Restatement of Prior Year Results

RNS Number : 2047B
Anglo-Eastern Plantations PLC
28 February 2014
 



28 February 2014

Anglo-Eastern Plantations Plc

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

 

Restatement of Prior Year Results

 

Anglo-Eastern Plantations Plc and its subsidiaries, which owns, operates and develops plantations in Indonesia and Malaysia, amounting to some 128,000 hectares producing mainly palm oil and some rubber of which approximately 61,000 hectares are planted.

 

The 2012 accounts stated that the Company was in the process of resolving a query from the Financial Reporting Council ("FRC") concerning the measurement of the notional rent used in the valuation of the Group's biological assets.

 

AEP has applied a notional rent equivalent to 9% of the value of planted land in the valuation of their biological assets and this has resulted in a reduction in the value of its biological assets at 31 December 2012 by $37 million (2011: $38 million) from $245 million (2011: $235 million) to $208 million (2011: $197 million), although the profit before biological asset adjustment of the Group remains unchanged. The Group's profit after biological asset adjustment for the years ended 31 December 2012 and 2011 were reduced by $1.6 million and $4.0 million respectively as a result of the restatement. The effect of these prior year adjustments has no impact on the cash flows of the Group. As a result of this change, the FRC has confirmed that it regards its enquiries into the Company's annual report and accounts for the year ended 31 December 2010 as concluded.

 

Financial Highlights

 


Restated

2012

$ m


Restated

2011

$ m

Revenue

237.4


259.0

Profit before tax




-  before biological asset ("BA") adjustment

88.6


101.9

-  after BA adjustment

81.9


117.7









EPS before BA adjustment

133.99cts


154.15cts

EPS after BA adjustment

119.41cts


186.35cts

Dividend (cents)

4.5cts


6.0cts





 

 



 

 

The restated results for the financial years ended 31 December 2012 and 31 December 2011 are enclosed with this announcement.

 

 

 

For further enquiry, contact:

 

Anglo-Eastern Plantations Plc


Dato' John Lim Ewe Chuan 

 +44 (0)20 7216 4621



Charles Stanley Securities


Russell Cook

Karri Vuori

+44 (0)20 7149 6000

 

 



 

Consolidated income statement

for the year ended 31 December 2012

 



(Restated)

2012

(Restated)

2011

 

 

Continuing operations

Notes

Result

before

BA adjustment

 

 

BA adjustment

 

 

 

Total

Result before

BA adjustment

 

 

BA adjustment

 

 

 

Total



 

$000

 

$000

 

$000

 

$000

 

$000

 

$000

Revenue


237,352

-

237,352

259,037

-

259,037

Cost of sales


(142,755)

-

(142,755)

(155,147)

-

(155,147)

Gross profit


94,597

-

94,597

103,890

-

103,890

Biological asset revaluation movement


-

(6,729)

(6,729)

-

15,763

15,763

Administration expenses


(9,201)

-

(9,201)

(5,372)

-

(5,372)

Operating profit


85,396

(6,729)

78,667

98,518

15,763

114,281

Exchange profits


(24)

-

(24)

213

-

213

Finance income


3,336

-

3,336

3,891

-

3,891

Finance expense


(117)

-

(117)

(707)

-

(707)

Profit before tax


88,591

(6,729)

81,862

101,915

15,763

117,678

Tax expense


(22,476)

1,682

(20,794)

(26,809)

(3,940)

(30,749)

Profit for the year


66,115

(5,047)

61,068

75,106

11,823

86,929

Attributable to:








  -  Owners of the parent


53,108

(5,777)

47,331

60,949

12,732

73,681

  -  Non-controlling interests


13,007

730

13,737

14,157

(909)

13,248



66,115

(5,047)

61,068

75,106

11,823

86,929

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


 

 

 

 





-  basic

3



119.41cts



186.35 cts

- diluted

3



119.27cts



185.69 cts

 

 

 

 

 



Consolidated Statement of Comprehensive Income

for the year ended 31 December 2012

 


(Restated)

2012

$000


(Restated)

2011

$000





 

Profit for the year

61,068


86,929





 

Other comprehensive income:




 

Unrealised loss on revaluation of land

(4,064)


(48,932)

 

Loss on exchange translation of foreign operations

(25,337)


(4,959)

 

Deferred tax on revaluation

1,015


12,233





Other comprehensive expenses for the year

(28,386)


(41,658)





Total comprehensive income for the year

32,682


45,271

 

 



Attributable to:




  -  Owners of the parent

23,172


41,805

  -  Non-controlling interests

9,510


3,466


32,682


45,271

 

 



 

Consolidated Statement of Financial Position

As at 31 December 2012

 


Notes

(Restated)

2012

$000

 

 

(Restated)

2011

$000


(Restated)

2010

$000

Non-current assets







Biological assets

4

207,679


197,410


153,915

Property, plant and equipment

4

212,177


214,840


249,610

Receivables


5,033


1,551


1,494










424,889


413,801


405,019

Current assets







Inventories


6,075


9,439


6,820

Tax receivables


4,734


5,098


7,342

Trade and other receivables


7,419


4,877


3,356

Cash and cash equivalents


116,250


90,482


70,871










134,478


109,896


88,389

Current liabilities







Loans and borrowings


(52)


(6,465)


(15,650)

Trade and other payables


(15,635)


(20,878)


(15,170)

Tax liabilities


(6,996)


(11,019)


(5,130)



(22,683)


(38,362)


(35,950)

Net current assets


111,795


71,534


52,439

Non- current liabilities







Loans and borrowings


(25,026)


(58)


(6,438)

Deferred tax liabilities


(37,236)


(43,098)


(50,982)

Retirement benefits - net liabilities


(3,057)


(1,593)


(2,305)

Net assets


471,365


440,586


397,733

Issued capital and reserves attributable to owners of the parent







Share capital


15,504


15,504


15,504

Treasury shares


(1,171)


(1,507)


(1,507)

Share premium


23,935


23,935


23,935

Capital redemption reserve


1,087


1,087


1,087

Revaluation reserves


36,799


39,480


67,303

Exchange reserves


(88,838)


(67,360)


(63,307)

Retained earnings


401,006


355,914


284,165



388,322


367,053


327,180

Non-controlling interests


83,043


73,533


70,553

Total equity


471,365


440,586


397,733

 

 

 

 


Consolidated Statement of Changes in Equity

For the year ended 31 December 2012


Share capital

Treasury shares

Share premium

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 as at 31 December  2010

15,504

(1,507)

23,935

1,087

67,303

(63,307)

305,683

348,698

73,665

422,363

Restatement (note 2)

-

-

-

-

-

-

(21,518)

(21,518)

(3,112)

(24,630)

Balance at 31 December 2010 after restatement

15,504

(1,507)

23,935

1,087

67,303

(63,307)

284,165

327,180

70,553

397,733

Items of other comprehensive income











-Unrealised gain on revaluation of land

-

-

-

-

(37,097)

-

-

(37,097)

(11,835)

(48,932)

-Deferred tax on revaluation of assets

-

-

-

-

9,274

-

-

9,274

2,959

12,233

-Loss on exchange translation

-

-

-

-

-

(4,053)

-

(4,053)

(906)

(4,959)

Net loss recognised directly in equity

-

-

-

-

(27,823)

(4,053)

-

(31,876)

(9,782)

(41,658)

Profit for year

-

-

-

-

-

-

73,681

73,681

13,248

86,929

Total comprehensive income and expense for the year

-

-

-

-

(27,823)

(4,053)

73,681

41,805

3,466

45,271

Issue of subsidiary shares to minority shareholder

-

-

-

-

-

-

-

-

2,054

2,054

Share options exercised / Share based payment expense

-

-

-

-

-

-

45

45

-

45

Dividends paid

-

-

-

-

-

-

(1,977)

(1,977)

(2,540)

(4,517)

Balance at 31 December 2011 after restatement

15,504

(1,507)

23,935

1,087

39,480

(67,360)

355,914

367,053

73,533

440,586

 



 

Consolidated Statement of Changes in Equity

For the year ended 31 December 2012


Share capital

Treasury shares

Share premium

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 as at 31 December  2011

15,504

(1,507)

23,935

1,087

39,480

(67,602)

380,633

391,530

77,369

468,899

Restatement (note 2)

-

-

-

-

-

242

(24,719)

(24,477)

(3,836)

(28,313)

Balance at 31 December 2011 after restatement

15,504

(1,507)

23,935

1,087

39,480

(67,360)

355,914

367,053

73,533

440,586

Items of other comprehensive income











-Unrealised loss on revaluation of land

-

-

-

-

(3,574)

-

-

(3,574)

(490)

(4,064)

-Deferred tax on revaluation of assets

-

-

-

-

893

-

-

893

122

1,015

-Loss on exchange translation

-

-

-

-

-

(21,478)

-

(21,478)

(3,859)

(25,337)

Total other comprehensive income

-

-

-

-

(2,681)

(21,478)

-

(24,159)

(4,227)

(28,386)

Profit for year

-

-

-

-

-

-

47,331

47,331

13,737

61,068

Total comprehensive income and expense for the year

-

-

-

-

(2,681)

(21,478)

47,331

23,172

9.510

32,682

Share option exercised

-

336

-

-

-

-

133

469

-

469

Dividends paid

-

-

-

-

-

-

(2,372)

(2,372)

-

(2,372)

Balance at 31 December 2012 after restatement

15,504

(1,171)

23,935

1,087

36,799

(88,838)

401,006

388,322

83,043

471,365


Notes

 

1.  Accounting policies

 

Anglo-Eastern Plantations Plc ("AEP") is a company incorporated in the United Kingdom under the Companies Act 2006 and is listed on the London Stock Exchange.  The registered office of AEP is located at Quadrant House, 6th Floor, 4 Thomas More Square, London E1W 1YW, United Kingdom. The principal activity of the Group is plantation agriculture.

 

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 financial information for the year ended 31 December 2012 included within this report does not constitute the full statutory accounts for that period. The statutory Annual Report and Financial Statements for 2012 have been filed with the Registrar of Companies. The Independent Auditors' Report on that Annual Report and Financial Statement for 2012 was qualified on the basis of a limitation in scope, did not draw attention to any matters by way of emphasis, and contained statements under 498(2) or 498(3) of the Companies Act 2006.

 

Except for the measurement of notional rent, the same accounting policies, presentation and methods of computation are followed in these restated consolidated financial statements as were applied in the Group's annual audited financial statements. The Company's accounting policy for biological assets, set out below, is unchanged. 

 

The 2012 Annual Report stated that the Company was in the process of resolving a query from the Financial Reporting Council ("FRC") concerning the measurement of the notional rent used in the valuation of the Group's biological assets. Following further discussion with the FRC, the Group has changed the determination of notional rent, one of the assumptions used in the valuation of the Group's biological assets in accordance with its stated policy to reflect current market data in the estimate of the cost for the use of the land. The change in measurement of the notional rent has significant impact on the carrying amount of biological asset and thus the accounts for years ended 31 December 2012 and 2011 were restated. The restatements and related adjustments are disclosed in these accounts in note 2.

 

Biological assets

Biological assets comprise oil palm trees and nurseries. The biological process commences with the initial preparation of land and planting of seedlings and ceases with the delivery of crop in the form of fresh fruit bunches ("FFB") to the manufacturing process in which crude palm oil and palm kernel are extracted from the FFB.

 

Biological assets are carried at fair value less costs to sell determined on the basis of the net present value of cash flows arising in producing FFB. No account is taken in the valuation of future replanting. Biological assets are valued at each accounting date based upon a valuation of the planted areas using a discounted cash flow method by reference to the FFB expected to be harvested over the full remaining productive life of the trees up to 20 years. Areas are included in the valuation once they are planted. However oil palm which are not yet mature at the accounting date, and hence are not producing FFB, are valued on a similar basis but with the discounted value of the estimated cost to complete planting and to maintain the assets to maturity being deducted from the discounted FFB value. Movement in valuation surplus of biological assets is charged or credited to the income statement for the relevant period (BA adjustment).

 

 



 

2.  Prior year restatement

 

The 2012 Annual Report stated that the Company was in the process of resolving a query from the Financial Reporting Council ("FRC") concerning the measurement of the notional rent used in the valuation of the Group's biological assets. In October 2013, the Group engaged a professional valuer in the United Kingdom ('UK valuer') for an independent opinion on the measurement of the notional rent. As a result, the Group has adopted a notional rent equivalent to 9% of the value of planted land value as proposed by the UK valuer in valuing its biological asset. This resulted in the accounts for the years ended 31 December 2012 and 2011 being restated and the closure of discussions with the FRC. The effect of the restatements is summarised below.

 

 

The impact of these prior year adjustments:-

 

 

 

After Biological Assets

 

 

(Restated)

2012

$000


 

 

(Restated)

2011

$000

Profit for the year before restatement

62,703


90,898

Effect of change in restatement:




Biological asset revaluation movement

(2,180)


(5,293)

Tax

545


1,324


(1,635)


3,969

Profit for the year after restatement

61,068


86,929





Other comprehensive income for the year before restatement

(30,108)


(41,944)

Effect of change in restatement:




Profit/(loss) on exchange translation of foreign operations

1,722


286

Other comprehensive income for the year after restatement

(28,386)


(41,658)

 

The effect of these prior year adjustments had a negative impact on the earnings per share of 3.69cts (2011: 8.10cts) for the year to 31 December 2012.

 


 

The following table summarises the impact of these prior year 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 1 January 2011

186,755

(59,192)

(63,307)

305,683

73,665

Effect of restatement

(32,840)

8,210

-

(21,518)

(3,112)

Restated balance as at 1 January 2011

153,915

(50,982)

(63,307)

284,165

70,553







Balance as reported 31 December 2011

235,158

(52,533)

(67,602)

380,633

77,369

Effect of restatement up to 1 January 2011

(32,840)

8,210

-

(21,518)

(3,112)

Effect of restatement during the year

(4,908)

1,225

242

(3,201)

(724)

Restated balance as at 31 December 2011

197,410

(43,098)

(67,360)

355,914

73,533








Balance as reported 31 December 2012

245,313

(46,644)

(90,571)

427,186

86,822

Effect of restatement up to 1 January 2012

(37,748)

9,435

242

(24,719)

(3,836)

Effect of restatement during the year

114

(27)

1,491

(1,461)

57

Restated balance as at 31 December 2012

207,679

(37,236)

(88,838)

401,006

83,043

 

 

 

 

 


3   Earning per ordinary share (EPS)

 


(Restated)

2012

$000


(Restated)

2011

$000





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

53,108


60,949

Net BA adjustment

(5,777)


12,732

Earnings used in basic and diluted EPS

47,331


73,681






Number


Number


'000


'000





Weighted average number of shares in issue in year




- used in basic EPS

39,636


39,539

- dilutive effect of outstanding share options

48


141

- used in diluted EPS

39,684


39,680





Basic EPS before BA adjustment

133.99cts


154.15cts

Basic EPS after BA adjustment

119.41cts


186.35cts





Dilutive EPS before BA adjustment

133.83cts


153.60cts

Dilutive EPS after BA adjustment

119.27cts


185.69cts

 

 


4   Biological assets, property, plant and equipment

 


Biological

assets

Mill

Land

Buildings

Estate plant,

equipment & vehicle

Office plant,

equipment & vehicle

Construction

 in progress

PPE

Total

Total


$000

$000

$000

$000

$000

$000

$000

$000

$000

Cost or valuation










At 1 January 2011 (restated)

153,915

39,080

200,977

15,859

11,883

1,212

2,114

271,125

425,040

Exchange translations

(2,601)

(354)

(308)

(370)

(15)

(24)

(44)

(1,115)

(3,716)

Decrease due to harvest

(14,905)

-

-

-

-

-

-

-

(14,905)

Revaluations

30,668

-

(48,932)

-

-

-

-

(48,932)

(18,264)

Additions

10,437

3,404

2,637

6,142

2,357

163

693

15,396

25,833

Development costs capitalised

19,896

-

3,016

966

248

-

216

4,446

24,342

Disposals

-

(243)

-

(23)

(222)

-

-

(488)

(488)

At 31 December 2011 (restated)

197,410

41,887

157,390

22,574

14,251

1,351

2,979

240,432

437,842

Exchange translations

(11,531)

(2,546)

(8,643)

(1,527)

(769)

(30)

(156)

(13,671)

(25,202)

Reclassification

848

-

(848)

4,350

-

-

(4,350)

(848)

-

Decrease due to harvest

(20,522)

-

-

-

-

-

-

-

(20,522)

Revaluations

13,793

-

(4,064)

-

-

-

-

(4,064)

9,729

Additions

3,749

2,509

4,246

7,674

2,571

81

2,165

19,246

22,995

Development costs capitalised

23,932

-

-

-

-

-

2,151

2,151

26,083

Disposals

-

(97)

-

(142)

(462)

(2)

(690)

(1,393)

(1,393)

At 31 December 2012

207,679

41,753

148,081

32,929

15,591

1,400

2,099

241,853

449,532

Accumulated depreciation and impairment










At 1 January 2011 (restated)

-

8,951

-

4,575

7,411

578

-

21,515

21,515

Exchange translations

-

(123)

-

(88)

(640)

(13)

-

(864)

(864)

Charge for the year

-

2,167

-

1,112

1,666

179

-

5,124

5,124

Disposal

-

(183)

-

-

-

-

-

(183)

(183)

At 31 December 2011 (restated)

-

10,812

-

5,599

8,437

744

-

25,592

25,592

Exchange translations

-

(704)

-

(305)

(431)

(23)

-

(1,463)

(1,463)

Charge for the year

-

2,344

-

1,640

1,963

188

-

6,135

6,135

Disposal

-

(77)

-

(102)

(408)

(1)

-

(588)

(588)

At 31 December 2012

-

12,375

-

6,832

9,561

908

-

29,676

29,676











Carrying amount










At 31 December 2010 (restated)

153,915

30,129

200,977

11,284

4,472

634

2,114

249,610

403,525

At 31 December 2011 (restated)

197,410

31,075

157,390

16,975

5,814

607

2,979

214,840

412,250

At 31 December 2012

207,679

29,378

148,081

26,097

6,030

492

2,099

212,177

419,856

Net (loss)/gain arising from changes in fair value of biological assets










At 31 December 2011 (restated)

15,763

-

-

-

-

-

-

-

15,763

At 31 December 2012

(6,729)

-

-

-

-

-

-

-

(6,729)

 

 


 

The fair value less costs to sell of FFB harvested during the period, determined at the point of harvest is exhibited below:

 


2012


2011

Fair value of FFB




Crop production and yield - FFB (mt)

783,000


707,000

Fair value of FFB ($000)

128,750


131,987

Fair value of FFB less costs to sell ($000)

122,783


124,373

 

 

The fair value of FFB at the point of harvest is recognised in the income statement within the biological asset revaluation. A reconciliation of the amount included within the income statement and the biological asset has been included below:

 


(Restated)

2012

$000


(Restated)

2011

$000

 





 

Harvest included in the biological asset valuation from estimated production and pricing assumptions less costs to sell in the prior year

 

 

20,522


 

 

14,905

 

Gain from actual production and pricing

102,261


109,468

 

Fair value of FFB harvested from own production

122,783


124,373

 





 

The decrease due to harvest of $20,522,000 (2011: $14,905,000) is the amount included within the prior year valuation for the current year and is therefore deducted from biological asset valuation in the current year as the FFB is harvested. The actual fair value of harvested FFB varies to that forecast due to the changes in; actual production, actual FFB price and actual costs incurred. The gain on fair value of the harvested FFB is written off as the FFB is processed in to CPO.

 

The biological asset revaluation movement included within the income statement is calculated as follows:

 


(Restated)

2012

$000


(Restated)

2011

$000





Decrease due to harvest

(20,522)


(14,905)

Revaluations

13,793


30,668

Net (loss)/gain arising in the income statement from changes in fair value of biological assets

 

(6,729)


 

15,763

 

The carrying amount of the Group's biological assets was based on independent valuations undertaken by independent valuers, Doli Siregar & Rekan which its head office is located in Jakarta, Indonesia except for an adjustment on discount rate and the measurement of the notional rent which is determined by the directors and the UK valuer respectively. Both firms have the appropriate professional qualifications and recent experience in the location and category of the properties being valued. Further information of the Indonesian firm can be obtained from 'www.ds-r.co.id'.  The Group's land as at 31 December 2012 has been valued by directors with the last independent valuation undertaken as at 31 December 2011.

 



 

The methodology of the valuations undertaken was using discounted cash flow 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 $675/mt (2011: $625/mt), discount rate of 17.5% (2011: 16.5%) and notional rent equivalent to 9% (2011: 9%) of the value of planted land value. 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 (2011: 10-year average) based on historical widely-quoted commodity price for CPO and represents the directors' best estimate of the price sustainable over the longer term. The CPO price assumed is revised to reflect a price which is closer to the market price of $810/mt as at 31 December 2012. The notional rent charge is based on key capital market and property indicators in the countries and regions of operations.

 

The following table exhibits the sensitivity of the Group's biological assets to the fluctuation in CPO price and discount rate:

 


(Restated)

2012

$000





A change of $50 in the price assumption for CPO



   -$50 in the price assumption

(43,991)


   +$50 in the price assumption

45,273


A change of 1% in the discount rate



   -1% in the discount rate

12,079


   +1% in the discount rate

(11,084)


A change of notional rent equivalent to 1% of the value of planted land



   -1% of the value of planted land

4,840


   +1% of the value of planted land

(4,716)


 

The estates include nil (2011: $14) of interest and $9,308,000 (2011: $6,074,000) of overheads capitalised during the year in respect of expenditure on estates under development.

 

 

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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