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Quarterly Report For The Financial Period Ended 30 September 2020

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INTERIM REPORT FOR THE THIRD QUARTER ENDED 30 SEPTEMBER 2020

Condensed Consolidated Statement of Financial Position

(The figures have not been audited)
Condensed Consolidated Statement of Financial Position

Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income

(The figures have not been audited)
Condensed Consolidated Statement of Comprehensive Income

Review of Performance

Quarter 3, 2020 vs Quarter 3, 2019

The Group recorded revenue of RM137.2 million in the current interim quarter ended 30 September 2020 compared with RM93.5 million reported in the corresponding period of the preceding year. The increase in revenue was due to the effect of higher sales volume of CPO and PK and higher realised average selling price of CPO and PK during the current interim quarter.

The Group's operating profit before tax was RM22.9 million for the current interim quarter compared to operating profit before tax of RM8.3 million for the corresponding period of the preceding year. The increase in operating profit was because of the increase in revenue despite higher production cost and operating cost.

The Group recorded a profit before tax of RM27.2 million for the current interim quarter, as compared to a profit before tax of RM7.5 million in the corresponding period of the preceding year. This was in line with the increase in operating profit and gain arising from changes in fair value of biological assets of RM4.3 million for the current interim quarter.

The performance of the respective major business segments of the Group are as follows:

Oil Palm Operations

The oil palm operations comprise estate and mill operations. During the current interim quarter, estate operations recorded a revenue and segment profit of RM49.2 million and RM22.9 million respectively, whereas mill operations recorded a revenue and segment profit of RM126.4 million and RM2.7 million respectively.

For the current interim quarter, the oil palm operations segment contributed 99.8% of the Group revenue of RM137.2 million.

Revenue of the oil palm operations increased by RM43.6 million to RM136.9 million in the current interim quarter compared with RM93.3 million reported in the corresponding period of the preceding year. The increase was principally attributed to the effect of higher sales volumes of CPO and PK and higher realised average selling prices of CPO and PK during the current interim quarter.

Average selling prices of CPO and PK had increased approximately by 34.8% and 33.1% whereas sales volumes of CPO and PK had increased by approximately 6.5% and 14.3% respectively for the current interim quarter.

The operating profit before tax for the oil palm operations (after deducting administrative and finance cost) was RM23.1 million for the current quarter as compared to operating profit before tax of RM8.5 million for the corresponding period of the preceding year. The increase in operating profit before tax was because of the increase in revenue despite higher production cost and operating cost.

Other segments

Other segments' results for the current financial period are insignificant to the Group.

Prospects for the Current Financial Year

As of now with the COVID 19 pandemic still ongoing, the economic climate is uncertain. Nevertheless, The Group has managed to adapt to this challenging environment with minimal disruption to its business and is complying fully with the standard operating procedures issued by the Government in all of its operations.

Crude palm oil (CPO) price has seen many rapid changes in 2020. It fluctuated from an average of RM3,000 per metric tonne (mt) in January 2020, declined to as low as an average of RM2,000 per mt in May 2020, then again surged to RM3,300 per mt as of early November 2020.

The Group will continue to manage its financial and operational risks in a prudent and cautious manner considering that the current economic situation due to COVID 19 pandemic is unpredictable.

In addition, the Group recorded a 28% growth in its fresh fruit bunches (FFB) production, for 9 months to date compared to corresponding period of 2019. The Board of Directors is of the view that the Group will record a notable growth in FFB production for the year 2020 compared to 2019.

Barring any unforeseen circumstances and subject to the sustainability of the current CPO price, the Board of Directors anticipates a better financial performance for the current financial year.