Sustainability Non-Deal Roadshow in Europe April/May 2019 Contents - PowerPoint PPT Presentation

SIME DARBY PLANTATION BERHAD Sustainability Non-Deal Roadshow in Europe April/May 2019

Contents  Business Overview Dr Shariman Alwani (Chief Strategy & Innovation Officer)  Strategy Moving Forward  Financial Overview Renaka Ramachandran (Chief Financial Officer)  Sustainability Purpose, Dr Simon Lord (Chief Sustainability Officer) Principles into Practice

3 Business Overview Integrated Plantation Company Involved in the Entire Palm Oil Value Chain ~600,000 hectares We are the world’s largest oil palm World’s Largest Oil Palm Plantation Company (by planted area) plantation company by oil palm planted area with total landbank of more than 20% of Global CSPO Production Capacity 1 997,000 hectares across Malaysia, Leader in Sustainability – Indonesia, PNG & Liberia World’s Largest Producer of CSPO 2 2.71 mn MT Jan-Dec 2018 Total CPO Production (~4% of Global Market Share 3 ) 250 71 11 Estates Mills Crushing Plants (inclusive of soy crushing plant) 3.8 mn MT p.a. Total Refining Capacity (11 Refineries) Market Leading R&D Edison Award 2017 under the Energy and Sustainability category (Genome Select Oil Palm Project) Note: Figures as at 31 December 2018 unless stated otherwise 1 Estimated based on global planted area of 21.5 mn ha worldwide 2 For the January – December 2018 period 3 Based on global CPO production of 70.46 mn MT in 2017/2018

4 Fully Integrated Business Model with Diversified Operations Along the Palm Oil Value Chain With a fully integrated business model, we are able to diversify our earnings risk from volatility of commodity price and leverage on operational synergies

5 Snapshot of Downstream Operations 3.8 million MT Refining Capacity 11 Refineries 75% * Average Refinery Utilisation Key Products Legend: Bulk Processing Differentiated Food Refined bulk products Ingredients produced by Non-food products * Excluding Industrial Enterprises (IE) Soya in Thailand produced by the Group’s bulk the Group’s refineries: produced by the Group’s Note: refineries: RBD Olein, RBD Bakery fats, specialty oils, biodiesel, oleochemicals ▪ Figures as at 31 December 2018 Stearin, CPKO, RBD PKO, etc. confectionery fats, health and nutrition plants ▪ Names of refineries in brackets refers to the respective proposed new names

6 A Leading Sustainable Oils and Fats Company Sime Darby Oils is a fully owned subsidiary of Sime Darby Plantation – World’s Largest Producer of Certified Sustainable Palm Oil (CSPO) ~20% of global supply (4% of global CPO production) Supplying essential ingredients to world-famous brands in food and non-food products 6

7 The Strategy Moving Forward VISION ‘The Leading Integrated Global Palm Oil Player’ The global brand for plantation sustainability 1 2 3 U P S T R EA M D OW N S T R EA M I N T EG R AT I O N DRIVING OPERATIONAL SERVING THE MAXIMISING RETURNS GROWTH STRATEGY EXCELLENCE VIA CUSTOMERS OF THE ACROSS THE PALM OIL DIGITISATION FUTURE VALUE CHAIN TARGETS BY 2023 Towards Mission 23:23 Higher Downstream Integrated economics PBIT contribution across the value chain Achieving FFB yields of 23 MT/ha & OER of 23% by 2023 20% of Group’s PBIT within the next 5 years Relentless Focus on Execution to Drive Value Creation

8 Medium to Long Term Targets FY2023 23.5 FY2020 FFB Yield 22.7 (MT/ha) FY2018 23.1% FFB Yield (MT/ha) 20.5 OER 22.7% >15% FFB Yield (MT/ha) OER reduction 2 21.0% 10-15% Cost to customer reduction 2 15-20% OER Cost to customer Downstream Contribution 1 11% 10-15% Downstream Downstream Contribution 1 Contribution 1 1 % of Contribution to Group PBIT 2 Reduction in Cost to Customer as compared to FY2018

9 Downstream – Significant Contributor to Sime Darby Plantation’s Revenue  Sales of oil (CSPO) To DOUBLE  Aggregation of third party oils PROFITS  Higher margin from product differentiation Organic in 2023  Expansion of destination markets Growth  Centralised sales structure handling specialty products across B2B and B2C markets VALUE CREATION  Higher premium for products with specific customer requirements (e.g. low 3-MCPD)  Reallocation of production capacity to higher Non-Organic margin products (bulk vs differentiated)  Addition of new assets like Sime Darby Oils’ Growth Specialty Ingredients  Increasing capacity in existing refineries by building new plants or purchasing higher capacity machines FY 2019 FY 2023 Merger & Acquisitions

10 RISE to APEX Driving performance through culture change Accelerating Performance Sustaining Performance PERFORMANCE HEALTH & CULTURE Excellence Excellence Measure: Measure: PATAMI Growth Organisational Health Index (OHI) “How we deliver results” “How we sustain results”   Value creation initiatives 6 Winning Mindsets   Operational excellence Organisational Practices TRANSFORMATION OFFICE Disciplined execution and rigour across APEX

11 Value Creation Establishment of Transformation Office to ensure effective execution of strategies TRANSFORMATION OFFICE  Unlocking value creation  Drive execution and de-bottleneck initiatives UPSTREAM  Track progress on value creation initiatives RESEARCH & DOWNSTREAM  Assess and monitor on weekly basis and DEVELOPMENT 7 ensure accountability work FINANCIAL CASH ORGANISATION streams CONTROL ALIGNMENT / PEOPLE TOWER Value creation targets SPECIAL DIGITAL PROGRAM PROJECTS MANAGEMENT PLATFORM Improve tracking efficiency & manage value creation progress

12 SD Plantation’s Journey to be the Leading Innovator in the Palm Oil Industry To protect, sustain and leap the growth of SD Plantation’s value >2020 LEAD IN INNOVATION 2020 EXEMPLARY ROLE ACT WITH 2019 MODEL INNOVATION BELIEVE IN INNOVATION INGRAIN & ENFORCE 2018 UPSKILL & ENHANCE EMBEDDING INNOVATION AWARENESS & PLATFORM

13 Upstream – Driving Operational Excellence ELEVATING YIELD PERFORMANCE A B C D SUPERIOR WATER PLANTATION REPLANTING PLANTING MANAGEMENT OF THE FUTURE MATERIAL • Enhancing • Group: 4 - 5% • Effective water • High yielding automation and management & planting material digitisation conservation (e.g. Genome, Dami) practices • Advanced milling and latest extraction technologies

14 Improving Operational Efficiencies Our strategic initiatives are yielding positive results Replanting Water Crop Quality with Superior Cost Strategic Management Improvements Planting Management Priorities Materials 2,071 ha irrigated 1  SD Premium Improving and  Labour 10,867 ha Initiatives streamlining rationalisation  Genome irrigated 1 To Improve processes to Select Operational  Fertiliser cost enhance crop 1,157 ha Efficiencies irrigated 1 evacuation reduction via  Super Family precise application 3,584 ha Dami irrigated 1 +2% YoY FFB Production 2 -3% YoY Cost to Progress Jul- Dec’18 : 5.56 mn MT Jul- Dec’17 : 5.46 mn MT To-date Customer 2 OER 2 +1% YoY Jul- Dec’18 : 21.17% Jul- Dec’17 : 20.96% 1 As at 31 December 2018 2 For the six-month financial period ended 31 December 2018 (FP December 2018)

15 Downstream – To Become The Preferred Sustainable Palm Oil & Fats Specialist & Customer Solutions Provider HOW DO WE DELIVER VALUE ? • Focus on differentiated, sustainable and traceable high value products • Explore & expand opportunities to increase our presence in key geographical markets Such as India, Southeast Asia, the United States, Europe, Africa, the Middle East and China • Create value by marketing and stronger branding Through achieving sustainability, quality and food safety requirements

Financial Overview

17 Snapshot of Oil Palm Plantation Operational Statistics As at 31 December 2018 Malaysia Indonesia Liberia PNG & SI Total unless otherwise stated Total oil palm planted 304,731 201,072 10,263 91,080 607,146 area(ha) 248,964 158,791 9,975 79,125 496,855 Mature area (ha) 3% 9% 9% 5% 11% 18% 18% 13% 21% Palm tree age profile & 13% 16% average tree age 22% (Years) 11.8 yrs 13.6 yrs 5.4 yrs 11.8 yrs 12.3 yrs 24% 13% 21% 22% 38% <3 yrs 4-8 yrs 9-18 yrs 45% 17% 35% 19-22 yrs >22 yrs 30% 97% FFB production* 5.373 2.892 0.086 1.980 10.331 (mn MT/year) CPO production* (Total) 1.332 0.787 0.020 0.571 2.710 (mn MT/year) PK production* (Total) 0.335 0.178 0.005 0.148 0.665 (mn MT/year) 21.9 18.1 8.7 25.1 20.9 FFB yield* (MT/ha) 20.8 21.1 21.1 22.4 21.2 OER* 5.2 4.8 5.5 5.8 5.2 KER* Average CPO selling price* 2,262 1,920 1,989 2,412 2,184 (RM/MT) Average PK selling price* 1,780 1,376 481 - 1,678 (RM/MT) * For the January – December 2018 period

18 Key Financial Metrics PBIT (RM'mn) Revenue (RM'bn) FY15 1,538 FY15 10.30 FY16 1,259 FY16 11.95 1 FY17 4,455 FY17 14.78 2 FY18 FY18 2,536 14.37 FP Dec 2018 FP Dec 2018 6.54 559 Jan-Dec 2018 13.29 Jan-Dec 2018 1,138 ROIC % PATAMI (RM'mn) FY15 997 FY15 6.7 FY16 967 FY16 4.4 1 FY17 3,507 FY17 7.9 2 FY18 1,727 FY18 8.5 FP Dec 2018 244 FP Dec 2018 4.3 Jan-Dec 2018 Jan-Dec 2018 523 4.5 1 FY17’s PBIT and PATAMI includes the non-cash gain on sale of MVV land to SD Berhad 2 FY18’s PBIT and PATAMI includes the non -cash gain on sale of land to SD Property and reversal of accrual for donation Note: FP Dec 2018 refers to the six-month financial period ended 31 December 2018