2012 Annual Report
ANNUAL REPORT
Anglo-Eastern Plantations Plc
Contents
About AEP
Financial Highlights
Key Information
Shareholder Information
Chairman's Statement
Operating and Financial Review
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
Form of Proxy and Attendance Card
Company addresses, advisers and website
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4
6
7
9
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16
17
18
19
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27
28
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71
72
Separate Attachment
Inside Back Cover
About Anglo-Eastern Plantations
Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”) are a major producer of palm oil and rubber with
plantations across Indonesia and Malaysia, amounting to some 126,000 ha.
AEP has a Premium Listing on the London Stock
Exchange. The Company was formed and floated in
1985.
Primary activities are
the crop production and
processing of palm oil and rubber through operations in
Indonesia and Malaysia.
The Group is committed to responsible development
and management of its plantations and facilities for the
benefit of the environment and society in which it
operates.
Annual Report 2012 | Anglo-Eastern Plantations Plc
2
Oil Palm Plantations
The Group has developed 40,000ha of mature oil palm at 12 plantations across
Indonesia and Malaysia
Oil Palm Development
An Oil Palm tree will usually take three years from planting to harvest of first crop
and will reach full production after five years. The Company has approximately
18,000ha of recently planted immature plantations of which 1,900ha were planted in
2012.
Palm Oil Production
The Group operates five palm oil mills in Indonesia, including a mill at Northern
Sumatera which will very soon be incorporating advanced waste management
treatment for biomass disposal and biogas emission capture. This project will be
completed in the third quarter of 2013.
Third party Palm Oil Processing
During 2012 the Group purchased approximately 537,100mt of fresh fruit bunches
from third party producers for processing through own mills.
Rubber Plantations
The Group has 678ha of established rubber plantations which, in 2012, produced
857mt of raw latex and rubber lumps.
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Financial Highlights
Revenue
Profit before tax
- before biological asset (“BA”) adjustment
- after biological asset adjustment
EPS before BA adjustment
EPS after BA adjustment
Dividend (cents)
Dividend (pence)
Note: * Based on exchange rate at 22 April 2013 of $1.5276/£
2012
$m
237.4
88.6
84.0
Restated
2011
$m
259.0
101.9
123.0
133.99cts
123.10cts
4.5cts
*2.9p
154.15cts
194.45cts
6.0cts
3.7p
Anglo-Eastern Plantations PLC
1000
800
600
400
200
0
2008
2009
2010
2011
2012
2013
Turnover by Volume ('000) (RHS)
Share Price (p)
600
500
400
300
200
100
0
Annual Report 2012 | Anglo-Eastern Plantations Plc
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Financial Highlights
Revenue ($000)
Profit Before Tax Before BA
($000)
120,000
100,000
80,000
60,000
40,000
20,000
0
300,000
250,000
200,000
150,000
100,000
50,000
0
2008 2009 2010 2011 2012
2008 2009 2010 2011 2012
Basic Earnings Per Share
Before BA ($, cents)
Asset Value Per Share
($, cents)
180.00
160.00
140.00
120.00
100.00
80.00
60.00
40.00
20.00
0.00
1,200
1,000
800
600
400
200
0
2008 2009 2010 2011 2012
2008 2009 2010 2011 2012
Note: The Financial Statements for the years 2011 were restated following the change of accounting
policies as disclosed in note 2 – Prior year adjustments of Notes to the Financial Statements. The Financial
Statements for the years 2008, 2009 and 2010 were not restated and were based on the previous
accounting policies.
Annual Report 2012 | Anglo-Eastern Plantations Plc
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Key Information
Crude Palm Oil Production (mt)
300,000
250,000
200,000
150,000
100,000
50,000
0
2008
2009
2010
2011
2012
Own FFB & Outside Purchase (mt)
800,000
600,000
400,000
200,000
0
2008
2009
2010
2011
2012
Own FFB
Outside Purchase
Age of Palm Trees
(as at 31/12/12)
18%
32%
33%
17%
Immature
Young
Prime
Old
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Shareholder Information
Market capitalisation
The market capitalisation of Anglo-Eastern Plantations Plc at 31 December 2012 was £265 million, the ordinary
share price at close of business on 22 April 2013 was 707.5 pence giving a market capitalisation of £280 million.
Website
www.angloeastern.co.uk contains various details and information on the Company and its operations, together with
all the key historical financial and regulatory information on the Company. The website is updated on a continuing
basis for all Company announcements and other relevant developments, including share price movements.
Investor relations
Investors requiring further information on the Company are invited to contact:
Dato’ John Lim Ewe Chuan
Executive Director, Corporate Finance and Corporate Affairs
Anglo-Eastern Plantations Plc
Quadrant House, 6th Floor
4 Thomas More Square
London E1W 1YW
United Kingdom
Tel:
44 (0) 20 7216 4621
Fax: 44 (0) 20 7767 2602
Registrar
Administrative queries about holdings of AEP can be directed to the Company's registrar:
Capita Registrars Ltd
Northern House
Woodsome Park
Fenay Bridge
Huddersfield
West Yorkshire, HD8 0GA
United Kingdom
Tel:
Tel:
0871 664 0300 (UK)
44 (0) 20 8639 3399 (international)
Shareholders can view and update their account details via the Capita website, details of which can be found at
www.capitaregistrars.com.
Annual General Meeting
The twenty-eighth Annual General Meeting of the Company will be held at the offices of UHY Hacker Young LLP,
Quadrant House, 4 Thomas More Square, London E1W 1YW on 19 June 2013. Notice of the meeting is set out at
the end of this Annual Report and pages 75 to 78.
Amalgamation of accounts
Shareholders receiving multiple copies of Company mailings as a result of a number of accounts being maintained in
their name are invited to write to the Company's registrar at the above address to request that their accounts be
amalgamated.
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Shareholder Information
Payment of dividends
The Group's reporting currency is US dollars. However shareholders can choose to receive dividends in US dollars
or in pounds 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.
Electronic communications
Capita Registrars offer AEP shareholders the opportunity to manage their shareholding through the Capita Share
Portal.
Registration is free and can be used to manage shareholdings quickly and securely. To register for this service go to
www.capitaregistrars.com/shareholder and follow the instructions.
Annual Report 2012 | Anglo-Eastern Plantations Plc
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Chairman's Statement
AEP has continued to build and expand its operations through 2012 in challenging market conditions.
The Group achieved a record level of oil production in the year to 31 December 2012, although the lower Crude
Palm Oil (“CPO”) prices meant revenue for the Group was $237.4 million, compared to $259.0 million achieved in
2011.
The continuing maturity of the Group’s trees resulting from the established planting programme mean that Fresh
Fruit Bunch (“FFB”) production for 2012 was 783,400mt, 11% higher than previous year (2011: 707,000mt). And
although FFB bought-in from surrounding smallholders during 2012 was 537,100mt (2011: 546,800mt), 2% lower
compared to 2011, the Group’s mills processed 5% more FFB, and increased CPO production to 260,500mt (2011:
248,000mt).
The decline in the CPO price during 2012 resulted from strong production in Indonesia and Malaysia which saw palm
oil inventories rise to record levels. While production levels were increasing, a slowdown in global economic activity
in 2012 led to weaker growth in demand. The average CPO price in 2012 was $995/mt, 11% lower than the figure of
$1,124/mt for 2011.
The Group operating profit for 2012, before biological asset (“BA”) adjustment was $85.4 million, 13% down on the
record figure of $98.5 million achieved in 2011. Earnings per share, before BA adjustment decreased to 133.99cts,
compared to 154.15cts in 2011 and post BA adjusted earnings per share were 123.10cts compared to 194.45cts for
the previous year.
As at 31 December 2012, the Group had cash and cash equivalents of $116.3 million and borrowings of $25.1
million, resulting in a net cash position of $91.2 million, compared to $84.0 million at 31 December 2011. The positive
cash flow helped strengthen the Group’s balance sheet over the year.
In spite of the challenging market conditions the Board has continued to invest in the development of new assets.
The Group planted 1,900ha of oil palms during 2012. This was less than planned, due primarily to a protracted
process in finalising agreement with villagers for land compensation payments and delays in securing the necessary
land release permits.
Permits for the construction of palm oil mills in North Sumatera and Central Kalimantan were held up by local
authorities in 2012 and the earthworks for one of the mills finally commenced in the fourth quarter of 2012.
Funding of the capital expenditure was aided through the securing of two loans for $45 million, details of which were
announced in August 2012.
AEP embraces the Group’s responsibility for the impact of its activities on the environment, consumers, employees,
communities, stakeholders and all other members of wider society. In meeting the Group’s Corporate Social
Responsibility (“CSR”) obligations it is cognisant of the contribution and welfare of its employees while continuing to
contribute to improve the well-being of the wider community.
As announced previously, the Group has committed a $4.5 million investment in the biogas and biomass project for
one of the mills in North Sumatera. Civil works for the plant commenced in the fourth quarter of 2012 and when
completed in the third quarter of 2013, will improve significantly the treatment of palm oil mill waste and mitigate the
emission of biogas from the effluent treatment process. The successful implementation and running of this project
will pave the way for further similar undertakings in the Group’s other palm oil mills.
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Chairman's Statement
The majority of our employees working at the Group’s plantations and mills, together with their families and
dependents, are housed in self-contained communities constructed by the Group. Employees and their dependents
are provided with free housing, clean water and electricity. Within these communities we also build and maintain
places of worship, schools and sports facilities. In 2012, the Group spent $174,342 to build additional facilities and
maintain these amenities and will continue to incur community development expenditure in 2013.
The Group also recognises its obligations to the wider farming communities in which it operates. The Indonesian
authorities have established that not less than 20% of the new planted area acquired from 2007 onwards are to be
reserved for the benefit of smallholder scheme cooperatives, known as Plasma scheme and the Group is integrating
such smallholder developments alongside its estates.
The Board intends to pursue a further development programme of smallholder scheme. This smallholder scheme
cooperative will be managed by the Group which involves 7 companies covering an approximate area of 5,379ha.
The Group will assist the smallholder scheme cooperative to obtain financing for the plasma scheme through a local
bank to be secured by land and assets of the scheme and guaranteed by the Group. As at end of 2012, the Group
has registered approximately 507ha for plasma planting.
The Board is mindful that given the anticipated further capital commitments the level of dividend needs to be
balanced against the planned expenditure. The Board has therefore declared a final dividend of 4.5cts per share in
respect of the year to 31 December 2012 (2011: 6.0cts). Subject to approval by shareholders at the Annual General
Meeting, the final dividend will be paid on 5 July 2013 to those shareholders on the register on 7 June 2013.
The Board views the prospects for 2013 with cautious optimism. With the continuing rise in income levels and
population growth in China, India and Indonesia, the Board anticipates that CPO prices may recover gradually from
the current low levels. Furthermore global inventories of 17 oils and fats remain at historically low levels and the price
differential between CPO and soya oil, CPO’s closest competing product, is at a near four-year high of over $300/mt,
more than double the historical average differential price. However, the introduction of 2.5% import duty on CPO in
India and China’s recent introduction of new quality controls over imported refined palm oil in first quarter of 2013
may dampen demand for palm oil in the short term.
Furthermore, rising fertiliser costs and increasing wage inflation in Indonesia are expected to increase the overall
production cost in 2013.
Nevertheless, the Group hopes that, against a backdrop of a global economic recovery, trading prospects would
improve in 2013 and beyond.
On behalf of the Board of Directors, I would like to convey our sincere thanks to our 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 shareholders, business associates, government authorities and all
other stakeholders for their continued confidence, understanding and support for the Group.
Madam Lim Siew Kim
Chairman
30 April 2013
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10
Operating and Financial Review
Financial Review
The operating and financial review has been prepared in accordance with Accounting Standard Board’s (ASB) 2006
Operating and Financial Review Reporting Statement.
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.
For the year ended 31 December 2012, revenue for the Group was $237.4 million, 8% lower than $259.0 million
reported in 2011 due primarily to lower CPO prices. Strong production in Indonesia and Malaysia boosted palm oil
inventory to record level. This coupled with weaker growth in demand drove CPO prices downward for most of 2012.
Group operating profit for 2012, before biological asset adjustment was $85.4 million, was 13% less than $98.5
million in 2011.
FFB production for 2012 was 783,400mt, 11% higher than the 707,000mt produced in 2011, due primarily to the
increase in matured planting. FFB bought-in from local smallholders for 2012 was 537,100mt (2011: 546,800mt), 2%
lower compared to 2011. During the year, FFB processed by the Group’s mills was 5% higher resulting in 5%
increase in CPO production at 260,500mt, compared to 248,000mt in 2011.
Profit before tax and after BA adjustment for the Group was $84.0 million, 32% lower compared to $123.0 million in
2011. The BA adjustment was a debit of $4.5 million, compared to a credit of $21.1 million in 2011, reflecting lower
biological value.
The average CPO price for 2012 was $995/mt, 11% lower than 2011 of $1,124/mt.
Earnings per share before BA adjustment decreased by 13% to 133.99cts, compared to 154.15cts in 2011.
The Group’s balance sheet remains strong. It continued to experience positive cash flow generation for 2012. As at
31 December 2012, the Group had cash and cash equivalents of $116.3 million and borrowings of $25.1 million,
giving it a net cash position of $91.2 million, compared to $84.0 million in 2011.
The Group signed two loan agreements during the year of $45 million to fund plantation development and
construction of two mills in North Sumatera and Central Kalimantan of which $25 million was drawndown during the
year. In 2012 the Group also repaid $6.5 million (2011: $15.6 million) of the existing borrowings of $6.5 million (2011:
$22.1 million).
On 14 November 2011 the Financial Reporting Council (‘FRC’) wrote to the company in respect of its policies and
methodologies for valuing and accounting for its biological assets and non-biological assets in its accounts for the
year ended 31 December 2010.
As a result of discussions with the FRC, the company’s interim accounts for the period ended 30 June 2012,
announced on 30 August 2012, stated that the company had revisited its policies and methodologies for valuing and
accounting for its estate assets. As a result, the directors had concluded that the proportions of the total value
attributed to the biological and non-biological assets needed to be restated and that it is not possible to measure
reliably the fair value of plant, machinery and estate infrastructure. The restatement and related adjustments are
disclosed in these accounts in note 2.
Annual Report 2012 | Anglo-Eastern Plantations Plc
11
Operating and Financial Review
Between 19 October 2012 and 29 April 2013 the FRC and the company exchanged correspondence. Additional
information and explanations were provided to the FRC in respect of the restatement of biological assets and land at
31 December 2010 and 2011, including in respect of the measurement of notional rent. Following receipt of
information during April, the FRC’s enquiries into the restated valuation of biological assets and land at 31 December
2010 and 2011 are on-going at the date of these accounts being signed.
Corporate Development
In 2012, the Group planted 1,900ha of oil palm mainly in Kalimantan, boosting planted area by 3% to 59,000ha
(2011: 57,100ha). New plantings remain behind schedule due to protracted negotiations over settlement of land
compensation with villagers and a delay in the issuance of land release permit (Izin Pelepasan) for two plantations.
However, one of these plantations has now obtained the necessary permit and shall proceed to clear the land for
planting.
Permits for the construction of palm oil mills in North Sumatera and Central Kalimantan were held up by local
authorities in 2012 and the earthworks for one of the mills finally commenced in fourth quarter of 2012.
On the progress of the Group's $4.5million investment in the biogas and biomass project for one of the mills in North
Sumatera, civil works for the plant commenced in the fourth quarter of 2012 and the whole project is expected to be
completed in the third quarter of 2013. This project will enhance the waste management treatment of the mill and at
the same time mitigate emissions of biogas.
The successful implementation and running of this project will pave the way for further similar undertakings for the
rest of the Group’s mills.
New Palm Oil Mill Projects
The earthworks for the mill in Kalimantan commenced in the fourth quarter of 2012 while civil works is expected to
start in second quarter of 2013. This mill is expected to be completed in first quarter of 2015 with an initial capacity of
45mt FFB/hr.
The earthworks for another mill in North Sumatera started in the first quarter of 2013 and the civil works is expected
to start in the fourth quarter of 2013. This mill is expected to be completed by the second quarter of 2015 with a final
capacity of 60mt FFB/hr.
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, provides and repair places of worship for workers of different religious faith as
well as schools and sports facilities in these communities. In 2012, the Group spent $174,342 to build additional
facilities and maintain these amenities in 2012 and will continue to incur community development expenditure in
2013.
Staff and selected employees are given the opportunity to be trained and to attend 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
Annual Report 2012 | Anglo-Eastern Plantations Plc
12
Operating and Financial Review
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 the estates and the cost of school buses to
transport employees’ children to the school are provided by the Group. Over the years a total of 32 schools have
been built with 100 teachers currently employed within our Group estates. In 2012, the Group spent some $313,121
for running the schools.
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. We have established 20 clinics operated by
qualified doctors, nurses and hospital assistants in the estates. Related healthcare expenses for 2012 were
$619,919.
A strong commitment to 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 approximate area of 5,379ha. The Group will
assist the smallholder scheme cooperative to obtain financing for the plasma scheme through a local bank to be
secured by land and assets of the scheme and guaranteed by the Group. As at end of 2012, we have registered
approximately 507ha for plasma planting.
In addition to education and healthcare which includes the construction of schools, provision of scholarships, books,
education and free medical activities, the Group also develop infrastructure such as construction and repair of
bridges and roads. The Group also provides aid to villagers such as goats and fish fries to start community
sustaining programs. The Group helped victims of floods and other disasters, including afforestation to the amount of
approximately $187,320 in 2012.
Indonesian Sustainable Palm Oil
The Indonesian Sustainable Palm Oil (“ISPO”) certification is legally mandatory for all plantations in Indonesia. In
March 2012, ISPO, which is fundamentally aligned 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 healthcare were carried out to inculcate a
safety culture in workplaces at the estates and mills in North Sumatera. In the year the Group upgraded its
agricultural chemical stores and diesel fuel storage tanks in various plantations and mills to meet safety and
environmental standards. Standard operating procedures were 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. The Group worked closely with appointed certification consultants in the
implementation of ISPO standard. Three plantations are expected to be ready for certification by third quarter of
2013.
Annual Report 2012 | Anglo-Eastern Plantations Plc
13
Operating and Financial Review
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.
On completion of the Group’s first biogas and biomass project in North Sumatera, it will enhance the waste
management treatment of the mill and at the same time mitigate greenhouse biogas emissions. Under this project,
the methane gas will be trapped and will be used to generate electricity to partially power its mills and increase
energy efficiency. Further similar undertakings for the Group’s mills are planned and shall be implemented in stages.
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 Owls were 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 areas 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.
Directors
Dato' John Lim Ewe Chuan's appointment as the Executive Director - Corporate Finance & Corporate Affairs expired
on 31 August 2012 and was extended for a further two years by the Board.
Madam Lim Siew Kim and Drs. Kanaka Puradiredja will be submitting themselves for re-appointment at the
forthcoming annual general meeting.
Brief profiles of all Directors are set out on page 28 of this Annual Report.
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 4.5cts in respect of 2012 (2011: 6.0cts). Subject to shareholder approval at
the AGM, the final dividend will be paid on 5 July 2013 to those shareholders on the register on 7 June 2013.
Shareholders choosing to receive their dividend in Sterling will do so at the rate ruling on 7 June 2013, when the
register closes. Based on the exchange rate at 22 April 2013 of $1.5276/£, the proposed dividend would be
equivalent to 2.9p, compared to 3.7p declared in respect of 2011.
Annual Report 2012 | Anglo-Eastern Plantations Plc
14
Operating and Financial Review
Outlook
FFB production for two months to February 2013 was 1% higher against the same period in 2012. 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.
The CIF (Cost, Insurance, Freight) Rotterdam CPO price opened the year 2013 at $835/mt and prices are expected
to be in the range of $700/mt to $1,000/mt for the first half of 2013. A confluence of negatives drove the CPO price to
a near two-year low. Recent CPO price weakness was driven by a weak global economy resulting in reduced growth
in demand coupled with seasonally high production accentuating in a high stockpile of CPO.
The US dollar appreciated by approximately 10% (2011:1%) against the Indonesian Rupiah in 2012. There was no
adverse fluctuation against the US dollar in early 2013. We expect a stable currency exchange level to be attainable
for the rest of the year.
The CPO price remained under pressure during first quarter of 2013 due to the continuing higher levels of supply
and lower demand from China and India. With rising income levels and population growth in China, India and
Indonesia, the Board believes that the CPO price will recover gradually. Furthermore global stock-to-usage of 17 oils
and fats is relatively low and the price differential between CPO and soyoil, the closest competing product, is at a
near four-year high of over $300/mt, which is more than double the historical average and should help spur demand
for CPO and ultimately price recovery. On the other hand, the introduction of 2.5% import duty on CPO in India and
the China’s implementation of quality control over imported refined palm oil in first quarter of 2013 may dampen
demand and hurt the palm oil industry in the short term.
The rising fertiliser costs and wages in Indonesia are expected to increase the overall production cost in 2013.
Indonesia's minimum wage has increased at an average rate of between 10% to 15% per annum over the last few
years. The Indonesian government however recently announced exceptional hikes in 2013 minimum wage ranging
from 29% to 49% for some provinces in Bengkulu and East Kalimantan. This wage hikes would potentially raise
overall estate costs and erode profit margins.
Nevertheless barring any unforeseen circumstances, the Group is confident that CPO demand will be sustainable in
the long term on the backdrop of global economic recovery and we can expect a satisfactory profit level and cash
flow for 2013.
Annual Report 2012 | Anglo-Eastern Plantations Plc
15
Financial Record
Income statement
Revenue
(Restated)
2011
$000
(Restated)
2010
$000
2012
$000
2009
$000
2008
$000
237,352
259,037
187,233 150,080
174,684
Trading profit before BA
85,396
98,518
64,937
58,955
74,064
Profit attributable to shareholders after BA
48,792
76,882
127,952
37,494
42,001
Dividend proposed for year
(1,784)
(2,372)
(1,977)
(1,973)
(1,973)
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: $
$000
462,523
116,198
(25,026)
(7,460)
(46,644)
499,591
(86,822)
412,769
15,504
(1,171)
25,022
(53,772)
427,186
412,769
39,976
133.99cts
123.10cts
4.5cts
1,041cts
84.5p
2.9p
641p
9,638
1.63
3.06
9,363
1.59
3.09
$000
451,549
84,017
(58)
(14,076)
(52,533)
468,899
(77,369)
391,530
15,504
(1,507)
25,022
(28,122)
380,633
391,530
$000
$000
437,859 249,699
55,221
54,337
(17,589)
(6,438)
285
(5,087)
(59,192)
(28,772)
422,363 257,960
(46,989)
(73,665)
348,698 210,971
15,504
(1,507)
25,022
3,996
15,504
(1,744)
25,022
(7,405)
305,683 179,594
348,698 210,971
39,976
39,976
39,976
154.15cts 99.59cts 94.11cts
194.45cts 323.61cts 94.99cts
5.0cts
535cts
5.0cts
882cts
6.0cts
990cts
95.5p
3.7p
637p
9,068
1.55
3.17
8,763
1.61
3.06
64.4p
3.1p
563p
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
$000
200,532
60,803
(27,025)
(13,571)
(28,450)
192,289
(31,558)
160,731
15,504
(1,785)
25,022
(22,083)
144,073
160,731
39,976
103.0cts
105.1cts
5.0cts
407cts
56.0p
3.0p
289p
10,950
1.41
3.48
9,735
1.84
3.34
Annual Report 2012 | Anglo-Eastern Plantations Plc
16
Estates Areas
Annual Report 2012 | Anglo-Eastern Plantations Plc
17
Location of Estates
Annual Report 2012 | Anglo-Eastern Plantations Plc
18
Business Review
Commodity Prices
The CPO CIF Rotterdam price started the year positively at $1,045/mt (2011: $1,195/mt) and reached a peak of
$1,200/mt in April 2012 before sliding downtrend for the remaining of the year. It ended the year at $810/mt (2011:-
$1,045/mt), averaging $995/mt for the year (2011: $1,124/mt). A confluence of negatives drove the CPO price to a
near two-year low. Recent CPO price weakness was driven by a weak global economy resulting in reduced growth in
demand coupled with seasonally high production accentuating in a high stockpile of CPO.
The recovery of price hinges on the strong recovery of demand and a reduction of the current high inventory of CPO
stockpile. The increasing world population leading to a pick-up in 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 and rapeseed crops together with large discount to soybean price would help
support the commodity prices.
Rubber prices averaged $2,967/mt for 2012 (2011: $4,300/mt). Our small area of 668ha of mature rubber contributed
a gross profit of $2.5 million in 2012 (2011: $3.6 million).
CPO CIF Rotterdam (from year 2003 to 2013)
1600
1400
1200
1000
t
M
/
$
U
800
600
400
200
0
2003
CPO CIF Rotterdam
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Source : Public
Valuation
During the year, the Directors reviewed the Group’s policies and methodologies for valuing and accounting for its
biological assets and non-biological assets for 2010 and 2011 and concluded after having the individual components
valued professionally for 2011, that the proportions of the total value attributed to the biological and non-biological
assets need to be restated. Following on from this, in the opinion of the directors, it is not possible to measure
reliably the fair value of plant, machinery and estate infrastructure as separate components and the Group has
therefore changed to a policy of carrying plant, machinery and estate infrastructure at cost less depreciation which
they believe is a more appropriate policy for the nature of the assets. Accordingly, the Directors have concluded that
in accordance with the requirements of International Accounting Standard (“IAS”) 8 (Accounting Policies, Changes in
Accounting Estimates and Errors), prior year adjustments are required to restate the figures previously reported. The
former policy and methodology and the revised policy is described in detail in notes 1 and 2.
In 2012, the Group’s biological assets were valued by qualified valuers based on discounted cash flow.
Annual Report 2012 | Anglo-Eastern Plantations Plc
19
Business Review
Indonesia
FFB production in North Sumatera, which aggregates the estates of Tasik, Anak Tasik, Labuhan Bilik, Blankahan,
Rambung, Sungai Musam and CPA, produced 346,329mt in 2012 (2011: 298,100mt), 16.2% higher than 2011. An
additional 1,134 ha of newly matured oil palm in Labuhan Bilik and 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 Sumatera), which aggregates the estates of Puding Mas, Alno, KKST, ELAP and
RAA produced 284,794mt (2011: 264,200mt), 7.8% higher than 2011. 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 776 ha of oil palm reached its prime production age significantly increasing its
yield.
FFB production in the Riau region, comprising Bina Pitri estates, produced 119,671mt in 2012 (2011: 110,400mt),
8.4% higher than 2011. The improved performance was attributable to favourable weather condition and higher yield
from fertilisation and rehabilitation programme.
FFB production in Kalimantan comprising Sawit Graha Manunggal estates produced 3,574mt in 2012 (2011: Nil)
mainly from newly matured oil palm area of 283 ha.
Overall bought-in crops for Indonesian operations were 1.8% lower at 537,100mt for the year 2012 (2011:
546,800mt). The average oil extraction rate from our mills was 20.2% in 2012 (2011: 20.3%). The extraction rate was
diluted by higher percentage of bought-in crops as well many young oil palm trees which reached maturity in 2012.
Malaysia
FFB production in 2012 was lower at 29,000mt, compared to 34,300mt in 2011. Unfavourable weather condition with
higher rainfall together with lack of manpower affected the transportation and harvesting of FFB. Malaysian estates
contributed a pre-tax profit of $0.3 million, 91% lower than 2011.
Development
In 2012, the Group planted another 1,900ha mainly in Kalimantan compared to 4,800ha in 2011.
New plantings remain behind planned schedule due to protracted negotiations over settlement of land compensation
with villagers and a delay in the issuance of land release permit (Izin Pelepasan Hutan) and Location Permit (Izin
Lokasi) for two plantations. As at the date of this report, both estates have obtained the necessary permits and
proceed to clear the land for planting.
Annual Report 2012 | Anglo-Eastern Plantations Plc
20
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 2012.
Principal activity
The Company is incorporated in the United Kingdom under the Companies Act 2006. The address of the registered
office is at Quadrant House, 6th Floor, 4 Thomas More Square, London E1W 1YW, United Kingdom.
The Company acts as a holding company and co-ordinates the businesses of its subsidiaries. At 31 December 2012,
the core activities of the Group are the cultivation of oil palm and rubber in Indonesia and Malaysia. The subsidiary
undertakings which principally contributed to 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 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 31.
Results and dividends
The audited financial statements for the year ended 31 December 2012 are set out on pages 39 to 74. The Group
profit for the year on ordinary activities before taxation was $84,042,000 (2011: $122,971,000) and the profit
attributable to ordinary shareholders was $48,792,000 (2011: $76,882,000). No interim dividend was paid. The
Directors recommend a final dividend of 4.5cts (2011: 6.0cts) to be paid to shareholders on 5 July 2013.
Shareholders may elect to receive their dividend in sterling as described on page 26.
Business Review
The review of the Group’s business is set out on page 19 and 20. 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 16 and in the business review on page 19 and 20.
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 especially with the impending Presidential election in 2014, the Board perceives that the Group will
be able to continue to extract profits from its subsidiaries in Indonesia for the foreseeable future.
Annual Report 2012 | Anglo-Eastern Plantations Plc
21
Directors’ Report
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.
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 and mills equipment) 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.
Annual Report 2012 | Anglo-Eastern Plantations Plc
22
Directors’ Report
In addition CPO is sold at a significant discount over its main competitor soya oil. The introduction of import duty and
quality control on CPO imports by India and China would affect demand and price in the short term.
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.
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 mixed success in managing such periodic delays and disruptions especially in
East and South Sumatera.
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 32 in the “Statement on Corporate Governance”.
The estates in North Sumatera 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's $4.5 million investment in the biogas and biomass project started for one
of the mills in North Sumatera which is expected to be completed in the third quarter of 2013 will enhance the waste
management treatment of that mill and at the same time mitigate emissions of biogas. The successful
implementation and running of this project will pave the way for further similar undertakings for the rest of the
Group’s mills.
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.
Annual Report 2012 | Anglo-Eastern Plantations Plc
23
Directors’ Report
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 operating
estates. The returns from these plots are used to improve villages’ community welfare. As at end of 2012, a total of
19 Kebun Kas Desa plots involving 275 ha have been developed. In 2013, the Group’s intended to build plasma
scheme of approximately 3,800ha for the surrounding communities, mostly in Bengkulu, Bangka and Kalimantan.
Financial risk
Information on financial instruments and other risks is set out in note 25 to the consolidated financial statements.
Biological assets, property, plant and equipment
Information relating to changes in fixed assets is given in note 11 to the consolidated financial statements.
Directors
A full list of Directors appears on page 28. Dato' John Lim Ewe Chuan's appointment as Executive Director -
Corporate Finance & Corporate Affairs expired on 31 August 2012 and was extended for a further two years by the
Board.
Madam Lim and Drs. Kanaka 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)
2012
Ordinary shares
20,521,314
-
-
-
-
2011
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 2012 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 7 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.
Annual Report 2012 | Anglo-Eastern Plantations Plc
24
Directors’ Report
Substantial share interests
As at 31 March 2013, the following interests had been notified to the Company, being interests in excess of 3% of
the issued ordinary share capital of the Company:
Name of holder
Genton International Limited
Alcatel Bell Pension Fund
S N Roditi
KBC Securities
Number
20,247,814
6,731,500
1,366,900
1,208,234
Percentage of
voting rights held
51.08%
16.98%
3.45%
3.05%
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 has 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 26 June 2012 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 is being sought under Resolution 7 at the forthcoming annual general meeting.
The aggregate nominal value which can be allotted under the authority set out in paragraph (i) of the resolution is
limited to £3,303,031 (representing 13,212,124 ordinary shares of 25p each) which is approximately one third of the
issued ordinary capital of the Company as at 19 June 2013 (being the latest practicable date before publication of
this notice). In accordance with guidance issued by the Association of British Insurers, the authority in paragraph (ii)
of the resolution will authorise the directors to allot shares, or to grant rights to subscribe for or convert any security
into shares, only in connection with a fully pre-emptive rights issue, up to a further nominal value of £3,303,031
(representing 13,212,124 ordinary shares). This amount (together with the authority provided under paragraph (a) of
the resolution) represents approximately two thirds of the Company’s issued ordinary share capital (excluding
treasury shares) as at 19 June 2013. This authority will expire at the conclusion of the next annual general meeting
of the company. The directors have no present intention of issuing new shares, or of granting rights to subscribe for
or to convert any security into shares.
Disapplication of pre-emption rights
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
Annual Report 2012 | Anglo-Eastern Plantations Plc
25
Directors’ Report
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 £495,454 representing 5% of the current
issued share capital. The authority will be expiring at the forthcoming annual general meeting or on 30 June 2013,
whichever is earlier. Renewal of this authority on similar terms is being sought under Resolution 8 at the forthcoming
annual general meeting.
Acquisition of the Company’s own shares and authority to purchase own shares
At 30 April 2013, the Directors had remaining authority under the shareholders’ resolution of 26 June 2012, to make
purchases of 3,997,627 of the Company’s ordinary shares. This authority expires on 30 June 2013. 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 3,963,637 ordinary shares of 25p each on the London Stock Exchange, representing 10% of the
Company’s issued ordinary share capital. The minimum price which may be paid for an ordinary share is 25p. The
maximum price which may be paid for an ordinary share on any exercise of the authority will be restricted to the
highest of (i) an amount equal 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 and (ii) the
higher of price of the last independent trade and the highest current independent bid on the London Stock Exchange.
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.
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 2012 (2011: 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
Annual Report 2012 | Anglo-Eastern Plantations Plc
30 April 2013
26
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
All of the Directors listed on page 28 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.
By order of the Board
Dato’ John Lim Ewe Chuan
Executive Director, Corporate Finance and Corporate Affairs
Annual Report 2012 | Anglo-Eastern Plantations Plc
30 April 2013
27
Directors
Madam Lim Siew Kim
(Non-Executive Chairman, aged 64)
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 63)
Appointed 26 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 65)
Appointed 1 April 2009.
Non-Executive Director of MTD Capital Berhad, MTD ACPI Engineering Berhad and APFT Berhad, of which the
latter two are 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 69)
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.
Annual Report 2012 | Anglo-Eastern Plantations Plc
28
Statement on Corporate Governance
Application of the UK Corporate Governance Code
Anglo-Eastern Plantations Plc is committed to business integrity, appropriately high ethical standards and
professionalism in all its activities and operations. This includes a commitment to high standards in corporate
governance relating in particular to appropriate systems and controls adopted at a senior level of management of the
Group and operation of the Board. The bench-mark standards in this regard are set out in the UK Corporate
Governance Code (‘the Code’), as most recently revised in September 2012 which forms part of the Listing Rules of
the London Stock Exchange. Where provisions of the Code were not met during 2012, particular comment is made
in the statements below and in the Directors’ remuneration report on pages 33 to 35.
The Board
AEP is led by a strong and experienced Board of Directors (see biographical details set out on page 28). During
2012 the Board comprised the Non-Executive Chairman, one Executive Director and two further Non-Executive
Directors, both of whom are considered by the Board to be 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 on 31 January 2011. 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 with her experience in plantation 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.
Independence of the Non-Executive Directors
The Board has evaluated the independence of each of its Non-Executive Directors. Following this assessment, the
Board has determined that, throughout the reporting period, both of its Independent Non-Executive Directors, who
were appointed for specified terms of office, were independent, based above all on their objectivity and integrity. The
terms and conditions relating to the appointment of the Non-Executive Directors are available from the Company
Secretary.
In arriving at its conclusion, the Board considered the factors set out in the Combined Code including, inter alia,
whether any of the Non-Executive Directors:
• has been an employee of the Group within the last five years;
• has, or had within the last three years, a material business relationship with the Group;
•
receives remuneration from the Group other than a director’s fee;
• has close family ties with any of the Group’s advisors, directors or senior employees;
• holds cross-directorships or has significant links with other directors through involvement in other companies or
bodies;
• has served more than nine years on the Board; or
•
represents a significant shareholder
The Combined Code acknowledges that a director may be regarded as independent notwithstanding the existence of
any of the above factors.
The 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.
Senior Non-Executive Director
Mr. Nik Din Bin Nik Sulaiman acted in the capacity of Senior Non-Executive Director throughout the year.
Annual Report 2012 | Anglo-Eastern Plantations Plc
29
Statement on Corporate Governance
Operation of the Board
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 from the Company Secretary.
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 2012, there were two meetings,
attended by all the Directors.
The Independent Non-Executive Directors met on their own during 2012. The Chairman met all the Non-Executive
Directors, in the absence of the Executive Director, twice in 2012.
The Board and its committees are supplied with relevant, timely and accurate information for review prior to each
meeting to enable them to discharge their duties. The Board has identified and formally adopted a schedule of key
matters that are reserved for its decision, including the annual fiscal and capital budgets, interim, preliminary and
final results announcements, interim and final dividends, the appointment or removal of directors and the company
secretary, circulars to shareholders, Group treasury policies and capital expenditure and acquisitions. Certain other
matters are delegated to Board committees, the details of which are set out below.
There is an agreed Board procedure enabling directors to take independent advice, in the furtherance of their duties,
at the Company’s expense. Each Board member has access to the impartial advice and services of the Company
Secretary, who is responsible to the Board for ensuring that appropriate procedures are followed. The Company
maintained directors’ and officers’ liability insurance throughout 2012.
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 2012 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 two meetings during 2012, attended
by all members. Dato’ John Lim was appointed as member on 8 April 2011.
Accountability and Audit Committee
The responsibilities of the Directors as regards the financial statements are set out on page 27. A statement of going
concern is also on page 27.
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. He attended two audit seminars organised by MIA in 2012. Dato’ John Lim has
attended two audit related seminars at UHY conferences whereas Drs. Kanaka has attended one seminar organised
by PricewaterhouseCoopers Indonesia in 2012. The committee met prior to the completion of the 2012 accounts and
four times during 2012.
The Audit Committee is responsible for:
Monitoring the integrity of the financial statements and reviewing formal announcements of financial
performance and significant reporting issues and judgements that such statements and announcements
contain;
Annual Report 2012 | Anglo-Eastern Plantations Plc
30
Statement on Corporate Governance
Reviewing the effectiveness of the internal control functions (including the internal financial controls and, the
internal audit function);
Making recommendations to the Board in relation to the appointment, reappointment and removal of the
external auditors, their remuneration and terms of engagement; and
Reviewing and monitoring the independence of the external auditors and the effectiveness of the audit process.
The Audit Committee also monitor the engagement of the auditors to perform non-audit work. The Committee
considered that the nature and scope of, and remuneration payable in respect of, these engagements were such that
the independence and objectivity of the auditors was not impaired.
The members of the Audit Committee discharge their responsibilities by informal discussions between themselves,
by meeting with the external auditors, the internal auditors and management and by consideration of reports by
management and by holding at least one formal meeting in each year.
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. Given
the current level of audit fees and the costs that a change would likely entail, the Committee did not recommend that
the Company’s audit be put out to tender.
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 systems of internal control and risk management and for
reviewing its effectiveness. Such a system is designed to manage, rather than eliminate, the risk of failure to achieve
business objectives and can only provide reasonable and not absolute assurance against material misstatement or
loss. 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 principally on
reviewing reports from management and considering whether significant risks in the Group are identified, evaluated,
managed and whether any significant weakness are promptly remedied 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.
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 2013 AGM.
The company maintains a corporate website at http://www.angloeastern.co.uk. This website has detailed information
on various aspects of the Group’s operations. The website is updated regularly and includes information on the
Company’s share price and the price of crude palm oil.
Annual Report 2012 | Anglo-Eastern Plantations Plc
31
Statement on Corporate Governance
The Company’s results and other news releases issued via the London Stock Exchange’s Regulatory News Service
are published on the “Investors” section of the website and together with other relevant documentation concerning
the company, are available for downloading.
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.
AEP seeks to comply with these principles in all areas of its activities.
Annual Report 2012 | Anglo-Eastern Plantations Plc
32
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 two meetings during 2012, attended by all members. Drs. Kanaka was
appointed as Chairman on 31 August 2010. Mr. Nik Din Nik Sulaiman was appointed to the Committee on 1
September 2010 while Dato John Lim was appointed as a member on 8 April 2011.
Compliance
The directors are satisfied that as far as practical the Company has complied with the provision of the UK Corporate
Governance Code and Revised Combined Code relating to Directors’ Remuneration throughout the year.
Policy
The Remuneration Committee makes recommendations on senior management pay and conditions, after
consultation with the Chairman, and recommends to the Board the terms for Executive Director.
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, pay and employment conditions of its other
employees in the organisation and the need to maintain an economic operation. This policy is currently to be applied
in subsequent years.
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.
Annual Report 2012 | Anglo-Eastern Plantations Plc
33
Directors’ Remuneration Report
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.
Performance Graph
The performance graph is set out on page 4 and shows the Company’s share price performance compared to FTSE
100 index for the period of 2008 to 2013 (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.
Annual Report 2012 | Anglo-Eastern Plantations Plc
34
Directors’ Remuneration Report
Directors’ remuneration
The following part provides details of the remuneration and share interests of all the Directors for the year ended 31
December 2012. The numerical components of these disclosures have been audited in accordance with Section 421
of the UK Companies Act 2006.
The remuneration of all Directors who served during the year was:
Audited information
Name of Director
Executive:
Fees
$000
Executive
Salary
Bonus and
allowance
Benefits in
kind
$000
$000
$000
Total
2012
$000
Total
2011
$000
Dato'John Lim Ewe Chuan (1)
105
-
Non-Executive
Lim Siew Kim (2)
Nik Din Bin Nik Sulaiman (3)
Drs. Kanaka Puradiredja (4)
Chan Teik Huat (5)
Total
Unaudited information
Notes:
61
28
28
-
222
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
105
83
61
28
28
-
57
23
23
8
222
194
(1) Appointed as Executive Director on 1 September 2010. Previously was the Senior Independent Non-Executive Director.
(2) Appointed on 29 November 1993 and appointed as Non-Executive Chairman on 31 January 2011
(3) Appointed on 1 April 2009
(4) Appointed on 1 August 2009
(5) 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 2013
Annual Report 2012 | Anglo-Eastern Plantations Plc
35
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 2012
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 flows 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.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified
opinion.
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.
Basis for qualified opinion on financial statements
We have been unable to conclude whether or not the carrying value of the Group’s biological assets currently stated
in the consolidated statement of financial position at a value of $245.3m has been determined in accordance with
IAS 41 Agriculture because as described in note 11, the Company is currently in the process of resolving a query
from the Financial Reporting Council (FRC) concerning the valuation methodology used by the Group to undertake
the valuation, a query that has been ongoing since 14 November 2011. More specifically, the FRC have stated in a
letter to the company dated 29 April 2013: “We do not understand the company's justification for notional rent being
determined on a historical cost basis because it does not reflect a market rate for the use of land. We consider this to
be a fundamental matter in the determination of the fair value of the company's biological assets and on which we do
not yet agree. The resolution of this matter may have a material effect on the amounts recorded in the company's
accounts. “
As noted in note 11, the Company’s Directors are confident that the methodology which has been applied is in
accordance with IAS 41, however, although the full facts are known, the existence of the ongoing FRC queries and
their description of the potential impact provides differing opinions regarding the application of IAS 41. Until this
matter is resolved between the FRC and the Group, we are unable to obtain sufficient audit evidence regarding the
appropriate application of IAS 41 to the carrying value of the Group’s biological assets.
Annual Report 2012 | Anglo-Eastern Plantations Plc
36
Auditors’ Report
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ANGLO-EASTERN PLANTATIONS PLC
(continued)
Opinion on financial statements
In our opinion, except for the possible effects of matters described in the Basis for qualified opinion paragraph:
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 2012 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.
Matters on which we are required to report by exception
In respect solely of the limitation on our work relating to the valuation of biological assets, described above:
we have not obtained all the information and explanations we considered necessary for the purpose of our audit;
and
we were unable to determine whether adequate accounting records had been kept .
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to
you if, in our opinion:
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.
Annual Report 2012 | Anglo-Eastern Plantations Plc
37
Auditors’ Report
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ANGLO-EASTERN PLANTATIONS PLC
(continued)
Under the Listing Rules we are required to review:
the directors’ statement, set out on page 27, 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 2013
Annual Report 2012 | Anglo-Eastern Plantations Plc
38
Consolidated Income Statement
For the year ended 31 December 2012
Continuing operations
Notes
Revenue
Cost of sales
Gross profit
Biological asset revaluation movement
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
4
4
5
8
9
9
2012
BA
adjustment
$000
(Restated)
2011
BA
adjustment
Result
before
BA
adjustment
$000
$000
Total
$000
-
-
-
237,352
259,037
(142,755)
(155,147)
94,597
103,890
-
-
-
Result
before
BA
adjustment
$000
237,352
(142,755)
94,597
Total
$000
259,037
(155,147)
103,890
-
(4,549)
(4,549)
-
21,056
21,056
(9,201)
-
(9,201)
(5,372)
-
(5,372)
85,396
(4,549)
80,847
98,518
21,056
119,574
(24)
3,336
(117)
-
-
-
(24)
3,336
(117)
213
3,891
(707)
-
-
-
213
3,891
(707)
88,591
(4,549)
84,042
101,915
21,056
122,971
(22,476)
1,137
(21,339)
(26,809)
(5,264)
(32,073)
66,115
(3,412)
62,703
75,106
15,792
90,898
53,108
13,007
66,115
(4,316)
48,792
60,949
15,933
76,882
904
13,911
14,157
(141)
14,016
(3,412)
62,703
75,106
15,792
90,898
123.10cts
122.95cts
194.45cts
193.75cts
Earnings per share before BA adjustment are shown in note 9.
The accompanying notes are an integral part of this consolidated income statement.
Annual Report 2012 | Anglo-Eastern Plantations Plc
39
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2012
Profit for the year
Other comprehensive income:
Unrealised loss on revaluation of the estates
Loss on exchange translation of foreign operations
Deferred tax on revaluation
Other comprehensive expenses for the year
Total comprehensive income for the year
Attributable to:
- Owners of the parent
- Non-controlling interests
2012
$000
(Restated)
2011
$000
62,703
90,898
(4,064)
(27,059)
1,015
(30,108)
32,595
23,142
9,453
32,595
(48,932)
(5,245)
12,233
(41,944)
48,954
44,764
4,190
48,954
The accompanying notes are an integral part of this consolidated statement of comprehensive income and expense.
Annual Report 2012 | Anglo-Eastern Plantations Plc
40
Consolidated Statement of Financial Position
As at 31 December 2012
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 reserves
Exchange reserves
Retained earnings
Non-controlling interests
Total equity
Note
2012
$000
11
11
12
13
14
15
16
15
17
18
19
19
245,313
212,177
5,033
462,523
6,075
4,734
7,419
116,250
134,478
(52)
(15,635)
(6,996)
(22,683)
111,795
(25,026)
(46,644)
(3,057)
499,591
15,504
(1,171)
23,935
1,087
36,799
(90,571)
427,186
412,769
86,822
499,591
(Restated)
2011
$000
235,158
214,840
1,551
(Restated)
2010
$000
186,755
249,610
1,494
451,549
437,859
9,439
5,098
4,877
90,482
109,896
(6,465)
(20,878)
(11,019)
(38,362)
71,534
(58)
(52,533)
(1,593)
468,899
15,504
(1,507)
23,935
1,087
39,480
6,820
7,342
3,356
70,871
88,389
(15,650)
(15,170)
(5,130)
(35,950)
52,439
(6,438)
(59,192)
(2,305)
422,363
15,504
(1,507)
23,935
1,087
67,303
(67,602)
(63,307)
380,633
391,530
77,369
468,899
305,683
348,698
73,665
422,363
The financial statements were approved by the Board of Directors and authorised for issue on 30 April 2013 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.
Annual Report 2012 | Anglo-Eastern Plantations Plc
41
Consolidated Statement of Changes in Equity
For the year ended 31 December 2012
Balance as at 31 December 2010
Restatement (note 2)
Share
capital
$000
15,504
-
Treasury
shares
$000
(1,507)
Share
premium
$000
23,935
Capital
redemption
reserve
$000
1,087
Revaluation
reserve
$000
149,396
Foreign
exchange
reserve
$000
(63,307)
Retained
earnings
$000
229,060
Non-
controlling
interests
$000
74,495
Total
equity
$000
428,663
Total
$000
354,168
-
-
-
(82,093)
-
76,623
(5,470)
(830)
(6,300)
Balance at 31 December 2010 after restatement
15,504
(1,507)
23,935
1,087
67,303
(63,307)
305,683
348,698
73,665
422,363
Items of other comprehensive income
-Unrealised gain on revaluation of estates
-Deferred tax on revaluation of assets
-Loss on exchange translation
Net loss recognised directly in equity
Profit for year
Total comprehensive income and expense for the year
Issue of subsidiary shares to minority shareholder
Share options exercised / Share based payment expense
Dividends paid
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(37,097)
9,274
-
(27,823)
-
-
-
(4,295)
(4,295)
-
(27,823)
(4,295)
-
-
-
-
-
-
-
-
-
-
(37,097)
(11,835)
(48,932)
9,274
(4,295)
2,959
12,233
(950)
(5,245)
(32,118)
(9,826)
(41,944)
76,882
76,882
-
45
76,882
44,764
-
45
14,016
90,898
4,190
2,054
48,954
2,054
-
45
(1,977)
(1,977)
(2,540)
(4,517)
Balance at 31 December 2011
15,504
(1,507)
23,935
1,087
39,480
(67,602)
380,633
391,530
77,369
468,899
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
Share option exercised
Dividends paid
-
-
-
-
-
-
-
-
-
-
-
-
-
-
336
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(3,574)
893
-
-
-
(22,969)
(2,681)
(22,969)
-
-
(2,681)
(22,969)
-
-
-
-
-
-
-
-
(3,574)
(490)
(4,064)
893
122
1,015
(22,969)
(4,090)
(27,059)
(25,650)
(4,458)
(30,108)
48,792
48,792
133
48,792
23,142
469
(2,372)
(2,372)
13,911
62,703
9,453
32,595
-
-
469
(2,372)
Balance at 31 December 2012
15,504
(1,171)
23,935
1,087
36,799
(90,571)
427,186
412,769
86,822
499,591
Annual Report 2012 | Anglo-Eastern Plantations Plc
42
Consolidated Statement of Cash Flows
For the year ended 31 December 2012
Cash flows from operating activities
Profit before tax
Adjustments for:
BA adjustment
Loss on disposal of tangible fixed assets
Depreciation
Retirement benefit provisions
Net finance income
Unrealised loss / (gain) in foreign exchange
Share based payments expense
Operating cash flow before changes in working capital
Decrease / (Increase) in inventories
Increase in trade and other receivables
Decrease / (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
Property, plant and equipment
- purchase
- sale
Interest received
Net cash used in investing activities
2012
$000
(Restated)
2011
$000
84,042
122,971
4,549
19
6,135
1,898
(3,219)
24
-
93,448
2,821
(6,646)
(4,143)
85,480
(144)
(294)
(26,622)
58,420
(49,054)
786
3,336
(44,932)
(21,056)
68
5,124
987
(3,184)
(213)
45
104,742
(2,665)
(1,578)
4,080
104,579
(759)
(1,716)
(17,917)
84,187
(50,086)
237
3,891
(45,958)
Annual Report 2012 | Anglo-Eastern Plantations Plc
43
Consolidated Statement of Cash Flows
For the year ended 31 December 2012
Financing activities
Dividends paid by Company
Share options exercised
Issue of subsidiary shares to minority shareholder
Repayment of existing long term loans
Drawdown of long term loans
Finance lease repayment
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
2012
$000
(2,372)
469
-
(6,438)
25,000
(27)
-
16,632
30,120
90,482
(4,352)
116,250
(Restated)
2011
$000
(1,977)
-
2,054
(15,555)
-
-
(2,540)
(18,018)
20,211
70,871
(600)
90,482
116,250
90,482
The accompanying notes are an integral part of this consolidated statement of cash flows.
.
Annual Report 2012 | Anglo-Eastern Plantations Plc
44
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 in note 2 – Prior year restatement.
On 14 November 2011 the Financial Reporting Council (‘FRC’) wrote to the company in respect of its policies and methodologies for valuing
and accounting for its biological assets and non-biological assets in its accounts for the year ended 31 December 2010.
As a result of discussions with the FRC, the company’s interim accounts for the period ended 30 June 2012, announced on 30 August 2012,
stated that the company had revisited its policies and methodologies for valuing and accounting for its estate assets. As a result, the
directors had concluded that the proportions of the total value attributed to the biological and non-biological assets needed to be restated and
that it is not possible to measure reliably the fair value of plant, machinery and estate infrastructure. The restatement and related adjustments
are disclosed in these accounts in note 2.
Between 19 October 2012 and 29 April 2013 the FRC and the company exchanged correspondence. Additional information and explanations
were provided to the FRC in respect of the restatement of biological assets and land at 31 December 2010 and 2011, including in respect of
the measurement of notional rent. Following receipt of information during April, the FRC’s enquiries into the restated valuation of biological
assets and land at 31 December 2010 and 2011 are on-going at the date of these accounts being signed.
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 amendment is also effective for the first time in these financial statements but does not have a material effect on the
Group.
•
IFRS 1 Amendments – Severe Hyperinflation and Removal of Fixed Dates for First Time Adopters
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 Financial Instruments (effective for accounting periods beginning on or after 1 January 2015)*
IFRS 10 Consolidated Financial Statements (effective for accounting periods beginning on or after 1 January 2014)
IFRS 11 Joint Arrangements (effective for accounting periods beginning on or after 1 January 2014)
IFRS 12 Disclosures of Interest in Other Entities (effective for accounting periods beginning on or after 1 January 2014)
IFRS 13 Fair Value Measurement (effective for accounting periods beginning on or after 1 January 2013)
IAS 27 Separate Financial Statements (effective for accounting periods beginning on or after 1 January 2014)
IAS 28 Investments in Associates and Joint Ventures (effective for accounting periods beginning on or after 1 January 2014)
IFRIC 20 Interpretations – Stripping Costs in the Production Phase of a Surface Mine (effective for accounting periods beginning on
or after 1 January 2013)
IFRS 7 Amendments – Offsetting Financial Assets and Financial Liabilities (effective for accounting periods beginning on or after 1
January 2013)
IAS 1 Amendments – Presentation of Items of Other Comprehensive Income (effective for accounting periods beginning on or after
1 July 2012)
IAS 19 Amendments – Employee Benefits (effective for accounting periods beginning on or after 1 January 2013)
IAS 32 Amendments – Offsetting Financial Assets and Financial Liabilities (effective for accounting periods beginning on or after 1
January 2014)
IAS 12 Amendments – Deferred tax : Recovery of Underlying Assets (effective for accounting periods beginning on or after 1
January 2013)
IFRS 1 Amendments – Government Loans (effective for accounting periods beginning on or after 1 January 2013)*
Improvements to IFRSs (effective for accounting periods beginning on or after 1 January 2013)*
•
•
*These standards and interpretations are not endorsed by the EU at present.
•
•
•
•
•
Other than IAS 12 and IAS 19, none of the other new standards, interpretations and amendments, which are effective for periods beginning
after 1 January 2013 and which have not been adopted early, are expected to have a material effect on the Group's future financial
statements. IAS 12 will impact the level of disclosure. IAS 19 requires all income and expenses in relation to retirement benefit to be
recognised in other comprehensive income rather than pass through income statement. If IAS 19 would have applied in year 2012, the
income statement would have increased by $1,749,000 and the other comprehensive income would have decreased by the same amount.
Annual Report 2012 | Anglo-Eastern Plantations Plc
45
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.
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.
Annual Report 2012 | Anglo-Eastern Plantations Plc
46
Notes to the Consolidated Financial Statements
1. Accounting policies – continued
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
During the year the Company has adopted new accounting policy on property, plant and equipment as stated below. The details of the
change of accounting policies are disclosed in note 2 – Prior year restatement.
All items of property, plant and equipment are initially measured at cost. Cost includes expenditure that is directly attributable to the
acquisition of the items. After initial recognition, all items of property, plant and equipment except land and construction in progress, are
stated at cost less accumulated depreciation and any accumulated impairment losses.
Estate land is subsequently carried at fair value, based on periodic valuations on an open market basis by a professionally qualified valuer.
These revaluations are made with sufficient regularity to ensure that the carrying amount does not differ materially from that which would be
determined using fair value at the end of the reporting period. Changes in fair value are recognised in other comprehensive income and
accumulated in the revaluation reserve except to the extent that any decrease in value in excess of the credit balance on the revaluation
reserve, or reversal of such a transaction, is recognised in income statement. On the disposal of a revalued estate, any related balance
remaining in the revaluation reserve is transferred to retained earnings as a movement in reserves.
Construction in progress is stated at cost. The accumulated costs will be reclassified to the appropriate class of assets when construction is
completed and the asset is ready for its intended use. Construction in progress is also not depreciated until such time when the asset is
available for use.
Buildings and oil mills are depreciated using the straight-line method. All other property, plant and equipment items are depreciated using the
double-declining-balance method. The yearly rates of depreciation are as follows:
Buildings - 5% to 10% per annum
Oil Mill - 5% per annum
Estate plant, equipment & vehicle - 12.5% to 50% per annum
Office plant, equipment & vehicle - 25% to 50% per annum
Biological assets
During the year the Company has changed their method of valuation on biological assets as stated below. The details of the change of
valuation are disclosed in note 2 – Prior year restatement.
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 fresh fruit bunches (“FFB”) to the manufacturing process in which crude palm oil
and palm kernel are extracted from the FFB.
Biological assets are carried at fair value less costs to sell determined on the basis of the net present value of cash flows arising in producing
FFB. No account is taken in the valuation of future replanting. Biological assets are valued at each accounting date based upon a valuation
of the planted areas using a discounted cash flow method by reference to the FFB expected to be harvested over the full remaining
productive life of the trees up to 20 years. Areas are included in the valuation once they are planted. However 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. 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.
Annual Report 2012 | Anglo-Eastern Plantations Plc
47
Notes to the Consolidated Financial Statements
1. Accounting policies - continued
Inventories
FFB harvested from the biological assets are stated at fair value less costs to sell at the point of harvest. The fair value gain arising on the
initial recognition of harvested produce is the result of the FFB weight produced multiplied by the FFB price adjusted for transportation costs
to sell. There is an active market for FFB and the price is based on statistics provided by the government for each region.
The gain/(loss) arising on the initial recognition at the point of harvest is recognised in the income statement within the biological asset
revaluation. The FFB is transferred to the mill, processed in to CPO and sold within 24 hours so the write off of the FFB is netted off against
the initial recognition within the biological asset revaluation.
All other 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, and 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 not exceeding 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 comprehensive income in the period in which they arise.
Annual Report 2012 | Anglo-Eastern Plantations Plc
48
Notes to the Consolidated Financial Statements
1 Accounting policies – continued
Treasury shares
Consideration paid or received for the purchase or sale of the Company’s own shares for holding in treasury is recognised directly in equity,
where the cost is presented as the treasury share reserve. Any excess of the consideration received on the sale of treasury shares over the
weighted average cost of shares sold, is taken to the share premium account.
Any shares held in treasury are treated as cancelled for the purpose of calculating earnings per share.
Critical accounting estimates and judgements
The preparation of the Group financial statements in conformity with IFRS requires the use of estimates and assumptions that affect the
reported assets and liabilities and reported revenue and expenses. Actual results could differ from those estimates and accordingly they are
reviewed on an on-going basis. The main areas in which estimates are used are: fair value of biological assets, property, plant and
equipment, deferred tax 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 11. Assumptions regarding the
valuation of agricultural produce at the point of harvest less costs to sell are set out in the inventories accounting policy. The Group's policy
with regard to impairment of such assets is set out above.
Details on deferred tax are given in note 17 and retirement benefits in note 18.
2. Prior year restatement
During the year the Company has revisited its policies and methodologies for valuing and accounting for its estate assets. As a result, the
directors have concluded that in accordance with the requirements of IAS 8 (Accounting Policies, Changes in Accounting Estimates and
Errors), prior year adjustments are required to restate the figures previously reported.
Former policy and methodology
Estates comprise biological assets and non-biological plantation assets including land, infrastructure and mills. In previous years, an overall
estate valuation was determined based upon a valuation of the planted and unplanted areas using a discounted cash flow method. The
value of the biological assets was estimated as a proportion of the overall estate value using percentages derived from historic data. For a
plantation with a mill, the biological asset portion was estimated at 18% of the estate value while for a plantation without a mill, it was
estimated at 23%. The movement in valuation of biological assets was charged or credited to the income statement for the relevant year.
The movement in valuation of non-biological assets (excluding mills which were carried at depreciated cost) was transferred to the
revaluation reserve.
Revised policy and methodology
For the current year, rather than valuing the entire estate and then estimate the amount attributable to its biological and non-biological
components using the percentages noted above, the Group has changed to an approach of valuing and accounting for the components
separately, as follows:
Biological assets - are carried at fair value less costs to sell determined on the basis of the net present value of cash flows arising in
producing FFB. Areas are included in the valuation once they are planted, however 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. No account is taken in the valuation of
future replanting. As in previous years, the movement in valuation surplus of biological assets is charged or credited to the income
statement for the relevant period.
Estate land - is initially recognised at cost, including related transaction costs. It is subsequently carried at fair value on an open market
basis. Land is not depreciated. As in previous years, any surplus or deficit on revaluation of estate land is transferred to the revaluation
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 balance remaining in the revaluation reserve is transferred to retained
earnings as a movement in reserves. In correcting the associated deferred tax, an error was also identified in the prior year calculation
separate to the above which has resulted in an $8,000,000 correction in the prior year restatement.
Non-biological assets (excluding land) comprise oil mills, plant, machinery and estate infrastructure - the Group’s historic accounting
policy in respect of oil mills was to carry them at depreciated cost and there has been no change to that policy. However, under the
Group’s former policy plant, machinery and estate infrastructure was valued as an integral part of the estate and, along with estate land,
carried at valuation in the consolidated balance sheet as ‘non-biological assets’. As noted above, the Group has now moved to a
methodology whereby the biological assets and estate land are valued as separate components. In the opinion of the directors, it is not
possible to measure reliably the fair value of plant, machinery and estate infrastructure as separate components. The Group has
therefore changed to a policy of carrying plant, machinery and estate infrastructure at cost less depreciation which they believe is a more
appropriate policy for the nature of the assets. Depreciation is calculated on a straight line basis for buildings and oil mills. All other non-
biological assets (excluding land) are depreciated using the double-declining-balance method.
Annual Report 2012 | Anglo-Eastern Plantations Plc
49
Notes to the Consolidated Financial Statements
2. Prior year restatement - continued
The Company has obtained independent valuations of its biological assets as at 31 December 2011 and as at 31 December 2010 to support
the reflection of the prior year adjustments. The Company has obtained independent valuations of its estate land as at 31 December 2011 on
an open market basis; the valuations as at 31 December 2010 are based on director’s estimates.
The change to a methodology of obtaining separate valuations of the biological assets and estate land has highlighted that biological assets
and estate land need to be restated in prior years as a consequence of using the percentage allocation method. The consequential change
to carrying non-biological assets excluding land and oil mills at cost less depreciation rather than at a valuation represents a change in
accounting policy. A prior year adjustment has therefore been made to restate the comparative figures to reflect the revised methodology. In
the opinion of the directors, it is not possible to reliably measure the fair value of plant, machinery and estate infrastructure as separate
components so it is not possible to split out the effect of restatements and the effect of change in accounting policy separately and this has
been summarised in total below instead.
The impact of these prior year adjustments:-
After Biological Assets
Profit for the year before restatement
Effect of change in restatement and accounting policy:
Cost of sales
Biological asset revaluation movement
Tax expense
Profit for the year after restatement
Other comprehensive income for the year before restatement
Effect of change in restatement and accounting policy:
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 after restatement
$000
3,650
10,545
(2,925)
27,717
(774)
(15,001)
(Restated)
2011
$000
79,628
11,270
90,898
(53,886)
11,942
(41,944)
The effect of these prior year adjustments had a positive impact on the earnings per share of 30.15cts for the year to 31 December 2011.
Annual Report 2012 | Anglo-Eastern Plantations Plc
50
Notes to the Consolidated Financial Statements
2 Prior year restatement – continued
The following table summarises the impact of these prior year adjustments on the Consolidated Statement of Financial Position:-
Biological
assets
$000
Property, plant
and equipment
$000
Deferred tax
liabilities
$000
Revaluation
reserve
$000
Balance as reported 1 January 2011
Effect of restatement and change in accounting policy
Restated balance as at 1 January 2011
Balance as reported 31 December 2011
Effect of restatement and change in accounting policy up to 1 January
2011
Effect of restatement and change in accounting policy during the year
Effect of exchange during the year
68,593
118,162
186,755
77,066
118,162
39,930
-
376,173
(126,563)
249,610
340,786
(126,563)
(668)
1,285
(61,293)
2,101
(59,192)
149,396
(82,093)
67,303
Exchange
reserve
$000
(63,307)
-
(63,307)
Retained
earnings
$000
Non-controlling
interest
$000
229,060
76,623
305,683
74,495
(830)
73,665
(37,299)
111,460
(66,893)
292,092
76,309
2,101
(17,335)
-
(82,093)
10,113
-
-
(709)
-
76,623
11,918
-
(830)
1,890
-
Restated balance as at 31 December 2011
235,158
214,840
(52,533)
39,480
(67,602)
380,633
77,369
Annual Report 2012 | Anglo-Eastern Plantations Plc
51
Notes to the Consolidated Financial Statements
2. Prior year restatement – continued
The following table details the effect of the prior year adjustments on Property, plant and equipment:-
Balance as reported 1 January 2011
Effect of restatement and change in accounting policy
Restated balance as at 1 January 2011
Balance as reported 31 December 2011
Effect of restatement and change in accounting policy up to 1 January 2011
Effect of restatement and change in accounting policy during the year
Effect of exchange during the year
Restated balance as at 31 December 2011
Mills
$000
30,129
-
30,129
31,075
-
-
-
31,075
Land
$000
243,366
(42,389)
200,977
200,447
(42,389)
(668)
-
157,390
Other Non-biological
assets
$000
102,678
(84,174)
18,504
109,264
(84,174)
-
1,285
26,375
Total
$000
376,173
(126,563)
249,610
340,786
(126,563)
(668)
1,285
214,840
Annual Report 2012 | Anglo-Eastern Plantations Plc
52
Notes to the Consolidated Financial Statements
3. Revenue
Sales of produce:
– CPO
– Rubber
Other income
4 Finance income and expense
Finance income
Interest receivable on:
Credit bank balances and time deposits
Finance expense
Interest payable on:
Development loans - (note 15)
Net finance income recognised in income statement
5 Profit before tax
Profit before tax is stated after charging
Depreciation (note 11)
Staff costs (note 7)
Auditors’ remuneration:
– Group audit
– Other services
– Total
-
2012
$000
232,717
2,527
2,108
237,352
2011
$000
253,357
3,669
2,011
259,037
2012
$000
2011
$000
3,336
3,891
(117)
3,219
(707)
3,184
2012
$000
6,135
23,545
244
46
290
2011
$000
5,124
19,701
151
87
238
Annual Report 2012 | Anglo-Eastern Plantations Plc
53
Notes to the Consolidated Financial Statements
6. Segment information
2012
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
Inter-Segment Transactions
Total Assets
Non-Current Assets
Non-Current Assets - Additions
2011(restated )
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
Inter-Segment Transactions
Total Assets
Non-Current Assets
Non-Current Assets - Additions
North
Sumatra
$000
Bengkulu
$000
South
Sumatra
$000
Riau
$000
Bangka
$000
Kalimantan
$000
Indonesia Malaysia
$000
$000
UK
$000
Total
$000
Total
95,755
2,527
1,030
99,312
44,456
78,385
-
359
78,744
25,609
-
-
-
-
52,915
-
712
53,627
-
-
-
-
322
-
7
329
227,377
2,527
2,108
232,012
5,340
-
-
5,340
-
-
-
-
(52)
20,422
(2)
(73)
90,360
555
(2,324)
232,717
2,527
2,108
237,352
88,591
(4,549)
84,042
1,487
(1,714)
(168)
(503)
-
(1,123)
(2,021)
1,771
250
-
187,516
137,886
9,770
150,806
131,237
7,615
57,002
54,884
14,168
76,408
42,459
1,409
11,495
10,960
497
85,889
68,588
15,229
569,116
446,014
48,688
22,577
15,146
390
5,308
1,363
-
597,001
462,523
49,078
96,485
3,669
513
100,667
45,928
91,678
-
485
92,163
34,065
-
-
15
15
18
57,265
-
811
58,076
20,377
77
(703)
-
(212)
-
-
-
-
-
-
-
-
-
-
-
-
245,428
3,669
1,824
250,921
7,929
-
183
8,112
-
-
4
4
100,388
3,475
(1,948)
253,357
3,669
2,011
259,037
101,915
21,056
122,971
(838)
813
25
-
174,623
137,086
12,012
167,265
146,433
8,091
51,219
48,904
13,199
64,503
32,189
771
11,701
11,629
293
59,398
56,917
15,641
528,709
433,158
50,007
26,138
17,028
168
6,598
1,363
-
561,445
451,549
50,175
Annual Report 2012 | Anglo-Eastern Plantations Plc
54
Notes to the Consolidated Financial Statements
6. Segment information – continued
In year 2012, revenues from 4 customers of the Indonesian segment represent approximately $128.1m (2011: $139.4m) of the Group’s total revenue. An analysis of these revenues is provided as below. Although customer 1
to 4 are over 10% of the Group total revenue, there is no over reliance on these Customers as tenders are performed on a monthly basis.
2012
Customer 1
Customer 2
Customer 3
Customer 4
2011
Customer 1
Customer 2
Customer 3
Customer 4
2012
Customer 1
Customer 2
Customer 3
Customer 4
2011
Customer 1
Customer 2
Customer 3
Customer 4
North
Sumatra
$000
-
15,976
17,907
31,205
65,088
-
26,411
26,843
-
53,254
%
-
6.7
7.5
13.1
27.3
-
10.2
10.4
-
20.6
Bengkulu
$000
South
Sumatra
$000
Riau
$000
Bangka
$000
Kalimantan
$000
Indonesia Malaysia
$000
$000
UK
$000
Total
$000
Total
33,999
1,890
-
-
35,889
37,324
-
6,068
15,019
58,411
%
14.3
0.8
-
-
15.1
14.4
-
2.3
5.8
22.5
-
-
-
-
-
-
-
-
-
-
%
-
-
-
-
-
-
-
-
-
-
-
13,749
13,326
-
27,075
-
9,936
-
17,846
27,782
%
-
5.8
5.6
-
11.4
-
3.8
-
6.9
10.7
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
33,999
31,615
31,233
31,205
128,052
37,324
36,347
32,911
32,865
139,447
%
%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
%
14.3
13.3
13.1
13.1
53.8
14.4
14.0
12.7
12.7
53.8
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
33,999
31,615
31,233
31,205
128,052
37,324
36,347
32,911
32,865
139,447
%
%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
%
14.3
13.3
13.1
13.1
53.8
14.4
14.0
12.7
12.7
53.8
Annual Report 2012 | Anglo-Eastern Plantations Plc
55
Notes to the Consolidated Financial Statements
6. 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.
7 Employees' and Directors' remuneration
Average numbers employed (primarily overseas) during the year
- full time
- casual
Staff costs (including Directors) comprise:
Wages and salaries
Social security costs
Retirement benefit costs/(credit) (note 18)
Share based payments expenses
Share option exercised
2012
number
4,819
9,012
13,831
2012
$000
21,106
774
1,749
-
(84)
23,545
2011
number
4,404
9,501
13,905
2011
$000
18,843
277
536
45
-
19,701
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 33 - 35 of which the information on page 35 has been audited.
Directors emoluments
Remuneration expense for key management personnel
2012
$000
222
222
2011
$000
194
194
The Executive Directors and Non-Executive Director are considered to be the key management personnel: their remuneration is shown on
page 35.
8 Tax expense
Foreign corporation tax - current year
Foreign corporation tax - prior year
Deferred tax adjustment - current year
Total tax charge for year
2012
$000
23,130
45
(1,836)
21,339
2011
$000
26,318
-
5,755
32,073
Annual Report 2012 | Anglo-Eastern Plantations Plc
56
Notes to the Consolidated Financial Statements
8 Tax expense - continued
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 24.5%.
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 24.5% (2011: 26%)
Effects of:
Rate adjustment relating to overseas profits
Group accounting adjustments not subject to tax
Expenses not allowable for tax
Temporary differences
Deferred tax assets not recognised
Income not subject to tax
Utilisation of tax losses brought forward
Under provision of prior year deferred tax assets
Under provision of income tax in prior year
Other
Total tax charge for year
9 Earning 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
10 Dividends
2012
$000
84,042
20,590
306
(2,071)
(373)
-
2,895
-
-
(44)
23
13
21,339
2012
$000
53,108
(4,316)
48,792
Number
‘000
39,636
48
39,684
133.99cts
123.10cts
133.83cts
122.95cts
2011
$000
122,971
31,972
(1,295)
317
1,628
(73)
494
(67)
(903)
-
-
-
32,073
2011
$000
60,949
15,933
76,882
Number
‘000
39,539
141
39,680
154.15cts
194.45cts
153.60cts
193.75cts
Paid during the year
Final dividend of 6.0 cts per ordinary share for the year ended 31 December 2011 (2010: 5.0
cts)
2012
$000
2011
$000
2,372
1,977
Proposed final dividend of 4.5 cts per ordinary share for the year ended 31 December 2012
(2011: 6.0 cts)
1,784
2,372
The proposed dividend for 2012 is subject to shareholders’ approval at the forthcoming annual general meeting and has not been included
as a liability in these financial statements.
Annual Report 2012 | Anglo-Eastern Plantations Plc
57
Notes to the Consolidated Financial Statements
11 Biological assets, property, plant and equipment
Biological
assets
$000
Mill
$000
Land
$000
Buildings
$000
Estate plant,
equipment & vehicle
$000
Office plant,
equipment & vehicle
$000
Construction
in progress
$000
PPE
Total
$000
Cost or valuation
At 1 January 2011 (restated)
Exchange translations
Decrease due to harvest
Revaluations
Additions
Development costs capitalised
Disposals
At 31 December 2011 (restated)
Exchange translations
Reclassification
Decrease due to harvest
Revaluations
Additions
Development costs capitalised
Disposals
At 31 December 2012
Accumulated depreciation and impairment
At 1 January 2011 (restated)
Exchange translations
Charge for the year
Disposal
At 31 December 2011 (restated)
Exchange translations
Charge for the year
Disposal
At 31 December 2012
Carrying amount
At 31 December 2010 (restated)
At 31 December 2011 (restated)
At 31 December 2012
Net (loss)/gain arising from changes in fair value of
biological assets
At 31 December 2011 (restated)
At 31 December 2012
186,755
(2,986)
(23,448)
44,504
10,437
19,896
-
235,158
(13,825)
848
(26,896)
22,347
3,749
23,932
-
245,313
-
-
-
-
-
-
-
-
-
39,080
(354)
-
-
3,404
-
(243)
41,887
(2,546)
-
-
-
2,509
-
(97)
41,753
8,951
(123)
2,167
(183)
10,812
(704)
2,344
(77)
12,375
200,977
(308)
-
(48,932)
2,637
3,016
-
157,390
(8,643)
(848)
-
(4,064)
4,246
-
-
148,081
-
-
-
-
-
-
-
-
-
186,755
235,158
245,313
30,129
31,075
29,378
200,977
157,390
148,081
15,859
(370)
-
-
6,142
966
(23)
22,574
(1,527)
4,350
-
-
7,674
-
(142)
32,929
4,575
(88)
1,112
-
5,599
(305)
1,640
(102)
6,832
11,284
16,975
26,097
21,056
(4,549)
-
-
-
-
-
-
11,883
(15)
-
-
2,357
248
(222)
14,251
(769)
-
-
-
2,571
-
(462)
15,591
7,411
(640)
1,666
-
8,437
(431)
1,963
(408)
9,561
4,472
5,814
6,030
-
-
1,212
(24)
-
-
163
-
-
1,351
(30)
-
-
-
81
-
(2)
1,400
578
(13)
179
-
744
(23)
188
(1)
908
634
607
492
-
-
Total
$000
457,880
(4,101)
(23,448)
(4,428)
25,833
24,342
(488)
475,590
(27,496)
-
(26,896)
18,283
22,995
26,083
(1,393)
487,166
21,515
(864)
5,124
(183)
25,592
(1,463)
6,135
(588)
29,676
2,114
(44)
-
-
693
216
-
2,979
(156)
(4,350)
-
-
2,165
2,151
(690)
2,099
-
-
-
-
-
-
-
-
-
271,125
(1,115)
-
(48,932)
15,396
4,446
(488)
240,432
(13,671)
(848)
-
(4,064)
19,246
2,151
(1,393)
241,853
21,515
(864)
5,124
(183)
25,592
(1,463)
6,135
(588)
29,676
2,114
2,979
2,099
249,610
214,840
212,177
436,365
449,998
457,490
-
-
-
-
21,056
(4,549)
Annual Report 2012 | Anglo-Eastern Plantations Plc
58
Notes to the Consolidated Financial Statements
11 Biological assets, property, plant and equipment – continued
The fair value less costs to sell of FFB harvested during the period, determined at the point of harvest is exhibited below:
Fair value of FFB
Crop production and yield – FFB (mt)
Fair value of FFB ($000)
Fair value of FFB less costs to sell ($000)
2012
2011
783,000
128,750
122,783
707,000
131,987
124,373
As referred to on page 48, the gain arising on the fair value of FFB at the point of harvest is recognised in the income statement within the
biological asset revaluation. A reconciliation of the amount included within the income statement and the biological asset has been included
below:
Harvest included in the biological asset valuation from estimated production and pricing
assumptions less costs to sell in the prior year
Gain from actual production and pricing
Fair value of FFB harvested from own production
2012
$000
26,896
95,887
122,783
2011
$000
23,448
100,925
124,373
The decrease due to harvest of $26,896,000 (2011: $23,448,000) is the amount included within the prior year valuation for the current year
and is therefore deducted from biological asset valuation in the current year as the FFB is harvested. The actual fair value of harvested FFB
varies to that forecast due to the changes in; actual production, actual FFB price and actual costs incurred. The gain on fair value of the
harvested FFB is written off as the FFB is processed in to CPO.
The biological asset revaluation movement included within the income statement is calculated as follows:
Decrease due to harvest
Revaluations
Net (loss)/gain arising in the income statement from changes in fair value of biological assets
2012
$000
(26,896)
22,347
(4,549)
2011
$000
(23,448)
44,504
21,056
The carrying amount of the Group’s biological assets was based on independent valuations undertaken by independent valuers, Doli Siregar
& Rekan which its head office is located in Jakarta, Indonesia except for an adjustment on discount rate which is determined by the directors.
The firm has the appropriate professional qualifications and recent experience in the location and category of the properties being valued.
Further information of the firm can be obtained from ‘www.ds-r.co.id’. The Group’s land as at 31 December 2012 has been valued by
directors with the last independent valuation undertaken as at 31 December 2011.
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 $675/mt (2011: $625/mt) and discount rate of 17.5%
(2011: 16.5%). The discount rates were determined by the directors based on their assessment of various risks including financial, business
and country risk of where the plantations are located as well as taking into account the Company’s weighted average cost of capital. The
CPO price is taken to be the 10-year average (2011: 10-year average) based on historical widely-quoted commodity price for CPO 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 $810/mt as at 31 December 2012.
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 discount rate
+1% in the discount rate
2012
$000
(44,142)
44,047
13,960
(12,808)
2011
$000
(36,985)
36,961
16,562
(14,918)
The estates include nil (2011: $14) of interest and $9,308,000 (2011: $6,074,000) of overheads capitalised during the year in respect of
expenditure on estates under development.
Annual Report 2012 | Anglo-Eastern Plantations Plc
59
Notes to the Consolidated Financial Statements
11 Biological assets, property, plant and equipment – continued
The Indonesian authorities have granted certain land exploitation rights and operating permits for the estates. In the case of established
estates in North Sumatra these rights and permits expire between 2023 and 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.
The land title of the estate in Malaysia is a long lease expiring in 2084.
On 14 November 2011 the Financial Reporting Council (‘FRC’) wrote to the company in respect of its policies and methodologies for valuing
and accounting for its biological assets and non-biological assets in its accounts for the year ended 31 December 2010.
As a result of discussions with the FRC, the company’s interim accounts for the period ended 30 June 2012, announced on 30 August 2012,
stated that the company had revisited its policies and methodologies for valuing and accounting for its estate assets. As a result, the
directors had concluded that the proportions of the total value attributed to the biological and non-biological assets needed to be restated and
that it is not possible to measure reliably the fair value of plant, machinery and estate infrastructure. The restatement and related adjustments
are disclosed in these accounts in note 2.
Between 19 October 2012 and 29 April 2013 the FRC and the company exchanged correspondence. Additional information and explanations
were provided to the FRC in respect of the restatement of biological assets and land at 31 December 2010 and 2011, including in respect of
the measurement of notional rent. Following receipt of information during April, the FRC’s enquiries into the restated valuation of biological
assets and land at 31 December 2010 and 2011 are on-going at the date of these accounts being signed.
12 Receivables: non-current
Due from non-controlling interests
Due from cooperatives under Plasma Programme
Due from village smallholder schemes
2012
$000
1,363
3,435
235
5,033
2011
$000
1,363
-
188
1,551
The non-controlling interests in PT Alno Agro Utama and PT Cahaya Pelita Andhika have acquired their interests on deferred terms (see
note 25, Credit risk).
Plasma Programme is an initiative by the Indonesian Government that seeks to encourage plantation owners in Indonesia to provide
economic and social assistance to surrounding villagers by helping them increase their income and welfare. During the year, certain
subsidiary companies have funded the plantation development cost of $3,435,000 (2011: Nil) for the land allocated to the cooperatives which
will be recoverable from them.
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.
13 Inventories
Estate and mill consumables
Processed produce for sale
2012
$000
4,644
1,431
6,075
2011
$000
7,918
1,521
9,439
Annual Report 2012 | Anglo-Eastern Plantations Plc
60
Notes to the Consolidated Financial Statements
14 Trade and other receivables
Trade receivables
Other receivables
Prepayments and accrued income
2012
$000
544
6,555
320
7,419
2011
$000
432
4,094
351
4,877
The carrying amount of trade and other receivables approximates their fair value.
15 Loans and borrowings
Long term development loan (a)
Long term development loan (b)
Long term loan (c)
Long term loan (d)
Finance lease (e)
Finance lease (f)
Finance lease (g)
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
in more five years
2012
under one
year
$000
more than
one year
$000
2011
under one
year
$000
more than
one year
$000
400
6,038
-
-
27
-
-
6,465
-
-
-
-
28
12
12
52
-
-
5,000
20,000
26
-
-
25,026
89
5,456
19,481
25,026
-
-
-
-
58
-
-
58
30
28
-
58
(a)
(b)
(c)
The long term development loan of $400,000 in year 2011, 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 bore interest rate at 5.5%
above the Bank’s prime lending rate per annum. The loan was repayable in sixteen quarterly instalments of $200,000 from July
2008 to April 2012.
The long term development loan of $6,038,000 in year 2011 to finance the purchase and development of new land or developed
estates was made in June and July 2007. It was 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 was guaranteed by Tasik and by the Company. Interest was at 3% over SIBOR
and premium charges with percentage depend on bank liquidity. Average interest in 2012 was about 5.0% (2011: 5.0%). The loan
was repayable from September 2008 to June 2012.
A subsidiary company, PT Hijau Pryan Perdana, has obtained a long term loan of $10,000,000 for a period of seven years (including
two years grace period) to support the capital expenditures requirement for planting, development and maintenance of oil palm
estate and to finance mill construction and other fixed assets owned by the subsidiary company as well as utilise to repay the
amount due to related parties. It is secured by the subsidiary company’s land and is guaranteed by PT Tasik Raja and by the
Company. This loan bears interest rate based on Base Lending Rate which is payable quarterly in arrears. Average interest in 2012
was about 5.25% (2011: Not applicable). The loan is repayable from 30 November 2014 to 30 August 2019.
(d) Another subsidiary company, PT Sawit Graha Manunggal, has obtained a long term loan of $35,000,000 for a period of eight years
(including four years grace period) to support the capital expenditures requirement for planting, development and maintenance of oil
palm estate and to finance oil mill construction and other fixed assets owned by the subsidiary company. It is secured by the
subsidiary company’s land and is guaranteed by the Company. This loan bears interest rate based on SIBOR + 4.5% + Liquidity
Premium which is payable quarterly in arrears. Average interest in 2012 was about 5.57% (2011: Not applicable). The loan is
repayable from 30 December 2016 to 30 September 2020.
(e)
The long-term leasing facility with a total principal 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.
(f)
The leasing facility with a total principal amounting to Rp234 million was obtained to finance the purchase of vehicles. Total interest
payable amounting to Rp117 million for a period of one year starting from May 2012 to April 2013 with fixed repayment basis.
Annual Report 2012 | Anglo-Eastern Plantations Plc
61
Notes to the Consolidated Financial Statements
15
Loans and borrowings - continued
(g)
The leasing facility with a total principal amounting to Rp219.2 million was obtained to finance the purchase of vehicles. Total
interest payable amounting to Rp109.6 million for a period of one year starting from May 2012 to April 2013 with fixed repayment
basis.
16 Trade and other payables
Trade creditors
Other creditors
Accruals
17 Deferred tax liabilities
Year end (liability) relates to
Revaluation surplus
Unutilised tax losses
Other temporary differences
Movement:
At beginning of year (liability)
(Charge) to
- income statement
- equity: revaluation and exchange reserve
Exchange adjustment
At end of year (liability)
Details of movement in 2012
Revaluation surplus
Accelerated capital allowances
Employee pension liabilities
Available losses
Other
Details of movement in 2011
Revaluation surplus
Accelerated capital allowances
Employee pension liabilities
Available losses
Other
A deferred tax asset has not been recognised for the following items:
Unutilised tax losses
Accelerated capital allowances
2012
$000
5,176
5,478
4,981
15,635
2012
$000
(47,394)
848
(98)
(46,644)
(52,533)
1,836
1,015
3,038
(46,644)
2011
$000
7,871
8,662
4,345
20,878
2011
$000
(52,769)
1,060
(824)
(52,533)
(59,192)
(5,755)
12,233
181
(52,533)
(Charged)/
credited
to income
(Charged)/
credited
to reserve
(Liability)
$000
(47,394)
(1,411)
1,313
848
-
(46,644)
(52,769)
(1,678)
854
1,060
-
(52,533)
$000
1,145
34
526
(171)
302
1,836
(5,256)
(514)
(109)
(173)
297
(5,755)
2012
$000
3,369
-
$000
1,015
-
-
-
-
1,015
12,233
-
-
-
-
12,233
2011
$000
3,217
20
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 $7,657,120 (2011: $6,288,821). 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.
Annual Report 2012 | Anglo-Eastern Plantations Plc
62
Notes to the Consolidated Financial Statements
18 Retirement benefits
The Group maintains a defined benefit funded pension scheme for some employees in Indonesia. The scheme is valued by an actuary at the
end of each financial year. Any excess of the actuarial liability over the fund assets is provided and charged to the income statement. The
major assumptions used by the actuary were:
Inflation
Rate of increase in wages
Rate of return on scheme assets
Discount rate
2012
4.3%
8.0%
7.0%
6.0%
2011
5.4%
8.0%
6.8%
6.6%
2010
7.0%
8.0%
6.5%
8.5%
2009
2008
10.0%
8.0%
9.0%
12.0%
10.0%
8.0%
9.0%
12.0%
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.
Defined
benefit-
funded
schemes
2012
$000
Defined
benefit-
unfunded
schemes
2012
$000
Past service cost not yet recognised
Unrecognised actuarial gain / (loss)
Reconciliation to consolidated statement of
financial position
Present value of defined benefit obligation
Fair value of plan assets
Unrecognised amount of:
-
-
Net liabilities
Reconciliation of fair value of assets
Fair value of asset beginning
Contribution - employer
Expected return on asset
Benefits paid
Actuarial gains and losses
Exchange adjustment
Fair value of asset ending
Reconciliation of present value of defined
benefit obligation (PVDBO)
PVDBO beginning
Mutation out
Mutation in
Current service cost
Interest cost
Benefits paid
Actuarial gains and losses
Exchange adjustment
PVDBO ending
(5,802)
3,853
28
761
(1,160)
3,785
260
221
(164)
(17)
(232)
3,853
(4,776)
969
(1,073)
(695)
(147)
14
(413)
319
(5,802)
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
(2,249)
-
15
337
(1,897)
-
-
-
-
-
-
-
(1,854)
-
-
(522)
(117)
34
85
125
(2,249)
2012
$000
695
732
(221)
1,206
522
137
-
1,865
Defined
benefit-
funded
schemes
2011
$000
Defined
benefit-
unfunded
schemes
2011
$000
(4,776)
3,785
74
696
(221)
2,060
1,717
148
(66)
-
(74)
3,785
(3,583)
226
(226)
(567)
(121)
42
(613)
66
(4,776)
2010
$000
149
6
(128)
27
161
146
-
334
(1,854)
-
17
465
(1,372)
-
15
-
-
(15)
-
-
(1,159)
-
-
(325)
(103)
22
(320)
31
(1,854)
2009
$000
214
4
(138)
80
342
-
-
422
Total
2012
$000
(8,051)
3,853
43
1,098
(3,057)
3,785
260
221
(164)
(17)
(232)
3,853
(6,630)
969
(1,073)
(1,217)
(264)
48
(328)
444
(8,051)
2011
$000
567
156
(148)
575
325
86
-
986
Total
2011
$000
(6,630)
3,785
91
1,161
(1,593)
2,060
1,732
148
(66)
(15)
(74)
3,785
(4,742)
226
(226)
(892)
(224)
64
(933)
97
(6,630)
2008
$000
275
5
(112)
168
308
-
57
533
Annual Report 2012 | Anglo-Eastern Plantations Plc
63
Notes to the Consolidated Financial Statements
18 Retirement benefits - continued
Defined contribution schemes
Scheme assets
Scheme liabilities
Surplus / (deficit)
Experience adjustments on liabilities
As a % of plan liabilities
Experience adjustments on assets
As a % of plan assets
19 Share capital
Ordinary shares of 25p each
Beginning and end of year
Treasury shares:
Beginning of year
Share options exercised
End of year
Market value of treasury shares:
Beginning of year (685.0p/share)
End of year (670.0p/share)
2012
$000
3,853
(6,910)
(3,057)
280
10%
-
-
2011
$000
3,785
(5,378)
(1,593)
217
9%
-
-
2010
$000
2,060
(4,365)
(2,305)
216
10%
-
-
2009
$000
1,675
(3,505)
(1,830)
106
6%
-
-
2008
$000
1,241
(2,735)
(1,494)
140
10%
-
-
Authorised
Number
Issued and
fully paid
Number
Authorised
£000
Issued and
fully paid
£000
Authorised
$000
Issued and
fully paid
$000
60,000,000 39,976,272
15,000
9,994
23,865
15,504
2012
Number
437,200
(97,300)
339,900
2011
Number
437,200
-
437,200
Cost
2012
$’000
(1,507)
336
(1,171)
Cost
2011
$’000
(1,507)
-
(1,507)
$’000
4,654
3,702
No treasury shares were purchased in 2012 (2011: Nil).
20 Share based payment
Options have been granted under the Company's 1994 Executive Share Option Scheme and Overseas Share Option Scheme and the 2005
Unapproved Executive Share Option Scheme to subscribe for ordinary shares of 25p each of the Company as follows:
Date of
grant
16.04.02
09.10.06
21.05.07
03.06.08
Price
per share
44.7p
323.25p
360.3p
598.0p
Period of option
30.04.05 – 29.04.12
09.10.09 – 08.10.16
21.05.10 – 20.05.17
03.06.11 – 02.06.18
Exercisable
1 Jan 11
Number
30,600
2,400
62,400
71,000
166,400
95,400
Exercised
Number
-
-
-
-
Lapsed
Number
-
-
(11,700)
(13,600)
31 Dec 11
Number
30,600
2,400
50,700
57,400
Exercised
Number
(30,600)
-
*(49,300)
*(17,400)
Adjustment
Number
-
-
2,700
1,200
-
(25,300)
141,100
(97,300)
3,900
95,400
31 Dec 12
Number
-
2,400
4,100
41,200
47,700
47,700
*$447,619 was received during the year but shares yet to be allotted.
3,900 share options recorded under adjustment was a reinstatement of share options wrongly recorded as lapsed in year 2011.
The weighted average contracted life of options outstanding at the end of the year was 5.2 years (2011: 4.7 years) and the weighted average
exercise price was 564p (2011: 388p). The weighted average exercise price of options exercisable at the end of the year was 564p (2011:
388p).
No option was exercised in year 2011. The weighted average share price at date of exercise of options exercised in 2012 was 810p. No
share options were granted in 2012 (2011: Nil).
The weighted average share price of options that lapsed in year 2011 was 488p. No option lapsed during the year.
Annual Report 2012 | Anglo-Eastern Plantations Plc
64
Notes to the Consolidated Financial Statements
20 Share based payment – continued
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.
21 Ultimate controlling shareholder
At 31 December 2012, Genton International Limited, a company registered in Hong Kong, held 20,247,814 (2011: 20,247,814) shares of the
Company representing 51.1% (2011: 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.
22 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 $9,216 (2011: $19,708). This contract is on an arm’s length basis. There is no balance
outstanding at year end (2011: Nil).
23 Reserves and non-controlling interest
Nature and purpose of each reserve:
Share capital
Amount of shares subscribed at nominal value.
Share premium
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.
24 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
2012
$000
1,820
77,671
2011
$000
2,260
40,000
Annual Report 2012 | Anglo-Eastern Plantations Plc
65
Notes to the Consolidated Financial Statements
25 Disclosure of financial instruments and other risks
The Group's principal financial instruments comprise cash, short and long term bank loans, trade receivables and payables and receivables
from local partners in respect of their investments.
The Group’s accounting classification of each class of financial asset and liability at 31 December 2012 and 2011 were:
2012
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
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
Loans and
receivables
$000
5,033
7,419
116,250
-
-
-
128,702
Loans and
receivable
$000
1,551
4,877
90,482
-
-
-
96,910
Financial
liabilities at
amortised cost
$000
-
-
-
(52)
(15,635)
(25,026)
(40,713)
Total carrying
value and
fair value
$000
5,033
7,419
116,250
(52)
(15,635)
(25,026)
87,989
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
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.
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 $67,992,000 (2011: $76,131,000), while the fair value of the Group's share of underlying assets at 31 December 2012 amounted to
$466,292,000 (2011: $442,976,000).
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.
Annual Report 2012 | Anglo-Eastern Plantations Plc
66
Notes to the Consolidated Financial Statements
25 Disclosure of financial instruments and other risks - continued
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 2011 and
2012, the policy has been for only a partial but increasing match because interest rates on local currency deposits were 3.53% higher than
on dollar deposits whereas interest rate for local currency borrowing was about 6% higher as compared to US dollars borrowing. The
unmatched balance at 31 December 2012 is represented by the $2,315,000 shown in the table below (2011: $5,273,000). If the Group's net
cash position continues to improve then dollar cash balances will continue to increase through 2013.
The table below shows the net monetary assets and liabilities of the Group at 31 December 2012 and 2011 that were not denominated in the
operating or functional currency of the operating unit involved.
Functional currency of Group operation
2012
Indonesian rupiah
US dollar
Total
2011
Indonesian rupiah
US dollar
Total
Net foreign currency assets/(liabilities)
US dollar
$000
Sterling
$000
(2,315)
-
(2,315)
(5,273)
-
(5,273)
-
734
734
-
320
320
Total
$000
(2,315)
734
(1,581)
(5,273)
320
(4,953)
The following table summarises the sensitivity of the Group’s financial assets and financial liabilities to foreign exchange risk. The impact on
profit before tax and equity if Ringgit or Rupiah strengthen or weaken by 10% against US dollars is:
2012
2011
Carrying
Amount
US$
$000
-10% in
Rp : $ and
RM : $
$000
+10% in
Rp : $ and
RM : $
$000
Carrying
Amount
US$
$000
-10% in
Rp : $ and
RM : $
$000
+10% in
Rp : $ and
RM : $
$000
5,033
7,419
116,250
(52)
(15,635)
(25,026)
(334)
(492)
(10,392)
5
1,239
2
(9,972)
408
601
12,701
(6)
(1,514)
(3)
12,187
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
(3)
(2,234)
(6)
7,792
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)
Liquidity risk
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 development 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.
Annual Report 2012 | Anglo-Eastern Plantations Plc
67
Notes to the Consolidated Financial Statements
25 Disclosure of financial instruments and other risks - continued
The Group's trade and tax payables are all due for settlement within a year. At 31 December 2012 the Group had the following loans and
facilities.
Indonesia:
US dollar denominated – long term loan
RP denominated – finance lease
Borrowings
$000
Facilities
$000
Repayable
25,000
78
45,000
131
2014 – 2020 (note 15)
2011 – 2014 (note 15)
The total loan borrowings of $25,078,000 together with interest at current rates is repayable as follows:
Principal
Interest
Total
2012
$000
2013
$000
2014 and after
$000
52
1,380
1,432
89
1,378
1,467
24,937
7,541
32,478
Forecasts prepared in December 2012 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 2012, 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 15.
2012
2011
Carrying
amount
$000
-1% in
interest rate
$000
+1% in
interest rate
$000
Carrying
amount
$000
-1% in
interest rate
$000
+1% in
interest rate
$000
116,250
(870)
870
90,482
(779)
779
Financial Assets
Cash and cash equivalents
Financial Liabilities
Borrowings due within one year
Borrowings due after one year
Total increase/(decrease)
(52)
(25,026)
-
251
(619)
-
(251)
619
(6,465)
(58)
64
-
(715)
(64)
-
715
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:
2012
Sterling
US dollar
Rupiah
Ringgit
Total
2011
Sterling
US dollar
Rupiah
Ringgit
Total
Total
$000
Fixed rate
$000
Variable rate
$000
No interest
$000
734
27,259
93,604
7,105
128,702
320
7,424
80,196
8,970
96,910
-
1,363
-
-
1,363
-
1,363
-
-
1,363
512
11,591
68,779
6,595
87,477
52
568
68,891
8,439
77,950
222
14,305
24,825
510
39,862
268
5,493
11,305
531
17,597
Annual Report 2012 | Anglo-Eastern Plantations Plc
68
Notes to the Consolidated Financial Statements
25 Disclosure of financial instruments and other risks - continued
Long term receivables of $1,363,000 (2011: $1,363,000) comprise dollar denominated amounts due from minority shareholders as described
in note 12 on which interest is due at a fixed rate of 6%.
Average US dollar deposit rate in 2012 was 2.63% (2011: 0.16%) and rupiah deposit rate was 6.15% (2011: 6.51%).
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:
2012
Sterling
US dollar
Rupiah
Ringgit
Total
2011
Sterling
US dollar
Rupiah
Ringgit
Total
Total
$000
Fixed rate
$000
Variable rate
$000
No interest
$000
-
(26,872)
(12,984)
(857)
(40,713)
(75)
(7,047)
(19,354)
(925)
(27,401)
-
-
-
-
-
-
-
-
-
-
-
(25,000)
(78)
-
(25,078)
-
(6,523)
-
-
(6,523)
-
(1,872)
(12,906)
(857)
(15,635)
(75)
(524)
(19,354)
(925)
(20,878)
Weighted average interest rate on variable rate borrowings was 5.51% in 2012 (2011: 4.83%).
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 2012 (2011: 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 (2011: $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 $412,013,000 at 31 December 2012 (2011: $391,530,000).
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.
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 2012 (2011: Nil) the Group had no net borrowings but, depending market conditions, the Board is prepared for the Group to have
net borrowings.
Annual Report 2012 | Anglo-Eastern Plantations Plc
69
Notes to the Consolidated Financial Statements
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 Pitri 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
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. On 17 October 2012, the Petitioner informed the Court that it has executed notice of discontinuance with liberty to re-file
the case and the case was duly struck off by the Judge.
Annual Report 2012 | Anglo-Eastern Plantations Plc
70
Company Balance Sheet
As at 31 December 2012
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
2012
$000
67,992
67,992
6,168
1,937
8,105
(1,424)
6,681
74,673
15,504
(1,171)
23,935
1,087
3,872
31,446
74,673
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
The financial statements were approved by the Board of Directors and authorised for issue on 30 April 2013 and were signed on its behalf by
Dato’ John Lim Ewe Chuan
The accompanying notes are an integral part of this balance sheet.
Annual Report 2012 | Anglo-Eastern Plantations Plc
71
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 46.
Deferred tax
A deferred tax asset has not been recognised in relation to brought forward tax losses of $7.4m (2011: $5.8m) 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
(6,146)
874
Loans to
subsidiary
undertakings
$000
69,111
(1,993)
67,118
Total
$000
76,131
(8,139)
67,992
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 subsidiary of $6.146m is due for full redemption in January 2012. On 21 May and 5 December 2012,
the Company sent letters to the subsidiary seeking full redemption of the preference shares.
The principal subsidiaries of the Company are listed in note 26 to the consolidated financial statements on page 70.
3 Other debtors
Other receivables
Preference shares due for redemption
2012
$000
22
6,146
6,168
2011
$000
18
-
18
Annual Report 2012 | Anglo-Eastern Plantations Plc
72
Notes to the Company Financial Statements
4 Dividends
Paid during the year
Final dividend of 6.0 cts for the year ended 31 December 2011 (2010: 5.0cts)
Proposed final dividend of 4.5 cts for the year ended 31 December 2012 (2011: 6.0cts)
2012
$000
2,372
1,784
2011
$000
1,977
2,372
The proposed dividend for 2012 is subject to shareholder approval at the forthcoming annual general meeting and has not been included as
a liability in these financial statements.
5. Other creditors
Accruals
6 Share capital
2012
$000
1,424
2011
$000
632
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
2012
Number
437,200
(97,300)
339,900
2011
Number
437,200
-
437,200
Treasury shares
Beginning of year
Share options exercised
End of year
Market value of treasury shares:
Beginning of year (685.0p /share)
End of year (670.0p/share)
9,994
Cost
2012
$’000
(1,507)
336
(1,171)
15,504
Cost
2011
$’000
(1,507)
-
(1,507)
$000
4,654
3,702
Details of share based payments are set out in note 20 to the consolidated financial statements on page 64.
7 Reserves
Company balance sheet
Beginning of year
Loss for the financial year
Share options exercised
Dividend paid
End of year
Share
premium
account
$000
23,935
-
-
-
23,935
Treasury
shares
$000
(1,507)
-
336
-
(1,171)
Capital
redemption
reserve
$000
Exchange
reserve
$000
(Distributable)
Retained
earnings
$000
1,087
-
-
-
1,087
3,872
-
-
-
3,872
35,857
(2,172)
133
(2,372)
31,446
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 $2,172,000 (2011 profit before tax: $1,075,000) and loss for the
year was $2,172,000 (2011 profit for the year: $1,090,000). The exchange reserve arose on the initial transition from sterling to US dollars
as the Company’s functional currency.
Annual Report 2012 | Anglo-Eastern Plantations Plc
73
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
2012
number
2011
number
4
2
6
2012
$000
70
8
78
4
2
6
2011
$000
67
8
75
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 33 to 35 of which the information on page 35 has been audited.
Directors' emoluments
2012
$000
222
2011
$000
194
9 Guarantees and other financial commitments
The Company has provided guarantees for loans to subsidiaries totalling $45,000,000 (2011: $17,588,000) as set out in note 15 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 Pitri Jaya
PT Mitra Puding Mas
PT Simpang Ampat
PT Anglo-Eastern Plantations Management Indonesia
PT Hijau Pryan Perdana
PT Sawit Graha Manunggal
Intercompany Payables
The Ampat (Sumatra) Rubber Estate (1913) Limited
Gadek Indonesia (1975) Limited
Mergeset (1980) Limited
PT Musam Utjing
PT Tasik Raja
2012
$000
773
428
76,167
1,068
142
51
32
80
1,536
42
50
175
80,544
782
226
9,255
122
3,041
13,426
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
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.
Annual Report 2012 | Anglo-Eastern Plantations Plc
74
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 0107
62 (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