FGV Annual Report 2014

Whilst ensuring cleaner rivers, widened riparian reserves also add to our wildlife corridor initiative in Sabah. We plan to establish a network of forest corridors to enable large mammals such as the Bornean elephant and orangutan to migrate safely between key forest habitats. Towards this end, we are also involved with BCT and the Sabah Wildlife Department to secure a mega biodiversity corridor in the Lower Kinabatangan region, which FGV through PUP will contribute a sum of approximately RM1.7 million over five years to the joint venture. The five-year project is a first of its kind to create a mega biodiversity corridor in the lower Kinabatangan basin. Another key aspect of the project is to provide a sustainable alternative livelihood for the local communities living along the Kinabatangan River, through a community homestay programme. Focusing specifically on individual species, the year also saw us embark on a maiden project to elevate the level of research and conservation efforts on the Rafflesia and Malayan sun bear. A memorandum of collaboration (MoC) is in the midst of being finalised with key governmental institutions, NGOs and universities and is expected to be signed in May 2015. Playing its part to create greater awareness of the importance of wildlife conservation, PUP jointly organised a programme with the Sabah Wildlife Department and NGOs such as HUTAN, BCT, Danau Girang Field Centre and the Borneo Sun Bear Conservation Centre. The commitment of all our plantations in safeguarding the quality of rivers has led to positive results. In 2014 our Sustainability Department analysed the water quality in 41 out of 51 major rivers systems in our plantations and found no significant deterioration. Since 2013, we have checked a total of 76 river systems, all with positive results. As announced in last year’s Annual Report, in 2014 we completed the High Conservation Value (HCV) assessment in our plantations in Sabah, Sarawak and Indonesia, and from the data obtained will enhance our biodiversity management plans in order to protect any endangered animal or plant species in the most effective manner. Profit As a public-listed company, we have a duty to make profit and thereby provide reasonable returns to our shareholders. Upon our listing in 2012, we declared a policy to provide our shareholders with a minimum 50 percent of net profit attributable to shareholders in the form of dividends. Despite the volatile global agro-commodity environment, and falling prices in the last few years, we have still kept to our pledge – providing a dividend pay- out of 63.4 percent 59.4 percent and 112.1 percent in the financial years ended 2012, 2013 and 2014 respectively. In addition to our shareholders, we also have a responsibility to our 112,635 settlers who stand to benefit from the RM248 million fixed lease payment and 15 percent profit sharing from the estates operation that we pay annually to FELDA under a Land Lease Agreement (LLA) on the 355,864 hectares of land leased. The LLA provides consistent income for FELDA to defray its overheads in running settler development programmes. Finally, through the Settlers Trust Fund, dividend payments on 20 percent of FGV shares are distributed to the settlers. During the financial year ended 2014, this amounted to RM116.7 million, with each settler receiving RM1,036. We have identified various strategies to grow our profit in a sustainable manner which, distilled to their bare essence, involves streamlining our businesses, diversifying across the value chain from the upstream to the downstream of each of our Clusters, and placing more focus on operational as well as cost efficiencies. This is the thrust of our Global Strategic Blueprint (GSB), which was developed following our IPO and serves as our roadmap, as we journey into a sustainable future. Guided by our GSB, which is a “living” document that is continuously reviewed and revised according to macro and micro-environmental changes and trends, we are confident of recording a steady stream of positive profits to the benefit of our shareholders, settlers and all other stakeholders. For more details on our financial performance and profit, please read our Chairman’s Statement, CEO’s Statement and the Business Operation Review in this Annual Report. Introduction Performance Highlights About FGV Reports Financial Statements Others Strategy and Value Creation Performance Review & Progress Foreword to Shareholders Annual General Meeting Annual Report 2014 pg 103