4 July 2017 - Welcome To Kim Loong Resources Berhad Briefing of KLR1Q18.pdf · ** A proposed final single tier dividend of 8 senin respect of the financial year 2017 payable on 29

Corporate Profile

4 July 2017

2K I M L O O N G R E S O U R C E S B E R H A D ( 2 2 7 0 3 - K )

Introduction to Kim Loong Resources Berhad(“KLR”) Group

• KLR’s holding company, Sharikat Kim Loong SendirianBerhad, 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 plantableNCR 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


Group Structure (Active Companies Only)AS AT 31 JANUARY 2017

KIMLOONG

RESOURCESBERHAD

100%OkidvilleHoldingsSdn. Bhd.

100%Kim Loong

Palm OilSdn. Bhd.

100%Kim LoongSabah MillsSdn. Bhd.

100%Kim Loong

TechnologiesSdn. Bhd.

90%Winsome

YieldsSdn. Bhd.

70%Desa Kim Loong

Palm OilSdn. Bhd.

70%Kim Loong –

KPD PlantationsSdn. Bhd.

51%Desa

OkidvilleSdn. Bhd.

100%Kim Loong

Palm Oil MillsSdn. Bhd.

68%Winsome

Al-YatamaSdn. Bhd.

98%Sungkit

EnterpriseSdn. Bhd.

100%Kim Loong

PowerSdn. Bhd.

100%Kim LoongCorporation

Sdn. Bhd.

60%Winsome Pelita (Pantu)

Sdn. Bhd.

75%Kim Loong

BiomassSdn. Bhd.

100%Winsome

PlantationsSdn. Bhd.

70%Winsome Pelita (Kranggas)

Sdn. Bhd.

100%Kim Loong

Technologies (Sabah)

Sdn. Bhd.


Principal activities

Business Activities

Plantation operations Milling operations

Oil PalmFFB

Crudepalm oil

Palmkernel

Biomass, bio-fertilizer,

solvent extracted palm oil, CER,

power generation

Palm kernel oil

Palm Kernelexpeller


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.


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.


Financial Highlights

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)23.7 22.9 7.8

PE Ratio (times)12.7 14.9 N/A

Return on Capital Employed (Pre-tax) [N1]15.4% 15.7% 5.7%

Return on Total Equity (Pre-tax)16.4% 16.5% 5.9%

Return on Total Assets (Pre-tax)13.4% 13.1% 4.8%

Gearing 0.07 0.05 0.05

Financial year

FINANCIAL PERFORMANCE

N1 : Capital Employed includes Total Equity and Bank Borrowings.* Based on unaudited 3-months results ended 30 April 2017.


Financial Highlights (continued)

REVENUE

2016

RM'000

2017

RM'000

1Q2018*

RM'000

Plantat ion 124,930 143,285 53,480

Palm Oil Milling 738,611 868,745 249,618

Less : Inter-segment eliminat ions (105,811) (119,437) (47,595)

TOTAL GROUP 757,730 892,593 255,651

RESULTS

Plantat 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 ad justments and eliminat ions (41) (1,094) (123)

Unallocated cost * * (4,211) (4,909) (417)

Finance income 8,724 8,894 2,232

Finance cost (1,048) (1,472) (389)

Other invest ment income - - -

Profit before t ax 107,579 111,165 41,973

Financial Year

ANALYSIS BY SEGMENTS

* 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.


Financial Highlights

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

Financial Year

DIVIDEND PAYMENT RECORD

* 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.


Oil palm estates (7,191 Ha)Keningau

Oil palm estate(1,996 Ha), Telupid

Oil palm estate(2,731 Ha), Sandakan

Oil palm estate (1,133 Ha) Kota Tinggi, Johor

Plantation Operations :

PENINSULARMALAYSIA

SARAWAK

SABAH

Sandakan

Pasir Gudang

LOCATION OF OPERATIONS

Oil palm estates Sg.Tenggang/Kranggas-Gross land area 10,471Ha-Estimated development area:

NCR land: 2,894 Ha; State land: 1,726 Ha.


Palm oil mill (90MT FFB/hr), Sook, Keningau

Palm oil mill (100MT FFB/Hr), Kota Tinggi, Johor

Palm Oil Milling:

PENINSULARMALAYSIA

SARAWAK

SABAH

Sandakan

Pasir Gudang

MILLING LOCATION

Palm oil mill (60MT FFB/hr), Telupid


StatisticsPRODUCTION, AREA AND AGE OF PALMS

PRODUCTION

FINANCIAL YEAR

2017

(MT)

1Q17

(MT)

1Q18

(MT)

Q to Q

% 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


FFB PRODUCTION

PRODUCTION, AREA AND AGE OF PALMS (CONTINUED)

Statistics (continued)

280,365 287,188304,732 299,455

251,926

88,256

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

2013 2014 2015 2016 2017 1Q18

FINANCIAL YEAR

MT FFB (MT)


FFB YIELD PER HECTARE


21.84 22.07 22.4921.56

18.89 19.02 18.63 18.48

17.66

15.91

0

5

10

15

20

25

2013 2014 2015 2016 2017

FINANCIAL YEAR

MT

/Ha

KLR Group

Malaysia



OIL YIELD PER HECTARE


0

1

2

3

4

5

6

7

FINANCIAL YEAR

MT

/Ha

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

2013 2014 2015 2016 2017


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).



CPO OER COMPARISON

20.31 19.5920.19 19.83

23.67 23.1621.57 21.11

0

5

10

15

20

25

2016 2017

FINANCIAL YEAR

%

KLR - Johor

Johor State

KLR - Sabah

Sabah State


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).


9%

17%

67%

7%

< 5 years 5 - 10 years 11 - 20 years > 20 years

Statistics (continued)PRODUCTION, AREA AND AGE OF PALMS (CONTINUED)

AGE PROFILE OF PALMS (AS AT 31 January 2017)

5%12%

28%48%

7%

< 3 years 3 - 6 years 7 - 15 years 16 - 20 years > 20 years


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).


Achievements (continued)

TELUPID MILL WAS AWARDED BY MPOB AS THE HIGHEST OER MILL (EXTERNAL FFB SOURCE) IN MALAYSIA IN YEAR 2013/2014.



KENINGAU MILL WAS AWARDED BY MPOB AS THE HIGHEST OER MILL IN MALAYSIA IN YEAR 2005 & 2007.



» 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.


Competitive Strengths

1. High FFB production yield will lead to strong cash flows andfinancial position :

» A large proportion of palm trees in our estates is at its prime age which

offer strong FFB production yield.


252,000312,000

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

2017 2018

FINANCIAL YEAR

MT

(F

FB

) Projection

Actual

Note : Projection of production is based on existing land bank.

FFB PRODUCTION PROJECTION

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


The Group has achieved complete integration of milling operations resulting in improved efficiency and at the same time generatingadditional 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.


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 milleffluent 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 1st 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.






(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 3rd 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.



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.

4. Commitment to improve efficiency in Plantation



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.


BUSINESS OUTLOOK

AND STRATEGIES


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.


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.


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.


KLR Group’s Future Plan

KLR’s future plans are as follows:

To source for additional plantation land in Johor, Pahang, Sabahand 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.


THANK YOU

(22703-K)(Incorporated in Malaysia under the Companies Act, 1965)

Contact person : Mr Gooi Seong Heen (Managing Director)Tel : 607-2248316Email : [email protected]


Corporate Fact Sheet

Corporate Address Lot 18.01, 18th Floor, Public Bank Tower

19, Jalan Wong Ah Fook,

80000 Johor Bahru, Johor, Malaysia

Directors Gooi Seong Lim Executive Chairman

Gooi Seong Heen Managing Director

Gooi Seong Chneh Executive Director

Gooi Seong Gum Executive Director

Gan Kim Guan Senior Independent Director

Chan Weng Hoong Independent Director

Cheang Kwan Chow Independent Director

Gooi Khai Chien Alternate Director to Mr. Gooi Seong Lim

Gooi Chuen Kang Alternate Director to Mr. Gooi Seong Heen


Corporate Fact Sheet (continued)

Stock Exchange Listing Main Market of Bursa Malaysia Securities Berhad

Listed on 27 November 2000

Issued shares 312 million shares of RM1.00 par value

Market Cap RM1,213 million (based on share price of RM3.89 on 30June 2017)

Major Shareholders Sharikat Kim Loong Sendirian Berhad 63.08%

(as at 21 April 2017) Teo Chuan Keng Sdn Bhd 2.11%

Morisem Consolidated Sdn Bhd 1.96%

Citigroup Nominees (Tempatan) Sdn Bhd 1.72%

Koperasi Polis DiRaja Malaysia Berhad 0.90%

Financial year end 31 January

4 July 2017 - Welcome To Kim Loong Resources Berhad Briefing of KLR1Q18.pdf · ** A proposed final single tier dividend of 8 senin respect of the financial year 2017 payable on 29

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