CONDENSED INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTHS AND FULL YEAR ENDED 31 DECEMBER 2022
Financials Archive
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Condensed Interim Consolidated Statement of Profit or Loss and Other Comprehensive Income For the six months and full year ended 31 December 2022
Condensed Interim Consolidated Statement of Financial Position As at 31 December 2022
Review of performance of the Group
Review of Income Statement
Half year results: 2H2022 vs 2H2021
Revenue
The Group's revenue for 2H2022 increased Rp72.3 billion or 25%, from Rp287.4 billion in 2H2021 to Rp359.7 billion in 2H2022. This was mainly due to the increase in sales revenue of crude palm oil ("CPO") of Rp76.7 billion and increase in sale revenue of palm kernel ("PK") of Rp4.1 billion, offset by decrease in sales revenue of fresh fruit bunch ("FFB") sales of Rp8.5 billion.
The increase in CPO sales revenue of Rp76.7 billion or 35%, from Rp218.7 billion in 2H2021 to Rp295.4 billion in 2H2022, was mainly due to the increase in CPO sales volume offset by a decrease in CPO average selling price. CPO sales volume increased from 18,008 tonnes (2H2021) to 28,013 tonnes (2H2022). This represented 138% in the increase in CPO sales revenue as compared to the previous period. CPO average selling price decreased from Rp12,145/kg (2H2021) to Rp10,545/kg (2H2022). This represented -38% in the increase in CPO sales revenue as compared to the previous period.
The increase in PK sales revenue of Rp4.1 billion or 19%, from Rp22.0 billion in 2H2021 to Rp26.1 billion in 2H2022, was mainly due to the increase in PK sales volume offset by decrease in PK average selling price. PK sales volume increased from 3,015 tonnes (2H2021) to 4,728 tonnes (2H2022). This represented 230% in the increase in PK sales revenue as compared to the previous period. PK average selling price decreased from Rp7,302/kg (2H2021) to Rp5,528/kg (2H2022). This represented -130% in the increase in PK sales revenue as compared to the previous period.
The decrease in FFB sales revenue of Rp8.5 billion or 18%, from Rp46.7 billion in 2H2021 to Rp38.2 billion in 2H2022, was mainly due to the decrease in FFB average selling price offset by increase in FFB sales volume. FFB average selling price decreased from Rp2,698/kg (2H2021) to Rp1,990/kg (2H2022). This represented 144% in the decrease in FFB sales revenue as compared to the previous period. FFB sales volume increased from 17,317 tonnes (2H2021) to 19,209 tonnes (2H2022). This represented -44% in the decrease in FFB sales revenue as compared to the previous period.
As at 31 December 2022, the Group's total planted area (excluding the area covered under the Plasma programme) is 9,803 hectares, comprising 8,724 hectares of matured planted area.
Costs of sales
Cost of sales increased Rp59.7 billion or 33%, from Rp179.8 billion in 2H2021 to Rp239.5 billion in 2H2022. This was mainly due to the increase in CPO, PK and FFB sales volume in 2H2022.
Gross profit
As a result of the foregoing, gross profit increased Rp12.6 billion or 12%, from Rp107.7 billion in 2H2021 to Rp120.3 billion in 2H2022. Gross profit margin decreased 4.1% points from 37.5% in 2H2021 to 33.4% in 2H2022.
Net loss from changes in fair value of biological assets
The Group recognised a net loss from changes in fair value of biological assets of Rp7.5 billion in FY2022, as compared a net gain from changes in fair value of biological assets of Rp14.4 billion in FY2021. The net loss was mainly due to the decrease in mature plants, which were used as assumptions for the fair valuation of biological assets as at 31 December 2022.
Distribution expenses
Distribution expenses increased Rp2.9 billion or 62% from Rp4.6 billion (2H2021) to Rp7.5 billion (2H2022). This was mainly due to increase in transport and unloading costs of Rp1.3 billion incurred mainly for the increase in sales volume of FFB and higher fuel costs, coupled with the increase in freight and stevedoring expenses of Rp1.5 billion.
Administrative expenses
Administrative expenses decreased by Rp8.6 billion or 26%, from Rp32.4 billion (2H2021) to Rp23.8 billion (2H2022). This was mainly due to decrease in estimated post-employment benefits of Rp16.2 billion, offset by an increase in professional fees of Rp2.9 billion, increase in salaries and wages of the Group of Rp1.9 billion, increase in depreciation expenses of Rp1.1 billion, increase in transportation and travelling expenses of Rp0.7 billion, increase in entertainment expenses of Rp0.6 billion and increase in office supplies expenses of Rp0.5 billion.
Loss allowances on Plasma plantation receivables
Loss allowances on Plasma plantation receivables decreased Rp0.1 billion or 64%, from Rp0.2 billion (2H2021) to Rp0.1 billion (2H2022) mainly due to the reduction of loan principal on the credit facilities extended to farmers under the Plasma KKPA programme.
Finance costs
Finance cost remained constant at Rp0.1 billion in 2H2022 and 2H2021.
Interest income
Interest income decreased by Rp0.6 billion or 23%, from Rp2.7 billion (2H2021) to Rp2.1 billion (2H2022). This was mainly due to decrease in interest earned from plasma receivables of Rp0.4 billion and decrease in bank interest of Rp0.2 billion in 2H2022.
Other income
Other income decreased by Rp9.7 billion or 126%, mainly due to the decrease in fair value gain from financial assets at fair value through profit or loss of Rp3.0 billion arising primarily from equity securities, decrease in sales of sludge oil of Rp1.9 billion and decrease in miscellaneous income of Rp1.2 billion. The Group also recorded a net foreign exchange loss in 2H2022, as compared to a net foreign exchange gain of Rp3.8 billion in 2H2021.
Other expenses
Other expenses decreased by Rp12.7 billion or 31%, from Rp40.7 billion (2H2021) to Rp28.0 billion (2H2022). This was mainly due to decrease in net fair value loss on derivative financial instruments of Rp44.9 billion and decrease in fixed assets written-off of Rp5.4 billion. This was offset by deferred charges written-off of Rp6.4 billion, impairment of trade receivables of Rp6.0 billion, plantation written-off of Rp6.1 billion and decrease in fair value loss from financial assets at fair value through profit or loss of Rp1.0 billion. The Group recorded a net foreign exchange loss of Rp16.2 billion in 2H2022. The net foreign exchange loss in 2H2022 was mainly due to the depreciation of IDR against SGD in 2H2022 for the IDR denominated inter-company financing for its subsidiary. In 2H2022, there was an inventory written-off expense of Rp0.3 billion (2H2022: Nil) due to obsolete stock.
Profit before income tax
As a result of the foregoing, profit before income tax decreased by Rp1.1 billion or 2%, from Rp54.5 billion in 2H2021 to Rp53.4 billion in 2H2022.
Income tax expense
Income tax expense decreased by Rp4.0 billion or 19%, mainly due to decrease in withholding tax expense of Rp6.8 billion and decrease in deferred tax expense of Rp0.2 billion, offset by an increase in corporate tax expense of Rp3.0 billion.
Profit after income tax
As a result of the above, profit after income tax increased Rp2.8 billion or 8%, from Rp33.7 billion in 2H2021 to Rp36.5 billion in 2H2022.
Full year results: FY2022 vs FY2021
Revenue
The Group's revenue for FY2022 increased Rp71.1 billion or 13%, from Rp535.4 billion in FY2021 to Rp606.5 billion in FY2022. This was mainly due to the increase in sales revenue of crude palm oil ("CPO") of Rp37.9 billion, increase in sale revenue of palm kernel ("PK") of Rp14.2 billion and increase in sales revenue of fresh fruit bunch ("FFB") sales of Rp19.0 billion.
The increase in CPO sales revenue of Rp37.9 billion or 9%, from Rp416.8 billion in FY2021 to Rp454.7 billion in FY2022, was mainly due to the increase in CPO average selling price. CPO sales volume remained the same at 38,018 tonnes in FY2022 and FY2021. CPO average selling price increased from Rp10,965/kg (FY2021) to Rp11,961/kg (FY2022). This represented 100% in the increase in CPO sales revenue as compared to the previous period.
The increase in PK sales revenue of Rp14.2 billion or 34%, from Rp42.0 billion in FY2021 to Rp56.2 billion in FY2022, was mainly due to both increase in PK sales volume and increase in PK average selling price. PK sales volume increased from 6,028 tonnes (FY2021) to 7,352 tonnes (FY2022). This represented 71% in the increase in PK sales revenue as compared to the previous period. PK average selling price increased from Rp6,963/kg (FY2021) to Rp7,645/kg (FY2022). This represented 29% in the increase in PK sales revenue as compared to the previous period.
The increase in FFB sales revenue of Rp19.0 billion or 25%, from Rp76.6 billion in FY2021 to Rp95.6 billion in FY2022, was mainly due to the increase in FFB sales volume and increase in FFB average selling price. FFB sales volume increased from 31,706 tonnes (FY2021) to 38,478 tonnes (FY2022). This represented 89% in the increase in FFB sales revenue as compared to the previous period. FFB average selling price increased from Rp2,417/kg (FY2021) to Rp2,484/kg (FY2022). This represented 11% in the decrease in FFB sales revenue as compared to the previous period.
The increase in sales volume was mainly contributed by higher FFB produced (Nucleus) from 129,121 tonnes (FY2021) to 155,302 tonnes (FY2021). As at 31 December 2022, the Group's total planted area (excluding the area covered under the Plasma programme) is 9,803 hectares, comprising 8,724 hectares of matured planted area.
Costs of sales
Cost of sales increased Rp18.8 billion or 5%, from Rp354.6 billion in FY2021 to Rp373.4 billion in FY2022. This was mainly due to the increase in PK and FFB sales volume in FY2022.
Gross profit
As a result of the foregoing, gross profit increased Rp52.2 billion or 29%, from Rp180.9 billion in FY2021 to Rp233.1 billion in FY2022. Gross profit margin increased 4.6% points from 33.8% in FY2021 to 38.4% in FY2022.
Net loss from changes in fair value of biological assets
The Group recognised a net loss from changes in fair value of biological assets of Rp7.5 billion in FY2022, as compared a net gain from changes in fair value of biological assets of Rp14.4 billion in FY2021. The net loss was mainly due to the decrease in mature plants, which were used as assumptions for the fair valuation of biological assets as at 31 December 2022.
Distribution expenses
Distribution expenses increased Rp3.3 billion or 37% from Rp8.9 billion (FY2021) to Rp12.2 billion (FY2022). This was mainly due to increase in transport and unloading costs of Rp2.0 billion incurred mainly for the increase in sales volume of FFB and higher fuel costs, coupled with the increase in freight and stevedoring expenses of Rp1.4 billion.
Administrative expenses
Administrative expenses decreased by Rp0.9 billion or 2%, from Rp55.3 billion (FY2021) to Rp54.4 billion (FY2022). This was mainly due to decrease in estimated post-employment benefits of Rp16.2 billion, offset by increase in salaries and wages of the Group of Rp4.9 billion, increase in professional fees of Rp3.0 billion, increase in depreciation expenses of Rp2.9 billion, increase in office supplies expenses of Rp1.3 billion, increase in repair and maintenance expenses of Rp1.1 billion, increase in entertainment expenses of Rp1.0 billion and increase in transport, travelling and accommodation expenses of Rp0.9 billion.
Loss allowances on Plasma plantation receivables
Loss allowances on Plasma plantation receivables decreased Rp0.3 billion or 63%, from Rp0.5 billion (FY2021) to Rp0.2 billion (FY2022) mainly due to the reduction of loan principal on the credit facilities extended to farmers under the Plasma KKPA programme.
Finance costs
Finance cost remained constant at Rp0.1 billion in FY2022 and FY2021.
Interest income
Interest income decreased by Rp0.8 billion or 16%, from Rp5.2 billion (FY2021) to Rp4.4 billion (FY2022). This was mainly due to decrease in interest earned from plasma receivables of Rp0.8 billion mainly due to the reduction of loan principal on the credit facilities extended to farmers under the Plasma KKPA programme.
Other income
Other income decreased Rp1.7 billion or 20%, mainly due to decrease in miscellaneous income of Rp1.2 billion, offset by increase in fair value gain from financial assets at fair value through profit or loss arising primarily from equity securities of Rp3.6 billion. The Group also recorded a net foreign exchange loss in FY2022, as compared to a net foreign exchange gain of Rp3.8 billion in FY2021.
Other expenses
Other expenses increased Rp11.2 billion or 25%, from Rp44.3 billion (FY2021) to Rp55.5 billion (FY2022). The Group recorded a net foreign exchange loss of Rp17.5 billion in FY2022. The net foreign exchange loss in FY2022 was mainly due to the depreciation of IDR against SGD in 2H2022 for the IDR denominated inter-company financing for its subsidiary. The increase was also mainly due to deferred charges writtenoff of Rp6.4 billion and plantation written-off of Rp6.2 billion. This was offset by a decrease in net fair value loss on derivative financial instruments of Rp19.8 billion in FY2022. In FY2022, there was an inventory written-off expense of Rp0.3 billion (FY2022: Nil) due to obsolete stock.
Profit before income tax
As a result of the foregoing, profit before income tax increased Rp14.5 billion or 15%, from Rp100.0 billion in FY2021 to Rp114.5 billion in FY2022.
Income tax expense
Income tax expense increased Rp14.9 billion or 68%, mainly due to increase in corporate tax expense of Rp22.5 billion, offset by decrease in withholding tax expense of Rp6.8 billion and decrease in deferred tax expense of Rp0.9 billion.
Profit after income tax
As a result of the above, profit after income tax decreased by Rp0.3 billion, from Rp78.0 billion in FY2021 to Rp77.7 billion in FY2022.
Review of Financial Position as at 31 December 2022
Non-current assets
Non-current assets for the Group increased Rp16.2 billion or 2%, from Rp666.8 billion as at 31 December 2021 to Rp683.0 billion as at 31 December 2022. This was mainly due to fair value through OCI investments of Rp33.3 billion, net additions to property, plant and equipment of Rp9.3 billion and increase in trade and other receivables of Rp4.9 billion. This was offset by the net decrease in bearer plants of Rp11.0 billion, decrease of Rp6.6 billion in the non-current portion of the of loan principal on the credit facilities extended to farmers under the Plasma KKPA programme, amortisation of operating use rights of Rp6.4 billion, deferred charges written-off of Rp6.4 billion.
Current assets
Current assets for the Group increased Rp95.6 billion or 36%, from Rp266.3 billion as at 31 December 2021 to Rp361.9 billion as at 31 December 2022. This was mainly due to increase in cash and cash equivalents of Rp43.2 billion, increase in inventories of Rp40.1 billion and increase in trade and other receivables of Rp16.8 billion. This was offset by a decrease in biological assets of Rp7.5 billion due to the net loss from changes in fair value of biological assets in FY2022.
Current liabilities
Current liabilities for the Group increased Rp38.9 billion or 66%, from Rp59.0 billion as at 31 December 2021 to Rp97.9 billion as at 31 December 2022. This was mainly due increase in trade and other payables of Rp34.8 billion and increase in current income tax payable of Rp6.4 billion, offset by decrease in derivative financial instruments of Rp2.0 billion. The increase in trade and other payables was mainly due to increase in advances from customers of Rp21.9 billion.
Non-current liabilities
Non-current liabilities for the Group decreased by Rp14.0 billion, from Rp77.0 billion as at 31 December 2021 to Rp63.1 billion as at 31 December 2022. This was mainly due to decrease in provision for post-employment benefits of Rp13.7 billion.
Accumulated losses
The accumulated losses of Rp80.4 billion was mainly contributed by the accumulated losses of Rp135.5 billion brought forward from FY2021 and dividend paid to equity holders of the Company of Rp16.9 billion, offset by total comprehensive income attributable to owners of the parent of Rp72.0 billion in FY2022.
Review of Consolidated Cash Flows
Net cash generated from operating activities of Rp124.7 billion in FY2022 was mainly due to cash generated from operations of Rp153.6 billion and interest received of Rp2.0 billion, offset by income tax paid of Rp31.0 billion.
Net cash used in investing activities of Rp70.2 billion in FY2022 included payment of Rp32.2 billion for the subscription for the participating shares issued by ASV Fund, purchases of property, plant and equipment of Rp30.3 billion and capital expenditure on bearer plants of Rp9.1 billion.
Net cash used in financing activities of Rp19.6 billion in FY2022 was mainly due to dividends paid to equity holders of the Company of Rp16.9 billion, the buyback of the Company's shares to be held as treasury shares of Rp1.4 billion and the repayment of lease liabilities of Rp1.2 billion.
Commentary On Current Year Prospects
CPO prices are expected to remain volatile considering the uncertainty in the global economy and abnormal weather's affect on market dynamics. Nonetheless, increase in demand from the newly implemented B35 mandatory biodiesel policy in Indonesia will lend support to CPO prices.
The Group will continue the replanting of older palm trees with newer breeds of higher-yielding palm trees to ensure long-term sustainability for the Group. The management is seeing higher yield per hectare from the earlier replanted palm trees. This together with the continuous effort to increase productivity, should result in a positive sustainable future for the Group.