FGV Annual Integrated Report 2019

114 FGV HOLDINGS BERHAD GOVERNANCE AT FGV: RELATIONS WITH OUR STAKEHOLDERS SUMMARY OF INVESTORS INTERESTS As a result of various engagements carried out throughout 2019, Investor Relations identified the main concerns of the stakeholders, and they are summarised as below: FOCUS AREA FGV’S RESPONSE Operational 1. Smarter application of fertiliser by prioritisation of soil enhancement for cost optimisation. 2. Achieved 85% of labour requirement, which was affected by abscondment issues. Introduced the 3R initiatives (Recruit, Retain, Repatriation) and one of the retention strategies was the use of e-wallets for migrant workers. 3. Targeted replanting of 15,000 Ha per year with cost allocation of RM300 million. Consistent replanting effort to achieve optimal palm tree age profile by 2026. 4. Forward selling of CPO was capped at 30% based on FFB produced internally. Financial Performance 1. Areas of leakages were identified and substantial savings have been achieved, the bulk of them from improved processes and negotiation strategies. 2. Impairment of assets in compliance with Malaysian Financial Reporting Standards (MFRS) 136 and MFRS 9. 3. Focused on reducing the CPO ex-mill production cost to a target of RM1,500. 4. Commercialisation of MSM Johor with low utilisation rate impacted the performance of FGV Sugar business. Non-Core and Non-Performing Assets Disposal 1. Reviews for the potential disposal of non-core assets are ongoing. 2. Sales proceeds from the disposal of non-core assets & non-performing businesses of RM126 million as at end-2019. 3. In discussion with JV partners to review the commercial terms of existing agreements or the potential for divestments, to turn around and maximise investment returns. LLA Land 1. The relationship between FGV and FELDA is a professional one, guided by good governance standards. There has not been any official discussion with regards to any renegotiation of the terms the LLA with FELDA. 2. FGV has contributed to the improvement of value on the LLA land via consistent replanting programmes, which have resulted in a marked improvement in the age profile since listing. HOW WE ARE GOVERNED COMMUNICATING WITH OUR STAKEHOLDERS