Annual Report 2010 A

“In business, I believe in going step by step, slowly but surely. To seek out opportunities with good potential and build on them.” - The late Tan Sri Lim Goh Tong, Founder of Genting Group THE GENTING STORY GENTING PLANTATIONS BERHAD The multinational corporation known as the Genting Group Genting Plantations, a 54.6%-owned subsidiary of Genting of companies began from humble beginnings in 1965. A Berhad, commenced operations in 1980. It has a landbank of contractor who spoke no English, but only Hokkien, Mandarin, about 66,000 hectares in Malaysia and is developing more than Malay and Cantonese, the late Tan Sri Lim Goh Tong built his 85,000 hectares in Indonesia through joint ventures. It owns 6 oil business empire with simple principles: humility, discipline and mills, with a total milling capacity of 265 metric tonnes per hour. conviction. Reputed as one of the lowest cost palm oil producers, Genting The traditional Chinese entrepreneur was ahead of his time Plantations is one of the early members of the Roundtable on in many ways. He adopted environmental measures, built an Sustainable Palm Oil (RSPO). integrated resort at Genting Highlands and executed his own succession plan in 2003, when he handed the chairmanship of Genting Plantations has also diversifi ed into property the Genting Group to his son Tan Sri Lim Kok Thay. development to unlock the value of its strategically-located landbank and has invested signifi cantly in biotechnology in a Tan Sri Lim Kok Thay has since taken the company to greater major effort to apply genomics to increase crop productivity heights with a successful overseas strategy. The Genting Group and sustainability. has won international awards for its management leadership, fi nancial prudence and sound investment discipline. It is also a corporation that values its employees and gives back to the communities where it operates in. 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/ 51 Financial Statements 10 2010 - A Year of Excitement 126 Statement on Directors’ Responsibility 12 Board of Directors 126 Statutory Declaration 14 Directors’ Profile 127 Independent Auditors’ Report 17 Management & Corporate Information 129 Five-Year Summary 18 Corporate Diary 131 List of Group Properties 19 Financial Highlights 132 Group Offices and Operating Units 20 Location of Group Properties 134 Analysis of Shareholdings 22 Year in Review 137 Notice of Annual General Meeting 28 Sustainability Report 140 Statement Accompanying Notice of Annual General Meeting 36 Corporate Governance Form of Proxy 40 Audit Committee Report 43 Statement on Internal Control 45 Directors’ Report and Statement by Directors CHAIRMAN’S STATEMENT “Our Group delivered a commendable set of fi nancial results, with revenue up 31% from the previous year at RM988.6 million and pre-tax profi t rising 46% to RM439.7 million.” Dear Fellow Shareholders, 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 2010. In the aftermath of one of the most severe recessions in modern times, the year 2010 was a defi ning period as the world economy endeavoured to get fi rmly back on its feet. As it turned out, the global economic environment indeed improved considerably. The recovery, however, was uneven. For advanced economies, the pace of growth remained mostly subdued, with diffi culties like Europe’s sovereign debt crisis serving as a chastening reminder of the still-vulnerable state of their fi nancial systems. The fragility of the recovery in the developed Western world meant that the onus fell squarely on the developing Asian economies to pick up the slack. Asia, in this regard, didn’t disappoint. The region emerged as the beacon of growth in 2010, spurred by brisk consumer spending and trade fl ows. Malaysia was no exception, registering solid expansion for the year. As one of Malaysia’s leading foreign exchange earners, the palm oil industry undoubtedly contributed in no small measure to the country’s sturdy economic rebound. On the whole, 2010 proved to be a good year for the plantation sector. Inevitably, erratic weather conditions and cyclical biological factors had a profound infl uence on crop productivity. Yet, this was more than outweighed by a rally in the price of crude palm oil (“CPO”), primarily during the second half of the year. Buoyant demand for palm oil amid tight supply and a liquidity-driven uptrend in global commodity markets lifted CPO prices in late-2010 to levels not seen since the 2008 bull-run. The positive undertone for CPO prices gave impetus to our Group’s performance in 2010. An increase in our Group’s crop production for the year – in stark contrast to a contraction experienced by the overall Malaysian palm oil industry – provided a further boost. Accordingly, our Group delivered a commendable set of fi nancial results, with revenue up 31% from the previous year at RM988.6 million and pre-tax profi t rising 46% to RM439.7 million. The Plantation Division made a strong comeback from the preceding year’s setback to regain its upward momentum. While crop output shrank at the broader national level for a second consecutive year, our Group bucked the trend, registering fresh fruit bunches production of 1.20 million metric tonnes in 2010 compared with 1.16 million metric tonnes in 2009. The average achieved prices for CPO and palm kernel 2 l GENTING PLANTATIONS BERHAD CHAIRMAN’S STATEMENT were higher at RM2,738 per metric tonne and RM1,754 per in ACGT. Crucially, it gives ACGT full control of all intellectual metric tonne respectively, up from RM2,236 and RM1,063 in property and thus, greater flexibility in shaping its licensing the previous year. On the back of these factors, the Plantation model and commercialisation programme. Complementary to Division reported a 33% increase in annual revenue to RM900.2 the exercise, our Company also entered into a preferred stock million and a 43% rise in adjusted earnings before interest, tax, subscription agreement to increase its economic interest in SGI depreciation and amortisation (“EBITDA”) to RM441.1 million to 5.2% from 4.1%. The investment represents an opportunity in 2010. for our Group to benefit from the potential commercialisation of SGI’s esteemed research advancements and to participate in Having navigated the adversities wrought by the global the emerging global renewable energy sector. economic crisis, the Property Division experienced more favourable operating conditions in 2010 as a revival in market As part of our pioneering efforts to reshape the future of oil palm sentiment and attractive home ownership financing schemes productivity in the country, we also embarked on important supported a turnaround in the country’s real estate sector. The collaborations during the year, including the signing of a improved investor interest translated into higher property sales Memorandum of Agreement with the Department of Agriculture, for our Group, led by the development projects in Johor, namely Sabah on 27 July 2010 for a marker-assisted oil palm breeding Genting Indahpura and Genting Pura Kencana. The Property programme to develop superior planting materials. Division registered revenue and adjusted EBITDA of RM88.3 million and RM12.2 million respectively in 2010, up 10% and In a momentous event for not only Malaysia, but also Southeast 49% from a year earlier. Asia, our Group and our joint venture partner Simon Property Group held a groundbreaking ceremony on 5 August 2010 Driven by an unwavering confidence in the power of science to to mark the commencement of the construction of Johor revolutionise agricultural productivity, the Biotechnology Division Premium Outlets, an upscale outlet shopping centre that will pressed on with its industry-leading research and development be the first of its kind in the region. The centre, strategically activities and achieved important milestones during the year. located within the Genting Indahpura development in Kulaijaya, is set to open its doors in the second half of 2011. That the In demonstration of the dynamism required to be a leading project has been highlighted by the government as among the corporation, we maintained a proactive approach by instituting key components of the Economic Transformation Programme in 2010 several strategic initiatives that are vital for our Group’s (“ETP”) is indeed a resounding testament to the promise the long-term progress. Johor Premium Outlets holds to become the iconic landmark that puts Malaysia on the world’s retail tourism map. During the year, a new joint venture was formed with the Sepanjang Group for the development of approximately Sustainability must not be merely an afterthought, but be integral 17,500 hectares of agricultural land into oil palm plantation to the formulation and execution of corporate strategies. This in Kecamatan Toba, Kabupaten Sanggau, Kalimantan Barat. fundamental tenet lies at the heart of our business conduct. The joint venture agreement was entered into on 5 February Consistent with our commitment to responsible stewardship, 2010 and the subscription of shares representing 70% of PT we continued in 2010 to take a conscientious approach in all Surya Agro Palma, the joint venture company, was completed our activities to ensure the pursuit of business objectives is in on 17 December 2010.

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