c 2018bousteadplantations.listedcompany.com/misc/ar2018.pdf · 2019. 3. 26. · boustead...

BOUSTEAD PLANTATIONS BERHAD 1245-M

28th Floor, Menara Boustead69 Jalan Raja Chulan50200 Kuala LumpurMalaysia

www.bousteadplantations.com.my

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BPB AR COVER FINAL (O).pdf 1 3/19/19 1:31 AM

Boustead Plantations Berhad (BPB) is a listed subsidiary of Boustead Holdings Berhad, one of Malaysia’s largest diversified conglomerates. Given our substantial track record in plantation management and operations which spans decades, BPB is today an established upstream oil palm plantation company.

The Group manages a portfolio of 46 oil palm estates in Malaysia. Of this, 19 estates are located in Peninsular Malaysia, 18 in Sabah and nine in Sarawak. Additionally, our operations include nine mills in Malaysia. BPB’s land bank spans 93,300 hectares (ha) of which 75,000 ha is cultivated with oil palm.

AREWHO WE

FACTSAT AGLANCE

REVENUE

RM584

RM51

RM64

RM124

RM4.2

RM857

7.0

MILLION

MILLION

MILLION

MILLION

BILLION

MILLION

SEN

LOSS BEFORE TAX

LOSSAFTER TAX

EBITDA

TOTAL ASSETS

CAPEX &ACQUISITION

DIVIDEND

WHAT’SINSIDE

22 28 CEO’SREVIEWCHAIRMAN’S STATEMENT

WHAT’SINSIDE

Who We Are Facts at a Glance

Five-Year Financial Highlights 4

Corporate Information 6

Financial Calendar 7

Profile of Directors 8

Profile of CEO 14

Senior Management Team 16

M A N A G E M E N T DISCUSSION AND ANALySIS

Chairman’s Statement 22

CEO’s Review 28

Audit Committee Report 38

Corporate Governance 41 Overview Statement

Statement on Risk Management 52

and Internal Control

Directors’ Responsibility 57 Statement

Financial Statements 58

Boustead Plantations Group 158

Additional Compliance 159 Information

Recurrent Related 160 Party Transactions

Properties of the Group 162

Group Agricultural Statistics 164

Plantation Area Statement 165

Location of Group Plantations 166

Shareholding Statistics 168

Statement of Directors’ and 170 CEO’s Interests

Dividend Policy 171

Notice of 172 Annual General Meeting

• Proxy Form

SUSTAINABILITy REPORT 2018

Scan to view or download our standalone Sustainability Report here

FIvE-YEARFINANCIAL HIGHLIGHTS

2018 2017* 2016 2015 2014

FINANCIAL PERFORMANCERevenue 584 760 708 615 717 (Loss)/Profit before taxation (51) 689 276 95 90 (Loss)/Profit after taxation (64) 614 216 72 52 (Loss)/Profit attributable to shareholders (52) 620 228 79 57(Loss)/Earnings per share# sen (2.3) 27.7 10.2 3.5 2.6Return on equity % (1.8) 21.7 10.4 3.5 3.1 Return on assets % (0.4) 19.2 9.3 3.6 4.1Return on revenue % (3.5) 19.2 20.2 9.8 17.9

DIVIDENDSDividend for the year 157 312 232 208 96Net dividend per share sen 7.0 19.5 14.5 13.0 6.0 Dividend yield % 9.3 11.8 8.7 8.7 4.1 Dividend cover times (0.3) 2.0 1.0 0.4 0.6

GEARINGBorrowings 1,118 140 901 915 841 Gearing times 0.4 0.1 0.4 0.4 0.4Interest cover times (0.4) 25.3 7.2 3.1 2.5

OTHER FINANCIAL STATISTICSNet assets per share sen 121 189 137 136 143Share price – high sen 137 175 166 150 164 Share price – low sen 67 159 140 116 140Earnings ratio times (32.4) 6.0 11.7 30.4 33.5 Paid up share capital 1,422 1,422 800 800 800 Number of issued share capital million 2,240 1,600 1,600 1,600 1,600 Shareholders’ equity 2,718 3,020 2,186 2,182 2,295 Total equity 2,631 2,945 2,215 2,228 2,348Total assets 4,165 3,451 3,257 3,299 3,303

All figures are in RM million unless otherwise stated.

* The financial information of the Group have been adjusted in accordance with MFRS 1 First-Time Adoption of Malaysian Financial Reporting Standards.

# After taking into account the effect of bonus share that was completed on 2 May 2018

4 BOUSTEAD PLANTATIONS BERHAD

717

615

708

760

584

REVENUE (RM Million)REVENUE (RM Million)

20142014

20152015

20162016

2017*2017*

20182018

90

95

276

689

(51)

(LOSS)/PROFIT BEFORE TAXATION (RM Million)(LOSS)/PROFIT BEFORE TAXATION (RM Million)

20142014

20152015

20162016

2017*2017*

20182018

2,295

2,182

2,186

3,020

2,718

SHAREHOLDERS’ EQUITY (RM Million)SHAREHOLDERS’ EQUITY (RM Million)

20142014

20152015

20162016

2017*2017*

20182018

10.2

27.7

(2.3)

(LOSS)/ EARNINGS PER SHARE# (Sen) (LOSS)/ EARNINGS PER SHARE# (Sen)

20142014

20152015

20162016

2017*2017*

20182018

6.0

13.0

14.5

19.5

7.0

DIVIDEND PER SHARE (Sen)DIVIDEND PER SHARE (Sen)

20142014

20152015

20162016

2017*2017*

20182018

143

136

137

189

121

NET ASSETS PER SHARE (Sen)NET ASSETS PER SHARE (Sen)

20142014

20152015

20162016

2017*2017*

20182018

2.6

3.53.5

717

615

708

760

584


20142014

20152015

20162016

2017*2017*

20182018

90

95

276

689

(51)


20142014

20152015

20162016

2017*2017*

20182018

2,295

2,182

2,186

3,020

2,718


20142014

20152015

20162016

2017*2017*

20182018

10.2

27.7

(2.3)


20142014

20152015

20162016

2017*2017*

20182018

6.0

13.0

14.5

19.5

7.0


20142014

20152015

20162016

2017*2017*

20182018

143

136

137

189

121


20142014

20152015

20162016

2017*2017*

20182018

2.6

3.53.5

717

615

708

760

584


20142014

20152015

20162016

2017*2017*

20182018

90

95

276

689

(51)


20142014

20152015

20162016

2017*2017*

20182018

2,295

2,182

2,186

3,020

2,718


20142014

20152015

20162016

2017*2017*

20182018

10.2

27.7

(2.3)


20142014

20152015

20162016

2017*2017*

20182018

6.0

13.0

14.5

19.5

7.0


20142014

20152015

20162016

2017*2017*

20182018

143

136

137

189

121


20142014

20152015

20162016

2017*2017*

20182018

2.6

3.53.5

717

615

708

760

584


20142014

20152015

20162016

2017*2017*

20182018

90

95

276

689

(51)


20142014

20152015

20162016

2017*2017*

20182018

2,295

2,182

2,186

3,020

2,718


20142014

20152015

20162016

2017*2017*

20182018

10.2

27.7

(2.3)


20142014

20152015

20162016

2017*2017*

20182018

6.0

13.0

14.5

19.5

7.0


20142014

20152015

20162016

2017*2017*

20182018

143

136

137

189

121


20142014

20152015

20162016

2017*2017*

20182018

2.6

3.53.5

717

615

708

760

584


20142014

20152015

20162016

2017*2017*

20182018

90

95

276

689

(51)


20142014

20152015

20162016

2017*2017*

20182018

2,295

2,182

2,186

3,020

2,718


20142014

20152015

20162016

2017*2017*

20182018

10.2

27.7

(2.3)


20142014

20152015

20162016

2017*2017*

20182018

6.0

13.0

14.5

19.5

7.0


20142014

20152015

20162016

2017*2017*

20182018

143

136

137

189

121


20142014

20152015

20162016

2017*2017*

20182018

2.6

3.53.5

717

615

708

760

584


20142014

20152015

20162016

2017*2017*

20182018

90

95

276

689

(51)


20142014

20152015

20162016

2017*2017*

20182018

2,295

2,182

2,186

3,020

2,718


20142014

20152015

20162016

2017*2017*

20182018

10.2

27.7

(2.3)


20142014

20152015

20162016

2017*2017*

20182018

6.0

13.0

14.5

19.5

7.0


20142014

20152015

20162016

2017*2017*

20182018

143

136

137

189

121


20142014

20152015

20162016

2017*2017*

20182018

2.6

3.53.5

* The financial information of the Group have been adjusted in accordance with MFRS 1 First-Time Adoption of Malaysian Financial Reporting Standards.

# After taking into account the effect of bonus share that was completed on 2 May 2018

5ANNUAL REPORT 2018

Gen. Tan Sri Dato’ Seri Panglima Mohd Ghazali Hj. Che Mat (R)ChairmanNon-Independent Non-Executive Director

Tan Sri Dato’ Seri Lodin Wok Kamaruddinvice ChairmanNon-Independent Non-Executive Director (until 31 December 2018)

REGISTERED OFFICE28th Floor, Menara Boustead69 Jalan Raja Chulan50200 Kuala Lumpur, MalaysiaTel : (03) 2141 9044Fax : (03) 2141 9750www.bousteadplantations.com.my

REGISTRARTricor Investor & Issuing House Services Sdn BhdUnit 32-01, Level 32, Tower Avertical Business SuiteAvenue 3, Bangsar SouthNo. 8 Jalan Kerinchi59200 Kuala Lumpur, MalaysiaTel : (03) 2783 9299Fax : (03) 2783 9222

SECRETARIESTasneem Mohd DahalanAffendi Mohd Yob

PRINCIPAL BANKERSAffin Bank BerhadAffin Islamic Bank BerhadAlliance Bank Malaysia BerhadKuwait Finance House (Malaysia) BerhadOCBC Bank (Malaysia) BerhadUnited Overseas Bank Berhad

AUDITORSErnst & Young

DIRECTORS

CORPORATEINFORMATION

STOCK EXCHANGE LISTINGBursa Malaysia Securities BerhadStock name: BPLANTStock code: 5254

HOLDING CORPORATIONBoustead Holdings Berhad

Dato’ Mohzani Abdul WahabSenior Independent Non-Executive Director

Maj. Gen. Dato’ Hj. Khairuddin Abu Bakar (R) J.P.Independent Non-Executive Director

Dr. Raja Abdul Malek Raja JallaludinIndependent Non-Executive Director

Datuk Zakaria SharifNon-Independent Non-Executive Director

CHIEF EXECUTIVE OFFICERChow Kok Choy


Issued 26 March 2019

First interimAnnounced 23 May 2018Entitlement date 8 June 2018Payment date 27 June 2018

Second interimAnnounced 23 August 2018Entitlement date 12 September 2018Payment date 25 September 2018

Third interimAnnounced 22 November 2018Entitlement date 7 December 2018Payment date 4 January 2019

FINANCIALCALENDAR

RESULTS

FINANCIAL yEAR

1 January to 31 December 2018

quarter

quarter

quarter

quarter

1st

2nd

3rd

4th

Announced 23 May 2018

Announced 23 August 2018

Announced 22 November 2018

Announced 25 February 2019

To be held 24 April 2019

ANNUAL REPORT

DIVIDEND

ANNUAL GENERAL MEETING

7ANNUAL REPORT 2018

GEN. TAN SRI DATO’ SERI PANGLIMA MOHD GHAZALI HJ. CHE MAT (R)ChairmanNon-Independent Non-Executive Director

PROFILE OF DIRECTORS

Age : 88Gender : MaleNationality : Malaysian Date the Director was first appointed to the Board• 18 January 1991 Board Committee(s)• Chairman of Remuneration Committee • Member of Nominating Committee Board Meetings attended in the financial year• 5/5 Working experience • Tan Sri Ghazali held various senior

command and staff positions in the Malaysian Armed Forces, the last being Chief of the Armed Forces from 1985 to 1987

• Tan Sri Ghazali was also the Chairman of Lembaga Tabung Angkatan Tentera from 23 February 1988 until 22 February 2007

• He has been Chairman of Boustead Holdings Berhad since 3 December 1990

Qualification • 1953 – Officer Cadet School Eaton Hall,

United Kingdom• 1955 - Royal Military Academy,

Sandhurst, United Kingdom• 1961 – Command and Staff College,

Quetta, Pakistan Details of any interest in the securities of Boustead Plantations Berhad • 2,184,000 Ordinary Shares Directorship in other public listed companies • Boustead Holdings Berhad (Chairman) Directorship in public companies • Boustead Properties Berhad (Chairman)• UAC Berhad (Chairman) Family relationship with any director and/or major shareholder of the Company • No Conflict of interests with the Company• No Other than traffic offences, any convictions for offences within the past 5 years and other particulars of any public sanction or penalty imposed by the relevant regulatory bodies during the financial year • Nil


TAN SRI DATO’ SERI LODIN WOK

KAMARUDDINVice Chairman

Non-Independent Non-Executive Director

(until 31 December 2018)

Age : 69Gender : MaleNationality : Malaysian Date the Director was first appointed to the Board• 25 October 2013 Board Committee(s)• Member of Remuneration Committee Board Meetings attended in the financial year• 5/5 Working experience • 1973 to 1982 – General Manager,

Perbadanan Kemajuan Bukit Fraser• 1983 – Deputy General Manager,

Lembaga Tabung Angkatan Tentera (LTAT)

• 1985 to 2018 – Chief Executive, LTAT• 1991 to 2018 – Group Managing Director,

Boustead Holdings Berhad (BHB)• 2010 to 2018 – Deputy Chairman, BHB Qualification • 1972 – Bachelor of Business

Administration, University of Toledo, Ohio, USA

• 1973 – Master of Business Administration, University of Toledo, Ohio, USA

• Member of Asian Institute of Chartered Bankers (AICB)

Details of any interest in the securities of Boustead Plantations Berhad • 38,971,520 Ordinary Shares Directorship in other public listed companies • Nil Directorship in public companies • Nil Family relationship with any director and/or major shareholder of the Company • No Conflict of interests with the Company• No Other than traffic offences, any convictions for offences within the past 5 years and other particulars of any public sanction or penalty imposed by the relevant regulatory bodies during the financial year • Nil

9ANNUAL REPORT 2018

PROFILE OFDIRECTORS

DATO’ MOHZANI ABDUL WAHABSenior Independent Non-Executive Director

Age : 65Gender : MaleNationality : Malaysian Date the Director was first appointed to the Board• 25 October 2013 Board Committee(s)• Chairman of Audit Committee• Chairman of Nominating Committee• Member of Sustainability Committee Board Meetings attended in the financial year• 5/5 Working experience • Dato’ Mohzani has held various senior

positions in Shell’s downstream oil products sector including supply, distribution, marketing, brand management, sales and retail management

Senior positions held:o 2001 to 2009 – Managing Director,

Shell Trading Sdn Bhd o 2005 to 2009 – Managing Director,

Shell Timur Sdn Bhd

Qualification • 1976 – Bachelor of Economics, Universiti

Malaya Details of any interest in the securities of Boustead Plantations Berhad • 282,800 Ordinary Shares Directorship in other public listed companies • Pavilion REIT Management Sdn Bhd Directorship in public companies • Hong Leong Investment Bank Berhad Family relationship with any director and/or major shareholder of the Company • No Conflict of interests with the Company• No Other than traffic offences, any convictions for offences within the past 5 years and other particulars of any public sanction or penalty imposed by the relevant regulatory bodies during the financial year • Nil


MAJ. GEN. DATO’ HJ.

KHAIRUDDIN ABU BAKAR (R)

J.P.Independent

Non-Executive Director

Age : 68Gender : MaleNationality : Malaysian Date the Director was first appointed to the Board• 10 April 2014 Board Committee(s)• Member of Nominating Committee Board Meetings attended in the financial year• 5/5 Working experience • 1971 to 2006 – Malaysian Armed Forces Senior positions held:

º 1995 to 1996 – Senior Officer, Logistics Plan & Operations for United Nations’ operations in Somalia

º 1996 to 1997 – Deputy Commandant, Malaysian Armed Forces Staff College

º 1998 to 2003 – Director of Defence, Logistics Policy

º 2003 to 2004 – Assistant Chief of Staff, Logistics

º 2004 to 2005 – Chief Logistics Qualification • 1978 - Member of Malaysian Institute of

Management

• 1986 – Malaysian Armed Forces Staff College

• 1988 – Diploma in Industrial Management, Universiti Kebangsaan Malaysia

• 1996 – Malaysian Armed Forces Defence College

• 2004 - Master of Business Administration, Charles Sturt University, Australia

Details of any interest in the securities of Boustead Plantations Berhad • Nil Directorship in other public listed companies • Nil Directorship in public companies • Nil Family relationship with any director and/or major shareholder of the Company • No Conflict of interests with the Company• No Other than traffic offences, any convictions for offences within the past 5 years and other particulars of any public sanction or penalty imposed by the relevant regulatory bodies during the financial year • Nil

11ANNUAL REPORT 2018

PROFILE OFDIRECTORS

DR. RAJA ABDUL MALEK RAJA JALLALUDIN Independent Non-Executive Director

Age : 73Gender : MaleNationality : Malaysian Date the Director was first appointed to the Board• 23 December 2013 Board Committee(s)• Chairman of Sustainability Committee• Member of Audit Committee• Member of Remuneration Committee Board Meetings attended in the financial year• 5/5 Working experience • 1972 to 1975 – General Hospital, Kuala

Lumpur and Faculty of Medicine, Universiti Kebangsaan Malaysia

• 1975 to 2003 – Senior Partner, Drs. Catterall, Khoo, Raja Malek & Partners

• 1984 to 2000 – Medical Director (Malaysia-Singapore), Parke Davis-Warner Lambert (later Pfizer Malaysia when both companies merged in 2001)

• 2003 to 2015 – Director of Medical and Scientific Affairs, HOE Pharmaceuticals Sdn Bhd

• Dr. Raja Malek has served as a clinical tutor in the Faculty of Medicine, Universiti Malaya, a member of the Ethical Committee of the Malaysian Medical Council, Ministry of Health and Chairman of Council, Academy of Family Physicians, Malaysia

Qualification • 1972 – Bachelor of Medicine and

Bachelor of Surgery, Universiti Malaya Details of any interest in the securities of Boustead Plantations Berhad • 421,260 Ordinary Shares Directorship in other public listed companies • Nil Directorship in public companies • Stemlife Berhad Family relationship with any director and/or major shareholder of the Company • No Conflict of interests with the Company• No Other than traffic offences, any convictions for offences within the past 5 years and other particulars of any public sanction or penalty imposed by the relevant regulatory bodies during the financial year • Nil


DATUK ZAKARIA

SHARIF Non-Independent

Non-Executive Director

Age : 61Gender : MaleNationality : Malaysian Date the Director was first appointed to the Board• 15 April 2014 Board Committee(s)• Member of Audit Committee• Member of Sustainability Committee Board Meetings attended in the financial year• 5/5 Working experience • 1980 – Senior Auditor, Price Waterhouse

& Co.• 1984 to 1987 – Arab Malaysian Finance

Berhad• 1988 to 1991 – Investment Manager,

Lembaga Tabung Angkatan Tentera (LTAT)• 1992 - General Manager, Emastulin

Automobile Sdn Bhd• 2000 – General Manager, Boustead

Trading Sdn Bhd• 2000 to 2003 – General Manager,

Perbadanan Hal Ehwal Bekas Angkatan Tentera

• 2003 to 2011 - General Manager, Perbadanan Perwira Harta Malaysia

• 2007 – General Manager, Investment, LTAT• 2011 to present – Deputy Chief Executive,

LTAT

Qualification • 1979 – Bachelor of Economics majoring

in Accountancy, Monash University, Australia

• 1984 – Member of the Malaysian Institute of Accountants

• 1989 – Associate, Malaysian Institute of Certified Public Accountant

• 2009 – Fellow, Australian Society of Certified Public Accountant

Details of any interest in the securities of Boustead Plantations Berhad • 284,200 Ordinary Shares Directorship in other public listed companies • Nil Directorship in public companies • Nil Family relationship with any director and/or major shareholder of the Company • No Conflict of interests with the Company• No Other than traffic offences, any convictions for offences within the past 5 years and other particulars of any public sanction or penalty imposed by the relevant regulatory bodies during the financial year• Nil


PROFILE OF CEO

MR. CHOW KOK CHOyChief Executive Officer

Age : 70Gender : MaleNationality : Malaysian Date of appointment to present position• 1 June 2018 Working experience • 1969 to June 1971 – Assistant Manager

with Guthrie Estate• July 1971 – Joined Barlow Boustead

Estates Agency Sendirian Berhad as Assistant Manager of Eldred Estate (Malakoff Berhad)

• 1978 – Manager, Telok Sengat Estate• 1990 – Senior Manager, Kuala Muda

Estate• 1993 – Planting Advisor, Boustead

Estates Agency Sdn Bhd (BEA)• 2001 – Planting Director, BEA• 2008 – Director of Operations,

Plantation, BEA• 2014 to May 2018 – Chief Operating

Officer, Boustead Plantations Berhad (BPB)

• 2014 to present – Managing Director, BEA

• June 2018 to present – Chief Executive Officer, BPB

Qualification• 1969 – Diploma in Agriculture, Universiti

Pertanian Malaysia (formerly known as College of Agriculture)

• 1974 – Associate Diploma in Plantation Management, Incorporated Society of Planters

• 2000 – Master of Science in Plantation Management, Universiti Putra Malaysia

Details of any interest in the securities of Boustead Plantations Berhad• 1,085,700 Ordinary Shares Directorship in public listed companies• Nil Directorship in public companies• Nil Family relationship with any director and/or major shareholder of the Company• No Conflict of interests with the Company• No Other than traffic offences, any convictions for offences within the past 5 years and other particulars of any public sanction or penalty imposed by the relevant regulatory bodies during the financial year• Nil


SENIOR MANAGEMENT TEAM

MR. CHOW KOK CHOyChief Executive Officer

EN. MOHAMAD AZLAN JAAFARDeputy Chief Executive Officer


EN. MOHD NIZAM ZAKARIASenior General Manager,Marketing

EN. SHAFIE MUHD ZAINGroup Engineer

TN. HJ. SHARUDIN JAFFARDirector of Operations, Plantation

MS. CHIN SUP CHIENChief Financial Officer

DATO’ SHOIB ABDULLAHSenior General Manager,Administration and Corporate Communication


Age : 70 • Gender : Male • Nationality : Malaysian

Date of appointment to present position• 1 June 2018 Working experience • 1969 to June 1971 – Assistant Manager with Guthrie

Estate• July 1971 – Joined Barlow Boustead Estates Agency

Sendirian Berhad as Assistant Manager of Eldred Estate (Malakoff Berhad)

• 1978 – Manager, Telok Sengat Estate• 1990 – Senior Manager, Kuala Muda Estate• 1993 – Planting Advisor, Boustead Estates Agency Sdn

Bhd (BEA)• 2001 – Planting Director, BEA• 2008 – Director of Operations, Plantation, BEA• 2014 to May 2018 – Chief Operating Officer, Boustead

Plantations Berhad (BPB)• 2014 to present – Managing Director, BEA• June 2018 to present – Chief Executive Officer, BPB Qualification• 1969 – Diploma in Agriculture, Universiti Pertanian

Malaysia (formerly known as College of Agriculture)• 1974 – Associate Diploma in Plantation Management,

Incorporated Society of Planters• 2000 – Master of Science in Plantation Management,

Universiti Putra Malaysia Details of any interest in the securities of Boustead Plantations Berhad• 1,085,700 Ordinary Shares Directorship in public listed companies• Nil Directorship in public companies• Nil Family relationship with any director and/or major shareholder of the Company• No Conflict of interests with the Company• No Other than traffic offences, any convictions for offences within the past 5 years and other particulars of any public sanction or penalty imposed by the relevant regulatory bodies during the financial year• Nil


Date of appointment to present position• 1 September 2018 Working experience • 1996 to 1999 – Audit Senior, KPMG Perth, Australia• 2000 to 2001 – Experienced Senior, Andersen, Kuala

Lumpur• 2001 to 2004 – Audit Manager, Malaysia Airlines System

Berhad• 2004 to 2007 – Assistant General Manager, Group

Internal Audit, Telekom Malaysia Berhad• 2008 to 2010 – Regional Head of Internal Audit, AirAsia

Berhad• 2010 to 2012 – Director Corporate Governance & Risk

Management, Ekuiti Nasional Berhad• 2012 to 2018 – Senior General Manager Group Internal

Audit & Risk Management, Boustead Holdings Berhad• September 2018 to present – Deputy Chief Executive

Officer, BPB Qualification• 1995 – Bachelor of Commerce (Accounting & Finance),

University of New South Wales, Sydney, Australia• 2000 – Member, Institute of Chartered Accountant

Australia• 2002 – Member, Malaysian Institute of Accountants

(MIA)• 2016 – Doctorate of Business Administration, Universiti

Utara Malaysia Details of any interest in the securities of Boustead Plantations Berhad• Nil Directorship in public listed companies• Nil Directorship in public companies• Nil Family relationship with any director and/or major shareholder of the Company• No Conflict of interests with the Company• No Other than traffic offences, any convictions for offences within the past 5 years and other particulars of any public sanction or penalty imposed by the relevant regulatory bodies during the financial year• Nil

PROFILE OF SENIOR MANAGEMENT TEAMMR. CHOW KOK CHOyChief Executive Officer

EN. MOHAMAD AZLAN JAAFARDeputy Chief Executive Officer



Date of appointment to present position• 1 July 2018 Working experience • 1980 – Joined Barlow Boustead Estates Agency

Sendirian Berhad as Junior Assistant in Eldred Estate• 1987 to 1990 – Senior Assistant Manager, Malakoff

Estate• 1991 to 1992 – Senior Assistant Manager, Kuala Muda

Estate• 1993 to 1995 – Manager, Sutera Estate• 1996 to 2000 – Senior Manager, Sungai Jernih Estate• 2001 to 2008 – Planting Advisor, BEA• 2008 to June 2018 – Planting Director, BEA• July 2018 to present – Director of Operations, Plantation Qualification • 1980 – Diploma in Agriculture, Universiti Pertanian

Malaysia• 1987 – Advance Diploma, Incorporated Society of

Planters• 2000 – Master of Science in Plantation Management,

Universiti Putra Malaysia Details of any interest in the securities of Boustead Plantations Berhad• 840,000 Ordinary Shares Directorship in public listed companies• Nil Directorship in public companies• Nil Family relationship with any director and/or major shareholder of the Company• No Conflict of interests with the Company• No Other than traffic offences, any convictions for offences within the past 5 years and other particulars of any public sanction or penalty imposed by the relevant regulatory bodies during the financial year• Nil

Age : 59 • Gender : Female • Nationality : Malaysian

Date of appointment to present position• 7 February 2011 Working experience • 1982 to 1985 – Audit Senior, Kreston John & Gan• 1987 to 1989 – Audit Senior, Ernst & Young• 1990 – Accountant, BEA• 1995 – Group Accountant, BEA• 2004 – Financial Controller, BEA• 2011 to present – Chief Financial Officer, BPB Qualification • 1981 – Graduate of Association of Chartered Certified

Accountants (ACCA)• 1982 – Diploma in Commerce (Financial Accounting),

Kolej Tunku Abdul Rahman• 1986 – Registered Accountant, MIA• 1990 – Fellow, ACCA Details of any interest in the securities of Boustead Plantations Berhad• 311,180 Ordinary Shares Directorship in public listed companies• Nil Directorship in public companies• Nil Family relationship with any director and/or major shareholder of the Company• No Conflict of interests with the Company• No Other than traffic offences, any convictions for offences within the past 5 years and other particulars of any public sanction or penalty imposed by the relevant regulatory bodies during the financial year• Nil

TN. HJ. SHARUDIN JAFFARDirector of Operations, Plantation

MS. CHIN SUP CHIENChief Financial Officer


PROFILE OFSENIOR MANAGEMENT TEAM


Date of appointment to present position• 1 January 2002 Working experience • 1966 – Joined the Armed Forces• 1967 to 1972 – Royal Malaysian Rangers. Last held

position in the Armed Forces was Acting Captain• 1972 to 1994 – General Manager, Riverview Rubber

Estate, Perak• 1994 – Technical Advisor of Operations, PT Poliplant• 1995 to 2001 – General Manager of Plantation

Operation, BEA• 2002 to present – Senior General Manager, Human

Resource and Corporate Communication, BEA. Redesignated as Senior General Manager, Administration and Corporate Communication on 1 July 2017

Qualification • 1965 – Secondary Education, Anderson School, Perak• 1966 to 1967 – Officer Cadet, Royal Military College Details of any interest in the securities of Boustead Plantations Berhad• 840,000 Ordinary Shares Directorship in public listed companies• Nil Directorship in public companies• Nil Family relationship with any director and/or major shareholder of the Company• No Conflict of interests with the Company• No Other than traffic offences, any convictions for offences within the past 5 years and other particulars of any public sanction or penalty imposed by the relevant regulatory bodies during the financial year.• Nil


Date of appointment to present position• 1 January 2019 Working experience • 1995 to 1997 – Management Executive, Sime Darby

Berhad• 1998 to 2003 – Research and Dealing, KL City Securities

Sdn Bhd• 2003 to 2006 – Market Analyst, Kumpulan Guthrie

Berhad• 2007 to 2008 – Senior Manager, Marketing, PT Minamas

Gemilang, Indonesia (PTMGG)• 2008 to 2013 – General Manager, Marketing, PTMGG• 2013 to 2014 – Head of Trading and Marketing, PTMGG• 2015 to 2016 – Vice President, Global Bulk Business,

Global Trading & Marketing, Sime Darby Plantation• 2016 to 2018 – General Manager, Marketing, BEA• 2019 to present – Senior General Manager, Marketing,

BEA Qualification • 1993 – Graduate of ACCA, Emile Woolf College, London,

United Kingdom• 1995 – Master of Science in Accounting & Finance,

De Montfort University, Leicester, United Kingdom Details of any interest in the securities of Boustead Plantations Berhad• 80 Ordinary Shares Directorship in public listed companies• Nil Directorship in public companies• Nil Family relationship with any director and/or major shareholder of the Company• No Conflict of interests with the Company• No Other than traffic offences, any convictions for offences within the past 5 years and other particulars of any public sanction or penalty imposed by the relevant regulatory bodies during the financial year• Nil

DATO’ SHOIB ABDULLAHSenior General Manager, Administration and Corporate Communication

EN. MOHD NIZAM ZAKARIASenior General Manager, Marketing



Date of appointment to present position• 1 June 2018 Working experience • 1983 to 1988 – Assistant Mill Manager, Felda Palm

Industries Sdn Bhd• 1989 to 1997 – Mill Manager, Felda Palm Industries Sdn

Bhd• 1998 to 2002 – Mill Manager, Hap Seng Consolidated,

Sabah• 2003 to 2005 – Mill Manager, BEA• 2007 – Visiting Engineer, BEA• 2008 – Senior Visiting Engineer, BEA• 2014 – Deputy Group Engineer, BEA• June 2018 to present – Group Engineer, BEA Qualification • 1982 – Diploma in Mechanical Engineering, Universiti

Teknologi Malaysia• 1989 – Steam Engineer Certificate of Competency,

Department of Occupational Safety and Health Malaysia• 1990 – Diploma in Palm Oil Milling Technology,

Malaysian Palm Oil Board Details of any interest in the securities of Boustead Plantations Berhad• 21,000 Ordinary Shares Directorship in public listed companies• Nil Directorship in public companies• Nil Family relationship with any director and/or major shareholder of the Company• No Conflict of interests with the Company• No Other than traffic offences, any convictions for offences within the past 5 years and other particulars of any public sanction or penalty imposed by the relevant regulatory bodies during the financial year• Nil

EN. SHAFIE MUHD ZAINGroup Engineer


GEN. TAN SRI DATO’ SERI PANGLIMA MOHD GHAZALI HJ. CHE MAT (R)Chairman

DEAR SHAREHOLDER,

IT HAS CERTAINLY BEEN A DIFFICULT PERIOD FOR THE PLANTATION INDUSTRY AND BOUSTEAD PLANTATIONS BERHAD BORE THE BRUNT OF THIS WITH THE SUBSTANTIAL REDUCTION IN CRUDE PALM OIL PRICES COUPLED WITH NEW ACCOUNTING REQUIREMENTS UNDER THE MALAYSIAN FINANCIAL REPORTING STANDARDS (MFRS) FRAMEWORK, THE GROUP’S PERFORMANCE WAS ADvERSELY IMPACTED IN 2018. DESPITE THE TOUGH ENvIRONMENT, WE ARE RESOLUTE IN OUR AIM TO ENHANCE PROSPECTS FOR THE GROUP MOvING FORWARD, PURSUING OUR STRATEGIC PLANS FOR SUSTAINABLE GROWTH.

CHAIRMAN’SSTATEMENT

ManageMent Discussion anD analysisChairman’s Statement


ECONOMIC LANDSCAPE

The global economy experienced slower expansion during the year under review, with moderate growth in both advanced and emerging markets. Against these global headwinds, the Malaysian economy saw positive growth on the back of domestic demand and private sector expenditure.

However, commodity markets were plagued by challenging conditions in 2018. The trade dispute between China and the US, which intensified in July 2018 with China imposing a tax on US exports, including soybeans, contributed to the volatility of commodity prices and heavily influenced the direction of soybean and crude palm oil (CPO) prices during the year.

Higher import duties levied by the Indian government in March 2018 greatly impacted palm oil exports to the country. Depreciating currencies of key importing countries such as India and China further limited their purchasing power.

Palm oil stockpiles increased in the second half of the year as a result of weaker demand and stronger CPO production in Indonesia. Coupled with rising palm oil import volumes from Indonesia, this saw Malaysian palm oil stocks hit a record high by the end of 2018.


FINANCIAL PERFORMANCE

The Group posted a deficit of RM51 million for the year under review. This was primarily as a result of significantly lower palm product prices which impacted our bottom line. High start-up expenses for the acquisition of 11,579 hectares of land in Sabah and the rehabilitation and improvements for these estates also contributed to the deficit.

Revenue for the year was RM584 million. Market capitalisation stood at RM1.7 billion as at 31 December 2018 and net assets per share came in at RM1.21.

DIVIDEND

Whatever challenges come our way, enhancing value for our shareholders is always a top priority for the Group.

Testament to this, dividend paid for the year was 7 sen per share, reflecting a 9.3% yield based on the closing stock price for the financial year ended 31 December 2018.

SUSTAINABILITy

Sustainability continues to be a driving force for the Group, underpinning our business strategy and operations. As a leader in Malaysia’s plantation sector, we are committed to leading by example, strengthening our sustainability commitments under our economic, environmental and social pillars.

This is reflected in the many programmes and measures we have in place to instil sustainable practices across the Group. A key indicator of this is our ongoing efforts to attain Roundtable on Sustainable Palm Oil and Malaysian Sustainable Palm Oil certification for all our operating units, which we continue to make positive headway on.

Mechanical tractor grabber



Reaffirming our commitment to sustainability, we are pleased to present our first dedicated Sustainability Report accompanying this Annual Report. Our progress and achievements for the year are encompassed in this separate report, demonstrating our dedication to responsible, conscientious growth.

HUMAN CAPITAL

In this competitive operating environment, the need for skilled, capable talent is greater than ever. Our talent pool is a mainstay of our success, allowing us to realise our goals and objectives.

To this end, our comprehensive talent development programmes along with employee engagement initiatives enable us to cultivate a driven and highly competent workforce. This in turn contributes to our performance and supports the Group’s long-term aspirations.

OUTLOOK

Going into 2019, we expect to see pick up in demand for palm oil in the first half of the year on the back of seasonal factors such as the Chinese New Year and Aidilfitri celebrations. However, additional palm oil demand is needed to absorb the current high palm oil inventories and support global CPO prices. Malaysia and Indonesia’s biodiesel mandate could encourage global demand for palm oil over the long term, although without sufficient support or subsidies, biodiesel production volume could be lower than expected.

Mechanical tractor grabber


Much of the CPO market outlook hinges upon the US-China trade talks. Should tensions ease, there may still be a long-term impact on the US soybean market, with some potential exports permanently lost to Brazil, where farmers have boosted production to take advantage of the trade rift.

Nevertheless, as long as the 25% import tariff on US soybeans remains in place, China is unlikely to return as a significant buyer and this will considerably reduce soybean crushing activities and soybean oil supply in China. This could also have repercussions on other agricultural markets, as US farmers could make a significant switch from soybeans to corn for 2019/20 plantings, unless the US government aid package for farmers continues. If this materialises, this would certainly be supportive towards the CPO market.

Workers housing complex at Sungai Jernih Estate, Pahang


SHAREHOLDERS’ FUND

BILLIONRM2.7

DIvIDEND

7.0SEN


In a positive development, India has cut import duties on crude and refined palm oil from Malaysia and Indonesia to comply with preferential trade agreements with Southeast Asian nations, which took effect 1 January 2019. This could increase demand for palm oil in India and help shore up palm product prices.

In terms of weather patterns, there are conflicting predictions regarding potential El Nino conditions. Certain weather agencies have forecasted a strong likelihood of the El Nino phenomenon persisting until the spring of 2019, while others have predicted neutral conditions which could possibly see El Nino resurfacing in the later part of 2019. It remains to be seen how this will manifest, however, a strong El Nino effect will result in a severe dry spell to Southeast Asian countries, which could cause supply shocks on palm oil production in Indonesia and Malaysia.

While there are certainly challenges ahead, we are confident that we will be able to overcome these given our proven track record. Building on our strengths, we are optimistic that the Group’s long-term prospects remain positive.

ACKNOWLEDGEMENT

My sincere appreciation to our Board members for guiding the Group through this turbulent year. Our gratitude as well to our capable management team and employees for their continued dedication to the success of the Group.

We would also like to express our deepest appreciation to our former Board member and vice Chairman, YBhg. Tan Sri Dato’ Seri Lodin Wok Kamaruddin. His vision, years of dedication and deep commitment were integral to the growth of the Group. We wish him all the best moving forward.

Our sincere thanks to our valued shareholders, financiers, business associates, consultants and the regulatory authorities, for their ongoing support.

GEN. TAN SRI DATO’ SERI PANGLIMA MOHD GHAZALI HJ. CHE MAT (R)Chairman

11 March 2019

Workers housing complex at Sungai Jernih Estate, Pahang


CEO’SREVIEW

CHOW KOK CHOyChief Executive Officer

ManageMent Discussion anD analysisCEO’s Review

DEAR SHAREHOLDER,

YOUR GROUP FACED CONSIDERABLE HEADWINDS IN 2018, DRIvEN PRIMARILY BY vOLATILE COMMODITY PRICES AND TURBULENT MARKET CONDITIONS. NEvERTHELESS, WE PERSEvERED BY BUILDING ON OUR ESTABLISHED FUNDAMENTALS.


FINANCIAL PERFORMANCE

Boustead Plantations Berhad (BPB) recorded a deficit of RM51 million for the financial year ended 31 December 2018. This was largely due to the sharp downturn in palm product prices and slowdown in production from all regions. The Group posted a revenue of RM584 million. The rehabilitation and system improvements in the newly acquired Pertama Estates along with financing costs also brought down earnings. The MFRS treatment which now requires bearer plants to be depreciated further impacted profitability.

Despite this impacted performance, the Group’s commitment to delivering value to our shareholders remains unwavering. Total dividend for the year under review was 7 sen per share, representing a total payout of RM157 million.

Loss per share was 2.3 sen, while net assets stood at RM1.21 per share. Market capitalisation was RM1.7 billion as at 31 December 2018.

The Group successfully completed the acquisition of the Pertama Estates. This saw borrowings increase to RM1.1 billion for the year, resulting in a gearing ratio of 0.41 times.

MARKET REVIEW

It was a challenging year for the plantation industry, as most commodity prices plunged to multi-year lows. The crude palm oil (CPO) market was not spared as CPO prices declined significantly from the previous year.

To help mitigate this, the Malaysian Government suspended export taxes in the first quarter of 2018. This pre-emptive measure stabilised CPO prices for the short-term, trading within the region of RM2,400 to RM2,600 per metric tonne (MT). However, CPO prices tumbled in March 2018 following an import tax hike by India, which saw CPO tax jumping to 44% from 30%, while refined palm oil tax soared to a decade-high of 54% from 40%. This significantly impacted palm oil exports to India for the year.


The suspension of export tax in Malaysia which was lifted in May 2018 and depreciating currencies of key importing countries such as India and China continued to put pressure on CPO prices. The trade dispute between the US and China further weighed down soybean and CPO prices. As the US-China trade conflict escalated, China imposed a 25% tariff on US soybeans in July 2018, causing soybean prices to fall to a 10-year low. Coupled with the bumper soybean harvest in the US and Brazil for the 2017/18 season, this had an adverse effect on CPO prices.

In the second half of the year, Indonesia’s increased CPO production paired with muted palm oil exports saw palm oil inventories building up in Malaysia and Indonesia. In 2018, Malaysian palm product imports surged by 51% to 841,452 MT, after Indonesian players opted to export their products to Malaysia as they struggled with local tank storages and heavy congestion at their domestic ports. As a result, Malaysia’s palm oil stocks grew to a record high of 3.22 million tonnes in December 2018.


AvERAGE CPO PRICE

PER MTRM2,261

REvENUE

MILLIONRM584


The Malaysian Palm Oil Board (MPOB)’s average CPO price for 2018 stood at RM2,239 per MT. This reflects a 19.6% drop compared with the previous year.

Amidst these demanding market conditions, the Group recorded an average CPO price of RM2,261 per MT for the year, 20% lower than last year. Average palm kernel price was RM1,780 per MT, compared with RM2,505 per MT in the previous year.

OPERATIONS REVIEW

BPB operates a total of 46 estates spanning across Peninsular Malaysia, Sabah and Sarawak. Our combined land bank stands at 93,300 hectares (ha), up from 81,800 ha in 2017, and we have a total of nine palm oil mills following the closure of Lepan Kabu Palm Oil Mill during the year. Total area under cultivation stood at 75,000 ha, consisting of 68,700 ha of mature oil palm areas and 6,300 ha of immature oil palm areas.

In the year under review, we invested a total of RM39 million in capital expenditure. This was mainly for the routine replacement and new additions of mill machineries, agricultural vehicles, workers’ quarters and staff accommodation. In addition, we commenced construction of a CPO washing plant at Trong Palm Oil Mill as part of the collaboration with MPOB to carry out a commercial trial to reduce chloride contaminants in CPO. The project cost RM1 million and we obtained a grant from MPOB for 50% of the project cost. We also undertook replanting efforts for a total of 2,394 ha. Replanting and upkeep of immature fields amounted to a total of RM44 million.

Apart from this, we completed the development of the tissue culture protocol for large-scale production of tissue culture Kacip Fatimah plantlets, a traditional local medicinal herb. Building on this breakthrough success, plans are currently underway for commercial production of Kacip Fatimah for the herbal market. We expect to see commercial returns from this project from the year 2020 onwards.

Fresh fruit bunches (FFB) production was 966,134 MT, consistent with 973,513 MT last year, while average yield per ha dropped to 14.9 MT from 16.7 MT. This shortfall was mainly due to a shortage of harvesters and change in weather patterns, which resulted in much lower yields in the second quarter of 2018, along with ongoing native customary rights land disputes in the Bukit Limau, Kelimut and Maong estates. Another contributing factor was the lower yields from the newly acquired Pertama Estates. With a processing capacity of 405 MT FFB per hour, the Group’s mills processed a total of 1,000,367 MT FFB in 2018, of which approximately 85% was from our own estates.

Average FFB production cost rose by 4% to RM327 per MT, attributed to the decline in crops and upkeep of roads, equipment and workers’ quarters for the Pertama Estates. Milling cost grew to RM83 per MT, mainly due to lower FFB processed, while cost of CPO production was RM1,664 per MT.

Boustead Pertama Estate in Sabah


CPO production amounted to 211,847 MT compared with 226,843 MT last year, while palm kernel production stood at 43,601 MT. Average oil extraction rate (OER) increased slightly to 21.2%, higher than 21.0% in the previous year and the MPOB’s 2018 national average of 19.9%. Kernel extraction rate (KER) was 4.4%, a marginal improvement from last year.

As part of the Group’s efforts to reduce labour dependency, maximise efficiency and optimise productivity, we continued with the mechanisation of our operations. We utilised harvesting tools such as lightweight graphite poles for tall palms across 29,000 ha and motorised cutters for young palms across 12,000 ha in our harvesting operations. Mini tractor grabbers were deployed across 28,000 ha together with bin systems to ensure the quality of FFB transported to our mills. For hilly areas, motorised wheelbarrows were used for FFB evacuation.

During the year, the bin system was implemented at the Boustead Pertama, Boustead Ruku Ruku and Boustead Sapa Payau estates in Labuk and Sugut, Sabah. The system is now utilised at a total of eight estates, comprising 12,700 ha.

We extended the use of smart fertiliser spreaders to the Bebar, Kuala Muda and Bukit Mertajam estates. Fifteen times more productive than conventional methods, these state-of-the-art fertiliser spreaders are capable of applying two types of fertiliser simultaneously. They are also equipped with digital sensors that generate fertiliser application maps, ensuring that the right amount of fertiliser is applied to each palm.

Mechanisation for in-field fresh fruit bunches collection



We also utilise precision agriculture and Internet of Things (IoT) technologies for more precise monitoring of our field operations. The use of Geographic Information System and Global Positioning System data coupled with IoT technologies helps to facilitate accurate and timely decision-making.

As a biological control measure, we have more than 200 barn owl nest boxes in Segaria Estate in Tawau, Sabah. This has demonstrated very positive results in curbing the rising population of rats. We will replicate this in our Sungai Segamaha Estate in Sandakan, Sabah in 2019.

The Group remains committed to achieving Roundtable on Sustainable Palm Oil (RSPO) and Malaysian Sustainable Palm Oil (MSPO) certification across our operating units. A total of four business units have received RSPO and MSPO certification, covering 26,300 ha. The remaining business units spanning 55,200 ha are slated to be MSPO certified by end 2019, within the mandatory Government deadline.

All of our mills have also undergone a re-certification and upgrading audit for ISO 9001:2015 carried out by SIRIM QAS International.

Peninsular Malaysia

Our Peninsular Malaysia land bank encompasses 25,800 ha over 19 estates. A total of 24,100 ha are planted with oil palms, with an average age profile of 13 years.

FFB production for the region was 385,731 MT, 10% lower than the previous year. The drop was mainly due to the severe crop downtrend during the second quarter of the year, as well as a 500 ha reduction in harvesting area and labour shortages. Estates in the southern region fared better, producing average yields of 20.2 MT per ha, compared with northern region estates which saw yields averaging 18.2 MT per ha. Young fields in the east coast estates also recorded encouraging yields of 20.8 MT per ha. Top performing estates in the region for the year were Bebar and Telok Sengat, which achieved average yields of 22.4 MT per ha and 22.0 MT per ha respectively.

Average OER for our Peninsular Malaysia mills was higher at 21.5% compared with last year’s average OER of 21.1%. This also surpassed the MPOB average of 19.7%. The Sungai Jernih Palm Oil Mill once again recorded the Group’s top OER of 23.5%, earning the National Highest OER Achievement Award for 2017/2018 from MPOB, its third consecutive win.


Sabah

Our operations in Sabah comprise 18 estates with a total land bank of 41,000 ha. Area under cultivation amounts to 37,300 ha, with an average age profile of approximately 15 years.

FFB production for our Sabah estates grew by 10% to 454,332 MT due to the contribution from the Pertama Estates, while average FFB yield per ha stood at 15.3 MT per ha compared with 17.3 MT in the previous year. This was attributable to the weak performance in our Sugut property which was severely impacted by wet weather conditions, resulting in flooding in some of the estates and damages to main access roads and field roads. This subsequently led to problems with evacuation of FFB. Shortage of skilled harvesters also hampered production.

Young mature areas performed positively, particularly for the Lahad Datu District and Sandakan District, boosting production in the Sungai Segamaha, Bukit Segamaha, Nak and Sutera estates. Resort Estate clinched the top performer spot for the region achieving a yield of 22.8 MT per ha, mainly attributable to adequate harvesters and the introduction of new harvesting tools for tall palm areas.

The G&G and Segaria estates also delivered good yields of 21.6 MT per ha and 20.8 MT per ha respectively. Meanwhile, the Pertama Estates have made progress in crop production towards the end of the year following upgrading of fields roads, improvements to logistics, repairs to workers’ quarters and equipment and stabilisation of the workforce.

Our Sabah mills recorded an average OER of 21.4% compared with 21.3% in the previous year. This exceeded MPOB’s average of 20.6% in 2018. Leading this was our Segaria Palm Oil Mill which achieved a commendable OER of 23.1% and was awarded Best Palm Oil Mill for Sabah/Sarawak (Own Crop Supply) for 2017/2018 by MPOB.

Sarawak

The Group operates nine estates in Sarawak with a combined land bank of 26,500 ha. This comprises a total harvesting area of 13,600 ha, with an average age profile of 21 years.

FFB production for the Sarawak estates was 126,071 MT in 2018, a 5% reduction from the previous year. Average yield per ha declined to 9.3 MT from 10.8 MT in 2017. Tough operating conditions continued to be a challenge in Sarawak, including an acute shortage of skilled harvesters and inclement weather causing evacuation issues and hindering harvesting activities. Ongoing issues arising from native customary rights land disputes also affected operations.

Bawan Estate recorded a higher average yield of 14.6 MT per ha. Meanwhile, over 1,900 ha of land in Bukit Limau Estate remained under blockade, while rehabilitation of more than 500 ha of oil palms in Sungai Lelak Estate has been completed, with the balance of approximately 700 ha to be replanted.



On a positive note, efforts to remedy the blockade on Bukit Limau Estate are in progress and we are working closely with the relevant authorities. As a result, we were able to enter the estate and commence harvesting operations on a very small area.

Our mills in Sarawak achieved an average OER of 19.8%, consistent with the previous year and MPOB’s average of 19.9%.

RESEARCH & DEVELOPMENT

We are strongly focused on research and development (R&D) to drive the Group forward. Spearheaded by our associate company, Applied Agricultural Resources Sdn Bhd (AAR), we advanced further in our aim to improve productivity by adopting best practices coupled with new technologies and innovations.

High oil-yielding planting materials, good agronomic practices and prudent management are key drivers of productivity for the Group. AA Hybrida II is the latest planting material developed by AAR’s oil palm breeding programme. The Group has replanted a total of 23,200 ha to date using superior clonal planting materials.

R&D on breeding of long-stalk bearing palms saw good progress, with one of the three selected families producing high yields on par with the current commercial DxP materials available in the market. AAR’s unique planting material produces bunches with longer stalks of 30 to 50 cm compared to the standard 20 cm. This could potentially improve pollination and allow for ease of detection of ripe fruit as well as harvesting. We look forward to large scale commercial planting once this makes further headway.

AAR also successfully developed an improved image-based inventory mapping and palm counting technique. The process uses drones to capture high resolution aerial photographs for planning and monitoring of palm growth. High-speed drones capable of acquiring images two to three times faster will soon be deployed.

As we seek to further minimise dependence on inorganic fertilisers, we are looking into the use of beneficial nitrogen-fixing microbes. This can enrich the soil and subsequently improve crop yields.

SUSTAINABILITy COMMITMENT

As a plantation company, the environment is at the crux of our business. As such, sustainability is not only a priority for us, it is a responsibility that we incorporate in all that we do.

Our vision of Achieving Strategic Growth, Safeguarding the Environment, Embracing the Diversity of People continues to propel the Group to fulfill and expand our sustainability efforts, comprising economic, environmental and social commitments. This year, we introduced our inaugural standalone Sustainability Report, extensively covering the various initiatives undertaken and targets achieved in 2018.

Aerial view of Bukit Segamaha Estate, Sabah


OUTLOOK

While 2018 was indeed challenging, the Group is positive on the prospects for 2019, particularly with the CPO market expected to see some recovery in the first half of the year as we enter into the low crop production season and anticipate improved demand from both food and non-food sectors. Although palm oil inventories remain high currently, the biodiesel mandates of Malaysia and Indonesia will help to trim this down to more manageable levels.

In addition, the Indian government’s move to reduce import duties on crude and refined palm oil should further support a recovery in CPO prices. Increased demand from China is also expected to shore up CPO prices.

The Group will place emphasis on increasing overall productivity and focus on cost optimisation to improve our margins going forward.

The Pertama Estates and the proposed acquisition of more than 4,000 ha of adjacent strategically located prime plantation lands with a 75 tonnes per hour palm oil mill will result in a business complex covering over 17,000 ha. This will result in huge cost savings from economies of scale and enhanced operational efficiencies. The proposed acquisition involving a commitment of RM357 million is on track for completion by the first half of 2019.

AAR lab



The Pertama Estates will focus on implementing good agronomic and best management practices as well as the commencement of replanting programme using high yielding oil palm planting materials from 2020 onwards. With these measures in place, we are confident that the Pertama business complex will contribute significantly to the Group’s profitability.

We are conscious that some land may have high development potential and as such, we will monetise these assets at an opportune time. To this end, we are set to dispose of 139 ha of the Malakoff Estate located in Seberang Perai Utara, Pulau Pinang and expect to realise a total estimated gain of RM120 million upon completion of the proposed disposal by the first quarter of 2019.

Planned capital expenditure for 2019 is in the region of RM79 million. We have allocated RM17 million for the installation of dust particulate reduction systems in eight palm oil mills, in compliance with Environment Quality (Clean Air) Regulations 2014. Apart from this, we will invest RM4 million in the Pertama Estates, largely for the construction of workers’ quarters and two schools.

In addition to this, RM56 million will be invested into replanting efforts targeting over 7,200 ha in 2019.

Looking ahead, the Group is well-prepared to tap on new opportunities on the horizon. As we leverage on our strengths to move forward, we are steadfast in our commitment to ensuring the sustainable long-term growth of the Group.

CHOW KOK CHOyChief Executive Officer

11 March 2019


MEMBERS AND MEETINGS

A total of four meetings were held during the financial year. Details of the composition of the Committee and the attendance by each member at the Committee meetings are set out as follows:

Name of Director Status of Directorship Independent Attendance of Meetings

Dato’ Mohzani Abdul Wahab¹ Senior Independent Non-Executive Director (Chairman of the Committee)

Yes 4/4

Dr. Raja Abdul Malek Raja Jallaludin

IndependentNon-Executive Director

Yes 4/4

Datuk Zakaria Sharif Non-Independent Non-Executive Director

No 4/4

Note: ¹The Audit Committee Chairman’s profile can be viewed on page 10 of this Annual Report.

The Audit Committee membership is in line with Paragraph 15.09 & 15.10 of the Main Market Listing Requirements (MMLR) of Bursa Malaysia Securities Berhad and Malaysian Code of Corporate Governance (MCCG) Practice 8.1 & 8.2, in which;

• All members are Non-Executive Directors and majority of the members are Independent Directors;• No alternate director is appointed as a member;• Datuk Zakaria Sharif is a member of the Malaysian Institute of Accountants;• The Chairman of the Audit Committee is not the Chairman of the Board; and• None of the Committee members is a former key audit partner of the Company’s external auditor.

The Audit Committee meetings were also attended by the Chief Executive Officer, Deputy Chief Executive Officer, Chief Financial Officer and Head of Internal Audit at the Audit Committee’s invitation and as and when appropriate. The Audit Committee also met with the external auditors during the year in two separate sessions, without the presence of management. The meetings have been appropriately structured with Audit Committee members receiving notices, agendas and papers sufficiently in advance of the meetings.

The Audit Committee Chairman reports to the Board on principal matters deliberated at the Audit Committee meetings. Minutes of each meeting are circulated to the Board at the next Board meeting.

All members of the Audit Committee have and will continue to undertake professional development to keep themselves abreast of relevant developments in accounting and auditing standards, practices and rules. Details of the Audit Committee members’ trainings can be viewed on page 49 and 50 of this Annual Report.

AUDITCOMMITTEE REPORT


The Audit Committee Terms of Reference (TOR) is accessible for viewing on the Company’s official website at www.bousteadplantations.com.my.

SUMMARy OF ACTIVITIES DURING THE FINANCIAL yEAR

During the year, the Audit Committee carried out its duties as set out in its terms of reference. The main activities undertaken were as follows:

• Reviewed the internal and external auditors’ scope of work and annual audit plan for the Group.

• Deliberated and reported the results of the external audit to the Board of Directors.

• Reviewed the management letters and the audit reports of the external auditors.

• Reviewed the adequacy of experience and resources allocated by the external auditors for the audit engagement including personnel assigned to the audit, level of experience and expected commitment to the audit engagement.

• Reviewed the performance of the external auditors and their remuneration to the Board of Directors. The external auditor’s non-audit service fees and the statutory audit fees are available on page 110 of this Annual Report.

• Reviewed and deliberated on the significant accounting and audit issues of the Group raised by the external auditors, and received progress updates from Management on actions taken for improvements.

• Deliberated on the key audit matters on the Group highlighted by the external auditors in relation to the audit of annual financial statements for the financial year ended 31 December 2018.

• Met with the external auditors twice during the year without the presence of management.

• Reviewed the quarterly and annual financial statements of the Group to ensure compliance with the MMLR, applicable approved accounting standards and other statutory and regulatory requirements prior to recommending for approval by the Board of Directors.

• Reviewed the key risk profiles and risk management activities.

• Reviewed the Audit Committee Report, Corporate Governance Overview Statement and Statement on Risk Management and Internal Control and recommend to the Board for approval prior to their inclusion in the Company’s annual report.

• Reviewed the Circular to Shareholders relating to shareholders’ mandate for recurrent related party transactions of revenue or trading nature before recommending the same for Board’s approval.

• Monitored the recurrent related party transactions entered by the Company and the Group pursuant to the shareholders’ mandate obtained at the Annual General Meeting held on 12 April 2018, on a quarterly basis.

• Reviewed the Framework and Procedures on related party transactions/recurrent related party transactions in order for the said framework to be abreast with the relevant provisions of the MMLR.

• Reviewed the adequacy of resource requirements and competencies of staff within the Company’s internal audit function to effectively execute the annual audit plan.

• Reviewed and supported the annual internal audit plan including budget and resource planning to ensure adequacy of resources, competencies and coverage of auditable areas with significant and high risks. The audit plan is prepared using a risk-based approach with focus on the areas with significant risks.

• Reviewed and deliberated internal audit reports and monitored the corrective actions taken by the Management in addressing and resolving issues.

ANNUAL REPORT 2018 39

INTERNAL AUDIT FUNCTION

The Audit Committee is assisted by Group Internal Audit (GIA) of Boustead Holdings Berhad (the Immediate Holding Company of Boustead Plantations Berhad). GIA’s principal responsibility is to evaluate the effectiveness of risk management, control and governance processes of Boustead Plantations Berhad and its Subsidiaries and recommend improvements to the processes where required. This is accomplished through a systematic and disciplined approach of regular reviews and appraisals of the management, control and governance processes based on the review plan that is approved by the Audit Committee annually.

GIA adopts a risk-based methodology in planning and conducting audits by focusing on key risks areas and activities that are aligned with the Group’s strategic plans. GIA has also adopted internal audit standards and best practices based on the International Professional Practices Framework (IPPF) promulgated by The Institute of Internal Auditors.

The terms of reference of GIA are clearly spelt out in the Internal Audit Charter. GIA has operated and performed in accordance to the principles of the Charter that provides for its independence. GIA reports directly to the Audit Committee, and is independent of the activities it audits. GIA has an adequately resourced internal audit function to assist the Audit Committee and the Board in maintaining an effective system of internal control and overall governance practices within the Company and the Group.

Eleven internal auditors from GIA have been assigned to perform the audit of plantations, palm oil mills, research unit and the support functions during the year. The audit teams have completed and issued internal audit reports for 61 assignments based on the approved annual audit plan. The audits conducted in 2018 covered a wide range of operational areas within the Group which include review of harvesting and maintenance processes, procurement and contract management, accounting and financial controls, resource management and administration, palm mill operations and plantation research unit. The corresponding audit reports were presented to the Management, Management Audit Committee and Audit Committee for attention, deliberation and corrective actions.

During the financial year, GIA had undertaken the following activities:

• Prepared the annual audit plan for approval by the Audit Committee.

• Performed risk-based audits based on the annual audit plan, including follow-up of matters from previous internal audit reports.

• Issued internal audit reports to the Management on risk management, control and governance issues identified from the risk-based audits together with recommendations for improvements for these processes.

• Undertook investigations and special reviews of matters arising from the audits and/or requested by the Management and/or Audit Committee and issued reports accordingly to the Management.

• Reported on a quarterly basis to the Management Audit Committee on significant risk management, control and governance issues from the internal audit reports issued, the results of investigations and special reviews undertaken and the results of follow-up of matters reported.

• Reported on a quarterly basis to the Audit Committee the achievement of the audit plan and status of resources of the Group’s internal audit function.

• Conducted follow-up of the recommendations by the external auditors in their management letter.

• Liaised with the external auditors to maximise the use of resources and for effective coverage of the audit risks.

• Reviewed the procedures relating to related party transactions.

• Conducted knowledge sharing sessions with the key operational staff on internal controls, internal audit observations and proposed action plans on the areas covered during the audit processes.

The total cost incurred by GIA for financial year ended 31 December 2018 was RM1.2 million.

AUDITCOMMITTEE REPORT


CORPORATE GOvERNANCEOVERVIEW STATEMENT

This Corporate Governance Overview Statement sets out the principal features of Boustead Plantations Berhad (BPB or the Company) and its subsidiaries’ (collectively referred to as the Group) corporate governance approach, summary of corporate governance practices during the financial year as well as key focus areas and future priorities in relation to corporate governance. The Corporate Governance Overview Statement is made pursuant to Paragraph 15.25(1) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (MMLR) and guidance was drawn from Practice Note 9 of the MMLR and the Corporate Governance Guide (3rd edition) issued by Bursa Malaysia Securities Berhad (Bursa Malaysia).

The Corporate Governance Overview Statement is augmented with a Corporate Governance Report, based on a prescribed format as enumerated in Paragraph 15.25(2) of the MMLR so as to provide a detailed articulation on the application of the Group’s corporate governance practices vis-à-vis the Malaysian Code on Corporate Governance (MCCG). The Corporate Governance Report is available on the Group’s website, http://www.bousteadplantations.com.my as well as via an announcement on the website of Bursa Malaysia.

This Corporate Governance Overview Statement should also be read in tandem with the other statements in the Annual Report namely Statement on Risk Management and Internal Control, Audit Committee Report and Sustainability Report.



CORPORATE GOVERNANCE APPROACH

The Board of Directors (Board) of BPB is committed towards reinforcing its market position in the plantation industry, whilst remaining true to the Group’s well-established corporate governance philosophies which are ingrained in the Group’s core values, namely, Respect, Integrity, Teamwork and Excellence. The Board believes that a robust and dynamic corporate governance framework is essential to form the bedrock of responsible and responsive decision making in the Group.

The Group’s overall approach to corporate governance is to:

• promote heightened accountability at the leadership level (Board and Senior Management);

• adopt the substance behind corporate governance enumerations and not merely in form;

• conduct a thorough debate and rigorous enquiry process before establishing corporate governance systems, policies and procedures;

• identify opportunities to drive the synergistic implementation of corporate governance systems, policies and procedures for improved strategic and operational decision making; and

• find a fine balance in meeting the expectations of the different groups of stakeholders of the Group.

Given that the Board forms the pivot of good corporate governance, the Board steers efforts to promote meaningful and thoughtful application of good corporate governance practices. The Group regularly reviews its corporate governance arrangements and practices to ascertain if they reflect prevailing norms, market dynamics, emerging trends, developments in the regulatory tapestry and evolving stakeholder expectations.

SUMMARy OF CORPORATE GOVERNANCE PRACTICES

In manifesting the Group’s commitment towards sound corporate governance, the Group has benchmarked its practices against the relevant promulgations as well as other best practices.

BPB has applied all the Practices encapsulated in MCCG for the financial year ended 31 December 2018 except:

• Practice 4.1 Board to comprise a majority of Independent Directors;

• Practice 4.5 Policy on Gender Diversity;

• Practice 6.1 Remuneration Policy for Directors and Senior Management;

• Practice 7.2 Disclosure of the top five Senior Management personnel’s remuneration on a named basis in bands of RM50,000;

• Practice 11.2 Adoption of integrated reporting; and

• Practice 12.3 Remote shareholders’ participation.

In line with the latitude accorded in the application mechanism of MCCG, the Company has provided explanations for the departures from the said practices supplemented with a description on the alternative measures that seek to achieve the Intended Outcome of the departed Practices, measures that the Company has taken or intends to take to adopt the departed Practices as well as the timeframe for adoption of the departed Practices. Further details on the application of each individual Practice of MCCG are available in the Corporate Governance Report.


A summary of the Group’s corporate governance practices with reference to the MCCG is described below.

BOARD ’S ROLES AND RESPONSIBILITIES

The Board is responsible for the corporate governance practices of the Group. Being at the helm of the Group, the Board governs the affairs of the Group on behalf of the shareholders and retains full and effective control over the Group.

As depicted in the above illustration, Board Committees have been established to assist the Board in its oversight function with reference to specific responsibility areas. However, it should be noted that the Board retains collective oversight over the Board Committees at all times. These Board Committees have been constituted with clear terms of reference and they are actively engaged to ensure that the Group is in adherence with good corporate governance.

BOARDResponsible for providing

stewardship and oversight of the Group’s business affairs

CHIEF EXECUTIVE OFFICER (CEO)

Responsible for the overall business and implementation of Board policies, decisions and powers within delegated limits for all matters except those reserved for the Board or delegated to Board Committees

Head of Internal Audit Heads of Operating units

Risk Management Committee Regional General Managers Tender Committee

AUDIT COMMITTEE (AC)

Review of financial reporting, internal controls, related party transactions and conflicts of interest, internal audit as well as

external audit processes.

NOMINATING COMMITTEE (NC)

Review candidatures for Board appointment and

re-appointment as well as annual assessment of the Board, Board Committees

and Directors.

REMUNERATION COMMITTEE (RC) SUSTAINABILITy COMMITTEE (SC)

Review and oversee administration of

remuneration policies and procedures of Directors

and Senior Management.

Monitor implementation of sustainability-related

policies, measures and actions in achieving

Group’s sustainability milestones and goals.

MANAGEMENT COMMITTEE



The Board has formalised a Board Charter which sets out the ethos of the Group, structure and authority of the Board. The Board Charter is the primary document that elucidates on the governance of the Board, Board Committees and individual Directors. The Board Charter is available on the Group’s website, http://www.bousteadplantations.com.my and was last reviewed on 27 February 2018.

The Directors allocate sufficient time to discharge their responsibilities effectively and attend Board and Board Committee meetings with sufficient regularity to deliberate on matters under their purview. Board meetings are held at quarterly intervals with additional meetings convened for particular matters, when necessary. During the year, the Board has deliberated on business strategies and critical issues concerning the Group, including business plan, annual budget, significant acquisitions and disposals, financial results as well as key performance indicators. The attendance of individual Directors at Board and Board Committees meetings during the financial year 2018 is outlined below:

Director Board AC NC RC SC

Non-Independent Non-Executive Directors

Gen. Tan Sri Dato’ Seri Panglima Mohd Ghazali Hj. Che Mat (R)

5/5 2/2 2/2

Tan Sri Dato’ Seri Lodin Wok Kamaruddin* 5/5 2/2

Datuk Zakaria Sharif 5/5 4/4 3/3

Independent Non-Executive Directors

Dato’ Mohzani Abdul Wahab 5/5 4/4 2/2 3/3

Maj. Gen. Dato’ Hj. Khairuddin Abu Bakar (R) J.P. 5/5 2/2

Dr. Raja Abdul Malek Raja Jallaludin 5/5 4/4 2/2 3/3

* Board Member until 31 December 2018

Board/Board Committee Chairman Member

There is clear delineation of roles of the Board and Management. The CEO is the conduit between the Board and the Management in driving the success of the Group’s governance and management function. The CEO manages and implements the Board’s policies and decisions through the Management Committee.

In performing their duties, all Directors have access to advice and services of a suitably qualified Company Secretary. The Company Secretary acts as a corporate governance counsel and ensures good information flow within Board, Board Committees and Senior Management. The Company Secretary attends all meetings of the Board and Board Committees and advises the Directors on the requirements encapsulated in the Company’s Constitution and legislative

promulgations such as the Companies Act 2016, Capital Markets and Services Act 2007 (Amendment 2012) and MMLR. Management provides Directors with complete, adequate and timely information prior to meetings and on an ongoing basis to enable them to make informed decisions.

As Integrity is a core value of the Group, the Board is cognizant of its responsibility to set the ethical tone for the Group. The Code of Ethics and Conduct and Whistleblowing Policy have been put in place to foster an ethical culture and allow legitimate ethical concerns to be escalated in confidence without risk of reprisal. The Code of Ethics and Conduct and Whistleblowing Policy are reviewed periodically by the Board. The Code of Ethics and Conduct is published on the Group’s website, http://www.bousteadplantations.com.my.


BOARD COMPOSITION

During the year under review, the Board of Directors comprised six members, three of whom are Independent Non-Executive Directors. Subsequently, YBhg. Tan Sri Dato’ Seri Lodin Wok Kamaruddin stepped down from the Board on 31 December 2018. With this, there are currently five Directors on the Board, three of whom are independent. The composition of the Independent Directors on the Board is in excess of the MMLR one third. The Board strives to ensure that it has an appropriate mix of skills, qualifications and experience to discharge its role and responsibilities effectively based on the Group’s nature of business. The Board, from time to time undertakes a review of its composition to determine areas of strengths and improvement opportunities.

Non-Independent Directors Independent DirectorsIndependent Directors

Independent Non-Executive DirectorsIndependent Non-Executive Directors

60-6960-69

70-7970-79

80-8980-89

Senior Independent DirectorSenior Independent Director

50% 33% 17%

66%17%

17%

Accounting

$Military Medical

Plantation Finance & Economics

Business Administration

Corporate Governance

Commerce

Board Skills and

Experience

Board Skills and

Experience

Age CompositionAge CompositionBoard CompositionBoard Composition

Non-Independent Directors

Independent DirectorsIndependent Directors

Independent Non-Executive DirectorsIndependent Non-Executive Directors

60-6960-69

70-7970-79

80-8980-89

Senior Independent DirectorSenior Independent Director

50% 33% 17%

66%17%

17%

Accounting

$Military Medical

Plantation Finance & Economics

Business Administration

Corporate Governance

Commerce

Board Skills and

Experience

Board Skills and

Experience



Appointments to the Board are made via a formal, rigorous and transparent process, premised on meritocracy and taking into account objective criteria such as qualification, skills, experience, professionalism, integrity and diversity needed on the Board in the context of the Group’s strategic direction. In the case of Independent Directors, the NC assesses the candidate’s ability to bring the element of detached impartiality and objective judgement to boardroom deliberations.

The Board, with the assistance of the NC, regularly assesses the skills, experience, independence and diversity required collectively for the Board to effectively fulfill its role. The Board was satisfied that there was mutual respect among Directors which contributed to a democratic environment so as to constructively deliberate and undertake a robust decision-making process.

The Board reviews its performance, and that of Board Committees and individual Directors on an annual basis. During the year under review, the Board engaged an external consultant to facilitate a Board Effectiveness Evaluation (BEE) exercise. Through the BEE, the Board was satisfied with level of commitment of its Directors in fulfilling the Board’s fundamental roles and responsibilities. The Board was also assured that there was mutual respect among Directors which contributed to a democratic environment so as to constructively deliberate and undertake a robust decision-making process. The Board and Board Committees’ composition had fulfilled the criteria required, possess a right

blend of knowledge, experience and mix of skills. In addition, the NC also recommended for the Board to endorse the re-election of the relevant Directors at the forthcoming Annual General Meeting (AGM).

In reviewing the independence of Independent Directors, the NC and Board adopt a qualitative approach in assessing if Independent Directors possess the intellectual honesty and moral courage to advocate professional views without fear or favour.

REMUNERATION

BPB aims to set remuneration at levels which are sufficient to attra

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