41st Annual General Meeting - investors-centre.cominvestors-centre.com/.../agm/presentation-slides.pdf · El Nino, El Nina. Slowdown in major economies such as China and EU. CHALLENGES

41st Annual General Meeting

24th August 2016 DEWAN BERJAYA, BUKIT KIARA EQUESTRIAN & COUNTRY RESORT

Fima Corporation Berhad

01

2016 Performance Overview 02

FIMACORP AT A GLANCE

05 Moving Forward

2016 Financial Snapshot 03

2016 Operation Overview 04

AGENDA


FIMACORP AT A GLANCE

Production and trading of security and confidential documents

Oil production and processing

Investment holding and property investment Core Businesses

Other Businesses

OTHERS

MANUFACTURING PLANTATION

Female Male

71% 29%

TOTAL WORKFORCE 1,786


2015/2016 PERFORMANCE OVERVIEW

SHAREHOLDERS’ EQUITY

2016: RM554.2 mil 2015: RM530.5 mil

CASH & CASH EQUIVALENTS

2016: RM177.6 mil 2015: RM172.6 mil

TOTAL ASSETS

2016: RM684.6 mil 2015: RM712.8 mil

PROFIT AFTER TAX

2016: RM54.9 mil 2015: RM60.3 mil

Earnings per share 2016: 21.24 sen 2015: 36.15 sen

Net Asset per share 2016: RM2.30 2015: RM2.20

Dividend 2016: 25.0% or 12.5 sen per share 2015: 25.0% or 12.5 sen per share


GROUP FINANCIAL SNAPSHOT

RM’million FY 2015/2016 FY 2014/2015

Revenue 375.2 378.0 PBT 77.3 87.8 PAT 54.9 60.3 Profit attributable to Equity Holders of the Company

51.3 55.8

VARIANCE %

(0.8)

(12.0)

(9.0)

(8.1)


GROUP FINANCIAL SNAPSHOT REVENUE BY BUSINESS SEGMENT

(RM’million) PROFIT BEFORE TAX BY BUSINESS SEGMENT

(RM’million)

268.3 266.8

102.6 107.1

4.3 4.1

2015/2016 2014/2015Manufacturing Plantation Others

54.0 50.5

21.4 34.4 1.9

2.9

2015/2016 2014/2015Manufacturing Plantation Others

Total: 375.2 Total: 378.0 Total: 77.3 Total: 87.8


Cautious consumer spending & higher input costs due to tighter monetary

policies

Volatile commodity prices affecting

global demand & products

Weakened Malaysian ringgit

against major currencies

Adverse weather / Climate change El Nino, El Nina

Slowdown in major economies such as

China and EU

CHALLENGES

Macroeconomic conditions not expected to change significantly in current financial year in

light of prevailing challenges


OPERATIONAL OVERVIEW – MANUFACTURING

268.3 266.8

2015/2016 2014/2015

Revenue (RM’million)

54.4 50.5

2015/2016 2014/2015

PBT (RM’million)

Improved sales volume.

PBT increased mainly due to lower depreciation cost.

+0.6%

+7.7%

152.3

87.0

7.0 1.6

20.4

149.1

88.0

10.0 1.5

18.2

TravellingDocuments

Licenses ConfidentialDocuments

Rental Income Others

2015/2016 2014/2015

Revenue Breakdown (RM’million)

MANUFACTURING


Turn Customer into Key Accounts

Develop New Products &

Solutions

Focus On Core Activities

Strengthen Strategic Alliance

Enhance Product & Services Pipe-line

To pursue its long term strategy to

enhance its products and

services

Priorities for FY16/17 MANUFACTURING

OPERATIONAL OVERVIEW – MANUFACTURING


102.6 107.1

2015/2016 2014/2015

Revenue (RM’million)

21.4

34.00

0

10

20

30

40

2015/2016 2014/2015

PBT (RM’million)

-4.2%

-37.1%

259.4 240.2 197.5 226.5 216.5

2016 2015 2014 2013 2012

Cost of FFB (RM/Mt)

27.2 27.9 26.2 26.9

30.4

2016 2015 2014 2013 2012

Processing Cost of FFB (RM/Mt)

OPERATIONAL OVERVIEW – PLANTATION PLANTATION


4% 39%

57%

2015/2016 Age Profile of Palms

4-7 Years 8-12 Years >12 Years

23.2 23.1 23.4 24.4

21.9

2016 2015 2014 2013 2012

Yield Per Mature Hectare (YPH)

149,060 149,701 150,703 154,995

139,144

2016 2015 2014 2013 2012

FFB Harvested (Mt)

22.4 22.7 22.6

23.4 23.8

2016 2015 2014 2013 2012

Oil Extraction Rate (OER %)



OPERATIONAL OVERVIEW – PLANTATION

Gabungan Warisan Sdn Bhd

Kuala Krai, Kelantan •Ladang Fima Dabong•249.82 ha.

Taka Worldwide Trading Sdn Bhd

Gua Musang, Kelantan •Ladang Fima Aring•202.30 ha.

Etika Gangsa Sdn Bhd

Gua Musang, Kelantan •Ladang Fima Aring•202.30 ha.

R.N.E. Plantation Sdn. Bhd

Sg. Siput, Perak •2,000.00 ha.

Cendana Laksana Sdn Bhd

Kemaman, Terengganu •Ladang Fima Cendana•785.39 ha

PT Nunukan Jaya Lestari

Kalimantan Timur,

Indonesia

•19,974.13 ha

PLANTATION


Estate Update: Cendana Laksana Sdn Bhd (Kemaman, Terengganu)

In Progress Completed Legend:

ACTIVITIES PHASE 1 380.38 ha

PHASE 2 388.69 ha

Authorities Approval

land Clearing

Road

Terracing

Main Drain

Field Drain

Chambering

Holing

Maucuna Bracteata Planting Palm Planting

Phase 1 Field Drain

PLANTATION



Estate Update: Gabungan Warisan Sdn Bhd (Kuala Krai, Kelantan)

In Progress Completed Not Started Legend:

ACTIVITIES 250.00 ha


land Clearing

Road

Terracing

Main Drain

Field Drain

Chambering

Holing Maucuna Bracteata Planting Palm Planting

PLANTATION



Estate Update: Taka Worldwide Trading Sdn Bhd & Etika Gangsa Sdn Bhd (Gua Musang, Kelantan)

In Progress Completed Not Started Legend:

ACTIVITIES ARING 1 202.34 ha

ARING 2 202.34 ha


Land Clearing

Road

Terracing

Main Drain

Field Drain

Chambering




Estate Update: R.N.E Plantation Sdn Bhd (Sg. Siput, Perak)

In Progress Not Started Legend:

ACTIVITIES SG. SIPUT 2,000 HA


Land Clearing

Road

Terracing

Main Drain

Field Drain

Chambering


PLANTATION



PRIORITIES

PLANTATION


Focus on development of existing estates

Pursue land bank expansion

Yield improvement

& cost management

practices

Continuous agriculture

practice (GAP) & efficiency

improvement


DIVIDEND DELIVERING SHAREHOLDERS’ VALUE

2015/2016

Proposed single tier final dividend of 15.0% or 7.5 sen per share of RM0.50 sen

Single tier interim dividend of 10.0% or 5.0 sen per share of RM0.50 sen paid on 31 December 2015

Entitlement date 05 September 2016

Payment date 22 September 2016

10.0% 10.0%

30.0%

15.0%

15.0% 15.0%

18.5%

5.0% 5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

2016 2015 2014 2013

DIVIDEND PAYOUT

Interim Dividend (sen) Final Dividend (sen) Special Dividend (sen)

25.0% 25.0%

35.0% 38.5%


MOVING FORWARD

Maintain Prudent

Financial Profile

Strengthen Core

Businesses

Leverage on Market

Opportunities

Establish Strong Pillars

For Future Growth

MAXIMIZE SHAREHOLDERS’ RETURNS STRONG CASH FLOW ORGANIC GROWTH

AGENDA RESPONSE TO MINORITY SHAREHOLDER WATCHDOG GROUP’S LETTER DATED 17 AUGUST 2016


RESPONSE TO MSWG’S QUERIES (Strategy/Financials)

Query No. 1(a) What are the Board’s digital initiatives that could meet with the impact implications of digital technologies and incorporate them into the organization? What are the Board’s expectations of these digital technologies that are truly changing the way business is being conducted in the future?

The Manufacturing division had implemented several digital initiatives which include system integration and identity personalization solutions, complete with provision and maintenance of computer hardware, server and software.



Query No. 1(b) Has the Board established new strategic alliances to spur the development of new products and solutions to complement its existing products?

Apart from the strategic alliances that we have developed in the course of implementing our current projects, there are presently several potential partners offering different technologies and expertise to support our future undertakings.



Query No. 1(c) Does the Board have any contingency plans for its Manufacturing Division in the view of the expiration of the contract to supply certain travel documents by Quarter 3 FY 2017?

The business impact from the expiration of the contract to supply certain travel documents by Quarter 3 FY 2017 shall be a temporary setback and will be replaced by similar or new products through our strategic alliances.


RESPONSE TO MSWG’S QUERIES (Strategy/Financials) Query No. 2(a) The share of results from its 20% owned associate namely Giesecke & Devrient Malaysia Sdn Bhd had declined for the past 3 years. What are the reasons for the decline in the share of results from this associate? The decline in the share of results from the associate for the past 3 years was mainly due to: • Share of results improved in 2013/2014 due to new jobs with high

profit margins.• Globally, banknote printing business has declined as demand

reduced, resulting in stiff competition and low margin orders. Thisis the main reason Giesecke & Devrient GmbH, Munich hadrelocated one of its plants to Malaysia to increasecompetitiveness.



Query No. 2(b) Who is the shareholder of the major portion of 80% equity interest in this associate?

80% equity interest in this associate is held by Giesecke & Devrient GmbH, Munich.


RESPONSE TO MSWG’S QUERIES (Strategy/Financials) Query No. 3(a) What are the Board’s plans for the new acquired subsidiary, R.N.E. Plantation Sdn Bhd (“RNEP”) over the longer term in respect of the estate development vis-à-vis Ladang Cendana, Kemaman, Terengganu, Ladang Dabong, Kuala Krai and Ladang Aring, Gua Musang, Kelantan respectively?

RNEP is presently in the midst of submitting the application for approval by the relevant authorities for zoning and Environmental Impact Assessment. Planting program for 1400 ha plantable land in RNEP is planned to be completed by mid-2018 while the palm planting for other estates namely Ladang Cendana in Kemaman, Terengganu, Ladang Dabong in Kuala Krai and Ladang Aring in Gua Musang, Kelantan totaling 1424 ha will be completed by December 2016.


RESPONSE TO MSWG’S QUERIES (Strategy/Financials) Query No. 3(b) What are the capital expenditures, if any for the estate development of the four respective plantation estates?

Capital expenditure for estate development of the four estates in Malaysia is estimated to be:

Estate RM’ million 1. Ladang Cendana 20.0 2. Ladang Dabong 5.0 3. Ladang Aring 7.8 4. RNEP 22.4 Total 55.2


RESPONSE TO MSWG’S QUERIES (Strategy/Financials) Query 3(c) Would the Board be considering other commercial crops for improved earnings given the longer gestation period of oil palm or rubber trees amid the declined demand from China, the impact of El Nino/La Nina on palm oil supply, biodiesel mandates of Malaysia and Indonesia respectively and the US soybean supply? The Board may consider other commercial crops to provide a broader earnings base for the Group if the investment improves the Group’s earnings profile in the long term. However, currently the Group wishes to focus on oil palm though it is subject to risks inherent to the plantation industry. The Board remains confident that the palm oil business as a whole will be positive, driven by the sustainability of the demand for palm oil related products as well as the competitive advantage of palm oil, in terms of yield and cost efficiency, compared to other edible oils.


RESPONSE TO MSWG’S QUERIES (Corporate Governance)

We noted that three of the Independent Non-Executive Directors had served the Board for more than 12 years and would like the Board to address the issue in the succession planning process in line with the recommendation 3.3 of MCCG 2012.


RESPONSE TO MSWG’S QUERIES (Corporate Governance) As part of the annual performance evaluation process of the Board and Committee, the Nomination Committee reviews the size and composition of the Board, changes required, if any and the performance and contribution of each Director. Succession planning and future requirements in respect of the Board structure to complement the Group’s strategic direction are part of this annual process. Although the Company currently does not have a policy on the tenue of its Independent Non-Executive Directors (INEDs), the Board would like to assure MWSG that the criteria for the retention of INEDs are strictly driven by their contribution to the Company, personal qualities, integrity and objectivity. In this regard, the Board having reviewed the performance of the three (3) INEDs, is satisfied that the Directors have acted in the best interests of the Company and the Group, free from any conflicts or undue influence and that the Group should continue to benefit from their experience and knowledge.

THANK YOU