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REVIEW OF FINANCIAL RESULTS

The Group’s revenue of RM842 million was 14% lower than RM981 million reported in the previous year mainly attributed to the following:

Oil Palm
Slight increase in revenue mainly due to mixture of:
• 9% lower of FFB price and 10% lower of CPO price
• 6% higher FFB production due to maturing trees

Timber
• 33% decrease in revenue was caused by reduction of sales volume. Sales volume in the logging division dropped by 58% while plywood division dropped by 5%. The reductions were due to 60% and 16% decrease in production volume respectively.

Profit before tax dropped by 140% to a loss of RM19.9 million for the current year from RM50.0 million in the previous year. This is partly due to an impairment loss of RM30.1 million on investment in RSawit (5113) equity which was accounted for as an available-for-sale financial asset. The impairment loss was recognized due to the significant or prolonged decline in fair value below cost.

The other reason for the decline in profit before tax was the 60% reduction in our log production as we are undertaking Sustainable Forest Management Certification. Furthermore, the increase in log royalty by more than 70% impacted our profit margin by approximately 8%.

Selling and distribution cost reduced by 33% in line with the lower sales volume from the timber divisions. The completion of the four CPO mills reduced traveling distances that were undertaken from the plantations to third party mills previously. This also contributed to lower logistics cost.

Finance cost decreased by 6% to RM53.6 million with total reduction of interest bearing loans and borrowings by 10%. Our cash flow from Operating Activities decreased by 3% to RM156.1 million.

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