Annual Report 2012 - IOI Group

Sustainability andCORPORATE SOCIALRESPONSIBILITYBeing a founding member of the Roundtable onSustainable Palm Oil (“RSPO”), the Group iscommitted to operate on a multi-stakeholder formatwhich involves strict principles and criteria coveringthe social and environmental requirements for theproduction and use of sustainable palm oil. To date,all of IOI Group’s mills and estates in PeninsularMalaysia have successfully attained the RSPOCertification whilst in East Malaysia, four of our millsand their supply bases have been certified. TheGroup’s pursuit of sustainability also extends to itsefforts to have its plantation and oil palm millingoperations certified for lower emission of greenhousegas with proper utilisation of their biomass byproducts. Presently, seven of the Group’s palm oilmills and their supply estates have also beencertified by the International Standard for CarbonCertification (“ISCC”) in Germany.Education continues to be an integral agenda forthe Group as the Group continues to supportdeserving students who excel in their education.Through Yayasan Tan Sri Lee Shin Cheng (“YayasanTSLSC”), a charitable foundation fully funded by theGroup, scholarships and grants are provided to highachievers. Underprivileged students and schools areadopted whilst facilities are sponsored to provide orimprove infrastructure and education needs forstudents. The Group is also actively involved incommunity projects with our partners such asHUMANA and World Vision Malaysia to providebasic education and care to children of foreignplantation workers in Sabah as well as to the nativechildren in Sarawak.A detailed review of the Group’s numeroussustainability measures and corporate socialresponsibility initiatives are covered in the“Sustainability and Corporate Social Responsibility”section.DIVIDENDS AND CAPITALMANAGEMENTTwo interim dividends totalling 15.5 sen per ordinaryshare amounting to a total payout of approximatelyRM992 million were declared for FY2012. Thedividends represented an approximately 55%distribution of the Group’s net profit attributable toshareholders which is higher than FY2011 dividendpayout ratio of 49%.The company continues to manage its capital in aproactive manner to enhance value to shareholderswhile optimising gearing levels and providing forfunding requirements. During the year, the Companybought back 28,941,100 ordinary shares of theCompany from the open market at an average priceof RM4.82 per share, representing 0.5% of the issuedand paid-up share capital of the Company.The Group also continues to maintain a healthy cashand cash equivalents, which as at 30 June 2012 stoodat RM4.36 billion, and a net gearing ratio of 30%.PROSPECTSFFB production volume from our estates is expectedto rise in FY2013 barring any unfavourable weatherconditions. The areas replanted with new clonalpalm seedlings are expected to spur the continuedrise in FFB production on a long-term horizon. TheGroup is optimistic that its investment in BAL willcontribute handsomely to Group profits in the yearsto come. As for the Group’s directly ownedplantations in Indonesia, with the recent plantingpermit approval, the Group will be able to embarkon a more aggressive planting programme. Whileprice competitiveness with other edible oils remainsan area which is beyond control by any industryplayer, demand for palm oil should remain strong asconsumption increases in select emerging economiescoupled with the general global population growth.10IOI CORPORATION BERHADAnnual Report 2012