RE: Topped up11 Jan 2020 20:51
Associate
EPO (through its wholly owned subsidiary Equatorial Biofuels (Guernsey) Limited) and Kuala Lumpur Kepong Berhad ("KLK") (through its wholly owned subsidiary KLK Agro Plantations Pte Ltd) each currently holds 50 per cent of the issued share capital of LPD. KLK also holds ordinary shares in EPO (through its wholly owned subsidiary KL-Kepong International Limited) representing approximately 62.86 per cent. of the issued share capital of the Company.
Under the Joint Venture Agreement, KLK has the power to appoint the Chairman to the Board of LPD and in the case of a tied vote the Chairman has the casting vote. For this reason, the Company accounts for its investment in LPD as an equity investment in which it has significant influence, therefore, classified as an associate.
LPD controls the operations in Liberia which involves the production and sale of oil palm products. The following operational review relates to the operations within the associate LPD which is referred to as "the Company" under the Operational review section.
Operational Review
On 7 January 2019, EPO announced that the first sale of crude palm oil ("CPO") was made from the newly commissioned palm oil mill ("POM") at Palm Bay estate.
As was announced on 27 September 2018, the POM, which currently has capacity to process up to 30 metric tonnes per hour ("mt/hr") (with the potential to increase capacity up to 60 mt/hr) of fresh fruit bunches, has been commissioned and is producing CPO.
EPO, through Libinc Oil Palm Inc ("Libinco"), its Liberian operating subsidiary, sold its first shipments of CPO to an oil palm trader. EPO understands that this shipment was delivered to Nigeria, which is a member of ECOWAS (The Economic Community of West African States), as is Liberia. Trade between ECOWAS member states is tariff free, and therefore no import or export duties were payable.
First shipments of CPO from the POM were made using flexibags, which sit inside shipping containers, each holding approximately 20 metric tonnes ("MT") of CPO, and were shipped out of the main port in Monrovia on conventional cargo ships.
Furthermore, on 20 August 2019, the Company announced that one of the customers of Libinco had confirmed the purchase of 2,700 MT of CPO whereby the customer arranged for the CPO to be collected by parcel tanker ship from the port of Buchanan, which is 45 kms from the POM on Palm Bay estate. This was a significant milestone for the Company, as this was the first time Libinco was able to sell the CPO in bulk for export on a parcel tanker ship as opposed to being shipped in 20MT flexibags.
All shipments to customers going forward are expected to be made by parcel tanker ship from the port of Buchanan, which, utilising the Company's 3,000 MT storage tank export facility, allows customers to purchase the Company's oil palm products in bulk for export.
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