FGV Annual Integrated Report 2019

23 ANNUAL INTEGRATED REPORT 2019 02 S E C T I O N THE LINKS BETWEEN MATERIAL MATTERS, STRATEGY AND RISKS MITIGATION MEASURES 2019 OUTCOMES 1. Continuous replanting to achieve optimum age profile. 2. Providing a conducive living environment for workers that provides accommodation and social activities, the setting up of a migrant workers’ initiation centre for training, enhancement of monetary incentives and subsidising of travel costs. 3. Flexible harvesting arrangements and expediting crop recovery during rainy/dry season. 4. Pricing FFB competitively to obtain higher FFB supply from suppliers. 5. Continuous engagement with related parties to seek assurance on tenure of LLA. 6. Market analysis provided to all traders for guidance in daily trades to focus on markets with minimum price disparity. 7. Progressively reviewing, strengthening and executing marketing strategy and sales plan as well as increasing diversification of products for export of liquid sugar and fine syrup. 1. Continuous assessment of the performance of past investments and identifying gaps between the actual results and original targets. 2. Concerted drive towards cost containment across the Group. Budgets are closely scrutinised and monitored to ensure alignment to the original plan. 3. Constant monitoring of CPO price movement, regular review of trading strategies such as hedging and tolling and production capacity, e.g. estate cost control and maximising Downstream business model to utilise in-house CPO. 4. Ensuring futures hedging and back-to-back pricing to secure trading margin. 5. Restructuring and rescheduling of term loans, stepping up principal repayments and proposed disposal of non-core assets in MSM. 6. Monitoring the Group cash flow forecast and conducting quarterly engagements with the banking market. Participating in the monthly Group Credit Committee meeting to discuss billing notices/invoices. 1. Ensuring the Group complies with the latest requirements of the Companies Act 2016, Malaysian Code on Corporate Governance 2017 and Main Market Listing Requirements of Bursa Malaysia Securities Berhad. Setting up of an Independent Advisory Panel to provide guidance on matters pertaining to corporate governance and sustainability. 2. Enhancing the Group’s governance by instituting comprehensive and more stringent Policies and Procedures across the Group. Inculcating the core values of P.R.I.D.E to uphold a strong governance and ethics culture through awareness and training. 3. Ensuring timely and accurate disclosure on material matters as per Bursa Malaysia requirements. 1. Undertaking initiatives and programmes to ensure compliance with sustainability standards such as, among others, the introduction of structured and systematic programmes containing detailed action plans for achieving full Roundtable on Sustainable Palm Oil (RSPO) and Malaysian Sustainable Palm Oil (MSPO) certifications. 2. Intensifying efforts to enhance practices on sustainability as well as engaging with various stakeholders to communicate, and where relevant collaborate, with them on initiatives related to sustainability issues. 3. Identifying FFB risk elements and high-risk mills by performing mapping with the suppliers. 4. Providing attractive compensation and benefits packages, emphasising talent retention and succession planning and providing training to enhance competency. 5. Providing wages in accordance with the Minimum Wages Order (Amendment) 2018. 1. Improved the age profile to 13.8 years. 2. Obtained approximately 85% of worker requirement. Heightened worker welfare through better provision of accommodation, especially in East Malaysia. 3. FFB volume increased by 0.3% compared to 2019 target. 4. FFB supply from external suppliers exceeded 2019 target by 1.05%. 5. Maintained regular and consistent communication between FGV and FELDA. 6. Focused sales in Pakistan and India for both cost net freight (CNF) and freight on board (FOB) market. Both markets yielded our target margin and safeguarded our profitability. 7. Identified product development prospects for Downstream business and conducted feasibility assessments. Maintained market leadership for domestic sugar market at 59%. Revised plans were put into action with expected results in 2020. 1. Divestments of identified non-core and non-performing assets to improve financial position. 2. Implemented initiatives during the year to improve operational/ processing efficiency and drive down operating costs. 3. Managed to close the gap between average actual CPO price and average budgeted CPO price. 4. The Group recorded a reduction in losses, which was contributed by efficient hedging. 5. MSM’s cash flow standing improved and is expected to be further improved with the potential disposal of a non-core asset and the restructuring and rescheduling of the term loan. 6. Achieved Group cash and cash equivalent targets through strengthened relationships with bankers and global market outlook and maintained existing banking facilities to support the Group’s liquidity. 1. Certification of (Anti-Bribery Management System) ABMS ISO 37001:2016 to significantly strengthen our anti-corruption framework. An Independent Advisory Panel was duly set up and the first meeting was held in February 2020. 2. Enhanced Group corporate governance and internal controls by revising and strictly enforcing our Policies and Procedures. Continuous awareness and training conducted across the Group to heighten employees’ understanding and commitment. 3. Engaged with investment community, media and bankers to ensure full transparency. 1. As of December 2019, 33 FGV mills have been RSPO-certified. As of 28 February 2020, FGV has been 100% MSPO-certified. 2. FGV has engaged with various stakeholders including business partners, banks, investors and government agencies to keep them abreast of FGV’s efforts to address sustainability issues. FGV has also established strategic partnerships with various independent bodies such as the Fair Labor Association (FLA), the International Organization for Migration (IOM) and the Earthworm Foundation to enhance labour practices. 3. 50% of external FFB supply has been mapped and assessed for its sustainability risk. The exercise will be continued in 2020 to cover the remaining 50%. 4. Improved employee competencies through various training programmes held throughout the year and reviewed remuneration packages for employees holding critical positions. 5. Better retention of migrant workers. UNDERSTANDING OUR BUSINESS