FGV Annual Integrated Report 2019

26 FGV HOLDINGS BERHAD While your Board continues to remain 100% committed to our transformation journey, I am pleased to report that we have turned the corner and have arrested the decline. Personally, I remain hands-on with various parts of the business, and continue to give guidance to the executive team to execute our transformation journey because I believe in FGV and I want to see it change for the better. This company touches the lives of hundreds of thousands of people, from our shareholders to the small farmers we support; from our partners to each of the 48,178 people we employ and their families. We need to press on so everybody can enjoy the fruits of our combined success. I am very proud of the hard work and dedication my colleagues have invested to turn the company around, despite the frustration of depressed CPO prices through most of 2019 and the unearthing of more legacy issues continuing to hamper our combined efforts to produce profits. Despite these challenges, I would like to highlight that there is a strong indication that our transformation efforts have taken root and are producing results. While we may not have achieved all our target numbers, I am also fully aware that the targets that were set were very aggressive and would have required every single variable to be in our favour. On a personal level, I am deeply concerned for all of us, our families and loved ones. As Chairman of FGV, I am also worried about the financial impact this will have on FGV, all our suppliers, especially our smallholders, and our customers. The impacts of COVID-19 will be far-reaching and potentially debilitating for many. As FGV is in the business of producing food and other essential items, we will survive this storm and eventually, we will thrive. But in the near term, there will certainly be negative impacts. We are facing a weakened global economy and traditional markets with reduced purchasing power. This will affect crude palm oil (CPO) price and thus our financial performance too. However, in every challenge we will seek opportunities. Although FGV was not in great financial shape before the pandemic took hold, we were on solid financial footing. Thus, your Board will be working hard to ensure that we mitigate the impacts of COVID-19 and take advantage of opportunities that present themselves. THE YEAR IN REVIEW If 2018 was the year we worked to set the governance right in FGV Holdings Berhad, 2019 was the year we devoted to the transformation of the strategy and operations, to rebuild the Group and set it back on track for success. While we have made great strides in the journey, there is still a long way to go to institutionalise the changes we have made and to ensure that FGV Group moves forward on a stronger and more robust footing. Dear Shareholders, As we prepare to send this Annual Integrated Report to print, the COVID-19 pandemic is causing devastation across the world on all economic fronts, as borders close and countries go into lockdown to protect their citizens. DATUK WIRA AZHAR ABDUL HAMID Chairman STATEMENT FROM THE CHAIRMAN For FY2019, I take great pride in revealing that our efforts have paid off as we recorded our first quarterly net profit in Q4 following six consecutive quarters of losses. For the full year, we posted a significantly lower net loss than FY2018, even with revenue declining by 1.5% due to lower average CPO realised prices by 11%, indicating that our business remained resilient even through such challenging times. For further details on financial performance, please refer to Financial Capital on pages 32-45 of this report. THE TRANSFORMATION CONTINUES With the Transformation Plan in full swing, I would like to update you on various initiatives we have undertaken to improve our effectiveness, efficiency and productivity. In the context of palm oil, we have implemented good agricultural practices (GAP) in some of our estates, which has improved yield and efficiency. Our consistent efforts to implement mechanisation means about a third of our planted land will see faster crop evacuation. We are also fully aware that maintaining overall productivity is closely linked to the age of our oil palm trees, and thus, replanting has continued, albeit at a slightly slower pace in 2019 due to the downturn in CPO prices. THIS COMPANY TOUCHES THE LIVES OF HUNDREDS OF THOUSANDS OF PEOPLE, FROM OUR SHAREHOLDERS TO THE SMALL FARMERS WE SUPPORT; FROM OUR PARTNERS TO EACH OF THE 48,178 PEOPLE WE EMPLOY AND THEIR FAMILIES. STATEMENTS AND ANALYSIS