Trading Statement

1 November 2018

Anglo-Eastern Plantations Plc

("AEP" or "Group")

Trading Statement

The group comprising Anglo-Eastern Plantations Plc ("AEP") and its subsidiaries ("The Group"), is a major producer of palm oil and some rubber across Indonesia and Malaysia, with land amounting to some 128,200 hectares of which approximately 69,159 hectares (including Plasma) are planted, today announces a trading update in respect of the period since 30 June 2018.

Operational and financial performance

For the first nine months ended 30 September 2018, our own production of fresh fruit bunches ("FFB") was 787,160mt, an increase of 14% compared to the same period in 2017 (9M17: 690,520mt). FFB bought-in was 760,460mt, which represents an increase of 2% in comparison with the same period in 2017 (9M17: 749,050mt). Total Crude Palm Oil ("CPO") produced was 316,920mt, 9% higher than the corresponding period in 2017 (9M17: 290,840mt) due to both higher FFB production and external FFB purchase.

CPO price ex-Rotterdam averaged $629/mt for the first nine months of 2018. This represents a significant decrease of 13% from the average price of $723/mt recorded in the comparative period of 2017. This trend has continued over the last quarter, with the average CPO price ex-Rotterdam for Q3 being down 13% compared to Q2. CPO ex-Rotterdam closed at a price of $512/mt on 26 October 2018, representing a 24% decline from $678/mt at the start of the year. This is due to a higher inventory of palm oil and weaker demand.

The Group's balance sheet remains strong with the Company continuing to generate positive cash flow. The Company's Long Term Development Loans totalled $23.6m as at 30 September 2018 (3Q17: $31.0m). The Group had net cash of $98.3m as at 30 September 2018 (3Q17: $110.9m). The lower net cash balance is due to translation loss as the Indonesian currency has weakened more than 10% in 2018 against the USD.

Development

The Group's new planting for the nine months ended 30 September 2018 totalled 1,156 hectares, of which replanting made up 394 hectares. The Group continues to face resistance and difficulty in concluding land compensation settlement with villagers in Bengkulu and Bangka due to unreasonably high land price expectations. 

The transmission line and electrical works to connect the 1 Megawatt biogas plant in Kalimantan to the national grid is expected to be completed by the end of 2018.

The earthwork for the seventh mill in North Sumatera has been delayed due to unfavourable weather and is now expected to finish by early next year.

Outlook

The higher CPO production to date will not compensate for the drop in CPO price which is expected to lead to a lower revenue and profitability for the year ending 31 December 2018, as experienced by plantation companies across the industry.

CPO demand was given a boost when the Indonesian government expanded the B20 Program from 1 September 2018, requiring the use of biodiesel blended fuels for all vehicles and heavy machinery. In addition, the spread of Soyoil-CPO price has widened to more than $130/tonne in early October 2018 from $90/tonne at the end of August 2018 which should lift demand for CPO.

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The information communicated in this announcement is inside information for the purposes of Article 7 of Market Abuse Regulation 596/2014.