1. SOUTHERN ACIDS (M) BERHAD
35TH ANNUAL
GENERAL MEETING
24 AUGUST 2016
SHAREHOLDERS
BRIEFING

2. Shareholders Briefing Information
This briefing is mainly the summary of the key highlights of the Chairman’s Statement and Management Discussion And Analysis as stated in the Company’s 2016 Annual Report (“2016 AR”). Information contained in this briefing is solely based on 2016 AR and all other information available from Bursa website.

3. Presentation Contents
Southern Acids (M) Berhad (“the Company or SAB”) & Its Subsidiaries (“Southern Acids”) Financial Highlights
Review Of Core Businesses
Prospects
Questions & Answers

4. SOUTHERN ACIDS
FY2016
FINANCIAL
HIGHLIGHTS

5. SELECTED FINANCIAL HIGHTLIGHTS - FY2016 Vs FY2015
FY2016 (RM’000)
FY2015 (RM’000)
Change
503,414
536,665
Revenue
6.2%
Profit before tax
36,916
43,691
15.5%
25,964
34,106
Profit for the year
23.9%
Earnings per share
18.2 sen
20.1 sen
9.5%
Dividend (net)
5.0 sen
No change
27.5%
24.9%
Dividend pay-out ratio
10.4%

6. SELECTED FINANCIAL HIGHLIGHTS - FY2016 Vs FY2015
FY2016 (RM’000)
FY2015 (RM’000)
Change
626,372
604,922
Total Assets
3.5%
Total Liabilities
67,854
65,847
3.0%
Net Current Assets
225,424
211,364
6.7%
Equity attributable to Shareholders of the Company
513,942
493,392
4.2%

7. Southern Acids Financial Results
FY2016
RM’000
FY2015
Variance %
Revenue
503,414
536,665
(33,251)
(6.2)
PBT
36,916
43,691
(6,775)
(15.5)
Highlights:-
Revenue was lower by 6.2% in FY2016 compared to FY2015; and
PBT was lower by 15.5% in FY2016 compared to FY2015.
In summary, Oleochemical and Healthcare Divisions achieved a higher PBT whereas Plantation & Milling reported a lower PBT in FY2016.
Profit before tax up mainly because of higher sales and better margin earned on sales recorded by the oleochemical and the plantation division.

8. REVIEW OF BUSINESS DIVISIONS
SOUTHERN ACIDS
FY2016
REVIEW OF BUSINESS DIVISIONS

9. Review of Oleochemical Division
FY2016
RM’000
FY2015
Variance %
Revenue
284,020
349,850
(65,830)
(18.8)
PBT
16,269
9,038
7,231
80.0
Highlights:-
The 18.8% lower in revenue was mainly due to 15.8% lower in sales volume. The lower demand from major importing countries has caused stiff competition in international market; and
Analysis of the RM7.2m increase in PBT:-
Operational profit; the efficient sourcing of raw material has cushioned the impact from lower sales. The division achieved a marginal increase of RM0.9m in PBT; and
Non-Operational profit; out of the RM7.2m, RM6.3m was contributed mainly by gain in forex (both realized and unrealized).

10. Prospects of Oleochemical Division
This division will remain to be challenging in FY2017 and it is expected to face the same uncontrollable factors as follow, amongst others:-
Economy situation of major importing countries which will determine the market demand and pricing;
Higher operating costs due to the increase in regulated price in Malaysia. For example, natural gas price and minimum wages;
Changes in Malaysia foreign labor policy;
Volatility in USD/MYR exchange rate; and
Volatility in CPO price.

11. Oleochemical Division’s Plan For FY2017
In view of the anticipated challenges in FY2017, the following are among the key identified measures to be taken:-
To implement cost optimization;
To increase sales to high margin market via more efficient marketing strategy; and
To look into automation processes to reduce dependency on workers and improve efficiency and productivity;
To look into the possibility of alternative fuel source to reduce the dependency on external energy supply; and
To manage the forex and commodity hedging more diligently.

12. Review of Plantation & Milling Division
FY2016
RM’000
FY2015
Variance %
Revenue
135,010
106,041
28,969
27.3
PBT
9,101
23,660
(14,559)
(61.5)
Highlights:-
The increase in revenue was mainly contributed from the new 60MT/hour palm oil mill (“POM”) commissioned in August 2015;
Despite higher revenue, operational profit was lower by RM14.6m was due to the following factors:-
The El Nino effect had severely affected the fresh fruit bunches (“FFB”) supply and its quality;
In view of the low FFB supply, the higher price for external outsourced FFB was higher; and
The average selling price (“ASP”) of CPO realized was lower compared to the ASP of CPO in FY2015.

13. Prospects Of Plantation & Milling Division
The performance of this division in FY2017 will be affected by the following factors, amongst others:-
Impact of post-El Nino on FFB production and its quality;
Changes in Indonesia’s regulated cost such as minimum wages (yearly affair) and export levy;
CPO selling price; and
Effectiveness on the implementation status of biodiesel mandate by Malaysia and Indonesia governments.

14. Plantation & Milling Division’s Plan For FY2017
In view of the anticipated challenges in FY2017, the following are among the key identified measures to be taken:-
To implement cost optimization;
To purchase external FFB more competitively;
To look into mechanization for plantation operations in order to reduce the dependency on workers and to improve efficiency and productivity; and
To look into the prospect of increasing brown field estate.

15. Review of Healthcare Division
FY2016
RM’000
FY2015
Variance %
Revenue
71,257
66,761
4,496
6.7
PBT
13,529
9,306
4,223
45.4
Highlights:-
The 6.7% higher in revenue was contributed by 11.0% higher in average revenue per patient (“ARPP”); and
Analysis of the RM4.2m increase in PBT:-
Operational profit; higher ARPP recorded in FY2016 contributed additional PBT of RM2.7m compared to PBT in FY2015; and
Non-Operational profit; RM1.5m was contributed mainly from the reversal of accounting provisions which no longer required in FY2016.

16. Prospects of Healthcare Division
The performance of this division in FY2017 may be affected by the following factors, amongst others:-
Competition from nearby hospitals;
Recruiting and training the key human resources; and
Economic outlook that may affect patients spending behavior.

17. Healthcare Division’s Plan For FY2017
The main objective of this division is to at least maintain its market share and improve its bottom line for FY2017. Among the identified measures to be taken are as follows:-
Cost optimization;
To enhance branding and awareness via strategic marketing activities;
To continue our staff retention program; and
To improve service delivery via gradual upgrading program.

18. Prospects of Southern Acids
Based on the prospects commentary, the performance of Southern Acids will remain challenging in FY2017.

19. SOUTHERN ACIDS
FY2016
QUESTIONS
& ANSWERS