Global Palm Resources

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UNAUDITED FINANCIAL STATEMENT ANNOUNCEMENT FOR THE FINANCIAL PERIOD FROM 1 JANUARY 2018 TO 31 MARCH 2018

Financials Archive

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Profit & Loss

Profit & Loss

Other comprehensive income

Balance Sheet

Balance Sheet

Review of Group performance

1Q2018 versus 1Q2017

Revenue

Our revenue for 1Q2018 decreased Rp49.7 billion or 33%, from Rp148.5 billion in 1Q2017 to Rp98.8 billion in 1Q2018. This was mainly due to the decrease in crude palm oil ("CPO") sales revenue of Rp49.1 billion and decrease in palm kernel ("PK") sales revenue of Rp0.6 billion.

CPO sales revenue decreased by Rp49.1 billion or 36%, from Rp135.6 billion in 1Q2017 to Rp86.5 billion in 1Q2018. This was mainly due to the decrease in CPO sales volume and CPO average selling price. Sales volume of CPO decreased by 4,302 tons or 27% from 15,807 tons in 1Q2017 to 11,505 tons in 1Q2018. CPO average selling price decreased by Rp1,062 per kilogram or 12%, from Rp8,578 per kilogram in 1Q2017 to Rp7,516 per kilogram in 1Q2018.

PK sales revenue decreased by Rp0.6 billion or 4%, from Rp12.9 billion in 1Q2017 to Rp12.3 billion in 1Q2018. The decrease was mainly due to lower PK average selling price. Average selling price of PK decreased by Rp285 per kilogram or 4% from Rp6,435 per kilogram in 1Q2017 to Rp6,150 per kilogram in 1Q2018. Sales volume of PK remained at 2,000 tons in 1Q2017 and 1Q2018.

Costs of sales

Cost of sales decreased by Rp23.1 billion or 22%, from Rp103.4 billion in 1Q2017 to Rp80.3 billion in 1Q2018. The decrease mainly resulted from the decrease in CPO sales volume in 1Q2018.

Gross profit

As a result of the foregoing, gross profit decreased by Rp26.6 billion or 59%, from Rp45.0 billion in 1Q2017 to Rp18.4 billion in 1Q2018. Gross profit margin decreased by 11.5% from 30.3% in 1Q2017 to 18.7% in 1Q2018.

Distribution expenses

Distribution expenses increased by Rp0.1 billion or 34%, from Rp0.1 billion in 1Q2017 to Rp0.2 billion in 1Q2018. This was mainly due to higher freight charges incurred in 1Q2018 for the transportation of PK from the plantation's bulk storage warehouse to the loading port of Pontianak.

Administrative expenses

Administrative expenses increased by Rp2.1 billion or 19% from Rp11.0 billion in 1Q2017 to Rp13.1 billion in 1Q2018. The increase is mainly due to increase in salaries and wages for the Group in 1Q2018.

Finance costs

Finance cost remained stable in 1Q2018 and in 1Q2017.

Interest income

Interest income decreased by Rp0.9 billion or 24%, from Rp3.9 billion in 1Q2017 to Rp3.0 billion in 1Q2018, mainly due to lower interest earned from bank deposits and lower interest earned from the plasma plantation receivables in 1Q2018.

Other income

Other income decreased by Rp7.7 billion or 89%, from Rp8.7 billion in 1Q2017 to Rp1.0 billion in 1Q2018, mainly due to the fair value gain on derivative financial instruments of Rp8.0 billion recognized in 1Q2017.

Other expenses

Other expenses increased by Rp0.6 billion or 62%, from Rp0.9 billion in 1Q2018 to Rp1.5 billion in 1Q2018, mainly due to mainly due to land permit application expenses amounting to Rp1.2 billion, offset by lower other expenses of Rp0.3 billion for the Group and lower plantation written-off expenses of Rp0.2 billion.

Foreign exchange loss, net

Net foreign exchange loss of Rp5.0 billion in 1Q2018 was mainly attributable to the depreciation of IDR against SGD, in relation to the Company's IDR bank balances held and IDR denominated inter-company non-working capital financing for its subsidiary.

Profit before income tax

Profit before income tax decreased by Rp37.5 billion or 94%, from Rp40.0 billion in 1Q2017 to Rp2.5 billion in 1Q2018. The main factors contributing to the decrease are further explained below:

Decrease in CPO sales volume mainly due to lower production

Production in 1Q2017 was exceptionally good with a CPO production output of 12,998 tons and CPO extraction rate of 21.10%.

In comparison, the production for 1Q2018 was quite normal.

The lower production for 1Q2018 was also attributable to the decrease in hectarage under the replanting programme.

Decrease in CPO and PK average selling price

CPO average selling price in 1Q2017 was high at Rp8,578 per kilogram while in 1Q2018, it decreased by 12% to Rp7,516 per kilogram. Average selling price of PK decreased by Rp285 per kilogram or 4% from Rp6,435 per kilogram in 1Q2017 to Rp6,150 per kilogram in 1Q2018.

Increase in stock inventory of 25.4%

The stock inventory of CPO increased from 2,855 tons as at 31 March 2017 to 3,582 tons as at 31 March 2018, an increase of 25.4%.

Fair value gain on derivative financial instruments of Rp8.0 billion recognized in 1Q2017

There was a fair value gain on derivative financial instruments of Rp8.0 billion recognized in 1Q2017, while there are none in 1Q2018.

Income tax expense

Income tax expense decreased by Rp8.6 billion or 85% from Rp10.1 billion in 1Q2017 to Rp1.5 billion in 1Q2018. The decrease is in line with the lower profit generated.

Profit after income tax

As a result of the above, profit after income tax decreased Rp28.9 billion or 97%, from Rp29.9 billion in 1Q2017 to Rp1.0 billion in 1Q2018.

Review of Financial Position as at 31 March 2018

Non-current assets

Non-current assets for the Group decreased by Rp3.7 billion or 1%, from Rp303.8 billion as at 31 December 2017 to Rp300.1 billion as at 31 March 2018. This was mainly due to decrease of Rp4.4 billion from the credit extended to the Plasma farmers for the biological assets transferred and partially offset by increase of Rp0.7 billion in property, plant and equipment.

Current assets

Current assets for the Group increased by Rp8.5 billion or 2%, from Rp452.8 billion as at 31 December 2017 to Rp461.3 billion as at 31 March 2018. This was mainly due to increase in inventories of Rp6.9 billion, increase in trade and other receivables of Rp4.0 billion and increase in income tax recoverable of Rp2.6 billion, and partially offset by decrease in cash and cash equivalent of Rp5.4 billion.

Current liabilities

Current liabilities for the Group decreased by Rp2.2 billion or 4%, from Rp51.1 billion as at 31 December 2017 to Rp48.9 billion as at 31 March 2018. This was mainly due to decrease in trade and other payables of Rp1.0 billion, payment of dividend payable to non-controlling interest of Rp0.6 billion and decrease in current income tax payable of Rp0.5 billion.

Non-current liabilities

Non-current liabilities for the Group decreased by Rp6.5 billion or 14% from Rp47.5 billion as at 31 December 2017 to Rp41.0 billion as at 31 March 2018, mainly due to decrease in provision for post-employment benefits of Rp8.3 billion and increase in deferred tax liabilities of Rp1.9 billion.

Accumulated losses

The accumulated losses of Rp117.1 billion was mainly contributed by the accumulated losses of Rp117.8 billion brought forward from FY2017, offset by the net profit attributable to owners of the parent of Rp0.7 billion in 1Q2018.

Review of Consolidated Cash Flows

Net cash used in operating activities of Rp8.3 billion in 1Q2018, compared to net cash generated from operation activities of Rp26.2 billion in 1Q2017, was mainly due to the decrease in operating profit in 1Q2018.

Net cash used in investing activities of Rp6.0 billion in 1Q2018 was mainly due to capital expenditure on bearer plants of Rp2.3 billion and purchases of property, plant and equipment of Rp3.7 billion in 1Q2018.

Net cash used in financing activities of Rp0.9 billion in 1Q2018 mainly due to dividend paid to non-controlling interest of Rp0.6 billion, repayment of obligations under finance leases of Rp0.1 billion and buyback of Rp0.1 billion of the Company's shares to be held as treasury shares.

Commentary On Current Year Prospects

CPO prices are expected to remain within the current price range given the supply situation and the uncertainty in the global economy and abnormal weather's affect on market dynamics. However, the demand for palm oil is expected to be well supported 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. 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.