Anglo Eastern Plantations : Interim Report 30 June 2020

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Chairman's Interim Statement

There is cautious reprieve from the Coronavirus pandemic as many countries are easing their lockdowns and encouraging their population to return to economic activities but to remain safe. There are expectations of a second wave and in fact some countries are experiencing it. We have gone through more than three months of the COVID-19 outbreak without significant impact to our productions as our plantations and mills have been able to operate close to normal levels. Likewise, the demand for Crude Palm Oil ("CPO") during the pandemic has not been affected, as reflected in the six months results to 30 June 2020.

While the total lockdown in Malaysia and Indonesia due to COVID-19 has been progressively lifted, local movement is still restricted and most international flights have not been restored. The Group continues to practise safety protocols like encouraging employees to wear masks, keep their distance, practise personal hygiene and avoid crowded places to minimize the spread of the virus. The pandemic is far from over as Indonesia reported more confirmed cases of COVID-19 compared to China.

As we are still facing a period of uncertainty, the Board and the management have carried out stress tests to ensure that the Group has adequate financial resources in a reasonable worse case scenario to remain as a going concern for at least twelve months from the date of this report. By the same token we have also carried out assessments of our significant assets to determine whether such assets need to be impaired as a result of the pandemic.

The interim results for the Group for the six months to 30 June 2020 are as follows:

Revenue for the six months to 30 June was $123.1 million, 26% higher than $97.9 million reported for the same period of 2019. The Group's gross profit was $21.8 million compared to $5.3 million for the first six months of 2019. Overall profit before tax for the first half of 2020 increased more than ten fold to $16.8 million (after biological assets movement) against $1.6 million for the corresponding period in 2019. This was attributed mainly to higher CPO prices and production.

Fresh Fruit Bunches ("FFB") production for the first half of 2020 was 9% higher at 511,700mt compared to 470,300mt in the same period last year due to better weather and increased matured area. Bengkulu plantations reported a 20% increase in crop production as the region recovered from the moisture stress. Young matured oil palms in North Sumatera are growing well and reported an 11% better harvest in the same period. Bought-in crops for the first half of 2020 also increased by 6% to 425,400mt from 402,900mt due to an abundance of crops in the Bengkulu region.

Operational and financial performance

For the six months ended 30 June 2020, gross profit margin increased to 17.7% from 5.4% as the Group experienced higher CPO and palm kernel prices.

CPO price ex-Rotterdam averaged $648/mt for the first six months to 30 June 2020, 23% higher than $527/mt over the same period in 2019. Our Group's average ex-mill price for CPO was higher at $551/mt for the same period (1H 2019: $466/mt).

Profit after tax for the six months ended 30 June 2020 was $12.5 million, compared to a profit of $0.3 million for the first six months of 2019, as a result of the increased gross profit margin.

Anglo-Eastern Plantations Plc

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Chairman's Interim Statement (continued)

The resulting basic earnings per share for the period was 26.35cts (1H 2019: loss of 3.74cts).

The Group's balance sheet remains strong. Net assets as at 30 June 2020 were $493.2 million compared to $472.7 million as at 30 June 2019 and $495.8 million as at 31 December 2019. The increase in net assets from the last interim report was attributed to higher profit and lower capital expenditure. The Indonesian Rupiah has depreciated by 3% against the US dollar in the first half of 2020.

As at 30 June 2020, the Group had cash and cash equivalents of $91.4 million (1H 2019: $100.1 million) and borrowings of $2.7 million (1H 2019: $16.1 million), giving it a net cash position of $88.7 million, compared to $84.0 million as at 30 June 2019 and $76.6 million as at 31 December 2019.

Operating costs

Operating costs for the Indonesian operations were higher in the first half of 2020 compared to the same period in 2019 mainly due to an increase in bought-in crops from third parties, higher wages due to the annual increase in minimum wage rates and a 5% increase in newly matured areas where the yield remains relatively low.

The Group's six mills processed a total of 918,100mt in FFB for the first half of 2020, an 8% increase compared to 849,900mt for the same period last year. The higher throughput was due to the higher FFB supplied from both own estates and bought-in from third parties due to reasons explained earlier.

Anglo-Eastern Plantations Plc

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