Sime Darby Jomalina becomes its first Malaysian refinery supplyingsegregated certified sustainable palm products

Petaling Jaya, 14 November 2013 - Sime Darby Jomalina Sdn Bhd, is now the world’s largest producer of segregated certified sustainable palm oil (CSPO), with a production capacity of 330,000 MT per annum. The Malaysia-based refinery, owned by Sime Darby Plantation, has been certified as a fully segregated producer of CSPO by the Roundtable on Sustainable Palm Oil (RSPO). This certification of SD Jomalina, is a major step forward for Sime Darby Plantation in its quest to produce and supply only certified sustainable palm oil and palm products.

SD Jomalina’s customers will now have the assurance that all the refined palm oil and derivatives produced by this refinery will be sourced from traceable and certified sources as its entire supply chain has been independently audited and certified. The CSPO supplied to SD Jomalina is sourced mainly from Sime Darby Plantation’s RSPO certified estates.

“This is Sime Darby Plantation’s first facility in Malaysia, with a fully certified supply chain, which allows us to offer RSPO certified segregated refined palm products to the market. With this certification, customers can be confident that SD Jomalina will offer not only refined palm oil and palm products of the best quality but also that its entire production has been sustainably produced and sourced from fully traceable supply chains,” said Tan Sri Mohd Bakke Salleh, President and Group Chief Executive of Sime Darby Berhad. “I am very proud of this achievement. It is proof of our enduring commitment to sustainable agricultural standards,” Mohd Bakke added.

To obtain certification as a segregated facility, SD Jomalina ensures that all the CSPO it sources is separated from non-CSPO at every stage of its production, from the mills to the refinery, the entire manufacturing process and also its transportation to storage and bulking facilities. This process is supported by a supply chain management system in accordance with the RSPO’s Supply Chain Certification System and Standard and is independently verified and certified by an RSPO accredited certification body.

Although the RSPO offers other options for the production and procurement of CSPO and its derivatives, such as the mass balance and the book & claim systems, segregation offers a higher level of commitment and thus assurance for customers.

“This is a timely move by Sime Darby Plantation as the demand for segregated CSPO and its derivatives continues to grow as customers shift towards sustainable sourcing. We have strategically positioned and aligned our mills throughout our operations in Malaysia to facilitate the segregation module,” said Datuk Franki Anthony Dass, Managing Director of Sime Darby Plantations.

Currently, there are 21 mills in Sime Darby Plantation’s operations in Malaysia and Indonesia that are certified with RSPO segregated supply chain status. This number is expected to grow to 35 mills in 2014.

“With the current number of RSPO certified mills, Sime Darby Plantation has the capacity to produce up to 900,000 MT per year of segregated CSPO from its operations in Malaysia and Indonesia. We expect total segregated CSPO production to increase to 1.5 million MT per year, after the next annual surveillance audit by the RSPO’s certification bodies,” Franki Anthony said.

Petaling Jaya, 18 November 2013 - Sime Darby Plantation Liberia (SDPL) had terminated the services of six employees on 1 Oct , 18 Oct and 20 Oct due to various factors including criminal actions perpetrated on other company employees and property. One of the terminated workers physically attacked a local employee while another damaged oil palm trees in retaliation against the company.

The termination of these workers was carried out in full compliance of the labour regulations of Liberia. SDPL is continuously engaging the Government of Liberia, Project Affected Communities (PAC) and NGOs to discuss issues raised by the PAC, including those related to the workforce. On this matter, two meetings have been held with the PAC so far on 7 Nov and 10 Nov to seek an amicable solution.

SDPL would also like to clarify a media report last week on a violent protest by SDPL workers including damaging property in demand of an increment of their monthly salary. The protest was not against SDPL but against the Workers Union to voice their dissatisfaction on the union fees being raised from USD2.00 per month to USD2.50 per month without consulting the workers. No SDPL property was damaged during the incident as reported.

SDPL will continue engaging the Government of Liberia, NGOs, PAC and the communities. However, under no circumstance will SDPL condone even indirectly, criminal conduct or gross indiscipline.

SDPL is committed to playing a major role in transforming Liberia’s economy for the better and to contribute to the balanced development of the economy and the people of Liberia. It strives to maintain an equitable balance between increasing value for shareholders and being responsible to society and environment.

The Group targets a net profit after tax and non-controlling interests of RM2.8 billion and a Return on Average Shareholders’ Funds of 10 percent for FY2013/2014

Kuala Lumpur, 29 November 2013 – Sime Darby Berhad reported a pre-tax profit of RM714.2 million and a net profit of RM489.0 million for the first quarter ended 30 September 2013 (1QFY2014), representing a decline of 44 percent and 51 percent respectively, over that of the corresponding quarter of the previous financial year.

The Group posted a lower pre-tax profit for 1QFY2014 due to challenging market conditions in most of the businesses it operates. In the Plantation Division, profit declined mainly due to weaker average crude palm oil (CPO) price realised and lower fresh fruit bunches (FFB) production during the period under review. This was in line with the industry which was also negatively impacted by lower CPO prices and a decline in FFB output due to a shift in cropping patterns in certain areas.

“We will continue to focus on improving operational efficiencies across the Group and ensure that the challenges each Division is facing are addressed. As an immediate measure, the Group will continue to institute prudent cost controls, increase focus on efficient working capital management and undertake a disciplined approach towards capital allocation and cash flow management”, said Sime Darby President & Group Chief Executive, Tan Sri Dato’ Mohd Bakke Salleh.

“Despite the headwinds, I am pleased to note that the Group has performed well from the operational perspective. We achieved a significant milestone in Liberia, having planted 10,018 hectares (ha) of oil palm as at 30 September 2013, up from 4,350 ha this time last year. In addition, the completion of our maiden Indonesian refinery in Pulau Laut, Kalimantan will allow us to capitalize on the reduced export duty on refined products in Indonesia. The Group has penetrated new markets through Sime Darby Motors by securing the Kia and BMW/MINI distributorships in Taiwan and Vietnam, respectively. Two new McLaren showrooms were also opened in Shanghai and Malaysia in September and October this year, respectively. Last but not least, our strategic partnership with Eastern & Oriental in the City of Elmina will certainly add value to that landmark development.” Mohd Bakke added.

1Q FY2013/2014 versus 1Q FY2012/2013 Year-on-Year (YoY) Comparison

The Plantation Division’s profit before interest and tax (PBIT) for the period under review declined to RM254.6 million, a decrease of 62 percent compared to RM671.9 million in the same period last year. Several factors contributed to the decline in the Division’s PBIT, including lower average CPO price realised of RM2,331 per tonne in 1QFY2014 against RM2,707 per tonne in 1QFY2013. The Division also witnessed a drop in FFB production by 16 percent to 2.47 million tonnes in the quarter under review. FFB production in Indonesia and Malaysia declined by 28 percent and 8 percent respectively, compared to the previous corresponding quarter. The decline in the Indonesian FFB production was largely attributable to the change in cropping patterns and delay in peak cropping, a trend that was particularly prevalent in Kalimantan.

The performance of the midstream and downstream operations improved, registering a PBIT of RM11.0 million in 1QFY2014 compared to a loss of RM24.9 million in the previous corresponding period. The turnaround in this segment was largely attributable to better results of the oils & fats and biodiesel businesses with reduced losses from the Unimills refinery operations in the Netherlands. The Emery Group, a jointly controlled entity in the oleochemicals business, also posted a profit in the period under review compared to a loss in the previous corresponding quarter.

Despite a sharp slowdown in the Australian mining sector due to downward pressure on commodity prices, the Industrial Division achieved a PBIT of RM327.2 million in the current quarter under review compared to RM382.4 million registered in the same period last year. The decline of the Division’s PBIT by 14 percent was mainly due to lower equipment sales to the mining sector in Australasia. However, the China/Hong Kong operations achieved a six-fold increase in PBIT to RM29.4 million for the first quarter of FY2013/2014. The unit’s market share for Caterpillar increased, boosted by higher engine sales in the marine, oil & gas and electrical power generation sectors.

The Motors Division registered a PBIT of RM106.6 million in 1QFY2014 compared to RM161.3 million in the previous corresponding period, representing a decline of 34 percent. This was mainly attributable to lower performances of all the regions except for Malaysia. Weaker market sentiment and changes in legislation in Singapore, as well as the economic slowdown in Thailand and China were the main reasons for the reduced earnings in these markets. Besides that, stiff competition faced in China’s luxury car segment and Australia’s mass brand vehicle segment has resulted in thinner margins. The Division’s operations in Malaysia recorded a YoY PBIT increase of 3 percent due to strong sales of all the marques under its stable.

The Property Division posted a PBIT of RM65.5 million in the first quarter of the financial year compared to RM69.5 million in the same period last year. The lower performance was partly due to residential launches that were scheduled for 1QFY2014 being accelerated to the second half of the previous financial year to take advantage of stronger market conditions. The PBIT decline of 6 percent was also due to lower contributions from associate companies. For the period under review, the Division successfully launched four projects with take-up rates reaching as high as 85 percent. On the international front, Phase Two of the Battersea Power Station project which consists of retail, residential and commercial units, is expected to be launched early next year.

The Energy & Utilities Division recorded a PBIT of RM56.8 million in the first quarter under review compared to RM58.2 million in the previous year’s corresponding quarter, representing a marginal decline of 2 percent due to lower profits from the power sector. However, the port operations registered a PBIT growth of 87% in the period under review compared to the same quarter in the previous year. The better performance of the port operations was primarily due to a 23% increase in throughput, better cargo mix and higher average tariff rates.

Headline Key Performance Indicators (KPIs)

The Group also announced its KPIs for the financial year ending 30 June 2014 (FY2014), with a target net profit after tax and non-controlling interests of RM2.8 billion and a Return on Average Shareholders’ Funds of 10 percent.

On the Group’s target KPIs for FY2014, Mohd Bakke said, “As we continue to move forward to achieve our strategic targets, we remain mindful of the potential headwinds and challenges ahead. We have taken into account the uncertainties in the global economic environment as well as the volatility in commodity prices, and will continue to seek new opportunities that will allow us to grow and strengthen the Group’s core businesses. Our priority is to meet these targets and to maximize shareholder value.”

Certification achieved a year ahead of schedule

Kuala Lumpur, 9 January 2014 – Sime Darby Plantation Sdn. Bhd., the plantation arm of the Sime Darby Group, has achieved its first ever Roundtable of Sustainable Palm Oil (RSPO) certification for smallholders under Indonesian subsidiary, PT Minamas Gemilang.

The achievement, which comes under the Kredit Koperasi Primer Anggota (KKPA) scheme, was one year ahead of the mid-2014 target set for any PT Minamas smallholders to be RSPO certified.

The certified KKPA scheme is located at the Estates in Sebamban, South Kalimantan in Indonesia, covering a total operational area of 16,639 hectares (ha) with a total production capacity of 347,749 metric tonnes (MT) of Fresh Fruit Bunches (FFB). The KKPA scheme is divided into five sections and KKPA 2, 3, and 5, which supply FFB to PT Minamas’ Mustika Palm Oil Mill were the first smallholdings to be RSPO certified. They were soon followed by KKPA 1 and 4 which were RSPO certified during the recent Annual Surveillance Audits. KKPA 1 and 4 are the respective FFB suppliers to Angsana Mini Oil Mill and Angsana Oil Mill.

As a result of this achievement, the three PT Minamas Mills – Mustika, Angsana Mini and Angsana Oil Mill - have now achieved segregated status under the RSPO Supply Chain Certification System (SCCS), as 100% of their supplies are now RSPO Certified FFB from PT Minamas’ KKPA smallholders. This has raised the number of PT Minamas’ segregated status Mills to 17 out of a total of 21 RSPO certified Mills.

“This is a significant milestone for Sime Darby Plantation. To be able to achieve the first RSPO certification for our smallholders one year ahead of the target we have set reinforces our overarching commitment to sustainability in our operations,” said Datuk Franki Anthony Dass, Managing Director of Sime Darby Plantation.

“The segregated status of our three Mills will also provide traceability of our palm oil along the entire value chain and will give us the advantage of gaining further access to the international sustainable palm oil market. This is yet another step forward for Sime Darby Plantation in our quest to produce and supply only certified sustainable palm oil and palm products, and it will further strengthen our position as a leading CSPO producer in the world,” added Datuk Franki.

The segregation status requires that CSPO is kept separated from non-CSPO at every stage of its production, from the mills to the refinery, the entire manufacturing process and also its transportation to storage and bulking facilities. It is supported by a proper management system in accordance with the RSPO SCCS, and is independently verified and certified by RSPO-accredited Certification Body.

Although RSPO offers other options for the production and procurement of CSPO and its derivatives such as Mass Balance and Book & Claim, the Segregation Module offers a higher level of commitment and thus assurance to customers.

“We trust the RSPO Certification awarded to the smallholders will have a positive impact on yield while improving efficiency as a result of the systematic management system. Smallholders are important stakeholders in our sustainability effort and we hope this achievement will also further raise awareness on the benefits of certification, not just among the smallholders in our outgrower schemes but also in other smallholder communities in Indonesia,” said Mohd Ghozali Yahya, President Director of PT Minamas.

“PT Minamas will continue to be actively involved in further increasing its production of CSPO and certification process. We will do this through intensified engagement activities, facilitation and support in terms of training, consultation and assistance for our smallholders in achieving RSPO Certification. We are committed to ensure that our current remaining outgrower schemes that have not been RSPO certified will achieve their certification by the year 2020,” he added.

Currently, there are two types of outgrower schemes under PT Minamas, which are intended to provide local communities with the means to make a living and raise their quality of life.

The first is KKPA, which is essentially a cooperative scheme where land for the development of smallholder oil palm plots is held by cooperatives. Individual smallholders are allocated share certificates for two hectares. Smallholders receive income via dividends issued from the profits made by the cooperative and wages earned. Meanwhile, for the second type of outgrower scheme which is called Plasma, PT Minamas assists locals to be independent growers of oil palm by undertaking land preparation, planting and maintenance for at least 48 months before handing over to the plasma participants for them to manage on their own. PT Minamas will purchase their FFB once they start to harvest their crop.

To date, PT Minamas has developed approximately 42,008 ha under the outgrower schemes in Indonesia which has improved the livelihood of more than 25,000 families.

Higher CPO prices and improved operational efficiencies continue to drive the Group forward

Kuala Lumpur, 28 February 2014 – Sime Darby Berhad registered a pre-tax profit of RM1.0 billion and a net profit of RM818.3 million for the second quarter ended 31 December 2013 (2QFY2014). The Group’s pre-tax profit for 2QFY2014 declined marginally by 1 percent whilst its net profit rose by 15 percent on reduced taxes, compared to the corresponding quarter of the previous financial year.

For the half year ended 31 December 2013 (1HFY2014), the Group reported a pre-tax profit of RM1.7 billion and a net profit of RM1.3 billion. Both the Group’s pre-tax profit and net profit for 1HFY2014 declined by 25 percent and 23 percent respectively, compared to the same period in the last financial year.

Commenting on the overall performance of the Group, Sime Darby’s President and Group Chief Executive, Tan Sri Dato’ Seri Mohd Bakke Salleh said, “The Group has undergone a challenging six months as the global economic and business environment continue to be volatile. Nonetheless, we remain resolute in our focus on improving operational efficiencies across the Group and ensuring that each Division addresses their challenges.”

“After a tough start to the financial year, I am pleased to note that crude palm oil (CPO) prices have improved from the previous quarter and the Group has seen continuous improvements in operational efficiencies. All our Divisions have been able to withstand the effects of the demanding market conditions, mainly attributable to the steadfast dedication of our workforce. Adding a feather to our cap are the strategic accomplishments such as our entry into the luxury car segment in Australia through the acquisition of the BMW dealership in Brisbane. The Battersea Power Station development project continues to move full steam ahead with sales for Phase Two expected to be launched this year.” he added.

“The management will continue to maintain a disciplined approach towards capital allocation and cash flow management while focusing on efforts to strengthen the Group’s capabilities and attain leadership positions in our core businesses.” said Mohd Bakke.

2Q FY2013/2014 versus 2Q FY2012/2013 Year-on-Year (YoY) Comparison

The Plantation Division posted a profit before interest and tax (PBIT) of RM507.5 million for the period under review, a decline of 3 percent compared to RM522.0 million in the previous corresponding quarter. In the quarter under review, the Division’s PBIT was marginally lower due to the fresh fruit bunch (FFB) production which fell by 13 percent to 2.57 million tonnes, largely attributable to the change in cropping pattern in Indonesia. The lower crop production was mitigated by 9.5 percent improvement in the average CPO price realised from RM2,207 per tonne in 2QFY2013 to RM2,416 per tonne in 2QFY2014. The Division also recorded an increase in oil extraction rate (OER) to 22.05% in 2QFY2014 compared to 21.83% in 2QFY2013. As compared to the preceding quarter, the Division’s PBIT almost doubled that of 1QFY2014 as improvements were recorded in average CPO price realised, FFB production and CPO sales volume. Operationally, average CPO price realised, FFB production, OER and CPO sales improved by 3.7 percent, 4.1 percent, 0.6 percent and 15.4 percent respectively, compared to the preceding quarter.

The midstream and downstream operations registered a PBIT of RM37.2 million in 2QFY2014 compared to RM29.3 million in the previous corresponding period. The 27% increase in profit was mainly due to improved performance from the Unimills refinery operations in Europe coupled with higher contribution from biodiesel operations and other refineries.

The Industrial Division recorded a PBIT of RM261.5 million in the current quarter under review compared to RM285.0 million registered in the same period last year. The decline of the Division’s PBIT by 8 percent was largely due to lower equipment deliveries and product support sales to the mining sector in Australia. All other regions achieved better performances as a result of higher equipment deliveries in the marine, oil & gas, logging and construction sectors. The Malaysia and China/Hong Kong operations chalked up more than 100 percent improvements in PBIT for the period under review compared to the previous corresponding quarter.

The Motors Division reported a PBIT of RM153.4 million in 2QFY2014, a decline of 7 percent compared to RM164.6 million in 2QFY2013. Changes in government regulation and stiff competition in the mass brand vehicle segment continue to impact performances in Singapore and Australia/New Zealand, respectively. However, Malaysia and China/Hong Kong recorded strong results with a PBIT increase of 7 percent and 32 percent, respectively. This was driven by higher contribution from Ford and Land Rover sales in Malaysia and better performance from all operations in China/Hong Kong.

The Property Division achieved a PBIT of RM72.2 million in the second quarter of the financial year compared to RM61.2 million in the same period last year, representing an increase of 18 percent. The commendable performance was underlined by higher sales and percentage of completion from project developments in Elmina East and Bandar Bukit Raja.

Finally, the Energy & Utilities Division recorded a PBIT of RM52.5 million for the period under review compared to RM72.1 million in the previous year’s corresponding quarter. The PBIT decline of 27 percent was mainly due to a gain on disposal of a jointly-controlled entity and the write back of provision for a completed project in the corresponding period last year. However, the PBIT of China Utilities operations grew by three fold in 2QFY2014 compared to the same quarter in the previous year as a result of increased throughput, wider cargo diversification and higher average tariff rates, all of which supports the Group’s belief in the growth potential of the ports & utilities business in China.

Interim Dividend

The Group announced an interim dividend of 6 sen per share for the financial year ending 30 June 2014.

SDPL is working with the Liberian authorities to ascertain the cause of the fire

Monrovia, 20 March 2014 - Sime Darby Plantation Liberia Inc (SDPL) would like to clarify media reports on the incident of fire in our estates.

Due to the very dry weather that started in December 2013, there have been fires in our Bomi, Matambo and Grand Cape Mount estates. This has affected about 214 hectares of land planted with oil palm.

SDPL has been working with the local authorities and the Liberian government to manage these incidents. The measures taken include:

• Briefing communities on the hazards of a fire outbreak. The company also requested for their cooperation to suspend all charcoal burning and burning related to farming.
• The suspension of all charcoal burning and farming related burning within plantation areas until early June 2014.
• Establishing a hotline to report fires.
• Increasing the number of staff involved in fire surveillance within the plantation area.

Planned radio broadcasts with Ministers, Senators and the local police to urge communities to cooperate with SDPL in ensuring no fires within the estates.

SDPL is also working closely with the Liberian government to investigate the cause of these fires. It has to be noted that media reports of local community dissatisfaction with SDPL is not true. Any suggestions that SDPL has entered into traditional land without consent is simply false. SDPL strictly observes the Free, Prior and Informed Consent process and this has been refined to include participatory mapping where community elders are involved in drawing the boundaries of areas considered as sacred or for farming, among others.

SDPL has a good working relationship with our Project Affected Community (PAC) and other key stakeholders. However, if the fires have been caused by arson, SDPL will work closely with the authorities to ensure the safety of all its employees and to protect the integrity of its investments

"We have condemned this fire thing from the first day. What is happening is very bad. What we like to make clear is that the fire is not coming from the PAC residents. We have been with Sime Darby helping to create awareness in the communities. Sime Darby is our friend and we hope the fire incident stops soon so that the company can move ahead with its development," said Mustapha Foboi, chairman of the PAC.

SDPL would like to call upon community residents to kindly assist with information regarding any fire throughout the plantation to ensure that it is managed effectively.

As a responsible long term investor, SDPL believes that the local communities are our biggest stakeholders. This is why we are committed to providing medical care, educational facilities, access to drinking water and sanitation, and roads to the communities within our concession area.

Sime Darby has provided more than 2,900 jobs over the last three years and has the potential to provide 35,000 jobs once the project is fully operational.

The Group achieves better earnings due to higher contribution from the Plantation Division.

Kuala Lumpur, 29 May 2014 – Sime Darby Berhad registered a pre-tax profit of RM1.0 billion and a net profit of RM852.5 million for the third quarter ended 31 March 2014 (3Q FY2013/2014). Both the Group’s pre-tax profit and net profit for 3Q FY2013/2014 rose by 7 percent and 23 percent respectively, compared to the corresponding quarter of the previous financial year following improved results from the Plantation Division and a lower effective tax rate.

For the nine months ended 31 March 2014 (9M FY2013/2014), the Group posted a pre-tax profit of RM2.7 billion and a net profit of RM2.2 billion. The nine months pre-tax profit and net profit declined by 16 percent and 10 percent respectively, compared to the corresponding period of the previous financial year.

Commenting on the overall performance of the Group, Sime Darby’s President and Group Chief Executive, Tan Sri Dato’ Seri Mohd Bakke Salleh said, “The Group had produced a satisfactory performance. Despite operating in a challenging environment, Sime Darby is on track to achieve its net profit Key Performance Indicator (KPI) of RM2.8 billion for the financial year ending 30 June 2014. The resilient performance of the Plantation Division is testament to the initiatives that have been put in place to enhance operational efficiencies of the Division. With the uncertainty in the global economy, it is important, now more than ever, for us to intensify our efforts to enhance efficiency and institute prudent cost management and saving measures in order to remain competitive and continue to deliver long-term returns to our shareholders.”

He added that the Group also continues to show progress in the key long-term strategic initiatives. “The Motors Division and SISMA Auto have formed a joint venture to represent Jaguar and Land Rover in Malaysia. The joint venture, Jaguar Land Rover (Malaysia), has been appointed as the exclusive importer for Jaguar and Land Rover marques. Another significant development is the Plantation Division’s initiative to build and nurture a sustainable portfolio of palm-related industrial biotechnology companies with its first investment in Verdezyne Inc.” said Mohd Bakke.

3Q FY2013/2014 versus 3Q FY2012/2013 (Year-on-Year Comparison)

The Plantation Division posted a profit before interest and tax (PBIT) of RM454.8 million for the period under review, an increase of 10 percent compared to RM413.2 million in the corresponding quarter of the previous year. The higher PBIT was attributable to the improvements in oil extraction rate (OER) and average crude palm oil (CPO) price realised. The OER rose from 21.95 percent in 3Q FY2012/2013 to 22.17 percent in 3Q FY2013/2014 while the average CPO price realised recorded a 20 percent increase from RM2,147 per tonne to RM2,573 per tonne. The improvements have more than offset the decline in fresh fruit bunch (FFB) production which fell by 6 percent to 2.10 million tonnes in the quarter under review. The Division recorded a lower crop production in the quarter due to the change in cropping pattern in Indonesia.

The midstream and downstream operations recorded a profit of RM19.5 million in 3Q FY2013/2014 compared to a profit of RM39.7 million in the previous corresponding quarter. The 51 percent decline in profit was mainly due to losses arising from the jointly-controlled entities as a result of weaker market conditions in Europe.

The Industrial Division’s PBIT of RM220.6 million for the period under review was lower by 16 percent compared to RM263.1 million in the previous corresponding quarter. The PBIT of the Australasia operations reported a decline of 38 percent due to lower equipment sales and product support sales in the mining sector. On a positive note, the performances of the Singapore and China/Hong Kong operations rose by 68 percent and 58 percent respectively, attributable to higher equipment deliveries in the marine and oil & gas sectors. The Division also experienced an improvement in order book by 24 percent to RM2.6 billion as at 31 March 2014 as compared to RM2.1 billion as at 31 December 2013.

The Motors Division recorded a PBIT of RM142.9 million in the third quarter of this year, a decline of 21 percent compared to RM181.6 million in the corresponding period of the preceding year. This was mainly attributable to the lower contribution from the Singapore operation due to changes in government regulation, as well as lower earnings from the China/Hong Kong operations because of competitive market conditions. However, the Malaysia operation posted a better result driven by higher sales in the brands represented.

The Property Division posted a PBIT of RM105.5 million in 3Q FY2013/2014 compared to RM139.3 million in the same period last year, representing a decline of 24 percent. The decline in earnings was due to the gain registered on the sale of land in Pagoh, Johor in the previous financial year. Nevertheless, the Division’s average take-up rate continued to remain strong. New launches of double-storey terrace houses such as the Garinia in City of Elmina and Nahara 1 & 2 in Bandar Bukit Raja garnered an average take-up rate of 89 percent since their launches between January to March 2014. On the international front, the launch of Phase Two of the Battersea Power Station project received overwhelming response with 95 percent of the 254 units reserved in the first week of sales.

The Energy & Utilities Division’s PBIT for 3Q FY2013/2014 declined by 34% to RM39.1 million. The port operations in China recorded a lower profit contribution due to lower throughput caused by the slowdown of the Chinese economy. However, the decline in PBIT was mitigated by higher contribution from the power business.

Petaling Jaya, 8 July 2014 - The world’s largest palm oil players have taken a significant step forward in sustainability, by committing to the Sustainable Palm Oil Manifesto which sets higher standards for growers, traders, end users, and other stakeholders. The Manifesto demands increased commitment to sustainable production right across the supply chain and is an important step the industry is taking to set the direction for sustainable agriculture.

The Manifesto commits its signatories to no deforestation, creating traceable and transparent supply chains, and protecting peat areas, while ensuring economic and social benefits for the local people and communities where oil palm is grown. These standards are higher than, and in addition to, those set by the Roundtable on Sustainable Palm Oil (RSPO), of which all signatories are members.

Five oil palm growers – who are the largest in the industry, together producing more than 9% of the world’s palm oil – were the first to sign the Manifesto. They are Sime Darby Plantation, IOI Corporation Berhad, Kuala Lumpur Kepong Berhad, Musim Mas Group, and Asian Agri. Other signatories include global palm oil trader Cargill and Apical.

These signatories, along with global agribusiness group, Wilmar International Limited, will also be funding research to define what constitutes a High Carbon Stock (HCS) forest and to establish HCS thresholds that take into account environmental, socio-economic and political factors in developing and emerging economies.

Unlike High Conservation Value (HCV) areas, which are areas of critical importance in terms of ecological, social or cultural value, HCS needs further study to establish appropriate thresholds that will not stifle the economic development of nations while ensuring that environmental concerns are addressed. The research will establish these, and determine suitable assessment methods to identify HCS forests, which will be excluded from future oil palm plantation development.

Speaking on behalf of the five growers, Tan Sri Dato’ Seri Mohd Bakke Salleh, President and Group Chief Executive of Sime Darby Bhd, said that while the signatories include many of the industry’s key players, the Manifesto is an open invitation to all stakeholders in the palm oil value chain, including civil society and environmental groups, to sign up and work together to increase momentum in the drive towards sustainability.

“This Manifesto represents an important milestone for the global palm oil industry. As the world’s leading palm oil producers, we want to make clear our commitment to driving progress towards sustainability in the industry, and across all sustainable agriculture, and to leading by example.”

“While many of these growers have been consistently improving their sustainability performance over the last five years, the Sustainable Palm Oil Manifesto puts their commitment in writing and calls on the rest of the industry to follow their lead,” Mohd Bakke said.

The Sustainable Palm Oil Manifesto aims to build upon the signatories’ existing commitments to the Roundtable for Sustainable Palm Oil (RSPO). The RSPO’s Principles and Criteria have established the foundation for the growing, production, processing and trading of sustainable palm oil. It is currently the only sustainability standard available in the global edible oil industry, making palm oil the only edible oil produced on a large scale that adheres to stringent social and environmental standards.

This is in reference to Greenpeace’s article “Greenwash alert as palm oil companies sign onto continued deforestation”, published on 11 July 2014.

Kuala Lumpur, 17 July 2014 - As the world’s largest producers of sustainable palm oil and key players of the industry, the Signatories to the Sustainable Palm Oil Manifesto strive to engage and work with all relevant stakeholders, especially in projects of major importance such as the High Carbon Stock (HCS) Study.

This co-operative approach was the basis of the Sustainable Palm Oil Manifesto, which aims to bring together everyone across the palm oil value chain; from growers, traders and processors, to end-users and non-governmental organisations (NGOs), to agree to an increased commitment to responsible and sustainable development, enhancing the standards already set by the Roundtable on Sustainable Palm Oil (RSPO). In view of the original intent and the spirit of inclusion and engagement, the Signatories of the Manifesto appreciate the feedback from the Greenpeace press release titled “Greenwash alert as palm oil companies sign onto continued deforestation”, issued on 11 July 2014.

The initial Signatories of the Manifesto are growers that together produce almost a tenth of, and physically trade more than a third of global palm oil. They include Apical, Asian Agri, Cargill, IOI Corporation Berhad, Kuala Lumpur Kepong Berhad, Musim Mas Group and Sime Darby Plantation.

A critical commitment under the Manifesto is the agreement to fund a major scientific study to determine HCS thresholds, in the absence of an industry-accepted methodology and standard for what constitutes HCS. Global agribusiness group, Wilmar International Ltd, although not a signatory to the Manifesto, has joined the group to co-fund the study.

A steering committee led by two respected co-chairs - leading environmentalist Sir Jonathon Porritt and eminent soil scientist Dr John Raison - has been established, comprising representatives from the Signatories, Wilmar International Ltd and other key stakeholders. Representatives from the RSPO and the Sustainable Trade Initiative (IDH) are observers and will actively contribute to the process. We are very much encouraged by the level of interest in this study and the fact that several other organisations have expressed their intention to support our efforts.

Critical socio-economic considerations

The new HCS study, funded by the Signatories, will adopt a holistic approach to sustainable development, addressing the concerns of all stakeholders. It will build on existing scientific work on carbon stocks, and will include a critical component for socio-economic considerations and the right of a country to sustainable development.

Led by renowned, independent experts in environmental and socio-economic research, the study will consider the right of developing nations and the people living in them to expect, anticipate and drive sustainable development, using the resources available to them, including land. The technical and social studies will be conducted over a 12-month period, and will be subject to transparent peer reviews.

It is our belief that most stakeholders within the palm oil value chain are supportive of this effort and we expect the veracity of the findings to withstand the scrutiny of the scientific community; the governments of poor and developing nations with a mandate to elevate their people out of poverty; the communities and their advocates in those developing nations who have worked in the past, and continue today to work with the companies that are funding the HCS Study. We are also very mindful and respectful of the fact that the inputs of the respective governments, especially with regard to land use policies and social economic development are crucial and a realistic solution is not possible without their involvement and endorsement.

NGOs invited to join the process and contribute positively

As Greenpeace is aware, in our effort to engage all stakeholders and secure as much input as possible in this groundbreaking work, the Signatories to the Manifesto extended an open invitation to NGOs to participate in the HCS study. In fact, discussions with various NGOs, including Greenpeace, about their participation have been ongoing for more than seven months, and the invitation remains open.

We welcome constructive and considered input, but are mindful of the practical challenges that lie ahead, to secure a global commitment to sustainable development, similar to the achievements of RSPO member companies. Therefore, work on the HCS study has started, to ensure that valuable time is not wasted while discussions with NGOs continue, as we understand the urgency of the matter. Ultimately, our objectives are similar, that is, to ensure sustainable development is achieved.

The Signatories understand that Greenpeace's main concern against the efforts to fund and undertake the HCS study, is to ensure that until the study is completed, palm oil companies will only plant on grassland and scrubland. While Greenpeace’s intention to maintain HCS areas is laudable, the Signatories would like to highlight that this request does not in any way acknowledge the role of governments and rural communities to assess their own rights to development, leaving the decision solely to NGOs and companies. This, we believe, is unacceptable and all conversations that limit sustainable development must include these critical stakeholders before policies are implemented, as they have the potential to cause long-term impact.

Also, it must be borne in mind that all the Signatories are members of the RSPO and are already preserving virgin forests, High Conservation Value (HCV) areas, and peat land. As required by the RSPO, the Signatories are committed to the implementation of Criterion 7.8, which includes voluntary submission of carbon maps and estimated GHG emissions to the RSPO’s Emission Reduction Working Group, to help develop a more robust methodology for carbon assessment and GHG emission estimates. Several Signatory companies have also conducted preliminary studies for the identification and measurement of carbon stocks for pilot areas on existing plantations, conservation set-asides, as well as new plantation development, in addition to conducting tests using the RSPO’s PalmGHG calculator for new plantations. Over and above these commitments to the environment, the Signatories all strictly observe the principles of Free, Prior and Informed Consent, and engage with local communities. All Signatories have, or are developing smallholder programmes.

These commitments are among the most stringent in the agricultural industry globally, yet Signatories have pledged to further strengthen these sustainability standards through the Manifesto. Once the new HCS study is completed and HCS thresholds suitably defined with due consideration given to socio-economic factors, the Signatories will implement the new standards. It is very clearly stated in the Manifesto that the HCS study will take 12 months.

Greenpeace has also made two additional claims that are incorrect. The commitment to no deforestation and protecting peat areas will apply across the entire supply chain of Signatories. Furthermore, Signatories will not do business with serious repeat violators of the RSPO’s principles and criteria. Signatories have also committed to promote the principles of the Manifesto in plantations where they do not have controlling stakes.

Existing methodology

The Signatories have taken into consideration the useful work carried out by Golden Agri Resources (GAR), Greenpeace, and The Forest Trust (TFT) in piloting a HCS study in 2011. As stated, the Signatories believe that it is imperative that the views of governments and local communities, as well as the socio-economic implications are considered. Similar studies in this area will also be reviewed by independent technical teams to ensure that the final result of our study is robust and meets all rigorous scientific criteria.

We also wish to draw your attention to RSPO’s “Carbon Assessment Tool for New Oil Palm Plantings” published in June 2014. Appendix 2: Limitations, Gaps & Opportunities states that there is subjectivity in land cover stratification and errors in biomass estimation, largely due to the inappropriate choice of allometric models used. The report emphasised the need for more reliable allometric models with better predictive ability for biomass estimation, and acknowledged the need and urgency to define the threshold value for ‘high carbon stock’. This report is a product of multi-stakeholder discussions, including those with environmentalists and NGOs. In our effort to develop a transparent science-driven initiative, we ask that Greenpeace lend its support to help make this a more robust endeavour by providing constructive inputs.

Sir Jonathon Porritt, co-chair of the steering committee for the HCS study, commented on the importance of the study. “I see this study as a critical test of what full-spectrum sustainability - taking into account all environmental, social, cultural and economic factors, at the global, national and local level - means in practice,” he said.

As members of the RSPO, Signatories are raising the bar on already stringent sustainability standards set. The Sustainable Palm Oil Manifesto and the HCS study are serious commitments by Signatories to continue moving forward in all aspects of sustainable development. Once again, we invite Greenpeace to constructively contribute to this work and support the advancement of sustainability across the palm oil supply chain.

Kuala Lumpur, 30 July 2014 - The world’s largest palm oil players are jointly funding a comprehensive 12-month study that will:

• clearly define what constitutes a High Carbon Stock (HCS) forest;
• provide practical guidance on how to delineate HCS forests on the ground; and
• establish thresholds for HCS that take account of regional socio-economic conditions and opportunities.

The study will take a wide-ranging and practical approach, using robust scientific methods to estimate both above and below ground carbon stocks, and carbon emissions resulting from conversion to oil palm plantations. An inclusive, consultative approach will be adopted (working with governments and leading social and developmental economics experts) to help deepen today's understanding of sustainable palm oil.

Malaysian companies IOI Corporation Berhad, Kuala Lumpur Kepong Berhad and Sime Darby Plantation, Indonesia’s Asian Agri and Musim Mas Group, and global agribusiness groups Cargill and Wilmar International, are funding the study and have committed to adopt the study’s findings in all their operations and supply chains.

The HCS study is a key component of the Sustainable Palm Oil Manifesto, which was signed by oil palm growers Sime Darby Plantation, IOI Corporation Berhad, Kuala Lumpur Kepong Berhad, Musim Mas Group, and Asian Agri, as well as global palm oil trader Apical and global agribusiness group Cargill. The Manifesto includes a commitment to no deforestation, creating traceable and transparent supply chains, and protecting peat areas, while ensuring economic and social benefits for the local people and communities where oil palm is grown.

To oversee this Study, a Steering Committee has been set up, independently co-chaired by Sir Jonathon Porritt, and Chief Research Scientist from Australia’s Commonwealth Scientific and Industrial Research Organisation (CSIRO), Dr John Raison. They are joined by independent economic advisor for the agribusiness sector, Dr James Fry, who will lend his expertise in international commodities to the process.

Leading environmentalist, Sir Jonathon Porritt, said: “Everyone acknowledges just how important it is to have robust methodologies in place to determine exactly what is meant by ‘High Carbon Stock’. This study will help to shed light both on the biophysical and on the socio-economic dimensions of that critical area of enquiry, taking a fully integrated approach in order to address the concerns of all stakeholders, including those of NGOs, local communities, smallholders and governments.”

The Steering Committee comprises delegates from the signatories of the Manifesto, representing key stakeholders in the palm oil value chain, along with Wilmar International which, although not a signatory, has joined the group to co-fund the study. Collectively, members of the Steering Committee have massive experience in palm oil research. They will be applying this expertise to support an independent, systematic and robust scientific process. Observers to this process include the Roundtable on Sustainable Palm Oil (RSPO) and the Sustainable Trade Initiative (IDH) who will actively contribute to ensure a transparent, objective and holistic approach. There are plans for discussions with wider stakeholder groups including the RSPO, to help ensure that the results of the study achieve international acceptance and are integrated into RSPO’s existing standards and policies.

Over the next weeks, the Steering Committee will appoint a Technical Committee to further scope the work, and then to assemble two groups of experts to contribute to the HCS study. A team of experts specialising in above-ground biomass, soil carbon, remote sensing and oil palm management will determine methods for estimating carbon stocks on the ground in regions where further oil palm development is likely. Concurrently, a team of socio-economic experts will assess the impact of adopting varying HCS forest thresholds on the developmental needs of local communities and governments in the same regions.

The consultants and the Technical Committee will then work together to integrate the findings and to produce an independent report, which will be finalised following extensive consultation. The report will recommend threshold values for what constitutes HCS forests, taking into account environmental concerns, regional socio-economic contexts, and the practical considerations in developing and managing economically viable oil palm plantations.

Sir Jonathon Porritt said, “The Steering Committee will have a critical role in overseeing this study, building common ground across the entire value chain to help define HCS values and thresholds. This is a highly significant move forward for the palm oil industry, and it should be rapidly emulated by others in the agricultural sector.”

Dr John Raison stated, “In-depth analysis will be needed to define HCS forest thresholds that also take account of both carbon emissions as well as local developmental opportunities. The Technical Committee will conduct an open and transparent process, and will consult widely in developing an independent report that is based on the best available science and practical experience.”