Global Palm Resources Holdings Limited 1QFY2010 Results 14 June 2010

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June Baker
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1 Global Palm Resources Holdings Limited 1QFY2010 Results 14 June 2010

2 Important Notice This presentation (this Presentation ) has been prepared by Global Palm Resources Holdings Limited (the Company ) for information purposes only and has not been independently verified. It is not the intention to provide, and you may not rely on this Presentation as providing, a complete or comprehensive analysis of the Company s financial or trading position or prospects. This Presentation does not constitute, or form any part of any opinion on any advice to sell, or any offer for the sale or subscription of, or invitation or agreement to subscribe for, or solicitation of any offer to buy or subscribe for, any securities, nor shall it or any part of it form the basis or be relied on in connection with, any contract or commitment or investment decision whatsoever. This Presentation may contain projections and forward-looking statements that reflect the Company s current views with respect to future events and financial performance, which are based on current assumptions subject to various risks and may therefore change over time. No assurance can be given that future events may occur, that projections will be achieved, or that the Company s assumptions are correct. Actual results may differ materially from those which may be projected. Opinions expressed herein reflect the judgement of the Company as of the date of this Presentation and may be subject to change without notice if the Company becomes aware of any information or developments, whether specific to the Company, its business or in general, which may have a material impact on any such opinions. Additionally, the information contained herein is current only as of the date of this Presentation and shall not, under any circumstances, create any implication that such information contained herein is correct as of any time subsequent to the date hereof or that there has been no change in the financial condition or affairs of the Company since the date herein. This Presentation may be updated from time to time and the Company does not undertake to post any such amendments or supplements on this Presentation. None of the Company or any of its subsidiaries, affiliates, advisers or representatives shall be responsible for any consequences resulting whatsoever from the use of this Presentation as well as the reliance upon any opinion or statement contained herein, or for any omission herein. Neither this Presentation nor any of its contents may be used, quoted, reproduced or disclosed in any manner by any other person without the prior written consent of the Company." 2

3 Industry Overview

Palm oil and its uses Typically start to

average commercial life span of 25 years CPO

and palm kernel oil vs other oils / fats:

growth Excellent profitability of palm oil

yields per ha) Attractive prices Palm kernel

derivatives 25% Derivatives Palm kernel meal

4 Palm oil and its uses Typically start to produce FFB 3 years after planting with an average commercial life span of 25 years CPO FFB Palm kernels Increase in demand for CPO and palm kernel oil vs other oils / fats: Versatility in uses Population & economic growth Excellent profitability of palm oil cultivation (low production costs and high yields per ha) Attractive prices Palm kernel oil (PKO) Edible products CPO 77-80% PKO derivatives 25% Derivatives Palm kernel meal Industrial applications CPO 20-23% PKO derivatives 75% 4

5 Demand: Rising importance of palm oil Demand: World consumption by commodity of major oils and fats 1998: mil tons consumed 2008: mil tons consumed Rapeseed oil 11.9% Sunflower oil 8.3% Other veg oils 19.5% Others/ Animal fats 20.4% Palm oil 17.1% Soybean oil 22.8% Sunflower oil 6.5% Other veg oils 15.4% Rapeseed oil 12.4% Others/ Animal fats 15.2% Palm oil 26.7% Soybean oil 23.8% Palm oil CAGR: 9.2% 5 Palm oil CAGR (compound annual growth rate) ( ) of 9.2% pa: Highest among the 17 major oils and fats World consumption steadily increasing: Increasing demand for food per capita Growing population primarily in developing countries Additional demand for non-food applications Note: All references to tons shall be in metric tonnes unless otherwise stated.

Indonesia: The top palm oil producer in the world with strong growth potential ahead World output of CPO by countries (mil tons) 50 40 30 20 10 0 Malaysia Indonesia Others Indonesia CAGR: 13.6% 6.2 5.

7 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Malaysia and Indonesia: 86% of world production of CPO in 2008 Since mid-2006, Indonesia has become the top palm oil producer Growth driven by

6 Indonesia: The top palm oil producer in the world with strong growth potential ahead World output of CPO by countries (mil tons) Malaysia Indonesia Others Indonesia CAGR: 13.6% Malaysia and Indonesia: 86% of world production of CPO in 2008 Since mid-2006, Indonesia has become the top palm oil producer Growth driven by rapidly rising mature oil palm area from its plantations Indonesia: much larger growth potential with large land reserves still available and suitable for oil palm cultivation ISTA Mielke expects mature area to rise from 4.1m ha on the average in 2006 to 5.0 mil ha in 2008 and to 8.0 mil ha in

China and India: High growth palm oil consumption markets World imports of palm oil by selected countries (mil tons) 35 India China All others 30 25 20 15 10 5 0 22.

8 98 99 00 01 02 03 04 05 06 07 08 Per Capita Consumption of oil and fats (kg) 10-yr CAGR for China 15.1%, India 13.

7 China and India: High growth palm oil consumption markets World imports of palm oil by selected countries (mil tons) 35 India China All others Per Capita Consumption of oil and fats (kg) 10-yr CAGR for China 15.1%, India 13.2% China: Sharp rise in imports expected to continue Imports to a record 4.9 mil tons in Jan/Sep 2009, up 17% yoy Lifting of quota on vegetable oil wef 1 Jan 2006 Accelerating economic activity (GDP) Rapidly rising disposable income, primarily in urban areas 7

due to initiatives by various governments

8 World market to become increasingly dependent on palm oil for bio-diesel production in the years ahead Increased utilisation of bio-diesel is anticipated due to initiatives by various governments eg the Kyoto Protocol World Production of Bio-diesel (mil tons) 8

9 Expected buoyant palm oil prices Monthly crude palm oil prices c.i.f. Rotterdam in US-$/ton Average CPO prices in Rotterdam 30 years ended 2005: US$466 per ton 10 years ended 2007: US$476 per ton Prices likely to remain sizably above the long-range average in 2010 and in the years ahead Prospective increase in world consumption of palm oil and other vegetable oils as a renewable source of energy (which comes in addition to the rising global demand for edible purposes) prospective increase in energy prices 9

10 Corporate Profile

11 About Global Palm Resources A palm oil producer in Indonesia Benefiting both people and the planet 11

12 Experienced management team Led by Dr. Suparno Adijanto, Executive Chairman and CEO and Thomas Agap Lim, COO and Executive Director, both of whom are veterans with approximately 17 years of experience in the oil palm plantation industry Supported by a team of executive officers Ge Luiyanto Yamin CFO Lim Ardi Dharma Head of Project Development Berlino Mahendra Head of General Affairs Chua Cheng Hian Financial Controller Cheong Meng Chit Head of Plantation Estate Sofian Masroeddin Head of Palm Oil Mill Experience (approximate) 27 years (Finance and accounting) 35 years (Working experience) 22 years (Licensing matters) 10 years (Finance and accounting) 38 years (Oil palm plantation cultivation and field maintenance) 22 years (Working experience) 12

Corporate milestones Commenced palm oil business in West Kalimantan Hak Guna Usaha for another 10,602 ha Entered Cooperation Agreements under the Plasma Programme in 1996 and 2000 Completed mill with

13 Corporate milestones Commenced palm oil business in West Kalimantan Hak Guna Usaha for another 10,602 ha Entered Cooperation Agreements under the Plasma Programme in 1996 and 2000 Completed mill with FFB processing capacity of 40 tons/hour; First sale of CPO in Dec 1997 Hak Guna Usaha to 16,079 ha of land as at 30 Sep Received Hak Guna Usaha for 5,477 ha for palm oil cultivation : Bulk of planting, amounting to approx. 7,000 ha, including Plasma Programme, was done : Additional 3,296 ha cultivated Increased FFB processing capacity to 60 tons/hr Listed on SGX-ST on 29 Apr: Received approval of RSPO membership application on 26 May 13

Business overview Office Office Plantation and mill Office Plantation (Cultivation) Mill (FFB Processing) Products In West Kalimantan, Indonesia As at 31 Dec 2009: Total land bank: 16,079 ha

14 Business overview Office Office Plantation and mill Office Plantation (Cultivation) Mill (FFB Processing) Products In West Kalimantan, Indonesia As at 31 Dec 2009: Total land bank: 16,079 ha Cultivated land: 11,535 ha Mature (1) area: 10,300 ha Ave. FFB yield: 17.5 tons/ha (1) Mature: Oil palms > 3 years old Process FFB harvested from Nucleus; purchased from Plasma farmers and from other nearby plantations FFB processing capability: -60 tons/hr -360,000 tons/yr -FY09: 218,203 tons processed Crude Palm Oil (CPO) Sold to Indonesian palm oil refineries and palm oil bulking facilities; commodity traders FY09: 46,850 tons produced Palm kernel Sold to Indonesian palm kernel processing plants FY09: 8,902 tons produced 14

Land bank Our plantation is located in Ketapang Regency of West Kalimantan where climatic conditions are suitable for cultivation of oil palms As at 31 Mar 2010 Area (ha) % of total land bank Under

15 Land bank Our plantation is located in Ketapang Regency of West Kalimantan where climatic conditions are suitable for cultivation of oil palms As at 31 Mar 2010 Area (ha) % of total land bank Under cultivation 11, % Nucleus 8,833 Plasma 2,834 Available for future cultivation 4, % Total land bank 16, % Mature (1) 10,300 ha 88.3% Immature (2) 1,367 ha 11.7% (1) Mature : oil palms > 3 years old (2) Immature : oil palms up to 3 years old

16 Healthy age profile As at 31 Mar 2010 Area cultivated First 3 years (Immature) 4-6 years (Mature) 7-18 years (Prime) Above 18 years Total Nucleus (ha) 1, ,180-8,833 Plasma (ha) ,802-2,834 Total (ha) 1, ,982-11,667 % of cultivated area 11.7% 2.7% 85.6% - 100% 85.6% are at peak production stage Weighted average age is 12.7 years Oldest oil palms about 17 years vs commercial life span of 25 years Age profile enables us to increase FFB production over the next several years with minimal increases in production costs and capital expenditure 16

Focus on Corporate Social Responsibility (CSR) Environmental Policy Sustainable development is integral Zero burning for planting of new oil palms Zero waste management on CPO production waste

17 Focus on Corporate Social Responsibility (CSR) Environmental Policy Sustainable development is integral Zero burning for planting of new oil palms Zero waste management on CPO production waste Proposed co-composting method of treating EFB (empty palm fruit bunches) and POME (palm oil mill effluent) Reduce methane gases emissions Produce organic compost fertilisers for cultivation of oil palms Community Initiatives To improve the social and economic welfare of surrounding communities Plasma Programme Benefiting approximately 1,400 small landholders as at 31 Dec 2009 Education, social and cultural welfare Scholarships for children of local communities Improve living conditions Sponsor and participate in various cultural and religious celebrations Membership to the Roundtable of Sustainable Palm Oil 17

Goodwill and support from local community and government agencies Aligning the Group s interests with the local communities and government agencies is crucial to long-term success Adopting an

18 Goodwill and support from local community and government agencies Aligning the Group s interests with the local communities and government agencies is crucial to long-term success Adopting an employee-centric approach with a view to being identified as the employer of choice within the local communities and government agencies Improving standard of living in the community through constructing modern facilities and amenities Constructing schools and child-care centres Providing utilities for workers on our oil palm plantation High employee retention rate 18

19 Financial Highlights

20 P&L highlights Rp bil FY09 FY08 Var % 1Q10 1Q09 Var % Revenue Gross profit Profit before tax nm Net profit after tax nm Profit attributable to shareholders nm EBITDA Gross profit margin (%) (3) Net profit margin (%) nm EBITDA margin (%) Revenue due to higher selling price of CPO and PK; while volume sales remained fairly constant Net profit attributable to shareholders surged

21 Segment review FY09 FY08 Var % 1Q10 1Q09 Var % Sales volume (tons) CPO 47,627 36, ,430 9,508 (1) Palm kernels 8,886 7, ,983 1, Average Selling Price (Rp/kg) CPO 5,925 6,611 (10) 6,453 4, Palm kernels 2,176 3,373 (35) 2,617 1, Revenue (Rp billion) CPO Palm kernels (23)

22 Segment review Revenue (Rp bil) Revenue by products (%) +13% +31% FY09 1Q10 22

23 Balance sheet highlights Rp bil Dec 09 Dec 08 Var Mar 10 Dec 09 Var Total assets Total liabilities (302.3) (317.0) (5) (292.7) (302.3) (3) Current ratio (times) (23) Net gearing (%) 26.7% 47.1% (20) 22.8% 26.7% (15)

24 Cashflow statement Rp bil FY09 FY08 1Q10 1Q09 Net cash generated from operating activities Net cash (used in) / generated from investing activities Net cash (used in) / generated from financing activities Cash on hand and in banks at the beginning of the year Cash on hand and in banks at the end of the year Net increase / (decrease) in cash on hand and in banks (420.3) (24.7) (5.4) (5.0) (17.6) (11.5) (5.3) (1.5) (1.9)

25 Production Highlights

26 Production statistics Production Output (tons) FY09 FY08 Var % 1Q10 1Q09 Var % FFB production 187, , ,767 44,369 (22) Nucleus 130, , ,857 30,573 (22) Plasma 56,277 51, ,910 13,796 (21) FFB processed 218, , ,770 52,228 (22) CPO production 46,850 38, ,807 11,081 (21) Palm kernels production 8,902 8, ,666 2,229 (25) Productivity FY09 FY08 Var % 1Q10 1Q09 Var % FFB yield (tons/ha) (22) CPO extraction rate (%) (1) Palm kernels extraction rate (%) (14) (4) Production output in 1Q10 affected by biological tree stress phenomenon 26

27 Productivity trend CPO & PK production affected by decline in harvest Extraction rates maintained 27

28 Plantation statistics As at 31 December Nucleus Planted Area (ha) FY08 % of total FY09 % of total 1Q10 % of total 8,124 74% 8,701 75% 8,833 76% Mature 7,466 68% 7,466 65% 7,466 64% Immature 658 6% 1,235 11% 1,367 12% Plasma Planted Area (ha) 2,834 26% 2,834 25% 2,834 24% Mature 2,834 26% 2,834 25% 2,834 24% Immature Total Planted Area (ha) 10, % 11, % 11, % Mature 10,300 94% 10,300 89% 10,300 88% Immature 658 6% 1,235 11% 1,367 12% Additional planting of 132 ha (1Q10 vs FY09) 4,412 ha available for future cultivation 28

5,045 ha Abundance of arable land in West Kalimantan 4.

29 Access to land banks suitable for future cultivation of oil palms Available for future cultivation: 4,412 ha Currently under cultivation: 11,667 ha PT Cemaru (call option) Total land bank with Hak Guna Usaha: 6,429 ha Cultivated land: 1,384 ha Available for cultivation: 5,045 ha Abundance of arable land in West Kalimantan 4.1 million ha of land zoned for oil palm cultivation (1) (1) Based on the article issued by the West Kalimantan government office entitled Slow Investment: Shortage of Palm Seed in West Kalimantan updated as at 4 March

30 Industry Outlook and Business Strategies 30

31 Continued global and Indonesian domestic demand for palm oil 1. Constant food requirements by world population, particularly in India, China and other emerging markets in Asia as well as Africa and several Central and South American countries 2. Usage of palm oil and other vegetables oils in the biofuel industry in line with global energy demand 3. Global requirements of vegetable oils from oleochemical as well as compound feed industries. Although CPO prices have increased in 1Q10, it is expected to be volatile given the uncertainty of the global financial market

32 Strategies and future plans 1. Develop uncultivated land bank 2. Acquire plantations & land banks Intend to cultivate remaining 4,412 ha uncultivated land bank into oil palm plantations in the next three years Intend to double the size of our current cultivated oil palm plantation land within the next three years Acquire other oil palm plantations that are revenue generating Targets must have at least 3,000 ha of land under cultivation and at least 4,000 ha of uncultivated land bank in Kalimantan and/or other parts of Indonesia Call option to acquire 95% stake in PT Cemaru to increase uncultivated land bank by 5,045 ha 3. Construct Co-Composting Plant To generate organic compost fertilisers using EFB and POME Cost savings from having to purchase fertilizers Proposed implementation of GPR-CDM programme to be registered with the relevant certification body under the Kyoto Protocol, which entitles accreditation of Certified Emission Reductions (CERs) for our efforts at reducing methane emissions, and derive potential revenue from the trading of such CERs 32

33 In Summary

34 Salient highlights 1QFY2010 performance Revenue 31% to Rp66.0 billion EBITDA 214% to Rp20.0 billion Profit margins remained healthy 1QFY2010 production statistics Production output declined (FFB 22%) due to tree stress phenomenon Extraction rates maintained Plantation Strong age profile with 85.6% of our palm in peak production stage New planting of 132 ha Clear growth strategies ahead To double land size of our current cultivated oil palm plantation land within the next three years via organic growth and acquisitions Construction of co-composting plan for organic compost fertilisers (cost savings from having to purchase fertilizers)

35 Summary of investment merits Industry Area Moment Strategy Equilibrium Xchange Investor I AM SEXI 35

36 Thank you Q & A session

Global Palm s 1Q10 EBITDA soars 214% to Rp20 billion

Press Release Global Palm s 1Q10 EBITDA soars 214% to Rp20 billion 31% rise in revenue supported by higher average selling prices of and palm kernels Net profit attributable to equity holders rises more