We strive towards being recognized as second to none within the plantation industry, producing high quality products, always focusing on the sustainability of our practices and our employees’ welfare whilst attaining acceptable returns for our shareholders. (Company No. 240-A) Contents Corporate Information 2 Executive Committee and Senior Management 3 Group Structure 4 Financial Highlights 5 Notice of Annual General Meeting 6 - 11 Profile of Directors 12 - 20 Chairman's Statement 22 - 38 Corporate Social Responsibility 40 - 87 Statement on Corporate Governance 88 - 96 Statement on Directors' Responsibility 97 Statement on Internal Control 98 - 99 Audit Committee Report 100 - 102 Additional Disclosures 103 Financial Statements 106 - 190 Shareholders Information 191 - 192 Comparative Statistics 193 All Properties of the Group 194 Group's Plantation Properties 195 Front Cover: Oil Palm, the highest oil yielding crop in the world. UNITED PLANTATIONS BERHAD - ANNUAL REPORT 2011 1 Corporate Information Country of Incorporation Malaysia Board of Directors Ybhg. Tan Sri Datuk Dr. Johari bin Mat (Chairman, Independent, Non-Executive) Mr. Ho Dua Tiam (Senior Executive Director (CEO)) Mr. G. Peter Selvarajah (Independent, Non-Executive) Ybhg. Dato’ Carl Bek-Nielsen (Executive) Mr. Ahmad Riza Basir (Independent, Non-Executive) Y. Hormat Dato’ Jeremy Derek Campbell Diamond (Independent, Non-Executive) Mr. Martin Bek-Nielsen (Executive) Mr. Mohamad Nasir bin Ab. Latif (Non-Independent, Non-Executive) Mr. Brian Bech Nielsen (Non-Independent, Non-Executive) Company Secretary Mr. A. Ganapathy Registered Office and Jendarata Estate, 36009 Teluk Intan, Perak Darul Ridzuan, Malaysia Principal Share Phone : +605-6411411 Register Fax : +605-6411876 E-mail : [email protected] Website : www.unitedplantations.com Copenhagen Office and 3rd Floor, 49, H.C. Andersens Boulevard, DK-1553, Copenhagen V, Denmark Branch Register Phone : +45 33 93 33 30 Fax : +45 33 93 33 31 E-mail : [email protected] Auditors Ernst & Young Principal Bankers Malaysia HSBC Bank Malaysia Berhad Maybank Berhad Standard Chartered Bank Malaysia Berhad Denmark Danske Bank A/S Stock Exchange Listings Malaysia Bursa Malaysia Securities Berhad (Bursa Malaysia) Website : www.bursamalaysia.com Denmark NASDAQ OMX Copenhagen A/S Website : www.nasdaqomxnordic.com 2 UNITED PLANTATIONS BERHAD - ANNUAL REPORT 2011 Executive Committee and Senior Management Ho Dua Tiam Senior Executive Director (CEO) & Inspector General, Estates Dato’ Carl Bek-Nielsen Martin Bek-Nielsen Vice Chairman & Executive Director (Corporate Affairs) Executive Director (Finance & Marketing) Director In-Charge, Unitata Berhad Commercial Director, Unitata Berhad Senior Executive Staff Finance & Corporate R. Nadarajan A. Ganapathy Ng Eng Ho Cheriachangel Mathews Group Financial Advisor Company Secretary / Group Financial Controller Group Manager Human Resources & Sr Group Manager (Finance) Environment, Safety & Health Ibu Dewi Anita Suyatman Azero bin Mohamed Anuar S. Chandra Mohan Erwin Khor Siew Yan Shirley Selvasingam Sr Manager, Legal & Corp Affairs Sr Accountant Manager, Internal Audit Financial Controller, PT SSS Manager, IT Systems President Director, PT SSS2 Plantations Loh Hang Pai, A.M.P. Edward Rajkumar Daniels C. Mohan Das Geoffrey Cooper Estates Director President Director, PT SSS1 Group Manager, Jendarata Estate Group Manager, UIE N. Sundian Nek Wahid bin Nek Harun Naslah bin Jajuli Muhammad Ratha bin Abdullah Sr General Manager, Sr Manager, Sr Manager, Sr Manager, PT SSS1 Sungei Erong Estate Ulu Basir Estate Estate 1, UIE Ridzuan Bin Md. Isa Tan Lay Guan Amrik Singh a/l Dewan Singh Azhar bin Yazid Manager, Sr Manager, Plantation Manager, Manager, Sungei Bernam Estate Lima Blas Estate PT SSS Changkat Mentri Estate Chantharavarnam Sathiam Gerald Anthony Kolandasamy Jason Joseph Siva Subramaniam Ragavan Manager, Manager, Manager, Manager, Ulu Bernam Estate Sungei Chawang Estate Kuala Bernam Estate Seri Pelangi Estate Research Dr. Xaviar Arulandoo Director of Research Ho Shui Hing Musa bin Bilal Lim Chin Ching Research Controller Sr Manager, Plant Breeding Sr Research Officer Engineering P. Seker Vincent Williams Ir V. Renganathan Group Engineer, Vice President, Engineering, Sr Resident Engineer, Ulu Bernam PT SSS1 UIE Lim Chin Yen K.T. Somasegaran Ir P. Rajasegaran Sr Resident Engineer, Sr Resident Engineer, Sr Resident Engineer, Lima Blas Ulu Basir Jendarata/Unitata G. Padmanathan Resident Engineer, Seri Pelangi Palm Oil Refining and Others Dr. C.T. Premakumari Nair, Kerk Choon Keng Jughdev Singh Dhillon Chief Research & Quality Controller, Group Manager, Commerce Sr Plant Manager, Unitata Berhad Unitata Berhad Unitata Berhad Soo Yook Kee Sr Manager / Engineer In-Charge Butterworth Bulking Installation Sdn. Bhd. Bernam Agencies Sdn. Bhd. UNITED PLANTATIONS BERHAD - ANNUAL REPORT 2011 3 Group as at 19 March 2012 United Plantations PT Surya Sawit PT Sawit Plantations Berhad Sejati (PT SSS1) Seberang Seberang (PT SSS2) Malaysia Issued Share Capital Indonesia Indonesia RM208m 95% 93% Palm Oil Refining Unitata Berhad Malaysia 100% Bernam Agencies Butterworth Bulking Bernam Advisory Berta Services Others Sdn. Bhd. Installation Services Sdn. Bhd. Sdn. Bhd. Sdn. Bhd. Malaysia Malaysia Malaysia Malaysia 100% 100% 100% 100% General Shareholding Structure as at 19 March 2012 Other The UIEL Group and the Others Major Shareholders Bek-Nielsen Family holding 5% and above 27.47% 47.40% 25.13% United Plantations Berhad Share Capital : RM 208 million 4 UNITED PLANTATIONS BERHAD - ANNUAL REPORT 2011 Financial Highlights 2011 2010 2009 2008 2007 Profit After Tax (RM’ Million) 374 264 281 300 179 Earnings Per Share (Sen) 180 127 135 144 86 Gross Dividend Per Share (Sen) * 120 90 70 50 40 Total Equity (RM’ Million) 1,996 1,772 1,638 1,434 1,197 Minority Interests (RM’ Million) 0.21 0.51 0.13 0.62 0.67 Total Assets (RM’ Million) 2,201 2,006 1,837 1,645 1,363 Total Liabilities (RM’ Million) 204 234 199 211 165 Year-End Closing Share Price (RM) 19.00 17.10 13.64 10.30 12.70 * Including proposed Final Dividend RM l l l Million Sen 2,500 200 190 180 170 2,000 160 150 140 130 1,500 120 110 100 90 1000 80 70 60 50 500 40 30 20 10 0 0 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011 l l l l RM Prot After Tax and Year-End Share Price CPO Price,UP Share Price, Kuala Lumpur Composite Index ( KLCI) Million 400 20.00 l 380 360 18.00 4,500 30.00 340 320 16.00 300 25.00 280 14.00 260 240 12.00 20.00 220 200 10.00 180 15.00 160 8.00 140 120 6.00 10.00 100 80 4.00 60 5.00 40 2.00 20 0 0.00 2007 2008 2009 2010 2011 2009 2010 2011 2012 19 March 2012 l l CPO Price (P/MT) UNITED PLANTATIONS BERHAD - ANNUAL REPORT 2011 5 Notice Of Annual General Meeting NOTICE IS HEREBY GIVEN that the 91st Ordinary Annual General Meeting of the Company will be held at Jendarata Estate, 36009 Teluk Intan, Perak Darul Ridzuan, Malaysia on 12 May 2012 at 10.30 a.m. for the purpose of considering the following business:- Ordinary Resolutions 1. To receive and consider the financial statements for the year ended 1 31 December 2011 together with the Reports of the Directors and the Auditors thereon. 2. To consider the recommendation of the Directors and authorise the payment 2 of a final dividend of 30% gross per share less 25% Malaysian Income Tax and a special dividend of 50% gross per share less 25% Malaysian Income Tax for the year ended 31 December 2011. 3. To approve Directors’ fees for 2011. 3 4. To re-elect as Director Mr. Ahmad Riza Basir who retires by rotation pursuant 4 to Article 92 of the Company’s Articles of Association. 5. To re-elect as Director Mr. Martin Bek-Nielsen who retires by rotation 5 pursuant to Article 92 of the Company’s Articles of Association. 6. To re-elect as Director Mr. Brian Bech Nielsen who retires by rotation 6 pursuant to Article 92 of the Company’s Articles of Association. 7. To consider and, if thought fit, pass the following resolution: 7 “That pursuant to Section 129(6) of the Companies Act,1965, Mr. G. Peter Selvarajah be re-appointed as Director of the Company to hold office until the conclusion of the next Annual General Meeting.” 8. To consider and, if thought fit, pass the following resolution: 8 “That pursuant to Section 129(6) of the Companies Act,1965, Y. Hormat Dato’ Jeremy Derek Campbell Diamond be re-appointed as Director of the Company to hold office until the conclusion of the next Annual General Meeting.” 9. To re-appoint Messrs. Ernst & Young as auditors of the Company for the 9 year 2012 and to authorize the Directors to fix their remuneration. 6 UNITED PLANTATIONS BERHAD - ANNUAL REPORT 2011 Notice Of Annual General Meeting Ordinary As Special Business Resolution To consider and, if thought fit, pass and adopt the following Resolutions as set out in parts A and B of the Circular to shareholders dated 18 April 2012: 10. Proposed Renewal of Shareholders’ Mandate for Recurrent Related Party 10 Transactions of a Revenue or Trading Nature “THAT approval be and is hereby given to the Company and its subsidiary companies to seek renewal of shareholders’ mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature to enter into and to give effect to the specified Recurrent Related Party Transactions with the specified Mandated Related Parties as stated in Section 2.4, Part A of the Circular to Shareholders dated 18 April 2012 which are necessary for the Group’s day to day operations subject to the following:- (i) the transactions are in the ordinary course of business and are on normal