Extracted from Annual Report 2016
Boustead Plantations Berhad marked another year of growth in 2016, turning in an improved performance amidst a highly challenging economic environment. With our focus on delivering results, we successfully maintained our growth momentum and strengthened our prospects in the plantations sector.
The year 2016 was indeed a difficult one and the commodities sector was not spared, impacted by global economic headwinds and erratic market conditions. What was most telling is the fact that growth rates by nations and corporations were revised downwards. Other factors across the world such as political instability, volatile currencies and geopolitical tensions, were additional burdens to the global economy.
Demand for palm oil suffered as China released its rapeseed oil reserves, and at the same time progressively moved away from crude palm oil (CPO) towards soybean.
Despite this bleak backdrop, towards the second half of the financial year CPO prices were supported by a decline in palm oil stockpiles, which hit a record low. This was certainly unprecedented for the industry, inevitably caused by adverse weather conditions which impacted fresh fruit bunches (FFB) production, resulting in CPO prices surging to a four-year high in the last quarter of 2016.
In our second full year as a listed company, the Group posted a higher profit of RM276 million compared with RM95 million last year. This was primarily due to gains from disposal of land and disposal of a subsidiary, complemented by the increase in palm product prices.
Revenue for the year was RM708 million, a 15% hike from the previous year. Cash flow generated from operations increased by 41% to RM139 million during the year.
We closed the year with earnings per share of 14.2 sen and net assets per share of RM1.37. Shareholders' funds stood at RM2.2 billion for the year ended 31 December 2016, while market capitalisation stood at RM2.7 billion.
Our commitment to our shareholders is unwavering. This is clearly reflected by our consistent dividend payouts.
Dividend for the year was 14.5 sen per share, representing a 8.7% yield based on the closing stock price for the financial year ended 31 December 2016. To date, dividends of 11 sen per share have been paid out to shareholders. The remaining 3.5 sen will be paid on 16 March 2017 to shareholders on the register as at 3 March 2017.
Sustainability has always been at the heart of our operations. Through our business practices at our estates and mills, as well as our community outreach initiatives, we are driven to embed sustainability in all that we do in order to ensure sustainable long-term growth of the Group. In this year's Annual Report, we present our inaugural Sustainability Report demonstrating our commitment through the various measures, programmes and initiatives undertaken over these past many years.
Furthermore, in 2016, in order to scale up our efforts in relation to sustainability objectives, policies and practices, we have established a Group Sustainability Committee comprising a Board Committee, a Management and a Sustainability Steering Committee. This will drive the Group's sustainability framework and set clear targets for sustainable development. As testament to this, we have also developed a Sustainability Vision and mandate for the Group.
The success of our Group is underpinned by a skilled and capable workforce. Only with a talent pool of the highest calibre can we achieve our objectives. Towards this end, the development of our human capital is an integral pillar of the Group.
We continue to implement various talent development programmes and employee engagement initiatives. This ensures that our people have opportunities to unlock their potential and continue to excel, in order to propel the Group forward.
Malaysia's palm oil exports are targeted to grow between 5% to 8% in 2017, with CPO prices supported by the stronger US dollar and gradually increasing global demand, which certainly bodes well for the Group.
However, while CPO prices are expected to remain high for the first quarter of the year, this will likely be moderated by a rebound in palm oil output in the latter half of 2017, as the effect of El Nino wanes. In addition, the production of soybean is projected to remain high which will further impact CPO prices.
Furthermore, global policy changes may have a bearing, such as the abrupt halt to the Trans Pacific Partnership Agreement curbing prospects for the sector.
Meanwhile, the Government's intention to impose a foreign labour levy on employers with the introduction of the Employer Mandatory Commitment policy could also have an impact on the plantations sector. We are certainly supportive of the Government and understand the need for this policy. However, this should be carefully planned in consultation with industry participants.
Nevertheless, we are confident that abundant opportunities remain for the Group to tap into. We are focused on improving our bottom line through effective management of our plantations.
To enhance profitability organically, we are looking into fast-tracking the replanting of old palms on our estates with improved planting materials. This will ultimately serve to increase yields and profitability over the long run.
We would like to express our deepest gratitude to our Board members and management team for guiding the Group through another successful year. To our employees, we sincerely appreciate your hard work and contributions to the Group.
Last but not least, thank you to our valued shareholders, financiers, business associates, consultants and regulatory bodies for your continued support in the Group.
GEN. TAN SRI DATO' MOHD GHAZALI HJ. CHE MAT (R)
23 February 2017