Annual Financial Report

RNS Number : 8488E

Asian Plantations Limited

14 April 2011

Asian Plantations Limited

("Asian Plantations" or the "Company")

Final Results for the year ended 31 December 2010

Asian Plantations Limited (LSE: PALM), a palm oil plantation company with operations in Malaysia, is pleased to announce its audited results for the year ended 31 December 2010.

Highlights

· Initiation of first-ever fresh fruit bunch ("FFB") sale of USD314,000.

· Completion of the acquisition of Fortune Plantation Sdn Bhd, significantly enlarging the Company's land bank to 15,645 hectares and an important step towards achieving the Company's stated objective of owning in excess of 20,000 hectares of Malaysian titled land within two years of listing.

· Planting programme on track, with over 4,051 hectares planted at as year-end 2010 and three nurseries in operation.

· Successful completion of two Company sponsored direct placings:

- on 13 August 2010, the issue of £4.26 million in new equity capital at 110 pence per share, a 46.7% premium to the Company's 30 November 2009 AIM Admission price of 75 pence per share.

- on 19 November 2010, the issue of USD1,000,000 unsecured four year convertible debt to Asian Agri Capital ("AAC"), an existing shareholder in the Company, via Asian Agriculture Fund III, at a conversion price of 201 pence per share. The conversion price represented a 21.8% premium to the closing price on 18 November 2010.

Post Balance Sheet Events

· The raising of approximately £16.0 million, before expenses, through the issue of 7,272,728 new shares at a price of 220 pence per share to new and existing investors

Dennis Melka, Asian Plantations' Joint Chief Executive Officer, commented:

"2010 has been a transformational year for the Company. Following on from the successful completion of the Company's first acquisition in 2009, doubling our land bank in Sarawak, Asian Plantations has now significantly enlarged that land bank by acquiring Fortune Plantation Sdn Bhd. We are confident of achieving our strategic objectives stated at the Company's admission to trading on AIM.

"The Company has continued to grow and develop in a sustainable and responsible manner throughout 2010, and considerable resources have been devoted to our community outreach initiative to those communities surrounding our land.

"Excellent progress has been made in the first three months of 2011 and we currently have over 845,000 seedlings in our three nurseries. We expect to complete the planting fully at our BJ estate this year and complete plantings at Fortune and Incosetia by 2012.

"The next 18 months promise to be exciting and challenging phase for the Group, as we continue to consolidate neighbouring land parcels selectively, complete the planting works on our existing parcels and open our milling complex. We look forward to providing further updates on our progress in the months ahead."

For Further information contact:

Asian Plantations Limited

Dennis Melka, Joint Chief Executive Officer Tel: +65 6325 0970

Graeme Browne, Joint Chief Executive Officer

Strand Hanson Limited

James Harris Tel: +44 (0) 20 7409 3494

Paul Cocker

Liam Buswell

Panmure Gordon (UK) Limited

Tom Nicholson Tel: +44 (0) 20 7459 3600

Edward Farmer

Bankside Consultants

Simon Rothschild Tel: +44 (0) 20 7367 8871

Louise Mason Tel: +44 (0) 20 7367 8872

CHAIRMAN'S STATEMENT

On behalf of the Board of Directors, I am pleased to present the 2nd Annual Report and Financial Statements of Asian Plantations Limited, for the financial year ended 31st December 2010.

Palm Oil

Palm oil is the most efficient agricultural crop that humans can grow to meet our population's ever-growing edible oil requirement with the least environmental impact. Edible oils are an integral part of the human food supply chain and utilized in cooking and baking across all socioeconomic levels. Humans need edible oils just as we need water, starch and sugars to survive. Global edible oil demand is currently in excess of 170 m tonnes per annum and has grown at a CAGR of 4.3 per cent. for over three decades (this demand is highly correlated to population growth and rising incomes in the emerging markets). Palm oil is the leading edible oil consumed globally, with a 37 per cent. market share; however, more importantly, palm oil represents over 55 per cent. of the global trade in exported edible oils. One hectare of mature palm yields over six tonnes of oil per annum, compared with less than half a tonne of oil from traditional row crops such as soya, rapeseed or sunflower. As such, it takes over ten hectares of an oilseed row crop to replace one hectare of naturally irrigated palm. Whilst certain environmental critics may target the palm oil industry, they provide no solutions to addressing the world's ever growing edible oil requirements, particularly in developing countries. Palm oil is a naturally irrigated crop which grows exclusively in a narrow band around the Equator. The palm oil industry provides direct employment for several million people in rural and remote areas, as it is manually harvested (compared to mechanised row crop agriculture). In addition, approximately half of the palm oil estates under cultivation are in fact owned by small holders who are able to join the emerging middle class because of their farming activities. The palm oil tree's immense productivity gives it the lowest cost of production for all edible oil crops. The cash cost of production is approximately USD350 per tonne of crude palm oil, compared with a current market selling price in excess of USD1,000 per tonne. It is for this reason that palm oil plantations in Southeast Asia have a global competitive and comparative advantage in the production of edible oils.

One hectare of mature palm yields over six tonnes of oil per annum, compared with less than half a tonne of oil from traditional row crops such as soya, rapeseed or sunflower. As such, it takes over ten hectares of an oilseed row crop to replace one hectare of naturally irrigated palm. Whilst certain environmental critics may target the palm oil industry, they provide no solutions to addressing the world's ever growing edible oil requirements, particularly in developing countries. Palm oil is a naturally irrigated crop which grows exclusively in a narrow band around the Equator. The palm oil industry provides direct employment for several million people in rural and remote areas, as it is manually harvested (compared to mechanised row crop agriculture). In addition, approximately half of the palm oil estates under cultivation are in fact owned by small holders who are able to join the emerging middle class because of their farming activities.

The palm oil tree's immense productivity gives it the lowest cost of production for all edible oil crops. The cash cost of production is approximately USD350 per tonne of crude palm oil, compared with a current market selling price in excess of USD1,000 per tonne. It is for this reason that palm oil plantations in Southeast Asia have a global competitive and comparative advantage in the production of edible oils.

Investment Thesis & Strategic Objectives

Due to Malaysia's strict land titling and zoning regulations, which protect over 60% of the country's land mass as a Forest or Forest Reserve, the supply of agriculturally titled land for the development of palm oil is nearly exhausted in Malaysia. There is some land available for purchase in the State of Sarawak; yet, we estimate this supply will also be depleted in a few years, similar to the situation of peninsular Malaysia and the State of Sabah.

Due to our on-the-ground presence in Kuching (the capital of the State of Sarawak), we have a unique opportunity to acquire, consolidate and develop this remaining land supply in Sarawak. All land parcels that we purchase are mineral soil and have full agriculture title. We will not consider peat soil opportunities due to the higher development costs and negative environmental impact. Since our Admission on the London Stock Exchange's AIM Market ("AIM") on 30th November 2009, we have completed two acquisitions thereby taking our total land resource to 15,645 hectares (38,658 acres). We continue to review select acquisition opportunities to achieve our stated objective of owning over 20,000 hectares (49,400 acres) of Malaysian titled land within two years of admission to AIM.

We are of the opinion that the development of properly titled green-field palm oil estates provides a highly attractive return on equity over the medium term. Our all-in-cost of acquisition, ownership and development in Sarawak, over a three year period, is approximately USD7,500 - USD8,000 per hectare. Of this gross investment per hectare, we are able to leverage approximately two-thirds from the local banks in local currency under long term (+10 years) financing arrangements.

Research shows that well-run, mature Malaysian palm oil plantations are valued at up to USD30,000 per hectare in the public equity markets, a meaningful premium when compared to valuations in other palm oil producing countries. As such, the Directors believe that green-field land acquisition in Malaysia, at valuations of approximately USD2,500 per hectare, are highly accretive in value to all shareholders of the Company.

We intend to be a global leader in fresh fruit bunch ("FFB") processing technology via the construction of our vertical sterilizer crushing mill with clean energy components. We have already initiated the planning and approval process for a 120 tonne vertical sterilizer mill at our estates. At completion, this mill will be among the largest in Malaysia. The mill will incorporate a proprietary sterilization process and carbon credit eligible methane recapture facility. We expect the mill to be operational in 2012 and we intend to also process third party crop from the smaller, independent operators in the area.

Malaysia

We are of the opinion that Malaysia represents a superior location for the development of palm oil estates due to a variety of legal, operational, financial and valuation considerations. Malaysia is an "A" rated country that has welcomed foreign investment since the 1960s. It benefits from a stable, multi- racial democratic system and an advanced land titling system for agriculture that protects the nation's forest reserves and indigenous land rights. Malaysia's banking system is generally regarded as stable and liquid; for example, no Malaysian bank was bailed-out by the government in the last global financial crisis. Borrowing costs are approximately 5% - 6% for our loan facilities compared with corporate borrowing costs of mid-teens in Indonesia and the non-availability of leverage in other countries on the Equator. The Group enjoys strong relations with its funding banks, with certain of the Company's borrowings personally guaranteed by the Executive Directors and Chairman. The availability of low cost bank finance for plantation development in Malaysia dramatically enhances the Group's long-term equity returns, when compared with alternative destinations in the emerging markets.

Financial Position

The Group is pleased to report its first revenue of USD314,000 in 2010. This is an important milestone given the intensive capital investment in our estates since 2008. The Group's balance sheet as at 31^st December 2010 shows a net assets position of USD18,002,000 compared to USD13,408,000 on 31^st December 2009. The Group has gross loans and borrowings with local Malaysian banks of USD38,571,000 compared to USD22,479,000 in 31^st December 2009. As at 31^st March 2011, the Group has an additional RM81,000,000 (approximately USD26,750,000) in undrawn bank lines for its plantation development activities.

Financial Performance

Consolidated income statements for the financial years ended:

	31.12.10 (USD)	31.12.09 (USD)
Revenue	314,000	-
Other Income	71,000	48,000
Administrative Expenses	2,207,000	1,306,000
Other Expenses	811,000	107,000
Finance Expenses	893,000	22,000
Loss before Taxation	3,796,000	1,387,000
Income Tax Benefit	185,000	145,000
Loss for the Year	3,611,000	1,242,000
Loss Attributable to:
Owners of the parent	3,611,000	1,226,000
Non-controlling Interests	-	16,000
Loss per share (cents per share)
Basic and diluted	11.6	6.1

Financing Activities

On 13^th August 2010, we completed a Company sponsored placing (without the use of placement agents and brokers) of 3,868,083 shares at a price of 110 pence per share, resulting in £4,265,891 in new equity capital; a portion of this was utilized for the Fortune acquisition. This placing was carried out at a 46.7% premium to the Company's AIM Admission on 30^th November 2009, also a Company sponsored placing at a price per share of 75 pence.

On 19^th November 2010, we executed a Company sponsored placing of a USD1,000,000 four year, 1.75% coupon, unsecured convertible bond. This bond has a conversion price of 201 pence per share. The conversion price represented a 21.8% premium to the closing price on 18^th November 2010.

Subsequent to a Company EGM, on 28^th February 2011, we completed a placing of 7,272,728 shares at a price of 220 pence per share, resulting in net proceeds after fees and commissions of approximately £15,400,000 (USD24,800,000) in new equity capital. This capital will allow the Group to complete its land acquisition programme stated earlier at admission to AIM, which targets a land resource in excess of 20,000 hectares (49,420 acres) by year-end 2011.

Operations & Planting Strategy to 2012

We have three wholly-owned estates:

BJ Corporation 4,795 hectares

Incosetia 5,850 hectares (acquired 30th December 2009)

Fortune 5,000 hectares (acquired 30th December 2010)

Total 15,645 hectares (approximately 38,658 acres)

As at year-end 2010, the Group had 4,051 hectares planted and two nurseries in operation with over 629,000 seedlings being grown for field planting. (Seedlings are grown in a nursery for approximately 9 months prior to field planting.) Post-acquisition of the Fortune estate, we initiated a third nursery. As at 31^st March 2011, the three nurseries had over 845,000 seedlings.

"In-the-ground" plantings at BJ Corporation have been ongoing since early 2009 and we are targeting completion of planting works in 2011, with a total expected planted area of approximately 4,300 hectares at this estate. In addition, the first FFB harvest from the BJ estate is scheduled for the late 2011.

Our acquisition of Incosetia (on 30^th December 2009) provided the Group with a large unplanted land resource of 4,650 hectares and planted land of another 1,200 hectares, some of which is fruit bearing. As such, we recorded our first revenue from FFB sales in January 2010, post-closing of the acquisition. Additional planting works are now well underway. Our acquisition of Fortune (on 30^th December 2010) provided the Group with an additional 5,000 hectares of land for development, with planting works now also having commenced on this estate. Incosetia and Fortune are expected to have, combined, over 4,000 hectares planted by the end of 2011; thereby achieving a gross planted area for the Group in excess of 8,000 hectares by year-end 2011.

All remaining "in-the-ground" plantings at Incosetia and Fortune are expected to be concluded by year-end 2012; this would coincide with a significant ramp-up in FFB production from the BJ estate. In 2012, our processing mill is scheduled to open, thereby enabling the Group to maximise operating margins. The mill complex is now in design and development and will have a total capacity of 120 tonnes per hour, via two lines of 60 tonnes per hour. The first line will open in the second half of 2012 and the second line will be turned on, with minimal additional capital expenditures, once fruit volumes are sufficient which is most likely in 2014. We are using vertical sterilizer technology, with certain proprietary elements, coupled with carbon credit eligible methane recapture for processing of the effluent water. Through the combination of these two technologies, we are of the opinion that the Group will have the most advanced processing mill complex in the palm oil plantation industry globally. Compared to the industry standard "horizontal sterilizer" mill (which is effectively pre-WWII British era technology), the Group's mill is expected to have a lower all-in construction cost and have a higher oil extraction ratio ("OER").

It is important to note that the Group's estates are in close proximity to each other, thereby simplifying operations and management. Further, the estates are only 2.5 hours away, on a combination of paved and unpaved roads, from the deep-water port of Bintulu. This port is the only deep-water port in Sarawak and the transit point for virtually all of Sarawak's CPO exports and refining.

Closing Comments

We wish to thank all our staff, who have worked to make the Group the success that it is today. We wish to thank our shareholders, who share our vision of creating a best-of-breed, sustainable palm oil company in Malaysia. We also take this opportunity to thank our bankers at Malayan Banking Berhad for their continued support of our operations.

The next 18 months are an exciting phase for the Group as we continue to consolidate neighboring land parcels selectively, complete the planting works on our existing parcels and open our milling complex. We look forward to updating you on our process in the months ahead.

Datuk Linggi

Non-Executive Chairman

14th April 2011

COMMUNITY OUTREACH PROGRAMME 2011

Corporate Philosophy

We are committed to improving the lives of the rural communities that are in the general vicinity of our estates. Approximately five to twenty kilometers from the Group's plantations, there are three villages totalling approximately 200 people. It is important to note that no native communities live or previously lived on the Group's land.

Malaysia has an advanced titling regime, established by the British prior to Malaysia's independence, which protects local and indigenous peoples' land rights under Native Customary Rights ("NCR") zoning. Agriculturally titled land for palm oil development cannot and does not overlap with NCR Land.

In addition, Malaysia has protected, via federal zoning, over 60% of its entire land mass as a "Forest" or "Forest Reserve"; in Western European countries, such as the United Kingdom or France, less than 30% of these countries' land is protected under a similar designation. Forest and Forest Reserve Land does not overlap with agricultural land and it is illegal to plant an agricultural crop, such as palm oil, on Forest Land. As such, we feel it is important to re-iterate that there is no "clearing the virgin rainforest for palm oil" in Malaysia - this practice stopped well over
15 years ago.

We have undertaken a variety of initiatives in our Community Outreach Programme:

Medical services

The Group's medical specialist visits each community on a monthly basis. Services provided include general medical treatment, vaccinations for newborns, provision of antibiotics and emergency medical evacuation when required. Prior to the Group's involvement, there was no regular medical service in these communities.

Clean Water Supply

We are pleased to report that in 2010, each of the three communities now has consistent, year-round clean water supply for the first time in their existence. We developed a gravity-fed water system utilizing mini-reservoirs and a piping system over 2 kilometres in length. The Group provided all equipment and materials and our staff worked hand-in-hand with the residents to build the water delivery system.

Employment Opportunities & Other

We employ all village residents who seek to work with the Group. Approximately 35 residents are currently employed in a variety of field and office roles.

In 2010, we also provided donations for the repair for a community chapel and initiated a daily transport service so that children have a shorter transit time to school.

Sustainable Community Development Through Agriculture

The village residents seek to plant palm oil on their own land, as they know the Group is planning construction of its mill. This mill will provide a ready off-take for the villagers' own FFB production, thereby allowing them to enjoy regular cash-crop incomes like thousands of other palm oil growing communities across Malaysia. As such, we have provided the villages with training and subsidized palm oil seedlings so they can begin planting their own fields. We are preparing for a further expansion of this programme in 2011 through a pioneering joint venture initiative.

Our staff are regularly invited to all local celebrations and community events; some of the residents have also participated in a video documentary which is available on www.asianplantations.com.

We strongly believe the foundation has been laid for closer cooperation in the years ahead. All aspects of our community outreach have been and will be guided by our desire to improve local lives in a sustainable and respectful manner.

Our Community Outreach Programme is also important for the Group as it prepares for the Roundtable on Sustainable Palm Oil ("RSPO") certification process. RSPO certification is a multi-year process which includes many audits, including on the Group's community and village relations.

ANNUAL FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2010

The Directors present the report to the members together with the audited consolidated financial statements of Asian Plantations and its subsidiaries (collectively the "Group") for the financial year ended 31 December 2010.

Consolidated Income Statement

For the financial year ended 31 December 2010

	Note	2010	2009
		USD'000	USD'000
			Restated

Revenue	5	314	-

Cost of sales		(270)	-


Gross profit		44	-

Other income	6	71	48

Other items of expenses
Administrative expenses	7	(2,207)	(1,306)
Other expenses	8	(811)	(107)
Finance expenses	9	(893)	(22)


Loss before taxation		(3,796)	(1,387)
Income tax benefit	10	185	145


Loss for the year		(3,611)	(1,242)


Loss attributable to :

Owners of the parent		(3,611)	(1,226)
Non-controlling interests		-	(16)


		(3,611)	(1,242)


Loss per share attributable to owners of the parent (cents per share)

Basic and diluted	11	(11.6)	(6.1)

The accompanying accounting policies and explanatory notes form an integral part of the financial statements.

Consolidated Statement of Comprehensive Income

For the financial year ended 31 December 2010

	2010	2009
	USD'000	USD'000
		Restated

Loss for the year	(3,611)	(1,242)

Other comprehensive income:
Foreign currency translation adjustments	1,453	(199)


Total comprehensive income for the year	(2,158)	(1,441)


Total comprehensive income attributable to:

Owners of the parent	(2,158)	(1,431)
Non-controlling interests	-	(10)


	(2,158)	(1,441)

The accompanying accounting policies and explanatory notes form an integral part of the financial statements.

Consolidated Statement of Financial Position

As at 31 December 2010

	Note	2010	2009
		USD'000	USD'000
			Restated

Non-current assets
Property, plant and equipment	12	9,576	5,063
Biological assets	13	11,022	6,093
Land use rights	14	33,546	20,950
Goodwill on consolidation	15	7,560	4,365


Total non-current assets		61,704	36,471


Current assets

Inventories	16	122	45
Trade and other receivables	17	193	180
Prepaid operating expenses		165	82
Cash and bank balances	18	1,247	4,174


Total current assets		1,727	4,481


Total assets		63,431	40,952


Current liabilities

Trade and other payables	19	795	585
Other liabilities	20	253	798
Loans and borrowings	21	2,267	2,544


Total current liabilities		3,315	3,927


Non-current liabilities
Loans and borrowings	21	36,304	19,935
Deferred tax liabilities	22	5,810	3,682


Total non-current liabilities		42,114	23,617


Total liabilities		45,429	27,544


Net assets		18,002	13,408

Consolidated Statement of Financial Position

As at 31 December 2010 (cont'd)

	Note	2010	2009
		USD'000	USD'000
			Restated

Equity attributable to owners of the parent

Share capital	23	42,211	35,459
Other reserves	24	(18,995)	(20,448)
Accumulated losses		(5,214)	(1,603)


Total equity		18,002	13,408

The accompanying accounting policies and explanatory notes form an integral part of the financial statements.

Consolidated Statement of Changes in Equity

For the financial year ended 31 December 2010

	Attributable to the equity holders of the parent
2010	Share capital	Other reserves	Accumulated losses	Total equity
	USD'000	USD'000	USD'000	USD'000
	(Note 23)	(Note 24)

At 1 January 2010
As previously reported	35,459	(20,452)	(1,748)	13,259
Prior year adjustments (Note 32)	-	4	145	149


At 1 January 2010 (restated)	35,459	(20,448)	(1,603)	13,408


Loss for the year	-	-	(3,611)	(3,611)

Other comprehensive income
Foreign currency translation adjustments	-	1,453	-	1,453

Total comprehensive income for the year	-	1,453	(3,611)	(2,158)

Issuance of ordinary shares for cash	6,752	-	-	6,752


At 31 December 2010	42,211	(18,995)	(5,214)	18,002

Consolidated Statement of Changes in Equity

For the financial year ended 31 December 2010

	Attributable to equity holders of the parent
2009	Share capital	Other reserves	Accumu-lated losses	Total share capital and reserves	Non-controlling interests	Total equity
	USD'000	USD'000	USD'000	USD'000	USD'000	USD'000
	(Note 23)	(Note 24)

At 1 January 2009	5,849	13	(377)	5,485	497	5,982


Loss for the year (restated) (Note 32)	-	-	(1,226)	(1,226)	(16)	(1,242)


Other comprehensive income
Foreign currency translation adjustments (restated)	-	(205)	-	(205)	6	(199)

Total comprehensive income for the year	-	(205)	(1,226)	(1,431)	(10)	(1,441)

Share issuance expenses	(160)	-	-	(160)	-	(160)

Issuance of ordinary shares for cash	8,714	-	-	8,714	-	8,714

Issuance of new shares as consideration for acquisition of a subsidiary	26,905	-	-	26,905	-	26,905

Adjustment due to pooling of interest method	(5,849)	(20,256)	-	(26,105)	-	(26,105)

Acquisition of non-controlling interest in a subsidiary	-	-	-	-	(487)	(487)


At 31 December 2009	35,459	(20,448)	(1,603)	13,408	-	13,408

The accompanying accounting policies and explanatory notes form an integral part of the financial statements.

Consolidated Cash Flow Statement

For the financial year ended 31 December 2010

	2010	2009
	USD'000	USD'000

Cash flows from operating activities
Loss before taxation	(3,796)	(1,387)

Adjustments for:
Amortisation of land use rights	406	105
Depreciation of property, plant and equipment	43	2
Interest income	(42)	-
Interest expense	893	22


Operating cash flows before changes in working capital	(2,496)	(1,258)

Increase in inventories	(77)	(13)
Decrease/(increase) in trade and other receivables	31	(69)
Decrease/(increase) in prepaid operating expenses	148	(24)
Decrease in trade and other payables	(5,302)	(6,884)


Cash flows used in operations	(7,696)	(8,248)

Interest received	42	-
Interest paid	(893)	(22)


Net cash used in operating activities	(8,547)	(8,270)


Cash flows from investing activities

Net cash outflow arising from acquisition of a subsidiary (Note 1)	(8,084)	(12,021)
Purchase of property, plant and equipment	(2,630)	(2,474)
Additions to biological assets	(3,809)	(2,009)
Acquisition of non-controlling interest in a subsidiary	-	(487)


Net cash used in investing activities	(14,523)	(16,991)

Consolidated Cash Flow Statement

For the financial year ended 31 December 2010 (cont'd)

	2010	2009
	USD'000	USD'000

Cash flows from financing activities

Proceeds from issuance of ordinary shares	6,752	8,714
Share issuance expenses	-	(160)
Drawdown of term loans	12,569	20,581
Repayment of finance lease	(103)	(9)


Net cash generated from financing activities	19,218	29,126


Net (decrease)/increase in cash and cash equivalents	(3,852)	3,865
Effect of exchange rates on cash and cash equivalents	697	235
Cash and cash equivalents, beginning balance	4,174	74


Cash and cash equivalents, ending balance (Note 18)	1,019	4,174

The accompanying accounting policies and explanatory notes form an integral part of the financial statements.

Notes to the Consolidated Financial Statements - 31 December 2010

1. General

(a) Corporate information

Asian Plantations Limited (the "Company") is a limited liability company incorporated and domiciled in the Republic of Singapore and listed on the Alternative Investment Market ("AIM") of the London Stock Exchange.

The registered office of the Company is located at No. 14 Ann Siang Road, #02-01, Singapore 069694.

The principal activity of the Company is that of investment holding. The principal activities of the subsidiaries are as disclosed in Note 1(b).

(b) Subsidiaries

As of 31 December 2010, the details of subsidiaries are as follows:

			Proportion of ownership interest
Subsidiaries	Country of incorporation	Activities	2010	2009
			%	%


Asian Plantations (Sarawak) Sdn. Bhd. (formerly known as Arus Plantation Sdn. Bhd.) ("APS") ⁽¹⁾	Malaysia	Investment holding	100	100


Held through APS:
BJ Corporation Sdn. Bhd. ("BJ") ⁽¹⁾	Malaysia	Oil-palm plantation	100	100

Jubilant Paradise Sdn. Bhd. ("JP") ⁽¹⁾	Malaysia	Investment holding	100	100

Incosetia Sdn. Bhd. ("Incosetia") ⁽¹⁾	Malaysia	Oil-palm plantation	100	-

Fortune Plantation Sdn. Bhd. ⁽¹⁾	Malaysia	Oil-palm plantation	100	-

Asian Plantation Milling Sdn. Bhd. ⁽¹⁾	Malaysia	Dormant	100	-

Held through JP:
Incosetia Sdn. Bhd. ("Incosetia") ⁽¹⁾	Malaysia	Oil-palm plantation	-	100

⁽¹⁾Audited by member firm of Ernst & Young Global in Malaysia.

1. General (cont'd)

On 31 December 2010, the Group acquired 100% equity interest in Fortune Plantation Sdn. Bhd. ("FPSB"), a company incorporated in Malaysia.

The fair values of the identifiable assets and liabilities of FPSB on the date that the Group acquired 100% of FPSB were:

	Recognised on date of acquisition	Carrying amount before acquisition
	USD'000	USD'000

Assets
Property, plant and equipment	1,286	1,286
Land use rights	10,702	1,584
Receivables	44	44
Cash and bank balances	116	116


	12,148	3,030


Liabilities
Payables	(4,736)	(4,736)
Deferred tax liabilities	(1,924)	-


	(6,660)	(4,736)


Net identifiable assets/(liabilities)	5,488	(1,706)

1. General (cont'd)

The total cost of the business combination is as follows:

					USD'000

Consideration paid for the 100% interest acquired					8,200


Goodwill is computed as follows:

Consideration paid					8,200
Share of net identifiable assets acquired					(5,488)


Goodwill on acquisition (Note 15)					2,712


The cash outflow on acquisition is as follows:

Purchase consideration					8,200
Cash and cash equivalents of the subsidiary acquired					(116)


Net cash outflow on acquisition					8,084

Goodwill on acquisition of USD 2,712,000 has been determined on a provisional basis as the purchase price allocation has not been completed by the date the financial statements was authorised for issue. Goodwill on acquisition, the carrying amount of the property, plant and equipment, land use rights, receivables, payables and deferred tax liabilities will be adjusted accordingly on a retrospective basis when the purchase price allocation is finalised.

Transaction costs relating to the acquisition of USD 234,000 have been recognised in the "other expenses" line item in profit or loss for the current year.

If the acquisition had occurred on 1 January 2010, the Group's revenue and loss for the year would have been USD 314,000 and USD 4,909,000, respectively.

2. Fundamental accounting concept

As at 31 December 2010, the Group's current liabilities exceeded its current assets by USD 1,588,000. The consolidated financial statements have been prepared under the going concern basis as the Directors are in the opinion that the Group and the Company is able to raise additional equity as and when required. The Company has issued new shares via a share placement and raised GBP 15,426,796 (equivalent to USD 24,892,000), net of commissions, on 28 February 2011 (Note 33).

3. Summary of significant accounting policies

3.1 Basis of preparation

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") are issued by the International Accounting Standards Board ("IASB").

The consolidated financial statements have been prepared on the historical cost basis, except as disclosed in the accounting policies below.

The consolidated financial statements are presented in United States Dollars ("USD") to facilitate the comparison of financial results with companies in the Oil-palm industry and all values are rounded to the nearest thousand ("USD'000") except when otherwise indicated.

3.2 Changes in accounting policies and disclosures

New and amended standards and interpretations

The accounting policies adopted are consistent with those of the previous financial year, except for the following new and amended IFRS and IFRIC interpretations effective as of 1 January 2010:

IFRS 2 Share-based Payment: Group Cash-settled Share-based Payment Transactions effective 1 January 2010

IFRS 3 Business Combinations (Revised) and IAS 27 Consolidated and Separate Financial Statements (Amended) effective 1 July 2009, including consequential amendments to IFRS 2, IFRS 5, IFRS 7, IAS 7, IAS 21, IAS 28, IAS 31 and IAS 39

IAS 39 Financial Instruments: Recognition and Measurement - Eligible Hedged Items effective 1 July 2009

IFRIC 17 Distributions of Non-cash Assets to Owners effective 1 July 2009

Improvements to IFRSs (May 2008)

Improvements to IFRSs (April 2009)

3. Summary of significant accounting policies (cont'd)

3.2 Changes in accounting policies and disclosures (cont'd)

New and amended standards and interpretations (cont'd)

The adoption of the standards or interpretations is described below:

IFRS 2 Share-based Payment (Revised)

The IASB issued an amendment to IFRS 2 that clarified the scope and the accounting for group cash-settled share-based payment transactions. The Group adopted this amendment as of 1 January 2010. It did not have an impact on the financial position or performance of the Group.

IFRS 3 Business Combinations (Revised) and IAS 27 Consolidated and Separate Financial Statements (Amended)

IFRS 3 (Revised) introduces significant changes in the accounting for business combinations occurring after becoming effective. Changes affect the valuation of non-controlling interest, the accounting for transaction costs, the initial recognition and subsequent measurement of a contingent consideration and business combinations achieved in stages. These changes will impact the amount of goodwill recognised, the reported results in the period that an acquisition occurs and future reported results.

IAS 27 (Amended) requires that a change in the ownership interest of a subsidiary (without loss of control) is accounted for as a transaction with owners in their capacity as owners. Therefore, such transactions will no longer give rise to goodwill, nor will it give rise to a gain or loss. Furthermore, the amended standard changes the accounting for losses incurred by the subsidiary as well as the loss of control of a subsidiary. The changes by IFRS 3 (Revised) and IAS 27 (Amended) affect acquisitions or loss of control of subsidiaries and transactions with non-controlling interests after 1 January 2010.

The change in accounting policy was applied prospectively and had no material impact on earnings per share.

IAS 39 Financial Instruments: Recognition and Measurement - Eligible Hedged Items

The amendment clarifies that an entity is permitted to designate a portion of the fair value changes or cash flow variability of a financial instrument as a hedged item. This also covers the designation of inflation as a hedged risk or portion in particular situations. The Group has concluded that the amendment will have no impact on the financial position or performance of the Group, as the Group has not entered into any such hedges.

IFRIC 17 Distribution of Non-cash Assets to Owners

This interpretation provides guidance on accounting for arrangements whereby an entity distributes non-cash assets to shareholders either as a distribution of reserves or as dividends. The interpretation has no effect on either, the financial position nor performance of the Group.

3. Summary of significant accounting policies (cont'd)

3.2 Changes in accounting policies and disclosures (cont'd)

New and amended standards and interpretations (cont'd)

Improvements to IFRSs

In May 2008 and April 2009, the IASB issued omnibus of amendments to its standards, primarily with a view to removing inconsistencies and clarifying wording. There are separate transitional provisions for each standard.

The adoption of the following amendments resulted in changes to accounting policies but did not have any impact on the financial position or performance of the Group.

Issued in May 2008

IFRS 5 Non-current Assets Held for Sale and Discontinued Operations: clarifies that when a subsidiary is classified as held for sale, all its assets and liabilities are classified as held for sale, even when the entity remains a non-controlling interest after the sale transaction. The amendment is applied prospectively and has no impact on the financial position nor financial performance of the Group.

Issued in April 2009

IFRS 5 Non-current Assets Held for Sale and Discontinued Operations: clarifies that the disclosures required in respect of non-current assets and disposal groups classified as held for sale or discontinued operations are only those set out in IFRS 5. The disclosure requirements of other IFRSs only apply if specifically required for such non-current assets or discontinued operations. As a result of this amendment, the Group amended its disclosures in Note 8 Segment information.

IFRS 8 Operating Segments: clarifies that segment assets and liabilities need only be reported when those assets and liabilities are included in measures that are used by the chief operating decision maker. As the Group's chief operating decision maker does review segment assets and liabilities, the Group has continued to disclose this information in Note 30.

IAS 7 Statement of Cash Flows: States that only expenditure that results in recognising an asset can be classified as a cash flow from investing activities. This amendment will impact amongst others, the presentation in the statement of cash flows of the contingent consideration on the business combination completed in 2010 upon cash settlement.

IAS 36 Impairment of Assets: The amendment clarifies that the largest unit permitted for allocating goodwill, acquired in a business combination, is the operating segment as defined in IFRS 8 before aggregation for reporting purposes. The amendment has no impact on the Group as the annual impairment test is performed before aggregation.

3. Summary of significant accounting policies (cont'd)

3.2 Changes in accounting policies and disclosures (cont'd)

New and amended standards and interpretations (cont'd)

Other amendments resulting from Improvements to IFRSs to the following standards did not have any impact on the accounting policies, financial position or performance of the Group:

Issued in April 2009

IFRS 2 Share-based Payment

IAS 1 Presentation of Financial Statements

IAS 17 Leases

IAS 34 Interim Financial Reporting

IAS 38 Intangible Assets

IAS 39 Financial Instruments: Recognition and Measurement

IFRIC 9 Reassessment of Embedded Derivatives

IFRIC 16 Hedge of a Net Investment in a Foreign Operation

3.3 Standards issued but not yet effective

Standards issued but not yet effective up to the date of issuance of the Group's financial statements are listed below. This listing is of standards and interpretations issued, which the Group reasonably expects to be applicable at a future date. The Group intends to adopt those standards when they become effective.

IAS 24 Related Party Disclosures (Amendment)

The amended standard is effective for annual periods beginning on or after 1 January 2011. It clarified the definition of a related party to simplify the identification of such relationships and to eliminate inconsistencies in its application. The revised standard introduces a partial exemption of disclosure requirements for government related entities. The Group does not expect any impact on its financial position or performance. Early adoption is permitted for either the partial exemption for government-related entities or for the entire standard.

IAS 32 Financial Instruments: Presentation - Classification of Rights Issues (Amendment)

The amendment to IAS 32 is effective for annual periods beginning on or after 1 February 2010 and amended the definition of a financial liability in order to classify rights issues (and certain options or warrants) as equity instruments in cases where such rights are given pro rata to all of the existing owners of the same class of an entity's non-derivative equity instruments, or to acquire a fixed number of the entity's own equity instruments for a fixed amount in any currency. This amendment will have no impact on the Group after initial application.

3. Summary of significant accounting policies (cont'd)

3.3 Standards issued but not yet effective (cont'd)

IFRS 9 Financial Instruments: Classification and Measurement

IFRS 9 as issued reflects the first phase of the IASBs work on the replacement of IAS 39 and applies to classification and measurement of financial assets as defined in IAS 39. The standard is effective for annual periods beginning on or after 1 January 2013. In subsequent phases, the IASB will address classification and measurement of financial liabilities, hedge accounting and derecognition. The completion of this project is expected in early 2011. The adoption of the first phase of IFRS 9 will have an effect on the classification and measurement of the Group's financial assets. The Group will quantify the effect in conjunction with the other phases, when issued, to present a comprehensive picture.

IFRIC 14 Prepayments of a minimum funding requirement (Amendment)

The amendment to IFRIC 14 is effective for annual periods beginning on or after 1 January 2011 with retrospective application. The amendment provides guidance on assessing the recoverable amount of a net pension asset. The amendment permits an entity to treat the prepayment of a minimum funding requirement as an asset. The amendment is deemed to have no impact on the financial statements of the Group.

IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments

IFRIC 19 is effective for annual periods beginning on or after 1 July 2010. The interpretation clarifies that equity instruments issued to a creditor to extinguish a financial liability qualify as consideration paid. The equity instruments issued are measured at their fair value. In case that this cannot be reliably measured, the instruments are measured at the fair value of the liability extinguished. Any gain or loss is recognised immediately in profit or loss. The adoption of this interpretation will have no effect on the financial statements of the Group.

Improvements to IFRSs (issued in May 2010)

The IASB issued Improvements to IFRSs, an omnibus of amendments to its IFRS standards. The amendments have not been adopted as they become effective for annual periods on or after either 1 July 2010 or 1 January 2011. The amendments listed below, are considered to have a reasonable possible impact on the Group:

IFRS 3 Business Combinations

IFRS 7 Financial Instruments: Disclosures

IAS 1 Presentation of Financial Statements

IAS 27 Consolidated and Separate Financial Statements

IFRIC 13 Customer Loyalty Programmes

The Group, however, expects no impact from the adoption of the amendments on its financial position or performance.

3. Summary of significant accounting policies (cont'd)

3.3 Standards issued but not yet effective (cont'd)

IFRS 7 Financial Instruments: Disclosures - Transfers of Financial Assets (Amendments)

The amendments to IFRS 7 are effective for annual periods beginning on or after 1 July 2011. The amendments introduce disclosure requirements for all transferred assets, existing at the reporting date, irrespective of when the related transfer transaction occurred. These additional disclosure requirements are to enable users of financial statements to evaluate the risk exposures relating to transfers transactions of financial assets (for example, securitisations), including understanding the possible effects of any risks that may remain with the entity that transferred the assets. The amendments also require additional disclosures if a disproportionate amount of transfer transactions are undertaken around the end of a reporting period. The amendments are deemed to have no impact on the financial statements of the Group.

IAS 12 Income Taxes: Deferred Tax - Recovery of Underlying Assets (Amendments)

The amendments to IAS 12 are effective for annual periods beginning on or after 1 January 2012. The amendments introduce a limited exception to the principle in IAS 12 Income Taxes that the measurement of deferred tax reflects the expected manner in which the entity intends to recover or settle the carrying amount of the underlying asset or liability. The amendments applies to deferred tax liabilities and assets arising from investment property measured using the fair value model in IAS 40, including investment property measured at fair value in a business combination and subsequently measured using the fair value model. For the purposes of measuring deferred tax, the amendments introduce a rebuttable presumption that the carrying amount of such an asset will be recovered entirely through sale. The presumption can be rebutted if the investment property is depreciable and is held within a business model whose objective is to consume substantially all of the economic benefits over time, rather than through sale. The amendments are deemed to have no impact on the financial statements of the Group.

3. Summary of significant accounting policies (cont'd)

3.4 Basis of consolidation

Basis of consolidation from 1 January 2010

The consolidated financial statements comprise the financial statements of the Group and its subsidiaries as at 31 December 2010.

Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date when such control ceases. The financial statements of the subsidiaries are prepared for the same reporting period as the Company, using consistent accounting policies. All intra-group balances, transactions, unrealised gains and losses resulting from intra-group transactions and dividends are eliminated in full.

Losses within a subsidiary are attributed to the non-controlling interest even if that results in a deficit balance.

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group loses control over a subsidiary, it:

· Derecognises the assets (including goodwill) and liabilities of the subsidiary

· Derecognises the carrying amount of any non-controlling interest

· Derecognises the cumulative translation differences, recorded in equity

· Recognises the fair value of the consideration received

· Recognises the fair value of any investment retained

· Recognises any surplus or deficit in profit or loss

· Reclassifies the parent's share of components previously recognised in other comprehensive income to profit or loss or retained earnings, as appropriate.

Basis of consolidation prior to 1 January 2010

Certain of the above-mentioned requirements were applied on a prospective basis. The following differences, however, are carried forward in certain instances from the previous basis of consolidation:

· Acquisitions of non-controlling interests, prior to 1 January 2010, were accounted for using the parent entity extension method, whereby, the difference between the consideration and the book value of the share of the net assets acquired were recognised in goodwill.

· Losses incurred by the Group were attributed to the non-controlling interest ("NCI") until the balance was reduced to nil. Any further excess losses were attributed to the parent, unless the non-controlling interest had a binding obligation to cover these. Losses prior to 1 January 2010 were not reallocated between NCI and the parent shareholders.

· Upon loss of control, the Group accounted for the investment retained at its proportionate share of net asset value at the date control was lost. The carrying value of such investments at 1 January 2010 will not be restated.

3. Summary of significant accounting policies (cont'd)

3.4 Basis of consolidation (cont'd)

Business combinations and goodwill

Business combinations from 1 January 2010

Other than business combinations involving entities under common control, business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, measured at acquisition date fair value and the amount of any non-controlling interest in the acquiree. For each business combination, the acquirer measures the non-controlling interest in the acquiree either at fair value or at the proportionate share of the acquiree's identifiable net assets. Acquisition costs incurred are expensed and included in other expenses.

When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree.

If the business combination is achieved in stages, the acquisition date fair value of the acquirer's previously held equity interest in the acquiree is remeasured to fair value at the acquisition date through profit or loss.

Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration which is deemed to be an asset or liability, will be recognised in accordance with IAS 39 either in profit or loss or as a change to other comprehensive income. If the contingent consideration is classified as equity, it should not be remeasured until it is finally settled within equity.

The Group elects for each individual business combination, whether non-controlling interest in the acquiree (if any) is recognised on the acquisition date at fair value, or at the non-controlling interest's proportionate share of the acquiree identifiable net assets.

Any excess of the sum of the fair value of the consideration transferred in the business combination, the amount of non-controlling interest in the acquiree (if any), and the fair value of the Group's previously held equity interest in the acquiree (if any), over the net fair value of the acquiree's identifiable assets and liabilities is recorded as goodwill. The accounting policy for goodwill is set out in Note 3.10. In instances where the latter amount exceeds the former, the excess is recognised as gain on bargain purchase in profit or loss on the acquisition date.

3. Summary of significant accounting policies (cont'd)

3.4 Basis of consolidation (cont'd)

Business combinations prior to 1 January 2010

In comparison to the above-mentioned requirements, the following differences applied:

Business combinations were accounted for using the purchase method. Transaction costs directly attributable to the acquisition formed part of the acquisition costs. The non-controlling interest (formerly known as minority interest) was measured at the proportionate share of the acquiree's identifiable net assets.

Business combinations achieved in stages were accounted for as separate steps. Any additional acquired share of interest did not affect previously recognised goodwill.

When the Group acquired a business, embedded derivatives separated from the host contract by the acquiree were not reassessed on acquisition unless the business combination resulted in a change in the terms of the contract that significantly modified the cash flows that otherwise would have been required under the contract.

Contingent consideration was recognised if, and only if, the Group had a present obligation, the economic outflow was more likely than not and a reliable estimate was determinable. Subsequent adjustments to the contingent consideration were recognised as part of goodwill.

Business combinations involving entities under common control: Pooling of interest method

Business combinations involving entities under common control are accounted for by applying the pooling of interest method. The assets and liabilities of the combining entities are reflected at their carrying amounts reported in the consolidated financial statements of the controlling holding company. No adjustments are made to reflect the fair values or recognise any new assets or liabilities. No goodwill is recognised as a result of the combination. Any difference between the consideration paid and the equity of the "acquired" entity is reflected within equity as "merger reserve". The statement of comprehensive income reflects the results of the combining entities for the full year, irrespective of when the combination took place. Comparatives are presented as if the entities had always been combined since the date the entities had come under common control.

Transactions with non-controlling interests

Non-controlling interest represents the equity in subsidiaries not attributable, directly or indirectly, to owners of the Company, and are presented separately in the consolidated statement of comprehensive income and within equity in the consolidated statement of financial position, separately from equity attributable to owners of the Company.

Changes in the Company owners' ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. In such circumstances, the carrying amounts of the controlling and non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiary. Any difference between the amount by which the non-controlling interest is adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the parent.

3. Summary of significant accounting policies (cont'd)

3.5 Foreign currency

Management has determined the currency of the primary economic environment in which the Company operates i.e. functional currency, to be in Ringgit Malaysia ("RM"). Revenues and major costs of providing services including major operating expenses are primarily influenced by fluctuations in RM. Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency.

a) Transactions and balances

Transactions in foreign currencies are measured in the respective functional currencies of the Company and its subsidiaries and are recorded on initial recognition in the functional currencies at exchange rates approximating those ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the end of reporting period. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.

Exchange differences arising on the settlement of monetary items or on translating monetary items at the end of reporting period are recognised in profit or loss except for exchange differences arising on monetary items that form part of the Group's net investment in foreign operations, which are recognised initially in other comprehensive income and accumulated under foreign currency translation reserve in equity. The foreign currency translation reserve is reclassified from equity to profit or loss of the Group on disposal of the foreign operation.

b) Group companies

The assets and liabilities of foreign operations are translated into USD at the rate of exchange ruling at the end of reporting period and their profit or loss are translated at the weighted average exchange rates for the year. The exchange differences arising on the translation are recognised in other comprehensive income. On disposal of a foreign operation, the component of other comprehensive income relating to that particular foreign operation is recognised in profit or loss.

Rates used in the translation of results and financial position of the Company and its subsidiaries from its functional currency to its presentation currency at the end of the reporting period are as follows:

	2010	2009

RM/USD
Assets and liabilities	3.0835	3.4245
Income and expenses	3.2133	3.5233

3. Summary of significant accounting policies (cont'd)

3.5 Foreign currency (cont'd)

b) Group companies (cont'd)

In the case of a partial disposal without loss of control of a subsidiary that includes a foreign operation, the proportionate share of the cumulative amount of the exchange differences are re-attributed to non-controlling interest and are not recognised in profit or loss.

The Group has elected to recycle the accumulated exchange differences in the separate component of other comprehensive income that arises from the direct method of consolidation, which is the method the Group uses to complete its consolidation.

3.6 Subsidiaries

A subsidiary is an entity over which the Group has the power to govern the financial and operating policies so as to obtain benefits from its activities.

3.7 Biological assets

Biological assets, which include mature and immature oil palm plantations, are stated at fair value less estimated costs to sell. Gains or losses arising on initial recognition of plantations at fair value less estimated costs to sell and from the changes in fair value less estimated costs to sell of plantations at each reporting date are included in profit or loss for the period in which they arise.

Oil palm trees have an average life of 28 years; with the first three as immature and the remaining as mature. Oil palm plantation is classified as mature when 60% of oil palm per block is bearing fruits with an average weight of 3 kilograms or more per bunch. Biological assets also include land preparation costs which is the cost incurred to clear the land and to ensure that the plantations are in a state ready for the planting of seedlings.

The fair value of the oil palm plantation is estimated by using the discounted cash flows of the underlying biological assets. The expected cash flows from the whole life cycle of the oil palm plantations is determined using the market price and the estimated yield of the agricultural produce, being fresh fruit bunches ("FFB"), net of maintenance and harvesting costs and any costs required to bring the oil palm plantations to maturity. The estimated yield of the oil palm plantations is affected by the age of the oil palm trees, the location, soil type and infrastructure. The market price of the fresh fruit bunches is largely dependent on the prevailing market price of the processed products after harvest, being crude palm oil and palm kernel.

Cost is taken to approximate fair value when little biological transformation has taken place since initial cost incurrence and the impact of the biological transformation on price is not expected to be material. Cost includes employee benefits expenses and depreciation of certain property, plant and equipment.

3. Summary of significant accounting policies (cont'd)

3.8 Property, plant and equipment

All items of property, plant and equipment are initially recorded at cost. Such cost includes the cost of replacing part of the property, plant and equipment and borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying property, plant and equipment. The accounting policy for borrowing costs is set out in Note 3.18. The cost of an item of property, plant and equipment is recognised as an asset if, and only if, it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably.

Subsequent to initial recognition, property, plant and equipment are measured at cost less accumulated depreciation and any accumulated impairment losses. When significant parts of property, plant and equipment are required to be replaced in intervals, the Group recognises such parts as individual assets with specific useful lives and depreciation, respectively. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the property, plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognised in profit or loss as incurred.

Depreciation of an asset begins when it is available for use and is computed on a straight-line basis over the estimated useful life of the asset at the following annual rates:

Building	-	6.67% - 20%
Renovation	-	20%
Infrastructure	-	4%
Office equipment	-	20%
Furniture and fittings	-	10-20%
Plant and machinery	-	20%
Motor vehicles	-	20%
Computers	-	20%

Depreciation of property, plant and equipment related to the plantations are allocated proportionately based on the area of mature and immature plantations.

Assets under construction included in property, plant and equipment is stated at cost and not depreciated as these assets are not yet available for use.

The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable.

The residual value, useful life and depreciation method are reviewed at each financial year-end and adjusted prospectively, if appropriate.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset is included in profit or loss in the year the asset is derecognised.

3. Summary of significant accounting policies (cont'd)

3.9 Land use rights

Land use rights are initially measured at cost. Following initial recognition, land use rights are measured at cost less accumulated amortisation. The land use rights are amortised on a straight line basis over the period of 60 years.

3.10 Intangible assets - Goodwill

Goodwill is initially measured at cost. Following initial recognition, goodwill is measured at cost less accumulated impairment losses.

For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group's cash-generating units that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.

The cash-generating unit to which goodwill has been allocated is tested for impairment annually and whenever there is an indication that the cash-generating unit may be impaired. Impairment is determined for goodwill by assessing the recoverable amount of each cash-generating unit (or group of cash-generating units) to which the goodwill relates. Where the recoverable amount of the cash-generating unit is less than the carrying amount, an impairment loss is recognised in profit or loss. Impairment losses recognised for goodwill are not reversed in subsequent periods.

Where goodwill forms part of a cash-generating unit and part of the operation within that cash-generating unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative fair values of the operations disposed of and the portion of the cash-generating unit retained.

Goodwill and fair value adjustments arising on the acquisition of foreign operations are treated as assets and liabilities of the foreign operations and are recorded in the functional currency of the foreign operations and translated in accordance with the accounting policy set out in Note 3.5.

3. Summary of significant accounting policies (cont'd)

3.11 Impairment of non-financial assets

The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the asset's recoverable amount.

An asset's recoverable amount is the higher of an asset's or cash-generating unit's fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or group of assets. Where the carrying amount of an asset or cash-generating unit exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows expected to be generated by the asset are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs to sell, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded subsidiaries or other available fair value indicators.

Impairment losses are recognised in profit or loss in those expense categories consistent with the function of the impaired asset.

For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Group estimates the asset's or cash-generating unit's recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset's recoverable amount since the last impairment loss was recognised. If that is the case, the carrying amount of the asset is increased to its recoverable amount. That increase cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised previously. Such reversal is recognised in profit or loss.

3.12 Financial assets

Initial recognition and measurement

Financial assets are recognised on the statement of financial position when, and only when, the Group becomes a party to the contractual provisions of the financial instrument. The Group determines the classification of its financial assets at initial recognition.

When financial assets are recognised initially, they are measured at fair value, plus, in the case of financial assets not at fair value through profit or loss, directly attributable transaction costs.

Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the marketplace (regular way trades) are recognised on the trade date, i.e., the date that the Group commits to purchase or sell the asset.

3. Summary of significant accounting policies (cont'd)

3.12 Financial assets (cont'd)

Subsequent measurement

The Group has only one class of financial assets, namely loans and receivables. The subsequent measurement of loans and receivables is as follows:

Loans and receivables

Financial assets with fixed or determinable payments that are not quoted in an active market are classified as loans and receivables. Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method ("EIR"), less impairment. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, and through the amortisation process.

Derecognition

A financial asset (or, where applicable a part of a financial asset or part of a group of similar financial assets) is derecognised when:

· The rights to receive cash flows from the asset have expired

· The Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a 'pass-through' arrangement; and either (a) the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

When the Group has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, and has neither transferred nor retained substantially all of the risks and rewards of the asset nor transferred control of the asset, the asset is recognised to the extent of the Group's continuing involvement in the asset.

In that case, the Group also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Group has retained.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Group could be required to repay.

3. Summary of significant accounting policies (cont'd)

3.13 Impairment of financial assets

The Group assesses at the end of each of reporting period whether there is any objective evidence that a financial asset is impaired.

Financial assets carried at amortised cost

For financial assets carried at amortised cost, the Group first assesses individually whether objective evidence of impairment exists individually for financial assets that are individually significant, or collectively for financial assets that are not individually significant. If the Group determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or continues to be recognised are not included in a collective assessment of impairment.

If there is objective evidence that an impairment loss on financial assets carried at amortised cost has incurred, the amount of the loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows discounted at the financial asset's original effective interest rate. If a loan has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account. The impairment loss is recognised in profit or loss.

When the asset becomes uncollectible, the carrying amount of impaired financial assets is reduced directly or if an amount was charged to the allowance account, the amounts charged to the allowance account are written off against the carrying value of the financial asset.

To determine whether there is objective evidence that an impairment loss on financial assets has been incurred, the Group considers factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments.

If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed to the extent that the carrying amount of the asset does not exceed its amortised cost at the reversal date. The amount of reversal is recognised in profit or loss.

3. Summary of significant accounting policies (cont'd)

3.14 Inventories

Inventories are stated at the lower of cost and net realisable value.

Inventories comprise consumable supplies, chemicals and fertilisers. Cost is determined using the weighted average method. The cost of the consumable supplies, chemicals and fertilisers includes expenses incurred in bringing them into store.

Where necessary, allowance is provided for damaged, obsolete and slow moving items to adjust the carrying value of inventories to the lower of cost and net realisable value.

Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

3.15 Cash and cash equivalents

Cash and cash equivalents comprise cash at banks and on hand, and short-term, highly liquid investments that are readily convertible to known amount of cash and which are subject to an insignificant risk of changes in value. These also include bank overdrafts that form an integral part of the cash management.

3.16 Financial liabilities

Initial recognition and measurement

Financial liabilities are recognised on the statement of financial position when, and only when, the Group becomes a party to the contractual provisions of the financial instrument. The Group determines the classification of its financial liabilities at initial recognition.

All financial liabilities are recognised initially at fair value and in the case of other financial liabilities, plus directly attributable transaction costs.

Subsequent measurement

After initial recognition, financial liabilities are subsequently measured at amortised cost using the effective interest rate method ("EIR"). Gains and losses are recognised in profit or loss when the liabilities are derecognised, and through the EIR amortisation process.

Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR.

Derecognition

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expired. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in profit or loss.

3. Summary of significant accounting policies (cont'd)

3.16 Financial liabilities (cont'd)

Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount reported in the consolidated statement of financial position if, and only if, there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously.

3.17 Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive), as a result of a past event, it is probable that an outflow of economic resources will be required to settle the obligation and the amount of the obligation can be estimated reliably.

Provisions are reviewed at the end of each reporting period and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of resources embodying economic benefits will be required to settle the obligation, the provision is reversed. If the effect of time value of money is material, provisions are discounted using a current pre tax rate that, reflects where appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

3.18 Borrowing costs

Borrowing costs are capitalised as part of the cost of a qualifying asset if they are directly attributable to the acquisition, construction or production of that asset. Capitalisation of borrowing costs commences when the activities to prepare the asset for its intended use or sale are in progress and the expenditures and borrowing costs are incurred. Borrowing costs are capitalised until the assets are substantially completed for their intended use or sale. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.

The Group capitalises borrowing costs for all eligible assets where construction was commenced on or after 1 January 2009.

3.19 Share capital and share issue expenses

Proceeds from issuance of ordinary shares are recognised as share capital in equity. Incremental costs directly attributable to the issuance of ordinary shares are deducted against share capital.

3. Summary of significant accounting policies (cont'd)

3.20 Employee benefits

(a) Defined contribution plans

The Group participates in the national pension schemes as defined by the laws of the countries in which it has operations. Such contributions to defined contribution pension schemes are recognised as an expense in the period in which the related service is performed.

In particular, the Singapore company in the Group makes contribution to the Central Provident Fund scheme in Singapore, a defined contribution scheme. Subsidiary companies in Malaysia make contribution to the Employees Provident Fund.

(b) Employee leave entitlement

Employee entitlements to annual leave are recognised as a liability when they accrue to the employees. The estimated liability for leave is recognised for services rendered by employees up to the end of the reporting period.

The expected cost of bonus plans is recognised as a liability when the Group has a present legal or constructive obligation as a result of services rendered by the employees and a reliable estimate of the obligation can be made. Liabilities for bonus plans are expected to be settled within 12 months of the end of the reporting period and are measured at the amounts expected to be paid when they are settled.

3.21 Leases

The determination of whether an arrangement is, or contains a lease is based on the substance of the arrangement at inception date: whether fulfillment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset.

For arrangements entered into prior to 1 January 2005, the date of inception is deemed to be 1 January 2005 in accordance with the transitional requirements of IFRIC 4.

As lessee

Finance leases, which transfer to the Group substantially all the risks and rewards incidental to ownership of the leased item, are capitalised at the inception of the lease at the fair value of the leased asset or, if lower, at the present value of the minimum lease payments. Any initial direct costs are also added to the amount capitalised. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged to profit or loss. Contingent rents, if any, are charged as expenses in the periods in which they are incurred.

3. Summary of significant accounting policies (cont'd)

3.21 Leases (cont'd)

As lessee (cont'd)

Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset and the lease term, if there is no reasonable certainty that the Group will obtain ownership by the end of the lease term.

Operating lease payments are recognised as an expense in profit or loss on a straight-line basis over the lease term. The aggregate benefit of incentives provided by the lessor is recognised as a reduction of rental expense over the lease term on a straight-line basis.

3.22 Revenue

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured, regardless of when the payment is made. Revenue is measured at the fair value of consideration received or receivable, taking into account contractually defined terms of payment and excluding discounts, rebates, and sales taxes or duty. The Group assesses its revenue arrangements to determine if it is acting as principal or agent. The Group has concluded that it is acting as a principal in all of its revenue arrangements. The following specific recognition criteria must also be met before revenue is recognised:

Sales of goods

Revenue from sale of goods is recognised upon the transfer of significant risk and rewards of ownership of the goods to the customer. Revenue is not recognised to the extent where there are significant uncertainties regarding recovery of the consideration due, associated costs or the possible return of goods.

Interest income

Interest income is recognised using the effective interest method.

3.23 Taxes

(a) Current income tax

Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantially enacted by the end of the reporting period, in the countries where the Group operates and generates taxable income.

Current income taxes are recognised in profit or loss except to the extent that the tax relating to items recognised outside the profit or loss is recognised, either in other comprehensive income or directly in equity. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

3. Summary of significant accounting policies (cont'd)

3.23 Taxes (cont'd)

(b) Deferred tax

Deferred tax is provided using the liability method on temporary differences at the end of reporting period between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax liabilities are recognised for all temporary differences, except:

- where the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

- in respect of temporary differences associated with investments in subsidiaries, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and carry forward of unused tax credits and unused tax losses can be utilised except:

- where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

- in respect of deductible temporary differences associated with investments in subsidiaries, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at the end of each reporting period and are recognised to the extent that it has became probable that future taxable income will allow the deferred tax assets to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised on the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the end of each reporting period.

3. Summary of significant accounting policies (cont'd)

3.23 Taxes (cont'd)

(b) Deferred tax (cont'd)

Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity and deferred tax arising from a business combination is adjusted against goodwill on acquisition.

Deferred tax assets and liabilities are offset, if a legally enforceable right exist to set off current income tax assets against current income tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

Tax benefits acquired as part of a business combination, but not satisfying the criteria for separate recognition at that date, would be recognised subsequently if new information about facts and circumstances changed. The adjustment would either be treated as a reduction to goodwill (as long as it does not exceed goodwill) if it incurred during the measurement period or in profit or loss.

Revenues, expenses and assets are recognised net of the amount of sales tax except:

- where the sales tax incurred on a purchase of assets or services is not recoverable from the taxation authority, in which case the sales tax is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and

- receivables and payables that are stated with the amount of sales tax included.

The net amount of sales tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the statement of financial position.

3.24 Segment reporting

The Group is organised and managed as one segment and the Chief Operating Decision Makers ("CODM") reviews profit or loss of the entity as a whole. Thus it does not present separate segmental information.

3. Summary of significant accounting policies (cont'd)

3.25 Contingencies

A contingent liability is:

(a) a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group; or

(a) a present obligation that arises from past events but is not recognised because:

(i) It is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or

(ii) The amount of the obligation cannot be measured with sufficient reliability.

A contingent asset is a possible asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group.

Contingent liabilities and assets are not recognised on the statement of financial position, except for contingent liabilities assumed in a business combination that are present obligations and which the fair values can be reliably determined.

3.26 Related parties

A party is considered to be related to the Group if:

(a) The party, directly or indirectly through one or more intermediaries,

(i) controls, is controlled by, or is under common control with, the Group;

(ii) has an interest in the Group that gives it significant influence over the Group; or

(iii) has joint control over the Group;

(b) The party is an associate;

(d) The party is a member of the key management personnel of the Group or its parent;

(e) The party is a close member of the family of any individual referred to in (a) or (d);

(f) The party is an entity that is controlled, jointly controlled or significantly influenced by or for which significant voting power in such entity resides with, directly or indirectly, any individual referred to in (d) or (e); or

(g) The party is a post-employment benefit plan for the benefit of the employees of the Group, or of any entity that is a related party of the Group.

4. Significant accounting judgements and estimates

The preparation of the consolidated financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the end of the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the future period.

4.1 Judgements made in applying accounting policies

In the process of applying the Group's accounting policies, management has made the following judgements, apart from those involving estimations, which has the most significant effect on the amounts recognised in the consolidated financial statements:

(a) Determination of functional currency

The Group measures foreign currency transactions in the respective functional currencies of the Company and its subsidiaries. In determining the functional currencies of the entities in the Group, judgement is required to determine the currency that mainly influences sales prices for goods and services and of the country whose competitive forces and regulations mainly determines the sales prices of its goods and services. The functional currencies of the entities in the Group, which have been determined to be RM, are based on management's assessment of the economic environment in which the entities operate and the entities' process of determining sales prices.

(b) Fair value of biological assets (immature plantation)

The biological assets are stated at fair value. Management made the judgement that cost approximates fair value of the biological asset for immature plantation because it involved a new oil palm plantation and that little biological transformation has taken place since its initial cost incurrence. The carrying amount of the immature plantation as at 31 December 2010 is USD 8,927,000 (2009: USD 4,537,000).

4.2 Key sources of estimation uncertainty

The key assumptions concerning the future and other key sources of estimation uncertainty at the end of each reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below:

(a) Biological assets (mature plantation)

The Group measured its mature plantation included in the biological assets at fair value less estimated costs to sell, based on a discounted cash flow model. The inputs to the cash flow model are derived from management's assumptions of the crude palm oil prices, fresh fruit bunches yield and oil extraction ratio based on observable market data over the remaining useful life of the mature plantation. The cash flow model does not include cash flows from financing assets, taxation or re-establishing biological assets after harvest.

4. Significant accounting judgements and estimates (cont'd)

4.2 Key sources of estimation uncertainty (cont'd)

(a) Biological assets (mature plantation) (cont'd)

The amount of changes in fair values would differ if there are changes to the assumptions used. Any changes in fair values of these plantations would affect the profit or loss and equity. The carrying amount of the mature plantation as at 31 December 2010 is USD 940,000 (2009: USD 847,000). Further details of the key assumptions used are disclosed in Note 13.

(b) Useful lives of property, plant and equipment

The cost of property, plant and equipment is depreciated on a straight-line basis over the property, plant and equipment's estimated economic useful lives. Management estimates the useful lives of these property, plant and equipment to be within 5 to 25 years. These are common life expectancies applied in the oil palm industry. Changes in the expected level of usage and technological developments could impact the economic useful lives and the residual values of these assets, therefore, future depreciation charges could be revised. The carrying amount of the property, plant and equipment as at 31 December 2010 is disclosed in Note 12.

An impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs to sell and its value in use. The fair value less costs to sell calculation is based on available data from binding sales transactions in an arm's length transaction of similar assets or observable market prices less incremental costs for disposing the asset. The value in use calculation is based on a discounted cash flow model. The cash flows are derived from the budget for the 25 years and do not include restructuring activities that the Group is not yet committed to or significant future investments that will enhance the asset's performance of the cash generating unit being tested. The recoverable amount is most sensitive to the discount rate used for the discounted cash flow model as well as the expected future cash inflows and the growth rate used for extrapolation purposes. Further details of the key assumptions applied in the impairment assessment of goodwill and brands, are given in Note 15.

4. Significant accounting judgements and estimates (cont'd)

4.2 Key sources of estimation uncertainty (cont'd)

(d) Deferred tax assets

Deferred tax assets are recognised for all unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits together with future tax planning strategies.

The carrying value of recognised tax losses at 31 December 2010 was USD 2.444 million (2009: USD 0.786 million).

5. Revenue

	2010	2009
	USD'000	USD'000

Sales of fresh fruit bunches	314	-

6. Other income

	2010	2009
	USD'000	USD'000

Interest income	42	-
Exchange gain	3	48
Sundry income	26	-


	71	48

7. Administrative expenses

	2010	2009
	USD'000	USD'000

Professional fees:
- audit fee	125	138
- acquisition advisory fee	355	-
- listing related advisory fee	-	460
- others	353	195
Stamp duty on agreements	200	168
Bank charges	54	119
Employee benefit expenses	603	30
Directors' fees (Note 26)	82	10
Depreciation of property, plant and equipment	43	2
Others	392	184


	2,207	1,306

7. Administrative expenses (cont'd)

Employee benefit expenses comprise:

	2010	2009
	USD'000	USD'000

Salaries, bonus and allowances	1,302	338
Contributions to defined contribution plans	108	40
Social security costs	6	2


	1,416	380
Less: Capitalised to biological assets (Note 13)	(813)	(350)


	603	30

8. Other expenses

	2010	2009
	USD'000	USD'000

Amortisation of land use rights (Note 14)	406	105
Stamp duties incurred related to plantation	-	2
Costs associated with the acquisition of subsidiaries	234	-
Others	171	-


	811	107

9. Finance expenses

	2010	2009
	USD'000	USD'000

Interest expense on loans and borrowings	893	22

10. Income tax benefit

(a) Major components ofincome tax benefit

The major components of income tax benefit for the financial years ended 31 December are as follows:

	2010	2009
	USD'000	USD'000
		Restated

Current income tax	(10)	-
Deferred tax (Note 22)
- relating to origination and reversal of temporary differences	195	145


Income tax benefit recognised in profit and loss	185	145

(b) Relationship between tax benefit and accounting loss

The reconciliation between income tax benefit and the product of accounting loss multiplied by the applicable corporate tax rate for the financial years ended 31 December is as follows:

	2010	2009
	USD'000	USD'000
		Restated

Loss before taxation	(3,796)	(1,387)


Tax benefit at domestic rate applicable to losses in the countries where the Group operates	(838)	(276)
Adjustments:
Income not subject to tax	-	(8)
Non-deductible expenses	653	139


Income tax benefit recognised in profit or loss	(185)	(145)

For the current financial year, the corporate income tax rate applicable to the Singapore and Malaysian companies in the Group was 17% (2009: 17%) and 25% (2009: 25%) respectively.

The above reconciliation is prepared by aggregating separate reconciliations for each national jurisdiction.

11. Loss per share

Basic loss per share amounts are calculated by dividing loss for the year, net of tax, attributable to owners of the parent by the weighted average number of ordinary shares outstanding during the financial year.

Diluted loss per share amounts are calculated by dividing loss for the year, net of tax, attributable to owners of the parent by the weighted average number of ordinary shares outstanding during the financial year plus the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares. There is no dilutive potential ordinary share as at year ended 2010 and 2009.

The following tables reflect the loss and share data used in the computation of basic loss and diluted per share for the years ended 31 December:

	2010	2009
	USD'000	USD'000
		Restated

Loss, net of tax, attributable to owners of the parent	(3,611)	(1,226)
-

	No. of shares	No. of shares
	'000	'000

Weighted average number of ordinary shares for basic and diluted loss per share computation	31,084	20,019
-

Asian Plantations Limited and its Subsidiaries

Notes to the Financial Statements - 31 December 2010

12. Property, plant and equipment

	Building	Motor vehicles	Office equipment, computers, furniture and fittings	Renovation	Plant and machinery	Infrastructure	Assets under construction	Total
	USD'000	USD'000	USD'000	USD'000	USD'000	USD'000	USD'000	USD'000

Cost
At 1 January 2009	33	51	22	-	51	-	264	421
Acquisition of subsidiaries	39	18	5	-	-	154	1,800	2,016
Additions	152	69	26	-	127	-	2,250	2,624
Reclassifications	124	-	-	-	-	-	(124)	-
Exchange differences	8	2	2	-	4	-	64	80


At 31 December 2009 and 1 January 2010	356	140	55	-	182	154	4,254	5,141
Acquisition of subsidiaries	76	4	16	-	10	1,172	140	1,418
Additions	367	233	171	33	317	406	1,423	2,950
Exchange differences	51	25	13	-	30	181	362	662


At 31 December 2010	850	402	255	33	539	1,913	6,179	10,171

12. Property, plant and equipment (cont'd)

	Building	Motor vehicles	Office equipment, computers, furniture and fittings	Renovation	Plant and machinery	Infrastructure	Assets under construction	Total
	USD'000	USD'000	USD'000	USD'000	USD'000	USD'000	USD'000	USD'000

Accumulated depreciation
At 1 January 2009	4	7	3	-	6	-	-	20
Charge for the year	12	15	6	-	22	-	-	55
Exchange differences	-	1	-	-	2	-	-	3

				-
At 31 December 2009 and 1 January 2010	16	23	9	-	30	-	-	78
Acquisition of subsidiaries	9	2	1	-	3	117	-	132
Charge for the year	33	58	28	1	67	168	-	355
Exchange differences	3	10	3	-	6	8	-	30


At 31 December 2010	61	93	41	1	106	293	-	595


Net carrying amount
At 31 December 2010	789	309	214	32	433	1,620	6,179	9,576


At 31 December 2009	340	117	46	-	152	154	4,254	5,063

12. Property, plant and equipment (cont'd)

Assets held under finance leases

During the financial year, the Group acquired property, plant and equipment at an aggregate cost of USD 2,950,000 (2009: USD 2,624,000) of which USD 320,000 (2009: USD 150,000) were acquired by means of finance leases arrangements. Net carrying amount of property, plant and equipment held under finance leases arrangements which comprise plant and machinery and motor vehicles amounted to USD 250,000 (2009: USD 96,000) and USD 232,000 (2009: USD 67,000) respectively.

Leased assets are pledged as security for the related finance lease liabilities.

Assets under construction

The Group's assets under construction mainly included terraces, roads and bridges/culverts with net carrying amount of USD 6,179,000 (2009: USD 4,254,000).

Depreciation of property, plant and equipment of the Group capitalised to biological assets for the financial year ended 31 December 2010 amounted to USD 312,000 (2009: USD 53,000) (Note 13).

13. Biological assets

Biological assets comprise primarily development activities for oil palm plantations and maintenance of nurseries with the following movements in their carrying value:

	2010	2009
	USD'000	USD'000
At fair value

At 1 January	6,093	1,019
Additions	4,121	2,062
Acquisition of subsidiary	-	2,941
Exchange differences	808	71


At 31 December	11,022	6,093


Represented by:
Mature plantation	940	847
Immature plantation	8,927	4,537
Nursery	1,155	709


Total	11,022	6,093

Mature oil palm trees produce FFBs which are used to produce Crude Palm Oil ("CPO"). The fair values of oil palm plantations are determined by using the discounted future cash flows of the underlying plantations. The expected future cash flows of the oil palm plantations are determined using the projected selling prices of CPO in the market.

13. Biological assets (cont'd)

Significant assumptions made in determining the fair values of the mature oil palm plantations, using a discounted cash flow model, are as follows:

(a) no new planting or re-planting activities are assumed;

(b) oil palm trees have an average life that ranges from 28 years (2009: 28 years), with the first three years as immature and the remaining years as mature;

(c) discount rate used for the Group's plantation operations which is applied in the discounted future cash flows calculation is 9.6% (2009: 8.9%);

(d) FFB price is derived by applying the oil extraction rate to the estimated CPO price of USD 741 (2009: USD 584) per metric tonne; and

(e) yield per hectare of oil palm trees is based on the standard yield profile of the industry.

There are no gain or loss arising from changes in fair value less estimated costs to sell during the financial years ended 2010 and 2009.

	2010	2009
	Hectares	Hectares
Planted area:
Mature plantation	200	200
Immature plantation	3,851	2,462


Total	4,051	2,662

Depreciation of property, plant and equipment capitalised to biological assets for the financial year ended 31 December 2010 amounted to USD 312,000 (2009: USD 53,000) (Note 12).

Employee benefit expenses capitalised to biological assets for the financial year ended 31 December 2010 amounted to USD 813,000 (2009: USD 350,000) (Note 7).

The plantations have not been insured against the risks of fire, diseases and other possible risks.

The Group is exposed to a number of risks related to its oil-palm plantations:

Regulatory and environmental risks

The Group is subject to laws and regulations in Malaysia. The Group has established environmental policies and procedures aimed at compliance with local environmental and other laws. Management performs regular reviews to identify environmental risks and to ensure that the systems in place are adequate to manage those risks.

13. Biological assets (cont'd)

Climate and other risks

The Group's oil-palm tree plantations are exposed to the risk of damage from climatic changes, diseases and other natural forces. The Group has extensive processes in place aimed at monitoring and mitigating those risks, including regular tree health inspections and industry pest and disease surveys.

14. Land use rights

	2010	2009
	USD'000	USD'000

At 1 January	20,950	6,178
Arising from acquisition of subsidiary (Note 1)	10,702	14,808
Amortisation charge for the year	(406)	(105)
Exchange differences	2,300	69


At 31 December	33,546	20,950


Amount to be amortised
- Not later than one year	605	379
- Later than one year but not more than five years	2,419	1,516
- Later than five years	30,522	19,055


	33,546	20,950

Land use rights represent the cost of land use rights owned by the Group. The land use rights are transferable and have a remaining tenure of 53 to 57 years (2009: 54 to 58 years).

Land use rights arose from the acquisition of the subsidiaries. The subsidiaries were granted a provisional registered lease in accordance with the provisions of the Land Code of Sarawak, Malaysia, for the use of the agricultural land for a period of 60 years by the relevant government agency. As has been the practise in East Malaysia to date, registered leases are able to be renewed at expiry for a further period of 60 years with the payment of a modest land premium per acre set annually by the State of Sarawak.

The land use rights were pledged to secure the bank overdraft, short term revolving credit and term loans facilities as mentioned in Note 21.

15. Goodwill on consolidation

	2010	2009
	USD'000	USD'000
		Restated
At 1 January	4,365	192
Arising from the acquisition of a subsidiary	2,712	4,003
Arising from the acquisition of additional equity interest in a subsidiary	-	168
Exchange differences	483	2


At 31 December	7,560	4,365

Goodwill has an indefinite useful life and is subject to annual impairment testing.

(a) Impairment testing of goodwill

Goodwill arising from business combinations is allocated to the cash-generating unit for the purpose of impairment testing. The cash-generating unit is as follows:

	2010	2009
	USD'000	USD'000
		Restated

Plantation Estates
Goodwill	7,560	4,365

The recoverable value of the goodwill of plantation estates as at 31 December 2010 was determined based on value-in-use calculations using cash flow projections, covering a period of 25 productive years of oil palms, from financial budgets approved by management. The calculations were based on the following key assumptions:

	2010	2009

Discount rate (pre-tax)	9.6%	8.9%

Projected CPO price	USD 741/tonne	USD 584/tonne

(b) Key assumptions used in value-in-use calculations

The calculations of value-in-use are most sensitive to the following assumptions:

CPO price - The CPO price is based on Peninsula Malaysia delivered price as published by the Malaysia Palm Oil Board.

Discount rate - The discounted rate reflects the current market assessment of the risk specific to palm oil industry. The discount rate applied to the cash flow projection is pre-tax and derived from the weighted average cost of equity and cost of debt, calculated based on the subsidiaries' actual composition of the equity and debt of the plantation estates.

Based on the above analysis, management has assessed that the goodwill is not impaired as at 31 December 2010 and 2009.

16. Inventories

	2010	2009
	USD'000	USD'000
At cost:

Chemicals and fertilisers	64	20
Consumable supplies	58	25


	122	45

17. Trade and other receivables

	2010	2009
	USD'000	USD'000

Trade receivables	48	25

Other receivables:
Deposits	72	3
Sundry receivables	73	152


Total trade and other receivables	193	180

Add: Cash and bank balances (Note 18)	1,247	4,174


Total loans and receivables	1,440	4,354

Trade receivables

Trade receivables are non-interest bearing and are generally 7 to 15 days' (2009: 7 to 15 days') terms. They are recognised at their original invoice amounts which represent their fair values on initial recognition.

Trade and other receivables are not denominated in the functional currencies of the respective entities are as follows:

	2010	2009
	USD'000	USD'000

Singapore Dollars ("SGD")	33	6
Sterling Pound ("GBP")	-	23

Other information on financial risk of trade and other receivables is disclosed in Note 28(a).

18. Cash and bank balances

	2010	2009
	USD'000	USD'000

Cash on hand and at banks	1,247	4,174

Cash at banks earn interest at floating rates based on daily bank deposit rates.

As at 31 December 2010, the amount of undrawn borrowing facilities that may be available in the future amounts to USD 14,489,000 (2009: USD 5,758,000).

Cash and bank balances are not denominated in the functional currencies of the respective entities are as follows:

	2010	2009
	USD'000	USD'000

SGD	184	1,040
USD	1	-
GBP	5	-

For the purpose of the consolidated cash flow statement, cash and cash equivalents comprise the following at the end of the reporting period:

	2010	2009
	USD'000	USD'000

Cash on hand and at banks	1,247	4,174
Bank overdraft (Note 21)	(228)	-


	1,019	4,174

19. Trade and other payables

	2010	2009
	USD'000	USD'000

Trade payables	470	239
Other payables	325	345
Amount due to a Director of a subsidiary	-	1


Total trade and other payables	795	585
Add:
- Other liabilities (Note 20)	253	798
- Loans and borrowings (Note 21)	38,571	22,479


Total financial liabilities carried at amortised cost	39,619	23,862

19. Trade and other payables (cont'd)

Trade and other payables are not denominated in the functional currencies of the respective entities are as follows:

	2010	2009
	USD'000	USD'000

SGD	14	1
GBP	-	93

Trade payables/other payables

These amounts are non-interest bearing. Trade payables are normally settled on 60 days (2009: 60 days) terms while other payables have an average term of 180 days (2009: 180 days).

Amount due to a Director of a subsidiary

The amount was non-interest bearing, unsecured and repayable on demand.

Other information on financial risks of trade and other payables is disclosed in Note 28(b).

20. Other liabilities

	2010	2009
	USD'000	USD'000

Accrued operating expenses	168	695
Retention monies	69	103
Deposits received	16	-


	253	798

Retention monies represent a 5% deduction of each progress payment claimed by contractors and it shall be payable to the contractors four months after completion of work, less any deductions for breaches of contracts.

21. Loans and borrowings

	2010	2009
	USD'000	USD'000

Bank overdraft	228	-
Short term revolving credit	1,946	1,752
Term loans	35,956	20,582


	38,130	22,334
Add: Obligations under finance leases (Note 25(c))	441	145


	38,571	22,479


Current
Bank overdraft	228	-
Short term revolving credit	1,946	1,752
Term loans	6	765
Obligations under finance leases	87	27


	2,267	2,544


Non-current
Term loans	35,950	19,817
Obligations under finance leases	354	118


	36,304	19,935


Total loans and borrowings	38,571	22,479


Maturity of loans and borrowings (excluding obligations under finance leases)

Within one year	2,180	2,517
After one year but not more than five years	4,086	13,496
More than five years	31,864	6,321


	38,130	22,334

21. Loans and borrowings (cont'd)

Details of the loans and borrowings are as follows:

Bank overdraft

The bank overdraft is denominated in RM and bears interest at base lending rate plus 1% per annum. It is repayable on demand and is secured by over a long leasehold land of which the Group has prepaid the rights to use the land as disclosed in Note 14.

Short term revolving credit and term loans

The short term revolving credit is denominated in RM and bears interest at the rate of the bank's cost of fund plus 1.75% per annum. It is repayable on demand and has a six months' rollover period upon maturity.

The term loans are denominated in RM and bear interest ranging from the rate of the bank's cost of fund plus 1.75% per annum to base lending rate plus 1% per annum. They are repayable over a range of 6 to 6.5 years.

The short term revolving credit and term loans of the subsidiaries are secured by 1st party 1st legal charge, 1st party 2nd legal charge and 3rd party 4th legal charge over the rights to use a long term leasehold land of which the Group has prepaid the lease payments relating to the land as disclosed in Note 14.

Obligations under finance leases

The Group entered into finance leases agreements denominated in RM for the purchase of certain property, plant and equipment incidental to the ordinary course of the business. These finance leases expire within the next 2 to 5 years. The interest rates of these finance leases range from 4.92% to 8.37% (2009: 6.09% to 7.86%) per annum.

Future minimum lease payments under finance leases together with the present value of the net minimum lease payments are disclosed Note 25(c).

22. Deferred tax liabilities

Deferred tax liabilities comprise the following:

Group	At 1 January 2010	Arising from acquisition of subsidiary	Recognised in profit or loss	Exchange differences	At 31 December 2010
	USD'000	USD'000	USD'000	USD'000	USD'000
	Restated

Deferred tax liabilities

Accelerated depreciation for tax purpose	44	266	672	34	1,016
Biological assets	779	-	892	123	1,794
Revaluation of land use rights to fair value	4,751	2,281	(92)	520	7,460


	5,574	2,547	1,472	677	10,270



Deferred tax assets
Unutilised tax losses	(786)	(561)	(970)	(127)	(2,444)
Unabsorbed capital and agricultural allowances	(1,106)	(62)	(697)	(151)	(2,016)


	(1,892)	(623)	(1,667)	(278)	(4,460)


Total	3,682	1,924	(195)	399	5,810

22. Deferred tax liabilities (cont'd)

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current income tax assets against current income tax liabilities and when the deferred taxes relate to the same taxation authority. The following amounts, determined after appropriate offsetting, were shown in the statement of financial position.

	2010	2009
	USD'000	USD'000
Deferred tax assets	-	-


Deferred tax liabilities	5,810	3,682

The availability of the unutilised tax losses and unabsorbed capital and agricultural allowances for offsetting against future taxable profits of the subsidiaries are subject to the provisions of the Malaysian Income Tax Act, 1967.

23. Share capital

	2010		2009
	No. of shares '000	USD'000	No. of shares '000	USD'000

Issued and fully paid ordinary shares
At 1 January	29,577	35,459	20,260	5,849
Adjustment due to pooling of interest method	-	-	(20,260)	(5,849)
Addition during the year	3,868	6,752	7,077	8,714
Issuance of new shares as consideration for acquisition of a subsidiary company	-	-	22,500	26,905
Share issuance expenses	-	-	-	(160)


At 31 December	33,445	42,211	29,577	35,459

The holders of ordinary shares are entitled to receive dividends as and when declared by the Company. Each ordinary share carries one vote per share without restriction. The ordinary shares have no par value.

24. Other reserves

The composition of other reserves is as follows:

	2010	2009
	USD'000	USD'000
		Restated

Merger reserve	(20,256)	(20,256)
Foreign currency translation reserve	1,261	(192)


	(18,995)	(20,448)

Merger reserve

This represents the difference between the consideration paid and the share capital of the "acquired" entity, APS.

Foreign currency translation reserve

The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of companies in the Group whose functional currencies are different from that of the Group's presentation currency.

	2010	2009
	USD'000	USD'000
		Restated

At 1 January	(192)	13
Foreign currency translation adjustments	1,453	(205)


At 31 December	1,261	(192)

25. Commitments and contingencies

(a) Capital commitments

Capital commitments contracted for at the end of the reporting period not recognised in the financial statements are as follows:

	2010	2009
	USD'000	USD'000

Approved and contracted for:
- property, plant and equipment	337	608
- biological assets	-	3,607

Approved and not contracted for:
- property, plant and equipment	17,157	4,446
- biological assets	6,546	1,552


	24,040	10,213

(b) Operating lease commitments

As lessee

The Group has no operating lease commitments other than the land use rights as mentioned in Note 14.

25. Commitments and contingencies (cont'd)

As lessee

The Group has finance leases for certain property, plant and equipment. These leases have terms of renewal but no purchase options and escalation clauses. Renewals are at the option of the specific entity that holds the lease.

Future minimum lease payments under finance leases together with the present value of the net minimum lease payments are as follows:

	2010		2009
	Minimum lease payments	Present value of minimum lease payments		Minimum lease payments	Present value of minimum lease payments
	USD'000	USD'000		USD'000	USD'000

Not later than one year	115	87		37	27
Later than one year but not more than five years	329	287		134	118
More than five years	67	67		-	-


Total minimum lease payments	511	441		171	145
Less: Amount representing finance charges	(70)	-		(26)	-


Present value of minimum lease payments	441	441		145	145

26. Related party disclosures

In addition to those related party information provided elsewhere in the relevant notes to the consolidated financial statements, the following are the significant transactions between the Group and related parties (who are not members of the Group) that took place during the financial years ended 31 December 2010 and 2009 at the terms agreed between the parties, which are conducted at arm's length.

	2010	2009
	USD'000	USD'000
(a) Transactions with Directors:
- Repayment of advances from a Director of a subsidiary	-	103


(b) Transactions with related companies
- Construction of estate housing	643	-
- Expenses payable	113	-

Compensation of key management personnel

	2010	2009
	USD'000	USD'000

Directors' salaries	338	22
Directors' fees (Note 7)	82	10
Short term employee benefits	189	54
Contributions to defined contribution plans	23	6


	632	92


Comprise amounts paid to:
- Directors of the Company	420	32
- Other key management personnel	212	60


	632	92

27. Fair value of financial instruments

(a) Fair value of financial instruments that are carried at fair value

The Group does not have any financial instruments carried at fair value.

(b) Fair value of financial instruments by classes that are not carried at fair value and whose carrying amounts are reasonable approximation of fair value

Trade and other receivables, Cash and bank balances, Trade and other payables, Other liabilities and Loans and borrowings (excluding obligations under finance leases).

The carrying amounts of these financial assets and liabilities are reasonable approximation of fair values, either due to their short-term nature or they are floating rate instruments that are re-priced to market interest rates on or near the end of the reporting period.

(c) Fair value of financial instruments by classes that are not carried at fair value and whose carrying amounts are not reasonable approximation of fair value

The fair value of financial assets and liabilities by classes that are not carried at fair value and whose carrying amounts are not reasonable approximation of fair value are as follows:

	Carrying Amount		Fair Value
	2010	2009	2010	2009
	USD'000	USD'000	USD'000	USD'000

Financial liabilities:
- Obligations under finance leases	441	145	463	151

28. Financial risk management objectives and policies

The Group are exposed to financial risks arising from its operations and the use of financial instruments. The key financial risks include credit risk, liquidity risk and interest rate risk. The board of Directors reviews and agrees policies and procedures for the management of these risks. It is, and has been throughout the current and previous financial year, that the Group's policy is that no derivatives shall be undertaken except for the use as hedging instruments where appropriate and cost-efficient.

The following sections provide details regarding the Group's exposure to the above-mentioned financial risks and the objectives, policies and processes for the management of these risks.

There has been no change to the Group's exposure to these financial risks or the manner in which it manages and measures the risks.

(a) Credit risk

Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. The Group's exposure to credit risk arises primarily from trade receivables.

The Group currently does not have significant exposure to credit risk as majority of the oil palm plantation is still in development stage. There is minimal credit risk arising from other receivables as the amount is mainly on advance of diesel to contractors and will be set off against services provided by those contractors (or debtors) to the Group. Cash are placed in accounts with licensed banks.

Exposure to credit risk

At the end of the reporting period, the Group's maximum exposure to credit risk is represented by the carrying amount of each class of financial assets recognised in the statement of financial position.

Credit risk concentration profile

The Group determines concentrations of credit risk by monitoring individual customers' outstanding balances on an ongoing basis. The trade receivables at the end of reporting period is relating to only one customer (2009: one customer).

Financial assets that are neither past due nor impaired

Trade and other receivables that are neither past due nor impaired are due from creditworthy debtors with good payment record with the Group. Cash at banks that are neither past due nor impaired are placed with or entered into with reputable financial institutions or companies with high credit ratings and no history of default.

Financial assets that are either past due or impaired

The Group does not have any financial assets that are either past due or impaired.

28. Financial risk management objectives and policies (cont'd)

(b) Liquidity risk

Liquidity risk is the risk that the Group will encounter difficulty in meeting obligations associated with financial liabilities.

The Group's exposure to liquidity risk arise primarily from mismatches of the maturities of financial assets and liabilities.

To manage the liquidity risk, the Group actively monitors its cash flows and reduces unnecessary operational expenditure and limits capital expenditure to key assets. Sufficient banking facilities are maintained to meet the Group's liquidity requirements. The Group is given four years moratorium period for its loan repayment which will only commence when the Group is able to generate steady income from crop sale in the fifth year from planting. Short term revolving credit was drawn for a period of six months and can be rolled over upon maturity as it is an ongoing working capital facility offered by the bank. In addition, the Company will increase equity through share placement as and when required.

Analysis of financial instruments by remaining contractual maturities

The table below summarises the financial assets and liabilities at the end of the reporting period based on contractual undiscounted repayment obligations.

	1 year or less	1 to 5 years	Over 5 years	Total
	USD'000	USD'000	USD'000	USD'000
2010

Financial assets:
Trade and other receivables	193	-	-	193
Cash and bank balances	1,247	-	-	1,247


Total undiscounted financial assets	1,440	-	-	1,440


Financial liabilities:
Trade and other payables	(795)	-	-	(795)
Other liabilities	(253)	-	-	(253)
Loans and borrowings	(2,304)	(6,561)	(30,291)	(39,156)


Total undiscounted financial liabilities	(3,352)	(6,561)	(30,291)	(40,204)


Total net undiscounted financial liabilities	(1,912)	(6,561)	(30,291)	(38,764)

28. Financial risk management objectives and policies (cont'd)

(b) Liquidity risk (cont'd)

Analysis of financial instruments by remaining contractual maturities (cont'd)

	1 year or less	1 to 5 years	Over 5 years	Total
Group	USD'000	USD'000	USD'000	USD'000
2009

Financial assets:
Trade and other receivables	180	-	-	180
Cash and bank balances	4,174	-	-	4,174


Total undiscounted financial assets	4,354	-	-	4,354

Financial liabilities:
Trade and other payables	(585)	-	-	(585)
Other liabilities	(798)	-	-	(798)
Loans and borrowings	(1,789)	(2,287)	(18,535)	(22,611)


Total undiscounted financial liabilities	(3,172)	(2,287)	(18,535)	(23,994)


Total net undiscounted financial assets/(liabilities)	1,182	(2,287)	(18,535)	(19,640)

Interest rate risk is the risk that the fair value or future cash flows of the Group's financial instruments will fluctuate because of changes in market interest rates.

The Group's exposure to interest rate risk mainly arises from its financial assets and liabilities which bear interest at floating rates.

Borrowings with floating interest rates expose the Group to certain elements of risk when there are unexpected adverse interest rate movements. The Group's policy is to manage its interest rate risk on an on-going basis, decision on whether to borrow at fixed or floating interest rates depends on the situation and the outlook of the financial market.

28. Financial risk management objectives and policies (cont'd)

Sensitivity analysis for interest rate risk

As at 31 December 2010, had the interest rates of the financial assets and liabilities which are at floating rates been 1% higher/lower (2009: 1%), ceteris paribus, the impact would be as follows:

	2010	2009
	USD'000	USD'000

Effect on borrowing cost:
- +1%	291	223
- -1%	(291)	(223)

29. Capital management

The primary objective of the Group's capital management is to ensure that it maintains healthy capital ratios in order to support its business and maximise shareholder value.

The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. No changes were made in the objectives, policies or processes during the financial years ended 31 December 2010 and 2009.

The Group monitors capital using a gearing ratio, which is loans and borrowings divided by total equity plus loans and borrowings. The Group's policy is to keep the gearing ratio below 75%.

	2010	2009
	USD'000	USD'000
		Restated
Loans and borrowings (Note 21)	38,571	22,479
Total equity	18,002	13,408

Gearing ratio	68%	63%

30. Segment information

The Group is organised and managed as one segment and the CODM reviews the profit or loss of the entity as a whole, which is the plantation segment and in one geographical location, Malaysia. Accordingly, no segmental information is prepared based on business segment or on geographical distribution as it is not meaningful.

31. Pooling of interest method of accounting

Pursuant to an agreement dated 9 November 2009, the Company acquired the entire issued and paid-up capital of APS at par, comprising 22,500,000 ordinary shares of RM 1 each, in exchange for 22,500,000 shares of the Company. As this arrangement constitutes a combination of entities under common control, the pooling of interest method of accounting was adopted in the preparation of the consolidated financial statements of the Group. Under this method of accounting, the results and cash flows of the Company and its subsidiaries and their assets and liabilities are combined at the amounts at which they were previously recorded as if they had been part of the Group for the whole of the current and preceding periods.

32. Prior year adjustments

Prior year adjustments comprise deferred tax liability arising from fair value acquisition of subsidiary in prior year and reversal of temporary difference on deferred tax. These adjustments have been made in accordance with the provisions of IFRS 3 Business Combinations (revised) and represent adjustments to complete the initial accounting for the acquisition of subsidiary arising from purchase price allocation.

The effects of these changes on accumulated losses are as follows:

Effect on accumulated losses:

		USD'000

Balance at 1 January 2009, as previously reported		(377)


Loss attributable to owners of the parent, as previously reported		(1,371)
Effect of prior year adjustments		145

Loss attributable to owners of the parent, as restated		(1,226)



Balance at 31 December 2009, as restated		(1,603)


Balance at 1 January 2010, as previously reported		(1,748)
Effect of prior year adjustments		145


Balance at 1 January 2010, as restated		(1,603)
Loss attributable to owners of the parent		(3,611)


Balance at 31 December 2010		(5,214)

32. Prior year adjustments (cont'd)

The following comparative figures in the consolidated income statement, consolidated statement of comprehensive income and consolidated statement of financial position have been restated for the prior year adjustments: -


		As restated		As previously reported
		USD'000		USD'000
Consolidated income statement and consolidated statement of comprehensive income

For the year ended 31 December 2009

Income tax benefit		145		-
Loss for the year		(1,242)		(1,387)
Other comprehensive income		(199)		(203)
Total comprehensive income for the year		(1,441)		(1,590)
Loss attributable to owners of the parent		(1,226)		(1,371)
Total comprehensive income attributable to owners of the parent		(1,431)		(1,580)


	As previously stated		Prior year adjustments	As restated
	USD'000		USD'000	USD'000

Consolidated statement of financial position

At 31 December 2009

Goodwill on consolidation	534		3,831	4,365
Deferred tax liabilities	-		(3,682)	(3,682)
Other reserves	(20,452)		4	(20,448)
Accumulated losses	(1,748)		145	(1,603)

33. Events occurring after the reporting period

On 19 November 2010, one of the Company's shareholders agreed to purchase a convertible unsecured bond of USD1 million which bears a cash interest coupon of 1.75% p.a., repayable semi-annually until the maturity date on 18 November 2014. The net proceeds from the bond are intended to be used for general working capital purposes augmenting the Company's existing working capital position. The convertible bond may be converted, in whole only, into 313,383 new ordinary shares of no par value in the Company, at any time until the maturity date at the bondholder's election. This represents a conversion price of 201 pence per share, at 21.8% premium to the closing price on 18 November 2010. In the event of non-conversion, the Company shall redeem the bond in whole at maturity date, such that the amount paid by the Company on redemption results in the bondholder having achieved, in respect of the bond, including coupon payments, an internal rate of return of 10%. Funds from the issuance of the bond were received on 6 January 2011 and therefore are not reflected in the financial statements for the current financial year.

On 22 February 2011, the Company has obtained the shareholders' approval on the Company Share Option Scheme. The initial options shall entitle the participants, on a cumulative basis, to subscribe for up to 3,568,000 ordinary shares, representing 8.76% of the enlarged share capital of the Company. This scheme will be adopted in order for the Company to be able to retain qualified and experienced key personnel and recruit new personnel with the necessary capabilities and high performance standards, which the Directors believe to be essential for the effectiveness and profitability of the Company.

On 28 February 2011, the Company raised an additional GBP16,000,001 (equivalent to USD 25,817,000) in equity through the placement of 7,272,728 shares. Proceeds of this placing, net of brokerage commissions, were GBP 15,426,796 (equivalent to USD 24,892,000). These additional funds enable the Group to continue its land acquisition strategy and provide working capital for plantation development.

34. Comparatives

The consolidated statement of financial position as at 1 January 2009 is not presented as there was no changes arising from the prior year adjustments.

35. Authorisation of financial statements for issue

The consolidated financial statements for the financial year ended 31 December 2010 were authorised for issue in accordance with a resolution of the Directors on 14 April 2011.

This information is provided by RNS

The company news service from the London Stock Exchange

END

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