Chairman’s Statement

Corporate Information  Chairman’s Statement

Extracted from Integrated Report 2021

Dear Shareholder,

2021 will be long remembered by the Group as the year in which, despite the ravages of the pandemic, we produced record-high revenue and profit – with revenue crossing the RM1 billion mark for the first time since relisting on Bursa Malaysia in 2014 and profit before tax (PBT) growing 316% year on year to RM345 million.

This is significant on many fronts. It allows Boustead Plantations Berhad (BPB or the Company and its subsidiaries collectively referred to as the Group) to reduce gearing. It enables the pursuit of various capex projects in line with the Group’s asset rebalancing programme and growth ambitions. Finally, it allows us to live up to our mission of creating sustainable value for our stakeholders, in recognition of their varied contributions to the Group.

For the financial year 2021, we are declaring a dividend of 8.35 sen per share (as compared to 1.0 sen per share in 2020), equivalent to a payout of RM187 million – more than eight times the payout in 2020 and the highest since 2017. Of note, this also represents about 77% of our profit after tax and zakat, exceeding the 60% of BPB Dividend Policy. The Board has felt privileged to be in a position to declare an attractive dividend and is leveraging the opportunity to do so in order to demonstrate our appreciation of and the value we place in our shareholders, especially members of the Lembaga Tabung Angkatan Tentera.

Although our sterling financial performance was the result of peak crude palm oil prices driven by external factors beyond our control, the year was not without its challenges. Since the pandemic, we have faced an acute shortage of labour while the price of fertilisers has surged and its supply disrupted due to logistics constraints. In addition, floods in the early and later parts of the year severely impacted fresh fruit bunch (FFB) production. Undeterred, our management and employees have displayed a high level of dedication and spirit of collaboration in order to overcome these obstacles, minimising the impact on BPB’s operational output.

From the beginning of 2020, the team has worked diligently to improve operational and cost efficiencies under a PPIP. In 2021, in line with BHB’s Reinventing strategy, our management further reinforced the PPIP to drive sustainable growth of the Group. A clearly outlined roadmap was presented to the Board which was approved in December 2021. This plan is now being rolled out, with razor-sharp focus on digitalisation and mechanisation to enhance plantation yield while diversifying into new growth areas. All of this is, furthermore, strengthened by the integration of sustainability considerations into our direction and decision-making.

SOWING THE SEEDS OF SUSTAINABILITY

Sustainability has always been a priority at BPB given the nature of the industry we are in. Aware of the need to demonstrate our commitment to environmental, social and governance (ESG) imperatives, we made it our mission to be certified by the most recognised and respected industry benchmarks. As a result, today, all our estates and mills have gained Malaysian Sustainable Palm Oil (MSPO) certification and 60% of them have also been Roundtable on Sustainable Palm Oil (RSPO)-certified. Meanwhile, all but one of our mills have been certified to ISO 9001 standards. Moving forward, we aim for 100% RSPO and ISO 9001 certifications and are also ensuring sustainability along our supply chain by encouraging our third-party FFB suppliers and smallholders to follow suit.

Environmentally, we do not just adhere to RSPO and MSPO guidelines such as identifying high conservation value lands within our plantations and abstaining from cultivating on peat, but are going one step further towards sustainable agriculture by diversifying into eco-friendly biofuel related businesses. During the year, we entered into a conditional land lease agreement with Next Generation Oil Sdn Bhd (NextGen) through which we are to lease approximately 520 ha of our land in Telok Sengat Estate for algae cultivation. Our objective, ultimately, is to support Boustead’s and the nation’s transition to a low-carbon economy. Towards this end, we also seek to create a more circular, resource-efficient system within our estates through the capture of methane from our mills and its conversion into energy to fuel our internal needs.

Socially, our priority has been to care for the well-being of our employees and workers. We have felt privileged to be categorised as providing an essential service, and therefore permitted to carry out our operations throughout the various phases of the pandemic- induced Movement Control Order. In turn, we have placed the utmost priority on ensuring the well-being of our workers and employees and made every effort to prevent the incidence of COVID-19 in our estates. Despite our conscientious efforts, sporadic cases were reported among our workers; however our quick actions meant we were able to minimise the infection rate and were required to shut down operations for only a few days in the year.

Among on-going efforts to contribute to local communities, I am particularly proud of programmes initiated to provide employment opportunities to those living on the fringes of society. We actively encourage members of Orang Asli communities living in the vicinity of our estates to work with us. In 2021, we further extended our employment net to include Armed Forces retirees. These programmes help BPB to meet some of our labour needs. In times of high unemployment as we are experiencing today, moreover, these initiatives have become even more significant and meaningful.

Meanwhile, we continue to uphold the highest standards of governance, guided by the Malaysian Code on Corporate Governance. In April 2021, the Securities Commission of Malaysia released a revised version of the code, which we have reviewed and internalised. Changes in our policies and procedures will be made according to the new recommendations. Among others, we are pursuing the ISO 37001 Anti-Bribery Management System certification, and expect to complete the process by end of 2022. We recognise the value of this certification in helping us to accelerate the creation of a culture of integrity, which is integral to BPB.

Aknowledgements

As mentioned earlier, it has been a very encouraging year, both financially and operationally. As always, our performance has been the result of the contributions of various parties, whom I would like to acknowledge.

Without differentiating between them, I would like to thank all our external stakeholders – namely our shareholders, financiers, business associates and partners, and regulatory authorities – for their continued belief in BPB, and for extending their support throughout the many trials and tribulations we encountered.

On behalf of the Board of Directors, I would like to express our gratitude to former Board Members, Dato’ Mohzani Abdul Wahab, Dato’ Ahmad Rizal Abdul Rahman and Ir. Abdul Aziz Julkarnain, for their invaluable contributions.

The Board had the pleasure of welcoming (Dr.) Salihin Abang, Datuk Mustapa Kamal Mohd Yusoff and Datuk Haji Abdul Ghani Abdul Rashid as Independent Non-Executive Directors.

Let us continue to work together as we reinvent for a sustainable future.

DATO' HAJI ISMAIL HAJI LASIM
Chairman
14 April 2022