MIRA INFORM REPORT

Report No. :	330924
Report Date :	09.07.2015

IDENTIFICATION DETAILS

Name :	SIME DARBY PLANTATION (SABAH) SDN. BHD.
Formerly Known As :	MOSTYN ESTATES SDN BHD
Registered Office :	Main Block, Plantation Tower, 2, Jalan Pju 1a/7, Ara Damansara, Level 10, 47301 Petaling Jaya, Selangor
Country :	Malaysia
Financials (as on) :	30.06.2014
Date of Incorporation :	16.12.1957
Com. Reg. No.:	29959-V
Legal Form :	Private Limited
Line of Business :	Subject is engaged in cultivation of oil palm and processing of palm oil and palm kernel
No. of Employee :	Not Available

RATING & COMMENTS

MIRA’s Rating :

A

RATING		STATUS	PROPOSED CREDIT LINE
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large

Status :	Good
Payment Behaviour :	Regular
Litigation :	Clear

NOTES :

Any query related to this report can be made on e-mail : infodept@mirainform.com while quoting report number, name and date.

ECGC Country Risk Classification List – March 31, 2015

Country Name	Previous Rating (31.12.2014)	Current Rating (31.03.2015)
Malaysia	A2	A2

Risk Category	ECGC Classification
Insignificant	A1
Low	A2
Moderate	B1
High	B2
Very High	C1
Restricted	C2
Off-credit	D

MALAYSIA - ECONOMIC OVERVIEW

Malaysia, a middle-income country, has transformed itself since the 1970s from a producer of raw materials into an emerging multi-sector economy. Under current Prime Minister NAJIB, Malaysia is attempting to achieve high-income status by 2020 and to move farther up the value-added production chain by attracting investments in Islamic finance, high technology industries, biotechnology, and services. NAJIB's Economic Transformation Program (ETP) is a series of projects and policy measures intended to accelerate the country's economic growth. The government has also taken steps to liberalize some services sub-sectors. The NAJIB administration also is continuing efforts to boost domestic demand and reduce the economy's dependence on exports. Nevertheless, exports - particularly of electronics, oil and gas, palm oil and rubber - remain a significant driver of the economy. As an oil and gas exporter, Malaysia has previously profited from higher world energy prices, although the rising cost of domestic gasoline and diesel fuel, combined with sustained budget deficits, has forced Kuala Lumpur to begin to address fiscal shortfalls, through initial reductions in energy and sugar subsidies and the announcement of the 2015 implementation of a 6% goods and services tax. Falling global oil prices in the second half of 2014 have strained government finances, shrunk Malaysia’s current account surplus and put downward pressure on the ringgit. The government is also trying to lessen its dependence on state oil producer Petronas. The oil and gas sector supplied about 29% of government revenue in 2014. Bank Negara Malaysia (central bank) maintains healthy foreign exchange reserves, and a well-developed regulatory regime has limited Malaysia's exposure to riskier financial instruments and the global financial crisis. Nevertheless, Malaysia could be vulnerable to a fall in commodity prices or a general slowdown in global economic activity because exports are a major component of GDP. In order to attract increased investment, NAJIB earlier raised possible revisions to the special economic and social preferences accorded to ethnic Malays under the New Economic Policy of 1970, but retreated in 2013 after he encountered significant opposition from Malay nationalists and other vested interests. In September 2013 NAJIB launched the new Bumiputra Economic Empowerment Program (BEEP), policies that favor and advance the economic condition of ethnic Malays. Malaysia is a member of the 12-nation Trans-Pacific Partnership free trade agreement negotiations and, with the nine other ASEAN members, will form the ASEAN Economic Community in 2015.

Source : CIA

EXECUTIVE SUMMARY

REGISTRATION NO.

:

29959-V

COMPANY NAME

:

SIME DARBY PLANTATION (SABAH) SDN. BHD.

FORMER NAME

:

GOLDEN HOPE PLANTATIONS (SABAH) SDN BHD (01/07/2008)
BAL PLANTATIONS SDN BHD (14/11/1996)
MOSTYN ESTATES SDN BHD (16/07/1982)

INCORPORATION DATE

:

16/12/1957

COMPANY STATUS

:

EXIST

LEGAL FORM

:

PRIVATE LIMITED

LISTED STATUS

:

NO

REGISTERED ADDRESS

:

MAIN BLOCK, PLANTATION TOWER, 2, JALAN PJU 1A/7, ARA DAMANSARA, LEVEL 10, 47301 PETALING JAYA, SELANGOR, MALAYSIA.

BUSINESS ADDRESS

:

KILOMETER 24, JALAN MEROTAI, 91007 TAWAU, SABAH, MALAYSIA.

TEL.NO.

:

089-762800

FAX.NO.

:

089-750882

WEB SITE

:

WWW.SIMEDARBYPLANTATION.COM

CONTACT PERSON

:

FRANKI A/L ANTHONY DASS ( DIRECTOR )

INDUSTRY CODE

:

01261 10403

PRINCIPAL ACTIVITY

:

CULTIVATION OF OIL PALM AND PROCESSING OF PALM OIL AND PALM KERNEL

AUTHORISED CAPITAL

:

MYR 500,000,000.00 DIVIDED INTO
ORDINARY SHARE 500,000,000.00 OF MYR 1.00 EACH.

ISSUED AND PAID UP CAPITAL

:

MYR 308,675,763.00 DIVIDED INTO
ORDINARY SHARES 308,675,763 CASH OF MYR 1.00 EACH.

SALES

:

MYR 629,234,000 [2014]

NET WORTH

:

MYR 1,278,174,000 [2014]

STAFF STRENGTH

:

N/A

BANKER (S)

:

BANK SIMPANAN NASIONAL BHD

LITIGATION

:

CLEAR

DEFAULTER CHECK

:

CLEAR

FINANCIAL CONDITION

:

STRONG

PAYMENT

:

PROMPT

MANAGEMENT CAPABILITY

:

AVERAGE

COMMERCIAL RISK

:

LOW

CURRENCY EXPOSURE

:

MODERATE

GENERAL REPUTATION

:

GOOD

INDUSTRY OUTLOOK

:

MATURE

HISTORY / BACKGROUND

The Subject is a private limited company and is allowed to have a minimum of one and a maximum of forty-nine shareholders. As a private limited company, the Subject must have at least two directors. A private limited company is a separate legal entity from its shareholders. As a separate legal entity, the Subject is capable of owning assets, entering into contracts, sue or be sued by other companies. The liabilities of the shareholders are to the extent of the equity they have taken up and the creditors cannot claim on shareholders' personal assets even if the Subject is insolvent. The Subject is governed by the Companies Act, 1965 and the company must file its annual returns, together with its financial statements with the Registrar of Companies.

The Subject is principally engaged in the (as a / as an) cultivation of oil palm and processing of palm oil and palm kernel.

The Subject is not listed on Bursa Malaysia (Malaysia Stock Exchange).

The immediate holding company of the Subject is SIME DARBY PLANTATION SDN. BHD., a company incorporated in MALAYSIA.

Share Capital History

Date	Authorised Shared Capital	Issue & Paid Up Capital
04/11/2014	MYR 500,000,000.00	MYR 308,675,763.00
28/12/1984	MYR 164,377,243.00	MYR 164,377,243.00
09/07/1982	MYR 114,298,520.00	MYR 114,298,520.00
31/05/1982	MYR 20,000,000.00	MYR 20,000,000.00

The major shareholder(s) of the Subject are shown as follows :

Name	Address	IC/PP/Loc No	Shareholding	(%)
SIME DARBY PLANTATION SDN. BHD.	MAIN BLOCK, PLANTATION TOWER, 2, JALAN PJU 1A/7, ARA DAMANSARA, LEVEL 10, 47301 PETALING JAYA, SELANGOR, MALAYSIA.	647766V	308,675,763.00	100.00
			---------------	------
			308,675,763.00	100.00
			============	=====

+ Also Director

The Subject's interest in other companies (Subsidiaries/Associates) are shown as follow :

Local No	Country	Company	(%)	As At
29960K	MALAYSIA	MOSTYN PALM PROCESSING SDN. BHD.	100.00	26/11/2014
44386H	MALAYSIA	TOHUNSUG PLANTATION SDN. BHD.	100.00	26/11/2014
217021X	MALAYSIA	COCOAHOUSE PROCESSING SDN. BHD.	40.00	26/11/2014
DIRECTORS

DIRECTOR 1

Name Of Subject	:	MS. RENAKA A/P RAMACHANDRAN
Address	:	19, JALAN ENDAH 6/7, 46000 PETALING JAYA, SELANGOR, MALAYSIA.
IC / PP No	:	A0821952
New IC No	:	671005-10-6080
Date of Birth	:	05/10/1967
Nationality	:	MALAYSIAN
Date of Appointment	:	24/08/2011

DIRECTOR 2

Name Of Subject	:	DATUK FRANKI A/L ANTHONY DASS
Address	:	3, JALAN 3/66, SECTION 3, 46000 PETALING JAYA, SELANGOR, MALAYSIA.
IC / PP No	:	5054901
New IC No	:	561002-07-5533
Date of Birth	:	02/10/1956
Nationality	:	MALAYSIAN
Date of Appointment	:	24/08/2011

DIRECTOR 3

Name Of Subject	:	MR. MOHAMAD NAGEEB BIN AHMAD ABDUL WAHAB
Address	:	3, JALAN KUBAH U8/48D, BUKIT JELUTONG, 40150 SHAH ALAM, SELANGOR, MALAYSIA.
IC / PP No	:	8196334
New IC No	:	550805-71-5115
Date of Birth	:	05/08/1955
Nationality	:	MALAYSIAN
Date of Appointment	:	10/02/2014
MANAGEMENT

1)	Name of Subject	:	FRANKI A/L ANTHONY DASS
	Position	:	DIRECTOR

AUDITOR

Auditor	:	PRICEWATERHOUSECOOPERS
Auditor' Address	:	1 SENTRAL, JALAN TRAVERS, KUALA LUMPUR CENTRAL, P.O.BOX 10192, LEVEL 10, 50706 KUALA LUMPUR, WILAYAH PERSEKUTUAN, MALAYSIA.

COMPANY SECRETARIES

1)	Company Secretary	:	MS. NORHELZA BINTI UJANG
	New IC No	:	710520-04-5058
	Address	:	LOT 684, TAMAN SRI KAMIN, ULU YAM BARU, 44300 ULU YAM BHARU, SELANGOR, MALAYSIA.

2)	Company Secretary	:	MS. AZRIN NASHIHA BINTI ABDUL AZIZ
	IC / PP No	:	A1987809
	New IC No	:	720603-08-5564
	Address	:	2, JALAN TUN TEJA 35/24, ALAM IMPIAN, 40470 SHAH ALAM, SELANGOR, MALAYSIA.

BANKING

Banking relations are maintained principally with :

1)

Name

:

BANK SIMPANAN NASIONAL BHD

ENCUMBRANCE (S)

No encumbrance was found in our databank at the time of investigation.

LITIGATION CHECK AGAINST SUBJECT

* A check has been conducted in our databank againt the Subject whether the Subject has been involved in any litigation. Our databank consists of 99% of the wound up companies in Malaysia.

No legal action was found in our databank.

No winding up petition was found in our databank.

DEFAULTER CHECK AGAINST SUBJECT

* We have checked through the Subject in our defaulters' database which comprised of debtors that have been blacklisted by our customers and debtors that have been placed or assigned to us for collection.

No blacklisted record & debt collection case was found in our defaulters' databank.

PAYMENT RECORD

SOURCES OF RAW MATERIALS:
Local	:	YES
Overseas	:	YES

The Subject refused to provide any name of trade/service supplier and we are unable to conduct any trade enquiry. However, from financial historical data we conclude that :

OVERALL PAYMENT HABIT
Prompt 0-30 Days	[	X	]	Good 31-60 Days	[	]	Average 61-90 Days	[	]
Fair 91-120 Days	[		]	Poor >120 Days	[	]

CLIENTELE
Local	:	YES
Domestic Markets	:	MALAYSIA
Overseas	:	YES
Export Market	:	ASIA
Credit Term	:	AS AGREED
Payment Mode	:	CHEQUES TELEGRAPHIC TRANSFER (TT)

OPERATIONS

Products manufactured

:

PALM OIL AND PALM KERNEL

Services

:

PLANTATION

Award

:

1 ) MS ISO 9001 : 2000 Year :2004
2 ) MS ISO 9001 : 2000 Year :1999

Branch

:

NO

Other Information:

The Subject is principally engaged in the (as a / as an) cultivation of oil palm and processing of palm oil and palm kernel.

The Group's operations in Malaysia is represented by 127 oil palm estates spanning 309,793 hectares of planted area in Peninsular Malaysia, Sarawak and Sabah and 9,029 hectares of rubber plantation in Negeri Sembilan, Melaka and Johor in Peninsular Malaysia as at 28 February 2015.

The Group is one of the world’s largest palm oil producers. It produces approximately 2.8 million tonnes or 5 per cent of the world’s crude palm oil (CPO) output annually, of which about 97% or 2.7 million tonnes are Certified Sustainable Palm Oil (CSPO). Its annual output of palm kernel is about 0.65 million tonnes, out of which 0.63 million tonnes are Certified Sustainable Palm Kernel (CSPK).

The Upstream operations include the development of oil palm plantations, cultivation of oil palm, management of estates, milling of fresh fruit bunches (FFB) for CPO and CPKO.

RECENT DEVELOPMENT

We have checked with the Malaysian National News Agency's (BERNAMA) database, but no latest development was noted in our investigation.

CURRENT INVESTIGATION

Latest fresh investigations carried out on the Subject indicated that :

Telephone Number Provided By Client	:	N/A
Current Telephone Number	:	089-762800
Match	:	N/A
Address Provided by Client	:	7 LEVEL 7 MAIN BLOCK PLANTATION TOWER, NO. 2, JALAN PJU 1A/7, ARA DAMANSARA 47301 PETALING JAYA SELANGOR DARUL EHSAN
Current Address	:	KILOMETER 24, JALAN MEROTAI, 91007 TAWAU, SABAH, MALAYSIA.
Match	:	NO
Latest Financial Accounts	:	YES

Other Investigations

We contacted one of the staff from the Subject and he provided some informaton.

The address provided belongs to the Subject's registered office.

The Subject refused to disclose its number of employees.

FINANCIAL ANALYSIS

Profitability
Turnover	:	Erratic	[	2010 - 2014	]
Profit/(Loss) Before Tax	:	Increased	[	2010 - 2014	]
Return on Shareholder Funds	:	Unfavourable	[	9.83%	]
Return on Net Assets	:	Acceptable	[	11.89%	]
The fluctuating turnover reflects the fierce competition among the existing and new market players.The Subject's management have been efficient in controlling its operating costs. The unfavourable return on shareholders' funds could indicate that the Subject was inefficient in utilising its assets to generate returns.
Working Capital Control
Stock Ratio	:	Favourable	[	3 Days	]
Debtor Ratio	:	Favourable	[	7 Days	]
Creditors Ratio	:	Favourable	[	8 Days	]
The Subject's stocks were moving fast thus reducing its holding cost. This had reduced funds being tied up in stocks. The favourable debtors' days could be due to the good credit control measures implemented by the Subject. The Subject had a favourable creditors' ratio where the Subject could be taking advantage of the cash discounts and also wanting to maintain goodwill with its creditors.
Liquidity
Liquid Ratio	:	Favourable	[	2.38 Times	]
Current Ratio	:	Favourable	[	2.48 Times	]
A minimum liquid ratio of 1 should be maintained by the Subject in order to assure its creditors of its ability to meet short term obligations and the Subject was in a good liquidity position. Thus, we believe the Subject is able to meet all its short term obligations as and when they fall due.
Solvency
Interest Cover	:	Favourable	[	147.41 Times	]
Gearing Ratio	:	Favourable	[	0.02 Times	]
The interest cover showed that the Subject was able to service the interest. The favourable interest cover could indicate that the Subject was making enough profit to pay for the interest accrued. The Subject was lowly geared thus it had a low financial risk. The Subject was mainly financed by its shareholders' funds and internally generated funds. In times of economic slowdown / downturn, the Subject being a lowly geared company, will be able to compete better than those companies which are highly geared in the same industry.
Overall Assessment :
Although the turnover was erratic, the Subject had maintained a steady growth in its profit. This indicate the management's efficiency in controlling its costs and profitability. The Subject was in good liquidity position with its total current liabilities well covered by its total current assets. With its current net assets, the Subject should be able to repay its short term obligations. With the favourable interest cover, the Subject could be able to service all the accrued interest without facing any difficulties. The Subject as a lowly geared company, will be more secured compared to those highly geared companies. It has the ability to meet all its long term obligations.
Overall financial condition of the Subject : STRONG

MALAYSIA ECONOMIC / INDUSTRY OUTLOOK

Major Economic Indicators:	2011	2012	2013	2014*	2015**
Population ( Million)	28.7	29.3	29.8	30.3	30.5
Gross Domestic Products ( % )	5.1	5.6	5.3	6.0	6.0
Domestic Demand ( % )	8.2	9.4	5.6	6.4	6.2
Private Expenditure ( % )	8.2	8.0	8.6	7.9	6.9
Consumption ( % )	7.1	1.0	5.7	6.5	5.6
Investment ( % )	12.2	11.7	13.3	12.0	10.7
Public Expenditure ( % )	8.4	13.3	4.4	2.3	4.2
Consumption ( % )	16.1	11.3	(1.2)	2.1	3.8
Investment ( % )	(0.3)	15.9	4.2	2.6	4.7
Balance of Trade ( MYR Million )	116,058	106,300	71,298	52,314	-
Government Finance ( MYR Million )	(45,511)	(42,297)	(39,993)	(37,291)	-
Government Finance to GDP / Fiscal Deficit ( % )	(5.4)	(4.5)	(4.0)	(3.5)	(3.0)
Inflation ( % Change in Composite CPI)	3.1	1.6	2.5	3.3	4.0
Unemployment Rate	3.3	3.2	3.0	3.0	3.0
Net International Reserves ( MYR Billion )	415	427	-	417	-
Average Risk-Weighted Capital Adequacy Ratio ( % )	3.50	2.20	-	-	-
Average 3 Months of Non-performing Loans ( % )	14.80	14.70	-	-	-
Average Base Lending Rate ( % )	6.60	6.53	6.53	-	-
Business Loans Disbursed( % )	15.3	32.2	-	-	-
Foreign Investment ( MYR Million )	23,546.1	26,230.4	38,238.0	-	-
Consumer Loans ( % )	-	-	-	-	-
Registration of New Companies ( No. )	45,455	45,441	46,321	-	-
Registration of New Companies ( % )	3.0	(0.0)	1.9	-	-
Liquidation of Companies ( No. )	132,485	17,092	26,430	-	-
Liquidation of Companies ( % )	417.8	(87.1)	54.6	-	-
Registration of New Business ( No. )	284,598	324,761	329,895	-	-
Registration of New Business ( % )	5.0	14.0	2.0	-	-
Business Dissolved ( No. )	20,121	20,380	18,161	-	-
Business Dissolved ( % )	1.9	1.3	(10.9)	-	-
Sales of New Passenger Cars (' 000 Unit )	535.1	552.2	576.7	598.4	610.3
Cellular Phone Subscribers ( Million )	35.3	38.5	43.0	43.8	-
Tourist Arrival ( Million Persons )	24.7	25.0	25.7	28.0	-
Hotel Occupancy Rate ( % )	60.6	62.4	62.6	-	-
Credit Cards Spending ( % )	15.6	12.6	-	-	-
Bad Cheque Offenders (No.)	32,627	26,982	28,876	-	-
Individual Bankruptcy ( No.)	19,167	19,575	21,984	-	-
Individual Bankruptcy ( % )	5.8	2.1	12.3	-	-
INDUSTRIES ( % of Growth ):	2011	2012	2013	2014*	2015**
Agriculture	5.8	1.0	2.1	3.8	3.1
Palm Oil	10.8	(0.3)	2.6	6.7	-
Rubber	6.1	(7.9)	(10.1)	(10.4)	-
Forestry & Logging	(7.6)	(4.5)	(7.8)	(4.2)	-
Fishing	2.1	4.3	1.6	2.7	-
Other Agriculture	7.1	6.4	8.2	6.2	-
Industry Non-Performing Loans ( MYR Million )	634.1	-	-	-	-
% of Industry Non-Performing Loans	3.2	-	-	-	-
Mining	(5.4)	1.4	0.9	(0.8)	2.8
Oil & Gas	(1.7)	-	-	-	-
Other Mining	-	-	-	-	-
Industry Non-performing Loans ( MYR Million )	46.5	-	-	-	-
% of Industry Non-performing Loans	0.1	-	-	-	-
Manufacturing #	4.7	4.8	3.4	6.6	5.5
Exported-oriented Industries	4.1	6.5	3.3	5.6	-
Electrical & Electronics	(4.0)	12.7	6.9	13.3	-
Rubber Products	20.7	3.0	11.7	(0.3)	-
Wood Products	(5.1)	8.7	(2.7)	5.1	-
Textiles & Apparel	13.2	(7.1)	(2.6)	11.5	-
Domestic-oriented Industries	10.7	1.7	6.8	9.4	-
Food, Beverages & Tobacco	4.80	2.70	3.60	6.13	6.13
Chemical & Chemical Products	10.0	10.8	5.6	-	-
Plastic Products	3.8	-	-	-	-
Iron & Steel	2.2	(6.6)	5.0	0.1	-
Fabricated Metal Products	21.8	13.8	9.9	2.9	-
Non-metallic Mineral	12.1	2.9	(2.0)	5.4	-
Transport Equipment	12.0	3.4	13.8	22.9	-
Paper & Paper Products	9.5	3.1	1.8	4.7	-
Crude Oil Refineries	9.3	-	-	-	-
Industry Non-Performing Loans ( MYR Million )	6,537.2	-	-	-	-
% of Industry Non-Performing Loans	25.7	-	-	-	-
Construction	4.7	18.6	10.9	12.7	10.7
Industry Non-Performing Loans ( MYR Million )	3,856.9	-	-	-	-
% of Industry Non-Performing Loans	10.2	-	-	-	-
Services	7.1	6.4	5.9	5.9	5.6
Electric, Gas & Water	3.5	4.4	4.2	3.6	3.9
Transport, Storage & Communication	6.50	7.10	7.30	7.50	7.15
Wholesale, Retail, Hotel & Restaurant	5.2	4.7	5.9	6.9	6.5
Finance, Insurance & Real Estate	6.90	9.70	3.70	4.65	4.25
Government Services	12.4	9.4	8.3	6.1	5.6
Other Services	5.1	3.9	5.1	4.8	4.5
Industry Non-Performing Loans ( MYR Million )	6,825.2	-	-	-	-
% of Industry Non-Performing Loans	23.4	-	-	-	-
* Estimate / Preliminary
** Forecast
# Based On Manufacturing Production Index

INDUSTRY ANALYSIS

MSIC CODE
01261 : Growing of oil palm (estate)
10403 : Manufacture of palm kernel oil
INDUSTRY :	PALM OIL
According to the Malaysian Palm Oil Council (MPOC), Malaysia currently accounts for 39% of world palm oil production and 44% of world exports in year 2014. Malaysia is also one of the biggest producers and exporters of oil palm and palm oil products. In the last 5 years until year 2014, Malaysia earned between RM50 billion and RM70 billion a year from palm oil exports.
Besides, the ongoing implementation of Entry Point Projects (EPPs) under the National Key Economic Area (NKEA) on palm oil to enhance productivity of upstream and downstream activities will further boost the palm oil sector. Thus, palm oil sector is expected to grow 6.7% in 2014 (2013: 2.6%). Moreover, the total oil palm planted areas increased 2.8% to 5.3 million hectares as at end-June 2014 (end-June 2013: 5.2 million hectares) following the opening of 30,544 hectares of cultivated areas mainly in Sabah and Sarawak. Other than that, the production of palm oil is expected to growth by 1.6% (19.52 million tonnes) in year 2014, compared to 19.22 million tonnes in year 2013.
According to Kenanga Research, the estimated average crude palm oil (CPO) price for 2014 and 2015 is between RM2,100 and RM2,500 per tonne due to lower inventory estimate by end-2015. The estimated prices also lifted by factors such as biofuel demand and petroleum price level. But, the average price of crude palm oil (CPO) strengthened to RM2,542 per tonne during the first eight months of 2014 (January - August 2013: Rm2,309 per tonne). However, with production rising in the second quarter coupled with high inventory level (end-August 2014: 2.1 million tonnes), the price of CPO moderated to RM2,162 per tonne as at end-August 2014, and hitting a five-year low of RM1,914 per tonne in Sept 2014 as stockpiles surged to a more than 1 year high above 2 million tonnes. The moderation in CPO prices was also due to a surge in global supplies of edible oil, particularly the bumper harvest of soybean in the US.
Over the total exports of major products in year 2013, palm oil accounts 6.4% of share in the total exports. During the first seven months of 2014, export receipts of palm oil rebounded by 4.9% to RM25.8 billion (January - July 2013: -21.9%, RM 24.6 billion) due to higher export prices averaging RM 2,703 per tonne (January - July 2013: Rm 2,456 per tonne). As a measure to reduce the high inventory due to strong output, the Government has exempted export tax on CPO until December 2014. The Government's move to extend the export duty exemption for crude palm oil (CPO) has received positive reaction from industry players. The chairman of Malaysian Palm Oil Board (MPOB) said the move provided a stable effect on the CPO market prices.
In Budget 2015, there is an allocation of RM41 million for smallholders to plant and replant oil palm. The incentives for commodities announced in Budget 2015 will help alleviate the problems faced by the industry, especially the poor prices for rubber and palm oil.
According to the Minister of Plantation Industries and Commodities, the Malaysian government will increase the amount of palm oil based bio-diesel in the national diesel supply mix from November 2014, in a move that will also help to increase consumption of crude palm oil (CPO) and reduce stockpile levels of the commodity. The implementation of the B7 blend will also increase the use palm oil which prices have softened due to oversupply in the market. According to the Malaysian Palm Oil Council (MPOC), CPO prices are expected to improve to between RM2,100 and RM2,500 in year 2015, lifted by factors such as biofuel demand from the B7 programme. CIMB Research estimates that the rollout could raise the country's palm oil demand by 263,000-390,000 tonnes per annum, or 1-2% of the total palm oil production in 2013.
OVERALL INDUSTRY OUTLOOK : Mature

CREDIT RISK EVALUATION & RECOMMENDATION

Incorporated in 1957, the Subject is a Private Limited company, focusing on cultivation of oil palm and processing of palm oil and palm kernel. The Subject has been in business for over two decades. It has built up a strong clientele base and good reputation will enable the Subject to further enhance its business in the near term. The Subject is expected to enjoy a stable market shares. The Subject is a large entity with strong capital position of MYR 308,675,763. We are confident with the Subject's business and its future growth prospect. Having strong support from its holding company has enabled the Subject to remain competitive despite the challenging business environment.

Over the years, the Subject has penetrated into both the local and overseas market. The Subject has positioned itself in the global market and is competing in the industry. Its stable clientele base will enable the Subject to further enhance its business in the near term. Overall, we regard that the Subject's management capability is average. This indicates that the Subject has greater potential to improve its business performance and raising income for the Subject. To improve its quality products and services, we noted that the Subject has received a number of certifications & awards. This will improve the customer's confidence level to the Subject.

We noted that both the turnover and profits have increased compared to the previous year. The higher profit could be due to increase in turnover and better control over its operating costs. The Subject has generated an unfavourable return on shareholders' funds indicating that the management was inefficient in utilising its funds to generate return. The Subject is in good liquidity position with its current liabilities well covered by it current assets. Hence, it has sufficient working capital to meet its short term financial obligations. Being a lowly geared company, the Subject is exposed to low financial risk as it is mainly dependent on its internal funds to finance its business needs. Given a positive net worth standing at MYR 1,278,174,000, the Subject should be able to maintain its business in the near terms.

Having a strong assets backing, the Subject possesses latent assets as collateral for further financial extension. Hence, it has good chance of getting loans if the needs arises. The Subject's supplier are from both the local and overseas countries. This will eliminates the risk of dependency on deliveries from a number of key suppliers and insufficient quantities of its raw materials. Overall the Subject has a good control over its resources.

We regard that the Subject's overall payment habit is prompt. The Subject had a favourable creditors' ratio as evidenced by its favourable collection days.

The industry has reached its optimum level and is generally stable. It is saturated and very competitive. Thus, the Subject's growth prospect is very much depends on its capacity in sustaining its performance in the market.

Based on the above condition, we recommend credit be granted to the Subject promptly.

PROFIT AND LOSS ACCOUNT

THE FINANCIAL STATEMENTS WERE PREPARED IN ACCORDANCE WITH MALAYSIAN FINANCIAL REPORTING STANDARDS(FRS)

SIME DARBY PLANTATION (SABAH) SDN. BHD.

Financial Year End	2014-06-30	2013-06-30	2012-06-30	2011-06-30	2010-06-30
Months	12	12	12	12	12
Consolidated Account	Company	Company	Company	Company	Company
Audited Account	YES	YES	YES	YES	YES
Unqualified Auditor's Report (Clean Opinion)	YES	YES	YES	YES	YES
Financial Type	FULL	FULL	SUMMARY	SUMMARY	SUMMARY
Currency	MYR	MYR	MYR	MYR	MYR
TURNOVER	629,234,000	594,423,000	766,389,000	744,385,000	559,945,000
	----------------	----------------	----------------	----------------	----------------
Total Turnover	629,234,000	594,423,000	766,389,000	744,385,000	559,945,000
	----------------	----------------	----------------	----------------	----------------
PROFIT/(LOSS) FROM OPERATIONS	158,711,000	140,562,000	279,692,000	326,592,000	3,565,100,000
	----------------	----------------	----------------	----------------	----------------
PROFIT/(LOSS) BEFORE TAXATION	158,711,000	140,562,000	279,692,000	326,592,000	3,565,100,000
Taxation	(33,049,000)	(37,742,000)	(66,281,000)	(81,069,000)	(46,738,000)
	----------------	----------------	----------------	----------------	----------------
PROFIT/(LOSS) AFTER TAXATION	125,662,000	102,820,000	213,411,000	245,523,000	3,518,362,000
	----------------	----------------	----------------	----------------	----------------
PROFIT/(LOSS) BEFORE EXTRAORDINARY ITEMS	125,662,000	102,820,000	213,411,000	245,523,000	3,518,362,000
Extraordinary items	296,000	-	-	-	-
	----------------	----------------	----------------	----------------	----------------
PROFIT/(LOSS) ATTRIBUTABLE TO SHAREHOLDERS	125,958,000	102,820,000	213,411,000	245,523,000	3,518,362,000
RETAINED PROFIT/(LOSS) BROUGHT FORWARD
As previously reported	1,013,893,000	994,416,000	929,169,000	4,348,098,000	847,793,000
	----------------	----------------	----------------	----------------	----------------
As restated	1,013,893,000	994,416,000	929,169,000	4,348,098,000	847,793,000
	----------------	----------------	----------------	----------------	----------------
PROFIT AVAILABLE FOR APPROPRIATIONS	1,139,851,000	1,097,236,000	1,142,580,000	4,593,621,000	4,366,155,000
TRANSFER TO RESERVES - General	-	-	-	2,616,000	-
DIVIDENDS - Ordinary (paid & proposed)	(216,073,000)	(83,343,000)	(148,164,000)	(3,667,068,000)	(18,057,000)
	----------------	----------------	----------------	----------------	----------------
RETAINED PROFIT/(LOSS) CARRIED FORWARD	923,778,000	1,013,893,000	994,416,000	929,169,000	4,348,098,000
	=============	=============	=============	=============	=============
INTEREST EXPENSE (as per notes to P&L)
Lease interest	1,068,000	1,113,000	-	-	-
Others	16,000	-	-	-	-
	----------------	----------------	----------------	----------------	----------------
	1,084,000	1,113,000	-	-	-
	=============	=============	-	-	-
DEPRECIATION (as per notes to P&L)	35,022,000	36,363,000	-	-	-
AMORTIZATION	332,000	336,000	-	-	-
	----------------	----------------	----------------	----------------	----------------
	35,354,000	36,699,000	-	-	-
	=============	=============

BALANCE SHEET

SIME DARBY PLANTATION (SABAH) SDN. BHD.

ASSETS EMPLOYED:
FIXED ASSETS	871,153,000	816,397,000	749,147,000	706,225,000	174,991,000
Others	396,877,000	397,350,000	-	-	-
	----------------	----------------	----------------	----------------	----------------
TOTAL LONG TERM INVESTMENTS/OTHER ASSETS	396,877,000	397,350,000	-	-	3,854,000
Computer software	-	49,000	-	-	-
	----------------	----------------	----------------	----------------	----------------
TOTAL INTANGIBLE ASSETS	-	49,000	-	-	-
	----------------	----------------	----------------	----------------	----------------
TOTAL LONG TERM ASSETS	1,268,030,000	1,213,796,000	749,147,000	706,225,000	178,845,000
Stocks	5,369,000	11,182,000	-	-	-
Trade debtors	12,291,000	10,101,000	-	-	-
Other debtors, deposits & prepayments	9,189,000	5,343,000	-	-	-
Amount due from holding company	100,791,000	220,331,000	-	-	-
Cash & bank balances	70,000	112,000	-	-	-
Others	-	13,841,000	-	-	-
	----------------	----------------	----------------	----------------	----------------
TOTAL CURRENT ASSETS	127,710,000	260,910,000	688,016,000	684,457,000	4,594,314,000
	----------------	----------------	----------------	----------------	----------------
TOTAL ASSET	1,395,740,000	1,474,706,000	1,437,163,000	1,390,682,000	4,773,159,000
	=============	=============	=============	=============	=============
CURRENT LIABILITIES
Trade creditors	14,030,000	14,854,000	-	-	-
Other creditors & accruals	29,595,000	22,548,000	-	-	-
Hire purchase & lease creditors	1,309,000	1,262,000	-	-	-
Amounts owing to related companies	1,149,000	-	-	-	-
Other liabilities	5,399,000	-	-	-	-
	----------------	----------------	----------------	----------------	----------------
TOTAL CURRENT LIABILITIES	51,482,000	38,664,000	57,016,000	79,776,000	40,090,000
	----------------	----------------	----------------	----------------	----------------
NET CURRENT ASSETS/(LIABILITIES)	76,228,000	222,246,000	631,000,000	604,681,000	4,554,224,000
	----------------	----------------	----------------	----------------	----------------
TOTAL NET ASSETS	1,344,258,000	1,436,042,000	1,380,147,000	1,310,906,000	4,733,069,000
	=============	=============	=============	=============	=============
SHARE CAPITAL
Ordinary share capital	308,676,000	308,676,000	308,676,000	308,676,000	308,676,000
	----------------	----------------	----------------	----------------	----------------
TOTAL SHARE CAPITAL	308,676,000	308,676,000	308,676,000	308,676,000	308,676,000
RESERVES
Share premium	45,720,000	45,720,000	45,720,000	45,720,000	45,720,000
Retained profit/(loss) carried forward	923,778,000	1,013,893,000	994,416,000	929,169,000	4,348,098,000
	----------------	----------------	----------------	----------------	----------------
TOTAL RESERVES	969,498,000	1,059,613,000	1,040,136,000	974,889,000	4,393,818,000
	----------------	----------------	----------------	----------------	----------------
SHAREHOLDERS' FUNDS/EQUITY	1,278,174,000	1,368,289,000	1,348,812,000	1,283,565,000	4,702,494,000
Lease obligations	28,628,000	29,937,000	-	-	-
Deferred taxation	34,291,000	33,915,000	-	-	-
Retirement benefits provision	2,681,000	3,901,000	-	-	-
Others	484,000	-	-	-	-
	----------------	----------------	----------------	----------------	----------------
TOTAL LONG TERM LIABILITIES	66,084,000	67,753,000	31,335,000	27,341,000	30,575,000
	----------------	----------------	----------------	----------------	----------------
	1,344,258,000	1,436,042,000	1,380,147,000	1,310,906,000	4,733,069,000
	=============	=============	=============	=============	=============

FINANCIAL RATIO

SIME DARBY PLANTATION (SABAH) SDN. BHD.

TYPES OF FUNDS
Cash	70,000	112,000	-	-	-
Net Liquid Funds	70,000	112,000	-	-	-
Net Liquid Assets	70,859,000	211,064,000	631,000,000	604,681,000	4,554,224,000
Net Current Assets/(Liabilities)	76,228,000	222,246,000	631,000,000	604,681,000	4,554,224,000
Net Tangible Assets	1,344,258,000	1,435,993,000	1,380,147,000	1,310,906,000	4,733,069,000
Net Monetary Assets	4,775,000	143,311,000	599,665,000	577,340,000	4,523,649,000
PROFIT & LOSS ITEMS
Earnings Before Interest & Tax (EBIT)	159,795,000	141,675,000	-	-	-
Earnings Before Interest, Taxes, Depreciation And Amortization (EBITDA)	195,149,000	178,374,000	-	-	-
BALANCE SHEET ITEMS
Total Borrowings	29,937,000	31,199,000	-	-	-
Total Liabilities	117,566,000	106,417,000	88,351,000	107,117,000	70,665,000
Total Assets	1,395,740,000	1,474,706,000	1,437,163,000	1,390,682,000	4,773,159,000
Net Assets	1,344,258,000	1,436,042,000	1,380,147,000	1,310,906,000	4,733,069,000
Net Assets Backing	1,278,174,000	1,368,289,000	1,348,812,000	1,283,565,000	4,702,494,000
Shareholders' Funds	1,278,174,000	1,368,289,000	1,348,812,000	1,283,565,000	4,702,494,000
Total Share Capital	308,676,000	308,676,000	308,676,000	308,676,000	308,676,000
Total Reserves	969,498,000	1,059,613,000	1,040,136,000	974,889,000	4,393,818,000
LIQUIDITY (Times)
Cash Ratio	0.00	0.00	-	-	-
Liquid Ratio	2.38	6.46	-	-	-
Current Ratio	2.48	6.75	12.07	8.58	114.60
WORKING CAPITAL CONTROL (Days)
Stock Ratio	3	7	-	-	-
Debtors Ratio	7	6	-	-	-
Creditors Ratio	8	9	-	-	-
SOLVENCY RATIOS (Times)
Gearing Ratio	0.02	0.02	-	-	-
Liabilities Ratio	0.09	0.08	0.07	0.08	0.02
Times Interest Earned Ratio	147.41	127.29	-	-	-
Assets Backing Ratio	4.35	4.65	4.47	4.25	15.33
PERFORMANCE RATIO (%)
Operating Profit Margin	25.22	23.65	36.49	43.87	636.69
Net Profit Margin	19.97	17.30	27.85	32.98	628.34
Return On Net Assets	11.89	9.87	20.27	24.91	75.32
Return On Capital Employed	11.88	9.86	20.27	24.91	75.32
Return On Shareholders' Funds/Equity	9.83	7.51	15.82	19.13	74.82
Dividend Pay Out Ratio (Times)	1.72	0.81	0.69	14.94	0.01
NOTES TO ACCOUNTS
Contingent Liabilities	0	0

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.63.57
UK Pound	1	Rs.98.22
Euro	1	Rs.69.93

INFORMATION DETAILS

Analysis Done by :	KAR
Report Prepared by :	ASH

RATING EXPLANATIONS

RATING		STATUS	PROPOSED CREDIT LINE
>86	Aaa	Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums	Unlimited
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory
26-40	B	Capability to overcome financial difficulties seems comparatively below average.	Small
11-25	Ca	Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity	Limited with full security
<10	C	Absolute credit risk exists. Caution needed to be exercised	Credit not recommended
--	NB	New Business	--

This score serves as a reference to assess SC’s credit risk and to set the amount of credit to be extended. It is calculated from a composite of weighted scores obtained from each of the major sections of this report. The assessed factors and their relative weights (as indicated through %) are as follows:

Financial condition (40%) Ownership background (20%) Payment record (10%)

Credit history (10%) Market trend (10%) Operational size (10%)

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