New Britain Palm Oil Ltd
New Britain Palm Oil Ltd
New Britain Palm Oil Ltd
Preliminary Results FY2013
February 2014
Facilities on New Britain
New Britain Palm Oil Ltd
Plantations
Land bank 134,600 ha
c.80,000 hectares of NBPOL managed oil palm
plantations
More than 42,500 mature hectares cultivated
by smallholders supplying NBPOL
All plantations (including smallholders) covered
by the same RSPO certificate
Milling and Refining
12 oil mills in Group
2 refineries
Special fractionation plant completed for
Ferrero
Bakery fats plant in the UK Infrastructure
c.80,000 tonnes / oil storage capacity
Trucking transport fleet
Housing
Two methane capture facilities
Export terminals
Seeds
NBPOL is one of the world’s largest
private seed producers
Highly respected plant breeding
research and development
Important for success of wider business
Cattle
9,282 hectares of cattle grazing land
Integrated with the palm oil plantation
>20,000 head of cattle
RAIL
1 sugar mill
1 ethanol plant
7,718 hectares sugar cane
Introduction NBPOL Today
5
Revenue contribution
Palm Oil Sales
Seed Sales
Cattle Production
Sugar Sales
•
New Britain Palm Oil Ltd
SOLOMON ISLANDS
NEW IRELAND Main area of
NBPOL operation 37,000 hectares oil palm
PAPUANEWGUINEA Lae •
RAIL
- acquired in Oct 2008 11,500 hectares oil palm 7,700 hectares sugar cane 8,888 hectares pasture
•
KPOL, Milne Bay
- acquired in April 2010 10,700 hectares oil palm
•
KPOL, Higaturu
- acquired in April 2010 8,800 hectares oil palm
GPPOL
- acquired in April 2005 6,300 hectares oil palm
• KPOL, Poliamba
- acquired in April 2010 5,600 hectares oil palm Kimbe
NEWBRITAIN
New Britain Oils
Commissioned in March 2010, the first fully segregated and traceable sustainable palm oil refinery in the UK. Bakery fats plant now operational
•
c. 80,000 total hectares of managed
oil palm plantations
An additional c.42,500 hectares
cultivated by smallholders
Orangerie Bay Plantations
- acquired in July 2012
c. 5,350 hectares to be planted
with oil palm
Introduction NBPOL Locations
6
New Britain Palm Oil Ltd
Challenging period for the Group
Profitability compared to FY2012 impacted by several principal factors:
• Lower average selling prices for crude palm oil and palm kernel oil
• Lower production mainly due to heavy rainfall early in the year, the Group’s accelerated replanting of over 6,500Ha of aged
palms at Kula plantations during 2012 and 2013, and biological yield declines in the second half of the year
• Net foreign exchange losses of US$17.5m comprised primarily of non-cash currency adjustments on the Group’s USD
denominated loans
Significant investment in prior years enabled the Group to scale back its capex programme in FY2013 to reflect market conditions
Cash generation remained solid enabling a 16.6% reduction in overall Group gearing
Devaluation of the PNG Kina by approximately 17% during the year reduced cash costs of production
Introduction Preliminary Results FY2013
7
Highlights - 2013 New Britain Palm Oil Ltd
Year Ended 31 December 2013 2012
FFB processed (tonnes) 2,085,670 2,273,081
CPO / PKO produced (tonnes) 507,856 545,207
Average CPO price achieved ($ / tonne) 868 1,062
Revenue ($m) 558.7 677.0
EBITDA* ($m) 96.8 162.1
Profit Before Tax* ($m) 17.3 81.6
Profit Before Tax* ($m)
(excl. non-cash FX losses on USD loans) 40.5 72.5
Earnings Per Share* (US¢) 7.4 36.0
*Excluding IAS 41 adjustments. Note: 2013 figures unaudited. 8
New Britain Palm Oil Ltd
Highlights - 2013
Processed 1,496,146 tonnes of FFB from Group estates (2012: 1,588,486)
Processed 589,524 tonnes of FFB from smallholders (2012: 684,594), representing 28.3% of total Group FFB processed
(2012: 30.2%)
Palm product extraction rates decreased to 27.50% (2012: 27.59%)
Crude palm oil extraction rate decreased to 22.15% (2012: 22.35%)
New kernel crushing plants at the KPOL sites contributed to Group PKO production of 45,796 tonnes, an increase of 22.9%
on 2012
Seed sales of 6.9m seeds, a decrease of 53.4% on 2012
Sugar revenues of US$46.0m, a decrease of 17.7% on 2012
The Liverpool refinery recorded strong EBITDA growth year-on-year driven by gross margin expansion and sales volume
increase
Continued progress on Group’s cost optimisation and efficiency review, achieving the targeted circa $35m of year-on-year
savings
Total Group borrowings decreased 16.6% to US$272.6m (2012: US$326.7m)
Interim dividend of $0.10 per share was paid in November 2013
9
300
400
500
600
700
800
900
1000
600
700
800
900
1000
1100
1200
1300
1400
1500
1600
NB
PO
.LN
(p
)
CIF
Pri
ces
(US$
/MT)
CPO CIF (US$/MT) CPKO CIF (US$/MT) NBPO.LN (GBP)
New Britain Palm Oil Ltd
Price Performance NBPOL share price, CPO, PKO
Global palm oil prices traded in a range between US$800 and
US$900/tonne for most of 2013, averaging $853 versus $1,001
for 2012
• Palm prices started the year negatively reflecting the
overhang of palm oil stocks in Malaysia and Indonesia
• Some improvement was seen during the first half of the
year as stock levels decreased, but the price retraced to a
low of $785/tonne as Malaysia and Indonesia entered
their peak production period
• Prices ended the year on a positive note reaching a high
of $935/tonne in November following a sharp reduction in
inventory levels and strong demand, driven partly by
biodiesel usage
A similar trend was seen in PKO prices for most of the year
• PKO prices averaged US$900/tonne in 2013 (versus
US$1,108/tonne in 2012)
• PKO averaged a premium of 5% over CPO during 2013
PKO and other lauric oil prices increased significantly late in 2013,
driven primarily by the expected supply concerns following
typhoon Haiyan in the Philippines (a major producer of coconut oil)
CPO is currently trading around US$930/tonne, while PKO is
trading around US$1,300/tonne
NBPOL Share Price and Palm Product Prices
Palm Oil vs. Soyoil; PKO vs. CNO
Source: Bloomberg, Reuters
-200
-100
0
100
200
300
400
US$
/MT
SBO FOB Arg - RBD Olein spread CNO-PKO CIF RDM
10
85.6 61.6
120.0
120.0
49.1
41.9
47.0
35.9
25.0
13.2
0
50
100
150
200
250
300
350
2012 2013
Long Term Debt - amortising Long Term Debt - non-amortising Short Term Financing - Liverpool RAMU Short Term Trade Finance
New Britain Palm Oil Ltd
Balance Sheet - 2013
Total Debt: US$272.6m
Total Debt: US$326.7m
(USDm)
Reduction in total borrowings during 2013
11
£(10.00)
£-
£10.00
£20.00
£30.00
£40.00
£50.00
0%
50%
100%
150%
200%
250%
Q4'10 Q1'11 Q2'11 Q3'11 Q4'11 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13 Q4'13
New Britain Palm Oil Ltd
EBITDA positive and strong EBITDA growth year-on-year,
driven by gross margin expansion and sales volume
increase
Continued growth in packed customer numbers
A second deodoriser was successfully installed and
commissioned during the first half of the year, increasing
nameplate capacity to 300,000 MT per annum
Significant further upside potential on the bakery products
business
• In-house test bakery opened to ensure our
products meet exacting customer requirements
• New products have also been successfully
developed
Liverpool Refinery Quarterly % Volume Increase (versus Q3 2010)
KEY FACTS
The first palm oil provider able to guarantee fully
traceable, sustainable palm oil direct from the
plantation to the EU consumer
Key contracts with well known UK and EU brands
Captures greater margin share for NBPOL
World’s first dedicated sustainable bakery
foodstuffs production facility operational since
2012
Liverpool Refinery Rolling 12 Month EBITDA/MT
Source: Unaudited management figures
New Britain Oils Liverpool Refinery
12
New Britain Palm Oil Ltd
Corporate Events
NBPOL entered into a ground-breaking agreement with Olenex C.V. (a joint venture between Archer Daniels Midland Company (“ADM”)
and Wilmar) to supply ADM and Wilmar with fully traceable, certified sustainable palm oil (refer to slide 23 for further details)
The Group entered into a joint venture with SIPEF N.V. and BioSing to develop high yielding F1 hybrid oil palms
• JV aims to achieve significant yield and productivity enhancements for the palm oil industry
• An F1 hybrid variety is the first generation offspring of two distinctly different and genetically uniform parents, each with identical
sets of chromosomes
• This breeding technology has the potential to at least double conventional palm oil yields per unit of area (based both on the
historic yields achieved by other F1 hybrid crops such as corn (maize), and on oil palm's estimated physiological yield potential)
13
New Britain Palm Oil Ltd
Background
In July 2013, Kulim (Malaysia) Berhad ("Kulim"), NBPOL's largest shareholder, launched an unsolicited conditional partial cash offer
for up to 20% of the issued shares of NBPOL at a price of GBP 5.50 per share (PGK 19.36)
If fully accepted, the Offer would have resulted in Kulim’s shareholding increasing from 48.97% to 68.97%
The NBPOL Board established an independent board committee to assess the merits of the Offer
The Independent Directors of NBPOL formed the view that the negative aspects of the Offer outweighed any advantages which the
Offer provided. Accordingly, the Independent Directors of NBPOL recommended to shareholders that the Offer be rejected
The PNG Minister for Trade, Commerce and Industry subsequently introduced an amendment to the PNG Takeovers Code
enabling the PNG Securities Commission to prevent the takeover of a Code company where it is deemed contrary to PNG’s
national interests
The Securities Commission exercised these new powers to issue orders preventing Kulim from proceeding with the Offer and the
Offer lapsed following the dismissal of a court application by Kulim to revoke the orders
Update
No further discussions have been held between Kulim and the Board with respect to the Offer or any future offer for the company
The Board remains committed to ensuring that proper standards of corporate governance and investor protection are adhered to
• An additional Independent Non-Executive Director, Mr Ernie Gangloff, was added to the Board earlier this year
Following the lapse of the Offer, NBPOL initiated discussions with the PNG Government to seek to address the uncertainty created
by the changes to PNG Takeovers Code
• The PNG Government has acknowledged the potential for the new rules to discourage foreign investment in PNG and we
understand that it is intending to release guidelines on the application of the new rules in the near future
Corporate Events Kulim Partial Offer
14
New Britain Palm Oil Ltd
Outlook
While palm oil inventories remain relatively tight, ample supply of other vegetable oils (particularly soybean oil) is expected to limit
any upward movement of palm oil prices in the near term
• At the end of 2013 the Group had forward sales of c. 76,000 tonnes of 2014 CPO production made at an average price of
$922/tonne (as at 21 February 2014 forward sales were c. 121,000 tonnes at an average of $933/tonne)
Expectation of normalised FFB collection, production and extraction in 2014
• FFB production in January/February 2014 is ahead of 2013 despite another wet start to the year
Work to commence at Orangerie Bay on site infrastructure and the nursery in 2014
Significant cost base reductions achieved through management initiatives and the circa 17% devaluation of the PNG Kina in 2013
should further contribute to improved operating margins this year
15
New Britain Palm Oil Ltd
Strategic Update NBPOL – A Leader in Sustainable & Traceable Palm Oil
9.0%
10.0%
11.0%
12.0%
13.0%
14.0%
15.0%
2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14
Major Vegetable Oil Palm Oil
1,200,000
1,400,000
1,600,000
1,800,000
2,000,000
2,200,000
2,400,000
2,600,000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
New Britain Palm Oil Ltd
World vegetable oil stocks remained relatively flat during
the 2012/13 marketing year
• Marginal increase of 2.6% to 17.94 million tonnes
(versus 17.49 million tonnes in 2011/12)
• Stocks-to-use ratio decreased slightly from
11.44% to 11.35%
According to MPOB, Malaysian palm oil inventories
tightened significantly during 2013
• Stocks decreased 24.3% Y-o-Y to close at 1.99
million tonnes (versus a record 2.63 million
tonnes in 2012)
• Reduction driven by strong export demand
(+3.1%) and low imports (-60.1%)
• Increase in exports of Malaysian palm oil to China
(+5.6%) and the EU (+5.2%)
• January 2014 closing stocks were 1.94 million
tonnes (-24.5% Y-o-Y)
While GAPKI does not publish official statistics for the
Indonesian palm oil industry, it is estimated that closing
stocks in Indonesia decreased during 2013, ending the
year at c. 2 million tonnes (Source: Bloomberg survey)
• January 2014 closing stocks estimated at 1.86
million tonnes
Global Vegetable Oil and Palm Oil Stocks-to-Use Ratio
Malaysian Palm Oil Ending Stocks
Source: USDA, MPOB
Global Vegetable Oil Market Overview
2012
2009
2011
2013
2010
USDA Forecast
(updated Feb 2014)
17
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
2006 2007 2008 2009 2010 2011 2012 2013
Mature Ha ('000) (LHS) Y-o-Y Growth % (RHS)
New Britain Palm Oil Ltd
Production growth in the major palm oil producing
countries was lower than market expectations
• Malaysia recorded record CPO production of
19.1 million tonnes in 2013, representing a
modest +2.3% growth Y-o-Y, driven primarily
by new areas coming into production in
Sarawak
• Indonesian production for 2013 estimated at
c. 26 million tonnes (-1.9% Y-o-Y), the first
yearly decrease in production since 1998
(Source: GAPKI, Bloomberg)
• Clear biological yield reduction across the
SEA region due to yield cycle factors – may
continue into 2014
Heavy supply of alternative vegetable oils during
2013
• Negatively impacted prices during the year:
soyoil (-20.0%), rapeoil (-19.4%) and sunoil
(-24.1%)
• CPO discount to SBO narrowed from
approximately US$300/tonne to
US$60/tonne during 2013
Limited expansion of planted area in major PO
producing countries
CPO, SBO and Rapeseed Prices (US$/MT)
Growth in Mature Hectarage – Malaysia and Indonesia
Source: MPOB, GAPKI, broker research
Global Vegetable Oil Market Production / Supply
Malaysia
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
20.0%
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
2006 2007 2008 2009 2010 2011 2012 2013
Mature Ha ('000) (LHS) Y-o-Y Growth % (RHS)
Indonesia
700
800
900
1000
1100
1200
1300
CPO CIF RDM SBO DEGUM FOB EX-MILL EU RAPEOIL FOB EX-MILL DUTCH/EU
18
0
20
40
60
80
100
120
140
160
180
0
1
2
3
4
5
6
7
8
9
00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13
To
tal
veg
oil
co
ns
um
pti
on
(M
T, m
)
Y-o
n-Y
ch
an
ge in
co
ns
um
pti
on
(M
T, m
)
Y-on-Y change F&F use Y-on-Y change in Industrial use
Total Consumption (MT, m)
-
100
200
300
400
500
600
700
800
900
1,000
2006 2007 2008 2009 2010 2011 2012 2013
Malaysia Indonesia
New Britain Palm Oil Ltd
Demand growth remained strong in 2013 according to USDA
figures (2012/13 marketing year)
• Palm oil consumption growth was 6.9%
• Total vegetable oil consumption growth was 3.4%,
driven by growth in both Food & Feed and Industrial use
Structural shift in incremental demand for palm oil
• Local consumption in Malaysia and Indonesia
increasingly important
• Y-o-Y import growth from EU (+10.6%), India (+11.2%)
and US (+24.5%) remains healthy, though some data
suggests China demand has stagnated
Biodiesel usage is expected to grow significantly
• Estimated that Indonesia’s B10 mandate is equivalent to
5-7% of global CPO production
In November 2013 the US FDA made a preliminary
determination that partially hydrogenated oils (e.g. PH soyoil) –
a major source of trans fat in American diets – is no longer
"generally recognized as safe“
Outlook for palm oil demand remains robust with the
strengthening global economy and mandatory biodiesel
implementation by the world’s two biggest PO producers
Indonesia and Malaysia’s Biodiesel Consumption (‘000 MT)
Vegetable Oil Consumption
Source: USDA, broker research
Global Vegetable Oil Market Consumption / Demand
19
-
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
New Britain Palm Oil Ltd
Accelerated replanting programme in the Kula estates has been
substantially completed resulting in a higher than usual level of
immature oil palm hectarage across the Group
• Around 13.5% of planted area is currently immature
• Approximately 25% of the acquired KPOL mature
hectarage (circa 6,500 hectares) has been replanted
since 2011
The Group also has approximately 11,000 Ha of cultivatable
land under lease which will be developed over the next few
years
• Much of the sustainability and environmental work has
been completed at Orangerie Bay (including the Social
Impact Assessment, Environmental Impact Assessment
and the High Conservation Value assessment)
• Planning underway to improve road access and establish
a nursery in 2014
At ‘steady-state’ the Group’s current land bank should see
approximately 86,000 Ha of mature oil palm in production, an
increase of c. 25% from today’s level
In addition, the Group is currently exploring a number of other
opportunities within PNG and the broader South East Asian
region to significantly expand the Group’s land bank
NBPOL Production Outlook Hectarage
Group Estates – Total Planted Oil Palm (Ha)
Group Estates – Utilisation of Plantable Area Palm Oil (Ha)
66,746 69,067
73,000 77,000
11,597 10,817 9,000 7,000
12,000 11,000 9,000
7,000
-
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
2012 2013 2014 2015
Mature Immature Cultivatable Land
20
-
500,000
1,000,000
1,500,000
2,000,000
2,500,000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
New Britain Palm Oil Ltd
Production in 2012 and 2013 was negatively impacted by
exceptionally heavy rainfall, lower mature hectarage and
biological yield declines in the second half of 2013
• Smallholder production was particularly impacted in
2013, down c.14% year-on-year
• Lower palm prices disincentivise smallholders from
harvesting fruit
• Smallholders are typically more exposed to biological
yield cycles due to lower fertiliser application
Expectation of normalised FFB collection, production and
extraction in 2014
Subject to favourable weather conditions in 2014, the Group is
targeting:
• FFB production (Group estates and smallholders) in the
range of 2.25 million – 2.40 million MT
• CPO extraction rate of 22.15 – 22.55%
Assuming the above FFB and OER targets are achieved (at
midpoints), the Group expects CPO and PKO production of
approximately 565,000 MT in 2014
NBPOL Production Outlook FFB and Oil Production
FFB Production (MT)
CPO and PKO Production
-
100,000
200,000
300,000
400,000
500,000
600,000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
21
New Britain Palm Oil Ltd
NBPOL Cost of Production Outlook
Group’s cost optimisation and efficiency review achieved a circa
$35m year-on-year saving
• Most of these cost savings should be maintained on an
ongoing basis
NBPOL’s fertiliser supply for 2014 was 100% contracted in October
2013
• Global fertiliser prices fell significantly during the first three
quarters of 2013, with some recovery seen late in the year
• NBPOL’s fertiliser costs in 2014 should be c. 10% per MT
lower year-on-year
• Fertiliser costs constitute approximately 15-20% of the
Group’s cash cost of production (excluding the cost of
purchasing smallholder FFB)
During 2013 the PNG Kina depreciated by c. 17% against the USD
• Assuming the Kina remains at current levels, the full effects of
the Kina depreciation will be seen in 2014 due the lag effect
on the P&L
• Kina denominated costs (such as labour costs) constitute
approximately 40% of the Group’s cost base
• Non-cash currency adjustments on the Group’s USD loans
and debtors was US$23.2m in 2013
Freight and fuel costs (approximately 25-30% of the Group’s cost
base) are expected to remain relatively flat in 2014
250
300
350
400
450
500
550
Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13
MOP DAP Urea
-23.7%
-15.9%
-16.1%
Fertiliser Prices (USD/MT)
Source: World Bank / Indexmundi
PGK denominated
costs (e.g. labour)
40%
Fertiliser 20%
Freight & Fuel 30%
Other 10%
Cost Analysis (approximate cash cost excluding FFB purchases)
22
Hamburg
Brake
Rotterdam
Liverpool
London
Papua New Guinea
New Britain Palm Oil Ltd
New Britain Oils Olenex Supply Agreement
Olenex: Access to a Powerful Marketing Platform in Europe
Olenex C.V. was established in 2012 for the sale
and marketing of refined vegetable oils and fats in
the EEA and Switzerland
Agreement will ensure unprecedented supply chain
co-operation and offer the widest range of palm oil
fractions and locations in Europe to date
Covers the supply of oil to Wilmar's Brake facility in
Germany, as well as the supply of oil from NBPOL’s
Liverpool refinery to ADM's Pura Food operations in
London
Oil production from these facilities, as well as from
ADM's operations in Hamburg, will be marketed and
sold by Olenex throughout Europe
The arrangement is extremely positive for capacity
utilisation and continued volume growth at the
Liverpool refinery
NBPOL entered into a ground-breaking agreement with Olenex C.V. (a joint venture between ADM and Wilmar) to supply ADM
and Wilmar with fully traceable, certified sustainable palm oil
23
New Britain Palm Oil Ltd
Sustainable Agriculture Our Approach: Sustaining People, Planet and Prosperity
Corporate and Product Integrity
RSPO certification and responsible supply
chains
Traceability
Transparency and anti-corruption
Report on Social, Labour and Environmental
Performance
Building 100% segregated, traceable and certified sustainable supply chains is core to our business philosophy
Sustainability certification is not a ‘cost of doing business’ – rather a way to differentiate our business in a commoditised industry
and satisfy customer requirements
NBPOL has a long history of industry leadership and innovation in sustainable palm oil
Active engagement with all stakeholder groups: employees, customary landowners, smallholders, community groups,
customers/consumer groups, investors, Governments, NGOs
Committed to achieving tangible objectives, not just policies – a ‘Principle-to-Practice’ approach
Partnerships with Communities
Free, Prior and Informed Consent (FPIC) of
indigenous peoples and local communities
Food security
Effective conflict resolution
Social conditions
Workers’ rights
Support of palm oil smallholders
Environmental Responsibility
Breaking the link between palm oil expansion
and deforestation
Greenhouse gas (GHG) accountability
Protect and conserve wildlife
Pesticides use minimisation and chemical
fertiliser
Water accountability
GMOs prohibition
Peat land planting prohibition
NBPOL APPROACH TO SUSTAINABLE AGRICULTURE
24
New Britain Palm Oil Ltd
Sustainable Agriculture NBPOL supply chain
A unique supply chain – fully integrated and low cost…
…delivering 100% segregated, traceable and certified sustainable food ingredients
25
New Britain Palm Oil Ltd
Sustainable Agriculture Raising the bar for palm oil sustainability
In 2013 NBPOL became a founding member of the Palm Oil
Innovation Group (POIG) , an initiative supported by organisations
such as Greenpeace, WWF and Rainforest Action Network
POIG has developed a Charter which builds on and goes beyond the
RSPO certification scheme
• POIG’s main aim is to break the link between responsible
palm oil and deforestation
Amongst other things, the POIG Charter includes:
• a complete ban on peat development
• a requirement for strengthened community engagement
• the implementation of high carbon stock approaches
• a requirement for full traceability in the supply chain
The POIG Charter also requires members to publish regular
sustainability and carbon reports
NBPOL is committed to completing trial audits against the POIG
Charter on all sites by year end 2014
PALM OIL INNOVATION GROUP (POIG)
If there is one lesson we have learned in our journey to RSPO certification, it is the value of stakeholder
engagement at all levels of operations
26
New Britain Palm Oil Ltd
Sustainable Agriculture Leadership in forest protection and disclosure
Launched the Group’s new Forest Policy in June 2013
• Group commitment to low carbon stock planting
• Seeks to provide for a balance between deforestation and the right to
social development through NBPOL’s ‘One Hour Principle’
• Policy endorsed by Greenpeace
NBPOL actively seeks grasslands and low carbon areas for new development
Partnership with The Forest Trust to assess and define High Carbon Stock forest
areas within Group plantations
For the second consecutive year, NBPOL was named sector leader for
agricultural products in the CDP’s 2013 annual forest footprint benchmark
• The CDP forest programme is an investor-led initiative mapping
companies’ exposure to and policies on deforestation.
2012 2013
THE ONE HOUR PRINCIPLE
A Community Needs Assessment that
uses three pillars of socially
responsible development based on
NBPOL’s own research as to what
can be achieved with investment in
rural development
The three pillars are based on The
One Hour Principle:
1. Access to 20 litres of tap fed
potable water within one
hour’s walk
2. Access to a medical health
post within one hour’s walk
3. Access to a primary school
within one hour’s walk
The three social pillars will be
considered in the HCS land use
decision making process for new
developments, to ensure NBPOL is
meeting community needs while not
causing deforestation
27
New Britain Palm Oil Ltd
Sustainable Agriculture Carbon reduction
No burn policy (since 1967) and no planting on peat land
Detailed strategy to reduce the Group’s carbon footprint and
achieve the ‘Zero Net GHG Emissions’ commitment
Active planting on grasslands and scrub (net sequestration)
• Oil palm sequesters carbon from the environment
and locks it up in the biomass of trunk, fruit bunches
and fronds
• Total standing carbon contained in palm trees in
West New Britain is calculated to be 80.31 tonnes of
carbon per hectare at 21 years
• On average, oil palms in West New Britain add 4.06
tonnes of carbon per hectare per year producing a
time averaged sequestration rate of 14.89 t CO2eq
/ha/year
Two methane capture projects have been commissioned
and further internal power generation capacity is in
preliminary development stages
NBPOL also operates a 5MW biomass power plant at
Kumbango reducing diesel requirements at this site by ~1
million litres p.a.
Methane Capture
Carbon Analysis: Sources of emissions at NBPOL
Land clearing 66%
Planting on peat 0.4%
Palm Oil Mill Effluent
26%
Nitrogenous fertiliser
3%
Mature fertiliser transport
3%
Fuel in transport
1% Mill diesel use
0.6%
28
New Britain Palm Oil Ltd
Sustainable Agriculture Partnerships with communities
Free, Prior and Informed Consent (FPIC) of indigenous peoples and local
communities
• Majority of the Group’s land bank is secured via lease-lease-back
arrangements
• FPIC process typically takes 2-5 years
Social conditions
• Housing provided for approximately 80,000 local people (employees
and family members)
• Group operates 6 health centres and 53 clinics with 130 health staff
• Initiatives to reduce HIV and malaria
Support of palm oil smallholders
• Important component of the Group’s total FFB production (~30%)
• Smallholders provided with seedlings, tools and fertilizer
Workers’ rights
Food security
Effective conflict resolution
Human rights charter
29
-50,000
50,000
150,000
250,000
350,000
450,000
2010 2011 2012 2013
CPO PKO Refined
New Britain Palm Oil Ltd
Sustainable Agriculture Consumer trends
NBPOL has long believed in the commercial benefits of positioning
the company as a responsible producer of sustainable palm oil
We have invested heavily over the years in developing a fully
integrated supply chain delivering 100% segregated, traceable and
certified sustainable palm oil products and food ingredients
The sustainability movement in the global palm oil industry has
generated significant momentum in recent times
• Retailers taking the issue particularly seriously (for many their
2015 deadlines are looming)
• Increasing concern about the need to go beyond RSPO and
make “deforestation-free” claims
NBPOL is now well positioned to proactively work with global food
manufacturers and other customers to achieve their stated
sustainability goals/commitments
Global demand for CSPO continues to grow, albeit from a low base
Both RSPO and CPET data suggest that customers are moving away
from GreenPalm certificates to physical oil supply
NBPO’s own sales data shows a clear trend towards physical CSPO
(though at this stage Mass Balance rather than Segregated)
• The Group’s ability to deliver certified sustainable oil to its
customers is worth a significant amount per year in
incremental revenue
-
1,000,000
2,000,000
3,000,000
4,000,000
2009 2010 2011 2012 2013
Segregation and Mass Balance Book & Claim (GreenPalm Certificates)
-
50,000
100,000
150,000
200,000
2009 2010 2011 2012
Segregation and Mass Balance Book & Claim (GreenPalm Certificates)
GLOBAL CSPO Sales (MT)
Source: RSPO
Source: CPET
UK CSPO Imports (MT)
NBPOL CSPO Sales Exports (MT)
+19% Y-o-Y
+58% Y-o-Y
+50% Y-o-Y
+18% Y-o-Y
+104% Y-o-Y
+3% Y-o-Y
+21% Y-o-Y
-17% Y-o-Y
+28.7% Y-o-Y
+70.6% Y-o-Y
+45.4% Y-o-Y
30
New Britain Palm Oil Ltd
Appendix
New Britain Palm Oil Ltd
First palm oil company to include all of its smallholders in the RSPO
certification process
NBPOL was instrumental in developing the Roundtable on Sustainable Palm
Oil and continues to play a pivotal role as an executive board member
For the second consecutive year, NBPOL was named sector leader for
agricultural products in the CDP’s 2013 annual forest footprint benchmark
World Economic Forum (WEF) identified NBPOL as one of 16 global
sustainability champions of 2011 and in 2012 invited NBPOL to join the Global
Agenda Council on Biodiversity and Natural Capital
In 2011 NBPO published its inaugural Carbon Footprint Report outlining its
“zero net carbon emissions” commitment (the first ever LCA Carbon report in
the industry)
NBPOL was named the 2013 inaugural Good Citizen by the PNG Department
of Labor & Industrial Relations
Agricultural Products
New Britain Palm Oil Ltd
Food and Staples Retailing
Sainsbury’s Supermarkets Ltd
General Retailers
Marks and Spencer plc
Media
British Sky Broadcasting
Oil & Gas
Greenergy International Ltd.
Packaged Foods & Meats
Marfrig Group and Unilever
Paper & Forest Products
Mondi PLC
Personal & Household Products
L’Oréal
Textiles, Apparel & Luxury Goods
PrimeAsia Leather Corporation
Travel & Leisure
British Airways
Utilities
Drax Group
Forest Footprint Disclosure – Leaders by Sector
Sustainable Agriculture Achievements
2012 2013
“[NBPO] has developed new ways to
engage small farmers, who provide one-
third of the company’s supply. These close
ties have not only helped to reduce
poverty, but also enabled the company to
develop one of the world’s first fully
traceable palm oil supply chains.”
World Economic Forum, September 2011
“NBPOL is unquestionably one of the
forerunners in the RSPO and can serve as
a positive example for other plantation
companies.”
World Wide Fund for Nature (WWF), 2009
32
New Britain Palm Oil Ltd
NBOL is an established player in biscuits, confectionary, ready
meals, fish & chip trade, industrial bakery sectors
Strong mix of grades available: palm / olein / stearin / palm-mid-
fraction / PKO
Broad range of proven product categories: bulk oils / bulk blends
(with or without liquid oils) / boxed products for manufacturers /
boxed and extruded industrial margarines
Opportunities to extend our reach into Eire & mainland Europe for
packed products from Liverpool
Example foods converted :
• morning goods
• pastries
• cakes
• croutons
• Christmas puddings
• pet food
• dairy food
• ice cream
New Britain Oils Liverpool Refinery
• icings
• garlic bread
• cereal bars
• caramel
• roast potatoes
• Yorkshire puddings
• sweets
33
New Britain Palm Oil Ltd
Special Projects: Ramu Irrigation Project
Located in Ramu Valley where oil
palm production is impacted by a
pronounced dry season from May to
October and areas of low water
holding capability
Project was commenced in 2009 to
assess the feasibility of oil palm
irrigation in the area
First oil palm irrigation system in
PNG and possibly the largest
irrigation system in the Asia Pacific
region
440km of piping, 3 multistage turbine
pumps and 38,000 sprinklers
installed
At peak times the project is irrigating
24 hours per day, 7 days per week,
pumping c.400 million litres of water
per week
1st Phase covers 620 Ha; 2nd Phase
a further 500 Ha (subject to results)
Potential to ‘unlock’ significant
grassland areas in Ramu Valley
Grassland and pasture available for planting in the Ramu Valley, significant expansion potential
Irrigation pump station Specialised automatic cleaning filters 38,000 sprinklers installed
34
February 2014
Disclaimer
This document, which is personal to the recipient (“Recipient”), has been prepared by New Britain Palm Oil Limited (the “Company”). This document does not constitute
or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for any securities, nor shall any part of it nor the fact of its
distribution form part of or be relied on in connection with any contract or investment decision relating thereto, nor does it constitute a recommendation regarding the
securities of the Company or any other entity. Prospective investors are required to make their own independent investigations and appraisals before taking any
investment decision. In making this document available to the Recipient the Company is not agreeing to take or refrain from taking any action in future or to undertake, or
cease to undertake, any activity. Any recipient who is in any doubt about the matters referred to herein should take advice from an authorised person specialising in
advising on matters of this kind.
No representation or warranty, express or implied, is given by or on behalf of the Company or any of such persons’ directors, officers or employees or any other person as
to the accuracy, fairness of the presentation, completeness of the information or opinions contained in this document. No liability whatsoever is accepted by the Company
or any of such persons’ members, directors, officers or employees nor any other person for any loss howsoever arising, directly or indirectly, from any use of such
information or opinions or otherwise arising in connection therewith.
This document may not be reproduced, copied, redistributed or passed on, directly or indirectly, whether in hard copy or by email, to any other person or published, in
whole or in part, for any purpose. This presentation is not directed to, or intended for distribution to or use by, any person or entity that is a citizen or resident of, or located
in, any locality, state, country or any jurisdiction where such distribution or use would be contrary to law or regulation or which would require any registration or licensing
within such jurisdiction.
Neither this document nor any copy of it may be taken or transmitted into the United States of America, its territories or possessions or distributed, directly or indirectly, in
the United States of America, its territories or possessions where to do so would contravene any law or regulation which would require any registration or licensing within
such jurisdiction. Neither this document nor any copy of it may be taken or transmitted into Canada, Australia or Japan or to Canadian, Australian or Japanese persons or
to any securities analyst or other person in any of those jurisdictions. Any failure to comply with this restriction may constitute a violation of United States, Canadian,
Australian or Japanese securities law. The distribution of this document in other jurisdictions may be restricted by law and persons into whose possession this document
comes should inform themselves about, and observe, any such restrictions.
Certain statements, beliefs and opinions in this document are forward-looking, which include all statements other than statements of historical facts, including, without
limitation, any statements preceded by, followed by or including the words “targets,” “believes,” “expects,” “aims,” “intends,” “may,” “anticipates,” “would,” “could” or similar
expressions or the negative thereof. These statements reflect the Company’s or, as appropriate, the Company’s directors’ current expectations and projections about
future events. By their nature, forward-looking statements involve a number of risks, uncertainties and assumptions that could cause actual results or events to differ
materially from those expressed or implied by the forward-looking statements. These risks, uncertainties and assumptions could adversely affect the outcome and
financial effects of the plans and events described herein. Such forward-looking statements are based on numerous assumptions regarding present and future business
strategies. Forward-looking statements contained in this document regarding past trends or activities should not be taken as a representation that such trends or activities
will continue in the future. The Company does not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information,
future events or otherwise. You should not place undue reliance on forward looking statements, which speak only as of the date of this document.
35
New Britain Palm Oil Ltd
Phone: +44 (0)20 7472 5936
www.nbpol.com.pg
New Britain Palm Oil Ltd