MSM Malaysia Holdings Berhad Annual Report 2019

SHAPING MATERIAL MATTERS MACROECONOMIC CONDITIONS • Exposed towards fluctuations in commodity and raw sugar price • Trading risks involved in futures market • Adverse FOREX movements • Raw sugar price influenced by global climate, economy and political factors • Legal and regulatory changes • Trade wars and protectionist policies • Investors, Analysts & Media • Customers & Industry Players • Suppliers/ Business Partners • Employees • Work closely with regulators and stakeholders to protect the interests of shareholders, customers and partners. • Integrating business model, hedging mechanisms and value chain to diversify earnings risk from the volatility of commodity prices, additional restrictions imposed by other countries and adverse FOREX movements. • Produce better margins via greater focus on high value markets and niche products. • Proactive monitoring of changes in macroeconomic landscape and development of adaptable response mechanisms. • Market monitoring for global sugar trend and outlook hence minimise the exposure of the volatility by strategic hedging. • Practice back-to-back hedging for industry and export sales and hedging based on budgeted target profit level for local wholesales. • Enhance robust governance framework to manage overall risk exposure. Refer to pages 24, 26, 30, 33 OPERATIONAL PERFORMANCE • Optimise asset utilisation • Unplanned factory shutdown time and production downtime • Operate in a scalable and sustainable manner • Consistent supply and product quality • Improve manufacturing capability • Efficient production and maintenance practices • Investors, Analysts & Media • Customers & Industry Players • Suppliers/ Business Partners • Employees • Communities • Dedicated performance monitoring units to monitor operational performance. • Focus on innovation to improve productivity, optimise efficiency of processes and enhance quality of products and services. • Leverage on MSM Johor refinery for volume growth and increase export sales. • Enhance capacity planning versus demand growth. • Continuous monitoring of critical and non-critical equipment upgrades/replacements. • Ensure cost management programme continues with target to become low-cost producer. Refer to pages 24, 26, 36, 38-39 FINANCIAL MANAGEMENT • Sustained financial, dividend and share performance • Responsible investment in new business strategy, mergers and acquisition • Strengthening risk and governance policies to ensure financial and trading frameworks are honoured, protected and inculcated as a check and balance mechanism • Optimising our funding strategy and gearing ratio • Prudent capital expenditure (CAPEX) allocation • Maintain healthy cash balance • Investors, Analysts & Media • Customers & Industry Players • Suppliers/ Business Partners • Employees • Communities • Disciplined approach in capital allocation and cash flow management. • Optimise our capital structure to ensure competitive cost of capital which includes balancing debt and equity levels by putting in place appropriate dividend and financing policies. • Maintain strong financial position for ready access to capital market. • Diversify revenue streams. • Expand presence in sugar value chain on a value enhancement opportunity in export and upstream. • Ensure cost savings and operational improvements focusing on freight cost, external warehouse for refined sugar, average group refining cost and finance cost. Refer to pages 24, 26, 31-32, 40, 41-45, 105- 224 MATERIAL MATTERS AFFECTED STAKEHOLDERS MITIGATION STRATEGY FOR MORE INFORMATION MSM Malaysia Holdings Berhad | Annual Report 2019 10