FGV Annual Report 2018

26 PRACTICED LEADERSHIP BY EXAMPLE FGV HOLDINGS BERHAD STATEMENT FROM THE CHAIRMAN PLANNING FOR THE FUTURE In addition to our Transformation Plan that has been put in place during the year, we reviewed the Group’s strategic objectives and formulated our Business Plan 2019-2021 (BP21) to guide FGV in implementing value-adding activities to maximise Shareholder returns. BP21 is anchored on the theme ‘ Stop the Decline and Drive Sustainable Growth ’ and is driven by the following key principles: • Better resource utilisation to generate higher returns on assets • Portfolio enhancements to balance structural inefficiencies • Value maximisation through an integrated business value chain • Commercially driven and accountable business decision-making • Optimising human capital potential in driving growth In line with these principles, we have identified four Strategic Thrusts to be implemented across our core businesses and support functions. These comprise operational improvements to maximise productivity, enhance quality and lower costs; products & market penetration to optimise value along our plantations, sugar and logistics value chains; new growth areas to identify strategic growth opportunities for long-term performance enhancement; and financial as well as capacity building to improve our financial position and human capital capabilities to drive our business forward. With BP21, we aim to identify and solve shortcomings hindering FGV’s growth and draw lessons from which we can move forward. Ultimately, we are steering FGV back on course to ensure its sustainability and realise value for our Shareholders. ANNOUNCED FORENSIC AUDITS In August 2018, FGV announced a total of six forensic audits and six internal investigations into various matters. Forensic investigators appointed by the Board, looked into the following cases: 1. The acquisition of Asian Plantations Limited (APL) in 2014 2. Investment into FGV Cambridge Nanosystems Ltd. in 2013 3. The acquisition of Troika Condominium units located in Kuala Lumpur in 2014 4. The lease of company cars in 2014 5. Investment into FGV Green Energy Sdn. Bhd. in 2015 6. The acquisition of Yapidmas Plantation Sdn. Bhd. (Yapidmas Plantation) in Sabah in 2015 On 23November 2018, FGV announced that it had commenced legal proceedings in the Kuala Lumpur High Court against 14 defendants who are former Directors and employees of FGV, in relation to the APL case. FGV is seeking inter alia damages amounting to RM514 million for losses resulting from the acquisition of APL, or damages as assessed by the Court, general damages and interest. On 30 November 2018, FGV announced the commencement of legal proceedings for the acquisition of Troika Condominium units and the lease of company cars. The Board is still in the process of reviewing the findings and legal advice on the following completed forensic investigations: 1. The investment in FGV Cambridge Nanosystems Ltd. 2. The investment in FGV Green Energy Sdn. Bhd. The forensic investigation into the acquisition of Yapidmas Plantation in Sabah remains in progress. FGV also undertook internal investigations involving six matters which were grouped into three categories, namely: (i) Open credit lines, poor purchasing trading practices and poor palm oil sales which resulted in bad debts. The legal actions taken to recover the debts are on going. (ii) Direct awards of procurement contracts in breach of best practice. FGV has enhanced its procurement practices and will continue this effort. (iii) Critical shortage of workers faced by the Group between May 2016 and April 2018 led to financial losses. FGV has undertaken aggressive worker recruitment in 2018 to restore our worker position. The Board is guided by and committed to the highest principles of corporate governance in undertaking all necessary steps to safeguard FGV’s interests. The Board has taken and will continue to take all necessary actions in a transparent manner andmake relevant announcements on its actions in accordance with the Main Market Listing Requirements of Bursa Malaysia Securities Berhad. Refer to our website for further details on the claims as disclosed in announcements to Bursa Malaysia. www.fgvholdings.com For further details on the Strategy Map of BP21 can be found in Our Business Plan on pages 22-23.