FGV Annual Integrated Report 2019

21 ANNUAL INTEGRATED REPORT 2019 02 S E C T I O N OUR VALUE CREATION MODEL, SHAPED BY MATERIAL MATTERS OUR STRATEGY KEY INPUTS OUR TARGETED VALUE PROPOSITIONS OPERATIONAL IMPROVEMENT NEW GROWTH AREA FINANCIAL & CAPABILITY BUILDING FINANCIAL CAPITAL NATURAL CAPITAL MANUFACTURED CAPITAL INTELLECTUAL CAPITAL HUMAN CAPITAL SOCIAL & RELATIONSHIP CAPITAL • Shareholder equity: RM4,173 million • Total assets: RM17,702 million • Deposits, cash and bank balances: RM1,618 million • Employees: 17,104 (Male: 85%; Female: 15%) • Migrant workers: 31,074 • 2019 investment in training: RM3.3 mil • 3 research and development centres supported by 56 highly qualified researchers and staff • Planting materials technology • Integrated pest and disease management • Development of best mechanisation practices and systems for Upstream • Number of mills: 68 • Palm oil refineries: 8 globally • Sugar refineries: 3 • Liquid terminals: 12 • Liquid tankers and cargo trucks: 437 • Warehouses: 3 • Commitment to completing RSPO certification and related initiatives • 55 MSPO-certified mills (fully certified as at February 2020) • Driving sustainability and conservation efforts • Enhancing labour practices • Partnering and supporting 112,635 FELDA settlers • Landbank – 439,230 Ha • Mechanised area – 115,000 Ha • Planted area: - Oil Palm: 338,437 Ha - Rubber: 11,201 Ha • Total replanted area: 74,953 Ha PRODUCTS & MARKETS PENETRATION OUR VALUE CREATION MODEL, SHAPED BY MATERIAL MATTERS VALUE-CREATING ACTIVITIES OUTPUTS TRADE-OFFS FINANCIAL CAPITAL • Revenue: RM13,259 million • Dividend from joint ventures and associates: RM44.06 million Financial Capital is key to sustain the growth of our business as investments of this Capital are needed to ensure all other Capitals are used effectively for the smooth running and growth of our business activities. The Group’s relationship with stakeholders is important for our business. We invest in building relationships with stakeholders through engagement with our workers, vendors, trainers, business partners and regulatory bodies. By engaging with stakeholders, we create sustainable relationships that will support our Financial Capital and Human Capital. SOCIAL & RELATIONSHIP CAPITAL • 33 RSPO-certified complexes • 55 MSPO-certified complexes (we are fully MSPO-certified as at February 2020) • Now 100% traceable to our mills • Expanded the applicability of our Group Sustainability Policy to third-party suppliers • Adopted the guidelines and procedures for responsible recruitment of foreign workers • Improved our ratings for the ESG-related SPOTT assessment and the Green Tigers Index Ranking The Group continues to optimise its Human Capital and associated costs to add value to our Financial Capital. While this move may not benefit the Group’s short-term reputation, it is a necessary trade-off to secure the long-term future of the business. HUMAN CAPITAL • 15,517 training man-days • Continued manpower and cost optimisation • Completed 319 blocks of housing for workers throughout Malaysia The Group invests significantly in improving the value of our Intellectual Capital. The investment is important for innovations in our Natural Capital and Manufactured Capital to improve our efficiency. This trade-off is necessary to maintain our competitive edge and deliver long-term sustainable value. INTELLECTUAL CAPITAL • Awards for oil palm tree disease prevention product and oil palm DNA fingerprint service • Developed four new products for Downstream commercialisation • High-value multi crop cloning for integrated farming The Group invests in Manufactured Capital to improve the performance of our mills and refineries, while investing in the development of new products and new business lines. This trade-off with our Intellectual Capital and Financial Capital is important to ensure the Group will be able to offset the cyclical nature of the business. MANUFACTURED CAPITAL • CPO production: 3.07 million MT • Oil extraction rate (OER): 20.61% • FFB processed: 14.90 million MT • Oils & Fats sales volume: 362,773 MT • Palm methyl ester (PME) sales volume: 78,668 MT • Refined Sugar production: 1.07 million MT • Bulking volume: 8.42 million MT • Transport volume: 6.02 million MT • 18.08 million seeds sold The Group’s business relies heavily on Natural Capital and the Group invests its Financial Capital to ensure the long-term sustainability of the palm oil business through the normalisation of our oil palm trees’ age distribution and responsible use of our land. NATURAL CAPITAL • FFB production: 4.45 million MT • Oil palm trees’ average age: 13.8 years • FFB yield: 18.44 MT/Ha • Carbon footprint: 158,830 MT CO 2 eq. • Rescued a total of 55 sun bears with 39 being successfully released PLANTATION SECTOR UPSTREAM • Cultivation, production and harvesting of fresh fruit bunches (FFB) • Processing of FFB into crude palm oil (CPO) and palm kernel (PK) • Transforming by-products into new product lines and renewable energy • Turning around the production and processing of rubber RESEARCH AND DEVELOPMENT • Research & development activities • New technologies in planting materials, fertiliser products and rat bait formulation • Protecting our intellectual property by filing for patents TRADING • Sales & trading of palms, laurics and biodiesel and its products • Product specification consultation • Sales & purchase planning • Freight on board and cost net freight shipment to export buyers • Ground transport for local delivery • Shipping documentation management DOWNSTREAM • Refining of CPO • Fractionation of refined, bleached, deodorised palm oil (RBDPO) • Crushing of PK • Production of various oleochemicals for industrial and fast-moving consumer goods (FMCG) applications • Processing and sales of biodiesel products • Production of consumer bulk and packed products • Established new animal feed business SUGAR SECTOR • Sugar refining • Sales and marketing of refined sugar and molasses • Export of value-added sugar products LOGISTICS & OTHERS SECTOR • Bulking and transportation facilities and services • Making foray into providing 3PL services • Providing services covering storage, transportation, information & communication technology and others UNDERSTANDING OUR BUSINESS UNDERSTANDING OUR BUSINESS