FGV Annual Report 2017

ANNUAL INTEGRATED REPORT 2017 CREATING VALUE 19 2017 PRIORITIES OUTCOMES REFERENCES • Increase FFBproduction to 4.30millionMT. • Increase FFB yield per hectare to 17.84 MT/Ha. • Reduce average CPO production cost (ex-mill) to RM1,450 per MT. • Replant 14,000 Ha to reduce the proportion of old palms. • Planting Inspectorate reported directly to GP/CEO to provide independent advice, feedback and report on a regular basis. • Increase in-fieldmechanisation to improve yieldandproductivity,expand irrigation to dry areas andcontinue fertiliser applications per agronomists’ recommendations. • Increase cash reserves to RM2 billion from RM1.80 billion through prudent working capital and cash flow management. • Formation of a Treasury Management Committee to better manage the Group’s liquidity and foreign exchange exposure. • Divest and liquidate identified non-core and non-performing businesses. • Improve the Board’s composition and representation in accordance with MCCG 2017. • Embark on Governance Quantum Leap initiatives to strengthen business processes in the areas of financial management, internal control mechanisms and Board oversight. • Periodic engagements with key Shareholders such as LTH, KWAP and PNB to keep themupdated on current matters related to FGV. • Strengthen terms for all current joint ventures to enhance participation, supervision and governance with more stringent criteria for future collaborations. • Participate in CSR programmes to build rapport and strengthen relationships with the public. • Strengthen engagement with Smallholders and external suppliers to achieve RSPO full supply chain certification. • Ethical treatment of our foreign guest workers. MITIGATING MEASURES • Focus efforts on best practices in the maintenance of our estate infrastructure, including using innovative irrigation methods to mitigate the impact of harsh weather. • Replanting programme has been ongoing since 2009 andwill continue until the age profiles of our plantations reach ideal levels. • Continuously foster close collaborations with the relevant local and foreign authorities to have more varied access to foreign guest workers, including from Indonesia, Bangladesh and India. • Increase mechanisation techniques to reduce labour dependency. • Progressively review and strengthen our marketing strategy and approach. We have also embarked on the innovation of our Downstream products to diversify our income stream. • Strict estate cost management to achieve savings and lower our break-even point, allowing margins even during periods of low CPO prices. • Continually engage with the Government on the refined sugar ceiling price, to mitigate the impact of scenarios where raw sugar prices reach untenable levels. • Apply a strict hedging policy to reduce exchange rate exposure through specific hedging mechanisms. Controls and a monitoring oversight framework are in place to ensure the risks associated with foreign exchange transactions are actively managed. • Concerted drive towards cost containment and reduction across the Group. Budgets are closely scrutinised and monitored, ensuring continued adherence. • Ensure that the Group complies with the latest requirements of the Companies Act 2016 and Malaysian Code on Corporate Governance 2017 (MCCG 2017), as well as the Bursa Malaysia Main Market Listing Requirements (MMLR). • Enhance the Group’s governance through instituting comprehensive and more stringent policies and procedures across the Group. • Frequent engagements with key Stakeholders (e.g. employees, FELDA settlers, investors, customers) to provide themwith updates and first-hand information related to the Group. • Focus on maintaining a cordial relationship with FELDA (the biggest Shareholder) and strive to meet our Shareholders’ expectations so that questions on LLA do not arise. • Group Sustainability & Environment Department has introduced structural, systematic and customised programmes which include detailed action plans to achieve RSPO certification by 2021. • Communicate with key Stakeholders (e.g. Felda settlers, investors, customers, NGOs) to address any issues related to sustainability. THE LINKS BETWEEN MATERIAL MATTERS, STRATEGY AND RISKS More information on pages 36-45 More information on pages 28-30 More information on pages 61-101 More information on pages 60, 99 and 100 More information on pages 57-60 99 % 86 % 76 % 2 %