Annual Report 2011
Total Page：16
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www.gentingplantations.com OUR VISION We strive: To become a leader in the plantation industry. To embark aggressively onto value-added downstream manufacturing activities which are synergistic to our core business. To enhance return on the company land bank through property development activities. To adopt a market-driven and customer-oriented approach, with emphasis on product quality and diversity. To strengthen our competitive position by adopting new technologies and innovations. As people are the key to achieving the company’s vision, we are committed to develop our employees and create a highly motivating and rewarding environment for them. CONTENTS 2 Chairman’s Statement/ Penyata Pengerusi/ 10 Board of Directors 12 Directors’ Profile 15 Management & Corporate Information 16 Corporate Diary 17 Financial Highlights 18 Location of Group Properties 20 Management’s Discussion and Analysis 22 Operational Review 27 Sustainability Report 36 Corporate Governance 40 Audit Committee Report 43 Statement on Internal Control 45 Directors’ Report and Statement by Directors Financial Statements 51 Income Statements 52 Statements of Comprehensive Income 53 Consolidated Statement of Financial Position 55 Statement of Financial Position 56 Statements of Changes in Equity 60 Statements of Cash Flows 65 Notes to the Financial Statements 122 Statement on Directors’ Responsibility 122 Statutory Declaration 123 Independent Auditors’ Report 125 Five-Year Summary 127 List of Group Properties 128 Group Offices and Operating Units 130 Analysis of Shareholdings 133 Notice of Annual General Meeting 136 Statement Accompanying Notice of Annual General Meeting Form of Proxy CHAIRMAN’S STATEMENT Dear Shareholders, On behalf of the Board of Directors, I am pleased to present the Annual Report and Audited Financial Statements of Genting Plantations Berhad (“our Company”) and its subsidiaries (“our Group”) for the year ended 31 December 2011. For Genting Plantations Berhad, 2011 was a particularly memorable year as it marked our Group’s best ever fi nancial performance. Financial market turbulence, increased fi scal uncertainties, uneven economic growth trends and socio-political unrest -- these were some of the dominant themes that shaped the global economy in 2011. In the face of the uncertain economic conditions, the palm oil industry demonstrated resilience in 2011. Sustained growth in demand and spillover strength from related agricultural and energy commodities helped ensure that palm oil product prices stayed fi rm throughout the year to average considerably above the previous year’s level. For Genting Plantations Berhad, 2011 was a particularly memorable year as it marked our Group’s best ever fi nancial performance. Revenue reached RM1.34 billion, up 35% from the previous year, while pre-tax profi t rose 37% to RM601.3 million. The record results were underpinned not only by the favourable palm product prices, but more importantly, by strong production growth across our Group’s Peninsular Malaysia and Sabah estates. What is all the more pleasing to note is that our Group’s commendable performance came amid broadly challenging global economic conditions. As the leading earnings contributor, the Plantation Division kept up its forward momentum in 2011, achieving marked increases of 33% and 38% year-on-year in revenue and adjusted earnings before interest, tax, depreciation (“EBITDA”) to RM1.20 billion and RM606.9 million respectively. Production of fresh fruit bunches totalled 1.37 million metric tonnes, a sizeable 15% improvement over the previous year. The rise in production owes as much to our Group’s own productivity- enhancing initiatives as it does to the biological upturn in yields experienced during the year, especially in the Sabah region, as well as the growing contribution from our Indonesian estates. Complementing the gains in crop output, average achieved prices of palm products also strengthened, with CPO at RM3,240 per metric tonne and palm kernel at RM2,235 per metric tonne compared with RM2,738 and RM1,754 respectively in the previous year. 2011 was similarly a positive period for the Property Division. The stream of negative newsfl ow out of the advanced economies did little to diminish investors’ appreciation for attractively-valued, well- located property investment opportunities. The country’s prevailing accommodative interest rate environment coupled with the appealing 2 l GENTING PLANTATIONS BERHAD ANNUAL REPORT 2011 property offerings of our Group formed the building blocks for the second half 2011, while over at Kabupaten Kapuas, a further pick-up in property sales during the year. Yet again, Kalimantan Tengah, another important milestone was befi tting of its status as our Group’s fl agship development, reached as harvesting began in late 2011. Genting Indahpura in Kulaijaya, Johor was the standout sales contributor. Overall, the Property Division registered revenue Powering ahead with our growth objectives in Indonesia, our of RM136.5 million and adjusted EBITDA of RM22.1 million, Group entered on 13 April 2012 into a Sale and Purchase 55% and 81% higher respectively than in the previous year. and Subscription Agreement with Global Agrindo Investment Company Limited and Global Agripalm Investment Holdings The Biotechnology Division continued throughout 2011 to Pte Ltd for the purpose of establishing a joint venture for carry out its research and development activities, staying well the development and cultivation of approximately 74,000 on time and on track towards the eventual commercialisation hectares of oil palm plantation in Kabupaten Kapuas of scientifi c innovations that will potentially revolutionise crop and Barito Selatan, Kalimantan Tengah. The proposed productivity and sustainability. joint venture, which will substantially enlarge our Group’s landbank, is expected to be completed by the end of the We see our Group’s achievements thus far only as added second quarter. motivation for us to redouble efforts and reach for even greater heights. Hence, with sights set fi rmly on future Our Group recognises that the sharing of fi nancial success progress, our Group unveiled several signifi cant corporate with shareholders through the distribution of dividends in the initiatives and developments in 2011. immediate-term is as important as the retention of suffi cient capital to support long-term growth objectives. Striking the On 18 May 2011, the acquisition of the entire equity interest appropriate balance between the two considerations is in GBD Holdings Ltd (“GBD”) for a total consideration of certainly one of the hallmarks of a business that can provide USD13.3 million was announced, signalling our Group’s sustainable returns to all shareholders. intention to explore a potential venture into the palm oil downstream segment. GBD principally owns a well- In this regard, the Board of Directors has recommended a fi nal maintained downstream manufacturing plant strategically- dividend of 5.75 sen per ordinary share of 50 sen, less 25% located in the Palm Oil Industrial Cluster in Lahad Datu, tax, for the fi nancial year ended 31 December 2011. This, Sabah. Having seized on the rare opportunity to obtain combined with the special dividend of 6.25 sen per ordinary a quality asset at a very reasonable price, our Group is share paid on 27 March 2012 and the interim dividend of 4.25 promptly working towards putting it to good commercial use sen per ordinary share paid on 18 October 2011, takes the to create added value. total dividends for the 2011 fi nancial year to 16.25 sen. In an occasion that created a buzz of excitement at home and Looking at the analyses of the experts, 2012 appears to be a abroad, Johor Premium Outlets, our Group’s joint venture year that could be fraught with volatility and potential pitfalls with U.S. real estate giant Simon Property Group, opened for for the global economy. business with a fl ourish in December 2011. Located within Genting Indahpura, Johor Premium Outlets celebrated its With no quick fi x in sight to Europe’s fi scal quandary and grand opening on 11 December 2011, offi ciated by the Prime the U.S. economy yet to fully shed its vulnerabilities, the Minister of Malaysia. The fi rst such upscale outlets centre of its threat of a severe slowdown in growth spreading to every kind in Southeast Asia stands in good stead to establish itself part of the globe is not being easily dismissed by pundits. As as a popular destination for discerning shoppers in the region. it stands, most forecasts are calling for at least some degree of moderation in the rate of global economic expansion in Meanwhile, the expansion of the upstream plantation 2012. Catastrophic natural disasters and the risk of more business continued in earnest in 2011 as our Group’s political upheaval in the oil-producing region of the Middle footprint in Indonesia was further enlarged. On 20 December East and North Africa are also being cited as potential black 2011, the subscription of shares representing 70% of PT swan events that would only serve to complicate the world’s Citra Sawit Cemerlang (“PT CSC”) was completed, resulting economic prospects even further. in PT CSC becoming our Company’s indirect subsidiary. With the completion of the subscription, our Group has, The dark clouds that loom over the horizon suggest that thus, secured an area measuring 15,119 hectares under many businesses may be in for a bumpy ride ahead in 2012. Location Permit in Kabupaten Ketapang, Kalimantan Barat Yet, if recent history is any indication, then there is justifi cation for oil palm cultivation. The addition of the new area is timely for the palm oil industry to remain upbeat in weathering as it comes just as our Group’s other joint venture plantation any impending storms. That is because data have shown development projects in Indonesia are hitting their stride that even during the 2008/2009 global fi nancial crisis that on all fronts. This includes the site in Kabupaten Sanggau, dragged many nations into recession, worldwide palm oil Kalimantan Barat, where planting works commenced in consumption did not stop growing.