Contents
Financial summary
Chairman’s statement
Financial record
Estate areas
Location of estates
Additional information
Business review
Director’s report
Director’s responsibilities
Directors
Statement on corporate governance
Director’s remuneration report
Auditor’s report
Consolidated income statement
Consolidated statement of recognised income and expenses
Consolidated balance sheet
Consolidated cash flow statement
Notes to the consolidated financial statements
Company balance sheet
Notes to the company financial statements
Notice of annual general meeting
Appendix to the notice of annual general meeting
Form of Proxy
1
2
5
6
7
8
10
13
18
19
20
23
25
26
27
28
29
31
51
52
54
57
59
Company addresses, advisers and website
inside back cover
Photographs
Oil palm nursery - Alno
Secondary school - Tasik
(cover)
(page 2)
Company addresses
Company advisers
Malaysian Office
7th Floor
Wisma Equity
150 Jalan Ampang
50450 Kuala Lumpur
Tel: 60 (3) 2162 9808
Fax: 60 (3) 2164 8922
Indonesian Office
P T United Kingdom Indonesia Plantations
Wisma HSBC
Jalan Diponegoro, Kav 11
Medan 20152
North Sumatra
Tel: 62 (0)61 4528683
Fax: 62 (0)61 4520029
Auditors
BDO Stoy Hayward LLP
55 Baker Street
London W1U 7EU
Principal Bankers
National Westminster Bank Plc
15 Bishopsgate
London EC2P 2AP
The Hong Kong and Shanghai Banking
Corporation Limited
Wisma HSBC
Jalan Diponegoro, Kav 11
Medan 20152
North Sumatra
Secretary and Registered Office (Number 1884630)
PT Bank DBS Indonesia
D W Smith
6/7 Queen Street
London EC4N 1SP
Tel: 44 (0)20 7236 2838
Fax: 44 (0)20 7236 8283
Company website
www.angloeastern.co.uk
Uniplaza Building
Jalan Letjen MT Haryonon A-1
Medan 20231
North Sumatra
Malayan Banking Corporation Bhd
Menara Promenade
100 Jalan Tun Razak
50050 Kuala Lumpur
Registrars
Capita Registrars
Northern House
Woodsome Park
Fenay Bridge
Huddersfield
West Yorkshire HD8 0LA
Solicitors
Withers LLP
16 Old Bailey
London EC4M 7EG
Anglo-Eastern Plantations Plc, quoted on the London Stock Exchange,
owns, operates and develops plantations in Indonesia and Malaysia,
amounting to some 83,000 hectares producing mainly palm oil and some
rubber.
Financial highlights
Revenue
Profit before tax
- before biological asset (BA) adjustment
- after BA adjustment
EPS before BA adjustment
Dividend
2007
$ m
2006
$ m
Increase
127.9
79.1
62%
52.6
53.6
cts
77.2
14.0
26.7
29.0
cts
38.3
10.8
97%
85%
102%
30%
PROFIT BEFORE TAX: NET INTEREST PAID
EARNINGS: DIVIDENDS PER SHARE
EPS
Dividend
Pre-tax profit
Interest Paid
60,000
50,000
40,000
0
0
0
$
'
30,000
20,000
10,000
0
e
r
a
h
s
r
e
p
s
t
n
e
c
S
U
80
70
60
50
40
30
20
10
0
2002
2003
2004
2005
2006
2007
2002
2003
2004
2005
2006
2007
ANGLO-EASTERN PLANTATIONS PLC
1
Chairman’s statement
Results
I am pleased to report a record profit for 2007 which was attributable to much improved prices for palm
oil. Of equal significance, the group is now strongly positioned for further development through four
substantial land acquisitions, three in 2007 and one early in 2008. This will enable the planted area
to double in the next six years. To support this, we have arranged appropriate borrowing facilities.
Group operating profit for 2007, before biological asset (BA) adjustment, was $52.6 million, double
that for 2006. Estate fresh fruit bunch (FFB) output for 2007 was 2% above the previous year, the
small increase reflecting the severe drought in the second half of 2006 in Bengkulu and Malaysia.
The good performance was mainly the result of the favourable crude palm oil (CPO) price, which
rose throughout the year to average 65% higher than that in 2006. The results were also adversely
affected by increases in Indonesian export taxes on CPO.
Profit before tax and after BA adjustment was $53.6 million, compared to $29.0 million in 2006.
The BA adjustment was a credit of $1.0 million, compared to $2.3 million in 2006, reflecting our
estate valuations referred to below. However, as I now repeat with every results statement, the BA
adjustment has no bearing on the operating performance or cash generation of the group.
Earnings per share before BA adjustment increased by 102% in US dollars to 77.2 cts, compared to
38.3 cts in 2006. This reflected a lower average tax rate arising from past losses carried forward in
our Malaysian subsidiary. In sterling terms, EPS before BA adjustment increased by 86% to 38.4p
from 20.6p.
Financing
Our policy is to fund the group’s development from self-generated funds supplemented by term
bank loans. The three acquisitions in 2007, referred to under ‘Recent acquisitions’ below, cost
$14.5 million. In addition, capital expenditure on field development and completion of the new mill at
Bina Pitri amounted to $12.2 million.
2
ANGLO-EASTERN PLANTATIONS PLC
Chairman’s statement
During the year, we repaid $1.7 million of our existing borrowings, including all the remaining
$0.9 million of bank loans to our Malaysian operation.
In anticipation of major capital expenditure, we secured and drew down in the middle of 2007 a
new five year loan of $34.5 million. Together with the group’s self-generated funds, this positioned
us to act quickly if and when acquisition opportunities arose. In addition the group also arranged a
revolving short-term facility of $3.0 million, which was fully drawn down for the year end and was
repaid early in 2008.
At the end of 2007, the group’s bank borrowings totalled $43.0 million against cash of $66.3 million,
giving net cash of $23.3 million, which compares with $9.6 million at the end of 2006. The effect of
these substantial increases in both borrowings and cash balances has been to increase interest
costs and income with a resulting small increase of $0.2 million in net finance costs.
Recent acquisitions
In my statements for the last two years, I said that, in anticipation of completion of planting of Bengkulu
and Labuhan Bilik by 2009, our management in Indonesia were actively searching for both vacant
land and planted estates for further expansion. It was pleasing to announce during 2007 and early
2008 that four acquisitions amounting to 58,000 ha had been made. This will enable the group to
more than double its plantable area from the present 38,660 ha to about 83,000 ha. While these
new properties are all evidenced by official “rights to occupy” (a temporary title which precedes
application for and grant of a full land title or Hak Guna Usaha (HGU)), they require detailed survey.
In addition to identifying plantable areas, this survey involves an assessment of the areas that ought
to be set aside for local community use. With land available for commercial and private agriculture
becoming increasingly scarce in Indonesia, this is an important and sensitive issue. At present, we
do not know for certain how large these set aside areas will be. For the purposes of providing some
indication, we have estimated that we will be able to plant about 70% of the vacant land we have
acquired. Therefore, of the 58,000 ha acquired in 2007/8 to date about 2,000 ha is already planted
and approximately 40,000 ha is estimated to be plantable.
The peak net development cost of the total plantable area of about 40,000 ha of the above acquisitions
is likely to be about $100 million over the period to 2013. We plan to build four oil mills which will
together cost about a further $35 million.
Directors
Mr Peter O’Connor and Mr Ho Soo Ching, two of our independent non-executive directors, have
decided not to seek re-election at the forthcoming annual general meeting. We thank them for their
contribution and service rendered in past years.
I am pleased to welcome Dato’ John Lim as a non-executive director of Anglo-Eastern with effect from
26 April 2008. Dato’ Lim, aged 58, is a Fellow of the Association of Chartered Certified Accountants
and has been a partner for 10 years with UHY Hacker Young LLP, Chartered Accountants, in London.
He has extensive audit and business consultancy experience, particularly with Far Eastern clients
with operations in the UK.
The Combined Code on Corporate Governance requires non-executive directors who have served
for more than nine years to submit themselves for re-election every year. Our two remaining long
serving non-executive directors are affected by this provision. In addition, the Code assumes that
after nine years, previously independent non-executive directors cease to be independent. This
applies to Datuk Henry Chin, whom I specifically commend to you as continuing to be thoroughly
independent. I recommend that shareholders vote in favour of re-appointment of both long serving
non-executive directors.
ANGLO-EASTERN PLANTATIONS PLC
3
Chairman’s statement
Our finance director, Mr Barnes, retired on 30 April 2008. I am pleased to welcome Mr David Smith,
who was appointed a director of Anglo-Eastern Plantations Plc, with effect from 26 April 2008 and
took over from Mr Barnes as Finance Director and Company Secretary on 1 May 2008. Mr Smith,
aged 59, is a Chartered Accountant. He was previously with the Commonwealth Development
Corporation and has extensive international experience, particularly in agriculture. He has been
involved in investment in the oil palm sector and has worked in Indonesia in plantations.
Outlook
FFB crops so far in 2008 have been satisfactory on all estates – production is about 20% ahead
of the same period in 2007. However it is too early to forecast whether this improvement can be
sustained for the rest of the year. Bought-in crops in the first two months have been 25% higher than
in the same period of 2007.
The CPO price has risen strongly from $960/mt at the start of 2008 to around $1,151/mt at present.
In early March 2008, it reached a brief all time high of $1,390/mt. Much of this increase may reflect
speculation by financial institutions seeking to diversify from traditional markets or hedge against the
dollar and we have now seen some correction. Nevertheless, most analysts see underlying demand
for traditional food uses, particularly in China and India, remaining strong through 2008.
In March 2008, Indonesian export taxes on CPO were reformulated to an escalating scale ranging
from 5% on effective Rotterdam CIF prices between $650 and $750/mt up to 20% on prices between
$1,200 and $1,300/mt and 25% over $1,300/mt. This scale effectively caps CIF prices between
$1,000 and $1,050/mt.
As long as any price reaction from current levels is only modest, in the absence of any further
increase in Indonesian export levies and providing FFB crops maintain their improved levels, we can
expect a satisfactory increase in profits and cash flow for 2008.
Dividend
The board is mindful that the group’s development programme represents a considerable capital
commitment. However, in view of the positive outlook for palm oil and the recent satisfactory crops,
the board is proposing to increase the annual dividend in respect of 2007 by 30% to 14.0 cts per
share from 10.8 cts per share in respect of 2006. Shareholders choosing to receive their dividend
in sterling will do so at the rate ruling on 8 August 2008, when the register closes. At the present
exchange rate, the proposed dividend would be equivalent to 7.0p per share, an increase of 28%
over the 5.46p per share paid in respect of 2006.
CHAN TEIK HUAT
Chairman
30 April 2008
4
ANGLO-EASTERN PLANTATIONS PLC
Financial record
Profit and Loss Account
Revenue
Trading profit
Biological asset (BA) movement
Exchange profits/(losses)
Net finance – (Costs)/income
Profit before tax
Tax
Minority interests
2007
IFRS
$000
127,898
52,521
1,001
215
(145)
53,592
(15,628)
(6,964)
2006
IFRS
$000
79,094
26,270
2,312
368
90
29,040
(9,289)
(3,277)
2005
IFRS
$000
64,321
22,201
(35)
(550)
(196)
21,420
(7,097)
(2,140)
2004
2003
IFRS UK GAAP
$000
$000
65,676
24,934
1,950
147
(287)
26,744
(9,034)
(2,901)
48,519
19,994
–
–
(407)
19,587
(6,141)
(2,201)
Profit attributable to shareholders
31,000
16,474
12,183
14,809
11,245
Dividend proposed for year
(5,524)
(4,266)
(3,514)
(3,147)
(2,375)
Balance Sheet
$000
$000
$000
$000
$000
Fixed assets
Cash net of short term borrowings
Long term loans
Other working capital
Deferred tax
Minority interests
Net worth
187,023
59,065
(35,719)
(8,979)
(23,052)
160,823
15,079
(5,454)
(1,919)
(21,152)
129,518
9,091
(3,940)
255
(16,941)
127,302
9,357
(5,558)
(4,341)
(16,698)
105,096
13,067
(6,108)
(4,677)
1,013
178,338
(32,367)
147,377
(25,421)
117,983
(20,519)
110,062
(19,276)
108,391
(19,229)
145,971
121,956
97,464
90,786
89,162
Share capital
Treasury shares
Share premium and capital redemption account
Revaluation and exchange reserve
Profit and loss account
15,504
(1,785)
25,022
46
107,184
15,495
(1,387)
24,991
2,407
80,450
15,481
(1,387)
24,955
(9,121)
67,536
15,424
(1,387)
24,912
(6,674)
58,511
15,319
–
24,766
5,375
43,702
Equity attributable to shareholders’ funds
145,971
121,956
97,464
90,786
89,162
Ordinary shares in issue (‘000s)
Earnings per share before BA adj. (US cents)
Dividend per share for year (US cents)
Asset value per share (US cents)
Earnings per share before BA adj
(pence equivalent)
Dividend per share for year
(pence equivalent – actual paid)
Proposed dividend per share for 2007
(pence equivalent at year end exchange rate) -
actual rate to be set at record date)
Asset value per share (pence equivalent)
Borrowings net of cash: shareholders’ funds (%)
Relevant exchange rates shown on page 8.
39,976
77.2cts
14.0cts
370cts
39,958
38.3cts
10.8cts
309cts
39,928
31.0cts
8.8cts
244cts
39,804
34.5cts
8.0cts
228cts
39,581
28.6cts
6.0cts
225cts
38.4p
20.6p
17.1p
18.7p
17.4p
5.46p
5.02p
4.26p
3.27p
7.0p
186p
–
–
158p
–
–
142p
–
–-
135p
–
126p
–
ANGLO-EASTERN PLANTATIONS PLC
5
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
)
d
(
0
0
0
,
8
1
0
0
0
,
8
0
)
d
(
0
0
0
,
6
0
0
0
,
3
0
0
0
,
6
2
0
0
0
,
9
2
8
9
,
3
0
8
7
9
0
6
9
,
4
0
0
0
0
6
9
,
4
0
0
3
4
1
3
4
1
0
0
0
0
0
0
)
d
(
-
I
L
A
K
N
A
T
N
A
M
A
K
G
N
A
B
U
A
R
I
U
L
U
K
G
N
E
B
A
R
T
A
M
U
S
H
T
R
O
N
I
A
S
E
N
O
D
N
I
P
U
O
R
G
L
A
T
O
T
I
A
S
Y
A
L
A
M
L
A
T
O
T
s
a
e
r
a
e
t
a
t
s
E
M
G
S
%
5
9
a
H
L
M
B
%
5
9
a
H
a
H
%
0
8
i
r
t
i
P
a
n
B
i
A
A
R
%
5
9
a
H
o
n
A
l
%
0
9
a
H
%
0
9
a
H
%
0
9
a
H
s
a
M
g
n
d
u
P
i
i
a
k
h
d
n
A
a
t
i
l
e
P
a
y
a
h
a
C
a
H
a
H
a
H
%
5
7
i
e
g
n
u
S
m
a
s
u
M
%
0
0
1
%
5
7
g
n
u
b
m
a
R
n
a
h
a
k
n
a
B
l
%
0
0
1
i
k
s
a
T
k
a
n
A
i
k
s
a
T
%
0
8
a
H
a
H
a
H
l
a
t
o
T
g
n
u
r
e
d
n
e
C
l
a
t
o
T
w
o
l
e
b
s
a
e
r
a
l
a
t
o
t
n
i
t
s
e
r
e
t
n
i
p
u
o
r
G
%
5
5
a
H
)
a
H
(
s
e
r
a
t
c
e
H
7
0
0
2
r
e
b
m
e
c
e
D
1
3
t
a
d
e
t
n
a
l
P
6
1
2
,
8
3
3
6
,
3
7
0
0
,
2
8
0
8
,
1
6
4
1
7
1
9
0
0
4
7
7
9
,
2
0
0
0
0
0
0
0
0
0
0
3
9
5
,
1
1
3
3
6
,
3
7
0
0
,
2
8
0
8
,
1
6
4
1
7
1
9
6
6
7
2
1
0
,
6
7
8
4
7
2
,
5
2
4
3
,
2
1
9
,
0
3
0
0
0
0
0
0
4
6
9
3
6
,
0
1
7
2
0
0
4
7
6
6
,
6
6
6
7
2
1
0
,
6
3
8
2
4
3
,
6
9
6
3
,
9
7
9
,
7
3
0
0
0
0
0
0
0
0
0
0
0
0
9
0
4
0
7
2
9
7
6
0
0
0
0
0
0
0
0
0
0
0
0
9
0
4
0
7
2
9
7
6
0
0
0
9
0
4
0
7
2
9
7
6
k
l
i
B
%
0
8
a
H
n
a
h
u
b
a
L
0
0
1
4
4
,
2
1
4
4
,
2
0
0
0
,
6
2
0
0
0
,
9
3
0
1
,
5
0
0
0
,
5
1
3
9
2
,
3
1
4
2
3
,
4
9
6
7
,
5
4
2
9
,
1
6
7
8
7
5
9
4
9
0
,
6
7
9
7
6
9
0
,
6
3
3
2
5
9
,
8
6
3
6
,
1
0
6
,
1
0
1
0
0
9
2
3
,
4
0
)
c
(
3
9
2
,
3
1
4
2
3
,
4
9
6
4
,
4
4
2
9
,
1
6
7
8
7
5
9
0
1
9
7
6
4
9
,
5
9
0
9
6
3
,
8
6
3
,
6
7
7
2
,
3
4
l
a
t
o
t
f
o
%
0
7
t
a
a
e
r
a
l
e
b
a
t
n
a
p
l
e
t
a
m
i
t
l
u
f
o
e
t
a
m
i
t
s
e
h
g
u
o
r
)
d
(
9
7
3
,
2
0
0
3
,
1
0
0
0
,
5
1
9
7
6
,
8
1
:
d
e
r
i
u
q
c
a
t
p
e
c
x
e
,
7
0
0
2
r
e
b
m
e
c
e
D
1
3
t
a
e
r
a
s
e
v
r
e
s
e
R
8
0
0
2
y
r
a
u
n
a
J
8
0
0
2
y
r
a
u
n
a
J
8
0
0
2
h
c
r
a
M
)
a
(
)
b
(
)
c
(
0
0
0
,
6
2
0
0
0
,
9
4
7
7
0
0
0
,
5
1
0
0
0
0
3
,
1
0
0
0
4
9
0
,
6
6
0
5
1
4
2
3
,
8
5
0
4
2
3
8
5
,
s
t
h
g
i
r
d
n
a
L
0
0
0
5
,
0
1
0
0
5
,
4
8
5
6
7
9
4
5
4
5
0
0
0
,
5
1
0
0
7
,
1
0
9
0
2
2
8
4
1
9
6
0
0
)
b
(
2
6
7
,
3
2
6
7
,
3
0
0
6
1
1
6
1
1
0
7
2
4
2
1
5
0
3
7
3
0
4
)
a
(
5
9
1
,
3
1
5
2
7
0
2
3
5
6
,
3
0
0
1
3
1
3
0
8
1
6
6
4
8
5
0
5
6
1
,
1
5
6
,
1
6
2
5
5
8
5
1
1
,
2
4
1
6
0
,
2
6
7
1
4
4
,
1
3
0
7
1
,
6
3
7
,
1
1
7
2
0
6
,
2
7
6
2
,
3
4
9
,
2
6
3
9
5
,
1
1
3
3
6
,
3
7
0
0
,
2
8
0
8
,
1
5
2
8
7
1
9
1
4
4
,
2
6
6
7
2
1
0
,
6
2
6
9
,
4
3
6
9
6
,
3
8
5
6
,
8
3
a
e
r
a
d
e
t
n
a
p
l
l
a
t
o
T
d
n
e
e
r
u
t
a
m
o
t
e
u
d
m
l
a
P
l
i
O
e
r
u
t
a
M
e
r
u
t
a
m
m
I
8
0
0
2
r
e
h
t
o
l
a
t
o
T
r
e
b
b
u
R
e
r
u
t
a
M
e
r
u
t
a
m
m
I
l
a
t
o
T
h
c
r
a
M
1
3
t
a
a
e
r
a
l
a
t
o
T
i
h
c
h
w
f
o
8
0
0
2
s
e
l
t
i
t
d
n
a
L
r
e
h
t
O
l
e
b
a
t
n
a
p
n
U
l
s
e
v
r
e
s
e
R
l
e
b
a
t
n
a
P
l
6
ANGLO-EASTERN PLANTATIONS PLC
2
1
1
1
0
1
m
a
s
u
M
i
e
g
n
u
S
g
n
u
r
e
d
n
e
C
n
a
h
a
k
n
a
B
l
g
n
u
b
m
a
R
i
k
s
a
T
k
a
n
A
k
i
l
i
B
n
a
h
u
b
a
L
a
t
i
l
e
P
a
y
a
h
a
C
i
r
t
i
P
a
n
B
i
i
k
s
a
T
.
1
.
2
.
3
.
4
.
5
.
6
.
7
.
8
.
9
s
e
t
a
t
s
e
l
u
u
k
g
n
e
B
.
0
1
L
M
B
.
1
1
M
G
S
.
2
1
7
s
e
t
a
t
s
e
f
o
s
n
o
i
t
a
c
o
L
1
4
3
2
9
6
5
8
7
ANGLO-EASTERN PLANTATIONS PLC
Additional information
Planted and plantable area
Oil palm – mature
– immature
– total planted
Rubber
Cocoa
Reserves – plantable (estimated)
Total potential plantable
Reserves – unplantable (estimate)
Total land area at 31 December
Acquired since year end (page 6)
Total land area 31 March 2008
Crops
FFB – all estates
– bought in
– mill throughput
Saleable crude palm oil (CPO)
Saleable palm kernels
Rubber
Cocoa
Average yields
FFB
Rubber
Cocoa
Extraction rates
CPO
Kernel
Sales
CPO
Palm kernels
FFB
Rubber
Cocoa
Average ex-factory sales prices – Indonesia
CPO
Palm kernels
Rubber
Cocoa
FFB (ex-estate)
Average ex-estate sales prices – Malaysia
FFB
Exchange rates – year end
Rp : $
$ : £
RM: $
Exchange rates – average
Rp : $
$ : £
RM: $
2007
Ha
30,912
7,067
37,979
679
0
25,996
64,654
18,268
82,922
18,679
101,601
mt
528,862
332,887
813,063
170,936
40,734
1,060
0
mt/ha
18.1
2.6
0
%
21.0
5.0
mt
169,343
40,666
48,564
1,062
0
Rp/kg
5,631
3,275
19,028
0
999
RM/mt
517
9,419
1.99
3.31
9,170
2.01
3.43
2006
Ha
27,390
6,005
33,395
534
0
7,264
41,193
3,629
44,822
mt
513,902
294,647
717,888
156,285
36,596
1,088
46
mt/ha
18.8
2.0
0
%
21.8
5.1
mt
157,326
36,556
90,659
1,074
67
Rp/kg
3,586
1,879
17,932
9,303
754
RM/mt
299
9,020
1.96
3.53
9,141
1.86
3.66
2005
Ha
26,393
5,481
31,874
434
258
7,779
40,345
3,575
43,920
mt
459,080
284,705
677,845
145,820
35,049
946
157
mt/ha
17.7
2.2
0.6
%
21.5
5.1
mt
145,943
35,220
65,864
947
125
Rp/kg
3,332
2,218
13,716
10,923
702
RM/mt
277
9,830
1.72
3.78
9,751
1.81
3.79
2004
Ha
25,533
4,500
30,033
434
258
8,808
39,533
4,387
43,927
mt
428,657
241,359
562,134
118,197
28,526
1,370
208
mt/ha
18.9
2.3
0.8
%
21.5
5.2
mt
119,250
28,315
107,844
1,376
221
Rp/kg
3,600
2,233
10,618
10,894
764
RM/mt
319
9,290
1.92
3.80
9,001
1.84
3.80
2003
Ha
19,910
4,507
24,417
757
258
11,818
37,250
2,829
40,079
mt
372,290
170,948
453,717
94,523
22,325
1,800
154
mt/ha
19.0
2.3
0.6
%
20.8
4.9
mt
91,238
22,302
90,119
1,800
141
Rp/kg
3,320
1,500
8,451
14,544
719
RM/mt
284
8,447
1.79
3.80
8,563
1.65
3.80
8
ANGLO-EASTERN PLANTATIONS PLC
Additional information
ANGLO-EASTERN PLANTATIONS PLC
9
Business review
Heading
Commodity Prices
During 2007 and so far in 2008, there were exceptional increases in vegetable oil prices, including
CPO. In 2007, the CPO price opened the year at $570/mt, already a satisfactory level by historic
standards, and ended at $960/mt. The average price was $790/mt compared to $479/mt in 2006.
Pricing in the vegetable oil market is a complex relationship between competing oils and meals, oil
seed production in both hemispheres, and now bio-fuels. At its simplest, the increase in the CPO
price has been driven by strong demand from traditional food uses, particularly in India and China,
expanding acceptances of oleo-chemicals derived from palm oil and increasing interest in bio-fuels.
The effect on domestic cooking oil prices of the sharp increases in CPO prices has been of concern
to the government of Indonesia, where cooking oil is one of the basic foodstuffs. In an attempt to limit
the effect on local prices, the export tax on CPO was increased in June 2007 from 1.5% to 6.5% and
again in September 2007 to 10%. As set out in the chairman’s statement on page 4, this rate of tax
was adjusted in March 2008. While we do not export CPO, this tax is passed back to producers and
reduces ex factory prices directly.
Rubber prices averaged $2,100/mt for 2007 (2006-$1,590/mt); in February 2008 they set a record at
$2,860/mt, the previous being $2,750/mt in June 2006. Our small area of 409 ha of mature rubber
contributed a pre-tax of $1.8 million in 2007. The newly planted 270 ha of rubber will not be brought
into production until 2012.
Valuations
In 2006 the main valuation assumptions were changed to reflect the improving outlook for palm oil
and for Indonesia, and also to reflect increasing operating costs. These trends continued in 2007
and therefore we have increased the CPO price assumption from $440/mt to $500/mt; the discount
rate is unchanged at 12%. This has had the effect of compensating for the expected operating cost
increases. As a result, we are valuing our planted Indonesian estates at about $4,630/ha compared
to $4,450/ha at the end of 2006. It should be noted that this is only a ‘value in use’ of the estates to
the group on the above assumptions and we feel it is a prudent figure in relation to current market
values of planted oil palm land in Indonesia. The relatively small BA adjustment in 2007 reflects this
small increase in estate valuations.
Indonesia
FFB production from Tasik and Anak Tasik was 178,896mt, 7% higher than 2006. Tasik again surprised
us with its good performance from ageing palms. The group has begun a small amount of under-
planting with young palms. However, in view of the current high produce prices, it is the plan to defer
the start of full replanting until 2010, then to be spread over eight years to 2017. Bought-in crop of
107,000mt at the Tasik mill was 17% below 2006, reflecting very strong competition in the vicinity. The
oil extraction rate fell to 20.7% from 21.4% in 2006.
FFB production from the three small estates around Medan was a new record at 76,000mt, 15%
higher than 2006. Bought in crop at the mill on Blankahan was 52,700mt, an increase of 17% on
2006; the oil extraction rate fell to 21.9% compared to 22.6% in 2008.
FFB production at Bengkulu, at 170,600mt was 10% below the previous year. This disappointing
output was probably due to the hilly terrain of these properties where drought of late 2006 might
have had a more pronounced adverse effect. Although crops in the first two months of 2008 have
been significantly higher than the level in the corresponding period in 2007, it is difficult to predict the
output for the rest of the year. Nevertheless, improvements to roads are being carried out against the
normal heavy year end monsoon. Bought-in crop fell only slightly to 117,330mt from 119,690mt, but
extraction rates fell back to 20.9% from 21.9% in 2006. The group plans to commence construction
in 2008 of a second 40/60mt/hr oil mill, to be located on one of the outlying estates where there will
be a saving in transport costs and where there is a prospect for bought-in crop from smallholders.
Cost is likely to be about $8.5 million.
10
ANGLO-EASTERN PLANTATIONS PLC
Business review
Bina Pitri, a run down estate acquired in 2004, was also affected by the drought with crop 7% below
expectations at 60,280mt but 29% up on 2006. The benefits of the resumption of fertilising and of
rehabilitation in 2005/6 are now beginning to show. The new mill was commissioned in April 2007
achieving extraction rates of 23% before the introduction of bought-in crop, when rates fell to 21.2%.
However, bought-in crop reached 55,390mt almost 50% of throughput, a very pleasing result for a
new operation. The acquisition cost of this estate was $10 million and investment in the mill and
rehabilitation has been a further $8 million; the contribution to pre-tax profit in 2007 was $7 million.
Malaysia
Our Malaysian production, at 39,210mt, was 11% below 2006 due largely to the unusual weather
of 2006. This was disappointing after the improvement of 14% achieved in 2006. However, with
the favourable CPO prices, the Malaysian properties recorded a contribution to pre-tax profit of
$2.3 million. By the end of 2007, the Malaysian subsidiary has had cash of $2.4 million with no external
debt. This will enable repayment during 2008 of some of the group’s investment.
Existing development
Labuhan Bilik is the most important development. The original area, which was acquired in December
2004, is now set at 3,700 ha. Negotiation has been ongoing since 2004 to acquire contiguous areas
amounting to 2,280 ha. This proved successful when the group received a formal “right to occupy”
in January 2008, making this potentially a 6,000 ha estate. At December 2006 2,440 ha had been
planted. It is expected to complete planting of the entire estate in 2009. This is a flat, fertile property
which will begin yielding as soon as 2009 and is expected to be a very valuable profit earner. The
land title over the original 3,700 ha is expected to be issued shortly. Issue of the full title over the
extension of 2,280 ha will take another two years.
The other current development is the completion of planting of 1,020 ha at Bengkulu where 360 ha
were planted during 2007 ha leaving 660 ha to complete. The slow progress has been caused by
protracted compensation negotiations with neighbouring villages. It is important these are handled
careful and fairly. When fully planted these “old” Bengkulu properties will total 15,880 ha.
Acquisitions
The four acquisitions during 2007 and early 2008 were:
1. Sibolga
As explained in the interim statement, in June 2007 the group acquired a 90% interest in PT
Cahaya Pelita Andhika (CPA) an Indonesian company operating an estate of 4,470 ha, of which
2007 ha are planted and mature. In March 2008, CPA was successful in obtaining re-instatement
of rights over 1,300 ha of plantable land, bringing the estates to 5,770 ha. The remaining 10%
interest in CPA will be held by a member of the family of one of our local partners. There is a
valid Hak Guna Usaha (HGU) land title over the 4,470 ha which expires in 2029 and is renewable
for about another 60 years. The estate is located on the west coast of North Sumatra near the
town of Sibolga and about 180km from our nearest existing estate, Tasik. The property was very
overgrown but is now being rehabilitated. A nursery has been established, from which existing
planted areas with low stands will be supplied, as well as providing material for planting up the
balance area of 3,760 ha. There is no mill but the group plans to commission one of 40/60mt/hr in
2010 at a cost of about $8.6 million. In the meantime it will be necessary to transport the crop to
Tasik. CPA is not expected to make a material contribution to group results until 2010.
2. Bangka
In December 2007, the group acquired a 95% interest in PT Bangka Malindo Lestari (BML), an
Indonesian company owning the rights to 7,000 ha of vacant land on the island of Bangka off the
south eastern coast of Sumatra. Consideration was $1.5 million in cash. In March 2008 the area
was redesignated and increased by the local authorities to 9,000 ha at a small cost to BML. The
balance 5% interest in BML is held by the vendor, an Indonesia national whom the group have
known for many years.
ANGLO-EASTERN PLANTATIONS PLC
11
Business review
Terrain and rainfall are suitable both for oil palm and rubber. Bangka is becoming an important
plantation development area. The estate is well located on the sheltered coast facing the
Sumatran mainland and therefore well placed to ship oil directly to mainland refineries. Vegetation
is scrub and previously logged secondary forest. The area is zoned for agricultural development
but contains small villages to which some land will be allocated for community development, as
described earlier in the chairman’s statement. Planting will commence in 2009 and should be
complete by 2012. Production should commence in 2013.
3. Kalimantan
Also in December 2007, the group acquired for a cash consideration of $6.8 million a 95% interest
in PT Sawit Graha Manunggal (SGM), an Indonesian company owning the rights to 26,000 ha
of vacant land in Central Kalimantan, on the island of Borneo, about six hours drive north of
the south eastern port city of Banjarmasin, just outside the district capital of Tamiang Lagang.
Access by both road and river is good. The balance 5% interest in SGM is held by the vendor, an
Indonesian national whom the group met only through the negotiations. Terrain and rainfall are
suitable both for oil palm and rubber. Again the area is mainly scrub, the original forest having
been removed some years ago. The area is zoned for commercial agricultural development but
contains isolated villages for which a portion of land will be reserved for community projects.
Development will commence in 2008. FFB production is likely to commence in 2013 and the area
should be fully planted by 2013. Kalimantan is already an important plantation region but, as there
are no mills in the vicinity of SGM, it will be necessary to build a mill by 2013/14.
It is planned to establish a sizable rubber estate either in Kalimantan or Bangka.
4. Bengkulu II
In January 2008, the group acquired for a cash consideration of $3.8 million a 95% interest in PT
Riau Agrindo Agung (RAA), an Indonesian company owning the rights to 15,000 ha of vacant land
in Bengkulu. The balance of 5% interest in RAA is held by the vendor, who is also the vendor of
SGM. The location is about 120 kilometres south of the group’s existing properties in Bengkulu
(“old” Bengkulu) and 60 kilometres north of the provincial capital, Bengkulu town. It will therefore
make a natural addition to the group’s existing 15,000 planted hectares and, in its early years, will
have the support of existing nurseries and access to the groups existing mills.
Terrain on this property is hilly, but better than that of the “old” Bengkulu properties. Soils are good
and rainfall is suitable for oil palm. Vegetation is scrub and light secondary forest, the original
forest having been removed some years ago. As for the other properties, the area is zoned for
development but contains villages whose own development needs must be met. Limited planting
can begin in 2008 with significant planting commencing in 2009 for completion by 2013, and
production commencing in 2013.
Conversion of the land rights in Bangka, Kalimantan and Bengkulu to full HGU titles is likely to take
two to three years.
12
ANGLO-EASTERN PLANTATIONS PLC
Directors’ report
The directors present their annual report on the affairs of the group, together with the financial
statements and auditors’ report, for the year ended 31 December 2007.
Principal activity
The company is incorporated in the United Kingdom under the Companies Act 1985. The address of
the registered office is on the inside back cover.
The company acts as a holding company and co-ordinates the businesses of its subsidiaries. At
31 December 2007 these comprised principally the cultivation of oil palm and rubber in Indonesia
and Malaysia.
The subsidiary undertakings which principally affected the profits or net assets of the group in the
year are listed in note 28 to the consolidated financial statements.
Results and dividends
The audited financial statements for the year ended 31 December 2007 are set out on pages
26 to 53. The group profit for the year on ordinary activities before taxation was $53,592,000
(2006 – $29,040,000) and the profit attributable to ordinary shareholders was $31,000,000
(2006 – $16,474,000). No interim dividend was paid. The directors recommend a final dividend per
share of 14.0cts (2006 – 10.8cts) to be paid on 9 September 2008 to shareholders on the register on 8
August 2008. Shareholders may elect to receive their dividend in sterling as described on page 16.
Business review
Refer to page 10 to 12. In addition, the principal risks and uncertainties of the group’s business are:
• Unexpected variations in crop, principally caused by unusual weather;
• Variations in commodity prices;
•
Variations in the rates of exchange of the Indonesian rupiah and the Malaysian ringgit against
the US dollar, which affect directly the local selling prices of the group’s products and the cost
of imported inputs, as well as the value of financial assets and liabilities as set out in note 25
of the consolidated financial statements;
Input cost inflation;
Changes in the policy of the Indonesian or Malaysian governments towards the plantation
industry and towards foreign investment; and
Protectionist tariffs or controls against CPO for either economic or environmental reasons by
importing countries.
•
•
•
Key performance indicators, being crops, extraction rates, areas and yields are set out under
“Additional information” on page 8 and in the business review on pages 10 to 12.
Financial risk
Information on financial instruments and other risks is set out in note 25 to the consolidated financial
statements.
Biological assets, property, plant and equipment
Information relating to changes in these fixed assets is given in note 11 to the consolidated financial
statements.
Directors
A full list of directors appears on page 19. Mr Kee served during the year until his resignation on
30 September 2007. All other directors served throughout the year and the preceding year. Datuk
Chin, who will have served for 10 years, together with Madam Lim, who willl have served for 14
years, will be submitting themselves for re-election as provided in the Combined Code of Corporate
Governance. Mr O’Connor and Mr Ho will not be seeking re-election.
ANGLO-EASTERN PLANTATIONS PLC
13
Directors’ report
Directors’ interests
The interests of the directors together with those of their immediate families in the securities of the
company were as shown below:
Directors’ beneficial interests at
31 December
R O B Barnes
T H Chan
Datuk Chin
S C Ho
L Y Kee
S K Lim
P E O’Connor
2007
Ordinary
shares
186,000
–
–
300,000
–
20,521,314
150,000
2006
Ordinary
shares
186,000
–
–
300,000
–
20,521,314
200,000
The interests disclosed for Madam Lim are held by Genton International Ltd and certain other
companies of which Madam Lim is the controlling shareholder.
There have been no changes in the interests of the directors in the securities of the company between
31 December 2007 and the date of this report. Neither Mr Smith nor Dato’ Lim had any interest in
the securities of the company between the date of their appointment on 26 April 2008 and the date
of this report.
Other than as set out in note 21 to the financial statements, no director had a material interest in any
contract of the company subsisting during, or at the end of, the financial year.
Substantial share interests
As at 30 April 2008, the following interests had been notified to the company, being interests in
excess of 3% of the issued ordinary share capital of the company:
Name of holder
Genton International Limited
Alcatel Bell Pension Fund
S N Roditi
Number
Percentage of voting rights held
20,247,814
5,940,000
2,116,900
51.3%
15.1%
5.4%
Share capital, restrictions on transfer of shares, arrangements affected by change of control
and other additional information
The company has one class of share capital, ordinary shares. All the shares rank pari passu. The
articles of association of the company contain provisions governing the transfer of shares, voting
rights, the appointment and replacement of directors and amendments to the articles of association.
These accord with usual English company law provisions. There are no special control rights in
relation to the company’s shares. There are no significant agreements to which the company is a
party which take effect, alter or terminate in the event of a change of control of the company. There
are no agreements providing for compensation for directors or employees on change of control.
Auditors
All of the current directors have taken all the steps that they ought to have taken to make themselves
aware of any information needed by the company’s auditors for the purposes of their audit and to
establish that the auditors are aware of the information. The directors are not aware of any relevant
audit information of which the auditors are unaware.
BDO Stoy Hayward LLP has expressed their willingness to continue in office and a resolution to re-
appoint them will be proposed as Resolution 7 at the forthcoming annual general meeting.
14
ANGLO-EASTERN PLANTATIONS PLC
Directors’ report
Authority to allot shares
At the annual general meeting held on 1 June 2007 shareholders authorised the board under the
provisions of section 80 of the Companies Act 1985 to allot relevant securities within specified
limits for a period of five years. Renewal of this authority on similar terms is being sought under
Resolution 8 at the forthcoming annual general meeting. Such authority will be limited to shares up to
a maximum nominal amount of £3,331,356 which represents 33.3% of the company’s current issued
share capital. The authority will last for up to five years from the date of the resolution. The directors
do not have any present intention of issuing any shares under this authority.
A fresh authority is also being sought under the provisions of section 95 of the Companies Act 1985
to enable the board to make an issue to existing shareholders without being obliged to comply with
certain technical requirements of the Companies Act, which create problems with regard to fractional
entitlements and overseas shareholders. In addition, the authority will give the board power to make
issues of shares for cash to persons other than existing shareholders up to a maximum aggregate
nominal amount of £499,703 representing 5% of the current issued share capital. The section 95
authority will last for up to 15 months from the date of the annual general meeting.
Scrip dividends
Resolution 9 to be proposed at the annual general meeting seeks renewal for a further five years of
the authority under which the directors are able to offer shareholders a scrip dividend alternative. No
scrip alternative is being offered in respect of the 2007 final dividend.
Acquisition of the company’s own shares and authority to purchase own shares
In September 2007, the company purchased 50,000 ordinary shares at 386p per share, (totalling
£193,000 and representing 0.1% of the company’s called up share capital). The reason for the
purchase was earnings enhancement. The maximum number of treasury shares held by the
company during the year was 518,000 with a nominal value of £129,500 and representing 1.3% of
the company’s called up share capital. The directors had remaining authority at 30 April 2008, under
the shareholders’ resolution of 1 June 2007, to make purchases of 3,942,837 of the company’s
ordinary shares. This authority expires on 31 October 2008.
The board will only make purchases if they believe the earnings or net assets per share of the
company would be improved by such purchases. All such purchases will be market purchases
made through the London Stock Exchange. Companies can hold their own shares which have been
purchased in this way in treasury rather than having to cancel them. The directors would, therefore,
consider holding the company’s own shares which have been purchased by the company as treasury
shares as this would give the company the flexibility of being able to sell such shares quickly and
effectively where it considers it in the interests of shareholders to do so. Whilst any such shares are
held in treasury, no dividends will be payable on them and they will not carry any voting rights.
Resolution 10 to be proposed at the forthcoming annual general meeting seeks renewed authority to
purchase up to a maximum of 3,997,627 ordinary shares of 25p each on the London Stock Exchange,
representing 10% of the company’s issued ordinary share capital. The maximum price which may be
paid for ordinary shares on any exercise of the authority will be restricted to 5% above the average
middle market quotations for such shares as derived from the London Stock Exchange Daily Official
List for the five business days before the purchase is made.
The maximum number of shares and the price range are stated for the purpose of compliance with
statutory requirements in seeking this authority and should not be taken as an indication of the level
of purchases, or the prices thereof, that the company would intend to make.
ANGLO-EASTERN PLANTATIONS PLC
15
Directors’ report
Amendments to articles of association
It is intended to amend the company’s articles of association in 2009 when the bulk of the provisions
of the Companies Act 2006 will be in place. In the meantime, there are two amendments, which the
board believes it would be advantageous to implement earlier at the forthcoming annual general meeting.
Therefore Resolution 11, to be proposed as a special resolution, propose the following amendments
respectively:
(a) the minimum period for general meetings (other than annual general meetings) is proposed to
be reduced from 21 days to 14 days, even where a special resolution is to be considered, in line
with what is now permitted by the Companies Act 2006 (the “2006 Act”).
(b) The 2006 Act sets out directors’ general duties which largely codify the existing law but with
some changes. Under the 2006 Act, from 1 October 2008 a director must avoid a situation where
he has, or can have, a direct or indirect interest that conflicts, or possibly may conflict with the
company’s interests. The requirement is very broad and could apply, for example, if a director
becomes a director of another company or a trustee of another organisation. The 2006 Act allows
directors of public companies to authorise conflicts and potential conflicts, where appropriate,
where the articles of association contain a provision to this effect. The 2006 Act also allows the
articles of association to contain other provisions for dealing with directors’ conflicts of interest
to avoid a breach of duty. The amendments to the current articles give the directors authority as
from 1 October 2008 to approve such conflict situations and include other provisions to allow
conflicts of interest to be dealt with in a similar way to the current position.
There are safeguards which will apply when directors decide whether to authorise a conflict or
potential conflict. First, only directors who have no interest in the matter being considered will
be able to take the relevant decision, and second, in taking the decision the directors must act
in a way they consider, in good faith, will be most likely to promote the company’s success. The
directors will be able to impose limits or conditions when giving authorisation if they think this is
appropriate.
It is also proposed to include provisions relating to confidential information, attendance at board
meetings and availability of board papers to protect a director being in breach of duty if a conflict
of interest or potential conflict of interest arises.
These provisions will only apply where the position giving rise to the potential conflict has previously
been authorised by the directors. It is the board’s intention to report annually on the company’s
procedures for ensuring that the board’s powers to authorise conflicts are operated effectively or
otherwise to follow developing best practice as regards process and reporting in relation to the
board’s powers to authorise conflicts.
Payment of dividends
The group reporting currency is US dollars. However, shareholders can choose to receive dividends
in US dollars or in sterling. In the absence of any specific instruction up to the date of closing the
register, shareholders with addresses in the UK are deemed to have elected to receive their dividends
in sterling and those with addresses outside the UK in US dollars.
The sterling equivalent dividend will be paid at the exchange rate ruling at the date of closure of the
register.
Supplier payment policy
It is the group’s policy to pay suppliers promptly in accordance with agreed terms of payment. Year
end trade creditor days were about 30 (2006 – 30).
16
ANGLO-EASTERN PLANTATIONS PLC
Directors’ report
Liability insurance for company officers
As permitted by the Companies Act 1985 the company has maintained insurance cover for the
directors against liabilities in relation to the company.
Political and charitable donations
None (2006: $ none).
By order of the board
R O B Barnes
Secretary
30 April 2008
ANGLO-EASTERN PLANTATIONS PLC
17
Directors’ responsibilities
The directors are responsible for keeping proper accounting records which disclose with reasonable
accuracy at any time the financial position of the group, for safeguarding the assets of the company,
for taking reasonable steps for the prevention and detection of fraud and other irregularities and
for the preparation of a directors’ report and directors’ remuneration report which comply with the
requirements of the Companies Act 1985.
The directors are responsible for preparing the annual report and the financial statements in
accordance with the Companies Act 1985. The directors are also required to prepare financial
statements for the group in accordance with International Financial Reporting Standards (IFRS) as
adopted by the European Union and Article 4 of the IAS Regulation. The directors have chosen to
prepare financial statements for the company in accordance with UK Generally Accepted Accounting
Practice (GAAP).
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.
Group financial statements
International Accounting Standard 1 requires that financial statements present fairly for each
financial year the group’s financial position, financial performance and cash flows. This requires
the faithful representation of the effects of transactions, other events and conditions in accordance
with the definitions and recognition criteria for assets, liabilities, income and expenses set out in
the International Accounting Standards Board’s ‘Framework for the preparation and presentation of
financial statements’. In virtually all circumstances, a fair presentation will be achieved by compliance
with all applicable International Financial Reporting Standards. A fair presentation also requires the
Directors to:
• consistently select and apply appropriate accounting policies;
•
present information, including accounting policies, in a manner that provides relevant, reliable,
comparable and understandable information; and
provide additional disclosures when compliance with the specific requirements of IFRS is
insufficient to enable users to understand the impact of particular transactions, other events and
conditions on the entity’s financial position and financial performance.
•
Parent company financial statements
Company law requires the directors to prepare financial statements for each financial year which
give a true and fair view of the state of affairs of the company and the group and of the profit or loss
of the company and the group for that period. In preparing these financial statements, the directors
are required to:
• select suitable accounting policies and then apply them consistently;
•
prepare the financial statements on the going concern basis unless it is inappropriate to presume
that the company will continue in business;
• make judgements and estimates that are reasonable and prudent; and
•
state whether applicable accounting standards have been followed, subject to any material
departures disclosed and explained in the financial statements.
Financial statements are published on the group’s website in accordance with legislation in the
United Kingdom governing the preparation and dissemination of financial statements, which may
vary from legislation in other jurisdictions. The maintenance and integrity of the group’s website is
the responsibility of the directors. The directors’ responsibility also extends to the ongoing integrity of
the financial statements contained therein.
18
ANGLO-EASTERN PLANTATIONS PLC
Directors
Chan Teik Huat (Chairman and CEO, aged 68) – appointed 29 November 1993
Chartered Accountant; former managing director of Metroplex Berhad until January 2006; founder
and managing partner of a leading accounting firm, Kassim Chan, Malaysia for some 17 years. The
firm has been renamed Deloitte Kassim Chan and, subsequently, Deloitte.
R O B Barnes (Financial director, aged 63) – appointed 10 July 1989 retired on 30 April 2008
Chartered Accountant; director of The Chillington Corporation Plc from 1986 to 1989.
D W Smith (Finance director, aged 59) – appointed 26 April 2008
Chartered Accountant; accounting career in UK and overseas, including three years with plantations
in Indonesia; investment and operational financial management with Commonwealth Development
Corporation 1990 to 2002 including country manager for India 1992 to 1995; director of finance
and administration, Institute of Development Studies, Sussex University 2003 to 2006; consultant in
finance and development 2006 to 2008.
Madam Lim Siew Kim (Non-executive, aged 59) – appointed 29 November 1993
Executive chairman of Metroplex Berhad.
Datuk H Chin Poy-Wu (Independent non-executive, chairman of remuneration committee, aged
70) – appointed 1 May 1998
Deputy chairman of Hap Seng Consolidated Berhad, director of Glenealy Plantations Berhad, both
listed on the Bursa Malaysia. Board member of University Malaysia, Sabah. Commissioner of Police
– Kuala Lumpur, retired 1993.
P E O’Connor (Senior independent non-executive, chairman of nomination and corporate governance
committee, aged 67) – appointed 3 June 1994
Chairman of Advance Developing Markets Plc; lead director of NEO Material Technologies Inc and
deputy chairman of IMS Investment Manager Selection Limited; director of GT Management Plc
1975 to 1990 (in London and Hong Kong).
Ho Soo Ching (Independent non-executive, chairman of audit committee, aged 58) – appointed
29 November 1993
From September 2006 chief executive officer of Manhattan Resources Limited, a Singapore listed
company operating in the Indonesian coal mining sector; prior to that, involved in financial services
sector including some time with Singapore Technologies Group; director of Morgan Grenfell,
Singapore from 1981 to 1987.
Dato’ John Lim Ewe Chuan (Non-executive, aged 58) – appointed 26 April 2008
Chartered Certified Accountant; partner with UHY Hacker Young LLP, London, since 1998; previous
professional accounting career in Malaysia and UK.
ANGLO-EASTERN PLANTATIONS PLC
19
Statement on corporate governance
During 2007 the company has complied with the majority of the requirements of the Combined
Code of Corporate Governance. Where provisions of the Combined Code were not met during 2007,
particular comment is made in the statements below and in the Directors’ remuneration report on
page 23. This statement does not attempt to rehearse all the provisions of the Combined Code.
The board
Until April 2008, the board comprised two executive and four non-executive directors. Three of these
non-executive directors are considered by the board to be independent. All of these three have
served for over nine years, which is the limit reckoned by the Combined Code to indicate prima
facie independence. All three have a wide range of business interests beyond their position with
the company and the rest of the board agrees unanimously that they have shown themselves to be
fully independent. Mr Chan has been both chairman and chief executive since 1998. Madam Lim,
who is a non-executive director, is the controlling shareholder of the company. In the opinion of the
board, given the size of his family’s commitment to the company, Mr Chan’s common interest as a
family member and manager in the company make it reasonable that the post of chairman and chief
executive are combined. The other members of the board are satisfied that through the specific
powers reserved for the board, and given the presence of three wholly independent non-executive
directors, there is a reasonable balance of influence. A schedule of duties and decisions reserved for
the board and management respectively has been adopted. The audit, remuneration and nomination
and corporate governance committees have written terms of reference.
Unless warranted by unusual matters, the board normally meets three times each year. Otherwise
all other matters are dealt with by written resolution. During 2007 there were three full meetings,
attended by all the directors except Madam Lim and Mr Kee, who each attended one.
All the independent non-executive directors met on their own in early 2007 and 2008. The Chairman
met all the non-executive directors, in the absence of the other executive directors, three times in
2007.
Mr O’Connor has been senior non-executive director since January 1999.
Non-executive directors are appointed for three year terms. There have been changes in non-executive
directors at intervals in the past (as recently as 2005) for a variety of reasons. While accepting the
need to maintain the vitality of the board the directors do not intend to specify fixed terms of office for
non-executive directors. However, the board will review the position of each director at the time set
for his normal three yearly reappointment under the Articles.
New directors do not received formal training on the occasion of their appointment to the board as
all have previous experience of public company directorships and some of them have worked in
financial service industries. Directors visit the estates.
In March 2008 the board conducted a review of its performance by questionnaire and discussion. No
major issues arose from this review.
The nomination and corporate governance committee comprises Mr O’Connor (chairman), Mr Ho
and Datuk Chin. The committee had one meeting during 2007, attended by all members, and has
met twice in 2008 to discuss succession and the appointment of finance director.
Relations with shareholders
Company executives and the senior independent non-executive director contact principal shareholders
twice a year and at all times are pleased to speak to and meet any shareholder. Given the dispersion
of directors and shareholders it is not possible for every non-executive director to meet shareholders
in the presence of management.
20
ANGLO-EASTERN PLANTATIONS PLC
Statement on corporate governance
Relations with shareholders – continued
A member of the audit and remuneration committees will be available at the 2008 annual general
meeting.
Accountability and audit
The responsibilities of the directors as regards the financial statements are set out on page 18. A
statement of going concern is also on page 18.
The audit committee comprises Mr Ho (chairman), Mr O’Connor and Datuk Chin. Mr Ho and Mr
O’Connor have current financial experience from their present principal occupations in corporate
finance and investment. The committee met prior to the completion of the 2007 accounts, and three
times during 2007. These meetings were attended by all members.
Internal control
The company has followed the Combined Code provisions and Turnbull Committee guidance on
internal control since 1999. The board has overall responsibility for the group’s internal control and
risk management and for reviewing its effectiveness; the audit committee reviews and monitors
specific risks and internal control procedures and reports to the board where appropriate. Executive
staff and directors are responsible for implementation of control procedures and for identifying and
managing business risks. The audit committee review is a continuous but sequential process and
in any one year does not necessarily cover all risks which are significant to the group. The process
aims to provide reasonable assurance against material misstatement or loss but cannot eliminate the
risk of loss. In 2007 and early 2008, for example, the audit committee reviewed, among other things,
in relation to risk - insurance arrangements, labour law provisions, exchange exposure, earthquake
and drought contingencies; and, in relation to financial control - bought-in crop pricing, squatter land
compensation and capital expenditure approval.
The board receives monthly reports from executive management in Indonesia and Malaysia and
focuses at each meeting on the principal continuing risks to which the group is exposed including, but
not limited to, commodity price movements, exchange rate movements, political and social change
and government legislation.
The group has an internal audit department which visits each operating site in Indonesia and Malaysia
twice a year and provides a wide ranging report to the managing director of those operations. The
work and conclusions of the internal audit department are reviewed independently by the audit
committee twice each year.
Environmental and corporate responsibility
In 2004 a group of growers, processors, retailers and wildlife and conservation groups founded the
“Round Table for Sustainable Palm Oil”, known as RSPO, to codify and promote best practices in
the industry. The group’s management and directors take a serious view of their environmental and
social responsibilities and are fully committed to the principles being developed by RSPO. These
principles cover eight headings as follows:
• Transparency
• Compliance with local laws and regulations
• Commitment to long term economic and financial viability
• Use of appropriate best practices by growers and millers
• Environmental responsibility and conservation of natural resources and biodiversity
• Responsible consideration of individuals and communities affected by growers and mills
• Responsible development of new plantings; and
• Commitment to continuous improvement in key areas of activity.
ANGLO-EASTERN PLANTATIONS PLC
21
Statement on corporate governance
Within these headings are 40 detailed principles. Among the most important are:
• Not to remove primary forest
• Not to use fire for clearing areas designated for new or replantings
• To follow accepted soil and water conservation practices
•
To use agrochemicals in ways that do not endanger health or the environment and to promote
non-chemical methods of pest management
• To leave wild areas for wildlife corridors, water catchment and riparian protection
• Provide full treatment of mill effluent water
• Ensure the wishes of local communities and individuals are taken account of, and
•
To pay to individuals with residual rights over land only freely agreed compensation, in addition to
following government land regulations.
The group attempts to comply with all these principles. Estate staff receives training in their importance
and application. A detailed description of the application of all the principles is not possible here, but
by way of two examples:
Mill effluent: In the last three years systems for treating mill liquid effluent with a final aerobic stage
has been installed in some of our mills where the final treated effluent is discharged to waterways.
This reduces biological oxygen demand (BOD) levels to 80ppm compared to the minimum statutory
level of 100 ppm. Mill effluent treatment ponds release methane gas, the “greenhouse” effect of which
is some 21 times worse than carbon dioxide. In 2008 the group will begin installation of systems to
capture methane from the ponds, either to be used in power generation or to be flared to less harmful
carbon dioxide. Such a system can qualify as a CDM (Clean Development Mechanism) project in
accordance to the Kyoto Protocols for tradable carbon credits and can be self-financing.
Local communities: The group is conscious of the role it can play in the development of local
communities, referred to in the chairman’s statement under “Recent acquisitions”. Indeed, the estates
could not operate without the support of those communities. In the last three years in Bengkulu
estate, management has arranged with surrounding villages to plant and maintain oil palms on 21
plots of communal land, each of about 20 ha. These developments are funded by the estates. Each
village agrees to sell the future crop back to the estates which retains a portion of the proceeds
until the development costs are repaid. The remaining revenue is paid to the villages to be used for
communal projects. The total sum invested so far is set out in note 12 of the financial statements.
22
ANGLO-EASTERN PLANTATIONS PLC
Directors’ remuneration report
This report by the remuneration committee has been approved by the board of directors for submission
to shareholders for their approval at the forthcoming annual general meeting.
Membership
The remuneration committee comprised throughout the year Datuk Chin (chairman), Mr Ho and
Mr O’Connor. The committee met three times in 2007, attended by all members.
Policy
The remuneration committee makes recommendations on senior management pay and conditions,
after consultation with the chief executive, and recommends to the board the terms of executive
directors.
Non-executive directors’ remuneration is considered by the board as a whole.
The committee recommends remuneration terms by reference to individual performance, market
conditions, the company’s performance and the need to maintain an economic operation.
The committee does not employ outside consultants.
Components
Base salary
Base salaries are reviewed on an annual basis by the remuneration committee or when an individual
changes responsibilities. Non-executive directors receive no benefits other than a fee.
Bonus
The group operates a bonus scheme for senior executives and managers which is generally
determined by operating performance criteria. Annual bonuses for senior executives and managers
can reach 80% of base salary. Executive directors receive a bonus which has ranged from 0% to
66% in past years, at the discretion of the board.
Share options
The UK and overseas executive share option schemes of the company are administered and
supervised by a committee consisting, in the majority, of non-executive directors. These schemes are
limited over their 10 year life to issuing no more than 10% of the issued ordinary share capital of the
company from time to time. They provide for options to be granted over treasury shares as well as
over new shares. To avoid dilution, the board intends generally to follow the treasury share route.
Individual grants are phased over three years. The total grant to each holder is determined by
seniority and total market value at date of grant is normally limited to two times base salary. Exercise
of options is only permitted three years after grant, provided that they remain employees of the group
throughout the period. There are no performance criteria for exercise of options granted so far.
Pensions
There is no company pension scheme for executive directors or senior executives and management.
In the case of one executive director, Mr Barnes, the company makes contributions based on base
salary only to a personal money purchase scheme. Senior executives in Indonesia who leave
voluntarily after more than five years’ service are entitled to a gratuity of one month’s base salary for
each year of service.
Service contracts
All directors, executive and non-executive, except Mr Barnes, have formal appointment letters. Those
of the non-executives are all for three year terms from 1 June 2007 with notice periods of one month.
Mr Chan has a rolling contract dated 22 February 2007 with a notice period of six months. Notice
periods for all other senior management are generally between three and six months. Mr Barnes
retired on 30 April 2008.
ANGLO-EASTERN PLANTATIONS PLC
23
Directors’ remuneration report
to
following graph shows
Performance graph
the company’s
The
return,
performance, measured by capital
compared
(KLSE)
the Bursa Malaysia
Plantation Index for the period 1 January 2002
to 13 March 2008. This is the only relevant index
available in terms of sector but, any comparison
should be qualified; many Malaysian plantation
companies are diversified, as well as not holding
as great a proportion of their assets in Indonesia
as Anglo-Eastern.
In determining senior management compensation,
the remuneration committee is influenced by the
operating performance of the company and not
directly by the share price.
Anglo-Eastern Plant (EQ)
Kuala Lumpur SE/Plantation Index
h
t
w
o
r
g
e
g
a
t
n
e
c
r
e
P
650.0
600.0
550.0
500.0
450.0
400.0
350.0
300.0
250.0
200.0
150.0
100.0
50.0
0.0
-50.0
2003
2004
2005
2006
2007
2008
5 years from 01/01/03 to 13/03/08
Audited information
Directors’ share options
Share options granted to the directors of the company under the company’s 1994 Executive Share
Option Scheme and Overseas Share Option Scheme and outstanding at 31 December 2007 were:
Name of Director
Date of Grant
Exercise price
Period of option
No of ordinary shares under option
1 Jan 07
(Exercised)
31 Dec 07
T H Chan
16.04.02
44.7p
30.04.05-29.04.12
30,600
–
30,600
The market price of the shares at 31 December 2007 was 447.50p and the range during 2007 was
307.75p to 450.00p.
Directors’ remuneration
The remuneration of all directors who served during the year was:
Name of director
Executive:
T H Chan (Chairman and CEO)
R O B Barnes
L Y Kee
(resigned 30 Sep 2007)
Non-executive:
S K Lim
Datuk H Chin
S C Ho
P E O’Connor
2007
2006
Executive
salary
$000
Bonus
(re 2006)
$000
Benefits
in kind
$000
Fees
$000
–
–
–
–
26
35
40
35
136
81
92
233
65
–
–
–
–
–
390
364
62
88
7
–
–
–
–
157
49
44
31
14
–
–
–
–
89
51
Total
2007
$000
198
352
86
26
35
40
35
772
Total
2006
$000
106
258
100
15
22
22
22
545
Pension contribution
2007
$000
2006
$000
–
39
–
–
–
–
–
39
–
34
–
–
–
34
34
Apart from the salaries of Mr Chan and Mr Kee, which are denominated in Malaysian ringgit, all the
other above salaries are denominated in sterling.
On behalf of the board
Datuk H Chin Poy-Wu
Chairman, remuneration committee
30 April 2008
24
ANGLO-EASTERN PLANTATIONS PLC
Auditors’ report
Independent auditors’ report to the shareholders of Anglo-Eastern Plantations Plc
We have audited the group and parent company financial statements (the ‘’financial statements’’) of Anglo Eastern Plantations Plc for the year
ended 31 December 2007 which comprise the consolidated income statement, the consolidated and parent company balance sheets, the
consolidated cash flow statement, the consolidated statement of total recognised income and expenses and the related notes. These financial
statements have been prepared under the accounting policies set out therein.
We have also audited the information in the directors’ remuneration report that is described as having been audited.
Respective responsibilities of directors and auditors
The directors’ responsibilities for preparing the Annual Report and the group financial statements in accordance with applicable law and
International Financial Reporting Standards (IFRS) as adopted by the European Union, and for preparing the parent company financial
statements and the directors’ remuneration report in accordance with applicable law and United Kingdom Accounting Standards (United
Kingdom Generally Accepted Accounting Practice) are set out in the statement of directors’ responsibilities.
Our responsibility is to audit the financial statements and the part of the directors’ remuneration report to be audited in accordance with relevant
legal and regulatory requirements and International Standards on Auditing (UK and Ireland).
We report to you our opinion as to whether the financial statements give a true and fair view and whether the financial statements and the part
of the directors’ remuneration report to be audited have been properly prepared in accordance with the Companies Act 1985 and whether in
addition, the group financial statements have been properly prepared in accordance with Article 4 of the IAS Regulation. We also report to you
if, in our opinion, the information in the directors’ report is consistent with the financial statements. In addition, we report to you if, in our opinion,
the company has not kept proper accounting records, we have not received all the information and explanations we require for our audit, or if
information specified by law regarding directors’ remuneration and other transactions is not disclosed.
We review whether the corporate governance statement reflects the company’s compliance with the nine provisions of the 2006 FRC Combined
Code specified for our review by the Listing Rules of the Financial Services Authority, and we report if it does not. We are not required to consider
whether the board’s statements on internal control cover all risks and controls, or form an opinion on the effectiveness of the group’s corporate
governance procedures or its risk and control procedures.
We read other information contained in the annual report and consider whether it is consistent with the audited financial statements. The other
information comprises only the financial summary, the chairman’s statement, financial record, estate areas, location of estates, additional
information, the business review, the directors’ report, statement on corporate governance and the unaudited parts of the directors’ remuneration
report. We consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the
financial statements. Our responsibilities do not extend to any other information.
Our report has been prepared pursuant to the requirements of the Companies Act 1985 and for no other purpose. No person is entitled to rely
on this report unless such a person is a person entitled to rely upon this report by virtue of and for the purpose of the Companies Act 1985 or
has been expressly authorised to do so by our prior written consent. Save as above, we do not accept responsibility for this report to any other
person or for any other purpose and we hereby expressly disclaim any and all such liability.
Basis of audit opinion
We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An
audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements and the part of the
directors’ remuneration report to be audited. It also includes an assessment of the significant estimates and judgments made by the directors in
the preparation of the financial statements, and of whether the accounting policies are appropriate to the group’s and company’s circumstances,
consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide
us with sufficient evidence to give reasonable assurance that the financial statements and the part of the directors’ remuneration report to be
audited are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the
overall adequacy of the presentation of information in the financial statements and the part of the directors’ remuneration report to be audited.
Opinion
In our opinion:
•
•
•
•
•
the group financial statements give a true and fair view, in accordance with IFRS as adopted by the European Union, of the state of the
group’s affairs as at 31 December 2007 and of its profit for the year then ended;
the group financial statements have been properly prepared in accordance with the Companies Act 1985 and Article 4 of the IAS
Regulation
the parent company financial statements give a true and fair view, in accordance with United Kingdom Generally Accepted Accounting
Practice, of the state of the parent company’s affairs as at 31 December 2007; and
the parent company financial statements and the part of the directors’ remuneration report to be audited have been properly prepared in
accordance with the Companies Act 1985.
the information given in the directors’ report is consistent with the financial statements.
BDO STOY HAYWARD LLP
Chartered Accountants and Registered Auditors
55 Baker Street
London W1U 7EU
30 April 2008
ANGLO-EASTERN PLANTATIONS PLC
25
Consolidated income statement
for the year ended 31 December 2007
Continuing operations
Notes
Revenue
Cost of sales
Gross profit
Biological asset reval-
uation movement (BA
adjustment)
Other income
Administration expenses
Operating profit
Exchange profits/(losses)
Finance income
Finance costs
Profit before tax
Tax
2
3
4
4
5
8
Result
before
BA
adjustment
$000
127,898
(72,297)
55,601
2007
BA
adjustment
$000
Result
before
BA
adjustment
$000
2006
BA
adjustment
$000
Total
$000
–
–
–
127,898
(72,297)
79,094
(50,089)
55,601
29,005
–
–
–
–
566
(3,646)
52,521
215
1,800
(1,945)
1,001
–
–
1,001
–
–
–
1,001
566
(3,646)
53,522
215
1,800
(1,945)
52,591
(15,328)
1,001
(300)
53,592
(15,628)
–
13
(2,748)
26,270
368
538
(448)
26,728
(8,595)
2,312
–
–
2,312
–
–
–
2,312
(694)
Total
$000
79,094
(50,089)
29,005
2,312
13
(2,748)
28,582
368
538
(448)
29,040
(9,289)
Profit for the year
37,263
701
37,964
18,133
1,618
19,751
Attributable to:
– Equity holders of the parent
– Minority interests
Earnings per share
– basic
– diluted
9
9
30,485
6,778
37,263
515
186
701
31,000
6,964
15,153
2,980
1,321
297
16,474
3,277
37,964
18,133
1,618
19,751
78.5 cts
78.4 cts
41.7 cts
41.7 cts
Earnings before BA adjustment are shown in note 9.
The accompanying notes are an integral part of this consolidated income statement.
26
ANGLO-EASTERN PLANTATIONS PLC
Consolidated statement of recognised income and expenses
for the year ended 31 December 2007
Unrealised surplus on revaluation of the estates
(Loss)/profit on exchange translation
Deferred tax on revaluation
Total recognised income and expense for the year
Profit for the year
Total recognised income and expense for the year
Attributable to:
– Equity holders of the parent
– Minority interest
Notes
2007
$000
2006
$000
22
22
22
22
22
22
4,823
(5,932)
(1,186)
(2,295)
37,964
6,016
11,718
(3,327)
14,407
19,751
35,669
34,158
28,639
7,030
28,002
6,156
35,669
34,158
The accompanying notes are an integral part of this consolidated statement of recognised income and expenses.
ANGLO-EASTERN PLANTATIONS PLC
27
Consolidated balance sheet
as at 31 December 2007
Non-current assets
Biological assets
Property, plant and equipment
Receivables
Current assets
Inventories
Tax receivables
Trade and other receivables
Cash and cash equivalents
Current liabilities
Bank loans and other financial liabilities
Trade and other payables
Tax liabilities
Net current assets
Non-current liabilities
Bank loans and other financial liabilities
Deferred tax liabilities
Retirement benefits - net liabilities
Net assets
Equity
Share capital
Treasury shares
Share premium reserve
Share capital redemption reserve
Revaluation and exchange reserves
Retained earnings
Equity attributable to equity holders of the parent
Minority interests
Total equity
Notes
2007
$000
2006
$000
11
11
12
13
14
15
16
15
17
18
19
19
22
22
22
22
22
38,580
148,443
1,677
33,255
127,568
1,337
188,700
162,160
4,910
1,875
1,462
66,358
1,785
2,684
1,652
17,246
74,605
23,367
(7,293)
(9,311)
(8,085)
(2,167)
(5,308)
(3,235)
(24,689)
(10,710)
49,916
12,657
(35,719)
(23,025)
(1,534)
(5,454)
(21,152)
(834)
178,338
147,377
15,504
(1,785)
23,935
1,087
46
107,184
15,495
(1,387)
23,904
1,087
2,407
80,450
145,971
32,367
121,956
25,421
178,338
147,377
The financial statements were approved by the board of directors and authorised for issue on 30 April 2008 and
were signed on its behalf by
R O B Barnes
The accompanying notes are an integral part of this consolidated balance sheet.
28
ANGLO-EASTERN PLANTATIONS PLC
Consolidated cash flow statement
for the year ended 31 December 2007
Cash flows from operating activities
Operating profit
Adjustments for:
BA adjustment
Net (profit)/loss on disposal of current and fixed asset investments
Depreciation
Share based remuneration expense
Retirement benefit provisions
Net finance income/(expense)
Operating cash flow before changes in working capital
(Increase)/decrease in inventories
Decrease in trade and other receivables
Increase in trade and other payables
Cash inflow from operations
Interest paid
Overseas tax paid
Net cash flow from operations
Investing activities
Acquisition of subsidiaries
Property, plant and equipment
- purchase
- sale
Interest received
Net cash used in investing activities
2007
$000
2006
$000
53,592
29,040
(1,001)
(518)
4,264
87
700
145
57,269
(3,125)
142
3,600
57,886
(2,051)
(9,196)
(2,312)
158
3,551
20
232
(90)
30,689
714
85
1,007
32,405
(541)
(9,321)
46,639
22,543
(14,480) –
(12,244)
94
1,800
(15,370)
119
538
(24,830)
(14,713)
ANGLO-EASTERN PLANTATIONS PLC
29
Consolidated cash flow statement
for the year ended 31 December 2007
Financing activities
Dividends paid by parent company
Share options exercised
Purchase of own shares for treasury
Repayment of existing long term loans
Drawdown of new long term loan
Finance lease drawdown/(repayment)
Dividends paid to minority shareholders
Loan to minority shareholder
Repayment of loan by minority shareholder
Purchase of portfolio investment
Receipt from sale of portfolio investment
Net cash used in financing activities
Increase in cash and cash equivalents
Cash and cash equivalents less overdrafts
At beginning of period
Foreign exchange
At end of period
Comprising,
Cash at end of year
Overdraft at end of year
2007
$000
2006
$000
(4,266)
40
(398) –
(1,694)
34,500
7
(735)
(578)
286 –
(1,668) –
2,234
(3,560)
50
(1,645)
3,200
(11)
(460)
267
27,728
(2,159)
49,537
5,671
16,823
(3,003)
10,805
347
63,357
16,823
66,358
(3,001)
17,246
(423)
63,357
16,823
The accompanying notes are an integral part of this consolidated cash flow statement.
30
ANGLO-EASTERN PLANTATIONS PLC
Notes to the consolidated financial statements
1 Accounting policies
Basis of preparation
The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS and IRFIC
interpretations) issued by the International Accounting Standards Board (IASB) as adopted by the EU and with those parts of the Companies
Act 1985 applicable to companies preparing their accounts under IFRS. The principal accounting policies adopted in the preparation of
these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise
stated.
Changes in accounting policies
(a) New standards effective in 2007 and adopted by the group
IFRS 7, Financial Instruments: disclosures and a complementary amendment to IAS 1, Presentation of Financial Statements – capital
disclosures (effective for accounting periods beginning on or after 1 January 2007), which introduces new requirements aimed at
improving the disclosure of information about financial instruments. It requires the disclosure of qualitative and quantitative information
about exposure to risks arising from financial instruments, including specified minimum disclosures about credit risk, liquidity risk and
market risk. Where those risks are deemed to be material to the group it requires disclosures based on the information used by key
management. It replaces the disclosure requirements in IAS 32 ‘Financial Instruments: disclosure and presentation’. It is applicable to
all entities that report under IFRS.
The amendment to IAS 1 introduces disclosures about the level and management of an entity’s capital. The group has applied IFRS 7
and the amendment to IAS 1 to the accounts for the period beginning on 1 January 2007.
IFRIC 8, Scope of IFRS2 (effective for accounting periods beginning on or after 1 May 2006). There was no impact on the group’s
accounts from its adoption.
IFRIC 9, Reassessment of embedded derivatives (effective for accounting periods beginning on or after 1 June 2006). There was no
impact on the group’s accounts from its adoption.
IFRIC 10, Interim Financial Reporting and Impairment (effective for accounting periods beginning on or after 1 November 2006). There
was no impact on the group’s accounts from its adoption.
(b) Standards, effective in 2007 but not relevant to the group
IFRIC 7, Applying the restatement approach under IAS 29, Financial Reporting in Hyperinflationary Economies (effective for accounting
periods beginning on or after 1 March 2006).
(c) Standards, not yet effective
Certain new standards, amendments and interpretations to existing standards have been published that are mandatory for the group’s
accounting periods beginning on or after 1 January 2008 or later periods and which the group has decided not to adopt early. These
are:
IFRS 8, Operating Segments (effective for accounting periods beginning on or after 1 January 2009). As this is a disclosure standard
it will not have any impact on the results or net assets of the group.
IAS 23, Borrowing Costs (revised) (effective for accounting periods beginning on or after 1 January 2009), which is still to be endorsed
by the EU. This is relevant to the group but it is expected there will be no impact on the financial statements.
IFRIC 11, IFRS 1 – Group and Treasury Share Transactions (effective for accounting periods beginning on or after 1 March 2007),
which requires share–based payment transactions in which an entity receives services as consideration for its own equity instruments
to be accounted for as equity settled. In terms of transactions to date there would be no impact on the accounts.
IFRIC 12, Service Concession Arrangements (effective for accounting periods beginning on or after 1 January 2008), which is not
relevant to the group.
IFRC 13, Customer Loyalty Programmes (effective for accounting periods after 1 July 2008), which is not relevant to the group.
IFRIC 14, IAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction (effective for accounting
periods beginning on or after 1 January 2008), which is still to be endorsed by the EU. Management is currently assessing the impact
of IFRIC 14 on the financial statements.
Revised IFRS 3, Business Combinations and complementary Amendments to IAS 27, ‘Consolidated and Separate Financial
Statements’ (both effective for accounting periods beginning on or after 1 July 2009). This revised standard and amendments to it is
still to be endorsed by the EU. Management is currently assessing the impact of revised IFRS 3 and amendments to IAS 27 on the
accounts.
Amendment to IFRS 2, Share–based payments; vesting conditions and cancellations (effective for accounting periods beginning on
or after 1 January 2009). This amendment is still to be endorsed by the EU. Management is currently assessing the impact of the
amendment on the accounts.
Amendment to IAS 32, Financial Instruments; Presentation and IAS 1, Presentation of Financial Statements (effective for accounting
periods beginning on or after 1 January 2009). This amendment is still to be endorsed by the EU but is not relevant to the group.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the company and entities controlled by the company (its
subsidiaries) made up to 31 December each year. Control is achieved where the company has the power to govern the financial and
operating policies of an investee entity so as to obtain benefits from its activities.
Business combinations
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the consolidated
balance sheet, the acquiree’s identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the
acquisition date.
The results of acquired operations are included in the consolidated income statement from the date on which control is obtained.
ANGLO-EASTERN PLANTATIONS PLC
31
Notes to the consolidated financial statements
1 Accounting policies – continued
Basis of consolidation – continued
Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those
used by the group.
All intergroup transactions, balances, income and expenses are eliminated on consolidation.
Foreign currency
The individual financial statements of each subsidiary are presented in the currency of the country in which it operates (its functional
currency) with the exception of the company and its UK subsidiaries which are presented in US dollars. The presentation currency for
the consolidated financial statements is also US dollars, chosen because the price of the bulk of the group’s products are ultimately
denominated in dollars.
On consolidation, the results of overseas operations are translated into US dollars at average exchange rates for the year unless exchange
rates fluctuate significantly. All assets and liabilities of overseas operations are translated at the rate ruling at the balance sheet date.
Exchange differences arising on translating the opening net assets at opening rate and the results of overseas operations at actual rate are
recognised directly in equity (the “foreign exchange reserve”). Exchange differences recognised in the income statement of group entities’
separate financial statements on the translation of long–term monetary items forming part of the group’s net investment in the overseas
operation concerned are reclassified to the foreign exchange reserve if the item is denominated in the presentational currency of the group
or of the overseas operation concerned.
On disposal of a foreign operation, the cumulative exchange differences recognised in the foreign exchange reserve relating to that
operation up to date of disposal are transferred to the income statement as part of the profit or loss on disposal.
All other exchange profits or losses are credited or charged to the income statement.
Revenue recognition
Revenue includes
–
amounts receivable for produce provided in the normal course of business, net of sales related taxes and levies, including export
taxes;
–
amounts received for sales of palm kernel shell, rubber wood and other income of an operating nature.
Sales of CPO and palm kernel are recognised when goods are delivered or allocated to a purchaser. Delivery or allocation does not take
place until contracts paid for. Sales of rubber are recognised on signing of sales contract.
Share based payments
In accordance with the transitional provisions, IFRS 2 has been applied to all share options granted after 7 November 2002 unvested at 1
January 2005.
The resulting outstanding share options are measured at fair value (excluding the effect of non market–based vesting conditions) at the
date of grant. This fair value is expensed on a straight–line basis over the vesting period, based on the group’s estimate of shares that will
eventually vest and adjusted for the effect of non market–based vesting conditions.
Fair value is measured by use of a binominal model. The expected life used in the model has been adjusted, based on management’s best
estimate, for the effects of non–transferability, exercise restrictions, and behavioural considerations.
Provided that all other vesting conditions are satisfied, a charge is made irrespective of whether the market vesting conditions are
satisfied.
Interest capitalisation
Interest on third party loans directly related to field development is capitalised in the proportion that the opening immature area bears to
the total planted area of the relevant estate. Interest on loans related to construction in progress (such as an oil mill) is capitalised up to the
commissioning of that asset.
Tax
UK and foreign corporation tax is provided at amounts expected to be paid or recovered using the tax rates and laws that have been
enacted or substantially enacted by the balance sheet date.
Dividends
Equity dividends are recognised when they become legally payable. The company pays only one dividend each year as a final dividend
which becomes legally payable when approved by the shareholders at the next following annual general meeting.
Segment reporting
Save for a small amount of rubber, all the group’s operations are devoted to oil palm. Therefore the group’s principal segment report is by
geographical area, as the estates in each specific area tend to be at the same stage of development and each area tends to have different
agricultural conditions.
Biological assets, property, plant and equipment
Estates, which comprise biological assets, and property plant and equipment, are shown at fair values in use, which are calculated internally
every year and reviewed by an external valuer every five years. Value in use is calculated as the present value of the local currency cash
flows of each estate over the next twenty years, including replanting where required.
Any surplus or deficit on revaluation of property, plant and equipment is transferred to the revaluation and exchange reserve, except that
a deficit which is in excess of any previously recognised surplus relating to the same property is charged to the income statement. On the
disposal or recognition of a provision for impairment of a revalued estate, any related balance remaining in the revaluation and exchange
reserve is transferred to retained earnings as a movement on reserves.
Oil mills, which are part of property, plant and equipment, are shown at cost less depreciation.
The depreciation charge on Indonesian estates is based on mature values at the beginning of the year and is provided at a rate of 2% per
annum. Oil mills are depreciated at 5% per annum. The Malaysian leasehold land is depreciated over the remaining term of the lease.
Mature plantations in Malaysia are depreciated at 5% per annum.
Within the estate valuations described above the value of biological assets is estimated separately and, as required by IAS41, the movement
in valuation surplus of biological assets is charged or credited to the income statement for the relevant period (BA adjustment).
32
ANGLO-EASTERN PLANTATIONS PLC
Notes to the consolidated financial statements
1 Accounting policies – continued
Leased assets
Assets financed by leasing agreements which give rights approximating to ownership (finance leases) are capitalised at amounts equal to
the original cost of the asset to the lessors and depreciation is provided on the asset over the shorter of the lease term or its useful economic
life on the basis of group depreciation policy. The capital elements of future obligations under finance leases are included as liabilities in
the balance sheet and the current year’s interest element is charged to the income statement to produce a constant rate of charge on the
balance of capital repayments outstanding. There are no operating leases.
Impairment
Impairment tests on tangible assets are undertaken annually on 31 December. Where the carrying value of an asset exceeds its recoverable
amount (i.e. the higher of value in use or fair value, less costs to sell), the asset is written down accordingly. Impairment charges are
included in the administrative expenses line item in the income statement, except to the extent they reverse gains previously recognised in
the statement of recognised income and expense.
Inventories
Inventories are initially recognised at cost, and subsequently at the lower of cost and net realisable value. Cost comprises all costs of
purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition.
Weighted average cost is used to determine the cost of ordinarily interchangeable items.
All produce inventories are already in processed form as oil or kernel and therefore the requirement under IAS41 to value agricultural
produce at market value, does not apply.
Current asset investment
In the case of the group, the only investments are in shares listed on a recognised stock exchange and available for sale. These shares
are carried at market value and changes in market value are recognised through reserves and recycled through the income statement on
disposal.
Financial assets
All the group’s receivables and loans are non–derivative financial assets with fixed or determinable payments that are not quoted in an
active market. They are recognised at fair value at inception and no impairment provisions have been considered necessary.
Cash and cash equivalents consist of cash in hand and short term deposits at banks. Bank overdrafts are shown within loans and borrowings
under current liabilities on the balance sheet.
There are no assets in hedging relationships and no financial assets or liabilities available for sale.
Financial liabilities
All the group’s financial liabilities are non–derivative financial liabilities.
Bank borrowings and long term development loans are initially recognised at fair value which is the total of proceeds received. Finance
charges are accounted for on an accruals basis and charged in the income statement, unless capitalised according to the policy as set out
under Interest capitalisation above.
Trade and other payables are shown at fair value at recognition.
Deferred tax
Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability in the balance sheet differs from its tax
base except for differences in the initial recognition of an asset or liability in a transaction which is not a business combination and at the
time of the transaction affects neither accounting nor taxable profit.
Recognition of deferred tax assets is restricted to those instances where it is possible that taxable profit will be available against which the
difference can be utilised. Within these parameters, deferred tax is recognised on temporary differences arising on property revaluation
surpluses.
Deferred tax is determined using the tax rates that are in force at the balance sheet date and are expected to apply in the period when
the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items
charged or credited directly to equity, such as revaluations, in which case the deferred tax is also dealt with in equity; in this case assets
and liabilities are offset.
Retirement benefits
Contributions to defined contribution pension schemes are charged to the income statement in the year to which they relate.
The group operates a number of defined benefit pension schemes in respect of its Indonesian operations. The pension costs of these
schemes charged to the income statement comprise the annual payments to the schemes together with any provision required for any
shortfall in funding as disclosed by annual valuations of the schemes as advised by the schemes’ actuaries.
Treasury shares
Consideration paid or received for the purchase or sale of the company’s own shares for holding in treasury is recognised directly in equity,
where the cost is presented as the treasury share reserve. Any excess of the consideration received on the sale of treasury shares over the
weighted average cost of shares sold, is taken to the share premium account.
Any shares held in treasury are treated as cancelled for the purpose of calculating earnings per share.
Critical accounting estimates and judgements
The preparation of the group financial statements in conformity with IFRS requires the use of estimates and assumptions that affect the
reported assets and liabilities and reported revenue and expenses. Actual results could differ from those estimates and accordingly they
are reviewed on an on–going basis. The main areas in which estimates are used are: fair value of biological assets, property, plant and
equipment; deferred tax; retirement benefits.
Revisions to accounting estimates are recognised in the period in which the estimate is revised or the revision affects only that period, or
in the period of revision and future periods if the revision affects both and current and future periods.
Assumptions regarding the valuation of biological assets, property, plant and equipment are set out in note 11. The group’s policy with
regard to impairment of such assets is set out above.
ANGLO-EASTERN PLANTATIONS PLC
33
Notes to the consolidated financial statements
2 Revenue
Sales of produce
Other operating income
3 Other income
Income from current asset investments
Gains from current asset investments
4 Finance income and expense
Finance income
Finance expense
Interest payable on:
Development loans – (note 15)
Overdraft – (note 15)
Finance leases
Other
Interest capitalised on loans related to field development and construction in progress
Net finance (expense)/income recognised in income statement
5 Profit before tax
Profit before tax is stated after charging
Depreciation (including $ 56,000 (2006 – $41,000) in respect of leased assets)
Staff costs (note 7)
Auditors’ remuneration – audit (company $25,000 (2006 $25,000)
– audit of subsidiaries
– other services
– Total
2007
$000
127,619
279
127,898
2006
$000
78,863
231
79,094
2007
$000
–
566 8
566
2007
$000
1,800
1,873
72
9 6
97 –
(106)
1,945
(145)
2006
$000
5
13
2006
$000
538
478
57
(93)
448
90
2007
$000
2006
$000
4,264
3,551
13,010
10,772
96
62
– –
75
54
158
129
34
ANGLO-EASTERN PLANTATIONS PLC
Notes to the consolidated financial statements
l
a
t
o
T
0
0
0
$
K
U
0
0
0
$
9
7
2
9
1
6
,
7
2
1
8
9
8
,
7
2
1
1
0
0
,
1
1
9
5
,
2
5
2
9
5
,
3
5
)
8
2
6
,
5
1
(
4
6
9
,
7
3
)
2
4
0
,
5
5
(
0
9
4
,
4
6
2
)
0
1
1
,
1
3
(
8
4
4
,
9
0
2
8
3
3
,
8
7
1
)
4
6
2
,
4
(
0
5
3
,
2
1
–
–
–
–
)
5
4
9
(
–
)
5
4
9
(
)
5
4
9
(
0
7
4
,
3
)
4
8
0
,
1
(
)
4
1
(
6
8
3
,
2
2
7
3
,
2
–
–
0
0
0
$
0
0
0
$
1
3
2
3
6
8
,
8
7
4
9
0
,
9
7
2
1
3
,
2
8
2
7
,
6
2
)
9
8
2
,
9
(
0
4
0
,
9
2
1
5
7
,
9
1
)
5
5
1
,
5
1
(
9
1
9
,
6
8
1
)
7
8
3
,
4
2
(
4
6
7
,
1
7
1
7
7
3
,
7
4
1
3
6
4
,
5
1
)
1
5
5
,
3
(
–
2
2
–
)
6
8
3
,
1
(
–
)
6
8
3
,
1
(
)
6
8
3
,
1
(
)
3
1
6
(
7
3
8
,
2
)
2
1
(
4
2
2
,
2
2
1
2
,
2
–
–
4
2
2
7
8
,
5
6
9
8
,
5
1
1
0
9
7
,
2
)
4
(
1
0
8
,
2
7
9
7
,
2
)
5
4
6
,
1
(
0
3
8
,
4
2
–
5
8
1
,
3
2
5
8
1
,
3
2
9
1
3
)
6
8
8
(
0
0
0
$
2
6
3
6
,
3
8
3
6
,
3
)
7
3
(
9
6
1
1
1
2
3
1
3
4
1
)
1
1
6
,
2
(
7
0
8
,
1
2
–
6
9
1
,
9
1
6
9
1
,
9
1
8
2
2
)
8
4
8
(
0
0
0
$
0
0
0
$
0
0
0
$
i
a
s
y
a
a
M
l
i
a
s
e
n
o
d
n
I
l
a
t
o
T
n
a
t
n
a
m
i
l
a
K
0
0
0
$
a
k
g
n
a
B
u
a
R
i
0
0
0
$
0
0
0
$
l
u
u
k
g
n
e
B
0
0
0
$
a
r
t
a
m
u
S
h
t
r
o
N
5
5
2
7
4
7
,
1
2
1
2
0
0
,
2
2
1
0
9
9
6
4
7
,
0
5
6
3
7
,
1
5
)
4
2
6
,
5
1
(
2
1
1
,
6
3
)
3
1
3
,
2
5
(
0
9
1
,
6
3
2
)
6
9
0
,
1
3
(
7
7
8
,
3
8
1
1
8
7
,
2
5
1
)
8
7
3
,
3
(
1
3
0
,
2
1
–
–
–
–
–
–
–
–
–
9
4
0
,
7
–
9
4
0
,
7
9
4
0
,
7
6
–
–
–
–
–
–
–
–
–
)
1
(
6
4
5
,
1
–
5
4
5
,
1
5
4
5
,
1
–
8
3
–
2
0
5
,
8
1
2
0
5
,
8
1
0
2
3
7
7
8
,
6
7
9
1
,
7
)
9
8
0
,
2
(
8
0
1
,
5
)
5
9
3
,
6
(
4
2
9
,
7
2
)
8
4
6
,
5
(
9
2
5
,
1
2
1
8
8
,
5
1
)
9
1
6
(
8
7
2
,
3
9
7
3
2
,
2
4
6
4
2
,
2
4
)
0
9
6
(
3
8
9
,
3
1
)
4
4
6
,
3
(
3
9
2
,
3
1
9
4
6
,
9
3
6
7
,
1
7
)
3
8
1
,
7
3
(
)
7
3
4
,
7
(
0
8
5
,
4
3
3
4
1
,
7
2
2
3
7
,
3
)
2
7
1
,
1
(
6
4
2
8
0
0
,
1
6
4
5
2
,
1
6
0
6
3
,
1
6
8
8
,
9
2
)
1
9
8
,
9
(
6
4
2
,
1
3
5
5
3
,
1
2
)
4
3
7
,
8
(
8
0
9
,
7
2
1
)
1
1
0
,
8
1
(
4
7
1
,
9
1
1
3
6
1
,
1
0
1
7
7
9
,
4
)
7
8
5
,
1
(
0
0
0
$
0
0
0
$
0
0
0
$
0
0
0
$
0
0
0
$
0
0
0
$
t
n
e
m
e
v
o
m
A
B
d
n
a
x
a
t
e
r
o
e
b
f
)
s
s
o
l
(
/
t
fi
o
r
P
)
l
a
n
r
e
t
x
e
l
l
a
(
e
u
n
e
v
e
r
s
e
a
s
l
l
a
t
o
T
7
0
0
2
i
n
o
g
e
r
y
b
g
n
i
t
r
o
p
e
r
y
r
a
m
i
r
P
e
m
o
c
n
i
r
e
h
t
O
e
u
n
e
v
e
r
l
a
t
o
T
d
e
u
n
i
t
n
o
c
–
n
o
i
t
a
m
r
o
f
n
i
t
n
e
m
g
e
S
6
x
a
t
e
r
o
e
b
f
)
s
s
o
l
(
/
t
fi
o
r
P
x
a
T
r
a
e
y
e
h
t
r
o
f
t
fi
o
r
P
t
n
e
m
e
v
o
m
A
B
s
t
e
s
s
a
t
n
e
m
g
e
S
x
a
T
s
t
e
s
s
a
t
e
N
s
e
i
t
i
l
i
b
a
L
i
s
t
e
s
s
A
e
r
u
t
i
d
n
e
p
x
e
l
a
t
i
p
a
C
n
o
i
t
i
a
c
e
r
p
e
D
ANGLO-EASTERN PLANTATIONS PLC
7
2
2
7
2
2
,
5
7
4
5
4
,
5
7
9
4
3
,
2
5
4
9
,
7
2
)
0
0
3
,
9
(
4
9
2
,
0
3
4
9
9
,
0
2
)
1
3
9
,
1
1
(
5
7
2
,
2
6
1
)
5
7
3
,
4
2
(
4
4
3
,
0
5
1
9
6
9
,
5
2
1
5
3
2
,
5
1
)
3
0
7
,
2
(
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
7
5
8
,
3
7
5
8
,
3
1
7
0
,
1
3
1
0
,
1
)
0
2
6
(
4
8
0
,
2
4
6
4
,
1
)
2
1
7
,
7
(
1
5
0
,
4
2
)
3
6
1
,
3
(
9
3
3
,
6
1
6
7
1
,
3
1
7
4
1
,
5
)
9
0
2
(
–
9
2
8
,
8
2
9
2
8
,
8
2
5
7
1
5
5
9
,
8
0
3
1
,
9
)
8
7
5
,
1
(
2
5
5
,
7
)
1
9
5
,
1
(
9
2
5
,
0
6
)
2
1
2
,
7
(
8
3
9
,
8
5
6
2
7
,
1
5
4
1
7
,
4
7
2
2
1
4
5
,
2
4
8
6
7
,
2
4
1
6
1
,
1
9
1
9
,
7
1
)
2
0
1
,
7
(
0
8
0
,
9
1
8
7
9
,
1
1
)
8
2
6
,
2
(
5
9
6
,
7
7
7
6
0
,
5
7
)
0
0
0
,
4
1
(
7
6
0
,
1
6
4
7
3
,
5
t
n
e
m
e
v
o
m
A
B
d
n
a
x
a
t
e
r
o
e
b
f
)
s
s
o
l
(
/
t
fi
o
r
P
)
l
a
n
r
e
t
x
e
l
l
a
(
e
u
n
e
v
e
r
s
e
a
s
l
l
a
t
o
T
6
0
0
2
e
m
o
c
n
i
r
e
h
t
O
e
u
n
e
v
e
r
l
a
t
o
T
x
a
t
e
r
o
e
b
f
)
s
s
o
l
(
/
t
fi
o
r
P
x
a
T
r
a
e
y
e
h
t
r
o
f
t
fi
o
r
P
t
n
e
m
e
v
o
m
A
B
s
t
e
s
s
a
t
n
e
m
g
e
S
x
a
T
s
t
e
s
s
a
t
e
N
e
r
u
t
i
d
n
e
p
x
e
l
a
t
i
p
a
C
s
e
i
t
i
l
i
b
a
L
i
s
t
e
s
s
A
)
0
9
1
,
1
(
)
4
0
3
,
1
(
n
o
i
t
i
a
c
e
r
p
e
D
35
Notes to the consolidated financial statements
6 Segment information – continued
Secondary reporting format by crop:
By activity:
Oil palm
Rubber
Cocoa
Gross profit
BA movement
Administration expenses
Unallocated assets/income/(expenses)
Interest
Carrying amount of
segment assets
External income
Profit/(loss)
before tax
2007
$000
2006
$000
2007
$000
2006
$000
2007
$000
2006
$000
146,584
2,065
–
129,962
2,357
–
125,663
2,235
–
76,862
2,186
46
–
–
29,689
–
–
–
15,058
–
–
–
– –
–
–
–
–
53,791
1,810
–
55,601
1,001
(3,646)
781
(145)
27,557
1,725
(277)
29,005
2,312
(2,748)
381
90
Profit before tax
178,338
147,377
127,898
79,094
53,592
29,040
7 Employees’ and directors’ remuneration
Average numbers employed (primarily overseas) during the year – full time
– casual
Staff costs (including directors) comprise:
Wages and salaries
Social security costs
Retirement benefit costs (note 18)
Share based remuneration expense (equity settled)
2007
number
2006
number
3,467
4,830
2007
$000
11,886
245
1,112
87
13,330
3,463
4,406
2006
$000
10,468
234
595
20
11,317
The information required by the Companies Act and the listing rules of the Financial Services Authority is contained in the
directors’ report on remuneration on pages 23 and 24 of which the information on page 24 has been audited.
Directors emoluments
Pension contributions
Remuneration expense for key management personnel
2007
$000
772
39
811
675
2006
$000
545
34
579
498
Executive directors are considered to be the only key management personnel: their remuneration is shown on page 24.
8 Tax
Foreign corporation tax – current year
Foreign withholding tax on remittances
Deferred tax adjustment – current year
Total tax charge for year
2007
$000
14,356
499
773
15,628
2006
$000
7,794
590
905
9,289
The corporation tax rates in Indonesia and Malaysia, the group’s countries of operation, are close to the 30% standard rate of corporation
tax in the UK but the charge for the year differs from the standard UK rate of corporation tax for the reasons below.
36
ANGLO-EASTERN PLANTATIONS PLC
Notes to the consolidated financial statements
8 Tax – continued
Profit before tax
Profit before tax multiplied by standard rate of UK corporation tax of 30% (2006 – 30%)
Effects of:
Rate adjustment relating to overseas profits
Group accounting adjustments not subject to tax
Expenses not allowable for tax
Temporary differences
Losses not offsetable against fellow subsidiary profits
Utilisation of tax losses brought forward
Foreign corporation tax charge for year
Foreign withholding tax
Deferred tax adjustments (note 17)
Total tax charge for year
9 Earnings per ordinary share (EPS)
Profit for the year attributable to equity holders of the parent company before BA
adjustment
Net BA adjustment
Earnings used in basic and diluted EPS
Weighted average number of shares in issue in year
– used in basic EPS
– dilutive effect of outstanding share options
– used in diluted EPS
Basic EPS before BA adjustment
Basic EPS
There is no significant difference between basic and diluted EPS.
10 Dividends
Paid during the year
Final dividend of 10.8 cts per ordinary share for the year ended 31 December 2006
(2005 – 8.80 cts)
2007
$000
2006
$000
53,592
29,040
16,077
8,712
(15)
(575)
147
(265)
97
(1,110)
14,356
499
773
15,628
(13)
(785)
150
(46)
99
(323)
7,794
590
905
9,289
2007
$000
2006
$000
30,485
515
31,000
15,153
1,321
16,474
Number
‘000
Number
‘000
39,480
65
39,545
39,478
55
39,533
77.2 cts
38.3 cts
78.5 cts
41.7 cts
2007
$000
2006
$000
4,266
3,560
Proposed final dividend of 14.0 cts per ordinary share for the year ended 31 December 2007
(2006 – 10.8 cts)
5,524
4,265
The proposed dividend for 2007 is subject to shareholder approval at the forthcoming annual general meeting and has not been included
as a liability in these financial statements.
ANGLO-EASTERN PLANTATIONS PLC
37
Notes to the consolidated financial statements
11 Biological assets, property, plant and equipment
Cost or valuation
At 1 January 2006
Exchange translations
Revaluations
Additions
Disposals
At 31 December 2006
Non–
biological
plantation
assets
$000
91,545
7,959
6,272
5,502
(272)
Total
property
plant and
equipment
$000
Biological
assets
$000
105,153
9,177
6,272
10,955
(364)
26,975
769
1,003
4,508
–
Mills
$000
13,608
1,218
–
5,453
(92)
Total
$000
132,128
9,946
7,275
15,463
(364)
111,006
20,187
131,193
33,255
164,448
Exchange translations
Revaluations
Additions
Estates acquired at valuation on acquisition
of a subsidiary
Disposals
(3,054)
2,945
6,524
13,870
(83)
(840)
–
2,458
–
(98)
(3,894)
2,945
8,982
13,870
(181)
(670)
1,006
3,368
1,621
–
(4,564)
3,951
12,350
15,491
(181)
At 31 December 2007
131,208
21,707
152,915
38,580
191,495
Accumulated depreciation and impairment
At 1 January 2006
Exchange translations
Revaluations
Charge for the year
Disposals
At 31 December 2006
Exchange translations
Revaluations
Charge for the year
Disposals
At 31 December 2007
Carrying amount
At 31 December 2006
–
–
2,163
(2,163)
–
(2,610)
(246)
–
(848)
79
(2,610)
(246)
2,163
(3,011)
79
–
(3,625)
(3,625)
–
2,505
(2,505)
–
175
–
(1,094)
72
175
2,505
(3,599)
72
–
(4,472)
(4,472)
–
–
540
(540)
–
–
–
665
(665)
–
–
(2,610)
(246)
2,703
(3,551)
79
(3,625)
175
3,170
(4,264)
72
(4,472)
111,006
16,562
127,568
33,255
160,823
At 31 December 2007
131,208
17,235
148,443
38,580
187,023
The directors valued the estates (comprising biological assets, non–biological plantation assets, plantation infrastructure and oil mills) at
31 December 2007 and 2006 at value in use derived from discounted estimated future cash flows of each estate. Among the principal
assumptions underlying the calculations were an assumed CPO selling price CIF Rotterdam of $500/mt (2006 – $440/mt) and a discount
rate of 12% (2006 – 12%). These values were reviewed at December 2006 by P.T. Nagadi Ekasakti, Jakarta based consultants, who are
familiar with the properties and the necessary assumptions underlying the calculations. Biological assets are estimated as a proportion of
these calculations. The Indonesian estates have been included at values in use. The change in assumptions reflects the continuing rise
in the price of and improved outlook for CPO, as well as increasing agricultural property values and replacement costs in Indonesia. If
the Indonesian estates had been valued at December 2007 using an assumed CPO price of $440/mt and a discount rate of 12% the total
carrying value of biological assets, property, plant and equipment would have been $147,185,000.
The Malaysian estates were professionally valued by PPC International, Kuala Lumpur based valuers, in December 2006 on an open
market existing use basis and are included at this valuation less potential sale costs, plus additions during 2007.
The estates include $106,000 (2006: $93,000) of interest and $2,144,000 (2006: $1,491,000) of overheads capitalised during the year in
respect of expenditure on estates under development during 2007.
Original cost and depreciation at historical rates of exchange of the estates at 31 December 2007:
Original cost
Cumulative depreciation based on original cost
Estates
$000
174,559
(33,688)
Mills
$000
29,665
(9,854)
Total
$000
204,224
(43,542)
140,871
19,811
160,682
38
ANGLO-EASTERN PLANTATIONS PLC
Notes to the consolidated financial statements
11 Biological assets, property, plant and equipment – continued
The Indonesian authorities have granted certain land exploitation rights and operating permits for the estates. In the case of established
estates in North Sumatra these rights and permits expire between 2023 and 2026 with rights of renewal thereafter for periods from 35 to
60 years. In the case of estates in Bengkulu land titles were issued between 1993 and 2002 and the titles expire between 2028 and 2032
with rights of renewal thereafter for two consecutive periods of 25 and 35 years respectively. In the case of estates in Riau, land titles were
issued in 2003 and expire in 2033; in the case of CPA’s estate acquired in 2007 (as set out in note 26) land titles were issued in 1996 to
expire in 2029. In both cases there are subsequent rights of renewal similar to those in Bengkulu. Renewal is subject to compliance with
the laws and regulations of Indonesia. As described in note 1 the values in use of the Indonesian estates are depreciated over a period of
fifty years, since the directors expect the renewals will take place. Land acquired during 2007 as set out in note 26 is held under temporary
“rights to occupy”, pending issue of formal land exploitation rights.
The land title of the estate in Malaysia is a long lease expiring in 2084.
12 Receivables: non–current
Due from minority shareholders
Due from village smallholder schemes
2007
$000
1,363
314
1,677
2006
$000
1,071
266
1,337
The minority shareholders in PT Alno Agro Utama and PT Cahaya Pelita Andhika have acquired their interests on deferred terms (see note
25, Credit risk). The minority shareholder in PT Mitra Puding Mas repaid his debt of $286,000 during 2007.
Amounts due from village smallholder schemes represents expenditure on planting and maintaining to maturity oil palms on communal land
owned by 21 separate villages neighbouring the group’s estates.
The book values of the amounts due from minority shareholders and village smallholder schemes approximates their fair values.
13 Inventories
Estate and mill consumables
Processed produce for sale
14 Trade and other receivables
Trade debtors
Other debtors
Accrued interest receivable
Prepayments
2007
$000
3,505
1,405
4,910
2007
$000
343
723
156
240
2006
$000
1,309
476
1,785
2006
$000
644
745
27
236
1,462
1,652
ANGLO-EASTERN PLANTATIONS PLC
39
Notes to the consolidated financial statements
15 Bank loans and other financial liabilities
Bank overdraft (a)
Bank overdraft (b)
Long term development loan (c)
Long term development loan (d)
Long term development loan (e)
Long term development loan (f)
Total bank loans
Finance lease obligations (g)
Total bank loans and lease obligations
Amounts repayable after more than one year, as follows:
in more than one year but not more than two years
in more than two years but not more than five years
in more than five years but not more than six years
in more than six years but not more than seven years
2007
under one more than
one year
$000
year
$000
2006
under one more than
one year
$000
year
$000
1
3,000
1,250
400
2,588
–
7,239
54
7,293
–
–
938
2,800
31,912
–
35,650
69
35,719
8,689
9,442
11,150
6,438
35,719
423
–
1,250
–
–
444
2,117
50
2,167
–
–
–
2,188
3,200
–
–
5,388
66
5,454
1,677
3,377
400
5,454
The carrying amount of trade and other receivables approximates to their fair value.
(a) The bank overdraft is secured by a fixed and floating charge over the land titles and assets of the parent company’s Malaysian
operating subsidiary, Anglo–Eastern Plantations (M) Sdn Bhd (“AEP Malaysia”) as well as over the parent company’s shareholding
in AEP Malaysia. The parent company has guaranteed the overdraft. Interest is at 2% above Malaysian Bank Lending Rate or about
8.75% (2006: 8.7%).
(b) The bank overdraft was made available in June 2007 and is secured by a fixed charge on the land titles of PT Musam Utjing. The
parent company has guaranteed the overdraft which was fully repaid in January 2008. The facility will be reviewed monthly through
2008. Interest is at 2.67% over the Singapore Interbank Lending Rate (SIBOR) or about 7.7%.
(c)
The long term development loan, which is part of an original facility of $5,000,000, was made in July 2004 to, and secured by a fixed
and floating charge on the land titles and other assets of, PT Bina Pitri Jaya. The parent company has guaranteed the loan. Interest
was at 3% under the US dollar Indonesian prime rate or about 7.9% through 2007 (2006: 8.00%). The loan is repayable in sixteen
quarterly instalments of $312,500 from October 2005 to July 2009.
(d) The long term development loan of $3,200,000, to part finance construction of a mill, was made in September 2006 to, and secured by
a fixed and floating charge on the land titles and other assets of, PT Bina Pitri Jaya. Interest and security is on the same terms as for
the loan under (b) above. The loan is repayable in sixteen quarterly instalments of $200,000 from July 2008 to April 2012.
(e) The long term development loan of $34,500,000 to finance the purchase and development of new land or developed estates, was
made in June and July 2007. It is secured by a fixed and floating charge on the land titles and other assets of PT Alno Agro Utama and
of PT Tasik Raja (Tasik) and is guaranteed by Tasik and by the parent company. Interest is at 3% over SIBOR or about 8.3% during
2007. The loan is repayable from August 2008 over four years in quarterly instalments amounting for each 12 months to 15%; 25%;
25% and 35% of the loan.
(f)
The long term development loan was made to AEP Malaysia on the same interest and security terms described for the overdraft in note
(a) above. The loan was part of an original facility of $2,266,000 and was fully repaid in 2007.
(g) Finance lease obligations relate to vehicles and machinery, on which the obligations are secured, in the Malaysian subsidiaries (2006
– Malaysia). Interest is effectively fixed at 3.0%. Payments complete by the end of 2010.
16 Trade and other payables
Trade creditors
Other creditors
Accruals
The carrying amount of trade and other payables approximates to their fair values.
2007
$000
3,405
3,951
1,955
9,311
2006
$000
1,737
2,200
1,371
5,308
40
ANGLO-EASTERN PLANTATIONS PLC
Notes to the consolidated financial statements
17 Deferred tax liabilities
Year end (liability) relates to
Revaluation surplus
Unutilised tax losses
Other temporary differences
Movement:
At beginning of year (liability)
(Charge) to
– income statement
– equity: revaluation and exchange reserve
Exchange adjustment
At end of year (liability)
Details of movement in 2007
Revaluation surplus
Accelerated capital allowances
Employee pension liabilities
Other temporary and deductible differences
Available losses
Details of movements in 2006
Revaluation surplus
Accelerated capital allowances
Employee pension liabilities
Other temporary and deductible differences
Available losses
A deferred tax asset has not been recognised for the following items:
Unutilised tax losses
2007
$000
2006
$000
(22,652)
95
(468)
(21,244)
330
(238)
(23,025)
(21,152)
(21,152)
(16,941)
(773)
(1,186)
86
(905)
(3,327)
21
(23,025)
(21,152)
(Charged)/
credited
to income
2007
$000
(Charged)/
credited
to reserves
2007
$000
(300)
(15)
200
(431)
(227)
(773)
(1,186)
–
–
–
–
(1,186)
(Charged)/
credited
to income
2007
$000
(Charged)/
credited
to reserves
2007
$000
(694)
(7)
82
38
(324)
(905)
(3,327)
–
–
–
–
(3,327)
2007
$000
2006
$000
13,181
15,186
(Liability)
2007
$000
(22,652)
(52)
346
(762)
95
(23,025)
(Liability)
2007
$000
(21,244)
(39)
158
(357)
330
(21,152)
18 Retirement benefits
The group maintains a defined benefit funded pension scheme for some employees in Indonesia. The scheme is valued by an actuary at
the end of each financial year. Any excess of the actuarial liability over the fund assets is provided and charged to the income statement.
The major assumptions used by the actuary were:
Inflation
Rate of increase in wages
Discount rate
2007
2006
2005
10%
10%
12%
10%
10%
12%
10%
10%
12%
The group also operates a non–contributory non–funded retirement plan for staff in Indonesia. Retirement benefits are paid to employees
in a single lump sum at the time of retirement. Retirement benefit is accrued by the group and charged in the income statement based on
individual employees’ service up to the end of the financial year.
ANGLO-EASTERN PLANTATIONS PLC
41
Notes to the consolidated financial statements
18 Retirement benefits – continued
Defined
benefit
– funded
schemes
2007
$000
Defined
benefit –
unfunded
schemes
2007
$000
Defined
benefit
– funded
schemes
2006
$000
Defined
benefit –
unfunded
schemes
2006
$000
Total
2007
$000
Total
2006
$000
Reconciliation to balance sheet
Scheme assets (all cash)
Scheme (liabilities)
1,195
(1,408)
–
(1,321)
1,195
(2,729)
1,032
(906)
Net assets/(liabilities)
(213)
(1,321)
(1,534)
126
–
(960)
(960)
1,032
(1,866)
(834)
–
–
–
–
–
–
–
(643)
(31)
(477)
191
789
73
151
65
(42)
(4)
1,032
(1,391)
(98)
(611)
234
(960)
(1,866)
Reconciliation of scheme assets
At beginning of year
Exchange gain/(loss)
Contributions by group
Income
Benefits paid
Expenses
At end of year
Reconciliation of scheme (liabilities)
At beginning of year
Exchange (loss)/gain
Current service (cost)/write back
Benefits paid
1,032
(49)
192
92 –
(66)
(6)
1,195
(906)
53
(621)
66
–
–
–
–
–
–
1,032
(49)
192
92
(66)
(6)
789
73
151
65
(42)
(4)
1,195
1,032
(960)
31
(535)
143
(1,866)
84
(1,156)
209
(748)
(67)
(134)
43
(906)
At end of year
(1,408)
(1,321)
(2,729)
The charge/(credit) for the year for retirement benefit comprises:
Defined benefit funded scheme
Current service cost
Expenses
Income
Defined benefit unfunded scheme
Current service cost
Defined contribution schemes
Contributions
2007
$000
621
6
(107)
520
535
57
1,112
2006
$000
134
4
(66)
72
475
48
595
2005
$000
28
(28)
(50)
(50)
(225)
48
(227)
The best estimate of expected contribution in 2008 is $500,000.
19 Share capital
Ordinary shares of 25p each
Beginning of year
Share options exercised
Issued and
Issued and
Authorised
Number
fully paid Authorised
£000
Number
fully paid Authorised
$000
£000
Issued and
fully paid
$000
60,000,000 39,958,272
18,000
–
15,000
–
9,989
5
23,865
–
15,495
9
End of year
60,000,000 39,976,272
15,000
9,994
23,865
15,504
Treasury shares
Beginning of year
Purchased in year
End of year
Market value of treasury shares
Beginning of year (312.5p/share)
End of year (447.5p/share)
2007
Number
2006
Number
468,000
50,000
468,000
–
518,000
468,000
2007
$’000
2006
$’000
(1,387)
(398)
(1,387)
–
(1,785)
(1,387)
2,867
4,659
The treasury shares purchased in 2007 were purchased in September at 386p/share.
42
ANGLO-EASTERN PLANTATIONS PLC
Notes to the consolidated financial statements
20 Share based payment
Options have been granted under the company’s 1994 Executive Share Option Scheme and Overseas Share Option Scheme and the 2005
Unapproved Executive Share Option Scheme to subscribe for ordinary shares of 25p each of the company as follows:
Date of grant Price per share
Period of option
1 Jan 06
Number
(Lapsed)
Number
Exercised
Number
1 Jan 07 Granted
Number Number
Exercised
Number
31 Dec 07
Number
16.04.02
21.05.03
13.05.04
19.05.06
09.10.06
21.05.07
44.7p
108.5p
181.2p
234.0p
323.25p
360.3p
30.04.05 – 29.04.12
21.05.06 – 20.05.13
13.05.07 – 12.05.14
19.05.09 – 18.05.16
09.10.09 – 08.10.16
21.05.10 – 20.05.17
Exercisable
38,100
42,800
30,000
–
–
–
110,900
38,100
–
–
–
51,200
15,500
–
66,700
(7,500)
(22,400)
–
–
–
–
30,600
20,400
30,000
51.200
15,500
–
–
–
–
–
– 78,300
(29,900)
147,700 78,300
51,000
–
(18,000)
–
–
–
–
(18,000)
30,600
2,400
30,000
51,200
15,500
78,300
208,000
63,000
Options granted to directors, included above, are shown on page 24.
The weighted average contracted life of options outstanding at the end of the year was 8 years (2006 – 8 years) and the weighted average
exercise price was 251p (2006 – 176p). The weighted average exercise price of options exercisable at the end of the year was 112p (2006
– 70p).
The weighted average share price at date of exercise of options exercise during the year was 360p (2006 – 266p).
78,300 share options were granted in 2007 (2006 – 66,700). The aggregate of the estimated fair value of options granted in 2007 was
$171,000. The assumptions applied in the binomial model used to calculate this fair value were:
Weighted average share price at grant date
Weighted average exercise price
Weighted average contracted life
Weighted average expected period to exercise
Expected volatility
Risk free rate
Expected dividend yield
2007
2006
385p
360p
10 years
3.5years
25%
5.0%
2.0%
256p
255p
10 years
3.5 years
25%
5%
2%
There are no vesting conditions other than that option holders may exercise their options at any time within three and ten years after grant,
provided they remain employees of the group throughout that period.
21 Ultimate controlling shareholder and related party transaction
At 31 December 2006 Genton International Limited, a company registered in Hong Kong, held 20,247,814 (2006 – 20,247,814) shares of
the company representing 50.6% (2006 – 50.7%) of the issued share capital of the company. Madam Lim, a director of the company, has
advised the company that she is the controlling shareholder of Genton International Limited.
During the year a subsidiary of the company managed, for a fee of $17,000 (2006 – $9,000), small plantations owned by companies
controlled by Madam Lim. This contract is on an arm’s length basis. At 31 December 2007 the amount due under this contract was $4,000
(2006 – $2,200).
In September 2007 the parent company purchased through the market 50,000 shares for treasury at a price of 386p. The ultimate vendor
was a director, Mr O’Connor (see note 19). On 29 April 2008, the Board received legal advice that the necessary prior board approval for
this transaction was not obtained. Therefore the board of directors propose that a resolution be put before the company’s shareholders at
an extraordinary general meeting of the Company, at a date to be fixed, to approve the transaction.
ANGLO-EASTERN PLANTATIONS PLC
43
Notes to the consolidated financial statements
6
1
0
,
6
7
6
3
,
1
9
4
6
,
4
)
7
2
3
,
3
(
)
9
6
5
(
)
8
5
7
,
2
(
8
1
7
,
1
1
1
8
0
,
2
7
0
4
,
4
1
9
7
8
,
2
7
3
6
,
9
8
2
5
,
1
1
–
–
–
–
)
3
5
8
(
6
5
2
7
3
6
,
9
0
4
0
,
9
1
5
7
,
9
1
7
7
2
,
3
4
7
4
,
6
1
4
7
4
,
6
1
–
2
0
5
,
5
)
4
1
0
,
3
(
–
–
8
8
4
,
2
0
5
–
0
5
–
)
4
1
8
,
4
(
)
4
5
2
,
1
(
)
0
6
5
,
3
(
)
0
6
5
,
3
(
–
–
–
–
8
5
1
,
4
3
6
5
1
,
6
2
0
0
,
8
2
4
7
4
,
6
1
0
4
0
,
9
8
8
4
,
2
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
6
3
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
4
1
r
a
e
y
e
h
t
r
o
f
e
s
n
e
p
x
e
d
n
a
e
m
o
c
n
i
i
d
e
s
n
g
o
c
e
r
l
a
t
o
T
y
t
i
u
q
e
n
i
y
l
t
c
e
r
i
d
i
d
e
s
n
g
o
c
e
r
e
m
o
c
n
i
t
e
N
d
o
i
r
e
p
r
o
f
t
fi
o
r
P
s
e
a
t
t
s
e
f
o
n
o
i
t
l
a
u
a
v
e
r
n
o
l
s
u
p
r
u
s
d
e
s
i
l
a
e
r
n
U
6
0
0
2
r
o
f
y
t
i
u
q
e
n
i
s
e
g
n
a
h
c
t
c
e
r
i
D
n
o
i
t
l
a
u
a
v
e
r
n
o
x
a
t
d
e
r
r
e
f
e
D
n
o
i
t
l
a
s
n
a
r
t
e
g
n
a
h
c
x
e
n
o
t
fi
o
r
P
n
o
i
t
p
i
r
c
s
b
u
s
l
a
t
i
p
a
c
e
r
a
h
S
l
e
b
a
y
a
p
s
d
n
e
d
v
D
i
i
7
7
3
,
7
4
1
1
2
4
,
5
2
6
5
9
,
1
2
1
0
5
4
,
0
8
)
1
4
2
,
1
7
(
8
4
6
,
3
7
7
8
0
,
1
4
0
9
,
3
2
)
7
8
3
,
1
(
5
9
4
,
5
1
6
0
0
2
r
e
b
m
e
c
e
D
1
3
t
a
e
c
n
a
l
a
B
3
8
9
,
7
1
1
9
1
5
,
0
2
4
6
4
,
7
9
6
3
5
,
7
6
)
1
8
2
,
0
8
(
0
6
1
,
1
7
7
8
0
,
1
8
6
8
,
3
2
)
7
8
3
,
1
(
1
8
4
,
5
1
5
0
0
2
r
e
b
m
e
c
e
D
1
3
t
a
e
c
n
a
l
a
B
l
a
t
o
T
y
t
i
u
q
e
0
0
0
$
’
0
0
0
$
’
y
t
i
r
o
n
M
i
s
t
s
e
r
e
t
n
i
l
a
t
o
T
0
0
0
$
’
0
0
0
$
’
i
d
e
n
a
t
e
R
i
s
g
n
n
r
a
e
0
0
0
$
’
e
v
r
e
s
e
r
i
n
g
e
r
o
F
e
g
n
a
h
c
x
e
e
r
a
h
S
l
a
t
i
p
a
c
n
o
i
t
a
u
a
v
e
R
l
n
o
i
t
p
m
e
d
e
r
e
r
a
h
S
0
0
0
$
e
v
r
e
s
e
r
0
0
0
$
’
e
v
r
e
s
e
r
0
0
0
$
’
i
m
u
m
e
r
p
0
0
0
$
’
s
e
r
a
h
s
y
r
u
s
a
e
r
T
e
r
a
h
S
l
a
t
i
p
a
c
0
0
0
$
’
s
t
s
e
r
e
t
n
i
i
y
t
i
r
o
n
m
d
n
a
s
e
v
r
e
s
e
R
2
2
44
)
6
8
1
,
1
(
)
2
5
4
(
)
4
3
7
(
3
2
8
,
4
2
5
4
,
1
1
7
3
,
3
)
5
9
2
,
2
(
6
6
)
2
3
9
,
5
(
)
4
3
9
(
)
8
9
9
,
4
(
)
1
6
3
,
2
(
–
–
–
–
–
)
0
6
1
(
)
8
9
9
,
4
(
)
8
5
1
,
5
(
4
6
9
,
7
3
4
6
9
,
6
0
0
0
,
1
3
0
0
0
,
1
3
–
)
4
7
5
(
1
7
3
,
3
–
7
9
7
,
2
–
9
6
6
,
5
3
0
3
0
,
7
9
3
6
,
8
2
0
0
0
,
1
3
)
8
5
1
,
5
(
7
9
7
,
2
)
8
9
3
(
0
4
7
6
9
–
–
7
6
9
)
8
9
3
(
0
4
–
–
–
–
)
7
1
3
,
5
(
)
1
5
0
,
1
(
)
6
6
2
,
4
(
)
6
6
2
,
4
(
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1
3
–
–
–
–
–
–
–
–
–
–
)
8
9
3
(
–
–
–
–
–
–
–
–
9
–
d
o
i
r
e
p
e
h
t
r
o
f
e
s
n
e
p
x
e
d
n
a
e
m
o
c
n
i
i
d
e
s
n
g
o
c
e
r
l
a
t
o
T
y
t
i
u
q
e
n
i
y
l
t
c
e
r
i
d
i
d
e
s
n
g
o
c
e
r
e
m
o
c
n
i
t
e
N
d
o
i
r
e
p
r
o
f
t
fi
o
r
P
s
e
a
t
t
s
e
f
o
n
o
i
t
l
a
u
a
v
e
r
n
o
l
s
u
p
r
u
s
d
e
s
i
l
a
e
r
n
U
7
0
0
2
r
o
f
y
t
i
u
q
e
n
i
s
e
g
n
a
h
c
t
c
e
r
i
D
n
o
i
t
l
a
u
a
v
e
r
n
o
x
a
t
d
e
r
r
e
f
e
D
n
o
i
t
l
a
s
n
a
r
t
e
g
n
a
h
c
x
e
n
o
)
s
s
o
L
(
d
e
r
i
u
q
c
a
i
s
e
i
r
a
d
s
b
u
s
i
n
i
t
s
e
r
e
t
n
I
n
o
i
t
p
i
r
c
s
b
u
s
l
a
t
i
p
a
c
e
r
a
h
S
d
e
s
a
h
c
r
u
p
s
e
r
a
h
S
l
e
b
a
y
a
p
s
d
n
e
d
v
D
i
i
8
3
3
,
8
7
1
7
6
3
,
2
3
1
7
9
,
5
4
1
4
8
1
,
7
0
1
)
9
9
3
,
6
7
(
5
4
4
,
6
7
7
8
0
,
1
5
3
9
,
3
2
)
5
8
7
,
1
(
4
0
5
,
5
1
7
0
0
2
r
e
b
m
e
c
e
D
1
3
t
a
e
c
n
a
l
a
B
ANGLO-EASTERN PLANTATIONS PLC
Notes to the consolidated financial statements
22 Reserves and minority interests – continued
Nature and purpose of each reserve:
Share premium
Amount subscribed for share capital in excess of nominal value.
Capital redemption
Amounts transferred from share capital on redemption of issued shares.
Treasury shares
Weighted average cost of own shares held in treasury.
Revaluation
Gains/loses arising on the revaluation of the group’s property.
Foreign exchange
Gains/losses arising on translating the net assets of overseas operations into dollars.
Retained earnings
Cumulative net gains and losses recognised in the consolidated income statement.
23 Guarantees and other financial commitments
Capital commitments at 31 December
Contracted but not provided
Authorised but not contracted
– normal estate operations
– new/extended oil mills
– normal estate operations
– new/extended oil mills
– land acquisition
2007
$000
70
–
16,377
–
6,400
2006
$000
306
710
7,336
1,520
476
24 Finance leases
The group leases a few tractors and cars, included under non–biological plantation assets at a net carrying value $163,000 (2006 –
$137,000). Such assets are classified as finance leases as the rental period amounts to the estimated useful economic life of the assets
concerned and the group has the right to purchase the assets outright at the end of the minimum lease term by paying a nominal amount.
Future lease payments are due as follows:
Not later than one year
Later than one year and not later than five years
Not later than one year
Later than one year and not later than five years
The present value of future lease payments are analysed as:
Current liabilities
Non–current liabilities
Minimum
lease
payments
2007
$’000
54
69
Interest
2007
$’000
6
8
Present
value
2007
$’000
48
61
123
14
109
Minimum
lease
payments
2006
$’000
50
66
Interest
2006
$’000
8
14
Present
value
2006
$’000
42
52
116
22
94
2007
$000
48
61
109
2006
$000
42
52
94
ANGLO-EASTERN PLANTATIONS PLC
45
Notes to the consolidated financial statements
25 Disclosure of financial instruments and other risks
The group’s principal financial instruments comprise cash, short and long term bank loans, trade receivables and payables and receivables
from local partners in respect of their investments.
The group’s accounting classification of each class of financial asset and liability at 31 December 2007 and 2006 were:
2007
Non–current receivables
Trade and other receivables
Cash and cash equivalent
Borrowings due within one year
Trade and other payables
Borrowings due after one year
2006
Non–current receivables
Trade and other receivables
Cash and cash equivalent
Borrowings due within one year
Trade and other payables
Borrowings due after one year
Total
Loans and Amortised carrying value
cost and fair value
receivables
$000
$000
$000
1,363
–
1,363
1,117
–
1,117
66,358
–
66,358
(7,293)
(7,293)
–
(5,422)
(5,422)
–
(35,719)
(35,719)
–
68,838
(48,434)
20,404
Total
Loans and Amortised carrying value
cost and fair value
receivables
$000
$000
$000
1,071
–
1,071
1,348
–
1,348
17,246
–
17,246
(2,167)
(2,167)
–
(3,488)
(3,488)
–
(5,454)
(5,454)
–
19,665
(11,109)
8,556
The principal financial risks to which the group is exposed are:
–
–
commodity selling price changes; and
exchange movements;
which, in turn, can affect financial instruments and/or operating performance.
With the exception described below, the company does not hedge any of its risks. Its trade credit risks are low. There are no fixed assets
or liabilities that are held at fair value through the profit and loss.
The board is directly responsible for setting policies in relation to financial risk management and monitors the levels of the main risks
through review of regular operational reports.
Commodity selling prices
The group does not normally contract to sell produce more than one month ahead. An exception was made in March 2007 when, believing
the CPO price was already very favourable, and to secure the group’s cash flow for an impending acquisition, 33% of annual CPO
production in Indonesia was sold forward through to December 2007.
A 1% change in the CPO and kernel selling price produces a 1% change in sales revenue less the level of export tax ruling at the time.
Profit is affected by an equal absolute amount.
Currency risk
All the group’s operations are in Indonesia and, to a lesser extent, Malaysia. The parent company and group accounts are prepared in
US dollars which is not the functional currency of the operating subsidiaries. The group does not hedge its net investment in its overseas
subsidiaries and is therefore exposed to a currency risk on that investment. The historic cost of investment (including intercompany loans)
by the parent in its subsidiaries amounted to $50,276,000, while the fair value of the group’s share of underlying assets at 31 December
2007 amounted to $145,971,000 (2006 – $121,956,000).
All the group’s sales are made in local currency and any trade receivables are therefore denominated in local currency. No hedging is
therefore necessary.
However, selling prices of the group’s produce are directly related to the US dollar denominated world prices. Appreciation of local currencies
therefore reduces profits and cash flow of the Indonesian and Malaysian subsidiaries in terms of local currency and, to a lesser extent, US
dollar consolidated profits – and vice versa. It is not practical to hedge this currency risk.
The group’s subsidiaries which are borrowing in US dollars, as set out under ‘Liquidity risk’, below could face significant exchange losses
in the event of depreciation of their local currency – and vice versa. This risk is mitigated by dollar denominated cash balances in those
subsidiaries. While the company was in a position to match dollar cash balances with dollar financial liabilities throughout 2007, policy
has been for only a partial but increasing match because interest rates on local currency deposits were some 3.6% higher than on dollar
deposits and about the same as dollar borrowing costs. The unmatched balance at 31 December 2007 is represented by the $24,258,000
shown in the table below. If the group’s net cash position continues to improve then dollar cash balances will continue to be increased
through 2008 – eventually to match dollar liabilities.
46
ANGLO-EASTERN PLANTATIONS PLC
Notes to the consolidated financial statements
25 Disclosure of financial instruments and other risks – continued
Currency risk – continued
A 1% change in the rupiah:dollar exchange rate would have caused a gain or less on exchange of $242,000 at 31 December 2007.
The table below shows the net monetary assets and liabilities of the group at 31 December 2007 and 2006 that were not denominated in
the operating or functional currency of the operating unit involved.
Functional currency of group operation
2007
Indonesian rupiah
US dollar
Total
2006
Indonesian rupiah
US dollar
Total
Net foreign currency assets/(liabilities)
US dollar
$000
Ringgit
$000
Sterling
$000
Total
$000
(24,258)
–
(24,258)
$000
(6,626)
–
(6,626)
–
(26)
(26)
$000
–
(31)
(31)
–
(62)
(62)
$000
–
(82)
(24,258)
(88)
(24,346)
$000
(6,626)
(113)
(82)
(6,739)
Liquidity risk
Development to profitability of new sizable plantations requires a period of between six and seven years before cash flow turns positive.
Because oil palms do not begin yielding significantly until four years after planting, this period and the cash requirement is little affected by
changes in commodity prices.
The group attempts to ensure that it is likely to have either self–generated funds or further loan/equity capital to complete its development
plans and to meet loan repayments. Long term forecasts are updated about twice a year for review by the board. In the event that falling
commodity prices reduce self–generated funds below expectations and to a level where group resources may be insufficient, further new
planting may be restricted. Consideration is given to the funds continued to be required to bring existing immature plantings to maturity.
The group’s trade and tax payables are all due for settlement within a year. At 31 December 2007 the group had the following loans and
facilities.
Malaysia: ringgit denominated
– overdraft
Indonesia: US dollar denominated
– overdraft
– long term loan
Borrowings
$000
Facilities
$000
Repayable
1
907
on demand
3,000
39,888
3,000
39,888
on demand
2008 – 2012 (note 15)
The Indonesian overdraft was repaid in full in January 2008. The facility remained in place and will be reviewed monthly through 2008. The
Malaysian overdraft facility is reviewed annually. The total long term loan facilities of $39,888,000 together with interest at current rates is
repayable as follows:
Principal
Interest
Total
2008
$000
4,238
3,097
7,335
2009
$000
8,638
2,569
2010
$000
9,424
1,829
2011
$000
11,150
985
11,207
11,253
12,135
2012
$000
6,438
264
6,702
In the event of a prolonged adverse movement in the CPO price the group would consider refinancing these borrowings into a longer term
loan stock.
Forecasts prepared in December 2007 indicate that the group has sufficient funds to meet its development plans and financial commitments
through 2008.
All the long term loans include varying covenants covering minimum net worth and cash balances, dividend and interest cover and debt
service ratios.
Interest rate risk
Both the group’s surplus cash and its borrowings are subject to variable interest rates. The group had net cash throughout 2007, so the
effect of variations in borrowing rates is more than offset. The rates on borrowings are set out in note 15.
ANGLO-EASTERN PLANTATIONS PLC
47
Notes to the consolidated financial statements
25 Disclosure of financial instruments and other risks – continued
Interest rate risk – continued
There is no policy to hedge interest rates, partly because of the net cash position and partly because net interest is a relatively small
proportion of group profits.
Interest rate profiles of the group’s financial assets (comprising non current receivables, tax receivables, trade and other receivables and
cash) at 31 December 2007 were:
2007
Sterling
US dollar
Rupiah
Ringgit
Total
2006
Sterling
US dollar
Rupiah
Ringgit
Total
Total
$000
104
22,982
45,392
2,894
71,372
$000
74
3,285
19,084
476
22,919
Fixed rate Variable rate No interest
$000
44
21
3,172
415
$000
60
21,598
42,220
2,479
$000
–
1,363
–
–
1,363
66,357
3,652
$000
–
1,071
–
–
1,071
$000
28
2,208
14,794
216
17,246
$000
46
6
4,290
260
4,602
Long term receivables of $1,363,000 (2006 – $1,071,000) comprise dollar denominated amounts due from minority shareholders as
described in note 12 on which interest is due at a fixed rate of 6%.
Average US dollar deposit rates in 2007 were 4.5% (2006 – 4.5%) and rupiah deposit rates were 8.1% (2006 – 11.4%).
Interest rate profiles of the group’s financial liabilities (comprising bank loans and other financial liabilities, trade and other payables, tax
liabilities and retirement benefit liabilities) at 31 December were:
2007
Sterling
US dollar
Rupiah
Ringgit
Total
2006
Sterling
US dollar
Rupiah
Ringgit
Total
Total
$000
(166)
(44,010)
(8,654)
(1,028)
Fixed rate Variable rate No interest
$000
(166)
(1,122)
(8,654)
(904)
$000
–
(42,888)
–
(1)
$000
–
–
–
(123)
(53,858)
(123)
(42,889)
(10,846)
$000
(156)
(7,196)
(4,686)
(1,725)
$000
–
–
–
(116)
$000
–
(6,638)
–
(867)
$000
(156)
(558)
(4,686)
(742)
(13,763)
(116)
(7,505)
(6,142)
Weighted average interest rate on variable rate borrowings was 8.1% in 2007 (8.3% in 2006).
Credit risk
CPO and kernel amounting to 97% of group revenue are not despatched unless payment has been received in advance. Remaining sales
are on credit for about 30 days. No provisions were considered necessary at 31 December 2007 (2006 – nil).
All cash is deposited with licensed banks.
Tax receivables of $1,875,000 at 31 December 2007 (2006 – $2,684,000) arise entirely in Indonesia and require time and patience to
arrange repayment, which is normally forthcoming.
Amounts receivable from local partners, amounting to $1,363,000, in relation to their investments in operating subsidiaries are secured on
those investments and are repayable from their share of dividends from those subsidiaries. Amounts due from village smallholder schemes
are unsecured but to be repaid from FFB supplied.
Capital
The group defines its Capital as Share capital and Reserves, shown in the consolidated balance sheet as “Equity attributable to equity
holders of the parent” and amounting to $143,344,000 at 31 December 2007.
Group policy is presently to attempt to fund development from self–generated funds and loans and not from issue of new share capital. At
31 December 2007 the group had no net borrowings but, depending on circumstances and outlook, the board is prepared for the company
to have net borrowings.
48
ANGLO-EASTERN PLANTATIONS PLC
Notes to the financial statements
26 Acquisitions
For each of the acquisitions below, since they were not active plantations, the directors consider that they have obtained control of an
entity that is not a business and accordingly have not accounted for these acquisitions as business combinations. Instead, the amount
paid for each acquisition has been allocated between individual identifiable assets and liabilities in the entity based on their fair values at
the acquisition date.
In June 2007 the group acquired a 90% interest in PT Cahaya Pelita Andhika (CPA) for a cash consideration of $5,198,000 and settled a
loan of $1,045,000 due by CPA. CPA owns a partly planted oil palm estate of 4,470 ha in the province of North Sumatra. The assets and
liabilities and their fair value adjustment were assessed as follows:
Fixed assets
Current borrowings
Other net current (liabilities)
Net assets acquired
Group share (90%)
Book value
$000
1,279
(1,045)
–
Revaluation to fair value
$000
5,542
–
–
Fair value
$000
6,821
(1,045)
–
234
5,542
5,776
5,198
The group’s share of the loss of CPA from acquisition to the end of 2007 was $276,000 which included rehabilitation expenditure. Prior to
acquisition CPA was not trading.
In December 2007 the group acquired a 95% interest in PT Bangka Malindo Lestari (BML) for a cash consideration of $1,451,000. BML
had no assets or liabilities other than the right to acquire a land title over 7,000 ha on the island of Bangka. The assets and their fair value
adjustment were assessed as follows:
Fixed assets only acquired
Group share (95%)
Book value
$000
545
Revaluation to fair value
$000
982
Fair value
$000
1,527
1,451
BML was inactive throughout 2007 and therefore the group’s share of any profit or loss from the date of acquisition to the end of 2007 was
nil.
In December 2007 the group acquired a 95% interest in PT Sawit Graha Manunggal (SGM) for a cash consideration of $6,786,000. SGM
had no assets or liabilities other than the right to acquire a land title over 26,000 ha in the province of Central Kalimantan on the island of
Borneo. The assets and their fair value adjustment were assessed as follows:
Fixed assets only acquired
Group share (95%)
Book value
$000
3,771
Revaluation to fair value
$000
3,372
Fair value
$000
7,143
6,786
SGM was inactive throughout 2007 and therefore the group’s share of any profit or loss from the date of acquisition to the end of 2007
was nil.
27 Post balance sheet acquisition
In January 2008 the group acquired a 95% interest in PT Riau Agrindo Agung (RAA) for a cash consideration of $3,800,000. RAA has no
assets or liabilities other than the right to a land title over 15,000 ha near the group’s existing estates in Bengkulu.
Also in January 2008 the group’s subsidiary PT Hijau Pryan Perdana acquired for a consideration of $600,000 the right to a land title over
a further 2,379 ha of land contiguous to its existing rights over 3,715 ha.
In March 2008 the group’s subsidiary PT Cahaya Pelita Andhika was able to restore, at minimal cost, a previously lapsed right to a land title
over a further 1,300 ha of land contiguous to its existing confirmed land title of 4,469 ha.
ANGLO-EASTERN PLANTATIONS PLC
49
Notes to the consolidated financial statements
28 Subsidiary companies
The principal subsidiaries of the company all of which have been included in these consolidated financial statements are as follows:
Percentage holding of
ordinary shares
Principal United Kingdom sub–holding company
Anglo–Indonesian Oil Palms Limited
UK management company
Indopalm Services Limited
Malaysian operating companies
Anglo–Eastern Plantations (M) Sdn Bhd
Anglo–Eastern Plantations Management Sdn Bhd
Indonesian operating companies
PT Alno Agro Utama
PT Anak Tasik
PT Bangka Malindo Lestari
PT Bina Pitra Jaya
PT Cahaya Pelita Andhika
PT Hijau Pryan Perdana
PT Mitra Puding Mas
PT Musam Utjing
PT Sawit Graha Manunggal
PT Simpang Ampat
PT Tasik Raja
PT United Kingdom Indonesia Plantations
100
100
55
100
90
100
95
80
90
80
90
75
95
100
80
75
The principal United Kingdom sub–holding company and UK management company are registered in England and Wales and are direct
subsidiaries of the company. Details of United Kingdom subsidiaries which are not significant have been omitted. The Malaysian operating
companies are incorporated in Malaysia and are direct subsidiaries of the company. The Indonesian operating companies are incorporated
in Indonesia and are direct subsidiaries of the principal sub–holding company. The principal activity of the operating companies is plantation
agriculture.
The company’s entire interest in Anglo–Eastern Plantations (M) Sdn Bhd has been secured against the loans to that subsidiary as set out
in note 15.
50
ANGLO-EASTERN PLANTATIONS PLC
Company balance sheet
(UK GAAP)
as at 31 December 2007
Non-current assets
Investment in subsidiaries
Current assets
Debtors
Cash and cash equivalents
Current liabilities
Other creditors
Net current assets
Net assets
Equity
Share capital
Treasury shares
Share premium reserve
Share capital redemption reserve
Exchange reserve
Retained earnings
Shareholders’ funds
Notes
2007
$000
2006
$000
2
50,276
50,949
50,276
50,949
3
43
2,062
2,105
45
1,720
1,765
5
(192)
(187)
1,913
1,578
52,189
52,527
6
6
7
7
7
7
15,504
15,495
(1,785)
(1,387)
23,935
23,904
1,087
3,872
9,576
1,087
3,872
9,556
52,189
52,527
The financial statements were approved by the board of directors and authorised for issue on 30 April 2008 and were
signed on its behalf by R O B Barnes.
The accompanying notes are an integral part of this balance sheet.
ANGLO-EASTERN PLANTATIONS PLC
51
Notes to the company financial statements
1 Accounting policies
Basis of accounting
The separate financial statements of the company are presented as required by the Companies Act 1985. They have been prepared under
the historical costs convention and in accordance with applicable United Kingdom Accounting Standards and law. The principal accounting
policies are summarised below.
Foreign currency
The functional currency of the company is US dollars, chosen because the price of the bulk of the group’s products are ultimately denominated
in dollars. Transactions in sterling are translated to US dollars at the actual exchange rate and exchange losses recognised in profit and
loss. Sterling denominated monetary assets and liabilities are converted to US dollars at the rate ruling at the balance sheet date.
Dividends
In accordance with FRS21 equity dividends are recognised when they become legally payable.
Share based payments
As set out under group accounting policies on page 32.
Current asset investments
The company’s only investments are in shares listed on a recognised stock exchange and available for sale. These shares are carried at
market value and changes in market value are recognised through reserves and recycled through the income statement on disposal.
Deferred tax
A deferred tax asset has not been set up in relation to brought forward tax losses because it is not certain those losses can be utilised.
Treasury shares
Consideration paid or received for the purchase or sale of the company’s own shares for holding in treasury is recognised directly in equity,
where the cost is presented as the treasury share reserve. Any excess of the consideration received on the sale of treasury shares over
the weighted average cost of shares sold, is taken to the share premium account. Any shares held in treasury are treated as cancelled for
the purpose of calculating earnings per share.
Financial guarantee contracts
Where the company enters into financial guarantee contracts and guarantees the indebtedness of other companies within the group, the
company considers these to be insurance arrangements and accounts for them as such. In this respect, the company treats the guarantee
contract as a contingent liability until such time that it becomes probable that the company will be required to make a payment under the
guarantee.
2
Investments in subsidiaries
At beginning of year
Movements in year
At end of year
Investments in
subsidiary
undertakings
$000
7,745
–
7,745
Loans to
subsidiary
undertakings
$000
43,204
(673)
42,531
Total
$000
50,949
(673)
50,276
Loans to and from subsidiary companies do not have fixed repayment terms and are repayable on demand. In practice they are effectively
long term in nature and therefore classified with investments in subsidiaries.
The principal subsidiaries of the company are listed in note 28 to the consolidated financial statements on page 50.
3 Debtors
Prepayments and accrued income
Other debtors
4 Dividends
Paid during the year
Final dividend of 10.80cts for the year ended 31 December 2006 (2005 – 8.80cts)
Proposed final dividend of 14.0cts for the year ended 31 December 2007 (2006 – 10.80cts)
2007
$000
43
– 4
43
2007
$000
4,266
5,524
2006
$000
41
45
2006
$000
3,560
4,265
The proposed dividend for 2007 is subject to shareholder approval at the forthcoming annual general meeting and has not been included
as a liability in these financial statements.
5 Other creditors
Accruals
Other creditors
2007
$000
176
16
192
2006
$000
172
15
187
52
ANGLO-EASTERN PLANTATIONS PLC
Notes to the company financial statements
6 Share capital
Ordinary shares of 25p each
Beginning of year
Share options exercised
End of year
Treasury shares
Beginning of year
Purchased in year
End of year
Market value of treasury shares
Beginning of year (312.5p/share)
End of year (447.5p/share)
Authorised
Number
Issued and
fully paid
Number
60,000,000
60,000,000
39,958,272
18,000
39,976,272
Authorised
£000
15,000
–
15,000
Issued and
fully paid
£000
9,989
5
9,994
Authorised
$000
23,865
–
23,865
Number
468,000
50,000
518,000
Issued and
fully paid
$000
15,495
9
15,504
$000
(1,387)
(398)
(1,785)
2,867
4,659
The treasury shares purchased in 2007 were purchased in September at 386p.
Details of share based payments are set out in note 21 to the consolidated financial statements on page 43.
7 Reserves
Company balance sheet
Beginning of year
Shares purchased
Share options exercised
Profit for the financial year
Dividend paid
End of year
Share
premium
account
$000
23,904
–
31
–
–
23,935
Treasury
shares
$000
1,387
398
–
–
1,785
Share
capital
redemption
$000
1,087
–
–
–
–
1,087
Exchange
reserve
$000
3,872
–
–
–
–
3,872
Profit and loss
account
(distributable)
$000
9,556
–
–
4,285
(4,265)
9,576
As permitted by section 230 of the Companies Act 1985, a separate profit and loss account dealing with the results of the company has
not been presented. The profit before tax of the company for the year was $4,318,000 (2006 – $4,801,000) and profit for the year was
$4,285,000 (2006 – $4,769,000). Of the exchange reserve, $3,449,000 is available to meet any reduction in dollar terms of investments in
and loans to subsidiaries caused by adverse exchange rate movements on the underlying assets.
8 Employees’ and directors’ remuneration
Average numbers employed during the year - directors
Average numbers employed during the year - staff
Staff costs
Wages and salaries
Social security costs
Retirement benefit costs
Share based remuneration expense
2007
number
2006
number
6 7
2 2
2007
$000
968
67
57
87
1,179
2006
$000
627
57
48
20
752
The information required by the Companies Act and the listing rules of the Financial Services Authority is contained in the directors’ report
on remuneration on pages 23 to 24 of which the information on page 24 has been audited.
Directors’ emoluments
Pension contributions
2007
$000
772
39
811
2006
$000
545
34
579
9 Guarantees and other financial commitments
The company has provided guarantees for loans and overdrafts to subsidiaries totalling $42,889,000 (2006 – $7,505,000) as set out in
note 15 of the consolidated financial statements.
ANGLO-EASTERN PLANTATIONS PLC
53
Notice of annual general meeting
Notice is hereby given that the twenty-third Annual General Meeting of Anglo-Eastern Plantations Plc will be
held at the offices of Withers LLP, 16 Old Bailey, London EC4M 7EG on Thursday, 31 July 2008 at 12 noon for
the following purposes:
As Ordinary Business
1 To receive and consider the company’s annual report for the year ended 31 December 2007.
2 To declare a dividend.
3 To approve the directors’ remuneration report for the year ended 31 December 2007.
4 To elect Dato’ John Lim Ewe Chuan, non-executive director
5 To re-elect Madam S K Lim, non-executive director, who has served more than nine years.
6 To re-elect Datuk Chin Poy-Wu, non-executive director, who has served more than nine years.
7 To appoint BDO Stoy Hayward LLP as auditors and to authorise the directors to fix their remuneration.
As Special Business
8 To consider and, if thought fit, to pass the following resolution as a special resolution:
That
(a)
(b)
the directors be generally and unconditionally authorised pursuant to and in accordance with section
80 of the Companies Act 1985 (“the Act”) to exercise for the period ending on 30 July 2013 all the
powers of the company to allot relevant securities up to an aggregate nominal amount equal to one-
third of the issued share capital at the date of this resolution;
during the period expiring on the date of the next Annual General Meeting or on 30 July 2009
(whichever shall be earlier) the directors be empowered to allot equity securities for cash pursuant
to the authority conferred under paragraph (a) above or by way of sale of treasury shares (within the
meaning of section 162A of the Act):
(i)
in connection with a rights issue; and
(ii) up to an aggregate nominal amount of £499,703, otherwise than in connection with a rights
issue;
as if section 89 (1) of the Act did not apply to any such allotment;
(c)
by such authority and power the directors may during such periods make offers or agreements which
would or might require the making of allotments after the expiry of such periods; and
(d)
for the purposes of this resolution:
(i)
“rights issue” means an offer of equity securities open for acceptance for a period fixed by the
directors to holders of equity securities (other than the company) on the register on a fixed
record date in proportion to their respective holdings of such securities or in accordance with the
rights attached thereto (but subject to such exclusions or other arrangements as the directors
may deem necessary or expedient in relation to fractional entitlements or legal or practical
problems under the laws of, or the requirements of any recognised regulatory body or any stock
exchange in, any territory);
54
ANGLO-EASTERN PLANTATIONS PLC
Notice of annual general meeting
(ii) the nominal amount of any securities shall be taken to be, in the case of rights to subscribe for
or convert any securities into shares of the company, the nominal amount of such shares which
may be allotted pursuant to such rights; and
(iii) words and expressions defined in or for the purposes of part IV of the Act shall bear the same
meanings herein.
9 To consider and if thought fit to pass the following resolution as a special resolution:
That the directors be and they are hereby authorised
(i)
(ii)
to exercise the powers contained in the Articles of Association of the company so that, to the extent
determined by the directors, the holders of ordinary shares be permitted to elect to receive new
ordinary shares in the capital of the company, credited as fully paid, instead of all or part of any
interim or final dividend or dividends which may be declared or paid at any time or times prior to
30 July 2013; and
to capitalise the appropriate nominal amount of additional ordinary shares, falling to be allotted
pursuant to elections made as aforesaid, out of the amount standing to the credit of any reserves
of the company, to apply such sum in paying up such ordinary shares and pursuant to section 80
of the Act to allot such ordinary shares up to a maximum nominal value of an aggregate nominal
amount equal to the company’s authorised but unissued share capital at the date of this resolution
to members of the company validly making such elections at any time or times prior to 30 July 2013
as if sub-section (1) of section 89 of the said Act did not apply thereto and so that this authority shall
be without prejudice and additional to the authority conferred by resolution no 8.
10 To consider and if thought fit to pass the following as a special resolution:
That the company is hereby generally and unconditionally authorised to make market purchases (within the
meaning of section 163 of the Act) of ordinary shares of 25p each in the capital of the company provided
that:
(a)
the maximum number of ordinary shares hereby authorised to be purchased is 3,997,627
(representing 10% of the issued ordinary share capital);
(b)
the minimum price which may be paid for each ordinary share is 25p;
(c)
(d)
the maximum price which may be paid for each ordinary share is an amount equal to 105% of the
average of the middle market quotations for such share as derived from the Daily Official List of the
London Stock Exchange plc for the five business days immediately preceding the date of purchase;
and
the authority hereby conferred shall expire on 31 October 2009 or, if earlier, at the conclusion of
the next Annual General Meeting of the company save that the company may before the expiry of
this authority make a contract of purchase which will or may be executed wholly or partly after such
expiry and may make a purchase of shares pursuant to any such contract.
ANGLO-EASTERN PLANTATIONS PLC
55
Notice of annual general meeting
11. To consider and if thought fit to pass the following as a special resolution:
That the amendments to the articles of association of the company set out in the appendix to the notice of
annual general meeting be adopted with effect from the conclusion of this Annual General Meeting.
By order of the board
D W SMITH
Secretary
30 June 2008
A member of the company entitled to attend and vote at the meeting may appoint one or more proxies to attend, speak and vote at a meeting.
Where more than one proxy is appointed, each proxy must be appointed for different shares. You may not appoint more than one proxy to
exercise rights attached to any one share. A proxy need not be a member of the company. The instrument appointing a proxy must be deposited
at the office of the registrars not less than forty-eight hours before the time appointed for holding the meeting (or any adjournment thereof).
Pursuant to regulation 41 of the Uncertificated Securities Regulations 2001, the company has specified that only those shareholders on the
register of members of the company at 11.30 am on 29 July 2008 shall be entitled to attend and vote at the meeting in respect of the number of
shares registered in their name at that time. Changes to the register of members after 11.30 am on 29 July 2008 or, if the meeting is adjourned,
in the register of members at 11.30 pm on the day which is two days before the day of any adjourned meeting shall be disregarded in determining
the rights of any person to attend and vote at the meeting.
As at 30 June 2008, the company’s issued share capital comprised 39,976,272 ordinary shares of 25p each. Each share carries one vote,
except 518,000 shares held as treasury shares.
The terms and conditions of appointment of the company’s non-executive directors will be available for inspection by any person at the company’s
registered office of the company during usual business hours and for 15 minutes prior to the meeting and at the meeting.
In order to facilitate voting by corporate representatives at the meeting, arrangements will be put in place at the meeting so that:
(i)
(ii)
if a corporate member has appointed the Chairman of the meeting as its corporate representative with instructions to vote on a poll in
accordance with the directions of all the other corporate representatives for that member at the meeting, then, on a poll, those corporate
representatives will give voting directions to the Chairman and the Chairman will vote (or withhold a vote) as corporate representative in
accordance with those directions; and
if more than one corporate representative for the same corporate member attends the meeting but the corporate member has not appointed
the Chairman of the meeting as its corporate representative, a designated corporate representative will be nominated, from those corporate
representatives who attend, who will vote on a poll and the other corporate representatives will give voting directions to that designated
corporate representative.
Corporate members are referred to the guidance issued by the Institute of Chartered Secretaries and Administrators on proxies and corporate
representatives - www.icsa.org.uk - for further details of this procedure. The guidance includes a sample form of representation letter to appoint
the Chairman as a corporate representative as described in (i) above.
56
ANGLO-EASTERN PLANTATIONS PLC
Appendix to the notice of annual general meeting
Set out below are the ways in which the articles of association are proposed to be amended at the annual
general meeting:
1.
2.
By deleting the text of article 59.1 and replacing it with the following: “An annual general meeting must be
called by at least 21 Clear Days’ notice. An extraordinary general meeting must be called by at least 14
Clear Days’ notice.”
By changing the heading of article 111 to “Other office or place of profit under the company; other conflicts
of interest”, numbering the existing text of article 111 as “111.1” and inserting the following new articles 111.2
to 111.6:
111.2 For the purposes of section 175 of the Companies Act 2006 (“2006 Act”) (subject to that section
coming into force), the Board may authorise any matter proposed to it relating to or arising out
of a situation in which a Director (the “Relevant Director”) has, or could have, a direct or indirect
interest that conflicts, or possibly may conflict, with the interests of the Company and which would,
if not so authorised, involve a breach of duty by a Director under that section (a “Relevant Conflict
Situation”).
111.3 Any Director (including the Relevant Director) may propose that a Relevant Conflict Situation be
authorised by the Board and any such proposal and authorisation shall be effected in the same way
that any other mater may be proposed to and resolved upon by the Board in accordance with the
provisions of these Articles, save that the Relevant Director and any other Director with a similar
interest:
(a) may not be counted as participating at the meeting or part of the meeting at which the authorisation
is considered for the purposes of the quorum requirement;
(b) may not vote on the matter, and if the Director in question or other interested Director does
not vote in contravention of this article, his vote may not be counted in determining whether the
matter was agreed to; and
(c) may, if the other Directors attending the meeting so decide, be excluded from the meeting while
the Relevant Conflict Situation is under consideration.
111.4 Where the Board authorises a Relevant Conflict Situation:
(a) the Board may make any such authorisation subject to any limits or conditions it expressly
imposes, but such authorisation is otherwise given to the fullest extent permitted;
(b) any limits or conditions of the type referred to in article 111.4(a) may be imposed at the time of
giving the authority or may be made or varied at any time subsequently and may include:
(i)
(ii)
whether the Relevant Director may vote or be counted in the quorum at any future Board
or other meeting at which the Relevant Conflict Situation is discussed; and
the exclusion of the Relevant Director from all information relating to, and discussion by
the Company of, the Relevant Conflict Situation; and
(c) the Board may withdraw the authority at any time.
111.5 In authorising a Relevant Conflict Situation, the Board may decide that if a Director obtains or has
obtained any information otherwise than as a Director of the Company and in respect of which he
owes a duty of confidentiality to another Person, the Director is under no obligation to:
(a) disclose any such information to the Board or to any Director or other officer or employee of the
Company; or
(b) use or apply any such information in performing his duties as a Director.
This article is without prejudice to any equitable principle or rule of law which may excuse the Director
from disclosing information, in circumstances where disclosure would otherwise be required under
this article.
111.6 For the purpose of these Articles, a conflict of interest includes a conflict of interest and duty and a
conflict of duties, and interest includes both direct and indirect interest.
3.
By inserting in article 113.1 the wording “or as otherwise decided by the Board pursuant to article 111.4(b)”
following the wording “Except as provided in article 113.2 and 113.3.”
4.
In article 123, by inserting the number “111” after the words “Subject to articles.”
ANGLO-EASTERN PLANTATIONS PLC
57
$
Anglo-Eastern Plantations Plc
Form of Proxy
Annual General Meeting
I/We being a member of the company hereby appoint the chairman of the meeting or (see note 2)
Name of Proxy: ........................................................................................................... Number of shares: ........................................
as my/our proxy to exercise all or any of my/our rights to attend, speak and vote in respect of my/our voting entitlement* on my/our
behalf at the Annual General Meeting of the Anglo-Eastern Plantations Plc to be held at the offices of Withers LLP, 16 Old Bailey,
London EC4M 7EG on Thursday, 31 July 2008 at 12 noon and at any adjourned meeting.
Please tick here if this proxy appointment is one of multiple appointments being made
proxy, please refer to Explanatory note 3 (below).
. For the appointment of one or more
I/We would like my/our proxy to vote on the resolution proposed at the meeting as indicated on this form. Unless otherwise instructed,
the proxy may use his/her discretion to vote as he or she sees fit or abstain in relation to any business of the meeting.
For
Against Withheld
Vote
Resolutions
1 To receive the annual report for the year ended 31 December 2007.
2 To declare a dividend.
3
To approve the directors’ remuneration report for the year ended 31 December 2007.
4 To elect Dato’ John Lim Ewe Chuan, non-executive director.
5 To re-elect Madam S K Lim, non-executive director.
6 To re-elect Datuk Chin Poy-Wu, non-executive director.
7
8
To appoint BDO Stoy Hayward LLP as auditors and to authorise the directors to fix their
remuneration.
To grant authority pursuant to section 80 of the Companies Act 1985 and to disapply
section 89(1) of the Companies Act 1985.
9 To grant authority for scrip dividend alternative.
10 To grant authority for purchase by the company of its own shares.
11 To approve the amendments to the articles of association of the Company.
To assist with arrangements, if you intend attending the meeting in person please place an ‘X’ in the box
Signature ........................................................................... Date ........................................................................................
In the case of a corporation, this proxy must be given under its common seal or signed on its behalf by an attorney or officer
duly authorised, stating their capacity (e.g. director, company secretary).
Notes
1
Members of the company entitled to attend and vote at the meeting may appoint a proxy or proxies to exercise all or any of their rights to attend and to
speak and vote on their behalf at the annual general meeting. A shareholder may appoint more than one proxy in relation to the annual general meeting
provided that each proxy is appointed to exercise the rights attached to a different share or shares held by that shareholder. A proxy need not be a
member of the company.
2
3
4
5
If you wish to appoint a person other than the chairman, please insert the name of your chosen proxy holder in the space provided. If the proxy is being
appointed in relation to less than your full voting entitlement, please enter in the box next to the proxy holder’s name the number of shares in relation to
which they are authorised to act as your proxy. If left blank, your proxy will be deemed to be authorised in respect of your full voting entitlement, (or if this
proxy form has been issued in respect of a designated account for a shareholder, the full voting entitlement for that designated account).
To appoint more than one proxy, (an) additional form(s) may be obtained by contacting the registrars helpline on 0871 664 0300 (calls cost 10p per minute
plus network charges) or, from overseas, on +44 208 639 3399. Alternatively you may photocopy this form. Please indicate in the box next to the proxy
holder’s name the number of shares in relation to which they are authorised to act as your proxy. Please also indicate by ticking the box provided if the
proxy instruction is one of multiple instructions being given. All forms must be signed and should be returned together in the same envelope.
The “vote withheld” option is to enable you to abstain on any particular resolution. Such a vote is not a vote in law and will not be counted in the votes
‘for’ and ‘against’ a resolution.
Pursuant to regulation 41 of the Uncertificated Securities Regulations 2001, to be entitled to attend and vote at the Annual General Meeting (and for the
purpose of the determination by the company of the votes they may cast), shareholders must be registered in the register of members of the company at
11.30 am on 29 July 2008 or at 11.30 pm on the day which is two days before the day of any adjournment. Changes to entries on the share register after
11.30 a.m. on 29 July 20008 or, if the meeting is adjourned, in the register of members at 11.30 pm on the day which is two days before the day of any
adjourned meeting, will be disregarded in determining the rights of any person to attend or vote at the Annual General Meeting.
6
Completion of this form of proxy will not preclude you from attending and voting at the meeting or any adjournment thereof in person if you so wish.
$
Second Fold
BUSINESS REPLY SERVICE
Licence No. MB122
l
d
o
F
t
s
r
i
F
Capita Registrars
Proxy Department
PO Box 25
Beckenham
Kent
BR3 4BR
Third Fold (Tuck in)
Contents
Financial summary
Chairman’s statement
Financial record
Estate areas
Location of estates
Additional information
Business review
Director’s report
Director’s responsibilities
Directors
Statement on corporate governance
Director’s remuneration report
Auditor’s report
Consolidated income statement
Consolidated statement of recognised income and expenses
Consolidated balance sheet
Consolidated cash flow statement
Notes to the consolidated financial statements
Company balance sheet
Notes to the company financial statements
Notice of annual general meeting
Appendix to the notice of annual general meeting
Form of Proxy
1
2
5
6
7
8
10
13
18
19
20
23
25
26
27
28
29
31
51
52
54
58
59
Company addresses, advisers and website
inside back cover
Photographs
Oil palm nursery - Alno
Secondary school - Tasik
(cover)
(page 2)
Company addresses
Company advisers
Malaysian Office
7th Floor
Wisma Equity
150 Jalan Ampang
50450 Kuala Lumpur
Tel: 60 (3) 2162 9808
Fax: 60 (3) 2164 8922
Indonesian Office
P T United Kingdom Indonesia Plantations
Wisma HSBC
Jalan Diponegoro, Kav 11
Medan 20152
North Sumatra
Tel: 62 (0)61 4528683
Fax: 62 (0)61 4520029
Auditors
BDO Stoy Hayward LLP
55 Baker Street
London W1U 7EU
Principal Bankers
National Westminster Bank Plc
15 Bishopsgate
London EC2P 2AP
The Hong Kong and Shanghai Banking
Corporation Limited
Wisma HSBC
Jalan Diponegoro, Kav 11
Medan 20152
North Sumatra
Secretary and Registered Office (Number 1884630)
PT Bank DBS Indonesia
D W Smith
6/7 Queen Street
London EC4N 1SP
Tel: 44 (0)20 7236 2838
Fax: 44 (0)20 7236 8283
Company website
www.angloeastern.co.uk
Uniplaza Building
Jalan Letjen MT Haryonon A-1
Medan 20231
North Sumatra
Malayan Banking Corporation Bhd
Menara Promenade
100 Jalan Tun Razak
50050 Kuala Lumpur
Registrars
Capita Registrars
Northern House
Woodsome Park
Fenay Bridge
Huddersfield
West Yorkshire HD8 0LA
Solicitors
Withers LLP
16 Old Bailey
London EC4M 7EG