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 - 17 Chairman’s Statements 18 - 34 Corporate Social Responsibility 35 - 87 Statement on Corporate Governance 88 - 96 Statement on Directors’ Responsibility 97 Statement on Risk Management and Internal Control 98 - 99 Audit Committee Report 100 - 102 Additional Disclosures 103 Financial Statements 105 - 194 Shareholders Information 195 - 196 Comparative Statistics 197 All Properties of the Group 198 Group’s Plantation Properties 199 Front Cover: For the evacuation of fresh fruit bunches (FFB), the buffalo assisted method, amongst others, is used successfully, especially where the ground is too soft for heavy vehicles. UNITED PLANTATIONS BERHAD - ANNUAL REPORT 2012 1 Corporate Information Country of Incorporation Malaysia Board of Directors Ybhg. Tan Sri Datuk Dr. Johari bin Mat (Chairman, Independent, Non-Executive) Ybhg. Dato’ Carl Bek-Nielsen (Chief Executive Director) Mr. Ho Dua Tiam (Executive) Mr. G.Peter Selvarajah (Independent, Non-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) Mr. Loh Hang Pai (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 Securites Berhad (Bursa Malaysia) Website : www.bursamalaysia.com Denmark NASDAQ OMX Copenhagen A/S Website : www.nasdaqomxnordic.com 2 UNITED PLANTATIONS BERHAD - ANNUAL REPORT 2012 Executive Committee and Senior Management Dato' Carl Bek-Nielsen Vice Chairman, Chief Executive Director Director In-Charge, Unitata Berhad Ho Dua Tiam Martin Bek-Nielsen Loh Hang Pai Inspector General, Estates & Special Adviser Executive Director (Finance & Marketing) Executive Director (Estates) Commercial Director, Unitata Berhad Senior Executive Staff Finance & Corporate A. Ganapathy Ng Eng Ho Cheriachangel Mathews Dewi Anita Suyatman Company Secretary / Group Financial Controller Group Manager Human Resources & Sr Manager, Legal & Corp Affairs Sr Group Manager (Finance) Environment, Safety & Health President Director, PT SSS2 Azero bin Mohamed Anuar S. Chandra Mohan Erwin Khor Siew Yan Shirley Selvasingam Sr Accountant Manager, Internal Audit Financial Controller, PT SSS Manager, IT Systems Plantations Edward Rajkumar Daniels C. Mohan Das Geoffrey Cooper Nek Wahid bin Nek Harun President Director, Group Manager, Group Manager, Sr Manager, PT SSS1 Jendarata Estate UIE Sungei Erong Estates Naslah bin Jajuli Muhammad Ratha D.Amrik Singh Ridzuan Bin Md. Isa Sr Manager, Sr Manager, Estate 1 General Manager, Manager, Ulu Basir Estate UIE PT SSS Ulu Bernam Estate Azhar bin Yazid Chantharavarnam Sathiam Jason Joseph Kumaresan Subramani Manager, Manager, Manager, Manager, Lima Blas Estate Sungei Chawang Estate Changkat Mentri Estate Kuala Bernam Estate Siva Subramaniam Ragavan Thilaganathan Karunagaran Manager, Manager, Seri Pelangi Estate Sungei Bernam Estate Research Dr. Xaviar Arulandoo Director of Research Ho Shui Hing Musa bin Bilal Lim Chin Ching Vijiandran Juva Rajah Research Controller Sr Manager, Plant Breeding Research Manager(Biotechnology) Research Manager Engineering P. Seker Vincent Wiiliams Ir P. Rajasegaran Ir V. Renganathan Group Engineer, Vice President, Engineering, Group Engineer, Sr Resident Engineer, Ulu Bernam PT SSS1 Jendarata / Unitata UIE Lim Chin Yen K.T. Somasegaran G. Padmanathan Sr Resident Engineer, Sr Resident Engineer, Resident Engineer, Lima Blas Ulu Basir 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 2012 3 Group as at 19 March 2013 United Plantations Berhad Malaysia Issued Share Capital Plantations RM 208m PT Surya Sawit PT Sawit Sejati Seberang Seberang (PT SSS1) (PT SSS2) Indonesia Indonesia 95% 93% Palm Oil Refining Unitata Berhad Malaysia 100% Bernam Agencies Butterworth Bulking Bernam Advisory Berta Services Others Sdn. Bhd. Installation Sdn. Bhd. Services Sdn. Bhd. Sdn. Bhd. Malaysia Malaysia Malaysia Malaysia 100% 100% 100% 100% General Shareholding Structure Group as at 19 March 2013 Others The UIEL Group and Major Shareholders Others The Bek-Nielsen Family holding 5% and above 29.21% 47.40% 23.39% United Plantations Berhad Share Capital : RM 208 million 4 UNITED PLANTATIONS BERHAD - ANNUAL REPORT 2012 Financial Highlights 2012 2011 2010 2009 2008 Profit After Tax (RM Million) 342 374 264 281 300 Earnings Per Share (Sen) 165 180 127 135 144 Gross Dividend Per Share (Sen) * 125 120 90 70 50 Total Equity (RM Million) 2,151 1,996 1,772 1,638 1,434 Non-Controlling Interests (RM Million) 0.42 0.21 0.51 0.13 0.62 Total Assets (RM Million) 2,371 2,201 2,006 1,837 1,645 Total Liabilities (RM Million) 220 204 234 199 211 Year-End Closing Share Price (RM) 25.00 19.00 17.10 13.64 10.30 * Including proposed Final Dividend Total Equity, Total Assets and Total Liabilities Earnings Per Share and Gross Dividend Per Share Profit After Tax and Year-End Share Price CPO Price, UP Share Price, Kuala Lumpur Composite Index (KLCI) UNITED PLANTATIONS BERHAD - ANNUAL REPORT 2012 5 Notice Of Annual General Meeting NOTICE IS HEREBY GIVEN that the 92nd Ordinary Annual General Meeting of the Company will be held at Jendarata Estate, 36009 Teluk Intan, Perak Darul Ridzuan, Malaysia on 11 May 2013 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 2012 together with the Reports of the Directors and the Auditors thereon. 2. To consider the recommendation of the Directors and authorise the 2 payment of a final dividend of 30% gross per share less 25% Malaysian Income Tax and a special dividend of 55% gross per share less 25% Malaysian Income Tax for the year ended 31 December 2012. 3. To approve Directors’ fees for 2012. 3 4. To re-elect as Director Ybhg. Tan Sri Datuk Dr. Johari bin Mat who 4 retires by rotation pursuant to Article 92 of the Company’s Articles of Association. 5. To re-elect as Director Ybhg. Dato’ Carl 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. Loh Hang Pai who retires pursuant to Article 84 6 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, 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.” 8. To re-appoint Messrs. Ernst & Young as auditors of the Company for the 8 year 2013 and to authorize the Directors to fix their remuneration. 6 UNITED PLANTATIONS BERHAD - ANNUAL REPORT 2012 Notice Of Annual General Meeting As Special Business Ordinary Resolutions To consider and if thought fit , to pass the following resolutions: (i) Proposed Continuation in Office as Independent Non- Executive Directors 9. “That Ybhg. Tan Sri Datuk Dr. Johari bin Mat having served as Independent 9 Non- Executive Director for a cumulative term of more than 9 years, continue to act as Independent Non-Executive Director of the Company.” 10. “That Mr. Ahmad Riza Basir having served as Independent Non- Executive 10 Director for a cumulative term of more than 9 years, continue to act as Independent Non-Executive Director of the Company.” 11 “That Y. Hormat Dato’ Jeremy Derek Campbell Diamond having served 11 as Independent Non-Executive Director for a cumulative term of more than 9 years, continue to act as Independent Non-Executive Director of the Company.” (ii) Proposed Renewal of Authority for Purchase of Own Shares 12 Proposed Renewal of Authority for Purchase of Own Shares 12 “THAT, subject to the Companies Act, 1965 (as may be amended, modified or re-enacted from time to time), the Company’s Articles of Association, the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Malaysia”) and approvals of all relevant governmental and/or regulatory authorities, where applicable, the Company be and is hereby authorized to purchase and/or hold such amount of ordinary shares of RM1.00 each in the Company (Proposed Share Buy-Back) as may be determined by the Directors of the Company from time to time and upon such terms and conditions as the Directors may deem fit and expedient in the interest of the Company provided that the aggregate number of ordinary shares purchased and/or held pursuant to