Final Results & Notice of AGM (Replacement)
The following amendment has been made to the 'Final Results & Notice of AGM' announcement released on 01 July 2014 at 7:00a.m. under RNS No 9969K.
The words "unaudited preliminary" were changed to "audited" in the first line of the Chairman's Statement
All other details remain unchanged. The full amended text is shown below.
Asian Plantations Ltd
("APL" or the "Company")
Final Results for the year ended 31 December 2013
& Notice of Annual General Meeting
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 2013.
Highlights
§ US$23,763,000 of revenue reported (2012: US$2,820,000), an increase of 742 per cent based on the production and sale of 26,584 tonnes of crude palm oil (CPO), 5,604 tonnes of palm kernel nuts (PK) and 12,455 tonnes of fresh fruit bunches (FFB). In 2014, the Company projects the sale of 45,000 tonnes of CPO, 10,000 tonnes of PK and over 20,000 tonnes of FFB.
§ Completion of the Company's land consolidation strategy with the closure of the Grand Performance Sdn Bhd acquisition on 21 August 2013.
§ Issuance of RM155,000,000 (US$49,800,000) of fixed income notes on 15 March 2013 which completed the Company's Medium Term Note Programme. On 23 August 2013, Issuance of the last tranche of the convertible bond to OCBC Bank; the convertible bond issuances were US$15,000,000 in total with an implied conversion price of 286 pence per share.
Graeme Brown, APL's Joint Chief Executive Officer, commented
"We are pleased with the results for 2013 which reported substantial revenue growth. Taking account of our performance to date we look forward to the future with confidence
In addition to its final results for 2013, the Company announces that the Annual General Meeting ("AGM") relating to is financial year ended 31 December 2013 will be held at The American Club at 10 Claymore Hill, Singapore 229573 on 25th August 2014 at 11:00 am (local time). The AGM notice is available for download from the Company's website at www.asianplantations.com
The Company's Annual Report and Accounts for the year ended 31 December 2013 have been posted to shareholders and are also available on the Company's website at www.asianplantations.com.
-END-
For further information contact:
|
Asian Plantations Limited Graeme Brown, Co-Founder & Joint Chief Executive Officer Dennis Melka, Co-Founder & Joint Chief Executive Officer
|
Tel: +65 6325 0970
|
|
Strand Hanson Limited James Harris James Spinney
|
Tel: +44 (0) 20 7409 3494 |
|
Macquarie Capital (Europe) Limited Steve Baldwin Dan Iacopetti
|
Tel: +44 (0) 203 037 2000
|
|
Panmure Gordon (UK) Limited Tom Nicholson Callum Stewart
|
Tel: +65 6824 8204 Tel: +44 (0) 20 7886 2500 |
|
Bankside Consultants Simon Rothschild
|
Tel: +44 (0) 20 7367 8871
|
CHAIRMAN'S STATEMENT
I am pleased to present the Company's audited results for the year ended 31 December 2013.
On 24 March 2014, the Company announced that it had retained a financial advisor to co-ordinate the potential sale of Asian Plantations Limited. Whilst a difficult decision, particularly as palm oil prices remain more than 30% below their 2011 and 2012 peaks, it is appropriate to explore a sale as we have completed several important milestones since our admission to AIM ("Admission") on 30 November 2009:
§ Consolidation of our project area, culminating with the Grand Performance Sdn Bhd acquisition on 21 August 2013, giving the Company a total titled land resource of 24,622 hectares (60,840 acres) compared with 4,795 hectares (11,848 acres) at the time of Admission;
§ Opening of our state-of-the-art crushing milling facility in 2013 allowing for integrated plantation operations and sale of crude palm oil to the refineries at the port of Bintulu;
§ Planted estates totalling 16,300 hectares (40,277 acres) compared with approximately 1,500 hectares (3,706 acres) at the time of Admission.; and,
§ Excellent revenue growth since Admission from zero in 2009 to US$ 23.7m in 2013. We anticipate further growth in unit volumes in 2014 as the estates mature and an increase in third party fresh fruit bunch (FFB) processing.
As announced on 30 June 2013, discussions are on-going and we look forward to reporting a positive conclusion in due course. We appreciate our shareholders' and lenders' understanding and patience as we conduct this process. Rest assured, we seek to maximize the value of the equity capital contributed and ensure a positive future for the Company and its dedicated employees in the event of a sale.
FINANCIAL PERFOMANCE
For 2013, the Company reported substantially increased revenue but a higher loss per share due to increased interest expense associated with long term debt incurred for the opening of the processing mill and other capital expenditures.
FINANCIAL POSITION
The Company is pleased to report revenue of USD23,763,000 in 2013, an increase of 743% over the 2012 result. The Company's balance sheet as at 31 December 2013 shows a net assets position of USD43,199,000 (2012: USD57,033,000). The Company has gross indebtedness of USD151,362,000 (2012: USD123,468,000). Cash balances were USD10,813,000 at year-end 2013.
During 2014, the Company expects to sell in excess of 45,000 tonnes of palm oil (2013: 26,584 tonnes), 10,000 tonnes of palm kernel nuts (2013: 5,604 tonnes) and 20,000 tonnes of FFB (2013: 12,455).
FINANCING ACTIVITIES
On 15 March 2013, the Company issued the second and final tranche of loan notes totalling RM155,000,000 (USD49,800,000) under its RM255,000,000 bond programme. The notes have maturities ranging from four to eight years and were issued via Maybank Investment Bank, a leading Southeast Asian investment bank. The notes are unconditionally guaranteed by Maybank and therefore were accorded an AAA rating in the local market. The all-in interest cost to the Company, including the annual bank guarantee fee, is 5.85%, 5.95%, 6.05%, 6.15% and 6.25% for the four, five, six, seven and eight year notes, respectively. This represents a 269 basis point ("bps") premium for the four year tranche over the equivalent four year Malaysian Government Securities ("MGS"), then trading at 3.16% and a 282 bps premium over the equivalent eight year MGS then trading at 3.43%.
Additionally in 2013, the Company issued convertible unsecured bonds in three tranches totalling USD15,000,000 to OCBC Capital Investment I Pte Ltd, a wholly owned subsidiary of OCBC Bank ("OCBC"). OCBC is one of the largest banks in Southeast Asia and its securities are publicly traded on the Singapore Stock Exchange. The convertible bonds bear a cash interest coupon of three month Libor + 2.00 per cent per annum, which is payable quarterly in arrears until the three year maturity is reached in 14 January 2016. The convertible bonds may be converted into a maximum of 3,260,041 new ordinary shares of the Company. This implies a conversion price of 286 pence per share.
OPERATIONS & PLANTING STRATEGY
We have five wholly-owned estates:
|
BJ Corporation |
4,795 |
ha |
|
Incosetia |
5,839 |
ha (acquired 30th December 2009) |
|
Fortune |
5,136 |
ha (acquired 30th December 2010) |
|
Dulit |
5,000 |
ha (acquired 28th February 2012) |
|
GP |
3,852 |
Ha (acquired 21st August 2013) |
|
Total |
24,622 |
ha (approximately 60,840 acres) |
As at year-end 2013, the Company had approximately 16,300 hectares of land planted, with a further 157 hectares being used for the mill site, seedling nurseries, staff housing, quarry and related infrastructure works essential for plantation operations. Whilst lower than expected, this compares favourably with 13,627 hectares planted as at year-end 2012. The Company believes that the total planted area can reach 21,000 hectares, subject to sufficient working capital, over the next two years.
It is important to note that the Company'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 Company 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, and we also take this opportunity to thank our bankers at Malayan Banking Berhad and OCBC for their continued support of our operations. Founded in 2008, the Company is now in its seventh year of heavy capital investment. We expect this investment to yield substantial cash flows to shareholders in the medium to long term, as our planting works are completed and estates mature.
The remainder of 2014 will be an exciting period for the Company, as we continue to plant out the estates and increase volume at our milling facility. We look forward to reporting progress in the months ahead.
TAN SRI Datuk Linggi
Non-Executive Chairman
Consolidated Income Statement
For the year ended 31 December 2013
|
|
Note |
|
2013 |
|
2012 |
|
|
|
|
USD'000 |
|
USD'000 |
|
|
|
|
|
|
|
|
Revenue |
6 |
|
23,763 |
|
2,820 |
|
|
|
|
|
|
|
|
Cost of sales |
7 |
|
(27,477) |
|
(2,225) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross (loss)/profit |
|
|
(3,714) |
|
595 |
|
|
|
|
|
|
|
|
Other operating income |
8 |
|
4,184 |
|
2,507 |
|
Administrative expenses |
9 |
|
(3,406) |
|
(5,139) |
|
Other operating expenses |
10 |
|
(1,294) |
|
(1,554) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss |
|
|
(4,230) |
|
(3,591) |
|
|
|
|
|
|
|
|
Finance costs |
11 |
|
(7,223) |
|
(3,481) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before tax |
|
|
(11,453) |
|
(7,072) |
|
|
|
|
|
|
|
|
Income tax benefit |
13 |
|
1,052 |
|
193 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss for the year |
|
|
(10,401) |
|
(6,879) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable to: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Owners of the Company |
|
|
(10,400) |
|
(6,879) |
|
Non-controlling interests |
|
|
(1) |
|
-* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(10,401) |
|
(6,879) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per share attributable to owners of the Company (cents per share) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
14 |
|
(22.3) |
|
(14.8) |
|
|
|
|
|
|
|
|
Diluted |
14 |
|
(22.3) |
|
(14.8) |
|
|
|
|
|
|
|
* Amount less than USD1,000
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2013
|
|
|
|
2013 |
|
2012 |
|
|
|
|
USD'000 |
|
USD'000 |
|
|
|
|
|
|
|
|
Loss for the year |
|
|
(10,401) |
|
(6,879) |
|
|
|
|
|
|
|
|
Other comprehensive income |
|
|
|
|
|
|
Items that may be reclassified subsequently to profit or loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments |
|
|
(3,949) |
|
2,453 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income for the year, net of tax |
|
|
(14,350) |
|
(4,426) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable to: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Owners of the Company |
|
|
(14,349) |
|
(4,426) |
|
Non-controlling interests |
|
|
(1) |
|
-* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(14,350) |
|
(4,426) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Amount less than USD1,000
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
Consolidated Statement of Financial Position
As at 31 December 2013
|
|
|
Note |
|
2013 |
|
2012 |
||
|
|
|
|
|
USD'000 |
|
USD'000 |
||
|
|
|
|
|
|
|
|
||
|
Assets |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
||
|
Non-current assets |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
||
|
Deferred tax assets |
|
13 |
|
511 |
|
178 |
||
|
Property, plant and equipment |
|
15 |
|
63,823 |
|
53,227 |
||
|
Biological assets |
|
16 |
|
66,994 |
|
55,287 |
||
|
Land use rights |
|
17 |
|
58,042 |
|
53,517 |
||
|
Goodwill on consolidation |
|
18 |
|
7,099 |
|
7,619 |
||
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
||
|
|
|
|
|
196,469 |
|
169,828 |
||
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
||
|
Current assets |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
||
|
Inventories |
|
19 |
|
1,542 |
|
1,724 |
||
|
Trade and other receivables |
|
20 |
|
6,738 |
|
6,714 |
||
|
Income tax recoverable |
|
|
|
36 |
|
99 |
||
|
Prepayments |
|
21 |
|
1,776 |
|
2,308 |
||
|
Cash and short-term deposits |
|
22 |
|
10,813 |
|
15,785 |
||
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
||
|
|
|
|
|
20,905 |
|
26,630 |
||
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
||
|
Total assets |
|
|
|
217,374 |
|
196,458 |
||
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
||
|
Equity and liabilities |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
||
|
Equity |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
||
|
Issued capital |
|
23 |
|
89,731 |
|
88,594 |
||
|
Accumulated losses |
|
|
|
(34,045) |
|
(23,645) |
||
|
Other reserves |
|
24 |
|
(12,487) |
|
(7,916) |
||
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
||
|
Equity attributable to owners of the Company |
|
|
|
43,199 |
|
57,033 |
||
|
Non-controlling interests |
|
|
|
(4) |
|
(3) |
||
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
||
|
Total equity |
|
|
|
43,195 |
|
57,030 |
||
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
||
|
Non-current liabilities |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
||
|
Loans and borrowings |
|
25 |
|
129,123 |
|
102,709 |
||
|
Convertible bonds |
|
26 |
|
17,420 |
|
1,995 |
||
|
Deferred tax liabilities |
|
13 |
|
5,430 |
|
6,556 |
||
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
||
|
|
|
|
|
151,973 |
|
111,260 |
||
|
|
|
|
|
|
|
|
||
|
Current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade and other payables |
|
27 |
|
14,279 |
|
6,810 |
|
|
|
Other current financial liabilities |
|
28 |
|
3,078 |
|
2,464 |
|
|
|
Loans and borrowings |
|
25 |
|
4,819 |
|
18,764 |
|
|
|
Derivative financial instruments |
|
26 |
|
30 |
|
130 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,206 |
|
28,168 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
|
|
174,179 |
|
139,428 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity and liabilities |
|
|
|
217,374 |
|
196,458 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
Consolidated Statement of Changes in Equity
For the year ended 31 December 2013
|
|
Attributable to the owners of the Company |
|
Non-controlling interests |
|
Total equity |
||||||
|
|
Share capital |
|
Other reserves |
|
Accumulated losses |
|
Total |
|
|
||
|
|
USD'000 |
|
USD'000 |
|
USD'000 |
|
USD'000 |
|
USD'000 |
|
USD'000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 January 2013 |
88,594 |
|
(7,916) |
|
(23,645) |
|
57,033 |
|
(3) |
|
57,030 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss for the year |
- |
|
- |
|
(10,400) |
|
(10,400) |
|
(1) |
|
(10,401) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments |
- |
|
(3,949) |
|
- |
|
(3,949) |
|
- |
|
(3,949) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income for the year |
- |
|
(3,949) |
|
(10,400) |
|
(14,349) |
|
(1) |
|
(14,350) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of ordinary shares pursuant to share-based payment plans |
1,137 |
|
(826) |
|
- |
|
311 |
|
- |
|
311 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based payment transactions (Note 29) |
- |
|
204 |
|
- |
|
204 |
|
- |
|
204 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 December 2013 |
89,731 |
|
(12,487) |
|
(34,045) |
|
43,199 |
|
(4) |
|
43,195 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Statement of Changes in Equity
For the year ended 31 December 2013 (cont'd)
|
|
Attributable to the owners of the Company |
|
Non-controlling interests |
|
Total equity |
||||||
|
|
Share capital |
|
Other reserves |
|
Accumulated losses |
|
Total |
|
|
||
|
|
USD'000 |
|
USD'000 |
|
USD'000 |
|
USD'000 |
|
USD'000 |
|
USD'000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 January 2012 |
87,321 |
|
(11,430) |
|
(16,769) |
|
59,122 |
|
- |
|
59,122 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss for the year |
- |
|
- |
|
(6,879) |
|
(6,879) |
|
- * |
|
(6,879) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments |
- |
|
2,453 |
|
- |
|
2,453 |
|
- |
|
2,453 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income for the year |
- |
|
2,453 |
|
(6,879) |
|
(4,426) |
|
- * |
|
(4,426) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of ordinary shares pursuant to share-based payment plans |
97 |
|
(67) |
|
- |
|
30 |
|
- |
|
30 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based payment transactions (Note 29) |
- |
|
1,128 |
|
- |
|
1,128 |
|
- |
|
1,128 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of ordinary shares pursuant to conversion of convertible bond |
1,176 |
|
- |
|
- |
|
1,176 |
|
- |
|
1,176 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dilution of interest in a subsidiary |
- |
|
- |
|
3 |
|
3 |
|
(3) |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 December 2012 |
88,594 |
|
(7,916) |
|
(23,645) |
|
57,033 |
|
(3) |
|
57,030 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Amount less than USD1,000
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
Consolidated Statement of Cash Flows
For the year ended 31 December 2013
|
|
2013 |
|
2012 |
|
|
USD'000 |
|
USD'000 |
|
|
|
|
|
|
Operating activities |
|
|
|
|
Loss before tax |
(11,453) |
|
(7,072) |
|
|
|
|
|
|
Adjustments to reconcile loss before tax to net cash flows: |
|
|
|
|
Amortisation of land use rights |
1,002 |
|
924 |
|
Depreciation of property, plant and equipment |
1,508 |
|
251 |
|
Gain arising on fair value changes in biological assets |
(3,183) |
|
(1,989) |
|
Gain arising from changes in fair value of embedded derivative of the convertible bonds |
(721) |
|
(172) |
|
(Gain)/loss on disposal of property, plant and equipment |
(6) |
|
1 |
|
Impairment of goodwill |
- |
|
5 |
|
Interest income |
(245) |
|
(280) |
|
Interest expense |
7,223 |
|
3,481 |
|
Share-based payment transaction expense |
64 |
|
1,001 |
|
Unrealised loss/(gain) on foreign exchange |
95 |
|
(159) |
|
|
|
|
|
|
Working capital adjustments: |
|
|
|
|
Decrease/(increase) in inventories |
65 |
|
(1,366) |
|
Increase in trade and other receivables and prepayments |
(60) |
|
(2,417) |
|
Increase in trade and other payables |
3,780 |
|
6,822 |
|
|
|
|
|
|
|
|
|
|
|
Cash flows used in operating activities |
(1,931) |
|
(970) |
|
|
|
|
|
|
Income taxes refund/(paid), net of refund |
48 |
|
(89) |
|
Interest received |
245 |
|
280 |
|
Interest paid |
(5,540) |
|
(3,190) |
|
|
|
|
|
|
|
|
|
|
|
Net cash flows used in operating activities |
(7,178) |
|
(3,969) |
|
|
|
|
|
|
|
|
|
|
|
Investing activities |
|
|
|
|
|
|
|
|
|
Purchase of property, plant and equipment |
(17,357) |
|
(37,056) |
|
Proceeds from sale of property, plant and equipment |
7 |
|
20 |
|
Purchase of land use rights |
(870) |
|
(21,044) |
|
Additions to biological assets |
(10,979) |
|
(27,912) |
|
Acquisition of a subsidiary (Note 1(b)) |
(3,301) |
|
(3) |
|
|
|
|
|
|
|
|
|
|
|
Net cash flows used in investing activities |
(32,500) |
|
(85,995) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing activities |
|
|
|
|
|
|
|
|
|
|
|
Proceeds from exercise of share options |
311 |
|
30 |
|
|
Repayment of term loan |
(38,611) |
|
(5) |
|
|
Proceeds from term loans |
12,284 |
|
45,349 |
|
|
Repayment of short-term revolving credit |
(1,828) |
|
- |
|
|
Proceeds from Bank Guaranteed Medium Term Notes Programme |
46,675 |
|
31,954 |
|
|
Short-term deposit pledged for a banking facility and supply of goods |
76 |
|
(888) |
|
|
Payment of finance lease liabilities |
(539) |
|
(380) |
|
|
Proceeds from issuance of convertible bonds |
14,981 |
|
- |
|
|
Issuance expense on liability component of convertible bonds |
(544) |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash flows from financing activities |
32,805 |
|
76,060 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net decrease in cash and cash equivalents |
(6,873) |
|
(13,904) |
|
|
Net foreign exchange difference |
158 |
|
714 |
|
|
Cash and cash equivalents at 1 January |
14,188 |
|
27,378 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at 31 December (Note 22) |
7,473 |
|
14,188 |
|
|
|
|
|
|
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
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 2013, the details of subsidiaries are as follows:
|
|
|
|
|
|
Proportion of ownership interest |
||
|
Subsidiaries |
Country of incorporation |
|
Activities |
|
2013 |
|
2012 |
|
|
|
|
|
|
% |
|
% |
|
|
|
|
|
|
|
|
|
|
Asian Plantations (Sarawak) Sdn. Bhd. ("APS") (1) |
Malaysia |
|
Investment holding |
|
100 |
|
100 |
|
|
|
|
|
|
|
|
|
|
Asian Plantations (Sarawak) II Sdn. Bhd. ("APS II") (1) |
Malaysia |
|
Investment holding |
|
100 |
|
100 |
|
|
|
|
|
|
|
|
|
|
Asian Plantations (Sarawak) III Sdn. Bhd. ("APS III") (1) |
Malaysia |
|
Investment holding |
|
100 |
|
100 |
|
|
|
|
|
|
|
|
|
|
South Asian Farms Sdn. Bhd. ("SAF") (1) (2) |
Malaysia |
|
Dormant |
|
- |
|
100 |
|
|
|
|
|
|
|
|
|
|
Held through APS: |
|
|
|
|
|
|
|
|
BJ Corporation Sdn. Bhd. ("BJ") (1) |
Malaysia |
|
Oil-palm plantation |
|
100 |
|
100 |
|
|
|
|
|
|
|
|
|
|
Incosetia Sdn. Bhd. ("Incosetia") (1) |
Malaysia |
|
Oil-palm plantation |
|
100 |
|
100 |
|
|
|
|
|
|
|
|
|
|
Fortune Plantation Sdn. Bhd. ("Fortune") (1) |
Malaysia |
|
Oil-palm plantation |
|
100 |
|
100 |
|
|
|
|
|
|
|
|
|
|
Asian Plantations Milling Sdn. Bhd. ("APM") (1) |
Malaysia |
|
Oil-palm milling |
|
100 |
|
100 |
|
|
|
|
|
|
|
|
|
|
Held through Incosetia : |
|
|
|
|
|
|
|
|
South Asian Farms Sdn. Bhd. (1) (2) |
Malaysia |
|
Dormant |
|
100 |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proportion of ownership interest |
||
|
Subsidiaries |
Country of incorporation |
|
Activities |
|
2013 |
|
2012 |
|
|
|
|
|
|
% |
|
% |
|
Held through APS II : |
|
|
|
|
|
|
|
|
Kronos Plantation Sdn. Bhd. ("KP") (1) |
Malaysia |
|
Oil-palm plantation |
|
100 |
|
100 |
|
|
|
|
|
|
|
|
|
|
Grand Performance Sdn. Bhd. ("GP") (1) |
Malaysia |
|
Oil-palm plantation |
|
100 |
|
- |
|
|
|
|
|
|
|
|
|
|
Held through APS III : |
|
|
|
|
|
|
|
|
Jubilant Paradise Sdn. Bhd. ("JP") (1) |
Malaysia |
|
Oil-palm plantation |
|
60 |
|
60 |
(1) Audited by member firm of Ernst & Young Global in Malaysia.
(2) During the year, the ownership of SAF has been transferred from the Company to Incosetia.
Acquisition in 2013
Acquisition of Grand Performance Sdn. Bhd.
On 19 August 2013, the Group acquired 100% equity interest in a new subsidiary, GP, which has land use rights over 3,852 hectares of agricultural land, for a purchase consideration of RM25.7 million (or approximately USD7,808,000), to be satisfied by cash. The acquisition of this subsidiary increased the Group's agricultural land bank at time of increasing scarcity of agricultural land in Malaysia. At date of acquisition, GP has yet to commence any planting activities or operations, and hence this acquisition represents purchase of assets by the Group with no goodwill arising on acquisition.
Assets acquired and liabilities assumed:
The fair values of the identifiable assets and liabilities of GP at the date of the acquisition were:
|
|
|
USD'000 |
|
|
Assets |
|
|
|
|
Land use rights |
|
8,228 |
|
|
Cash at bank |
|
303 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,531 |
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
Other payables |
|
(723) |
|
|
|
|
|
|
|
|
|
|
|
|
Total identifiable net assets at fair value |
|
7,808 |
|
|
|
|
|
|
|
|
|
|
|
|
Purchase consideration transferred |
|
|
|
|
Cash paid |
|
3,604 |
|
|
Remaining consideration payable in cash |
|
4,204 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,808 |
|
|
|
|
|
|
|
Effect of the acquisition on cash flows |
|
|
|
Net cash acquired with the subsidiary |
|
303 |
|
Cash paid |
|
(3,604) |
|
|
|
|
|
|
|
|
|
Net cash outflow on acquisition |
|
(3,301) |
|
|
|
|
Transaction costs of USD68,000 have been expensed and are included in administrative expenses.
Acquisitions in 2012
Acquisition of South Asian Farms Sdn. Bhd.
On 24 September 2012, the Group acquired a new subsidiary, SAF, which was a dormant company, and therefore does not have a material effect on the financial results and financial position of the Group. There were no acquisition related expenses arising from the acquisition of this subsidiary. As SAF is a dormant company, there was no fair value adjustment to be recognised. At the date of acquisition of SAF, the only identifiable assets and liabilities are payables of USD2,000. Goodwill arising on initial recognition of USD5,000 was subsequently impaired in view of the inactivity of this company. The purchase consideration for the acquisition of SAF amounted to USD3,000.
2. Fundamental accounting concept
For the financial year ended 31 December 2013, the Group incurred a loss of USD10,401,000, and as at that date, the Group's current liabilities exceeded its current assets by USD1,301,000. These factors indicate the existence of a material uncertainty which may cast doubt about the Group's ability to operate as a going concern.
Nevertheless, these financial statements are prepared on a going concern basis because of the following assumptions and measures undertaken:
a) The Group will be able to generate adequate cash flows from operations in the future
b) The drawn and undrawn borrowing facilities from banks will continue to be available to the Group. As at 31 December 2013, the Group has available existing undrawn committed credit facilities amounting to USD17,261,000;
c) Certain major shareholders have indicated its willingness to provide financial support to the Group to meet its obligations as and when required; and
d) The Group is considering a range of funding options, including raising additional capital through a rights issue.
If the Group is unable to continue in operational existence for the foreseeable future, the Group may be unable to discharge its liabilities in the normal course of business and adjustments may have to be made to reflect the situation that assets may need to be realised other than in the normal course of business and at amounts which could differ significantly from the amounts at which they are currently recorded on the balance sheet. In addition, the Group may have to reclassify long term assets and liabilities as current assets and liabilities. No such adjustments have been made to these financial statements.
3.1 Basis of preparation
The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB").
The consolidated financial statements have been prepared on a 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 where otherwise indicated.
3.2 Basis of consolidation
The consolidated financial statements comprise the financial statements of the Group and its subsidiaries as at 31 December 2013. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if and only if the Group has:
- Power over the investee (i.e., existing rights that give it the current ability to direct the relevant activities of the investee)
- Exposure, or rights, to variable returns from its involvement with the investee; and
- The ability to use its power over the investee to affect its returns
When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:
- The contractual arrangement with the other vote holders of the investee
- Rights arising from other contractual arrangements
- The Group's voting rights and potential voting rights
The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the statement of comprehensive income from the date the Group gains control until the date the Group ceases to control the subsidiary.
Profit or loss and each component of other comprehensive income ("OCI") are attributed to the equity holders of the parent of the Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group's accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.
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 interests
- 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 OCI to profit or loss or retained earnings, as appropriate, as would be required if the Group had directly disposed of the related assets or liabilities
3.3 Summary of significant accounting policies
a) Business combinations and goodwill
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 Group elects whether to measure the non-controlling interests in the acquiree at fair value or at the proportionate share of the acquiree's identifiable net assets. Acquisition-related costs are expensed as incurred and included in other operating 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, any previously held equity interest is re-measured at its acquisition date fair value and any resulting gain or loss is recognised in profit or loss. It is then considered in the determination of goodwill.
Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Contingent consideration classified as an asset or liability that is a financial instrument and within the scope of IAS 39 Financial Instruments: Recognition and Measurement, is measured at fair value with changes in fair value recognised in either profit or loss or as a change to OCI. If the contingent consideration is not within the scope of IAS 39, it is measured in accordance with the appropriate IFRS. Contingent consideration that is classified as equity is not re-measured and subsequent settlement is accounted for within equity.
Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognised for non-controlling interests, and any previous interest held, over the net identifiable assets acquired and liabilities assumed. If the fair value of the net assets acquired is in excess of the aggregate consideration transferred, the Group re-assesses whether it has correctly identified all of the assets acquired and all of the liabilities assumed and reviews the procedures used to measure the amounts to be recognised at the acquisition date. If the re-assessment still results in an excess of the fair value of net assets acquired over the aggregate consideration transferred, then the gain is recognised in profit or loss.
After initial recognition, goodwill is measured at cost less any 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 combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.
Where goodwill has been allocated to a cash-generating unit and part of the operation within that unit is disposed of, the goodwill associated with the disposed operation is included in the carrying amount of the operation when determining the gain or loss on disposal. Goodwill disposed in this circumstance is measured based on the relative values of the disposed operation and the portion of the cash-generating unit retained.
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 restated to reflect the combination as if it had occurred from the beginning of the earliest period presented in the financial statements or from the date the entities had come under common control, if later.
b) 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's 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 Company.
c) Current versus non-current classification
The Group presents assets and liabilities in the statement of financial position is based on current/non-current classification. An asset is current when it is:
- Expected to be realised or intended to be sold or consumed in normal operating cycle
- Held primarily for the purpose of trading
- Expected to be realised within twelve months after the reporting period; or
- Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period
All other assets are classified as non-current. A liability is current when:
- It is expected to be settled in normal operating cycle
- It is held primarily for the purpose of trading
- It is due to be settled within twelve months after the reporting period, or
- There is no conditional right to defer the settlement of the liability for at least twelve months after the reporting period
The Group classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
d) Fair value measurement
The Group measures financial instruments, such as derivatives, at fair value at each balance sheet date. Also, fair values of financial instruments measured at amortised cost are disclosed in Note 32.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
- In the principal market for the asset or liability, or
- In the absence of a principal market, in the most advantageous market for the asset or liability
The principal or the most advantageous market must be accessible by the Group.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level inputs that is significant to the fair value measurement as a whole:
- Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities
- Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
- Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group determines whether transfers have occurred between Levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
For the purpose of fair value disclosures, the Group has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
e) Revenue recognition
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 being made. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding discounts, rebates, and sales taxes or duty. The Group has concluded that it is the principal in all of its revenue arrangements since it is a primary obligor in all the revenue arrangements, has pricing latitude and is also exposed to inventory and credit risks.
The specific recognition criteria described below must also be met before revenue is recognised.
Sale of goods
Revenue from the sale of goods is recognised when the significant risk and rewards of ownership of the goods have passed to the buyer, usually on delivery of goods. 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
For all financial instruments measured at amortised cost and interest-bearing financial assets, interest income is recorded using the effective interest rate ("EIR"). EIR is the rate that exactly discounts the estimated future cash payments or receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the net carrying amount of the financial asset or liability. Interest income is included in other operating income in the statement of profit or loss.
f) Taxes
Current income tax
Current income tax assets and liabilities for the current period 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 substantively enacted, at the reporting date in the countries where the Group operates and generates taxable income.
Current income tax relating to items recognised directly in equity is recognised in equity and not in the statement of profit or loss. 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.
Deferred tax
Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.
Deferred tax liabilities are recognised for all temporary differences, except:
- when 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 taxable temporary differences associated with investments in subsidiaries, when 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, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised, except:
- when 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 each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits 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 or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
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 OCI or directly in equity.
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists 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, are recognised subsequently if new information about facts and circumstances change. The adjustment is either treated as a reduction in goodwill (as long as it does not exceed goodwill) if it was incurred during the measurement period or recognised in profit or loss.
Sales tax
Expenses and assets are recognised net of the amount of sales tax, except:
- when 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
- when receivables and payables 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.
g) Property, plant and equipment
Property, plant and equipment are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. Such cost includes the cost of replacing part of the property, plant and equipment and borrowing costs for long-term construction projects if the recognition criteria are met. When significant parts of property, plant and equipment are required to be replaced at intervals, the Group recognises such parts as individual assets with specific useful lives and depreciates them accordingly. Likewise, when a major inspection is performed, its costs are recognised in the carrying amount of the 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. The present value of the expected cost for decommissioning of an asset after its use is included in the cost of the respective asset if the recognition criteria for a provision are met.
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 |
- |
1.67% to 20% |
|
Renovation |
- |
20% |
|
Infrastructure |
- |
4% |
|
Office equipment, computers, furniture and fittings |
- |
10% to 20% |
|
Plant and machinery |
- |
20% |
|
Motor vehicles |
- |
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 are stated at cost and not depreciated as these assets are not yet available for use.
An item of property, plant and equipment and any significant part initially recognised 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 (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement when the asset is derecognised.
The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
h) Financial instruments - initial recognition and subsequent measurement
i) Financial assets (cont'd)
Initial recognition and measurement
Financial assets are classified, at initial recognition, as financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, available-for-sale financial assets, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. All financial assets are recognised initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset.
Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognised on the trade date, i.e., the date that the Group commits to purchase or sell the asset.
The Group has only one class of financial assets, namely loans and receivables.
Subsequent measurement
The subsequent measurement of loans and receivables is as follows:
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial measurement, such financial assets are subsequently measured at amortised cost using the EIR method, 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. The EIR amortisation is included in other operating income in the statement of profit or loss. The losses arising from impairment are recognised in the statement of profit or loss in finance costs for loans and in cost of sales or other operating expenses for receivables.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised (i.e., removed from the Group's consolidated statement of financial position) when:
- The rights to receive cash flows from the asset have expired, or
- 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.
i) Financial assets
When the Group has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Group continues to recognise the transferred asset to the extent of the Group's continuing involvement. 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.
ii) Impairment of financial assets
The Group assesses, at each reporting date, whether there is objective evidence that a financial asset or a group of financial assets is impaired. An impairment exists if one or more events that has occurred since the initial recognition of the asset (an incurred 'loss event'), has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation and observable data indicating that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.
Financial assets carried at amortised cost
For financial assets carried at amortised cost, the Group first assesses whether 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.
The amount of any impairment loss identified is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows (excluding future expected credit losses that have not yet been incurred). The present value of the estimated future cash flows is discounted at the financial asset's original effective interest rate.
ii) Impairment of financial assets (cont'd)
The carrying amount of the asset is reduced through the use of an allowance account and the loss is recognised in statement of profit or loss. Interest income (recorded as finance income in the statement of profit or loss) continues to be accrued on the reduced carrying amount and is accrued using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss. Loans together with the associated allowance are written off when there is no realistic prospect of future recovery and all collateral has been realised or has been transferred to the Group. If, in a subsequent year, the amount of the estimated impairment loss increases or decreases because of an event occurring after the impairment was recognised, the previously recognised impairment loss is increased or reduced by adjusting the allowance account. If a write-off is later recovered, the recovery is credited to finance costs in the statement of profit or loss.
iii) Financial liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.
The Group's financial liabilities include trade and other payables, loans and borrowings including bank overdrafts and derivative financial instruments.
Subsequent measurement
The measurement of financial liabilities depends on their classification as described below:
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss.
Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the Group that are not designated as hedging instruments in hedge relationships as defined by IAS 39. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments.
Gains or losses on liabilities held for trading are recognised in the statement of profit or loss.
Financial liabilities designated upon initial recognition at fair value through profit or loss are designated at the initial date of recognition, and only if the criteria in IAS 39 are satisfied. The Group has not designated any financial liability as at fair value through profit or loss.
Loans and borrowings
This is the category most relevant to the Group. After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as 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. The EIR amortisation is included as finance costs in the statement of profit or loss.
This category generally applies to interest-bearing loans and borrowings. For more information refer Note 32.
Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. 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 the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit or loss.
iv) Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the consolidated statement of financial position if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
i) Inventories
Inventories are valued at 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.
Inventories of crude palm oil ("CPO") and palm kernel ("PK")
The cost of CPO and PK includes cost of raw materials, direct labour and an appropriate proportion of fixed and variable production overheads incurred on a normal operating capacity
Other inventories
The cost of consumable supplies, chemicals and fertilisers is determined using the weighted average method and 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.
j) 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 estimates the asset's recoverable amount. An asset's recoverable amount is the higher of an asset's or cash-generating unit's ("CGU") fair value less costs of disposal and its value in use. Recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. When the carrying amount of an asset or CGU 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 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 of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded companies or other available fair value indicators.
The Group bases its impairment calculation on detailed budgets and forecast calculations, which are prepared separately for each of the Group's CGUs to which the individual assets are allocated. These budgets and forecast calculations generally cover a period of five years. For longer periods, a long-term growth rate is calculated and applied to project future cash flows after the fifth year.
Impairment losses of continuing operations, including impairment of inventories, are recognised in the statement of profit or loss in expense categories consistent with the function of the impaired asset.
For assets excluding goodwill, an assessment is made at each reporting date to determine whether there is an indication that previously recognised impairment losses no longer exist or have decreased. If such indication exists, the Group estimates the asset's or CGUs recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset's recoverable amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in the statement of profit or loss.
The following asset has specific characteristics for impairment testing:
Goodwill
Goodwill is tested for impairment annually as at 31 December and when circumstances indicate that the carrying value may be impaired.
Impairment is determined for goodwill by assessing the recoverable amount of each CGU (or group of CGUs) to which the goodwill relates. When the recoverable amount of the CGU is less than its carrying amount, an impairment loss is recognised. Impairment losses relating to goodwill cannot be reversed in future periods.
k) Cash and short-term deposits
Cash and short-term deposits in the statement of financial position comprise cash at banks and on hand and short-term deposits with a maturity of three months or less.
For the purpose of the consolidated statement of cash flows, cash and cash equivalents consist of cash and short-term deposits as defined above, net of outstanding bank overdrafts.
l) 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 resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. When the Group expects some or all of a provision to be reimbursed, for example, under an insurance contract, the reimbursement is recognised as a separate asset, but only when the reimbursement is virtually certain. The expense relating to a provision is presented in the statement of profit or loss net of any reimbursement.
m) Employee benefits
i) Defined contribution plans
The Group participates in the national pension schemes as defined by the laws of the countries in which it has operations. 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. Such contributions to defined contribution pension schemes are recognised as an expense in the period in which the related service is performed.
ii) 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 each reporting date.
iii) Bonus plans
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 each reporting date and are measured at the amounts expected to be paid when they are settled.
n) Share-based payment
Directors, employees and consultants of the Group receive remuneration in the form of share-based payment transactions, whereby the directors, employees and consultants render services as consideration for equity instruments (equity-settled transactions).
The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using an appropriate valuation model.
That cost is recognised, together with a corresponding increase in other capital reserves in equity, over the period in which the performance and/or service conditions are fulfilled in employee benefits expense (Note 12). The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Group's best estimate of the number of equity instruments that will ultimately vest. The statement of profit or loss expense or credit for a period represents the movement in cumulative expense recognised as at the beginning and end of that period and is recognised, depending on the type of services rendered, in employee benefits expense (Note 12), as part of professional fees and if related to the development of biological assets, the expense are allocated proportionately based on the area of mature and immature plantations.
No expense is recognised for awards that do not ultimately vest, except for equity-settled transaction for which vesting is conditional upon a market or non-vesting condition. These are treated as vesting irrespective of whether or not the market or non-vesting condition is satisfied, provided that all other performance and/or service conditions are satisfied.
When the terms of an equity-settled transaction award are modified, the minimum expense recognised is the expense had the terms had not been modified, if the original terms of the award are met. An additional expense is recognised for any modification that increases the total fair value of the share-based payment transaction, or is otherwise beneficial to the employee as measured at the date of modification.
The dilutive effect of outstanding options is reflected as additional share dilution in the computation of diluted earnings per share (further details are given in Note 14).
o) Foreign currency
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. Management determines the functional currency based on the the primary economic environment in which the individual entity operates. The Company's functional currency is Singapore Dollars (SGD) while the functional currency of the Group's principal subsidiaries is Ringgit Malaysia (RM). The Group has elected to recycle the gain or loss that arises from the direct method of consolidation, which is the method the Group uses to complete its consolidation.
i) Transactions and balances
Transactions in foreign currencies are initially recorded by the Group entities at their respective functional currency spot rates at the date the transaction first qualifies for recognition.
Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency spot rate of exchange at the reporting date.
Differences arising on settlement or translation of monetary items are recognised in profit or loss with the exception of monetary items that are designated as part of the hedge of the Group's net investment of a foreign operation. These are recognised in other comprehensive income until the net investment is disposed of, at which time, the cumulative amount is reclassified to profit or loss. Tax charges and credits attributable to exchange differences on those monetary items are also recorded in other comprehensive income.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates 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 is determined. The gain or loss arising on retranslation of non-monetary items measured at fair value is treated in line with the recognition of gain or loss on change in fair value of the item (i.e., translation differences on items whose fair value gain or loss is recognised in other comprehensive income or profit or loss is also recognised in other comprehensive income or profit or loss, respectively).
ii) Group companies
On consolidation the assets and liabilities of foreign operations are translated into USD at the rate of exchange prevailing at the reporting date and their income statements are translated at exchange rates prevailing at the dates of the transactions. The exchange differences arising on translation for consolidation 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.
Any goodwill arising on the acquisition of foreign operation and any fair value adjustments to the carrying amounts of assets and liabilities arising on the acquisition are treated as assets and liabilities of the foreign operation and translated at the spot rate of exchange at the reporting date.
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.
p) Leases
The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at inception date. The arrangement is assessed for 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 or assets, even if that right is not explicitly specified in an arrangement.
Group as a lessee
Finance leases that transfer substantially all the risks and benefits incidental to ownership of the leased item to the Group, are capitalised at the commencement 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 recognised in finance costs in profit or loss. Contingent rents, if any, are charged as expenses in the period in which they are incurred.
A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Group will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and the lease term.
Operating lease payments are recognised as an operating 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.
q) 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.
r) Convertible bonds and embedded derivatives
When convertible bonds are issued, the total proceeds are allocated to the liability component and conversion option, which are separately presented on the statements of financial position. The conversion option is recognised initially at its fair value and is accounted for as a derivative liability. The difference between the total proceeds and the conversion option is allocated to the liability component. The liability component is subsequently carried at amortised cost using EIR method until the liability is extinguished on conversion or redemption of the bonds.
Derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value. Derivative financial instruments are carried as assets when the fair value is positive and as liabilities when the fair value is negative. Any gain or losses arising from changes in fair value on derivative financial instruments are taken to profit or loss for the financial year.
s) 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 years 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.
t) 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.
u) Share capital and share issuance 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.
v) 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
(b) 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.
w) Related parties
A related party is defined as follows:
(a) A person or a close member of that person's family is related to the Group and the Company if that person:
(i) has control or joint control over the Company;
(ii) has significant influence over the Company; or
(iii) is a member of the key management personnel of the Group or Company or of a parent of the Company.
(b) An entity is related to the Group and the Company if any of the following conditions applies:
(i) The entity and the Company are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others).
(ii) One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member).
(iii) Both entities are joint ventures of the same third party.
(iv) One entity is a joint venture of a third entity and the other entity is an associate of the third entity.
(v) The entity is a post-employment benefit plan for the benefit of employees of either the Company or an entity related to the Company. If the Company is itself such a plan, the sponsoring employers are also related to the Company.
(vi) The entity is controlled or jointly controlled by a person identified in (a).
(vii) A person identified in (a) (i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity).
3.4 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 in the current financial year, the Group has adopted all the new and revised standards that are effective for annual periods beginning as of 1 January 2013. The adoption of these standards did not have any effect on the financial performance or position of the Group and the Company except for the following amendments to IFRS:
IAS 1 Presentation of Items of Other Comprehensive Income - Amendments to IAS 1
The amendments to IAS 1 introduce a grouping of items presented in other comprehensive income (OCI). Items that will be reclassified ('recycled') to profit or loss at a future point in time (e.g., net loss or gain on available-for sale financial assets) have to be presented separately from items that will not be reclassified (e.g., revaluation of land and buildings). The amendments affect presentation only and had no impact on the Group's financial position or performance.
4. Significant accounting judgements and estimates
The preparation of the Group's consolidated financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the assets or liabilities affected in future periods.
4.1 Judgements
In the process of applying the Group's accounting policies, management has made the following judgements, which has the most significant effect on the amounts recognised in the consolidated financial statements:
Fair value of biological assets (nursery)
The biological assets are stated at fair value. Management made the judgement that cost approximates fair value of the biological asset for nursery because little biological transformation has taken place since its initial cost incurrence. The carrying amount of nursery as at 31 December 2013 is USD1,294,000 (2012: USD1,742,000) as disclosed in Note 16.
4.2 Estimates and assumptions
The key assumptions concerning the future and other key sources of estimation uncertainty at the 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 described below. The Group based its assumptions and estimates on parameters available when the consolidated financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising beyond the control of the Group. Such changes are reflected in the assumptions when they occur.
(a) Biological assets (mature and immature plantation)
As at 31 December 2013, the Group measured its mature and immature plantation included in the biological assets at fair value less estimated costs to sell, based on a discounted cash flow model by engaging a professional valuer. The inputs to the cash flow model are derived from the professional valuer'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 and immature plantation. The cash flow model does not include cash flows from financing assets, taxation or re-establishing biological assets after harvest.
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. The total carrying amount of the mature and immature plantation as at 31 December 2013 was USD40,750,000 (2012: USD27,442,000) and USD24,950,000 (2012: USD26,103,000) respectively. Further details of the key assumptions used and the sensitivity analysis are disclosed in Notes 16 and 33(d), respectively.
(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 60 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 of these assets, therefore, future depreciation charges could be revised. The carrying amount of the property, plant and equipment as at 31 December 2013 is disclosed in Note 15. A 5% difference in the expected useful lives of these assets from management's estimates would result in less than 1% (2012: less than 1%) variance in the Group's loss for the year.
(c) Impairment of goodwill
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 value in use calculation is based on a discounted cash flow model. The cash flows are derived from projected net cash flows over a period of 25 productive years of oil palms from financial budgets approved by management 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. Further details of the key assumptions applied in the impairment assessment of goodwill, are given in Note 18.
(d) Taxes
Uncertainties exist with respect to the interpretation of complex tax regulations, changes in tax laws, and the amount and timing of future taxable income. Given the wide range of international business relationships and the long-term nature and complexity of existing contractual agreements, differences arising between the actual results and the assumptions made, or future changes to such assumptions, could necessitate future adjustments to tax income and expense already recorded. The Group establishes provisions, based on reasonable estimates, for possible consequences of audits by the tax authorities of the respective counties in which it operates. The amount of such provisions is based on various factors, such as experience of previous tax audits and differing interpretations of tax regulations by the taxable entity and the responsible tax authority. Such differences of interpretation may arise for a wide variety of issues depending on the conditions prevailing in the respective domicile of the Group of companies.
The carrying amount of income tax recoverable at 31 December 2013 was USD36,000 (2012: USD99,000).
Deferred tax assets are recognised for all unused tax losses, unabsorbed capital and agricultural allowances to the extent that it is probable that taxable profit will be available against which the losses, unabsorbed capital and agricultural allowances 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 the level of future taxable profits together with future tax planning strategies.
Further details on taxes are disclosed in Note 13.
(e) Share-based payment
The Group measures the cost of equity-settled transactions with directors, employees and consultants by reference to the fair value of the equity instruments at the date at which they are granted. Estimating fair value for share-based payment transactions requires determination of the most appropriate valuation model, which is dependent on the terms and conditions of the grant. This estimate also requires determination of the most appropriate inputs to the valuation model including the expected life of the share option, volatility and dividend yield and making assumptions about them. The assumptions and models used for estimating fair value for share-based payment transactions are disclosed in Note 29.
5. Standards issued but not yet effective
The standards and interpretations that are issued, but not yet effective, up to the date of issuance of the Group's financial statements are disclosed below. The Group intends to adopt these standards, if applicable, when they become effective.
IFRS 9 Financial Instruments
IFRS 9, as issued, reflects the first phase of the IASB's work on the replacement of IAS 39 and applies to classification and measurement of financial assets and financial liabilities as defined in IAS 39. The standard was initially effective for annual periods beginning on or after 1 January 2013, but Amendments to IFRS 9 Mandatory Effective Date of IFRS 9 and Transition Disclosures, issued in December 2011, moved the mandatory effective date to 1 January 2015. In subsequent phases, the IASB is addressing hedge accounting and impairment of financial assets. The adoption of the first phase of IFRS 9 will have an effect on the classification and measurement of the Group's financial assets, but will not have an impact on classification and measurements of the Group's financial liabilities. The Group will quantify the effect in conjunction with the other phases, when the final standard including all phases is issued.
Investment Entities (Amendments to IFRS 10, IFRS 12 and IAS 27)
These amendments are effective for annual periods beginning on or after 1 January 2014 provide an exception to the consolidation requirement for entities that meet the definition of an investment entity under IFRS 10. The exception to consolidation requires investment entities to account for subsidiaries at fair value through profit or loss. It is not expected that this amendment would be relevant to the Group, since none of the entities in the Group would quality to be an investment entity under IFRS 10.
IAS 32 Offsetting Financial Assets and Financial Liabilities - Amendments to IAS 32
These amendments clarify the meaning of "currently has a legally enforceable right to set-off" and the criteria for non-simultaneous settlement mechanisms of clearing houses to qualify for offsetting. These are effective for annual periods beginning on or after 1 January 2014. These amendments are not expected to be relevant to the Group.
IFRIC Interpretation 21 Levies (IFRIC 21)
IFRIC 21 clarifies that an entity recognises a liability for a levy when the activity that triggers payment, as identified by the relevant legislation, occurs. For a levy that is triggered upon reaching a minimum threshold, the interpretation clarifies that no liability should be anticipated before the specified minimum threshold is reached. IFRIC 21 is effective for annual periods beginning on or after 1 January 2014. These amendments are not expected to be relevant to the Group.
IAS 39 Novation of Derivatives and Continuation of Hedge Accounting - Amendments to IAS 39
These amendments provide relief from discontinuing hedge accounting when novation of a derivative designated as a hedging instrument meets certain criteria. These amendments are effective for annual periods beginning on or after 1 January 2014. These amendments are not expected to be relevant to the Group.
6. Revenue
|
|
|
2013 |
|
2012 |
|
|
|
USD'000 |
|
USD'000 |
|
|
|
|
|
|
|
Sale of crude palm oil ("CPO") |
|
19,554 |
|
- |
|
Sale of palm kernel ("PK") |
|
2,451 |
|
- |
|
Sale of fresh fruit bunches ("FFBs") |
|
1,758 |
|
2,820 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,763 |
|
2,820 |
|
|
|
|
|
|
7. Cost of sales
|
|
|
2013 |
|
2012 |
|
|
|
USD'000 |
|
USD'000 |
|
|
|
|
|
|
|
FFBs harvesting |
|
716 |
|
351 |
|
FFBs external transportation |
|
400 |
|
245 |
|
Field upkeep and maintenance |
|
3,594 |
|
766 |
|
Estate general charges |
|
676 |
|
228 |
|
Direct production costs - CPO and PK |
|
18,319 |
|
- |
|
Mill overheads |
|
443 |
|
92 |
|
Mill transport |
|
744 |
|
- |
|
Employee benefits expense (Note 12) |
|
1,147 |
|
432 |
|
Depreciation of property, plant and equipment |
|
1,376 |
|
100 |
|
Rental expense |
|
62 |
|
11 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,477 |
|
2,225 |
|
|
|
|
|
|
8. Other operating income
|
|
|
2013 |
|
2012 |
|
|
|
USD'000 |
|
USD'000 |
|
|
|
|
|
|
|
Interest income |
|
245 |
|
280 |
|
Gain on disposal of property, plant and equipment |
|
6 |
|
- |
|
Sale of seedlings |
|
- |
|
66 |
|
Gain arising on fair value changes in biological assets |
|
3,183 |
|
1,989 |
|
Gain arising from changes in fair value of embedded derivative of the convertible bonds |
|
721 |
|
172 |
|
Others |
|
29 |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,184 |
|
2,507 |
|
|
|
|
|
|
9. Administrative expenses
|
|
|
2013 |
|
2012 |
|
|
|
USD'000 |
|
USD'000 |
|
|
|
|
|
|
|
Professional fees: |
|
|
|
|
|
- audit fee |
|
106 |
|
129 |
|
- consultancy |
|
392 |
|
631 |
|
- MTN Programme |
|
- |
|
195 |
|
- others |
|
302 |
|
391 |
|
Stamp duty on agreements |
|
23 |
|
2 |
|
Bank charges |
|
56 |
|
29 |
|
Employee benefits expense (Note 12) |
|
1,514 |
|
2,812 |
|
Directors' fees (Note 31) |
|
187 |
|
187 |
|
Loss on disposal of property, plant and equipment |
|
- |
|
1 |
|
Depreciation of property, plant and equipment |
|
132 |
|
151 |
|
Rental expense |
|
17 |
|
55 |
|
Others |
|
677 |
|
556 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,406 |
|
5,139 |
|
|
|
|
|
|
10. Other operating expenses
|
|
|
2013 |
|
2012 |
|
|
|
USD'000 |
|
USD'000 |
|
|
|
|
|
|
|
Amortisation of land use rights (Note 17) |
|
1,002 |
|
924 |
|
Repair and maintenance |
|
202 |
|
117 |
|
Motor vehicle running expenses |
|
- |
|
10 |
|
Cost of seedlings sold |
|
8 |
|
54 |
|
Impairment of goodwill (Note 1(b)) |
|
- |
|
5 |
|
Net foreign exchange loss |
|
82 |
|
444 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,294 |
|
1,554 |
|
|
|
|
|
|
11. Finance costs
|
|
|
2013 |
|
2012 |
|
|
|
USD'000 |
|
USD'000 |
|
|
|
|
|
|
|
Interest expense on loans and borrowings |
|
5,373 |
|
3,115 |
|
Interest expense on convertible bonds |
|
254 |
|
75 |
|
Accretion of interest on the convertible bonds |
|
1,596 |
|
291 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,223 |
|
3,481 |
|
|
|
|
|
|
12. Employee benefits expense
|
|
|
2013 |
|
2012 |
|
|
|
USD'000 |
|
USD'000 |
|
|
|
|
|
|
|
Included in cost of sales (Note 7): |
|
|
|
|
|
Salaries, bonus and allowances |
|
971 |
|
342 |
|
Contributions to defined contribution plans |
|
105 |
|
50 |
|
Social security costs |
|
12 |
|
2 |
|
Share-based payment transaction (Note 29) |
|
59 |
|
38 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,147 |
|
432 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Included in cost of biological assets (Note 16): |
|
|
|
|
|
Salaries, bonus and allowances |
|
1,291 |
|
1,461 |
|
Contributions to defined contribution plans |
|
156 |
|
173 |
|
Social security costs |
|
10 |
|
10 |
|
Share-based payment transaction (Note 29) |
|
144 |
|
150 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,601 |
|
1,794 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Included in cost of administrative expenses (Note 9): |
|
|
|
|
|
Salaries, bonus and allowances |
|
1,427 |
|
1,738 |
|
Contributions to defined contribution plans |
|
79 |
|
107 |
|
Social security costs |
|
3 |
|
4 |
|
Share-based payment transaction (Note 29) |
|
5 |
|
963 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,514 |
|
2,812 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total employee benefits expense |
|
4,262 |
|
5,038 |
|
|
|
|
|
|
13. Income tax benefit
Major components of income tax benefit
The major components of income tax benefit for the financial years ended 31 December are as follows:
|
|
|
2013 |
|
2012 |
|
|
|
USD'000 |
|
USD'000 |
|
|
|
|
|
|
|
Income tax: |
|
|
|
|
|
- Under/(over) provision in prior year |
|
9 |
|
(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013 |
|
2012 |
|
|
|
USD'000 |
|
USD'000 |
|
Deferred tax: |
|
|
|
|
|
- relating to origination and reversal of temporary differences |
|
(1,125) |
|
(242) |
|
- Under provision in prior year |
|
64 |
|
52 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,061) |
|
(190) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,052) |
|
(193) |
|
|
|
|
|
|
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:
|
|
2013 |
|
2012 |
|
|
USD'000 |
|
USD'000 |
|
|
|
|
|
|
Accounting loss before tax |
(11,453) |
|
(7,072) |
|
|
|
|
|
|
|
|
|
|
|
Tax benefit at domestic rate applicable to losses in the countries where the Group operates |
(2,603) |
|
(1,461) |
|
Adjustments: |
|
|
|
|
Non-deductible expenses |
1,478 |
|
1,219 |
|
Under/(over) provision of income tax in prior year |
9 |
|
(3) |
|
Under provision of deferred tax in prior year |
64 |
|
52 |
|
|
|
|
|
|
|
|
|
|
|
|
(1,052) |
|
(193) |
|
|
|
|
|
For the current financial year, the corporate income tax rate applicable to the Singapore and Malaysian companies in the Group was 17% (2012: 17%) and 25% (2012: 25%) respectively.
The above reconciliation is prepared by aggregating separate reconciliations for each national jurisdiction.
Included in non-deductible expenses is the tax effects of share-based payment transaction of USD13,000 (2012: USD173,000).
Deferred tax
Deferred tax relates to the following:
|
|
Consolidated statement of financial position |
|
Consolidated income statement |
|||||||
|
|
2013 |
|
2012 |
|
2013 |
|
2012 |
|
||
|
|
USD'000 |
|
USD'000 |
|
USD'000 |
|
USD'000 |
|
||
|
|
|
|
|
|
|
|
|
|
||
|
Accelerated depreciation for tax purposes |
(5,408) |
|
(3,765) |
|
1,967 |
|
1,619 |
|
||
|
Biological assets |
(11,468) |
|
(7,987) |
|
4,171 |
|
3,419 |
|
||
|
Revaluation of land use rights to fair value |
(6,621) |
|
(7,245) |
|
(134) |
|
(137) |
|
||
|
Capital items expensed off |
105 |
|
- |
|
(109) |
|
- |
|
||
|
Unutilised tax losses |
7,408 |
|
4,649 |
|
(3,187) |
|
(1,941) |
|
||
|
Unabsorbed capital and agricultural allowances |
11,065 |
|
7,970 |
|
(3,769) |
|
(3,150) |
|
||
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
||
|
Deferred tax benefit |
|
|
|
|
(1,061) |
|
(190) |
|
||
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
||
|
Net deferred tax liabilities |
(4,919) |
|
(6,378) |
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
||
|
Reflected in the statement of financial position as follows: |
|
|
|
|
|
|
|
|
||
|
Deferred tax assets |
511 |
|
178 |
|
|
|
|
|
||
|
Deferred tax liabilities |
(5,430) |
|
(6,556) |
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
||
|
Deferred tax liabilities, net |
(4,919) |
|
(6,378) |
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
||
|
Reconciliation of deferred tax liabilities, net |
|||||
|
|
|
|
|
|
|
|
|
|
2013 |
|
2012 |
|
|
|
|
USD'000 |
|
USD'000 |
|
|
|
|
|
|
|
|
|
Opening balance as of 1 January |
|
(6,378) |
|
(6,325) |
|
|
Recognised in profit or loss |
|
1,061 |
|
190 |
|
|
Exchange differences |
|
398 |
|
(243) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Closing balance as at 31 December |
|
(4,919) |
|
(6,378) |
|
|
|
|
|
|
|
|
The Group offsets tax assets and liabilities if and only if it has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority.
The Group has unutilised tax losses and unabsorbed capital and agricultural allowances totaling USD73,896,000 (2012: USD50,476,000). 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.
14. Loss per share
Basic loss per share amounts are calculated by dividing loss for the year, net of tax, attributable to owners of the Company 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 Company 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 2013 and 2012.
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:
|
|
|
2013 |
|
2012 |
|
|
|
USD'000 |
|
USD'000 |
|
|
|
|
|
|
|
Loss, net of tax, attributable to owners of the Company |
|
(10,400) |
|
(6,879) |
|
- |
|
|
|
|
|
|
|
|
||
|
|
|
No. of shares |
|
No. of shares |
|
|
|
'000 |
|
'000 |
|
|
|
|
|
|
|
Weighted average number of ordinary shares for basic and diluted loss per share computation* |
|
46,663 |
|
46,382 |
|
- |
|
|
|
|
* The weighted average number of ordinary shares takes into account the weighted average effect of changes in ordinary shares transactions during the year
The potential ordinary shares from unsecured convertible bonds and options granted pursuant to the Company's share option scheme have not been included in the calculation of diluted loss per share because they are anti-dilutive.
15. 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 2012 |
2,338 |
|
721 |
|
340 |
|
39 |
|
1,548 |
|
10,173 |
|
1,856 |
|
17,015 |
|
Additions |
220 |
|
396 |
|
261 |
|
- |
|
1,799 |
|
9,823 |
|
25,817 |
|
38,316 |
|
Disposal |
- |
|
(24) |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(24) |
|
Reclassifications |
2,640 |
|
1 |
|
32 |
|
- |
|
(37) |
|
1 |
|
(2,637) |
|
- |
|
Exchange differences |
90 |
|
35 |
|
18 |
|
2 |
|
75 |
|
484 |
|
292 |
|
996 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 December 2012 and 1 January 2013 |
5,288 |
|
1,129 |
|
651 |
|
41 |
|
3,385 |
|
20,481 |
|
25,328 |
|
56,303 |
|
Additions |
1,104 |
|
265 |
|
305 |
|
- |
|
698 |
|
4,976 |
|
10,769 |
|
18,117 |
|
Disposal |
- |
|
(26) |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(26) |
|
Reclassifications |
13,035 |
|
(32) |
|
59 |
|
- |
|
1,683 |
|
2,120 |
|
(16,865) |
|
- |
|
Exchange differences |
(230) |
|
(78) |
|
(55) |
|
(2) |
|
(262) |
|
(1,611) |
|
(2,379) |
|
(4,617) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 December 2013 |
19,197 |
|
1,258 |
|
960 |
|
39 |
|
5,504 |
|
25,966 |
|
16,853 |
|
69,777 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 2012 |
170 |
|
249 |
|
96 |
|
9 |
|
262 |
|
629 |
|
- |
|
1,415 |
|
Charge for the year |
273 |
|
164 |
|
83 |
|
8 |
|
452 |
|
614 |
|
- |
|
1,594 |
|
Disposals |
- |
|
(3) |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(3) |
|
Reclassifications |
10 |
|
- |
|
- |
|
- |
|
(10) |
|
- |
|
- |
|
- |
|
Exchange differences |
10 |
|
12 |
|
4 |
|
- |
|
14 |
|
30 |
|
- |
|
70 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 December 2012 and 1 January 2013 |
463 |
|
422 |
|
183 |
|
17 |
|
718 |
|
1,273 |
|
- |
|
3,076 |
|
Charge for the year |
938 |
|
228 |
|
134 |
|
8 |
|
890 |
|
1,022 |
|
- |
|
3,220 |
|
Disposals |
- |
|
(26) |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(26) |
|
Exchange differences |
(66) |
|
(31) |
|
(15) |
|
(1) |
|
(80) |
|
(123) |
|
- |
|
(316) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 December 2013 |
1,335 |
|
593 |
|
302 |
|
24 |
|
1,528 |
|
2,172 |
|
- |
|
5,954 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net carrying amount |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 December 2013 |
17,862 |
|
665 |
|
658 |
|
15 |
|
3,976 |
|
23,794 |
|
16,853 |
|
63,823 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 December 2012 |
4,825 |
|
707 |
|
468 |
|
24 |
|
2,667 |
|
19,208 |
|
25,328 |
|
53,227 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capitalised borrowing costs
The Group has substantially completed and commenced operation of its vertical sterilizer crushing mill during the current year. The carrying amount of the mill at 31 December 2013 included in assets under construction was USD10,942,000 (2012: USD20,271,000). The construction of this mill was financed by a bridging loan and Bank Guaranteed Medium Term Notes Programme. Details of these borrowings are disclosed in Note 25.
The amount of borrowing costs capitalised as part of the cost of qualifying assets during the year ended 31 December 2013 was USD786,000 (2012: USD1,208,000). The rates used to determine the amount of borrowing costs eligible for capitalisation range from 1.65% per annum to 5.21% per annum ("p.a.") (2012: 1.65% p.a. to 5.95% p.a.), depending on the source of financing.
Assets held under finance leases
During the financial year, the Group acquired property, plant and equipment at an aggregate cost of USD18,117,000 (2012: USD38,316,000) of which USD691,000 (2012: USD1,260,000) were acquired by means of finance leases. Leased assets are pledged as security for the related finance lease liabilities.
Net carrying amount of property, plant and equipment held under finance leases arrangements which comprise plant and machinery and motor vehicles amounted to USD1,853,000 (2012: USD969,000) and USD524,000 (2012: USD457,000), respectively.
Assets pledged for banking facilities
A building of the Group with net carrying amount of USD291,000 (2012: USD318,000) is pledged for banking facilities as disclosed in Note 25.
Assets under construction
The Group's assets under construction mainly included a palm oil mill, a biogas plant, workers quarters, terraces, roads and bridges/culverts with total net carrying amount of USD16,853,000 (2012: USD25,328,000). The substantially completed oil palm mill as mentioned above represent the main asset under construction as at the reporting date.
Depreciation capitalised to biological assets
Depreciation of property, plant and equipment of the Group capitalised to biological assets for the financial year ended 31 December 2013 amounted to USD1,712,000 (2012: USD1,343,000) (Note 16).
16. Biological assets
Biological assets comprise primarily development activities for oil palm plantations and maintenance of nurseries with the following movements in their carrying value:
|
|
|
2013 |
|
2012 |
|
|
|
USD'000 |
|
USD'000 |
|
At fair value less cost to sell |
|
|
|
|
|
|
|
|
|
|
|
At 1 January |
|
55,287 |
|
22,811 |
|
Additions |
|
12,867 |
|
29,405 |
|
Gain arising from changes in fair value |
|
3,183 |
|
1,989 |
|
Exchange differences |
|
(4,343) |
|
1,082 |
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 December |
|
66,994 |
|
55,287 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Represented by: |
|
|
|
|
|
Mature plantation |
|
40,750 |
|
27,442 |
|
Immature plantation |
|
24,950 |
|
26,103 |
|
Nursery |
|
1,294 |
|
1,742 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
66,994 |
|
55,287 |
|
|
|
|
|
|
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 long term average CPO price in the market.
Significant assumptions made in determining the fair values of the mature and immature 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 of 28 years (2012: 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 range from 9.5% to 10.5% (2012: 10.5% to 11.3%);
(d) FFB price is derived by applying the oil extraction rate to the estimated long term average CPO price of USD868 (2012: USD907) per metric tonne; and
(e) yield per hectare of oil palm trees is based on the standard yield profile of the industry.
Gain arising from changes in fair value less estimated costs to sell during the financial year ended 2013 amount to USD636,000 (2012: USD1,989,000).
|
|
|
2013 |
|
2012 |
|
|
|
Hectares |
|
Hectares |
|
Planted area: |
|
|
|
|
|
Mature plantation |
|
4,507 |
|
3,559 |
|
Immature plantation |
|
7,654 |
|
4,591 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
12,161 |
|
8,150 |
|
|
|
|
|
|
Depreciation of property, plant and equipment capitalised to biological assets for the financial year ended 31 December 2013 amounted to USD1,712,000 (2012: USD1,343,000) (Note 15).
Employee benefit expenses capitalised to biological assets for the financial year ended 31 December 2013 amounted to USD1,601,000 (2012: USD1,794,000) (Note 12).
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.
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.
17. Land use rights
|
|
|
2013 |
|
2012 |
|
|
|
USD'000 |
|
USD'000 |
|
|
|
|
|
|
|
At 1 January |
|
53,517 |
|
32,158 |
|
Additions |
|
9,141 |
|
21,044 |
|
Amortisation charge for the year (Note 10) |
|
(1,002) |
|
(924) |
|
Exchange differences |
|
(3,614) |
|
1,239 |
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 December |
|
58,042 |
|
53,517 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount to be amortised |
|
|
|
|
|
- Not later than one year |
|
1,119 |
|
1,040 |
|
- Later than one year but not more than five years |
|
4,477 |
|
4,160 |
|
- Later than five years |
|
52,446 |
|
48,317 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
58,042 |
|
53,517 |
|
|
|
|
|
|
Land use rights are in respect of:
(a) cost of land use rights over seven pieces (2012: six pieces) of long-term leasehold land owned by the Group, for the oil palm plantation development activities of the Group. The land use rights are transferable and have a remaining tenure of 50 to 60 years (2012: 51 to 60 years). The Group was 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 practice 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 Government of Sarawak.
(b) deferred land rights acquisition costs representing the cost associated with the legal transfer or renewal for titles of land rights such as, among others, legal fees, land survey and re-measurement fees, taxes and other related expenses. Such costs are also deferred and amortised on a straight-line basis over the tenure of the related land rights.
Acquisition during the financial year
On 19 August 2013, the Group acquired a piece of long-term leasehold agricultural land through the acquisition of Grand Performance Sdn. Bhd. as disclosed in Note 1(b).
Assets pledged as security
The land use rights were pledged to secure the bank overdrafts, short term revolving credit, term loans facilities and the MTN Programme as disclosed in Note 25.
18. Goodwill on consolidation
|
|
|
2013 |
|
2012 |
|
|
|
USD'000 |
|
USD'000 |
|
|
|
|
|
|
|
At 1 January |
|
7,619 |
|
7,335 |
|
Arising from the acquisition of a subsidiary (Note 1(b)) |
|
- |
|
5 |
|
Impairment of goodwill |
|
- |
|
(5) |
|
Exchange differences |
|
(520) |
|
284 |
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 December |
|
7,099 |
|
7,619 |
|
|
|
|
|
|
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:
|
|
|
2013 |
|
2012 |
|
|
|
USD'000 |
|
USD'000 |
|
|
|
|
|
|
|
Plantation Estates |
|
|
|
|
|
Goodwill |
|
7,099 |
|
7,619 |
|
|
|
|
|
|
The recoverable value of the goodwill of plantation estates as at 31 December 2013 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:
|
|
|
2013 |
|
2012 |
|
|
|
|
|
|
|
Discount rate (pre-tax) |
|
9.5% to 10.5% |
|
10.5% to 11.3% |
|
|
|
|
|
|
|
Projected CPO price |
|
USD868/tonne |
|
USD907/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 long term average CPO price is based on 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 2013 and 2012. Changes to the assumptions used by management to determine the recoverable amounts can have an impact on the results of the assessment. Management is of the opinion that no reasonably possible change in any of the key assumptions stated above would cause the carrying amount of the goodwill for each of the CGUs to materially exceed their recoverable amount.
19. Inventories
|
|
2013 |
|
2012 |
|
|
USD'000 |
|
USD'000 |
|
At cost: |
|
|
|
|
|
|
|
|
|
Crude palm oil |
223 |
|
- |
|
Palm kernel |
72 |
|
- |
|
Chemicals and fertilisers |
729 |
|
1,020 |
|
Consumable supplies |
518 |
|
704 |
|
|
|
|
|
|
|
|
|
|
|
|
1,542 |
|
1,724 |
|
|
|
|
|
20. Trade and other receivables
|
|
2013 |
|
2012 |
|
|
USD'000 |
|
USD'000 |
|
|
|
|
|
|
Trade receivables |
386 |
|
259 |
|
Other receivables: |
|
|
|
|
Deposits |
5,312 |
|
5,820 |
|
Sundry receivables |
1,040 |
|
635 |
|
|
|
|
|
|
|
|
|
|
|
Total trade and other receivables |
6,738 |
|
6,714 |
|
|
|
|
|
|
Add: Cash and short-term deposits (Note 22) |
10,813 |
|
15,785 |
|
|
|
|
|
|
|
|
|
|
|
Total loans and receivables carried at amortised cost |
17,551 |
|
22,499 |
|
|
|
|
|
Trade receivables
Trade receivables are non-interest bearing and are generally 30 days' (2012: 30 days') terms. They are recognised at their original invoice amounts which represent their fair values on initial recognition.
Deposits
Included in deposits is amount totalling USD4,025,000 (2012: USD4,828,000) paid for the proposed acquisition of Malaysian companies and land use rights.
Other receivables that are not denominated in the functional currencies of the respective entities are as follows:
|
|
2013 |
|
2012 |
|
|
USD'000 |
|
USD'000 |
|
|
|
|
|
|
Singapore Dollars ("SGD") |
25 |
|
25 |
|
|
|
|
|
Other information on financial risk of trade and other receivables is disclosed in Note 33(a).
21. Prepayments
Prepayments comprise prepaid operating expenses.
22. Cash and short-term deposits
|
|
2013 |
|
2012 |
|
|
USD'000 |
|
USD'000 |
|
|
|
|
|
|
Cash at banks and on hand |
4,289 |
|
5,255 |
|
Short-term deposits |
6,524 |
|
10,530 |
|
|
|
|
|
|
|
|
|
|
|
|
10,813 |
|
15,785 |
|
|
|
|
|
Short-term deposits earn interest at 3% (2012: 3%) p.a.
As at 31 December 2013, the amount of undrawn committed credit facilities that may be available in the future amounts to USD17,261,000 (2012: USD53,609,000).
The Group has pledged a part of its short-term deposits amounting to USD62,000 (2012: USD149,000) to fulfil collateral requirements for supply of goods and USD801,000 (2012: USD835,000) as security for a term loan facility as disclosed in Note 25.
Cash and bank balances that are not denominated in the functional currencies of the respective entities are as follows:
|
|
2013 |
|
2012 |
|
|
USD'000 |
|
USD'000 |
|
|
|
|
|
|
SGD |
20 |
|
1,188 |
|
USD |
3,155 |
|
2,088 |
|
GBP |
172 |
|
1,725 |
|
|
|
|
|
For the purpose of the consolidated statement of cash flows, cash and cash equivalents comprise the following at the end of the reporting period:
|
|
2013 |
|
2012 |
|
|
USD'000 |
|
USD'000 |
|
|
|
|
|
|
Cash and short-term deposits |
10,813 |
|
15,785 |
|
Less: Short-term deposits pledged for supply of goods |
(62) |
|
(149) |
|
Less: Short-term deposits pledged for a banking facility (Note 25) |
(801) |
|
(835) |
|
|
|
|
|
|
|
|
|
|
|
|
9,950 |
|
14,801 |
|
Bank overdraft (Note 25) |
(2,477) |
|
(613) |
|
|
|
|
|
|
|
|
|
|
|
|
7,473 |
|
14,188 |
|
|
|
|
|
23. Issued capital
|
|
2013 |
|
2012 |
||||
|
|
No. of shares '000 |
|
USD'000 |
|
No. of shares '000 |
|
USD'000 |
|
|
|
|
|
|
|
|
|
|
Issued and fully paid ordinary shares |
|
|
|
|
|
|
|
|
At 1 January |
46,511 |
|
88,594 |
|
46,175 |
|
87,321 |
|
Issuance during the year |
250 |
|
1,137 |
|
336 |
|
1,273 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 December |
46,761 |
|
89,731 |
|
46,511 |
|
88,594 |
|
|
|
|
|
|
|
|
|
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.
Issuance of shares
On 17 May 2013, a director exercised 250,000 Initial Options that were granted in accordance with the Company's share option scheme (Note 29) and these shares were subsequently listed on AIM on 22 May 2013.
On 16 April 2012, the Board approved the allotment of 23,000 shares pursuant to the exercise of initial options granted to a consultant in accordance with the Company's share option scheme (Note 29) and these shares were subsequently listed on AIM on 30 April 2012.
On 28 May 2012, the Board approved the conversion of the convertible bond with face value of USD1,000,000 to 313,383 ordinary shares of the Company and these shares were subsequently listed on AIM on 7 June 2012.
24. Other reserves
The composition of other components of other reserves is as follows:
|
|
2013 |
|
2012 |
|
|
USD'000 |
|
USD'000 |
|
|
|
|
|
|
Merger reserve |
(20,256) |
|
(20,256) |
|
Foreign currency translation reserve |
(2,213) |
|
1,736 |
|
Share-based payment transaction reserve (Note 29) |
9,982 |
|
10,604 |
|
|
|
|
|
|
|
|
|
|
|
|
(12,487) |
|
(7,916) |
|
|
|
|
|
Merger reserve
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 RM1 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.
Merger reserve 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.
|
|
2013 |
|
2012 |
|
|
USD'000 |
|
USD'000 |
|
|
|
|
|
|
At 1 January |
1,736 |
|
(717) |
|
Foreign currency translation adjustments |
(3,949) |
|
2,453 |
|
|
|
|
|
|
|
|
|
|
|
At 31 December |
(2,213) |
|
1,736 |
|
|
|
|
|
Share-based payment transaction reserve
The share-based payment transaction reserve is used to recognise the value of equity-settled share-based payment transaction provided to directors, employees and consultants as part of their remuneration or compensation for services rendered. Refer Note 29 for further details of these plans.
|
|
2013 |
|
2012 |
|
|
USD'000 |
|
USD'000 |
|
|
|
|
|
|
At 1 January |
10,604 |
|
9,543 |
|
Expense recognised during the year |
204 |
|
1,128 |
|
Pursuant to issuance of ordinary shares (Note 23) |
(826) |
|
(67) |
|
|
|
|
|
|
|
|
|
|
|
At 31 December |
9,982 |
|
10,604 |
|
|
|
|
|
25. Loans and borrowings
|
|
2013 |
|
2012 |
|
|
USD'000 |
|
USD'000 |
|
|
|
|
|
|
Bank overdraft |
2,477 |
|
613 |
|
Short term revolving credit |
- |
|
1,962 |
|
Bank Guaranteed Medium Term Notes Programme |
76,607 |
|
31,954 |
|
Term loans |
52,741 |
|
84,821 |
|
|
|
|
|
|
|
|
|
|
|
|
131,825 |
|
119,350 |
|
Add: Obligations under finance leases (Note 30(c)) |
2,117 |
|
2,123 |
|
|
|
|
|
|
|
|
|
|
|
|
133,942 |
|
121,473 |
|
|
|
|
|
|
|
|
|
|
|
|
|
2013 |
|
2012 |
|
|
Maturity |
USD'000 |
|
USD'000 |
|
|
|
|
|
|
|
Current |
|
|
|
|
|
Bank overdraft BLR* + 1.0% p.a. |
On demand |
2,477 |
|
613 |
|
Short term revolving credit COF** + 2.5% p.a. |
On demand |
- |
|
1,962 |
|
Term loan BLR - 1.5% |
2014 |
5 |
|
5 |
|
Term loans BLR + 1.0% p.a. |
2014 |
965 |
|
2,292 |
|
Term loans COF + 2.0% p.a. |
2014 |
762 |
|
- |
|
Term loans COF + 2.5% p.a. |
2014 |
- |
|
964 |
|
Bridging loan COF + 1.75% p.a. |
2014 |
- |
|
12,426 |
|
Obligations under finance leases (Note 30(c)) |
2014 |
610 |
|
502 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,819 |
|
18,764 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current |
|
|
|
|
|
Term loan BLR - 1.5% p.a. |
2015 - 2031 |
159 |
|
177 |
|
Term loans BLR + 1.0% p.a. |
2015 - 2020 |
28,036 |
|
46,947 |
|
Term loans COF + 2.0% p.a. |
2015 - 2020 |
22,814 |
|
12,118 |
|
Term loans COF + 2.5% p.a. |
2015 - 2019 |
- |
|
9,892 |
|
Bank Guaranteed Medium Term Notes Programme |
2017 - 2020 |
76,607 |
|
31,954 |
|
Obligations under finance leases (Note 30(c)) |
2015 - 2017 |
1,507 |
|
1,621 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
129,123 |
|
102,709 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans and borrowings |
|
133,942 |
|
121,473 |
|
|
|
|
|
|
|
|
|
|
|
|
* BLR refers to Base Lending Rate
** COF refers to Cost of Fund
Details of the loans and borrowings, which are all denominated in RM, are as follows:
Obligations under finance leases
These obligations are secured by a charge over the leased assets (Note 15). Interest rates of the leases range from 4.13% to 6.23% (2012: 4.68% to 6.23%) p.a. Future minimum lease payments under finance leases together with the present value of the net minimum lease payments are disclosed Note 30(c).
Short-term revolving credit COF + 2.5% p.a.
During the current financial year, the short-term revolving credit, which was repayable on demand with a six months rollover period, was fully settled through the MTN Programme as elaborated below. It was secured over a leasehold land of the Group in which the rights to use the land as disclosed in Note 17 was prepaid. This revolving credit included a financial covenant which requires the subsidiary company to maintain a gearing ratio not exceeding 70%.
Bank overdrafts BLR + 1.0% p.a.
There are three (2012: two) bank overdrafts facilities which bear interest of BLR + 1% p.a. and with a total combined amount of USD4.0 million (2012: USD2.6 million) are currently available for use by the Group. The bank overdrafts are secured over leasehold lands of the Group in which it has prepaid the rights to use the lands as disclosed in Note 17. This bank overdraft includes a financial covenant which requires the subsidiary company to maintain a gearing ratio not exceeding 70%.
Term loan BLR - 1.5% p.a.
This term loan which is obtained for the purchase of a building is secured over the said building as disclosed in Note 15 and is repayable over a period of 22 years.
Term loans BLR + 1.0% p.a.
There are currently two (2012: three) term loans which bear interest of BLR + 1% p.a. obtained for the purpose of acquisition of subsidiaries and land use rights. During the current financial year, the MTN Programme as further elaborated below has wholly re-financed a term loan amounting to USD18.0 million that was due to commence repayment this year. The remaining two term loans of USD8.0 million and USD23.4 million will commence repayment in Year 2014 and Year 2015, respectively.
All term loans are repayable over a period of six years and are secured over certain leasehold land of the Group in which the Group has prepaid the rights to use the land as disclosed in Note 17 and a corporate guarantee provided by the Company. The term loan of USD23.4 million is further secured by a fixed deposit of USD801,000 (2012: USD835,000) as disclosed in Note 22. These loans include financial covenants which require the subsidiary company to maintain a gearing ratio not exceeding 70%.
Term loan COF + 2.0% p.a
There are three (2012: two) term loans which bear interest of COF + 2.0% p.a. obtained for the purpose of oil palm development activities. The total facility amount available from the term loans is USD39.9 million (2012: USD27.0 million), and is to be drawn down in two to four tranches. As at the reporting date, the Group has only drawn down USD23.8 million (2012: USD12.0 million), and the balance is available for further draw down until 31 December 2016. The term loans will commence repayment in Year 2014, Year 2015 and Year 2016, respectively, for a period of six years.
The term loans are secured over leasehold land of the Group in which the Group has prepaid the rights to use the land as disclosed in Note 17 and a corporate guarantee provided by the Company. These loans include a financial covenant which requires the subsidiary company to maintain a gearing ratio not exceeding 70%.
Term loans COF + 2.5% p.a
There were two term loans which bear interest of COF + 2.5% p.a. obtained for the purpose of partial financing of acquisition of a subsidiary and land use rights, and oil palm development activities. The total amount of loan obtained for these term loans amounted to USD11 million and the Group had fully drawn down this amount in previous years. Both term loans which were due to commence repayment in the current year were wholly re-financed through the MTN Programme as elaborated below.
The term loans were secured over a leasehold land of the Group in which the Group has prepaid the rights to use the land as disclosed in Note 17. These loans include financial covenants which require the subsidiary company to maintain a gearing ratio not exceeding 70%.
Bank Guaranteed Medium Term Notes Programme
The MTN Programme of up to RM255 million (approximately USD85 million) in nominal value is guaranteed by Malayan Banking Berhad ("MBB") for the full principal redemption of up to RM255 million and one semi-annual coupon payment. The proceeds from this programme is utilised towards the construction of the Group's first vertical steriliser oil palm mill, refinancing of the Group's certain loans and borrowings that are due for repayment as mentioned in the preceding paragraphs, and to also finance the plantation development expenditure including working capital requirements for BJ.
As at 31 December 2013, the Group has fully drawn down the second tranche of the MTN Programme totalling RM155 million (USD52 million). The first tranche of USD100 million (USD33 million) was drawn down in the previous year.
Of the first tranche of the MTN Programme, RM35 million (USD12 million) bears a coupon rate of 4.35% p.a., while the balance of RM65 million (USD21 million) bears a coupon rate of 4.45% p.a. The coupon rate for the second tranche of the MTN Programme ranges from 3.9% p.a. to 4.3% p.a. Tenure of the MTN Programme is up to 10 years from the date of the first issuance and repayment is to commence 5 years from the date of first issue.
The MTN Programme is secured over all the leasehold land of the Group in which the Group has prepaid rights to use the land as disclosed in Note 17 and a corporate guarantee provided by the Company.
Bank guarantee by MBB on the MTN Programme includes financial covenants which require the Group on a consolidated level, to maintain the following:
(a) Maximum Debt to Equity ratio of 2.25:1
(b) Minimum Debt Service Cover Ratio of 1.50:1
(c) Minimum Equity of USD92 million (or RM276 million) as at 31 December 2013
In December 2013, the Group secured a temporary relaxation from MBB to allow the Group up to 31 December 2014 to comply with the abovementioned loan covenants.
Bridging Loan COF + 1.75% p.a.
In the interim period to the drawdown of the MTN Programme, the Group obtained a bridging loan facility from Malayan Banking Berhad to part finance the construction of the vertical sterilizer oil palm mill and BJ's development expenditure. This bridging loan was repaid through the issuance of the second tranche of the MTN Programme. This loan was secured over all the leasehold land of the Group in which the Group has prepaid rights to use the land as disclosed in Note 17 and a corporate guarantee provided by the Company.
26. Convertible bonds
|
|
2013 |
|
2012 |
|
|
USD'000 |
|
USD'000 |
|
|
|
|
|
|
Face value of the convertible bonds |
17,100 |
|
2,100 |
|
Less: Embedded derivative |
(1,017) |
|
(403) |
|
Less: Transaction costs on liability component |
(571) |
|
(27) |
|
|
|
|
|
|
|
|
|
|
|
Liability component at initial recognition |
15,512 |
|
1,670 |
|
Add: Accretion of interest on the convertible bonds |
1,904 |
|
325 |
|
Add: Exchange differences |
4 |
|
- |
|
|
|
|
|
|
|
17,420 |
|
1,995 |
|
|
|
|
|
|
|
|
2013 |
|
2012 |
|
Face value |
Maturity |
USD'000 |
|
USD'000 |
|
|
|
|
|
|
|
USD2.1 million |
8 August 2015 |
2,273 |
|
1,995 |
|
USD15.0 million |
14 January 2016 |
15,147 |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,420 |
|
1,995 |
|
|
|
|
|
|
Unsecured convertible bonds of USD2.1 million:
The unsecured convertible bonds of USD2.1 million bear a cash interest coupon of 2.5% per annum and is payable semi-annually. The convertible bonds may be converted, in whole only, into 434,700 new ordinary shares of no par value in the Company. This represents a conversion price of 294 pence per share, at any time until the maturity date at the bondholder's election. In the event of non-conversion, the Company shall redeem the convertible bonds, in whole, on maturity date such that the amount paid by the Company on redemption results in the bondholder having achieved, in respect of the convertible bonds, including coupon payments, an internal rate of return of 10%.
Unsecured convertible bonds of USD15.0 million:
On 14 January 2013, the first tranche of the USD15 million convertible unsecured bonds, amounting to USD5 million, was issued to OCBC Capital Investment I Pte. Ltd. ("OCBC") The remaining two tranches with balance of USD5 million each was issued on 14 August 2013 and 23 August 2013, respectively. All three tranches bear cash interest coupon at a rate determined by adding OCBC's Cost of Funds on the business day prior to interest payment date and 2.0% per annum. Coupon is payable on a quarterly basis. The convertible bonds may be converted, in whole or in part, into 3,260,041 new ordinary shares of no par value in the Company. This represents a conversion price of 286 pence per share, at any time until the maturity date at the bondholder's election. In the event of non-conversion, the Company shall redeem the convertible bonds, in whole, on maturity date such that the amount paid by the Company on redemption results in the bondholder having achieved, in respect of the convertible bonds, including coupon payments, an internal rate of return of 15%.
The convertible bonds with face value of USD15.0 million contain financial covenants which require the Group on a consolidated level, to maintain the following:
(a) Minimum tangible net worth (i.e. equity less goodwill) of at least USD35 million
(b) Minimum current ratio of 2.0
(c) Maximum gearing ratio (consolidated total bank debt/consolidated net worth) of 5.0 in financial year 2013, 6.25 in the financial year 2014 and 5.5 in the financial year 2015.
During the financial year, the Group has obtained a waiver from OCBC on the requirement of minimum current ratio of 2.0.
Embedded derivative relating to the conversion option of the convertible bond is recorded as a "fair value through profit or loss" financial instrument with a balance of USD30,000 as at 31 December 2013 (2012: USD130,000).
27. Trade and other payables
|
|
2013 |
|
2012 |
|
|
USD'000 |
|
USD'000 |
|
|
|
|
|
|
Trade payables |
4,373 |
|
3,776 |
|
Other payables |
9,906 |
|
3,034 |
|
|
|
|
|
|
|
|
|
|
|
Total trade and other payables |
14,279 |
|
6,810 |
|
Add: |
|
|
|
|
- Other liabilities (Note 28) |
3,078 |
|
2,464 |
|
- Loans and borrowings (Note 25) |
133,942 |
|
121,473 |
|
- Convertible bonds (Note 26) |
17,420 |
|
1,995 |
|
|
|
|
|
|
|
|
|
|
|
Total financial liabilities carried at amortised cost |
168,719 |
|
132,742 |
|
|
|
|
|
Other payables that are not denominated in the functional currencies of the respective entities are as follows:
|
|
2013 |
|
2012 |
|
|
USD'000 |
|
USD'000 |
|
|
|
|
|
|
SGD |
354 |
|
135 |
|
USD |
31 |
|
75 |
|
GBP |
- |
|
1 |
|
|
|
|
|
Trade and other payables
These amounts are non-interest bearing. Trade payables are normally settled on 60 days (2012: 60 days) terms while other payables have an average term of 150 days (2012: 150 days).
Other information on financial risks of trade and other payables is disclosed in Note 33(b).
Included in other payables are amounts of USD4.2 million (2012: Nil) payable for the acquisition of Grand Performance Sdn. Bhd. as disclosed in Note 1(b).
28 Other current financial liabilities
|
|
2013 |
|
2012 |
|
|
USD'000 |
|
USD'000 |
|
|
|
|
|
|
Accrued operating expenses |
2,518 |
|
1,118 |
|
Retention monies |
560 |
|
1,346 |
|
|
|
|
|
|
|
|
|
|
|
|
3,078 |
|
2,464 |
|
|
|
|
|
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.
29. Share-based payment plans
The Company's share option scheme (the "Scheme"), as outlined and adopted in the Extraordinary General Meeting on 22 February 2011 (the "Adoption Date"), is a share incentive scheme to retain and to give recognition to employees, consultants and directors of the Group, and to recognise their contributions to the success and development of the Group. The Scheme also promotes an ownership culture by giving employees, consultants and directors an opportunity to have a real and personal direct interest in the Group and to align the interests of such persons with those of the shareholders so as to motivate them to contribute to the future growth and profitability of the Group. There are no cash settlement alternatives for this Scheme.
The Scheme will be administered by a committee comprising directors of the Company, duly authorised and appointed by the Board of Directors (the "Committee"). There are two categories of options namely Initial Option and Additional Option. Initial Option refers to options that are to be granted to the directors, employees, and consultants to subscribe for up to 3,568,000 shares whereas Additional Option refers to the additional options granted or to be granted pursuant to the Scheme subsequent to the grant of the Initial Option.
The aggregate amount of shares granted under the Scheme, when added to the amount of shares issued and issuable in respect of all options granted under the Scheme, shall not exceed 10% of the issued share capital of the Company (on a fully diluted basis) on the day preceding the Date of Grant.
Subscription Price for each share underlying the Initial Options shall equal SGD1.55 (approximately the equivalent of 75 pence). Subject to a non-cash variation condition in the issued ordinary share capital of the Company, Subscription Price for each share underlying the Additional Options shall be the higher of:
(i) the prevailing Market Price (converted to Singapore Dollars on the relevant date at the prevailing spot rate) on the Date of Grant of such Additional Options; and
(ii) the aggregate of (a) 1 pence and (b) the highest placement price per share (converted to Singapore Dollars on the relevant date at the prevailing spot rate) of any placement effected by the Company.
The Scheme shall continue to be in force at the absolute discretion of the Committee, subject to a maximum period of 10 years, commencing on the Adoption Date, provided always that the Scheme may continue beyond the above stipulated period with the approval of the Shareholders by ordinary resolution in a general meeting and of any relevant authorities which may then be required.
The vesting conditions for the grant of Additional Options shall be determined by the Committee prior to the Date of Grant of Additional Options. Vesting conditions on Initial Options are outlined as follows:
Vesting conditions
(a) Directors
The Options granted to each director, both executive and non-executive, under the Scheme shall, subject to certain performance criteria being fulfilled, be granted in four tranches as follows:
1) the first tranche of the Initial Options comprising 25% of the award shall vest to such director when
a) the average market price of the Shares is not less than 205 pence for 30 consecutive Market Days; and
b) the CPO Crushing Mill license has been issued to the Company by the Malaysian Palm Oil Board, or similar related regulatory authority, in the course of 2011.
2) the second tranche of the Initial Options comprising a further 25% of the award shall be granted to such director when
a) the average Market Price of the Shares is not less than 205 pence for 30 consecutive Market Days; and
b) the BJ Plantation is fully planted by 31 March 2012;
3) the third tranche of Options under the Scheme comprising a further 25% of the Earmarked Director Shares shall be granted to such director when, in 2012, the average Market Price of the Shares is not less than 225 pence for 30 consecutive Market Days; and
4) in relation to each director, the fourth tranche of Options granted under the Scheme comprising the final 25% of the Earmarked Director Shares shall be granted to such director when the average Market Price of the Shares is not less than 300 pence for 30 consecutive Market Days.
As at 31 December 2013 and 2012, the first, second and third tranches totalling 2,137,500 Initial Options and 800,000 Additional Options, that were granted in year 2011, are vested.
As at 31 December 2013, a director exercised 250,000 Initial Options. There was no new issuance of Initial Options or Additional Options during the current financial year.
The remaining fourth tranche of 712,500 shares (or 25% of the award) from Initial Options are not vested due to vesting conditions not met as at 31 December 2013 and 31 December 2012.
(b) Employees
Any confirmed full time employee of the Group, excluding executive directors, the Initial Options which is granted to an employee are exercisable on or after 1 January 2015; however options granted for the calendar year 2010 are exercisable on or after 31 January 2013 if the BJ, Fortune and Incosetia estates are fully planted by end of calendar year 2012.
As at 31 December 2012, certain employees were granted a total of 220,000 Initial Options and these options will only vest on or after 1 January 2015. The contractual term of each option granted is 10 years.
There was no new issuance or exercise of Initial Options as at 31 December 2013.
(c) Consultants
An Option granted to a consultant is exercisable in accordance with the Scheme.
On 16 April 2012, a consultant has exercised 23,000 Initial Options (Note 23).
There was no new issuance or exercise of Initial Options as at 31 December 2013.
Fair value of share options
The fair value of share options granted is estimated at the date of the grant using a Monte-Carlo simulation model, taking into account the terms and conditions upon which the share options were granted. The model takes into account historic and expected dividends, and share price fluctuations covariance of the Group and companies in similar industries to predict the distribution of relative share performance.
The expense recognised for this equity-settled share-based payment transaction amount to USD204,000 (2012: USD1,151,000), of which USD153,000 (2012: USD150,000) has been capitalised to biological assets.
There has been no cancellation or modification to the Scheme during the years ended 31 December 2013 or 2012.
Movements in the year
The following table illustrates the number and weighted average exercise prices (WAEP) of, and movements in, share options during the year:
|
|
|
2013 |
|
2013 |
|
2012 |
|
2012 |
|
|
|
Number |
|
WAEP |
|
Number |
|
WAEP |
|
|
|
|
|
USD |
|
|
|
USD |
|
Outstanding at 1 January |
|
3,944,000 |
|
1.92 |
|
3,747,000 |
|
1.83 |
|
Granted during the year |
|
- |
|
- |
|
220,000 |
|
2.51 |
|
Exercised during the year |
|
(250,000)* |
|
1.23 |
|
(23,000)* |
|
1.27 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at 31 December |
|
3,694,000 |
|
1.90 |
|
3,944,000 |
|
1.92 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at 31 December |
|
2,713,500 |
|
2.05 |
|
2,963,500 |
|
2.05 |
|
|
|
|
|
|
|
|
|
|
* The weighted average share price at the date of exercise of this option was USD3.65 (2012: USD4.22).
The weighted average remaining contractual life for the share options outstanding as at 31 December 2013 is 6.32 years (2012: 7.39 years).
The range of exercise price for options outstanding at the end of the year was SGD1.55 (approximately USD1.23) to SGD5.07 (approximately USD4.01) per share (2012: SGD1.55 (approximately USD1.27) per share to SGD5.07 (approximately USD4.15) per share).
The expected life of the share options is based on historical data and current expectations and is not necessarily indicative of exercise patterns that may occur. The expected volatility reflects the assumption that the historical volatility over a period similar to the life of the options is indicative of future trends, which may also not necessarily be the actual outcome.
30. Commitments
(a) Capital commitments
Capital commitments contracted for at the end of the reporting period not recognised in the financial statements are as follows:
|
|
|
2013 |
|
2012 |
|
|
|
USD'000 |
|
USD'000 |
|
|
|
|
|
|
|
Approved and contracted for: |
|
|
|
|
|
- property, plant and equipment |
|
5,878 |
|
10,434 |
|
|
|
|
|
|
|
Approved and not contracted for: |
|
|
|
|
|
- property, plant and equipment |
|
9,221 |
|
19,970 |
|
- biological assets |
|
4,093 |
|
10,162 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,192 |
|
40,566 |
|
|
|
|
|
|
30. Commitments (cont'd)
(b) Operating lease commitments
As lessee
In addition to the land use rights disclosed in Note 17, the Group has no other operating leases.
(c) Finance leases commitments
As lessee
The Group has finance leases for various items of plant and equipment and motor vehicles.
Future minimum lease payments under finance leases together with the present value of the net minimum lease payments are as follows:
|
|
2013 |
|
2012 |
|||||||
|
|
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 |
724 |
|
610 |
|
622 |
|
502 |
|
||
|
Later than one year but not more than five years |
1,630 |
|
1,507 |
|
1,782 |
|
1,621 |
|
||
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
||
|
Total minimum lease Payments |
2,354 |
|
2,117 |
|
2,404 |
|
2,123 |
|
||
|
Less: Amount representing finance charges |
(237) |
|
- |
|
(281) |
|
- |
|
||
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
||
|
Present value of minimum lease payments |
2,117 |
|
2,117 |
|
2,123 |
|
2,123 |
|
||
|
|
|
|
|
|
|
|
|
|
||
31. 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 2013 and 2012, which are conducted at mutually agreed terms between the parties.
31. Related party disclosures (cont'd)
|
|
2013 |
|
2012 |
|
|
USD'000 |
|
USD'000 |
|
|
|
|
|
|
Transactions with related parties |
|
|
|
|
- Rental expense |
63 |
|
42 |
|
- Payment of expenses on behalf of related parties |
11 |
|
9 |
|
- Administrative costs charged |
166 |
|
157 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount due from related parties |
8 |
|
2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount due to related parties |
197 |
|
42 |
|
|
|
|
|
Amounts due from/(to) related parties are non-trade related, unsecured, non-interest bearing and are repayable in cash on demand.
Amount due from/(to) related parties are included within the line items in Notes 20 and 27.
Related parties represent companies in which certain directors of the Group have financial interest and are also directors of these companies.
Compensation of key management personnel
|
|
|
2013 |
|
2012 |
|
|
|
USD'000 |
|
USD'000 |
|
|
|
|
|
|
|
Directors' salaries |
|
639 |
|
723 |
|
Directors' fees (Note 9) |
|
187 |
|
187 |
|
Short term employee benefits |
|
436 |
|
532 |
|
Contributions to defined contribution plans |
|
55 |
|
86 |
|
Share-based payment transactions |
|
79 |
|
1,032 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,396 |
|
2,560 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation comprise |
|
|
|
|
|
|
|
|
|
|
|
Amounts paid to: |
|
|
|
|
|
- Directors of the Company |
|
820 |
|
904 |
|
- Directors of a subsidiary company |
|
6 |
|
6 |
|
- Other key management personnel |
|
491 |
|
618 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,317 |
|
1,528 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based payment transactions expense: |
|
|
|
|
|
- Directors of the Company |
|
- |
|
958 |
|
- Other key management personnel |
|
79 |
|
74 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
79 |
|
1,032 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,396 |
|
2,560 |
|
|
|
|
|
|
The amounts disclosed above are the amounts recognised as an expense during the reporting period related to key management personnel.
Directors' and other key management personnel interests in the Company's share option scheme ("the Scheme")
Share options held by directors (Note 29) and other key management personnel under the Scheme have the following expiry dates and exercise price:
|
|
|
Expiry date |
|
Exercise price |
|
Number outstanding |
||
|
Directors |
|
|
|
|
|
2013 |
|
2012 |
|
Issue date: |
|
|
|
|
|
|
|
|
|
- 2011 |
|
2021 |
|
SGD1.55 |
|
2,600,000 |
|
2,850,000 |
|
- 2011 |
|
2021 |
|
SGD5.07 |
|
800,000 |
|
800,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other key management personnel |
|
|
|
|
|
|
|
|
|
Issue date: |
|
|
|
|
|
|
|
|
|
- 2011 |
|
2021 |
|
SGD1.55 |
|
32,000 |
|
32,000 |
|
- 2012 |
|
2022 |
|
SGD4.89 |
|
100,000 |
|
100,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32. Fair value of assets and liabilities
(a) Fair value hierarchy
The Group categories fair value measurements using a fair value hierarchy that is dependent on the valuation inputs used as follows:
- Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Group can access at the measurement date,
- Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, and
- Level 3 - Unobservable inputs for the asset or liability.
Fair value measurements that use inputs of different hierarchy levels are categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.
(b) Assets and liabilities measured at fair value
The following table shows an analysis of each class of assets and liabilities measured at fair value at the end of the reporting period:
|
|
Quoted prices in active markets for identical instruments |
|
Significant other observable inputs |
|
Significant unobservable inputs |
|
Total |
|
|
(Level 1) |
|
(Level 2) |
|
(Level 3) |
|
|
|
Group |
US$'000 |
|
US$'000 |
|
US$'000 |
|
US$'000 |
|
|
|
|
|
|
|
|
|
|
2013 |
|
|
|
|
|
|
|
|
Recurring fair value measurements: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-financial assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Biological assets |
- |
|
- |
|
66,994 |
|
66,994 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative financial liabilities Convertible bonds |
- |
|
30 |
|
- |
|
30 |
|
|
|
|
|
|
|
|
|
(c) Level 2 fair value measurements
The following is a description of the valuation techniques and inputs used in the fair value measurement for assets and liabilities that are categorised within Level 2 of the fair value hierarchy:
Derivative financial liabilities
Convertible bonds
Convertible bonds are valued using a valuation technique with market observable inputs. The most frequently applied valuation techniques is binomial tree models. The models incorporate various inputs including share price, risk free rate, FX spot rate, dividend, volatility based on historical daily log return of the shares and credit spread based on the transacted price at Issue date.
(d) Level 3 fair value measurements
(i) Information about significant unobservable inputs used in Level 3 fair value measurements
The following table shows the information about fair value measurements using significant unobservable inputs (Level 3).
|
Description |
Fair value at 31 December 2013 |
|
Valuation techniques |
|
Unobservable inputs |
|
Range |
|
|
|
|
|
|
|
|
|
|
Biological assets |
66,994 |
|
Discounted cash flow |
|
Discount rate |
|
9.5% - 10.5% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Projected selling price of CPO |
|
USD868 per tonne |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FFB yield |
|
0.0 - 21.6 tonnes per hectare |
|
|
|
|
|
|
|
|
|
For biological assets, a significant increase (decrease) in discount rate would result in a significantly lower (higher) fair value. Changes in projected selling price of CPO and FFB yield will result in directionally similar changes in fair value.
(i) Movements in Level 3 assets measured at fair value
The movements in biological assets and derivative financial liabilities measured at fair value are disclosed in Note 16 and Note 26 respectively.
(iii) Valuation policies and procedures
To determine the fair value of biological assets, the Group engages external valuation experts to perform the valuation. The corporate finance team is responsible for selecting and engaging valuation experts that possess the relevant credentials and knowledge on the subject of valuation, valuation methodologies, and IFRS 13 fair value measurement guidance.
The corporate finance team reviews the appropriateness of the valuation methodologies and assumptions adopted by the external valuation experts. The corporate finance team also evaluates the appropriateness and reliability of the inputs (including those developed internally by the Group) used in the valuations.
Significant changes in fair value measurements from period to period are evaluated by the corporate finance team for reasonableness. Key drivers of the changes are identified and assessed for reasonableness against relevant information from independent sources, or internal sources if necessary and appropriate.
(e) Assets and liabilities not carried at fair value but for which fair value is disclosed
The following table shows an analysis of the assets and liabilities not measured at fair value but for which fair value is disclosed:
|
|
Fair value measurements at the end of the reporting period using |
|
|||||||
|
Group |
Quoted prices in active market for identical instruments |
|
Significant other observable inputs |
|
Significant unobservable inputs |
|
Total |
|
Carrying amount |
|
|
(Level 1) |
|
(Level 2) |
|
(Level 3) |
|
|
|
|
|
|
US$'000 |
|
US$'000 |
|
US$'000 |
|
US$'000 |
|
US$'000 |
|
2013 |
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans and borrowings |
|
|
|
|
|
|
|
|
|
|
- Obligations under finance leases |
- |
|
- |
|
2,098 |
|
2,098 |
|
2,117 |
|
|
|
|
|
|
|
|
|
|
|
|
- Bank Guarantee Medium Term Notes Programme |
- |
|
- |
|
77,775 |
|
77,775 |
|
76,607 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Determination of fair value
The fair value of obligations under finance leases and Bank Guarantee Medium Term Notes Programme is estimated by discounting future cash flows using rates currently available for debt on similar terms, credit risk and remaining maturities.
(f) 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:
|
|
2013 |
|
2012 |
||||
|
|
Carrying amount |
|
Fair value |
|
Carrying amount |
|
Fair value |
|
|
USD'000 |
|
USD'000 |
|
USD'000 |
|
USD'000 |
|
|
|
|
|
|
|
|
|
|
Financial liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans and borrowings |
|
|
|
|
|
|
|
|
- Obligations under finance leases |
2,117 |
|
2,098 |
|
2,123 |
|
2,129 |
|
- Convertible bonds |
17,420 |
|
* |
|
1,995 |
|
* |
|
- Bank Guarantee Medium Term Notes Programme |
76,607 |
|
77,775 |
|
31,954 |
|
31,938 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Convertible bonds
It is not practicable and cost outweighs benefits to determine the fair value of the unquoted convertible bonds
33. Financial risk management objectives and policies
The Group is 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 a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Group is exposed to credit risk from its operating activities (primarily trade and other receivables) and from its financing activities, mainly deposits with banks.
Trade and other receivables
The Group managed customer credit risk through the Group's established policy, procedures and control relating to customer credit risk management. Credit quality of a customer is assessed based on an extensive credit worthiness assessment. Credit risk for the Group is also minimised by the oil palm industry norm whereby all trade debtors (i.e., mill operators and refineries) are required to settle their outstanding balances within 14 days from date FFBs are received by the mill or the date CPOs and PKs are received by the refineries. The limited supply of FFBs in the Group's area of operations for mill consumption had also encouraged mill operators to make settlement within the industry norm to ensure continuous supply of FFBs by oil palm developers to their respective mills.
Currently, the Group does not have significant exposure to credit risk in trade receivables as majority of the oil palm plantation is still in development stage and more than half of the FFBs produced are sold internally to the Group's mill. The sale of CPOs and PKs by the mill is to reputable refineries that have proven good payment track records.
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 deposits
Deposits placed have minimal credit risk as these are placed with creditworthy counterparties and are refundable. Cash and short-term deposits 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 relates to three customers (2012: three customers).
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 and short-term deposits 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.
(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 arises 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 and convertible bonds are sold to meet the Group's liquidity requirements. The Group is given three to four years moratorium period for its bank loan repayment which will only commence when the Group is able to generate steady income from crop sale in the fifth year from planting. To further manage its liquidity, the Group has refinanced certain of its loans through the MTN Programme as disclosed in Note 25. 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 |
|
2013 |
|
|
|
|
|
|
|
|
Financial assets: |
|
|
|
|
|
|
|
|
Trade and other receivables |
6,738 |
|
- |
|
- |
|
6,738 |
|
Cash and bank balances |
10,813 |
|
- |
|
- |
|
10,813 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total undiscounted financial assets |
17,551 |
|
- |
|
- |
|
17,551 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Analysis of financial instruments by remaining contractual maturities (cont'd)
|
|
1 year or less |
|
1 to 5 Years |
|
Over 5 years |
|
Total |
|
|
USD'000 |
|
USD'000 |
|
USD'000 |
|
USD'000 |
|
Financial liabilities: |
|
|
|
|
|
|
|
|
Trade and other payables |
(14,279) |
|
- |
|
- |
|
(14,279) |
|
Other liabilities |
(3,078) |
|
- |
|
- |
|
(3,078) |
|
Loans and borrowings* |
(11,433) |
|
(59,368) |
|
(88,690) |
|
(159,491) |
|
Derivative financial instruments |
(30) |
|
- |
|
- |
|
(30) |
|
Convertible bonds** |
(388) |
|
(17,480) |
|
- |
|
(17,868) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total undiscounted financial liabilities |
(29,208) |
|
(76,848) |
|
(88,690) |
|
(194,746) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net undiscounted financial liabilities |
(11,657) |
|
(76,848) |
|
(88,690) |
|
(177,195) |
|
|
|
|
|
|
|
|
|
|
|
1 year or less |
|
1 to 5 Years |
|
Over 5 years |
|
Total |
|
2012 |
USD'000 |
|
USD'000 |
|
USD'000 |
|
USD'000 |
|
Financial assets: |
|
|
|
|
|
|
|
|
Trade and other receivables |
6,714 |
|
- |
|
- |
|
6,714 |
|
Cash and bank balances |
15,785 |
|
- |
|
- |
|
15,785 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total undiscounted financial assets |
22,499 |
|
- |
|
- |
|
22,499 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities: |
|
|
|
|
|
|
|
|
Trade and other payables |
(6,810) |
|
- |
|
- |
|
(6,810) |
|
Other liabilities |
(2,464) |
|
- |
|
- |
|
(2,464) |
|
Loans and borrowings* |
(26,323) |
|
(73,672) |
|
(65,318) |
|
(165,313) |
|
Derivative financial instruments |
(130) |
|
- |
|
- |
|
(130) |
|
Convertible bonds** |
(52) |
|
(2,184) |
|
- |
|
(2,236) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total undiscounted financial liabilities |
(35,779) |
|
(75,856) |
|
(65,318) |
|
(176,953) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net undiscounted financial liabilities |
(13,280) |
|
(75,856) |
|
(65,318) |
|
(154,454) |
|
|
|
|
|
|
|
|
|
* The contractual undiscounted repayment obligations is assumed based on the bankers' BLR and COF as at the reporting date
** Assuming the convertible bonds are redeemed on maturity rather than converted to shares during period of issue
(c) Interest rate risk
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.
Sensitivity analysis for interest rate risk
As at 31 December 2013, had the interest rates of the financial assets and liabilities which are at floating rates been 0.5% higher/lower (2012: 1%), ceteris paribus, the impact would be as follows:
|
|
2013 |
|
2012 |
|
|
USD'000 |
|
USD'000 |
|
|
|
|
|
|
Effect on total borrowing cost: |
|
|
|
|
- +0.5% (2012: +1%) |
282 |
|
618 |
|
- -0.5% (2012: -1%) |
(282) |
|
(618) |
|
|
|
|
|
The assumed movement in percentage for interest rate sensitivity analysis is based on the currently observable market environment.
(d) Commodity price risk
The Group's fair value measurement of its biological assets is susceptible to the volatility in the crude palm oil ("CPO") prices in Malaysia. The Group's policy in measuring fair value of the biological assets is to adopt an average CPO price over a period of five years given CPO trend over the last 30 years has been significantly volatile. This average CPO price will also be more relevant as it is reflective of the increase in production cost and impact of inflation in recent years.
Sensitivity analysis for commodity price risk
As at 31 December 2013, had the average CPO price used in measuring fair value of the biological assets been 3% higher/lower (2012: 3%), ceteris paribus, the impact on loss before tax would be as follows:
|
|
2013 |
|
2012 |
|
|
USD'000 |
|
USD'000 |
|
|
|
|
|
|
Effect on fair value changes in biological assets: |
|
|
|
|
- +3% |
8,251 |
|
5,666 |
|
- -3% |
(8,135) |
|
(6,478) |
|
|
|
|
|
34. 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 2013 and 2012.
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 80%.
|
|
|
2013 |
|
2012 |
|
|
|
USD'000 |
|
USD'000 |
|
|
|
|
|
|
|
Loans and borrowings (Note 25) |
|
133,942 |
|
121,473 |
|
Total equity |
|
43,195 |
|
57,030 |
|
|
|
|
|
|
|
Gearing ratio |
|
76% |
|
68% |
|
|
|
|
|
|
The Group has complied with financial loan covenants for all the loans and borrowings as at 31 December 2013 and 2012.
35. Segment information
For management purposes, the Group is organised into business units based on its products and services and has three reportable segments as follows:
· The oil palm plantation segment, which produces FFBs and develop oil palm plantation;
· The oil palm mill segment, which produces CPOs and PKs; and
· Investment holding segment, which provides corporate services to the Group.
No operating segments have been aggregated to form the above reportable operating segments.
The Executive Management Committee monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss and is measured consistently with operating profit or loss in the consolidated financial statements. However, certain Group financing (including the interest expense and interest income) and income taxes are managed on a Group basis and are not allocated to operating segments. Financing obtained for the specific purpose of each segment is recognised within the segment itself.
Transfer prices between operating segments are on an arm's length basis in a manner similar to transactions with third parties.
No segmental information is prepared based on geographical area as all operations are located within one location, Malaysia.
|
Year ended 31 December 2013 |
|
Plantation activities |
|
Oil palm milling activities |
|
Investment holding |
|
Total segments |
|
Adjustments and eliminations |
|
Consolidated |
|
|
|
USD'000 |
|
USD'000 |
|
USD'000 |
|
USD'000 |
|
USD'000 |
|
USD'000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
External customers |
|
1,758 |
|
22,005 |
|
- |
|
23,763 |
|
- |
|
23,763 |
|
Inter-segment |
|
2,244 |
|
- |
|
- |
|
2,244 |
|
(2,244) |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue |
|
4,002 |
|
22,005 |
|
- |
|
26,007 |
|
(2,244) |
|
23,763 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Results |
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortisation |
|
1,594 |
|
798 |
|
118 |
|
2,510 |
|
- |
|
2,510 |
|
Gain arising on fair value changes in biological assets |
|
3,183 |
|
- |
|
- |
|
3,183 |
|
- |
|
3,183 |
|
Interest expense |
|
3,213 |
|
538 |
|
- |
|
3,751 |
|
- |
|
3,751 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment loss |
|
(4,836) |
|
(1,730) |
|
(2,939) |
|
(9,505) |
|
- |
|
(9,505) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment assets |
|
170,877 |
|
34,598 |
|
76,817 |
|
282,292 |
|
(72,564) |
|
209,728 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment liabilities |
|
137,021 |
|
34,886 |
|
5,084 |
|
176,991 |
|
(72,564) |
|
104,427 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other disclosures |
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditure |
|
32,242 |
|
7,148 |
|
13 |
|
39,403 |
|
- |
|
39,403 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inter-segment revenues are eliminated upon consolidation and reflected in the "adjustments and eliminations" column. All other adjustments and eliminations are part of detailed reconciliations presented further below.
|
Year ended 31 December 2012 |
|
Plantation activities |
|
Oil palm milling activities |
|
Investment holding |
|
Total segments |
|
Adjustments and eliminations |
|
Consolidated |
|
|
|
USD'000 |
|
USD'000 |
|
USD'000 |
|
USD'000 |
|
USD'000 |
|
USD'000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
External customers |
|
2,820 |
|
- |
|
- |
|
2,820 |
|
- |
|
2,820 |
|
Inter-segment |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue |
|
2,820 |
|
- |
|
- |
|
2,820 |
|
- |
|
2,820 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Results |
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortisation |
|
1,038 |
|
21 |
|
116 |
|
1,175 |
|
- |
|
1,175 |
|
Gain arising on fair value changes in biological assets |
|
1,989 |
|
- |
|
- |
|
1,989 |
|
- |
|
1,989 |
|
Interest expense |
|
2,065 |
|
2 |
|
- |
|
2,067 |
|
- |
|
2,067 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment loss |
|
(1,943) |
|
(341) |
|
(2,858) |
|
(5,142) |
|
- |
|
(5,142) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment assets |
|
148,734 |
|
30,987 |
|
75,988 |
|
255,709 |
|
(67,147) |
|
188,562 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment liabilities |
|
117,777 |
|
29,594 |
|
1,020 |
|
148,391 |
|
(67,147) |
|
81,244 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other disclosures |
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditure |
|
67,643 |
|
21,090 |
|
32 |
|
88,765 |
|
- |
|
88,765 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income and certain finance costs, gain arising from changes in fair value of embedded derivative of the convertible bonds are not allocated to individual segments as the underlying instruments are managed on a group basis.
Current taxes, deferred taxes, share-based payment transaction expense, goodwill on consolidation and certain liabilities are not allocated to those segments as they are also managed on a group basis.
Capital expenditure consists of additions to property, plant and equipment, biological assets and land use rights.
Inter-segment revenues are eliminated on consolidation.
|
|
2013 |
|
2012 |
|
Reconciliation of loss before tax |
USD'000 |
|
USD'000 |
|
|
|
|
|
|
Segment loss |
(9,505) |
|
(5,142) |
|
Interest income |
245 |
|
280 |
|
Interest expense |
(2,909) |
|
(1,414) |
|
Share-based payment transaction |
(5) |
|
(963) |
|
Gain arising from changes in fair value of embedded derivative of the convertible bonds |
721 |
|
172 |
|
Impairment of goodwill |
- |
|
(5) |
|
|
|
|
|
|
|
|
|
|
|
Group loss |
(11,453) |
|
(7,072) |
|
|
|
|
|
|
|
|
|
|
|
|
2013 |
|
2012 |
|
Reconciliation of assets |
USD'000 |
|
USD'000 |
|
|
|
|
|
|
Segment assets |
209,728 |
|
188,562 |
|
Deferred tax assets |
511 |
|
178 |
|
Goodwill arising on consolidation |
7,099 |
|
7,619 |
|
Income tax recoverable |
36 |
|
99 |
|
|
|
|
|
|
|
|
|
|
|
Total assets |
217,374 |
|
196,458 |
|
|
|
|
|
|
|
|
|
|
|
|
2013 |
|
2012 |
|
Reconciliation of liabilities |
USD'000 |
|
USD'000 |
|
|
|
|
|
|
Segment liabilities |
104,427 |
|
81,244 |
|
Deferred tax liabilities |
5,430 |
|
6,556 |
|
Loans and borrowings |
46,872 |
|
49,503 |
|
Derivative financial instruments |
30 |
|
130 |
|
Convertible bonds |
17,420 |
|
1,995 |
|
|
|
|
|
|
|
|
|
|
|
Total liabilities |
174,179 |
|
139,428 |
|
|
|
|
|
Information about major customers
The following two (2012: one) customers of the Group have contributed to more than 10% of the total revenue of the Group:
|
|
2013 |
|
2012 |
|
|
USD'000 |
|
USD'000 |
|
|
|
|
|
|
Sales from plantation activities |
|
|
|
|
Customer 1 |
- |
|
2,165 |
|
|
|
|
|
|
Sales from oil palm milling activities |
|
|
|
|
Customer 2 |
15,477 |
|
- |
|
Customer 3 |
6,151 |
|
- |
|
|
|
|
|
36. Authorisation of financial statements for issue
The consolidated financial statements for the financial year ended 31 December 2013 were authorised for issue in accordance with a resolution of the Directors made on 30 June 2014.
This information is provided by RNS
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