FGV Annual Report 2013

Profit from the Research & Development and Manufacturing, Logistics and Others (MLO) segment declined by 45.6 percent in 2013 to RM186.8 million. This was due to a 34.1 percent reduction in research and development income, lower margins achieved as a result of a 12 percent decline in the average selling price of fertilisers and a 5 percent dip in the sales volume of compound fertilisers. We continue to be a strong and financially sound company and this is evidenced by the growth in our balance sheet. Other than the internal operations growth, the acquisitions of FHB and Pontian United Plantations Berhad (PUP) contributed to the increase in the Group Shareholders’ Funds of RM6.57 billion from RM6.10 billion in 2012. The Group’s retained earnings grew to RM1.65 billion fromRM1.19 billion the year before whilst the Return on Shareholders’ Funds was 14.9 percent compared to 13.2 percent in 2012 on the back of Net Tangible Assets (NTA) per share of RM1.56 increase from RM1.48 the year before. As a plantation player, the vagaries of market demand and supply and fluctuating CPO prices are limiting the upside potential of FGV’s share price. In 2013, our stock traded at a low of RM4.11 in 3 October 2013, after reaching a high of RM4.77 in 12 March 2013 before closing the year at RM4.49. It may be noted that the counters of other oil palm-based listed companies have not fared any better. We are taking steps to cushion the impact of fluctuating CPO prices by diversifying further into other commodities namely rubber and sugar. Looking beyond temporal market fluctuations, long-term investors will no doubt recognise the intrinsic value of FGV shares and appreciate our efforts to unlock the full potential the Group has to offer moving forward. DIVIDENDS In line with the Group’s commitment to deliver shareholder value, the Board of Directors is recommending a final dividend payment of 10 sen per share amounting to RM364.8 million, subject to the approval of shareholders at the forthcoming Annual General Meeting. This is in addition to an interim payment of 6 sen per share declared in December 2013, bringing the total dividend payment for FY 2013 to RM583.7 million. The amount declared is approximately 60 percent of the Group’s net profit after minority interest and higher than the 50 percent payout as promised in the IPO prospectus. The dividend payment is expected to benefit approximately 50,000 shareholders, including 112,635 FELDA settlers who are FGV shareholders via Felda Asset Holdings Company Sdn Bhd. ANCHORING NEW GROWTH FGV is ranked among the top 30 companies on Bursa Malaysia with a market capitalisation of RM16.6 billion. The Group’s integrated operations span the entire palm oil value chain, with our upstream plantation business ably supported by its midstream and downstream ventures. Through our two refineries, we are also the largest producer of refined sugar in Malaysia with a 57 percent market share. We have also established a strong global presence, with operations in more than 10 countries across four continents. As a brand, FGV has gained resonance with the international investing community. Building on this position of strength, the GSB charts the course for the Group to transform into a leading agri-business power-house. The key aspects of the GSB focus our attention on stepping up acquisitions, expanding our downstream capabilities, improving operating efficiency and productivity and applying our extensive R&D expertise across the industry value chain. Several key corporate exercises were carried out during the year to support the future growth of the Group. Upstream acquisitions. Organic growth has only taken the Group so far. In line with the Group’s plan to expand its plantation upstream business, we realised that the way forward is through strategic acquisitions, preferably a combination of greenfield or brownfield land that would add to earnings accretion or generate positive cash flow immediately. Care was also exercised to ensure that the prospective acquisition was not high-conservation or peat swamp forests to protect their unique ecosystem. Chairman’s Letter to Shareholders Perutusan Pengerusi kepada Pemegang Saham Felda Global Ventures Holdings Berhad 14