Corporate Profile 4 July 2017
Introduction to Kim Loong Resources Berhad ( KLR ) Group KLR s holding company, Sharikat Kim Loong Sendirian Berhad, had its beginning back in 1967 with a 1,000 acre rubber plantation in Ulu Tiram, Johor KLR is listed on the Main Market of Bursa Malaysia Securities Berhad since year 2000 and currently with a RM1,213 million market capitalisation KLR is primarily involved in oil palm cultivation and related businesses which include the following: More than 15,000 Ha of oil palm plantations in Sabah, Sarawak and Johor (excluding 2,000 Ha of plantable NCR land and State land to be secured and developed) 3 palm oil mills located in Johor and Sabah with a total processing capacity of 250MT of FFB per hour 2
Group Structure (Active Companies Only) AS AT 31 JANUARY 2017 KIM LOONG RESOURCES BERHAD 100% Okidville Holdings Sdn. Bhd. 100% Kim Loong Palm Oil Sdn. Bhd. 100% Kim Loong Sabah Mills Sdn. Bhd. 100% Kim Loong Technologies Sdn. Bhd. 90% Winsome Yields Sdn. Bhd. 70% Desa Kim Loong Palm Oil Sdn. Bhd. 70% Kim Loong KPD Plantations Sdn. Bhd. 100% Kim Loong Power Sdn. Bhd. 100% Kim Loong Corporation Sdn. Bhd. 100% Winsome Plantations Sdn. Bhd. 51% Desa Okidville Sdn. Bhd. 100% Kim Loong Palm Oil Mills Sdn. Bhd. 68% Winsome Al-Yatama Sdn. Bhd. 100% Kim Loong Technologies (Sabah) Sdn. Bhd. 60% Winsome Pelita (Pantu) Sdn. Bhd. 70% Winsome Pelita (Kranggas) Sdn. Bhd. 98% Sungkit Enterprise Sdn. Bhd. 75% Kim Loong Biomass Sdn. Bhd. 3
Principal activities Business Activities Plantation operations Milling operations Oil Palm FFB Crude palm oil Palm kernel Biomass, bio-fertilizer, solvent extracted palm oil, CER, power generation Palm kernel oil Palm Kernel expeller 4
Recent Developments Winsome Pelita (Pantu) Sdn. Bhd. Out of the total gross land area 10,471 Ha, the preliminary estimated plantable area is approximately 5,000 Ha inclusive of the state land to be developed by its related company Winsome Pelita (Kranggas) Sdn. Bhd. As at 31 May 2017, we have secured 2,894 Ha of which 2,419 Ha have already been planted. The estimated plantable area is subject to Pelita Holdings Sdn Bhd ( PHSB ), the Government agency which monitors the implementation of the project, obtaining acceptance from the NCR owners of those areas to participate. We plan to develop the remaining available NCR plantable land within the next 2 years. 5
Recent Developments (continued) Winsome Pelita (Kranggas) Sdn. Bhd. Winsome Plantations Sdn. Bhd. ( WPSB ) a wholly-owned subsidiary of KLRB had on 21st November, 2013 entered into a Joint Venture Agreement and on 10 July 2015 entered a Supplemental Agreement with Pelita Holdings Sdn. Bhd. for the purpose of developing approximately 2,072 Ha of the State land at Kranggas Pantu, Sri Aman Division, Sarawak into an oil palm plantation through Winsome Pelita (Kranggas) Sdn. Bhd., a joint venture company. We are in the process of surveying the land. We also have to settle the squatter problem prior to development of the State land. 6
Financial Highlights FINANCIAL PERFORMANCE 2016 2017 1Q2018* Revenue (RM'000) 757,730 892,593 255,651 EBITDA (RM'000) 137,778 143,431 50,144 Profit before tax (RM'000) 107,579 111,165 41,973 Weighted Average No. of Share ('000) 311,161 311,202 311,202 Shareholders' equity (RM'000) 579,963 593,349 618,664 Basic earnings per share (Sen) PE Ratio (times) Return on Capital Em ployed (Pre-tax) [N1] Return on Total Equity (Pre-tax) Return on Total Assets (Pre-tax) Financial year 23.7 22.9 7.8 12.7 14.9 N/A 15.4% 15.7% 5.7% 16.4% 16.5% 5.9% 13.4% 13.1% 4.8% Gearing 0.07 0.05 0.05 N1 : Capital Employed includes Total Equity and Bank Borrowings. * Based on unaudited 3-months results ended 30 April 2017. 7
Financial Highlights (continued) ANALYSIS BY SEGMENTS REVENUE 2016 RM'0 00 Financial Year 2017 RM'000 1Q2018* RM'0 00 Plant at ion 124,930 143,285 53,480 Palm Oil Milling 738,611 868,745 249,618 Less : Int er-segment eliminat ions (105,811) (119,437) (47,595) TOTAL GROUP 757,730 892,593 255,651 RESULTS Plant at ion 46,894 65,970 34,317 Palm Oil Milling 57,261 43,776 6,353 104,155 109,746 40,670 Int er-segment adjust ment s and eliminat ions (41) (1,094) (123) Unallocat ed cost ** (4,211) (4,909) (417) Finance income 8,724 8,894 2,232 Finance cost (1,048) (1,472) (389) Ot her invest ment income - - - Profit before t ax 107,579 111,165 41,973 * Based on unaudited 3-months results ended 30 April 2017. ** Unallocated cost mainly consists of salaries and other office administration cost net of management fee and commission income receivable. 8
Financial Highlights DIVIDEND PAYMENT RECORD Financ ial Year 2016 2017 1Q2018 Net profit attributable to equity holders of the Company (RM'000) 73,783 71,118 24,311 Net dividend declared (RM'000) 71,583 **62,241 N/A Gross Dividend Per Share (sen) 23.0 20.0 N/A Gross Dividend Yield (%) 7.6% 5.8% N/A Dividend Pay- out (%) 97.0% 87.5% N/A Market Price at period end (RM) 3.04 3.43 3.70 NTA per share (RM) 1.86 1.91 1.99 * Based on unaudited 3-months results ended 30 April 2017. ** A proposed final single tier dividend of 8 sen in respect of the financial year 2017 payable on 29 August 2017. 9
Plantation Operations : LOCATION OF OPERATIONS Oil palm estate(1,996 Ha), Telupid Oil palm estates (7,191 Ha) Keningau Sandakan PENINSULAR MALAYSIA SABAH Oil palm estate (1,133 Ha) Kota Tinggi, Johor SARAWAK Pasir Gudang Oil palm estates Sg.Tenggang/Kranggas -Gross land area 10,471Ha -Estimated development area: NCR land: 2,894 Ha; State land: 1,726 Ha. Oil palm estate(2,731 Ha), Sandakan 10
Palm Oil Milling: MILLING LOCATION Palm oil mill (60MT FFB/hr), Telupid Palm oil mill (90MT FFB/hr), Sook, Keningau Sandakan PENINSULAR MALAYSIA SABAH Palm oil mill (100MT FFB/Hr), Kota Tinggi, Johor SARAWAK Pasir Gudang 11
Statistics PRODUCTION, AREA AND AGE OF PALMS PRODUCTION FINANCIAL YEAR 2017 1Q17 1Q18 Q to Q (MT) (MT) (MT) % change FFB 251,926 52,460 88,256 68 CPO 250,197 51,389 69,279 35 PK 56,689 12,179 15,623 28 12
Statistics (continued) PRODUCTION, AREA AND AGE OF PALMS (CONTINUED) FFB PRODUCTION 350,000 300,000 280,365 287,188 250,000 304,732 299,455 251,926 MT 200,000 150,000 FFB (MT) 100,000 88,256 50,000 0 2013 2014 2015 2016 2017 1Q18 FINANCIAL YEAR 13
Statistics (continued) PRODUCTION, AREA AND AGE OF PALMS (CONTINUED) FFB YIELD PER HECTARE 25 21.84 22.07 22.49 21.56 20 17.66 MT/Ha 15 10 18.89 19.02 18.63 18.48 15.91 KLR Group Malaysia 5 0 2013 2014 2015 2016 2017 FINANCIAL YEAR 14
Statistics (continued) PRODUCTION, AREA AND AGE OF PALMS (CONTINUED) OIL YIELD PER HECTARE 7 6 5 MT/Ha 4 3 2 1 0 2013 2014 2015 2016 2017 KLR - Sabah estate 5.73 5.67 5.85 5.38 4.24 Sabah state 4.29 4.40 4.59 4.31 3.61 FINANCIAL YEAR Note : The statistics for Sabah state are extracted from MPOB web-site based on calendar year 2013 to 2017 whilst the figures from KLR are based on its financial year (Feb Jan). 15
Statistics (continued) PRODUCTION, AREA AND AGE OF PALMS (CONTINUED) CPO OER COMPARISON % 25 20 15 10 5 20.31 23.67 23.16 21.57 21.11 20.19 19.59 19.83 KLR - Johor Johor State KLR - Sabah Sabah State 0 2016 2017 FINANCIAL YEAR Note : The statistics for Johor and Sabah state are extracted from MPOB web-site based on calendar year 2016 and 2017 whilst the figures from KLR are based on its financial year (Feb Jan). 16
Statistics (continued) PRODUCTION, AREA AND AGE OF PALMS (CONTINUED) AGE PROFILE OF PALMS (AS AT 31 January 2017) 7% 5% 9% 12% 17% 48% 28% 67% < 3 years< 5 years 3-6 years 5-107 years - 15 years 11-20 16 years - 20 years > 20 years > 20 years 17
Achievements KIM LOONG RESOURCES BERHAD WAS AWARDED BY THE EDGE IN YEAR 2016 AS THE HIGHEST RETURNS TO SHAREHOLDERS OVER THREE YEARS IN MALAYSIA (PLANTATION). 18
Achievements (continued) TELUPID MILL WAS AWARDED BY MPOB AS THE HIGHEST OER MILL (EXTERNAL FFB SOURCE) IN MALAYSIA IN YEAR 2013/2014. 19
Achievements (continued) KENINGAU MILL WAS AWARDED BY MPOB AS THE HIGHEST OER MILL IN MALAYSIA IN YEAR 2005 & 2007. 20
Achievements (continued)» The FIRST Palm-pressed Fibre Oil Extraction ( PFOE ) plant in the World. The Group has successfully commissioned the first PFOE plant in Kota Tinggi, Johor in September 2007 and operated profitably ever since. The second PFOE plant in Keningau, Sabah was commissioned in September 2010 and is also in operation.» The FIRST registered methane emission reduction CDM Project from palm oil mill effluent in the World. The Group has successfully registered its first biogas project in Kota Tinggi, Johor with the Clean Development Mechanism ( CDM ) Executive Board of United Nations Framework Convention on Climate Change ( UNFCCC ) on 8 April 2007. The plant was fully commissioned in August 2008 and CER generated was certified. 21
Competitive Strengths 1. High FFB production yield will lead to strong cash flows and financial position :» A large proportion of palm trees in our estates is at its prime age which offer strong FFB production yield. 22
Competitive Strengths (continued) 400,000 350,000 FFB PRODUCTION PROJECTION MT (FFB) 300,000 250,000 200,000 150,000 100,000 252,000 312,000 Projection Actual 50,000 0 2017 2018 FINANCIAL YEAR Note : Projection of production is based on existing land bank. 23
Competitive Strengths (continued) 2. High OER to ensure our mill remain competitive :» Higher OER from mills generate higher processing margin for mills and enable our mills to offer competitive FFB price to attract external crops. This also improves efficiency in terms of oil yield per Ha. Keningau mill Telupid mill 24
Competitive Strengths (continued) 3. Improved efficiency and additional income from wastes in Mill The Group has achieved complete integration of milling operations resulting in improved efficiency and at the same time generating additional income from wastes. We have positively contributed towards reducing the pollution impact of our palm oil mills on the environment and improved sustainability of palm oil production. Some of our projects in improving efficiency and conversion of wastes through new innovation and technology are as follows: - PFOE plant in our Kota Tinggi mill & Keningau mill The plants extract residual oil from pressed fibre and increase OER by about 0.5%. Profit before tax based on average selling price of RM2,580/MT in FY2017 is RM0.6 million from Kota Tinggi mill. 25
Competitive Strengths (continued) 3. Improved efficiency and additional income from wastes in Mill (Cont d) - Biogas project at Kota Tinggi mill, Keningau mill & Telupid mill. This project reduces greenhouse gas emissions from palm oil mill effluent by capturing the methane gas emissions to generate power / steam, thereby reducing environmental impact of milling operations and also supply power to various plants and quarters. Gas engines are being installed in all biogas plants to generate power more efficiently. The Group has taken steps to apply to SEDA and TNB / SESB to supply power to the Grid. The 1 st plant in Kota Tinggi mill has commenced operations in November 2013 and our gas engine system in Keningau and Telupid mills have commenced operations in FY2016. Our gas engine system will help to conserve shell for sale. 26
Competitive Strengths (continued) 3. Improved efficiency and additional income from wastes in Mill (Cont d) Currently, we have obtained Sustainable Energy Development Authority ( SEDA ) approval for 1.8 megawatt for Kota Tinggi mill and 2.0 megawatt for Keningau mill. We have applied for another 2.0 megawatt for our Telupid mill. Kota Tinggi mill has purchased gas engines and awarded interconnection system contract. Target commissioning by 3 rd quarter of 2017. - Sale of surplus shell to replace usage of fossil fuel. The revenue for FY2017 from the sale of shell to third parties is RM7.4 million from our three mills. 27
Competitive Strengths (continued) 4. Commitment to improve efficiency in Plantation Latest planting material and technology is used to improve yield potential from plantation operations. Recycling mill wastes to improve soil conditions in plantations. To improve productivity and reduce reliance on foreign labour through mechanisation on suitable activities and areas. 28
Competitive Strengths (continued) 5. Management Capability» The Group management has over 40 years experience in oil palm industry.» Capable managers and supporting staffs in all business entities.» Ability to identify commercially viable projects for expansion or diversification backed by strong in-house research capability. 29
BUSINESS OUTLOOK AND STRATEGIES 30
Near Term Prospect Plantation» The Group s FFB production for FY2018 is expected to recover significantly from the low FFB production recorded in FY2017.» Our main focus in the near term is to secure and plant up the NCR land and state land within our project area in Sarawak. We expect more contribution from our young palms from Johor, new planting in Sarawak and replanting in Sabah.» The Group s performance is expected to be satisfactorily for the FY2018 based on current trend of production as well as palm oil prices.» Continual replanting programme for old palms. 31
Near Term Prospect (continued) Mill» In term of CPO production, despite stiff competition from surrounding mills, we target to achieve FFB intake of 1.20 million MT which is slightly higher than 1.15 million MT achieved in the FY2017.» Estimated sales of excess palm kernel shells to third parties is about RM6.8 million from our three mills in FY2018.» Both palm fiber and solvent extraction plants ( PFOE ) in our Kota Tinggi and Keningau mills are running satisfactorily, contributing revenue and profit for the Group. 32
Development of Downstream Projects (continued) Implementation of long fibre project In January 2014, the Group has successfully implemented and commissioned a plant capable of extracting dried long fibre from empty fruit bunch ( EFB ) which is normally considered as waste product from palm oil milling. Dried long fibre can be processed into various dimensions and grades to suit specific application for export such as: - mattress and cushion production - erosion control mat / blanket for landscaping and horticulture - medium density fibre board manufacturing - moulded wares and composite material production - paper and pump production - Bio-crete - acoustics control This dried long fibre plant is expected to contribute positively (though may not be significant) to the Group s overall revenue and profitability in coming years. 33
KLR Group s Future Plan KLR s future plans are as follows: To source for additional plantation land in Johor, Pahang, Sabah and Sarawak. However, RSPO restrictions is a major contraint. To look into the possibility of setting up a palm oil mill in Sarawak. Utilisation of de-oiled fibre and empty fruit bunches as raw materials for other downstream products. To generate power from biogas for sale to TNB national and Sabah Electricity Sdn. Bhd. grid. 34
(22703-K) (Incorporated in Malaysia under the Companies Act, 1965) THANK YOU Contact person : Mr Gooi Seong Heen (Managing Director) Tel : 607-2248316 Email : heen@kimloong.com.my 35
Corporate Fact Sheet Corporate Address Lot 18.01, 18 th Floor, Public Bank Tower 19, Jalan Wong Ah Fook, 80000 Johor Bahru, Johor, Malaysia Directors Gooi Seong Lim Executive Chairman Gooi Seong Heen Gooi Seong Chneh Gooi Seong Gum Gan Kim Guan Chan Weng Hoong Cheang Kwan Chow Gooi Khai Chien Gooi Chuen Kang Managing Director Executive Director Executive Director Senior Independent Director Independent Director Independent Director Alternate Director to Mr. Gooi Seong Lim Alternate Director to Mr. Gooi Seong Heen 36
Corporate Fact Sheet (continued) Stock Exchange Listing Listed on 27 November 2000 Issued shares Main Market of Bursa Malaysia Securities Berhad 312 million shares of RM1.00 par value Market Cap RM1,213 million (based on share price of RM3.89 on 30 June 2017) Major Shareholders Sharikat Kim Loong Sendirian Berhad 63.08% (as at 21 April 2017) Teo Chuan Keng Sdn Bhd 2.11% Financial year end Morisem Consolidated Sdn Bhd 1.96% Citigroup Nominees (Tempatan) Sdn Bhd 1.72% Koperasi Polis DiRaja Malaysia Berhad 0.90% 31 January 37