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Financials

UNAUDITED FINANCIAL STATEMENT ANNOUNCEMENT FOR THE FINANCIAL YEAR FROM 1 JANUARY 2017 TO 31 DECEMBER 2017

Financials Archive

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Profit & Loss

Profit & Loss

Other comprehensive income

Balance Sheet

Balance Sheet

Review of Group performance

4Q2017 versus 4Q2016

Revenue

Our revenue for 4Q2017 decreased Rp16.4 billion or 13%, from Rp122.2 billion in 4Q2016 to Rp105.8 billion in 4Q2017. This was mainly due to the decrease in crude palm oil ("CPO") sales revenue of Rp18.6 billion and offset by increase in palm kernel ("PK") sales revenue of Rp2.2 billion.

CPO sales revenue decreased by Rp18.6 billion or 17%, from Rp110.4 billion in 4Q2016 to Rp91.8 billion in 4Q2017. This was mainly due to the decrease in CPO sales volume and partially offset by higher CPO average selling price. Sales volume of CPO decreased by 2,500 tons or 18% from 14,007 tons in 4Q2016 to 11,507 tons in 4Q2017. CPO average selling price increased by Rp93 per kilogram or 1%, from Rp7,884 per kilogram in 4Q2016 to Rp7,977 per kilogram in 4Q2017.

PK sales revenue increased by Rp2.2 billion or 19%, from Rp11.7 billion in 4Q2016 to Rp13.9 billion in 4Q2017. The increase was mainly contributed by higher PK average selling price and partially offset by lower PK sales volume. Average selling price of PK increased by Rp1,122 per kilogram or 19% from Rp5,857 per kilogram in 4Q2016 to Rp6,979 per kilogram in 4Q2017. Sales volume of PK decreased by 3 tons, from 2,003 tons in 4Q2016 to 2,000 tons in 4Q2017.

Costs of sales

Cost of sales decreased by Rp5.9 billion or 7%, from Rp88.9 billion in 4Q2016 to Rp83.0 billion in 4Q2017. Excluding the effects of the adjustment of Rp5.1 billion taken in 4Q2016 for the adoption of the amendments of FRS 16 and FRS41, cost of sales decreased Rp0.8 billion, from Rp83.8 billion in 4Q2016 to Rp83.0 billion in 4Q2017. The decrease mainly resulted from the decrease in CPO and PK sales volume in 4Q2017.

Gross profit

As a result of the foregoing, gross profit decreased by Rp10.6 billion or 32%, from Rp33.3 billion in 4Q2016 to Rp22.7 billion in 4Q2017. Gross profit margin decreased by 5.7% from 27.2% in 4Q2016 to 21.5% in 4Q2017.

Net loss from changes in fair value of biological assets

The Group recognized a net loss from changes in fair value of biological assets of Rp0.7 billion in FY2017, as compared to a net gain from changes in fair value of biological assets of Rp0.9 billion in FY2016. The net loss from changes in fair value of biological assets in FY2017 mainly resulted from the reduction of total planted area from replanting and write-off during FY2017.

Distribution expenses

Distribution expenses decreased by Rp0.3 billion or 69%, from Rp0.5 billion in 4Q2016 to Rp0.2 billion in 4Q2017. This was mainly due to lower freight charges incurred in 4Q2017 for the transportation of PK from the plantation's bulk storage warehouse to the loading port of Pontianak.

Administrative expenses

Administrative expenses increased by Rp2.6 billion or 18% from Rp14.8 billion in 4Q2016 to Rp17.4 billion in 4Q2017. The increase is mainly due to additional headcount for the Group, higher estimated post-employment benefits and higher professional fees for 4Q2017.

Finance costs

Finance cost remained stable in 4Q2017 and in 4Q2016.

Interest income

Interest income decreased by Rp1.0 billion or 23%, from Rp4.1 billion in 4Q2016 to Rp3.1 billion in 4Q2017, mainly due to lower interest earned from the plasma plantation receivables and lower interest earned from bank deposits in 4Q2017.

Other income

Other income decreased by Rp3.6 billion, from Rp3.4 billion in 4Q2016, mainly due to the decrease in sales of sludge oil by Rp2.3 billion.

Other expenses

Other expenses decreased by Rp7.0 billion or 83%, from Rp8.5 billion in 4Q2016 to Rp1.5 billion in 4Q2017, mainly due to decrease in plantation written-off expenses by Rp2.2 billion, decrease in deferred charges written-off expense of Rp3.6 billion and decrease in land application expenses by Rp0.5 billion.

Foreign exchange loss, net

Net foreign exchange loss of Rp4.1 billion in 4Q2017 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, the depreciation of IDR against SGD for the Company's IDR bank balances held 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 Rp23.2 billion or 93%, from Rp25.0 billion in 4Q2016 to Rp1.8 billion in 4Q2017.

Income tax expense

Income tax expense decreased by Rp6.5 billion or 54% from Rp12.0 billion in 4Q2016 to Rp5.5 billion in 4Q2017. The decrease is in line with the lower profit generated.

(Loss)/profit after income tax

As a result of the above, there is a loss after income tax of Rp3.6 billion in 4Q2017 incurred against a profit after income tax of Rp13.0 billion in 4Q2016.

Financial Year 2017 ("FY2017") versus Financial Year 2016 ("FY2016")

Revenue

Our revenue for FY2017 increased by Rp74.5 billion or 19%, from Rp385.7 billion in FY2016 to Rp460.3 billion in FY2017, mainly due to the increase in crude palm oil ("CPO") sales revenue of Rp70.3 billion and increase in palm kernel ("PK") sales revenue of Rp4.2 billion.

CPO sales revenue increased by Rp70.3 billion or 20%, from Rp344.8 billion in FY2016 to Rp415.1 billion in FY2017 due to higher CPO sales volume and higher CPO average selling prices. Sales volume of CPO increased 5,650 tons from 46,175 tons in FY2016 to 51,825 tons in FY2017. CPO average selling price increased by Rp542 per kilogram, from Rp7,467 per kilogram in FY2016 to Rp8,009 per kilogram in FY2017.

PK sales revenue increased by Rp4.2 billion or 10%, from Rp41.0 billion in FY2016 to Rp45.2 billion in FY2017 due to higher PK average selling price and partially offset by decrease in PK sales volume. Average selling price of PK increased by Rp547 per kilogram from Rp5,099 per kilogram in FY2016 to Rp5,646 per kilogram in FY2017. Sales volume of PK decreased 32 tons, from 8,035 tons in FY2016 to 8,003 tons in FY2017.

Costs of sales

Cost of sales increased by Rp54.9 billion or 19%, from Rp294.1 billion in FY2016 to Rp349.0 billion in FY2017. This was mainly due to the higher CPO sales volume in FY2017.

Gross profit

As a result of the foregoing, gross profit increased by Rp19.6 billion or 21%, from Rp91.7 billion in FY2016 to Rp111.3 billion in FY2017. Gross profit margin increased 0.4% from 23.8% in FY2016 to 24.2% in FY2017.

Net loss from changes in fair value of biological assets

The Group recognized a net loss from changes in fair value of biological assets of Rp0.7 billion in FY2017, as compared to a net gain from changes in fair value of biological assets of Rp0.9 billion in FY2016. The net loss from changes in fair value of biological assets in FY2017 mainly resulted from the reduction of total planted area from replanting and write-off during FY2017.

Distribution expenses

Distribution expenses decreased by Rp0.5 billion or 37%, from Rp1.3 billion in FY2016 to Rp0.8 billion in FY2017. This was mainly due to lower freight charges incurred in FY2017 for the transportation of PK from the plantation's bulk storage warehouse to the loading port of Pontianak.

Administrative expenses

Administrative expenses increased by Rp5.6 billion or 14% from Rp41.0 billion in FY2016 to Rp46.6 billion in FY2017. This was mainly due to increase in estimated post-employment benefits, increase in additional headcount for the Group and higher professional fees for FY2017.

Finance costs

Finance cost increased by Rp0.01 billion or 76% in FY2017 due to higher finance lease interest paid for the additional finance lease in FY2017.

Interest income

Interest income decreased by Rp0.5 billion or 4%, from Rp14.4 billion in FY2016 to Rp13.9 billion in FY2017, mainly due to decrease in interest earned from the plasma plantation receivables of Rp1.0 billion, offset by higher interest earned from bank deposits of Rp0.5 billion.

Other income

Other income increased by Rp1.4 billion or 15%, from Rp9.3 billion in FY2016 to Rp10.7 billion in FY2017, which was mainly due to fair value gain from derivative financial instruments of Rp7.8 billion, and partially offset by the decrease in sales of sludge oil revenue of Rp2.3 billion.

Other expenses

Other expenses decreased by Rp6.4 billion or 67% from Rp9.5 billion in FY2016 to Rp3.1 billion in FY2017, as there are no deferred charges being written-off in FY2017 compared to a deferred charges written-off of Rp3.6 billion in FY2016. In addition, there is a decrease in plantation written-off expense of Rp2.0 billion in FY2017.

Foreign exchange loss, net

Net foreign exchange loss of Rp14.8 billion in FY2017 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 (Rp6.0 billion foreign exchange loss), the depreciation of IDR against SGD for the Company's IDR bank balances held and the depreciation of USD against SGD for the USD bank balances held (Rp6.8 billion foreign exchange loss).

Profit before income tax

As a result of the foregoing, profit before income tax remains at Rp69.9 billion in FY2016 and FY2017.

Income tax expense

Income tax expense increased by Rp2.8 billion or 13% from Rp21.4 billion in FY2016 to Rp24.2 billion in FY2017. This was mainly due to the increase in income tax expense which resulted from higher profits in Indonesia and the assessment 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 Rp2.9 billion or 6% from Rp48.5 billion in FY2016 to Rp45.6 billion in FY2017.

Review of Financial Position as at 31 December 2017

Non-current assets

Non-current assets for the Group increased by Rp5.4 billion or 2%, from Rp298.4 billion as at 31 December 2016 to Rp303.8 billion as at 31 December 2017. This was mainly due to the net increase of Rp3.7 billion in property, plant and equipment, additional plantings of Rp1.0 billion, increase of Rp0.4 billion from the credit extended to the Plasma farmers for the biological assets transferred and increase in deferred charges of Rp0.3 billion in FY2017.

Current assets

Current assets for the Group decreased by Rp13.0 billion or 3%, from Rp465.8 billion as at 31 December 2016 to Rp452.8 billion as at 31 December 2017. This was mainly due to the decrease in income tax recoverable of Rp12.4 billion, decrease in inventories of Rp8.6 billion, decrease in trade and other receivables of Rp3.0 billion, and partially offset by an increase in cash and cash equivalent of Rp9.9 billion.

Current liabilities

Current liabilities for the Group decreased by Rp13.9 billion or 21%, from Rp65.0 billion as at 31 December 2016 to Rp51.1 billion as at 31 December 2017. This was mainly due to decrease in trade and other payables of Rp19.8 billion, and partially offset by an increase in current income tax payable of Rp4.3 billion.

Non-current liabilities

Non-current liabilities for the Group increased by Rp4.3 billion or 10% from Rp43.0 billion as at 31 December 2016 to Rp47.3 billion as at 31 December 2017, mainly due to increase in provision for post-employment benefits of Rp2.4 billion and increase in deferred tax liabilities of Rp1.9 billion.

Accumulated losses

The accumulated losses of Rp117.6 billion was mainly contributed by the accumulated losses of Rp99.5 billion brought forward from FY2016, dividend paid to owners of the parent of Rp56.8 billion and other comprehensive income of Rp4.0 billion in FY2017, offset by the net profit attributable to owners of the parent of Rp42.7 billion in FY2017. 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 an adjustment of Rp231.0 billion in accumulated profits/(losses) in FY2016.

Review of Consolidated Cash Flows

Net cash generated from operating activities of Rp81.7 billion in FY2017 was lower compared to Rp105.0 billion net cash generated from operating activities in FY2016. The lower cash generated was mainly due reduction in trade and other payables and offset by higher operating profit before tax in FY2017.

Net cash used in investing activities of Rp22.3 billion in FY2017 was mainly due to capital expenditure on bearer plants of Rp12.6 billion and purchases of property, plant and equipment of Rp15.9 billion in FY2017, offset by a net cash received of Rp7.7 billion from trading in derivative financial instruments in FY2017.

Net cash used in financing activities of Rp69.0 billion in FY2017 mainly due to dividend paid to owners of the parents of Rp56.8 billion and increase of Rp11.9 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 trade within the recent range given no new variables. Outlook for the global economy has improved and 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. Nevertheless the supply of palm oil is also expected to increase resulting in range bound prices.

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.

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