Annual Report 2020

Over the years, the Group has grown to become Southeast Asia’s largest surimi and surimi-based producer, one of its largest egg producers and Malaysia’s largest fishmeal manufacturer. Building on our strong fundamentals, QL continues to fine- tune strategy and expand capabilities as well as capacity in line with our commitment to deliver sustainable and profitable growth year on year (YoY). The culmination of this is QL delivering a top line growth of 15% or an increase of RM537 million to RM4.15 billion for FY2020. This is despite having to withstand many external factors including weakening purchasing power, weather factors that affected oil palm productivity, pressures on the palm oil industry, continuing eggs oversupply in Peninsular Malaysia, biosecurity challenges, forex fluctuations, continued trade war between theUnitedStates (US) andChina, and the unprecedented coronavirus pandemic. FY2020 called on all our astuteness and prudent management to steer the business throughwith foresight, grit anddetermination. Utilising all resources available to adapt strategically and operationally to increase revenue, pretax profit (PBT) increased in tandem with revenue, and grew 13% YoY, or RM35 million, to RM307 million from the RM272 million of the previous fiscal year. In terms of profit after tax and minority interests (PATAMI), QL posted RM239million, which compared to FY2019’s RM217million, translated to an improvement of 10%. Business pillar-wise, FY2020 was a year of mixed fortunes. ILF continues to be the centrepiece for QL, contributing slightly over 66% of total group revenue, comparable with previous performance. Once again, this segment posted improvement from the year before, with an 19% and 16% increment in revenue and earnings respectively mainly due to improved trading activities. MPM’s resurgence from the previous financial year carried forward into FY2020 on the back of better fish landing and weaker domestic currency. After breaking into the billion-ringgit revenue mark in FY2019, this segment continued this upward trajectory with sales topping RM1.16 billion. YoY, this translates to 15% growth as PBT also grew, by 23%, to RM192 million from the previously recorded RM156 million. The third business pillar, POA, recorded RM256 million sales in the financial year. This segment did not catch a break in FY2020 as the marginally higher crude palm oil (CPO) price of RM2,292 per metric tonne on average compared to RM2,122 per metric tonne could not outweigh the lower fresh fruit bunch (FFB) processed and oil extraction rate (OER) as well as forex translation loss. These factors caused top line to shrink 15% from FY2019. PBT took a dive down from RM20 million in FY2019 to RM4 million in FY2020. REVIEW OF OPERATIONS QL’s regional footprint beyond Malaysia is in Indonesia and Vietnam, two of the most populated countries in Southeast Asia. Currently they are ranked 4th and 15th most in the world with 273.48 million and 97.33 million people respectively. It represents a ready market for QL’s agro based nourishing products. The operations in Indonesia and Vietnam are stable and have found their niche. QL’s emphasis on strengthening our value chain through downstream integration is proceeding at good pace and with better than expected performance. The FamilyMart convenience store business had begun to turn a profit within two years and the initial target of opening 300 stores by FY2022 is well within our grasp on the current track record. As at 31 March 2020, there are 184 stores opened and QL is investing into an additional central kitchen to support FamilyMart’s enlarging footprint in Malaysia. The current central kitchen holds halal certification from Jabatan Kemajuan Islam Malaysia (JAKIM). In pushing ahead to grow the business sustainably and continuously create shared value, a total of RM350 million was pumped into the business over the last financial year in various capacity and efficiency building exercises in the MPM and ILF business pillars. Additional capital of about RM400 million has been set aside for further investment in the coming period, consistent with our historical spending and growth aspiration. A Milestone on Our Sustainable Growth Journey 29