FGV Annual Report 2020

Q 4 RENEWABL ES Revenue & Profits Prospect Segments Strategy By-Products • Empty Fruit Brunch (EFB) • Palm Kernel Shell (PKS) • Mesocarp Fibre • Sludge Oil • Bunch Ash Target to reach an annual revenue of RM200 million over the next 5 years. • 28 biogas capture plants in operation • Focus on zero-investment projects (Biogas, BioCNG, Biofuel, pulp paper) • Maximise profits from PKS / Sludge Oil • Focus on end-users for by-products • Powering towns using renewable energy sources Renewables • IPP Sahabat • Rural Electrification (Ayu, Umas, Miri, Cenderawasih, Desa Kencana) • 11FiT Biogas Plants • Sg. Tengi BioCNG - 1 st in the world for BioCNG from POME • 4 Compost Plants In 2020, renewable business achieved a revenue of RM143 million and PBT of RM72 million. What are FGV’s existing strengths that can be leveraged for immediate and medium term growth? leverage on LOW HANGING FRUITS We have been the world’s largest CPO producer for some years, and produce an average of three million metric tonnes of CPO every year. Most of our CPO is exported and it is the primary contributor to the Group’s revenue. In the process of palm oil production, we also generate large amounts of waste products from estate and milling activities. Waste products have become business opportunities with good prospects, and we have already started plucking the “low hanging fruits” in our own backyard under our waste-to-wealth initiative. Besides the commercial benefit, the waste-to-wealth initiative is about being environmentally friendly and fosters a sustainable circular economy. Our focus is the production of renewable energy, an environmentally friendly fuel that is encouraged by the Government. It has set a target for Malaysia to have 20% renewable energy in the capacity mix by 2025. In addition to the waste-to-wealth initiative, we are cognisant that most of our operation are impacted by the climate and environmental risk. Thus, we recognised the urgent needs to address the impact of climate change on our business operation. We have accelerated our climate mitigation effort and further details are discussed in Section 4 of this report. At FGV, we produce biogas fuels by using methane capture from our mills. We have 68 mills and one of the highest methane capture outputs in Malaysia. The methane- rich biogas is sent to our 28 biogas plants that include 11 Feed-in-Tariff plants, supplying renewable energy to the grid. Some of our biogas plants are part of the rural electrification of Sabah. In addition, FGV became the first Malaysian plantation company to establish a palm-based commercial-scale Bio-Compressed Natural Gas (Bio-CNG) plant in the country. In 2020, our renewable energy business generated RM143 million in revenue, with a PBZT of RM72 million. Our target is to generate RM200 million in revenue over the next five years. Under the Group’s Recovery Strategy post COVID-19, we will be reviewing this business segment with the objective of developing a solid plan that can be executed almost immediately. R&D FOR LUCRATIVE PLANTING MATERIALS Another inherent FGV identity is our research and development capabilities, especially for premium planting materials that are drought and disease tolerant. Our Yangambi ML161 has become the number one oil palm planting material in Malaysia, with a 38% market share. In November 2020, FGV is expanding its presence in India’s oil palm seed by establishing a Joint Venture with Pre-Unique Pvt. Ltd. We are exporting Yangambi ML161 planting materials to Indonesia and India. In India, some states are planting oil palm to support their local consumption. In 2020, FGV secured the contract to supply one million of our premium oil palm seeds. We target to sell another 1.5 million seeds by 2021. 41 Who We Are How We Operate How We Are Governed Additional Information Sustainability Matters Statement & Discussion By Our Leaders