Annual Report 2012 - IOI Group

INTRODUCTIONThe purpose of this review is to highlight and provide brief insights on key financial and operating information at Group level. A moredetailed commentary on operating performance is covered under the respective business segment reports.KEY FINANCIAL INDICATORS2012 2011 Change %Profit before interest and taxation (“EBIT”) RM million 2,520.3 2,986.4 (16)Pre-tax earnings RM million 2,379.0 2,863.6 (17)Net earnings RM million 1,789.4 2,222.9 (20)Return on average equity (“ROE”) % 14.5 19.5 (26)Return on average capital employed (“ROCE”) % 9.9 14.0 (29)Net operating profit after taxation (“NOPAT”) RM million 1,971.8 2,417.9 (18)Economic profit RM million 465.0 713.4 (35)Total return to shareholders– Gross dividend (per RM0.10 share) sen 15.5 17.0 (9)Net cash flow generated from operation RM million 2,131.6 909.7 134Net gearing % 29.8 21.8 37FINANCIAL HIGHLIGHTS AND INSIGHTS• At Group level, the results for FY2012 versus FY2011 is best compared and explained at three levels, mainly, EBIT, Pre-tax and NetEarnings, as different factors affected the changes between the two fiscal years at the respective levels.• Looking at EBIT, contributions from the segments are as follows:2012RM millionMix%2011RM millionMix%Change%Plantation 1,638.5 65 1,575.8 53 4Downstream manufacturing 287.1 11 446.0 14 (36)Palm oil - Total 1,925.6 76 2,021.8 67 (5)Property 704.0 28 770.1 26 (9)Others (unallocated) (109.3) (4) 194.5 7 (156)EBIT 2,520.3 100 2,986.4 100 (16)• Plantation segment’s EBIT increased by 4% to RM1,638.5 million, contributed by higher average CPO price realised.• The downstream manufacturing segment’s EBIT decreased by 36% to RM287.1 million. The lower profit is due mainly to fair valuedifferences on derivative contracts as well as weaker performance from the refinery and specialty fats sub-segments.• The property segment registered a drop of 9% in EBIT to RM704.0 million, mainly due to slower sales take up rates and lower gainarising from disposal of investment properties amounting to RM0.7 million (FY2011 – RM62.7 million), in spite of higher fair valuegain on investment properties amounting to RM165.0 million (FY2011 – RM93.1 million).• The “unallocated segment” in respect of both financial years comprises primarily the gain or loss on translation difference onforeign currency denominated borrowings with loss of RM327.1 million and gain of RM215.4 million registered in FY2012 andFY2011 respectively. The results were however moderated by net fair value gain on financial instruments of RM72.7 million (FY2011– loss of RM83.2 million) and net gain on changes in interests in associates of RM115.3 million (FY2011 – nil).Annual Report 2012IOI CORPORATION BERHAD 19