FGV Annual Integrated Report 2019

34 FGV HOLDINGS BERHAD MANAGEMENT DISCUSSION & ANALYSIS ASSET MONETISATION FGV is concerned about its capital being deployed effectively and efficiently. Thus, the Group will sell non-core businesses that are utilising resources but not giving reasonable returns that investors would expect. In 2019, FGV disposed of FGV China Oils Ltd. for a gain of RM219,000 and disposed of shares in its associate, Paragon Yield Sdn. Bhd., for a loss of RM1.41 million. IMPAIRMENTS Impairments have been carried out to strengthen our financial position over the longer term. Such assets have caused losses to the Group, and do not look viable going forward. Impairments of RM147 million were recorded due to asset rationalisation exercises in view of excess production capacity in our Sugar business and of RM21 million in a biogas plant that was operating below its capacity. Other than that, the Group provided a net impairment amounting to RM86 million, mainly on its outstanding receivables from joint ventures. DISPOSAL OF SUBSIDIARY Proceeds RM97 Million 2018: Nil RM0.22 Million 2018: Nil Gain DISPOSAL OF ASSOCIATE Proceeds RM29 Million 2018: RM145 Million (RM1.41) Million 2018: (RM18.49) Million (Loss) FINANCIAL PERFORMANCE The Group recorded revenue of RM13,259 million in 2019, down slightly by 1.5% from RM13,464 million in the previous year. The lower revenue was due to the average CPO price realised for 2019 being lower by 11% at RM2,021 per MT compared to RM2,282 per MT in 2018 despite higher volume sold. The Sugar Sector also recorded lower average selling price by 6%. The Group recorded lower loss before zakat and taxation (LBZT) of RM339 million for 2019 compared to LBZT of RM1,025 million in 2018 largely attributed to: • Higher palm products margin due to lower CPO cost ex-mill at RM1,503 per MT compared to RM1,800 per MT, aided by higher FFB production. • Lower total impairment recognised during the year of RM254 million compared to RM949 million in 2018 that also significantly contributed to the lower loss. • Lower finance cost due to higher borrowing cost capitalisation of RM54 million (2018: RM31 million) subsequent to clarification onMFRS 123 Borrowing Cost in 2019. This was, however, offset by a loan modification cost of RM26 million in relation to the restructuring of loans in its subsidiary, MSM Group. • Improved share of results from joint ventures and associate companies. STATEMENTS AND ANALYSIS