FGV Annual Integrated Report 2019

31 ANNUAL INTEGRATED REPORT 2019 03 S E C T I O N STATEMENTS AND ANALYSIS MESSAGE FROM THE GROUP CHIEF EXECUTIVE OFFICER Palm Oil (MSPO) certification, we are now fully certified as at 28 February 2020. In 2019, FGV invested significant time and resources in assisting independent smallholders (ISHs) to obtain MSPO certification in collaboration with the Malaysian Palm Oil Board. The main objective of assisting the ISHs was not only to ensure MSPO certification but also to obtain 100% traceability to ISH plantations that supply to FGV. In this respect, efforts to improve traceability across the supply chain remains one of our key focus areas, and in 2019 we achieved 100% traceability of our palm oil to our mills. FGV has also made significant progress across the board based on our strong scores from internationally recognised assessments such as the Sustainability Policy Transparency Toolkit (SPOTT) assessment and the Green Tiger Index rating that were conducted in 2019. Moreover, theGrouphas recently revised its Group Sustainability Policy, which extends the coverage of this policy to our vendors and third-party suppliers, a significant move that extends FGV’s human rights and sustainability commitments along our supply chain. In addition to this, the Group, with the support of the Procter & Gamble Chemicals (PGC), is now a Participating Company of the Fair Labor Association (FLA). This affiliation with the FLA will help FGV to identify, address and resolve gaps in our labour practices, as well as in our supply chain. In terms of environmental stewardship, FGV’s Sun Bear Conservation Programme continues to be a mainstay with 55 bears rescued. We have also maintained our support of the Mega Biodiversity Corridor Conservation project in Sabah and the Rafflesia Conservation and Interpretive Centre in Perak. OUTLOOK AND PROSPECTS The outlook for the industry remains uncertain given the severe impact of the COVID-19 outbreak which has brought the world economy to a temporary halt. While the full impact of the outbreak has yet to be determined, FGV will be affected mainly because of the effects of the Restriction of Movement Order (RMO) imposed by the Malaysian authorities on March 18, 2020 which has curtailed our workforce strength, shuttered businesses and limited movement of consumers. In terms of our crops, we are projecting a significant shortfall in production in 2020. For our Downstream business, we are expecting a reduction in processing volume especially for the export and bulk product segments. FGV will do its best to mitigate these challenges and will be reviewing our strategies to reduce the impact on our business operations. In addition, as a caring and responsible company, FGV continues to support our large workforce, both migrant and local. Within days of the RMO, we provided basic necessities such as rice, sugar, cooking oil, flour, coffee and eggs to our workers in our plantations, while our refinery workers were provided their daily meals so that they would not have to go out to obtain food. We are also extending financial aid to employees who require help during this time, and we have also launched a fund to help those in the B40 category, especially those who have lost their jobs or were dependent on daily wages. ACKNOWLEDGEMENTS I would like to take this opportunity to record my gratitude to the Board of Directors for their stewardship which led the Group through its recent period. I also extend my appreciation to all our employees for their diligence and steadfastness in carrying out their duties for our organisation. They play a crucial role in helping to realise our Transformation Plan and I look forward to serving alongside them as we embark on our new chapter. My thanks also go to our shareholders and FELDA communities for their continued support. Rest assured, these stakeholders represent our utmost priority due to our shared history and common goal towards value creation. Finally, I would like to express my appreciation to all our other stakeholders, including our regulators, members of the media, suppliers and partners locally and abroad, for their cooperation. We look forward to our continued collaboration as we drive FGV into its next phase of growth. Alignment with the Bursa Securities ListingRequirements, the Management Discussion and Analysis (MD&A) focuses on the disclosure of nonfinancial information such as Group business, operations and performance. We have structured this year’s MD&A based on the information required to be disclosed which includes: CONTENTS Financial Capital • Financial performance for the Group and Sectors • Statement of Value Added and Value Distributed • Five-year Group Financial Summary Natural Capital • Landbank and estates ’ performance • Sustainability Manufactured Capital • Plantation Sector performance - Upstream & Trading - Downstream - Research and Development • Sugar Sector performance • Logistics & Others Sector performance Intellectual Capital • Research & Development activities • Intellectual Property Human Capital Social & Relationship Capital • Engagement with Stakeholders • Sustainable Palm Oil HIGHLIGHTS pages 32-45 pages 46-51 pages 52-63 pages 64-67 pages 68-73 pages 74-81