TIDMAEP
RNS Number : 1363Q
Anglo-Eastern Plantations PLC
27 August 2014
27 August2014
Anglo-Eastern Plantations Plc
("AEP", "Group" or "Company")
Announcement of interim results for six months ended 30 June
2014
Anglo-Eastern Plantations Plc, and its subsidiaries are a major
producer of palm oil and rubber with plantations across Indonesia
and Malaysia amounting to some 127,794 hectares, has today released
its results for the six months ended 30 June 2014.
Financial Highlights
2014 2013 2013
6 months 6 months 12 months
to 30 to 30 to 31
June June Dec
$ m $ m $ m
(unaudited) (unaudited (audited)
& restated)
Revenue 130.0 83.5 201.9
Profit before tax
- before biological asset ("BA")
adjustment 43.2 15.8 59.7
- after BA adjustment 66.3 18.3 153.4
EPS, after BA adjustment 103.66cts 21.11cts 235.95cts
Total Net Assets 552.0 463.2 494.0
Enquiries:
Anglo-Eastern Plantations Plc
Dato' John Lim Ewe Chuan 020 7216 4621
Charles Stanley Securities
Russell Cook / Karri Vuori 020 7149 6000
Chairman's statement
I am pleased to present the interim results for the Company for
the six months to 30 June 2014. The Group performance improved
significantly compared to last year due to improved Crude Palm Oil
("CPO") prices, higher Fresh Fruit Bunches ("FFB") production and
increased purchase of external crops by the mills.
Despite the relatively good performance in the first half the
Board emphasises that challenging times are ahead for the Group and
the palm oil industry in general. Of late CPO price has weakened
mainly due to the prospect of a record soybean production in North
and South America on the back of favourable weather expectations
and increased planting acreage.
Demand remains soft as top buyers in India and China purchase a
greater proportion of soybean as the price differential between the
two edible oils continues to narrow. The spread was about $98 per
metric tonne on 4 July 2014 down from an average of $244/mt on the
same date in 2013. Pressure on the CPO price is exacerbated further
by a good supply of sunflower oil in the market at very competitive
prices. A slowly deflating energy market due to the poor
infrastructure for oil distribution and biodiesel blending in some
developing countries has also undermined earlier widely held
expectations for biodiesel to absorb surplus CPO.
Operational and financial performance
For the six months ended 30 June 2014, revenue was $130.0
million, an increase of 56% (1H 2013: $83.5 million). Gross margins
for the period increased from 25% to 35% reflecting a 6% increase
in average CPO price in the first half of 2014 compared to the same
period in the previous year. This was on top of 20% weakening of
Indonesian Rupiah against the US Dollar for the same period.
The Group benefited from a $23.1 million revaluation of its
biological assets ("BA valuation") (1H 2013: $2.5 million). With
this contribution operating profits for the period increased by
259% to $63.9 million (1H 2013: $17.8 million) while profit before
tax was $66.3 million, 262% higher than the $18.3 million achieved
for the same period in 2013.
The resulting earnings per share for the period were up 391% at
103.66cts (1H 2013: 21.11cts).
During the first six months of 2014 the CPO price averaged at
$895/mt compared to $847/mt for 1H 2013. FFB production for the
first six months of 2014 was 393,900mt, 17% higher compared to
335,900mt for 1H 2013. Bought-in crops for the same period was
310,900mt, 62% higher than last year of 191,900mt due to better
prices offered for external crops.
The Group's balance sheet remains strong and cash flow remains
healthy even after our capital expenditure necessary to maintain
immature trees and new planting.
The BA valuation is determined using discounted cash flow over
the expected 20-year economic life of the assets. Among the
assumption used in the valuation includes the 10-year average CPO
price. The BA valuation increased by $23.1 million for 30 June 2014
was due primarily to the increase in the 10-year average CPO price
from $700/mt to $725/mt.
As at 30 June 2014 the Group's total cash balance was $115.8
million (1H 2013: $98.7 million) with total borrowings of $35.0
million (1H 2013: $35.0 million), giving a net cash position of
$80.8 million, compared to $63.7million as at 30 June 2013.
Operating costs
The operating costs for the Indonesian operations were higher in
1H 2014 compared to the same period in 2013 mainly due to the
increase in wages, fertilisers, fuel and general upkeep of
plantations. Higher operating costs were also partly attributed to
13% increase in matured areas.
Production and Sales
2014 2013 2013
6 months 6 months Year
to 30 June to 30 June to 31 December
(unaudited) (unaudited) (audited)
mt mt mt
Oil palm production
FFB
- all estates 393,900 335,900 787,500
- bought-in or processed for
third parties 310,900 191,900 496,600
Saleable CPO 141,700 109,900 262,600
Saleable palm kernels 33,100 25,400 61,500
Oil palm sales
CPO 145,000 108,700 253,200
Palm kernels 31,600 24,900 60,800
FFB sold outside 37,300 12,300 54,300
Rubber production 480 450 1,049
The Group's five mills processed a total of 667,500mt in FFB for
the 1H 2014, a 29% increase compared to 515,500mt for the same
period last year.
Internal crop production was higher by 17% in line with an
increase in matured plantations in the Bengkulu and Central
Kalimantan.
Bought-in crops were 62% higher than last year due to additional
sources of FFB supplies and improved pricing.
Capital outlay is required to improve road conditions in
Bengkulu, easing the FFB transportation especially during rainy
season. Significant capital expenditure is expected in the
replanting of 1,029ha of old palms in North Sumatra.
Commodity prices
CPO price was fairly strong for the 1H 2014 and hit a high of
$993/mt in March 2014. The average CPO price for 1H 2014 was
$895/mt (1H 2013: $847/mt). The higher CPO price in the first three
months of 2014 was due to initial concerns over dry weather that
hit Peninsular Malaysia and parts of Indonesia which delayed the
ripening of fruits.
Rubber price averaged $1,823/mt, 30% lower than 2013 (1H 2013:
$2,599/mt).
Development
The Group's planted areas at 30 June 2014 comprised:
Total Mature Immature
ha ha ha
North Sumatra 19,249 17,702 1,547
Bengkulu 18,819 17,717 1,102
Riau 4,873 4,873 -
South Sumatra 3,969 159 3,810
Kalimantan 10,391 4,651 5,740
Bangka 307 - 307
Plasma 734 510 224
-------- -------- ----------
Indonesia 58,342 45,612 12,730
Malaysia 3,695 3,379 316
-------- -------- ----------
Total : 30 June 2014 62,037 48,991 13,046
-------- -------- ----------
Total : 31 December 2013 61,099 43,236 17,863
-------- -------- ----------
Total : 30 June 2013 59,715 43,483 16,232
-------- -------- ----------
The Group's new planting for the first six months ended 30 June
2014 totalled 941ha. The slow rate of new planting is due to
protracted land compensation negotiations.
The Group is optimistic that planting will pick up in the second
half of 2014. The Group's total landholding comprises some
127,794ha, of which the planted area stands around 62,037ha (1H
2013: 59,715ha).
The biogas purification equipment and biomass plant for the mill
in North Sumatra are in final stages of testing and commissioning
in early Q3 2014. This mill will enhance the treatment of the
effluent and at the same time mitigate the emission of biogas.
Under this project, the empty fruit bunches will be processed into
dried long fibres for export.
The earthworks for the construction of the 45mt/hr palm oil mill
in Central Kalimantan are 85% completed while civil and mechanical
works is progressing as scheduled with the mill expected to be
completed and operational in Q2 2015.
Dividend
As in previous years no interim dividend has been declared. A
final dividend of 3.0 pence per share in respect of the year to 31
December 2013 was paid on 17 June 2014.
Outlook
It has been reported in the Public Ledger that many buyers of
refined palm oil in China struggled for funding as the country
crackdown on commodity financing in the face of slowing domestic
demand. This may lead to lower CPO imports as a result of tighter
access to credit. However, the industry believe CPO price is
expected to be resilient due to concerns on weaker FFB production
in Malaysia and parts of Indonesia in the fourth quarter of 2014
due to a prolonged dry spell in the first three months of the year.
Parts of some growing areas in Malaysia and Indonesia received less
than 50 millimetres of rain in January and February, the driest
period since 1997. El Nino weather phenomenon is also forecasted
this year and if materialises could induce droughts which would
curb production and yield.
The Board remains cautiously confident of reporting a
satisfactory level of profitability. Cash generation is expected to
remain strong and the Board looks forward to reporting further
progress in its next Interim Management Statement.
Principal risks and uncertainties
The directors do not consider that the principal risks and
uncertainties have changed since the publication of the annual
report for the year ended 31 December 2013.
A more detailed explanation of the risks relevant to the Group
is on pages 18 to 20 and from pages 78 to 83 of the 2013 annual
report which is available at www.angloeastern.co.uk.
Following the conclusion of the discussions with the Financial
Reporting Council ("FRC") regarding the use of current market data
to estimate notional rent for the use of land in its discounted
cash flow for the determination of biological assets, details of
which were set out in the 2013 Annual Report and Accounts, the
Group has adopted a notional rent equivalent to 9% of the value of
planted land in valuing its biological asset and resulted in the
accounts for the period ended 30 June 2013 being restated. The
details of the restatement are disclosed in Note 2 - Prior period
restatement on page 15.
Madam Lim Siew Kim
Chairman
27 August 2014
Responsibility Statements
We confirm that to the best of our knowledge:
a) The unaudited interim financial statements have been prepared
in accordance with IAS34: Interim Financial Reporting as adopted by
the European Union;
b) The Chairman's statement includes a fair review of the
information required by DTR 4.2.7R (an indication of important
events during the first six months and a description of the
principal risks and uncertainties for the remaining six months of
the year); and
c) The interim financial statements include a fair review of the
information required by DTR 4.2.8R (material related party
transactions in the six months ended 30 June 2014 and any material
changes in the related party transactions described in the last
Annual Report) of the Disclosure and Transparency Rules of the
United Kingdom Financial Services Authority.
By order of the Board
Dato' John Lim Ewe Chuan
27 August 2014
Condensed Consolidated Income Statement
2014 2013 2013
6 months to 30 June 6 months to 30 June Year to 31 December
(unaudited) (unaudited & restated) (audited)
--------------------------------------- -------------------------------------- ---------------------------------------
Notes Result Result Result
Continuing before before before
operations BA BA BA BA BA BA
adjustment adjustment Total adjustment adjustment Total adjustment adjustment Total
$000 $000 $000 $000 $000 $000 $000 $000 $000
------------------- ------- ------------ ------------ ------------ ------------ ---------- ------------ ------------ -----------
Revenue 130,006 - 130,006 83,528 - 83,528 201,917 - 201,917
Cost of sales (84,892) - (84,892) (62,408) - (62,408) (133,400) - (133,400)
------------------- ------- ------------ ------------ ----------- ------------ ------------ ---------- ------------ ------------ -----------
Gross profit 45,114 - 45,114 21,120 - 21,120 68,517 - 68,517
Biological asset
revaluation
movement (BA
adjustment) - 23,103 23,103 - 2,503 2,503 - 93,661 93,661
Administration
expenses (4,300) - (4,300) (5,795) - (5,795) (8,898) - (8,898)
------------------- ------- ------------ ------------ ----------- ------------ ------------ ---------- ------------ ------------ -----------
Operating profit 40,814 23,103 63,917 15,325 2,503 17,828 59,619 93,661 153,280
Exchange loss 413 - 413 (512) - (512) (2,781) - (2,781)
Finance income 2,942 - 2,942 1,763 - 1,763 4,676 - 4,676
Finance expense 4 (1,003) - (1,003) (784) - (784) (1,774) - (1,774)
------------------- ------- ------------ ------------ ----------- ------------ ------------ ---------- ------------ ------------ -----------
Profit before tax 5 43,166 23,103 66,269 15,792 2,503 18,295 59,740 93,661 153,401
Tax expense 6 (11,918) (5,776) (17,694) (5,926) (626) (6,552) (16,178) (23,415) (39,593)
------------------- ------- ------------ ------------ ----------- ------------ ------------ ---------- ------------ ------------ -----------
Profit for the
period 31,248 17,327 48,575 9,866 1,877 11,743 43,562 70,246 113,808
------------------- ------- ------------ ------------ ----------- ------------ ------------ ---------- ------------ ------------ -----------
Attributable to:
- Owners of the
parent 25,879 15,209 41,088 6,859 1,509 8,368 35,950 57,571 93,521
- Non-controlling
interests 5,369 2,118 7,487 3,007 368 3,375 7,612 12,675 20,287
------------------- ------- ------------ ------------ ----------- ------------ ------------ ---------- ------------ ------------ -----------
31,248 17,327 48,575 9,866 1,877 11,743 43,562 70,246 113,808
------------------- ------- ------------ ------------ ----------- ------------ ------------ ---------- ------------ ------------ -----------
Earnings per share
for profit
attributable
to the owners of
the
parent during the
period
- basic 8 103.66cts 21.11cts 235.95cts
- diluted 8 103.54cts 21.09cts 235.67cts
Condensed Consolidated Statement of Comprehensive Income
2014 2013 2013
6 months 6 months Year
to 30 June to 30 June to 31 December
(unaudited) (unaudited & restated) (audited)
$000 $000 $000
---------------------------------------------------- ------------- ------------------------ ----------------
Profit for the period 48,575 11,743 113,808
---------------------------------------------------- ------------- ------------------------ ----------------
Other comprehensive income
Items may be reclassified to profit or loss
in subsequent periods:
Profit / (Loss) on exchange translation of
foreign operations 12,403 (13,845) (112,824)
---------------------------------------------------- ------------- ------------------------ ----------------
Net other comprehensive income may be reclassified
to profit or loss in subsequent periods 12,403 (13,845) (112,824)
---------------------------------------------------- ------------- ------------------------ ----------------
Items not to be reclassified to profit or
loss in subsequent periods:
Unrealised (loss) / gain on revaluation of
the estates (704) (3,057) 31,807
Deferred tax on revaluation 177 765 (7,951)
Remeasurements of retirement benefit plan - (1,414) 278
Deferred tax on retirement benefit - - (71)
---------------------------------------------------- ------------- ------------------------ ----------------
Net other comprehensive (expense) / income
not being reclassified to profit or loss in
subsequent periods (527) (3,706) 24,063
---------------------------------------------------- ------------- ------------------------ ----------------
Total other comprehensive income / (expenses)
for the period, net of tax 11,876 (17,551) (88,761)
Total comprehensive income / (expenses) for
the period 60,451 (5,808) 25,047
Attributable to:
- Owners of the parent 50,718 (6,396) 21,508
- Non-controlling interests 9,733 588 3,539
---------------------------------------------------- ------------- ------------------------ ----------------
60,451 (5,808) 25,047
---------------------------------------------------- ------------- ------------------------ ----------------
Condensed Consolidated Statement of Financial Position
2014 2013 2013
as at 30 June as at 30 June as at 31 December
Notes (unaudited) (unaudited & restated) (audited)
$000 $000 $000
------------------------------------------------- --------------- ------------------------ -------------------
Non-current assets
Biological assets 304,156 215,117 265,835
Property, plant and equipment 224,030 210,865 213,342
Receivables 5,857 5,216 5,649
-------------------------------------------------- --------------- ------------------------ -------------------
534,043 431,198 484,826
------------------------------------------------- --------------- ------------------------ -------------------
Current assets
Inventories 9,817 6,987 8,448
Tax receivables 9,333 9,427 8,464
Trade and other receivables 10,261 12,181 7,271
Cash and cash equivalents 115,831 98,671 98,738
-------------------------------------------------- --------------- ------------------------ -------------------
145,242 127,266 122,921
------------------------------------------------- --------------- ------------------------ -------------------
Current liabilities
Loans and borrowings (196) (29) (84)
Trade and other payables (18,990) (14,710) (15,331)
Tax liabilities (7,845) (2,794) (4,988)
Dividend payables (20) (1,784) -
-------------------------------------------------- --------------- ------------------------ -------------------
(27,051) (19,317) (20,403)
------------------------------------------------- --------------- ------------------------ -------------------
Net current assets 118,191 107,949 102,518
-------------------------------------------------- --------------- ------------------------ -------------------
Non-current liabilities
Loans and borrowings (34,813) (35,010) (34,937)
Deferred tax liabilities (61,787) (35,894) (55,298)
Retirement benefits - net liabilities (3,593) (5,091) (3,099)
-------------------------------------------------- --------------- ------------------------ -------------------
(100,193) (75,995) (93,334)
------------------------------------------------- --------------- ------------------------ -------------------
Net assets 552,041 463,152 494,010
-------------------------------------------------- --------------- ------------------------ -------------------
2014 2013 2013
as at 30 June as at 30 June as at 31 December
Notes (unaudited) (unaudited & restated) (audited)
$000 $000 $000
Issued capital and reserves attributable
to
owners of the parent
Share capital 15,504 15,504 15,504
Treasury shares (1,171) (1,171) (1,171)
Share premium reserve 23,935 23,935 23,935
Share capital redemption reserve 1,087 1,087 1,087
Revaluation reserves 56,297 34,632 56,767
Exchange reserves (171,007) (100,194) (181,107)
Retained earnings 532,121 406,349 493,031
------------------------------------------------------ --------------- ------------------------ -------------------
456,766 380,142 408,046
Non-controlling interests 95,275 83,010 85,964
------------------------------------------------------ --------------- ------------------------ -------------------
Total equity 552,041 463,152 494,010
------------------------------------------------------ --------------- ------------------------ -------------------
Condensed Consolidated Statement of Changes in Equity
Attributable to owners of the parent
---------------------------------------------------------------------------------------------------------------------------------------
Share
capital Foreign
Share Treasury Share redemption Revaluation exchange Retained Non-controlling Total
capital shares premium reserve reserve reserve earnings Total interests equity
$000 $000 $000 $000 $000 $000 $000 $000 $000 $000
---------------------------------------------------------- --------- ---------- --------- ------------ ------------- ------------ ---------- ------------ ----------------- -------------
Balance at 31 December
2012 15,504 (1,171) 23,935 1,087 36,799 (88,838) 401,006 388,322 83,043 471,365
Items of other comprehensive
income
* Unrealised gain on revaluation of estates, net of
tax - - - - 20,062 - - 20,062 3,794 23,856
-Disposal of land (94) - 94 - - -
* Remeasurement of retirement benefit plan, net of t
ax - - - - - - 194 194 13 207
Loss on exchange translation
of foreign operations - - - - - (92,269) - (92,269) (20,555) (112,824)
---------------------------------------------------------- --------- ---------- --------- ------------ ------------- ------------ ---------- ------------ ----------------- -------------
Total other comprehensive
income / (expenses) - - - - 19,968 (92,269) 288 (72,013) (16,748) (88,761)
Profit for year - - - - - - 93,521 93,521 20,287 113,808
---------------------------------------------------------- --------- ---------- --------- ------------ ------------- ------------ ---------- ------------ ----------------- -------------
Total comprehensive income
and expenses for the year - - - - 19,968 (92,269) 93,809 21,508 3,539 25,047
Dividends paid - - - - - - (1,784) (1,784) (618) (2,402)
---------------------------------------------------------- --------- ---------- --------- ------------ ------------- ------------ ---------- ------------ ----------------- -------------
Balance at 31 December
2013 15,504 (1,171) 23,935 1,087 56,767 (181,107) 493,031 408,046 85,964 494,010
Items of other comprehensive
income
* Unrealised loss on revaluation of estates, net of
tax - - - - (470) - - (470) (57) (527)
* Gain on exchange translation of foreign operations - - - - - 10,100 - 10,100 2,303 12,403
---------------------------------------------------------- --------- ---------- --------- ------------ ------------- ------------ ---------- ------------ ----------------- -------------
Total other comprehensive
(expenses) / income - - - - (470) 10,100 - 9,630 2,246 11,876
Profit for period - - - - - - 41,088 41,088 7,487 48,575
---------------------------------------------------------- --------- ---------- --------- ------------ ------------- ------------ ---------- ------------ ----------------- -------------
Total comprehensive income
and expenses for the period - - - - (470) 10,100 41,088 50,718 9,733 60,451
Dividend paid - - - - - - (1,998) (1,998) (422) (2,420)
Balance at 30 June 2014 15,504 (1,171) 23,935 1,087 56,297 (171,007) 532,121 456,766 95,275 552,041
---------------------------------------------------------- --------- ---------- --------- ------------ ------------- ------------ ---------- ------------ ----------------- -------------
Balance at 31 December
2012 15,504 (1,171) 23,935 1,087 36,799 (88,838) 401,006 388,322 83,043 471,365
Items of other comprehensive
income
* Unrealised loss on revaluation of estates, net of
tax - - - - (2,167) - - (2,167) (125) (2,292)
* Remeasurement of retirement benefit plan, net of t
ax - - - - - - (1,241) (1,241) (173) (1,414)
* Loss on exchange translation of foreign operations - - - - - (11,356) - (11,356) (2,489) (13,845)
---------------------------------------------------------- -------- --------- -------- ------- --------- ----------- --------- ---------- --------- -----------
Total other comprehensive
expenses - - - - (2,167) (11,356) (1,241) (14,764) (2,787) (17,551)
Profit for period as restated - - - - - - 8,368 8,368 3,375 11,743
---------------------------------------------------------- -------- --------- -------- ------- --------- ----------- --------- ---------- --------- -----------
Total comprehensive income
and expenses for the period - - - - (2,167) (11,356) 7,127 (6,396) 588 (5,808)
Dividends payable - - - - - - (1,784) (1,784) (621) (2,405)
Balance at 30 June 2013
as restated 15,504 (1,171) 23,935 1,087 34,632 (100,194) 406,349 380,142 83,010 463,152
---------------------------------------------------------- -------- --------- -------- ------- --------- ----------- --------- ---------- --------- -----------
Condensed Consolidated Statement Cash Flows
2014 2013 2013
6 months 6 months Year
to 30 June to 30 June to 31 December
(unaudited
(unaudited) & restated) (audited)
$000 $000 $000
----------------------------------- ------------- -------------- ----------------
Cash flows from operating
activities
Profit before tax 66,269 18,295 153,401
Adjustments for:
BA adjustment (23,103) (2,503) (93,661)
Loss / (Profit) on disposal
of tangible fixed assets 2 91 (319)
Depreciation 3,107 4,143 6,406
Retirement benefit provisions 418 550 1,325
Net finance income (1,939) (979) (2,902)
Unrealised (gain) / loss
in foreign exchange (413) 512 2,781
Tangible fixed assets written
off 6 31 97
Operating cash flow before
changes in working capital 44,347 20,140 67,128
Increase in inventories (1,145) (1,089) (3,591)
(Increase) / Decrease in
trade and other receivables (3,628) (4,430) 2,456
Increase / (Decrease) in
trade and other payables 3,312 (529) 2,400
----------------------------------- ------------- -------------- ----------------
Cash inflow from operations 42,886 14,092 68,393
Interest paid (1,003) (784) (1,774)
Retirement benefit paid (6) (52) (244)
Overseas tax paid (10,309) (15,113) (23,981)
----------------------------------- ------------- -------------- ----------------
Net cash flow from / (used
in) operations 31,568 (1,857) 42,394
----------------------------------- ------------- -------------- ----------------
Investing activities
Property, plant and equipment
- purchase (17,589) (23,583) (49,938)
- sale 34 87 641
Interest received 2,942 1,763 4,676
Net cash used in investing
activities (14,613) (21,733) (44,621)
----------------------------------- ------------- -------------- ----------------
Financing activities
Dividends paid by Company (1,998) - (1,784)
Drawdown of long term loans - 10,000 10,000
Finance lease repayment (12) (36) (30)
Dividends paid to non-controlling
interests (398) (621) (618)
Net cash (used in) / from
financing activities (2,408) 9,343 7,568
----------------------------------- ------------- -------------- ----------------
Increase / (Decrease) in
cash and cash equivalents 14,547 (14,247) 5,341
Cash and cash equivalents
At beginning of period 98,738 116,250 116,250
Foreign exchange 2,546 (3,332) (22,853)
----------------------------------- ------------- -------------- ----------------
At end of period 115,831 98,671 98,738
----------------------------------- ------------- -------------- ----------------
Comprising:
Cash at end of period 115,831 98,671 98,738
----------------------------------- ------------- -------------- ----------------
Notes to the interim statements
1. Basis of preparation of interim financial statements
These interim consolidated financial statements have been
prepared in accordance with IAS 34,"Interim Financial Reporting",
as adopted by the European Union. They do not include all
disclosures that would otherwise be required in a complete set of
financial statements and should be read in conjunction with the
2013 Annual Report. The financial information for the half years
ended 30 June 2014 and 30 June 2013 does not constitute statutory
accounts within the meaning of Section 434(3) of the Companies Act
2006 and has been neither audited nor reviewed pursuant to guidance
issued by the Auditing Practices Board.
Basis of preparation
The annual financial statements of Anglo-Eastern Plantations Plc
are prepared in accordance with IFRSs as adopted by the European
Union. The comparative financial information for the year ended 31
December 2013 included within this report does not constitute the
full statutory accounts for that period. The statutory Annual
Report and Financial Statements for 2013 have been filed with the
Registrar of Companies. The Independent Auditors' Report on the
Annual Report and Financial Statements for 2013 was unqualified,
did not draw attention to any matters by way of emphasis, and did
not contain a statement under 498(2) or 498(3) of the Companies Act
2006.
Changes in accounting standards
The same accounting policies, presentation and methods of
computation are followed in these condensed consolidated financial
statements as were applied in the Group's latest annual audited
financial statements except for the following new standards that
have come into effect from the previous reporting date:
-- IFRS 10 Consolidated Financial Statements
-- IFRS 11 Joint Arrangements
-- IFRS 12 Disclosures of Interest in Other Entities
-- IAS 27 Separate Financial Statements
-- IAS 28 Investments in Associates and Joint Ventures
-- IAS 32 Amendments - Offsetting Financial Assets and Financial Liabilities
-- IAS 36 Amendments - Recoverable Amounts Disclosures for Non-financial Assets
-- IFRIC 21 Levies
None of the new standards, interpretations and amendments above
have had a material effect on the Group's reporting.
After making enquiries, the directors have a reasonable
expectation that the Company and the Group have adequate resources
to continue operations for the foreseeable future. For this reason,
they continue to adopt the going concern basis in preparing the
financial statements.
2. Prior period restatement
Following the conclusion of the discussions with the Financial
Reporting Council ("FRC") regarding the use of current market data
to estimate notional rent for the use of land in its discounted
cash flow for the determination of biological assets, details of
which were set out in the 2013 Annual Report and Accounts, the
Group has adopted a notional rent equivalent to 9% of the value of
planted land in valuing its biological asset and resulted in the
accounts for the period ended 30 June 2013 being restated. The
effect of the restatements is summarised in the following page.
2013
6 months
The impact of these prior period adjustments: to 30 June
(unaudited
& restated)
After Biological Assets $000 $000
--------------------------------------------------- ---------- --------------
Profit for the period before restatement 22,317
Effect of change in restatement:
Biological asset revaluation movement (14,098)
Tax expense 3,524
----------
(10,574)
Profit for the period after restatement 11,743
--------------
Other comprehensive expenses for the
period before restatement (18,573)
Effect of change in restatement:
Profit on exchange translation of
foreign operations 1,022
--------------
Other comprehensive expenses for the
period after restatement (17,551)
--------------
The effect of these prior period adjustments had a negative
impact on the earnings per share of 25.03cts for the period to 30
June 2013.
The following table summarises the impact of these prior period
adjustments on the Consolidated Statement of Financial
Position:
Deferred
Biological tax Exchange Retained Non-controlling
assets liabilities reserve earnings interest
$000 $000 $000 $000 $000
Balance as reported 30
June 2013 265,487 (48,486) (102,827) 442,449 87,321
Effect of restatement during
the year (50,370) 12,592 2,633 (36,100) (4,311)
Restated balance as at
30 June 2013 215,117 (35,894) (100,194) 406,349 83,010
------------ -------------- ----------- ----------- -----------------
3. Foreign exchange
2014 2013 2013
6 months 6 months Year
to 30 June to 30 June to 31 December
(unaudited) (unaudited) (audited)
Average exchange rates
Rp : $ 11,725 9,732 10,445
$ : GBP 1.67 1.54 1.56
RM : $ 3.27 3.07 3.15
Closing exchange rates
Rp : $ 11,855 9,925 12,170
$ : GBP 1.71 1.52 1.66
RM : $ 3.21 3.16 3.28
4. Finance costs
2014 2013 2013
6 months 6 months Year
to 30 June to 30 June to 31 December
(unaudited) (unaudited) (audited)
$000 $000 $000
Payable 1,003 784 1,774
------------- ------------- ----------------
5. Segment information
North South Total
Sumatra Bengkulu Sumatra Riau Bangka Kalimantan Indonesia Malaysia UK Total
$000 $000 $000 $000 $000 $000 $000 $000 $000 $000
6 months to 30 June 2014
(unaudited)
Total sales
revenue
(all external) 48,753 53,335 38 21,787 - 3,002 126,915 2,215 - 129,130
Other income 283 373 - 220 - - 876 - - 876
---------- ---------- --------- --------- -------- ------------ ----------- ----------
Total revenue 49,036 53,708 38 22,007 - 3,002 127,791 2,215 - 130,006
---------- ---------- --------- --------- -------- ------------ ----------- ---------- --------- ----------
Profit / (loss)
before
tax 17,056 18,182 (167) 8,848 (21) (728) 43,170 531 (535) 43,166
BA Movement 23,103
Profit for the
period
before tax per
consolidated
income statement 66,269
----------
Depreciation (1,092) (1,045) (203) (272) (16) (354) (2,982) (125) - (3,107)
Inter-segment
transactions 2,806 (1,704) (197) (490) - (921) (506) 476 30 -
Income tax (7,289) (3,722) (1,581) (2,095) (7) (2,653) (17,347) (66) (281) (17,694)
Total Assets 214,804 155,588 70,765 80,644 13,283 109,770 644,854 29,996 4,435 679,285
Non-Current
Assets 165,229 126,071 68,839 39,477 13,193 97,695 510,504 22,346 1,193 534,043
Non-Current
Assets -
Additions 3,298 1,615 2,466 605 420 9,138 17,542 47 - 17,589
6 months to 30 June 2013 (unaudited &
restated)
Total sales
revenue
(all external) 40,378 25,727 2 14,481 - 680 81,268 1,842 - 83,110
Other income 413 (31) - 34 - 2 418 - - 418
Total revenue 40,791 25,696 2 14,515 - 682 81,686 1,842 - 83,528
---------- ---------- --------- --------- -------- ------------ ----------- ---------- --------- ----------
Profit / (loss)
before
tax 12,110 1,879 (292) 4,374 (10) (1,271) 16,790 (284) (714) 15,792
BA Movement 2,503
Profit for the
period
before tax per
consolidated
income statement 18,295
----------
Depreciation (1,378) (1,653) (236) (502) (15) (230) (4,014) (129) - (4,143)
Inter-segment
transactions 664 (858) (84) (252) - (457) (987) 957 30 -
Income tax (6,771) (2,202) 2,071 (1,216) 107 787 (7,224) 892 (220) (6,552)
Total Assets 176,750 144,251 50,404 65,872 11,260 84,184 532,721 19,196 6,547 558,464
Non-Current
Assets 129,532 124,531 48,113 37,974 10,662 67,136 417,948 11,887 1,363 431,198
Non-Current
Assets -
Additions 4,738 3,120 6,180 625 488 8,262 23,413 170 - 23,583
North South Total
Sumatra Bengkulu Sumatra Riau Bangka Kalimantan Indonesia Malaysia UK Total
$000 $000 $000 $000 $000 $000 $000 $000 $000 $000
Year to 31 December 2013 (audited)
Total sales
revenue (all
external) 93,261 63,019 18 38,166 - 2,516 196,980 4,318 2 201,300
Other income 827 112 6 91 - (419) 617 - - 617
---------- ---------- --------- --------- -------- ------------ ----------- ----------
Total revenue 94,088 63,131 24 38,257 - 2,097 197,597 4,318 2 201,917
---------- ---------- --------- --------- -------- ------------ ----------- ---------- --------- ----------
Profit / (loss)
before
tax 33,879 15,700 (443) 19,017 1 (6,633) 61,521 206 (1,987) 59,740
BA Movement 93,661
Profit for the
period
before tax per
----------
consolidated
income
statement 153,401
----------
Depreciation (2,248) (2,268) (475) (585) (32) (540) (6,148) (258) - (6,406)
Inter-Segment
Transactions 2,821 (2,236) (242) (656) - (1,512) (1,825) 845 980 -
Income tax (24,567) (8,086) (554) (6,542) 79 (288) (39,958) 585 (220) (39,593)
Total Assets 195,447 148,268 59,285 67,739 12,744 89,882 573,365 29,720 4,662 607,747
Non-Current Assets 153,524 122,485 57,673 38,726 12,462 76,259 461,129 22,334 1,363 484,826
Non-Current Assets
-
Additions 13,164 5,952 10,172 1,513 1,069 17,828 49,698 240 - 49,938
In the 6 months to 30 June 2014, revenues from 4 customers of
the Indonesian segment represent approximately $87.7m of the
Group's total revenues. In year 2013, revenues from 4 customers of
the Indonesian segment represent approximately $110.1m of the
Group's total revenues. An analysis of these revenues is provided
below:
2014 2013 2013
6 months 6 months Year
to 30 June to 30 June to 31 December
(unaudited) (unaudited) (audited)
$m % $m % $m %
Major Customers
Customer 1 28.9 22.2 14.6 17.4 31.4 15.6
Customer 2 21.3 16.4 13.7 16.3 30.5 15.1
Customer 3 19.6 15.2 9.4 11.3 25.6 12.7
Customer 4 17.9 13.7 8.1 9.6 22.6 11.1
--------------------- --------- --------- ----------- -------- -------- --------
Total 87.7 67.5 45.8 54.6 110.1 54.5
--------------------- --------- --------- ----------- -------- -------- --------
6. Tax
2014 2013 2013
6 months 6 months Year
to 30 June to 30 June to 31 December
(unaudited
(unaudited) & restated) (audited)
$000 $000 $000
Foreign corporation tax
- current year 12,415 6,090 17,804
Foreign corporation tax
- prior year - - (61)
Deferred tax adjustment
- current year 5,279 462 22,143
Deferred tax adjustment
- prior year - - (293)
------------- -------------- ----------------
17,694 6,552 39,593
------------- -------------- ----------------
7. Dividend
The final and only dividend in respect of 2013, amounting to
3.0p per share, or $1,997,614 was paid on 17 June 2014 (2012:
4.5cts per share, or $1,783,637, paid on 5 July 2013). As in
previous years no interim dividend has been declared.
8. Earnings per ordinary share (EPS)
2014 2013 2013
6 months 6 months Year
to 30 June to 30 June to 31 December
(unaudited
(unaudited) & restated) (audited)
Profit for the period attributable
to owners of the Company before
BA adjustment 25,879 6,859 35,950
Net BA adjustment 15,209 1,509 57,571
------------- -------------- ----------------
Earnings used in basic and
diluted EPS 41,088 8,368 93,521
------------- -------------- ----------------
Number Number Number
'000 '000 '000
Weighted average number of
shares in issue in period
- used in basic EPS 39,636 39,636 39,636
- dilutive effect of outstanding
share options 48 48 48
------------- -------------- ----------------
- used in diluted EPS 39,684 39,684 39,684
------------- -------------- ----------------
Shares in issue at period end 39,976 39,976 39,976
Less: Treasury shares (340) (340) (340)
------------- -------------- ----------------
Shares in issue at period end
excluding treasury shares 39,636 39,636 39,636
------------- -------------- ----------------
Basic EPS before BA adjustment 65.29cts 17.30cts 90.70cts
Basic EPS after BA adjustment 103.66cts 21.11cts 235.95cts
Dilutive EPS before BA adjustment 65.21cts 17.28cts 90.59cts
Dilutive EPS after BA adjustment 103.54cts 21.09cts 235.67cts
9. Fair value measurement of financial instruments
IAS 34 requires that interim financial statements include
certain of the disclosures about fair value of financial
instruments set out in IFRS 13 and IFRS 7. These disclosures
include the classification of fair values within a three-level
hierarchy. The three levels are defined based on the observability
of significant inputs to the measurement, as follows:
-- Level 1 - quoted prices (unadjusted) in active markets for
identical assets or liabilities;
-- Level 2 - inputs other than quoted prices included within
Level 1 that are observable for the asset or liability, either
directly or indirectly;
-- Level 3 - unobservable inputs for the asset or liability.
The following tables show the Levels within the hierarchy of
Group's assets measured at fair value on a recurring basis at 30
June 2014, 30 June 2013 and 30 December 2013:
Level 1 Level Level 3 Total
2
30 June 2014 $000 $000 $000 $000
---------------------- ------------ ------- --------- ---------
Biological assets - - 304,156 304,156
Land - - 153,756 153,756
Level 1 Level Level 3 Total
2
30 June 2013 $000 $000 $000 $000
---------------------- ------------ ------- --------- ---------
Biological assets - - 215,117 215,117
Land - - 143,792 143,792
Level 1 Level Level 3 Total
2
31 December 2013 $000 $000 $000 $000
---------------------- ------------ ------- --------- ---------
Biological assets - - 265,835 265,835
Land - - 149,871 149,871
There were no items classified under Level 1 and Level 2 and
thus no transfers between Level 1 and Level 2 during the
periods.
The methodology used for biological asset valuations is using
discounted cash flow ("DCF") over the expected 20-year economic
life of the asset. The assumption applied in the valuation were,
inter alia, an assumed CPO selling price of $725/mt (30 June 2013
and 31 December 2013: $700/mt), discount rate of 15.8% (30 June
2013: 17.5%, 31 December 2013: 15.8%) and notional rent equivalent
to 9% (30 June 2013 and 31 December 2013: 9%) of the value of
planted land. The discount rates were determined by the Directors
based on their assessment of various risks including financial,
business and country risk of where the plantations are located as
well as taking into account the Company's weighted average cost of
capital. The CPO price is taken to be the 10-year average (30 June
2013 and 31 December 2013: 10-year average) rounded to the nearest
$25 based on historical widely-quoted commodity price for CPO and
represents the Directors' best estimate of the price sustainable
over the longer term. An inflation rate of 5% (30 June 2013 and 31
December 2013: 5%) was applied to the second to sixth years of the
DCF. The notional rent charge is based on key capital market and
property indicators in the countries and regions of operations.
There were no changes in valuation techniques during the
periods.
The significant unobservable inputs used in the fair value
measurement of biological assets and its relationship to fair value
are exhibited below:
Significant
unobservable inputs Relationship of unobservable inputs
to fair value
CPO selling price The higher the CPO selling price, the
higher the fair value
Discount rate The higher the discount rate, the lower
the fair value
Notional rent The higher the notional rent, the lower
the fair value
For the six months ended 30 June 2014, the directors are of the
opinion the fair value movements of the land are insignificant as
compared to the land value at 31 December 2013 and therefore the
land value at 31 December 2013 is adopted as fair value of land at
30 June 2014 except for the adjustment of exchange differences. The
fair values of the land at 31 December 2013 for five major
companies in Indonesia and a Malaysia company are derived using the
sale comparison approach. Although there is observable market data,
there is a significant degree of judgement in determining the
adjustments required in deriving at the final land valuation. Sale
prices of comparable land in similar location are adjusted for
differences in key attributes such as location, legal title, land
area, land type and topography. The valuation model is based on
price per hectare. The growth rates per hectare obtained by
comparing the current valuation against the valuation undertaken in
year 2011 were then applied to the 2011 land value of the remaining
companies in the same geographical location to derive year 2013
fair value of land. Unplantable land was excluded in this exercise
since it has zero value.
The fair value of the following financial assets and liabilities
approximate their carrying amount:
-- Non-current receivables
-- Trade and other receivables
-- Cash and cash equivalents
-- Borrowings
-- Trade and other payables
10. Report and financial information
Copies of the interim report for the Group for the period ended
30 June 2014 are available on the AEP website at
www.angloeastern.co.uk.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR MMGZRZNVGDZM
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