RAISING THE BAR ON

SUSTAINABLE
GROWTH

AN N UAL R E P O R T 2 019
 RAISING THE BAR ON
SUSTAINABLE GROWTH
‘Raising the Bar on Sustainable Growth’ is the driving theme of our Integrated Report, which
documents Sime Darby Plantation’s journey in the financial year 2019. The theme is reflected in
the overall green hues of the cover design, which embodies our deep-rooted legacy in
sustainability. The curved and contour lines simultaneously represent the topography of our
plantations and supply chain. The elevated peaks signify the standards we set to raise the bar on
sustainable growth – the latest of which is to ‘draw the line on deforestation’ as unveiled in this
financial year. A circle highlighting the topography denotes ‘Crosscheck’ – the online tool which
enables traceability of our supply chain.

Deforestation        is an urgent challenge for the planet. People around the world are concerned about

the continued rapid rate of deforestation, and that the palm oil industry is contributing to the problem.

As the world’s largest producer of certified sustainable palm oil,      this concerns us too.

Sime Darby Plantation (SDP) has worked to produce palm oil responsibly for a long time, because we believe it

is the right thing to do for our company, for the industry, and for forests globally. We made our

    Zero Burning commitment over 30 years ago, even before we became the founding members

of the Roundtable on Sustainable Palm Oil (RSPO) in 2004. Today, we are committed to upholding the

No Deforestation, No Peat, No Exploitation (NDPE) standards, and extending these

same standards to our suppliers.

Yet the standards to which we hold ourselves continue to evolve: today, we are operating to higher standards

than we did in the past. Amid intensifying global debate on the viability of the palm oil sector and its ability to

contribute to a sustainable future,   the expectations from our stakeholders  have increased and

demand a meaningful response.

Knowing that the industry needs to make a step change, we have taken a stand to draw the line on

deforestation throughout our supply chain. We are committed to help make deforestation an unviable

way to participate in the industry. In the year under review, SDP also backed this commitment through

our  Research and Development capabilities, enabling us to produce more yield on our existing land. By

removing the need to deliver growth through the expansion of our plantation into new areas, we can help to

preserve forests and biodiversity without compromising on efficiency and productivity.

Our teams are committed to making a meaningful impact, but we know we could not achieve what we aim to

do without like-minded partners. By working together with our industry peers, NGOs as well as third party

suppliers and smallholders in our supply chain, we believe that we can provide long term business advantage

and growth prospects for the palm oil      industry, and raise the bar on     sustainable growth.

This sector has been critical to providing livelihoods and    economic prosperity for palm oil producing

regions over many years. Now, it is imperative that we continue to work together with our partners in improving

the economic, environmental and      social performance of our business as well as that of the palm oil industry.
 HOW WE ARE RAISING THE BAR

TAKING THE LEAD

Drawing the Line on Deforestation
There is a worldwide concern that palm oil production is causing deforestation.
Increasingly, major global customers, investors, and other stakeholders require
confidence that the palm oil they buy is not associated with deforestation.
SDP believes the frontier to halting deforestation is traceability. Tracking supply
back to its source will make it possible to identify where problems may exist,
and to take action.

COMMITTED TO TRACEABILITY
Crosscheck
To achieve this level of visibility, we developed Crosscheck, a new online tool that
allows anyone to trace sources of our palm oil supply down to the mill level. The
open source platform places all our mills and refineries, including third-party
suppliers, on a digital map with the aim of ensuring traceability and inviting
others to alert us to problems so that we can act on them.

INSPIRING CHANGE
Working in Partnership
Our goal is to expand the sphere of like-minded stakeholders and smallholders
operating to the NDPE standards, especially those within our supply chain.
We have extended these standards to our third-party suppliers to improve their
sustainability compliance. We also believe in obtaining independent feedback
and input to further improve our own standards and practices, as well as raising
the bar on sustainable growth for the industry.
 I N S I D E
T H I S R E P O R T

001
004
Raising The Bar On Sustainable Growth
About Our Report
038-039
MANAGEMENT D ISCUSSI O N
006 Our Approach To Integrated Thinking
& A NA LYS I S
008 Our Approach To Sustainability

STRATEGIC REVIEW

010-011 040
044
Our Market Landscape
Our Value Creation Model
OVERVIE W 046 Stakeholder Engagement
048 Managing Our Material Matters
012 Vision & Values 050 Our Strategies
013 Who We Are 051 Rise To Apex
014 What We Do
PERFORMANCE REVIEW
016 Global Footprint
Financial Review
018 Our Financial Highlights
054 Group Financial Review
019 Corporate Information
061 5-Year Financial Highlights

Business Review
020-021 062 Upstream
KE Y ME SSAGE S 068 Sime Darby Oils
072 Others: Renewables

022 Chairman’s Message 074 R&D

030 Group Managing Director’s Review 080 Human Capital Growth

 090-091
SUS TAINABLE
VALUE CRE ATI O N

092 Sustainability At Sime Darby Plantation

094 Drawing The Line On Deforestation
100 Building Climate Change Resilience
104 Our Commitment To
Human Rights And Decent Work
108 Innovating For Sustainability

114-115
LE AD ERSHIP

116 Board Of Directors’ Profile

128 Our Leadership Team
130 Profiles Of Leadership Team

138-139
GOVERNANCE FR AME WO RK

370-371
140 Corporate Governance Overview Statement
150 Governance & Audit Committee Report
160 Nomination & Remuneration Committee AD D ITI O NAL INF O RMATI O N
Report
164 Sustainability Committee Report
372 Properties Of The Group
169 Board Tender Committee Report
378 Analysis Of Shareholdings
171 Risk Management Committee Report
381 Additional Compliance Information
174 Statement On Risk Management And Internal
387 Financial Calendar
Control
388 Share Price Movement
183 Statement Of Responsibility By The Board Of
Directors 389 Notice To Shareholders
(Under The Personal Data Protection Act 2010)
390 Notis Kepada Pemegang Saham

184-185 391
(Di Bawah Akta Perlindungan Data Peribadi 2010)
Notice To Proxies
FINANCIAL S TATEMENTS (Under The Personal Data Protection Act 2010)
(“Notice”)
392 Notis Kepada Proksi
186 Directors’ Report
(Di Bawah Akta Perlindungan Data Peribadi 2010)
191 Statements Of Profit Or Loss (“Notis”)
192 Statements Of Comprehensive Income 393 Global Reporting Initiative (GRI) Content Index
193 Statements Of Financial Position
195 Consolidated Statement Of Changes In Equity
196 Company Statement Of Changes In Equity
197 Statements Of Cash Flows
202 Notes To The Financial Statements
364 Statement By Directors
364 Statutory Declaration
365 Independent Auditors’ Report
ABOUT
OUR REP ORT

OUR PRIMARY REPORTS TO STAKEHOLDERS

Interim Reports
Financial Results and Group Updates
Corporate Governance Reports

Malaysian Companies Act 2016

Malaysian Financial Reporting Standards (MFRS)
Main Market Listing Requirements of Bursa
Malaysia Securities Berhad
Malaysian Code on Corporate Governance 2017
International Integrated Reporting Framework
Financial Statements:

Key Stakeholders Involved

Shareholders Employees Customers Regulators

Suppliers Business Partners Analysts
Communities Non-Profit Partners

Reporting Boundary

Group Subsidiaries Joint Ventures

The United Nations Sustainable Development Goals

The Sustainable Development Goals (SDGs) are global

benchmarks set by the United Nations as a call to
action for sustainable development.

Sime Darby Plantation Berhad (SDP or The Group)

aligns all its sustainability efforts to the SDGs, and we
have developed an articulation on how we approach
and contribute to the goals.

We have identified two main SDGs that drive our

approach and this is further supported by primary
goals and secondary goals that we contribute to
indirectly.

Read all about our efforts to deliver these goals in

Our Approach to Sustainability on pages 8 and 9 of
this Integrated Report.

C ROS S RE F E RE NC E S

Tells you where you can find more information

within the reports
Tells you where you can find more information
online at www.simedarbyplantation.com
This Annual Report is available at
www.simedarbyplantation.com
Reporting Boundary and Scope NAVIGATION ICONS
This Integrated Report covers the primary activities of
SDP, our business divisions, Malaysian and
Our Stakeholders
international operations as well as our entities.
Prepared in accordance with the International
CUSTOMERS GOVERNMENT AGENCIES
Integrated Reporting <IR> Framework, our third
Integrated Report provides a concise and material
assessment of our strategic path for achieving strong EMPLOYEES LOCAL COMMUNITIES

financial performance while also delivering

environmental and societal value in an increasingly NGOs / CIVIL SOCIETY
ACADEMIC INSTITUTIONS
ORGANISATIONS
dynamic business sector. The information disclosed in
this report outlines the measures we have
INDUSTRY GROUPS
undertaken to provide value for our key stakeholders,
including employees, regulators, suppliers and
business partners, analysts as well as the
communities in which we operate in. SDP has also
detailed our approach to sustainability and have Material Matters
provided insights into our strategies as well as
highlighted the economic, environmental and social OPERATIONAL
PEOPLE MANAGEMENT
PERFORMANCE
aspects of our developments and operations in
countries including Malaysia, Vietnam, Papua New MACROECONOMIC SOCIAL AND
Guinea, Solomon Islands, Singapore, China, Indonesia CONDITIONS ENVIRONMENTAL IMPACT

and the United Kingdom. OCCUPATIONAL SAFETY

CAPITAL
AND HEALTH
MANAGEMENT
PERFORMANCE
Reporting Period
This Integrated Report encapsulates material
information encompassing our strategy and business
model, operating contexts, material risks, stakeholder Stakeholders Affected
interests, performance, financial reports and
NGOs / CIVIL SOCIETY
governance from 1 January 2019 to 31 December SHAREHOLDERS
ORGANISATIONS
2019 (FY2019) unless otherwise stated.
INVESTORS LOCAL COMMUNITIES
Standards and Guidelines
GOVERNMENT
This report applies the Guiding Principles of the CUSTOMERS
AGENCIES
International Integrated Reporting <IR> Framework
and is aligned with the Global Reporting Initiative SUPPLIERS/
REGULATORS
BUSINESS PARTNERS
(GRI) Standards: Core option.

EMPLOYEES INDUSTRY GROUPS

All financial statements have been prepared in
accordance with the requirements of the Companies
Act 2016 and the Malaysian Financial Reporting ACADEMIC INSTITUTIONS

Standards (MFRS).

Our Capitals
Our relevance as a business today and in the future, Capitals Impacted
as well as our ability to create long term value, are
MANUFACTURED
interrelated and fundamentally dependent on the FINANCIAL CAPITAL
CAPITAL
forms of capital available to us (our inputs), how we
use them (our value-added activities), and our impact INTELLECTUAL
NATURAL CAPITAL
CAPITAL
and the value we produce (our outputs and
outcomes). SOCIAL & RELATIONSHIP
HUMAN CAPITAL
CAPITAL
OUR APPROACH
TO INTEGR ATED THINKING

PERFORMANCE LINKED TO
Influencing Our Integrated Thinking VALUE CREATION
Our high-performance culture is
supported by an environment in
which our people are
empowered and rewarded for
their contribution towards
realising our purpose and vision.
OUR STAKEHOLDERS
Our stakeholders are the providers of financial
and non-financial capitals that we need to
create value. Our proactive engagement with
stakeholders provides a platform for us to
share how we execute our business strategy
and activities, shape products and services,
help us manage and respond to their
concerns as well as expectations, minimise
reputational risks and positively influence the
OUR MATERIAL OUR ABILITY TO CREATE AND
environment that we operate in.
ISSUES PROTECT VALUE
Our material
Our governance approach
issues synthesise
OUR OPERATING CONTEXT promotes strategic decision-
the interests of
Our organisational agility supports flexible making that combines long term
the Group and
strategic responses to the cyclical pressures in our stakeholders, and short term outcomes to
our markets while aligning our business taking into reconcile the interests of the
effectively to the structural shifts in our account Group and society in our pursuit
industry in the long term. We identify focused structural shifts of sustainable value. Our
specific opportunities for revenue generation, and cyclical governance framework supports
pressures in our the creation and protection of
and use well-developed risk models to
operating value in our activities which
anticipate and manage the impact of risks.
context. They enables ethical and effective
We align our strategy to changes in our
steer our
operating environment, instil an innovation- leadership and a sustainable
priorities in
driven culture throughout the Group and organisation.
managing our
continually enhance our capabilities. strategic value
drivers.

OUR STRATEGY
Our Group strategy is focused on creating
sustainable value. It represents our
commitment to the shared future we are
creating for our people and our stakeholders.
Our strategic value drivers and focus areas
align our allocation of resources to our REMUNERATION THAT DRIVES
strategy. They determine and provide the VALUE OVER TIME
basis for measuring the value we create.
Our reward philosophy reflects
the Group strategy and is
aligned to our value drivers
through the lenses of client
experience, productivity and
shareholder value.
 Annual Report 2019 PG. 006 – 007

OPERATIONAL PERFORMANCE
Investors
Customers
Suppliers/Business Partners
Employees

ALLOCATING OUR RESOURCES

We apply a formal decision-
making framework to optimally
PEOPLE MANAGEMENT
deploy our resources and align
Investors
our relationships to drive growth,
Employees
Shareholders reinforce resilience and deliver
sustainable value for all our
stakeholders.

Strategy
MACROECONOMIC CONDITIONS GROWTH Is the investment or
Investors opportunity aligned with
Customers our strategy?
Material Issues Impacting SDP

Suppliers Does it create value and

Employees support our ability to
Business Partners
deliver an integrated
offering?

Capability
RESILIENCE

SOCIAL AND
Does the investment or
ENVIRONMENTAL IMPACT
opportunity fall within our
Investors risk appetite and available
Customers resources, and can we
Suppliers/Business Partners
deliver it through our
Employees
existing expertise and
Civil Society Organisations/NGOs
Society/Communities processes?
Government/Authorities/Regulators

Value
RETURNS

Will the investment or

opportunity provide us
OCCUPATIONAL SAFETY with an adequate return
AND HEALTH PERFORMANCE and unlock future
Investors opportunities to create
Suppliers/Business Partners value?
Employees
Regulators

CAPITAL MANAGEMENT
Investors
Shareholders
Suppliers/Business Partners
OUR APPROACH
TO SUSTAINABILIT Y

SHAPING THE FUTURE

Sime Darby Plantation (SDP) has long been committed to
sustainable practices. We were at the forefront of implementing
the Zero Burning principles decades ago. We were the
founding members of the Roundtable on Sustainable Palm
Oil. We operate our plantations to the No Deforestation, No
Peat, No Exploitation (NDPE) standards today and require all SUSTAINABILITY FOR US IS ABOUT
companies that supply to us to endorse and comply with TAKING DEFINITIVE ACTION TO
those standards. It is because we are proud of this heritage,
that we are committed to playing a leading role in shaping PRESERVE THE ENVIRONMENTAL AND
a sustainable future for the palm oil industry. THE SOCIAL FABRIC OF OUR SOCIETY.
Today, there is a need to raise the bar again. Deforestation AS THE WORLD’S LARGEST PRODUCER
has become an urgent challenge for the planet. People around OF CERTIFIED SUSTAINABLE PALM OIL,
the world are concerned about the continued rapid rate of
deforestation and believe, correctly, that unsustainably produced WE WANT TO RAISE THE BAR ON
palm oil is a contributor to that. As the world’s largest producer SUSTAINABLE GROWTH. THIS MEANS
of certified sustainable palm oil, it concerns us too.
WE WILL CONTINUE TO LEAD
In the context of the threat from global warming and the INDUSTRY CONVERSATIONS AND
reality that we all face a narrowing window of opportunity
to take decisive action, it is vital that all stakeholders say no BUSINESS ACTION ON SUSTAINABLE
to deforestation. Amid intensifying global debate on the AGRICULTURAL PRACTICES AND
viability of the palm oil industry, our stakeholders are
demanding more of us than ever before. It is time to break HUMAN WELFARE. WE WILL SET NEW
free of the legacy of bad practice that has beset the industry BENCHMARKS AND CHAMPION NEW
for too long. We will undermine the long term prospects of
the industry if we do not operate in a different way in the STANDARDS TO ENSURE WE ARE
future to conserve the forests that remain. POSITIVELY CONTRIBUTING TO BOTH
At SDP, we are striving to eradicate deforestation in our supply THE GLOBAL SUSTAINABLE
chain. This is no easy task. To drive lasting change, we have DEVELOPMENT GOALS AND PROGRESS
to recognise that changing traditional practices presents real
operational challenges for third-party suppliers and smallholders. IN THE LOCAL CONTEXT.
However, we need to persevere because raising the bar on
sustainable growth will provide long term business advantage
and secure us a license to operate and compete in the future,
At SDP, we will continue to work to improve the economic,
for our suppliers and for us. This, in turn, enables our suppliers
environmental and social performance of our business and
and smallholders to benefit from being in business with us.
our industry. We are committed to maintaining our investment
So we are engaging with our extensive network to develop
to achieve this and share our learning with our peers and
new practical ways of accelerating progress.
the many stakeholders in the value chain.

COMMITTED TO RESPONSIBLE GROWTH

In the last three years, we have set out our approach to
responsible production in our charters: our Responsible
Agriculture Charter, Human Rights Charter; and Innovation
and Productivity Charter. They can be found at www.
SUSTAINABILITY simedarbyplantation.com.
PURPOSE
We operate our business on the basis of our Good Agriculture
and Best Management Practices, in addition to the principles
of sustainability standards that we have committed to,
including the Roundtable on Sustainable Palm Oil (RSPO),
Malaysian Sustainable Palm Oil (MSPO), Indonesian Sustainable
Palm Oil (ISPO) and the Rainforest Alliance. Together, these
guide our actions and determine how we manage our
performance in relation to economic, environmental, social
and governance factors.

Deliver Sustainable These policies, procedures and internal operating systems are
Contribute to
Development fundamental to SDP as a sustainable palm oil producer today.
a Better Society
We want to build on that foundation to devise new forward-
looking solutions that will help to drive change across the
Minimise industry and catalyse business growth in a sustainable way.
Environmental Harm
 Annual Report 2019 PG. 008 – 009

DRIVING CHANGE THROUGH TRACEABILITY
We believe that the frontline of halting deforestation is
increasing traceability across the sector. By tracking supply
back to the source, we can identify where the problems are
and take action more effectively.
As the industry continues to mature and face new and
emerging risks, it is a collective responsibility for us and our
partners to evolve how we operate. Throughout 2019,
we formed new alliances and strengthened existing
collaborations to tackle some of the complex sustainability
problems we face.

In 2019, we launched Crosscheck as an open access, online

platform that traces our supply right down to the mill level.
It allows users to overlay the location of any mill against maps
of the surrounding landscape that highlight risk areas, including
forest, peat or other protected areas, and the habitats of large
animals; orangutans, elephants and tigers. In addition, the
platform increases accountability by providing new data that
links the mills to their owners, for both SDP’s own mills and
the group owners of others beyond our direct network.
Crosscheck was an important step forward in traceability. It
was developed to support new data over time, so we will
work with NGO partners and other stakeholders to make it
increasingly useful as a tool for driving change in the industry.
NEW WAYS TO TACKLE OLD CHALLENGES
We see opportunities for innovation in all parts of the business.
We continue to find new ways to tackle old challenges to
ensure the sustainability and competitiveness of our business
well into the future. That is why in the year under review,
we continued our efforts to improve our operational efficiencies,
which is all about operating at the lowest cost possible to
mitigate externalities and Crude Palm Oil (CPO) price
volatilities: the “new normal” for the industry.
CREATING VALUE, SUSTAINING GROWTH
As a leading business in our sector, we recognise that we
must continue to sustain our growth and deliver value to
our shareholders, while also serving the needs of multiple
other stakeholders.
A sustainable industry requires successful, profitable businesses
that are also accountable to improve environmental and
social performance: often referred to as ‘profits with purpose’.
Understanding the impact of trends driving change in the
external world and the expectations of all our stakeholders
is key to creating long term value. Working with others, our
ambition is to shape a responsible future for our business,
our people and our industry.
For more information on our sustainability initiatives
and outcomes, please refer to pages 92 to 113 of this report
or download our Sustainability Report 2019 from our website
www.simedarbyplantation.com.

We initiated our Operational Excellence and Innovation

Business Management Strategy 2.0 (OEIBMS 2.0), which is a
blueprint for achieving RM550 million in cumulative operational
excellence benefits by FY2022. These are both hard benefits
derived from cost savings as well as improved revenue
generation and soft benefits derived from cost avoidance
and sustainability performance. Our cost savings, improved
operational resilience and productivity also support our
sustainability commitments, such as more effective resource
management.

Our focus on innovative solutions includes our investment

in Research and Development (R&D) to improve yield. The
year under review saw the first harvest of the seeds produced
by our GenomeSelectTM initiative. It confirmed that over time
these seeds will deliver considerably higher yields from our
plantations. This represents another step forward for us in
our sustainability journey, enabling us to continue growing
as a business, while producing more palm oil without using
more land.

COLLABORATION WITH STAKEHOLDERS

We believe in an inclusive approach to transformation that
leads us toward forging long term partnerships. Engagement
is not only about initiating dialogue. At SDP, we want to go
beyond just sharing the problem. We want to work with
others to devise lasting solutions.
O V E R V I E W O F
SIME DA R B Y PL AN TAT I ON
012 Vision & Values
013 Who We Are
014 What We Do
016 Global Footprint
018 Our Financial Highlights
019 Corporate Information
VISION &
VALUES

O UR VISI O N
To be the Leading Integrated Global R&D
Over 190 technocrats, scientists
Palm Oil Player
and technicians working together
to improve every aspect of our
business

O UR VALUE S

Integrity

Respect & Responsibility

Enterprising

Excellence

UPSTREAM
583,766 ha planted with oil palm
 Annual Report 2019 PG. 012 – 013

WHO
WE ARE

THE WORLD’S LARGEST Formerly under the multinational conglomerate Sime

PRODUCER OF CERTIFIED
SUSTAINABLE PALM OIL (CSPO)
WITH A PRODUCTION OF 2.496
MILLION MT (AS AT 31 DEC 2019).
Darby Berhad (SDB), Sime Darby Plantation (SDP) was
listed on Bursa Malaysia on 30 November 2017, following
a strategic decision by SDB to unlock value for its shareholders
by demerging its plantation and property sectors, thereby
creating three independent pure play entities. Today, with
a market capitalisation of RM34.1 billion (as of 30 April
2020) and a global operation across 16 countries with a
workforce of more than 94,000 employees, SDP is among
the largest companies listed on Bursa Malaysia and one
of the most valuable plantation companies in the world.

SDP is involved in the full spectrum of the palm oil value

RENEWABLES chain. Under our Upstream operations, the Group has

Leveraging the potential of related
products along the palm oil value
chain to create a portfolio of
sustainable businesses
OVERVIEW
776,812 hectares (ha) of landbank spread across Malaysia,
Indonesia, Papua New Guinea (PNG) and the Solomon
Islands (SI), of which 583,766 ha are currently being
cultivated for oil palm. Under this sector, the Group is
also involved in rubber, sugar cane plantation as well as
cattle rearing.

In the Downstream sector, SDP’s current operations

represented by Sime Darby Oils in 16 countries worldwide, 1
comprise the production as well as the sales and marketing
of oils and fats, oleochemicals, biodiesel and other palm
oil derivatives. SDP’s business philosophy in the manufacturing
of a comprehensive range of palm oil based products is
to maintain the highest quality at all times. This ensures
that the Group has an edge in our unique selling proposition
and sets SDP apart from our competition.

Committed to operational excellence, innovation and

sustainability, SDP has R&D and Innovation Centres located
across the globe with over 190 technocrats, scientists and
technicians assisting to improve every aspect of our value
chain; from developing quality planting materials and
environmental-friendly fertilisers to enhancing the systems
and processes in cultivating, harvesting and milling, to
manufacturing not only high quality but also traceable
refined palm oil and palm kernel products.

In addition to our Upstream and Downstream operations,

SDP is also involved in various other businesses that
leverage on the potential of related products along the
palm oil value chain.

SIME DARBY OILS

Operations across 16 countries comprising
production as well as the sales and marketing of
oils and fats products, oleochemicals, biodiesel,
and other palm oil derivatives
WHAT
WE D O
MALAYSIA
UPSTREAM

343,254
Total Landbank
hectares (ha)

Upstream operations
encompass 240 estates
and 69 palm oil mills
located in Malaysia,
Indonesia, Papua New
Guinea and the Solomon
Islands where fresh fruit
bunches (FFB) from our In Malaysia, we own and operate 123 oil
estates are delivered to our palm estates in Peninsular Malaysia,
mills to be processed into Sarawak and Sabah, 34 palm oil mills, as
crude palm oil (CPO). well as 12,606 ha of rubber plantations in
the states of Kedah, Perak, Negeri Sembilan
and Johor in Peninsular Malaysia

GLOBAL PRESENCE
SIME DARBY OILS

Our current Downstream

operations, represented by
Sime Darby Oils, comprise
the production of oils and
fats, oleochemicals,
biodiesel, other palm oil
derivatives and renewables
as well as the sales and
marketing of these
products. With business presence in 16 countries
around the world, we take pride in our
identity as a global provider of sustainable
palm oil products to our customers

RESEARCH & DEVELOPMENT CAPACITY

R&D
5
Our R&D capabilities RESEARCH & DEVELOPMENT CENTRES
encompass all research area
in Malaysia, Indonesia and Papua New Guinea
requirements across the
value chain. Through our
strategic and operational
3
R&D, we are committed to INNOVATION CENTRES
developing, applying and in Malaysia, the Netherlands and South Africa
transferring relevant
knowledge, research 1
findings and technologies
FULLY OPERATIONAL GENETIC TESTING FACILITY
to improve our plantation
in Malaysia to commercialise high yielding oil
yields, milling processes and
palm with secondary traits for harvesting
customise our Downstream
efficiency and climate resilience
products.

190
190 SCIENTISTS AND TECHNICIANS
developing better seedlings and systems to
enhance plantation yields
 Annual Report 2019 PG. 014 – 015

INDONESIA PAPUA NEW GUINEA AND SOLOMON ISLANDS

287,460
Total Landbank
ha 146,098
Total Landbank
ha

In Indonesia we own and operate 66 oil
palm estates, 1 rubber estate and 23
palm oil mills located in Sumatera,
Kalimantan and Sulawesi
In Papua New Guinea & Solomon Islands,
we own and operate 48 oil palm estates,
12 palm oil mills, as well as sugar cane
plantation and grazing pasture for cattle
rearing

OVERVIEW
Our operations are located in:
Malaysia The Netherlands 1
Indonesia USA
Singapore United Kingdom
Thailand South Korea
China Japan
South Africa Papua New Guinea
Germany Solomon Islands
UAE
Philippines

RENEWABLES

SDP seeks to invest in

complementary and SOLAR
integrated platforms to In 2018, 20 MW Large Scale Solar project
leverage on various commenced operations in SDP’s estate
products and by-products
along the palm oil value
chain, transforming these
into high value-added BIOGAS
SDP achieved a 12% relative carbon emission
goods. At the core of SDP’s
reduction intensity between 2017-2019
business is the investment
and development of
innovative technologies in
the bio-chemicals, BIOMASS
nutraceuticals & wellness Exploration into the valorisation of oil palm trunks,
and bio-energy space. empty fruit bunches and palm kernel shells with
multiple global partners
GLOBAL
FOOTPRINT

UNITED
KINGDOM

GERMANY

NETHERLANDS

UAE
USA

Certifications

Malaysian Sustainable
Palm Oil (MSPO)

Roundtable on Sustainable
Palm Oil (RSPO)

Indonesian Sustainable
Palm Oil (ISPO)
 Annual Report 2019 PG. 016 – 017

16
Countries

776,812

OVERVIEW
Hectares Landbank

240
Estates
*including oil palm, rubber,
sugar cane and grazing pasture
1
SOUTH
KOREA JAPAN
CHINA

71
Mills
*including two (2) copra mills
PHILIPPINES
THAILAND

SINGAPORE SOLOMON
MALAYSIA
ISLANDS

INDONESIA PAPUA NEW

5
R&D Centres
GUINEA

11
Refineries

3
Innovation Centres
OUR FINANCIAL
HIGHLIGHTS
14,336

15,000 3,000

2,737
12,062
2,500
12,000

2,000
9,000
6,518

1,500

6,000
1,000

615
3,000

406
500

0 0
FY2018 FP2018* FY2019 FY2018 FP2018* FY2019

REVENUE** PROFIT BEFORE INTEREST AND TAX**

(RM Million) (RM Million)
1,928

2,000 16

1,500 12 14.1

1,000 8
4.6

500 4
300

122

0.9

0 0
FY2018 FP2018* FY2019 FY2018 FP2018* FY2019

NET EARNINGS** RETURN ON SHAREHOLDERS’ EQUITY**

(RM Million) (%)
10,232

25 11,000
9,679

10,000
20.51

19.77

20 9,000

8,000

7,000
15
5,556

6,000
11.25

5,000
10
4,000

3,000
0000

5 2,000

1,000

0 0
FY2018 FP2018* FY2019 FY2018 FP2018* FY2019

FFB YIELD FFB PRODUCTION

(MT per hectare) ('000 MT)

* Six-month financial period ended 31 December 2018

** The financial results for FY2018 and FP2018 have been restated to exclude discontinuing operations
 Annual Report 2019 PG. 018 – 019

CORP OR ATE
INFORMATION
As At 2 April 2020

BOARD OF DIRECTORS

TAN SRI DATO’ A. GHANI OTHMAN TUNKU ALIZAKRI RAJA MUHAMMAD ALIAS
Non-Independent Non-Executive Chairman Non-Independent Non-Executive Director

TAN SRI DATUK DR YUSOF BASIRAN ZAINAL ABIDIN JAMAL

Independent Non-Executive Director Non-Independent Non-Executive Director

MUHAMMAD LUTFI TAN TING MIN

Independent Non-Executive Director Independent Non-Executive Director

DATUK ZAITON MOHD HASSAN LOU LEONG KOK

Senior Independent Non-Executive Director Independent Non-Executive Director

DATO’ MOHD NIZAM ZAINORDIN MOHAMAD HELMY OTHMAN BASHA

Non-Independent Non-Executive Director Group Managing Director

OVERVIEW
DATO’ HENRY SACKVILLE BARLOW
Independent Non-Executive Director

GROUP MANAGING DIRECTOR AUDITORS

MOHAMAD HELMY OTHMAN BASHA PricewaterhouseCoopers PLT
(LLP0014401-LCA & AF 1146)
Chartered Accountants
SECRETARY Level 10, 1 Sentral, Jalan Rakyat
AZRIN NASHIHA ABDUL AZIZ (LS 0007238) Kuala Lumpur Sentral 1
50706 Kuala Lumpur, Malaysia.
Tel : +(603) 2173 1188
REGISTERED OFFICE Fax : +(603) 2173 1288

Level 10, Main Block, Plantation Tower

No. 2, Jalan PJU 1A/7, Ara Damansara
47301 Petaling Jaya, Selangor Darul Ehsan, Malaysia.
Tel : +(603) 7848 4000
Fax : +(603) 7848 5360
Email : communications@simedarbyplantation.com
Website : www.simedarbyplantation.com
FORM OF LEGAL ENTITY
Incorporated on 2 April 2004 as a private company
limited by shares under the Companies Act, 1965 and
converted into a public company limited by shares on
20 July 2017.

SHARE REGISTRAR STOCK EXCHANGE LISTING

Tricor Investor & Issuing House Services Sdn Bhd Listed on the Main Market of Bursa Malaysia Securities
Registration No.: 197101000970 (11324-H) Berhad since 30 November 2017.
Stock Code : 5285
Office:
Stock Name : SIMEPLT
Unit 32-01, Level 32, Tower A
Vertical Business Suite
Avenue 3, Bangsar South
PLACE OF INCORPORATION AND DOMICILE
No. 8, Jalan Kerinchi
59200 Kuala Lumpur, Malaysia. Malaysia
Tel : +(603) 2783 9299
Fax : +(603) 2783 9222
Email : is.enquiry@my.tricorglobal.com
Customer Service Centre:
Unit G-3, Ground Floor, Vertical Podium
Avenue 3, Bangsar South
No. 8, Jalan Kerinchi
59200 Kuala Lumpur, Malaysia.
K E Y
M E SSAG E S
022 Chairman’s Message
030 Group Managing Director’s Review
C H A I R M A N ’ S
M E S S A G E
“As the world’s largest producer of Certified Sustainable Palm Oil (CSPO), we are imbued
with a great sense of responsibility towards the industry that has provided for the well-
being and livelihood of generations in palm oil producing regions. At Sime Darby
Plantation, we know we have to continuously demonstrate our leadership by raising the
bar on sustainable growth. It is not only an expectation from our stakeholders, but also
our own aspiration to set new benchmarks and improve standards, as well as positively
contribute to the sector’s sustainable future.”

Dear valued shareholders,

IT IS MY PRIVILEGE TO SHARE THE ANNUAL NAVIGATING THROUGH A CHALLENGING ENVIRONMENT &

REPORT 2019 FOR SIME DARBY PLANTATION
BERHAD (“SDP” OR THE “GROUP”). AS
PRESCRIBED BY THE INTERNATIONAL
INTEGRATED REPORTING COUNCIL, WE
HAVE SUBSCRIBED TO THE PRINCIPLES OF
INTEGRATED REPORTING TO PRESENT A TRUE
NARRATIVE ON OUR STRATEGIES, GOALS AND
PERFORMANCE FOR THE FINANCIAL YEAR
ENDED 31 DECEMBER 2019 (FY2019). IN THIS
REPORT, WE FOCUS ON IMPROVING THE
QUALITY OF OUR DISCLOSURES BY SHARING
RELEVANT AND CREDIBLE INFORMATION ON
OUR JOURNEY DURING THE YEAR UNDER
REVIEW. THIS REPORT SPEAKS OF OUR
TRANSFORMATION EFFORTS, INNOVATIVE
SOLUTIONS, SUSTAINABILITY APPROACHES,
AND ABOVE ALL, VALUE CREATED FOR OUR
MULTIPLE STAKEHOLDERS.
FUTURE UNCERTAINTIES
Throughout our existence for more than a century in the plantation
industry, the Group has encountered and navigated through numerous
challenges. Our resilience and resolve in the face of various adversities
have been instrumental in our effort to rise above any obstacle,
allowing the Group to come out stronger and more determined to
continue our journey towards building a sustainable future.
Amid the preparation of this report, the Group, as well as many other
companies around the world, are facing an unprecedented challenge
in the wake of a major global disruption. On 11 March 2020, the
World Health Organisation (WHO) declared the outbreak of COVID-19
as a global pandemic and this has unexpectedly become a new
global threat to our daily lives. It is now the single most significant
element that will determine the world’s economy and hence, the
entire palm oil industry’s outlook in 2020.
In Malaysia, to contain the spread of COVID-19, the Movement Control
Order (MCO) has been imposed from 18 March to 12 May 2020*, but
the Malaysian Government has allowed the oil palm and rubber
industries to continue to operate as these are industries that provide
essential services to the country. Thankfully, we are able to continue
with most of our operations in spite of the restrictions in movement
in various countries.

The Group is blessed to be operating in an industry that provides

an essential product to the world. It is foreseeable that the demand
for palm oil as an important ingredient in food and non-food products
would continue, even in times of crisis. Based on preliminary
assessment, the potential impact of COVID-19 on the Group’s business
and results have been limited at this juncture.

* A
 s per the latest official announcement made by the Malaysian government
on 23 April 2020.
 Annual Report 2019 PG. 022 – 023

KEY MESSAGES
2

TAN SRI DATO’ A. GHANI OTHMAN

Chairman
 CHAIRMAN’S MESSAGE

Over

580k
Hectares
Planted with Oil Palm

Nevertheless, the Group should never
be under the illusion that our industry
would be insulated from the impact
of this pandemic as it has not reached
its peak, and many nations are still
struggling to contain the rapid
increase in global infection rate and
mortality. A prolonged pandemic may
impact global markets, disrupt supply
chains and economies, and trigger a
looming global recession which could
also impact palm oil’s supply and
demand worldwide.
I would like to assure our shareholders
that the Group will, to the best of our
abilities, weather through the
challenging period ahead and deal
with the assault of the COVID-19
pandemic. Mitigation plans have been
put in place by the Group to minimise
any adverse impact of this pandemic
to our business and we will continue
to rely on the Group’s diversity, as
well as our resolve and resilience as
we have done many times in the past.
Indeed, these are the qualities that
have taken us through the challenges
of FY2019 as presented in this report.
Our tenacity throughout the year
under review demanded the focus
and readiness to make decisive, and
sometimes, difficult decisions while
we leveraged on our inherent
strengths.
The tough market conditions faced
by the palm oil industry in the Group’s
previous financial period continued
to present a challenging business
environment throughout FY2019.
Unfavourable weather conditions
which affected our FFB production,
prevailing low CPO and Palm Kernel
(PK) prices for the most part of 2019,
as well as a volatile external
environment influenced by the on-
going US-China trade war have
continued to impact our financial
performance. Although there was
some respite to industry players when
CPO prices rebounded towards the
end of 2019, the recent diplomatic
friction between India and Malaysia
Annual Report 2019 PG. 024 – 025
has impacted demand from the
world’s largest palm oil importer, thus
setting up a discouraging start to the
new year 2020 for the Malaysian palm
oil industry.
In the year under review, SDP navigated
through the various challenges by
focusing on improving its efficiencies
and operating at the lowest possible
costs. We had felt it vital to provide a
focal point to initiate, structure and
drive change within the Group to
survive the “New Normal” of low
KEY MESSAGES
commodity prices.
Our key to survival and competitiveness
was our diversification strategy, which
allowed us to explore new
opportunities for growth across
different markets, as well as in our
Downstream business, which is now
represented by a new brand, Sime
Darby Oils. From differentiated 2
products to alternative sectors such
as renewables, the Group’s integrated
supply chain allowed us to leverage
on our presence across the palm oil
production value chain. In short, we
were partially insulated against socio-
economic, political, environmental
and social influences due to our
integrated approach to business.
We continued to dedicate our
resources towards some of the most
critical aspects of our business such
as our replanting and outside crop
programmes; upskilling of human
capital; digitalisation and supply chain
engagement, especially with
smallholders and third-party traders.
Our investments in these areas
reinforced SDP’s commitment to its
transformation journey through the
Group’s RISE to APEX value creation
programme aimed at accelerating
the performance of our core businesses
through results driven initiatives that
incorporate the six (6) Winning
Mindsets – Deliver Results, Customer
First, Value Talent, Build Trust,
Continuous Improvement and
Empowered Decisions.
CHAIRMAN’S MESSAGE

240 estates and 69 palm oil mills located in Malaysia, Indonesia, Papua New Guinea and the Solomon Islands form an essential part of
SDP’s Upstream operations.

PROTECTING VALUE & DELIVERING
RETURNS
For the financial year under review,
the Group registered total revenue of
RM12.1 billion and net profit of RM122
million from its continuing operations.
The weaker earnings were attributable
to lower CPO and PK prices realised,
as well as lower FFB production in
FY2019. This was partially offset by
lower non-recurring losses, finance
costs and a tax credit registered for
the financial year.
The Group’s discontinuing operations,
comprising its Liberian operations and
joint ventures in the oleochemical
and biomass businesses, recorded a
net loss of RM322 million, mainly
arising from the impairment charge
of RM235 million for its assets in
Liberia. Accordingly, the Group posted
a net loss of RM200 million for FY2019
compared to a net profit of RM523
million in the same period last year.
Despite an overall weaker financial
performance, the Group’s unwavering
resolve on a number of strategic
priorities to ensure long term stability
and deliver better returns to our
shareholders moving forward
continued throughout FY2019. The
Group remains on track in its strategies
of increasing profit contribution from
its Downstream segment. Our various
initiatives to improve operational
efficiencies and maintain disciplined
management of cost and liquidity
were also strengthened throughout
the Group’s operations. We were
determined to lower our costs and
stop continuing losses from non-
performing assets so that we could
re-allocate our financial resources
towards better value creation for our
shareholders.

At the end of FY2019, the Group
decided to divest its entire equity
interest in Sime Darby Plantation
(Liberia) Inc. to Mano Palm Oil Industries
Limited (MPOI). The decision to exit
was made in view of various operating
challenges the Group had faced since
its foray into the West African country
in 2009. The divestment will prevent
future losses from our operations in
Liberia and will enable the Group to
reallocate financial resources to generate
higher value for its shareholders. The
divestment exercise was completed in
January 2020.
The Group also remained on track in
our deleveraging journey via the asset
monetisation of other non-core and
under-performing assets, as well as a
refinancing exercise to improve our
debt maturity profile. We completed
the refinancing of SDP’s credit facilities
worth approximately RM3.9 billion on
marginally improved terms in
December 2019. The refinancing
exercise, which involved mainly
Shariah-compliant instruments, has
not only resulted in a lower cost of
debt for us, but also strengthened
our balance sheet and provided
financial flexibility to manage our
operations and finances. Furthermore,
this exercise has placed the Group in
a much stronger position to withstand
the volatility and uncertainties that
can be expected as a result of the
COVID-19 implications on global
markets. The refinancing exercise was
viewed positively by many financial
analysts and Moody’s Investors Service.
Please refer to the Group Financial
Review section on pages 54 to 61 of
the Annual Report for a detailed
discussion on our financial performance.
INTERNALISING GOVERNANCE FOR
HIGH PERFORMANCE
At SDP, we recognise the importance
of having an optimum balance of
governance in yielding sustainable
high performance. From Board
oversight and accountability to
institutional checks and balances to
transparency – in adopting the
principles of good governance, our
endeavour is to go beyond compliance
and take into account progressive
measures that are required to move
our business forward.
Our governance activities are focused
on delivering value to stakeholders
and aligned with our strategic
objectives of driving operational
excellence, serving our customers and
maximising returns across our value
chain. Our Code of Business Conduct
(COBC) guides us in upholding our
Core Values of Integrity, Respect &
Responsibility, Enterprising and
Excellence, which in turn promotes
exemplary and responsible behaviour,
while we seize opportunities and
challenge set boundaries to achieve
outstanding results.
At the Board level, we approved the
implementation of ISO 37001:2016
Anti-Bribery Management Systems
(ABMS) Certification (ISO 37001) for
SDP, as well as the Anti-Corruption
Compliance Framework and Anti-
Corruption Policy Statement as part
of the Group’s Anti-Corruption
Compliance Programme to further
strengthen our stand against corruption.
Overall, in FY2019 the Board continued
to provide the benefit of its leadership
towards successful implementation of
corporate strategies, ethical practices,
and sustainability approaches. This
underscored the ultimate responsibility
of the Board in guiding the Group
towards long term success and
delivering sustainable value to our
stakeholders.
Read more about the Group’s approach
to governance in the Governance
Framework section on pages 140 to
183 of the Annual Report.
Annual Report 2019 PG. 026 – 027
MANAGING RISKS THAT CAN
IMPACT OUR STRATEGIES
The inherent nature of our business
is prone to both internal and external
risks. Our approach has been and will
continue to:
exercise caution by staying attuned
to global developments and
external vulnerabilities which
impact trades, price trends,
bilateral arrangements and
relationships, as well as our value
KEY MESSAGES
chain;
apply prudent risk management
principles to manage and mitigate
various types of risks – from credit,
liquidity, operational, people and
market risks to economic,
environmental, social and
governance risks; and
pre-empt and prepare resources, 2
capabilities, and capacity to
effectively manage the emerging
risks and unprecedented challenges
that may arise in the mid-to-long
term.
In 2019, we encountered both the
traditional and some unanticipated
risks that affected markets and trade
relationships. A common approach to
risk analysis and management is
enshrined in SDP’s Risk Management
Framework and Standard. Our focus
on risk management activities was to
ensure that internal risks were
appropriately managed, while external
risks that could impact the achievement
of the Group’s strategies and objectives
were proactively identified and
mitigated, where possible.
The risk management framework and
approach is further described in the
Statement on Risk Management and
Internal Control on pages 174 to 182
of the Annual Report. Key risk
management activities undertaken
during the year under review are
described in the Risk Management
Committee report on pages 171 to 173
of the Annual Report
CHAIRMAN’S MESSAGE
BUILDING CAPABILITIES &
MAINTAINING THE WELL-BEING OF
OUR WORKFORCE
At SDP, human capital development
is anchored on three key thrusts. First
is to create an alignment between
our vision and everything that drives
our people to contribute to that vision.
This includes the culture of the
organisation, where our people are
guided by our values, strategic goals,
and capable leadership. Second is
the need to build our people’s
capabilities, whilst instilling in them,
a sense of responsibility and
accountability to not just drive
profitable business, but to continually
create value for our stakeholders. The
third thrust is our appetite and
capacity for new knowledge and
innovation that will future-proof our
business as well as our people.
On the back of these thrusts, during
the year under review, leadership and
technical capabilities development has
been one of our top priorities. We
introduced a number of programmes,
including Upstream capability building
through the BEST Programme (Building
Estates’ Sustainable Transformation).
In support of our diversity and inclusion
agenda, we introduced our Female
Manager Development programme,
mainly to provide opportunities for
high potential female talents to
shoulder bigger responsibilities and to
develop future leaders.
During FY2019, we also continued our
Culture and Health Transformation
journey, anchored on our commitment
to sustain performance excellence
through Organisational Health. We
deployed Organisational Health Index
or OHI pulse surveys across our
operations and developed robust
actions plans based on the findings.
Moving forward, our focus will be on
establishing Core Leadership
Development programmes to support
SDP’s future-ready talent and
succession pool.
SDP firmly believes in human capital development and emphasised on leadership and
technical capabilities during the year under review to future-proof our business and support
our future-ready talent and succession pool initiatives.
Read more about the Group’s work
culture in the Human Capital Growth
section on pages 80 to 89 of the
Annual Report.
LEADERSHIP TO RAISE THE BAR
ON SUSTAINABLE GROWTH
We believe that businesses have a
responsibility to champion sustainability
and sustainable development; it’s the
right thing to do. We also believe the
most effective way to do so is by
mobilising stakeholders’ support and
building partnerships. In our industry,
we must allocate resources to improve
our environmental footprint as well
as create a deforestation-free and
exploitation-free supply chain.
As at 31 December 2019, we are 99%
Roundtable on Sustainable Palm Oil
(RSPO) certified for all our operations
and we hope to attain a 100% certified
status in the second half of 2020.
However, for the Group, sustainability
goes beyond certification. It also
means a commitment to addressing
global issues including the rising
concern about deforestation within
the palm oil industry. As the leading
producer of sustainable palm oil, SDP
shares those concerns. We believe
that we can offer leadership in helping
to provide solutions that prevent
deforestation.
Our commitment to drawing the line
on deforestation is the inspiration
behind the theme of this Annual
Report.
For us, the frontier to halting
deforestation is traceability. Tracking
supply back to its source will make
it possible to identify where problems
may exist, and for action to be taken.
This led us to develop and launch
‘Crosscheck’. The first of its kind for
the palm oil industry, it is an online
tool that allows everyone to trace
sources of the Group’s palm oil supply
down to the mill level.
With our latest ‘Working with Suppliers
to Draw the Line on Deforestation’
policy, we extended our pledge to
responsible agricultural practices to
our third-party suppliers. The policy
builds on SDP’s existing practices and
sets a path for suppliers to meet our
expectation that they also adhere to
No Deforestation, No Peat, No
Exploitation (NDPE) standards.
Raising the standard for responsible
practices throughout the supply chain
is not a feat that can be achieved
alone. SDP works with our stakeholders
to obtain valuable advice and insights
on the best management and
agricultural practices for our company.

Indonesia’s Chairman of Palm Oil Agribusiness Strategic Policy as well as the Borneo Orangutan Survival
Foundation, Prof. Bungaran Saragih, speaking to stakeholders and members of the media during our Introduction
to ‘Crosscheck: Drawing The Line on Deforestation’ session in Jakarta on 9 September 2019.
During FY2019, the Group partnered
with NGOs, industry partners and
customers to collaborate on a number
of significant initiatives in our effort to
build a sustainable future for the palm
oil industry. These include, a radar-
based forest monitoring system known
a s R adar A l ert s f o r De te c ting
Deforestation (RADD); the Decent Rural
Living Initiative (DRLI) to tackle labour
rights challenges and improvements
in working conditions for Indonesia’s
palm oil sector; and partnering with
the European Palm Oil Alliance (EPOA)
to drive the uptake of CSPO by Europe’s
food manufacturing value chain.
These initiatives and others are
described in detail in our Sustainability
Report that is now publicly available
together with this Annual Report. They
demonstrate SDP’s effort to remain
at the forefront of raising the bar for
the industry as well as for our own
business to catalyse sustainable growth.
For further details on our progress
around sustainability, please refer to
the Our Approach To Sustainability
section on pages 8 to 9 and Sustainable
Value Creation section on pages 92 to
113 of the Annual Report as well as
SDP’s Sustainability Report 2019.
Annual Report 2019 PG. 028 – 029
KEY MESSAGES
ACKNOWLEDGING THE VALUABLE On behalf of the Board, I would like
CONTRIBUTIONS OF OUR PEOPLE to congratulate all members of Senior
I would like to bid a warm welcome
Management and the SDP family for
2
your patience and determination in
to YM Tunku Alizakri Raja Muhammad
one of the most challenging years we
Alias who joined the Board on
have had in decades. Moving forward,
1 January 2020. On another note, I
and with the COVID-19 pandemic
would like to thank Dato’ Mohamad
taking centre stage globally, the Group
Nasir Ab Latif for his tenure of service
will be counting on your continued
to the Group. I am grateful to have
support, tenacity and dedication.
been given the opportunity to serve
alongside them both.
We need to acknowledge that the
turmoil is far from over. As I have
I would like to take this opportunity to
mentioned, the Group will need to
thank Tan Sri Dato’ Seri Mohd Bakke
once again rely on its resilience to
Salleh, who retired as SDP’s Executive
wade through the uncertainties that
Deputy Chairman & Managing Director
lie ahead. We will deal with this
on 30 June 2019, for his dedicated
pandemic together with all our
service and commitment during his
countries of operations, joined in unity
tenure of service to the Group. Replacing
with other citizens around the world.
him at the helm of the Group’s
We are not alone in this predicament
management team is Mohamad Helmy
and God willing, we will persevere.
Othman Basha who assumed the
position of SDP’s Group Managing
Director effective 1 July 2019. I thank
Mohamad Helmy for bringing passion,
insight and experience to the table
Tan Sri Dato’ A. Ghani Othman
and for his unwavering commitment
Chairman
in driving this organisation forward.
MOHAMAD HELMY OTHMAN BASHA
Group Managing Director
 Annual Report 2019 PG. 030 – 031

GROUP MANAGING
DIRECTOR’S REVIEW
“At Sime Darby Plantation, we are committed to raising the bar on sustainable value
creation while responding effectively to emerging global challenges, external factors that
drive market trends as well as the expectations of our various stakeholders. In pursuing
our commitment, we employ robust strategies that can strengthen our position and
improve our performance, to enable us to continuously deliver value to our stakeholders.”

KEY MESSAGES
Dear valued shareholders,

I AM PLEASED TO PRESENT THE FY2019 was for us, a year of many strategic interventions; ones that we hope
INTEGRATED ANNUAL REPORT would continue to pave the way towards greater progress for the Group and
2019 FOR THE GROUP, WHICH
the entire palm oil industry. It was also a year of ‘Leadership with a Purpose’ for
2
the Group; requiring each one of our people to strengthen our sense of
CHRONICLES OUR KEY AREAS OF accountability and ownership in the face of challenging times as we continue
FOCUS, THE CHALLENGES WE FACED, our journey towards building a sustainable future for the Group.
AS WELL AS OUR ACHIEVEMENTS
DURING THE YEAR UNDER REVIEW. I FACING THE LATEST GLOBAL THREAT
MUST BEGIN BY EMPHASISING THAT Just as circumstances seemed to improve for the palm oil industry when CPO
DURING FY2019, SDP REMAINED and PK prices rebounded towards the end of 2019, the whole world was caught
off-guard by an unprecedented global threat. As countries around the world
COMMITTED TO PURSUE OUR
battled to deal with the spread of the deadly COVID-19 virus, major disruptions
TARGETS WHILST IMPROVING ON in global businesses, markets and supply chains quickly ensued, giving rise to an
THE WAY WE RUN OUR BUSINESS impending global recession in the new year 2020.
AND OPERATIONS. AS THE WORLD’S
LARGEST PRODUCER OF CSPO, WE
EMBRACE OUR LEADERSHIP ROLE
AND ARE RENEWING OUR EFFORTS
TO IMPROVE SUSTAINABILITY
STANDARDS AND PRACTICES, THUS
RAISING THE BAR ON SUSTAINABLE
GROWTH FOR THE PALM OIL
INDUSTRY.

Through the Group’s combined contribution with Sime Darby Berhad and Sime Darby
Property Berhad, Yayasan Sime Darby (YSD) or the Sime Darby Foundation pledged over
RM4.4 million to support efforts to alleviate the impact of COVID-19 pandemic.
GROUP MANAGING DIREC TOR’S REVIEW

At the time of preparing this statement, a Movement Control Order (MCO) to contain the
spread of the virus has been imposed by the Malaysian government throughout the country
from 18 March until 12 May 2020*. The period may be extended depending on the outcome
of the containment exercise in the days to come. For our Malaysian operations, the Group
is thankful that the government has relaxed the earlier MCO rulings to allow our estates and
mills to continue to operate, with strict safety conditions. To date, no restrictions were imposed
on our Upstream operations in Indonesia, Papua New Guinea and the Solomon Islands.

Our Downstream operations in Malaysia are still running too, albeit under certain operating
conditions as allowed under the MCO. Whilst SDO has begun to experience a slight impact
to its overall B2B segment with less demand from customers, the need to continue filling
up supermarket shelves with our cooking oils to cater to customers’ demand has buoyed
SDO’s B2C business. At the point of preparing this report, based on our preliminary assessment,
the impact of the pandemic on the Group’s operations and financials has been limited.

Nevertheless, we foresee increasing challenges to our operations due to disruption in logistics

arrangements and supply chain if the global pandemic prolongs. As the world’s economy
showed signs of rapid deterioration, we should be cognisant that the domino effect of the
upcoming recession is going to further impact the Group’s value chain as well as global demand
for CPO and palm oil products. In facing the rising threat of COVID-19 to our operations, the
Group had responded swiftly to assess all our operational and financial risks and came up with
business continuity plans and our mitigation actions.

I would like to take this opportunity to record my highest appreciation to our employees for
their dedication in continuing to run our business operations, where allowed, with as little
disruption as possible while abiding to movement restrictions. I am also heartened to see
the intense care and devotion displayed by our teams across the globe in responding to the
crisis – both the frontliners in operations and support services working in the background.
The extra effort and long hours they have sacrificed in making sure that infrastructures are
ready for the Group to operate under these very challenging circumstances with minimum
disruption, as well as in ensuring the safety of our employees and their family members, are
truly commendable indeed.

As the Group Managing Director, I give my assurance that the management will continue
to monitor the COVID-19 situation closely. Our team will continue to endeavour to further
minimise the threat of this pandemic on the safety of our people, while we mitigate any
adverse operational and financial impact to our business as we strive to overcome the
challenging times ahead.

RE-STRATEGISING IN RESPONSE TO MARKET DEVELOPMENTS

It is truly unfortunate that this global catastrophe has come at a time when the palm oil
sector is already grappling with various challenges such as low CPO and PK prices for the
most part of 2019, unfavourable weather conditions as well as a volatile external environment
influenced by the US-China trade tensions. CPO prices dropped to as low as approximately
RM1,800 per MT in March 2019 before surging to its highest level in nearly three years at
around RM3,000 per MT in December 2019. However, due to concern on demand arising
from the worsening situation of COVID-19 global pandemic and sharply lower oil price, CPO
price has plunged to around RM2,200 per MT in March 2020.

* As per the latest official announcement made by the Malaysian government on 23 April 2020.
 Annual Report 2019 PG. 032 – 033

KEY MESSAGES
2

YAB Prime Minister Tan Sri Muhyiddin Yassin checking on the

availability of essential items including the first RSPO certified
cooking oil Alif by Sime Darby Oils at a hypermarket in Seri
Kembangan during the COVID-19’s Movement Control Order.
GROUP MANAGING DIREC TOR’S REVIEW
For the Group, FY2019 was indeed a
crucial time for us to re-strategise and
tap the revenue potential of our
different business segments and
create a more balanced profit
contribution between our Upstream
and Downstream segments.
Aligning to this aspiration, the Group
rebranded its global Downstream
business under a new identity, Sime
Darby Oils (SDO) to realise our full
potential as a trusted brand for
sustainability and superior product
qualities. In FY2019, SDO continued
to achieve stronger profits, and made
positive contributions to the Group’s
overall performance, largely driven by
good performance from its
differentiated business and global
trading operations in Asia Pacific.
SDO’s extensive network, assets
locations and distribution channels
in key markets around the world were
instrumental in creating easy access
for buyers at destination markets
during the year under review. In
keeping with its signature tagline
‘Realising Possibilities Together’, SDO
continued to form strategic
partnerships with local and global
distributors to further grow its
customer base and market reach in
major markets such as India, China
and Europe, whilst establishing various
distribution channels and satellite
sales offices to unlock untapped value
from markets such as the Middle East
and North America.
The Group believes that by continuously
rediscovering our innate potential
beyond Upstream operations, we can
push our very own boundaries and
institutionalise new revenue streams
to mitigate external risks to our
business such as palm oil price
fluctuations, increasing costs of labour
and fertiliser, and other socio-economic
and political influences. The Group
will continue to strengthen its focus
on operational excellence for our
Upstream segment with strategies
such as greater automation,
mechanisation and digitalisation.
Meanwhile, the Group’s Downstream
growth plans will complement our
existing Upstream strategies and
become our game-changer.
Our rebranded Downstream division, Sime Darby Oils, manages 11 refineries located in
7 countries throughout its global operations.
ACCELERATING EFFORTS TO proceeds of RM103 million. A few
HARNESS GROWTH POTENTIAL parcels of land in Malaysia and in
Thailand were also sold for
During the year under review, we
approximately RM21 million.
continued to focus on the Group’s
three-pronged strategic blueprint and
Assets identified for disposal and exit
priorities – Driving Operational
including our joint ventures in
Excellence; Maximising Returns; and
oleochemical and biomass businesses
Serving our Customers Evolving Needs.
as well as our West African operations,
These in turn, have guided SDP
Sime Darby Plantation (Liberia) Inc.
towards operating at lower costs,
(SDPL) were classified as discontinuing
improving our efficiencies and ability
operations in FY2019. These divestments
to withstand challenging market
will enable us to prevent further losses
conditions, as well as delivering
in our books and reallocate our
optimum returns in FY2019.
financial resources into areas where
they will create the highest value for
Apart from the return on investments,
the Group and its shareholders.
we aim to raise the bar on all aspects
of our business and continue to
Despite our best endeavours throughout
contribute to value creation. Thus, in
FY2019, the Group’s performance was
FY2019, we continued to embrace the
severely impacted by prevailing external
Group’s RISE to APEX value creation
factors. The Group registered a total
programme realised through the six
revenue of RM12.1 billion and a net
(6) Winning Mindsets and focused our
profit of RM122 million from its
efforts on strengthening the confidence
continuing operations; a decline of
of our shareholders.
9% and 83% respectively compared
to similar period in 2018. Operationally,
In FY2019, the Group continued its
we registered a 6% decline in FFB
pursuit to unlock value from non-core
production and 0.46% increase in oil
and underperforming assets, and have
extraction rate (OER) for our Upstream
completed the disposal of our 100%
operations. As for SDO, sales volume
stake in PT Mitra Austral Sejahtera
increased by 5% while capacity
(PT MAS) in Indonesia, for a total
utilisation rate was maintained at 75%.

The Group’s discontinuing operations
recorded a net loss of RM322 million,
mainly arising from the impairment
charge of RM235 million for its assets
in Liberia. Accordingly, the Group
posted a net loss of RM200 million
for FY2019 compared to a net profit
of RM523 million in the same period
last year.
Please refer to the Group Financial
Review section on pages 54 to 61 of
the Annual Report for a detailed
analysis of our financial performance
and position.
INVESTING IN THE WELFARE,
WELL-BEING AND GROWTH OF
OUR PEOPLE
During the year under review, the
Group continued to invest in our people
to instil in them a sense of belonging
and pride in SDP, as well as the belief
in our core values. In the spirit of our
flagship RISE to APEX initiatives, we
focus our efforts to drive the Group’s
transformation towards a high-
performance work culture by motivating
our people to achieve professional and
personal growth and contribute to
SDP’s value creation aspirations, while
achieving work-life balance.
In FY2019, we accelerated the efforts
of Results Delivery Office (RDO) to drive
transformation and enhance the
performance of our core businesses.
This dedicated unit championed
initiatives to drive value creation while
helping our people overcome barriers
to growth by eliminating redundancies
and improving efficiencies.
During the financial year, a pilot
Process Rationalisation Lab was rolled
out in Malaysia whereby 18 initiatives
to improve process efficiencies on
three work-streams, namely tender
process, management reports, and
Headquarter visits were implemented.
A Lab is essentially an intense cross-
functional problem-solving workshop
involving various departments within
the Group. The Process Rationalisation
Lab target was to reduce approximately
66% of overall time spent on the
three processes and reports, thus
enabling employees to allocate their
unhampered time for other high-
priority value-creation assignments.
As at 31 December 2019, the Lab
achieved 42.7% of the target time-
spent reduction.
RDO conducted 5 other Lab series
throughout the Group’s operations in
Malaysia, Indonesia and Papua New
Guinea. Key focus areas for these Labs
include amongst others, enhancing
business and operational efficiency,
reducing costs, and creating a stronger
ecosystem of SDP talents to thrive
and excel. The lessons learnt and
efforts of these labs will drive future
results and ensure value creation
efforts will be delivered.
In addition to productivity and
performance improvement initiatives,
we continue to offer new opportunities
to our employees by equipping them
with new competencies and catalysing
their career development. In FY2019,
we set-up a Digital Office to develop,
amongst others, new skill sets in data
science, design thinking, as well as
agile delivery and management. Our
objective is to provide digital
immersion opportunities, incubating
a new digital culture, with an agile
and collaborative work culture. It is
our aspiration to adopt a Digital
Factory Model and co-create exciting
opportunities for our people in
Precision Agriculture, Intelligent
Process Automation, Sales and
Marketing and many others. During
the year under review, we explored
our digital imperatives and digital
opportunities with leaders across
various transformational initiatives. We
also delivered our first round of Digital
Immersion Days for our Malaysian
managers and innovators in 2019.
More immersions and challenges are
planned for colleagues across various
functions of our business in 2020.
Annual Report 2019 PG. 034 – 035
It is also important that we optimise
the power and potential of digital,
data analytics, robotics, automation,
artificial intelligence and crowd
sourcing platforms to solve all the
pain points that our industry is
struggling to overcome. For instance,
strategic investments in data analytics
and algorithms can help to make
better yield prediction and even price
forecasting, which are valuable in
preparing us against volatile markets
and global uncertainties.
KEY MESSAGES
Already in the pipeline, one of our
pioneering establishments, the Sime
Darby Plantation Academy is creating
future-ready talents, not only for the
Group, but also the industry. Through
the Academy, we continue to increase
the pool with higher quality talents,
whom we hope will accelerate the
development of the sector in the 2
future. It is our aspiration to develop
candidates with high integrity and
unparalleled experience to champion
the present and future growth of the
palm oil industry.
In 2018, the Group also introduced
the Organisational Health Index (OHI)
as an important part of our Health
and Culture transformation journey
for a more performance-driven
workforce. Last year, the results of the
survey were translated into action
plans that became key deliverables
for all business heads. In November
2019, the OHI pulse survey was
deployed, seeking feedback and input
from employees on how the action
plans have improved the teams’
abilities to carry out their duties and
enhanced their work satisfaction
throughout the year of implementation.
Not only has the survey provided an
avenue to the Group’s most valuable
assets to voice their opinions, it also
gave the Group the opportunity to
optimise performance where necessary.
GROUP MANAGING DIREC TOR’S REVIEW
SHAPING A SUSTAINABLE FUTURE
& EMPOWERING SUSTAINABLE
COMMUNITIES
Being the world’s largest CSPO
producer comes with a great
responsibility to continue doing the
right things, even though they may
be challenging. With over three
decades of track record in
championing sustainable palm oil
production, SDP is well positioned to
address some of the most critical
issues for the palm oil industry.
From environmental stewardship to
social equity, we seek to work with
the industry, our supply chain partners,
smallholders and government to
raise standards of production. In the
year under review, we remained
uncompromising in our approach to
implement No Deforestation, No Peat,
No Exploitation (NDPE) standards
across our supply chain.
In FY2019, the Group announced our
stand on drawing the line on
deforestation in the palm oil supply
chain. We believe that the frontline
to stopping deforestation is traceability,
so we launched an online open access
tool called ‘Crosscheck’. It allows any
of our stakeholders to trace our supply
back to the mill level whilst checking
that against suppliers throughout our
supply chain, as well as the risk on
the ground where those mills are
SDP held an engagement in London to introduce Crosscheck to multiple stakeholders and
gain their feedback as part of our commitment to work with like-minded individuals to
drive deforestation out of our industry.
located. The first of its kind for the
sector, Crosscheck reinforces our
commitment to traceability and
transparency of our supply chain.
As at 31 December 2019, Crosscheck
provides information on 14 facilities
and 909 mills in our supply chain, in
the context of the risk areas in the
landscapes surrounding our mills, and
our network of suppliers. Our aspiration
is to create a deforestation-free supply
chain, but we know we cannot do it
alone. Crosscheck is an open invitation
to our stakeholders to alert us to
where problems in our supply chain
lie. We continue to engage with our
NGO partners, investors and customers
to incorporate their valuable input
and suggestions on how Crosscheck
can be further improved. Following
the publication of Crosscheck, we
released our ‘Working with Suppliers
to Draw the Line on Deforestation’
policy statement to expand the sphere
of oil palm companies in our supply
chain operating to NDPE standards,
whilst employing constructive
engagement to systematically resolve
non-compliance.
At SDP, we believe that our efforts in
building sustainable local communities
can contribute not only to the success
of our business and the wellbeing of
our employees, but also to the
development of a better, fairer society.
In FY2019, together with ‘Yayasan
Sime Darby’ (YSD) or the Sime Darby
Foundation, we supported various
Corporate Social Responsibility (CSR)
programmes comprising those that
promoted environmental stewardship,
community health and well-being,
access to universal education as well
as employee volunteering programmes.
In view of the calamity that befell the
world due to the outbreak of the
COVID-19 virus, the Group played our
part to assist the brave efforts by
frontliners to contain the pandemic
and save human lives. Through our
combined contribution with Sime
Darby Berhad and Sime Darby
Property Berhad, YSD pledged over
RM4.4 million to support efforts that
address the immediate needs of
individuals and communities impacted
by the COVID-19 pandemic. In
addition, SDP by itself also pledged
an additional RM3 million to be
channelled as contribution (either in
cash or in kind) to official disaster
relief networks and hospitals that have
been designated to deal with infected
cases in Malaysia, Indonesia as well
as Papua New Guinea and Solomon
Islands where we have our main
operations.
Indeed, the Group is passionate about
our sustainability initiatives and CSR
contributions because we truly believe
that it is important for corporate
citizens to act responsibly regardless
of the challenges that we may face.
On that note, we were humbled by
the various acknowledgements we
received in recognition of our efforts
throughout FY2019. These include
among others, the Group’s continued
successful showing at the Sustainable
Business Awards Malaysia 2019 and
the 2019 Europa Awards for
Sustainability for the second
consecutive year. We were also ranked
first in the ‘Human Rights Disclosure
in ASEAN’ collaborative study by
ASEAN CSR Network, the Institute of
Human Rights and Peace Studies,
Mahidol University and Article 30s.
More than anything, these awards
motivate us to continuously improve
and deliver on our various sustainable
commitments.

I would like to take this opportunity
to invite all our stakeholders to learn
more about the Group’s journey and
on-going initiatives to raise the bar on
sustainable growth that we have
curated and displayed at our new Palm
Oil Experience Centre (POEC) in Carey
Island, Malaysia. Launched in October
2019, the POEC has been designed to
be an educational hub where visitors
from all over the world can gain more
insight about the production of CSPO,
SDP’s complete value chain of
operations as well as our best practices
and passion for the production of
sustainable palm oil.
For further details on our progress
around sustainability, please refer to
the Our Approach To Sustainability
section on pages 8 to 9 and Sustainable
Value Creation section on pages 92
to 113 of the Annual Report as well as
SDP’s Sustainability Report 2019.
ENVISIONING SUSTAINABLE
FUTURES FOR THE GROUP AND
OUR PEOPLE
As we continue our journey into 2020
and beyond, our primary responsibility
is to prepare our business and our
people to efficiently manage the
emerging economic, environmental,
social and governance risks. We will
need to continuously strengthen our
value proposition as a future-ready
organisation, which is well-positioned
to attract the best of talents, deploy
the most innovative of technologies,
and deliver sustainable outcomes for
our stakeholders.
The role of the Group’s Research and
Development (R&D) will thus be
critical to devise new solutions that
will enable our business to serve the
needs of our various stakeholders and
contribute towards solving various
global challenges such as deforestation
and food security for an ever-increasing
world population. During FY2019, our
R&D team has been on track to plant
more than 2,300 ha of our
GenomeSelect™ palms in multiple
locations across Malaysia and
commenced test seed production for
new GenomeSelect™ mother palms.
With a target to cater to full replanting
Annual Report 2019 PG. 036 – 037
KEY MESSAGES
Students from The International School @ ParkCity, taking a closer look at a barn owl that is
part of SDP’s Integrated Pest Management System to control the rat population in our estates
during their visit to the Palm Oil Experience Centre in Carey Island. Photo by Ian Pittman.
needs throughout Malaysia by 2023, ACKNOWLEDGING PERFORMERS 2
this breakthrough palm oil breed, that & MAINTAINING OUR RESOLVE
enables yield improvement of 15%
I take this opportunity to thank all
above our previous best planting
our stakeholders for your utmost
material, is going to be yet another
confidence in the Group to plan and
game-changer that will future-proof
deliver strategic programmes to drive
our business and performance.
sustainable performance. I also
commend our people’s untiring efforts
Moving forward, the Group will
and demonstrated leadership in
continue to focus on improving the
steering through the challenges and
execution of various strategies and
changes the Group has implemented
value creation initiatives that have
in FY2019 for a better future.
been identified to achieve a balanced
Upstream and Downstream portfolio.
Despite the global uncertainties we
are currently facing due to the
Our Upstream operations will continue
COVID-19 pandemic, I believe that
to rigorously pursue operational
what the Group has achieved in
excellence improvements with
strategies in accelerated replanting, FY2019 will resonate strongly in the
year 2020 and beyond, and will help
best agricultural practices as well as
us to steer through a sustainable path
greater automation, mechanisation
amidst the challenging tide ahead.
and digitalisation. As for SDO, our key
The Group will continue to operate
areas of focus will be on product de-
to a set of high standards, ethics and
commoditisation, asset utilisation and
integrity, industry best practices, and
optimisation, strengthening supply
resilience to continuously raise the
chain network for seamless connectivity
bar on sustainable growth.
globally, and improving customer
satisfaction through productivity and
efficiency improvement measures. I
believe that all these continuing
initiatives will positively contribute in
Mohamad Helmy Othman Basha
improving our balance sheet position,
Group Managing Director
while helping the Group to become
more robust and resilient against
various externalities.
M A N A G E M E N T
D IS C U S S I O N & AN ALYS I S
STRATEGIC REVIEW
040 Our Market Landscape
044 Our Value Creation Model
046 Stakeholder Engagement
048 Managing Our Material Matters
050 Our Strategies
051 Rise To Apex

PERFORMANCE REVIEW
Financial Review
054 Group Financial Review
061 5-Year Financial Highlights

Business Review
062 Upstream
068 Sime Darby Oils
072 Others: Renewables
074 R&D
080 Human Capital Growth
STRATEGIC REVIEW

OUR MARKET
L ANDSCAPE

GLOBAL TRENDS & MARKET OUTLOOK

GLOBAL VEGETABLE OIL DEMAND & SUPPLY VS POPULATION

Million MT KG

300 28.1 30.0

25.2 25.4 25.6

24.7
250 25.0
Total Demand (Million MT) (LHS)
200 20.0
Total Supply (Million MT) (LHS)
150 15.0
Total Population (bil)
100 10.0
Demand per capita (kg) (RHS)

50 5.0
7.6 7.7 7.8 8.2 8.5

0 0
2018 2019 2020 2025 2030

(Source: LMC Oilseeds & Oils Report 2019)

The recent pandemic will create significant demand uncertainties in the vegetable oils market, especially in the
next couple of years. Nonetheless, the longer-term fundamentals of the business remain relatively strong.

Demand for vegetable oils in both the developing and developed nations continue to grow, driven largely by
rapidly expanding populations as well as an increase in per capita intake especially in China, India, the European
Union, the United States and Indonesia.

TOTAL FOOD DEMAND FOR VEGETABLE OILS IN LEADING CONSUMERS (MILLION MT)

Million MT
50

45

40

35

30

25

20

15

10

0
2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

China EU India Indonesia USA

(Source: LMC Oilseeds & Oils Report 2019)

For vegetable oil (food use), India and China together account for over a third of the total food oil consumption
today. This has increased from a market share of less than 30% in 2000 of which 20% of the consumption was
palm oil. By 2030, their combined shares will have climbed close to 40% of which 30% of the consumption
would be palm oil, making these two (2) markets fundamental to the sector’s development.

Globally, palm oil is the largest consumed vegetable oil making up 36% of the total vegetable oil consumption.
This is followed by soybean oil (29%) and rapeseed oil (14%). Global dependence on palm oil is expected to rise
in 2020, particularly with higher import needs from India and China.

Hence, despite some impact on demand as a result of the pandemic in the near term, food demand remains
fundamentally sound.
 Annual Report 2019 PG. 040 – 041

PALM OIL SUPPLY FORECAST (MILLION MT)

Million MT

MANAGEMENT DISCUSSION & ANALYSIS

60

50

40

30

20

10

0
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Indonesia Malaysia Rest of The World

(Source: LMC Oilseeds & Oils Report 2019)

In the immediate aftermath of the pandemic, some supply disruptions may occur. However, the long term supply
trends will still be determined by fundamentals such as the growth of new planting and replanting exercises as 3
well as improvements in planting materials.

YOY GROWTH IN OIL PALM HARVESTED AREA (%)

30

25

20

15

10

0
1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2000

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Indonesia Malaysia

(Source: USDA)

Despite the slowdown in plantings due to moratoriums and other expansion challenges, palm oil has consistently
contributed to around 38% of the total vegetable oil supply over the past few years. This is expected to remain over
the coming years. Malaysia and Indonesia will continue to be key palm oil producers, supplying around 80% of the
total palm oil output by 2030. The focus moving forward will be on strengthening productivity and efficiency to
improve yields.
STRATEGIC REVIEW

OUR MARKET LANDSCAPE

VEGETABLE OIL PRICE OUTLOOK (USD/MT)

USD/MT

2,000

1,800

1,600

1,400

1,200

1,000

800

600

400

200

0
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013

2014
2015
2016
2017

2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
Coconut Oil Palm Kernel Oil Rapeseed Oil Sunflower Oil Soybean Oil Palm Oil Brent Crude Oil

(Source: LMC Oilseeds & Oils Report 2019)

Crude Palm oil (CPO) prices are also partially influenced by unpredictable and extreme weather patterns which
have been occurring more frequently over the last few years. Beyond 2019, the supply and demand calculations
suggest the palm oil market will once again move into deficit by 2024. This rebalancing of supply and demand
is principally the result of slowing output growth.

In addition to the uncertainties resulting from the 2020 global pandemic, other factors such as the movement
of the Ringgit, the revision of biodiesel mandates in Malaysia and Indonesia, tax regulations in major consuming
countries and competition from other edible oils are also likely to influence the market prices of CPO and other
palm products. As output slows, demand growth will also be weaker than in the past as higher prices restrict
biodiesel demand, notably in Indonesia.

SDP’s carbon reduction initiative involves the establishment of biogas facilities at our mills for captive use as well as supplying electricity
to the national grid
 Annual Report 2019 PG. 042 – 043

CERTIFIED SUSTAINABLE PALM OIL PRODUCTION AREA (MILLION HA)

Million Ha

3.5

MANAGEMENT DISCUSSION & ANALYSIS

3.0

2.5

2.0

1.5

1.0

0.5

0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

(Source: RSPO, December 2019)

MSPO CERTIFICATION AS OF 31 DECEMBER 2019

CERTIFIED AREA CERTIFIED MILLS

280 4,115,944 384 20,555

Units Ha Units Capacity (MT/Hour)

Over the years, there has been a continuous increased awareness on global issues surrounding climate change
and human rights. As a result, there is greater expectation and demand from stakeholders for organisations to
continue operating in an environmentally, socially and economically responsible manner. The agricultural sector,
particularly the palm oil industry, has been under intense scrutiny by a wide range of stakeholders including
customers, governments, investors and civil society organisations who demand the adoption and implementation
of sustainable practices. More palm oil companies have already taken the initiative to comply with recognised
certification standards e.g. RSPO, MSPO and ISPO, in order to remain sustainability of the business.
STRATEGIC REVIEW

OUR VALUE
CRE ATION MODEL

The World’s Largest Oil Palm Plantation Leadership in Sustainability

OUR COMPETITIVE ADVANTAGE Company by Planted Area Taking a leadership position in
Proven track record with over 100 years of the sustainable production of
experience in the plantation industry palm oil

OUR 6 CAPITALS OUR ENABLERS OUR VALUE CHAIN

FINANCIAL

RM28.5 billion
UPSTREAM
worth of total assets Access to Capital

RM15.9 billion
in total equity

SOCIAL &
RELATIONSHIP Presence in
Strategic
Vendor Development
Programme Geographical
Smallholder & supply chain Locations
collaboration
Collaborative partnerships with
customers and business partners
Continuous engagement with Intellectual
communities, authorities and Property & Over Seed
related stakeholders where we 10 Decades of Production
operate Experience &
Expertise

INTELLECTUAL

Brand Values Assets: Rubber/ Oil Palm

Industry Best Practices Technologies, Sugar cane/ Nursery
Intellectual Property, Expertise, Cattle Products
Innovations and
Knowledge & Experience within
Brand Values
the Industry
Mills – CPO &
Estate PK Production
Management
NATURAL Talent: Highly
Skilled And
776,812 ha Land Experienced
240 Estates Workforce

MANUFACTURED
Palm Fibres,
Stakeholder
Smallholders Sludge Oil,
11 Refineries & 71 Mills Relationships: Palm Oil
Aggregation
5 R&D Centres Engaged and Mill Effluent
(POME),
collaborated with
3 Innovation Centres Empty Fruit
various stakeholders Bunch (EFB),
273,160 MT Bulking Terminals Kernel Shell
capacity
Sustainability Focus:
Responsible Business
HUMAN WASTE TO WEALTH
Practices and
Adherence to Energy Compost Biogas
Over 94,000 employees
and Environmental
Science Impact

MA TERI AL MAT T E R S WH ICH ALIGN

OPERATIONAL PERFORMANCE PEOPLE MANAGEMENT MACROECONOMIC CONDITIONS

 Annual Report 2019 PG. 044 – 045

As a fully integrated palm oil company, our operations are diversified within the palm oil industry. This allows the Group to mitigate volatilities
in segment margins and maximise value by de-commoditising our Crude Palm Oil (CPO) into high-value differentiated products that garner
higher margins. Our ‘Waste-to-Wealth’ initiatives convert by-products into applications such as animal nutrition and feed from palm kernel
expellers as well as tocotrienols from palm fatty acid distillate. Our value creation model reflects this agility and is formulated to better withstand
an ever-changing business landscape, whilst maximising returns.

Performance & Innovation Driven Culture Value Chain Integration Wide & Diverse Geographical Reach
Develop talent to propel Sime Darby Fully integrated operations across the Upstream operations in 4 countries.
Plantation (SDP) into a high performance value chain with economies of scale Downstream operations are spread
company across 16 countries

OUR OUTPUTS VALUE CREATION HOW WE SHARE THE

MANAGEMENT DISCUSSION & ANALYSIS

VALUE WE CREATE

GENERATE INVESTORS
Higher financial – Total shareholder return
DOWNSTREAM returns through – Responsible investment
operational – Shariah-compliant
excellence and
high performance
standards LOCAL COMMUNITIES
– Improvement in the livelihood
Shareholder of our employees
Value – Mutual growth and
DIFFERENTIATE
De-commoditising development of local
sustainably communities via provision of
Palm Oil Food Applications produced palm employment, technical training,
Cooking Oil products smallholder schemes and
Confectionary community development
Bakery projects (focused on education,
Dairy Replacer healthcare, food security, water
Spread INNOVATION
Ongoing and sanitation)
Infant Formula
Nutrition transformational – Development of a sustainable 3
efforts to establish palm oil supply chain that
Quality contributes to national and local
Products a sustainable
innovation economic development, while
ecosystem which balancing traditional needs and
Customised improves environmental protection
Refineries productivity,
optimises
CUSTOMERS
efficiency of
– Preferred supplier of green palm
processes, and
Bulk products and quality food
Refineries enhances quality
ingredients
of products and
Food – Customisation of products to fit
services
specific needs
Oleo
Chemicals – Focus on value added/
Service differentiated products
CULTIVATE
Excellence – Focus on food safety products
Cultivate a skilled
Biodiesel and healthy
workforce and EMPLOYEES
Non-Food develop an – Cultivation of winning mindsets
Animal Feed innovative work – Continuous capability building
culture via structured development
programmes for technical/
leadership competency
CONTRIBUTE – Enhance quality of life through
Committed in provision of a safe, healthy and
Trading of CPO ensuring conducive work-life environment
and Bulk Sales socioeconomic
Sustainable
developments
Development
as well as GOVERNMENT & SOCIETY
environmental – Develop positive relationships
and carbon with authorities and local
WASTE TO WEALTH
management communities to gain support for
in-line with our business development
Tocotrienol Animal Feed Biodiesel
growth strategy – Support the industry’s biodiesel
and other green initiatives

O U R V AL UE CR E AT ION MODE L

SUSTAINABILITY HEALTH AND SAFETY PERFORMANCE FINANCIAL CAPITAL GOVERNANCE

STRATEGIC REVIEW

STAKEHOLDER
ENGAGEMENT

Stakeholder Engagement is both a business-as-usual and strategic exercise. At the operational level, our intent is to
understand our stakeholders’ climate of opinion, identify opportunities to collaborate, take stock of various challenges and
impeding factors in order to deliver their expectations. The ultimate objective is to ensure a certain degree of consensus,
acceptance, and trust is established between the Group and stakeholders who are associated with us, directly or indirectly.
Other objectives include seeking consultation, co-creating ideas, and sharing responsibilities. Beyond these, our continuous
engagement with stakeholders also helps to put in place various monitoring and grievance mechanisms for proactive and
fair assessments and resolution of potential conflicts. At SDP, we strongly believe that stakeholders’ participation and
engagement in the course of our business can and should positively contribute to value creation.

PRIORITY FREQUENCY OF
MODE OF ENGAGEMENT
STAKEHOLDERS ENGAGEMENT

•• Engagement Events and Forums

•• Meetings
•• Satisfaction Surveys and Feedback
CUSTOMERS •• E-mails

•• Employee Engagement Surveys

•• Volunteer Programmes
•• Skills Development Workshops
EMPLOYEES •• Organisational Health Index (OHI)

•• Meetings and Forum Participation

•• Engagement Surveys
NGOs/
CIVIL SOCIETY •• Collaborative Projects
ORGANISATIONS

•• Working Groups
•• Task Forces
INDUSTRY GROUPS •• Technical Committees

•• Meetings
•• On-Site Inspections
GOVERNMENT •• E-Correspondence
AGENCIES

•• Community Meetings and Engagement Events

•• RSPO Complaints
LOCAL •• Grievance Panels
COMMUNITIES

•• Collaborative Projects
•• Advisory Roles
ACADEMIC •• Funding Applications
INSTITUTIONS
 Annual Report 2019 PG. 046 – 047

Annually Quarterly Monthly

MANAGEMENT DISCUSSION & ANALYSIS

HOW WE ADDRESS STAKEHOLDERS’ CONCERNS AND
KEY STAKEHOLDERS’ CONCERNS
EXPECTATIONS

•• Product Quality & Services •• ISPO, RSPO, MSPO Certified Products

•• Product Pricing •• No Deforestation, No Peat, No Exploitation (NDPE) Policy
•• Traceability •• Responsible Agriculture Charter, Human Rights Charter,
•• Environmental Harm Innovation and Productivity Charter
•• Social Injustice or Exploitation •• R&D and Product Innovation (to work with customers)

•• Health & Safety Issues

•• Occupational Safety and Health Policy and Training
•• Skill Gaps
•• Technical Skills Training and Development
•• KPI Misalignments
•• KPIs & Performance Management Sustainability Roadmap 3
•• Sustainability Issues
•• Organisational Health Index (OHI) Action Plans
•• Career Development

•• Free, Prior and Informed Consent

•• Environmental & Social Issues
•• Expansion Plans •• Occupational Safety and Health (OSH) Systems and
•• Traceability Standards
•• Sustainability Issues
•• Food Security

•• Certification-Related Issues
•• Newly Imposed Regulations •• Diversification Strategies
•• Regulatory Pressures •• Partnership Opportunities
•• Market Forces (Trade and Business) •• SDP’s Sustainability Scorecard
•• Sustainability Issues

•• Compliance Issues •• Beyond Compliance Approach

•• Regulations (Breaches) •• Robust Governance
•• Newly Imposed Regulations •• Risk Frameworks Policy Participation and Support

•• NDPE Policy
•• Land Rights
•• Responsible Agriculture Charter
•• Fire and Haze Prevention
•• Human Rights Charter
•• Exploitation
•• Commitment to Community Development
•• Local Ecosystems/Employment
•• Free, Prior and Informed Consent (FPIC)

•• Awareness on Sustainable Palm Oil

•• Partnership Opportunities
Production
•• Collective Action and Commitments
•• Community Engagement
STRATEGIC REVIEW

MANAGING OUR
MATERIAL MAT TERS
At SDP, our deep understanding of the industry and sectoral challenges, as well as our long-standing relationships with various
stakeholders in our value chain gives us a business advantage. The very foundation of our mid-to-long term strategies, as well
as solutions, are built on the most critical aspects of our business and the matters that are most material to our diverse
stakeholders. At functional or operational level, we focus our efforts on responding to various risks and opportunities in relation
to the identified/top material matters. This in itself contributes to value creation. Our aspiration, however, is to go beyond the
expectations of our stakeholders by Raising the Bar on Sustainable Growth and delivering innovative, future-proof solutions.

MATERIAL MATTERS RISKS OPPORTUNITIES

Disruption in production cycles due to economic and
political factors, in addition to externalities and Black
Swan events can affect throughput and erode revenue
potential
OPERATIONAL
PERFORMANCE Inefficiencies can compromise the volume, quality and
safety of products
Deploy innovative technologies including digitalisation
and mechanisation strategies to improve operational
performance and excellence
Enhance technical skills and invest in the welfare and
well-being of people to improve efficiencies

Productivity loss due to poor working conditions, low Create a healthy pipeline of talent through systematic
morale, and lack of adequate skills can affect succession planning, upskilling and reskilling, as well
organisational performance as well as reputation as employee welfare and well-being policies
PEOPLE MANAGEMENT

Fluctuation in commodity prices due to trade wars and Agility and flexibility to capitalise on changing market
protectionist policies, political instability and conflicts, conditions
and competition can affect demand and supply trends,
as well as erode revenue potential Ability of pre-emptively leverage and take advantage
MACROECONOMIC of cyclicalities to deliver sustained profit growth
CONDITIONS Changes in legal and regulatory environments can put
additonal pressure and increase cost of compliance
and operations

High costs of recovery from negative environmental
and social impacts
Reputational risks and as a result, erosion of credibility
SOCIAL AND and trust in the marketplace from real or perceived
concerns especially related to environmental and social
ENVIRONMENTAL IMPACT
harm, traceability, food security and emissions
Future-proof business and people
Capture greater market share and customer
segments through responsibly produced/sustainable
high value products
Enhance brand equity and investor proposition by
improving environmental and social performance

Fatalities, injuries, accidents of employees lead to drop Create a culture of safety and health across the
in performance organisation (operations in the value chain),
OCCUPATIONAL SAFETY optimising human potential
AND HEALTH Unsafe or poor working conditions affect employee
PERFORMANCE morale and productivity

Capital depreciation, financial distress, value destruction, Strengthen balance sheet and improve profitability
corporate credit rating downgrade through prudent and resilient capital management
tactics and approaches
CAPITAL MANAGEMENT
 Annual Report 2019 PG. 048 – 049

HOW WE MEASURE STAKEHOLDERS CAPITALS

STRATEGIES (MID-TERM) HOW WE CREATE VALUE

MANAGEMENT DISCUSSION & ANALYSIS

VALUE CREATION AFFECTED IMPACTED

RISE to APEX to focus on execution strategy
Drive operational excellence through
digitalisation, innovation, mechanisation and
automation
Focused implementation on cost reduction
strategies
Create a sustainable innovation Profits (PATAMI)
ecosystem to improve productivity,
Cost-to-Customer (CtC)
optimise efficiency of processes and
enhance quality of products and services Customer Satisfaction Index
Manage capital, create savings on cost,
optimise portfolio performance, enable
incremental earnings and revenue
generation through higher productivity
and responsiveness in decision-making

Invest in human capital development and in
strategies that help future-proof employees and
their growth
Cultivate a skilled workforce and develop
an innovative work culture on the back
of our core values – Integrity, Respect &
Responsibility, Enterprising, and
Excellence
Upskilling and Reskilling
Workforce
Employee Satisfaction Index
Employee Productivity &
Performance

Diversify business and risks across geographies; Identify trends ahead of competitions Cost Savings
3
product segments; and trading partners and execute strategies to secure market
Stable long term profit
leadership and deliver a sustainable and
De-commoditise by increasing the ratio growth over cycles
stable profit growth
between commodity and differentiated
Commercialise innovations
products and service offerings across markets
and tapping on alternative revenue streams
Operate at the lowest cost possible by
improving efficiencies and leveraging on
innovations to produce more from less

Map and manage environmental and social Ensure socio-economic development, Higher customer acceptance
risks across the value chain towards creating proactive environmental and carbon of product offerings &
net positive impact footprint management in-line with our higher market share
growth strategy
No Deforestation, No Peat,
Strengthen stakeholder relationships No Exploitation (NDPE)
through purposeful engagement policy
Carbon Footprint and
Mitigation
Community Investments

Raise awareness and educate employees and Develop the capabilities of our Occupational Safety &
supply chain partners on safety precautions/ employees and leaders through training, Health (OSH) systems and
measures as well as preventive health emphasising on safety and health for standards compliance
high performance
Zero harm under the OSH
systems

Develop a robust and effective capital risk Prioritise financial resources, manage the
management framework, including an working capital and inventory turnover
efficient inventory and capital deployment ratio, in addition to improving controls,
strategies capital deployment monitoring
as well as performance
Profitability Index:
Return on Capital Employed
(ROCE)/Return on Assets
(ROA), Return on Equity
(ROE)
Total Shareholder Return
(TSR)
STRATEGIC REVIEW

OUR
STR ATEGIES

RAISING THE BAR ON SUSTAINABLE GROWTH

The global health pandemic has resulted in a new normal in the global business environment that requires businesses
to be more resilient as well as have a heightened agility in a rapidly evolving operating environment. Hence the key
thrust in our three-pronged Strategy Blueprint has always been on building businesses that are resilient to the
uncertainties of the international commodities markets based on the three key pillars of driving operational excellence,
serving our customers’ evolving needs and maximising returns across the business’ integrated value chain.

The new normal also places increased focus on businesses that are agile. With over 100 years of industry experience,
SDP has the in-depth knowledge on various aspects of the palm oil business and sector. Our market intelligence
and demonstrated leadership further allow us to pre-empt the emerging global trends and influences, providing us
the agility and a strong platform that enable us to deliver our best to our customers and the marketplace while
continuously “Raising the Bar on Sustainable Growth”.

Vision To Be The Leading Integrated Global Palm Oil Player

Strategic Strategic Interventions Strategic Priorities

Objectives 2019 2020

Driving operational Scaled-up preparation of GenomeSelectTM Implementation of GenomeSelectTM

excellence in our materials for replanting on a limited
Upstream sector arable land to increase FFB production per
hectare
GenomeSelectTM programme to further
enhance the planting materials’
productivity traits
Conducted Cost-to-Customer Reduction
Lab in Indonesia and Papua New Guinea
(PNG) to improve operations’ profitability
and competitiveness
Commercialised and rolled-out irrigation
plans across all regions
Rolled-out mechanisation best practices in
Indonesia and PNG
programme to further enhance the
planting materials’ productivity traits
Focus on driving the implementation
of the various initiatives recommended
by the Labs conducted in FY2019 to
ensure the targeted values are delivered
Roll out additional Labs which cover
areas such as logistics and finance
Continued focus on digital and industry
4.0 innovation to improve productivity
and efficiency – innovation in operational
processes to reduce manpower,
increase productivity and quality

Serving our Increased the product ratio between SDO transformation programme
customers’ evolving commodity and differentiated products Continuous effort and focus on high
needs in our such as premium frying oils, differentiated margin differentiated products
Downstream sector bakery and confectionery products, etc
Greater focus on customers’ evolving
Disciplined portfolio management across needs and trends on food products in
the value chain by minimising the number terms of health, food safety and
of product rework and rejections by sustainability
customers
Continuous efforts to improve
Initiated efforts to make inroads into North operational excellence and increase
America and Middle East by establishing sales in high growth key markets
satellite offices and/or partnerships with
local players Digital interventions to improve supply
chain efficiencies and deliver customer
Increased refinery and kernel crushing needs
plant’s (KCP) utilisation rates across all
business units by improving sales volume
in key growth markets
Initiated SDO Logistics Lab to design and
implement performance improvement
initiatives

Maximising returns Optimised supply chain to ensure Strengthen the supply chain network
across the palm oil seamless connectivity, taking advantage of and focus on flawless execution
value chain by price spreads across locations Continuous efforts to integrate all data
leveraging on our Intensified trading around the assets by points throughout SDP and implement
integrated business leveraging on SDP’s assets in various data analytics to enhance efficiency
model countries and productivity across the value chain
 Annual Report 2019 PG. 050 – 051

RISE
TO APEX

DRIVING PERFORMANCE THROUGH CULTURE CHANGE

RISE is a performance-driven cultural transformation initiative, incorporating our 6 Winning Mindsets in setting up a
culture of accountability. APEX, on the other hand is a value creation programme aimed at accelerating the
performance of our core businesses through results-driven initiatives.

‘RISE to APEX’ is our rallying call for the Group to focus on delivering superior performance. It anchors our transformation

MANAGEMENT DISCUSSION & ANALYSIS

towards a healthy and performance-based organisation. RISE unites us around a common culture that allows us to
speak in a common language and align ourselves to the targets set by APEX, as well as the vision to become the
Leading Integrated Global Palm Oil Player.

In 2020, the Results Delivery Office (RDO) was set up to drive and ensure the effective execution of the strategy,
timely delivery of value creation projects and ultimately, the overall profit targets under RISE to APEX. To strengthen
results delivery, the activities of the Change Management Office instituted in August 2019, are now incorporated into
the RDO which is now focused on driving not just value creation initiatives, but also to ensure that our Overall profits
targets are achieved. RDO combines disciplined execution and rigour with constant innovation and ideation in an
agile work culture. The RDO’s renewed focus will strengthen SDP’s ability to sustainably outperform in the post-
pandemic “New Normal”.

RESULTS
INNOVATION ACCELERATING
SUSTAINABILITY PERFORMANCE
ENERGY EXCELLENCE

PERFORMANCE HEALTH AND CULTURE

Accelerating Performance Excellence Sustaining Performance

Excellence through RISE

Measure: Measure:
PATAMI Growth Organisational Health Index (OHI)
“How we deliver results” “How do we sustain results”

DELIVER RESULTS CUSTOMER FIRST VALUE TALENT

We drive results. We put customers first. We value talent.
I exceed expectations. I win with the customer. I am a team player.

CONTINUOUS EMPOWERED BUILD TRUST

VALUE CREATION INITIATIVES IMPROVEMENT DECISIONS We build trust.
We make empowered I walk the talk.
Generating value beyond Business As Usual We improve and
innovate. decisions.
7 workstreams I do better, every time. I am responsible and
proactive.

OPERATIONAL EXCELLENCE 6 WINNING MINDSETS

Continuous improvements to reinforce results Key behavioural indicators in setting up a culture of
accountability as a foundation for organisational health

ORGANISATION PRACTICES
Committing to action on health, focusing on priority areas
for each business unit

RESULTS DELIVERY OFFICE

Disciplined execution and rigour across APEX
STRATEGIC REVIEW

RISE TO APEX

At SDP, it is our utmost priority to constantly shape the mind and behaviour of our workforce towards practicing a
strong performance and healthy culture across the organisation. In achieving this objective, SDP has introduced a
performance management system that focuses on the identification, tracking and evaluation of performance results
using performance indicators. The adoption of this system at SDP is aimed to instill accountability, motivate high
performance and align business goals. In entirety, it is a process of matching our resources against our value creation
levers. Below are the value creation levers and the corresponding financial and non-financial KPIs.

FFB Aggregation
CPO Aggregation &
Trading
Bulk Sales

Seed Production
& Nursery Customised Refineries

Estate Mills Refineries/Bulking

Management

Non-Food

UPSTREAM DOWNSTREAM

Drive efficiency to yield more CPO from “Integrated’ model as differentiator & key Position SDP as a sustainable key
our existing land bank offering downstream industry player

High quality & sustainable feedstock to Leverage on sustainability, traceability & Emphasis on growth strategy to expand
fuel SDP’s growth efficiency reach & capture value from palm oil

Financial Metrics Non-Financial Metrics Financial Metrics

Yield Sustainability – Sustainable Palm Price/Margin, Volume, Cost, Customer
Extraction Rates Oil Transparency Toolkit (SPOTT) Satisfaction Index, Customised vs
Evaluation Commodity Product Ratio, Sales of
Cost
Brand Index Physical Certified Palm Oil
New Revenue
Organisational Health Index (OHI)

Non-Financial Metrics Non-Financial Metrics

(Productivity and Efficiency) (Productivity and Efficiency)
FFB Production/Yield Oil Yield/Oil Loss Refinery Utilisation/
OER & KER Refinery’s availability

Mill Utilisation/Replanting Customer Satisfaction Index

 Annual Report 2019 PG. 052 – 053

Key Value Creation (VC) & Innovation Activities Carried Out Since Inception

Total
Value Creation (VC) Idea Generation Workshops 18

MANAGEMENT DISCUSSION & ANALYSIS

VC Bottom Up Planning 4
Digital Bootcamp & Sprints 2
Change Management Office (CMO) Process & HR Labs 4
CMO Cost-to-Customer Labs 2
APEX/VC Engagements 19
APEXpedition Newsletters 42
OHI Pulse Surveys 2
Total 93

Ongoing Initiatives Across 7 Workstreams*

Total 1,603 3
Inclusive of  
Digital Transformation 22
Operational Excellence 82
Cost-to-Customer Labs 162

* 7 Workstreams: Upstream, Downstream (SDO), Cash Control Tower, R&D, Special Projects, Organisation & Digital

SDP is on an ongoing transformation journey to create a high performance and innovation culture within the
organisation. The Group began by nurturing RISE & the 6 Winning Mindsets culture amongst our employees before
implementing the Accelerating Performance Excellence (APEX) programme to achieve SDP’s value creation aspirations.

We are continuously re-inventing ourselves and the way we work to become more agile and efficient; lean and
productive; whilst maintaining an optimum level of governance and controls.

This year, we have embarked on various labs to scrutinise and to seek greater opportunities to create and protect
our organisation’s value from Process Rationalisations and Performance Management to exploring innovative ways
to ensure the competitiveness of our Cost-to-Customer.

Our aim is to periodically engage, recognise and celebrate our organisation’s successes through roadshows, engagement
sessions and internal publications as a way to keep our employees abreast with the progress and achievements delivered.
PERFORMANCE REVIEW – Financial Review
GROUP FINANCIAL
RE VIE W
SDP’s mechanisation projects have helped improve productivity and operational efficiencies in our estates.
CHANGE IN THE FINANCIAL YEAR END
The Board of Directors had on 22 February 2018 approved
the change in the financial year end of the Group from
30 June to 31 December, which was implemented after
the close of the financial year ended 30 June 2018. The
first set of financial statements issued subsequent to the
change in the financial year end reflect the 6 months
ended 31 December 2018 (FP2018).
The audited financial statements for 31 December 2019
(FY2019) is the first full 12-month financial statements
issued subsequent to the change in the financial year.
For more equitable and meaningful review, financial results
of the Group for the financial year ended 31 December
2019 are compared against the results of the previous
year, the unaudited 12 months ended 31 December 2018
(YE2018).
REVIEW OF OPERATIONS
FY2019 was indeed a challenging year for the oil plantation
industry and the Group was operating under unfavourable
business environment, stemming from volatility in CPO
market prices which resulted in low CPO and PK prices
realised during the financial year and fair value losses
registered on commodity hedges as the palm product
prices increased sharply towards the end of the financial
year. In addition, the unfavourable weather conditions
and pest and disease issue posed operational challenges
to the Upstream segment in its oil palm and sugar
operations which resulted in a decline in crop production
in the year under review.
As the Group continues its pursuit to unlock value from
under performing assets, the Board of Directors of the
Company had during the year under review made its
decision to divest the Group’s operations in Liberia and
to exit the joint ventures in oleochemical and biomass
 Annual Report 2019 PG. 054 – 055

businesses. Consequently, the Group had reclassified the
assets and liabilities of its subsidiary, Sime Darby Plantation
Liberia Inc. (“SDP Liberia”) and joint ventures, Emery
Oleochemical (M) Sdn Bhd and Emery Specialty Chemicals
Sdn Bhd (collectively referred to as “Emery”), as Non-current
The Group has performed a preliminary assessment and
carefully considered the potential impact of COVID-19 on
the Group’s and the Company’s operations and financial
performance in the financial year ending 31 December
2020, which include amongst others the slowing down

MANAGEMENT DISCUSSION & ANALYSIS

assets held for sale and these operations were also
presented as discontinuing operations in accordance with
the requirements of MFRS 5 “Non-current assets held for
sale and Discontinued Operations” (“MFRS 5”).
Subsequent to the close of the FYE 31 December 2019,
on 11 March 2020, the World Health Organisation (“WHO”)
has declared the outbreak of COVID-19 to be a global
pandemic. The restrictions in movement which have been
implemented in the various countries where the Group
operates in, fortunately has not curtailed all of its operations
and value chain. Additionally, the Group had implemented
remote work arrangements to maintain certain operations,
such as financial reporting systems and monitoring of its
operations at its various sites.
of demand for oils, increasing risks on customers deferring
or defaulting on contracts, customer credit risks, and
volatility from foreign exchange fluctuations. Based on
the preliminary assessment, the Group’s operating results
have been forecasted to remain satisfactory and the cash
flow position together with its undrawn facilities are
adequate to meet the Group’s requirements.
The rapid and widening spread of COVID-19 outbreak,
deteriorating global economic outlook, falling oil prices
and asset price declines are creating a severe and extensive
credit shock across many sectors, regions and markets.
The combined credit effects of these developments are
unprecedented. Hence, Management will continue to
monitor developments and will take the necessary
corrective actions.

3
REVIEW OF OPERATIONS

 (RM’million) FY2019 YE2018* %

CONTINUING OPERATIONS

Revenue 12,062 13,246 (9)

Recurring profit before interest and tax 430 1,458 (71)

Non-recurring transactions (24) (114) 79

Profit before interest and tax 406 1,344 (70)

Finance income 13 15 (13)
Finance costs (168) (195) 14

Profit before tax 251 1,164 (78)

Tax credit/(expense) 24 (297) 108

Profit after tax 275 867 (68)

Perpetual Sukuk (124) (123) (1)
Non-controlling interests (29) (15) (93)

Profit from continuing operations attributable to

equity holders of the Company 122 729 (83)

DISCONTINUING OPERATIONS
Loss from discontinuing operations attributable to
equity holders of the Company (322) (206) (56)

(Loss)/profit attributable to equity holders of the Company (200) 523 (138)

* Unaudited 12 months ended 31 December 2018

PERFORMANCE REVIEW – Financial Review

GROUP FINANCIAL REVIEW

REVENUE**
(RM Million)

15,000

12,000

9,000

6,000

3,000

0
FY2019

*YE2018

FY2019

*YE2018

FY2019

*YE2018

FY2019

*YE2018

FY2019

*YE2018

FY2019

*YE2018
Upstream Upstream Upstream Total Downstream Total Group
Malaysia Indonesia PNG/SI Upstream

External Inter-segment

* Unaudited 12 months ended 31 December 2018

** Excluding Discontinuing Operations

Revenue from the Group’s continuing operations for FY2019 was lower by 9% compared to the previous year,
attributable to a 6% lower average CPO realised price of RM2,063 per MT (YE2018: RM2,185 per MT), a 33% lower
average PK realised price of RM1,118 per MT (YE2018: RM1,660 per MT), exacerbated by the 7% lower FFB production
of 9.58 million MT (YE2018: 10.25 million MT).

PROFIT BEFORE INTEREST & TAX (PBIT)*

(RM Million)

1,500

1,200

900

600

300

-300

Upstream Upstream Upstream Total Downstream Other Recurring Non-

Malaysia Indonesia PNG/SI Upstream Operations PBIT Recurring
Items

FY2019 YE2018
* Excluding Discontinuing Operations
 Annual Report 2019 PG. 056 – 057

For the Group’s continuing operations, the recurring PBIT of RM430 million was 71% lower than RM1,458 million
recorded in YE2018, mainly due to the weaker performance from the Upstream segment which was adversely affected
by the volatility in CPO and PK prices, as well as operational challenges faced by its oil palm and sugar operations
during the year under review. The downstream operations posted slightly lower recurring PBIT, mainly impacted by
unrealised fair value losses on its commodity hedges.

MANAGEMENT DISCUSSION & ANALYSIS

UPSTREAM

For the year ended 31 December 2019, Upstream operations reported a recurring PBIT of RM125 million from
continuing operations, lower than RM1,141 million reported in the previous year. The weaker performance was largely
due to:
i. lower average CPO and PK prices realised, which declined by 6% and 33% respectively in the year under review;
ii. 7% lower FFB production; and
iii. unrealised fair value loss on commodity hedges of RM136 million attributable to the sharp rise in market prices
in the last 2 months of the financial year. This was partially cushioned by the higher OER which improved to
21.58% in the current year.

The key operational drivers for the Upstream segments for FY2019 and comparison against the previous year are as follows:

CPO price realised (RM per MT) FFB production (MT’000)

FY2019 YE2018 +/(-) FY2019 YE2018 +/(-)

% % 3
SEGMENT
Upstream Malaysia 2,069 2,262 (9) 5,102 5,373 (5)
Upstream Indonesia 2,048 1,920 7 2,663 2,892 (8)
Upstream PNG/SI 2,074 2,412 (14) 1,814 1,980 (8)

Continuing operations 2,063 2,185 (6) 9,579 10,246 (7)

Discontinuing operations 2,037 1,989 2 100 86 16

Total 2,063 2,184 (6) 9,679 10,332 (6)

PK price realised (RM per MT) CPO Extraction Rate (%)

FY2019 YE2018 +/(-) FY2019 YE2018 +/(-)

%
SEGMENT
Upstream Malaysia 1,220 1,780 (31) 21.18 20.65 0.53
Upstream Indonesia 933 1,430 (35) 21.92 21.14 0.79
Upstream PNG/SI – – 22.10 22.35 (0.25)

Continuing operations 1,118 1,660 (33) 21.58 21.13 0.44

Discontinuing operations 399 481 (17) 22.35 19.76 2.59

Total 1,106 1,653 (33) 21.58 21.12 0.46

DOWNSTREAM

Downstream reported a recurring PBIT of RM276 million in the year under review, slightly lower than the previous year
despite the improved results of Asia Pacific bulk and differentiated refineries which recorded higher sales volumes and
margins. The weak results were primarily due to lower PBIT reported by the Europe, Middle East and Africa operations
which suffered from lower sales volume and margin, and unrealised fair value loss arising from commodity contracts.

OTHER OPERATIONS
Other operations reported a lower recurring PBIT of RM29 million compared to RM38 million recorded in the previous
year due to the lower results from associates and joint ventures in the current year.
PERFORMANCE REVIEW – Financial Review

GROUP FINANCIAL REVIEW

NON-RECURRING TRANSACTIONS Net Earnings

The Group reported non-recurring LBIT of RM24 million
which comprised of the impairment of assets in Indonesia
of RM19 million, impairment of a loan to a joint venture
of RM25 million, compensated by gains on sale of land in
Malaysia and Thailand of RM11 million, and a gain from
divestment of a subsidiary in Indonesia of RM9 million.
The net non-recurring LBIT of RM114 million in the previous
year comprised of impairment charges of assets mainly in
Indonesia of RM83 million and impairment of investments
of RM180 million, compensated by a gain from divestment
of a subsidiary in Vietnam of RM30 million and a gain on
sale of land in Malaysia of RM119 million.
DISCONTINUING OPERATIONS
Upstream Liberia reported a loss of RM318 million, as
compared to a loss of RM196 million in the previous year,
mainly due to the higher impairment charges on its non-
current assets in the current year of RM235 million as
compared to RM127 million last year.
For the year ended 31 December 2019, the Group posted
net earnings from continuing operations of RM122 million,
as compared to RM729 million recorded in the previous
year, mainly due to lower recurring PBIT contributed by
the Upstream segment, partially compensated by lower
finance costs arising from higher capitalisation of borrowing
costs, and lower non-recurring losses arising from
impairment charges on the Group’s non-current assets.
Discontinuing operations registered higher net loss of
RM322 million compared to RM206 million in the previous
year mainly due to higher impairment charge on non-
current assets in Liberia in the current year of RM235
million against RM127 million charge incurred in the
previous year.
As a result, the Group reported a total net loss of RM200
million, as compared to the net earnings of RM523 million
recorded last year.

The joint ventures recognised under discontinuing Earnings per share are as follows:
operations reported a loss of RM4 million, as compared
to a loss of RM10 million in the previous year. FY2019 YE2018*

Basic (loss)/earnings per share

Finance Cost
attributable to equity holders
Finance costs incurred during the year of RM168 million of the Company (sen):
were 14% lower than YE2018, due to higher capitalisation – from continuing operations 1.8 10.6
of borrowing costs in the current year, which compensated – from discontinuing
for the higher interest charges due to the increased operations (4.7) (3.0)
funding for working capital required in FY2019 attributable
to the low CPO market prices during the year. Total (2.9) 7.6

Taxation
Return on Shareholder’s Equity (ROE)
The Group reported a net tax credit of RM24 million
during the year under review, as compared to a charge  % FY2019 YE2018*
of RM297 million in the previous year mainly due to lower
Return on Equity
profits and recognition of deferred tax assets.
– from continuing operations 0.9 5.6
– from discontinuing (2.4) (1.6)
For the year ended 31 December 2019, the Group recognised
operations
deferred tax asset of RM78 million on losses suffered by
the holding company of PT Mitra Austral Sejahtera (“PT Total (1.5) 4.0
MAS”) on the disposal of the subsidiary. In addition,
deferred tax asset of RM33 million was recognised on * Unaudited 12 months ended 31 December 2018
unrealised profit on sale of land within the Group from
prior years as a result of the change in Real Property
Gains Tax (RPGT) rate in Malaysia, which compensated
for the impact of non-deductible expenses and interests.
 Annual Report 2019 PG. 058 – 059

GROUP BORROWING POSITION The Sale & Purchase agreement for the sale of the Group’s
entire shareholding in Sime Darby Plantation Liberia Inc.
December December with Mano Palm Oil Industries Ltd was signed on 12
 RM’Million 2019 2018 December 2019 and the divestment was completed on
Total Borrowings 7,745 7,297 15 January 2020.

MANAGEMENT DISCUSSION & ANALYSIS

Bank balances, deposits 431 491
and cash In addition to these disposals and as part of the asset
monetisation exercise, the Group is in the midst of divesting
Equity 15,861 15,746
amongst others the following assets which have been
Debt/Equity 48.8% 46.3%
classified as assets held for sale:

The Group’s borrowings as at 31 December 2019 increased the entire 50% shareholding in joint ventures, Emery
to RM7.7 billion from RM7.3 billion reported at the end Oleochemical (M) Sdn Bhd and Emery Specialty
of the previous financial period ended 31 December 2018, Chemical Sdn Bhd, respectively
attributable to additional funding for working capital the entire 52% shareholding in Verdant Bioscience
drawn down during the year. Pte Ltd, a subsidiary in Singapore
the entire 95% shareholding in PT Indo Sukses Lestari
GROUP CASH FLOW Makmur, a subsidiary which has a rubber development
in Indonesia
 RM’Million FY2019 YE2018*
The Group continues to place priority in its deleveraging
Revenue 12,062 13,246
efforts and completed the refinancing of its credit facilities
EBITDA – total 1,612 2,531
EBITDA – recurring 1,636 2,645
worth approximately RM3.9 billion on marginally improved 3
terms in December 2019. The refinancing exercise was
Operating cash flow 1,745 1,990
rated as credit positive by Moody’s Investors Service.
Capital expenditure (1,573) (1,638)
Investments – (252)
Proceeds from disposals 194 646 DIVIDENDS
Finance cost, net of finance (249) (218)
In line with the Group’s policy of distributing of not less
income
than 50% of the consolidated recurring net earnings as
Free cash flow 117 529 dividends to its shareholders, the Board of Directors of
the Company has approved a final dividend of 1.0 sen
* Unaudited 12 months ended 31 December 2018
per share with respect to the financial year ended
31 December 2019. The dividend will be paid in cash on
The decline in the Group’s free cash flow in FY2019 was
22 May 2020.
due to lower operating cashflow of RM1,745 million, 12%
lower than YE2018 largely attributable to the lower profits
generated by the operations given lower CPO prices, and DIVIDEND REINVESTMENT PLAN
lower proceeds from disposal, which had posed greater
During the Extraordinary General Meeting held on
challenges in reducing the Group’s debt. In addition, the
21 November 2018, the shareholders of the Company
Group has yet to fully realise benefit from its asset
approved the establishment of the Dividend Reinvestment
monetisation exercise in FY2019, as planned divestments
Plan that provides the shareholders of the Company with
are still under negotiation and land sales in Malaysia are
an option to elect to reinvest their dividend in new
pending completion.
ordinary shares of the Company (“DRP”). The Board of
Directors of the Company has the authority to determine
ASSET MONETISATION AND DELEVERAGING EXERCISES whether the DRP shall apply to a particular dividend
distribution. There was no application of DRP on dividends
During the year under review, the Group realised proceeds
with respect to FY2019.
from disposals which include sale of the Group’s entire
100% shareholding in PT Mitra Austral Sejahtera, a
subsidiary in Indonesia. In addition, the Group had also
put up for sale by tender certain parcels of land in Malaysia
during the year, of which sale of 2 parcels have been
completed by December 2019. The remaining parcels are
pending completion.
PERFORMANCE REVIEW – Financial Review

GROUP FINANCIAL REVIEW

VALUE DISTRIBUTION

The value that the Group creates for its stakeholders can either be in the form of financial returns or in non-financial
or intangible forms.

The Statement of Value Added illustrates how the Group’s performance supports its ability to deliver financial value
to its stakeholders.

The financial value in the statement is based on the Profit before Finance Costs, Corporate Social Responsibility (CSR)
expenses, Tax, Depreciation & Amortisation and Staff Cost.

VALUE ADDED** VALUE DISTRIBUTED**

 (RM’000) FY2019 YE2018*  (RM’000) FY2019 YE2018*

Turnover 12,114,056 13,285,436 Employees 2,301,133 2,504,515

Direct & Indirect Costs (8,097,902) (8,451,376) Government & Society (13,579) 328,137
Value Added from
Providers of Capital
Operations 4,016,154 4,834,060
Dividends 459,011 442,054
Other Operating Finance Costs 269,522 242,785
Income 202,361 428,488 Non-controlling Interests 28,952 14,007
Other Losses (209,376) (36,096) Perpetual sukuk 124,300 124,300
Share of Results of Joint
881,785 823,146
Ventures 7,972 (14,123)
Share of Results of
Associates (2,257) (4,508) Reinvestment and
Finance Income 12,975 16,137 future growth 858,490 1,568,160

Total Value Added 4,027,829 5,223,958 Total Value Distributed 4,027,829 5,223,958

* Unaudited 12 months ended 31 December 2018

** Including Discontinued Operations
 Annual Report 2019 PG. 060 – 061

5-YE AR
FINANCIAL HIGHLIGHTS

GROUP
FY 30 June FP 31 Dec
2018(2)
  Financial Year/Period Ended A six month FY 31 Dec
 (RM’000) 2016(1) 2017 2018 financial period 2019

MANAGEMENT DISCUSSION & ANALYSIS

FINANCIAL RESULTS
CONTINUING OPERATIONS
Revenue* 11,945,994 14,767,935 14,335,826 6,518,321 12,062,266
Earnings before interest, tax,
depreciation and amortisation
(EBITDA)* 2,394,776 6,073,863 3,872,983 1,213,295 1,611,899
Profit before interest and tax* 1,275,604 4,848,815 2,736,749 614,687 405,886
Profit before tax* 855,274 4,424,443 2,577,722 513,175 251,316
Profit after tax* 1,019,170 3,945,390 2,086,175 367,923 274,885
Perpetual sukuk* – (2,724) (124,300) (62,661) (124,300)
Non-controlling interests* (35,756) (42,087) (33,624) (5,626) (28,952)
Profit from continuing operations
attributable to equity holders of
the Company 983,414 3,900,579 1,928,251 299,636 121,633
DISCONTINUING OPERATIONS
Loss from discontinuing operations
attributable to equity holders of
the Company (16,235) (393,480) (200,772) (56,128) (321,793)
Profit attributable to equity 3
holders of the Company 967,179 3,507,099 1,727,479 243,508 (200,160)
FINANCIAL POSITION
Share capital 600,000 600,000 1,100,000 1,100,000 1,506,119
Reserves 8,992,178 11,858,084 12,574,687 12,018,449 11,754,854
Shareholders’ equity 9,592,178 12,458,084 13,674,687 13,118,449 13,260,973
Perpetual sukuk – 2,231,384 2,230,717 2,231,398 2,231,398
Non-controlling interests 454,959 433,887 408,398 396,078 368,351
Total equity 10,047,137 15,123,355 16,313,802 15,745,925 15,860,722
Borrowings 5,522,365 7,737,927 6,489,398 7,296,914 7,744,927
Liabilities associated with
assets held for sale – 15,395 45,993 21,133 35,735
Other liabilities 12,867,607 6,578,200 4,642,482 5,562,330 4,866,338
Total equity and liabilities 28,437,109 29,454,877 27,491,675 28,626,302 28,507,722
Non-current assets 23,732,635 23,794,526 22,517,962 23,583,606 23,541,567
Current assets excluding Cash 4,064,272 4,763,309 4,391,511 4,426,979 4,012,270
Assets held for sale 3,862 183,594 218,964 124,675 522,538
Cash 636,340 713,448 363,238 491,042 431,347
Total assets 28,437,109 29,454,877 27,491,675 28,626,302 28,507,722

FINANCIAL RATIOS
Operating margin (%)* 10.8 32.9 19.2 9.4 3.4
Return on shareholders’ equity (%) 10.1 28.2 12.6 3.7(5) (1.5)
Debt/Equity (%) 55.0 51.2 39.8 46.3 48.8
Debt/EBITDA (times) 2.3 1.4 1.8 6.0 4.8
SHARE INFORMATION
Basic earnings per share (sen)(3) 14.4 52.2 25.5 3.6 (2.9)
Net assets per share attributable
to owners of the Company (RM) 1.4 1.8 2.0 1.9 1.9
Net dividend per share (sen)(4) 116.7 150.0 17.5 1.7 1.0

Note: 1 Restated following the first-time adoption of the MFRS framework and early adoption of MFRS 15.
2 A six month financial period.
3 The weighted average numbers of ordinary shares in issue for the financial year ended (FYE) 30 June 2016 and FYE 30 June
2017 have been adjusted for 1:11.19 share split.
4 Based on number of ordinary shares in issue of 600,000,000 as at 30 June 2016 and 30 June 2017, 6,800,839,377 as at
30 June 2018 and 31 December 2018, and 6,884,575,283 as at 31 December 2019.
5 Ratio is annualised.
* The financial results have been restated to exclude discontinuing operations.
PERFORMANCE REVIEW – Business Review

OUR PERFORMANCE
BY SEC TOR:

UPSTREAM

“
FY2019 was a year of
planning, and a springboard
for all future growth. Despite
a challenging operating
environment, our Upstream
operations continued in its
implementation of efficiency
improvement and cost
reduction initiatives. We took
an integrated approach by
synergising opportunities
beyond Upstream and
hedging risks through mid-
term strategies for
diversification of products,
solutions, and markets. We
grew stronger and more
resilient to externalities with
our focus on sustainability
best practices, and efforts to
future-proof our organisation
as well as our people.”
“
The Mini Tractor Grabber is part of SDP’s mechanisation initiative that has helped
improve our productivity and cost efficiency.

ABOUT OUR UPSTREAM OPERATIONS

Under our Upstream operations, the Group owns 776,812 hectares of landbank across Malaysia, Indonesia, Papua New
Guinea (PNG) and Solomon Islands (SI), of which 583,766 hectares are currently being cultivated for oil palm. Under this
sector, the Group is also involved in rubber, sugar cane plantation as well as cattle rearing.

Our Upstream plantation operations are located in some of the most diverse ecosystems globally. As the world’s
largest producer of CSPO, the Group embraces the RSPO Principles and Criteria and remains committed to
environmental best practices, biodiversity conservation, and social protection in all areas of our operations. As at 31
December 2019, we are 99% RSPO certified for all our operations, and we aspire to achieve a 100% certified status
in the second half of 2020.
 Annual Report 2019 PG. 062 – 063

KEY CONTRIBUTORS TO PERFORMANCE IN 2019 YIELD PER HECTARE

(mt/ha)
Despite the susceptibility to volatile commodity prices,

MANAGEMENT DISCUSSION & ANALYSIS

our Upstream operations continued to strengthen its focus 25
on operational excellence with strategies such as greater

20.51

19.77
automation, mechanisation and digitalisation in FY2019.
We also leveraged on our supply chain network to maximise 20
value by ‘decommoditising’. This entailed the diversification
into differentiated products that can help build alternative
15
revenue streams as well as fetch higher margins as

11.25
compared to commodity products. In addition, we looked
at enhancing trading and aggregation, with external 10
purchases of FFB, PK and CPO to optimise the utilisation
of the Group’s mills and refineries. In the long run, we
believe these approaches, will prove effective in managing 5
market uncertainties, price volatility, and our sales margins.

During the year under review, we also invested in digital 0

FY2018* FP2018^ FY2019
innovations in our plantation business, mainly to automate
various processes, with the objective to further improve
efficiencies, productivity and cost savings while enhancing 3
the outputs for better value. In line with these objectives, OIL EXTRACTION RATE
%
we also expanded our mechanisation initiative to PNG
and SI.

In FY2019, our focused efforts helped to shape more

efficient supply chain systems and improve our risk
management mechanism. We also initiated the process
21.58
of integrating all data points throughout the Group to 21.17
deploy data analytics. We believe that quality data will 21.02
help improve demand and supply forecasting processes,
resource allocation, our sales mix and asset utilisation.

FY2018* FP2018^ FY2019

FINANCIAL AND NON-FINANCIAL PERFORMANCE

In terms of financial performance, with unfavourable

business environment, fair value losses registered on
KERNEL EXTRACTION RATE
commodity hedges, and less favourable operating %
environment, the Group’s Upstream operations registered
a PBIT of RM125 million, compared to RM1,141 million
reported in the previous 12 months ended 31 December
2018. Operationally, we registered a 6% decline in FFB
production and 0.46% increase in OER.

5.20 5.22
Despite various market and operational challenges, we
remained committed to environmental stewardship and 5.15
social equity. We introduced a number of programmes,
such as the BEST programme (Building Estates’ Sustainable
Transformation) to further build the Group’s Upstream
FY2018* FP2018^ FY2019
capability. We also continued with our replanting programme
using GenomeSelectTM, which is critical to increase yield
Note: * Financial year ended 30 June 2018
per hectare on our existing land. ^ 6-month financial period ended 31 December 2018
PERFORMANCE REVIEW – Business Review

UPSTREAM
ACHIEVEMENTS/INDUSTRY RECOGNITION

Recognition Awarding Body

Upstream Indonesia:
Three Awards for Operational Excellence for PT Sajang Opexcon 2019
Heulang’s Mustika Factory and PT Ladangrumpun
Suburabadi Angsana Factory

Upstream Malaysia:
Three Gold Awards for Operational Excellence for Seri Pulai Malaysian Productivity Council
Estate

Best Innovation in Sustainability

Metamorphosis Projects – Technology innovation to upcycle
waste from our estate operations
War on Waste Project – Waste elimination through Kaizen
methodology, focusing on cultural transformation and a
continuous improvement mindset
Europa Awards 2019
OPEX Business Transformation World
Summit 2019, USA (Award Category:
Most Innovative Approach to Driving
Culture)

KEY HIGHLIGHTS FOR THE YEAR

Driving efficiency to yield more CPO Reducing Cost-to-Customer (CtC)

from existing landbank

PT Minamas, Indonesia: Implemented five PT Minamas, Indonesia: Executed 45 initiatives

initiatives to generate an additional revenue of
RM23 million by 31 December 2020
Malaysia: Replanted over 2,300 hectares with
GenomeSelectTM, with estimated yield potentially
higher than the GH600 material
to reduce CtC by 2.4% or RM27 million
New Britain Palm Oil Limited, PNG:
Implemented 64 initiatives to reduce CtC by
15% or RM148 million by 31 December 2020.
As of 31 December 2019, achieved 134% of the
target for FY2019

Accelerating digitalisation and innovation Developing model plantations to scale

for efficiencies, productivity and best practices and produce high
responsiveness in decision-making quality and sustainable feedstock:

Process Rationalisation Lab, Malaysia: Continued Increased OER by reducing oil loss and
implementing 18 initiatives to improve process ensuring mill efficiency (through Structured
efficiencies via three work-streams: tender Oil Recovery Assessment) from the average
process, reports, and HQ visits 1.6% to 1.21%

Reduced 66% of overall time spent on the

three streams, and allocated freed-up time for
other high-priority value-creation assignments

Achieved 42.7% of the target time-spent

reduction as at 31 December 2019
 Annual Report 2019 PG. 064 – 065

KEY CHALLENGES & STRATEGIES

Risks Strategies Results

Extreme Weather & Pests:

Affects quality and quantity of Strict adherence to the Agriculture Reference Zero cases/instances of severe palm
fruit and oil production Manual by all operating units to maximise stress observed during the year
and sustain the potential yield

MANAGEMENT DISCUSSION & ANALYSIS

Compromised Milling
Capacities:
Increased pressure, (especially
during low volume of crop
production), to maintain mill
utilisation and support
Downstream businesses
Increase outside FFB purchases that are in Optimum mill utilisation rate even
compliance with the Responsible Sourcing during low cropping season
Guidelines (RSG)
(Annually, the Group processes approximately
10% of outside FFB purchases of its total mill
processing)

Rising Production Costs:

Erodes margins and revenue Remodel the current cost structure through Reallocation of financial resources to
potential, especially with weak LABs by implementing cost reduction partially offset losses and improve
CPO price environment and initiatives and tapping high-potential revenue operations through cost reduction
trade tensions generating opportunities and cost avoidance initiatives

Shortage of Competent
Manpower:
Affects the performance and
overall productivity
Reduce dependency on manual labour
through mechanisation and by maintaining
an optimum level of labour-to-land ratio
3
Improvement in the current labour-
to-land ratio, contributing to the
target ratio of 1:11 by end of 2020 for
Malaysia

WAY FORWARD – RISKS AND OPPORTUNITIES

As trade tensions and disruptions due to the COVID-19 pandemic continue, CPO prices may continue
to be volatile in the short term. However, there will be opportunities to diversify products as well as
export markets, in addition to deploying technology and R&D to devise innovative solutions. Additionally,
the Group will also pursue operational excellence improvements with strategies in accelerated replanting, best
agricultural practices as well as greater automation, mechanisation and digitalisation. Other continuing measures
by the Group’s Upstream operations will include the following:

Cost reduction initiatives as one of the main drivers of improvement in 2020 and beyond:
– We aspire to lower down the current ex-mill production cost of Minamas and NBPOL to slightly
above our Malaysia operations. We will also continue to realign our processes and implement
mechanisation, where possible, to achieve our targeted production cost. For instance,
mechanisation will be further expanded to our operations in PNG and SI. Mechanising some of
the estate activities would also help to reduce our dependency on manual labour given the
recent announcement on the increase in minimum wage which affects 56 City Councils and
Municipal Councils

Application of new knowledge, skills, and innovation:

– The production of our GenomeSelectTM planting material, which has started to bear fruit in 2019,
will be further expanded to enable replanting of all our estates with the high-yielding breed by
2023.

Deployment of technology to improve efficiency and performance:

– We will continue to leverage on technology and digital platforms to accelerate our progress and
catalyse future growth. We will further develop big data application through machine learning to
assist in the planning and allocation of our resources

In summary, the efforts in the coming year will focus on efficiency improvement, cost reduction, and
sustainable operations, with positive social and environmental impacts.
PERFORMANCE REVIEW – Business Review

UPSTREAM

KEY HIGHLIGHTS
12

10.23

9.68
10

5.56
6

0
FY2018 FP2018 FY2019

FFB PRODUCTION
(Million MT)

FY2018 (July 2017 – June 2018)

  3-YEAR OPERATIONAL REVIEW
Malaysia Indonesia PNG & SI Liberia Total

FFB Production (in MT) 5,822,150 2,614,615 1,731,006 64,611 10,232,382

Oil Palm Hectarage (in hectare)

  – Mature hectares 252,055 158,180 77,500 9,701 497,436
  – Immature hectares 48,972 43,040 9,804 741 102,557
  – Total planted hectares 301,027 201,220 87,304 10,442 599,993
Yield per Hectare (in MT per hectare) 23.13 16.40 22.36 6.78 20.51

FFB Processed (in MT)

  – Own 5,822,123 2,614,615 1,731,006 64,611 10,232,354
  – Outside 1,133,700 705,801 537,008 10,726 2,387,235
  – Total 6,955,823 3,320,416 2,268,014 75,337 12,619,589

Mill Production
  – Crude Palm Oil (in MT) 1,418,945 710,207 508,263 15,520 2,652,935
  – Palm Kernel (in MT) 356,930 159,529 130,437 2,989 649,886
  – Oil Extraction Rate (%) 20.40 21.39 22.41 20.60 21.02
  – Kernel Extraction Rate (%) 5.13 4.80 5.75 3.97 5.15

Rubber
  – Planted area (in hectare) 12,674 1,924 107 14,705
  – Rubber production (in kg) 6,512,000 6,512,000
  – Yield per Hectare (kg per hectare) 1,318 1,318

Sugar Cane
  – Planted area (in hectare) 5,613 5,613
  – Cane yield (MT per hectare) 52.59 52.59

Beef Production
  – Grazing Pasture (in hectare) 8,956 8,956
  – Total herd as at 31 December 2019 (in heads) 26,013 26,013
  – Average deadweight (kg per head) 268 268
Total Landbank/Concession 343,445 299,278 140,373 220,000 1,003,096
 Annual Report 2019 PG. 066 – 067

83%
Own Crop 83%
82% OwnMT Crop
Mature 82% 9,679,191

MANAGEMENT DISCUSSION & ANALYSIS

Mature 9,679,191 MT
488,024 ha
488,024 ha
Oil Palm
Oil Palm FFBFFB
Hectarage
Hectarage Processed
Processed
in FY2019
in FY2019 in FY2019
in FY2019

18% 18% 17%17%

Immature
Immature Outside Crop
Outside Crop
106,022 ha
106,022 ha 2,010,706 MT MT
2,010,706

MATURE vs IMMATURE
MATURE AREAAREA
vs IMMATURE OWN CROP
OWN vs OUTSIDE
CROP CROP
vs OUTSIDE CROP

FP2018 (July 18 – December 18) FY2019 (January 2019 – December 2019)

Malaysia Indonesia PNG & SI Liberia Total Malaysia Indonesia PNG & SI Liberia Total
3
2,798,425 1,712,521 994,214 51,154 5,556,314 5,101,675 2,663,105 1,814,399 100,303 9,679,482

244,963 158,791 79,126 9,975 492,854 244,615 152,469 80,803 10,137 488,024 
55,767 42,282 11,955 288 110,292 54,735 41,336 9,808 143 106,022
300,730 201,072 91,081 10,263 603,145 299,350 193,805 90,611 10,280 594,046
11.40 10.72 12.59 5.13 11.25 20.96 17.14 22.44 9.90 19.77

2,798,425 1,712,521 994,214 51,154 5,556,314 5,101,384 2,663,105 1,814,399 100,303 9,679,191
508,669 489,052 287,786 1,281 1,286,788 811,768 670,754 527,970 214 2,010,706
3,307,094 2,201,573 1,282,000 52,435 6,843,102 5,913,152 3,333,859 2,342,369 100,517 11,689,897

683,678 465,306 288,677 11,042 1,448,703 1,252,236 730,908 517,598 22,468 2,523,210
171,670 105,759 75,405 3,156 355,991 307,666 160,996 135,409 5,749 609,820
20.67 21.14 22.52 21.06 21.17 21.18 21.92 22.10 22.35 21.58
5.19 4.80 5.88 6.02 5.20 5.20 4.83 5.78 5.72 5.22

12,680 1,924 121 14,725 12,606 1,924 121 14,651

4,038,335 4,038,335 7,402,829 7,402,829
770 770 1,422 1,422

5,613 5,613 5,613 5,613

50.69 50.69 29.36 29.36

9,560 9,560 9,503 9,503

23,527 23,527 24,625 24,625
260 260 265 265
343,251 299,255 146,463 220,000 1,008,969 343,254 287,460 146,098 *220,000 *996,812
*Numbers reflect our hectarage prior to SDP’s Liberia asset divestment. Our current total landbank stands at 776,812ha.
PERFORMANCE REVIEW – Business Review

OUR PERFORMANCE
BY SEC TOR:

SIME DARBY OILS

“
The year under review was a
key turning point and an
important milestone for
Downstream operations,
which deployed strategies to
hedge risks and externalities
that affect the Group’s
overall performance. Sime
Darby Oils (SDO), the
rebranded Downstream
division, focused its efforts
on introducing differentiated
products and market
solutions, which in turn
helped mitigate the impact
from our exposure to lower
CPO prices and trade
tensions. On the back of
SDO’s positive performance
during the year, its future
prospects are promising in
terms of both growth and
sustainability.
“
At Sime Darby Oils, we are focused on delivering quality excellence throughout our
integrated and fully traceable value chain.

ABOUT SIME DARBY OILS ensuring sustainable living for consumers. With extensive
network and global footprint, SDO strives to be the most
Our Downstream segment, known as Sime Darby Oils
accessible supplier of oils and fats by focusing on quality,
(SDO) is present in 16 countries worldwide. SDO is involved
food safety, sustainability, integration and innovation.
in trading, manufacturing as well as sales and marketing
of refined oils and fats products, oleochemicals, palm oil
based biodiesel, nutraceuticals and other palm oil KEY CONTRIBUTORS TO PERFORMANCE IN 2019
derivatives. Globally, SDO manages and operates 11
Our key growth drivers in FY2019 came from improved
refineries with a total capacity of 3.8 million metric tonne
refining operations, enhanced trading performance and
(MT) per year and a total bulking installation capacity of
efficient supply chain operations, among others. SDO
273,160 MT. In addition, SDO also operates 10 kernel
continued to achieve stronger profits, and made positive
crushing plants (KCP) with a total annual capacity of
contributions to SDP’s overall performance. Substantial
569,640 MT, one biodiesel plant with a production capacity
contributions were from higher volumes and better
of 120,000 MT per annum, a soya crushing plant with
margins, largely driven by good performance from our
an annual capacity of 132,000 MT and two copra mills
differentiated business and global trading operations in
in Papua New Guinea.
Asia Pacific. Increased demand led to higher capacity
utilisation of our refineries with better processing cost
In keeping with our mission of ‘Realising Possibilities,
allowing for sustainable increase in profit growth.
Together’, our philosophy is to leverage on various
partnerships to produce quality and enriching products,

In March 2019, the Group rebranded its entire Downstream
operations to SDO to realise SDP’s full potential as a
trusted brand for sustainability and superior product
qualities. During the year, we initiated efforts to achieve
the highest standards of operational excellence, with a
focus on quality, food safety, traceability, responsible
environmental and social practices, secured supply of
feedstock and innovation.
SDO is responsible for the trading and sales of CPO and
refined palm products. It is therefore, critical to ensure
robust risk management strategies to prevent factors
which can negatively impact our performance. During
the year, CPO prices were low due to large inventory
build-up and weak demand but were mitigated by our
improved earnings attributable to better contribution
from customised businesses offering higher value added
products and increased focus on the physical sale of
CSPO. SDO’s presence in key markets through its assets
GROSS MARGIN SALES VOLUME
RM million ’000MT
3,828
3,638
732 819
YE2018* FY2019 YE2018* FY2019
* Unaudited 12 months ended 31 Dec 2018.
ACHIEVEMENTS/INDUSTRY RECOGNITION
Recognition
SDO Morakot
#1 Brand and the most popular of vegetable oils in
Thailand (2018-2019)
The Superbrands Award (2018-2019)
The Corporate Management Excellence Award
First RSPO Segregated (SG)/Identity Preserve (IP) oil
manufacturer in Thailand
SDO Pulau Laut
3 Stars Gold Award:
Best Performance Team Award and The Overall Best
Award
Annual Report 2019 PG. 068 – 069
locations, strategic partnerships and distribution channels
also played a major role in helping to create easy access
MANAGEMENT DISCUSSION & ANALYSIS
for buyers at the destination markets.
FINANCIAL AND NON-FINANCIAL PERFORMANCE
For the year under review, SDO operations continued to
register strong profits, with substantial contributions largely
from customised businesses and global trading operations
in Asia Pacific This is primarily attributable to an increase
in sales volume at 5% Year on Year (YoY) and better
margins as well as manageable operating expenses.
This compensated for the lower profits from customised
businesses in Europe & Africa due to the loss arising from
the fair value of commodity contracts and declining
margins from certain speciality products to the competitive
market environment.
CAPACITY UTILISATION 3
%
74.7 75.3
YE2018* FY2019
Awarding Body
Marketeer Magazine
Superbrands Thailand Organisation
Thailand Corporate Excellence Award 2019 by
Thailand Management Association
International ACE Award 2019 by Asia Pacific
Quality Organisation (APQO)
PERFORMANCE REVIEW – Business Review

SIME DARBY OILS

KEY HIGHLIGHTS FOR THE YEAR

Shift to Higher-Margin, Sustainable, Strategic Partnerships with Local and

Traceable and Customised Products
Improved earnings attributable to better
contribution from customised businesses and
higher value-added products
Expanded the customised product portfolio by
collaborating with our Innovation Centres to
introduce and market new product offerings to
existing and potential customers globally
Increased focus on the physical sales of CSPO
Efficient supply chain and enhanced traceability
to connect our palm oil production to
destination markets and customers
Global Distributors to Grow Customer
Base and Market Reach
Accelerated efforts to strengthen presence in
major markets (India, China and Europe) for
bulk CPO and other commoditised products
Established various distribution channels locally
and internationally to market
Established partnerships with local players in
North America and Middle East to establish
our satellite sales office and unlock untapped
value from key markets, our assets and by-
products

Optimum Utilisation via Improved Excellent Customer Satisfaction

Aggregation and Manufacturing
Operational Excellence
Achieved lower costs on higher utilisation
through aggregation of external oil for the bulk
refineries, which in turn contributed to an
increase in profit growth by 9%
Introduced a framework (Operational Excellence
Model) as a tool to benchmark the standard of
operational excellence in terms of cost
efficiencies and quality
Index as the Driver for
Continuous Improvement
Driven by production of sustainable, innovative
and high quality products, SDO has shown its
credibility as a trusted and reliable edible oils
and fats producer

Diversify to Hedge Risks

Explored the value chain of specialty and customised products to reap better returns and contribute to
the business accretive growth

KEY CHALLENGES & STRATEGIES

Risks Strategies Results

US-China Trade War

Waning business confidence
and slowing growth due to
lingering concerns over
foreign trade and export
policies
Memorandum Of Understanding From the partnership, SDO had
(MOU) with China Oil and successfully shipped 70,000 MT of olein
Foodstuffs Corporation (COFCO) to COFCO in FY2019
on the back of CPO price
recovery and potential export of
palm oil to China. However, this
strategy was hindered post
FY2019 due to the impact of
COVID-19 pandemic

Our business continues to find

pockets of opportunity in the
midst of the US-Led Trade
Wars. The way forward for SDO
includes expansion of
differentiated product sales to
China
 Annual Report 2019 PG. 070 – 071

Risks Strategies Results

Geopolitical Uncertainties
Affecting CPO prices,
exacerbated by bilateral
tensions, trade uncertainty,
volatile markets, vulnerable
and shifting trade
arrangements, etc
Explore alternative markets as
approved by SDO Board –
namely North America, Middle
East, Philippines, China
(Differentiated) and Australia
and Pakistan (Bulk)
Sales to India had decreased sharply in
FY2019 by approximately 380,000 MT
due to various tax changes and
restrictions applied on palm and refined
oil made by the government of India.

MANAGEMENT DISCUSSION & ANALYSIS

SDO has mapped out the
expansion to alternative
markets in the strategic growth
plan. We are in progress of
setting up respective offices
where necessary to accelerate
the opportunities
While India remains as our biggest
market, we have been agile and flexible
in channelling our volumes to other
destination markets (China, Pakistan,
Netherlands and Africa) to cushion the
impact of the aforementioned restriction
Additionally, SDO has successfully
established various distribution channels
in the Middle East and North America

Sustainability Risks &

Pressures: Expectations from
stakeholders in the value
chain, including the EU
continue to rise in ensuring
sustainability and food
safety requirements in the
conduct of our business
Impacting the reputation
and potential trade
arrangements, mainly
sprouting from supply chain
scrutiny and allegations by
NGO/Civil Society on possible
linkages to deforestation,
human rights and related
issues
Maintain and improve supply
chain traceability systems
Implement a supplier
sustainability risk monitoring
and engagement framework
Our current traceability platform, 3
Crosscheck and other systems provide
approximately 95% traceability to mills
and 48% traceability to plantations
Our grievance mechanisms have surfaced
a total of 61 investigations, with 15 issues
resolved and 7 companies no longer in
SDO’s supply chain. 17 of the companies
are in active engagements and 22 in
preliminary investigation

WAY FORWARD – RISKS AND OPPORTUNITIES

SDO aims to be the preferred sustainable palm oil and fats specialists and a trusted customer
solutions provider by focusing on differentiated, sustainable and traceable high value products, to
serve its customers’ evolving needs. We are constantly working together with our Innovation Centres
to introduce new product offerings, intended for both our existing and potential customers globally.
SDO’s business philosophy is to provide a comprehensive range of oil and fats products of the world’s best
quality which has placed us securely ahead of our competitors.

In addition to SDO’s transformation aspirations, SDO aspires to increase its share of revenue to the Group.
Going into 2020 and beyond, we will focus on the following:

Superior financial returns through operational excellence and high-performance standards

De-commoditisation of sustainably produced palm products
Establishment of a sustainable innovation ecosystem, which improves productivity, optimises efficiency
of processes and enhances quality of product and services
Consistent delivery of profitable growth by optimising existing business vertically Improving returns, on
trading, enhancing capacity utilisation and site condition, and most importantly, pivot towards high
value-add business
Building a world-class company, with world-class capabilities and processes as well as top quartile
organisational health and culture
PERFORMANCE REVIEW – Business Review

OUR PERFORMANCE
BY SEC TOR:

OTHERS: RENEWABLES

“
Global warming and the
looming Climate Emergency
are piling on pressure on
businesses worldwide to
generate energy from clean
sources. As the world
transitions to a low-carbon
or carbon neutral economy,
the business case for going
green is becoming
undeniable. SDP believes in
a future that is powered by
renewables and we are
committed to strategising
our investments today to
address environmental
challenges along our value
chain, as well as complement
our mainstream business
verticals, in terms of both
revenue and sustainable
growth.
“
SDP’s first solar project that was established on 28ha of land in our Byram Estate,
Penang began delivering returns in 2019.

ABOUT OUR RENEWABLES BUSINESS During the year under review, we accelerated our efforts
to develop the Renewables business, particularly in the
With Renewables as part of our diversification strategy,
energy space, mainly to reduce our fossil fuel dependence
the idea is to leverage on our asset and various by-products
and methane emissions. Our current exploration and
along the palm oil value chain to further produce high
involvement is in solar, biogas, biodiesel and biomass.
value-added goods. With our ability to generate sustainable
feedstock, the Group is well positioned to stimulate new
In the mid-to-long term, we see significant potential for
growth and innovation in the renewables industry,
Renewables to create value for our business, mainly in
unlocking greater value for our business as well as our
two ways: First, there will be an opportunity for cost
stakeholders.
reduction/cost advantage through biogas or solar energy;
and second, we will be able to generate new revenue
Over the years, the Group has shifted from our strategy
from our land and valorising our biomass.
to invest in early-stage start-ups in this promising sector.
Instead, we now subscribe to an asset-light strategy of
ACHIEVEMENTS
partnering with established players, and focus on renewable
energy sector, instead of renewable chemicals. The objective In FY2019, Sime Darby Plantation Renewable Energy Sdn
is to acquire new capacities and capabilities from local Bhd (formerly known as Sime Darby Beverage Sdn Bhd)
and international players to unlock untapped values from was restructured to champion the Group’s renewable energy
our assets and by-products. businesses. Meanwhile, we achieved a good momentum
with positive earnings from large-scale solar business.
 Annual Report 2019 PG. 072 – 073

KEY HIGHLIGHTS FOR THE YEAR

Solar Biogas

In 2018, SDP’s first involvement in solar project was SDP explored a more unique asset-light
commissioned in Penang. The 20 MW project was built on business model for its biogas plants.
28 ha of SDP’s estate The Group partnered with many

MANAGEMENT DISCUSSION & ANALYSIS

different players to unlock the value
We started realising returns in terms of rental and revenue- from our feedstock whilst doing good
share income in 2019 and SDP has been more active in to the environment
searching for potential partners to build more solar farms for
the future. This is also in line with the National Renewable Several of our plants are already in
Energy generation target construction. The Group’s focus for the
coming year is to execute plans to
In addition to the large-scale solar, SDP is also identifying reduce SDP’s carbon emission
different business models for solar mainly for self-consumption,
and a corporate power purchase model for consideration as
the government further liberalises the market

Biomass

During the year under review, the Group continued to assess potential partnerships with regional and
international technology partners to pilot new Biomass projects. For instance, the valorisation of biomass for
energy pellet is a potential area where we can work with global experts as well as our home-grown R&D
team to innovate and introduce solutions of the future 3

KEY CHALLENGES & STRATEGIES

Externalities/Market
Uncertainties:
The ‘new normal’ affects the
core business, revenue
potential and value creation
Hedge risks by exploring value Generated positive results from our
preservation and revenue expansion solar businesses, and initiated efforts
opportunities in alternatives/ to focus on replicating the results in
Renewables (also leveraging our other sites
present assets and complying to
regulatory requirements and
sustainability demands)

Early Investments in
Renewables:
Concerns over commercial
viability of projects, considering
challenging factors such as
high levels of capital for
Biogas and the need to
aggregate volume in Biomass
Assess business potential, Explored potential partnerships with
emerging opportunities and matured players/experts in
revenue potential in food, energy Renewables
and water-related businesses by
investing in R&D and frontier
technologies

Right Capabilities with Right

Partners:
Risk of entering into bold
ventures with partners without
the right capabilities
Forge global partnerships to
build SDP’s expertise and
capacity through transfer of
knowledge and skills from the
world’s ‘crème de la crème’
Signed several commercial
agreements with seasoned industry
players and exploring further
opportunities to expand the network
of Sime Darby Plantation Renewable
Energy Sdn Bhd
PERFORMANCE REVIEW – Business Review

OUR PERFORMANCE
BY SEC TOR:

R&D

“
In raising the bar on
sustainable growth, we are
committed to investing in
frontier research and
development efforts that can
deliver solutions of the
future for the palm oil
sector. From technologies
that will improve oil
extraction and reduce waste,
to mechanisation of supply
chain processes for improved
efficiencies and enhanced
productivity; from genomics
for climate resilient plants to
digital solutions for
traceability and sustainability
– our aspiration is to
champion promising R&D
that will generate
meaningful commercial,
environmental and social
benefits for us as well as the
industry at large.
“
At the heart of SDP’s business, are the dedicated scientists who continuously deliver
value for both the company and the industry at large.

ABOUT OUR R&D DIVISION KEY CONTRIBUTORS TO PERFORMANCE

SDP has been in the forefront of agricultural research
and development since the early 1900’s. The Group has
well-established facilities in five countries. These include
five R&D centres in Malaysia, Indonesia and PNG; three
Innovation Centres (IC) in Malaysia, the Netherlands and
South Africa; and one genetic testing facility in Malaysia.
These centres of research and innovation are equipped
with robust, infrastructure and more than 190 scientists
and technicians, who are constantly at work to revolutionise
palm oil products and industry practices. The projects range
from developing better seedlings and systems, to enhancing
plantation yields, reinventing the milling processes for
improved production and designing new technologies to
bolster Downstream activities. Key areas and priorities are;
to increase yield, improve efficiency, reduce cost of
production, and accelerate sustainability performance.
In FY2019, the R&D division continued its efforts to
accelerate development of solutions, tools and platforms,
technologies, which in turn contribute to improving
efficiencies and productivity along our value chain. During
the year under review, we have been on track with our
GenomeSelect TM – a technology developed by SDP’s
scientists to enable yield improvement of 15% above the
current best planting materials available in SDP. We
pursued our plan to plant 1,000 ha of GenomeSelectTM
per year from 2018 to 2021, and scale-up to a capacity
of 15,000 ha in order to cater for full annual replanting
activities in Malaysia by 2023. We are confident of the
outcomes as the pre-commercial yield records from the
2016 GenomeSelectTM fields showed FFB yields in excess
of 40% more, and OER results that were 10% higher than
other commercial fields of the same age and similar
location. Research at Dami OPRS in 2019 included ongoing
collaboration with the Molecular Breeding team at the
 Annual Report 2019 PG. 074 – 075

Sime Darby Plantation Technology Centre in Malaysia on other production areas, reducing our total dependency
the development of a genomic selection model from an on labour. This is in addition to our efforts to develop
elite line of Dami breeding material. Furthermore, clone new rapid methods to expand our lab automation and

MANAGEMENT DISCUSSION & ANALYSIS

production of around new 15 selections of elite Dura
palms and five elite Pisifera palms was initiated in 2019
for future SUPERFAMILY® seed production.
Our efforts in plantation research and agronomy also
reinforced the potential of Agriculture 4.0 and the need
for large-scale deployment of new precision agriculture
tools to improve productivity and decision-making
processes. Another strategy to enhance productivity and
efficiency in our estates has been to deploy mechanised
solutions or new digital technologies in processing and
robotics to cover soil, water, and food safety tests, mainly
to increase its throughput.
To fully leverage on new technologies and digital solutions,
our researchers have worked to develop capabilities in
data collection, processing and analytics. Another strategy
to enhance productivity and efficiency in our estates has
been to deploy mechanised solutions to reduce our
dependency on labour. Additional efficiency gains come
from expansion of the level of automation in our labs.

OUR PERFORMANCE: LAB SERVICES

LAB SERVICES NUMBER OF DETERMINATIONS CONDUCTED

392,000
390,000
388,000 Lab Analyses : 201,002 3
386,000 Investment : RM4.53 million
384,000 ISO1705 Accreditation : 150 Tests
382,000 Savings : RM0.62 million
380,000
378,000
376,000
374,000
2018 2019

ACHIEVEMENTS/INDUSTRY RECOGNITION

Recognition Awarding Body

Accreditation

MS ISO/IEC 17025:2017 Accreditation for our Genetic Department of Standards Malaysia

Testing Laboratory

Awards

R&D’s Enzyme Project team won two awards on 14 IChemE Malaysia

October 2019: 1. Palm Oil Award 2019; 2. Sustainability
Award; for the Enzymatic Assisted Extraction Palm
Oil project.

Innovation

R&D’s Advanced Mechanisation Technology team Permodalan Nasional Berhad (PNB)

won PNB Innovation Challenge 2019 on 24 October
2019 for their Mechanical Buffalo Grabber innovation.
PERFORMANCE REVIEW – Business Review
R&D
KEY HIGHLIGHTS FOR THE YEAR
GenomeSelectTM Enhancing Yield
and Climate Resiliency
At the end of 2019, more than 2,300 ha of
GenomeSelectTM palms have been planted in
multiple locations across Peninsular and East
Malaysia. We also commenced test seed
production for new GenomeSelectTM mother palms.
Genetic testing facilities initiated routine seed
purity testing of all seeds produced since 2019
During the year under review, we also released
elite hybrid seed, iCalix to our plantations in
Indonesia. iCalix is derived from the best of the
Calix600 seeds planted in Malaysia and will serve
as a base to deploy GenomeSelectTM technology in
Indonesia in the coming years
Agronomic Trials Ensuring Best
Practices
We focused on refining and improving our
approaches in best agricultural practices through
continuous Pest & Diseases (P&D) and agronomic
trials, which contributed to higher economic
returns, while reducing the burden on the
environment
Similarly, we continued our efforts to optimise the
use of green fertilisers to enhance soil health,
especially on low fertility soils. We have also made
progress on early pest and disease detection using
advanced remote sensing and non-invasive
technologies
Differentiated Products: Innovating for our Customers
Our IC in Malaysia developed and launched six new quality consumer products in Asia. IC also provided
extensive technical support and services to internal and external customers. We have also initiated efforts
to phase out the trans fats from our product offerings
Monitoring and Mapping
Our Operations
We have set-up an enterprise wide geographic
information system (GIS) to centralise spatial data
and facilitate faster decision-making
We have also dedicated additional resources to
increase image collection through drone and
satellite-based systems. These images allow for
more efficient delivery of mapping services as well
as the development of operational analytics such
as palm census, health, and water management
status. The use of artificial intelligence has
increased the amount of images and data that
can be processed, improving delivery of solutions
to our internal customers
Mechanisation: Improving
Efficiencies & Productivity
After systematic trials and tests in our estates, we
initiated efforts to scale-up and commercialise
our patented machines that assist in more
efficient FFB evacuation and loose fruit collection
We also developed two new machines –
Mechanical Buffalo Scissor Lift (MBSL) and
Integrated Oil Palm Loose Collector (ILFC), which
have already been commercialised and licensed
to external manufacturers

KEY CHALLENGES & STRATEGIES
Risks
Climate Change:
Impacts crop productivity,
quality and sustainability,
affecting revenue potential
Stagnant Labour Productivity:
Compromises performance,
mainly due to absence of
skilled and well-trained labour
Mineral Oil Hydrocarbon and
3-MCPD Contamination:
Raising concerns over food
safety and compliance to
regulations; affecting product
quality and reputation
Effluents & Waste from Mills:
Impacts negatively on the
environment and the
communities that depend on
it, creating cyclical ecosystem
and health issues
Patent Infringements:
Imposes cost of litigation,
compromises credibility and
quality of patented technology
Strategies
Invest in R&D for developing
climate resilient agricultural inputs
and infrastructure. For e.g., new
planting materials in breeding, tools
and solutions to manage water-
related issues in estates
Accelerate research for
mechanisation of processes and
labour-intensive components in the
production value chain
Develop effective and alternative/
permanent solutions to eliminate
contamination in CPO production
Strategise a blueprint for
‘wastewater treatment’ system to
address effluent issues in oil palm
industries
Improve our Intellectual Property
(IP) management system, conduct
periodic monitoring of industry’
patents activity, and set-up active IP
committee to review classification
of potential IP and its protection
status on a regular basis
Annual Report 2019 PG. 076 – 077
Results
MANAGEMENT DISCUSSION & ANALYSIS
Developing drought resistant
materials. Mapping areas with
water management problems and
devising viable solutions
Deployed new tools/machines in
the field to enhance efficiencies
and workers’ productivity
Monitored and evaluated ongoing
findings from the comprehensive
3
trial to determine various causes
of contamination and use of
alternatives at a test mill
Initiated efforts to equip business
units with the right facilities to
achieve the contamination limits
set by the EU
Launched new solution that
combines membrane and electro
oxidation technology into a small
footprint, patented wastewater
treatment process. Patented and
licenced for industry use
Filed five new patents for new
technologies and solutions.
Commercialised 1 new patented
product for industry use
PERFORMANCE REVIEW – Business Review

R&D

WAY FORWARD – RISKS AND OPPORTUNITIES

Moving forward, in FY2020, R&D will continue to focus on three key strategies – yield and productivity
improvement; increase in revenue streams; and development of sustainable practices. There will be
a shift in our focus from Upstream to developing new technologies and products for the Group’s
Downstream business, catalysing new growth through diversification. In keeping with customers’ demand
for sustainable products, we will continue to invest in technologies and processes which will ensure traceable,
sustainably produced palm oil of the highest quality.

In the coming years, the high yielding potential of GenomeSelectTM will be augmented by research into
other oil palm traits to enable faster harvesting and climate change tolerance. With a focus on field testing
of elite palms, supported by experimental data in specifically designed plant phenotyping nurseries, while
this research has been on track, we will validate the results in 2020. Additionally, we will pursue the ongoing
development of models for plant health and nutrition to allow optimise use of resources.

In the case of our processing technology that relies on application of biocatalyst, we will replicate its
deployment in twelve palm oil mills in 2020. We are expecting a potential increase in OER of 0.70% based
on the commercial evaluations at four test mills.

As the world transitions to Industry 4.0, we will continue our mechanisation and automation efforts. Beginning
2020, we will commence the operations of a 5 ton/hr experimental pilot plant known as Tennamaram
Experimental Station (TESt). TESt will be the foundation for the next generation palm oil mill with more
automation and process control. It will also provide an opportunity for our engineers and mill managers
to objectively evaluate and determine the best design that will help our mills reach their optimum
performance.

On the digital side, our ongoing efforts will be directed on the continued development and roll-out of
imaging and analytics tools to benefit estate operations. We also recognise the potential of investing in the
internet of things (IoT) – enabled devices to further strengthen our data collection capabilities and enable
additional analytics to improve performance.

At SDP, we have a talented and diverse group of over 190 scientists, of which more than 50% are women who have been critical in
translating ideas into reality.
 Annual Report 2019 PG. 078 – 079

MANAGEMENT DISCUSSION & ANALYSIS

3

R&D initiatives are critical for SDP to continue producing quality products while delivering sustainable growth concurrently.
 PERFORMANCE REVIEW – Business Review

OUR PERFORMANCE
BY SEC TOR:

HUMAN CAPITAL GROWTH

“
With the advent of
digitalisation, the
dynamics of both
people and their
expectations from
organisations are fast
evolving. Human
capital development is
no longer a functional
aspect, but a
performance indicator
which contributes to
the overall success of
our business
endeavours.
“

It has been more than two years into our journey as a pure play entity and our focus has been on refining our HR
strategy towards strengthening and sustaining performance excellence as the anchor to our transformation agenda.
 Annual Report 2019 PG. 080 – 081

Our HR strategy, aligned to SDP’s strategy, is focused on three (3) key areas below as part of our value creation for

MANAGEMENT DISCUSSION & ANALYSIS

employees.

Group HR’s three (3) strategic thrusts:

Creating Alignment Quality of Execution Capacity for Renewal

Establish clarity on strategic
goals through demonstrated
leadership helps align our
vision and shape a
performance culture.
Core Focus Areas in FY2019
include:
Inculcating Health and
Culture Agenda
Accelerating Leadership
Development
Develop employees who are
accountable and capable to
drive the business of today
and create value for
tomorrow.
Core Focus Areas in FY2019
include:
Enhancing Performance
Management
Improving Total Rewards
Facilitating Engagement
and Reach Out
Drive and enable innovation
and knowledge-sharing to
face future business
challenges.
Core Focus Areas in FY2019
include:
Driving Digitalisation
Building Future 3
Capabilities
Shaping Talent and
Employee Development

We remain cognisant that our ability to adapt to changes, remain competitive and relevant will increasingly be
influenced by our strategies that foster human capital growth. It will be about our commitment to shape an inspired
generation of employees, who are engaged, healthy, and productive, contributing to create a high-performance
culture as strategic partners in business as well as growth.

INCULCATING HEALTH AND CULTURE AGENDA

What is OHI?
SDP remains steadfast in ensuring our workforce is enabled with the right
setting and culture that will support and drive performance. It has been a OHI is Organisational
year since we first embarked on our Health and Culture Transformation in Health Index. It focusses
2018. on targeted interventions
to improve elements of
This transformation journey is strengthened by our commitment to achieve organisational health and
desired business results through OHI as an anchor to build and sustain culture directly linked to
performance. performance
PERFORMANCE REVIEW – Business Review

H U M A N C A P I TA L G R O W T H

The chart below illustrates the approach undertaken in our culture and health transformation – Measure, Focus, Act
and Embed.

OHI Journey and Key Milestones

Measure Focus Act Embed

What is our health How do we How do we How do we

condition? achieve optimal manage the live the
health? journey? action plan?
Objectives & Key Highlights

Identification of Prioritisation of Action Plans Periodic pulse survey

baseline OHI Score Management Practices execution, monitoring and actual impact on
Action Plans design and refinement the ground to ensure
and endorsement Action Plan efforts are
embedded consistently
OHI Mirror &
Commitment
Workshops across all
business segments

July 2018 Now 2018 Jan 2019 June 2019 onwards

For the year under review, we forged strong partnerships with the business to “execute, assess and refine” the OHI
interventions/actions, to improve our health and culture towards building a performance-driven workforce.

Recognising that implementation of these interventions is crucial in driving the desired outcomes, periodic pulse
surveys, involving our operations in Malaysia, Indonesia, Thailand, South Africa, Papua New Guinea and Solomon
Islands, were undertaken in June and November 2019 to seek employees’ feedback on the effectiveness of these
targeted interventions in addressing the priority focus areas for the respective businesses.

Through dedicated follow-through and implementation of Action Plans, positive movements have been noted at
most of our business segments and units despite FY2019’s industry conditions.
 Annual Report 2019 PG. 082 – 083

Below are some of the key insights and findings from the recent OHI November 2019 Pulse Survey:

FY19 Achievements

Increased appreciation of focus practices and

MANAGEMENT DISCUSSION & ANALYSIS

criticality of action plan to unlocking business
performance
Leaders showed strong commitment through
volatile market conditions, to execute the health
and culture agenda, fully appreciating its strategic
Action Plans importance
improved from
OHI June 2018 FY19 Challenges

Restructuring in the departments/business units and

remobilisation of key leaders diluted the bottom-up
implementation impact with changes in team
dynamics
71% Departments/Business Units went through “trial and
error” to understand and gauge the most relevant
focus practices that can clear the most pressing
3
hurdles to performance excellence

FY20 Recommended Strategy

17 teams Leadership to continue defining impactful strategies

and driving its implementation that can address the
Improved their OHI scores by more than 100%
enterprise-wide performance hurdles: Motivation,
Capability and Work Environment

The pulse survey essentially resulted in better understanding of the sentiments on the ground. This has enabled the
businesses to identify current and arising challenges and allowing them to review and refine their action plan focus
to “unlocking best performance” in arriving at the desired business results.

A OHI Debrief Workshop for Human Resource (HR) Network personnel that was held in September 2019.
PERFORMANCE REVIEW – Business Review

H U M A N C A P I TA L G R O W T H

FY2020 and Forward Priorities

To further strengthen our transformation journey, our focus will be to review the FY2019 OHI performance against
the baseline and redefine the FY2020 action plans based on the feedbacks and insights received from the pulse
survey. A “review and reset” action plan session with the business will be undertaken to help enhance their action
plans towards achieving the desired organisational culture and health that drives performance.

The effectiveness of the enhanced action plans will be monitored and reviewed through ground observation checks
or interviews and periodic pulse surveys that focus on assessing the impact of the initiatives against the targeted
management practice scores. This is to ensure a continuous delivery of Health and Culture Transformation in SDP.

ACCELERATING LEADERSHIP DEVELOPMENT

Leadership involvement in talent management is crucial to secure top-down commitment and accountability in
building leadership pipeline. For the year under review, extensive discussions were carried out with top management
across business segments in the identification of mission critical positions and their potential next in lines.

The chart below illustrates our approach in building our talent bench strength:

SDP talent
High Potential successor
High Performer
Fast tracker

Competent worker

Talent Bench
Strength
Talent identification,
assessment and
Normal position development
Talent Supply

Building SDP’s Talent Bench Strength.

Given the criticality of our business needs, we recognise that it is imperative to ensure SDP’s investment towards
people development to bridge the talent gaps through a structured assessment that delivers superior outcome. To
predict workplace performance, SDP focused on aptitude and personality assessments that provide both potential
and person-position fit dimensional outputs.

The potential leadership development area identified was an effective communication style by continuously providing
feedback, giving motivation and clarity of work to the team. This is in line with the Group’s objective to enhance
performance management. In driving continuous growth of leaders, the intervention is planned to be deployed in
the next financial year where it will be embedded within each leaders’ KPI and their superiors’ under people
development. This is to ensure necessary support is extended while enforcing positive accountability.

Understanding the need and importance of leadership development in succession planning, an Enterprise Talent
Council (ETC) was held to re-ignite a holistic talent review, being the first after the pure play. Comprehensive outcomes
from the successors’ assessment were put forward for deliberation to ensure consensus was achieved on the proposed
developmental interventions for the identified successors.
 Annual Report 2019 PG. 084 – 085

FY2020 and Forward Priorities

The respective Talent Councils at the enterprise, country and operational levels, will continue to play a pivotal role
to ensure a holistic coverage of succession management. The next line of leaders will be included in the succession
management exercise to nurture talent throughout the Group. The Plantation Leadership Committee is committed
and will continue to be actively involved in talent discussions towards driving the talent strategy forward.

MANAGEMENT DISCUSSION & ANALYSIS

Our focus moving forward is to ensure that structured core leadership development programmes are also in place
to equip our leaders with the qualities and skills necessary to drive SDP to achieve its business objectives and enhance
performance outcomes.

ENHANCING PERFORMANCE MANAGEMENT

Performance management has been the key component

to our organisational health and culture. It drives employee
behaviour to align with organisational goals and objectives.
Over the years, leaders have been very consistent in their
messaging that the execution and ownership of
performance is the penultimate determinant in driving
performance across the Group.

For the year under review, we emphasised on enhancing

performance management through the following initiatives: 3
The Group MD officiating the Performance Management Lab.
(i) Strengthening Goal Setting
In line with our continuous effort to strengthen and
sustain performance of the organisation, an enhanced
performance management framework that places
emphasis on strengthening goal setting, and ownership
was introduced. This framework was designed from
ground up, leveraging feedback and input from
employees across all business segments through an
8-day lab session, where ideas and improvement
recommendations were gathered and reviewed from
various segments of the business. Individual
responsibilities in owning performance via solid
alignment between strategy and job function translates
into positive performance for the organisation.
The Group MD emphasising the importance of enhancing
Goals and targets were shared across levels and performance management.
deliberated to align with expectations between
different functions. These goals were first created
based on functional focus and strategy with a 3-year
vision supporting SDP’s target PATAMI by FY2022.

As we strive towards instilling accountability and

ownership, we have moved the overall governance
of performance to the Group MD’s office. This is in
line with our belief that performance must be driven
from the top, and ownership should be cascaded
down through solid alignment between business
strategy, the management team and employees.

Attendees at the Performance Management Lab with

representatives from the Plantation Leadership Committee.
PERFORMANCE REVIEW – Business Review

H U M A N C A P I TA L G R O W T H

(ii) Continuous Performance Management

Performance conversations have become increasingly important as we grow to the next level of performance
management. For the year under review, all managers across Malaysia, Indonesia and Thailand were equipped
with the right tools and competencies to have a meaningful and constructive performance conversation that
inspires their direct reports to achieve their goals. This was done through the Conversation to Inspire Performance
(CIP) workshop. Anchored around the Health and Culture Transformation, this development initiative focused
on improving conversation skills, building effective relationships within teams, giving developmental feedback
and providing a guide for managing common coaching challenges.

In line with our objective to build a healthy and strong performance driven culture in SDP, a new feedback
application system was introduced to encourage more frequent performance conversations between managers
and employees. This new approach makes the conversation easier, relatable and brings a casual flair to an
otherwise serious conversation whilst maintaining the importance for continuous engagement and feedback.

FY2020 and Forward Priorities

Our focus in FY2020 is to continuously enhance the performance management framework by operationalising
performance dialogues between managers and employees. Frequent conversations between managers and employees
will be the centrepiece of the new performance framework. As we progress, we aim to build a more robust
performance management that drives improved performance for SDP.

IMPROVING TOTAL REWARDS HR Engagement & Reach Out (HERO) capitalises on four
communication platforms, established to expand reach
In recognising that our people are our priority, a series
and improve engagement effectiveness, which supports
of Total Rewards Review exercises were undertaken for
the operations at large to enhance and improve their
the year under review. The enhanced total rewards,
performance through people.
including the review of salary structures and employee
benefits, were implemented in Malaysia, Thailand and
Indonesia operations.
Interactive platform to
FY2020 and Forward Priorities discuss HR related matters
To remain competitive, our focus in FY2020 is to review
Total Rewards for Papua New Guinea operations by aligning
employee terms, salary structure and employee benefits.
In support of SDP’s commitment to grow the business in
SDO, focus will be given to ensure that the right remuneration Scheduled session between
framework for the respective SDO entities worldwide is HR and employee on
put in place in line with SDO’s aspirational target to achieve one-to-one basis
RM1 billion PIBT in FY2024.

FACILITATING HR ENGAGEMENT AND REACH OUT HR information access such

as policies, procedures,
SDP recognises the importance of engaging with employees
FAQs and HR contacts
from all levels of the business. For the year under review,
focus group sessions were undertaken to hear employees’
feedback and areas for improvements that were expected.

Avenue for employees to

direct their queries/concerns
to HR

HERO provides varied HR channels for employees

 Annual Report 2019 PG. 086 – 087

Two pilot sessions were rolled-out in Johor and Sabah in September and October 2019 respectively. A total of ten
sessions were conducted, with participation from more than 500 employees from various levels in both Upstream
and Downstream operations. Joined by leaders at the Operations, the impact delivered through the sessions created
greater alignment between HR, operations and our employees, to shed light on SDP’s people strategy while
strengthening the bond and rapport that ensure smooth delivery of our internal initiatives.

MANAGEMENT DISCUSSION & ANALYSIS

HR Engagement & Reach Out (HERO) sessions that were conducted at SDP’s Southern and Sabah Region.

FY2020 and Forward Priorities

While engagement is one of the important indicators in gauging satisfaction at the workplace, it is also imperative
for us to ensure the engagement session is effective and ultimately leads to engaged employees that are more 3
productive. A structured agenda with clear goals will be planned and tracked to improve these engagement sessions
moving forward.

DRIVING DIGITALISATION FY2020 and Forward Priorities

SDP demonstrated unwavering commitment in anchoring
Digital as a core driver of our long term strategies and
vision in FY2019. The introduction of SDP’s very own Chief
Digital Officer, Mr. Aditya Ranjit Tuli, into the ranks of our
Plantation Leadership Committee (PLC), is a clear signal
that our adoption of Digitalisation is not limited to token
projects or “buzz words”. Instead, Digital will be considered
as an enabling tool for the business in assessing and
unlocking hidden synergies along our value chain, taking
us to the next level of value maximisation.
Understanding that this “DNA-level” change of how SDP
operates will require more than just technical talents to
deliver our Digital initiatives. During the year under review,
Group HR made headway into the foundational setup
of the change engine of this mindset shift. The main
initiative undertaken was the SAP HR System Carve-out,
which saw the employee data of SDP employees being
transitioned from its original storage location within Group
Sime Darby’s data infrastructure domain, into our very
own system architecture and environment. A monumental
milestone in our journey of Digitalising HR, it signifies
the establishment of the first “living” set of employee
data that relates to Finance, IT and other relevant modules
in our architecture. This is our first starting point of pure
plantation-related data and trends, setting us up for the
bigger HR Digitalisation journey ahead.
To start-off a multiyear partnership between SDP and
Workday Inc. for the wholesome review and transformation
of SDP’s People Management System. This journey will
be no small feat as it goes beyond a one-dimensioned
system implementation project. The focus on delivery
precision will be dedicated to this journey to deliver the
following outcomes for the business:
A. Transition People Management System
All existing HR Processes, Systems and Environment
will be aligned across Business Segments, Countries
and Operating Units, and migrated seamlessly into
the destination system with minimal disruption to
ongoing HR activities in the coming years.
B. Enabling Adoption of Self-Service HR Delivery
Model
Ownership and accountability of routine, transactional
HR activities will be handed over to each individual/
user for faster transaction turnover and independent
self-management for greater productivity.
C. Elevate Group HR to SDP’s Strategic Anchor
Group HR will focus on the long term people needs
of the business to leverage digital technologies. Group
HR will not just be the frontline adopter of digital
mindset in SDP, it will also be demystifying the
“digital buzz” and transition our workforce to the
change mindset ahead.
PERFORMANCE REVIEW – Business Review
H U M A N C A P I TA L G R O W T H
BUILDING FUTURE CAPABILITIES
SDP places great importance on cultivating and nurturing
future generation with the right skills, knowledge and
values that are essential to drive the organisation forward.
Graduate Accelerated Programme (GAP) is a 2-year
programme providing a structured and unique platform
to leverage and enhance the skills of SDO’s Core Talent
Pool as well as provide the required exposure to specific
segments of the business such as commodity trading,
sales and marketing as well as manufacturing. The objectives
of the programme are to build a pool of talented and
global-ready talents, increase agility and flexibility of talents
in dealing with new world problems and challenges, foster
exchange of talents between operating units within SDO,
reduce potential talent hoarding by creating an environment
that supports Talent Mobilisation and Succession Pipeline
and placement of internal talents to fill critical roles in
mid-to-long term.
For the year under review, the GAP participants have
undergone various developmental programmes such as
familiarisation sessions, structured training programmes,
leadership series and job rotation and placement to
Upstream operations and Downstream functions. This
programme will be a continuous joint effort between
SDO and Group HR.
GAP Participants with the Group MD, Chief Human Resources Officer
and other employees during its launch.
Mentoring Executive Talent (MET) is a mentor-mentee
programme initiated in August 2019 with the objective
of focussing on leadership and personal effectiveness
skills to maximise on the mentees’ potential and
performance. For the year under review, a total of 26
mentees were mentored by the Plantation Leadership
Committee (PLC) members. These sessions focused on
the mentees’ expectations, career goals, support required
and moving forward plans.
MET Participants with the Group MD and PLC members.
FY2020 AND FORWARD PRIORITIES
The second batch of the GAP participants will be coming
on board in August 2020. Group HR will review the
impact and effectiveness of MET programme based on
the post programme feedback.
Our focus in FY2020 is to review and design learning
needs assessment for all departments and develop the
learning interventions.
SHAPING TALENT AND EMPLOYEE DEVELOPMENT
Equipping our employees with the necessary knowledge
and skills to keep us in the forefront of the industry has
always been our priority. Our obligation to ‘Developing
Sustainable Futures’ is demonstrated in our continued
commitment to build a sustainable talent pipeline through
well-developed and dedicated assistants to meet the
present and future needs of our Upstream business,
through the Building Estate Sustainable Transformation
(BEST) programme.
BEST is a structured programme that is developed and
implemented internally, encompassing material aspects
of Upstream operations, and is divided into targeted
trainings such as Estate Assistants Structured Training
(EAST), Cadet Planters (CP), Cadet Engineers (CE), Field
Officer Structured Training (FOST) and Medical Assistant
Structured Training (MEDICAST).
Over the years, we have consistently supported our
Upstream operations in delivering a total of 888 BEST
alumni, comprising of:
181 EAST graduates
290 Cadet Planters
211 Cadet Engineers
75 FOST graduates
131 MEDICAST graduates

For the year under review, a total of 89 graduates from
Malaysia, Indonesia, Papua New Guinea and Solomon
Island received recognition from our Group MD, Mohamad
Helmy Othman Basha.
The Group MD’s address during the BEST Programme 2019
ceremony.
Embracing diversity and inclusion in the workplace has
become increasingly vital for SDP to grow. We are
committed to developing the next generation of leaders
by providing development opportunities to interested
female employees with huge potential to take on
leadership roles in Upstream Business. In conjunction
with International Women’s Day 2019, SDP has reaffirmed
its commitment to improve gender equality by launching
its first Female Manager Development Programme
(FMDP) in March 2019.
For the year under review, female employees from
Upstream estate operations were enrolled into a 1-year
programme, with the objective of providing development
opportunities for female assistants to shoulder higher
responsibilities as potential future leaders. This development
programme encompassed both technical as well as
leadership and personal effectiveness programmes with
coaching elements focused on their development needs.
Annual Report 2019 PG. 088 – 089
MANAGEMENT DISCUSSION & ANALYSIS
The FMDP’s participants with the trainer during the Project
Management Training.
The programme provided an avenue for our female
leaders to excel. Some of their accomplishments are
highlighted below:
Received Malaysian Society for Occupational Safety
and Health (MSOSH) Silver Award for Tanah Merah
Mill in August 2019. The award was given in recognition
of commendable and outstanding OSH performance 3
and achievements through stringent compliance and
practices at workplace.
Reduced pests and diseases prevention cost by planting
beneficial plant at oil palm plantation.
Improved OER of between 19.45% and 20.61% through
process modification to enhance oil recovery, FFB
handling method, flexible sterilisation programme and
engagement with estates for them to deliver good
quality bunches and crop freshness.
FY2020 AND FORWARD PRIORITIES
The BEST programme will continue to support the talent
pipeline for Upstream operations. SDP is also in collaboration
with FELDA and FELCRA to facilitate their employees’ via
participation in the EAST and Cadet Planter programmes
at Sime Darby Plantation Academy, Carey Island, as part
of our effort to share knowledge and support our industry
players. We will also be moving forward with developing
more female future leaders through the FMDP.
S U S T A I N A B L E
VAL UE CR E AT I O N
092 Sustainability At Sime Darby Plantation
094 Drawing The Line On Deforestation
100 Building Climate Change Resilience
104 Our Commitment To Human Rights And Decent Work
108 Innovating For Sustainability
SUSTAINABILIT Y
AT SIME DARBY PL ANTATION

“
The inroads we have made in
tackling the multifaceted and
challenging issues of
deforestation, traceability and
exploitation are only the
beginning. We are on a journey
and are committed to progress
our initiatives, engage with
stakeholders and lead the
industry in its sustainability
efforts for the benefit of all
parties. Our aspiration is to
continuously raise the bar for
sustainable growth.
“
SDP has long been committed to sustainable practices. bad practices that has beset the industry for too long.
We were at the forefront of the Zero Burning principles We will undermine our long term prospects if, as an
implementation decades ago. SDP was a founding member industry, we do not operate in a different way in the
of the Roundtable on Sustainable Palm Oil (RSPO). We future to conserve the remaining forests.
operate our plantations on No Deforestation, No Peat, No
Exploitation (NDPE) standards and extend those expectations At SDP, we are striving to eradicate deforestation in our
to all the companies that supply to us. It is because we supply chain and abolish it as a viable way to participate
are proud of this heritage and we are committed to in the industry. This is not an easy task. To drive a lasting
playing a leading role in shaping a sustainable future for change, we are aware that shifting practices presents real
the palm oil industry. operational challenges for third-party suppliers and
smallholders. We need to persevere because raising the
Today, there is a need to raise the bar again. Deforestation bar on sustainable growth will provide long term business
has become an urgent challenge for the planet. People advantage and secure a license to operate as well as
around the world are concerned about the rapid rate of compete in the future, for us and for our suppliers.
deforestation and the oil palm industry is an alleged Therefore, we are engaging across our extensive network
contributor. As the world’s largest producer of sustainable to develop new practical ways of accelerating progress.
palm oil, this is also a concern to us. In the context of
the global warming threat and the reality that we are
facing a narrowing window of opportunity to take a COMMITTED TO GLOBAL GOALS & LOCAL IMPACT:
decisive action, it is vital that we say no to deforestation. LEAVING NO ONE BEHIND

Our approach to sustainability embraces the Sustainable

Amidst the intensifying global debate on palm oil industry Development Goals (SDGs). We are focused on the goals
viability, our stakeholders are demanding more of us than and targets that are most relevant to our business, where
ever before. It is time to break free from the legacy of we can make the most impactful contributions.

Central Pillar
Base Goal
We have developed an articulation on how we approach
and contribute to the SDGs, in the illustration above. We
have identified two goals as the central pillar and base of
our approach. This is further supported by the primary and
secondary goals, that we contribute to indirectly.
We treat Goal 17, Partnerships for the Goals, as our
foundational goal as we believe partnerships are the base
from which we build upon. We recognise that we cannot
tackle the issues facing our industry alone, and in order
to overcome more complex challenges, we collaborate
with like-minded organisations. SDP is currently actively
involved in multiple platforms and collaborations with
stakeholders and other growers.
Goal 12, Responsible Consumption and Production, is the
central pillar of our activities because responsible production
is fundamental to everything we do. It is who we are as
a company, and it defines our aspiration to be a leader in
the best agriculture practices.
Around the central pillar, we have other goals which we
call our ‘Primary Goals’ namely Goal 2; Zero Hunger; Goal
8; Decent Work and Economic Growth; Goal 9; Industry,
Innovation and Infrastructure; Goal 13; Climate Action; and
Goal 15; Life on Land.
The remaining Goals-1, No Poverty; 3, Good Health and
Well-being; 4, Quality Education; 5, Gender Equality; 6, Clean
Water and Sanitation; 7, Affordable and Clean Energy; 10,
Reduced Inequality; 11, Sustainable Cities and Communities;
14, Life Below Water; and 16, Peace and Justice Strong
Institutions; are considered the ‘Secondary Goals’ which are
indirectly related to our operations. These are, in many cases,
covered by our compliance with the Principles and Criteria
of the RSPO, the Malaysian Sustainable Palm Oil (MSPO)
and the Indonesian Sustainable Palm Oil (ISPO) standards.
Together, they articulate our alignment and contributions
to the SDGs.
Annual Report 2019 PG. 092 – 093
Primary Goals
Secondary Goals
SUSTAINABLE VALUE CREATION
COLLABORATION WITH STAKEHOLDERS
We believe in an inclusive approach to transformation that
leads us towards forging long term partnerships. Engagement
4
is not only about initiating a dialogue. We want to go
beyond just sharing the problem; we want to work with
others to devise lasting solutions.
As the industry continues to mature and face new and
emerging risks, it is a collective responsibility for us and
our partners to evolve in our operations. Throughout 2019
we have formed new alliances and strengthened existing
collaborations to tackle some of the complex sustainability
problems we face.
CREATING VALUE THROUGH SUSTAINABLE GROWTH
At SDP, we will continue to improve the economic,
environmental and social performance of our business and
industry. We are committed to maintaining our investment
in sustainability to achieve this and share our knowledge
with peers and stakeholders in the value chain.
Regulators, governments, investors and customers are looking
at the sustainability of palm oil production, and an increasing
number of end-consumers are raising concerns about the
use of unsustainably produced palm oil in their products.
As a leading business in our industry, we recognise the
importance of delivering growth in ways that are sustainable,
and in delivering value to our shareholders while also serving
the needs of multiple stakeholders.
A sustainable industry requires successful, profitable
businesses that are also accountable for improving improving
environmental and social performance. Understanding the
impact of trends driving change in the external world and
the expectations our stakeholders is key to creating long
term value. Along with others, our ambition is to shape a
responsible future for our business, our people and our
industry.
DR AWING THE LINE
ON DEFORESTATION
DRIVING SUPPLY CHAIN TRACEABILITY
WHAT IS THE CHALLENGE?
The rapid rate of deforestation is an
urgent challenge for the world.
Satellite data shows that tropical
forests are being destroyed at a rate
of about 8 million hectares a year,
with about 81,000 hectares of
rainforest – an area the size of
Singapore – are burned around the
wo r ld e a c h d ay. D ef o r est at i o n
represents up to 20% of all CO 2
emissions, more than the entire
transportation sector, and agricultural
commodities account for 70% of
global deforestation.
Many stakeholders are concerned that
palm oil production is driving
deforestation. As the leading producer
of sustainable palm oil, we share their
concern and are working towards
No-Deforestation for our industry.
Yet, driving deforestation out of the
industry is a complex challenge. It
involves hundreds and thousands of
producers and smallholders. Supply
chains are vast and complex, company
structures are often opaque, and
visibility of problems is low. This makes
it very difficult to pinpoint issues on
the ground and prioritise the areas
of greatest risk.
WHY DOES IT MATTER TO US?
In countries where palm oil production
is concentrated, the industry has
brought prosperity and economic
growth over the past decades.
However, looking into the future, we
believe that in order to remain
relevant, the industry must change.
As a vertically integrated palm oil
company, most of the palm products
processed by our refineries originate
from SDP’s own mills. As of 2019, 63%
of our palm-based raw materials were
sourced from our own operations,
which are certified with RSPO. We
are proud as this allows us to provide
our customers with high quality, and
responsibly produced palm oil.
However, the remaining 37% of our
palm-based raw materials are sourced
from third-party producers and traders.
This is why traceability is the next
frontier in halting deforestation.
Assuring traceability across the palm
oil supply chain is a crucial first step
to identifying the existence of problems
and allowing us to take action.
 Annual Report 2019 PG. 094 – 095

WHAT IS OUR PROGRESS? Crosscheck takes a big step forward in making

traceability possible throughout our supply chain
Our commitment to halting deforestation means
It traces our supply up to the level of specific mills
that we are increasingly focused on improving
the traceability of the oils in our supply chain It links the mills to their owners in order to improve

SUSTAINABLE VALUE CREATION

that are sourced beyond our own production. To
do so, we have created two tools to enhance
traceability:
In 2016, we launched Open Palm Traceability
Dashboard to enhance the transparency of
our supply chain for customers and record
the actions taken to ensure that it remains
sustainable
In 2019, we introduced Crosscheck with
additional layers of information: an open access
tool that further adds layers of information.
This allow access to our investors, NGO partners,
customers, and any other stakeholders who
are concerned about the preservation of the
forests to access information about our supply
chain
traceability and accountability. Some of those mills
belong to SDP but many are not. For those that did
not belong to us, we identify the group owners of
each mill. This will provide new information about
the extent of network and relationships that runs
through our supply chain and beyond
It enables users to overlay the location of any mill
against maps of the surrounding landscape that
highlight risk areas i.e.: forest, peat or other protected
areas, and also the habitats of large animals;
orangutans, elephants and tigers
It is linked to satellite data so anyone can check
the information against imagery that provides more
information about happenings on the ground
4

Covering all the 14 refineries and 909 mills in our supply chain, the publication of Crosscheck was a first for the
industry with SDP, as a leading producer, putting this enhanced level of information into the public domain. The
platform has been developed to enable additional layers of data to be incorporated over time. We will work with
NGO partners and other stakeholders to make it increasingly useful as a tool for driving change in the industry.

We know we do not have all the answers; but we are determined to work with our stakeholders to raise the bar for
the industry and to draw the line on deforestation. We invite you to visit https://www.simedarbyplantation.com for
more information on our efforts.

HOW DO WE CREATE VALUE?

During the year, we joined a coalition of 10 major palm

As of December 2019, 94% of FFB supplied to our
mills are traceable to the plantation and we have
set the target to achieving 100% by 2022
oil producers and buyers to fund and pilot Radar Alerts
for Detecting Deforestation (RADD) – the first radar-based
monitoring system that will make deforestation alerts
publicly available. RADD complements our Crosscheck,
which maps out our operations on the ground, by providing
satellite data to identify where the problems might be.
RADD is being developed in collaboration with various
stakeholders in Indonesia and Malaysia, where the
preliminary results demonstrate its capability to detect
tropical deforestation several weeks earlier than optical-
based systems

For more information, please refer to pages 21 to 29 of our Sustainability Report 2019.
D R AW I N G T H E L I N E O N D E F O R E S TAT I O N
WORKING WITH SUPPLIERS
WHAT IS THE CHALLENGE?
Raising the bar across an extensive network of
suppliers that is complex, dispersed and diverse is
a significant challenge with no easy answer. Some
industry issues remain particularly difficult to tackle.
We believe that we cannot do it alone, hence, we
continue to work in collaboration with our stakeholders
in support of our aspiration for a deforestation-free
supply across the industry. For instance, it is critical
for us to obtain relevant information from our third-
party suppliers especially on the sources of their raw
materials. Such information, though challenging to
obtain consistently, will allow us to monitor more
effectively how our sustainability requirements are
being met by third-party suppliers.
Another aspect that remains a concern is operational
practices of smallholders, who operate on less than
50 hectares of land, and small growers who operate
on more than 50 hectares, but less than 500
hectares. Despite having small landholdings,
smallholders account for almost 40% of the palm
oil industry’s production. However, with inadequate
information and knowledge to effectively grow
palms and sell oil and relatively low yield from their
crop, they may resort to deforesting to increase
their production.
As of 2019, 63% of our palm-based raw materials were
sourced from our own operations, which are certified with
RSPO.
WHY DOES IT MATTER TO US?
We were founding members of the RSPO and we
operate our plantations on NDPE standards and
we extend those expectations to all the companies
that supply to us. Hence, to raise the bar on
sustainable practice with our third-party suppliers,
we need to enhance our engagement. Our goal is
to expand the base of responsible palm oil producers.
WHAT IS OUR PROGRESS?
Our aspiration is to draw the line on deforestation
and the practices that contribute to it across the
industry. Therefore, in 2019 we updated our approach
to working with suppliers through our new Draw
the Line policy and an expansion of our team. The
policy can be viewed at www.simedarbyplantation.
com/content/working-suppliers-draw-line-
deforestation-policy-statement. The policy sets out
what suppliers are expected to do in the event of
a confirmed violation of the NDPE standards:
Stop work immediately on the affected land.
Develop a plan for remediating the damaged
forest, including conducting High Carbon Stock
Approach (HCSA)/High Carbon Value (HCV)
assessments, as necessary.
Develop a programme to improve their ongoing
operational practices to meet NDPE standards.
If the supplier concerned is unwilling to make
these commitments, it is our policy then to remove
them from our supply chain. Once a supplier is no
longer in our supply chain, purchases will not
resume until our conditions above are met.
At SDP, it is our view that it is not helpful to cut
off suppliers without providing a path for
reengagement. Constructive engagement has been
proven to be critical to systematically resolving
issues and building suppliers’ capacity to improve
their practices. Also, simply suspending suppliers
may create an unintended consequence of driving
poor practice elsewhere into the system, making
it less visible and harder to act on.
 Annual Report 2019 PG. 096 – 097

Engagement is critical. With the support from Aidenvironment, we SUPPORTING SMALLHOLDERS

do not only conduct due diligence on third-party supplying mills
Working with smallholders requires a different
to identify and assess various risks, but also engage mill owners to
approach and dedicated programmes to build
share guidelines on sustainable production.
their capacity. We work actively in partnership
with governments to lift smallholders to a
We have put in place an expanded team to implement our policy
certifiable standard of sustainability, so they

SUSTAINABLE VALUE CREATION

and manage supplier engagement. As of December 2019, we have
can make their living in a way that does not
had 61 high risk mills in our supply chain that were identified through
damage the forest.
our Supplier Grievance Register. Of these, we have removed seven
from our supply chain. We are currently engaging 22 mills, and 17
We have smallholders in our supply chain across
more have begun to put in place the remedial plans as per our policy
Papua New Guinea, Thailand, Indonesia and
requirements. We have investigated and resolved 15 other cases.
Malaysia. We take a localised approach to best
meet the needs in each of the geographies
we operate in.

To assist smallholders in Malaysia with

certification, we initiated a small-scale pilot

11% with just 300 smallholders in the Northern

Region. We brought together partners to help
No longer in
supply chain 36% tackle the barriers encountered by smallholders
Under in their effort to be certified, most notably 4
financial constraints and land title registration.
investigation
SDP teams provide practical support to
smallholders for example with the registration
process. Following this intervention, SDP’s Sungai
Dingin Oil Mill is now 84% traceable to the
Breakdown of Grievances plantation with 349 registered smallholders.
25% by Status as of
December 2019 Our pilot project and partnerships have helped
Solved
cases us identify models that we will now use to
replicate and expand across more smallholder
supply base in Malaysia.

In Indonesia, since receiving our first RSPO

smallholder certification for Kredit Koperasi
Primer Anggota (KKPA) smallholders in 2014,
28% we have to date certified 50% of our smallholders
Remedial plans in the country (5 KKPA and 2 Plasma) with a
in place total of 22,506 hectares of smallholder area
and total production capacity of 404,108 MT
of FFB. Our aim is to have 100% of our
associated smallholders in Indonesia RSPO
Certified by 2022.

For more information, please refer to pages

30 to 35 of our Sustainability Report 2019.
D R AW I N G T H E L I N E O N D E F O R E S TAT I O N

MANAGING LAND AND BIODIVERSITY ECOSYSTEMS

WHAT IS THE CHALLENGE? freshwater ecosystems support a rich and diverse

array of flora and fauna ranging from the Bornean
Sustainable growth and expansion continue to
orangutans, Pygmy elephants, Sumatran Rhinoceros
present challenges to the palm oil industry. Land
and many more. Yet, every year, the species that
clearing for oil palm plantations over the last decade
roam our rainforests are under severe threat due
has led to the destruction of rainforests and
to deforestation. The rapid rate of deforestation is
degradation of peatland. The greatest impact is
an urgent challenge for the world that demands
seen in the largest producing countries – Indonesia
a meaningful response.
and Malaysia. New expansion is also threatening
ecosystems in other parts of Asia, Central and South
Major agricultural commodities are some of the
America, and Central and West Africa.
main drivers of deforestation. Reports cite the top
five contributors are cattle, soy, pulp & paper, maize
At SDP, we are working towards a deforestation-
and palm oil1. Palm oil companies have led the
free supply chain by making the alternative an
way in establishing significant and stricter
unviable way to participate in the industry.
commitments to zero deforestation.

WHY DOES IT MATTER TO US?

WHAT IS OUR PROGRESS?
Our Upstream plantation operations are spread
In 2014, we made a commitment to cease all new
across the world in some of the most diverse
development or clearing of forested land. This
ecosystems. The tropical rainforests, sea and
commitment also includes no new planting on peat
lands. Today, we are focused on increasing yields on
existing plantations and any new development will
be done in accordance with the HCSA:

We do not develop on land identified as High

Carbon Stock (HCS) areas. The HCSA requires
that such areas must be protected because
they are considered high density forests that
are intact, or young regenerating forests that,
if left alone, will regenerate themselves. We
abide by that definition in our operations.

We abide by the HCV and protect the rights

of local communities.

Our commercial operations and new

developments will be limited to shrubs and
grass land which are low carbon stock areas
and have no demonstrable conservation values.

An integrated HCV-HCSA Assessment Manual has

been developed to merge the importance of HCSA
and HCV assessments.

SDP has managed to identify 39,482.94 ha as High 1

Progress on the New York Declaration on Forests: Eliminating
Conservation Value (HCV) areas across our global Deforestation from the Production of Agricultural Commodities,
operations as of December 2019 through detailed Goal 2 Assessment Report November 2016.
periodic assessments.

These assessments are conducted for every new planting
area but have subsequently being used only on low carbon
landscapes as we enforce the HCSA. Additionally,
conservation areas within plantation operations such as
riparian zones, steep slopes and forest boundary reserves
are also required to be mapped out. As at December
2019, through periodic assessments of our plantations,
we have mapped HCV areas and Conservation Set Aside
(CSA) areas, with 39,482.94 ha tagged as HCV and 8,323
ha as CSA.
HOW DO WE CREATE VALUE?
Overall, our efforts to draw the line on deforestation aim to:
Drive change through the supply chain by increasing
traceability to better identify the whereabouts of the
problems and prioritise attention on the areas of
greatest risk and to build confidence over time
amongst our stakeholders about sustainability of the
industry
Expand the sphere of NDPE compliant companies
within the industry by becoming more deliberate in
our engagement with suppliers around instances of
non-compliance. This includes working with them
to develop plans to improve their practices to deliver
NDPE standards consistently
Annual Report 2019 PG. 098 – 099
Managing Peatland
For our existing plantations on peat, we employ best
practices to ensure the water table in the area is maintained
at 45-65 cm below soil surface to reduce decomposition
rate of dried peat. In addition, we maintain existing
vegetation within and adjacent to our oil palm plantations.
We also engage local communities to educate them on
sustainable management of peat areas in an effort to
SUSTAINABLE VALUE CREATION
prevent slash and burn activities.
We are guided by the RSPO Drainability Assessment
Procedure. We started piloting the drainability assessment
in our current peatland plantings in 2017. The assessment
procedure, officially issued in 2019, will be tested and
further refined for 12 months.
4
Support the inclusion of smallholders in the supply
chain in a sustainable way, using the learnings from
our pilot projects to get more of them on-board the
path to certification
Abide by our commitment not to develop on forest
areas as defined by the HCSA and that any existing
plantations planted on peat, will remain guided by
best management practices
BUILDING CLIMATE
CHANGE RESILIENCE
Composting of empty fruit bunches as part of our
efforts to reduce waste.
WHAT IS THE CHALLENGE?
Recent global studies consistently show
rising greenhouse gas emissions and the
rapid advancement of climate change.
According to the SDG 13 2019 progress
report issued by the Economic and Social
Council of the United Nations, in 2017,
greenhouse gas concentrations reached
globally averaged mole fractions of CO2 at
405.5 parts per million (ppm), up from
400.1 ppm in 2015, and at 146 per cent of
pre-industrial levels. Moving towards 2030
emission objectives compatible with the
2°C and 1.5°C pathways requires a peak to
be achieved as soon as possible, followed
by rapid reductions.
Another cyclical issue is that of fire and
haze. Every year during dry season in
Southeast Asia, the atmosphere surrounding
Indonesia, Singapore and Malaysia is
polluted with ash, dust and smoke. Coupled
with the El Niño phenomenon this year,
and overall hotter temperatures, South
Kalimantan province experienced four times
more peat fires compared to other
provinces. ‘Open burning’ practised by local
communities also led to peat fires within
and around estate boundaries. As a result,
local communities’ health and natural
ecosystems are also adversely affected.
WHY DOES IT MATTER TO US?
Global growth in food demand, has
prompted increased agricultural activity.
While this has helped feed billions of people
and contribute to socio-economic progress,
it has also come at a cost to the stability
of the planet. While palm oil is so widely
used due to its versatility, we have to work
to reduce the industry’s carbon footprint.
The complex value chain and the inherent
risks of oil palm plantations pose many
challenges to our operations, including in
carbon inventory, mapping, operational
and supply chain emissions measuring, as
wel l as em i ssi o ns m o ni t o r i ng and
management. Identifying, the primary
sources of emissions, including from land
use change (LUC), is also one of our biggest
challenges, in terms of investments,
coverage and reliability of data.
By increasing the use of renewable energy
and putting in place more rigorous
sustainability standards and commitments,
the palm oil industry aims to reduce its
carbon footprint and thereby its impact
on global warming trends.
 Annual Report 2019 PG. 100 – 101

WHAT IS OUR PROGRESS? Renewable energy

We are making efforts to minimise our
environmental impact through restoration
of degraded land, protection of habitats,
and reduction of emissions, as well as
through our efforts to drive deforestation
out of the supply chain.
There has been a large reduction of renewable energy usage since 2015.
This is largely due to lower FFB processing. Most of the energy used by
palm oil boilers comes from renewable sources such as biomass (palm
kernel shell and fibre). This contributes to 84% of SDP’s overall energy
requirements. This initiative has managed to avoid approximately 1.8 million
tCO2-e had diesel been used instead.

SUSTAINABLE VALUE CREATION

In 2012, we set relative targets for reducing
emissions; 40% reduction in carbon
emissions intensity (tonnes of CO2-e per
metric tonne of CPO produced) by 2020
against a 2009 baseline for our Upstream
operations. Following review of the
progress in meeting our target, together
with input from relevant stakeholders
and our sustainability advisor, we decided
to extend the target date to 2030- a
more realistic and achievable timeframe
to deliver our goal.
We have made significant investments to
accelerate reduction targets through
improved infrastructure in climate change
adaptation and mitigation efforts. Our
operations are actively exploring energy
efficient alternatives such as transition from
diesel to natural gas for energy production
in palm oil mill boilers. However, this
remains highly dependent on the
accessibility and availability of alternative
solutions in the areas where we operate.
Similarly, the biogas produced during the degradation of Palm Oil Mill
Effluent (POME) is used to generate power that is fed to the grid, or flared,
to ensure that methane is not released into the atmosphere. The installation
of biogas plants at our palm oil mills contributes significantly to our carbon
reduction target. On top of that, we also compost empty fruit bunches (EFB),
POME as well as boiler ash and use the end product for manuring as part
of our efforts to reduce inorganic fertiliser usage hence achieving zero waste.
To date, 13% of our mills are equipped with methane capture plants. As
of December 2019, we achieved an emissions intensity reduction of 13.7%
delivered by these plants.
Fire & Haze management
Since 1985, SDP has introduced a Zero Burning Policy. In 2015, we began 4
proactively monitoring and managing fire and haze issues within our
operating areas through our Hotspot Alert Dashboard. It provides near
real-time fire hotspot monitoring with data retrieved from the Fire
Information for Resource Management System (FIRMS) of the United
States National Aeronautics and Space Administration (NASA) and ASEAN
Specialised Meteorological Centre (ASMC) websites. These platforms are
linked to SDP’s own geospatial programme, based on Google Earth maps.
In 2015 we announced our commitment to respond to fires that occur
within 5 km beyond our boundaries.

NUMBER OF FIRE ALERTS DETECTED WITHIN SDP’S OPERATIONS AND COMMITMENT AREA

1,400
Number of fire alerts detected

1,200

1,000

800

600

400

200

0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

FY2018 FY2019
B U I L D I N G C L I M AT E C H A N G E R E S I L I E N C E

While forest fires are cyclical, typically occurring every year, most of the potential fires or hotspots in 2019 were detected
during the month of August and September, unlike in 2018 where the high occurrences were in July and August.

From January to December 2019, a total of 2,445 hotspots were detected within our field of operations and commitment
areas. They were verified by satellites within our operating fields and commitment areas. Upon verification, 255 fires,
occurred within our field of operations. Approximately 90% of the remaining fire alerts were verified to be within our
5km radius commitment area. Please refer to our Sustainability Report 2019 for more information on the causes of fire.

Number of confirmed fires by country in 2019

MALAYSIA
Within field: 1 case
Outside field: 12 cases

4 13

64
2,364
LIBERIA
Within field: 3 cases
Outside field: 1 case

INDONESIA PNG & SI

Within field: 191 cases Within field: 60 cases
Outside field: 2,173 cases Outside field: 4 cases

Our Hotspot Alert Dashboard can also be accessed via our corporate website:
http://www.simedarbyplantation.com/sustainability/hotspot-dashboard
Note: *Outside field refers = 5km radius outside operating fields

Since 2011, we have established the Desa Mandiri Cegah Api (DMCA) or Community-based Fire Prevention Programme
in our effort to manage and support the management of fires within the vicinity of our estates. The programme has
resulted in a myriad of tangible positive impacts to the environment, with notable declines in the number of fire
occurrences, improvements communities’ livelihoods, increased their capacity through education and awareness, as
well as maintaining good relationships between the Company, surrounding communities and civil society groups.

Our partnership with the local communities is an integral part of our Community-based Fire Prevention Programme
and Zero Burning initiative.
 Annual Report 2019 PG. 102 – 103

HOW DO WE CREATE VALUE?

Our initiatives to build climate change resilience encompass:

SUSTAINABLE VALUE CREATION

Responding to fire and haze occurrences within and Actively pursuing the 40% emissions reduction target
up to 5km radius beyond our boundaries, where we from our operations by 2030, through the
work with local communities on the prevention and establishment of biogas plants at 50% of our current
management of fires mills in Indonesia and Malaysia

+
4

Expanding alternative energy infrastructure, e.g., four

Exploring power generation technologies that can
new biogas plants are being constructed in Malaysia
potentially generate cheaper power and steam for
and more will be constructed in strategic locations
palm oil mills as well as managing waste
worldwide over the next five years

Using our land that is unsuitable for oil palm planting

to generate power via solar PV technology, which
could potentially offset our carbon emissions
OUR COMMITMENT TO
HUMAN RIGHTS AND DECENT
WHAT IS THE CHALLENGE?
About 86% of the world’s palm oil is
currently grown in Indonesia or
Malaysia, where 4.5 million people
earn their living from the industry. In
Indonesia alone, as many as 25 million
people depend indirectly on palm oil
production for their livelihoods.
This includes smallholders in both
Indonesia and Malaysia that produce
40% of the world’s palm oil.
As a labour intensive industry, reports
continue to reveal issues of poor
working conditions experienced by an
alarming number of workers in the
agriculture sector. Palm oil particularly,
has been no stranger to this criticism.
Highly complex supply chains, poor
economic conditions, a lack of legal
enforcement and inadequate regulatory
support and action have presented
challenges in ending exploitation in
the industry.
There are strong indications that the
issues surrounding forced labour in
palm oil estates may be largely
attributed to weak systems and
enforcement, geographical locations
that present limited opportunities and
employment systems related to casual
and undocumented workers.
WORK
WHY DOES IT MATTER TO US?
Due to our large global footprint, we
are faced with a myriad of human
rights challenges that are at times
systemic but unique to the countries
we operate in. For instance, our
operations in Malaysia alone employ
approximately 24,814 migrant workers
which represent nearly 63% of our
workers on the ground in Malaysia.
We also continue to be challenged
with cross border policy gaps and
deeply rooted socio-economic drivers
of migration.
We support the SDG’s for decent work
and economic growth. Therefore, our
ambition to raise the bar of sustainable
growth includes our commitment to
human rights and providing decent
work for our employees.
WHAT IS OUR PROGRESS?
Our complex supply chains however,
provide us with opportunities to work
on identifying areas where collective
action can create a positive change
to the industry. We believe that
innovative partnerships can help palm
oil to drive economic growth and
provide decent work as a means to
end exploitation in the supply chain.
 Annual Report 2019 PG. 104 – 105

Respecting Human Rights

In 2015, we took a hard look at gaps in our operational

practice against the UN Guiding Principles on Business
and Human Rights. We undertook a Human Rights Due
Diligence exercise to identify salient issues in our operations.
Through a human rights heat map, we prioritised our
efforts in areas where salient human rights risks exist and

SUSTAINABLE VALUE CREATION

have the most severe impact. We started reporting our
progress in eradicating exploitation in 2016 through the
UK Modern Slavery Act Statement and to date we have
issued four statements. Visit our website to see our UK
Modern Slavery Act Statement 2019.

Responsible Recruitment

We practise direct hiring method in our operations to

ensure we have better oversight and management. Our
dedicated Workforce Management Teams visit countries
of origin to promote recruitment efforts, conduct interviews
Our Workforce Management Team engaging with workers during
and select workers. Following our human rights due
recruitment in Indonesia.
diligence programme, our approach focuses on salient
issues surrounding key indicators of forced labour in our
operations in Malaysia. We monitor this through ongoing 4
engagements with our agents as well as our established
grievance mechanisms that help us respond to risks in
our supply chain.

Our Responsible Recruitment Programme outlines our best practices as follows:

1. We do not charge recruitment fees

Recruitment is conducted directly by our own teams in countries of origin
We cover all statutory costs including return transport from country of origin
We work with agents and their sub-agents to monitor risks of debt bondage

2. We ensure transparent working terms

Briefing materials are translated into local languages during recruitment to
ensure workers understand and accept terms & conditions of work voluntarily
All written contracts are translated into native languages and explained to
workers

3. We do not retain personal documents

Workers are reminded to always keep their own personal documents
All our operations do not retain passports unless explicitly requested to by
workers, in which written consent in their respective native language is required
Workers right to freedom of movement is never be compromised at our
operations
OUR COMMITMENT TO HUMAN RIGHTS AND DECENT WORK

Grievance Mechanism In 2019, nine accidents resulted in occupational permanent

disability were recorded in Papua New Guinea (4), Malaysia
We established a worker’s helpline that is designed to
(3), Indonesia (1), and Sime Darby Oils (1). They were due
be accessible. In collaboration with Nestlé, the Workers’
to machinery (4), harvesting (3) and working near a tractor
Voice (“Suara Kami”) helpline is a pioneer in the oil palm
(2).
industry in providing a 24/7 helpline in multiple languages
that is accessible to workers via phone call, text and
The Group is determined to continue its mitigation efforts
Facebook Messenger. All calls and texts to the helpline
such as safety programmes to keep our workers safe and
are toll-free.
healthy in the workplace. The high number of fatalities and
permanent injuries has been a sober reminder that we
Workers’ Voice is run by ELEVATE, the company behind
cannot rest on our laurels to achieve zero harm. These
the renowned ‘Amada Kother’ garment industry helpline
serious accidents are particularly worrying especially when
in Bangladesh, and an electronics and manufacturing
we have consistently managed to reduce the overall number
industry helpline in Malaysia. Workers’ Voice for the palm
of accidents year on year. Our lost time injury frequency
oil industry had to be adapted to meet the demographic
rate shows that the total number of accidents has been
needs of our workers as well as the geographical spread
reduced by 34% since 2015.
and remote locations of the work sites. In 2019, we piloted
the helpline in one of our six regions – Central East region.
More details on our safety and health data can be found
More information on the pilot programme is available in
in our Sustainability Report 2019.
our Sustainability Report 2019.

Empowering Community for Inclusive Development

A Safe and Healthy Workplace
We actively engage local community leaders and members
We recognise our inherent responsibility to strengthen the
prior to embarking on any development by obtaining
safety performance of our operations. Our continued efforts
their Free, Prior and Informed Consent (FPIC). We are
are in support of our contribution to the global goals of
guided at all times by effective conflict resolution
good health and well-being. The key to our delivery has
frameworks through independent social impact assessments
been to ensure that our people have the necessary technical
and periodic stakeholder consultations before and during
and educational support in occupational safety and health.
our operations.

We regret to report that there were six (6) occupational

fatalities in 2019 and a Fatality Rate (FAR) of 2.8 (2.8 fatalities
for every 100 million hours worked). The fatalities were all
work related – transporting/travelling using a tractor (4),
machinery (1) and harvesting (1). The accidents occurred in
Papua New Guinea (4), Malaysia (1) and Liberia (1).
OCCUPATIONAL FATALITIES & FATALITY RATE
SDP Fatalities FAR (Per 100m Hours Worked)
8 8
We are committed to supporting land cultivation that
proactively promotes benefit sharing and enhances local
food security. In these locations we support and sometimes
take on the role of building and rebuilding infrastructure
and facilities such as roads, community halls and health
centres, as well as facilities that help improve or make
basic needs such as clean water, sanitation and education
accessible for everyone. We also support the livelihoods
of local communities through job opportunities, economic
growth and alternative livelihood trainings through our
operations.

Additionally, together with the Sime Darby Foundation,

6 6 we supported various Corporate Responsibility programmes
amounting to more than RM127 million to date. These
5
include initiatives on environmental stewardship, community
health and well-being, access to universal education as
3.5 3.4 well as volunteerism programmes involving our employees.
2.5
2.8

2.1

CY2015 CY2016 CY2017 CY2018 CY2019


Pre-competitive collaborations
In 2018, the Decent Rural Living Initiative was formed as
a unique pre-competitive collaboration with five large
palm oil producers – Cargill Incorporated, Golden Agri-
Resources Ltd., Musim Mas Holdings Pte. Ltd., Wilmar
International Limited and SDP, it was convened by
international sustainability non-profit, Forum for the Future.
The aim of this initiative is to tackle labour rights challenges
in the palm oil industry in Indonesia, through the
development of a much needed improvement in working
conditions.
HOW DO WE CREATE VALUE?
Overall, our initiatives to support human rights and decent work resilience include the following:
Taking proactive and tangible steps to improve the
welfare and well-being of workers and uphold the
fundamental principles of Human Rights
Building and rebuilding infrastructure and facilities
to improve access to basic needs such as clean
water, sanitation and education
Annual Report 2019 PG. 106 – 107
Our collective vision is to identify and scale grower-driven
solutions that enable a palm oil industry that provides
employment in a safe, fair and decent manner in rural
Indonesia. The initiative is now entering its implementation
phase and is expected to receive support from other
SUSTAINABLE VALUE CREATION
companies, experts and NGOs who will be invited to assist
in empowering and enhancing the lives of communities.
Supporting land cultivation that proactively promotes
benefit sharing and enhances local food security
Supporting livelihoods of local communities through
job opportunities, economic growth and alternative
livelihood training
INNOVATING FOR
SUSTAINABILIT Y
WHAT IS THE CHALLENGE?
With the world population increasing,
there is expected to be a food gap
of approximately 56%. Projections from
the World Resources Institute (WRI)
show that to close this gap, with
agricultural practice remaining the
same – we would need to expand a
further 593 million hectares of land.
This expansion will lead to a global
increase in emissions of about 11
gigatons of CO2 equivalent.
The continuing challenge for
agricultural industries is to invest in
frontier research and innovate to
produce high-yielding agricultural
inputs, double yields, and modernise
to increase productivity. All of this
must be achieved without clearing or
converting forest land.
WHY DOES IT MATTER TO US
Yield is core to our growth and
essential to creating a deforestation-
free industry. At SDP, we are aware
that sustainable growth in the palm
oil industry cannot be achieved
through additional land expansion.
Therefore, we have been working on
breakthrough innovation to increase
yield. Yield innovation enables our
industry to produce more oil without
clearing forested land hence promoting
sustainable growth.
Moreover, with a glut in the edible oil
market and low crude oil prices,
additional land expansion and
production capacity will be
counterproductive to the industry. We
urgently need a steady and consistent
growth in yield, to meet the world’s
growing demand.
WHAT IS OUR PROGRESS?
Raising the bar on yield
At SDP, we have been working on
breakthrough innovations to increase
yield. Oil palm is already a very efficient
crop, capable of producing 10 times
more oil per hectare than other leading
oilseed crops. Through genetic analysis
and selection, we have been able to
identify outstanding individual oil palms
for plant breeding purposes that can
further improve yield per hectare. This
will help us to continue meeting the
world’s demand for oils and fats
without increasing our land size.
GenomeSelectTM
Our GenomeSelectTM oil palm planting
material is another major step forward
in our sustainability journey because
it allows us to produce more oil with
our existing land. This is in line with
our sustainability commitment to
minimise green and brown field
expansions. We have begun planting
GenomeSelect TM commercially in
selected operations in Malaysia. This
year, we saw the first harvest of
GenomeSelect TM on a 100-hectare
land. Over time these seeds will deliver
considerably higher yields from our
plantations.

Currently in Malaysia we have over 2,300 hectares replanted
with GenomeSelectTM material. The plantings are equipped
with geotagging technology to help us monitor environment
interaction – data for us to further optimise our breeding
materials to withstand climate challenges over the next 30
years. In 2017, the project received recognition from the
Edison Award under the Energy and Sustainability category.
Features of GenomeSelectTM
GenomeSelectTM is able to deliver oil yield improvements
of up to 15% above our previous best seeds
Under optimal growth conditions, the potential yield
from the GenomeSelectTM palms can go above 11 MT
oil/ha, resulting in average yields above 6.1 MT oil/ha
across all environments in our Malaysian plantations,
compared to 5.3 MT from our Calix 600 yields.
In addition to the GenomeSelectTM successful, our Research
& Development (R&D) team will continue to focus on the
three key strategies – yield and productivity improvement;
increase in revenue streams; and the development of
sustainable practices. In addition, the team will focus
more on developing new technologies and products for
Downstream business and catalysing new growth through
diversification.
Innovating for operational excellence:
In February 2018, SDP embarked on the second instalment
of our five-year Operational Excellence and Innovation
Business Management Strategy (OEIBMS 2.0), which is
the blueprint for achieving RM550 million in cumulative
Operational Excellence benefits by 2022. The benefits
consist of hard benefits derived from cost savings and
improved revenue generation, and soft benefits derived
from cost avoidance and sustainability indicators.
Central to the implementation OEIBMS 2.0 is a holistic
approach that not only incorporates a vision and measurable
target to achieve higher operational excellence and
productivity, but also capacity building and skills as well
as people transformation.
OEIBMS 2.0 Implementation
Lagging target:
RM550 million in cumulative benefits by 2022
Leading targets:
80% Operating Unit participation by 2022
452 business leaders and champions developed by 2022
70 internally developed Black Belts by 2022
Annual Report 2019 PG. 108 – 109
Impact created from the project is as follows:
Actual To-date
 Items (Dec 2019)
Total Number of Projects 3,208
Operating Unit Participation 74%
SUSTAINABLE VALUE CREATION
Number of Champions 240
Number of Internally Developed 56
Black Belts
Number of Practitioners Trained 1,550
The OEIBMS 2.0 and its operationalisation is strengthened
by four key programmes namely War on Waste (WOW),
Lean Palm & Value Chain Enterprise, Clone Protocol, and
our Universal Learning programme.
1. War on Waste Programme (WOW): SDP’s WOW was
introduced in 2015 to enable and empower each employee
to create bottom line impact through intensification of
waste elimination efforts using the Kaizen methodology. 4
In the fourth edition of WOW in 2019 we introduced the
“Clone Protocol” framework – a platform to replicate our
successful projects throughout the business to accelerate
growth. The framework serves as a replication platform
that highlights hard benefits, high impact projects that
impact key business strategies and objectives of each
business stream – (Downstream & Upstream).
2. Clone Protocol is built onto the pre-existing analysis of
each business stream, Upstream and Downstream, to
further enhance key projects that will help improve the
business. Projects must be derived from the established
Clone Protocol Catalogue for each business stream
(Downstream & Upstream).
3. Lean Palm and Value Chain Enterprise: Focused on
expanding the coverage of Lean Six Sigma (LSS) application
across our value chains, Lean Palm and Value Chain
Enterprise drives organic growth through operational
excellence. It ensures innovative enhancements to our
products through improvements to maximise profit margins.
This programme was rolled out in December 2017 and is
due for completion in 2022.
4. Universal learning: In keeping with the fast changing
dynamics of learning, we introduced digital versions of our
Operational Excellence resources in 2015. This way, our
employees will have access to a variety of e-learning
resources to supplement training workshops. This approach
allows us to train a wider base of employees across our
operations.
I N N O VAT I N G F O R S U S TA I N A B I L I T Y

Managing Quality

In pursuing our goals, we are aware that certification alone is not enough. On that note we combined our field assessments into
one programme called the Structured Crop Recovery Assessment (SCRA Q+) in our endeavour to develop and implement new,
innovative approaches.

SCRA Q+ aims to further realise our commitment to achieving high yield and OER by increasing efficiency in harvesting and
evacuation of crops, maximising crop quality, reducing oil losses and ensuring mill efficiency. The programme comprises three
assessments, Structured Crop Recovery Assessment (SCRA) for palm oil estates, and Structured Oil Recovery Assessment (SORA)
for palm oil mills and Quality & Hygiene Assessments (QHA) for rubber.

SCRA supports yield maximisation by addressing the yield loss factor (efficiency of crop harvesting and evacuation to the mill). The
assessment also includes crop quality, which directly affects OER. A SCRA scoring of more than good harvesting and recovery culture
in operating units.

SORA supports the realisation of increased OER by reducing oil loss and ensuring mill efficiency. In addressing the effectiveness
of mill processes, this assessment covers 10 areas including leakages, housekeeping, palm product quality, laboratories, oil and
kernel losses, as well as safety and security.

01 02 03
Empty fertiliser bags are At the factory, the fertiliser The shredded bags are
kept in the estate’s store, bags are shredded into further melted into a soft
waiting to be recycled finer pieces black substance

04 05
The melted plactic is The plastic resins
cooled off under running produced will undergo an
water to harden it injection moulding process
to create the final product

Project Metamorphosis upcycles discarded fertiliser bags into plastic chairs.

 Annual Report 2019 PG. 110 – 111

Effective Resource Management Environmental Mainstreaming Tools Deployed in

Malaysia
Effluent management
In compliance with effluent discharge standards
We maintain robust management systems to regulated by the Malaysian Department of Environment

SUSTAINABLE VALUE CREATION

ensure all our mills are in compliance with
national environmental standards. All our mills
and refinery operations are fitted with Palm
Oil Mill Effluent Treatment Systems (POMETS)
and Industrial Effluent Treatment Systems
(IETS) to support management of waste
We invested in technically competent
employees to manage effluent and the
treatment systems such as Certified Professionals
in Palm Oil Mill Effluent (CePPOME), and
Certified Environmental Professionals in the
Operation of Industrial Effluent Treatment
Systems (CePIETSO – PCP/BP, etc)
(DOE)
Sabah Region complies with the Biochemical Oxygen
Demand (BOD) limit of 20 ppm for water discharge
Sarawak Region complies with the BOD limit of 50
ppm for water discharge and land application
Northern, Central East and Central West Regions
comply with relevant BOD levels, which vary from
5,000 ppm for land application to 50 ppm for water
discharge
Southern Region is moving towards compliance
with a BOD limit of 20 ppm for water discharge
and 100 ppm for land application
4

Effluent management in all our mill operations are constantly monitored by the respective mills and any non-
conformance will be addressed immediately and corrected by the mill management.

Water management

The current palm oil benchmark for water consumption is approximately 1.4m3 per tonne of FFB produced. In 2017,
we began monitoring water intensity at our mills. Whilst our mill design ratio is 1:1 (1 MT FFB: 1m3 water) an approximate
0.2 to 0.4m3 of water is used for processing other than FFB (approximately 20%).

Water intensity
Palm Oil Mills Annual reduction required to achieve target by 2023
2019 2023

Total Upstream 1.40 1.00 6%

Plastic waste management

In 2017, we conducted an inventory of single-use plastic waste at our Head Office and recorded 325,830 pieces of
single use plastic which is equivalent to 4,522.12 kg in a year. Meanwhile, in our estate operations, we collaborated
with a plasticware manufacturer, to develop the technology to upcycle discarded fertiliser bags into plastic chairs.
This innovative discovery will not only reduce the number of discarded fertiliser plastic bags but also support the
waste management strategy for our Upstream operations.

Known as the Metamorphosis project, it was awarded the Best Innovation in Sustainability, EUROPA AWARDS 2019.
We have piloted the project in two estates in the Southern Region since 2019 and have collected 8,750kg of bags
and produced 35 chairs.
I N N O VAT I N G F O R S U S TA I N A B I L I T Y

HOW DO WE CREATE VALUE?

Overall, our initiatives to drive forward innovation for sustainability encompass:

Continuing research and development on our high- Accelerating our Replanting Programme – to improve
yielding planting materials to develop better seed- our average palm age from about 13 years in 2017
production palms without genetic modifications to approximately 12 years by 2023

Investing in ideas and solutions to reduce water

Addressing issues concerning air, water and soil
intensity to a target of 1.0m3 per tonne of FFB by
pollution by implementing sustainable management
2023, translated into a cumulative reduction of
systems at the mills
10-40% over five years

FFB

Just as we are committed to innovating to improve

our sustainability, productivity, and product quality,
Continuously improving our Malaysian operations,
we strive to raise the bar on our operational
with a target of maintaining 0.65 tonnes of effluent
performance. Doing so effectively enables us to
per FFB processed
consistently improve our resource management and
impact as well as people development

Other notable awards

Opexcon 2019: PT Sajang Heulang’s Mustika Factory and PT Ladangrumpun Suburabadi Angsana
Factory won three awards between them for Operational Excellence

Asia Pacific Quality Organisation (APQO): Gold Medal won by PT Sime Darby Oils Pulau Laut
(SDOPLR) and Rhimau Selatan for Quality & The Best for Impact on Transformation Award for
Sime Darby Oils

Malaysia Productivity Corporation (MPC): Three Gold Awards won by Seri Pulai estate for team
excellence. The team showcased their innovation, Field Machine 3 – a semi mechanised fertiliser
application machine capable of reducing manuring cost per hectare
 Annual Report 2019 PG. 112 – 113

SUSTAINABLE VALUE CREATION

4

The Zero Burning Policy has been the hallmark of Sime Darby Plantation’s (SDP) global business operations for over three (3)
decades. SDP adheres strictly to this policy and will continue to do so because we believe it is the right thing to do for our
planet.
L E A D E R S H I P
116 Board Of Directors’ Profile
128 Our Leadership Team
130 Profile Of Leadership Team
BOARD OF DIREC TORS ’
PROFILE
OUR COMMITMENT
Governance is not just about adherence to a set of recommendations. It is a way of doing business and is at the
heart of everything we do.

TAN SRI DATO’ A. GHANI

OTHMAN
Chairman,
Non-Independent Non-Executive Director

NATIONALITY  Malaysian AGE  73 GENDER  Male

DATE OF APPOINTMENT:
1 July 2013

AREAS OF EXPERTISE:
Economics

RELEVANT EXPERIENCE:
Began his career with the Faculty of Economics, University of Malaya and has held various positions in the
Malaysian Government including Deputy Minister of Energy, Telecommunications and Post, Deputy Minister
of Finance, Minister of Youth and Sports and Chief Minister of Johor. Former Chairman of Sime Darby Berhad,
Sime Darby Property Berhad and Johor Corporation. Current member of the Board of Trustees of the World
Islamic Economic Forum (WIEF) Foundation and the Board of Trustee of Malaysian Institute of Economic
Research.

DIRECTORSHIP OF OTHER LISTED ISSUERS/PUBLIC COMPANIES:

Listed Issuers:
None

Public Companies:
None
 Annual Report 2019 PG. 116 – 117

TAN SRI DATUK

DR YUSOF BASIRAN
Independent Non-Executive Director

LEADERSHIP
5

NATIONALITY  Malaysian AGE  71 GENDER  Male

DATE OF APPOINTMENT:
31 December 2010 (Designated as Independent Non-Executive Director of Sime Darby Plantation Berhad
on 30 November 2017)

AREAS OF EXPERTISE:
Plantation and Research & Development

RELEVANT EXPERIENCE:
Former Chief Executive Officer of the Malaysian Palm Oil Council and Director-General of the Malaysian
Palm Oil Board and Palm Oil Research Institute of Malaysia. Past President of the Academy of Sciences
Malaysia. Former Director of Bank Negara Malaysia and Federal Land Development Authority (FELDA). Current
Executive Director of Council of Palm Oil Producing Countries. Senior Fellow of the Academy of Sciences
Malaysia and Fellow of the Malaysian Oil Scientists’ and Technologists’ Association and the Incorporated
Society of Planters.

DIRECTORSHIP OF OTHER LISTED ISSUERS/PUBLIC COMPANIES:

Listed Issuers:
CB Industrial Product Holding Berhad

Public Companies:
None

MEMBERSHIP OF BOARD COMMITTEE(S):

NRC Nomination & Remuneration Committee (Chairman) BTC   Board Tender Committee (Chairman)
BOARD OF DIREC TORS’ PROFILE

MUHAMMAD LUTFI
Independent Non-Executive Director

NATIONALITY  Indonesian AGE  50 GENDER  Male

DATE OF APPOINTMENT:
24 November 2015 (Designated as Independent Non-Executive Director of Sime Darby Plantation Berhad
on 30 November 2017)

AREAS OF EXPERTISE:
Trading, Oil & Gas and Power Utilities

RELEVANT EXPERIENCE:
Former President Director and Chief Executive Officer of Mahaka Group of Companies. Former National
Chairman of the Indonesia Young Entrepreneurs Association (HIPMI) and Chairman of the Indonesia
Coordinating Board of Investment. Former Ambassador Extraordinary and Plenipotentiary to Japan and the
Federated States of Micronesia and Minister of Trade of the Republic of Indonesia. Current President
Commissioner of PT Medco Energi International Tbk.

DIRECTORSHIP OF OTHER LISTED ISSUERS/PUBLIC COMPANIES:

Listed Issuers:
None

Public Companies:
None

MEMBERSHIP OF BOARD COMMITTEE(S):

SC Sustainability Committee
 Annual Report 2019 PG. 118 – 119

DATUK ZAITON MOHD

HASSAN
Senior Independent Non-Executive
Director

LEADERSHIP
NATIONALITY  Malaysian AGE  63 GENDER  Female 5

DATE OF APPOINTMENT:
24 February 2016 (Appointed as Senior Independent Non-Executive Director of Sime Darby Plantation Berhad
on 14 July 2017)

AREAS OF EXPERTISE:
Banking and Finance

RELEVANT EXPERIENCE:
Has working experience in PricewaterhouseCoopers, Bank Pembangunan (M) Bhd and Bapema Corporation
Sdn Bhd. Has served 12 years with Maybank in various senior positions including that of General Manager,
Group Strategic Planning. Former President/Executive Director of Malaysian Rating Corporation Berhad.
Current Chairman of the Private Pension Administrator Malaysia and Chief Executive Officer of the Malaysia
Professional Accountancy Centre. Fellow and Council Member of the Association of Chartered Certified
Accountants and member of the Malaysian Institute of Accountants, Malaysian Institute of Certified Public
Accountants, International Federation of Accountants (IFAC) Professional Accountants in Business (PAIB)
Committee and Vice Chairman of FIDE Forum.

DIRECTORSHIP OF OTHER LISTED ISSUERS/PUBLIC COMPANIES:

Listed Issuers:
None

Public Companies:
Bank Pembangunan Malaysia Berhad (Chairman)

MEMBERSHIP OF BOARD COMMITTEE(S):

GAC Governance & Audit Committee (Chairman) NRC   Nomination & Remuneration Committee

RMC Risk Management Committee

BOARD OF DIREC TORS’ PROFILE

DATO’ MOHD NIZAM

ZAINORDIN
Non-Independent Non-Executive Director

NATIONALITY  Malaysian AGE  56 GENDER  Male

DATE OF APPOINTMENT:
14 July 2017

AREAS OF EXPERTISE:
Finance and Investment Management

RELEVANT EXPERIENCE:
Over 20 years of experience in the finance sector. Held various senior positions in Permodalan Nasional
Berhad (PNB) including Senior Vice President of Finance and Investment Processing Division, Chief Financial
Officer (CFO) and Group CFO. Presently, the Deputy President and Group CFO of PNB. Holds an Executive
Masters in Business Administration. A Certified Financial Planner since 2002. Fellow of the Association of
Chartered Certified Accountants and member of the Malaysian Institute of Accountants.

DIRECTORSHIP OF OTHER LISTED ISSUERS/PUBLIC COMPANIES:

Listed Issuers:
None

Public Companies:
Pengurusan Pelaburan ASN Berhad
Securities Industry Dispute Resolution Center

MEMBERSHIP OF BOARD COMMITTEE(S):

GAC Governance & Audit Committee NRC   Nomination & Remuneration Committee
 Annual Report 2019 PG. 120 – 121

DATO’ HENRY SACKVILLE

BARLOW
Independent Non-Executive Director

LEADERSHIP
NATIONALITY  British AGE  75 GENDER  Male 5

DATE OF APPOINTMENT:
5 April 2019

AREAS OF EXPERTISE:
Finance and Plantation

RELEVANT EXPERIENCE:
Over 35 years of experience in the plantation industry including Finance Director of Barlow Boustead Estates
Agency Sdn Bhd and Joint Managing Director of Highlands & Lowlands Berhad. Former Board member of
Sime Darby Berhad and HSBC Bank Malaysia Berhad. Former Council Member of the Incorporated Society
of Planters and Joint Chairman of the Roundtable on Sustainable Palm Oil (RSPO) Biodiversity Technical
Committee. Currently Joint Chair of the Grievance Committee of the RSPO, Fellow of the Institute of
Chartered Accountants in England and Wales and Honorary Treasurer of the Malaysian Branch of the Royal
Asiatic Society.

DIRECTORSHIP OF OTHER LISTED ISSUERS/PUBLIC COMPANIES:

Listed Issuers:
None

Public Companies:
None

MEMBERSHIP OF BOARD COMMITTEE(S):

SC Sustainability Committee (Chairman) GAC   Governance & Audit Committee

NRC Nomination & Remuneration Committee

BOARD OF DIREC TORS’ PROFILE

TUNKU ALIZAKRI RAJA

MUHAMMAD ALIAS
Non-Independent Non-Executive Director

NATIONALITY  Malaysian AGE  50 GENDER  Male

DATE OF APPOINTMENT:
1 January 2020

AREAS OF EXPERTISE:
Investment Management and Strategic Management

RELEVANT EXPERIENCE:
Former Chief Marketing Officer and Chief Operating Officer of the Iclif Leadership and Governance Centre.
Former Director of Strategic Management at Bank Negara Malaysia, Director and Head of Strategy and
Corporate Affairs at DiGi Telecommunications Berhad, and Vice-President and Head of Group Strategic
Planning at Malayan Banking Berhad. Currently Chief Executive Officer of the Employees Provident Fund.

DIRECTORSHIP OF OTHER LISTED ISSUERS/PUBLIC COMPANIES:

Listed Issuers:
Astro Malaysia Holdings Berhad

Public Companies:
None

MEMBERSHIP OF BOARD COMMITTEE(S):

SC Sustainability Committee
 Annual Report 2019 PG. 122 – 123

ZAINAL ABIDIN JAMAL

Non-Independent Non-Executive Director

LEADERSHIP
NATIONALITY  Malaysian AGE  66 GENDER  Male 5

DATE OF APPOINTMENT:
14 July 2017

AREAS OF EXPERTISE:
Legal, Business and Regulatory Affairs

RELEVANT EXPERIENCE:
Enrolled as an Advocate and Solicitor of the Supreme Court of Singapore and the High Court of Malaya.
Served as a First Class Magistrate in Brunei Darussalam and was Company Secretary of Harrisons Malaysian
Plantations Berhad. Founder and Senior Partner of Zainal Abidin & Co. Presently the Chairman of Global
Humanitarian Fund, a company limited by guarantee in the United Kingdom. Appointed as a member of
the Asian International Arbitration Centre Advisory Council since July 2019. A member of Shariah Advisory
Council, Bank Negara Malaysia from 2019 to 2022.

DIRECTORSHIP OF OTHER LISTED ISSUERS/PUBLIC COMPANIES:

Listed Issuers:
Chemical Company of Malaysia Berhad

Public Companies:
Maybank Islamic Berhad (Chairman)
Padu Corporation (Limited by Guarantee) (Chairman)

MEMBERSHIP OF BOARD COMMITTEE(S):

RMC Risk Management Committee (Chairman) SC   Sustainability Committee

BTC Board Tender Committee

BOARD OF DIREC TORS’ PROFILE

TAN TING MIN

Independent Non-Executive Director

NATIONALITY  Malaysian AGE  51 GENDER  Female

DATE OF APPOINTMENT:
14 July 2017

AREAS OF EXPERTISE:
Equity Research and Investment Analyst

RELEVANT EXPERIENCE:
Had served over 23 years with Credit Suisse Malaysia. Head of Equity Research in Credit Suisse Malaysia
from 2010 until her retirement in 2017. Led the team to top the Institutional Investor polls for seven (7)
consecutive years, 2010 to 2017. Has also served as the Malaysian equity strategist and the regional plantations
head for Credit Suisse.

DIRECTORSHIP OF OTHER LISTED ISSUERS/PUBLIC COMPANIES:

Listed Issuers:
IJM Corporation Berhad

Public Companies:
None

MEMBERSHIP OF BOARD COMMITTEE(S):

GAC Governance & Audit Committee RMC   Risk Management Committee

BTC Board Tender Committee

 Annual Report 2019 PG. 124 – 125

LOU LEONG KOK

Independent Non-Executive Director

LEADERSHIP
NATIONALITY  Singaporean AGE  65 GENDER  Male 5

DATE OF APPOINTMENT:
1 December 2017

AREAS OF EXPERTISE:
Trading and Investment Management

RELEVANT EXPERIENCE:
Has a wealth of industry experience in the edible oil sector spanning over 41 years managing investments
and businesses of edible oil and grains trading, shipping, storage terminals, refineries and biofuel manufacturing,
as well as investor & advisor to a leading physical palm brokerage. Presently, the Founding Chairman of
Charleston Holdings Pte Ltd, a private investment group which controls subsidiaries and investments ranging
from trading, brokerage and logistics.

DIRECTORSHIP OF OTHER LISTED ISSUERS/PUBLIC COMPANIES:

Listed Issuers:
None

Public Companies:
None

MEMBERSHIP OF BOARD COMMITTEE(S):

RMC Risk Management Committee
BOARD OF DIREC TORS’ PROFILE

MOHAMAD HELMY OTHMAN

BASHA
Group Managing Director

NATIONALITY  Malaysian AGE  53 GENDER  Male

DATE OF APPOINTMENT:
1 July 2019

AREAS OF EXPERTISE:
Accounting, Management and Plantation

RELEVANT EXPERIENCE:
Began his career as a Trainee Accountant/Auditor with Wellers Accountants, Oxford, United Kingdom before
joining Shell Refining Company (FOM) Bhd and held various roles including Head of General Accounts,
Project Accountant, Area Accountant for Shell Malaysia Trading Sdn Bhd (Southern Region) and Indirect Tax
Advisor for Shell Malaysia Ltd. Former Chief Executive Officer of Highlands & Lowlands Berhad and Guthrie
Ropel Berhad. Held various senior positions in SDP including Head, Plantation Upstream Malaysia; Head,
Plantation Services and Special Project; Chief Operating Officer, Upstream; and Deputy to Managing Director.

DIRECTORSHIP OF OTHER LISTED ISSUERS/PUBLIC COMPANIES:

Listed Issuers:
None

Public Companies:
None
 Annual Report 2019 PG. 126 – 127

AZRIN NASHIHA ABDUL AZIZ

Acting Group Secretary

LEADERSHIP
NATIONALITY  Malaysian AGE  48 GENDER  Female 5

DATE OF APPOINTMENT:
1 February 2020

RELEVANT EXPERIENCE:
Began her career with the Group Secretarial Department of Malayan Banking Berhad in 1996 before joining
Affin Investment Bank Berhad in 1999. Joined the SDP Group in February 2002 and was appointed
Company Secretary/Head of Legal in October 2004. After the merger of Sime Darby Berhad, Golden Hope
Plantations Berhad and Kumpulan Guthrie Berhad in November 2007, she was designated as the Head
of Legal and Corporate Secretarial Department of SDP. Following the re-organisation of the Department
in June 2014, she led the Corporate Secretarial Department until the completion of the Pure Play exercise
in November 2017.

QUALIFICATIONS:
LLB (Hons) from the University of Newcastle Upon Tyne, United Kingdom
Certificate in Legal Practice from the Legal Profession Qualifying Board, Malaysia
Postgraduate Diploma in Strategic Management from the University of Technology Malaysia
Licensed Company Secretary

Note:
The profile of the Acting Group Secretary is also available online in the Senior Management section at www.simedarbyplantation.com/our-
people/senior-management

Additional Information
1. Save as disclosed herein, none of the Directors has any family
relationship with and is not related to any Director and/or major
shareholder of Sime Darby Plantation Berhad, nor has any personal
pecuniary interest in any business arrangement involving the Group:
i. Tunku Alizakri Raja Muhammad Alias is a nominee director of
the Employees Provident Fund Board.
ii. The nominee Directors of Permodalan Nasional Berhad as follows:
  Tan Sri Dato’ A. Ghani Othman;
  Dato’ Mohd Nizam Zainordin; and
  Zainal Abidin Jamal.
2. Other than traffic offences, none of the Directors has any conviction
for offences within the past five (5) years nor public sanctions or
penalties imposed by the relevant regulatory authorities during the
financial period. None of the Directors has any conflict of interest
with Sime Darby Plantation Berhad.
3. The details of Directors’ attendance at Board Meetings held in the
financial year ended 31 December 2019 are set out in the Corporate
Governance Overview Statement on page 143 of this Annual Report.
4. The full profiles of the Directors are available online in the Board of
Directors section at www.simedarbyplantation.com
OUR
LE ADERSHIP TE AM
Annual Report 2019 PG. 128 – 129

LEADERSHIP
5
PROFILES OF
LE ADERSHIP TE AM

MOHAMAD HELMY OTHMAN BASHA

Group Managing Director

NATIONALITY AGE GENDER

Malaysian 53 Male

DATE OF APPOINTMENT
1 July 2019

SKILLS AND EXPERIENCE:

Began his career as a Trainee Accountant/Auditor with Wellers Accountants, Oxford, United Kingdom. Joined Shell
Refining Company (FOM) Bhd and has held various roles including Head of General Accounts, Project Accountant, Area
Accountant for Shell Malaysia Trading Sdn Bhd (Southern Region) and Indirect Tax Advisor for Shell Malaysia Ltd.

He joined Guthrie Property Holding Sdn Bhd in 1997 as Finance and Administration Manager and subsequently held
various leadership positions in Kumpulan Guthrie Berhad including Head of Marketing, Head of Corporate Planning &
Development, Head of Plantation as well as Chief Executive Officer of Highlands & Lowlands Berhad and Guthrie Ropel
Berhad, the two (2) listed companies within the Kumpulan Guthrie Berhad Group. He was instrumental in bringing
about the completion of the acquisition and restructuring exercise of PT Minamas Gemilang Plantation in Indonesia.

He was appointed Head Plantation Upstream Malaysia of Sime Darby Plantation Berhad (SDPB) before he left in
2013 to set up Xcellence Alliance Sdn Bhd and Chemara Palmea Holdings Bhd. He later joined SDPB as Head,
Plantation Services and Special Project in 2016 and was subsequently appointed as the Chief Operating Officer,
Upstream in 2017. He was appointed Deputy to Managing Director & Chief Operating Officer, Upstream on 1 January
2019. In this role, he assisted the Managing Director with the overall running of the SDP Group and led the Plantation
Upstream business. He was appointed the Group Managing Director of SDP on 1 July 2019.

Presently, he is the President of the Malayan Agricultural Producers Association and a member of Incorporated
Society of Planters.

QUALIFICATION(S):
Fellow of the Association of Chartered Certified Accountants
Member of the Malaysian Institute of Accountants

MOHD HARIS MOHD ARSHAD
Managing Director, Sime Darby Oils
NATIONALITY AGE GENDER
Malaysian 47 Male
DATE OF APPOINTMENT
1 April 2014
SKILLS AND EXPERIENCE:
Began his career as a trader with Cargill in Malaysia and
the Philippines. He joined Nestlé in Kuala Lumpur in 2001
and subsequently moved to London to join the company’s
global cocoa procurement and price risk management
desk. He held various senior positions in Nestlé including
General Manager and Head of Global Oils and Fats, and
helped establish Nestlé’s Commodity Procurement Centre
for Asia, Oceania and Africa Regions in Singapore. He was
a former Director of Commodity Risk Management, Unilever
Plc (Singapore) before joining Sime Darby Plantation
Berhad in 2014 as Head of Global Trading and Marketing/
Sime Darby Oils Manufacturing.
QUALIFICATION(S):
Bachelor of Science degree in Business Administration
from the University of Arizona, United States of America
Annual Report 2019 PG. 130 – 131
LEADERSHIP
RENAKA RAMACHANDRAN
Chief Financial Officer
NATIONALITY AGE GENDER
Malaysian 52 Female
DATE OF APPOINTMENT
5
1 April 2011
SKILLS AND EXPERIENCE:
More than 20 years of experience in finance, external audit
and financial advisory services. Began her career with Raj
and Associates and subsequently joined
PricewaterhouseCoopers (PwC). Held various senior positions/
leadership roles in PwC including Executive Director. As an
Executive Director, she was involved in, among others, the
audit of public listed companies, review of profit and cash
flow forecast and projections for restructurings and initial
public offerings, due diligence and financial analysis. She
has been actively involved in the Malaysian Accounting
Standards Board (MASB) for the changes to IAS 41 by
working on papers with the MASB for its onward discussion
with the International Accounting Standards Board. She is
also a member of the Accounting and Taxation Committee
of the Malaysian Palm Oil Association and a member of
the ACCA Accountants for Business Global Forum.
QUALIFICATION(S):
Fellow of the Association of Chartered Certified
Accountants
PROFILES OF LEADERSHIP TEAM

DATUK FRANKI ANTHONY DASS ZULKIFLI ZAINAL ABIDIN

Chief Advisor & Value Officer Chief Human Resources Officer

NATIONALITY AGE GENDER NATIONALITY AGE GENDER

Malaysian 63 Male Malaysian 58 Male

DATE OF APPOINTMENT DATE OF APPOINTMENT

1 December 2010 21 November 2017

SKILLS AND EXPERIENCE: SKILLS AND EXPERIENCE:

Has over 35 years of plantation management and corporate
experience in Sime Darby Plantation Berhad (SDPB). He
began his career with Kumpulan Guthrie Berhad (KGB) and
has held various senior leadership roles in KGB rising up
through the ranks to become the Chief Executive Officer,
PT Minamas Gemilang, Indonesia and subsequently, appointed
Managing Director of SDPB on 1 December 2010. He assumed
his current position on 21 November 2017.
He is also a Board member of a number of subsidiary
companies in SDPB both local and abroad.
Presently, he is the Chairman of the Malaysian Palm Oil
Association, a member of the Programme Advisory Council
of Malaysian Palm Oil Board, The Board of Trustees of the
Malaysian Palm Oil Council and a council member of the
Malaysia Productivity Corporation. He is a Fellow of the
Incorporated Society of Planters (ISP) and the Malaysian Oils
Scientists and Technologists Association (MOSTA).
Has more than 25 years of experience across the full
spectrum of the human resources discipline. Held various
senior positions including General Manager, Group Human
Resources, Golden Hope Plantations Berhad and Group
Chief Human Resources Officer, Sime Darby Berhad.
QUALIFICATION(S):
Master in International Affairs degree and a Bachelor
in Business Administration degree from Ohio University,
United States of America (USA)
Attended Senior Management Development Programmes
at Harvard Business School and Peter F. Drucker School
of Management, Claremont, California, USA

QUALIFICATION(S):
Bachelor of Science degree in Agriculture from Universiti
Pertanian Malaysia. He has also attended various
management and business programmes with the
Malaysian Institute of Management (MIM), the Asian
Institute of Management (AIM) and the Harvard Senior
Management Leadership programmes
 Annual Report 2019 PG. 132 – 133

LEADERSHIP
PROF. SIMON LORD DR SHARIMAN ALWANI MOHAMED NORDIN
Chief Sustainability Officer Chief Strategy & Innovation Officer

NATIONALITY AGE GENDER NATIONALITY AGE GENDER

British 62 Male Malaysian 50 Male

DATE OF APPOINTMENT DATE OF APPOINTMENT

5
21 November 2017 1 February 2014

SKILLS AND EXPERIENCE: SKILLS AND EXPERIENCE:

Began his career as a Management Trainee at Unilever PLC
– Unilever Plantations Ltd, and rose through the ranks as
Business Development Manager in 1996. Held various senior
leadership positions in New Britain Palm Oil Limited Group
including Group Director of Sustainability for New Britain
Plantation Services Pte Ltd, Head of Research and Head
of Technical Services. Former Vice President/Executive Board
Member of the Roundtable on Sustainability Palm Oil Board
and Group Chief Sustainability Officer of Sime Darby Berhad.
Presently, he is an Adjunct Professor at the National
University of Malaysia (UKM) Faculty of Engineering and
Built Environment, a member of the Industry Advisory
Board for the University of Nottingham Business School
and Industry advisor Flex Crops and Commodities Supply
Chain Initiative (FLEXIS) Leeds University. He is also a
member of the Procter & Gamble Palm External Advisory
Panel, a Trustee of the Forest Conservation Trust, Earthworm
Foundation, Geneva and a member of the Advisory Board
of Rainforest Alliance Landscape Standard, Landscale.
He was formerly the Senior Vice President, Strategy &
Value Management in Sime Darby Berhad, an Economist
at Bank Negara Malaysia and a Sector Economist in
Fidelity Management and Research, Boston, USA. He was
appointed as Head, Strategy & Business Development of
Sime Darby Plantation Berhad (SDPB) in 2014 and was
redesignated as Chief Strategy & Innovation Officer in
January 2018.
QUALIFICATION(S):
PhD in International Economics & Finance from Brandeis
University’s International Business School, United States
of America
Bachelor’s degree in Economics from Cambridge
University, United Kingdom
Chartered Financial Analyst (CFA)

He is one of the founders of the Pongo Alliance, an alliance

of oil palm growers, businesses and NGOs working towards
supporting and implementing projects. He was a member
of the World Economic Forum’s Global Agenda Council
on Natural Capital and Biodiversity.

QUALIFICATION(S):
Bachelor of Science degree in Applied Biology from
Lanchester (Coventry) Polytechnic, United Kingdom
PhD in Environmental Effects of Pesticides from the
University of Bath, United Kingdom
PROFILES OF LEADERSHIP TEAM
DR HARIKRISHNA KULAVEERASINGAM
Chief Research & Development Officer
NATIONALITY AGE GENDER
Malaysian 58 Male
DATE OF APPOINTMENT
1 July 2016
SKILLS AND EXPERIENCE:
Began his career as a Post-Doctoral Researcher with the
University of California, Davis. Joined Golden Hope
Plantations Berhad as a Biotechnologist. He was a Lecturer
and an Associate Professor at Universiti Putra Malaysia.
Joined Sime Darby Technology Centre Sdn Bhd as General
Manager, Biotechnology, where he helped establish a
new technology centre with biotechnology capability, and
subsequently assumed the position as Director of Research.
Held various senior positions in Sime Darby Plantation
Berhad including Senior Vice President II, Biotechnology
and Breeding and Head Research & Development.
QUALIFICATION(S):
Bachelor’s degree in Plant Sciences from London
University
PhD in Plant Molecular and Developmental Biology
from Leicester University
ADI WIRA ABD. RAZAK
Chief Operations Services Officer
NATIONALITY AGE GENDER
Malaysian 45 Male
DATE OF APPOINTMENT
1 November 2019
SKILLS AND EXPERIENCE:
Has over 20 years of working experience with commercial
and operations career development with top MNC, which
include three world No. 1 company in its industry sector.
Industry experience covers tobacco, snack and beverages,
intergrated food business and agribusiness.
Began his career with Torray Plastics (M) Sdn Bhd in a
supply chain function and subsequently with Philip Morris
International – Malaysia and Asia Regional Operations and
Technical Centre. Following which he joined Coca Cola
Bottlers Malaysia in procurement and project function,
during which time he was a team member building and
completing the Coca Cola Bottlers greenfield plant in
Malaysia. Subsequently moving into roles with increasing
responsibility in other food industry and intergrated food
business in procurement role and finally as CEO of an
upstream division prior to joining Sime Darby Plantation.
He was also the Group Head of Procurement for Sime
Darby Berhad from 2013 up to the completion of demerger,
end 2017
QUALIFICATION(S):
BA (Hon) Accounting & Management from Sheffield
Hallam University, United Kingdom
 Annual Report 2019 PG. 134 – 135

LEADERSHIP
AZRIN NASHIHA ABDUL AZIZ LEE AI LENG
Acting Group Secretary Group General Counsel

NATIONALITY AGE GENDER NATIONALITY AGE GENDER

Malaysian 48 Female Malaysian 54 Female

DATE OF APPOINTMENT DATE OF APPOINTMENT

5
1 February 2020 1 June 2014

SKILLS AND EXPERIENCE: SKILLS AND EXPERIENCE:

Began her career with the Group Secretarial Department
of Malayan Banking Berhad in 1996 before joining Affin
Investment Bank Berhad in 1999. Joined the SDP Group
in February 2002 and was appointed Company Secretary/
Head of Legal in October 2004. After the merger of Sime
Darby Berhad, Golden Hope Plantations Berhad and
Kumpulan Guthrie Berhad in November 2007, she was
designated as the Head of Legal and Corporate Secretarial
Department of SDP. Following the re-organisation of the
Department in June 2014, she led the Corporate Secretarial
Department until the completion of the Pure Play exercise
in November 2017.
QUALIFICATION(S):
LLB (Hons) from the University of Newcastle Upon Tyne,
United Kingdom
Certificate in Legal Practice from the Legal Profession
Qualifying Board, Malaysia
Postgraduate Diploma in Strategic Management from
the University of Technology Malaysia
Licensed Company Secretary
Has more than 25 years of experience in the areas of
corporate and commercial law focusing on domestic and
cross-border mergers and acquisitions, capital markets,
issuance of private debt securities, joint ventures, banking
and finance matters as well as real and personal property
transactions. Beginning her career in private practice in
1991, she subsequently joined IOI Corporation Berhad in
1994 as the Group Legal Advisor and later served as
Company Secretary as well. She was appointed as Head
of Legal at Sime Darby Plantation Berhad in 2014 and was
redesignated as the Group General Counsel in April 2018.
QUALIFICATION(S):
LLB (Hons) degree in Law from the University of Malaya,
Kuala Lumpur
Admitted to the Malaysian Bar
Licensed Company Secretary
Diploma in Accounting and Finance (Association of
Chartered Certified Accountants)
PROFILES OF LEADERSHIP TEAM

NIK MAZIAH NIK MUSTAPHA ELIZA MOHAMED

Chief Integrity & Assurance Officer Chief Communications Officer

NATIONALITY AGE GENDER NATIONALITY AGE GENDER

Malaysian 45 Female Malaysian 52 Female

DATE OF APPOINTMENT DATE OF APPOINTMENT

1 March 2018 1 July 2017

SKILLS AND EXPERIENCE: SKILLS AND EXPERIENCE:

Began her career as an audit associate with one of the
big six global accounting firm back then, and had since
accumulated almost 23 years’ experience in internal and
external audit, credit management and financial accounting.
Held senior positions in the Group Corporate Assurance
function of Sime Darby Berhad including Head of Group
Corporate Assurance – Plantation and Head of Group
Corporate Assurance – Property.
She was appointed as the Acting Head, Governance,
Assurance & Compliance of Sime Darby Plantation Berhad
(SDPB) on 1 March 2018. She was then designated as the
Chief Internal Auditor on 1 July 2018 and effective 25
February 2019, she was designated as the Chief Integrity
& Assurance Officer of SDPB.
Held various senior leadership positions including Group
Head – Corporate Affairs at Nestlé Malaysia, Group Head
– Corporate Affairs & Sustainability at Maybank and Group
General Manager – Group Communications at Media
Prima Berhad. Served public affairs roles at Phillip Morris
Malaysia and has experience in the legal profession.
QUALIFICATION(S):
LLB (Hons) degree in law from the University of Leeds,
United Kingdom
Admitted as Barrister-at-law Lincolns Inn, London

QUALIFICATION(S):
Member of the Malaysian Institute of Accountants
Certified Internal Auditor from the Institute of Internal
Auditors, United States of America
Certification in Control Self-Assessment from the Institute
of Internal Auditors, United States of America
Chartered member of the Institute of Internal Auditors,
Malaysia
Bachelor of Accounting (Hons) degree from the Universiti
Utara Malaysia
 Annual Report 2019 PG. 136 – 137

LEADERSHIP
GAJANI NAYAGI SEEVENESERAJAH ADITYA TULI
Chief Risk Officer Chief Digital Officer

NATIONALITY AGE GENDER NATIONALITY AGE GENDER

Malaysian 43 Female British 42 Male

DATE OF APPOINTMENT DATE OF APPOINTMENT

5
1 June 2018 1 August 2019

SKILLS AND EXPERIENCE: SKILLS AND EXPERIENCE:

Began her career in Ernst & Young and rose through the Has more than 17 years of experience in the IT Industry.
ranks to become a Director in the Advisory practice where Began his career as a Software Analyst and later became
she provided assurance & advisory services to various multi- CTO at company Info Bahn in India. Served as Applications
national and public listed companies across a myriad of Head for Petrofac in 2006. Former Vice President of Technology
industries. She joined the Group Risk Management Department and Innovation for Malaysia Global Innovation and Creativity
of Sime Darby Berhad as a Vice President in July 2012 and Centre (MaGIC) prior to joining SDP.
subsequently moved on to be the Head of Performance &
Innovation Management for Sime Darby Berhad Group. She QUALIFICATION(S):
was appointed as Head of Portfolio Management of Sime B.E. (Computer Engineering), University of Mumbai, India
Darby Plantation Berhad in October 2017. She was appointed Master’s Degree in Business Administration (MBA) from
as the Chief Risk Officer in June 2018. Glasgow Business School in University of Glasgow, United
Kingdom
QUALIFICATION(S):
Fellow of the Institute of Chartered Accountants in
England & Wales
Member of the Malaysian Institute of Accountants
Bachelor of Arts (Hons) degree in Accounting and
Financial Management from the University of Sheffield,
United Kingdom

Additional Information
1. None of the Senior Management has any family relationship
with and is not related to any director and/or major shareholder
of Sime Darby Plantation Berhad.
2. None of the Senior Management has any conflict of interest
with Sime Darby Plantation Berhad.
3. Other than traffic offences, none of the Senior Management has
any conviction for offences within the past five (5) years nor
public sanctions or penalties imposed by the relevant regulatory
authorities during the financial year period.
4. Directorships held by the Senior Management in public companies
and listed issuers, other than companies within the Sime Darby
Plantation Berhad Group, if any, are disclosed in the Senior
Management section at www.simedarbyplantation.com/ourpeople/
senior-management.
5. The full profiles of the Senior Management are available online
in the Senior Management section at www.simedarbyplantation.
com/ourpeople/senior-management.
G O V E R N A N C E
F RAM E WO R K
140 Corporate Governance Overview Statement
150 Governance & Audit Committee Report
160 Nomination & Remuneration Committee Report
164 Sustainability Committee Report
169 Board Tender Committee Report
171 Risk Management Committee Report
174 Statement On Risk Management And Internal Control
183 Statement Of Responsibility By The Board Of Directors
CORP OR ATE GOVERNANCE
OVERVIE W STATEMENT

As a testament to our commitment to the right values and ethical conduct, the Board
of Sime Darby Plantation Berhad (SDP) embraces the enhanced corporate governance
disclosure requirements set out in the Main Market Listing Requirements of Bursa
Malaysia Securities Berhad (the Listing Requirements). This statement is also prepared
in accordance with the requirements of the Companies Act 2016 of Malaysia and the
Corporate Governance Guide – 3rd Edition issued by Bursa Malaysia Berhad.

The Board is pleased to present the CG Overview Statement (Statement),

The Board believes that
effective Corporate
Governance (CG) practices
cement our commitment to
doing business responsibly
which highlights how our Company complies with the three key CG principles
of the Malaysian Code on Corporate Governance (MCCG) 2017, which are:
Principle A : Board Leadership and Effectiveness
Principle B : Effective Audit and Risk Management
Principle C : Integrity in Corporate Reporting and Meaningful Relationship
with Stakeholders

towards protecting
stakeholder value and the
sustainable growth of the
Group. We recognise the
importance of setting an
appropriate tone from the
top in ensuring that ethical
This Statement is to be read together with the CG Report 2019, which is
available on the Company’s corporate website at http://www.simedarbyplantation.
com/CGReport.
As at the date of this Statement, the Company has applied almost all of the
recommended practices (including Step Up) in MCCG 2017, except for the
following:
Recommended Practice Step Up Practice

standards of behaviour Practice 4.5 Practice 4.3

“The Board must have at least “The board has a policy which limits
permeate throughout the 30% women directors.” the tenure of its independent directors
Group at all levels. The way to nine years.”

we live and breathe our Practice 12.3 Practice 7.3

“Leverage technology to facilitate “Full disclosure of detailed remuneration
culture can be seen by the voting and remote shareholders’ of each member of senior management
way in which our Core Values participation at General Meetings.” on a named basis.”

are embedded across all our Practice 8.4

businesses and how they
underpin our business model
and strategy of delivering
long term shareholder value.
“The Audit Committee should comprise
solely of Independent Directors.”
Detailed explanations for the practices’ departure and the non-adoption of
Step-up practices are outlined in the CG Report 2019. The Board remain
committed to promoting strong and effective governance to support better
decision-making and accountability and instil stakeholders’ confidence and
trust in the Company.

This statement is made in accordance with a resolution of the Board of

Directors dated 16 April 2020.
 Annual Report 2019 PG. 140 – 141

CORPORATE GOVERNANCE FRAMEWORK

Our CG framework is designed based on the following principles:

To promote greater transparency, accountability and responsiveness.

To balance the operating autonomy of the various Group Companies with appropriate checks and balances and
performance benchmarks.
To cultivate ethical business conduct and instil desired behaviours based on the Group’s espoused Core Values
and Business Principles as set out in the Code of Business Conduct.

GOVERNANCE FRAMEWORK
The diagram below illustrates our Group’s governance structure.

POLICY INSTRUMENT
Stakeholders FRAMEWORK

Legislation
Board of Directors

BOARD
Company
Constitution
Governance Risk Nomination &
Sustainability Board Tender
& Audit Management Remuneration
Committee Committee Board Charter &
Committee Committee Committee
Board Committees’

6
Terms of Reference

MANAGEMENT Group Policies &

Group Authorities (GPA)
& Other Policies
Managing
Director
(GMD)*
Procedures

Group Integrity, Plantation

External Group Risk Leadership
Governance &
Auditors Management Committee
Assurance
(PLC)

Note: * The GMD is also an Executive Director of the Board

The role and effectiveness of the Board are essential, and the Board’s primary remit is to provide direction to help
shape the Group’s strategy and ensure that this is being executed effectively within a well-controlled structure,
mitigates risk and is compliant with the requisite rules and regulations. Our Board takes pride in what we do and
in the way we conduct our business and deliver our strategic objectives.

The Board Committees are established to assist the Board in discharging its statutory and fiduciary responsibilities.
This includes ensuring independent oversight of risk management and internal control. We have established the
Board Committees’ Terms of Reference (TOR) to ensure that Committees remain focused on their duties, thus enables
the Board to take a broader perspective, looking at enterprise-level issues such as strategy and governance.

The TOR of each Board Committee is available on the Company’s website under Governance section at http://www.
simedarbyplantation.com/corporate/corporate-governance.
C O R P O R AT E G O V E R N A N C E O V E R V I E W S TAT E M E N T

PRINCIPLE A: BOARD LEADERSHIP AND EFFECTIVENESS

BOARD RESPONSIBILITIES

Our Board Charter sets out the Board’s strategic intent and outlines the roles and powers that the Board reserves
explicitly for itself, and those which it delegates to Management. In so doing, it also sets the tone of the various
Board Committees. The specified roles are summarised below:

Board Chairman Group Managing Director

Leading and managing Board meetings to ensure The Group Managing Director assumes the overall
robust decision-making; responsibility for the execution of the Group’s strategies
Building a high-performance Board; in line with the Board’s Direction, oversees the operations
Managing Board and Management interface by acting of the subsidiary companies and drives the Group’s
as the conduit between Management and the Board, businesses and performance towards achieving the Group’s
developing a positive relationship with the Group vision and goals.
Managing Director;
Acting as a spokesperson for and representative of
Group Secretary
the Board and the Group; and
Ensuring appropriate steps are taken to provide effective
The Group Secretary is responsible for advising the Board
communication with stakeholders and that their views
on regulatory compliance matters and providing good
are communicated to the Board as a whole.
information flow and comprehensive practical support to
Directors, both as individuals and collectively, with particular
Individual Directors emphasis on supporting the Non-Executive Directors in
maintaining the highest standards of probity and corporate
Acting in good faith and the best interests of the governance. All Directors have unrestricted access to the
Group; advice and services of the Group Secretary to facilitate
Demonstrating good stewardship and acting the discharge of their duties.
professionally with sound mind;
Acting with reasonable care, skill and diligence For further details, refer to the Board Charter that is
subject to the business judgement rule; available on the Company’s corporate website at http://
Avoiding conflicts of interest with the Group in a www.simedarbyplantation.com/boardcharter.
personal or professional capacity, including improper
use of the property, information and opportunity
of the Group;
Exercising greater vigilance and professional
scepticism in understanding and shaping the
strategic direction of the Company and the Group;
and
Complying with the Companies Act 2016 of Malaysia,
Securities Commission Malaysia’s regulations, and
the Listing Requirements.

Senior Independent Non-Executive Director

The Senior Independent Non-Executive Director serves as

a sounding board for the Chairman, an intermediary for
other Directors when necessary, and the point of contact
for shareholders and other stakeholders with concerns
that have failed to be resolved or would not be appropriate
to be communicated through the usual channels of the
Chairman or Group Managing Director.
 Annual Report 2019 PG. 142 – 143

BOARD MEETINGS & ATTENDANCE

(Total Board & Board Committees Meetings Hours = 67.4)

The breakdown of the Board and Board Committee Meetings (Meetings) held as well as Directors’ attendances at
the Meetings are set out below:

Board and Board Committee Meetings held in financial year ended 31 December 2019 (FY2019)

SC BTC SC SC SC

GOVERNANCE FRAMEWORK
RMC BTC RMC RMC RMC

NRC SC NRC NRC NRC NRC

BOD GAC RMC BOD GAC BOD GAC BOD GAC BOD BOD GAC

Jan’19 Feb’19 Mar’19 Apr’19 May’19 Jun’19 Jul’19 Aug’19 Sep’19 Oct’19 Nov’19 Dec’19

Board Meetings: Board Committee Meetings:

BOD Board GAC Governance & Audit Committee SC Sustainability Committee RMC Risk Management Committee

NRC Nomination & Remuneration Committee BTC Board Tender Committee

Details of the key activities of each Board Committee are set out within the relevant Committee reports from pages
150 to 173.
6
The table below shows each Director’s attendance at the Meetings during FY2019.

Board Meetings#
Directors Designation/Independence
Attendance %

Tan Sri Dato’ A. Ghani Othman Chairman, Non-Independent 6/6 100

Tan Sri Datuk Dr. Yusof Basiran Independent 5/6 83
Muhammad Lutfi Independent 3/6 50
Datuk Zaiton Mohd Hassan Senior Independent 4/6 67
Dato’ Mohd Nizam Zainordin Non-Independent 5/6 83
Dato’ Henry Sackville Barlow Independent 4/4 100
Tunku Alizakri Raja Muhammad Alias Non-Independent N/A(ii) N/A(ii)
Zainal Abidin Jamal Non-Independent 6/6 100
Tan Ting Min Independent 6/6 100
Lou Leong Kok Independent 4/6 67
Mohamad Helmy Othman Basha Group Managing Director 3/3(i) 100(i)

Board Meetings#
Former Directors Designation/Independence
Attendance %
Tan Sri Dato’ Seri Mohd Bakke Salleh Executive Deputy Chairman & 3/3(iii) 100(iii)
Managing Director
Dato’ Mohamad Nasir Ab. Latif Non-Independent 4/6(iv) 67(iv)

Notes:
# Reflects the number of meetings held during the time the Director held office.
(i) The Group Managing Director, Mohamad Helmy Othman Basha, was appointed on 1 July 2019.
(ii) Not Applicable as the effective date of appointment was 1 January 2020.
(iii) The Executive Deputy Chairman & Managing Director, Tan Sri Dato’ Seri Mohd Bakke Salleh, retired on 30 June 2019.
(iv) A Non-Independent Director, Dato’ Mohamad Nasir Ab. Latif, resigned on 31 December 2019.

Details of the respective Directors’ attendance at Board Committee Meetings are provided in the relevant Committee
reports from pages 150 to 173.
C O R P O R AT E G O V E R N A N C E O V E R V I E W S TAT E M E N T
BOARD COMPOSITION AND DYNAMICS
Board Composition
The Board is pleased to confirm that the composition of
the Board complies with Paragraph 15.02 of the Listing
Requirements, that calls for at least two or one-third of
the Board members shall be Independent Directors,
whichever is higher. It is also in line with the prescribed
Practice 4.1 under MCCG 2017 to have a majority
Independent Directors on the Board. As at the date of
this Annual Report, the Board Composition is as follows:
Independent Non-Executive Directors : 6 out of 11
(or 55%)
Non-Independent Non-Executive : 4 out of 11
Directors (including the Chairman) (or 36%)
Executive Director : 1 out of 11
(Group Managing Director) (9%)
Our Board is composed of eleven Directors, in which five
are Non-Independent Directors, including the Chairman.
Apart from our Group Managing Director (GMD) who is
an Executive Director, the other four are Non-Executive
Directors. The majority of our Directors (55% or six) are
Independent Non-Executive Directors.
The Non-Independent Non-Executive Directors are Tan
Sri Dato’ A. Ghani Othman (Chairman), Dato’ Mohd Nizam
Zainordin, Zainal Abidin Jamal, who are all nominees of
Permodalan Nasional Berhad (PNB), and Tunku Alizakri
Raja Muhammad Alias, who is a nominee of Kumpulan
Wang Simpanan Pekerja (KWSP).
The profiles of the Board of Directors are presented on
pages 116 to 127 of this Annual Report.
Board Dynamics
Beyond age, ethnic and gender diversity, our Board consists
of members with diverse skills and educational background,
international and industry experiences, as well as knowledge
and philosophies in bringing competing views when
deliberating matters at Board meetings, thus ensuring
decision-making perspectives are enhanced (refer to
further details on our Board Diversity on page 163 of this
report). A majority of our Board members are independent
to foster greater boardroom objectivity.
Board Evaluations are conducted annually to provide
opportunities for increasing efficiency, maximising strengths
and highlighting areas for improvement. Pursuant to the
Board Effectiveness Evaluation exercise in November 2019,
it was concluded that the Board had discharged its
responsibilities well, with good Board structure and
operations. Out of the 5-point Likert scale, with 5 being
the best possible rating, most assessment criteria under
the Board assessment were rated either ‘4’ or ‘5’. The
Board was satisfied with the evaluation outcome and
identified key areas of enhancement.
CORPORATE CULTURE & VALUES
Our Code of Business Conduct (COBC) demonstrates
our enforcement for behaving fairly, honestly and
ethically wherever we do business, and our collective
commitment to uphold integrity throughout the Group.
The COBC guides the standards of behaviour expected
of all Directors and Employees of the Group, and
where applicable, Counterparties and Business Partners.
· Our commitment to excellence extends beyond our
organisation. In this regard, our Vendor Code of
Business Conduct (VCOBC) guides our Vendors on
the required standards of behaviour when conducting
work for the Group and mirrors our Group’s Core
Values and Business Principles. By signing off on the
Vendor Integrity Pledge (VIP), our Vendors acknowledge
compliance with our standards of behaviour on labour
and human rights, environment, safety & health as
well as ethics & management practices (including
regulations on anti-bribery, fraud and corruption).
Our Anti-Corruption Management System is a
manifestation of our zero tolerance policy against all
forms of bribery and corruption and demonstrates the
Group’s commitment to combat corruption in
furtherance of our Core Values and Business Principles.
Our Whistleblowing Policy provides an avenue for
the reporting of genuine concerns on wrongdoings
without fear of retaliation and reprisals. Any employee,
stakeholder or the public can lodge their concerns
via the Company’s corporate website www.
simedarbyplantation.com.
 Annual Report 2019 PG. 144 – 145

SETTING STRATEGY

The Board is responsible in deciding the Group’s strategy and overseeing its performance while passing the responsibility
of the day-to-day operations to the GMD. The Board is directly involved in approving major acquisitions, providing
oversight and control, growing shareholder value and promoting corporate governance. The regular report by the
GMD to the Board includes business updates and insights, which ensures that the Directors have a sound understanding
of our operational matters, the competitive and regulatory environment, group and business unit performance, investor
relations and sustainability.

GOVERNANCE FRAMEWORK
The Board supports the Group in its implementation of the Group’s value-driven strategic objectives and achieving
them. The Board commits to providing credible and comprehensive financial and non-financial reporting accompanied
by strong constructive stakeholder engagement. On the public and other stakeholder interests, we have aligned with
best practices relating to disclosures and are subject to internal and external assurance and governance procedures.

The Board devises strategies focused on unlocking value for our shareholders, whilst mitigating risks to ensure holistic
growth. The Board and Management strive to create maximum shared value by delivering on our purpose and
ensuring relevance and sustainability of our business model. Our strategy of leveraging our efforts around sustainability
enables us to create value to the organisation and our wide range of stakeholders by delivering sustainable development.
Making available capital inputs and taking care of stakeholders’ needs, has enabled the Group to maintain focus in
conducting operations underpinned by good governance, and at the same time, delivering our financial targets.

MATTERS CONSIDERED BY THE BOARD

6
The Board primarily focused on the Group’s strategic growth, plans and financial
budgets. During the Board and Management Retreat in September 2019, the Board
together with PLC members, discussed the strategic direction of the Company and
Group to remain resilient and position itself for future growth.
STRATEGY
The Board met in November 2019 to set the tone for the Group’s overall long term
strategy blueprint and to discuss and challenge the Group’s business strategy and
plan as well as Group Budget. The Board also monitored the progress of
implementation of the Group’s strategy and value creation initiatives.

The Board had in-depth deliberations on financial and business performance of the
Group. The Board considered and approved major acquisitions, disposals and
PERFORMANCE transactions of the Group such as the rebranding of the Group’s Downstream
business to Sime Darby Oils, disposal of PT Mitra Austral Sejahtera in Indonesia as
well as the divestment of its business operations in Liberia.

The Board considered the principal risks of business proposals and the
implementation of appropriate internal controls and mitigation measures to manage
these risks.
RISK & INTERNAL
CONTROL
The Board reviewed the Group’s system of internal control covering financial,
operational and compliance as well as risk management, and the adequacy and
integrity of the system.

During FY2019, the Board reviewed changes in and considered for adoption key
INTEGRITY & policies, procedures and delegated authority limits of the Group such as the Group
GOVERNANCE Policies & Authorities, Anti-Corruption Compliance Framework and Anti-Corruption
Policy Statement.

The Board reviewed the Group’s succession planning process by reviewing and
SUCCESSION
considering the appointment of the Group Managing Director and Key Management
PLANNING
of the Group.
C O R P O R AT E G O V E R N A N C E O V E R V I E W S TAT E M E N T
PROFESSIONAL DEVELOPMENT AND CONTINUOUS
EDUCATION
Newly appointed Directors undergo an on-boarding session
to orientate them on the Group’s business, performance,
issues, strategies and structure. Site visits, which include
briefings from the Management of operational units, are
organised to provide each new Director with a visual
perspective of the Group’s operations and further depth
and appreciation of the key drivers behind the Group’s
businesses.
We encourage all Directors to keep their skills and
knowledge up to date and to help them; we provide the
Board and individual directors with the continuous
education that they require. All our Directors have attended
the Mandatory Accreditation Programme (MAP).
During FY2019, the Group Secretary regularly organised
training programmes for the Directors. All Directors attended
training programmes, conferences, seminars, courses and/
or workshops. For more details on the Directors’ Training
and Continuous Education Programme, please refer to
the Company’s corporate website at http://www.
simedarbyplantation.com/our-people/board-of-directors.
Remuneration for the Non-Executive Directors of the Board and as members of the Board Committees in the form
of fees for FY2019 is shown below:
Board/Board Committee
Board
Governance & Audit Committee
Nomination & Remuneration Committee
Risk Management Committee
Sustainability Committee
Board Tender Committee
Notes:
1 Fee for Resident Director
2 Fee for Non-Resident Director
BOARD REMUNERATION
The Nomination & Remuneration Committee (NRC) is
primarily responsible for conducting periodical reviews
and recommending to the Board a formal and transparent
remuneration policy and framework for Directors and
Senior Management of our Company, drawing on external
consultants’ advice as necessary, as well as the remuneration
framework of employees of our Company.
The Directors’ remuneration policy is reviewed regularly
to ensure that the compensation of the Chairman and
Directors of the Board are aligned to at least around the
75th percentile and the 50th percentile of appropriate
peer groups, respectively. The remuneration framework is
aligned to the complexity and leadership position of the
Company and benchmarked against regional companies
which are comparable to us in terms of size and similar
nature of the business, to ensure that we are remunerating
our Board and Board Committee members competitively.
[The salient elements of the Directors’ remuneration policy and a
summary of the Executive Director’s remuneration package are
described in Practice 7.1 of the CG Report 2019.]
Chairman Member
(RM/Year) (RM/Year)
600,000 240,0001
400,0002
80,000 50,000
60,000 35,000
60,000 35,000
60,000 35,000
60,000 35,000
 Annual Report 2019 PG. 146 – 147

Remuneration & Material Benefits of Our Directors

The remuneration of our Directors, which includes salaries and bonuses for the Executive Director and Director’s fees,
meeting allowances, benefits for the Non-Executive Directors, is considered and recommended by our NRC and
subsequently approved by our Board. Our shareholders approve the fees and benefits payable to the Non-Executive
Directors at a general meeting of the Company.

Details of Directors’ remuneration (including benefits-in-kind) and the aggregate remuneration of Directors at the
Group level for FY2019 are as follows:

GOVERNANCE FRAMEWORK
Directors’
Directors’ Fees (vi) Fees(vii)
Salary & As Board Total
Other As Committee Directors’ Benefits Subsidiaries Grand
(RM’000) Remuneration Directors Members Fees -in-kind(i) Sub-Total of SDP Total
EXECUTIVE DIRECTOR
Mohamad Helmy 1,070 N/A(v) N/A(v) N/A(v) 14 1,084 0 1,084
Othman Basha(ii)
NON-EXECUTIVE DIRECTOR
Tan Sri Dato’ A. 600 0 600 69 669 0 669
Ghani Othman(iii)
Tan Sri Datuk Dr. Yusof
Basiran
240 120 360 11 371 119 490
6
Muhammad Lutfi (iv) 400 35 435 2 437 50 487
Datuk Zaiton Mohd 240 150 390 117 507 0 507
Hassan
N/A(v)
Dato’ Mohd Nizam 240 85 325 2 327 0 327
Zainordin
Dato’ Henry Sackville 178 108 286 9 295 125 420
Barlow
Zainal Abidin Jamal 240 125 365 8 373 21 393
Tan Ting Min 240 120 360 10 370 43 414
Lou Leong Kok (iv) 400 35 435 2 437 0 437
Total for Non-Executive 2,778 778 3,556 230 3,786 358 4,144
Directors
Grand Total 1,070 2,778 778 3,556 244 4,870 358 5,228

Notes:
(i) Benefits-in-kind include Healthcare, Insurance and Mobile Phone
(ii) Appointed as the Group Managing Director of SDP on 1 July 2019
(iii) Company car, petrol and driver for Non-Executive Chairman
(iv) Non-Resident Director
(v) N/A – Not Applicable
(vi) Paid by SDP
(vii) Paid by Subsidiary Companies of SDP
C O R P O R AT E G O V E R N A N C E O V E R V I E W S TAT E M E N T

Additionally, details of remuneration (including benefits-in-kind) for Directors who had retired or resigned during
FY2019 are as follows:

Directors’
Directors’ Fees (iii) Fees (iv)

Salary & As Board Total

Other As Committee Directors’ Benefits Subsidiaries Grand
(RM’000) Remuneration Directors Members Fees -in-kind (i) Sub-Total of SDP Total
EXECUTIVE DIRECTOR
Tan Sri Dato’ Seri Mohd 2,923 N/A(v) N/A(v) N/A(v) 27 2,950 N/A(v) 2,950
Bakke Salleh (ii)

NON-EXECUTIVE DIRECTOR
Dato’ Mohamad Nasir N/A(v) 240 35 275 7 282 0 282
Ab. Latif
Grand Total 2,923 240 35 275 34 3,232 0 3,232

Notes:
(i) Benefits-in-kind include Healthcare, Insurance & Mobile Phone
(ii) Retired as the Executive Deputy Chairman & Managing Director on 30 June 2019
(iii) Paid by SDP
(iv) Paid by Subsidiary Companies of SDP
(v) Not Applicable

Bands of the senior management’s remuneration for FY2019 are disclosed in Practice 7.2 of the CG Report 2019.

PRINCIPLE B: EFFECTIVE AUDIT AND RISK MANAGEMENT

GOVERNANCE & AUDIT COMMITTEE (GAC) RISK MANAGEMENT COMMITTEE (RMC)

The Group’s Senior Independent Non-Executive Director,
Datuk Zaiton Mohd Hassan, is the Chairman of the GAC.
Following the appointment of Dato’ Henry Sackville Barlow
on 5 April 2019, the GAC is composed of three Independent
Non-Executive Directors and one Non-Independent Director.
The GAC’s TOR encapsulates its mandate which, among
others, defines its purpose, composition, appointment,
authority, functions and duties. During the year under
review, the GAC had convened five meetings, during
which, significant matters relating to financial reporting,
internal and external audits, governance and related party
transactions, among others, were discussed.
In effectively discharging its oversight roles on governance
and internal controls, the GAC is assisted by the Chief
Integrity & Assurance Officer (CIAO) who leads the Group’s
in-house internal audit (assurance) and integrity &
governance functions.
The RMC is established as one of the committees of the
Board and supports the Board by setting and overseeing
the Group’s Risk Management Framework (the Framework).
RMC also regularly assess the Framework and policies to
ascertain its adequacy and effectiveness. The RMC is
composed of four Directors and chaired by a Non-
Independent Non-Executive Director, Zainal Abidin Jamal.
The remaining three RMC members are Independent
Non-Executive Directors, including one who is the Senior
Independent Non-Executive Director.
The RMC is assisted by the Chief Risk Officer (CRO) in
executing its main functions and duties as specified in
the RMC’s TOR.
The activities of the RMC, its duties and responsibilities as well as
details of meetings attended by each member can be found on
pages 171 to 173 of this Annual Report and Section A of the CG
Report 2019.

The activities of the GAC, its duties and responsibilities as well as

details of meetings attended by each member is deliberated on
pages 150 to 159 of this Annual Report and Section A of the CG
Report 2019.

RISK MANAGEMENT AND INTERNAL CONTROL
FRAMEWORK
The Board has delegated its responsibilities of overseeing
the effectiveness of risk management and internal control
systems to the RMC and GAC. Accordingly, RMC and GAC,
advise the Board on principal risks facing our business,
including those that would threaten the Group’s solvency
or liquidity.
Details of the Risk Management and Internal Control Framework
are disclosed in the “Statement on Risk Management and Internal
Control” and can be found on pages 174 to 182 of this Annual
Report and Section A of the CG Report 2019.
PRINCIPLE C:
INTEGRITY IN CORPORATE REPORTING
AND MEANINGFUL RELATIONSHIP WITH
STAKEHOLDERS
COMMUNICATION WITH STAKEHOLDERS
“The Board Believes in an Effective, Transparent and
Regular Communication with Its Stakeholders to Build
Trust and Facilitate Mutual Understanding of Each Other’s
Objectives and Expectations.”
TIMELY AND QUALITY DISCLOSURE
The Board is committed to ensuring all communications
to the investing public regarding the business, operations
and financial performance of the Company are accurate,
timely, factual, informative, consistent, broadly disseminated
and where necessary, filed with regulators in accordance
with applicable legal and regulatory requirements.
We look forward to engaging with our shareholders at
the forthcoming Annual General Meeting (AGM). The AGM
offers an opportunity to our shareholders to raise questions
pertaining to our Company’s performance directly to our
Board, GMD and Senior Leaders.
The Group’s corporate website is a key communication
channel for the Company to reach its shareholders, the
investment community, and the general public. The
Group’s values, Corporate Governance Framework, Code
of Business Conduct (COBC), whistleblowing guidelines,
and various other corporate governance initiatives are
available on the Company’s corporate website.
Annual Report 2019 PG. 148 – 149
The Group’s financial results, announcements made to
Bursa Malaysia Securities Berhad and corporate
presentations are retrievable from our Company’s corporate
website at http://www.simedarbyplantation.com/investor-
relations and this facilitates accessibility of information to
the shareholders and other stakeholders.
Integrated Reporting
Our Annual Report for FY2019 is prepared in accordance
GOVERNANCE FRAMEWORK
with the Global Reporting Initiative Standards: Core Option
and guided by the International Integrated Reporting
Council (IIRC). All financial statements have been prepared
according to the requirements of the Companies Act
2016 of Malaysia and the Malaysian Financial Reporting
Standards (MFRS) and audited by our external auditors,
PricewaterhouseCoopers PLT.
CONDUCT OF GENERAL MEETINGS
Notification in writing to shareholders (via hard copy or
electronic means) of the publication of the Notice of AGM
and the Annual Report on the Company’s corporate
website, will be dispatched to shareholders at least 6
28 days prior to the AGM. The Notification will provide
the designated website link and Quick Response (QR)
code, where a copy of the Notice of AGM and the Annual
Report may be downloaded.
Shareholders have the right to request a hard copy of
our Annual Report through the designated channel. The
venue of the AGM is at a central and easily accessible
location.
The AGM provides an opportunity to the Chairman and
other members of the Board to share the Company’s
progress and performance. Directors shall attend the AGM
to answer any question from shareholders.
In view of the current COVID-19 pandemic, the Company
is taking the necessary precautions and preventive measures
in complying with directives issued by the Malaysian Ministry
of Health. These include considering the option of
shareholders’ remote participation at the forthcoming AGM.
More detailed information on the AGM is available
online in the Investor Relations section http://www.
simedarbyplantation.com/investor-relations/shareholder-
dividend-information.
GOVERNANCE & AUDIT
COMMIT TEE REP ORT

“The Committee assists the Board in embedding a strong ethics and integrity
culture within the Group, thus ensuring the implementation of good governance
practices that are fundamental in delivering sustainable value for our stakeholders.”

DATUK ZAITON MOHD HASSAN

Chairman of Governance & Audit Committee

INSIDE THIS REPORT

This report highlights the activities of the Governance & Audit Committee (GAC) during the year under review, i.e.
financial year ended 31 December 2019 (FY2019). We report to shareholders on our oversight responsibilities of
overseeing the financial risk processes, financial reporting and internal control systems, external and internal audit
functions, as well as compliance and ethics programmes established in the Group.

WHO IS THE COMMITTEE

Members 1 Membership Appointment Attendance 2

Datuk Zaiton Mohd Chairman 24 February 2016 4/5 80%

Hassan Senior Independent Non-Executive Director

Dato’ Mohd Nizam Member 14 July 2017 4/5 80%

Zainordin Non-Independent Non-Executive Director

Dato’ Henry Sackville Member 5 April 2019 3/3 100%

Barlow Independent Non-Executive Director

Tan Ting Min Member 9 August 2017 5/5 100%

Independent Non-Executive Director

Notes:
1 For the Members’ profiles see pages 116 to 127.
2 A total of five GAC meetings were held in FY2019. Reflects the number of meetings held during the time the member held office.

The GAC comprises four members, all of whom are Non-Executive Directors, with a majority being Independent Directors. The composition
of the GAC complies with the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (Listing Requirements) that stipulates,
at the minimum, a three-member committee with a majority being Independent Non-Executive Directors. Datuk Zaiton Mohd Hassan
serves as the Chairman of the GAC, thus satisfying the requirement of a separation of powers between the Chairman of the Board and
the Chairman of the GAC as prescribed by the Malaysian Code on Corporate Governance (MCCG) 2017. None of the GAC members is a
former key audit partner of the Group.

Meetings of the GAC are attended by the Group Managing Director, Chief Financial Officer, Managing Director, Sime Darby Oils, Chief
Operations Services Officer, Chief Integrity & Assurance Officer (CIAO), and Chief Risk Officer. In addition, other members of senior management
are also invited to attend meetings as and when necessary to support detailed discussions.

The external auditors, PricewaterhouseCoopers PLT (PwC), also attend and brief the GAC on matters relating to external audit for the year
under review and provided update on past audit matters at the meetings.
 Annual Report 2019 PG. 150 – 151

The Chairman of the GAC, Datuk Zaiton Mohd Hassan, ROLES OF THE COMMITTEE
is a Fellow and Council Member of the Association of
Key areas under the purview of the GAC include financial
Chartered Certified Accountants (ACCA), a member of
reporting and performance oversight, the Group’s in-house
the Malaysian Institute of Accountants (MIA), Malaysian
internal audit (assurance) and integrity & governance
Institute of Certified Public Accountants (MICPA) and
functions, dealings with external auditors, related party
International Federation of Accountants (IFAC) Professional
transactions, share issuance schemes, as well as controls
Accountants in Business (PAIB) Committee.
and governance oversight.

Dato’ Mohd Nizam Zainordin is a Fellow of the ACCA, a

GOVERNANCE FRAMEWORK
Further details on the functions and duties of the GAC
member of the MIA and holds an Executive Masters in
are provided in its Terms of Reference (TOR), which is
Business Administration. He is a Certified Financial Planner
available in the Corporate Governance section of our
and has held various finance and investment positions in
Group’s corporate website at www.simedarbyplantation.
his more than 25-year career.
com/corporate/corporate-governance.

Dato’ Henry Sackville Barlow obtained his Bachelor and

Master of Arts degrees from the University of Cambridge, ANNUAL PERFORMANCE ASSESSMENT
United Kingdom, and is a Fellow of the Institute of
In April 2020, the Board performed an annual review of
Chartered Accountants in England and Wales (ICAEW)
the term of office and performance of the GAC. The Board
and a member of the MIA. He has over 35 years of
is satisfied that the GAC has effectively discharged its
experience in the plantation industry and is currently the
duties in accordance with its TOR. The Board agreed that
Joint Chair of the Grievance Committee of the Roundtable
the GAC Chairman has properly discharged her
on Sustainable Palm Oil (RSPO).
responsibilities, deploying resources and expertise and
providing appropriate reporting and recommendation to
6
Tan Ting Min obtained her Bachelor and Master of Arts
the Board.
degrees from the University of Cambridge, United Kingdom
in 1991 and 1994, respectively. She is an experienced equity
strategist, having served Credit Suisse Malaysia since 1994
until her retirement in 2017, and has covered the plantation
sector for close to 25 years.

The GAC members bring diversity in knowledge and skills

to the Group in the effective discharge of their duties.
Among the four members of the GAC, three are qualified
accountants. Additionally, two of the members have
extensive experience in the plantation business. Both
professions, combined, satisfy the need for the GAC to
be financially literate and have sufficient understanding
of the Group’s activities. In keeping abreast of relevant
developments in the industry, governance and regulatory
landscape, the GAC members participate in relevant
continuous professional development programmes, which
maintains high-quality GAC deliberations.

Further details on the professional development

programmes attended by the GAC members are provided
in their respective profiles available in the Group’s corporate
website at www.simedarbyplantation.com/our-people/
board-of-directors.
GOVERNANCE & AUDIT COMMIT TEE REPORT

OUR FOCUS AND ACTION PLAN

The GAC received updates on key governance matters, audit initiatives and issues across the Group at each of its
quarterly meetings. The GAC also reviewed significant matters including financial reporting issues, significant judgements
made by Management, material and unusual events or transactions, and how these matters were addressed. The
summary of key matters discussed by the GAC during the year is shown below:

Significant
Matters Considered Outcomes
Initiatives/Issues

Recoverability of the Following the Board’s approval of SDP Liberia’s The GAC considered and
Group’s investment finalised exit option, Management had assessed the concurred with Management’s
in Sime Darby conditions of the Malaysian Financial Reporting assessment that the non-
Plantation (Liberia) Standards (MFRS) 5 to classify SDP Liberia as current assets of SDP Liberia
Inc. (SDP Liberia) non-current assets held for sale as at 30 September are fully impaired. The GAC
2019, and accordingly re-measured the non-current further concurred that the
assets held for sale at the lower of its carrying results of SDP Liberia are
amount and fair value less cost of disposal (FVLCS). presented as a discontinuing
As a result, Management had recognised an operation in FY2019 following
additional impairment charge of RM256 million in the requirements of MFRS 5.
FY2019 for SDP Liberia, on the basis that the
recoverable amount based on FVLCS is expected to The gain on disposal of SDP
be USD1 and included impairment of other current Liberia would be recognised in
assets. Quarter 1 of FY2020 as the
completion of the divestment of
PwC had reviewed and concurred with SDP Liberia only took place on
Management’s assessment. 15 January 2020. The completion
of the divestment of SDP
Liberia would be disclosed in
the financial statements for
FY2019 as a subsequent event
in accordance with MFRS 110
“Events after the reporting
period”.

Impairment The carrying value of goodwill arising from NBPOL’s The GAC agreed with
assessment on the acquisition was allocated to two of SDP’s cash Management’s assessment and
carrying value of generating units (CGU), i.e. NBPOL Group and view that no impairment charge
goodwill arising Minamas Group, since Minamas Group operations are is required for FY2019 as the
from the New Britain expected to benefit from the synergies of the recoverable amount exceeded
Palm Oil Limited acquisition of NBPOL. NBPOL’s carrying value. The
(NBPOL) acquisition GAC further concurred that
Management performed an impairment assessment of appropriate disclosures of key
the CGU based on value-in-use (VIU) determined using assumptions and sensitivities are
the discounted cash flow projection for each CGU. made in the Group’s financial
Management also performed a range of statements for FY2019.
sensitivity analysis, the results of which showed that
an individual change of the key assumptions
provides sufficient headroom on the VIU to recover
the carrying value of the net assets (including the
allocated goodwill) in Minamas Group. However,
should all the key assumptions used change in a
negative manner, the Group will record a deficit.

PwC had reviewed and concurred with

Management’s assessment.

SUMMARY OF ACTIVITIES
During the year under review, the GAC discharged its
functions and carried out its duties as set out in its TOR.
The summary of key activities undertaken by the GAC
during the year under review is provided below:
1. Financial Reporting
At its quarterly meetings, the GAC reviewed the
quarterly financial results and the related
announcements and press statements, prior to
submission to the Board for approval.
The GAC reviewed the annual audited financial
statements of the Company and the Group, and
the accompanying Directors’ Report to ensure
that the financial statements were drawn up
pursuant to the requirements of MFRS and
provisions of the Companies Act 2016 in Malaysia,
for recommendation to the Board for approval.
At its quarterly meetings, the GAC focused on
changes to the accounting policies and practices,
significant judgement and estimates, summary of
uncorrected misstatement, foreign currency
exposures and liquidity risk, divestment of non-
performing and non-core assets, and matters relating
to big data analytics and information technology.
The GAC also reviewed Management’s assessment
and impact analysis on the following:
(a) Tax provisions;
(b) Tax reviews conducted by inland revenue,
customs and other authorities on companies
within the Group;
(c) Provisions for doubtful debts and stock
obsolescence;
(d) Provisions and disclosures on legal matters
and claims; and
(e) All other financial disclosures to be made in
the public documents.
The GAC considered the proposed dividends for
recommendation to the Board for approval.
2. External Audit
The GAC had quarterly private meetings with the
external auditors, PwC, without the presence of
Management (except for the Group Secretary)
during the year under review to discuss any matters
PwC may wish to present and to ensure that there
were no restrictions in the scope and discharge
of their audit activities.
Annual Report 2019 PG. 152 – 153
At all of its quarterly meetings held throughout
FY2019, the GAC reviewed the results and issues
arising from PwC’s audit, including the Key Audit
Matters and the update on Management’s
responses and resolution actions on issues
highlighted in PwC’s report.
On 22 August 2019, the GAC reviewed and
approved PwC’s Group Audit Plan which outlined
GOVERNANCE FRAMEWORK
the audit strategy and approach for FY2019. PwC
and all members of its engagement team have
confirmed their independence in accordance with
PwC’s requirement and with the provisions of the
By-Laws on Professional Ethics, Conduct and
Practice of the MIA in its Report to the GAC.
The annual assessment on PwC’s performance
(i.e. suitability, objectivity and independence) was
completed on 2 April 2020 and conducted in
accordance with the Group’s policy on External
Auditor Appointment & Selection based on the
following criteria:
(a) The competence, audit service quality and
resource capacity of the external auditor in
6
relation to the audit;
(b) The nature and extent of the non-audit
services rendered and the appropriateness
of the level of fees; and
(c) The governance and independence of the
external auditor.
Accordingly, the GAC had recommended the
reappointment of PwC to the Board. Prior to that,
on 21 February 2020, the GAC had also
recommended for the Board’s approval the
proposed global audit fees payable to the Group’s
external auditors for FY2019.
3. Internal Audit
The GAC held quarterly sessions with the CIAO,
without the presence of Management (except for
the Group Secretary) to discuss any matters CIAO
may wish to present and to ensure that there
were no restrictions in the discharge of the Group’s
internal audit activities. As the Group has a
combined internal audit (assurance) and integrity
& governance functions under the CIAO’s purview,
matters relating to integrity & governance activities
were also included in the private discussions.
GOVERNANCE & AUDIT COMMIT TEE REPORT

On 22 November 2018, the GAC reviewed the
Group Corporate Assurance (GCA) Plan for FY2019
(the Plan) and ensured adequacy of its scope and
coverage of the Group’s activities based on GCA’s
risk-based audit methodology and adoption of
agile auditing principles. In approving the Plan,
the GAC considered the adequacy of GCA’s
resources and competencies to execute the Plan.
The GAC had also approved the revised GCA
Charter.
At every quarterly meeting held throughout FY2019,
the GAC reviewed the internal audit reports
presented by GCA. These include the results of
all planned, follow-up and special audits (including
investigations on whistleblowing and non-
whistleblowing cases) and the corresponding key
findings, recommendations and corrective actions
taken by Management. GCA also presented the
status of audits as compared to the Plan and its
resource adequacy in fulfilling the Plan.
At every quarterly meeting, the GAC also reviewed
the minutes of meetings of Minamas Plantation’s
GAC and/or the minutes of meetings of New
Britain Palm Oil’s Audit Committee for oversight
of the state of internal control systems of those
key subsidiaries.
The Group Integrity, Governance & Assurance’s
(GIGA) Key Performance Indicators (KPI) for FY2019
was approved by the GAC on 2 April 2019.
Subsequently, the performance appraisal of the
CIAO following GIGA’s FY2019 KPI was deliberated
and approved by the GAC on 21 February 2020.
4. Integrity & Governance
The GAC Chairman updated the Board on key
matters deliberated at GAC meetings and the
activities undertaken by the GAC. Minutes of the
GAC meetings are circulated to the Board for
noting. This is a standing agenda item at the
quarterly meetings of the Board.
On 22 November 2018, the GAC reviewed and
approved the Group Compliance (GCO) Plan for
FY2019, which outlined the Group’s integrity and
governance initiatives/key activities and the
corresponding resources required to support the
achievement of the GCO Plan. The GAC had also
approved the revised Integrity & Governance
Charter.
The GAC had reviewed and endorsed the revisions
made to the Group Policies & Authorities (GPA)
on 20 February 2019 and 22 August 2019 for
recommendation to the Board for approval. The
GPA revision made in August 2019 included changes
to the Limits of Authority proposed by Management,
following senior leadership changes.
In ensuring the Group’s readiness for the
enforcement of the Corporate Liability provision
of the Malaysian Anti-Corruption Commission
(Amendment) Act 2018 (Section 17A) come June
2020, the GAC had:
(a) On 20 February 2019, reviewed and
recommended to the Board for approval the
Anti-Corruption Compliance Programme,
which follows the Adequate Procedures’
Guiding Principles of T.R.U.S.T 1. As part of the
Group’s Anti-Corruption Programme, the GAC
had endorsed for GCO to pursue the ISO
37001 Anti-Bribery Management System
(ABMS) certification in ensuring that the
Group is on the right track of the adequate
procedures defence against Section 17A.
(b) On 18 November 2019, reviewed and
recommended for the Board’s approval, the
Group’s Anti-Corruption Compliance Framework
and Anti-Corruption Policy Statement in
strengthening the Group’s defence on adequate
procedures.
(c) Reviewed the quarterly updates on ABMS
certification progress presented in GCO Reports
from the GAC’s May 2019 meeting onwards,
including the anti-corruption risk assessment
exercises undertaken and to be undertaken
for each country that the Group operates.
The GAC had endorsed the GPA on Integrity &
Governance (IG) for the Board’s approval in August
2019 and subsequently approved the IG Charter
in November 2019. The GAC also endorsed the
biannual submission of the “Integrity & Governance
Core Function Report” to the Malaysian Anti-
Corruption Commission (MACC) in August 2019
and February 2020, for the periods January to
June 2019 and July to December 2019, respectively.

1 The “Guidelines on Adequate Procedures” issued by the Malaysian Prime Minister’s Department outline the five Adequate Procedures
principles, in the acronym of T.R.U.S.T (Top Level Commitment; Risk Assessment; Undertake Control Measures; Systematic Review, Monitoring
and Enforcement; Training and Communication)
 Annual Report 2019 PG. 154 – 155

The GAC reviewed the statistics of whistleblowing 6. Annual Report

complaints received through the Group’s various
whistleblowing channels and the manner to which
the complaints were addressed. Results of
whistleblowing investigations were also monitored
every quarter to ensure that independent
investigation of the allegations had been conducted
and appropriate follow-up action was taken.
The GAC reviewed and endorsed on 2 April 2020
for the Board’s approval, the following documents
for inclusion in the Group’s Annual Report 2019:
(a) The Corporate Governance Report;
(b) The Corporate Governance Overview Statement;
(c) The Governance & Audit Committee Report;
and

The Group’s regulatory compliance across prioritised
compliance areas were monitored on a quarterly
basis by the GAC, through GCO Report that
included the results of self-attestation by
Management to known non-compliance incidents
and independent assessments of the adequacy
of compliance controls.
GOVERNANCE FRAMEWORK
(d) The Statement on Risk Management and
Internal Control.
7. Other Matters
The GAC reviewed its TOR and recommended
the amendments to the Board for approval.

5. Related Party Transactions (RPT) and Recurrent
Related Party Transactions (RRPT)
The GAC reviewed the related party disclosures
of the Group in compliance with the MFRS 124,
the Listing Requirements, the Malaysian Companies
Act 2016, and the Group’s internal guidelines, on
a quarterly basis. The GAC reviewed the RPTs/
RRPTs at all quarterly meetings held during FY2019.
As a standing agenda, the following reports are
presented to the GAC on a quarterly basis for
noting purposes:
(a) Report on hedges and open positions; and
(b) Appointments of financial advisors for
non-audit services. 6

GROUP INTEGRITY, GOVERNANCE & ASSURANCE

A. Overview
The GIGA function comprises GCA and Group Integrity
Non-
& Governance (GIG1). GIGA is an independent function, Offices/Regions Executives Executives Total
reporting directly and functionally to the GAC and
administratively to the Group Managing Director and Head Office,
 Malaysia 39* 3# 42
headed by the CIAO, Nik Maziah Nik Mustapha. Nik
Indonesia 31@ 0 31
Maziah is a Certified Internal Auditor (CIA) with the
Papua New
Global Institute of Internal Auditors, a member of the
 Guinea 2& 0 2
MIA and has completed the Certified Integrity Officer
(CeIO) programme by the MACC. She has gained Total 72 3 75
about 23 years of working experience, primarily within
Notes:
the ambit of Governance, Risk and Compliance (GRC)
* CIAO, Practice Manager, 25 GCA, 7 GCO and 5 GFCRM personnel
function, in a wide range of industries including # Includes 1 Secretary who is a diploma holder
banking, airline, property and plantation. @ 30 GCA and 1 GCO personnel

& 2 GCA personnel

GIGA is manned by 75 personnel comprising

72 executives and 3 non-executive/administrative Diploma
staff across Malaysia, Indonesia and Papua New 4 With
20
Guinea, who have the right balance of knowledge,
skills and competencies to support the effective
Professional
execution of the annual GCA and GIG Plans. In
Education Certifications
enhancing the professionalism and quality of services or equivalent
Level
to the Group, members of GIGA are encouraged to (including
pursue relevant professional certifications and in progress)

memberships as detailed out below:

68 52
Degree Without
1 GIG comprises GCO and Group Fraud & Corruption Risk Management
(GFCRM) as its sub-functions.
GOVERNANCE & AUDIT COMMIT TEE REPORT

B. Group Corporate Assurance

GCA’s principal responsibility is to undertake regular
and systematic reviews for the Group to evaluate and
improve the effectiveness of risk management, control
and governance processes. The ambit of GCA is defined
in the GCA Charter, which is annually reviewed and
tabled to the GAC for approval.
GCA activities are governed by the Global Institute of
Internal Auditors mandatory guidance including the
Definition of Internal Auditing, the Code of Ethics, and
the International Professional Practices Framework. In
addition, an internal Quality Assurance and Improvement
Programme (QAIP) that is managed by GCA’s Practice
Management unit, promotes continuous assessment
and improvement within the function. As part of the
QAIP, structured projects focussing on operational
excellence, elevating competence, improved
communication and sharing of best practices set the
foundation towards GCA’s first external assessment
exercise (post Pure Play) to be undertaken in FY2021.
All of these continuous improvement efforts ensure
that GCA remains effective and responds to the
expanding demand for value-added internal audit and
advisory services.
In maintaining independence and objectivity, GCA
ensures that its internal auditors are free from any
relationship or conflict of interest when performing
their duties.
All independent internal audit and advisory services
for the Group during FY2019 were conducted by GCA.
In ascertaining adequate internal audit coverage
throughout the Group’s operations, GCA is supported
by Regional Heads in GCA Malaysia, GCA Indonesia
and GCA Papua New Guinea, who all report to CIAO.
Under the supervision of a GCA IT & Analytics Head,
who also reports to CIAO, GCA runs an in-house data
analytics unit to optimise further the use of analytics
throughout the audit lifecycle. The expanded use of
data analytics helps to broaden audit coverage in
providing a more comprehensive opinion on the
effectiveness of governance, risk and controls to the
businesses, increases audit efficiencies and enables
GCA to provide continuous control monitoring services
to operating management in assisting them to embrace
self-governance. The operational costs incurred by
GCA for FY2019 was approximately RM10.7 million,
comprising mainly staff costs and travelling expenses.

In line with the Group’s Strategic Plan, GCA supports the Group by providing assurance within the following key
focus areas:

Group’s Strategic Plan GCA’s Audit Coverage

Driving operational excellence through
digitisation
Serving the customer of the future
Maximise returns across the value chain
Digitised systems – Utilisation of fresh fruit bunches evacuation/
tracking (SEMUA) and harvesting supervision (SDDS) systems
CAPEX – dust collection system
FFB bunch reconciliation
Open position monitoring and reporting
Options trade
Procurement, inventory and cost management
Bulking operations
Kernel crushing plant
Doubtful debts
Value creation initiatives
Land management

Apart from the above assurance coverage, GCA also regularly monitors the implementation progress of
recommended action plans by Management to ensure timely resolution of audit findings/issues in addressing
any risk and control gaps.
 Annual Report 2019 PG. 156 – 157

C. Group Integrity & Governance

GIG oversees the functions of whistleblowing (complaints management), investigations (detection & verification),
integrity enhancement, and governance for the Group.

Group Compliance
GCO provides compliance assurance and advisory support to ensure that the Group’s operations are conducted
in accordance with regulatory requirements, internal policies and procedures, Code of Business Conduct
(COBC) and standards of good business practice. The GCO Framework is based on the Australian Standard

GOVERNANCE FRAMEWORK
3086 Compliance Programme and maps out its key activities as prescribed in its Integrity & Governance
Charter, which is depicted below:

IANCE CULTUR
MPL E
CO
TRAINING

Compliance Compliance
Reporting Risk Identification
& Resolution & Assessment 6

LEADERSHIP
ENGAGEMENT

Compliance
Compliance
Management
Monitoring
& Mitigation

CO M N
MUNICATIO
CO M RE
P LI A N C E C U L T U

Compliance Governance Regulatory Compliance Corporate Compliance

Whistleblowing Regulation & Legislation Policy Instrument Framework

Anti-Corruption Compliance Code of Business Conduct
Advisory & Special Projects (COBC)
Control Self-Assessment
GOVERNANCE & AUDIT COMMIT TEE REPORT

In addressing the compliance issues and concerns within the Group, the following key activities were undertaken
during the year under review:

Pillars Key Activities

Compliance a) Revised the Group Compliance Charter in aligning to the integrity & governance unit’s
Governance roles and responsibilities.

b) Administered the whistleblowing channel which entails receipt of whistleblowing

complaints, channelling complaints for investigation, monitoring of cases for closure as
well as reporting to relevant parties on whistleblowing complaints received.

c) Conducted half-yearly reporting of the activities of the Integrity & Governance function
to the MACC.

Regulatory a) Commenced the pursuit of the ISO 37001 ABMS certification, as part of the Group’s
Compliance preparation to meet the requirements of Adequate Procedures as a defence to
Section 17A. Among others, these included the following:

– Developed an Anti-Corruption Compliance Framework and Anti-Corruption Policy

Statement. In line with the Listing Requirements, the Group’s Anti-Corruption
Policy Statement has been made available on the Group’s corporate website to
emphasise the Group’s zero tolerance towards bribery and corruption.

– Conducted corruption awareness sessions and corruption risk assessment

workshops for key management and operations personnel based in Malaysia,
Indonesia, Papua New Guinea, the Solomon Islands and Thailand. Following the
outcome of the corruption risk assessments, internal control improvements to
mitigate corruption risks were identified for Management’s implementation.

– Equipped GCO, GCA and GFCRM staff with the necessary skills and knowledge for
better understanding of the Section 17A requirements via relevant trainings on
“Implementing ISO 37001” and “ISO 37001 Lead Auditor Training”.

– Conducted awareness sessions on anti-bribery and anti-corruption as part of the

COBC awareness programmes.

– Enhanced relevant HR policies and procedures on consequence management and

the identification of ‘hot jobs’ relating to corruption exposure.

b) Provided advisory on regulatory compliance matters such as sanctions, anti-

competition and personal data protection.

c) Monitored the status of compliance with laws and regulations and the
implementation of corrective action.

Corporate a) Conducted COBC awareness sessions for employees based in Malaysia, Indonesia,
Compliance Papua New Guinea, the Solomon Islands and Thailand.

b) Reviewed GPA to ensure that they remain relevant in the current operating
environment, reflect better intended practices for relevance, which included the
development of new GPA on competition law compliance and trading & sales.

c) Conducted awareness sessions on the Policy Instrument Framework to ascertain that

operations within the Group adhere to the established standards on the hierarchy,
approval, development, establishment, amendment and review of all core policy
instruments.

d) Engaged Upstream Malaysia operations in a control self-assessment exercise covering

121 estates and 33 mills.
 Annual Report 2019 PG. 158 – 159

Group Fraud & Corruption Risk Management

GFCRM detects and responds to fraud and corruption incidents/risks by conducting special reviews and investigations
at the request of the GAC, Management and complaints received through the whistleblowing channel. Key
activities conducted by GFCRM during the year under review included the following:

Strategy Activities

Prevent Collaborated with GCO in the implementation of integrity enhancement activities as

part of the prevention mechanism for the Group.

GOVERNANCE FRAMEWORK
Detect Given the first year of set-up, GFCRM had initiated a fraud and corruption risk
assessment for Upstream Malaysia operations and implemented fraud and corruption
detection strategies and mechanisms for the same. This activity will expand in FY2020.

Respond Undertook special reviews and investigations reported via the whistleblowing
channel or as requested by stakeholders, including conducting or assisting the
investigation of suspected fraudulent activities within the Group.

Worked closely with the Industrial Relations of Group HR in verifying evidence and
participated in Disciplinary Inquiry due processes.

This Report is made in accordance with the resolution of the Board of Directors dated 16 April 2020.
6
NOMINATION & REMUNER ATION
COMMIT TEE REP ORT

“The Committee reviews the Board composition and ensures that any appointment
brings the right balance of skills, knowledge, breadth of experience and diversity
to the Board. The Committee also oversees the appointment and promotion of
Senior Management and succession plans to support the development of talent
within the Group.”

TAN SRI DATUK DR. YUSOF BASIRAN

Chairman of the Nomination & Remuneration Committee

INSIDE THIS REPORT

This report highlights the activities of the Nomination & Remuneration Committee (NRC) during the financial year
ended 31 December 2019. We report to shareholders on our responsibility in supporting the development of a
balanced Board in terms of expertise, skills, experience and diversity and ensuring remuneration principles for Directors
will adequately compensate the Directors for their time and effort for the continuous success of the Company.

WHO IS THE COMMITTEE:

Members 1 Membership Appointment Attendance

Tan Sri Datuk Dr. Yusof Chairman/Independent 14 July 2017 5/5 100%
Basiran Non-Executive Director

Datuk Zaiton Mohd Member/ 14 July 2017 3/5 60%

Hassan Senior Independent Non-Executive Director

Dato’ Mohd Nizam Member/ 14 July 2017 4/5 80%

Zainordin Non-Independent Non-Executive Director

Dato’ Henry Sackville Member/ 5 April 2019 3/3 100%2

Barlow Independent Non-Executive Director

Notes:
1 For the Members’ profiles, see pages 116 to 127.
2 Reflects the number of meetings held during the time the Director held office

The NRC comprises Non-Executive Directors (NED) with a majority being Independent Directors and includes a Senior
Independent NED. The composition of the NRC complies with the requirements of both the Main Market Listing
Requirements of Bursa Malaysia Securities Berhad (Listing Requirements) and the Malaysian Code on Corporate
Governance (MCCG) 2017.

Meetings of the NRC are attended by the Group Managing Director (GMD). Other members of Senior Management
are invited to meetings of the NRC when necessary to support detailed discussion on matters relevant to the agenda
of the meeting.

ROLES OF THE COMMITTEE
The primary objectives of the Committee are as follows:
To assist the Board in reviewing the appropriate size
and balance of the Board, and reviewing the required
mix of skills, experience and knowledge of the Directors.
The NRC also ensures that there is sufficient succession
planning and human capital development focus in
the Sime Darby Plantation Berhad (SDP) Group.
To recommend to the Board the remuneration
framework for the Non-Executive Chairman, the GMD,
NEDs, Executive Directors, key Management positions
and employees of the SDP Group.
The Terms of Reference (TOR) of the NRC are available
online in the Governance section at www. simedarbyplantation.
com/corporate/corporate-governance.
ANNUAL PERFORMANCE ASSESSMENT
The Board has reviewed the Committee’s effectiveness in
carrying out its duties as set out in the Committee’s TOR.
The Board is satisfied that the Committee has effectively
discharged its duties in accordance with its TOR.
The Committee’s TOR was revised on 6 January 2020 for
administrative matters.
OUR FOCUS DURING THE FINANCIAL YEAR ENDED
31 DECEMBER 2019
During the Financial Year Ended 31 December 2019, the
NRC undertook the following key activities:
1. Nomination Function
Recommending the re-election of Directors retiring
at the 2019 Annual General Meeting (AGM)
Assessing and recommending the composition
of the Board and Board Committees
Evaluating and recommending suitable candidates
for appointments at key Management positions
Recommending revisions to the TOR of the NRC
Recommending the disclosure of the Report on
the NRC for the Annual Report for the six-month
financial period ended 31 December 2018.
Overseeing succession planning for the Executive
Deputy Chairman & Managing Director (EDCMD)
Reviewing and recommending development
Annual Report 2019 PG. 160 – 161
initiatives for key Management.
Monitoring the conduct of the Board Effectiveness
Assessment (BEA) 2019
Recommending suitable training programmes to
continuously train and equip Directors
Reviewing the Bumiputera Empowerment Agenda
Key Performance Indicators (KPI) 2018 achievement
GOVERNANCE FRAMEWORK
from January 2018 to December 2018.
2. Remuneration Function
Recommending the remuneration for the NEDs
of the SDP Group of Companies for the six-month
financial period ended 31 December 2018
Reviewing and recommending the remuneration
and benefits for the EDCMD and Direct Reports
to the EDCMD
Recommending the salary increment and ex-gratia
proposals for the six-month financial period from
1 July 2018 until 31 December 2018
Recommending the composition and remuneration 6
framework of the Board of Directors of Sime
Darby Oils International Limited
Reviewing the performance of the EDCMD and
recommending the ex-gratia proposal for the
EDCMD
Recommending the salary increment and ex-gratia
proposals for Direct Reports to the EDCMD
Deferment of the Long Term Incentive Plan.
NOMINATION AND RECRUITMENT PROCESS
One of the NRC’s key roles is to drive the recruitment
process for new Directors. In considering candidates as
potential Directors, the NRC takes into account the
following criteria:
Skills, knowledge, expertise and experience
Time commitment, character, professionalism and
integrity
Perceived ability to work cohesively with other members
of the Board
Specialist knowledge or technical skills in line with
the Group’s strategy
Diversity in age, gender and experience/background
Number of directorships in companies outside the
Group.
On the appointment of Directors on the Board of SDP,
N O M I N AT I O N & R E M U N E R AT I O N C O M M I T T E E R E P O R T
where applicable, the NRC will seek third-party feedback
on candidates that the NRC is considering for recommendation
to the Board of SDP.
Prior to appointment, potential Directors are made aware
of the time commitment expected from each of them
in carrying out their roles as Director and/or Member of
Board Committees including attendance at the Board,
Board Committees and other meetings. Directors are
required to confirm that they are able to devote sufficient
time to their roles at the Company and at the Group
taking into consideration the number of their listed
company board(s) and other commitments. In accordance
with the provisions of the Listing Requirements, none of
the Directors hold more than five (5) directorships in listed
issuers during the financial year ended 31 December 2019.
Mohamad Helmy Othman Basha was appointed as the
GMD of the Company on 1 July 2019 following the
retirement of Tan Sri Dato’ Seri Mohd Bakke Salleh as
the EDCMD of the Company on 30 June 2019.
On 28 November 2019, the Board approved the appointment
of Tunku Alizakri Raja Muhammad Alias in place of Dato’
Mohamad Nasir Ab. Latif as a Non-Independent NED on
the Board of SDP and as a Member of the Sustainability
Committee.
The Group Secretary ensures that all appointments are
properly made and that all necessary information is
obtained from the Directors, both for the Company’s own
records and for the purposes of meeting statutory obligations
as well as obligations arising from the Listing Requirements.
RE-ELECTION OF DIRECTORS
The NRC ensures that the Directors retire and are re-
elected in accordance with the relevant laws and
regulations and the Company’s Constitution.
Pursuant to Rule 81.2 of the Company’s Constitution, any
Director appointed during the year shall hold office only
until the conclusion of the next AGM and shall be eligible
for re-election at such meeting, but shall not be taken
into account in determining the number of Directors who
are to retire by rotation at such meeting.
Pursuant to Rule 103 of the Company’s Constitution, at
least one-third (1/3) of the Directors (excluding the Director
seeking re-election pursuant to Rule 81.2 of the Company’s
Constitution) are required to retire by rotation at each AGM.
Rule 104 of the Company’s Constitution states that all
Directors shall retire from office once at least in each three
(3) years. A retiring Director shall be eligible for re-election.
The Board recommends the re-election of the following
Directors who will be retiring pursuant to Rules 81.2 and
103 of the Company’s Constitution at the forthcoming
AGM:
Rule 81.2 of the Constitution
Tunku Alizakri Raja Muhammad Alias
Tunku Alizakri is the Chief Executive Officer of the
Employees Provident Fund Board (EPF). Representing
EPF as its nominee Director on the Board of the
Company, Tunku Alizakri’s extensive experience in policy
development and strategic planning contributes
significantly to the deliberations at meetings of the
Board and Board Committees.
Mohamad Helmy Othman Basha
Mohamad Helmy was appointed as the GMD of the
Company on 1 July 2019. He has been instrumental in
delivering the transformational strategies and driving
the Group’s business and performance towards achieving
its vision and goals by focusing on operational
improvements and acceleration of innovation through
research & development and agronomic practices as
well as enhancing value through sustainability.
Rule 103 of the Constitution
Zainal Abidin Jamal
Zainal has held the position of a Non-Independent NED
since 14 July 2017 and is currently Chairman of Risk
Management Committee of the Company. He is also
the Chairman of Maybank Islamic Berhad. As a prominent
corporate and commercial lawyer, He possesses immense
knowledge, skill and experience in the legal, compliance
and regulatory area. He provides valuable legal perspective
and insight to the Company’s investment proposals and
corporate activities. He is also a member of the
Sustainability Committee and Board Tender Committee
of the Company.
Tan Ting Min
Tan has held the position of an Independent NED of
the Company since 14 July 2017. She was the regional
plantation sector team lead in Credit Suisse Malaysia
from 1998 to 2017 and has an extensive career in
plantation sector spanning over 25 years. She has
extensive experience in equity investment through her
career in Credit Suisse has provide effective discussion
at Board and Board Committee meetings. She is also
a member of the Risk Management Committee,
Governance & Audit Committee and Board Tender
Committee.

Lou Leong Kok
Lou is an Independent NED of the Company and was
appointed to the Board on 1 December 2017. He has
broad business experience and knowledge on
investment and edible oil sector spanning over 38
years. His extensive network and expertise in managing
investment and business of edible oil have brought
added input during deliberation at meetings of the
Board and Board Committees. He is also a member
of the Risk Management Committee.
The Directors have met the Board’s expectations of high
performance based on the performance and contribution
of each Director as assessed through the BEA 2019.
The Board is of the view that the Independent Directors
have brought independent and objective judgment in
Board deliberations and decisions.
TENURE OF THE INDEPENDENT DIRECTORS
None of the six (6) Independent Directors have served
on the Board for more than nine (9) years.
Two (2) Independent Directors namely Tan Ting Min and
Lou Leong Kok are seeking re-election at this AGM.
BOARD COMPOSITION AND DIVERSITY
The Board Composition Policy was adopted by the Board
in February 2018 and reviewed in September 2018 to
align with the Securities Commission Malaysia’s stated
target of increasing women participation on the Boards
of the top 100 companies on Bursa Malaysia Securities
Berhad. The Board’s progress towards achieving targets
set out in the Policy is as shown below.
Gender Diversity
The Board will maintain at least two (2) women Directors
on the Board and will actively work towards having a
minimum of 30% women as members of the Board
by 2020.
Age Diversity
The Board will work towards having a generationally-
diverse Board so as to have a balance between maturity
and experience.
The age diversity of the Board can be found on page
26 of the Corporate Governance Report at www.
simedarbyplantation.com/corporate/corporate-governance.
Annual Report 2019 PG. 162 – 163
• Ethnic Diversity
The Board will work towards diversifying the ethnic
composition of the Board as and when vacancies arise
and suitable candidates are identified.
• Independence of Directors
Currently, six (6) out of 11 Directors of SDP are Independent
Directors. A Board comprising a majority of Independent
Directors allows for more effective oversight of
GOVERNANCE FRAMEWORK
Management.
The NRC is responsible for the implementation of the
Policy and for monitoring progress towards the achievement
of the Board’s objectives.
The salient features of the Policy are available online in
the Corporate Governance section at www.
simedarbyplantation.com/corporate/corporate-governance
BOARD EFFECTIVENESS ASSESSMENT
The BEA 2019 was conducted internally through
questionnaires. The questionnaires were based on the 6
Corporate Governance Guide (3rd Edition) on the Guidance
on Board Leadership and Effectiveness issued by Bursa
Malaysia Securities Berhad.
Detailed information on the BEA and the assessment
criteria is provided in the Corporate Governance Report
from pages 35 to 37 available in our website www.
simedarbyplantation.com/corporate/corporate-governance.
BOARD REMUNERATION FRAMEWORK
The Remuneration Framework for members of the Board
and Board Committees of SDP was last reviewed and
adopted in August 2017. There has been no change to
the Remuneration Framework since 2017.
Detailed disclosure on the remuneration of individual
Directors of SDP on named basis is provided in the
Corporate Governance Overview Statement from pages
146 to 148.
SUSTAINABILIT Y
COMMIT TEE REP ORT

“With increased scrutiny around the implementation of No Deforestation, No Peat

and No Exploitation commitments within the supply chain, Sime Darby Plantation
Berhad has implemented measures to further strengthen how it manages supply
chain sustainability risks this year.”

DATO’ HENRY SACKVILLE BARLOW

Chairman of the Sustainability Committee

INSIDE THIS REPORT

The purpose of this report is to highlight areas that the Committee has reviewed during the financial year ended
31 December 2019. We report to shareholders on our oversight responsibilities in relation to the Sime Darby Plantation
Berhad (SDP) Group objectives, policies and practices pertaining to sustainability, more particularly towards contributing
to a better society, minimising environmental harm and delivering sustainable development.

WHO IS THE COMMITTEE

Members 1 Membership Appointment Attendance

Dato’ Henry Sackville Chairman 5 April 2019 3/3 100%2

Barlow Independent Non-Executive Director

Muhammad Lutfi Member 13 December 2017 2/5 40%

Independent Non-Executive Director

Tunku Alizakri Raja Member 1 January 2020 N/A4 N/A4

Muhammad Alias3 Non-Independent Non-Executive Director

Zainal Abidin Jamal Member 13 December 2017 5/5 100%

Non-Independent Non-Executive Director

Former Member Membership Retirement Attendance

Dato’ Mohammad Nasir Member 31 December 2019 5/5 100%

Ab. Latif Non-Independent Non-Executive Director

Ex Officio Member Membership Appointment Attendance

Sir Jonathon Espie Sustainability Advisor 22 March 2018 4/5 80%

Porritt

Notes:
1 For the Members’ profiles see pages 116 to 127.
2 Reflects the number of meetings held during the time the Director held office.
3 Tunku Alizakri Raja Muhammad Alias was appointed after the FYE 31 December 2019.
4 Not Applicable.

The Sustainability Committee (SC) consists of Non-Executive Directors with 50% being Independent Non-Executives.
The Committee is supported by Sir Jonathon Espie Porritt, Sustainability Advisor. Sir Jonathon assists the Committee
by identifying emerging sustainability trends and their implications to SDP, and reviewing and advising on SDP’s
progress towards meeting its sustainability commitments, whilst meeting stakeholders’ expectations.

Meetings of the Committee are attended by the Group Managing Director, the Chief Sustainability Officer, together
with other members of senior management.
 Annual Report 2019 PG. 164 – 165

ROLES OF THE COMMITTEE OUR FOCUS AND ACTION PLANS

The SC is committed to ensuring that the Group operates
in line with its sustainability purpose, which is to contribute
to a better society, minimise environmental harm and
deliver sustainable development.
The primary objectives of the Committee are as follows:
Reviewing the sustainability strategy and performance
Our Focus During the Financial Year Ended 31 December
2019
As SDP continues to implement responsible agricultural
practices throughout its global operations, there has been
increased scrutiny this year around how companies
operating in our sector, including SDP, are implementing
commitments to contribute to a better society, minimise

at the Board level around the critical sustainability
issues to the SDP Group, which includes health and
safety, biodiversity, conservation, human rights, climate
change, and supply chain sustainability.
Overseeing the monitoring, reporting and verification
of the Sustainability Key Performance Indicators of
SDP Group and their implementation through the
Group Blueprint and Roadmaps.
Emphasising and facilitating the adoption of a mindset
in favour of sustainability throughout the Group.
Working to a set of Corporate Sustainability Principles
(the Charter).
Detailed Terms of Reference for the Committee are
available online at the Corporate Governance section of
the corporate website at www.simedarbyplantation.com/
corporate/corporate-governance
ANNUAL PERFORMANCE ASSESSMENT
The Board performs an annual assessment of the SC’s
effectiveness in carrying out its duties as set out in the
Terms of Reference. The Board is satisfied that the
Committee has effectively discharged its duties in
accordance with its Terms of Reference.
GOVERNANCE FRAMEWORK
environmental harm and deliver sustainable development
throughout its global supply chain.
Although the SC deliberates in detail the sustainability
performance of SDP’s own operations, the management
of supply chain sustainability risks has also gained
prominence, with the company rolling out key initiatives
around the supply chain this year. These include:
– Launching the “Crosscheck” system, which is an online
access platform to demonstrate the transparency of
SDP’s global supply chain
– Launching the “Working with Suppliers to Draw the
Line on Deforestation” policy. This articulates SDP’s
approach to engaging with its supply chain. This is to 6
eliminate deforestation by third-party suppliers.
Throughout the year, SDP has been recognised for its
efforts around sustainability, and for the second year
running, SDP received awards in the 2019 Sustainable
Business Awards. SDP was awarded in the supply chain
management and land use and biodiversity categories,
whilst receiving a special recognition in the United Nations
Sustainable Development Goals category.

The Committee’s Terms of Reference was revised on

28 November 2019 on administrative matters.

Throughout the reporting period, the Committee has received updates on key sustainability initiatives and issues
across the Group at each Committee meeting. The Committee’s focus during these meetings has included:

Significant
Initiatives/Issues Matters Considered Outcome

Improving OSH related issues remain one of the top priority OSH Performance continues
Occupational areas deliberated in detail during the SC meetings, to be an area of focus for the
Safety and Health as the number of fatalities and major incidents entire Group. The frequency of
(OSH) Performance remain an area of concern. Safety & Health related
incidents have been reducing
Safety and Health performance indicators and for the third year running
mitigation actions undertaken by management since Calendar Year 2016.
across the Group are discussed extensively to
improve the overall performance of the company.
S U S TA I N A B I L I T Y C O M M I T T E E R E P O R T

Significant
Initiatives/Issues Matters Considered Outcome

Enhancing Supply Stakeholder expectations around the management The Group has achieved a 95%
Chain Sustainability of sustainability risks within the supply chain has traceability to mill level, and a
continued to intensify, with a focus on the issue of 47% traceability to plantation.
deforestation within the supply chain. The Group has launched
“Crosscheck”, an online access
The Committee has continued to deliberate in detail tool, to demonstrate and
the management’s efforts to improve supply chain communicate more effectively
transparency, manage supply chain sustainability the Group’s supply chain
risks and engage with suppliers around compliance footprint.
with SDP’s sustainability commitments.
The Group has also launched
its policy to “Work with
Suppliers to Draw the Line
Against Deforestation” to
articulate the Group’s
approach to engagement with
suppliers.

These initiatives are above and

beyond existing efforts to
manage supply chain risks
and manage supplier
grievances from stakeholders.

Enhancing Respect We have enhanced our scrutiny around how The Group has further rolled
for Human Rights organisations are implementing respect for Human out its Human Rights Impact
within the Rights, in line with the United Nations Guiding Assessments throughout its
Organisation Principles (UNGP) on Business and Human Rights. global operations to identify
salient human rights risks.
Salient human rights risks, such as management of Although the focus previously
migrant workers, modern day slavery and providing was around Upstream
access to grievance mechanisms continue to be operations, the scope of the
deliberated during Committee meetings and are assessments has also been
mitigated on the ground. extended to include Sime
Darby Oils operations.
Customers are also starting to look into Human
Rights practices of their suppliers with more An enhanced third-party
diligence. grievance channel was piloted
in selected Malaysian
operations to provide better
access to workers, and is
targeted to be rolled out
across Malaysia in 2020.

The Group also continues to

work with NGOs and
competitors in a pre-
competitive collaboration to
develop solutions to address
the more systemic human
rights challenges the industry
faces.
 Annual Report 2019 PG. 166 – 167

Significant
Initiatives/Issues Matters Considered Outcome

Climate Change The impact of Climate Change and mitigation To date, 13% of SDP’s mills
Impacts and actions undertaken by the Group has continued to have been equipped with
Mitigation be an area of focus for the Committee; progress of measures for methane
the biogas implementation plan is deliberated in capture, while several more
detail during the Committee meetings. are in different stages of
planning and/or development.

GOVERNANCE FRAMEWORK
The Committee this year has also looked into the
risk of stranded assets within the Group and The Group’s no-deforestation
deliberated around diversification of existing land commitment has also been
use, considering the future impacts of climate further strengthened
change and emerging regulations. throughout its supply chain
with increased efforts being
implemented in managing
supply chain sustainability
risks, and supplier grievances
from stakeholders.

The Group is currently

exploring various approaches
to diversify its existing land 6
use, taking into account
economic considerations and
issues of stranded assets whilst
ensuring any climate change
related impacts may be
mitigated.

COVID-19 Pandemic The Committee has at the end of FY2019 and at the Every effort has been made by
start of FY2020 deliberated and endorsed various management to contain the
Standard Operating Procedures and Guidelines to spread of the virus, which
tackle the issue of the COVID-19 pandemic. include:
Working from Home
arrangements
Restrictions and
minimisation of business
travel
Full compliance with
government guidelines and
regulations in all countries,
e.g. the Movement Control
Order (MCO) in Malaysia
Rollout of Emergency
Preparedness and
Response Procedures
across the organisation to
protect the safety and
health of workers
Execution and rollout of
the Business Continuity
Plan
S U S TA I N A B I L I T Y C O M M I T T E E R E P O R T

Priorities for 2020

Moving forward in 2020, the SC will continue to work with management to ensure the Group pursues sustainability
in a way that creates value to the organisation. Key areas of focus will include:

– Ensuring flawless implementation of sustainability standards that the Group adopts. These include the Roundtable
on Sustainable Palm Oil (RSPO), Malaysian Sustainable Palm Oil (MSPO) and Indonesian Sustainable Palm Oil
(ISPO), amongst others.

– Effectively managing sustainability risks in the supply chain, via increased transparency, supplier risk management,
handling of supplier grievances and smallholder inclusion.

– Leading in the development of new environmental and social standards and approaches to tackle material
sustainability issues faced by the Group and the Industry.

– Ensuring stakeholders are effectively engaged with and included throughout the Group’s sustainability journey.

– Finding ways for the Group to leverage on its sustainability credentials to differentiate itself and create value to
the organisation.

– Mitigate the impacts of the COVID-19 pandemic to the organisation with the priority of ensuring the safety and
health of all employees of the organisation in the immediate and long term.
 Annual Report 2019 PG. 168 – 169

BOARD TENDER
COMMIT TEE REP ORT

“The Board Tender Committee is established to assume the responsibility for

reviewing and deliberating on key tenders, ensuring that tender exercises are
conducted in a transparent and fair manner adopting the principle of good
governance, and delivering the best value to the Group. The Committee will
continue to ensure that the procurement of key contracts also comply with the

GOVERNANCE FRAMEWORK
processes and procedures of the Group Procurement Policies & Authorities.”

TAN SRI DATUK DR YUSOF BASIRAN

Chairman of the Board Tender Committee

INSIDE THIS REPORT

The purpose of this report is to highlight areas that the Committee has reviewed during the year and its priorities
going forward.

WHO IS THE COMMITTEE:

6
Members* Membership Appointment Attendance

Tan Sri Datuk Dr. Yusof Chairman 21 February 2018 2/2 100%
Basiran Independent Non-Executive Director

Zainal Abidin Jamal Member 27 February 2019 2/2 100%

Non-Independent Non-Executive Director

Tan Ting Min Member 21 February 2018 2/2 100%

Independent Non-Executive Director

Notes:
*  For the Members’ profiles see pages 116 to 127.

The BTC comprised a majority of Independent Non-Executive Directors. The BTC is supported by Group Procurement
who assists in arranging various sub-tender committee meetings to review and support the tender papers prior to
tabling to the BTC. The BTC Chairman reports to the Board on key matters deliberated at the BTC meetings.

Meetings of the BTC are attended by the Group Managing Director, Chief Financial Officer, Sime Darby Oils Managing
Director, Chief Operations Services Officer, Head of Group Procurement and other members of senior management.
BOARD TENDER COMMIT TEE REPORT
ROLES OF THE COMMITTEE
The Board Tender Committee (BTC) was established on
21 February 2018 to assist the Board in fulfilling its statutory
and fiduciary responsibilities in overseeing the process of
awarding significant contracts/tenders by Sime Darby
Plantation Berhad (SDP) and its subsidiaries (SDP Group).
The BTC has the mandate to review and approve tenders
with value above RM100 million up to RM500 million.
For tenders above RM500 million, the BTC has the
mandate to review and support the tenders before the
same are deliberated and approved by the Board. Meetings
of the BTC are held as and when required.
The Committee is responsible for:
Overseeing that the tender process is carried out in
accordance with the Group Procurement Policies &
Authorities including ensuring that the tender evaluation
criteria is comprehensive and allows for maximum
competition among vendors resulting in tenders being
awarded based on merit.
Reviewing and deliberating the adequacy of the Tender
Evaluation Report, which incorporates both the technical
and commercial evaluations, and recommending
appropriate actions. The BTC reviews and approves
the Tender Report, highlighting any concern or
irregularity in the tender (if any).
Detailed Terms of Reference for the Committee are
available online at www.simedarbyplantation.com/corporate/
corporategovernance.
ANNUAL PERFORMANCE ASSESSMENT
The Board performs an annual assessment of the BTC’s
effectiveness in undertaking its duties as set out in the
Terms of Reference. The Board is satisfied that the
Committee has effectively discharged its duties in
accordance with its Terms of Reference.
OUR FOCUS & ACTION PLAN
The BTC is committed to ensuring that the Group continues
to procure goods and services for key contracts/tenders
in a transparent, objective and fair manner adopting the
principles of good governance and at the same time
deliver best value to the Group.
The BTC is also committed to ensuring that the procurement
of key contracts is conducted in accordance with the
processes and procedures of the Group Procurement
Policies & Authorities.
The Group has undertaken the following key activities in
the financial year ended 31 December 2019:
Revised its Terms of Reference and the Group Policies
& Authorities on procurement in alignment to the
changes proposed by the Change Management Office.
Standardised specifications, consolidated volume,
sourced for alternative materials and adopted the
most competitive method of negotiation to secure
the best value to the Group.
The BTC will continue to focus on its commitment in
ensuring that SDP continues to pursue value creation for
the SDP Group which is sustainable and of significant
benefit to all stakeholders. In addition to getting the best
value for the Group through procurement, cost reduction
and cost avoidance have become a top priority for the
Group.
 Annual Report 2019 PG. 170 – 171

RISK MANAGEMENT
COMMIT TEE REP ORT

“The Committee is committed to ensuring the deployment of a robust risk

management framework, enabling key risks to be adequately identified, mitigated
and reported in the pursuit of the Group’s strategies and objectives.”

ZAINAL ABIDIN JAMAL

GOVERNANCE FRAMEWORK
Chairman of the Risk Management Committee

INSIDE THIS REPORT

The purpose of this report is to highlight areas that the Committee has reviewed during the financial year ended
31 December 2019 and the priorities going forward.

We report to shareholders on our responsibility to ensure the implementation of appropriate systems to manage
the overall risk exposures of the Sime Darby Plantation Berhad (SDP) Group.

WHO IS THE COMMITTEE:

6
Members1 Membership Appointment Attendance

Zainal Abidin Jamal Chairman 14 July 2017 5/5 100%

Non-Independent Non-Executive Director

Datuk Zaiton Mohd Member 14 July 2017 2/5 40%

Hassan Senior Independent Non-Executive Director

Tan Ting Min Member 14 July 2017 5/5 100%

Independent Non-Executive Director

Lou Leong Kok Member 1 December 2017 5/5 100%

Independent Non-Executive Director

Notes:
1 For the Members’ profiles see pages 116 to 127.

The RMC comprises a majority of Independent Non-Executive Directors and is supported by the Group Risk Management
(GRM) Department in discharging its responsibilities. The RMC Chairman reports to the Board on key matters
deliberated at the RMC meetings.

Meetings of the Committee are attended by the Group Managing Director, Chief Financial Officer, Sime Darby Oils
Managing Director, Chief Operations Services Officer, Chief Risk Officer and Chief Integrity & Assurance Officer. In
addition, other members of senior management are also invited to attend meetings as and when necessary to
support detailed discussions.
RISK MANAGEMENT COMMIT TEE REPORT
ROLES OF THE COMMITTEE
The primary objective of the Committee is to assist the
Board of Directors in the discharge of its statutory and
fiduciary responsibilities by identifying significant risks and
ensuring that the Group Risk Management Framework
(RMF) includes the necessary policies and mechanisms
to manage the overall risk exposures of the Group. The
RMC is also tasked with reviewing the adequacy and
effectiveness of the RMF to ensure that it continues to
support the vision, mission, and strategic objectives of the
Group whilst safeguarding stakeholders’ interests.
Specific duties of the Committee are as follows:
Review the adequacy of the scope, functions, authority,
competency and resources of the GRM Department.
Provide oversight, direction and counsel to the risk
management process, specifically to:
(i) Establish the Group’s risk management framework
based on internationally recognised risk
management standards
(ii) Conduct an annual review and periodic testing
of the Group RMF
(iii) Establish and periodically review the Group risk
management guidelines and policies and ensure
implementation of the objectives outlined in the
policies and compliance with them
(iv) Review and recommend the Group’s level of risk
tolerance and actively identify, assess and monitor
key business risks to safeguard shareholders’
investments and the Group’s assets
(v) Monitor the Group level risk exposures and
management of the significant financial and non-
financial risks identified including considering
whether response strategies (and contingency
plans) to manage or mitigate material risks are
appropriate and effective given the nature of the
identifiable risks.
Review investment proposals that are significant from
a risk perspective and monitor the execution of risk
mitigation strategies for such proposals. Follow up on
post-investment risk mitigation strategies to ensure
that the strategies are implemented subsequent to
the Board’s approval.
Detailed Terms of Reference of the Committee are available
online in the Corporate Governance section at http://www.
simedarbyplantation.com/corporate/corporate-governance.
ANNUAL PERFORMANCE ASSESSMENT
The Board performs an annual assessment of the
Committee’s effectiveness in undertaking its duties as set
out in the Terms of Reference. The Board is satisfied that
the Committee has effectively discharged its duties in
accordance with its Terms of Reference.
OUR FOCUS AND ACTION PLANS
During the financial year ended December 2019, the RMC
has undertaken the following key activities:
Monitoring of principal risks affecting the achievement
of the Group’s strategies & objectives. This includes
reviewing strategic risk reports on external and emerging
risk outlooks as well as country risk assessments for
territories in which we operate;
Reviewing and providing oversight on GRM’s activities
which includes the following, amongst others:
– Fortnightly key risks perspective newsletter
– Development of Group risk appetite statements
– Revision to the Risk Management Standard
– Development of Business Continuity Plans at
Upstream and Downstream sites as well as a refresh
of the SDP Head Office Business Continuity Plans
– Project risk assessments.
Reviewing of risk appetite principles and related
exposures;
Reviewing and tracking previous approved investment
initiatives; and
Reviewing and tracking the financial exposure position
of the Group.
Where appropriate, the RMC also leveraged on the work
of other Board committees such as the Sustainability
Committee and Nomination & Remuneration Committee
to assist with ensuring robust oversight of these particular
risk exposures.
In the coming year, the RMC will continue to focus on
providing oversight over the implementation of the RMF
throughout the Group as well as monitoring the key risk
exposures and the resultant mitigating actions affecting
SDP. In the first quarter of 2020, the RMC was apprised
of the key risk exposures arising from the COVID-19
outbreak. In particular, focus was on ensuring adequate
business continuity procedures were undertaken in line
 Annual Report 2019 PG. 172 – 173

with the business continuity management framework
outlined in the Statement on Risk Management and
Internal Control. Amongst the activities undertaken by
the organisation to mitigate this risk includes the following:
Establishment and activation of SDP COVID-19 Response
Team on 3 March 2020, chaired by the Group Managing
Director to closely monitor related developments and
deliberate action plans focusing on the areas of risk
Developed and deployed specific and customised
guidelines in addition to SC19PERP for specific countries
where SDP operates including those for Sime Darby
Oils (SDO) operating plants and sites. These include
manpower repatriation plans whilst ensuring minimum
disruption to SDP’s operations.
To ensure business continuity, a chain of command
was approved by the Board and all direct report

GOVERNANCE FRAMEWORK
management, safety & health, employee welfare, positions to the Group Managing Director have identified
communications and business continuity. Where alternates in the event the incumbent is indisposed.
necessary, specific country-level teams were also
SDP is also active in assisting the frontlines i.e hospitals,
established at locations where SDP operates.
directly, through industry umbrella bodies (Malaysian
Developed and deployed the SDP COVID-19 Preparedness Palm Oil Association) and also through Yayasan Sime
and Emergency Response Plan (SC19PERP) which Darby in collaboration with the other two Sime Darby
includes procedures and guidelines drawn in accordance listed companies.
with those prescribed by the World Health Organisation,
Ministry of Health, Malaysia and other relevant
authorities, as well as specific procedures and guidelines
to fit SDP’s various operations. SC19PERP has been
deployed throughout the organisation and customised
where applicable. Measures that have been deployed
include stringent health screening and monitoring e.g. 6
mandating temperature checks, provision of adequate
protective equipment and quarantine guidelines;
business travel bans as well as ensuring social distancing
is practiced through leveraging technology, limiting
meeting sizes and segregation of teams and work
from home arrangements.

Extensive communication to all employees on company

policies and preventive measures to be adopted in
response to COVID-19 as outlined in the SC19PERP.

Active engagement and communication to all

stakeholders, particularly during the Movement Control
Order in Malaysia (18 March 2020 to 12 May 20201),
including major shareholders, Board of Directors,
employees, business partners, regulators and policy
makers to ensure minimum disruption to SDP’s
operations while adhering to all laws and regulations
imposed in SDP’s operating regions.

Developed and deployed specific guidelines in addition

to SC19PERP for SDP estates and mills incorporating
the specific requirements outlined by the Malaysian
government as a condition for operating.

Liaising closely with other stakeholders to ensure the

industry continues to operate and all industry players
abide by the guidelines issued by the Authorities. SDP
COVID-19 guidelines for estates and mills operations
were adopted as industry standard in Malaysia.

1 As at press time
STATEMENT ON RISK MANAGEMENT
AND INTERNAL CONTROL

INTRODUCTION

The Board is pleased to provide the Statement on Risk Management and Internal
Control which outlines the state of risk management and internal control within
Sime Darby Plantation (SDP) for the financial year under review.

RESPONSIBILITIES AND ACCOUNTABILITIES

In today’s volatile, uncertain, complex and ambiguous business environment, it’s imperative that the Group anticipates
future challenges and addresses its risks strategically. In SDP, our governance structure accords a dynamic balance
of Board and Management working within a corporate ecosystem of risk management and internal controls. This is
to effectively steer the Group in meeting its long term objectives and deliver value to the Group’s stakeholders within
the realm of accountability, transparency, integrity and ethics.

The following sections further describe our corporate ecosystem of risk management and controls:

Board of Directors

Governance & Audit Risk Management Group Managing

Committee Committee Director

Group Integrity,
Group Risk Plantation Leadership
Governance &
Management Committee
Assurance

Group Fraud &

Group Corporate Group
Corruption Risk
Assurance Compliance
Management

Board
The Board recognises that business decisions involve taking appropriate risks and the Board’s understanding of
risks and how risks are addressed have been fundamental in achieving the right balance of risks and controls in
the Group. In carrying out its responsibility for the Group’s Risk Management Framework and related processes,
the Board sets the risk appetite within which the Board expects Management to operate and monitor the
operational, financial and risk management processes of the Group. Delegation of these responsibilities to the
Governance & Audit Committee and the Risk Management Committee, ensures independent oversight over risk
and internal control matters in the Group.
 Annual Report 2019 PG. 174 – 175

Governance & Audit Committee

The Governance & Audit Committee (GAC) supports the Board in fulfilling its statutory and fiduciary responsibilities
by overseeing SDP’s internal control framework to ensure operational effectiveness and adequate protection of
SDP’s assets from misappropriation. This covers a wide scope of duties that include oversight over financial reporting,
governance and controls. The GAC is assisted by Group Integrity, Governance & Assurance (GIGA) which comprises
three distinct functions of Group Corporate Assurance (GCA), Group Compliance (GCO) and Group Fraud & Corruption
Risk Management (GFCRM).

GOVERNANCE FRAMEWORK
▶ Group Integrity, Governance & Assurance
The three functions within GIGA are tasked with a unique role in addressing the integrity, governance and
assurance functions in the Group, as provided below:
GCA undertakes regular and systematic reviews to evaluate and improve the effectiveness of risk management,
control and governance processes throughout the Group operations and activities.
GCO coordinates compliance risk management activities and provides reasonable assurance that the Group’s
operations and activities are conducted in line with all regulatory requirements, internal policies and
procedures, Code of Business Conduct and standards of good business practice.
GFCRM detects and responds to fraud and corruption incidents/risks in the Group’s operations and activities
by way of conducting special and investigative reviews.

For further details on the activities of the GAC and GIGA, refer to the GAC Report on pages 150 to 159.
6
Risk Management Committee
The Risk Management Committee (RMC) assists the Board in providing the framework and guidance in which
the business units can operate, identify, and report on Group-wide risks. The RMC has a broad mandate to ensure
effective implementation of the objectives outlined in the Group Risk Management Framework and compliance
with them throughout the Group. The RMC is also responsible for periodically reporting higher risk exposures as
well as on the progress and assessment of risk management in the Group to the Board. Where appropriate, the
RMC also leveraged on the work of other Board Committees such as the Sustainability Committee and Nomination
& Remuneration Committee to assist with ensuring robust oversight of these particular risk exposures. The RMC
is assisted by the Group Risk Management (GRM) function.

▶ Group Risk Management

GRM assists the Board and the RMC with establishment, update and oversight of the Group Risk Management
Framework. In carrying out its functions, GRM integrates risk into key business processes to facilitate effective
decision making, embeds risk into the organisational culture to encourage effective decision making at all
levels of the organisation, establishes and maintains a formal risk management process, including the
establishment and maintenance of the business continuity management planning process.

For further details on the activities of the RMC and GRM, refer to the RMC Report on pages 171 to 173.

Group Managing Director

The Board delegates to the Group Managing Director (GMD) the responsibility for ensuring effective implementation
and maintenance of the Group Risk Management Framework and that all personnel adhere to its mandates. The
Plantation Leadership Committee (PLC) supports the GMD in ensuring that appropriate controls are in place and
working effectively in managing risk and governance within the Board mandated risk appetite as entrusted by
the Board, as part of their responsibility in evaluating and making key strategic and operational decisions in the
pursuit of the Group’s strategies.
S TAT E M E N T O N R I S K M A N A G E M E N T A N D I N T E R N A L C O N T R O L

RISK MANAGEMENT

Group Risk Management Framework

Our Group Risk Management Framework is aligned with ISO31000:2018 standard on risk management which promotes
three facets of risk management as depicted in the diagram below:

Continual
Integrated
Improvement

Human and
Structured and
Cultural
Comprehensive
Factors
Value Creation
and
Protection
Best Available Customised
Information

Dynamic Inclusive

Principles (clause 4)
Integration
Scope, Context, Criteria
COMMUNICATION & CONSULTATION

Risk Assessment

MONITORING & REVIEW

Risk Identification
Improvement Design

Leadership and Risk Analysis

Commitment
Risk Evaluation

Evaluation Implementation Risk Treatment

RECORDING & REPORTING

Framework (clause 5) Process (clause 6)

The primary goal of the Group Risk Management Framework
is to identify, evaluate and manage risks that would
impede the achievement of the Group’s long term and
short term strategies and objectives. Our approach to risk
management is aimed at embedding risk awareness in
all decision-making and a commitment to managing risk
proactively and effectively. This includes identifying and
evaluating threats and opportunities early, managing and
preventing threats before they materialise and responding
effectively if they do, and actively pursuing opportunities
to capture value within agreed risk tolerances.
As creating and protecting value is the key driver of risk
management, it is imperative that the Group Risk
Management Framework involves identification of risk and
mitigating measures in both, strategy-setting and in driving
performance. The role of leaders and their responsibilities
are emphasised in the framework to ensure that risk
management is an essential part of business. The
responsibility for identifying, evaluating and managing risks
lies with all employees and business leaders and they
operate within the Group-wide framework to manage risks
within approved limits. The Group Risk Management
Framework is also aligned with COSO1 2017 Enterprise Risk
Management – Integrating with Strategy and Performance
which clearly underscores our commitment towards
enterprise risk management in strategic planning and our
will to embed risk management throughout the organisation.

1 Committee of Sponsoring Organisations of the Treadway Commission

 Annual Report 2019 PG. 176 – 177

Our integrated approach is two pronged, i.e. a top down strategic view which is complemented by bottom up
operational risk assessments, whilst taking cognisance of the external environment in which we operate. These risk
assessments are complemented by strategic country risk analyses and forecasts as well as risk assessments for key
projects and investments undertaken by the Group in an effort to proactively anticipate and mitigate risk events.
This facilitates the understanding and management of risk at all levels of the business.

The Risk Management Governance Structure shown below captures the arrangements and accountability of relevant
levels of management and operations.

GOVERNANCE FRAMEWORK
Board of Directors

Governance Risk
& Audit Management
Committee Committee Group Managing Director

Group
Integrity,
Governance &
Group Risk
Management
Plantation Leadership Committee 6
(Risk Owners)
Assurance Accountable and responsible for effective risk
identification & management

2nd & 3rd

Lines of Defence

Risk Champions
Respective Business Units/Support Function have nominated Risk Champions who will support the Risk
Owners on risk management matters

Business Units / Support Functions

Group
Group Advisory Sime Darby Group Group Human Sustainability
Upstream
& Value Creation Oils Finance Resources & Quality
Management

Group Strategy Group Group Research Group Corporate Group

Group Digital
& Innovation Legal & Development Secretarial Communications

1st Line of Defence

These three lines of defence in the exercise of their functions are designed to reinforce each other in the implementation
and strengthening of the Group Risk Management Framework.

To read more about how risk management was implemented during the year under review, refer to the RMC Report
on pages 171 to 173.
S TAT E M E N T O N R I S K M A N A G E M E N T A N D I N T E R N A L C O N T R O L

Group Business Continuity Framework

Our Business Continuity Framework is aligned with ISO22301:2012 standard on business continuity management
systems. It covers end to end guidance to assist with managing a crisis event with the main objectives as follows:
To safeguard life, property and environment;
To minimise the loss of assets, revenue and impact upon customers;
To continue to provide products and services during adverse conditions; and
To facilitate timely recovery of critical business functions.

Process Emergency and Crisis Management Recovery and Restoration Management

Document Emergency Crisis Disaster Recovery Business Continuity

Preparedness and Communications Plan (DRP) Plan (BCP)
Response (EPR) Plan (CCP)
Procedures

Nature of Documents Documents Documents Documents

Document procedures to procedures to procedures to recover procedures to recover
manage potential manage and protect business and restore business
and actual communications operations to
IT infrastructure to
emergency situations when a crisis is normality
support business
with ESH imminent or has
operations
implications happened

Objective of Safety and health of Communications IT applications/data People relocate and

Document people are occurs effectively protected resume operation
maintained effectively

The Group is committed to safeguard the interests of all stakeholders in times of disaster and/or emergency. Therefore,
Business Continuity processes are put in place to ensure that the Group is able to continue operations with minimal
impact to stakeholders in the event of disruption.

Risk Reporting
The Group Risk Management Framework provides for consistent review and reporting. On a quarterly basis, formal
risk reports are developed and presented to the PLC and RMC. Any potential risks identified are escalated as
appropriate, with mitigation actions put in place to manage such risks. Significant risks affecting the business as well
as periodic external and emerging risk outlooks are presented to the RMC. Additionally, due to the evolving nature
of risk events in the external environment in which we operate, a fortnightly key risks perspective newsletter on
external and emerging risks is prepared and circulated to the Board and Management.
 Annual Report 2019 PG. 178 – 179

INTERNAL CONTROL FRAMEWORK

At SDP, the following key control components have been embedded to assist the Board in maintaining a sound
system of internal control in the Group.

Policy Instruments
Our policy instruments refer to the various types of policies, procedures and guidelines which serve as a backbone
for both, external and internal compliance, in achieving best practices and streamlining internal processes. Within
the hierarchy of our Policy Instrument Framework, we have established ground rules for the development, establishment,

GOVERNANCE FRAMEWORK
amendment, and review of all core policy instruments.

Legislation

Hierarchy of Policy Instruments

Company
Constitution

• Board Charter
• T
 erms of reference of Board
Committees
6
Board Charter

• GPAs
• Group Policies
• Business Segment Policies (GHO)
• Business Segment Policies (Others)
Policies • Statement of Intent

• Group Procedures
• GHO Departmental Procedures
• Business Segment Procedures
• Business Unit Procedures
Procedures • Guidelines
The list of Policy Instrument above is non exhaustive. Categorical equivalence to policies/procedures include, but are not
limited to items illustrated in this diagram.

Key policy instruments for the Group include the following:

Our Board Charter sets out the Board’s strategic intent and outlines the Board’s roles and powers which it reserves
for itself, and those which it delegates to Management.

Our Terms of Reference of the respective Board Committees set the tone of the various Board Committees with
regard to their purpose, scope, responsibility, and accountability.

Our Group Policies & Authorities (GPAs) define the lines of responsibility, accountability, and authority limits and
represent a formal delegation of the Board’s powers and functions to Management. The GPAs are designed to
empower Management to achieve business objectives within the boundaries of business ethics governance and
covers functional policies, ethics and conduct, protecting of Group assets, key processes, and Limits of Authority.

Our policies, procedures and guidelines are developed by relevant departments, business segments and business
units to support the achievement of the principles stipulated in the GPAs, all of which, are mandatory to be
complied with by Directors and Employees of the Group.

Key policy instruments are accessible via the Group intranet in ensuring that Directors and Employees understand
their obligations within the Group’s governance framework. All policy instruments are reviewed and revised, as
appropriate, on a periodic basis to ensure that they are relevant to the current operating environment and better
reflect intended practices.
S TAT E M E N T O N R I S K M A N A G E M E N T A N D I N T E R N A L C O N T R O L

Code of Business Conduct

Our Code of Business Conduct (COBC) has been instrumental in guiding Directors and Employees in upholding our
Core Values of Integrity, Respect & Responsibility, Enterprising and Excellence.

All Directors and Employees are required to sign an attestation to acknowledge compliance with the COBC and
their understanding of the rules, principles and policies outlined in the COBC. The COBC is made available in all key
languages in the jurisdictions within which the Group operates and is accessible on the Group’s corporate website
and intranet.

In enhancing the awareness and understanding of the COBC among Employees throughout the Group, various
awareness programmes are rolled out across the Group via a combination of physical briefings, video briefings,
collaterals, surveys and graphics.

INTEGRITY RESPECT & RESPONSIBILITY

We uphold high levels of personal We have respect for the individuals
and professional values in all our we interact with, the environment that
business interactions and decisions we operate in and are committed to
being responsible in all our actions
CORE
VALUES
EXCELLENCE
ENTERPRISING
We stretch the horizons of growth for
We seek and seize opportunities with
ourselves and our business through
speed and agility, challenging set
our unwavering ambition to achieve
boundaries
personal and business results

Business Planning and Reporting People Development

Our annual business planning process entails the
development of a Group Strategy Blueprint which includes
among others, our vision and mission, business objectives
and goals, assessment of the competitive environment,
financial highlights and details on our strategies, action
plans and roadmap and corresponding Group Budget.
Both the Group Strategy Blueprint and the Group Budget
are subjected to rigorous deliberation with key stakeholders
prior to approval by the Board. Our performance is
monitored on a periodic basis by the Board and
Management via the preparation and review of operational
reports, periodic budgets and financial performance (actual
against budget) and forecast reports. This provides an
avenue for performance to be periodically monitored and
followed up upon, whereby corrective actions are taken
to address deviation from plans.
Performance Management
Our Performance Management Framework applies the
balanced scorecard approach in setting goals aligned to
Group’s vision of becoming a high performance organisation.
The organisation’s strategies are translated into Key
Performance Indicators (KPI), which is then mapped across
four dimensions, i.e. financial, customer, operational and
people development. These KPIs are aligned across
businesses, functions and levels; striving towards shared
common goals of driving business objectives, while strongly
upholding core governance principles.
Our people development approach applies consistent
structured development through experiential and practical
learning. Talent identification for high potential and
succession talent candidates emphasise on assessment
criteria and talent governing structure steered by our
Enterprise Talent Council at Management level and
Nomination & Remuneration Committee at the Board
Committee level. High potential talents are identified for
their future growth development in harnessing their
capability while ensuring talent retention whereas for
succession talent, the focus is on identifying talent readiness
to succeed the Group Mission Critical Positions. As staff
KPIs are defined based on critical business strategies, there
exists clarity on development potential for each employee
based on technical, functional and competency requirements.
Internal Audit
Our internal audits provide independent, objective and
risk based assurance and consulting services designed to
add value and improve the operations in the Group by
assessing whether risk management, control and
governance processes are designed and operate sustainably
and effectively. Where control limitations are noted,
corrective actions are proposed for Management’s
consideration and thereafter monitored for implementation.
The implementation of data analytics and continuous
control monitoring harnesses the potential of real-time
auditing towards improving the control environment.

Control Self-Assessment
Our Control Self-Assessment (CSA) process accords line
Management with full responsibility and accountability
for effective risk management and controls implementation
within their operations. Selected validation promotes the
integrity of the process while focused workshops provide
the avenue to deliberate and agree on control enhancements.
Fraud & Corruption Risk Management
Our Fraud & Corruption Risk Management function detects
and responds to fraud and corruption incidents/risks by
way of conducting special and investigative reviews at
the request of the GAC, Management and/or complaints
formally received through the whistleblowing channel or
based on red flags identified through other form of reviews.
The implementation of fraud and corruption risk assessment
as well as fraud and corruption detection strategies assist
to minimise the incidence of fraud and corruption in the
Group.
Whistleblowing
Our whistleblowing channels assist stakeholders to raise
concerns, without fear of retaliation, on any wrongdoing
that they may observe in the Group. We take a serious
view of any wrongdoing on the part of any of our
Employees, Management, Directors and Vendors, in
particular with respect to their obligations to the Group’s
interests and all reports made in good faith will be
investigated, regardless of the length of service, position/
title, relationship or connection of the alleged parties to
the Group. To facilitate reporting of whistleblowing
complaints, complaints can be lodged via various channels
(website, e-mail, telephone, WhatsApp, postal box)
throughout our global operations and are managed via
an independent function to ensure the transparency and
confidentiality of the process.
Anti-Corruption Compliance
Our Anti-Corruption Compliance Framework promotes
the implementation and enforcement of effective systems
to counter corruption by providing the principles and
guidelines to address corruption risks in a coordinated
and consistent manner and defining roles, responsibilities
and accountabilities of key parties within the Group. This
Framework is developed based on the ISO 37001:2016
(Anti-Bribery Management System) and the Plan-Do-
Check-Act (PDCA) model, taking cognisance of the Group’s
global operating footprint, in consideration of, among
others, the nature of activities, business norms, organisation
structure, regulatory requirements, as well as the needs
and expectations of the Group’s stakeholders.
Annual Report 2019 PG. 180 – 181
Amongst others, this Framework entails the development
of relevant policies and procedures on corruption
management, corruption risk assessment as well as relevant
training and awareness programmes for our Directors and
Employees. The Board is kept abreast on our anti-corruption
compliance programmes via periodic reporting in
demonstrating the top-level commitment on the Group’s
anti-corruption efforts. Where applicable, the requirements
of this Framework are extended to our Counterparties and
GOVERNANCE FRAMEWORK
Business Partners in ensuring that anti-corruption and
bribery initiatives are applied throughout our supply chain
in promoting a corruption-free business environment. Our
stance on our Commitment in Combatting Corruption is
made publicly available via our Anti-Corruption Policy
Statement on our corporate website.
Vendor Management
Vendor Code of Business Conduct
Our Vendor Code of Business Conduct (VCOBC) emphasises
our commitment to work closely with our Vendors (such
as Service Providers, Suppliers, Contractors and Consultants)
to ensure that our values and principles are carried through
in every aspect of our business operations. In this regard,
6
we extend our business principles and standards of
behaviour to our Vendors via the VCOBC, which outlines
the standards of behaviour required from the Vendors in
relation to labour & human rights, sustainability, health,
safety & environment, and ethics & management practices.
Vendor Integrity Pledge
The Vendor Integrity Pledge is a formal affirmation by
any Vendor who intends to conduct business transaction(s)
with us that the said Vendor will comply with all applicable
laws or regulations, is not involved with any offence of
bribery, corruption or fraud; and will not engage in bribery,
corruption or fraud with the Group.
Vendor selection
Vendor management is a key area in managing compliance
of our overall vendor and procurement governance. All
vendors are required to undergo the various processes
involved, including registration and pre-qualification for
the Group to establish a quality and comprehensive
Approved Vendor List. Further evaluation is conducted to
assess vendors’ range of work categories and nature of
business against the business needs. Continuous
performance evaluations will be carried out to ensure
that these Vendors continue to meet the business
requirements of the Group.
S TAT E M E N T O N R I S K M A N A G E M E N T A N D I N T E R N A L C O N T R O L
Communication and Reporting
Our relevant policies and procedures on stakeholder
engagement ensures that we proactively engage and
effectively manage the dissemination of information to
key stakeholders of the Group. Disclosures, which include
quarterly and annual financial statements, announcements
made to Bursa Malaysia Securities Berhad (Bursa Securities),
and corporate presentations are made in accordance to
regulatory requirements and are published on our website
on a timely basis.
Information Systems
Our Enterprise Resource Planning (ERP) system enables
transactions to be captured, compiled, analysed, and
reported in a timely and accurate manner. This is in line
with the need to maintain a secure, effective and reliable
IT environment to support the Group’s business operations.
In this regard, information systems in the Group are
automated and provide Management with data, analysis,
variations, exceptions and other inputs relevant to the
Group’s performance.
The information system platform in the Group also operates
based on a set of IT policies and procedures intended to
protect the usage of the Group’s information and resources.
These include IT governance and authority, information
security policies, identity and access management standards,
project management framework, service management,
and guidelines on the usage of computer facilities.
Sustainability
Our Group Sustainability Principles, which are guided by
the United Nations Sustainable Development Goals, seek
to contribute to a better society, minimise environmental
harm and deliver sustainable development and these
principles are encapsulated in our Human Rights, Responsible
Agriculture and Innovation & Productivity Charters. All
Employees are responsible to promote good governance
and transparency in their actions by instilling a culture of
integrity and addressing sustainability and quality risks into
all operational and decision making process.
Risk Management
Enterprise Risk Management
Please refer to the Risk Management section of this
Statement on pages 171 to 173.
Business Continuity Management
Please refer to the Risk Management section of this
Statement on pages 171 to 173.
Insurance
Our insurance programmes are designed as a key risk
management tool to protect the Group against insurable
critical threats. Prior to procuring any insurance policy, risk
assessments are conducted to develop an insurance
programme which balances insurance premium costs, the
quality of insurance coverage and overall claim experience
without compromising on our overall risk exposure.
MATERIAL JOINT VENTURES AND ASSOCIATES
The disclosures in this statement exclude the risk
management and internal control practices of the Group’s
Joint Ventures and Associates. The Group’s interests in
these entities are safeguarded through the appointments
of members of the Group’s Senior Management team to
the Board of Directors and, in certain cases, the
management or operational committees of these entities.
REVIEW OF THE STATEMENT BY THE EXTERNAL
AUDITORS
As per the requirement of Paragraph 15.23 of the Main
Market Listing Requirements (MMLR) of Bursa Securities,
the external auditors have reviewed this Statement on Risk
Management and Internal Control (SORMIC). Their limited
assurance review was performed in accordance with the
Audit and Assurance Practice Guide (AAPG) 3 (Revised:
February 2018) issued by the Malaysian Institute of Accountants.
The AAPG 3 (Revised) does not require the external auditors
to consider whether the SORMIC covers all risks and controls,
or to form an opinion on the adequacy and effectiveness
of the Group’s risk management and internal control systems
including the assessment and opinion by the Board of
Directors and the Management thereon.
CONCLUSION
For the financial year under review and up to the date
of approval of this statement, the Board is satisfied with
the adequacy and effectiveness of the Group’s system of
risk management and internal control to safeguard the
shareholders’ investments and the Group’s assets.
The Board has received reasonable assurance from the
GMD and the Chief Financial Officer that the Group’s risk
management and internal control systems, in all material
aspects, are operating adequately and effectively. This
statement is made in compliance with Paragraph 15.26(b)
of the MMLR of Bursa Securities and Principle B of the
Malaysian Code on Corporate Governance 2017 issued by
Securities Commission Malaysia, and guided by the
Statement on Risk Management & Internal Control:
Guidelines for Directors of Listed Issuers.
This statement is made in accordance with a resolution
of the Board dated 16 April 2020.
 Annual Report 2019 PG. 182 – 183

STATEMENT OF RESP ONSIBILIT Y

BY THE BOARD OF DIREC TORS

The Directors are responsible for the preparation, integrity and fair presentation of the annual financial statements
of the Sime Darby Plantation Berhad Group. As required by the Companies Act, 2016 (Act) and the Main Market
Listing Requirements of Bursa Malaysia Securities Berhad, the financial statements for the financial year ended 31
December 2019, as presented on pages 191 to 363, have been prepared in accordance with the Malaysian Financial
Reporting Standards, International Financial Reporting Standards and the requirements of the Act.

The Directors consider that in preparing the financial statements, the Group and the Company have used the
appropriate accounting policies, consistently applied and supported by reasonable and prudent judgments and
estimates. The Directors are satisfied that the information contained in the financial statements give a true and fair

GOVERNANCE FRAMEWORK
view of the financial position of the Group and of the Company at the end of the financial year and of the financial
performance and cash flows for the financial year.

The Directors have responsibility for ensuring that proper accounting records are kept. The accounting records should
disclose with reasonable accuracy the financial position of the Group and the Company to enable the Directors to
ensure that the financial statements comply with the Act. The Directors have the general responsibility for taking
such steps as are reasonably open to them to safeguard the assets of the Group to prevent and detect fraud and
other irregularities.

This statement is made in accordance with a resolution of the Board of Directors dated 29 April 2020.

BOARD APPROVAL OF FINANCIAL STATEMENTS

The annual financial statements for the financial year ended 31 December 2019 are set out on pages 191 to 363. 6
The preparation thereof was supervised by the Chief Financial Officer and approved by the Board of Directors on
29 April 2020.
F I N A N C I A L
STATE M E N T S
186 Directors’ Report
191 Statements Of Profit Or Loss
192 Statements Of Comprehensive Income
193 Statements Of Financial Position
195 Consolidated Statement Of Changes In Equity
196 Company Statement Of Changes In Equity
197 Statements Of Cash Flows
202 Notes To The Financial Statements
364 Statement By Directors
364 Statutory Declaration
365 Independent Auditors’ Report
DIREC TORS ’
REP ORT
For The Financial Year Ended 31 December 2019

The Directors hereby submit the Directors’ Report (“Report”) together with the audited financial statements of the
Group and of the Company for the financial year ended 31 December 2019.

PRINCIPAL ACTIVITIES

The principal activities of the Company consist of the production, processing, refining and sales of palm oil and palm
kernel oil, manufacturing and marketing of specialty fats and edible oils, rubber and other palm oil related products
and investment holding.

The principal activities of the Group consist of the production, processing, refining and sales of palm oil and palm
kernel oil, manufacturing and blending, marketing and distribution of specialty fats, edible oils, rubber, coconut oil
and other palm oil related products, production and sales of sugar and beef, and the involvement in other agriculture
related business as disclosed in Note 51 to the financial statements.

Other than the above, there were no significant changes in the nature of these activities during the financial year.

FINANCIAL RESULTS
Group Company
RM’000 RM’000

Profit/(loss) before tax 251,316 (255,789)

Tax credit/(expense) 23,569 (5,755)

Profit/(loss) for the financial year from continuing operations 274,885 (261,544)
Loss for the financial year from discontinuing operations (321,793) –

Loss for the financial year (46,908) (261,544)

Profit/(loss) for the financial year attributable to:

– equity holders of the Company
  – from continuing operations 121,633 (385,844)
  – from discontinuing operations (321,793) –

(200,160) (385,844)
– Perpetual Sukuk
  – from continuing operations 124,300 124,300
– non-controlling interests
  – from continuing operations 28,952 –

(46,908) (261,544)

DIVIDENDS

Since the end of the previous financial period, the Company has paid the following dividends:

RM’000

Dividends for the financial period ended 31 December 2018:

Final single tier dividend of 1.7 sen per ordinary share, paid on 21 May 2019 117,038

A final single tier dividend of 1.0 sen per ordinary share, amounting to RM68.9 million in respect of the financial
year ended 31 December 2019 has been declared on 28 February 2020 and will be paid on 22 May 2020. The
entitlement date for the dividend payment is 12 May 2020.
 Annual Report 2019 PG. 186 – 187

RESERVES AND PROVISIONS

All material transfers to or from reserves and provisions during the financial year are shown in the financial statements.

SHARE CAPITAL, PERPETUAL SUKUK AND DEBENTURES

During the financial year, the Company increased its issued and paid-up share capital to RM1,506,119,114 by way of
issuance of 83,735,906 new shares pursuant to the Dividend Reinvestment Plan of the Company.

DIRECTORS

FINANCIAL STATEMENTS
The Directors in office during the financial year and during the period from the end of the financial year to date of
this Report are:

Tan Sri Dato’ A. Ghani Othman

Tan Sri Dato’ Seri Mohd Bakke Salleh (Retired on 30 June 2019)
Tan Sri Datuk Dr. Yusof Basiran
Muhammad Lutfi
Datuk Zaiton Mohd Hassan
Dato’ Mohamad Nasir Ab. Latif (Resigned on 31 December 2019)
Dato’ Mohd Nizam Zainordin
Dato’ Henry Sackville Barlow
Tunku Alizakri Raja Muhammad Alias (Appointed on 1 January 2020)
Zainal Abidin Jamal
7
Tan Ting Min
Lou Leong Kok
Mohamad Helmy Othman Basha (Appointed on 1 July 2019)

DIRECTORS’ REMUNERATION

Details of Directors’ remuneration are set out in Note 11 to the financial statements.

DIRECTORS’ BENEFITS

During and at the end of the financial year, no arrangements subsisted to which the Company is a party, with the
object or objects of enabling Directors of the Company to acquire benefits by means of the acquisition of shares in,
or debentures of, the Company or any other body corporate, as disclosed in Directors’ Interests in Shares.

Since the end of the previous financial period, no Director has received or become entitled to receive a benefit
(other than benefits disclosed as Directors’ remuneration in Note 11 to the financial statements) by reason of a contract
made by the Company or a related corporation with the Director or with a firm of which he or she is a member,
or with a company in which he or she has a substantial financial interest except for any benefits which may be
deemed to have arisen from the transactions disclosed in Note 11 to the financial statements.

The Directors and officers of the Group and of the Company are covered by Directors and Officers liability insurance
for any liability incurred in the discharge of their duties, provided that they have not acted fraudulently or dishonestly
or derived any personal profit or advantage. The insurance premium paid for the financial year amounted to RM329,525.

DIRECTORS’ INTERESTS IN SHARES

According to the Register of Directors’ Shareholdings required to be kept under Section 59 of the Companies Act
2016, none of the Directors who held office at the end of the financial year held any shares, or debentures of, the
Company or its related corporations during the financial year.
DIREC TORS’ REPORT
For The Financial Year Ended 31 December 2019

STATUTORY INFORMATION ON THE FINANCIAL STATEMENTS

(a) Before the financial statements of the Group and of the Company were prepared, the Directors took reasonable steps:

(i) to ascertain that proper action had been taken in relation to the writing off of bad debts and the impairment
for doubtful debts, and satisfied themselves that all known bad debts had been written off and adequate
impairment had been made for doubtful debts; and

(ii) to ensure that any current assets, which were unlikely to realise in the ordinary course of business, their
values of current assets as shown in the accounting records of the Group and of the Company, have been
written down to amounts which they might be expected to realise.

(b) At the date of this Report, the Directors are not aware of any circumstances:

(i) which would render the amount written off for bad debts or the amount of the impairment for doubtful
debts in the financial statements of the Group and of the Company inadequate to any substantial extent;

(ii) which would render the values attributed to current assets in the financial statements of the Group and
of the Company misleading; or

(iii) which have arisen which render adherence to the existing method of valuation of assets or liabilities of the
Group and of the Company misleading or inappropriate.

(c) As at the date of this Report:

(i) there are no charges on the assets of the Group or of the Company which have arisen since the end of
the financial year to secure the liability of any other person; and

(ii) there are no contingent liabilities in the Group or in the Company which have arisen since the end of the
financial year other than those arising in the ordinary course of business.

(d) At the date of this Report, the Directors are not aware of any circumstances not otherwise dealt within the
Report or financial statements which would render any amount stated in the financial statements misleading.

(e) In the opinion of the Directors:

(i) the results of the operations of the Group and of the Company during the financial year were not substantially
affected by any item, transactions or events of a material and unusual nature, except that (a) the Group has
impaired the assets in a wholly-owned subsidiary, Sime Darby Plantation (Liberia) Inc. (“SDP Liberia”) of RM235.4
million as disclosed in Note 13 to the financial statements; and (b) impairment of the Company’s cost of
investment in SDP Liberia amounting to RM305.9 million as described in Note 21 to the financial statements.

(ii) no contingent or other liability has become enforceable or is likely to become enforceable within the period
of twelve months after the end of the financial year which will or may substantially affect the ability of the
Group and of the Company to meet their obligations as and when they fall due; and

(iii) no item, transaction or event of a material and unusual nature has arisen in the interval between the end
of the financial year and the date of this Report which is likely to affect substantially the results of the
operations of the Group and of the Company for the financial year in which this Report is made except
for the events disclosed in Note 52 to the financial statements.
 Annual Report 2019 PG. 188 – 189

LIST OF DIRECTORS OF SUBSIDIARIES

Pursuant to Section 253 of the Companies Act 2016, the list of Directors of the subsidiaries during the financial year
and up to the date of this Report is as follows (excluding Directors who are also Directors of the Company):

Abdul Jalil Sulaiman Fazli Salikin Nor Aznan Mohd Yusof

Adi Wira Abd Razak Francois van Hoydonck Nuchanand Sukmongkol
Agus Dani Ariyanto Fuyuhiko Nakata Nurwanto
Ahmad Zairil Zainal Gajani Nayagi Seeveneserajah Pandu Wibowo
Ahmad Faraid Mohammed Yahaya Godfrey Shiletikwa Urasa Philip KO Kunjappy
Alagendran Maniam Handi Kusnandar Prof. Peter Caligari

FINANCIAL STATEMENTS
Amir Hisham Hashim Hernandy Rifansyah Karli R Krishna Moorthy Ramasamy
Amir Mohareb Hersoebeno Brotowinoto Rasyid Redza Anwarudin
Andrew Timothy Worrall Hissammudin Mohamad Sabidin Renaka Ramachandran
Armando Edgar Mahyudion Daniel Ir. Safwani Robert Anak Tugang
Ary Tri Prasetyo Izaidin Mohd Zahari Robert Nilkare
Asanee Mallamphut James Walter Graham Roslin Azmy Hassan
Asmawatti Othman Jeffry Faizal Kamaruddin Ruari MacWilliam
Ayu Siri Ratana Chandra Johari Meor Ngah Rusdianto S. Sos
Azmi Jaafar Jonathan Pennefather Sandeep Bhan
Bambang Sumantri Hadi Mulyanto Khaizarudin Awaludin Shahrakbah Yacob
Benjamin McKeeman Oakley Lakon Anak Igey Shahrizan Aini Shamsul Khalil
Bryan Dyer Lee Ai Leng Shamsuddin Muhammad
Budi Darmono Lee Chong Yee Shogo Yoshida 7
Budi Suyanto Lim Ban Yeow (Alternate Director to
Burhan Chahyadi Lisnawati Ibrahim Fuyuhiko Nakata)
Chim Foong May M. Rukun Siregar Sir Joseph Tauvasa
Craig Gibsone Marie Cindhia Veronique Suhartono
Datu Haji Abdul Rashid Mohd Azis Magny-Antoine Supasak Chirasavinuprapand
Datuk Franki Anthony Dass Marie-Claude Priscille Koenig Syah Nizam
Denny Wicaksana Mersal Abang Rosli Syamsidar Syamsul, SH
Djoko Martopo (Alternate Director to Datu Haji Tan Sri Datuk Amar Haji Bujang
Dodik Prayitno Abdul Rashid Mohd Azis) Mohammed Bujang Mohammed
Dorab Erach Mistry Michael Barkhuysen Nor
Dr. K. Harikrishna Michelle Chang Yuet Ling Datuk Haji Abang Abdul Wahap
Dr. K. Kulaveerasingam Mohamed Abd Samad Bin Haji Abang Julai
Dr. Luc Bonneau Mohammad Japri Giman (Alternate Director to Tan Sri
Dr. Shariman Alwani Mohamed Mohd Amri Baharuddin Datuk Amar Haji Bujang
Nordin Mohd Hamdi Abd Karim Mohammed Bujang Mohammed
Dr. Stephen Nelson Mohd Haris Mohd Arshad Nor)
Dr. Ir. Ahmad Jaafar Abd Hamid Mohd Khiri Abd Wahab Vistra NC B.V.
Drs. Jakob Tobing MPA Mohd Nazri Mohamad Nageeb Wan Fauzan Shah Wan Ismail
Edeng Mulia Dermawan Mohd Zamri Pardi Yogesh Kotak
Edi Febriyanto Muhammud Nurazli Razali Yustinus Lambang Setyo Putro
Elaim Tangirongo Nindyo Pranantoro Zuhairi Zubir
Eliza Mohamed Zulkifli Zainal Abidin
Ernie Gangloff
DIREC TORS’ REPORT
For The Financial Year Ended 31 December 2019

SUBSIDIARIES

Details of subsidiaries of the Company are set out in Note 51 to the financial statements.

IMMEDIATE AND ULTIMATE HOLDING COMPANIES

The Directors regard Permodalan Nasional Berhad as its immediate holding company and Yayasan Pelaburan
Bumiputra as its ultimate holding company. Both companies are incorporated in Malaysia.

AUDITORS

The audit fees for services rendered by the auditors to the Group and the Company for the financial year ended
31 December 2019 are disclosed in Note 6(f) to the financial statements.

The Group and the Company do not indemnify the auditors of the Company for losses in the event of legal actions
brought against the auditors for alleged wrongful acts by the auditors.

The auditors, PricewaterhouseCoopers PLT (LLP0014401-LCA & AF 1146), have expressed their willingness to accept
the re-appointment as auditors.

This Report was approved by the Board of Directors on 29 April 2020.

TAN SRI DATO’ A. GHANI OTHMAN MOHAMAD HELMY OTHMAN BASHA
DIRECTOR DIRECTOR

Selangor
29 April 2020
 Annual Report 2019 PG. 190 – 191

STATEMENTS OF
PROFIT OR LOSS
For The Financial Year Ended 31 December 2019

GROUP COMPANY

Financial Financial Financial Financial

year ended period ended year ended period ended
31.12.2019 31.12.2018 31.12.2019 31.12.2018
Note RM’000 RM’000 RM’000 RM’000

Continuing operations
Revenue 5 12,062,266 6,518,321 3,161,885 1,652,040
Operating expenses 6 (11,651,019) (6,103,470) (3,307,209) (1,676,203)
Other operating income 7 202,361 155,620 168,980 137,941

FINANCIAL STATEMENTS
Other gains and losses 8 (209,376) 42,423 (99,387) (153,938)

Operating profit/(loss) 404,232 612,894 (75,731) (40,160)

Share of results of joint ventures 22(a) 3,911 225 – –
Share of results of associates 23(a) (2,257) 1,568 – –

Profit/(loss) before interest and tax 405,886 614,687 (75,731) (40,160)

Finance income 9 12,975 8,473 17,786 8,934

Finance costs 10 (167,545) (109,985) (197,844) (89,347)

Profit/(loss) before tax 251,316 513,175 (255,789) (120,573)

Tax credit/(expense) 12 23,569 (145,252) (5,755) (15,970)

Profit/(loss) for the financial year/

period from continuing operations 274,885 367,923 (261,544) (136,543) 7
Discontinuing operations
Loss for the financial year/period
from discontinuing operations 13 (321,793) (56,128) – –

(Loss)/profit for the financial year/period (46,908) 311,795 (261,544) (136,543)

Profit/(loss) for the financial year/

period attributable to:
– equity holders of the Company
  – from continuing operations 121,633 299,636 (385,844) (199,204)
  – from discontinuing operations 13 (321,793) (56,128) – –

(200,160) 243,508 (385,844) (199,204)

– Perpetual Sukuk
  – from continuing operations 36 124,300 62,661 124,300 62,661
– non-controlling interests
  – from continuing operations 37 28,952 5,626 – –

(46,908) 311,795 (261,544) (136,543)

sen sen

Basic/diluted earnings/(loss) per share

attributable to equity holders of the
Company

  – from continuing operations 14 1.77 4.41

  – from discontinuing operations 14 (4.67) (0.83)
STATEMENTS OF
COMPREHENSIVE INCOME
For The Financial Year Ended 31 December 2019

GROUP COMPANY

Financial Financial Financial Financial

year ended period ended year ended period ended
31.12.2019 31.12.2018 31.12.2019 31.12.2018
Note RM’000 RM’000 RM’000 RM’000

(Loss)/profit for the financial year/period (46,908) 311,795 (261,544) (136,543)

Continuing operations
Items that will be reclassified
subsequently to profit or loss:
Currency translation differences gains/
(losses):
– subsidiaries 16 88,580 160,998 – –
Cash flow hedge
– changes in fair value (17,564) (4,551) (18,899) (7,465)
– transfers to profit or loss 8 (6,433) (7,966) 1,211 267
Tax (expense)/credit relating to
components of other comprehensive
income 16 (1,181) (975) (302) 26

63,402 147,506 (17,990) (7,172)

Items that will not be reclassified

subsequently to profit or loss:
Actuarial loss on defined benefit plans 38 (15,257) (2,100) – –
Investment at fair value through other
comprehensive income (“FVOCI”)
– changes in fair value 25 1,175 1,204 1,300 (839)
Tax credit relating to components of
other comprehensive loss 16 3,567 526 – –

(10,515) (370) 1,300 (839)

Other comprehensive income/(loss)

from continuing operations 52,887 147,136 (16,690) (8,011)
Other comprehensive income from
discontinuing operations 13 2,000 15,557 – –

Total other comprehensive income/(loss)

for the financial year/period 16 54,887 162,693 (16,690) (8,011)

Total comprehensive income/(loss) for

the financial year/period 7,979 474,488 (278,234) (144,554)

Total comprehensive income/(loss)

for the financial year/period
attributable to:
– equity holders of the Company
– from continuing operations 173,236 441,326 (402,534) (207,215)
– from discontinuing operations 13 (319,793) (40,571) – –

(146,557) 400,755 (402,534) (207,215)

– Perpetual Sukuk
– from continuing operations 124,300 62,661 124,300 62,661
– non-controlling interests
– from continuing operations 30,236 11,072 – –

7,979 474,488 (278,234) (144,554)

 Annual Report 2019 PG. 192 – 193

STATEMENTS OF
FINANCIAL P OSITION
As At 31 December 2019

GROUP COMPANY

31.12.2019 31.12.2018 31.12.2019 31.12.2018

Note RM’000 RM’000 RM’000 RM’000

NON-CURRENT ASSETS
Property, plant and equipment 17 17,314,025 17,004,073 7,914,895 7,838,988
Investment properties 18 7,609 15,176 – –
Right-of-use assets 20 2,145,540 2,239,212 282,601 287,477
Subsidiaries 21 – – 8,032,180 8,381,283
Joint ventures 22 34,152 446,805 3,745 311,938

FINANCIAL STATEMENTS
Associates 23 39,755 41,678 420 420
Intangible assets 24 2,840,508 2,892,843 2,073,603 2,081,424
Investments at fair value through other
comprehensive income (“FVOCI”) 25 30,469 29,294 27,049 25,749
Deferred tax assets 26 640,094 508,991 – –
Tax recoverable 27 333,674 290,412 – –
Trade and other receivables 28 155,741 115,122 – –
Amount due from a subsidiary 30 – – 59,768 49,080

23,541,567 23,583,606 18,394,261 18,976,359

CURRENT ASSETS
Inventories 29 1,498,398 1,681,776 141,046 219,530
7
Biological assets 19 188,764 178,783 27,767 19,007
Trade and other receivables 28 1,933,597 2,070,290 227,902 218,841
Tax recoverable 27 312,616 435,295 50,821 93,372
Amounts due from subsidiaries 30 – – 536,325 522,981
Amounts due from related parties 30 2,158 2,171 3,226 2,903
Derivatives 31 76,737 58,664 35,489 20,860
Bank balances, deposits and cash 32 431,347 491,042 85,403 65,693

4,443,617 4,918,021 1,107,979 1,163,187

Non-current assets held for sale 33 522,538 124,675 328,247 14

TOTAL ASSETS 28,507,722 28,626,302 19,830,487 20,139,560

EQUITY
Share capital 34 1,506,119 1,100,000 1,506,119 1,100,000
Reserves 35 11,754,854 12,018,449 7,449,143 7,968,715

Attributable to equity holders of the

Company 13,260,973 13,118,449 8,955,262 9,068,715
Perpetual Sukuk 36 2,231,398 2,231,398 2,231,398 2,231,398
Non-controlling interests 37 368,351 396,078 – –

TOTAL EQUITY 15,860,722 15,745,925 11,186,660 11,300,113

S TAT E M E N T S O F F I N A N C I A L P O S I T I O N
As At 31 December 2019

GROUP COMPANY

31.12.2019 31.12.2018 31.12.2019 31.12.2018

Note RM’000 RM’000 RM’000 RM’000

NON-CURRENT LIABILITIES
Retirement benefits 38 259,736 229,809 50,699 50,306
Deferred income 41 207 446 – –
Deferred tax liabilities 26 2,598,247 2,653,870 701,855 710,406
Amount due to a subsidiary 30 – – 503,112 504,707
Borrowings 39 5,255,384 5,492,575 4,051,838 4,292,526
Lease liabilities 40 162,112 165,433 6,954 7,478
Trade and other payables 42 77,401 63,447 58,071 139,939

8,353,087 8,605,580 5,372,529 5,705,362

CURRENT LIABILITIES
Trade and other payables 42 1,360,612 1,466,545 387,133 363,567
Deferred income 41 13,071 28,536 7 42
Amounts due to subsidiaries 30 – – 994,982 1,000,313
Amounts due to related parties 30 6,989 61,020 6,027 36,826
Retirement benefits 38 15,189 7,784 – –
Lease liabilities 40 25,163 27,122 1,340 1,919
Tax payable 104,698 89,028 – –
Derivatives 31 242,913 21,198 134,197 8,883
Dividend payable – 748,092 ­– 748,092
Borrowings 39 2,489,543 1,804,339 1,747,612 974,443

4,258,178 4,253,664 3,271,298 3,134,085

Liabilities directly associated with

non-current assets held for sale 33 35,735 21,133 – –

TOTAL LIABILITIES 12,647,000 12,880,377 8,643,827 8,839,447

TOTAL EQUITY AND LIABILITIES 28,507,722 28,626,302 19,830,487 20,139,560

 Annual Report 2019 PG. 194 – 195

CONSOLIDATED STATEMENT OF
CHANGES IN EQUIT Y
For The Financial Year Ended 31 December 2019

Attributable to equity holders of the Company

Non-
Share Retained Perpetual controlling Total
Capital Reserves earnings Total Sukuk interests equity
GROUP Note RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 1 January 2019 1,100,000 670,359 11,348,090 13,118,449 2,231,398 396,078 15,745,925

Continuing operations
Profit for the financial year – – 121,633 121,633 124,300 28,952 274,885
Other comprehensive income/(loss)

FINANCIAL STATEMENTS
for the financial year 16 – 62,170 (10,567) 51,603 – 1,284 52,887
Total comprehensive income for
the financial year – 62,170 111,066 173,236 124,300 30,236 327,772

Transactions with equity holders:

– share issue 34 406,119 – – 406,119 – – 406,119
– dividends – – (117,038) (117,038) – (57,963) (175,001)
– distribution to Perpetual Sukuk holders 36 – – – – (124,300) – (124,300)

Discontinuing operations
Total comprehensive income/(loss)
for the financial year 13 – 13,402 (333,195) (319,793) – – (319,793)

At 31 December 2019 1,506,119 745,931 11,008,923 13,260,973 2,231,398 368,351 15,860,722 7

At 1 July 2018 1,100,000 515,841 12,050,571 13,666,412 2,230,717 408,398 16,305,527

Continuing operations
Profit for the financial period – – 299,636 299,636 62,661 5,626 367,923
Other comprehensive income/(loss)
for the financial period 16 – 143,123 (1,433) 141,690 – 5,446 147,136
Total comprehensive income
for the financial period – 143,123 298,203 441,326 62,661 11,072 515,059
Transactions with equity holders:
– dividends – – (952,117) (952,117) – (24,557) (976,674)
– distribution to Perpetual Sukuk holders 36 – – – – (61,980) – (61,980)
– disposal of a subsidiary – (931) 4,330 3,399 – 1,165 4,564

Discontinuing operations
Total comprehensive income/(loss)
for the financial period 13 – 12,326 (52,897) (40,571) – – (40,571)

At 31 December 2018 1,100,000 670,359 11,348,090 13,118,449 2,231,398 396,078 15,745,925

COMPANY STATEMENT OF
CHANGES IN EQUIT Y
For The Financial Year Ended 31 December 2019

Attributable to equity holders of the Company

Share Retained Perpetual Total

Capital Reserves earnings Total Sukuk equity
COMPANY Note RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 1 January 2019 1,100,000 43,502 7,925,213 9,068,715 2,231,398 11,300,113

(Loss)/profit for the
financial year – – (385,844) (385,844) 124,300 (261,544)
Other comprehensive loss
for the financial year 16 – (16,690) – (16,690) – (16,690)
Total comprehensive (loss)/
income for the
financial year – (16,690) (385,844) (402,534) 124,300 (278,234)

Transactions with equity

holders:
– share issue 34 406,119 – – 406,119 – 406,119
– dividends 15 – – (117,038) (117,038) – (117,038)
– distribution to
  Perpetual Sukuk holders 36 – – – – (124,300) (124,300)

At 31 December 2019 1,506,119 26,812 7,422,331 8,955,262 2,231,398 11,186,660

At 1 July 2018 1,100,000 51,513 9,076,534 10,228,047 2,230,717 12,458,764

(Loss)/profit for the
financial period – – (199,204) (199,204) 62,661 (136,543)
Other comprehensive loss
for the financial period 16 – (8,011) – (8,011) – (8,011)
Total comprehensive (loss)/
income for the financial
period – (8,011) (199,204) (207,215) 62,661 (144,554)

Transactions with equity

holders:
– dividends 15 – – (952,117) (952,117) – (952,117)
– distribution to
  Perpetual Sukuk holders 36 – – – – (61,980) (61,980)

At 31 December 2018 1,100,000 43,502 7,925,213 9,068,715 2,231,398 11,300,113

 Annual Report 2019 PG. 196 – 197

STATEMENTS OF
CA SH FLOWS
For The Financial Year Ended 31 December 2019

GROUP COMPANY
Financial Financial Financial Financial
year ended period ended year ended period ended
31.12.2019 31.12.2018 31.12.2019 31.12.2018
Note RM’000 RM’000 RM’000 RM’000
CASH FLOWS FROM OPERATING
ACTIVITIES
Profit/(loss) for the financial year/period
from continuing operations 274,885 367,923 (261,544) (136,543)

FINANCIAL STATEMENTS
Adjustments for:
Amortisation of intangible assets 24 32,544 19,077 7,990 4,741
Bad debts written off 6(e) 19 97 19 –
Depreciation of:
– property, plant and equipment 6(a) 1,073,555 516,237 255,811 122,987
– investment properties 18 84 40 – –
– right-of-use assets 6(a) 99,830 63,254 5,337 2,627
Dividend income 5(b) (4,059) (4,059) (4,059) (4,059)
Finance costs 10 167,545 109,985 197,844 89,347
Finance income 9 (12,975) (8,473) (17,786) (8,934)
Unrealised fair value losses/(gains):
– commodities options and futures
 contracts 178,701 (3,268) 92,785 3,849
– forward foreign exchange contracts
  (non-hedging derivatives) (1,250) (8,838) – (1,112)
7
– forward foreign exchange contracts
  (cash flow hedge) 6,433 7,966 (1,211) (267)
Fair value changes in biological assets
(net) (13,065) (22,939) (8,760) 17,145
Gains on disposals of:
– property, plant and equipment 7 (60,684) (35,589) (54,280) (26,328)
– non-current assets held for sale 7 (19,455) (46,058) (832) (16,756)
Impairment of:
– property, plant and equipment (6e) 2,474 5,969 – 1,296
– right-of-use assets (6e) 19,446 – – –
– investment in subsidiaries 21 – – 309,462 136,084
– investment in a joint venture – – 11,350 –
– amounts due from subsidiaries 6(e) – – 18,267 11,795
– amounts due from joint ventures 6(e) 27,501 – 25,088 2,413
– advances for plasma plantation
 projects 6(e) 1,703 3,440 – –
– trade and other receivables 6(e) 9,310 5,768 1,475 311
Write off of:
– Intangible assets 24 13 193 – 193
– property, plant and equipment 17 26,218 32,268 9,510 12,241
Write-down of:
– right-of-use assets 20 1,971 – – –
– inventories (net) 6(e) 3,554 4,070 459 50
Retirement benefits 38 41,805 12,838 7,622 4,262
Reversal of impairment of:
– investment in subsidiaries 7 – – (94,731) (72,509)
– amounts due from subsidiaries 7 – – (1,153) –
– advances for plasma plantation
 projects 7 (2,130) (315) – –
– trade and other receivables 7 (18,309) (7,498) – –
Share of results of:
– joint ventures 22(a) (3,911) (225) – –
– associates 23(a) 2,257 (1,568) – –
S TAT E M E N T S O F C A S H F L O W S
For The Financial Year Ended 31 December 2019

GROUP COMPANY
Financial Financial Financial Financial
year ended period ended year ended period ended
31.12.2019 31.12.2018 31.12.2019 31.12.2018
Note RM’000 RM’000 RM’000 RM’000
CASH FLOWS FROM OPERATING
ACTIVITIES (CONTINUED)
Tax (credit)/expense 12 (23,569) 145,252 5,755 15,970
Unrealised exchange (gains)/losses (net) (13,856) (26,818) (5,571) 119,838
1,796,585 1,128,729 498,847 278,641

Changes in working capital:

Inventories 154,978 (113,294) 78,025 (73,515)
Trade and other payables (99,678) (97,560) 22,491 (37,607)
Trade and other receivables 137,264 105,423 (11,906) 81,417
Intercompany and related party
balances (44,822) 2,877 (128,694) 105,361
Cash generated from operations 1,944,327 1,026,175 458,763 354,297
Tax (paid)/refunded (net) (111,214) (154,255) 27,943 (74,130)
Retirement benefits paid 38 (25,242) (2,793) (7,229) (2,589)
Operating cash flow from continuing
operations 1,807,871 869,127 479,477 277,578
Operating cash flow used in
discontinuing operations (63,363) (23,916) – –
Net cash generated from operating
activities 1,744,508 845,211 479,477 277,578

CASH FLOWS FROM INVESTING

ACTIVITIES
Acquisition of a subsidiary 43 – (227,882) – –
Capital contribution to a subsidiary 48(c) – – (63,081) (23,214)
Advances for plasma plantation projects (10,078) (7,236) – –
Repayment of advances for plasma
plantation projects 8,137 – – –
Advances to subsidiaries 48(e) – – (46,365) (61,774)
Repayment of advances to a subsidiary 48(c) – – 77,333 –
Repayment of capital contribution
from a subsidiary 48(c) – – 161,653 51,120
Dividends received from:
– associates 23(d) 2,955 – – –
– other investments 5(b) 4,059 4,059 4,059 4,059
Finance income received 12,975 8,473 17,786 8,934
Proceeds from sale of:
– property, plant and equipment 71,340 44,018 58,922 31,145
– non-current assets held for sale 122,575 66,861 846 45,246
Purchase of:
– property, plant and equipment (1,566,157) (793,061) (394,903) (210,735)
– intangible assets (6,406) (3,403) (3,054) (1,358)
Investing cash flow used in continuing
operations (1,360,600) (908,171) (186,804) (156,577)
Investing cash flow used in
discontinuing operations – (2,332) – –
Net cash used in investing activities (1,360,600) (910,503) (186,804) (156,577)
 Annual Report 2019 PG. 198 – 199

GROUP COMPANY
Financial Financial Financial Financial
year ended period ended year ended period ended
31.12.2019 31.12.2018 31.12.2019 31.12.2018
Note RM’000 RM’000 RM’000 RM’000
CASH FLOWS FROM FINANCING
ACTIVITIES
Finance costs paid (261,831) (117,614) (211,824) (98,861)
Loans raised 6,028,965 1,292,226 4,877,644 512,260

FINANCIAL STATEMENTS
Borrowing transaction cost paid 39 (10,644) (700) (10,437) (700)
Loan repayments (5,557,088) (719,990) (4,340,450) (269,165)
Repayments of lease liabilities (56,078) (19,397) (2,901) (1,334)
Distribution to Perpetual Sukuk holders 36 (124,300) (61,980) (124,300) (61,980)
Dividend paid to shareholders 15 (459,011) (204,025) (459,011) (204,025)
Dividend paid to non-controlling
interests of subsidiaries 37 (57,963) (24,557) – –
Financing cash flow (used in)/from
continuing operations (497,950) 143,963 (271,279) (123,805)
Financing cash flow from discontinuing
operations 63,081 23,204 – –
Net cash (used in)/generated from
financing activities (434,869) 167,167 (271,279) (123,805) 7
NET (DECREASE)/INCREASE IN CASH
AND CASH EQUIVALENTS DURING
THE FINANCIAL YEAR/PERIOD (50,961) 101,875 21,394 (2,804)

Exchange differences (7,240) 25,929 (1,684) 213

CASH AND CASH EQUIVALENTS AT

BEGINNING OF THE FINANCIAL
YEAR/PERIOD 491,042 363,238 65,693 68,284
Less: R
 eclassified to non-current assets
  held for sale 33(c) (1,494) – – –
CASH AND CASH EQUIVALENTS AT
END OF THE FINANCIAL YEAR/
PERIOD 431,347 491,042 85,403 65,693

NOTES TO STATEMENTS OF CASH FLOWS

(A) Principal non-cash transactions

Details of significant non-cash transactions during the financial year are set out in Note 34 to the financial
statements.
S TAT E M E N T S O F C A S H F L O W S
For The Financial Year Ended 31 December 2019

NOTES TO STATEMENTS OF CASH FLOWS (CONTINUED)

(B) Reconciliation of liabilities arising from financing activities

A reconciliation between the opening and closing balances in the statement of financial position for liabilities
arising from financing activities is as follows:

Lease
Borrowings* liabilities Total
GROUP Note RM’000 RM’000 RM’000

31 December 2019
At 1 January 2019 7,342,384 192,555 7,534,939

Cash flows from financing activities

Finance costs paid (261,831) – (261,831)
Loans raised 6,092,046 – 6,092,046
Borrowing transaction cost paid 39 (10,644) – (10,644)
Loan repayments (5,557,088) – (5,557,088)
Repayment of lease liabilities – (56,078) (56,078)

Non-cash changes
Finance costs 10 159,854 7,691 167,545
Finance costs capitalised 10 113,582 – 113,582
Recognition of additional lease liabilities – 42,615 42,615
Exchange differences (89,834) 492 (89,342)

At 31 December 2019 7,788,469 187,275 7,975,744

31 December 2018
At 1 July 2018 6,537,995 199,538 6,737,533

Cash flows from financing activities

Finance costs paid (117,614) – (117,614)
Loans raised 1,315,430 – 1,315,430
Borrowing transaction cost paid 39 (700) – (700)
Loan repayments (719,990) – (719,990)
Repayment of lease liabilities – (19,397) (19,397)

Non-cash changes
Acquisition of a subsidiary 43 34,806 – 34,806
Finance costs 10 105,371 4,614 109,985
Finance costs capitalised 10 17,452 – 17,452
Recognition of additional lease liabilities – 8,439 8,439
Exchange differences 169,634 (639) 168,995

At 31 December 2018 7,342,384 192,555 7,534,939

* The borrowings include interest payable for the Group which was classified under trade and other payable
in Note 42.
 Annual Report 2019 PG. 200 – 201

NOTES TO STATEMENTS OF CASH FLOWS (CONTINUED)

(B) Reconciliation of liabilities arising from financing activities (continued)

A reconciliation between the opening and closing balances in the statement of financial position for liabilities
arising from financing activities is as follows: (continued)

Amounts
Lease due to a
Borrowings* liabilities subsidiary Total
COMPANY Note RM’000 RM’000 RM’000 RM’000

FINANCIAL STATEMENTS
31 December 2019
At 1 January 2019 5,289,563 9,397 511,765 5,810,725

Cash flows from financing activities

Finance costs paid (200,423) – (11,401) (211,824)
Loan raised 4,877,644 – – 4,877,644
Borrowing transaction cost paid (10,437) – – (10,437)
Loan repayments (4,340,450) – – (4,340,450)
Repayment of lease liabilities – (2,901) – (2,901)

Non-cash changes
Finance costs 10 179,900 877 17,067 197,844
Finance costs capitalised 10 27,766 – – 27,766 7
Recognition of additional lease
liabilities – 921 – 921
Exchange differences (7,090) – (1,512) (8,602)

At 31 December 2019 5,816,473 8,294 515,919 6,340,686

31 December 2018
At 1 July 2018 4,939,282 10,406 497,341 5,447,029

Cash flows from financing activities

Finance costs paid (86,409) – (12,452) (98,861)
Loan raised 512,260 – – 512,260
Borrowing transaction cost paid 39 (700) – – (700)
Loan repayments (269,165) – – (269,165)
Repayment of lease liabilities – (1,334) – (1,334)

Non-cash changes
Finance costs 10 80,236 325 8,786 89,347
Finance costs capitalised 10 10,922 – – 10,922
Exchange differences 103,137 – 18,090 121,227

At 31 December 2018 5,289,563 9,397 511,765 5,810,725

* The borrowings include interest payable for the Company which was classified under trade and other payable
in Note 42.
NOTES TO THE
FINANCIAL STATEMENTS
For The Financial Year Ended 31 December 2019

1. CORPORATE INFORMATION

The principal activities of the Company consist of the production, processing, refining and sales of palm oil and
palm kernel oil, manufacturing and marketing of specialty fats and edible oils, rubber and other palm oil related
products and investment holding.

The principal activities of the Group consist of the production, processing, refining and sales of palm oil and
palm kernel oil, manufacturing and blending, marketing and distribution of specialty fats, edible oils, rubber,
coconut oil and other palm oil related products, production and sales of sugar and beef, and the involvement
in other agriculture related business as disclosed in Note 51 to the financial statements.

Other than the above, there were no significant changes in the nature of these activities during the financial year.

The Company is a public limited company incorporated and domiciled in Malaysia, and is listed on the Main
Market of Bursa Malaysia Securities Berhad commencing 30 November 2017. The registered office of the Company
is located at Level 10, Main Block, Plantation Tower, No. 2, Jalan PJU 1A/7, Ara Damansara, 47301 Petaling Jaya,
Selangor Darul Ehsan.

The Directors regard Permodalan Nasional Berhad as its immediate holding company and Yayasan Pelaburan
Bumiputra as its ultimate holding company. Both companies are incorporated in Malaysia.

2. BASIS OF PREPARATION

The financial statements of the Group and of the Company have been prepared in accordance with the Malaysian
Financial Reporting Standards (“MFRS”), International Financial Reporting Standards and the requirements of the
Companies Act 2016 in Malaysia.

The financial statements have been prepared under the historical cost convention except as disclosed in the
summary of principal accounting policies in Note 3.

The preparation of financial statements in conformity with MFRS, requires the use of certain critical accounting
estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements, and the reported amounts of the revenue
and expenses during the reported period. It also requires Directors to exercise their judgement in the process
of applying the Group’s and the Company’s accounting policies. Although these estimates and judgement are
based on Directors’ best knowledge of current events and actions, actual results may differ. The areas involving
a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the
financial statements are disclosed in Note 4.

The Group and Company had changed its financial year end from 30 June to 31 December effective from the
previous reporting period. Consequently, the comparative figures are the previous 6 months period from 1 July
2018 to 31 December 2018. The current financial statements are for a period of 12 months from 1 January 2019
to 31 December 2019. Due to the change in the financial year end, the amounts presented in the financial
statements are not entirely comparable.
 Annual Report 2019 PG. 202 – 203

2. BASIS OF PREPARATION (CONTINUED)

a. Accounting pronouncements that have been adopted in preparing these financial statements

During the financial year, the Group has considered the new accounting pronouncements in the preparation
of the financial statements, as follows:

(i) New accounting pronouncements with effective date on or after 1 January 2019

• Amendments to MFRS 9 “Prepayment Features with Negative Compensation”

• Amendments to MFRS 128 “Long-term Interests in Associates and Joint Ventures”

FINANCIAL STATEMENTS
• Amendments to MFRS 119 “Plan Amendment, Curtailment or Settlement”
• IC Interpretation 23 “Uncertainty over Income Tax Treatments”
• Annual Improvements to MFRSs 2015 – 2017 Cycle

The Annual Improvements to MFRSs 2015–2017 Cycle on MFRS123 “Borrowing Costs” requires borrowings
obtained specifically for the construction of a qualifying asset to be designated as general borrowings
when the qualifying asset is ready for its intended use or sale. Hence, instead of charging to profit and
loss, such borrowing costs are capitalised as part of other qualifying assets. This has resulted in the
capitalisation of additional finance costs of RM48.8 million into property, plant and equipment for the
year ended 31 December 2019.

Other than that, the adoption of these amendments and IC Interpretations listed above did not have
any impact on the current year or any prior period/years and is not likely to affect future periods. 7
b. Standards and amendments that have been issued but not yet effective

Interpretation and amendments that are effective on or after 1 January 2020

• Amendments to MFRS 3 “Definition of a Business”

• Amendments to MFRS 101 and MFRS 108 “Definition of Material”
• The Conceptual Framework for Financial Reporting

The amendments shall be applied prospectively.

c. Accounting pronouncement where the effective date has been deferred to a date to be determined by
the Malaysian Accounting Standards Board (“MASB”) is set out below:

• Amendments to MFRS 10 and MFRS 128 “Sale or Contribution of Assets between an Investor and its
Associate or Joint Venture”
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
For The Financial Year Ended 31 December 2019

3. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES

The following significant accounting policies have been applied consistently in dealing with items that are
considered material in relation to the financial statements, and to all the financial periods presented, unless
otherwise stated.

(a) Basis of consolidation

The consolidated financial statements comprise the financial statements of the Company and all of its
subsidiaries made up to the end of the financial year and are prepared using uniform accounting policies
for like transactions and other events in similar circumstances.

(i) Subsidiaries

Subsidiaries are entities over which the Group has control. The Group controls an entity when the
Group has power over the entity, has exposure to or rights to variable returns from its involvement
with the entity and has the ability to affect those returns through its power over the entity.

Subsidiaries are consolidated using the acquisition method except for those subsidiaries acquired under
common control. Under the acquisition method, subsidiaries are consolidated from the date on which
control is transferred to the Group and de-consolidated from the date when control ceases. The
consideration is measured at the fair value of the assets given, equity instruments issued and liabilities
incurred at the date of exchange.

Contingent consideration is recorded at fair value as component of the purchase consideration with
subsequent adjustment resulting from events after the acquisition date taken to profit or loss. Acquisition
related costs are recognised as expenses when incurred.

Existing equity interests in the acquiree are re-measured to fair value at the date of business combination
with any resulting gain or loss taken to profit or loss.

Identifiable assets, liabilities and contingent liabilities assumed in a business combination are measured
at their fair values, at the date of acquisition. The excess of the consideration and the fair value of
previously held equity interests over the Group’s share of the fair value of the identifiable net assets
acquired at the date of acquisition is reflected as goodwill. Any gain from bargain purchase is recognised
directly in profit or loss.

Intercompany transactions and balances are eliminated on consolidation, but unrealised losses arising
therefrom are eliminated only to the extent of the cost of the asset that can be recovered, and the
balance is recognised in profit or loss as reduction in net realisable value or as impairment loss.

Non-controlling interests in the results and net assets of non-wholly owned subsidiaries are presented
separately in the financial statements. Transactions with owners of non-controlling interests without a
change in control are treated as equity transactions in the statements of changes in equity.

When control ceases, the disposal proceeds and the fair value of any retained investment are compared
to the Group’s share of the net assets disposed. The difference together with the carrying amount of
allocated goodwill and the exchange reserve that relate to the subsidiary is recognised as gain or loss
on disposal in profit or loss.

(ii) Business combinations under common control

Business combinations under common control are accounted using the predecessor method of
accounting where the profit or loss and other comprehensive income include the results of each of
the combining entities from the earliest date presented or from the date when these entities came
under the control of the common controlling party (if later).
 Annual Report 2019 PG. 204 – 205

3. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (CONTINUED)

(a) Basis of consolidation (continued)

(ii) Business combinations under common control (continued)

The assets and liabilities of the combining entities are accounted for based on the carrying amounts
from the perspective of the common controlling party, or the combining entities if the common
controlling party does not prepare consolidated financial statements.

The difference in cost of acquisition over the aggregate carrying value of the assets and liabilities of
the combining entities as of the date of the combination is taken to equity. Transaction costs for the

FINANCIAL STATEMENTS
combination are recognised in profit or loss.

Similar treatment applies in the Company’s separate financial statements when assets and liabilities
representing the underlying businesses under common control are directly acquired by the Company.
In accounting for business combinations in the Company’s separate financial statements, the excess
of the cost of acquisition over the aggregate carrying amounts of assets and liabilities as of the date
of the combination is taken to equity.

(iii) Joint ventures

Joint ventures are separate vehicles in which the Group has rights to its net assets and where its
strategic, financial and operating decisions require unanimous consent of the Group and one or more
parties sharing the control. 7
Joint ventures are accounted using the equity method. Equity method is a method of accounting
whereby the investment is recorded at cost inclusive of goodwill and adjusted thereafter for the Group’s
share of the post-acquisition results and other changes in the net assets of the joint ventures based
on their latest audited financial statements or management accounts. Where necessary, adjustments
are made to the financial statements of joint ventures used by the Group in applying the equity method
to ensure consistency of accounting policies with those of the Group.

After application of the equity method, the carrying amount of the joint ventures will be assessed for
impairment. Equity method is discontinued when the carrying amount of joint venture reaches zero,
or reaches the limit of the obligations in the case when the Group has incurred legal or constructive
obligations in respect of the joint venture.

Unrealised gains on transactions between the Group and its joint ventures are eliminated to the extent
of the Group’s interest in the joint ventures. Unrealised losses are also eliminated on the same basis but
only to the extent of the costs that can be recovered, and the balance that provides evidence of reduction
in net realisable value or an impairment of the assets transferred are recognised in profit or loss.

When joint control ceases, the disposal proceeds and the fair value of any retained investment are
compared to the carrying amount of the joint venture. The difference together with the exchange
reserve that relate to the joint venture is recognised as gain or loss on disposal. In the case of partial
disposal without losing joint control, the difference between the proceeds and the carrying amount
disposed, and the proportionate exchange reserve is recognised as gain or loss on disposal.

(iv) Associates

Associates are entities in which the Group is in a position to exercise significant influence. Significant
influence is the power to participate in the financial and operating policy decisions, but not control
over those policies.

Investments in associates are accounted for using the equity method, similar to Note 3(a)(iii) above.
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
For The Financial Year Ended 31 December 2019

3. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (CONTINUED)

(b) Investments in subsidiaries, joint ventures and associates in separate financial statements

In the Company’s separate financial statements, investments in subsidiaries, joint ventures and associates
are carried at cost less accumulated impairment losses. On disposal of investments in subsidiaries, joint
ventures and associates, the difference between disposal proceeds and the carrying amounts of the
investments are recognised in profit or loss.

The amount due from subsidiaries of which the Company does not expect repayment in the foreseeable
future are considered as part of the Company’s investments in the subsidiaries.

(c) Foreign currencies

(i) Presentation and functional currency

Items included in the financial statements of each of the Group’s entities are measured using the
currency of the primary economic environment in which the entity operates (“the functional currency”).
The consolidated financial statements are presented in Ringgit Malaysia (“RM”), which is the Company’s
functional and presentation currency.

(ii) Transactions and balances

Foreign currency transactions and monetary items are translated into the functional currency using
the exchange rates prevailing at the transaction dates and at the end of the reporting period, respectively.
Foreign exchange differences arising therefrom and on settlement are recognised in profit or loss.

Foreign exchange differences arising from the translation of a monetary item designated as hedge of
net investment in a foreign operation are recognised in other comprehensive income in the consolidated
financial statements until the net investment is disposed.

(iii) Translation of foreign currency financial statements

For consolidation purposes, foreign operations’ results are translated into the Group’s presentation
currency at average exchange rates for the financial year whilst the assets and liabilities, including
goodwill and fair value adjustments arising on consolidation, are translated at exchange rates ruling
at the end of the reporting period. The resulting translation differences are recognised in other
comprehensive income and accumulated in exchange reserve.

Intercompany loans where settlement is neither planned nor likely to occur in the foreseeable future,
are treated as part of the parent’s net investment. Translation differences arising therefrom are recognised
in other comprehensive income and reclassified from equity to profit or loss upon repayment or disposal
of the relevant entity.

Exchange reserve in respect of a foreign operation is recognised to profit or loss when control, joint
control or significant influence over the foreign operation is lost. On partial disposal without losing
control, a proportion of the exchange reserve in respect of the subsidiary is re-attributed to the non-
controlling interests. The proportionate share of the cumulative translation differences is reclassified to
profit or loss in respect of all other partial disposals.
 Annual Report 2019 PG. 206 – 207

3. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (CONTINUED)

(d) Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment
losses. Cost includes expenditure that is directly attributable to the acquisition of an asset. The carrying
amount of the replaced part is derecognised and all repairs and maintenance costs are charged to profit
or loss during the financial year in which they are incurred.

All costs directly related to bearer plants are capitalised until such time as the bearer plants reach maturity,
at which point all further costs are expensed and depreciation commences. Such costs include seedling

FINANCIAL STATEMENTS
and planting costs, other upkeep costs, and an allocation of overhead costs.

Freehold land is not depreciated as it has indefinite life. Depreciation commences when the bearer plants
mature or when the assets under construction are ready for their intended use. Other property, plant and
equipment are depreciated on a straight-line basis to write down the cost or valuation of each asset to its
residual value over its estimated useful lives as follows:

Buildings 20 to 50 years
Bearer plants
– Oil palm 22 years, or the lease term, if shorter
– Rubber trees 24 years, or the lease term, if shorter
– Growing canes 5 years, or the lease term, if shorter
Plant and machinery 5 to 40 years 7
Vehicles, equipment and fixtures 3 to 10 years

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date.

Property, plant and equipment are tested for impairment whenever indication of impairment exists, see
Note 3(l)(i) on impairment of non-financial assets.

(e) Investment properties

Investment properties are land and buildings held for rental income and/or capital appreciation which are
not substantially occupied or intended to be occupied for use by, or in the operations of the Group.

Investment properties are stated at cost less accumulated depreciation and accumulated impairment losses.
Freehold land and buildings under construction are not depreciated. Other investment properties are
depreciated on a straight-line basis to write down the cost of each asset to its residual value over its
estimated useful life as follows:

Buildings 20 to 50 years, or over the lease term, if shorter

The residual values and useful lives are reviewed, and adjusted if appropriate, annually. Investment properties
are tested for impairment whenever indication of impairment exists, see Note 3(l)(i) on impairment of non–
financial assets.

(f) Biological assets

Biological assets comprised cattle livestock and produce growing on bearer plants. Biological assets are measured
at fair value less costs of disposal. Any gains or losses arising from changes in the fair value less costs of disposal
net of transfers to produce stocks are recognised net in profit or loss. Fair value is determined based on the
present value of expected net cash flows from the biological assets. The expected net cash flows are estimated
using the expected output method and the estimated market price of the biological assets.

Biological assets are classified as current assets for bearer plants that are expected to be harvested and
livestock that are expected to be sold or used for production on a date not more than 12 months after
the reporting date, and the balance is classified as non-current.
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
For The Financial Year Ended 31 December 2019

3. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (CONTINUED)

(g) Intangible assets

(i) Goodwill

Goodwill represents the excess of the consideration and the fair value of previously held interests over
the Group’s share of the fair value of identifiable assets, liabilities and contingent liabilities of the
acquiree at the date of acquisition.

Goodwill is stated at cost less accumulated impairment losses. Goodwill is allocated to cash generating
units for the purpose of impairment testing. Goodwill on acquisition of joint ventures and associates
is included as part of the cost of investments in joint ventures and associates. Such goodwill is tested
for impairment as part of the overall net investment in each joint venture and associate.

(ii) Research and development costs

Research costs are charged to profit or loss in the financial year in which the expenditure is incurred.

Internally generated agriculture development costs are capitalised as intangible assets when the following
criteria are fulfilled:

(i) it is technically feasible to complete the intangible asset so that it will be available for use or sale;
(ii) management intends to complete the intangible asset and use or sell it;
(iii) there is an ability to use or sell the intangible asset;
(iv) it can be demonstrated how the intangible asset will generate probable future economic benefits;
(v) adequate technical, financial and other resources to complete the development and to use or sell
the intangible asset are available; and
(vi) the expenditure attributable to the intangible asset during its development can be reliably measured.

Subsequently, such capitalised development costs are amortised from the commencement of commercial
production of the product to which they relate on a straight-line basis between 5 and 20 years. The
useful life will be reviewed and adjusted, if appropriate, annually. Impairment testing is performed
annually on development activities which have not entered commercial production. Development
activity is also tested for impairment whenever indication of impairment exists. See Note 3(l)(i) on
impairment of non-financial assets.

Development costs previously recognised as an expense in profit and loss are not recognised as an
asset in subsequent period.

(iii) Smallholder relationships

Smallholder relationships have arisen on the acquisition of subsidiaries. These assets reflect the economic
relationship between Group and the smallholders who cultivate and harvest fresh fruits bunches on
land owned by the smallholders. These assets are shown at fair value on acquisition of subsidiaries
and subsequently subject to amortisation on a straight line basis over the estimated average remaining
lease term of the Group’s land of 45 years. The smallholder relationships are tested for impairment
whenever indication of impairment exists.

(iv) Computer software

Expenditure on computer software that is not an integral part of the related hardware is treated as
an intangible asset and is carried at cost less accumulated amortisation and accumulated impairment
losses. Amortisation is calculated using the straight-line basis over their estimated useful lives. The
annual amortisation rates range from 10% to 33%. Projects in progress are not amortised as these
computer software are not yet available for use.
 Annual Report 2019 PG. 208 – 209

3. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (CONTINUED)

(g) Intangible assets (continued)

(v) Intellectual property rights

Intellectual property rights acquired from third parties are carried at cost less accumulated amortisation
and accumulated impairment losses. Amortisation is calculated using the straight-line basis over their
estimated useful life of 20 years.

(vi) Other intangible assets

FINANCIAL STATEMENTS
Other intangible assets with finite useful lives are carried at cost less accumulated amortisation and
accumulated impairment losses. Amortisation is calculated using the straight-line basis over their
contractual periods or estimated useful lives. The principal annual amortisation rates are:

Brand names and trademarks 5% to 20%

Assets usage rights 7%
Customer relationships Contract periods ranging from 10 months to 10 years

These intangible assets are tested for impairment whenever indication of impairment exists. See Note
3(l)(i) on impairment of non-financial assets.

(h) Non-current assets held for sale

Non-current assets (or disposal groups) are classified as “held for sale” if their carrying amounts will be
7
recovered principally through a sale transaction rather than through continuing use and a sale is considered
highly probable. Depreciation ceases when an asset is classified as a non-current asset held for sale. Non–
current assets held for sale are stated at the lower of carrying amount and fair value less costs of disposal.

An impairment loss is recognised for any initial or subsequent write-down of the asset (or disposal group)
to fair value less costs of diposal. A gain is recognised for any subsequent increases in fair value less costs
of disposal of an asset (or disposal group), but not in excess of any cumulative impairment loss previously
recognised. A gain or loss not previously recognised by the date of the sale of the non-current asset (or
disposal group) is recognised at the date of derecognition.

A discontinued operation is a component of the entity that has been disposed of or is classified as held
for sale and that represents a separate major line of business or geographical area of operations, is part of
a single co-ordinated plan to dispose of such a line of business or area of operations, or is a subsidiary
acquired exclusively with a view to resale. The results of discontinued operations are presented separately
in the statements of profit or loss and statement of comprehensive income.

(i) Inventories

Inventories comprise palm oil products, sugar stocks, coconut oil, raw materials, trading inventories,
consumables and spare parts. Inventories are stated at the lower of cost and net realisable value. The cost
of raw materials, trading inventories and consumable stores represent cost of purchase plus incidental costs,
and in the case of other inventories, include cost of materials, direct labour, other direct costs and related
production overheads based on normal operating capacity.

Costs for palm oil products and sugar stock includes all direct expenses, an appropriate proportion of
variable and fixed overheads arising from manufacturing and head office expenses and the estimated fair
value less costs of disposal attributed to agriculture produce at the point of harvest in accordance with
MFRS 141 “Agriculture”. The fair value of biological assets harvested from the Group’s own plantations and
sold during the financial year are recorded as part of the biological assets movement (see Note 19) and as
part of “fair value changes in biological assets (net)” in determining the profit.

The cost of inventories is determined on a weighted average basis whilst net realisable value is the estimated
selling price in the ordinary course of business, less estimated cost to completion and estimated selling expenses.
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
For The Financial Year Ended 31 December 2019

3. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (CONTINUED)

(j) Financial assets

The Group classifies its financial assets in the following measurement categories:

(i) Financial assets at amortised cost – Debt instruments

The Group and the Company classify its financial assets at amortised cost when the asset is held within
a business model with the objective to collect contractual cash flows and the contractual terms give
rise to cash flows that are solely payments of principal and interest (“SPPI”). Financial assets of the
Group and the Company which fall under this category are trade and other receivables, bank balances,
deposits and cash.

At initial recognition, the Group and the Company measure a financial asset at its fair value plus
transaction costs that are directly attributable to the acquisition of the financial asset. Interest income
from these financial assets is included in finance income using the effective interest rate method. Any
gain or loss arising on derecognition is recognised directly in profit or loss and presented in other gains
and losses together with the related foreign exchange gains and losses.

(ii) Financial assets at fair value through other comprehensive income (“FVOCI”) – Equity instruments

The Group and the Company have made an irrevocable election to classify its equity investments in
unquoted shares under this category. At initial recognition, the Group and the Company measure a
financial asset at its fair value plus transaction costs that are directly attributable to the acquisition of
the financial asset.

Subsequently, any fair value gains and losses on equity investments are recognised in investment in
FVOCI reserve. On derecognition, the cumulative gain or loss is reclassified from investment in FVOCI
reserve to retained earnings. Dividends from such investments continue to be recognised in profit or
loss as other income when the Group’s and the Company’s right to receive payments are established.

Equity instruments designated at FVOCI are not subject to impairment assessment.

(iii) Financial assets at fair value through profit or loss (“FVTPL”) – Debt instruments

Financial assets that do not meet the criteria for amortised cost or FVOCI are measured at FVTPL.
Financial assets are classified as held for trading if they are acquired for the purpose of selling or
repurchasing in the near term. Derivatives, including separated embedded derivatives, are also classified
as held for trading unless they are designated as effective hedging instruments. Accordingly, the Group
and the Company classify its non-hedging derivative assets under this category.

At initial recognition, the Group and the Company measure this financial asset at its fair value. Transaction
costs attributable to the acquisition of the financial asset are expensed in profit or loss. Net changes
in the fair value of financial assets at FVTPL are subsequently recognised in other gains and losses in
profit or loss.

Purchases and sales of financial assets are recognised at trade date, the date at which the Group and the
Company commit to purchase or sell the asset. Financial assets are derecognised when the rights to receive
cash flows from the financial assets have expired or have been transferred and the Group and the Company
have transferred substantially all the risks and rewards of ownership.

Financial assets are classified as current assets for those having maturity dates of not more than 12 months
after the end of the reporting period, and the balance is classified as non-current.

See Note 3(l)(ii) on impairment of financial assets.

 Annual Report 2019 PG. 210 – 211

3. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (CONTINUED)

(k) Derivatives and hedging activities

Derivatives are measured at fair value and carried as assets when the fair value is positive and as liabilities
when the fair value is negative.

A derivative that is neither designated nor an effective hedging instrument is categorised under fair value
through profit or loss and changes in its fair value is recognised in profit or loss. In the case of a derivative
that qualifies for cash flow hedge, the effective portion of changes in its fair value is recognised in other
comprehensive income.

FINANCIAL STATEMENTS
The gain or loss is removed from equity and included in profit or loss in the same period or periods during
which the hedged item affects profit or loss. In the case of a hedge of a forecast transaction which results
in the recognition of a non-financial asset or a non-financial liability, the gain or loss is removed from equity
and included in the carrying amount of the asset or liability.

When a derivative expires or is sold or terminated, or when a hedge no longer meets the criteria for hedge
accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognised
when the forecast transaction is ultimately recognised in profit or loss. When a forecast transaction is no
longer expected to occur, the cumulative gain or loss that was reported in equity is immediately reclassified
to profit or loss within other gains and losses.

Hedges of net investments in foreign operations are accounted for similarly to cash flow hedges. 7
Any gain or loss on the hedging instrument relating to the effective portion of the hedge is recognised in
other comprehensive income and accumulated in reserves within equity. The gain or loss relating to the
ineffective portion is recognised immediately in profit or loss within other gains or losses.

Gains and losses accumulated in equity are reclassified to profit or loss when the foreign operation is
disposed or partially disposed of.

The Group and the Company document at the inception of the hedge relationship, the economic relationship
between hedging instruments and hedged items including whether changes in the cash flows of the
hedging instruments are expected to offset changes in the cash flows of hedged items. The Group and
the Company document its risk management objective and strategy for undertaking its hedge transaction.

(l) Impairment

(i) Impairment of non-financial assets

Goodwill and other intangible assets that have an indefinite useful life or are not yet available for use
are tested for impairment. Other non-financial assets are assessed for indication of impairment. If an
indication exists, an impairment test is performed.

An impairment loss is recognised for the amount by which the carrying amount of the non-financial
asset exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less
costs of disposal and value-in-use. Impairment loss on non-financial assets is charged to profit or loss.

Except for goodwill, non-financial assets that were previously impaired are reviewed for possible reversal of the
impairment at the end of each reporting period. Any subsequent increase in recoverable amount is recognised
in the profit or loss. Reversal of impairment loss is restricted to the carrying amount that would have been
determined had no impairment loss been recognised for the asset in prior financial periods.

An impairment loss recognised for goodwill is not reversed.

The Group and the Company perform impairment exercise annually and whenever events or circumstances
occur indicating that impairment may exist.
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
For The Financial Year Ended 31 December 2019

3. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (CONTINUED)

(l) Impairment (continued)

(ii) Impairment of financial assets

The Group and the Company recognise an allowance for expected credit loss (“ECL”) for all debt
instruments not held at FVTPL and financial guarantee contracts issued. ECLs are based on the difference
between the contractual cash flows due in accordance with the contract and all the cash flows that
the Group and the Company expect to receive, discounted at an approximation of the original effective
interest rate. The expected cash flows will include cash flows from the sale of collateral held or other
credit enhancements that are integral to the contractual terms. For financial guarantee contract, the
ECL is the difference between expected payments to reimburse the holder of the guarantee debt
instruments less any amounts the Group and the Company expect to recover from the other party.

While cash and cash equivalents are also subject to the impairment requirements of MFRS 9 “Financial
Instruments”, the identified impairment loss is immaterial.

ECLs are measured based on a general 3-stage approach and a simplified approach.

General 3-stage approach for other receivables, non-trade inter-company balances, advances for plasma
plantation projects and financial guarantee contracts issued

ECLs are recognised in two stages. For credit exposures for which there has not been a significant
increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default
events that are possible within the next 12 months (a 12-month ECL). For those credit exposures for
which there has been a significant increase in credit risk since initial recognition, a loss allowance is
required for credit losses expected over the remaining life of the exposure, irrespective of the timing
of the default (a lifetime ECL).

Simplified approach for trade receivables including inter-company balances

For trade receivables, the Group and the Company apply a simplified approach in calculating ECLs.
Therefore, the Group and the Company do not track changes in credit risk, but instead recognises a
loss allowance based on lifetime ECLs at each reporting date. The Group and the Company have
established a provision matrix that is based on its historical credit loss experience, adjusted for forward-
looking factors specific to the debtors and the economic environment.

Significant increase in credit risk

The Group and the Company consider the probability of default upon initial recognition of asset and
whether there has been a significant increase in credit risk on an ongoing basis throughout each
reporting period. To assess whether there is a significant increase in credit risk, the Group and the
Company compare the risk of a default occurring on the asset as at the reporting date with the risk
of default as at the date of initial recognition. The assessment considers available, reasonable and
supportable forward-looking information.

The following indicators are incorporated in the assessment:

• internal/external credit rating (as far as available)

• actual or expected significant adverse changes in business, financial or economic conditions that
are expected to cause a significant change to the debtor’s ability to meet its obligations
• actual or expected significant changes in the operating results of the debtor
• significant increases in credit risk on other financial instruments of the same debtor
• significant changes in the value of the collateral supporting the obligation or in the quality of third-
party guarantees or credit enhancements
• significant changes in the expected performance and behaviour of the debtor, including changes
in the payment status of debtor in the Group and changes in the operating results of the debtor.
 Annual Report 2019 PG. 212 – 213

3. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (CONTINUED)

(l) Impairment (continued)

(ii) Impairment of financial assets (continued)

Significant increase in credit risk (continued)

Macroeconomic information (such as market interest rates or growth rates) is incorporated as part of
the internal rating model.

Regardless of the analysis above, a significant increase in credit risk is presumed if a debtor is more

FINANCIAL STATEMENTS
than 90 days past due in making a contractual payment.

Definition of default and credit-impaired financial assets

The Group and the Company consider a financial asset in default, which is fully alligned with the
definition of credit-impaired, when contractual payments are 90 days past due. However, in certain
cases, the Group and the Company may also consider a financial asset to be in default when internal
or external information indicates that the Group and the Company are unlikely to receive the outstanding
contractual amounts in full before taking into account any credit enhancements held by the Group
and the Company. A financial asset is written off to profit or loss when there is no reasonable expectation
of recovering the contractual cash flows.

Grouping of instruments for ECL measured on collective basis

7
Collective assessment

To measure ECL, trade receivables arising from plantation upstream and downstream, and other
operations were assessed based on credit risk profile and grouped into two categories (i.e. local and
export customers). Local customers are defined as the customers with operation presence within the
country in which the entity operates. Export customers represent customers outside the country in
which the entity operates. Both portfolios are differentiated by country risks and are subject to different
credit assessment.

Individual assessment

Trade receivables, other receivables, advances from plasma plantation projects, amounts due from
subsidiaries and amounts due from related parties which are in default or credit-impaired are assessed
individually.

(m) Share capital and Perpetual Sukuk

(i) Share capital

Proceeds from ordinary shares issued are accounted for as share capital in equity. Costs directly
attributable to the issuance of new shares are deducted from equity.

Dividends to the owner of the Company and non-controlling interests are recognised in the statement
of changes in equity in the period in which they are declared.

(ii) Perpetual Sukuk

Perpetual Sukuk is classified as equity instruments as there is no contractual obligation to redeem the
instrument. Costs directly attributable to the issuance of the instrument, net of tax, are treated as a
deduction from the proceeds.

Perpetual Sukuk holders’ entitlement is accounted for as an appropriation in profit or loss and distribution
is recognised in the statement of changes in equity in the period in which it is declared.
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
For The Financial Year Ended 31 December 2019

3. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (CONTINUED)

(n) Provisions

Provisions are recognised when the Group and the Company have a legal or constructive obligation, where the
outflow of resources is probable and can be reliably estimated. Provisions are measured at the present value
of the obligation. The increase in the provision due to the passage of time is recognised as finance costs.

(o) Employee benefits

(i) Short-term employee benefits

Wages, salaries, paid annual leave and sick leave, bonuses and non-monetary benefits are accrued in
the financial period in which the services are rendered by employees.

(ii) Defined contribution pension plans

A defined contribution pension plan is a pension plan under which the Group pays fixed contributions
into a separate entity. The Group has no legal or constructive obligations to pay further contributions
if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service
in the current and prior periods.

The Group has various defined contribution pension plans in accordance with local conditions and
practices in the countries in which it operates. The Group’s contributions to defined contribution pension
plans are charged to profit or loss in the financial period in which they relate.

(iii) Defined benefit pension plans

A defined benefit pension plan is a pension plan that is not a defined contribution pension plan. Typically
defined benefit pension plans define an amount of pension benefit that an employee will receive on
retirement, usually dependent on one or more factors such as age, years of service and compensation.

The Group has various defined benefit pension plans, some of which are funded by payments from
the relevant group of companies in various countries. The Group’s defined benefit pension plans are
determined based on a periodic actuarial valuation by external consultants where the amount of the
benefits that eligible employees have earned in return for their services in the current and prior financial
periods are estimated.

The liabilities in respect of the defined benefit pension plans are the present value of the defined
benefit obligations at the end of the reporting period, adjusted for actuarial gains and losses and past
service costs, and reduced by the fair value of the plan assets. The defined benefit obligations, calculated
using the Projected Unit Credit Method, are determined by independent actuaries, considering the
estimated future cash outflows.

Actuarial gains or losses arising from market adjustments and changes in actuarial assumptions are
recognised in other comprehensive income.

(iv) Termination benefits

Termination benefits are payable whenever an employee’s employment is terminated in exchange for these
benefits. The Group recognises termination benefits when it is demonstrably committed to either terminate
the employment of current employees according to a detailed formal plan without possibility of withdrawal
or to provide termination benefits as a result of a proposal to encourage voluntary redundancy.

(v) Other long-term employee benefits

Other long-term employee benefits such as deferred compensation payable 12 months or more after
the service period are calculated based on the Group’s and the Company’s policy using the same
methodology as other post-employment benefits.
 Annual Report 2019 PG. 214 – 215

3. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (CONTINUED)

(p) Financial liabilities

The Group’s financial liabilities are classified into four categories and the accounting policies for each of
these categories are as follows:

(i) Financial liabilities at fair value through profit or loss (“FVTPL”)

Financial liabilities are classified as FVTPL if they are held for trading. Derivatives are categorised as
held for trading unless they are designated and are effective hedging instruments.

FINANCIAL STATEMENTS
(ii) Financial guarantee contracts

A financial guarantee contract is a contract that requires the issuer to make specified payments to
reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due,
in accordance with the terms of a debt instrument. Financial guarantee contracts are recognised initially
at fair value plus transaction costs.

Financial guarantee contracts are subsequently measured at the higher of the amount determined in
accordance with expected credit loss model under MFRS 9 “Financial Instruments” and the amount
initially recognised less, the cumulative amount of income recognised in accordance with the principles
of MFRS 15 “Revenue from Contracts with Customers”, where appropriate.

Where financial guarantees in relation to loans or payables of subsidiaries are provided by the Company 7
for no compensation, the fair values are accounted for as contributions and recognised as part of the
cost of investment in subsidiaries.

(iii) Financial liabilities at amortised cost

Payables, amounts due to subsidiaries, amounts due to related parties and borrowings are recognised
initially at fair value plus transaction costs and thereafter, at amortised cost using the effective interest
method. Amortisation is charged to profit or loss.

(iv) Derivatives used for hedging activities

The accounting policy for derivatives used for hedging activities is disclosed in Note 3(k).

Financial liabilities are classified as current liabilities for those having maturity dates of not more than
12 months after the reporting date, and the balance is classified as non-current.

Financial assets and liabilities are offset and the net amount presented in the statement of financial
position when there is a legally enforceable right to offset the recognised amounts and there is an
intention to settle on a net basis, or realise the asset and settle the liability simultaneously. The legally
enforceable right must not be contingent on future events and must be enforceable in the normal
course of business and in the event of default, insolvency or bankruptcy.

(q) Cash and cash equivalents

For the purpose of the statements of cash flows, cash and cash equivalents include cash in hand and
deposits held at call with banks and other short-term highly liquid investments (with original maturities of
3 months or less) and are subject to an insignificant risk of changes in value, net of bank overdrafts. In the
statements of financial position, bank overdrafts are included in short-term borrowings.
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
For The Financial Year Ended 31 December 2019

3. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (CONTINUED)

(r) Borrowings and borrowing costs

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently
carried at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption
value is recognised in the statements of profit or loss over the period of the borrowings using the effective
interest method.

Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the
extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred
until the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the
facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over
the period of the facility to which it relates.

General and specific borrowing costs that are directly attributable to the acquisition, construction or production
of qualifying assets are capitalised to the cost of those assets until the assets are substantially ready for their
intended use or sale. Any specific borrowing that remains outstanding after a related qualifying asset is ready
for its intended use or sale will become part of the Group’s general borrowings. All other borrowing costs
are recognised in the statement of profit and loss in the financial year in which they are incurred.

(s) Tax

Taxation comprises current and deferred tax. Tax is recognised in the profit or loss, except to the extent
that it relates to items recognised directly in other comprehensive income. In this case, the tax is recognised
in other comprehensive income.

The current income tax charge is the expected income taxes payable in respect of the taxable profit for
the financial year and is measured using the applicable tax rates. Management periodically evaluates
positions taken in tax returns with respect to situations in which applicable tax regulation is subject to
interpretation. Provisions are established where appropriate on the basis of amounts expected to be paid
to the tax authorities.

Deferred tax is recognised on temporary difference arising between the tax bases of assets and liabilities
and their carrying amounts in the financial statements including those arising from business combination.
Deferred tax is not recognised on goodwill and those arising from initial recognition of an asset or liability
which at the time of the transaction affects neither accounting nor taxable profit or loss.

Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available
against which the temporary differences can be utilised. Deferred tax is recognised on temporary differences
arising on investments in subsidiaries, joint ventures and associates except where the timing of the reversal
of the temporary difference can be controlled and it is probable that the temporary difference will not
reverse in the foreseeable future.

Deferred tax is measured based on the tax rates (and laws) that have been enacted or substantively enacted
at the end of the reporting period and are expected to apply when the related deferred income tax asset
is realised or the deferred income tax liability is settled.

(t) Government grants

Government grants are recognised at fair value when there is reasonable assurance that the Group will
comply with the conditions attached to them and the grants will be received. Grants are treated as deferred
income and allocated to profit or loss over the useful lives of the related assets or over the period of the
operating expenditure to which the grants are intended to compensate.
 Annual Report 2019 PG. 216 – 217

3. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (CONTINUED)

(u) Revenue

(i) Revenue from contracts with customers

Revenue from contracts with customers is recognised by reference to each distinct performance
obligation promised in the contract with customer when or as the Group and the Company transfer
control of the goods or services promised in a contract and the customer obtains control of the goods
or services. Revenue from contracts with customers is measured at its transaction price, being the
amount of consideration to which the Group and the Company expect to be entitled in exchange for
transferring promised goods or services to a customer, net of any Government Tax applicable at the

FINANCIAL STATEMENTS
prevailing rates. The transaction price is allocated to each distinct good or service promised in the
contract. Depending on the terms of the contract, revenue is recognised when the performance
obligation is satisfied, which may be at a point in time or over time.

Sales of agricultural produce and refined palm oil related products

The Group’s and the Company’s revenue are derived mainly from its upstream and downstream operations.

In the upstream operations, revenue is from sales of agricultural produce such as crude palm oil (“CPO”),
fresh fruit bunches (“FFB”), palm kernel (“PK”), rubber, beef and sugar. In the downstream operations,
revenue is derived from sales of refined oil related products and provision of freight and tolling services.

Revenue from sales of agricultural produce and refined palm oil related products are recognised net of
7
discount and taxes collected on behalf at the point in time when control of the goods has transferred
to the customer. Depending on the terms of the contract with the customer, control transfers either
upon delivery of the goods to a location specified by the customer and acceptance of the goods by the
customer; or upon delivery of the goods on board vessels or tankers for onward delivery to the customer.

Contracts where control of goods transfer to the customer upon delivery of the goods on board vessels
or tankers are often bundled with freight services. In such contracts, sale of goods and provision of freight
are accounted for as separate performance obligations as the customer can benefit from the sale of
goods and freight services on its own or with the use of other resources. The transaction price is allocated
to each performance obligation based on the stand-alone selling prices of the goods and services.

There is no element of financing present as the Group’s and the Company’s sale of goods are either
on cash terms (immediate payments or advance payments not exceeding 30 days); or on credit terms
of up to 30 days. The Group’s and the Company’s obligations to provide quality claims against off-spec
goods under the Group’s and the Company’s standard contractual terms are recognised as a provision.

Rendering of services – Provision for freight, tolling and other services

Revenue from provision of freight is recognised in the accounting period in which services are rendered.
In cases where customers pay for the bundled contract in advance to the rendering of the freight
services, a deferred income is recognised.

Revenue from the provision of tolling services is recognised in the period in which the manufacturing
activities are performed. There is no element of financing present as the sales is made with credit
terms of up to 30 days.

(ii) Revenue from other sources

Specific revenue recognition criteria for other revenue and income earned by the Group and the
Company are as follows:
• Rental income – recognised on a straight-line basis over the lease terms.
• Dividend income – recognised when the right to receive payment is established.
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
For The Financial Year Ended 31 December 2019

3. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (CONTINUED)

(v) Leases

The Group as a lessee

The Group and the Company recognise a right-of-use (“ROU”) asset and a lease liability at the lease
commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount
of the lease liability adjusted for any lease payments made at or before the commencement date, plus any
initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to
restore the underlying asset or site on which it is located, less any lease incentives received.

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement
date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The
estimated useful lives of the right-of-use assets are determined on the same basis as those of property,
plant and equipment as follows:

Leasehold land over the lease period ranging from 20 to 999 years
Buildings 20 to 50 years, or over the lease term, if shorter
Plant and machinery 5 to 40 years, or over the lease term, if shorter
Vehicles, equipment and fixtures 5 years, or over the lease term, if shorter

In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for
certain remeasurement of the lease liability.

The lease liability is initially measured at the present value of future lease payments at the commencement
date, discounted using the Group’s and the Company’s incremental borrowing rates. Lease payments included
in the measurement of the lease liability include fixed payments, any variable lease payments, amount
expected to be payable under a residual value guarantee, and exercise price under an extension option
that the Group and the Company are reasonably certain to exercise. This incremental borrowing rates is
the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of
similar value to the ROU assets in a similar economic environment with similar term, security and conditions.

In determining the lease term, the Group and the Company consider all facts and circumstances that create
an economic incentive to exercise an extension option, or not to exercise a termination option. Extension
options (or periods after termination options) are only included in the lease term if the lease is reasonably
certain to be extended (or not to be terminated).

The Group and the Company reassess the lease term upon the occurrence of a significant event or change
in circumstances that is within the control of the Group and Company and affect whether the Group and
the Company are reasonably certain to exercise an option not previously included in the determination of
lease term, or not to exercise an option previously included in the determination of lease term.

The Group and the Company are also exposed to potential future increases in variable lease payments that
depend on an index or rate, which are not included in the lease liability until they take effect. When
adjustments to lease payments based on an index or rate take effect, the lease liability is remeasured and
adjusted against the ROU assets.

The lease liability is measured at amortised cost using the effective interest method. It is remeasured when
there is a change in future lease payments arising from a change in rate, or if the Group or the Company
changes its assessment of whether it will exercise an extension or termination option.

Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or
loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance
of the liability for each period.
 Annual Report 2019 PG. 218 – 219

3. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (CONTINUED)

(v) Leases (continued)

The Group as a lessee (continued)

Lease payments associated with short term leases and leases of low value assets are recognised on a
straight-line basis as an expense in profit or loss. Short term leases are leases with a lease term of 12 months
or less. Low value assets are those assets valued at less than RM20,000 each when purchased new.

The Group presents the lease liabilities as a separate line item in the statement of financial position. Interest
expense on the lease liability is presented within the finance cost in the statement of profit or loss.

FINANCIAL STATEMENTS
The Group as a lessor

As a lessor, the Group and the Company determine at lease inception whether each lease is a finance
lease or an operating lease. To classify each lease, the Group and the Company make an overall assessment
of whether the lease transfers substantially all of the risks and rewards incidental to ownership of the
underlying asset to the lessee. As part of this assessment, the Group and the Company consider certain
indicators such as whether the lease is for the major part of the economic life of the asset.

Operating leases

The Group and the Company classify a lease as an operating lease if the lease does not transfer substantially
all the risks and rewards incidental to ownership of an underlying asset to the lessee.
7
The Group recognises lease payments received under operating lease as lease income on a straight-line
basis over the lease term.

(w) Commodity futures, forward contracts and options

Commodity futures, forward contracts and options are entered into by the Group and the Company to
manage exposure to adverse movements in vegetable oil prices. Certain contracts are entered into and
continue to be held for the purpose of the receipt or delivery of the physical commodity in accordance
with the Group’s and the Company’s expected purchase, sale or usage requirements. Accordingly, such
contracts are deemed not to be financial instruments. Gains or losses arising from these contracts are
deferred and included in the measurement of the purchase or sale transactions only upon the recognition
of the anticipated transactions.

Contracts entered other than for the purpose of the receipt or delivery of physical commodity are treated
as derivatives.

(x) Contingent liabilities

The Group and the Company do not recognise contingent liabilities, but discloses their existence in the notes
to the financial statements. A contingent liability is a possible obligation that arises from past events whose
existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events
beyond the control of the Group or the Company or a present obligation that is not recognised because it
is not probable that an outflow of resources will be required to settle the obligation. A contingent liability
also arises in the extremely rare circumstances where there is a liability that cannot be recognised because
it cannot be measured reliably. However, contingent liabilities do not include financial guarantee contracts.

(y) Segment reporting

Segment information is presented in a manner that is consistent with the internal reporting provided to
management for the allocation of resources and assessment of its performance. The Group’s operating
businesses are organised and managed separately according to the nature of the products and services
provided, with each segment representing a strategic business unit that offers different products and serves
different markets.
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
For The Financial Year Ended 31 December 2019

3. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (CONTINUED)

(y) Segment reporting (continued)

Segment revenue, expense, assets and liabilities are those amounts resulting from operating activities of a
segment that are directly attributable to the segment and the relevant portion that can be allocated on a
reasonable basis to the segment. They are determined before intragroup balances and intragroup transactions
are eliminated as part of the consolidation process, except to the extent that such intragroup balances and
transactions are between group companies within a single segment. Intragroup transactions which in
substance represent re-allocation of non-current assets from a segment to another segment are also
eliminated. Inter-segment pricing is based on similar terms as those available to external parties.

(z) Fair value estimation

Fair values shown in the financial statements are categorised into three different levels to increase consistency
and comparability in fair value measurements. The levels of hierarchy are based on the input used to measure
the fair value of an asset or a liability. The hierarchy based on highest to the lowest priority is as follows:

Level 1 – quoted prices in active markets for identical assets or liabilities

Level 2 – 
valuation inputs (other than Level 1 input) that are observable for the asset or liability, either
directly or indirectly
Level 3 – valuation inputs that are not based on observable market data

4. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENT IN APPLYING ACCOUNTING POLICIES

The preparation of financial statements in conforming with MFRS requires the use of certain critical accounting
estimates that involve complex and subjective judgements and the use of assumptions, some of which may be
for matters that are inherently uncertain and susceptible to change. The Directors exercise their judgement in
the process of applying the Group’s accounting policies. Estimates and assumptions are based on the Directors’
best knowledge of current events. Such estimates and judgement could change from period to period and
have a material impact on the results, financial position, cash flows and other disclosures.

The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year are outlined below:

(a) Impairment of goodwill

The Group determines whether goodwill is impaired at least on an annual basis. This requires an estimation
of the recoverable amount of the cash generating units (“CGU”) to which the goodwill is allocated. Estimating
the recoverable amount requires management to make an estimate of the expected future cash flows from
the CGUs and also to choose a suitable discount rate in order to calculate the present value of those cash
flows. The recoverable amounts of the CGUs were determined based on the value in use (“VIU”) calculations.
The VIU is the net present value of the projected future cash flows derived from the CGU discounted at
an appropriate discount rate. Projected cash flows are estimates made based on historical and industry
trends, general market and economic conditions and other available information.

The carrying amount of the Group’s and the Company’s goodwill as at 31 December 2019 were USD517.0
million (RM2,123.3 million based on 31 December 2019 exchange rate) arising from the acquisition of New
Britain Palm Oil Limited (“NBPOL”) and goodwill of RM1,974.8 million arising from the merger exercise of
plantation businesses as disclosed in Note 24(i) to the financial statements. Based on the impairment
assessments, no impairment charge is required. The key assumptions are also disclosed in Note 24(i) to the
financial statements.
 Annual Report 2019 PG. 220 – 221

4. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENT IN APPLYING ACCOUNTING POLICIES (CONTINUED)

(b) Impairment of investment in subsidiaries and joint ventures

The Group and the Company assessed whether there is any indication that the investments in subsidiaries and
joint ventures are impaired at the end of each reporting period in accordance with the respective accounting
policies. Significant judgement is required in the estimation of the present value of future cash flows generated
by the assets, which involve uncertainties and are significantly affected by assumptions used and judgements
made regarding estimates of future cash flows and discount rates. Changes in assumptions could significantly
affect the results of the Group’s and the Company’s test for impairment of assets.

FINANCIAL STATEMENTS
During the financial year, the Group has reassessed the profitability of its investment in a joint venture,
MYBiomass Sdn Bhd. As a result, of recurring losses for the past years and the Board’s decision to discontinue
the financing in the joint venture, the Group and the Company has recognised an impairment of RM8.2
million and RM11.4 million, respectively in the current financial year.

The Company also recorded impairment of investments in subsidiaries of RM309.5 million during the
financial year. The impairments were mainly attributed to impairment of cost of investments in Sime Darby
Plantation (Liberia) Inc. of RM305.9 million (see Note 21).

(c) Taxation

(i) Income taxes

The Group is subject to income taxes in numerous jurisdictions in which the Group operates. Significant 7
judgement is required in determining the provision for income taxes. There are transactions and
calculations for which the ultimate tax determination is uncertain during the ordinary course of business.
The Group recognises liabilities for tax based on estimates of assessment of the tax liability due. The
Group also recognised certain tax recoverable for which the Group believes that there is reasonable
basis for recognition. Where the final tax outcome of these matters is different from the amounts that
were initially recorded, such differences will impact the income tax and deferred tax provisions and
tax recoverable balance in the financial year in which such determination is made.

(ii) Deferred tax assets

Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be
available against which temporary differences or unutilised tax losses and tax credits (including investment
allowances) can be utilised. This involves judgement regarding future taxable profits of particular entities
within the Group in which the deferred tax asset has been recognised.

During the financial year, the Group has recognised deferred tax assets arising from unutilised tax losses
and other deductible temporary differences as disclosed in Note 26.

(d) Bearer plants

There are certain parcels of land use rights where the remaining periods are less than 25 years as at 31
December 2019. The assumption of further extension of the land use rights periods to be granted on those
lands involve judgement on the future decision by the local authority and the explicit terms and conditions
imposed on the land titles. Based on the management’s assessment of the assumed extension of the land
use rights, management is of the view that there is no impairment indicator of the related bearer plants.
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
For The Financial Year Ended 31 December 2019

5. REVENUE

The Group and the Company derive the following types of revenue:

GROUP COMPANY

Financial Financial Financial Financial

year ended period ended year ended period ended
31.12.2019 31.12.2018 31.12.2019 31.12.2018
Note RM’000 RM’000 RM’000 RM’000

Revenue from contracts with

customers 5(a) 12,046,316 6,504,904 3,148,353 1,642,464
Revenue from other sources 5(b) 15,950 13,417 13,532 9,576

12,062,266 6,518,321 3,161,885 1,652,040

(a) Disaggregation of revenue from contracts with customers

GROUP COMPANY

Financial Financial Financial Financial

year ended period ended year ended period ended
31.12.2019 31.12.2018 31.12.2019 31.12.2018
Note RM’000 RM’000 RM’000 RM’000

Upstream
– Malaysia 780,944 473,237 539,780 314,989
– Indonesia 865,114 468,596 – –
– Papua New Guinea and
 Solomon Islands (“PNG/SI”) 836,398 581,693 – –
Downstream
– Bulk products 5(a)(i) 5,514,435 2,647,541 1,095,600 678,527
– Differentiated products 5(a)(ii) 3,994,753 2,305,006 1,505,966 645,295
Other operations 54,672 28,831 7,007 3,653

12,046,316 6,504,904 3,148,353 1,642,464

(i) Bulk products include basic refined products comprising Refined Bleached Deodorised (“RBD”) palm oil,
palm olein, stearin Palm Fatty Acid Distillate (“PFAD”), crude palm kernel oil which are refined in the
bulk refineries and kernel crushing plants and coconut oils products which are extracted from the copra.

(ii) Differentiated products are further processed from the basic refined products into products catering
to customers’ specific requirements.
 Annual Report 2019 PG. 222 – 223

5. REVENUE (CONTINUED)

(a) Disaggregation of revenue from contracts with customers (continued)

GROUP COMPANY

Financial Financial Financial Financial

year ended period ended year ended period ended
31.12.2019 31.12.2018 31.12.2019 31.12.2018
RM’000 RM’000 RM’000 RM’000

Sales of palm based products, other

FINANCIAL STATEMENTS
refined edible oils, rubber, sugar,
beef and other agricultural products 11,741,983 6,392,519 3,140,960 1,638,070
Freight services 297,099 107,697 386 741
Tolling services 7,234 4,688 7,007 3,653

12,046,316 6,504,904 3,148,353 1,642,464

Timing of revenue recognition

– at point in time 11,741,983 6,392,519 3,140,960 1,638,070
– over time 304,333 112,385 7,393 4,394

12,046,316 6,504,904 3,148,353 1,642,464

7
(b) Revenue from other sources
GROUP COMPANY

Financial Financial Financial Financial

year ended period ended year ended period ended
31.12.2019 31.12.2018 31.12.2019 31.12.2018
RM’000 RM’000 RM’000 RM’000

Dividends (gross) received/receivable

from:
– other investments 4,059 4,059 4,059 4,059
Rental income 11,891 9,358 9,473 5,517

15,950 13,417 13,532 9,576

(c) Revenue expected to be recognised in relation to unsatisfied performance obligations

The following table shows the revenue expected to be recognised in the future relating to performance
obligations that were unsatisfied (or partially satisfied) at the end of the financial year/period.

Expected timing of recognition:

GROUP COMPANY

Financial Financial Financial Financial

year ended year ended year ended year ended
31.12.2020 31.12.2019 31.12.2020 31.12.2019
Note RM’000 RM’000 RM’000 RM’000

Freight income 41 13,071 28,536 7 42

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
For The Financial Year Ended 31 December 2019

6. OPERATING EXPENSES
GROUP COMPANY
Financial Financial Financial Financial
year ended period ended year ended period ended
31.12.2019 31.12.2018 31.12.2019 31.12.2018
Note RM’000 RM’000 RM’000 RM’000
(a) Operating expenses include:
Changes in inventories of
finished goods and
work-in-progress (991,470) (695,958) 11,981 (47,766)
Finished goods and
work-in-progress purchased 1,423,964 583,602 – –
Raw materials and
consumables 4,893,392 2,652,275 1,157,723 531,662
Other direct costs of sales 6(b) 1,883,434 1,231,512 508,099 291,818
Employee costs 6(d) 2,301,133 1,270,833 715,160 455,435
Depreciation of:
– property, plant and equipment 6(c) 1,073,555 516,237 255,811 122,987
– right-of-use assets 6(c) 99,830 63,254 5,337 2,627
– investment properties 18 84 40 – –
Amortisation of intangible assets 24 32,544 19,077 7,990 4,741
Other operating expenses 6(e) 934,553 462,598 645,108 314,699
11,651,019 6,103,470 3,307,209 1,676,203

(b) Other direct costs of sales

include:
Transport and handling charges 676,858 394,944 54,206 31,935
Commissions fees 7,046 3,589 32,980 23,336
Tolling fees 23,121 9,900 4,787 4,436
Upkeep, manuring, and
collection expenses 601,137 370,156 218,284 118,592
Selling and distribution expenses 83,100 98,827 761 457
Mills and refineries
maintenance expenses 173,783 146,997 62,584 37,292
Research expenses 2,585 1,586 87,250 46,926
Others 315,804 205,513 47,247 28,844
1,883,434 1,231,512 508,099 291,818

(c) Depreciation
Depreciation for the financial
year/period
– property, plant and equipment 17 1,119,197 533,353 265,005 127,622
– capitalised in immature
bearer plant (45,642) (17,116) (9,194) (4,635)
6(a) 1,073,555 516,237 255,811 122,987
Depreciation for the financial
year/period
– right-of-use assets 20 109,105 64,805 5,797 2,843
– c
 apitalised in immature
  bearer plant (9,275) (1,551) (460) (216)
6(a) 99,830 63,254 5,337 2,627
Depreciation included in profit
or loss 1,173,385 579,491 261,148 125,614
 Annual Report 2019 PG. 224 – 225

6. OPERATING EXPENSES (CONTINUED)

GROUP COMPANY

Financial Financial Financial Financial

year ended period ended year ended period ended
31.12.2019 31.12.2018 31.12.2019 31.12.2018
Note RM’000 RM’000 RM’000 RM’000

(d) Employee costs include:

Salaries, wages and bonus 1,899,838 1,020,166 490,720 316,654
Defined contribution plans 104,630 62,728 80,624 49,706

FINANCIAL STATEMENTS
Retirement benefits 38 41,805 12,838 7,622 4,262
Termination benefits 3,072 19,566 3,072 12,897
Other employee benefits 251,788 155,535 133,122 71,916

2,301,133 1,270,833 715,160 455,435

(e) Other operating expenses include:

Fair value changes in
biological assets (net) (13,065) (22,939) (8,760) 17,145
Impairment of:
– property, plant and
 equipment 17 2,474 5,969 – 1,296
– investment in subsidiaries 21 – – 309,462 136,084
7
– investment in joint venture – – 11,350 –
– right-of-use assets 20 19,446 – – –
– advances for plasma
  plantation projects 49(c)(iii) 1,703 3,440 – –
– trade and other receivables 49(c)(iii) 9,310 5,768 1,475 311
– amounts due from
 subsidiaries 49(c)(iii) – – 18,267 11,795
– a
 mounts due from joint
 ventures 49(c)(iii) 27,501 – 25,088 2,413
Write off of:
– property, plant and
 equipment 17 26,218 32,268 9,510 12,241
– intangible assets 24 13 193 – 193
– bad debts 19 97 19 –
Write-down of:
– right-of-use assets 20 1,971 – – –
– inventories 3,554 4,070 459 50
Donations 20,000 20,000 2,948 21,042
Insurance charges 32,354 12,675 5,511 2,562
Information technology
charges 74,610 38,011 22,284 14,339
Professional fees 108,510 36,011 34,506 8,702
Quit rent and assessment 48,224 21,725 21,195 8,282
Expense relating to short-
term leases 22,224 12,963 12,476 8,283
Repairs and maintenance 225,198 100,313 30,464 17,290
Telecommunication
expenses 9,621 4,949 1,118 471
Travelling expenditure 40,789 27,722 11,483 5,284
Utilities expenditure 137,150 66,280 34,000 16,250
Liberia’s exit cost – – 20,650 –
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
For The Financial Year Ended 31 December 2019

6. OPERATING EXPENSES (CONTINUED)

GROUP COMPANY
Financial Financial Financial Financial
year ended period ended year ended period ended
31.12.2019 31.12.2018 31.12.2019 31.12.2018
RM’000 RM’000 RM’000 RM’000

(f) Auditors’ remuneration

Fees for statutory audits:
– PricewaterhouseCoopers PLT,
 Malaysia 2,769 2,659 1,521 1,564
– Member firms of
 PricewaterhouseCoopers
  International Limited 7,503 6,245 – –
– Other firms 334 644 – –
10,606 9,548 1,521 1,564

Fees for non-audit services:

– PricewaterhouseCoopers PLT,
 Malaysia 318 149 318 149
– Member firms of
 PricewaterhouseCoopers
  International Limited 1,717 1,439 – –
– Other firms* 1,853 4,614 1,212 4,413
3,888 6,202 1,530 4,562

* Fees for non-audit services provided by other firms for the financial year ended 31 December 2019
exclude amount capitalised in intangible asset of RM3.5 million for the Group and the Company.

7. OTHER OPERATING INCOME

GROUP COMPANY

Financial Financial Financial Financial

year ended period ended year ended period ended
31.12.2019 31.12.2018 31.12.2019 31.12.2018
Note RM’000 RM’000 RM’000 RM’000

Gain on disposal of:

– property, plant and equipment 60,684 35,589 54,280 26,328
– non-current assets held for sale 19,455 46,058 832 16,756
Government grants/incentives 7,543 3,117 – –
Insurance claims 25,670 10,201 1,111 5,675
Other compensation income 17,526 9,320 742 8,919
Reversal of impairment of:
– investment in subsidiaries 21 – – 94,731 72,509
– advances for plasma plantation
 projects 49(c)(iii) 2,130 315 – –
– trade and other receivables 49(c)(iii) 18,309 7,498 – –
– amounts due from subsidiaries 49(c)(iii) – – 1,153 –
Sale of scrap 13,765 14,195 4,280 2,428
Sale of rubber wood 3,204 428 3,204 428
Other income 34,075 28,899 8,647 4,898

202,361 155,620 168,980 137,941

 Annual Report 2019 PG. 226 – 227

8. OTHER GAINS AND LOSSES

GROUP COMPANY

Financial Financial Financial Financial

year ended period ended year ended period ended
31.12.2019 31.12.2018 31.12.2019 31.12.2018
RM’000 RM’000 RM’000 RM’000

Fair value losses on forward foreign

exchange contracts:
– non-hedging derivatives (320) – – –

FINANCIAL STATEMENTS
– cash flow hedge (6,433) (7,966) – –
Fair value losses on commodities future
contracts
– realised (68,836) – (65,499) –
– unrealised (178,701) – (92,785) (3,849)
Foreign currencies exchange losses:
– realised (2,024) (15,627) (318) (32,741)
– unrealised (13,134) (17,114) (7,281) (121,603)
Fair value gains on forward foreign
exchange contracts:
– non-hedging derivatives 1,570 8,838 – 1,112
– cash flow hedge – – 1,211 267
Fair value gains on commodities 7
future contracts – 3,268 – –
Foreign currencies exchange gains:
– realised 31,512 27,092 52,433 1,111
– unrealised 26,990 43,932 12,852 1,765

(209,376) 42,423 (99,387) (153,938)

9. FINANCE INCOME
GROUP COMPANY

Financial Financial Financial Financial

year ended period ended year ended period ended
31.12.2019 31.12.2018 31.12.2019 31.12.2018
RM’000 RM’000 RM’000 RM’000

Finance income from:

– banks and other financial
  institutions 8,478 5,146 1,970 957
– subsidiaries – – 8,482 7,155
– financial guarantee contracts – – 7,322 –
– others 4,497 3,327 12 822

12,975 8,473 17,786 8,934

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
For The Financial Year Ended 31 December 2019

10. FINANCE COSTS

GROUP COMPANY

Financial Financial Financial Financial

year ended period ended year ended period ended
31.12.2019 31.12.2018 31.12.2019 31.12.2018
Note RM’000 RM’000 RM’000 RM’000

Finance costs charged by:

– banks and other financial
 institutions 261,831 117,614 196,098 86,516
– lease liabilities 7,691 4,614 877 325
– subsidiaries – – 17,067 8,786
Amortisation of deferred financing
expenses 39 11,605 5,209 11,568 4,642

281,127 127,437 225,610 100,269

Interests capitalised in:

– capital work-in-progress 17 (25,316) (875) (1,424) (840)
– immature bearer plants 17 (88,037) (16,476) (26,113) (9,981)
– intangible assets 24 (229) (101) (229) (101)

(113,582) (17,452) (27,766) (10,922)

Net finance costs 167,545 109,985 197,844 89,347

11. DIRECTORS’ REMUNERATION

GROUP COMPANY

Financial Financial Financial Financial

year ended period ended year ended period ended
31.12.2019 31.12.2018 31.12.2019 31.12.2018
RM’000 RM’000 RM’000 RM’000

Non-executive Directors:
– fees and allowances 4,189 2,153 3,018 1,938
– estimated monetary value of
 benefits 237 108 237 108

4,426 2,261 3,255 2,046

Executive Director:
– salaries and other emoluments 3,704 2,386 3,704 2,386
– defined contribution pension
 plans 290 376 290 376
– estimated monetary value of
 benefits 40 29 40 29

4,034 2,791 4,034 2,791

 Annual Report 2019 PG. 228 – 229

12. TAX EXPENSE

GROUP COMPANY

Financial Financial Financial Financial

year ended period ended year ended period ended
31.12.2019 31.12.2018 31.12.2019 31.12.2018
Note RM’000 RM’000 RM’000 RM’000

Current tax:
In respect of current financial year/
period

FINANCIAL STATEMENTS
– Malaysian income tax 24,022 25,418 3,912 7,389
– foreign income tax 108,586 48,699 – –

132,608 74,117 3,912 7,389

In respect of prior financial period/

year
– Malaysian income tax 30,086 (33) 10,696 1,553
– foreign income tax (13,528) (1,274) – –

16,558 (1,307) 10,696 1,553

Deferred tax
– o
 rigination and reversal of
temporary differences 26 (172,735) 72,442 (8,853) 7,028 7
Tax (credit)/expense (23,569) 145,252 5,755 15,970
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
For The Financial Year Ended 31 December 2019

12. TAX EXPENSE (CONTINUED)

A reconciliation of income tax expense applicable to profit/(loss) before tax at the statutory income tax rate to
income tax expense at the effective income tax rate is as follows:

GROUP COMPANY

Financial Financial Financial Financial

year ended period ended year ended period ended
31.12.2019 31.12.2018 31.12.2019 31.12.2018
Note RM’000 RM’000 RM’000 RM’000

Profit/(loss) from continuing

operations before income tax
expense 251,316 513,175 (255,789) (120,573)
Loss from discontinuing operations
before income tax expense 13 (321,793) (56,128) – –

(70,477) 457,047 (255,789) (120,573)

Applicable tax 12(a) (54,350) 107,772 (61,389) (28,937)

Effects of income not subject to
tax (99,367) (35,620) (60,435) (16,648)
Effects of expenses not deductible
for tax purposes 102,440 57,920 169,406 87,321
Expenses subject to double
deductions (26,667) (14,405) (22,691) (12,280)
Deferred tax assets not recognised
in respect of tax losses and
deductible temporary differences
for the current financial year/
period 93,460 40,828 – –
Under/(over) provision in respect of
prior financial period/year 16,558 (1,307) 10,696 1,553
Perpetual Sukuk distribution and
expenses (29,832) (15,039) (29,832) (15,039)
Effect of changes in tax rates on
current tax (33,116) – – –
Real property gain tax 188 – – –
Share of tax expense from
associates and joint ventures 7,117 5,103 – –

Tax (credit)/expense for the

financial year/period (23,569) 145,252 5,755 15,970

Effective tax rate (%) 12(b) 33.4 31.8 (2.2) (13.2)

(a) The applicable tax rate of the Group is derived from the consolidation of all the Group’s companies’
applicable tax rates based on their respective domestic tax rates. The applicable tax of the Company is the
product of profit before tax multiplied by the domestic tax rate of the Company.

(b) The effective tax rate is lower than the average applicable tax rate of the Group mainly due to the effect
of the change in real property gain tax rate and the recognition of deferred tax asset on the loss on disposal
of cost of investment in PT Mitra Austral Sejahtera (“PT MAS”) suffered by the holding company.
 Annual Report 2019 PG. 230 – 231

13. DISCONTINUING OPERATIONS

During the financial year, the Board of Directors has approved the Group’s intention to exit the upstream business
in Liberia, to dispose its investments in the joint ventures, Emery Oleochemical (M) Sdn Bhd and Emery Specialty
Chemicals Sdn Bhd and to cease further investment in its joint venture, MYBiomass Sdn Bhd. The associated
assets and liabilities were consequently presented as held for sale in Note 33 to the financial statements.

On 12 December 2019, Sime Darby Plantation Investment (Liberia) Private Limited, a wholly-owned subsidiary of
the Group entered into a Sale and Purchase Agreement with Mano Palm Oil Industries Limited (“MPOI”) to dispose
off its entire 100% equity interest in Sime Darby Plantation (Liberia) Inc. (“SDP Liberia”) for a total cash consideration
of USD1. The Group will receive from MPOI, an earn-out payment to be determined by the average future crude

FINANCIAL STATEMENTS
palm oil (“CPO”) price and future CPO production of SDP Liberia. The earn-out consideration will be payable
quarterly over a period of eight (8) years, commencing from April 2023. The disposal of SDP Liberia was completed
subsequent to the financial year on 15 January 2020 as disclosed in Note 52(a) to the financial statements.

(a) Analysis of the results and cash flow information of the discontinuing operations are as follows:

GROUP

Financial Financial
year ended period ended
31.12.2019 31.12.2018
Note RM’000 RM’000

Statements of Profit or Loss 7

Revenue 51,790 24,227
Operating expenses (377,644) (81,721)

Operating loss (325,854) (57,494)

Share of results of joint ventures 22(a) 4,061 1,366

Loss for the financial year/period (321,793) (56,128)

Loss for the financial year/period attributable to:

– equity holders of the Company (321,793) (56,128)

Statements of Comprehensive Income

Loss for the financial year/period (321,793) (56,128)

Items that will be reclassified subsequently to profit/(loss):

Currency translation differences gains:

– subsidiary 1,412 7,454
– joint ventures 11,990 4,872

13,402 12,326

Items that will not be reclassified subsequently to profit/(loss):

Share of other comprehensive (loss)/profit of joint ventures 22(a) (11,402) 3,231

Total other comprehensive income for the financial year/period 16 2,000 15,557

Total comprehensive loss for the financial year/period (319,793) (40,571)

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
For The Financial Year Ended 31 December 2019

13. DISCONTINUING OPERATIONS (CONTINUED)

(a) Analysis of the results and cash flow information of the discontinuing operations are as follows: (continued)

GROUP

Financial Financial
year ended period ended
31.12.2019 31.12.2018
Note RM’000 RM’000

Statements of Cash Flows

Net cash used in operating activities (63,363) (23,916)
Net cash used in investing activities – (2,332)
Net cash generated from financing activities 63,081 23,204

Net decrease in cash and cash equivalents (282) (3,044)

Foreign exchange differences (18) 102
Cash and cash equivalents at beginning of the financial year/period 1,794 4,736

Cash and cash equivalents at end of the financial year/period 1,494 1,794

(b) Significant operating expenses of the discontinuing operations for the financial year/period are as follow:

Financial Financial
year ended period ended
31.12.2019 31.12.2018
Note RM’000 RM’000

Depreciation of:
– property, plant and equipment 19,520 10,394
– right-of-use assets 206 103
Impairment of:
– property, plant and equipment 17 224,467 14,539
– right-of-use assets 20 10,967 –
Liberia’s exit cost 6(e) 20,650 –
Impairment of investment in a joint venture 22(e) 8,176 –
 Annual Report 2019 PG. 232 – 233

14. EARNINGS PER SHARE

Basic earnings per share
The basic earnings per share for the financial year/period has been calculated based on the Group’s net profit
attributable to the equity holders of the Company for the financial year/period and the weighted average number
of ordinary shares in issue during the financial year/period.
GROUP

Financial Financial
year ended period ended
31.12.2019 31.12.2018

FINANCIAL STATEMENTS
RM’000 RM’000

Profit/(loss) for the financial year/period (RM’000)

– continuing operations 121,633 299,636
– discontinuing operations (321,793) (56,128)

Weighted average number of ordinary shares in issue (‘000 units)

– continuing operations 6,884,575 6,800,839
– discontinuing operations 6,884,575 6,800,839

Basic earnings/(loss) per share (sen)

– continuing operations 1.77 4.41
– discontinuing operations (4.67) (0.83)
7
Diluted earnings per share
There is no dilution in earnings per share as there is no potential dilutive ordinary shares.

15. DIVIDENDS
Dividends payable and paid in respect of the ordinary shares for the financial year/period are as follows:
GROUP

Financial Financial
year ended period ended
31.12.2019 31.12.2018
RM’000 RM’000

Dividends for the financial period ended 31 December 2018:

Final single tier dividend of 1.7 sen per ordinary share, paid on 21 May 2019 117,038 –
Dividends for the financial year ended 30 June 2018:
Special interim single tier dividend of 3.0 per share, paid on 5 October 2018 – 204,025
Final single tier dividend of 8.0 sen per ordinary share, paid on 7 January
2019 – 544,067
Special final single tier dividend of 3.0 per share, paid on 7 January 2019 – 204,025

117,038 952,117

A final single tier dividend of 1.0 sen per ordinary share, amounting to RM68.9 million in respect of the financial
year ended 31 December 2019 has been declared on 28 February 2020 and will be paid on 22 May 2020. The
entitlement date for the dividend payment is 12 May 2020.

The final single tier dividend in respect of the financial period ended 31 December 2018 of RM117.0 million was
paid in cash on 21 May 2019.

The final single tier dividend and special final single tier dividend in respect of the financial year ended 30 June
2018 (“FYE June 2018 Final Dividend”) of RM748.1 million was paid on 7 January 2019, RM406.1 million which
was satisfied by the issuance of 83,735,906 new Sime Darby Plantation Berhad shares pursuant to the Company’s
Dividend Reinvestment Plan (“DRP”) and cash of RM342.0 million.
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
For The Financial Year Ended 31 December 2019

16. OTHER COMPREHENSIVE INCOME

Attributable to equity holders of the Company

Investments Non-
Hedging at FVOCI Exchange Retained controlling
reserve reserve reserve earnings Total interests Total
GROUP Note RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

For the financial year ended

31 December 2019
Items that will be reclassified
subsequently to profit or loss:
Currency translation differences:
  – subsidiaries – – 86,821 – 86,821 1,759 88,580
Net changes in fair value:
  – cash flow hedge (24,645) – – 382 (24,263) 266 (23,997)
Tax expenses relating to components of
other comprehensive income (1,181) – – – (1,181) – (1,181)
Items that will not be reclassified
subsequently to profit or loss:
Actuarial loss on defined benefit plans 38 – – – (14,516) (14,516) (741) (15,257)
Net changes in fair value:
  – investment at FVOCI 25 – 1,175 – – 1,175 – 1,175
Tax credit relating to actuarial loss on
defined benefit plans – – – 3,567 3,567 – 3,567

Continuing operations (25,826) 1,175 86,821 (10,567) 51,603 1,284 52,887

Discontinuing operations 13 – – 13,402 (11,402) 2,000 – 2,000

Total other comprehensive (loss)/income (25,826) 1,175 100,223 (21,969) 53,603 1,284 54,887

For the financial period ended

31 December 2018
Items that will be reclassified
subsequently to profit or loss:
Currency translation differences:
  – subsidiaries – – 155,765 – 155,765 5,233 160,998
Net changes in fair value:
  – cash flow hedge (12,517) – – – (12,517) – (12,517)
Tax expenses relating to components of
other comprehensive income (975) – – – (975) – (975)
Items that will not be reclassified
subsequently to profit or loss:
Actuarial loss on defined benefit plans 38 – – – (1,911) (1,911) (189) (2,100)
Net changes in fair value:
  – investment at FVOCI 25 – 850 – – 850 354 1,204
Tax credit relating to actuarial loss on
defined benefit plans – – – 478 478 48 526

Continuing operations (13,492) 850 155,765 (1,433) 141,690 5,446 147,136

Discontinuing operations 13 – – 12,326 3,231 15,557 – 15,557

Total other comprehensive (loss)/income (13,492) 850 168,091 1,798 157,247 5,446 162,693
 Annual Report 2019 PG. 234 – 235

16. OTHER COMPREHENSIVE INCOME (CONTINUED)

Investments
at FVOCI Hedging
reserve reserve Total
COMPANY Note RM’000 RM’000 RM’000

For the financial year ended

31 December 2019
Items that will be reclassified subsequently to profit
or loss:

FINANCIAL STATEMENTS
Net changes in fair value:
– cash flow hedge – (17,688) (17,688)
Tax expenses relating to cash flow hedge – (302) (302)
Items that will not be reclassified subsequently to
profit or loss:
Net changes in fair value:
  – investment at FVOCI 25 1,300 – 1,300

Total other comprehensive income/(loss) 1,300 (17,990) (16,690)

For the financial period ended

31 December 2018 7
Items that will be reclassified subsequently to profit
or loss:
Net changes in fair value:
– cash flow hedge – (7,198) (7,198)
Tax credit relating to cash flow hedge – 26 26
Items that will not be reclassified subsequently to
profit or loss:
Net changes in fair value:
– investment at FVOCI 25 (839) – (839)

Total other comprehensive loss (839) (7,172) (8,011)

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
For The Financial Year Ended 31 December 2019

17. PROPERTY, PLANT AND EQUIPMENT

Bearer Vehicles, Capital
Freehold plants Plant and equipment work-in-
land Buildings (Note 17(a)) machinery and fixtures progress Total
GROUP Note RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
31 December 2019
Net Book Value
At 1 January 2019 2,759,863 3,158,441 7,915,811 1,935,156 485,174 749,628 17,004,073
Additions – 16,097 1,027,961 61,646 109,033 519,690 1,734,427
Disposals (4,701) (19) (652) (1,539) (1,471) (2,274) (10,656)
Write offs 6(e) – (1,063) (23,777) (1,123) (255) – (26,218)
Depreciation charge for the 6(c),
financial year 13(b) – (225,262) (456,790) (320,809) (135,856) – (1,138,717)
Impairment charge for the 6(c),
financial year 13(b) – (38,760) (145,928) (24,822) (6,324) (11,107) (226,941)
Transfer to non-current assets
held for sale 33 (51,655) (17,397) (23,676) (3,670) (1,905) (2,477) (100,780)
Reclassification – 505,857 – 217,337 43,745 (766,939) –
Exchange differences 4,450 18,331 34,331 24,932 (1,770) (1,437) 78,837
At 31 December 2019 2,707,957 3,416,225 8,327,280 1,887,108 490,371 485,084 17,314,025

At 31 December 2019
Cost 2,707,957 5,219,349 11,653,369 4,280,529 2,222,541 488,870 26,572,615
Accumulated depreciation – (1,789,232) (3,324,455) (2,375,447) (1,726,464) – (9,215,598)
Accumulated impairment losses – (13,892) (1,634) (17,974) (5,706) (3,786) (42,992)
Net book value 2,707,957 3,416,225 8,327,280 1,887,108 490,371 485,084 17,314,025

31 December 2018
Net Book Value
At 1 July 2018 2,758,103 3,089,014 7,378,752 1,849,669 436,552 767,596 16,279,686
Additions – 17,678 494,596 27,146 72,222 219,990 831,632
Disposals (5,262) (5) (3,088) – (295) – (8,650)
Write offs 6(e) – (1,011) (21,640) (3,764) (379) (5,474) (32,268)
Depreciation charge for the financial 6(c),
period 13(b) – (114,807) (227,917) (132,701) (68,322) – (543,747)
Impairment charge for the financial 6(c),
period 13(b) – (646) (15,921) (2,599) (1,342) – (20,508)
Acquisition of a subsidiary 43(a) – 13,624 201,287 26,793 2,410 – 244,114
Reclassification – 98,830 – 108,615 34,475 (241,920) –
Exchange differences 7,022 55,764 109,742 61,997 9,853 9,436 253,814
At 31 December 2018 2,759,863 3,158,441 7,915,811 1,935,156 485,174 749,628 17,004,073

At 31 December 2018
Cost 2,759,863 4,780,771 11,250,462 4,061,486 2,201,542 768,787 25,822,911
Accumulated depreciation – (1,565,903) (3,038,299) (1,977,062) (1,708,472) – (8,289,736)
Accumulated impairment losses – (56,427) (296,352) (149,268) (7,896) (19,159) (529,102)
Net book value 2,759,863 3,158,441 7,915,811 1,935,156 485,174 749,628 17,004,073

Included in depreciation charge for the financial year are depreciation charged for continuing and discontinuing operations of RM1,119.2 million (2018:
RM533.4 million) and RM19.5 million (2018: RM10.4 million) respectively while included in impairment charge for the financial year are impairment
charged for continuing and discontinuing operations of RM2.5 million (2018: RM6.0 million) and RM224.5 million (2018: RM14.5 million) respectively.

Included in additions of the Group’s property, plant and equipment (“PPE”) during the financial year are depreciation charged for PPE of RM45.6
million (2018: RM17.1 million) and depreciation charged for right-of-use assets of RM9.3 million (2018: RM1.6 million) capitalised in immature bearer
plants, borrowing costs capitalised in capital work-in-progress of RM25.3 million (2018: RM0.9 million) and borrowing costs capitalised in immature
bearer plants of RM88.0 million (2018: RM16.5 million). The finance cost is capitalised at an average capitalisation rate of 3.65% (2018: 3.18%).
 Annual Report 2019 PG. 236 – 237

17. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

Bearer Vehicles, Capital
Freehold plants Plant and equipment work-in-
land Buildings (Note 17(a)) machinery and fixtures progress Total
COMPANY Note RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
31 December 2019
Net Book Value
At 1 January 2019 4,102,105 1,013,713 2,205,905 342,155 116,629 58,481 7,838,988
Additions – 7,656 301,918 9,203 24,147 89,170 432,094

FINANCIAL STATEMENTS
Intra group acquisition – – – – 27 – 27
Disposals (4,642) – – – – – (4,642)
Intra group disposal – (408) – (3,296) (4,387) – (8,091)
Write offs 6(e) – (4) (9,019) – (12) (475) (9,510)
Depreciation charge for the financial year 6(c) – (59,681) (100,513) (67,331) (37,480) – (265,005)
Transfer to non-current assets
held for sale 33 (55,700) (285) (12,879) (102) – – (68,966)
Reclassification – 21,510 – 40,415 16,994 (78,919) –
At 31 December 2019 4,041,763 982,501 2,385,412 321,044 115,918 68,257 7,914,895

At 31 December 2019
Cost 4,041,763 1,468,577 3,076,086 902,206 421,274 68,257 9,978,163
Accumulated depreciation – (486,076) (690,674) (577,714) (305,356) – (2,059,820) 7
Accumulated impairment losses – – – (3,448) – – (3,448)
Net book value 4,041,763 982,501 2,385,412 321,044 115,918 68,257 7,914,895

31 December 2018
Net Book Value
At 1 July 2018 4,106,922 1,014,037 2,101,439 353,211 111,020 65,592 7,752,221
Additions – 3,258 160,411 5,872 21,771 35,095 226,407
Intra group acquisition – 9,875 – 561 49 – 10,485
Disposals (4,817) – – – – – (4,817)
Intra group disposal – (152) – (694) (3,303) – (4,149)
Write offs 6(e) – (191) (10,276) (1,547) (11) (216) (12,241)
Depreciation charge for the financial
period 6(c) – (29,091) (45,669) (34,334) (18,528) – (127,622)
Impairment charge for the financial
period 6(e) – – – (1,296) – – (1,296)
Reclassification – 15,977 – 20,382 5,631 (41,990) –
At 31 December 2018 4,102,105 1,013,713 2,205,905 342,155 116,629 58,481 7,838,988

At 31 December 2018
Cost 4,102,105 1,441,879 2,834,184 864,440 400,630 58,481 9,701,719
Accumulated depreciation – (428,166) (628,279) (518,837) (284,001) – (1,859,283)
Accumulated impairment losses – – – (3,448) – – (3,448)
Net book value 4,102,105 1,013,713 2,205,905 342,155 116,629 58,481 7,838,988

Included in additions of the Company’s property, plant and equipment (“PPE”) during the financial year are depreciation charged for PPE of RM9.2
million (2018: RM4.6 million) and depreciation charged for right-of-use assets of RM0.5 million (2018: RM0.2 million) capitalised in immature bearer
plants, borrowing costs capitalised in capital work-in-progress of RM1.4 million (2018: RM0.8 million) and borrowing costs capitalised in immature
bearer plants of RM26.1 million (2018: RM10.0 million). The finance cost is capitalised at an average capitalisation rate of 3.38% (2018: 3.56%).
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
For The Financial Year Ended 31 December 2019

17. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

(a) Bearer plants

Bearer plants comprised oil palm, rubber trees and growing canes.

Mature Immature
Total
Rubber Growing Rubber bearer
Oil palm trees canes Total Oil palm trees Total plants
GROUP RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

31 December 2019
Net Book Value:
At 1 January 2019 5,230,084 44,016 223 5,274,323 2,455,313 186,175 2,641,488 7,915,811
Additions – – – – 980,978 46,983 1,027,961 1,027,961
Disposals (219) – – (219) (433) – (433) (652)
Write offs (23,186) (331) – (23,517) (260) – (260) (23,777)
Depreciation charge for
the financial year (455,697) (2,565) 1,472 (456,790) – – – (456,790)
Impairment charge for
the financial year (145,693) – – (145,693) (235) – (235) (145,928)
Transfer to non-current
assets held for sale (16,507) – 9 (16,498) (7,178) – (7,178) (23,676)
Reclassification 874,302 3,410 – 877,712 (874,302) (3,410) (877,712) –
Exchange differences 9,734 – (27) 9,707 24,624 – 24,624 34,331
At 31 December 2019 5,472,818 44,530 1,677 5,519,025 2,578,507 229,748 2,808,255 8,327,280

At 31 December 2019
Cost 8,687,151 58,415 97,914 8,843,480 2,580,141 229,748 2,809,889 11,653,369
Accumulated depreciation (3,214,333) (13,885) (96,237) (3,324,455) – – – (3,324,455)
Accumulated impairment
losses – – – – (1,634) – (1,634) (1,634)
Net book value 5,472,818 44,530 1,677 5,519,025 2,578,507 229,748 2,808,255 8,327,280

31 December 2018
Net Book Value:
At 1 July 2018 5,093,766 38,895 8,759 5,141,420 2,073,402 163,930 2,237,332 7,378,752
Additions 353 – – 353 465,523 28,720 494,243 494,596
Disposals (3,088) – – (3,088) – – – (3,088)
Write offs (19,203) (211) – (19,414) (2,226) – (2,226) (21,640)
Depreciation charge for
the financial period (217,292) (1,263) (9,362) (227,917) – – – (227,917)
Impairment charge for
the financial period (14,582) – – (14,582) (1,339) – (1,339) (15,921)
Acquisition of a subsidiary – – – – 201,287 – 201,287 201,287
Reclassification 295,435 6,595 – 302,030 (295,435) (6,595) (302,030) –
Exchange differences 94,695 – 826 95,521 14,101 120 14,221 109,742
At 31 December 2018 5,230,084 44,016 223 5,274,323 2,455,313 186,175 2,641,488 7,915,811

At 31 December 2018
Cost 8,444,690 56,049 98,233 8,598,972 2,462,395 189,095 2,651,490 11,250,462
Accumulated depreciation (2,928,256) (12,033) (98,010) (3,038,299) – – – (3,038,299)
Accumulated impairment
losses (286,350) – – (286,350) (7,082) (2,920) (10,002) (296,352)
Net book value 5,230,084 44,016 223 5,274,323 2,455,313 186,175 2,641,488 7,915,811
 Annual Report 2019 PG. 238 – 239

17. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

(a) Bearer plants (continued)

Bearer plants comprised oil palm, rubber trees and growing canes. (continued)

Mature Immature
Rubber Rubber Total bearer
Oil palm trees Total Oil palm trees Total plants
COMPANY RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

31 December 2019

FINANCIAL STATEMENTS
Net Book Value:
At 1 January 2019 1,399,378 44,016 1,443,394 610,757 151,754 762,511 2,205,905
Additions – – – 267,279 34,639 301,918 301,918
Write offs (8,443) (316) (8,759) (260) – (260) (9,019)
Depreciation charge for the financial
year (97,948) (2,565) (100,513) – – – (100,513)
Transfer to non-current assets held
for sale (10,720) – (10,720) (2,159) – (2,159) (12,879)
Reclassification 298,909 3,410 302,319 (298,909) (3,410) (302,319) –

At 31 December 2019 1,581,176 44,545 1,625,721 576,708 182,983 759,691 2,385,412

At 31 December 2019
7
Cost 2,257,966 58,429 2,316,395 576,708 182,983 759,691 3,076,086
Accumulated depreciation (676,790) (13,884) (690,674) – – – (690,674)

Net book value 1,581,176 44,545 1,625,721 576,708 182,983 759,691 2,385,412

31 December 2018
Net Book Value:
At 1 July 2018 1,358,304 38,895 1,397,199 568,045 136,195 704,240 2,101,439
Additions – – – 138,257 22,154 160,411 160,411
Write offs (7,839) (211) (8,050) (2,226) – (2,226) (10,276)
Depreciation charge for the financial
period (44,406) (1,263) (45,669) – – – (45,669)
Reclassification 93,319 6,595 99,914 (93,319) (6,595) (99,914) –

At 31 December 2018 1,399,378 44,016 1,443,394 610,757 151,754 762,511 2,205,905

At 31 December 2018
Cost 2,015,624 56,049 2,071,673 610,757 151,754 762,511 2,834,184
Accumulated depreciation (616,246) (12,033) (628,279) – – – (628,279)

Net book value 1,399,378 44,016 1,443,394 610,757 151,754 762,511 2,205,905
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
For The Financial Year Ended 31 December 2019

17. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

(b) Underlying assets for Islamic financing facilities

In January 2013, the Company entered into a notional sale and leaseback of certain of its plantation land
and bearer plants with Sime Darby Plantation Global Berhad (fka Sime Darby Global Berhad) (“SDP Global”),
a special purpose vehicle established by Sime Darby Berhad (“SDB”), the former immediate holding company.
This sale and leaseback arrangement is solely to facilitate the issuance of Islamic Trust Certificates (“Sukuk”)
by SDP Global and it does not represent a collateralisation nor involve a transfer of registered land title.
On 23 May 2017, the Company acquired the entire equity interest of SDP Global.

The carrying amount of the assets used as underlying Sukuk assets amounted to RM253 million (2018:
RM265 million), comprised of property, plant and equipment of RM240 million (2018: RM252 million) and
right-of-use assets of RM13 million (2018: RM13 million).

(c) Impairment of Group’s property, plant and equipment (“PPE”) in Liberia

Pursuant to the disposal of SDP Liberia, an impairment of property, plant and equipment of RM224.5 million
has been recognised in the profit or loss for the current financial year within discontinuing operations as
disclosed in Note 13(b). The carrying cost of SDP Liberia’s property, plant and equipment impaired, accumulated
depreciation and accumulated impairment losses of RM655.9 million, RM89.3 million and RM566.6 million
have been reclassified to non-current assets held for sale.

In the previous financial period, the recoverable amount of the Group’s PPE in Liberia that comprise of the oil
palm estates and oil palm mill valued by management with assistance of CBRE CH Williams Sdn Bhd (“CBRE”),
an independent valuer based on the higher of fair value less costs of disposal (“FVLCTS”) and value-in-use (“VIU”)
using the comprehensive valuation model performed for financial year ended 30 June 2018 by CBRE.

The updated valuation, as approved by the Directors in the previous financial period resulted in an impairment
loss on PPE in Liberia of RM14.5 million recorded as the carrying amount of the PPE exceeded its FVLCTS
of RM242.8 million. Estimate of fair values on the PPE as determined by CBRE were based on the income
approach and are within Level 3 of the fair value hierarchy. The sensitivity analysis of each of these assumptions
with all other variables being held constant are as follows:

Key assumptions 31.12.2018

CPO price (net of freight costs) USD560 per MT
FFB yields 6 to 22 MT per hectare
Fixed operating costs USD682 per hectare
Discount rate 12% per annum

Additional impairment
Sensitivity analysis: (RM’million)
(i) CPO and PKO price decrease by 10% 97.5
(ii) FFB yields decrease by 1 MT per hectare 30.0
(iii) Average costs increased by 10% 18.7
(iv) Discount rate increased by 200 basis points 26.2
 Annual Report 2019 PG. 240 – 241

18. INVESTMENT PROPERTIES

Freehold land Buildings Total
GROUP Note RM’000 RM’000 RM’000
31 December 2019
Cost
Cost At 1 January 2019 14,719 1,406 16,125
Transfer to non-current assets held for sale 33 (8,259) (799) (9,058)
Exchange differences 861 108 969
At 31 December 2019 7,321 715 8,036

FINANCIAL STATEMENTS
Accumulated depreciation
At 1 January 2019 – 611 611
Charge for the financial year 6(a) – 84 84
Transfer to non-current assets held for sale 33 – (317) (317)
Exchange differences – 49 49
At 31 December 2019 – 427 427

Accumulated impairment losses

At 1 January 2019 – 338 338
Transfer to non-current assets held for sale 33 – (364) (364)
Exchange differences – 26 26
7
At 31 December 2019 – – –
Net book value at 31 December 2019 7,321 288 7,609

31 December 2018
Cost
Cost At 1 July 2018 14,234 1,345 15,579
Exchange differences 485 61 546
At 31 December 2018 14,719 1,406 16,125

Accumulated depreciation
At 1 July 2018 – 546 546
Charge for the financial period 6(a) – 40 40
Exchange differences – 25 25
At 31 December 2018 – 611 611

Accumulated impairment losses

At 1 July 2018 – 323 323
Exchange differences – 15 15
At 31 December 2018 – 338 338
Net book value at 31 December 2018 14,719 457 15,176

The aggregate direct operating expenses arising from investment properties that did not generate rental income
which were recognised during the financial year amounted to RM91,141 (2018: RM48,990) respectively.

The fair value of investment properties is RM11.6 million (2018: RM24.2 million) based on the valuation performed
by external professional firms of surveyors and valuers. The valuation was performed using the comparable
method based on current prices of comparable properties in an active market for all properties within Level 2
of the fair value hierarchy. Level 2 is based on the inputs other than quoted prices included within Level 1 that
are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices).
The latest external valuation was carried out as at 31 December 2019.
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
For The Financial Year Ended 31 December 2019

19. BIOLOGICAL ASSETS

Growing
Oil palm canes Livestock Total
GROUP RM’000 RM’000 RM’000 RM’000

31 December 2019
At 1 January 2019 33,335 96,888 48,560 178,783
Transfers to produce stocks (33,366) (98,172) (49,203) (180,741)
Fair value changes 63,018 59,043 71,745 193,806
Exchange differences (89) (630) (2,365) (3,084)

At 31 December 2019 62,898 57,129 68,737 188,764

31 December 2018
At 1 July 2018 66,056 40,889 45,297 152,242
Transfers to produce stocks (66,167) (42,319) – (108,486)
Fair value changes 34,029 95,925 1,471 131,425
Exchange differences (583) 2,393 1,792 3,602

At 31 December 2018 33,335 96,888 48,560 178,783

Total
COMPANY RM’000

Oil Palm
31 December 2019
At 1 January 2019 19,007
Transfers to produce stocks (19,007)
Fair value changes 27,767

At 31 December 2019 27,767

31 December 2018
At 1 July 2018 36,152
Transfers to produce stocks (36,152)
Fair value changes 19,007

At 31 December 2018 19,007

The Group’s and the Company’s biological assets were fair valued within Level 3 of the fair value hierarchy with
the exception of livestock which are on Level 2 basis (inputs are observable indirectly). Fair value assessments
have been completed consistently using the same valuation techniques.

There were no transfers between Level 2 and Level 3 of the fair value hierarchy during the financial year/period.
 Annual Report 2019 PG. 242 – 243

19. BIOLOGICAL ASSETS (CONTINUED)

The biological assets have the following maturity periods:

GROUP COMPANY

31.12.2019 31.12.2018 31.12.2019 31.12.2018

RM’000 RM’000 RM’000 RM’000

Current
Due not later than one year 188,764 178,783 27,767 19,007

FINANCIAL STATEMENTS
The biological assets of the Group and the Company comprise of:

(i) Oil palm

Oil palm represents the fresh fruit bunches (“FFB”) of up to 2 weeks prior to harvest for use in the Group’s
and the Company’s palm product operations. During the financial year, the Group and the Company
harvested approximately 9,579,000 metric tonnes (“MT”) of FFB (2018: 5,576,000 MT) and 3,610,557 MT of
FFB (2018: 1,995,000 MT) respectively. The quantity of unharvested FFB of the Group and of the Company
as at 31 December 2019 included in the fair valuation of FFB was 291,652 MT (2018: 370,299 MT) and 87,373
MT (2018: 142,976 MT) respectively.

The Group and the Company attribute a fair value on the FFB prior to harvest at each statement of financial
position date as required under MFRS 141 “Agriculture”. FFB are produce of oil palm trees and are harvested 7
continuously throughout the financial year to be used in the production of crude palm oil (“CPO”). Each
FFB takes approximately 22 weeks from pollination to reach maximum oil content to be ready for harvesting.
The value of each FFB at each point of the FFB production cycle will vary based on the cumulative oil
content in each fruit.

In determining the fair values of FFB, management has considered the oil content of all unripe FFB from
the week after pollination to the week prior to harvest. As the oil content accrues exponentially in the 2
weeks prior to harvest, the FFB prior to 2 weeks before harvesting are excluded in the valuation as the
increase in fair values are considered negligible.

The valuation model adopted by the Group and the Company is a discounted cash flow model which
includes all cash inflows, cash outflows and imputed contributory asset charges where no actual cash flows
associated with the use of assets essential to the agricultural activity are accounted for. The net present
value of cash flows is then determined with reference to the market value of CPO at the reporting date,
adjusted for freight, extraction rates, production, transportation, contributory asset charges and other cost
to sell at the point of harvest. Changes to the assumed tonnage included in the valuation will have a direct
effect on the reported valuation.

If the Group’s and the Company’s FFB tonnage changes by 10% (2018: 10%) and 10% (2018: 10%) respectively,
the impact of fair value of FFB would be as follows:

31.12.2019 31.12.2018
RM’000 RM’000

GROUP
FFB tonnage increase by 10% (2018: 10%) 10,861 7,389
FFB tonnage decrease by 10% (2018: 10%) (10,861) (7,389)

COMPANY
FFB tonnage increase by 10% (2018: 10%) 3,020 2,169
FFB tonnage decrease by 10% (2018: 10%) (3,020) (2,169)
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
For The Financial Year Ended 31 December 2019

19. BIOLOGICAL ASSETS (CONTINUED)

(ii) Growing canes

Growing canes represent the standing canes prior to harvest whereby the values are dependent on the
age, sucrose content and condition as at the statement of financial position date. During the financial year,
the Group harvested approximately 165,680 MT (2018: 184,916 MT) of canes. The estimated quantity of
unharvested canes as at 31 December 2019 included in the fair valuation of growing canes of the Group
was 258,040 MT (2018: 319,315 MT).

The determination of fair value for the Group’s growing canes requires estimates to be made of the
anticipated canes harvest, its age and condition at the statements of financial position date, the sucrose
content to be extracted and sugar prices. The anticipated canes harvest is based on management’s historical
records, current planting statistics and production forecast. Fair value of the harvested canes is based on
the accepted industry benchmark of allocating the fair value of sugar production between the fair value
attributable to the canes grower and the value attributable to the miller. The fair value of the growing
canes at the statement of financial position date is based on the estimated fair value of the growing canes
less further costs to be incurred in growing and harvesting the canes up to the point of harvest and
contributory asset charges.

If the estimated harvest volume of canes increased or decreased by 10% (2018: 6%), fair value changes in
growing canes would have increased or decreased by approximately RM8.3 million (2018: RM2.0 million)
accordingly.

(iii) Livestock

Livestock comprise the cattle livestock included within the Group’s beef production operations. Cattle
livestock are generally fed for 120 days prior to use for beef production. During the financial year, the Group
produced 1,957.5 tonnes (2018: 982.2 tonnes) of beef. The number of cattle as at 31 December 2019 included
in the fair values of livestock was 24,625 heads (2018: 23,527 heads).

The fair value of livestock is based on the Group’s assessment of age, average weights and market values
of the livestock at the statement of financial position date. If the average weight per cattle increases or
decreases by 1% (2018: 1%), fair value changes in livestock would have increased or decreased by approximately
RM0.7 million (2018: RM0.5 million) respectively.
 Annual Report 2019 PG. 244 – 245

20. RIGHT-OF-USE ASSETS

Vehicles,
Leasehold Plant and equipment
land Buildings machinery and fixtures Total
GROUP Note RM’000 RM’000 RM’000 RM’000 RM’000

31 December 2019
Net Book Value:
At 1 January 2019 2,152,669 40,626 39,726 6,191 2,239,212
Additions 11,178 24,789 5,420 1,228 42,615

FINANCIAL STATEMENTS
Write-downs 6(e) – (1,181) – (790) (1,971)
Depreciation charge for the
financial year (71,181) (17,984) (17,058) (3,088) (109,311)
Impairment charge for the
financial year (30,393) (20) – – (30,413)
Exchange differences 5,093 1,117 (846) 44 5,408

At 31 December 2019 2,067,366 47,347 27,242 3,585 2,145,540

At 31 December 2019:
Cost 3,294,170 74,366 56,235 9,142 3,433,913
Accumulated depreciation (1,207,065) (26,999) (28,993) (5,557) (1,268,614)
Accumulated impairment (19,739) (20) – – (19,759) 7
Net book value 2,067,366 47,347 27,242 3,585 2,145,540

31 December 2018
Net Book Value:
At 1 July 2018 2,081,102 43,101 45,608 7,801 2,177,612
Additions 3,556 4,883 – – 8,439
Disposal (51) – – (188) (239)
Depreciation charge for the
financial period (50,398) (7,570) (5,512) (1,428) (64,908)
Acquisition of a subsidiary 43(a) 82,037 225 – – 82,262
Exchange differences 36,423 (13) (370) 6 36,046

At 31 December 2018 2,152,669 40,626 39,726 6,191 2,239,212

At 31 December 2018:
Cost 3,293,025 49,845 51,766 8,638 3,403,274
Accumulated depreciation (1,139,855) (9,219) (12,040) (2,447) (1,163,561)
Accumulated impairment (501) – – – (501)

Net book value 2,152,669 40,626 39,726 6,191 2,239,212

Included in the depreciation charge for the financial year are depreciation charged for continuing and discontinuing
operations of RM109.1 million (2018: RM64.8 million) and RM0.2 million (2018: RM0.1 million) respectively while
included in impairment charge for the financial year are impairment charged for continuing and discontinuing
operations of RM19.4 million (2018: nil) and RM11.0 million (2018: nil) respectively.

Pursuant to the proposed disposal of SDP Liberia, an impairment of right-of-use assets of RM11.0 million has
been recognised in the profit or loss for the current financial year within discontinuing operations as disclosed
in Note 13(b). The carrying cost of SDP Liberia’s right-of-use assets impaired, accumulated depreciation and
accumulated impairment of RM12.4 million, RM1.4 million and RM11.0 million respectively have been reclassified
to non-current assets held for sale.
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
For The Financial Year Ended 31 December 2019

20. RIGHT-OF-USE ASSETS (CONTINUED)

Vehicles,
Leasehold Plant and equipment
land Buildings machinery and fixtures Total
COMPANY RM’000 RM’000 RM’000 RM’000 RM’000

31 December 2019
Net Book Value:
At 1 January 2019 278,191 200 7,388 1,698 287,477
Additions 312 78 – 852 1,242
Disposal – – – (321) (321)
Depreciation charge for the financial
year (3,574) (242) (534) (1,447) (5,797)

At 31 December 2019 274,929 36 6,854 782 282,601

At 31 December 2019:
Cost 316,878 428 7,655 2,932 327,893
Accumulated depreciation (41,949) (392) (801) (2,150) (45,292)

Net book value 274,929 36 6,854 782 282,601

31 December 2018
Net Book Value:
At 1 July 2018 279,965 350 7,655 2,401 290,371
Disposal (51) – – – (51)
Depreciation charge for the financial
period (1,723) (150) (267) (703) (2,843)

At 31 December 2018 278,191 200 7,388 1,698 287,477

At 31 December 2018:
Cost 316,566 350 7,655 2,401 326,972
Accumulated depreciation (38,375) (150) (267) (703) (39,495)

Net book value 278,191 200 7,388 1,698 287,477

(a) Underlying assets for Islamic financing facilities

During the financial year ended 30 June 2016, a subsidiary of the Company entered into a notional sale
and leaseback of certain of its plantation land and bearer plants with SDB. This sale and leaseback
arrangement is solely to facilitate the issuance of Perpetual Subordinated Sukuk Programme (“Perpetual
Sukuk”) by Sime Darby Berhad (“SDB”). The structure does not represent collateralisation and there was no
transfer of registered land title. On 23 June 2017, the Perpetual Sukuk was novated from SDB to the
Company. The sale and leaseback agreement was similarly novated from SDB to the Company.

The carrying amount of assets used as underlying Perpetual Sukuk assets amounted to RM109 million (2018:
RM111 million).
 Annual Report 2019 PG. 246 – 247

21. SUBSIDIARIES
COMPANY

31.12.2019 31.12.2018
RM’000 RM’000

Unquoted shares at cost 7,748,778 7,794,595

Amounts due from subsidiaries – non-interest bearing 1,084,902 2,051,736
Accumulated impairment losses (801,500) (1,465,048)

8,032,180 8,381,283

FINANCIAL STATEMENTS
The amounts due from subsidiaries above are deemed as capital contribution to subsidiaries as the repayment
of these amounts are neither fixed nor expected.

Movements of impairment losses for investment in subsidiaries are as follows:

COMPANY

31.12.2019 31.12.2018
Note RM’000 RM’000

At 1 January 2019/1 July 2018 1,465,048 1,401,473

Charge for the financial year/period 6(e) 309,462 136,084
Reversal for the financial year/period 7 (94,731) (72,509) 7
Transfer to non-current assets held for sale (878,279) –

At 31 December 2019/2018 801,500 1,465,048

As set out in Note 13, the Group will dispose its entire 100% equity interest in SDP Liberia for a total cash
consideration of USD1. As a result, an impairment loss of RM305.9 million has been recognised during the
financial year, for the excess of the carrying amount of the cost of investment in SDP Liberia (including the
amount due from SDP Liberia which was deemed as capital contribution to SDP Liberia) over the fair value less
costs of disposal (“FVLCS”), as determined by the expected purchase consideration, less any directly related costs
not yet recognised as expense.

In the previous financial period, the recoverable amount of the investment in SDP Liberia of RM242.8 million
was determined based on FVLCS method (Level 3 of the fair value hierarchy). The fair value was determined by
an independent professional valuer via a simulation based on the valuation model as per the independent
valuation report dated 28 June 2018. The key assumptions and sensitivity analysis for the impairment assessment
are disclosed in Note 17(c) to the financial statements. As a result of the impairment assessment, an impairment
charge on the costs of investments (including the amount due from SDP Liberia which was deemed as capital
contribution to SDP Liberia) of RM49.6 million was recorded in the operating expense in the Company’s statement
of profit or loss for financial period ended 31 December 2018.

A further impairment charge on costs of investment (including the amount due from subsidiaries) of RM86.5
million was recorded in the Company’s statement of profit or loss for the previous financial period relating
mainly to Kumpulan Jelei Sdn Bhd (“Kumpulan Jelei”) of RM78.2 million. The cost of investment in Kumpulan
Jelei was fully impaired as the company had become dormant and did not generate sufficient cash flows.

During the financial year, a reversal of impairment on the amount due from Sime Darby Oils Zwijndrecht Refinery
B.V. (which deemed as capital contribution) of RM94.7 million (2018: reversal of impairment of RM68.6 million)
was recorded in the Company’s statement of profit or loss as a result of a higher recoverable amount. The
recoverable amount was determined based on its value-in-use calculations using cash flow from the approved
financial budgets covering a 5 year period.

The Group’s equity interest in the subsidiaries as at 31 December 2019 and 31 December 2018, their principal
activities and countries of incorporation are shown in Note 51.
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
For The Financial Year Ended 31 December 2019

22. JOINT VENTURES

The Group’s equity interest in the joint ventures as at 31 December 2019 and 31 December 2018, their respective
principal activities and countries of incorporation are shown in Note 51.

(a) Share of results of joint ventures

The Group’s share of results of joint ventures are as follows:

GROUP

Financial Financial
year ended period ended
31.12.2019 31.12.2018
RM’000 RM’000

Share of results for the financial year/period 3,911 225

Aggregate amount from discontinuing operations:

Share of results for the financial year/period 4,061 1,366
Currency translation differences 11,990 4,872
Share of other comprehensive (loss)/income (net of tax) (11,402) 3,231

Share of total comprehensive (loss)/income from discontinuing

operations 4,649 9,469

(b) Investments in joint ventures

The Group’s and the Company’s investments in joint ventures are as follows:

GROUP COMPANY

31.12.2019 31.12.2018 31.12.2019 31.12.2018

RM’000 RM’000 RM’000 RM’000

Unquoted shares, at cost 79,348 375,347 3,745 311,938

Share of post-acquisition reserves (45,196) 71,458 – –

34,152 446,805 3,745 311,938

(c) Material joint ventures

Set out below are the joint ventures of the Group as at 31 December 2019 which, in the opinion of the
Directors, are material to the Group.

Group’s effective Place of business/

Name of joint ventures interest (%) Country of incorporation

Continuing Operations
Rizhao Sime Darby Oils & Fats Co. Ltd. 45.0 China

Discontinuing Operations
Emery Oleochemicals (M) Sdn Bhd 50.0 Malaysia
Emery Specialty Chemicals Sdn Bhd 50.0 Malaysia

The Group’s investments in joint ventures are in private companies and there are no quoted market prices
available for these shares.

There are no contingent liabilities in respect of the Group’s interests in the joint ventures.
 Annual Report 2019 PG. 248 – 249

22. JOINT VENTURES (CONTINUED)

(d) Summarised financial information

The summarised statements of comprehensive income of the joint ventures are as follows:

Discontinuing operations Continuing operations

Emery Rizhao
Emery Specialty Sime Darby
Oleochemicals Chemicals MYBiomass Oils & Fats
(M) Sdn Bhd Sdn Bhd* Sdn Bhd Total Co. Ltd. Others* Total

FINANCIAL STATEMENTS
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

For the financial year

ended 31 December 2019
Revenue 2,119,385 172,713 74 2,292,172 45,548 68,342 113,890

Depreciation and
amortisation (75,747) (13,695) (98) (89,540) – (2,065) (2,065)
Interest income 11,729 78 – 11,807 18 45 63
Interest expense (34,810) (14,420) – (49,230) – (2,599) (2,599)

Profit/(loss) before tax 23,136 (40,892) (1,108) (18,864) (4,320) 12,408 8,088
Tax (expense)/credit (14,234) (23) 65 (14,192) – (608) (608)

Profit/(loss) for the financial 7

year 8,902 (40,915) (1,043) (33,056) (4,320) 11,800 7,480

Profit/(loss) for the financial

year attributable to
owners of:
– the joint venture 8,121 (40,915) (1,043) (33,837) (4,320) 11,800 7,480
– non-controlling interests 781 – – 781 – – –

Profit/(loss) for the financial

year 8,902 (40,915) (1,043) (33,056) (4,320) 11,800 7,480

Other comprehensive (loss)/

income
– unrealised exchange
differences (12,240) 36,220 – 23,980 – – –
– actuarial loss on defined
benefit plans (31,142) – – (31,142) – – –
– tax credit relating to
actuarial loss on defined
benefit plans 8,338 – – 8,338 –

(35,044) 36,220 – 1,176 – – –

Total comprehensive (loss)/

income for the financial
year (26,142) (4,695) (1,043) (31,880) (4,320) 11,800 7,480

Total comprehensive (loss)/

income for the financial
year attributable to
owners of:
– the joint venture (26,923) (4,695) (1,043) (32,661) (4,320) 11,800 7,480
– non-controlling interests 781 – – 781 – – –

(26,142) (4,695) (1,043) (31,880) (4,320) 11,800 7,480

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
For The Financial Year Ended 31 December 2019

22. JOINT VENTURES (CONTINUED)

(d) Summarised financial information (continued)

The summarised statements of comprehensive income of the joint ventures are as follows: (continued)

Discontinuing operations Continuing operations

Emery Rizhao
Emery Specialty Sime Darby
Oleochemicals Chemicals MYBiomass Oils & Fats
(M) Sdn Bhd Sdn Bhd* Sdn Bhd Total Co. Ltd. Others* Total
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

For the financial period

ended 31 December 2018
Revenue 1,209,604 88,884 59 1,298,547 21,414 39,729 61,143

Depreciation and
amortisation (38,850) (7,985) (54) (46,889) – (1,068) (1,068)
Interest income 6,079 35 – 6,114 9 462 471
Interest expense (20,031) (7,638) – (27,669) (17) (507) (524)

Profit/(loss) before tax 12,689 (28,833) (330) (16,474) (1,913) 3,727 1,814
Tax (expense)/credit (9,568) (17) 65 (9,520) – (261) (261)

Profit/(loss) for the financial

period 3,121 (28,850) (265) (25,994) (1,913) 3,466 1,553

Profit/(loss) for the financial

period attributable to
owners of:
– the joint venture 2,890 (25,277) (265) (22,652) (1,913) 3,466 1,553
– non-controlling interests 231 (3,573) – (3,342) – – –

Profit/(loss) for the financial

period 3,121 (28,850) (265) (25,994) (1,913) 3,466 1,553

Other comprehensive
income/(loss)
– unrealised exchange
differences 9,971 (226) – 9,745 – – –
– actuarial gain on defined
benefit plans 9,679 – – 9,679 – – –
– tax expense relating to
actuarial gain on defined
benefit plans (3,218) – – (3,218) – – –
16,432 (226) – 16,206 – – –

Total comprehensive
income/(loss) for the
financial period 19,553 (29,076) (265) (9,788) (1,913) 3,466 1,553

Total comprehensive
income/(loss) for the
financial period
attributable to owners of:
– the joint venture 19,322 (25,503) (265) (6,446) (1,913) 3,466 1,553
– non-controlling interests 231 (3,573) – (3,342) – – –

19,553 (29,076) (265) (9,788) (1,913) 3,466 1,553

 Annual Report 2019 PG. 250 – 251

22. JOINT VENTURES (CONTINUED)

(d) Summarised financial information (continued)

The summarised statements of financial position of the joint ventures are as follows:

Discontinuing operations Continuing operations

Emery Rizhao
Emery Specialty Sime Darby
Oleochemicals Chemicals MYBiomass Oils & Fats
(M) Sdn Bhd Sdn Bhd* Sdn Bhd Total Co. Ltd. Others* Total

FINANCIAL STATEMENTS
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

31 December 2019
Non-current assets 876,216 216,116 190 1,092,522 67,180 106,526 173,706

Current assets
Cash and cash equivalents 110,966 19,798 1,053 131,817 168 2,963 3,131
Other current assets 950,744 49,805 26,190 1,026,739 1,690 60,724 62,414

1,061,710 69,603 27,243 1,158,556 1,858 63,687 65,545

Non-current liabilities
Financial liabilities
(excluding trade and
7
other payables) (4,369) – – (4,369) – (22,086) (22,086)
Other non-current liabilities – – – – (175) (495) (670)
(4,369) – – (4,369) (175) (22,581) (22,756)

Current liabilities
Financial liabilities
(excluding trade and
other payables) (614,578) (62,890) – (677,468) – (33,578) (33,578)
Other current liabilities (481,146) (351,714) (180) (833,040) (8,748) (121,469) (130,217)

(1,095,724) (414,604) (180) (1,510,508) (8,748) (155,047) (163,795)

Non-controlling interests (50,094) 7,145 – (42,949) – – –

Net assets/(liabilities) 787,739 (121,740) 27,253 693,252 60,115 (7,415) 52,700

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
For The Financial Year Ended 31 December 2019

22. JOINT VENTURES (CONTINUED)

(d) Summarised financial information (continued)

The summarised statements of financial position of the joint ventures are as follows: (continued)

Discontinuing operations Continuing operations

Emery Rizhao
Emery Specialty Sime Darby
Oleochemicals Chemicals MYBiomass Oils & Fats
(M) Sdn Bhd Sdn Bhd* Sdn Bhd Total Co. Ltd. Others* Total
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

31 December 2018
Non-current assets 901,951 227,752 297 1,130,000 72,887 117,983 190,870

Current assets
Cash and cash equivalents 168,761 17,100 3,299 189,160 172 3,186 3,358
Other current assets 1,014,017 62,032 24,839 1,100,888 24,252 26,898 51,150

1,182,778 79,132 28,138 1,290,048 24,424 30,084 54,508

Non-current liability
Financial liabilities
(excluding trade and
other payables) (4,859) – – (4,859) (195) (23,633) (23,828)

(4,859) – – (4,859) (195) (23,633) (23,828)

Current liabilities
Financial liabilities
(excluding trade and
other payables) (714,784) (81,071) – (795,855) – (35,543) (35,543)
Other current liabilities (501,111) (314,456) (139) (815,706) (31,006) (83,841) (114,847)

(1,215,895) (395,527) (139) (1,611,561) (31,006) (119,384) (150,390)

Non-controlling interests (49,313) 7,145 – (42,168) – – –

Net assets/(liabilities) 814,662 (81,498) 28,296 761,460 66,110 5,050 71,160

 Annual Report 2019 PG. 252 – 253

22. JOINT VENTURES (CONTINUED)

(e) Reconciliations of summarised financial information

Reconciliations of the summarised financial information presented to the carrying amounts of the Group’s
interests in joint ventures are as follows:

Discontinuing operations Continuing operations

Emery Rizhao
Emery Specialty Sime Darby
Oleochemicals Chemicals MYBiomass Oils & Fats

FINANCIAL STATEMENTS
(M) Sdn Bhd Sdn Bhd* Sdn Bhd Total Co. Ltd. Others* Total
Note RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

31 December 2019
Net assets
At 1 January 2019 814,662 – 28,296 842,958 66,110 5,050 71,160
Total comprehensive
(loss)/income (26,923) – (1,043) (27,966) (4,320) 11,800 7,480
Exchange differences – – – – (1,675) 240 (1,435)

At 31 December 2019 787,739 – 27,253 814,992 60,115 17,090 77,205

Group’s effective 7
interest 50.0% 50.0% 30% 30.0% – 50.0% 45% 49.0% – 51.0% 45.0% – 51.0%
Interests in joint
ventures 393,870 – 8,176 402,046 27,052 7,100 34,152
Impairment charge
for the financial
year 13(b) – – (8,176) (8,176) – – –
Transfer to
non-current assets
held for sale 33 (393,870) – – (393,870) – – –

Carrying amount at
end of the
financial year – – – – 27,052 7,100 34,152

* The Group has capped the recognition of its share of losses incurred by Emery Specialty Chemicals Sdn Bhd (“ESC”) in the previous financial
period/years and Guangzhou Keylink Chemicals Co. Ltd. (“Keylink”) in the current financial year as the Group’s interests in ESC and Keylink
had been reduced to zero and the Group does not have any obligations or guarantee of any obligations on behalf of ESC and Keylink. The
Group’s share of losses in ESC and Keylink for the current financial year amounted to RM2.3 million and RM5.7 million, respectively, which
had not been equity accounted for. As at 31 December 2019, the unrecognised amounts of the Group’s share of losses in ESC and Keylink
are RM46.9 million and RM5.7 million (2018: RM44.6 milion and nil), respectively.
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
For The Financial Year Ended 31 December 2019

22. JOINT VENTURES (CONTINUED)

(e) Reconciliations of summarised financial information (continued)

Reconciliations of the summarised financial information presented to the carrying amounts of the Group’s
interests in joint ventures are as follows: (continued)

Discontinuing operations Continuing operations

Emery Rizhao
Emery Specialty Sime Darby
Oleochemicals Chemicals MYBiomass Oils & Fats
(M) Sdn Bhd Sdn Bhd* Sdn Bhd Total Co. Ltd. Others* Total
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

31 December 2018
Net assets
At 1 July 2018 795,340 – 24,061 819,401 68,712 1,553 70,265
Total comprehensive
income/(loss) 19,322 – (265) 19,057 (1,913) 3,466 1,553
Additional investment in
existing joint ventures – – 4,500 4,500 – – –
Exchange differences – – – – (689) 31 (658)

At 31 December 2018 814,662 – 28,296 842,958 66,110 5,050 71,160

Group’s effective interest 50.0% 50.0% 30% 30.0% – 50.0% 45% 49.0% – 51.0% 45.0% – 51.0%
Interests in joint ventures 407,331 – 8,489 415,820 29,750 1,235 30,985

Carrying amount at end of

the financial period 407,331 – 8,489 415,820 29,750 1,235 30,985

23. ASSOCIATES
The Group’s equity interest in the associates as at 31 December 2019 and 31 December 2018, their respective
principal activities and countries of incorporation are shown in Note 51.

(a) Share of results of associates

The Group's share of results of associates are as follows:

GROUP

Financial Financial
year ended period ended
31.12.2019 31.12.2018
RM’000 RM’000

Share of results for the financial year/period (2,257) 1,568

(b) Investments in associates

The Group’s and the Company's investments in associates are as follows:

GROUP COMPANY

31.12.2019 31.12.2018 31.12.2019 31.12.2018

RM’000 RM’000 RM’000 RM’000

Unquoted shares, at cost 73,733 70,456 420 420

Share of post-acquisition reserves (33,978) (28,778) – –

39,755 41,678 420 420

 Annual Report 2019 PG. 254 – 255

23. ASSOCIATES (CONTINUED)

(c) Material associates

Set out below are the associates of the Group as at 31 December 2019, which, in the opinion of the Directors,
are material to the Group:

Name of associates Group’s effective Place of business/

interest (%) Country of incorporation

Muang Mai Guthrie Public Company Limited 49.0 Thailand

Verdezyne, Inc. 43.5 United States of America

FINANCIAL STATEMENTS
The Group’s investments in associate companies are in private companies and there are no quoted market
prices available for these shares.

There are no contingent liabilities in respect of the Group’s interests in the associates.

(d) Summarised financial information

The summarised statements of comprehensive income/(loss) and dividends received from the associates
are as follows:

Muang Mai
Guthrie 7
Public
Company Verdezyne,
Limited Inc. Others Total
RM’000 RM’000 RM’000 RM’000

For the financial year ended

31 December 2019
Revenue 192,095 – 60,162 252,257

Loss before tax (1,623) – (3,979) (5,602)

Tax expense (157) – (72) (229)

Loss for the financial year/

Total comprehensive loss for the
financial year (1,780) – (4,051) (5,831)

Dividend received (2,955) – – (2,955)

For the financial period ended

31 December 2018
Revenue 98,278 – 48,711 146,989

Profit before tax 2,917 – 841 3,758

Tax expense (401) – – (401)

Profit for the financial period/Total

comprehensive income for the
financial period 2,516 – 841 3,357

Dividend received – – – –
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
For The Financial Year Ended 31 December 2019

23. ASSOCIATES (CONTINUED)

(d) Summarised financial information (continued)

The summarised statements of financial position of the associates are as follows:

Muang Mai
Guthrie
Public
Company Verdezyne,
Limited Inc. Others Total
RM’000 RM’000 RM’000 RM’000
31 December 2019
Non-current assets 42,201 247,507 53,792 343,500

Current assets
Cash and cash equivalents 947 18,687 8,630 28,264
Other current assets 41,838 5,158 7,387 54,383

42,785 23,845 16,017 82,647

Non-current liabilities
Financial liabilities
(excluding trade and other payables) – (189,826) – (189,826)
Other non-current liabilities (1,299) – (20,519) (21,818)

(1,299) (189,826) (20,519) (211,644)

Current liabilities
Other current liabilities (28,869) (81,526) (15,438) (125,833)

Net assets/(liabilities) 54,818 – 33,852 88,670

31 December 2018
Non-current assets 39,625 250,339 54,101 344,065

Current assets
Cash and cash equivalents 588 18,901 6,530 26,019
Other current assets 44,591 5,217 12,952 62,760

45,179 24,118 19,482 88,779

Non-current liabilities
Financial liabilities
(excluding trade and other payables) – (191,998) – (191,998)
Other non-current liabilities (695) – (22,334) (23,029)

(695) (191,998) (22,334) (215,027)

Current liabilities
Other current liabilities (25,465) (82,459) (15,774) (123,698)

Net assets 58,644 – 35,475 94,119

The above information reflects the amounts presented in the financial statements of the associates adjusted
for differences in accounting policies between the Group and the associates as well as post-acquisition
changes to the fair value adjustments at the acquisition date.
 Annual Report 2019 PG. 256 – 257

23. ASSOCIATES (CONTINUED)

(e) Reconciliations of summarised financial information

Reconciliations of the summarised financial information presented to the carrying amounts of the Group’s
interests in associates are as follows:

Muang Mai
Guthrie
Public
Company Verdezyne,

FINANCIAL STATEMENTS
Limited Inc. Others Total
RM’000 RM’000 RM’000 RM’000

31 December 2019
Net assets
At 1 January 2019 58,644 – 35,475 94,119
Total comprehensive loss (1,780) – (4,051) (5,831)
Dividend declared (6,030) – – (6,030)
Exchange differences 3,984 – 2,428 6,412

At 31 December 2019 54,818 – 33,852 88,670

Group’s effective interest 49.0% 43.5% 32.0% – 40.0% 32.0% – 49.0%

Interests in associates 26,861 – 12,593 39,454
7
Goodwill – – 301 301

Carrying amount at end of the

financial year 26,861 – 12,894 39,755

31 December 2018
Net assets
At 1 July 2018 54,480 – 29,714 84,194
Total comprehensive income 2,516 – 841 3,357
Exchange differences 1,648 – 4,920 6,568

At 31 December 2018 58,644 – 35,475 94,119

Group’s effective interest 49.0% 43.5% 32.0% – 40.0% 32.0% – 49.0%

Interests in associates 28,736 – 12,641 41,377
Goodwill – – 301 301

Carrying amount at end of the

financial period 28,736 – 12,942 41,678

The Group has capped the recognition of its share of losses incurred by Verdezyne, Inc. (“Verdezyne”) in the
previous financial period/years as the Group’s interests in Verdezyne had been reduced to zero and the
Group does not have any obligations or guarantee if any obligations on behalf of Verdezyne.
24. INTANGIBLE ASSETS
Work-in-
progress
capitalised Acquired
Assets Intellectual Agriculture – agriculture brand
usage property Smallholder Customer Computer development development names/
Goodwill rights rights relationships relationships software costs costs trademarks Total
GROUP Note RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
31 December 2019
Net book value
At 1 January 2019 2,169,202 824 14,700 560,929 2,592 20,693 76,972 8,816 38,115 2,892,843
Additions – – – – – 2,765 3 3,867 – 6,635
Write-off 6(e) – – – – – (13) – – – (13)
Amortisation 6(a) – (132) (840) (14,977) (724) (7,996) (4,650) – (3,225) (32,544)
Transfer to non-current assets held
for sale 33 (3,113) – – – – (15) – – – (3,128)
Exchange differences (17,113) (1) – (2,301) (191) (1,982) (1,362) – (335) (23,285)
At 31 December 2019 2,148,976 691 13,860 543,651 1,677 13,452 70,963 12,683 34,555 2,840,508
For The Financial Year Ended 31 December 2019

Cost 2,154,499 1,925 16,800 610,924 9,741 172,063 87,668 12,683 69,909 3,136,212
Accumulated amortisation – (1,234) (2,940) (67,273) (8,064) (155,203) (16,705) – (33,036) (284,455)
Accumulated impairment losses (5,523) – – – – (3,408) – – (2,318) (11,249)
Net book value as at
31 December 2019 2,148,976 691 13,860 543,651 1,677 13,452 70,963 12,683 34,555 2,840,508
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

31 December 2018
Net book value
At 1 July 2018 2,102,062 889 15,120 553,533 2,972 24,677 79,257 7,396 38,635 2,824,541
Acquisition of a subsidiary 43 9,054 – – – – – – – – 9,054
Additions – – – – – 2,084 – 1,420 – 3,504
Write-off 6(e) (193) – – – – – – – – (193)
Amortisation 6(a) – (65) (420) (7,464) (693) (6,471) (2,358) – (1,606) (19,077)
Exchange differences 58,279 – – 14,860 313 403 73 – 1,086 75,014
At 31 December 2018 2,169,202 824 14,700 560,929 2,592 20,693 76,972 8,816 38,115 2,892,843

Cost 2,174,725 1,927 16,800 612,786 10,260 169,942 88,050 8,816 70,694 3,154,000
Accumulated amortisation – (1,103) (2,100) (51,857) (7,668) (145,817) (11,078) – (30,255) (249,878)
Accumulated impairment losses (5,523) – – – – (3,432) – – (2,324) (11,279)
Net book value as at
31 December 2018 2,169,202 824 14,700 560,929 2,592 20,693 76,972 8,816 38,115 2,892,843

Included in the additions of the Group’s intangible assets during the financial year is borrowing costs capitalised of RM0.2 million (2018: RM0.1 million).
 Annual Report 2019 PG. 258 – 259

24. INTANGIBLE ASSETS (CONTINUED)

Work-in-
progress
capitalised
Intellectual Agriculture – agriculture
property Computer development development
Goodwill rights software costs costs Total
COMPANY Note RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

31 December 2019

FINANCIAL STATEMENTS
Net book value
At 1 January 2019 1,977,918 14,700 5,486 74,504 8,816 2,081,424
Additions – – 228 – 3,054 3,282
Amortisation 6(a) – (840) (2,901) (4,249) – (7,990)
Transfer to non-current assets
held for sale 33 (3,113) – – – – (3,113)

At 31 December 2019 1,974,805 13,860 2,813 70,255 11,870 2,073,603

Cost 1,974,805 16,800 64,895 84,995 11,870 2,153,365

Accumulated amortisation – (2,940) (62,082) (14,740) – (79,762)

Net book value as at

31 December 2019 1,974,805 13,860 2,813 70,255 11,870 2,073,603
7

31 December 2018
Net book value
At 1 July 2018 1,978,111 15,120 7,643 76,629 7,396 2,084,899
Additions – – 39 – 1,420 1,459
Write-off 6(e) (193) – – – – (193)
Amortisation 6(a) – (420) (2,196) (2,125) – (4,741)

At 31 December 2018 1,977,918 14,700 5,486 74,504 8,816 2,081,424

Cost 1,977,918 16,800 64,666 84,995 8,816 2,153,195

Accumulated amortisation – (2,100) (59,180) (10,491) – (71,771)

Net book value as at

31 December 2018 1,977,918 14,700 5,486 74,504 8,816 2,081,424

Included in the additions of the Company’s intangible assets during the financial year is borrowing costs capitalised of RM0.2 million (2018:
RM0.1 million).
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
For The Financial Year Ended 31 December 2019

24. INTANGIBLE ASSETS (CONTINUED)

(i) Goodwill

The goodwill in the Group’s consolidated statement of financial position represents mainly the excess of
the purchase consideration over the fair value of identifiable assets, liabilities and contingent liabilities
recognised upon the Group’s acquisition of New Britain Palm Oil Limited (“NBPOL”) and its subsidiaries of
USD517.0 million (RM2,123.3 million) during the financial year ended 30 June 2015.

The Group carries out its annual impairment assessment on the goodwill arising from the acquisition of
NBPOL, which for the purposes of impairment testing has been allocated to cash generating units (“CGU”)
within the Group, namely NBPOL CGU and PT Minamas Gemilang and its subsidiaries (“Minamas Group
CGU”) as the Group believes that Minamas Group’s operations will benefit from the additional planting
material synergies arising from the acquisition of NBPOL and will not be impacted from Group’s planned
disposal of Verdant Bioscience Pte Lte, as set out in Note 33 (c)(ii).

The impairment assessment is carried out on goodwill allocated to NBPOL CGU of USD367 million (equivalent
to RM1,507.2 million) (2018: USD367 million (equivalent to RM1,524.5 million)) and Minamas Group CGU of
USD150 million (equivalent to RM616.1 million) (2018: USD150 million (equivalent to RM623.1 million)).

The recoverable amounts of these two CGUs are based on their respective value-in-use calculations which
are derived at using cash flow projections in which the following key assumptions are used:

GROUP

31.12.2019 31.12.2018

NBPOL CGU
Projection period A 37-year cash flow projection, based A 37.5-year cash flow projection, based
on the average remaining lease on the average remaining lease period
period of land in NBPOL of land in NBPOL
FFB yields 24.7 to 30.7 MT per hectare ("ha") 24 to 32 MT per hectare ("ha")
CPO price USD581 to USD944 per MT USD625 to USD947 per MT
Discount rate 10.4% per annum 9.1% per annum

Minamas Group CGU

Projection period A 45-year cash flow projection, based
on the average remaining lease
period of land in Indonesia
FFB yields 18.7 to 27.2 MT per ha, inclusive of a
1MT per ha yield increase from a
replanting programme with Super
Dami seeds
CPO price USD500 to USD718 per MT
Discount rate 9.8% per annum
A 45.5-year cash flow projection, based
on the average remaining lease period
of land in Indonesia
19 to 30 MT per ha, inclusive of a 1MT
per ha yield increase from a replanting
programme with Super Dami seeds
USD525 to USD708 per MT
9.5% per annum

The Group’s impairment assessment of both CGUs as outlined above included a sensitivity analysis on the
key assumptions used. Based on the results of the sensitivity analysis, no reasonable change in the key
assumptions used would result in an impairment charge for current financial year or prior financial period.

Management believes that no impairment charge is required on the goodwill as the recoverable amount
calculated based on value-in-use exceeded the carrying value of the goodwill of NBPOL CGU and Minamas
Group CGU.
 Annual Report 2019 PG. 260 – 261

24. INTANGIBLE ASSETS (CONTINUED)

(i) Goodwill (continued)

The Company’s goodwill arose from merger exercise of plantation businesses between Sime Darby Berhad,
Golden Hope Plantations Berhad and Kumpulan Guthrie Berhad in the financial year 2008. The acquisition
of the plantation businesses from this merger exercise resulted in a goodwill of RM1,974.8 million.

The Company evaluates the recoverable amounts of the goodwill as one CGU based on its value-in-use
calculations using cash flow from approved financial budgets covering a 5 year period inclusive of the
terminal values.

FINANCIAL STATEMENTS
COMPANY

31.12.2019 31.12.2018

Discount rates (%) 9 9

CPO price (RM per MT) 2,200 to 2,675 2,300 to 2,650

Based on our assessment, no impairment charge is required on the goodwill as the recoverable amounts
exceed the carrying value of the CGUs’ assets and goodwill. The management believes that no reasonable
possible change in any of the key assumptions used would result in the carrying amount of the CGU to
materially exceed the recoverable amounts.

(ii) Smallholder relationships 7

The smallholder relationships arose from the acquisition of a controlling interest in a subsidiary. These assets
reflect the relationship between the Group and smallholders who cultivate and harvest FFB on land which
is owned by the smallholders. The FFB is subsequently purchased by the Group for processing as palm oil.
These assets are initially recognised at fair value and thereafter amortised over the remaining lease term
of the Group’s land of 45 years.

(iii) Work-in-progress capitalised – agriculture development costs

Capitalised agriculture development costs comprise of expenditure incurred relating to the development
of oil palm genomic data and techniques, as well as clonal technology with the objective to increase yields
and profit streams from the Group’s plantation. Once the development enters into commercial production,
the asset will be amortised over its estimated useful life of 5 to 20 years.

(iv) Intellectual property rights

The Company acquired intellectual property rights (“IP rights”) on the genome base data from a third party,
Synamatix Sdn Bhd for RM16.8 million. The Company had assessed that the IP rights have a finite life. As a
result, the Company amortised the IP rights on a straight line basis, over the estimated useful life of 20 years.

(v) Acquired brand names/trademarks

This mainly consists of fair value of brands in relation to the Group’s beef, sugar and seed production
operations which arose from the acquisition of NBPOL. The brands are initially recognised at fair value and
thereafter amortised on a straight-line basis over the estimated useful life of 20 years.
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
For The Financial Year Ended 31 December 2019

25. INVESTMENTS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME (“FVOCI”)

GROUP COMPANY

31.12.2019 31.12.2018 31.12.2019 31.12.2018

Note RM’000 RM’000 RM’000 RM’000

Non-current
Unquoted shares
At 1 January 2019/1 July 2018 29,294 28,090 25,749 26,588
Net changes in fair value 16 1,175 1,204 1,300 (839)

At 31 December 2019/2018 30,469 29,294 27,049 25,749

The unquoted non-current investments at FVOCI of the Group and of the Company were categorised under
Level 3 investment, of which the fair value is determined using a valuation technique with reference made to
quoted market prices for companies with similar business.

The Group and the Company have irrevocably elected non-trading equity securities above at initial recognition
to present its fair value changes in OCI. The Group and the Company consider the classification to be more
relevant as these instruments are strategic investments of the Group and the Company and not held for trading
purposes.

26. DEFERRED TAX

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets
against current tax liabilities and when the deferred taxes relate to the same tax authority.

The following amounts, determined after appropriate offsetting, are shown in the statements of financial position:

GROUP COMPANY

31.12.2019 31.12.2018 31.12.2019 31.12.2018

RM’000 RM’000 RM’000 RM’000

Deferred tax assets 640,094 508,991 – –

Deferred tax liabilities (2,598,247) (2,653,870) (701,855) (710,406)

(1,958,153) (2,144,879) (701,855) (710,406)

 Annual Report 2019 PG. 262 – 263

26. DEFERRED TAX (CONTINUED)

The unutilised tax losses and deductible temporary differences for which no deferred tax assets are recognised
in the consolidated financial statements are as follows:

GROUP

31.12.2019 31.12.2018
RM’000 RM’000

Unutilised tax losses

– Expiring within 10 years* 1,522,416 1,233,711**

FINANCIAL STATEMENTS
– No expiry period – 21,029

1,522,416 1,254,740

Deductible temporary differences

– No expiry period 20,354 20,596

1,542,770 1,275,336

* Included unutilised tax losses related to discontinuing operations of SDP Liberia of RM1,000.1 million (2018:
RM655.1 million).

** Under the Malaysia Finance Act 2018 which was gazetted on 27 December 2018, the Group’s unutilised tax
losses with no expiry period amounting to RM39.3 million as at 31 December 2018 will be imposed with a time 7
limit of utilisation. Any accumulated unutilised tax losses brought forward from year of assessment 2018 can be
carried forward for another 7 consecutive years of assessment (i.e. from year of assessments 2019 to 2025).

Deferred tax assets are not recognised by certain subsidiaries in respect of the above temporary differences as
the Directors are of the view it is not probable that sufficient taxable profits will be available to allow the deferred
tax assets to be utilised.
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
For The Financial Year Ended 31 December 2019

26. DEFERRED TAX (CONTINUED)

The components and movements of the deferred tax assets and liabilities during the financial year/period are
as follows:

GROUP COMPANY

31.12.2019 31.12.2018 31.12.2019 31.12.2018

Note RM’000 RM’000 RM’000 RM’000

At 1 January 2019/1 July 2018 (2,144,879) (1,975,677) (710,406) (703,404)

(Credited)/charged to profit or loss 12
– property, plant and equipment (27,194) (38,560) (3,120) (15,378)
– biological assets (12,214) 11,913 (2,102) 4,115
– right-of-use assets 8,641 4,212 – –
– derivatives 39,227 187 26,867 (137)
– unutilised tax losses 136,965 (26,042) – –
– retirement benefits 4,815 2,410 (1,438) 401
– impairments and provisions 2,063 (20,257) (11,354) 2,997
– others 20,432 (6,305) – 974

172,735 (72,442) 8,853 (7,028)

Charged/(credited) to other
comprehensive income 16 2,386 (449) (302) 26
Transfers to non-current assets held
for sale 33 (6,150) – – –
Acquisition of a subsidiary 43 – (68,279) – –
Exchange differences 17,755 (28,032) – –

At 31 December 2019/2018 (1,958,153) (2,144,879) (701,855) (710,406)

 Annual Report 2019 PG. 264 – 265

26. DEFERRED TAX (CONTINUED)

GROUP COMPANY

31.12.2019 31.12.2018 31.12.2019 31.12.2018

Note RM’000 RM’000 RM’000 RM’000

Deferred tax assets

(before offsetting)
– unutilised tax losses 221,656 83,859 – –
– retirement benefits 66,540 56,528 10,635 12,073
– impairments and provisions 51,202 47,828 8,715 20,069

FINANCIAL STATEMENTS
– derivatives 33,454 – 23,690 –
– property, plant and equipment 26(a) 386,235 385,825 – –
– others 6,402 11,182 – –

765,489 585,222 43,040 32,142

Offsetting (125,395) (76,231) (43,040) (32,142)

Deferred tax assets (after offsetting) 640,094 508,991 – –

Deferred tax liabilities

(before offsetting)
– property, plant and equipment (2,348,364) (2,327,930) (738,231) (735,111)
– biological assets (52,167) (40,322) (6,664) (4,562) 7
– intangible assets (122,114) (128,443) – –
– right-of-use assets (181,381) (190,022) – –
– derivatives – (6,365) – (2,875)
– others (19,616) (37,020) – –

(2,723,642) (2,730,102) (744,895) (742,548)

Offsetting 125,395 76,231 43,040 32,142

Deferred tax liabilities

(after offsetting) (2,598,247) (2,653,871) (701,855) (710,406)

(a) The Ministry of Finance in Indonesia has issued a new regulation on fixed assets revaluation (under Peraturan
Menteri Keuangan No.191/PMK.010/2015) (“PMK 191”) effective from 20 October 2015 as a temporary special
tax treatment to taxpayers. Under the special tax regulation, taxpayers who elect to apply the fixed asset
revaluation are granted a special tax treatment, leading to a reduction in the final tax rate to be applied
on the companies.

Under the special tax regulation, the Group’s Indonesia subsidiaries had elected and submitted their application
for the special tax incentive by performing a tax revaluation on certain assets and paid a final tax for the
revaluation surplus. Subsequent to the approvals of the fixed assets revaluation by the Director General of
Taxation (“DGT”), the Group has recognised deferred tax assets arising from the fixed asset revaluation surplus.

Deferred tax is not recognised on the unremitted earnings of overseas subsidiaries where the Group is able to
control the timing of the remittance and it is probable that there will be no remittance in the foreseeable
future. If these earnings were remitted, tax of RM938 million (2018: RM944 million) would have been payable.
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
For The Financial Year Ended 31 December 2019

27. TAX RECOVERABLE

GROUP COMPANY

31.12.2019 31.12.2018 31.12.2019 31.12.2018

Note RM’000 RM’000 RM’000 RM’000

Non-current
Corporate income taxes recoverable 27(a) 177,250 178,832 – –
Value added tax recoverable 27(b) 144,832 100,144 – –
Other taxes recoverable 11,592 11,436 – –

333,674 290,412 – –

Current
Corporate income taxes recoverable 27(a) 149,419 113,435 50,821 93,372
Value added tax recoverable 27(b) 163,197 321,860 – –

312,616 435,295 50,821 93,372

Note:
(a) Certain subsidiaries within the Minamas Group have received corporate income tax assessments from the
local tax authorities in Indonesia for various years of assessment. These subsidiaries disagreed with certain
of these assessments and have filed objections, appeals and judicial reviews.

During the financial year, the Group received tax refunds of IDR635 billion (RM187 million) (2018: IDR77
billion (RM22 million)) and paid tax assessments of IDR160 billion (RM47 million) (2018: IDR167 billion (RM48
million)).

(b) During the financial year, the Group has received VAT refund of IDR609 billion (RM180 million) (2018: IDR80
billion (RM23 million)) out of the approved VAT refund of IDR457 billion (RM135 million) (2018: IDR476 billion
(RM136 million)). Subsequently in January 2020, the Group has also received a total VAT refund of IDR47
billion (RM14 million).

The non-current tax recoverable includes additional tax assessments paid and value added taxes, which would
normally take more than a year to resolve with the relevant tax authorities.
 Annual Report 2019 PG. 266 – 267

28. TRADE AND OTHER RECEIVABLES

GROUP COMPANY

31.12.2019 31.12.2018 31.12.2019 31.12.2018

Note RM’000 RM’000 RM’000 RM’000

Non-current
Advances for plasma plantation
projects 179,579 138,588 – –
Accumulated impairment losses 49(c)(iii) (23,838) (23,466) – –

FINANCIAL STATEMENTS
155,741 115,122 – –

Current
Trade receivables 1,264,454 1,431,891 181,261 143,621
Other receivables 293,283 122,400 18,599 20,042
Goods and services tax/value added
tax receivable 204,019 267,643 6,326 11,312
Prepayments 144,178 218,166 15,791 17,195
Deposits 16,626 17,385 8,683 8,833
Amounts due from associates 2,425 3,046 778 774
Amounts due from joint ventures 51,881 52,159 40,541 40,858
Interest receivable 29,302 11,499 – –
7
2,006,168 2,124,189 271,979 242,635

Accumulated impairment losses:

Trade receivables 49(c)(iii) (24,648) (33,099) (766) (3,846)
Other receivables 49(c)(iii) (3,081) (3,459) (2,692) (4,417)
Amounts due from associates 49(c)(iii) (618) (618) (618) (618)
Amounts due from joint ventures 49(c)(iii) (44,224) (16,723) (40,001) (14,913)

(72,571) (53,899) (44,077) (23,794)

1,933,597 2,070,290 227,902 218,841

Credit terms for trade receivables of the Group and of the Company ranges from 7 to 120 days (2018: 7 to 120
days).

The amounts due from associates and joint ventures are trade in nature, unsecured, interest free and repayable
within 30 days (2018: 30 days).

As at 31 December 2019, no trade and other receivables pledged as security for borrowings (2018: nil).

The Group’s and the Company’s currency exposure profile and concentration of credit risk are disclosed in Note
49(c)(i) and 49(c)(iii).
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
For The Financial Year Ended 31 December 2019

29. INVENTORIES
GROUP COMPANY

31.12.2019 31.12.2018 31.12.2019 31.12.2018

RM’000 RM’000 RM’000 RM’000

Produce inventories:
– palm oil products 429,144 393,759 20,383 36,189
– sugar stocks 5,526 47,020 – –
– rubber 15,769 10,564 14,013 7,784
Trading inventories 6,505 11,422 – –
Raw materials and consumable stores 699,403 764,675 40,711 60,452
Refined inventories:
– work-in-progress 194,560 298,469 52,907 105,182
– finished goods 147,491 155,867 13,032 9,923

1,498,398 1,681,776 141,046 219,530

The carrying amounts of inventories of the Group of RM24.1 million (2018: RM124.7 million) and the Company
of RM12.5 million (2018: RM29.5 million) are stated at net realisable value.

30. AMOUNTS DUE FROM/(TO) SUBSIDIARIES AND RELATED PARTIES

GROUP COMPANY

31.12.2019 31.12.2018 31.12.2019 31.12.2018

RM’000 RM’000 RM’000 RM’000

Non-current
Amount due from a subsidiary
– interest bearing (non-trade) – – 59,768 49,080

Amount due to a subsidiary

– interest bearing (non-trade) – – (503,112) (504,707)

Current
Amounts due from subsidiaries
– interest bearing (non-trade) – – 235,485 156,494
– non-interest bearing (non-trade) – – 111,015 135,118
– non-interest bearing (trade) – – 189,825 231,369

– – 536,325 522,981

Amounts due from related parties

– non-interest bearing (trade) 2,158 2,171 3,226 2,903

Amounts due to subsidiaries

– interest bearing (non-trade) – – (12,807) (7,058)
– non-interest bearing (trade) – – (982,175) (993,255)

– – (994,982) (1,000,313)

Amounts due to related parties

– non-interest bearing (trade) (6,989) (61,020) (6,027) (36,826)
 Annual Report 2019 PG. 268 – 269

30. AMOUNTS DUE FROM/(TO) SUBSIDIARIES AND RELATED PARTIES (CONTINUED)

Interest rates per annum

COMPANY

31.12.2019 31.12.2018
% %

Non-current
Amount due from a subsidiary 2.65 – 4.16 4.27 – 4.45
Amount due to a subsidiary 3.29 3.29

FINANCIAL STATEMENTS
Current
Amounts due from subsidiaries 4.02 – 4.45 4.02 – 4.45
Amounts due to subsidiaries 3.29 3.29

The amounts due (to)/from subsidiaries and related parties are unsecured whilst the non-current amounts are
payable after 12 months and all current amounts are repayable on demand. The amounts due from subsidiaries
and related parties are neither past due nor impaired.

The Group’s and the Company’s currency exposure profile and concentration of credit risk are disclosed in Note
49(c)(i) and 49(c)(iii).
7
31. DERIVATIVES

The Group’s and the Company’s derivatives are as follows:

GROUP

Contract/
notional Fair value
amount Assets Liabilities
RM’000 RM’000 RM’000

31 December 2019
Current
Cash flow hedges:
– forward foreign exchange contracts 395,253 2,584 (405)
– interest rate swap contracts 797,785 232 –

1,193,038 2,816 (405)

Non-hedging derivatives:
– forward foreign exchange contracts 194,418 3,661 (3,616)
– commodities options and futures contracts 1,215,486 70,260 (238,892)

1,409,904 73,921 (242,508)

2,602,942 76,737 (242,913)

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
For The Financial Year Ended 31 December 2019

31. DERIVATIVES (CONTINUED)

The Group’s and the Company’s derivatives are as follows: (continued)

GROUP

Contract/
notional Fair value
amount Assets Liabilities
RM’000 RM’000 RM’000

31 December 2018
Current
Cash flow hedges:
– forward foreign exchange contracts 94,075 944 (1,375)
– interest rate swap contracts 1,130,407 18,536 –

1,224,482 19,480 (1,375)

Non-hedging derivatives:
– forward foreign exchange contracts 783,619 7,333 (2,727)
– commodities options and futures contracts 645,645 31,851 (17,096)

1,429,264 39,184 (19,823)

2,653,746 58,664 (21,198)

COMPANY
Contract/ Fair
notional value
amount Assets Liabilities
RM’000 RM’000 RM’000

31 December 2019
Current
Cash flow hedges:
– interest rate swap contracts 797,785 232 –

797,785 232 –

Non-hedging derivatives:
– forward foreign exchange contracts 171,724 1,609 (36)
– commodities options and futures contracts 692,202 33,648 (134,161)

863,926 35,257 (134,197)

1,661,711 35,489 (134,197)

 Annual Report 2019 PG. 270 – 271

31. DERIVATIVES (C0NTINUED)

The Group’s and the Company’s derivatives are as follows: (continued)

COMPANY
Contract/ Fair
notional value
amount Assets Liabilities
RM’000 RM’000 RM’000

31 December 2018

FINANCIAL STATEMENTS
Current
Cash flow hedges:
– interest rate swap contracts 1,130,407 18,536 –

1,130,407 18,536 –

Non-hedging derivatives:
– forward foreign exchange contracts 261 – (1)
– commodities options and futures contracts 326,203 2,324 (8,882)

326,464 2,324 (8,883)

1,456,871 20,860 (8,883)

7
The Group and the Company have forward foreign exchange contracts in place with a notional value that are
designated and effected as cash flow hedges. These contracts are expected to cover the Group’s exposures
ranging from 1 month to 6 months (2018: 2 month to 12 months) and the Company’s exposures ranging from
1 month to 12 months (2018: 1 month to 6 months).

The interest rate swap contracts require settlement of net interest receivable or payable every 6 months. The
settlement dates coincide with the dates on which interest is payable on the underlying debt and settlement
occurs on a net basis.

These derivatives are entered into to hedge certain risks as described in Note 49(c). Whilst all derivatives entered
into provide economic hedges to the Group, non-hedging derivatives are instruments that do not qualify for
the application of hedge accounting under the specific rules in MFRS 9.
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
For The Financial Year Ended 31 December 2019

31. DERIVATIVES (C0NTINUED)

(a) Forward foreign exchange contracts

As at end of the financial year/period, forward foreign exchange contracts have been entered into with the
following notional amounts and maturities:

Within 1 year

31.12.2019 31.12.2018
GROUP RM’000 RM’000

Forward contracts used to hedge anticipated sales

– United States Dollar 166,757 233,235
– European Union Euro 7,224 7,743
Forward contracts used to hedge receivables
– United States Dollar 215,879 322,704
– European Union Euro – 9,765
Forward contracts used to hedge anticipated purchases
– United States Dollar 83,258 266,807
– European Union Euro 7,832 16,541
Forward contracts used to hedge payables
– United States Dollar 108,721 20,899

589,671 877,694

Within 1 year

31.12.2019 31.12.2018
COMPANY RM’000 RM’000

Forward contracts used to hedge anticipated sales

– United States Dollar – 261

Forward contracts used to hedge payables

– United States Dollar 171,724 –

171,724 261
 Annual Report 2019 PG. 272 – 273

31. DERIVATIVES (C0NTINUED)

(b) Commodities options and futures contracts
As at end of the financial year/period, the notional amounts and maturity of commodities options and
futures contracts that are not held for the purpose of physical delivery are as follows:

Within 1 year

31.12.2019 31.12.2018
RM’000 RM’000

GROUP

FINANCIAL STATEMENTS
Commodities contracts – buying
– Ringgit Malaysia 233,907 158,399
– United States Dollar 121,561 97,640

Commodities contracts – selling

– Ringgit Malaysia 482,520 10,401
– United States Dollar 377,498 379,205

1,215,486 645,645

COMPANY
Commodities contracts – buying
– Ringgit Malaysia 230,477 167,107 7
Commodities contracts – selling
– Ringgit Malaysia 461,725 159,096

692,202 326,203

(c) Interest rate swap contracts

As at the end of the financial year/period, the notional amounts and terms of the interest rate swap contracts
for the Group and the Company are as follows:

Range of weighted
average rate Notional amount in Notional amount in
per annum (%) original currency Ringgit equivalent
Type of
interest With Without At At At At
rate swap Effective period swap swap 31.12.2019 31.12.2018 31.12.2019 31.12.2018

Plain vanilla 19.08.2019 to

18.02.2020 1.89 3.11 41,625 – 170,954 –
Plain vanilla 19.08.2019 to
18.02.2020 1.84 3.11 41,625 – 170,954 –
Plain vanilla 19.08.2019 to
18.02.2020 1.75 3.11 27,750 – 113,969 –
Plain vanilla 19.08.2019 to
18.02.2020 1.78 3.11 41,625 – 170,954 –
Plain vanilla 19.08.2019 to
18.02.2020 1.78 3.11 41,625 – 170,954 –
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
For The Financial Year Ended 31 December 2019

31. DERIVATIVES (C0NTINUED)

(c) Interest rate swap contracts (continued)
As at the end of the financial year/period, the notional amounts and terms of the interest rate swap contracts
for the Group and the Company are as follows: (continued)

Range of weighted
average rate per Notional amount in Notional amount in
annum (%) original currency Ringgit equivalent
Type of
interest With Without At At At At
rate swap Effective period swap swap 31.12.2019 31.12.2018 31.12.2019 31.12.2018

Plain vanilla 17.08.2018 to

19.02.2019 1.89 3.61 – 58,313 – 242,230
Plain vanilla 17.08.2018 to
19.02.2019 1.84 3.61 – 58,313 – 242,230
Plain vanilla 17.08.2018 to
19.02.2019 1.75 3.61 – 38,875 – 161,487
Plain vanilla 17.08.2018 to
19.02.2019 1.78 3.61 – 58,313 – 242,230
Plain vanilla 17.08.2018 to
19.02.2019 1.78 3.61 – 58,313 – 242,230

The notional amount, fair value and maturity periods of the interest rate swap contracts are as follows:

GROUP/COMPANY

31.12.2019 31.12.2018
RM’000 RM’000

Notional amount
Maturity periods:
– due not later than one year 797,785 1,130,407

Fair value asset/(liabilities)

Maturity periods:
– due not later than one year 232 18,536

32. BANK BALANCES, DEPOSITS AND CASH

GROUP COMPANY

31.12.2019 31.12.2018 31.12.2019 31.12.2018

RM’000 RM’000 RM’000 RM’000

Deposits with licensed banks 76,389 63,428 52,833 30,032

Cash and bank balances 354,958 427,614 32,570 35,661

431,347 491,042 85,403 65,693

Effective annual interest rates applicable

during the financial year/period are as
follows:
% % % %

Deposits with licensed banks 3.77 4.23 3.02 3.19

 Annual Report 2019 PG. 274 – 275

32. BANK BALANCES, DEPOSITS AND CASH (CONTINUED)

The maturity period for deposits with licensed banks of the Group and the Company range from 1 to 90 days
(31 December 2018: 1 to 90 days) and 3 days (31 December 2018: 3 days) respectively.

Bank balances are non-interest bearing deposits held at call with banks.

The currency exposure profile is disclosed in Note 49(c)(i).

33. ASSETS AND LIABILITIES HELD FOR SALE

FINANCIAL STATEMENTS
GROUP COMPANY

31.12.2019 31.12.2018 31.12.2019 31.12.2018

Note RM’000 RM’000 RM’000 RM’000

Non-current assets held for sale

– property, plant and equipment 33(a) 65,946 14 68,966 14
– intangible assets 24 3,128 – 3,113 –
– joint venture 33(b) 393,870 – 256,168 –
Disposal group held for sale
– property, plant and equipment 34,668 78,633 – –
– other assets 24,926 46,028 – –

522,538 124,675 328,247 14 7

Disposal group held for sale
– liabilities (35,735) (21,133) – –

486,803 103,542 328,247 14

(a) Proposed disposal of property, plant and equipment

(i) On 30 May 2019, 12 parcels of land totalling 1,004 hectares have been approved by the Board of
Directors of the Company for disposal. During the financial year, Sale and Purchase Agreements (“SPA(s)”)
for 8 parcels of land, totalling RM479.1 million have been signed. The condition precedents are expected
to be fulfilled within the next 12 months after the financial year end.

Certain transactions have been completed subsequent to the financial year end as described in Note
52(b).

(ii) On 8 May 2018, the Company accepted the offer to dispose off two plots of freehold land for a total
consideration of RM2.6 million. The sale and purchase agreements for the respective plot of land were
signed on 28 August 2018. The disposal has been completed during the financial year.

(b) Proposed divestment of joint venture

(i) On 29 August 2019, the Board of Directors of the Company has authorised the proposed divestment of
its entire 50% equity interest in Emery Oleochemicals (M) Sdn Bhd and Emery Specialty Chemicals Sdn
Bhd. The Group has commenced active discussion with the potential buyer and the disposal of the joint
ventures is expected to be completed within the next 12 months subsequent to the financial year end.

(ii) During the financial year, the Board of Directors has expressed its intention to divest the equity interest
of 30% in a joint venture, MYBiomass Sdn Bhd (“MYBiomass”) as the investment has been in loss
making position in prior financial years. Following a shareholders agreement to cease further investments
in the joint venture as the technology is not feasible to be rolled out by the biofuel refinery, MYBiomass
ceased its operations with effect from 31 December 2019.
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
For The Financial Year Ended 31 December 2019

33. ASSETS AND LIABILITIES HELD FOR SALE (CONTINUED)

(c) Proposed divestment of subsidiaries
(i) On 12 December 2019, Sime Darby Plantation Investment (Liberia) Private Limited, a wholly-owned
subsidiary of the Group has entered into a Sales and Purchase Agreement with Mano Palm Oil Industries
Limited (“MPOI”) to dispose off its entire 100% equity interest in Sime Darby Plantation (Liberia) Inc.
(“SDP Liberia”) for a total cash consideration of USD1 plus an earn-out payment which is to be determined
by the average future crude palm oil (“CPO”) price and future CPO production of SDP Liberia. The
earn-out consideration will be payable quarterly over a period of eight (8) years, commencing from
April 2023. The transaction has been completed on 15 January 2020 as described in Note 52(a).

The following assets and liabilities have been reclassified as held for sale in relation to the discontinuing
operation as at 31 December 2019:

GROUP

31.12.2019
RM’000

Inventories 13,800
Receivables 709
Bank 1,494
Payables (424)

Net assets disposed 15,579

(ii) On 18 November 2019, the Board of Directors of the Company has authorised its wholly owned subsidiary,
NBPOL to divest the entire 52% equity interest in Verdant Bioscience Pte Ltd. The Group has commenced
active discussion with a potential buyer and the disposal is expected to be completed within the next
12 months subsequent to the financial year end.

(iii) In prior financial period, the Board of Directors approved a proposed divestment of the entire equity
interest in PT Indo Sukses Lestari Makmur (“PT ISLM”), a subsidiary of the Group. Despite of the current
market condition, the Group is actively seeking for potential buyers. The transaction is expected to be
completed within the next 12 months subsequent to the financial year end.

(d) Completed divestment of subsidiaries

(i) On 15 February 2019, the Board of Directors has completed the divestment of the entire 100% equity
stake in PT Mitra Austral Sejahtera (“PT MAS”), a subsidiary of the Group. The disposal of the equity
interest in PT MAS for a consideration of USD29.7 million (equivalent to approximately RM123.1 million)
was completed on 25 June 2019.

Details of the assets, liabilities and net cashflow arising from the disposal of the subsidiary are as follows:

RM’000

Property, plant and equipment 77,468

Rights-of-use assets 2,005
Advances for plasma plantation projects 12,952
Receivables 759
Prepayments 34
Inventories 3,614
Bank 796
Payables (2,885)

Net assets disposed 94,743

Gain on disposal of a subsidiary 8,682

Proceeds from disposal, net of transaction costs 103,425

Less: Cash and cash equivalent in a subsidiary (796)
Net cash inflow from disposal of a subsidiary 102,629
 Annual Report 2019 PG. 276 – 277

33. ASSETS AND LIABILITIES HELD FOR SALE (CONTINUED)

(d) Completed divestment of subsidiaries (continued)

(ii) On 29 November 2018, the Group completed the divestment of the 65% equity interest in Golden
Hope-Nha Be Edible Oils Ltd. (“GHN”), a former subsidiary of the Group for a consideration of RM8.2
million (equivalent to 45.9 billion Vietnamese Dong). As at 31 December 2018, part of the consideration
of RM4.1 million (equivalent to 23.0 billion Vietnamese Dong) was retained in an escrow account which
shall be released after 2 years.

Upon disposal of GHN, the Group received a corporate guarantee from the new shareholder of GHN

FINANCIAL STATEMENTS
primarily on the outstanding trade receivables due from GHN of RM48.2 million (which aged more
than 360 days). As the trade receivables were secured by the corporate guarantee, these receivables
were not provided for.

Details of the assets, liabilities and net cash flow arising from the disposal of the subsidiary are as follows:

RM’000

Property, plant and equipment 5,443

Receivables 15,139
Inventories 18,604
Deferred tax assets 665
Cash and cash equivalents 1,490
Payables (61,584) 7
Non-controlling interest (1,165)

Net liabilities disposed (21,408)

Gain on disposal of a subsidiary 29,624

Proceeds from disposal, net of transaction costs 8,216

Less: Cash and cash equivalent in a subsidiary (1,490)

Net cash inflow from disposal of a subsidiary 6,726

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
For The Financial Year Ended 31 December 2019

33. ASSETS AND LIABILITIES HELD FOR SALE (CONTINUED)

(e) The movements during the financial year/period relating to net assets held for sale are as follows:

GROUP COMPANY

31.12.2019 31.12.2018 31.12.2019 31.12.2018

Note RM’000 RM’000 RM’000 RM’000

At 1 January 2019/1 July 2018 103,542 172,971 14 28,504

Change in value of disposal
group (15,652) (48,888) – –
Transfers from/(to):
– property, plant and
equipment 17 100,780 – 68,966 –
– intangible assets 24 3,128 – 3,113 –
– investment property 18 8,377 – – –
– joint ventures 22 393,870 – 256,168 –
– inventories 14,174 390 – –
– trade and other receivables 3,292 – – –
– deferred tax assets 26 6,150 – – –
– trade and other payables (32,101) (1,086) – –
– b
 ank balances, deposits and
cash 1,494 – – –
Disposals (103,120) (22,293) (14) (28,490)
Exchange differences 2,869 2,448 – –

At 31 December 2019/2018 486,803 103,542 328,247 14

34. SHARE CAPITAL

GROUP/COMPANY

Number of shares Amount

31.12.2019 31.12.2018 31.12.2019 31.12.2018

’000 ’000 RM’000 RM’000

Issued and fully paid ordinary shares:

At 1 January 2019/1 July 2018 6,800,839 6,800,839 1,100,000 1,100,000
Shares Issue 83,736 – 406,119 –

At 31 December 2019/2018 6,884,575 6,800,839 1,506,119 1,100,000

The final single tier dividend and special final single tier dividend in respect of the financial year ended 30 June
2018 (“FYE June 2018 Final Dividend”) of RM748.1 million was paid on 7 January 2019, RM406.1 million which
was satisfied by the issuance of 83,735,906 new Sime Darby Plantation Berhad shares pursuant to the Company’s
Dividend Reinvestment Plan (“DRP”) and cash of RM342.0 million.
 Annual Report 2019 PG. 278 – 279

35. RESERVES

Investments
Hedging Capital at FVOCI Exchange Merger Retained
reserve reserve reserve reserve reserve earnings Total
GROUP Note RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

31 December 2019
At 1 January 2019 31,457 9,574 26,419 620,605 (17,696) 11,348,090 12,018,449
Profit for the financial year – – – – – 121,633 121,633
Total other comprehensive

FINANCIAL STATEMENTS
(loss)/income for the
financial year 16 (25,826) – 1,175 86,821 – (10,567) 51,603
Transactions with equity
holders:
– dividends 15 – – – – – (117,038) (117,038)

Continuing operations 5,631 9,574 27,594 707,426 (17,696) 11,342,118 12,074,647

Discontinuing operations 13 – – – 13,402 – (333,195) (319,793)

At 31 December 2019 5,631 9,574 27,594 720,828 (17,696) 11,008,923 11,754,854

31 December 2018
At 1 July 2018 44,949 13,361 25,569 449,658 (17,696) 12,050,571 12,566,412 7
Profit for the financial
period – – – – – 299,636 299,636
Total other comprehensive
(loss)/income for the
financial period 16 (13,492) – 850 155,765 – (1,433) 141,690
Transactions with equity
holders:
– dividends 15 – – – – – (952,117) (952,117)
Disposal of a subsidiary – (3,787) – 2,856 – 4,330 3,399

Continuing operations 31,457 9,574 26,419 608,279 (17,696) 11,400,987 12,059,020

Discontinuing operations 13 – – – 12,326 – (52,897) (40,571)

At 31 December 2018 31,457 9,574 26,419 620,605 (17,696) 11,348,090 12,018,449

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
For The Financial Year Ended 31 December 2019

35. RESERVES (CONTINUED)

Investments
at FVOCI Hedging Retained
reserve reserve earnings Total
COMPANY Note RM’000 RM’000 RM’000 RM’000

31 December 2019
At 1 January 2019 24,644 18,858 7,925,213 7,968,715
Loss for the financial year – – (385,844) (385,844)
Total other comprehensive income/
(loss) for the financial year 16 1,300 (17,990) – (16,690)
Transactions with equity holders:
– dividends 15 – – (117,038) (117,038)

At 31 December 2019 25,944 868 7,422,331 7,449,143

31 December 2018
At 1 July 2018 25,483 26,030 9,076,534 9,128,047
Loss for the financial period – – (199,204) (199,204)
Total other comprehensive loss for
the financial period 16 (839) (7,172) – (8,011)
Transactions with equity holders:
– dividends 15 – – (952,117) (952,117)

At 31 December 2018 24,644 18,858 7,925,213 7,968,715

36. PERPETUAL SUKUK

GROUP/COMPANY

31.12.2019 31.12.2018
RM’000 RM’000

At 1 January 2019/1 July 2018 2,231,398 2,230,717

Profit attributable to Perpetual Sukuk holders 124,300 62,661
Distribution to Perpetual Sukuk holders (124,300) (61,980)

At 31 December 2019/2018 2,231,398 2,231,398

On 23 June 2017, the RM2.2 billion nominal value of Perpetual Subordinated Sukuk (“Perpetual Sukuk”) was
novated by Sime Darby Berhad, the former immediate holding company to the Company. The Perpetual Sukuk
is rated AAIS by the Malaysian Rating Corporation Berhad.
 Annual Report 2019 PG. 280 – 281

36. PERPETUAL SUKUK (CONTINUED)

The Perpetual Sukuk is accounted for as an equity instrument as there is no contractual obligation to redeem
the instrument and pay periodic distribution. The salient features of the Perpetual Sukuk are as follows:

a. Unsecured and is issued under the Islamic principle of Wakalah Bi Al-Istithmar (“Sukuk Wakalah”) where
the Company is to manage a Wakalah portfolio on behalf of the Perpetual Sukuk holders. The Wakalah
portfolio comprises certain assets of the Group (see Note 17(b)(ii)) and investments in commodities in
accordance with the Shariah Principle of Ijarah and Murabahah.

b. Carries an initial fixed periodic distribution rate of 5.65% per annum payable on a semi-annual basis in

FINANCIAL STATEMENTS
arrears. The periodic distribution rate will be reset on 24 March 2026 to the then prevailing 10-year Malaysian
Government Securities (“MGS”) benchmark rate plus 1.75% (“Initial Spread”) and 1.00% (“Step-Up Margin”) at
every 10 year thereafter.

c. No fixed redemption date but the Company has the option to redeem at the end of the tenth year from
the date of issue and on each subsequent semi-annual periodic distribution date.

d. The expected periodic distribution amount may be deferred by the Company to perpetuity as long as no
discretionary dividend distribution or other payment has been declared by the Company in respect of any
of the Company’s ordinary shares.

e. The Company also has the option to redeem the Perpetual Sukuk under the following circumstances:
7
(i) Accounting Event – if the Perpetual Sukuk is or will no longer be recorded as equity as a result of
changes to accounting standards;

(ii) Tax Event – if the Company is or will become obliged to pay additional amount due to changes in
tax laws or regulations;

(iii) Tax Deductibility Event – if distribution made would not be fully deductible for income tax purposes
as a result of changes in tax laws or regulations or changes to official interpretation or pronouncement
that provides for a position with respect to such laws or regulations; and

(iv) Rating Event – if the equity credit is lower than initially assigned to the Perpetual Sukuk as a result of
changes in equity credit criteria, guidelines or methodology of rating agency.

The Perpetual Sukuk holders do not have any voting rights in the Company and rank in priority to holders of
ordinary shares, but subordinated to the claims of present and future creditors of the Company.
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
For The Financial Year Ended 31 December 2019

37. NON-CONTROLLING INTERESTS

The subsidiaries of the Group that have non-controlling interests, which, in the opinion of the Directors, are
material to the Group are as follows:

Proportion of equity
held by owners of
non-controlling interests
(%)
Place of business/
Name of subsidiaries 31.12.2019 31.12.2018 Country of incorporation

Subsidiaries consolidated under

PT Minamas Gemilang:
– PT Kartika Inti Perkasa 40.00 40.00 Indonesia
– PT Sritijaya Abaditama 40.00 40.00 Indonesia
– PT Asricipta Indah 10.00 10.00 Indonesia
– PT Bersama Sejahtera Sakti 8.90 8.90 Indonesia
– PT Laguna Mandiri 11.40 11.40 Indonesia
– PT Indotruba Tengah 50.00 50.00 Indonesia
– PT Tunggal Mitra Plantations 40.00 40.00 Indonesia
– PT Tamaco Graha Krida 10.00 10.00 Indonesia
– PT Bahari Gembira Ria 0.03 0.70 Indonesia
– PT Indo Sukses Lestari Makmur 5.00 5.00 Indonesia

Subsidiaries consolidated under

New Britain Palm Oil Limited:
– PT Timbang Deli Indonesia 51.00 51.00 Indonesia
– Guadalcanal Plains Palm Oil Limited 20.00 20.00 Solomon Islands
– Verdant Bioscience Pte Ltd 48.00 48.00 Singapore
Wangsa Mujur Sdn Bhd 27.50 27.50 Malaysia

There are no significant restrictions on the ability of these subsidiaries to transfer funds to the Group in the
form of cash dividends.

The summarised financial information of the subsidiaries that has non-controlling interests to the Group is based
on amounts before intercompany elimination.
 Annual Report 2019 PG. 282 – 283

37. NON-CONTROLLING INTERESTS (CONTINUED)

Summarised financial information

The summarised statements of comprehensive income and dividends paid by each subsidiary that has non-
controlling interests to the Group are as follows:

Subsidiaries of
Subsidiaries of New Britain Wangsa
PT Minamas Palm Oil Mujur
Gemilang Limited Sdn Bhd Others Total

FINANCIAL STATEMENTS
RM’000 RM’000 RM’000 RM’000 RM’000

For the financial year

ended 31 December 2019
Revenue 3,862,817 1,953,609 45,160 2,002,220 7,863,806

Profit/(loss) for the

financial year 285,235 (154,650) 782 64,158 195,525
Other comprehensive
income 8,814 397 – 24 9,235

Total comprehensive
income/(loss) 294,049 (154,253) 782 64,182 204,760

7
Profit/(loss) allocated to
non-controlling interests 20,898 396 (324) 7,982 28,952

Dividends paid to
non-controlling interests (57,963) – – – (57,963)

For the financial period

ended 31 December 2018
Revenue 2,141,974 1,108,719 24,287 972,779 4,247,759

Profit for the financial

period 55,070 85,267 2,151 4,149 146,637
Other comprehensive
income 3,758 1,668 – 27 5,453

Total comprehensive
income 58,828 86,935 2,151 4,176 152,090

Profit/(loss) allocated to
non-controlling interests 9,801 (1,299) 143 (3,019) 5,626

Dividends paid to
non-controlling interests (22,238) – (1,549) (770) (24,557)
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
For The Financial Year Ended 31 December 2019

37. NON-CONTROLLING INTERESTS (CONTINUED)

Summarised financial information (continued)

The summarised statements of financial position of each subsidiary that has non-controlling interests to the
Group are as follows:

Subsidiaries of
Subsidiaries of New Britain Wangsa
PT Minamas Palm Oil Mujur
Gemilang Limited Sdn Bhd Others Total
RM’000 RM’000 RM’000 RM’000 RM’000

31 December 2019
Non-current assets 5,955,517 4,814,084 261,864 506,705 11,538,170

Current assets 1,697,252 2,393,571 2,110 718,175 4,811,108

Non-current liabilities (1,875,883) (1,205,696) (28,090) (191,158) (3,300,827)

Current liabilities (1,368,636) (1,829,121) (14,185) (498,587) (3,710,529)

Net assets 4,408,250 4,172,838 221,699 535,135 9,337,922

Non-controlling interests’
share of net assets 217,382 59,874 61,205 29,890 368,351

31 December 2018
Non-current assets 5,292,599 4,957,135 244,623 365,728 10,860,085

Current assets 1,976,136 2,088,030 15,812 502,629 4,582,607

Non-current liabilities (1,566,379) (1,458,338) (28,209) (174,783) (3,227,709)

Current liabilities (1,624,735) (1,201,819) (9,347) (357,508) (3,193,409)

Net assets 4,077,621 4,385,008 222,879 336,066 9,021,574

Non-controlling interests’
share of net assets 246,929 65,736 61,529 21,884 396,078
 Annual Report 2019 PG. 284 – 285

37. NON-CONTROLLING INTERESTS (CONTINUED)

Summarised financial information (continued)

The summarised statements of cash flows of each subsidiary that has non-controlling interests that are material
to the Group are as follows:

Subsidiaries of
Subsidiaries of New Britain Wangsa
PT Minamas Palm Oil Mujur
Gemilang Limited Sdn Bhd

FINANCIAL STATEMENTS
RM’000 RM’000 RM’000

For the financial year ended 31 December 2019

Cash flows from operating activities
Cash generated from operations 654,611 387,342 30,906
Tax paid (133,574) (42,541) (245)

Net cash from operating activities 521,037 344,801 30,661

Net cash used in investing activities (460,173) (320,990) (30,950)
Net cash (used in)/generated from financing activities (76,664) (66,695) 1

Net decrease in cash and cash equivalents (15,800) (42,884) (288)

Exchange differences 3,770 (5,631) –
Cash and cash equivalents at beginning of the
financial year 113,433 88,085 506
7
Cash and cash equivalents at end of the financial year 101,403 39,570 218

For the financial period ended 31 December 2018

Cash flows from operating activities
Cash generated from operations 216,018 220,064 21,561
Tax paid (38,100) (82,401) (9)

Net cash from operating activities 177,918 137,663 21,552

Net cash used in investing activities (474,307) (392,803) (13,980)
Net cash generated from/(used in) financing activities 308,176 257,245 (7,300)

Net increase in cash and cash equivalents 11,787 2,105 272

Exchange differences 1,685 18,394 –
Cash and cash equivalents at beginning of the
financial period 99,961 67,586 234

Cash and cash equivalents at end of the financial period 113,433 88,085 506
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
For The Financial Year Ended 31 December 2019

38. RETIREMENT BENEFITS

The Group operates unfunded and funded final salary defined benefit plans for its employees in Malaysia,
Thailand and Netherlands, and funded defined benefit plans for its employees in Indonesia.

The employees in Malaysia are covered under collective agreements with the following unions:

– All Malayan Estates Staff Union (“AMESU”)

– National Union of Commercial Workers (“NUCW”)
– Sabah Plantation Industry Employees Union (“SPIEU”)

Subsidiary companies in Indonesia operate a funded defined benefit scheme for qualified permanent employees
in accordance with Labour Law No. 13 Year 2003.

Subsidiaries in Thailand operate a wholly unfunded defined benefit scheme, in respect of the Statutory Severance
Pay Plan prescribed under Section 118, Chapter 11 of the Labour Protection Act B.E. 2541 (1998).

One of the Group’s subsidiary in Netherlands has a defined benefit scheme for non-active participants only,
managed by Aegon N.V. (“AEGON”). The conditions of the Dutch Pension Act are applicable to the scheme.

The latest actuarial valuations of the plans in Malaysia and Indonesia were carried out on 21 September 2017
and 6 February 2020, respectively.

The movements during the financial year/period in the amounts recognised in the statements of financial position
are as follows:

GROUP COMPANY

31.12.2019 31.12.2018 31.12.2019 31.12.2018

Note RM’000 RM’000 RM’000 RM’000

Non-current

At 1 January 2019/1 July 2018 229,809 213,209 50,306 48,633

Charge for the financial year/period 6(d) 41,805 12,838 7,622 4,262
Actuarial loss recognised in other
comprehensive income 16 15,257 2,100 – –
Contributions and benefits paid (25,242) (2,793) (7,229) (2,589)
Transfers (to)/from current
retirement benefits (7,188) 2,935 – –
Acquisition of a subsidiary 43 – 55 – –
Exchange differences 5,295 1,465 – –

At 31 December 2019/2018 259,736 229,809 50,699 50,306

Current

At 1 January 2019/1 July 2018 7,784 10,485 – –

Transfers from/(to) non-current
retirement benefits 7,188 (2,935) – –
Exchange differences 217 234 – –

At 31 December 2019/2018 15,189 7,784 – –

 Annual Report 2019 PG. 286 – 287

38. RETIREMENT BENEFITS (CONTINUED)

The amounts recognised on the statements of financial position are determined as follows:

GROUP COMPANY

31.12.2019 31.12.2018 31.12.2019 31.12.2018

Note RM’000 RM’000 RM’000 RM’000

Present value of funded obligations 38(a) 193,271 155,071 – –

Fair value of plan assets 38(b) (454,175) (415,651) – –

FINANCIAL STATEMENTS
(260,904) (260,580) – –
Present value of unfunded
obligations 38(a) 535,829 498,173 50,699 50,306

Net liabilities 274,925 237,593 50,699 50,306

The expenses recognised in statements of profit or loss are analysed as follows:

GROUP COMPANY

Financial Financial Financial Financial

year ended period ended year ended period ended
31.12.2019 31.12.2018 31.12.2019 31.12.2018
Note RM’000 RM’000 RM’000 RM’000 7
Current service cost 17,706 7,777 2,925 1,466
Interest cost 23,199 6,907 2,309 1,141
Expected return on plan assets (7,637) (3,792) – –
Contracted gratuity 9,613 2,371 2,388 1,655
Curtailment (1,076) (425) – –

Total included in employee costs 6(d) 41,805 12,838 7,622 4,262

(a) Changes in the present value of defined benefit (funded and unfunded) obligations

GROUP COMPANY

31.12.2019 31.12.2018 31.12.2019 31.12.2018

Note RM’000 RM’000 RM’000 RM’000

At 1 January 2019/1 July 2018 653,244 620,218 50,306 48,633

Current service cost 17,706 7,777 2,925 1,466
Interest cost 23,199 6,907 2,309 1,141
Contracted gratuity 9,613 2,371 2,388 1,655
Curtailment (1,076) (425) – –
Benefits paid (33,979) (7,496) (7,229) (2,589)
Actuarial losses recognised in
other comprehensive income 69,089 16,447 – –
Acquisition of a subsidiary 43 – 55 – –
Exchange differences (8,696) 7,390 – –

At 31 December 2019/2018 729,100 653,244 50,699 50,306

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
For The Financial Year Ended 31 December 2019

38. RETIREMENT BENEFITS (CONTINUED)

(b) Changes in the fair value of plan assets

GROUP

31.12.2019 31.12.2018
RM’000 RM’000

At 1 January 2019/1 July 2018 415,651 396,524

Expected return on plan assets 7,637 3,792
Actuarial gains due to actual experience 53,832 14,347
Benefits paid (8,737) (4,703)
Exchange differences (14,208) 5,691

At 31 December 2019/2018 454,175 415,651

The range of principal assumptions used in respect of the Group’s and the Company’s defined benefit plans
are as follows:

GROUP

31.12.2019 31.12.2018
% %

Expected return on plan assets (per annum) 2.0 – 8.3 1.9 – 8.5
Discount rates (per annum) 1.9 – 8.3 1.9 – 8.3
Expected rate of salary increases (per annum) 1.5 – 6.5 1.5 – 6.5

COMPANY

31.12.2019 31.12.2018
% %

Discount rates (per annum) 5.2 5.2

Expected rate of salary increases (per annum) 6.0 6.0
 Annual Report 2019 PG. 288 – 289

39. BORROWINGS
GROUP COMPANY

31.12.2019 31.12.2018 31.12.2019 31.12.2018

RM’000 RM’000 RM’000 RM’000

Non-current
Unsecured
– term loans 2,709,767 3,032,785 2,466,226 2,814,335
– revolving credits-i 1,601,730 1,495,440 1,601,730 1,495,440
– bonds 459,738 475,405 – –

FINANCIAL STATEMENTS
– multi-currency Sukuk 503,112 508,869 – –
– unamortised deferred financing expenses (18,963) (19,924) (16,118) (17,249)

5,255,384 5,492,575 4,051,838 4,292,526

Current
Secured
– trade facilities 2 – – –

Unsecured
– term loans 957,023 588,106 693,056 532,133
– revolving credits 1,532,518 1,216,233 1,054,556 442,310

2,489,543 1,804,339 1,747,612 974,443 7

Total borrowings 7,744,927 7,296,914 5,799,450 5,266,969

During the financial year, a subsidiary did not meet its loan covenant obligations. As a result, RM132.0 million
has been reclassified from non-current to current liabilities as at 31 December 2019. Subsequent to the financial
year end, the subsidiary has received an unconditional waiver from the financial institution.

In December 2019, the Group has completed the refinancing exercise to improve the Group’s loan maturity
profile and liquidity. The Group repaid in full the USD760 million (RM3.2 billion) term loans that were due with
drawdowns of new facilities from three financial institutions and additional short term facilities of RM800 million.
The refinancing exercise in December 2019 is considered an extinguishment of the previous term loans and
correspondingly, the unamortised transaction costs related to the former loans had been charged to profit and
loss and the transactions cost for the new facilities has been capitalised as at 31 December 2019.

The currency exposure profile is disclosed in Note 49(c)(i).

The breakdown of the unamortised deferred financing expenses is as follows:

GROUP COMPANY

31.12.2019 31.12.2018 31.12.2019 31.12.2018

Note RM’000 RM’000 RM’000 RM’000

At 1 January 2019/1 July 2018 19,924 24,433 17,249 21,191

Drawdown during the financial
year/period 10,644 700 10,437 700
Amortisation/acceleration of
amortisation 10 (11,605) (5,209) (11,568) (4,642)
At 31 December 2019/2018 18,963 19,924 16,118 17,249
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
For The Financial Year Ended 31 December 2019

39. BORROWINGS (CONTINUED)

(a) Term loans

The term loans include the following:

i. RM500 million 5-year unsecured term loan repayable in full 60 months after the first drawdown date
of 26 December 2019.

ii. USD110 million 3-year unsecured term loan repayable over 5 semi-annual instalments starting from the
twelfth month after the first drawdown date of 23 December 2019.

iii. USD260 million 5-year unsecured term loan repayable over 10 semi-annual instalments starting from
the sixth month after the first drawdown date of 20 December 2019.

iv. USD35 million 5-year unsecured term loan repayable in equal quarterly instalments commencing from
the first repayment date of 23 March 2020.

v. USD50 million 3-year unsecured term loan repayable in equal quarterly instalments commencing from
the first repayment date of 23 March 2020.

vi. USD60 million term loan credit facility drawdown on 23 August 2018 repayable commencing from
one month after the first drawndown.

vii. THB432.5 million 10-year unsecured term loan repayable in equal quarterly instalments commencing
from the first repayment date of 1 March 2017.

viii. USD500 million 7-year unsecured multi-currency term loan repayable over eight semi-annual instalments
of 11.125%, commencing 36 months from the first drawdown date of 17 February 2015 and one final
payment of 11% on the final maturity date.

The term loans which have been repaid during the financial year include the following:

i. RM500 million 7-year unsecured term loan repayable over nine semi-annual instalments from 36
months after the first drawdown date of 26 June 2012 was repaid on 26 June 2019.

ii. USD100 million 3-year unsecured term loan repayable in full from 36 months after the first drawdown
date of 22 June 2017 was repaid on 23 December 2019.

iii. USD300 million 3-year unsecured term loan under commodity murabahah financing-i facility repayable
in full from 36 months after the first drawdown date of 22 June 2017 was repaid on 26 December 2019.

(b) Revolving credits

The revolving credits include the following:

i. USD390 million 5 years unsecured term loan under revolving credit-I facility repayable in full from 60
months after the first drawdown date of 19 December 2019.

ii. Facility limit of IDR1 trillion or its equivalent in other currency with availability period within 12 months
from the signing date. The loan agreement has been renewed several times and most recently on 15
January 2019 for the period up to 15 January 2020.

iii. RM350 million mutli-currency revolving credit facility with availability period of up to one year with
annual extension subject to annual review by the bank.

iv. RM190 million multi-currency revolving credit facility with availability period of up to one year with
annual extension subject to annual review by the bank.

v. EUR15 million uncommitted short-term revolving loans facility for period not exceeding 1 month or 3
months with availability period of up to one year with annual extension subject to annual review by
the bank. Outstanding balance as at 31 December 2019 was EUR15 million.
 Annual Report 2019 PG. 290 – 291

39. BORROWINGS (CONTINUED)

(b) Revolving credits (continued)

The revolving credits include the following: (continued)

vi. USD40 million uncommitted short-term revolving loans facility for a period up to one year and
automatically extended for a continuous one year period after each expiry date. Outstanding balance
as at 31 December 2019 was USD40 million.

vii. RM700 million multi-currency revolving credit facility, with first drawdown 16 August 2018. Facility has
a maximum tenure of 5 years.

FINANCIAL STATEMENTS
viii. USD100 million multi-currency revolving time loan facility with first drawdown date 2 July 2018. Tenure
is up to a maximum of 6 month, as may be agreed by the bank from time to time.

ix. USD60 million multi-currency revolving credit facility for advances of 1 week, 1 month, 3 months or 6
months tenor, or any other period agreeable to the bank commencing from the effective date of 12
January 2015. Outstanding balance as at 31 December 2019 was USD38.6 million.

The revolving credit which has been repaid during the financial year include the following:

i. USD360 million 3-year unsecured term loan under revolving credit-i facility repayable at maturity was
repaid on 19 December 2019.

(c) Multi-currency Sukuk

7
On 11 January 2013, Sime Darby Berhad (“SDB”) had established a Multi-currency Sukuk Programme (“Sukuk
Programme”) with a programme limit of USD1,500 million (or its equivalent in other currencies). Sime Darby
Plantation Global Berhad (fka Sime Darby Global Berhad) (“SDP Global”), a subsidiary of SDB is the issuer
of the Sukuk Programme structured under the Shariah Principle of Ijarah, which is a sale and leaseback
arrangement. On 29 January 2013, SDP Global issued two tranches of USD400 million Sukuk each with a
tenure of 60 months (“2018 Sukuk”) and 120 months (“2023 Sukuk”) respectively.

On 18 April 2017, SDB invited eligible sukukholders to tender for its purchase of the outstanding Sukuk (the
“Sukuk Tender Offer”) and to consent to the substitution of the Company in place of SDB in its capacities
as Obligor, Seller and Lessee in respect of both tranches of the Sukuk (hereinafter referred to as “the consent
solicitation”). Pursuant to the Sukuk Tender Offer, SDB has repurchased in part the 2018 Sukuk and 2023
Sukuk in an aggregate principal amount of USD350.4 million and USD277.5 million.

At the meetings of the sukukholders held on 16 May 2017, consents were received for substitution of the
Company to replace SDB. On 23 May 2017, the Company acquired all of the shareholding in SDP Global,
as part of SDB’s corporate restructuring.

On 29 January 2018, the 2018 Sukuk matured and SDP Global paid off the principal amount of USD49.6
million (RM195.6 million) to the sukukholders.
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
For The Financial Year Ended 31 December 2019

39. BORROWINGS (CONTINUED)

(c) Multi-currency Sukuk (continued)

Details of the Sukuk Programme that remains outstanding are as follows:

31 December 2019
Nominal value

At At At Periodic
Tenure 31.12.2018 31.12.2019 31.12.2019 distribution Maturity
Date of issuance (month) RM’000 RM’000 USD’000 (per annum) date

29.01.2013 120 508,869 503,112 122,501 3.29% 29.01.2023

The Sukuk Programme has been accorded ratings of BBB and Baa1 by Fitch Ratings on 1 October 2019
and Moody’s Investors Service on 9 October 2019 respectively.

(d) Other borrowings

The N-bonds amounting to EUR100 million shall be repayable at a nominal amount on 12 August 2030.

For other borrowings, the factoring agreement is entered into with maximum limit of EUR75 million with
availability period of up to 12 months from the signing date, and is renewable for the same period of time,
unless the agreement is terminated by one of the parties.

(e) Other information

(i) The average annual effective interest rates by currency profile of the borrowings, analysed into their
respective currency profiles are as follows:
GROUP

31.12.2019 31.12.2018
% %

Floating interest rates

Term loans
– Ringgit Malaysia 4.51 – 4.55 4.68
– United States Dollar 2.68 – 3.85 2.68 – 3.55
– Thailand Baht 3.34 3.36

Revolving credits
– Ringgit Malaysia 3.60 – 3.93 4.21 – 4.74
– United States Dollar 2.28 - 3.88 2.00 – 4.00
– European Union Euro 0.50 0.50

Trade facilities
– European Union Euro 0.60 –

Fixed interest rates

Bonds
– European Union Euro 2.90 2.90

Distribution rate
Multi–currency Sukuk
– United States Dollar 3.29 3.29
 Annual Report 2019 PG. 292 – 293

39. BORROWINGS (CONTINUED)

(e) Other information (continued)

(ii) The average annual effective interest rates by currency profile of the borrowings, analysed into their
respective currency profiles are as follows: (continued)

COMPANY

31.12.2019 31.12.2018
% %

FINANCIAL STATEMENTS
Floating interest rates
Term loans
– Ringgit Malaysia 4.51 – 4.55 4.68
– United States Dollar 3.01 – 3.55 3.20 – 3.55

Revolving credits
– Ringgit Malaysia 3.60 – 3.93 4.21 – 4.74
– United States Dollar 2.28 – 3.86 2.69 – 3.25

(iii) The maturity periods of borrowings are as follows:

GROUP COMPANY

31.12.2019 31.12.2018 31.12.2019 31.12.2018

7
RM’000 RM’000 RM’000 RM’000

Not later than 1 year 2,489,543 1,804,339 1,747,612 974,443

Later than 1 year but
not later than 2 years 790,651 3,664,114 705,781 3,610,238
Later than 2 years but
not later than 5 years 3,495,236 1,307,517 3,346,057 682,288
More than 5 years 969,497 520,944 – –

7,744,927 7,296,914 5,799,450 5,266,969

The fair values of borrowings approximate their carrying values as the impact of discounting is not
significant. It is estimated based on discounted cash flows using prevailing market rates for borrowings
with similar risk profile and is within Level 2 of the fair value hierarchy.
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
For The Financial Year Ended 31 December 2019

40. LEASE LIABILITIES

GROUP COMPANY

31.12.2019 31.12.2018 31.12.2019 31.12.2018

RM’000 RM’000 RM’000 RM’000

Non-current 162,112 165,433 6,954 7,478

Current 25,163 27,122 1,340 1,919

187,275 192,555 8,294 9,397

Minimum lease payments:

– not later than 1 year 32,839 34,939 1,438 2,491
– later than 1 year and not later
than 5 years 104,246 91,015 3,556 3,812
– later than 5 years 122,951 172,352 6,454 7,553

260,036 298,306 11,448 13,856

Less: unexpired finance charges (72,761) (105,751) (3,154) (4,459)

187,275 192,555 8,294 9,397

Present value of lease liabilities:

– not later than 1 year 25,163 27,122 1,340 1,919
– later than 1 year and not later
than 5 years 76,733 80,398 2,845 1,888
– later than 5 years 85,379 85,035 4,109 5,590

187,275 192,555 8,294 9,397

41. DEFERRED INCOME

GROUP COMPANY

31.12.2019 31.12.2018 31.12.2019 31.12.2018

RM’000 RM’000 RM’000 RM’000

Non-current
Government grant 207 446 – –

Current
Deferred freight income 13,071 28,536 7 42

The government grants are received in relation to the purchase of property, plant and equipment and right-of-
use leasehold land of certain subsidiaries.
 Annual Report 2019 PG. 294 – 295

41. DEFERRED INCOME (CONTINUED)

Significant changes of the deferred freight income during the financial year/period are as follows:

GROUP COMPANY

Financial Financial Financial Financial

year ended period ended year ended period ended
31.12.2019 31.12.2018 31.12.2019 31.12.2018
RM’000 RM’000 RM’000 RM’000

Revenue recognised that was deferred

FINANCIAL STATEMENTS
from previous financial period/year 28,536 19,275 42 36

Consideration received for freight services

that are partially or fully unsatisfied at
the end of the financial year/period 13,071 28,536 7 42

42. TRADE AND OTHER PAYABLES

GROUP COMPANY

31.12.2019 31.12.2018 31.12.2019 31.12.2018

Note RM’000 RM’000 RM’000 RM’000 7
Non-current
Other payables 76,774 62,664 – –
Financial guarantee contracts 42(a) 627 783 58,071 139,939

77,401 63,447 58,071 139,939

Current
Trade payables 528,685 710,434 80,695 98,281
Accruals 364,614 294,921 62,003 98,181
Other payables 263,812 301,364 160,612 59,289
Employee related payables 154,204 106,443 59,478 57,905
Interest payable 43,542 45,470 17,023 22,594
Goods and services tax/
value added tax payable 5,145 7,225 – –
Financial guarantee contracts 42(a) 610 688 7,322 27,317

1,360,612 1,466,545 387,133 363,567

Credit terms for trade payables of the Group and of the Company range from 1 to 90 days (2018: 1 to 90 days).
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
For The Financial Year Ended 31 December 2019

42. TRADE AND OTHER PAYABLES (CONTINUED)

(a) Financial guarantee contracts

The gross financial guarantees provided by the Group and the Company at the end of the financial year/
period are as follows:

GROUP COMPANY

31.12.2019 31.12.2018 31.12.2019 31.12.2018

RM’000 RM’000 RM’000 RM’000

Guarantees in respect of
credit facilities granted to:
– joint ventures 5,717 6,443 5,717 6,443
– subsidiaries – – 874,730 1,167,211
– plasma stakeholders 46,846 45,165 – –

43. ACQUISITIONS

Acquisition of subsidiary in the previous financial period

New Britain Palm Oil Limited (“NBPOL”), a wholly-owned subsidiary of the Company, had on 23 August 2018,
completed the acquisition of a 100% equity interest in Markham Farming Company Limited (“MFCL”) for a total
cash consideration of USD55.0 million (equivalent to approximately RM230.0 million), from Markham Agro Pte.
Ltd. (“MAPL”) pursuant to a Share Sale and Purchase Agreement (“SPA”) entered into between NBPOL and MAPL
on 23 August 2018 (“the Acquisition”).

The valuation of material assets (land, building, plant and machinery) of the subsidiary acquired were carried
out by independent professional firms, to arrive at fair value of identifiable assets and liabilities at the date of
acquisition.

As allowed under MFRS 3 “Business Combinations”, the Group had exercised the option to finalise the purchase
price allocation (“PPA”) within 12-month period from acquisition date. As such, on finalisation of the PPA, there
may be changes in the provisional fair values of the net assets acquired and, consequently the residual goodwill.
The provisional goodwill of RM9.1 million arising from the acquisition consists largely the cost of entry into
coconut oil production, synergies and economies of scale expected from combining the oil palm operations of
the Group and the subsidiary acquired.
 Annual Report 2019 PG. 296 – 297

43. ACQUISITIONS (CONTINUED)

Acquisition of subsidiary (continued)

(a) The provisional fair value of net identifiable assets including residual goodwill recognised in the financial
statements of the Group are as follows:

GROUP

As at
31.12.2018
Note RM’000

FINANCIAL STATEMENTS
Property, plant and equipment 17 244,114
Right-of-use assets 20 82,262
Trade and other receivables 2,219
Inventories 2,039
Cash and cash equivalents 1,521
Retirement benefits 38(a) (55)
Deferred tax liabilities 26 (68,279)
Trade and other payables (8,666)
Borrowings (34,806)

Net assets acquired 220,349

Purchase consideration (229,403)
7
Goodwill 24 (9,054)

The Group has completed the PPA during the current financial year, with no changes being made to the
provisional fair value of net assets acquired and the residual goodwill amount arising from the acquisition.

(b) The cash outflow on the acquisition was as follows:

GROUP

As at
31.12.2018
RM’000

Outflow of cash to acquire subsidiary, net of cash acquired

Cash consideration 229,403
Less: Bank balances acquired (1,521)

Net cash outflow from acquisition of a subsidiary 227,882

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
For The Financial Year Ended 31 December 2019

44. SEGMENT INFORMATION – GROUP

The Company is a globally integrated plantation company which is involved in the entire span of the palm oil
value chain, from upstream to downstream activities, research and development (“R&D”), renewables and
agribusiness. The Group is also involved in rubber and sugar cane plantations, coconut crushing as well as beef
cattle industry.

The management of the Group has determined the operating segments based on information reviewed by the
Group’s Plantation Leadership Committee (“PLC”) which consists of the Group Managing Director (“GMD”), Chief
Financial Officer (“CFO”), Managing Director (Sime Darby Oils), Chief Human Resources Officer, Chief Sustainability
Officer, Chief Strategy & Innovation Officer, Group Secretary, Chief Communication Officer, Group General Counsel,
Chief Integrity & Assurance Officer, Chief Risk Officer, Chief Digital Officer, Chief Operations Services and other
key management personnel for the purposes of allocating resources and assessing performance.

Management separately evaluates the performance of the upstream segment by geographical locations. Although
the Upstream Liberia segment does not meet the quantitative threshold as a reportable segment, the segment
remains closely monitored by the PLC. As at 31 December 2019, the Upstream Liberia segment has been classified
as discontinuing operation, in accordance to MFRS 5 “Non-current Assets Held for Sale and Discontinued
Operations” pursuant to the disposal of the subsidiary as disclosed in Note 13.

The downstream segment is evaluated based on the nature of the products and services, specific expertise and
technologies requirement of individual operating units. These operating units have been reported as a single
segment as the disaggregation does not meet the quantitative thresholds for separate disclosures, and may
exceed the practical limit of a reportable segment. The other business activities of the Group are excluded from
the reportable operating segments as they are individually insignificant.

Segments comprise:
Upstream Malaysia developing, cultivating and managing oil palm and rubber plantation estates and
milling of fresh fruit bunches ("FFB") into crude palm oil ("CPO") and palm kernel
("PK"), processing and sales of rubber

Upstream Indonesia developing, cultivating and managing oil palm plantation estates and milling of
FFB into CPO and PK

Upstream Papua New developing, cultivating and managing oil palm and sugar cane plantation estates;
Guinea and Solomon milling of FFB into CPO and PK, processing and sales sugar cane, cocounut oil,
Islands ("PNG/SI") cattle rearing and beef production

Downstream crushing of PK to crude palm kernel oil (“CPKO”) and palm kernel expeller (“PKE”);
production and sales of refined oils and fats (which includes specialty and end-user
oils and fats); production and sales of coconut oils; and production and sales of
biodiesel products and derivatives

Other operations other operations including trading of agricultural products and services, production
and/or sale of oil palm seeds and seedlings, sales of oleochemical products, research
and breeding programmes of oil palm and rubber with special focus on genome
science; and renewables business with a focus on development of green technology
and renewable energy which includes bio-based chemicals, biogas and composting

Note:

(i) FFB, being the oil palm fruits which grow in bunches on oil palm trees, from which CPO and PK are
obtained.
(ii) CPO, which is the oil extracted from the fibrous outer layer (mesocarp) of the oil palm fruit.

Transactions between segments are carried out on agreed terms between both parties. The effects of such
inter-segment transactions are eliminated on consolidation.
44. SEGMENT INFORMATION – GROUP (CONTINUED)
(a) Segment results
Continuing operations

Inter-
Upstream Upstream Upstream Other segment Discontinuing
Malaysia Indonesia PNG/SI Downstream operations elimination Total operations Total
Note RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

For the financial year ended

31 December 2019
Segment revenue
External 793,364 865,114 836,742 9,512,374 54,672 – 12,062,266 51,790 12,114,056
Inter-segment 2,275,669 833,804 439,067 81,699 288,437 (3,918,676) – – –

3,069,033 1,698,918 1,275,809 9,594,073 343,109 (3,918,676) 12,062,266 51,790 12,114,056

Segment results
Operating profit/(loss) 155,246 196,202 (239,075) 283,850 8,009 – 404,232 (325,854) 78,378
Share of results of joint ventures and
associates – – – – 1,654 – 1,654 4,061 5,715

Profit/(loss) before interest and tax 155,246 196,202 (239,075) 283,850 9,663 – 405,886 (321,793) 84,093
Finance income 1,988 6,858 – 3,525 604 – 12,975 – 12,975
Finance costs (127,115) – – (10,099) (30,331) – (167,545) – (167,545)

Profit/(loss) before tax 30,119 203,060 (239,075) 277,276 (20,064) – 251,316 (321,793) (70,477)
Tax credit/(expense) 5,047 2,744 70,362 (27,941) (26,643) – 23,569 – 23,569

Profit/(loss) for the financial year 35,166 205,804 (168,713) 249,335 (46,707) – 274,885 (321,793) (46,908)

Included in the operating (profit)/loss are:

Depreciation and amortisation 6(a), 372,481 229,020 470,036 114,361 20,115 – 1,206,013 19,726 1,225,739
13(b)
Impairment losses of property, plant and
equipment, right-of-use assets, trade and
other receivables, advances for plasma 6(e),
Annual Report 2019

plantation projects and joint venture 13(b) 27,501 3,545 2 9,776 19,610 – 60,434 243,610 304,044
Reversal of impairment losses of trade and
other receivables and advances for plasma
plantation projects 7 (3) (2,130) (1,086) (17,206) (14) – (20,439) – (20,439)
Gains on disposals of property, plant and
equipment and non-current assets held
PG. 298 – 299

for sale 7 (58,716) (11,926) (911) (8,586) – – (80,139) – (80,139)

7

FINANCIAL STATEMENTS
44. SEGMENT INFORMATION – GROUP (CONTINUED)
(a) Segment results (continued)
Continuing operations

Inter-
Upstream Upstream Upstream Other segment Discontinuing
Malaysia Indonesia PNG/SI Downstream operations elimination Total operations Total
Note RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

For the financial period ended

31 December 2018
Segment revenue
External 483,185 468,626 584,225 4,952,723 29,562 – 6,518,321 24,227 6,542,548
Inter-segment 1,306,657 654,466 213,490 2,125,135 144,872 (4,444,620) – – –

1,789,842 1,123,092 797,715 7,077,858 174,434 (4,444,620) 6,518,321 24,227 6,542,548

Segment results
For The Financial Year Ended 31 December 2019

Operating profit/(loss) 301,367 67,880 56,629 176,270 10,748 – 612,894 (57,494) 555,400
Share of results of joint ventures and
associates – – – – 1,793 – 1,793 1,366 3,159
Profit/(loss) before interest and tax 301,367 67,880 56,629 176,270 12,541 – 614,687 (56,128) 558,559
Finance income 1,790 4,100 46 2,262 275 – 8,473 – 8,473
Finance costs (80,463) (1,349) (4,171) (8,627) (15,375) – (109,985) – (109,985)
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

Profit/(loss) before tax 222,694 70,631 52,504 169,905 (2,559) – 513,175 (56,128) 457,047
Tax expense (44,063) (58,740) (14,550) (26,249) (1,650) – (145,252) – (145,252)

Profit/(loss) for the financial period 178,631 11,891 37,954 143,656 (4,209) – 367,923 (56,128) 311,795

Included in the operating (profit)/loss are:

Depreciation and amortisation 6(a), 176,433 110,268 245,195 56,961 9,751 – 598,608 10,497 609,105
13(b)
Impairment losses of property, plant and
equipment, trade and other receivables and 6(e),
advances for plasma plantation projects 13(b) 4,259 5,220 2,926 2,772 – – 15,177 14,539 29,716
Reversal of impairment losses of trade and
other receivables and advances for plasma
plantation projects 7 (2,208) (315) (2,312) (2,978) – – (7,813) – (7,813)
Gains on disposals of property, plant and
equipment and non-current assets
held for sale 7 (50,721) (474) (107) (30,345) – – (81,647) – (81,647)
44. SEGMENT INFORMATION – GROUP (CONTINUED)

(b) Segment assets and liabilities and additions to non-current assets

Continuing operations
Inter-
Upstream Upstream Upstream Other segment Discontinuing
Malaysia Indonesia PNG/SI Downstream operations elimination Total operations Total
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
31 December 2019
Segment assets
Operating assets 9,400,590 4,860,256 7,877,568 4,263,085 223,394 – 26,624,893 – 26,624,893
Joint ventures and associates – – – – 73,907 – 73,907 – 73,907
Non-current assets held for sale 69,059 – 43,909 – – – 112,968 409,570 522,538
9,469,649 4,860,256 7,921,477 4,263,085 297,301 – 26,811,768 409,570 27,221,338

Segment liabilities
Liabilities 660,775 287,839 81,657 878,896 66,951 – 1,976,118 – 1,976,118
Liabilities directly associated with non-current
assets held for sale – 3,507 31,804 – – – 35,311 424 35,735
660,775 291,346 113,461 878,896 66,951 – 2,011,429 424 2,011,853

Additions to non-current assets are as follows:

Capital expenditure 681,517 603,562 230,640 244,406 23,552 – 1,783,677 – 1,783,677

31 December 2018
Segment assets
Operating assets 9,168,113 4,268,847 8,164,513 4,625,821 263,354 – 26,490,648 287,798 26,778,446
Joint ventures and associates – – – – 72,663 – 72,663 415,820 488,483
Non-current assets held for sale 14 124,587 – 74 – – 124,675 – 124,675
9,168,127 4,393,434 8,164,513 4,625,895 336,017 – 26,687,986 703,618 27,391,604

Segment liabilities
Liabilities 1,294,130 576,159 241,694 395,549 86,178 – 2,593,710 33,167 2,626,877
Annual Report 2019

Liabilities directly associated with non-current

assets held for sale – 21,133 – – – – 21,133 – 21,133
1,294,130 597,292 241,694 395,549 86,178 – 2,614,843 33,167 2,648,010

Additions to non-current assets are as follows:

PG. 300 – 301

Capital expenditure 369,792 262,412 141,576 52,321 14,921 – 841,022 2,553 843,575
7

FINANCIAL STATEMENTS
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
For The Financial Year Ended 31 December 2019

44. SEGMENT INFORMATION – GROUP (CONTINUED)

(b) Segment assets and liabilities and additions to non-current assets (continued)

Capital expenditure consists of the following:

Continuing Discontinuing
operations operations Total
RM’000 RM’000 RM’000

For the financial year 31 December 2019

Property, plant and equipment 1,734,427 – 1,734,427
Right-of-use assets 42,615 – 42,615
Intangible assets other than goodwill 6,635 – 6,635

1,783,677 – 1,783,677

For the financial period 31 December 2018

Property, plant and equipment 829,079 2,553 831,632
Right-of-use assets 8,439 – 8,439
Intangible assets other than goodwill 3,504 – 3,504

841,022 2,553 843,575

Reconciliations of segment assets and liabilities to total assets and total liabilities are as follows:

31.12.2019 31.12.2018
RM’000 RM’000

Assets:
Segment total 27,221,338 27,391,604
Tax assets 1,286,384 1,234,698

28,507,722 28,626,302

Liabilities:
Segment total 2,011,853 2,648,010
Tax liabilities 2,702,945 2,742,898
Borrowings 7,744,927 7,296,914
Lease liabilities 187,275 192,555

12,647,000 12,880,377
 Annual Report 2019 PG. 302 – 303

44. SEGMENT INFORMATION – GROUP (CONTINUED)

(c) Segment by geography

Revenue by location of customers is analysed as follows:

Financial Financial
year ended period ended
31.12.2019 31.12.2018
RM’000 RM’000

Malaysia 3,045,208 1,495,248

FINANCIAL STATEMENTS
Europe 2,547,424 1,227,976
India 1,967,517 1,489,702
Indonesia 954,724 447,252
Thailand 1,059,900 544,604
Other countries in South East Asia 107,648 184,178
South Africa 541,545 282,666
Papua New Guinea and Solomon Islands 283,021 245,587
China 545,415 106,163
Other countries (which are individually insignificant) 1,009,864 494,945

12,062,266 6,518,321

Non-current assets, other than financial instruments and tax assets, by location of the Group’s operations 7
are analysed as follows:

31.12.2019 31.12.2018
RM’000 RM’000

Malaysia 11,807,354 11,997,659

Indonesia 3,971,981 3,546,698
Papua New Guinea and Solomon Islands 5,739,975 5,996,536
Thailand 289,151 274,080
China 27,052 23,911
Europe 533,594 536,994
Liberia – 251,332
South Africa 12,482 12,577

22,381,589 22,639,787

Reconciliations of non-current assets, other than financial instruments and tax assets to the total non-current
assets are as follows:

31.12.2019 31.12.2018
RM’000 RM’000

Non-current assets other than financial instruments and tax assets 22,381,589 22,639,787
Investments at FVOCI 30,469 29,294
Deferred tax assets 640,094 508,991
Tax recoverable 333,674 290,412
Receivables 155,741 115,122

23,541,567 23,583,606

The Group’s operations are diverse in terms of the range of products and services it offers and the geographical
coverage. There is no single customer that contributed 10% or more to the Group’s revenue
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
For The Financial Year Ended 31 December 2019

45. CONTINGENT LIABILITIES

Other than those disclosed in Note 47, there are no significant contingent liabilities as at the financial year/
period end.

46. COMMITMENTS
(a) Capital commitments
GROUP COMPANY

31.12.2019 31.12.2018 31.12.2019 31.12.2018

RM’000 RM’000 RM’000 RM’000

Authorised capital expenditure not

provided for in the financial
statements:
Contracted
– property, plant and equipment 330,994 330,636 88,190 105,403
Not contracted
– bearer plants 768,000 681,400 264,526 255,903
– property, plant and equipment 175,444 68,924 104,833 119,281

1,274,438 1,080,960 457,549 480,587

(b) Plasma plantation

The Group is committed to develop a total of 53,381 (2018: 56,722) hectares of oil palm plantation for plasma
farmers in Indonesia. A total of 43,558 (2018: 47,004) hectares have been developed of which approximately
37,054 (2018: 37,113) hectares have been transferred/handed over to plasma farmers.

47. MATERIAL LITIGATION

Material litigation against the Group are as follows:

(a) PT Sajang Heulang (“PT SHE”) vs. PT Anzawara Satria (“PT AS”)

On 23 April 2014, PT SHE filed a claim at the District Court of Batulicin against PT AS for the sum of
IDR672.8 billion (equivalent to around RM198.4 million) for damages caused by PT AS in executing the
Supreme Court Decision which ordered PT SHE to surrender 2,000 hectares of land in Desa Bunati forming
part of HGU 35 to PT AS.

On 20 January 2015, the District Court of Batulicin decided in favour of PT SHE and awarded damages in
the sum of IDR69.9 billion (equivalent to around RM20.6 million) to be paid by PT AS, but on appeal on
19 November 2015, the Banjarmasin High Court ruled in favour of PT AS.

On 22 February 2016, PT SHE filed an appeal to the Supreme Court against the decision of the Banjarmasin
High Court but the Supreme Court rejected PT SHE’s appeal. Following that, on 5 March 2018, PT SHE filed
a judicial review against the decision of the Supreme Court. On 9 July 2019, PT SHE received the official
notice of the Supreme Court rejecting PT SHE’s judicial review application.

In February 2018, PT SHE received a copy of a notice from the Provincial Land Office in Kalimantan Selatan
dated 3 January 2018 addressed to the Central Land Office in Jakarta on an application to annul PT SHE’s
HGU 35. PT SHE has filed a written objection to the Central Land Office in Jakarta in respect of the said
application. PT SHE received written notification from BPN that part of PT SHE’s HGU 35 measuring
approximately 1,580 Ha has been annulled. After having further assessed and considered the matter, PT
SHE has since decided not to pursue the matter. Such annulment does not have a material impact on the
Group as substantial impairments have been made in the Group’s financial statements.
 Annual Report 2019 PG. 304 – 305

47. MATERIAL LITIGATION (CONTINUED)

Material litigation against the Group are as follows: (continued)

(b) New Britain Palm Oil Limited (“NBPOL”) vs. Masile Incorporated Land Group (“Masile”), Rikau Incorporated
Land Group (“Rikau”) & Meloks Incorporated Land Group (“Meloks”) (collectively, “Defendants”)

NBPOL, a wholly-owned subsidiary of the Company, had on 31 August 2011 initiated 3 separate legal actions
against the Defendants in the National Court of Justice at Waigani, Papua New Guinea (Court). All 3 actions
relate to the same cause of action whereby the Defendants had defaulted in their obligations to surrender
their Special Agricultural Business Leases (SABL) to NBPOL for registration of the sub-leases despite having

FINANCIAL STATEMENTS
received benefits from NBPOL under the sub-lease agreements (SLA). Such benefits received by the Defendants
include rental paid by NBPOL for 3,720 Ha of land under the SABL (Land), royalties for the FFB harvested
from the Land, and 31,250 ordinary shares in NBPOL respectively issued to each of the Defendants.

On 25 June 2018, the Court rendered its decision on NBPOL’s claims against Meloks in NBPOL’s favour. In
its decision, the Court declared the SLA entered into between NBPOL and Meloks to be valid and an order
of specific performance was made against Meloks to deliver the SABL to NBPOL and to do all acts and
things necessary to enable NBPOL to register the SLA entered into between NBPOL and Meloks. On 10
October 2018, Meloks surrendered the SABL to NBPOL. However, in view that Meloks had laminated the
SABL, Meloks had to execute an application for the official copy of the SABL which NBPOL will lodge with
the registrar of titles together with NBPOL’s application for registration of the SLA.

Masile and Rikau were considering whether to continue defending against NBPOL’s claims in view of the 7
Court’s decision on the trial relating to NBPOL’s claims against Meloks or to conclude on the same basis
as Meloks given that the facts, issues and evidences are similar. However, Masile and Rikau have been
unable to come to a decision and therefore NBPOL decided to proceed with trial in respect of the claims
against Rikau and Masile. The matter has been adjourned to a date to be fixed as Masile and Rikau have
engaged a new lawyer.

(c) PT Mulia Agro Persada (“PT MAP”) and PT Palma Sejahtera (“PT PS”) vs. PT Minamas Gemilang (“PT MGG”),
PT Anugerah Sumbermakmur (“PT ASM”) and PT Indotruba Tengah (“PT ITH”)

PT MGG and PT ASM, both indirect wholly-owned subsidiaries of the Company, and PT ITH, a 50%-owned
subsidiary of the SDP Group, are involved in a lawsuit brought by Yayasan Kartika Eka Paksi (YKEP) against
PT MAP, PT PS and others. PT MGG and PT ASM are shareholders of PT ITH, each holding 25% equity
interest. YKEP holds the remaining 50% share in PT ITH.

YKEP sold and transferred its shares in PT ITH to PT MAP in December 2008 but thereafter YKEP filed a
lawsuit to invalidate and nullify the transfer of shares as it is against law and regulations. The purchase of
shares in PT ITH by PT MAP was funded by PT PS. Subsequently, on 31 May 2016, the Supreme Court
decided the Judicial Review (1st Judicial Review Decision) application by Darsono CS (ex-officer of YKEP)
in favour of YKEP. This decision reinforced the earlier District Court decision which had invalidated and
nullified the transfer of the ordinary shares of PT ITH from YKEP to PT MAP.

In that regard, YKEP then filed a petition at the Central Jakarta District Court to execute the 1st Judicial
Review Decision, demanding that (i) the 6,200 ordinary shares in PT ITH be returned to YKEP and
(ii) PT MAP and the former officers of YKEP to pay compensation for damages to YKEP in the amount of
IDR200.0 billion (equivalent to around RM59.0 million). YKEP’s petition was granted under a Warning Letter
(Surat Aanmaning) issued by the Central Jakarta District Court which obligates PT MAP and the former
officers of YKEP to comply with the 1st Judicial Review Decision.
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
For The Financial Year Ended 31 December 2019

47. MATERIAL LITIGATION (CONTINUED)

Material litigation against the Group are as follows: (continued)

(c) PT Mulia Agro Persada (“PT MAP”) and PT Palma Sejahtera (“PT PS”) vs. PT Minamas Gemilang (“PT MGG”),
PT Anugerah Sumbermakmur (“PT ASM”) and PT Indotruba Tengah (“PT ITH”) (continued)

In response, the former officers of YKEP (some of them were represented by their heirs) filed a Third Party
Opposition Suit (Gugatan Perlawan) registered under case number 537/PDT.PLW/2017/PN.Jkt.Pst dated 18
October 2017, seeking nullification towards both the Warning Letter (Surat Amaran) issued by the Central
Jakarta District Court and the execution of the 1st Judicial Review Decision, on the basis that (i) the 6,200
ordinary shares in PT ITH are currently owned by YKEP; (ii) YKEP has also received dividends as a shareholder
of PT ITH; and (iii) there are conflicting decisions on the matter of legality of transfer of the 6,200 shares in
PT ITH between (i) the 1st Judicial Review Decision No. 196 PK/Pdt/2016, which nullified such transfer of shares,
and (ii) the Decision of East Jakarta District Court No. 130/Pdt.G/2015/PN.Jkt.tim dated 7 July 2015 (Decision
of East Jakarta District Court), which declared the transfer of 6,200 ordinary shares in PT ITH from YKEP to
PT MAP as legally valid. However, neither YKEP, PT ITH, PT MGG nor PT ASM were included as parties under
the Decision of East Jakarta District Court. On 12 April 2018, the Central Jakarta District Court rejected the
Third Party Opposition Suit (Gugatan Perlawanan) by the former officers of YKEP. The former officers of YKEP
then filed an appeal at the Jakarta High Court against the decision of the Central Jakarta District Court. On
4 March 2019, PT ITH was notified that the former officers’ appeal was rejected by the Jakarta High Court.

Despite the 1st Judicial Review Decision, PT MAP and PT PS still filed a lawsuit at the South Jakarta District
Court seeking compensation from the defendants (and a number of individuals), individually or jointly and
severally, namely PT ITH, PT MGG, PT ASM and YKEP. The compensation sought by PT MAP and PT PS
comprised of: (i) material damages (direct loss) in the amount of IDR247.0 billion (equivalent to around
RM69.4 million) with an interest of 3% per month of the amount of IDR137.2 billion (equivalent to around
RM38.5 million) until the payment is made to PT MAP and PT PS; (ii) fine (dwangsom) in the amount of
IDR250 billion (equivalent to around RM70.2 million); and (iii) immaterial damages (indirect loss) in the
amount of IDR500 billion (equivalent to around RM140.4 million). The potential exposure of PT MGG, PT
ASM and PT ITH could be up to IDR997.0 billion (equivalent to around RM280.0 million), being the total
sum of the above material damages (excluding the 3% interest), fine and immaterial damages claimed by
PT MAP and PT PS from all the 11 defendants, individually or jointly and severally. The term “individually or
jointly and severally” means that one or more defendants can be pursued to pay all amounts demanded.
In other words, PT MAP and PT PS may recover all the damages from any of the defendants regardless of
their individual share of the liability.

To that extent, the South Jakarta District Court and the Jakarta High Court, which previously adjudicated and
examined this case, rejected PT MAP and PT PS’s lawsuit. In response, PT MAP and PT PS filed an appeal to
the Supreme Court which was subsequently rejected. PT MAP and PT PS then filed a judicial review (Jakarta
Selatan Judicial Review) in the Supreme Court against the Supreme Court’s decision. As at the reporting date,
parties are awaiting the official decision of the Jakarta Selatan Judicial Review by the Supreme Court.

Separately, PT PS filed a judicial review in the Supreme Court against the 1st Judicial Review. As at the
reporting date, the matter is still before the Supreme Court.

(d) Chantico Ship Management Ltd (“Chantico”) vs. Sime Darby Oils Zwijndrecht Refinery B.V. (fka Sime Darby
Unimills B.V.) (“SDOZR”)

SDOZR, an indirect wholly-owned subsidiary of the Company, is involved in litigation in respect of a vessel
known as the mv Geraki (fka mv Cap Thanos). This vessel was carrying vegetable oils for 9 different cargo
owners (7 European cargo owners including SDOZR, and 2 Algerian cargo owners). One of the 9 cargo
owners is SDOZR. The percentage of SDOZR’s cargo on board was about 14.4%. The vessel was auctioned
and in April 2011 sold to Chantico. All cargo were eventually discharged in April/May 2013. Beginning in
2012, Chantico started various proceedings against the cargo owners.
 Annual Report 2019 PG. 306 – 307

47. MATERIAL LITIGATION (CONTINUED)

Material litigation against the Group are as follows: (continued)

(d) Chantico Ship Management Ltd (“Chantico”) vs. Sime Darby Oils Zwijndrecht Refinery B.V. (fka Sime Darby
Unimills B.V.) (“SDOZR”) (continued)

The following 2 lawsuits are still pending:

(i) Proceedings before the Court of Piraeus which started in October 2014 (“Lawsuit 1”)

The claims by Chantico are based on alleged actions in tort (i.e. alleged delay of discharge of cargo)

FINANCIAL STATEMENTS
and the current total amount claimed from all 9 cargo owners, jointly and severally, is EUR6 million
(approximately RM27.6 million). The hearing for Lawsuit 1 concluded on 25 September 2018.

(ii) Proceedings before the Court of Piraeus which started in December 2015 (“Lawsuit 2”)

The claim in these proceedings is based on the alleged damage to the vessel and loss of profit caused
by the alleged actions in tort during transshipment and heating of the cargo. The claim against the
9 cargo owners and the third party, jointly and severally, amounts to EUR9.3 million (approximately
RM42.8 million) and an additional claim was filed against all cargo owners, jointly and severally, of
EUR380,000 (approximately RM1.7 million) for port and anchorage dues. The hearing for Lawsuit 2
concluded on 25 September 2018.

SDOZR is waiting for the court judgement to be rendered on both of the above cases. SDOZR’s Greek 7
lawyer estimates the exposure of SDOZR (and all of the other 8 cargo owners, jointly and severally) at EUR2.1
million (approximately RM9.7 million) for Lawsuit 1 and EUR145,000 (approximately RM0.7 million) for Lawsuit
2, all amounts inclusive of interest. As at this juncture, adequate provision has been made.

(e) Sime Darby Plantation Berhad (“SDP”) v. Pengarah Tanah dan Galian Negeri Melaka, Pentadbir Tanah
Daerah Jasin, Kerajaan Negeri Melaka and GI A Resources Sdn Bhd (“GI A”) (collectively “the Respondents”)

On 29 April 2019, SDP commenced a Judicial Review proceeding in the Melaka High Court against the
Respondents for wrongfully initiating compulsory acquisition of SDP’s land measuring 185.5 acres held under
Lot 7498, GRN 49371, Mukim Merlimau, District Jasin, State of Melaka which forms part of SDP’s Kempas
Estate (“JR”).

SDP is seeking, among others, the orders of certiorari1 and mandamus2 to nullify the compulsory acquisition,
and a declaratory relief that the Land Acquisition Act 1960 cannot be abused to compulsorily acquire land
belonging to SDP for the benefit of a foreign owned company, GI A.

On 23 May 2019, the Melaka High Court granted SDP leave to commence JR, among others, to declare
the compulsory acquisition of its land as wrongful and void.

The High Court has also granted a stay of all further proceedings in the land acquisition. Consequently, the
land shall remain in SDP until final disposal of the JR. On 26 June 2019, GI A filed an appeal against the
High Court’s decision.

Parties negotiated for out of court settlement and are currently finalising the settlement terms. Pending
settlement, all court proceedings have been stayed.

1
Certiorari is an order of court to quash the legal effect of a decision.
2
Mandamus is a command issued by the court asking an authority to perform a public duty imposed
upon it by law.
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
For The Financial Year Ended 31 December 2019

48. DISCLOSURES OF SIGNIFICANT RELATED PARTY TRANSACTIONS

The immediate and ultimate holding companies of the Company are Permodalan Nasional Berhad (“PNB”) and
Yayasan Pelaburan Bumiputra (“YPB”), which are incorporated in Malaysia.

Transactions entered into for the respective financial year/period under review, with companies in which PNB
and YPB have significant interest, include the sales and purchases of goods and services.

These related party transactions were entered into in the ordinary course of business on negotiated trade terms
and conditions and do not require the approval of shareholders.

In addition to related party disclosures mentioned elsewhere in the financial statements, set out below are other
significant related party transactions and balances:

GROUP COMPANY

Financial Financial Financial Financial

year ended period ended year ended period ended
31.12.2019 31.12.2018 31.12.2019 31.12.2018
RM’000 RM’000 RM’000 RM’000

(a) Transactions with joint ventures

(i) Sale of goods and tolling services
 mery Oleochemicals (M)
– E
Sdn Bhd 50,917 16,618 50,390 15,957
– R
 izhao Sime Darby Oils & Fats
Co. Ltd. 33,758 19,268 14 –

(b) Transactions with associates

(i) Purchase of latex concentrate
– Thai Eastern Trat Co., Ltd. 36,904 29,989 – –

(c) Transactions with subsidiaries

(i) Sales of goods
– S
 ime Darby Oils Trading
(Labuan) Limited – – 941,320 423,946
– S
 ime Darby Oils Trading
Sdn Bhd – – – 834
 ime Darby Oils Biodiesel
– S
Sdn Bhd – – 152,226 63,721
– S
 ime Darby Oils Zwijndrecht
Refinery B.V. – – 4,320 39,108
– S
 ime Darby Oils Professional
Sdn Bhd (fka Sime Darby
Foods & Beverages Marketing
Sdn Bhd) – – 74,597 35,899
– S
 ime Darby Oils Pasir Gudang
Sdn Bhd – – 72,480 41,402
 he China Engineers (Malaysia)
– T
Sdn Bhd – – 43,282 17,234
– S
 ime Darby Oils South Africa
(Pty) Ltd. – – 14,558 7,143
 Annual Report 2019 PG. 308 – 309

48. DISCLOSURES OF SIGNIFICANT RELATED PARTY TRANSACTIONS (CONTINUED)

In addition to related party disclosures mentioned elsewhere in the financial statements, set out below are other
significant related party transactions and balances: (continued)

GROUP COMPANY

Financial Financial Financial Financial

year ended period ended year ended period ended
31.12.2019 31.12.2018 31.12.2019 31.12.2018
RM’000 RM’000 RM’000 RM’000

FINANCIAL STATEMENTS
(c) Transactions with subsidiaries
(continued)
(ii) Research expenses
– S
 ime Darby Technology Centre
Sdn Bhd – – 27,745 14,594
– S
 ime Darby Plantation
  Research Sdn Bhd – – 58,568 33,482

(iii) Commission on purchase of FFB

and sale of palm products
– S
 ime Darby Oils Trading
Sdn Bhd – – 33,805 18,506

(iv) Management fees income

7
– S
 ime Darby Plantation (Sabah)
Sdn Bhd – – 13,688 6,843

(v) Interest income/(expenses)

– G
 uthrie Industries Malaysia
Sendirian Berhad – – 1,357 4,313
– Mulligan International B.V. – – 5,790 2,814
– S
 ime Darby Plantation Global
Berhad (fka Sime Darby
Global Berhad) – – (16,669) (8,291)

(vi) Purchases of goods

– T
 he China Engineers (Malaysia)
Sdn Bhd – – 57,043 61,362
– S
 ime Darby Plantation Agri-Bio
Sdn Bhd (fka Sime Darby
Agri-Bio Sdn Bhd) – – 106,593 49,658
– S
 ime Darby Oils Bintulu Sdn
Bhd – – 26,792 38,318
 ime Darby Oils Trading
– S
Sdn Bhd – – – 14,212
– Sanguine (Malaysia) Sdn Bhd – – 4,727 2,799
– PT Aneka Inti Persada – – – 6,406
– PT Teguh Sempurna – – – 12,793
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
For The Financial Year Ended 31 December 2019

48. DISCLOSURES OF SIGNIFICANT RELATED PARTY TRANSACTIONS (CONTINUED)

In addition to related party disclosures mentioned elsewhere in the financial statements, set out below are other
significant related party transactions and balances: (continued)

GROUP COMPANY

Financial Financial Financial Financial

year ended period ended year ended period ended
31.12.2019 31.12.2018 31.12.2019 31.12.2018
RM’000 RM’000 RM’000 RM’000

(c) Transactions with subsidiaries

(continued)
(vii) Capital contribution to
subsidiaries/(repayment of
capital contribution)
– S
 ime Darby Plantation (Liberia)
Inc. – – 63,081 23,214
– S
 ime Darby Oils Zwijndrecht
Refinergy B.V. – – (161,653) –
– S
 ime Darby Plantation (Europe)
Ltd – – – (51,120)

(viii) Advances to subsidiaries

 ime Darby Oils Trading
– S
(Labuan) Limited – – 41,945 61,774
– T
 he China Engineers (Malaysia)
Sdn Bhd – – 4,420 –

(ix) Repayment of advances to a

subsidiary
 ime Darby Oils Trading
– S
(Labuan) Limited – – 77,333 –

(x) Purchase of compost plant

– S
 ime Darby Plantation Agri-Bio
Sdn Bhd – – – 10,446

(xi) Sales of property, plant and

equipment
 ime Darby Plantation
– S
(Sarawak) Sdn Bhd – – 4,387 –
– S
 ime Darby Plantation (Sabah)
Sdn Bhd – – 3,704 –
 Annual Report 2019 PG. 310 – 311

48. DISCLOSURES OF SIGNIFICANT RELATED PARTY TRANSACTIONS (CONTINUED)

In addition to related party disclosures mentioned elsewhere in the financial statements, set out below are other
significant related party transactions and balances: (continued)

(d) Transactions with related parties

PNB and the funds managed by its subsidiary, Amanah Saham Nasional Berhad, together owns 56.49% as
at 31 December 2019 (2018: 55.93%) of the issued share capital of the Company. PNB is an entity controlled
by the Malaysian Government through YPB. The Group considers that, for the purpose of MFRS 124 “Related
Party Disclosures”, the Malaysian Government are in the position to exercise significant influence over it. As

FINANCIAL STATEMENTS
a result, the Malaysian Government and Malaysian Government’s controlled bodies (collectively referred to
as government related entities) are related parties of the Group and of the Company.

Transactions entered into during the financial year/period include the following:

GROUP COMPANY

Financial Financial Financial Financial

year ended period ended year ended period ended
31.12.2019 31.12.2018 31.12.2019 31.12.2018
RM’000 RM’000 RM’000 RM’000

Transactions with related parties

(i) Payroll, accounting and IT
7
processing costs
– DXC Technology Sdn Bhd
(fka Sime Darby Global Services
Centre Sdn Bhd) 27,094 32,628 13,274 12,062

(ii) Purchase of heavy equipment,

spare parts and services
– Sime Darby Industrial Sdn Bhd 24,633 25,311 6,385 11,364
– Sime Kubota Sdn Bhd 1,474 13,584 3,730 12,608

(iii) Foreign currency payment

arrangement
– Hastings Deering (PNG) Limited 124,225 48,957 – –

Transactions with associate

(i) Corporate social responsibility
donation paid
– Yayasan Sime Darby 20,000 20,000 2,800 20,000

Apart from the individually significant transactions as disclosed elsewhere in the financial statements, the
Group and the Company have collectively, but not individually, significant transactions with other government-
related entities which include but not limited to the following:

(i) Purchasing of goods and services, including use of public utilities and amenities; and
(ii) Placement of bank deposits with government-related financial institutions

All the transactions entered into by the Group and the Company with the government-related entities are
conducted in the ordinary course of the Group’s and the Company’s businesses on negotiated terms.
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
For The Financial Year Ended 31 December 2019

48. DISCLOSURES OF SIGNIFICANT RELATED PARTY TRANSACTIONS (CONTINUED)

In addition to related party disclosures mentioned elsewhere in the financial statements, set out below are other
significant related party transactions and balances: (continued)

(e) Remuneration of Directors and key management personnel

GROUP/COMPANY

Financial Financial
year ended period ended
31.12.2019 31.12.2018
RM’000 RM’000

Remuneration of key management personnel

The aggregate amount of emoluments received/receivable by key

management personnel of the Group and the Company during the
financial year/period are as follows:
– Salaries, fees and other emoluments 21,380 10,232
– Defined contribution pension plans 1,843 1,361
– Estimated monetary value of benefits by way of usage of the Group’s
and the Company’s assets 532 177

23,755 11,770

Key management personnel comprise all Plantation Leadership Committee (“PLC”) members having authority
and responsibility for planning, directing and controlling the activities of the Group either directly or indirectly.

(f) The outstanding balances with related companies within the PNB Group are shown in Note 30. The
significant outstanding balances with other related parties are as follows:

GROUP COMPANY

Financial Financial Financial Financial

year ended period ended year ended period ended
31.12.2019 31.12.2018 31.12.2019 31.12.2018
RM’000 RM’000 RM’000 RM’000

Amounts due from joint ventures

– Rizhao Sime Darby Oils &
Fats Co. Ltd. 7,657 7,432 513 327
– Guangzhou Keylink Chemicals
Co., Ltd. – 44,715 – 25,606

Financial guarantees in respect of

credit facilities
– Sime Darby Oils Nonthaburi Co., Ltd
(fka Industrial Enterprises Co., Ltd.) – – 38,027 48,175
– Sime Darby Oils Netherlands B.V – – 645,202 640,846
– New Britain Palm Oil Limited – – 191,501 478,190

All outstanding balances are unsecured and repayable within the normal credit periods.
 Annual Report 2019 PG. 312 – 313

49. FINANCIAL INSTRUMENTS

(a) Financial instruments by category

Financial assets and financial liabilities are categorised as follows:

Financial
Derivatives Financial assets at Financial
used for assets at amortised assets at
hedging FVTPL cost FVOCI Total
GROUP RM’000 RM’000 RM’000 RM’000 RM’000

FINANCIAL STATEMENTS
31 December 2019
NON-CURRENT ASSETS
Investments at FVOCI – – – 30,469 30,469
Trade and other receivables – – 155,741 – 155,741

CURRENT ASSETS
Trade and other receivables – – 1,585,400 – 1,585,400
Amounts due from related
parties – – 2,158 – 2,158
Derivatives 2,816 73,921 – – 76,737
Bank balances, deposits
and cash – – 431,347 – 431,347 7
Total financial assets 2,816 73,921 2,174,646 30,469 2,281,852

Financial
Derivatives Financial Financial liabilities at
used for liabilities at guarantee amortised
hedging FVTPL contracts cost Total
RM’000 RM’000 RM’000 RM’000 RM’000

NON-CURRENT LIABILITIES
Borrowings – – – 5,255,384 5,255,384
Lease liabilities – – – 162,112 162,112
Other payables – – – 76,774 76,774
Financial guarantee
contracts – – 627 – 627

CURRENT LIABILITIES
Trade and other payables – – 610 1,354,857 1,355,467
Borrowings – – – 2,489,543 2,489,543
Lease liabilities – – – 25,163 25,163
Amounts due to related
parties – – – 6,989 6,989
Derivatives 405 242,508 – – 242,913

Total financial liabilities 405 242,508 1,237 9,370,822 9,614,972

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
For The Financial Year Ended 31 December 2019

49. FINANCIAL INSTRUMENTS (CONTINUED)

(a) Financial instruments by category (continued)

Financial assets and financial liabilities are categorised as follows: (continued)

Financial
Derivatives Financial assets at Financial
used for assets at amortised assets at
hedging FVTPL cost FVOCI Total
GROUP RM’000 RM’000 RM’000 RM’000 RM’000

31 December 2018
NON-CURRENT ASSETS
Investments at FVOCI – – – 29,294 29,294
Trade and other receivables – – 115,122 – 115,122

CURRENT ASSETS
Trade and other receivables – – 1,584,481 – 1,584,481
Amounts due from related
parties – – 2,171 – 2,171
Derivatives 19,480 39,184 – – 58,664
Bank balances, deposits and
cash – – 491,042 – 491,042

Total financial assets 19,480 39,184 2,192,816 29,294 2,280,774

Financial
Derivatives Financial Financial liabilities at
used for liabilities at guarantee amortised
hedging FVTPL contracts cost Total
RM’000 RM’000 RM’000 RM’000 RM’000

NON-CURRENT LIABILITIES
Borrowings – – – 5,492,575 5,492,575
Lease liabilities – – – 165,433 165,433
Other payables – – – 62,664 62,664
Financial guarantee
contracts – – 783 – 783

CURRENT LIABILITIES
Trade and other payables – – 688 1,458,632 1,459,320
Borrowings – – – 1,804,339 1,804,339
Lease liabilities – – – 27,122 27,122
Amounts due to related
parties – – – 61,020 61,020
Dividend payable – – – 748,092 748,092
Derivatives 1,375 19,823 – – 21,198

Total financial liabilities 1,375 19,823 1,471 9,819,877 9,842,546

 Annual Report 2019 PG. 314 – 315

49. FINANCIAL INSTRUMENTS (CONTINUED)

(a) Financial instruments by category (continued)

Financial assets and financial liabilities are categorised as follows: (continued)

Financial
Derivatives Financial assets at Financial
used for assets at amortised assets at
hedging FVTPL cost FVOCI Total
COMPANY RM’000 RM’000 RM’000 RM’000 RM’000

FINANCIAL STATEMENTS
31 December 2019
NON-CURRENT ASSETS
Investments at FVOCI – – – 27,049 27,049
Amount due from a
subsidiary – – 59,768 – 59,768

CURRENT ASSETS
Trade and other receivables – – 205,785 – 205,785
Amounts due from
subsidiaries – – 536,325 – 536,325
Amounts due from related
parties – – 3,226 – 3,226 7
Derivatives 232 35,257 – – 35,489
Bank balances, deposits and
cash – – 85,403 – 85,403

Total financial assets 232 35,257 890,507 27,049 953,045

Financial
Financial Financial liabilities at
liabilities at guarantee amortised
FVTPL contracts cost Total
RM’000 RM’000 RM’000 RM’000

NON-CURRENT LIABILITIES
Amount due to a subsidiary – – 503,112 503,112
Borrowings – – 4,051,838 4,051,838
Lease liabilities – – 6,954 6,954
Financial guarantee contracts – 58,071 – 58,071

CURRENT LIABILITIES
Trade and other payables – 7,322 379,811 387,133
Borrowings – – 1,747,612 1,747,612
Lease liabilities – – 1,340 1,340
Amounts due to subsidiaries – – 994,982 994,982
Amounts due to related parties – – 6,027 6,027
Derivatives 134,197 – – 134,197

Total financial liabilities 134,197 65,393 7,691,676 7,891,266

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
For The Financial Year Ended 31 December 2019

49. FINANCIAL INSTRUMENTS (CONTINUED)

(a) Financial instruments by category (continued)

Financial assets and financial liabilities are categorised as follows: (continued)

Financial
Derivatives Financial assets at Financial
used for assets at amortised assets at
hedging FVTPL cost FVOCI Total
COMPANY RM’000 RM’000 RM’000 RM’000 RM’000

31 December 2018
NON-CURRENT ASSETS
Investments at FVOCI – – – 25,749 25,749
Amount due from a
subsidiary – – 49,080 – 49,080

CURRENT ASSETS
Trade and other receivables – – 190,334 – 190,334
Amounts due from
subsidiaries – – 522,981 – 522,981
Amounts due from related
parties – – 2,903 – 2,903
Derivatives 18,536 2,324 – – 20,860
Bank balances, deposits and
cash – – 65,693 – 65,693

Total financial assets 18,536 2,324 830,991 25,749 877,600

Financial
Financial Financial liabilities at
liabilities at guarantee amortised
FVTPL contracts cost Total
RM’000 RM’000 RM’000 RM’000

NON-CURRENT LIABILITIES
Amount due to a subsidiary – – 504,707 504,707
Borrowings – – 4,292,526 4,292,526
Lease liabilities – – 7,478 7,478
Financial guarantee
contracts – 139,939 – 139,939

CURRENT LIABILITIES
Trade and other payables – 27,317 336,250 363,567
Borrowings – – 974,443 974,443
Lease liabilities – – 1,919 1,919
Amounts due to subsidiaries – – 1,000,313 1,000,313
Amounts due to related
parties – – 36,826 36,826
Dividend payable – – 748,092 748,092
Derivatives 8,883 – – 8,883

Total financial liabilities 8,883 167,256 7,902,554 8,078,693

 Annual Report 2019 PG. 316 – 317

49. FINANCIAL INSTRUMENTS (CONTINUED)

(b) Income, expenses, gains and losses on financial instruments

Income, expenses, gains and losses on the financial instruments are as follows:

Derivatives
used for Financial
hedging assets at FVTPL

Forward Forward Commodities Financial Financial

foreign foreign options and assets at liabilities at

FINANCIAL STATEMENTS
exchange exchange futures amortised amortised
contracts contracts contracts cost cost Total
GROUP RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

For the financial year ended

31 December 2019
Operating expenses
– impairment of trade and other
receivables – – – (9,310) – (9,310)
– impairment of amounts due
from joint ventures – – – (27,501) – (27,501)
– impairment of advances for
plasma plantation projects – – – (1,703) – (1,703) 7
– bad debts written off – – – (19) – (19)
Other operating income
– reversal of impairment of trade
and other receivables – – – 18,309 – 18,309
– reversal of impairment of advances
for plasma plantation projects – – – 2,130 – 2,130
Other gains and losses
– net change in fair value (6,433) 1,250 (247,537) – – (252,720)
Finance income – – – 12,975 – 12,975
Finance costs – – – – (281,127) (281,127)

(6,433) 1,250 (247,537) (5,119) (281,127) (538,966)

For the financial period ended

31 December 2018
Operating expenses
– impairment of trade and other
receivables – – – (5,768) – (5,768)
– impairment of advances for
plasma plantation projects – – – (3,440) – (3,440)
– bad debts written off – – – (97) – (97)
Other operating income
– reversal of impairment of trade
and other receivables – – – 7,498 – 7,498
– reversal of impairment of advances
for plasma plantation projects – – – 315 – 315
Other gains and losses
– net change in fair value (7,966) 8,838 3,268 – – 4,140
Finance income – – – 8,473 – 8,473
Finance costs – – – – (127,437) (127,437)

(7,966) 8,838 3,268 6,981 (127,437) (116,316)

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
For The Financial Year Ended 31 December 2019

49. FINANCIAL INSTRUMENTS (CONTINUED)

(b) Income, expenses, gains and losses on financial instruments (continued)

Income, expenses, gains and losses on the financial instruments are as follows: (continued)

Derivatives
used for Financial
hedging assets at FVTPL

Forward Forward Commodities Financial Financial

foreign foreign options and assets at liabilities at
exchange exchange futures amortised amortised
contracts contracts contracts cost cost Total
COMPANY RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

For the financial year ended

31 December 2019
Operating expenses
– impairment of trade and other
receivables – – – (1,475) – (1,475)
– impairment of amounts due
from subsidiaries – – – (18,267) – (18,267)
– impairment of amounts due
from joint ventures – – – (25,088) – (25,088)
– bad debt written off – – – (19) – (19)
Other operating income
– reversal of impairment of
a mounts due from
subsidiaries – – – 1,153 – 1,153
Other gains and losses
– net change in fair value 1,211 – (158,284) – – (157,073)
Finance income – – – 17,786 – 17,786
Finance costs – – – – (225,610) (225,610)

1,211 – (158,284) (25,910) (225,610) (408,593)

For the financial period ended

31 December 2018
Operating expenses
– impairment of trade and other
receivables – – – (311) – (311)
– impairment of amounts due
from subsidiaries – – – (11,795) – (11,795)
– impairment of amounts due
from joint ventures – – – (2,413) – (2,413)
Other gains and losses
– net change in fair value 267 1,112 (3,849) – – (2,470)
Finance income – – – 8,934 – 8,934
Finance costs – – – – (100,269) (100,269)

267 1,112 (3,849) (5,585) (100,269) (108,324)

 Annual Report 2019 PG. 318 – 319

49. FINANCIAL INSTRUMENTS (CONTINUED)

(c) Financial risk management objectives and policies

The Group’s activities expose it to a variety of financial risks, including foreign currency exchange risk, interest
rate risk, credit risk, liquidity risk, cash flow risk and price risk. The Group’s financial risk management
objective is to ensure that the Group creates value for its shareholders. Financial risk management is carried
out through risk reviews, internal control systems, insurance programmes and adherence to the Group’s
financial risk management policies. The Board regularly reviews these risks and approves the policies covering
the management of these risks. The Group uses derivative financial instruments such as foreign exchange
contracts, forward commodities contracts and interest rate swaps to hedge certain exposures.

FINANCIAL STATEMENTS
Whilst all derivatives entered into provide economic hedges to the Group, certain derivatives do not qualify
for the application of hedge accounting under the specific rules in MFRS 9. Changes in the fair value of
these derivatives are recognised in profit or loss, whilst changes in the fair value of those derivatives that
qualify for cash flow hedge accounting are recognised in other comprehensive income.

(i) Foreign currency exchange risk

The Group and the Company are exposed to currency risk as a result of the foreign currency transactions
entered into by the Group and the Company. The Group’s and the Company’s revenue were transacted
in the following currencies:

Other than
Functional functional Total 7
currency currency revenue
GROUP RM’000 RM’000 RM’000

For the financial year ended 31 December 2019

Transacted currency
Ringgit Malaysia 2,820,081 – 2,820,081
United States Dollar 3,942,324 517,069 4,459,393
Indonesian Rupiah 944,098 9,020 953,118
European Union Euro 1,223,439 24,561 1,248,000
Thailand Baht 1,070,205 – 1,070,205
South African Rand 536,251 – 536,251
United Kingdom Pound – 678,114 678,114
Papua New Guinea Kina – 297,104 297,104

10,536,398 1,525,868 12,062,266

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
For The Financial Year Ended 31 December 2019

49. FINANCIAL INSTRUMENTS (CONTINUED)

(c) Financial risk management objectives and policies (continued)

(i) Foreign currency exchange risk (continued)

The Group and the Company are exposed to currency risk as a result of the foreign currency transactions
entered into by the Group and the Company. The Group’s and the Company’s revenue were transacted
in the following currencies: (continued)

Other than
Functional functional Total
currency currency revenue
GROUP RM’000 RM’000 RM’000

For the financial period ended 31 December 2018

Transacted currency
Ringgit Malaysia 1,435,087 – 1,435,087
United States Dollar 2,268,163 256,949 2,525,112
Indonesian Rupiah 425,498 4,402 429,900
European Union Euro 706,447 16,682 723,129
Singapore Dollar 759 8,572 9,331
Thailand Baht 535,229 – 535,229
Vietnamese Dong 77,965 – 77,965
South African Rand 282,025 – 282,025
United Kingdom Pound – 301,499 301,499
Papua New Guinea Kina – 199,044 199,044

5,731,173 787,148 6,518,321

Other than
Functional functional Total
currency currency revenue
COMPANY RM’000 RM’000 RM’000

For the financial year ended 31 December 2019

Transacted currency
Ringgit Malaysia 2,040,035 – 2,040,035
United States Dollar – 1,121,565 1,121,565
European Union Euro – 285 285

2,040,035 1,121,850 3,161,885

For the financial period ended 31 December 2018

Transacted currency
Ringgit Malaysia 1,057,738 – 1,057,738
United States Dollar – 594,225 594,225
European Union Euro – 77 77

1,057,738 594,302 1,652,040

 Annual Report 2019 PG. 320 – 321

49. FINANCIAL INSTRUMENTS (CONTINUED)

(c) Financial risk management objectives and policies (continued)

(i) Foreign currency exchange risk (continued)

Where the transacted currencies differ from the Company’s and subsidiaries’ functional currency, the
Group is exposed to currency translation risk. The risk also extends to purchases denominated in
currency other than the subsidiaries’ functional currency.

Where possible, the Group will apply natural hedge by selling and purchasing in the same currency.
Otherwise, the Group enters into forward foreign exchange contracts to limit its exposure on foreign

FINANCIAL STATEMENTS
currency receivables and payables, and on cash flows generated from anticipated transactions denominated
in foreign currencies. These derivatives are normally contracted through centralised treasury in order
to achieve the benefits of netting within the Group and to manage the cost of hedging effectively.

The Group’s policy on the extent of a foreign currency transaction or balance to be hedged is dependent
on the duration to the settlement date. In terms of forecast transaction, exposure is hedged only if it
is expected to be cost effective.

The Group does not hedge its cash, deposits and borrowings denominated in other than functional
currency.

The Group is also exposed to currency translation risk arising from its net investments in foreign
subsidiaries. The investments in foreign subsidiaries are not hedged due to the long-term nature of
7
those investments, except for the net investments in NBPOL group whereby the foreign currency
borrowings related to the acquisition of the subsidiary of USD1,160.0 million (equivalent to RM4,764.1
million) (2018: USD1,271.3 million (equivalent to RM5,280.8 million)) are designated as a natural hedge
against the net investment. The unrealised foreign currencies exchange gains of RM56.7 million (2018:
unrealised foreign currencies exchange losses of RM145.9 million) in relation to the net investment
hedge was adjusted to other comprehensive income. There was no ineffectiveness to be recorded from
net investment in NBPOL group hedge.
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
For The Financial Year Ended 31 December 2019

49. FINANCIAL INSTRUMENTS (CONTINUED)

(c) Financial risk management objectives and policies (continued)

(i) Foreign currency exchange risk (continued)

Currency profile of monetary financial assets and financial liabilities are as follows:

Denominated
United European in functional
States Dollar Union Euro Others currencies Total
GROUP RM’000 RM’000 RM’000 RM’000 RM’000
31 December 2019
Investments at FVOCI
– non-current – – – 30,469 30,469
Trade and other receivables
(net)
– non-current – – – 155,741 155,741
– current 192,965 503 165,505 1,226,427 1,585,400
Bank balances, deposits and
cash 61,456 26,512 17,892 325,487 431,347
Amounts due from related
parties – – – 2,158 2,158
Derivatives assets 6,377 101 – 70,259 76,737
Long-term borrowings (4,262,646) – – (992,738) (5,255,384)
Short-term borrowings (1,802,993) – – (686,550) (2,489,543)
Lease liabilities – – (125,444) (61,831) (187,275)
Amounts due to related
parties – – – (6,989) (6,989)
Trade and other payables
– non-current (64,778) – – (12,623) (77,401)
– current (24,087) (2,913) (96,798) (1,231,669) (1,355,467)
Derivatives liabilities (3,851) (171) – (238,891) (242,913)

(5,897,557) 24,032 (38,845) (1,420,750) (7,333,120)

31 December 2018
Investments at FVOCI
– non-current – – – 29,294 29,294
Trade and other receivables
(net)
– non-current – – – 115,122 115,122
– current 181,475 2,336 84,146 1,316,524 1,584,481
Bank balances, deposits and
cash 12,837 34,698 73,253 370,254 491,042
Amounts due from related
parties – – – 2,171 2,171
Derivatives assets 21,720 220 – 36,724 58,664
Long-term borrowings (4,801,745) – – (690,830) (5,492,575)
Short-term borrowings (1,062,507) – – (741,832) (1,804,339)
Lease liabilities – – (116,611) (75,944) (192,555)
Dividend payables – – – (748,092) (748,092)
Amounts due to related
parties – – – (61,020) (61,020)
Trade and other payables
– non-current – – – (63,447) (63,447)
– current (34,778) (147) (396) (1,423,999) (1,459,320)
Derivatives liabilities (2,417) (117) – (18,664) (21,198)
(5,685,415) 36,990 40,392 (1,953,739) (7,561,772)
 Annual Report 2019 PG. 322 – 323

49. FINANCIAL INSTRUMENTS (CONTINUED)

(c) Financial risk management objectives and policies (continued)

(i) Foreign currency exchange risk (continued)

Currency profile of monetary financial assets and financial liabilities are as follows: (continued)

United Denominated
States European in functional
Dollar Union Euro Others currencies Total
COMPANY RM’000 RM’000 RM’000 RM’000 RM’000

FINANCIAL STATEMENTS
31 December 2019
Investments at FVOCI
– non-current – – – 27,049 27,049
Trade and other receivables
(net) 16,727 (14) 191 188,881 205,785
Bank balances, deposits and
cash 9,965 410 – 75,028 85,403
Amounts due from related
parties – – – 3,226 3,226
Amounts due from
subsidiaries
– non-current – – – 59,768 59,768 7
– current 16,743 199,682 28,142 291,758 536,325
Derivatives assets 1,841 – – 33,648 35,489
Long-term borrowings (3,551,838) – – (500,000) (4,051,838)
Short-term borrowings (1,136,612) – – (611,000) (1,747,612)
Lease liabilities – – – (8,294) (8,294)
Amounts due to related
parties – – – (6,027) (6,027)
Amounts due to subsidiaries
– non-current (503,112) – – – (503,112)
– current (31,832) (18,231) (51,899) (893,020) (994,982)
Trade and other payables
– non-current (3,114) (50,693) (4,239) (25) (58,071)
– current (17,725) (5,609) (1,035) (362,764) (387,133)
Derivatives liabilities (33) (3) – (134,161) (134,197)

(5,198,990) 125,542 (28,840) (1,835,933) (6,938,221)

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
For The Financial Year Ended 31 December 2019

49. FINANCIAL INSTRUMENTS (CONTINUED)

(c) Financial risk management objectives and policies (continued)

(i) Foreign currency exchange risk (continued)

Currency profile of monetary financial assets and financial liabilities are as follows: (continued)

United Denominated
States European in functional
Dollar Union Euro Others currencies Total
COMPANY RM’000 RM’000 RM’000 RM’000 RM’000

31 December 2018
Investments at FVOCI
– non-current – – – 25,749 25,749
Trade and other receivables
(net) 43,918 – 40,549 105,867 190,334
Bank balances, deposits and
cash 20,447 86 – 45,160 65,693
Amounts due from related
parties – – – 2,903 2,903
Amounts due from
subsidiaries
– non-current – – – 49,080 49,080
– current 1,253 157,347 14,408 349,973 522,981
Derivatives assets 18,536 – – 2,324 20,860
Long-term borrowings (4,292,526) – – – (4,292,526)
Short-term borrowings (524,443) – – (450,000) (974,443)
Lease liabilities – – – (9,397) (9,397)
Amounts due to related
parties – – – (36,826) (36,826)
Amounts due to subsidiaries
– non-current (504,707) – – – (504,707)
– current (27,961) – (66,781) (905,571) (1,000,313)
Dividend payables – – – (748,092) (748,092)
Trade and other payables
– non-current (75,524) (58,262) (6,081) (72) (139,939)
– current (19,703) (5,113) (28,992) (309,759) (363,567)
Derivatives liabilities (1) – – (8,882) (8,883)

(5,360,711) 94,058 (46,897) (1,887,543) (7,203,093)

 Annual Report 2019 PG. 324 – 325

49. FINANCIAL INSTRUMENTS (CONTINUED)

(c) Financial risk management objectives and policies (continued)

(i) Foreign currency exchange risk (continued)

The following table illustrates the effects of changes in exchange rate on the translation of foreign
currency monetary items against the functional currency at 31 December 2019 and 31 December 2018,
both before and after taking into account the hedge instruments. If the major currencies strengthened
by the following percentage at the end of the reporting year/period, the Group’s and the Company’s
profit after tax will improve/(decline) by:

FINANCIAL STATEMENTS
Impact on profit after tax
Net
Strengthened monetary Before After
against item Hedged hedge hedge
Major currency RM by RM’000 RM’000 RM’000 RM’000

GROUP
31 December 2019
United States Dollar
– Assets 5% 260,798 215,879 13,040 2,246
– Liabilities 5% (6,158,355) (108,721) (307,918) (302,482)
European Union Euro
– Assets 4% 27,116 – 1,085 1,085 7
– Liabilities 4% (3,084) – (123) (123)

31 December 2018
United States Dollar
– Assets 3% 216,032 322,704 6,481 (3,200)
– Liabilities 3% (5,901,447) (20,899) (177,043) (176,416)
European Union Euro
– Assets 1% 37,254 9,765 373 275
– Liabilities 1% (264) – (3) (3)

COMPANY
31 December 2019
United States Dollar
– Assets 5% 45,276 – 2,264 2,264
– Liabilities 5% (5,244,266) (171,724) (262,213) (253,627)
European Union Euro
– Assets 4% 200,078 – 8,003 8,003
– Liabilities 4% (74,536) – (2,981) (2,981)

31 December 2018
United States Dollar
– Assets 3% 84,154 261 2,525 2,517
– Liabilities 3% (5,444,865) – (163,346) (163,346)
European Union Euro
– Assets 1% 157,432 – 1,574 1,574
– Liabilities 1% (63,375) – (634) (634)

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
For The Financial Year Ended 31 December 2019

49. FINANCIAL INSTRUMENTS (CONTINUED)

(c) Financial risk management objectives and policies (continued)

(i) Foreign currency exchange risk (continued)

Net monetary items balances are higher than hedged as the Group and the Company do not hedge
its foreign currency denominated bank balances, deposits and cash and amount due from subsidiaries.

A similar percentage decrease in the exchange rate would have an equal but opposite effect. Changes
in exchange rate will also result in changes to the fair value of forward foreign exchange contracts
used to hedge forecast transactions. No sensitivity is performed as the Group’s exposure in those
contracts is limited.

The table below illustrates the effects of changes in exchange rate on the translation of foreign
operations’ profit or loss on the Group’s profit after tax. If the currency of the foreign operations
strengthened by the following percentage during the financial year/period, the Group’s profit after tax
and equity will improve/(decline) by:

Impact on
Profit/(loss) Strengthened profit
after tax against after tax
Currency of foreign operations RM’000 RM by RM’000

GROUP
For the financial year ended 31 December 2019
Indonesian Rupiah 285,235 9% 25,671
United States Dollar (161,410) 5% (8,071)

For the financial period ended 31 December 2018

Indonesian Rupiah 54,222 2% 1,084
United States Dollar 62,252 3% 1,868

A similar percentage decrease in the exchange rate would have an equal but opposite effect.

(ii) Interest rate risk

The Group’s and the Company’s income and operating cash flows are substantially independent of
changes in market interest rates. Interest rate exposure which arises from certain of the Group’s and
the Company’s borrowings is managed through the use of floating debt and derivative financial
instruments. Derivative financial instruments are used, where appropriate, to generate the desired
interest rate profile.

The percentages of fixed rate borrowings, both before and after taking into account the interest rate
swap contracts, to the total of borrowings at the end of the financial year/period are as follows:

GROUP COMPANY

31.12.2019 31.12.2018 31.12.2019 31.12.2018

RM’000 RM’000 RM’000 RM’000

Total of borrowings 7,744,927 7,296,914 5,799,450 5,266,969

Fixed rate borrowings 962,850 984,274 – –

Floating rate borrowings
(swapped to fixed) 797,785 1,130,407 797,785 1,130,407

Total fixed rate after swaps 1,760,635 2,114,681 797,785 1,130,407

 Annual Report 2019 PG. 326 – 327

49. FINANCIAL INSTRUMENTS (CONTINUED)

(c) Financial risk management objectives and policies (continued)

(ii) Interest rate risk (continued)

Percentage of fixed rate borrowings over total of borrowings.

GROUP COMPANY

31.12.2019 31.12.2018 31.12.2019 31.12.2018

% % % %

FINANCIAL STATEMENTS
– before swaps 12 13 – –
– after swaps 23 29 14 21

As at 31 December 2019, all of the Group’s and the Company’s floating rate borrowings (after interest
swap contracts) stood at RM5,984.3 million (2018: RM5,182.2 million) and RM5,001.7 million (2018:
RM4,136.6 million) respectively. The following tables demonstrate the effects of changes in interest rate
on floating rate borrowings. If the interest rate increased by 0.5% (2018: 0.5%), the Group’s and the
Company’s profit or loss after tax will be lower/higher by:

GROUP COMPANY

Financial Financial Financial Financial

year ended period ended year ended period ended 7
31.12.2019 31.12.2018 31.12.2019 31.12.2018
RM’000 RM’000 RM’000 RM’000

Profit or loss after tax 22,740 9,846 19,006 7,859

A 0.5% (2018: 0.5%) decrease in interest rate would have an equal but opposite effect.

The following table demonstrates the effect of changes in interest rate on the fair value of the interest
rate swap contracts which are designated as cash flow hedge. If the interest rate increased by 0.5%
(2018: 0.5%), the Group’s and the Company’s hedging reserve will be higher by:

GROUP/COMPANY

31.12.2019 31.12.2018
RM’000 RM’000

Hedging reserve 5,945 11,115

A 0.5% (2018: 0.5%) decrease in interest rate would have an equal but opposite effect.
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
For The Financial Year Ended 31 December 2019

49. FINANCIAL INSTRUMENTS (CONTINUED)

(c) Financial risk management objectives and policies (continued)

(iii) Credit risk

Credit risk arises on sales made on credit terms, derivatives with positive fair value and deposits with
banks.

A) Risk management

The Group and the Company seek to control credit risk by dealing with customers and joint
venture partners of appropriate credit history and transact and deposit with bank and financial
institution with good credit ratings. Third party agencies’ ratings are considered, if available. In
addition, the customers’ most recent financial statements, payment history and other relevant
information are considered in the determination of credit risk. Customers are assessed at least
annually and more frequently when information on significant changes in the customers’ financial
position becomes known. Credit terms and limit are set based on the assessment. Where appropriate,
guarantees or securities are obtained to limit credit risk. Sales to customers are usually suspended
when earlier amounts are overdue exceeding 180 days.

B) Collateral

The Group and the Company receive collateral at the end of the reporting period, summarised
as follows:

GROUP COMPANY

Collateral Collateral
Maximum and credit Maximum and credit
exposure enhancement exposure enhancement
RM’000 RM’000 RM’000 RM’000

31 December 2019
Trade and other receivables
(net)
– non-current 155,741 – – –
– current 1,585,400 501,010 205,785 1,535
Amounts due from
subsidiaries – – 596,093 –
Amounts due from related
parties 2,158 – 3,226 –
Derivatives 76,737 – 35,489 –
Bank balances, deposits
and cash 431,347 – 85,403 –
Guarantees in respect of
credit facilities granted to:
– a joint venture 5,717 – 5,717 –
– subsidiaries – – 874,730 –
– plasma stakeholders 46,846 – – –

2,303,946 501,010 1,806,443 1,535

 Annual Report 2019 PG. 328 – 329

49. FINANCIAL INSTRUMENTS (CONTINUED)

(c) Financial risk management objectives and policies (continued)

(iii) Credit risk (continued)

B) Collateral (continued)

The Group and the Company receive collateral at the end of the reporting period, summarised
as follows: (continued)

GROUP COMPANY

FINANCIAL STATEMENTS
Collateral Collateral
Maximum and credit Maximum and credit
exposure enhancement exposure enhancement
RM’000 RM’000 RM’000 RM’000

31 December 2018
Trade and other receivables
(net)
– non-current 115,122 – – –
– current 1,584,481 507,115 190,334 2,209
Amounts due from
subsidiaries – – 572,061 –
Amounts due from related
parties 2,171 – 2,904 – 7
Derivatives 58,664 – 20,860 –
Bank balances, deposits
and cash 491,042 – 65,693 –
Guarantees in respect of
credit facilities granted to:
– a joint venture 6,443 – 6,443 –
– subsidiaries – – 1,167,211 –
– plasma stakeholders 45,165 – – –

2,303,088 507,115 2,025,506 2,209

C) Impairment of financial assets and financial guarantee contracts

The Group and the Company assess on a forward looking basis the expected credit loss (“ECL”)
associated with its debt instruments carried at amortised cost and financial guarantee contracts
issued. The impairment methodology applied depends on whether there has been a significant
increase in credit risk. The Group and the Company have six types of financial instruments that
are subject to the ECL model:

Measurement of ECL – simplified approach

• Trade receivables
• Intercompany receivables (trade) – inclusive of amounts due from associates, joint ventures,
subsidiaries and related parties

Measurement of ECL – general 3-stage approach

• Intercompany receivables (non-trade) – inclusive of amounts due from subsidiaries
• Advances for plasma plantation projects
• Financial guarantee contracts issued
• Other receivables

While cash and cash equivalents are also subject to the impairment requirements of MFRS 9, the
identified impairment loss was immaterial.
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
For The Financial Year Ended 31 December 2019

49. FINANCIAL INSTRUMENTS (CONTINUED)

(c) Financial risk management objectives and policies (continued)

(iii) Credit risk (continued)

C) Impairment of financial assets and financial guarantee contracts (continued)

Reconciliation of loss allowance for trade and other receivables, intercompany receivables (trade),
intercompany receivables (non-trade) and advances from plasma plantation projects.

Amounts Advances
Amount due from for plasma
Trade due from joint plantation Other
receivables associates ventures projects receivables Total
GROUP Note RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

31 December 2019
At 1 January 2019 33,099 618 16,723 23,466 3,459 77,365
Charge for the
financial year 6(e) 9,308 – 27,501 1,703 2 38,514
Reversal for the
financial year 7 (17,930) – – (2,130) (379) (20,439)
Exchange differences 171 – – 799 (1) 969

At 31 December 2019 24,648 618 44,224 23,838 3,081 96,409

31 December 2018
At 1 July 2018 35,577 618 15,817 20,315 2,821 75,148
Charge for the
financial period 6(e) 2,842 – – 3,440 2,926 9,208
Write offs 97 – – – – 97
Write backs – – – – (698) (698)
Reversal for the
financial period 7 (5,904) – – (315) (1,594) (7,813)
Exchange differences 487 – 906 26 4 1,423

At 31 December 2018 33,099 618 16,723 23,466 3,459 77,365

 Annual Report 2019 PG. 330 – 331

49. FINANCIAL INSTRUMENTS (CONTINUED)

(c) Financial risk management objectives and policies (continued)

(iii) Credit risk (continued)

C) Impairment of financial assets and financial guarantee contracts (continued)

Reconciliation of loss allowance for trade and other receivables, intercompany receivables (trade),
intercompany receivables (non-trade) and advances from plasma plantation projects. (continued)

Amount Amount

FINANCIAL STATEMENTS
Amounts due from due from
Trade due from joint subsidiaries Other
receivables associates ventures (non-trade) receivables Total
Note RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

COMPANY
31 December 2019
At 1 January 2019 3,846 618 14,913 303,515 4,417 327,309
Charge for the
financial year 6(e) 63 – 25,088 18,267 1,412 44,830
Write offs (3,143) – – – (3,137) (6,280)
Reversal for the
financial year 7 – – – (1,153) – (1,153) 7
At 31 December 2019 766 618 40,001 320,629 2,692 364,706

31 December 2018
At 1 July 2018 3,545 618 12,500 291,720 4,407 312,790
Charge for the
financial period 6(e) 301 – 2,413 11,795 10 14,519

At 31 December 2018 3,846 618 14,913 303,515 4,417 327,309

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
For The Financial Year Ended 31 December 2019

49. FINANCIAL INSTRUMENTS (CONTINUED)

(c) Financial risk management objectives and policies (continued)

(iii) Credit risk (continued)

C) Impairment of financial assets and financial guarantee contracts (continued)

A summary of the assumptions underpinning the Group’s and the Company’s ECL are as follows:

• Trade receivables using simplified approach

The ECL rates are based on 5-year historical credit losses experienced by the Group and the
Company. The historical loss rates are adjusted to reflect current and forward-looking information
on macroeconomic factors affecting the ability of the customers to settle the receivables.
However, based on the Group’s and the Company’s assessment, the ability to collect has minimal
correlation with macroeconomic factors as these are consumers products. No significant changes
to estimation techniques or assumptions were made during the reporting year/period.

The following table contains an analysis of the credit risk exposure of trade receivables for
which a loss allowance is recognised using simplified approach. The gross carrying amount of
trade receivables below also represents the Group’s and the Company’s maximum exposure
to credit risk on these assets:

Carrying
Expected amount
Gross credit loss Loss (net of loss
receivables rate allowances allowance)
GROUP RM’000 % RM’000 RM’000

31 December 2019
Upstream
Local customers:
Current 82,353 0.0% – 82,353
Past due by:
– 1 to 30 days 16,449 12.6% (2,075) 14,374
– 31 to 60 days 8,795 6.9% (605) 8,190
– 61 to 90 days 1,293 0.0% – 1,293
– 91 to 180 days 283 0.0% – 283
– 181 to 360 days 16 0.0% – 16
– more than 360 days 2,663 100.0% (2,663) –

111,852 (5,343) 106,509

Export customers:
Current 576 0.0% – 576
Past due by:
– 1 to 30 days 13,519 0.0% – 13,519

14,095 – 14,095
 Annual Report 2019 PG. 332 – 333

49. FINANCIAL INSTRUMENTS (CONTINUED)

(c) Financial risk management objectives and policies (continued)

(iii) Credit risk (continued)

C) Impairment of financial assets and financial guarantee contracts (continued)

• Trade receivables using simplified approach (continued)

The following table contains an analysis of the credit risk exposure of trade receivables for
which a loss allowance is recognised using simplified approach. The gross carrying amount of
trade receivables below also represents the Group’s and the Company’s maximum exposure

FINANCIAL STATEMENTS
to credit risk on these assets: (continued)

Carrying
Expected amount
Gross credit loss Loss (net of loss
receivables rate allowances allowance)
GROUP RM’000 % RM’000 RM’000

31 December 2019
(continued)
Downstream
Local customers:
Current 316,214 0.0% – 316,214 7
Past due by:
– 1 to 30 days 154,552 0.0% (7) 154,545
– 31 to 60 days 41,082 0.0% – 41,082
– 61 to 90 days 1,930 0.0% – 1,930
– 91 to 180 days 177 35.0% (62) 115
– 181 to 360 days 11,355 82.7% (9,391) 1,964
– more than 360 days 2,873 100.0% (2,873) –

528,183 (12,333) 515,850

Export customers:
Current 503,542 0.0% – 503,542
Past due by:
– 1 to 30 days 72,715 0.0% (20) 72,695
– 31 to 60 days 14,061 0.0% – 14,061
– 61 to 90 days 2,990 19.0% (569) 2,421
– 91 to 180 days 1,739 0.7% (12) 1,727
– 181 to 360 days 4,670 40.8% (1,906) 2,764
– more than 360 days 4,355 100.0% (4,355) –

604,072 (6,862) 597,210

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
For The Financial Year Ended 31 December 2019

49. FINANCIAL INSTRUMENTS (CONTINUED)

(c) Financial risk management objectives and policies (continued)

(iii) Credit risk (continued)

C) Impairment of financial assets and financial guarantee contracts (continued)

• Trade receivables using simplified approach (continued)

The following table contains an analysis of the credit risk exposure of trade receivables for
which a loss allowance is recognised using simplified approach. The gross carrying amount of
trade receivables below also represents the Group’s and the Company’s maximum exposure
to credit risk on these assets: (continued)

Carrying
Expected amount
Gross credit loss Loss (net of loss
receivables rate allowances allowance)
GROUP RM’000 % RM’000 RM’000

31 December 2019
(continued)
Other Operations
Local customers:
Current 273 0.0% – 273
Past due by:
– 1 to 30 days 313 0.0% – 313
– 31 to 60 days 14 0.0% – 14
– 61 to 90 days 2 0.0% – 2
– 91 to 180 days 106 0.0% – 106
– 181 to 360 days 35 0.0% – 35
– more than 360 days 217 0.0% – 217

960 – 960

Export customers:
Current 3,850 0.0% – 3,850
Past due by:
– 1 to 30 days 1,152 0.0% – 1,152
– 31 to 60 days 180 0.0% – 180
– 61 to 90 days 30 100.0% (30) –
– 91 to 180 days – 0.0% – –
– 181 to 360 days 39 100.0% (39) –
– more than 360 days 41 100.0% (41) –

5,292 (110) 5,182

 Annual Report 2019 PG. 334 – 335

49. FINANCIAL INSTRUMENTS (CONTINUED)

(c) Financial risk management objectives and policies (continued)

(iii) Credit risk (continued)

C) Impairment of financial assets and financial guarantee contracts (continued)

• Trade receivables using simplified approach (continued)

The following table contains an analysis of the credit risk exposure of trade receivables for
which a loss allowance is recognised using simplified approach. The gross carrying amount of
trade receivables below also represents the Group’s and the Company’s maximum exposure

FINANCIAL STATEMENTS
to credit risk on these assets: (continued)

Carrying
Expected amount
Gross credit loss Loss (net of loss
receivables rate allowances allowance)
GROUP RM’000 % RM’000 RM’000

31 December 2018
Upstream
Local customers:
Current 165,676 0.0% – 165,676
Past due by: 7
– 1 to 30 days 57,362 0.0% (4) 57,358
– 31 to 60 days 5,511 2.2% (123) 5,388
– 61 to 90 days 826 2.4% (20) 806
– 91 to 180 days 37 0.0% – 37
– 181 to 360 days 23 0.0% – 23
– more than 360 days 3,935 100.0% (3,935) –

233,370 (4,082) 229,288

Export customers:
Current 161,320 0.0% – 161,320
Past due by:
– 1 to 30 days 870 0.0% – 870

162,190 – 162,190
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
For The Financial Year Ended 31 December 2019

49. FINANCIAL INSTRUMENTS (CONTINUED)

(c) Financial risk management objectives and policies (continued)

(iii) Credit risk (continued)

C) Impairment of financial assets and financial guarantee contracts (continued)

• Trade receivables using simplified approach (continued)

The following table contains an analysis of the credit risk exposure of trade receivables for
which a loss allowance is recognised using simplified approach. The gross carrying amount of
trade receivables below also represents the Group’s and the Company’s maximum exposure
to credit risk on these assets: (continued)

Carrying
Expected amount
Gross credit loss Loss (net of loss
receivables rate allowances allowance)
GROUP RM’000 % RM’000 RM’000

31 December 2018
(continued)
Downstream
Local customers:
Current 289,531 0.0% – 289,531
Past due by:
– 1 to 30 days 194,029 0.1% (164) 193,865
– 31 to 60 days 52,227 0.0% – 52,227
– 61 to 90 days 11,272 1.3% (148) 11,124
– 91 to 180 days 8,256 9.2% (758) 7,498
– 181 to 360 days 1,561 69.0% (1,077) 484
– more than 360 days 8,782 97.7% (8,580) 202

565,658 (10,727) 554,931

Export customers:
Current 323,647 0.0% – 323,647
Past due by:
– 1 to 30 days 51,560 0.0% – 51,560
– 31 to 60 days 12,979 0.0% – 12,979
– 61 to 90 days 5,300 0.0% – 5,300
– 91 to 180 days 2,197 0.0% – 2,197
– 181 to 360 days 2,602 0.0% – 2,602
– more than 360 days 66,422 100.0% (18,211) 48,211*

464,707 (18,211) 446,496

* The RM48.2 million relates to amounts due from Golden Hope-Nha Be Edible Oils Ltd.
which was secured by a corporate guarantee as described in Note 33(d)(ii).
 Annual Report 2019 PG. 336 – 337

49. FINANCIAL INSTRUMENTS (CONTINUED)

(c) Financial risk management objectives and policies (continued)

(iii) Credit risk (continued)

C) Impairment of financial assets and financial guarantee contracts (continued)

• Trade receivables using simplified approach (continued)

Carrying
Expected amount

FINANCIAL STATEMENTS
Gross credit loss Loss (net of loss
receivables rate allowances allowance)
GROUP RM’000 % RM’000 RM’000

31 December 2018
(continued)
Other Operations
Local customers:
Current – 0.0% – –
Past due by:
– 1 to 30 days 1,737 0.0% – 1,737
– 31 to 60 days 1,398 0.0% – 1,398
– 61 to 90 days 1,341 0.0% – 1,341 7
– 91 to 180 days 644 0.2% (1) 643
– 181 to 360 days 135 0.7% (1) 134
– more than 360 days 226 33.6% (76) 150

5,481 (78) 5,403

Export customers:
Current – 0.0% – –
Past due by:
– 1 to 30 days 457 0.0% – 457
– 31 to 60 days 28 0.0% – 28

485 – 485
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
For The Financial Year Ended 31 December 2019

49. FINANCIAL INSTRUMENTS (CONTINUED)

(c) Financial risk management objectives and policies (continued)

(iii) Credit risk (continued)

C) Impairment of financial assets and financial guarantee contracts (continued)

• Trade receivables using simplified approach (continued)

The following table contains an analysis of the credit risk exposure of trade receivables for
which a loss allowance is recognised using simplified approach. The gross carrying amount of
trade receivables below also represents the Group’s and the Company’s maximum exposure
to credit risk on these assets: (continued)

Carrying
Expected amount
Gross credit loss Loss (net of loss
receivables rate allowances allowance)
COMPANY RM’000 % RM’000 RM’000

31 December 2019
Upstream
Local customers:
Current 29,888 0.0% – 29,888
Past due by:
– 1 to 30 days 2,075 0.0% – 2,075
– 31 to 60 days 579 0.0% – 579
– 61 to 90 days – 0.0% – –
– 91 to 180 days 59 0.0% – 59
– 181 to 360 days 11 0.0% – 11
– more than 360 days 389 100.0% (336) 53

33,001 (336) 32,665

Export customers:
Current – 0.0% – –
Past due by:
– 1 to 30 days 1,042 0.0% – 1,042

1,042 – 1,042
 Annual Report 2019 PG. 338 – 339

49. FINANCIAL INSTRUMENTS (CONTINUED)

(c) Financial risk management objectives and policies (continued)

(iii) Credit risk (continued)

C) Impairment of financial assets and financial guarantee contracts (continued)

• Trade receivables using simplified approach (continued)

The following table contains an analysis of the credit risk exposure of trade receivables for
which a loss allowance is recognised using simplified approach. The gross carrying amount of
trade receivables below also represents the Group’s and the Company’s maximum exposure

FINANCIAL STATEMENTS
to credit risk on these assets: (continued)

Carrying
Expected amount
Gross credit loss Loss (net of loss
receivables rate allowances allowance)
COMPANY RM’000 % RM’000 RM’000

31 December 2019
(continued)

Downstream

Local customers: 7
Current 69,333 0.0% – 69,333
Past due by:
– 1 to 30 days 61,696 0.0% – 61,696
– 31 to 60 days 5,051 0.0% – 5,051
– 61 to 90 days 16 0.0% – 16
– 91 to 180 days – 0.0% – –
– 181 to 360 days – 0.0% – –
– more than 360 days 430 100.0% (430) –

136,526 (430) 136,096

Export customers:
Current 8,773 0.0% – 8,773
Past due by:
– 1 to 30 days 526 0.0% – 526
– 31 to 60 days 1,393 0.0% – 1,393

10,692 – 10,692
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
For The Financial Year Ended 31 December 2019

49. FINANCIAL INSTRUMENTS (CONTINUED)

(c) Financial risk management objectives and policies (continued)

(iii) Credit risk (continued)

C) Impairment of financial assets and financial guarantee contracts (continued)

• Trade receivables using simplified approach (continued)

The following table contains an analysis of the credit risk exposure of trade receivables for
which a loss allowance is recognised using simplified approach. The gross carrying amount of
trade receivables below also represents the Group’s and the Company’s maximum exposure
to credit risk on these assets: (continued)

Carrying
Expected amount
Gross credit loss Loss (net of loss
receivables rate allowances allowance)
COMPANY RM’000 % RM’000 RM’000

31 December 2018
Upstream
Local customers:
Current 763 0.0% – 763
Past due by:
– 1 to 30 days 8,354 0.0% – 8,354
– 31 to 60 days 176 0.0% – 176
– 61 to 90 days 31 0.0% – 31
– 91 to 180 days 37 0.0% – 37
– 181 to 360 days 15 0.0% – 15
– more than 360 days 793 100.0% (793) –

10,169 (793) 9,376

Export customers:
Current – 0.0% – –
Past due by:
– 1 to 30 days 860 0.0% – 860

860 – 860
 Annual Report 2019 PG. 340 – 341

49. FINANCIAL INSTRUMENTS (CONTINUED)

(c) Financial risk management objectives and policies (continued)

(iii) Credit risk (continued)

C) Impairment of financial assets and financial guarantee contracts (continued)

• Trade receivables using simplified approach (continued)

The following table contains an analysis of the credit risk exposure of trade receivables for
which a loss allowance is recognised using simplified approach. The gross carrying amount of
trade receivables below also represents the Group’s and the Company’s maximum exposure

FINANCIAL STATEMENTS
to credit risk on these assets: (continued)

Carrying
Expected amount
Gross credit loss Loss (net of loss
receivables rate allowances allowance)
COMPANY RM’000 % RM’000 RM’000

31 December 2018
(continued)
Downstream
Local customers:
Current 65,266 0.0% – 65,266 7
Past due by:
– 1 to 30 days 45,204 0.0% – 45,204
– 31 to 60 days 2,883 0.0% – 2,883
– 61 to 90 days 408 0.0% – 408
– 91 to 180 days 62 0.0% – 62
– 181 to 360 days 96 0.0% – 96
– more than 360 days 367 100.0% (367) –

114,286 (367) 113,919

Export customers:
Current 11,854 0.0% – 11,854
Past due by:
– 1 to 30 days 3,544 0.0% – 3,544
– 31 to 60 days 222 0.0% – 222
– more than 360 days 2,686 100.0% (2,686) –

18,306 (2,686) 15,620

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
For The Financial Year Ended 31 December 2019

49. FINANCIAL INSTRUMENTS (CONTINUED)

(c) Financial risk management objectives and policies (continued)

(iii) Credit risk (continued)

C) Impairment of financial assets and financial guarantee contracts (continued)

• Intercompany receivables (trade) – inclusive of amounts due from associates, joint ventures,
subsidiaries and related parties using simplified approach

Intercompany receivables (trade) represent amounts outstanding arising from sales of goods.
In arriving at loss allowance, the same assumptions as trade receivables have been applied. As
a result, management is of the view that adequate loss allowance has been recognised as at
the date of reporting.

• Intercompany receivables (non-trade) - inclusive of amounts due from subsidiaries using general
3-stage approach

The Company provides unsecured advances to subsidiaries and where necessary makes payments
for expenses on behalf of its subsidiaries. The Company monitors the performance of the
subsidiaries regularly.

Management has assessed the loss allowance for amount due from subsidiaries individually
taking into consideration of the financial position and the plans in place for the respective
subsidiaries. As at this reporting date, management is of the view that adequate loss allowance
has been recognised.

• Advances for plasma plantation projects using general 3-stage approach

In Indonesia, oil palm plantation owners/operators are required to participate in selected

programs to develop plantations for smallholders (herein referred to as “plasma farmers”). The
Group is involved in “Perusahaan Inti Rakyat Transmigrasi” and “Kredit Koperasi Primer untuk
Anggotanya” which require the Group to serve as a contractor for developing the plantations,
train and develop the skills of the plasma farmers, and purchase the fresh fruit bunches
harvested by plasma farmers at prevailing prices determined by the Indonesian Government.

The advances made by the Group in the form of plasma plantation development costs are
recoverable from the plasma farmers upon the completion of the plasma plantation projects,
either from the plasma farmers directly, through the assignment to plasma farmers of the loans
obtained for the projects or netted-off with the FFB purchased from the plasma farmers.
Impairment losses are made when the estimated recoverable amounts are less than the
outstanding advances.

• Financial guarantee contracts using general 3-stage approach

The Group is exposed to credit risk arising from financial guarantee contracts given to banks
for joint ventures’ and plasma stakeholders’ borrowings where the maximum credit risk exposure
is the amount of borrowings utilised by the joint ventures or plasma stakeholders. Management
has reviewed the financial position of the joint ventures and plasma stakeholders as at the
reporting date and was of the view that the financial guarantee contracts are unlikely to be
called by the lenders.

The Company is exposed to credit risk arising from financial guarantee contracts given to banks
for joint ventures’ and subsidiaries’ borrowings where the maximum credit risk exposure is the
amount of borrowings utilised by the joint ventures and subsidiaries. Historically, the Group has
not defaulted in any borrowings and with the stringent monitoring over the treasury process,
management is of the view that the financial guarantee contracts are unlikely to be called by
the joint ventures’ and subsidiaries’ lenders.
 Annual Report 2019 PG. 342 – 343

49. FINANCIAL INSTRUMENTS (CONTINUED)

(c) Financial risk management objectives and policies (continued)

(iii) Credit risk (continued)

C) Impairment of financial assets and financial guarantee contracts (continued)

• Other receivables using general 3-stage approach

The Group’s and the Company’s other receivables are amounting to RM290.2 million and RM15.9
million (2018: RM118.9 million and RM15.6 million) respectively. Management has assessed the
other receivables comprises mainly of amounts due from brokers, arising from the Group’s

FINANCIAL STATEMENTS
trading operations individually and determined that the majority of the other receivables were
fully recoverable and adequate loss allowance has been recognised.

(iv) Liquidity and cash flow risks

Liquidity and cash flow risks are the risks that the Group or the Company will encounter difficulty in
meeting financial obligations due to shortage of funds. The Group’s and the Company’s exposure to
these risks arise primarily from the mismatch of maturities of financial assets and liabilities. To mitigate
these risks to an acceptable level, the Group maintains sufficient cash and marketable securities, and
the availability of funding through an adequate amount of committed credit facilities.

The Group maintains centralised treasury functions where all strategic funding requirements are
managed. 7
The undiscounted contractual cash flows of the Group’s and the Company’s financial liabilities are as
follows:

On demand Between Between Total Total

or within 1 and 2 2 and 5 Above 5 contractual carrying
1 year years years years cash flows amount
GROUP RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

31 December 2019
Trade and other
payables 1,311,315 – – 76,774 1,388,089 1,388,089
Borrowings
– principal 2,489,543 790,651 3,495,236 969,497 7,744,927 7,744,927
– interest 89,230 84,480 195,653 103,049 472,412 43,542
Amounts due to related
parties 6,989 – – – 6,989 6,989
Lease liabilities 32,839 39,654 64,592 122,951 260,036 187,275
Derivatives
– gross settled 589,671 – – – 589,671 4,021

4,519,587 914,785 3,755,481 1,272,271 10,462,124 9,374,843

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
For The Financial Year Ended 31 December 2019

49. FINANCIAL INSTRUMENTS (CONTINUED)

(c) Financial risk management objectives and policies (continued)

(iv) Liquidity and cash flow risks (continued)

The undiscounted contractual cash flows of the Group’s and the Company’s financial liabilities are as
follows: (continued)

On demand Between Between Total Total

or within 1 and 2 2 and 5 Above 5 contractual carrying
1 year years years years cash flows amount
GROUP RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

31 December 2018
Trade and other
payables 1,413,162 – – 62,664 1,475,826 1,475,826
Borrowings
– principal 1,804,339 3,664,114 1,307,517 520,944 7,296,914 7,296,914
– interest – 16,589 45,085 97,457 159,131 45,470
Dividend payable 748,092 – – – 748,092 748,092
Amounts due to related
parties 61,020 – – – 61,020 61,020
Lease liabilities 34,939 38,539 52,476 172,352 298,306 192,555
Derivatives
– gross settled 877,694 – – – 877,694 4,102

4,939,246 3,719,242 1,405,078 853,417 10,916,983 9,823,979

 Annual Report 2019 PG. 344 – 345

49. FINANCIAL INSTRUMENTS (CONTINUED)

(c) Financial risk management objectives and policies (continued)

(iv) Liquidity and cash flow risks (continued)

The undiscounted contractual cash flows of the Group’s and the Company’s financial liabilities are as
follows: (continued)

On demand Between Between Total Total

or within 1 and 2 2 and 5 Above 5 contractual carrying
1 year years years years cash flows amount

FINANCIAL STATEMENTS
COMPANY RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

31 December 2019
Trade and other
payables 362,788 – – – 362,788 362,788
Borrowings
– principal 1,747,612 705,781 3,346,057 – 5,799,450 5,799,450
– interest 48,338 43,065 102,054 – 193,457 17,023
Intra-group payables 994,982 – 503,112 – 1,498,094 1,498,094
Lease liabilities 1,438 991 2,565 6,454 11,448 8,294
Derivatives
– gross settled 171,724 – – – 171,724 36

3,326,882 749,837 3,953,788 6,454 8,036,961 7,685,685

7

31 December 2018
Trade and other
payables 313,656 – – – 313,656 313,656
Borrowings
– principal 974,443 3,610,588 681,938 – 5,266,969 5,266,969
– interest 168,483 86,993 15,516 – 270,992 22,594
Intra-group payables 1,000,313 – – 504,707 1,505,020 1,505,020
Lease liabilities 2,491 1,247 2,565 7,553 13,856 9,397
Dividend payable 748,092 – – – 748,092 748,092
Derivatives
– gross settled 261 – – – 261 1

3,207,739 3,698,828 700,019 512,260 8,118,846 7,865,729

As at 31 December 2019, the Group’s and the Company’s maximum potential liabilities under financial
guarantee contracts amounted to RM52.6 million and RM880.4 million respectively (2018: RM51.6 million
and RM1,173.7 million respectively). Financial guarantee contracts are assumed to be immediately payable
on demand.
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
For The Financial Year Ended 31 December 2019

49. FINANCIAL INSTRUMENTS (CONTINUED)

(c) Financial risk management objectives and policies (continued)

(v) Price risk

The Group and the Company are largely exposed to commodity price risk due to fluctuations in crude
palm oil and other palm products futures prices.

The Group and the Company enter into commodities options and futures contracts to minimise
exposure to adverse movements in crude palm oil and other palm products prices. Certain contracts
are entered into and continue to be held for the purpose of the receipt or delivery of the physical
commodity in accordance with the Group’s and the Company’s expected purchase, sale or usage
requirements. Contracts that are not held for the purpose of physical delivery are accounted for as
derivatives and are disclosed in Note 31(b).

Average
contract
Maturity price per
period Tonnage tonne
Months Tonnes RM

GROUP – 31 December 2019

Sale contracts Less than 12 426,501 2,868
Purchase contracts Less than 12 134,285 2,559

GROUP – 31 December 2018

Sale contracts Less than 12 129,516 2,992
Purchase contracts Less than 12 103,834 2,466

COMPANY – 31 December 2019

Sale contracts Less than 12 384,725 1,200
Purchase contracts Less than 12 89,400 2,578

COMPANY – 31 December 2018

Sale contracts Less than 12 750 1,862
Purchase contracts Less than 12 64,100 2,232
 Annual Report 2019 PG. 346 – 347

49. FINANCIAL INSTRUMENTS (CONTINUED)

(d) Financial instruments measured at fair value

In estimating the financial instruments carried at fair value, there are, in general, three different levels which
can be defined as follows:

(i) Level 1 – Quoted prices in active markets for identical assets or liabilities;
(ii) Level 2 – Valuation inputs (other than level 1 input) that are observable for the asset or liability, either
directly or indirectly; and
(iii) Level 3 – Valuation inputs that are not based on observable market data.

FINANCIAL STATEMENTS
The following table presents the Group’s and the Company’s financial assets and liabilities that are measured
at fair value at the end of the reporting date based on the three different levels as defined above:

Level 1 Level 2 Level 3 Total

GROUP RM’000 RM’000 RM’000 RM’000

31 December 2019
Financial assets
Investments at FVOCI – 3,396 27,073 30,469
Derivatives
– commodities options and futures
contracts 70,260 – – 70,260
– forward foreign exchange contracts – 6,245 – 6,245 7
– interest rate swap contracts – 232 – 232

70,260 9,873 27,073 107,206

Financial liabilities
Derivatives
– commodities futures contracts (238,892) – – (238,892)
– forward foreign exchange contracts – (4,021) – (4,021)

(238,892) (4,021) – (242,913)

31 December 2018
Financial assets
Investments at FVOCI – 3,545 25,749 29,294
Derivatives
– commodities futures contracts 31,851 – – 31,851
– forward foreign exchange contracts – 8,277 – 8,277
– interest rate swap contracts – 18,536 – 18,536

31,851 30,358 25,749 87,958

Financial liabilities
Derivatives
– commodities futures contracts (17,096) – – (17,096)
– forward foreign exchange contracts – (4,102) – (4,102)

(17,096) (4,102) – (21,198)

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
For The Financial Year Ended 31 December 2019

49. FINANCIAL INSTRUMENTS (CONTINUED)

(d) Financial instruments measured at fair value (continued)

The following table presents the Group’s and the Company’s financial assets and liabilities that are measured
at fair value at the end of the reporting date based on the three different levels as defined above: (continued)

Level 1 Level 2 Level 3 Total

COMPANY RM’000 RM’000 RM’000 RM’000

31 December 2019
Financial assets
Investments at FVOCI – – 27,049 27,049
Derivatives
– commodities options and futures
contracts 33,648 – – 33,648
– forward foreign exchange contracts – 1,609 – 1,609
– interest rate swap contracts – 232 – 232

33,648 1,841 27,049 62,538

Financial liabilities
Derivatives
– commodities options and futures
contracts (134,161) – – (134,161)
– forward foreign exchange contracts – (36) – (36)

(134,161) (36) – (134,197)

31 December 2018
Financial assets
Investments at FVOCI – – 25,749 25,749
Derivatives
– commodities options and futures
contracts 2,324 – – 2,324
– interest rate swap contracts – 18,536 – 18,536

2,324 18,536 25,749 46,609

Financial liabilities
Derivatives
– commodities options and futures
contracts (8,882) – – (8,882)
– forward foreign exchange contracts – (1) – (1)

(8,882) (1) – (8,883)

 Annual Report 2019 PG. 348 – 349

49. FINANCIAL INSTRUMENTS (CONTINUED)

(d) Financial instruments measured at fair value (continued)

If quoted market prices in active markets are available, these are considered Level 1. If such quoted market
prices are not available, fair value is determined using market prices for similar assets or present value
techniques, applying an appropriate risk-free interest rate adjusted for non-performance risk. The inputs
used in present value techniques are observable and fall into the Level 2 category. It is classified into the
Level 3 category if significant unobservable inputs are used.

The fair values of derivatives are determined using quoted price of identical instruments from an active

FINANCIAL STATEMENTS
market, if available (Level 1). If quoted prices are not available, price quoted for similar instruments,
appropriately adjusted or present value techniques, based on available market data, or option pricing models
are used. The fair values obtained using price quotes for similar instruments or valuation techniques represent
a Level 2 input unless significant unobservable inputs are used.

(e) Financial instruments measured at amortised costs

The carrying amounts and fair values of non-current financial assets and liabilities are measured at amortised
cost.

The following methods and assumptions are used to estimate the fair value of each class of financial
instruments:

(i) Short-term financial instruments

7
The carrying amounts of financial assets and liabilities with a maturity of less than one year are assumed
to approximate their fair values.

(ii) Long-term financial instruments

The fair value of the Group’s long-term financial instruments is estimated by discounting the future
contractual cash flows at the current market rate available to the Group for similar instruments.
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
For The Financial Year Ended 31 December 2019

50. CAPITAL MANAGEMENT

(a) Capital management objectives

The Group’s capital management objectives are to ensure the Group’s ability to continue as a going concern
and maximise shareholder value. This is achieved through reviewing and managing its equity, debt and cash.
Equity attributable to equity holders of the Company includes share capital, reserves and retained earnings.

The Group seeks to achieve optimal capital structure taking into account returns expected by shareholders,
cost of debts, capital expenditure, investment opportunities, projected cash flows and externally imposed
financial covenants. The Group has consistently paid out around 50% to 70% of its annual profit attributable
to equity holders of the Company as dividends and reinvests the rest. Whilst the current practice provides
a reasonable balance between expansion and cash dividends, the Group may adjust the dividend payout,
equity levels and debt levels to achieve the optimal capital structure.

(i) Rating by External Rating Agencies

The Company and its capital market programmes are rated by both local and international rating
agencies:

Rating Agency Company/Programme Rating as at Rating

Fitch Ratings Company and the USD1.5 billion 1.10.2019 BBB

Multi-currency Sukuk Programme
Moody’s Investors Service Company and the USD1.5 billion 9.10.2019 Baa1
Multi-currency Sukuk Programme

Malaysian Rating RM3.0 billion Perpetual Subordinated 19.12.2019 AAIS

Corporation Berhad Sukuk Programme (Perpetual Sukuk)

(ii) Gearing ratio and interest cover

Gearing ratio and interest cover are some of the ratios used in capital management. Gearing ratio is
calculated as gross debt divided by total equity. Gross debt is calculated as the total of borrowings and
amount due to a subsidiary (including “current and non-current” as shown in the Company’s statements
of financial position). Interest cover is calculated as profit/(loss) before interest and tax excluding impairment
on investments in subsidiaries and joint ventures divided by total finance costs (gross).

The ratios are as follows:

GROUP COMPANY

31.12.2019 31.12.2018 31.12.2019 31.12.2018

Gearing ratio (%) 48.8 46.3 56.3 51.0

Interest cover (times)
– continuing operations 1.4 4.8 1.1 1.0

(b) Externally imposed financial covenants and capital structure

In addition to optimising capital structure and complying with externally imposed financial covenants, the
Group is also required to comply with statutory requirements in certain countries where the Group operates.
This includes minimum capital requirement and the requirement to maintain legal reserves which are
non-distributable.

The Group was in compliance with externally imposed financial covenants and capital requirements for the
financial year/period ended 31 December 2019 and 31 December 2018 except as disclosed in Note 39.
 Annual Report 2019 PG. 350 – 351

51. LIST OF SUBSIDIARIES, JOINT VENTURES AND ASSOCIATES

(i) Subsidiaries which are active as at 31 December 2019 are as follows:

Country of
incorporation/
Group’s effective
Principal
interest (%)
place of
Name of company business 31.12.2019 31.12.2018 Auditors Principal activities

Chartquest Sdn Bhd Malaysia 61.1 61.1 1 Cultivation of oil palm

FINANCIAL STATEMENTS
Chermang Development Malaysia 83.9 83.9 1 Investment holding
(Malaya) Sdn Bhd
Consolidated Plantations Malaysia 100.0 100.0 1 Investment holding
Berhad
Golden Hope Overseas Malaysia 100.0 100.0 1 Investment holding
Sdn Bhd
Guthrie Industries Malaysia 100.0 100.0 1 Cultivation of oil palm and
Malaysia Sendirian processing of palm oil
Berhad and palm kernel
Guthrie International Labuan, 100.0 100.0 1 Investment holding
Investments (L) Ltd Malaysia
7
Mostyn Palm Processing Malaysia 100.0 100.0 1 Investment holding
Sdn Bhd
Sanguine (Malaysia) Malaysia 100.0 100.0 1 Cultivation of oil palm
Sdn Bhd
Sime Darby Plantation Malaysia 100.0 100.0 1 Manufacturing and
Agri-Bio Sdn Bhd marketing of rat baits
(fka Sime Darby Agri-Bio and trading of
Sdn Bhd) agricultural related
products
Sime Darby Plantation Malaysia 100.0 100.0 1 Investment holding
Austral Holdings Berhad
(fka Sime Darby Austral
Holdings Berhad)
Sime Darby Oils Bintulu Malaysia 60.0 60.0 1 Processing of palm oil and
Sdn Bhd palm kernel oil
Sime Darby Oils Biodiesel Malaysia 100.0 100.0 1 Production and sale of
Sdn Bhd biodiesel and related
products
Sime Darby Plantation Malaysia 100.0 100.0 1 Provision of oil palm tissue
Biotechnology Lab Sdn culture services
Bhd (fka Sime Darby
Biotech Laboratories
Sdn Bhd)
Sime Darby Consulting Malaysia 100.0 100.0 1 Investment holding
Sdn Bhd
Sime Darby Oils Malaysia 100.0 100.0 1 Distribution and marketing
Professional Sdn Bhd of cooking oil,
(fka Sime Darby Foods & tocotrienols, coconut oil
Beverages Marketing and palm related
Sdn Bhd) products
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
For The Financial Year Ended 31 December 2019

51. LIST OF SUBSIDIARIES, JOINT VENTURES AND ASSOCIATES (CONTINUED)

(i) Subsidiaries which are active as at 31 December 2019 are as follows: (continued)

Country of
incorporation/
Group’s effective
Principal
interest (%)
place of
Name of company business 31.12.2019 31.12.2018 Auditors Principal activities

Sime Darby Oils Trading Malaysia 100.0 100.0 1 Trading of crude palm oil
Sdn Bhd and palm oil products
and as marketing agent
of commodities for its
related companies
Sime Darby Plantation Malaysia 100.0 100.0 1 Special purpose vehicle for
Global Berhad (fka Sime the issue of securities
Darby Global Berhad) programme
Sime Darby Oils Trading Labuan, 100.0 100.0 1 Trading of commodities
(Labuan) Limited Malaysia
Sime Darby Oils Pasir Malaysia 100.0 100.0 1 Processing of edible oil
Gudang Refinery and related products
Sdn Bhd
Sime Darby Plantation Malaysia 100.0 100.0 1 Investment property
Latex Sdn Bhd activity
(fka Sime Darby Latex
Sdn Bhd)
Sime Darby Plantation Malaysia 100.0 100.0 1 Cultivation of oil palm and
(Sabah) Sdn Bhd processing of palm oil
and palm kernel
Sime Darby Plantation Malaysia 100.0 100.0 1 Cultivation of oil palm and
(Sarawak) Sdn Bhd processing of palm oil
and palm kernel
Sime Darby Plantation Malaysia 100.0 100.0 1 Operating childcare
Childcare Centre services to employees
Sdn Bhd
Sime Darby Plantation Malaysia 100.0 100.0 1 Acquiring, developing and
Intellectual Property investing in trademarks,
Sdn Bhd patents and intellectual
property rights
Sime Darby Plantation Malaysia 100.0 100.0 1 Investment holding
Thailand Sdn Bhd
Sime Darby Plantation Malaysia 100.0 100.0 1 Research and
Research Sdn Bhd development services to
(fka Sime Darby group companies in
Research Sdn Bhd) relation to tropical
agriculture
Sime Darby Plantation Malaysia 100.0 100.0 1 Agricultural research and
Seeds & Agricultural advisory services,
Services Sdn Bhd production and sale of
(fka Sime Darby Seeds & oil palm seeds and
Agricultural Services seedlings
Sdn Bhd)
 Annual Report 2019 PG. 352 – 353

51. LIST OF SUBSIDIARIES, JOINT VENTURES AND ASSOCIATES (CONTINUED)

(i) Subsidiaries which are active as at 31 December 2019 are as follows: (continued)

Country of
incorporation/
Group’s effective
Principal
interest (%)
place of
Name of company business 31.12.2019 31.12.2018 Auditors Principal activities

Sime Darby Plantation Malaysia 100.0 100.0 1 Research and

FINANCIAL STATEMENTS
Technology Centre Sdn development services in
Bhd (fka Sime Darby biotechnology and
Technology Centre agriculture
Sdn Bhd)
The China Engineers Malaysia 100.0 100.0 1 Cultivation of oil palm and
(Malaysia) Sdn Bhd processing of palm oil
and palm kernel
Wangsa Mujur Sdn Bhd Malaysia 72.5 72.5 1 Cultivation of oil palm and
processing of palm oil
and palm kernel
PT Aneka Intipersada Indonesia 100.0 100.0 2 Cultivation of oil palm and
processing of palm oil 7
and palm kernel
PT Aneka Sawit Lestari Indonesia 100.0 100.0 2 Production and sale of oil
palm planting materials
PT Anugerah Indonesia 100.0 100.0 2 Investment holding
Sumbermakmur
PT Asricipta Indah Indonesia 90.0 90.0 2 Investment holding
PT Bahari Gembira Ria Indonesia 99.97 99.3 2 Cultivation of oil palm and
processing of palm oil
and palm kernel
PT Bersama Sejahtera Indonesia 91.1 91.1 2 Cultivation of oil palm and
Sakti processing of palm oil
and palm kernel
PT Bhumireksa Nusasejati Indonesia 100.0 100.0 2 Cultivation of oil palm and
processing of palm oil
and palm kernel
PT Bina Sains Cemerlang Indonesia 100.0 100.0 2 Cultivation of oil palm and
processing of palm oil
and palm kernel
PT Budidaya Agrolestari Indonesia 100.0 100.0 2 Cultivation of oil palm
PT Sime Darby Oils Indonesia 100.0 100.0 2 Processing of palm oil
Pulau Laut Refinery products
PT Guthrie Pecconina Indonesia 100.0 100.0 2 Cultivation of oil palm and
Indonesia processing of palm oil
and palm kernel
PT Indo Sukses Lestari Indonesia 95.0 95.0 2 Development of rubber
Makmur plantation
PT Indotruba Tengah Indonesia 50.0 50.0 2 Cultivation of oil palm and
processing of palm oil
and palm kernel
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
For The Financial Year Ended 31 December 2019

51. LIST OF SUBSIDIARIES, JOINT VENTURES AND ASSOCIATES (CONTINUED)

(i) Subsidiaries which are active as at 31 December 2019 are as follows: (continued)

Country of
incorporation/
Group’s effective
Principal
interest (%)
place of
Name of company business 31.12.2019 31.12.2018 Auditors Principal activities

PT Kartika Inti Perkasa Indonesia 60.0 60.0 2 Investment holding

PT Kridatama Lancar Indonesia 100.0 100.0 2 Cultivation of oil palm and
processing of palm oil
and palm kernel
PT Ladangrumpun Indonesia 100.0 100.0 2 Cultivation of oil palm and
Suburabadi processing of palm oil
and palm kernel
PT Laguna Mandiri Indonesia 88.6 88.6 2 Cultivation of oil palm and
processing of palm oil,
palm kernel and palm
kernel oil
PT Lahan Tani Sakti Indonesia 100.0 100.0 2 Cultivation of oil palm and
processing of palm oil
and palm kernel
PT Langgeng Indonesia 100.0 100.0 2 Cultivation of oil palm and
Muaramakmur processing of palm oil
and palm kernel
PT Minamas Gemilang Indonesia 100.0 100.0 2 Investment holding
PT Mitra Austral Sejahtera Indonesia – 100.0 2 Cultivation of oil palm and
processing of palm oil
and palm kernel
PT Muda Perkasa Sakti Indonesia 100.0 100.0 2 Investment holding
PT Padang Palma Permai Indonesia 100.0 100.0 2 Cultivation of oil palm and
processing of palm oil
and palm kernel
PT Paripurna Swakarsa Indonesia 100.0 100.0 2 Cultivation of oil palm and
processing of palm oil
and palm kernel
PT Perkasa Subur Sakti Indonesia 100.0 100.0 2 Processing of palm oil and
palm kernel
PT Perusahaan Indonesia 100.0 100.0 2 Cultivation of oil palm
Perkebunan Industri
dan Niaga Sri Kuala
PT Sajang Heulang Indonesia 100.0 100.0 2 Cultivation of oil palm and
processing of palm oil
and palm kernel
PT Sandika Natapalma Indonesia 100.0 100.0 2 Cultivation of oil palm and
processing of palm oil
and palm kernel
PT Sime Darby Indonesia 100.0 100.0 2 Trading of agricultural
Plantation Agri Bio related products
(fka PT Sime Agri Bio)
 Annual Report 2019 PG. 354 – 355

51. LIST OF SUBSIDIARIES, JOINT VENTURES AND ASSOCIATES (CONTINUED)

(i) Subsidiaries which are active as at 31 December 2019 are as follows: (continued)

Country of
incorporation/
Group’s effective
Principal
interest (%)
place of
Name of company business 31.12.2019 31.12.2018 Auditors Principal activities

PT Sime Darby Oils Indonesia 100.0 – 2 Provision of procurement,

FINANCIAL STATEMENTS
Indonesia marketing and sale of
edible oils
PT Sime Darby Plantation Indonesia 100.0 100.0 2 Cultivation of oil palm and
Indo Agro (fka PT Sime processing of palm oil
Indo Agro) and palm kernel
PT Sritijaya Abaditama Indonesia 60.0 60.0 2 Investment holding
PT Swadaya Andika Indonesia 100.0 100.0 2 Cultivation of oil palm and
processing of palm oil
and palm kernel
PT Tamaco Graha Krida Indonesia 90.0 90.0 2 Cultivation of oil palm and
processing of palm oil
and palm kernel 7
PT Tamiyang Sumber Indonesia 90.0 90.0 3 Cultivation of oil palm
Rezeki
PT Teguh Sempurna Indonesia 100.0 100.0 2 Cultivation of oil palm and
processing of palm oil
and palm kernel
PT Tunggal Mitra Indonesia 60.0 60.0 2 Cultivation of oil palm and
Plantations processing of palm oil
and palm kernel
PT Timbang Deli Indonesia 49.0 49.0 2 Oil palm seed production
Indonesia and cultivation of rubber
Kula Palm Oil Limited Papua New 100.0 100.0 2 Cultivation of oil palm and
Guinea processing of palm oil,
palm kernel and palm
kernel oil
New Britain Palm Oil Papua New 100.0 100.0 2 Investment holding,
Limited Guinea cultivation of oil palm
and processing of palm
oil, palm kernel and
palm kernel oil
Poliamba Limited Papua New 100.0 100.0 2 Cultivation of oil palm and
Guinea processing of palm oil,
palm kernel and palm
kernel oil
Ramu Agri-Industries Papua New 100.0 100.0 2 Cultivation of oil palm and
Limited Guinea growing canes, cattle
rearing, processing and
sale of palm oil, palm
kernel oil, sugar, ethanol
and beef
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
For The Financial Year Ended 31 December 2019

51. LIST OF SUBSIDIARIES, JOINT VENTURES AND ASSOCIATES (CONTINUED)

(i) Subsidiaries which are active as at 31 December 2019 are as follows: (continued)

Country of
incorporation/
Group’s effective
Principal
interest (%)
place of
Name of company business 31.12.2019 31.12.2018 Auditors Principal activities

Markham Farming Papua New 100.0 100.0 2 Cultivation of oil palm and
Company Limited Guinea processing of palm oil,
palm kernel, palm kernel
oil and coconut
Guadalcanal Plains Palm Solomon 80.0 80.0 3 Cultivation of oil palm and
Oil Limited Islands processing of palm oil,
palm kernel and palm
kernel oil
New Britain Plantation Singapore 100.0 100.0 2 Investment holding and
Services Pte. Ltd. management of oil palm
plantations and seed
production
Ultra Oleum Pte. Ltd. Singapore 100.0 100.0 2 Investment holding
Verdant Bioscience Singapore 52.0 52.0 2 Agriculture science and
Pte. Ltd. research
Sime Darby Oils Liverpool United 100.0 100.0 2 Processing of edible oil
Refinery Limited Kingdom and related products
Sime Darby Oils Singapore 100.0 100.0 2 Marketing of edible oils
International Limited and palm oil related
products
Sime Darby Oils Singapore 100.0 100.0 2 Investment holding
Singapore Limited
(fka Sime Darby
Plantation Europe Ltd.)
Sime Darby Plantation Singapore 100.0 100.0 2 Investment holding
Investment (Liberia)
Private Limited
Sime Darby China Oils Hong Kong 100.0 100.0 2 Investment holding
And Fats Company SAR
Limited
Sime Darby Hong Kong Hong Kong 100.0 100.0 2 Investment holding
Nominees Limited SAR
Sime Darby Oils Thailand 99.9 99.9 2 Processing of soya bean
Nonthaburi Co., Ltd oil and related products
(fka Industrial Enterprises
Co., Ltd.)

Sime Darby Oils Morakot Thailand 99.9 99.9 2 Processing and marketing
Public Company Limited of edible oil and related
(fka Morakot Industries products
Public Company
Limited)
 Annual Report 2019 PG. 356 – 357

51. LIST OF SUBSIDIARIES, JOINT VENTURES AND ASSOCIATES (CONTINUED)

(i) Subsidiaries which are active as at 31 December 2019 are as follows: (continued)

Country of
incorporation/
Group’s effective
Principal
interest (%)
place of
Name of company business 31.12.2019 31.12.2018 Auditors Principal activities

Sime Darby Oils Holdings Thailand 100.0 100.0 2 Investment holding

FINANCIAL STATEMENTS
(Thailand) Limited
(fka Sime-Morakot
Holdings (Thailand)
Limited)
The China Engineers Thailand 99.9 99.9 2 Investment holding
(Thailand) Limited
Sime Darby Plantation Cayman 100.0 100.0 4 Investment holding
International Investments Islands
Limited (fka Sime Darby
International Investments
Limited)
Sime Darby Plantation Cayman 100.0 100.0 4 Investment holding 7
Holdings (Asia Pacific) Islands
Sime Darby Plantation Cayman 100.0 100.0 4 Investment holding
Holdings (Cayman Islands
Islands)
Sime Darby Plantation Liberia 100.0 100.0 2 Cultivation of oil palm and
(Liberia) Inc. rubber and processing of
palm oil and palm kernel
Golden Hope Overseas Mauritius 100.0 100.0 2 Investment holding
Capital
Mulligan International B.V. Netherlands 100.0 100.0 2 Investment holding
Sime Darby Oils Netherlands 100.0 100.0 2 Investment holding
Netherlands B.V.
Sime Darby Oils Netherlands 100.0 100.0 2 Processing and marketing
Zwijndrecht Refinery B.V. of edible oil and related
products
Sime Darby Oils South South Africa 100.0 100.0 2 Processing and marketing
Africa (Pty) Ltd. of edible oils and related
edible
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
For The Financial Year Ended 31 December 2019

51. LIST OF SUBSIDIARIES, JOINT VENTURES AND ASSOCIATES (CONTINUED)

(ii) Joint venture which are active as at 31 December 2019 are as follows:

Country of
incorporation/
Group’s effective
Principal
interest (%)
place of
Name of company business 31.12.2019 31.12.2018 Auditors Principal activities

Emery Oleochemicals (M) Malaysia 50.0 50.0 3 Investment holding,

Sdn Bhd
Emery Specialty
Chemicals Sdn Bhd
production and sale of
fatty acids, fatty alcohols,
refined glycerine, oilfield
chemicals, ozone acids,
plastic additives, methyl
esters and other
oleochemical derivatives
Malaysia 50.0 50.0 3 Investment holding

MYBiomass Sdn Bhd Malaysia 30.0 30.0 3 Develop and pioneer high
value green chemicals
biorefinery Ceased
operation effective from
31 December 2019
SD Plantation TNBES Malaysia 51.0+ 51.0+ 1 Production and sale of
Renewable Energy renewable energy using
Sdn Bhd (fka Sime palm oil effluents
Darby TNBES Renewable
Energy Sdn Bhd)
Guangzhou Keylink China 49.0 49.0 3 Manufacturing of surface
Chemicals Co., Ltd. active agents
Rizhao Sime Darby China 45.0 45.0 2 Storage and marketing of
Oils & Fats Co. Ltd. palm oil related products
 Annual Report 2019 PG. 358 – 359

51. LIST OF SUBSIDIARIES, JOINT VENTURES AND ASSOCIATES (CONTINUED)

(iii) Associates which are active as at 31 December 2019 are as follows:

Country of
incorporation/
Group’s effective
Principal
interest (%)
place of
Name of company business 31.12.2019 31.12.2018 Auditors Principal activities

Barlow Bulking Sdn Bhd Malaysia 32.0 32.0 3 Provision of bulking and

FINANCIAL STATEMENTS
marketing facilities for
edible oil producers and
millers
Nescaya Maluri Sdn Bhd Malaysia 40.0 40.0 3 Investment holding and
licensing
Muang Mai Guthrie Thailand 49.0 49.0 3 Processing of rubber
Public Company Limited
Thai Eastern Trat Co., Ltd. Thailand 40.0 40.0 2 Processing of palm oil and
palm kernel
Yayasan Sime Darby Malaysia @ @ 1 Administration of
scholarship awards and
educational loans, 7
undertake sports,
environmental
conservation and
sustainability projects
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
For The Financial Year Ended 31 December 2019

51. LIST OF SUBSIDIARIES, JOINT VENTURES AND ASSOCIATES (CONTINUED)

(iv) Subsidiaries which are dormant/inactive as at 31 December 2019 are as follows:

Country of
incorporation/
Group’s effective
Principal
interest (%)
place of
Name of company business 31.12.2019 31.12.2018 Auditors Principal activities

Kwang Joo Seng Singapore 100.0 100.0 2 Dormant

(Malaysia) Private Limited
Derawan Sdn Bhd Malaysia 100.0 100.0 1 Dormant
Kumpulan Jelei Sendirian Malaysia 100.0 100.0 1 Dormant
Berhad
Kumpulan Jerai Sendirian Malaysia 100.0 100.0 1 Dormant
Berhad
Kumpulan Linggi Malaysia 100.0 100.0 1 Dormant
Sendirian Berhad
Kumpulan Sua Betong Malaysia 100.0 100.0 1 Dormant
Sdn Berhad
Kumpulan Tebong Sdn Malaysia 100.0 100.0 1 Dormant
Berhad
Kumpulan Temiang Malaysia 100.0 100.0 1 Dormant
Sdn Berhad
Sahua Enterprise Malaysia 100.0 100.0 1 Dormant
Sdn Bhd
Sime Darby Beverages Malaysia 100.0 100.0 1 Dormant
Sdn Bhd
Bukit Talang Malaysia 100.0 100.0 1 Dormant
Smallholders Sdn Bhd
(fka Sime Darby Bukit
Talang Sdn Bhd)
Sime Darby Oils & Fats Malaysia 100.0 100.0 1 Dormant
Sdn Bhd
Sime Darby Plantation Malaysia 100.0 100.0 1 Dormant
Ecogardens Sdn Bhd
(fka Sime Darby
Plantation IT Sdn Bhd)
Sime Darby Plantation Malaysia 100.0 100.0 1 Dormant
(Peninsular) Sdn Bhd
PT Guthrie Abdinusa Indonesia 70.0 70.0 2 Dormant
Industri
PT Sime Darby Indonesia 100.0 100.0 2 Dormant
Commodities Trading
Sime Darby Oils Netherlands 100.0 100.0 4 Dormant
Speciality Ingredients
B.V. (fka Sime Darby
CleanerG B.V.)
Sime Darby Oils Europe Netherlands 100.0 100.0 4 Dormant
B.V.
 Annual Report 2019 PG. 360 – 361

51. LIST OF SUBSIDIARIES, JOINT VENTURES AND ASSOCIATES (CONTINUED)

(iv) Subsidiaries which are dormant/inactive as at 31 December 2019 are as follows: (continued)

Country of
incorporation/
Group’s effective
Principal
interest (%)
place of
Name of company business 31.12.2019 31.12.2018 Auditors Principal activities

Sime Darby Edible Tanzania 100.0 100.0 4 Dormant

FINANCIAL STATEMENTS
Products Tanzania
Limited
Sime Darby Oils Malaysia 100.0 100.0 4 Dormant
Nutrition Sdn Bhd
(fka Sime Darby
Bioganic Sdn Bhd)
Sime Darby Oils North United States 100.0 – 4 Dormant
America Inc.
Trolak Estates Limited Scotland 100.0 100.0 5 Dormant
Dusun Durian United 100.0 100.0 5 Dormant
Plantations Limited Kingdom
Kinta Kellas Rubber United 100.0 100.0 5 Dormant 7
Estate Plc. Kingdom
Malaysian Estates Plc. United 100.0 100.0 5 Dormant
Kingdom
The Kuala Selangor United 100.0 100.0 5 Dormant
Rubber Plc. Kingdom
The London Asiatic United 100.0 100.0 5 Dormant
Rubber and Produce Kingdom
Company Limited
The Pataling Rubber United 100.0 100.0 5 Dormant
Estates Limited Kingdom
The Straits Plantations United 100.0 100.0 5 Dormant
Limited Kingdom
The Sungei Bahru United 100.0 100.0 5 Dormant
Rubber Estates Plc. Kingdom
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
For The Financial Year Ended 31 December 2019

51. LIST OF SUBSIDIARIES, JOINT VENTURES AND ASSOCIATES (CONTINUED)

(v) Subsidiaries placed under members’ voluntary liquidation/deregistered are as follows:

Country of
incorporation/
Group’s effective
Principal
interest (%)
place of
Name of company business 31.12.2019 31.12.2018 Auditors Principal activities

Eminent Platform Malaysia 100.0 100.0 4 In members’ voluntary

Sdn Bhd liquidation

Golden Hope Agrotech Malaysia 100.0 100.0 4 In members’ voluntary

Consultancy Sdn Bhd liquidation

Golden Hope Fruit Malaysia 100.0 100.0 4 In members’ voluntary

Industries Sdn Bhd liquidation

Nature Ambience Malaysia 100.0 100.0 4 In members’ voluntary

Sdn Bhd liquidation

Sime Darby Julau Malaysia 100.0 100.0 4 In members’ voluntary

Plantation Sdn Bhd liquidation

Sime Darby Plantation Cameroon 100.0 100.0 4 In members’ voluntary

Cameroon Ltd. liquidation

Sime Darby Edible India 100.0 100.0 4 In members’ voluntary

Products India Private liquidation
Limited

Vertical Drive Sdn Bhd Malaysia 100.0 100.0 4 In members’ voluntary

liquidation

(vi) Associates placed under members’ voluntary liquidation/deregistered during the financial year are as follows:

Country of
incorporation/
Group’s effective
Principal
interest (%)
place of
Name of company business 31.12.2019 31.12.2018 Auditors Principal activities

Verdezyne, Inc. United States 43.5 43.5 3 In members’ voluntary

of America liquidation

Notes:
1. Subsidiaries and associates which are audited by PricewaterhouseCoopers PLT, Malaysia.
2. Subsidiaries and associates which are audited by member firms of PricewaterhouseCoopers International
Limited, which are separate and independent legal entities from PricewaterhouseCoopers PLT, Malaysia.
3. Subsidiaries, joint ventures and associates which are audited by firms other than member firms of
PricewaterhouseCoopers International Limited.
4. No legal requirement to appoint statutory auditors.
5. Subsidiaries which are exempted from having their financial statements audited in UK pursuant to
exemption available under section 480 of the UK Companies Act 2006.
+ Notwithstanding that the Group holds more than 50% equity interest in SD Plantation TNBES Renewable
Energy Sdn Bhd, the investment is classified as a joint venture (and not a subsidiary) as significant
decisions require unanimous consent from all its shareholders.
@
Yayasan Sime Darby is a company without share capital, limited by guarantee.
 Annual Report 2019 PG. 362 – 363

52. SUBSEQUENT EVENTS AFTER REPORTING DATE

(a) Sime Darby Plantation Investment (Liberia) Private Limited, a wholly-owned subsidiary of the Group, has on
15 January 2020, completed the disposal of its entire 100% equity interest in Sime Darby Plantation (Liberia)
Inc. (“SDP Liberia”) to Mano Palm Oil Industries Limited (“MPOI”) for a total cash consideration of USD1 plus
an earn-out payment to be determined by the average future crude palm oil (“CPO”) price and future CPO
production of SDP Liberia. The earn-out consideration will be payable quarterly over a period of eight years,
commencing from April 2023. The expected gain from the disposal is RM74 million, after taking into
consideration of the cost to sell.

(b) In January and February 2020, the Group has completed the land disposal for five of the signed Sale and

FINANCIAL STATEMENTS
Purchase Agreements (“SPA”), which form part of the planned disposal indicated in Note 33(a)(i) and
recognised a gain on land disposal of RM232.1 million, net of costs to sell and real property gain tax.

(c) On 11 March 2020, the World Health Organisation (WHO) has declared the outbreak of COVID-19 to be a
global pandemic. The Group is involved in the full spectrum of the value chain comprising upstream and
downstream operations across 16 countries and primarily operates in Malaysia, Indonesia, Papua New Guinea,
Solomon Islands, Netherlands, United Kingdom, Thailand and South Africa. In Malaysia, to contain the spread
of COVID-19, the Movement Control Order (MCO) had been imposed from 18 March to 12 May 2020. However
the Malaysian Government has relaxed the MCO on oil palm and rubber industry as these are industries
that provide essential services to the country. With this decision but subject to any state or territorial restrictions
which may be introduced from time to time, the Group’s estate, mill, rubber and refinery operations are
able to operate subject to conditions to certain operating conditions. The restriction in movement which
have been implemented in the various countries where the Group operates in has not curtailed all of its
7
operations. Additionally, the Group has implemented remote work arrangements to maintain certain operations,
such as financial reporting systems and monitoring of its operations at its various sites.

As a result of these effects, the Group has performed an assessment and carefully considered the potential
impact of COVID-19 on the Group’s and the Company’s operations and financials, which include amongst
others the slowing down of demand for oils, increasing risks on customers deferring or defaulting on
contracts, customers credit risks and volatility from foreign exchange fluctuations. Based on the assessment
and information available at the point of reporting, the Group’s operating results have been forecasted to
remain satisfactory and the cash flow position together with its undrawn facilities are adequate to meet
the Group’s requirements.

Overall at this stage, the impact on the Group’s business and results has been limited. Management will
however continue to monitor developments and will take the necessary corrective actions. The Group will
continue to run its operations in the best and safest way without jeopardising the health and safety of its
employees and abiding with all governmental policies and directives.

53. APPROVAL OF FINANCIAL STATEMENTS

The financial statements have been approved for issue in accordance with a resolution of the Board of Directors
on 29 April 2020.
STATEMENT BY
DIREC TORS
Pursuant To Section 251(2) Of The Companies Act 2016

We, Tan Sri Dato’ A. Ghani Othman and Mohamad Helmy Othman Basha, two of the Directors of Sime Darby
Plantation Berhad, do hereby state that, in the opinion of the Directors, the financial statements set out on pages
191 to 363 are drawn up so as to give a true and fair view of the financial position of the Group and the Company
as at 31 December 2019 and of the financial performance of the Group and the Company for the financial year
ended on that date in accordance with the Malaysian Financial Reporting Standards, International Financial Reporting
Standards and the requirements of the Companies Act 2016 in Malaysia.

Signed in accordance with a resolution of the Board of Directors dated 29 April 2020.

TAN SRI DATO’ A. GHANI OTHMAN MOHAMAD HELMY OTHMAN BASHA
DIRECTOR DIRECTOR

Selangor
29 April 2020

STATUTORY
DECL AR ATION
Pursuant To Section 251(1) Of The Companies Act 2016

I, Renaka Ramachandran, the Officer primarily responsible for the financial management of Sime Darby Plantation
Berhad, do solemnly and sincerely declare that the financial statements set out on pages 191 to 363 are, to the best
of my knowledge and belief, correct and I make this solemn declaration conscientiously believing the same to be
true, and by virtue of the provisions of the Statutory Declarations Act 1960.

RENAKA RAMACHANDRAN
OFFICER

Subscribed and solemnly declared by the abovenamed Renaka Ramachandran at Selangor, Malaysia on 29 April
2020.

Before me,

COMMISSIONER FOR OATHS

 Annual Report 2019 PG. 364 – 365

INDEPENDENT AUDITORS ’REP ORT

To The Members Of Sime Darby Plantation Berhad
(Incorporated In Malaysia) Registration No. 200401009263 (647766-V)

REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS

Our opinion
In our opinion, the financial statements of Sime Darby Plantation Berhad (“the Company”) and its subsidiaries (“the
Group”) give a true and fair view of the financial position of the Group and of the Company as at 31 December 2019,
and of their financial performance and their cash flows for the financial year then ended in accordance with Malaysian
Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies
Act 2016 in Malaysia.

What we have audited

FINANCIAL STATEMENTS
We have audited the financial statements of the Group and of the Company, which comprise the statements of
financial position as at 31 December 2019 of the Group and of the Company, and the statements of profit or loss,
statements of comprehensive income, statements of changes in equity and statements of cash flows of the Group
and of the Company for the financial year then ended, and notes to the financial statements, including a summary
of significant accounting policies, as set out on pages 191 to 363.

Basis for opinion

We conducted our audit in accordance with approved standards on auditing in Malaysia and International Standards
on Auditing. Our responsibilities under those standards are further described in the “Auditors’ responsibilities for the
audit of the financial statements” section of our report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
7
Independence and other ethical responsibilities
We are independent of the Group and of the Company in accordance with the By-Laws (on Professional Ethics,
Conduct and Practice) of the Malaysian Institute of Accountants (“By-Laws”) and the International Ethics Standards
Board for Accountants’ Code of Ethics for Professional Accountants (“IESBA Code”), and we have fulfilled our other
ethical responsibilities in accordance with the By-Laws and the IESBA Code.

Our audit approach

As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the
financial statements of the Group and of the Company. In particular, we considered where the Directors made
subjective judgements; for example, in respect of significant accounting estimates that involved making assumptions
and considering future events that are inherently uncertain. As in all of our audits, we also addressed the risk of
management override of internal controls, including among other matters, consideration of whether there was
evidence of bias that represented a risk of material misstatement due to fraud.

We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the
financial statements as a whole, taking into account the structure of the Group and of the Company, the accounting
processes and controls, and the industry in which the Group and the Company operate.

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of
the financial statements of the Group and of the Company for the current financial year. These matters were addressed
in the context of our audit of the financial statements of the Group and of the Company as a whole, and in forming
our opinion thereon, and we do not provide a separate opinion on these matters.
INDEPENDENT AUDITORS’ REPORT
To The Members Of Sime Darby Plantation Berhad
(Incorporated In Malaysia) Registration No. 200401009263 (647766-V)
REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS (CONTINUED)
Key audit matters (continued)
Key audit matters
Measurement, presentation and disclosure of the Group’s
and the Company’s disposal of its 100% equity interest
in Sime Darby Plantation (Liberia) Inc (“SDP Liberia”)
Refer to Notes 13, 17(c), 20, 21, 33(c)(i) and 52(a) to the
financial statements.
On 12 December 2019, the Group entered into a Sale
and Purchase Agreement (“SPA”) with Mano Palm Oil
Industries Limited (“MPOI”) to dispose of its entire 100%
equity interest in SDP Liberia for a total cash consideration
of USD 1, inclusive of an earn-out payment by MPOI to
SDP, determined by the average future crude palm oil
(“CPO”) price and future CPO production of SDP Liberia.
The earn-out consideration is payable quarterly over a
period of eight years, commencing from April 2023. The
disposal of SDP Liberia was completed subsequent to
the financial year on 15 January 2020 upon fulfillment
of all conditions precedent.
In accordance with MFRS 5 “Non-current Assets Held for
Sale and Discontinued Operations” (“MFRS 5”), SDP Liberia
has been classified as non-current assets held for sale
and its results as discontinuing operations as the conditions
set out in MFRS 5 were met as at the financial year end.
Arising from the disposal of SDP Liberia, the impact to
the Group’s and to the Company’s results for the current
financial year ended 31 December 2019 is as follows:
i) Impact to the Group
An impairment of property, plant and equipment
amounting to RM224.5 million and right-of-use assets
of RM11.0 million in SDP Liberia had been recognised
within discontinuing operations in addition to
providing for specific costs that the Group would
be liable for under the terms of the SPA.
ii) Impact to the Company
An impairment of RM305.9 million was recognised
in respect of the Company’s cost of investment in
and deemed capital contribution to SDP Liberia.
We focused on the measurement and presentation of
the disposal of SDP Liberia in the Group’s and the
Company’s financial statements as it represented a
significant transaction to both the Group and the Company
during the financial year.
How our audit addressed the key audit matters
We reviewed the SPA entered into with MPOI to
determine:
i) the carrying amount of property, plant and
equipment, right-of-use assets, other assets and
liabilities of SDP Liberia that will be transferred
to MPOI on completion of the disposal compared
with the consideration receivable to assess the
adequacy of the impairment made on these
assets at the Group;
ii) the liabilities including other costs and obligations
that will be assumed or payable by the Group
on and post disposal to ensure that these liabilities
have been adequately accrued for and taken up
in the correct financial year; and
iii) the conditions precedent in determining the
completion date for SDP Liberia’s disposal had
been fulfilled as at 15 January 2020.
In addition, we determined the carrying amount of
the cost of investment in SDP Liberia including any
amount due from SDP Liberia which has been deemed
as capital contribution to ensure the adequacy of the
impairment made at the Company.
We evaluated the measurement, presentation and
disclosure of SDP Liberia as non-current assets held
for sale and its results as discontinuing operations
made in the financial statements are in accordance
with the requirements of MFRS 5.
We also evaluated the appropriateness of the
presentation and disclosure of the completion of SDP
Liberia’s disposal on 15 January 2020 as a subsequent
event including checking management’s calculation
of the expected gain of disposal of investment in SDP
Liberia disclosed in that note.
Based on the above procedures, we did not note any
material exception on the measurement, presentation
and disclosure arising from the disposal of SDP Liberia
in the Group’s and the Company’s financial statements
as at 31 December 2019.

REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS (CONTINUED)
Key audit matters (continued)
Key audit matters
Recoverability of the Group’s carrying amount of goodwill
arising from the acquisition of New Britain Palm Oil
Limited (“NBPOL”)
Refer to Notes 24 (i) and 33(c)(ii) to the financial statements.
The intangible assets of the Group’s consolidated financial
statements include goodwill of RM2,123.3 million which
arose from the acquisition of NBPOL group during the
financial year ended 30 June 2015. The goodwill was
partly allocated to PT Minamas Gemilang and its
subsidiaries (“Minamas Group”) cash generating units
(“CGUs”) as Minamas Group operations are expected
to benefit from the additional planting material synergies
arising from the acquisition of NBPOL and these synergies
will not be impacted from the Group’s planned disposal
of Verdant Bioscience Pte Ltd.
In accordance with the Group’s policy, the Group determines
whether goodwill is impaired on an annual basis.
Management performed impairment assessments of the
two CGUs based on value-in-use (“VIU”) determined using
the discounted cash flow models, which was approved
by the Directors. A range of sensitivity analysis was also
performed by management.
We continue to focus on the recoverability of the carrying
amount of goodwill in the two CGUs due to the significant
amount and significant estimates involved in determining
the key assumptions used in deriving the recoverable
amounts of the CGUs, i.e. projection period, FFB yields,
CPO selling prices and the discount rates as disclosed
in Note 24 (i).
Based on management’s assessments, no impairment
was required as the recoverable amounts exceeded
the carrying amount of goodwill in the two CGUs as at
31 December 2019.
Annual Report 2019 PG. 366 – 367
How our audit addressed the key audit matters
We evaluated the reasonableness of the key
FINANCIAL STATEMENTS
assumptions used by management in the approved
cash flow projections by comparing the FFB yields
and CPO selling prices to historical results, forecasted
commodity prices and industry data where appropriate.
We had also agreed the projection period to the
remaining lease terms for the respective CGUs.
We reviewed the Group’s approved disposal plans of
Verdant Bioscience Pte Ltd and the consideration of
its impact on NBPOL’s goodwill allocated to Minamas
Group, arising from the planting material synergies.
We assessed the reliability of management’s cash flow 7
projections by comparing their previous years’ forecasted
results against past trends of actual results. We checked
that the cash flow projections had been updated with
the previous financial period’s historical results.
We involved our valuation experts to assess the
discount rates used in determining the recoverable
amounts of the respective CGUs and also determined
whether the change in the discount rates used as
compared to the rates used in the previous financial
period is reasonable.
We assessed the appropriateness of sensitivity analysis
performed by management, including the disclosures
of a reasonable possible change in the key assumptions
and the corresponding effect on the respective
recoverable amounts by re-performing the sensitivity
analysis.
Based on the above procedures, we did not note any
material exception to management’s assessment on
the recoverability of the Group’s carrying amount of
goodwill arising from the acquisition of NBPOL as at
31 December 2019.
INDEPENDENT AUDITORS’ REPORT
To The Members Of Sime Darby Plantation Berhad
(Incorporated In Malaysia) Registration No. 200401009263 (647766-V)

INFORMATION OTHER THAN THE FINANCIAL STATEMENTS AND AUDITORS’ REPORT THEREON

The Directors of the Company are responsible for the other information. The other information comprises the Directors’
Report and the remaining 2019 Annual Report of Sime Darby Plantation Berhad, but does not include the financial
statements of the Group and of the Company and our auditors’ report thereon.

Our opinion on the financial statements of the Group and of the Company does not cover the other information
and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements of the Group and of the Company, our responsibility is to
read the other information and, in doing so, consider whether the other information is materially inconsistent with
the financial statements of the Group and of the Company or our knowledge obtained in the audit or otherwise
appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information,
we are required to report that fact. We have nothing to report in this regard.

RESPONSIBILITIES OF THE DIRECTORS FOR THE FINANCIAL STATEMENTS

The Directors of the Company are responsible for the preparation of the financial statements of the Group and of the
Company that give a true and fair view in accordance with Malaysian Financial Reporting Standards, International
Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia. The Directors are also
responsible for such internal control as the Directors determine is necessary to enable the preparation of financial
statements of the Group and of the Company that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements of the Group and of the Company, the Directors are responsible for assessing
the Group’s and the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to
going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the
Group or the Company or to cease operations, or have no realistic alternative but to do so.

AUDITORS’ RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS

Our objectives are to obtain reasonable assurance about whether the financial statements of the Group and of the
Company as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’
report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with approved standards on auditing in Malaysia and International Standards on
Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with approved standards on auditing in Malaysia and International Standards on
Auditing, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

(a) Identify and assess the risks of material misstatement of the financial statements of the Group and of the
Company, whether due to fraud or error, design and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may
involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

(b) Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Group’s and of the Company’s internal control.
 Annual Report 2019 PG. 368 – 369

AUDITORS’ RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS (CONTINUED)

(c) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made by the Directors.

(d) Conclude on the appropriateness of the Directors’ use of the going concern basis of accounting and, based on the
audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant
doubt on the Group’s or on the Company’s ability to continue as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial
statements of the Group and of the Company or, if such disclosures are inadequate, to modify our opinion. Our
conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events

FINANCIAL STATEMENTS
or conditions may cause the Group or the Company to cease to continue as a going concern.

(e) Evaluate the overall presentation, structure and content of the financial statements of the Group and of the
Company, including the disclosures, and whether the financial statements of the Group and of the Company
represent the underlying transactions and events in a manner that achieves fair presentation.

(f) Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities
within the Group to express an opinion on the financial statements of the Group. We are responsible for the
direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with the Directors regarding, among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
7
We also provide the Directors with a statement that we have complied with relevant ethical requirements regarding
independence, and to communicate with them all relationships and other matters that may reasonably be thought
to bear on our independence, and where applicable, related safeguards.

From the matters communicated with the Directors, we determine those matters that were of most significance in
the audit of the financial statements of the Group and of the Company for the current financial year and are therefore
the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences of doing so would reasonably be expected to
outweigh the public interest benefits of such communication.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

In accordance with the requirements of the Companies Act 2016 in Malaysia, we report that the subsidiaries of which
we have not acted as auditors, are disclosed in Note 51 to the financial statements.

OTHER MATTERS

This report is made solely to the members of the Company, as a body, in accordance with Section 266 of the
Companies Act 2016 in Malaysia and for no other purpose. We do not assume responsibility to any other person for
the content of this report.

PRICEWATERHOUSECOOPERS PLT LEE TUCK HENG

LLP0014401-LCA & AF 1146 02092/09/2020 J
Chartered Accountants Chartered Accountant

Kuala Lumpur
29 April 2020
A D D I T I O N A L
IN F O R M AT I O N
372 Properties Of The Group
378 Analysis Of Shareholdings
381 Additional Compliance Information
387 Financial Calendar
388 Share Price Movement
389 Notice To Shareholders
(Under The Personal Data Protection Act 2010)
390 Notis Kepada Pemegang Saham
(Di Bawah Akta Perlindungan Data Peribadi 2010)
391 Notice To Proxies
(Under The Personal Data Protection Act 2010) (“Notice”)
392 Notis Kepada Proksi
(Di Bawah Akta Perlindungan Data Peribadi 2010) (“Notis”)
393 Global Reporting Initiative (GRI) Content Index
PROPERTIES OF
THE GROUP
As At 31 December 2019

Age of Net book

Land area Year of building value
Location Tenure (Hectares) acquisition (Years)+ Description (RM million)

UPSTREAM PROPERTIES
Malaysia
Kedah Darul Aman
Anak Kulim, Bukit Hijau, Bukit Freehold 18,885 1978-2006 14 Oil palm and 472
Selarong, Jentayu, Padang Buluh, rubber estates and
Somme, Sungai Dingin a palm oil mill
Bukit Hijau Leasehold 9 2006 – Rubber estate ^
expiring 2068

Perak Darul Ridzuan

Bagan Datoh, Bikam, Chersonese, Freehold 37,155 1978-2001 10-26 Oil palm and 1,061
Cluny, Elphil, Flemington, Holyrood, rubber estates and
Kalumpong, Kamuning, Kinta Kellas, 5 palm oil mills
Sabrang, Selaba, Seri Intan, Sogomana,
Sungei Samak, Sungei Wangi, Tali Ayer
Chersonese, Cluny, Kalumpong, Leasehold 5,446 1978-1987 – Oil palm estates 78
Kamuning, Kinta Kellas, Sogomana, expiring
Sungai Samak, Sungei Wangi, Tali Ayer 2035-2897

Pahang Darul Makmur

Bukit Puteri, Chenor, Jabor, Jentar, Freehold 9,336 1985-2006 23 Oil palm estates 298
Kerdau, Mentakab, Sungai Mai and 2 palm oil
mills
Bukit Puteri, Chenor, Kerdau, Sungai Leasehold 10,621 1985-1992 13-23 Oil palm estates 115
Mai expiring and a palm oil mill
2057-2086

Selangor Darul Ehsan

Banting, Bestari Jaya, Bukit Cheraka, Freehold 36,153 1978-2013 2-28 Oil palm estates, 1,300
Bukit Kerayong, Bukit Lagong, Bukit 4 palm oil mills,
Rajah, Bukit Rotan, Bukit Talang, biodiesel and
Dusun Durian, East Carey Island, kernel crushing
Elmina, Sabak Bernam, Sepang, Sungai plants, rat bait
Buloh, Teluk Panglima Garang, factory, laboratories,
Tennamaram, West Carey Island research centres,
warehouse and a
training centre
East Carey Island, Port Klang, Sungai Leasehold 171 1978-2010 43 Oil palm estates 19
Buloh, Tennamaram expiring and a bulking
2020-2083 plant

Negeri Sembilan Darul Khusus

Bradwall, Bukit Pelandok, Bukit Pilah, Freehold 36,020 1978-2009 7-22 Oil palm and 826
Kok Foh, Labu, New Labu, Muar River, rubber estates,
P.D. Lukut, Pertang, Rantau, Salak, 4 palm oil mills
Sengkang, Siliau, Sungai Gemas, Sungai and a research
Sabaling, St Helier, Sua Betong, Sungai laboratory
Bharu, Tampin Linggi, Tanah Merah
Kok Foh, Sungai Bharu Leasehold 145 1982-1993 – Oil palm estates 2
expiring
2034-2072
 Annual Report 2019 PG. 372 – 373

Age of Net book

Land area Year of building value
Location Tenure (Hectares) acquisition (Years)+ Description (RM million)

UPSTREAM PROPERTIES (CONTINUED)

Malaysia (Continued)
Melaka
Bukit Asahan, Diamond Jubilee, Freehold 14,779 1978-2011 12-20 Oil palm estates 267
Kempas, Kemuning, Serkam and 2 palm oil

ADDITIONAL INFORMATION
mills
Leasehold 470 1982-1992 – Oil palm estates 3
expiring
2025-2071

Johor Darul Takzim

Batu Anam, Bintang, Bukit Badak, Freehold 54,518 1978-2012 2-23 Oil palm and 1,494
Bukit Benut, Bukit Paloh, CEP Nyior, rubber estates, 4
CEP Renggam, Cha’ah, Gunung Mas, palm oil mills, a
Hadapan, Kempas Klebang, Kulai, research centre
Lambak, Lanadron, Layang, New Pagoh, and 2 rubber
Nordanal, North Labis, Pagoh, factories
Pengkalan Bukit, Sembrong, Seri Pulai,
Sungai Senarut, Sungai Simpang Kiri,
Tangkah, Tun Dr. Ismail, Ulu Remis, 8
Welch, Yong Peng
Cenas, CEP Nyior, Cha’ah, Lanadron, Leasehold 18,612 1978-2012 23-27 Oil palm estates 242
Layang, Muar River, Pekan, Sembrong, expiring and 2 palm oil
Sungai Senarut, Sungai Simpang Kiri, 2020-2918 mills
Ulu Remis

Sabah
Binuang, Giram, Imam, Jeleta Bumi, Leasehold 53,654 1978-1983 12-33 Oil palm estates, 5 1,373
Kunak, Melalap, Merotai, Mostyn, expiring palm oil mills, a
Sandakan Bay, Sapong, Segaliud, 2020-2940 bulking plant and
Sentosa, Sungang, Table, Tiger, Tigowis, a research centre
Tingkayu, Tun Tan Siew Sin, Tunku

Sarawak
Bayu, Belian, Chartquest, Damai, Leasehold 47,280 1990-2004 16-24 Oil palm estates 789
Derawan, Dulang, Kelida, Lavang, expiring and 4 palm oil
Paroh, Pekaka, Rajawali, Rasan, Ruai, 2048-2082 mills
Sahua, Samudera, Semarak, Takau

Upstream Malaysia Properties 343,254 8,339

PROPERTIES OF THE GROUP
As At 31 December 2019

Age of Net book

Land area Year of building value
Location Tenure (Hectares) acquisition (Years)+ Description (RM million)

UPSTREAM PROPERTIES (CONTINUED)

Indonesia
Kalimantan – West
Awatan, Beturus, East, Kelampai, Leasehold 36,880 2001-2013 8-17 Oil palm estates, 2 206
Lembiru, Pelanjau, Sei Mawang, Sungai expiring 2030 palm oil mills and
Putih, West a bulking plant

Kalimantan – Central
Baras Danum, Batang Garing,Hatan Leasehold 59,116 2001-2018 11-22 Oil palm estates, 3 374
Tiring, Kawan Batu, Kuala Kuayan, expiring palm oil mills, a
Pemantang, Sapiri, Sekunyir, Seruyan, 2033-2034 bulking plant and
Sukamandang, Barito a kernel crushing
plant

Kalimantan – South
Angsana, Bakau, Bebunga, Betung, Leasehold 86,924 2001-2012 2-23 Oil palm estates, 8 1,254
Binturung, Gunung Aru, Gunung expiring palm oil mills, 2
Kemasan, Gunung Sari, Lanting, Laut 2032-2039 bulking plants and
Timur, Matalok, Mustika, Pantai Bonati, a kernel crushing
Pantai Timur, Pondok Labu, Rampa, plant
Randi, Rantau, Sangkoh, Sekayu,
Selabak, Sesulung, Sungai Cengal

Sulawesi – Central
Ungkaya Leasehold 4,712 2001-2011 7-24 Oil palm estate, a 76
expiring 2024 palm oil mill and a
bulking plant

Sumatera – Jambi
Panjang Leasehold 4,000 2001-2007 11 Oil palm estate 43
expiring 2038 and a palm oil mill

Sumatera – South
Bumi Ayu, Bukit Pinang, Karang Ringin, Leasehold 21,157 2001-2002 16-18 Oil palm estates 284
Mangun Jaya, Napal, Rantau Panjang, expiring and 2 palm oil
Sungai Jernih, Sungai Pinang 2033-2034 mills
Bangka Belitung Leasehold 10,045 2012 – Rubber estate –
expiring 2072

Sumatera – East Aceh

Batang Ara, Blang Simpo 1 & 2, Leasehold 8,820 2001-2008 21-36 Oil palm estates 154
Tamiang expiring and a palm oil mill
2022-2037
 Annual Report 2019 PG. 374 – 375

Age of Net book

Land area Year of building value
Location Tenure (Hectares) acquisition (Years)+ Description (RM million)

UPSTREAM PROPERTIES (CONTINUED)

Sumatera – Riau
Alur Damai, Aneka Persada, Mandah, Leasehold 54,835 2001-2015 5-23 Oil palm estates, 5 804
Menggala 1 – 3, Nusa Lestari, Nusa expiring palm oil mills and
Persada, Pinang Sebatang, Rotan 2031-2036 a research centre
Semelur, Teluk Bakau, Teluk Siak

ADDITIONAL INFORMATION
Sumatera – North
Deli Serdang Leasehold 972 2015 – Rubber estate, oil 29
expiring 2023 palm nursery and
office building

Upstream Indonesia Properties 287,460 3,224

Liberia
Bomi, Bong 1 & 2, Grand Cape Mount, Leasehold 220,000 2009 5-8 Oil palm and –
Gbarpolu, Lofa expiring 2072 rubber estates

8
Papua New Guinea
West New Britain, Morobe, Oro, Milne Leasehold 137,783 2018 2-46 Oil palm estates, a 3,695
Bay, New Ireland, Markham Valley expiring sugar cane,
2020-2107 plantation, grazing,
pasture, a refinery,
2 biogas plants, a
sugar factory, 11
palm oil mills, 5
kernel crushing
plants, and 2
abattoirs

Solomon Islands
Guadalcanal Leasehold 8,315 2015 3-13 Oil palm estates, a 323
expiring palm oil mills and
2043-2065 a kernel crushing
plant

Upstream Properties 996,812 24 15,581

PROPERTIES OF THE GROUP
As At 31 December 2019

Age of Net book

Land area Year of building value
Location Tenure (Hectares) acquisition (Years)+ Description (RM million)

DOWNSTREAM AND OTHERS

PROPERTIES
Malaysia
Selangor Darul Ehsan
Teluk Panglima Garang Freehold 2 2012 – Vacant land 11
North Port Edible Oil Refinery Leasehold 17 2006-2012 8-10 Refineries 134
Complex, Teluk Panglima Garang expiring
2076-2105

Johor Darul Takzim

Pasir Gudang Leasehold 6 1974-1985 43 Refinery 9
expiring
2035-2043

Sarawak
Kawasan Perindustrian Kidurong, Leasehold 14 2004 5-11 Refinery and a 27
Bintulu expiring 2072 kernel crushing
plant

Downstream and Others

39 181
Properties – Malaysia

OVERSEAS
Indonesia
Desa Sei Taib, Kecamatan Pulau Laut, Leasehold 32 2014 4-5 Refinery 111
Kalimantan expiring 2044

Thailand
Sukhumvit Road, Bangkok Freehold – 1986-2011 11-30 Office buildings 6
Poochaosamingprai Road, Samut Freehold 5 1986 11-30 Refinery 43
Prakan
Yok Krabat-Laksi Road, Samut Sakhon Freehold – 1986 – Vacant land –
Tiwanon Road, Nonthaburi Freehold 13 2014 33-38 Crushing and 92
refining plant and
office building

The Netherlands
Lindtsedijk, Zwijndrecht Freehold 11 2002 5-87 Refinery and a 145
research centre

South Africa
Boksburg Leasehold 1 2004 7 Refinery ^
expiring 2019
 Annual Report 2019 PG. 376 – 377

Age of Net book

Land area Year of building value
Location Tenure (Hectares) acquisition (Years)+ Description (RM million)

DOWNSTREAM AND OTHERS

PROPERTIES (CONTINUED)
OVERSEAS (CONTINUED)
United Kingdom
Liverpool Leasehold 3 2015 4-9 Refinery and 76

ADDITIONAL INFORMATION
expiring 2034 office building

Papua New Guinea

Markham Valley Leasehold 1 2018 10-3 2 copra mills 207
expiring 2033

Downstream and Others Properties –

66 680
Overseas

Downstream and Others Properties 105 861

GENERAL 8
Malaysia
Selangor Darul Ehsan
Plantation Tower, Oasis, Ara Damansara Freehold 2 2012 5 Office complex 221

Negeri Sembilan Darul Khusus

Port Dickson Freehold 3 2018 24-60 Holiday bungalow 10

Pahang Darul Makmur

Cameron Highlands Leasehold 2 2018 32-89 Holiday bungalow 2
expiring
2026-2082

Plantation Properties – General 7 233

Total Plantation Properties 996,925 16,675

+ The age of building is in respect of the building, mill and plant

^ NBV less than RM1 million
* Included Upstream Liberia which was divested in January 2020
A N A LYS I S O F
SHAREHOLDINGS
As At 2 April 2020

Total Number of Issued Shares : 6,884,575,283 ordinary shares

Class of Shares : Ordinary shares
Voting Rights : One vote per ordinary share in the case of a poll and one vote per person on a
show of hand

No. of % of No. of % of
Size of Shareholdings Shareholders Shareholders Shares Held Issued Shares

Less than 100 2,776 11.01 72,304 0.00

100 to 1,000 6,064 24.04 3,625,131 0.05

1,001 to 10,000 12,204 48.37 40,080,086 0.58

10,001 to 100,000 3,282 13.01 91,104,535 1.32

100,001 to less than 5% of issued capital 899 3.56 2,310,094,145 33.56

5% and above of issued capital 3 0.01 4,439,599,082 64.49

Total 25,228 100.00 6,884,575,283 100.00

No. of % of No. of % of
Classification of Shareholders Shareholders Shareholders Shares Held Issued Shares

Individuals 20,811 82.49 124,667,912 1.81

Banks/Finance Companies 89 0.35 4,478,809,589 65.05

Investment Trusts/Foundations/Charities 15 0.06 482,173 0.01

Industrial and Commercial Companies 580 2.30 72,634,242 1.06

Government Agencies/Institutions 2 0.01 1,085,890 0.02

Nominees 3,729 14.78 2,206,790,202 32.05

Others 2 0.01 105,275 0.00

Total 25,228 100.00 6,884,575,283 100.00

DIRECTORS’ DIRECT AND INDIRECT INTERESTS IN THE COMPANY AND ITS RELATED CORPORATIONS

As disclosed in the Directors’ Report of the Financial Statements as set out on page 187, none of the Directors of
the Company has any interest, direct or indirect, in shares, or debentures of, the Company or in a related corporation.
 Annual Report 2019 PG. 378 – 379

TOP 30 SECURITIES ACCOUNT HOLDERS ACCORDING TO THE RECORD OF DEPOSITORS

No. of % of Issued
No. Name of Shareholder Shares Held Shares

1 Amanahraya Trustees Berhad 3,106,412,577 45.12

  Amanah Saham Bumiputera
2 Citigroup Nominees (Tempatan) Sdn Bhd 937,737,853 13.62
  Employees Provident Fund Board

ADDITIONAL INFORMATION
3 Kumpulan Wang Persaraan (Diperbadankan) 395,448,652 5.74
4 Permodalan Nasional Berhad 223,147,723 3.24
5 Amanahraya Trustees Berhad 163,766,464 2.38
Amanah Saham Malaysia 2 – Wawasan
6 Amanahraya Trustees Berhad 152,621,454 2.22
  Amanah Saham Malaysia
7 Amanahraya Trustees Berhad 94,041,237 1.37
  Amanah Saham Bumiputera 2
8 Amanahraya Trustees Berhad 87,450,437 1.27
  Amanah Saham Malaysia 3
9 HSBC Nominees (Asing) Sdn Bhd 64,598,669 0.94
  JPMCB NA for Vanguard Total International Stock Index Fund 8
10 Citigroup Nominees (Tempatan) Sdn Bhd 62,692,649 0.91
  Great Eastern Life Assurance (Malaysia) Berhad (PAR 1)
11 Citigroup Nominees (Tempatan) Sdn Bhd 59,363,900 0.86
  Urusharta Jamaah Sdn Bhd (1)
12 Amanahraya Trustees Berhad 53,650,000 0.78
  Amanah Saham Bumiputera 3 – Didik
13 HSBC Nominees (Asing) Sdn Bhd 52,741,479 0.77
  JPMCB NA for Vanguard Emerging Markets Stock Index Fund
14 Cartaban Nominees (Tempatan) Sdn Bhd 47,209,527 0.69
  PAMB for Prulink Equity Fund
15 Maybank Nominees (Tempatan) Sdn Bhd 47,000,000 0.68
  Maybank Trustees Berhad for Public Ittikal Fund (N14011970240)
16 Cartaban Nominees (Asing) Sdn Bhd 40,772,728 0.59
  Exempt AN for State Street Bank & Trust Company (WEST CLT OD67)
17 Citigroup Nominees (Tempatan) Sdn Bhd 40,462,700 0.59
  Employees Provident Fund Board (Nomura)
18 Maybank Nominees (Tempatan) Sdn Bhd 33,346,216 0.48
  Maybank Trustees Berhad for Public Regular Savings Fund (N14011940100)
19 Citigroup Nominees (Tempatan) Sdn Bhd 32,367,345 0.47
  Exempt AN for AIA Bhd
20 Amanahraya Trustees Berhad 26,127,863 0.38
  Public Islamic Dividend Fund
21 Citigroup Nominees (Tempatan) Sdn Bhd 21,978,402 0.32
  Great Eastern Life Assurance (Malaysia) Berhad (PAR 3)
A N A LY S I S O F S H A R E H O L D I N G S
As At 2 April 2020

TOP 30 SECURITIES ACCOUNT HOLDERS ACCORDING TO THE RECORD OF DEPOSITORS (CONTINUED)

No. of % of Issued
No. Name of Shareholder Shares Held Shares

22 Cartaban Nominees (Asing) Sdn Bhd 19,969,346 0.29

  GIC Private Limited for Government of Singapore (C)
23 Maybank Nominees (Tempatan) Sdn Bhd 19,418,703 0.28
  MTrustee Berhad for Principal Dali Equity Growth Fund (UT-CIMB-DALI)
 (419455)
24 Lembaga Tabung Haji 18,940,900 0.28
25 Amanahraya Trustees Berhad 18,844,187 0.27
  Public Ittikal Sequel Fund
26 Citigroup Nominees (Tempatan) Sdn Bhd 18,720,800 0.27
  Employees Provident Fund Board (CIMB PRIN)
27 Amanahraya Trustees Berhad 17,171,204 0.25
  Public Islamic Select Enterprises Fund
28 HSBC Nominees (Asing) Sdn Bhd 15,408,000 0.22
  JPMCB NA for Flexshares Morningstar Global Upstream Natural Resources
  Index Fund
29 Pertubuhan Keselamatan Sosial 14,495,465 0.21
30 UOB Kay Hian Nominees (Asing) Sdn Bhd 14,032,098 0.20
  Exempt AN for UOB Kay Hian Pte Ltd (A/C clients)

TOTAL 5,899,938,578 85.69

SUBSTANTIAL SHAREHOLDERS ACCORDING TO THE REGISTER OF SUBSTANTIAL SHAREHOLDERS

No. of
No. of Shares Held
Shares Held % of (Indirect/ % of
(Direct Issued Deemed Issued
No. Name of Substantial Shareholder Interest) Shares Interest) Shares

1 AmanahRaya Trustees Berhad 3,111,412,677 45.19 – –

– Amanah Saham Bumiputera

2 Employees Provident Fund Board 926,526,415 13.46 101,172,459 1.47

3 Kumpulan Wang Persaraan 396,539,278 5.76 16,490,400 0.24

(Diperbadankan)
 Annual Report 2019 PG. 380 – 381

ADDITIONAL COMPLIANCE
INFORMATION

Information pertaining to Sime Darby Plantation Berhad (SDP or Company) and Group for the financial year under
review is as follows:

UTILISATION OF PROCEEDS RAISED FROM CORPORATE PROPOSAL

There was no proceed raised from corporate proposals during the financial year ended 31 December 2019.

AUDIT AND NON-AUDIT FEES

ADDITIONAL INFORMATION
(i) The amount of audit fees paid or payable to the external auditors, Messrs PricewaterhouseCoopers PLT (PwC),
for services rendered to the Group and the Company for the financial year ended 31 December 2019 amounted
to RM10,272 million and RM1.521 million, respectively.

(ii) The amount of non-audit fees paid or payable to the external auditors, PwC, and their affiliated companies for
services rendered to the Group and the Company for the financial year ended 31 December 2019 amounted to
RM2.035 million and RM0.318 million, respectively.

MATERIAL CONTRACTS INVOLVING INTERESTS OF DIRECTORS AND MAJOR SHAREHOLDERS

There was no material contract entered into by the Company and its subsidiaries involving interests of Directors and
Major Shareholders during the financial year ended 31 December 2019.

MATERIAL CONTRACTS RELATING TO LOANS 8

There was no material contract relating to loans by the Company involving interests of Directors and Major Shareholders
during the financial year ended 31 December 2019.

RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE

At the Sixteenth Annual General Meeting (AGM) held on 23 May 2019, the Company obtained a general mandate
from its shareholders for recurrent related party transactions (RRPT) of a revenue or trading nature, to be entered
into by the Company and/or its subsidiaries (RRPT Mandate).

The RRPT Mandate is valid until the conclusion of the forthcoming Seventeenth AGM of the Company.

The Group proposes to seek a renewal of the existing RRPT Mandate at its forthcoming Seventeenth AGM. The
renewal of the existing RRPT Mandate, if approved by the shareholders, will be valid until the conclusion of the
Company’s next AGM. Details of the RRPT Mandate being sought are provided in the Circular to Shareholders to be
uploaded together with the Notice of AGM.
A D D I T I O N A L C O M P L I A N C E I N F O R M AT I O N

Pursuant to Paragraph 10.09(2)(b) and Paragraph 3.1.5 of Practice Note 12 of the Main Market Listing Requirements
of Bursa Malaysia Securities Berhad, details of the RRPT of a revenue or trading nature entered into during the
financial year ended 31 December 2019 by the Company and/or its subsidiaries were as follows:

Value of
Transaction
Company Transacting Party Nature of Transactions (RM’million)

Transactions with Subsidiaries of Sime Darby Berhad (SDB)

1. SDP Kumpulan Sime Darby Leaseback of the Malaysia Vision 6.5

Berhad (KSDB) Valley (MVV) Land 1 from KSDB to
SDP for the SDP Group to carry out
planting/replanting, maintenance of oil
palm, harvesting and selling of fresh
fruit bunches (FFB) for 3,560 hectares
of Labu and New Labu Estates located
at Mukim Labu, Seremban, Negeri
Sembilan for a term of three (3) years
from 30 June 2017.

The rental expenses are payable on a

monthly basis.

2. SDP Sime Darby Malaysia Grant of a non-exclusive, non- 2.0

Berhad (SDMB) assignable and non-transferable licence
to use the “SIME DARBY” mark, Sime
Darby Shield Device Logo, Shield
Device Logo, Sime Darby in Chinese
Characters, the “DEVELOPING
SUSTAINABLE FUTURES” tagline and
the “DELIVERING SUSTAINABLE
FUTURES” tagline worldwide, solely in
the course of or in connection with
SDP’s business  via the Trademark and
Brand Licence Agreement by SDMB to
SDP.

3. SDP and Group DXC Technology Global Receipt of centralised operational 27.1
Services Centre (DXC support, i.e. payroll, accounting and
Technology) (fka Sime information technology processing,
Darby Global Services and other administration services.
Centre Sdn Bhd)

DXC Technology ceased

to be a related party
effective from 1 May
2019.

4. SDP and its following Sime Darby Auto Purchase of motor vehicles and 0.9
subsidiaries: ConneXion Sdn Bhd charges for vehicle maintenance
Sime Darby Sime Darby Auto services on an ad hoc basis.
Plantation (Sabah) Hyundai Sdn Bhd
Sdn Bhd (SDP
Sabah)
Sime Darby
Plantation Sarawak
Sdn Bhd (SDP
Sarawak)
 Annual Report 2019 PG. 382 – 383

Value of
Transaction
Company Transacting Party Nature of Transactions (RM’million)

Transactions with Subsidiaries of Sime Darby Berhad (SDB) (Continued)

4. SDP and its following

subsidiaries: (Continued)
Sime Darby
Plantation Research

ADDITIONAL INFORMATION
Sdn Bhd (SDP
Research)
(fka Sime Darby
Research Sdn Bhd)
Sime Darby
Plantation Seeds &
Agricultural Services
Sdn Bhd (SDP SAS)
(fka Sime Darby
Seeds & Agricultural
Services Sdn Bhd)
Sime Darby
Plantation Agri-Bio
Sdn Bhd
(fka Sime Darby
8
Agri-Bio Sdn Bhd)
Sime Darby
Plantation
Technology Centre
Sdn Bhd (SDP TC)
(fka Sime Darby
Technology Centre
Sdn Bhd)
The China Engineers
(Malaysia) Sdn Bhd
(TCEM)
Wangsa Mujur Sdn
Bhd (WMSB)

5. SDP and its following Sime Darby Rent-A-Car Car leasing charges payable on an ad 2.1
subsidiaries: Sdn Bhd hoc basis.
SDP Sabah
SDP Sarawak
SDP TC
Sime Darby
Plantation Biotech
Lab Sdn Bhd (fka
Sime Darby Biotech
Laboratories Sdn
Bhd)
A D D I T I O N A L C O M P L I A N C E I N F O R M AT I O N

Value of
Transaction
Company Transacting Party Nature of Transactions (RM’million)

6. SDP and its following Kubota Malaysia Purchase of heavy equipment and 27.1
subsidiaries: Sdn Bhd spare parts, and receipt of
SDP Sabah (fka Sime Kubota Sdn maintenance services on an ad hoc
SDP Sarawak Bhd) (Kubota) basis.
SDP Research Hastings Deering (PNG)
SDP SAS Limited
SDP TC Hastings Deering
TCEM (Solomon Islands)
WMSB Limited
Guthrie Industries Sime Darby Industrial
Malaysia Sendirian Sdn Bhd
Berhad
Chartquest Sdn Bhd Kubota ceased to be a
New Britain Palm Oil related party effective
Limited from 1 April 2019.
Sanguine (Malaysia)
Sdn Bhd (Sanguine)

7. SDP Sabah Sime Darby Energy Design, engineering, procurement, –

Solutions Sdn Bhd construction, testing, commissioning
and completion of palm oil mill
effluent biogas power plant for
Sandakan Bay, Binuang and Giram.

SDP Sabah has terminated the

engagement of Sime Darby Energy
Solutions Sdn Bhd and engaged a
third party contractor for the
remaining work. The amount granted
under the mandate represents the
balance of the contract amount due
to Sime Darby Energy Solutions Sdn
Bhd for the work performed.

Transactions with Sime Darby Property Berhad (SD Property) and its subsidiaries

8. SDP Sime Darby Property (City Rental income from the tenancy of 0.5
of Elmina) Sdn Bhd quarry land of 80.14 hectares of Tanah
(fka Sime Darby Elmina Merah Estate located at Mukim Jimah,
Development Sdn Bhd) District of Port Dickson, Negeri
Sembilan for a term of 30 years from
SDP terminated the 1 January 1995 until 31 December
tenancy of Tanah Merah 2024.
quarry land with effect
from December 2019. The rental income is receivable on an
annual basis.
 Annual Report 2019 PG. 384 – 385

Value of
Transaction
Company Transacting Party Nature of Transactions (RM’million)

Transactions with Sime Darby Property Berhad (SD Property) and its subsidiaries (Continued)

9. SDP and its following Sime Darby Property Rental expenses from leasing of the 5.5
subsidiaries: (Ampar Tenang) Sdn following agricultural lands:
Sime Darby Bhd (fka Sime Darby (i) Six (6) tenancy agreements for a
Plantation Latex Sdn Ampar Tenang Sdn term of two (2) years from 1 July

Bhd Bhd)
(fka Sime Darby Sime Darby Property
Latex Sdn Bhd) (Bukit Selarong) Sdn
SDP Sabah Bhd
Sime Darby Property
Sanguine
(Nilai) Sdn Bhd
Sime Darby Property
(Sabah) Sdn Bhd
(fka Sime Darby
Properties (Sabah) Sdn
Bhd)
Sime Darby Property
(Lukut) Sdn Bhd
(fka Sime Darby Lukut
Development Sdn Bhd)
Sime Darby Property
(Nilai Realty) Sdn Bhd
(fka Sime Darby
Properties Realty Sdn
Bhd)
Sime Darby Property
(Lembah Acob) Sdn
Bhd
Sime Darby Property
(Utara) Sdn Bhd
Sime Darby Property
(Pagoh) Sdn Bhd
(fka Sime Darby Pagoh (ii) Three (3) tenancy agreements for
Development Sdn Bhd)
(iii) A tenancy agreement for a term
ADDITIONAL INFORMATION
2017 with an option to renew for
a further term of one (1) year in
respect of:
(a) 95 hectares of Bukit
Kerayong Estate located at
Mukim Kapar, Klang,
Selangor
(b) 120 hectares of Sua Betong
Estate located at Mukim Si
Rusa, Port Dickson, Negeri
Sembilan
(c) 61 hectares of Mostyn Estate
located at Mukim Kunak,
Tawau, Sabah
8
(d) 20 hectares of Bukit Selarong
Estate located at Mukim
Naga Lilit, Kulim, Kedah
(e) 371 hectares of Padang
Buluh Estate located at
Mukim Bandar Gurun, Kuala
Muda, Kedah
(f) 138.76 hectares of Lanadron
Estate located at Mukim
Jorak, Muar, Johor
a term of two (2) years from 1
November 2017 with an option to
renew for a further term of one
(1) year in respect of:
(a) 121 hectares of Bukit
Selarong Estate located at
Mukim Padang Meha, Kulim,
Kedah
(b) 495 hectares of Bukit Lagong
Estate located at Mukim
Rawang, Gombak, Selangor
(c) 206.59 hectares of New Labu
Estate located at Mukim
Labu, Nilai, Negeri Sembilan
of two (2) years from 1 January
2018 with an option to renew for
a further term of one (1) year for
269.5 hectares of Labu Estate
located at Mukim Dengkil,
Sepang, Selangor.
A D D I T I O N A L C O M P L I A N C E I N F O R M AT I O N

Value of
Transaction
Company Transacting Party Nature of Transactions (RM’million)

9. SDP and its following (iv) A tenancy agreement for a term

subsidiaries: (Continued) of two (2) years from 1 November
2017 with an option to renew for
a further term of one (1) year for
563.05 hectares of Elmina Estate
located at Mukim Rawang,
Gombak, Selangor.
(v) A tenancy agreement for a term
of three (3) years from 29
September 2017 with an option
to renew for a further three (3)
years of the MVV Land 2 for
760.95 hectares of Labu and New
Labu Estates located at Mukim
Labu, Seremban, Negeri Sembilan.

The rental expenses are payable on a

monthly basis.

Transaction with Yayasan Sime Darby 1

10. SDP Yayasan Sime Darby Rental income from office space 0.4
located at Level 2, Block C, Plantation
Tower for a period of 12 months
commencing 1 July 2018 with an
option to extend for a further three (3)
years.

The rental income is receivable on a

monthly basis.

Transaction with subsidiary of UMW Holdings Berhad (UMWH) 2

11. SDP UMW Toyota Motor Sdn Purchases of motor vehicles. 0.8
Bhd

GRAND TOTAL 72.9

Notes:

1 SDP, SDB and SD Property are the registered corporate members of Yayasan Sime Darby, a company limited by guarantee.

2 AmanahRaya Trustees Berhad – Amanah Saham Bumiputera (ASB) is a major shareholder of SDP with 45.19% direct equity interest
in SDP as at 2 April 2020 and is deemed interested in the Recurrent Related Party Transactions (Interested Major Shareholder). ASB
is also a Major Shareholder of SDB and SD Property with 43.96% direct equity interest in SDB and 41.20% direct equity interest in
SD Property, as at 2 April 2019. ASB is also a Major Shareholder of UMWH, holding 41.14% direct equity interest as at 2 April 2019.
 Annual Report 2019 PG. 386 – 387

FINANCIAL
CALENDAR
For The Financial Year Ended 31 December 2019

ANNOUNCEMENT OF UNAUDITED CONSOLIDATED RESULTS

1st Quarter ended 31 March 2019 : 31 May 2019
2nd Quarter ended 30 June 2019 : 30 August 2019
3rd Quarter ended 30 September 2019 : 29 November 2019
4th Quarter ended 31 December 2019 : 28 February 2020

DIVIDEND

ADDITIONAL INFORMATION
Notice Date Entitlement Date Payment Date

Final Single Tier Dividend of 1.0 sen per

28 February 2020 12 May 2020 22 May 2020
Ordinary Share

SEVENTEENTH ANNUAL GENERAL MEETING

Notice Date : to be announced at a later date
Meeting Date : to be announced at a later date

8
SHARE PRICE
MOVEMENT
For The Financial Year Ended 31 December 2019

Closing Price Volume Traded

of the Month (Million shares)
(RM) (RHS)

7 140

6 120

5 100

4 80

3 60

2 40

1 20

0 0
Jan’19 Feb’19 Mar’19 Apr’19 May’19 Jun’19 Jul’19 Aug’19 Sep’19 Oct’19 Nov’19 Dec’19

Volume Traded
Highest (RM) Lowest (RM)
(Million Share) (RHS)

Jan’19 Feb’19 Mar’19 Apr’19 May’19 Jun’19 Jul’19 Aug’19 Sep’19 Oct’19 Nov’19 Dec’19

Highest (RM) 5.18 5.28 5.15 5.17 5.14 5.00 4.90 4.98 4.93 4.91 5.15 5.56

Lowest (RM) 4.55 5.09 5.02 5.02 4.53 4.55 4.61 4.42 4.73 4.60 4.91 5.07

Volume Traded
(Million Shares) 73.70 52.25 46.95 45.32 101.37 93.10 40.32 59.04 44.70 42.02 127.34 109.50
(RHS)

NOTICE TO
SHAREHOLDERS
(Under The Personal Data Protection Act 2010) (“Notice”)
Sime Darby Plantation Berhad (“SDP” or “we” or “us” or
“our”) strives to protect your personal data in accordance
with the Personal Data Protection Act 2010 (“the Act”).
The Act was enacted to regulate the processing of personal
data. To comply with the Act, we are required to manage
the personal data that we collect from you relating to
your shareholding in SDP.
The purposes for which your personal data may be used
are, but not limited to:
Internal record keeping including but not limited to
the registration and management of your shareholding
in SDP
To provide services to you
To communicate with you as a shareholder of SDP
To better understand your needs as a shareholder of
SDP
For security and fraud prevention purposes
For the purposes of statistical analysis of data
For marketing activities
For the purposes of our corporate governance
To send you event invitations based on selected events
To comply with any legal, statutory and/or regulatory
requirements
For the purposes of inclusion in media engagements
and/or any relevant or related events
For the purposes of us preparing guest invitations,
registration and/or sign-ups for our events
For the purposes of printed and online publications
(collectively, “the Purposes”)
Your personal data is or will be collected from information
provided by you, including but not limited to, postal,
facsimile, telephone, and e-mail communications with or
from you, and information provided by third-parties, including
but not limited to, Bursa Malaysia Berhad and any other
stock exchange, and your stockbrokers and remisiers.
You may be required to supply us with your name, identity
card/passport number, correspondence address, telephone
number, facsimile number and email address.
If you fail to supply us with such personal data, we may
not be able to process and/or disclose your personal data
for any of the Purposes.
Please be informed that your personal data may be
disclosed, disseminated and/or transferred to companies
within the SDP group of companies (including the holding
company, subsidiaries, related and affiliated companies,
both local and international), whether present or future
(collectively, “the Group”) or to any third-party organisations
or persons for the purpose of fulfilling our obligations to
you in respect of the Purposes and all such other purposes
that are related to the Purposes and also in providing
integrated services, maintaining and storing records
including but not limited to the share registrar(s) appointed
by us to manage the registration of shareholders.
The processing, disclosure, dissemination and/or transfer
of your personal data by us and/or the Group and/or
third-party organisations or persons may result in your
personal data being transferred outside of Malaysia.
Annual Report 2019 PG. 388 – 389
To this end, we are committed to ensuring the
confidentiality, protection, security and accuracy of your
personal data made available to us. It is your obligation
to ensure that all personal data submitted to us and
retained by us are accurate, not misleading, updated and
complete in all aspects. For the avoidance of doubt, we
and/or the Group and/or our or their employees or
authorised officers or agents will not be responsible for
any personal data submitted by you to us that is inaccurate,
misleading, not up to date and incomplete.
ADDITIONAL INFORMATION
Further, we request you to procure the consent of third
parties including, but not limited to your proxy(ies) whose
personal data is made available by you to us and you
hereby agree to use your best endeavours to do so.
You may at any time after the submission of your personal
data to us, request for information relating to your personal
data by contacting our share registrar Tricor Investor &
Issuing House Services Sdn Bhd if you wish to enquire
about any aspects of share registration matters:
Tricor Investor & Issuing House Services Sdn Bhd
Unit 32-01, Level 32, Tower A
Vertical Business Suite
Avenue 3, Bangsar South
No. 8, Jalan Kerinchi
59200 Kuala Lumpur. 8
Attention : Ms Lim Lay Kiow, Senior Manager
Tel : 03-2783 9299
e-mail : lay.kiow.lim@my.tricorglobal.com
In addition, you may request for access to your personal
data by contacting your broker or alternatively Tricor
Investor & Issuing House Services Sdn Bhd as shown
above if:
you require access, wish to limit access and/or make
any corrections and/or updates to your personal data
subject to such request for access, limitation, correction
and/or updates not being refused under the provisions
of the Act and/or existing laws; or
you wish to enquire about your personal data.
Any personal data retained by us shall be destroyed and/
or deleted from our records and system in accordance
with our retention policy in the event such data is no
longer required for the said Purposes.
In the event of any inconsistency between the English
version and the Bahasa Malaysia version of this Notice,
the English version shall prevail over the Bahasa Malaysia
version.
We shall process your personal data for the Purposes as
set out above, on the basis that you have consented to
our processing of your personal data in accordance with
this Notice until we receive a notification from you with
regards to this Notice, and you hereby declare that you
have read, understood and accepted the statements and
terms herein. SDP reserves the right to change and/or
amend this Notice from time to time.
 
NOTIS KEPADA
PEMEGANG SAHAM
(Di Bawah Akta Perlindungan Data Peribadi 2010) (“Notis”)
Sime Darby Plantation Berhad (“SDP” atau “kami”)
bermatlamat untuk melindungi data peribadi anda selaras
dengan Akta Perlindungan Data Peribadi 2010 (“Akta”).
Akta tersebut digubal untuk mengawal selia pemprosesan
data peribadi. Bagi mematuhi Akta tersebut, kami perlu
menguruskan data peribadi yang kami kumpulkan daripada
anda berkenaan dengan pegangan saham anda di SDP.
Tujuan penggunaan data peribadi anda adalah untuk,
tetapi tidak terhad kepada:
Penyimpanan rekod dalaman termasuk, tetapi tidak
terhad kepada, pendaftaran dan pengurusan pegangan
saham anda di SDP
Untuk memberikan perkhidmatan kepada anda
Untuk berkomunikasi dengan anda sebagai pemegang
saham SDP
Untuk lebih memahami keperluan anda sebagai
pemegang saham SDP
Bagi maksud-maksud keselamatan dan pencegahan
penipuan
Bagi maksud analisis statistik data
Untuk aktiviti-aktiviti pemasaran
Bagi maksud tadbir urus korporat kami
Untuk menghantar undangan-undangan ke acara-acara
terpilih
Untuk mematuhi sebarang keperluan undang-undang,
statutori, dan peraturan
Bagi maksud penyertaan dalam penglibatan media
dan/atau apa-apa acara yang relevan atau yang berkaitan
Bagi maksud untuk kami menyediakan jemputan
tetamu, pendaftaran dan/atau kemasukan untuk acara-
acara kami
Bagi maksud penerbitan bercetak dan penerbitan
dalam talian kami
(secara kolektif dirujuk sebagai, “Tujuan-Tujuan tersebut”).
Data peribadi anda adalah data yang sedang atau yang
akan dikumpulkan daripada maklumat yang diberikan
oleh anda, termasuk tetapi tidak terhad kepada, komunikasi-
komunikasi dengan anda atau daripada anda melalui pos,
faksimili, telefon, dan e-mel serta maklumat yang diberikan
oleh pihak ketiga, termasuk tetapi tidak terhad kepada,
Bursa Malaysia Berhad dan mana-mana bursa saham lain,
broker saham dan remisier anda.
Anda mungkin diminta untuk memberikan kepada kami
nama, nombor kad pengenalan/pasport, alamat surat-
menyurat, nombor telefon, nombor faksimili dan alamat
emel anda.
Jika anda gagal membekalkan kepada kami data peribadi
tersebut, kami tidak akan dapat memproses dan/atau
mendedahkan data peribadi anda untuk Tujuan-Tujuan
tersebut.
Sila ambil maklum bahawa data peribadi anda boleh
didedahkan, disebarkan dan/atau dipindahkan kepada
syarikat-syarikat di dalam kumpulan syarikat SDP (termasuk
syarikat induk, anak-anak syarikat, syarikat-syarikat berkaitan
dan bersekutu tempatan dan antarabangsa), sama ada
pada masa kini atau masa hadapan (secara kolektif,
“Kumpulan”), atau kepada mana-mana organisasi atau
individu pihak ketiga bagi maksud memenuhi
tanggungjawab kami kepada anda untuk melaksanakan
Tujuan-Tujuan tersebut dan apa sahaja tujuan lain yang
berkaitan dengan Tujuan-Tujuan tersebut, serta dalam
menyediakan perkhidmatan-perkhidmatan bersepadu,
menyelenggara dan menyimpan rekod-rekod oleh, termasuk
tetapi tidak terhad kepada, pendaftar saham atau pendaftar-
pendaftar saham yang dilantik oleh kami bagi menguruskan
pendaftaran pemegang saham.
Pemprosesan, pendedahan, penyebaran dan/atau
pemindahan data peribadi anda oleh kami dan/atau
Kumpulan dan/atau organisasi atau individu pihak ketiga
mungkin akan mengakibatkan data peribadi anda
dipindahkan ke luar Malaysia.
Untuk tujuan ini, kami komited untuk memastikan
kerahsiaan, perlindungan, keselamatan dan ketepatan data
peribadi anda yang diberikan kepada kami. Anda
bertanggungjawab untuk memastikan bahawa semua
data peribadi yang anda berikan kepada kami dan yang
disimpan oleh kami adalah tepat, tidak mengelirukan,
terkini dan lengkap dalam semua aspek. Bagi mengelakkan
keraguan, kami dan/atau Kumpulan dan/atau pekerja atau
pegawai yang diberi kuasa atau ejen kami tidak akan
bertanggungjawab untuk apa-apa data peribadi yang
diberikan oleh anda kepada kami yang tidak tepat,
mengelirukan, bukan terkini dan tidak lengkap.
Selanjutnya, kami meminta anda untuk mendapatkan
persetujuan pihak ketiga, termasuk tetapi tidak terhad
kepada proksi yang data peribadinya telah diberikan oleh
anda kepada kami dan anda dengan ini bersetuju untuk
menggunakan usaha terbaik anda untuk berbuat demikian.
Anda boleh pada bila-bila masa selepas penyerahan data
peribadi anda kepada kami, mengemukakan permintaan
untuk mengakses data peribadi anda dengan menghubungi
pendaftar saham kami Tricor Investor & Issuing House Services
Sdn Bhd jika anda ingin membuat sebarang pertanyaan
berkenaan dengan aspek-aspek pendaftaran saham:
Tricor Investor & Issuing House Services Sdn Bhd
Unit 32-01, Aras 32, Tower A
Vertical Business Suite, Avenue 3, Bangsar South
No. 8, Jalan Kerinchi, 59200 Kuala Lumpur.
Untuk perhatian : Puan Lim Lay Kiow, Pengurus Kanan
No.Tel : 03-2783 9299
e-mel : lay.kiow.lim@my.tricorglobal.com
Anda juga boleh membuat permintaan untuk mengakses
data peribadi anda dengan menghubungi broker anda
atau secara alternatif Tricor Investor & Issuing House Services
Sdn Bhd seperti yang tersebut di atas jika:
anda memerlukan akses, menyekat akses, meminda
dan/atau mengemas kini data peribadi anda, tertakluk
kepada syarat bahawa permintaan untuk akses, sekatan,
pindaan dan/atau kemas kini tersebut tidak ditolak di
bawah peruntukan Akta dan/atau undang-undang yang
sedia ada; atau
anda ingin membuat pertanyaan mengenai data
peribadi anda.
Data peribadi anda yang disimpan oleh kami akan
dimusnahkan dan/atau dipadamkan daripada rekod dan
sistem kami mengikut polisi penyimpanan kami sekiranya
data tersebut tidak lagi diperlukan bagi Tujuan-Tujuan
tersebut.
Sekiranya terdapat sebarang percanggahan atau konflik
antara versi Bahasa Inggeris dan versi Bahasa Malaysia
Notis ini, versi Bahasa Inggeris akan digunapakai.
Kami akan memproses data peribadi anda untuk Tujuan-
Tujuan tersebut, atas dasar bahawa anda telah bersetuju
untuk membenarkan kami memproses data peribadi anda
mengikut Notis ini sehingga kami menerima pemberitahuan
daripada anda berkenaan Notis ini dan anda dengan ini
mengakui bahawa anda telah membaca, memahami dan
menerima pernyataan-pernyataan dan terma-terma di
dalam Notis ini. SDP berhak mengubah dan/atau meminda
Notis ini dari semasa ke semasa.
 Annual Report 2019 PG. 390 – 391

NOTICE TO
PROXIES
(Under The Personal Data Protection Act 2010) (“Notice”)

Sime Darby Plantation Berhad (“SDP” or “we” or “us” or
“our”) strives to protect your personal data in accordance
with the Personal Data Protection Act 2010 (“the Act”).
The Act was enacted to regulate the processing of personal
data. To comply with the Act, we are required to manage
the personal data that we collect from you relating to
your acting as a proxy for a shareholder in SDP.
The purposes for which your personal data may be used
are, but not limited to:
Further, we request you to procure the consent of third-
parties whose personal data is made available by you
to us and you hereby agree to use your best endeavours
to do so.
You may at any time after the submission of your personal
data to us, request for access to your personal data from
Tricor Investor & Issuing House Services Sdn Bhd if:
you require access, wish to limit access and/or make
any corrections and/or updates to your personal data

Internal record keeping including but not limited to
the registration of attendance at the general meeting(s)
To communicate with you as a proxy for a shareholder
of SDP
For security and fraud prevention purposes
For the purposes of statistical analysis of data
For the purposes of our corporate governance
To comply with any legal, statutory and/or regulatory
requirements
(collectively, “the Purposes”)
Your personal data is or will be collected from information
provided by you, including but not limited to, postal,
facsimile, telephone, and e-mail communications with or
from you, and information provided by third-parties, including
but not limited to, Bursa Malaysia Berhad and any other
stock exchange, and your stockbrokers and remisiers.
You may be required to supply us with your name, identity
card/passport number and correspondence address.
ADDITIONAL INFORMATION
subject to such request for access, limitation, correction
and/or updates not being refused under the provisions
of the Act and/or existing laws; or
you wish to enquire about your personal data.
Tricor Investor & Issuing House Services Sdn Bhd
Unit 32-01, Level 32, Tower A
Vertical Business Suite
Avenue 3, Bangsar South
No. 8, Jalan Kerinchi
59200 Kuala Lumpur.
Attention : Ms Lim Lay Kiow, Senior Manager
Tel : 03-2783 9299
e-mail : lay.kiow.lim@my.tricorglobal.com
8
Any personal data retained by us shall be destroyed and/
or deleted from our records and system in accordance
with our retention policy in the event such data is no
longer required for the said Purposes.

If you fail to supply us with such personal data, we may
not be able to process and/or disclose your personal data
for any of the Purposes.
Please be informed that your personal data may be
disclosed, disseminated and/or transferred to companies
within the SDP group of companies (including the holding
company, subsidiaries, related and affiliated companies,
both local and international), whether present or future
(collectively, “the Group”) or to any third-party organisations
or persons for the purpose of fulfilling our obligations to
you in respect of the Purposes and all such other purposes
that are related to the Purposes and also in providing
integrated services, maintaining and storing records
including but not limited to the share registrar(s) appointed
by us to manage the registration of shareholders.
In the event of any inconsistency between the English
version and the Bahasa Malaysia version of this Notice,
the English version shall prevail over the Bahasa Malaysia
version.
We shall process your personal data for the Purposes as
set out above, on the basis that you have consented to
our processing of your personal data in accordance with
this notice until we receive a notification from you with
regards to this Notice, and you hereby declare that you
have read, understood and accepted the statements and
terms herein. SDP reserves the right to change and/or
amend this Notice from time to time.

The processing, disclosure, dissemination and/or transfer

of your personal data by us and/or the Group and/or
third-party organisations or persons may result in your
personal data being transferred outside of Malaysia.

To this end, we are committed to ensuring the confidentiality,

protection, security and accuracy of your personal data
made available to us. It is your obligation to ensure that
all personal data submitted to us and retained by us are
accurate, not misleading, updated and complete in all
aspects. For the avoidance of doubt, we and/or the Group
and/or our or their employees or authorised officers or
agents will not be responsible for any personal data
submitted by you to us that is inaccurate, misleading, not
up to date and incomplete.
NOTIS KEPADA
PROKSI
(Di Bawah Akta Perlindungan Data Peribadi 2010) (“Notis”)
Sime Darby Plantation Berhad (“SDP” atau “kami”)
bermatlamat untuk melindungi data peribadi anda selaras
dengan Akta Perlindungan Data Peribadi 2010 (“Akta”).
Akta tersebut digubal untuk mengawal selia pemprosesan
data peribadi. Bagi mematuhi Akta tersebut, kami perlu
menguruskan data peribadi yang kami kumpulkan daripada
anda yang berkait dengan perwakilan anda sebagai proksi
untuk pemegang saham SDP.
Data peribadi anda adalah untuk, tetapi tidak terhad
kepada tujuan-tujuan berikut:
Penyimpanan rekod dalaman termasuk, tetapi tidak
terhad kepada, pendaftaran kehadiran di mesyuarat
atau mesyuarat-mesyuarat agung
Untuk berkomunikasi dengan anda sebagai proksi
kepada pemegang saham SDP
Bagi maksud-maksud keselamatan dan pencegahan
penipuan
Bagi maksud analisis statistik data
Bagi maksud tadbir urus korporat kami
Untuk mematuhi sebarang keperluan undang-undang,
statutori, dan/atau peraturan
(secara kolektif dirujuk sebagai, “Tujuan-Tujuan tersebut”).
Data peribadi anda adalah data yang sedang atau yang
akan dikumpulkan daripada maklumat yang diberikan
oleh anda, termasuk tetapi tidak terhad kepada, komunikasi-
komunikasi dengan anda atau daripada anda melaui pos,
faksimili, telefon, dan e-mel serta maklumat yang diberikan
oleh pihak ketiga, termasuk tetapi tidak terhad kepada,
Bursa Malaysia Berhad dan mana-mana bursa saham lain,
broker saham dan remisier anda.
Anda mungkin diminta untuk memberikan kepada kami
nama, nombor kad pengenalan/pasport dan alamat surat-
menyurat anda.
Jika anda gagal membekalkan kepada kami data peribadi
tersebut, kami tidak akan dapat memproses dan/atau
mendedahkan data peribadi anda untuk Tujuan-Tujuan
tersebut.
Sila ambil maklum bahawa data peribadi anda boleh
didedahkan, disebarkan dan/atau dipindahkan kepada
syarikat-syarikat di dalam kumpulan syarikat SDP (termasuk
syarikat induk, anak-anak syarikat, syarikat-syarikat berkaitan
dan bersekutu tempatan dan antarabangsa), sama ada
pada masa kini atau masa hadapan (secara kolektif,
“Kumpulan”), atau kepada mana-mana organisasi atau
individu pihak ketiga bagi maksud memenuhi
tanggungjawab kami kepada anda untuk melaksanakan
Tujuan-Tujuan tersebut dan apa sahaja tujuan lain yang
berkaitan dengan Tujuan-Tujuan tersebut, serta dalam
menyediakan perkhidmatan-perkhidmatan bersepadu,
menyelenggara dan menyimpan rekod-rekod oleh,
termasuk tetapi tidak terhad kepada, pendaftar saham
atau pendaftar-pendaftar saham yang dilantik oleh kami
bagi menguruskan pendaftaran pemegang saham.
Pemprosesan, pendedahan, penyebaran dan/atau
pemindahan data peribadi anda oleh kami dan/atau
Kumpulan dan/atau organisasi atau individu pihak ketiga
mungkin akan mengakibatkan data peribadi anda
dipindahkan ke luar Malaysia.
Untuk tujuan ini, kami komited untuk memastikan
kerahsiaan, perlindungan, keselamatan dan ketepatan
data peribadi anda yang diberikan kepada kami. Anda
bertanggungjawab untuk memastikan bahawa semua
data peribadi yang anda berikan kepada kami dan yang
disimpan oleh kami adalah tepat, tidak mengelirukan,
terkini dan lengkap dalam semua aspek. Bagi mengelakkan
keraguan, kami dan/atau Kumpulan dan/atau pekerja
atau pegawai yang diberi kuasa atau ejen kami tidak
akan bertanggungjawab untuk apa-apa data peribadi
yang diberikan oleh anda kepada kami yang tidak tepat,
mengelirukan, bukan terkini dan tidak lengkap.
Selanjutnya, kami meminta anda untuk mendapatkan
persetujuan pihak ketiga yang data peribadinya telah
diberikan oleh anda kepada kami dan anda dengan ini
bersetuju untuk menggunakan usaha terbaik anda untuk
berbuat demikian.
Anda boleh pada bila-bila masa selepas penyerahan data
peribadi ini mengemukakan permintaan untuk mengakses
data peribadi anda daripada Tricor Investor & Issuing
House Services Sdn Bhd jika:
anda memerlukan akses, menyekat akses, meminda
dan/atau mengemaskini data peribadi anda, tertakluk
kepada syarat bahawa permintaan untuk akses, sekatan,
pindaan dan/atau kemaskini tersebut tidak ditolak di
bawah peruntukan Akta dan/atau undang-undang
yang sedia ada; atau
anda ingin membuat pertanyaan mengenai data
peribadi anda.
Tricor Investor & Issuing House Services Sdn Bhd
Unit 32-01, Aras 32, Tower A
Vertical Business Suite, Avenue 3, Bangsar South
No. 8, Jalan Kerinchi, 59200 Kuala Lumpur.
Untuk perhatian : Puan Lim Lay Kiow, Pengurus Kanan
No.Tel : 03-2783 9299
e-mel : lay.kiow.lim@my.tricorglobal.com
Data peribadi anda yang disimpan oleh kami akan
dimusnahkan dan/atau dipadamkan daripada rekod dan
sistem kami mengikut polisi penyimpanan kami sekiranya
data tersebut tidak lagi diperlukan bagi Tujuan-Tujuan
tersebut.
Sekiranya terdapat sebarang percanggahan atau konflik
antara versi Bahasa Inggeris dan versi Bahasa Malaysia
Notis ini, versi Bahasa Inggeris akan digunapakai.
Kami akan memproses data peribadi anda untuk Tujuan-
Tujuan tersebut atas dasar bahawa anda telah bersetuju
untuk membenarkan kami memproses data peribadi
anda mengikut Notis ini sehingga kami menerima
pemberitahuan daripada anda berkenaan Notis ini dan
anda dengan ini mengakui bahawa anda telah membaca,
memahami dan menerima pernyataan-pernyataan dan
terma-terma di dalam Notis ini. SDP berhak untuk
mengubah dan/atau meminda Notis ini dari semasa ke
semasa.
 Annual Report 2019 PG. 392 – 393

GLOBAL REP ORTING INITIATIVE (GRI)

CONTENT INDE X

The Global Reporting Initiative (GRI) is a multi-stakeholder standard for sustainability reporting, providing guidance on
determining report content and indicators. Sime Darby Plantation Berhad Annual Report has been prepared in
accordance with the GRI Standards: Core option. The following summary table details the location of specific disclosures
throughout this report and its supplementary Sustainability Report. It also includes additional supporting commentary
and reasons for the omission of data, where relevant. For further details, please visit www.simedarbyplantation.com.

GRI 101: Foundation 2016

GRI 102: General Disclosures 2016

ADDITIONAL INFORMATION
Disclosure Page or reason for omission
Organisational Profile
102-1 Name of organisation Sime Darby Plantation Berhad (SDP)
102-2 Activities, brands, products, and services Who We Are (12-13)
What We Do (14-15)
102-3 Location of headquarters Our Corporate Information (19)
102-4 Location of operations What We Do (14-15)
Our Global Presence (16-17)
102-5 Ownership and legal form Our Corporate Information (19)
102-6 Markets served What We Do (14-15)
Our Global Presence (16-17)
Our Value Creation Model (44-45) 8
102-7 Scale of the organisation Who We Are (12-13)
Our Global Presence (16-17)
Our Financial Highlights (18)
Group Financial Review (54-60)
5-Year Financial Highlights (61)
102-8 Information on employees and other Sustainability Report 2019 – Our Commitment to
workers Human Rights and Decent Work (69), Where We are in
Numbers (90-91)
102-9 Supply chain What We Do (14-15)
Our Global Presence (16-17)
Our Value Creation Model (44-45)
Our Performance by Sector: Upstream (62)
Our Performance by Sector: Downstream (70)
Supporting Smallholders (97)
102-10 Significant changes to the organisation and Chairman’s Message (26-27)
its supply chain Group Managing Director’s Review (34-35)
Group Financial Review (54-60)
Corporate Governance Overview Statement (145)
102-11 Precautionary Principle or approach Chairman’s Message (27)
Statement on Risk Management and Internal Control
(176-177)
102-12 External initiatives About Our Report (4-5)
Our Approach to Sustainability (8)
Sustainability at Sime Darby Plantation (92-93)
Drawing the Line on Deforestation (95-98)
Our Commitment to Human Rights and Decent Work
(104, 106)
G LO B A L R E P O R T I N G I N I T I AT I V E ( G R I ) C O N T E N T I N D E X

GRI 102: General Disclosures 2016 (Continued)

Disclosure Page or reason for omission
Organisational Profile (Continued)
102-13 Membership of associations About Our Report (4)
Our Approach to Sustainability (8)
Sustainability at Sime Darby Plantation (93)
Drawing the Line on Deforestation (95-98)
Our Commitment to Human Rights and Decent Work
(104, 106)
Strategy
102-14 Statement from senior decision-maker Group Managing Director’s Review (36-37)
Ethics and integrity
102-16 Values, principles, standards, and norms of Corporate Governance Overview Statement (144)
behavior Statement on Risk Management and Internal Control
(180-181)
Governance
102-18 Governance structure Corporate Governance Overview Statement (140-144)
Stakeholder Engagement
102-40 List of stakeholder groups Stakeholder Engagement (46-47)
102-41 Collective bargaining agreements Sustainability Report 2019 – Our Commitment to
Human Rights and Decent Work (60)
102-42 Identifying and selecting stakeholders Stakeholder Engagement (46-47)
102-43 Approach to stakeholder engagement Stakeholder Engagement (46-47)
102-44 Key topics and concerns raised Stakeholder Engagement (46-47)
Managing Our Material Matters (48-49)
Reporting Practice
102-45 Entities included in the consolidated Financial Statements
financial statements
102-46 Defining report content and topic About This Report (5)
Boundaries
102-47 List of material topics About This Report (5)
102-48 Restatements of information Who We Are (13)
102-49 Changes in reporting About This Report (5)
102-50 Reporting period About This Report (5)
102-51 Date of most recent report Non-applicable. Reports are produced every financial year.
102-52 Reporting cycle About This Report (5)
102-53 Contact point for questions regarding the Our Corporate Information (19)
report
102-54 Claims of reporting in accordance with the About This Report (5)
GRI Standards
102-55 GRI Content Index Global Reporting Index (GRI) Content Index
102-56 External assurance Independent Assurance Report
 Annual Report 2019 PG. 394 – 395

Material Topics
GRI Standard Disclosure Page or reason for omission
ECONOMIC

Economic Performance
GRI 103: 103-1 Explanation of the material topic Group Managing Director’s Review (30-37)
Management and its Boundary Group Financial Review (54-60)
Approach 2016 103-2 The management approach and Group Financial Review (54-60)
its components

ADDITIONAL INFORMATION
103-3 Evaluation of the management Group Financial Review (54-60)
approach
GRI 201: 201-1 Direct economic value generated Group Financial Review (54-60)
Economic and distributed Financial Statements
Performance 2016
Market Presence
GRI 103: 103-1 Explanation of the material topic Our Global Presence (16-17)
Management and its Boundary
Approach 2016 103-2 The management approach and Our Market Landscape (40-43)
its components
103-3 Evaluation of the management Our Market Landscape (40-43)
approach 8
GRI 202: 202-2 Proportion of senior Profile of Leadership Team (128-137)
Market Presence management hired from the
2016 local community
Indirect Economic Impacts
GRI 103: 103-1 Explanation of the material topic Our Commitment to Human Rights and
Management and its Boundary Decent Work (104-107)
Approach 2016 103-2 The management approach and Our Commitment to Human Rights and
its components Decent Work (104-107)
103-3 Evaluation of the management Our Commitment to Human Rights and
approach Decent Work (104-107)
GRI 203: 203-1 Infrastructure investments and Our Commitment to Human Rights and
Indirect Economic services supported Decent Work (104-107)
Impacts 2016 Group Managing Director’s Review (31, 36)
203-2 Significant indirect economic Our Commitment to Human Rights and
impacts Decent Work (104-107)
Procurement Practices
GRI 103: 103-1 Explanation of the material topic Board Tender Committee Report (169-170)
Management and its Boundary
Approach 2016 103-2 The management approach and Board Tender Committee Report (169-170)
its components Statement of Risk Management and Internal
Control (174-182)
103-3 Evaluation of the management Statement of Risk Management and Internal
approach Control (174-182)
Anti-corruption
GRI 103: 103-1 Explanation of the material topic Governance and Audit Committee Report
Management and its Boundary (150-159)
Approach 2016 103-2 The management approach and Governance and Audit Committee Report
its components (150-159)
103-3 Evaluation of the management Statement of Risk Management and Internal
approach Control (174-182)
G LO B A L R E P O R T I N G I N I T I AT I V E ( G R I ) C O N T E N T I N D E X

Material Topics
GRI Standard Disclosure Page or reason for omission
ENVIRONMENT

Water and Effluents

GRI 103: 103-1 Explanation of the material topic Innovating for Sustainability (111)
Management and its Boundary
Approach 2016 103-2 The management approach and Innovating for Sustainability (111)
its components
103-3 Evaluation of the management Innovating for Sustainability (111)
approach
GRI 303: 303-2 Management of water discharge- Sustainability Report 2019 - Innovation for
Water and Effluents related impacts Sustainability (80-81)
2018
Biodiversity
GRI 103: 103-1 Explanation of the material topic Drawing the Line on Deforestation (98-99)
Management and its Boundary
Approach 2016 103-2 The management approach and Drawing the Line on Deforestation (98-99)
its components
103-3 Evaluation of the management Drawing the Line on Deforestation (98-99)
approach
GRI 304: 304-2 Significant impacts of activities, Sustainability Report 2019 – Drawing the Line
Biodiversity products, and services on on Deforestation (38-41)
2016 biodiversity
304-3 Habitats protected or restored Sustainability Report 2019 – Drawing the Line
on Deforestation (38-41)
Emissions
GRI 103: 103-1 Explanation of the material topic Building Climate Change Resilience (100-103)
Management and its Boundary
Approach 2016 103-2 The management approach and Building Climate Change Resilience (100-103)
its components
103-3 Evaluation of the management Building Climate Change Resilience (100-103)
approach
GRI 305: Emissions 305-1 Direct (Scope 1) GHG emissions Sustainability Report 2019 – Building Climate
2016 Change Resilience (42-43, 89)
305-2 Disclosure 305-2 Energy indirect Sustainability Report 2019 – Building Climate
(Scope 2) GHG emissions Change Resilience (42-43, 89)
305-3 Other indirect (Scope 3) GHG Sustainability Report 2019 – Building Climate
emissions Change Resilience (42-43, 89)
305-4 GHG emissions intensity Sustainability Report 2019 – Building Climate
Change Resilience (42-43, 89)
305-5 Reduction of GHG emissions Sustainability Report 2019 – Building Climate
Change Resilience (42-43, 89)
Effluents and Waste
GRI 103: 103-1 Explanation of the material topic Innovating for Sustainability (111)
Management and its Boundary
Approach 2016 103-2 The management approach and Innovating for Sustainability (111)
its components
103-3 Evaluation of the management Innovating for Sustainability (111)
approach
 Annual Report 2019 PG. 396 – 397

Material Topics
GRI Standard Disclosure Page or reason for omission
ENVIRONMENT (CONTINUED)

Environmental Compliance
GRI 103: 103-1 Explanation of the material topic Innovating for Sustainability (111)
Management and its Boundary
Approach 2016 103-2 The management approach and Innovating for Sustainability (111)

ADDITIONAL INFORMATION
its components
103-3 Evaluation of the management Innovating for Sustainability (111)
approach
GRI 307: 307-1 Non-compliance with Sustainability Report 2019 – Building Climate
Environmental environmental laws and Change Resilience (45), Where We Are in
Compliance 2016 regulations Numbers (94)

SOCIAL

Employment
GRI 103: 103-1 Explanation of the material topic Our Performance by Sector: Human Capital
Management and its Boundary Growth (80-89)
Approach 2016 103-2 The management approach and Our Performance by Sector: Human Capital 8
its components Growth (80-89)
103-3 Evaluation of the management Our Performance by Sector: Human Capital
approach Growth (80-89)
Labour/Management Relations
GRI 103: 103-1 Explanation of the material topic Our Performance by Sector: Human Capital
Management and its Boundary Growth (80-89)
Approach 2016 103-2 The management approach and Our Performance by Sector: Human Capital
its components Growth (80-89)
103-3 Evaluation of the management Our Performance by Sector: Human Capital
approach Growth (80-89)
Occupational Health and Safety
GRI 103: 103-1 Explanation of the material topic Our Commitment to Human Rights and
Management and its Boundary Decent Work (106-107)
Approach 2016 103-2 The management approach and Our Commitment to Human Rights and
its components Decent Work (106-107)
103-3 Evaluation of the management Our Commitment to Human Rights and
approach Decent Work (106-107)
GRI 403: 403-1 Occupational health and safety Statement of Risk Management and Internal
Occupational management system Control (181)
Health and Safety Sustainability Report 2019 - Our Commitment
2018 to Human Rights and Decent Work (56-59,
84-85)
403-3 Occupational health services Sustainability Report 2019 – Our Commitment
to Human Rights and Decent Work (53-55)
403-4 Worker participation, Sustainability Report 2019 – Our Commitment
consultation, and communication to Human Rights and Decent Work (60),
on occupational health and Managing Our Material Matters (84-85)
safety
G LO B A L R E P O R T I N G I N I T I AT I V E ( G R I ) C O N T E N T I N D E X

Material Topics
GRI Standard Disclosure Page or reason for omission
SOCIAL (CONTINUED)

Occupational Health and Safety (Continued)

GRI 403: 403-5 Worker training on occupational Our Commitment to Human Rights and
Occupational health and safety Decent Work (106-107)
Health and Safety 403-7 Prevention and mitigation of Corporate Governance Overview Statement
2018 (Continued) occupational health and safety (144)
impacts directly linked by Our Approach to Integrated Thinking (6-7)
business relationships Statement of Risk Management and Internal
Control (180-181)
Drawing the Line on Deforestation (96-97, 99)
403-9 Work-related injuries Sustainability Report 2019 – Our Commitment
to Human Rights and Decent Work (56-59)
Training and Education
GRI 103: 103-1 Explanation of the material topic Our Performance by Sector: Human Capital
Management and its Boundary Growth (80-89)
Approach 2016 103-2 The management approach and Our Performance by Sector: Human Capital
its components Growth (80-89)
103-3 Evaluation of the management Our Performance by Sector: Human Capital
approach Growth (80-89)
Diversity and Equal Opportunity
GRI 103: 103-1 Explanation of the material topic Our Performance by Sector: Human Capital
Management and its Boundary Growth (80-89)
Approach 2016 103-2 The management approach and Our Performance by Sector: Human Capital
its components Growth (80-89)
103-3 Evaluation of the management Our Performance by Sector: Human Capital
approach Growth (80-89)
Non-discrimination
GRI 103: 103-1 Explanation of the material topic Our Performance by Sector: Human Capital
Management and its Boundary Growth (80-89)
Approach 2016 103-2 The management approach and Our Performance by Sector: Human Capital
its components Growth (80-89)
103-3 Evaluation of the management Our Performance by Sector: Human Capital
approach Growth (80-89)
Freedom of Association and Collective Bargaining
GRI 103: 103-1 Explanation of the material topic Sustainability Report 2019 – Our Commitment
Management and its Boundary to Human Rights and Decent Work (60)
Approach 2016 103-2 The management approach and Sustainability Report 2019 – Our Commitment
its components to Human Rights and Decent Work (60)
103-3 Evaluation of the management Sustainability Report 2019 – Our Commitment
approach to Human Rights and Decent Work (60)
GRI 407: 407-1 Operations and suppliers in Sustainability Report 2019 – Our Commitment
Freedom of which the right to freedom to Human Rights and Decent Work (60)
Association of association and collective
and Collective bargaining may be at risk
Bargaining 2016
 Annual Report 2019 PG. 398 – 399

Material Topics
GRI Standard Disclosure Page or reason for omission
SOCIAL (CONTINUED)

Child Labour
GRI 103: 103-1 Explanation of the material topic Sustainability Report 2019 – Our Commitment
Management and its Boundary to Human Rights and Decent Work (70-71)
Approach 2016 103-2 The management approach and Sustainability Report 2019 – Our Commitment

ADDITIONAL INFORMATION
its components to Human Rights and Decent Work (70-71)
103-3 Evaluation of the management Sustainability Report 2019 – Our Commitment
approach to Human Rights and Decent Work (70-71)
GRI 407: 408-1 Operations and suppliers at Sustainability Report 2019 – Our Commitment
Child Labour 2016 significant risk for incidents to Human Rights and Decent Work (70-71)
of child labor
Forced or Compulsory Labour
GRI 103: 103-1 Explanation of the material topic Our Commitment to Human Rights and
Management and its Boundary Decent Work (104-107)
Approach 2016 103-2 The management approach and Our Commitment to Human Rights and
its components Decent Work (104-107)
103-3 Evaluation of the management Our Commitment to Human Rights and 8
approach Decent Work (104-107)
GRI 409: 409-1 Operations and suppliers at Sustainability Report 2019 – Our Commitment
Forced or significant risk for incidents of to Human Rights and Decent Work (51-53)
Compulsory Labour forced or compulsory labour
2016
Human Rights Assessments
GRI 103: 103-1 Explanation of the material topic Our Commitment to Human Rights and
Management and its Boundary Decent Work (104-107)
Approach 2016 103-2 The management approach and Our Commitment to Human Rights and
its components Decent Work (104-107)
103-3 Evaluation of the management Our Commitment to Human Rights and
approach Decent Work (104-107)
Local Communities
GRI 103: 103-1 Explanation of the material topic Our Commitment to Human Rights and
Management and its Boundary Decent Work (104-107)
Approach 2016 103-2 The management approach and Our Commitment to Human Rights and
its components Decent Work (104-107)
103-3 Evaluation of the management Our Commitment to Human Rights and
approach Decent Work (104-107)
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