FGV Annual Report 2018

21 ESTABLISHED INTEGRATED AND COMPREHENSIVE IMPLEMENTATION PLANS 01 02 05 03 07 06 04 08 09 ANNUAL INTEGRATED REPORT 2018 • 14 mills RSPO-certified (total as at December 2018: 22 mills RSPO-certified) • 7 MSPO-certified • Improved employees competencies through various trainings held throughout the year. • Better retention of foreign guest workers. • Introduce structured, systematic and customised programmes which include detailed action plans for the mills to achieve full RSPO certification by 2021. • Monitor progress of the palm oil ban and continuous engagement with industry and relevant agencies to push palm oil agenda to the fore. • Proactive engagement with Key Stakeholders (e.g., Settlers, investors, customers, NGOs) to address any issues related to sustainability. THE LINKS BETWEEN MATERIAL MATTERS, STRATEGY AND RISKS MITIGATING MEASURES 2018 OUTCOMES • Provide attractive compensation and benefits packages, talent retention and succession planning, and trainings to enhance competency. • Provided wages to our workers between RM1,000 to RM2,500 in Peninsular Malaysia and RM920 to RM2,300 for Sabah before the implementation of the Minimum Wages Order (Amendment) 2018. • Continuous replanting of 15,000 Ha per annum to achieve optimum age profile. • Continually working closely with relevant local and foreign authorities to have more varied access to foreign guest workers. • Provide conducive living environment to retain workers. • Increase in-field mechanisation on suitable area to improve harvester’s productivity. • Flexible harvesting arrangement to maximise crop recovery during rainy season and use of rafting in flood prone areas. • Implement Good Agricultural Practices (GAP) to protect the trees from dry weather. • Revision of FFB pricing to attract higher FFB supply from suppliers. • Continuous engagement with related parties to seek assurance on tenure of LLA. • Progressively review and strengthen the marketing strategy and approach, and diversify our products (Downstream and Sugar products) to generate additional income stream. • Active engagement and discussion with the government and local authority. • Replanted 13,119 Ha to reduce the proportion of old palm trees and improved the age profile to 14.3 years. • Obtained approximately 88% of worker requirement (comprised mainly of foreign guest workers) for estates from continued recruitment effort. • Heightened worker welfare through better provision of accommodation especially in Sabah area. • Additional 16,500 Ha was mechanised in 2018 to improve harvesters ’ man-to-land ratio. Total mechanised area to-date is 96,500 Ha. • Setup harvesting group to intensify crop evacuation during raining period. • Implemented GAP which include empty fruit bunches mulching and compost application. • Implemented a market driven-price mechanism to FFB suppliers. • Identified product development prospects for Downstream business and currently conducting the feasibility assessments. • Increased annual production of refined sugar capacity by 1.0 million MT. • Assessment of the quality of existing assets and investments. • Identify non-core and non-performing assets for divestment. • Concerted drive towards cost containment across the Group. Budgets are closely scrutinised and monitored, ensuring continued adherence. • Constant monitoring of CPO price movement, regular review of trading strategies such as hedging and tolling, and production capacity e.g. estate cost control. • Proactive monitoring of the global macroeconomic landscape. • Continuous engagement with the government and relevant ministries to discuss issues related to FGV’s businesses to mitigate the impact of price volatility. • Performed impairments of Property, Plant & Equipment, Goodwill, Intangible Assets and Receivables. • Divested one non-core and non-performing assets to improve financial position. • Implemented Transformation Plan in the fourth quarter to improve operational efficiency. • Saved Headquarters cost through relocation of office. • Optimisation of manpower resources through Separation Schemes. • Ensure the Group complies with the latest requirements of the Companies Act 2016, Malaysian Code on Corporate Governance 2017, and the Main Market Listing Requirements on Bursa Malaysia Securities Berhad. • Enhance the Group’s governance by instituting comprehensive and more stringent Policies and Procedures across the Group. • Enforcement of Code of Business Conduct and Ethics for Employees (CoBCe). • Ensure timely and accurate disclosure is made on material matters. • Enhanced Group corporate governance and business control by revising and enforcing Policies and Procedures of operational governance. • Strengthened Board oversight roles. • Group’s strategic objectives were reviewed by the Board. • Engaged with investment community, media and bankers to stabilise the share price.