FGV Annual Report 2017

FELDA GLOBAL VENTURES HOLDINGS BERHAD UNDERSTANDING OUR BUSINESS CONTEXT 30 MESSAGE FROM THE GROUP CHIEF FINANCIAL OFFICER Management Discussion & Analysis WORKFLOW IMPROVEMENTS FOR GREATER EFFICIENCY Our systems and processes continued to be improved upon in 2017 in response to changes in our operating landscape. These improvements, in line with our SP20 (V2) aim to continually optimise our internal operational efficiencies, were in the following forms: 1. Enhancement to our Credit Control Policy; 2. Enhancement to our Business Planning and Consolidation (BPC) system; and 3. Improving management reporting to enhance financial management. Enhanced Credit Control Policy The Credit Control Policy was enhanced to establish standards for the credit control processes of the Group. Incorporating best practices from within and outside of the Group, the Policy encompasses the roles and responsibilities of the Credit Control Committee, acceptable sales payment terms, rules on credit application as well as ongoingmonitoring of customer accounts and processes for customer accounts that exceed their credit limits and terms, and other related areas to minimise the Group’s credit and collectability risks of its sales and revenues generated from its business activities. With the establishment of this Policy, there is now notably greater clarity on the authority required for the granting of credit, whilst credit control processes can now be better monitored with the establishment of Credit Control Committees in each subsidiary. The acceptable sales payment terms will also work to reduce the frequency of delinquent payments. Improving Management Reporting to Enhance Financial Management In line with our BPC enhancement initiative, we are also improving management reporting on a standardised platform as a key enabler for the enhancement of our Group’s financial management. This effort entails the establishment of a centralised hub for financial and operational data, whereby information is gathered via an online dashboard on a monthly basis with strict deadlines enforced to deliver quality reporting for management decision making. Greater accountability is being placed on subsidiaries to provide their monthly performance analytics on top of financial and operational data submission to the Group. This information is used to establish a monthly report to Senior Management for monitoring purposes. This shared accountability between subsidiaries and the Group in delivering management information will help instill a positive reporting culture and enhance transparency in shared information. WHAT WE WILL DO IN 2018-2020 We will remain committed to containing our costs through initiatives that promote the efficient use of data collected throughout FGV’s operations. These include: • Undertaking Procurement Spend Analysis, which is a process of collecting, cleansing, enriching, classifying and analysing expenditure data to reduce procurement costs whilst improving efficiencies and compliance. This will give FGV Group Procurement the ability to better analyse procurement data and spending patterns of all material purchases and expenses to make better spending decisions; • Enhancing our SAP system for Investment Management and Project System (IM-PS) to better manage our investments and track investment activity; and Ahmad Tifli Dato’ Haji Mohd Talha Group Chief Financial Officer • Implementing the Digital Board Meeting System for Senior Management and administrators to conveniently run secured digital meetings. Aside from enhancing accountability and being environmentally friendly, this paperless meeting solution canpromote significant savings on printing and delivery. To furthermanage theGroup’sgearing ratio, we are exploring value chain management and vendor financing initiatives. The end- to-end business solution on trade, working capital and vendor financing will enable our business to manage the Group’s liquidity, external borrowings and supply chain funding throughout our financial ecosystem. In an effort to diversify our sources of liquidity, we are exploring opportunities to raise funds from the debt capital markets. With an organic growth strategy in place, a sukuk programme is positioned to match the gestation period of a palm plantation, and support our Group liquidity for a tenure between 10 and 20 years. EP