OIL OIL OIL ADVANCING RESPONSIBLY Annual Integrated Report 2022
GUIDED BY GLOBAL BEST PRACTICES 3 Basis of This Report 6 Our Story 8 2022 Highlights 10 5-Year Financial Highlights 11 Sustainability Highlights 12 Our Approach to Sustainability 14 Global Presence 16 Corporate Details 17 FGV’s Key Businesses 18 Organisational Structure WE REMAIN AN ESTABLISHED BUSINESS 20 Chairman’s Statement 24 A Thank You to FGV’s Former Chairman 25 Group Chief Executive Officer’s Review 30 Operating Landscape 32 Stakeholders Engagement 36 Material Matters 38 Our Value Creation Model 40 Business Strategy 46 Linking Material Matters to Risks and Strategy OUR STRONG LEADERSHIP PAVES THE WAY TURNING STRATEGY INTO OUTCOMES WE ARE ADVANCING RESPONSIBLY THIS REPORT DETAILS OUR JOURNEY TO FGV is progressing with confidence towards being a global agribusiness company while creating value in a responsible and sustainable way. Our business foresight and responsible practices have led us to triumphantly establish our presence in nine countries across the globe, ensuring our communities prosper economically, environmentally and socially as we safeguard the interests of our stakeholders. As we are Advancing Responsibly, we are aligned with our purpose of building an integrated value chain advantage. Our business is growing beyond our core Sectors to include opportunities which will drive our global agribusiness ambitions. ANNUAL GENERAL MEETING INSIDE THIS REPORT Tuesday, 20 June 2023 https://meeting.boardroomlimited.my (virtual meeting platform) 11:00 a.m.
VALUE CREATION IS THE BEDROCK OF OUR BUSINESS SHAPED BY HIGH STANDARDS OF GOVERNANCE WITH TRANSPARENCY EMBEDDED IN OUR BUSINESS PRACTICES CREATE GREATER VALUE The illustration we have created shows the sustainable cycle of our presence at various levels of the value chain. The final touch point is represented by a retail store where we connect with people by supplying everyday essential. Our optimism, enthusiasm and commitment are expressed by the warm colour tone, as we want to evoke feelings of happiness, comfort and positive encouragement to our stakeholders. 49 Group Financial Review 55 Group Business Review 73 Sustainability Review 106 At a Glance - Board of Directors 108 Board of Directors’ Profile 116 At a Glance - Group Management Committee 119 Group Management Committee’s Profile 126 Corporate Governance Overview Statement 161 Statement on Risk Management and Internal Control 171 Share Price Movement 172 Financial Calendar 173 Analysis of Shareholdings 177 Top 10 Properties of FGV Group 179 Additional Disclosure: • Utilisation of Proceeds • Non-Audit Fees • Material Contracts • Long-Term Incentive Plan • Share Issuance Scheme • Recurrent Related Party Transaction of Revenue or Trading Nature 188 Global Reporting Initiative Content Index 192 Application of the Principles and Practices of the Malaysian Code on Corporate Governance 2021 (MCCG 2021)
2 FGV HOLDINGS BERHAD Guided By Global Best Practices GUIDED BY GLOBAL BEST PRACTICES 3 Basis of This Report
ANNUAL INTEGRATED REPORT 2022 3 Guided By Global Best Practices BASIS OF THIS REPORT For a better understanding, this Report should be read together with the other reports in our Reporting Suite above and other information made available on our website. www.fgvholdings.com FGV’S 8TH ANNUAL INTEGRATED REPORT SERVES AS AN IMPORTANT TOOL IN COMMUNICATING OUR FINANCIAL AND NON-FINANCIAL PERFORMANCE FOR THE YEAR. THIS REPORT IS GUIDED BY THE PRINCIPLES OF INTEGRATED REPORTING AS OUTLINED BY THE INTERNATIONAL INTEGRATED REPORTING COUNCIL. Through our continuous efforts in improving our reporting disclosures and practices, we aim to help investors and businesses gain a deeper understanding of the value FGV Holdings Berhad (FGV) creates, preserves and shares with our stakeholders. FGV adheres to various reporting guidelines and standards including the Malaysian Code on Corporate Governance 2021 and the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, in the production of this Annual Integrated Report. We also continue to ensure that we work towards meeting the Global Reporting Initiative Standards with regard to sustainability reporting. REPORTING SCOPE AND BOUNDARIES This Report covers our value creation activities from 1 January 2022 to 31 December 2022. Unless stated otherwise, it includes all of FGV’s businesses in Malaysia and other countries involving operations that we are in full control of, subsidiaries and joint ventures. We also report on various developments that may go beyond our reporting boundaries but are highly material to the Group’s performance. The Report is designed to provide information in a comparative format to make it easier for readers to review. We have also embedded sustainability disclosures throughout the report, demonstrating our commitment to sustainability and its importance in the value creation process. 2022 REPORTING SUITE Annual Integrated Report 2022 Audited Financial Statements 2022 UN SDGs End hunger, achieve food security and improved nutrition, and promote sustainable agriculture Ensure healthy lives and promote well-being for all at all ages Ensure inclusive and equitable quality education and promote lifelong learning opportunities for all Achieve gender equality and empower all women and girls Reduce inequality within and among countries Promote sustained, inclusive and sustainable economic growth, full and productive employment, and decent work for all Make cities and human settlements inclusive, safe, resilient and sustainable Ensure sustainable consumption and production patterns Take urgent action to combat climate change and its impacts Protect, restore and promote sustainable use of terrestrial ecosystems, sustainably manage forests, combat desertification, halt and reverse land degradation, and halt biodiversity loss Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels Strengthen the means of implementation and revitalise the global partnership for sustainable development We support the United Nations Sustainable Development Goals (UN SDGs) by aligning our sustainability approach and initiatives with the 14 goals where possible. We strive to contribute to a sustainable future for all, in line with the UN SDGs’ aim of leaving no one behind. Ensure access to affordable, reliable, sustainable and modern energy for all Conserve and sustainably use the oceans, seas and marine resources for sustainable development
4 FGV HOLDINGS BERHAD Guided By Global Best Practices fgv.investors@fgvholdings.com 03-2789 0000 DETERMINING OUR MATERIAL MATTERS This Report has been developed based on the material matters identified in 2021 and revalidated in 2022 to ensure that our reporting provides a fair, accurate and comprehensive account of our strategy, performance and prospects. These material matters were mapped against our three sustainability pillars to provide a more inclusive and informed view to our stakeholders. REPORTING INTEGRITY In safeguarding the integrity of this Report, we ensured that information provided is reliable, consistent and complete. The reviewing process and approval by the Reporting Committee ensures compliance with the International Integrated Reporting Council Framework and is fair representation of FGV’s performance and operations. This Report was also reviewed by the Audit Committee and submitted to the Board for final approval together with the Audited Financial Statements as part of our stringent governance practice. The review of this Report is further supported by our external auditors who conducted assurance on our Audited Financial Statements. The external auditors also provided a limited assurance review on our Statement on Risk Management and Internal Control. FORWARD-LOOKING STATEMENTS Forward-looking statements are used throughout this Report to describe FGV’s plans, objectives, strategies, future operations and performance. Such statements should not be considered as guarantees of the Group’s future performance as it is subject to risks, uncertainties and assumptions. Actual results and outcomes may differ from those described in the forward-looking statements. FGV does not make any representation or warranty, whether explicit or implied, that forward-looking statements will be realised. OPPORTUNITIES FOR FEEDBACK We welcome the feedback of our stakeholders and the public on our reporting to continuously assist us in elevating our reporting practices and standards. Please reach out to our Investor Relations team by phone or email via the following contact details: NAVIGATING THROUGH THIS REPORT All icons featured here are Navigation Icons that will be consistently featured within our Report as a guide towards better integration and presentation of information. OUR SIX CAPITALS Natural Manufactured Social & Relationship Human Intellectual OUR STRATEGIC THRUSTS Product & Market Penetration Basis of This Report More information on Material Matters can be found on pages 36 to 37. OUR KEY MATERIAL MATTERS Operational Excellence Sustainability Certification Traceability, Responsible Sourcing & Supply Chain Management Upholding Human Rights & Labour Standards Occupational Health & Safety Climate Action Governance, Ethics & Integrity PILLAR 1 PILLAR 2 PILLAR 3 OUR TOP RISKS Labour Risk Climate Risk Cyber Security Risk Sustainability Risk Financial Risks Financial New Growth Areas Financial & Capability Building Operational Improvement Market Risk Trading Risk
ANNUAL INTEGRATED REPORT 2022 5 Guided By Global Best Practices WE REMAIN AN ESTABLISHED BUSINESS 6 Our Story 8 2022 Highlights 10 5-Year Financial Highlights 11 Sustainability Highlights 12 Our Approach to Sustainability 14 Global Presence 16 Corporate Details 17 FGV’s Key Businesses 18 Organisational Structure
We Remain An Established Business 6 FGV HOLDINGS BERHAD OUR STORY FGV is a Malaysian-based agribusiness and is one of the world’s largest producers of Crude Palm Oil (CPO), accounting for 4% of global and 16% of Malaysian CPO production. Since its listing on the Main Market of Bursa Malaysia in 2012, FGV has remained committed to achieve its strategic goals and leveraging synergies to create value for its stakeholders. OUR PRIDE VALUES Best solutions and ideas come from working with both internal and external parties. OUR VISION Delivering Sustainable Foods and Agriproducts to the World OUR MISSION CONSUMER PRODUCT BRANDS P PARTNERSHIP Developing and producing high-quality products sustainably that are both good for the people and the environment Practicing a healthy and innovative working environment and culture within the Group whilst promoting the same to our suppliers 51,919 OUR WORKFORCE I D E R Our sustained success and achievements can only come from respect for people as well as the environment, which is the main source of our business. RESPECT It means being responsible and accountable for one’s own actions and behaviours. Each employee is responsible for the Group’s success and business reputation. INTEGRITY Strive to discover, create ideas and identify growth potential from uncharted opportunities and beyond traditional boundaries, all done in the best interest of our stakeholders. DYNAMISM We are enthusiastic about what we do, committed to the growth and future of our agribusinesses, while propagating sustainable development around the world. ENTHUSIASM Establishing an integrated value chain business ecosystem The embodiment of governance and compliance Cultivating diversification in products and geographies
We Remain An Established Business ANNUAL INTEGRATED REPORT 2022 7 Our Story OUR BUSINESSES The Plantation Sector forms the core of the Group and focuses on all aspects of the supply chain, including Upstream, Downstream, Research & Development (R&D), Marketing and Trading, as well as Renewable Energy. 100% MSPO-certified & 45% RSPO-certified 67 Mills 27% (3.85 million MT) Third Parties 28% (3.99 million MT) FGV Estates 45% (6.41 million MT) FELDA Settlers FFB Processed 14.25 million MT Oil palm 334,075 Ha Rubber 7,204 Ha Other crops 3,435 Ha Unplanted area 94,337 Ha Planted Area >40%domestic seed market share Producer of Yangambi ML161, an award-winning planting material with 69 highly qualified researchers 15 agronomists of oil palm plantations for R&D purposes >12,000 Ha R&D Malaysia’s leading fertiliser manufacturer with >700,000 MT annual production capacity Total Landbank (including Malaysia and Indonesia) 439,051 Ha CPO Production 2.90 million MT PLANTATION SUGAR Our Sugar Sector operates mainly through our 51% owned subsidiary, MSM Malaysia Holdings Berhad (MSM). MSM is Malaysia’s leading refined sugar producer and one of the largest standalone sugar refiners in Asia. MSM manufactures, markets and sells refined sugar products ranging from refined sugars to sugar sucralose and stevia mix, promoting healthier options for our consumers. 2.05 million MT Sugar Refining Capacity domestic refined sugar market share GULA PRAI >60% Our Logistics arm strengthens the core of FGV’s business entities with the nation’s largest liquid bulking installation and dedicated fleets to drive growth in Logistics through innovation and technology. Other supporting businesses under this Sector include Information Technology and Hospitality. Total Storage Capacity (including Malaysia and Pakistan) 1.07 million MT Mixed Fleet Vehicles >600 units Liquid 948,990 MT Dry Cargo 123,000 MT LOGISTICS & OTHERS CONSUMER PRODUCTS & INTEGRATED FARMING Consumer Products & Integrated Farming leverage on synergies within FGV to diversify into other forms of agriculture products, in bringing additional revenue to the Group. 45.7% #1 refined cooking oil brand in Malaysia with market share of 43.9% #1 margarine brand in Malaysia with market share of More information on Business Performance for each Sector can be found in the Group Business Review on pages 55 to 72.
We Remain An Established Business 8 FGV HOLDINGS BERHAD 2022 HIGHLIGHTS Completed 10,858 Ha of felling and 3,232 Ha of planting work. NATURAL CAPITAL INTELLECTUAL CAPITAL SOCIAL & RELATIONSHIP CAPITAL Applied 240,448 MT of fertiliser, equivalent to 75% coverage. Updated FGV’s e-Wallet mobile application with a remittance feature which allows our migrant workers to send remittances to their families in their country of origin. Awarded the Jendela Project (Phase 1) for 91 sites across Malaysia. Launched FGV e-Productivity mobile application for our estate workers to effectively manage their adminstrative matters and engage with the workers on-site. Expanded intelligent Robotic Process Automation’s scope to improved efficiency and productivity of the finance shared services function. Implemented Audit Command Language Analytics which enables the extraction of data, manages risk and detects and prevents fraud. Established the Sustainability Framework to manage Environmental, Social and Governance risks and opportunities. Invested around RM17.18 million in various initiatives under Corporate Social Responsibility. Launched the Independent Smallholders Consultation Programme to engage with smallholders in accordance with FGV’s responsible sourcing commitment. Collaborated with Yayasan Didik Negara, to educate 120 primary school students on wildlife conservation. Collaborated with The Malaysian Trades Union Congress and The International Labour Organization (ILO) Malaysia to raise awareness on child labour and forced labour. Partnered with Project Liber8 to conduct multiple workshops with 117 students and teachers to raise awareness of child trafficking.
We Remain An Established Business ANNUAL INTEGRATED REPORT 2022 9 2022 Highlights MANUFACTURED CAPITAL Collaborated with Bank Simpanan Nasional to launch a Shariah-compliant financing facility for Umrah, Hajj and packaged tours. FINANCIAL CAPITAL Increased Saji refined cooking oil and Seri Pelangi margarine market share to 45.7% and 43.9% respectively. Launched a total of nine Stock Keeping Units (SKUs): - Five SKUs under Oils & Fats segment • Saji 3 Kg Cooking Oil, Saji Beras Basmathi & Aroma, Adela Tub Sunflower Oil and Non-Hydrogenated Margarine. - Four SKUs under Integrated Farming segment • Horeca Malaysian Fragrant Rice (under Ladang’57), Native Chicken Feed, Cat Food and Cat Litter (under ALMA). Supplied olein and other palm-based products to Cambodia and Vietnam, and palm-based shortening to the North American market. Commissioned a new warehouse with a capacity of 15,000 MT in Pasir Gudang. Awarded a three-year transportation contract with Tabung Haji to handle Hajj pilgrims’ baggages. Expanded Linggi’s fresh milk processing capacity to 30,000 litres per day. Signed a conditional shareholders’ agreement with Baladna Q.P.S.C. and Touch Group Holdings Sdn Bhd to support the National Food Security Agenda. Conducted 230,626 hours of training across all levels to upskill employees. HUMAN CAPITAL Scored 81% in the FGV Employee Engagement Survey, placing us in the top quartile of the Malaysian norm. Recruited more than 10,000 plantation workers which reduced the Group’s labour shortage to 13%.
We Remain An Established Business 10 FGV HOLDINGS BERHAD 2022 2021 2020 2019 2018 Operating Results (RM Million) Revenue 25,562 19,566 14,076 13,259 13,464 Operating profit/(loss) 1,907 1,779 445 (194) (815) Profit/(Loss) before taxation and zakat 1,955 1,714 346 (339) (1,025) Profit/(Loss) attributable to owners of the Company 1,329 1,168 146 (246) (1,081) Key Balance Sheet Data (RM Million) Property, plant and equipment 7,728 7,674 7,810 8,190 8,501 Total assets 18,111 17,956 17,180 17,702 18,992 Total borrowings 3,059 3,998 4,293 4,907 5,403 Total liabilities 10,226 10,770 11,079 11,601 12,388 Shareholders’ equity 6,232 5,421 4,262 4,173 4,465 Share Information Earnings per share (sen) 36.4 32.0 4.0 (6.7) (29.6) Dividend per share (sen) 15.0 8.0 3.0 2.0 Nil Net asset per share (RM) 1.71 1.49 1.17 1.14 1.22 Share price as at 31 December (RM) 1.32 1.48 1.28 1.52 0.71 Note: Financial highlights in previous years are based on latest restated amounts in accordance to changes in accounting policy and application of new MFRS. 5-YEAR FINANCIAL HIGHLIGHTS REVENUE (RM Million) 2018 2019 2020 2021 2022 PROFIT/(LOSS) AFTER TAX AND MINORITY INTEREST (RM Million) EARNINGS PER SHARE (Sen) RETURN ON SHAREHOLDERS’ FUND (%) NET ASSET PER SHARE (RM) DIVIDEND PER SHARE (Sen) 2018 2019 2020 2021 2022 2018 2019 2020 2021 2022 13,464 13,259 14,076 19,566 25,562 (1,081) (246) 146 1,168 1,329 2018 2019 2020 2021 2022 (29.6) (6.7) 4.0 32.0 36.4 (24.21) (5.90) 3.43 21.55 21.33 1.22 1.14 1.17 1.49 1.71 Nil 2.0 3.0 8.0 15.0 2018 2019 2020 2021 2022 2018 2019 2020 2021 2022
We Remain An Established Business ANNUAL INTEGRATED REPORT 2022 11 SUSTAINABILITY HIGHLIGHTS Revised and strengthened the Guidelines and Procedures for Responsible Recruitment and Employment of Migrant Workers to align our practices with international standards, and ensure the application of No Recruitment Fees policy. Signed 16 Collective Agreements with our workers’ unions for the period of 2022 to 2024. Received the Corporate Excellence in the Commodities Sector for Sustainable Value Chain Award 2022 from International Business Review ASEAN. Demonstrated our commitment to gender equality as the first agribusiness company in Malaysia to be a signatory of the Women’s Empowerment Principles (WEPs), established by the United Nations Global Compact and the United Nations Entity for Gender Equality and the Empowerment of Women (UN Women). Obtained the 2022 Malaysia Sustainable Palm Oil Developments Market Leadership Award from Frost & Sullivan’s Best Practices. Organised a Fun Run for our management, plantation management and migrant workers to commemorate International Migrants Day. Received the National Energy Awards (NEA) 2022 under the Renewable Energy on Grid National Grid category for Triang Biogas Power Plant. Maintained 100% Traceability to Mills and achieved 99% Traceability to Plantations.
We Remain An Established Business 12 FGV HOLDINGS BERHAD OUR APPROACH TO SUSTAINABILITY SUSTAINABILITY FRAMEWORK FGV is guided by a robust Sustainability Framework that allows us to integrate sustainable practices into our business management and operations while ensuring continuous value creation for our stakeholders and promoting positve social and environmental impacts. We are committed to upholding human rights in our operations and supply chain, and will continue to enhance our labour practices in line with labour standards and regulatory frameworks. Our Sustainability Framework encapsulates key aspects of the Environmental, Social and Governance (ESG) agenda. OUR SUSTAINABILITY FRAMEWORK GUIDES THE WAY WE APPROACH ESG ASPECTS CROSSING THE CHASM 2022 - RETHINK • Revision of policies and standards • Resolving resistance and lack of integration • Feasibility study and re-assessment of existing and new business strategies • Enhancement of existing sustainability programmes • Strengthening governance for a holistic approach • Promoting sustainability-related innovation management AND PROVIDES THE CATALYST FOR Our priority is to fully employ a holistic sustainability approach that encompasses all sustainability programmes and targets to create positive economic, environmental and social impacts. The approach is anchored on three phases – Rethink, Repurpose and Redesign, and is being rolled out from 2022 to 2024: Profitability and economic growth as the main output of a holistic sustainability approach. Economic Growth Integration of sustainability objectives and targets into the Company’s core business strategy, model and governance structure. Governance Integration of a responsible approach to social and human rights issues. Social Integration of environmental protection and sustainable food production in becoming a zero environmental impact business. Environment Linking innovation and transformation to promote incremental and disruptive sustainabilityoriented innovations and progress. Innovation & Transformation Transformation Innovation Social Governance Environment
We Remain An Established Business ANNUAL INTEGRATED REPORT 2022 13 Our Approach to Sustainability SUSTAINABILITY GOVERNANCE The Board has oversight of sustainability-related matters and leads the Group’s sustainability direction. Supported by the Board Sustainability Committee, which receives reports from the Group Management Committee, the Board ensures strategic development and execution of the Group Sustainability Policy (GSP), and is responsible for the approval of the Group’s sustainability disclosures. TAKING THE LEAP 2023 - REPURPOSE The GSP, which was first introduced in 2016, embodies commitment to contribute to the achievement of the United Nations Sustainable Development Goals (SDGs) by having positive impacts on the economy, environment and people. The GSP is reviewed and refreshed periodically to align with the latest sustainability-related legislation and standards and stakeholder demands, as well as ESG indices. In 2020, we introduced an enhanced GSP 4.0 as an updated policy to emphasise on the Company’s ongoing commitment to sustainability. Comprising three pillars, namely Promoting Economic Growth, Respecting Human Rights and Protecting the Environment, the GSP serves as an overarching framework for FGV’s sustainability agenda. It is applicable to all our portfolios and entities, including our listed and non-listed subsidiaries worldwide, in which FGV has management control. This includes contractors, consultants, suppliers and all other third parties, who work for them. BRIDGING AT PEAK 2024 - REDESIGN • Adoption and integration of a holistic sustainability approach at the operational level • Management of negative impacts throughout operations • Building a culture that integrates sustainability principles into improving profitability and livelihood • Commitment to zero-impact business operations through circularity (closed-loop) • Full ethical investment and sourcing • Redesign processes and products to close the loop • Full and continuous compliance with sustainability regulations and standards at national and global levels • Continuous engagement and materiality assessment • Continuous improvement on policies and internal standards • Branding of FGV as a sustainability-based commerce WHICH ARE SUPPORTED BY OUR SUSTAINABILITY POLICIES OUR SUSTAINABILITY STRATEGIES More information on FGV’s Sustainability Governance can be found in the Corporate Governance Overview Statement on pages 126 to 160. GROUP SUSTAINABILITY POLICY • Enhancing livelihood • Profitability and efficient use of resources • Obligation of value chain partners • Equality and non-discrimination • Upholding labour standards • Respecting rights of indigenous peoples and local communities • Health and safety • Preventing harassment and abuse • Efficient use of natural resources • Managing environmental impacts • No deforestation and planting on peat • Protect high biodiversity value and high conservation value areas • Limitations on the use of hazardous chemicals and agrochemicals • No open burning/use of fire • Water and waste management • Addressing climate change Protecting the Environment Promoting Economic Growth Respecting Human Rights
We Remain An Established Business 14 FGV HOLDINGS BERHAD GLOBAL PRESENCE North America FGV OPERATES IN 9 COUNTRIES ACROSS USA 1 Oleochemical plant FRANCE 1 Trading office* SPAIN 1 Trading office* TURKEY 1 Vegetable oil refinery* Europe FGV’s Assets Sugar 2 Sugar refineries 1 Refined sugar warehouse Plantation 219 Estates 67 Mills 8 Vegetable oil refineries (3 are JVs)* 6 Rubber processing facilities 4 Kernel crushing plants 3 R&D centres 3 Seed production centres 3 Fertiliser manufacturing plants 3 Trading offices* 2 Oleochemical plants (1 is JV)* 1 Biodiesel plant 1 Green rubber processing facility Logistics & Others 12 Bulking terminals (1 is JV)* 10 Transportation hub and spoke 8 Warehouses (1 is JV)* 4 Transportation depots 2 Jetty operations 1 Hotel Integrated Farming 2 Collection, Processing and Packaging Centres (CPCC) 1 Agro food valley 1 Paddy farming 1 Animal feed plant 1 Fresh milk processing facility 1 Integrated cattle dairy farm * Joint Venture More information on the assets owned by FGV can be found on our website, www.fgvholdings.com.
We Remain An Established Business ANNUAL INTEGRATED REPORT 2022 15 Global Presence Asia PAKISTAN 1 Trading office* 1 Warehouse 2 Bulking terminals (1 is JV)* 1 Vegetable oil refinery 1 Jetty operation INDONESIA 5 Estates CAMBODIA 1 Rubber processing facility THAILAND 1 Rubber processing facility MALAYSIA 214 Estates 67 Mills 6 Vegetable oil refineries (2 are JVs)* 4 Rubber processing facilities 4 Kernel crushing plants 3 R&D centres 3 Seed production centres 3 Fertiliser manufacturing plants 1 Biodiesel plant 1 Oleochemical plant* 1 Green rubber processing facility 2 Sugar refineries 1 Refined sugar warehouse 10 Bulking terminals 10 Transportation hub and spoke 7 Warehouses 4 Transportation depots 1 Jetty operation 1 Hotel 2 Collection, Processing and Packaging Centres (CPCC) 1 Fresh milk processing facility 1 Agro food valley 1 Animal feed plant 1 Paddy farming 1 Integrated cattle dairy farm NORTH AMERICA, EUROPE AND ASIA FGV’s Total Workforce1 51,919 (Male) 86% (Female) 14% 1 FGV’s total workforce as at 31 December 2022 including permanent employees and operational labour Permanent Employees (Male) 84% (Female) 16% 16,812 Operational Labour (Male) 87% (Female) 13% 35,107
We Remain An Established Business 16 FGV HOLDINGS BERHAD CORPORATE DETAILS BOARD OF DIRECTORS Dato’ Amiruddin Abdul Satar Non-Independent Non-Executive Director Dato’ Shahrol Anuwar Sarman Chairman (Interim) Non-Independent Non-Executive Director Datuk Yatimah Sarjiman Non-Independent Non-Executive Director Dato’ Mohd Rafik Shah Mohamad Senior Independent Non-Executive Director Dato’ Nonee Ashirin Dato’ Mohd Radzi Independent Non-Executive Director Kasmuri Sukardi Independent Non-Executive Director Nik Fazila Nik Mohamed Shihabuddin Independent Non-Executive Director Azmin Che Yusoff Independent Non-Executive Director COMPANY SECRETARY Azni Ariffin LS0010610 Appointed on 13 July 2022 REGISTERED OFFICE Level 21, Wisma FGV Jalan Raja Laut 50350 Kuala Lumpur Malaysia Tel : +603 2789 0000 Fax : +603 2789 0001 Website : www.fgvholdings.com PLATFORM FOR SHAREHOLDERS/ STAKEHOLDERS TO CONVEY CONCERNS Dato’ Mohd Rafik Shah Mohamad (Senior Independent Non-Executive Director) Email : sid@fgvholdings.com Dato’ Mohd Nazrul Izam Mansor GROUP CHIEF EXECUTIVE OFFICER Nurul Syazatul Aiman Taifor Head of Investor Relations Level 20, Wisma FGV Jalan Raja Laut 50350 Kuala Lumpur Malaysia Tel : +603 2789 0000 Email : fgv.investors@fgvholdings.com INVESTOR RELATIONS AND ENQUIRIES Boardroom Share Registrars Sdn Bhd Registration No: 199601006647 (378993-D) 11th Floor, Menara Symphony No 5, Jalan Prof. Khoo Kay Kim Seksyen 13 46200 Petaling Jaya Selangor Darul Ehsan Malaysia Tel (Help Desk) : +603 7890 4700 Fax : +603 7890 4670 Website : www.boardroomlimited.com Email : bsr.helpdesk@ boardroomlimited.com SHARE REGISTRAR PricewaterhouseCoopers PLT (LLP0014401-LCA & AF 1146) Chartered Accountants Level 10, Menara TH 1 Sentral Jalan Rakyat, Kuala Lumpur Sentral P.O. Box 10192 50706 Kuala Lumpur Malaysia Tel : +603 2173 1188 Fax : +603 2173 1288 Website : www.pwc.com/my AUDITORS Listed on Main Market of Bursa Malaysia Securities Berhad Listing Date : 28 June 2012 Stock Name : FGV Stock Code : 5222 Stock Sector : Plantation @fgvholdings @fgvholdings FGV Holdings Berhad FGV Holdings Berhad STOCK EXCHANGE LISTING
We Remain An Established Business ANNUAL INTEGRATED REPORT 2022 17 FGV’S KEY BUSINESSES Subsidiaries Joint Ventures More information can be found in the Audited Financial Statements 2022. Scan the QR code to view our Audited Financial Statements. MSM Malaysia Holdings Berhad MSM Prai Berhad MSM Sugar Refinery (Johor) Sdn Bhd MSM Logistics Sdn Bhd MSM Trading & Distribution Sdn Bhd FGV Johor Bulkers Sdn Bhd FGV Bulkers Sdn Bhd FGV Grains Terminal Sdn Bhd Langsat Bulkers Sdn Bhd FGV Transport Services Sdn Bhd F.W.Q. Enterprises (Pvt) Ltd Logistics FGV Prodata Systems Sdn Bhd Felda Travel Sdn Bhd Mapak Edible Oils (Pvt) Ltd Others LOGISTICS & OTHERS Upstream FGV Plantations (Malaysia) Sdn Bhd Pontian United Plantations Berhad Asian Plantations Limited FGV Security Services Sdn Bhd FGV Palm Industries Sdn Bhd PT Citra Niaga Perkasa PT Temila Agro Abadi Downstream Delima Oil Products Sdn Bhd FGV Kernel Products Sdn Bhd FGV Refineries Sdn Bhd FGV Biotechnologies Sdn Bhd Twin Rivers Technologies Holdings Inc FGV IFFCO Sdn Bhd FPG Oleochemicals Sdn Bhd Research & Development FGV Agri Services Sdn Bhd FGV R&D Sdn Bhd FGV Fertiliser Sdn Bhd Rubber FGV Rubber Industries Sdn Bhd Feltex Co Ltd FGV-CVC (Cambodia) Co Ltd Marketing & Trading FGV Trading Sdn Bhd FGV Marketing Services Sdn Bhd INTEGRATED FARMING FGV Integrated Farming Holdings Sdn Bhd FGV Dairy Farm Sdn Bhd FGV Dairy Industries Sdn Bhd FGV Agro Fresh Technology Sdn Bhd FGV Chuping Agro Valley Sdn Bhd PLANTATION SUGAR
We Remain An Established Business 18 FGV HOLDINGS BERHAD ORGANISATIONAL STRUCTURE Logistics & Others Consumer Products Integrated Farming MSM Malaysia Holdings Berhad Investment Committee Nomination & Remuneration Committee Board Sustainability Committee Audit Committee Group Chief Executive Officer Group Governance & Risk Management Group Internal Audit Group Secretarial Board Governance & Risk Management Committee Board of Directors FGV Holdings Berhad Plantation Finance & Corporate Services Group Human Capital Group Strategy Group Transformation Group Strategic Communication Group Sustainability Group Health, Safety & Environment Group Finance Group Procurement Group Legal Group Tax Group Treasury Group Information Technology Upstream Downstream Research & Development Marketing & Trading Renewable Energy Operational Excellence Logistics Others Business Sector Support Sector Business Division Support Division
We Remain An Established Business ANNUAL INTEGRATED REPORT 2022 19 OUR STRONG LEADERSHIP PAVES THE WAY 20 Chairman’s Statement 24 A Thank You to FGV’s Former Chairman 25 Group Chief Executive Officer’s Review
Our Strong Leadership Paves The Way 20 FGV HOLDINGS BERHAD CHAIRMAN’S STATEMENT It was an impressive year for FGV as we delivered our best-ever financial performance since our listing and made further headway in our sustainability journey. We continue to position ourselves for long-term sustainable growth as we advance responsibly to the next level, investing resources in our people and crystallising the strategies needed to deliver sustainable agriproducts to the world. This year’s achievement was the result of the unwavering and tireless efforts put forth by our Management Team and employees. NAVIGATING THE POST-PANDEMIC RECOVERY In 2022, the world saw a broader return to normalcy for economies, businesses and societies following two full years of pandemic-led disruptions as lockdowns were lifted. This also marked the return to more normal levels of consumption which caught many off-guard due to the pace of the rebound. As a result, prices of energy and commodities escalated and even reached decade-high levels in the first half of 2022. This was further aggravated by the Russia-Ukraine conflict which set off a chain of events that pushed food and fertiliser prices higher and disrupted supply chains. The price of Crude Palm Oil (CPO) per MT, which had already been tracking upward in 2021 was pushed even higher in 2022. The effect of the price rises increased inflation significantly and led to central banks globally tightening monetary policy with most countries, including Malaysia, seeing interest rates back to pre-pandemic levels. Although the world’s Gross Domestic Product (GDP) grew steadily in 2022, it is expected to moderate going forward as high interest rates start to dampen spending and demand1. Dato’ Shahrol Anuwar Sarman Chairman (Interim) FINANCIAL HIGHLIGHTS With the elevated palm oil price environment supporting our Plantation Sector’s higher CPO production, the Group delivered record revenues and profits in 2022, delivering our best results since FGV was listed. This was further supported by robust results from our Logistics & Others Sector but was partially offset by the losses in the Sugar Sector due to higher input costs. Based on our commendable results, the Board approved an interim dividend of 4 sen per share in the second quarter of 2022 and declared a final dividend of 11 sen per share, for a total dividend payout of RM547 million for the year. FGV’S AVERAGE CPO PRICE REACHED A HISTORICAL HIGH OF RM4,832 PER MT IN 2022. 1 Source: International Monetary Fund (IMF), January 2023 World Economic Outlook Update TOTAL DIVIDEND 15sen per share
Our Strong Leadership Paves The Way ANNUAL INTEGRATED REPORT 2022 21 Chairman’s Statement SETTING THE STAGE FOR SUSTAINABLE GROWTH In the year under review, the Group’s focus was on developing new strategies to support its aspiration of advancing responsibly and creating long-term sustainable value for our shareholders. Going forward, the Group’s Business Plan 2025 (BP25) contains specific initiatives that will enable us to expand beyond the traditional Upstream and Downstream spaces in which FGV operates, as well as in our Logistics and Sugar businesses. Broadly, the Plantation Sector remains committed to implement good labour and agricultural practices, innovate, and maximise production to mitigate any potential setbacks. Despite the ongoing challenge of high input costs in the Sugar Sector, we are determined to adopt a proactive approach to manage risk. We plan to employ strategic hedging practices for raw sugar, currency, and crude oil, while also prioritising efforts to increase production and enhance reliability. In the Logistics & Others Sector, our businesses will have greater opportunities for growth as economies continue to recover. However, beyond the products and services that we will bring to the market, what happens behind the scenes is equally important. In this context, we will need a mindset shift within FGV to one that embraces lifelong learning and an entrepreneurial culture to explore the potential capabilities of the Group. Here, employees should embrace continuous learning not only for the benefit of the Company, but also to uplift their professional and personal lives. This is why we continue to invest significantly in upskilling and training across all levels of our employees. As part of our ongoing efforts to foster a culture of innovation and inculcate PRIDE values among our employees, we launched the inaugural edition of the Chairman’s Innovation Award, which received an impressive total of 34 entries from our subsidiaries. These entries were evaluated based on a range of criteria, Celebrating our Chairman’s Innovation Award winners, inspiring us to innovate and grow towards a brighter future. including productivity, Environmental, Social and Governance (ESG) and safety, scalability, presentation and concept. After careful consideration, FGV Palm Industries Sdn Bhd stood out with its Rotary Drum Oil Skimmer (RODOS) and Automated Steriliser, which demonstrated significant potential to enhance our operations and drive sustainable growth. Meanwhile, FGV R&D Sdn Bhd introduced its innovative Fortified Organic Fertiliser, which has the potential to revolutionise our approach to sustainable agriculture. Their ideas and initiatives are a testament to the creativity and ingenuity that underpins our success, and we look forward to building on this momentum to drive further innovation and growth in the future. ADVANCING RESPONSIBLY At FGV, we remain fully committed to advance the business in a responsible, sustainable and ethical manner. This is where ESG considerations take centre stage, providing us with the tools and frameworks to take FGV and the palm oil industry forward sustainably. In the year under review, we continued to build on our ESG agenda, especially in the context of responsible labour practices and gained considerable recognition domestically and regionally for our sustainability practices. In recognition of our ESG efforts, FGV received two significant awards in 2022. These were the 2022 Malaysia Sustainable Palm Oil Development Market Leadership Award from Frost & Sullivan’s Best Practices Awards and the Corporate Excellence in the Commodities Sector for Sustainable Value Chain Award 2022 from International Business Review ASEAN Awards. These awards serve as a massive encouragement for us to continue strengthening our ESG efforts together with our stakeholders.
Our Strong Leadership Paves The Way 22 FGV HOLDINGS BERHAD Chairman’s Statement From an environmental perspective, we have continued our conservation efforts with the launch of the Sun Bear Management Guidelines with our partners; PERHILITAN, Malaysian Nature Society (MNS) and Universiti Kebangsaan Malaysia. FGV is also looking forward to expand the circularity approach to sustainability by strengthening our waste-to-wealth initiatives. In this regard, we are actively seeking collaborations with local manufacturers to convert our Empty Fruit Bunches (EFB) into EFB pellets that can serve as an alternative renewable energy solution. Seeking alternative renewable energy is one of our efforts in combatting climate change, which is currently the most pressing issue in the world. The negative effects of global warming due to human activities have intensified and impacted all industries and global supply chains. Plantation, which is our core business, is one of the industries that has been significantly affected by the effects of climate change. In view of the urgent need to combat climate change, we committed to the Science-Based Targets initiative (SBTi) and net zero ambition in 2021 to accelerate our transition to a low-carbon economy. Going forward, we aspire to embark on the Task Force on Climate-related Financial Disclosures in the coming financial year to identify our climate-related risks and opportunities. FGV IS THE FIRST AGRIBUSINESS COMPANY IN MALAYSIA TO BE A SIGNATORY OF THE WOMEN’S EMPOWERMENT PRINCIPLES (WEPs), A SET OF GUIDELINES DEVELOPED BY THE UNITED NATIONS GLOBAL COMPACT AND UNITED NATIONS WOMEN, IN LINE WITH OUR AGENDA ON GENDER EQUALITY AND WOMEN’S EMPOWERMENT. At FGV, our commitment to governance is unwavering, and we strive to cultivate a culture that aligns with our PRIDE values. To embed best practices in corporate governance and foster a culture that upholds it, we keep ourselves abreast of the latest developments and practices in the field. Our framework sets clear boundaries and defines the various committees that govern different aspects of the business. Throughout the year, we reaffirmed and communicated the FGV Governance Framework to set clear expectations and alignment of conduct by our subsidiaries with the Board’s risk appetite, where certain reserved matters for FGV have been spelt out for adherence by the subsidiaries. At the Board level, we deliberated on many issues including strategy, risk and sustainability. This included continuous monitoring of FGV governance arrangements and ensuring that all of our people acted with openness, honesty and transparency. We recognise that as we continue to grow, it is crucial to maintain a strong culture that aligns with our vision, strategy and values. We pay particular attention to Anti-Bribery and Anti-Corruption initiatives as we have a zero-tolerance stance against bribery and corruption. In 2022, we further reinforced our Corruption Risk Management (CRM) programme, extending coverage to 32 companies, compared to 28 in 2021, and conducted an Anti-Bribery Internal Audit on FGV-identified sites. Additionally, we engaged third-party experts to evaluate our performance. We achieved a score of 91% on documentation and 85% on implementation for compliance with the Malaysian Anti-Corruption Commission’s (MACC) Section 17A Adequate Procedures and successfully underwent SIRIM Berhad’s 2nd Surveillance Audit. We also took proactive steps to strengthen our integrity efforts by appointing two former officers from the MACC to lead our Whistleblowing and Grievance initiatives. As a result of our strong commitment to uphold good governance, we received several awards and recognitions as a testament to our efforts in good practices. This year, FGV revised and strengthened its Guidelines and Procedures for Responsible Recruitment and Employment of Migrant Workers to align its practices with international standards, including committing to No Recruitment Fees for its migrant workers. By eliminating these fees, our migrant workers will not be required to pay recruitment fees to third parties. This is a commendable initiative as it aims to protect and respect the rights of migrant workers and ensure fair and ethical employment practices. We also continued to work closely with labour-related non-profit organisations such as the Fair Labor Association (FLA), Project Liber8, the International Labour Organization (ILO) Malaysia and the Malaysian Trades Union Congress (MTUC) to promote greater recognition and understanding of the issue of child labour and forced labour among plantation workers. The Group has also successfully negotiated 16 Collective Agreements with its workers’ unions, comprising internal unions and the National Union of Petroleum and Chemical Industry Workers Peninsular Malaysia, covering the period 2022 to 2024. These agreements, which are renegotiated every three years, will ensure that our workers continue to have salaries and benefits commensurate with the market. For our smallholders, we launched the Independent Smallholders Consultation Programme which focuses on creating awareness on the role of smallholders in the sustainable palm oil industry and understanding the industry’s challenges and ways forward. In giving back to society, FGV has invested around RM17.18 million in corporate social responsibility activities for underprivileged groups and educational initiatives that have benefitted students all around the country. Environmental Social Governance
Our Strong Leadership Paves The Way ANNUAL INTEGRATED REPORT 2022 23 Chairman’s Statement BUILDING A SUSTAINABLE FUTURE Looking ahead, we are cautiously optimistic about the global outlook, especially with a recession looming, persistent inflationary effects and ongoing geopolitical uncertainties. Global GDP is expected to moderate to 2.7% in 2023, while Malaysia’s GDP growth is forecast at 4% to 5%, according to the Ministry of Finance. The palm oil sector is, however, expected to remain resilient despite expectations of the CPO price softening to around RM4,000 per MT in 2023. For the Group, besides ongoing productivity and efficiency improvements in the Upstream business, we will continue to leverage our research and development capabilities to enhance existing processes, create new revenue streams and product offerings. Our Downstream and Sugar businesses will prioritise operational excellence initiatives while penetrating new markets and business channels. Meanwhile, our Logistics business will continue to expand capacity and utilise technology to serve customers effectively. Lastly, we will explore other segments which we believe hold great potential for FGV, especially given the existing capabilities and assets that we possess. We also have a strong pipeline of ESG initiatives lined up which include developing a Greenhouse Gas (GHG) inventory and reduction plan in line with our net zero ambition, alongside other programmes to reduce our impact on the environment. In the social context, we will formally adopt policies on respecting and protecting child rights as well as gender equality and women’s empowerment. We will also strive to have the Withhold Release Order (WRO) issues by the United States (US) Customs and Border Protection (CBP) modified. Our independent assessor has concluded its on-site assessment, and we are currently implementing its recommendations and anticipate submitting the final report to the US CBP soon. Effective governance practices are critical for the success and sustainability of FGV. The formation of a Risk Management Committee is one of the steps towards achieving this goal, as it provides oversight and assistance in identifying and managing potential risks as well as promoting greater transparency and accountability. In addition, we continuously review our policies to ensure compliance with current laws and guidelines. We are also set to conduct a recertification audit for SIRIM Berhad’s ISO 37001. These measures demonstrate a commitment to responsible and effective governance, which can ultimately benefit both the Company and its stakeholders. Bronze medal in Integrity, Governance & Anti-Bribery Award 2022 from Institut Integriti Malaysia Strongest Adherence to Corporate Governance 2021 category at Alpha Southeast Asia’s 12th Annual Institutional Investor Awards ASEAN Corporate Governance Disclosure Award 2021 and ASEAN Asset Class Award 2021 based on the Minority Shareholder Watch Group ASEAN Corporate Governance Scorecard From an overall sustainability perspective, we will advocate shared responsibility in promoting sustainability. We believe that all stakeholders have a role to play, especially the government, which can facilitate the creation of an enabling environment for sustainability to be embedded in business operations. This is where FGV will continue engaging with the government to introduce more ESG-friendly incentives and policies, while forging new relationships with relevant parties to address environmental, social and other sustainability issues. IN APPRECIATION As we advance responsibly, our achievements are attributed to the efforts of many, including the past and present Board of Directors. On behalf of Warga FGV, I would like to extend our heartfelt gratitude to our former Chairman, Dato’ Dzulkifli Abd Wahab, who handed over the reins to me on 1 April 2023, after two years of exceptional service at FGV. We wish him every success in his future endeavours and appreciate his unwavering commitment and dedication to the growth and success of FGV. Dato’ Dzulkifli’s visionary strategies and insightful guidance have played a crucial role in shaping our corporate culture, fostering innovation and driving sustainable growth. It has been an immense honour for all of us at FGV to have had the opportunity to work with Dato’ Dzulkifli. I am deeply grateful to have been entrusted with the responsibility of continuing the invaluable legacy left by Dato’ Dzulkifli, and will devote my utmost commitment to lead and steer FGV forward. I would like to take this opportunity to express my gratitude to our Non-Executive Director, Datuk Dr. Zunika Mohamed, who served with us until 11 March 2022. I also warmly welcome two new Non-Executive Directors who have joined the Board, Datuk Yatimah Sarjiman who joined us on 8 April 2022, and Encik Azmin Che Yusoff on 13 September 2022. The Board now has a total of eight Directors, three of whom are women, upholding the best practices outlined in the Malaysian Code on Corporate Governance. Our Board members bring a wide range of skills, capabilities and depth of experience that will hold FGV in good stead going forward. I would also like to extend my sincere appreciation to my fellow Board Members for their immeasurable support, guidance and foresight. To the FGV Management Team and employees, thank you for your relentless dedication and commitment towards achieving our vision, and your efforts to reflect our PRIDE values. It is you, our employees, who have enabled FGV to record its historic achievement this year and I hope that you will continue to execute your duties to the best of your abilities. Lastly, I would like to extend my appreciation to the Federal Land Development Authority (FELDA) and its settlers, and our valued stakeholders; Thank you for your trust, loyalty and belief in us. We look forward to achieving more and capitalising on present opportunities to pave a brighter tomorrow for everyone. Dato’ Shahrol Anuwar Sarman Chairman (Interim)
Our Strong Leadership Paves The Way 24 FGV HOLDINGS BERHAD A THANK YOU TO FGV’S FORMER CHAIRMAN A Thank You To Dato’ Dzulkifli Abd Wahab Warga FGV bids a heartfelt farewell to Dato’ Dzulkifli Abd Wahab, a committed leader who devoted two fulfilling years to the organisation as our Chairman. As a well-respected veteran of the plantation industry, his outstanding leadership skills, combined with his vast experience in the plantation industry, have been instrumental in advancing the organisation responsibly, creating value for our stakeholders, and transforming FGV’s performance. Dato’ Dzulkifli’s strategic direction has been crucial in guiding us to remain competitive and relevant in today’s ever-changing business landscape. He instilled a culture of learning within FGV, encouraging us to embrace new ideas and technologies, and his invaluable contributions to our organisation will be deeply missed. We express our highest regard and appreciation to him for his unwavering dedication and remarkable commitment to FGV and the plantation industry. We wish him the very best in his future endeavours, knowing that he will continue to make a positive impact wherever he goes. We are honoured to have had him as our Chairman, and his dedication and leadership have left an indelible mark on FGV. We thank him for his exceptional service and for inspiring us to be the best that we can be.
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