Our Business

BUSINESS OVERVIEW

The Group is principally involved in cultivation of oil palm, processing of Fresh Fruits Bunches (FFB) to produce crude palm oil (CPO) and palm kernel (PK). The Group is presently undertaking planting and development on 22,763 hectares of land of which approximately 12,500 hectares are suitable for oil palm planting. Plantation operation is organised under six (6) estates, namely Imbak, Gunung Rara, Labau, Maliau, Lokan and Luasong estates and one (1) palm oil mill with capacity of 60/90 MT FFB per hour. All are located in the locality of Gunung Rara/Kalabakan, Sabah.

The Group is working towards certification by the Roundtable for Sustainable Palm Oil (RSPO)/Malaysian Sustainable Palm Oil (MSPO) and is committed to becoming an environmental and community friendly organization.

FINANCIAL RESULTS

Key Financial Performance

The purpose of this review is to provide an overview of key financial performance at Group Level.

    2018 2017
(Restated)
Revenue RM’000 114,222 138,211
Profit before interest & taxation RM’000 14,276 41,961
Profit before tax RM’000 12,485 39,940
Profit net of tax RM’000 9,465 30,768
Return on average equity (ROE) % 3.07 9.82
Net cash generated from operating activities RM’000 35,078 62,266
Net gearing % 11 12
Total Shareholder’s fund RM’000 308,526 313,418

Group’s revenue for FY2018 decreased by 17% to RM114.222 million due to average selling prices of CPO and PK dropping by 21% and 30% respectively compared to preceding year.

Pre-tax profit decreased 69% to RM12.485 million compared to the previous financial year due to lower average selling prices of CPO and PK.

Financial Assets and Financial Liabilities

For the financial year 2018, the Group spent RM17.612 million for the acquisition of vehicles and field/mill equipment as well as the construction of housing, staff and workers’ quarters and stores for fertiliser and chemicals and multipurpose hall. The Group also spent RM4.555 million on oil palm plantation development.

Biological assets recorded a loss on FFB valuation of RM0.775 million compared to preceding year.

The Group’s shareholders’ equity as at 31 December 2018 stood at RM308,526 million, a decrease of RM4.892 million as compared to FY2017 (Restated). The decrease was mainly due to net profit for the year of RM9.465 million offset by a single-tier dividend of 3 sen amounting to RM14.366 million paid during the year.

As at 31 December 2018, the Group’s borrowings stood at RM24.999 million as compared to RM35.861 million in FY2017.

BUSINESS REVIEW

Plantation Operations

Out of a total land bank of 22,763 hectares, it is estimated that 12,602 hectares are plantable. At the end of the financial year, total area planted is 11,990 hectares of which 11,074 hectares are matured. About 250 hectares planted in steep terrain and loose soil is subject to frequent erosion and landslip. Management has therefore decided to abandon these areas. During 2018, 176 hectares has been planted. A further 181 hectares will come into maturity during 2019. We expect to complete our planting programme by 2020. The area statement is as shown below:

  2018


Ha
2017
Ha
Matured 11,074 10,701
Immature 916 1,363
Total Planted 11,990 12,064
Plantable 612 658
Unplantable 10,161 10,041
Total Area 22,763 22,763

In FY2018, the Group’s plantation operating environment was rendered more challenging by the wet La Nina weather as most of the area is undulating to hilly. On the other hand, lower selling prices of CPO and PK also impacted on the overall performance. Nonetheless management is confident that above average yield can be achieved with hands-on management and dedication to details. Yield achievable is further augmented through planting of TSH’s Wakuba high yielding clonal palms. Critically, the Group is able to tap on the management expertise of TSH Resources Bhd on agronomic and agricultural husbandry practices.


During the financial year, the Group is able to produce 209,936 MT of FFB, which represents an increase of 7% against FY2017. The increase is principally due to higher hectarage under harvesting and improving age profile of the plantings. Yield per mature hectare improved to 18.96 MT per hectare in 2018 from 18.37 MT per hectare in 2017.

The Group’s oil palm ages are between 1 to 11 years with about 8% being immature palms. About 35% are young mature palms (4 - 7 years) with an increasing yield trend in coming years and 57% of the total palms are of prime mature (8 years and more). As such there will be no necessity for replanting for the next 15 years.

Details of Oil Palm Maturity Profile are as follow:


  Imbak
Estate

Ha
Labau
Estate

Ha
Maliau
Estate

Ha
Lokan
Estate

Ha
Luasong
Estate

Ha
Gunung Rara
Estate

Ha
Total
Ha
Immature 138 116 135 358 169 - 916
Young Mature - 598 376 1,313 1,452 472 4,211
Prime Mature 1,660 1,557 1,581 434 640 991 6,863
Total 1,798 2,271 2,092 2,105 2,261 1,463 11,990

The Group recognises the importance of quality planting materials as the primary building block for long term competitiveness and sustainability. Towards this end more new area will be planted with TSH Wakuba clonal oil palm materials which have proven to produce high oil yield per hectare and at the same time stringent culling, best nursery upkeep practices and field planting standard will be observed.

While many factors, including weather conditions influence yield, management has to focus on controllable factors, be hands on and pay attention to details in order to achieve high productivity and cost efficiency. Quality Management Team has been established at each estate to ensure all aspects of operation comply with Standard Operating Procedures.

The Group is firmly committed to sustainability and has been a member of Roundtable on Sustainable Oil Palm (RSPO) since 2014. Certification process is in progress and the Group targets to have the mill and one (1) estate certified in 2019. The management targets to achieve MSPO certification by end of 2019.

Milling Operations

The Group operates a 60/90 MT FFB per hour palm oil mill which commenced commercial operation on 17 December 2014. In FY2018, total FFB processed was 208,021 MT which is 13,711 MT higher than the preceding financial year. The mill recorded total production of 46,542 MT (2017: 44,758 MT) of CPO and 7,317 MT (2017: 6,779 MT) of PK. The Group achieved OER of 22.37% for CPO (2017: 23.03%). Heavy rainfall especially during the second half of the year adversely impacted FFB collection operating and consequently oil extraction rate. Despite this, OER is still much above industrial average and can be sustained through the Group’s commitment to KPI oriented process and procedures in oil palm cultivation, harvesting and milling operations.

Mill processing statistics are as shown below:-


  2018 2017 Change (%)
FFB Processed (MT) 208,021 194,310 7.06%
Mill Production (MT)      
  • CPO
46,542 44,758 3.99%
  • PK
7,317 6,779 7.94%
Extraction Rates (%)      
  • CPO
22.37 23.03 (2.87%)
  • PK
3.52 3.49 0.86%
Average Selling Price (RM/MT):      
  • CPO
2,177 2,742 (20.61%)
  • PK
1,714 2,458 (30.27%)
Sales Volume (MT)      
  • CPO
46,328 44,100 5.05%
  • PK
7,304 6,658 9.70%



OUTLOOK AND PROSPECT

Management is confident of a double digit percentage growth in FFB production in 2019 due to favourable weather in 2018 and in the case of the Group, production should also be boosted by the better age profile as more area comes into higher yielding age and with additional area coming into maturity and harvesting.

On the global front, there will be more economic uncertainties brought about by political changes in Europe and USA with the latter posing a risk of trade war which could dampen world trade and economic growth. CPO price for 2019 will be governed by the extent increase in CPO production in Indonesia and Malaysia, supply of oilseed crop from USA/ South America and demand from India and People’s Republic of China. Also critical to price outlook will be the bio-diesel policies of Indonesia, Malaysia and the European Union. With a general undulating consensus that prices for 2019 will be better than 2018, the Group is confident of achieving reasonable profit for 2019.

For the longer term the Group is optimistic about the prospects of palm oil industry due to population growth propelling increased demand, higher per capital income and the many health qualities of palm oil.

To enhance long term sustainability management will continue its relentless drive for productivity and efficiency improvement to reduce unit cost of production.


DIVIDEND

The Board has recommended a Final Dividend of 1 sen per share for the year ended 2018 subject to shareholder’s approval at the Annual General Meeting to be held on 21 May 2019.

With the majority of the Group’s plantation already mature and on an ascending yield curve phase and as much of the supporting infrastructural facilities, offices, stores, staff and labour quarters and workers’ amenities having been completed, future capital expenditure will be substantially reduced.

In the light of the above, your Board has adopted a dividend policy to distribute up to 70% of profit after tax by way of dividend.

This statement is made in accordance with a resolution of the Board of Directors passed on 18 April 2019.


流水的女人-女人张腿给男人桶视频