Sime Darby Plantation : 3Q FY2023 Quarterly Report

QUARTERLY REPORT

On the consolidated results for the third quarter ended 30 September 2023

The Directors are pleased to announce the following:

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS

Amounts in RM million unless otherwise stated

		Quarter ended		Three quarters ended
		30 September	%	30 September	%
	Note	2023		2022	+/(-)	2023	2022	+/(-)
Revenue	A8, A9	4,774		5,392	(11)	13,148	15,360	(14)
Operating expenses		(4,040)		(4,964)		(11,890)	(13,348)
Other operating income		942		67		1,330	607
Other (losses)/gains		(31)		123		(122)	137
Operating profit	B5, A9	1,645		618	>100	2,466	2,756	(11)
Share of results of joint ventures		16		-	*	24	59
Share of results of associates		-	*	4		1	13
Profit before interest and tax	A9	1,661		622	>100	2,491	2,828	(12)
Finance income		10		2		17	8
Finance costs		(50)		(39)		(151)	(87)
Profit before tax		1,621		585	>100	2,357	2,749	(14)
Tax expense	B6	(362)		(154)		(568)	(676)
Profit for the financial period		1,259		431	>100	1,789	2,073	(14)

Profit for the financial period attributable to:

- equity holders of the Company		1,211	396	>100	1,660	1,926	(14)
- Perpetual Sukuk		31	31		93	93
- non-controlling interests		17	4		36	54
		1,259	431	>100	1,789	2,073	(14)
Basic earnings per share attributable to
equity holders of the Company:
Basic (sen)	B12	17.5	5.7	>100	24.0	27.8	(14)

The unaudited condensed consolidated statement of profit or loss should be read in conjunction with the accompanying explanatory notes and the audited financial statements for the financial year ended 31 December 2022.

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UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Amounts in RM million unless otherwise stated

	Quarter ended		Three quarters ended
	30 September	%	30 September	%
	2023	2022	+/(-)	2023	2022	+/(-)
Profit for the financial period	1,259	431	>100	1,789	2,073	(14)

Other comprehensive income/(loss):

Items that will be reclassified subsequently to profit or loss:

Currency translation differences (loss)/gains:
- subsidiaries	(145)		324		765	626
- joint ventures and associates	(10)		(8)		17	(22)
Cash flow hedge
- changes in fair value	52		99		109	12
- transfers (to)/from profit or loss	(28)		64		(78)	360
Tax expense relating to components
of other comprehensive (loss)/income	(19)		(39)		(8)	(96)
	(150)		440		805	880
Items that will be not reclassified subsequently
to profit or loss:
Actuarial gain/(loss) on defined benefit pension plans	2		(1)		11	(2)
Investments at fair value through other
comprehensive income ("FVOCI"):
- changes in fair value	‒	*	‒		‒ *	‒
Share of other comprehensive income of joint
ventures	‒		‒		1	‒
Tax (expense)/credit relating to components
of other comprehensive income/(loss)	‒	*	‒	*	(2)	‒	*
	2		(1)		10	(2)
Total other comprehensive (loss)/income
for the financial period	(148)		439		815	878
Total comprehensive income
for the financial period	1,111		870		2,604	2,951
Total comprehensive income
for the financial period attributable to:
- equity holders of the Company	1,067		833	28	2,449	2,803	(13)
- Perpetual Sukuk	31		31	-	93	93	-
- non-controlling interests	13		6	>100	62	55	13
Total	1,111		870	28	2,604	2,951	(12)

* Less than 1 million

The unaudited condensed consolidated statement of comprehensive income should be read in conjunction with the accompanying explanatory notes and the audited financial statements for the financial year ended 31 December 2022.

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UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

Amounts in RM million unless otherwise stated

		Unaudited	Audited
		As at	As at
		30 September	31 December
	Note	2023	2022
Non-current assets
Property, plant and equipment		18,921	17,800
Investment properties		8	11
Right-of-use assets		2,092	2,008
Joint ventures		409	368
Associates		50	57
Intangible assets		3,104	2,947
Investments at fair value through other comprehensive income ("FVOCI")	22	22
Deferred tax assets		439	496
Tax recoverable		157	164
Trade and other receivables		59	35
		25,261	23,908
Current assets
Inventories		3,144	2,778
Biological assets		201	180
Trade and other receivables		2,316	2,603
Tax recoverable		406	235
Amounts due from related parties		‒ *	1
Derivatives	B9	85	157
Bank balances, deposits and cash		702	635
		6,854	6,589
Non-current assets held for sale	(1)	157	651
Total assets	A9	32,272	31,148
Equity
Share capital		1,634	1,634
Reserves		16,539	14,733
Attributable to equity holders of the Company	18,173	16,367
Perpetual Sukuk		2,200	2,231
Non-controlling interests		442	418
Total equity		20,815	19,016

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UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION (CONTINUED) Amounts in RM million unless otherwise stated

		Unaudited	Audited
		As at	As at
		30 September	31 December
	Note	2023	2022
Non-current liabilities
Retirement benefits		169	158
Deferred income		‒ *	‒ *
Deferred tax liabilities		2,686	2,738
Borrowings	B8	3,685	3,633
Lease liabilities		196	147
Trade and other payables		50	43
		6,786	6,719
Current liabilities
Trade and other payables		2,065	2,444
Contract liabilities		32	35
Amounts due to related parties		10	10
Retirement benefits		18	15
Lease liabilities		27	25
Tax payable		299	219
Derivatives	B9	18	62
Borrowings	B8	1,965	2,464
Dividend payable		225	‒
		4,659	5,274
Liabilities directly associated with non-current assets held for sale	(2)	12	139
Total liabilities		11,457	12,132
Total equity and liabilities		32,272	31,148
Net assets per share attributable to equity holders
of the Company (RM)		2.63	2.37

Note:

1. Non-currentassets held for sale Non-current assets held for sale

	- property, plant and equipment	7	20
	Disposal group held for sale
	- property, plant and equipment	112	250
	- right of use assets	1	28
	- tax assets	16	107
	- receivables	6	182
	- bank balances	‒	11
	- other assets	15	53
		157	651
(2)	Liabilities directly associated with non-current assets
	held for sale
	Disposal group held for sale
	- payables	8	120
	- retirement benefits	4	12
	- tax liabilities	‒	5
	- other liabilities	‒ *	2
		12	139
	* Less than 1 million

The unaudited condensed consolidated statement of financial position should be read in conjunction with the accompanying explanatory notes and the audited financial statements for the financial year ended 31 December 2022.

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UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Amounts in RM million unless otherwise stated

					Attributable to equity holders of the Company
					Investments					Non-
	Share	Capital	Hedging	Merger	at FVOCI	Exchange	Retained		Perpetual	controlling	Total
Three quarters ended 30 September 2023	capital	reserve	reserve	reserve	reserve	reserve	profits	Total	Sukuk	interests	equity
At 1 January 2023	1,634	9	10	(18)	20	716	13,996	16,367	2,231	418	19,016
Profit for the financial period	‒	‒	‒	‒	‒	‒	1,660	1,660	93	36	1,789
Other comprehensive income
for the financial period	‒	‒	21	‒	‒	781	10	812	‒	26	838
Disposal of subsidiaries	‒	‒	‒	‒	‒	(23)	‒	(23)	‒	‒	(23)
Total comprehensive income
for the financial period	‒	‒	21	‒	‒	758	1,670	2,449	93	62	2,604
Transactions with equity holders:
Dividends	‒	‒	‒	‒	‒	‒	(643)	(643)	‒	(38)	(681)
Distribution to Perpetual Sukuk holders	‒	‒	‒	‒	‒	‒	‒	‒	(124)	‒	(124)
At 30 September 2023	1,634	9	31	(18)	20	1,474	15,023	18,173	2,200	442	20,815
					Attributable to equity holders of the Company
					Investments					Non-
	Share	Capital	Hedging	Merger	at FVOCI	Exchange	Retained		Perpetual	controlling	Total
Three quarters ended 30 September 2022	capital	reserve	reserve	reserve	reserve	reserve	profits	Total	Sukuk	interests	equity
At 1 January 2022	1,634	9	(126)	(18)	27	645	13,017	15,188	2,231	437	17,856
Profit for the financial period	‒	‒	‒	‒	‒	‒	1,926	1,926	93	54	2,073
Other comprehensive income/(loss)
for the financial period	‒	‒	276	‒	‒	605	(4)	877	‒	1	878
Total comprehensive income
for the financial period	‒	‒	276	‒	‒	605	1,922	2,803	93	55	2,951
Transactions with equity holders:
Dividends	‒	‒	‒	‒	‒	‒	(1,548)	(1,548)	‒	(56)	(1,604)
Distribution to Perpetual Sukuk holders	‒	‒	‒	‒	‒	‒	‒	‒	(125)	‒	(125)
At 30 September 2022	1,634	9	150	(18)	27	1,250	13,391	16,443	2,199	436	19,078

The unaudited condensed consolidated statement of changes in equity should be read in conjunction with the accompanying explanatory notes and the audited financial statements for the financial year ended 31 December 2022.

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UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

Amounts in RM million unless otherwise stated

		Three quarters ended
		30 September
	Note	2023		2022
Cash flows from operating activities
Profit for the financial period		1,789		2,073
Adjustments for:
Share of results of joint ventures and associates		(25)		(72)
Finance income		(17)		(8)
Finance costs		151		87
Gain on disposal of:
- property, plant and equipment	B5	(11)		(15)
- non-current assets held for sale	B5	(1,093)		(276)
Depreciation and amortisation	B5	1,056		1,015
Unrealised fair value losses/(gains)
- commodities contracts	B5	48		(252)
- forward foreign exchange contracts	B5	10		64
Unrealised foreign exchange losses	B5	45		51
Tax expense	B6	568		676
Fair value changes on biological assets		(14)		105
Retirement benefits		36		23
Net of impairment/(reversal) of:
- property, plant and equipment	B5	17		4
- right-of-use assets	B5	‒		‒ *
- advances for plasma plantation projects	B5	1		‒
- trade and other receivables	B5	(1)		6
Write off of:
- inventories	B5	1		‒
- trade and other receivables	B5	‒	*	‒
- property, plant and equipment	B5	9		18
- intangible assets	B5	1		1
Write down of inventories	B5	19		85
Dividend income from FVOCI		(3)		(9)
		2,587		3,576
Changes in working capital:
Inventories		(245)		(1,042)
Trade and other receivables		498		400
Trade and other payables		(502)		287
Intercompany and related party balances		‒	*	(10)
Cash generated from operations		2,338		3,211
Tax paid		(689)		(926)
Retirement benefits paid		(28)		(23)
Net cash generated from operating activities		1,621		2,262
Cash flows from investing activities
Finance income received		17		8
Purchase of:
- property, plant and equipment		(1,390)		(1,097)
- intangibles assets		(9)		(11)
Advances for plasma plantation projects		(1)		(3)
Repayment of advances for plasma plantation projects		‒		49
Proceeds from sale of:
- property, plant and equipment		12		19
- non-current assets held for sale		1,387		285
Dividend received from:
- other investments		3		9
- joint venture		‒		3
- an associate		9		4
Net cash used in investing activities		28		(734)

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UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED) Amounts in RM million unless otherwise stated

	Three quarters ended
	30 September
Note	2023	2022
Cash flows from financing activities
Distribution to Perpetual Sukuk holders	(124)	(125)
Finance costs paid	(247)	(120)
Loans raised	3,720	2,935
Loan repayments	(4,429)	(3,024)
Repayment of lease liabilities	(37)	(21)
Dividends paid to shareholders	(418)	(856)
Dividends paid to non-controlling interests of subsidiaries	(35)	(48)
Net cash used in financing activities	(1,570)	(1,259)
Net changes in cash and cash equivalents during the financial period	79	269
Foreign exchange difference	(12)	1
Cash and cash equivalents at beginning of the period	635	665
Cash and cash equivalents at end of the period	702	935

* Less than 1 million

The unaudited condensed consolidated statement of cash flows should be read in conjunction with the accompanying explanatory notes and the audited financial statements for the financial year ended 31 December 2022.

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EXPLANATORY NOTES ON THE QUARTERLY REPORT - 30 SEPTEMBER 2023

Amounts in RM million unless otherwise stated

A. EXPLANATORY NOTES PURSUANT TO MFRS 134

A1. Basis of preparation

This interim financial report is prepared in accordance with the requirements of paragraph 9.22 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad and complies with the requirements of the Malaysian Financial Reporting Standard ("MFRS") 134 "Interim Financial Reporting" and other MFRSs issued by the Malaysian Accounting Standards Board ("MASB"). The interim financial report is unaudited and should be read in conjunction with the audited consolidated financial statements for the financial year ended 31 December 2022.

A2. Accounting policies

The accounting policies and presentation adopted for this interim financial report are consistent with those adopted for the audited consolidated financial statements for the financial year ended 31 December 2022 except as described below.

1. Accounting pronouncements that are effective and have been adopted in preparing these financial statements:
2. 1. Amendments that are effective on or after 1 January 2023
   2. • Amendments to MFRS 101, MFRS Practice Statement 2 and MFRS 108 on disclosure of accounting policies and definition of accounting estimates
      • Amendments to MFRS 112 on "Deferred Tax related to Assets and Liabilities arising from a Single Transaction"

The adoption of these amendments does not have any significant impact on the current period or any prior periods and is not likely to affect future periods.

• Amendments to MFRS 112 on International Tax Reform - Pillar Two Model Rules

As provided in the amendments to MFRS 112 issued in May 2023, the Group applies the mandatory exception, whereby the Group does not need to recognise or disclose information about deferred tax assets and liabilities related to Pillar Two income taxes.

1. Accounting pronouncements that are not yet effective and have not been early adopted in preparing these financial statements:
2. 1. Amendments that are effective on or after 1 January 2024

• Amendments to MFRS 101 on "Classification of Liabilities as Current or Non-current" ('2020 amendments') and "Non-current Liabilities with Covenants" ('2022 amendments')
• Amendments to MFRS 16 on Lease Liability in a Sale and Leaseback
• Amendments to MFRS 107 and MFRS 7 on Supplier Finance Arrangements

The amendments shall be applied retrospectively.

A3. Seasonal and cyclical factors

The Group's operations are not materially affected by seasonal or cyclical factors except for the fresh fruit bunch production which may be affected by the vagaries of weather and cropping patterns.

A4. Unusual items affecting assets, liabilities, equity, net income or cash flows

Except as disclosed in Notes B1 and B2, there were no material unusual items affecting the Group's assets, liabilities, equity, net income or cash flows during the quarter under review.

A5. Material changes in estimates

There were no material effects from estimates made in prior periods or previous year.

A6. Debt and equity securities

There were no issuances, cancellations, repurchases, resale and repayments of debt and equity securities during the quarter under review.

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EXPLANATORY NOTES ON THE QUARTERLY REPORT - 30 SEPTEMBER 2023

Amounts in RM million unless otherwise stated

1. EXPLANATORY NOTES PURSUANT TO MFRS 134 (CONTINUED)
   A7. Dividends paid
   No dividend was paid during the quarter under review.

A8. Revenue
The Group derived the following types of revenue:
		Three quarters ended
		30 September
	Note	2023	2022
Revenue from contracts with customers	A8(a)	13,124	15,333
Revenue from other sources	A8(b)	24	27
Total revenue		13,148	15,360
(a) Disaggregation of revenue from contracts with customers
Upstream
- Malaysia		719	395
- Indonesia		755	662
- Papua New Guinea and Solomon Islands ("PNG/SI")		134	95
Downstream		11,410	14,100
Other operations		106	81
		13,124	15,333
Sales of palm based products, other refined edible oils, rubber,
sugar, beef and other agricultural products		12,850	15,042
Freight services		231	185
Tolling services		43	106
		13,124	15,333
Timing of revenue recognition
- at point in time		12,850	15,042
- over time		274	291
		13,124	15,333
(b) Revenue from other sources
Dividend (gross) received/receivable from investments		3	9
Rental income		21	18
		24	27

1. Revenue expected to be recognised in relation to unsatisfied performance obligations
   The following table shows the revenue expected to be recognised in the future relating to performance obligations that were unsatisfied (or partially unsatisfied) as at 30 September 2023:

	Expected timing of recognition
	During the quarter ending
	31 December 2023
Freight income	32

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EXPLANATORY NOTES ON THE QUARTERLY REPORT - 30 SEPTEMBER 2023

Amounts in RM million unless otherwise stated

1. EXPLANATORY NOTES PURSUANT TO MFRS 134 (CONTINUED)
   A9. Segment information

						Inter-
	Upstream	Upstream	Upstream		Other	segment
	Malaysia	Indonesia	PNG/SI	Downstream	operations	elimination	Total
Three quarters ended 30 September 2023
Segment revenue:
External sales	741	755	134	11,412	106	‒	13,148
Inter-segment sales	2,160	1,049	2,234	255	502	(6,200)	‒
Total revenue	2,901	1,804	2,368	11,667	608	(6,200)	13,148
Segment results:
Operating profit:
- recurring activities	182	480	293	393	46	‒	1,394
- non-recurring transactions	794	278	‒	‒	‒	‒	1,072
Share of results of joint ventures and associates	‒	‒	‒	24	1	‒	25
Profit before interest and tax	976	758	293	417	47	‒	2,491
						Inter-
	Upstream	Upstream	Upstream		Other	segment
	Malaysia	Indonesia	PNG/SI	Downstream	operations	elimination	Total
Three quarters ended 30 September 2022
Segment revenue:
External sales	419	662	95	14,103	81	‒	15,360
Inter-segment sales	2,987	1,055	2,263	72	383	(6,760)	‒
Total revenue	3,406	1,717	2,358	14,175	464	(6,760)	15,360
Segment results:
Operating profit:
- recurring activities	145	624	937	711	46	‒	2,463
- non-recurring transactions	273	‒	‒	‒	20	‒	293
Share of results of joint ventures and associates	‒	‒	‒	61	11	‒	72
Profit before interest and tax	418	624	937	772	77	‒	2,828

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