Global Palm Resources

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UNAUDITED FINANCIAL STATEMENT ANNOUNCEMENT FOR THE FINANCIAL PERIOD FROM 1 JANUARY 2017 TO 30 JUNE 2017

Financials Archive

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Profit & Loss

Profit & Loss

Other comprehensive income

Balance Sheet

Balance Sheet

Review of Group performance

2Q2017 versus 2Q2016

Revenue

Our revenue for 2Q2017 decreased Rp5.9 billion or 6%, from Rp106.3 billion in 2Q2016 to Rp100.4 billion in 2Q2017. This was mainly due to lower crude palm oil ("CPO") sales revenue of Rp88.4 billion and palm kernel ("PK") sales revenue of Rp12.0 billion.

CPO sales revenue decreased by Rp2.1 billion or 2%, from Rp90.5 billion in 2Q2016 to Rp88.4 billion in 2Q2017. This was due to lower CPO average selling price and partially offset by higher CPO sales volume. CPO average selling price decreased by Rp319 per kilogram or 4%, from Rp8,004 per kilogram in 2Q2016 to Rp7,685 per kilogram in 2Q2017. Sales volume of CPO increased by 201 tons or 2% from 11,304 tons in 2Q2016 to 11,505 tons in 2Q2017.

PK sales revenue decreased by Rp3.9 billion or 24%, from Rp15.9 billion in 2Q2016 to Rp12.0 billion in 2Q2017. This was due to lower PK average selling price and lower PK sales volume. Average selling price of PK decreased by Rp1,262 per kilogram or 24% from Rp5,257 per kilogram in 2Q2016 to Rp3,995 per kilogram in 2Q2017. Sales volume of PK decreased by 12 tons, from 3,015 tons in 2Q2016 to 3,003 tons in 2Q2017.

Costs of sales

Cost of sales increased by Rp3.1 billion or 4%, from Rp81.0 billion in 2Q2017 to Rp84.1 billion in 2Q2017. This was due to the higher CPO sales volume and the depreciation of bearer plants of Rp3.5 billion recognised in 2Q2017.

Gross profit

As a result of the foregoing, gross profit decreased by Rp9.1 billion or 36%, from Rp25.3 billion in 2Q2016 to Rp16.2 billion in 2Q2017. Gross profit margin decreased to 16.2% in 2Q2017 from 23.8% in 2Q2016.

Distribution expenses

Distribution expenses increased by Rp0.2 billion or 68%, from Rp0.2 billion in 2Q2016 to Rp0.4 billion in 2Q2017. This was mainly due to higher freight charges incurred in 2Q2017 for the transportation of PK from the plantation's bulk storage warehouse to the loading port of Pontianak.

Administrative expenses

Administrative expenses decreased by Rp0.2 billion or 2% from Rp9.4 billion in 2Q2016 to Rp9.2 billion in 2Q2017. The decrease is due to one-off professional fees being charged for 2Q2016 and is not required for 2Q2017.

Finance costs

Finance cost increased by Rp0.004 billion or 178% in 2Q2017 due to higher finance lease interest paid for the additional finance lease in 2Q2017.

Interest income

Interest income increased by Rp0.1 billion or 3%, from Rp3.3 billion in 2Q2016 to Rp3.4 billion in 2Q2017, mainly due to higher interest earned from bank deposits in 2Q2017.

Other income

Other income increased by Rp1.3 billion or 108%, from Rp1.2 billion in 2Q2016 to Rp2.5 billion in 2Q2017, contributed mainly from increased sales of sludge oil by Rp1.4 billion in 2Q2017.

Other expenses

Other expenses decreased by Rp0.3 billion or 67%, from Rp0.5 billion in 2Q2016 to Rp0.2 billion in 2Q2017, mainly due to decrease in areal survey expenses in 2Q2017.

Foreign exchange loss, net

Net foreign exchange loss of Rp0.9 billion in 2Q2017 was mainly attributable to the depreciation of IDR against SGD in relation to the Company's IDR denominated inter-company non-working capital financing for its subsidiary and the depreciation of USD against SGD for the USD bank balances held.

Profit before income tax

As a result of the foregoing, profit before income tax decreased by Rp8.8 billion or 43%, from Rp20.2 billion in 2Q2016 to to Rp11.4 billion in 2Q2017.

Income tax expense

Income tax expense increased by Rp0.7 billion or 22% from Rp2.9 billion in 2Q2016 to Rp3.6 billion in 2Q2017. This was mainly due to the reassessment of previous years' income tax returns by the Indonesia tax authorities.

Profit after income tax

As a result of the above, profit after income tax decreased by Rp9.4 billion or 55% from Rp17.3 billion in 2Q2016 to Rp7.9 billion in 2Q2017.

1H2017 versus 1H2016

Revenue

Our revenue for 1H2017 increased by Rp56.5 billion or 29%, from Rp192.4 billion in 1H2016 to Rp248.9 billion in 1H2017, mainly due to higher crude palm oil ("CPO") sales revenue of Rp53.4 billion and palm kernel ("PK") sales revenue of Rp3.0 billion.

CPO sales revenue increased by Rp53.4 billion or 31%, from Rp170.6 billion in 1H2016 to Rp224.0 billion in 1H2017 due to higher CPO sales volume and CPO average selling prices. Sales volume of CPO increased 3,148 tons from 24,164 tons in 1H2016 to 27,312 tons in 1H2017. CPO average selling price increased by Rp1,142 per kilogram, from Rp7,060 per kilogram in 1H2016 to Rp8,202 per kilogram in 1H2017.

PK sales revenue increased by Rp3.0 billion or 14%, from Rp21.9 billion in 1H2016 to Rp24.9 billion in 1H2017 due to higher PK average selling price and partially offset by decrease in PK sales volume. Average selling price of PK increased by Rp624 per kilogram from Rp4,347 per kilogram in 1H2016 to Rp4,971 per kilogram in 1H2017. Sales volume of PK decreased 21 tons, from 5,024 tons in 1H2016 to 5,003 tons in 1H2017.

Costs of sales

Cost of sales increased by Rp31.2 billion or 20%, from Rp156.3 billion in 1H2016 to Rp187.5 billion in 1H2017. This was mainly due to the higher CPO sales volume and the depreciation of bearer plants of Rp5.0 billion recognised in 1H2017.

Gross profit

As a result of the foregoing, gross profit increased by Rp25.2 billion or 70%, from Rp36.1 billion in 1H2016 to Rp61.3 billion in 1H2017. Gross profit margin increased 5.8% from 18.8% in 1H2016 to 24.6% in 1H2017.

Distribution expenses

Distribution expenses remained stable at Rp0.5 billion for 1H2017 and 1H2016.

Administrative expenses

Administrative expenses increased by Rp1.3 billion or 7% from Rp18.9 billion in 1H2016 to Rp20.2 billion in 1H2017. This was mainly due to higher salaries and wages paid in 1H2017.

Finance costs

Finance cost increased by Rp0.007 billion or 174% in 1H2017 due to higher finance lease interest paid for the additional finance lease in 1H2017.

Interest income

Interest income increased by Rp0.9 billion or 13%, from Rp6.4 billion in 1H2016 to Rp7.3 billion in 1H2017, mainly due to higher interest earned from bank deposits in 1H2017.

Other income

Other income increased by Rp7.5 billion or 204%, from Rp3.7 billion in 1H2016 to Rp11.2 billion in 1H2017, which was mainly due to fair value gain from derivative financial instruments of Rp8.2 billion in 1H2017.

Other expenses

Other expenses increased by Rp0.1 billion or 12%, from Rp1.0 billion in 1H2016 to Rp1.1 billion in 1H2017, mainly from the write off of matured plantation due to replanting.

Foreign exchange loss, net

Net foreign exchange loss of Rp6.5 billion in 1H2017 was mainly attributable to the depreciation of IDR against SGD in relation to the Company's IDR denominated inter-company non-working capital financing for its subsidiary and the depreciation of IDR against SGD for the Company's IDR bank balances held.

Profit before income tax

As a result of the foregoing, profit before income tax increased by Rp32.6 billion or 173%, from Rp18.9 billion in 1H016 to Rp51.5 billion in 1H2017.

Income tax expense

Income tax expense increased by Rp9.7 billion or 232% from Rp4.2 billion in 1H2016 to Rp13.9 billion in 1H2017. This was mainly due to the reassessment of previous years' income tax returns by the Indonesia tax authorities.

Profit after income tax

As a result of the above, profit after income tax increased by Rp22.9 billion or 156% from Rp14.7 billion in 1H2016 to Rp37.6 billion in 1H2017.

Review of Financial Position as at 30 June 2017

Non-current assets

Non-current assets for the Group decreased by Rp3.6 billion or 1%, from Rp298.4 billion as at 31 December 2016 to Rp294.8 billion as at 30 June 2017. This was mainly due to the net decrease of Rp2.2 billion in bearer plants and net decrease of Rp1.3 billion in property, plant and equipment, contributed by depreciation during 1H2017.

Current assets

Current assets for the Group decreased by Rp25.3 billion or 5%, from Rp465.8 billion as at 31 December 2016 to Rp440.5 billion as at 30 June 2017. This was mainly due to dividend paid to owners of the parents of Rp56.8 billion in 1H2017, offset by cash receipts from decrease in inventories of Rp13.9 billion and decrease in income tax recoverable by Rp12.3 billion in 1H2017.

Current liabilities

Current liabilities for the Group decreased by Rp11.5 billion or 18%, from Rp65.0 billion as at 31 December 2016 to Rp53.5 billion as at 30 June 2017. This was mainly due to the decrease of Rp17.0 billion in trade and other payables resulted from the advances from customers and offset by an increase in current income tax payable of Rp5.4 billion.

Non-current liabilities

Non-current liabilities for the Group decreased by Rp3.0 billion or 7% from Rp43.0 billion as at 31 December 2016 to Rp40.0 billion as at 30 June 2017, mainly due to utilization of post-employment benefits of Rp3.4 billion in 1H2017.

Accumulated losses

The accumulated losses of Rp120.5 billion was mainly contributed by the accumulated losses of Rp99.5 billion brought forward from FY2016 and dividend paid to owners of the parent of Rp56.8 billion in 1H2017, offset by the net profit of Rp35.8 billion in 1H2017. The accumulated losses of Rp99.5 billion in FY2016 was mainly due to the adoption of Amendments to FRS 16 and FRS 41 in FY2016, which resulted in a deficit of Rp231.0 billion in accumulated profits/(losses) in FY2016.

Review of Consolidated Cash Flows

Net cash generated from operating activities of Rp60.2 billion in 1H2017 was higher compared to Rp46.1 billion net cash generated from operating activities in 1H2016. The higher cash generated was mainly contributed by a higher operating profit from increased CPO sales volume and higher CPO and PK average selling prices in 1H2017.

Net cash used in investing activities of Rp0.2 billion in 1H2017 decreased by Rp11.6 billion as compared to net cash used in investing activities of Rp11.8 billion in 1H2016. This was mainly due to the net cash received of Rp7.6 billion from trading in derivative financial instruments in 1H2017, lower capital expenditure of bearer plants of R2.7 billion and lower purchase of plant and equipment of Rp2.1 billion.

Net cash used in financing activities of Rp63.6 billion in 1H2017 increased by Rp52.0 billion as compared to net cash used in financing activities for Rp11.6 billion in 1H2016. This was mainly due to increase of Rp48.9 billion in dividend paid to owners of the parents and increase of Rp 4.0 billion in the buyback of the Company's shares to be held as treasury shares.

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. The demand for palm oil is expected to remain strong in view of rising food requirements from China, India, Indonesia and emerging markets, as well as demand from the biofuel, oleochemicals and compound feed industries.

The Group is starting to replace its older palm trees with newer breed of higher yielding palm trees gradually over the next five years. The management expects to see higher yield per hectare when the replanted palm trees reach maturity. This together with the management continuous effort to increase productivity, should result in a positive sustainable future for the Group.