IJM PLANTATIONS BERHAD32nd ANNUAL GENERAL MEETING

Tuesday, 22nd August 2017, Holiday Villa, Subang Jaya

1917 – 2017100 YEARS OF OIL PALM COMMERCIALISATION IN MALAYSIA

3,000 BC FROM AFRICA -> SOUTH EAST ASIA ->100 YEARS AGO TO PENINSULAR MALAYSIA -> 60 YEARS AGO TO SABAH

INDONESIA

MALAYSIA

AFRICA

EGYPT

Bogor Palms

32 Years Ago

in 1985

Sandakan

IJMP 32 YEARS OIL PALM JOURNEY : 1985 –2017 Organic growth from zero base to over 60,000 hectares of planted oil palms

Land-bank Expansion

1998 2008/9 2020

Year

SANDAKAN,SABAHFirst 10,000 ha

PHASE 1

SUGUT,SABAHNext 20,000 ha

PHASE 2

2017

REPLANTING

INDONESIANext 30,000 ha

PHASE 3

1985 / 87

32 YEARS

FYE 2017

60,570 ha

OUR PALM OIL UPSTREAM BUSINESS

6

IJMP MALAYSIAN OPERATIONS

1 & 2

IJMP INDONESIAN OPERATIONS

PARCEL 1 (PBP)Primabahagia Permai

PARCEL 3 (PTS)Sinergi Agroindustri

PARCEL 4 (PPA)Prima Alumga, Lampung

IPS PALM OIL MILL

PARCEL 5 (KBSA)Karya Bakti Sejahtera Agrotama

PARCEL 2 (IPS)Indonesia Plantation Synergy

PTS PALM OIL MILL

BEST RESULTS IN 5 YEARS

… a very favourable performance,

blessed with good palm product prices

against the backdrop of El Nino phenomenon …

SUMMARY : FY 2017 PERFORMANCE

BEAR HAS BEEN WINNING, TRAILED BY THE BULLTHEN THE BULL RETURNS – BUT WILL IT BE SHORT-LIVED?

FY12: RM3,049

FY13: RM2,620

FY14: RM2,385

FY15: RM2,289

FY16: RM2,142

FY17:

RM2,753

VOLATILE CPO PRICE MOVEMENT IN FY 2017

Q1FY17

Q2FY17

Q3FY17 Q4FY17

GLOOMY

HOPEFUL

BLESSED

Q1FY17

Q2FY17

Q3FY17

UNCERTAIN

South East

Asia

EL NINO

SUPER ‘MONSTER’ EL NINO REVEALED ITS TRUE COLOURProlonged drought in SEA worse than 1997-1998 affecting crop production

IJMP PLANTED AREA ( Hectarage as of 31 March 2017 )

MALAYSIAN

OPERATIONS

INDONESIAN

OPERATIONSGROUP

%

Average Palm Age 14.4 5.9 9.5

Mature-Prime (> 8 years) 20,510 1,557 22,067 36

Mature-Young (4-7 years) 2,636 27,095 29,731 49

Immature (1-3 years) 1,975 6,797 8,772 15

TOTAL PLANTED AREA 25,121 35,449 60,570 100

No of employees : About 10,000

OIL PALM INVESTMENT : HIGH CAPITAL & LONG TERM BUSINESS

Immature

OIL PALM AGE PROFILE AND PRODUCTIVITY

PRIME - Gentle

0

500

1000

1500

2000

2500

3000

3500

4000

4500

1 3 5 7 9 11 13 15 17 19 21 23 25

Malaysian Operations - Age Profile

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

1 3 5 7 9 11 13 15 17 19 21 23 25

Indonesian Operations - Age Profile

14.4 yearsha ha

To be

replant

ed

Start-

up

yields

Higher yieldsYoung

replants

5.9 years

IJMP FYE 2017 OIL PALM AGE PROFILE

AgeAge

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26

Group's Age Profileha

Mature Prime Age

Age

Higher yields OPPORTUNE

TIMES

9.5 years

IJMP FY17 vs FY16 ESTATES CROP PRODUCTION

FFB

PRODUCTION

FY17

‘000 mt

FY16

‘000 mt

Variance

%

SANDAKAN(El Nino, ongoing replanting,

newly matured & older trees)

131 137 -4

SUGUT (El Nino 2/3 area,

maturing trees)

333 343 -3

MALAYSIA 464 481 -3

INDONESIA(El Nino, more maturing

areas with start-up yields)

398 367 +8

GROUP 862 848 +2

IJMP FY17 vs FY16 FINANCIAL RESULTSRecord revenue to-date and best PBT results in 5 years

Performance Indicators FY17 FY16 Variance

Revenue (RM mil) 754 558 +35%

EBIDTA (RM mil) 258 126 +105%

Operating Profit (RM mil) 174 67 +159%

P B T (RM mil) 169 50 +234%

CPO Price (M’sia) (RM/pmt) 2,753 2,142 +29%

CPO Price (Indon) (RM/pmt) 2,589 1,899 +36%

CPKO Price (M’sia) (RM/pmt) 5,830 3,294 +77%

CPKO Price (Indon) (RM/pmt) 5,473 2,614 +109%

OUTLOOK : MULTI-CONFOUNDING FACTORS DETERMINING PRICESPalm oil is a commodity : Price taker and NOT price maker

Production of

competing edible oils

Inventory levels Crude oil prices

Distortive speculations

in market ?Uncertainties in global economy

Production of palm oil

post El Nino / La Nina UNCERTAINITIES

WEATHER!

WEATHER!

WEATHER!

POSITIVE LONG TERM OUTLOOKAPPRECIATING THE SUPPLY-DEMAND DYNAMICS IN A GROWING WORLD

Future demand driven by 4Fs consumption ie ‘food, non-food, feed & fuel’

Year 2016

At 7.4 Billion

Year 2050

At 9 Billion

APPRECIATING OIL PALM PRODUCES

HIGHEST OIL PRODUCTIVITY PER PLANTED AREA

metric of oil per hectare

Global vegetable

oil yields

3.8 to 4.1 mt/ha

0.59

0.42

0.36

0 1 2 3 4 5 6

Rapeseed

Sunflower

Soybean

can do > 5.0 mt/ha

Palm oil

Competing

Edible Oils

BETTER MANAGED COMPANIES :

FOOD PRODUCTIVITY : SERVICE TO MANKIND

DRIVING INNOVATIONS AND

ENHANCING SUSTAINABILITY ASPECTS

IN OIL PALM BUSINESS

GOING FORWARD

BUFFALO

WHEEL

BARROW

MOTORISED

WHEEL

BARROW

(SEMUT)

MECHANICAL

BUFFALO -

(BISON

PAYAKING)

FFB from tree -> ground -> road-side -> ramp -> mill

PLANTATION INNOVATION : IN-FIELD MECHANISATION

Manufactured in-house

PLANTATION INNOVATION : IN-FIELD MECHANISATIONExtending to wider coverage areas

Manual tracking

PLANTATION INNOVATION : DIGITAL SUPERVISIONReimagining plantation with GPS-precision toolkits

GPS enabled Android-based hand-held

devices tracking plantation activities

with a web-based backend system

PLANTATION INNOVATION : DIGITAL SUPERVISIONPhase 1 digitalisation implementation in plantation

The Edge, 29 May 2017

EXPLORING CATTLE INTEGRATION IN PLANTATIONCost reduction in weeding and diversification

BEFORE GRAZING DURING GRAZING AFTER GRAZING

ONGOING IJMP OIL PALM RESEARCH 1. Oil Palm breeding & seed production, agronomy advisory

2. Collaborative BMP research with external partners

3. Extending BMP know-hows to small-holders

ONGOING REPLANTING IMPERATIVES…. a pragmatic and zero burning replanting programme with IJM planting material

Zero Burning

Integrated Pest Management (IPM)

Nursery – Drip Irrigation

Water Reservoir

Bio-gas Facility

Bio-composting

ADOPTING BEST MANAGEMENT PRACTICES (BMPs)Implementing BMPs for sustained productivity and care for environment

RETURNING TOCOMMUNITY

CARE FORENVIRONMENT

PRODUCTIVITY& INNOVATIONS

INVESTOR INPEOPLE

IJMP’S SUSTAINABILITY INITIATIVES IN THE MARKETPLACENURTURING A PURPOSE-DRIVEN ORGANISATION

PROFIT

PEOPLEPLANET

SUSTAINABILITY

NURTURING SUSTAINABILITY

100%Global Land Area

13.4 Billion Ha

~1/3

Global

Agriculture Land

5 Billion Ha = 37%

BIG PICTURE ON GLOBAL LAND-USE & SUSTAINABILITY

Pasture

3.45 Billion Ha

= 69%>2/3

<1/3 Arable Land for Crops

1.55 billion ha

= 31%

GLOBAL OIL PALM : 18.87 million ha

0.38%of global agricultural land

30%of global edible oils production

55%of global edible oils exports

0.11%

10%

20%

FLORA BIODIVERSITY - IJM SUGUT ‘HUNDRED ACRE WOOD’Conservation and rehabilitation projects

IJMP ‘Secret Garden’

FLORA BIODIVERSITY - IJM SUGUT ‘SECRET GARDEN’Partnership with the Sabah Forestry Department

Based on a 1911 novel by

Frances Hodgson Burnett,

FLORA BIODIVERSITY - IJM SUGUT ‘SECRET GARDEN’MoU inked with Sabah Forestry Department on 17.8.17

FLORA BIODIVERSITY- TREE PLANTING IN MANGROVE AREASOngoing projects including during IJM GIVE DAYs involving our employees

FAUNA BIODIVERSITY

FOCUSED ON GRASS-ROOT AWARENESS ON B0RNEO BIRDS

IJMP & RUGBY : CREATING OPPORTUNITIES AND INSPIRING YOUTH

Rugby youth development partnership with Sabah Education Department and Sabah Rugby Union

Partnership

IJMP AND BREAST HEALTH AWARENESS IN SABAH COLLABORATION WITH NGO, SANDAKAN PINK RIBBON (SPR) AND LOCAL HOSPITAL, DUCHESS OF KENT (DOK)

Partnership

GUEST WORKERS’ CHILDREN EDUCATION AND RURAL OUTREACHPartnership with social NGO, Humana-Borneo Child Aid

Partnership

MORE RECENT : ENHANCED OUTREACH TO SMALLHOLDERS Collaboration with NGO the Forest Trust (TFT) & Crop Quality Day

Partnership

OUR EMPLOYEES TRAINING & RETRAININGCovering safety & health, technical-competency, soft skills, wellness etc

100KM Virtual Run Flag-off at HQ – 04 October 2016

100KM Virtual Run Flag-off at Sugut – 06 October 2016

PROMOTING LOCAL CULTURAL HERITAGE

SUSTAINABILITY ASSURANCE AND CERTIFICATIONS

ONGOING STAKEHOLDERS ENGAGEMENTSince 2004, strengthening dialogues with relevant stakeholders

DISTRIBUTION OF TOTAL VALUE ADDED IN FY 2017

Service providers benefiting and with other spin-off and multiplying effects

PAGE 3 ANNUAL REPORT 2017

FOCUSED ON

PERFORMANCE

Enhancing Long Term

Shareholders Value Creation

Move from

start-up to

higher yields

Drive to sustain

high yields

Completion

of field planting

Replanting

excellence

GOING FORWARD – PERFORMANCE AND CAPABILITIES

ENHANCING

CAPABILITIES

2. Drive for

innovations

3. Find fit in

use of new

technologies

5. Inspire

talent pool

4. Enhancing

sustainability

footprints

1. R&D

and best

practices

GOING FORWARD – PERFORMANCE AND CAPABILITIES

IJM PLANTATIONS BERHAD32nd ANNUAL GENERAL MEETING

Tuesday, 22nd August 2017, Holiday Villa, Subang Jaya

QUESTIONS &

ANSWERS SESSION

QUESTIONS

FROM MSWG

1. The Group sells CPO using the MPOB’s average price mechanism either on

spot or long term contracts as well as hedging through forward sales and/or

CPO pricing swap arrangements.

a. In FY2017, what was the percentage of sales done through forward sales

and/or swap arrangements?

b. In the guidelines set by the Board, was there a limit or capping for CPO

sales in percentage, done through forward sales or swap contracts?

For the Malaysian operations, forward sales volume accounted for 6% of

total CPO sales. Swap contracts constituted 24% of the volume of CPO

sold in FY2017 while the spot sales were 5%.

The Group has a policy that allows management to sell up to 50% of its

own CPO forward on a 12 months rolling basis. Depending on market

prices and demand, quantities are committed. Where physical buyers

are not available, non-physical swap contracts offered by financial

institutions are relied upon.

2. Shortage of labour has been a pressing issue in the palm oil industry. It has cost some

companies millions of Ringgit in lost revenue.

a. How critical was the labour shortage issue in the Group and was there any loss of

revenue in FY2017 due to the shortage of labour?

b. Could the Board share the mechanisation that had been implemented and the

results achieved in terms of labour ratio per hectare or the cost saved?

c. What is the current percentage of foreign workers to the total workers in the Group?

The shortage of labour is less acute in Sabah as compared to Peninsular Malaysia.

The issue in Sabah is more about securing skilled harvesters for tall palms. In FY2017,

the demand on scarce labour resource was less felt due to the lower crop production

that resulted from the El Nino weather impact. The Group has not incurred any loss

of revenue in FY2017 due to shortage of labour.

In the Malaysian operations, foreign workers approximate 90% of the total workforce.

The Group’s investment in mechanisation is to ensure its operations are sustainable

in the future as labour constraints are expected to worsen. The Group has been

primarily focusing on site specific in-field mechanisation pertaining to crop

evacuation. This has helped ease labour constraints and over time, should contribute

towards reducing the labour ratio per hectare. Costs, however, is higher as durability

of machines is subjected to rigorous conditions.

QUESTIONS

FROM MSWG

3. For the last 14 years, the entire oil palm planting material requirements in the

Group’s Malaysian operations including all the replanting programme, as well as

the Group’s requirements in the Indonesian operations were all planted with IJM

DxP planting material produced by the Group’s Research Centre.

a. How was the current yields of the palms planted with DxP seeds 14 years

ago compared to the industry average?

b. Would there be any plan to produce DxP seeds for commercial sales?

In addition to planting materials, FFB yields are dependent on many factors such as weather, terrain, labour availability and estate practices. Performance of any planting material cannot be compared with another easily. However, based on commercial results, the IJMP DxP seeds are considered among the better seeds, particularly for its early high yields, oil and kernel content and low Dura contamination.

The IJMP DxP seeds have been sold commercially since 2010.

QUESTIONS

FROM MSWG

4. As at 31 March 2017, the amount due from non-controlling interest totaled RM38.7

million. As explained in Note 19 (b)(v) to the Financial Statements, these amounts are

operational in nature on furtherance of the overseas subsidiaries business operations.

a. What is the principal activities of these subsidiaries and what is the effective equity

interest of IJM in these subsidiaries?

b. Could the Board share the latest financial positions of these subsidiaries and their

outlook in the coming years?

c. Is the amount expected to increase further in the coming years and when would

management intend to demand for repayment of the amount?

The principal activities of the subsidiaries are cultivation of oil palms and processing of FFB. The effective equity interests of IJM Plantations in these entities range between 90-95%. Refer to page 5 of the Annual Report.

The subsidiaries form the Group’s operations in Indonesia. The outlook is as stated in the Management Discussion and Analysis on page 27 of the Annual Report and the Segmental Reporting in page 162-164.

The amount is not expected to increase materially in the coming years. Repayment

would coincide with the dividends paid by these subsidiaries.

QUESTIONS

FROM MSWG

5. The internal Audit function has been outsourced to the Internal Audit Department of

IJM Corporation Bhd. As reported in the Audit Committee Report, the internal audit

costs incurred for the Group for the financial year 31 March 2017 was approximately

RM600,000. For the financial year ended 31 March 2016, the internal audit fees

charged to the Group was only RM160,000.

a. What was the reason for the significant increase in the internal audit fees for the

Group?

b. Could the Board share the basis of the fees charged by IJM Corporation Bhd?

In the FY2017 Annual Report, the figures include IJM Corporation’s group internal audit cost and cost of the internal audit staff based in Sabah and Indonesia. In FY2016, the audit fees related to the IJM Corporation’s group internal audit cost only.

The fees charged by IJM Corporation Bhd is based on proportionate time incurred by the internal audit staff of IJM Corporation Bhd assigned to undertake the internal audit work for IJM Plantations.

QUESTIONS &

ANSWERS SESSION

IJM PLANTATIONS BERHAD32nd ANNUAL GENERAL MEETING

Tuesday, 22nd August 2017, Holiday Villa, Subang Jaya