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Financials

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

Financials Archive

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Profit & Loss

Profit & Loss

Other comprehensive income

Balance Sheet

Balance Sheet

Review of Group performance

3Q2017 versus 3Q2016

Revenue

Our revenue for 3Q2017 increased Rp34.5 billion or 49%, from Rp71.1 billion in 3Q2016 to Rp105.7 billion in 3Q2017. This was mainly due to the increase in crude palm oil ("CPO") sales revenue of Rp35.5 billion and offset by lower palm kernel ("PK") sales revenue of Rp1.0 billion.

CPO sales revenue increased by Rp35.5 billion or 56%, from Rp63.7 billion in 3Q2016 to Rp99.3 billion in 3Q2017. This was contributed by higher CPO sales volume and partially offset by lower CPO average selling price. Sales volume of CPO increased by 5,002 tons or 63% from 8,004 tons in 3Q2016 to 13,006 tons in 3Q2017.CPO average selling price decreased by Rp328 per kilogram or 4%, from Rp7,963 per kilogram in 3Q2016 to Rp7,635 per kilogram in 3Q2017.

PK sales revenue decreased by Rp1.0 billion or 14%, from Rp7.4 billion in 3Q2016 to Rp6.4 billion in 3Q2017. This was due to lower PK average selling price and lower PK sales volume. Average selling price of PK decreased by Rp979 per kilogram or 13% from Rp7,338 per kilogram in 3Q2016 to Rp6,359 per kilogram in 3Q2017. Sales volume of PK decreased by 7 tons, from 1,007 tons in 3Q2016 to 1,000 tons in 3Q2017.

Costs of sales

Cost of sales increased by Rp29.5 billion or 61%, from Rp48.8 billion in 3Q2017 to Rp78.3 billion in 3Q2017. This was due to the higher CPO sales volume and the depreciation of bearer plants of Rp2.5 billion recognised in 3Q2017.

Gross profit

As a result of the foregoing, gross profit increased by Rp5.0 billion or 22%, from Rp22.3 billion in 3Q2016 to Rp27.3 billion in 3Q2017. Gross profit margin decreased to 25.9% in 3Q2017 from 31.4% in 3Q2016.

Distribution expenses

Distribution expenses decreased by Rp0.2 billion or 54%, from Rp0.3 billion in 3Q2016 to Rp0.1 billion in 3Q2017. This was mainly due to lower freight charges incurred in 3Q2017 for the transportation of PK from the plantation's bulk storage warehouse to the loading port of Pontianak.

Administrative expenses

Administrative expenses increased by Rp1.7 billion or 23% from Rp7.3 billion in 3Q2016 to Rp9.0 billion in 3Q2017. The increase is mainly due to additional headcount for the Group and higher professional fees for 3Q2017.

Finance costs

Finance cost increased by Rp0.002 billion or 45% in 3Q2017 due to higher finance lease interest paid for the additional finance lease in 3Q2017.

Interest income

Interest income decreased by Rp0.4 billion or 11%, from Rp3.8 billion in 3Q2016 to Rp3.4 billion in 3Q2017, mainly due to lower interest earned from the plasma plantation receivables and lower interest earned from bank deposits in 3Q2017.

Other income

Other income decreased by Rp2.5 billion, from Rp2.3 billion in 3Q2016, mainly due to the decrease in sales of sludge oil by Rp2.0 billion, coupled with the fair value loss from derivative financial instruments of Rp0.5 billion in 3Q2017.

Other expenses

Other expenses increased by Rp0.5 billion or 482%, from Rp0.1 billion in 3Q2016 to Rp0.6 billion in 3Q2017, mainly due to the net loss in disposal of property, plant and equipment of Rp0.4 billion in 3Q2017.

Foreign exchange loss, net

Net foreign exchange loss of Rp4.2 billion in 3Q2017 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 Rp9.5 billion or 36%, from Rp26.0 billion in 3Q2016 to Rp16.5 billion in 3Q2017.

Income tax expense

Income tax expense decreased by Rp0.3 billion or 6% from Rp5.2 billion in 3Q2016 to Rp4.9 billion in 3Q2017. The decrease is mainly due to lower tax provision for 3Q2017.

Profit after income tax

As a result of the above, profit after income tax decreased by Rp9.1 billion or 44% from Rp20.8 billion in 3Q2016 to Rp11.7 billion in 3Q2017.

9M2017 versus 9M2016

Revenue

Our revenue for 9M2017 increased by Rp91.0 billion or 35%, from Rp263.5 billion in 9M2016 to Rp354.5 billion in 9M2017, mainly due to the increase in crude palm oil ("CPO") sales revenue of Rp 89.0 billion and increase in palm kernel ("PK") sales revenue of Rp2.0 billion.

CPO sales revenue increased by Rp89.0 billion or 38%, from Rp234.3 billion in 9M2016 to Rp323.3 billion in 9M2017 due to higher CPO sales volume and higher CPO average selling prices. Sales volume of CPO increased 8,150 tons from 32,168 tons in 9M2016 to 40,318 tons in 9M2017. CPO average selling price increased by Rp734 per kilogram, from Rp7,285 per kilogram in 9M2016 to Rp8,019 per kilogram in 9M2017.

PK sales revenue increased by Rp2.0 billion or 7%, from Rp29.2 billion in 9M2016 to Rp31.2 billion in 9M2017 due to higher PK average selling price and partially offset by decrease in PK sales volume. Average selling price of PK increased by Rp355 per kilogram from Rp4,847 per kilogram in 9M2016 to Rp5,202 per kilogram in 9M2017. Sales volume of PK decreased 29 tons, from 6,032 tons in 9M2016 to 6,003 tons in 9M2017.

Costs of sales

Cost of sales increased by Rp60.8 billion or 30%, from Rp205.1 billion in 9M2016 to Rp265.9 billion in 9M2017. This was mainly due to the higher CPO sales volume and the depreciation of bearer plants of Rp7.5 billion recognised in 9M2017.

Gross profit

As a result of the foregoing, gross profit increased by Rp30.2 billion or 52%, from Rp58.4 billion in 9M2016 to Rp88.6 billion in 9M2017. Gross profit margin increased 2.8% from 22.2% in 9M2016 to 25.0% in 9M2017.

Distribution expenses

Distribution expenses decreased by Rp0.1 billion or 17%, from Rp0.8 billion in 9M2016 to Rp0.7 billion in 9M2017. This was mainly due to lower freight charges incurred in 9M2017 for the transportation of PK from the plantation's bulk storage warehouse to the loading port of Pontianak.

Administrative expenses

Administrative expenses increased by Rp3.0 billion or 11% from Rp26.2 billion in 9M2016 to Rp29.2 billion in 9M2017. This was mainly due to additional headcount for the Group and higher professional fees for 9M2017.

Finance costs

Finance cost increased by Rp0.009 billion or 102% in 9M2017 due to higher finance lease interest paid for the additional finance lease in 9M2017.

Interest income

Interest income increased by Rp0.5 billion or 4%, from Rp10.2 billion in 9M2016 to Rp10.7 billion in 9M2017, mainly due to higher interest earned from bank deposits of Rp1.2 billion, offset by lower interest earned from the plasma plantation receivables of Rp0.7 billion in 9M2017.

Other income

Other income increased by Rp5.0 billion or 85%, from Rp6.0 billion in 9M2016 to Rp11.0 billion in 9M2017, which was mainly due to fair value gain from derivative financial instruments of Rp7.7 billion, and partially offset by the decrease in gain on KKPA project of Rp1.4 billion in 9M2017.

Other expenses

Other expenses increased by Rp0.6 billion or 60%, from Rp1.1 billion in 9M2016 to Rp1.7 billion in 9M2017, mainly due to net loss in disposal of property, plant and equipment of Rp0.4 billion and the write off of matured plantation of Rp0.2 billion due to replanting.

Foreign exchange loss, net

Net foreign exchange loss of Rp10.7 billion in 9M2017 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.

Profit before income tax

As a result of the foregoing, profit before income tax increased by Rp23.2 billion or 52%, from Rp44.8 billion in 9M2016 to Rp68.0 billion in 9M2017.

Income tax expense

Income tax expense increased by Rp9.4 billion or 100% from Rp9.4 billion in 9M2016 to Rp18.8 billion in 9M2017. 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 increased by Rp13.8 billion or 39% from Rp35.5 billion in 9M2016 to Rp49.3 billion in 9M2017.

Review of Financial Position as at 30 September 2017

Non-current assets

Non-current assets for the Group increased by Rp4.2 billion or 1%, from Rp298.4 billion as at 31 December 2016 to Rp302.6 billion as at 30 September 2017. This was mainly due to the additional credit of Rp5.2 billion extended to the Plasma farmers for the biological assets transferred and partially offset by the net decrease of Rp1.5 billion in property, plant and equipment, contributed by depreciation during 9M2017.

Current assets

Current assets for the Group decreased by Rp4.4 billion or 1%, from Rp465.8 billion as at 31 December 2016 to Rp461.4 billion as at 30 September 2017. This was mainly due to the decrease in inventories and trade and other receivables and partially offset by an increase in cash and cash equivalent.

Current liabilities

Current liabilities for the Group increased by Rp0.7 billion or 1%, from Rp65.0 billion as at 31 December 2016 to Rp65.7 billion as at 30 September 2017. This was mainly due to increase in current income tax payable of Rp7.1 billion and offset by a decrease in trade and other payables of Rp6.4 billion.

Non-current liabilities

Non-current liabilities for the Group decreased by Rp5.7 billion or 13% from Rp43.0 billion as at 31 December 2016 to Rp37.3 billion as at 30 September 2017, mainly due to the Group entered into Manulife insurance programme for employee retirement benefits in 9M2017.

Accumulated losses

The accumulated losses of Rp109.7 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 9M2017, offset by the net profit of Rp46.6 billion in 9M2017. 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 Rp87.0 billion in 9M2017 was higher compared to Rp79.6 billion net cash generated from operating activities in 9M2016. 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 9M2017.

Net cash used in investing activities of Rp9.9 billion in 9M2017 decreased by Rp5.1 billion as compared to net cash used in investing activities of Rp15.0 billion in 9M2016. This was mainly due to the net cash received of Rp7.6 billion from trading in derivative financial instruments in 9M2017, lower capital expenditure of bearer plants of R0.6 billion and offset by additions to available-for-sale financial assets of Rp1.7 billion and higher purchase of plant and equipment of Rp1.0 billion.

Net cash used in financing activities of Rp67.5 billion in 9M2017 increased by Rp53.3 billion as compared to net cash used in financing activities for Rp14.2 billion in 9M2016. This was mainly due to increase of Rp48.9 billion in dividend paid to owners of the parents and increase of Rp5.6 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. In the recently-concluded Bali CPO conference, the consensus among the CPO analysts are that for the next 6 months, prices will increase slightly from the present level.

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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