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 year |
|
191,097 |
372,476 |
|
|
_________ |
_________ |
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 activities |
|
|
|
-113,847 |
-188,755 |
|
|
|
|
_________ |
__________ |
|
|
|
|
|
|
Cash flow from
investing activities |
|
|
|
|
|
Interest received |
|
|
|
4,901 |
8,651 |
Purchase of
investment |
|
|
|
-182 |
-1,275 |
|
|
|
|
_________ |
__________ |
Net cash inflow
from investing activities |
|
|
|
4,719 |
7,376 |
|
|
|
|
_________ |
___________ |
|
|
|
|
|
|
Net decrease in
cash and cash equivalents |
|
|
|
-109,128 |
-181,379 |
Cash and cash
equivalents at the beginning of the year |
|
|
|
191,097 |
372,476 |
|
|
|
|
_________ |
__________ |
Cash and cash
equivalents at the end of the year |
|
|
|
81,969 |
191,097 |
|
|
|
|
======== |
========= |
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 |
|
======== |
======== |
======== |