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Golden Agri-Resources Ltd
Company Presentation
November 2014
0
Disclaimer
This presentation has been prepared by Golden Agri-Resources Ltd. (“GAR” or “Company”) for informational
purposes, and may contain projections and forward looking statements that reflect the Company’s current
views with respect to future events and financial performance. These views are based on current
assumptions which are subject to various risks and which may change over time. No assurance can be
given that future events will occur, that projections will be achieved, or that the Company’s assumptions are
correct. Actual results may differ materially from those projected. A prospective investor must make its own
independent decision regarding investment in securities.
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, whether
specific to the Company, its business, or in general, which may have a material impact on any such
opinions.
The information is current only as of its date and shall not, under any circumstances, create any implication
that the information contained therein is correct as of any time subsequent to the date thereof or that there
has been no change in the financial condition or affairs of GAR since such date. This presentation may be
updated from time to time and there is no undertaking by GAR to post any such amendments or
supplements on this presentation.
The Company will not be responsible for any consequences resulting from the use of this presentation as
well as the reliance upon any opinion or statement contained herein or for any omission.
© Golden Agri-Resources Ltd. All rights reserved.
1
Contents
1
Corporate Overview
3
2
Key Competitive Strengths
6
3
Growth Strategy
16
4
Financial Performance
19
2
1
Corporate Overview
Overview of GAR
•
GAR is listed on SGX since 1999
•
A leading Indonesian plantation group with
integrated operations for the production of palm
oil-based edible oil and fat products
•
Integrated operations in China including a deep
sea port, soybean crushing plants, and
production of refined edible oil products
Plantation Profile
Planted Area (as of 30 Sep 2014)1 :
471,500 ha
Output of Palm Products2
YTD Sep 2014
:
2,230,000 MT
FY 2013
:
2,768,000 MT
•
Crude palm oil (CPO)
•
Cooking Oil
•
Palm Kernel (PK)
•
Margarine
FY 2013
•
Palm Kernel Oil (PKO)
•
Shortening
•
Palm Kernel Meal
•
Specialty Fats
•
Soybean Oil
•
Stearin
•
Soybean Meal
•
Oleochemicals
Financial Statistics (in US$ million)
YTD Sep 2014
Key Products
Revenue
:
5,797
6,585
EBITDA
:
431
662
Core Net Profit3
:
176
318
Equity4
:
8,800
8,721
Notes:
1. Including plasma
2. CPO and PK
3. Net profit attributable to owners of the Company excluding net effect of net gain from changes in fair value of biological assets, foreign exchange gain/
loss and exceptional items
4. Attributable to owners of the Company
4
Largest Indonesian Plantation Group with
Integrated Operations
Research &
Development
Collaborate with
CIRAD
Seedling
Plantations &
Harvesting
No of mills
Planted area1,2
Total
471,536 ha 42
• Nucleus 370,781 ha
• Plasma 100,755 ha
Dami Mas Seed
Garden
Capacity1
24,000,000 seeds
p.a.
CPO milling
Mature area2
441,334 ha
production2
FFB
7,326,826 MT
(YTD Sep 2014)
9,040,682 MT
(FY 2013)
Capacity1
11,645,000 MT
FFB p.a.
Basic product
Processing
CPO
Refining
Production
1,804,865 MT
(YTD Sep 2014)
2,240,598 MT
(FY 2013)
No of refineries
5
Palm kernel
(PK)
Kernel
crushing
Production
425,456 MT
(YTD Sep 2014)
527,509 MT
(FY 2013)
Capacity1
3,180,000 MT p.a.
No of plants
8
Processed
product
Branded &
Unbranded
Cooking Oil
Margarine
Specialty Fats
Palm Kernel
Meal
Palm Kernel
Oil
Capacity1
1,065,000 MT p.a.
Fatty Acids
Oleochemical
Notes:
1. Data as of 30 Sep 2014
2. Including plasma
Capacity1
88,000 MT p.a.
Glycerine
5
2
Key Competitive Strengths
Key Competitive Strengths
GAR is a leader in the high growth palm oil industry in Indonesia
Leading Indonesian
plantation
groups with
vertically integrated
operations
Sustained growth
through expansion in
upstream and
downstream
Well established and
prudent downstream
business in both
domestic and export
markets
Management
expertise and unrivalled
technology platform
underpin high
production yields
Continuous
strong
commitment to
the environment
and social
community
7
Largest Indonesian Plantation Group with
Vertically Integrated Operations
Largest plantation group in Indonesia and second largest globally in terms
of planted area
Malaysia
Indonesia
‘000 ha
600
400
525
472
200
282
330
280
184
125
0
GAR
Astra Agro
Wilmar
Indo Agri (incl
First
Lonsum)
Resources
Sampoerna Sime Darby
392
161
193
IOI
KLK
Felda
Planted
Note: Based on latest publicly available information (including plasma, except Felda)
Largest plantation group in Indonesia and third largest globally in terms of
CPO production 1,2
Malaysia
Indonesia
‘000 MT
3,000
2,981
2,000
1,000
2,466
2,241
1,539
1,848
589
810
351
Indo Agri
First
Sampoerna Sime Darby
CPO
Resources
0
GAR
Astra Agro
Notes:
1. Based on latest full fiscal year data
Wilmar
708
778
IOI
KLK
Felda
2. Felda is the largest CPO producer with about 68% of its FFB processed sourced from plasma farmers and other parties
8
Management Expertise Delivers High
Production Yields
GAR is one of the lowest cost producers with industry-leading efficiencies
FFB yield per hectare 1
CPO yield per hectare1 & 2
22
4.8
5.0
20.7
4.6
20
18.7
4.5
(MT/ha)
(MT/ha)
21.0
18.8
4.3
3.8
4.0
3.6
18
3.5
16.3
16
GAR
Astra Agro
First
Resources
Wilmar
Indo Agri
Note:
1. Based on full fiscal year data
3.0
GAR
Astra Agro
First
Wilmar
Indo Agri
Notes:
Resources
1. Based on full fiscal year data
2. CPO yield/ha is derived from FFB yield/ha multiply by extraction rate
GAR Age Profile 1
Prime 2 (19‐25 yrs), 29%
Immature (1‐3 yrs), 6%
Young (4‐6 yrs), 14%
Prime 1 (7‐18 yrs), 46%
5
4.8
3.7
4
(MT/ha)
Old (> 25 yrs), 5%
Palm is the highest yielding vegetable oil
3
2
1
0.7
0.6
0.5
Rape Oil
Sun Oil
Soy Oil
0
Palm Oil
(GAR)
Note:
1. Data as of 30 Sep 2014, include plasma. Average age is 14 years
Palm Oil
(Industry)
Source: Oil World and Company
9
Unrivalled Technology Platform
Enhancing Operational Efficiency
To monitor and manage its widely spread operations efficiently, GAR utilises a
state-of-the-art proprietary information technology system
•
War Room utilises SAP, GIS and Google Earth applications
•
Block-by-block Performance Analysis (30 ha per block) is updated daily
•
Facilitates problem identification (e.g. low yielding areas), enhancing management’s ability to address
issues early and prioritise improvements/changes
Output of Palm Products
(‘000 MT)
2,911
2,768
2,640
2,347 2,273
1,794
1,666
1,3431,433
1,201
1,039
1,890 1,967 2,073
Note:
2010 and 2013 output declined due to unfavourable weather conditions and
biological tree stress
10
Unrivalled Technology Platform Optimising the
Production Yields and Minimising Cost
Superior fertiliser cost management through operational control and R&D
•
Fertiliser program developed with CIRAD1
•
Accurate fertiliser plan to optimize benefit
especially with more volatile climate conditions
•
Application and dosage based on cost/benefit
analysis using leaf sampling (“blood test”),
analysing condition of each plantation
•
GAR utilises GPS-guided aerial manuring to
cover expansive plantation hectarage
•
With this advanced aerial manuring, GAR can
tighten its cost of production compared to
manual application
Note:
1 CIRAD = Centre de cooperation Internationale en Recherche Agronomique pour le Développement
(French Agricultural Research Centre for International Development)
11
Downstream Highlights – YTD Sep 2014
Sourcing of
raw materials
Processing
• Almost six million
tonnes of palm
based products
were sold during
YTD Sep 2014, a
year-on-year
increase of 25%
• Full utilisation of all
our refineries in
Indonesia
• Ongoing exploration
of strategic sourcing
opportunities to be
more competitive in
China
• Managing utilisation
of facilities in China to
reduce cost
• New refinery in
Lampung with
capacity of 3,000 MT
per day is completed
Product
customisation
Sales and
distribution
• Sales of palm
based refined
products increased
by 40% year-onyear
• Destination sales grew
by 57% year-on-year,
contributing 69% to our
export volume
• Broadening
consumer product
portfolio in
Indonesia with food
and beverage
products
• Ongoing fleet acquisition
and preparing for the
opening of new branch
offices in destination
countries
• Investment in integrated
consumer distribution
network in Indonesia,
including e-commerce
12
Strong Commitment to the Environment
and Community for Sustainable Palm Oil
Sustainable Practices for Existing Plantations
ƒ
ƒ
ƒ
Zero waste policy by recycling of mill wastes (Empty
Fruit Bunch and Palm Oil Mill Effluent)
Precise dosage in fertiliser application plan to
minimise risk of pollution
Integrated pest management by deploying
biological controls to minimise and mitigate the
impact of chemical pesticides
Enhanced Planting Procedures
ƒ
No deforestation footprint in our palm oil operations by not developing on:
ƒ
ƒ
ƒ
ƒ
ƒ
ƒ
ƒ
High carbon stock (HCS) forests
High conservation value (HCV) forest areas
Peat lands of any depth
Continuous yield improvement in nucleus and plasma plantations managed by the Company
Zero burning policy in land clearing
Ensure free, prior and informed consent for indigenous and local communities
Comply with all relevant laws and National Interpretation of RSPO Principles and Criteria
13
Holistic Approach to Sustainability
We believe that multi-stakeholder collaboration is the best way to find solutions for sustainable
palm oil production to conserve the forests, create much needed employment and ensure long-term
sustainable growth of the palm oil industry which is a vital part of the Indonesian economy. We will
continue to engage with the Government of Indonesia, civil society organisations, local and
indigenous communities, key growers and other stakeholders in the Indonesian palm oil industry.
Alignment of commitment to deforestation-free palm oil
GAR participated in the United Nations Climate Summit 2014 in Sep 2014 with the signing of:
• New York Declaration on Forests, a collective vision by the public
and private sector to address deforestation and promote restoration
of forests
• Indonesia Palm Oil Pledge, an Indonesian Chamber of Commerce
and Industry (KADIN)-led initiative to advance Indonesian
sustainable palm oil
Certification received as at 30 September 2014
• RSPO: 224,321 ha of plantations including smallholder
plantations of 49,909 ha, 22 mills, 3 kernel crushing plants,
3 refineries and 1 bulking station
• ISCC: 266,843 ha of plantations including smallholder plantations
of 59,628 ha, 28 mills, 3 kernel crushing plants, 3 refineries and
12 bulking stations
• ISPO: 35,789 ha of plantations and 3 mills
14
Empowering communities
The palm oil industry is effective in creating jobs and alleviating poverty
Employment
• GAR provides employment for almost 175,000 people in Indonesia
• 47,000 direct employees, 66,000 smallholders and 62,000 casual workers
• We promote small and micro enterprises near our operation areas
Education
• Built 232 schools with 2,348 teachers for 37,487 students in the estates
• Provided scholarships for more than 700 students
Facilities and infrastructure
• 145 clinics to provide free treatment for about 1,400 patients daily
• Builds and maintains public infrastructures and facilities
• Roads, bridges, places of worship and sporting facilities
15
3
Growth Strategy
Strategic Priorities
Build on core competitive strengths and leverage scale to maximize long-term
shareholder returns
Objective:
Sustained Growth and Profitability
Downstream
Upstream
To stay
focused as a
leading oil
palm plantation
company
Sustain cost
leadership
• Operational excellence
• Best-in-class plantation
management
• R&D focus
Optimise
value
throughout
the chain
Grow
destination
business
• With prudent
risk
management
distribution and
processing reach
to key consuming
countries
• Extending
Shift product
mix to higher
value-added
products
• Innovation
• Customer
solutions
Continued strong commitment to environmental and social responsibility
17
Growth Strategy and Outlook
GAR continues to expand its operation capabilities to capitalise on the robust long-term
industry outlook, best-in-class plantation management and solid financial position
Upstream
• Expanding palm oil plantations by 20,000-30,000 hectares through organic growth
and acquisition
• Exploring new initiatives for cost efficiency such as mechanisation and alternative
energy
• Projected 2014 capex US$250 million
Downstream
• Constructing additional downstream processing capacity in strategic locations
• Extending product portfolio, distribution coverage and global market reach as well
as logistic facilities to enhance our integrated operations
• Projected 2014 capex US$300 million
Outlook
• In the long term, GAR stays confident with the robust demand growth for palm oil
• Oilseed industry in China is expected to remain challenging, GAR will review
business model and strategic alternatives for its China oilseed business
18
4
Financial Performance
Financial Performance
(in US$ million)
YTD Sep
2014
YTD Sep
2013
2013
2012
2011
Revenue
5,797
4,683
6,585
6,052
5,953
Gross Profit
1,013
938
1,363
1,611
1,837
17%
20%
21%
27%
31%
Operating Profit
268
341
528
678
1,700
Tax1
(54)
(81)
(114)
(196)
(428)
176
203
318
404
571
-
-
27
37
672
(48)
(15)
(34)
(7)
19
-
-
(24)
6
Gross Profit Margin
2
Core Net Profit
Addition:
-
Net gain from changes in fair value of biological assets, net of
tax and non-controlling interests
- Foreign exchange gain/(loss), net of non-controlling interests
- Exceptional items, net of non-controlling interests
7
Net Profit attributable to owners of the Company
135
188
311
410
1,268
EPS (in US$ cents)3
1.06
1.47
2.42
3.30
10.45
EBITDA
431
462
662
785
942
7%
10%
10%
13%
16%
EBITDA margin
Notes:
1. Includes deferred tax provided on net gain from changes in fair value of biological assets
2. Net profit attributable to owners of the Company, excluding net effect of net gain from changes in fair value of biological assets, foreign
exchange gain/loss and exceptional items
3. Based on weighted average numbers of shares
20
Segmental Results
YTD Sep
2014
US$ million
YTD Sep
2013
YoY
Change
Revenue
Plantations and palm oil mills 1
Palm and lauric2
Oilseeds3
Others4
Elimination and adjustments
Consolidated Revenue
1,469
4,902
670
149
-1,393
5,797
1,221
3,674
798
144
-1,155
4,682
20%
33%
-16%
3%
21%
24%
442
348
27%
30%
28%
2%
47
97
-51%
1%
3%
-2%
-61
8
n.m
-9%
1%
-10%
EBITDA
Plantations and palm oil mills 1
Palm and lauric
Oilseeds
Others
2
3
4
Elimination and adjustments
Consolidated EBITDA
3
8
-60%
2%
6%
-4%
1
431
1
462
6%
-7%
Notes:
1. Products from upstream
2. Processing and merchandising of palm based products, i.e. bulk and branded products as well as oleochemicals
3. Processing and merchandising of oilseed based products, i.e. bulk and branded products
4. Food products in China such as noodles
21
Financial Position
Balance sheet fundamentals remain strong with ample liquidity and
prudent gearing
(in US$ million)
30-Sep-14
31-Dec-13
14,468
14,148
2%
Cash and Short-Term Investments
476
587
-19%
Trade Receivables and Inventories
1,297
1,246
4%
10,434
10,340
1%
5,583
5,345
4%
2,894
2,581
12%
Total Equity Attributable to Owners of the Company
8,800
8,721
1%
Net Debt3/Equity4 Ratio
0.17x
0.12x
Net Debt3/Total Assets
0.10x
0.08x
Net Debt3/EBITDA5
2.53x
1.63x
EBITDA/Interest
4.89x
6.51x
Total Assets
Fixed Assets1
Total Liabilities2
Interest Bearing Debts
Change
Notes:
1. Include Biological Assets, Property, Plant and Equipment, and Investment Properties
2. Include Deferred Tax Liabilities of US$1.9 billion which mainly arising from the accumulated gain of the revaluation of biological assets
3. Interest bearing debts less cash and short-term investments as well as liquid working capital
4. Equity attributable to owners of the Company
5. 30 Sep 2014 figure is based on annualized EBITDA
22
Contact Us
If you need further information, please contact:
Golden Agri-Resources Ltd
c/o 108 Pasir Panjang Road
#06-00 Golden Agri Plaza
Singapore 118535
Telephone
Facsimile
: +65 65900800
: +65 65900887
www.goldenagri.com.sg
Contact Person : Richard Fung
[email protected]
23