Annual Report 2012 - IOI Group

CONTRIBUTION TO SEGMENT RESULTS2012Plantation60%Property26%Resource-based Manufacturing11%Others3%2011Plantation55%Property27%Resource-based Manufacturing15%Others3%The resource-based manufacturing division reported a profit ofRM287.1 million for FY2012, 36% lower than the profit of RM446.0million reported for FY2011. The division has reported a RM88.2million loss on changes in fair value of derivative contracts forFY2012 whilst there was a fair value gain of RM6.4 million forFY2011. After excluding these fair value differences, the resourcebasedmanufacturing division’s profit reported a decline of RM64.3million or 15% to RM375.3 million which is due to weakerperformance from the refinery and specialty fats sub-segments,but partially offset by better performance from the oleochemicalsub-segment. The weaker results were mainly attributed to stiffcompetition posed by the Indonesian resource-based manufacturerswhich have a cost advantage due to Indonesia’s preferentialexport duty tariff structure. Despite the shortcoming on theresults, it is still considered satisfactory given the challengingenvironment the Group has to operate in.The Group’s pre-tax profit of RM2,379.0 million was 17% lowerthan the results achieved in the previous year whilst net earningsdeclined by 20% to RM1,789.4 million. Apart from the effects fromthe aforementioned, the decline was also caused by translationloss on its foreign-currency denominated borrowings amountingto RM327.1 million as opposed to a translation gain of RM215.4million from the previous year. The translation loss is howeverpartially mitigated by a gain of RM124.5 million due to dilution ofinterest in our associate company, BAL, as a result of BAL’s listingexercise on the Singapore Stock Exchange (“SGX”). After excludingthe translation gain and loss on foreign-currency denominatedborrowings, gain from changes in interest in BAL, and otherone-off items from both financial years, the normalised pre-taxprofit for the Group would be 2% lower and the net profit wouldbe similar to the previous year.A more detailed review of the Group’s performance is coveredunder the section on “Management’s Discussion and Analysis” inthis Annual Report.Right: Currently, 80% to 90% ofIOI Group’s plantations areplanted with high yielding oilpalm clones produced in theTissue Culture Laboratory.8IOI CORPORATION BERHADAnnual Report 2012