about GENTING PLANTATIONS 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. OUR CORE VALUES • HARDWORK • HONESTY • HARMONY • LOYALTY • COMPASSION CORPORATE PROFILE Genting Plantations, a subsidiary of Genting Berhad, commenced operations in 1980. It has a landbank of about 64,600 hectares in Malaysia and some 178,900 hectares (including the Plasma schemes) in Indonesia. It owns seven oil mills in Malaysia and five in Indonesia, with a total milling capacity of 665 metric tonnes per hour. In addition, our Group has ventured into the manufacturing of downstream palm-based products. Genting Plantations has also diversified into property development to unlock the value of its strategically- located landbank and has invested significantly in biotechnology in a major effort to apply genomics- based solutions to increase crop productivity and sustainability. www.gentingplantations.com CONTENTS FINANCIAL STATEMENTS: 02 Chairman’s Statement/ 72 Statements of Profit or Loss Penyata Pengerusi/ 主席文告 73 Statements of Comprehensive Income 10 Board of Directors 74 Statements of Financial Position 12 Directors’ Profile 76 Statements of Changes in Equity 21 Management & Corporate Information 80 Statements of Cash Flows 23 Corporate Diary 84 Notes to the Financial Statements 24 Financial Highlights 152 Statement on Directors’ Responsibility 25 Five-Year Summary 152 Statutory Declaration 27 List of Group Properties 153 Independent Auditors’ Report 28 Location of Group Properties OUR CORE VALUES 157 Analysis of Shareholdings 30 Management’s Discussion and Analysis • HARDWORK • HONESTY • HARMONY • LOYALTY • COMPASSION of Business Operations and 163 Notice of Annual General Meeting Financial Performance 168 Statement Accompanying Notice of 32 Review of Operations Annual General Meeting 38 Sustainability Statement Form of Proxy 40 Highlights of Group’s Key Group Offices and Operating Units Sustainability Performance 42 Corporate Governance Overview Statement 54 Audit Committee Report 58 Statement on Risk Management and Internal Control 62 Directors’ Report 02 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 (“the Company”) and its subsidiaries (“our Group”) for the year ended 31 December 2020. FINANCIAL OVERVIEW 2020 was an unprecedented year fraught with uncertainty and volatility as the world battles the widespread pandemic caused by Coronavirus Disease 2019 (“COVID-19”), which resulted in a slowdown in many economies and industries globally. In Malaysia, the domestic economy was severely affected by a nationwide Movement Control Order (“MCO”) and the necessary measures taken to contain the COVID-19 outbreak. The MCO had temporarily disrupted some of our Group’s operations but thankfully, this was quickly lifted for the upstream and downstream operations of the palm oil industry, which is regarded as an essential sector. The uncertainties in the global economy brought on by the pandemic led to significant volatility in crude palm oil (“CPO”) prices over the course of the year. CPO prices had started the year strongly at above the RM3,000 per metric tonne (“mt”) mark but soon began experiencing a pullback as demand uncertainties surfaced due to the pandemic in major importing countries. After falling to a low of RM2,021 per mt in early May 2020, CPO prices started recovering swiftly during the second half of 2020 to end the year on a high note at RM3,788 per mt, hitting levels not seen since 2011. This was mainly aided by the tight supply situation of palm oil and its substitutes as well as the recovery in demand from major consuming countries, especially China and India, following the reopening of global economic sectors. Ultimately, the market dynamics that prevailed in 2020 resulted in palm product selling prices averaging for the full year at considerably higher levels compared to the previous year amid a decline in Malaysian palm oil stockpiles. Our Group’s average CPO price achieved for the year rose 23% to RM2,511 per mt from RM2,048 per mt in 2019. Likewise, the average palm kernel price achieved was 29% higher at RM1,519 per mt compared to RM1,179 per mt in the previous year. The positive undertone for CPO prices proved to be a decisive factor for our Group’s financial performance in 2020, where we reported a 10% increase in revenue to RM2.5 billion for the year while pre-tax profit rose 74% to RM323.2 million. CHAIRMAN’S STATEMENT 03 OPERATIONAL PERFORMANCE opening of new luxury brand stores such as Burberry, Fendi and Steve Madden. For our mainstay Plantation Division, total fresh fruit bunch (“FFB”) production for 2020 saw a decline of 5% year- Meanwhile, our Biotechnology Division continues to strive on-year, mainly owing to the lagged effect of dry weather in delivering value through its genomics research and conditions in 2019. Consequently, the Group’s FFB yield development (“R&D”) of high yielding planting materials also declined to 17.9 mt per hectare compared to the 18.5 and microbial solutions. mt per hectare recorded in the previous year. DIVIDENDS In December 2020, the Group expanded our processing capacities following the commissioning of our fifth palm oil Our Group recognises that the sharing of financial success mill in Indonesia. Cemerlang Oil Mill, which has a capacity with shareholders through the distribution of dividends of 60 mt per hour, will cater to the continuously growing in the immediate-term is as important as the retention of harvest at our Group’s estates in Kalimantan Barat. sufficient capital to support long-term growth objectives. In this regard, the Board of Directors has recommended 2020 saw our Group’s Downstream Manufacturing Division a final single-tier dividend of 4.0 sen per ordinary share operating in a tough environment for the greater part of for the 2020 financial year. The Board has also declared a the year, where the onslaught of the COVID-19 pandemic special single-tier dividend of 11.0 sen per ordinary share. in the first half of 2020 had devastating effects on demand If approved by shareholders at the coming Annual General in key importing countries. The biodiesel operation was Meeting, the final dividend would take the total dividend further besieged by the unfavourable palm oil–gas oil (including the interim dividend of 6.0 sen) for 2020 to spread throughout the year, which discouraged the export 21.0 sen per ordinary share, representing a payout ratio demand for both discretionary and mandatory blending. of 74%. In comparison, the total dividend paid out for the These factors led to lower sales, and correspondingly lower 2019 financial year amounted to 13.0 sen per ordinary capacity utilisation during the year for both the refinery share, equivalent to a payout ratio of 82%. and biodiesel plants. LOOKING FORWARD Having to contend with lacklustre demand since 2019, the property market in Malaysia was dealt with yet another As the threat of the COVID-19 pandemic continued to rage blow in 2020 as the outbreak of the pandemic led to an on particularly on the home front, we maintain a cautious even more cautious investor sentiment. outlook for 2021. Having seen the disruptions brought on by the pandemic for most part of the previous year, the Given the uncertainties present in the property market deployment of vaccine across the world is much welcomed over the course of the year, the Group’s Property Division and will provide a shot in the arm to many economies and timed its new launches towards the latter part of the year industries in 2021. However, it remains to be seen whether and this included 278 units of Rumah Mampu Biaya Johor the global economy will be able to return to pre-pandemic priced at RM150,000 per unit. The overall response has levels this year. been encouraging despite the current climate with over 65% sold or booked as at end-December 2020. Looking ahead, fundamentals are supportive of strong CPO prices in the near term but this will likely moderate in the Our Group’s Property Division also managed to overcome second half of 2021, as production is expected to recover the unforeseen delays in its construction works caused with the normalisation of weather conditions. by the MCO and had successfully completed 442 units of residential properties in Genting Indahpura and Genting With that said, the long-run outlook for the palm oil industry Pura Kencana ahead of its scheduled time frame. remains positive given palm oil’s unrivalled versatility as a superior resource for both food and non-food applications, The performance of the Group’s Premium Outlets® was while the continuous growth in global population and adversely affected by the various phases of MCO which household incomes will only increase demand for this were implemented by the Malaysian government to combat exceptional resource. the pandemic in 2020. Despite the very challenging retail market, Premium Outlets® managed to maintain near- These demand drivers coupled with the oil palm’s full occupancy and brought in more luxury brand names. unmatched qualities as the most productive crop, yielding Genting Highlands Premium Outlets® marked its third year the most affordable and versatile edible oil, point to a of operations with new stores opening such as Ball Watch promising future for palm oil as the sustainable solution to and Sephora, which for the latter is the first outlet store the world’s ever-growing food and fuel needs.