Chairman’s Statement Chairman’s Statement enhance the incorporation of sustainability concerns into our overall strategy, risk management practices and operations to manage and monitor our economic, environmental, and social impact. We pay close attention to how we deploy capitals to derive lasting value for stakeholders. Walking the talk on sustainability, we increased the use of renewable energy and climate solutions in our business. With the experience gained, we extended similar clean energy and water solutions to help other businesses in their environmental agenda. Doing right by nature became a business philosophy that holds potential for QL. It sits well in the Sustainably Enhancing Performance thrust of our strategy. Progressively, QL is working towards setting targets for our material matters such as Occupational Health & Safety while intensifying focus on food safety and quality; we are in the midst of engaging an external, certified consultant to guide us. We are committed to embracing the Task Force on Climate-Related Financial Disclosures (TCFD) recommendations. Thought is the wind, knowledge the sail, and mankind the vessel; strategies will remain as such without understanding and execution. Data-driven management and an improvement-focused mindset become cogs in the wheel for change to happen from within. Supporting this is greater technology integration and automation across our business pillars. With a top-down and hands-on commitment, our Board takes lead in the strategic initiatives and ensures that the implementation and progress are monitored and managed. These are then communicated to internal and external stakeholders. Making progress towards our vision of being the preferred global agro-based enterprise requires sound business strategy and the ability and capability to act on it. Our 4C approach comprising Conserve, Continue, Core Focus and Cultivate helps QL evaluate opportunities and identify resources required to strengthen our businesses. The pandemic and events around the world have changed customer behaviour. As a business that aims to meet a critical need of nutritious and affordable food, QL keeps a finger on the pulse of happenings. Continuous product innovation is complemented by our value chain integration with scalable businesses that enables us to extend downstream into convenient ready-to-cook food and CVS. QL is focusing on expanding our valueadded food processing capability and capacity to feed an increasingly growing population, which crossed the eight billionth mark this year. Enlarging our direct-to-customer network through CVS i.e. FamilyMart has enabled this business to become a growth catalyst for QL. Applying kaizen for continuous improvement and diverse points-of-sale in CVS will power our next phase of growth. The strong brand recall of FamilyMart has boosted visibility. In this same vein, QL is also enhancing the brand presence of MPM products and eggs, while expanding sales channels. We have added Enhance Branding & Product Innovation into the Strengthening of Core Competencies component of our strategy. Sustainability is central to our business and our Board has attended various environmental, social and governance (ESG) trainings. We continuously STRATEGIC FOCUS Financial Performance Guided by our strategy, QL delivered another year of uninterrupted revenue growth for the financial year ended 31 March 2023, recording a year-on-year (YoY) growth of 19.2% to RM6.24 billion, attributable to normalised demand and higher unit selling price. Profit before tax (PBT) increased in tandem with revenue growth, rising 49.7% to RM480.83 million as margins normalised after dipping last year. The efforts in improving productivity and efficiency, as well as cost subsidy helped in this regard. We invested in areas such as product innovation, information technology systems, employee development and branding to deliver a turnaround performance. Value Creation Performance QL is driven by our mission to create nourishing products from agro resources. To this end, our focus on creating value to benefit all received additional acknowledgement in December 2022 when QL was inducted into the FTSE Bursa Malaysia KLCI Index Constituent. Importantly, we also maintained our position in the MSCI Global Index. We also made a significant step forward in our sustainability journey as our ESG Grading Band rating has improved to three-star in accordance with FTSE Russell ESG Ratings Methodology. At the same time, our MSCI ESG rating moved upwards to BBB while S&P Global ESG Score continued to show progress. The advancements in our ESG rating scores are a testament to our sustainability efforts across our business pillars. QL’s market capitalisation increased 15.7% from RM12.22 billion to RM14.14 billion as at 31 March 2023, outperforming the FBM KLCI performance which slid 11.2%. Living up to our name, Quan Li and philosophy of sharing value with all, QL has proposed a final single tier interim dividend of 3.50 sen per share to be approved by shareholders at our upcoming Annual General Meeting. This is in addition to the 3.50 sen per share dividend paid on 29 March 2023. Upon approval, the total dividend payout would amount to RM170.36 million, representing a 49.1% payout ratio, the highest payout to-date. CORPORATE GOVERNANCE QL is built on integrity. Our word is our bond; we do what we say. There is a zero-tolerance stance on bribery and corruption. The Board sets the direction for QL, with our core values of winwin, innovation, integrity and teamwork as the cornerstone. This is enhanced by the personality and culture that have been nurtured throughout the operations. Regular evaluations of the skills, competencies, and qualifications of the Board and management assure that the interests of stakeholders are upheld. Responsibilities are assigned based on respective scopes governed by terms of reference. This streamlined approach supports QL in paying close attention to identified key metrics to enable us in making good on our mission and purpose. In this spirit, the Board committees were restructured to more efficiently carry out its respective ambit based on members’ expertise. To ensure suitability of appointed or elected directors, we formalised our Directors’ Fit and Proper Policy, in accordance with Bursa Malaysia’s requirements beginning 1 July 2022. This policy can be read from our website. Our Board comprises six executive directors and seven independent non-executive directors, of which five are women. This translates to 39% female representation, above the 30% mandate. More detailed reading of our sustainability efforts can be found on pages 28 - 76. 17.2% GHG intensity reduction against base year FY2020 (32.3 tCO2e/RM Mil Revenue) 1,145 (+57.5%) halal certified products (largely due to commission of the second central kitchen of FamilyMart) 10 certifications for food safety and quality 15 average training hours per employee (Total employees: ~14,600) 3,433 QL suppliers signed Code of Conduct In our annual review with reference to the Malaysian Code on Corporate Governance (MCCG), I am pleased to share that we have made progress and now apply 43 out of the total 48 MCCG recommendations compared to last year. Remaining deviances and measures to address them are explained in our CG Report, available for reading at https://ql.com.my/corporate-governance/. The Board has also engaged independent experts to conduct an externally facilitated evaluation of the Board’s effectiveness which is scheduled for completion in FY2024. More details about our CG practices can be read on pages 94 - 102. PROSPECTS The uncertain global economy is anticipated to linger. The drawn-out Russia-Ukraine geopolitical conflict continues to cast a long shadow on the world economy in particular on energy and agriculture-related goods. Input prices are expected to remain high in light of sustained inflation and increasingly extreme weather, which affects agricultural productivity. The situation experienced thus far shows the importance of food security and producing food locally. Food is a fundamental physiological need as highlighted by Maslow. As a food producer, delivering nutritious food, in particular affordable protein for the masses is a matter of national duty. QL shoulders this role by ensuring our operations are efficient and sustainable regardless of economic and market pressures. As we deal in staple foods and the world population grows, barring unforeseen circumstances, the prospects for QL remain positive as we execute and advance on our strategy. ACKNOWLEDGEMENTS AND APPRECIATION Our philosophy of creating value for all, is deeply ingrained in QL’s DNA and motivates us to continue delivering growth and shared value for stakeholders. This is complemented by our emphasis on sustainability. We hold ourselves accountable in our actions. We recognise the effort it took to get where we are today. Our three-pronged strategy of regional replication, value chain strengthening, and downstream integration has expanded to strengthening core competencies over the years. This evidence of the team’s management and execution capability is reflected in our price-to-earnings ratio, signifying investors’ confidence. We will rise to the challenge of driving sustainable value creation and keep working hard to deliver on our mission. On behalf of the Board of Directors, I record a deep appreciation to all stakeholders for their faith and trust in QL. We are grateful for the continued loyalty and support. In addition, I want to express my heartfelt gratitude to fellow Board members, Management, and all employees for your internalisation of and dedication to Quan Li. 011 010 QL RESOURCES BERHAD INTEGRATED ANNUAL REPORT 2023 SEC. PG. PG. CHAIRMAN’S STATEMENT 3
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