ASIAN PLANTATIONS LIMITED
LONDON NUSANTARA PLANTATIONS PLC
("London Nusantara", the "Group" or the "Company")
Audited Results for the Year Ended 31 December 2016 and Disposal of 11 per
cent. Interest in Next Oasis
CHAIRMAN'S STATEMENT
I am pleased to present the Group's audited financial results for the year
ended 31 December 2016. With no operating business as yet, the Group made a
consolidated pre-tax loss for the year of £113,438 (2015: £165,706). The parent
company loss for the year amounted to £112,944 (2015: £165,706). Cash at bank
at the end of December 2016 was £82,633 (2015: £191,097). During the financial
year 2016, a new subsidiary entity - Lonnus (M) Sdn Bhd - was incorporated in
Malaysia. Our net assets stood at £178,629 (2015: 292,067) as at 31 December
2016.
The Company remains quoted on the NEX Exchange Growth Market (formerly ISDX
Growth Market), as an investment vehicle seeking to identify and secure
potential acquisition opportunities within the agriculture sector, primarily in
oil palm plantations (upstream and downstream) and also vacant land suitable
for oil palm cultivation.
Principal Activities and Review of the Business
The principal activity of the Company is to invest in companies, or assets, in
the agriculture sector primarily in oil palm plantations and/or vacant land
suitable for oil palm cultivation. The Company has continued in this activity
since listing on the NEX Exchange Growth Market in June 2014.
Subsequent to the financial year end, the Company has entered into a Share Sale
Agreement ("SSA") dated 29 May 2017 to dispose of its investment in Next Oasis
Sdn Bhd for RM683,000 (£124,181). The sale averaged a return of 8.1% which is
above average return on capital asset disposals.
During the year we expanded our investment horizon to include Indonesia as the
rebound in palm oil prices resulted in an increase in capital values of estates
in Malaysia. Negotiations with estate owners have been difficult in 2016, on
the back of a challenging 2015. Capital raising from conventional bank
borrowings and equity placements have also proved difficult. We have now
embarked on looking at further downstream opportunities in varying our
investment strategy for 2017. These include the possibility of investing in the
palm oil mill sector, which includes production of crude palm oil, and
renewable energy businesses from oil palm waste monetisation. We also intend to
capitalise on the joint venture business model as it allows us to tap into the
experience of more established players, possibly working together to raise
conventional bank loans to finance investments.
We are constantly looking for investment opportunities in the region and our
plan is to embark on an aggressive fund raising exercise in 2017 in conjunction
with an expanded investment plan in the palm oil industry.
Financial Review
The audited results for the year show a loss of £113,438. About 40% of the
Company's primary expenses are largely to maintain its listing status, and
professional fees. The other expenses are related to business development
incurred in identifying potential investment targets, directors' fees and
office rentals. In a more positive note the Group recorded a foreign exchange
gain of £26,668 compared to the loss in 2015 of £44,955 thanks to the improving
Ringgit vs. the British Sterling. We also recorded revenue of £4,901 from
interest received from our treasury fund placements. Our cash position as at 31
December 2016 stood at £82,633. We expect to undertake a further capitalisation
during the year 2017 in order to maintain the listing status and continue
seeking further investments.
The directors do not recommend the payment of a dividend for the year ended 31
December 2016.
The Directors consider the results for the year to be satisfactory despite the
adverse conditions faced during the year 2016.
CHAIRMAN'S STATEMENT & INDUSTRY OUTLOOK 2017
This year, Malaysia is celebrating 100 years of oil palm planting. In 1917,
Henri Fauconnier, established Malaysia's first commercial oil palm planting at
Tennamaram Estate, Selangor, in a bid to replace an unsuccessful coffee estate.
The industry has played a large part in the development of the economy and will
continue to be one of the main pillars for Malaysia's economy.
Prolonged dry weather conditions and below average rainfall brought about by
the El-Nino weather phenomena during the second half of 2015 and into the first
half of 2016 had impacted the Malaysian oil palm industry performance in 2016.
Prices of all oil palm products were traded higher and Crude Palm Oil ("CPO")
price was traded higher by 23.2% or RM499.50 per tonne. The average CPO price
in 2016 was higher by 23.2% to reach RM2,653 (£482) per tonne as compared to
RM2,153.50 (£391) per tonne in 2015. The year 2016 saw CPO production recording
a decline of 13.2% to 17.32 million tonnes, against 19.96 million tonnes
produced in 2015. This double-digit, decline drew down palm oil stocks and
pushed up palm oil prices. The decrease was due to lower Fresh Fruit Bunches
("FFB") processed; down by 12.0% arising from lower FFB yield. The FFB yield
for 2016 was also lower, down by 13.9% to 15.91 tonnes per hectare, against
18.48 tonnes per hectare achieved in 2015. CPO production in Peninsular
Malaysia, Sabah and Sarawak decreased by 15.7%, 15.3% and 3.2% to 8.89 million
tonnes, 4.85 million tonnes and 3.59 million tonnes respectively compared to
2015. High palm oil prices had influenced exports to major markets as the
discount of CPO to soyabean oil narrowed. Higher palm oil prices also helped to
increase export revenue by 7.3% to RM64.58 billion (£11.7 billion) from RM60.17
billion (£10.9 billion) in 2015 for Malaysia.
The FFB yield for 2016 was also lower, down by 13.9% to 15.91 tonnes per
hectare as against 18.48 tonnes per hectare achieved in 2015. The El-Nino
phenomenon beginning in the second half of 2015, with prolonged dry weather
conditions and below average rainfall had impacted the production of FFB in
2016. FFB yield for Peninsular Malaysia declined by 16.0% to 15.77 tonnes per
hectare, against 18.77 tonnes per hectare achieved in 2015. Sabah registered a
decline of 14.5% to 17.10 tonnes per hectare, against 19.99 tonnes per hectare
achieved in the previous year. Sarawak's FFB yield was relatively lower at
14.86 tonnes per hectare or down by 8.3% as compared to 16.21 tonnes per
hectare achieved in 2015. Palm oil stocks closed at 1.67 million tonnes, a
decline of 36.7% from 2.63 million tonnes recorded in December 2015. The lower
closing stocks was mainly due to lower CPO production, down by 13.2% or 2.64
million tonnes and lower palm oil imports by 59.6% or 612,743 tonnes.
The highest traded price was in December 2016 at RM3,200 per tonne and the
lowest price was in January at RM2,250.50 per tonne. The higher CPO price
during the year was mainly due to lower CPO production as dryness caused by
El-Nino weather phenomena, which lowered FFB yield, thus boosting palm oil
prices, coupled with firmer competing vegetable oil prices, i.e. Soybean Oil
("SBO") price and weaker Ringgit, against the US Dollar, which made palm oil
cheaper as compared to other vegetable oils in the world market. (Source:
Malaysian Palm Oil Board).
Malaysia's economic growth expanded at 4.5 per cent in the fourth quarter of
2016, which was flat when compared to a year ago, underpinned by the
manufacturing and services sector, according to Bank Negara Malaysia. The
central bank said for 2016, the gross domestic product reported lower growth of
4.2%, which was slightly lower from 5%. In the agriculture sector, economic
activity contracted at a slower pace at -2.4%, reflecting the diminishing
impact of El Niño on crude palm oil yields. The global economy is on the
recovery path after bottoming out last year. Better-than-expected performance
in major economies, particularly the United States, China, Japan and Euro area,
and the recovery of larger emerging and low income economies as commodities
prices improved provided the impetus for global growth (Malaysian Institute of
Economic Research).
Leading analysts have forecast 2017 to be a positive year for palm oil prices,
at least for the first half. Global palm oil production is forecast to increase
by 6 million tonnes in 2017, according to leading vegetable oils analysts. Last
October 2016, it had been estimated global palm oil output for 2016/2017 to
grow by 5.5 million tonnes. Malaysian palm oil output is forecast to increase
to 19.85 million tonnes this year from 17.32 million tonnes, a year ago, while
production of Indonesian palm oil will rise to 35 million tonnes in 2017 from
32.10 million tonnes last year. Most oil palm analysts agree that palm oil
prices have peaked, but due to insufficient supplies and a prospective strong
world import demand, prices are likely to remain at current levels. Yields are
expected to recover, but remain below average, adding that last year, the
average annual oil yield fell to a 19-year-low. Replenishment of vegetable oil
stocks will take time and will not be possible in 2016/2017 as good weather and
high production is required. It is anticipated that palm oil [PRODUCTION//]
would stay below soybean oil for much of 2017. World imports of vegetable oils
have to increase by at least 3.3 million tonnes to 3.6 million tonnes in
January/September 2017, to ensure sustainable supplies to meet the current
demand.
Stocks will remain low during these lower production months, plantations bounce
back from El Niño perhaps more slowly than many traders expect, and exports to
India recover from the current issues surrounding the availability of large
denomination currency, which will likely exaggerate the already decreasing
levels of in-country palm oil stocks in the short-term. In the other main
export markets for palm oil, Chinese stocks are already at historic low levels,
although we wait to see whether this is indeed a low or a new normal. The
Chinese government appears to be focusing more on rival soybean oil through
increased imports and encouragement to increase its own modest levels of
domestic production. However, the election of Donald Trump in the US may swing
this focus back towards palm oil, given his articulated views on China and
China's own moves to take the initiative away from the US with regards to South
East Asia trade.
Towards the back end of 2017, and into 2018, it is possible we may see some
softening of palm oil prices as the US soybean crop is harvested and the impact
of El Niño is finally removed from palm oil estates, which may result in a
prolonged period of flush production.
Therefore it's predicted the CPO price outlook for 2017 is expected to average
RM2,700 per tonne compared with RM2,653 per tonne in 2016. CPO prices can be
traded within a low of RM2,500 per tonne and a high of RM2,800 per tonne this
year.
Principal Risks and Uncertainties
The principal risks and uncertainties lie in the investments the Group holds.
The agriculture sector means that returns are influenced by external factors
that include weather patterns, suitability and availability of arable land and
global demand and supply.
Given the nature of the business and activity of the Group, the Directors
believe that the Group is more specifically exposed to the following risks:
Agricultural risk
The primary risk factors that affect most agricultural operations are usually
related to agro climatic conditions, pests and diseases that may affect the
crop production and the crop itself. To mitigate the abovementioned risk
factors, companies need to be cognizant of their Agricultural practices which
can mitigate the risk of outbreaks of pests and diseases. Adverse climatic
conditions including drought or excessive rainfall or unusually low levels of
rainfall required for the normal development of the oil palms may lead to a
reduction in subsequent crop levels.
London Nusantara will consider the above risk factors and mitigating factors
which would be part of its agronomic due diligence process before deciding on
the investment.
Commodity and Crude Palm Oil ("CPO") prices
Oil palm production companies depend on sales of Fresh Fruit Bunches ("FFBs")
to mills or Crude Palm Oil ("CPO") if the Company owns its own mill as its
primary source of revenue. The price of the commodity is dependent on the
demand and supply of the product globally and other competing edible oil
supplies, especially soybean oil. The price of edible oils depends generally on
the production levels of all other edible oils including palm oil, which are
substitutable by users. Therefore the price fluctuation is influenced by
factors beyond the Group's control.
These factors include global supply and demand of CPO and other macro-economic
factors related to the global commodity market. A significant prolonged decline
in CPO prices could impact the viability of some or all of the Group's
investments.
Liquidity risk
The Group's continued future operations depend on the ability to hold
sufficient working capital to be able to meet its financial obligations. The
Directors are confident that there is adequate funding to finance future
immediate working capital requirements for the next 12 months.
Financial Risk Management
The Group's principal financial instruments are cash and cash equivalents. No
bank loans or other financing arrangements have been entered into. No
borrowings have been raised to finance working capital. Therefore the Group's
exposure to credit risk, liquidity risk and market risk is not deemed
significant.
M Subramaniam H Bin Abdul Jalil
Chief Executive Officer Non-Executive Director
30 May 2017
DISPOSAL OF 11 PER CENT. INTEREST IN NEXT OASIS
London Nusantara is pleased to announce that it has disposed of its 11 per
cent. interest in Next Oasis Sdn Bhd ("Next Oasis") for a consideration of, in
aggregate, RM 683,000 (approximately GBP 124,181). The purchase details are
summarised in the next paragraph. The after-transaction net profit uplift,
before capital gains tax, is approximately 16.2 per cent. The consideration has
been paid in cash upon signing of the Share Sales Agreement dated 29 May 2017.
The sale was made to FCB Plantation Holdings SDN BHD ("FCB"), the owner of the
other 89 per cent. interest in Next Oasis.
On 18 March 2015, the Company completed the acquisition of an 11 per cent.
interest in Next Oasis. London Nusantara advanced RM510,000 (approximately
GBP92,636) to Next Oasis as a deposit for the purchase of the 11 per cent.
interest in the oil palm land from MWE Holdings Berhad ("MWE"). An additional
RM50,000 (approximately GBP9,081) advance was made by an issuance of 200,000
new ordinary shares in London Nusantara at an agreed value of 5p per share to
MWE, the vendor of 404.6-hectare oil palm land. On completion, London Nusantara
owned 11 per cent. and FCB owned the remaining 89 per cent. of Next Oasis.
The Company continues to seek investments in accordance with its investment
criteria as outlined in the Company's admission document dated 13 June 2014.
The Directors of the Company accept responsibility for the contents of this
announcement.
For further information please contact:
The Company
LONDON NUSANTARA PLANTATIONS PLC
Manichelvam Subramaniam, Chief Executive Officer +60 3 7865 3987
Simon Rothschild, Non-executive Director +44 7703 167 065
NEX Exchange Corporate Adviser +44 (0)20 7469 0930
PETERHOUSE CORPORATE FINANCE LIMITED
Mark Anwyl/Guy Miller
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2016
Year ended Year ended
31-Dec 31-Dec
2016 2015
£ £
Revenue - -
Cost of sales - -
_________ _________
Gross profit -
Administration expenses -118,339 -174,357
_________ _________
Operating loss -118,339 -174,357
Finance income 4,901 8,651
_________ _________
Loss before taxation -113,438 -165,706
Taxation - -
_________ _________
Loss for the year -113,438 -165,706
Other comprehensive income - -
_________ _________
Total comprehensive loss -113,438 -165,706
======== ========
Loss attributable to:
Equity holders of the company -113,438 -165,706
======== ========
Loss per share (0.06)p (0.09)p
======== ========
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2016
31-Dec 31-Dec
2016 2015
£ £
Non-Current Assets
Office equipment 151 230
Investments 111,772 111,772
________ ________
Total non-current assets 111,923 112,002
________ ________
Current assets
Prepayments 24 -
Cash and cash equivalents 82,633 191,097
________ ________
Total current assets 82,657 191,097
_________ ________
Total assets 194,580 303,099
_________ ________
Current liabilities
Accruals -15,951 -11,032
_________ _________
Total liabilities -15,951 -11,032
_________ ________
Net assets / (liabilities) 178,629 292,067
======== ========
Capital and reserves
Share capital 669,438 669,438
Retained losses -490,809 -377,371
_________ ________
Total equity 178,629 292,067
======== ========
The financial statements of London Nusantara Plantations plc, registered number
009753V (Isle of Man), were approved by the board of directors and authorised
for issue on 30 May 2017. They were signed on its behalf by:
M Subramaniam
Director
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2016
31-Dec 31-Dec
2016 2015
£ £
Non-Current Assets
Office equipment 151 230
Investments 111,954 111,772
________ _________
Total non-current assets 112,105 112,002
________ _________
Current assets
Amounts receivable from related parties 862 -
Prepayments 24 -
Cash and cash equivalents 81,969 191,097
_________ _________
Total current assets 82,855 191,097
_________ _________
Total assets 194,960 303,099
_________ _________
Current liabilities
Accruals -15,837 -11,032
_________ _________
Total liabilities -15,837 -11,032
_________ _________
Net assets / (liabilities) 179,123 292,067
======== ========
Capital and reserves
Share capital 669,438 669,438
Retained losses -490,315 -377,371
_________ _________
Total equity 179,123 292,067
======== ========
The financial statements of London Nusantara Plantations plc, registered number
009753V (Isle of Man), were approved by the board of directors and authorised
for issue on 30 May 2017. They were signed on its behalf by:
M Subramaniam
Director
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2016
Year ended Year ended
31-Dec 31-Dec
2016 2015
£
Cash flow from operating activities
Loss for the year -113,438 -165,706
Adjusted for:
Depreciation 79 78
Interest received -4,901 -8,651
(Increase) / decrease in receivables -24 750
Increase / (decrease) in payables 4,919 -15,226
_________ _________
Net cash outflow from operating activities -113,365 -188,755
_________ _________
Cash flow from investing activities
Interest received 4,901 8,651
Purchase of investment - -1,275
_________ _________
Net cash inflow from investing activities 4,901 7,376
_________ _________
Net decrease in cash and cash equivalents -108,464 -181,379
Cash and cash equivalents at the beginning of the 191,097 372,476
year
_________ _________
Cash and cash equivalents at the end of the year 82,633 191,097
======== ========
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2016
Year ended Year ended
31-Dec 31-Dec
2016 2015
£ £
Cash flow from operating activities
Loss for the year -112,944 -165,706
Adjusted for:
Depreciation 79 78
Interest received -4,901 -8,651
(Increase) / decrease in receivables -728 750
Decrease / (increase) in payables 4,647 -15,226
_________ __________
Net cash outflow from operating -113,847 -188,755
activities
_________ __________
Cash flow from investing activities
Interest received 4,901 8,651
Purchase of investment -182 -1,275
_________ __________
Net cash inflow from investing 4,719 7,376
activities
_________ ___________
Net decrease in cash and cash -109,128 -181,379
equivalents
Cash and cash equivalents at the 191,097 372,476
beginning of the year
_________ __________
Cash and cash equivalents at the end of 81,969 191,097
the year
======== =========
LONDON NUSANTARA PLANTATIONS PLC
STATEMENTS OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2016
Group Share Retained Total
capital losses equity
£ £ £
As at 1 January 2016 669,438 -377,371 292,067
Loss for the year - -113,438 -113,438
_________ _________ _________
At 31 December 2016 669,438 -490,809 178,629
======== ======== ========
As at 1 January 2015 659,438 -211,665 447,773
Loss for the year - -165,706 -165,706
Shares issued in the year 10,000 - 10,000
_________ _________ _________
At 31 December 2015 669,438 -377,731 292,067
======== ======== ========
Company Share Retained Total
capital losses equity
£ £ £
As at 1 January 2016 669,438 -377,371 292,067
Loss for the year - -112,944 -112,944
_________ _________ _________
At 31 December 2016 669,438 -490,315 179,123
======== ======== ========
As at 1 January 2015 659,438 -211,665 447,773
Loss for the year - -165,706 -165,706
Shares issued in the year 10,000 - 10,000
_________ _________ _________
At 31 December 2015 669,438 -377,731 292,067
======== ======== ========
Asian Plantations : London Nusantara Plantations PLC - Year End Results and Disposal of Next Oasis
May 31, 2017 at 02:16 pm IST
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