• More than 200 jobs will be created at this new specialty oils and fats refinery in Sei Mangkei.
• Over USD150 million invested in the refinery, production to commence in 2024.

Petaling Jaya, 8 November 2022 – Sime Darby Oils (SDO) announced the construction of its new specialty oils and fats refinery in the Sei Mangkei Special Economic Zone in North Sumatera’s Simalungun Region. The refinery will be built on a 16-hectare site, with an annual production capacity of more than 450,000 MT of palm and lauric based products.

SDO, the downstream arm of Sime Darby Plantation Berhad (SDP) is investing over USD150 million in the refinery, which is expected to begin production in 2024. At full capacity, the refining operations will create more than 200 jobs locally and other positive spillover effects.

On 2 November 2022, a groundbreaking ceremony in Simalungun, North Sumatera, to mark the construction of the new refinery was attended by the Regent of Simalungun’s representative – Zonny Waldi, Chairman of Simalungun Parliament - Timbul Jaya Sibarani and other representatives of local stakeholders.

According to Mohd Haris Mohd Arshad, SDO’s Managing Director, the company’s latest investment reflects SDO’s long term commitment to Indonesia and in contributing to the development of the North Sumatera region.

“The Sei Mangkei refinery is Sime Darby Oils’ biggest investment in Indonesia to date and will be our second refinery investment in this country after our Pulau Laut refinery in Kalimantan. It shall employ world-class technologies to produce our specialty oils and fats as well as more value-added products for export markets,” said Mohd Haris.

SDO’s latest refinery is the company’s fourth downstream asset in Indonesia. Besides its premier refinery in Pulau Laut, which began operations in 2014, the company also operates two Kernel Crushing Plants in Rantau, South Kalimantan and in Pemantang, Central Kalimantan. The Sei Mangkei refinery, SDO’s first facility in the Sumatera region, is expected to leverage on existing crude palm oil production within the region through Minamas Plantation, SDP’s Indonesian subsidiary.

“With the complexity of our specialty oils production, coupled with automation and digitisation installed within the refinery, we are opening our doors to Indonesian’s young and upcoming, skilled workforce including engineers, technicians, logistic planners, financial executives, and other high value adding workers, especially in the Northern Sumatera region. Our Sei Mangkei refinery will also offer opportunities for existing and new businesses in the region and we hope to be the catalyst in spurring local and sustainable economic growth,” he added.

The launch of the Sei Mangkei refinery is in line with SDO’s strategic priority to grow its existing downstream business, particularly in the production of sustainable and traceable specialty oils and fats where it is expected to meet demand growth from existing and new customers globally.

SDO’s latest investment in Indonesia, the largest economy in Southeast Asia, will also be supporting the Country’s aspiration to further fortify its downstream sector, whilst fueling further growth in the local region, particularly in industries such as logistics, utilities and services. The investment will also increase SDO’s flexibility to leverage on multiple assets in different geographical locations, globally.

Sei Mangkei is considered a strategic location due to its good inbound and outbound access as well as proximity to both bulk and containerised ports. The region is also among the Special Economic Zones established by the Indonesian government that are implementing green growth principles to attract more green investment opportunities into the country. Hence, the decision by SDO to build its new refinery in the region aligns with SDO’s own target to contribute towards the Sustainable Development Goals, particularly Goal 12 of ensuring sustainable consumption and production patterns. 

Strong results by Sime Darby Oils boosts Group’s performance

Petaling Jaya, 22 November 2022 - Sime Darby Plantation Berhad recorded a net profit of RM1.93 billion for the nine-months ended 30 September 2022 (9M FY2022) representing an 8% year-on-year (YoY) increase. For the quarter ended 30 September 2022 (3Q FY2022) the Group achieved a net profit of RM396 million.

In 3Q FY2022, higher fresh fruit bunch (FFB) production was recorded in Indonesia (+21% YoY) and Papua New Guinea (+1% YoY) but FFB production in Malaysia saw a decline (-27% YoY) resulting in an overall 8% reduction for the Group. The decline in productivity was largely due to the shortage of harvesters but this was mitigated by higher average realised crude palm oil (CPO) prices (+13% YoY).

Sime Darby Oils (SDO), continued its stellar performance in 3Q FY2022, registering a PBIT of RM337 million, a significant increase from RM6 million recorded in 3Q FY2021. SDO’s Asia Pacific operations registered higher trading margins during the quarter which mitigated lower overall sales volumes and lower margins in its European operations.

Key Highlights

• 3Q FY2022: SDO’s strong performance and higher non-recurring profits cushioned some of the adverse impacts of lower FFB production and lower OER achieved.
• 9M FY2022: Higher non-recurring profits of RM293 million, mainly from gains on the disposal of land in Malaysia as well as the receipt of RM48 million “earn out” settlement for the disposal of a former subsidiary in Liberia.

Chairman, Tan Sri Dato’ Seri Haji Megat Najmuddin bin Datuk Seri Dr Haji Megat Khas said:

Despite the unprecedented operational challenges faced, the Group is resolute in delivering long term value to our stakeholders.

Group Managing Director, Mohamad Helmy Othman Basha said,

We welcome the entry of more migrant workers into Malaysia which is now gathering speed. As we work hard to restore our plantations to optimal conditions, we are also pushing ahead with our plans to automate and mechanise several functions in our Malaysian operations.

As we progressively reduce the need for manual workers in all our non-harvesting activities, we aim to achieve a land-to-man ratio of 17.5 hectares for every worker by the end of 2024, which will be a major improvement compared to the current industry average of 8 hectares for every worker. With further automation and digitalisation, we are determined to make work in plantations less laborious and more sophisticated to attract a new generation of skilled local workforce.

OUTLOOK FOR REMAINING FY2022:

The Group expects its overall FFB production to be lower than the previous year due to the slow inflow of foreign workers into Malaysia.

CPO price, which peaked in the first half of 2022, has now stabilised as increased supply in producing countries fulfil pent up global demand. The CPO price is anticipated to remain attractive in comparison to alternative vegetable oils which would continue to support demand.

• Parties ink 2-year Tripartite Agreement for the guaranteed uptake of Certified Sustainable FFB by SDP at a premium
• Intan Hebat and Wild Asia will ensure that the FFB supplied by small producers are sustainably produced and traceable from farm-to-mill

CAREY ISLAND, 29 November 2022: Sime Darby Plantation Berhad (SDP) has agreed to procure certified sustainable fresh fruit bunches (FFB) from a group of independent small producers in Carey Island, in the Kuala Langat district of Selangor, Malaysia, for two (2) years commencing 25 November 2022. The small producers, including some farmers from the Mah Meri tribe who reside on the island, are represented by Intan Hebat Baru Sdn Bhd (Intan Hebat). They are certified under a sustainable palm oil scheme organised by the social enterprise, Wild Asia Sdn Bhd (Wild Asia).

This scheme, known as the Wild Asia Group Scheme (WAGS), is a management system founded in 2013 to provide technical and management support for smallholders to have their production independently certified. It also helps to improve farming practices of these smallholders and to support them with meeting compulsory sustainability standards, in compliance to those set by the Malaysian Sustainable Palm Oil (MSPO) as well as the Roundtable on Sustainable Palm Oil (RSPO) voluntary certification scheme so that they can participate in the global sustainable palm oil value chain. Small producers are classified as smallholders (with a total farm area of less than 40ha) while small growers are those with total farm area of more than 41ha and less than 500ha.

Under a tripartite agreement, all three parties also commit to jointly ensure the traceability of palm oil produced by the independent small producers. By procuring FFB from WAGS-certified small producers at an agreed premium, SDP will be supporting and promoting their inclusion into its sustainable supply chain, whilst Intan Hebat will in turn ensure clear traceability of the FFB from farm to SDP’s mills. In support of Intan Hebat’s traceability reporting and journey, Wild Asia will be working closely with Intan Hebat to trial the most appropriate traceability system.

SDP’s Chief Sustainability Officer, Rashyid Redza Anwarudin said, smallholders are a critical part of the global palm oil production, accounting for about 40% of the world’s supply, as such, initiatives that can help to increase their participation in sustainable supply chains should be supported by bigger players in the industry with the right credentials.

“As the world’s largest producer of certified sustainable palm oil, one of Sime Darby Plantation’s top priorities is to promote the responsible production of certified sustainable palm oil to as many stakeholders as we can. The inclusion of WAGS-certified small producers’ into our sustainable supply chain will contribute to the livelihoods of these small producers and signal to many others that they can continue to make a living by choosing to produce palm oil more responsibly and sustainably,” said Rashyid.

He added that SDP also runs its own extensive smallholder programmes in Malaysia, Indonesia, Papua New Guinea, and the Solomon Islands where its operations are located, helping more than 52,000 small and independent farmers get their plantations sustainably certified under both compulsory national schemes and the RSPO voluntary scheme.

“Today’s agreement marks another significant milestone for furthering the agenda of sustainable palm oil in the supply value chain. At Wild Asia, our tagline ‘business for good’ encapsulates our goal and mission to bring about social and environmental change within the palm oil industry through better solutions, inclusion, and compliance to progress toward traceable and certified palm oil,” said Dr Reza Azmi, founder and executive director of Wild Asia.

“One of our missions is to create better livelihoods for the smallholders through higher yields and better profits once they are able to meet the international standards and demands of sustainability. This new purchase agreement will not only promote a fair benefit share of RSPO premiums to the producers and dealers but also encourage more smallholders to join WAGS as the first step toward RSPO certification,” he added.

“Following today’s signing, I look forward to recruiting more smallholders to sign up with WAGS and in encouraging more of them to participate as an RSPO supplier that also supports their long-term sustainability to supply to large corporations like Sime Darby Plantation. We will be sure to invite Wild Asia again for the certification process by that time,” said Ang.

• Declares a final dividend of 6.04 sen per share
• Continues to make strides on the ESG front as the USCBP modifies its Finding 

Petaling Jaya, 17 February 2023 - Sime Darby Plantation Berhad registered a net profit of RM2.49 billion for the Financial Year Ended 31 December 2022 (FY2022), a year-on-year (YoY) increase of 10%.

This strong showing was registered on the back of a record performance by the Group’s downstream operations, Sime Darby Oils (SDO), which achieved a profit before interest and tax (PBIT) of RM859 million in FY2022, 61% higher than the previous year. Meanwhile, higher average realised crude palm oil (CPO) price, a 20% increase on the previous year, mitigated the 10% decline in fresh fruit bunch (FFB) production. The Group’s FFB production in FY2022 was particularly challenged in Malaysia, the impact of which was partially compensated by better production in its operations in Indonesia as well as Papua New Guinea and the Solomon Islands. The Group anticipates that with the expected arrival of a full complement of workers by the end of June 2023, its Malaysian operations will see improved performance in FY2023.

For the quarter ended 31 December 2022 (4Q FY2022), the Group’s net profit increased by 20% to RM562 million, despite a 2% and a 4% decline in FFB production and realised CPO prices respectively as compared to the previous year's corresponding period. During the period, SDO was also impacted by lower overall sales volumes as well as lower margins in its European operations.

Key Highlights 

• 4Q FY2022: The previous corresponding period (4Q FY2021) was impacted by an impairment charge of RM279 million in respect of the Group’s immature rubber plantation in Malaysia.
• FY2022: Further to a solid performance by SDO, the Group’s profits were also bolstered by higher contributions from the Group’s other operations (+10% YoY), as well as higher non-recurring profits of RM291 million, arising from gains on the disposal of land in Malaysia as well as the “earn out” settlement for the disposal of a former subsidiary in Liberia.

Chairman, Tan Sri Dato’ Seri Haji Megat Najmuddin bin Datuk Seri Dr Haji Megat Khas said:

“This is indeed a promising start to the new year. Sime Darby Plantation has delivered a commendable performance in FY2022 and has been cleared by the United States Customs and Border Protection (USCBP) to resume exports to the US. We have come out better and stronger from this challenging period, thanks largely to the continued resilience and dedication of our employees. I am truly proud of what we have achieved, and I believe we are now well-positioned to deliver even greater value to our shareholders whilst upholding our unwavering commitment to sustainable development.”

Group Managing Director, Mohamad Helmy Othman Basha said,

“For three years we were tested in ways we could never have imagined. First, it was the pandemic, movement controls and the acute labour shortage, and then it was the finding by the USCBP that there were forced labour indicators present in our Malaysian operations.

Today, in this post-pandemic era, and having been cleared by the USCBP, we have emerged stronger and with an exciting new outlook. We have launched our Net Zero roadmap to achieve clear goals and targets by 2030 and 2050. A new drive to mechanise, automate and digitalise have delivered promising results. And of course, the tremendous effort undertaken by my colleagues across the Group to address the USCBP’s findings has delivered results, restoring our reputation as a leader in all areas of sustainability.

Moving ahead, we are driving all our operations to deliver sustained and strong financial performance. If 2022 was a transformative year for the Group, we are now progressing into a new financial year with renewed vigour and determination to build on our strengths and rise to greater heights.”

OUTLOOK FOR FY2023:

CPO prices are expected to hold at current levels for the first quarter of 2023, on the back of continued strong demand. This is due, in part, to the considerable price advantage when compared to alternative oils and supply concerns resulting from Indonesia’s anticipated higher biodiesel mandate as well as tighter export policies.

With the arrival of more foreign workers into Malaysia, particularly harvesters, the Group expects its FFB production in Malaysia to improve in 2023 after a challenging two years.

Barring any unforeseen circumstances, the Group expects to perform satisfactorily in FY2023.

DIVIDEND:

The Group has declared a final dividend of 6.04 sen per share, which together with the interim dividend of 10.00 sen per share, amounts to a total single tier dividend of 16.04 sen per share for FY2022.

Petaling Jaya, 22 February 2023 - Sime Darby Plantation Berhad (SDP) welcomed a delegation from the United States of America last Wednesday, to better understand plantation industry labour practices and operations. The delegation comprised representatives of the United States Customs and Border Protection (USCBP), the Department of Labour, Immigration & Customs Enforcement, Homeland Security Investigations and officials from the US Embassy in Kuala Lumpur.

Expressing his appreciation to the delegation for taking the time to visit SDP’s estates in Carey Island, Group Managing Director, Mohamad Helmy Othman Basha shared the company’s experience and the enormity of the challenges it faced when instituting sweeping changes of labour practices and standards throughout its Malaysian operations.

“Given the sheer scale and complexity of our operations, we really had our work cut out for us to ensure our workers feel engaged and safe, and have a clear understanding of their rights. Today, they have a high level of trust in the platforms we had established for them to communicate their questions, concerns or grievances. On our part, we have committed to responding in a timely manner and to continuously monitor the quality of their living and working conditions,” said Mohamad Helmy.

The delegates also met with Malaysia’s Deputy Prime Minister and Minister of Plantation and Commodities, Dato’ Sri Haji Fadillah Haji Yusof, and had the opportunity to discuss continued bilateral collaboration and trade issues during a working lunch with the minister at the end of the visit.

The courtesy visit, organised by the Malaysian Palm Oil Council (MPOC) just over two weeks after the modification by the USCBP of a forced labour finding against SDP, provided an opportunity for the delegates to learn more about oil palm plantation operations and get an up-close view of the daily lives of plantation workers in SDP. On 3 February 2023, the USCBP modified its forced labour finding against SDP, which resulted in the immediate lifting of a US import ban imposed on palm oil produced by the Company’s Malaysian operations since 30 December 2020.

On 26 April 2021, SDP had submitted a comprehensive report to the USCBP detailing the enhancements that were implemented to improve its labour standards and practices. These include the reimbursement of recruitment fees that may have been paid by current and eligible former workers to secure employment with SDP; a more enhanced Migrant Worker Responsible Recruitment Procedure as well as regular and stricter due diligence on how contractors manage their workers; more effective two-way communication platforms for workers such as social dialogues, dedicated helplines and a mobile application for workers to channel various grievances; better controls on workers working hours; and, an ESG (Environmental, Social and Governance) scorecard in SDP’s operating units to drive behavioural change. With the modification of the USCBP finding in place, and the recognition of its many new and improved initiatives, SDP has committed to advocate for change at an industry level.

“Our experience, no matter how hard it was, has made Sime Darby Plantation a better company than it was two years ago. We would be delighted to share our learnings with our peers and partners in the palm oil sector. Producing palm oil that is free of forced labour must be the way forward for the entire industry,” he added.

Petaling Jaya, 30 March 2023 - A 50-hectare area in Bintulu, Sarawak, will be restored into a functioning rehabilitated peat ecosystem in the next two years.

Malaysian Palm Oil Green Conservation Foundation (MPOGCF) has agreed to contribute RM1.48 million to fund the project to plant and maintain suitable tree species in Sime Darby Plantation's Lavang estate. This project is expected to become a peatland rehabilitation model for academics and researchers. It will benefit the ecosystem and biodiversity of the area, as well as water and fire management systems.

Chief Sustainability Officer of Sime Darby Plantation Berhad (SDP), Rashyid Redza Anwarudin said, the latest collaboration with MPOGCF aligns with SDP’s No Deforestation, No Peat and No Exploitation (NDPE) commitment which the company has adopted since 2016, and SDP’s latest target to achieve net-zero emissions across its entire value chain by 2050.

“One of the key approaches we are taking to achieve our net-zero ambition is through land use transformation which include reforesting and rehabilitating non-productive agriculture land as a nature-based solution to increase carbon sinks. By restoring damaged peatlands, we are sequestering carbon, enhancing biodiversity, and reducing our overall environmental impact,” said Rashyid.

To achieve its net-zero target, SDP has decided to reforest a total of 400ha of peat plantations in East Malaysia. Ever since its NDPE commitment in 2016, there has been no new development of oil palm on peatland in SDP’s operations, regardless of the depth or location of the peat.

For its existing planted areas on peatland, SDP conducts drainability assessment procedures five years prior to replanting to assess the land status. If replanting is not viable, the area would be rehabilitated to its original peat ecosystem. SDP is planning to reforest more areas in its existing plantation in the near future.

“We are pleased to collaborate with MPOGCF on this impactful initiative. As with many of our tree-planting projects in the past, we are delighted to have the opportunity to work together with yet another like-minded partner who share our passion for environmental conservation,” added Rasyhid.

MPOGCF General Manager Zamakhshari Muhamad believed the signing of the MOA with SDP signified the Malaysian palm oil industry’s commitment to ensuring the rehabilitation of peatlands that can no longer be replanted into its natural ecosystem.

“Changing the status of forest reserves and peatland areas for oil palm plantations is no longer permitted, thus why existing oil palm on peatlands must be regulated more strictly.

“With the development and implementation of this project alongside SDP, MPOGCF aims to make this peatland rehabilitation model a pioneer in the industry in terms of the benefits it holds including carbon sequestration, prevention of peat fires and haze, provision of wildlife corridors as well as areas with high conservation value,” he added.

As a model of peat rehabilitation, the project will be testing the Roundtable on Sustainable Palm Oil’s best management practices for peatland management and will also be a research platform for internal researchers as well as academicians from Universiti Putra Malaysia Kampus Bintulu Sarawak, the Forestry Department and the Malaysian Palm Oil Board.

The parties also hope to increase awareness and share knowledge on peat ecosystems with neighbouring communities and other stakeholders, besides creating job opportunities for the local community via the establishment of forest tree nurseries and tree planting programmes with interested stakeholders, including villagers and school children. 

• Lower average realised prices and continued challenges to productivity impacted profits
• Increased arrival of foreign workers is expected to improve operational performance 

Petaling Jaya, 24 May 2023 - Sime Darby Plantation Berhad (SDP) registered a Profit Before Interest and Tax (PBIT) of RM303 million in the first quarter of its financial year ending 31 December 2023 (1Q FY2023), a decrease from the RM1,060 million PBIT recorded in 1Q FY2022. SDP’s net profit declined by 90% to RM69 million as compared to RM718 million.

The decline in profits was mainly attributable to lower year-on-year (YoY) average realised crude palm oil (CPO) and palm kernel (PK) prices, lower fresh fruit bunch (FFB) production as well as higher finance costs with increased benchmark interest rates. Realised CPO prices in 1Q FY2023 averaged RM3,887 per metric tonne (MT), a YoY decline of 13% compared to RM4,465 per MT the year before, whilst average realised PK prices declined significantly by 56% YoY to RM1,794 per MT from RM4,105 per MT in the previous period. The Group’s overall FFB production declined by 5% YoY as its Malaysian upstream operations continued to be impacted by the lingering effects from the prolonged acute labour shortage resulting in a 11% decline whilst both its operations in Indonesia and Papua New Guinea recorded a 1% growth.

The Group’s downstream operations, Sime Darby Oils (SDO), experienced a challenging quarter registering a PBIT of RM68 million, as compared to RM161 million in the previous year. SDO recorded lower sales volumes and margins in its Asia Pacific bulk and differentiated operations. However, its European operations recorded improved performance in both sales volumes and margins.

Key Highlights

• The Group’s 1Q FY2023 profits declined in its recurring segment and there were no profits from non-recurring transactions in the period.

Chairman, Tan Sri Dato’ Seri Haji Megat Najmuddin bin Datuk Seri Dr Haji Megat Khas said:

“Having successfully navigated a multitude of challenges over the last few years, I am confident that the Group will address any lingering issues swiftly. We will build on our strengths and forge ahead to sustain our market leadership, delivering value to our stakeholders.”

Group Managing Director, Mohamad Helmy Othman Basha said,

“Our performance was affected by the sharp decline in average CPO prices and the impact of the prolonged labour shortage in Malaysia, which is only now in the nascent stages of recovery.

These efforts will be the foundation of more sustainable, productive, and efficient operations for us in the future, as we continue to recover our productivity and reinvent our plantation operations this financial year.”

OUTLOOK FOR FY2023:

CPO prices are expected to trade at current levels in the near term with price competitiveness of CPO being dependent on a few factors, including the supply outlook of competing oils as well as Indonesia’s palm oil export policies. Macroeconomic and geopolitical challenges, including concerns of slowing economic growth and high interest rates could limit the upside potential of commodity prices. Furthermore, the lower demand and higher stockpiles in major importing countries could pose further challenges to CPO prices this year.

The Group anticipates registering improved FFB production this year with the easing of labour shortage in Malaysia. Additionally, with the Group’s intensive mechanisation, automation and digitalisation efforts in its operations, the Group is optimistic of achieving improved productivity this year.

The Group expects its FY2023 performance to remain challenging.

Petaling Jaya, 30 June 2023 - Sime Darby Plantation Berhad (SDP) is pleased to announce the appointment of Non-Independent Non-Executive Director, Tan Sri Dr Nik Norzrul Thani Nik Hassan Thani as Chairman, today.

Tan Sri Dr Nik Norzrul Thani has served as a member of the Board since 16 June 2022. He was appointed Interim Chairman of SDP following the retirement of Tan Sri Dato’ Seri Haji Megat Najmuddin Datuk Seri Dr Haji Megat Khas at the Annual General Meeting held on 15 June 2023.

Tan Sri Dr Nik Norzrul Thani practices with Zaid Ibrahim & Co., Malaysia's largest law firm, and a member of KPMG's Global Legal Services network comprising 3,200 lawyers across 84 jurisdictions. He has expertise in a vast range of areas including Islamic finance, banking, offshore finance, debt restructuring, as well as international, corporate and commercial law. He provides legal counsel for mergers and acquisitions, regulatory compliance, and the issuance of private debt securities, including Islamic financial instruments.

Before joining Zaid Ibrahim & Co., he worked at international law firm Baker & McKenzie. In 2017, he was appointed Chairman of the Malaysia-Singapore Business Council by the Ministry of International Trade & Industry.

Tan Sri Dr Nik Norzrul Thani is currently Chairman of the Malaysian Rating Corporation Berhad and T7 Global Berhad as well as a Director of several public companies including Amanah Saham Nasional Berhad, Cagamas Holdings Berhad and Pertama Digital Berhad.

Tan Sri Dr Nik Norzrul Thani obtained his LL.B (Hons) from the University of Buckingham, LL.M from Queen Mary College, University of London; and Ph.D in Law from the School of Oriental and African Studies (SOAS), University of London and is a Barrister at Law, Lincoln’s Inn. He was a Visiting Fulbright Scholar at Harvard Law School from 1996 to 1997, and a Chevening Fellow at the Oxford Centre for Islamic Studies, Oxford University from 2004 to 2005.

“Tan Sri Nik takes the reign at a pivotal time in SDP’s transformational journey in the palm oil industry. He has been a strong proponent of our ongoing initiatives in mechanisation, automation and digitalisation. Under his guidance and leadership, we look forward to the opportunities ahead, steadfast in our commitment to maximising value for our shareholders”, said Datuk Mohamad Helmy Othman Basha, SDP’s Group Managing Director.

• The evolving role of auditors

   

Petaling Jaya, 13 July 2023 - The traditional role of internal auditors is expanding to encompass Environmental, Social and Governance (ESG) practices and disclosures, particularly as companies integrate ESG into their operations.

“The increasing scrutiny on how ESG requirements are managed and the integrity of disclosures provides an opportunity for internal auditors to carve their position in their respective organisations,” said Suhailah Mohamed Abdulla, Sime Darby Plantation Berhad’s (SDP) Chief Integrity and Assurance Officer. “It is therefore important for internal auditors to equip themselves with the necessary skills and knowledge in this space to add credibility to the internal audit function and create a bigger impact.”

Suhailah was speaking at a Breakfast Talk organised by SDP and the Malaysian Institute of Corporate Governance (MICG) yesterday on: “Stepping up to the role: Objective Assurance & Advisory on ESG”. Devanesan Evanson, Chief Executive Officer of Minority Shareholders Watch Group moderated the discussion. Other panellists were MICG’s Governor, Marina Yong Poh Nyuk, and Permodalan Nasional Berhad’s Senior Vice President & Head of Investment Stewardship, Muazzam Mohamad.

Panellists discussed the role of objective and independent assurance to establish trust and credibility in companies’ Environmental, Social & Governance (ESG) practices and disclosures. They also highlighted emerging trends and common challenges faced in ESG assurance and advisory, and the best practices to address them.

MICG Governor Marina Yong said that with greater scrutiny from regulators and investors, it is critical that boards are provided the full picture of the company’s ESG performance and ambitions to be confident that their ESG reporting is fair and sufficiently ambitious.

“Independent and thorough internal and external audits play a significant role in providing this assurance to the boards. However, internal auditors face huge challenges in upskilling to undertake ESG audits as the subject is not only vast, but also complex. Companies must therefore be strategic in accelerating the building of ESG audit competencies internally, not just for reporting purposes, but to transition to ESG compliance as rapidly as possible. While the additional cost of developing the ESG knowledge and capabilities is the primary concern of most companies, being left behind while others leap ahead in ESG strengths would ultimately be more costly,” she said.

Suhailah added that companies are increasingly recognising the importance of integrating ESG considerations into their operations, not just as a moral imperative, but also as a strategic advantage. In this context, the role of audit professionals in providing objective assurance and advisory on ESG matters has gained significant importance.

“Their expertise and guidance can help to ensure that real positive impact on ESG is delivered, enabling companies to meet stakeholder expectations on ESG which is important in enhancing companies’ long-term viability and resilience,” she said.

The Breakfast Talk was attended by MICG Chairman and the Board of Governors, as well as Chairman, Board Members, Senior Management and Executives from several GLC and MNCs including Sime Darby Plantation, Petronas, FGV Holdings, Telekom Malaysia, TNB, MTDC, Dutch Lady, KPJ Healthcare, IOI Global Service, SP Setia and UEM Sunrise. 

• Realised crude palm oil prices averaged RM3,765 per metric ton in 2Q FY2023
• Interim dividend of 3.25 sen per share declared 
   

Key Highlights

The Group recorded lower profits from non-recurring transactions, consisting of gains from land sales in Malaysia, during 2Q FY2023 of RM196 million.

Chairman, Tan Sri Dr Nik Norzrul Thani Nik Hassan Thani said:
“Although 2023 has had its challenges, I believe the Group is well-positioned to weather any storms that may lie ahead. Programmes that are underway across the Group will ensure that shareholders value is preserved in the shorter term and enhanced in the medium and longer terms.”

Group Managing Director, Datuk Mohamad Helmy Othman Basha said:

“The aggressive on-going rehabilitation of our Upstream Malaysia operations is beginning to show results with the improvement in our Malaysian FFB production in the second quarter of 2023. This, coupled with the arrival and upskilling of new harvesters will put our harvesting operations and field conditions back on track to deliver better productivity for the rest of the year.

“As we approach the peak production period in the coming months, the Group is looking forward to continued improvement of our performance in the second half of 2023.”

OUTLOOK FOR 2H FY2023:
The rebound in CPO and other commodity prices was mainly driven by the increasingly uncertain weather conditions in key oilseed regions, as well as the escalation of the Russia-Ukraine war. Thus, price volatility is expected to continue in the near term, particularly as geopolitical crises and global macroeconomic conditions add to prevailing uncertainties.
FFB production is expected to see steady increase as the Group progresses into the peak production period in the coming months. The Group is optimistic that its FFB production will improve as it continues to improve field conditions in its Malaysian operations. These efforts complement the Group’s commitment to continue its transformational initiatives to mechanise, automate and digitalise its operations in Malaysia.

The Group expects its FY2023 performance to remain challenging.

DIVIDEND:
The Group is pleased to declare an interim dividend of 3.25 sen per share for FY2023.