FGV Annual Integrated Report 2019

22 FGV HOLDINGS BERHAD MATERIAL MATTER THE LINKS BETWEEN MATERIAL MATTERS, STRATEGY AND RISKS RISKS BEST–IN-CLASS OPERATIONS We aim to establish a sustainable future for our stakeholders by focusing on our core businesses and utilising our key assets efficiently. STRONG FINANCIAL MANAGEMENT We endeavour to create a strong financial environment that is resilient to internal and external challenges through prudent and optimised measures to maximise stakeholder returns. WELL-ENTRENCHED GOVERNANCE AND ETHICS We strive to build a solid foundation for our business through good governance and ethical practices. STRONG SUSTAINABILITY AND SOCIAL RESPONSIBILITY ORIENTATION We work closely with our people, customers and suppliers to lead the way in maximising resources without compromising on economic, environment and social considerations. 1. Ageing oil palm profile affecting overall yield. 2. Shortage of migrant workers for estates. 3. Unpredictable weather conditions affecting productivity of oil palm trees. 4. Low fresh fruit bunches (FFB) supply from external suppliers due to competitive market. 5. Risk of the Land Lease Agreement (LLA) being terminated. 6. Price disparity at palm oil destination markets causing margin erosion. 7. Static domestic demand for sugar while having excess refining capacity. 1. Non-performing investments. 2. Escalating processing and operation costs. 3. CPO prices remaining volatile due to the cyclical nature of the industry and competition from Indonesia. 4. Volatility of foreign exchange movements. 5. Possible default of term loans at MSM. 6. Shortfall in cash flow for the Group’s working capital. 1. Adverse reputational impact arising from perceived weakness in internal governance. 2. Potential loss arising from inadequate internal controls. 3. Lack of transparency leading to a negative perception of the Group. 1. Erosion of sustainability sensitive customers’ confidence in FGV. 2. Not meeting sustainability standards, resulting in adverse reputational repercussions. 3. Traceability of FFB supply. 4. Shortage of talents and capable employees. 5. Changes in regulations related to migrant workers that can significantly impact the Group. YI EP GE RC HR STRATEGIC INTENT UNDERSTANDING OUR BUSINESS