Half Yearly Report

RNS Number : 1363Q
Anglo-Eastern Plantations PLC
27 August 2014
 



27 August2014

 

Anglo-Eastern Plantations Plc

("AEP", "Group" or "Company")

 

Announcement of interim results for six months ended 30 June 2014

 

 

Anglo-Eastern Plantations Plc, and its subsidiaries are a major producer of palm oil and rubber with plantations across Indonesia and Malaysia amounting to some 127,794 hectares, has today released its results for the six months ended 30 June 2014.

 

Financial Highlights

 


2014
6 months
to 30 June
$ m

(unaudited)


2013
6 months
to 30 June
$ m

(unaudited & restated)


2013
12 months
to 31 Dec
$ m

(audited)

Revenue

130.0


83.5


201.9

Profit before tax






-  before biological asset ("BA") adjustment

43.2


15.8


59.7

-  after BA adjustment

66.3


18.3


153.4

EPS, after BA adjustment

103.66cts


21.11cts


235.95cts







Total Net Assets

552.0


463.2


494.0

 

 

 

 

Enquiries:

 

Anglo-Eastern Plantations Plc


Dato' John Lim Ewe Chuan 

 020 7216 4621



Charles Stanley Securities


Russell Cook / Karri Vuori

020 7149 6000



 

Chairman's statement

 

I am pleased to present the interim results for the Company for the six months to 30 June 2014. The Group performance improved significantly compared to last year due to improved Crude Palm Oil ("CPO") prices, higher Fresh Fruit Bunches ("FFB") production and increased purchase of external crops by the mills.

 

Despite the relatively good performance in the first half the Board emphasises that challenging times are ahead for the Group and the palm oil industry in general. Of late CPO price has weakened mainly due to the prospect of a record soybean production in North and South America on the back of favourable weather expectations and increased planting acreage.

 

Demand remains soft as top buyers in India and China purchase a greater proportion of soybean as the price differential between the two edible oils continues to narrow. The spread was about $98 per metric tonne on 4 July 2014 down from an average of $244/mt on the same date in 2013. Pressure on the CPO price is exacerbated further by a good supply of sunflower oil in the market at very competitive prices. A slowly deflating energy market due to the poor infrastructure for oil distribution and biodiesel blending in some developing countries has also undermined earlier widely held expectations for biodiesel to absorb surplus CPO.

 

 

Operational and financial performance

 

For the six months ended 30 June 2014, revenue was $130.0 million, an increase of 56% (1H 2013: $83.5 million). Gross margins for the period increased from 25% to 35% reflecting a 6% increase in average CPO price in the first half of 2014 compared to the same period in the previous year. This was on top of 20% weakening of Indonesian Rupiah against the US Dollar for the same period. 

 

The Group benefited from a $23.1 million revaluation of its biological assets ("BA valuation") (1H 2013: $2.5 million).  With this contribution operating profits for the period increased by 259% to $63.9 million (1H 2013: $17.8 million) while profit before tax was $66.3 million, 262% higher than the $18.3 million achieved for the same period in 2013.

 

The resulting earnings per share for the period were up 391% at 103.66cts (1H 2013: 21.11cts).

 

During the first six months of 2014 the CPO price averaged at $895/mt compared to $847/mt for 1H 2013. FFB production for the first six months of 2014 was 393,900mt, 17% higher compared to 335,900mt for 1H 2013. Bought-in crops for the same period was 310,900mt, 62% higher than last year of 191,900mt due to better prices offered for external crops.

 

The Group's balance sheet remains strong and cash flow remains healthy even after our capital expenditure necessary to maintain immature trees and new planting.

 

The BA valuation is determined using discounted cash flow over the expected 20-year economic life of the assets. Among the assumption used in the valuation includes the 10-year average CPO price. The BA valuation increased by $23.1 million for 30 June 2014 was due primarily to the increase in the 10-year average CPO price from $700/mt to $725/mt.

 

As at 30 June 2014 the Group's total cash balance was $115.8 million (1H 2013: $98.7 million) with total borrowings of $35.0 million (1H 2013: $35.0 million), giving a net cash position of $80.8 million, compared to $63.7million as at 30 June 2013.

 

 

Operating costs

 

The operating costs for the Indonesian operations were higher in 1H 2014 compared to the same period in 2013 mainly due to the increase in wages, fertilisers, fuel and general upkeep of plantations. Higher operating costs were also partly attributed to 13% increase in matured areas.

 

 

Production and Sales





2014

2013

2013


6 months

6 months

Year


to 30 June

to 30 June

to 31 December


(unaudited)

(unaudited)

(audited)


mt

mt

mt

Oil palm production




FFB




- all estates

393,900

335,900

787,500

- bought-in or processed for third parties

310,900

191,900

496,600

Saleable CPO

141,700

109,900

262,600

Saleable palm kernels

33,100

25,400

61,500





Oil palm sales




CPO

145,000

108,700

253,200

Palm kernels

31,600

24,900

60,800

FFB sold outside

37,300

12,300

54,300





Rubber production

480

450

1,049

 

 

The Group's five mills processed a total of 667,500mt in FFB for the 1H 2014, a 29% increase compared to 515,500mt for the same period last year.

 

Internal crop production was higher by 17% in line with an increase in matured plantations in the Bengkulu and Central Kalimantan.

 

Bought-in crops were 62% higher than last year due to additional sources of FFB supplies and improved pricing.

 

Capital outlay is required to improve road conditions in Bengkulu, easing the FFB transportation especially during rainy season. Significant capital expenditure is expected in the replanting of 1,029ha of old palms in North Sumatra.

 

 

Commodity prices

 

CPO price was fairly strong for the 1H 2014 and hit a high of $993/mt in March 2014. The average CPO price for 1H 2014 was $895/mt (1H 2013: $847/mt). The higher CPO price in the first three months of 2014 was due to initial concerns over dry weather that hit Peninsular Malaysia and parts of Indonesia which delayed the ripening of fruits.

 

Rubber price averaged $1,823/mt, 30% lower than 2013 (1H 2013: $2,599/mt).

 



 

 

Development

 

The Group's planted areas at 30 June 2014 comprised:

 


Total

Mature

Immature


ha

ha

ha

North Sumatra

19,249

17,702

1,547

Bengkulu

18,819

17,717

1,102

Riau

4,873

4,873

-

South Sumatra

3,969

159

3,810

Kalimantan

10,391

4,651

5,740

Bangka

307

-

307

Plasma

734

510

224

Indonesia

58,342

45,612

12,730

Malaysia

3,695

3,379

316

Total : 30 June 2014

62,037

48,991

13,046

Total : 31 December 2013

61,099

43,236

17,863

Total : 30 June 2013

59,715

43,483

16,232

 

 

The Group's new planting for the first six months ended 30 June 2014 totalled 941ha. The slow rate of new planting is due to protracted land compensation negotiations.

 

The Group is optimistic that planting will pick up in the second half of 2014. The Group's total landholding comprises some 127,794ha, of which the planted area stands around 62,037ha (1H 2013: 59,715ha).

 

The biogas purification equipment and biomass plant for the mill in North Sumatra are in final stages of testing and commissioning in early Q3 2014. This mill will enhance the treatment of the effluent and at the same time mitigate the emission of biogas. Under this project, the empty fruit bunches will be processed into dried long fibres for export.

 

The earthworks for the construction of the 45mt/hr palm oil mill in Central Kalimantan are 85% completed while civil and mechanical works is progressing as scheduled with the mill  expected to be completed and operational in Q2 2015.

 

 

Dividend

 

As in previous years no interim dividend has been declared. A final dividend of 3.0 pence per share in respect of the year to 31 December 2013 was paid on 17 June 2014.

 

 

Outlook

 

It has been reported in the Public Ledger that many buyers of refined palm oil in China struggled for funding as the country crackdown on commodity financing in the face of slowing domestic demand. This may lead to lower CPO imports as a result of tighter access to credit. However, the industry believe CPO price is expected to be resilient due to concerns on weaker FFB production in Malaysia and parts of Indonesia in the fourth quarter of 2014 due to a prolonged dry spell in the first three months of the year. Parts of some growing areas in Malaysia and Indonesia received less than 50 millimetres of rain in January and February, the driest period since 1997. El Nino weather phenomenon is also forecasted this year and if materialises could induce droughts which would curb production and yield.

 

The Board remains cautiously confident of reporting a satisfactory level of profitability. Cash generation is expected to remain strong and the Board looks forward to reporting further progress in its next Interim Management Statement.

 

 

Principal risks and uncertainties

 

The directors do not consider that the principal risks and uncertainties have changed since the publication of the annual report for the year ended 31 December 2013.

 

A more detailed explanation of the risks relevant to the Group is on pages 18 to 20 and from pages 78 to 83 of the 2013 annual report which is available at www.angloeastern.co.uk.

 

Following the conclusion of the discussions with the Financial Reporting Council ("FRC") regarding the use of current market data to estimate notional rent for the use of land in its discounted cash flow for the determination of biological assets, details of which were set out in the 2013 Annual Report and Accounts, the Group has adopted a notional rent equivalent to 9% of the value of planted land in valuing its biological asset and resulted in the accounts for the period ended 30 June 2013 being restated. The details of the restatement are disclosed in Note 2 - Prior period restatement on page 15.

 

 

 

 

 

 

Madam Lim Siew Kim

Chairman

27 August 2014

 



 

Responsibility Statements

 

We confirm that to the best of our knowledge:

 

a)   The unaudited interim financial statements have been prepared in accordance with IAS34: Interim Financial Reporting as adopted by the European Union;

 

b)   The Chairman's statement includes a fair review of the information required by DTR 4.2.7R (an indication of important events during the first six months and a description of the principal risks and uncertainties for the remaining six months of the year); and

 

c)   The interim financial statements include a fair review of the information required by DTR 4.2.8R (material related party transactions in the six months ended 30 June 2014 and any material changes in the related party transactions described in the last Annual Report) of the Disclosure and Transparency Rules of the United Kingdom Financial Services Authority.

 

 

 

 

 

 

By order of the Board

Dato' John Lim Ewe Chuan

27 August 2014

 


Condensed Consolidated Income Statement

 



2014

6 months to 30 June

(unaudited)

2013

6 months to 30 June

(unaudited & restated)

2013

Year to 31 December

(audited)

 

Continuing operations

 

Notes

 

Result before BA adjustment
$000

BA adjustment
$000

Total
$000

Result

before BA adjustment
$000

BA adjustment
$000

Total
$000

Result

before BA adjustment
$000

BA adjustment
$000

Total
$000

Revenue


130,006

-

130,006

83,528

-

83,528

201,917

-

201,917

Cost of sales


(84,892)

-

(84,892)

(62,408)

-

(62,408)

(133,400)

-

(133,400)

Gross profit


45,114

-

45,114

21,120

-

21,120

68,517

-

68,517

Biological asset revaluation

movement (BA adjustment)


-

23,103

23,103

-

2,503

2,503

-

93,661

93,661

Administration expenses


(4,300)

-

(4,300)

(5,795)

-

(5,795)

(8,898)

-

(8,898)

Operating profit


40,814

23,103

63,917

15,325

2,503

17,828

59,619

93,661

153,280

Exchange loss


413

-

413

(512)

-

(512)

(2,781)

-

(2,781)

Finance income


2,942

-

2,942

1,763

-

1,763

4,676

-

4,676

Finance expense

4

(1,003)

-

(1,003)

(784)

-

(784)

(1,774)

-

(1,774)

Profit before tax

5

43,166

23,103

66,269

15,792

2,503

18,295

59,740

93,661

153,401

Tax expense

6

(11,918)

(5,776)

(17,694)

(5,926)

(626)

(6,552)

(16,178)

(23,415)

(39,593)

Profit for the period


31,248

17,327

48,575

9,866

1,877

11,743

43,562

70,246

113,808

Attributable to:











-  Owners of the parent


25,879

15,209

41,088

6,859

1,509

8,368

35,950

57,571

93,521

-  Non-controlling interests


5,369

2,118

7,487

3,007

368

3,375

7,612

12,675

20,287



31,248

17,327

48,575

9,866

1,877

11,743

43,562

70,246

113,808

Earnings per share for profit attributable to the owners of the parent during the period








 

 

 

 

 

 

-  basic

8



103.66cts



21.11cts



235.95cts

-  diluted

8



103.54cts



21.09cts



235.67cts

 

 



 

Condensed Consolidated Statement of Comprehensive Income



2014

 

2013

2013



6 months

6 months

Year



to 30 June

to 30 June

to 31 December



(unaudited)

(unaudited & restated)

(audited)



$000

$000

$000


48,575

11,743

113,808





Items may be  reclassified to profit or loss in subsequent periods:





Profit / (Loss) on exchange translation of foreign operations


12,403

(13,845)

(112,824)

Net other comprehensive income may be reclassified to profit or loss in subsequent periods


12,403

(13,845)

(112,824)

Items not to be reclassified to profit or loss in subsequent periods:





Unrealised (loss) / gain on revaluation of the estates


(704)

(3,057)

31,807

Deferred tax on revaluation


177

765

(7,951)

Remeasurements of retirement benefit plan


-

(1,414)

278

Deferred tax on retirement benefit


-

-

(71)

Net other comprehensive (expense) / income not being reclassified to profit or loss in subsequent periods


(527)

(3,706)

24,063

Total other comprehensive income / (expenses) for the period, net of tax


11,876

(17,551)

(88,761)


60,451

(5,808)

25,047

Attributable to:





-  Owners of the parent


50,718

(6,396)

21,508

-  Non-controlling interests


9,733

588

3,539



60,451

(5,808)

25,047

 



 

 

 

Condensed Consolidated Statement of Financial Position



2014

2013

2013



as at 30 June

as at 30 June

as at 31 December


Notes

(unaudited)

(unaudited & restated)

(audited)



$000

$000

$000

Non-current assets




Biological assets


304,156

215,117

265,835

Property, plant and equipment


224,030

210,865

213,342

Receivables


5,857

5,216

5,649



534,043

431,198

484,826

Current assets





Inventories


9,817

6,987

8,448

Tax receivables


9,333

9,427

8,464

Trade and other receivables


10,261

12,181

7,271

Cash and cash equivalents


115,831

98,671

98,738



145,242

127,266

122,921

Current liabilities





Loans and borrowings


(196)

(29)

(84)

Trade and other payables


(18,990)

(14,710)

(15,331)

Tax liabilities


(7,845)

(2,794)

(4,988)

Dividend payables


(20)

(1,784)

-



(27,051)

(19,317)

(20,403)

Net current assets


118,191

107,949

102,518

Non-current liabilities





Loans and borrowings


(34,813)

(35,010)

(34,937)

Deferred tax liabilities


(61,787)

(35,894)

(55,298)

Retirement benefits - net liabilities


(3,593)

(5,091)

(3,099)



(100,193)

(75,995)

(93,334)

Net assets


552,041

463,152

494,010

 

 







 



2014

2013

2013



as at 30 June

as at 30 June

as at 31 December


Notes

(unaudited)

(unaudited & restated)

(audited)



$000

$000

$000

Issued capital and reserves attributable to owners of the parent




Share capital


15,504

15,504

15,504

Treasury shares


(1,171)

(1,171)

(1,171)

Share premium reserve


23,935

23,935

23,935

Share capital redemption reserve


1,087

1,087

1,087

Revaluation reserves


56,297

34,632

56,767

Exchange reserves


(171,007)

(100,194)

(181,107)

Retained earnings


532,121

406,349

493,031



456,766

380,142

408,046

Non-controlling interests


95,275

83,010

85,964

Total equity


552,041

463,152

494,010

 

 

 

Condensed Consolidated Statement of Changes in Equity

 


Attributable to owners of the parent

 


Share capital

Treasury

shares

Share premium

Share capital redemption reserve

Revaluation reserve

Foreign exchange reserve

Retained earnings

Total

Non-controlling interests

Total equity

 


$000

$000

$000

$000

$000

$000

$000

$000

$000

$000

 












 

Balance at 31 December 2012

15,504

(1,171)

23,935

1,087

36,799

(88,838)

401,006

388,322

83,043

471,365

Items of other comprehensive income











-Unrealised gain on revaluation of estates, net of tax

 

-

 

-

 

-

 

-

 

20,062

 

-

 

-

 

20,062

 

3,794

 

23,856

-Disposal of land





(94)

-

94

-

-

-

-Remeasurement of retirement benefit plan, net of tax

 

-

 

-

 

-

 

-

 

-

 

-

 

194

 

194

 

13

 

207

Loss on exchange translation of foreign operations

 

-

 

-

 

-

 

-

 

-

 

(92,269)

 

-

 

(92,269)

 

(20,555)

 

(112,824)

Total other comprehensive income / (expenses)

 

-

 

-

 

-

 

-

 

19,968

 

(92,269)

 

288

 

(72,013)

 

(16,748)

 

(88,761)

Profit for year

-

-

-

-

-

-

93,521

93,521

20,287

113,808

Total comprehensive  income and expenses for the year

 

-

 

-

 

-

 

-

 

19,968

 

(92,269)

 

93,809

 

21,508

 

3,539

 

25,047

Dividends paid

-

-

-

-

-

-

(1,784)

(1,784)

(618)

(2,402)

Balance at 31 December 2013

15,504

(1,171)

23,935

1,087

56,767

(181,107)

493,031

408,046

85,964

494,010












Items of other comprehensive income











-Unrealised loss on revaluation of estates, net of tax

-

-

-

-

(470)

-

-

(470)

(57)

(527)

-Gain on exchange translation of foreign operations

-

-

-

-

-

10,100

-

10,100

2,303

12,403

Total other comprehensive (expenses) / income

-

-

-

-

(470)

10,100

-

9,630

2,246

11,876

Profit for period

-

-

-

-

-

-

41,088

41,088

7,487

48,575

Total comprehensive income and expenses for the period

-

-

-

-

(470)

10,100

41,088

50,718

9,733

60,451

Dividend paid

-

-

-

-

-

-

(1,998)

(1,998)

(422)

(2,420)

Balance at 30 June 2014

15,504

(1,171)

23,935

1,087

56,297

(171,007)

532,121

456,766

95,275

552,041

 




































Balance at 31 December 2012

15,504

(1,171)

23,935

1,087

36,799

(88,838)

401,006

388,322

83,043

471,365























Items of other comprehensive income











-Unrealised loss on revaluation of estates, net of tax

-

-

-

-

(2,167)

-

-

(2,167)

(125)

(2,292)

-Remeasurement of retirement benefit plan, net of tax

-

-

-

-

-

-

(1,241)

(1,241)

(173)

(1,414)

-Loss on exchange translation of foreign operations

-

-

-

-

-

(11,356)

-

(11,356)

(2,489)

(13,845)

Total other comprehensive expenses

-

-

-

-

(2,167)

(11,356)

(1,241)

(14,764)

(2,787)

 (17,551)

Profit for period as restated

-

-

-

-

-

-

8,368

8,368

3,375

11,743

Total comprehensive income and expenses for the period

-

-

-

-

(2,167)

(11,356)

7,127

(6,396)

588

(5,808)

Dividends payable

-

-

-

-

-

-

(1,784)

(1,784)

(621)

(2,405)

Balance at 30 June 2013 as restated

15,504

(1,171)

23,935

1,087

34,632

(100,194)

406,349

380,142

83,010

463,152


Condensed Consolidated Statement Cash Flows

 


2014

2013

2013

 


6 months

6 months

Year

 


to 30 June

to 30 June

to 31 December

 


(unaudited)

(unaudited & restated)

(audited)

 


$000

$000

$000

 

Cash flows from operating activities




Profit before tax

66,269

18,295

153,401

Adjustments for:




BA adjustment

(23,103)

(2,503)

(93,661)

Loss / (Profit) on disposal of tangible fixed assets

2

91

(319)

Depreciation

3,107

4,143

6,406

Retirement benefit provisions

418

550

1,325

Net finance income

(1,939)

(979)

(2,902)

Unrealised (gain) / loss in foreign exchange

(413)

512

2,781

Tangible fixed assets written off

6

31

97

Operating cash flow before changes in working capital

44,347

20,140

67,128

Increase in inventories

(1,145)

(1,089)

(3,591)

(Increase) / Decrease in trade and other receivables

(3,628)

(4,430)

2,456

Increase / (Decrease)  in trade and other payables

3,312

(529)

2,400

Cash inflow from operations

42,886

14,092

68,393

Interest paid

(1,003)

(784)

(1,774)

Retirement benefit paid

(6)

(52)

(244)

Overseas tax paid

(10,309)

(15,113)

(23,981)

Net cash flow from / (used in) operations

31,568

(1,857)

42,394





Investing activities




Property, plant and equipment




-  purchase

(17,589)

(23,583)

(49,938)

-  sale

34

87

641

Interest received

2,942

1,763

4,676

Net cash used in investing activities

(14,613)

(21,733)

(44,621)





Financing activities




Dividends paid by Company

(1,998)

-

(1,784)

Drawdown of long term loans

-

10,000

10,000

Finance lease repayment

(12)

(36)

(30)

Dividends paid to non-controlling interests

(398)

(621)

 

(618)

Net cash (used in) / from financing activities

(2,408)

9,343

7,568

Increase / (Decrease) in cash and cash equivalents

14,547

(14,247)

5,341





Cash and cash equivalents




At beginning of period

98,738

116,250

116,250

Foreign exchange

2,546

(3,332)

(22,853)

At end of period

115,831

98,671

98,738

 

Comprising:




Cash at end of period

115,831

98,671

98,738

 

 



 

Notes to the interim statements

 

 

1.         Basis of preparation of interim financial statements

 

These interim consolidated financial statements have been prepared in accordance with IAS 34,"Interim Financial Reporting", as adopted by the European Union. They do not include all disclosures that would otherwise be required in a complete set of financial statements and should be read in conjunction with the 2013 Annual Report. The financial information for the half years ended 30 June 2014 and 30 June 2013 does not constitute statutory accounts within the meaning of Section 434(3) of the Companies Act 2006 and has been neither audited nor reviewed pursuant to guidance issued by the Auditing Practices Board.

 

Basis of preparation

The annual financial statements of Anglo-Eastern Plantations Plc are prepared in accordance with IFRSs as adopted by the European Union. The comparative financial information for the year ended 31 December 2013 included within this report does not constitute the full statutory accounts for that period. The statutory Annual Report and Financial Statements for 2013 have been filed with the Registrar of Companies. The Independent Auditors' Report on the Annual Report and Financial Statements for 2013 was unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.

 

Changes in accounting standards

The same accounting policies, presentation and methods of computation are followed in these condensed consolidated financial statements as were applied in the Group's latest annual audited financial statements except for the following new standards that have come into effect from the previous reporting date:

·      IFRS 10 Consolidated Financial Statements

·      IFRS 11 Joint Arrangements

·      IFRS 12 Disclosures of Interest in Other Entities

·      IAS 27 Separate Financial Statements

·      IAS 28 Investments in Associates and Joint Ventures

·      IAS 32 Amendments - Offsetting Financial Assets and Financial Liabilities

·      IAS 36 Amendments - Recoverable Amounts Disclosures for Non-financial Assets

·      IFRIC 21 Levies

 

None of the new standards, interpretations and amendments above have had a material effect on the Group's reporting.

 

After making enquiries, the directors have a reasonable expectation that the Company and the Group have adequate resources to continue operations for the foreseeable future.  For this reason, they continue to adopt the going concern basis in preparing the financial statements.

 

2.         Prior period restatement

 

Following the conclusion of the discussions with the Financial Reporting Council ("FRC") regarding the use of current market data to estimate notional rent for the use of land in its discounted cash flow for the determination of biological assets, details of which were set out in the 2013 Annual Report and Accounts, the Group has adopted a notional rent equivalent to 9% of the value of planted land in valuing its biological asset and resulted in the accounts for the period ended 30 June 2013 being restated. The effect of the restatements is summarised in the following page.

 

The impact of these prior period adjustments:

 

 

After Biological Assets

 

 

 

 

 

$000


2013

6 months to 30 June

(unaudited & restated)

$000

Profit for the period before restatement



22,317

Effect of change in restatement:




Biological asset revaluation movement

(14,098)



Tax expense

3,524






(10,574)

Profit for the period after restatement



11,743





Other comprehensive expenses for the period before restatement



(18,573)

Effect of change in restatement:




Profit on exchange translation of foreign operations



1,022

Other comprehensive expenses for the period after restatement



(17,551)

 

The effect of these prior period adjustments had a negative impact on the earnings per share of 25.03cts for the period to 30 June 2013.

 

The following table summarises the impact of these prior period adjustments on the Consolidated Statement of Financial Position:

 

                                                                                 

Biological

assets

Deferred tax

liabilities

Exchange

reserve

Retained

earnings

Non-controlling

interest


$000

$000

$000

$000

$000

Balance as reported 30 June 2013

265,487

(48,486)

(102,827)

442,449

87,321

Effect of restatement during the year

(50,370)

12,592

2,633

(36,100)

(4,311)

Restated balance as at 30 June 2013

215,117

(35,894)

(100,194)

406,349

83,010

 

 

3.           Foreign exchange



2014

2013

2013



6 months

6 months

Year



to 30 June

to 30 June

to 31 December



(unaudited)

(unaudited)

(audited)






            Average exchange rates





            Rp : $


11,725

9,732

10,445

            $ : £


1.67

1.54

1.56

            RM : $


3.27

3.07

3.15






            Closing exchange rates





            Rp : $


11,855

9,925

12,170

            $ : £


1.71

1.52

1.66

            RM : $


3.21

3.16

3.28

 

 

4.         Finance costs



2014

2013

2013



6 months

6 months

Year



to 30 June

to 30 June

to 31 December



(unaudited)

(unaudited)

(audited)



$000

$000

$000






            Payable


1,003

784

1,774


 

5.    Segment information

 


North

Sumatra

Bengkulu

South Sumatra

Riau

Bangka

Kalimantan

Total Indonesia

Malaysia

UK

Total

 


$000

$000

$000

$000

$000

$000

$000

$000

$000

$000

 

6 months to 30 June 2014 (unaudited)










 

     Total sales revenue (all external)

48,753

53,335

38

21,787

-

3,002

126,915

2,215

-

129,130

 

     Other income

283

373

-

220

-

-

876

-

-

876

 

     Total revenue

49,036

53,708

38

22,007

-

3,002

127,791

2,215

-

130,006

 












 

     Profit / (loss) before tax

17,056

18,182

(167)

8,848

(21)

(728)

43,170

531

(535)

43,166

 

     BA Movement










23,103

 

     Profit for the period before tax per  consolidated income statement










66,269

 












 

     Depreciation

(1,092)

(1,045)

(203)

(272)

(16)

(354)

(2,982)

(125)

-

(3,107)

 

     Inter-segment transactions

2,806

(1,704)

(197)

(490)

-

(921)

(506)

476

30

-

 

     Income tax

(7,289)

(3,722)

(1,581)

(2,095)

(7)

(2,653)

(17,347)

(66)

(281)

(17,694)

 












 

     Total Assets

214,804

155,588

70,765

80,644

13,283

109,770

644,854

29,996

4,435

679,285

 

     Non-Current Assets

165,229

126,071

68,839

39,477

13,193

97,695

510,504

22,346

1,193

534,043

 

     Non-Current Assets - Additions

3,298

1,615

2,466

605

420

9,138

17,542

47

-

17,589

 












 

6 months to 30 June 2013 (unaudited & restated)









 

     Total sales revenue (all external)

40,378

25,727

2

14,481

-

680

81,268

1,842

-

83,110

 

     Other income

413

(31)

-

34

-

2

418

-

-

418

 

     Total revenue

40,791

25,696

2

14,515

-

682

81,686

1,842

-

83,528

 












 

     Profit / (loss) before tax

12,110

1,879

(292)

4,374

(10)

(1,271)

16,790

(284)

(714)

15,792

 

     BA Movement










2,503

 

     Profit for the period before tax per  consolidated income statement










18,295

 












 

     Depreciation

(1,378)

(1,653)

(236)

(502)

(15)

(230)

(4,014)

(129)

-

(4,143)

 

     Inter-segment transactions

664

(858)

(84)

(252)

-

(457)

(987)

957

30

-

 

     Income tax

(6,771)

(2,202)

2,071

(1,216)

107

787

(7,224)

892

(220)

(6,552)

 












 

     Total Assets

176,750

144,251

50,404

65,872

11,260

84,184

532,721

19,196

6,547

558,464

 

     Non-Current Assets

129,532

124,531

48,113

37,974

10,662

67,136

417,948

11,887

1,363

431,198

 

     Non-Current Assets - Additions

4,738

3,120

6,180

625

488

8,262

23,413

170

-

23,583













North

Sumatra

Bengkulu

South Sumatra

Riau

Bangka

Kalimantan

Total Indonesia

Malaysia

UK

Total


$000

$000

$000

$000

$000

$000

$000

$000

$000

$000

Year to 31 December 2013 (audited)









     Total sales revenue (all external)

93,261

63,019

18

38,166

-

2,516

196,980

4,318

2

201,300

     Other income

827

112

6

91

-

(419)

617

-

-

617

     Total revenue

94,088

63,131

24

38,257

-

2,097

197,597

4,318

2

201,917












     Profit / (loss) before tax

33,879

15,700

(443)

19,017

1

(6,633)

61,521

206

(1,987)

59,740

     BA Movement










93,661

     Profit for the period before tax per 











        consolidated income statement










153,401












     Depreciation

(2,248)

(2,268)

(475)

(585)

(32)

(540)

(6,148)

(258)

-

(6,406)

     Inter-Segment Transactions

2,821

(2,236)

(242)

(656)

-

(1,512)

(1,825)

845

980

-

     Income tax

(24,567)

(8,086)

(554)

(6,542)

79

(288)

(39,958)

585

(220)

(39,593)












     Total Assets

195,447

148,268

59,285

67,739

12,744

89,882

573,365

29,720

4,662

607,747

     Non-Current Assets

153,524

122,485

57,673

38,726

12,462

76,259

461,129

22,334

1,363

484,826

     Non-Current Assets - Additions

13,164

5,952

10,172

1,513

1,069

17,828

49,698

240

-

49,938

 

In the 6 months to 30 June 2014, revenues from 4 customers of the Indonesian segment represent approximately $87.7m of the Group's total revenues. In year 2013, revenues from 4 customers of the Indonesian segment represent approximately $110.1m of the Group's total revenues.  An analysis of these revenues is provided below:


2014

2013

2013


6 months

6 months

Year


to 30 June

to 30 June

to 31 December


(unaudited)

(unaudited)

(audited)


$m

%

$m

%

$m

%

Major Customers







Customer 1

28.9

22.2

14.6

17.4

31.4

15.6

Customer 2

21.3

16.4

13.7

16.3

30.5

15.1

Customer 3

19.6

15.2

9.4

11.3

25.6

12.7

Customer 4

17.9

13.7

8.1

9.6

22.6

11.1

Total

87.7

67.5

45.8

54.6

110.1

54.5


 

 

6.         Tax


2014

2013

2013


6 months

6 months

Year


to 30 June

to 30 June

to 31 December


(unaudited)

(unaudited & restated)

(audited)


$000

$000

$000





Foreign corporation tax - current year

12,415

6,090

17,804

Foreign corporation tax - prior year

-

-

(61)

Deferred tax adjustment - current year

5,279

462

22,143

Deferred tax adjustment - prior year

-

-

(293)


17,694

6,552

39,593

 

 

7.         Dividend

           

The final and only dividend in respect of 2013, amounting to 3.0p per share, or $1,997,614 was paid on 17 June 2014 (2012: 4.5cts per share, or $1,783,637, paid on 5 July 2013). As in previous years no interim dividend has been declared.

 

 

8.         Earnings per ordinary share (EPS)



2014

2013

2013



6 months

6 months

Year



to 30 June

to 30 June

to 31 December



(unaudited)

(unaudited & restated)

(audited)

         Profit for the period attributable to owners of the Company before BA adjustment


25,879

6,859

 

 

35,950

            Net BA adjustment


15,209

1,509

57,571

            Earnings used in basic and diluted EPS


41,088

8,368

 

93,521








Number

Number

Number



'000

'000

'000

            Weighted average number of shares in issue in period





            -     used in basic EPS


39,636

39,636

39,636

         -     dilutive effect of outstanding share options


48

48

 

48

            -     used in diluted EPS


39,684

39,684

39,684

        

 

Shares in issue at period end


39,976

39,976

39,976

Less: Treasury shares


(340)

(340)

(340)

Shares in issue at period end excluding treasury shares


39,636

39,636

39,636






        Basic EPS before BA adjustment


65.29cts

17.30cts

90.70cts

        Basic EPS after BA adjustment


103.66cts

21.11cts

235.95cts






        Dilutive EPS before BA adjustment


65.21cts

17.28cts

90.59cts

        Dilutive EPS after BA adjustment


103.54cts

21.09cts

235.67cts

 

 

 

9.         Fair value measurement of financial instruments

           

IAS 34 requires that interim financial statements include certain of the disclosures about fair value of financial instruments set out in IFRS 13 and IFRS 7. These disclosures include the classification of fair values within a three-level hierarchy. The three levels are defined based on the observability of significant inputs to the measurement, as follows:

·        Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities;

·        Level 2 - inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly;

·        Level 3 - unobservable inputs for the asset or liability.

 

The following tables show the Levels within the hierarchy of Group's assets measured at fair value on a recurring basis at 30 June 2014, 30 June 2013 and 30 December 2013:

 


Level 1

Level 2

Level 3

Total

30 June 2014

$000

$000

$000

$000






Biological assets

-

-

304,156

304,156

Land

-

-

153,756

153,756

 

 


Level 1

Level 2

Level 3

Total

30 June 2013

$000

$000

$000

$000






Biological assets

-

-

215,117

215,117

Land

-

-

143,792

143,792

 

 


Level 1

Level 2

Level 3

Total

31 December 2013

$000

$000

$000

$000






Biological assets

-

-

265,835

265,835

Land

-

-

149,871

149,871

 

 

There were no items classified under Level 1 and Level 2 and thus no transfers between Level 1 and Level 2 during the periods.

 

The methodology used for biological asset valuations is using discounted cash flow ("DCF") over the expected 20-year economic life of the asset. The assumption applied in the valuation were, inter alia, an assumed CPO selling price of $725/mt (30 June 2013 and 31 December 2013: $700/mt), discount rate of 15.8% (30 June 2013: 17.5%, 31 December 2013: 15.8%) and notional rent equivalent to 9% (30 June 2013 and 31 December 2013: 9%) of the value of planted land. The discount rates were determined by the Directors based on their assessment of various risks including financial, business and country risk of where the plantations are located as well as taking into account the Company's weighted average cost of capital. The CPO price is taken to be the 10-year average (30 June 2013 and 31 December 2013: 10-year average) rounded to the nearest $25 based on historical widely-quoted commodity price for CPO and represents the Directors' best estimate of the price sustainable over the longer term. An inflation rate of 5% (30 June 2013 and 31 December 2013: 5%) was applied to the second to sixth years of the DCF. The notional rent charge is based on key capital market and property indicators in the countries and regions of operations.

 

There were no changes in valuation techniques during the periods.

 

The significant unobservable inputs used in the fair value measurement of biological assets and its relationship to fair value are exhibited below:

 

Significant

unobservable inputs

 

Relationship of unobservable inputs to fair value

CPO selling price

The higher the CPO selling price, the higher the fair value

Discount rate

The higher the discount rate, the lower the fair value

Notional rent

The higher the notional rent, the lower the fair value

 

For the six months ended 30 June 2014, the directors are of the opinion the fair value movements of the land are insignificant as compared to the land value at 31 December 2013 and therefore the land value at 31 December 2013 is adopted as fair value of land at 30 June 2014 except for the adjustment of exchange differences. The fair values of the land at 31 December 2013 for five major companies in Indonesia and a Malaysia company are derived using the sale comparison approach. Although there is observable market data, there is a significant degree of judgement in determining the adjustments required in deriving at the final land valuation. Sale prices of comparable land in similar location are adjusted for differences in key attributes such as location, legal title, land area, land type and topography. The valuation model is based on price per hectare. The growth rates per hectare obtained by comparing the current valuation against the valuation undertaken in year 2011 were then applied to the 2011 land value of the remaining companies in the same geographical location to derive year 2013 fair value of land. Unplantable land was excluded in this exercise since it has zero value.

 

The fair value of the following financial assets and liabilities approximate their carrying amount:

·        Non-current receivables

·        Trade and other receivables

·        Cash and cash equivalents

·        Borrowings

·        Trade and other payables

 

 

10.        Report and financial information

 

Copies of the interim report for the Group for the period ended 30 June 2014 are available on the AEP website at www.angloeastern.co.uk.

 


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