FGV Annual Report 2020

224 FGV HOLDINGS BERHAD Annual Integrated Report 2020 Governance at FGV: Relations With Our Stakeholders COMMUNICATING WITH OUR STAKEHOLDERS Various engagements were conducted throughout 2020, including virtual meetings due to the movement restrictions in light of COVID-19 pandemic. As a result, Investor Relations identified the main concerns of stakeholders, as summarised below: Summary of Investors Interests Area of Focus FGV’s Response Sustainability Issue LLA Termination Operational and Financial performance & COVID-19 Take-Overs & Mergers Business Plan Strategy and Divestment There were two sustainability issues in 2020 1. RSPO audit a. FGV submitted an appeal against the RSPO Complaints Panel (CP) directive to halt RSPO audits on 13 January 2020, but it was dismissed by the CP on procedural grounds. b. FGV continued to implement its action plan to address the CP’s directives of 28 November 2018. Verification audit began on 13 November 2020 but site audits were postponed due to Conditional Movement Control Order (CMCO). c. On PT Temila Agro Abadi, FGV appointed a third party soil surveyor to conduct soil survey as directed by the CP. FGV also conducted a socialisation exercise involving the local communities. 2. US CBP WRO against palm oil and palm oil products made by FGV, its subsidiaries and joint ventures a. The CBP issued a Withhold Release Order for FGV products and the FGV Board responded on the next steps to be taken. When the LLA termination was announced, FGV responded that there was no official written letter with regard to this and that it will make an announcement once the Group has received the termination notice. With regard to compensation for the termination, the Group is expecting a compensation of between RM3.5 and RM4.3 billion and this is not inclusive of mills operations. Operational Performance: • FGV provides operational guidance such as FFB volume, yield and OER for the year of 2020. The guidance has been reviewed and shared with analysts during the quarterly result announcements. • FGV anticipates Crude Palm Oil (CPO) prices to be favourable at around RM2,400 to RM2,500 for the year 2020, but gains from this have been offset by the lag effect of the drought season and the impact of COVID-19. • With the Movement Control Order (MCO) and closed border announcements by the Government, the plantation business has updated its foreign labour status on quarterly basis. Financial Performance: • FGV reported its financial quarterly results with detailed explanations on the performance of the Group and business segments. • In addition, the Group has informed of a potential loss due to the COVID-19 pandemic. • The Group has also given the assurance that there will not be a huge impairment in 2020 together with the status of its cash balances and equivalents. • FGV conducted the 2020 Annual General Meeting (AGM) virtually and had virtual engagements with analysts, external stakeholders, third parties and the like. • During the year, the workforce followed the SOP directives of the Government. FGV implemented the work from home policy and also the Group applied work integrated with technology that is readily available in the company. 1. The Board of Directors of FGV received a notice from the Board of Directors of FELDA informing them that they have entered into an agreement to acquire 13.88 per cent of FGV interest. This increased the shareholding of FELDA to 35.12 per cent. This acquisition enables FELDA (together with the parties involved) to submit a mandatory acquisition offer. 2. The FGV Board is of the opinion that this is a corporate exercise by its shareholders. The Board will therefore remain objective in its actions and will follow the appropriate process of acting in the best interests of the minority shareholders. 3. The Board and Management will also continue to carry out their duties as usual until this corporate exercise is finalised. FGV will continue to strive to achieve good results in the interests of all parties. FGV announced the progress of its Business Plan strategy during quarterly results as stated below: 1. Acquisition on Bright Cow and the Group strategy on Integrated Farming. 2. Launched three essential food items under the flagship brand SAJI Rice, SAJI Coarse Sugar and SAJI Coconut Milk. 3. Granted a rice wholesale licence by the Ministry of Agriculture and Food Industries. 4. New fresh milk factory with a capacity of 30,000 litres per day scheduled to be completed in 1H FY2021. 5. Completion of two divestments which includes Kao Malaysia and FGV Cambridge Nanosystems, estimated at approximately RM57.2 million.