. He retired as Chief Executive VELAYUTHAN A/L Officer (“CEO”) & Managing Director (“MD”) of IJMP in May 2010. TAN KIM SONG He was with Multi-Purpose Holdings Berhad for 5 years as Assistant Manager Non-Executive Director before joining IJM Corporation Berhad (“IJM”) Group in 1985. He held the Malaysian | Age 67 | Male following positions in IJM Group prior to his retirement from IJMP:- • Project Officer of Desa Talisai Sdn Bhd (“DTSB”) (1985 - 1987) Board Committee • Plantation Manager of DTSB (1987 - 1990) Membership(s) • Senior Manager of DTSB (1990 - 1994) • Nil • Group General Manager of IJMP (1994 - 1997) • Executive Director of IJMP (1997 - 2003) ACADEMIC/PROFESSIONAL • Group Executive Director of IJM (2001 - 2003) QUALIFICATION • Managing Director of IJMP (2003 - 2004) • Diploma in Management, • CEO & MD of IJMP (2004 - 2010) Malaysian Institute of Management Present Directorship(s) Listed Companies Other Public Companies • Nil • Sandakan Community Services Berhad
Other Current PositionS Held • Chairman of Islands Own Pte Ltd, Solomon & Singapore • Managing Director of Taniaga Holdings S/B & Techno Agri Management S/B • Vice President of Asia Rugby (2019 - Current) • Chairman of Development Committee of Asia Rugby (2017- Current) • Vice President (Hon) of Malaysia Rugby (2019 - Current)
DATE APPOINTED/WORKING EXPERIENCE 8 Mr Liew was appointed a Non-Executive Director of IJM Plantations Berhad on 1 September 2019. He is currently the Chief Executive Officer and Managing LIEW HAU SENG Director of IJM Corporation Berhad. Non-Executive Director His past appointments and/or working experience were as follows:- Malaysian | Age 55 | Male • Engineer, GR Concrete Sdn Bhd (1989 - 1995) • Senior Engineer, IJM Construction Sdn Bhd (“IJMC”) (1995 - 2002) Board Committee • Senior Project Manager, IJMC (2003 - 2005) Membership(s) • Project Director, IJMC (2006 - 2009) • Nomination & • Operations Director, IJMC (2010 - 2011) Remuneration Committee • Executive Director, IJMC (2012 – 2015) (Member) • Managing Director, IJMC (2015 – 2019) • Securities & Options Committee (Member) Present Directorship(s) Listed Companies Other Public Companies ACADEMIC/PROFESSIONAL • IJM Corporation Berhad • IJM Land Berhad QUALIFICATION • Road Builder (M) Holdings Bhd • Bachelor of Engineering • ERMS Berhad (1st Class Honours) in Civil • Perdana Leadership Foundation Engineering, Universiti (Trustee) Teknologi Malaysia Other Current PositionS Held • Master in Business Administration, HELP • Vice President, Master Builders Association Malaysia University • Member, Governing Council of the Malaysia-India Business Council NURTURING SUSTAINABILITY 15 ANNUAL REPORT 2021
DATE APPOINTED/WORKING EXPERIENCE 9 Ms Ng was appointed Company Secretary on 6 April 2012. She started her career with a secretarial firm for about 5 years and was an Ng Yoke Kian Assistant Manager of the Technical and Research Department of MAICSA Company Secretary prior to joining IJM Corporation Berhad (“IJM”). She has more than Malaysian | Age 53 | Female 25 years’ experience in corporate secretarial work.
Board Committee Present Directorship(s) Membership(s) Listed Companies Other Public Companies • Nil • Nil • Nil
ACADEMIC/PROFESSIONAL Other Current PositionS Held QUALIFICATION • Company Secretary, IJM • Associate of Malaysian • Head, Corporate Services Department of IJM Institute of Chartered Secretaries & Administrators (MAICSA)
Notes: 1. There are no family relationship between the Directors and/or major shareholders of the Company. 2. Save for Velayuthan a/l Tan Kim Song, who has interest in certain related party transactions, none of the Directors has any financial interest in any business arrangement involving the Group. 3. All Directors maintain a clean record with regard to convictions for offences.
Housing and water catchment in IPS Estate 16 IJM PLANTATIONS BERHAD PROFILE OF KEY SENIOR MANAGEMENT
JOSEPH TEK CHOON YEE PURUSHOTHAMAN A/L KUMARAN Chief Executive Officer & • Chief Financial Officer & Executive Director Managing Director • Chief Executive Officer (Indonesia)
Malaysian | Age 55 | Male Malaysian | Age 59 | Male
As expressed on page 11 of the Profile of Directors As expressed on page 11 of the Profile of Directors
DATE APPOINTED/WORKING EXPERIENCE Mr Sandra Segran was appointed the Director - Plantations (Indonesia) on 1 May 2018.
He started his career in the plantation industry as a cadet planter in 1980 with Pamol Plantations Sdn Bhd. He served various capacities in that company for 26 years where he accumulated experiences in managing the entire supply chain of oil palm cultivation. He joined IJM Plantations Berhad in 2006 as Senior Plantation Manager in the Group’s Malaysian operations. He was transferred to Indonesia in 2007 to pioneer the Group’s expansion project there. He was promoted to Plantation Controller in 2008. In 2012, he was appointed the General Manager - Plantations (Kutai Timur) before assuming his current position.
SANDRA SEGRAN A/L KENGANATHAN Present Directorship (s) Director – Plantations (Indonesia) Listed Companies • Nil Malaysian | Age 60 | Male Other Public Companies ACADEMIC/PROFESSIONAL QUALIFICATION • Nil • Diploma awarded by the Incorporated Society of Planters Other Current PositionS Held • Nil
NOTES:- 1. There are no family relationship between the Key Senior Management, Directors and/or major shareholders of the Company. 2. None of the Key Senior Management has any conflict of interest with the Company. 3. All the Key Senior Management maintain a clean record with regard to convictions for offences. NURTURING SUSTAINABILITY 17 ANNUAL REPORT 2021 OVERVIEW OF THE BUSINESS ACTIVITIES
Pre & Main Oil Palm Nursery Plantation
R&D
Fresh Fruit DxP Seed Bunches, FFB Production
Palm Kernel, PK
Fresh Fruit Bunches, FFB Palm Kernel Palm Oil Mill Crushing Plant
External FFB Crude Palm Palm Kernel Suppliers Crude Palm Kernel Oil, Expeller, Oil, CPO CPKO PKE
Customers - Customers-Refiners Animal Feed 18 IJM PLANTATIONS BERHAD
MANAGEMENT DISCUSSION AND ANALYSIS
OVERVIEW OF GROUP’S BUSINESS AND OPERATIONS
About the Group
The Group commenced its business in oil palm plantations back in 1985 with an initial land-bank of 4,000 hectares in Desa Talisai estates in Sabah, Malaysia. Since then, the Group had progressively jumped the growth curve to increase its cultivated area to more than 15 folds including establishing its presence in Indonesia.
The total land bank of the Group as at the end of the financial year, spread over Sabah, East and North Kalimantan, and Sumatra together with its oil palm age profile are as follows:
Malaysian Indonesian Group Operations Operations
Hectares % Hectares % Hectares %
Mature (> 20 years) 6,584 26% - 0% 6,584 11%
Mature - Prime (8 - 20 years) 12,351 50% 28,333 78% 40,684 66%
Mature - Young (4 - 7 years) 3,073 12% 4,808 13% 7,881 13%
Immature (1 - 3 years) 3,006 12% 3,122 9% 6,128 10%
Total Planted Area 25,014 100% 36,263 100% 61,277 100% Plantable reserves and replantable 1,196 477 1,673 area Buildings, infrastructures, 3,024 10,209 13,233 conservation etc. Total Land Area 29,234 46,949 76,183
The total planted area at the end of the financial year mill, which is strategically located in North Kalimantan, increased to 61,277 ha (FY2020: 60,966 ha) consisting operated for a full year to increase the total FFB of 55,149 ha (FY2020: 54,369 ha) mature areas and processed by the Group, in addition to complement 6,128 ha (FY2020: 6,597 ha) immature areas with a processing support for its plantations in that region. weighted average age of 11.8 years. 59% of the total planted area is located in Indonesia while the balance 41% With the third mill in the Indonesian operations, the is located in Sabah, Malaysia. From the total planted processing capacity of the Group now stands at 360 area, 88% of the Malaysian planted areas are mature mt of FFB per hour. Four of the palm oil mills which whereas the mature area in the Indonesian operations are located in the Malaysian operations are operating was 91%. at a capacity of 180 mt of FFB per hour. Similarly, the other three mills in the Indonesian operations are also The prime area in the Malaysian operations at the close operating at a capacity of 180 mt of FFB per hour. These of the financial year decreased by 21% to 12,351 ha seven palm oil mills are strategically located in close (FY2020: 15,536 ha) as more areas located in the Sugut proximity to the plantations. region in Sabah moved into the 20 years maturity age bracket. As for the Indonesian operations, the prime True to its mission, the Group is committed to uphold area group remained in the same level as reported in the highest standards of performance in its plantations, the previous financial year. to remain focused on productivity and innovations, and care for the environment, its’ people and the The Group achieved another milestone when its third surrounding communities to enable the Group to mill in the Indonesian operations was commissioned achieve its vision and to realise a balanced mix between in the last quarter of the previous financial year. This performance growth and sustainability. NURTURING SUSTAINABILITY 19 ANNUAL REPORT 2021
NURTURING SUSTAINABILITY
The four quadrants of the Group’s ‘Nurturing Sustainability’ endeavours to continue driving for sustained and positive remained the cornerstone of its sustainability journey. social economic impacts for its employees and the The focus on productivity and innovations, care for the surrounding communities. The Group’s approach and environment, investing in its’ people and returning management of its key economic, environmental and social to the surrounding communities reflects continuous aspects are covered under the Sustainability Report Year improvements while addressing the social environmental 2021 on pages 54 to 100. aspects relating to the Group’s business.
Best management practices are implemented while impactful initiatives and effective collaborations on environmental protection, conservation and biodiversity enhancements were pursued. In addition, the Group
Sijas Estate, Sabah. 20 IJM PLANTATIONS BERHAD
MANAGEMENT DISCUSSION AND ANALYSIS
Key Global Megatrends
Megatrends are transformative global forces that may have profound impact on businesses in the short and longer term. The Group proactively strategises to harness on opportunities and mitigate potential threats that may arise from these drivers of change:
INCREASED UNCERTAINTIES IN THE MARKET The business environment is becoming increasingly complex with economic growth rates becoming less foreseeable. The volatilities in commodity prices and the currencies are intertwiningly driven by a host of multiple factors including changes in weather patterns, financial speculation, currency exchange rates, stock market dynamics, protectionism by consuming countries in the form of import duties, uncertainties in governmental policies, collapse in crude oil prices and the recent COVID-19 virus pandemic. These volatilities, coupled with the virus pandemic are expected to remain and continue to pose significant risks and challenges to businesses in the foreseeable future. Businesses must be able to adapt and innovate to face this challenging environment while continuing to ensure cost efficiency and effectiveness in its operations.
POPULATION GROWTH AND DIMINISHING ARABLE LAND
The current world population of 7.8 billion is expected to reach 8.5 billion by 2030, 9.7 billion in 2050 and 11.2 billion in 2100 (UN DESA). Significant demographic changes are likely to unfold in the coming years, as well as the challenges and opportunities that they present to achieve sustainable development and food security. The food demand is robust with limited arable land available. Removing palm oil out of the global food supply equation will not help to address the long-term global demand. Palm oil commands 55% of the global oils and fats exports for consumption. The world needs to rely on biologically high yielding crops like oil palm to address sustainable food security. In addition, palm oil is also renowned for its health and nutritional benefits and has competitive prices vis-à-vis other edible oils and fats.
INCREASING AWARENESS ON SUSTAINABILITY ASPECTS
Best management practices and other proactive initiatives must be implemented to mitigate any potential negative impacts on the environment. The palm oil industry, having embraced sustainability must continue to enhance its sustainability footprints by enhancing and implementing best practices while strengthening dialogues and realising effective stakeholder engagements. However, sustainability indicators must adopt time-tested scientific evidence and pursue level playing consideration that are in line with the goals for sustainable development and climate change agenda. Thus, sustainability issues must be considered objectively and balanced with recognition of the importance of palm oil in ensuring that supply is adequate in the global food equation.
REIMAGING PLANTATIONS WITH INNOVATIVE TECHNOLOGIES
Many businesses today are leveraging on innovative technologies. The plantation industry can potentially ‘jump the curve’ by embracing applicable technologies within its resource effectiveness. Precision agriculture with geospatial technologies, unmanned aerial vehicles and drones have already found its way into the agriculture landscape while Internet of Things, supported by cloud computing, can potentially be game changers for the agriculture sector. Leveraging on technological advancements in automation, R&D such as in augmentation with exoskeletons or harnessing effective site-specific mechanisation can help in selected operations under plantation landscape. However, investments in telecommunication and internet connectivity are prerequisites, especially in rural areas where plantations are mainly located. The formation of the Mechanisation and Automation Research Consortium of Oil Palm (MARCOP) in Malaysia is poised to enhance the industry’s research and development (R&D) and commercialisation of mechanisation. NURTURING SUSTAINABILITY 21 ANNUAL REPORT 2021
Malaysian Palm Oil Supply And Demand Outlook Global palm oil production in For 2021 2020 was estimated to decline The year under review continued to be a very challenging year for by almost 2.7 million mt from a most business industries in the world. The already battered global economy as a consequence of the prolonged US-China trade war year earlier. Although a recovery continued to face an unprecedented global crisis triggered by occurred in the third quarter of the COVID-19 pandemic. The pandemic had disrupted the global supply and demand and impacted every aspect of life in the form of 2020, it could not compensate massive job and income losses for most of the economic sectors; for the reduction of production further surging the wealth disparities and social unrest. in first half of 2020. Notwithstanding the continued effort of the governments and central banks across the world to cushion the pandemic impacts by keeping the interest rates at record low and maintaining the unprecedented stimulus measures; the COVID-19 outbreak had also led to demand uncertainties. However, the rise of the petroleum prices from the low in the previous financial year revived the palm oil sector during the year.
The various phases of movement controls and lock downs imposed by countries across the world during the year to contain the COVID-19 outbreak and the decision to freeze the guest workers’ recruitment by the Malaysian Government had caused severe labour shortages in the plantation sector and resulted in significant crop losses to many players in the industry. Coupled with the declining biological crop production trend experienced across most of Malaysia’s palm oil producing states, and with the adverse weather impacts affecting both the two largest palm oil producing countries, Malaysia and Indonesia, have led to the overall decline in CPO production, thus curtailing the production growth trajectory in the previous years.
Overview of the Global Palm Oil Sector in 2020 and Outlook For 2021
Over the years, the global production of oils and fats has risen steadily. Out of 17 oils and fats cultivated in the world, only 4 oils have significant shares in the production of oils and fats. They are palm oil, soybean oil, rapeseed oil and sunflower oil. These four major oils contributed about 76% of the global oils and fats production. In Year 2020, it was estimated that global oils and fats production will drop by 0.6 million mt or 0.26% to 235.7 million mt compared to the Year 2019. Palm oil was the major oil produced which accounted for 31.4% or 74.02 million mt from total oils and fats production globally in 2020.
Global Oils and Fats Production (Million MT)
250.00 57.01 56.69 54.13 55.86 200.00 51.89 20.77 21.35 18.94 18.89 150.00 16.49 24.94 25.14 25.12 25.00 25.40 56.89 58.47 100.00 52.45 54.52 56.69
76.67 74.02 50.00 59.68 69.22 69.41
0 2016 2017 2018 2019 2020
Palm oil Soybean oil Rapeseed oil Sunflower Oil Other oil 22 IJM PLANTATIONS BERHAD
MANAGEMENT DISCUSSION AND ANALYSIS
The consumption of oils and fats grows in tandem with the rise in the world population. The strong demand for the oils and fats are driven by strong growth in the food and beverage, oleochemical and biodiesel sector. The sector experienced strong growth due to strong GDP growth, rising per capita income, rapid urbanisation and growing middle-class consumers in the major consumer countries.
Projected Production & Consumption (‘000 MT)
600,000
500,000
400,000
300,000
200,000
100,000
0 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050
Oils & Fats Oils & Fats Linear Exponential Production Consumption (Oil & Fats Production) ( Oils & Fats Consumption)
Review of Malaysian palm oil in 2020 and Outlook for Palm oil Sector for 2021 and beyond Palm oil is the most produced vegetable oil in the world and earlier heavy rains and flooding which disrupted harvesting in 2020, palm oil production was initially expected to and processing activities. The re-imposition of MCO also exceed 2019 production as both Indonesia and Malaysia, had some degree of impacts in production although palm the two largest producers of palm oil were poised to lead oil industry was considered as an essential sector and the growth output. Unfortunately, the total palm oil output activities were allowed to continue. However, this is seen recorded a drop instead primarily due to the prolonged as a temporary setback as palm oil production in Malaysia dry weather experienced especially in Indonesia, as is expected to recover in the second half of 2021 till the well as disruptions in fertiliser applications among the peak production period in the fourth quarter. smallholders. It is forecast that in 2021, Malaysian palm oil production This situation was further exacerbated by the COVID-19 will likely reach close to 19.4 million mt contributed by pandemic which curtailed production as both countries the maturing oil palm areas that were replanted earlier imposed strict movement control orders. This in turn as well as better FFB yields due to recovery from the hampered production as harvesting, processing and earlier dry weather. The export tax structure in Indonesia transportation activities were restricted and this is which incentivises processed palm oil exports and make reflected in the lower production especially from March to crude palm oil of Indonesian origin to be more costly will May 2020. As a result, Malaysian palm oil production fell to likely continue to support demand for CPO from Malaysia. 19.1 million mt, down by 300,000 mt from earlier forecast However, any revisions in the export tax structure will of 19.4 million mt. This led to export supplies falling short change the CPO price dynamics. of expectations and not meeting demand, which in turn reflected on CPO price recovery, particularly during the As for prices, there was a period of uptrend reaching third and fourth quarters of 2020. an all-time high in mid-December 2020 with unusually high volatility in crude palm oil futures trading on the According to MPOB statistics, for the first 6 months into Bursa Malaysia Derivative market. But as expected, the Year 2021, CPO production is still trailing previous year by unprecedented prices were not sustainable, and it is about 7.6% or an equivalent of 687,000 mt in Malaysia. In forecasted that CPO prices are likely to still trade in the Sabah per se, it is registering a negative variance of 14.4%. range of RM3,200 to RM3,400 per mt on the average. This is probably due to weather related impacts from NURTURING SUSTAINABILITY 23 ANNUAL REPORT 2021
Palm oil production
Global palm oil production in 2020 was estimated to decline by almost 2.7 million mt from a year earlier. Although a recovery occurred in the third quarter of 2020, it could not compensate for the reduction of production in the first half of 2020. World consumption of palm oil suffered from the COVID-19 pandemic in consuming countries like India, China and many other countries, while higher soybean oil consumption due to the recovery of swine husbandry sector in China also led to lower demand for palm oil.
(‘000 T) 2016 2017 2018 2019 2020E 2021F Opening Stock 13,527 10,652 13,105 15,264 14,022 12,842 Production 60,057 69,638 74,680 76,670 74,020 78,500 Import 44,828 50,299 51,426 55,409 51,100 54,800 Export 44,393 51,099 52,205 54,737 50,940 54,900 Consumption 63,368 66,385 71,743 78,584 75,360 78,900 Ending Stock 10,652 13,105 15,264 14,022 12,842 12,342 Source: Oil World, 2021 A moderate increase in CPO production in 2021 is expected but the rate of increase will be lower than previous years as the effects of COVID-19 pandemic carry on into 2021. A La Nina phenomenon was seen taking place in first quarter of 2021 which brought heavy rainfall and flooding in some oil palm planting areas which affected harvesting activities and lowered the CPO output. The low beginning stocks of palm oil in 2021 will not be matched by production as demand for palm oil is expected to increase due to a combination of higher consumption requirements and the lower production of other oils such as rapeseed and sunflower oils.
Although there may be a growth in production in 2021, major challenges are ahead in the Malaysia and Indonesia palm oil industry due to a combination of unfavourable weather and shortage of labour especially in Malaysia. This will be further aggravated by the recent Movement Control Order imposed in Malaysia which indirectly affected palm oil planting and harvesting activities, on top of the bad weather conditions mentioned earlier. Furthermore, the limited expansion in planted area and also delays in replanting activities in both countries are expected to be other major factors leading to the slowdown in output growth.
Palm oil consumption Palm oil price
The expected increase in demand for oils and fats may not be met Malaysia CPO production in 2021 may increase by other vegetable oils and the world will still be dependent on palm slightly by 300,000 mt to 19.4 million mt while oil contribution. If production does not improve, an uptrend in palm exports are forecast to increase to 4.5 million oil prices may be seen again. Coupled with the Indonesian plans to mt leaving about 15.1 million mt for domestic continue with its B30 programme in 2021, the market could see a refining. As a result, there is a CPO supply shortage of palm oil available for the food industry. Although it is deficit of at least 500,000 mt and this supply expected that palm oil consumption in EU will decline slightly by 1.2 and demand scenario has been postulated to million mt due to a decline in palm oil use in their food sector, it create low monthly ending stocks for much should not impact consumption of palm oil in other parts of the world. of 2021, trending below 1.5 million mt per Demand for palm oil will also come from major palm oil consuming month. This appears to be a classic setting countries such as India, China, Pakistan, Africa and to a lesser extent for higher CPO prices for most parts of 2021. Europe and the Americas. In December 2020, the FCPO+3 price of India had very low palm oil opening stocks in 2021 and the recent palm oil climbed steadily reaching a high of reduction in palm oil import duties will result in higher demand RM3,850 per mt. The price of palm oil ended for palm oil as even at current prices, it is still lower than all other firm in December 2020 at RM3,621 per mtand competing oils. The recovery of economic activities in India, Pakistan there were heavy trading activities for CPO in the and Africa despite the COVID-19 pandemic will be a major factor BMD futures market. For the first half of 2021, in the rise in demand. In Europe, palm oil demand will stem from it is forecasted that palm oil price will be range the biodiesel producers in order to meet their respective biodiesel bound between RM3,500 per mt to RM3,850 per mandates. Widening price discount between palm, sunflower and mt while for the rest of the year prices would rapeseed oils, coupled with projected shortfall in sunflower production likely ease but remain above RM3,300 per mt as by almost 2 million mt are expected to render support for palm oil in production of palm oil recovers in the second half this EU market. Sunflower oil as biodiesel feedstock is forecast to of 2021. reduce from 600,000 mt to only 100,000 mt in 2021. Palm oil will be challenged to fill this gap since European national mandates such as (Source: MPOC, 2021) in France and Denmark are already poised to phase out palm biodiesel. 24 IJM PLANTATIONS BERHAD
MANAGEMENT DISCUSSION AND ANALYSIS
PALM OIL COMPETITIVENESS AND KEY FINANCIAL AND OPERATIONAL RISKS AFFECTING THE SUSTAINABILITY GROUP PERFORMANCE
The bullish palm oil price during the reporting financial year was influenced by an interplay of numerous contributory Fluctuations in CPO prices factors with CPO price soaring in parallel with gains in the other edible • CPO is a commodity. As such producers are “price takers” and oils especially the soybean complex, not “price makers”. crude oil prices and its biodiesel • The Group manages this risk by monitoring the price trends of linkage, pick-up in demand from major oils and fats as well as crude petroleum. importing countries against draw-down • In the Malaysian operations, the Group sells CPO using the in importers’ respective inventories, MPOB’s average price mechanism either on long term contracts market expectation of lower CPO or spot; as well as hedging through forward physical sales and/or production due to labour shortage and CPO pricing swap arrangements. In the Indonesian operations, weather impacts and forecast of La CPO is sold using mostly the monthly average tender price of a Nina weather. And all these intertwined state own entity, PT Kharisma Pemasaran Bersama Nusantara factors were set against the backdrop (‘PT KPBN’) in Dumai. of anticipated demand building up from the post COVID-19 pandemic.
With the growing population and the need for more food, reliance on high Weather Related ie. El Nino, La Nina yielding tropical crop like oil palm to address sustainable food security is • The Group continues to take proactive steps to locate additional essential. Removing palm oil from the and suitable sites to serve as supplementary water catchment supply chain will not help to address the ponds. increasing demand, especially when • In addition, existing catchment ponds are deepened at interval to palm oil also offers competitive prices meet the requirements of the FFB processing mills. vis-à-vis other edible oils and fats. Palm • Water canals are also desilted when needed and bunds are oil’s dominance can be expected to constructed for better water retention. increase globally and continue to be an attractive long-term choice commodity for both producers and consumers. However, the sustainability of the oil Shortage of skilled workers palm industry is very dependent on continuous improvements to improve and sustain high productivity, continued • Additional plantation areas are integrated with site-specific availability of skilled workers, in-field crop evacuation systems to increase productivity and to implementing best management address shortage of workers. practices, pursuing game changing • Good facilities and amenities are being provided to workers in innovations and technologies that are the operations. cost-effective while raising both the • The Group remains focused with its high-performance culture floor and ceiling on sustainability- initiatives by investing in its people, which include attracting and related assurance. However, the developing various flexible ways to retain skill and talent. ongoing debate relating to sustainability must be pursued objectively along with the appreciation on the importance and competitiveness of palm oil to ensure Volatility in Currency Exchange Rates adequate supply in the food equation for the world at present and the future. • Borrowings in the Group are substantially denominated in US Dollar and Japanese Yen. Exchange rate movements against the Ringgit and Rupiah have been volatile. The Group monitors closely these movements in addition to having restructured its borrowing facilities as appropriately needed. NURTURING SUSTAINABILITY 25 ANNUAL REPORT 2021
Financial REVIEW OF OPERATIONS
Financial Highlights
Revenue Profit/(Loss) Before Tax (RM’Mil) (RM’Mil)
1,000.00 935.69
800.00 739.13 300.00 272.13 600.00 200.00 400.00 100.00 200.00
- - 2021 2020 (50.47) For the financial year 2021, the Group posted the (100.00) highest ever revenue of RM935.69 million, which is an 2021 2020 increase of 26.6% over RM739.13 million achieved in 2020. The higher CPO prices coupled with the favorable currency movement of the Rupiah against the This record revenue was attributable mainly to higher US Dollar and Japanese Yen had propelled the Group to CPO prices and sales volume. achieve the highest ever profit before tax of RM272.13 million in FY2021.
Total Assets Shareholders’ Fund (RM’Bil) (RM’Bil)
2.40 2.39 2.00
1.44 2.35 1.50 1.19
2.30 2.29 1.00
2.25 0.50
2.20 - 2021 2020 2021 2020
The Group’s total assets remained at above RM2 billion The increase in shareholders’ fund is a result of: mark at the end of the financial year. 1. Current year net profit attributable to owners of the company of RM205.08 million; and 2. Strengthening of IDR against MYR that resulted in currency translation gain arising from the translation of the Group’s net investments in Indonesian entities amounting to RM61.72 million. 26 IJM PLANTATIONS BERHAD
MANAGEMENT DISCUSSION AND ANALYSIS
CPO Prices Realised
The uncertainties caused by the COVID-19 pandemic and lockdown measures introduced by governments across the world had caused jittery in the market resulted in a sharp decline in CPO price in first quarter of the financial year. CPO price was trading in the range of RM2,100 per mt in May 2020, a sharp decline from the RM3,100 per mt level seen in January 2020. Notwithstanding that Malaysian government designated oil palm as an essential sector and allowed to continue to operate with less operational disruptions, the border closures had severely impacted the supply of foreign workers, resulting in acute labour shortages in Malaysia, further impacted global production which was already dampened by the low biological crop cycle and capricious weather patterns. Whilst production was severely impacted, the returning of demand from key consuming countries to replenish their stockpiles in 2nd half of 2020, coupled with the push for the B30 Biodiesel programme by the Indonesian government set against the parallel gain in the other edible oils especially the soybean complex, the anticipated demand building up from post COVID-19 outbreak and forecast of La Nina weather, CPO prices had since staged a strong rally.
With the convergence of the above-mentioned price driver factors, the CPO price per metric tonne which was traded at around RM2,300 in April 2020 had moved up to RM3,600 by end of December 2020. It continued with the upward trajectory to above RM4,000 at the end of the financial year. This contributed to the higher average CPO price realised of RM2,648 per mt (FY2020: RM2,156 per mt). Average CPO price from its Malaysian operations increased to RM2,912 per mt (FY2020: RM2,269 per mt) whereas in its Indonesian operations, the CPO price increased to RM2,424 per mt (FY2020: RM2,052 per mt).
Returning to Shareholders
The Group is committed to the payment of annual dividends. The quantum of dividends will be determined after taking into account, inter alia, the level of available funds, the amount of retained earnings, capital expenditure commitments and other investment planning requirements. The adopted policy is deemed as a balanced approach between rewarding shareholders and maintaining reserves for future growth.
In respect of the financial year ended 31 March 2020, a single-tier interim dividend of 2 sen per share was paidon 18 August 2020 totaling RM 17.61 million.
For the financial year under review, the Directors declared a single tier interim dividend on 27 May 2021, amounting to 10 sen per share. The single tier interim dividend will be paid on 30 July 2021 to every member who was entitled to receive the dividend as at 5.00 p.m. on 14 July 2021. The Directors do not recommend the payment of any final dividend for the financial year ended 31 March 2021.
Share Performance 1.86 1.81 1.82 1.80 1.76 1.74 1.66 1.60 1.68 1.59 1.64 70,000 66,320 1.36 62,660 60,000 50,210 50,000 44,350 40,270 40,000 38,560 32,810 29,220 29,580 30,000 25,140
20,000 16,940 16,020
10,000
0 Apr’20 May’20 June’20 July’20 Aug’20 Sep’20 Oct’20 Nov’20 Dec’20 Jan’21 Feb’21 Mar’21
Monthly Volume Month End Price (RM) Traded Lot (100) NURTURING SUSTAINABILITY 27 ANNUAL REPORT 2021
OPERATIONAL REVIEW
Plantations Operations
Oil Palm Planted Area and Crop Production (Hectares) (MT) 1,061,772 1,064,678
50,000 976,395 47,275 47,268 1,000,000 932,950
45,000 862,435
40,000 800,000
35,000 32,223 29,731 30,000 28,259 600,000 25,053 25,000 22,067 21,881 20,000 400,000
15,000
10,000 8,772 7,669 7,094 7,881 200,000 6,529 6,597 6,128
5,000
0 0 2017 2018 2019 2020 2021
Planted Area - Planted Area - Planted Area - Own FFB production Immature (ha) Mature: Young (ha) Mature (ha)
Grabber system for crop evacuation 28 IJM PLANTATIONS BERHAD
MANAGEMENT DISCUSSION AND ANALYSIS
FFB Production (MT)
1,200,000 1,064,678 1,061,772 1,000,000 800,000 600,000 466,470 598,208 465,361 596,411 400,000 200,000 0
FY2021 FY2020
Group 1,064,678 1,061,772
Malaysian 466,470 465,361 Operations Indonesian 598,208 596,411 Operations
Crop Production
Despite the lagged effect from moisture stress on oil palm trees arisen from adverse dry weather conditions, and subsequent continuous high rainfall disrupting the Group’s operations in Indonesia, exacerbated by the lesser prime areas and on-going replanting activities in the Group’s Malaysian operations and challenging operating conditions due to the COVID-19 pandemic, the Group managed to sustained its production through optimum usage of resources for harvesting and crop evacuation, and meeting the nutrient replenishment in the manuring activities. Total crop production of the Group for the current financial year continued to surpassed the 1 million mt mark for the second consecutive year to close the year at 1,064,678 mt (FY2020: 1,061,772 mt).
By geographical segment, both FFB production from the Malaysian and Indonesian operations registered a slight growth to close the year at 466,470 mt of FFB (FY2020: 465,361 mt) and 598,208 mt of FFB (FY2020: 596,411 mt) respectively.
The Group achieved an average overall yield per ha of 19.3 mt per ha for the financial year, slightly lower than the average yield of 19.5 mt per ha achieved in the previous year. With lesser prime areas, the on-going replanting activities and constraints of labour availability, the Malaysian operations recorded FFB yield of 21.2 mt per ha (FY2020: 21.6 mt per ha) while the Indonesian operations recorded FFB yield of 18.1 mt per ha (FY2020: 18.2 mt per ha) after being affected by the extreme weather conditions. Replanting in Meliau Estate, Sabah NURTURING SUSTAINABILITY 29 ANNUAL REPORT 2021
Crop Processed (MT)
1,400,000 718,830 627,761 1,200,000
1,000,000 362,411 450,028 800,000
600,000 619,419 268,802 598,228 265,350 400,000 466,471 465,361
200,000 131,757 154,058 0 Own FFB Outside FBB Total Own FFB Outside FBB Total FY2021 FY2020
Malaysian Indonesian Group Malaysian Indonesian Group Operations Operations Total Operations Operations Total Own FFB 466,471 450,028 916,499 465,361 362,411 827,772 Outside FFB 131,757 268,802 400,559 154,058 265,350 419,408 Total 598,228 718,830 1,317,058 619,419 627,761 1,247,180
Crop Processed
The commencement of the Group’s third mill in the mt) of CPO and 27,209 mt (FY2020: 24,257 mt) of PK Indonesian operations towards the end of last financial were produced. Average OER and KER achieved in the year to cater for the crops from its North Kalimantan Indonesian operations were 21.2% (FY2020: 23.0%) and plantations had contributed to the overall increase in FFB 3.7% (FY2020: 3.9%) respectively. Oil extraction rate was processed by the Group. Total FFB processed in FY2021 affected by the extreme weather conditions and poor fruit increased by 5.6% to 1,317,058 mt (FY2020: 1,247,180 mt). setting. By geographical segment, FFB processed in the Group’s Malaysian operations during the year was 598,228 mt The kernel crushing plant in the Malaysian operations (FY2020: 619,419 mt), whereas the Indonesian operations processed 21,312 mt (FY2020: 28,358 mt) of palm kernel to processed 718,830 mt (FY2020: 627,761 mt). produce 9,942 mt (FY2020: 13,164 mt) of crude palm kernel oil (“CPKO”) and 10,507 mt (FY2020: 13,874 mt) of palm With this, a total of 122,572 mt (FY2020: 123,737 mt) of CPO kernel expellers (“PKE”). Average extraction rate for CPKO and 29,670 mt (FY2020: 30,950 mt) of PK were produced and PKE were 46.6% (FY2020: 46.4%) and 49.3% (FY2020: by the Malaysian operations. Average oil extraction rate 48.9%) respectively. Whereas in the Indonesian operations, (“OER”) and kernel extraction rate (“KER”) achieved by the kernel crushing plant processed 21,310 mt (FY2020: the Malaysian operations were 20.5% (FY2020: 20.0%) and 21,006 mt) of palm kernels to produce 8,560 mt (FY2020: 5.0% (FY2020: 5.0%) respectively. As for the Indonesian 8,561 mt) and 12,528 mt (FY2020: 12,063 mt) of CPKO and operations, a total of 152,339 mt (FY2020: 144,126 PKE respectively. 30 IJM PLANTATIONS BERHAD
MANAGEMENT DISCUSSION AND ANALYSIS
OIL YIELD PRODUCTIVITY CAPITAL EXPENDITURE
Despite the lesser prime areas, ongoing The Group’s capital expenditure of RM71.72 million (FY2020: RM99.79 replanting programme and challenging million) consisted mainly of immature planting expenditure and the cost operating conditions due to the pandemic, to complete the third palm oil mill in the Indonesian operations, and productivity based on oil yield realised for the related infrastructure establishment and replanting expenditure in the Malaysian operations was sustained at 4.3 Malaysian operations. mt per ha. As for the Indonesian operations, the lagged effect from moisture strain RESEARCH AND DEVELOPMENT arisen from adverse dry weather conditions and subsequent continuous high rainfall The Group’s Quality, Training and Research Centre (“QTRC”) located in experienced in most of the Group’s operation Sandakan with its sub-stations in Sugut and Kutai Timur in Kalimantan sites resulted in the lower oil yield of 3.8 is committed to developing, applying and transferring relevant mt (2020: 4.2 mt) per ha. Notwithstanding knowledge, research findings and technologies to improve plantation the above, the Group’s oil yield realised in yields and milling processes. The Group aims to develop high yielding 2020 were noted to be 26% higher than the planting materials which will enable it to achieve superior oil yields Malaysian national oil yield average of 3.2 mt from existing planted area. QTRC also provides in-house agronomy (2020: 3.5 mt) per ha over the same period. and advisory services along with the promotion of integrated pest For the coming year, the Group’s oil yield was management (“IPM”). expected to improve further with more areas moving towards prime age. The QTRC sub-stations in Sugut and Kutai Timur regions provide the necessary agro-technical support for the Group’s estates in that REPLANTING AND NEW PLANTING region. They also render support to the Group’s various sustainability initiatives including engaging in various research project collaborations. A total of 786 ha were replanted in the In addition, QTRC also engages with visiting stakeholders as well Malaysian operations during the year as sharing technical know-how with smallholders and surrounding compared to 947 ha in FY2020. The replanting communities as part of the Group’s continued out-reach programmes. programme that was extended to the Sugut region during the financial year was affected The Group’s long-term oil palm breeding, selection and progeny testing by the movement control order constraints of programme would enable it to improve the oil palm planting materials the pandemic despite the Group maintained to meet the present and future requirements to ensure better yields its policy to pursue with replanting both in and other desired oil palm characteristics. The seed production unit in times of low as well as high palm product QTRC is able to produce over 1.5 million DxP seeds annually derived from prices in order to achieve the desired oil palm Deli Dura and AVROS pedigrees. The seed production unit was accredited age profile for the Group. Failure to implement with SIRIM’s MS157:2005 certification. Selected mother palms from the this critical aspect of plantation management genetic blocks located in Sijas Estate had also been certified by SIRIM will inevitably lead to stagnating yields and and were being used for commercial seed production. For the last declining crop production in the future. 17 years, the entire oil palm planting material requirements in the Group’s Malaysian operations including in all the replanting programme, The replanting continued to be carried out in as well as the Group’s permissible requirement in the Indonesian accordance with the environmentally friendly operations were all planted with IJM DxP planting materials. “zero burning policy” where old palm stands are felled, chipped and left to decompose Fertiliser recommendations carried out by the Group are based on soil at site. Other best management practices and foliar analysis coupled with technical observations by competent pertaining to replanting were also carried out agronomists during field visits. The recommendations prepared by in accordance with the Group’s agricultural the agronomists and the team in QTRC are part of the agronomic and policy. Only the Group’s internally produced technical advisory services for the Group’s estates. QTRC staff were IJM DxP planting materials which have also responsible for estate field audits, pest and disease census and demonstrated early and high yields along with reviewing the quality grading of crops received by the palm oil mills. other desirable attributes were used in the GPS mapping services are also under the ambit of QTRC. In addition, replanting. QTRC also acted as a training center for many agronomic and plantation management programmes for the Group’s employees. All of the plantable lands in the Malaysian operations have been planted. There was On thrust for innovation, the Group, in collaboration with MPOB has no further land-bank for expansion in come up with a breakthrough technology for CPO washing. the Malaysian operations. Similarly, the The technology will address the removal of chlorine levels in CPO Indonesian operations reached the tail end of which is a precursor to a food process contaminant known above its development project. Aside little pockets of as 3-monochloropropane diol ester (3-MCPDE). Through appointed land, there are no further land-bank available vendors, the Group will be looking forward to expedite the partnership for larger scale planting. with the palm oil industry in offering this alternative technology which is deemed practical and with enhanced cost effectiveness in both capital NURTURING SUSTAINABILITY 31 ANNUAL REPORT 2021
and operational expenditures. The technology entails the use of a patented innovative palm oil settling tank (POS Tank) as an alternative to the separators currently used in the conventional technology to carry out the CPO washing and achieving the desired results of low chlorine levels with minimal oil losses.
PERFORMANCE OUTLOOK
No doubt the ongoing vaccination program will provide a shot in the arm to many economies and industries around the world, the Group nevertheless maintains a cautious outlook for FY2022. Having seen the challenges caused by the pandemic up till today and the emergence of the 2nd and 3rd waves in many countries aside the detection of new variants, it remains uncertain whether the global economy will be able to recover to pre-pandemic level in the coming year.
At the home front, the Malaysian Government continue to pursue different phases of movement controls including suspension of recruitment of guest workers from source Oil palm fruitlets countries, and as at the date of reporting there is no sign that the deferment will be lifted soon to address the shortage of workers in the industry. This is expected The construction work of a refinery in East Kalimantan to continue to impact the Group’s Malaysian operations for which the Group had 20% stake with the balance which is dependent on guest workers, especially the 80% owned by KL-Kepong Plantation Holdings Sdn Bhd prerequisite for tall palm skilled harvesters. have started and is scheduled to be operational in FY2023. With the commencement of the refinery operations in Looking ahead, the current strong CPO prices are expected FY2023, the Group will be able to capture better value to moderate in the second half of 2021 as production for its palm products produced from its East Kalimantan recover with the normalisation of weather conditions. operations. Notwithstanding this, the Group remains positive on the palm oil industry’s long run outlook given the continuous Premised on these factors and barring any volatility in growth in global population and household incomes which the foreign exchange rates, the Group is optimistic of a will continue to drive and sustain the demand of palm oil favourable financial performance for the year ahead. given its unrivalled versatility as a superior resource for both food and non-food applications. ACKNOWLEDGEMENT
Though the lingering effects of adverse weather conditions The Group wish to take the opportunity to record across Malaysia and Indonesia may still affect crop our sincere appreciation to Mr Boey Tak Kong who production, the Group anticipates a higher FFB production resigned as Independent Non-Executive Director and for FY2022, boosted by a better age profile in its Indonesian Chairman of the Audit Committee on 21 September 2020 operations. As for the Malaysian operations, crop and Tan Sri Dato’ Tan Boon Seng @ Krishnan who resigned as production is expected to be moderated by the on-going Non-Executive Director on 7 April 2021, for their dedication replanting activities. and valuable contribution to the Group.
Meanwhile, the Group will continue its dedicated focus The Group also wish to welcome Ms Shirley Goh who on manuring, harvesting and fruits evacuation as well as was appointed as Independent Non-Executive Director increased mechanisation to achieve greater operational and Chairman of the Audit Committee on 22 September efficiencies and drive performance to a higher level. 2020 and Mr Velayuthan A/L Tan Kim Song who was The Group is confident that with the continuous appointed as Non-Executive Director on 7 April 2021. improvements in productivity and implementation of The Board is confident that their wealth of experience best management practices together with cost effective would benefit both the Board and the Group. strategies, it would be able ride out the challenges ahead. The game plan of the Group is to leverage on operational excellence throughout the supply chain to realise and JOSEPH TEK CHOON YEE sustain productivity and achieve cost effectiveness while remaining true to its goal to create and nurture a Chief Executive Officer & Managing Director sustainable future. 32 IJM PLANTATIONS BERHAD 5-YEAR GROUP PLANTATION STATISTICS
Unit 2021 2020 2019 20181 20172 ESTATES Oil Palm Area Malaysian Operations Mature (> 20 Years) hectare 6,584 3,326 1,354 1,772 1,881 Mature – Prime (8-20 Years) hectare 12,351 15,536 17,318 17,776 18,629 Mature – Young (4-7 Years) hectare 3,073 2,714 3,316 3,046 2,636 Immature (1-3 Years) hectare 3,006 3,322 2,793 2,556 1,975 Total hectare 25,014 24,898 24,781 25,150 25,121 Indonesian Operations Mature – Prime (8-20 Years) hectare 28,333 28,413 13,551 5,505 1,557 Mature – Young (4-7 Years) hectare 4,808 4,380 18,565 25,213 27,095 Immature (1-3 Years) hectare 3,122 3,275 3,736 5,113 6,797 Total hectare 36,263 36,068 35,852 35,831 35,449 Total Planted Area hectare 61,277 60,966 60,633 60,981 60,570 FFB Production Malaysia mt 466,470 465,361 442,502 470,947 464,019 Indonesia mt 598,208 596,411 533,893 462,003 398,416 Group FFB Production mt 1,064,678 1,061,772 976,395 932,950 862,435 Yield Per Mature Hectare Malaysia mt 21.2 21.6 20.1 20.8 20.1 Indonesia mt 18.1 18.2 16.6 15.0 13.9 Group mt 19.3 19.5 18.1 17.5 16.6 MILLS FFB Processed Malaysian Operations Own FFB mt 466,471 465,361 442,502 470,947 464,019 Outside FFB mt 131,757 154,058 173,889 227,667 195,606 Total mt 598,228 619,419 616,391 698,614 659,625 FFB Processed Indonesian Operations Own FFB mt 450,028 362,411 299,092 282,454 273,966 Outside FFB mt 268,802 265,350 127,516 114,527 76,520 Total mt 718,830 627,761 426,608 396,981 350,486 Total FFB processed mt 1,317,058 1,247,180 1,042,999 1,095,595 1,010,111 Palm Kernel Processed Malaysian Operations Own Palm Kernel mt 21,312 28,358 25,663 33,531 32,202 Indonesian Operations Own Palm Kernel mt 21,310 21,006 17,837 15,423 12,394 Total Palm Kernel Processed mt 42,622 49,364 43,500 48,954 44,596 Production Malaysian Operations Crude Palm Oil mt 122,572 123,737 122,973 140,496 135,275 Palm Kernel mt 29,670 30,950 32,502 36,303 32,672 Crude Palm Kernel Oil mt 9,942 13,164 11,757 14,810 14,669 Palm Kernel Expeller mt 10,507 13,874 12,621 16,447 15,876 Indonesian Operations Crude Palm Oil mt 152,339 144,126 101,192 89,113 76,405 Palm Kernel mt 27,209 24,257 18,455 15,519 13,676 Crude Palm Kernel Oil mt 8,560 8,561 7,169 5,904 5,206 Palm Kernel Expeller mt 12,528 12,063 10,331 9,433 7,187 Total Group Crude Palm Oil mt 274,911 267,863 224,165 229,609 211,680 Palm Kernel mt 56,879 55,207 50,957 51,822 46,348 Crude Palm Kernel Oil mt 18,502 21,725 18,926 20,774 19,875 Palm Kernel Expeller mt 23,035 25,937 22,952 25,880 23,063 NURTURING SUSTAINABILITY 33 ANNUAL REPORT 2021
Unit 2021 2020 2019 20181 20172 Extraction Rates Malaysian Operations Oil Extraction Rates % 20.5 20.0 20.0 20.1 20.5 Kernel Extraction Rates % 5.0 5.0 5.3 5.2 5.0 Crude Palm Kernel Oil Extraction Rates % 46.6 46.4 45.8 44.2 45.6 Indonesian Operations Oil Extraction Rates % 21.2 23.0 23.7 22.4 21.8 Kernel Extraction Rates % 3.7 3.9 4.3 3.9 3.9 Crude Palm Kernel Oil Extraction Rates % 40.2 40.8 39.8 38.3 42.0 Group Oil Extraction Rates % 20.8 21.5 21.5 21.0 21.0 Kernel Extraction Rates % 4.4 4.4 4.9 4.7 4.6 Crude Palm Kernel Oil Extraction Rates % 43.4 44.0 43.3 42.3 44.6 Oil Yield Malaysian Operations mt/hectare 4.3 4.3 4.0 4.2 4.1 Indonesian Operations mt/hectare 3.8 4.2 3.9 3.4 3.0 Group mt/hectare 4.0 4.2 3.9 3.7 3.5 AVERAGE SELLING PRICES Malaysian Operations Crude Palm Oil RM/mt 2,912 2,269 2,125 2,639 2,753 Palm Kernel RM/mt 1,548 1,152 1,336 1,810 2,860 Palm Kernel Oil RM/mt 3,771 2,668 3,168 4,812 5,830 Palm Kernel Expeller RM/mt 500 382 399 385 353 Indonesian Operations Crude Palm Oil RM/mt 2,424 2,052 1,846 2,380 2,589 Palm Kernel RM/mt 1,185 848 - - 1,922 Palm Kernel Oil RM/mt 2,947 2,121 2,712 4,575 5,473 Palm Kernel Expeller RM/mt 108 99 98 100 101 Fresh Fruits Bunches RM/mt 541 408 381 516 509 FINANCIAL RESULTS Revenue RM’000 935,693 739,133 630,900 747,217 753,711 Profit From Operations RM’000 290,056 10,138 6,940 97,326 192,335 Finance Cost RM’000 (18,272) (61,263) (50,744) (46,556) (23,821) Share of Profits of an associate RM’000 345 653 497 - - Profit/(Loss) Before Tax RM’000 272,129 (50,472) (43,307) 50,770 168,514 Earnings Before Interest, Tax, Depreciation & Amortisation (EBITDA) RM’000 407,320 122,655 118,989 218,910 258,366 Income Tax Expense RM’000 (57,122) (22,507) (922) (26,978) (51,976) Non-Controlling Interests RM’000 (9,924) 9,556 7,885 4,070 (1,458) Net Profit/(Loss) attributable to Owners of the Company RM’000 205,083 (63,423) (36,344) 27,862 115,080 Shareholders’ Fund RM’000 1,436,947 1,188,736 1,327,757 1,389,480 1,784,968 Total Assets RM’000 2,387,143 2,294,890 2,282,493 2,297,195 2,977,083 Earnings Per Share – Basic Sen 23.29 (7.20) (4.13) 3.16 13.07 Earnings Per Share – Diluted Sen 23.29 (7.20) (4.13) 3.16 13.07 Net Tangible Assets Per Share RM 1.63 1.35 1.51 1.58 2.03 Share price High RM 2.05 2.48 2.61 3.23 3.74 Low RM 1.26 1.01 1.30 2.20 3.14 Closing RM 1.68 1.44 1.57 2.20 3.22
Notes: 1. Restated following the first-time adoption of the Malaysian Financial Reporting Standards (“MFRS”) framework. 2. The comparatives have not been restated for the first-time adoption of MFRS framework and reclassifcations made in 2019. 34 IJM PLANTATIONS BERHAD Corporate Governance Overview Statement
The Board of Directors (“the Board”) believes that a strong and robust corporate governance is essential in enhancing shareholders’ value and for long-term sustainability and growth, and is committed to ensuring that the highest standards of corporate governance are practised throughout IJM Plantations Berhad and its subsidiaries (“the Group”).
The Board is pleased to present this overview statement which sets out a summary of the Group’s corporate governance practices during the financial year ended 31 March 2021 (“FY2021”) in accordance with the Malaysian Code on Corporate Governance (“the Code”). This statement is to be read together with the Corporate Governance Report 2021 (“CG Report”) of the Company as the application of each practice as set out in the Code is disclosed in the CG Report. The CG Report is available on the Company’s website www.ijmplantations.com and Bursa Malaysia’s website.
PRINCIPLE A: Group’s business to ensure that the Group remains BOARD LEADERSHIP AND EFFECTIVENESS resilient and was able to deliver sustainable value despite the challenging operating environment I. board Responsibilities arising from the pandemic.
1. board Duties and Responsibilities Management had conducted a Strategy Updates Session (“Session”) in January 2021 to update the The Board is collectively responsible for the Board on the short-term and long-term business long-term success of the Group and the delivery of strategy plans. The on-going strategic plantation sustainable value to the stakeholders. The Board initiatives of the Group were towards innovation, sets the Group’s overall strategic plans, reviews sustainability and revenue generation which business performance, oversees the proper conduct included amongst others, plantation mechanisation of business, reviews succession planning of key and digitalisation, and improved mill utilisation. management, ensures proper risk management The sustainability issue on climate risk was and internal control, and effective shareholders’ also discussed. Constructive views and valuable communication; whilst Management is accountable insights were also shared at the Session. for the execution of the expressed policies and attainment of the Group’s corporate objectives and At the scheduled Board meeting in February of operating goals. The demarcation complements each year, the Board reviews the Budget of the and reinforces the supervisory role of the Board and Group which includes comparing the actual results operational goals. against budgets and considering the new budget and proposed capital expenditure requirements. The Board is always guided by the Board Charter The Board and Management deliberate on the which outlines the duties and responsibilities and proposed budgets and debate the rationale and matters reserved for the Board in discharging its assumptions used for the Budget. fiduciary duties. The Board Charter is reviewed by the Board from time to time to ensure that it In order to assist in the execution of the Board’s continues to remain relevant and appropriate. responsibilities for the Group, certain functions During FY2021, the Board reviewed the Board have been delegated to Board Committees. Clear Charter and had included the duty of the Board and defined Terms of Reference have been given to oversee and evaluate the implementation to these Board Committees to enable them to and effectiveness of an anti-bribery and operate effectively. The Board Committees are corruption system of the Group. The details of authorised by the Board to deal with and to the Board Charter are available for reference at deliberate on matters delegated to them within their www.ijmplantations.com. Terms of Reference. The Chair of the respective Board Committees report to the Board on the Since the emergence of the Covid-19 pandemic, outcome of their Board Committee meetings and the Board has been addressing and monitoring the such reports are included in the Board papers. challenges and impacts of the pandemic on the NURTURING SUSTAINABILITY 35 ANNUAL REPORT 2021
The governance structure of the Board is as follows:-
BOARD OF DIRECTORS
Nomination & Securities AUDIT COMPANY Remuneration & Options COMMITTEE SECRETARY Committee Committee
Risk Management Internal Committee Audit
2. roles and Responsibilities of the Chairman and undertakes continuous professional development the Chief Executive Officer & Managing Director and her details of trainings/seminars attended are available for reference at www.ijmplantations.com. The roles of the Independent Non-Executive Chairman and the Chief Executive Officer & 4. board and Board Committees Meetings Managing Director (“CEO&MD”) are distinct and separate, and the positions are held by different All Directors are provided with the performance individuals, in order to ensure that there is a and progress reports on a timely basis prior to balance of power and authority. The responsibilities the scheduled Board meetings. Board papers are of the Independent Non-Executive Chairman and distributed electronically and generally at least five the CEO&MD are set out in the Board Charter. (5) business days in advance to ensure Directors are well informed and have the opportunity to 3. Company Secretary seek additional information, and are able to obtain further clarification from the Company Secretary/ The Board is supported by a qualified and competent Management, should such a need arise. The Company Secretary to provide sound governance Company Secretary always ensures the recording advice, ensure adherence to Board policies, of proper minutes of all deliberations and decisions rules and procedures, and advocate adoption of of the Board and Board Committees, including corporate governance best practices. The profile any dissenting views and abstentions by any of the Company Secretary is provided on page 15. director from voting or deliberating on a particular The Directors always have access to the advice matter. For cybersecurity purpose, all meeting and services of the Company Secretary especially materials are kept in a secure and collaborative relating to procedural and regulatory requirements board portal and the Directors are granted access such as company and securities laws and to the meeting materials via respective user regulations, governance matters and Main Market identities and passwords. Listing Requirements. The Company Secretary 36 IJM PLANTATIONS BERHAD Corporate Governance Overview Statement
Board meetings (including Board Committees’ an indication of time that will be spent on the new meetings) are scheduled in advance prior to the appointments. In addition, assurances are given new calendar year, to enable the Directors to plan by the Directors that their new appointments will ahead and coordinate their respective schedules not affect their commitment and responsibilities and/or events. The Board conducts at least four (4) as Directors of the Company. In the event that the scheduled meetings annually, with additional Chairman has any new directorship or significant meetings convened as and when necessary. commitments outside the Company, he will also However, informal meetings and consultations are notify the Board. All Directors of the Company do frequently and freely held to share expertise and not hold more than five (5) directorships each in experiences. Directors are also invited to attend public listed companies. the Board Committees’ meetings, where deemed necessary. During FY2021, five (5) Board meetings During the annual Board evaluation, each Director were held. was assessed whether he/she was able to devote adequate time and attention for Board meetings, The attendance record of each Director is as Board briefings, Board Committee meetings and follows:- activities of the Company. Overall, the Board was satisfied with the commitment of all members Number of Percentage of the Board and the time contributed by each of Meetings them. The time commitment of the Directors was Attended demonstrated by the attendance and time spent at Executive Directors the Board and Board Committee meetings during FY2021. Joseph Tek Choon Yee 5 / 5 100% 5. Code of Conduct and Ethics Purushothaman A/L 5 / 5 100% Kumaran The Board is committed to conducting its business in a legal and professional manner, with the Independent Non-Executive Directors highest standard of integrity and ethical values, Pushpanathan A/L S. 5 / 5 100% and has adopted the Code of Conduct and Ethics A. Kanagarayar for Employees (“CCEE”) which applies to all Directors and employees. The CCEE covers the Fatimah Binti 5 / 5 100% areas of workplace culture and environment, Merican company records and assets, conflicts of interest, Datuk Dr. Choo Yuen 5 / 5 100% anti-bribery and corruption, gifts, hospitality and May entertainment, insider trading, money laundering, fraud and so forth. Shirley Goh 3 / 3 100% (appointed on 22 The Board also places emphasis on the business September 2020) ethics and conduct of third parties who have dealings Boey Tak Kong 1 / 2 50% or transactions with the Group and has adopted the (resigned on 21 Code of Business Conduct for Third Parties (“CBC September 2020) for 3rd Parties”) which applies to all persons or entities who provide work, goods and services or act Non-Executive Directors for or on behalf of the Group. The areas covered by Liew Hau Seng 5 / 5 100% the CBC for 3rd Parties include but are not limited to the company’s assets and information, dealing Tan Sri Dato’ 4*/ 5 100% with customers and media, conflicts of interest, Tan Boon Seng @ Krishnan health, safety and environment (HSE), anti-bribery (resigned on 7 April and corruption, gifts, hospitality and entertainment. 2021) As part of the Company’s commitment against all * Abstained from participating in one (1) of the Board forms of bribery and corruption, the anti-bribery meetings and corruption system (“ABCS”) established by the Company has consolidated various policies In fostering the commitment of the Board that and processes in compliance with anti-bribery and the Directors devote sufficient time to carry out corruption laws. The Anti-Bribery and Corruption their responsibilities, the Directors are required Policy (“ABC Policy”) of the Company forms part to notify the Chairman before accepting any new of the ABCS and aims to set out the parameters directorships and such notifications shall include including the main principles, policies and NURTURING SUSTAINABILITY 37 ANNUAL REPORT 2021
guidelines in relation to anti-bribery and corruption. shareholders, other relevant stakeholders and the The details of the ABCS of the Company are set out community in which the Group conducts its business. in the Statement on Risk Management and Internal Control. The composition and size of the Board is reviewed from time to time to ensure its appropriateness and The CCEE, CBC for 3rd Parties and ABC Policy are effectiveness. The profile of each Director is presented available for reference at www.ijmplantations.com. on pages 10 to 14.
6. Whistleblowing Policy 1. Independence
The Board encourages employees and associates The Independent Non-Executive Directors play a to report incidences of suspected and/or real crucial role of bringing objectivity to the decisions misconduct, wrongdoings, corruption and instances made by the Board. They provide independent of fraud, waste, and/or abuse involving the judgement, experience and objectivity without resources of the Group. The Whistleblowing Policy being subordinated to operational considerations. adopted by the Company provides and facilitates They help to ensure that the interests of all a structured mechanism for any employee and stakeholders are taken into account and that the associate to make disclosures of alleged improper relevant issues are subjected to objective and conduct (whistleblowing) to the relevant authorities impartial consideration by the Board. in good faith. The Whistleblowing Policy is posted on the Company’s website at www.ijmplantations. To-date, none of the present independent directors com for ease of access for reporting by employees, of the Company have exceeded the nine (9) associates and third parties of the Group. years tenure as recommended under the Code. The retention of independent directors after 7. Sustainability serving a cumulative term of nine (9) years is subject to shareholders’ approval in line with the The Board always ensures that sustainability is recommendation of the Code. part and parcel of the business strategy of the Group and believes that meeting the expectations 2. board Diversity of the stakeholders is not only the right thing to do but also critical for the long-term success of The Directors have a diverse set of skills, the Group. The Board had adopted a sustainability experience and knowledge necessary to govern governance framework that defines and guides the Group. The Directors are professionals in the the Group towards impact-focused targets. The fields of agriculture, audit, finance, accounting, details of the sustainability initiatives of the Group engineering, management and information are set out in the Sustainability Report. technology. Together, they bring a wide range of competencies, capabilities, technical skills and II. board Composition relevant experiences to support the needs of the Group to make it one of the foremost plantation The Board comprises 50% Independent Directors. Six companies in the country. (6) of the eight (8) Board members are Non-Executive Directors and among the Non-Executive Directors, The Company currently has three (3) women four (4) are Independent. The Chairman is one (1) of directors on its Board and had met the the Independent Non-Executive Directors. 30% women Directors requirement during the FY2021. The Board Diversity Policy of Puan Fatimah Binti Merican is the Senior Independent the Company is available for reference at Non-Executive Director to whom queries or concerns www.ijmplantations.com. relating to the Group may be conveyed by shareholders by way of writing to the Company’s registered address 3. Nomination & Remuneration Committee or electronic mail to [email protected] or contact via Tel: +603-79858131. The Nomination & Remuneration Committee (“NRC”) which was established on 26 April 2003, The balance between Independent Non-Executive, comprises exclusively of Non-Executive Directors Non-Executive and Executive Directors, together with a majority of them being Independent Directors. with the support from Management, is to ensure that Puan Fatimah Binti Merican is the Chair of the NRC, there is an effective and fair representation for the and the other members are Mr Pushpanathan shareholders, including minority shareholders. It A/L S. A. Kanagarayar and Mr Liew Hau Seng. further ensures that issues of strategy, performance The terms of reference of the NRC are available for and resources are fully addressed and investigated reference at www.ijmplantations.com. to take into account the long-term interests of 38 IJM PLANTATIONS BERHAD Corporate Governance Overview Statement
The activities of the NRC during FY2021 included Assessments and Assessments of Independence the following:- of Independent Directors (collectively referred to as “the Assessments”). Based on the results of the (i) review of the Balanced Scorecard of the Assessments, the NRC and the Board were satisfied CEO&MD and the Group; with the overall performance and effectiveness (ii) review of the salaries, bonuses & incentives of the Board. The Assessment also revealed that for senior management of the Group; the service of a director with field experience in plantation management or with planter/agronomist (iii) assessment and evaluation of the background is critical and Mr Velayuthan A/L effectiveness of the Board and individual Tan Kim Song was appointed to the Board on Directors through the annual Board 7 April 2021. Another area of concern revealed evaluations (including the CEO&MD was the succession planning for key management and the independence of Independent positions and this is currently being addressed by Non-Executive Directors); the NRC and Management. (iv) assessment and evaluation of the effectiveness of the Audit Committee and The Board also undertook an evaluation on the individual Committee members through Audit Committee and NRC facilitated by the the annual Audit Committee evaluations; independent expert in order to review their performance and determine whether the Board (v) assessment and evaluation of the Committees had carried out their duties in effectiveness of the NRC; accordance with their Terms of Reference. The (vi) review of the re-election of Directors at the Board was satisfied with the performance and Annual General Meeting (“AGM”); effectiveness of both the Board Committees. (vii) review of the Directors’ fees and benefits In view of the appropriate level of knowledge, payable to Non-Executive Directors; skills, experience and commitment of the Audit Committee members being critical to the Audit (viii) review of the enhancement of the Board Committee’s ability to discharge its responsibilities Evaluation process for Board and Board effectively, an assessment of the Audit Committee Committees Assessments with the members (self & peers) was also carried out assistance of an independent expert; during the financial year. (ix) review of the Board and Board Committees composition; and The NRC had reviewed and assessed the performance of the Directors who are subject for (x) propose the appointment of new Directors. re-election through the Self & Peer Assessments. The NRC was satisfied with their performance All recommendations of the NRC are subject to and are of the view that their continued service the endorsement of the Board. would benefit the Company and its stakeholders. The NRC meets as required. Two (2) meetings 5. Directors’ Training were held during FY2021 and the attendance record of each member of the NRC is as follows: During the financial year, all the Directors have attended various relevant in-house and external Number of Percentage training programmes, workshops, seminars, Meetings briefings and/or conferences. The trainings Attended programmes attended by the Directors were Fatimah Binti 2/2 100% related to human rights, cybersecurity, anti- Merican money laundering compliance, economics, climate change, anti-corruption, sustainability, finance and Pushpanathan 2/2 100% industry knowledge. The Board has undertaken an A/L S. A. assessment of the training needs of each Director Kanagarayar through the Self & Peer Assessment during FY2021.
Liew Hau Seng 2/2 100% The details of the training programmes of each of the Directors of the Company are available for 4. board and Board Committee Evaluation reference at www.ijmplantations.com.
The Board undertook a formal and rigorous Where possible and when the opportunity arises, annual evaluation of its own performance, Board visits will be organised to locations within comprising the Board as a whole and that of the the Group’s operating businesses to enable the Individual Directors for FY2021 via an independent Directors to obtain a better perspective of the expert. The Board evaluation comprises a Board businesses and enhance their understanding of the Assessment by Individual Directors, Self & Peer Group’s operations. NURTURING SUSTAINABILITY 39 ANNUAL REPORT 2021
III. Remuneration
1. remuneration Policy and Procedures
The Company supports levels of remuneration and external inputs before presenting it to the NRC and compensation necessary to attract, retain and for approval. The NRC reviews the remuneration motivate quality people required to lead, manage and of Non-Executive Directors, Executive Directors serve the Company in a competitive environment. and senior management in the month of May The appropriate levels of remuneration and annually whereby the NRC will consider various compensation are essential to enhance the factors including the performance of the Group, long-term interests of the stakeholders and individual performance, duties, responsibilities shareholders. and commitments of the Directors and senior management. Upon the review by the NRC, The Remuneration Policy of the Company provides the appropriate recommendations will be clear and guiding principles for determining the made to the Board for approval. The Board will remuneration of the Board and senior management consider and, if deemed appropriate, approve the and to align their interests with the interests of recommended remuneration for the Executive shareholders and with the business strategies of Directors and senior management. As for the the Group. The Policy is available for reference at remuneration of the Non-Executive Directors, www.ijmplantations.com. upon the endorsement of the recommendation by the NRC, the Board will propose the remuneration The annual remuneration review takes place in April for approval by the shareholders at the following each year. The remuneration of the Group will be AGM. reviewed by the CEO&MD with the relevant internal
2. Directors’ Remuneration
The details of the remuneration of Directors for the FY2021 are as follows:
A. The Directors’ total remuneration consists of different components as shown in the table below:
Bonuses, Incentives Benefits Salaries Fees & Others -in-kind Total RM’000 RM’000 RM’000 RM’000 RM’000 Executive Directors 1,817 - 688 57 2,562 Non-Executive Directors - 814 50* - 864 Total 1,817 814 738 57 3,426
* Meeting allowances paid/payable to the Non-Executive Directors for Board and Board Committee meetings attended during the FY2021.
B. Aggregate remuneration of each Director:
RM’000 Executive Directors Joseph Tek Choon Yee 1,319 Purushothaman A/L Kumaran 1,243 Non-Executive Directors Pushpanathan A/L S. A. Kanagarayar 237 Fatimah Binti Merican 154 Datuk Dr. Choo Yuen May 130 Liew Hau Seng 111 Shirley Goh (appointed on 22 September 2020) 74 Boey Tak Kong (resigned on 21 September 2020) 66 Tan Sri Dato’ Tan Boon Seng @ Krishnan (resigned on 7 April 2021) 92 Total 3,426 40 IJM PLANTATIONS BERHAD Corporate Governance Overview Statement
PRINCIPLE B: 3. Related Party Transactions EFFECTIVE AUDIT AND RISK MANAGEMENT Related party transactions of the Group for I. Audit Committee FY2021 are disclosed in Note 33 to the Financial Statements. Except for those disclosed in Note 33 1. Composition of Audit Committee to the Financial Statements, there were no material contracts of the Group involving Directors and The Audit Committee comprises entirely of major shareholders during the reporting period. Independent Non-Executive Directors. The Chair of the Audit Committee, Ms Shirley Goh is a Member The Audit Committee had reviewed the related party of the Malaysian Institute of Certified Public transactions that arose within the Group to ensure Accountants (MICPA) and a Chartered Accountant that the transactions were fair and reasonable, not of the Malaysian Institute of Accountants (MIA). detrimental to the minority shareholders and were She was appointed as the Chair of the Audit in the best interests of the Company. Committee on 22 September 2020 in place of Mr Boey Tak Kong who had resigned. She is not the 4. Directors’ Responsibility Statement Chair of the Board. The other members of the The Companies Act 2016 (“the Act”) requires the Audit Committee are Mr Pushpanathan A/L S. A. Directors to cause the preparation of the financial Kanagarayar, Datuk Dr. Choo Yuen May and Puan statements for each financial year in accordance Fatimah Binti Merican. with the requirements of the Act and applicable 2. relationship with the External Auditors approved accounting standards to give a true and fair view of the financial position of the Group and Through the Audit Committee, the Board has a of the Company at the end of the financial year and direct relationship with the external auditors. of their financial performance and their cash flows The role of the Audit Committee in relation to the for the financial year then ended. Where there are external auditors is set out on pages 42 to 46. new accounting standards or policies that become The external auditors were invited and had attended effective during the year, the impact of adoption of all the Audit Committee meetings and AGM during these new standards would be stated in the notes to the financial year. the financial statements, accordingly.
The Audit Committee (together with the Chief The Directors have ensured that Management, in Financial Officer and Chief Audit Executive) had preparing the financial statements: undertaken an assessment on the suitability of the external auditors for the financial year pursuant to • adopted appropriate accounting policies which the External Auditors Policy, which has outlined were consistently applied; the guidelines and procedures for the assessment • made judgments and used estimates that are and monitoring of external auditors. There were no reasonable under the circumstances; major concerns from the results of the assessment of the External Auditors. The Audit Committee • ensured that all applicable approved accounting was satisfied with the performance of the external standards have been complied with; and auditors in terms of their quality of service provided as well as their exercise of audit independence. • have assessed the Group and the Company’s ability to continue as a going concern and The details of the External Auditors Policy are that the going concern basis of accounting is available for reference at www.ijmplantations.com appropriate. and the last review of the Policy was done during the financial year ended 31 March 2020. Pursuant The Directors are responsible for ensuring that to the policy, the partner responsible for the Group the Group and the Company keeps accounting and audit is rotated as a minimum after every seven other records in a manner to sufficiently explain (7) cumulative financial years and in the event of the transactions and to enable the preparation of a former audit partner being appointed as a financial statements that comply with the provisions member of the Board and Audit Committee, he/she of the Act. The Directors have also taken such steps shall observe a cooling-off period of at least two (2) to have in place a system of internal control that years before such appointment. will provide reasonable assurance that the assets of the Group are safeguarded against loss from unauthorised use or disposition. NURTURING SUSTAINABILITY 41 ANNUAL REPORT 2021
II. risk Management and Internal Control Framework II. Conduct of General Meetings
The Board is responsible for establishing and The AGM is the principal forum for dialogue with maintaining a sound risk management framework shareholders. The notice of the AGM and the annual and internal control system to ensure that the report are sent out to the shareholders at least 28 days shareholders’ investments, other stakeholders’ before the date of the AGM. interest and assets of the Group are safeguarded. The Board through the Audit Committee evaluates Seven (7) of the eight (8) Directors had attended the the adequacy and effectiveness of the internal last AGM held during the financial year. At the last control system by reviewing the actions taken on AGM, a presentation was given to shareholders by the lapses, recommendations of internal auditors and CEO&MD to explain the Group’s strategy, performance Management’s responses. and major developments, including the responses to questions submitted by shareholders prior to the The details of the internal audit function of the Group AGM. The Board encourages shareholders to actively are set out in the Audit Committee Report on pages 42 participate in the question and answer session at all to 46, and the overview of the risk management and general meetings. internal control framework of the Group is set out on pages 47 to 53 of the Statement on Risk Management Shareholders are encouraged to be aware of their and Internal Control. rights with regards to the convening of general meetings and appointment of proxies. The details of PRINCIPLE C: the shareholder’s rights are available for reference at INTEGRITY IN CORPORATE REPORTING AND www.ijmplantations.com. MEANINGFUL RELATIONSHIP WITH STAKEHOLDERS The Company convened a virtual AGM last year and I. Communication with Stakeholders has adopted online remote voting for the conduct of poll on all resolutions. All shareholders were briefed The Company places great importance in ensuring the on the voting procedures by the poll administrator prior highest standards of transparency and accountability to the poll voting and an independent scrutineer was in the disclosure of pertinent information to its appointed to validate the votes cast and announce the shareholders as well as to potential investors, analysts poll results. and the public. The extract of minutes of general meetings The Group conducts regular dialogues with financial (including the list of attendance of Directors, pertinent analysts. At least two (2) scheduled IJM Group Briefings questions raised by shareholders and the respective are held each year, usually coinciding with the release responses, and outcome of the voting results) are made of the IJM Group’s second and final quarter’s results, to available to the shareholders and public for reference explain the results achieved as well as the strategies at www.ijmplantations.com. going forward. A press conference is normally held after each AGM The Group has established a comprehensive website and/or General Meeting of the Company to provide at www.ijmplantations.com, which includes a the media an opportunity to receive an update from dedicated section on Investor Relations, to support the Board on the proceedings at the meetings and to its communication with the investor community. address any queries or areas of interest. In addition, stakeholders who wish to reach the Group can do so through the ‘Contact Us’. This Corporate Governance Overview Statement is made in accordance with the resolution of the Board of Directors Investor queries pertaining to financial performance dated 12 July 2021. or company developments may be directed to the Assistant General Manager (Investor Relations) of IJM, Mr Shane Guha Thakurta (Tel: +603-79858041, Fax: +603-79529388, E-mail: [email protected]), whereas shareholder and company related queries may be referred to the Company Secretary, Ms Ng Yoke Kian (Tel: +603-79858131, Fax: +603-79521200, E-mail: [email protected]). 42 IJM PLANTATIONS BERHAD AUDIT COMMITTEE REPORT
During the financial year, the Audit Committee carried out its duties and responsibilities in accordance with its terms of reference and held discussions with the internal auditors, external auditors and relevant members of Management. The Audit Committee is of the view that no material misstatements or losses, contingencies or uncertainties have arisen, based on the reviews made and discussions held.
MEMBERSHIP AND TERMS OF REFERENCE OF THE The Company Secretary acts as the secretary to the Audit AUDIT COMMITTEE Committee. Minutes of each meeting are distributed electronically to each Board member and the Chairperson Membership of the Audit Committee reports on key issues discussed at each meeting to the Board. The Audit Committee is appointed by the Board of Directors from amongst the Non-Executive Directors and Details of the Audit Committee members’ attendance are consists of not less than three (3) members, all of whom tabled below: are Independent Directors. No. of meetings Ms Shirley Goh took over the role as Chairperson of the attended Audit Committee on 22 September 2020 following the resignation of Mr Boey Tak Kong as a Director of IJM 1 Shirley Goh 2/2 Plantations Berhad. Ms Shirley Goh is a Member of Independent Non-Executive the Malaysian Institute of Certified Public Accountants Director (Chairperson with ef- (“MICPA”) and a Chartered Accountant of the Malaysian fect from 22 September 2020) Institute of Accountants (“MIA”). The other members 2 Pushpanathan A/L S. A. 4/4 of the Audit Committee are Mr Pushpanathan A/L S. A. Kanagarayar Kanagarayar, Datuk Dr. Choo Yuen May and Puan Fatimah Independent Non-Executive Binti Merican. Director
Meetings and Minutes 3 Fatimah Binti Merican 4/4 Senior Independent Four (4) meetings were held during the financial year Non-Executive Director with the attendance of the Chief Executive Officer & Managing Director (“CEO&MD”) (by invitation), the Chief 4 Datuk Dr. Choo Yuen May 4/4 Financial Officer & Executive Director (“CFO&ED”) (by Independent Non-Executive invitation), the CEO & MD of IJM Corporation Berhad Director (“IJM”), the holding company (by invitation), the Chief 5 Boey Tak Kong 2/2 Audit Executive (“CAE”), the Chief Risk Management Independent Non-Executive & Integrity Officer (“CRMIO”) (who participated since her Director (Resigned on appointment on 3 August 2020), the Engagement Partner 21 September 2020) and senior representatives of the external auditors and the Company Secretary. AUTHORITY AND DUTIES A quorum consists of two (2) members present and both of whom must be independent Directors. Other Board The details of the terms of reference of the Audit Committee members and Senior Management may attend meetings are available for reference at www.ijmplantations.com. upon the invitation of the Audit Committee. Both the internal and external auditors, too, may request a meeting REVIEW OF THE AUDIT COMMITTEE if they consider that one is necessary. An annual assessment and evaluation on the performance During the financial year, the Audit Committee had and effectiveness of the Audit Committee was undertaken engaged on a continuous basis with the relevant Senior by the Board of Directors for the financial year ended Management, the CAE and the external auditors, in order 31 March 2021. The Audit Committee was assessed to keep abreast of matters and issues affecting the Group. based on four (4) key areas, namely effectiveness and NURTURING SUSTAINABILITY 43 ANNUAL REPORT 2021
quality, internal and external audit, risk management • Reviewed the effectiveness of the internal audit and internal control, and financial reporting, to determine process, the Group Internal Audit Department’s whether the Audit Committee had carried out its duties (“IAD”) organisation structure, resource in accordance with its terms of reference. requirements (adequacy and suitability) for the year and assessed the performance of the overall In view of the appropriate level of knowledge, skills, Internal Audit function; experience and commitment of its members being critical to the Audit Committee’s ability to discharge its • The Audit Committee met with the CAE twice responsibilities effectively, an assessment of the Audit during the year, without the presence of Committee members (self and peer) was also carried Management, to review key issues within out for the financial year ended 31 March 2021. the internal auditors’ area of coverage and responsibility. During the private sessions with The Board is satisfied that the Audit Committee and the CAE, it was noted that there were no major its members discharged their functions, duties and concerns and he conveyed that the internal responsibilities in accordance with the Audit Committee’s auditors had been receiving full cooperation from terms of reference and supported the Board in ensuring Management throughout the course of their work; the Group upholds appropriate standards of Corporate Governance. • Reviewed the audit reports presented by the internal auditors on their findings and SUMMARY OF ACTIVITIES FOR THE FINANCIAL recommendations with respect to governance, YEAR risk and internal control weaknesses. The Audit Committee then discussed and considered those During the financial year, the Audit Committee carried out recommendations including the Management’s the following activities: responses thereon, before proposing that those noted weaknesses be rectified and 1.0 financial Reporting recommendations for improvements be implemented where appropriate; and • Reviewed the quarterly financial results and announcements as well as the year-end financial • Reviewed the internal auditors’ findings on statements of the Group and Company, and whistleblowing cases, if any, and Management’s recommended them for approval by the Board; responses and resolutions thereon. There were no whistleblowing cases received during the • In the review of the quarterly financial results and financial year. annual audited financial statements, the Audit Committee discussed with Management and the 3.0 External Audit external auditors, amongst others, the accounting policies that were applied, the use of certain • Reviewed and endorsed the external auditors’ critical accounting estimates and the exercise Audit Plan, including the areas of audit emphasis of their judgement in the process of applying the and their audit approach for this financial year; Group’s accounting policies that may affect the • Exercised oversight over the scope of work of the financial results and position; and external auditors to ensure that their coverage is • Confirmed with Management and the external sufficient and that there was appropriate reliance auditors that the Group’s and the Company’s annual placed on the work of the internal auditors; audited financial statements have been prepared • Reviewed the level and scope of assistance given by in accordance with applicable Financial Reporting internal auditors to the external auditors; Standards and requirements of the Companies Act 2016 in Malaysia. • The Audit Committee reviewed and discussed the 2.0 Internal Audit following with the external auditors: - the detailed terms of responsibilities and • Reviewed and approved the annual internal audit their scope of work as set out in the external plan proposed by the internal auditors to ensure auditors’ engagement letter; the adequacy of the scope and coverage of work; 44 IJM PLANTATIONS BERHAD AUDIT COMMITTEE REPORT
- the overall work plan, including the audit independence in accordance with the provisions approach and an overview on the areas of audit of the By-Laws on Professional Independence of emphasis and fee proposal; the MIA.
- the significant audit and accounting matters Pursuant to the Group’s Policy on Audit Partner identified during the course of the audit and the rotation requirements, the Key Audit Partners manner they were resolved; (“KAP”) include the Engagement Partner, Engagement Quality Control Reviewer and other - results of their audit of accounting estimates KAP on significant subsidiaries of the Group. The and areas involving judgements; rotation requirements of the KAP are set out as - the corrected and uncorrected misstatements below:- noted during the audit; and Cumulative Cooling-off - internal control recommendations made by Stay-on Period the external auditors and the adequacy of Period* Management’s responses thereon. Engagement Partner 7 years 5 years
• Reviewed and approved the provision of Engagement Quality 7 years 3 years non-audit services (if any) by the external auditors Control Reviewer permissible for the external auditors to undertake, Other KAP 7 years 2 years as provided under the By-Laws of the Malaysian Institute of Accountants. * The KAP shall not act in any of the above roles, or a The amount of audit fees incurred for the financial combination of such roles, for a period of more than year ended 31 March 2021 are as follows:- seven (7) cumulative years. In the event of a former audit partner of the Audit Fees Group being appointed as a member of the Board RM’000 and Audit Committee, he/she shall observe a The Company 155 cooling-off period of at least two (2) years before such appointment. The Group 580 Following the review of the external auditors’ There were no non-audit services rendered during performance, suitability and independence, the the year. Audit Committee recommended to the Board • The Audit Committee met with the external that Messrs PricewaterhouseCoopers PLT be auditors, without the presence of management, re-appointed as auditors of the Company. A twice during the year, on any concerns or issues resolution for their re-appointment will be tabled affecting their areas of work, including the level of for approval at the forthcoming Annual General cooperation received from the Management and Meeting; and staff throughout the course of their engagement; • Recommended the proposed audit fee for the • Reviewed with the external auditors the results of Board’s approval. their work and their audit report on the financial 4.0 Risk Management Committee statements; • Reviewed the Risk Management Committee’s • Reviewed and assessed the performance, reports, assessed the adequacy and effectiveness suitability and independence of the external of the risk management framework and the auditors pursuant to the External Auditors Policy appropriateness of Management’s responses to (“the Policy”). The Audit Committee undertook an the identified key risk areas (including bribery annual assessment to assess the performance, and corruption risks) as well as proposed suitability and independence of the external recommendations for improvements to be auditors based on, amongst others, the quality of implemented; service, adequacy of resources, communication and interaction, as well as independence, • Reviewed the monitoring reports and objectivity and professional scepticism. The implementation progress arising from the external auditors have confirmed their Anti-Bribery and Corruption System (“ABCS”) NURTURING SUSTAINABILITY 45 ANNUAL REPORT 2021
Policy that was developed to address the risk The IAD provides to the Board (primarily via the Audit of fraud, misconducts, bribery and corruption Committee) and to Management reasonable assurance as well as ensure adequate procedures were in on the effectiveness of the Group’s systems of governance, place to mitigate against the risk of corporate risk and internal control and the adequacy of these liabilities arising from Section 17A of the Malaysian systems to manage business risks and to safeguard the Anti-Corruption Commission Act (“MACC Act”) Group’s assets and resources. 2009; and The Internal Audit Charter sets out the purpose, • Reviewed and approved the annual enterprise functions, scope and responsibilities of the IAD and how risk management plan as proposed by the CRMIO it maintains independence from the first and second to ensure the adequacy of scope, resources and lines of defence by Management. The four main functions coverage of work. of IAD are to:
5.0 Related Party Transactions • Assess and report on the effectiveness of the design and operation of the framework of governance, risk and • Reviewed the related party transactions that arose controls which enable business issues to be assessed within the Group to ensure that the transactions and managed; are fair and reasonable to the Group and Company • Assess and report on the effectiveness of management and are not to the detriment of the minority actions to address deficiencies in the framework of shareholders. governance, risk and controls;
TRAINING • Investigate and report on cases of suspected employee fraud and malpractice, if any; and During the year, all the Audit Committee members • Undertake designated consulting services to had attended various seminars, training programmes Management provided that it does not threaten IAD’s and conferences. Details of these are available at independence from Management and the provision of www.ijmplantations.com. Level Three assurance.
INTERNAL AUDIT FUNCTION The Internal Audit Plan for FY2021 which was approved by the Audit Committee in February 2020 reflected the The Internal Audit function is headed by Mr Chan Weng Group’s FY2021 Operational Plan that was prioritised Yew, who is the Chief Audit Executive (“CAE”) of IJM, following a risk-based assessment of its entire business the ultimate holding company. He holds a Bachelor of landscape and a review against the Group’s risk policies. Arts (Honours) in Economics from the University of The reviews carried out covered an extensive sample of Sheffield, England, is a Fellow of the Association controls over high and significant risk types (including of Chartered Certified Accountants (“ACCA”) and an related party transactions), business units and entities. Associate of the Institute of Internal Auditors (“IIA”). Selective lower risk units were also included on a periodic The CAE reports directly to the Audit Committee on rotation basis. During the year, the Internal Audit Plan the IAD’s activities based on the approved annual Internal for FY2022 was reviewed and approved by the Audit Audit Plan. The Group maintains a small number of Committee in February 2021. internal audit staff and further supplemented by resources from IJM. The Board has chosen this structure The IAD adopts a risk-based auditing approach, guided of the internal audit function as they are of the opinion by the International Professional Practices Framework that the level of operations of the Group by itself cannot (“IPPF”) issued by the IIA. They evaluated the adequacy support an effective IAD in terms of availability of and effectiveness of key controls in responding to risks appropriate skills and resources, which a large IAD through within the organisation’s governance, operations and IJM Group can provide. information systems, in terms of:
The Audit Committee is satisfied that the internal • Reliability and integrity of financial and operational auditors’ independence have been maintained as information; adequate safeguards are in place. All internal auditors • Effectiveness and efficiency of operations; have signed the annual declarations that they were and had been independent, objective and in compliance • Safeguarding of assets; with the Code of Ethics and Conduct of IJM, MIA, and IIA in carrying out their duties for the financial year. 46 IJM PLANTATIONS BERHAD AUDIT COMMITTEE REPORT
• Exposure to committed and contingent liabilities; and The IAD also plays an active advisory role in the review and improvement of existing internal controls within • Compliance with relevant laws, regulations and the Group. contractual obligations. IJM’s IAD comprises twenty (20) auditors and the level of All audit findings, for which root-cause analysis were expertise and qualifications within the IAD as at the end of conducted, are reported to the appropriate levels of the financial year ended of 31 March 2021 were as follows: Management when identified. Based on the scope of the audits performed, IAD will give their overall opinion on Qualification Category Percentage of total the state of the audit unit’s governance, risk and control auditors processes. The Audit Committee received quarterly Diploma Level 10% reports from the IAD on audit reviews carried out and Management’s responses to the findings and progress in Bachelor’s Degree 40% addressing identified issues. Members of Management were made responsible for ensuring that timely corrective Post Graduate Degree 10% actions on the reported deficiencies were taken within (MBA, MA, etc) the required timeframes. IAD conducted follow-up audits Professional Qualification 40% on key engagements to ensure that the corrective actions (CPA, CIA, ACCA, CIMA, etc) were implemented appropriately and timely. The internal auditors also strive to continuously stay The Audit Committee reviewed and approved the IAD’s updated with current developments to equip themselves financial budget and staffing requirements to ensure that with the awareness to address new risks as well as the the function is adequately resourced. knowledge to better understand existing ones. A total of 767 hours were spent on structured training and The total internal audit costs incurred for Group for the development, which averages 38 hours per person per financial year ended 31 March 2021 was approximately annum. This is in addition to the numerous hours spent on RM422,000 (2020: RM598,000). self-learning for audit purposes. The above training and development hours were mainly accumulated by taking INTERNAL AUDIT ACTIVITIES FOR THE FINANCIAL advantage of numerous free webinars offered by various YEAR professional bodies and subject matter experts. The categories of training attended are as follows: Notwithstanding the movement limitations and restrictions due to the Movement Control Orders imposed Training & Development Percentage of hours by the Government to address the Covid-19 pandemic Category during the financial year, the IAD completed and reported Technical (e.g. auditing, 55% on 24 audit assignments covering the operations in the accounting, tax) head office, regional office, the estates and mills both in Malaysia and Indonesia and testing of RPT. This included Management, Leadership & 29% ad-hoc audits conducted on the basis of special requests Soft skills from the Board, Audit Committee and Senior Management. Industry related trainings 16% Subsequently, IAD performed follow-up procedures to determine the adequacy, effectiveness and timeliness IJM is a Corporate Member of the IIA’s Malaysia Chapter. of actions taken by Management (or as a result of other internal or external factors) to correct the reported issues This Audit Committee Report is made in accordance with and recommendations. the resolution of the Board of Directors dated 12 July 2021. NURTURING SUSTAINABILITY 47 ANNUAL REPORT 2021 STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL
The Board is committed to nurture and preserve throughout IJM Plantations Berhad (“the Company”) and its subsidiaries (“the Group”) a sound system of risk management and internal controls and good corporate governance practices as set out in the Board’s Statement on Risk Management and Internal Control, made in compliance with Paragraph 15.26(b) of the Main Market Listing Requirements (“LR”) of Bursa Malaysia Securities Berhad (“Bursa Securities”) and guided by the Statement on Risk Management & Internal Control: Guidelines for Directors of Listed Issuers.
BOARD’S RESPONSIBILITY monitoring activity ensures key risks are deliberated and mitigating actions are implemented. The Audit Committee The Board affirms its responsibility for maintaining a presents a summary of its deliberations and decisions sound risk management framework and internal control to the Board on a quarterly basis. system to safeguard the shareholders’ investments and the Group’s assets, as well as to discharge its stewardship During the financial year, the adequacy and effectiveness responsibility in identifying principal risks and ensuring of the system of internal controls was reviewed by the implementation of an appropriate risk management the Audit Committee in relation to the internal audits and internal control system to manage those risks in conducted by the Internal Audit Department (“IAD”), accordance with Principle B of the Malaysian Code on as well as the control issues reported by the external Corporate Governance. auditors. The Audit Committee deliberated on the audit issues and actions taken by Management, and a summary The Board continually articulates, implements and reviews of these deliberations has been presented to the Board. the adequacy and effectiveness of the Group’s enterprise wide risk management and internal control system which has been embedded in all aspects of the Group’s activities. KEY FEATURES OF RISK MANAGEMENT AND The Board reviews the processes, responsibilities and INTERNAL CONTROL FRAMEWORK assesses for reasonable assurance that risks have been The Group has a well-defined organisational structure managed within the Group’s risk appetite and tolerance, with clearly delineated lines of accountability, authority with a system that is viable and robust. and responsibility to the Board, its committees and Recognising the ever-changing risk landscape, the Group’s operating units. Key processes have been established system is designed to manage effectively rather than for reviewing the adequacy and effectiveness of the risk completely eliminate the risk of failure to achieve the management and internal control system. Group’s business objectives. Accordingly, such systems 1. authority and Responsibility can only provide a reasonable but not absolute assurance against material misstatement, loss or fraud. The aim, • The Management Committee (“MC”) manages the however, is to ensure that any adverse impact arising Group’s operations in accordance with corporate from a foreseeable future event or situation on the Group’s strategies and business objectives, strategies, objectives is identified, mitigated and managed. policies, key performance indicators and annual budgets as approved by the Board. For the financial year ended 31 March 2021 (“FY2021”), the Board has received assurance from the Chief Executive • The Audit Committee, with the assistance of the RMC, Officer & Managing Director (“CEO&MD”) and the Chief has oversight over the Group’s risk management Financial Officer that the Group’s risk management and framework, and obtains assurance through the internal control system is operating adequately and IAD, on the adequacy and effectiveness of the risk effectively, in all material aspects, based on the risk management and internal control systems. The management and internal control framework of the Group. Audit Committee also consults the independent external auditors of the Group, whenever required. During FY2021, the Risk Management Committee (“RMC”) reviewed, appraised and assessed the controls and actions • The RMC oversees and performs regular in place to mitigate and manage the overall Group’s reviews on the risk management processes of risk exposure, as well as raised issues of concerns and the Group’s business and operations to ensure recommended mitigating actions. The RMC reports to the prudent risk management. The RMC for Sabah Audit Committee on a quarterly basis and as part of its operations is chaired by the CEO&MD and the 48 IJM PLANTATIONS BERHAD STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL
RMC for Indonesian operations is chaired by the 3. policies, Procedures and Values Chief Executive Officer (Indonesia). Both the RMCs comprise of representatives from operations, as • The Company’s culture reflects its core values, well as from the relevant Head Office operations behaviours and decisions. These form the base support departments. The two (2) RMCs report to of an effective risk management system and are the Audit Committee on a quarterly basis where key reflected in the Company’s statements of vision, risks and mitigating actions are deliberated and mission and core values, code of ethics and conduct, implemented. corporate disclosure policy, diversity and inclusion policy, anti-bribery and corruption policy as well as • The Nomination & Remuneration Committee assists avenues for whistleblowing. the Board by including in but not limited to reviewing and recommending appropriate remuneration • Clearly documented standard operating policies policies for Directors and senior management, and procedures to ensure compliance with internal reviewing succession plans, recommending controls, relevant laws and regulations, which are candidates to the Board, and evaluating the subjected to regular reviews and improvements, performance of the Board as a whole, Board have been communicated to all levels and are easily Committees and the contribution of individual accessible on the Company’s intranet platform. Directors on an annual basis. • Established guidelines for recruitment and • The Securities and Options Committee administers termination, human capital development and options and/or shares under the employee share performance appraisal to enhance staff competency scheme of the Company and regulates the securities levels have been disseminated to all employees. transactions in accordance with established • Clearly defined levels of authority for regulations and By-laws. day-to-day business aspects of the Group covering 2. planning, Monitoring and Reporting procurement, payments, investments, acquisition and disposal of assets are reviewed periodically. • Regular, comprehensive and up-to-date information is conveyed to the Board and its Committees • Adoption and consistent application of covering finance, operations, key performance appropriate accounting policies in the annual indicators and other business indicators such as financial statements of the Group, and prudent economic and market conditions at their monthly judgements and reasonable estimates have or periodic meetings, facilitating the monitoring of been made in accordance with the applicable performance against the corporate strategy and approved accounting standards in Malaysia. business plans. Processes and controls are in place for effective and efficient financial reporting and disclosure • Annual budgets are prepared for the forthcoming in the annual and quarterly financial statements year and approved by the Board. These budgets of the Group to give a true and fair view of the are used to monitor actual versus budgeted and financial position and financial performance of prior period’s performance with major variances the Group. being reviewed and management actions taken as necessary. 4. audits
• Periodic company briefings with analysts • The IAD of the Group’s holding company IJM are conducted to apprise the shareholders, Corporation Berhad performs internal audits on stakeholders and the general public of the Group’s various operating units within the Group on a risk- performance whilst promoting transparency and based approach based on the annual audit plan open discussions. approved by the Audit Committee. The IAD checks for compliance with policies and procedures and • Annual validation of the Group’s sustainability the effectiveness of the internal control system and materiality matrix was carried out at the Group level highlights significant findings of non-compliance to ensure that the identified factors remain relevant in the quarterly Audit Committee meetings of the and material to the business and stakeholders. Group. Further details of the IAD’s functions and Adjustments are made in line with current activities are set out in the Audit Committee Report. circumstances facing the Group. The outcome is disclosed in the Sustainability Report of the Annual • The external auditor’s annual audit strategy, Report. audit plan and scope of works for the financial year in relation to the audit services on the Group’s financial statements as well as NURTURING SUSTAINABILITY 49 ANNUAL REPORT 2021
non-audit services, if any, are reviewed and compliance framework, the RMI was established approved by the Audit Committee. Further details during the year as a Group function assisting the Board, on the oversight of the external auditors are set Audit Committee and Management in discharging their out in the Audit Committee Report. risk management responsibilities. The key roles and responsibilities of RMI is to provide support to the Group • The Company and certain subsidiaries, which with regards to risk management implementation and are accredited with various quality, health, activities, ensuring that risks are prudently identified, safety and environment and other certifications, analysed and effectively managed.These include undergo scheduled on-site audits by auditors of the development and implementation of risk management relevant industry certification bodies. The results of and compliance strategies, as well as to spearhead these audits are reported to management. and coordinate governance, risk management and compliance programmes across the Group. 5. risk Management Recognising the diverse nature and the challenges The RMC principally develops, executes and maintains faced by the Group, RMI’s programmes and activities the enterprise wide risk management system to are tailored to meet the specific needs and ensure that the Group’s corporate objectives and requirements of the Group. Risk management strategies are achieved within the acceptable risk workshops for the Group were conducted during appetite of the Group. The Group’s risk management FY2021 in collaboration with an external consultant. framework conforms with international guidelines The main objective of the engagement was to review of the ISO 31000 and the Committee of Sponsoring the Group’s current risk profiles in relation to business Organizations of the Treadway Commission’s (COSO) plans and to be in line with the Group’s strategic focus; Enterprise Risk Management Framework 2017. with corruption risks being assessed concurrently The risk management reviews cover responses during these workshops. The Audit Committee to significant risks identified which would ensure monitors the strategy and delivery of risk management the achievement of: the corporate strategies and and compliance programmes through progress reports business objectives; effectiveness and efficiency of submitted on a quarterly basis. operations; integrity of information and reporting; and compliance with the relevant laws, regulations, The other key role and responsibility of RMI include policies and procedures. coordinating compliance programmes and activities to provide awareness, training and communication to A risk map summarising the risks to the achievement employees on the risks of non-compliance, specifically of strategic, operational, reporting and compliance to Section 17A of the MACC Act 2009. In an effort to objectives, using quantitative and qualitative aspects provide assurance that the Group’s operations to assess their likelihood and impact matrices, and and activities are conducted in line with the key the controls for assuring the Board that processes put regulatory requirements, RMI facilitates the process in place continue to operate adequately and effectively of identification, analysis, evaluation, monitoring to manage those risks to acceptable levels, is prepared and reporting of the Group’s state of compliance quarterly. while continuously promoting the culture of integrity As the business risk profile changes, new areas are and ethics. introduced for risk assessment and the necessary Risk Assessment Reviews updates are made to the existing risk register. During the financial year ended 31 March 2021, the The Group’s Head Office considers and incorporates Group conducted their risk management and internal the risks associated with the Group’s strategic control system reviews which were assessed by the objectives and overall risk appetite which are not RMC and reported to the Audit Committee at each addressed at operations level. The consolidated quarter. The Group identified significant risk areas of major risks and the mitigating actions are reported concern and mitigating actions were undertaken within to the RMC before being presented to the Audit appropriate timeframes. The management of the Committee and the Board on a quarterly basis. Group’s significant risks identified for the financial year Risk Management & Integrity Department (“RMI”) 2021 is outlined below:
The risk management and integrity functions are a) Strategic Risk Management outsourced to the RMI of IJM Corporation Berhad, Strategic risks refer to the risks resulting from which is headed by the Chief Risk Management & economic and regulatory conditions and the Integrity Officer. With the Group’s ongoing commitment inherent cyclical nature of the business. to enhance the robustness of the Group’s risk and 50 IJM PLANTATIONS BERHAD STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL
Political risks The Group continuously manages and monitors its regulatory risks through the following measures: Political risks refer to the change of government, government decisions, reforms, events or • Be updated with the new laws and/or conditions that may affect the performance requirements by participating in seminars, of the Group’s businesses such as new laws conferences and trainings, both in-house and and regulations, minimum wage increases external, as presented by authorities, experts or and new taxes. With the state of Emergency specialists; declared on 11 January 2021, coupled with the government-imposed movement restrictions since • Implementing appropriate policies, procedures, 18 March 2020 as part of preventive measures in guidelines, and contract management practices; meeting the challenges posed by the COVID-19 and pandemic, there may be policy modifications, • Maintaining regular communication with the changes, monetary and economic stimulus plans authorities, industry bodies and members, affecting the Group moving forward. accounting, tax and legal experts to ensure The Group will closely monitor and proactively compliance at all times. manage the associated risks by engaging and working with the governments in office to improve The Group initially adopted an Anti-Bribery and business, consumer and market sentiments in Corruption (“ABC”) Policy in 2019 in view of the addition to complying with the governments’ introduction of Section 17A of the MACC Act 2009. directives to address the COVID-19 pandemic With effect from 1 June 2020, a commercial impacts. organisation may be found liable for acts of corruption committed by any persons associated Commodity and Currency risks with the organisation. During FY2021, the Group has enhanced its policies, procedures, The Group is susceptible to commodity risks as manuals and code of conduct and ethics for palm product prices are subject to market volatility employees as part of its anti-bribery and which affects its profitability. The Group manages corruption system. Through the code of business such commodity risks with the following measures: conduct for third parties, these anti-bribery and • Constant monitoring of the commodity prices corruption principles are extended to the Group’s to determine the appropriate timing to transact associates, business partners and its supply chain. sales; The government-imposed movement restrictions • Selling using the Malaysian Palm Oil Board are aimed at restricting mass movements and (“MPOB”) and PT Kharisma Pemasaran gatherings to contain the COVID-19 pandemic Bersama Nusantara (‘PT KPBN’) average price and break the chain of transmission. The mechanism; Group has complied with the directives as well as instituted new work arrangements for • Hedging through forward sales or crude palm business continuity. The Group will continue to oil pricing swap arrangements; and comply with government directives and respond promptly to changes in a concerted effort towards • Close monitoring of pricing trends of major oils containing the spread of COVID-19. and fats. b) financial Risk Management The Group manages its foreign exchange exposures by monitoring its movement and Debt Recovery would enter into forward foreign exchange contracts or cross currency swap contracts when there is a This risk arise from the inability to recover debts need. Borrowings are kept to an acceptable level. in a timely manner which may adversely affect the Group’s profitability, liquidity, cash flows and Regulatory risks funding. The Group minimises such exposures with the following measures: The Group’s businesses are governed by relevant laws, regulations, standards and licenses. The • Assessing the creditworthiness of potential Group constantly assesses the impact of new laws customers before granting credit limits and and regulations affecting its businesses to ensure periods; that its processes and infrastructure settings are able to operate under the new requirements. NURTURING SUSTAINABILITY 51 ANNUAL REPORT 2021
• Close monitoring of collections and overdue debts; Adverse weather risk and To mitigate the effect of any prolonged dry weather • Ensuring effective credit utilisation to keep and severe flooding, the Group continued to ensure leverage at a comfortable level. the following measures are being carried out and in place: Working Capital Management • Employing good agronomic and estate practices The Group closely monitor its operating cash flows as per the operating manual; by maintaining sufficient level of cash to meet its working capital requirements. Regular assessment • Carrying out water conservation and irrigation on the Group’s cash flow position is being conducted measures to ensure the oil palms receive to ensure that a healthy balance is maintained adequate water; between the continuity of funding and financial flexibility through availability of necessary credit • Deepening reservoirs, where possible, to facilities. increase water storage capacity with the objective of irrigating the surrounding fields; c) Operational Risk Management and
Operational risks arise from the execution of a • Ensuring appropriate agricultural training for Group’s business including risks of inadequate the cadets and field staff. skilled workforce, adverse climatic conditions, equipment and systems failure as well as Pandemic risks overcapacity situations. A year on since its outbreak in early 2020, the Inadequate skilled workforce risk prevailing coronavirus (“COVID-19”) pandemic continues to overshadow other risks and has Similar to other companies in the industry, the created intensely damaging global economic effects Group faces a common challenge in the form of and unprecedented threats to lives and livelihood. an inadequate skilled labour due to the difficulty While travel bans and movement control measures in recruiting skilled workers. To mitigate the risk are absolutely essential in impeding the outbreak of slowdown in harvesting operations, various of COVID-19, the freeze on the intake of new workers measures as follows are being carried out by the had resulted in severe shortage of harvesters to the Group to attract and retain skilled labour: industry in which the Group operates, high level of job losses and unemployment. • Working with the industry fraternity to improve the availability of labour; Whilst the industry in which the Group operates is allowed to continue operating during this • Upgrading the living quarters of workers government-imposed movement restrictions complete with amenities including electricity period, the Group has ensured that necessary and water, medical care, crèche, education procedures are put in place to manage the risk and centres, recreational and sports facilities in closely monitor the situation to ensure its operations phases; are not disrupted and are in compliance with the regulations and rules imposed by the authorities • Entering into partnership with NGOs such as during the movement control periods. the Borneo Child Aid to provide education to the children of workers with the intention of The Group is wary of the COVID-19 pandemic retaining the workers; and has taken the necessary steps to protect its employees, contractors and suppliers at its • Encouraging local school leavers to participate properties and work sites. These measures in the plantation sector and to offer suitable are updated from time to time and include the internship programmes for undergraduates via following: establishing crisis management teams; joint ventures with universities and agricultural/ instituting daily precautions, sanitisation and daily labour authorities; and temperature readings; introducing alternative work • Reviewing the remuneration benefits of workers arrangements; postponing physical group events from time to time to stay competitive. and face to face trainings; issuing travel advisory guides for business and non business travels; and enforcing quarantine rules in accordance with the 52 IJM PLANTATIONS BERHAD STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL
health authorities’ pronouncements. The Group will 6. anti-Bribery and Corruption System (“ABCS”) Policy continue to monitor the situation closely and will do whatever is necessary to protect its employees The ABCS compliance function is outsourced to the and the supply chain whilst ensuring business Risk Management & Integrity Department (“RMI”) of continuity. IJM Corporation Berhad, which is headed by the Chief Risk Management & Integrity Officer. As part of the The path to economic recovery hinges on the commitment in ensuring that all business dealings scale and effectiveness of the vaccine rollouts, are conducted in an honest and ethical manner though uncertainties remained in the light of whilst maintaining the highest standard of integrity the emergence of new virus variants globally. The and corporate governance, various efforts have been Group strongly supports the COVID-19 vaccination undertaken by the Group. During the financial year, and has been encouraging its employees to sign up the Anti-Bribery and Corruption System (“ABCS”) for the vaccination programme. The Group is also was formalised for the Group pursuant to Section exploring opportunities with various government 17A of the Malaysian Anti-Corruption Commission channels to expedite the vaccination of its Act 2009 (“MACC Act”) which came into force on employees. 1 June 2020. As an essential component of the Group’s ABCS framework and to complement the existing Code of Greater adoption of digital communication was also Conduct, the ABCS Policy (“the Policy”) was established necessary to overcome the restrictions imposed on and approved by the Board in May 2020, further physical meetings. The Group’s critical business formalising the Group’s commitment to upholding systems are accessible remotely to support the and strengthening the Group’s corporate governance changing operating landscape brought about by the and ensuring the Group commitment to ethical pandemic so that there will be minimal disruption conduct, integrity and accountability in all business to the operations. The Group’s first fully virtual activities and operations of the Group. The Policy th 35 Annual General Meeting was held on 21 outlines key guiding principles and mitigating controls September 2020 to further demonstrate the Group’s in place with regards to anti-bribery and corruption. commitment towards continued innovations and It is guided by the Guidelines on Adequate Procedures that we are responsive and remain relevant to our issued in accordance with Section 17A of the MACC Act. stakeholders. The ABCS Policy has been published on the Group’s While key economic indicators are pointing towards website with the intention to: an improving outlook for the Malaysian economy, the containment and actual impact of the COVID-19 • set out the parameters including the main pandemic remain uncertain; and the rising infection principles, policies and guidelines which the Group rates continue to adversely affect global economic adopts in relation to anti-bribery and corruption; prospects despite the increasing vaccinations. • provide guidance to its Board members and d) Disaster Recovery Management employees whilst discharging their duties; and
With the advent of cyber threats, Management • serve as guiding principles for its customers, Information System (“MIS”) failure and other business partners and stakeholders. potential hazards such as fires, floods, earthquakes and major equipment failures, amongst others, The objective of the Policy is to continuously enforce the the continuity of business operations is of a major Group’s Code of Conduct and business ethics in order concern to the Group. to ensure that all directors and employees understand their responsibilities in compliance with the Group’s To manage the risk, the Group has put in place the zero-tolerance for bribery and corruption within the necessary disaster recovery plan for its critical organisation. All directors and employees of the Group business system. are required to read, understand and acknowledge the ABCS Policy and the Code of Conduct & Ethics Regular incident management drills including for Employees; and sign the Integrity Pledge in basic fire safety are conducted to ensure that our acknowledgement of their obligations and responsibilities. employees are familiar with the planned emergency The Policy will be reviewed at least once every three responses and crisis management plans. During years to ensure that it continues to remain relevant, the financial year, the Group did not encounter any appropriate and effective towards enforcement of the major business interruption or crisis situations. principles highlighted therein and to ensure continued compliance with the prevailing laws. NURTURING SUSTAINABILITY 53 ANNUAL REPORT 2021
Since the introduction of Section 17A of the MACC 8. Insurance Act, an ABCS implementation plan has been established to communicate and disseminate the ABCS Policy The Group has in place adequate and regularly throughout the Group through a series of awareness and reviewed insurance coverage for its business training programmes including mandatory e-learning operations, assets and employees where it is courses on ABCS, which have been launched for the available on economically acceptable terms to minimise Group’s employees and members of the Board to enhance the related financial impacts of any losses should they Group-wide awareness and understanding on Section arise. 17A and ABCS as well as to propagate a strong tone from the top and ethical culture within the Group. REVIEW OF THE STATEMENT BY EXTERNAL AUDITORS The Group’s holding company has also formalised the appointment of a Chief Risk Management & Integrity As required by Paragraph 15.23 of the LR of Bursa Officer with effect from 3 August 2020 and a Compliance Securities, the external auditors have reviewed this Officer at the Group level under the purview of the Audit Statement on Risk Management and Internal Control. Committee to support implementation and increase Their limited assurance review was performed in the effectiveness and efficiency of the ongoing ABCS accordance with the Audit and Assurance Practice implementation efforts. Compliance with the ABCS Guide (“AAPG”) 3 issued by the Malaysian Institute Policy will be monitored closely, both on an ongoing basis of Accountants. AAPG 3 does not require the external and in conjunction with the Group’s Corruption Risks auditors to form an opinion on the adequacy and Assessment exercise to ensure the appropriateness of effectiveness of the risk management and internal control the mitigation measures established to minimise the systems of the Group. exposure to these risks.
To ensure that business is conducted conforming to the CONCLUSION highest level of integrity and ethics, the ABCS Policy For the financial year under review and up to the and the Code of Business Conduct for Third Parties date of issuance of this statement, the Board is were also distributed to business partners as an effort to pleased to state that the Group’s system of risk communicate the Group’s stance on ABCS, in which they management and internal control was rated will be aware and acknowledge that reasonable and overall as satisfactory, adequate and effective for appropriate measures will be taken to demonstrate their the Group’s purpose and safeguards the Group’s commitment to act professionally and with integrity assets and shareholders’ investments, as well as in all business dealings. A Due Diligence process the interests of customers, employees and other has been embedded to ensure a viable potential stakeholders. There have been no material losses, defence to Section 17A through a series of guidelines, contingencies or uncertainties identified from assessments, reporting and monitoring implemented the reviews. in alignment with MACC’s Guidelines on Adequate Procedures. Additionally, clauses relating to ABCS have The Board will continue to monitor all major risks been incorporated in written agreements to ensure affecting the Group and will take the necessary measures to that business partners and suppliers to the Group mitigate them and enhance the adequacy and effectiveness understand their obligations and abide by the relevant of the risk management and internal control system of the laws and regulations. Continuous reinforcement of Group. communications to the business partners and suppliers on the Group’s expectations in relation to ABCS are This Statement on Risk Management and Internal Control in progress. is made in accordance with a resolution of the Board of Directors dated 27 May 2021. 7. Sustainability
Major sustainability risks have been addressed in line with the Group’s sustainability framework and business strategies emphasising key focus areas of Marketplace, Environment, Community and Workplace as elaborated in the Sustainability Report. 54 IJM PLANTATIONS BERHAD SUSTAINABILITY REPORT
55 57 59 About This Report Sustainability Governance Engaging with Stakeholders 56 58 61 Sustainability Commitment FY2021 Highlights and Managing Material Matters and Policy Achievements
65 72 84 94 PRODUCTIVITY AND CARE FOR INVESTOR RETURNING TO INNOVATIONS ENVIRONMENT IN PEOPLE COMMUNITY
65 72 84 94 Regulatory Compliance Responsible Land Respect for Human Community Outreach and Ethical Business Use and Agricultural Rights and CSR Initiatives Conduct Practice 84 96 66 73 Responsible Community Creating Shared Values Responsible Recruitment Development Through Partnerships Agrochemical Usage 84 67 74 People Asset and Priming and Driving Environment and Talent Retention Innovations Biodiversity Protection 89 68 77 Children’s Protection Sustainability Climate Change and and Well-being Certification and Carbon Emission 90 Quality Assurance 78 Occupational Safety 69 Fire Management and and Health Traceability and Supply Prevention 92 Chain Management 80 Managing COVID-19 98 Water Stewardship Crisis Global Reporting 83 Initiative (GRI) Waste Management Standards 2016 Content Index NURTURING SUSTAINABILITY 55 ANNUAL REPORT 2021
ABOUT THIS REPORT
Sustainability Report 2021 is incorporated into the IJM Plantations Berhad Annual Report 2021, and is prepared in accordance with the Global Reporting Initiative (“GRI”) Standards: Core option. The disclosure in this report was also guided by Bursa Malaysia’s Sustainability Reporting Framework which comprises the Sustainability Reporting Guide and six (6) supporting toolkits, and the GRI Sustainability Reporting Guidelines. The report covers the sustainability journey of the Group over the past financial year, from 1st April 2020 to 31st March 2021, with historical data from previous years for comparison, where available and relevant. Any significant changes beyond the reporting period will be covered in the following year’s publication.
The scope of this report covers the sustainability related targets, achievements and various initiatives carried out in the financial year 2021, unless otherwise specified, and covers the entire Group’s operations covering Malaysia and Indonesia. The Group strives to provide its stakeholders with an overview of the Group’s strategies and progress made in meeting its sustainability commitments, of which this report was prepared based on key sustainability issues discussed through the annual review of materiality aspects, management meetings and stakeholder engagement activities.
The Group believes that external assurance adds credibility and transparency to the report, and will move towards improving its data reporting and embrace additional external assurance in the future. Significant data and practices were externally verified during the third-party sustainability audits carried out in the Group’s operations. The reported sustainability data was also verified by Internal Audit. 56 IJM PLANTATIONS BERHAD SUSTAINABILITY REPORT
Sustainability Commitment and Policy
The Group adopts an organisational sustainability The Group recognises the importance of operating framework, referred to as “Nurturing Sustainability” in a responsible and sustainable manner to ensure which comprises key sustainability aspects in the a deforestation and exploitation free supply chain. production of sustainable palm products. This framework In February 2019, the Group has formally adopted a encompassed four (4) intertwined sustainability pillars, “No Deforestation, No Peat and No Exploitation” (“NDPE”) namely Productivity and Innovations, Care for Environment, policy in its new development activities. The NDPE Investor in People and Returning to Community. commitment was detailed in the Group’s policy statements Relevant aspects of environmental performances, social on Sustainability, Environment and Biodiversity, Human practices and governance issues are discussed according Rights and Occupational Safety and Health. In addition, to the respective sustainability pillars of the framework. the Group’s sustainability approach embraces the United The palm oil sector continued to be under increased Nations’ Sustainable Development Goals and is guided scrutiny with growing expectations and concerns from by the Group’s Sustainability Policy that provides the the market and its stakeholders in respect of the issues organisation with clear directions and strategies on of deforestation, human rights and many other facets of its overall sustainability framework. This include the sustainability. The Group is doing its best to manage the following areas of focus:- sustainability risks and related challenges amidst new norms of operating in an uncertain business environment arising from the global outbreak of the COVID-19 pandemic since the early 2020.
Marketplace Environment Social
• Complying with relevant local • No Deforestation, No Peat and • Respecting and recognising and national statutory and No Exploitation” (“NDPE”) in its rights of employees including regulatory requirements. new development activities. contract, temporary and migrant employees. • Creating shared values through • Adopting zero burning policy in constructive partnerships and all new planting and replanting • Striving to provide a safe and effective engagements with developments. healthy workplace for all relevant stakeholders. employees. • Protection of High Conservation • Providing assurance through Value Areas. • Respecting land use rights of the certifications. local communities and adoption • Promoting positive environmental of the principle of Free, Prior and • Ensuring traceability on the impacts and establishing Informed Consent (FPIC). origins of its palm products. site-specific conservation and rehabilitation initiatives. • Facilitating the inclusion of smallholders into its supply • Adopting good agricultural and chain. processing practices. • Addressing complaints and grievances in an open, transparent and consultative manner.
The Group will sustain its efforts to engage, provide guidance and monitor its relevant stakeholders towards a deforestation-free or NDPE supply chain. We are committed to address any occurrences of non-compliance by imposing immediate and appropriate corrective actions. NURTURING SUSTAINABILITY 57 ANNUAL REPORT 2021
Sustainability Governance
A robust and effective sustainability governance and management structure is vital to ensure integration of the Group’s sustainability strategies and commitments into its business agenda and operations. The following functional governance structure was adopted by the Group, setting out the respective roles and responsibilities in the governance of the Group’s sustainability practices.
Audit Board of Committee Directors
Oversees the assurance activities with Approve and govern the overall respect to sustainability management and sustainability strategy and policies reporting processes
Group’s CEO & Managing Director
Responsible for the overall decision making in the implementation of the strategy including determining the operational directions to achieve the Group’s sustainability goals and targets
Management Committees spearheaded by Group’s CEO & Managing Director
• Formulate sustainability strategies and policies • Represented by key personnel from various departments and operations • Discuss sustainability issues and identify business and sustainability risks • Review sustainability performance and alignment • Formulate action plans and set targets and goals • Update the Board of Directors on the progress of the Group’s sustainability targets and any significant or material matters that may arise
Sustainability Steering Teams in Malaysian and Indonesian Operations
• Key drivers of the Group’s Sustainability practices and work closely with the operations’ Sustainability Working Teams and the relevant stakeholders • Ensure the sustainability initiatives and implementation plans are consistent with the Group’s strategy and commitments • Implement sustainability initiatives and mitigation controls on associated sustainability risks • Monitor and report on the progress of the surveillance to the Management Committees • Raise awareness among employees and surrounding communities
Sustainability Working Teams in the Operating Units
Dedicated teams in the operating units that are responsible to implement the sustainability practices and plans in the respective operations 58 IJM PLANTATIONS BERHAD SUSTAINABILITY REPORT
FY2021 Highlights and Achievements
Number of processing plants: The Group achieved Total planted areas: its best ever financial 7 palm oil mills and 2 kernel 61,277 ha performance to date crushing plants
Certification-Malaysian Operations: 100% ISCC-EU and MPSO certified; 100% of the FFB processed traceable to the plantations Indonesian Operations: 60% ISPO certified
MARKETPLACE 80% of the CSPO 5,671 Ha Plasma schemes and IJM Anti-Bribery and produced in Malaysian 4,121 Ha Kemitraan Schemes Corruption System operations were sold were developed, benefited Manual officially launched with premiums 5,136 farmers
Maintained a workforce of 8.4% turnover rate 9,088 employees (excluding workers category)
27 employees were Zero workplace related awarded with 20 Years’ 29% of female representation fatal accidents Long Service Award SOCIAL Proactive preventive measures in managing the COVID-19 pandemic Monetary support of RM384,000 in operations in the outreach programmes
Committed to No Deforestation, 6,083 ha protected as No Peatland and No Exploitation Achieved 0.54 tCO -e/mt HCV and conservation 2 (“NDPE”) and conducted compliance CPO of GHG intensity verification on crop suppliers areas
78% energy from renewable sources - 1.36 m3 water usage per tonne Reductions in fire cases - carbon emissions savings of FFB processed cases (FY2020: 147) ENVIRONMENT of more than (below the threshold 1.5 m3) 27
41,000 tCO2-e
No peatland development since 2016 No Paraquat usage since 2019 NURTURING SUSTAINABILITY 59 ANNUAL REPORT 2021
Engaging with Stakeholders
The Group actively engages with its key stakeholders to the year. During the engagement process, information understand their concerns and expectations, and to better and feedbacks were collected to improve understanding align its strategies and objectives with the wider group and advance the management of the potential risks and of stakeholders. The key and relevant stakeholders are material issues relating to the Group’s activities. individuals or groups that significantly impact the Group’s business or are influenced by its business activities. Due to the restriction of movements during the COVID-19 pandemic, most of the stakeholder engagement activities The Group continues to adopt an open, timely and proactive were carried out virtually. The various key stakeholders approach in engagement with key stakeholders. The and the engagement processes and channels adopted are Group engages with the key stakeholders through various listed below: platforms or channels at certain intervals throughout
Key Stakeholders Mode of Engagement Key Topics and Concerns Likely Solutions and Outcomes
• Dialogues held • Latest news or updates • Robust governance in compliance through forums and and emerging changes with regulations virtual meetings in regulations or GOVERNMENT • Site visits and standards AUTHORITIES inspections • Safety aspects in the AND • Virtual and webinar workplace REGULATORS meetings • COVID-19 related issues • Engagement surveys • Foreign workers from the government legalisation procedures agencies • Periodic reporting to authorities
• Pro-active • Group performance and • Updates on the Group’s correspondences in productivity insights performance, corporate news made addressing queries • Updates on business through corporate website and INVESTORS AND through emails and strategy and impacts annual report SHAREHOLDERS phone calls • ESG performance or • ESG reporting under sustainability • Analyst briefings analysis, updates and report integrated with annual report (virtual) and reports focused topics • Governance reporting in compliance • Annual general • Corporate governance with Bursa Malaysia’s standards meeting (virtual) and compliance matters and guidelines
• Dialogues and • Supply chain and • Sustainability policies and practices engagement meet-up sustainability issues including NDPE Implementation • Pricing mechanism and • Briefing on pricing mechanism and LOCAL crop quality crop quality COMMUNITIES • Agricultural practices • Sharing of knowledge on • Health related topics agricultural best practices • Fire and haze • Proactive briefings and special prevention committee on COVID-19 preventive • Local development measures, developed relevant SOPs • Fire related trainings which include no burning in land clearing • Strategic partnership ie. Kemitraan projects and Plasma schemes • Community development initiatives including philanthropic support 60 IJM PLANTATIONS BERHAD SUSTAINABILITY REPORT
Key Stakeholders Mode of Engagement Key Topics and Concerns Likely Solutions and Outcomes
• Telecommunication • Supply chain and • MSPO, ISCC, ISPO certified and email traceability Products correspondences • Sustainability • No Deforestation, No Peat, No • Customer’s commitments and Exploitation (NDPE) Policy CUSTOMERS assessment tools progress • Customer feedback documentation • Product quality and services • Pricing and delivery arrangement
• Virtual meetings, • Sustainability related • Strategic NGO with Group email correspondence, topics partnership eg. Rurality Project collaborative projects • Industry latest • Smallholders’ development and updates and policies best practices training programmes NGOS AND • Wildlife conservation • Establishment of plantation INDUSTRY and human-elephant conductorship programme for the ASSOCIATIONS conflict issues rural youth by collaborating with • Industry’s best Montfort Youth Training Centre practices and (MYTC) and MEOA agricultural knowledge • Views channeled to authorities through industry associations ie MEOA • Sustainability data and traceability reporting through annual report and corporate website
• Meet-up sessions, • Sustainability • Products and technology trials email correspondence, commitments and • Supplier assessment forms and virtual meetings related matters code of ethical business conduct • Briefings and trainings including certifications, • Tender procedures and pricing-rate SUPPLIERS traceability and best matrix AND BUSINESS management practices PARTNERS • Product specifications and work quality • Company’s policies and governance • Relevant laws and regulations applied • Cost-efficiencies and practicality of the new products or technologies employed
• Operational and • Operational • Alignment and improvement of management performance and performance committee meetings productivity • Identification of training needs and • Briefings and trainings • Sustainability updates implementation of development EMPLOYEES • Employees Wellness and practices programme to build capabilities Programme • Welfare and • Implementation of an effective • Annual appraisals remuneration Occupational Safety and Health • Workplace and living System and Standards conditions • Implementation of COVID-19 SOPs • Safety and health issues to mitigate the risk of COVID-19 and practices, including • Whistle blowing channel, COVID-19 grievance heard through the • Group’s directions, grievance procedure and two-way vision, policies and communication meetings practices • Human resource related matters
Note: The frequency of engagement with the key stakeholders can be periodic or on a needs basis, unless otherwise stated. NURTURING SUSTAINABILITY 61 ANNUAL REPORT 2021
Managing Material Matters
In this reporting year, the Group focused on eleven through various collaborative platforms, dialogues and (11) material matters and aligned them accordingly to meetings. Beyond stakeholders’ feedback, topics of the relevant SDG. The material matters reported were concern were also determined based on evaluation of representative of matters deemed as of significant concern internal and external reports, and the significant ESG risks to the business and its key stakeholders as they influence and opportunities which are vital to the Group’s long-term the execution of the Group’s sustainability strategies. success and continued growth.
The material matters disclosed in the previous year’s The material matters were then reviewed and approved sustainability report were first assessed to determine if by the Group’s Management Committee. The relevant they are still relevant and if there are any new concerns targets and key indicators under each material matters to be raised based on the current global and local trends, were reviewed and discussed periodically in the changes in regulatory as well as the directions of the management meetings to ensure sufficient and applicable industry. The material matters were also determined mitigation plans were being employed and the progress through engagements with the key stakeholder groups of the implementation targets were closely monitored.
Government authorities Local Communities Customers Suppliers and business and regulators partners
Employees Investors and Non-governmental shareholders organisations and industry associations
Material Corresponding Details in this Stakeholder Matters UN SDGs Description Report Groups
Profitability • The Group’s business • Economic value and Value revenue generated was creation and Creation shared and distributed distribution SDG-1 across to various • Priming No Poverty stakeholders, with about and driving End poverty in all its forms in 25% to its employees, 8% innovations everywhere to capital providers and • Smallholders about 15% as taxes and and out growers’ cess to the governments. transformation • The Group promoted schemes and conducted various trials and experiments using innovative technologies to enhance its work efficiencies and productivity, such as use of drone technology, in-field mechanisation and digitalisation in field management. 62 IJM PLANTATIONS BERHAD SUSTAINABILITY REPORT
Material Corresponding Details in this Stakeholder Matters UN SDGs Description Report Groups
Corporate • Ensure compliance of all • Regulatory Governance relevant statutory and legal compliance and Stewardship requirements. ethical conducts SDG-16 • Implement the whistle Peace, justice and strong blowing platform and institutions grievance mechanism to Promote peaceful and ensure voices are heard. inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels
Assurance • The Group provides • Sustainability and assurance to its certification and Certification product buyers through quality assurance SDG-12 certifications that the Responsible Consumption palm products are and Production produced responsibly and Ensure sustainable sustainably. consumption and Supply Chain • The Group ensures the • Traceability and production patterns Management origins of palm products supply chain are traceable and with management good level of transparency.
Occupational • The Group is committed to • OSH performance Safety and provide a safe and healthy • Accident Mitigation Health environment to employees and Safety SDG-3 and take necessary Intervention Good Health & Well Being preventive measures to • Work related Ensure healthy lives and secure the safety and illness promote well-being for all at health of employees at • Medical care all ages work and its supply chain and well being partners. • Security in operations
COVID-19 • The COVID-19 pandemic • COVID-19 Pandemic has impacted the pandemic lives of many and the • Community Group recognised its outreach and responsibility to ensure the development employees, as well as the surrounding communities remain safe and protected from the disease. NURTURING SUSTAINABILITY 63 ANNUAL REPORT 2021
Material Corresponding Details in this Stakeholder Matters UN SDGs Description Report Groups
Employees • Human capital is vital • People asset and Retention and play an integral role talent retention and in delivering values to • Fair Engagement SDG-8 shareholders. remuneration Decent work and economic • It is vital to cultivate a and benefits growth positive organisational and • Employee Promote sustained, inclusive offer employees jobs with engagement and and sustainable economic fair compensation, safe development growth, full and working condition, decent • Education and productive employment living environment and childcare in and decent work for all social protection. plantations for workers’ children
SDG-4 Quality Education Ensure inclusive and equitable quality education and promote lifelong learning opportunities for all
Human • The Group respects the • Respect for Rights rights of its employees human rights and to treat them with • Freedom of SDG-5 dignity in line with relevant association Gender Equality legal requirements and & collective Ensure inclusive and regulations. bargaining equitable quality education • Empowering and promote lifelong women at learning opportunities for all workplace • Grievance procedure and whistle blowing channel SDG-16 • Children’s Peace, justice and strong protection and institutions well-being
Climate • As a sustainable palm oil • Fire management Change producer, it is imperative and prevention in building climate change • Managing carbon SDG-13 resilience and minimising emission Climate action the environmental impacts. • Energy Take urgent action to combat • Increased frequency and management climate change and its severity of adverse weather impacts conditions and patterns could severely disrupt the stability of the business and its supply chain. • The Group strives to set SDG-7 realistic targets for the Affordable and Clean emission reductions and Energy improve its reduction Ensure access to affordable, strategies. reliable, sustainable and modern energy for all 64 IJM PLANTATIONS BERHAD SUSTAINABILITY REPORT
Material Corresponding Details in this Stakeholder Matters UN SDGs Description Report Groups
Conservation • Reputational risks or • Responsible and Land Use perceived concerns can land use and arise from negative agricultural SDG-6 environmental as well as practices Clean Water and Sanitation social impacts from the • Environment Ensure availability and business activities. and biodiversity sustainable management of • The Group adopts protection water and sanitation for all responsible land use and • Responsible agricultural practices, and agrochemical committed to conserve and usage maintaining areas of HCS • Water and HCV. stewardship SDG-15 • The Group’s strategies • Effluent Life on land in water management and waste Sustainably manage forests, leads towards water management combat desertification, use optimisation and halt and reverse land reduction in water degradation, halt biodiversity wastage. The Group loss strives to ensure water resources are utilised in the most optimum way with minimal impacts to the environment.
Stakeholder • The Group believes that • Creating shared Engagement collaborating with other values through stakeholders are vital in partnerships and SDG-17 creating shared values collaborative Partnership for the Goal and working towards the initiatives Strengthen the means common goals. • Community of implementation and outreach and revitalize the global development partnership for sustainable development
The annual stakeholder engagement activity – “Walk with CEO” shifted from a physical programme to a virtual meet-up “Meet the CEO” NURTURING SUSTAINABILITY 65 ANNUAL REPORT 2021
PRODUCTIVITY AND INNOVATIONS
Briefing on IJM-ABCS to employees
Regulatory Compliance and Ethical Business Conduct
The Group is committed to implement responsible and integrity, honesty and compliance in all of its business ethical business policies and practices in compliance activities. The IJM-ABCS comprises a manual and with relevant legal requirements and regulations. This policy which contains principles and guidelines to guide is a collective commitment to build a corporate culture the employees and its business partners in making within the Group to operate the businesses in an ethical ethical decisions. It is also a management system to manner that is vital to advance confidence and build trust consolidate various policies, procedures and processes among stakeholders. in relation to bribery and corruption risks of the Group. In the reporting year, the Group had launched the ABCS The Group’s operations and practices are guided by Self-Learning Module, which online self-learning was various policies, standards and procedures in made possible for all employees. Third-party vendors ensuring its activities and transactions are open, are also required to adhere to the Group’s practices and transparent and in compliance with relevant laws principles and signed on the Vendor Integrity Pledge to and regulations. The details of the policies and acknowledge compliance with the standards and policies procedures can be found from the Group’s website at adopted by the Group. http://www.ijmplantations.com/corporate-governance.php. Employees, suppliers and business partners are also The Group practices a zero-tolerance approach against encouraged to utilise the Whistle Blowing Mechanism, all forms of bribery and corruption and upholds all should there be any suspected violations of the policy. applicable laws in relation to anti-bribery and corruption. The Whistle Blowing Mechanism provides an avenue Employees were briefed to ensure their roles and duties for the reporting of genuine concerns on wrongdoings were performed in accordance with the Group’s policies without fear of retaliation and reprisals. In the reporting and core values. The Group had officially launched and year, there were no reports of misconduct or violation on implemented an Anti-Bribery and Corruption System laws and regulations in the Group. (“IJM-ABCS”) which seeks to uphold and promote 66 IJM PLANTATIONS BERHAD SUSTAINABILITY REPORT
Creating Shared Values Through Partnerships
The Group believes that collaborating with other key The Group continues its collaborations with a multitude stakeholders, such as business partners, communities, of partner-stakeholders. The Group believes that the NGO partners, government agencies and industry joint efforts involving various experts and parties will fraternity are vital to create shared values and working enable the intensification of joint efforts and focused towards achieving deforestation-exploitation free supply attention on areas where progress can be addressed chain. This is also in line with the SDG Goal 17 focused towards delivering positive and constructive impacts to the on Partnerships for the Goals, as the fundamental relevant stakeholders. The table below summarises the principle from which sustainability partnerships are various organisations that the Group are in collaborations built upon. and active participation.
Commencement No Year No of years Organisations Project/Engagement Activities
1 2001 20 University Malaysia Sabah Tertiary student’s internship programme, (UMS) research activities and field visits
2 2002 19 Tripartite partnership with Tripartite partnership with Sabah Rugby Sabah Rugby Union (“SRU”), Union (“SRU”), Eagles Rugby Club (“ERC”) Eagles Rugby Club (“ERC”) and Sabah Education Department and Sabah Education school children and youth rugby sports Department development programme in Sabah
3 2006 15 Sandakan Pink Ribbon Grass-root students and public breast health awareness and outreach initiatives
4 2007 14 NGO Humana Child Aid Education for guest workers’ children in Society Sabah Sabah
5 2008 13 Malaysian Estate Owners’ Active participation and organised various Association (“MEOA”) workshops and industrial related initiatives
6 2009 12 Malaysian Palm Oil Board Participated in the audit trials ie. Code (“MPOB”) of Practices, MSPO, CPO washing trials and innovations. (Collaboration during earlier years was on oil palm breeding programme)
7 2010 11 Duchess of Kent Hospital in Blood donation campaigns and health- Sandakan related activities
8 2011 10 NGO Borneo Bird Club Avian fauna surveys and school outreach Sandakan awareness program
9 2012 7 ACGT Sdn Bhd and Genting Research and development trials in Green Tech Sdn Bhd relation to the use of genomics-based solutions to increase productivity
10 2014 6 Wildlife Rescue Unit and Wildlife translocation, conservation Sabah Wildlife Department awareness and human-elephant conflict issues, Honorary Wildlife Warden Programme
11 2015 5 NGO Earthworm Foundation Smallholders’ outreach Rurality Project
13 2019 2 Montfort Youth Training Rendering leadership and related technical Centre (MYTC) and the support in rural youth skill development Malaysian Estate Owners’ programme focused on plantation Association (MEOA) conductorship NURTURING SUSTAINABILITY 67 ANNUAL REPORT 2021
Plantation Digitalisation and Mechanisation
The Group deployed mechanised solutions and digital technologies in the daily estate operations to improve productivity and decision-making processes, as well as progressively reduce the dependence on manual labour. The Group continues using GPS enabled hand-held devices in plantation supervision tracking. Estate operations in Malaysia have implemented the digital supervision system with better efficiency realised in estate supervision. The Group is also exploring additional usage of the devices by the R&D personnel through incorporation of agronomic data into the estate blocks coupled with the crop productivity data.
The Group continues to pursue work method variations involving various combinations of machineries and manpower to enhance infield mechanisation and work towards customisation of most effective options suited against site-specificness, time-motion and overall cost-benefits. Grabbers coupled with bin system, motorised wheel barrows and mini-tractors are widely used for Stringent selection process in the production of IJM in-field crop evacuations and fertiliser application. The graphite DxPTM planting materials harvesting poles which are noted to be more durable and lighter in weight were also widely promoted and used by the oil palm Priming and Driving Innovations harvesters in the operations. Implementing befitting strategies for plantation related innovations are imperative especially against the backdrop of acute labour shortage, increasing customer expectations e.g. food safety and quality, and changing business landscape. The strategies for innovations are driven by the objectives of improving operational performance and productivity, enhancing the development of sustainable practices while promoting the culture of continuous improvement.
The Group’s research and development Bin system in crop evacuation (“R&D”) team continues to pursue conventional oil palm breeding, progeny testing and selection trials leading towards producing high yielding oil palm planting materials. The Group also focused on fine-tuning and improving the approaches in good agricultural practices through continuous pests and diseases management techniques and other related agronomic trials. In addition, the Group has also invested in and evaluated various technologies and innovative mechanisms to improve the operational efficiencies and improve social-environmental footprints in the operations.
Grabber system 68 IJM PLANTATIONS BERHAD SUSTAINABILITY REPORT
Sustainability Certification and Quality Assurance Monitoring and Surveillance The Group’s sustainable palm oil production and its practices along with palm product quality were externally verified through both international and national certification schemes such as the International Sustainability and Drones coupled with a Carbon Certification (“ISCC”), Malaysian Sustainable Palm Oil (“MSPO”), Geographic Information system Indonesian Sustainable Palm Oil (“ISPO”); and quality related management (GIS) were used to generate system certification scheme such as GMP+ (Good Manufacturing Practices precise operational analytic data and the + for the integration of HACCP- Hazard Analysis and Critical Control such as palm census, potential Points). The Group strives to provide external assurance wherever possible palm nutritional conditions and to enhance its credibility, transparency and building trust with relevant localised block information in stakeholders. order to facilitate more effective estate management and The Group also cooperates closely with government agencies such as resource planning. Surveillance Department of Environment (“DOE”) and the Department of Occupational and monitoring using drones on Safety and Health (“DOSH”) in compliance audits and site visits to validate the land boundaries and HCV that the Group’s practices are carried out in compliance with various legal areas were also able to assist requirements and standards. in detecting any encroachments and deforestation activities by However, the COVID-19 pandemic had caused disruptions in the management external parties. In addition, the of audit processes and the periodic sustainability compliance monitoring drones were also useful in fire programme. Due to the restrictions of movement and the strict SOPs in surveillance when fire hotspots managing the COVID-19 pandemic, most of the certification audits were carried are reported. out remotely. Required documents were uploaded on a shared platform made accessible to the external auditors during remote audits. Notwithstanding this, limited physical monitoring visits were conducted during the window when physical movements were allowed.
Food Safety
The CPO washing plant in the Group’s Desa Talisai Palm Oil Mill International Sustainability and Carbon Certification (“ISCC”) in Sandakan, which was installed under the Memorandum of ISCC is a multi-stakeholder organisation that provides a globally Agreement (“MoA”) with MPOB applicable certification system for the sustainability of biomass and in 2018, was able to consistently bioenergy products. All the Group’s palm oil mills and their respective achieve very low chloride internal supplying estates in the Malaysian operations were certified under content in the CPO. The principle this voluntary scheme. The total ISCC EU certified palm oil dispatched of the CPO washing plant is to from the mills were 97,740 MT in the reporting year or 80% of total CPO reduce chloride content in CPO, production in the Malaysian operations. The Group will continue to pursue thus mitigating the production with the re-certification under the ISCC-EU certification scheme, if there of 3-monochloropropane diol is market demand and cost-benefit advantage from the sale of ISCC-EU esters (“3-MCPDE”) and Glycidyl certified oils. Fatty Acid Esters (“GE”), which are the contaminants formed Malaysian Sustainable Palm Oil Certification (“MSPO”) during food processing and refining of edible oils and fats MSPO is a mandatory national sustainability certification scheme for the at high temperatures in the oil palm industry in Malaysia, covering the whole supply chain from oil downstream processes. The palm plantations to downstream facilities. The entire Group’s mills and Group continues to monitor the estates in the Malaysian operations were certified under this national performance of the CPO washing mandatory scheme. The Group also monitored the progress of MSPO plant and another improved certification of its external FFB suppliers and engaged with suppliers who system will also be installed have not initiated the certification processes. at the Sabang POM-1 in Sugut region in the next reporting year. NURTURING SUSTAINABILITY 69 ANNUAL REPORT 2021
Traceability and Supply Chain Management
Traceability in the palm oil supply chain is crucial to identify where Indonesian Sustainable Palm Oil the supply originates and to ensure that the palm products were Certification (“ISPO”) legally sourced and produced sustainably. The information obtained from the FFB suppliers enables the Group to determine whether ISPO is the sustainability certification the plantation is in a high-risk area and assist in prioritising the scheme established in 2011 for its oil palm industry in Indonesia. In this reporting verification process. In the process of tracking and monitoring the year, all certified units had undergone origins of palm products, the Group can influence better governance surveillance audits and there are 2 estates and responsible land use among its suppliers. remaining that are still pending, awaiting The Group’s target to achieve 100% traceability to plantations was documents to be issued by the authorities. achieved in the reporting year. In the reporting year, 70% of the Quality and Process Assurance FFB processed in the Group’s mills were from its own estates and the remaining 30% were from external sourced crops, which The Group’s processing operations and included the independent outgrowers, independent and schemed palm products are certified under quality smallholders, plasma and Kemitraan schemes. In addition, management systems such as GMP+ and 100% of the processed palm kernels at its palm kernel crushing Standard and Standard and Industrial plants could be traced back to its sources. In summary, the Group is Research Institute of Malaysia (“SIRIM”) now able to ensure all palm products received were from legal and quality standards. The Group adheres to known sources. stringent production requirements and delivers quality products in compliance All CPO and palm kernel products were produced from the Group’s with customers’ needs and standards. The processing plants. No CPO or kernels were sourced externally. Group also considers comments or feedback The traceability assurance was based on the information derived from customers and promptly engages in and collected from the fresh fruit bunches (“FFB”) sources, responses and follow-up actions. including the company name, estate coordinates, availability of legal documents, sustainability certification status (MSPO for the Malaysian operations and ISPO for the Indonesian operations), size of estate and the amount of FFB supplied to the Group’s processing plants.
Crop Traceability, FY2021
6.0% 2.0% 3.8% 69.6%
Inspection visit by enforcement officers from DOSH 18.6%
Internal Sources Smallholders (≤40 Ha)
Third Party Estates (>500 Ha) Scheme Smallholders (FELCRA, Plasma and Smallgrowers (>40 - 500 Ha) Kemitraan Schemes) MSPO surveillance audit in progress 70 IJM PLANTATIONS BERHAD SUSTAINABILITY REPORT
FFB Intake by Category of Crop Suppliers, FY2021 (%)
FFB Intake (%)
Scheme Smallholders (FELCRA, Third Party Plasma and Internal Estates Smallgrowers Smallholders Kemitraan Operations Sources (>500 Ha) (>40 - 500 Ha) (≤40 Ha) Schemes)
Minat Teguh Palm Oil Mill 86.4 1.5 4.6 7.5 Nil
Desa Talisai Palm Oil Mill 70.7 3.5 12.1 8.3 5.4
Sabang Palm Oil Mill 1 70.8 16.2 11.2 1.8 Nil
Sabang Palm Oil Mill 2 97.9 Nil 1.9 0.2 Nil
IPS Palm Oil Mill 67.8 17.1 8.7 2.2 4.2
Sinergi Palm Oil Mill 59.5 30.8 2.1 Nil 7.6
Prima Palm Oil Mill 61.6 34.0 Nil Nil 4.4
Mapping of External Crop Suppliers
The Group continued its mapping activities to assess potential environmental and social risks of the external crop suppliers. In the reporting year, about 67% of the mapping activities for the Group’s external crop suppliers were completed. This includes about 21,154 ha of areas belonging to outgrowers and 1,757 ha of active independent smallholders supplying crops to the Group’s mills in the Malaysian operations. Whereas in the Indonesian operations, with the additional new mill, Prima palm oil mill in Bulungan region, additional external crop suppliers were engaged, with about 26,758 ha of land were from outgrowers, and 9,792 ha of land was developed under the Group’s outgrower schemes. The details are shown in the following table on the areas of the Group’s external crop Security check on the palm oil tanker suppliers and number of third-party crop’s suppliers engaged.
Malaysian Operations Indonesian Operations
No. of No. of companies/ companies/ Category of Crop’s Supplier Ha growers Ha growers
Third Party Estates 17,407 9 25,335 9 (>500 Ha)
Smallgrowers 3,747 27 1,423 11 (>40 - 500 Ha)
Smallholders 1,757 276 330 18 (≤40 Ha) Scheme Smallholders 1,054 4 9,792 5,136 (FELCRA, Plasma and Kemitraan Schemes) NURTURING SUSTAINABILITY 71 ANNUAL REPORT 2021
Supplier Risk Assessment
Eradicating deforestation along with other unsustainable engagement meetings organised to brief on the Group’s agricultural practices is a multifaceted challenge sustainability commitments and to discuss issues that that requires collective and committed efforts from arise when adopting the commitments. the producers and its supply chain, including the Suppliers that were found having confirmed violations smallholders. As part of the Group’s pledge towards NDPE, in the sustainability requirements will be engaged in the Group has developed procedures to assess the risk proactive meetings and guidance will then be initiated. If levels for external crop suppliers. the concerned suppliers are unwilling to take corrective In the reporting year, the Group continued the supplier actions or remediations, the Group will then remove them risk assessment programme where a set of sustainability from its supply chain. In the reporting year, the Group questionnaires were distributed to the crop suppliers in did not detect any valid violations of the sustainability the Malaysian operations for self-assessment on the practices and commitment as adopted by the Group. gaps with the Group’s sustainability practices and commitments. This self-assessment activity was aimed Progress on Supplier Risk Assessment in the Malaysian Operations to assess the level of compliance by the Group’s suppliers in their social-environmental practices as well as their legal Crop’s Suppliers Category Progress (%) compliance level, and seeks to verify the cases of potential non-compliant land conversion, peat clearing or burning Third Party Estates 78 that have been detected by satellite monitoring and ground (>500 Ha) verification. The self-assessment for third party crop suppliers were also initiated in the Indonesian operations Smallgrowers 89 which the progress of completion will be reported in the (>40 - 500 Ha) next reporting year. Smallholders 42 (≤40 Ha) The progress of assessment conducted on third-party crop suppliers is shown in the Table below. Due to the Scheme Smallholders 100 geographical remoteness of the crop suppliers, and the (FELCRA) restrictions on movement during the COVID-19 pandemic, the targeted progress for smallholders’ assessment has For the Group’s processing plants, the risk levels were not been achieved yet. However, higher potential risks verified and assessed during external audits, ie. ISCC were portrayed by the outgrowers’ estates, of which more annual re-certification audits, MSPO and ISPO surveillance than 70% of them were assessed. audits. During the ISCC audits, all the internal mills were The Group understands that elevating sustainability rated under normal risk and was able to get independent accountability across the network of suppliers is complex third-party verification on sustainability requirements and can never be straightforward, particularly on the NDPE including the NDPE commitment implementation. commitment, which requires an enormous effort to ensure The Group has also adopted a procurement procedure best practices across the entire supply chain. Thus, it is where due diligences are conducted on the suppliers important to continue engaging with the crop suppliers and contractors prior to any awards of contracts or on the ground, towards developing effective relationships business dealings. Suppliers and contractors were and to share best practices in supplier-related policies as required to understand and adopt the Group’s policies and well as updates on the industry. The sustainability ethical business conduct and any other applicable legal commitments were enforced through agreements and requirements. contracts, and there were virtual briefings and stakeholder 72 IJM PLANTATIONS BERHAD SUSTAINABILITY REPORT
CARE FOR ENVIRONMENT
Zero burning in replanting activities
Responsible Land Use and Agricultural Practices
Prior to any new developments, and in line with the As an integral part of the new planting procedures, Group’s commitment towards responsible palm oil all new planting development are subjected to the findings production and its No Deforestation, No Peat and No from third-party independent assessments such as Social Exploitation (“NDPE”) commitment prior to any new Environmental Impact Assessments (“SEIA”), Analisis developments, the Group shall ensure that: Mengenai Dampak Lingkungan (“AMDAL”), HCV and HCS integrated assessments, soil suitability and topographic No deforestation takes place in any surveys. For quality assurance of the assessments, High Conservation Value (“HCV”) and only assessors accredited by the HCV Resource Network’s High Carbon Stock (“HCS”) areas. Assessor Licensing Scheme (“ALS”) were appointed to conduct the HCV-HCS assessments. This commitment is also applicable to the third-party suppliers inclusive of No new development occurs on peat plasma scheme smallholders. land regardless of any depth. The Group’s agricultural practices are also aligned to Zero burning policy is strictly adhered industry best practices and comply with the local legal to during new development and requirements and sustainability standards, which include but replanting. not limited to the following: • Avoid planting on steep slopes and marginal soils. Free, Prior, Informed Consent (“FPIC”) • Protect and maintain riparian reserves. procedures were conducted and • Enhance soil moisture retention by planting ground mutual consents were obtained at the legume cover crops, application of empty fruit bunches as newly acquired areas. mulch and soil conditioner and fronds stacking. • Water table management with water gates, silt pits and Respect human and land use rights. canals. • Practice Integrated Pest Management (“IPM”). • Science-based agronomic recommendation on fertilisation and agrochemical usage. NURTURING SUSTAINABILITY 73 ANNUAL REPORT 2021
Responsible Agrochemical Usage
The Group strives to reduce the reliance on inorganic to collaborate closely with agrochemical suppliers to fertilisers and pesticides by optimising the usage of conduct agrochemical trials and evaluate various new agrochemicals and substitutes with organics wherever products in the market to explore better agricultural possible. The Group is committed not to use chemicals products or alternatives to minimise the chemical usage. that fall under the World Health Organisation (“WHO”) Class IA and IB, and also chemicals as listed in the In the reporting year, pesticides usage was reduced Stockholm or Rotterdam Conventions. Since year 2019, compared to the previous reporting year (FY2021: 3.21; the Group has ceased the usage of Paraquat and instead FY2020: 3.41). Overall, herbicides accounted for 78% of use safer Class III and IV pesticides, wherever possible. total pesticides used in FY2021 whilst increasing trend of The same commitment also applies to all the Group’s crop rodenticides over the years indicate that more frequent suppliers in the supply chain. The Group also continues monitoring of rat baitings may be needed to assess and treat rat infestations in the fields.
Pesticides Usage in the Group’s Operations (kg/ha/annum)
Type FY2018 FY2019 FY2020 FY2021
Herbicides 3.20 2.76 2.71 2.51
Fungicides 0.00 0.01 0.03 0.03
Rodenticides 0.52 0.26 0.34 0.47
Insecticides 0.16 0.24 0.33 0.20
TOTAL USED 3.88 3.27 3.41 3.21
Integrated Pest Management (“IPM”)
Integrated Pest Management is widely practiced in the Group’s operations. This consists of four (4) main components – Prevention, Monitoring, Physical Control, and Chemical Control being the last resort. Implementation and monitoring of IPM programme was carried out by the Group’s Research and Development (“R&D”) team, working in collaboration with the estates’ management to ensure pests and diseases in the field are below the threshold levels.
In the reporting year, about 840 of predatory bugs, Platynopus sp. were released into the field as part of biological control for leaf eating caterpillars. Beneficial plants such as Cassia sp., Turnera sp. and Antigonon sp. continued to be planted at strategic locations within the estates. For any Ganoderma infected palms, the trees were removed and sanitised in accordance with the Group’s SOP to avoid infecting other nearby oil palm Beneficial plant, Antigonon sp. stands.
Fertiliser Management
The fertiliser application programme was determined by an in-house agronomist who makes recommendations of fertiliser types, application intervals and dosage levels. Fertilisers were sampled to analyse its nutrient contents to ensure the quality of products applied. Field audits were also conducted to assess that the application methods and practices followed the Standard Operating Procedures. 74 IJM PLANTATIONS BERHAD SUSTAINABILITY REPORT
In addition, the Group is also committed to minimise Management of HCV and HCS the usage of inorganic fertilisers through the following approaches: In total, the Group manages 6,083 ha (FY2020: 5,299 ha) of High Conservation Value (“HCV”) and Conservation • Application of inorganic fertilisers based on plant Set Aside (“CSA”) areas for conservation and adopts nutrient requirements adaptive management approach in managing these • Promote oil palm roots’ health for better fertiliser conservation areas including constantly reviewing the uptakes biodiversity management plans and enhancing its capacity to monitor these areas. • Enhancing precision in determining fertiliser dosage based on site specific characteristics Designated conservation sites within the Group’s • Improve soil fertility and moisture through the concession areas, such as the Secret Garden and Hundred application of oil palm biomass where possible Acre Woods in the Malaysian and Indonesian operations, and Lembuak Naga Lake located in its Indonesian In the reporting year, a total of 742 kg/ha/annum (FY2020: operations are conserved and protected to minimise 770 kg/ha/annum) of fertilisers were applied per hectare of disturbance to these HCV areas. Apart from designated planted areas. conservation sites, forest buffer zones along the boundary of government gazetted forest reserves and riparian Fertiliser Application in the Group’s Estate Operations reserves along the natural waterways within the (kg/ha/annum) concession areas were protected and set-aside from any new or replanting activities.
FY2018 FY2019 FY2020 FY2021 In addition, the Group also recognised the importance of adopting the landscape approach in managing these Fertilisers 901 806 770 742 HCV areas and its adjacent connecting HCV landscapes. Usage Engagement with various stakeholders including local authorities, non-governmental organizations (NGOs), and surrounding local communities were carried out, Environment and Biodiversity Protection in strengthening the security of the surrounding HCV Natural forests and ecosystems play an essential role in landscapes and protecting against encroachment and providing resources such as clean water, fresh air, food poaching activities. as well as provide crucial natural buffers to extreme weather and flooding conditions. The Group holds steadfast to its no deforestation policy and strive to protect the important ecosystems and biodiversity in its operations and the surrounding landscapes. The Group adopts an Environment and Biodiversity Policy which emphasises the commitments in protecting biodiversity and minimising the environmental impacts.
Monitoring on Deforestation Danau Lembuak, with HCV 4 and HCV 6 in Indonesian operations
The Group’s no deforestation policy was repeatedly briefed to the Group’s external crop suppliers including plasma scheme smallholders and local communities through engagement activities and also formal notifications. Self-assessments, followed by sustainability related risk analysis were conducted on the Group’s third-party crop suppliers to ensure their practices are also in line with the Group’s sustainability commitments.
In addition, monitoring plans such as patrolling activities and regular aerial surveys using drones at the HCV areas were carried out. In spite of all the ongoing and enhanced In-house wildlife wardens participated in the enforcement efforts, safeguarding these areas from conversion by activities with Sabah Wildlife Department in battling wildlife third-parties remains an ongoing challenge. poaching NURTURING SUSTAINABILITY 75 ANNUAL REPORT 2021
Peatland Protection
The Group acknowledges the importance of peatland in preserving biodiversity, provide safe drinking water, minimise flood risk and help address climate change. Thus, the Group is committed to no new development on peatland regardless of depth. The same commitment is also applicable to its external crop suppliers including the plasma scheme smallholders. Water level monitoring
There were no new areas planted on peat for the past 5 years since the inception of the Group’s “No Peat” commitment. However, about 10% of the total planted areas equivalent to 6,308 ha was planted on peat in earlier years of establishment. Thus, for the existing planted areas on peat, the Group adopts industry best management practices for managing the planting on peat, which include the periodic monitoring of water table and rates of soil erosion at designated locations. Peat soil analysis
Biodiversity Protection and Management The Group prohibited capturing, hunting and poaching of flora and fauna species within the Group’s operations and adjacent forest The Group strives to minimise its reserves. Any offender will be reported to the authorities. The environmental footprints in its areas of awareness of no hunting and biodiversity protection was promoted operations and is committed to protect and through internal training and stakeholder engagement meetings. conserve flora and fauna species including Employees and local communities were also briefed on the applicable endangered, rare and threatened species laws and regulations on wildlife and reminded on the penalty or classified under the International Union for punishment for violations of the regulations. Conservation of Nature (“IUCN”), found or encountered within the Group’s concession The table below provides a summary of the species sighted and areas and adjacent gazetted forest reserves. identified in the Group’s operations and listed according to the Red List of threatened species under IUCN. Apart from that, endemic species The Group’s patrolling teams in every were also recorded during the survey activities and interview sessions operating unit are responsible to conduct with employees. 15 species that were endemic to Borneo Island were periodic patrols along the forest reserve recorded. boundaries and HCV areas, and report any poaching and encroachment activities to the Summary of IUCN Red List of Threatened Species Sighted in the sustainability teams and local authorities. Group’s Operations The patrolling teams were trained by the Sabah Wildlife Department (“SWD”) under Critically Near the ‘Honorary Wildlife Warden’ programme. Type Endangered Endangered Vulnerable Threatened
In addition, the Group supports and promotes Mammals 1 4 4 2 the concept of wildlife co-existence with people in plantations. The Group continues Birds 2 2 5 8 to assist and support the crop supplying Plants 5 5 13 3 smallholders in Ulu Muanad, Sabah in mitigating human-elephant conflict under the Reptiles 0 0 1 1 Group’s Rurality Project. TOTAL 8 11 23 14 76 IJM PLANTATIONS BERHAD SUSTAINABILITY REPORT
A B C
D E
F H
G
Some of the wildlife pictures taken during patrolling activities
A Pangolin C Orang Utan E Oriental pied hornbill G Banteng B Wild Boar D Pig-tailed macaque F Crocodile H Python
Briefing on protected species Briefing and interview sessions with employees in the operations NURTURING SUSTAINABILITY 77 ANNUAL REPORT 2021
Climate Change and Carbon Emission Rehabilitation and Conservation Increased frequency and severity of adverse weather conditions The Group also initiates conservation and patterns, attributed to global climate change could severely and restoration of flood prone areas and disrupt the stability of the Group’s supply chain. As a responsible palm riparian reserves that were previously oil producer, whilst agricultural activities inevitably are related to planted with oil palms with suitable tree climate change, it is imperative to build on common but differentiated species. In the Malaysian operations, climate change resilience and ensuring long-term sustainability in Bongkul (Neonauclea subdita) tree the business supply chain. species were planted in flood prone area The Group strives to contribute to the SDG-13 on Climate Action in Sungai Sabang and Rakanan Jaya under the Sustainable Development Goals, through minimising its South estate. This species was selected environmental impact such as its adoption of zero burning in all land for flood-prone planting due to its flood preparation activities, optimising the usage of renewable energy, tolerant characteristic. In the Indonesian protection of HCV areas, rehabilitation of degraded land, as well as operations, 184,905 (FY2021 : planted efforts in driving for no peat and no deforestation commitment in its 1,782 ) saplings of various tree species supply chain. including Shorea almon foxw, Shorea The Group focused on the reduction of GHG emissions through dasyphylla and local fruit trees were enhancing operational performance and optimising the usage of planted at various sites within the Group’s renewable energy as much as possible. The Group sets the desirable operations under the “Sejuta Pohon” target of 30% reduction on carbon emissions intensity per tonne of initiative since 2015. CPO produced, compared with the base year figures by 2030.
Carbon Performance
The operational emissions data was collected and calculated using toolkits that were aligned with the calculation methodology guided by the EU Renewable Energy Directive and guidelines from ISCC 205 - GHG Emissions 3.0 and in accordance with the GHG Protocol accounting standard. The carbon emissions data for Malaysian operations were externally verified during the annual external ISCC recertification audits. The greenhouse gas (“GHG”) measurements did not include the emissions from land use change, conservation set aside and carbon sequestration.
In the reporting year, the total carbon emissions for the Group was
approximately 230,096 tonnes of carbon dioxide equivalent (“tCO2-e”), with a slight decrease compared to the previous reporting year Bongkol tree planting plot in Sungai Sabang (FY2020: 231,695 tCO2-e). This was mainly due to the reduction of Estate fertilisers and fossil fuel usage in the operations.
GHG Protocol Emissions for Group’s Operations, FY2019 to FY2021
GHG Protocol Emission
FY2019 FY2020 FY2021
Scope 1 (tCO2-e) 207,349 222,425 222,492
*Scope 2 (tCO2-e) 4,081 5,096 4,349
Scope 3 (tCO2-e) 4,367 4,174 3,255
Total 215,797* 231,695* 230,096
* Restatement of information Note: Scope 1: Direct GHG emissions which are defined as emissions from sources that are owned or controlled by the organisation such as fertilisers usage, fossil fuels used (diesel & petrol), emission from effluent treatment, chemicals, transportation and processed water from palm oil mills. Scope 2: Indirect GHG emissions which include emission from purchased electricity Tree planting activities in the Indonesian Scope 3: Indirect GHG emissions which are not directly owned or controlled operations by the organisation such as fossil fuels used by the contractors for crop transportation and machineries. 78 IJM PLANTATIONS BERHAD SUSTAINABILITY REPORT
A detailed breakdown of the Group’s GHG emissions generated using renewable sources. The renewable showed that the highest emission sources came from the sources are from milling biomass such as palm fibres, effluent treatment plants, followed by fertilisers usage in palm kernel shells and empty fruit bunches, while the the estate operations, fuel used in transport and machinery. balance of the non-renewable sources consist of diesel and purchased electricity.
Carbon Emissions by Source for the Group’s The Group was able to substitute about 88% of Operations, FY2021 non-renewable fossil fuels with renewable sources for energy generation. This was translated to carbon emissions
savings of more than 41,000 tCO2-e if non-renewable 1.9% 0.3% sources were used. There are no significant changes in the energy intensity for both renewable and non-renewable energy consumptions per tonne of CPO produced in the 11.4% 0.4% 60.9% reporting year (FY2021: 0.60; FY2020: 0.61 GJ/MT CPO).
Fire Management and Prevention
25.1% Regional air quality in Southeast Asia has been seasonally affected by the transboundary haze problem in past decades, and caused immense adverse environmental health and economic impacts in this region. The Group recognised that this is a shared responsibility by all stakeholders to address the issue and required concerted joint efforts to mitigate the situation.
The Group is committed to a strict zero burning policy, Effluent Treatment Purchased Electicity where no fires are involved in land preparations during Fertilisers Pesticides, Chemicals and replanting and new development activities. The zero Lubricants burning policy is also applicable to all crop suppliers, Transport and Machinery Processed Water (Mill) contractors and other relevant stakeholders in the Group’s supply chain. Suppliers and contractors engaged for replanting activities were also constantly informed on the GHG Emissions Intensity Group’s zero burning policy during engagement activities.
GHG emissions intensity indicates the total carbon Since FY2019, the Group had tracked and reported fire emissions per tonne of product produced. In the reporting hotspots occurring not only within the concession areas year, the Group observed no significant changes in the but also surrounding areas within a 500-meter radius GHG emissions intensity, which was 0.54 tCO -e/MT CPO 2 outside the concession boundaries using the data compared with the base year of similar value. However, extracted from the Fire information for Resource the Group’s purpose-driven plans in carbon reduction were Management System (“FIRMS”). In addition, the Group hindered by the COVID-19 pandemic where some of the also monitors and conducts surveillance from the estate proposed tree planting activities and processing plants’ fire surveillance towers and monitoring stations at the improvement projects had to be deferred. locations which have higher fire risks and hazards.
Energy Management In the reporting year, 31 possible fires were detected from the satellite images. Upon on-ground verification, The Group recognises its responsibility in improving only 14 hotspots were confirmed as actual fires. From energy efficiency in the operations to mitigate the adverse the confirmed fires, 10 cases were fires that occurred effects of climate change. The Group strives to explore and outside of the estate boundaries and only 4 cases happened source for cost-effective alternatives to reduce the usage within the Group’s concession boundaries. There were of non-renewable fossil fuels for power generation such also 13 cases reported by the ground teams that were as installation of solar panels and connection to the not detected through the satellite images. The milder national power supply grid. dry season in the reporting year resulted in an overall In the reporting year, the Group had recorded 164,894 decrease in reported cases. The disruptions to daily life and (FY2020: 167,747) Gigajoule (“GJ”) of energy usage, movement controls attributed to the COVID-19 pandemic, of which about 78% of the energy consumed was may have played a role in the reduction of fire incidences. NURTURING SUSTAINABILITY 79 ANNUAL REPORT 2021
While some fire incidences might be caused by dry weather, recorded as unknown, most fires are due tolocal communities using illegal slash and burn methods to clear land for agriculture and other purposes. Engagement with the local communities continued to be carried out to ensure that the communities are aware on the importance of employing the zero-burning technique in land clearing activities.
Fire simulation and firefighting training in Pertama Estate
Fire drill training in Binai Estate
Fire Hazard Indicator in IPS Estate Fire monitoring from the fire surveillance tower in Pertama Estate
Engagement session with local communities on zero burning Engagement with local villagers who practice slash and burn in practices land preparation for crop farming
Trends on Fire Incidences from FY2019 to FY2021
50 40 30 20 10 0
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
FY2019 FY2020 FY2021 80 IJM PLANTATIONS BERHAD SUSTAINABILITY REPORT
AIR EMISSION MONITORING
The Group continues to enhance existing air pollution control technology in the Group’s palm oil mill operations in Malaysia, in order to comply with the Environmental Quality Act (Clean Air Regulations) 2014 wherein a limit for emission dust concentration of not exceeding 150 mg/m3 is stipulated. The Group has installed the dust removal technology using an Electrostatic Precipitator (“ESP”) at Desa Talisai palm oil mill in the Malaysian operations in compliance with the air quality standard. The other palm oil mills in the Malaysian operations will also be installed with similar system in stages thus ensuring all mills are in compliance with the regulations. However, the progress of the projects was also deterred by movement restrictions due to the current COVID-19 pandemic and the completion of the projects will be deferred to another reporting year.
The Group periodically monitors and assesses its air emissions levels through the real time stack emission monitoring and emissions levels were tested by external accredited environmental consultation firms. In the Malaysian operations, gaseous emissions were monitored through the Continuous Emission Monitoring System (“CEMS”) and installation of Closed-Circuit Television (“CCTV”) near the chimney for visual monitoring of smoke released from the chimney. In the Indonesian operations, periodic ambient air monitoring is carried out by the accredited environmental consultant to monitor the pollutant levels in the surrounding outdoor air.
Dust removal technology using an Electrostatic Precipitator at Desa Talisai palm oil mill
Ambient air monitoring carried out at IPS Palm Oil Gaseous emission monitoring carried out by external consultant Mill
Water Stewardship
Adverse weather patterns, including droughts or • Minimising water wastage including using drip El Nino phenomenon, pollution and availability of clean irrigation system in oil palm nurseries water source can lead to disrupted water supply. The • Optimising the water usage per tonne of FFB processed Group is committed to protect and utilise available water resources in a responsible and sustainable manner. • Recycling the treated POME for land irrigation and The Group adopted a holistic approach in managing the application in the fields resources in its operations, which comprises adopting industry best management practices, monitoring and • Monitoring reservoir water levels and increasing the safeguarding of the water quality as well as adhering capacity of water storage to relevant regulatory requirements and sustainability • Protecting riparian reserves and periodic monitoring of standards. surface water quality
The Group’s water management strategy is focused on the • Exploring innovative and cost-effective technologies in water use optimisation and reduction in water wastage, optimising water usage which include the following: • Collecting rain water for washing purposes NURTURING SUSTAINABILITY 81 ANNUAL REPORT 2021
Water Source and Usage
The main sources of water for the Group’s operations are from surface water like rain-fed Group’s Average Water Usage per Tonne of FFB Processed water reservoirs and water catchments. Only the (m3) water requirement for the main offices in Sandakan and Balikpapan are met by water supplied by 1.38 the local utility company. In the reporting year, 1.40 1.36 about 779,373 m3 (FY2020: 677,634 m3) of water was used for domestic purposes in the operations 1.33 which include for drinking and washing purposes. 1.35
Palm oil milling process remained as the main water user component, which has consumed 1.79 1.30 (FY2020: 1.60) million m3 of water in the reporting year. The Group continues to monitor the water usage per tonne of FFB processed in the palm oil 1.25 mills and is able to achieve its target of not more than 1.50m3 of water used for the last seven (7) 1.17 years. In the reporting year, the Group recorded 1.20 an average 1.36 m3 water usage per tonne of FFB processed in the Group’s mill operations. 1.15 Drip irrigation system was utilised widely in the main nursery for oil palm seedlings. Rain-fed water reservoirs are constructed to supply water to the nurseries through a drip irrigation system. 1.10 In the reporting year, two additional nurseries were established on-site to cater for the oil palm seedling 1.05 planting for the replanting programme in Sugut FY2018 FY2019 FY2020 FY2021 region, Sabah. About 129,700 m3 (FY2020: 69,592 m3) of water was used to irrigate the seedlings.
Water Withdrawal (m3) FY2019 FY2020 FY2021
Surface Water (Total) 2,055,715 2,346,472 2,698,342 Domestic 556,943 677,634 779,373 usage Freshwater Process 1,443,015 1,599,246 1,789,272 Water 55,757 69,592 129,697 withdrawal by Nursery source Produced Water (Total) 777,577 921,183 993,917 Raw Palm Oil Mill Effluent (POME) 777,577 921,183 993,917 Third-Party Water (Total) 3,393 3,400 3,447 Municipal water supply 3,393 3,400 3,447 Total water Surface Water + Produced Water + Third-Party Water 2,836,685 3,271,055 3,695,706 withdrawal
Water Discharge (m3) FY2019 FY2020 FY2021
Treated POME final discharge: 591,924 625,077 645,952* Water Land application discharge Treated POME final Discharge: 363,545 461,612 420,578 Land irrigation Total water Land Application + Land Irrigation 955,469 1,086,689 1,066,530 withdrawal
* Two months data on treated POME (final discharge) was captured for the new mill 82 IJM PLANTATIONS BERHAD SUSTAINABILITY REPORT
Water Quality Monitoring
The Group conducts periodic river water Effluent Management sampling to ensure that the health of the river is not adversely affected by the Group’s business activities. The river water analysis results were Palm Oil Mill Effluents (“POME”) generated from the benchmarked against the baseline data and Group’s operations were managed in accordance with the river classification such as the Water Quality guidelines and regulatory requirements. In the reporting Index (“WQI”) in the Malaysian operations. In year, 993,917 m3 (FY2020: 921,183 m3) of POME generated addition, the water quality of the treated water for from the Group’s mill operations was treated by the ponding domestic consumption were also monitored and system and further treated with a tertiary treatment system tested by the external accredited laboratory. This to achieve permissible quality limits. The treated POME was then is to ensure that the treated water quality is safe reused to irrigate the field through approved land irrigation and for human consumption and in compliance with land application systems. the World Health Organisation (“WHO”) Drinking Water Standard Guidelines. Discharge water samples were collected at various designated sampling stations for testing by a third-party laboratory. The Biochemical Oxygen Demand (“BOD”) and Chemical Oxygen Demand (“COD”) were among the parameters tested on a monthly basis by accredited laboratories where the analysis results were then submitted to the local environmental authorities on a quarterly basis. In the reporting year, the POME discharge quality parameters, included both the BOD and COD in all the Group’s mills were within the stipulated regulatory limits.
Stipulated Discharge Limits BOD Level (mg/l) FY2018 FY2019 FY2020 FY2021
Land In-situ river water sample tests 20 9 13 11 16 Irrigation
Land Application
1,000 73 89 142 113 Malaysian Operations
5,000 390 453 696 1,091 Indonesian Operations
External party collecting water samples for analysis at laboratory NURTURING SUSTAINABILITY 83 ANNUAL REPORT 2021
Waste Management Waste Inventory A holistic and detailed waste management plan is vital in ensuring the waste products In the reporting year, about 72 MT of scheduled waste was produced from the Group’s business disposed by the authorised disposal contractors, of which about activities did not negatively impacting the 76% of this scheduled waste was on spent oil. The quantities of environment and the health of surrounding scheduled waste generation were monitored and the inventory was local communities. All waste products reported monthly online to the Department of Environment. produced by the Group’s operations were identified, and if not recycled, were disposed The Group continued to promote the reuse and recycling activities in accordance with the prevailing regulations in the operations to reduce the impact to the environment. The and best practices. Group recognises the importance to put in more effective efforts in raising awareness among employees in practicing recycling The Group also ensures that the people and waste segregation. In the reporting year, about 1,990 MT in processing plants have the competency (FY2020: 1,779 MT) of domestic wastes were generated from the in handling the respective environmental operating units and only 2.35 MT (FY2020: 400 MT) of recyclable management matters, such as Certified items were sent to the recycling centres, whilst the remaining was Environmental Professionals in the sent to dedicated landfill sites in the operations. Again, the recycling Treatment of Palm Oil Mill Effluent (Pond efforts were hampered due to the COVID-19 restricted movement and Processes) (“CePPOME”) and Certified voluntary lock-down procedures adopted by the Group’s operations. Environmental Professionals in Scheduled Waste Management (“CePSWAM”). 1% 6% In the Indonesian operations, two of the 4% 76% Group’s palm oil mills, PT Indonesia Plantation Synergy (IPS) and PT Synergy Agro Industri (PTS) palm oil mills received a 6% BLUE rating award under the Government’s Programme for Pollution Control, Evaluation and Rating (“PROPER”) signifying that the mills had adopted appropriate 7% environmental management in pollution Types of control. Scheduled Wastes Disposed
Used Batteries Used Containers Contaminated Rags Both IPS and PTS mills were awarded ‘BLUE’ rating award under PROPER Used Oil Used Oil Filters Others (Clinical Wastes, Used Fibre By-product Utilisation Saw Dusts, Used Chemicals, etc.) The biomass generated from the milling processes which include palm fibres and palm kernel shells were utilised efficiently By-Products Generated from Milling Operations for energy generation, while the empty fruit bunches (“EFB”) were applied in Total Total the estates as organic mulch and soil Generated Recycled conditioner. In the reporting year, a total of By Products (MT) (MT) FY2020 595,949 MT (FY2020: 602,626 MT) of biomass were generated by the mills’ operations in Mesocarp Fibre 218,454 218,454 Fuel which 99 % of the biomass were utilised and recycled as fuel source or as mulch in the Shell 91,041 90,829 Fuel fields. Remaining 1 % was sold to external EFB 286,454 276,988 Fuel and parties as alternative fuel source. mulch 84 IJM PLANTATIONS BERHAD SUSTAINABILITY REPORT
INVESTOR IN PEOPLE
People is the key success component in Responsible Recruitment achieving sustainable business goals. Without their expertise, talent and The Group’s operations in Malaysia employed guest workers who are dedication, the Group will not be where primarily from Indonesia. The Group is vigilant on the potential risks of it is today. The Group remains focused forced labour and practices direct hiring through the appropriate Government on empowering its workforce with approved channels to prevent exploitation and wrong dissemination of equal opportunities for personal and information to the guest workers. The Group also ensures that no recruitment career development along side with the fees are imposed in the recruitment process and all written contracts are provision of decent and safe work briefed in their language to ensure workers understand and accept terms environment, culture and tools to support and conditions of work voluntarily. The Group prohibits any form of forced and drive their professional growth towards and bonded labour, including the withholding of workers’ travel documents, building a high performing team. wages, passports and any personal belongings without their consent. In the Malaysian operations, guest workers can decide as to how and where they want their passports to be kept. The Group had provided passport lockers in every operating unit in the Malaysian operations, to enable the Respect for Human Rights guest workers free access to their passports without any restrictions. Moving forward, the Group will continue to monitor the process and expect the same practice is adopted by the third-party suppliers.
The Group is committed to protect the People Assets and Talent Retention rights of its people and to treat them with dignity in line with all relevant In the reporting year, the Group employed more than 9,000 people as at legal requirements and regulations, 31 March 2021. Employability is based on qualification and the ability required and with key reference to the Universal for the work to be performed. This commitment is governed under the Group’s Declaration of Human Rights. The Diversity and Inclusion Policy. However, priority of hiring was given to locals Group had taken a proactive approach to whenever possible, to continue creating job opportunities and deliver positive ensure that internationally-recognised multiplying economic impacts to the local communities. human rights and workplace standards are upheld across all our The entire workforce in the Group is on a full-time basis. Management operations. The Group endeavours to personnel, non-executive staff and local workers are permanent employees, adhere to the standards and while guest workers employed in the Malaysian operations are on a fixed term practices that were aligned with contract basis. Most senior management positions in the Group are held by international principles, such as Malaysians, and key operatives are based at the Group’s headquarters and the International Labour Organisation’s regional offices. (ILO) core labour standards and United Nations Guiding Principles on FY2019 FY2020 FY2021 Business and Human Rights, subject to the restrictions of the governing Categories Female Male Female Male Female Male laws and regulations of the countries where the Group operates. The Top Management Group’s commitment is reflected in its 0 2 0 2 0 2 Human Rights Policy, of which more Senior 0 2 0 2 0 1 information can be found in the Group’s Management website. Management 2 29 2 33 2 32 The commitment to respect human rights is applicable to all the Group’s Junior 9 33 10 32 10 31 operations and its supply chain. Management The commitment and practices on upholding human rights were socialised Executives 33 142 39 149 36 148 to all relevant stakeholders, including Non-Executives 166 441 160 461 157 430 the entire workforce, contractors, suppliers and the neighbouring Workers 3,052 6,116 2,950 6,300 2,433 5,806 communities. Total 3,262 6,765 3,161 6,979 2,638 6,450 NURTURING SUSTAINABILITY 85 ANNUAL REPORT 2021
Both the number of employees hired Workers Turnover Rate and resigned were reduced in this reporting year. The Group also observed (%) a lower turnover rate for all employees compared with the previous reporting 35 31 year. Higher turnover rate was observed 30 28 for Gen-Y and most of them were from 27 the workers category. On average, the 30 26 turnover rate for employees (excluding the workers category) was 8.4%, 21 lower than both the previous reporting 25 year (FY2020: 10.6), and the national average of 11%. Workforce recruitment 20 and retention are challenging in the plantation industry due to the remoteness of the operations and 15 the nature of plantation tasks. The Group recognised the importance of retaining quality employees than to 10 recruit and train for a replacement employee of the same quality. Besides offering competitive remuneration 5 and promoting a conducive working culture and environment, the Group 0 will continue to nurture its young FY2019 FY2020 FY2021 talent and empower them to explore adoption of innovative technologies in Malaysian Operations Indonesian Operations the operations.
Group Turnover and New Hire Chart
2500
3
2000 341 18 23 34 381 1256 299 405 12 1500 296 1228 1163 5 4 959 962 143 11 183 911 114 1000 710 702 19 12 282 0 164 500 514 0 95 411 55 408 349 242 356 292 330 358 149 139 148 76 54 65 0 48 Female Male Female Male Female Male Female Male Female Male Female Male (New (New (Left (Left (New (New (Left (Left (New (New (Left (Left Hire) Hire) Service) Service) Hire) Hire) Service) Service) Hire) Hire) Service) Service) 2019 2020 2021
Born 1997 & Born 1980 to 1996 Born 1964 to 1979 Born 1946 to 1963 later (Gen Z) (Gen Y) (Gen X) (Baby Boomer) 86 IJM PLANTATIONS BERHAD SUSTAINABILITY REPORT
Empowering Women at Workplace Women Committee
The Group actively promotes the Women Committees were established in every operating unit with the employment of women in the plantation assistance from the management. The representations were from the industry. There were 29% of female workers category and management to promote female participation employees in the Group holding various and advancement in the workplace. The Women Committees also executive (from junior management to functioned as a grievance platform to manage and discuss issues middle management) and non-executive specifically affecting women such as sexual harassment complaints positions, and a larger number were and provide support for domestic violence victims. In the reporting year, engaged in the field as sprayers, loose hobby-oriented workshops such as face mask making classes, health fruit collectors, maintenance and for related briefings and get-together activities were organised by the upkeep works as well as that of household respective women committees in the operating units. helpers. There were 22% of women in the management roles, and the Group also has 3 female directors on its Board of Directors, bringing in different sets of experience and expertise which help to enhance the governance of the Group.
The Group understands female employees faced various challenges and often family-oriented concerns. Day care centres and kindergartens are available in operating units to support the Group’s female employees and their children. The Group also observed both maternal and paternal leaves in accordance with the Women committee meeting in the Minat Teguh Estate local laws and requirements.
Training and Development
With 90% of the Group’s workforce being in the workers category and with more than 20% annual turnover rate, it is imperative that competency or job specific trainings and retraining are regularly conducted. All employees were trained and re-trained under a structured skills development programme based on the individual training needs and the types of jobs performed.
Every operating unit organised its own annual training calendar to ensure that the training was carried out on a regular basis throughout the year. In addition, the scopes of training were extended and involved the relevant external parties, including the contractors and external crop suppliers. Due to the restrictions of movement during the COVID-19 pandemic, most of the training were organised virtually. The Group also encouraged its people to Virtual training was conducted for employees located in different operations enhance their capabilities and knowledge through participation in various external webinar training programme, as well as the virtual conferences and seminars, which are useful to their job. NURTURING SUSTAINABILITY 87 ANNUAL REPORT 2021
Fair Remuneration and Benefits
The Group strives to provide decent living and fair remuneration that support the development of the local communities. The Group is committed to pay fair wages to its employees and ensures that it meets at least the applicable minimum wages based on normal working hours, in the regions where the Group operates. The stipulated minimum wages are summarised in the table below.
Monthly Minimum Wages
Country/Region 2013 2016 2019 2020 2021
Malaysia
Sabah RM 1,100 1,100
Sabah (Areas under the jurisdiction RM 1,200 1,200 of Municipal Council of 800 920 1,100 Sandakan)
Indonesia
Bulungan Rp.’000 1,875 2,254 2,865 3,109 3,109
Kutai Timur Rp.’000 1,765 2,276 2,894 3,140 3,140
Lampung Rp.’000 1,150 1,763 2,386 2,589 2,674
Tasks on the plantations are typically productivity-based all employees were remunerated fairly without that are either remunerated daily or by piece rates. discrimination. The Group ensures that the piece rates are calculated to meet at least the stipulated minimum wages. During the For eligible employees, benefits such as long-term low crop season, the workers were re-assigned to other incentive programmes involving share options were work in order to achieve the minimum wages. While during granted based on the annual performance appraisals, the high crop season, the workers were provided with organisational performance and governed by the productivity bonuses when they exceeded their volume established By-laws of the Company. Other benefits, such targets. as housing, free healthcare, transportation to schools for their children, utilities, sports facilities, places of worship Wage payments were made timely and wage records were and day care centres were also provided in the operating countersigned by the workers to acknowledge receipts units. For employees who had served for more than and they were briefed to understand how the payments 20 years, their contribution was dully recognised with were calculated. Employees’ performances were the Group’s Long Service Awards. In the reporting year, appraised annually with discretionary salary increments 27 employees in the Malaysian operations were awarded and bonuses awarded accordingly. In addition, the Group with the Long Service Award. practices a gender equality policy on wage payments and
Semi-detached houses for workers living in plantation 88 IJM PLANTATIONS BERHAD SUSTAINABILITY REPORT
The Group provides a community- Freedom of Association and living environment that is safe, Collective Bargaining conducive and connected. Houses were equipped with facilities for The Group respects the rights of its water, sanitation and electricity. The employees to form organisations and Group continued to upgrade and join trade unions of their choice and conduct regular maintenance works recognises their rights to bargain on the existing housing facilities while collectively. Through joint consultative constructing new houses in stages. platforms, the management is able With the enforcement of Workers’ to engage with its workforce and mutually address remuneration and Minimum Standards of Housing and Morning stretching exercises at PTS mill Amenities Act 1990 (Act 446) in Sabah, social related concerns. The Group the Group will re-evaluate workers’ also encourages its employees to facilities to ensure compliance to voice their concerns and ensure Act 446. collective agreements that reflect their concerns. The Group also encourages its employees to participate in sports In the reporting year, 408 of the with the provision of sporting employees in the Group’s Indonesian facilities such as football fields and operations are members of various in door facilities in the operating unions. For operations where formal units. Friendly matches and outdoor unions do not exist, communication activities were organised to foster 20-year Long Service Award for employees in and engagement were through the teamwork among the employees. the Malaysian operations joint consultative committee (“JCCs”) and other similar bipartite platforms for its employees to raise their concerns.
Grievance Procedure and Whistle Blowing Channel Employees Engagement and Communication The Group does not tolerate any violations of human rights principles The Group’s management regularly and will address in a fair, effective engaged its employees through and consultative manner any various platforms. Induction grievances or complaints. The programme was formulated to Group’s guidelines and grievance ensure the Group’s policies and procedures to handle social related procedures were briefed and issues are stated in the Group’s Social adopted by the newly recruited Manual.The grievance procedures employees during their orientation provide a non-discriminatory and fair periods. Besides, consultative JCC meeting in Sabang Palm Oil Mill-1 treatment framework for all involved meetings, town-hall engagements stakeholders. The Group encourages and surveys were organised to an open culture in which workers help management to understand and managers or supervisors can and identify the strengths and resolve grievances directly at the opportunities towards creating a operational level. The Group also better workplace. Joint Consultative provides anonymous whistle blowing Committee (“JCC”) meetings channels as platforms to report together with safety and health violations against procedures without committee meetings were organised the fear of repercussions. Complaints can be lodged manually using the every three months to discuss complaint forms from the respective various aspects relating to the operating units’ offices and addressed workplace and living environment. to any head of operating units or The workers’ representatives in departments in the Group or email to the committee were freely elected [email protected]. Another channel by the workers in their respective for reporting grievances in relation operating units. Bipartite meeting in Lampung estate to sexual harassment or domestic violence is through the Women Committees in the operating units, where the committees were trained in handling such issues. NURTURING SUSTAINABILITY 89 ANNUAL REPORT 2021
Children’s Protection and Well-Being
The Group adhered to the minimum age of employment and prohibits the employment of child labour in the operations. The minimum age of employment is defined by law and is made known to the recruitment team, operations, suppliers and contractors throughout the Group’s business supply chain. Awareness programme was also often conducted for parents to understand the importance of education and to keep their children out of the fields.
Education and Childcare Healthcare and Nutrition
Plantations are generally located in remote areas and near villages with little access to education. Basic education and day care centres were provided at the operating units to ensure the workers’ children had access to basic education and young children were taken care of during working hours. Transportation for children in the operations to the local schools and learning centres were provided by the respective operating units.
The Group continues to upkeep and maintain the 4 existing Humana Learning Centres and 2 units of Community Learning Centres in the Malaysian operations. In addition, the Group operates 25 day care centres and 6 kindergartens to cater for the children in the operating units. Vaccination programme for young children
Amid the COVID-19 pandemic, most of the time the classes were conducted virtually, or through in situ dissemination of homework and reading materials, which enabled the children to home study. Notwithstanding the above, SOPs were strictly adhered to protect the schoolchildren when the learning centres were allowed to re- open.
In the Indonesian operations, the Group continued to financially support the local schools and its teachers who provide education for local students in the locations where the Group operates, that includes schools in Sajau Pura Village, Rimba Hijau, Bual-Bual, Pulau Miang, Desa Kerayaan and Desa Susuk Dalam. Supplements provided for expectant mothers
The employees living in the operating units have access to free healthcare facilities in the sites. Qualified Doctors or medical staff were stationed in the clinics in the operations and provide basic healthcare and first aid treatments to the employees and their dependents living in the operating units. Visiting Medical Officers (“VMO”) often conducted programmes and visits especially for women and children. In addition, the Group ensured that expectant Day care centre in Prima estate and breastfeeding mothers were reassigned from work that may be hazardous such as chemical spraying or fertilisation applications.
Vaccination and health checks for children in plantations were also conducted by the clinic nurses and by the local health department officers. Supplemental food was distributed to the workers’ children for their better health and well-being in the Indonesian operations. Schoolchildren were frequently reminded on self-hygiene and sanitation 90 IJM PLANTATIONS BERHAD SUSTAINABILITY REPORT
Occupational Safety and OSH Performance Health The Group’s ultimate aim is to avoid incidents that will risk the The Group recognised its employees’ life and to achieve zero fatality cases. In the reporting year, responsibility in a creating strong the Group is pleased to observe zero fatality for both the Indonesian safety culture that promotes an and Malaysian operations. injury-free workplace to safeguard the well-being of its employees. The However, the total accidents with lost days increased in the reporting Group’s commitment in securing period. The Group also recorded higher Lost Time Injury Frequency a safe and healthy workplace Rate (“LTIFR”) of 12.35 cases of accidents with lost days in one for all employees and contractors million hours worked, and 47.40 in the Group’s Lost Time Injury engaged at work is reflected in the Severity Rate (“LTISR”), which was the number of days lost Group’s Environmental, Occupational in every one million man-hours worked. The majority of the injuries were Safety & Health Policy. caused by road accidents, thorn pricks, cuts from sharp tools, insect bites, eye injuries and irritations from falling debris, and injuries caused by The Group adopted a proactive and mechanical hazards in the processing operations. preventative approach to safety and health through workplace risk Total LTI Frequency LTI Severity mitigation measures, health initiatives accidents rate rate and safety training programmes to with lost (per 1,000,000 (per 1,000,000 keep the people safe and healthy in days hours worked) hours worked) Fatalities the workplace. FY2019 168 8.29 31.57 0
FY2020 149 7.11 29.96 2
FY2021 239 12.35 47.40 0
In securing the safety and health of the employees and its relevant Accident Mitigation and Safety Intervention stakeholders, the following strategies were in place: The Group placed great emphasis on the competencies of employees working at Implementing an inclusive OSH higher risk stations and behavioural safety to management system based on ensure the safety of employees in the Group. the prevailing legal requirements All employees working at higher risk stations and guidelines or job tasks were trained and evaluated to ensure that they were competent in carried Adopting risk-based approach out specific job tasks. Additionally, supervision to identify, manage and take on the respective stations were tightened with Total safety & working permits to ensure works were done in preventive measures on the health related potential hazards and risks in the accordance with the safety procedures. workplace training in The Group also trained the employees to : Conducting refresher training on be able to respond to workplace accidents FY2021 safe operating procedures and and had the knowledge or ability to 389 training respective competency training respond and assist the people around sessions with to ensure the employees are them. Training on first aid, emergency technically competent in handling response during fires, floods and accidents, 16,108 their job tasks as well as simulation training were conducted participants for all the people at the workplace including Conducting internal audits and their dependents living in the operating units. inspections by in-house Safety and Health Officers
Organising regular dialogues and engagements with stakeholders on the safety and health related issues
Pursuing continuous improvement, i.e. reviewing the adequacy of safe operating procedures
First aid training Training on safe operating procedures in operating grabber NURTURING SUSTAINABILITY 91 ANNUAL REPORT 2021
In addition, all newly recruited employees were trained under the safety induction programme to ensure the overall safety contents were covered prior to starting their work. Annual safety campaigns were also organised at every operating unit to promote safety awareness among the workers. Accident simulations and safety equipment demonstrations were performed during the safety campaigns.
The Group also regularly reviewed all the operations that posed safety hazards and with potential safety risks, especially on the operations where fatal accidents had occurred. The Group had ceased the usage Machinery Inspection of tractors in transporting people in the Malaysian operations, which posed high safety risk to the passengers. Dedicated passenger trailers were custom-made with appropriate safety features such as emergency exits and emergency brake system. In addition, the FFB trailers were design modified, with consent from DOSH, to have a designated sitting compartment for loaders, to ensure the safety of the loaders during crop evacuation operations. Noise monitoring at IPS Mill Dedicated passenger trailer is used for ferrying workers in field
Work-Related Illnesses
the health assessments were maintained to keep track on their health trend. In the reporting year, no work-related illnesses were reported.
The Group provides free basic medical care and dispensary services in the operating units which are managed by qualified hospital assistants or medical staff. The medical staff are responsible to provide first aid responses and basic medical attention for both occupational and non-occupational requirements. The medical staff are also responsible to Annual health surveillance for workers exposed to health conduct periodic health monitoring for workers whose hazards lines of work are at risk of work-related illnesses. During emergencies and serious cases, transportation The Group identified various work-related hazards and or ambulance is used to send the patients to the nearest potential illnesses through the Hazard Identification, government medical facility. Health programmes Risk Assessment and Risk Control (“HIRARC”) system to prevent and control the transmission of dengue and risks assessments such as Chemical Health Risk and other contagious diseases were implemented. Assessment (“CHRA”) and Noise Risk Assessment Regular cleaning-up and fogging activities were (“NRA”). The Group ensures all the employees who organised to ensure the living environment and are potentially affected by the working environment sanitation conditions were satisfactory and to prevent or exposed to chemicals hazardous to health were the transmission of the dengue virus. In addition, screened under the annual health surveillance routine inspections were also carried out by the programme. This includes their hearing assessments, estate’s medical staff to ensure the surrounding blood and urine tests to ensure that the employees hygiene standards were maintained and to identify any are healthy and fit for the job tasks. The records of potential health issues or risks at the housing areas. 92 IJM PLANTATIONS BERHAD SUSTAINABILITY REPORT
Managing COVID-19 Crisis
Security in Operations The Group proactively adapted to the pandemic situations with prevailing SOPs and guidelines to ensure the people remain safe and healthy. Furthermore, The Group worked closely with the Group adopted the voluntary lockdown strategy where all movements in related local government agencies the operations were restricted and any visitation to the operations were subjected to safeguard the estates and for prior approval from the Management. There is no doubt that adopting such associated facilities to provide strict SOPs will require collective efforts from all the employees and to some a secure environment for the extent, has resulted in personal sacrifices, to protect the people from the employees living in the operating disease while ensuring business continuity with minimal disruptions. units. Internal security personnel The Group is grateful on the dedication and perseverance of its people during were involved to enhance the this unprecedented time, and together navigated through the complex security patrolling and formed the challenges amid this COVID-19 pandemic. ‘Rukun Tetangga’ patrol teams in order to be always watchful and In the reporting year, 9 employees in the Malaysian operations and 63 employees alert on the surrounding areas in the Group’s Indonesian operations were unfortunately tested positive for within the various plantations. Covid-19. However, with strict measures and timely response mechanisms, Security is also a highlighted the Group was able to break the chain of COVID-19 transmissions and all the topic of discussion during the JCC affected employees recovered and returned to work. deliberations held quarterly.
In addition, the Group had adopted The Covid-19 pandemic has affected our daily lives with behavioural changes the lock-down policy in its and new norms. Among the preventive actions and mitigating measures operations to safeguard and protect undertaken to help contain the potential spread of the virus and ensure the its employees and their families well-being of the employees were as follows: during the COVID-19 pandemic. Main entrances at operating units Daily online meetings among Sanitising the common areas were securely guarded and all the Crisis Management and workplaces regularly. other entrances were closed to Committee members to monitor the movements of the update and discuss various Providing clinical face people and tightened the security issues in reference to the masks to employees and disease. checks during this control period. appropriate PPE for medical staff in the estate clinics Reviewing and updating and employees carrying out SOPs and precautionary the regular screening of practices to guide operations symptoms. during the Covid-19 pandemic and adapting to Conducting swap tests the prevailing government on the employees in the policies. operations.
Implementing social Ensuring sufficient supplies distancing and avoid of essential food at on-site physical meetings, food store. wherever possible.
Distributing essential food Screening of Covid-19 supplies to employees in symptoms such as checking operating units. body temperature and other COVID-19 symptoms on a daily basis by specially Supporting emotional trained staff or medical staff. well-being through online wellness programme. NURTURING SUSTAINABILITY 93 ANNUAL REPORT 2021
Health screening at the mill’s entrances Morning health checks Daily workplace sanitisation
Practice social distancing in the operations and Humana Learning COVID-19 swap tests for employees in the operations Centre
Distribution of face masks and briefing to workers
Distribution of food supplies for Sanitisation at housing areas in the Ensuring sufficient food supplies in the employees in the operating units operating units operating units during MCO 94 IJM PLANTATIONS BERHAD SUSTAINABILITY REPORT
RETURNING TO COMMUNITY
Graduates from the Montfort-MEOA Oil Palm Plantation Blood donation campaign Conductorship undergoing the internship programme in Sabah operations
Community Outreach and CSR Initiatives
The Group’s outreach programme includes In the reporting year, more contributions were in the forms initiatives that promote environmental stewardship, of philanthropic supports, due to the restriction of movement community health and well-being, access to quality during the COVID-19 pandemic and the consideration that education, and CSR initiatives, which was also financial aids would directly benefiting the underprivileged in line with the Sustainable Development Goals, groups. The Group continued to provide assistance to the local SDG 3 – Good Health and Well-being, SDG4 – Quality communities in rebuilding infrastructure and facilities such as Education, as well as the SDG-8 Decent Work & roads, places of worship and clinics as well as facilities that Economic Growth. The overall monetary supports help improve, or make available access to basic needs such as amounting to about RM384,000 were contributed to clean water, sanitation and education. The Group also supported the outreach programme with details as shown in the the schools in the villages nearby its operations by subsidising following pie chart. the salary of the teachers.
Access to schools is integral in the efforts to combat child Contribution to Communities in FY2021 labour and where possible, the Group supports vocational programmes for early school leavers, such as collaborating with 8% 13% the MEOA in the establishment of Montfort Youth Training Centre 38% - MEOA Oil Palm Plantation Conductorship in Kinarut, Kota Kinabalu. The course emphasises on both the knowledge and practical skills needed in the field of supervision in plantations. 4% The programme is targeted with priority accorded to those who are orphaned, from poor and large families particularly from the rural and interior areas of Sabah and Sarawak. Among the 19 interns from the first batch, 2 of the students are now under the internship programme at the Group’s operations in Sabah.
The Group continued to collaborate with a local NGO in Sabah, 37% the Sandakan Pink Ribbon (“SPR”) in the promotion of breast health awareness amongst the public and school-going girls. However, due to the COVID-19 pandemic, the Group’s outreach team was not able to reach out the school-going girls. During COVID-19 hardship, the Group provided financial aids to about 50 breast cancer patients in Sandakan, to ease their Donation Education burden on medication and livelihood during the pandemic period. Utility and Infrastructure Sports The Group also continued to promote youth development Cultural through the rugby sports platform in the State of Sabah, through the Academy for Sabah Rugby Excellence. NURTURING SUSTAINABILITY 95 ANNUAL REPORT 2021
Social Support During COVID-19 Pandemic
The Group recognised its responsibility in helping the donations of surgical masks, PPE, nasopharyngeal surrounding communities to remain safe and protected swabs and other equipment to medical facilities in from the COVID-19 pandemic. The Group assisted the Sabah. Supplies with arranged delivery by mercy neighbouring villages, such as Desa Susuk and Desa flights from the Peninsular to the hospitals targeted Marukangan in the Indonesian operations in carrying the hard-hit regions in Sabah. The Group also out sanitisation of the village’s common areas and also contributed essential items including meals as well as conducted awareness briefings to the villagers on the protective gears to the local hospital, Duchess of Kent importance of self-hygiene. The Group’s medical staff Hospital, Sandakan. also assisted in daily screening for COVID-19 symptoms in the neighbouring communities. In the Indonesian operations, the Group had contributed to the Indonesian government for the In addition, the Group provided supports to alleviate purchase of COVID-19 test kits, face masks and funding the impact of COVID-19 on the livelihood of the local to support the poor families which include communities. The Group did its best to support and contributions in the form of PPE, medicines, essential contribute to national or local initiatives. Through food items, disinfectants and other necessities to the the Malaysian Estate Owners’ Association (“MEOA”), local surrounding communities. the Group contributed towards prioritisation of the
Disinfecting the surrounding areas in neighbouring Food aids to the neighbouring village during the movement control communities period
Food aids to the neighbouring village during the movement control Donation of PPE to local communities period
Essential items and PPE donated to Duchess of Kent Hospital, Sandakan Food aids to the local communities in Sugut region that were affected by flood incidents 96 IJM PLANTATIONS BERHAD SUSTAINABILITY REPORT
Community Development Smallholders and Outgrowers Transformation Schemes
The Group believes that assisting and Produce from Independent smallholders, together with the schemed working in partnership with the local smallholders, accounted for about 4% of the total FFB received and processed communities will help to catalyse the by the Group’s processing plants. The Group strives to help its smallholders to growth of the community and promote increase their resilience under the current challenging business environment, sustainable development within and through agronomy and best practices training in improving crop productivity beyond its business borders. The and provide the access to governmental support services. These were achieved Group aspires to enhance the shared through outgrowers’ schemes and the partnership project Rurality with the economic value not only through NGO Earthworm Foundation. Nevertheless, the Group also provided the employment creation opportunities smallholders with sufficient resources and was committed to buy their FFB at but also to drive positive social- government determined rates. In the reporting year, there were 294 independent environmental impacts for the smallholders in the Group’s supply chain. surrounding communities where it Project Rurality- Upscaling the transformation operates. The Group collaborated with the Earthworm Foundation, an NGO in a smallholder transformation project namely Rurality project since 2015. Through the Rurality Project, a total of 276 smallholders supplying crops to Desa Talisai Palm Oil Mill in the Sandakan region from Ulu Muanad and Meliau areas, were assessed and engaged closely under this project with a total of 1,222 ha mapped. Free, Prior, and Informed Other than best practices training, initiatives such as income diversification, Consent human-elephant conflict management and MSPO certification assistance were also rendered to the smallholders engaged under the Rurality project. The Group respects the land use and tenure rights of the local However, due to the COVID-19 pandemic, most of the Rurality’s usual field visits communities, and practice the and training to smallholders were halted. As an alternative, communication principles of Free, Prior, and through social media and virtual meeting and training were conducted to reach Informed Consent (“FPIC”) in all out to the smallholders. the negotiations and interactions with the relevant stakeholders. This ensures project-affected communities are well informed and they have awareness as to their rights to customary and traditional lands. In addition, the Group practices transparent avenues for dialogue with its stakeholders, to fairly resolve any potential issues or conflicts with the affected Training on proper usage of PPE to smallholders parties. The local stakeholders Photo Source: Rurality Project Team were also made aware of the Group’s sustainability policies and practices, including the communication mechanism and grievance procedures. Periodic environmental monitoring and review on the Social Impact Assessment (“SIA”) internally were conducted to assess any potential negative impacts while positive impacts were further replicated and enhanced.
Best management practices training for the smallholders Photo Source: Rurality Project Team NURTURING SUSTAINABILITY 97 ANNUAL REPORT 2021
Plasma and Kemitraan Schemes
In the Indonesian operations, more than 11,000 ha were allocated for the Group’s outgrowers’ scheme. The Group partnered with 10 cooperatives under the Plasma Schemes and another 5 local cooperatives under its Kemitraan or partnership schemes. To-date, 5,671 Ha of Plasma Schemes and 4,121 Ha of Kemitraan schemes were developed for a total of 5,136 farmers who were directly supported by the Group.
Under the Plasma Schemes, the Group helped the villagers to develop their lands, including land preparation and cultivation of oil palms. Once developed, the plantation is managed by the Group until it is ready to be handed over to the villagers for self-management. Profits, after deduction of the development costs generated from the FFB produced that were sent for Annual meeting with members of plasma schemes in Bulungan region processing by the Group’s mills, were paid to the villagers. The Group envisaged that the scheme is able to uplift the livelihood of the local communities and help alleviate poverty, which is also in line with the SDG-1, to end poverty in all its forms everywhere.
Food Security
Canteen inspection at PTS mill on hygiene practices, Vegetable plots at the housing areas food pricing and supplies
The Group ensures the land developed was allocated for agricultural purposes and did not negatively impact the local food security. The Group donated and supported the local communities in needs, during difficult times, like the recent COVID-19 movement control periods where accessibility to food supplies were restricted. The management also recognised the needs of the employees on the accessibility to affordable food and daily necessities. The management periodically checked and monitored the pricing for the essential items and food stocks available in the grocery stores in the operating units. Employees were also encouraged to grow their own vegetables in the operating units. 98 IJM PLANTATIONS BERHAD
Global Reporting Initiative (GRI) Standards 2016 Content Index
IJM Plantations Berhad Report 2021 was prepared in accordance with the GRI Standards: Core option. The table below details the location of specific disclosures throughout the report. It also includes additional information and comments on some of the indicators.
GRI Standards Disclosure Reference/Response Page GRI 102: General Disclosure Organisational Profile 102-1 Name of the organisation Front Cover 102-2 Activities, brands, products, and services Overview of the Business Activities; 17, 18 Management Discussion an Analysis 102-3 Location of headquarters Corporate Information 01 102-4 Location of operations Location of Operations 05 102-5 Ownership and legal form Group Corporate Structure 06 102-6 Markets served Management Discussion and Analysis 18 102-7 Scale of the organisation Management Discussion and Analysis; 18, 101 Financial Statements 102-8 Information on employees and other workers People Asset and Talent Retention 84 102-9 Supply chain Traceability and Supply Chain Management 69 102-10 Significant changes to the organisation and There were changes in the Directors’ Board 08 its supply chain (Refer to Board of Directors & Secretary). No other significant changes to the size, structure, ownership or supply chain 102-11 Precautionary Principle or approach Statement on Risk Management and Internal 47 Control 102-12 External initiatives Creating Shared Values Through Partnerships 66 102-13 Membership of associations Creating Shared Values Through Partnerships 66 Strategy 102-14 Statement from senior decision-maker Management Discussion and Analysis 18 102-15 Key impacts, risks, and opportunities Management Discussion and Analysis 18 Ethics And Integrity 102-16 Values, principles, standards, and norms of Vision, Mission, Culture and Core Values; 02,65 behaviour Regulatory Compliance and Ethical Business Conduct 102-17 Mechanisms for advice and concerns about Regulatory Compliance and Ethical Business 65, 88 ethics Conducts; Grievance Procedure and Whistle Blowing Governance 102-18 Governance structure Corporate Governance Overview Statement; 34, 57 Sustainability Governance Stakeholder Engagement 102-40 List of stakeholder groups Engaging with Stakeholders 59 102-41 Collective bargaining agreements Freedom of Association & Collective Bargaining 88 102-42 Identifying and selecting stakeholders Engaging with Stakeholders 59 102-43 Approach to stakeholder engagement Engaging with Stakeholders 59 102-44 Key topics and concerns raised Engaging with Stakeholders 59 Reporting Practice 102-45 Entities included in the consolidated Financial Statements 101 financial statements 102-46 Defining report content and topic Boundaries About This Report 55 102-47 List of material topics Managing Material Matters 61 102-48 Restatements of information Climate Change and Carbon Emission: 77 GHG Emissions (Scope 2) 102-49 Changes in reporting No significant changes. About This Report 55 102-50 Reporting period About This Report 55 102-51 Date of most recent report Annual Report 2020 102-52 Reporting cycle About This Report 55 102-53 Contact point for questions regarding the Corporate Information 01 report 102-54 Claims of reporting in accordance with the About This Report 55 GRI Standards 102-55 GRI content index Global Reporting Initiative (GRI) Standards 2016 98 Content Index NURTURING SUSTAINABILITY 99 ANNUAL REPORT 2021
GRI Standards Disclosure Reference/Response Page GRI 103: Management Approach 103-1 Explanation of the material topic and its Managing Material Matters 61 Boundary 103-2 The management approach and its Sustainability Commitment and Policy; 56, 65, components Productivity and Innovations; Care for 72, 84, Environment; Investor in People; 94 Returning to Community 103-3 Evaluation of the management approach Sustainability Commitment and Policy; 56, 65, Productivity and Innovations; Care for 72, 84, Environment; Investor in People; 94 Returning to Community GRI 201: Economic Performance 201-1 Direct economic value generated and Statement on Value Added and Distribution; 04, 18, distributed Management Discussion & Analysis; 101 Financial Statements GRI 202: Market Presence 202-2 Proportion of senior management hired from People Asset and Talent Retention; The Group’s 84 the local community approach is to hire employees with skills and positive attitudes, with no discrimination towards the employee’s race, colour, religion, gender, national origin and sexual orientation GRI 203: Indirect Economic Impacts 203-1 Infrastructure investments and services Community Outreach and CSR Initiatives; 94, 96 supported Community Development 203-2 Significant indirect economic impacts Statement on Value Added and Distribution; 04, 94, Community Outreach and CSR Initiatives; 96 Community Development GRI 205: Anti-Corruption 205-2 Communication and training about Regulatory Compliance and Ethical Business 65 anticorruption policies and procedures Conduct 205-3 Confirmed incidents of corruption and No incidents of confirmed corruption for the actions taken reporting period GRI 302: Energy 302-1 Energy consumption within the organisation Energy Management 78 302-3 Energy intensity Energy Management 78 GRI 303: Water & Effluent 2018 303-1 Interactions with water as a shared resource Water Stewardship 80 303-2 Management of water discharge-related Water Stewardship; Effluent Management 80, 82 impacts 303-3 Water withdrawal Water Source and Usage 81 303-4 Water discharge Water Source and Usage; Effluent Management 81, 82 303-5 Water consumption Water Source and Usage 81 GRI 304: Biodiversity 304-1 Operational sites owned, leased, managed Environment and Biodiversity Protection 74 in, or adjacent to, protected areas and areas of high biodiversity value outside protected areas 304-2 Significant impacts of activities, products Environment and Biodiversity Protection 74 and services on biodiversity 304-3 Habitats protected or restored Environment and Biodiversity Protection 74 304-4 IUCN Red List species and national Biodiversity Protection and Management 75 conservation list species with habitats in areas affected by operations GRI 305: Emissions 305-1 Direct (Scope 1) GHG emissions Climate Change and Carbon Emission 77 305-2 Energy indirect (Scope 2) GHG emissions Climate Change and Carbon Emission. 77 Restatement of the data using different emission factor in energy conversion for purchased electricity in Indonesia 305-3 Other indirect (Scope 3) GHG emissions Climate Change and Carbon Emission 77 305-4 GHG emissions intensity Climate Change and Carbon Emission 77 305-5 Reduction of GHG emissions Climate Change and Carbon Emission 77 100 IJM PLANTATIONS BERHAD
GRI Standards Disclosure Reference/Response Page GRI 306: Effluents and Waste 306-1 Water discharge by quality and destination Effluent Management 81 306-2 Waste by type and disposal method Waste Management 83 306-3 Significant spills No significant spill was reported GRI 307: Environmental Compliance 307-1 Non-compliance with environmental laws No non-compliance was reported and regulations GRI 401: Employment 401-1 New employee hires and employee turnover People Asset and Talent Retention 84 GRI 403: Occupational Health and Safety 2018 403-1 Occupational health and safety management Occupational Safety and Health 90 system 403-2 Hazard identification, risk assessment, Occupational Safety and Health 90 and incident investigation 403-3 Occupational health services Occupational Safety and Health 90 403-4 Worker participation, consultation, and Occupational Safety and Health 90 communication on occupational health and safety 403-5 Worker training on occupational health Occupational Safety and Health 90 and safety 403-6 Promotion of worker health Occupational Safety and Health 90 403-7 Prevention and mitigation of occupational Occupational Safety and Health 90 health and safety impacts directly linked by business relationships 403-9 Work-related injuries Occupational Safety and Health 90 403-10 Work-related ill health Occupational Safety and Health 90 No work-related illnesses were reported GRI 404: Training and Education 404-2 Programmes for upgrading employee skills Training and Development 86 and transition assistance programmes 404-3 Percentage of employees receiving regular All employees are subjected to annual performance and career development performance appraisal by the superiors reviews GRI 405: Diversity and Equal Opportunity 405-1 Diversity of governance bodies and People Asset and Talent Retention 84 employees GRI 406: Non-discrimination 406-1 Incidents of discrimination and corrective No incidents were reported actions taken GRI 407: Freedom of Association and Collective Bargaining 407-1 Operations and suppliers in which the right Respect for Human Rights; Responsible 84, 88 to freedom of association and collective Recruitment; Freedom of Association & bargaining may be at risk Collective Bargaining GRI 408: Child Labour 408-1 Operations and suppliers at significant risk Children’s Protection and Well-Being 89 for incidents of child labour GRI 409: Forced or Compulsory Labour 409-1 Operations and suppliers in which the right Respect for Human Rights; 84, 88 to freedom of association and collective Responsible Recruitment; bargaining may be at risk Freedom of Association & Collective Bargaining GRI 412: Human Rights Assessment 412-2 Employee training on human rights policies Respect for Human Rights; All employees were 84 or procedures trained on the Group’s Human Rights Policy and practices. GRI 413: Local Communities 413-1 Operations with local community Traceability and Supply Chain Management; 69, 96 engagement, impact assessments, and Community Development development programs 413-2 Operations with significant actual and Traceability and Supply Chain Management; 69, 96 potential negative impacts on local Community Development communities NURTURING SUSTAINABILITY 101 ANNUAL REPORT 2021
101 FINANCIAL STATEMENTS
102 113 188 Directors’ Report and Company Statement of Statutory Declaration Statement Changes in Equity 189 108 114 Independent Auditors’ Statements of Statements of Cash Flows Report Comprehensive Income 117 109 Summary of Significant Statements of Financial Accounting Position Policies 111 138 Consolidated Statement of Notes to the Financial Changes in Equity Statements 102 IJM PLANTATIONS BERHAD DIRECTORS’ REPORT AND STATEMENT
The Directors have pleasure in presenting their report and statement together with the audited financial statements of the Group and of the Company for the financial year ended 31 March 2021.
PRINCIPAL ACTIVITIES
The principal activities of the Company are the cultivation of oil palms, investment holding and provision of management services to the subsidiaries. The principal activities of the subsidiaries are stated in Note 16 to the financial statements.
FINANCIAL RESULTS
Group Company RM’000 RM’000
Net profit for the financial year 215,007 89,761
Attributable to: Owners of the Company 205,083 89,761 Non-controlling interests 9,924 - 215,007 89,761
DIVIDENDS
Dividends paid or declared since the end of the previous financial year are as follows:
RM’000
In respect of the financial year ended 31 March 2020 as reported in the Directors’ Report and Statement of that year:
A single tier interim dividend of 2 sen per share, on 880,580,460 ordinary shares, paid on 18 August 2020 17,612
On 27 May 2021, the Directors declared a single tier interim dividend amounting to 10.0 sen per share in respect of the financial year ended 31 March 2021. The single tier interim dividend will be paid on 30 July 2021 to every member who is entitled to receive the dividend as at 5.00 p.m. on 14 July 2021.
The Directors do not recommend the payment of any final dividend for the financial year ended 31 March 2021.
RESERVES AND PROVISIONS
All material transfers to or from reserves or provisions during the financial year are disclosed in the financial statements.
SHARE CAPITAL
The Company has not issued any shares during the financial year. NURTURING SUSTAINABILITY 103 ANNUAL REPORT 2021 DIRECTORS’ REPORT AND STATEMENT
DIRECTORS
The Directors in office during the financial year and during the period from the end of the financial year to the date of the report are:
Pushpanathan a/l S.A. Kanagarayar*# Independent Non-Executive Chairman Joseph Tek Choon Yee+ Chief Executive Officer & Managing Director Purushothaman a/l Kumaran Chief Financial Officer & Executive Director Fatimah Binti Merican*# Senior Independent Non-Executive Director Datuk Dr. Choo Yuen May#+ Independent Non-Executive Director Liew Hau Seng*+ Non-Executive Director Shirley Goh# Independent Non-Executive Director (appointed on 22/09/2020) Velayuthan a/l Tan Kim Song Non-Executive Director (appointed on 07/04/2021) Boey Tak Kong Independent Non-Executive Director (resigned on 21/09/2020) Tan Sri Dato’ Tan Boon Seng @ Krishnan Non-Executive Director (resigned on 07/04/2021)
* Members of Nomination and Remuneration Committee # Members of Audit Committee + Members of Securities and Options Committee
DIRECTORS’ BENEFITS
Since the end of the previous financial year, no Director has received or become entitled to receive a benefit (other than the remuneration shown under Directors’ Remuneration in the financial statements of the Company and its related corporations) by reason of a contract made by the Company or a related corporation with the Director or with a firm of which the Director is a member, or with a company in which the Director has a substantial financial interest.
Neither during nor at the end of the financial year was the Company or any of subsidiaries a party, to any arrangements whose object was to enable the Directors to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate, other than the shares and options over ordinary shares of the ultimate holding company awarded under the Long Term Incentive Plan of the ultimate holding company, comprising the Employee Share Option Scheme (ESOS) and Employee Share Grant Plan (ESGP).
DIRECTORS’ REMUNERATION
Details of the Directors’ Remuneration are set out in Note 10 to the financial statements.
DIRECTORS’ INTERESTS IN SHARES
According to the Register of Directors’ Shareholdings required to be kept under Section 59 of the Companies Act 2016, none of the Directors who held office at the end of the financial year held any shares and options over ordinary shares of the Company and its related corporations during the financial year except as follows:
IJM Plantations Berhad
Number of ordinary shares At At 1.4.2020 Acquired Disposed 31.3.2021
Name of Director
Direct interest:
Purushothaman a/l Kumaran 877,500 - - 877,500 Tan Sri Dato’ Tan Boon Seng @ Krishnan 794,060 48,000 - 842,060
Indirect interest:
Tan Sri Dato’ Tan Boon Seng @ Krishnan 823,033(1) 50,000 - 873,033(1) 104 IJM PLANTATIONS BERHAD DIRECTORS’ REPORT AND STATEMENT
DIRECTORS’ INTERESTS IN SHARES (CONTINUED)
Ultimate holding company - IJM Corporation Berhad
Number of ordinary shares At At 1.4.2020 Acquired Disposed 31.3.2021
Name of Director
Direct interest:
Joseph Tek Choon Yee 453,900 38,400 - 492,300 Purushothaman a/l Kumaran 807,900 38,400 - 846,300 Tan Sri Dato’ Tan Boon Seng @ Krishnan 6,493,066 300,000 - 6,793,066 Liew Hau Seng 923,500 236,100 - 1,159,600
Indirect interest:
Tan Sri Dato’ Tan Boon Seng @ Krishnan 421,972(1) - - 421,972(1)
Ultimate holding company - IJM Corporation Berhad
Options over ordinary shares (“Options”) under Employee Share Option Scheme (“ESOS”) Provisional Number of Options+ Number of Options At At At At Name of Director 1.4.2020 31.3.2021 1.4.2020 Vested Exercised 31.3.2021
First ESOS Award on 24.12.2012 Joseph Tek Choon Yee - - 98,700 - - 98,700
Second ESOS Award on 24.12.2013 Joseph Tek Choon Yee - - 200,500 - - 200,500 Purushothaman a/l Kumaran - - 101,800 - - 101,800 Liew Hau Seng - - 108,600 - - 108,600
Third ESOS Award on 24.12.2014 Joseph Tek Choon Yee - - 143,600 - - 143,600 Liew Hau Seng - - 93,000 - - 93,000
Fifth ESOS Award on 24.12.2016 Purushothaman a/l Kumaran - - 143,000 - - 143,000
Sixth ESOS Award on 30.03.2018 Joseph Tek Choon Yee 255,000 - 164,900 232,300 - 397,200 Purushothaman a/l Kumaran 280,500 - 181,400 252,300 - 433,700 Liew Hau Seng 280,500 - 175,900 255,600 - 431,500
Seventh ESOS Award on 30.03.2019 Joseph Tek Choon Yee 255,000 76,500 - 163,100 - 163,100 Purushothaman a/l Kumaran 233,800 70,100 - 147,500 - 147,500 Liew Hau Seng 233,800 70,100 - 149,600 - 149,600 NURTURING SUSTAINABILITY 105 ANNUAL REPORT 2021 DIRECTORS’ REPORT AND STATEMENT
DIRECTORS’ INTERESTS IN SHARES (CONTINUED)
Ultimate holding company - IJM Corporation Berhad
Number of ordinary shares (“Shares”) under Employee Share Grant Plan (“ESGP”) Performance Share Plan++ Retention Share Plan+++ +Provisional +Provisional +Provisional +Provisional number number number number as at as at as at as at Name of Director 1.4.2020 31.3.2021 Vested 1.4.2020 31.3.2021 Vested
Sixth ESGP Award on 15.04.2018 Joseph Tek Choon Yee 116,400 58,200 29,100 46,600 23,300 9,300 Purushothaman a/l Kumaran 116,400 58,200 29,100 46,600 23,300 9,300 Liew Hau Seng 116,400 58,200 29,100 46,600 23,300 7,000
Seventh ESGP Award on 15.04.2019 Joseph Tek Choon Yee 116,400 116,400 - 46,600 46,600 - Purushothaman a/l Kumaran 116,400 116,400 - 46,600 46,600 - Liew Hau Seng 116,400 116,400 - 46,600 46,600 -
Notes:
(1) Through a family member + The vesting of the Options and/or Shares to the eligible Director is subject to the fulfillment of the relevant vesting conditions as at the relevant vesting dates ++ The quantum of shares to be vested may vary from 0% to 200% of the number of shares provisionally awarded +++ The quantum of shares to be vested may vary from 0% to 150% of the number of shares provisionally awarded
OTHER STATUTORY INFORMATION
Before the financial statements of the Group and of the Company were prepared, the Directors took reasonable steps:
(a) to ascertain the action taken in relation to the writing off of bad debts and the making of allowance for doubtful debts and satisfied themselves that there were no known bad debts and adequate allowance had been made for doubtful debts; and
(b) to ensure that any current assets, other than debts, which were unlikely to be realised in the ordinary course of business including the values of current assets as shown in the accounting records of the Group and of the Company had been written down to an amount which the current assets might be expected so to realise.
At the date of this report and statement, the Directors are not aware of any circumstances:
(a) which would render the amounts written off for bad debts or the allowance for doubtful debts of the Group and of the Company inadequate to any substantial extent and the values attributed to current assets of the Group and of the Company misleading; or
(b) which have arisen which would render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate; or
(c) not otherwise dealt with in this report and statement or in the financial statements that would render any amount stated in the financial statements of the Group and of the Company misleading. 106 IJM PLANTATIONS BERHAD DIRECTORS’ REPORT AND STATEMENT
OTHER STATUTORY INFORMATION (continued)
At the date of this report and statement, neither any charge on the assets of the Group and the Company has arisen since the end of the financial year which secures the liability of any other person nor any contingent liability of the Group and the Company.
In the interval between the end of the financial year and the date of this report and statement, no item, transaction or other event of a material and unusual nature has arisen which, in the opinion of the Directors, would substantially affect the results of the operations of the Group and of the Company for the current financial year.
No contingent or other liability of any company in the Group has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which, in the opinion of the Directors, will or may affect the ability of the Company and its subsidiaries to meet their obligations when they fall due.
In the opinion of the Directors:
(a) other than as disclosed in the financial statements, the results of the operations of the Group and of the Company during the financial year have not been substantially affected by any item, transaction or event of a material and unusual nature; and
(b) the financial statements of the Group and of the Company set out on pages 108 to 187 are drawn up so as to give a true and fair view of the financial position of the Group and of the Company as at 31 March 2021 and of the financial performance and cash flows of the Group and of the Company for the financial year ended 31 March 2021 in accordance with the Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia.
HOLDING COMPANY
The Directors regard IJM Corporation Berhad, a company incorporated in Malaysia and listed on the Main Market of Bursa Malaysia Securities Berhad, as the ultimate holding company.
SUBSIDIARIES
Details of subsidiaries are set out in Note 16 to the financial statements.
INDEMNITY AND INSURANCE FOR DIRECTORS AND OFFICERS
The ultimate holding company, IJM Corporation Berhad (“IJM”), has maintained a Directors & Officers Liability Insurance Policy on a consolidated basis, covering the Directors and officers of IJM Group throughout the financial year. The amount of insurance premium paid by IJM for the financial year ended 31 March 2021 was RM159,800.
LIST OF DIRECTORS OF SUBSIDIARIES
Pursuant to Section 253 of the Companies Act 2016, the list of Directors of the subsidiaries during the financial year and up to the date of this report is as follows:
Joseph Tek Choon Yee Purushothaman a/l Kumaran Kunalan a/l Thamudaran Sandra Segran a/l Kenganathan Khoo Choom Kwong (Resigned w.e.f. 5/10/2020) Wong Kim Sun (Appointed w.e.f. 5/10/2020) NURTURING SUSTAINABILITY 107 ANNUAL REPORT 2021 DIRECTORS’ REPORT AND STATEMENT
AUDITORS
Details of auditors’ remuneration are set out in Note 8(b) to the financial statements.
The auditors, PricewaterhouseCoopers PLT (LLP0014401-LCA & AF 1146), have expressed their willingness to continue in office.
This report and statement were approved by the Board of Directors on 27 May 2021.
Signed on behalf of the Board in accordance with a resolution of the Directors.
JOSEPH TEK CHOON YEE PURUSHOTHAMAN A/L KUMARAN DIRECTOR DIRECTOR
Petaling Jaya 27 May 2021 108 IJM PLANTATIONS BERHAD STATEMENTS OF COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR ENDED 31 MARCH 2021
Group Company Note 2021 2020 2021 2020 RM’000 RM’000 RM’000 RM’000
Revenue 4 935,693 739,133 169,778 173,468 Cost of sales 5 (614,081) (562,615) (64,543) (60,240) Gross profit 321,612 176,518 105,235 113,228 Other (expenses)/income 6(a) (6,413) (2,153) 1,262 1,414 Other net gains/(losses) 6(b) 70,166 (60,531) 6,879 - Selling and distribution expenses (69,253) (74,072) (5,551) (5,726) Administrative expenses (26,056) (29,624) (3,478) (4,704) Operating profit 290,056 10,138 104,347 104,212 Finance costs 7 (18,272) (61,263) (280) - Operating profit/(loss) after finance costs 271,784 (51,125) 104,067 104,212 Share of profits of an associate 345 653 - - Profit/(loss) before tax 8 272,129 (50,472) 104,067 104,212 Income tax expense 11 (57,122) (22,507) (14,306) (6,814) Net profit/(loss) for the financial year 215,007 (72,979) 89,761 97,398
Other comprehensive income/(loss):
Item that may be reclassified subsequently to profit or loss: - currency translation differences arising from translation of net investments in foreign entities 60,977 (57,614) - -
Item that will not be reclassified subsequently to profit or loss: - actuarial (loss)/gain on defined benefit plan (639) 528 - - 60,338 (57,086) - - Total comprehensive income/(loss) for the financial year 275,345 (130,065) 89,761 97,398
Net profit/(loss) attributable to: Owners of the Company 205,083 (63,423) 89,761 97,398 Non-controlling interests 9,924 (9,556) - - Net profit/(loss) for the financial year 215,007 (72,979) 89,761 97,398
Total comprehensive income/(loss) attributable to: Owners of the Company 266,198 (121,488) 89,761 97,398 Non-controlling interests 9,147 (8,577) - - Total comprehensive income/(loss) for the financial year 275,345 (130,065) 89,761 97,398
Group 2021 2020
Earnings/(loss) per share attributable to owners of the Company (sen): - Basic 12 23.29 (7.20) - Diluted 12 23.29 (7.20) NURTURING SUSTAINABILITY 109 ANNUAL REPORT 2021 STATEMENTS OF FINANCIAL POSITION AS AT 31 MARCH 2021
Group Company Note 2021 2020 2021 2020 RM’000 RM’000 RM’000 RM’000
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 14 1,582,925 1,526,477 182,372 178,881 Inventory – Oil palm nurseries 18 4,860 6,886 1,934 1,823 Right-of-use assets 15 228,242 226,495 82,345 83,455 Interests in subsidiaries 16 - - 1,258,459 1,171,459 Associate 17 14,113 12,712 - - Other receivables 19(b) 145,717 128,256 - - Deferred tax assets 27 3,326 8,987 - - 1,979,183 1,909,813 1,525,110 1,435,618
CURRENT ASSETS
Inventories 18 76,264 73,104 2,363 2,603 Amounts due from subsidiaries 19(a) - - 11,162 23,118 Trade and other receivables 19(b) 90,842 58,362 1,328 1,131 Derivative financial instruments 20 - 329 - - Produce growing on bearer plants 21 19,380 11,892 3,876 2,767 Tax recoverable 4,603 137 - - Deposits, cash and bank balances 22 216,871 241,253 5,194 16,253 407,960 385,077 23,923 45,872 TOTAL ASSETS 2,387,143 2,294,890 1,549,033 1,481,490
EQUITY AND LIABILITIES
Capital and reserves attributable to owners of the Company
Share capital 23 922,530 922,530 922,530 922,530 Equity contribution reserve 24 7,859 8,234 5,858 6,059 Other reserves 25 (97,972) (159,692) - - Retained profits 26 604,530 417,664 527,169 455,020 1,436,947 1,188,736 1,455,557 1,383,609 Non-controlling interests 3,331 (5,816) - - TOTAL EQUITY 1,440,278 1,182,920 1,455,557 1,383,609 110 IJM PLANTATIONS BERHAD STATEMENTS OF FINANCIAL POSITION AS AT 31 MARCH 2021
Group Company Note 2021 2020 2021 2020 RM’000 RM’000 RM’000 RM’000
NON-CURRENT LIABILITIES
Derivative financial instruments 20 - 872 - - Deferred tax liabilities 27 88,147 76,435 39,098 37,552 Retirement benefits 28 20,279 20,084 - - Borrowings 29 501,476 758,335 - - Amounts due to subsidiaries 30(a) - - 18,562 - Other payables 30(b) - - 5,836 15,243 Lease liabilities 31 20,885 21,096 8,720 8,832 630,787 876,822 72,216 61,627
CURRENT LIABILITIES
Derivative financial instruments 20 4,388 3,236 - - Borrowings 29 195,857 149,260 - - Retirement benefits 28 1,292 1,975 - - Amounts due to subsidiaries 30(a) - - - 24,442 Trade and other payables 30(b) 99,812 76,255 17,157 9,384 Lease liabilities 31 1,208 1,208 521 521 Current tax liabilities 13,521 3,214 3,582 1,907 316,078 235,148 21,260 36,254 TOTAL LIABILITIES 946,865 1,111,970 93,476 97,881 TOTAL EQUITY AND LIABILITIES 2,387,143 2,294,890 1,549,033 1,481,490 NURTURING SUSTAINABILITY 111 ANNUAL REPORT 2021 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 31 MARCH 2021 (46) (639) (329) Total equity 60,977 60,338 (17,612) (17,987) RM’000 215,007 275,345 1,182,920 1,440,278 - - - - (34) Non (743) (777) 9,924 9,147 3,331 (5,816) RM’000 interests controlling-
(46) (605) (329) Total 61,720 61,115 (17,612) (17,987) RM’000 205,083 266,198 1,188,736 1,436,947 - - - (605) (605) profits (17,612) (17,612) RM’000 417,664 205,083 204,478 604,530 Retained (Note 26) (Note ------Other 61,720 61,720 61,720 (97,972) RM’000 (159,692) reserves (Note 25) (Note ------(46) (329) (375) 8,234 7,859 Equity RM’000 reserve Attributable to owners of the Company owners to Attributable (Note 24) (Note contribution
------Share capital RM’000 922,530 922,530 (Note 23) (Note
25 33 13 Note from translation of net investments in of net investments translation from entities foreign for the financial year the financial for exercise of employee share options share of employee exercise by employees grants and share
At 1 April 2020 Comprehensive income: Comprehensive year for the financial Net profit Other comprehensive income/(loss): Other comprehensive arising differences translation Currency Actuarial loss on defined benefit plan Actuarial loss
Total comprehensive income income comprehensive Total Transactions with owners: Transactions holding company by ultimate contribution Capital Adjustment to capital contribution upon contribution capital to Adjustment Dividends with owners transactions Total At 31 March 2021 At 31 March 112 IJM PLANTATIONS BERHAD CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 31 MARCH 2021 528 Total 1,176 (1,097) equity (72,979) (57,614) (57,086) (17,612) (17,533) RM’000 (130,065) 1,330,518 1,182,920 - - - - 42 937 979 Non 2,761 (9,556) (8,577) (5,816) RM’000 interests controlling-
486 Total 1,176 (1,097) (63,423) (58,551) (58,065) (17,612) (17,533) RM’000 (121,488) 1,327,757 1,188,736 - - - 486 486 profits (63,423) (62,937) (17,612) (17,612) RM’000 498,213 417,664 Retained (Note 26) (Note ------Other (58,551) (58,551) (58,551) RM’000 (101,141) (159,692) reserves (Note 25) (Note ------79 8,155 1,176 8,234 (1,097) Equity RM’000 reserve (Note 24) (Note Attributable to owners of the Company owners to Attributable contribution
------Share capital RM’000 922,530 922,530 (Note 23) (Note
25 33 13 Note from translation of net investments in of net investments translation from entities foreign for the financial year the financial for exercise of employee share options share of employee exercise by employees grants and share
At 1 April 2019 Comprehensive loss: Comprehensive year the financial for Net loss Other comprehensive (loss)/income: Other comprehensive arising differences translation Currency Actuarial gain on defined benefit plan
loss comprehensive Total Transactions with owners: Transactions holding company by ultimate contribution Capital Adjustment to capital contribution upon contribution capital to Adjustment Dividends with owners transactions Total At 31 March 2020 At 31 March NURTURING SUSTAINABILITY 113 ANNUAL REPORT 2021 COMPANY STATEMENT OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 31 MARCH 2021
Non-distributable Distributable Equity Share contribution Retained capital reserves profits Total Note (Note 23) (Note 24) (Note 26) equity RM’000 RM’000 RM’000 RM’000
At 1 April 2020 922,530 6,059 455,020 1,383,609 Total comprehensive income for the financial year - - 89,761 89,761 Transactions with owners: Capital contribution by ultimate holding company - 117 - 117 Adjustment to capital contribution upon exercise of employee share options and share grants by employees 33 - (318) - (318) Dividends 13 - - (17,612) (17,612) Total transactions with owners - (201) (17,612) (17,813) At 31 March 2021 922,530 5,858 527,169 1,455,557
Non-distributable Distributable Equity Share contribution Retained capital reserves profits Total Note (Note 23) (Note 24) (Note 26) equity RM’000 RM’000 RM’000 RM’000
At 1 April 2019 922,530 6,220 375,234 1,303,984 Total comprehensive income for the financial year - - 97,398 97,398 Transactions with owners: Capital contribution by ultimate holding company - 833 - 833 Adjustment to capital contribution upon exercise of employee share options and share grants by employees 33 - (994) - (994) Dividends 13 - - (17,612) (17,612) Total transactions with owners - (161) (17,612) (17,773) At 31 March 2020 922,530 6,059 455,020 1,383,609 114 IJM PLANTATIONS BERHAD STATEMENTS OF CASH FLOWS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2021
Group Company Note 2021 2020 2021 2020 RM’000 RM’000 RM’000 RM’000
OPERATING ACTIVITIES Receipts from customers 909,569 743,598 126,907 83,167 Payments to contractors, suppliers and employees (627,766) (582,539) (56,256) (57,357) Interest paid (18,886) (21,807) - - Income tax paid (33,821) (10,430) (11,085) (2,970) Income tax refund - 12,705 - 3,790 Net cash flows generated from operating activities 229,096 141,527 59,566 26,630
INVESTING ACTIVITIES Repayment from subsidiaries - - 60,871 193,207 Advances to subsidiaries - - (137,134) (186,019) Subscription of additional shares in subsidiaries - - (500) (2,000) Additions to property, plant and equipment (69,330) (86,636) (16,458) (17,383) Additions to right-of-use assets (62) (2,078) - - Proceeds from disposal of property, plant and equipment 45 52 306 12 Dividends received - - 40,000 - Interest received 3,807 4,384 423 359 Net cash flows used in investing activities (65,540) (84,278) (52,492) (11,824)
FINANCING ACTIVITIES Drawdown of borrowings, net of transaction cost - 167,799 - - Repayment of borrowings (178,585) (98,770) - - Repayment of lease liabilities (1,310) (1,524) (521) (447) Net placement of restricted deposits (78) (124) - - Dividends paid (17,612) (17,612) (17,612) (17,612) Net cash flows (used in)/generated from financing activities (197,585) 49,769 (18,133) (18,059)
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (34,029) 107,018 (11,059) (3,253) FOREIGN EXCHANGE DIFFERENCES 9,841 (5,517) - - CASH AND CASH EQUIVALENTS AT BEGINNING OF FINANCIAL YEAR 229,322 127,821 16,253 19,506 CASH AND CASH EQUIVALENTS AT END OF FINANCIAL YEAR 36 205,134 229,322 5,194 16,253 NURTURING SUSTAINABILITY 115 ANNUAL REPORT 2021 STATEMENTS OF CASH FLOWS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2021
Reconciliation of liabilities arising from financing activities:
Reconciliation between the opening and closing balances in the statement of financial position of the Group and of the Company for the liabilities arising from the financing activities are as follows:
Lease liabilities Borrowings Total RM’000 RM’000 RM’000
Group At 1 April 2020 22,304 907,595 929,899
Cash flow movements: Repayments of borrowings - (178,585) (178,585) Repayments of lease liabilities (1,310) - (1,310)
Non-cash changes: Foreign exchange differences 45 (31,677) (31,632) Finance costs 1,128 - 1,128 Others (74) - (74) At 31 March 2021 22,093 697,333 719,426
Group At 1 April 2019 22,730 787,933 810,663
Cash flow movements: Drawdown of borrowings - 167,799 167,799 Repayments of borrowings - (98,770) (98,770) Repayments of lease liabilities (1,524) - (1,524)
Non-cash changes: Foreign exchange differences (34) 50,633 50,599 Finance costs 1,132 - 1,132 At 31 March 2020 22,304 907,595 929,899
Lease liabilities RM’000
Company At 1 April 2020 9,353
Cash flow movements: Repayments of lease liabilities (521)
Non-cash changes: Finance costs 483 Others (74) At 31 March 2021 9,241
Company At 1 April 2019 9,317
Cash flow movements: Repayments of lease liabilities (447)
Non-cash changes: Finance costs 483 At 31 March 2020 9,353 116 IJM PLANTATIONS BERHAD STATEMENTS OF CASH FLOWS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2021
Significant non-cash transactions:
(a) During the financial year, the wholly-owned subsidiaries of the Company issued preference shares amounting to RM87,000,000 and part of the consideration of the shares amounting to RM86,500,000 was set-off against the amount due to the Company and the remaining consideration amounting to RM500,000 was settled via cash.
(b) In the previous financial year, a wholly-owned subsidiary of the Company declared a single tier dividend amounting to RM80,000,000 to set-off against the amount due from the Company.
(c) In the previous financial year, the wholly-owned subsidiaries of the Company issued preference shares amounting to RM80,000,000 and part of the consideration of the shares amounting to RM78,000,000 was set-off against the amount due to the Company and the remaining consideration amounting to RM2,000,000 was settled via cash. NURTURING SUSTAINABILITY 117 ANNUAL REPORT 2021 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES FOR THE FINANCIAL YEAR ENDED 31 MARCH 2021
The following accounting policies have been applied consistently to all the years presented in dealing with items which are considered material in relation to the financial statements, unless otherwise stated.
1 BASIS OF PREPARATION
The financial statements of the Group and the Company have been prepared in accordance with the Malaysian Financial Reporting Standards (“MFRS”), International Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia.
The financial statements have been prepared under the historical cost convention, unless otherwise indicated in this summary of significant accounting policies.
The preparation of financial statements in conformity with MFRS requires the use of certain critical accounting estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported period. It also requires management to exercise their judgement in the process of applying the Group’s and the Company’s accounting policies. Although these estimates and judgements are based on the management’s best knowledge of current events and actions, actual results may differ from those estimates.
The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 2 to the financial statements.
The Group and the Company adopted the following Standards, Amendments and Annual Improvements to Standards.
(a) Amendments to published standards that are effective
The amendments to published standards that are effective for the Group’s and the Company’s financial year beginning on 1 April 2020 and applicable to the Group and the Company are as follows:
• The Conceptual Framework for Financial Reporting (Revised 2018)
• Amendments to MFRS 101 and MFRS 108 “Definition of Material”
• Amendments to MFRS 3 “Definition of a Business”
The adoption of amendments to published standards listed above did not have any impact on the current financial year or any prior financial year.
(b) Amendments to published standard that are applicable to the Group and the Company, but are not yet effective and have been early adopted
The Group has elected to early adopt Amendments to MFRS 16 “COVID-19-Related Rent Concessions” for the first time in the 2021 financial statements; with the date of initial application of 1 April 2020, which resulted in changes in accounting policies.
On adoption of the MFRS 16 amendment, the Group is not required to assess whether a rent concession that occurs as a direct consequence of the COVID-19 pandemic and meet specified conditions is a lease modification.
The Group accounts for such COVID-19-related rent concession as a variable lease payment in the period in which the event or condition that triggers the reduced payment occurs. The Group recognised the reduction in lease payments in profit or loss with corresponding adjustment to the lease liability to reduce the part of the lease liability that has been waived. In accordance with the transitional provisions provided in the MFRS 16 amendment, the comparative information for 2020 was not restated and continued to be reported under the previous accounting policies in accordance with the lease modification principles in MFRS 16.
In addition, the Group has elected to early adopt Amendments to MFRS 16 “COVID-19-Related Rent Concessions beyond 30 June 2021” for the first time in the 2021 financial statements, with the initial application date of 1 April 2020, which resulted in changes in accounting policies. This amendment has further extended the timeline to include any reduction in lease payments which is due on or before 30 June 2022.
The early adoption of these amendments did not have any impact to the retained earnings of the Group and of the Company as at 1 April 2020. 118 IJM PLANTATIONS BERHAD SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES FOR THE FINANCIAL YEAR ENDED 31 MARCH 2021
1 BASIS OF PREPARATION (CONTINUED)
(c) Amendments to published standards and annual improvements that are applicable to the Group and the Company, but are not yet effective and have not been early adopted
(i) The amendments to published standards that are mandatory for the Group’s and the Company’s financial year beginning on 1 April 2021 and the Group and the Company have not early adopted are as follows*:
• Amendments to MFRS 9 Financial Instruments, MFRS 139 Financial Instruments: Recognition and Measurement, MFRS 7 Financial Instruments: Disclosures and MFRS 16 Leases – Interest Rate Benchmark reform – Phase 2
The Phase 1 amendments, which was effective on 1 January 2020, provided temporary reliefs from applying specific hedge accounting requirements to relationships affected by uncertainties arising as a result of IBOR reform. The Phase 2 amendments address issues that arise from the implementation of the reforms, including the replacement of one benchmark with an alternative one.
The Phase 2 amendments provide a practical expedient allowing entities to update the effective interest rate (for instruments measured at amortised cost, for lessees and insurers applying the temporary exemption from MFRS 9) to account for any required changes in contractual cash flows that is a direct consequence of IBOR reform. This results in no immediate gain or loss recognised in profit or loss.
The Phase 2 amendments require entities to update the hedge documentation to reflect the changes required by the IBOR replacement. These amendments also provide reliefs that enable and require entities to continue hedge accounting in circumstances when changes in hedged items and hedging instruments are solely due to IBOR reform.
(ii) The amendments to published standard and annual improvements that are mandatory for the Group’s and the Company’s financial year beginning on 1 April 2022 and the Group and the Company have not early adopted are as follows*:
• Annual improvements to MFRS 9 “Fees in the 10% test for derecognition of financial liabilities” clarifies that only fees paid or received between the borrower and the lender, including the fees paid or received on each other’s behalf, are included in the cash flow of the new loan when performing the 10% test.
An entity shall apply the amendment to financial liabilities that are modified or exchanged on or after the beginning of the annual reporting period in which the entity first applies the amendment.
• Amendments to MFRS 3 “Reference to Conceptual Framework” replace the reference to Framework for Preparation and Presentation of Financial Statements with 2018 Conceptual Framework. The amendments did not change the current accounting for business combinations on acquisition date.
The amendments provide an exception for the recognition of liabilities and contingent liabilities to be in accordance with the principles of MFRS 137 “Provisions, contingent liabilities and contingent assets” and IC Interpretation 21 “Levies” when they fall within their scope. The amendments also clarify that contingent assets should not be recognised at the acquisition date.
The amendments shall be applied prospectively.
• Amendments to MFRS 141 “Agriculture”
The amendments removed the requirement to exclude cash flows for taxation when measuring fair value to align with the requirements in MFRS 13 “Fair Value Measurements”.
The amendments shall be applied retrospectively. NURTURING SUSTAINABILITY 119 ANNUAL REPORT 2021 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES FOR THE FINANCIAL YEAR ENDED 31 MARCH 2021
1 BASIS OF PREPARATION (CONTINUED)
(c) Amendments to published standards and annual improvements that are applicable to the Group and the Company, but are not yet effective and have not been early adopted (continued)
(ii) The amendments to published standard and annual improvements that are mandatory for the Group’s and the Company’s financial year beginning on 1 April 2022 and the Group and the Company have not early adopted are as follows*: (continued)
• Amendments to MFRS 116 “Proceeds before intended use” prohibit an entity from deducting from the cost of a property, plant and equipment the proceeds received from selling items produced by the property, plant and equipment before it is ready for its intended use. The sales proceeds should instead be recognised in profit or loss.
The amendments also clarify that testing whether an asset is functioning properly refers to assessing the technical and physical performance of the property, plant and equipment.
The amendments shall be applied retrospectively.
• Amendments to MFRS 137 “Onerous contracts-cost of fulfilling a contract” clarify that direct costs of fulfilling a contract include both the incremental cost of fulfilling the contract as well as an allocation of other costs directly related to fulfilling contracts. The amendments also clarify that before recognising a separate provision for an onerous contract, impairment that has occurred on assets used in fulfilling the contract should be recognised.
The amendments shall be applied retrospectively.
(iii) The amendment to published standard that is mandatory for the Group’s and the Company’s financial year beginning on 1 April 2023 and the Group and the Company have not early adopted is as follows*:
• Amendments on classification of liabilities as current or non-current (Amendments to MFRS 101)
The MFRS 101 classification principle requires an assessment of whether an entity has the substantive right to defer settlement of a liability at the end of the reporting period.
The amendments clarify that when the right to defer settlement is subject to complying with specified conditions, the right only exists at the end of the reporting period if the entity complies with those conditions at that date. The entity must comply with the conditions at the end of the reporting period even if the lender does not test compliance until a later date.
Also, classification is unaffected by the expectations of the entity or events after the reporting date (e.g. waiver obtained or breach of loan covenant).
• Amendments on disclosure of accounting policies (Amendments to MFRS 101 and MFRS Practice Statement 2)
The amendments to MFRS 101 require companies to disclose material accounting policies rather than significant accounting policies. Entities are expected to make disclosure of accounting policies specific to the entity and not generic disclosures on MFRS applications.
The amendment explains an accounting policy is material if, when considered together with other information included in an entity’s financial statements, it can reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements.
Also, accounting policy information is expected to be material if, without it, the users of the financial statements would be unable to understand other material information in the financial statements. Accordingly, immaterial accounting policy information need not be disclosed. However, if it is disclosed, it should not obscure material accounting policy information.
MFRS Practice Statement 2 was amended to provide guidance on how to apply the concept of materiality to accounting policy disclosures. 120 IJM PLANTATIONS BERHAD SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES FOR THE FINANCIAL YEAR ENDED 31 MARCH 2021
1 BASIS OF PREPARATION (CONTINUED)
(c) Amendments to published standards and annual improvements that are applicable to the Group and the Company, but are not yet effective and have not been early adopted (continued)
(iii) The amendment to published standard that is mandatory for the Group’s and the Company’s financial year beginning on 1 April 2023 and the Group and the Company have not early adopted is as follows*: (continued)
• Amendments on definition of accounting estimates (Amendments to MFRS 108)
The amendments to MFRS 108, redefined accounting estimates as “monetary amounts in financial statements that are subject to measurement uncertainty”. To distinguish from changes in accounting policies, the amendments clarify that effects of a change in an input or measurement technique used to develop an accounting estimate is a change in accounting estimate, if they do not arise from prior period errors.
Examples of accounting estimates include expected credit losses; net realisable value of inventory; fair value of an asset or liability; depreciation for property, plant and equipment; and provision for warranty obligations.
* These amendments to published standards and annual improvements will be adopted on the respective effective dates. The Group and the Company have started a preliminary assessment on the effects of the above amendments to published standards and annual improvements and the impact is still being assessed.
2 ECONOMIC ENTITIES IN THE GROUP
(a) Subsidiaries
Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the relevant activities of the entity.
The existence and effect of potential voting rights are considered when assessing whether the Group controls another entity. In assessing whether potential voting rights contribute to control, the Group examines all facts and circumstances (including the terms of exercise of the potential voting rights and any other contractual arrangements whether considered individually or in combination) that affect potential voting rights.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group and are deconsolidated from the date that control ceases. Subsidiaries are consolidated using the acquisition method of accounting, except for business combinations involving entities or businesses under common control, which are accounted for using the predecessor basis of accounting.
Under the acquisition method of accounting, the consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred and the liabilities incurred, to the former owners of the acquiree and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement and fair value of any pre-existing equity interest in the subsidiary. The costs directly attributable to the acquisition are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the date of acquisition. The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the identifiable net assets acquired is recognised as goodwill. If the total of consideration transferred, non-controlling interest recognised and previously held interest measured is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognised directly in profit or loss.
If the business combination is achieved in stages, the carrying value of the acquirer’s previously held equity interest in the acquiree is remeasured to fair value at the subsequent acquisition dates, any gains or losses arising from such remeasurement are recognised in profit or loss. NURTURING SUSTAINABILITY 121 ANNUAL REPORT 2021 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES FOR THE FINANCIAL YEAR ENDED 31 MARCH 2021
2 ECONOMIC ENTITIES IN THE GROUP (CONTINUED)
(a) Subsidiaries (continued)
Under the predecessor basis of accounting, assets and liabilities acquired are not restated to their respective fair values but at the carrying amounts in the consolidated financial statements of the ultimate holding company of the Group and adjusted to ensure uniform accounting policies of the Group. The difference between any consideration given and the aggregate carrying amounts of the assets and liabilities (as of the date of transaction) of the acquired entity is recognised as an adjustment to equity. No additional goodwill is recognised. The acquired entity’s results, assets and liabilities are consolidated as if both the acquirer and the acquiree had always been combined. Consequently, the consolidated financial statements reflect both entities’ full year’s results. The comparative information is restated to reflect the combined results of both entities.
Non-controlling interest represents that portion of profit or loss and net assets of a subsidiary attributable to equity interests that are not owned, directly or indirectly through subsidiaries, by the Company. It is measured on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest’s proportionate share of the recognised amounts of the acquiree’s identifiable net assets at the date of acquisition and the non-controlling interests’ share of changes in the subsidiaries’ equity since that date.
All earnings and losses of the subsidiary are attributed to the owners of the Company and the non-controlling interests, even if the attribution of losses to the non-controlling interests results in a debit balance in the total equity.
Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated statement of comprehensive income, statement of changes in equity and statement of financial position respectively.
All inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the transferred asset. Where necessary, adjustments are made to the financial statements of subsidiaries to ensure consistency of accounting policies with those of the Group.
(b) Changes in ownership interests in subsidiaries without change of control
Transactions with non-controlling interests that do not result in loss of control are accounted for as transactions with equity owners of the Group. A change in ownership interest results in an adjustment between the carrying amounts of the controlling and non-controlling interests to reflect their relative interests in the subsidiary. Any difference between the amount of the adjustment to non-controlling interests and any consideration paid or received is recognised in equity attributable to owners of the Group.
(c) Disposal of subsidiaries
When the Group ceases to consolidate because of a loss of control, any retained interest in the entity is remeasured to its fair value with the change in carrying amount recognised in profit or loss. This fair value becomes the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss.
Gains or losses on the disposal of subsidiaries include the carrying amount of goodwill relating to the subsidiaries disposed. 122 IJM PLANTATIONS BERHAD SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES FOR THE FINANCIAL YEAR ENDED 31 MARCH 2021
2 ECONOMIC ENTITIES IN THE GROUP (CONTINUED)
(d) Goodwill
Goodwill arises from a business combination and represents the excess of the aggregate of fair value of consideration transferred, the amount of any non-controlling interest in the acquiree and the fair value of any previously held equity interest in the acquiree over the fair value of the net identifiable assets acquired and liabilities assumed on the acquisition date. If the fair value of consideration is transferred, the amount of non-controlling interest and the fair value of previously held interest in the acquiree are less than the fair value of the net identifiable assets of the acquiree, the resulting gain is recognised in profit or loss.
Goodwill on acquisition of subsidiaries is included in the statements of financial position as intangible assets. Goodwill is not amortised but it is tested for impairment annually or more frequently if events or changes in circumstances indicate that it might be impaired, and carried at cost less accumulated impairment. Any impairment is recognised immediately as an expense and is not subsequently reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity disposed.
For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash-generating units (“CGUs”), or groups of CGUs, that are expected to benefit from the synergies of the business combination in which the goodwill arose. The Group allocates goodwill to each business segment in each country in which it operates.
(e) Associates
Associates are all entities over which the Group has significant influence but not control or joint control, generally accompanying a shareholding of between 20% and 50% of the voting rights. The existence and the effect of potential voting rights are considered when assessing whether the group exercises significant influence over another entity. Significant influence is the power to participate in the financial and operating policy decisions of the associates but not the power to exercise control over those policies.
Investments in associates are accounted for using the equity method of accounting. Under the equity method, the investment is initially recognised at cost, and adjusted thereafter to recognise the Group’s share of the post-acquisition profit or loss of the associate in profit or loss, and the Group’s share of movements in other comprehensive income of the associate in other comprehensive income. Dividends received or receivable from an associate are recognised as a reduction in the carrying amount of the investment. The Group’s investment in associates includes goodwill identified on acquisition.
When the Group’s share of losses in an associate equals or exceeds its interests in the associate, including any long-term interests that, in substance, form part of the Group’s net investment in the associate, the Group does not recognise further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.
The Group determines at each reporting date whether there is any objective evidence that the investment in the associate is impaired. An impairment is recognised for the amount by which the carrying amount of the associate exceeds its recoverable amount and the amount is recognised in profit or loss.
Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associates; unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been changed where necessary to ensure consistency with the policies adopted by the Group.
When the Group ceases to equity account its associate because of a loss of significant influence, any retained interest in the entity is remeasured to its fair value with the change in carrying amount recognised in profit or loss. This fair value becomes the initial carrying amount for the purposes of subsequently accounting for the retained interest as a financial asset. In addition, any amount previously recognised in other comprehensive income in respect of the entity is accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss.
If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate share of the amounts previously recognised in other comprehensive income is reclassified to profit or loss where appropriate.
For incremental interest in an associate when significant influence is retained, the date of acquisition is the purchase date at each stage and goodwill is calculated at each purchase date based on the fair value of assets and liabilities identified. The previously held interest is not re-measured. NURTURING SUSTAINABILITY 123 ANNUAL REPORT 2021 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES FOR THE FINANCIAL YEAR ENDED 31 MARCH 2021
3 PROPERTY, PLANT AND EQUIPMENT AND DEPRECIATION
All property, plant and equipment are stated at cost or at valuation less accumulated depreciation and accumulated impairment except for capital work-in-progress which are not depreciated.
The cost of an item of property, plant and equipment initially recognised includes its purchase price, import duties (if any), non-refundable purchase taxes and any cost that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Cost also includes borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance costs are recognised as expenses in profit or loss during the financial year in which they are incurred.
The Group amortises plantation infrastructure in equal annual instalments over the remaining period of the respective leases ranging from 21 to 81 years.
Bearer plants are living plants that are used in the production or supply of agriculture produce for more than one period and have remote likelihood of being sold as agriculture produce, except for incidental scrap sales. The bearer plants that are available for use are measured at cost less accumulated depreciation and any accumulated impairment losses. Cost includes plantation expenditure incurred from land clearing to the stage of maturity. Bearer plants have an average life cycle of 25 years with the first 3 years as immature bearer plants and the remaining years as mature bearer plants. The mature bearer plants are depreciated over its remaining useful lives of 22 years on a straight-line basis. The immature bearer plants are not depreciated until such time when they become mature.
Other property, plant and equipment are depreciated on a straight-line basis to write-off the cost of the assets, or their revalued amounts, to their residual values over their estimated useful lives. The annual rates of depreciation are:
Buildings 2 to 10% Plant, machinery and equipment and vehicles 4 to 20% Office equipment, furniture and fittings 10 to 33.3%
Capital work-in-progress comprising mainly buildings, plant, machinery and equipment which are stated at cost are not depreciated until the assets are ready for their intended use.
The residual values and useful lives of property, plant and equipment are reviewed, and adjusted as appropriate, at each reporting date. The effects of any revision of the residual values and useful lives are included in profit or loss for the financial year in which the changes arise.
At each reporting date, the Group assesses whether there is any indication of impairment. Where an indication of impairment exists, the carrying value of the asset is assessed and written down immediately to its recoverable amount. See accounting policy Note 6 on impairment of non-financial assets.
Gains and losses on disposals are determined by comparing the net proceeds with the carrying amounts and are included in profit or loss.
4 PRODUCE GROWING ON BEARER PLANTS
Produce growing on bearer plants are measured at fair value less costs to sell. Any gains or losses arising from changes in the fair value less costs to sell of produce growing on bearer plants are recognised in profit or loss within cost of sales. Fair value of the produce growing on bearer plants, which are estimated using the expected output method is the estimated market price of the produce growing on bearer plants.
5 INVESTMENTS
In the Company’s separate financial statements, investments in subsidiaries are carried at cost less accumulated impairment. Where an indication of impairment exists, the carrying amount of the investment is assessed and written down immediately to its recoverable amount. See accounting policy Note 6 on impairment of non-financial assets. On disposal of investments in subsidiaries, the difference between the disposal proceeds and the carrying amounts of the investments are recognised in profit or loss. 124 IJM PLANTATIONS BERHAD SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES FOR THE FINANCIAL YEAR ENDED 31 MARCH 2021
6 IMPAIRMENT OF NON-FINANCIAL ASSETS
Assets (including goodwill and intangible assets not ready for use) that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Other non-financial assets (including those which are subject to amortisation) are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. An impairment is recognised for the amount by which the carrying value of the asset exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs of disposal and value-in-use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets, other than goodwill, that suffered impairment are reviewed for possible reversal of the impairment at each reporting date.
The impairment is charged to profit or loss unless it reverses a previous revaluation, in which case it is charged to the revaluation surplus. Impairment of goodwill is not reversed. In respect of other assets, any subsequent increase in recoverable amount is recognised in profit or loss unless it reverses an impairment of a revalued asset, in which case it is taken to the revaluation surplus reserve.
7 LEASES
A lease is an agreement whereby the lessor conveys to the lessee in return for a payment, or series of payments, the right to use an asset for an agreed period of time.
Accounting as lessee
Leases are recognised as right-of-use (‘ROU’) assets and a corresponding liability at the dates on which the leased assets are available for use by the Group (i.e. the commencement dates).
Contracts may contain both lease and non-lease components. The Group allocates the consideration in the contract to the lease and non-lease components based on their relative stand-alone prices. However, for leases of properties for which the Group is a lessee, it has elected the practical expedient provided in MFRS 16 not to separate lease and non-lease components. Both components are accounted for as a single lease component and payments for both components are included in the measurement of the lease liability.
(i) Lease term
In determining the lease term, the Group considers all facts and circumstances that create an economic incentive to exercise an extension option, or not to exercise a termination option. Extension options (or periods after termination options) are only included in the lease term if the lease is reasonably certain to be extended (or not to terminated).
The Group reassesses the lease term upon the occurrence of a significant event or change in circumstances that is within the control of the Group and affects whether the Group is reasonably certain to exercise an option not previously included in the determination of the lease term, or not to exercise an option previously included in the determination of the lease term. A revision in lease term results in remeasurement of the lease liabilities.
(ii) ROU assets
ROU assets are initially measured at cost comprising the following:
• The amount of the initial measurement of lease liability;
• Any lease payments made at or before the commencement date less any lease incentive received;
• Any initial direct costs; and
• Decommissioning or restoration costs, if any.
ROU assets that are not investment properties are subsequently measured at cost, less accumulated depreciation and impairment loss (if any). The ROU assets are generally depreciated over the shorter of the asset’s useful life and the lease term on a straight-line basis. If the Group is reasonably certain to exercise a purchase option, the ROU asset is depreciated over the underlying asset’s useful life. In addition, the ROU assets are adjusted for certain remeasurement of the lease liabilities. NURTURING SUSTAINABILITY 125 ANNUAL REPORT 2021 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES FOR THE FINANCIAL YEAR ENDED 31 MARCH 2021
7 LEASES (CONTINUED)
Accounting as lessee (continued)
(ii) ROU assets (continued)
The estimated useful lives of the ROU assets are as follows:
Buildings over the lease periods ranging from 6 to 7 years Leasehold land over the lease periods ranging from 36 to 883 years
The Group presents ROU assets that meet the definition of investment property in the statement of financial position as investment property. ROU assets that are not investment properties are presented as a separate line item in the statement of financial position.
(iii) Lease liabilities
Lease liabilities are initially measured at the present value of the lease payments that are not paid at the commencement date. The lease payments include the following:
• Fixed payments (including in-substance fixed payments), less any lease incentives receivable;
• Variable lease payments that are based on an index or a rate, initially measured using the index or rate as at the commencement date;
• Amounts expected to be payable by the Group under residual value guarantees;
• The exercise price of a purchase and extension option if the Group is reasonably certain to exercise that option; and
• Payments of penalties for terminating the lease, if the lease term reflects the Group exercising that option.
Lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, which is generally the case for leases in the Group, the lessee’s incremental borrowing rate is used. This is the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the ROU asset in a similar economic environment with similar terms, security and conditions.
Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.
The Group presents the lease liabilities as a separate line item in the statement of financial position. Interest expense on the lease liability is presented within the finance cost in profit or loss in the statement of comprehensive income.
Reassessment of lease liabilities
The Group is also exposed to potential future increases in variable lease payments that depend on an index or rate, which are not included in the lease liability until they take effect. When adjustments to lease payments based on an index or rate take effect, the lease liability is remeasured and adjusted against the ROU assets.
Short term leases and leases of low value assets
Short term leases are leases with a lease term of 12 months or less. Low value assets comprise small IT equipment and office furniture. Payments associated with short term leases of assets and all leases of low value assets are recognised on a straight-line basis as an expense in profit or loss. 126 IJM PLANTATIONS BERHAD SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES FOR THE FINANCIAL YEAR ENDED 31 MARCH 2021
7 LEASES (CONTINUED)
Accounting as lessee (continued)
(iii) Lease liabilities (continued)
Short term leases and leases of low value assets (continued)
During the financial year, the Group applies the practical expedient to account for a COVID-19-related rent concession that meets all of the following conditions in the same way as they would if they were not lease modifications:
• the change in lease payments results in revised consideration for the lease that is substantially the same as, or less than, the consideration for the lease immediately preceding the change;
• any reduction in lease payments affects only payments due on or before 30 June 2022; and
• there is no substantive change to other terms and conditions of the lease.
The Group accounts for COVID-19 related rent concession as a variable lease payment in the period in which the event or condition that triggers the reduced payment occurs. Impacts of rent concessions are presented within operating expenses.
Accounting as lessor
As a lessor, the Group determines at lease inception whether each lease is a finance lease or an operating lease. To classify each lease, the Group makes an overall assessment of whether the lease transfers substantially all of the risks and rewards incidental to ownership of the underlying asset to the lessee. As part of this assessment, the Group considers certain indicators such as whether the lease is for the major part of the economic life of the asset.
(i) Operating leases
The Group classifies a lease as an operating lease if the lease does not transfer substantially all the risks and rewards incidental to ownership of an underlying asset to the lessee. The Group recognises lease payments received under operating lease as lease income on a straight-line basis over the lease term.
When assets are leased out under an operating lease, the asset is included in property, plant and equipment in the statement of financial position. Lease income (net of any incentives given to lessees) is recognised over the term of the lease on a straight line basis.
8 INVENTORIES
Inventories are stated at the lower of cost and net realisable value. Cost comprises the original cost of purchase plus the cost of bringing the inventories to their intended location and condition. The costs are determined at weighted average basis and include the cost of raw materials, direct labour and a portion of production overheads.
Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.
9 RECEIVABLES
(a) Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business. Other receivables generally arise from transactions outside the usual operating activities of the Group. If collection is expected in one year or less (or in the normal operating cycle of the business, if longer), they are classified as current assets. If not, they are presented as non-current assets.
Trade and other receivables are recognised initially at fair value. After recognition, trade and other receivables are subsequently measured at amortised cost using the effective interest method, less loss allowance. NURTURING SUSTAINABILITY 127 ANNUAL REPORT 2021 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES FOR THE FINANCIAL YEAR ENDED 31 MARCH 2021
9 RECEIVABLES (CONTINUED)
(b) Advances for plasma schemes represent accumulated plantation development costs including indirect overheads less repayments todate and net of impairment, which are recoverable from plasma farmers. See Note 19(b)(iii) to the financial statements on other receivables.
In the event the Group or the Company provides corporate guarantees to the plasma schemes to obtain loans from financial institutions, they will be accounted for as financial guarantee contracts. See accounting policy Note 21 on financial guarantee contracts.
See accounting policy Note 18(d) on impairment of financial assets.
10 CASH AND CASH EQUIVALENTS
For the purpose of the statement of cash flows, cash equivalents are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes. Cash and cash equivalents comprise cash in hand, deposits held at call with financial institutions, other short term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to insignificant risk of changes in value, less bank overdrafts.
Bank overdrafts, if any, are included within borrowings in current liabilities on the statement of financial position.
11 SHARE CAPITAL
(i) Classification
Ordinary shares are classified as equity.
(ii) Share issue costs
Incremental costs directly attributable to the issue of new shares are deducted against equity.
(iii) Dividends
Liability is recognised for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the Group, on or before the end of the reporting period but not distributed at the end of the reporting period. Distributions to holders of an equity instrument are recognised directly in equity.
12 BORROWINGS AND BORROWING COSTS
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost; any difference between the initial recognised amount and the redemption value is recognised in profit or loss over the period of the borrowings using the effective interest method.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.
General and specific borrowing costs, including exchange differences to the extent that they are regarded asan adjustment to interest costs, directly attributable to the acquisition, construction or production of qualifying assets which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.
Borrowing costs incurred on borrowings to finance the property, plant and equipment and bearer plants during the period that is required to complete and prepare the asset for its intended use are capitalised as part of the cost of the asset and presented as part of the cash flows used in investing activities.
All other borrowing costs are charged to profit or loss in the period in which they are incurred.
Where an entity has modification of terms of borrowings which do not result in extinguishment, the following accounting policy is considered:
When a borrowing measured at amortised cost is modified without resulting in derecognition, any gain or loss, being the difference between the original contractual cash flows and the modified cash flows discounted atthe original effective interest rate, are recognised immediately in profit or loss. 128 IJM PLANTATIONS BERHAD SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES FOR THE FINANCIAL YEAR ENDED 31 MARCH 2021
13 INCOME TAXES
The income tax expense for the period comprises current and deferred tax. The income tax expense or credit for the period is the tax payable on the current period’s taxable income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case the tax is also recognised in other comprehensive income or directly in equity, respectively.
Current tax expense is determined according to the tax laws of each jurisdiction in which the Group operates and includes all taxes based upon the taxable profits. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities. This liability is measured using the single best estimate of the most likely outcome.
Deferred tax is recognised, using the liability method, on temporary differences arising between the amounts attributed to assets and liabilities for tax purposes and their carrying amounts in the financial statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill. Deferred tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit.
Deferred tax is determined using tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.
Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, unused tax losses or unused tax credits can be utilised.
Deferred tax is recognised on temporary differences arising on investments in subsidiaries, and associates, except where the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred tax is recognised in profit or loss, except when it arises from a transaction which is recognised directly in equity, in which case the deferred tax is also charged or credited directly to equity, or when it arises from a business combination that is an acquisition, in which case the deferred tax is adjusted against goodwill on acquisition.
Deferred tax and income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income tax assets and liabilities relate to taxes levied by the same taxation authority on either the taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.
14 EMPLOYEE BENEFITS
(a) Short term employee benefits
The Group recognises a liability and an expense for bonuses based on a formula that takes into consideration the profit attributable to the owners of the Company after certain adjustments. The Group recognises a provision where there is a contractual obligation or where there is a past practice that has created a constructive obligation.
Wages, salaries, bonuses and non-monetary benefits are accrued in the period in which the associated services are rendered by the employees of the Group.
(b) Post-employment benefits
The Group has various post-employment benefit schemes in accordance with local conditions and practices in the countries in which it operates. These benefit plans are either defined contribution plans or defined benefit plans.
A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity (a fund) in a mandatory, contractual or voluntary basis and the Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employee benefits relating to employees services in the current and prior periods. A defined benefit plan is a pension plan that defines an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service or compensation. NURTURING SUSTAINABILITY 129 ANNUAL REPORT 2021 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES FOR THE FINANCIAL YEAR ENDED 31 MARCH 2021
14 EMPLOYEE BENEFITS (CONTINUED)
(b) Post-employment benefits (continued)
(i) Defined contribution plan
The Group’s contributions to a defined contribution plan are charged to the profit or loss in the period to which they relate. Once the contributions have been paid, the Group has no further payment obligations. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available. As required by law, companies in Malaysia make contributions to the national pension scheme, the Employees Provident Fund (“EPF”), which is a defined contribution plan.
(ii) Defined benefit plan
The liability or asset recognised in the statement of financial position in respect of a defined benefit plan is the present value of the defined benefit obligation at the statement of financial position date, less the fair value of plan assets, together with adjustments for its actuarial gains/losses and past service costs.
The defined benefit obligation, calculated using the projected unit credit method, is determined by independent actuaries, considering the estimated future cash outflows using market yields at the reporting date on government bonds which have currency and terms to maturity approximating the terms of the related liability.
Actuarial gains and losses arise mainly from the changes in actuarial assumptions and experience adjustments. Such gains and losses are credited or charged to equity in other comprehensive income in the period in which they arise. The actuarial gains and losses are not subsequently reclassified to profit or loss in subsequent periods.
Changes in present value of the defined benefit obligation resulting from amendments or curtailments are recognised immediately in profit or loss as past service costs.
(c) Share-based compensation
The Company’s ultimate holding company operates an equity-settled share-based compensation plan under which the Group receives services from employees as consideration for equity instruments (share options and share grants) of the ultimate holding company. The fair value of the employees services received in exchange for the grant of the share options and share grants is recognised as an expense in profit or loss.
Non-market vesting conditions are included in assumptions about the number of share options and share grants that are expected to vest. The total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of the reporting period, the Group revises its estimates of the number of share options and share grants that are expected to vest based on the non-market vesting conditions. It recognises the impact of the revision to original estimates, if any, in profit or loss over the vesting period with a corresponding credit recognised in equity. The credit to equity is treated as a capital contribution as the ultimate holding company is compensating the Group’s employees with no expense to the Group.
If the terms of equity-settled share-based compensation plans are modified, at a minimum an expense is recognised as if the terms had not been modified. An additional expense is recognised for any modification that increases the total fair value of the share-based payment arrangement, or is otherwise beneficial to the employee, as measured at the date of modification.
When the ultimate holding company recharges the Group for the equity instruments granted, the recharge is treated as an adjustment to the equity contribution reserve from the ultimate holding company.
15 CONTINGENT LIABILITIES
The Group does not recognise a contingent liability other than those arising from business combinations, but discloses its existence in the financial statements. A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Group or a present obligation that is not recognised because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in the extremely rare circumstance where there is a liability that cannot be recognised because it cannot be measured reliably. Contingent liabilities do not include financial guarantee contracts. (see accounting policy Note 21 on financial guarantee contracts) 130 IJM PLANTATIONS BERHAD SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES FOR THE FINANCIAL YEAR ENDED 31 MARCH 2021
15 CONTINGENT LIABILITIES (CONTINUED)
In the acquisition of subsidiaries by the Group under a business combination, the contingent liabilities assumed are measured initially at their fair values at the acquisition date, irrespective of the extent of any non-controlling interest.
The Group recognises separately the contingent liabilities of the acquirees as part of allocating the cost of a business combination where their fair values can be measured reliably. Where the fair values cannot be measured reliably, the resulting effect will be reflected in the goodwill arising from the acquisitions and the information aboutthe contingent liabilities acquired are disclosed in the notes to the financial statements.
Subsequent to the initial recognition, the Group measures the contingent liabilities that are recognised separately at the date of acquisition at the higher of the amount that would be recognised in accordance with the provisions of MFRS 137 “Provisions, Contingent Liabilities and Contingent Assets” and the amount initially recognised less, when appropriate, cumulative amortisation recognised in accordance with MFRS 15 “Revenue from contracts with customers”.
16 REVENUE AND OTHER INCOME RECOGNITION
Revenue from contracts with customers is recognised by reference to each distinct performance obligation promised in the contract with the customer when or as the Group transfers controls of the goods or services promised in a contract and the customer obtains control of the goods or services.
Revenue from contracts with customers is measured at its transaction price, being the amount of consideration to which the Group expects to be entitled in exchange for transferring promised goods or services to a customer, net of discounts. The transaction price is allocated to each distinct good or service promised in the contract. Depending on the terms of the contract, revenue is recognised when the performance obligation is satisfied, which may be a point in time or over time.
The Group satisfies a performance obligation and recognises revenue over time, if one of the following criteria is met:
- The customer simultaneously receives and consumes the benefits provided by the Group’s performance as the Group performs.
- The Group’s performance creates or enhances an asset that the customer controls as the asset is created or enhanced.
- The Group’s performance does not create an asset with an alternative use to the Group and the Group has an enforceable right to payment for performance completed to date.
If any of the above conditions are not met, the Group recognises revenue at the point in time at which the performance obligation is satisfied.
(a) Revenue from the contracts with customers
(i) Plantations and upstream manufacturing
The Group’s revenue is derived mainly from its upstream operations. In the upstream operations, the Group sells plantation products and produce such as crude palm oil, palm kernel produce and fresh fruit bunches (“FFB”) (collectively known as “plantation products and produce”).
Revenue from sales of plantation products and produce are recognised (net of discount and taxes collected on behalf, if any) at the point when the control of goods has been transferred to the customer. Based on the terms of the contract with the customer, control transfers upon delivery of the goods to a location specified by the customer and the acceptance of the goods by the customer. There is no element of financing present as the Group’s sales of goods are on credit terms ranging from 1 to 30 days.
(ii) Advisory and management fee services
Fees from advisory and management services are recognised as revenue over time during the period in which the services are rendered. There is no element of financing as the sales are made with a credit term of 30 days, which is consistent with the market practice. NURTURING SUSTAINABILITY 131 ANNUAL REPORT 2021 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES FOR THE FINANCIAL YEAR ENDED 31 MARCH 2021
16 REVENUE AND OTHER INCOME RECOGNITION (CONTINUED)
(b) Revenue from other sources
(i) Interest income
Interest income is recognised using the effective interest method.
Interest income on financial assets at amortised cost which is calculated using the effective interest method is recognised in the statement of comprehensive income as part of other income.
Interest income is calculated by applying the effective interest rate to the gross carrying amount of a financial asset except for financial assets that subsequently become credit-impaired. For credit-impaired financial assets the effective interest rate is applied to the net carrying amount of the financial asset (after deduction of the loss allowance).
(ii) Lease income
Lease payments received under operating leases are recognised as lease income on a straight-line basis over the lease term. Refer to accounting policy Note 7 on leases.
(iii) Dividend income
Dividend income is recognised when the Group’s right to receive payment is established.
17 FOREIGN CURRENCIES
(a) Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The financial statements of the Group and of the Company are presented in Ringgit Malaysia, which is the Company’s functional and presentation currency and the Group’s presentation currency.
(b) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the date of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss, except that exchange differences arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs are classified as borrowing costs.
Exchange differences are deferred in other comprehensive income when they are attributable to items that form part of the net investment in a foreign operation.
Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss. Translation differences on non-monetary financial assets and liabilities such as equities held at fair value through profit or loss are recognised in profit or loss as part of the fair value gain or loss. Translation differences on non-monetary financial assets, such as equities classified as at fair value through other comprehensive income (“FVOCI”), are included in other comprehensive income. 132 IJM PLANTATIONS BERHAD SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES FOR THE FINANCIAL YEAR ENDED 31 MARCH 2021
17 FOREIGN CURRENCIES (CONTINUED)
(c) Group companies
The results and financial position of all the group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:
• Assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that statement of financial position;
• Income and expenses for each statement of comprehensive income presented are translated at the average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions); and
• All resulting exchange differences are recognised as a separate component of other comprehensive income.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate at the date of the statement of financial position. Exchange differences arising are recognised in other comprehensive income.
17 FOREIGN CURRENCIES (CONTINUED)
(c) Group companies (continued)
On consolidation, exchange differences arising from the translation of any net investment in foreign operations are recognised in other comprehensive income. On the disposal of a foreign operation (that is, a disposal of the Group’s entire interest in a foreign operation, or a disposal involving loss of control over a subsidiary that includes a foreign operation, a disposal involving loss of joint control over a joint venture that includes a foreign operation, or a disposal involving loss of significant influence over an associate that includes a foreign operation), all of the exchange differences relating to that foreign operation recognised in other comprehensive income and accumulated in the separate component of equity are reclassified to profit or loss, as part of the gain or loss on disposal. In the case of a partial disposal that does not result in the Group losing control over a subsidiary that includes a foreign operation, the proportionate share of accumulated exchange differences are re-attributed to non-controlling interests and are not recognised in profit or loss. For all other partial disposals (that is, reductions in the Group’s ownership interest in associates or joint ventures that do not result in the Group losing significant influence or joint control) the proportionate share of the accumulated exchange difference is reclassified to profit or loss.
18 FINANCIAL INSTRUMENTS
Financial instruments are contracts that give rise to both a financial asset of one enterprise and a financial liability or equity instrument of another enterprise.
A financial asset is any asset that is cash, a contractual right to receive cash or another financial asset from another enterprise, a contractual right to exchange financial instruments with another enterprise under conditions that are potentially favourable, or an equity instrument of another enterprise.
A financial liability is any liability that is a contractual obligation to deliver cash or another financial asset to another enterprise, or to exchange financial instruments with another enterprise under conditions that are potentially unfavourable.
Financial Assets
(a) Classification
The Group classifies its financial assets in the following measurement categories:
• those to be measured subsequently at fair value through profit or loss; and
• those to be measured at amortised cost NURTURING SUSTAINABILITY 133 ANNUAL REPORT 2021 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES FOR THE FINANCIAL YEAR ENDED 31 MARCH 2021
18 FINANCIAL INSTRUMENTS (CONTINUED)
(b) Recognition and derecognition
Regular way purchases and sales of financial assets are recognised on trade-date, the date on which the Group commits to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership.
(c) Measurement
At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss (“FVTPL”), transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at FVTPL are expensed in profit or loss.
Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely payment of principal and interest (“SPPI”).
Debt instruments
Subsequent measurement of debt instruments depends on the Group’s business model for managing the asset and the cash flow characteristics of the asset. There are two measurement categories into which the Group classifies its debt instruments:
(i) Amortised cost
Assets that are held for collection of contractual cash flows where those cash flows represent solely payment of principal and interest (“SPPI”) are measured at amortised cost. Interest income from these financial assets is included in other income using the effective interest rate method. Any gain or loss arising on derecognition is recognised directly in profit or loss together with foreign exchange gains and losses. Impairment is presented as a separate line item in the statement of comprehensive income.
(ii) Fair value through profit or loss (“FVTPL”)
Assets that do not meet the criteria for amortised cost or FVOCI are measured at FVTPL. The Group may also irrevocably designate financial assets at FVTPL if doing so significantly reduces or eliminates a mismatch created by assets and liabilities being measured on different basis. Fair value changes are presented net in other gains/(losses) in the statement of comprehensive income in the period in which it arises.
(d) Impairment – financial assets and financial guarantee contracts
(i) Impairment for debt instruments and financial guarantee contracts
The Group assesses on a forward looking basis the expected credit loss (“ECL”) associated with its debt instruments carried at amortised cost and financial guarantee contracts issued. The impairment methodology applied depends on whether there has been a significant increase in credit risk.
The Group has three types of financial instruments that are subject to the ECL model:
• Trade receivables
• Other receivables (including amounts due from subsidiaries)
• Financial guarantee contracts
While cash and cash equivalents are also subject to the impairment requirements of MFRS 9, the identified impairment was immaterial.
ECL represents a probability-weighted estimate of the difference between present value of cash flows according to contract and present value of cash flows the Group expects to receive, over the remaining life of the financial instrument. For financial guarantee contracts, the ECL is the difference between the expected payments to reimburse the holder of the guaranteed debt instrument less any amounts that the Group expects to receive from the holder, the debtor or any other party. 134 IJM PLANTATIONS BERHAD SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES FOR THE FINANCIAL YEAR ENDED 31 MARCH 2021
18 FINANCIAL INSTRUMENTS (CONTINUED)
Financial Assets (continued)
(d) Impairment – financial assets and financial guarantee contracts (continued)
(i) Impairment for debt instruments and financial guarantee contracts (continued)
The measurement of ECL reflects:
• an unbiased and probability-weighted amount that is determined by evaluating a range of possible outcomes;
• the time value of money; and
• reasonable and supportable information that is available without undue cost or effort at the reporting date about past events, current conditions and forecasts of future economic conditions.
a) General 3-stage approach is applied to determine the expected credit losses for other receivables (including amounts due from subsidiaries – non-trade and non-interest bearing advances) and financial guarantee contracts issued
At each reporting date, the Group measures ECL through loss allowance at an amount equal to 12 months ECL if credit risk on a financial instrument or a group of financial instruments hasnot increased significantly since initial recognition. For all other financial instruments, a loss allowance at an amount equal to lifetime ECL is required.
b) Simplified approach for trade receivables
The Group applies the MFRS 9 simplified approach to measure ECL which uses a lifetime ECL for all trade receivables.
(ii) Significant increase in credit risk
The Group considers the probability of default upon initial recognition of asset and whether there has been a significant increase in credit risk on an ongoing basis throughout each reporting period. To assess whether there is a significant increase in credit risk, the Group compares the risk of a default occurring on the asset as at the reporting date with the risk of default as at the date of initial recognition. It considers available reasonable and supportable forward-looking information.
The following indicators are incorporated:
• internal credit rating
• external credit rating (as far as available)
• actual or expected significant adverse changes in business, financial or economic conditions thatare expected to cause a significant change to the debtor’s ability to meet its obligations
• actual or expected significant changes in the operating results of the debtor
• significant increases in credit risk on other financial instruments of the same debtor
• significant changes in the value of the collateral supporting the obligation or in the quality of third-party guarantees or credit enhancements
• significant changes in the expected performance and behaviour of the debtor, including changes in the payment status of the debtor in the Group and changes in the operating results of the debtor.
Macroeconomic information (such as market interest rates or growth rates) is incorporated as part of the internal rating model.
Regardless of the analysis above, a significant increase in credit risk is presumed if a debtor is more than 30 days past due in making a contractual payment.
For financial guarantee contracts, the Group considers the change in the risk that the specific debtor will default on the contract by considering the above indicators. NURTURING SUSTAINABILITY 135 ANNUAL REPORT 2021 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES FOR THE FINANCIAL YEAR ENDED 31 MARCH 2021
18 FINANCIAL INSTRUMENTS (CONTINUED)
Financial Assets (continued)
(d) Impairment – financial assets and financial guarantee contracts (continued)
(iii) Definition of default and credit-impaired financial assets
The Group defines a financial instrument as in default, which is fully aligned with the definitionof credit-impaired, when it meets one or more of the following criteria:
(i) Quantitative criteria:
The Group defines a financial instrument as in default, when the counterparty fails to make contractual payment within 90 days of when they fall due, unless there are specific reasons for delay in payment beyond 90 days by certain customers, as determined on a case by case basis by management.
(ii) Qualitative criteria:
The debtor meets unlikeliness to pay criteria, which indicates the debtor is in significant financial difficulty. The Group considers the following instances:
• the debtor is in breach of financial covenants
• concessions have been made by the lender relating to the debtor’s financial difficulty
• it is becoming probable that the debtor will enter bankruptcy or other financial reorganisation
• the debtor is insolvent
Financial instruments that are credit-impaired are assessed on an individual basis.
(iv) Groupings of instruments for ECL measured on collective basis
Trade receivables which are in default or credit-impaired are assessed individually.
Amounts due from subsidiaries in the Company’s separate financial statements are assessed on an individual basis for ECL measurement, as credit risk information of these entities can be obtained and monitored by the Company.
(e) Write-off
(i) Trade receivables
Trade receivables are written off when there is no reasonable expectation of recovery. Indicators that there are no reasonable expectation of recovery include, amongst others, the failure of a debtor to engage in a repayment plan with the Group, and significant delays in collection periods.
Impairment of trade receivables are presented as net impairment and disclosed as a separate line item in the statement of comprehensive income. Subsequent recoveries of amounts previously written off are credited against the same line item.
(ii) Other receivables
The Group writes off financial assets, in whole or in part, when it has exhausted all practical recovery efforts and has concluded there is no reasonable expectation of recovery. The assessment of no reasonable expectation of recovery is based on unavailability of debtor’s sources of income or assets to generate sufficient future cash flows to repay the amount. The Group may write off financial assets that arestill subject to enforcement activity. Subsequent recoveries of amounts previously written off will result in write back of impairment 136 IJM PLANTATIONS BERHAD SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES FOR THE FINANCIAL YEAR ENDED 31 MARCH 2021
18 FINANCIAL INSTRUMENTS (CONTINUED)
Financial Liabilities
The Group classifies its financial liabilities as financial liabilities at fair value through profit or loss and those measured at amortised cost. The classification depends on the nature of the liabilities and the purpose for which the financial liabilities were incurred. Management determines the classification at initial recognition.
(a) Financial liabilities at fair value through profit or loss
The Group classifies financial liabilities at fair value through profit or loss if they are acquired principally for the purpose of buying in the short term, i.e. are held for trading. They are presented as current liabilities if they are expected to be settled within 12 months after the end of the reporting period; otherwise they are presented as non-current liabilities. Derivatives are also categorised as held for trading unless they are designated as hedges.
(b) Financial liabilities at amortised cost
Financial liabilities at amortised cost of the Group comprise ‘borrowings’ and ‘trade and other payables’.
When financial liabilities at amortised cost are recognised initially, they are measured at fair value plus directly attributable transaction costs.
Subsequent to initial recognition, financial liabilities at amortised cost are measured at amortised cost using the effective interest method. Gains and losses are recognised in the statement of comprehensive income when the financial liabilities at amortised cost are derecognised, and through the amortisation process.
Financial liabilities are derecognised when the obligation specified in the contract is discharged, cancelled or expired.
Offsetting financial instruments
Financial assets and liabilities are offset and the net amount presented on the statement of financial position when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously.
Derivative financial instruments
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value.
19 TRADE AND OTHER PAYABLES
Trade and other payables represent liabilities for goods or services provided to the Group prior to the end of the financial year which are unpaid. They are classified as current liabilities if payment is due within one year, or in the normal operating cycle of the business if longer. Otherwise, they are presented as non-current liabilities.
Trade and other payables are recognised initially at fair value net of transaction costs incurred and subsequently measured at amortised cost using the effective interest method. NURTURING SUSTAINABILITY 137 ANNUAL REPORT 2021 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES FOR THE FINANCIAL YEAR ENDED 31 MARCH 2021
20 PROVISIONS
Provisions are recognised when:
• the Group has a present legal or constructive obligation as a result of past events;
• it is probable that an outflow of resources will be required to settle the obligation; and
• a reliable estimate of the amount can be made.
Where the Group expects a provision to be reimbursed by another party, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. Provisions are not recognised for future operating losses.
Provisions are measured at the present value of management’s best estimate of the expenditure expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as finance cost.
21 FINANCIAL GUARANTEE CONTRACTS
Financial guarantee contracts are contracts that require the Group or the Company to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due, in accordance with the terms of the debt instrument.
Financial guarantee contracts are recognised as a financial liability at the time the guarantee is issued. The liability is initially measured at fair value.
The fair value of a financial guarantee is determined as the present value of the difference in net cash flows between the contractual payments under the debt instrument and the payments that would be required without the guarantee, or the estimated amount that would be payable to a third party for assuming the obligations.
When financial guarantees in relation to loans or payables of subsidiaries are provided by the Company forno compensation, the fair values are accounted for as contributions and recognised as part of the cost of investment in subsidiaries.
Financial guarantee contracts are subsequently measured at the higher of the amount determined in accordance with the expected credit loss model under MFRS 9 “Financial Instruments” and the amount initially recognised less cumulative amount of income recognised in accordance with the principles of MFRS 15 “Revenue from Contracts with Customers”, where appropriate.
22 SEGMENTAL INFORMATION
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker (“CODM”). The Management Committee (“MC”), who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the CODM.
Segment revenue, expenses, assets and liabilities are those amounts resulting from the operating activities of a segment that are directly attributable to the segment and the relevant portion that can be allocated on a reasonable basis to the segment.
Segment revenue, expenses, assets and liabilities are determined before intragroup balances and intragroup transactions are eliminated as part of the consolidation process.
The profit before tax for each operating segment is presented net of adjustment for any relevant intersegment transactions. 138 IJM PLANTATIONS BERHAD NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2021
1 GENERAL INFORMATION
The principal activities of the Company are the cultivation of oil palms, investment holding, trading of crude palm oil and provision of management services to the subsidiaries. The principal activities of the subsidiaries are stated in Note 16 to the financial statements.
There have been no significant changes in the nature of the principal activities of the Company and its subsidiaries during the financial year.
The Company is a public limited liability company, incorporated and domiciled in Malaysia, and is listed on the Main Market of Bursa Malaysia Securities Berhad. The registered office of the Company is located at the 2nd Floor, Wisma IJM, Jalan Yong Shook Lin, 46050 Petaling Jaya, Selangor Darul Ehsan. The principal place of business of the Company is located at Wisma IJM Plantations, Lot 1, Jalan Bandar Utama, Batu 6, Jalan Utara, 90000 Sandakan, Sabah.
The ultimate holding company is IJM Corporation Berhad, a company incorporated in Malaysia and listed on the Main Market of Bursa Malaysia Securities Berhad.
The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the Directors on 27 May 2021.
2 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Estimates and judgements are continually evaluated by the Directors and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, rarely equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are outlined below.
(a) Deferred tax assets
The Group reviews the carrying amounts of deferred tax assets at the end of each reporting period and reduces these to the extent that it is probable that sufficient taxable income will be available to allow all or part of the deferred tax assets to be utilised. The Group’s assessment on the recognition of deferred tax assets on deductible temporary differences and unutilised tax losses is based on the level and timing of forecasted taxable income of the subsequent reporting periods. This forecast is based on the Group’s past results and future expectations of fresh fruit bunches and crude palm oil prices and yields, estate operational costs, finance costs as well as foreign exchange differences. However, there is no certainty that the Group will generate sufficient taxable income to allow all or part of the deferred tax assets to be utilised, which would result in a reversal in the deferred tax assets which have been recognised. Refer to Note 27 to the financial statements for further details.
(b) Fair value of produce growing on bearer plants
To arrive at the fair value, the Group has considered the oil content of the unripe fresh fruit bunches (“FFB”) and assumed that the net cash flows to be generated from FFB prior to more than 15 days to harvest is negligible. Therefore, the quantity of unripe FFB on the bearer plants of up to 15 days prior to harvest was used for valuation purpose. The fair value of the unripe FFB was derived using the market approach based on a certain percentage of the fair value of the ripe FFB, to adjust for the actual oil extraction rate and kernel extraction rate of the unripe FFB, less costs to sell, which were established based on historical information. NURTURING SUSTAINABILITY 139 ANNUAL REPORT 2021 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2021
2 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (CONTINUED)
(c) Lease
The measurement of the right-of-use asset and lease liability for leases where the Group is a lessee requires the use of judgements and assumptions, such as lease terms and incremental borrowing rates. In determining the lease term, the Group considers all facts and circumstances that create an economic incentive to exercise an extension option. The Group had included extension options in the lease term of the leasehold lands and buildings where the lease is reasonably certain to be extended. In determining the incremental borrowing rate, the Group first determines the closest borrowing rate before using judgement to determine the adjustments required to reflect the terms, security, value of economic environment of the respective leases.
(d) Impairment of other receivables
The Group has determined the ECL for the other receivable balances that primarily comprise advances for plasma schemes and amounts due from non-controlling interests, by considering the likelihood that the receivables would not be able to repay during the contractual periods.
The Group applied judgement with regards to the recovery strategies and the scenarios that reflect the possibility of a credit loss occurring for other receivables. The Group also uses judgement in making these assumptions and selecting the inputs to the impairment calculations to assess the quality of the underlying collaterals or the financial viability of the operations that provide cash flows to these receivables over the recovery periods. These calculations take into consideration the projected cash flows of the plasma estates to support the repayment of advances for plasma schemes by the cooperatives and the projected dividend yields from the Company’s subsidiaries of which the non-controlling interests are entitled to in the case of the recovery of the amounts due from non-controlling interests. The projected cash flows include key estimates such as the market prices of the crude palm oil, production volume and yields of the oil palms and are discounted based on the credit risks of the receivables. The Group bases these assumptions on historical data and adjusts for any forward-looking information derived from market research reports with respect to commodity market outlook and inflation rates. As with any economic forecasts, the projections and likelihoods of occurrence are subject to a high degree of inherent uncertainty and therefore the actual outcomes may be significantly different from those projected.
The Group considers these forecasts to represent its best estimate of the possible outcomes and are appropriately representative of the range of possible scenarios. Further details on the Group’s expected credit losses for other receivables are disclosed in Note 3(b)(ii) and Note 19(b) to the financial statements.
3 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group’s financial risk management policy seeks to ensure that adequate financial resources are available for the development of the Group’s businesses whilst managing its market, credit, liquidity and capital risks. The Board of Directors has set the policies to manage each of the financial risks and reviews them regularly throughout the financial year. The Group’s financial risk management policies are summarised as follows:
(a) Market risk
(i) Interest rate risk
Cash flow interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Fair value interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in market interest rates. As the Group has no significant interest-bearing financial assets, the Group’s income and operating cash flows are substantially independent of changes in market interest rates. The Group’s interest-bearing financial assets are mainly short-term in nature and comprise mostly fixed deposit placements. 140 IJM PLANTATIONS BERHAD NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2021
3 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)
(a) Market risk (continued)
(i) Interest rate risk (continued)
Cash flow interest rate risk
The Group’s interest rate risk arises primarily from interest-bearing borrowings at floating rates which expose the Group to cash flow interest rate risk. The Group manages its interest rate exposure by monitoring closely interest rate movements and maintaining the alternative to swap its floating rate borrowings to fixed rate borrowings.
If the Group’s borrowings at variable rates for which effective hedges have not been entered into, change by the following basis points, with all other variables being held constant, the effects on profit after tax and equity would be as follows:
Group 2021 2020 RM’000 RM’000
Effects to profit after tax and equity if borrowings based on benchmark prime lending rate (“LIBOR”): - increase by 50 basis points (1,711) (2,017) - decrease by 50 basis points 1,711 2,017
Effects to profit after tax and equity if borrowings based on cost of funds (“COF”): - increase by 50 basis points (619) (1,015) - decrease by 50 basis points 619 1,015
Effects to profit after tax and equity if borrowings based on cost funding rate (“CFR”): - increase by 50 basis points (380) (380) - decrease by 50 basis points 380 380
At the reporting date, if annual interest rates had been 0.5% (2020: 0.5%) higher/lower respectively, with all other variables in particular foreign exchange rates and tax rate being held constant, the Group’s profit after tax will be lower/higher by RM2.7 million (2020: RM3.4 million) as a result of increase/(decrease) in finance cost on those borrowings.
(ii) Foreign currency exchange risk
The Group maintains a hedge, whenever possible, by borrowing in the currency of the country in which the investment is located or by borrowing in currencies that match the future revenue stream to be generated from its investments. Foreign exchange exposures in transactional currencies other than functional currencies of the operating entities are kept to an acceptable level.
The Group principally keeps cash and bank balances in their respective functional currencies except for certain fixed deposits which are kept in currencies other than their respective functional currencies (i.e. US Dollar fixed deposits).
Entities in the Group primarily transact in their respective functional currencies except for certain borrowings which were denominated in currencies other than their respective functional currencies (i.e. US Dollar and Yen borrowings). NURTURING SUSTAINABILITY 141 ANNUAL REPORT 2021 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2021
3 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)
(a) Market risk (continued)
(ii) Foreign currency exchange risk (continued)
Currency risks as defined by MFRS 7 Financial Instruments: “Disclosures” arise on account of monetary assets and liabilities being denominated in a currency that is not the functional currency. As at the reporting date, the Group’s Indonesian Rupiah (“IDR”) and Ringgit Malaysia (“RM”) functional currency entities had US Dollar (“USD”) and Japanese Yen (“YEN”) denominated net monetary liabilities and USD denominated net monetary assets. The effects to the Group’s profit after tax and equity if the USD and YENhad strengthened/weakened by 5% (2020: 10%) against IDR and RM are as follows:
Group 2021 2020 RM’000 RM’000
Net monetary liabilities denominated in USD 388,063 465,090
Effects to profit after tax and equity if the USD had strengthened/weakened against IDR: - strengthened by 5% (2020: 10%) (15,134) (34,882) - weakened by 5% (2020: 10%) 15,134 34,882
Net monetary liabilities denominated in YEN 157,811 208,931
Effects to profit after tax and equity if the YEN had strengthened/weakened against IDR: - strengthened by 5% (2020: 10%) (6,155) (15,670) - weakened by 5% (2020: 10%) 6,155 15,670
Net monetary assets denominated in USD 49,668 52,125
Effects to profit after tax and equity if the USD had strengthened/weakened against RM: - strengthened by 5% (2020: 10%) 2,483 5,212 - weakened by 5% (2020: 10%) (2,483) (5,212)
As at the reporting date, there are no other significant monetary balances held by the Group and the Company that are denominated in non-functional currencies.
(iii) Commodity price risk
The Group is exposed to the price volatility risk due to fluctuation in the palm products commodity market. To manage and mitigate the risk on price volatility, the Group monitors the fluctuation of crude palm oil prices on a daily basis and enters into physical forward selling commodity contracts or crude palm oil (“CPO”) pricing swap arrangements in accordance with the guidelines set by the Board of Directors. The CPO swap contracts which are offered by certain reputable banks in Malaysia, can be net settled during the period of the contracts.
If average prices for crude palm oil change by 10% with all other variables being held constant, the effects on profit after tax and equity would be as follows:
Group 2021 2020 RM’000 RM’000
CPO swap contracts Effects to profit after tax and equity if crude palm oil prices - increased by 10% (655) (2,861) - decreased by 10% 655 2,861 142 IJM PLANTATIONS BERHAD NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2021
3 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)
(a) Market risk (continued)
(iii) Commodity price risk (continued)
Physical forward selling commodity contracts are entered into and continue to be held for the purpose of the delivery of the physical commodity in accordance with the Group’s expected sale requirements as follows:
Group Average contract price Tonnage per tonne Tonnes RM
Physical forward selling commodity contracts Sales contracts: - 31 March 2021 5,730 3,466 - 31 March 2020 4,500 2,634
(b) Credit risk
Risk management
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. Credit risk arises from derivative financial instruments, and deposits, cash and bank balances with financial institutions, credit exposures to customers arising from sale of goods or rendering services and outstanding receivables which mainly consist of amounts due from subsidiaries, advances under plasma schemes and advances to non-controlling interests.
For trade receivables, it is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures. To mitigate credit risk, the Group only trades with the selected parties who are known to be creditworthy.
Advances under plasma schemes are recoverable either through bank loans or direct repayments from plasma schemes when these plasma areas mature. As for the advances to non-controlling interests, the shares of the subsidiaries held by the non-controlling interests have been pledged as a security for the Group.
For other financial assets which include derivative financial instruments and deposits, cash and bank balances with financial institutions, the Group adopts the policy of dealing only with counterparties of high credibility (i.e. banks and other financial institutions).
Impairment
The Group has the following types of financial instruments that are subject to the expected credit loss (“ECL”) model:
• Trade receivables arising from sale of goods or rendering of services;
• Other receivables (including amounts due from subsidiaries); and
• Financial guarantee contracts
While deposits, cash and bank balances with financial institutions are also subject to the impairment requirements as set out in MFRS 9, there is no impairment loss identified as the Group places these balances with reputable financial institutions with high credit ratings and hence the credit risk identified is low. NURTURING SUSTAINABILITY 143 ANNUAL REPORT 2021 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2021
3 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)
(b) Credit risk (continued)
Impairment (continued)
(i) Trade receivables using the simplified approach
The Group applies the simplified approach under MFRS 9 to measure expected credit losses, which uses a lifetime expected loss allowance for trade receivables. To measure the expected losses, trade receivables have been grouped based on shared credit risk characteristics and days past due.
The expected loss rates are based on historical payment profiles of sales and the corresponding historical credit losses experienced by the Group. The historical loss rates are adjusted to reflect current and forward-looking information on macroeconomic factors (such as palm product prices and crude oil price) affecting the ability of the customers to settle the receivables. The historical loss rates will be adjusted based on the expected changes in these factors. No significant changes to estimation techniques or assumptions were made during each reporting period.
(ii) Other receivables (including amounts due from subsidiaries – non-trade and non-interest bearing advances)
The Group uses four categories to reflect their credit risk and how the loss allowance is determined for each of those categories. A summary of the assumptions underpinning the Group’s expected credit loss is as follows:
Basis for recognition of Category Definition of category expected credit loss provision
Performing Customers have a low risk of default 12 months expected losses. Where and a strong capacity to meet the expected lifetime on an asset is contractual cash flows. less than 12 months, expected losses are measured at its expected lifetime.
Underperforming Debtors for which there is a significant Lifetime expected losses. increase in credit risk due to actual or expected significant adverse changes in business, financial or economic conditions that are expected to cause a significant change to the debtor’s ability to meet its obligation.
Non-performing There is evidence indicating the assets Lifetime expected losses. are credit-impaired.
Write-off There is evidence indicating that Asset is written off. there is no reasonable expectation of recovery based on unavailability of debtor’s sources of income or assets to generate sufficient future cash flows to repay the amount.
Based on the above, loss allowance is measured on either 12 months ECL or lifetime ECL, by considering the likelihood that the debtor would not be able to repay during the contractual period, the percentage of contractual cash flows that will not be collected if default happens and the outstanding amount that is exposed to default risk. In addition, forward looking information such as the macroeconomic conditions has been incorporated into the determination of expected credit losses. 144 IJM PLANTATIONS BERHAD NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2021
3 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)
(b) Credit risk (continued)
Impairment (continued)
(ii) Other receivables (including amounts due from subsidiaries – non-trade and non-interest bearing advances) (continued)
For the Group’s and the Company’s receivables which are repayable on demand, the calculation of ECL is based on the following assumptions:
• If the borrower has sufficient accessible highly liquid assets in order to repay the loan if demanded at the reporting date, the ECL is likely to be immaterial;
• If the borrower could not repay the loan if demanded at the reporting date, the Group considers the expected manner of recovery to measure the ECL. The recovery manner could be either through ‘repayment over time’ or a fire sale of less liquid assets by the borrower; and
• If the recovery strategies indicate that the Group would fully recover the outstanding balance of the loan, the ECL would be limited to the effect of the discounting of the amount due on the loan, at the loan’s effective interest rates, over the period until the amount is fully recovered.
(iii) Financial guarantee contracts
Other than those disclosed in Note 30, all of the financial guarantee contracts of the Group and the Company are considered to be performing and have low risks of default. There were no significant increases in credit risks as at the reporting period and historically there were no instances where these financial guarantee contracts were called upon by the holders of these financial guarantee contracts.
Whilst the Group’s financial assets and financial guarantee contracts are subject to the impairment requirements as described above, there was no impairment loss recognised as at the reporting date as these balances are assessed as performing, have low credit risks, and historically there were limited instances where counterparties have defaulted on their contractual payments obligations.
The Group’s and the Company’s maximum exposure to credit risk for trade and other receivables, derivative financial instruments, deposits, cash and bank balances are disclosed in Note 19, Note 20 and Note 22 to the financial statements respectively.
(c) Liquidity risk
The Group actively manages its debt maturity profile, operating cash flows and the availability of funding so as to ensure that all refinancing, repayment and funding needs are met. As part of its overall prudent liquidity management, the Group maintains sufficient levels of cash or cash convertible investments to meet its working capital requirements. In addition, the Group strives to maintain available banking facilities of a reasonable level to its overall financial position.
The tables below analyse the financial liabilities and derivative financial instruments of the Group and of the Company into relevant maturity groupings based on the remaining period from the statement of financial position date to the contractual maturity dates. The amounts disclosed in the table are the contractual undiscounted cash flows. For CPO swaps and interest rate swaps contracts which are net settled, the cash flows have been estimated using forward CPO price and interest rates respectively which are applicable at the end of the reporting period. NURTURING SUSTAINABILITY 145 ANNUAL REPORT 2021 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2021
3 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)
(c) Liquidity risk (continued)
Less than Between 1 Over 1 year and 5 years 5 years Total RM’000 RM’000 RM’000 RM’000
Group
At 31 March 2021
Derivative financial instruments 4,388 - - 4,388 Revolving credit-i 102,970 - - 102,970 Term loans 102,346 513,102 - 615,448 Trade and other payables 97,427 - - 97,427 Lease liabilities 1,268 4,831 58,040 64,139 Financial guarantee contracts 3,783 14,475 9,107 27,365 312,812 532,408 67,147 911,737
At 31 March 2020
Derivative financial instruments 3,236 872 - 4,108 Revolving credit-i 101,057 - - 101,057 Term loans 56,265 801,821 - 858,086 Trade and other payables 76,255 - - 76,255 Lease liabilities 1,374 4,886 52,847 59,107 Financial guarantee contracts 7,998 13,995 13,919 35,912 246,185 821,574 66,766 1,134,525
The Group has provided corporate guarantees and undertaking to PT Bank CIMB Niaga of Indonesia in respect of plasma loans facility amounting to IDR282 billion or approximately RM80.9 million (2020: IDR282 billion or approximately RM74.7 million). No loss is expected to arise from these corporate guarantees and undertaking and the risk of default on the repayment obligation is minimal as all amounts are estimated to be recoverable. As at 31 March 2021, loan balances amounting to IDR95.3 billion or approximately RM27.4 million (2020: IDR135.5 billion or approximately RM35.9 million) remains outstanding.
The restricted deposits with a licenced bank held as security with respect of the covenants under the Group’s term loans and corporate guarantee on the plasma loans facility are disclosed in Note 36 to the financial statements. 146 IJM PLANTATIONS BERHAD NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2021
3 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)
(c) Liquidity risk (continued)
Less than Between 1 Over 1 year and 5 years 5 years Total RM’000 RM’000 RM’000 RM’000
Company
At 31 March 2021
Amounts due to subsidiaries - 18,562 - 18,562 Trade and other payables 13,524 - - 13,524 Lease liabilities 547 2,084 21,604 24,235 Financial guarantee contracts 105,890 518,938 - 624,828 119,961 539,584 21,604 681,149
At 31 March 2020
Amounts due to subsidiaries 24,442 - - 24,442 Trade and other payables 8,368 - - 8,368 Lease liabilities 547 2,084 22,021 24,652 Financial guarantee contracts 57,281 817,064 - 874,345 90,638 819,148 22,021 931,807
The Company has guaranteed the term loans for certain subsidiaries under the terms of the financial guarantee contracts. Under the terms of the financial guarantee contracts, the Company will fulfil all the repayment obligations on behalf of the guaranteed subsidiaries to the lenders upon failure of the subsidiaries to make payments when they become due. The risk of default on the repayment obligations by the subsidiaries is minimal. Accordingly, no loss allowance was identified based on 12 months expected credit losses.
The credit terms of financial liabilities are disclosed in Note 29 and Note 30 to the financial statements.
(d) Capital risk
The Group and the Company considered net debt and equity capital as their primary definition of capital, which is further defined below.
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern, to maintain an optimal capital structure so as to maximise shareholder value and to meet its’ externally imposed capital requirements. In order to maintain or achieve an optimal capital structure, the Group may adjust the dividend payment, return capital to shareholders, issue new shares, buy back issued shares, obtain new financing facilities or dispose assets to reduce borrowings.
Management monitors capital based on the Group’s gearing ratio. The gearing ratio is calculated as net debt divided by equity capital. Net debt is calculated as total borrowings (excluding trade and other payables) less cash and cash equivalents. Restricted deposits which are pledged to the bank under the borrowings are also included as part of the cash and cash equivalents for the purpose of gearing ratio computation. Equity capital is equivalent to capital and reserves attributable to owners of the Company. The Group monitors the gearing ratio based on the terms of the respective loan agreements. The gearing ratio of the Group as at 31 March 2021 was 0.33 (2020: 0.56), which was calculated based on the net debt and equity capital of the Group as at 31 March 2021. The Company does not have any borrowings as at 31 March 2021 (2020: Nil).
Certain subsidiaries of the Group are subject to externally imposed capital requirements and for which the Group has complied with those requirements as disclosed in Note 29 to the financial statements. NURTURING SUSTAINABILITY 147 ANNUAL REPORT 2021 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2021
3 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)
(e) Fair value measurements
The following table presents assets and liabilities measured at fair value and classified by level of the following fair value measurement hierarchy:
(a) quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1);
(b) inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly (Level 2); and
(c) inputs for the asset or liability that are not based on observable market data (unobservable inputs) (Level 3).
Level 1 Level 2 Level 3 Total RM’000 RM’000 RM’000 RM’000
2021
Group
Liabilities Derivative financial instruments (Note 20) - (4,388) - (4,388)
2020
Group
Assets Derivative financial instruments (Note 20) - 329 - 329
Liabilities Derivative financial instruments (Note 20) - (4,108) - (4,108) - (3,779) - (3,779)
The carrying amounts of the Group’s and the Company’s trade and other receivables, trade and other payables and borrowings approximate their fair values. 148 IJM PLANTATIONS BERHAD NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2021
4 REVENUE
Group Company 2021 2020 2021 2020 RM’000 RM’000 RM’000 RM’000
Revenue from contracts with customers: - Crude palm oil 755,875 573,145 - - - Crude palm kernel oil 67,146 53,522 - - - Fresh fruit bunches 80,110 95,096 120,698 84,265 - Palm kernel expellers 6,662 6,632 - - - Palm kernel and other by-products 23,482 8,850 - - - Oil palm seeds 712 637 716 637 - Plantation advisory fee 1,706 1,251 - - - Management fees from subsidiaries - - 8,364 8,566 935,693 739,133 129,778 93,468
Revenue from other source: - Dividend income from subsidiaries - - 40,000 80,000 935,693 739,133 169,778 173,468
Timing of revenue from contracts with customers: - Point in time 933,987 737,882 121,414 84,902 - Over time 1,706 1,251 8,364 8,566 935,693 739,133 129,778 93,468
5 COST OF SALES
Group Company 2021 2020 2021 2020 RM’000 RM’000 RM’000 RM’000
Cost of sales consist of: - Planting and operational costs 300,443 289,229 42,129 38,552 - Raw materials 198,080 163,166 - - - Depreciation of property, plant and equipment 111,931 105,505 13,052 14,130 - Depreciation of right-of-use assets 3,627 4,715 952 1,566 - Cost of services rendered - - 8,410 5,992 614,081 562,615 64,543 60,240
6 OTHER (EXPENSES)/INCOME AND NET GAINS/(LOSSES)
Group Company 2021 2020 2021 2020 RM’000 RM’000 RM’000 RM’000
(a) Other (expenses)/income
Interest income from placement of fixed deposits in financial institutions 3,807 4,384 423 359 Lease income from properties 277 281 225 244 Insurance claims 211 164 - - Gain on disposal of property, plant and equipment 23 52 35 12 Value added tax (“VAT”) and other tax expenses (11,310) - - - Miscellaneous other income/(expense) 599 (2,780) 584 817 Property, plant and equipment scrapped (20) (254) (5) (18) Impairment losses on other receivables - (4,000) - - (6,413) (2,153) 1,262 1,414 NURTURING SUSTAINABILITY 149 ANNUAL REPORT 2021 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2021
6 OTHER (EXPENSES)/INCOME AND NET GAINS/(LOSSES) (CONTINUED)
Group Company 2021 2020 2021 2020 RM’000 RM’000 RM’000 RM’000
(b) Other net gains/(losses)
Financial assets/(liabilities) at fair value through profit or loss: - Fair value loss on crude palm oil pricing swaps (12,549) (7,881) - - - Fair value gains/(loss) on interest rate swaps 325 (3,257) - - (12,224) (11,138) - -
- Amortisation of financial guarantee contract (Note 30(b)(iv)) - - 6,879 -
Foreign exchange: - Realised foreign exchange gains 15,988 6,859 - - - Unrealised foreign exchange gains/(losses) 66,402 (56,252) - - 82,390 (49,393) - - 70,166 (60,531) 6,879 -
7 FINANCE COSTS
Group Company 2021 2020 2021 2020 RM’000 RM’000 RM’000 RM’000
Interest expense on: - Term loans 16,793 27,315 - - - Short term advance facility - 2,942 - - - Revolving credit-i 3,257 658 - - - Lease liabilities 1,128 1,132 483 483 21,178 32,047 483 483 Foreign exchange differences on borrowings - 44,581 - - Amortisation of upfront fees on borrowings 845 859 - - 22,023 77,487 483 483
Less: Interest expense capitalised in property, plant and equipment (Note 14(b)) (3,751) (9,360) (203) (483) Less: Foreign exchange differences capitalised in property, plant and equipment (Note 14(b)) - (6,864) - - Total finance costs capitalised (3,751) (16,224) (203) (483) Recognised in the statement of comprehensive income 18,272 61,263 280 -
Finance costs recognised in the statement of comprehensive income comprise: - Interest expense 17,427 22,687 280 - - Foreign exchange differences on borrowings - 37,717 - - - Amortisation of upfront fee on borrowings 845 859 - - 18,272 61,263 280 - 150 IJM PLANTATIONS BERHAD NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2021
8 PROFIT/(LOSS) BEFORE TAX
(a) The following amounts have been charged/(credited) in arriving at profit/(loss) before tax:
Group Company 2021 2020 2021 2020 RM’000 RM’000 RM’000 RM’000
Employee benefits expense (Note 9) 141,950 154,547 25,461 22,342 Non-Executive Directors’ remuneration (Note 10) 864 812 864 812 Auditors’ remuneration (Note 8(b)) - Current year 580 617 155 155 - Under provision in prior year - 18 - 5 Depreciation of right-of-use assets (Note 15) 3,702 4,917 952 1,566 Depreciation of property, plant and equipment (Note 14) 113,217 106,947 13,052 14,130 Property, plant and equipment scrapped 20 254 5 18 Gains on disposal of property, plant and equipment (23) (52) (35) (12) Fair value loss on crude palm oil pricing swaps 12,549 7,881 - - Fair value (gain)/loss on interest rate swaps (325) 3,257 - - Net realisable value adjustment on inventories - 5,441 - - Realised foreign exchange gains (16,997) (6,881) - - Realised foreign exchange losses 1,009 22 - - Unrealised foreign exchange losses 11,036 66,997 - - Unrealised foreign exchange gains (77,438) (10,745) - -
(b) Auditors’ remuneration – statutory audit
Group Company 2021 2020 2021 2020 RM’000 RM’000 RM’000 RM’000
PricewaterhouseCoopers PLT Malaysia* 256 274 155 160 Other member firm of PricewaterhouseCoopers International Limited* 324 361 - - 580 635 155 160
* PricewaterhouseCoopers PLT, Malaysia and other member firm of PwC International Limited are separate and independent legal entities.
9 EMPLOYEE BENEFITS EXPENSE
Group Company 2021 2020 2021 2020 RM’000 RM’000 RM’000 RM’000
Salaries, wages and bonuses 149,807 148,633 26,381 23,520 Contributions to defined contribution plan 8,214 8,621 2,423 1,820 Social security contributions 4,166 3,099 257 186 Employees insurance scheme 42 43 15 15 Share-based payments (46) 1,176 117 833 Defined benefit expense (Note 28) (1,212) 5,602 - - 160,971 167,174 29,193 26,374 Less: Expenses capitalised in bearer plants (Note 14(b)) (19,021) (12,627) (3,732) (4,032) Recognised in statement of comprehensive income (Note 8) 141,950 154,547 25,461 22,342
Included in employee benefits expense of the Group and of the Company are Executive Directors’ remuneration amounting to RM2,505,000 (2020: RM2,110,000) and RM2,505,000 (2020: RM2,110,000) respectively as further disclosed in Note 10 to the financial statements. NURTURING SUSTAINABILITY 151 ANNUAL REPORT 2021 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2021
10 DIRECTORS’ REMUNERATION
Group Company 2021 2020 2021 2020 RM’000 RM’000 RM’000 RM’000
Executive: Salaries and other emoluments 2,070 1,628 2,070 1,628 Contributions to defined contribution plan 311 244 311 244 Share-based payment 124 238 124 238 2,505 2,110 2,505 2,110
Non-Executive: Fees 814 767 814 767 Other emoluments 50 45 50 45 864 812 864 812
Total Directors’ remuneration 3,369 2,922 3,369 2,922 Benefits-in-kind 57 68 57 68 Total Directors’ remuneration including benefits-in-kind 3,426 2,990 3,426 2,990
11 INCOME TAX EXPENSE
Group Company 2021 2020 2021 2020 RM’000 RM’000 RM’000 RM’000
Current tax: - Current year 39,168 14,220 12,808 4,877 - Under/(over) accrual in prior years 529 (75) (48) (175) 39,697 14,145 12,760 4,702
Deferred tax (Note 27): - Relating to origination of temporary differences 17,425 8,010 1,546 2,112 - Change in tax rate* - 352 - - 17,425 8,362 1,546 2,112 Total income tax expense 57,122 22,507 14,306 6,814
* The reduction of the Group’s Indonesian subsidiaries’ tax rates from 25% to 22% for the financial year 2021 and 20% thereafter was substantively enacted on 31 March 2020. As a result, the relevant deferred tax balances have been remeasured. Deferred taxes expected to reverse in the financial year ending 31 March 2021 and thereafter have been measured using the tax rates of 22% and 20% respectively which will apply to these Indonesian entities for the relevant financial years. 152 IJM PLANTATIONS BERHAD NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2021
11 INCOME TAX EXPENSE (CONTINUED)
A reconciliation of income tax expense applicable to profit/(loss) before tax at the statutory income tax rate to income tax expense at the effective income tax rate of the Group and of the Company are as follows:
Group Company 2021 2020 2021 2020 RM’000 RM’000 RM’000 RM’000
Profit/(loss) before tax 272,129 (50,472) 104,067 104,212
Tax calculated at the Malaysian tax rate of 24% (2020: 24%) 65,311 (12,113) 24,976 25,011 Tax effects of: - Different tax rate in other country (3,233) (942) - - - Income not subject to tax (493) (1,643) (11,251) (19,200) - Change in tax rate - 352 - - - Share of profits of an associate (83) (157) - - - Utilisation and recognition of previously unrecognised tax losses (11,904) - - - - Reversal of deferred tax assets previously recognised and non-recognition of deferred tax assets - 27,426 - - - Expenses not deductible for tax purposes 6,995 9,659 629 1,178 - Under/(over) accrual of current tax in prior years 529 (75) (48) (175) Total income tax expense 57,122 22,507 14,306 6,814
12 EARNINGS/(LOSS) PER SHARE
Basic earnings/(loss) per share
The basic earnings/(loss) per share for the financial year is calculated by dividing the Group’s net profit/(loss) attributable to owners of the Company for the financial year by the weighted average number of ordinary shares in issue during the financial year.
Group 2021 2020
Net profit/(loss) attributable to owners of the Company (RM’000) 205,083 (63,423)
Weighted average number of ordinary shares in issue (‘000) 880,580 880,580
Basic earnings/(loss) per share (sen) 23.29 (7.20)
The Group does not have any potential dilutive shares that will have an impact on its basic earnings/(loss) per share. Therefore, the diluted earnings/(loss) per share is the same as the basic earnings/(loss) per share. NURTURING SUSTAINABILITY 153 ANNUAL REPORT 2021 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2021
13 DIVIDENDS
Group and Company 2021 2020 Gross Gross dividend Amount of dividend Amount of per share dividend per share dividend Sen RM’000 Sen RM’000
In respect of financial year ended 31 March 2020: - A single tier interim dividend on 880,580,460 ordinary shares 2 17,612 - -
In respect of financial year ended 31 March 2019: - A single tier interim dividend on 880,580,460 ordinary shares - - 2 17,612 2 17,612 2 17,612
On 27 May 2021, the Directors declared a single tier interim dividend amounting to 10.0 sen per share in respect of the financial year ended 31 March 2021. The single tier interim dividend will be paid on 30 July 2021 to every member who is entitled to receive the dividend as at 5.00 p.m. on 14 July 2021. The interim dividend has not been recognised in the statement of changes in equity as it was declared subsequent to the financial year end.
The Directors do not recommend the payment of any final dividend for the financial year ended 31 March 2021 (2020: Nil). 154 IJM PLANTATIONS BERHAD NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2021 - (22) (20) Total (1,829) 71,660 99,876 RM’000 (115,046) (113,217) 1,526,477 1,582,925 2,709,886 1,582,925 (1,126,961) ------594 9,189 7,153 7,153 7,153 26,860 (29,490) Capital RM’000 work-in- progress - - * (8) 852 281 and 6,658 5,920 5,920 Office (1,863) (1,863) 33,786 (27,866) fittings RM’000 furniture equipment, (6) (22) and (444) 6,506 Plant, 16,135 11,834 (34,266) (33,822) RM’000 227,718 227,899 646,304 227,899 vehicles (418,405) equipment machinery,
- - (6) 81 14,348 13,403 (18,071) (18,071) RM’000 214,827 224,582 403,187 224,582 (178,605) Buildings
- - - - plants 30,826 49,689 Bearer (46,325) (46,325) RM’000 717,351 751,541 751,541 (378,583) 1,130,124 (Note (a)) (Note
- - 6,535 4,253 infra- (1,385) 18,829 (14,521) (13,136) RM’000 350,734 365,830 489,332 365,830 (123,502) structure Plantation
8 Note income comprehensive below RM1,000/= below PROPERTY, PLANT AND EQUIPMENT
Group
2021 Net book value At 1 April 2020 Additions Disposal Scrapped Depreciation charge for the financial year the financial for charge Depreciation Recognised in statement of in statement Recognised Capitalised in bearer plants in bearer Capitalised differences Exchange Reclassifications At 31 March 2021 At 31 March At 31 March 2021 At 31 March Cost depreciation Accumulated Net book value * 14 NURTURING SUSTAINABILITY 155 ANNUAL REPORT 2021 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2021 - * (254) Total (2,652) 97,714 (85,634) RM’000 (109,599) (106,947) 1,624,250 1,526,477 2,529,857 1,526,477 (1,003,380) ------9,189 9,189 9,189 (5,809) 81,536 41,729 Capital RM’000 (108,267) work-in- progress - - * (28) and (202) 7,464 1,548 6,658 6,658 Office (2,124) (2,124) 32,145 (25,487) fittings RM’000 furniture equipment, * (32) and 3,762 (1,081) (9,011) Plant, 73,066 (29,119) (28,038) RM’000 189,052 227,718 604,658 227,718 vehicles (376,940) equipment machinery,
- - (3) 2,355 34,388 (18,147) (18,147) (10,889) RM’000 207,123 214,827 371,718 214,827 (156,891) Buildings
- - - (191) plants 37,812 Bearer (46,000) (46,000) (42,712) RM’000 768,442 717,351 717,351 (340,376) 1,057,727 (Note (a)) (Note
- - 813 infra- (1,571) 10,508 (14,209) (12,638) (17,011) RM’000 370,633 350,734 454,420 350,734 (103,686) structure Plantation
8 Note income comprehensive below RM1,000/= below PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
Group
2020 Net book value At 1 April 2019 Additions Disposal Scrapped Depreciation charge for the financial year the financial for charge Depreciation Recognised in statement of in statement Recognised Capitalised in bearer plants in bearer Capitalised differences Exchange Reclassifications At 31 March 2020 At 31 March At 31 March 2020 At 31 March Cost depreciation Accumulated Net book value * 14 156 IJM PLANTATIONS BERHAD NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2021 - (5) (271) (394) Total 17,213 (13,446) (13,052) RM’000 178,881 182,372 366,688 182,372 (184,316) ------173 315 291 291 291 (197) Capital RM’000 work-in- progress - - - (3) 312 and (415) (415) 1,376 1,270 1,270 Office 15,561 (14,291) fittings RM’000 furniture equipment, (2) 172 and (271) (106) 3,601 1,918 4,198 4,198 (1,220) (1,114) Plant, 20,745 (16,547) RM’000 vehicles equipment machinery,
- - * 23 25 (2,571) (2,571) 15,302 12,779 70,716 12,779 (57,937) RM’000 Buildings
- - - - (7,313) (7,313) plants 13,585 Bearer (71,245) RM’000 114,558 120,830 192,075 120,830 (Note (a)) (Note
- - - (288) 1,060 infra- (1,927) (1,639) 43,871 43,004 67,300 43,004 (24,296) RM’000 structure Plantation
8 Note income comprehensive below RM1,000/= below PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
Company
2021 Net book value At 1 April 2020 Additions Scrapped Disposal Depreciation charge for the financial year the financial for charge Depreciation Recognised in statement of in statement Recognised Capitalised in bearer plants in bearer Capitalised Reclassifications At 31 March 2021 At 31 March At 31 March 2021 At 31 March Cost depreciation Accumulated Net book value * 14 NURTURING SUSTAINABILITY 157 ANNUAL REPORT 2021 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2021 - * (18) (340) Total 18,376 (14,470) (14,130) RM’000 174,993 178,881 368,610 178,881 (189,729) ------(43) 104 112 173 173 173 Capital RM’000 work-in- progress - - - (1) 411 and (472) (472) 1,438 1,376 1,376 Office 15,335 (13,959) fittings RM’000 furniture equipment, * 26 (14) (91) 713 and 4,067 3,601 3,601 (1,191) (1,100) Plant, 19,674 (16,073) RM’000 vehicles equipment machinery,
- - (3) 17 349 (3,224) (3,224) 18,163 15,302 70,673 15,302 (55,371) RM’000 Buildings
- - - - (7,663) (7,663) plants 15,141 Bearer (81,957) RM’000 107,080 114,558 196,515 114,558 (Note (a)) (Note
- - - (249) 1,650 infra- (1,920) (1,671) 44,141 43,871 66,240 43,871 (22,369) RM’000 structure Plantation
8 Note income comprehensive below RM1,000/= below PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
Company
2020 Net book value At 1 April 2019 Additions Scrapped Disposal Depreciation charge for the financial year the financial for charge Depreciation Recognised in statement of in statement Recognised Capitalised in bearer plants in bearer Capitalised Reclassifications At 31 March 2020 At 31 March At 31 March 2020 At 31 March Cost depreciation Accumulated Net book value * 14 158 IJM PLANTATIONS BERHAD NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2021
14 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
(a) Analysis of mature and immature bearer plants are as follows:
Group Company Mature Immature Total Mature Immature Total RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
2021
Net book value:
At 1 April 2020 554,032 163,319 717,351 69,531 45,027 114,558 Additions - 30,826 30,826 - 13,585 13,585 Depreciation charge for the financial year (46,325) - (46,325) (7,313) - (7,313) Exchange differences 40,309 9,380 49,689 - - - Reclassification 48,636 (48,636) - 19,434 (19,434) - At 31 March 2021 596,652 154,889 751,541 81,652 39,178 120,830
At 31 March 2021
Cost 975,235 154,889 1,130,124 152,897 39,178 192,075 Accumulated depreciation (378,583) - (378,583) (71,245) - (71,245) Net book value 596,652 154,889 751,541 81,652 39,178 120,830
2020
Net book value:
At 1 April 2019 608,243 160,199 768,442 73,732 33,348 107,080 Additions - 37,812 37,812 - 15,141 15,141 Depreciation charge for the financial year (46,000) - (46,000) (7,663) - (7,663) Scrapped (191) - (191) - - - Exchange differences (33,581) (9,131) (42,712) - - - Reclassification 25,561 (25,561) - 3,462 (3,462) - At 31 March 2020 554,032 163,319 717,351 69,531 45,027 114,558
At 31 March 2020
Cost 894,408 163,319 1,057,727 151,488 45,027 196,515 Accumulated depreciation (340,376) - (340,376) (81,957) - (81,957) Net book value 554,032 163,319 717,351 69,531 45,027 114,558 NURTURING SUSTAINABILITY 159 ANNUAL REPORT 2021 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2021
14 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
(b) Expenditure capitalised in property, plant and equipment during the financial year include the following:
Group Company 2021 2020 2021 2020 RM’000 RM’000 RM’000 RM’000
Cash items: Employee benefits expense (Note 9) 19,021 12,627 3,732 4,032 Payments to contractors and suppliers 46,764 65,781 12,726 13,351 Finance costs on borrowings (Note 7) 3,545 8,228 - - 69,330 86,636 16,458 17,383
Non-cash items: Depreciation of right-of-use assets (Note 15) 295 430 158 170 Depreciation of property, plant and equipment (Note 14) 1,829 2,652 394 340 Finance cost on foreign exchange differences (Note 7) - 6,864 - - Finance cost on lease liabilities (Note 7) 206 1,132 203 483 2,330 11,078 755 993 Total additions 71,660 97,714 17,213 18,376
The interest expense and foreign exchange differences capitalised under property, plant and equipment during the financial year are as follows:
Group Company 2021 2020 2021 2020 RM’000 RM’000 RM’000 RM’000
Interest expense (Note 7) Bearer plants 3,526 6,090 203 483 Capital work-in-progress 225 3,270 - - Total additions 3,751 9,360 203 483
Foreign exchange differences (Note 7) Bearer plants - 5,354 - - Capital work-in-progress - 1,510 - - Total additions - 6,864 - -
Included in the Group and the Company’s additions to property, plant and equipment is finance cost capitalised at an average capitalisation rate of 2.98% (2020: 3.57%) and 5.26% (2020: 5.64%) respectively for the financial year ended 31 March 2021. 160 IJM PLANTATIONS BERHAD NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2021
15 RIGHT-OF-USE ASSETS
Leasehold Buildings lands Total RM’000 RM’000 RM’000
Group
2021
Net book value
At 1 April 2020 763 225,732 226,495 Additions - 62 62 Depreciation for the financial year (193) (3,804) (3,997) Exchange differences 64 5,618 5,682 At 31 March 2021 634 227,608 228,242
At 31 March 2021
Cost 968 298,004 298,972 Accumulated depreciation (334) (70,396) (70,730) Net book value 634 227,608 228,242
2020
Net book value
At 1 April 2019 964 234,044 235,008 Additions - 2,078 2,078 Depreciation for the financial year (143) (5,204) (5,347) Exchange differences (58) (5,186) (5,244) At 31 March 2020 763 225,732 226,495
At 31 March 2020
Cost 893 290,572 291,465 Accumulated depreciation (130) (64,840) (64,970) Net book value 763 225,732 226,495 NURTURING SUSTAINABILITY 161 ANNUAL REPORT 2021 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2021
15 RIGHT-OF-USE ASSETS (CONTINUED)
Leasehold lands RM’000
Company
2021
Net book value
At 1 April 2020 83,455 Depreciation for the financial year (1,110) At 31 March 2021 82,345
At 31 March 2021
Cost 101,286 Accumulated depreciation (18,941) Net book value 82,345
2020
Net book value
At 1 April 2019 85,191 Depreciation for the financial year (1,736) At 31 March 2020 83,455
At 31 March 2020
Cost 101,286 Accumulated depreciation (17,831) Net book value 83,455
The deprecation for the financial year comprises:
Group Company 2021 2020 2021 2020 RM’000 RM’000 RM’000 RM’000
Recognised in statement of comprehensive income (Note 8) 3,702 4,917 952 1,566 Capitalised in bearer plants (Note 14(b)) 295 430 158 170 3,997 5,347 1,110 1,736
Depreciation of right-of-use assets included in the Group’s cost of sales and administrative expenses was RM3,627,000 (2020: RM4,715,000) and RM75,000 (2020: RM202,000) respectively.
Depreciation of right-of-use assets included in the Company’s cost of sales was RM952,000 (2020: RM1,566,000).
The Group’s right-of-use assets with a carrying value of RM21.1 million (2020: RM19.7 million) are still in the process of having the land titles secured or being transferred to the Group. 162 IJM PLANTATIONS BERHAD NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2021
15 RIGHT-OF-USE ASSETS (CONTINUED)
The Group’s and the Company’s leasing activities as lessors
The Group and the Company leased a small portion of the vacant office and right-of-use assets to related and non-related parties as well as a subsidiary for the purposes of carrying out their business activities. The following table sets out the maturity analysis of lease payments, showing the undiscounted lease payments to be received after the reporting date.
Group Company 2021 2020 2021 2020 RM’000 RM’000 RM’000 RM’000
Less than 1 year 206 281 154 244 Between 1 and 5 years 332 562 238 488 Total undiscounted lease payments 538 843 392 732
16 INTERESTS IN SUBSIDIARIES
Company 2021 2020 RM’000 RM’000
Investments in subsidiaries, at cost At 1 April 2020/2019 - Unquoted shares in Malaysia 1,232,578 1,152,578
Add: Subscription of convertible cumulative redeemable preference shares in subsidiaries (“CCRPS”)* 87,000 80,000 At 31 March - Unquoted shares in Malaysia 1,319,578 1,232,578
Less: Accumulated impairment - Unquoted shares in Malaysia (82,427) (82,427)
1,237,151 1,150,151 Financial guarantees extended to subsidiaries 21,308 21,308 1,258,459 1,171,459
Notes:
* CCRPS are classified as equity instruments by the issuer as the conversion is at the option of the holder and the redemption of the CCRPS as well as the dividend distribution are at the discretion of the issuer. NURTURING SUSTAINABILITY 163 ANNUAL REPORT 2021 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2021
16 INTERESTS IN SUBSIDIARIES (CONTINUED)
(a) Details of subsidiaries are as follows:
Country of Name of subsidiaries incorporation Principal activities Equity interest 2021 2020 % %
Held by the Company: Akrab Perkasa Sdn. Bhd. Malaysia Dormant 100 100 Berakan Maju Sdn. Bhd. Malaysia Cultivation of oil palms 100 100 Desa Talisai Sdn. Bhd. Malaysia Dormant 100 100 Desa Talisai Palm Oil Mill Sdn. Bhd. Malaysia Dormant 100 100 Dynasive Enterprise Sdn. Bhd. Malaysia Investment holding 100 100 Excellent Challenger (M) Sdn. Bhd. Malaysia Cultivation of oil palms 100 100 Gunaria Sdn. Bhd. Malaysia Investment holding 100 100 IJM Biofuel Sdn. Bhd. Malaysia Dormant 100 100 IJM Edible Oils Sdn. Bhd. Malaysia Palm oil and kernel milling 100 100 Minat Teguh Sdn. Bhd. Malaysia Investment holding 100 100 Rakanan Jaya Sdn. Bhd. Malaysia Cultivation of oil palms 100 100 Ratus Sempurna Sdn. Bhd. Malaysia Property holding 100 100 Sabang Mills Sdn. Bhd. Malaysia Dormant 100 100 Sijas Plantations Sdn. Bhd. Malaysia Dormant 100 100
Held by Minat Teguh Sdn. Bhd.: PT Primabahagia Permai* Indonesia Cultivation of oil palms 95 95 and milling
Held by Dynasive Enterprise Sdn. Bhd.: PT Prima Alumga* Indonesia Cultivation of oil palms 95 95
Held by PT Primabahagia Permai: PT Indonesia Plantation Synergy* Indonesia Cultivation of oil palms 90 90 and milling
Held by Gunaria Sdn. Bhd.: PT Sinergi Agro Industri* Indonesia Cultivation of oil palms 95 95 and milling PT Karya Bakti Sejahtera Agrotama* Indonesia Cultivation of oil palms 95 95
* Audited by a member firm of PricewaterhouseCoopers International Limited which is a separate and independent legal entity from PricewaterhouseCoopers PLT, Malaysia. 164 IJM PLANTATIONS BERHAD NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2021
16 INTERESTS IN SUBSIDIARIES (CONTINUED)
(b) The transactions carried out between the Company and its wholly-owned subsidiaries during the current financial year are as follows:
(i) A wholly-owned subsidiary of the Company, Minat Teguh Sdn. Bhd. (“MTSB”), issued a total of 37,000 new preference shares to the Company, for a total consideration of RM37,000,000. The consideration amounting to RM37,000,000 was settled through a set-off against amount due from MTSB.
(ii) A wholly-owned subsidiary of the Company, Dynasive Enterprise Sdn. Bhd. (“DESB”), issued a total of 15,000 new preference shares to the Company, for a total consideration of RM15,000,000. The consideration amounting to RM14,500,000 was settled through a set-off against amount due from DESB, and the remaining consideration amounting to RM500,000 was settled via cash.
(iii) A wholly-owned subsidiary of the Company, Excellent Challenger (M) Sdn. Bhd. (“ECSB”), issued a total of 35,000 new preference shares to the Company, for a total consideration of RM35,000,000. The consideration amounting to RM35,000,000 was settled through a set-off against amount due from ECSB.
(c) The transactions carried out between the Company and its wholly-owned subsidiaries in the previous financial year are as follows:
(i) A wholly-owned subsidiary of the Company, Gunaria Sdn. Bhd. (“GSB”) issued a total of 80,000 new preference shares to the Company for a total consideration of RM80,000,000. The consideration amounting to RM78,000,000 was settled through a set-off against amount due from GSB, and the remaining consideration amounting to RM2,000,000 was settled via cash.
17 ASSOCIATE
The Group 2021 2020 RM’000 RM’000
Unquoted shares outside Malaysia, at cost 12,408 12,408 Share of post-acquisition reserves 1,495 1,150 Exchange differences 210 (846) 14,113 12,712
The principal activity and country of incorporation of the associate is set out as follows:
Place of business/ country of Nature of Principal Name of entity incorporation % of ownership relationship activity 2021 2020
Held by IPS PT Perindustrian Sawit Sinergi Indonesia 20 20 Associate Refining of palm products, kernel crushing and manufacturing of oleochemicals*
* The construction of the plant is in progress and operation has not commenced. NURTURING SUSTAINABILITY 165 ANNUAL REPORT 2021 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2021
17 ASSOCIATE (CONTINUED)
(a) Set out below is the summarised financial information for the associate which is accounted for using the equity method:
(i) Summarised statement of financial position:
2021 2020 RM’000 RM’000
Current Cash and cash equivalents 32,682 57,792 Other current assets (excluding cash) 2,614 2,460 Other payables (21) - Total net current assets 35,275 60,252
Non-current Assets 35,250 3,270 Net assets 70,525 63,522
(ii) Summarised statement of comprehensive income:
2021 2020 RM’000 RM’000
Interest income 2,426 3,557
Profit before tax 1,582 3,189 Income tax credit 141 74 Net profit and total comprehensive income for the financial year 1,723 3,263
(iii) Reconciliation of the summarised financial information presented to the carrying amount of interest in associate is set out below:
2021 2020 RM’000 RM’000
Net assets as at 1 April 2020/2019 63,522 65,371 Net profit for the year 1,723 3,263 Exchange differences 5,280 (5,112) Net assets as at 31 March 70,525 63,522
Interest in associate 14,105 12,704 Goodwill 8 8 Carrying amount of interest in associate 14,113 12,712 166 IJM PLANTATIONS BERHAD NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2021
18 INVENTORIES
Group Company 2021 2020 2021 2020 RM’000 RM’000 RM’000 RM’000
Non-current
At cost: Oil palm nurseries 4,860 6,886 1,934 1,823
Current
At cost: Palm and palm oil products: - Crude palm oil 18,405 - - - - Oil palm nurseries 143 36 143 36 - Crude palm kernel oil 1,749 5,559 - - - Palm kernels 3,521 1,911 - - - Palm kernel expellers 118 444 - -
Consumables: - Fertilisers and chemicals 15,901 8,604 904 1,273 - Stores and spares 15,169 12,143 1,316 1,294 55,006 28,697 2,363 2,603
At net realisable value: Palm and palm oil products: - Crude palm oil 19,864 44,407 - - - Crude palm kernel oil 388 - - - - Palm kernels expellers 952 - - - - Compost 54 - - - 21,258 44,407 - - 76,264 73,104 2,363 2,603 81,124 79,990 4,297 4,426
19 TRADE AND OTHER RECEIVABLES
(a) Amounts due from subsidiaries
Company 2021 2020 RM’000 RM’000
Trade 10,615 7,744 Non-trade and non-interest bearing advances 547 15,374 11,162 23,118
Amounts due from subsidiaries are denominated in Ringgit Malaysia, unsecured, interest free and repayable on demand. The trade balances are mainly on credit, with credit periods ranging from 1 to 30 days (2020: 1 to 30 days). Amounts due from subsidiaries are assessed individually for impairment, as the credit risk information of these entities can be obtained and monitored by the Company.
The carrying amounts of these balances are assessed to be performing as these entities are able to settle the balances with their liquid assets. As at 31 March 2021, none of the Company’s amounts due from subsidiaries was impaired (2020: Nil). NURTURING SUSTAINABILITY 167 ANNUAL REPORT 2021 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2021
19 TRADE AND OTHER RECEIVABLES (CONTINUED)
(b) Trade and other receivables
Group Company 2021 2020 2021 2020 RM’000 RM’000 RM’000 RM’000
Non-current
Other receivables Advances for plasma schemes (Note iii) 96,049 76,131 - - Amounts due from non-controlling interests (Note iv) 53,668 56,125 - - 149,717 132,256 - - Less: Loss allowance (4,000) (4,000) - - 145,717 128,256 - -
Current
Trade receivables Third parties 51,421 24,376 - -
Other receivables Other receivables 2,619 3,393 309 247 Prepayments 35,961 30,077 975 840 Deposits 841 516 44 44 39,421 33,986 1,328 1,131 90,842 58,362 1,328 1,131 Total trade and other receivables 236,559 186,618 1,328 1,131
The currency exposure profile of trade and other receivables (excluding deposits and prepayments) is as follows:
Group 2021 2020 RM’000 RM’000
United States Dollar 49,668 52,125
(i) Trade receivables
The Group’s trading terms with its customers are mainly on credit, with credit periods ranging from 1 to 30 days (2020: 1 to 30 days).
The Group’s and the Company’s trade receivables were due from external parties with continuing business transactions with the Group and have no history of default. Hence, these receivables were assessed as performing at the reporting date. In addition, there were no conditions identified which indicate that the receivables were in significant financial difficulty. Therefore, there was no impairment loss recognised for these receivables. As at 31 March 2021, the Group has a high concentration of credit risk whereby 32% (2020: 34%) of the Group’s trade receivables is with respect to a single debtor.
(ii) Other receivables
The other classes of receivables of the Group and the Company do not contain any credit-impaired assets. These receivables were assessed as performing as there is no indication of a significant increase in credit risks for these receivables and the identified credit loss is minimal. 168 IJM PLANTATIONS BERHAD NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2021
19 TRADE AND OTHER RECEIVABLES (CONTINUED)
(b) Trade and other receivables (continued)
(iii) Advances for plasma schemes
Group 2021 2020 RM’000 RM’000
At 1 April 2020/2019 76,131 75,010 Additions 13,598 6,628 Exchange differences 6,320 (5,507) At 31 March 96,049 76,131
The Government of the Republic of Indonesia requires companies involved in plantation development to provide support to develop and cultivate oil palm lands for local communities in oil palm plantations as part of their social obligation which are known as “Plasma” schemes.
In line with this requirement, the Group’s subsidiaries are involved in several cooperative programs for the development and cultivation of oil palm lands for local communities. The Group’s subsidiaries supervise and manage the plasma schemes. Advances made by the Group’s subsidiaries to the plasma schemes in the form of plantation development costs are recoverable either through bank loans obtained by the cooperatives or direct repayments from the plasma schemes when these plasma areas come into production. These advances are currently interest free but the Group has the right to charge interest on the outstanding balances. The Group has assessed the likelihood of the irrecoverability of the balances and credit loss occuring by reviewing the financial viability of the operations of the plasma schemes and the expected cash flows derived from the operations.
Based on the cash flow projections, the outstanding balances are expected to be recovered in full. Accordingly, the credit risk arising from these advances is minimal. Management expects that these advances will not be repaid within the next financial year. As a result, these amounts are classified as non-current assets.
(iv) The amounts due from non-controlling interests are denominated in United States Dollars. The amounts due from non-controlling interests are operational in nature in furtherance of the overseas subsidiaries’ business operations. The amounts due from non-controlling interests are currently interest free and secured over the related shares held by the non-controlling interests. Management reserves the right to charge interest on the outstanding balances. Management does not intend to demand for repayment of the amounts owing by the non-controlling interests within the next twelve months from the reporting date, and has therefore classified the balance as non-current receivables.
During the previous financial year, there was a loss allowance of RM4,000,000 in respect of the amount due from non-controlling interests arising from the difference between the present value of the expected cash flows and the contractual cash flows over the recovery period.
The Group’s and the Company’s maximum exposure to credit risk is the carrying value of each class of receivables mentioned above. Except as disclosed above, the Group and the Company do not hold any collaterals with respect to these receivables. NURTURING SUSTAINABILITY 169 ANNUAL REPORT 2021 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2021
20 DERIVATIVE FINANCIAL INSTRUMENTS
Group 2021 2020 Assets Liabilities Assets Liabilities RM’000 RM’000 RM’000 RM’000
Current: Crude palm oil (“CPO”) swap contracts (i) - 3,078 329 1,115 Interest rate swap contracts (ii) - 1,310 - 2,121 - 4,388 329 3,236
Non-current: Interest rate swap contracts (ii) - - - 872 - 4,388 329 4,108
The currency exposure profile of derivatives financial instruments is as follows:
Group 2021 2020 RM’000 RM’000
United States Dollar 1,310 2,993
The Group entered into CPO swap contracts and interest rate swap contracts to mitigate the exposure to fluctuations in the price of crude palm oil and the interest rates movement of its floating-rate US Dollar borrowings respectively.
(i) CPO swap contracts
The fair value of CPO swap contracts is derived based on the differences between fixed CPO prices as per the swap contracts and the average CPO Futures prices quoted on the Bursa Malaysia Derivatives Exchange for the specific contracted periods.
As at the reporting date, the outstanding CPO swap contracts are made up of notional amounts of 2,250 metric tonnes (2020: 15,500 metric tonnes) with contracted prices ranging from RM2,400 to RM2,559 per metric tonne (2020: RM2,225 to RM2,565 per metric tonne) and settlement date of 30 June 2021 (2020: 30 April 2020 to 31 March 2020).
(ii) Interest rate swap contracts
The fair values of interest rate swap contracts as at the reporting date are estimated based on the present values of the estimated future cash flows based on observable yield curves. As at the reporting date, the outstanding interest rate swap contracts are made up of notional amounts as follows:
Notional value Fair value outstanding as at of derivative Group Base currency the reporting date financial liability RM’000 RM’000
As at 31 March 2021 Less than 1 year USD 163,104 1,310
Notional value Fair value outstanding as at of derivative Group Base currency the reporting date financial liability RM’000 RM’000
As at 31 March 2020 Less than 1 year USD 168,812 2,121 1 to 2 years USD 168,812 872 170 IJM PLANTATIONS BERHAD NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2021
21 PRODUCE GROWING ON BEARER PLANTS
Group Company 2021 2020 2021 2020 RM’000 RM’000 RM’000 RM’000
At 1 April 2020/2019 11,892 7,750 2,767 1,815 Harvested produce transferred to inventories (11,892) (7,750) (2,767) (1,815) Change in fair value less cost to sell 18,903 12,429 3,876 2,767 Exchange difference 477 (537) - - At 31 March 19,380 11,892 3,876 2,767
During the financial year, the Group and the Company harvested approximately 1,064,678 metric tonnes (2020: 1,061,771 metric tonnes) and 213,820 metric tonnes (2020: 210,288 metric tonnes) of FFB respectively. The quantities of unharvested FFB of the Group and of the Company as at the reporting date are approximately 45,872 metric tonnes (2020: 47,395 metric tonnes) and 7,005 metric tonnes (2020: 8,921 metric tonnes) respectively.
The fair value measurement of the Group’s and the Company’s produce growing on bearer plants are categorised within Level 3 of the fair value hierarchy. A change of 10% in the discounted market price of FFB used ranging from RM432 to RM641 per metric tonne (2020: from RM276 to RM328 per metric tonne) for the Group, and RM615 to RM641 per metric tonne (2020: from RM287 to RM328 per metric tonne) for the Company, would cause the fair value of the Group’s and the Company’s produce growing on bearer plants to increase or decrease equally by approximately RM2.4 million (2020: RM1.7 million) and RM0.4 million (2020: RM0.3 million) respectively.
22 DEPOSITS, CASH AND BANK BALANCES
Group Company 2021 2020 2021 2020 RM’000 RM’000 RM’000 RM’000
Cash and bank balances (Note 36) 103,830 82,898 156 233 Deposits with licensed banks (Note 36) 113,041 158,355 5,038 16,020 216,871 241,253 5,194 16,253
The currency profile of cash and bank balances is as follows:
Group Company 2021 2020 2021 2020 RM’000 RM’000 RM’000 RM’000
Ringgit Malaysia 103,347 126,392 5,194 16,253 United States (“US”) Dollar 51,956 75,723 - - Indonesian Rupiah 60,755 38,294 - - Japanese Yen 813 844 - - 216,871 241,253 5,194 16,253 NURTURING SUSTAINABILITY 171 ANNUAL REPORT 2021 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2021
22 DEPOSITS, CASH AND BANK BALANCES (CONTINUED)
The effective interest rates per annum at the reporting date for the deposits with licensed banks of the Group and the Company are as follows:
Group 2021 2020 % %
Deposits with licensed banks: Ringgit Malaysia 1.25 – 1.50 2.05 – 2.40 US Dollar 0.5 – 0.75 0.75 – 2.15 Indonesian Rupiah 3.00 – 3.75 4.50 – 5.00
Company 2021 2020 % %
Deposits with licensed banks: Ringgit Malaysia 1.25 – 1.35 2.05 – 2.15
Deposits with licensed banks of the Group and of the Company have maturity periods as follows:
Group Company 2021 2020 2021 2020
Days 2 - 365 1 – 365 2 - 8 1 - 7
Except for the restricted deposits with licensed banks as disclosed in Note 36, these deposits are not restricted for use and can be withdrawn for use without incurring any penalty.
Bank balances are deposits held at call with banks and earn no interest.
23 SHARE CAPITAL
Group and Company Number of ordinary shares Amount 2021 2020 2021 2020 ’000 ’000 RM’000 RM’000
Issued and fully paid with no par value:
At beginning and end of financial year 880,580 880,580 922,530 922,530 172 IJM PLANTATIONS BERHAD NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2021
24 EQUITY CONTRIBUTION RESERVE
The equity contribution reserve represents the equity-settled share options over the ordinary shares of the ultimate holding company, IJM Corporation Berhad which are granted to certain employees of the Group. The reserve is made up of the cumulative value of services received from employees recorded over the vesting periods commencing from the grant date of the share options and is reduced by the recharge from the ultimate holding company upon the exercise of the equity settled-share options by the eligible employees.
25 OTHER RESERVES
Foreign currency translation reserve RM’000
Group
At 1 April 2019 (101,141)
Currency translation differences arising from translation of net investments in foreign entities (58,551) At 31 March 2020 (159,692)
Currency translation differences arising from translation of net investments in foreign entities 61,720 At 31 March 2021 (97,972)
Foreign currency translation reserve arising as at the reporting date is not subject to tax and therefore has no current and deferred tax impact.
The foreign currency translation reserve represents the exchange differences arising from the translation of the net investments of foreign entities whose functional currencies are different from that of the Group’s presentation currency and the exchange differences arising from monetary items which form part of the Group’s net investment in foreign entities.
26 RETAINED PROFITS
The Company may distribute dividends out of its entire retained profits as at 31 March 2021 under the single-tier tax system. NURTURING SUSTAINABILITY 173 ANNUAL REPORT 2021 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2021
27 DEFERRED TAXATION
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets and current tax liabilities and when the deferred taxes relate to the same tax authority.
The following amounts, determined after appropriate offsetting, are shown in the statement of financial position:
Group Company 2021 2020 2021 2020 RM’000 RM’000 RM’000 RM’000
Deferred tax assets 3,326 8,987 - - Deferred tax liabilities (88,147) (76,435) (39,098) (37,552) (84,821) (67,448) (39,098) (37,552)
Subject to income tax:
Deferred tax assets (before offsetting): - Unutilised tax losses 12,228 25,402 - - - Retirement benefits 4,313 4,853 - - - Lease liabilities 5,184 5,220 2,218 2,245 - Derivative financial instruments 1,001 655 - - 22,726 36,130 2,218 2,245 Offsetting (19,400) (27,143) (2,218) (2,245) Deferred tax assets (after offsetting) 3,326 8,987 - -
Deferred tax liabilities (before offsetting): - Property, plant and equipment (98,317) (95,708) (38,226) (36,935) - Produce growing on bearer plants (4,178) (2,734) (930) (664) - Right-of-use assets (5,052) (5,136) (2,160) (2,198) (107,547) (103,578) (41,316) (39,797) Offsetting 19,400 27,143 2,218 2,245 Deferred tax liabilities (after offsetting) (88,147) (76,435) (39,098) (37,552)
At 1 April 2020/2019 (67,448) (59,389) (37,552) (35,440)
(Charged)/credited to statement of comprehensive income (Note 11): - Property, plant and equipment (208) 4,499 (1,291) (1,495) - Unutilised tax losses (15,336) (12,294) - - - Derivative financial instruments 289 1,777 - - - Produce growing bearer plants (1,338) (2,874) (266) (664) - Retirement benefits (907) 445 - - - Right-of-use assets 112 85 38 47 - Lease liabilities (37) * (27) * (17,425) (8,362) (1,546) (2,112) Exchange differences 52 303 - - At 31 March (84,821) (67,448) (39,098) (37,552)
* below RM1,000/= 174 IJM PLANTATIONS BERHAD NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2021
27 DEFERRED TAXATION (CONTINUED)
(a) The following are amounts of deductible temporary differences and unutilised tax losses in certain Malaysian subsidiaries for which no deferred tax asset is recognised in the statement of financial position:
Group 2021 2020 RM’000 RM’000
Deductible temporary differences (no expiring period) 1,328 1,328 Unutilised tax losses 733 733 2,061 2,061
Deferred tax assets not recognised at 24% (2020: 24%) 495 495
The Group’s unutilised tax losses arising from its Malaysian subsidiaries amounting to RM733,000 as at 31 March 2021 (2020: RM733,000) has been imposed with a time limit of utilisation, which will expire in the year of assessment 2025 (2020: year of assessment 2025).
(b) The unutilised tax losses and other deductible temporary differences in the Indonesian subsidiaries not recognised as deferred tax assets at the end of the financial year:
Group 2021 2020 RM’000 RM’000
Unutilised tax losses - 70,315
Deferred tax assets not recognised at 20% (2020: 20% to 22%) - 14,618
(c) The unutilised tax losses in the Indonesian subsidiaries will expire in the following financial years:
Group 2021 2020 RM’000 RM’000
Financial year: 2021 - 27,744 2022 - 2,601 2023 - 18,016 2024 - 12,251 2025 - 9,703 - 70,315
Deferred tax assets were not recognised in respect of the unutilised tax losses in the prior financial year as they may not be used to offset taxable profits of other subsidiaries in the Group and they have arisen in subsidiaries that have a recent history of losses and some of the subsidiaries were not expected to generate sufficient taxable profits before the expiry of the unutilised tax losses. During the financial year, these tax losses had been recognised by the Group based on the projected taxable profits available to these entities arising from the strong commodity prices. NURTURING SUSTAINABILITY 175 ANNUAL REPORT 2021 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2021
28 RETIREMENT BENEFITS
The subsidiaries in Indonesia operate an unfunded defined benefit scheme for qualified permanent employees who are eligible under the employment policy. The benefits payable on retirement are calculated based on the employees’ length of service and their pensionable salary in the final years leading up to retirement.
The latest actuarial valuations of the plans in Indonesia were carried out on 31 March 2021 by a qualified actuary.
The movements during the financial year in the amounts recognised in the statements of financial position are as follows:
Group 2021 2020 RM’000 RM’000
At beginning of financial year 22,059 19,340 Recognised in consolidated statement of comprehensive income (1,095) 5,141 Capitalised in bearer plants (117) 461 (Reversal of costs)/total costs of unfunded defined benefits plan (Note 9) (1,212) 5,602 Exchange differences 1,834 (1,912) Benefits paid (1,749) (443) Actuarial loss/(gain) recognised in other comprehensive income 639 (528) At end of financial year 21,571 22,059
The amount of unfunded defined benefits recognised in the consolidated statement of financial position is as follows:
Group 2021 2020 RM’000 RM’000
Present value of unfunded defined benefit obligations classified in the statement of financial position as follows: - Current 1,292 1,975 - Non-current 20,279 20,084 21,571 22,059
The following amounts have been recognised in the consolidated statement of comprehensive income during the financial year and included within cost of sales:
Group 2021 2020 RM’000 RM’000
Current service cost 3,377 3,696 Interest cost 1,764 1,445 Change in benefits plan (6,236) - (Reversal of costs)/total costs (1,095) 5,141
During the financial year, the Group’s retirement benefits plans were remeasured to account for the plan amendment arising from a change in the employment regulations in Indonesia, resulting in reversal of past service cost of RM6,236,000 recognised in the statement of comprehensive income. 176 IJM PLANTATIONS BERHAD NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2021
28 RETIREMENT BENEFITS (CONTINUED)
The expenses capitalised in bearer plants during the financial year were analysed as follows:
Group 2021 2020 RM’000 RM’000
Current service cost 332 359 Interest cost 189 102 Change in benefits plan (638) - (Reversal of costs)/total costs (117) 461
The principal assumptions used in respect of the Group’s unfunded defined benefit plan were as follows:
Group 2021 2020 % %
Discount rate 8 8 Expected rate of salary increases 8 8
Through the defined benefit plan, the Group is exposed to a number of risks, and the most significant risk is the change in the bond yield whereby a decrease in the corporate bond yield will increase the plan liabilities.
Based on the same method used to derive the present value of the defined benefit obligation using the projected unit credit method, it is estimated that a 1% change in the principal assumptions would not have a significant impact to the defined benefit obligation of the Group.
The weighted average duration of the defined benefit obligation is 19.0 years (2020: 18.5 years) for the Group.
29 BORROWINGS
Group 2021 2020 RM’000 RM’000
Current - term loans 95,857 49,260 - revolving credit-i 100,000 100,000 195,857 149,260
Non-current - term loans 501,476 758,335 697,333 907,595
The currency profile of borrowings is as follows:
US Dollars 438,709 537,820 Japanese Yen 158,624 209,775 Ringgit Malaysia 100,000 160,000 697,333 907,595 NURTURING SUSTAINABILITY 177 ANNUAL REPORT 2021 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2021
29 BORROWINGS (CONTINUED)
The net exposure of borrowings to cash flow interest rate risk and the periods in which the borrowings mature are as follows:
Effective Floating interest rate interest rate as at year end Total per carrying < 1 1-2 2-3 3-4 4-5 > 5 Group annum amount year years years years years years % RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
At 31 March 2021
Term loan 8 1.04 158,624 9,914 59,484 89,226 - - - Term loan 9 2.29 142,716 21,956 54,890 65,870 - - - Term loan 10 2.29 142,716 21,956 54,890 65,870 - - - Term loan 11 2.81 57,505 15,683 20,911 20,911 - - - Term loan 12 2.81 95,772 26,348 35,130 34,294 - - - Revolving credit facility-i 2.97 100,000 100,000 - - - - - 697,333 195,857 225,305 276,171 - - -
Effective Floating interest rate interest rate as at year end Total per carrying < 1 1-2 2-3 3-4 4-5 > 5 Group annum amount year years years years years years % RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
At 31 March 2020
Term loan 7 5.15 60,000 16,000 16,000 16,000 12,000 - - Term loan 8 1.04 209,775 10,490 41,954 62,932 94,399 - - Term loan 9 4.04 182,165 11,385 45,542 56,926 68,312 - - Term loan 10 4.04 182,165 11,385 45,542 56,926 68,312 - - Term loan 11 4.38 65,059 - 21,686 21,686 21,687 - - Term loan 12 4.38 108,431 - 36,433 36,433 35,565 - - Revolving credit facility-i 4.32 100,000 100,000 - - - - - 907,595 149,260 207,157 250,903 300,275 - -
The term loans and the revolving credit facility-i drawn down by certain subsidiaries of the Group are denominated in US Dollars (“USD”), Japanese Yen (“YEN”) and Ringgit Malaysia (“RM”) and are secured by way of corporate guarantees of the Company.
The principal features of the borrowings are as follows:
(a) Term loan 7 of RM80.0 million was drawn down by Excellent Challenger (M) Sdn. Bhd., a subsidiary of the Company in Malaysia, to part-finance the mill construction of PT Primabahagia Permai, a subsidiary of the Company in Indonesia and for general working capital requirements during the previous financial year. This term loan is repayable in 20 quarterly instalments of RM4.0 million commencing on the first day of the third month from the date of the first drawdown on 23 October 2018. This term loan bears interest at a rate of Cost of Funds (“COF”) plus 1.40% per annum.
This term loan requires the Group’s leverage ratio to not exceed 1.0 time as at every financial year end. Leverage ratio is defined as total liabilities against tangible net worth.
The term loan 7 has been fully repaid during the current financial year. 178 IJM PLANTATIONS BERHAD NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2021
29 BORROWINGS (CONTINUED)
The principal features of the borrowings are as follows: (continued)
(b) Term loan 8 of YEN5.65 billion was partially drawn down by PT Sinergi Agro Industri, a subsidiary of the Company in Indonesia, to refinance the remaining unpaid balances of its previous term loans. The amount drawn down in the previous financial year amounted to YEN5.25 billion. The undrawn balance of YEN0.4 billion was cancelled as at the end of previous financial year.
This term loan is repayable as follows:
(i) YEN2.10 billion is to be repaid in 8 equal quarterly instalments of YEN262.50 million each with the first principal repayment commencing on 27 March 2021; and
(ii) YEN3.15 billion is to be repaid in the subsequent 4 equal quarterly instalments of YEN787.50 million each.
This term loan bears interest at a rate of COF plus 1.00% per annum.
The facility under term loan 8 contains covenants which require the subsidiary to maintain positive tangible net worth throughout the tenor of the term loan facility. Tangible net worth is defined as the sum of total shareholders’ equity and shareholders’ loans. The facility also requires the Group to maintain an EBITDA to interest expense ratio of no less than 2.5 times at all times. EBITDA is defined as profit before tax, interest, depreciation, amortisation and excluding unrealised foreign exchange gain or loss. Besides, the facility also requires the Group’s leverage ratio to not exceed 1.0 time as at the financial year end. Leverage ratio is defined as total liabilities against tangible net worth.
This term loan also contains covenants which require the subsidiary to maintain at all times a minimum sum in the Interest Service Reserve Account equivalent to three months of interest obligations under the term loan.
(c) Term loan 9 and term loan 10 of USD42.0 million each were partially and fully drawn down by PT Prima Alumga and PT Indonesia Plantation Synergy respectively, subsidiaries of the Company in Indonesia, for the purposes of refinancing the Group’s borrowings.
The repayment periods for Term loan 9 and Term loan 10 are as follows:
(i) USD42.0 million is to be repaid in 8 equal quarterly instalments of USD5.25 million with the first repayment commencing 29 January 2021; and
(ii) USD42.0 million is to be repaid in 4 equal quarterly instalments of USD10.5 million commencing 31 January 2023.
These term loans bear interest at a rate of London Inter-bank Offered Rate (“LIBOR”) plus 1.50% per annum.
The facilities under term loan 9 and term loan 10 each contain covenants which require these subsidiaries to maintain positive net worth throughout the tenor of the term loan facilities. Net worth is defined as the sum of paid-up capital and retained profits. In the event that the subsidiaries are not able to maintain apositive net worth, the subsidiaries are required to ensure their adjusted net worth (which include non-trade advances from related companies and shareholders loans) are maintained at a minimum of USD1.0 million. The facilities also require the Group to maintain an EBITDA to interest expense ratio of not less than 2.5 times at all times. EBITDA is defined as profit before tax, interest, depreciation and amortisation. In addition, the facilities also require the Group’s leverage ratio to not exceed 1.0 time at all times. Leverage ratio is defined as total liabilities against tangible net worth. NURTURING SUSTAINABILITY 179 ANNUAL REPORT 2021 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2021
29 BORROWINGS (CONTINUED)
The principal features of the borrowings are as follows: (continued)
(d) Term loan 11 and term loan 12 amounting to USD15.0 million and USD25.0 million respectively were drawn down during the previous financial year by PT Primabahagia Permai and PT Sinergi Agro Industri, subsidiaries of the Company in Indonesia, to repay remaining unpaid balances of their previous term loans and for working capital purposes. The repayment periods for these new term loan facilities are as follows:
(i) USD15.0 million is to be repaid in 12 equal quarterly instalments of USD1.25 million with the first repayment commencing 24 months after the first drawdown on 1 April 2019 for term loan 11.
(ii) USD25.0 million is to be repaid in 11 equal quarterly instalments of USD2.1 million and 1 final instalment of USD1.9 million with the first repayment commencing 24 months after the first drawdown on 1 April 2019 for term loan 12.
These term loans bear interest at a rate of LIBOR plus 1.40% per annum.
These term loans contain covenants which require the Group as the guarantor to maintain a gearing ratio of not exceeding 1.0 time. Gearing ratio is to be calculated based on the ratio of total borrowings to tangible net worth (represented by total shareholders’ equity less intangible assets, non-controlling interest and dividends declared).
Term loan 11 and Term loan 12 also contain covenants which require the subsidiaries to maintain at all times a minimum sum in the fixed deposit accounts of USD0.66 million and USD1.1 million respectively.
(e) The Islamic revolving credit facility (“revolving credit-i”) of RM100.0 million was drawn down during the previous financial year by Rakanan Jaya Sdn. Bhd., a subsidiary of the Company in Malaysia for general working capital requirements. The revolving credit facility bears interest at a rate of Cost Funding Rate (“CFR”) plus 0.90% per annum.
The Group’s borrowings contain covenants that require the Group to maintain certain financial ratios (as disclosed above) as well as a negative pledge which states that any other security shall not be provided over the assets of subsidiaries receiving these borrowings. As at 31 March 2021, the Group has complied with all the covenants of these borrowings.
30 TRADE AND OTHER PAYABLES
(a) Amounts due to subsidiaries
Company 2021 2020 RM’000 RM’000
Non-current
Non-trade and interest bearing advances (note b(v)) 18,562 -
Current
Non-trade and non-interest bearing advances (note b(ii)) - 24,442 180 IJM PLANTATIONS BERHAD NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2021
30 TRADE AND OTHER PAYABLES (continued)
(b) Trade and other payables
Group Company 2021 2020 2021 2020 RM’000 RM’000 RM’000 RM’000
Non-current
Other payable Financial guarantee contracts - - 5,836 15,243
Current Trade payables - Third parties 64,944 46,460 6,474 4,231
Other payables Other payables 22,877 20,489 1,525 1,458 Financial guarantee contracts - - 3,544 1,016 Accruals 11,747 9,068 5,370 2,441 Amount due to ultimate holding company 157 151 157 151 Amount due to a fellow subsidiary 87 87 87 87 34,868 29,795 10,683 5,153 99,812 76,255 17,157 9,384
(i) Trade and other payables
Trade and other payables are non-interest bearing and the normal trade credit terms granted to the Group and the Company range from 45 to 60 days (2020: 45 to 60 days).
(ii) Amount due to a fellow subsidiary and subsidiaries- current
The amount due to a fellow subsidiary and subsidiaries were denominated in Ringgit Malaysia, interest free, unsecured and repayable on demand.
(iii) Amount due to ultimate holding company
The amount due to ultimate holding company is denominated in Ringgit Malaysia, interest free, unsecured and repayable on demand.
(iv) Financial guarantee contracts
Company 2021 2020 RM’000 RM’000
At 1 April 2020/2019 16,259 16,259 Amortisation for the financial year (Note 6(b)) (6,879) - At 31 March 9,380 16,259
Classified as: - Current 3,544 1,016 - Non-current 5,836 15,243 At 31 March 9,380 16,259
The financial guarantee contracts represent the fair value of corporate guarantees extended by the Company to its subsidiaries to secure their term loans. NURTURING SUSTAINABILITY 181 ANNUAL REPORT 2021 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2021
30 TRADE AND OTHER PAYABLES (continued)
(b) Trade and other payables (continued)
(v) Amount due to a subsidiary – Non-current
The amount due to a subsidiary is denominated in Ringgit Malaysia, unsecured and is due for repayment after twelve months from the reporting date. The balance is subject to interest at the prevailing lending rate to be agreed between the Company and its subsidiary after twelve months from the reporting date.
31 LEASE LIABILITIES
The Group’s and the Company’s leasing activities as lessees
The Group’s and the Company’s leasing activities as a lessee are mainly lease of lands from third parties for the purposes of oil palm cultivation and lease of buildings for carrying out administrative activities. These leases comprise fixed payments over the lease terms, which are typically made for a period ranging from 2 to 99 years and may contain extension options. Lease terms are negotiated on an individual basis.
Group Company 2021 2020 2021 2020 RM’000 RM’000 RM’000 RM’000
Current
Lease liabilities 1,208 1,208 521 521
Non-current
Lease liabilities 20,885 21,096 8,720 8,832 Total lease liabilities 22,093 22,304 9,241 9,353
The lease liabilities are initially measured at the present value of the lease payments that are not paid at that date. The lease payments are discounted using the entities’ incremental borrowing rate. Subsequent to the initial recognition, the Group measures the lease liabilities by increasing the carrying amount to reflect interest on the lease liabilities, reducing the carrying amount to reflect lease payments made.
The maturity analysis of the lease liabilities as at the reporting date is disclosed in Note 3(c) to the financial statements.
Total cash outflow for the leases in the financial year ended 31 March 2021 of the Group and of theCompany amounted to RM1,310,000 (2020: RM1,524,000) and RM521,000 (2020: RM447,000) respectively.
32 COMMITMENTS
Group Company 2021 2020 2021 2020 RM’000 RM’000 RM’000 RM’000
Property, plant and equipment
Approved and contracted for 66,186 29,790 219 358 Approved but not contracted for 124,515 163,996 45,210 38,464 190,701 193,786 45,429 38,822 182 IJM PLANTATIONS BERHAD NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2021
33 SIGNIFICANT RELATED PARTY DISCLOSURES
(a) In addition to related party disclosures mentioned elsewhere in the financial statements, set out below are other significant related party transactions and balances at the reporting date. The following transactions with related parties were carried out under terms and conditions negotiated amongst the related parties:
Related parties Relationship
IJM Corporation Berhad Ultimate holding company
IJM Land Management Services Sdn. Bhd. A subsidiary of the ultimate holding company
Group Company 2021 2020 2021 2020 RM’000 RM’000 RM’000 RM’000
Transactions during the financial year:
Ultimate holding company: - Recharge upon exercise of share options and share grants by employees (329) (1,097) (318) (994) - Management fee charged (1,517) (1,813) (1,483) (1,813) - Dividend paid (9,897) (9,897) (9,897) (9,897)
Subsidiary of the ultimate holding company: - Rental income 97 116 97 116
Company 2021 2020 RM’000 RM’000
Subsidiaries: - Sale of fresh fruit bunches 120,698 84,265 - Sale of oil palm seedlings 74 174 - Purchase of empty fruit bunches - (109) - Management fee income 8,364 8,566 - Recovery of management fee charged by ultimate holding company 34 37 - Purchase of compost and bunch ash (27) (22) - Rental income 38 38 - Electricity consumption (484) (484) - Repayment from subsidiaries 60,871 193,207 - Advances to subsidiaries (137,134) (186,019) - Sale of seeds 4 - - Disposal of property, plant and equipment to subsidiaries 271 - - Purchase of property, plant and equipment to subsidiaries (4) -
(b) The Group has transactions with companies in which a Director of the Company has deemed interest through his family members:
Group Company 2021 2020 2021 2020 RM’000 RM’000 RM’000 RM’000
Transactions during the financial year:
- Purchase of fresh fruit bunches (6,568) (4,614) - - - Sale of compost * 4 - - - Supply of electricity 20 21 - -
* below RM1,000/= NURTURING SUSTAINABILITY 183 ANNUAL REPORT 2021 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2021
33 SIGNIFICANT RELATED PARTY DISCLOSURES (CONTINUED)
(c) Key management compensation during the financial year
Key management personnel comprise the Directors and certain management personnel of the Group, having authority and responsibility for planning, directing and controlling the activities of the Group entities directly or indirectly.
Group Company 2021 2020 2021 2020 RM’000 RM’000 RM’000 RM’000
Key management compensation
Wages, salaries and bonuses 3,525 2,754 2,070 1,628 Defined contribution plan 505 389 311 244 Fees and other emoluments 864 812 864 812 Other employee benefits 59 75 57 68 Share-based payment 129 351 124 238 5,082 4,381 3,426 2,990
Included in the total key management compensation is:
Directors’ remuneration including benefits-in-kind (Note 10) 3,426 2,990 3,426 2,990
34 FINANCIAL INSTRUMENTS BY CATEGORIES
Group Company 2021 2020 2021 2020 RM’000 RM’000 RM’000 RM’000
Financial assets
Financial assets at amortised cost: - Trade and other receivables (excluding prepayments) (Note 19(b)) 200,598 156,541 353 291 - Amounts due from subsidiaries (Note 19(a)) - - 11,162 23,118 - Deposits, cash and bank balances (Note 22) 216,871 241,253 5,194 16,253
Financial assets at fair value through profit or loss: - Derivative financial instruments (Note 20) - 329 - - 417,469 398,123 16,709 39,662
Financial liabilities
Financial liabilities at amortised cost: - Trade and other payables 97,427 76,255 13,524 8,368 - Borrowings (Note 29) 697,333 907,595 - - - Amounts due to subsidiaries (Note 30(a)) - - 18,562 24,442
Financial liabilities at fair value through profit or loss: - Derivative financial instruments (Note 20) 4,388 4,108 - -
Lease liabilities (Note 31) 22,093 22,304 9,241 9,353
Financial guarantee contracts (Note 30(iv)) - - 9,380 16,259 821,241 1,010,262 50,707 58,422 184 IJM PLANTATIONS BERHAD NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2021
35 SEGMENTAL REPORTING
Management has determined the operating segments based on the reports reviewed by the Management Committee (“MC”) of the Group that are used to make strategic decisions for allocating resources and assessing performance. The MC considers the business from a country perspective and assesses the performance of the operating segments based on a measure of revenue, Earnings Before Interest, Tax, Depreciation and Amortisation (“EBITDA”) and Profit Before Taxation (“PBT”). The Group principally operates in the cultivation of oil palms and milling of fresh fruit bunches which are geographically located in Malaysia and Indonesia.
(a) The segment information provided to the MC for the reportable segments are as follows:
Malaysia Indonesia Group RM’000 RM’000 RM’000
2021
REVENUE: Recognised at a point in time 439,499 494,488 933,987 Recognised over time - 1,706 1,706 439,499 496,194 935,693
RESULTS: Profit/(loss) before tax 109,295 162,834 272,129 Depreciation of property, plant and equipment 33,250 79,967 113,217 Depreciation of right-of-use assets 2,228 1,474 3,702 Finance costs* 5,145 13,127 18,272 EBITDA 149,918 257,402 407,320
Profit/(loss) before tax includes: - Interest income 2,150 1,657 3,807 - Share of profits of an associate - 345 345
2020
REVENUE: Recognised at a point in time 335,836 402,046 737,882 Recognised over time - 1,251 1,251 335,836 403,297 739,133
RESULTS: Profit/(loss) before tax 40,182 (90,654) (50,472) Depreciation of property, plant and equipment 35,143 71,804 106,947 Depreciation of right-of-use assets 3,618 1,299 4,917 Finance costs* 3,061 58,202 61,263 EBITDA 82,004 40,651 122,655
Profit/(loss) before tax includes: - Interest income 1,880 2,504 4,384 - Share of profits of an associate - 653 653
The MC makes operational decisions based on EBITDA for which finance costs and depreciation and amortisation are excluded. EBITDA focuses on operational profitability as a single measurement of the regional performance of the Group.
* Foreign exchange differences on borrowings of nil (2020: RM37.72 million) were regarded as finance costs, refer to Note 7 to the financial statements. NURTURING SUSTAINABILITY 185 ANNUAL REPORT 2021 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2021
35 SEGMENTAL REPORTING (CONTINUED)
(b) The other segment information provided to the MC for the reportable segments are as follows:
2021 2020 RM’000 RM’000
Segment assets:
Malaysia 742,520 773,086 Indonesia 1,636,694 1,512,680 2,379,214 2,285,766
Unallocated assets: - Deferred tax assets 3,326 8,987 - Tax recoverable 4,603 137 7,929 9,124 Total assets 2,387,143 2,294,890
Included in the segment assets are non-current assets other than financial instruments and deferred tax assets amounting to RM525.4 million (2020: RM534.3 million) and RM1,304.8 million (2020: RM1,238.3 million) which are located in Malaysia and Indonesia respectively.
2021 2020 RM’000 RM’000
Segment liabilities:
Malaysia 162,681 208,260 Indonesia 682,516 824,061 845,197 1,032,321
Unallocated liabilities: - Deferred tax liabilities 88,147 76,435 - Current tax liabilities 13,521 3,214 101,668 79,649 Total liabilities 946,865 1,111,970 186 IJM PLANTATIONS BERHAD NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2021
35 SEGMENTAL REPORTING (CONTINUED)
(b) The other segment information provided to the MC for the reportable segments are as follows: (continued)
Malaysia Indonesia Group RM’000 RM’000 RM’000
2021
Other information
Capital expenditure: - property, plant and equipment (Note 14) 26,967 44,693 71,660 - right-of-use assets (Note 15) - 62 62 26,967 44,755 71,722
2020
Other information
Capital expenditure: - property, plant and equipment (Note 14) 23,636 74,078 97,714 - right-of-use assets (Note 15) - 2,078 2,078 23,636 76,156 99,792
Revenues of approximately RM363,658,000 (2020: RM324,935,000) are derived from 2 major external customers in Malaysia.
Revenues of approximately RM253,247,000 (2020: RM281,333,000) are derived from 2 major external customers in Indonesia.
Revenue from external customers reported to the MC is measured in a manner consistent with that in the statement of comprehensive income.
Revenue from operating segments is disclosed in Note 4 to the financial statements.
The amounts provided to the MC with respect to total assets and total liabilities are measured in a manner consistent with that of the financial statements. These assets and liabilities are allocated based on the geographical location of the Group’s operations.
- Segment assets comprise property, plant and equipment, investment in associate, land use rights, right-of-use assets, inventories, derivatives, receivables, deposits, cash and bank balances.
- Segment liabilities comprise payables, lease liabilities, borrowings, derivatives and retirement benefits.
The MC evaluates the performance of the operating segments by excluding the foreign exchange gains and losses arising from the intersegment loans denominated in Indonesian Rupiah. The net unrealised foreign exchange gains and losses arising from the intersegment loans that form part of the Group’s net investments are presented in the other comprehensive income in the consolidated financial statements of the Group. NURTURING SUSTAINABILITY 187 ANNUAL REPORT 2021 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2021
36 CASH AND CASH EQUIVALENTS
Cash and cash equivalents included in the Group’s and the Company’s statements of cash flows comprise the following:
Group Company 2021 2020 2021 2020 RM’000 RM’000 RM’000 RM’000
Cash and bank balances (Note 22) 103,830 82,898 156 233 Deposits with licensed banks (Note 22) 113,041 158,355 5,038 16,020 216,871 241,253 5,194 16,253 Less: Restricted deposits with licensed banks (Notes (a) & (b) & (c)) (11,737) (11,931) - - 205,134 229,322 5,194 16,253
(a) The restricted deposit with a licensed bank relates to a deposit by PT Sinergi Agro Industri, a subsidiary of the Company, which was assigned to the bank as security in respect of a corporate guarantee facility to a cooperative in Indonesia as referred to in Note 3(c) to the financial statements.
(b) Term loan 8 contains covenants which require the subsidiary to maintain at all times a minimum sum in the Interest Service Reserve Account equivalent to three months of interest obligations under the term loan as set out in Note 29(b).
(c) Term loan 11 and term loan 12 contain covenants which require the subsidiaries concerned to maintain at all times a minimum placement in a fixed deposit account as required under the term loans as referred to in Note 29(d) to the financial statements. 188 IJM PLANTATIONS BERHAD STATUTORY DECLARATION PURSUANT TO SECTION 251(1)(b) OF THE COMPANIES ACT 2016
I, Purushothaman a/l Kumaran, being the Director primarily responsible for the financial management of IJM Plantations Berhad, do solemnly and sincerely declare that, to the best of my knowledge and belief, the financial statements set out on pages 108 to 187 are correct and I make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of the Statutory Declarations Act, 1960.
PURUSHOTHAMAN A/L KUMARAN (MIA 5747)
Subscribed and solemnly declared at Petaling Jaya in the state of Selangor Darul Ehsan on 27 May 2021.
Before me: NURTURING SUSTAINABILITY 189 ANNUAL REPORT 2021 INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF IJM PLANTATIONS BERHAD (Incorporated in Malaysia) Registration No. 198501000955 (133399-A)
REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS
Our opinion
In our opinion, the financial statements of IJM Plantations Berhad (“the Company”) and its subsidiaries (“the Group”) give a true and fair view of the financial position of the Group and of the Company as at 31 March 2021, and of their financial performance and their cash flows for the financial year then ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia.
What we have audited
We have audited the financial statements of the Group and of the Company, which comprise the statements of financial position as at 31 March 2021 of the Group and of the Company, and the statements of comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the financial year then ended, and notes to the financial statements, including a summary of significant accounting policies, as set out on pages 108 to 187.
Basis for opinion
We conducted our audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing. Our responsibilities under those standards are further described in the “Auditors’ responsibilities for the audit of the financial statements” section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence and other ethical responsibilities
We are independent of the Group and of the Company in accordance with the By-Laws (on Professional Ethics, Conduct and Practice) of the Malaysian Institute of Accountants (“By-Laws”) and the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants (including International Independence Standards) (“IESBA Code”), and we have fulfilled our other ethical responsibilities in accordance with the By-Laws and the IESBA Code.
Our audit approach
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements of the Group and of the Company. In particular, we considered where the Directors made subjective judgements; for example, in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in all of our audits, we also addressed the risk of management override of internal controls, including among other matters, consideration of whether there was evidence of bias that represented a risk of material misstatement due to fraud.
We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the financial statements as a whole, taking into account the structure of the Group and of the Company, the accounting processes and controls, and the industry in which the Group and the Company operate.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the Group and of the Company for the current financial year. These matters were addressed in the context of our audit of the financial statements of the Group and of the Company as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
There are no key audit matters to report.
Information other than the financial statements and auditors’ report thereon
The Directors of the Company are responsible for the other information. The other information comprises the Directors’ Report and the Statement on Risk Management and Internal Control, which we obtained prior to the date of this auditors’ report, and other sections of the 2021 Annual Report, which are expected to be made available to us after that date. Other information does not include the financial statements of the Group and of the Company and our auditors’ report thereon.
Our opinion on the financial statements of the Group and of the Company does not cover the other information and we do not express any form of assurance conclusion thereon. 190 IJM PLANTATIONS BERHAD INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF IJM PLANTATIONS BERHAD (CONTINUED) (Incorporated in Malaysia) Registration No. 198501000955 (133399-A)
REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS (CONTINUED)
Information other than the financial statements and auditors’ report thereon (continued)
In connection with our audit of the financial statements of the Group and of the Company, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements of the Group and of the Company or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information that we obtained prior to the date of this auditors’ report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the financial statements
The Directors of the Company are responsible for the preparation of the financial statements of the Group and of the Company that give a true and fair view in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia. The Directors are also responsible for such internal control as the Directors determine is necessary to enable the preparation of financial statements of the Group and of the Company that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements of the Group and of the Company, the Directors are responsible for assessing the Group’s and the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or the Company or to cease operations, or have no realistic alternative but to do so.
Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements of the Group and of the Company as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with approved standards on auditing in Malaysia and International Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
(a) Identify and assess the risks of material misstatement of the financial statements of the Group and of the Company, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
(b) Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s and of the Company’s internal control.
(c) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Directors.
(d) Conclude on the appropriateness of the Directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s or on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial statements of the Group and of the Company or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Group or the Company to cease to continue as a going concern. NURTURING SUSTAINABILITY 191 ANNUAL REPORT 2021 INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF IJM PLANTATIONS BERHAD (CONTINUED) (Incorporated in Malaysia) Registration No. 198501000955 (133399-A)
REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS (CONTINUED)
Auditors’ responsibilities for the audit of the financial statements (continued)
(e) Evaluate the overall presentation, structure and content of the financial statements of the Group and of the Company, including the disclosures, and whether the financial statements of the Group and of the Company represent the underlying transactions and events in a manner that achieves fair presentation.
(f) Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial statements of the Group. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with the Directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the Directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.
From the matters communicated with the Directors, we determine those matters that were of most significance in the audit of the financial statements of the Group and of the Company for the current financial year and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
In accordance with the requirements of the Companies Act 2016 in Malaysia, we report that the subsidiaries of which we have not acted as auditors, are disclosed in Note 16 to the financial statements.
OTHER MATTERS
This report is made solely to the members of the Company, as a body, in accordance with Section 266 of the Companies Act 2016 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.
PRICEWATERHOUSECOOPERS PLT HEW CHOOI YOKE LLP0014401-LCA & AF 1146 03203/07/2021 J Chartered Accountants Chartered Accountant
Kuala Lumpur 27 May 2021 192 IJM PLANTATIONS BERHAD LIST OF PROPERTIES AS AT 31 MARCH 2021
Approx. Year of Age of Net Book Area Year of Revaluation (R)/ Buildings Value Location Description (Hectares) Tenure Expiry Acquisition (A) (Years) (RM’000)
SABAH
1. Desa Talisai North Oil Palm Estate 4,055 Leasehold 2082 R: 1997 30 60,963 & South Estate and Palm Oil Mill A: 2002 Beluran
2. Minat Teguh Estate Oil Palm Estate 2,839 Leasehold 2031 to R: 1997 22 59,337 Sandakan and Palm Oil Mill 2887 A: 2000, 2004
3. Meliau Estate Oil Palm Estate 2,257 Leasehold 2032, R: 1997 – 31,007 Beluran 2087, A: 1998, 2000, 2094, 2002 2097
4. Sijas Estate Labuk/ Oil Palm Estate 1,011 Leasehold 2087 R: 1997 19 15,990 Sugut and Seed A: 2002 Production, Training & Research Centre
5. Berakan Maju Oil Palm Estate 3,010 Leasehold 2030 – A: 1999 – 56,250 Estate Labuk/ 2098 Sugut
6. Sabang Estate Oil Palm Estate 4,650 Leasehold 2030 – A: 1999, 2002 19 85,523 Labuk/Sugut and Palm Oil Mill 2098
7. Rakanan Jaya Oil Palm Estate 4,919 Leasehold 2030 – A: 1999, 2001 – 71,803 North & South 2099 Estate Labuk/ Sugut
8. Excellent Oil Palm Estate 6,364 Leasehold 2030 – A: 1997, 2008 13 92,378 Challenger I & II and Palm Oil Mill 2098 Estate Labuk/ Sugut
INDONESIA
9. Bulungan Oil Palm Estate 13,836 Leasehold/ 2043 & A: 2008, 2020 2 304,186 North Kalimantan and Palm Oil Mill Location 2046 Permit
10. Kutai Timur Oil Palm Estate, 21,178 Leasehold/ 2044, A: 2008, 2012, 4 & 9 678,404 East Kalimantan Palm Oil Mills Location 2045 & 2014, 2017 and Kernel Permit 2053 Crushing Plant
11. Lampung Sumatra Oil Palm Estate 10,513 Leasehold 2021, A: 2010 – 135,198 2029 & 2049
OTHER PROPERTIES OWNED
12. Wisma IJM Office building 6,155 m2 Leasehold 2102 A: 2000 21 2,761 Plantations Sandakan Sabah
13. IJM Edible Oil Kernel Crushing 22 Leasehold 2035, A: 1996, 1997, 18 14,326 Sungai Mowtas Plant 2095, 2002 & 2003 Sandakan 2100
Notes: Estate include Land, Plantation Expenditure, Infrastructure and Buildings NURTURING SUSTAINABILITY 193 ANNUAL REPORT 2021 Analysis of Shareholdings As at 30 June 2021
Number of Issued Shares : 880,580,460 Class of Shares : Ordinary Shares Voting Rights On show of hands : 1 vote On a poll : 1 vote for each share held
REGISTER OF SUBSTANTIAL SHAREHOLDERS
Number of Shares Percentage of Issued Shares Direct Indirect IJM Corporation Berhad 494,865,786 - 56.20% Employees Provident Fund Board 109,669,162 - 12.45%
For information purposes, Kuala Lumpur Kepong Berhad (“KLK”) and its major shareholder, Batu Kawan Berhad as well as another nine (9) direct or indirect substantial shareholders of KLK, namely Wan Hin Investments Sdn Berhad, Tan Sri Dato’ Seri Lee Oi Hian, Dato’ Lee Hau Hian, Grateful Blessings Foundation, Grateful Blessings Inc, DI-YI Sdn Bhd,, High Quest Anstalt, Cubic Crystal Corporation, High Quest Holdings Sdn Bhd, had on 15 June 2021 served the Notices of Interest of Substantial Shareholder pursuant to Section 137 of the Companies Act 2016 (“the Act”) to the Company of their deemed interest in the shares of the Company by virtue of Section 8(6)(a) of the Act upon entering the Share Sale and Purchase Agreement dated 11 June 2021 between IJM Corporation Berhad and KLK in respect of the proposed disposal of 494,865,786 ordinary shares representing 56.20% equity interest in the Company to KLK for a total cash consideration of RM1,534,083,936.60.
DISTRIBUTION OF SHAREHOLDINGS Number of Number of Percentage of Range of Shareholdings Shareholders Shares Issued Shares Less than 100 8,786 322,715 0.04% 100 to 1,000 3,156 1,212,345 0.14% 1,001 to 10,000 2,563 9,976,444 1.13% 10,001 to 100,000 728 21,943,556 2.49% 100,001 to less than 5% of issued shares 148 242,590,452 27.55% 5% and above of issued shares 2 604,534,948 68.65% 15,383 880,580,460 100.00%
THIRTY LARGEST SHAREHOLDERS Number of Percentage of Shares Issued Shares 1. IJM Corporation Berhad 494,865,786 56.20% 2. Citigroup Nominees (Tempatan) Sdn Bhd 109,669,162 12.45% Employees Provident Fund Board 3. Kumpulan Wang Persaraan (Diperbadankan) 41,585,500 4.72% 4. Desa Plus Sdn Bhd 37,000,000 4.20% 5. Sakilan Desa Sdn Bhd 13,120,894 1.49% 6. Southern Realty Resource Sdn Bhd 12,639,300 1.44% 7. Amanahraya Trustees Berhad 10,544,100 1.20% Amanah Saham Malaysia 3 8. HSBC Nominees (Asing) Sdn Bhd 8,491,100 0.96% Exempt AN for Credit Suisse Securities (USA) LLC (PB Client) 194 IJM PLANTATIONS BERHAD Analysis of Shareholdings As at 30 June 2021
Number of Percentage of Shares Issued Shares 9. CIMSEC Nominees (Tempatan) Sdn Bhd 6,810,000 0.77% CIMB for Siva Kumar A/L M Jeyapalan (PB) 10. HSBC Nominees (Asing) Sdn Bhd 6,259,590 0.71% Exempt AN for Morgan Stanley & Co. International PLC (IPB Client Acct) 11. AMSEC Nominees (Tempatan) Sdn Bhd 6,000,000 0.68% Ambank (M) Berhad for Lembaga Kemajuan Tanah Negeri Sabah (8317-1101) 12. Citigroup Nominees (Tempatan) Sdn Bhd 5,347,300 0.61% Great Eastern Life Assurance (Malaysia) Berhad (LSF) 13. CIMSEC Nominees (Tempatan) Sdn Bhd 5,191,100 0 . 5 9 % CIMB for John Chia Sin Tet (PB) 14. John Chia Sin Tet 4,258,000 0.48%
15. Citigroup Nominees (Asing) Sdn Bhd 4,199,100 0.48% GSI for Maven Investment Partners Ltd 16. Amanahraya Trustees Berhad 3,614,400 0.41% Public Dividend Select Fund 17. HSBC Nominees (Asing) Sdn Bhd 3,600,000 0.41% Exempt AN for The Hongkong and Shanghai Banking Corporation Limited (HBAP-SGDIV-ACCL) 18. Citigroup Nominees (Tempatan) Sdn Bhd 3,380,100 0.38% Great Eastern Life Assurance (Malaysia) Berhad (Par 1) 19. Amanahraya Trustees Berhad 3,373,700 0.38% ASN Imbang (Mixed Asset Balanced) 1 20. HSBC Nominees (Asing) Sdn Bhd 2,361,010 0.27% Exempt AN for Morgan Stanley & Co. LLC (Client) 21. HSBC Nominees (Asing) Sdn Bhd 2,316,200 0.26% J.P. Morgan Securities PLC 22. Velayuthan A/L Tan Kim Song 2,307,250 0.26%
23. Permodalan Nasional Berhad 2,306,500 0.26% Bumiputera Wealth Fund 24. Kenanga Nominees (Tempatan) Sdn Bhd 2,175,400 0.25% Rakuten Trade Sdn Bhd for Ku Tien Sek 25. Casi Management Sdn Bhd 2,000,000 0.23%
26. Koh Tse Ming @ Quek Tse Ming 1,956,168 0.22% 27. CIMSEC Nominees (Tempatan) Sdn Bhd 1,950,000 0.22% CIMB for Muthukumar A/L Jeyapalan (PB) 28. Amanahraya Trustees Berhad 1,874,200 0.21% Public Savings Fund 29. Kenanga Nominees (Tempatan) Sdn Bhd 1,821,200 0.21% Rakuten Trade Sdn Bhd for Pui Cheng Wui 30. Maybank Securities Nominees (Tempatan) Sdn Bhd 1,600,000 0.18% Pledged Securities Account for Mary Tan @ Tan Hui Ngoh (STF) 802,617,060 91.13% NURTURING SUSTAINABILITY 195 ANNUAL REPORT 2021
DIRECTORS’ SHAREHOLDINGS IN IJM PLANTATIONS BERHAD AS AT 30 JUNE 2021
Number of Shares Percentage of Name Direct Indirect Issued Shares Pushpanathan A/L S. A. Kanagarayar - - - Joseph Tek Choon Yee * - - - Purushothaman A/L Kumaran * 877,500 - 0.100% Datuk Dr. Choo Yuen May - - - Fatimah Binti Merican - - - Shirley Goh - - - Liew Hau Seng - - - Velayuthan A/L Tan Kim Song 2,327,250 1,586,9001 0.444% * also key senior management 1 through family members
KEY SENIOR MANAGEMENT’S SHAREHOLDINGS IN IJM PLANTATIONS BERHAD AS AT 30 JUNE 2021
Number of Shares Percentage of Name Direct Indirect Issued Shares Sandra Segran A/L Kenganathan 42,000 - 0.005%
DIRECTORS’ SHAREHOLDINGS IN IJM CORPORATION BERHAD AS AT 30 JUNE 2021
Number of Shares Percentage of Name Direct Indirect Issued Shares Joseph Tek Choon Yee* 578,500 - 0.016% Purushothaman A/L Kumaran* 932,500 - 0.026% Liew Hau Seng 1,243,500 - 0.034% Velayuthan A/L Tan Kim Song - 25,0001 0.001% * also key senior management 1 through family members
KEY SENIOR MANAGEMENT’S SHAREHOLDINGS IN IJM CORPORATION BERHAD AS AT 30 JUNE 2021
Number of Shares Percentage of Name Direct Indirect Issued Shares Sandra Segran A/L Kenganathan 178,900 - 0.005%
DIRECTORS’ INTERESTS UNDER THE EMPLOYEE SHARE OPTION SCHEME OF IJM CORPORATION BERHAD AS AT 30 JUNE 2021
Options over Ordinary Shares under Employee Share Option Scheme Balance Provisional No. of Options Award Name Number of Options + Unexercised First Award on Joseph Tek Choon Yee* - 98,700 24.12.2012 Second Award on Joseph Tek Choon Yee* - 200,500 24.12.2013 Purushothaman A/L Kumaran* - 101,800 Liew Hau Seng - 108,600 Third Award on Joseph Tek Choon Yee* - 143,600 24.12.2014 Liew Hau Seng - 93,000 196 IJM PLANTATIONS BERHAD Analysis of Shareholdings As at 30 June 2021
Options over Ordinary Shares under Employee Share Option Scheme Balance Provisional No. of Options Award Name Number of Options + Unexercised Fifth Award on Purushothaman A/L Kumaran* - 143,000 24.12.2016 Sixth Award on Joseph Tek Choon Yee* - 397,200 30.03.2018 Purushothaman A/L Kumaran* - 433,700 Liew Hau Seng - 431,500 Seventh Award on Joseph Tek Choon Yee* 76,500 163,100 30.03.2019 Purushothaman A/L Kumaran* 70,100 147,500 Liew Hau Seng 70,100 149,600
* also key senior management
KEY SENIOR MANAGEMENT’S INTERESTS UNDER THE EMPLOYEE SHARE OPTION SCHEME OF IJM CORPORATION BERHAD AS AT 30 JUNE 2021
Options over Ordinary Shares under Employee Share Option Scheme Balance Provisional No. of Options Award Name Number of Options + Unexercised Second Award on Sandra Segran A/L Kenganathan - 101,400 24.12.2013 Third Award on Sandra Segran A/L Kenganathan - 37,400 24.12.2014 Sixth Award on Sandra Segran A/L Kenganathan - 113,200 30.03.2018 Seventh Award on Sandra Segran A/L Kenganathan 30,000 66,000 30.03.2019
DIRECTORS’ INTERESTS UNDER THE EMPLOYEE SHARE GRANT PLAN OF IJM CORPORATION BERHAD AS AT 30 JUNE 2021
Balance Provisional Number of Ordinary Shares under Employee Share Grant Plan + Award Name Performance Share Plan ++ Retention Share Plan +++ Seventh Award on Joseph Tek Choon Yee* 58,200 23,300 15.04.2019 Purushothaman A/L Kumaran* 58,200 23,300 Liew Hau Seng 58,200 23,300 * also key senior management
KEY SENIOR MANAGEMENT’S INTERESTS UNDER THE EMPLOYEE SHARE GRANT PLAN OF IJM CORPORATION BERHAD AS AT 30 JUNE 2021
Balance Provisional Number of Ordinary Shares under Employee Share Grant Plan + Award Name Performance Share Plan ++ Retention Share Plan +++ Seventh Award on Sandra Segran A/L Kenganathan 17,200 12,800 15.04.2019
Notes:- + The vesting of the options and/or shares to the eligible Directors/Key Senior Management are subject to the fulfillment of the relevant vesting conditions as at the relevant vesting dates ++ The quantum of shares to be vested may vary from 0% to 200% of the number of shares provisionally awarded +++ The quantum of shares to be vested may vary from 0% to 150% of the number of shares provisionally awarded Except as disclosed above, none of the Directors/Key Senior Management had any interest in the securities of the Company and the related corporations of the Company. NURTURING SUSTAINABILITY 197 ANNUAL REPORT 2021 NOTICE OF ANNUAL GENERAL MEETING
NOTICE IS HEREBY GIVEN that the 36th Annual General Meeting (“AGM”) of IJM PLANTATIONS BERHAD [198501000955 (133399-A)] will be held virtually through live streaming from the broadcast venue at the Multipurpose Hall, 3rd Floor, Wisma IJM, Jalan Yong Shook Lin, 46050 Petaling Jaya, Selangor Darul Ehsan, Malaysia (“Broadcast Venue”) on Wednesday, 25 August 2021, at 10.00 a.m. to transact the following matters:-
1. To receive the audited financial statements for the year ended 31 March 2021 together with the reports of the Directors and Auditors thereon. 2. To re-elect the following Directors who retire in accordance with Clause 92 of the Company’s Constitution and who being eligible, offer themselves for re-election:-
(a) Shirley Goh (Resolution 1) (b) Velayuthan A/L Tan Kim Song (Resolution 2)
Please refer to Note 1 3. To re-elect the following Directors who retire by rotation in accordance with Clause 88 of the Company’s Constitution and who being eligible, offer themselves for re-election:-
(a) Purushothaman A/L Kumaran (Resolution 3) (b) Fatimah Binti Merican (Resolution 4)
Please refer to Note 1 4. To re-appoint PricewaterhouseCoopers PLT as Auditors and to authorise the Directors to fix (Resolution 5) their remuneration. 5. As special business to consider and pass the following resolutions:-
(a) DIRECTORS’ FEES (Resolution 6)
“THAT the Directors’ fees of RM814,000 for the year ended 31 March 2021 be approved to be divided amongst the Directors in such manner as they may determine.”
Please refer to Note 2
(b) DIRECTORS’ MEETING ALLOWANCE (Resolution 7)
“THAT the payment of meeting allowance to the Non-Executive Directors up to an amount of RM70,000 for the period from 26 August 2021 until the next Annual General Meeting be approved.”
Please refer to Note 3
(c) AUTHORITY TO ISSUE SHARES UNDER SECTIONS 75 AND 76 (Resolution 8)
“THAT the Directors be and are hereby authorised, pursuant to Sections 75 and 76 of the Companies Act 2016, to allot and issue not more than 10% of the total number of issued shares of the Company at any time, upon such terms and conditions and for such purposes as the Directors in their absolute discretion deem fit or in pursuance of offers, agreements or options to be made or granted by the Directors while this approval is in force, and that the Directors be and are hereby further authorised to make or grant offers, agreements or options which would or might require shares to be issued after the expiration of the approval hereof.”
Please refer to Note 4
By Order of the Board
NG YOKE KIAN Company Secretary CCM PC No. 202008000554 MAICSA 7018150
Petaling Jaya 27 July 2021 198 IJM PLANTATIONS BERHAD NOTICE OF ANNUAL GENERAL MEETING
IMPORTANT NOTICE
A. VIRTUAL MEETING
In view of the COVID-19 pandemic and as part of the Company’s precautionary measures, the 36th AGM of the Company will be held virtually through live streaming and online remote voting via the Remote Participation and Voting (“RPV”) Facilities provided by Tricor Investor & Issuing House Services Sdn. Bhd. (“Tricor”) which are available on its TIIH Online website at https://tiih.online. Please follow the procedures provided in the Administrative Guide for the 36th AGM in order to register, participate and vote remotely via the RPV Facilities.
The Broadcast Venue is strictly for the purpose of complying with Section 327(2) of the Companies Act 2016 which requires the Chairperson of the meeting to be present at the main venue of the meeting.
No members or proxies shall be physically present at the Broadcast Venue on the day of the meeting.
B. APPOINTMENT OF PROXY AND ENTITLEMENT OF ATTENDANCE
(i) every member, including authorised nominee and exempt authorised nominee which holds securities for multiple beneficial owners in one (1) securities account (Omnibus Account), is entitled to appoint another person as his proxy and such proxy need not be a member;
(ii) a member who appoints a proxy must duly execute the Form of Proxy, and if more than one (1) proxy is appointed, the number of shares to be represented by each proxy must be clearly indicated;
(iii) a corporate member who appoints a proxy must execute the Form of Proxy under seal or the hand of its officer or attorney duly authorised;
(iv) only members whose names appear in the Record of Depositors and/or Register of Members as at 18 August 2021 will be entitled to attend and vote at the meeting;
(v) the duly executed Form of Proxy may be deposited in a hard copy form or by electronic means in the following manner before 10.00 a.m. on 24 August 2021:-
(a) In hard copy form submit to the Share Registrar of the Company, Tricor at Unit 32-01, Level 32, Tower A, Vertical Business Suite, Avenue 3, Bangsar South, No. 8, Jalan Kerinchi, 59200 Kuala Lumpur, Malaysia or its Customer Service Counter at Unit G-3, Ground Floor, Vertical Podium, Avenue 3, Bangsar South, No. 8, Jalan Kerinchi, 59200 Kuala Lumpur, Malaysia; OR
(b) By electronic form lodge via TIIH Online website at https://tiih.online by following the procedures provided in the Administrative Guide for the 36th AGM; and
(vi) a member who has appointed a proxy or authorised representative to attend and vote at the 36th AGM via RPV must request his/her proxy or authorised representative to register himself/herself for RPV at TIIH Online website at https://tiih.online. Please follow the procedures in the Administrative Guide for the 36th AGM.
C. The Annual Report, Form of Proxy and Administrative Guide are available for viewing and/or downloading at www.ijmplantations.com/agm.php. NURTURING SUSTAINABILITY 199 ANNUAL REPORT 2021
EXPLANATORY NOTES ON ORDINARY/SPECIAL BUSINESS
1. RE-ELECTION OF DIRECTORS
The performance of each Director subject to re-election had been assessed through the Board annual evaluation. The Nomination & Remuneration Committee and the Board are satisfied with the performance and effectiveness of the Directors.
Shirley Goh, Velayuthan A/L Tan Kim Song, Purushothaman A/L Kumaran and Fatimah Binti Merican being eligible, have offered themselves for re-election at this AGM.
The profiles of the Directors who are subject for re-election are set out on pages 10 to 14 of the Annual Report 2021.
2. DIRECTORS’ FEES
The Resolution 6, if approved, will authorise the payment of Directors’ fees pursuant to Clause 95 of the Constitution of the Company.
3. DIRECTORS’ MEETING ALLOWANCE
The Resolution 7, if approved, will authorise the payment of meeting allowance to the Non-Executive Directors up to an amount of RM70,000 for the period from 26 August 2021 until the next AGM in year 2022.
Presently, all the Non-Executive Directors of the Company do not receive any benefits from the Company and its subsidiaries, other than Directors’ fees and the meeting allowance of RM1,000 per person for each meeting attended. The estimated Directors’ meeting allowance payable of RM70,000 is based on the number of scheduled and unscheduled meetings (when necessary) for the Board and Board Committees to be held for the period from 26 August 2021 until the next AGM.
4. AUTHORITY TO ISSUE SHARES UNDER SECTIONS 75 AND 76
The Resolution 8, if approved, will empower the Directors to issue up to 10% of the total number of issued shares of the Company, for purposes of funding future investment projects, working capital, acquisitions and/or so forth. The approval is a renewal of general mandate and is sought to provide flexibility and avoid any delay and cost in convening a general meeting for such issuance of shares for fund raising activities, including placement of shares. The authorisation, unless revoked or varied by the Company at a general meeting, will expire at the next AGM. At this juncture, there is no decision to issue new shares. Should there be a decision to issue new shares after the authorisation is sought, the Company will make an announcement of the actual purpose and utilisation of proceeds arising from such issuance of shares. This page is intentionally left blank. FORM OF PROXY
I/We ______
NRIC/Passport/Company No.: ______Mobile Phone No.: ______
CDS Account No.: ______Number of Shares Held: ______
Address: ______
______being a member of IJM PLANTATIONS BERHAD [198501000955 (133399-A)], hereby appoint:-
(1) Name of proxy: ______NRIC No.: ______
Address: ______
______Number of Shares Represented: ______
(2) Name of proxy: ______NRIC No.: ______
Address: ______
______Number of Shares Represented: ______or failing him/her, the Chairman of the meeting, as my/our proxy to vote for me/us and on my/our behalf at the 36th Annual General Meeting (“AGM”) of IJM PLANTATIONS BERHAD to be held virtually through live streaming from the broadcast venue at the Multipurpose Hall, 3rd Floor, Wisma IJM, Jalan Yong Shook Lin, 46050 Petaling Jaya, Selangor Darul Ehsan, Malaysia on Wednesday, 25 August 2021, at 10.00 a.m., and at any adjournment thereof, in the manner indicated below:-
No. Resolutions For Against 1. To re-elect Shirley Goh as Director 2. To re-elect Velayuthan A/L Tan Kim Song as Director 3. To re-elect Purushothaman A/L Kumaran as Director 4. To re-elect Fatimah Binti Merican as Director 5. To re-appoint PricewaterhouseCoopers PLT as Auditors and to authorise the Directors to fix their remuneration 6. To approve the payment of Directors’ fees of RM814,000 7. To approve the payment of Directors’ meeting allowance up to an amount of RM70,000 8. To authorise the issuance of up to 10% of the total number of issued shares of the Company
Please indicate with “X” how you wish your vote to be cast. In the absence of specific instruction, your Proxy will vote or abstain as he/she thinks fit.
Signed (and sealed) this ______day of ______2021
Signature(s) : ______
Notes:- (i) every member, including authorised nominee and exempt authorised nominee which holds securities for multiple beneficial owners in one (1) securities account (Omnibus Account), is entitled to appoint another person as his proxy and such proxy need not be a member; (ii) a member who appoints a proxy must duly execute the Form of Proxy, and if more than one (1) proxy is appointed, the number of shares to be represented by each proxy must be clearly indicated; (iii) a corporate member who appoints a proxy must execute the Form of Proxy under seal or the hand of its officer or attorney duly authorised; (iv) only members whose names appear in the Record of Depositors and/or Register of Members as at 18 August 2021 will be entitled to attend and vote at the meeting; (v) the duly executed Form of Proxy may be deposited in a hard copy form or by electronic means in the following manner before 10.00 a.m. on 24 August 2021:- (a) In hard copy form submit to the Share Registrar of the Company, Tricor Investor & Issuing House Services Sdn. Bhd. (“Tricor”) at Unit 32-01, Level 32, Tower A, Vertical Business Suite, Avenue 3, Bangsar South, No. 8, Jalan Kerinchi, 59200 Kuala Lumpur, Malaysia or its Customer Service Counter at Unit G-3, Ground Floor, Vertical Podium, Avenue 3, Bangsar South, No. 8, Jalan Kerinchi, 59200 Kuala Lumpur, Malaysia; OR (b) By electronic form lodge via TIIH Online website at https://tiih.online by following the procedures provided in the Administrative Guide for the 36th AGM (vi) a member who has appointed a proxy or authorised representative to attend and vote at the 36th AGM via the Remote Participation and Voting (“RPV”) Facilities provided by Tricor must request his/her proxy or authorised representative to register himself/herself for RPV at TIIH Online website at https://tiih.online. Please follow the procedures in the Administrative Guide for the 36th AGM. 2. Fold this flap to seal
STAMP
The Share Registrar Tricor Investor & Issuing House Services Sdn. Bhd. Registration No. 197101000970 (11324-H) Unit 32-01, Level 32, Tower A Vertical Business Suite Avenue 3, Bangsar South No. 8, Jalan Kerinchi 59200 Kuala Lumpur
1. Fold here Sabang Jetty and Bulking Facilities