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Quarterly Report For The Financial Period Ended 31 December 2017

Financials Archive

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Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income
For the 4th Quarter Ended 31 December 2017

Income Statement

Condensed Consolidated Statement of Financial Position
As at 31 December 2017

Balance Sheets

Review of performance

Financial review for current quarter and financial year to date

Balance Sheets

The Group's revenue improved by 13.7% and 29.7% to RM92.4mil and RM325.1mil respectively for 3 months and 12 months ended 31 December 2017 as compared to corresponding period in 2016. The better revenue in the current quarter is mainly attributable to higher CPO and PK production while for the yearly revenue, the increment was also substantiated by better CPO price.

Balance Sheets

Refer to the table above, CPO and PK production elevated by 39.5% and 50.5% to 19,965MT and 4,502MT respectively in current quarter ended 31 December 2017 as compared to corresponding period in 2016. For year-to-date, CPO and PK production raised by 37.2% and 46.0% to 67,374MT and 15,469MT respectively. The improvement in Group's CPO and PK production was partly attributed by the commencement of new mill and increased in FFB harvested.

Current quarter gross profit dropped by 69.3% compared to corresponding period in 2016 as the GP margin retreated to 1.3% compared to corresponding period of 4.9% - mainly due to lower CPO price. For year-to-date, gross profit improved by 308.0% as compared to 2016, on the back of better GP margin from 2.1% in 2016 to 6.5% in 2017. Cost of sales increased by 17.9% and 23.9% respectively for the current quarter and year-to-date as compared to corresponding period in 2016, which is in line with higher cost of FFB purchased by mill operation and increase in manuring activities by plantation. In addition, the depreciation charges for mill operation has increased by 2.6 times in corresponding to the commencement of the new mill.

The Group's pre-tax loss expanded to RM153.9 million in the current quarter as compared to last year corresponding quarter of RM32.0 million. For 12-month ended 2017, the pre-tax loss recorded RM174.1 million as compared to 2016 of RM77.1 million. The higher pre-tax loss is mainly attributed to the impairment losses provided on our plantation estates, which is in line with Financial Reporting Standard (FRS) 136 – Impairment of Assets. The breakdown of impairment losses provided is as follows:

Balance Sheets

The impairment losses for Jayamax, Selangau, Selangor, and Splendid estates have to be provided considering that their FFB yield has been flattish and persistently low with subdued returns due to their ageing palm tree population as some of these estates has left with five-year economic lifespans. As for Biawak and Lundu estates, the impairment losses are provided in view that majority of their palm trees have entered into old mature stage with expectation of dwindling FFB yield in the coming years. Concurrently, the Group has write-back the impairment losses provided for Simunjan estate in 2016 by in view of changes in its carrying amount as at 31 December 2017.

The Group recorded loss after taxation of RM129.4 million as compared to corresponding quarter loss after taxation of RM43.2 million. The loss after taxation for year-to-date increased significantly by 100.2% to RM151.6 million as compared to 2016.

Commentary on Prospects

The Group remains upbeat on its FFB yield for year 2018. In terms of CPO price, various external factors such as the strengthening of Ringgit Malaysia against the US Dollar, European Union's proposed ban on palm oil from biofuel and renewable energy mix by 2020, and imposition of higher import tax on edible oil by India may pose downward pressure on the price.