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IOI CORPORATION BERHAD (9027-W)
(Incorporated in Malaysia)
Interim report for the financial period ended 30 June 2006
(The figures have not been audited)
CONDENSED CONSOLIDATED INCOME STATEMENTS
INDIVIDUAL QUARTER (Q4) CUMULATIVE QUARTER (12 Mths)
CURRENT PRECEDING YEAR CURRENT PRECEDING YEAR
YEAR CORRESPONDING YEAR TO CORRESPONDING
QUARTER QUARTER DATE PERIOD
6/30/2006 6/30/2005 6/30/2006 6/30/2005
RM'000 RM'000 RM'000 RM'000
Revenue 1,649,090 1,399,009 6,109,668 6,072,507
Operating profit 306,729 323,841 1,233,083 1,234,905
Interest income 8,306 8,353 26,124 31,976
Finance cost (34,916) (38,648) (133,786) (109,854)
Share of profits of associates 9,192 16,739 57,664 63,827
Profit before tax 289,311 310,285 1,183,085 1,220,854
Taxation (52,113) (50,441) (211,241) (134,341)
Profit after tax 237,198 259,844 971,844 1,086,513
Minority interest (17,897) (47,023) (128,056) (184,293)
Net profit for the period 219,301 212,821 843,788 902,220
Earnings per share (sen)
Basic 18.54 19.05 73.86 80.61
Diluted 17.54 19.05 68.11 80.54
(The notes set out on pages 5 to 8 form an integral part of and should be read in conjunction with this interim financial
report).
- Page 1 -
IOI CORPORATION BERHAD (9027-W)
(Incorporated in Malaysia)
Interim report for the financial period ended 30 June 2006
(The figures have not been audited)
CONDENSED CONSOLIDATED BALANCE SHEETS
AS AT END OF AS AT
CURRENT PRECEDING
QUARTER FINANCIAL YEAR
END
6/30/2006 6/30/2005
RM'000 RM'000
Property, plant & equipment 4,925,551 4,770,375
Associates 247,385 249,441
Investment properties 514,975 508,176
Other long term investments 30,376 30,699
Land held for property development 628,327 637,393
Deferred tax assets 95,389 118,792
Goodwill on consolidation 415,830 447,485
Current assets
Property development costs 356,207 236,695
Inventories 907,895 719,430
Receivables 959,381 817,806
Short term investments 2,032 2,057
Short term funds 460,633 1,023,739
Short term deposits 418,595 590,446
Cash and bank balances 349,110 352,525
3,453,853 3,742,698
Current liabilities
Payables 525,412 491,871
Bank overdrafts 7,897 8,569
Short term borrowings 153,656 117,978
Provision for taxation 22,875 27,931
Dividend payable - 167,508
709,840 813,857
Net current assets 2,744,013 2,928,841
9,601,846 9,691,202
Share capital 605,267 559,241
Reserves 5,428,656 4,303,087
Shareholders' equity 6,033,923 4,862,328
Minority interests 746,984 1,175,183
Total equity 6,780,907 6,037,511
Long term borrowings 2,334,231 3,092,883
Other long term liabilities 55,823 70,599
Deferred tax liabilities 430,885 490,209
9,601,846 9,691,202
Net assets per share attributable to ordinary equity holders of
the parent (RM) 5.02 4.35
(The notes set out on pages 5 to 8 form an integral part of and should be read in conjunction with this
interim financial report).
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IOI CORPORATION BERHAD (9027-W)
(Incorporated in Malaysia)
Interim report for the financial period ended 30 June 2006
(The figures have not been audited)
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
12 Months Ended 12 Months Ended
6/30/2006 6/30/2005
RM'000 RM'000
Operating Activities
Profit before taxation 1,183,085 1,220,854
Adjustments for:
Depreciation and amortisation 192,710 182,937
Other non-cash items (57,257) 70,362
Operating profit before working capital changes 1,318,538 1,474,153
Net changes in working capital (289,083) (90,165)
Cash generated from operations 1,029,455 1,383,988
Other payments (1,042) (21,872)
Taxes paid (243,162) (303,286)
Net cash inflow from operating activities 785,251 1,058,830
Investing Activities
Equity investments (372,319) (175,582)
Property, plant and equipment (318,766) (278,810)
Other investments (72,840) (42,760)
Net cash outflow from investing activities (763,925) (497,152)
Financing Activities
Dividends paid (413,919) (265,859)
Dividends paid (minority shareholders) (54,429) (78,702)
Issuance/repurchase of shares (net) (92,319) (79,745)
Issuance/repurchase of shares (subsidiary) (34,873) (25,300)
Issuance of bonds - 3,064,586
Bank borrowings (164,105) (1,896,121)
Net cash (outflow)/inflow from financing activities (759,645) 718,859
Net (decrease)/increase in cash and cash equivalents (738,319) 1,280,537
Cash and cash equivalents at beginning of period 1,958,141 677,585
Effect of exchange rate changes 619 19
Cash and cash equivalents at end of period 1,220,441 1,958,141
(The notes set out on pages 5 to 8 form an integral part of and should be read in conjunction with this interim
financial report).
- Page 5 -
IOI CORPORATION BERHAD (9027-W)
(Incorporated in Malaysia)
Interim report for the financial period ended 30 June 2006
(The figures have not been audited)
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(RM'000) Share Share Revaluation Capital Foreign Reserve on Retained Treasury Total
capital premium surplus reserve exchange consolidation profits shares
fluctuation
reserve
As at 1 July 2005 559,241 890,919 82,310 156,422 (101,357) 7,263 3,283,399 (15,869) 4,862,328
Net (loss)/gain not
recognised in income
statement - - (20) - 39 - 20 - 39
Net profit for the period - - - - - - 843,788 - 843,788
Dividend paid in respect of
current financial year - - - - - - (246,411) - (246,411)
Issue of shares arising from
conversion of Exchangeable
Bonds 30,966 654,001 - (69,734) - - 9,844 - 625,077
Issue of shares arising from
the privatisation of a
subsidiary 15,060 310,845 - - - - - - 325,905
Difference between share of
net assets acquired and
consideration paid arising
from the privatisation of a
subsidiary - - - - - - (283,733) - (283,733)
Repurchase of shares - - - - - - - (92,319) (92,319)
Amortisation for the period - - - - - (751) - - (751)
As at 30 June 2006 605,267 1,855,765 82,290 86,688 (101,318) 6,512 3,606,907 (108,188) 6,033,923
As at 1 July 2004 582,618 1,152,750 82,385 9,330 (35,831) 6,597 2,814,471 (194,168) 4,418,152
Net (loss)/gain not
recognised in income
statement - - (75) - (65,526) - 75 - (65,526)
Net profit for the period - - - - - - 902,220 - 902,220
Dividend paid in respect of
previous financial year - - - - - - (105,062) - (105,062)
Dividend paid in respect of
current financial year - - - - - - (160,797) - (160,797)
Dividend declared in respect
of current financial year - - - - - - (167,508) - (167,508)
Issue of shares 3,787 44,723 - - - - - - 48,510
Equity component of
Exchangeable Bonds - - - 119,928 - - - - 119,928
Repurchase of shares - - - - - - - (128,255) (128,255)
Cancellation of treasury shares (27,164) (306,554) - 27,164 - - - 306,554 -
Acquisition of subsidiaries - - - - - 3,060 - - 3,060
Disposal of subsidiary - - - - - (1,636) - - (1,636)
Amortisation for the period - - - - - (758) - - (758)
As at 30 June 2005 559,241 890,919 82,310 156,422 (101,357) 7,263 3,283,399 (15,869) 4,862,328
(The notes set out on pages 5 to 8 form an integral part of and should be read in conjunction with this interim financial report).
- Page 7 -
IOI CORPORATION BERHAD (9027-W)
(Incorporated in Malaysia)
Interim report for the financial period ended 30 June 2006
(The figures have not been audited)
EXPLANATORY NOTES
a) Accounting Policies
The interim financial report is unaudited and has been prepared in accordance with FRS134 “Interim Financial
Reporting”. The report should be read in conjunction with the audited financial statements of the Group for the financial
year ended 30 June 2005.
The accounting policies and methods of computation adopted by the Group in this interim financial report are consistent
with those adopted in the annual financial statements for the financial year ended 30 June 2005.
b) Audit Qualification
The audit report of the Group's preceding year financial statements was not qualified.
c) Seasonal or Cyclical Factors
There were no significant seasonal or cyclical factors that affect the business of the Group for the quarter under review.
d) Unusual Items
There were no unusual items affecting assets, liabilities, equity, net income and cash flows for the current financial year.
e) Material Changes in Estimates of Amounts Reported
There were no changes in estimates of amounts reported in prior interim period or financial year that have a material
effect in the current financial period.
- Page 9 -
IOI CORPORATION BERHAD (9027-W)
(Incorporated in Malaysia)
Interim report for the financial period ended 30 June 2006
(The figures have not been audited)
EXPLANATORY NOTES
f) Details of Changes in Debt and Equity Securities
During the current financial year-to-date, the Company issued:
i) 61,931,661 new ordinary shares of RM0.50 each at RM11.06 arising from the exchange of USD180,254,000
nominal value Five Year Unsecured Exchangeable Guaranteed Bonds into new ordinary shares of the Company.
ii) 30,120,634 new ordinary shares of RM0.50 each at RM10.82 per share arising from the privatisation of IOI
Oleochemical Industires Berhad.
During the current financial year-to-date, the Company has repurchased 7,541,000 of its issued shares capital from the
open market. The average price paid for the shares repurchased was RM12.24 per share. The repurchase transactions
were financed by internally generated funds. The shares repurchased are being held as treasury shares and treated in
accordance with the requirement of Section 67A of the Companies Act 1965. None of the treasury shares has been
resold or distributed as share dividends during the current financial period.
On 23 November 2005, the Company has implemented a new Executive Share Option Scheme of up to 10% of the issued
and paid-up share capital of the Company. During the current financial year-to-date, 23,286,000 options with the
subscription price of RM12.50 per ordinary share have been offered and accepted by the eligible executives of the
Group. As at 30 June 2006, none of the said options has been exercised.
g) Dividends Paid
CURRENT YEAR PRECEDING
TO DATE YEAR
CORRESPONDING
PERIOD
RM'000 RM'000
Interim dividend in respect of financial year ended 30 June 2006
- 30.0 sen per ordinary share less 28% income tax 246,411 -
Second interim dividend in respect of financial year ended 30 June 2005
- 15.0 sen per ordinary share tax exempt 167,508 -
Interim dividend in respect of financial year ended 30 June 2005
- 20.0 sen per ordinary share less 28% income tax - 160,797
Second interim dividend in respect of financial year ended 30 June 2004
- 13.0 sen per ordinary share less 28% income tax - 105,062
413,919 265,859
- Page 10 -
IOI CORPORATION BERHAD (9027-W)
(Incorporated in Malaysia)
Interim report for the financial period ended 30 June 2006
(The figures have not been audited)
EXPLANATORY NOTES
h) Segment Revenue & Results
(RM'000) Plantation Property Property Resource-based Other Eliminations Consolidated
Development Investment Manufacturing Operations
12 Months Ended 30/06/06
REVENUE
External Sales 373,911 623,778 60,291 4,967,012 84,676 - 6,109,668
Inter-segment sales 865,039 - - - - (865,039) -
Total Revenue 1,238,950 623,778 60,291 4,967,012 84,676 (865,039) 6,109,668
RESULT
Operating results 636,288 331,350 36,959 139,851 19,811 - 1,164,259
Loss on goodwill impairment - - - (13,886) - - (13,886)
Segment results 636,288 331,350 36,959 125,965 19,811 - 1,150,373
Translation gain on USD
denominated borrowings 92,128
Other unallocated corporate expenses (9,418)
Operating profit 1,233,083
Finance cost (133,786)
Interest income 26,124
Share of profits of associates 4,934 - - 52,730 - - 57,664
Profit before taxation 1,183,085
Taxation (211,241)
Profit after taxation 971,844
Minority interest (128,056)
Net profit for the period 843,788
12 Months Ended 30/06/05
REVENUE
External sales 456,170 587,848 44,886 4,902,596 81,007 - 6,072,507
Inter-segment sales 916,339 - - 6,994 - (923,333) -
Total Revenue 1,372,509 587,848 44,886 4,909,590 81,007 (923,333) 6,072,507
RESULT
Operating results 767,472 295,249 24,647 155,644 14,581 - 1,257,593
Gain on disposal of a business
sub-unit - - - 30,898 - - 30,898
Property, plant and equipment
written off - - - (13,087) - - (13,087)
Segment results 767,472 295,249 24,647 173,455 14,581 - 1,275,404
Unallocated corporate expenses (40,499)
Operating profit 1,234,905
Finance cost (109,854)
Interest income 31,976
Share of profits of associates 10,453 - - 53,374 - - 63,827
Profit before taxation 1,220,854
Taxation (134,341)
Profit after taxation 1,086,513
Minority interest (184,293)
Net profit for the period 902,220
- Page 13 -
IOI CORPORATION BERHAD (9027-W)
(Incorporated in Malaysia)
Interim report for the financial period ended 30 June 2006
(The figures have not been audited)
EXPLANATORY NOTES
i) Valuations of Property, Plant & Equipment
Valuations of investment properties have been brought forward, without amendments from the previous annual financial
statements.
j) Material Events Subsequent to the End of Financial Period
There were no material events subsequent to 30 June 2006 that have not been reflected in the financial statements.
k) Changes in the Composition of the Group
There were no material changes in the composition of the Group during the financial period ended 30 June 2006 except
for the following:
EFFECTIVE EQUITY INTEREST
AS AT
6/30/2006 6/30/2005
IOI Oleochemical Industries Berhad 100.0% 64.91%
.
l) Contingent Liabilities
There were no material changes in contingent liabilities since the last annual balance sheet date.
- Page 15 -
IOI CORPORATION BERHAD (9027-W)
(Incorporated in Malaysia)
Interim report for the financial period ended 30 June 2006
(The figures have not been audited)
ADDITIONAL INFORMATION AS REQUIRED BY APPENDIX 9B OF BURSA MALAYSIA LISTING REQUIREMENTS
1) Review of the Performance of the Company and Its Principal Subsidiaries
The Group's pre-tax profit for FY2006 was RM1.18 billion, lower by 3% as compared to the RM1.22 billion reported for FY2005.
The marginal decrease is due mainly to higher net interest charges and lower profit contributions from the associates.
Operating profit is however maintained at previous year's level of RM1.23 billion. The lower profit contributions from our palm
oil business (plantation and manufacturing segments) were mitigated by higher profit from the property segment and foreign
exchange translation gain on USD denominated borrowings.
Plantation earning of RM636.3 million for FY2006 was 17% lower than previous year. Average CPO price for FY2006 decreased
by 5% to RM1,386 per MT as compared to RM1,453 per MT realised for FY2005 whilst FFB production increased marginally
from 3,657,776 MT for FY2005 to 3,674,483 MT for FY2006. Apart from lower CPO price realised, the decrease in plantation
earnings by 17% was also attributable to a relatively higher level of production still held in inventory, and higher Sabah sales tax
of 7.5% for H1 FY2006 as compared to 5% for H1 FY2005.
For the resource-based manufacturing segment (including associates), operating results for FY2006 was 21% lower than FY2005
at RM178.7 million. Performance for this segment was below expectation due mainly to provision for impairment of goodwill on a
subsidiary in Canada, inventory write-offs and the interruption of operations arising from the tank explosion in February 2006 at
an associate company which is also a major customer of our oleochemicals business. This accident resulted in loss of profit
contributions from both the associate and subsidiary companies involved.
The property business performed above expectation against a softer housing market backdrop to achieve a higher operating profit
for FY2006 at RM368.3 million, compared to RM319.9 million achieved in FY2005, a 15% improvement. This was due mainly
to higher sales of commercial properties and improvement in rental and occupancy rates of investment properties.
At net earnings level, the following factors has affected the comparability of results between FY2006 and FY2005:
i) The tax rate for the FY2006 is higher than FY2005 because of the backdated tax incentives granted by the tax authority
taken up in FY2005.
ii ) Minority interest for FY2006 is lower than FY2005 because of the privatisation of IOI Oleochemical Industries Berhad as
well as the increase in equity interest in other subsidiaries such as IOI Properties Berhad.
The net earnings of the Group for FY2006 was RM843.8 million, which is 6.5% lower than the RM902.2 million for FY2005
mainly because of the reasons as explained above.
In the opinion of the Directors, the results for the financial period under review have not been affected by any transaction or event
of a material or unusual nature which may have arisen between 30 June 2006 and the date of this announcement.
- Page 17 -
IOI CORPORATION BERHAD (9027-W)
(Incorporated in Malaysia)
Interim report for the financial period ended 30 June 2006
(The figures have not been audited)
2) Material Change in Profit Before Taxation for the Current Quarter as Compared with the Immediate Preceding Quarter
Profit before taxation for the current quarter is about the previous quarter's level. All major segments reported higher profit for the
current quarter. Operating profit was however flat as the higher contributions from the major segments were offset by lower
translation gain on USD denominated borrowings (included under unallocated corporate income) as compared to the preceding
quarter.
The analysis of contribution by segment is as follows:
CURRENT PRECEDING INCREASE/ (DECREASE)
QUARTER QUARTER
RM'000 RM'000 RM'000
Plantation 135,686 127,019 8,667 6.8%
Property development 106,277 83,114 23,163
Property investment 9,998 9,555 443
Total Property 116,275 92,669 23,606 25.5%
Resource-based manufacturing 42,255 7,805 34,450 441.4%
Other operations 3,813 3,625 188
298,029 231,118 66,911 29.0%
Unallocated corporate income * 8,700 75,507 (66,807)
Operating profit 306,729 306,625 104 0.0%
Interest expense (34,916) (32,197) (2,719) 8.4%
Interest income 8,306 5,614 2,692 48.0%
Share of profits of associates 9,192 12,544 (3,352) (26.7%)
Profit before tax 289,311 292,586 (3,275) (1.1%)
* Translation gain on USD denominated
borrowings included in unallocated corporate
income 9,917 67,518 (57,601)
3) Current Year Prospects
CPO prices are on the uptrend and are expected to average at significantly higher levels. Crop yields are also expected to recover
this year. Therefore, barring any unforeseen circumstances, the Group's results for the current financial year is expected to be
significantly better, principally as a result of much higher anticipated plantation earnings.
4) Variance of Actual Profit from Forecast Profit
Not applicable.
- Page 18 -
IOI CORPORATION BERHAD (9027-W)
(Incorporated in Malaysia)
Interim report for the financial period ended 30 June 2006
(The figures have not been audited)
5) Taxation
INDIVIDUAL QUARTER (Q4) CUMULATIVE QUARTER (12 Mths)
CURRENT YEAR PRECEDING YEAR CURRENT PRECEDING YEAR
QUARTER CORRESPONDING YEAR TO DATE CORRESPONDING
QUARTER PERIOD
RM'000 RM'000 RM'000 RM'000
The tax expense comprises the following:
Current taxation
- Current year 64,057 73,514 215,865 255,321
- Prior years (1,140) (1,058) (685) (83,332)
Deferred taxation
- Current year (10,903) (32,178) (22,132) (49,004)
- Prior years (3,819) 6,147 3,110 (1,075)
Share of taxation of associates 3,918 4,016 15,083 12,431
52,113 50,441 211,241 134,341
The tax expense for the previous year corresponding period is significantly lower due mainly to adjustment to over-provision of
prior years taxation following the tax incentive obtained for the acquisition of Loders Croklaan under the Income Tax (Deduction
for Cost on Acquisition of A Foreign Company) Rules 2003.
Apart from the afore-mentioned, the effective tax rates of the Group for the current year and current quarter are lower than the
statutory tax rate due principally to the utilisation of previously unrecognised tax losses, capital and agricultural allowances as well
as tax incentives available to the Company and certain subsidiaries and associates.
6) Profit on Sale of Unquoted Investments and/or Properties
There were no material disposal of unquoted investments and/or properties outside the ordinary course of business of the Group
for the current quarter and financial year to-date.
- Page 19 -
IOI CORPORATION BERHAD (9027-W)
(Incorporated in Malaysia)
Interim report for the financial period ended 30 June 2006
(The figures have not been audited)
7) Quoted Securities
(Other than Securities in Existing Subsidiaries)
a) Purchases and disposals of quoted securities
INDIVIDUAL QUARTER (Q4) CUMULATIVE QUARTER (12 Mths)
CURRENT YEAR PRECEDING YEAR CURRENT PRECEDING YEAR
QUARTER CORRESPONDING YEAR TO DATE CORRESPONDING
QUARTER PERIOD
RM'000 RM'000 RM'000 RM'000
Total purchase consideration - 129 - 129
Total sale proceeds 1,035 - 1,147 1,560
Total gain on disposal 467 - 510 474
b) Total investments in quoted securities (mainly classified under 'other long term investments') as at 30 June 2006 are as follows:
RM'000
Quoted in Malaysia
At cost 35,581
Allowance for diminution in value (6,863)
Net book value 28,718
At market value 40,724
Quoted outside Malaysia *
At cost 16,194
Allowance for diminution in value (14,179)
Net book value 2,015
At market value 4,152
* Held at IOI Oleochemical Industries Berhad's level
- Page 20 -
IOI CORPORATION BERHAD (9027-W)
(Incorporated in Malaysia)
Interim report for the financial period ended 30 June 2006
(The figures have not been audited)
8) Status of Corporate Proposal
The status of corporate proposal announced by the Group but not completed as at 9 August 2006 (being a date not earlier than 7
days from the date of issue of the quarterly report) is as follows:
i) IOI Properties Berhad
Proposal Proposed Acquisition by Flora Horizon Sdn Bhd, Hartawan Development Sdn Bhd, Pilihan Teraju
Sdn Bhd and Paduwan Development Sdn Bhd, which are wholly-owned subsidiaries of IOI
Properties Berhad (“IOIP”), of freehold land with a combined area of approximately 925 hectares
located in the State of Melaka for a total purchase consideration of RM91,347,849 (“Proposed
Acquisition”).
Adviser Not Applicable.
Approvals Pending The Proposed Acquisition is subject to approval of the Estate Land Board for the transfer of
ownership of the said land to the respective IOIP’s subsidiaries, which is pending as at August 2006.
9) Group Borrowings and Debt Securities
Group borrowings and debt securities as at 30 June 2006 are as follows:
RM'000
a) Bank overdrafts
Unsecured
Denominated in EGP (EGP12,463,000) 7,897
Total Bank Overdrafts 7,897
b) Short term borrowings
Secured
Denominated in RM 117,777
Denominated in SGD (SGD15,500,000) 35,879
Total Short Term Borrowings 153,656
c) Long term borrowings
Secured
Denominated in RM 43,750
Denominated in SGD (SGD11,000,000) 25,464
69,214
Unsecured
Denominated in USD (USD616,331,000) 2,265,017
Total Long Term Borrowings 2,334,231
Total Borrowings 2,495,784
- Page 21 -
IOI CORPORATION BERHAD (9027-W)
(Incorporated in Malaysia)
Interim report for the financial period ended 30 June 2006
(The figures have not been audited)
10) Off Balance Sheet Financial Instruments
a) Forward foreign exchange sale and purchase contracts that were entered into as at 9 August 2006 (being a date not earlier than 7
days from the date of issue of the quarterly report) by certain subsidiary companies were RM2.23 billion and RM113.3 million
respectively. These contracts were entered into as hedges for committed sales and purchases denominated in foreign currencies
and to limit the exposure to potential changes in foreign exchange rates with respect to subsidiary companies’ foreign currencies
denominated estimated receipts and payments. The maturity period of these contracts range from August 2006 to March 2009.
The committed sales and purchases transactions that are hedged by forward contracts are subsequently recorded in the books at the
contracted foreign exchange rates. Other gains and losses arising from forward contracts are dealt with through the income
statement upon maturity.
There is minimal credit risk as the contracts were entered into with reputable banks.
b) Commodity future contracts entered into by certain subsidiary companies and outstanding as at 9 August 2006 are as follows:
Description Ringgit MMaturity Period
Equivalent a
(RM'mil) t
u
Sale contracts 23.1 September 2006 to October 2006
Purchase contracts 107.0 September 2006 to May 2007
The above exchange traded commodity contracts were entered into with the objective of managing and hedging the Group's
exposure to adverse price movements in vegetable oil commodities.
The associated credit risk is minimal as these contracts were entered into with brokers of commodity exchanges. Gains or losses
arising from contracts entered into as hedges of anticipated future transactions are deferred until the date of such transactions, at
which time they are included in the measurement of such transactions. Gains and losses on contracts which are no longer
designated as hedges are included in the income statement.
- Page 22 -
IOI CORPORATION BERHAD (9027-W)
(Incorporated in Malaysia)
Interim report for the financial period ended 30 June 2006
(The figures have not been audited)
c) As at 9 August 2006, the Group has the following interest rate swap contracts:
Interest Rate Swap Notional Amount Effective Period
Fixed rate to USD LIBOR RM350 million, to be fully amortised 15 January 2004 to 15 January 2008
(Settlement in Ringgit) over a period of four years, commencing
15 April 2004.
CMS Spread Range Accrual Swap USD 100.0 million, over a period of 5 12 October 2005 to 12 October 2010
years, commencing 12 October 2005
CMS Spread Range Accrual Swap USD 50.0 million, over a period of 5 13 October 2005 to 13 October 2010
years, commencing 13 October 2005
CMS Spread Range Accrual Swap RM100 million, over a period of 5 years, 11 May 2006 to 11 May 2011
commencing 11 May 2006
Note:
USD LIBOR: USD London Interbank Offered Rate
Any differential to be paid or received on the interest rate swap contract is recognised as a component of interest expense over the
period of the contract. Gains or losses on early termination of interest rate swap contract or on repayment of the borrowings are
taken to the income statement.
There is minimal credit risk as the interest rate swap contracts were entered into with a reputable bank.
d) As at 9 August 2006, the Company has the following cross currency swap contracts:
Cross Currency Swap Notional Amount Effective Period
Fixed rate USD liability to fixed rate EUR USD 209.6 million into EUR 161million 1 April 2005 to 28 February 2015
liability
The contracts effectively swapped part of the Company's USD 500 million 5.25% Guaranteed Notes due 2015 into fixed rate EUR
liability and serve as a hedge against the Company's EUR assets.
There is minimal credit risk as the swaps were entered into with reputable banks.
- Page 23 -
IOI CORPORATION BERHAD (9027-W)
(Incorporated in Malaysia)
Interim report for the financial period ended 30 June 2006
(The figures have not been audited)
e) As at 9 August 2006, the Company has the following currency option contracts:
Currency Option Contract Amount Effective Period
EUR/USD Staggered Knockout Collars * EUR3.6 million 17 June 2005 to 22 February 2007
EUR/USD Knockout Collars * EUR1.8 million 11 January 2006 to 22 August 2007
EUR/USD Knockout Collars * EUR1.8 million 24 March 2006 to 22 August 2007
EUR/USD Knockout Option # EUR515,000 12 May 2005 to 28 November 2006
* The above contracts were entered into as hedges for committed coupon interest payments denominated in EUR for the
Company's EUR/USD Cross Currency Swap. These contracts are zero cost in nature and the Company was not required to
pay any upfront premium for the contracts.
# The above contract was entered into as hedge for the Company's committed payables denominated in EUR. This contract is
zero cost in nature and the Company was not required to pay any upfront premium for the contract.
There is minimal credit risk as the contracts were entered into with a reputable bank.
f) As at 9 August 2006, the Group has the following commodity swap contract:
Commodity Swap Contract Amount Effective Period
The Group pays fixed CPO price and 2,084 MT per month May 2006 to March 2007
receives floating CPO price from
counterparty
The above commodity swap contract was entered into to partially hedge the prices of our CPO requirement for our manufacturing
activities. There is minimal credit risk as the contract was entered into with a reputable bank.
- Page 24 -
IOI CORPORATION BERHAD (9027-W)
(Incorporated in Malaysia)
Interim report for the financial period ended 30 June 2006
(The figures have not been audited)
11) Material Litigations
There are no new material litigation nor significant changes to the status of material litigations which are pending disposal in the
courts since 30 June 2005. For ease of reference, the material litigations brought forward are detailed below:
a) IOI Corporation Berhad
i) A minority shareholder of IOI Oleochemical Industries Berhad ("IOI Oleo"), Tuan Haji Zulkifli bin Haji Hussain ("the Applicant")
has on 26 July 2000 obtained an Ex-parte Order For Leave to apply for an Order of Mandamus against the Securities Commission
to compel the Securities Commission to direct the Company to make a mandatory general offer on the remaining shares of IOI
Oleo not owned by the Company.
Notwithstanding that the Company was not a party to the above proceedings, in order to protect the interests of the Company, the
Company has applied and has been allowed to be joined as a party to the aforesaid court action on 1 November 2000. Subsequent
thereto, the Company has instructed its solicitors to make the necessary application to set aside the Order For Leave and to strike
out the Applicant's Notice of Motion for an Order of Mandamus. The Company had successfully completed a mandatory general
offer on IOI Oleo in October 2001. The High Court had on 20 December 2004 struck out with costs the Applicant's Notice of
Motion for an Order of Mandamus and the Applicant has since filed an appeal against the said decision.
On 15 March 2006, the Company had completed the privatisation of IOI Oleo by way of a members' scheme of arrangement under
Section 176 of the Companies Act, 1965 and IOI Oleo is now a wholly-owned subsidiary of the Company.
The Board, based on legal advice, is of the opinion that the Company has valid grounds to succeed in this litigation.
ii) A civil suit has been instituted by Tuan Haji Zulkifli Bin Hussain and 6 others, the shareholders/former shareholders of IOI
Oleochemical Industries Berhad ("IOI Oleo") against the Company, its Executive Chairman Tan Sri Dato' Lee Shin Cheng and its
Executive Director, Dato' Lee Yeow Chor. The Writ of Summons and the Statement of Claim, inter alia, alleged that the
defendants are under an obligation pursuant to Rule 34.1 of the Malaysian Code on Take-Overs and Mergers, 1987 to extend a
mandatory general offer to the plaintiffs to acquire their shares in IOI Oleo and have sought for damages by reason of alleged
failure by the defendants to extend the said general offer.
The plaintiffs' claim in this suit is based on similar facts that gave rise to the mandamus proceeding initiated by the first plaintiff in
the High Court of Kuala Lumpur against the Securities Commission, as disclosed under item 11(a)(i), in which the Company and
Tan Sri Dato' Lee Shin Cheng were subsequently allowed to be joined as parties to the said mandamus proceeding.
The Company had been advised by its solicitors that it has genuine and valid defences to advance against the plaintiffs' cause of
actions and the claims made therein.
- Page 25 -
IOI CORPORATION BERHAD (9027-W)
(Incorporated in Malaysia)
Interim report for the financial period ended 30 June 2006
(The figures have not been audited)
b) Unipamol Malaysia Sdn Bhd (subsidiary of IOI Oleochemical Industries Berhad)
Unipamol Malaysia Sdn Bhd ("Unipamol") has obtained summary judgement against Unitangkob (Malaysia) Berhad
("Unitangkob") on 27 July 2001 in the High Court of Sabah and Sarawak at Kota Kinabalu for, inter alia, recovery of the principal
sum of approximately RM5 million together with interest and costs. Unitangkob's appeal against the summary judgement was
dismissed with costs and it has filed further appeal to the Court of Appeal. Meanwhile, Unipamol has commenced winding-up
proceedings against Unitangkob to recover the amount due under the summary judgement. The following applications are still
pending disposal in court:
i) an application to stay the execution of the summary judgement; and
ii) an application to amend their Defence and include a Counter-claim against Unipamol for a sum of RM208 million for special
and general damages;
Unipamol has obtained favourable legal opinion on the merits of the case.
c) Unipamol Malaysia Sdn Bhd and Pamol Plantations Sdn Bhd (subsidiaries of IOI Oleochemical Industries Berhad)
A legal suit has been instituted by Joseph bin Paulus Lantip, Mairin @ Martin bin Idang, Jaskri Doyou, Saffar bin Jumat @ Beklin
bin Jumat, Datuk Miller Munang and George Windom Munang against Unipamol Malaysia Sdn Bhd ("Unipamol"), Pamol
Plantations Sdn Bhd ("PPSB"), Unilever plc and its subsidiary Pamol (Sabah) Ltd. The Writ of Summons and Statement of Claim
are dated 4 December 2002 and inter-alia, alleged that the Defendants have wrongfully refused or failed to continue with the Share
Sale Agreement (to which PPSB is a party but not Unipamol) and Shareholders' Agreement (to which both PPSB and Unipamol
are parties). The Plaintiffs are claiming for, inter-alia, special damages of RM43.47 million, general damages of RM136.85
million or such amount as may be assessed, exemplary damages, interest and costs. Unipamol and PPSB have entered an
appearance and filed a Defence to the claim as well as a Counter-claim against the Plaintiffs. Unipamol and PPSB have obtained
favourable legal opinion on the merits of the case.
- Page 26 -
IOI CORPORATION BERHAD (9027-W)
(Incorporated in Malaysia)
Interim report for the financial period ended 30 June 2006
(The figures have not been audited)
12) Dividend
The Board has on 27 January 2006 declared an interim dividend of 60% or 30.0 sen per ordinary share of RM0.50 each less 28%
income tax in respect of the six months financial period ended 31 December 2005 (31 December 2004: 40% or 20.0 sen per
ordinary share of RM0.50 each less 28% income tax). The dividend was paid on 15 March 2006.
The Board now declares a second interim tax exempt dividend of 27% or 13.5 sen per ordinary share of RM0.50 each in respect
of the financial year ended 30 June 2006 (30 June 2005: second interim tax exempt dividend of 30% or 15.0 sen per ordinary
share of RM0.50 each).
The second interim dividend is payable on 28 September 2006 to shareholders whose names appear in the Record of Depositors of
the Company at the close of business on 15 September 2006.
A Depositor shall qualify for entitlement only in respect of :
a) Shares deposited into the Depositor’s Securities account before 12.30 p.m. on 13 September 2006 (in respect of shares which
are exempted from mandatory deposit);
b) Shares transferred into the Depositor’s Securities account before 4.00 p.m. on 15 September 2006 in respect of ordinary
transfers; and
c) Shares bought on Bursa Malaysia Securities Berhad on a cum entitlement basis according to the Rules of Bursa Malaysia
Securities Berhad.
The total dividend declared for the current financial year is 43.5 sen per ordinary share of RM0.50 each which comprises of 30.0
sen less 28% income tax and 13.5 sen tax exempt (30 June 2005: 35.0 sen per ordinary share of RM0.50 each which comprises of
20.0 sen less 28% income tax and 15.0 sen tax exempt).
- Page 27 -
IOI CORPORATION BERHAD (9027-W)
(Incorporated in Malaysia)
Interim report for the financial period ended 30 June 2006
(The figures have not been audited)
13) Earnings per Share
INDIVIDUAL QUARTER (Q4) CUMULATIVE QUARTER (12 Mths)
CURRENT YEAR PRECEDING YEAR CURRENT PRECEDING YEAR
QUARTER CORRESPONDING YEAR TO DATE CORRESPONDING
QUARTER PERIOD
RM'000 RM'000 RM'000 RM'000
a) Basic earnings per share
Net profit for the period 219,301 212,821 843,788 902,220
Weighted average number of ordinary 1,182,698 1,117,243 1,142,476 1,119,181
shares in issue ('000)
Basic earnings per share (sen) 18.54 19.05 73.86 80.61
b) Diluted earnings per share
Adjusted net profit for the period
Net profit for the period 219,301 212,821 843,788 902,220
Assumed exchange of USD310
million Zero Coupon Guaranteed
Exchangeable Bonds at beginning of
period
Net interest savings 4,316 - 24,070 -
Net foreign exchange differences
taken up (4,558) - (30,186) -
219,059 212,821 837,673 902,220
Adjusted weighted average number of
ordinary shares in issue ('000)
Weighted average number of
ordinary shares in issue 1,182,698 1,117,243 1,142,476 1,119,181
Assumed exchange of USD310
million Zero Coupon Guaranteed
Exchangeable Bonds at beginning of
period 63,114 - 86,283 -
Assumed exercise of Executive Share
Options at inception date / beginning
of period 3,051 - 1,080 993
1,248,864 1,117,243 1,229,838 1,120,174
Diluted earnings per share (sen) 17.54 19.05 68.11 80.54
By Order of the Board
Lee Ai Leng
Yap Chon Yoke
Company Secretaries
Putrajaya
16 August 2006
- Page 28 -
IOI CORPORATION BERHAD (9027-W)
(Incorporated in Malaysia)
Interim report for the financial period ended 30 June 2006
(The figures have not been audited)
Group Plantation Statistics
Planted Area
As At As At
6/30/2006 6/30/2005
Oil palm
Mature (hectares) 135,860 135,291
Total planted (hectares) 144,055 143,632
Rubber
Mature (hectares) 568 1,035
Total planted (hectares) 568 1,035
6/30/2006 6/30/2005
(12 months) (12 months)
Average Mature Area
Oil Palm (hectares) 136,455 132,679
Rubber (hectares) 619 1,054
Production
Oil Palm
FFB production (tonnes) 3,674,483 3,657,776
Yield per mature hectare (tonnes) 26.93 27.57
FFB processed (tonnes) 3,767,558 3,778,533
Crude palm oil production (tonnes) 805,627 815,790
Palm kernel production (tonnes) 786,118 192,446
Crude palm oil extraction rate (%) 21.38% 21.59%
Palm kernel extraction rate (%) 5.00% 5.09%
Rubber
Rubber production ('000kgs) 1,234 1,730
Yield per mature hectare (kgs) 1,993 1,641
Average Selling Price Realised
Oil palm
Crude palm oil (RM/tonne) 1,386 1,453
Palm kernel (RM/tonne) 928 1,005
Rubber
All grades average (Sen/kg) 523 488
- Page 41 -
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