03 Financial Performance POCE saw a decline in performance with both revenue and PBT decreasing by 7.3% to RM600.49 million and 74.1% to RM11.74 million respectively. The positive contribution from the pick-up in CE project rollouts was offset by the poor revenue contribution from the palm oil activities. The PBT was severely affected by the decline in CPO prices, high agriculture input cost and the high raw material cost for CE projects. Detailed insights into Boilermech’s performance review can be read in their 2022/2023 Annual Report at the following link: www.boilermech.com Challenges The POCE business pillar faced a very tough period as indicated in our FY2022 Integrated Annual Report. Lower year-on-year CPO prices, low FFB productivity and low OER due to wet weather conditions collectively contributed to a poor performance. With an old tree profile, yield in the Sabah region was low. Competition for smallholders’ FFB was also fierce. In view of the low economic viability, operations of Mill 2 in Sabah were suspended. While Boilermech made notable strides, several external factors impacted the overall results. High raw material costs and unfavourable foreign exchange sapped the overall performance of POCE. Outlook CPO prices are expected to trend further downwards, but the incoming hot weather pattern (El Niño) might affect the yield and heat the prices. Over at the CE front, the order book remains robust, generating a steady stream of revenue but the margin is anticipated to be stable as the main raw material price trends down. This, however, might be affected if the US dollar continues to strengthen. The outlook for POCE is projected to be negative. Palm Oil and Clean Energy (POCE) Business Review Business Review BUSINESS PILLAR Revenue (RM million) FY2021 312.55 FY2021 86.56 FY2022 647.94 FY2022 45.33 FY2023 600.49 FY2023 11.74 PBT (RM million) The business segments in POCE include palm oil activities and clean energy (CE) engineering comprising bioenergy, solar energy, and water treatment. Acting as a catalyst to climate change responsibility, CE empowers businesses to embrace environmental solutions which either harness solar energy or convert byproducts into valuable energy sources. Furthermore, QL’s palm oil activities also offer milling services to smallholders, in addition to estate holding and Indonesian Sustainable Palm Oil (ISPO) certification. Oil palm plantation Crude Palm Oil (CPO) milling Water treatment solutions Bioenergy and solar energy solutions POCE ASSETS 6 operating entities OUR VALUE CHAIN KEY DEVELOPMENTS 337 green energy solutions projects with 13.40 MWp renewable energy generation capacity installed for customers 4 wastewater treatment plants with the capacity to treat 0.3 million m3 wastewater installed for businesses Operational Review Palm oil activities slowed in FY2023 with a drop in Fresh Fruit Bunch (FFB) produced and processed, which was compounded by low Oil Extraction Rates (OER); factors arising from a prolonged wet season, low yield from old trees in the Sabah region, and stiff competition for FFB from other millers. During the year, the partial disposal process initiated in relation to Sabah Palm Oil Mill 2 in FY2022 has been concluded. 158 acres (64 hectares) of oil palm estate has been sold with a disposal gain recognised in FY2023. The remaining assets (Mill 2) will be gradually divested at the right price. QL’s estate holding remains close to 16,000 hectares with slightly over half, at 9,000 hectares cultivated while the remainder is left fallowing, in line with sustainable land management. Clean energy business activities conducted through Boilermech Holdings Berhad reported moderate project progress throughout FY2023. Project rollouts accelerated after Movement Control Order was lifted. During the year, we completed 337 solar solution projects as well as four wastewater treatment solutions. Translating into measurable terms, the projects have a combined capacity of treating 300 megalitres of wastewater and generating 13.40 MWp in renewable energy. Scan to link to Boilermech’s website 023 022 QL RESOURCES BERHAD INTEGRATED ANNUAL REPORT 2023 SEC. PG. PG. MANAGEMENT DISCUSSION AND ANALYSIS 4
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