2011
ANNUAL REPORT
Anglo-Eastern Plantations Plc
Contents
Financial Highlights
Chairman's Statement
Financial Record
Estate Areas
Location of Estates
Business Review
Directors' Report
Directors' Responsibilities
Directors
Statement on Corporate Governance
Directors' Remuneration Report
Auditors' Report
Consolidated Income Statement
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Company Balance Sheet
Notes to the Company Financial Statements
Notice of Annual General Meeting
Form of Proxy and Attendance Card
Company addresses, advisers and website
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3
8
9
10
11
13
19
20
21
24
27
29
30
31
32
33
35
55
56
59
Separate Attachment
Inside Back Cover
Anglo-Eastern Plantations Plc, quoted on the London Stock Exchange, owns, operates
and develops plantations in Indonesia and Malaysia, amounting to some 130,000 hectares
producing mainly palm oil and some rubber.
2011
$ m
259.0
99.4
108.8
2010
$ m
187.2
66.6
85.0
149.73cts
164.30cts
6.0cts
*3.7p
99.59cts
129.82cts
5.0cts
3.1p
Financial Highlights
Revenue
Profit before tax
- before biological asset (“BA”) adjustment
- after BA adjustment
EPS before BA adjustment
EPS after BA adjustment
Dividend (cents)
Dividend (pence)
Note: * Based on exchange rate at 23 April 2012 of $1.6080/£
1 Annual Report 2011 | Anglo-Eastern Plantations Plc
Financial Highlights
Revenue ($000)
Profit Before Tax After BA
($000)
120,000
100,000
80,000
60,000
40,000
20,000
0
2007 2008 2009 2010 2011
2007 2008 2009 2010 2011
Profit Attributable to
Shareholders ($000)
Basic Earnings Per Share
After BA (U$, cents)
180.00
160.00
140.00
120.00
100.00
80.00
60.00
40.00
20.00
0.00
300,000
250,000
200,000
150,000
100,000
50,000
0
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
2007 2008 2009 2010 2011
2007 2008 2009 2010 2011
Denominated in US Dollar
2 Annual Report 2011 | Anglo-Eastern Plantations Plc
Chairman’s Statement
On behalf of the Board of Directors of Anglo-Eastern Plantations Plc, I am pleased to present to you the 2011
Annual Report and Audited Financial Statements on the performance and operations of the Group and the
Company for the year ended 31 December 2011.
Financial Performance
For the year ended 31 December 2011, revenue was $259.0 million, 38% higher than $187.2 million reported in
2010. This is due primarily to higher production of estates fresh fruit bunch (“FFB”) and a higher CPO price. The
Group operating profit for 2011, before biological asset (“BA”) adjustment was $96.0 million, 48% more than $64.9
million in 2010. FFB output for 2011 was 707,000mt, 18% higher than previous year (2010: 599,200mt). FFB
bought in from surrounding smallholders for 2011 was 546,800mt (2010: 432,800mt), 26% higher compared to
2010. With a higher FFB processed by the mills, Crude Palm Oil (“CPO”) production in 2011 was 248,000mt, 21%
higher compared to 204,600mt in 2010.
Profit before tax and after BA adjustment was $108.8 million, compared to $85.0 million in 2010. The BA
adjustment was a credit of $9.4 million, compared to a credit of $18.4 million in 2010, reflecting higher biological
value.
The average CPO price for 2011 was $1,124/mt, 26% higher than 2010 of $892/mt.
Earnings per share before BA adjustment increased by 50% to 149.73cts, compared to 99.59cts in 2010.
The Group’s balance sheet remains strong. The Group continued to experience positive cash flow generation for
2011, enabling it to build up cash reserves and reduce its borrowings. As at 31 December 2011, the Group had a
cash position of $90.5 million and lower borrowings of $6.5 million, giving it a net cash position of $84.0 million,
compared to $48.8 million in 2010.
During the year, we repaid $15.6 million (2010: $4.9 million) out of our existing borrowings of $22.1 million (2010:
$27.0 million).
Corporate Development
In 2011, we planted 4,800 hectares of oil palm mainly in Kalimantan, boosting our planted area by 9% to 57,100
hectares (2010: 52,300 hectares). New plantings remain behind planned schedule due to adverse dry weather
conditions in South Sumatra and Central Kalimantan, alongside with certain hold-up in issuing of necessary
permits due to the recently introduced timber cutting licenses (“IPK”). In anticipation of the March 2012 Indonesian
Sustainable Palm Oil (“ISPO”) standards becoming mandatory, the Group has reviewed our planting programme,
which at present can be prudently estimated to increase our planted area by 9,000 hectares over the next two
years.
Following the retirement of the Chief Executive Officer for the Indonesian operations after 12 years with the Group,
the Group rationalized its management structure in Indonesia with the incorporation of a local management
company. A new Chief Executive Officer was recruited locally to focus on streamlining and revamping its
Indonesian operations with the objective of enhancing and/or maximizing the profitability of each of the Group’s
Indonesian oil palm estates which are spread out across six different provinces in Indonesia, each of which is
subjected to its own provincial and local government’s style, efficiency and accuracy in interpreting and
implementing the applicable laws and regulations.
The tender process for the construction of new palm oil mills in Central Kalimantan and North Sumatra will begin in
3Q2012. The upgrading of Blankahan palm oil mill from rated throughput of 25mt/hr to 40mt/hr was completed at a
cost of $1.5 million.
3 Annual Report 2011 | Anglo-Eastern Plantations Plc
Chairman’s Statement
Directors
Drs. Kanaka Puradiredja’s appointment as Independent Non-Executive Director expired on 31 July 2011 and was
extended for another two years by the Board.
Mr. Nik Din Bin Nik Sulaiman’s appointment as Independent Non-Executive Director expired on 31 March 2011 and
was extended for another two years by the Board. Mr. Nik Din will be submitting himself for re-appointment at the
forthcoming annual general meeting.
I will be submitting myself for re-election at the same annual general meeting. Brief profiles of all Directors are set
out on page 20 of this Annual Report.
Corporate Social Responsibility
Corporate social responsibility (“CSR”) is an integral part of corporate self-regulation incorporated into our business
model. Our Group embraces responsibility for the impact of its activities on the environment, consumers,
employees, communities, stakeholders and all other members of the public sphere. In engaging the social
dimension of CSR, the Group’s business has taken cognizance of the contribution and further enrichment of its
employees while continuing to make contributions to improve the well being of the surrounding community.
The majority of employees and their dependents in the plantations and mills are housed in self-contained
communities built by the Group. The employees and their dependents are provided with free housing, clean water
and electricity. The Group also builds and provides places of worship for workers of different religious faith as well
as schools and sports facilities in these communities. The Group spent $2.2 million to build and maintain these
amenities in 2011 and this is expected to increase further in 2012.
Staff and selected employees are given the opportunity to follow training and seminars to enhance their working
skills and capacity. The Group provides free education for all employees’ children in the local plantations and
communities where they work. In some cases, scholarships were provided to selected employees’ children to
further their tertiary education. In addition the Group provides funding to construct educational facilities such as
laboratories, libraries, and computers. The salaries of teachers in estates and school buses to transport
employees’ children to school are provided by the Group. Over the years a total of 23 schools have been built with
95 teachers currently employed within our Group estates. In 2011, the Group spent some $300,000 for running the
schools alone.
The Group continues to provide free comprehensive health care for all its workers as we believe that every
employee and their dependents should have easy access to health services. The medical facilities currently
comprise of 20 clinics, 28 nurses and hospital assistants and 10 units of ambulances. Related health expenses for
2011 were $400,000.
A strong commitment to corporate social responsibility (CSR) has a positive impact on employees attitudes and
boosts employee engagement. The Group realizes that employees are valuable assets in order to run an efficient,
effective, profitable and sustainable business and operations.
For plantations acquired from 2007 onwards, the Group has an obligation to develop not less than 20% of the new
planted area for benefit of smallholder scheme cooperatives. The smallholder scheme or commonly known as
Plasma scheme in Indonesia will be developed alongside the Group’s estates. This smallholder scheme
cooperative will be managed by the Group which involves 7 companies covering an area of 5,379 hectares. The
Group is negotiating external finance for a plasma scheme with a local bank secured by land and assets of the
scheme and guaranteed by the Group.
4 Annual Report 2011 | Anglo-Eastern Plantations Plc
Chairman’s Statement
Indonesian Sustainable Palm Oil
The Indonesian Sustainable Palm Oil (“ISPO”) is legally mandatory for all plantations in Indonesia. In March 2012,
ISPO which fundamentally aligns to RSPO (Roundtable on Sustainable Palm Oil) principles has become the
mandatory standard for Indonesian planters.
A Steering Committee was established to work out a roadmap to support the ISPO implementation at mills and
estates. Workshops and training sessions on occupational safety and health were carried out to inculcate a safety
culture in workplaces at the estates and mills in North Sumatra. The Group is currently upgrading its agricultural
chemical stores and diesel fuel storage tanks to meet safety and environmental standards. Standard operating
procedures are being refined and documented based on sustainable oil palm best practices. The Group also
conducts internal audit using audit checklist adopted from the above practices to determine level of compliance.
Care For The Environment and Sustainable Practices
As a Group, we highlight the importance of creating awareness and implementation of good environmental
management practices throughout the organisation. The Group has been consistently practising good agricultural
practices such as zero burning, integrated pest management, land terracing and recycling of biomass and reducing
fossil fuel consumption.
Effluent discharged from some mills is initially treated in lagoons before they are applied to trenches located
between rows of palm trees. Once the effluent dries up, it becomes organic fertilizer for the oil palm and reduces
the application and buying of inorganic fertilizers. In some estates, empty bunches are shredded and applied to
land where it biodegrades to fertilizers.
The Group has future plans to mitigate the emissions of biogas from the lagoons by trapping it. The methane gas
will then be used to generate electricity to partially power its mills.
The Group is committed to implementing good agricultural practices as spelled out in its standard operating
procedures for the planting of oil palm. Integrated Pest Management has been adopted to control pests and to
improve biological balance. Barn Owl was introduced to control rats. Beneficial plants of Turnera sp, Cassia
cobannesis and Antigonon leptosus were planted to attract predator insects of caterpillar pests. Weeds are
controlled selectively by using more environmental friendly herbicide such as Glyphosate. The usage of Paraquat
herbicide has been reduced and minimized.The sprayers are also trained in safety and spraying techniques.
Natural vegetation on uncultivable land such as deep peat, very steep area and riparian zones along watercourses
are maintained to preserve biodiversity and wildlife corridor.
Our mills utilize the waste mesocarp fibre from the oil palm fruits as fuel to generate steam from boilers to produce
power. The power generated drives some of the processing equipment in mills and estate housing. This helps to
reduce reliance on fossil fuels such as diesel in our milling operations.
5 Annual Report 2011 | Anglo-Eastern Plantations Plc
Chairman’s Statement
Outlook
FFB production for two months to February 2012 was 13% higher against the same period in 2011. Although we
have been spared extreme weather patterns so far this year, it is too early to forecast whether the production will
be better for the rest of the year.
Weather experts have however expressed concerns that La Nina which returned in September 2011 would disrupt
global edible oil production. It is typified by wetter-than-usual weather in Malaysia and Indonesia and could lead to
prolonged drought in South America and parts of North America. On the bright side, La Nina would help replenish
the moisture in the soil. It is too early to predict this outcome as it is highly dependent on the strength of the La
Nina.
Oil World expects global consumption for oils & fats to rise by 7mt in 2012, above the 10-year average of 5.8mt. It
also expects global oils and fats production to increase by 6.7mt, above the 10 year average of 5.9mt. Based on its
early estimates, demand will exceed supply and would certainly help support the CPO price.
The CIF (Cost, Insurance, Freight) Rotterdam CPO price opened the year 2012 at $1,045/mt and prices are
expected to be in the range of $900/mt to $1,200/mt for 1H 2012.The fundamentals for palm oil remain bright due
to expectations of tighter supplies and growing dependence on palm oil to raise edible oil supplies. Various factors
like weather, crude oil price, government policies and global liquidity will influence CPO price movement. Global
demand for CPO and other edible oils are vulnerable to economic setbacks and linked to the world economic
health particularly the continued growth in China and India, its two largest consumers of CPO. While it is difficult to
forecast the CPO price in 2012, it should remain satisfactory.
The US dollar appreciated by approximately 1% (2010: US dollar depreciated by approximately 4%) against the
Indonesian Rupiah in 2011. There was no adverse fluctuation against the US dollar in early 2012. We expect a
stable currency exchange level to be attainable for the rest of the year.
The prospects for 2012 should be cautiously optimistic in view of higher CPO price during 1Q2012 on the back of
robust growth of emerging markets. We remain bullish on the demand for edible oil in view of the rising income
levels and population growth in China, India and Indonesia. However, the continued economic crisis in Europe and
North America may dent the growth of Asian economies, slowing the increase in the income levels of the low- to
medium-income groups thus curbing demand for edible oils.
The rising fertiliser costs and wages in Indonesia are expected to increase the overall production cost in 2012.
Barring any unforeseen circumstances, the Group is confident that CPO demand will be sustainable in view of
global economic recovery and we can expect a satisfactory profit level and cash flow for 2012.
6 Annual Report 2011 | Anglo-Eastern Plantations Plc
Chairman’s Statement
Dividends
The Board is mindful that the Group’s development programme will require a considerable capital commitment. In
this respect, the dividend level needs to be balanced against the planned capital expenditure. The Board is
proposing to declare a final dividend of 6.0cts in respect of 2011 (2010: 5.0cts). The final dividend will be paid on 9
July 2012 to those shareholders on the register on 8 June 2012. Shareholders choosing to receive their dividend in
Sterling will do so at the rate ruling on 8 June 2012, when the register closes. Based on the exchange rate at 23
April 2012 of $1.6080/£, the proposed dividend would be equivalent to 3.7p, compared to 3.1p declared in respect
of 2010.
Acknowledgment
On behalf of the Board of Directors, I would like to convey our sincere thanks to our Directors, management and all
employees of the Group for their dedication, loyalty, resourcefulness, commitment and contribution to the success
of the Group.
I would also like to take this opportunity to thank the shareholders, business associates, government authorities
and all other stakeholders for their continued confidence, understanding and support for the Group.
Madam Lim Siew Kim 30 April 2012
Chairman
7 Annual Report 2011 | Anglo-Eastern Plantations Plc
Financial Record
Income statement
Revenue
Trading profit
Biological asset (BA) adjustment
Exchange profits
Net finance –income / (costs)
Profit before tax
Tax
Non-controlling interest
Profit attributable to shareholders
Dividend proposed for year
Financial position
Non-current assets & long term receivables
Cash net of short term borrowings
Long term loans
Other working capital
Deferred tax
Non-controlling interest
Net worth
Share capital
Treasury shares
Share premium and capital redemption account
Revaluation and exchange reserve
Profit and loss account
Equity attributable to shareholders’ funds
Ordinary shares in issue (‘000s)
Earnings per share before BA adj. (US cents)
Earnings per share after 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)
Asset value per share (pence equivalent)
Exchange rates – year end
Rp : $
$ : £
RM: $
Exchange rates – average
Rp : $
$ : £
RM: $
2011
IFRS
$000
2010
IFRS
$000
2009
IFRS
$000
2008
IFRS
$000
2007
IFRS
$000
259,037 187,233
64,937
96,021
18,429
9,358
657
213
1,015
3,184
85,038
108,776
(22,573)
(29,148)
(11,136)
(14,664)
51,329
64,964
(1,977)
(2,372)
$000
$000
419,403 446,260
55,221
84,017
(6,438)
(58)
(14,076)
(5,087)
(37,299)
(61,293)
451,987 428,663
(76,309)
(74,495)
375,678 354,168
15,504
15,504
(1,507)
(1,507)
25,022
25,022
86,089
44,567
292,092 229,060
375,678 354,168
150,080 174,684
74,064
58,955
1,347
888
1,503
1,259
983
959
77,873
62,085
(25,891)
(16,934)
(7,657)
(9,981)
42,001
37,494
(1,973)
(1,973)
$000
$000
249,699 200,532
60,803
54,337
(27,025)
(17,589)
(13,571)
285
(28,772)
(28,450)
257,960 192,289
(46,989)
(31,558)
210,971 160,731
15,504
15,504
(1,785)
(1,744)
25,022
25,022
(22,083)
(7,405)
179,594 144,073
210,971 160,731
127,898
52,521
1,001
215
(145)
53,592
(15,628)
(6,964)
31,000
(5,524)
$000
188,700
59,065
(35,719)
(10,683)
(23,025)
178,338
(32,367)
145,971
15,504
(1,785)
25,022
46
107,184
145,971
39,976
39,976
39,976
39,976 39,976
149.73cts 99.59cts 94.11cts 103.0cts 77.2cts
164.30cts 129.82cts 94.99cts 105.1cts 78.5cts
5.0cts 14.0cts
370cts
407cts
6.0cts
950cts
5.0cts
896cts
5.0cts
535cts
93.4p
3.7p
611p
9,068
1.55
3.17
8,763
1.60
3.06
64.4p
3.1p
572p
9,010
1.57
3.08
9,080
1.55
3.22
59.9p
3.3p
332p
9,400
1.61
3.42
10,158
1.57
3.52
56.0p
3.0p
289p
10,950
1.41
3.48
9,735
1.84
3.34
38.4p
7.0p
186p
9,419
1.99
3.31
9,170
2.01
3.43
8 Annual Report 2011 | Anglo-Eastern Plantations Plc
Estate Areas
9 Annual Report 2011 | Anglo-Eastern Plantations Plc
Location of Estates
10 Annual Report 2011 | Anglo-Eastern Plantations Plc
Business Review
Commodity Prices
2011 has been a good year for vegetable oil prices, including CPO. The CPO CIF Rotterdam price opened the year
2011 at $1,195/mt (2010: $780/mt) and ended the year at $1,045/mt (2010: $1,195/mt), averaging $1,124/mt for
the year (2010: $892/mt). Palm oil prices remained favourable after hitting a low in 2H2008. The increasing world
population leading to higher demand and consumption, lack of agricultural land due to competition among other
grains, increasing renewable biofuel demand from Europe and USA due to higher crude oil price, shortfall in
soybean production together with the increased demand from China and India helped support the commodity
prices.
Rubber prices averaged $4,300/mt for 2011 (2010: $3,300/mt). Our small area of 506 ha of mature rubber
contributed a gross profit of $3.6 million in 2011 (2010: $2.2 million).
CPO CIF Rotterdam (from year 2002 to 2012)
CPO CIF Rotterdam
1600
1400
1200
1000
t
M
/
$
U
800
600
400
200
0
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Source : Public Ledger
11 Annual Report 2011 | Anglo-Eastern Plantations Plc
Business Review
Valuation
In 2011, the Group’s estates were valued by qualified valuers, except for PT Bangka Malindo and PT Kahayan
Agro Plantation which were valued in January 2012. The valuation methodology is disclosed in note 10 of the
consolidated financial statements. The assumptions used by the valuer in the valuation methodology were revised
and streamlined for all estates in 2011 to reflect a realistic and consistent approach to the valuation of biological
assets throughout the Group.
Although higher CPO price of $625/mt has been assumed in the discounted cash flows for the purpose of
valuation, the value of the non-biological plantation assets has reduced by $77 million as compared to year 2010
due to significant reduction of plantable areas for the oil palm trees. The ratio of plantable against unplantable
areas was 70% in 2011 as compared to 92% in 2010. Land surveys including one carried out by the Ministry of
Forestry on undeveloped land in the newer estates in 2011 in accordance with sustainable palm oil best practices
confirmed that some areas of the land were not suitable for planting of oil palm trees whereas the plantable areas
in 2010 was based on historic estimates.
Indonesia
FFB production in North Sumatra, which aggregates the estates of Tasik, Anak Tasik, Labuhan Bilik, Blankahan,
Rambung, Sungai Musam and CPA, produced 298,100mt in 2011 (2010: 258,000mt), 16% higher than 2010. An
additional 1,900 hectares of newly matured oil palm in Labuhan Bilik and CPA together with higher yield from trees
between the age group of 12 to 20 years contributed to the improved performance.
FFB production in Bengkulu (South Sumatra), which aggregates the estates of Puding Mas, Alno, KKST, ELAP
and RAA produced 264,200mt (2010: 211,200mt), 25% higher than 2010. Higher yield was achieved in Bengkulu
region due to moderate weather pattern and improvement of infrastructure like roads and bridges which leads to
more efficient transportation of FFB. Also 2,000 hectares of oil palm reached its prime production age significantly
increasing its yield.
FFB production in the Riau region, comprising Bina Pitri estates, produced 110,400mt in 2011 (2010: 96,000mt),
15% higher than 2010. The improved performance was attributable to favourable weather and higher yield from
fertilisation and rehabilitation programme.
Overall bought-in crops for Indonesian operations were 26% higher at 546,800mt for the year 2011 (2010:
432,800mt). The average oil extraction rate from our mills was 20.3% in 2011 (2010: 20.5%). The extraction rate
was diluted by higher percentage of bought-in crops as well many young oil palm trees which reached maturity in
2011.
Malaysia
FFB production in 2011 was marginally higher at 34,300mt, compared to 34,000mt in 2010. Unfavourable weather
for the last two months of the year together with lack of manpower affected the harvesting and transportation of
FFB. Malaysian estates contributed a pre-tax profit of $3.5 million, 94% higher than 2010.
Development
In 2011, the Group planted another 4,800 hectares mainly in Kalimantan compared to 7,580 hectares in 2010.
New plantings remain behind planned schedule due to adverse dry weather conditions in South Sumatra and
Central Kalimantan, alongside with certain hold-up in issuing of necessary permits due to the recently introduced
timber cutting licenses (“IPK”). In anticipation of the March 2012 Indonesian Sustainable Palm Oil (“ISPO”)
standards becoming mandatory, the Group has reviewed our planting programme, which at present can be
prudently estimated to increase our planted area by 9,000 hectares over the next two years.
12 Annual Report 2011 | 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 2011.
Principal activity
The Company is incorporated in the United Kingdom under the Companies Act 2006. 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
2011, the core activities of the Group are 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 26 to the consolidated financial statements.
Accountability and audit
The Group is committed to ensure that the quality of its financial reporting is of a high standard. The Board
continually reviews its internal controls and risk management systems to ensure the Group’s affairs and financial
reporting are complied with the applicable accounting standards as well as good corporate governance. The main
features of the Group’s internal controls and risk management systems are further disclosed on page 22.
Results and dividends
The audited financial statements for the year ended 31 December 2011 are set out on pages 29 to 58. The Group
profit for the year on ordinary activities before taxation was $108,776,000 (2010: $85,038,000) and the profit
attributable to ordinary shareholders was $64,964,000 (2010: $51,329,000). No interim dividend was paid. The
Directors recommend a final dividend of 6.0cts (2010: 5.0cts) to be paid to shareholders on the register on 8 June
2012. Shareholders may elect to receive their dividend in sterling as described on page 18.
Business Review
The review of the Group’s business is set out on page 11 and 12. The Group’s key performance indicators, being
revenue, profit before tax, profit after tax, production volume, extraction rates and yield are set out in “Financial
record” on page 8 and in the business review on page 11 and 12.
The Group’s objectives are to provide attractive returns to investors in the long term from operation as well as
expansion of the Group’s business, to foster economic progress in the localities of the Group’s activities and to
develop the Group’s operations in accordance with the best corporate social responsibility and sustainable
standards.
Principal risks and uncertainties
The Group’s business involves risks and uncertainties of which the Directors currently consider the following to be
material. There are or may be other risks and uncertainties faced by the Group that the Directors currently deem
immaterial, or of which they are unaware, that may have a material adverse impact on the Group. The Board
reviews risk management on an annual basis.
Country
The Group’s operations are located substantially in Indonesia and therefore significantly rely on economic and
political stability in Indonesia. The country has recently benefited from a period of relative political stability, steady
economic growth and stable exchange-rates without exchange control. Whilst the risks should never be
underestimated, the Board perceives that the Group will be able to continue to extract profits from its subsidiaries
in Indonesia for the foreseeable future.
The Group holds its land under 25 or 35 year renewable leases (HGU’s) which the Directors believe will be
renewed when due by complying with existing law and regulations. Any changes in law and regulations relating to
land tenure could have negative impact on the Group’s activities.
13 Annual Report 2011 | Anglo-Eastern Plantations Plc
Directors’ Report
Exchange Rates
Crude Palm Oil is a US-Dollar–denominated commodity and a significant proportion of revenue costs in Indonesia
(such as fertiliser and fuel) and development costs (such as heavy machinery) are imported and are US-Dollar
related. Adverse movements of Rupiah against US Dollar can have a negative effect on the operating costs. The
Board has taken the view that these risks are inherent in the business and feels that adopting hedging mechanisms
to counter the negative effects of exchange controls are both difficult to achieve and would not be cost effective.
Equally, increases in input costs are likely to reduce profit margins.
Weather and natural disasters
Oil palms rely on regular sunshine and rainfall but these weather patterns can vary and extremes such as unusual
dry periods or, conversely, heavy rainfall leading to flooding in some locations do occur. Dry periods, in particular,
will affect yields in the short and medium terms but any deficits so caused tend to be made up at a later date. High
levels of rainfall can disrupt estate operations and result in harvesting delays with loss of oil palm fruits or
deterioration in fruit quality. Where appropriate, bunding is built around flood prone areas and drainage constructed
and adapted either to evacuate surplus water or to maintain water levels in areas quick to dry out. Where practical,
natural disasters are covered by insurance policy.
Cultivation risks
As in any plantations business, there are risks that crops from the Group’s estate operations may be affected by
pests and diseases. Agricultural best practice and husbandry can to some extent mitigate these risks but they
cannot be entirely eliminated.
Other operational factors
The Group’s plantation productivity is dependent upon necessary inputs, including, in particular fertiliser and fuel.
Whilst the Directors have no reason to anticipate shortages of such inputs, Group’s operations could be materially
disrupted should such shortages occur over an extended period.
The Group has bulk storage facilities located within its mills and are adequate to meet the Group’s requirements for
CPO storage. Nevertheless, delays in collection of CPO sold could result in CPO production exceeding the
available CPO storage capacity. This would likely force a temporary halt in FFB processing resulting in loss of crop.
The Group maintains insurance to cover those risks against which the Directors consider economical to insure.
Certain risks (including the risk of crop loss through fire, earthquake and other perils potentially affecting the
planted areas on the Group’s estates), for which insurance cover is either not available or would in the opinion of
the Directors be disproportionately expensive, are not insured. These risks are mitigated by the geographical
spread of the plantations and to the extent feasible by management practices but an occurrence of an adverse
uninsured event could result in the Group sustaining material losses.
Produce prices
The profitability and cash flow of the plantation operations depend upon world prices of CPO and upon the Group’s
ability to sell CPO at price levels comparable with world prices.
CPO is a primary commodity and is affected by the world economy, including levels of inflation. This may lead to
significant price swings although, the Directors believe that such swings should be moderated by surging demand
in fast-developing economies like China and India. In addition CPO is sold at a significant discount over its main
competitor soya oil.
The Indonesian authorities have in the past, in the times of very high CPO prices, imposed very high duties on
export sales of such oil. The Directors believe that such measures materially reduce the profitability of oil palm
cultivation. In August 2011, the Indonesian government halved its refined palm oil export taxes from 25% to 13% to
encourage domestic downstream processing while keeping the CPO taxes virtually unchanged at 22.5%.
14 Annual Report 2011 | Anglo-Eastern Plantations Plc
Directors’ Report
Expansion
The Group is planning to plant more oil palm. In areas where the Group holds the land rights (or izin lokasi), the
settlers and land owners are compensated before land is cleared for planting. The Group compensates the settlers
and land owners in a transparent and fair way. The negotiation for compensation can, however, involve a
considerable number of local individuals with differing views and this can cause difficulties in reaching agreement
with all affected parties. Such difficulties have in the past caused delays to the planting programme. It is rather
difficult to foretell with reliable accuracy what area will be available for planting out of the total area covered by land
rights. Much depends upon the success of negotiations with settlers and land owners and satisfactory resolution of
land title issue. The Group has to-date been successful in managing such periodic delays and disruptions so that
they have not, in overall terms, materially disrupted the Group’s planting programme or operations.
The Directors believe that when the land become available for planting, the development programme can be
funded from available Group cash resources and future operational cash flows, supplemented with external debt
funding. Should, however, land or cash availability fall short of expectations and the Group is unable to secure
alternative land or funding, the Group’s continued growth may be delayed or curtailed.
Environmental, social and governance practices
The Group’s management and Directors take a serious view of their environmental and social responsibilities. The
ISPO which fundamentally aligns with RSPO principles became the mandatory standard for all Indonesian planters
in March 2012.The key RSPO principles are set out on page 23 in the “Statement on Corporate Governance”.
The estates in North Sumatra are long established. Management follows industry best-practice guidelines and
abides by Indonesian law with regard to such matters as application of fertilisers, health and safety. The Group has
started to use empty fruit bunches for mulching in the estates which is a form of fertiliser and reduces the
consumption of inorganic fertilisers. The liquid effluent from the mills after treatment is applied to trenches in the
estates as a form of fertiliser.
The Group has had an environmental-impact assessment undertaken by independent consultant for its new project
in Kalimantan.
The Group recognises that its plantations hire large numbers of people and have significant economic importance
for local communities in the areas of the Group’s operations. This imposes social and governance obligations
which bring with them risks that any failure by the Group to meet the standards expected of it may result in
reputational and financial damage. The Group seeks to mitigate such risks by establishing standard procedures to
ensure that it meets its obligations, monitoring performance against those standards and investigating thoroughly
and taking action to prevent recurrence in respect of any failures identified. The Group undertakes periodic reviews
of its management performance in relation to various matters and this review pays particular attention to the
manner in which the Group has discharged its corporate social responsibilities including setting up of plasma
schemes for its new plantations.
Local relations
Any material breakdown in relations between the Group and the host population in the vicinity of the operations
could disrupt the Group’s operations. The Group therefore endeavours to mitigate this risk by liaising regularly with
representatives of surrounding villages and by seeking to improve local living standards through mutually beneficial
economic and social interaction with the local villages. In particular, the Group, when possible, gives priority to
applications for employment from members of the local population and supports specific initiatives to encourage
local farmers and tradesmen to act as suppliers to the Group, its employees and their dependents. The Group
spends considerable sums of money constructing new roads and bridges and maintaining existing roads used by
villagers and the Group for the transportation of FFB. The Group also provides technical and management
expertise to villagers to develop oil palm and rubber plots or Kebun Kas Desa (village’s scheme) surrounding the
15 Annual Report 2011 | Anglo-Eastern Plantations Plc
Directors’ Report
Local relations - continued
operating estates.The returns from these plots are used to improve villages community welfare. In total, 19 Kas
Desa plots involving 275 hectares had been developed.
Financial risk
Information on financial instruments and other risks is set out in note 24 to the consolidated financial statements.
Biological assets, property, plant and equipment
Information relating to changes in fixed assets is given in note 10 to the consolidated financial statements.
Directors
A full list of Directors appears on page 20. On 31 January 2011, Mr. Chan Teik Huat retired as Non-Executive
Chairman and Director of the Company. Madam Lim Siew Kim was appointed as Non-Executive Chairman upon
retirement of Mr. Chan. Mr. Nik Din’s appointment as Non-Executive Director expired on 31 March 2011 and was
extended for a further two years to 31 March 2013. Drs. Kanaka’s appointment as Non-Executive Director expired
on 31 July 2011 and was extended for a further two years to 31 July 2013. Madam Lim and Mr. Nik Din will be
submitting themselves for re-appointment by shareholders.
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
Madam Lim Siew Kim
Dato' John Lim Ewe Chuan
Nik Din Bin Nik Sulaiman
Drs. Kanaka Puradiredja
Chan Teik Huat (retired on 31 January 2011)
2011
Ordinary shares
20,521,314
-
-
-
-
2010
Ordinary shares
20,521,314
-
-
-
-
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 2011 and the date of this report. Other than Madam Lim, none of the Directors had any interest in the
securities of the Company between the date of their appointments and the date of this report.
Other than as set out in note 6 to the consolidated financial statements, no Director had a material interest in any
contract of the Company subsisting during, or at the end of the financial year.
16 Annual Report 2011 | Anglo-Eastern Plantations Plc
Directors’ Report
Substantial share interests
As at 31 March 2012, 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
KBC Securities
S N Roditi
Number
20,247,814
6,990,000
1,389,528
1,366,900
Percentage of
voting rights held
51.21%
17.68%
3.51%
3.46%
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 accords 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 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 LLP have expressed their willingness to continue in office and a resolution to re-appoint them will be
proposed as Resolution 6 at the forthcoming annual general meeting.
Authority to allot shares
At the annual general meeting held on 22 June 2011 shareholders authorised the Board under the provisions of
section 551 of the Companies Act 2006 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 7 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 sections 570 and 573 of the Companies Act 2006 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 empower the Board 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 authority will be expiring at the forthcoming annual general meeting or on 30 June
2012, whichever is earlier. Renewal of this authority on similar terms is being sought under Resolution 7 at the
forthcoming annual general meeting.
Scrip dividends
Resolution 8 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 2011 final dividend.
17 Annual Report 2011 | Anglo-Eastern Plantations Plc
Directors’ Report
Acquisition of the Company’s own shares and authority to purchase own shares
At 30 April 2012, the Directors had remaining authority under the shareholders’ resolution of 22 June 2011, to
make purchases of 3,997,627 of the Company’s ordinary shares. This authority expires on 30 June 2012. 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 9 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.
Amendment of Company’s Articles of Association
A number of significant changes to the Companies Act 2006 were implemented after 27 March 2009. The
Company is proposing to adopt these changes in the coming annual general meeting. Resolution 10 is to adopt the
Act which abolishes the requirement for a company to have an authorised share capital. Resolution 11 is to amend
the Articles by virtue of Section 28 Companies Act 2006.
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. The Company had
no trade creditors at 31 December 2011 (2010: Nil).
Liability insurance for Company officers
As permitted by the Companies Act the Company has maintained insurance cover for the Directors against
liabilities in relation to the Company.
By order of the Board
Dato’ John Lim Ewe Chuan
Executive Director, Corporate Finance and Corporate Affairs 30 April 2012
18 Annual Report 2011 | Anglo-Eastern Plantations Plc
Directors’ Responsibilities
The Directors are responsible for preparing the annual report and the financial statements in accordance with
applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the
Directors are required to prepare the group financial statements in accordance with International Financial
Reporting Standards (“IFRSs”) as adopted by the European Union and have elected to prepare the Company
financial statements in accordance with UK Generally Accepted Accounting Practice (UK GAAP). Under company
law the directors must not approve the financial statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Group and Company and of the profit or loss for the Group for that period.
In preparing these financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
state whether they have been prepared in accordance with IFRSs as adopted by the European Union, subject
to any material departures disclosed and explained in the financial statements;
prepare a Director’s report and Director’s remuneration report which comply with the requirements of the
Companies Act 2006.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the
Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company
and enable them to ensure that the financial statements comply with the Companies Act 2006 and, as regards the
group financial statements, Article 4 of the IAS Regulation. They are also responsible for safeguarding the assets
of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other
irregularities.
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.
Website publication
The Directors are responsible for ensuring the annual report and the financial statements are made available on a
website. Financial statements are published on the Company’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 Company's website is the responsibility of the Directors.
The Directors' responsibility also extends to the ongoing integrity of the financial statements contained therein.
Directors’ responsibilities pursuant to DTR4
The Directors confirm to the best of their knowledge:
The group financial statements have been prepared in accordance with IFRSs as adopted by the European
Union and Article 4 of the IAS Regulation and give a true and fair view of the assets, liabilities, financial position
and profit and loss of the Group.
The annual report includes a fair review of the development and performance of the business and the financial
position of the Group and the parent Company, together with a description or the principal risks and
uncertainties that they face.
19 Annual Report 2011 | Anglo-Eastern Plantations Plc
Directors
Madam Lim Siew Kim (Non-Executive Chairman, aged 63) – Non-Executive Director since 29 November 1993
and appointed as Non-Executive Chairman on 31 January 2011.
Dato’ John Lim Ewe Chuan (Executive Director, Corporate Finance and Corporate Affairs, member of Nomination
and Corporate Governance Committee, Audit and Remuneration Committee, aged 62) – Appointed 28 April 2008.
On 1 September 2010 appointed as Executive Director. Prior to 1 September 2010, Dato’ John Lim was the Senior
Independent Non-Executive Director.
Chartered Certified Accountant; partner with UHY Hacker Young LLP, London, since 1998; previously he had a
professional accounting career in Singapore and the UK.
Nik Din Bin Nik Sulaiman (Senior Independent Non-Executive Director, Chairman of Audit Committee and
Chairman of Nomination & Corporate Governance Committee and member of Remuneration Committee, aged 64)
– appointed 1 April 2009.
Non-Executive Director of MTD Capital Berhad and MTD ACPI Engineering Berhad, of which the latter is listed on
Bursa Malaysia.
Drs. Kanaka Puradiredja (Independent Non-Executive Director, Chairman of Remuneration Committee, member
of Audit Committee and member of Nomination & Corporate Governance Committee, age 68) – appointed 1
August 2009.
Former Managing Partner and Chairman of KPMG Indonesia. Founded Kanaka Puradiredja Suhartono, an
Indonesian based accounting firm in 2000 and was a Senior Partner until October 2007. He was the former
Chairman of the Institute of Audit Committee. Currently, he holds the positions of Chairman of the Honorary Board
of Indonesian Institute of Accountants and is an Independent Commissioner of PT Bakrieland Development Tbk
and PT Dharma Henwa Tbk, both listed in Indonesia.
20 Annual Report 2011 | Anglo-Eastern Plantations Plc
Statement on Corporate Governance
During 2011 the Company has complied with the majority of the requirements of the UK Corporate Governance
Code (‘the Code’). Where provisions of the Code were not met during 2011, particular comment is made in the
statements below and in the Directors’ remuneration report on pages 24 to 26.
The Board
As at 30 April 2012, the Board comprises one Executive and three Non-Executive Directors, two of whom are
Independent. Excluding Madam Lim and Dato’ John Lim, the remaining two Non-Executive Directors are
considered by the Board to be Independent. Both Independent Non-Executive Directors have a wide range of
business interests beyond their position with the Company and the rest of the Board agree unanimously that they
have shown themselves to be fully independent. Dato’ John Lim was appointed as Executive Director, Corporate
Finance and Corporate Affairs on 1 September 2010. Prior to 1 September 2010, Dato’ John Lim was the Senior
Independent Non-Executive Director. Madam Lim Siew Kim was appointed as Non-Executive Chairman upon
retirement of Mr. Chan Teik Huat. Neither external search consultancy nor open advertising was used for such
appointment. The Nomination and Corporate Governance Committee is of the view that Madam Lim, who owns
52% of the Company’s shares and was the Chairman of the Company from 1993 to 1998 is an appropriate
candidate for the position. The other members of the Board are satisfied that through the specific powers reserved
for the Board, and given the presence of the 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 & Corporate Governance Committees have written terms of
reference which are available for inspection upon request.
Unless warranted by unusual matters, the Board normally meets two to three times each year. Otherwise all other
matters are dealt with by written resolution and telephone conference. During 2011, there were two meetings,
attended by all the Directors.
All the Independent Non-Executive Directors met on their own during 2011. The Chairman met all the Non-
Executive Directors, in the absence of the Executive Director, twice in 2011.
Non-Executive Directors are appointed for two year terms renewable on recommendation of the Board. To
maintain the vitality of the Board, the Directors specify fixed terms of office for Non-Executives. However, the Board
will review the position of each Director for the normal three yearly re-election under the Articles.
In 2011 the Board conducted a review of its performance by discussion. No major issues arose from this review.
Nomination Committee
The Nomination and Corporate Governance Committee currently comprises Mr. Nik Din Bin Nik Sulaiman
(Chairman), Dato’ John Lim and Drs. Kanaka Puradiredja. The committee had four meetings during 2011, attended
by all members. Mr. Chan Teik Huat was appointed as Chairman on 1 September 2010 and retired on 31 January
2011. Mr. Nik Din Nik Sulaiman chaired the Nomination and Corporate Governance Committee after Mr. Chan Teik
Huat retired. Dato’ John Lim was appointed as member on 8 April 2011.
Relations with shareholders
Company executives and the Senior Independent Non-Executive Director attempt to 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. A member of the Audit, Nomination and Remuneration Committees will be available at the 2012
annual general meeting.
21 Annual Report 2011 | Anglo-Eastern Plantations Plc
Statement on Corporate Governance
Accountability and audit
The responsibilities of the Directors as regards the financial statements are set out on page 19. A statement of
going concern is also on page 19.
The Audit Committee comprises Mr. Nik Din Bin Nik Sulaiman (Chairman), Dato’ John Lim and Drs. Kanaka
Puradiredja. Mr. Nik Din Bin Nik Sulaiman is a Fellow member of the Association of Chartered Certified
Accountants (FCCA) and a member of the Malaysian Institute of Accountants (MIA), CA(M). He has extensive
experience in accounting, auditing and finance. The committee met prior to the completion of the 2011 accounts
and five times during 2011.
The Audit Committee has recommended to the Board of the Company that it should seek the approval of the
Company’s shareholders for the reappointment of the Company’s current auditors. That recommendation reflected
an assessment of the qualifications, expertise, resources and independence of the auditors based upon reports
produced by the auditors, the committee’s own dealings with the auditors and feedback from management.
Internal control
The Company has followed the 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.
The Board receives 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 internal auditors who visit operating sites in Indonesia and Malaysia regularly and provide wide
ranging reports.
22 Annual Report 2011 | Anglo-Eastern Plantations Plc
Statement on Corporate Governance
Environmental and corporate responsibility
In 2004 a group of growers, processors, retailers and wildlife and conservation groups founded the “Roundtable 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
• Commitment to continuous improvement in key areas of activity.
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 replanting
• 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.
23 Annual Report 2011 | 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.
Remuneration Committee
The Remuneration Committee comprises of Drs. Kanaka Puradiredja (Chairman), Mr. Nik Din Bin Nik Sulaiman
and Dato’ John Lim. The Committee had three meetings during 2011, attended by all members. Drs. Kanaka was
appointed as Chairman on 31 August 2010 after Dato’ John Lim resigned as Chairman. Mr. Nik Din Nik Sulaiman
was appointed to the Committee on 1 September 2010. Mr. Chan Teik Huat sat in the Committee from 1
September 2010 until his retirement on 31 January 2011. Dato John Lim was appointed as a member on 8 April
2011.
Policy
The Remuneration Committee makes recommendations on senior management pay and conditions, after
consultation with the Chairman, and recommends to the Board the terms of Executive Directors.
Non-Executive Directors’ remuneration is considered by the Board as a whole.
When determining Executive Director’s remuneration, the committee reviews the pay policy and levels for
executives below the board, as well as pay and conditions of employees throughout the Group. Other factors
considered are individual performance, market conditions, the Company’s performance and the need to maintain
an economic operation.
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 benefit other than a fee.
Bonus
The Group operates a bonus scheme for senior executives and managers of operating units, which is determined
by weighted performance criteria.
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 vest 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 the holder remains an employee of the Group throughout the period. There are no other
performance criteria for exercise of options granted so far.
Pensions
The operating units in Indonesia participate in mandatory pension schemes for their local executives and
management. There is no Company-sponsored scheme for senior executives outside of Indonesia.
Service contracts
All Directors, Executive and Non-Executive, have formal appointment letters. Those of the Non-Executives are all
for two year terms with notice periods of one month. Notice periods for all other senior management are generally
two months.
24 Annual Report 2011 | Anglo-Eastern Plantations Plc
Directors’ Remuneration Report
Performance graph
The following graph shows the Company’s share price performance compared to FTSE 100 index for the period of
2007 to 2011 (last 5 years) to indicate the volatility and trend of the market generally. Our share price performance
consistently outperformed the FTSE 100 index throughout these periods. In determining senior management
compensation, the Remuneration Committee is influenced by the operating performance of the Company and not
directly by the share price.
AEP Share Price Performance Vs FTSE 100 (5 yrs Chart)
______ Anglo-Eastern Plantations ________FTSE 100
25 Annual Report 2011 | Anglo-Eastern Plantations Plc
Directors’ Remuneration Report
Directors’ remuneration
The remuneration of all Directors who served during the year was:
Name of Director
Executive:
Dato'John Lim Ewe Chuan (1)
Donald H Low (2)
Non-Executive
Lim Siew Kim (3)
Nik Din Bin Nik Sulaiman (4)
Drs. Kanaka Puradiredja (5)
Chan Teik Huat (6)
Total
Fees
$000
83
-
57
23
23
7
193
Executive
Salary
Bonus
and
allowance
Benefits in
kind
$000
$000
$000
Total
2011
$000
Total
2010
$000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1
1
83
-
57
23
23
8
52
62
16
19
19
177
194
345
Notes:
(1) Appointed as Executive Director on 1 September 2010. Previously was the Senior Independent Non-Executive Director.
(2) Appointed on 26 August 2008, resigned on 25 May 2010
(3) Appointed on 29 November 1993 and appointed as Non-Executive Chairman on 31 January 2011
(4) Appointed on 1 April 2009
(5) Appointed on 1 August 2009
(6) Appointed to Non-Executive Chairman on 10 February 2010 and retired on 31 January 2011
On behalf of the Board
Drs. Kanaka Puradiredja
Chairman, Remuneration Committee 30 April 2012
26 Annual Report 2011 | Anglo-Eastern Plantations Plc
Auditors’ Report
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ANGLO-EASTERN PLANTATIONS PLC
We have audited the financial statements of Anglo-Eastern Plantations Plc for the year ended 31 December 2011
which comprise the consolidated income statement, the consolidated statement of comprehensive income, the
consolidated statement of financial position and Company balance sheet, the consolidated statement of changes in
equity, the consolidated statement of cash flow and the related notes. The financial reporting framework that has
been applied in the preparation of the Group financial statements is applicable law and International Financial
Reporting Standards (IFRSs) as adopted by the European Union. The financial reporting framework that has been
applied in preparation of the Company financial statements is applicable law and United Kingdom Accounting
Standards (United Kingdom Generally Accepted Accounting Practice).
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so that we might state to the Company’s members
those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than the Company and the
Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of Directors and auditors
As explained more fully in the statement of directors’ responsibilities, the directors are responsible for the
preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility
is to audit and express an opinion on the financial statements in accordance with applicable law and International
Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s
(APB’s) Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is provided on the APB’s website at
www.frc.org.uk/apb/scope/private.cfm.
Opinion on financial statements
In our opinion:
the financial statements give a true and fair view of the state of the group’s and the parent company’s affairs
as at 31 December 2011 and of the group’s profit for the year then ended;
the group financial statements have been properly prepared in accordance with IFRSs as adopted by the
European Union;
the parent company financial statements have been properly prepared in accordance with United Kingdom
Generally Accepted Accounting Practice; and
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006;
and, as regards the group financial statements, Article 4 of the IAS Regulation.
Opinion on other matters prescribed by the Companies Act 2006
In our opinion:
the part of the directors’ remuneration report to be audited has been properly prepared in accordance with the
Companies Act 2006; and
the information given in the directors’ report for the financial year for which the financial statements are
prepared is consistent with the financial statements.
27 Annual Report 2011 | Anglo-Eastern Plantations Plc
Auditors’ Report (Continued)
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ANGLO-EASTERN PLANTATIONS PLC
(continued)
Matters on which we are required to report by exception
We have nothing to report in respect of the following:
Under the Companies Act 2006 we are required to report to you if, in our opinion:
adequate accounting records have not been kept by the parent company, or returns adequate for our audit
have not been received from branches not visited by us; or
the parent company financial statements and the part of the directors’ remuneration report to be audited are
not in agreement with the accounting records and returns; or
certain disclosures of directors’ remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Under the Listing Rules we are required to review:
the directors’ statement, set out on page 19, in relation to going concern;
the part of the corporate governance statement relating to the company’s compliance with the nine provisions
of the UK Corporate Governance Code specified for our review; and
certain elements of the report to shareholders by the Board on directors’ remuneration.
David Eagle (senior statutory auditor)
For and on behalf of BDO LLP, statutory auditor
55 Baker Street, London
United Kingdom
30 April 2012
28 Annual Report 2011 | Anglo-Eastern Plantations Plc
Consolidated Income Statement
For the year ended 31 December 2011
Continuing operations
Notes
Result
before
BA
adjustment
$000
2011
BA
adjustment
$000
Result
before
BA
2010
BA
Total
$000
adjustment
$000
adjustment
$000
Total
$000
Revenue
Cost of sales
Gross profit
2
259,037
-
259,037
187,233
-
187,233
(157,644)
(1,153)
(158,797)
(118,641)
(1,377)
(120,018)
101,393
(1,153)
100,240
68,592
(1,377)
67,215
Biological asset revaluation movement
-
10,511
10,511
-
19,806
19,806
Administration expenses
Operating profit
Exchange profits
Finance income
Finance expense
Profit before tax
Tax expense
Profit for the year
Attributable to:
- Owners of the parent
- Non-controlling interests
Earnings per share for profit
attributable to the owners of the
parent during the year
- basic
- diluted
3
3
4
7
8
8
(5,372)
96,021
213
3,891
(707)
-
(5,372)
(3,655)
-
(3,655)
9,358
105,379
64,937
18,429
83,366
-
-
-
213
657
3,891
2,220
(707)
(1,205)
-
-
-
657
2,220
(1,205)
99,418
9,358
108,776
66,609
18,429
85,038
(26,809)
(2,339)
(29,148)
(17,984)
(4,589)
(22,573)
72,609
7,019
79,628
48,625
13,840
62,465
59,201
13,408
72,609
5,763
1,256
7,019
64,964
39,375
11,954
14,664
9,250
1,886
51,329
11,136
79,628
48,625
13,840
62,465
164.30cts
163.72cts
129.82cts
129.27cts
Earnings per share before BA adjustment are shown in note 8.
The accompanying notes are an integral part of this consolidated income statement.
29 Annual Report 2011 | Anglo-Eastern Plantations Plc
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2011
Profit for the year
Other comprehensive income:
Unrealised (loss)/surplus on revaluation of the estates
Profit/(loss) on exchange translation of foreign operations
Deferred tax on revaluation
Other comprehensive income for the year
Total comprehensive income for the year
Attributable to:
- Owners of the parent
- Non-controlling interests
2011
$000
79,628
(76,649)
(4,471)
27,234
(53,886)
25,742
23,442
2,300
25,742
2010
$000
62,465
121,908
14,193
(26,482)
109,619
172,084
144,823
27,261
172,084
The accompanying notes are an integral part of this consolidated statement of comprehensive income and expense.
30 Annual Report 2011 | Anglo-Eastern Plantations Plc
Consolidated Statement of Financial Position
As at 31 December 2011
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
Loans and borrowings
Trade and other payables
Tax liabilities
Net current assets
Non- current liabilities
Loans and borrowings
Deferred tax liabilities
Retirement benefits - net liabilities
Net assets
Issued capital and reserves attributable to owners of the parent
Share capital
Treasury shares
Share premium
Capital redemption reserve
Revaluation and exchange reserves
Retained earnings
Non-controlling interests
Total equity
Note
10
10
11
12
13
14
15
14
16
17
18
18
2011
$000
77,066
340,786
1,551
419,403
9,439
5,098
4,877
90,482
109,896
(6,465)
(20,878)
(11,019)
(38,362)
71,534
(58)
(37,299)
(1,593)
451,987
15,504
(1,507)
23,935
1,087
44,567
292,092
375,678
76,309
451,987
2010
$000
68,593
376,173
1,494
446,260
6,820
7,342
3,356
70,871
88,389
(15,650)
(15,170)
(5,130)
(35,950)
52,439
(6,438)
(61,293)
(2,305)
428,663
15,504
(1,507)
23,935
1,087
86,089
229,060
354,168
74,495
428,663
The financial statements were approved by the Board of Directors and authorised for issue on 30 April 2012 and were signed on its behalf by
Dato’ John Lim Ewe Chuan
The accompanying notes are an integral part of this consolidated statement of financial position.
31 Annual Report 2011 | Anglo-Eastern Plantations Plc
Consolidated Statement of Changes in Equity
For the year ended 31 December 2011
Balance as at 1 January 2010
Items of other comprehensive income
-Unrealised gain on revaluation of estates
-Deferred tax on revaluation of assets
-Gain on exchange translation
Total other comprehensive income
Profit for year
Total comprehensive income and expense for the year
Acquisition of subsidiary
Share options exercised / Share based payment expense
Dividends paid
Share
capital
$000
Treasury
shares
$000
Share
premium
$000
Capital
redemption
reserve
$000
Revaluation
reserve
$000
Foreign
exchange
reserve
$000
Retained
earnings
$000
Non-
controlling
interests
$000
Total
$000
Total
equity
$000
15,504
(1,744)
23,935
1,087
67,179
(74,584)
179,594
210,971
46,989
257,960
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
237
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
105,296
(23,079)
-
82,217
-
-
-
11,277
11,277
-
82,217
11,277
-
-
-
-
-
-
-
-
-
-
51,329
51,329
-
110
105,296
16,612
121,908
(23,079)
(3,403)
(26,482)
11,277
93,494
51,329
2,916
14,193
16,125
109,619
11,136
62,465
144,823
27,261
172,084
-
347
245
-
-
245
347
(1,973)
(1,973)
(1,973)
Balance at 31 December 2010
15,504
(1,507)
23,935
1,087
149,396
(63,307)
229,060
354,168
74,495
428,663
Items of other comprehensive income
-Unrealised loss on revaluation of estates
-Deferred tax on revaluation of assets
-Loss on exchange translation
Total other comprehensive income
Profit for year
Total comprehensive income and expense for the year
Issue of subsidiary shares to minority shareholder
Share based payment expense
Dividends paid
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(59,991)
22,055
-
(37,936)
-
-
-
(3,586)
(3,586)
-
(37,936)
(3,586)
-
-
-
-
-
-
-
-
-
-
64,964
64,964
-
45
(59,991)
(16,658)
(76,649)
22,055
(3,586)
5,179
27,234
(885)
(4,471)
(41,522)
(12,364)
(53,886)
64,964
23,442
-
45
14,664
79,628
2,300
2,054
-
25,742
2,054
45
(1,977)
(1,977)
(2,540)
(4,517)
Balance at 31 December 2011
15,504
(1,507)
23,935
1,087
111,460
(66,893)
292,092
375,678
76,309
451,987
32 Annual Report 2011 | Anglo-Eastern Plantations Plc
Consolidated Statement of Cash Flows
For the year ended 31 December 2011
Cash flows from operating activities
Profit before tax
Adjustments for:
BA adjustment
(Profit) / Loss on disposal of tangible fixed assets
Depreciation
Retirement benefit provisions
Net finance income
Tangible fixed assets written off
Unrealised gain in foreign exchange
Share based payments expense
Operating cash flow before changes in working capital
Increase in inventories
Increase in trade and other receivables
Increase in trade and other payables
Cash inflow from operations
Interest paid
Retirement benefit paid
Overseas tax paid
Net cash flow from operations
Investing activities
Acquisition of subsidiary
Property, plant and equipment
- purchase
- sale
Interest received
Net cash used in investing activities
2011
$000
2010
$000
108,776
85,038
(10,511)
(18,429)
68
8,060
536
(3,184)
-
(213)
45
103,577
(2,665)
(1,578)
4,818
104,152
(759)
(1,289)
(17,917)
84,187
(50)
8,953
334
(1,015)
12
(755)
112
74,200
(2,937)
(591)
5,939
76,611
(1,254)
(63)
(18,959)
56,335
-
(4,645)
(50,086)
(43,540)
237
3,891
222
2,220
(45,958)
(45,743)
33 Annual Report 2011 | Anglo-Eastern Plantations Plc
Consolidated Statement of Cash Flows
For the year ended 31 December 2011
Financing activities
Dividends paid by Company
Share options exercised
Issue of subsidiary shares to minority shareholder
Repayment of existing long term loans
Dividends paid to minority shareholders
Net cash used in financing activities
Increase in cash and cash equivalents
Cash and cash equivalents
At beginning of year
Foreign exchange
At end of year
Comprising:
Cash at end of year
2011
$000
(1,977)
-
2,054
(15,555)
(2,540)
(18,018)
20,211
70,871
(600)
90,482
2010
$000
(1,973)
235
-
(4,925)
-
(6,663)
3,929
63,761
3,181
70,871
90,482
70,871
The accompanying notes are an integral part of this consolidated statement of cash flows.
34 Annual Report 2011 | Anglo-Eastern Plantations Plc
Notes to the Consolidated Financial Statements
1 Accounting policies
Anglo-Eastern Plantations Plc (“AEP”) is a company incorporated in the United Kingdom under the Companies Act 2006 and is listed
on the London Stock Exchange. The registered office of AEP is located at Quadrant House, 6th Floor, 4 Thomas More Square, London
E1W 1YW, United Kingdom. The principal activity of the Group is plantation agriculture.
The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies
have been consistently applied to all years presented, unless otherwise stated.
Basis of preparation
The financial statements have been prepared in accordance with International Financial Reporting Standards and its interpretations
(IFRS and IFRIC interpretations) issued by the International Accounting Standards Board (“IASB”) as adopted by the EU and with
those parts of the Companies Act 2006 applicable to companies preparing their accounts under IFRS.
Changes in accounting standards
a) The following new standards, amendments and interpretations are also effective for the first time in these financial statements but
none have had a material effect on the Group.
•
•
•
•
•
•
•
•
•
•
•
IFRS 1
IFRS 2
IFRS 7
IAS 24
IAS 32
IAS 39
IFRIC 14
IFRIC 17
IFRIC 18
IFRIC 19
Improvements to IFRSs (May 2010)
Amendments - First-time Adoption of International Financial Standards
Amendments - Group Cash-settled Share-based Payment Transactions
Amendments - Disclosures - Transfer of Financial Assets
Amendments - Related Party Disclosures
Amendments - Classification of Right Issues
Amendments - Financial Instruments: Recognition and Measurement: Eligible Hedged Items
Amendments - Prepayments of Minimum Funding Requirement
Interpretations - Distributions of Non-cash Assets to Owners
Interpretations - Transfer of Assets from Customers
Interpretations - Extinguishing Financial Liabilities with Equity Instruments
None of the new standards, interpretations and amendments effective for the first time from 1 January 2011, have had a material effect
on the financial statements.
b) New standards, interpretations and amendments not yet effective.
The following new standards, interpretations and amendments, which have not been applied in these financial statements, will or
may have an effect on the Group's future financial statements:
•
•
•
•
IFRS 9
IFRS 10
IFRS 11
IFRS 12
Financial Instruments (effective for accounting periods beginning on or after 1 January 2013)
Consolidated Financial Statements (effective for accounting periods beginning on or after 1 January 2013)
Joint Arrangements (effective for accounting periods beginning on or after 1 January 2013)
Disclosures of Interest in Other Entities (effective for accounting periods beginning on or after 1 January
2013)
Fair Value Measurement (effective for accounting periods beginning on or after 1 January 2013)
Separate Financial Statements (effective for accounting periods beginning on or after 1 January 2013)
Investments in Associates and Joint Ventures (effective for accounting periods beginning on or after 1
January 2013)
Interpretations – Stripping Costs in the Production Phase of a Surface Mine (effective for accounting periods
beginning on or after 1 January 2013)
Amendments - Severe Hyperinflation and Removal of Fixed Dates for First Time Adopters (effective for
accounting periods beginning on or after 1 July 2011)
Amendments – Offsetting Financial Assets and Financial Liabilities (effective for accounting periods
beginning on or after 1 January 2013)
Amendments - Presentation of Items of Other Comprehensive Income (effective for accounting periods
beginning on or after 1 July 2012)
Amendments - Employee Benefits (effective for accounting periods beginning on or after 1 January 2013)
Amendments – Offsetting Financial Assets and Financial Liabilities (effective for accounting periods
beginning on or after 1 January 2014)
Amendments - Deferred tax : Recovery of Underlying Assets (effective for accounting periods beginning on
or after 1 January 2012)
•
•
•
•
•
•
•
•
•
•
IFRS 13
IAS 27
IAS 28
IFRIC 20
IFRS 1
IFRS 7
IAS 1
IAS 19
IAS 32
IAS 12
Other than IAS 12, which will impact the level of disclosure, none of the other new standards, interpretations and amendments, which
are effective for periods beginning after 1 January 2012 and which have not been adopted early, are expected to have a material effect
on the Group's future financial statements.
35 Annual Report 2011 | Anglo-Eastern Plantations Plc
Notes to the Consolidated Financial Statements
1 Accounting policies - continued
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
statement of financial position, the acquiree’s identifiable assets, liabilities and contingent liabilities are initially recognised at their fair
values at the acquisition date. Acquisitions of entities that comprise principally land with no active plantation business do not represent
business combinations, in such cases, the amount paid for each acquisition is allocated between the identifiable assets/liabilities at the
acquisition date.
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, as internationally traded commodities, the price of the bulk of
the Group’s products are ultimately link to the US dollar.
On consolidation, the results of overseas operations are translated into US dollars at average exchange rates for the year unless
exchange rates fluctuate significantly in which case the actual rate is used. All assets and liabilities of overseas operations are
translated at the rate ruling at the balance sheet date. Exchange differences arising on re-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, palm kernel and rubber slab are recognised when goods are delivered or allocated to a purchaser. Delivery or allocation
does not take place until contracts are paid for. Sales of latex are recognised on signing of sales contract, this being the point at which
the significant risks and rewards of ownership are passed over to the buyer. Other income mainly consists of amounts received from
sales of nut shell, which is recognised when the goods are delivered.
Share based payments
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 binomial 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.
Capitalisation on development activities
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. These interest rates are booked at the rate prevailing at the time.
36 Annual Report 2011 | Anglo-Eastern Plantations Plc
Notes to the Consolidated Financial Statements
1 Accounting policies -continued
Plantation development
Plantation development comprises cost of planting and development on oil palm and other plantation crops. Costs of new planting and
development of plantation crops are capitalised from the stage of land clearing up to the stage of maturity or subject to certificate of
Land Exploitation Rights (HGU) being obtained, whichever is earlier. The costs of immature plantations consist mainly of the
accumulated cost of land clearing, planting, fertilising and maintaining the plantation, borrowing costs and other indirect overhead costs
up to the time the trees are harvestable and to the extent appropriate.
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 substantively 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.
Property, plant and equipment
Estates comprise biological assets, non-biological plantation assets and mills. Estates (excluding the mills) are valued based upon a
valuation of the planted and unplanted areas using a discounted cash flow method by reference to the fresh fruit bunches (“FFB”)
expected to be harvested over the full remaining productive life of the trees up to 20 years. Oil palm which are not yet mature at the
accounting date, and hence are not producing FFB, are valued on a similar basis but with the discounted value of the estimated cost to
complete planting and to maintain the assets to maturity being deducted from the discounted FFB value. In preparing the current year
financial statements the productive life has been revised from 19 years to 20 years for Indonesian estates and 30 years to 20 years for
Malaysian estates.
Any surplus or deficit on revaluation of non-biological plantation assets (after deduction of a proportion of biological assets as described
under Biological assets below) 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 of a revalued estate,
any related balance remaining in the revaluation and exchange reserve is transferred to retained earnings as a movement in reserves.
Oil mills are carried at cost less depreciation.
Depreciation is computed using the straight line method. 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
which representing the bio life of the tree.
Biological assets
Biological assets comprise oil palm trees and nurseries. The biological process commences with the initial preparation of land and
planting of seedlings and ceases with the delivery of crop in the form of FFB to the manufacturing process in which crude palm oil and
palm kernel are extracted from the FFB. The value of the biological assets is estimated as a proportion of the estate value (excluding
the mills). For a plantation with a mill, the biological asset portion is estimated at 18% of the estate value while for a plantation without a
mill, it is estimated at 23%. The 5% difference in valuation represents the plant, machinery and infrastructure which is an integral part of
estates with mills but does not form part of the mill itself. The movement in valuation surplus of biological assets is charged or credited
to the income statement for the relevant period (BA adjustment).
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 in accordance with 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 in the income statement, except to the extent they reverse gains previously
recognised in the statement of recognised income and expense.
37 Annual Report 2011 | Anglo-Eastern Plantations Plc
Notes to the Consolidated Financial Statements
1 Accounting policies - continued
Inventories
Inventories are initially recognised at cost, and subsequently at the lower of cost and net realisable value. In the case of processed
produce for sale which comprises palm oil and kernel, cost represents the monthly weighted-average cost of production, including
appropriate production overheads. Estate and mill consumables are valued on a weighted average cost basis.
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 subsequently at amortised cost. No impairment provisions have been
considered necessary.
Cash and cash equivalents consist of cash in hand and short term deposits at banks with an original maturity of less than three months.
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 and subsequently at amortised cost, which is
the total of proceeds received net of issue costs. 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 and subsequently at amortised cost.
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.
The Group recognises deferred tax liabilities arising from taxable temporary differences on investments in subsidiaries, except where
the Group is able to control the reversal of the temporary differences and it is probable that the temporary difference will not reverse in
the foreseeable future.
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.
Deferred tax is recognised on temporary differences arising on property revaluation surpluses.
Deferred tax is determined using the tax rates that are enacted or substantively enacted at the balance sheet date. 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. Any difference between
the expected return on assets and that actually achieved, and any changes in the liabilities over the year due to changes in
assumptions or experience within the scheme are recognised in other comprehensive income in the period in which they arise.
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.
38 Annual Report 2011 | Anglo-Eastern Plantations Plc
Notes to the Consolidated Financial Statements
1 Accounting policies – continued
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 and 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 current and future periods.
Assumptions regarding the valuation of biological assets, property, plant and equipment are set out in note 10. The Group's policy with
regard to impairment of such assets is set out above.
Details on deferred tax are given in note 16 and retirement benefits in note 17.
2 Revenue
Sales of produce - CPO
- Rubber
Other income
3
Finance income and expense
Finance income
Interest receivable on:
Credit bank balances and time deposits
Finance expense
Interest payable on:
Development loans - (note 14)
Net finance income recognised in income statement
4
Profit before tax
Profit before tax is stated after charging
Depreciation (note 10)
Staff costs (note 6)
Auditors’ remuneration
- Group audit (Company $10,100 (2010: $9,300))
- audit of subsidiaries
- Total
2011
$000
253,357
3,669
2,011
259,037
2010
$000
183,305
2,777
1,151
187,233
2011
$000
2010
$000
3,891
2,220
707
3,184
2011
$000
8,060
19,701
87
53
140
1,205
1,015
2010
$000
8,953
17,803
82
52
134
39 Annual Report 2011 | Anglo-Eastern Plantations Plc
Notes to the Consolidated Financial Statements
5. Segment Information
2011
Total sales revenue (all external)
- CPO
- Rubber
Other income
Total revenue
Profit/(loss) before tax
BA Movement
Profit for the year before tax per consolidated
income statement
Total Assets
Non-Current Assets
2010
Total sales revenue (all external)
- CPO
- Rubber
Other income
Total revenue
Profit/(loss) before tax
BA Movement
Profit for the year before tax per consolidated income
statement
Total Assets
Non-Current Assets
Bengkulu
$000
South
Sumatra
$000
Riau
$000
Bangka
$000
Kalimantan
$000
Malaysia
$000
UK
$000
Total
$000
North
Sumatra
$000
96,485
3,669
513
100,667
91,678
-
485
92,163
-
-
15
15
57,265
-
811
58,076
45,297
33,141
(80)
20,125
160,262
122,726
151,859
131,027
48,485
46,170
62,230
29,915
$000
$000
$000
$000
77,624
2,777
660
81,061
57,998
-
123
58,121
35,003
17,401
-
-
-
-
-
41,352
-
350
41,702
13,879
-
-
-
-
-
1,870
1,798
$000
-
-
-
-
-
Total
Indonesia
$000
245,428
3,669
1,824
250,921
-
-
-
-
-
7,929
-
183
8,112
-
-
4
4
98,483
2,883
(1,948)
67,251
64,770
491,957
396,406
30,744
21,634
6,598
1,363
$000
$000
$000
$000
$000
-
-
-
-
-
176,974
2,777
1,133
180,884
6,331
-
8
6,339
-
-
10
10
66,283
1,616
(1,290)
253,357
3,669
2,011
259,037
99,418
9,358
108,776
529,299
419,403
183,305
2,777
1,151
187,233
66,609
18,429
85,038
534,649
446,260
186,131
155,813
174,024
137,070
32,275
30,857
57,032
50,045
6,618
6,537
38,045
36,367
494,125
416,689
36,835
28,208
3,689
1,363
40 Annual Report 2011 | Anglo-Eastern Plantations Plc
Notes to the Consolidated Financial Statements
5. Segment Information – continued
In year 2011, revenues from 4 customers of the Indonesian segment represent approximately $139.4m (2010: $118.1m) of the Group’s total revenue. An analysis of these revenues is provided as below:
2011
Customer 1
Customer 2
Customer 3
Customer 4
2010
Customer 1
Customer 2
Customer 3
Customer 4
2011
Customer 1
Customer 2
Customer 3
Customer 4
2010
Customer 1
Customer 2
Customer 3
Customer 4
North
Sumatra
$000
-
26,411
26,843
-
53,254
18,864
3
21,227
16,559
56,653
%
-
10.2
10.4
-
20.6
10.1
-
11.3
8.8
30.2
Bengkulu
$000
South
Sumatra
$000
37,324
-
6,068
15,019
58,411
7,938
26,898
5,105
-
39,941
%
14.4
-
2.3
5.8
22.5
4.2
14.4
2.7
-
21.3
-
-
-
-
-
-
-
-
-
-
%
-
-
-
-
-
-
-
-
-
-
Riau
$000
-
9,936
-
17,846
27,782
13,873
-
-
7,683
21,556
%
-
3.8
-
6.9
10.7
7.4
-
-
4.1
11.5
Bangka
$000
Kalimantan
$000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
%
%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total
Indonesia
$000
37,324
36,347
32,911
32,865
139,447
40,675
26,901
26,332
24,242
118,150
%
14.4
14.0
12.7
12.7
53.8
21.7
14.4
14.0
12.9
63.0
Malaysia
$000
UK
$000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
%
%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total
$000
37,324
36,347
32,911
32,865
139,447
40,675
26,901
26,332
24,242
118,150
%
14.4
14.0
12.7
12.7
53.8
21.7
14.4
14.0
12.9
63.0
41 Annual Report 2011 | Anglo-Eastern Plantations Plc
Notes to the Consolidated Financial Statements
5 Segment information - continued
Save for a small amount of rubber, all the Group’s operations are devoted to oil palm. Therefore the Group’s 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.
6
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/(credit) (note 17)
Share based payments expenses
2011
number
4,404
9,501
13,905
2011
$000
18,843
277
536
45
19,701
2010
number
3,802
8,512
12,314
2010
$000
17,128
229
334
112
17,803
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 24 - 26 of which the information on pages 25 and 26 has been audited.
Directors emoluments
Pension contributions
Remuneration expense for key management personnel
2011
$000
194
-
194
194
2010
$000
341
4
345
345
The Executive Directors and Non-Executive Director are considered to be the key management personnel: their remuneration is shown
on page 26.
7
Tax expense
Foreign corporation tax - current year
Deferred tax adjustment - current year
Total tax charge for year
2011
$000
26,318
2,830
29,148
2010
$000
18,017
4,556
22,573
Both corporation tax rates in Indonesia and Malaysia are at 25%. The standard rate of corporation tax in the UK for the current year is
26%. The Group’s charge for the year differs from the standard UK rate of corporation tax for the reasons below.
Profit before tax
Profit before tax multiplied by standard rate of UK corporation tax of 26% (2010: 28%)
Effects of:
Rate adjustment relating to overseas profits
Group accounting adjustments not subject to tax
Expenses not allowable for tax
Temporary differences
Utilisation of tax losses brought forward
Income not subject to tax
Total tax charge for year
42 Annual Report 2011 | Anglo-Eastern Plantations Plc
2011
$000
108,776
28,282
(1,153)
1,229
1,339
(73)
(409)
(67)
29,148
2010
$000
85,038
23,811
(2,719)
1,522
176
85
(65)
(237)
22,573
Notes to the Consolidated Financial Statements
8
Earnings per ordinary share (EPS)
Profit for the year attributable to owners of the 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 after BA adjustment
Dilutive EPS before BA adjustment
Dilutive EPS after BA adjustment
9
Dividends
Paid during the year
Final dividend of 5.0 cts per ordinary share for the year ended 31 December 2010 (2009:
5.0 cts)
2011
$000
59,201
5,763
64,964
Number
‘000
39,539
141
39,680
2010
$000
39,375
11,954
51,329
Number
‘000
39,539
166
39,705
149.73cts
164.30cts
99.59cts
129.82cts
149.20cts
163.72cts
99.17cts
129.27cts
2011
$000
2010
$000
1,977
1,973
Proposed final dividend of 6.0 cts per ordinary share for the year ended 31 December 2011
(2010: 5.0 cts)
2,372
1,977
The proposed dividend for 2011 is subject to shareholders’ approval at the forthcoming annual general meeting and has not been
included as a liability in these financial statements.
10 Biological assets, property, plant and equipment
Cost or valuation
At 1 January 2010
Exchange translations
Reclassification
Revaluations
Additions
Development costs capitalised
Acquisition of a subsidiary
Written off
Disposals
At 31 December 2010
Exchange translations
Revaluations
Additions
Development costs capitalised
Disposals
At 31 December 2011
Non-
biological
plantation
assets
$000
181,783
10,955
(8,301)
118,089
14,358
24,427
4,890
(12)
(145)
346,044
(1,470)
(81,389)
21,281
25,490
(245)
309,711
Total
property
plant and
equipment
$000
Biological
assets
$’000
204,881
13,780
-
118,089
19,253
24,427
4,890
(12)
(184)
385,124
(1,824)
(81,389)
24,685
25,490
(488)
351,598
47,608
2,556
-
18,429
-
-
-
-
-
68,593
(885)
9,358
-
-
-
77,066
Mills
$'000
23,098
2,825
8,301
-
4,895
-
-
-
(39)
39,080
(354)
-
3,404
-
(243)
41,887
Total
$'000
252,489
16,336
-
136,518
19,253
24,427
4,890
(12)
(184)
453,717
(2,709)
(72,031)
24,685
25,490
(488)
428,664
43 Annual Report 2011 | Anglo-Eastern Plantations Plc
Notes to the Consolidated Financial Statements
10 Biological assets, property, plant and equipment – continued
Accumulated depreciation and impairment
At 1 January 2010
Exchange translations
Revaluations
Charge for the year
Disposals
At 31 December 2010
Exchange translations
Revaluations
Charge for the year
Disposals
At 31 December 2011
Carrying amount
At 31 December 2009
At 31 December 2010
At 31 December 2011
Fair value of FFB
Crop production and yield - FFB – (mt)
Fair value of FFB ($000)
Non-
biological
plantation
assets
$000
54
(54)
5,637
(5,637)
-
-
-
4,740
(4,740)
-
-
Total
property
plant and
equipment
$000
Biological
assets
$’000
(4,467)
(2,557)
5,637
(7,576)
12
(8,951)
123
4,740
(6,907)
183
(10,812)
-
-
1,377
(1,377)
-
-
-
1,153
(1,153)
-
-
Mills
$'000
(4,521)
(2,503)
-
(1,939)
12
(8,951)
123
-
(2,167)
183
(10,812)
Total
$'000
(4,467)
(2,557)
7,014
(8,953)
12
(8,951)
123
5,893
(8,060)
183
(10,812)
181,837
346,044
309,711
18,577
30,129
31,075
200,414
376,173
340,786
47,608
68,593
77,066
248,022
444,766
417,852
2011
2010
707,000
131,987
599,200
102,770
The carrying amount of the Group’s biological assets and non-biological plantation assets were based on independent valuations as at
31 December 2011 respectively undertaken by independent valuers, Doli Siregar & Rekan (for estates located in Indonesia) and PPC
International Sdn. Bhd. (for estates located in Malaysia). Both independent valuers have appropriate professional qualifications and
recent experience in the location and category of the properties being valued.
The methodology of the valuations undertaken was using discounted cash flow over the expected 20-year economic life of the asset.
The assumption applied in the valuation were, inter alia, an assumed CPO selling price of $625/mt (2010: $550/mt) and discount rate of
16.5% (2010: 16.25%). The discount rates were determined by the professional valuers based on their assessment of various risks
including financial, business and country risk of where the plantations are located. The CPO price is taken to be the 10-year average
(2010: 15-year average) based on historical widely-quoted commodity price for crude palm oil and represents the directors’ best
estimate of the price sustainable over the longer term. The CPO price assumed is revised to reflect a price which is closer to the
market price of $1,045/mt as at 31 December 2011 as the CPO price has continually increased since year 2009.
In valuing its estates, which comprise biological assets and property, plant and equipment, the Group has historically calculated value
in use based upon the present value of the local currency cash flows of each estate over the following nineteen years for Indonesian
estates and thirty years for Malaysian estates. The directors have reviewed their estimate of the period over which the value in use
should be determined and have concluded that a period of twenty years should be applied for both Indonesian and Malaysian estates,
this being a better reflection of the expected economic life of the asset. If the change in estimate had not been applied, then the profit
before tax (after BA) for the current financial year would have decreased by $755,000.
In previous years the directors have estimated that 8% of the land yet to be planted, which form part of non-biological plantation, will
not be plantable based on historic percentages for the mature estates. A detailed survey of the recent new estates which have yet to
reach maturity was indentified that these contain significantly higher unplantable areas. As a result, the directors have revised the
unplanted area to approximately 30% resulting in a deficit on revaluation of $77 million which transferred to the revaluation reserve.
44 Annual Report 2011 | Anglo-Eastern Plantations Plc
Notes to the Consolidated Financial Statements
10 Biological assets, property, plant and equipment – continued
The following table exhibits the sensitivity of the Group’s biological assets to the fluctuation in CPO price and discount rate:
A change of $50 in the price assumption for CPO
-$50 in the price assumption
+$50 in the price assumption
A change of 1% in the discount rate
-1% in the discounted rate
+1% in the discounted rate
2011
$000
(9,043)
9,791
4,008
(3,657)
2010
$000
(7,478)
7,748
2,272
(4,447)
The estates include $14 (2010: $72) of interest and $6,074,000 (2010: $4,621,000) of overheads capitalised during the year in respect
of expenditure on estates under development.
Original cost and depreciation at historical rates of exchange of the estates at 31 December 2011:
2011
Mills
$000
40,681
(16,082)
24,599
Original cost
Cumulative depreciation based on original cost
Estates
$000
320,235
(53,648)
266,587
2011
2011
Total
$000
360,916
(69,730)
291,186
2010
Total
$000
311,229
(61,670)
249,559
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 2038 with rights of renewal thereafter. In the
case of estates in Bengkulu land titles were issued between 1994 and 2008 and the titles expire between 2028 and 2034 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
2004 and expire in 2033. In the case of PT Cahaya Pelita Andhika’s estate acquired in 2007 land titles were issued in 1996 to expire in
2029.
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.
The land title of the estate in Malaysia is a long lease expiring in 2084.
11 Receivables: non-current
Due from non-controlling interests
Due from village smallholder schemes
2011
$000
1,363
188
1,551
2010
$000
1,363
131
1,494
The non-controlling interests in PT Alno Agro Utama and PT Cahaya Pelita Andhika have acquired their interests on deferred terms
(see note 24, Credit risk).
Amounts due from village smallholder schemes represents expenditure on planting and maintaining to maturity oil palms on communal
land owned by 19 separate villages neighbouring the Group's estates.
The book values of the amounts due from minority shareholders and village smallholder schemes approximate to their fair values.
12
Inventories
Estate and mill consumables
Processed produce for sale
13 Trade and other receivables
Trade receivables
Other receivables
Prepayments and accrued income
The carrying amount of trade and other receivables approximates their fair value.
45 Annual Report 2011 | Anglo-Eastern Plantations Plc
2011
$000
7,918
1,521
9,439
2011
$000
432
4,094
351
4,877
2010
$000
4,856
1,964
6,820
2010
$000
617
2,359
380
3,356
Notes to the Consolidated Financial Statements
14 Loans and borrowings
2011
2010
Long term development loan (a)
Long term development loan (b)
Finance lease (c)
Revolving credit (d)
Total bank loans
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
more than
one year
under one
year
$000
400
6,038
27
-
6,465
$000
-
-
58
-
58
30
28
58
under one
year
$000
800
10,350
-
4,500
15,650
more than
one year
$000
400
6,038
-
-
6,438
6,438
-
6,438
(a)
(b)
(c)
(d)
The long term development loan of $400,000 (2010: $1,200,000), to part finance construction of a mill, was made in September
2006, and secured by a fixed and floating charge on the land titles and other assets of, PT Bina Pitri Jaya. This loan bears
interest rate at 5.5% above the Bank’s prime lending rate per annum. The loan is repayable in sixteen quarterly instalments of
$200,000 from July 2008 to April 2012.
The long term development loan of $6,038,000 (2010: $16,388,000) 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 Company. Interest is at
3% over SIBOR and premium charges with percentage depend on bank liquidity. Average interest in 2011 was about 5.0%
(2010: 4.8%). The loan is repayable from September 2008 to June 2012.
The long-term leasing facility with a total principle amounting to Rp807 million was obtained to finance the purchase of a
vehicle. Total interest payable amounting to Rp139 million for a period of three years starting from November 2011 to October
2014 with fixed repayment basis.
The revolving credit facility (“RCF”) is the extension of the development loan disclosed in Note 14(b) above and is available up
to a maximum amount of Rp120 billion, which is available in USD currency with equivalent to Rp108 billion for the period one
year with loan tenor maximum three months. The security for this facility is the same as the development loan disclosed in the
Note 14(b) above.
15 Trade and other payables
Trade creditors
Other creditors
Accruals
16 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)
46 Annual Report 2011 | Anglo-Eastern Plantations Plc
2011
$000
7,871
8,662
4,345
20,878
2011
$000
(37,534)
1,060
(825)
(37,299)
2010
$000
4,766
6,811
3,593
15,170
2010
$000
(62,004)
277
434
(61,293)
(61,293)
(28,772)
(2,830)
27,234
(410)
(37,299)
(4,556)
(26,482)
(1,483)
(61,293)
Notes to the Consolidated Financial Statements
16 Deferred tax liabilities – continued
Details of movement in 2011
Revaluation surplus
Accelerated capital allowances
Employee pension liabilities
Available losses
Other
Details of movement in 2010
Revaluation surplus
Accelerated capital allowances
Employee pension liabilities
Available losses
A deferred tax asset has not been recognised for the following items:
Unutilised tax losses
Accelerated capital allowances
(Liability)
2011
$000
(37,534)
(1,678)
853
1,060
-
(37,299)
(Liability)
2010
$000
(62,004)
(530)
964
277
(61,293)
(Charged)/
credited
to income
2011
$000
(Charged)/
credited
to reserve
2011
$000
(2,331)
(514)
(109)
(173)
297
(2,830)
(Charged)/
credited
to income
2010
$000
(4,575)
(431)
231
219
(4,556)
2011
$000
3,217
20
27,234
-
-
-
-
27,234
(Charged)/
credited
to reserve
2010
$000
(26,482)
-
-
-
(26,482)
2010
$000
1,799
653
The Group does not recognise the tax losses of certain companies in the Group as tax assets as the future recoverability of the losses
cannot be certain.
At the balance sheet date, the aggregate amount of temporary differences associated with undistributed earnings of subsidiaries for
which deferred tax liabilities have not been recognised was $6,963,949 (2010: $5,541,000). No liability has been recognised in respect
of these differences because the Group is in a position to control the timing of reversal of the temporary differences, or because such a
reversal would not give rise to an additional liability.
17 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
Rate of return on scheme assets
Discount rate
2011
5.4%
8.0%
6.8%
6.6%
2010
7.0%
8.0%
6.5%
8.5%
2009
10%
8%
9%
12%
2008
10%
8%
9%
12%
2007
10%
10%
8%
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.
47 Annual Report 2011 | Anglo-Eastern Plantations Plc
Notes to the Consolidated Financial Statements
17 Retirement benefits - continued
Defined
benefit
- funded
schemes
2011
$000
Defined
benefit –
unfunded
schemes
2011
$000
2,412
(2,551)
(139)
2,060
(26)
309
152
(78)
-
(5)
2,412
(2,198)
27
(380)
-
-
-
(2,551)
-
(1,454)
(1,454)
-
-
-
-
-
-
-
-
(2,167)
(11)
(415)
1,367
(4)
(224)
(1,454)
Reconciliation to consolidated statement of
financial position
Scheme assets (all cash)
Scheme (liabilities)
Net liabilities
Reconciliation of scheme assets
At beginning of year
Exchange gain / (loss)
Contributions by Group
Income
Benefits paid
Actuarial gain / (loss)
Expenses
At end of year
Reconciliation of scheme (liabilities)
At beginning of year
Exchange gain / (loss)
Current service (cost)
Benefits paid
Actuarial gain / (loss)
Interest cost
At end of year
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/(credit)
Expenses
Defined contribution schemes
Contributions
Defined benefit obligation trends:
Scheme assets
Scheme liabilities
Surplus / (deficit)
Experience adjustments on liabilities
As a % of plan liabilities
Experience adjustments on assets
As a % of plan assets
2011
$000
71
5
(152)
(76)
415
197
-
536
2011
$000
2,412
(4,005)
(1,593)
217
9%
-
-
48 Annual Report 2011 | Anglo-Eastern Plantations Plc
Defined
benefit
- funded
schemes
2010
$000
Defined
benefit –
unfunded
schemes
2010
$000
2,060
(2,198)
(138)
1,675
75
243
128
(55)
-
(6)
2,060
(1,781)
(80)
(392)
55
-
-
(2,198)
2009
$000
214
4
(138)
80
342
-
-
422
2009
$000
1,675
(3,505)
(1,830)
106
6%
-
-
-
(2,167)
(2,167)
-
-
-
-
-
-
-
-
(1,724)
(59)
(290)
63
8
(165)
(2,167)
2008
$000
275
5
(112)
168
308
-
57
533
2008
$000
1,241
(2,735)
(1,494)
140
10%
-
-
Total
2010
$000
2,060
(4,365)
(2,305)
1,675
75
243
128
(55)
-
(6)
2,060
(3,505)
(139)
(682)
118
8
(165)
(4,365)
2007
$000
621
6
(107)
520
535
-
57
1,112
2007
$000
1,195
(2,729)
(1,534)
143
10%
-
-
Total
2011
$000
2,412
(4,005)
(1,593)
2,060
(26)
309
152
(78)
-
(5)
2,412
(4,365)
16
(795)
1,367
(4)
(224)
(4,005)
2010
$000
149
6
(128)
27
161
146
-
334
2010
$000
2,060
(4,365)
(2,305)
216
10%
-
-
Notes to the Consolidated Financial Statements
18 Share capital
Authorised
Number
Issued and
fully paid
Number
Authorised
£000
Issued and
fully paid
£000
Authorised
$000
Issued and
fully paid
$000
Ordinary shares of 25p each
Beginning and end of year
60,000,000
39,976,272
15,000
9,994
23,865
15,504
2011
Number
2010
Number
437,200
-
437,200
506,000
(68,800)
437,200
Treasury shares
Beginning of year
Share options exercised
End of year
Market value of treasury shares:
Beginning of year (730.0p /share)
End of year (685.0p/share)
No treasury shares were purchased in 2011 (2010: Nil).
19 Share based payment
Cost
2011
$’000
(1,507)
-
(1,507)
Cost
2010
$’000
(1,744)
237
(1,507)
4,997
4,654
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
16.04.02
13.05.04
19.05.06
09.10.06
21.05.07
03.06.08
Price
per share
Period of option
44.7p 30.04.05 – 29.04.12
181.2p 13.05.07 – 12.05.14
234.0p 19.05.09 – 18.05.16
323.25p 09.10.09 – 08.10.16
360.3p 21.05.10 – 20.05.17
598.0p 03.06.11 – 02.06.18
Exercisable
1 Jan 10
Number
30,600
20,400
44,800
8,700
65,100
73,700
243,300
104,500
Exercised
Number
-
(20,400)
(44,800)
(3,600)
-
-
Lapsed
Number
-
-
-
(2,700)
(2,700)
(2,700)
(68,800)
(8,100)
31 Dec 10
Number
30,600
-
-
2,400
62,400
71,000
Exercised
Number
-
-
-
-
-
-
Lapsed
Number
-
-
-
-
(11,700)
(13,600)
31 Dec 11
Number
30,600
-
-
2,400
50,700
57,400
166,400
95,400
-
(25,300)
141,100
141,100
The weighted average contracted life of options outstanding at the end of the year was 4.7 years (2010: 5.9 years) and the weighted
average exercise price was 388p (2010: 403p). The weighted average exercise price of options exercisable at the end of the year was
388p (2010: 258p).
No option (2010: 68,800) was exercised during the year. The weighted average share price at date of exercise of options exercised in
2010 was 595p. No share options were granted in 2011 (2010: Nil).
The weighted average share price of options that lapsed during the year was 488p (2010: 427p).
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 for a period of three years from date of grant.
20 Ultimate controlling shareholder
At 31 December 2011, Genton International Limited, a company registered in Hong Kong, held 20,247,814 (2010: 20,247,814) shares
of the Company representing 51.2% (2010: 51.2%) of the issued share capital of the Company. Together with other deemed interested
parties, the Genton‘s shareholding totals 20,521,314 or 51.9%. Madam Lim, a Director of the Company, has advised the Company that
she is the controlling shareholder of Genton International Limited.
21 Related party transactions
During the year the Company engaged UHY Hacker Young, an accounting firm of which Dato’ John Lim Ewe Chuan is a partner, to
provide company secretarial and taxation services for a fee of $19,708 (2010: $7,303). This contract is on an arm’s length basis.
49 Annual Report 2011 | Anglo-Eastern Plantations Plc
Notes to the Consolidated Financial Statements
22 Reserves and non-controlling interest
Nature and purpose of each reserve:
Share capital
Share premium
Amount of shares subscribed at nominal value.
Amount subscribed for share capital in excess of nominal value.
Capital redemption reserve
Amounts transferred from share capital on redemption of issued shares.
Treasury shares
Cost of own shares held in treasury.
Revaluation reserve
Gains/losses arising on the revaluation of the Group's property.
Foreign exchange reserve
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 - normal estate operations
Authorised but not contracted - plantation and mill development
24 Disclosure of financial instruments and other risks
2011
$000
2,260
40,000
2010
$000
2,006
60,000
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 2011 and 2010 were:
2011
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
2010
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
Loans and
receivables
$000
1,551
4,877
90,482
-
-
-
96,910
Loans and
receivable
$000
1,494
3,356
70,871
-
-
-
75,721
Financial
liabilities at
amortised cost
$000
-
-
-
(6,465)
(20,878)
(58)
(27,401)
Total carrying
value and
fair value
$000
1,551
4,877
90,482
(6,465)
(20,878)
(58)
69,509
Financial
liabilities at
amortised cost
$000
-
-
-
(15,650)
(15,170)
(6,438)
(37,258)
Total carrying
value and
fair value
$000
1,494
3,356
70,871
(15,650)
(15,170)
(6,438)
38,463
The principal financial risks to which the Group is exposed are:
- commodity selling price changes;
- exchange movements; and
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 financial
assets or liabilities that are held at fair value through the profit and loss.
50 Annual Report 2011 | Anglo-Eastern Plantations Plc
Notes to the Consolidated Financial Statements
24 Disclosure of financial instruments and other risks – continued
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.
Currency risk
Most of the Group's operations are in Indonesia. The 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 $76,131,000 (2010: $80,142,000), while the fair value of the Group's share of underlying assets at 31
December 2011 amounted to $415,211,000 (2010: $359,741,000).
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.
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 US dollar terms and vice versa.
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 to some extent 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 2010 and 2011, the policy has been for only a partial but increasing match because interest rates on local currency deposits
were 6.35% higher than on dollar deposits and about the same as dollar borrowing costs. The unmatched balance at 31 December
2011 is represented by the $5,782,000 shown in the table below (2010: $16,791,000). If the Group's net cash position continues to
improve then dollar cash balances will continue to be increased through 2012.
The table below shows the net monetary assets and liabilities of the Group at 31 December 2011 and 2010 that were not denominated
in the operating or functional currency of the operating unit involved.
Functional currency of Group operation
2011
Indonesian rupiah
US dollar
Total
2010
Indonesian rupiah
US dollar
Total
Net foreign currency assets/(liabilities)
Sterling
$000
US dollar
$000
Total
$000
(5,782)
-
(5,782)
$000
(16,791)
-
(16,791)
-
320
320
$000
-
792
792
(5,782)
320
(5,462)
$000
(16,791)
792
(15,999)
The following table summarises the sensitivity of the Group’s financial assets and financial liabilities to foreign exchange risk. The
impact on profit before tax and equity if Ringgit or Rupiah strengthen or weaken by 10% against US dollars is:
Carrying
Amount
US$
$000
2011
2010
-10% in
+10% in Carrying
-10% in
Rp : $ and
RM : $
$000
Rp : $ and
RM : $
$000
Amount
US$
$000
Rp : $ and
RM : $
$000
Financial Assets
Non-current receivable
Trade and other receivables
Cash and cash equivalents
Financial Liabilities
Borrowings due within one year
Trade and other payables
Borrowings due after one year
Total increase/(decrease)
1,551
4,877
90,482
(6,465)
(20,878)
(58)
(17)
(261)
(7,932)
2
1,828
5
(6,375)
21
319
9,695
1,494
3,356
70,871
(3)
(2,234)
(6)
7,792
(15,650)
(15,170)
(6,438)
(12)
(301)
(6,236)
-
1,262
-
(5,287)
51 Annual Report 2011 | Anglo-Eastern Plantations Plc
+10% in
Rp : $ and
RM : $
$000
15
367
7,622
-
(1,542)
-
6,462
Notes to the Consolidated Financial Statements
24 Disclosure of financial instruments and other risks - continued
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
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 2011 the Group had the following loans
and facilities.
Indonesia:
US dollar denominated – long term loan
RP denominated – finance lease
Borrowings
$000
Facilities
$000
Repayable
6,438
85
17,588
89
2008 - 2012 (note 14)
2011 - 2014 (note 14)
The total loan borrowings of $6,523,000 together with interest at current rates is repayable as follows:
Principal
Interest
Total
2012
$000
6,465
173
6,638
2013
$000
30
5
35
2014
$000
28
4
32
Forecasts prepared in December 2011 indicate that the Group has sufficient funds to meet its development plans and financial
commitments through 2013.
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 2011, so
the effect of variations in borrowing rates is more than offset. A 1% change in the borrowing or deposit interest rate would not have a
significant impact on the Group’s reported results as shown in table below. The rates on borrowings are set out in note 14.
Financial Assets
Cash and cash equivalents
Financial Liabilities
Borrowings due within one year
Borrowings due after one year
Total increase/(decrease)
2011
2010
Carrying
amount
+1% in
interest rate
-1% in
interest rate
Carrying
amount
+1% in
interest rate
$000
$000
$000
$000
$000
-1% in
interest rate
$000
90,482
779
(779)
70,871
667
(667)
(6,465)
(58)
(64)
-
715
64
-
(715)
(15,650)
(6,438)
(112)
(64)
491
112
64
(491)
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, trade and other receivables and cash) at 31
December were:
2011
Sterling
US dollar
Rupiah
Ringgit
Total
Total
$000
320
7,424
80,196
8,970
96,910
Fixed rate
$000
-
1,363
-
-
1,363
Variable rate
$000
52
568
68,891
8,439
77,950
No interest
$000
268
5,493
11,305
531
17,597
52 Annual Report 2011 | Anglo-Eastern Plantations Plc
Notes to the Consolidated Financial Statements
24 Disclosure of financial instruments and other risks - continued
2010
Sterling
US dollar
Rupiah
Ringgit
Total
Total
$000
832
8,143
58,242
8,504
75,721
Fixed rate
$000
-
1,363
-
-
1,363
Variable rate
$000
52
6,190
52,622
7,897
66,761
No interest
$000
780
590
5,620
607
7,597
Long term receivables of $1,363,000 (2010: $1,363,000) comprise dollar denominated amounts due from minority shareholders as
described in note 11 on which interest is due at a fixed rate of 6%.
Average US dollar deposit rate in 2011 was 0.16% (2010: 2.0%) and rupiah deposit rate was 6.51% (2010: 7.07%).
Interest rate profiles of the Group's financial liabilities (comprising bank loans and other financial liabilities, trade and other payables,
and retirement benefit liabilities) at 31 December were:
2011
Sterling
US dollar
Rupiah
Ringgit
Total
2010
Sterling
US dollar
Rupiah
Ringgit
Total
Total
$000
(75)
(7,047)
(19,354)
(925)
(27,401)
$000
(75)
(22,634)
(13,044)
(1,505)
(37,258)
Fixed rate
$000
-
-
-
-
-
Variable rate
$000
-
(6,523)
-
-
(6,523)
No interest
$000
(75)
(524)
(19,354)
(925)
(20,878)
$000
-
-
-
-
-
$000
-
(22,088)
-
-
(22,088)
$000
(75)
(546)
(13,044)
(1,505)
(15,170)
Weighted average interest rate on variable rate borrowings was 4.83% in 2011 (2010: 5.36%).
Credit risk
Sales of CPO and kernel 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 2011 (2010: Nil).
All cash is deposited with licensed banks. The list of the principal banks used by the Group is given on the inside of the back cover of
this report.
Amounts receivable from local partners, amounting to $1,363,000 (2010: $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 and are to be repaid from FFB supplied.
Capital
The Group defines its Capital as Share capital and Reserves, shown in the statement of financial position as "Issued capital attributable
to owners of the parent" and amounting to $375,678,000 at 31 December 2011 (2010: $354,168,000).
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 2011 (2010: Nil) the Group had no net borrowings but, depending market conditions, the Board is prepared for the
Group to have net borrowings.
25 Acquisitions
For the acquisition below, since it was not an active plantation, the Directors consider that it has obtained control of an entity that is not
a business and accordingly have not accounted for this acquisition as a business combination. Instead, the amount paid for the
acquisition has been allocated between individual identifiable assets and liabilities in the entity based on their fair values at the
acquisition date.
2011
There was no acquisition during the year.
53 Annual Report 2011 | Anglo-Eastern Plantations Plc
Notes to the Consolidated Financial Statements
25 Acquisitions – continued
2010
PT Kahayan Agro Plantation (KAP)
On 25 February 2010, the Group acquired 95% interest in PT Kahayan Agro Plantation for a cash consideration of $4,645,000.
Kahayan has no assets or liabilities other than the location permit of 17,500 hectares in Gunung Mas District near Palangkaraya,
Central Kalimantan. Plantable area is approximately 70%. The assets and liabilities and their fair value adjustment were assessed as
follows:
Fixed assets only acquired
Group share (95%)
Book value
$000
1,612
Revaluation to fair value
$000
3,278
Fair value
$000
4,890
4,645
Kahayan was inactive throughout 2010 and therefore the Group's share of any profit or loss from the date of acquisition to the end of
2010 was nil.
26 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 Empat Lawang Agro Perkasa
PT Hijau Pryan Perdana
PT Kahayan Agro Plantation
PT Karya Kencana Sentosa Tiga
PT Mitra Puding Mas
PT Musam Utjing
PT Riau Agrindo Agung
PT Sawit Graha Manunggal
PT Simpang Ampat
PT Tasik Raja
PT United Kingdom Indonesia Plantations
PT Anglo-Eastern Plantations Management Indonesia
100
100
55
100
90
100
95
80
90
95
80
95
95
90
75
95
95
100
80
75
100
On 27 May 2011, the Group incorporated PT AEP Indonesia Management with a share capital of $150,000.
During the year, PT Sawit Graha Manunggal has increased its share capital by Rp360,000,000,000 at Rp1,000,000 per share.
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.
*On 6 May 2011, SPPT Development Sdn. Bhd. (“the Petitioner”), a minority shareholder of Anglo-Eastern Plantations (M) Sdn Bhd, filed a petition in
the Kuala Lumpur High Court to wind-up Anglo-Eastern Plantations (M) Sdn Bhd based on inter-alia some alleged shareholders’ disputes between the
Petitioner and Anglo-Eastern Plantations Plc. The winding-up petition is being defended and it is fixed for continued hearing on 4 July 2012.
54 Annual Report 2011 | Anglo-Eastern Plantations Plc
Company Balance Sheet
As at 31 December 2011
Fixed assets
Investment in subsidiaries
Current assets
Other debtors
Cash and cash equivalents
Creditors: amount falling due within one year
Other creditors
Net current assets
Net assets
Capital and reserves
Share capital
Treasury shares
Share premium
Capital redemption reserve
Exchange reserve
Retained earnings
Shareholders' funds
Notes
2
3
5
6
6
7
7
7
7
2011
$000
76,131
76,131
18
3,231
3,249
(632)
2,617
78,748
15,504
(1,507)
23,935
1,087
3,872
35,857
78,748
2010
$000
80,142
80,142
50
2,276
2,326
(653)
1,673
81,815
15,504
(1,507)
23,935
1,087
3,872
38,924
81,815
The financial statements were approved by the Board of Directors and authorised for issue on 30 April 2012 and were signed on its behalf by
Dato’ John Lim Ewe Chuan
The accompanying notes are an integral part of this balance sheet.
55 Annual Report 2011 | Anglo-Eastern Plantations Plc
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 2006. 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 prices 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 assets and liabilities are converted to US dollars at the rate ruling at the balance
sheet date.
Investments
Investments in subsidiaries are stated at cost less provision for any permanent diminution in value.
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 36.
Deferred tax
A deferred tax asset has not been recognised in relation to brought forward tax losses of $5.8m (2010: $4.1m) because it is not certain
those losses can be utilised in the foreseeable future.
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
7,020
-
7,020
Loans to
subsidiary
undertakings
$000
73,122
(4,011)
69,111
Total
$000
80,142
(4,011)
76,131
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 investment of preference shares in subsidiaries of $6.146m is due for full redemption in January 2012 and the Board has since
resolved to seek full repayment for the redemption of the preference shares.
The principal subsidiaries of the Company are listed in note 26 to the consolidated financial statements on page 54.
3
Other debtors
Other receivables
Prepayments
2011
$000
18
-
18
2010
$000
39
11
50
56 Annual Report 2011 | Anglo-Eastern Plantations Plc
Notes to the Company Financial Statements
4
Dividends
Paid during the year
Final dividend of 5.0 cts for the year ended 31 December 2010 (2009: 5.0cts)
Proposed final dividend of 6.0 cts for the year ended 31 December 2011 (2010: 5.0cts)
2011
$000
1,977
2,372
2010
$000
1,973
1,977
The proposed dividend for 2011 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
Other payables
Accruals
6
Share capital
2011
$000
-
632
632
2010
$000
36
617
653
Issued and
fully paid
Number
Issued and
fully paid
£000
Issued and
fully paid
$000
Ordinary shares of 25p each
Beginning and end of year
39,976,272
2011
Number
437,200
-
437,200
2010
Number
506,000
(68,800)
437,200
Treasury shares
Beginning of year
Share options exercised
End of year
Market value of treasury shares:
Beginning of year (730.0p /share)
End of year (685.0p/share)
9,994
Cost
2011
$’000
(1,507)
-
(1,507)
15,504
Cost
2010
$’000
(1,744)
237
(1,507)
4,997
4,654
Details of share based payments are set out in note 19 to the consolidated financial statements on page 49.
7
Reserves
Company balance sheet
Beginning of year
Share options exercised
Loss for the financial year
Dividend paid
End of year
Share
premium
account
$000
23,935
-
-
-
23,935
Treasury
shares
$000
(1,507)
-
-
-
(1,507)
Capital
redemption
reserve
$000
1,087
-
-
-
1,087
Exchange
reserve
$000
3,872
-
-
-
3,872
(Distributable)
Retained
earnings
$000
38,924
-
(1,090)
(1,977)
35,857
As permitted by section 408 of the Companies Act 2006, a separate profit and loss account dealing with the results of the Company
has not been presented. The loss before tax of the Company for the year was $1,075,000 (2010 profit before tax: $3,515,000) and loss
for the year was $1,090,000 (2010 profit for the year: $3,489,000). The profit for 2010 was restated after the exceptional release of a
provision against amounts due from subsidiary undertakings of $5,360,000. The exchange reserve arose on the initial transition from
sterling to US dollars as the Company’s functional currency.
57 Annual Report 2011 | Anglo-Eastern Plantations Plc
Notes to the Company Financial Statements
8
Employees' and Directors' remuneration
Average numbers employed during the year
- director
- staff
Staff costs
Wages and salaries
Social security costs
2011
number
2010
number
4
2
6
2011
$000
67
8
75
6
2
8
2010
$000
93
6
99
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 24 to 26 of which the information on page 25 and 26 have been audited.
Directors' emoluments
Pension contributions
2011
$000
194
-
194
2010
$000
341
4
345
9
Guarantees and other financial commitments
The Company has provided guarantees for loans to subsidiaries totalling $17,588,000 (2010: $22,088,000) as set out in note 14 of the
consolidated financial statements.
10 Related Party Transactions
Intercompany Receivables
Anglo-Eastern Plantations Management Sdn Bhd
Anglo-Eastern Plantations (M) Sdn Bhd
Anglo-Indonesian Oil Palms Limited
Musam Indonesia Limited
PT Alno Agro Utama
PT Anak Tasik
PT Bina Pitra Jaya
PT Mitra Puding Mas
PT Simpang Ampat
PT Anglo-Eastern Plantations Management Indonesia
Intercompany Payables
The Ampat (Sutera) Rubber Estate (1913) Limited
Gadek Indonesia (1975) Limited
Mergeset (1980) Limited
PT Musam Utjing
PT Tasik Raja
2011
$000
5,558
-
74,166
1,068
99
24
32
55
1,536
9
82,547
782
226
9,255
132
3,041
13,436
2010
$000
3,621
3,373
82,645
1,038
54
-
32
28
1,544
-
92,335
812
256
9,285
1,493
7,367
19,213
The intercompany balances arise as a result of advances from/to subsidiaries and expenses payable on behalf. The terms of the
intercompany receivables/payables are disclosed in note 2 of the Company financial statements.
58 Annual Report 2011 | Anglo-Eastern Plantations Plc
Notice of Annual General Meeting
Notice is hereby given that the twenty-seventh Annual General Meeting of Anglo-Eastern Plantations Plc will be held at the offices of UHY
Hacker Young LLP, Quadrant House, 4 Thomas More Square, London E1W 1YW on Tuesday, 26 June 2012 at 11.00 a.m. for the following
purposes:
As Ordinary Business
1
2
3
4
5
6
To receive and consider the Company’s annual report and accounts for the year ended 31 December 2011
To declare a dividend
To approve the Directors' remuneration report for the year ended 31 December 2011
To re-appoint Mr. Nik Din Bin Nik Sulaiman, independent Non-Executive director
To re-elect Madam S K Lim, a Non-Executive Director, who has served more than nine years.
To re-appoint BDO LLP as auditors and to authorise the Directors to fix their remuneration.
As Special Business
7
To consider and, if thought fit, to pass the following resolution as special resolution:
That
(a)
the Directors be generally and unconditionally authorised pursuant to and in accordance with section 551 of the Companies Act
2006 (“the Act”), in substitution for all existing authorities to the extent unused, to exercise all the powers of the Company to allot
shares in the Company up to an aggregate nominal amount equal to one third of the issued share capital at the date of this
resolution provided that this authority shall expire on 25 June 2017 save that the Company may before such expiry make an offer
or agreement which would or might require relevant securities to be allotted after such expiry and the Directors may allot relevant
securities in pursuance of such an offer or agreement as if the authority conferred hereby had not expired;
(b) during the period expiring on the date of the next annual general meeting or on 30 June 2013 (whichever shall be earlier) the
Directors be empowered pursuant to section 570 and 573 of the Companies Act 2006 (“the Act”) 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
560 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 561(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);
(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 17 of the Act shall bear the same meanings herein.
59 Annual Report 2011 | Anglo-Eastern Plantations Plc
Notice of Annual General Meeting
8
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)
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
25 June 2017; and
(ii)
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 561 of the Companies Act 2006 (“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 25 June 2017 as if sub-section (1) of
section 561 of the Act did not apply thereto and so that this authority shall be without prejudice and additional to the authority
conferred by resolution no 7.
9
To consider and if thought fit to pass the following as a special resolution:
That the Company is hereby generally and unconditionally authorised for the purposes of section 701 of the Companies Act 2006 (“the
Act”) to make market purchases (as defined in section 693(2) of the Companies Act 2006) 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 30 June 2013 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.
10 To consider and if thought fit pass the following resolution as an ordinary resolution
That pursuant to paragraph 42 of Schedule 2 to the Companies Act 2006 (Commencement No. 8, Transitional Provisions and Savings)
Order 2008, any provision relating to the amount of the Company’s authorised share capital be and is hereby revoked.
11 To consider and if thought fit pass the following resolution as special resolution
(a) That the Articles of Association of the Company be amended by deleting all the provisions of the Company’s Memorandum of
Association which, by virtue of section 28 Companies Act 2006, are to be treated as provisions of the Company’s Articles of
Association; and
(b) That the Articles of Association produced to the meeting and initialled by the chairman of the meeting for the purpose of
identification be adopted as the Articles of Association of the Company in substitution for, and to the exclusion of, the existing
Articles of Association.
12 To consider and if thought fit to pass the following resolution as a special resolution:
That a general meeting of the Company other than an annual general meeting may be called on not less than 14 clear days’ notice.
By order of the Board
CETC (Nominees) Limited
Company Secretary
21 May 2012
60 Annual Report 2011 | Anglo-Eastern Plantations Plc
Notice of Annual General Meeting
Notes:
1.
2.
3.
4.
5.
6.
7.
8.
9.
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 11.00 a.m. on 22 June 2012 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 11.00 am on 22 June 2012 or, if the meeting is adjourned, in the register
of members at 6.00 p.m. on the date which is two days before the day of the adjourned meeting shall be disregarded in determining the rights of any
person to attend and vote at the meeting.
As at 30 April 2012 (being the latest practicable date prior to the publication of this notice), the Company’s issued share capital comprised 39,976,272
Ordinary Shares of 25p each. Each share carries one vote except 437,200 shares held as treasury shares and therefore the total number of voting
rights in the Company as at 9.00 am on 30 April 2012 is 39,539,072.
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 in relation to the meeting, each proxy must be appointed to exercise rights attaching to a different share or 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).
In the case of joint holders, where more than one of the joint holders purports to appoint a proxy, only the appointment submitted by the most senior
holder will be accepted. Seniority is determined by the order in which the names of the joint holders appear in the Company’s register of members in
respect of the joint holding (the first-named being the most senior).
CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so for the annual general
meeting to be held on 26 June 2012 and any adjournment thereof by using the procedures described in the CREST Manual on the Euroclear website
(www.euroclear.com). CREST personal members or other CREST sponsored members and those CREST members who have appointed a voting
service provider should refer to their CREST sponsor or voting service provider, who will be able to take the appropriate action on their behalf. In order
for a proxy appointment or instruction made using the CREST service to be valid, the appropriate CREST message (a “CREST Proxy Instruction”) must
be properly authenticated in accordance with Euroclear’s specifications and must contain the information required for such instructions, as described in
the CREST Manual. All messages relating to the appointment of a proxy or an instruction to a previously appointed proxy must be transmitted so as to
be received by our Registrar [CREST ID: RA10] by 22 June 2012. It is the responsibility of the CREST member concerned to take such action as shall
be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In this connection, CREST members and,
where applicable, their CREST sponsors or voting service providers are referred, in particular, to those sections of the CREST Manual concerning
practical limitations of the CREST system and timings. The Company may treat a CREST Proxy Instruction as invalid in the circumstances set out in
Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001.
You may submit your proxy electronically using The Share Portal service at www.capitashareportal.com. If not already registered for The Share Portal
you will need your Investor Code which can be found on your share certificate.
The statement of the rights of shareholders in relation to the appointment of proxies does not apply to a person who receives this notice of general
meeting as a person nominated to enjoy “information rights” under section 146 of the Companies Act 2006. If you have been sent this notice of meeting
because you are such a nominated person the following statements apply: (i) you may have a right under an agreement between you and the registered
shareholder by whom you were nominated to be appointed (or to have someone else appointed) as a proxy for this general meeting and (ii) if you have
no such a right, or do not wish to exercise it, you may have a right under such an agreement to give instructions to that registered shareholder as to the
exercise of voting rights. Nominated persons should contact the registered member by whom they were nominated in respect of these arrangements.
A member of the Company which is a corporation may authorise a person or persons to act as its representative(s) at the meeting. In accordance with
the provisions od the Companies Act 2006, each such representative may exercise (on behalf of the corporation) the same powers as the corporation
could exercise if it were an individual member of the Company, provided that they do not do so in relation to the same shares. It is no longer necessary
to nominate a designated corporate representative.
10. Members satisfying the requirements of section 527 of the Companies Act 2006 may require the Company to publish on a website a statement by them
(at the Company’s cost) relating to the audit of the Company’s accounts which are being laid before this meeting (including the auditor’s report and the
conduct of the audit) or, where applicable, any circumstances connected with an auditor of the Company ceasing to hold office since the previous
general meeting at which accounts were laid. As at 30 April 2012, no such statement has been received by the Company. Should such a statement be
received, it will be published on the Company’s website at www.angloeastern.co.uk. In those circumstances the Company would be under an obligation
to forward a copy of the statement to the auditors forthwith and the statement would form part of the business which may be dealt with at this meeting.
11. Any member attending the meeting has the right to ask questions. The Company must cause to be answered any such questions relating to the
business being dealt with at the meeting but no such answer need be given if (a) to do so would interfere unduly with the preparation of the meeting or
involve the disclosure of confidential information, (b) the answer has already been given on a website in the form of an answer to a question, or (c) it is
undesirable in the interests of the Company or the good order of the meeting that the question be answered.
12. The following documents are available for inspection by members at the registered office of the Company during normal business hours (except Bank
Holidays) and at the place of the meeting not less than 15 minutes prior to and during the meeting:
(a) The register of Directors’ interests, showing any transactions of Directors and of their families in the securities of the Company;
(b) Copies of the Director’s service agreements and letters of appointment.
(c) a copy of the Company’s existing articles of association and a copy marked up to show the differences between those and the articles of
association proposed to be adopted pursuant to resolution 11.
61 Annual Report 2011 | Anglo-Eastern Plantations Plc
Notice of Annual General Meeting
13. A copy of this notice and the other information required by section 311A of the Companies Act 2006 can be found at www.angloeastern.co.uk.
14.
15.
If you are in any doubt as to any aspect of Resolutions 7 to 12 or as to the action you should take, you should immediately take your own advice from a
stockbroker, solicitor, accountant or other independent financial advisor authorised under the Financial Services and Markets Act 2000. The Board
believes that these Resolutions are in the best interests of the Company and shareholders as a whole.
If you have sold or otherwise transferred all your shares in the Company, please hand this document and the accompanying form of proxy to the
purchaser or transferee, or to the bank, stockbroker or other agent through whom the sale or transfer was effected, for transmission to the purchaser or
transferee. If you sell or have sold or otherwise transferred only part of your holding of existing shares please consult the bank, stockbroker or other
agent through whom the sale or transfer was effected.
62 Annual Report 2011 | Anglo-Eastern Plantations Plc
Company addresses
London Office
Anglo-Eastern Plantations Plc
Quadrant House, 6th Floor
4 Thomas More Square
London E1W 1YW
United Kingdom
Tel:
Fax:
44 (0)20 7216 4621
44 (0)20 7767 2602
Malaysian Office
Anglo-Eastern Plantations (M) Sdn Bhd
7th Floor, Wisma Equity
150 Jalan Ampang
50450 Kuala Lumpur
Malaysia
60 (0)3 2162 9808
Tel:
Fax: 60 (0)3 2164 8922
Indonesian Office
PT United Kingdom Indonesia Plantations
Wisma HSBC, Jalan Diponegoro, Kav 11
Medan 20152
North Sumatra
Indonesia
Tel:
Fax:
62 (0)61 452 8683
60 (0)61 452 0029
Secretary and registered office
Anglo-Eastern Plantations Plc
(Number 1884630)
(Registered in England and Wales)
CETC (Nominees) Limited
Quadrant House, 6th Floor
4 Thomas More Square
London E1W 1YW
United Kingdom
Tel:
Fax:
44 (0)20 7216 4600
44 (0)20 7767 2602
Company website
www.angloeastern.co.uk
Company advisers
Auditors
BDO LLP
55 Baker Street
London W1U 7EU
United Kingdom
Principal Bankers
National Westminster Bank Plc
15 Bishopsgate
London EC2P 2AP
United Kingdom
The Hong Kong and Shanghai Banking Corporation
Limited
Wisma HSBC
Jalan Diponegoro, Kav 11
Medan 20152
North Sumatra
Indonesia
PT Bank DBS Indonesia
Uniplaza Building
Jalan Letjen MT Haryono A-1
Medan 20231
North Sumatra
Indonesia
RHB Bank Bhd
Podium Block, Plaza OSK
Jalan Ampang
50450 Kuala Lumpur
Malaysia
Registrars
Capita Registrars Ltd
Northern House
Woodsome Park
Fenay Bridge
Huddersfield
West Yorkshire HD8 0GA
United Kingdom
Solicitors
Withers LLP
16 Old Bailey
London EC4M 7EG
United Kingdom
Sponsor/Broker
Charles Stanley Securities
131 Finsbury Pavement
London EC2A 1NT
United Kingdom