MSM Malaysia Holdings Berhad Annual Report 2019

BUSINESS PLAN 2019 – 2021 ACHIEVEMENTS 2019 SEGMENTS Export to Asian market • Started to export value-added sugar products to Asian market from 2H 2019 • Poised to expand the value added products capacity to leverage on the increasing demand for export market in 2020 R&D for value added sugar products with targeted commercialisation by 2020 • On-going R&D effort on food and non-food sugar related products e.g. low calorie sucralose, mudcake and molasses Explore sweetener business • Developing quick win initiatives i.e. low calorie sucralose blend with sugar and target to launch in 2H 2020 A new joint venture (JV) company to export refined sugar and sugar related products • On-going effort to explore a strategic partnership for export of refined sugar • Exploring investment i.e. M&A in food based business to diversify Group’s income stream and increase utilisation of MSM Johor Advisory in raw sugar and FOREX hedging • Procuring raw sugar and hedging FOREX as per the Group’s policy allowable time frame • Cost optimisation in raw sugar procurement with “Just-In-Time” mechanism by 2020 Benchmarking with other efficient sugar refineries • Embark on Biomass effective from mid 2021 onwards (2-year project) Identify target companies and plantations by region To serve local markets in sugar deficit countries • On-going effort to explore feasible upstream M&A Monetise non-core assets • On-going effort to monetise non-core assets in 2020 Potential divestment • On-going effort on divestment of MSM’s non-core business Plan to balance operations • Ensure MSM’s refineries operate at optimal level with quality sales from the production • Rationalise groupwide capacity through consolidation of production in MSM Johor in 2020 Raw sugar procurement • Implement “Just-In-Time” mechanism in 2020 to optimise raw sugar stocks level • Reduce external Raw Sugar warehouse Freight cost • Ended the old-contracted and high-priced freight in 2019 • 2020 onwards, the freight premium will be at market rate Lower refining cost • Continuously improve the refining yield and utilisation through production of value added sugar products Finance cost • Reduce Finance cost through shorter borrowing tenure and optimum raw sugar inventory MARKET LEADERSHIP KEY STRATEGIES 1. Product Diversification & New Product Development CONTINOUS GROWTH KEY STRATEGIES 1. Commercial Collaboration 2. Explore Upstream M&A OPERATIONAL EXCELLENCE KEY STRATEGIES 1. Disposal of Non-Core Assets 2. Rationalise Operations 3. Cost Savings & Operational Improvements 25 MANAGEMENT DISCUSSION & ANALYSIS 03