20th Aug 2019 12:26
(Alliance News) - Equatorial Palm Oil PLC said Tuesday it has completed the establishment of its end to end supply chain, but warned of an annual loss due to the impairment of assets at Butaw estate.
For the Palm Bay estate in Liberia, Equatorial said that Libnic Oil Palm Inc confirmed that it will acquire its next quantity of crude palm oil, arranging for the oil to be collected by parcel tanker ship from the port of Buchanan in Liberia.
In late June, Equatorial had crude palm oil transported from the Palm Bay estate to its 3,000 metric tonnes storage tank export facility at the port.
The group considers it a "significant milestone" to have the facility operational, allowing customers to purchase products in bulk straight from the port.
Looking ahead, Equatorial expects the storage tank export facility to be fully commissioned within the fourth quarter of 2019.
As for the Butaw estate, the company is assessing the impairment for the year ending September 30 from the downsizing of the estate.
Back in May, the company undertook a strategic review of its Butaw estate operations and reached a conclusion to scale down these operations. Recent assessments have shown Butaw estate to have insufficient plantable area, therefore making it neither economic nor sustainable to build a long-term oil palm business, Equatorial Palm Oil explained.
Equatorial said that its parent company Kuala Lumpur Kepong Berhad made an impairment on its investment in joint venture Liberian Palm Developments Ltd at USD35.1 million, due to the impairment of assets as Butaw.
Equatorial currently holds a 50% stake in Liberian Palm Developments, which was valued at USD10.4 million at the end of March.
The company said it is highly likely that it will make an impairment in the year, leading to the carrying value of its LPD investment to none. Should this take place, it would result in a significant net loss for the year.
"Having the bulking station and export facility at the port of Buchanan up and running is the last part of completing our end to end supply chain. This now allows our customers to purchase our oil palm products in bulk from the working port. This is another significant milestone for the company and also for Liberia which is looking to re-invigorate the agricultural industry," said Executive Director Geoffrey Brown.
Shares in Equatorial Palm Oil were up 6.7% at 0.80 pence on Tuesday in London.
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