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Industrias Bachoco, S.A. de C.V.2015 Annual Report Anglo-Eastern Plantations Plc l A n g o - E a s t e r n P a n t a t i l o n s P l c 2 0 1 5 A n n u a l R e p o r t Anglo_EasternARcov 2015.indd 1 4/27/16 5:20 PM About Anglo-Eastern Plantations Contents 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 128,600ha. About AEP Financial Highlights Key Information Shareholder Information Chairman's Statement Strategic Report Financial Record Estate Areas Location of Estates Directors' Report Directors' Responsibilities Directors Statement on Corporate Governance Audit Committee Report Directors' Remuneration Report Auditors' Report Consolidated Income Statement Consolidated Statement of Comprehensive Income Consolidated Statement of Financial Position Consolidated Statement of Changes in Equity 2 4 6 7 9 11 29 30 31 32 38 39 40 44 47 52 59 60 61 62 Consolidated Statement of Cash Flows Notes to the Consolidated Financial Statements Company Balance Sheet Company Statement of Changes in Equity Notes to the Company Financial Statements Notice of Annual General Meeting Form of Proxy and Attendance Card AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. 65 63 Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. 94 95 93 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. Separate Attachment 100 Company addresses, advisers and website Inside Back Cover Annual Report 2015 | Anglo-Eastern Plantations Plc 2 Company addresses London Office 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 Malaysian Office Anglo-Eastern Plantations Management Sdn Bhd 7th Floor, Wisma Equity 150 Jalan Ampang 50450 Kuala Lumpur Malaysia Tel: 60 (0)3 2162 9808 Fax: 60 (0)3 2164 8922 Indonesian Office PT Anglo-Eastern Plantations Management Indonesia Wisma HSBC, Jalan Diponegoro, Kav 11 Medan 20152 North Sumatera Indonesia Tel: 62 (0)61 452 0107 Fax: 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: 44 (0)20 7216 4600 Fax: 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 Sumatera Indonesia PT Bank DBS Indonesia Uniplaza Building Jalan Letjen MT Haryono A-1 Medan 20231 North Sumatera 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 Panmure Gordon (UK) Limited One New Change London EC4M 9AF United Kingdom Anglo_EasternARcov 2015.indd 2 4/27/16 5:20 PM About Anglo-Eastern Plantations About Anglo-Eastern Plantations About Anglo-Eastern Plantations About Anglo-Eastern Plantations Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”) are a major producer of palm oil Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”) are a major producer of palm oil Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”) are a major producer of palm oil 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 128,600ha. and rubber with plantations across Indonesia and Malaysia, amounting to some 128,600ha. and rubber with plantations across Indonesia and Malaysia, amounting to some 128,600ha. and rubber with plantations across Indonesia and Malaysia, amounting to some 128,600ha. AEP has a Premium Listing on the London Stock AEP has a Premium Listing on the London Stock AEP has a Premium Listing on the London Stock AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in Exchange. The Company was formed and floated in Exchange. The Company was formed and floated in Exchange. The Company was formed and floated in 1985. 1985. 1985. 1985. Primary activities are Primary activities are Primary activities are Primary activities are the crop production and the crop production and the crop production and the crop production and processing of palm oil and some rubber through processing of palm oil and some rubber through processing of palm oil and some rubber through processing of palm oil and some rubber through operations in Indonesia and Malaysia. operations in Indonesia and Malaysia. operations in Indonesia and Malaysia. operations in Indonesia and Malaysia. The Group is committed to responsible development The Group is committed to responsible development The Group is committed to responsible development The Group is committed to responsible development and management of its plantations and facilities for the and management of its plantations and facilities for the and management of its plantations and facilities for the and management of its plantations and facilities for the benefit of the environment and society in which it benefit of the environment and society in which it benefit of the environment and society in which it benefit of the environment and society in which it operates. operates. operates. operates. Annual Report 2015 | Anglo-Eastern Plantations Plc Annual Report 2015 | Anglo-Eastern Plantations Plc Annual Report 2015 | Anglo-Eastern Plantations Plc Annual Report 2015 | Anglo-Eastern Plantations Plc 2 2 2 2 2 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. About Anglo-Eastern Plantations About Anglo-Eastern Plantations About Anglo-Eastern Plantations Oil Palm Plantations Oil Palm Plantations Oil Palm Plantations The Group has developed 50,800ha of mature oil palm at 15 plantations across The Group has developed 50,800ha of mature oil palm at 15 plantations across The Group has developed 50,800ha of mature oil palm at 15 plantations across Indonesia and Malaysia. Indonesia and Malaysia. Indonesia and Malaysia. Oil Palm Development Oil Palm Development Oil Palm Development An Oil Palm tree will usually take 3 years from planting to harvest of first crop and An Oil Palm tree will usually take 3 years from planting to harvest of first crop and An Oil Palm tree will usually take 3 years from planting to harvest of first crop and will reach full production after 5 years. The Group has approximately 13,000ha of will reach full production after 5 years. The Group has approximately 13,000ha of will reach full production after 5 years. The Group has approximately 13,000ha of recently planted immature plantations of which 3,416ha were planted in 2015, recently planted immature plantations of which 3,416ha were planted in 2015, recently planted immature plantations of which 3,416ha were planted in 2015, including replanting of 1,590ha. including replanting of 1,590ha. including replanting of 1,590ha. Palm Oil Production Palm Oil Production Palm Oil Production The Group operates 6 palm oil mills in Indonesia, including a mill at Northern The Group operates 6 palm oil mills in Indonesia, including a mill at Northern The Group operates 6 palm oil mills in Indonesia, including a mill at Northern Sumatera incorporating advanced waste management treatment for biomass Sumatera incorporating advanced waste management treatment for biomass Sumatera incorporating advanced waste management treatment for biomass disposal and biogas emission capture. A second biogas plant is being disposal and biogas emission capture. A second biogas plant is being disposal and biogas emission capture. A second biogas plant is being constructed at the new mill in Central Kalimantan which began commercial constructed at the new mill in Central Kalimantan which began commercial constructed at the new mill in Central Kalimantan which began commercial operations in the third quarter of 2015. The 6 mills will be able to process up to a operations in the third quarter of 2015. The 6 mills will be able to process up to a operations in the third quarter of 2015. The 6 mills will be able to process up to a combined 295mt of fresh fruit bunches (“FFB”) per hour. combined 295mt of fresh fruit bunches (“FFB”) per hour. combined 295mt of fresh fruit bunches (“FFB”) per hour. Third Party Palm Oil Processing Third Party Palm Oil Processing Third Party Palm Oil Processing During 2015 the Group purchased approximately 678,200mt of FFB from third During 2015 the Group purchased approximately 678,200mt of FFB from third During 2015 the Group purchased approximately 678,200mt of FFB from third party producers for processing through our own mills. The total FFB throughput party producers for processing through our own mills. The total FFB throughput party producers for processing through our own mills. The total FFB throughput at the Group’s mills in 2015 was 1.51 million mt producing 321,400mt of crude at the Group’s mills in 2015 was 1.51 million mt producing 321,400mt of crude at the Group’s mills in 2015 was 1.51 million mt producing 321,400mt of crude palm oil (“CPO”). palm oil (“CPO”). palm oil (“CPO”). Rubber Plantations Rubber Plantations Rubber Plantations The Group has 512ha of established rubber plantations which, in 2015, produced The Group has 512ha of established rubber plantations which, in 2015, produced The Group has 512ha of established rubber plantations which, in 2015, produced 847mt of raw latex and rubber lumps. The size of rubber plantations will be 847mt of raw latex and rubber lumps. The size of rubber plantations will be 847mt of raw latex and rubber lumps. The size of rubber plantations will be further reduced as the Group replaces ageing rubber trees with oil palm. further reduced as the Group replaces ageing rubber trees with oil palm. further reduced as the Group replaces ageing rubber trees with oil palm. Annual Report 2015 | Anglo-Eastern Plantations Plc Annual Report 2015 | Anglo-Eastern Plantations Plc Annual Report 2015 | Anglo-Eastern Plantations Plc 3 3 3 3 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Financial Highlights Financial Highlights Financial Highlights Revenue Profit before tax Revenue Revenue - before biological asset (“BA”) adjustment Profit before tax Profit before tax - after biological asset adjustment - before biological asset (“BA”) adjustment - before biological asset (“BA”) adjustment - after biological asset adjustment - after biological asset adjustment EPS before BA adjustment EPS after BA adjustment EPS before BA adjustment EPS before BA adjustment Dividend (pence) EPS after BA adjustment EPS after BA adjustment Dividend (cents) Dividend (pence) Dividend (pence) Dividend (cents) Dividend (cents) Note: * Based on exchange rate at 22 April 2016 of $1.4409/£ Note: * Based on exchange rate at 22 April 2016 of $1.4409/£ Note: * Based on exchange rate at 22 April 2016 of $1.4409/£ Anglo-Eastern Plantations Plc Anglo-Eastern Plantations Plc Anglo-Eastern Plantations Plc 2015 $m 2015 2015 $m $m 196.5 196.5 196.5 45.0 (19.1) 45.0 45.0 (19.1) (19.1) 69.39cts (37.58)cts 69.39cts 69.39cts 1.75p (37.58)cts (37.58)cts 2.5*cts 1.75p 1.75p 2.5*cts 2.5*cts 2014 $m 2014 2014 $m $m 251.3 251.3 251.3 85.0 51.2 85.0 85.0 51.2 51.2 132.26cts 77.61cts 132.26cts 132.26cts 3.0p 77.61cts 77.61cts 4.5cts 3.0p 3.0p 4.5cts 4.5cts % % % FTSE 100 Annual Report 2015 | Anglo-Eastern Plantations Plc FTSE 100 FTSE 100 Annual Report 2015 | Anglo-Eastern Plantations Plc Annual Report 2015 | Anglo-Eastern Plantations Plc Share Price (p) Share Price (p) Share Price (p) Turnover by volume ('000) Turnover by volume ('000) Turnover by volume ('000) 4 4 4 4 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Profit Before Tax Before BA Profit Before Tax Before BA ($000) ($000) 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 Asset Value Per Share Asset Value Per Share ($, cents) ($, cents) Financial Highlights Financial Highlights 300,000 300,000 250,000 250,000 200,000 200,000 150,000 150,000 100,000 100,000 50,000 50,000 0 0 Revenue ($000) Revenue ($000) 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 120,000 120,000 100,000 100,000 80,000 80,000 60,000 60,000 40,000 40,000 20,000 20,000 0 0 Basic Earnings Per Share Basic Earnings Per Share Before BA ($, cents) Before BA ($, cents) 180.00 180.00 160.00 160.00 140.00 140.00 120.00 120.00 100.00 100.00 80.00 80.00 60.00 60.00 40.00 40.00 20.00 20.00 0.00 0.00 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 1,200 1,200 1,000 1,000 800 800 600 600 400 400 200 200 0 0 2011 2011 2012 2012 2013 2013 2014 2014 2015 2015 Annual Report 2015 | Anglo-Eastern Plantations Plc Annual Report 2015 | Anglo-Eastern Plantations Plc 5 5 5 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Key Information Key Information Crude Palm Oil Production (mt) Crude Palm Oil Production (mt) 350,000 350,000 300,000 300,000 250,000 250,000 200,000 200,000 150,000 150,000 100,000 100,000 50,000 50,000 - - 2011 2011 2012 2012 2013 2013 2014 2014 2015 2015 Own FFB & Outside Purchase (mt) Own FFB & Outside Purchase (mt) 1,000,000 1,000,000 900,000 900,000 800,000 800,000 700,000 700,000 600,000 600,000 500,000 500,000 400,000 400,000 300,000 300,000 200,000 200,000 100,000 100,000 - - 2011 2011 2012 2012 Own FFB Own FFB 2013 2013 2014 2014 Outside Purchase Outside Purchase Age of Palm Trees Age of Palm Trees (as at 31/12/15) (as at 31/12/15) 12% 12% 20% 20% 28% 28% 40% 40% (as at 31/12/14) (as at 31/12/14) 11% 11% 25% 25% 30% 30% 34% 34% 2015 2015 Immature Immature Young Young Prime Prime Old Old Annual Report 2015 | Anglo-Eastern Plantations Plc Annual Report 2015 | Anglo-Eastern Plantations Plc 6 6 6 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Shareholder Information Market capitalisation The market capitalisation of Anglo-Eastern Plantations Plc at 31 December 2015 was £210 million, the ordinary share price at close of business on 1 April 2016 was 555 pence giving a market capitalisation of £220 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: Fax: 44 (0) 20 7216 4621 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 31st 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 27 June 2016. Notice of the meeting is set out at the end of this Annual Report and pages 100 to 103. 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. Annual Report 2015 | Anglo-Eastern Plantations Plc 7 7 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Shareholder Information Payment of dividends The Group's reporting currency is US Dollar. While the dividend is declared in Pounds Sterling, shareholders can choose to receive dividends in US Dollar. 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 Dollar. The US Dollar 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 2015 | Anglo-Eastern Plantations Plc 8 8 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Chairman's Statement The Group achieved record production of fresh fruit bunches (“FFB”) in 2015. The crop production of 900,400mt, was 5% higher than the previous year (2014: 857,400mt) broadly in line with 9% increase in matured trees. The mills similarly recorded the highest purchase of external FFB in recent years. FFB bought-in from surrounding smallholders in 2015 was 678,200mt (2014: 626,200mt), 8% higher, as the Group offered competitive prices for the external crops. The mills as a result processed 9% more FFB, and increased crude palm oil (“CPO”) production by 9% to 321,400mt (2014: 294,200mt). FFB harvest in Kalimantan exceeded expectation and was higher than last year’s production by 65% as matured trees increased from 4,650ha to 7,790ha. This made up for the lower production in other established regions in North Sumatera, Riau and Bengkulu which were adversely affected by four months of drought caused by the El Nino weather phenomenon. The dry spell compounded by the indiscriminate open burning by villagers to clear their land for planting resulted in an unprecedented haze that blanketed parts of Indonesia for months. Sporadic fire from surrounding land encroached onto our plantations resulting in damages of up to 175ha of palm oil in South Sumatera and Kalimantan. The fire burned the ground weeds, cover crops and scorched lower fronds but most of the affected palms will survive and recover. The quick response from our fire patrol teams equipped with proper fire-fighting gear helped to quickly contain the spread of fire. In the aftermath of the forest fires, it was reported that the Indonesian government investigated more than 200 companies and sanctioned 23 companies with suspension to permanent revocation of operating licenses. I am pleased to report that the Group is not involved in open burning and that normal rainfall has since returned. Despite the increase in crop and CPO production, revenue and profitability suffered as CPO prices fell to a 7-year low. The average CPO Rotterdam price in 2015 was 25% lower at $613/mt, compared to $815/mt in 2014. The Group’s revenue was lower by 22% at $196.5 million, compared to $251.3 million achieved in 2014. For the year the Indonesian Rupiah depreciated by 13% against the US dollar, the Group’s reporting currency, which also partly explains the lower revenue. The Group operating profit for 2015, before the biological asset (“BA”) adjustment was $42.7 million, 46% lower compared to $78.8 million achieved in 2014. Earnings per share, before BA adjustment decreased to 69.39cts, from 132.26cts in 2014. The Group suffered an operating loss for 2015 at $21.4 million after a downward BA adjustment of $64.1 million as compared to 2014 operating profit of $45.1 million after a downward BA adjustment of $33.7 million. Profit was eroded by losses from five newly matured plantations in Bengkulu, Bangka and Kalimantan. With the current low CPO prices, it will take another three to four years for these plantations to turn in a profit when the FFB yield reaches its optimum level. At a recent 2015 Indonesian Palm Oil Conference in Bali, vegetable oil analysts forecast that CPO will trade between a moderate price band of $550/mt to $770/mt by middle of 2016. We have seen a pick-up in CPO price in December 2015 to close at $560/mt on concern of lower production arising from the effect of El Nino. Despite this, challenging times are ahead for the Group and the palm oil industry. Earlier this year, the Indian government in its effort to reduce the import of vegetable oil had permitted 100% foreign direct investment in oil palm plantations in India from mid-November 2015. This caused some flutter in the global edible oils industry which is understandable as India is currently the largest consumer of CPO. The slowdown in the Chinese economy and weaker Chinese Yuan continue to hurt the export of CPO. There are however signs that the world’s second largest economy and second largest consumer of CPO is stabilizing and clarity on the timing of US interest rate hikes are bolstering speculation that commodities will rebound from the worst year since 2008. China’s recent move from a one-child to two-child policy may also bode well for the future of CPO as increased population will drive the demand for vegetable oil. The over production of crude oil remains a major concern as crude oil prices had plunged to recent twelve year low which undermines the competitiveness of CPO as a source of biodiesel. In spite of the challenging market conditions the Board has continued to invest in the development of new assets. The Group planted 3,416ha of oil palms in 2015 of which 1,590ha comprised of replanting. This was less than planned, due primarily to delays in finalising agreements with villagers for land compensation payments in Bengkulu, Bangka and Kalimantan. Annual Report 2015 | Anglo-Eastern Plantations Plc 9 9 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Chairman's Statement The 45mt/hr mill in Central Kalimantan built at a cost of $11.2 million has started commercial operation in the third quarter of 2015. At the same time a biogas plant estimated to cost $2.5 million is also being constructed at this mill. Upon completion of the biogas plant by the middle of 2016, it will help reduce the mill reliance on fossil fuel and at the same time reduces the Group’s carbon foot print. This will be the second biogas plant within the Group. 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 is also mindful of shareholders’ sentiment and therefore declared a final dividend of 1.75p per share in respect of the year to 31 December 2015 (2014: 3.0p). Subject to the approval by shareholders at the Annual General Meeting, the final dividend will be paid on 11 July 2016 to those shareholders on the register on 10 June 2016. Last year I highlighted the introduction of the new Law on Plantation by the Indonesian Government in October 2014. The new law inter-alia mandated the Government to prioritise domestic investments in the plantation business development and restricts foreign investments in the same sector based on types of plantation crops, business scale and conditions of a particular region; and possibly in the future, may set a cap on foreign investments. Following the introduction of the new Law on Plantation by the Indonesian Government in October 2014, the Indonesian Government has recently announced plans to push through a moratorium on new concessions for oil palm plantations in a bid to protect the environment. 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 26 April 2016 Annual Report 2015 | Anglo-Eastern Plantations Plc 10 10 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Strategic Report Business Model The Group will continue to focus on its strength and expertise which is planting more oil palms which includes replanting old palms with low yield, replace old rubber trees with palm trees and building more mills to process the FFB. The Group has over the years created value to shareholders through expansion in a responsible way. We have in the last few years bought and invested in new tracts of land and portions remain to be planted. Good land at reasonable price has become more scarce. The Indonesian government has in 2014 moved to introduce a law to cap the size of new plantations owned by foreign companies. The Group remains committed to use its available resources to develop the land bank in Indonesia as regulatory constraints permit. The Group’s objectives are to provide appropriate 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 sustainability standards. We believe that sustainable success for the Group is best achieved by acting in the long-term interests of our shareholders, our partners and society. Our Strategy The Group’s objectives are to provide an appropriate level of returns to the investors and to enhance shareholders’ value. Profitability however is very much dependent on the CPO price which is volatile and determined by supply and demand. In the short term, CPO price remains under pressure due to the abundance of vegetable oil and the falling crude oil prices which undermine the potential of CPO as a source for biodiesel. Nevertheless the Group believes in the long-term viability of palm oil which remains a cheap and the most productive source of vegetable oil in a growing population. The Group’s strategies therefore focus on maximising yield per hectare above 22mt/ha, mill production efficiency of 110%, minimising production costs below $300/mt and streamlining estate management. For the year under review, the Group achieved a yield of 18.4mt/ha, 109% mill efficiency and production cost of $250/mt on Indonesia operations. This compared to 2014 yield of 19.1mt/ha, 115% mill efficiency and production cost of $255/mt. Despite stiff competition for external crops from surrounding millers, the Group is committed to purchase more external crops from third parties at competitive, yet fair prices, to maximise the production efficiency of the mills. With higher throughput, the mills achieved economy of scales in production. A mill achieves 100% mill efficiency when it operates 16 hours a day for 300 days per annum. In line with the commitment to reduce its carbon foot prints, the Group plans to construct in stages biogas plants at all its mills to trap the methane gas to generate electrical power and at the same time reduces the consumption of fossil fuel. It plans to reduce the greenhouse gas emissions per metric ton of CPO produced in the next two to three years. The Group will continue to follow-up and offer competitive and fair compensation to villagers so that land can be cleared and planted. Financial Review 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 European Union (“EU”) and with those parts of the Companies Act 2006 applicable to companies preparing their accounts under IFRS. Annual Report 2015 | Anglo-Eastern Plantations Plc 11 11 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Strategic Report For the year ended 31 December 2015, revenue for the Group was $196.5 million, 22% lower than $251.3 million reported in 2014 due primarily to the lower CPO price and the weakened of Rupiah against US Dollar. CPO price hit a 7-year low as palm oil inventory reaches new all-time high. The average exchange rate of Rupiah against US Dollar in 2015 was 13,392, 13% lower than 2014 of 11,861. Group operating profit for 2015 before biological asset adjustment was $42.7 million, 46% less than $78.8 million in 2014. With the current low CPO prices, fives subsidiaries with substantial newly matured oil palms incurred losses and are expected to breakeven in about three to four years when the FFB yield reaches the optimum production level. FFB production for 2015 was 900,400mt, 5% higher than the 857,400mt produced in 2014. The yield remains below expectation due to wide spread flooding in North Sumatera at the beginning of the year, followed by 4 months of extreme dry weather between the third and fourth quarters of the year across Indonesia and Malaysia and a higher proportion of young palms. FFB bought-in from local smallholders for 2015 was 678,200mt (2014: 626,200mt), 8% higher compared to 2014. The supply of third party crops was lower in the third and fourth quarters of 2015 due to dry weather. The drought induced tree stress resulted in late ripening of the fruits. During the year, FFB processed by the Group’s mills was 1.51 million mt, 9% higher than last year of 1.38 million mt and CPO production was 9% higher at 321,400mt, compared to 294,200mt in 2014. Loss before tax and after BA adjustment for the Group was $19.1 million, 137% lower compared to a profit of $51.2 million in 2014. The BA adjustment was a debit of $64.1 million, compared to a debit of $33.7 million in 2014. The CPO price for 2015 remained weak. It ended the year at $560/mt far lower than the 10-year average CPO price at $750/mt, which is normally used in the calculation of BA. Therefore a benchmarking exercise was made to ensure the directors’ best estimate of the price sustainable over the longer term is being used. The directors adopted the recommendation of the valuer who has suggested applying a ratio of 70% of the current CPO price and 30% of the historical price (10-year average) given the assumption to calculate CPO price over the past 10 years is no longer considered to be appropriate. As a result, the directors adopted the CPO price of $625/mt which falls within the valuer’s recommended range of $600/mt to $650/mt and the World Bank forecast of CPO price for 2016 at $600/mt. The lower biological value was due to the weakening of Rupiah against US Dollar and also was due to a higher discount rate applied in the determination of biological assets from 16.4% to 16.8%. The higher discount rate is a reflection of the increased sovereign risks in Indonesia. However, this is the last year bearer plants will be fair valued given the change to the IAS 41 which is effective on 1 January 2016. The average CPO price for 2015 was $613/mt, 25% lower than 2014 of $815/mt. Due to the material fluctuation of Rupiah and Malaysia Ringgit against US Dollar, a simulation was conducted on the 2014 income statement’s major items by applying year 2015 average rate onto these major items. The simulation enabled comparison on a like for like basis eliminating the exchange element. The result is exhibited in the table below: Revenue Cost of sales Gross profit BA adjustment Operating profit before BA adjustment Loss before tax after BA adjustment 2015 $000 196,451 2014 $000 222,322 Difference $000 (25,871) (145,897) (145,697) 50,554 (64,121) 42,728 (19,074) 76,625 (29,759) 69,663 45,443 (200) (26,071) (34,362) (26,935) (64,517) Annual Report 2015 | Anglo-Eastern Plantations Plc 12 12 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Strategic Report With the elimination of the exchange element, the revenue for 2015 was lower as a result of the lower CPO price. Despite the increase in production tonnage, the cost of sales for 2015 only increased marginally. The difference of BA adjustment between 2015 and 2014 was greater after the elimination of exchange element. Earnings per share before BA adjustment decreased by 48% to 69.39cts compared to 132.26cts in 2014. Earnings per share after BA adjustment fell from 77.61cts to (37.58)cts. Going Concern The Group’s balance sheet remains strong notwithstanding an unrealised exchange loss on translation of foreign subsidiaries of $54.6 million compensated by a land revaluation gain of $3.7 million net of deferred tax. As at 31 December 2015, the Group had cash and cash equivalents of $104.6 million and borrowings of $34.6 million, giving it a net cash position of $70.0 million, compared to $91.0 million in 2014. Net Group’s borrowings in the year reduced to $34.6 million (2014: $34.9 million). For these reasons, the Group adopts a going concern basis of accounting and believe the Group will continue operation and meet its liabilities for the foreseeable future. Business Review Indonesia FFB production in North Sumatera, which aggregates the estates of Tasik, Anak Tasik, Labuhan Bilik, Blankahan, Rambung, Sg Musam and Cahaya Pelita (“CPA”), produced 325,200mt in 2015 (2014: 342,900mt), 5% lower than 2014. In January 2015, CPA experienced heavy rainfall that inundated over 2,000ha of the plantation. The evacuation of FFB was not possible until the flood receded. A larger budget will be allocated to build canals and water gates as part of its flood mitigation program at CPA. In October 2015, strong wind in Rambung estate damaged nearly 6,500 matured rubber trees covering an area of 13ha. The area affected will be replanted with oil palms. Dry weather for a period of four months in between the third and fourth quarters of 2015 interrupted the ripening of FFB in Tasik, Anak Tasik and Labuhan Bilik. Over 1,400ha of ageing oil palm was replanted in Tasik in 2015. Replanting was necessary due to declining yield as workers find it difficult to harvest the palm trees which were about 30 years old as they have reached an average height of 16 to 18 metres tall. Ganoderma fungus and Upper Stem Rot which attacks the productive palms in Anak Tasik, Blankahan and Rambung remains a threat. Water management, good sanitation and high standards of agronomic practices remain the main priority to avoid spreading of the diseases. This includes proper disposal of severely diseased palms after detection. Soil mounding on infected palms was carried out to lengthen the economic life span of oil palms. Replanting is scheduled in 2016 at Anak Tasik due to significant decline in yield attributed to Ganoderma attack. There was no serious insect damage by Oryctes beetle, other leaf eating pests, wild animals and rats. FFB production in Bengkulu and South Sumatera, which aggregates the estates of Puding Mas, Alno, KKST, ELAP and RAA produced 317,400mt (2014: 304,200mt), 4% higher than 2014. With the dry weather in Bengkulu, about 165km of roads were resurfaced with gravel and laterite soil while another 550km of roads were graded and compacted to improve transport of FFB. As most of the estates are situated close to forest reserves, wild boars and herds of elephants continued to damage palm trees. Deep trenches and fencing provide temporary relief. The protracted negotiation with the villagers over land compensation will have an effect on the future planting in Bengkulu and South Sumatera. CPO production in Alno increased significantly by 27% due to higher purchase of FFB from smallholders and marginally higher own crop production. FFB production in the Riau region, comprising Bina Pitri estates, produced 122,500mt in 2015 (2014: 116,700mt), 5% higher than 2014. This was achieved despite the region experiencing severe drought and haze resulting from indiscriminate open burning by farmers from July to September 2015 when rainfall averaged below 100mm per month. CPO production improved by 10% due to the higher purchase of FFB from smallholders, despite the competitiveness for external crops from millers. Our mill offered higher prices for external crops raising the mill utilization rate at the expense of a lower operating margin. Annual Report 2015 | Anglo-Eastern Plantations Plc 13 13 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Strategic Report Strategic Report FFB production in Kalimantan which comprises of the Sawit Graha Manunggal estates produced 108,100mt in 2015 FFB production in Kalimantan which comprises of the Sawit Graha Manunggal estates produced 108,100mt in 2015 (2014: 65,700mt) mainly from newly matured oil palm area of 7,792ha. FFB yield has surpassed expectation, despite (2014: 65,700mt) mainly from newly matured oil palm area of 7,792ha. FFB yield has surpassed expectation, despite the sandy soil condition. FFB yield from young trees averaged 14mt/ha. As in other regions in Indonesia, the low the sandy soil condition. FFB yield from young trees averaged 14mt/ha. As in other regions in Indonesia, the low rainfall over a four month period of 2015 is likely to affect the FFB production in 2016. A comprehensive soil and rainfall over a four month period of 2015 is likely to affect the FFB production in 2016. A comprehensive soil and water conservation management including applying empty fruit bunch (“EFB”) mulching, fronds cut placement, water conservation management including applying empty fruit bunch (“EFB”) mulching, fronds cut placement, proper drain maintenance have been conducted in sandy soil to minimise early decline in palm trees population due proper drain maintenance have been conducted in sandy soil to minimise early decline in palm trees population due to soil erosion. to soil erosion. Overall bought-in crops for Indonesian operations were 8% higher at 678,200mt for the year 2015 (2014: Overall bought-in crops for Indonesian operations were 8% higher at 678,200mt for the year 2015 (2014: 626,200mt). The average oil extraction rate from our mills was 21.2% in 2015 (2014: 21.3%). 626,200mt). The average oil extraction rate from our mills was 21.2% in 2015 (2014: 21.3%). Malaysia Malaysia FFB production in 2015 was 3% lower at 27,200mt, compared to 28,000mt in 2014. The Malaysian operations faced FFB production in 2015 was 3% lower at 27,200mt, compared to 28,000mt in 2014. The Malaysian operations faced severe shortage in workers due to difficulty in recruiting foreign workers hampering harvesting and estate work. New severe shortage in workers due to difficulty in recruiting foreign workers hampering harvesting and estate work. New incentives and increase in monthly wages were also not sufficient to retain workers after their initial two-year contract incentives and increase in monthly wages were also not sufficient to retain workers after their initial two-year contract expired. In 2015, the Malaysian plantations had $0.7 million pre-tax profit after BA adjustment compared to a pre-tax expired. In 2015, the Malaysian plantations had $0.7 million pre-tax profit after BA adjustment compared to a pre-tax loss of $0.9 million in 2014. loss of $0.9 million in 2014. Commodity Prices Commodity Prices The CPO CIF Rotterdam price started the year at $700/mt (2014: $890/mt) and reached a peak of $707/mt in March The CPO CIF Rotterdam price started the year at $700/mt (2014: $890/mt) and reached a peak of $707/mt in March 2015 before retreating to a 7-year low in August 2015. It staged a slight recovery due to larger imports after price 2015 before retreating to a 7-year low in August 2015. It staged a slight recovery due to larger imports after price drop to record low and on concern of lower production in 2016. It ended the year at $560/mt (2014: $700/mt), drop to record low and on concern of lower production in 2016. It ended the year at $560/mt (2014: $700/mt), averaging $613/mt for the year (2014: $815/mt). averaging $613/mt for the year (2014: $815/mt). CPO CIF Rotterdam (from year 2005 to 2016) CPO CIF Rotterdam (from year 2005 to 2016) CPO CIF Rotterdam CPO CIF Rotterdam U$/mt U$/mt 1600 1600 1400 1400 1200 1200 1000 1000 800 800 600 600 400 400 200 200 0 0 3/1/2005 3/1/2005 3/8/2006 3/8/2006 3/3/2008 3/3/2008 3/10/2009 3/10/2009 3/5/2011 3/5/2011 3/12/2012 3/12/2012 3/7/2014 3/7/2014 3/2/2016 3/2/2016 Annual Report 2015 | Anglo-Eastern Plantations Plc Annual Report 2015 | Anglo-Eastern Plantations Plc 14 14 14 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Strategic Report Strategic Report The soft demand for palm oil due to the abundance of soya oil is likely to curb a quick recovery of the CPO price. The soft demand for palm oil due to the abundance of soya oil is likely to curb a quick recovery of the CPO price. The depressed crude oil prices for much of 2015 did not help to boost the competitiveness of CPO as a source of The depressed crude oil prices for much of 2015 did not help to boost the competitiveness of CPO as a source of biodiesel. It is widely reported that the El Nino weather phenomenon which brought severe drought across Indonesia biodiesel. It is widely reported that the El Nino weather phenomenon which brought severe drought across Indonesia and Malaysia for four months in 2015 is likely to cause moisture stress in palm trees. Furthermore, the region was and Malaysia for four months in 2015 is likely to cause moisture stress in palm trees. Furthermore, the region was blanketed by haze reducing the sunlight required for photosynthesis process in palms and will likely result in reduced blanketed by haze reducing the sunlight required for photosynthesis process in palms and will likely result in reduced crop production in 2016. A lower production will most likely lead to a gradual increase in CPO price. The successful crop production in 2016. A lower production will most likely lead to a gradual increase in CPO price. The successful efforts of Indonesia and Malaysia to introduce higher mandatory blending of biodiesel for industrial and commercial efforts of Indonesia and Malaysia to introduce higher mandatory blending of biodiesel for industrial and commercial purposes likewise could provide some price support. purposes likewise could provide some price support. Rubber prices averaged $1,269/mt for 2015 (2014: $1,616/mt). Our small area of 502ha of mature rubber contributed Rubber prices averaged $1,269/mt for 2015 (2014: $1,616/mt). Our small area of 502ha of mature rubber contributed a revenue of $1.1 million in 2015 (2014: $1.8 million). a revenue of $1.1 million in 2015 (2014: $1.8 million). Corporate Development Corporate Development In 2015, the Group opened up new land and planted 1,826ha of oil palm mainly in Kalimantan, boosting planted area In 2015, the Group opened up new land and planted 1,826ha of oil palm mainly in Kalimantan, boosting planted area including Plasma by 3% to 65,100ha (2014: 63,500ha). This excludes the replanting of 1,423ha of oil palm in North including Plasma by 3% to 65,100ha (2014: 63,500ha). This excludes the replanting of 1,423ha of oil palm in North Sumatera. Another 166ha of ageing rubber trees were replanted with oil palm. New plantings remain behind Sumatera. Another 166ha of ageing rubber trees were replanted with oil palm. New plantings remain behind schedule due to delays in finalising settlement of land compensation with villagers in Bengkulu, Bangka and schedule due to delays in finalising settlement of land compensation with villagers in Bengkulu, Bangka and Kalimantan. The villagers seek compensation beyond what the Group considered fair and reasonable resulting in Kalimantan. The villagers seek compensation beyond what the Group considered fair and reasonable resulting in protracted negotiations. The progress of new planting in Kalimantan was interrupted by prolonged dry weather during protracted negotiations. The progress of new planting in Kalimantan was interrupted by prolonged dry weather during a four month period. a four month period. The mill construction in Central Kalimantan was completed in the second quarter of 2015. It began commercial The mill construction in Central Kalimantan was completed in the second quarter of 2015. It began commercial operation in the third quarter with an initial capacity to process FFB at a rate of 45mt/hr. There is sufficient space to operation in the third quarter with an initial capacity to process FFB at a rate of 45mt/hr. There is sufficient space to add a new processing line in the mill to expand the processing capacity to 90mt/hr when the need arises. add a new processing line in the mill to expand the processing capacity to 90mt/hr when the need arises. Biogas Purification Plant Biogas Purification Plant Annual Report 2015 | Anglo-Eastern Plantations Plc Annual Report 2015 | Anglo-Eastern Plantations Plc 15 15 15 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Strategic Report Strategic Report Strategic Report Biomass plant producing dried long fibre Biomass plant producing dried long fibre Biomass plant producing dried long fibre Negotiation to sell the surplus power estimated at 5.75 million kwh per year to the Indonesian National Electricity Negotiation to sell the surplus power estimated at 5.75 million kwh per year to the Indonesian National Electricity Negotiation to sell the surplus power estimated at 5.75 million kwh per year to the Indonesian National Electricity Company from its new biogas plant in North Sumatera is pending approval from authority after completion of a Company from its new biogas plant in North Sumatera is pending approval from authority after completion of a Company from its new biogas plant in North Sumatera is pending approval from authority after completion of a feasibility study. Upon approval, the Company will install electric cables, transformer and switchgears estimated to feasibility study. Upon approval, the Company will install electric cables, transformer and switchgears estimated to feasibility study. Upon approval, the Company will install electric cables, transformer and switchgears estimated to cost $300,000 to link the biogas plant to the national grid. cost $300,000 to link the biogas plant to the national grid. cost $300,000 to link the biogas plant to the national grid. The Group has started construction of a second biogas plant in Kalimantan which is expected to be completed by The Group has started construction of a second biogas plant in Kalimantan which is expected to be completed by The Group has started construction of a second biogas plant in Kalimantan which is expected to be completed by end of next year. This project would contribute to the Group’s reduction of carbon footprint. end of next year. This project would contribute to the Group’s reduction of carbon footprint. end of next year. This project would contribute to the Group’s reduction of carbon footprint. Corporate Social Responsibility Corporate Social Responsibility Corporate Social Responsibility Corporate Social Responsibility (“CSR”) is an integral part of corporate self-regulation incorporated into our business Corporate Social Responsibility (“CSR”) is an integral part of corporate self-regulation incorporated into our business 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, model. Our Group embraces responsibility for the impact of its activities on the environment, consumers, employees, 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 communities, stakeholders and all other members of the public sphere. In engaging the social dimension of CSR, the 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 Group’s business has taken cognizance of the contribution and further enrichment of its employees while continuing 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. to make contributions to improve the well-being of the surrounding community. 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 The majority of employees and their dependents in the plantations and mills are housed in self-contained 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 communities built by the Group. The employees and their dependents are provided with free housing, clean water 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 repairs places of worship for workers of different religious faiths and electricity. The Group also builds, provides and repairs places of worship for workers of different religious faiths and electricity. The Group also builds, provides and repairs places of worship for workers of different religious faiths as well as schools and sports facilities in these communities. Over the years, the Group has built a total of 71 as well as schools and sports facilities in these communities. Over the years, the Group has built a total of 71 as well as schools and sports facilities in these communities. Over the years, the Group has built a total of 71 mosques and 16 churches in all its estates. In 2015, the Group spent $399,500 to build additional facilities and to mosques and 16 churches in all its estates. In 2015, the Group spent $399,500 to build additional facilities and to mosques and 16 churches in all its estates. In 2015, the Group spent $399,500 to build additional facilities and to maintain these amenities. This includes construction of a new classroom in a school in Bengkulu while a new maintain these amenities. This includes construction of a new classroom in a school in Bengkulu while a new maintain these amenities. This includes construction of a new classroom in a school in Bengkulu while a new elementary school in Labuhan Bilik was built and handed over to the local government. elementary school in Labuhan Bilik was built and handed over to the local government. elementary school in Labuhan Bilik was built and handed over to the local government. Annual Report 2015 | Anglo-Eastern Plantations Plc Annual Report 2015 | Anglo-Eastern Plantations Plc Annual Report 2015 | Anglo-Eastern Plantations Plc 16 16 16 16 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Strategic Report Strategic Report Strategic Report Strategic Report School bus for employees’ children School bus for employees’ children School bus for employees’ children School bus for employees’ children Fun game on employees’ Family Day Fun game on employees’ Family Day Fun game on employees’ Family Day Fun game on employees’ Family Day Annual Report 2015 | Anglo-Eastern Plantations Plc Annual Report 2015 | Anglo-Eastern Plantations Plc Annual Report 2015 | Anglo-Eastern Plantations Plc Annual Report 2015 | Anglo-Eastern Plantations Plc 17 17 17 17 17 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Strategic Report Strategic Report Strategic Report Strategic Report Staff and selected employees are given the opportunity to be trained and to attend seminars to enhance their Staff and selected employees are given the opportunity to be trained and to attend seminars to enhance their Staff and selected employees are given the opportunity to be trained and to attend seminars to enhance their Staff and selected employees are given the opportunity to be trained and to attend seminars to enhance their working skills and capability. In 2015 the Group’s Head Agronomist completed his PhD in Soil Science with summa working skills and capability. In 2015 the Group’s Head Agronomist completed his PhD in Soil Science with summa working skills and capability. In 2015 the Group’s Head Agronomist completed his PhD in Soil Science with summa working skills and capability. In 2015 the Group’s Head Agronomist completed his PhD in Soil Science with summa cum laude from the University of North Sumatera. The Group provides free education for all employees’ children in cum laude from the University of North Sumatera. The Group provides free education for all employees’ children in cum laude from the University of North Sumatera. The Group provides free education for all employees’ children in cum laude from the University of North Sumatera. The Group provides free education for all employees’ children in the local plantations and communities where they work. In 2015, scholarships amounting to $32,300 were provided the local plantations and communities where they work. In 2015, scholarships amounting to $32,300 were provided the local plantations and communities where they work. In 2015, scholarships amounting to $32,300 were provided the local plantations and communities where they work. In 2015, scholarships amounting to $32,300 were provided to children in surrounding villages and selected employees’ children to further their tertiary education in collaboration to children in surrounding villages and selected employees’ children to further their tertiary education in collaboration to children in surrounding villages and selected employees’ children to further their tertiary education in collaboration to children in surrounding villages and selected employees’ children to further their tertiary education in collaboration with universities in Riau and Bengkulu. In total 95 scholarships were given out. Selected under graduates were given with universities in Riau and Bengkulu. In total 95 scholarships were given out. Selected under graduates were given with universities in Riau and Bengkulu. In total 95 scholarships were given out. Selected under graduates were given with universities in Riau and Bengkulu. In total 95 scholarships were given out. Selected under graduates were given opportunities for industrial training during semester breaks. In addition the Group provides funding to construct opportunities for industrial training during semester breaks. In addition the Group provides funding to construct opportunities for industrial training during semester breaks. In addition the Group provides funding to construct opportunities for industrial training during semester breaks. In addition the Group provides funding to construct educational facilities including laboratories, libraries, and computers. The salaries of teachers in the estates and the educational facilities including laboratories, libraries, and computers. The salaries of teachers in the estates and the educational facilities including laboratories, libraries, and computers. The salaries of teachers in the estates and the educational facilities including laboratories, libraries, and computers. The salaries of teachers in the estates and the cost of school buses to transport employees’ children to the schools are provided by the Group. Over the years a cost of school buses to transport employees’ children to the schools are provided by the Group. Over the years a cost of school buses to transport employees’ children to the schools are provided by the Group. Over the years a cost of school buses to transport employees’ children to the schools are provided by the Group. Over the years a total of 34 schools have been built with 121 teachers currently employed within our Group estates. In 2015, the total of 34 schools have been built with 121 teachers currently employed within our Group estates. In 2015, the total of 34 schools have been built with 121 teachers currently employed within our Group estates. In 2015, the total of 34 schools have been built with 121 teachers currently employed within our Group estates. In 2015, the Group spent some $552,500 on running the schools. The Group bought a new school bus in Kalimantan taking the Group spent some $552,500 on running the schools. The Group bought a new school bus in Kalimantan taking the Group spent some $552,500 on running the schools. The Group bought a new school bus in Kalimantan taking the Group spent some $552,500 on running the schools. The Group bought a new school bus in Kalimantan taking the tally of school buses operated by the Group in 2015 to 32 vehicles. tally of school buses operated by the Group in 2015 to 32 vehicles. tally of school buses operated by the Group in 2015 to 32 vehicles. tally of school buses operated by the Group in 2015 to 32 vehicles. The Group continues to provide free comprehensive health care for all its workers as we believe that every employee The Group continues to provide free comprehensive health care for all its workers as we believe that every employee The Group continues to provide free comprehensive health care for all its workers as we believe that every employee 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 22 clinics operated by and their dependents should have easy access to health services. We have established 22 clinics operated by and their dependents should have easy access to health services. We have established 22 clinics operated by and their dependents should have easy access to health services. We have established 22 clinics operated by qualified doctors, nurses and hospital assistants in the estates. In addition, the Group organised fogging to prevent qualified doctors, nurses and hospital assistants in the estates. In addition, the Group organised fogging to prevent qualified doctors, nurses and hospital assistants in the estates. In addition, the Group organised fogging to prevent qualified doctors, nurses and hospital assistants in the estates. In addition, the Group organised fogging to prevent spread of dengue mosquitoes. In isolated locations, the Group drill tube wells to provide clean water. Related spread of dengue mosquitoes. In isolated locations, the Group drill tube wells to provide clean water. Related spread of dengue mosquitoes. In isolated locations, the Group drill tube wells to provide clean water. Related spread of dengue mosquitoes. In isolated locations, the Group drill tube wells to provide clean water. Related healthcare expenses for 2015 were $550,800. healthcare expenses for 2015 were $550,800. healthcare expenses for 2015 were $550,800. healthcare expenses for 2015 were $550,800. A strong commitment to CSR has a positive impact on employees’ attitudes and boosts employee recruitment. The A strong commitment to CSR has a positive impact on employees’ attitudes and boosts employee recruitment. The A strong commitment to CSR has a positive impact on employees’ attitudes and boosts employee recruitment. The A strong commitment to CSR has a positive impact on employees’ attitudes and boosts employee recruitment. The Group realizes that employees are valuable assets in order to run an efficient, effective, profitable and sustainable Group realizes that employees are valuable assets in order to run an efficient, effective, profitable and sustainable Group realizes that employees are valuable assets in order to run an efficient, effective, profitable and sustainable Group realizes that employees are valuable assets in order to run an efficient, effective, profitable and sustainable business and operations. business and operations. business and operations. business and operations. The Group also recognises its obligations to the wider farming communities in which it operates. The Indonesian The Group also recognises its obligations to the wider farming communities in which it operates. The Indonesian The Group also recognises its obligations to the wider farming communities in which it operates. The Indonesian 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 areas acquired from 2007 onwards are to be authorities have established that not less than 20% of the new planted areas acquired from 2007 onwards are to be authorities have established that not less than 20% of the new planted areas acquired from 2007 onwards are to be authorities have established that not less than 20% of the new planted areas acquired from 2007 onwards are to be reserved for the benefit of smallholder cooperative scheme, known as Plasma, and the Group is integrating such reserved for the benefit of smallholder cooperative scheme, known as Plasma, and the Group is integrating such reserved for the benefit of smallholder cooperative scheme, known as Plasma, and the Group is integrating such reserved for the benefit of smallholder cooperative scheme, known as Plasma, and the Group is integrating such smallholder developments alongside its estates. In order to aid the development of Plasma scheme, a subsidiary smallholder developments alongside its estates. In order to aid the development of Plasma scheme, a subsidiary smallholder developments alongside its estates. In order to aid the development of Plasma scheme, a subsidiary smallholder developments alongside its estates. In order to aid the development of Plasma scheme, a subsidiary provided a corporate guarantee to a local bank in excess of $16 million to cover loans raised by the cooperative. The provided a corporate guarantee to a local bank in excess of $16 million to cover loans raised by the cooperative. The provided a corporate guarantee to a local bank in excess of $16 million to cover loans raised by the cooperative. The provided a corporate guarantee to a local bank in excess of $16 million to cover loans raised by the cooperative. The plasma development has commenced in stages for its estates in Sumatera and Kalimantan. plasma development has commenced in stages for its estates in Sumatera and Kalimantan. plasma development has commenced in stages for its estates in Sumatera and Kalimantan. plasma development has commenced in stages for its estates in Sumatera and Kalimantan. The Board supported Kas Desa smallholder village development programme to supplement the livelihood of the The Board supported Kas Desa smallholder village development programme to supplement the livelihood of the The Board supported Kas Desa smallholder village development programme to supplement the livelihood of the The Board supported Kas Desa smallholder village development programme to supplement the livelihood of the villages. The Group has to-date financed, developed and managed 22 smallholder village schemes across four villages. The Group has to-date financed, developed and managed 22 smallholder village schemes across four villages. The Group has to-date financed, developed and managed 22 smallholder village schemes across four villages. The Group has to-date financed, developed and managed 22 smallholder village schemes across four companies. companies. companies. companies. In addition to education and healthcare which includes the construction of schools, provision of scholarships, books, In addition to education and healthcare which includes the construction of schools, provision of scholarships, books, In addition to education and healthcare which includes the construction of schools, provision of scholarships, books, In addition to education and healthcare which includes the construction of schools, provision of scholarships, books, the Group also develops infrastructure such as construction and repair of 3 bridges and maintain 680km of external the Group also develops infrastructure such as construction and repair of 3 bridges and maintain 680km of external the Group also develops infrastructure such as construction and repair of 3 bridges and maintain 680km of external the Group also develops infrastructure such as construction and repair of 3 bridges and maintain 680km of external roads in 2015. The Group also provides initial aid and seed capital to villagers such as fruit seedlings, fish fries, roads in 2015. The Group also provides initial aid and seed capital to villagers such as fruit seedlings, fish fries, roads in 2015. The Group also provides initial aid and seed capital to villagers such as fruit seedlings, fish fries, roads in 2015. The Group also provides initial aid and seed capital to villagers such as fruit seedlings, fish fries, cattle and ducks to start community sustainable programs. cattle and ducks to start community sustainable programs. cattle and ducks to start community sustainable programs. cattle and ducks to start community sustainable programs. Indonesian Sustainable Palm Oil (“ISPO”) Indonesian Sustainable Palm Oil (“ISPO”) Indonesian Sustainable Palm Oil (“ISPO”) Indonesian Sustainable Palm Oil (“ISPO”) The ISPO certification is legally mandatory for all plantations in Indonesia. In March 2012, ISPO, which is The ISPO certification is legally mandatory for all plantations in Indonesia. In March 2012, ISPO, which is The ISPO certification is legally mandatory for all plantations in Indonesia. In March 2012, ISPO, which is The 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 fundamentally aligned to RSPO (Roundtable on Sustainable Palm Oil) principles, has become the mandatory fundamentally aligned to RSPO (Roundtable on Sustainable Palm Oil) principles, has become the mandatory fundamentally aligned to RSPO (Roundtable on Sustainable Palm Oil) principles, has become the mandatory standard for Indonesian planters. standard for Indonesian planters. standard for Indonesian planters. standard for Indonesian planters. A Steering Committee was established to work out a roadmap to support the ISPO implementation at mills and A Steering Committee was established to work out a roadmap to support the ISPO implementation at mills and A Steering Committee was established to work out a roadmap to support the ISPO implementation at mills and 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 estates. Workshops and training sessions on occupational safety and healthcare were carried out to inculcate a estates. Workshops and training sessions on occupational safety and healthcare were carried out to inculcate a 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, Riau, Bengkulu and Kalimantan. During the safety culture in workplaces at the estates and mills in North Sumatera, Riau, Bengkulu and Kalimantan. During the safety culture in workplaces at the estates and mills in North Sumatera, Riau, Bengkulu and Kalimantan. During the safety culture in workplaces at the estates and mills in North Sumatera, Riau, Bengkulu and Kalimantan. During the year the Group continued to upgrade its agricultural chemical stores and diesel fuel storage tanks in various year the Group continued to upgrade its agricultural chemical stores and diesel fuel storage tanks in various year the Group continued to upgrade its agricultural chemical stores and diesel fuel storage tanks in various year the Group continued to upgrade 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 plantations and mills to meet safety and environmental standards. Standard operating procedures were refined and plantations and mills to meet safety and environmental standards. Standard operating procedures were refined and 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 audits using an audit documented based on sustainable oil palm best practices. The Group also conducts internal audits using an audit documented based on sustainable oil palm best practices. The Group also conducts internal audits using an audit documented based on sustainable oil palm best practices. The Group also conducts internal audits using an audit checklist adopted from the above practices to determine the level of compliance. The Group worked closely with checklist adopted from the above practices to determine the level of compliance. The Group worked closely with checklist adopted from the above practices to determine the level of compliance. The Group worked closely with checklist adopted from the above practices to determine the level of compliance. The Group worked closely with appointed certification consultants in the implementation of ISPO standard. In addition to three subsidiaries which appointed certification consultants in the implementation of ISPO standard. In addition to three subsidiaries which appointed certification consultants in the implementation of ISPO standard. In addition to three subsidiaries which appointed certification consultants in the implementation of ISPO standard. In addition to three subsidiaries which were ISPO certified, another subsidiary has been approved for ISPO certification in December 2015. Six companies were ISPO certified, another subsidiary has been approved for ISPO certification in December 2015. Six companies were ISPO certified, another subsidiary has been approved for ISPO certification in December 2015. Six companies were ISPO certified, another subsidiary has been approved for ISPO certification in December 2015. Six companies are at the second stage of ISPO audit while one company is at first stage of certification. are at the second stage of ISPO audit while one company is at first stage of certification. are at the second stage of ISPO audit while one company is at first stage of certification. are at the second stage of ISPO audit while one company is at first stage of certification. Annual Report 2015 | Anglo-Eastern Plantations Plc Annual Report 2015 | Anglo-Eastern Plantations Plc Annual Report 2015 | Anglo-Eastern Plantations Plc Annual Report 2015 | Anglo-Eastern Plantations Plc 18 18 18 18 18 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Strategic Report 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. When it comes to replanting, old palms felled are chipped and left to decompose at site. This mitigates the greenhouse gas emissions commonly associated with open burning when land is cleared through the traditional method of slash-and- burn. It also enriches the organic matter in the soil. Where the land is undulating, we build terraces for planting which helps to prevent landslides, conserve the water and nutrients effectively and provide better accessibility for employees. Legume cover crops are planted to minimise soil erosion and preserve the soil moisture. In mature areas, fronds and EFB are placed inter-rows to allow the slow release of organic nutrients while minimising soil erosion and degradation. Effluent discharged from some mills is initially treated in lagoons before being 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, EFB are applied to land where it biodegrades to fertilizers. Through the application of a combination of EFB, organic fertilisers from mill by-products and inorganic fertilisers, the Group is able to raise the fertility of sandy soil in Kalimantan plantations. The Group’s first biogas and biomass project in North Sumatera completed last year will enhance the waste management treatment in the mill and at the same time mitigate greenhouse biogas emissions. The methane gas trapped will be used to generate and supply power to its biomass plant without dependency on fossil fuel. Another biogas plant is being constructed at the new mill in Kalimantan. Further similar undertakings for the Group’s mills are planned and shall be implemented in stages. The Group intends to sell surplus power generated to the National Grid. 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 Turnerasp, Cassia cobannesis and Antigononleptosus were planted to attract natural predators for biological control of bagworms and leaf-eating caterpillars. Weeds are controlled selectively by using more environmental friendly herbicide such as Glyphosate. The usage of Paraquat herbicide and chemicals has been reduced and minimized to control weeds and vermins.The sprayers are also trained in safety and spraying techniques. The chemicals are kept in designated storage and examined at regular intervals. Employees who handled the use of chemicals undergo medical examination. Natural vegetation on uncultivable land such as deep peat, very steep areas and riparian zones along watercourses are maintained to preserve biodiversity and wildlife corridors. Two mills in the Bengkulu region have been installed with Extended Aeration to enhance the treatment of the mill effluent by mechanical aeration. All our mills utilize the waste mesocarp fibre from the oil palm fruits as fuel to generate steam from boilers to eventually produce power from steam turbines. The power generated drives all of the processing equipment in mills and estate housing. This helps to reduce reliance on fossil fuel such as diesel in our milling operations. The Group continues to comply and preserve the High Conservative Value (“HCV”) areas recognised by the Department of Forestry. 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 carries out a robust assessment of the principal risks facing the Group on an annual basis. Annual Report 2015 | Anglo-Eastern Plantations Plc 19 19 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Strategic Report Strategic Report Nature of the risk and its origin Nature of the risk and its origin Country and regulatory Country and regulatory The likelihood and impact of the The likelihood and impact of the the circumstances risk and the circumstances risk and under which the risk might be under which the risk might be most relevant to the Company most relevant to the Company Mitigating or other considerations Mitigating or other considerations relevant relevant in The Group’s operations are located The Group’s operations are located Indonesia and substantially in substantially Indonesia and therefore rely on significantly therefore rely on significantly economic and political stability in economic and political stability in Indonesia. Indonesia. upheaval Political and Political and upheaval deterioration in security situation deterioration in security situation may cause disruption on operation may cause disruption on operation and consequently financial loss. and consequently financial loss. The country has recently benefited The country has recently benefited from a period of relative political from a period of relative political stability, steady economic growth stability, steady economic growth and stable financial system. But and stable financial system. But during the Asian financial crisis in during the Asian financial crisis in late 1990 there were civil unrest late 1990 there were civil unrest attributed to ethnic tensions in attributed to ethnic tensions in some parts of Indonesia. But the some parts of Indonesia. But the Group not operations were Group not interrupted by the regional security interrupted by the regional security problems. problems. operations were Introduction of measures to rein in Introduction of measures to rein in the country’s fiscal deficits. This the country’s fiscal deficits. This included the exchange controls and included the exchange controls and restriction on repatriation of profit restriction on repatriation of profit through payment of dividend. through payment of dividend. rights the land the land The Group acquires The Group acquires (“HGU”) after rights (“HGU”) after exploitation exploitation paying land acquisition and HGU paying land acquisition and HGU processing costs. These costs are processing costs. These costs are capitalized as land asset costs capitalized as land asset costs since the asset characteristics fulfill since the asset characteristics fulfill the recognition criteria. The Group the recognition criteria. The Group holds its land under 25 or 35 year holds its land under 25 or 35 year renewable leases. renewable leases. Changes in land legislation. Based Changes in land legislation. Based on National Land Agency Law 2 / on National Land Agency Law 2 / 1999, mandatory restriction to land 1999, mandatory restriction to land ownership by non-state plantation ownership by non-state plantation companies and companies not companies and companies not listed in Indonesia to 20,000ha per listed in Indonesia to 20,000ha per province and a total of 100,000ha in province and a total of 100,000ha in Indonesia. Indonesia. Transfer of profit from Indonesia to Transfer of profit from Indonesia to UK will be restricted affecting UK will be restricted affecting servicing of UK obligations and servicing of UK obligations and payment to of payment to of shareholders. shareholders. dividends dividends the government The Board is not aware of any The Board is not aware of any to attempt by attempt by to the government that impose exchange controls that impose exchange controls would restrict the transfer of profits would restrict the transfer of profits from Indonesia to the UK. The from Indonesia to the UK. The Board perceives that the Group Board perceives that the Group will be able to continue to extract will be able to continue to extract profits in profits in Indonesia foreseeable Indonesia foreseeable future. future. its subsidiaries for its subsidiaries the from for from the in law law changes changes Any and Any and in regulations relating to land tenure regulations relating to land tenure could have negative impact on the could have negative impact on the Group’s activities. Group’s activities. There are several more years There are several more years before the first HGU is due for before the first HGU is due for renewal in 2023. There are no renewal in 2023. There are no reasons to reasons to believe that the HGU will not be believe that the HGU will not be renewed upon expiration by renewed upon expiration by complying with existing law and complying with existing law and regulations. regulations. the Directors the Directors for for foreign Mandatory reduction of foreign Mandatory reduction of ownership Indonesian in Indonesian ownership in plantations. Forced divestment of plantations. Forced divestment of interests in Indonesia at below interests in Indonesia at below market values. market values. The Group realize that there is a possibility that foreign owners may be required over time to partially divest ownership of Indonesia oil palm operations but has no reason to believe that such divestment would be anything other than at market value. The Group realize that there is a possibility that foreign owners may be required over time to partially divest ownership of Indonesia oil palm operations but has no reason to believe that such divestment would be anything other than at market value. Annual Report 2015 | Anglo-Eastern Plantations Plc Annual Report 2015 | Anglo-Eastern Plantations Plc 20 20 20 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Strategic Report Strategic Report Nature of the risk and its origin Nature of the risk and its origin The likelihood and impact of the The likelihood and impact of the the circumstances risk and the circumstances risk and under which the risk might be under which the risk might be most relevant to the Company most relevant to the Company Mitigating or other Mitigating or other considerations considerations relevant relevant Country and regulatory (cont’d) Country and regulatory (cont’d) Group failure to meet the standards Group failure to meet the standards expected in relation to bribery and expected in relation to bribery and corruption. corruption. Reputational damage and criminal Reputational damage and criminal sanctions. sanctions. Exchange rates Exchange rates a a and and revenue costs revenue costs CPO is a US Dollar denominated CPO is a US Dollar denominated significant commodity commodity significant in proportion of in proportion of Indonesia (such as fertiliser and Indonesia (such as fertiliser and fuel) and development costs (such fuel) and development costs (such as heavy machinery and mills as heavy machinery and mills equipment) are imported and are equipment) are imported and are US Dollar related. US Dollar related. Weather and natural disasters Weather and natural disasters rainfall but rainfall but Oil palms rely on regular sunshine Oil palms rely on regular sunshine and these weather and these weather patterns can vary and extremes patterns can vary and extremes such as unusual dry periods or, such as unusual dry periods or, conversely, heavy rainfall leading to conversely, heavy rainfall leading to flooding locations can flooding locations can occur. occur. in some in some Adverse movements of Rupiah Adverse movements of Rupiah against US Dollar can have a against US Dollar can have a negative effect on the operating negative effect on the operating costs and raise funding cost. costs and raise funding cost. in particular, will Dry periods, in particular, will Dry periods, affect yields in the short and affect yields in the short and medium terms. Drought induces medium terms. Drought induces moisture stress in palm trees. moisture stress in palm trees. High levels of rainfall can disrupt High levels of rainfall can disrupt estate operations and result in estate operations and result in harvesting delays with loss of oil harvesting delays with loss of oil palm fruits or deterioration in fruit palm fruits or deterioration in fruit quality. Any delay in collection of quality. Any delay in collection of harvested FFB during the rainy harvested FFB during the rainy season could raise the level of season could raise the level of free fatty acid (“FFA”) in the CPO. free fatty acid (“FFA”) in the CPO. CPO with higher level of FFA will CPO with higher level of FFA will be sold at a discount to market be sold at a discount to market level of sunshine prices. Low level of sunshine prices. Low could result in delay in formation could result in delay in formation of FFB resulting in potential loss of of FFB resulting in potential loss of revenue. revenue. The Group continues to maintain The Group continues to maintain strong controls in this area as strong controls in this area as Indonesia has been classified as Indonesia has been classified as the relatively high the relatively high International Transparency Transparency International Corruption Perceptions index. Corruption Perceptions index. risk by risk by The Board has taken the view that The Board has taken the view that these risks are inherent in the these risks are inherent in the business and feels that adopting business and feels that adopting hedging mechanisms to counter hedging mechanisms to counter the negative effects of foreign the negative effects of foreign volatility are both volatility are both exchange exchange difficult to achieve and would not difficult to achieve and would not be cost effective. be cost effective. Where appropriate, bunding is is Where appropriate, bunding built around flood prone areas and built around flood prone areas and canals/drainage constructed and canals/drainage constructed and adapted either to evacuate surplus adapted either to evacuate surplus water or to maintain water levels in water or to maintain water levels in areas quick to dry out. Where areas quick to dry out. Where practical, natural disasters are practical, natural disasters are covered by insurance policy. insurance policy. covered by Certain risks (including the risk of Certain risks (including the risk of crop loss through fire, earthquake, crop loss through fire, earthquake, flood and other perils potentially flood and other perils potentially affecting the planted areas on the affecting the planted areas on the Group’s estates) if they materialise Group’s estates) if they materialise could dent the potential revenues, could dent the potential revenues, for which insurance cover is either for which insurance cover is either not available or would the the not available or would opinion of the Directors be the Directors be opinion of disproportionately expensive, are disproportionately expensive, are not insured. These risks of floods not insured. These risks of floods the or haze are mitigated by the or haze are mitigated by geographical the of geographical the of plantations but an occurrence of plantations but an occurrence of an adverse uninsured event could an adverse uninsured event could result the Group sustaining the Group sustaining in in result material losses. material losses. spread spread in in Annual Report 2015 | Anglo-Eastern Plantations Plc Annual Report 2015 | Anglo-Eastern Plantations Plc 21 21 21 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Strategic Report Strategic Report Nature of the risk and its origin Nature of the risk and its origin Cultivation risks Cultivation risks The Group’s plantations may be The Group’s plantations may be affected by pests and diseases like affected by pests and diseases like ganoderma fungus and white rot. ganoderma fungus and white rot. Crop damages by oryctes beetles, Crop damages by oryctes beetles, nettie caterpillar, termites, vermins, nettie caterpillar, termites, vermins, elephants and wild boars are elephants and wild boars are common. common. Other operational factors Other operational factors The Group’s plantation productivity The Group’s plantation productivity is dependent upon necessary is dependent upon necessary inputs, in particular in particular inputs, fertiliser, spare-parts, chemicals fertiliser, spare-parts, chemicals and fuel. and fuel. including, including, The Group has bulk storage The Group has bulk storage facilities its mills located within its mills located within facilities which are adequate to meet the which are adequate to meet the for CPO requirements Group’s for CPO requirements Group’s storage. Nevertheless, delays in in storage. Nevertheless, delays collection of CPO sold could result collection of CPO sold could result in CPO production exceeding the in CPO production exceeding the available CPO storage capacity. available CPO storage capacity. increases increases Substantial in in Substantial governmental directed minimum governmental directed minimum wage levels in Indonesia. wage levels in Indonesia. The likelihood and impact of the The likelihood and impact of the the circumstances risk and the circumstances risk and under which the risk might be under which the risk might be most relevant to the Company most relevant to the Company Mitigating or other Mitigating or other considerations considerations relevant relevant these these risks but risks but Agricultural best practice and Agricultural best practice and husbandry can to some extent husbandry can to some extent mitigate they they mitigate cannot be entirely eliminated. The cannot be entirely eliminated. The spread the of majority the of majority spread plantations over Sumatera and plantations over Sumatera and Kalimantan mitigates risks risks Kalimantan mitigates affecting the entire Group. affecting the entire Group. the the of of inputs, inputs, Whilst the Directors have no the Directors have no Whilst reason to anticipate shortages of reason to anticipate shortages of the Group’s such the Group’s such investment in biogas plants will investment in biogas plants will reduce reliance on fossil fuel for reduce reliance on fossil fuel for the mill operations. the mill operations. substantial substantial The Group bulk storage facilities The Group bulk storage facilities have capacity. capacity. have Furthermore these facilities have Furthermore these facilities have always being adequate for the always being adequate for the mills production storage in the mills production storage in the past. past. The Group endeavours to improve The Group endeavours to improve productivity of field workers to productivity of field workers to justify the increase in wages. Field justify the increase in wages. Field workers are employed on part- workers are employed on part- time basis. time basis. Loss of crops or reduction in the Loss of crops or reduction in the quality of harvest resulting in loss quality of harvest resulting in loss of potential revenue. of potential revenue. With the removal of fuel subsidy With the removal of fuel subsidy by the Indonesian government in by the Indonesian government in January 2015, diesel will be priced January 2015, diesel will be priced in accordance to global oil prices. in accordance to global oil prices. When global oil prices rise, it will When global oil prices rise, it will put pressure on production inputs put pressure on production inputs which include cost of electricity to which include cost of electricity to the mills and the transportation of the mills and the transportation of FFB. Group’s operations could be FFB. Group’s operations could be materially disrupted should such materially disrupted should such shortages occur over an extended shortages occur over an extended period. Increase in prices would period. Increase in prices would significantly increase production increase production significantly costs. costs. likely likely force force This would a a This would temporary halt in FFB processing temporary halt in FFB processing resulting loss of crop and loss of crop and resulting revenue. revenue. in in Regional hikes in minimum wages Regional hikes in minimum wages for 2016 averaged 10.4%. The for 2016 averaged 10.4%. The Group pays no less than the Group pays no less than the minimum wage and the increase minimum wage and the increase will result in a significant rise in will result in a significant rise in Group’s employment costs. Higher Group’s employment costs. Higher wages will erode the profitability wages will erode the profitability as it forms a substantial part of the as it forms a substantial part of the production costs. production costs. Annual Report 2015 | Anglo-Eastern Plantations Plc Annual Report 2015 | Anglo-Eastern Plantations Plc 22 22 22 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Strategic Report Strategic Report Nature of the risk and its origin Nature of the risk and its origin Produce prices Produce prices CPO is a primary commodity and is CPO is a primary commodity and is affected by the world economy, affected by the world economy, inflation, availability of levels of levels of inflation, availability of alternative soft oils such as soya alternative soft oils such as soya oils. CPO price also moves in oils. CPO price also moves in tandem with crude oil prices which tandem with crude oil prices which determines the competitiveness of determines the competitiveness of CPO as a source of biodiesel. CPO as a source of biodiesel. The likelihood and impact of the The likelihood and impact of the the circumstances risk and risk and the circumstances under which the risk might be under which the risk might be most relevant to the Company most relevant to the Company Mitigating or other Mitigating or other considerations considerations relevant relevant This may lead to significant price This may lead to significant price swings. The profitability and cash swings. The profitability and cash flow of the plantation operations flow of the plantation operations depend upon world prices of CPO depend upon world prices of CPO and upon the Group’s ability to sell and upon the Group’s ability to sell CPO at price levels comparable CPO at price levels comparable with world prices. with world prices. be moderated be moderated Directors believe that such swings Directors believe that such swings should by should by continuous demand in economies continuous demand in economies like China, India and Indonesia. like China, India and Indonesia. Larger export would lead to lower Larger export would lead to lower inventory of CPO which augurs inventory of CPO which augurs well for future produce price. well for future produce price. import controls or import controls or Imposition of Imposition of taxes in consuming and exporting taxes in consuming and exporting countries. Indonesian Indonesian The The countries. government in July 2015 imposes a government in July 2015 imposes a $50/mt export levy to fund biodiesel $50/mt export levy to fund biodiesel introduced a subsidies. introduced a subsidies. simpler system system tax tax simpler expressed in US dollar instead of a expressed in US dollar instead of a percentage of CPO price. percentage of CPO price. It also It also export export levy will levy will Reduced revenue and reduction in Reduced revenue and reduction in cash flow and profit. When CPO cash flow and profit. When CPO price is below $750/mt, the export price is below $750/mt, the export tax impact upon the tax impact upon the Group’s profit. When CPO price Group’s profit. When CPO price recovers to above $750/mt, the recovers to above $750/mt, the effective tax rate will be lower effective tax rate will be lower providing some relief to planters. providing some relief to planters. Indonesian Indonesian government government The The allows free export of CPO but allows free export of CPO but applies a sliding scale of duties on applies a sliding scale of duties on exports which allows producers exports which allows producers economic margins. The export economic margins. The export regarded as a levy may be regarded as a levy may be support CPO to measure support CPO to measure producers in increase through producers in increase through biodiesel consumption. biodiesel consumption. Environmental and governance practices Environmental and governance practices ISPO which ISPO which fundamentally fundamentally The The aligns with RSPO principles principles aligns with RSPO became the mandatory standard for became the mandatory standard for all Indonesian planters in March all Indonesian planters in March 2012. The key RSPO principles are 2012. The key RSPO principles are set out on page 43 the the set out on page 43 “Statement Corporate Corporate “Statement Governance”. Governance”. on on in in pollutions pollutions and and Environment Environment criticism by environmental activists criticism by environmental activists resulting reputational and reputational and resulting financial damage. financial damage. in in and and The Directors take seriously their The Directors take seriously their social environmental social environmental Management responsibilities. Management responsibilities. best-practice industry follows best-practice industry follows by abides and guidelines by abides and guidelines Indonesian law with regard to such Indonesian law with regard to such matters as health and safety. The matters as health and safety. The Group uses EFB for mulching in Group uses EFB for mulching in the estates which is a form of the estates which is a form of fertiliser the the fertiliser consumption inorganic inorganic consumption fertilisers. The liquid effluent from fertilisers. The liquid effluent from the mills after treatment is applied the mills after treatment is applied to trenches in the estates as a to trenches in the estates as a form of fertiliser. The biogas plant form of fertiliser. The biogas plant in North Sumatera will mitigate in North Sumatera will mitigate biogas. of emissions biogas. of emissions Environmental impact assessment Environmental impact assessment is undertaken by an independent is undertaken by an independent consultant for its new project. consultant for its new project. reduces reduces of of and and Annual Report 2015 | Anglo-Eastern Plantations Plc Annual Report 2015 | Anglo-Eastern Plantations Plc 23 23 23 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Strategic Report Nature of the risk and its origin Expansion The Group is planning to plant more oil palm. In areas where the Group holds the land compensation rights (or Izin lokasi), the settlers and land owners are compensated before land is cleared for planting. and cash resources The Directors believe that when the land becomes available for planting, the development programmes can be funded from available Group future cash operational flows, supplemented with external debt funding. 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 is affected by changes in commodity prices. requirement the cash The likelihood and impact of the risk and the circumstances under which the risk might be most relevant to the Company Mitigating or other considerations relevant 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 similar ownership claims and this can cause difficulties in reaching agreement with affected parties. Such disruptions have in the past caused delays to the and planting consequently financial loss. programmes all Should land or cash availability fall short of expectations and the Group to secure is unable alternative land or funding, the Group’s continued growth may be delayed or curtailed. This may lead to reduction of reported profit and adverse market perceptions as to the value of the Company’s shares. It is rather difficult to foresee 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 South Sumatera, Bengkulu, Bangka and Kalimantan. The Group has fair amount of fund planting cash holding to exercise. The Group aims to manage finances its conservatively to ensure that it is able to fund the planned planting programme. Hedging risk The Group's subsidiaries have borrowing in US Dollar. The Group could face significant exchange losses in the event of depreciation of their local currency (i.e. Strengthening of US Dollar) - and vice versa. Risk is partially mitigated by US Dollar cash denominated balances. It also considers the average interest rate on Rupiah deposits which is 7.47% higher than on US Dollar deposits whereas interest rate for Rupiah borrowing is about 6.65% higher as compared to US Dollar borrowing. Annual Report 2015 | Anglo-Eastern Plantations Plc 24 24 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Strategic Report Nature of the risk and its origin The likelihood and impact of the the circumstances risk and under which the risk might be most relevant to the Company Mitigating or other considerations relevant Social, community and human rights issues could Any material breakdown in relations between the Group and the host population in the vicinity of the the operations Group’s operations. The plantations hire large numbers of people and have economic importance for local communities in the areas of the Group’s operations. significant disrupt Communication breakdown would cause disruption on operation and consequently financial loss. local living standards The Group endeavours to mitigate this risk by liaising regularly with representatives of surrounding villages and by seeking to improve local 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 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. The Group also provides technical and management expertise to villagers to develop oil palm plots or Kebun Kas Desa (village’s scheme) and plasma schemes surrounding the returns operating estates. The from to community improve welfare. these plots are used villages’ Interest rate risk The Group's surplus cash and its borrowings are subject to variable interest rates. is no policy There to hedge interest rates, partly because of the net cash position and because the net interest is relatively small proportion of the Group profits. net The Group had cash throughout 2015, 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 note 23. The rates on borrowings are set out in note 14. Annual Report 2015 | Anglo-Eastern Plantations Plc 25 25 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Strategic Report Gender diversity The AEP Plc Board is composed of three men and one woman with extensive knowledge in their respective fields of experience. The Board has taken note of the recent legislative initiatives with regard to the representation of women on the boards of Directors of listed companies and will make every effort to conform to its composition based on legislative requirement. Group Headcount Board Senior Management (GM and Above) Managers & Executives Full Time Part-time Field Workers Total % 2015 average employed during the year Total 16 Women 2 Men 14 - 30 314 4,745 5,091 30% 8 369 5,095 6,235 11,721 70% 8 399 5,409 10,980 16,812 100% Group Headcount Board Senior Management (GM and Above) Managers & Executives Full Time Part-time Field Workers Total % 2014 average employed during the year Women 2 - 23 168 3,005 3,198 21% Men 14 8 363 4,944 6,682 12,011 79% Total 16 8 386 5,112 9,687 15,209 100% Although the Group provides equal opportunities for female workers in the plantations, the male workers make up a majority of the field workers due to the nature of work and the remote location of plantations from the towns and cities. Nevertheless the percentage of women workforce within the Group increased from 21% in 2014 to 30% in 2015. Employees In 2015, the number of full time workforce averaged 5,832 (2014: 5,522) while the part-time labour averaged 10,980 (2014: 9,687). The Group has formal processes for recruitment particularly key managerial positions, where psychometric testing is conducted to support the selection and hiring decisions. Exit interviews are also conducted with departing employees to ensure that management can address any significant issues. Annual Report 2015 | Anglo-Eastern Plantations Plc 26 26 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Strategic Report The Group has a programme for recruiting graduates from Indonesian universities to join existing employees selected on regular basis to training programmes organised by the Group’s training centre that provides grounding and refresher courses in technical aspects of oil palm estate and mill management. The training centre also conducts regular programmes for all levels of employees to raise the competency and quality of employees in general. These programmes are often supplemented by external management development courses including attending industry conferences for technical updates. A wide variety of topics are covered including work ethics, motivation, self- improvement, company values, health and safety. A large workforce and their families are housed in the Group’s housing across the Group’s plantations. The Group further provides at its own cost water and electricity and a host of other amenities including places of worship, schools and clinics. On top of competitive salaries and bonuses, extensive benefits and privileges help the Group to retain and motivate its employees. The Group promotes a policy for creation of equal and ethnically diverse employment opportunities including with respect to gender. The Group has in place key performance linked indicators to determine increment and bonus entitlements for its employees. The Group promotes and encourages employee involvement in every aspect wherever practical as it recognises employees as a valuable asset and is one of the key contributions to the Group’s success. The employees contribute their ideas, feedback and voice out their concerns through formal and informal meetings, discussions and annual performance appraisal. In addition, various work related and personal training programmes are carried out annually for employees to promote employee engagement and interaction. Although the Group does not have a specific policy on employment of disabled persons, it however employs disabled persons as part of its workforce. The Group welcomes disabled persons joining the Group based on their suitability. Outlook FFB production for three months to March 2016 was 9% higher against the same period in 2015 mainly due to the increase in production from Kalimantan region. It is too early to forecast whether the production will be better for the rest of the year. The CPO CIF (Cost, Insurance, Freight) Rotterdam price opened the year 2016 at $570/mt and prices are expected to be in the range of $500/mt to $750/mt for the first half of 2016. CPO price is likely to recover if a significant drop in crop production materialises due to the effects of El Nino in 2015. It was reported that the US Dollar appreciated by approximately 13% (2014: +2%) against the Indonesian Rupiah in 2015 in anticipation of an interest rate hike in the United States and the weak emerging economies. The Rupiah has since strengthened by 4% in 2016 which makes palm oil more expensive for importers. The continuing rise in income levels and population growth in China, India and Indonesia would expect to drive the consumption of CPO and likely lead to a gradual recovery in CPO prices. The Indonesian and Malaysian government efforts to rein in fiscal deficits by introducing higher mandatory blending of biodiesel could provide some price support. The rising material costs and wages in Indonesia are expected to increase the overall production cost in 2016. Indonesia's minimum wage has increased at an average rate of between 8% and 15% per annum over the last few years. The Indonesian government recently announced regional hikes in 2016 minimum wage ranging from 7% in Bengkulu to 12% in South Sumatera. These wage hikes will raise overall estate costs and erode profit margins. A depreciating Rupiah would also mean that imports of fertilisers and equipment for the mills and estates will be more costly. Annual Report 2015 | Anglo-Eastern Plantations Plc 27 27 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Strategic Report 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 2016. On behalf of the Board Dato’ John Lim Ewe Chuan Executive Director, Corporate Finance and Corporate Affairs 26 April 2016 Annual Report 2015 | Anglo-Eastern Plantations Plc 28 28 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Financial Record Income statement Revenue 2015 $000 2014 $000 (Restated) 2012 $000 (Restated) 2011 $000 2013 $000 196,451 251,258 201,917 237,352 259,037 Trading profit before BA 42,728 78,845 59,619 85,396 98,518 (Loss) / Profit attributable to shareholders after BA (14,897) 30,762 93,521 47,331 73,681 Dividend proposed for year (1,028) (1,854) (1,969) (1,784) (2,372) 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 $000 402,655 102,864 (32,875) 225 (20,911) 451,958 (82,607) $000 481,761 125,624 (34,625) (10,343) (44,368) 518,049 (90,813) $000 484,826 98,654 (34,937) 765 (55,298) 494,010 (85,964) $000 424,889 116,198 (25,026) (7,460) (37,236) 471,365 (83,043) $000 413,801 84,017 (58) (14,076) (43,098) 440,586 (73,533) 369,351 427,236 408,046 388,322 367,053 Share capital Treasury shares Share premium and capital redemption account Revaluation and exchange reserve Profit and loss account 15,504 (1,171) 25,022 (174,896) 504,892 15,504 (1,171) 25,022 (133,474) 521,355 15,504 (1,171) 25,022 (124,340) 493,031 15,504 (1,171) 25,022 (52,039) 401,006 15,504 (1,507) 25,022 (27,880) 355,914 Equity attributable to shareholders’ funds 369,351 427,236 408,046 388,322 367,053 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: $ 39,976 69.39cts (37.58)cts 2.5*cts 932cts 39,976 132.26cts 77.61cts 4.5cts 1,078cts 39,976 90.70cts 235.95cts 5.0cts 1,029cts 45.4p 1.75p 629p 13,795 1.48 4.29 13,392 1.53 3.91 80.2p 3.0p 691p 12,385 1.56 3.50 11,861 1.65 3.27 58.0p 3.0p 622p 12,170 1.66 3.28 10,445 1.56 3.15 Note: * Based on exchange rate at 22 April 2016 of $1.4409/£ Annual Report 2015 | Anglo-Eastern Plantations Plc 39,976 39,976 133.99cts 154.15cts 119.41cts 186.35cts 6.0cts 928cts 4.5cts 980cts 84.5p 2.9p 603p 9,638 1.63 3.06 9,363 1.59 3.09 95.5p 3.7p 597p 9,068 1.55 3.17 8,763 1.61 3.06 29 29 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Estate Areas Annual Report 2015 | Anglo-Eastern Plantations Plc 30 30 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Location of Estates Location of Estates Annual Report 2015 | Anglo-Eastern Plantations Plc Annual Report 2015 | Anglo-Eastern Plantations Plc 31 31 31 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. 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 2015. 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 the Group’s financial reporting comply 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 46. The Board considers the annual report and accounts including the strategic report when taken as a whole, is fair, balanced and understandable as it provides the information necessary for shareholders to assess the Group’s position and performance, business model and strategy. Results and dividends The audited financial statements for the year ended 31 December 2015 are set out on pages 59 to 99. The Group’s loss for the year on ordinary activities before taxation was $19,074,000 (2014: profit $51,236,000) and the loss attributable to ordinary shareholders was $14,897,000 (2014: profit $30,762,000). No interim dividend was paid. The Directors recommend a final dividend of 1.75p (2014: 3.0p) to be paid to shareholders on 11 July 2016. Shareholders may elect to receive their dividend in US Dollar as described on page 37. Viability Statement The viability assessment considers solvency and liquidity over a longer period than for the purposes of the going concern assessment made on page 13. Inevitably, the degree of certainty reduces over this longer period. The Group’s business activities, financial performance, corporate development and principal risks associated with the local operating environment are covered under the Strategic Report. In undertaking its review of the Group’s performance in 2015, the Board considered the prospects of the Company over the one and five-year periods. The process involved a detailed review of the 2016 detailed budget and the five-year income and cash flow projection. The one-year budget which has a greater level of certainty and is used to set detailed budgetary targets at all levels across the Group. It is also used by the Remuneration Committee to set targets for the annual incentive. The five- year income and cash flow projection contains less certainty of outcome, but provides a robust planning tool against which strategic decisions can be made. The Board also considered the five-year cash flow projection under various scenarios, including the need to support financially loss making newly matured estates together with the projected capital expenditure. On the basis of this and other matters considered and reviewed by the Board during the year, the Board concluded and believe that the Group has adequate resources to continue operation and meet its liabilities over the five years from 2016 to 2020. Accordingly, the Directors adopt the going concern basis of accounting in preparing the financial statements. Research and Development The Group did not undertake any research and development activities. It relies on third parties to conduct research and development of new diseases resistant and higher yield oil palm seeds. Valuation In 2015, the Group’s biological assets were valued by qualified valuers based on discounted cash flow. The assumptions used in the discounted cash flow are described in greater detail in note 10. Nine companies located across North Sumatera, Bengkulu, Riau, Kalimantan and Malaysia were valued by qualified valuers in 2015 to provide indicative fair values and support the valuation for the estate lands. The Directors revalued the estate land not covered by the valuation exercise based on the regional appreciation rate quantified by the qualified valuers. Land is valued on a rotational basis and all land is valued by qualified valuers every two years. Political donations The Group made no political donations during the year. Annual Report 2015 | Anglo-Eastern Plantations Plc 32 32 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Directors’ Report Directors’ Report Directors’ Report Directors’ Report Directors’ Report Directors’ Report Carbon Reporting Carbon Reporting Carbon Reporting Carbon Reporting Carbon Reporting A greenhouse gas (“GHG”) emissions assessment quantifies greenhouse gases produced directly and indirectly A greenhouse gas (“GHG”) emissions assessment quantifies greenhouse gases produced directly and indirectly A greenhouse gas (“GHG”) emissions assessment quantifies greenhouse gases produced directly and indirectly Carbon Reporting A greenhouse gas (“GHG”) emissions assessment quantifies greenhouse gases produced directly and indirectly A greenhouse gas (“GHG”) emissions assessment quantifies greenhouse gases produced directly and indirectly from the Group’s agricultural activities. Also known as a carbon footprint, it is essential tool in the process of from the Group’s agricultural activities. Also known as a carbon footprint, it is essential tool in the process of from the Group’s agricultural activities. Also known as a carbon footprint, it is essential tool in the process of A greenhouse gas (“GHG”) emissions assessment quantifies greenhouse gases produced directly and indirectly from the Group’s agricultural activities. Also known as a carbon footprint, it is essential tool in the process of from the Group’s agricultural activities. Also known as a carbon footprint, it is essential tool in the process of understanding, monitoring, managing and reducing the Group’s climate change impact. The emissions sources understanding, monitoring, managing and reducing the Group’s climate change impact. The emissions sources understanding, monitoring, managing and reducing the Group’s climate change impact. The emissions sources from the Group’s agricultural activities. Also known as a carbon footprint, it is essential tool in the process of understanding, monitoring, managing and reducing the Group’s climate change impact. The emissions sources understanding, monitoring, managing and reducing the Group’s climate change impact. The emissions sources included in this report were fuel and electricity consumption at the mills, palm oil mill effluent (“POME”) treatment, included in this report were fuel and electricity consumption at the mills, palm oil mill effluent (“POME”) treatment, included in this report were fuel and electricity consumption at the mills, palm oil mill effluent (“POME”) treatment, understanding, monitoring, managing and reducing the Group’s climate change impact. The emissions sources included in this report were fuel and electricity consumption at the mills, palm oil mill effluent (“POME”) treatment, included in this report were fuel and electricity consumption at the mills, palm oil mill effluent (“POME”) treatment, nitrogen emissions from mineral fertiliser use, company owned vehicle use, third party vehicle fuel use, electricity nitrogen emissions from mineral fertiliser use, company owned vehicle use, third party vehicle fuel use, electricity nitrogen emissions from mineral fertiliser use, company owned vehicle use, third party vehicle fuel use, electricity included in this report were fuel and electricity consumption at the mills, palm oil mill effluent (“POME”) treatment, nitrogen emissions from mineral fertiliser use, company owned vehicle use, third party vehicle fuel use, electricity nitrogen emissions from mineral fertiliser use, company owned vehicle use, third party vehicle fuel use, electricity consumption in employee housing and emissions associated with land use change and carbon sequestration. consumption in employee housing and emissions associated with land use change and carbon sequestration. consumption in employee housing and emissions associated with land use change and carbon sequestration. nitrogen emissions from mineral fertiliser use, company owned vehicle use, third party vehicle fuel use, electricity consumption in employee housing and emissions associated with land use change and carbon sequestration. consumption in employee housing and emissions associated with land use change and carbon sequestration. consumption in employee housing and emissions associated with land use change and carbon sequestration. The report identifies and quantifies GHG emissions in the production of CPO at the Group’s mills and related estate The report identifies and quantifies GHG emissions in the production of CPO at the Group’s mills and related estate The report identifies and quantifies GHG emissions in the production of CPO at the Group’s mills and related estate The report identifies and quantifies GHG emissions in the production of CPO at the Group’s mills and related estate The report identifies and quantifies GHG emissions in the production of CPO at the Group’s mills and related estate supply base and planting activities. The Board believes that this report will help the Group plans and facilitate supply base and planting activities. The Board believes that this report will help the Group plans and facilitate supply base and planting activities. The Board believes that this report will help the Group plans and facilitate The report identifies and quantifies GHG emissions in the production of CPO at the Group’s mills and related estate supply base and planting activities. The Board believes that this report will help the Group plans and facilitate supply base and planting activities. The Board believes that this report will help the Group plans and facilitate designs and implementation of effective strategies for reducing the Group’s GHG emissions in future as well as designs and implementation of effective strategies for reducing the Group’s GHG emissions in future as well as designs and implementation of effective strategies for reducing the Group’s GHG emissions in future as well as supply base and planting activities. The Board believes that this report will help the Group plans and facilitate designs and implementation of effective strategies for reducing the Group’s GHG emissions in future as well as designs and implementation of effective strategies for reducing the Group’s GHG emissions in future as well as providing a benchmark to monitor reduction of similar gas. We understand the urgent need for the industry to identify providing a benchmark to monitor reduction of similar gas. We understand the urgent need for the industry to identify providing a benchmark to monitor reduction of similar gas. We understand the urgent need for the industry to identify designs and implementation of effective strategies for reducing the Group’s GHG emissions in future as well as providing a benchmark to monitor reduction of similar gas. We understand the urgent need for the industry to identify providing a benchmark to monitor reduction of similar gas. We understand the urgent need for the industry to identify and respond to reducing the environmental risk and impact by developing appropriate sustainable practices. We and respond to reducing the environmental risk and impact by developing appropriate sustainable practices. We and respond to reducing the environmental risk and impact by developing appropriate sustainable practices. We providing a benchmark to monitor reduction of similar gas. We understand the urgent need for the industry to identify and respond to reducing the environmental risk and impact by developing appropriate sustainable practices. We and respond to reducing the environmental risk and impact by developing appropriate sustainable practices. We remain committed to monitoring, targeting and reducing all our environmental impact across the Group. remain committed to monitoring, targeting and reducing all our environmental impact across the Group. remain committed to monitoring, targeting and reducing all our environmental impact across the Group. and respond to reducing the environmental risk and impact by developing appropriate sustainable practices. We remain committed to monitoring, targeting and reducing all our environmental impact across the Group. remain committed to monitoring, targeting and reducing all our environmental impact across the Group. remain committed to monitoring, targeting and reducing all our environmental impact across the Group. This assessment has been carried out in accordance with the World Business Council for Sustainable Development This assessment has been carried out in accordance with the World Business Council for Sustainable Development This assessment has been carried out in accordance with the World Business Council for Sustainable Development This assessment has been carried out in accordance with the World Business Council for Sustainable Development This assessment has been carried out in accordance with the World Business Council for Sustainable Development and World Resources Institute’s (WBCSD/WRI) Greenhouse Gas Protocol; a Corporate Accounting and Reporting and World Resources Institute’s (WBCSD/WRI) Greenhouse Gas Protocol; a Corporate Accounting and Reporting and World Resources Institute’s (WBCSD/WRI) Greenhouse Gas Protocol; a Corporate Accounting and Reporting This assessment has been carried out in accordance with the World Business Council for Sustainable Development and World Resources Institute’s (WBCSD/WRI) Greenhouse Gas Protocol; a Corporate Accounting and Reporting and World Resources Institute’s (WBCSD/WRI) Greenhouse Gas Protocol; a Corporate Accounting and Reporting Standard, together with the latest emission factors from recognised public sources including, but not limited to, Defra, Standard, together with the latest emission factors from recognised public sources including, but not limited to, Defra, Standard, together with the latest emission factors from recognised public sources including, but not limited to, Defra, and World Resources Institute’s (WBCSD/WRI) Greenhouse Gas Protocol; a Corporate Accounting and Reporting Standard, together with the latest emission factors from recognised public sources including, but not limited to, Defra, Standard, together with the latest emission factors from recognised public sources including, but not limited to, Defra, the International Energy Agency, the US Energy Information Association, the US Environmental Protection Agency the International Energy Agency, the US Energy Information Association, the US Environmental Protection Agency the International Energy Agency, the US Energy Information Association, the US Environmental Protection Agency Standard, together with the latest emission factors from recognised public sources including, but not limited to, Defra, the International Energy Agency, the US Energy Information Association, the US Environmental Protection Agency the International Energy Agency, the US Energy Information Association, the US Environmental Protection Agency and the Intergovernmental panel on Climate Change. The values for the amount of carbon sequestered by the oil and the Intergovernmental panel on Climate Change. The values for the amount of carbon sequestered by the oil and the Intergovernmental panel on Climate Change. The values for the amount of carbon sequestered by the oil the International Energy Agency, the US Energy Information Association, the US Environmental Protection Agency and the Intergovernmental panel on Climate Change. The values for the amount of carbon sequestered by the oil and the Intergovernmental panel on Climate Change. The values for the amount of carbon sequestered by the oil palm have been taken from the OPRODSIM and OPCABSIM average growth models provided in the PalmGHG palm have been taken from the OPRODSIM and OPCABSIM average growth models provided in the PalmGHG palm have been taken from the OPRODSIM and OPCABSIM average growth models provided in the PalmGHG and the Intergovernmental panel on Climate Change. The values for the amount of carbon sequestered by the oil palm have been taken from the OPRODSIM and OPCABSIM average growth models provided in the PalmGHG palm have been taken from the OPRODSIM and OPCABSIM average growth models provided in the PalmGHG Tool. GHG emissions have been reported by the three WBCSD/WRI scopes. Land use emissions and carbon Tool. GHG emissions have been reported by the three WBCSD/WRI scopes. Land use emissions and carbon Tool. GHG emissions have been reported by the three WBCSD/WRI scopes. Land use emissions and carbon palm have been taken from the OPRODSIM and OPCABSIM average growth models provided in the PalmGHG Tool. GHG emissions have been reported by the three WBCSD/WRI scopes. Land use emissions and carbon Tool. GHG emissions have been reported by the three WBCSD/WRI scopes. Land use emissions and carbon sequestration results were calculated in line with the methodology used by The Roundtable for Sustainable Palm Oil sequestration results were calculated in line with the methodology used by The Roundtable for Sustainable Palm Oil sequestration results were calculated in line with the methodology used by The Roundtable for Sustainable Palm Oil Tool. GHG emissions have been reported by the three WBCSD/WRI scopes. Land use emissions and carbon sequestration results were calculated in line with the methodology used by The Roundtable for Sustainable Palm Oil sequestration results were calculated in line with the methodology used by The Roundtable for Sustainable Palm Oil (“RSPO”) GHG Working Group 2 throughout the PalmGHG Calculator. The carbon stock values were derived by the (“RSPO”) GHG Working Group 2 throughout the PalmGHG Calculator. The carbon stock values were derived by the (“RSPO”) GHG Working Group 2 throughout the PalmGHG Calculator. The carbon stock values were derived by the sequestration results were calculated in line with the methodology used by The Roundtable for Sustainable Palm Oil (“RSPO”) GHG Working Group 2 throughout the PalmGHG Calculator. The carbon stock values were derived by the (“RSPO”) GHG Working Group 2 throughout the PalmGHG Calculator. The carbon stock values were derived by the RSPO based on a review of relevant literature and satellite images for land use changes associated with oil palm RSPO based on a review of relevant literature and satellite images for land use changes associated with oil palm RSPO based on a review of relevant literature and satellite images for land use changes associated with oil palm (“RSPO”) GHG Working Group 2 throughout the PalmGHG Calculator. The carbon stock values were derived by the RSPO based on a review of relevant literature and satellite images for land use changes associated with oil palm RSPO based on a review of relevant literature and satellite images for land use changes associated with oil palm plantations in Indonesia and Malaysia. An estimate of CO2 emissions from cultivation of peat soils has been included plantations in Indonesia and Malaysia. An estimate of CO2 emissions from cultivation of peat soils has been included plantations in Indonesia and Malaysia. An estimate of CO2 emissions from cultivation of peat soils has been included RSPO based on a review of relevant literature and satellite images for land use changes associated with oil palm plantations in Indonesia and Malaysia. An estimate of CO2 emissions from cultivation of peat soils has been included plantations in Indonesia and Malaysia. An estimate of CO2 emissions from cultivation of peat soils has been included in this report. The detailed methodology in calculation the GHG emissions under the three scopes can be viewed at in this report. The detailed methodology in calculation the GHG emissions under the three scopes can be viewed at in this report. The detailed methodology in calculation the GHG emissions under the three scopes can be viewed at plantations in Indonesia and Malaysia. An estimate of CO2 emissions from cultivation of peat soils has been included in this report. The detailed methodology in calculation the GHG emissions under the three scopes can be viewed at in this report. The detailed methodology in calculation the GHG emissions under the three scopes can be viewed at www.ghgprotocol.org. www.ghgprotocol.org. www.ghgprotocol.org. in this report. The detailed methodology in calculation the GHG emissions under the three scopes can be viewed at www.ghgprotocol.org. www.ghgprotocol.org. www.ghgprotocol.org. The gross overall emissions computed by the outsourced agent were 1,477,208 tCO2e for 2015 compared to The gross overall emissions computed by the outsourced agent were 1,477,208 tCO2e for 2015 compared to The gross overall emissions computed by the outsourced agent were 1,477,208 tCO2e for 2015 compared to The gross overall emissions computed by the outsourced agent were 1,477,208 tCO2e for 2015 compared to The gross overall emissions computed by the outsourced agent were 1,477,208 tCO2e for 2015 compared to 1,291,241 tCO2e for 2014. 1,291,241 tCO2e for 2014. 1,291,241 tCO2e for 2014. The gross overall emissions computed by the outsourced agent were 1,477,208 tCO2e for 2015 compared to 1,291,241 tCO2e for 2014. 1,291,241 tCO2e for 2014. 1,291,241 tCO2e for 2014. The overall emissions have increased by 185,967 tCO2e, or 14%, from 1,291,241 tCO2e during the 2014 to 2015 The overall emissions have increased by 185,967 tCO2e, or 14%, from 1,291,241 tCO2e during the 2014 to 2015 The overall emissions have increased by 185,967 tCO2e, or 14%, from 1,291,241 tCO2e during the 2014 to 2015 The overall emissions have increased by 185,967 tCO2e, or 14%, from 1,291,241 tCO2e during the 2014 to 2015 The overall emissions have increased by 185,967 tCO2e, or 14%, from 1,291,241 tCO2e during the 2014 to 2015 assessment period. This increase was mainly due to an increase in emissions associated with land use, specifically assessment period. This increase was mainly due to an increase in emissions associated with land use, specifically assessment period. This increase was mainly due to an increase in emissions associated with land use, specifically The overall emissions have increased by 185,967 tCO2e, or 14%, from 1,291,241 tCO2e during the 2014 to 2015 assessment period. This increase was mainly due to an increase in emissions associated with land use, specifically assessment period. This increase was mainly due to an increase in emissions associated with land use, specifically land clearance. land clearance. land clearance. assessment period. This increase was mainly due to an increase in emissions associated with land use, specifically land clearance. land clearance. land clearance. Emissions source Emissions source Emissions source Emissions source Emissions source POME treatment POME treatment Emissions source POME treatment POME treatment POME treatment Fertiliser application Fertiliser application POME treatment Fertiliser application Fertiliser application Fertiliser application Premises energy consumption Premises energy consumption Fertiliser application Premises energy consumption Premises energy consumption Premises energy consumption Company owned vehicles Company owned vehicles Premises energy consumption Company owned vehicles Company owned vehicles Company owned vehicles Third party vehicle use Third party vehicle use Company owned vehicles Third party vehicle use Third party vehicle use Third party vehicle use Employee housing Employee housing Third party vehicle use Employee housing Employee housing Employee housing Employee housing 2015 Emissions in tCO2e 2015 Emissions in tCO2e 2015 Emissions in tCO2e 2015 Emissions in tCO2e 2015 Emissions in tCO2e 2015 Emissions in tCO2e 2014 Emissions in tCO2e 2014 Emissions in tCO2e 2014 Emissions in tCO2e 2014 Emissions in tCO2e 2014 Emissions in tCO2e 2014 Emissions in tCO2e 249,327 249,327 249,327 249,327 249,327 25,202 25,202 249,327 25,202 25,202 25,202 13,513 13,513 25,202 13,513 13,513 13,513 5,828 5,828 13,513 5,828 5,828 5,828 8,121 8,121 5,828 8,121 8,121 8,121 1,123 1,123 8,121 1,123 1,123 1,123 303,114 303,114 1,123 303,114 303,114 303,114 Own crop Out-grower crop Own crop Out-grower crop 303,114 Own crop Out-grower crop Own crop Out-grower crop Own crop Out-grower crop 722,408 722,408 Own crop Out-grower crop 722,408 722,408 722,408 -421,475 -421,475 722,408 -421,475 -421,475 -421,475 22,870 22,870 -421,475 22,870 22,870 22,870 1,174,094 1,174,094 22,870 1,174,094 1,174,094 1,174,094 1,477,208 1,477,208 1,174,094 1,477,208 1,477,208 1,477,208 1,477,208 889,867 889,867 889,867 889,867 889,867 -519,175 -519,175 889,867 -519,175 -519,175 -519,175 479,599 479,599 -519,175 479,599 479,599 479,599 479,599 260,325 260,325 260,325 260,325 260,325 20,530 20,530 260,325 20,530 20,530 20,530 13,163 13,163 20,530 13,163 13,163 13,163 5,827 5,827 13,163 5,827 5,827 5,827 7,104 7,104 5,827 7,104 7,104 7,104 2,570 2,570 7,104 2,570 2,570 2,570 309,519 309,519 2,570 309,519 309,519 309,519 Out-grower crop Out-grower crop 309,519 Out-grower crop Out-grower crop Out-grower crop 620,094 620,094 Out-grower crop 620,094 620,094 620,094 -405,054 -405,054 620,094 -405,054 -405,054 -405,054 20,425 20,425 -405,054 20,425 20,425 20,425 981,722 981,722 20,425 981,722 981,722 981,722 1,291,241 1,291,241 981,722 1,291,241 1,291,241 1,291,241 1,291,241 Own crop Own crop Own crop Own crop Own crop Own crop 749,023 749,023 749,023 749,023 749,023 -489,272 -489,272 749,023 -489,272 -489,272 -489,272 486,506 486,506 -489,272 486,506 486,506 486,506 486,506 Total operational emissions Total operational emissions Total operational emissions Total operational emissions Total operational emissions Total operational emissions Land clearance Land clearance Land clearance Land clearance Land clearance Carbon sequestered by standing crop Carbon sequestered by standing crop Land clearance Carbon sequestered by standing crop Carbon sequestered by standing crop Carbon sequestered by standing crop Peat soils cultivation Peat soils cultivation Carbon sequestered by standing crop Peat soils cultivation Peat soils cultivation Peat soils cultivation Peat soils cultivation Total land use emissions Total land use emissions Total land use emissions Total land use emissions Total land use emissions Overall emissions Overall emissions Total land use emissions Overall emissions Overall emissions Overall emissions Overall emissions Annual Report 2015 | Anglo-Eastern Plantations Plc Annual Report 2015 | Anglo-Eastern Plantations Plc Annual Report 2015 | Anglo-Eastern Plantations Plc Annual Report 2015 | Anglo-Eastern Plantations Plc Annual Report 2015 | Anglo-Eastern Plantations Plc Annual Report 2015 | Anglo-Eastern Plantations Plc 33 33 33 33 33 33 33 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Directors’ Report Directors’ Report Directors’ Report Directors’ Report 2015 and 2014 emissions in tCO2e 2015 and 2014 emissions in tCO2e 2015 and 2014 emissions in tCO2e 2015 and 2014 emissions in tCO2e Operational emissions (Exc. POME) combined Operational emissions (Exc. POME) combined Operational emissions (Exc. POME) combined Operational emissions (Exc. POME) combined 2,000,000 2,000,000 2,000,000 2,000,000 1,500,000 1,500,000 1,500,000 1,500,000 1,000,000 1,000,000 1,000,000 1,000,000 500,000 500,000 500,000 500,000 e e e e 2 2 2 2 O O O O C C C C t t t t 0 0 0 0 -500,000 -500,000 -500,000 -500,000 -1,000,000 -1,000,000 -1,000,000 -1,000,000 POME treatment Operational POME treatment Operational POME treatment Operational POME treatment Operational emissions emissions emissions emissions Land clearance Land clearance Land clearance Land clearance Carbon Carbon Carbon Carbon sequestered by sequestered by sequestered by sequestered by standing crop standing crop standing crop standing crop Peat soils Peat soils Peat soils Peat soils cultivation cultivation cultivation cultivation 2015 2015 2015 2015 2014 2014 2014 2014 The following chart display 2014 and 2015 overall emissions by scope. The following chart display 2014 and 2015 overall emissions by scope. The following chart display 2014 and 2015 overall emissions by scope. The following chart display 2014 and 2015 overall emissions by scope. Scope 1 are direct GHG emissions from sources owned and controlled by the Company which cover emissions Scope 1 are direct GHG emissions from sources owned and controlled by the Company which cover emissions Scope 1 are direct GHG emissions from sources owned and controlled by the Company which cover emissions Scope 1 are direct GHG emissions from sources owned and controlled by the Company which cover emissions associated with own crop land clearance, natural gas combustion and company owned vehicles. This made up associated with own crop land clearance, natural gas combustion and company owned vehicles. This made up associated with own crop land clearance, natural gas combustion and company owned vehicles. This made up associated with own crop land clearance, natural gas combustion and company owned vehicles. This made up majority of the GHG emissions. This has increased in 2015 due primarily to increase in land clearance emissions. majority of the GHG emissions. This has increased in 2015 due primarily to increase in land clearance emissions. majority of the GHG emissions. This has increased in 2015 due primarily to increase in land clearance emissions. majority of the GHG emissions. This has increased in 2015 due primarily to increase in land clearance emissions. Scope 2 accounts for GHG emissions of purchased electricity, heat and steam generated off-site. Scope 3 includes Scope 2 accounts for GHG emissions of purchased electricity, heat and steam generated off-site. Scope 3 includes Scope 2 accounts for GHG emissions of purchased electricity, heat and steam generated off-site. Scope 3 includes Scope 2 accounts for GHG emissions of purchased electricity, heat and steam generated off-site. Scope 3 includes all other indirect emissions such as out-grower crop, waste disposal, business travel and staff commuting. The all other indirect emissions such as out-grower crop, waste disposal, business travel and staff commuting. The all other indirect emissions such as out-grower crop, waste disposal, business travel and staff commuting. The all other indirect emissions such as out-grower crop, waste disposal, business travel and staff commuting. The increase in 2015 was associated with out-grower crop land clearance. increase in 2015 was associated with out-grower crop land clearance. increase in 2015 was associated with out-grower crop land clearance. increase in 2015 was associated with out-grower crop land clearance. 2015 and 2014 Emissions in tCO2e by Scope 2015 and 2014 Emissions in tCO2e by Scope 2015 and 2014 Emissions in tCO2e by Scope 2015 and 2014 Emissions in tCO2e by Scope e e e e 2 2 2 2 O O O O C C C C t t t t 1,200,000 1,200,000 1,200,000 1,200,000 1,000,000 1,000,000 1,000,000 1,000,000 800,000 800,000 800,000 800,000 600,000 600,000 600,000 600,000 400,000 400,000 400,000 400,000 200,000 200,000 200,000 200,000 0 0 0 0 Scope 1 Scope 1 Scope 1 Scope 1 Scope 2 Scope 2 Scope 2 Scope 2 Scope 3 Scope 3 Scope 3 Scope 3 Annual Report 2015 | Anglo-Eastern Plantations Plc Annual Report 2015 | Anglo-Eastern Plantations Plc Annual Report 2015 | Anglo-Eastern Plantations Plc Annual Report 2015 | Anglo-Eastern Plantations Plc 2015 2015 2015 2015 2014 2014 2014 2014 34 34 34 34 34 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Directors’ Report Directors’ Report Directors’ Report Comparison of GHG emissions per production metrics: Comparison of GHG emissions per production metrics: Comparison of GHG emissions per production metrics: Operational emissions reporting metric Operational emissions reporting metric Operational emissions reporting metric 2015 in tCO2e 2015 in tCO2e 2015 in tCO2e 2014 in tCO2e 2014 in tCO2e 2014 in tCO2e GHG per tonne of CPO production GHG per tonne of CPO production GHG per tonne of CPO production GHG per tonne of FFB production GHG per tonne of FFB production GHG per tonne of FFB production GHG per tonne of FFB processed GHG per tonne of FFB processed GHG per tonne of FFB processed GHG per hectare of planted area GHG per hectare of planted area GHG per hectare of planted area 0.95 0.95 0.95 0.34 0.34 0.34 0.20 0.20 0.20 4.72 4.72 4.72 1.05 1.05 1.05 0.36 0.36 0.36 0.22 0.22 0.22 5.02 5.02 5.02 2015 and 2014 emissions per reporting metric in tCO2e 2015 and 2014 emissions per reporting metric in tCO2e 2015 and 2014 emissions per reporting metric in tCO2e t t t i i i n n n u u u r r r e e e p p p e e e 2 2 2 O O O C C C t t t 6 6 6 5 5 5 4 4 4 3 3 3 2 2 2 1 1 1 0 0 0 2015 2015 2015 2014 2014 2014 per tonne of CPO per tonne of CPO per tonne of CPO production production production per tonne of FFB per tonne of FFB per tonne of FFB production production production per tonne of FFB per tonne of FFB per tonne of FFB processed processed processed per hectare of per hectare of per hectare of planted area planted area planted area Principal risks Principal risks Principal risks Information on financial instruments risks is set out in note 23 to the consolidated financial statements and Information on financial instruments risks is set out in note 23 to the consolidated financial statements and Information on financial instruments risks is set out in note 23 to the consolidated financial statements and information on other risks is set out in Strategic Report. information on other risks is set out in Strategic Report. information on other risks is set out in Strategic Report. Biological assets, property, plant and equipment Biological assets, property, plant and equipment Biological assets, property, plant and equipment Information relating to changes in fixed assets is given in note 10 to the consolidated financial statements. Information relating to changes in fixed assets is given in note 10 to the consolidated financial statements. Information relating to changes in fixed assets is given in note 10 to the consolidated financial statements. Directors Directors Directors Madam Lim Siew Kim, Dato’ John Lim Ewe Chuan, Mr. Lim Tian Huat and Mr. Jonathan Law Ngee Song will be Madam Lim Siew Kim, Dato’ John Lim Ewe Chuan, Mr. Lim Tian Huat and Mr. Jonathan Law Ngee Song will be Madam Lim Siew Kim, Dato’ John Lim Ewe Chuan, Mr. Lim Tian Huat and Mr. Jonathan Law Ngee Song will be submitting themselves for re-appointment at the forthcoming annual general meeting. submitting themselves for re-appointment at the forthcoming annual general meeting. submitting themselves for re-appointment at the forthcoming annual general meeting. Brief profiles of all Directors are set out on page 39 of this Annual Report. Brief profiles of all Directors are set out on page 39 of this Annual Report. Brief profiles of all Directors are set out on page 39 of this Annual Report. Annual Report 2015 | Anglo-Eastern Plantations Plc Annual Report 2015 | Anglo-Eastern Plantations Plc Annual Report 2015 | Anglo-Eastern Plantations Plc 35 35 35 35 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Directors’ Report Substantial share interests As at 31 March 2016 and 31 December 2015, 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 Number Percentage of voting rights held Number Percentage of voting rights held As at 31.3.2016 As at 31.12.2015 Genton International Limited 20,247,814 51.08% 20,247,814 Alcatel Bell Pension Fund 6,830,000 17.23% 6,830,000 KBC Securities 1,449,608 3.66% 1,485,113 51.08% 17.23% 3.75% 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. This 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 its willingness to continue in office and a resolution to re-appoint them will be proposed as Resolution 8 at the forthcoming annual general meeting. Authority to allot shares At the annual general meeting held on 29 June 2015 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 10 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 29 April 2016 (being the latest practicable date before publication of this notice). In accordance with guidance issued by The Investment Association, 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 29 April 2016. 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. Annual Report 2015 | Anglo-Eastern Plantations Plc 36 36 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Directors’ Report Directors’ Report 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 Disapplication of pre-emption rights enable the Board to make an issue to existing shareholders without being obliged to comply with certain technical A fresh authority is also being sought under the provisions of sections 570 and 573 of the Companies Act 2006 to requirements of the Companies Act, which create problems with regard to fractional entitlements and overseas enable the Board to make an issue to existing shareholders without being obliged to comply with certain technical shareholders. In addition, the authority will empower the Board to make issues of shares for cash to persons other requirements of the Companies Act, which create problems with regard to fractional entitlements and overseas than existing shareholders up to a maximum aggregate nominal amount of £495,454 representing 5% of the current shareholders. In addition, the authority will empower the Board to make issues of shares for cash to persons other issued share capital. The authority will be expiring at the forthcoming annual general meeting or on 30 June 2016, than existing shareholders up to a maximum aggregate nominal amount of £495,454 representing 5% of the current whichever is earlier. Renewal of this authority on similar terms is being sought under Resolution 11 at the issued share capital. The authority will be expiring at the forthcoming annual general meeting or on 30 June 2016, forthcoming annual general meeting. whichever is earlier. Renewal of this authority on similar terms is being sought under Resolution 11 at the forthcoming annual general meeting. Acquisition of the Company’s own shares and authority to purchase own shares At 29 April 2016, the Directors had remaining authority under the shareholders’ resolution of 29 June 2015, to make Acquisition of the Company’s own shares and authority to purchase own shares purchases of 3,963,637 of the Company’s ordinary shares. This authority expires on 30 June 2016. The Board will At 29 April 2016, the Directors had remaining authority under the shareholders’ resolution of 29 June 2015, to make only make purchases if they believe the earnings or net assets per share of the Company would be improved by purchases of 3,963,637 of the Company’s ordinary shares. This authority expires on 30 June 2016. The Board will such purchases. All such purchases will be market purchases made through the London Stock Exchange. only make purchases if they believe the earnings or net assets per share of the Company would be improved by Companies can hold their own shares which have been purchased in this way in treasury rather than having to such purchases. All such purchases will be market purchases made through the London Stock Exchange. cancel them. The Directors would, therefore, consider holding the Company’s own shares which have been Companies can hold their own shares which have been purchased in this way in treasury rather than having to purchased by the Company as treasury shares as this would give the Company the flexibility of being able to sell cancel them. The Directors would, therefore, consider holding the Company’s own shares which have been such shares quickly and effectively where it considers it in the interests of shareholders to do so. Whilst any such purchased by the Company as treasury shares as this would give the Company the flexibility of being able to sell shares are held in treasury, no dividends will be payable on them and they will not carry any voting rights. 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 12 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 Resolution 12 to be proposed at the forthcoming annual general meeting seeks renewed authority to purchase up to Company’s issued ordinary share capital. The minimum price which may be paid for an ordinary share is 25p. The a maximum of 3,963,637 ordinary shares of 25p each on the London Stock Exchange, representing 10% of the maximum price which may be paid for an ordinary share on any exercise of the authority will be restricted to the Company’s issued ordinary share capital. The minimum price which may be paid for an ordinary share is 25p. The highest of (i) an amount equal to 5% above the average middle market quotations for such shares as derived from maximum price which may be paid for an ordinary share on any exercise of the authority will be restricted to the the London Stock Exchange Daily Official List for the five business days before the purchase is made and (ii) the highest of (i) an amount equal to 5% above the average middle market quotations for such shares as derived from higher of price of the last independent trade and the highest current independent bid on the London Stock Exchange. the London Stock Exchange Daily Official List for the five business days before the purchase is made and (ii) the The maximum number of shares and the price range are stated for the purpose of compliance with statutory higher of price of the last independent trade and the highest current independent bid on the London Stock Exchange. requirements in seeking this authority and should not be taken as an indication of the level of purchases, or the The maximum number of shares and the price range are stated for the purpose of compliance with statutory prices thereof, that the Company would intend to make. 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. Dividends The Board is mindful that the Group’s development programme will require a considerable capital commitment. In Dividends this respect, the dividend level needs to be balanced against the planned capital expenditure in view of weaker CPO The Board is mindful that the Group’s development programme will require a considerable capital commitment. In prices. The Board is also mindful of shareholders’ sentiment and declared a final dividend of 1.75p in respect of 2015 this respect, the dividend level needs to be balanced against the planned capital expenditure in view of weaker CPO (2014: 3.0p). Subject to shareholders approval of Resolution 3 at the AGM, the final dividend will be paid on 11 July prices. The Board is also mindful of shareholders’ sentiment and declared a final dividend of 1.75p in respect of 2015 2016 to those shareholders on the register on 10 June 2016. Shareholders choosing to receive their dividend in US (2014: 3.0p). Subject to shareholders approval of Resolution 3 at the AGM, the final dividend will be paid on 11 July Dollar will do so at the rate ruling on 10 June 2016, when the register closes. Based on the exchange rate at 22 April 2016 to those shareholders on the register on 10 June 2016. Shareholders choosing to receive their dividend in US 2016 of $1.4409/£, the proposed dividend would be equivalent to 2.5cts, compared to 4.5cts declared in respect of Dollar will do so at the rate ruling on 10 June 2016, when the register closes. Based on the exchange rate at 22 April 2014. 2016 of $1.4409/£, the proposed dividend would be equivalent to 2.5cts, compared to 4.5cts declared in respect of 2014. Liability insurance for Company officers As permitted by the Companies Act the Company has maintained insurance cover for the Directors against liabilities Liability insurance for Company officers in relation to the Company. As permitted by the Companies Act the Company has maintained insurance cover for the Directors against liabilities in relation to the Company. On behalf of the Board On behalf of the Board Dato’ John Lim Ewe Chuan Executive Director, Corporate Finance and Corporate Affairs Dato’ John Lim Ewe Chuan Executive Director, Corporate Finance and Corporate Affairs Annual Report 2015 | Anglo-Eastern Plantations Plc Annual Report 2015 | Anglo-Eastern Plantations Plc 26 April 2016 26 April 2016 37 37 37 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Directors’ Responsibilities Directors’ Responsibilities The Directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations. 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 Company law requires the Directors to prepare financial statements for each financial year. Under that law the Standards (“IFRSs”) as adopted by the European Union and have elected to prepare the Company financial Directors are required to prepare the Group financial statements in accordance with International Financial Reporting statements in accordance with FRS 101 Reduced Disclosure Framework under the UK Generally Accepted Standards (“IFRSs”) as adopted by the European Union and have elected to prepare the Company financial Accounting Practice (UK GAAP). Under company law the Directors must not approve the financial statements unless statements in accordance with FRS 101 Reduced Disclosure Framework under the UK Generally Accepted 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 Accounting Practice (UK GAAP). Under company law the Directors must not approve the financial statements unless or loss for the Group for that period. 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; In preparing these financial statements, the Directors are required to: make judgements and accounting estimates that are reasonable and prudent; select suitable accounting policies and then apply them consistently; state whether they have been prepared in accordance with IFRSs as adopted by the European Union, subject to make judgements and accounting estimates that are reasonable and prudent; any material departures disclosed and explained in the financial statements; state whether they have been prepared in accordance with IFRSs as adopted by the European Union, subject to prepare a Strategic Report, a Director’s Report and Director’s Remuneration report which comply with the any material departures disclosed and explained in the financial statements; requirements of the Companies Act 2006; prepare a Strategic Report, a Director’s Report and Director’s Remuneration report which comply with the make an assessment of the Company and Group’s ability to continue as a going concern. requirements of the Companies Act 2006; make an assessment of the Company and Group’s ability to continue as a going concern. 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 The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the and enable them to ensure that the financial statements comply with the Companies Act 2006 and, as regards the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company Group financial statements, Article 4 of the IAS Regulation. They are also responsible for safeguarding the assets of and enable them to ensure that the financial statements comply with the Companies Act 2006 and, as regards the the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. 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. 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. Website publication The Directors are responsible for ensuring the annual report and the financial statements are made available on a Website publication website. Financial statements are published on the Company’s website in accordance with legislation in the United The Directors are responsible for ensuring the annual report and the financial statements are made available on a Kingdom governing the preparation and dissemination of financial statements, which may vary from legislation in website. Financial statements are published on the Company’s website in accordance with legislation in the United other jurisdictions. The maintenance and integrity of the Company's website is the responsibility of the Directors. Kingdom governing the preparation and dissemination of financial statements, which may vary from legislation in The Directors' responsibility also extends to the ongoing integrity of the financial statements contained therein. 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 39 confirm to the best of their knowledge: Directors’ responsibilities pursuant to DTR4 The Group financial statements have been prepared in accordance with IFRSs as adopted by the European All of the Directors listed on page 39 confirm to the best of their knowledge: Union and Article 4 of the IAS Regulation and give a true and fair view of the assets, liabilities, financial position The Group financial statements have been prepared in accordance with IFRSs as adopted by the European and profit and loss of the Group. Union and Article 4 of the IAS Regulation and give a true and fair view of the assets, liabilities, financial position The Strategic Report in annual report includes a fair review of the development and performance of the business and profit and loss of the Group. and the financial position of the Group and the parent Company, together with a description or the pr incipal risks The Strategic Report in annual report includes a fair review of the development and performance of the business and uncertainties that they face. and the financial position of the Group and the parent Company, together with a description or the pr incipal risks The annual report and financial statements, taken as a whole, are fair, balanced and understandable and provide and uncertainties that they face. the information necessary for shareholders to assess the Company’s performance, business model and strategy. The annual report and financial statements, taken as a whole, are fair, balanced and understandable and provide the information necessary for shareholders to assess the Company’s performance, business model and strategy. On behalf of the Board On behalf of the Board Dato’ John Lim Ewe Chuan Executive Director, Corporate Finance and Corporate Affairs Dato’ John Lim Ewe Chuan Executive Director, Corporate Finance and Corporate Affairs Annual Report 2015 | Anglo-Eastern Plantations Plc Annual Report 2015 | Anglo-Eastern Plantations Plc 26 April 2016 26 April 2016 38 38 38 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Directors Madam Lim Siew Kim (Non-Executive Chairman, age 67) 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, age 66) 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. Lim Tian Huat (Senior Independent Non-Executive Director, Chairman of Audit Committee and Chairman of Nomination & Corporate Governance Committee and member of Remuneration Committee, age 61) Appointed 8 May 2015. Fellow member of the Association of Chartered Certified Accountants and member of the Malaysian Institute of Accountants and Malaysian Institute of Certified Public Accountants. He is the founding President of Insolvency Practitioners Association of Malaysia. He holds a degree in Bachelor of Economics. Mr. Lim is a practising Chartered Accountant with his own Corporate Restructuring and Insolvency practice Rodgers Reidy & Co. He is also the Managing Director of Andersen Corporate Restructuring Sdn. Bhd. He was previously a partner in Ernst & Young from 2002 to 2009 and prior to that, partner in Arthur Andersen & Co from 1990 to 2002. He co-authored a book entitled “The Law and Practice of Corporate Receivership in Malaysia and Singapore”. Mr. Lim also served as Commissioner to the United Nations Compensations Commission for a period of five years. He was also appointed by the Domestic Trade Minister to be a member of the Corporate Law Reform Committee under the purview of the Companies Commission of Malaysia. Independent Non-Executive Director of Malaysia Building Society Berhad and UEM Sunrise Berhad, both of which are listed on Bursa Malaysia. Jonathan Law Ngee Song (Independent Non-Executive Director, Chairman of Remuneration Committee, member of Audit Committee and member of Nomination & Corporate Governance Committee, age 50) Appointed 4 July 2013. He was admitted as an Advocate and Solicitor, to the High Court of Malaya in 1991. Following his graduation from Australia National University in 1989 with a Bachelor of Commerce and Bachelor of Laws, he practised as a legal assistant in Allen & Gledhill (1991 to 1995) and was promoted to a partner (1995 to 1996). In 1996 he joined the Malaysian law firm Messrs Nik Saghir & Ismail as a partner of the firm. Independent Non-Executive Director of Karex Berhad and Evergreen Fibreboard Berhad, public listed companies in Malaysia. Appointed Independent Non-Executive Chairman of Evergreen Fibreboard Berhad on 22 February 2010. He is also the Chairman of Audit Committee and Remuneration Committee and a member of Nomination Committee of Evergreen Fibreboard Berhad. Annual Report 2015 | Anglo-Eastern Plantations Plc 39 39 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Statement on Corporate Governance Application of the UK Corporate Governance Code AEP 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 October 2014 which forms part of the Listing Rules of the London Stock Exchange. The Code is available from the Financial Reporting Council’s (“FRC”) website at www.frc.org.uk. Where provisions of the Code were not met during 2015, particular comment is made in the statements below and in the Directors’ remuneration report on pages 47 to 51. UK Listing Rules The UK Listing Rules require a premium listed issuer with a controlling shareholder to have in place a relationship agreement with the controlling shareholder by 16 November 2014. The mandatory requirement for the relationship agreement is intended to prevent controlling shareholders from exercising their influence in a way that is improper or unfair to minority shareholders. The requirement is not intended to prevent a controlling shareholder from engaging fairly with an issuer or legitimately disagreeing with the issuer and neither are they intended to prevent shareholders from holding board positions. AEP Plc has identified all controlling shareholders and regarded its major shareholder, Genton International Limited (“Genton”) as the only controlling shareholder. In this respect, the Company entered into a relationship agreement with Genton on 14 November 2014. The agreement is available for inspection by the shareholders upon request from the Company Secretary. AEP Plc has complied with the independence provisions included in the agreement and that, so far as it is aware, those independence provisions have been complied with by Genton. The Board AEP is led by a strong and experienced Board of Directors (see biographical details set out on page 39). During 2015 the Board comprised the Non-Executive Chairman, one Executive Director and two 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 the 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. In compliance with the Code, Madam Lim who has been a Non-Executive Director for more than 9 years will submit herself for re-election every year. 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, base 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. Annual Report 2015 | Anglo-Eastern Plantations Plc 40 40 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Statement on Corporate Governance In arriving at its conclusion, the Board considered the factors set out in the Combined Code includ ing, 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; • • 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 receives remuneration from the Group other than a Director’s fee; 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 Independent Non-Executive Director Mr. Lim Tian Huat, an experienced Chartered Accountant acted in the capacity of Senior Independent Non-Executive Director from 8 May 2015 following the resignation of Mr. Nik Din Bin Nik Sulaiman. 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 2015, there were two Board meetings, attended by all the Directors. Agenda and minutes of previous meetings were circulated prior to meetings. The Independent Non-Executive Directors met on their own during 2015. Telephone discussions between the Chairman and Non-Executive Directors also took place outside these meetings. The Board is supplied with relevant, timely and accurate information for review prior to each meeting to enable them to discharge their duties. The Audit Committee is responsible for the integrity of the financial information and this is achieved by interacting with the management and with the internal auditors. 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, final dividends, the appointment of Directors and the Company Secretary, circulars to shareholders, Group treasury policies and acquisitions. Certain other matters are delegated to Board committees, the details of which are set out below. During 2015, the Board followed the Group results and the development of the activities of the various subsidiaries by means of reports prepared by the management in Malaysia and Indonesia. It received further reports and minutes of Executive Committee meetings in Indonesia chaired by a senior manager from Malaysia. The objectives of the Executive Committee is to resolve operational issues and to drive the performance budget set at the beginning of every year by the Board. The other members of the Executive Committee are made up of senior members of the management team based in Indonesia which amongst others includes the Chief Executive Officer, the Chief Operating Officers, and the Finance Director. The Board also discussed at length the various options available to the Group to maximise the return on its surplus cash. The Board during the year sought the recommendation from professionals on treasury functions. Annual Report 2015 | Anglo-Eastern Plantations Plc 41 41 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Statement on Corporate Governance 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. Where necessary the Board members may seek independent advice including legal counsel at the Company’s expense. The Company maintained Directors’ and officers’ liability insurance throughout 2015. 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 yearly re-election under the Code. Dato’ John Lim, the only Executive Director on Board sits on the Audit, Remuneration and Nomination Committees for 2015. The UK Corporate Governance Code 2014 provides for smaller companies like AEP to have two independent Non-Executive Directors in the Audit and Remuneration Committees and a majority independent Non- Executive Directors in the Nomination Committee. The Code does not expressly provide for the exclusion of the Executive Director in the Audit and Remuneration Committees. In practice companies would normally exclude the Executive Director from membership so as not to taint the independence of both the Audit and Remuneration Committees. However the Board felt strongly that given the small composition of the various Committees, they would benefit from Dato’ John Lim’s wealth of commercial and audit experience. It was also felt that Dato’ John Lim being the only Director based in London could only adequately represent the Company in any sh areholders and investor meetings if he sits in the three Committees. The Board also believes that the Non-Executive Directors, being professionals in their own areas of expertise would maintain their impartiality and independence by their majority presence in all three Committees. In 2015 the Board conducted a review of its performance by discussion. It concluded that the Board is performing effectively and that the Board members have the complementary skills appropriate to propel the Group in its strategic direction and for challenges ahead. No other major issues arose from this review. Following a review of the internal control and risks management in March 2016 and in the absence of any reported failing and weaknesses which the Board considered significant, it concluded that these remain effective and sufficient for their purpose. Nomination Committee The Nomination and Corporate Governance Committee currently comprises Mr. Lim Tian Huat (Chairman), Dato’ John Lim and Mr. Jonathan Law Ngee Song. The committee had three meetings during 2015, attended by all members. The policy on gender diversity is described in page 26 of the Strategic Report. During the year, the Nomination Committee reviewed and deliberated on the Statement of Corporate Governance for inclusion in the Annual Report. It also met to discuss and approve the extension of contracts of two Directors. During the year it also recommended the recruitment of a Finance Director to replace the outgoing in the Indonesian operations. The Nomination Committee also reviewed, deliberated and recommended the appointment of Mr. Lim Tian Huat to join the Board on 8 May 2015 to replace Mr. Nik Din Bin Nik Sulaiman who resigned. Relations with shareholders The Executive Director contacted and met certain principal shareholders during the year to understand their concerns and at all times are pleased to speak to and meet any shareholder. The views of the shareholders were communicated to the Board to ensure that it is mindful of the shareholders’ sentiment and issues arising at all times. Given the dispersion of Directors and shareholders it is not possible for every Director to meet shareholders in the presence of management. A member of the Audit, Nomination and Remuneration Committees will be available at the 2016 AGM. It is the intention of the Board that the Company would engage with identifiable shareholders who have voted against Company’s resolutions in the past. Annual Report 2015 | Anglo-Eastern Plantations Plc 42 42 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Statement on Corporate Governance The annual report, interim report and interim management statements are intended to keep the shareholders informed as to the progress in the operational and financial performance of the Group. 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. The Company’s results and other news releases issued via the London Stock Exchange’s Regulatory News Service are published on the “Investors” and “News” sections 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. Although AEP is not a member of the RSPO, the Group’s management and Directors take a serious view of their environmental and social responsibilities and are fully committed to the principles developed by RSPO. Many of these principles overlap with ISPO of which compliance is mandatory for AEP. 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. Lim Tian Huat Chairman, Nomination and Corporate Governance Committee 26 April 2016 Annual Report 2015 | Anglo-Eastern Plantations Plc 43 43 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Audit Committee Report Audit Committee The Audit Committee comprises Mr. Lim Tian Huat (Chairman), Dato’ John Lim and Mr. Jonathan Law Ngee Song, all of whom are considered by the Directors to have relevant financial and professional experiences to discharge their specific duties with respect to the Audit Committee. Mr. Lim Tian Huat is a Fellow member of the Association of Chartered Certified Accountants and a member of the Malaysian Institute of Accountants and Malaysian Institute of Certified Public Accountants. He is also the founding President of Insolvency Practitioners of Malaysia. He has extensive experience in accounting, auditing, finance and corporate insolvency. He attended five seminars in 2015, some of them were organised by Malaysian Institute of Accountants and Institute of Internal Auditors of Malaysia. The seminars covered topics such as governance, risks and controls and stewardship of boards with regards to audit strategy, risks, talents, culture and leadership. Dato’ John Lim attended webinars hosted by UHY on update of accounting and auditing standards. Jonathan Law attended three seminars covering topics on business of innovation, how to maximise Internal Audits and Board rewards and recognition organised by the Malaysia Stock Exchange and Malaysian Directors Academy in 2015. During the year, all members of the Audit Committee attended a conference call jointly organised by the Company Sponsor and Company Solicitors from London to update members on the Insider Trading and London Stock Exchange Rules. A copy of the presentation paper on Understanding Application of the Model Code was circulated before the meeting. Follow-up conference calls with the Sponsor and Company Solicitor were organised to implement the Model Code in the Company. Overview The Audit Committee met prior to the completion of the 2015 accounts and five times during 2015 with full attendance. During the year, the Committee reviewed the 2014 Annual Report, Interim Results, 1 st Quarter and 3rd Quarter Interim Management Statement for 2015, dividend rate, risks management and the internal audit reports. It also approved the Internal Audit Plan for the year. The Committee met with the external auditors twice in 2015 to discuss the audit findings as well as the planning for the 2015 audit. In preparing the financial statements, the Directors have made a number of subjective judgements around significant accounting estimates which involved making assumptions regarding uncertain future events. The Committee reviewed the relevance of key assumptions used in the determination of biological assets. As the current CPO price and forecast CPO prices are much lower than the average over the past 10 years, a benchmarking exercise was made to ensure the directors’ best estimate of the price sustainable over the longer term is being used. The Directors adopted the recommendation of the valuer who has suggested applying a ratio of 70% of the current CPO price and 30% of the historical price (10-year average) given the assumption to calculate CPO price over the past 10 years is no longer considered to be appropriate. As a result, the directors adopted the CPO price of $625/mt which falls within the valuer’s recommended range of $600/mt to $650/mt and the World Bank forecast of CPO price for 2016 at $600/mt. All other key assumptions are significantly unchanged other than the discount rate which was increased to 16.8% from 16.4% to reflect the increase in sovereign risks in Indonesia. To provide indicative fair values and support valuation for the estate lands, nine companies located across North Sumatera, Bengkulu, Riau, Kalimantan and Malaysia were valued by qualified valuers in 2015. The Directors revalued the estate land not covered by the valuation exercise based on the regional appreciation rate quantified by the qualified valuers. Land is valued on a rotational basis and all land is valued by qualified valuers every two years. Annual Report 2015 | Anglo-Eastern Plantations Plc 44 44 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Audit Committee Report The Committee also reviewed the policy on revenue recognition and believe that revenue is recognized when significant risks and rewards of ownership of the FFB and CPO have been transferred to the buyers have been observed. The Group generates revenue predominantly from the sale of CPO from processed FFB. The Audit Committee also reviewed the internal audit reports and the Committee met with the Internal Auditor on one occasion to discuss the audit findings. No major fraud and theft were discovered. Most of the weaknesses were operational in nature and based on our discussions suggested improvement in internal controls were satisfactorily implemented. The Committee was apprised by the Executive Director on the on-going discussion amongst UK plantation companies on the adoption of new amendments to IAS 16 and IAS 41 for bearer plants mandatory from 1 January 2016. The standards require bearer plants to be treated as property, plant and equipment to be valued at historical costs less depreciation or deemed costs at last valuation. The directors have quantified the impact that would have on the Group net assets with the adoption of the amended IAS 16 and IAS 41 which is disclosed in note 1 to the financial statements on page 65. FFB not due for harvest is currently measured as part of the BA valuation. The Board receives reports from executive management in Indonesia and Malaysia and focuses principally on reviewing reports from management and considers whether significant risks in the Group are identified, evaluated, managed and whether significant weaknesses are promptly remedied including, but not limited to, commodity price movements, exchange rate movements, political and social change and government legislation. A member of the Audit Committee also met up with the senior management during the year to discuss various financial and operational issues. There is a regular dialogue, both formal and informal between the Audit Committee and the senior management and communication is open and constructive. During the year the Committee carried out an assessment of the effectiveness of the external audit process. The assessment was led by the Chairman of the Audit Committee, assisted by the Senior General Manager and the Group Accountant and focused on certain criteria which the Committee considered to be important factors in demonstrating an effective audit process. These factors included the quality of audit staff, the planning and execution of the audit according to agreed plans and timeline, provision of sound advice on technical issues and degree of independence and professionalism displayed during the audit. The current Audit Partner from BDO has been the Company’s audit engagement partner since 2014. Following this assessment, the Committee concluded that the external audit process remained effective, objectivity of the external auditors was not impaired and that it provides an appropriate independent challenge of the senior management of the Group. Responsibility 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 are fair, and balanced; 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; Reviewing and monitoring the independence of the external auditors and the effectiveness of the audit process; Providing advice to the Board on the assessment of the principal risks facing the Group; and Providing advice to the Board on the form and basis underlying the longer term viability statement and going concern statement to be contained in Annual Reports. Annual Report 2015 | Anglo-Eastern Plantations Plc 45 45 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Audit Committee Report The Committee also monitors 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 Committee discharge their responsibilities by informal discussions between them selves, 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. Internal control The Company has followed the Code provisions on internal control since 1999 and the Guidance on Risk Management, Internal Control and Related Financial and Business Reporting issued by the Financial Reporting Council in 2014. 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 Group has internal auditors who visit operating sites in Indonesia and Malaysia regularly based on approved Internal Audit Plan and provide summarized internal audit reports to the Audit Committee on a regular basis. The Internal Audit also conducts special audits throughout the year as and when required by management. The internal audit team provides objective assurance as to the effectiveness of the Group’s systems of internal control and risk management of the Group’s operating management to the Committee. Follow-up audits and discussions are also held to ensure remedial actions are taken promptly. The internal audit 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. Annual Report 2015 | Anglo-Eastern Plantations Plc 46 46 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Directors’ Remuneration Report I am pleased to report on the activities of the Remuneration Committee for the year ended 31 December 2015. It sets out the remuneration policy and remuneration details for the Executive and Non-Executive directors of the Group. It has been prepared in accordance with Schedule 8 of The Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 as amended in August 2013. The Companies Act 2006 requires the auditors to report to the shareholders on certain parts of the Directors’ Remuneration Report and to state whether, in their opinion, those parts of the report have been properly prepared in accordance with the Regulations. The parts of the annual report on remuneration that are subject to audit are indicated in that report. Other sections of the Remuneration Report are not subject to audit. The Executive Director’s compensation is not linked to the profitability of the Group. It is linked to his role in respect of activities relating to corporate finance and corporate affairs, including liaising with the Company’s advisers and regulators and interaction with shareholders. The Executive Director basic salary remains and is capped at £90,000 per annum until August 2016. The operating units in Indonesia and Malaysia however have in place variable compensation policy that rewards senior executives and employees with bonuses ranging from 2 to 5 months’ pay based on individual’s and operating units’ performance. The key criteria used in the determination of the variable compensation policy for bonus was revised in May 2014 following discussion and consultation with the Company’s Chairman The Remuneration policy detailed below took effect from 1 January 2015. The Remuneration policy and Director’s remuneration report was last approved at Company’s AGM on 29 June 2015. In the meeting, the shareholders voted in the following manner: To approve Directors’ Remuneration Report To approve Directors’ Remuneration Policy % For 99.68% 99.17% % Against 0.02% 0.82% % Withheld/Abstain 0.30% 0.01% The Committee would welcome your support for our Remuneration Report. Remuneration Committee The Remuneration Committee comprises of Mr. Jonathan Law Ngee Song (Chairman), Dato’ John Lim and Mr. Lim Tian Huat. The Committee had one meeting in 2015, attended by all members. Besides formal meetings, it also has informal discussions and consultation with the Company’s Chairman in relation to the variable bonuses for operational staff in Indonesia. During the year the Remuneration Committee reviewed the annual increment and bonus entitlement of senior management in Indonesia and made the necessary recommendation to the Board. The Committee also deliberated on the 2014 Remuneration Report and recommended to the Board for acceptance. 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 the Executive Director. It periodically assesses the remuneration of the Non-Executive Directors and submits proposal to the Board. In determining the remuneration policy of senior management, the Committee takes into account the need to attract, retain and motivate employees. It also makes external comparison with the current market trends and practices of equivalent roles taking into account the size, business complexity and relative performance. Annual Report 2015 | Anglo-Eastern Plantations Plc 47 47 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Directors’ Remuneration Report Non-Executive Directors’ remuneration is considered by the Board and consist exclusively of a fixed payment. 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 continues to be consistently applied. Components Base salary Base salaries of senior management are reviewed on an annual basis by the Remuneration Committee or when an individual changes his 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 including crop production, external crop purchase, increased in planted area, efficiency of mill performance and overall profitability. There is no bonus scheme for the Executive Director. 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 3 years. The total grant to each holder is determined by seniority and total market value at date of grant is normally limited to 2 times base salary. Exercise of options is only permitted 3 years after grant, provided that the holder remains an employee of the Group throughout the period. There are no other performance criteria for exercise of options granted so far. Pensions The operating units in Indonesia participate in mandatory pension schemes for their local executives and management. There is no company-sponsored scheme for senior executives outside of Indonesia. Remuneration Policy Table For Executive Director The table below summarises the key aspects of the Group’s Remuneration Policy for Executive Director effective 1 January 2016. Type Base salary - fixed pay Purpose To contain fixed costs Maximum payment Capped at £90,000.The cap is reviewed periodically. The policy permits the cap to be changed if this is deemed necessary to meet business, regulatory requirements. legislative or There is no bonus, fringe benefits or employee share option scheme for the Executive Director. Annual Report 2015 | Anglo-Eastern Plantations Plc 48 48 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Directors’ Remuneration Report Directors’ Remuneration Report Executive Director’s Remuneration Over 7 Years Executive Director’s Remuneration Over 7 Years Benefits Benefits - - - - - - - - - - - - - - Year ended 31 Dec Year ended 31 Dec 2015 2015 2014 2014 2013 2013 2012 2012 2011 2011 2010 2010 2009 2009 Salary Salary $137,000 $137,000 $133,000 $133,000 $117,000 $117,000 $105,000 $105,000 $83,000 $83,000 $114,000 $114,000 $137,000 $137,000 Pension Pension - - - - - - - - - - - - - - Bonus Bonus - - - - - - - - - - - - - - Total Total $137,000 $137,000 $133,000 $133,000 $117,000 $117,000 $105,000 $105,000 $83,000 $83,000 $114,000 $114,000 $137.000 $137.000 Percentage change of remuneration Percentage change of remuneration The following table shows a comparison of percentage change in salaries of the Executive Director, senior The following table shows a comparison of percentage change in salaries of the Executive Director, senior management in Indonesia and total wages and salaries between 2014 and 2015. management in Indonesia and total wages and salaries between 2014 and 2015. 2015 2015 Percentage change in Executive Director’s salary Percentage change in Executive Director’s salary Salary Salary $137,200 $137,200 2014 2014 Change Change $132,800 $132,800 +3.3% +3.3% Percentage change in selected Group senior management salaries Percentage change in selected Group senior management salaries Salaries Salaries $2,048,700 $2,048,700 $2,025,000 $2,025,000 +1.2% +1.2% Percentage change in total wages and salaries Percentage change in total wages and salaries Total wages and salaries Total wages and salaries $26,690,664 $26,690,664 $26,724,916 $26,724,916 -0.1% -0.1% Relative importance of spend on pay Relative importance of spend on pay 30,000 30,000 25,000 25,000 20,000 20,000 $'000 $'000 15,000 15,000 10,000 10,000 5,000 5,000 - - 28,316 27,859 28,316 27,859 1,998 1,998 1,869 1,869 2014 2014 2015 2015 2014 2014 2015 2015 Total Group Employee Remuneration Total Group Employee Remuneration Total Dividend Paid Total Dividend Paid Annual Report 2015 | Anglo-Eastern Plantations Plc Annual Report 2015 | Anglo-Eastern Plantations Plc 49 49 49 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Directors’ Remuneration Report Service contracts All Directors, Executive and Non-Executive have formal appointment letters. The Executive and Non-Executives are appointed normally on two year terms with notice periods of one month to two months. The service contracts are kept at the registered office and may be inspected by shareholders on request. Notice periods for all other senior management are generally two months. Therefore any remuneration payment for loss of office will be capped at a maximum of two months. At 31 December 2015, the unexpired term of the retiring Directors are: Expiry 30 January 2017 Madam Lim Siew Kim Expiry 31 August 2016 Dato’ John Lim Ewe Chuan Mr. Lim Tian Huat Expiry 7 May 2017 Mr. Jonathan Law Ngee Song Expiry 3 July 2017 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 2009 to 2015 (last 7 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. There may be some positive impact on share price after AEP Plc has been included by Morgan Stanley in the MSCI Global Micro Cap UK Indices with effect from 29 May 2015. Directors’ interests (audited) 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 Lim Tian Huat Jonathan Law Ngee Song 2015 Ordinary shares 20,551,914 2014 Ordinary shares 20,551,914 - - - - - - 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 betw een 31 December 2015 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. There is no requirement for Directors to hold shares in the Company. Other than as set out in notes 6 and 20 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 2015 | Anglo-Eastern Plantations Plc 50 50 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Directors’ Remuneration Report Directors’ remuneration (audited) The following part provides details of the remuneration of all the Directors for the year ended 31 December 2015. 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 Directors Executive: Dato' John Lim Ewe Chuan (1) Non-Executive: Lim Siew Kim (2) Lim Tian Huat (3) Nik Din Bin Nik Sulaiman (4) Jonathan Law Ngee Song (5) Total Total 2015 Fees Total 2014 Fees $000 $000 137 56 15 9 23 240 133 61 - 27 27 248 Directors’ remuneration comprises of directors fees only. Unaudited information Notes: (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 8 May 2015. (4) Resigned on 8 May 2015. (5) Appointed on 4 July 2013. Jonathan Law Ngee Song Chairman, Remuneration Committee 26 April 2016 Annual Report 2015 | Anglo-Eastern Plantations Plc 51 51 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. 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 2015 which comprise the consolidated income statement, the consolidated statement of comprehensive income, the consolidated statement of financial position, the consolidated statement of changes in equity, the consolidated statement of cash flows, the Company balance sheet, the Company statement of changes in equity 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), including Financial Reporting Standard 101 (FRS 101) Reduced Disclosure Framework. Opinion on financial statements In our opinion: the financial statements give a true and fair view of the state of the Group’s and of the Parent Company’s affairs as at 31 December 2015 and of the Group’s loss 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. Purpose of report 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 directors’ responsibilities statement, 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 Financial Reporting Council’s Ethical Standards for Auditors. Scope of the audit of the financial statements A description of the scope of an audit of financial statements is provided on the Financial Reporting Council’s website at www.frc.org.uk/auditscopeukprivate. Annual Report 2015 | Anglo-Eastern Plantations Plc 52 52 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Auditors’ Report Auditors’ Report Auditors’ Report Auditors’ Report INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ANGLO-EASTERN PLANTATIONS PLC INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ANGLO-EASTERN PLANTATIONS PLC INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ANGLO-EASTERN PLANTATIONS PLC INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ANGLO-EASTERN PLANTATIONS PLC (continued) (continued) (continued) (continued) Our application of materiality Our application of materiality Our application of materiality Our application of materiality We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements. We consider materiality to be the magnitude by which misstatements, including omissions, could misstatements. We consider materiality to be the magnitude by which misstatements, including omissions, could misstatements. We consider materiality to be the magnitude by which misstatements, including omissions, could misstatements. We consider materiality to be the magnitude by which misstatements, including omissions, could influence the economic decisions of reasonable users that are taken on the basis of the financial statements. In order influence the economic decisions of reasonable users that are taken on the basis of the financial statements. In order influence the economic decisions of reasonable users that are taken on the basis of the financial statements. In order influence the economic decisions of reasonable users that are taken on the basis of the financial statements. In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower materiality level, performance materiality, to determine the extent of testing needed. Importantly, misstatements materiality level, performance materiality, to determine the extent of testing needed. Importantly, misstatements materiality level, performance materiality, to determine the extent of testing needed. Importantly, misstatements materiality level, performance materiality, to determine the extent of testing needed. Importantly, misstatements below these levels will not necessarily be evaluated as immaterial as we also take account of the nature of identified below these levels will not necessarily be evaluated as immaterial as we also take account of the nature of identified below these levels will not necessarily be evaluated as immaterial as we also take account of the nature of identified below these levels will not necessarily be evaluated as immaterial as we also take account of the nature of identified misstatements and the particular circumstances of their occurrence, when evaluating their effect on the financial misstatements and the particular circumstances of their occurrence, when evaluating their effect on the financial misstatements and the particular circumstances of their occurrence, when evaluating their effect on the financial misstatements and the particular circumstances of their occurrence, when evaluating their effect on the financial statements as a whole. statements as a whole. statements as a whole. statements as a whole. We determined materiality for the financial statements as a whole to be US$2.00 million (2014: US$2.50 million), We determined materiality for the financial statements as a whole to be US$2.00 million (2014: US$2.50 million), We determined materiality for the financial statements as a whole to be US$2.00 million (2014: US$2.50 million), We determined materiality for the financial statements as a whole to be US$2.00 million (2014: US$2.50 million), which approximates to 1% of revenues (2014: 1%). We consider revenue to be a key indicator of the Group’s which approximates to 1% of revenues (2014: 1%). We consider revenue to be a key indicator of the Group’s which approximates to 1% of revenues (2014: 1%). We consider revenue to be a key indicator of the Group’s which approximates to 1% of revenues (2014: 1%). We consider revenue to be a key indicator of the Group’s financial performance and therefore an appropriate basis for materiality. We agreed with the Audit Committee that financial performance and therefore an appropriate basis for materiality. We agreed with the Audit Committee that financial performance and therefore an appropriate basis for materiality. We agreed with the Audit Committee that financial performance and therefore an appropriate basis for materiality. We agreed with the Audit Committee that we would report to the Committee all individual audit differences identified during the course of our audit in excess of we would report to the Committee all individual audit differences identified during the course of our audit in excess of we would report to the Committee all individual audit differences identified during the course of our audit in excess of we would report to the Committee all individual audit differences identified during the course of our audit in excess of US$50,000 (2014: US$50,000). We also agreed to report differences below this threshold that, in our view, US$50,000 (2014: US$50,000). We also agreed to report differences below this threshold that, in our view, US$50,000 (2014: US$50,000). We also agreed to report differences below this threshold that, in our view, US$50,000 (2014: US$50,000). We also agreed to report differences below this threshold that, in our view, warranted reporting on qualitative grounds. warranted reporting on qualitative grounds. warranted reporting on qualitative grounds. warranted reporting on qualitative grounds. An overview of the scope of our audit An overview of the scope of our audit An overview of the scope of our audit An overview of the scope of our audit Total assets Total assets Total assets Total assets (Loss)/profit before tax (Loss)/profit before tax (Loss)/profit before tax (Loss)/profit before tax Group level procedures on the audit of biological assets and land 60% Group level procedures on the audit of biological assets and land 60% Group level procedures on the audit of biological assets and land 60% Group level procedures on the audit of biological assets and land 60% (2014: 64%) (2014: 64%) (2014: 64%) (2014: 64%) Total assets of the five operating plantation companies significant by Total assets of the five operating plantation companies significant by Total assets of the five operating plantation companies significant by Total assets of the five operating plantation companies significant by size, excluding land and biological assets, subject to audit and review by size, excluding land and biological assets, subject to audit and review by size, excluding land and biological assets, subject to audit and review by size, excluding land and biological assets, subject to audit and review by Group auditors 32% (2014:30%) Group auditors 32% (2014:30%) Group auditors 32% (2014:30%) Group auditors 32% (2014:30%) Audit procedures performed by component auditors on specific areas Audit procedures performed by component auditors on specific areas Audit procedures performed by component auditors on specific areas Audit procedures performed by component auditors on specific areas subject to review by Group auditors 4% (2014: 4%) subject to review by Group auditors 4% (2014: 4%) subject to review by Group auditors 4% (2014: 4%) subject to review by Group auditors 4% (2014: 4%) Other 4% (2014:3%) Other 4% (2014:3%) Other 4% (2014:3%) Other 4% (2014:3%) Total profit before tax of the five operating plantation companies Total profit before tax of the five operating plantation companies Total profit before tax of the five operating plantation companies Total profit before tax of the five operating plantation companies significant by size, excluding the biological asset adjustment, subject to significant by size, excluding the biological asset adjustment, subject to significant by size, excluding the biological asset adjustment, subject to significant by size, excluding the biological asset adjustment, subject to audit and review by Group auditors $46,342m (2014: $71,149m) audit and review by Group auditors $46,342m (2014: $71,149m) audit and review by Group auditors $46,342m (2014: $71,149m) audit and review by Group auditors $46,342m (2014: $71,149m) Group level procedures on the biological asset adjustment loss of Group level procedures on the biological asset adjustment loss of Group level procedures on the biological asset adjustment loss of Group level procedures on the biological asset adjustment loss of $64,121m (2014: loss of $33,718) $64,121m (2014: loss of $33,718) $64,121m (2014: loss of $33,718) $64,121m (2014: loss of $33,718) Other loss of $1,295m (2014: loss of $19,913m) Other loss of $1,295m (2014: loss of $19,913m) Other loss of $1,295m (2014: loss of $19,913m) Other loss of $1,295m (2014: loss of $19,913m) Annual Report 2015 | Anglo-Eastern Plantations Plc Annual Report 2015 | Anglo-Eastern Plantations Plc Annual Report 2015 | Anglo-Eastern Plantations Plc Annual Report 2015 | Anglo-Eastern Plantations Plc 53 53 53 53 53 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Auditors’ Report INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ANGLO-EASTERN PLANTATIONS PLC (continued) Revenue Audit procedures performed by component auditors subject to audit and review by Group auditors covered 100% of revenue (2014: 100%). The Group financial statements are a consolidation of twenty six companies made up of the parent company, four management companies, four dormant companies and seventeen trading companies operating fifteen mature plantations and two immature plantations. Sixteen of the plantations are located in Indonesia and one in Malaysia. The head office and main accounting location is located in Kuala Lumpur, Malaysia, at a separate location from the plantations. Our Group audit scope focused on the group’s principal operating companies and based on our risk assessment we identified five operating plantation companies which, in our view, required an audit of their complete financial information due to their size and a further twelve which required audit procedures on specific areas due to their risk characteristics. This, together with additional procedures performed at Group level, which included the audit of biological assets and leasehold land, gave us the evidence we needed to form our opinion on the Group financial statements as a whole. Audits of the subsidiary companies were performed at materiality levels which were lower than Group materiality and determined by us to be appropriate to the relative size of the company concerned. The audits of each of the operating companies were performed entirely in Malaysia and Indonesia, as well as the audit of corporate accounting function in Malaysia. All audits were conducted by BDO network firms with teams drawn from the UK, Malaysia and Indonesia. As part of our audit strategy, the Senior Statutory Auditor and other senior members of the team between them visit Malaysia and Indonesia each year. During these visits the Group audit team reviewed the full audit files for the five operating plantation companies considered to be significant by size and the audit work in relation to the specific areas identified due to risk for the other twelve. Following the review, any further work required by the Group audit team was then performed by the component auditor. The component auditors visit the plantation estates on a rotational basis so that the plantation estates are visited at least once every three years. The component auditors visited sixteen out of the seventeen plantation estates in the current year. The remaining components of the Group include non-significant holding companies and these components were principally subject to analytical review procedures performed by the Group audit team. Annual Report 2015 | Anglo-Eastern Plantations Plc 54 54 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Auditors’ Report INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ANGLO-EASTERN PLANTATIONS PLC (continued) Our assessment of risks of material misstatement In preparing the financial statements, the Directors have made a number of subjective judgements around significant accounting estimates which involved making assumptions regarding uncertain future events. The assessed risks of material misstatement that had the greatest impact on the audit strategy, the allocation of resources in the audit and directing the efforts of the engagement team and component auditors are described below. As there has been no significant change in the Group’s operations these key risks are the same as in the prior year. These risks were discussed with the Audit Committee and are included within their report on those matters they considered to be significant issues in relation to the financial statements set out on pages 44 to 45. Risk of material misstatement Our response to the risks identified Revenue recognition Substantially all revenue is derived from the sales of crude palm oil and palm kernel, the revenue from which is recognised when the goods are delivered or allocated to a purchaser subsequent to payment as detailed in note 1. Revenue is calculated as the quantity of crude palm oil multiplied by the crude palm oil price, net of processing and transportation charges. We consider there to be a risk over the accuracy of the recorded weight of crude palm oil sales and therefore the completeness of revenue. Valuation of estate land Estate land is carried at fair value, based on periodic valuations on an open market basis by a professionally qualified valuer. The directors obtain a professional valuation on land on a rotational basis and all land has been professionally valued at either the current or previous financial year end. We identified the valuation of estate land as a risk due to the subjective judgements involved in the estimation and the volatility of land market price within Indonesia. We tested, on a sample basis, that sale invoices were raised on the delivery date based on the goods dispatched note and that the total weight stated in the goods dispatched note agrees with that in the delivery order. We also identified revenue from sales of crude palm oil and palm kernel at the end of the current year and the beginning of the new financial year and tested a sample to ensure that revenue had been recognised in the correct period. the current year the directors engaged an In independent valuer to perform a market-based valuation on all land that was not independently valued in the prior year increasing the selection to ensure geographical coverage of all areas in which they operate. The directors performed their own valuation on the rest of the land by considering the movements on the valued land from last year and applying the same movements to the rest of the land on a regional basis. We assessed the capabilities, objectivity and competence of the independent valuer and considered the to be satisfactory. We challenged them assumptions in the input data from the valuer and also assessed the reasonableness of the movements in the valuation of land on an estate by estate basis in light of land area and market movements valuation trends. We challenged the assumptions used by the Directors in their valuation, most notably on how they applied the movements as determined by the independent valuers to the other estates. in plantation Annual Report 2015 | Anglo-Eastern Plantations Plc 55 55 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Auditors’ Report Auditors’ Report INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ANGLO-EASTERN PLANTATIONS PLC INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ANGLO-EASTERN PLANTATIONS PLC (continued) (continued) Risk of material misstatement Risk of material misstatement Valuation of biological assets Valuation of biological assets Biological assets are held at fair value less costs to sell Biological assets are held at fair value less costs to sell determined on the basis of the net present value of determined on the basis of the net present value of cash flows arising in the production of fresh fruit cash flows arising in the production of fresh fruit (FFB). Management exercise significant bunches (FFB). Management exercise significant bunches judgement in determining the underlying assumptions judgement in determining the underlying assumptions used in the calculation of fair value. These assumptions used in the calculation of fair value. These assumptions include the crude palm oil price (CPO), discount rate, include the crude palm oil price (CPO), discount rate, FFB production, estate yield, overhead cost and FFB production, estate yield, overhead cost and notional rent. We identified this as a risk due to the notional rent. We identified this as a risk due to the inherent uncertainty around the future estimates. inherent uncertainty around the future estimates. CPO price sensitivity CPO price sensitivity Our response to the risks identified Our response to the risks identified The directors engaged an independent valuer to The directors engaged an independent valuer to perform the valuation exercise. We assessed the perform the valuation exercise. We assessed the capabilities, objectivity and competence of the the capabilities, objectivity and competence of independent valuer and considered them to be independent valuer and considered them to be satisfactory. We also challenged the assumptions in satisfactory. We also challenged the assumptions in the input data made by management and the valuer the input data made by management and the valuer through discussions, comparisons to industry peers through discussions, comparisons to industry peers and independent external data sources and where and independent external data sources and where available supporting supporting available documentation and historical trends. Sensitivity of the documentation and historical trends. Sensitivity of the valuation to key assumptions is disclosed in note 10 of valuation to key assumptions is disclosed in note 10 of is most the is most the sensitive to the movement in CPO price as illustrated sensitive to the movement in CPO price as illustrated below. below. financial statements. The valuation financial statements. The valuation corroboration with corroboration with to to Annual Report 2015 | Anglo-Eastern Plantations Plc Annual Report 2015 | Anglo-Eastern Plantations Plc 56 56 56 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Auditors’ Report INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ANGLO-EASTERN PLANTATIONS PLC (continued) 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 strategic report and the directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements. Statement regarding the directors’ assessment of principal risks, going concern and longer term viability of the company We have nothing material to add or to draw attention to in relation to: the directors’ confirmation in the annual report that they have carried out a robust assessment of the principal risks facing the entity, including those that would threaten its business model, future performance, solvency or liquidity; the disclosures in the annual report that describe those risks and explain how they are being managed or mitigated; the directors’ statement in the financial statements about whether they considered it appropriate to adopt the going concern basis of accounting in preparing them and their identification of any material uncertainties to the entity’s ability to continue to do so over a period of at least twelve months from the date of approval of the financial statements; or the directors’ explanation in the annual report as to how they have assessed the prospects of the entity, over what period they have done so and why they consider that period to be appropriate, and their statement as to whether they have a reasonable expectation that the entity will be able to continue in operation and meet its liabilities as they fall due over the period of their assessment, including any related disclosures drawing attention to any necessary qualifications or assumptions. Matters on which we are required to report by exception 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: adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or the Parent Company financial statements and the part of the directors’ remuneration report to be audited are not in agreement with the accounting records and returns; or we have not received all the information and explanations we require for our audit; or certain disclosures of directors’ remuneration specified by law are not made. Annual Report 2015 | Anglo-Eastern Plantations Plc 57 57 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Auditors’ Report INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ANGLO-EASTERN PLANTATIONS PLC (continued) Our duty to read other information in the annual report Under the Listing Rules we are required to review: the directors’ statement, set out on page 13, in relation to going concern and on page 32, in relation to longer term viability; the part of the corporate governance statement relating to the Company’s compliance with the provisions of the UK Corporate Governance Code specified for our review. We have nothing to report arising from our review. Under the ISAs (UK and Ireland), we are required to report to you if, in our opinion, information in the annual report is: materially inconsistent with the information in the audited financial statements; or apparently materially incorrect based on, or materially inconsistent with, our knowledge of the Group acquire d in the course of performing our audit; or otherwise misleading. In particular, we are required to consider whether we have identified any inconsistencies between our knowledge acquired during the audit and the directors’ statement that they consider the annual report is fair, balanced and understandable and whether the annual report appropriately discloses those matters that we communicated to the Audit Committee which we consider should have been disclosed. We confirm that we have not identified any such inconsistencies or misleading statements. Anna Draper Senior Statutory Auditor For and on behalf of BDO LLP, Statutory Auditor Chartered Accountants London United Kingdom 26 April 2016 BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127). Annual Report 2015 | Anglo-Eastern Plantations Plc 58 58 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Consolidated Income Statement Consolidated Income Statement For the year ended 31 December 2015 For the year ended 31 December 2015 Continuing operations Continuing operations Revenue Revenue Cost of sales Cost of sales Gross profit Gross profit Biological asset revaluation movement Biological asset revaluation movement Administration expenses Administration expenses Operating profit / (loss) Operating profit / (loss) Exchange (losses) / gains Exchange (losses) / gains Finance income Finance income Finance expense Finance expense Profit / (Loss) before tax Profit / (Loss) before tax Tax expense Tax expense Profit / (Loss) for the year Profit / (Loss) for the year Attributable to: Attributable to: - Owners of the parent - Owners of the parent - Non-controlling interests - Non-controlling interests Earnings per share for profit / Earnings per share for profit / (loss) attributable to the owners (loss) attributable to the owners of the parent during the year of the parent during the year - basic - basic - diluted - diluted Note Note 2 2 3 3 3 3 4 4 7 7 8 8 8 8 Result Result before before BA BA adjustment adjustment $000 $000 251,258 251,258 (164,666) (164,666) 86,592 86,592 - - (7,747) (7,747) 78,845 78,845 852 852 7,276 7,276 (2,019) (2,019) 84,954 84,954 (20,967) (20,967) 63,987 63,987 2014 2014 BA BA adjustment adjustment $000 $000 - - - - - - (33,718) (33,718) - - (33,718) (33,718) - - - - - - (33,718) (33,718) 8,429 8,429 (25,289) (25,289) 52,422 52,422 11,565 11,565 63,987 63,987 (21,660) (21,660) (3,629) (3,629) (25,289) (25,289) Result Result before before BA BA adjustment adjustment $000 $000 196,451 196,451 (145,897) (145,897) 50,554 50,554 - - (7,826) (7,826) 42,728 42,728 (2,354) (2,354) 6,683 6,683 (2,010) (2,010) 45,047 45,047 (10,385) (10,385) 34,662 34,662 2015 2015 BA BA adjustment adjustment $000 $000 - - - - - - (64,121) (64,121) - - (64,121) (64,121) - - - - - - (64,121) (64,121) 16,030 16,030 (48,091) (48,091) 27,505 27,505 7,157 7,157 34,662 34,662 (42,402) (42,402) (5,689) (5,689) (48,091) (48,091) Total Total $000 $000 196,451 196,451 (145,897) (145,897) 50,554 50,554 (64,121) (64,121) (7,826) (7,826) (21,393) (21,393) (2,354) (2,354) 6,683 6,683 (2,010) (2,010) (19,074) (19,074) 5,645 5,645 (13,429) (13,429) (14,897) (14,897) 1,468 1,468 (13,429) (13,429) (37.58)cts (37.58)cts (37.58)cts (37.58)cts Total Total $000 $000 251,258 251,258 (164,666) (164,666) 86,592 86,592 (33,718) (33,718) (7,747) (7,747) 45,127 45,127 852 852 7,276 7,276 (2,019) (2,019) 51,236 51,236 (12,538) (12,538) 38,698 38,698 30,762 30,762 7,936 7,936 38,698 38,698 77.61cts 77.61cts 77.53cts 77.53cts Earnings per share before BA adjustment are shown in note 8. Earnings per share before BA adjustment are shown in note 8. The accompanying notes are an integral part of this consolidated income statement. The accompanying notes are an integral part of this consolidated income statement. Annual Report 2015 | Anglo-Eastern Plantations Plc Annual Report 2015 | Anglo-Eastern Plantations Plc 59 59 59 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Consolidated Statement of Comprehensive Income For the year ended 31 December 2015 Consolidated Statement of Comprehensive Income For the year ended 31 December 2015 2015 $000 Profit / (Loss) for the year Other comprehensive income / (expense): Profit / (Loss) for the year Items may be reclassified to profit or loss: Other comprehensive income / (expense): Loss on exchange translation of foreign operations Items may be reclassified to profit or loss: Net other comprehensive expense may be reclassified to profit or loss Loss on exchange translation of foreign operations Items not to be reclassified to profit or loss: Net other comprehensive expense may be reclassified to profit or loss Unrealised gain on revaluation of leasehold land Items not to be reclassified to profit or loss: Deferred tax on revaluation of leasehold land Unrealised gain on revaluation of leasehold land Remeasurement of retirement benefits plan Deferred tax on revaluation of leasehold land Deferred tax on retirement benefits Remeasurement of retirement benefits plan Net other comprehensive income / (expense) not being reclassified to profit or loss Deferred tax on retirement benefits Total other comprehensive expenses for the year, net of tax Total comprehensive (expense) / income for the year Net other comprehensive income / (expense) not being reclassified to profit or loss Total other comprehensive expenses for the year, net of tax Attributable to: Total comprehensive (expense) / income for the year - Owners of the parent - Non-controlling interests Attributable to: - Owners of the parent - Non-controlling interests (13,429) 2015 $000 (13,429) (54,595) (54,595) (54,595) (54,595) 4,902 (1,226) 4,902 445 (1,226) (111) 445 4,010 (111) (50,585) (64,014) 4,010 (50,585) (64,014) (56,016) (7,998) (64,014) (56,016) (7,998) (64,014) 2014 $000 38,698 2014 $000 38,698 (12,019) (12,019) (12,019) (12,019) 386 (96) 386 (680) (96) 170 (680) (220) 170 (12,239) 26,459 (220) (12,239) 26,459 21,188 5,271 26,459 21,188 5,271 26,459 The accompanying notes are an integral part of this consolidated statement of comprehensive income and expense. The accompanying notes are an integral part of this consolidated statement of comprehensive income and expense. Annual Report 2015 | Anglo-Eastern Plantations Plc Annual Report 2015 | Anglo-Eastern Plantations Plc 60 60 60 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Consolidated Statement of Financial Position As at 31 December 2015 Consolidated Statement of Financial Position As at 31 December 2015 Non-current assets Biological assets Non-current assets Property, plant and equipment Biological assets Receivables Property, plant and equipment Deferred tax assets Receivables Deferred tax assets Current assets Inventories Current assets Tax receivables Inventories Trade and other receivables Tax receivables Cash and cash equivalents Trade and other receivables Cash and cash equivalents Current liabilities Loans and borrowings Current liabilities Trade and other payables Loans and borrowings Tax liabilities Trade and other payables Dividend payables Tax liabilities Dividend payables Net current assets Non- current liabilities Net current assets Loans and borrowings Non- current liabilities Deferred tax liabilities Loans and borrowings Retirement benefits – net liabilities Deferred tax liabilities Retirement benefits – net liabilities Net assets Issued capital and reserves attributable to owners of the parent Net assets Share capital Issued capital and reserves attributable to owners of the parent Treasury shares Share capital Share premium Treasury shares Capital redemption reserve Share premium Revaluation reserves Capital redemption reserve Exchange reserves Revaluation reserves Retained earnings Exchange reserves Retained earnings Non-controlling interests Total equity Non-controlling interests Note Note 10 10 10 11 10 16 11 16 12 12 13 13 14 15 14 15 14 16 14 17 16 17 18 18 18 18 2015 $000 2015 $000 179,010 219,990 179,010 3,655 219,990 8,021 3,655 410,676 8,021 410,676 6,693 16,679 6,693 4,704 16,679 104,614 4,704 132,690 104,614 132,690 (1,750) (17,406) (1,750) (5,917) (17,406) - (5,917) (25,073) - 107,617 (25,073) 107,617 (32,875) (28,932) (32,875) (4,528) (28,932) (66,335) (4,528) 451,958 (66,335) 451,958 15,504 (1,171) 15,504 23,935 (1,171) 1,087 23,935 59,594 1,087 (234,490) 59,594 504,892 (234,490) 369,351 504,892 82,607 369,351 451,958 82,607 2014 $000 2014 $000 251,374 227,380 251,374 3,007 227,380 3,982 3,007 485,743 3,982 485,743 7,846 9,231 7,846 8,807 9,231 125,937 8,807 151,821 125,937 151,821 (313) (21,010) (313) (10,752) (21,010) (20) (10,752) (32,095) (20) 119,726 (32,095) 119,726 (34,625) (48,350) (34,625) (4,445) (48,350) (87,420) (4,445) 518,049 (87,420) 518,049 15,504 (1,171) 15,504 23,935 (1,171) 1,087 23,935 57,029 1,087 (190,503) 57,029 521,355 (190,503) 427,236 521,355 90,813 427,236 518,049 90,813 Total equity The financial statements were approved by the Board of Directors and authorised for issue on 26 April 2016 and were signed on its behalf by 518,049 451,958 The financial statements were approved by the Board of Directors and authorised for issue on 26 April 2016 and were signed on its behalf by Dato’ John Lim Ewe Chuan Executive Director, Corporate Finance and Corporate Affairs Dato’ John Lim Ewe Chuan Executive Director, Corporate Finance and Corporate Affairs The accompanying notes are an integral part of this consolidated statement of financial position. The accompanying notes are an integral part of this consolidated statement of financial position. Annual Report 2015 | Anglo-Eastern Plantations Plc Annual Report 2015 | Anglo-Eastern Plantations Plc 61 61 61 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. l a t o T y t i u q e 0 0 0 $ 0 1 0 , 4 9 4 0 0 0 $ 4 6 9 5 8 , - n o N s t s e r e t n i g n i l l o r t n o c l a t o T 0 0 0 $ 6 4 0 8 0 4 , 0 0 0 $ d e n i a t e R i s g n n r a e 1 3 0 , 3 9 4 0 0 0 $ n g i e r o F e v r e s e r e g n a h c x e ) 7 0 1 1 8 1 ( , 0 9 2 ) 0 1 5 ( 8 2 ) 0 7 ( ) 9 1 0 , 2 1 ( ) 3 2 6 , 2 ( ) 9 3 2 , 2 1 ( ) 5 6 6 2 ( , 8 9 6 8 3 , 9 5 4 6 2 , 6 3 9 7 , 1 7 2 5 , ) 0 2 4 , 2 ( ) 2 2 4 ( 2 6 2 ) 0 4 4 ( ) 6 9 3 , 9 ( ) 4 7 5 , 9 ( 2 6 7 0 3 , 8 8 1 1 2 , ) 8 9 9 , 1 ( - - ) 0 4 4 ( ) 0 4 4 ( 2 6 7 0 3 , 2 2 3 0 3 , ) 8 9 9 , 1 ( - - - ) 6 9 3 9 ( , ) 6 9 3 9 ( , ) 6 9 3 9 ( , - 0 0 0 $ e v r e s e r 7 6 7 , 6 5 2 6 2 - - - 2 6 2 2 6 2 - n o i t a u a v e R l n o i t p m e d e r l a t i p a C e v r e s e r 0 0 0 $ 7 8 0 , 1 8 3 7 , 8 9 0 0 0 $ 5 3 9 , 3 2 7 3 9 , 5 2 1 0 0 0 $ ) 1 7 1 , 1 ( e r a h S i m u m e r p s e r a h s y r u s a e r T - - - - - - - ) 4 0 0 , 2 ( 7 3 9 , 5 2 1 7 3 9 , 5 2 1 - - - - - - - ) 0 6 2 , 3 1 ( 4 1 6 , 4 0 1 4 1 6 , 4 0 1 - - - - - - - e r a h S l a t i p a c 0 0 0 $ 4 0 5 , 5 1 - - - - - - - 9 4 0 8 1 5 , 3 1 8 0 9 , 6 3 2 , 7 2 4 5 5 3 1 2 5 , ) 3 0 5 0 9 1 ( , 9 2 0 , 7 5 7 8 0 , 1 5 3 9 , 3 2 ) 1 7 1 , 1 ( 4 0 5 , 5 1 4 3 3 6 7 6 , 3 1 3 1 1 1 , 1 3 0 3 5 6 5 2 , ) 5 9 5 , 4 5 ( ) 8 0 6 0 1 ( , ) 7 8 9 , 3 4 ( ) 5 8 5 0 5 ( , ) 6 6 4 9 ( , ) 9 2 4 , 3 1 ( 8 6 4 , 1 ) 9 1 1 , 1 4 ( ) 7 9 8 , 4 1 ( ) 7 9 8 4 1 ( , - - - 3 0 3 3 0 3 - - ) 7 8 9 3 4 ( , ) 7 8 9 3 4 ( , - - 5 6 5 , 2 - 5 6 5 , 2 ) 7 7 0 , 2 ( ) 8 0 2 ( ) 9 6 8 1 ( , ) 9 6 8 , 1 ( - - ) 4 1 0 , 4 6 ( ) 8 9 9 , 7 ( ) 6 1 0 6 5 ( , ) 4 9 5 , 4 1 ( ) 7 8 9 3 4 ( , 5 6 5 , 2 - - - - - - - - - - - - - - - - - - - - - - - - - - - - 8 5 9 1 5 4 , 7 0 6 2 8 , 1 5 3 , 9 6 3 2 9 8 4 0 5 , ) 0 9 4 4 3 2 ( , 4 9 5 , 9 5 7 8 0 , 1 5 3 9 , 3 2 ) 1 7 1 , 1 ( 4 0 5 , 5 1 . s w o l f h s a c f o t n e m e t a t s l f o t n e m s e n a t o a m t r S e t g d n o e g n t i t a s x d e f i o l t o n e s m y n a p o e R C i l i l s t n e a v u q e h s a c d n a h s a c n i e s a e r c n I / ) e s a e r c e D ( 5 1 0 2 i r s e e i b t i v m i t c e a c g e n D c n a 1 n 3 i f m d o e r d f n ) n e d r e a s e u ( y h s e a h c t t e r N o F / i s t n e l a v i u q e h s a c d n a h s a C l s r e d o h e r a h s i i y t i r o n m o t d a p s d n e d v D i i y n a p m o C y b d a p s d n e d v D i i i t n e m y a p e r e s a e l e c n a n F i x a t f o t e n , d n a l l d o h e s a e l f o l n o i t a u a v e r n o r n a a e g y f d o e d s n a e e t r A n U i l i - x a t f o t e n , n a p t i f e n e b l t n e m e r i t e r f o t n e : m g n e i s r u i r s p a m e o m C e R - e m o c n i i e v s n e h e r p m o c r e h t o f o s m e t I e g n a h c x e n g e r o F i s n o i t a r e p o i n g e r o f f o l n o i t a s n a r t e g n a h c x e n o s s o L - r a e y f o d n e t a h s a C 3 1 0 2 r e b m e c e D 1 3 t a e c n a a B l r a e y i f o g n n n g e b t i A ) s e s n e p x e ( / e m o c n i i e v s n e h e r p m o c r e h t o l a t o T r a e y e h t r o f s e s n e p x e d n a e m o c n r a e y e h t r o f s e s n e p x e d n a e m o c n r a e y e h t x a t f o t e n , d n a l l d o h e s a e l f o n o i t a u l a v e r n o n i a g d e s i l a e r n U x a t f o t e n , n a l p t i f e n e b t n e m e r i t e r s n o i t a r e p o n g i e r o f f o n o i t a l s n a r t e g n a h c x e n o s s o L - ) s e s n e p x e ( / e m o c n i e v i s n e h e r p m o c r e h t o e m o c n i e v i s n e h e r p m o c r e h t o f o s m e t I 4 1 0 2 r e b m e c e D 1 3 t a e c n a l a B 5 1 0 2 r e b m e c e D 1 3 t a e c n a l a B i i r a e y e h t s e t o n g n y n a p m o c c a e h T i e v i s n e h e r p m o c l a t o T f o t n e m e r u s a e m e R d i a p s d n e d v D e v s n e h e r p m o c d a p s d n e d v D ) s s o L ( t i f o r P l a t o T a t o T t i f o r r o f r o f P - - i i / i i i l i d e t a d i l o s n o c s h t i f o t r a p l a r g e t n i n a e r a 4 1 0 2 0 0 0 $ ) 0 2 ( ) 2 0 4 ( ) 3 6 ( ) 8 9 9 , 1 ( ) 3 8 4 , 2 ( 3 0 2 , 9 2 5 1 0 2 0 0 0 $ - ) 8 2 2 ( ) 3 1 3 ( ) 9 6 8 , 1 ( ) 0 1 4 , 2 ( ) 3 6 0 , 8 ( y t i u q E n i s e g n a h C s w o l F h s a C f o t n e m e t a t S d e t a d i l o s n o C 5 1 0 2 r e b m e c e D 1 3 d e d n e r a e y e h t r o F s e i t i v i t c a g n i c n a n i F 2 6 2 6 4 6 c l P s n o i t a t n a l P n r e t s a E - o l g n A | 5 1 0 2 t r o p e R l a u n n A . c l P s n o i t a t n a l P n r e t s a E - o l g n A | 5 1 0 2 t r o p e R l a u n n A About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Consolidated Statement of Cash Flows For the year ended 31 December 2015 Cash flows from operating activities (Loss) / Profit before tax Adjustments for: BA adjustment (Profit) / Loss on disposal of tangible fixed assets Depreciation Retirement benefit provisions Net finance income Unrealised loss / (gain) in foreign exchange Property, plant and equipment written off Operating cash flow before changes in working capital Decrease in inventories Decrease in non-current, 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 2015 $000 2014 $000 (19,074) 51,236 64,121 (111) 6,768 973 (4,673) 2,354 1,708 52,066 341 4,425 (1,623) 55,209 (2,010) (103) (27,856) 25,240 33,718 36 6,833 951 (5,257) (852) 135 86,800 451 664 5,929 93,844 (2,019) (61) (17,756) 74,008 (38,555) (49,754) 979 6,683 156 7,276 (30,893) (42,322) Annual Report 2015 | Anglo-Eastern Plantations Plc 63 63 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Consolidated Statement of Cash Flows For the year ended 31 December 2015 Financing activities Dividends paid by Company Consolidated Statement of Cash Flows For the year ended 31 December 2015 Finance lease repayment Dividends paid to minority shareholders Repayment of existing long term loans Net cash (used in) / from financing activities Financing activities (Decrease) / Increase in cash and cash equivalents Dividends paid by Company Finance lease repayment Cash and cash equivalents Dividends paid to minority shareholders At beginning of year Repayment of existing long term loans Foreign exchange Net cash (used in) / from financing activities At end of year (Decrease) / Increase in cash and cash equivalents Comprising: Cash at end of year Cash and cash equivalents At beginning of year Foreign exchange At end of year Comprising: Cash at end of year 2015 $000 (1,869) - (228) (313) 2015 $000 (2,410) (8,063) (1,869) - (228) 125,937 (313) (13,260) (2,410) 104,614 (8,063) 104,614 125,937 (13,260) 104,614 2014 $000 (1,998) (20) (402) (63) 2014 $000 (2,483) 29,203 (1,998) (20) (402) 98,738 (63) (2,004) (2,483) 125,937 29,203 125,937 98,738 (2,004) 125,937 104,614 125,937 The accompanying notes are an integral part of this consolidated statement of cash flows. . The accompanying notes are an integral part of this consolidated statement of cash flows. . Annual Report 2015 | Anglo-Eastern Plantations Plc Annual Report 2015 | Anglo-Eastern Plantations Plc 64 64 64 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. 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, except as detailed in the following paragraph. 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 European Union (“EU”) and with those parts of the Companies Act 2006 applicable to companies preparing their accounts under IFRS as adopted by the EU. Changes in accounting standards a) The following amendment is effective for the first time in these financial statements but does not have a material effect on the Group's financial statements: • IAS 19 Amendments - Defined Benefit Plans: Employee Contributions (effective for accounting periods beginning on or after 1 July 2014) b) New standards, interpretations and amendments not yet effective. The following new standards, interpretations and amendments are effective for periods beginning after 1 January 2016 and have not been applied in these financial statements: • • • • • IFRS 9 Financial Instruments (effective for accounting periods beginning on or after 1 January 2018)* IFRS 15 Revenue from Contracts with Customers (effective for accounting periods beginning on or after 1 January 2018)* IFRS 16 Leases (effective for accounting periods beginning on or after 1 January 2019)* IAS 16 Amendments - Property, Plant and Equipment (effective for accounting periods beginning on or after 1 January 2016)* IAS 41 Amendments - Agriculture (effective for accounting periods beginning on or after 1 January 2016)* *These standards and interpretations are not endorsed by the EU at present. None of the above new standards, interpretations and amendments are expected to have a material effect on the Group's future financial statements except for IAS 16 and IAS 41. The amendments to IAS 16 and IAS 41 change the accounting requirements for biological assets that meet the definition of bearer plants. Biological assets that meet the definition of bearer plants are required to account for as bearer plants in accordance with IAS 16 using either cost model or revaluation model. The produce growing on bearer plants will remain within the scope of IAS 41 measured at fair value less costs to sell. The biological assets of the Group fall within the definition of bearer plants. With effect from 1 January 2016, immature plantations will be recognised at cost and accumulated until maturity whereas mature plantations will be recognised at historical cost less accumulated depreciation. Immature plantations are subject to impairment reviews. The FFB, which is agricultural produce under the revised IAS 41, will be recognised at fair value less cost to sell at the point of harvest, with changes recognised in profit or loss. However, the Company has yet to reach a decision as to the measurement of the unharvested produce at balance sheet date. The directors have quantified the financial impact that would have on the Group with the adoption of the amended IAS 16 and IAS 41. The Group would have been reported a profit for the year ended 31 December 2015 of US$24.9 million rather than a loss for the year of US$13.4 million. Included in the adjusted loss for the year was an impairment loss on bearer plants of US$34.1 million. The Group’s reported net assets as at 31 December 2015 would have been US$324.5 million rather than US$369.4 million. The impacts on the financial position of the Group are disclosed below: Non-current assets Biological assets Property, plant and equipment Non-current liabilities Deferred tax liabilities Issued capital and reserves attributable to owners of the parent Retained earnings Non-controlling interests Reported as at 31 Dec 2015 $000 Adjustments $000 Financial position after adjustments $000 179,010 219,990 (179,010) 124,644 - 344,634 (28,932) 2,314 (26,618) (504,892) (82,607) 44,847 7,205 (460,045) (75,402) Annual Report 2015 | Anglo-Eastern Plantations Plc 65 65 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. 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. The Company controls a subsidiary if all three of the following elements are present; power over the subsidiary, exposure to variable returns from the subsidiary, and the ability of the investor to use its power to affect those variable returns. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date control ceases. 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 Dollar. The presentation currency for the consolidated financial statements is also US Dollar, 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 Dollar 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, biomass products and other income of an operating nature. Sales of CPO, palm kernel, shell nut, biomass products 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. Annual Report 2015 | Anglo-Eastern Plantations Plc 66 66 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Notes to the Consolidated Financial Statements 1 Accounting policies - continued Plantation development Plantation development comprises cost of planting and development on oil palm and other plantation crops. Costs of new planting and development of plantation crops are capitalised from the stage of land clearing up to the stage of maturity or subject to certificate of Land Exploitation Rights (HGU) being obtained, whichever is earlier. The costs of immature plantations consist mainly of the accumulated cost of land clearing, planting, fertilising and maintaining the plantation, borrowing costs and other indirect overhead costs up to the time the trees are harvestable and to the extent appropriate. Tax UK and foreign corporation tax is provided at amounts expected to be paid or recovered using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date. The directors consider that the carrying amount of tax receivables approximates its fair value. 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. Fair value measurement A number of assets and liabilities included in the Group’s financial statements require measurement at, and/or disclosure of, fair value. The fair value measurement of the Group’s financial and non-financial assets and liabilities utilises market observable inputs and data as far as possible. Inputs used in determining fair value measurements are categorised into different levels based on how observable the inputs used in the valuation technique utilised are (the ‘fair value hierarchy’): • • • Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 - inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; Level 3 - unobservable inputs for the asset or liability. The classification of an item into the above levels is based on the lowest level of the inputs used that has a significant effect on the fair value measurement of the item. Transfers of items between levels are recognised in the period they occur. The Group measures the following assets at fair value: • Biological assets (note 10) • Revalued land - Property, plant and equipment (note 10) For more detailed information in relation to the fair value measurement of the items above, please refer to the applicable notes. Property, plant and equipment 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. The Indonesian authorities have granted certain land exploitation rights and operating permits for the estates. The land rights are usually renewed without significant cost subject to compliance with the laws and regulations of Indonesia. Therefore, the Group has classified the land rights as leasehold land and accounted for as an indefinite finance lease. The leasehold land is recognised at cost initially and is not depreciated. The 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 Annual Report 2015 | Anglo-Eastern Plantations Plc 67 67 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Notes to the Consolidated Financial Statements 1 Accounting policies - continued Biological assets Biological assets comprise oil palm trees and nurseries. The biological process commences with the initial preparation of land and planting of seedlings and ceases with the delivery of crop in the form of 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 for those held at cost. Land rights are held at fair value and revalued at the balance sheet date. 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. 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. Annual Report 2015 | Anglo-Eastern Plantations Plc 68 68 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Notes to the Consolidated Financial Statements 1 Accounting policies - continued 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 Defined contribution schemes Contributions to defined contribution pension schemes are charged to the consolidated income statement in the year to which they relate. Defined benefit schemes The Group operates a number of defined benefit schemes in respect of its Indonesian operations. These schemes’ surpluses and deficits are measured at: • • • • The fair value of plan assets at the reporting date; less Plan liabilities calculated using the projected unit credit method discounted to its present value using yields available on high quality corporate bonds that have maturity dates approximating to the terms of the liabilities; plus Unrecognised past service costs; less The effect of minimum funding requirements agreed with scheme trustees. Remeasurements of the net defined obligation are recognised directly within equity. The remeasurements include: • • • Actuarial gains and losses; Return on plan assets (interest exclusive); Any asset ceiling effects (interest inclusive). Service costs are recognised in comprehensive income, and include current and past service costs as well as gains and losses on curtailments. Net interest expense / (income) is recognised in comprehensive income, and is calculated by applying the discount rate used to measure the defined benefit obligation / (asset) at the beginning of the annual period to the balance of the net defined benefit obligation / (asset), considering the effects of contributions and benefit payments during the period. Gains or losses arising from changes to scheme benefits or scheme curtailment are recognised immediately in comprehensive income. Settlements of defined benefit schemes are recognised in the period in which the settlement occurs. 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. Annual Report 2015 | Anglo-Eastern Plantations Plc 69 69 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Notes to the Consolidated Financial Statements 1 Accounting policies - continued Critical accounting estimates and judgements The preparation of the Group financial statements in conformity with IFRS requires the use of estimates and assumptions that affect the reported assets and liabilities and reported revenue and expenses. Actual results could differ from those estimates and accordingly they are reviewed on an on-going basis. The main areas in which estimates are used are: fair value of biological assets, property, plant and equipment, deferred tax and retirement benefits. Revisions to accounting estimates are recognised in the period in which the estimate is revised or the revision affects only that period, or in the period of revision and future periods if the revision affects both current and future periods. Assumptions regarding the valuation of biological assets, property, plant and equipment are set out in note 10. 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 16 and retirement benefits in note 17. 2 Revenue Sales of produce: - CPO - Rubber - Shell nut - Biomass products 3 Finance income and expense Finance income Interest receivable on: Credit bank balances and time deposits Finance expense Interest payable on: Development loans - (note 14) Net finance income recognised in income statement - 2015 $000 193,364 1,075 1,685 327 196,451 2014 $000 247,868 1,836 1,554 - 251,258 2015 $000 2014 $000 6,683 7,276 (2,010) 4,673 (2,019) 5,257 Annual Report 2015 | Anglo-Eastern Plantations Plc 70 70 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Notes to the Consolidated Financial Statements 4 Profit before tax Profit before tax is stated after charging Depreciation (note 10) Exchange losses / (gains) Operating lease expense - Property Professional fees Staff costs (note 6) Remuneration received by the group’s auditor or associates of the group’s auditor: - Audit of parent company - Audit of consolidated financial statement - Audit related assurance service - Audit of UK subsidiaries Total audit services Audit of overseas subsidiaries - Malaysia - Indonesia Total audit services Total auditors’ remuneration 5 Segment information 2015 $000 6,768 2,354 523 1,086 29,007 5 157 7 13 182 19 66 85 267 2014 $000 6,833 (852) 574 441 28,881 6 159 7 - 172 22 75 97 269 Measurement of operating segment profit or loss, assets and liabilities The Group evaluates segmental performance on the basis of profit or loss from operations calculated in accordance with IFRS but excluding non-recurring losses, such as share based payments. Inter-segment transactions are made based on terms mutually agreed by the parties to maximise the utilisation of Group’s resources at a rate acceptable to local tax authorities. This policy was applied consistently throughout the current and prior period. The Group’s assets are allocated to segments based on geographical location. Annual Report 2015 | Anglo-Eastern Plantations Plc 71 71 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. 7 2 3 5 7 0 , 1 5 8 6 , 1 4 6 3 , 3 9 1 1 5 4 , 6 9 1 7 4 0 5 4 , ) 1 2 1 , 4 6 ( ) 4 7 0 , 9 1 ( ) 8 6 7 , 6 ( - 5 4 6 , 5 6 6 3 , 3 4 5 6 7 6 , 0 1 4 5 5 5 8 3 , 6 3 8 , 1 4 5 5 , 1 8 6 8 , 7 4 2 8 5 2 , 1 5 2 4 5 9 4 8 , ) 8 1 7 , 3 3 ( 6 3 2 1 5 , - ) 3 3 8 , 6 ( ) 8 3 5 , 2 1 ( 4 6 5 , 7 3 6 3 4 7 , 5 8 4 4 5 7 9 4 , 2 7 - - - - - - ) 3 4 0 , 1 ( ) 3 4 0 , 1 ( - 2 8 2 ) 5 0 1 ( 4 9 2 , 4 3 9 1 , 1 - - - - - - ) 9 6 3 ( ) 9 6 3 ( - 4 9 2 ) 7 8 2 ( ) 8 8 ( ) 3 3 2 ( ) 1 2 3 ( ) 8 4 ( ) 2 9 1 ( 7 5 1 , 1 1 4 1 3 2 0 1 2 , 3 8 0 7 1 , - 2 3 5 2 , 4 5 5 2 , 4 5 5 2 ) 3 0 1 , 2 ( ) 8 4 8 , 1 ( ) 6 4 2 ( 2 6 9 7 3 4 - 9 7 2 , 4 3 9 1 , 1 7 1 1 8 9 3 5 2 , 4 3 8 8 1 , 3 2 3 , 6 4 ) 3 3 0 , 4 6 ( ) 0 1 7 , 7 1 ( ) 6 7 5 6 ( , ) 9 3 4 1 ( , 8 9 7 5 , 9 4 0 , 8 1 5 0 0 4 , 2 9 3 4 1 4 , 8 3 6 3 8 1 , 2 5 5 1 , 5 1 6 , 3 4 2 3 0 0 , 7 4 2 8 6 0 , 5 8 ) 5 1 6 , 1 3 ( 3 5 4 , 3 5 ) 7 8 5 6 ( , ) 6 5 2 1 ( , ) 8 8 6 , 2 1 ( 7 8 8 , 7 0 6 6 1 7 , 5 6 4 7 3 6 , 9 4 ) 5 5 5 , 4 ( ) 2 8 4 , 3 ( ) 7 3 0 , 8 ( ) 9 2 2 , 1 ( ) 7 2 4 , 1 ( 7 1 5 , 3 6 9 4 4 9 , 4 4 9 9 8 , 5 2 9 7 1 , - 2 6 1 4 , 7 8 1 4 , 7 ) 6 2 2 , 1 ( ) 9 4 4 3 1 ( , ) 5 7 6 4 1 ( , ) 8 5 9 ( ) 3 4 4 , 1 ( 8 6 2 , 4 6 9 0 5 9 , 7 7 4 4 8 , 2 3 9 6 2 , l a t o T 0 0 0 $ K U 0 0 0 $ 0 0 0 $ i a s y a a M l l t a o T 0 0 0 $ i a s e n o d n I 0 0 0 $ t n a n a m a K i l - - - 7 2 3 5 7 0 1 , 5 8 6 1 , - - 7 8 2 3 1 , 3 2 3 2 , 0 9 1 6 2 4 1 1 , 2 3 1 , 3 9 1 3 , 3 9 1 3 1 5 1 1 , 0 0 0 $ a k g n a B u a R i 0 0 0 $ 0 0 0 $ h t u o S a r e t a m u S 0 0 0 $ l u u k g n e B 0 0 0 $ h t r o N a r e t a m u S 1 - - 8 3 9 3 3 1 ) 9 4 5 ( ) 6 3 5 ( ) 6 2 ( - 7 3 1 8 8 2 0 1 , 3 3 1 0 1 , 2 1 0 1 , - - - - ) 7 5 ( ) 7 2 6 ( ) 4 8 6 ( ) 3 3 ( - 1 7 1 0 3 9 3 9 0 3 1 , 9 5 8 2 1 , 2 7 - - 9 2 1 , 7 3 5 2 2 4 5 3 , 7 3 ) 8 2 1 , 1 ( 7 3 6 , 5 1 9 0 5 , 4 1 ) 6 3 6 ( ) 4 2 6 ( ) 6 8 5 , 3 ( 3 8 8 , 1 7 8 8 2 , 7 3 8 5 6 , 2 - 7 3 2 1 9 , 4 4 9 4 9 , 4 4 4 9 6 7 7 4 , 9 1 1 7 1 , 0 2 ) 2 7 5 ( ) 1 7 6 ( ) 9 8 5 , 4 ( 1 7 3 , 4 8 4 6 8 , 9 3 4 2 2 , 1 - - 7 3 0 1 7 4 ) 6 4 1 , 1 ( ) 5 7 5 , 6 1 ( ) 1 2 7 , 7 1 ( ) 5 2 3 ( ) 5 6 7 ( 8 1 5 , 5 3 1 4 , 2 4 7 2 3 , 1 4 9 1 2 , 4 - 3 2 0 1 5 0 1 ) 2 5 5 ( ) 5 5 2 , 5 ( ) 7 0 8 , 5 ( ) 1 1 4 ( ) 7 5 2 ( 8 6 9 , 1 2 2 9 , 8 5 2 5 4 , 7 5 2 9 4 , 5 - - 1 6 6 , 3 7 2 1 8 3 7 4 , 4 7 7 2 4 , 7 1 ) 2 8 5 , 1 1 ( 5 4 8 , 5 ) 8 9 0 , 2 ( ) 9 6 1 , 2 ( ) 8 5 1 ( 7 2 6 , 3 7 4 2 , 3 3 1 8 1 3 , 0 0 1 - 7 9 6 6 8 8 , 5 9 3 8 5 , 6 9 ) 6 8 8 , 1 ( 5 9 7 , 0 3 9 0 9 , 8 2 ) 8 2 2 , 2 ( ) 1 3 3 , 2 ( ) 5 7 7 , 5 ( 5 4 8 , 4 0 3 7 , 3 5 1 3 8 4 , 1 2 1 7 2 3 3 1 5 5 7 0 , 1 8 7 9 , 7 6 3 9 8 , 9 6 7 4 9 , 8 1 ) 7 1 7 , 0 3 ( ) 0 7 7 , 1 1 ( ) 2 6 2 , 2 ( 0 7 3 6 4 5 , 3 3 7 9 , 8 2 2 7 , 5 6 1 0 9 3 , 3 1 1 6 3 8 , 1 9 9 2 , 5 9 3 1 8 8 4 9 , 7 9 1 3 6 , 6 3 ) 2 9 0 , 1 1 ( 9 3 5 , 5 2 ) 5 8 3 , 2 ( 6 4 4 , 3 ) 1 3 7 , 8 ( 5 7 6 , 2 0 2 1 8 5 , 9 4 1 4 1 2 , 0 1 t n e m e t a t s e m o c n i d e t a d i l o s n o c r e p x a t e r o f e b r a e y e h t r o f s s o L s n o i t i d d A - s t e s s A t n e r r u C - n o N s t e s s A t n e r r u C - n o N s t e s s A l a t o T ) l a n r e t x e l l a ( e u n e v e r s e a s l l a t o T 4 1 0 2 s n o i t c a s n a r t t n e m g e s - r e t n I n o i t a i c e r p e D x a t e m o c n I r e b b u R O P C - - e m o c n i r e h t O e u n e v e r l a t o T t n e m e t a t s e m o c n i d e t a d i l o s n o c r e p x a t e r o f e b r a e y e h t r o f t i f o r P x a t e r o f e b ) s s o L ( / t i f o r P t n e m e v o m A B s n o i t i d d A - s t e s s A t n e r r u C - n o N s t e s s A t n e r r u C - n o N s t e s s A l a t o T s n o i t c a s n a r t t n e m g e s - r e t n I i n o i t a c e r p e D x a t e m o c n I c l P s n o i t a t n a l P n r e t s a E - o l g n A | 5 1 0 2 t r o p e R l a u n n A o s n o C e h t o t s e t o N d e u n i t n o c - n o i t a m r o f n i t n e m g e S 5 ) l a n r e t x e l l a ( e u n e v e r s e l a s l a t o T 5 1 0 2 s t c u d o r p s s a m o B i r e b b u R O P C - - - e m o c n i r e h t O e u n e v e r l a t o T x a t e r o f e b ) s s o L ( / t i f o r P t n e m e v o m A B s t n e m e t a t S l a i i c n a n F d e t a d i l About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. . r a e y r o i r p e h t n i s a e m a s e h t e r a s r e m o t s u c r u o f p o t e h t f o e e r h T i l . s s a b y h t n o m a n o d e m r o f r e p e r a s r e d n e t s a s r e m o t s u C e s e h t n o e c n a i l e r h g u o h t l A . w o e b l s a i d e d v o r p s i e u n e v e r e s e h t f o i s s y a n a l n A . e u n e v e r l a t o t ’ s p u o r G e h t f o ) m 1 . 2 5 1 $ : 4 1 0 2 ( m 2 . 7 0 1 $ i l y e t a m x o r p p a t n e s e r p e r t n e m g e s i n a s e n o d n I e h t f o s r e m o t s u c 4 m o r f e u n e v e r , 5 1 0 2 r a e y n I d e u n i t n o c - n o i t a m r o f n i t n e m g e S 5 s t n e m e t a t S l a i i c n a n F d e t a d i l o s n o C e h t o t s e t o N l a t o T 0 0 0 $ 9 6 0 , 5 3 2 3 6 , 2 3 1 5 8 , 9 1 3 3 6 , 9 1 5 8 1 , 7 0 1 1 4 9 , 7 4 2 9 4 , 5 4 7 7 4 , 3 3 8 6 1 , 5 2 8 7 0 , 2 5 1 % 9 . 7 1 6 . 6 1 1 . 0 1 0 . 0 1 6 . 4 5 1 . 9 1 1 . 8 1 3 . 3 1 1 . 0 1 6 . 0 6 - - - - - - - - - - K U 0 0 0 $ - - - - - - - - - - % % - - - - - - - - - - - - - - - - - - - - . s n o i t i d n o c 0 0 0 $ 0 0 0 $ 0 0 0 $ i a s y a a M l l t a o T i a s e n o d n I n a t n a m a K i l 0 0 0 $ a k g n a B u a R i 0 0 0 $ 0 0 0 $ h t u o S a r e t a m u S 0 0 0 $ l u u k g n e B 0 0 0 $ h t r o N a r e t a m u S 9 6 0 , 5 3 2 3 6 , 2 3 1 5 8 9 1 , 3 3 6 , 9 1 5 8 1 7 0 1 , 1 4 9 , 7 4 2 9 4 , 5 4 7 7 4 3 3 , 8 6 1 , 5 2 8 7 0 2 5 1 , % 9 . 7 1 6 . 6 1 1 . 0 1 0 . 0 1 6 . 4 5 1 . 9 1 1 . 8 1 3 . 3 1 1 . 0 1 6 . 0 6 - - - - - - - - - - - - - - - - - - - - % % - - - - - - - - - - - - - - - - - - - - - - 4 0 0 , 2 8 8 0 , 3 1 2 9 0 , 5 1 - 7 5 5 , 2 1 9 3 8 , 1 1 2 7 , 1 1 7 1 1 , 6 2 % - - 7 . 6 0 . 1 7 . 7 - 0 . 5 7 . 0 7 . 4 4 . 0 1 - - - - - - - - - - % - - - - - - - - - - - - 9 6 0 , 5 3 3 9 1 , 5 1 2 6 2 , 0 5 - 1 4 9 , 7 4 - 1 0 5 , 4 2 2 4 4 , 2 7 % - - 7 . 7 9 . 7 1 6 . 5 2 - - 8 . 9 1 . 9 1 9 . 8 2 - 4 5 6 , 2 4 4 5 , 9 1 3 3 6 , 9 1 1 3 8 , 1 4 - 7 3 1 , 7 5 3 9 , 2 3 7 4 4 , 3 1 9 1 5 , 3 5 % - 9 . 9 4 . 1 0 . 0 1 3 . 1 2 - 1 . 3 1 8 . 2 4 . 5 3 . 1 2 r e v o o n s i e r e h t , e u n e v e r l a t o t p u o r G e h t f o % 0 1 r e v o e r a 4 o t 1 r e m o t s u C 1 r e m o t s u C 2 r e m o t s u C 3 r e m o t s u C 4 r e m o t s u C 5 1 0 2 1 r e m o t s u C 2 r e m o t s u C 3 r e m o t s u C 4 r e m o t s u C 4 1 0 2 1 r e m o t s u C 2 r e m o t s u C 3 r e m o t s u C 4 r e m o t s u C 5 1 0 2 1 r e m o t s u C 2 r e m o t s u C 3 r e m o t s u C 4 r e m o t s u C 4 1 0 2 l a r u t l u c i r g a t n e r e f f i d e v a h o t s d n e t a e r a h c a e s a , a e r a l i a c h p a r g o e g y b s i ’ t r o p e r s p u o r G e h T . l m a p l i o o t d e t o v e d e r a s n o i t a r e p o ’ s p u o r G e h t l l a , r e b b u r f o t n u o m a l l a m s a r o f e v a S 3 7 3 7 c l P s n o i t a t n a l P n r e t s a E - o l g n A | 5 1 0 2 t r o p e R l a u n n A About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Notes to the Consolidated Financial Statements 6 Employees' and Directors' remuneration Average numbers employed (primarily overseas) during the year: - full time - part-time field workers Staff costs (including Directors) comprise: Wages and salaries Social security costs Retirement benefit costs - Indonesia (note 17) - Malaysia 2015 Number 5,832 10,980 16,812 2015 $000 26,691 880 1,378 58 29,007 2014 number 5,522 9,687 15,209 2014 $000 26,725 939 1,150 67 28,881 The information required by the Companies Act and the Listing Rules of the Financial Conduct Authority is contained in the Directors' remuneration report on pages 47 - 51 of which certain information on pages 50- 51 has been audited. Directors emoluments Remuneration expense for key management personnel 2015 $000 240 2,289 2014 $000 248 2,273 The Executive Director, Non-Executive Directors and senior management (general managers and above) are considered to be the key management personnel. The remuneration of Executive Director and Non-Executive Directors is shown on page 51. 7 Tax expense Foreign corporation tax - current year Foreign corporation tax - prior year Deferred tax adjustment - origination and reversal of temporary differences Total tax charge for year 2015 $000 15,069 208 (20,922) (5,645) 2014 $000 22,855 32 (10,349) 12,538 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 20%. 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 20% (2014: 21%) Effects of: Rate adjustment relating to overseas profits Group accounting adjustments not subject to tax Expenses not allowable for tax Income not subject to tax Under provision of prior year income tax (Over) / Under provision of prior year deferred tax assets Deferred tax assets not recognised Total tax charge for year Annual Report 2015 | Anglo-Eastern Plantations Plc 2015 $000 (19,074) (3,815) (1,051) (542) 1,304 (1,737) 208 (40) 28 (5,645) 2014 $000 51,236 10,760 1,845 (27) 184 (309) 32 53 - 12,538 74 74 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Notes to the Consolidated Financial Statements 8 Earnings per ordinary share (EPS) Profit for the year attributable to owners of the Company before BA adjustment Net BA adjustment Earnings used in basic and diluted EPS Weighted average number of shares in issue in year - used in basic EPS - dilutive effect of outstanding share options - used in diluted EPS Basic EPS before BA adjustment Basic EPS after BA adjustment Dilutive EPS before BA adjustment Dilutive EPS after BA adjustment 9 Dividends Paid during the year Final dividend of 3.0p per ordinary share for the year ended 31 December 2014 (2013: 3.0p) Proposed final dividend of 1.75p per ordinary share for the year ended 31 December 2015 (2014: 3.0p) 2015 $000 27,505 (42,402) (14,897) Number ‘000 39,636 - 39,636 69.39cts (37.58)cts 69.39cts (37.58)cts 2015 $000 1,869 1,028 2014 $000 52,422 (21,660) 30,762 Number ‘000 39,636 43 39,679 132.26cts 77.61cts 132.12cts 77.53cts 2014 $000 1,998 1,854 The proposed dividend for 2015 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 2015 | Anglo-Eastern Plantations Plc 75 75 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. E P P l t a o T s s e r g o r p n i n o i t c u r t s n o C l , t n a p e c i f f O , t l n a p e a t s E t l i e c h e v & t n e m p u q e i l i e c h e v & t n e m p u q e i s g n d i l i u B l a t o T 0 0 0 $ ) 2 6 5 0 1 ( , 1 2 0 8 0 5 , - ) 1 1 3 7 ( , ) 1 2 0 6 2 ( , 8 2 7 , 5 2 6 2 0 , 4 2 ) 9 8 0 1 ( , ) 9 2 6 3 5 ( , 2 9 7 2 1 5 , - ) 1 2 2 5 2 ( , ) 8 9 9 3 3 ( , 5 4 1 , 9 1 0 1 4 , 9 1 ) 6 6 5 1 ( , ) 8 3 6 1 ( , 0 0 0 $ 0 0 0 $ ) 2 4 1 6 ( , 6 8 1 2 4 2 , - - 6 8 3 4 3 4 3 4 6 , 5 2 ) 9 8 0 1 ( , ) 8 1 0 9 2 ( , 8 1 4 1 6 2 , - - - 7 7 6 ) 6 7 7 ( 2 0 9 4 , 2 8 0 , 9 1 - - ) 9 7 ( 7 7 0 2 , ) 7 5 3 5 ( , - 2 2 3 7 5 0 6 , 0 2 0 3 , ) 8 6 2 ( ) 7 7 4 7 ( , - - 3 6 6 2 0 4 5 , - - 0 0 0 $ ) 5 4 ( 6 9 2 , 1 - - - - 8 5 1 ) 7 0 2 ( ) 6 6 1 ( 2 0 2 , 1 - - - - 8 5 ) 6 ( - 5 9 2 5 3 4 , 5 8 2 6 5 2 , 0 4 3 1 , 8 8 0 , 1 4 4 8 , 8 2 ) 7 7 8 ( 3 3 8 6 , ) 2 6 7 ( ) 3 8 8 3 ( , 8 3 0 , 4 3 - ) 8 2 6 ( 8 6 7 6 , 5 9 2 , 6 3 4 4 8 , 8 2 ) 7 7 8 ( 3 3 8 6 , ) 2 6 7 ( ) 3 8 8 3 ( , 8 3 0 , 4 3 - ) 8 2 6 ( 8 6 7 6 , 5 9 2 , 6 3 - - - - - - - - - - ) 8 1 7 3 3 ( , ) 1 2 1 4 6 ( , - - - - 7 7 1 9 7 4 , 4 5 7 8 7 4 , 0 0 0 9 9 3 , 2 4 3 3 1 2 , 0 8 3 7 2 2 , 0 9 9 9 1 2 , 7 7 0 2 , 0 2 0 3 , 0 4 3 1 , 6 3 9 ) 5 3 ( 9 6 1 ) 2 7 1 ( 8 9 8 ) 4 3 1 ( - ) 6 ( 5 3 1 3 9 8 0 6 3 4 0 3 5 9 1 - - 1 - - 0 0 0 $ ) 8 7 3 ( 3 4 6 , 4 1 - 0 4 8 1 , ) 1 9 5 ( ) 1 2 7 1 ( , 5 1 5 , 5 1 - - 1 1 - 2 0 7 ) 3 5 3 ( - 4 5 1 , 4 1 1 7 1 9 , ) 5 7 2 ( 3 2 7 1 , ) 8 3 4 ( ) 7 8 1 1 ( , 1 8 1 , 0 1 1 1 ) 5 8 2 ( 2 3 4 1 , 2 5 1 , 0 1 2 7 4 5 , 4 3 3 5 , 2 0 0 4 , - - 0 0 0 $ ) 4 9 8 ( 6 5 3 , 5 6 3 7 , 4 3 - - - 4 6 ) 9 1 2 ( ) 1 3 3 , 4 ( 7 7 4 , 7 3 4 0 , 9 3 - - - 2 3 - ) 9 1 1 ( 2 0 1 , 2 4 5 8 1 , 7 ) 5 5 2 ( 4 4 2 , 2 ) 9 9 ( 5 7 0 , 9 ) 6 6 0 , 1 ( - ) 0 6 ( 0 7 2 , 2 9 1 2 , 0 1 1 5 5 , 7 2 8 6 9 , 9 2 3 8 8 , 1 3 - - d n a L 0 0 0 $ l d o h e s a e L l l i M 0 0 0 $ ) 4 9 4 , 3 ( 1 7 8 , 9 4 1 ) 2 5 2 , 1 ( 3 6 5 , 9 3 - - - - 6 8 3 9 1 2 , 4 ) 6 3 9 , 6 1 ( 2 8 9 , 0 5 1 - - - - 4 1 2 0 9 , 4 7 2 7 , 1 - - - 5 0 3 , 3 1 ) 2 7 ( 2 1 1 ) 1 1 ( ) 6 9 5 , 5 ( 6 5 6 , 1 5 - - - - ) 8 9 2 ( 1 6 1 , 1 1 9 8 6 , 0 4 1 2 1 9 , 6 5 - - - - - - - - - - - - 1 7 8 , 9 4 1 2 8 9 , 0 5 1 9 8 6 , 0 4 1 2 5 5 , 1 1 ) 3 5 ( ) 2 1 3 ( 7 9 6 , 2 ) 6 9 4 , 1 ( 4 8 8 , 3 1 ) 1 1 ( ) 7 7 2 ( 1 3 9 , 2 1 3 0 , 5 1 1 1 0 , 8 2 2 7 7 , 7 3 1 8 8 , 1 4 - - l i a c g o o B l i 0 0 0 $ s t e s s a ) 0 2 4 , 4 ( 5 3 8 , 5 6 2 - - ) 7 9 6 , 7 ( ) 1 2 0 , 6 2 ( 5 8 2 9 5 , 3 2 4 7 3 , 1 5 2 ) 1 1 6 , 4 2 ( - ) 1 2 2 , 5 2 ( ) 0 0 9 , 8 3 ( 3 6 3 3 7 , 8 1 ) 0 9 7 ( ) 8 3 6 , 1 ( 0 1 0 , 9 7 1 - - - - - - - - - - 5 3 8 , 5 6 2 4 7 3 , 1 5 2 0 1 0 , 9 7 1 ) 8 1 7 , 3 3 ( ) 1 2 1 , 4 6 ( s t e s s a t s e v r a h o t e u d e s a e r c e D l s n o i t a s n a r t e g n a h c x E n o i t a c i f i s s a c e R l 4 1 0 2 y r a u n a J 1 t A n o i t a u a v l r o t s o C s n o i t a u a v e R l s n o i t i d d A d e s i l a t i p a c s t s o c t n e m p o e v e D l f f o n e t t i r W / l a s o p s D i d e s i l a t i p a c s t s o c t n e m p o l e v e D f f o n e t t i r W / s l a s o p s D i m l a p l i o o t r e b b u r f o n o i s r e v n o C 5 1 0 2 r e b m e c e D 1 3 t A s n o i t a l s n a r t e g n a h c x E 4 1 0 2 r e b m e c e D 1 3 t A n o i t a c i f i s s a l c e R t s e v r a h o t e u d e s a e r c e D s n o i t a u l a v e R s n o i t i d d A l l i i a c g o o b f o e u a v l r i a f n i s e g n a h c m o r f g n s i r a s s o i l t e N 4 1 0 2 r e b m e c e D 1 3 t A 5 1 0 2 r e b m e c e D 1 3 t A s n o i t a l s n a r t e g n a h c x E 4 1 0 2 r e b m e c e D 1 3 t A f f o n e t t i r W / l a s o p s D i 5 1 0 2 r e b m e c e D 1 3 t A r a e y e h t r o f e g r a h C n o i t a c i f i s s a l c e R 3 1 0 2 r e b m e c e D 1 3 t A 4 1 0 2 r e b m e c e D 1 3 t A 5 1 0 2 r e b m e c e D 1 3 t A t n u o m a g n y r r a C i t n e m r i a p m i d n a i n o i t a c e r p e d d e t a u m u c c A l l s n o i t a s n a r t e g n a h c x E r a e y e h t r o f e g r a h C 4 1 0 2 y r a u n a J 1 t A f f o n e t t i r W / l a s o p s D i s t n e m e t a t S l a i i c n a n F d e t a d i l o s n o C e h t o t s e t o N i t n e m p u q e d n a t n a l p , y t r e p o r p , s t e s s a l a c i g o o B l i 0 1 6 7 6 7 c l P s n o i t a t n a l P n r e t s a E - o l g n A | 5 1 0 2 t r o p e R l a u n n A About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Notes to the Consolidated Financial Statements 10 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) 2015 900,000 101,019 90,924 2014 857,000 132,342 121,850 As referred to on page 76, 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 2015 $000 25,221 65,703 90,924 2014 $000 26,021 95,829 121,850 The decrease of $25,221,000 (2014: $26,021,000) from harvest was included in 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 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 arising in the income statement from changes in fair value of biological assets 2015 $000 (25,221) (38,900) (64,121) 2014 $000 (26,021) (7,697) (33,718) The Group engaged Muttaqin Bambang Purwanto Rozak Uswatun & Rekan (MBPRU) with its head office located in Jakarta, Indonesia to undertake the valuation of biological assets for both financial years ended 31 December 2014 and 2015. Except for an adjustment on discount rate, CPO price and the measurement of the notional rent which are determined by the Directors, the valuation was carried out independently by MBPRU who has the appropriate professional qualifications and recent experience in the location and category of the properties being valued. Further information of MBPRU can be obtained from ‘www.kjpp-mbpru.com’. MBPRU was also engaged to undertake the land valuation for the Group. For the year ended 31 December 2015, valuation was done on land of nine subsidiaries. The increase per hectare obtained by comparing the current valuation against the year 2014’s carrying amount were then applied to the 2014 land value of the remaining companies in the same geographical location to derive the fair value of land in 2015. In the year 2014, independent land valuation was undertaken for 11 subsidiary companies in Indonesia. The increase per hectare obtained by comparing the year 2014 valuation against the valuation undertaken in year 2013 were then applied to the 2013 land value of the remaining subsidiary companies in the same geographical location to derive the fair value of land in 2014. Unplantable land was excluded in this exercise since it has zero value. Land is valued on a rotational basis and all land is valued by qualified valuers every two years. Had the revalued land been measured on a historical cost basis, their net book value would have been $42,993,000 (2014: $47,317,000). Annual Report 2015 | Anglo-Eastern Plantations Plc 77 77 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Notes to the Consolidated Financial Statements 10 Biological assets, property, plant and equipment - continued The methodology of the biological asset valuations was using discounted cash flow (“DCF”) over the expected 20-year economic life of the asset. The assumption applied in the valuation were, inter alia, an assumed CPO selling price of $625/mt (2014: $700/mt), discount rate of 16.8% (2014: 16.4%) and notional rent equivalent to 9% (2014: 9%) of the value of planted land. The discount rates were determined by the Directors based on their assessment of various risks including financial, business and country risk of where the plantations are located as well as taking into account the Company’s weighted average cost of capital. The CPO price is normally based on the 10-year average (2014: 10-year average) rounded to the nearest $25 based on historical widely-quoted commodity price for CPO and represents the Directors’ best estimate of the price sustainable over the longer term. However the CPO price for 2015 remained weak. It ended the year at $560/mt far lower than the 10-year average CPO price at $750/mt, therefore a benchmarking exercise was made to ensure the directors’ best estimate of the price sustainable over the longer term is being used. The directors adopted the recommendation of the valuer who has suggested applying a ratio of 70% of the current CPO price and 30% of the historical price (10-year average) given the assumption to calculate CPO price over the past 10 years is no longer considered to be appropriate. As a result, the directors adopted the CPO price of $625/mt which falls within the valuer’s recommended range of $600/mt to $650/mt and the World Bank forecast of CPO price for 2016 at $600/mt. An inflation rate of 3.4% (2014: 4.0%) was applied to the second to sixth years of the DCF. The notional rent charge is based on key capital market and property indicators in the countries and regions of operations. Details of the information about the fair value hierarchy in relation to biological assets and land at 31 December are as follows: At 31 December 2015 Biological assets Land At 31 December 2014 Biological assets Land Level 1 $000 Level 2 $000 Level 3 $000 Fair value $000 - - - - - - - - 179,010 140,689 179,010 140,689 251,374 251,374 150,982 150,982 There were no items classified under Level 1 and Level 2 and thus there were no transfers between Level 1 and Level 2 during the year. The valuation techniques and significant unobservable inputs used in determining the fair value measurement of biological assets and land, as well as the inter-relationship between key unobservable inputs and fair value, are set out in the table below: Item Valuation approach Inputs used Inter-relationship between key unobservable inputs and fair value Land location Selling prices of comparable land in similar for adjusted differences in key attributes. The valuation model is based on price per hectare. Location, legal title, land area, land type and topography Selling prices of comparable land The higher the selling price, the higher the fair value Biological assets Discounted cash the expected 20-year economic life of the asset flow over CPO selling price Discount rate Notional rent Yield Overhead cost These are qualitative inputs which require significant judgement by professional valuer, MBPRU The higher the CPO selling price, the higher the fair value The higher the discount rate, the lower the fair value The higher the notional rent, the lower the fair value The higher the yield, the higher the fair value The higher the overhead cost, the lower the fair value Annual Report 2015 | Anglo-Eastern Plantations Plc 78 78 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Notes to the Consolidated Financial Statements 10 Biological assets, property, plant and equipment - continued There were no changes to the valuation techniques during the period. The fair value measurement is based on the above items’ highest and best use, which does not differ from their actual use. The following table exhibits the sensitivity of the Group’s biological assets to the fluctuation in CPO price, discount rate, notional rent, CPO yield and overhead cost: 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 A change of notional rent equivalent to 1% of the value of planted land -1% in the value of planted land +1% in the value of planted land A change of 1% in the CPO yield -1% in the CPO yield +1% in the CPO yield A change of 1% in the overhead cost -1% in the overhead cost +1% in the overhead cost 2015 $000 (56,647) 56,670 8,900 (8,207) 4,849 (4,848) (23,117) 23,140 6,272 (6,249) 2014 $000 (54,021) 53,993 14,182 (13,043) 5,191 (5,190) (28,863) 28,835 7,468 (7,496) The estates include $483,000 (2014: $1,321,000) of interest and $4,909,000 (2014: $5,623,000) of overheads capitalised during the year in respect of expenditure on estates under development. The Indonesian authorities have granted certain land exploitation rights and operating permits for the estates. In the case of established estates in North Sumatera these rights and permits expire between 2023 and 2038 with rights of renewal thereafter. As 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 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. Subject to compliance with the laws and regulations of Indonesia, land rights are usually renewed. The cost of renewing the land rights is not significant. The land title of the estate in Malaysia is a long-term lease expiring in 2084. 11 Receivables: non-current Due from non-controlling interests Due from cooperatives under Plasma scheme Due from village smallholder schemes 2015 2014 Book value $000 Fair value $000 Book value $000 Fair value $000 1,193 2,231 231 3,655 924 2,056 213 3,193 1,193 1,557 257 3,007 872 1,397 237 2,506 The non-controlling interests in PT Alno Agro Utama and PT Cahaya Pelita Andhika have acquired their interests on deferred terms (see note 23, Credit risk). Plasma scheme 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 improve their income and welfare. During the year, certain subsidiary companies have funded the plantation development cost of $2,231,000 (2014: $1,557,000) for the land allocated to the cooperatives which will be recoverable from them. Amount due from village smallholder schemes represents expenditure on planting and maintaining to maturity oil palms on communal land owned by 22 (2014: 22) separate villages neighbouring the Group's estates. The fair value disclosed above are for disclosure purposes and all non-current receivables are classified as Level 3 in the fair value hierarchy. Annual Report 2015 | Anglo-Eastern Plantations Plc 79 79 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Notes to the Consolidated Financial Statements 11 Receivables: non-current – continued The valuation techniques and significant unobservable inputs used in determining the fair value measurement of non-current receivables, as well as the inter-relationship between key unobservable inputs and fair value, are set out in the table below: Item Valuation approach Inputs used Inter-relationship between key inputs and fair unobservable value Due from non-controlling interests Based on cash flows discounted using current lending rate of 6% (2014: 6%) Discount rate The higher the discount rate, the lower the fair value from cooperatives Due under Plasma scheme Based on cash flows discounted using an estimated current lending rate of 5.57% (2014: 5.58%) Discount rate The higher the discount rate, the lower the fair value Due smallholder schemes from village Based on cash flows discounted using an estimated current lending rate of 5.57% (2014: 5.58%) Discount rate The higher the discount rate, the lower the fair value 12 Inventories Estate and mill consumables Processed produce for sale 13 Trade and other receivables Trade receivables Other receivables Prepayments and accrued income 2015 $000 5,887 806 6,693 2015 $000 271 4,211 222 4,704 2014 $000 3,183 4,663 7,846 2014 $000 1,538 7,081 188 8,807 The carrying amount of trade and other receivables classified as loans and receivables approximates fair value. 14 Loans and borrowings Non-current Long term loan (a) Long term loan (b) Current Long term loan (a) Long term loan (b) 2015 2014 Book value $000 Fair value $000 Book value $000 Fair value $000 4,000 28,875 32,875 625 1,125 1,750 3,899 28,407 32,306 625 1,125 1,750 4,625 30,000 34,625 313 - 313 4,523 29,505 34,028 313 - 313 Total loans and borrowings 34,625 34,056 34,938 34,341 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 12,750 20,125 32,875 7,784 26,841 34,625 Annual Report 2015 | Anglo-Eastern Plantations Plc 80 80 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Notes to the Consolidated Financial Statements 14 Loans and borrowings – continued (a) (b) 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 repayment 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 to utilise for repayment of 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 2015 was about 5.38% (2014: 5.39%). The loan is repayable from 30 November 2014 to 30 August 2019. 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 repayment 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 2015 was about 5.76% (2014: 5.76%). The loan is repayable from 30 December 2016 to 30 September 2020. The fair value of the items classified as loans and borrowings is disclosed below and is classified as Level 3 in the fair value hierarchy: 2015 2014 Book value $000 Fair value $000 Book value $000 Fair value $000 Loans and borrowings 34,625 34,056 34,938 34,341 The fair value for disclosure purposes has been determined using discounted cash flows. Significant inputs include the discount rate used to reflect the credit risk associated with the Group. The fair value reduces as higher discount rate being used. 15 Trade and other payables Trade payables Other payables Accruals 2015 $000 7,732 2,956 6,718 17,406 2014 $000 7,342 6,027 7,641 21,010 The carrying amount of trade and other payables classified as financial liabilities measured at amortised cost approximates fair value. Annual Report 2015 | Anglo-Eastern Plantations Plc 81 81 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Notes to the Consolidated Financial Statements 16 Deferred tax The movement on the deferred tax account is as shown below: At 1 January Recognised in profit and loss: Tax expense Revaluation of biological assets Recognised in other comprehensive income: Revaluation of leasehold land Retirement benefits Exchange differences At 31 December 2015 $000 (44,368) 4,892 16,030 (1,226) (111) 3,872 (20,911) 2014 $000 (55,298) 1,920 8,429 (96) 170 507 (44,368) Details of the deferred tax liability, amounts recognised in profit or loss and amounts recognised in other comprehensive income are as follows: 2015 Revaluation surplus Retirement benefits Unutilised tax losses Other temporary differences Tax assets / (liabilities) Set off of tax Net tax assets / (liabilities) 2014 Revaluation surplus Retirement benefits Unutilised tax losses Other temporary differences Tax assets / (liabilities) Set off of tax Net tax assets / (liabilities) Asset $000 - 1,127 6,970 - 8,097 (76) 8,021 - 1,106 3,021 - 4,127 (145) 3,982 Liability $000 (28,907) - - (101) (29,008) 76 (28,932) (48,087) - - (408) (48,495) 145 (48,350) Net $000 (28,907) 1,127 6,970 (101) (20,911) - (20,911) (48,087) 1,106 3,021 (408) (44,368) - (44,368) A deferred tax asset has not been recognised for the following items: Unutilised tax losses (Charged)/ credited to profit or loss $000 (Charged)/ credited to equity $000 16,054 249 4,386 233 20,922 - 20,922 8,438 196 1,460 255 10,349 - 10,349 2015 $000 2,842 (1,226) (111) - - (1,337) - (1,337) (96) 170 - - 74 - 74 2014 $000 2,787 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 $3,028,799 (2014: $5,687,714). No liability has been recognised in respect of these differences either 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 2015 | Anglo-Eastern Plantations Plc 82 82 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Notes to the Consolidated Financial Statements 17 Retirement benefits The Group operates two defined benefit schemes in respect of its Indonesian operations in accordance with Indonesia Labour Law No. 13/2003 ("the Law") dated 25 March 2003. The law does not impose funding requirement on Company to create fund asset to pay the defined benefit obligations. The first scheme is defined benefit pension scheme offered to certain employees. This scheme is funded and managed by SKU UKINDO Pension Fund authorised by the Ministry of Finance of the Republic of Indonesia. When an employee reaches normal retirement age, dies or becomes disabled, the Group shall pay the higher of the benefit from the pension scheme and the benefit calculated under the Law. The assets value of the pension scheme is adequate to fund the annual payment of benefits. The Group also established a funding programme through a savings plan managed by PT Asuransi Allianz Life Indonesia for the payment of severance / pension for eligible staff. The assets of the fund are to be used only to settle defined benefit obligations. The assets value of the funding programme is adequate to fund the annual payment of benefits. The scheme is valued by an actuary at the end of each financial year. The major assumptions used by the actuary were: Inflation Rate of increase in wages Rate of return on scheme assets Discount rate 2015 5.0% 8.0% 8.3% 9.0% 2014 5.0% 8.0% 9.0% 8.3% 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. Current service cost Past service cost Service cost - - Net interest expense Total employee benefits expense 2015 $000 1,016 20 342 1,378 2014 $000 905 (38) 283 1,150 Annual Report 2015 | Anglo-Eastern Plantations Plc 83 83 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some rubber through operations in Indonesia and Malaysia. 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- ) 9 4 4 ( ) 9 - 4 4 ( ) 0 7 1 ( ) ) 0 9 - 4 7 4 1 ( ( ) 0 7 1 ( ) ) ) 9 9 0 - 1 1 7 6 6 1 ( ( ( ) 9 1 6 ( ) ) 9 0 7 1 1 6 ( ( ) 1 5 5 , 1 ( ) 1 0 5 0 5 0 , $ 1 ( 0 0 0 $ ) ) e 1 1 0 m 5 5 0 5 5 0 e , , $ h 1 1 c ( ( s ) ) ) 9 9 1 4 4 5 4 4 5 ( ( , 1 ( e e 0 0 d m m 0 0 e 0 0 d e e $ $ n h h u c c s s f n U e e 0 0 d m m 0 0 e 0 0 d e e $ $ n h h u c c s s F 0 0 0 $ ) ) e 4 4 0 m 1 1 0 7 7 0 e , , $ h 4 4 c ( ( s ) 4 1 7 , 4 ( ) 4 0 1 0 7 0 , $ 4 ( ) ) ) 6 6 4 5 5 1 4 4 7 ( ( , 4 ( 8 3 ) 6 5 4 ( ) 6 8 5 3 4 ( 8 3 ) 1 1 4 ( ) ) 1 6 8 5 1 3 4 4 ( ( ) 1 1 4 ( ) ) ) 9 9 1 8 2 2 1 3 8 8 4 ( ( ( ) 9 2 8 ( ) ) 9 1 1 2 4 8 ( ( ) 0 5 1 , 1 ( ) 9 1 6 ( ) 1 3 5 ( 8 9 2 - 8 9 2 ) 8 4 4 , 1 ( ) 9 1 6 ( ) 9 2 8 ( ) 3 2 ( ) 3 2 ( ) 3 2 ( ) 0 3 6 ( ) ) 0 3 3 2 6 ( ( ) 7 2 ( ) 0 3 6 ( ) ) ) 0 7 3 3 2 2 6 ( ( ( ) 7 2 ( ) ) ) ) 0 0 0 7 3 8 8 2 6 6 6 ( ( ( ( ) 0 8 6 ( ) ) 0 7 8 2 6 ( ( ) 0 8 8 8 1 1 6 1 1 ( 8 1 1 3 0 3 3 8 1 0 1 3 3 0 3 3 8 3 3 1 0 6 6 1 3 3 6 4 4 3 3 0 8 8 6 3 4 4 4 8 4 ) ) 5 5 4 3 4 4 8 6 4 4 4 , , 4 4 ( ( ) 5 4 4 , 4 ( ) 5 4 4 8 4 4 , 4 ( ) ) ) 6 6 5 4 1 1 4 0 0 , , , 4 1 1 ( ( ( ) 0 2 ( ) 6 1 0 , 1 ( ) ) 6 0 1 2 0 ( , 1 ( ) 0 2 ( ) ) ) ) 2 2 6 0 4 4 1 2 3 3 0 ( ( ( , 1 ( ) 2 4 3 ( ) ) ) ) 2 8 8 0 4 7 7 2 3 3 3 ( ( , , 1 1 ( ( ) 8 7 3 , 1 ( ) ) 2 8 4 7 3 3 ( , 1 ( 7 2 7 2 7 2 - - ) 3 5 2 ( ) 3 7 5 2 2 ( ) 3 5 2 ( ) 3 - 7 5 2 2 ( ) ) ) 6 6 3 - 5 2 2 2 2 2 ( ( ( ) 6 2 2 ( ) 6 - 2 2 ( ) 6 2 2 2 6 6 2 ( - - 2 6 - 2 6 - 7 7 2 6 5 5 7 5 - 9 9 7 1 1 5 1 1 9 1 1 ) ) 7 7 9 7 7 7 1 5 2 2 1 2 2 ( ( ) 7 7 2 2 ( ) 7 9 7 1 2 1 2 ( , , , , ) ) ) 4 4 7 2 2 7 5 5 2 ( ( 2 ( , - - ) 4 2 5 ( ) 4 - 2 5 ( ) ) ) 7 7 4 - 2 9 9 5 1 1 ( ( ( ) 7 9 1 ( ) ) ) 1 1 7 - 9 2 2 1 7 7 ( ( ( ) 1 2 7 ( ) ) 1 7 9 2 1 7 ( ( ) 0 5 ( ) 0 5 ( ) 0 5 ( ) 7 7 3 ( ) ) 7 0 7 5 3 ( ( ) 7 2 ( ) 7 7 3 ( ) ) ) 7 7 0 7 5 2 3 ( ( ( ) 7 2 ( ) ) ) ) 4 4 7 7 7 5 5 2 3 4 4 ( ( ( ( ) 4 5 4 ( ) ) 4 7 5 2 4 ( ( ) 4 6 6 5 5 5 4 ( 6 6 5 3 0 3 3 6 0 5 3 3 0 3 6 6 3 6 0 5 3 6 5 5 3 0 6 6 3 3 3 5 6 3 ) ) 8 8 6 5 6 6 6 1 1 3 2 2 ( ( ) 8 6 1 2 ( ) 8 5 6 6 1 3 2 ( , , , , ) ) ) 2 2 8 9 9 6 4 4 1 ( ( 2 ( , ) 2 9 4 ( ) 0 2 ( ) ) 2 0 9 2 4 ( ( ) 0 2 ( ) ) ) ) 5 5 2 0 9 4 4 2 4 1 1 ( ( ( ( ) 5 4 1 ( ) ) ) ) 7 7 5 0 5 5 4 2 6 6 1 ( ( ( ( ) 7 5 6 ( ) ) 7 5 4 5 1 6 ( ( - - - - - - - ) 7 2 ( ) 7 - - 2 ( ) 7 2 ( ) ) ) 7 7 7 - 2 2 2 ( ( ( ) 7 2 ( ) ) 7 7 2 2 ( ( ) ) ) 2 2 7 2 7 7 ( ( ( ) 2 7 ( ) 2 3 7 0 ( 3 3 0 3 3 0 3 ) ) ) 2 2 2 3 6 6 7 0 1 1 ( 3 ( ( ) 2 6 1 ( ) 2 3 9 9 6 0 6 6 1 3 ( 9 6 ) 2 6 6 9 6 0 0 6 1 5 5 ( , 3 3 6 0 5 3 6 9 0 6 5 3 , , , - - 6 0 5 3 , - - - - - - - 2 2 7 7 2 2 2 7 2 - 2 2 2 7 7 7 2 2 2 2 7 2 2 2 7 7 2 2 - - - - - - - ) 7 2 ( ) 7 - - 2 ( ) 7 2 ( ) ) ) 7 7 7 - 2 2 2 ( ( ( ) 7 2 ( ) ) 7 7 2 2 ( ( ) ) ) 2 2 7 2 7 7 ( ( ( ) 2 7 ( ) 2 3 7 0 ( 3 3 0 3 3 0 3 ) ) ) 2 2 2 3 6 6 7 0 1 1 ( 3 ( ( ) 2 6 1 ( ) 2 3 9 9 6 0 6 6 1 3 ( 9 6 ) 2 6 6 9 6 0 0 6 1 5 5 ( , , 3 3 6 0 5 , 3 6 9 0 6 5 , 3 - - 6 0 5 , 3 - - - - - - - 2 2 7 7 2 2 2 7 2 - 2 2 2 7 7 7 2 2 2 2 7 2 2 2 7 7 2 2 - - ) 3 2 ( ) 3 2 ( ) 3 2 ( ) 0 3 6 ( ) ) 0 3 3 2 6 ( ( ) 0 3 6 ( ) ) 0 3 - 3 2 6 ( ( ) ) ) 3 3 0 - 3 5 5 6 6 6 ( ( ( ) 3 5 6 ( ) 3 - 5 6 ( ) 3 0 0 5 9 9 6 1 1 ( - - 0 9 1 - 0 9 1 - 5 5 0 9 2 2 1 2 2 5 2 2 - 5 5 5 1 1 2 2 4 4 5 1 4 ) ) 1 1 5 5 5 5 2 1 9 9 2 4 , , 7 7 ( ( ) 1 5 9 , 7 ( ) 1 5 5 1 9 4 , 7 ( ) 0 2 ( ) ) ) 6 6 1 5 1 1 9 0 0 , , , 7 1 1 ( ( ( ) 6 1 0 , 1 ( ) ) 0 6 2 1 0 ( , 1 ( ) 0 2 ( ) ) ) ) 4 4 0 6 1 1 2 1 6 6 0 ( ( ( , 1 ( ) 4 1 6 ( ) ) ) ) 4 0 0 0 1 2 5 5 6 6 6 ( ( , , 1 1 ( ( ) 0 5 6 , 1 ( ) ) 4 0 1 5 6 6 ( , 1 ( 7 2 7 2 7 2 - - ) 3 5 2 ( ) 3 7 5 2 2 ( ) 3 5 2 ( ) 3 - 7 5 2 2 ( ) ) ) 6 6 3 - 5 2 2 2 2 2 ( ( ( ) 6 2 2 ( ) 6 - 2 2 ( ) 6 2 2 2 6 6 2 ( - - 2 6 - 2 6 - 7 7 2 6 5 5 7 5 - 7 9 9 5 1 1 1 1 9 1 1 ) ) 7 7 7 9 7 7 5 1 2 2 1 , , 2 2 ( ( ) 7 7 2 , 2 ( ) 7 9 7 1 2 1 , 2 ( ) ) ) 4 4 7 2 2 7 5 5 2 ( ( , 2 ( - - ) 4 2 5 ( ) 4 - 2 5 ( ) ) ) 7 7 4 - 2 9 9 5 1 1 ( ( ( ) 7 9 1 ( ) ) ) 1 1 7 - 2 2 9 7 7 1 ( ( ( ) 1 2 7 ( ) ) 1 7 9 2 1 7 ( ( - - ) 0 5 ( ) 0 5 ( ) 0 5 ( ) 7 7 3 ( ) ) 7 0 7 5 3 ( ( ) 7 7 3 ( ) ) 7 0 - 7 5 3 ( ( ) ) ) 7 7 7 - 7 2 2 3 4 4 ( ( ( ) 7 2 4 ( ) 7 - 2 4 ( ) 7 8 8 2 2 2 4 1 1 ( - - 8 2 1 - 8 2 1 - 8 8 8 2 6 6 1 1 1 8 6 1 - 6 6 8 9 9 6 2 1 2 6 9 2 ) ) 4 4 6 8 7 7 6 9 6 6 1 2 , , 5 5 ( ( ) 4 7 6 , 5 ( ) 4 6 7 9 6 2 , 5 ( ) ) ) 2 2 4 9 9 7 4 4 6 ( ( , 5 ( ) 2 9 4 ( ) 0 2 ( ) ) 2 0 9 2 4 ( ( ) 0 2 ( ) ) ) ) 7 7 2 0 9 1 1 2 4 4 4 ( ( ( ( ) 7 1 4 ( ) ) ) ) 9 9 7 0 2 2 1 2 9 9 4 ( ( ( ( ) 9 2 9 ( ) ) 9 7 1 2 4 9 ( ( ) 6 6 1 ( ) 6 6 1 ( ) 6 6 1 ( 9 5 6 ) 6 9 6 5 1 6 ( 9 5 6 ) ) ) 6 8 8 9 6 4 4 5 1 ( ( 6 ( ) 8 4 ( ) 8 5 5 9 4 5 4 4 ( 6 4 4 ) 8 5 4 4 ( 4 5 4 4 1 1 5 4 7 7 4 4 4 1 7 4 4 7 2 4 1 7 7 4 2 4 7 2 5 0 1 5 4 1 7 0 7 4 1 2 5 0 1 0 0 5 4 7 5 5 0 2 8 8 1 0 5 8 ) ) 8 8 0 5 2 2 0 5 5 5 1 8 , , 4 4 ( ( ) 8 2 5 , 4 ( ) 8 0 2 5 5 8 , 4 ( 4 1 4 1 - 4 1 8 7 2 8 4 7 1 2 8 7 2 - - 8 4 7 1 2 - 2 2 8 7 9 9 2 2 2 2 9 2 - 2 9 2 - - 4 4 2 9 4 4 2 2 2 4 4 2 - 4 4 2 4 5 - 4 4 4 5 2 4 5 - 8 8 4 9 9 5 2 2 8 9 2 ) ) 8 8 8 4 0 0 9 5 4 4 2 2 2 ( ( ) 8 0 4 2 ( ) 8 8 0 9 4 2 2 ( , , , , ) 0 8 1 ( ) 0 8 1 ( ) 0 8 1 ( 1 8 3 ) 0 1 8 8 1 3 ( 1 8 3 ) ) ) 0 8 8 1 8 4 4 8 1 ( ( 3 ( ) 8 4 ( ) 8 3 3 1 4 8 5 5 ( 3 1 1 ) 8 3 4 5 ( 1 3 5 1 7 7 3 5 2 2 1 2 2 7 2 2 4 7 2 4 7 2 7 2 2 1 5 4 7 2 4 7 1 2 7 5 2 2 1 5 2 2 4 1 7 5 5 5 2 5 5 2 5 5 ) ) 0 0 2 1 2 2 5 5 1 1 5 2 2 ( ( ) 0 2 1 2 ( ) 0 2 2 5 1 5 2 ( , , , , - - - - - - - ) ) 8 8 - - 4 4 ( ( ) 8 4 ( ) ) ) 8 8 8 - 4 4 4 ( ( ( ) 8 4 ( ) ) 8 8 4 4 ( ( ) ) ) 9 9 8 6 6 4 3 3 ( ( ( ) 9 6 3 ( 4 7 2 ) 9 4 6 7 3 2 ( 4 7 2 ) 9 3 1 ( ) ) 9 9 4 6 3 7 3 1 2 ( ( ) 9 3 1 ( ) ) ) 4 4 9 4 3 3 3 7 2 2 1 2 ( ( ( ) 4 3 2 ( ) ) 4 9 6 6 3 3 9 9 1 2 4 4 ( ( , , 3 3 ) 4 6 3 9 2 4 ( , 3 6 9 4 3 , 4 8 ) 8 2 5 , 4 ( ) 8 0 4 2 ( , ) 0 2 1 2 ( , 6 9 4 3 , - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 4 8 4 8 4 8 4 8 4 8 - - - - - - - ) ) 8 8 - - 4 4 ( ( ) 8 4 ( ) ) ) 8 8 8 - 4 4 4 ( ( ( ) 8 4 ( ) ) 8 8 4 4 ( ( ) ) ) 9 9 8 6 6 4 3 3 ( ( ( ) 9 6 3 ( 4 7 2 ) 9 4 6 7 3 2 ( 4 7 2 ) 9 3 1 ( ) ) 9 9 4 6 3 7 3 1 2 ( ( ) 9 3 1 ( ) ) ) 4 4 9 4 3 3 3 7 2 2 1 2 ( ( ( ) 4 3 2 ( ) ) 4 9 6 6 3 3 9 9 1 2 4 4 ( ( , , 3 3 ) 4 6 3 9 2 4 ( , 3 6 9 4 , 3 ) 6 6 1 ( ) 6 6 1 ( ) 6 6 1 ( 9 5 6 ) 6 9 6 5 1 6 ( 9 5 6 ) 6 - - 9 6 5 1 6 ( - - 3 3 9 5 9 9 6 4 4 3 9 4 - 3 9 4 - - 0 0 3 9 4 4 4 8 8 0 4 8 - 0 4 8 4 4 2 - 4 0 4 4 8 2 4 4 2 - 4 4 4 4 8 8 2 0 0 , , 1 1 4 8 0 , 1 ) ) 4 4 4 4 2 2 4 8 0 0 2 0 , , , 8 8 1 ( ( ) 4 2 0 , 8 ( ) 4 4 2 8 0 0 , , 8 1 ( 4 1 4 1 - 4 1 8 7 2 4 8 1 7 2 8 7 2 - - 4 8 1 7 2 - 2 2 8 7 9 9 2 2 2 2 9 2 - 2 9 2 - - 4 4 2 9 4 4 2 2 2 4 4 2 - 4 4 2 4 5 - 4 4 5 4 2 4 5 - 4 8 8 5 9 9 2 2 8 9 2 ) ) 8 8 4 8 0 0 5 9 4 4 2 , , 2 2 ( ( ) 8 0 4 , 2 ( ) 8 8 0 9 4 2 , 2 ( ) 0 8 1 ( ) 0 8 1 ( ) 0 8 1 ( 1 8 3 ) 0 1 8 8 1 3 ( 1 8 3 ) 0 - - 1 8 8 1 3 ( - - 1 1 1 8 0 0 3 2 2 1 0 2 - 1 0 2 - - 6 6 1 0 9 9 2 5 5 6 9 5 - 6 9 5 0 9 1 - 0 6 9 9 5 1 0 9 1 - 6 6 0 8 8 9 7 1 7 6 8 7 ) ) 6 6 6 0 1 1 9 8 6 6 1 7 , , 5 5 ( ( ) 6 1 6 , 5 ( ) 6 6 1 8 6 7 , 5 ( 6 9 4 , 3 ) 4 2 0 , 8 ( ) 8 0 4 , 2 ( ) 6 1 6 , 5 ( ) 8 7 3 , 1 ( ) 1 2 7 ( ) 7 5 6 ( 2 7 2 - 2 7 2 ) 0 5 6 , 1 ( ) 1 2 7 ( ) 9 2 9 ( - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - f o e u a v l r i a f d n a n o i t a g i l b o t i f e n e b d e n i f e d f o n o i t a i l i c n o c e R f o e u a v f o e u a v f o e u a v f o e u a v l l l l r i a f d n a n o i t a g r i a f d n a n o i t a g r i a f d n a n o i t a g r i a f d n a n o i t a g i l i l i l i l b o t i f e n e b d e n i f e d b d d o e e t u u i f e n n n i i t t e n n b o o d c c e - - n s s i f t t e i i f f d e e n n f f o o e e n n b b o o t t i i n n t t a a e e m m c c n n e e o o r r i i c c t t e e e e R R R R d d e e u u n n i i t t n n o o c c - - s s t t i i f f e e n n e e b b t t n n e e m m e e r r i i t t e e R R i l i i l i b o t i f e n e b d e n i f e d b d o e t u i f e n n i t e n b o d c e - n s i f t e i f d e n f o e n b o t i n t a e m c n e o r i c t e e R R i l i c n o c e R f o n o i t a i l i 7 1 7 1 7 1 7 1 7 1 e m o c n i i e v s n e h e r p m o c i i i e e m m o o c c n n i ) ) e e e e m m v v s s o o n n t c c s e e n n a h h i i p ( ( e e r r - / p p t t t m m s s s o o o o o c c c c c e t s n n c e i v d d r e r e e e t d d n S u u I c c n n I I t s e r e t n I / i i l l i i i i i i i l : : / : s s o e e d d u u ) e l c c c x x n s s e e e n n ( ( o o i r s s e i i t t t t p p p e e m m x s s e s s u u a a ( s s s n n s s t a a n a a e p p a a m n n c c t o o n n s u a a n n j n n d r r u u i A F F t t e e R R ) ) e e : c c m n n s s o e e n n r o o i i f r r e e i i t t ) p p p p n m m x x a e e g u u ( ( s s ( s s s s / t t a a n n s e e s a a o m m l c c t t l n n s s a u u a a i r j n n a d d u A A F F t c A e m o c n i ) e e m v s o n c e n h i ( e r / p t m s o o c c t s n e d r e e t d n u I c n I ) n a g ( ) n a g ( e m o c n ) ) n n i e a a v g g i s ( ( n / / e s s h s s o o e r l p t t n n m e e o m m c e e n r r u u i d s s a a e e e d m m u e e c n R R I ) ) e e : c c m m n n ) o o n e e r r i i i a f f r r e e g ) p p n ( i x x a / e e g s ( ( s ( s s o / / t t l n n s s t e e s s n o o m m e l m t t l s s a a e u u i i r r r j a a d d u u u s A A a t t c c e A A m e R m m ) ) o o n n r r i a a f f g g ) n ( ( i a / g s s ( o / / l s s t t s s n n o o e e m m a a e e i i r r r r a a u u u u s s a a t t c c e e A A m m e e R R l l i l i l i i l l j i i l i j l l i l l l l l l l d e d u c n I l n i / t s a p - ) ) e e t m m n e o o r t c c s r n n u a i i c p ( ( – - / t t t s s s o o o c c c e e t t s s c c e e i i v v r r e e r r e e t t n n S S I I t s o c e c v r e S t s o c t s a p - t n e r r u c – t t s s o o c c e e c c v v r r e e S S t n e r t s r u a c p – - t t s s o o c c e e c c v v r r e e S S t t n n e e r r r r u u c c 4 – – 1 t t 0 s s o o 2 c c y e e r a c c u v v n r r a e e J S S 1 t i i i i i i i 4 1 0 2 y r a u n a J 1 t 4 1 0 2 y r a u n a J 1 t 4 1 0 2 y r a u n a J 1 t 4 1 0 2 y r a u n a J 1 t A A A A A ) t s e r e t n ) t s e r e t n i i i i i i i l i l i i i i i i i l i i i i i e m o c n e v s n e h e r p m o c ) t s e r e t n ) t s e e e r e m m t n o o c c e n n d u e e v v c x s s s e n n n e e ( o s h h i t e e t p e r r m s p p s m m u a s o o n s c c a a r r e e p a h h n c t t o o o n a n n n n r u i d d F t e e e d d R u u c c n n I I e d u c x e ( s t e s s a n a p n o n r u t e R ) t s e e r e m t n o c e n d u e v c x s e n e ( s h e t e r s p s m a o n c a r e p h n t o o n n r u d t e e d R u c n I d e d u c n I r e h t o s e t a r e g n a h c x e n s e t a r e g n a h c x e s s n n n o o s s t t i i n n t t u u e e b b m m i i r r e e t t n n v v o o o o c c m m r r e e f f o o y y o o t t l c c p p e e m m f f f f E E E E s e t a r e g n a h c x e s n n o s t i n t u e b m i r e t n v d d o o c a a m p p r r e e f s s o y y t t o o i i f f t e e l c p p n n e m m e e f f E B B E E s n o i t u b i r t n o c s s e e t t e a a m r r e e o g g c n n n a a e h h v c c x x s e e n e n n h e s s r t t n n p e e m m m o e e c v v r o o e m m h t o f f o o n t t i c c d e e e f f f f d E E u c n I n l l l i i l l i l i l i i i l l l l ) ) e e m m t n o o e c c t r s r n n u a i i p ( ( c - - / / t s a p - t n e r r u c - t n e t r s r u a p c - - t s a p - t s o c e c i v r e S t t t s s s o o o c c c e e e c c c i i i v v v r r r e e e S S S t s o c e c i v r e S t t t t s s s s o o o o c c c c e e t t s s c c e e i i v v r r e e r r e e t t n n S S I I i i i s n o i t u b i r t s s n d d t t o n n c a a e e p p m m r e s s e e y t t o v v i i f f o o e e l p m m n n m e e r r E B B e e h h t t O O 4 4 1 1 0 0 2 2 s s r r d t t e e n n a b b e e p m m m m s e e e e t v v i c c f o o e e e m m n D D e r B 1 1 e 3 3 h t t t O A A 4 1 0 2 r e b m e c e D 1 3 t 4 1 0 2 s r t e n b e m m e e v c o e m D r 1 e 3 h t t O A r e h t O A t t n n e e r r r r 4 u u 1 c c 0 2 - - t t r s s e o o b c c m e e e c c c i i e v v D r r e e S S 1 3 t A ) t s e r e t n ) t s e r e t n e m o c n ) ) t t s s e e e e r r m m e e t t o o n n c c i i n n e e i i d d e e u u v v l l i i c c s s x x s n n e e n e e ( ( o h h s s i e e t t t p r r e e p p m s s m m s s u a a o o s c c n n s a a a r r l l e e p p l a h h i t t n n c o o o o n n n a n n i i n r r d d u u i F e e t t e e d d R R u u l l c c n n i e v i s n e h e r p m o c r e h t o n ) t s e e r m e t o n c i n e i d e u v l i c s x n e e ( h s e t r e p s m s a o c n a r l e p h t n o o n n i r d u e t e d R u l c n d e d u l c n i s e t a r e g n a h c x e n s e t a r e g n a h c x e s s n n n i i o o s s i i t t t t n n u u e e b b m m i i r r t t e e n n v v o o o o c c m m r r e e f f o o y y o o t t l c c p p e e m m f f f f E E E E s e t a r e g n a h c x e s s n n n i o o s i i t t t n u u e b b m i i r r t t e n n v d d o o o i i a a c c m p p r r e e f s s o y y t t i i o o f f t e e l c p p n n e m m f e e f B B E E E s s e e e t t m a a r r o e e c g g n n n i a a e h h v c c i s x x n e e e n n h i i e s s r t t p n n m e e m m o c e e v v r e o o h m m t o f f o o n i t t c c d e e e f f d f f E E u l c n l l I I I I I s n o i t u b i r t s s n d t t o n n i a c e e p m m r e s e e y t v v i o f o o e l p m m n m e r r B E e e h h t t O O d i a p s t i f e n e B : : : e e m m o o c c n n / s s o ) n i a g ( ) n i a g ( e m o c n e m o c n i e v i s n e h e r p m o c n e m ) ) o e e : c m m m m c c n n n ) ) ) ) ) o o o o i i n n n n n e e ) e e r r r r e i i i i i i i f f f f a a a a a r r v v m e e ) ) g g g g g i i n n s s p p o ( ( ( ( ( n n i i x x a a c / / / / e e e e g g s s s s n h h ( ( s s s s ( ( i e e ( s s o o o o / / / / r r t t s s s s l l l / p p n n s s s s t t t t t t e e m m s n n n n n o o o o m m e e e e e o o o l l m m m m m c t t c c l l l l s s a a a a e e e e e t u u n n i i i i s r r r r r r r r r j j i i a a a a e u u u u u d d d d d u u u u r s s s s s A A e e e e t t t t a a a a a c c c c t d d d e e e e e n A A A A u u u m m m m m I l l l c c c e e e e e n n n R R R R R i i ) ) e e e e v v m m i i s s o o n n c c t e e s n n a h h i i e e p ( ( r r - / p p t t t m m s s s o o o o o c c c c c e t t n n s s c i i e e i d d v r r e e e e r e t t d d n n S u u I l l c c n n i i e e d d u u ) e l l c c c x x s s n e e n n e ( ( o o i r s s i i e t t t t p p p e e m m x s s e s s u u a a ( s s s n n s s t a a n a a l l e p p l l a a m i i n n c c t o o s n n u a a n n j n n r r d u u i A F F t t e e R R ) ) e e : m c c s s n n o n n e e r o o i i f r r i i e e ) t t n p p p p i m m x x a e e g u u ( ( ( s s s s / s s t t s n n a a s e e l l o a a m m l i i c c t t l s s a n n u u i a a r j a n n d d u i i A A F F t c A I I l I l I I / I i l l j i c l P s n o i t a t n a l P n r e t s a E c l P s n o i t a t n a l P n r e t s a E c l P s n o i t a t n a l P n r e t s a E c l P s n o i t a t n a l P n r e t s a E c l P s n o i t a t n a l P n r e t s a E - o - o - o - o - o l l l l l | | 5 1 0 2 r e b m e c e D 1 3 t 5 5 1 1 0 0 s s 2 2 d t t n n r r i e e a e e b b p m m m m s e e t e e v v i f c c o o e e e m m n D D e r B 1 1 e 3 3 h t t t O A A r e h t O 5 1 0 2 5 1 0 s 2 t n r e e b m m e e v c o e m D r 1 e 3 h t t O A g g g n n n 5 A A A 1 0 | 2 5 5 r 1 1 e 0 0 b 2 2 m t t t e r r r c o o o e p p p D e e e R R R 1 3 a t A u n n A a u n n A a u n n A A l l l g n A g n A | | 5 1 0 2 5 1 0 2 t r o p e R t r o p e R l l a u n n A a u n n A s s s s t t t t n n n n e e e e m m m m e e e e t t t t a a a a t t t t s t n e m e t a t S S S S S l l l l l a a a a a i i i i i i i i i i c c n n a a n n F F d d e e t t a a d d c n a n F d e t a d c n a n F d e t a d c n a n F d e t a d i l i l i l i l i l o o o o s s s s n n n n o o o o C C C C e e e e h h h h t t t t o o o o t t t t o s n o C e h t o t s s s s e e e e t t t t o o o o N N N N s e t o N About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements 17 Retirement benefits - continued 17 Retirement benefits - continued 17 Retirement benefits - continued 17 Retirement benefits - continued The following table exhibits the sensitivity of the Group’s retirement benefits to the fluctuation in the discount rate and wages: The following table exhibits the sensitivity of the Group’s retirement benefits to the fluctuation in the discount rate and wages: The following table exhibits the sensitivity of the Group’s retirement benefits to the fluctuation in the discount rate and wages: The following table exhibits the sensitivity of the Group’s retirement benefits to the fluctuation in the discount rate and wages: 2015 2015 $000 2015 $000 2015 $000 $000 860 860 (758) 860 (758) 860 (758) (758) (799) (799) 895 (799) 895 (799) 895 895 2014 2014 $000 2014 $000 2014 $000 $000 873 873 (845) 873 (845) 873 (845) (845) (881) (881) 900 (881) 900 (881) 900 900 A change of 1% in the discount rate A change of 1% in the discount rate -1% in discount rate A change of 1% in the discount rate -1% in discount rate A change of 1% in the discount rate +1% in discount rate -1% in discount rate +1% in discount rate -1% in discount rate A change of 1% in wages +1% in discount rate A change of 1% in wages +1% in discount rate -1% in wages A change of 1% in wages -1% in wages A change of 1% in wages +1% in wages -1% in wages +1% in wages -1% in wages +1% in wages +1% in wages The following contributions, which reflect expected future service, as appropriate are expected to be paid: The following contributions, which reflect expected future service, as appropriate are expected to be paid: The following contributions, which reflect expected future service, as appropriate are expected to be paid: The following contributions, which reflect expected future service, as appropriate are expected to be paid: Year Year 2016 Year 2016 Year 2017 2016 2017 2016 2018 2017 2018 2017 2019 2018 2019 2018 2020 2019 2020 2019 2021 to 2025 2020 2021 to 2025 2020 Total 2021 to 2025 Total 2021 to 2025 Total Total $000 $000 250 $000 250 $000 709 250 709 250 495 709 495 709 594 495 594 495 873 594 873 594 6,792 873 6,792 873 9,713 6,792 9,713 6,792 9,713 9,713 18 Share capital and treasury shares 18 Share capital and treasury shares 18 Share capital and treasury shares 18 Share capital and treasury shares Ordinary shares of 25p each Ordinary shares of 25p each Beginning and end of year Ordinary shares of 25p each Beginning and end of year Ordinary shares of 25p each Beginning and end of year Beginning and end of year Authorised Authorised Number Authorised Number Authorised Number Number 60,000,000 60,000,000 60,000,000 60,000,000 Treasury shares: Treasury shares: Beginning of year Treasury shares: Beginning of year Treasury shares: Share options exercised Beginning of year Share options exercised Beginning of year End of year Share options exercised End of year Share options exercised End of year End of year Market value of treasury shares: Market value of treasury shares: Beginning of year (555.0p/share) Market value of treasury shares: Beginning of year (555.0p/share) Market value of treasury shares: End of year (531.0p/share) Beginning of year (555.0p/share) End of year (531.0p/share) Beginning of year (555.0p/share) End of year (531.0p/share) No treasury shares were purchased in 2015 (2014: Nil). End of year (531.0p/share) No treasury shares were purchased in 2015 (2014: Nil). No treasury shares were purchased in 2015 (2014: Nil). No treasury shares were purchased in 2015 (2014: Nil). Issued and Issued and fully paid Issued and fully paid Issued and £000 fully paid £000 fully paid £000 £000 9,994 9,994 9,994 9,994 Issued and Issued and fully paid Issued and fully paid Issued and Number fully paid Number fully paid Number Number 39,976,272 39,976,272 39,976,272 39,976,272 2015 2015 Number 2015 Number 2015 339,900 Number 339,900 Number - 339,900 - 339,900 339,900 - 339,900 - 339,900 339,900 Authorised Authorised £000 Authorised £000 Authorised £000 £000 15,000 15,000 15,000 15,000 2014 2014 Number 2014 Number 2014 339,900 Number 339,900 Number - 339,900 - 339,900 339,900 - 339,900 - 339,900 339,900 Authorised Authorised $000 Authorised $000 Authorised $000 $000 23,865 23,865 23,865 23,865 Cost Cost 2015 Cost 2015 Cost $’000 2015 $’000 2015 (1,171) $’000 (1,171) $’000 - (1,171) - (1,171) (1,171) - (1,171) - (1,171) (1,171) Issued and Issued and fully paid Issued and fully paid Issued and $000 fully paid $000 fully paid $000 $000 15,504 15,504 15,504 15,504 Cost Cost 2014 Cost 2014 Cost $’000 2014 $’000 2014 (1,171) $’000 (1,171) $’000 - (1,171) - (1,171) (1,171) - (1,171) - (1,171) (1,171) $’000 $’000 2,942 $’000 2,942 $’000 2,675 2,942 2,675 2,942 2,675 2,675 19 Ultimate controlling shareholder 19 Ultimate controlling shareholder 19 Ultimate controlling shareholder 19 Ultimate controlling shareholder At 31 December 2015, Genton International Limited, a company registered in Hong Kong, held 20,247,814 (2014: 20,247,814) shares of the At 31 December 2015, Genton International Limited, a company registered in Hong Kong, held 20,247,814 (2014: 20,247,814) shares of the Company representing 51.1% (2014: 51.1%) of the issued share capital of the Company. Together with other deemed interested parties, At 31 December 2015, Genton International Limited, a company registered in Hong Kong, held 20,247,814 (2014: 20,247,814) shares of the Company representing 51.1% (2014: 51.1%) of the issued share capital of the Company. Together with other deemed interested parties, At 31 December 2015, Genton International Limited, a company registered in Hong Kong, held 20,247,814 (2014: 20,247,814) shares of the the Genton‘s shareholding totals 20,551,914 or 51.9%. Madam Lim, a Director of the Company, has advised the Company that she is the Company representing 51.1% (2014: 51.1%) of the issued share capital of the Company. Together with other deemed interested parties, the Genton‘s shareholding totals 20,551,914 or 51.9%. Madam Lim, a Director of the Company, has advised the Company that she is the Company representing 51.1% (2014: 51.1%) of the issued share capital of the Company. Together with other deemed interested parties, controlling shareholder of Genton International Limited. the Genton‘s shareholding totals 20,551,914 or 51.9%. Madam Lim, a Director of the Company, has advised the Company that she is the controlling shareholder of Genton International Limited. the Genton‘s shareholding totals 20,551,914 or 51.9%. Madam Lim, a Director of the Company, has advised the Company that she is the controlling shareholder of Genton International Limited. controlling shareholder of Genton International Limited. 20 Related party transactions 20 Related party transactions 20 Related party transactions 20 Related party transactions Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note. Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note. Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note. disclosed in this note. During the year the Company engaged UHY Hacker Young, an accounting firm of which Dato’ John Lim Ewe Chuan is a partner, to provide 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 $28,978 (2014: $23,548). This contract is on an arm’s length basis. The balance 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 $28,978 (2014: $23,548). This contract is on an arm’s length basis. The balance During the year the Company engaged UHY Hacker Young, an accounting firm of which Dato’ John Lim Ewe Chuan is a partner, to provide outstanding at year end was $3,057 (2014: $3,483). company secretarial and taxation services for a fee of $28,978 (2014: $23,548). This contract is on an arm’s length basis. The balance outstanding at year end was $3,057 (2014: $3,483). company secretarial and taxation services for a fee of $28,978 (2014: $23,548). This contract is on an arm’s length basis. The balance outstanding at year end was $3,057 (2014: $3,483). outstanding at year end was $3,057 (2014: $3,483). An office premises lease agreement was entered with Infra Sari Sdn Bhd, a company controlled by Madam Lim Siew Kim. The rental paid An office premises lease agreement was entered with Infra Sari Sdn Bhd, a company controlled by Madam Lim Siew Kim. The rental paid during the year was $307,567 (2014: $319,147). There was no balance outstanding at year end (2014: Nil). An office premises lease agreement was entered with Infra Sari Sdn Bhd, a company controlled by Madam Lim Siew Kim. The rental paid during the year was $307,567 (2014: $319,147). There was no balance outstanding at year end (2014: Nil). An office premises lease agreement was entered with Infra Sari Sdn Bhd, a company controlled by Madam Lim Siew Kim. The rental paid during the year was $307,567 (2014: $319,147). There was no balance outstanding at year end (2014: Nil). during the year was $307,567 (2014: $319,147). There was no balance outstanding at year end (2014: Nil). Annual Report 2015 | Anglo-Eastern Plantations Plc Annual Report 2015 | Anglo-Eastern Plantations Plc Annual Report 2015 | Anglo-Eastern Plantations Plc Annual Report 2015 | Anglo-Eastern Plantations Plc 85 85 85 85 85 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements 21 Reserves 21 Reserves Amount of shares subscribed at nominal value. Amount of shares subscribed at nominal value. Amount subscribed for share capital in excess of nominal value. Amount subscribed for share capital in excess of nominal value. Nature and purpose of each reserve: Nature and purpose of each reserve: Share capital Share capital Share premium Share premium Capital redemption reserve Amounts transferred from share capital on redemption of issued shares. Capital redemption reserve Amounts transferred from share capital on redemption of issued shares. Treasury shares Treasury shares Revaluation reserve Revaluation reserve Foreign exchange reserve Gains/losses arising on translating the net assets of overseas operations into US Dollar. Foreign exchange reserve Gains/losses arising on translating the net assets of overseas operations into US Dollar. Retained earnings Retained earnings Cost of own shares held in treasury. Cost of own shares held in treasury. Gains/losses arising on the revaluation of the Group's property. Gains/losses arising on the revaluation of the Group's property. Cumulative net gains and losses recognised in the consolidated income statement. Cumulative net gains and losses recognised in the consolidated income statement. 22 Guarantees and other financial commitments 22 Guarantees and other financial commitments Capital commitments at 31 December Capital commitments at 31 December Contracted but not provided - normal estate operations Contracted but not provided - normal estate operations Authorised but not contracted - plantation and mill development Authorised but not contracted - plantation and mill development 2015 2015 $000 $000 5,325 5,325 37,719 37,719 2014 2014 $000 $000 2,061 2,061 52,925 52,925 A subsidiary company, PT Sawit Graha Manunggal (“SGM”) has provided a corporate guarantee to Koperasi Bartim Sawit Sejahtera A subsidiary company, PT Sawit Graha Manunggal (“SGM”) has provided a corporate guarantee to Koperasi Bartim Sawit Sejahtera (“KBSS”), a party under Plasma scheme as disclosed in note 11, in relation to a loan undertaken by KBSS from PT Bank Mandiri (Persero) (“KBSS”), a party under Plasma scheme as disclosed in note 11, in relation to a loan undertaken by KBSS from PT Bank Mandiri (Persero) Tbk. of Rp226.02 billion ($16.4 million) (2014: Rp226.02 billion, $18.2 million). The corporate guarantee remains until the loan is fully settled Tbk. of Rp226.02 billion ($16.4 million) (2014: Rp226.02 billion, $18.2 million). The corporate guarantee remains until the loan is fully settled by 23 December 2027. The HGU (land right) that belongs to the Plasma scheme is currently held under SGM’s master title. An application to by 23 December 2027. The HGU (land right) that belongs to the Plasma scheme is currently held under SGM’s master title. An application to separate the HGU was submitted to the Land Office and the land will be pledged to the bank as security once the title separation approval is separate the HGU was submitted to the Land Office and the land will be pledged to the bank as security once the title separation approval is obtained. In addition, the terms and conditions of the loan agreement require KBSS to sell all the FFB produce to SGM and its plantation obtained. In addition, the terms and conditions of the loan agreement require KBSS to sell all the FFB produce to SGM and its plantation estate is to be managed by SGM. In view of these, the Group exposure to this contingent liability is minimised. estate is to be managed by SGM. In view of these, the Group exposure to this contingent liability is minimised. 23 Disclosure of financial instruments and other risks 23 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 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. from local partners in respect of their investments. The Group’s accounting classification of each class of financial asset and liability at 31 December 2015 and 2014 were: The Group’s accounting classification of each class of financial asset and liability at 31 December 2015 and 2014 were: 2015 2015 Non-current receivables Non-current receivables Trade and other receivables Trade and other receivables Cash and cash equivalent Cash and cash equivalent Borrowings due within one year Borrowings due within one year Trade and other payables Trade and other payables Borrowings due after one year Borrowings due after one year 2014 2014 Non-current receivables Non-current receivables Trade and other receivables Trade and other receivables Cash and cash equivalent Cash and cash equivalent Borrowings due within one year Borrowings due within one year Trade and other payables Trade and other payables Borrowings due after one year Borrowings due after one year Loans and Loans and receivables receivables $000 $000 3,655 3,655 4,704 4,704 104,614 104,614 - - - - - - 112,973 112,973 Loans and Loans and receivables receivables $000 $000 3,007 3,007 8,807 8,807 125,937 125,937 - - - - - - 137,751 137,751 Financial Financial liabilities at liabilities at amortised cost amortised cost $000 $000 Total carrying Total carrying value value $000 $000 - - - - - - (1,750) (1,750) (17,406) (17,406) (32,875) (32,875) (52,031) (52,031) 3,655 3,655 4,704 4,704 104,614 104,614 (1,750) (1,750) (17,406) (17,406) (32,875) (32,875) 60,942 60,942 Financial Financial liabilities at liabilities at amortised cost amortised cost $000 $000 Total carrying Total carrying value value $000 $000 - - - - - - (313) (313) (21,010) (21,010) (34,625) (34,625) (55,948) (55,948) 3,007 3,007 8,807 8,807 125,937 125,937 (313) (313) (21,010) (21,010) (34,625) (34,625) 81,803 81,803 Annual Report 2015 | Anglo-Eastern Plantations Plc Annual Report 2015 | Anglo-Eastern Plantations Plc 86 86 86 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Notes to the Consolidated Financial Statements 23 Disclosure of financial instruments and other risks - continued Financial instruments not measured at fair value Financial instruments not measured at fair value includes cash and cash equivalents, trade and other receivables, trade and other payables, and borrowings due within one year. Due to their short-term nature, the carrying value of cash and cash equivalents, trade and other receivables, trade and other payables approximates their fair value. Please refer to the applicable notes for details of the fair value hierarchy, valuation techniques, and significant unobservable inputs related to determining the fair value of the following items: - Non-current receivables (note 11); and - Loans and borrowings (note 14). 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 Dollar 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 $67,591,000 (2014: $68,042,000), while the fair value of the Group's share of underlying assets at 31 December 2015 amounted to $399,070,000 (2014: $457,002,000). All the Group's sales are made in local currency and any trade receivables are therefore denominated in local currency. No hedging is therefore necessary. Selling prices of the Group's produce are directly related to the US Dollar denominated world prices. Appreciation of local currencies therefore reduces profits and cash flow of the Indonesian and Malaysian subsidiaries in US Dollar terms and vice versa. The Group's subsidiaries which are borrowing in US Dollar, 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 US Dollar denominated cash balances in those subsidiaries. The Company will continue to partially match US Dollar cash balances with US Dollar financial liabilities. The average interest rate on local currency deposits was 7.47% higher than on US Dollar deposits whereas interest rate for local currency borrowing was about 6.65% higher as compared to US Dollar borrowing. The unmatched balance at 31 December 2015 is represented by the $26,397,000 shown in the table below (2014: $20,250,000). If the Group's net cash position continues to improve then US Dollar cash balances will continue to increase through 2016. The table below shows the net monetary assets and liabilities of the Group at 31 December 2015 and 2014 that were not denominated in the operating or functional currency of the operating unit involved. Functional currency of Group operation 2015 Indonesian Rupiah US Dollar Total 2014 Indonesian Rupiah US Dollar Total Net foreign currency assets/(liabilities) US Dollar $000 Sterling $000 (26,397) - (26,397) (20,250) - (20,250) - 117 117 - 98 98 Total $000 (26,397) 117 (26,280) (20,250) 98 (20,152) Annual Report 2015 | Anglo-Eastern Plantations Plc 87 87 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”) are a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,600ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Notes to the Consolidated Financial Statements 23 Disclosure of financial instruments and other risks - continued The following table summarises the sensitivity of the Group’s financial assets and financial liabilities to foreign exchange risk. The impact on profit before tax and equity if Ringgit or Rupiah strengthen or weaken by 10% against US Dollar is: 2015 2014 Carrying Amount US$ $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 3,655 4,704 104,614 (1,750) (17,406) (32,875) (224) (246) (9,410) - 1,458 - (8,422) 274 300 11,502 - (1,782) - 10,294 3,007 8,807 125,937 (313) (21,010) (34,625) (165) (618) (11,351) - 1,770 - (10,364) 202 756 13,873 - (2,164) - 12,667 Financial Assets Non-current receivables 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 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 required to bring existing immature plantings to maturity. The Group's trade and tax payables are all due for settlement within a year. At 31 December 2015 the Group had the following loans and facilities. Indonesia: US Dollar denominated – long term loan 34,625 45,000 2016 – 2020 (note 14) Borrowings $000 Facilities $000 Repayable The total loan borrowings together with interest at current rates is as follows: Principal Interest Total 2015 $000 34,625 6,140 40,765 2014 $000 34,938 8,134 43,072 Forecasts prepared in December 2015 indicate that the Group has sufficient funds to meet its development plans and financial commitments through 2016. All the long term loans include varying covenants covering minimum net worth and cash balances, dividend and interest cover and debt service ratios. The subsidiary companies concerned have complied with the covenants as stated in the loan agreement. Annual Report 2015 | Anglo-Eastern Plantations Plc 88 88 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Notes to the Consolidated Financial Statements 23 Disclosure of financial instruments and other risks - continued Interest rate risk Both the Group's surplus cash and its borrowings are subject to variable interest rates. The Group had net cash throughout 2015, so the effect of variations in borrowing rates is more than offset. A 1% change in the borrowing or deposit interest rate would not have a significant impact on the Group’s reported results as shown in table below. The rates on borrowings are set out in note 14. Financial Assets Cash and cash equivalents Financial Liabilities Borrowings due within one year Borrowings due after one year Total increase / (decrease) 2015 2014 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 $000 104,614 (797) 857 125,937 (906) 1,053 (1,750) (32,875) - 346 (451) - (346) 511 (313) (34,625) - 349 (557) - (349) 704 There is no policy to hedge interest rates, partly because of the net cash position and because the net interest is relatively small proportion of the 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: 2015 Sterling US Dollar Rupiah Ringgit Total 2014 Sterling US Dollar Rupiah Ringgit Total Total $000 Fixed rate $000 Variable rate $000 No interest $000 117 11,423 97,790 3,643 112,973 98 18,869 112,505 6,279 137,751 - 1,193 - - 1,193 - 1,193 - - 1,193 22 6,108 76,202 3,361 85,693 24 14,785 84,506 5,974 105,289 95 4,122 21,588 282 26,087 74 2,891 27,999 305 31,269 Long term receivables of $1,193,000 (2014: $1,193,000) comprise US Dollar denominated amounts due from minority shareholders as described in note 11 on which interest is due at a fixed rate of 6%. Average US Dollar deposit rate in 2015 was 1.50% (2014: 3.02%) and Rupiah deposit rate was 8.97% (2014: 9.18%). Interest rate profiles of the Group's financial liabilities (comprising bank loans and other financial liabilities and trade and other payables) at 31 December were: 2015 Sterling US Dollar Rupiah Ringgit Total 2014 Sterling US Dollar Rupiah Ringgit Total Total $000 Fixed rate $000 Variable rate $000 No interest $000 - (35,861) (15,903) (267) (52,031) - (36,338) (19,100) (510) (55,948) - - - - - - - - - - - (34,625) - - (34,625) - (34,938) - - (34,938) - (1,236) (15,903) (267) (17,406) - (1,400) (19,100) (510) (21,010) Annual Report 2015 | Anglo-Eastern Plantations Plc 89 89 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Notes to the Consolidated Financial Statements 23 Disclosure of financial instruments and other risks - continued Weighted average interest rate on variable rate borrowings was 5.70% in 2015 (2014: 5.71%). 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 2015 (2014: 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 $1,193,000 (2014: $1,193,000), 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. Amount receivable due from cooperatives under Plasma scheme as disclosed in note 11, are unsecured and are to be repaid from FFB supplied by the cooperatives. A subsidiary company has provided a corporate guarantee for one of the cooperatives in obtaining a bank loan in 2013. The amount drawdown from this loan was used to repay the advances made by the subsidiary. See note 22. 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 $369,351,000 at 31 December 2015 (2014: $427,236,000). 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 2015 (2014: Nil) the Group had no net borrowings but, depending market conditions, the Board is prepared for the Group to have net borrowings. Plantation industry risk Please refer to pages 20 - 25. Annual Report 2015 | Anglo-Eastern Plantations Plc 90 90 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Notes to the Consolidated Financial Statements 24 Subsidiary companies The principal subsidiaries of the Company all of which have been included in these consolidated financial statements are as follows: Country of incorporation and principal place of business Proportion of ownership interest at 31 December Non-controlling interests ownership / voting interest at 31 December 2015 2014 2015 2014 Name Principal sub-holding company Anglo-Indonesian Oil Palms Limited Management company Indopalm Services Limited Operating companies Anglo-Eastern Plantations (M) Sdn Bhd Anglo-Eastern Plantations Management Sdn Bhd 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 Dormant companies United Kingdom 100% 100% United Kingdom 100% 100% Malaysia Malaysia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia 55% 100% 90% 100% 95% 80% 90% 95% 80% 95% 95% 90% 75% 95% 82% 100% 80% 75% 100% 55% 100% 90% 100% 95% 80% 90% 95% 80% 95% 95% 90% 75% 95% 82% 100% 80% 75% 100% - - 45% - 10% - 5% 20% 10% 5% 20% 5% 5% 10% 25% 5% 18% - 20% 25% - - - - - - - 45% - 10% - 5% 20% 10% 5% 20% 5% 5% 10% 25% 5% 18% - 20% 25% - - - - - The Ampat (Sumatra) Rubber Estate (1913) United Kingdom 100% 100% Limited Gadek Indonesia (1975) Limited Mergeset (1980) Limited Musam Indonesia Limited United Kingdom United Kingdom United Kingdom 100% 100% 100% 100% 100% 100% The principal United Kingdom sub-holding company, UK management company and UK dormant companies are registered in England and Wales and are direct subsidiaries of the Company. 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. Annual Report 2015 | Anglo-Eastern Plantations Plc 91 91 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some rubber through operations in Indonesia and Malaysia. 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o - o l l g n A g n A | | 5 1 0 2 5 1 0 2 t r o p e R t r o p e R l l a u n n A a u n n A 6 1 4 , 7 6 1 4 , 7 ) 9 9 3 1 ( ) 9 9 3 1 ( ) 6 2 6 0 1 ( ) 6 2 6 0 1 ( ) 5 2 0 2 1 ( ) 5 2 0 2 1 ( , , , , , , 6 2 4 1 1 6 2 4 1 1 , , ) 4 8 2 6 ( ) 4 8 2 6 ( ) 0 1 2 2 ( ) 0 1 2 2 ( ) 4 9 4 8 ( ) 4 9 4 8 ( , , , . , . 2 1 9 , 4 4 2 1 9 , 4 4 4 3 4 , 6 1 4 3 4 , 6 1 ) 5 5 3 , 2 ( ) 5 5 3 , 2 ( 9 7 0 , 4 1 9 7 0 , 4 1 - - ) 5 5 2 ( ) 5 5 2 ( ) 4 3 9 1 ( ) 4 3 9 1 ( , , ) 9 8 1 2 ( ) 9 8 1 2 ( , , - - ) 2 0 4 ( ) 2 0 4 ( ) 4 4 1 1 ( ) 4 4 1 1 ( , , ) 6 4 5 1 ( ) 6 4 5 1 ( , , ) 1 7 4 ( ) 1 7 4 ( 7 8 2 3 7 8 2 3 , , 6 1 8 2 6 1 8 2 , , 2 9 2 9 8 8 5 8 8 5 9 2 1 7 3 9 2 1 7 3 4 3 0 3 1 4 3 0 3 1 , , , , ) 6 4 4 2 1 ( ) 6 4 4 2 1 ( . . 6 3 2 , 6 5 6 3 2 , 6 5 9 8 1 , 1 1 9 8 1 , 1 1 ) 5 0 8 , 1 ( ) 5 0 8 , 1 ( 4 8 3 , 9 4 8 3 , 9 ) 9 5 7 , 2 ( ) 9 5 7 , 2 ( ) 3 5 4 , 9 ( ) 3 5 4 , 9 ( 5 7 7 , 6 4 5 7 7 , 6 4 ) 2 1 2 , 2 1 ( ) 2 1 2 , 2 1 ( 2 5 1 , 9 2 5 1 , 9 7 0 9 , 0 4 7 0 9 , 0 4 ) 1 8 5 , 1 ( ) 1 8 5 , 1 ( 1 7 5 , 7 1 7 5 , 7 8 7 2 , 6 8 7 2 , 6 9 5 5 , 9 2 9 5 5 , 9 2 ) 0 1 7 , 7 ( ) 0 1 7 , 7 ( ) 2 3 4 , 1 ( ) 2 3 4 , 1 ( 5 4 8 , 4 5 5 4 8 , 4 5 2 3 9 , 1 1 2 3 9 , 1 1 ) 7 2 8 , 2 ( ) 7 2 8 , 2 ( 5 0 1 , 9 5 0 1 , 9 7 0 6 , 2 7 0 6 , 2 ) 9 8 4 2 ( ) 9 8 4 2 ( , , 8 2 8 2 8 1 1 8 1 1 ) 1 8 1 ( ) 1 8 1 ( 9 1 1 , 1 9 1 1 , 1 9 3 9 9 3 9 0 0 2 0 0 2 ) 6 7 2 ( ) 6 7 2 ( ) 5 4 9 ( ) 5 4 9 ( ) 1 2 2 , 1 ( ) 1 2 2 , 1 ( 0 2 0 2 5 1 9 5 1 9 ) 8 5 1 ( ) 8 5 1 ( 7 5 7 7 5 7 4 2 4 2 8 2 6 8 2 6 ) 1 7 7 ( ) 1 7 7 ( ) 3 4 1 ( ) 3 4 1 ( 3 2 3 2 ) 5 6 5 ( ) 5 6 5 ( 6 8 3 , 2 6 8 3 , 2 1 2 8 , 1 1 2 8 , 1 6 0 1 6 0 1 5 8 6 , 7 5 8 6 , 7 8 8 8 , 8 3 8 8 8 , 8 3 ) 8 3 7 , 8 ( ) 8 3 7 , 8 ( ) 3 2 4 , 6 1 ( ) 3 2 4 , 6 1 ( 1 9 1 9 7 3 5 , 1 7 3 5 , 1 ) 5 8 2 , 3 ( ) 5 8 2 , 3 ( ) 8 4 7 , 1 ( ) 8 4 7 , 1 ( I I C N o t C N o t d e t a c o d e t a c o l l l l a a I I C N o t C N o t ) e s n e p x e ( ) e s n e p x e ( e s n e p x e e s n e p x e / e m o c n / e m o c n i i i i i i e v s n e h e r p m o c e v s n e h e r p m o c e v s n e h e r p m o c e v s n e h e r p m o c l l r e h t O r e h t O a t o T a t o T x a t x a t r e t f a ) s s o L ( r e t f a ) s s o L ( e u n e v e R e u n e v e R / / t i f o r t i f o r P P d e t a c o d e t a c o l l l l a a ) e s n e p x e ( ) e s n e p x e ( e s n e p x e e s n e p x e / e m o c n / e m o c n I I C N o t d e t a c o C N o t d e t a c o l l l l a ) s s o L ( a ) s s o L ( / / t i f o r t i f o r P P i i i i i i e v s n e h e r p m o c e v s n e h e r p m o c e v s n e h e r p m o c e v s n e h e r p m o c l l r e h t O r e h t O a t o T a t o T I I C N o C N o i i t d a p s d n e d v D t d a p s d n e d v D i i i i About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Company Balance Sheet As at 31 December 2015 Fixed assets Investments in subsidiaries Current assets Debtors Cash at bank and in hand Creditors: amount falling due within one year Net current (liabilities) / assets Net assets Capital and reserves Share capital Treasury shares Share premium Capital redemption reserve Exchange reserve Retained earnings Shareholders' funds Note 3 4 5 6 6 2015 $000 67,591 67,591 2,252 1,099 3,351 (3,996) (645) 66,946 15,504 (1,171) 23,935 1,087 3,872 23,719 66,946 2014 $000 68,042 68,042 4,579 1,079 5,658 (3,974) 1,684 69,726 15,504 (1,171) 23,935 1,087 3,872 26,499 69,726 The financial statements were approved by the Board of Directors and authorised for issue on 26 April 2016 and were signed on its behalf by Dato’ John Lim Ewe Chuan Executive Director, Corporate Finance and Corporate Affairs The accompanying notes are an integral part of this balance sheet. Annual Report 2015 | Anglo-Eastern Plantations Plc 93 93 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. l a t o T 0 0 0 $ 8 2 8 1 7 , ) 4 0 1 ( ) 4 0 1 ( ) 8 9 9 1 ( , 6 2 7 , 9 6 ) 1 1 9 ( ) 1 1 9 ( ) 9 6 8 1 ( , 6 4 9 , 6 6 ) 4 0 1 ( ) 4 0 1 ( ) 8 9 9 , 1 ( 9 9 4 , 6 2 ) 1 1 9 ( ) 1 1 9 ( ) 9 6 8 , 1 ( 9 1 7 , 3 2 0 0 0 $ 1 0 6 8 2 , d e n i a t e R i s g n n r a e 0 0 0 $ 2 7 8 , 3 e v r e s e r e g n a h c x E - - - 2 7 8 3 , 7 8 0 , 1 5 3 9 , 3 2 ) 1 7 1 , 1 ( 4 0 5 , 5 1 - - - - - - - - - - - - - - - 2 7 8 3 , 7 8 0 , 1 5 3 9 , 3 2 ) 1 7 1 , 1 ( 4 0 5 , 5 1 r a e y e h t r o f e s n e p x e e v i s n e h e r p m o c l a t o T r a e y e h t r o f e m o c n i e v i s n e h e r p m o C 4 1 0 2 r e b m e c e D 1 3 t a e c n a l a B r a e y e h t r o f s s o L 5 1 0 2 r e b m e c e D 1 3 t a e c n a l a B d i a p s d n e d i v i D . y t i u q e n i s e g n a h c f o t n e m e t a t s s h t i f o t r a p l a r g e t n i n a e r a s e t o n g n y n a p m o c c a e h T i - - - 0 0 0 $ e v r e s e r 7 8 0 1 , l a t i p a C n o i t p m e d e r 0 0 0 $ 5 3 9 , 3 2 e r a h S i m u m e r p 0 0 0 $ s e r a h s ) 1 7 1 , 1 ( y r u s a e r T e r a h S l a t i p a c 0 0 0 $ 4 0 5 , 5 1 - - - - - - - - - r a e y e h t r o f e s n e p x e i e v s n e h e r p m o c l a t o T r a e y e h t r o f e m o c n i i e v s n e h e r p m o C 3 1 0 2 r e b m e c e D 1 3 t a e c n a a B l r a e y e h t r o f s s o L i d a p s d n e d v D i i y t i u q E n i s e g n a h C f o t n e m e t a t S y n a p m o C 5 1 0 2 r e b m e c e D 1 3 d e d n e r a e y e h t r o F 4 9 4 9 c l P s n o i t a t n a l P n r e t s a E - o l g n A | 5 1 0 2 t r o p e R l a u n n A About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Notes to the Company Financial Statements 1 Accounting policies Basis of preparation The financial statements have been prepared in accordance with Financial Reporting Standard 100 Application of Financial Reporting Requirements ("FRS 100") and Financial Reporting Standard 101 Reduced Disclosure Framework ("FRS 101"). Disclosure exemptions adopted In preparing these financial statements the Company has taken advantage of all disclosure exemptions conferred by FRS 101. Therefore these financial statements do not include: • • • • • • certain comparative information as otherwise required by EU endorsed IFRS; certain disclosures regarding the Company's capital; a statement of cash flows; the effect of future accounting standards not yet adopted; the disclosure of the remuneration of key management personnel; and disclosure of related party transactions with other wholly owned members of Anglo-Eastern Plantations Plc group of companies. In addition, and in accordance with FRS 101 further disclosure exemptions have been adopted because equivalent disclosures are included in the Company's consolidated financial statements. These financial statements do not include certain disclosures in respect of: • • • Share based payments; Financial instruments (other than certain disclosures required as a result of recording financial instruments at fair value); or Fair value measurement (other than certain disclosures required as a result of recording financial instruments at fair value). Principal accounting policies The principal accounting policies adopted in the preparation of the financial statements are set out below. The policies have been consistently applied to all the years presented, unless otherwise stated. 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. The presentation currency used is US Dollar and amounts have been presented in round thousands ("$000"). The principal accounting policies are summarised below. First time application of FRS 100 and 101 In the current year the Company has adopted FRS 100 and FRS 101. In previous years the financial statements were prepared in accordance with applicable United Kingdom (“UK”) Accounting Standards and law. This change in the basis of preparation has not materially altered the recognition and measurement requirements previously applied in accordance with UK Accounting Standards. Consequently the principal accounting policies are unchanged from the prior year. The change in basis of preparation has enabled the Company to take advantage of all of the available disclosure exemptions permitted by FRS 101 in the financial statements, the most significant of which are summarised above. There have been no other material amendments to the disclosure requirements previously applied in accordance with UK Accounting Standards. Foreign currency The functional currency of the Company is US Dollar, chosen because the prices of the bulk of the Group’s products are ultimately denominated in US Dollar. Transactions in sterling are translated to US Dollar at the actual exchange rate and exchange losses recognised in profit and loss. Sterling denominated assets and liabilities are converted to US Dollar at the rate ruling at the balance sheet date. Exchange differences arising on the retranslation of unsettled monetary assets and liabilities are recognised immediately in profit or loss. Investments Investments in subsidiaries are stated at cost less provision for any permanent diminution in value. 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. Share based payments As set out under Group accounting policies on page 66. Deferred taxation A deferred tax asset has not been recognised in relation to brought forward tax losses of $9.5m (2014: $8.6m) because it is not certain those losses can be utilised in the foreseeable future. Annual Report 2015 | Anglo-Eastern Plantations Plc 95 95 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Notes to the Company 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. 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 Profit and loss account 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 for the year for the Company dealt with in the consolidated financial statements of the Company was $906,000 (2014: $100,000) and loss after tax for the year was $911,000 (2014: $104,000). The remuneration of the directors of the Company is disclosed in note 6 to the group financial statements. Auditor's remuneration is disclosed in to note 4 to the group financial statements. 3 Investments in subsidiaries At 1 January 2014 Movements during the year At 31 December 2014 Movements during the year At 31 December 2015 Net carrying amount At 31 December Investments in subsidiary undertakings $000 Loans to subsidiary undertakings $000 874 1,936 2,810 - 2,810 65,022 210 65,232 (451) 64,781 2015 $000 Total $000 65,896 2,146 68,042 (451) 67,591 2014 $000 67,591 68,042 Loans to 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 holding of preference shares in a subsidiary of $6.146m was due for full redemption in January 2012. On 15 January 2014, the shareholders of the subsidiary at EGM voted in favour of a capital reduction of its preference shares to enable partial redemption. A court order was obtained on 5 June 2014 allowing the partial redemption of $4.210m as proposed by the shareholders. The balance preference shares of $1.936m were extended to year 2017 with the terms and conditions remain unchanged. The following subsidiary undertakings are directly held by the Company. Directly held Anglo-Indonesian Oil Palms Limited Indopalm Services Limited Anglo-Eastern Plantations (M) Sdn Bhd Anglo-Eastern Plantations Management Sdn Bhd Proportion of voting rights and shares held Nature of business Investment holding 100% 100% Management service 55% Plantation agriculture 100% Management service Annual Report 2015 | Anglo-Eastern Plantations Plc 96 96 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Notes to the Company Financial Statements 3 Investments in subsidiaries - continued The following were subsidiaries undertakings at the end of the year of AEP Plc and have been included in the consolidated financial statements. Indirectly held 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 The Ampat (Sumatra) Rubber Estate (1913) Limited Gadek Indonesia (1975) Limited Mergeset (1980) Limited Musam Indonesia Limited 4 Debtors Amounts owed by group undertakings: Anglo-Eastern Plantations Management Sdn Bhd Anglo-Eastern Plantations (M) Sdn Bhd Other debtors Proportion of voting rights and shares held Nature of business 90% Plantation agriculture 100% Plantation agriculture 95% Plantation agriculture 80% Plantation agriculture 90% Plantation agriculture 95% Plantation agriculture 80% Plantation agriculture 95% Plantation agriculture 95% Plantation agriculture 90% Plantation agriculture 75% Plantation agriculture 95% Plantation agriculture 82% Plantation agriculture 100% Plantation agriculture 80% Plantation agriculture 75% Plantation agriculture 100% Management service 100% 100% 100% 100% Investment holding Investment holding Investment holding Investment holding 2015 $000 1,930 305 2,235 17 2,252 2014 $000 4,183 374 4,557 22 4,579 The amounts owed by group undertakings arise as a result of advances to subsidiary companies and expenses paid on their behalf. The amounts are unsecured, interest free and do not have fixed repayment terms. 5 Creditors: amounts falling due within one year Amounts owed to group undertakings Mergeset (1980) Limited Musam Indonesia Limited PT Musam Utjing PT Tasik Raja Accruals 2015 $000 2,163 246 121 230 2,760 1,236 3,996 2014 $000 1,857 142 121 455 2,575 1,399 3,974 The amounts owed to group undertakings arise as a result of advances from subsidiary companies and expenses paid on our behalf. The amounts are unsecured, interest free and do not have fixed repayment terms. Annual Report 2015 | Anglo-Eastern Plantations Plc 97 97 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Notes to the Company Financial Statements Notes to the Company Financial Statements Notes to the Company Financial Statements 6 Share capital and treasury shares 6 Share capital and treasury shares 6 Share capital and treasury shares Ordinary shares of 25p each Ordinary shares of 25p each Ordinary shares of 25p each Beginning and end of year Beginning and end of year Beginning and end of year Treasury shares: Treasury shares: Treasury shares: Beginning of year Beginning of year Beginning of year Share options exercised Share options exercised Share options exercised End of year End of year End of year Market value of treasury shares: Market value of treasury shares: Market value of treasury shares: Beginning of year (555.0p/share) Beginning of year (555.0p/share) Beginning of year (555.0p/share) End of year (531.0p/share) End of year (531.0p/share) End of year (531.0p/share) 7 Related party transactions 7 Related party transactions 7 Related party transactions Authorised Authorised Authorised Number Number Number 60,000,000 60,000,000 60,000,000 Issued and Issued and Issued and fully paid fully paid fully paid £000 £000 £000 9,994 9,994 9,994 Issued and Issued and Issued and fully paid fully paid fully paid Number Number Number 39,976,272 39,976,272 39,976,272 2015 2015 2015 Number Number Number 339,900 339,900 339,900 - - - 339,900 339,900 339,900 Authorised Authorised Authorised £000 £000 £000 15,000 15,000 15,000 2014 2014 2014 Number Number Number 339,900 339,900 339,900 - - - 339,900 339,900 339,900 Authorised Authorised Authorised $000 $000 $000 23,865 23,865 23,865 Cost Cost Cost 2015 2015 2015 $’000 $’000 $’000 (1,171) (1,171) (1,171) - - - (1,171) (1,171) (1,171) Issued and Issued and Issued and fully paid fully paid fully paid $000 $000 $000 15,504 15,504 15,504 Cost Cost Cost 2014 2014 2014 $’000 $’000 $’000 (1,171) (1,171) (1,171) - - - (1,171) (1,171) (1,171) $’000 $’000 $’000 2,942 2,942 2,942 2,675 2,675 2,675 During the year the Company engaged UHY Hacker Young, an accounting firm of which Dato’ John Lim Ewe Chuan is a partner, to provide During the year the Company engaged UHY Hacker Young, an accounting firm of which Dato’ John Lim Ewe Chuan is a partner, to provide 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 $28,978 (2014: $23,548). This contract is on an arm’s length basis. The balance company secretarial and taxation services for a fee of $28,978 (2014: $23,548). This contract is on an arm’s length basis. The balance company secretarial and taxation services for a fee of $28,978 (2014: $23,548). This contract is on an arm’s length basis. The balance outstanding at year end was $3,057 (2014: $3,483). outstanding at year end was $3,057 (2014: $3,483). outstanding at year end was $3,057 (2014: $3,483). An office premises lease agreement was entered with Infra Sari Sdn Bhd, a company controlled by Madam Lim Siew Kim. The rental paid An office premises lease agreement was entered with Infra Sari Sdn Bhd, a company controlled by Madam Lim Siew Kim. The rental paid An office premises lease agreement was entered with Infra Sari Sdn Bhd, a company controlled by Madam Lim Siew Kim. The rental paid during the year was $227,318 (2014: $235,863). There was no balance outstanding at year end (2014: Nil). during the year was $227,318 (2014: $235,863). There was no balance outstanding at year end (2014: Nil). during the year was $227,318 (2014: $235,863). There was no balance outstanding at year end (2014: Nil). Transactions between the Company and its subsidiaries are disclosed below: Transactions between the Company and its subsidiaries are disclosed below: Transactions between the Company and its subsidiaries are disclosed below: Nature of transactions Nature of transactions Nature of transactions Management fees from Management fees from Management fees from Corporate guarantee fees from Corporate guarantee fees from Corporate guarantee fees from Corporate guarantee fees from Corporate guarantee fees from Corporate guarantee fees from Receivable from Receivable from Receivable from Payable to Payable to Payable to The details of the intercompany receivables and payables are disclosed in note 4 and note 5 of the Company financial statements The details of the intercompany receivables and payables are disclosed in note 4 and note 5 of the Company financial statements The details of the intercompany receivables and payables are disclosed in note 4 and note 5 of the Company financial statements respectively. respectively. respectively. Name Name Name Anglo-Eastern Plantations Malaysia Sdn Bhd Anglo-Eastern Plantations Malaysia Sdn Bhd Anglo-Eastern Plantations Malaysia Sdn Bhd PT Hijau Pryan Perdana PT Hijau Pryan Perdana PT Hijau Pryan Perdana PT Sawit Graha Manunggal PT Sawit Graha Manunggal PT Sawit Graha Manunggal Subsidiaries (note 4) Subsidiaries (note 4) Subsidiaries (note 4) Subsidiaries (note 5) Subsidiaries (note 5) Subsidiaries (note 5) 2014 2014 2014 $000 $000 $000 69 69 69 50 50 50 175 175 175 4,557 4,557 4,557 2,575 2,575 2,575 2015 2015 2015 $000 $000 $000 57 57 57 50 50 50 175 175 175 2,235 2,235 2,235 2,760 2,760 2,760 8 Employees' and Directors' remuneration 8 Employees' and Directors' remuneration 8 Employees' and Directors' remuneration Average numbers employed during the year Average numbers employed during the year Average numbers employed during the year - directors - directors - directors - staff - staff - staff Staff costs Staff costs Staff costs Wages and salaries Wages and salaries Wages and salaries Social security costs Social security costs Social security costs 2015 2015 2015 Number Number Number 4 4 4 - - - 4 4 4 2015 2015 2015 $000 $000 $000 - - - - - - - - - 2014 2014 2014 Number Number Number 4 4 4 - - - 4 4 4 2014 2014 2014 $000 $000 $000 - - - - - - - - - The information required by the Companies Act and the Listing Rules of the Financial Conduct Authority is contained in the Directors' The information required by the Companies Act and the Listing Rules of the Financial Conduct Authority is contained in the Directors' The information required by the Companies Act and the Listing Rules of the Financial Conduct Authority is contained in the Directors' remuneration report on pages 47 - 51 of which certain information on pages 50 - 51 has been audited. remuneration report on pages 47 - 51 of which certain information on pages 50 - 51 has been audited. remuneration report on pages 47 - 51 of which certain information on pages 50 - 51 has been audited. Directors' emoluments Directors' emoluments Directors' emoluments Annual Report 2015 | Anglo-Eastern Plantations Plc Annual Report 2015 | Anglo-Eastern Plantations Plc Annual Report 2015 | Anglo-Eastern Plantations Plc 2015 2015 2015 $000 $000 $000 240 240 240 2014 2014 2014 $000 $000 $000 248 248 248 98 98 98 98 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Notes to the Company Financial Statements 9 Dividends Paid during the year Final dividend of 3.0p per ordinary share for the year ended 31 December 2014 (2013: 3.0p) Proposed final dividend of 1.75p per ordinary share for the year ended 31 December 2015 (2014: 3.0p) 2015 $000 1,869 1,028 2014 $000 1,998 1,854 The proposed dividend for 2015 is subject to shareholder approval at the forthcoming annual general meeting and has not been included as a liability in these financial statements. 10 Guarantees and other financial commitments The Company has provided guarantees for loans to subsidiaries totalling $45,000,000 (2014: $45,000,000) as set out in note 14 of the consolidated financial statements. 11 First time adoption of FRS 101 Reduced Disclosure Framework This is the first time that the Company has adopted FRS 101 having previously applied applicable UK Accounting Standards. The date of transition to FRS 101 was 1 January 2015. In applying FRS 101 for the first time the Company has elected to retain the cost of investment in subsidiary undertakings at their carrying amounts under applicable UK Accounting Standards. There is no effect on the Company’s equity and total comprehensive income of applying FRS 101 for the first time. Annual Report 2015 | Anglo-Eastern Plantations Plc 99 99 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Notice of Annual General Meeting Notice of Annual General Meeting Notice of Annual General Meeting Notice of Annual General Meeting Notice of Annual General Meeting Notice of Annual General Meeting Notice of Annual General Meeting Notice of Annual General Meeting Notice of Annual General Meeting Notice of Annual General Meeting Notice is hereby given that the thirty-first Annual General Meeting of Anglo-Eastern Plantations Plc will be held at the offices of UHY Hacker Notice is hereby given that the thirty-first Annual General Meeting of Anglo-Eastern Plantations Plc will be held at the offices of UHY Hacker Notice is hereby given that the thirty-first Annual General Meeting of Anglo-Eastern Plantations Plc will be held at the offices of UHY Hacker Notice is hereby given that the thirty-first Annual General Meeting of Anglo-Eastern Plantations Plc will be held at the offices of UHY Hacker Notice is hereby given that the thirty-first Annual General Meeting of Anglo-Eastern Plantations Plc will be held at the offices of UHY Hacker Notice is hereby given that the thirty-first Annual General Meeting of Anglo-Eastern Plantations Plc will be held at the offices of UHY Hacker Notice is hereby given that the thirty-first Annual General Meeting of Anglo-Eastern Plantations Plc will be held at the offices of UHY Hacker Notice is hereby given that the thirty-first Annual General Meeting of Anglo-Eastern Plantations Plc will be held at the offices of UHY Hacker Notice is hereby given that the thirty-first Annual General Meeting of Anglo-Eastern Plantations Plc will be held at the offices of UHY Hacker Notice is hereby given that the thirty-first Annual General Meeting of Anglo-Eastern Plantations Plc will be held at the offices of UHY Hacker Young LLP, Quadrant House, 4 Thomas More Square, London E1W 1YW on Monday 27 June 2016 at 11.00 a.m. for the following purposes: Young LLP, Quadrant House, 4 Thomas More Square, London E1W 1YW on Monday 27 June 2016 at 11.00 a.m. for the following purposes: Young LLP, Quadrant House, 4 Thomas More Square, London E1W 1YW on Monday 27 June 2016 at 11.00 a.m. for the following purposes: Young LLP, Quadrant House, 4 Thomas More Square, London E1W 1YW on Monday 27 June 2016 at 11.00 a.m. for the following purposes: Young LLP, Quadrant House, 4 Thomas More Square, London E1W 1YW on Monday 27 June 2016 at 11.00 a.m. for the following purposes: Young LLP, Quadrant House, 4 Thomas More Square, London E1W 1YW on Monday 27 June 2016 at 11.00 a.m. for the following purposes: Young LLP, Quadrant House, 4 Thomas More Square, London E1W 1YW on Monday 27 June 2016 at 11.00 a.m. for the following purposes: Young LLP, Quadrant House, 4 Thomas More Square, London E1W 1YW on Monday 27 June 2016 at 11.00 a.m. for the following purposes: Young LLP, Quadrant House, 4 Thomas More Square, London E1W 1YW on Monday 27 June 2016 at 11.00 a.m. for the following purposes: Young LLP, Quadrant House, 4 Thomas More Square, London E1W 1YW on Monday 27 June 2016 at 11.00 a.m. for the following purposes: To receive and consider the accounts and the reports of the directors and auditors thereon for the year ended 31 December 2015. 1 To receive and consider the accounts and the reports of the directors and auditors thereon for the year ended 31 December 2015. 1 To receive and consider the accounts and the reports of the directors and auditors thereon for the year ended 31 December 2015. 1 To receive and consider the accounts and the reports of the directors and auditors thereon for the year ended 31 December 2015. 1 To receive and consider the accounts and the reports of the directors and auditors thereon for the year ended 31 December 2015. 1 To receive and consider the accounts and the reports of the directors and auditors thereon for the year ended 31 December 2015. 1 To receive and consider the accounts and the reports of the directors and auditors thereon for the year ended 31 December 2015. 1 To receive and consider the accounts and the reports of the directors and auditors thereon for the year ended 31 December 2015. 1 To receive and consider the accounts and the reports of the directors and auditors thereon for the year ended 31 December 2015. 1 To receive and consider the accounts and the reports of the directors and auditors thereon for the year ended 31 December 2015. 1 To approve the Directors' Remuneration Report as set out in the Company’s annual report and accounts for the year ended 31 December 2 To approve the Directors' Remuneration Report as set out in the Company’s annual report and accounts for the year ended 31 December 2 To approve the Directors' Remuneration Report as set out in the Company’s annual report and accounts for the year ended 31 December 2 To approve the Directors' Remuneration Report as set out in the Company’s annual report and accounts for the year ended 31 December 2 To approve the Directors' Remuneration Report as set out in the Company’s annual report and accounts for the year ended 31 December 2 To approve the Directors' Remuneration Report as set out in the Company’s annual report and accounts for the year ended 31 December 2 To approve the Directors' Remuneration Report as set out in the Company’s annual report and accounts for the year ended 31 December 2 To approve the Directors' Remuneration Report as set out in the Company’s annual report and accounts for the year ended 31 December 2 To approve the Directors' Remuneration Report as set out in the Company’s annual report and accounts for the year ended 31 December 2 To approve the Directors' Remuneration Report as set out in the Company’s annual report and accounts for the year ended 31 December 2 2015. 2015. 2015. 2015. 2015. 2015. 2015. 2015. 2015. 2015. To declare a final dividend. To declare a final dividend. To declare a final dividend. To declare a final dividend. To declare a final dividend. To declare a final dividend. To declare a final dividend. To declare a final dividend. To declare a final dividend. To declare a final dividend. To re-elect Madam Lim Siew Kim, a Non-Executive Director, who has served more than nine years. To re-elect Madam Lim Siew Kim, a Non-Executive Director, who has served more than nine years. To re-elect Madam Lim Siew Kim, a Non-Executive Director, who has served more than nine years. To re-elect Madam Lim Siew Kim, a Non-Executive Director, who has served more than nine years. To re-elect Madam Lim Siew Kim, a Non-Executive Director, who has served more than nine years. To re-elect Madam Lim Siew Kim, a Non-Executive Director, who has served more than nine years. To re-elect Madam Lim Siew Kim, a Non-Executive Director, who has served more than nine years. To re-elect Madam Lim Siew Kim, a Non-Executive Director, who has served more than nine years. To re-elect Madam Lim Siew Kim, a Non-Executive Director, who has served more than nine years. To re-elect Madam Lim Siew Kim, a Non-Executive Director, who has served more than nine years. To re-elect Jonathan Law Ngee Song as a director. To re-elect Jonathan Law Ngee Song as a director. To re-elect Jonathan Law Ngee Song as a director. To re-elect Jonathan Law Ngee Song as a director. To re-elect Jonathan Law Ngee Song as a director. To re-elect Jonathan Law Ngee Song as a director. To re-elect Jonathan Law Ngee Song as a director. To re-elect Jonathan Law Ngee Song as a director. To re-elect Jonathan Law Ngee Song as a director. To re-elect Jonathan Law Ngee Song as a director. To re-elect Dato’ John Lim Ewe Chuan as a director. To re-elect Dato’ John Lim Ewe Chuan as a director. To re-elect Dato’ John Lim Ewe Chuan as a director. To re-elect Dato’ John Lim Ewe Chuan as a director. To re-elect Dato’ John Lim Ewe Chuan as a director. To re-elect Dato’ John Lim Ewe Chuan as a director. To re-elect Dato’ John Lim Ewe Chuan as a director. To re-elect Dato’ John Lim Ewe Chuan as a director. To re-elect Dato’ John Lim Ewe Chuan as a director. To re-elect Dato’ John Lim Ewe Chuan as a director. To re-elect Lim Tian Huat as a director. To re-elect Lim Tian Huat as a director. To re-elect Lim Tian Huat as a director. To re-elect Lim Tian Huat as a director. To re-elect Lim Tian Huat as a director. To re-elect Lim Tian Huat as a director. To re-elect Lim Tian Huat as a director. To re-elect Lim Tian Huat as a director. To re-elect Lim Tian Huat as a director. To re-elect Lim Tian Huat as a director. To re-appoint BDO LLP as auditors. To re-appoint BDO LLP as auditors. To re-appoint BDO LLP as auditors. To re-appoint BDO LLP as auditors. To re-appoint BDO LLP as auditors. To re-appoint BDO LLP as auditors. To re-appoint BDO LLP as auditors. To re-appoint BDO LLP as auditors. To re-appoint BDO LLP as auditors. To re-appoint BDO LLP as auditors. To authorise the directors to fix the remuneration of the auditors. To authorise the directors to fix the remuneration of the auditors. To authorise the directors to fix the remuneration of the auditors. To authorise the directors to fix the remuneration of the auditors. To authorise the directors to fix the remuneration of the auditors. To authorise the directors to fix the remuneration of the auditors. To authorise the directors to fix the remuneration of the auditors. To authorise the directors to fix the remuneration of the auditors. To authorise the directors to fix the remuneration of the auditors. To authorise the directors to fix the remuneration of the auditors. 3 3 3 3 3 3 3 3 3 3 4 4 4 4 4 4 4 4 4 4 5 5 5 5 5 5 5 5 5 5 6 6 6 6 6 6 6 6 6 6 7 7 7 7 7 7 7 7 7 7 8 8 8 8 8 8 8 8 8 8 9 9 9 9 9 9 9 9 9 9 10 To consider the following resolution as a special resolution: 10 To consider the following resolution as a special resolution: 10 To consider the following resolution as a special resolution: 10 To consider the following resolution as a special resolution: 10 To consider the following resolution as a special resolution: 10 To consider the following resolution as a special resolution: 10 To consider the following resolution as a special resolution: 10 To consider the following resolution as a special resolution: 10 To consider the following resolution as a special resolution: 10 To consider the following resolution as a special resolution: That the directors be generally and unconditionally authorised in accordance with section 551 of the Companies Act 2006, in substitution for That the directors be generally and unconditionally authorised in accordance with section 551 of the Companies Act 2006, in substitution for That the directors be generally and unconditionally authorised in accordance with section 551 of the Companies Act 2006, in substitution for That the directors be generally and unconditionally authorised in accordance with section 551 of the Companies Act 2006, in substitution for That the directors be generally and unconditionally authorised in accordance with section 551 of the Companies Act 2006, in substitution for That the directors be generally and unconditionally authorised in accordance with section 551 of the Companies Act 2006, in substitution for That the directors be generally and unconditionally authorised in accordance with section 551 of the Companies Act 2006, in substitution for That the directors be generally and unconditionally authorised in accordance with section 551 of the Companies Act 2006, in substitution for That the directors be generally and unconditionally authorised in accordance with section 551 of the Companies Act 2006, in substitution for That the directors be generally and unconditionally authorised in accordance with section 551 of the Companies Act 2006, in substitution for all existing authorities to the extent unused, to exercise all the powers of the Company to allot: all existing authorities to the extent unused, to exercise all the powers of the Company to allot: all existing authorities to the extent unused, to exercise all the powers of the Company to allot: all existing authorities to the extent unused, to exercise all the powers of the Company to allot: all existing authorities to the extent unused, to exercise all the powers of the Company to allot: all existing authorities to the extent unused, to exercise all the powers of the Company to allot: all existing authorities to the extent unused, to exercise all the powers of the Company to allot: all existing authorities to the extent unused, to exercise all the powers of the Company to allot: all existing authorities to the extent unused, to exercise all the powers of the Company to allot: all existing authorities to the extent unused, to exercise all the powers of the Company to allot: (i) (i) (i) (i) (i) (i) (i) (i) (i) (i) shares in the Company up to an aggregate nominal amount of £3,303,031 (representing 13,212,124 ordinary shares of 25p each) shares in the Company up to an aggregate nominal amount of £3,303,031 (representing 13,212,124 ordinary shares of 25p each) shares in the Company up to an aggregate nominal amount of £3,303,031 (representing 13,212,124 ordinary shares of 25p each) shares in the Company up to an aggregate nominal amount of £3,303,031 (representing 13,212,124 ordinary shares of 25p each) shares in the Company up to an aggregate nominal amount of £3,303,031 (representing 13,212,124 ordinary shares of 25p each) shares in the Company up to an aggregate nominal amount of £3,303,031 (representing 13,212,124 ordinary shares of 25p each) shares in the Company up to an aggregate nominal amount of £3,303,031 (representing 13,212,124 ordinary shares of 25p each) shares in the Company up to an aggregate nominal amount of £3,303,031 (representing 13,212,124 ordinary shares of 25p each) shares in the Company up to an aggregate nominal amount of £3,303,031 (representing 13,212,124 ordinary shares of 25p each) shares in the Company up to an aggregate nominal amount of £3,303,031 (representing 13,212,124 ordinary shares of 25p each) which is equal to one third of the issued ordinary share capital (excluding treasury shares) at the date of this resolution: and in which is equal to one third of the issued ordinary share capital (excluding treasury shares) at the date of this resolution: and in which is equal to one third of the issued ordinary share capital (excluding treasury shares) at the date of this resolution: and in which is equal to one third of the issued ordinary share capital (excluding treasury shares) at the date of this resolution: and in which is equal to one third of the issued ordinary share capital (excluding treasury shares) at the date of this resolution: and in which is equal to one third of the issued ordinary share capital (excluding treasury shares) at the date of this resolution: and in which is equal to one third of the issued ordinary share capital (excluding treasury shares) at the date of this resolution: and in which is equal to one third of the issued ordinary share capital (excluding treasury shares) at the date of this resolution: and in which is equal to one third of the issued ordinary share capital (excluding treasury shares) at the date of this resolution: and in which is equal to one third of the issued ordinary share capital (excluding treasury shares) at the date of this resolution: and in addition addition addition addition addition addition addition addition addition addition equity securities of the Company (within the meaning of section 560(1) of the Companies Act 2006) in connection with an offer of equity securities of the Company (within the meaning of section 560(1) of the Companies Act 2006) in connection with an offer of equity securities of the Company (within the meaning of section 560(1) of the Companies Act 2006) in connection with an offer of equity securities of the Company (within the meaning of section 560(1) of the Companies Act 2006) in connection with an offer of equity securities of the Company (within the meaning of section 560(1) of the Companies Act 2006) in connection with an offer of equity securities of the Company (within the meaning of section 560(1) of the Companies Act 2006) in connection with an offer of equity securities of the Company (within the meaning of section 560(1) of the Companies Act 2006) in connection with an offer of equity securities of the Company (within the meaning of section 560(1) of the Companies Act 2006) in connection with an offer of equity securities of the Company (within the meaning of section 560(1) of the Companies Act 2006) in connection with an offer of equity securities of the Company (within the meaning of section 560(1) of the Companies Act 2006) in connection with an offer of such securities by way of a rights issue up to an aggregate nominal amount of £3,303,031 such securities by way of a rights issue up to an aggregate nominal amount of £3,303,031 such securities by way of a rights issue up to an aggregate nominal amount of £3,303,031 such securities by way of a rights issue up to an aggregate nominal amount of £3,303,031 such securities by way of a rights issue up to an aggregate nominal amount of £3,303,031 such securities by way of a rights issue up to an aggregate nominal amount of £3,303,031 such securities by way of a rights issue up to an aggregate nominal amount of £3,303,031 such securities by way of a rights issue up to an aggregate nominal amount of £3,303,031 such securities by way of a rights issue up to an aggregate nominal amount of £3,303,031 such securities by way of a rights issue up to an aggregate nominal amount of £3,303,031 (ii) (ii) (ii) (ii) (ii) (ii) (ii) (ii) (ii) (ii) provided that this authority shall expire on the date of the next annual general meeting after the passing of this resolution or 30 June 2017 provided that this authority shall expire on the date of the next annual general meeting after the passing of this resolution or 30 June 2017 provided that this authority shall expire on the date of the next annual general meeting after the passing of this resolution or 30 June 2017 provided that this authority shall expire on the date of the next annual general meeting after the passing of this resolution or 30 June 2017 provided that this authority shall expire on the date of the next annual general meeting after the passing of this resolution or 30 June 2017 provided that this authority shall expire on the date of the next annual general meeting after the passing of this resolution or 30 June 2017 provided that this authority shall expire on the date of the next annual general meeting after the passing of this resolution or 30 June 2017 provided that this authority shall expire on the date of the next annual general meeting after the passing of this resolution or 30 June 2017 provided that this authority shall expire on the date of the next annual general meeting after the passing of this resolution or 30 June 2017 provided that this authority shall expire on the date of the next annual general meeting after the passing of this resolution or 30 June 2017 whichever is earlier save that the Company may before such expiry make an offer or agreement which would or might require rel evant whichever is earlier save that the Company may before such expiry make an offer or agreement which would or might require rel evant whichever is earlier save that the Company may before such expiry make an offer or agreement which would or might require rel evant whichever is earlier save that the Company may before such expiry make an offer or agreement which would or might require rel evant whichever is earlier save that the Company may before such expiry make an offer or agreement which would or might require rel evant whichever is earlier save that the Company may before such expiry make an offer or agreement which would or might require rel evant whichever is earlier save that the Company may before such expiry make an offer or agreement which would or might require rel evant whichever is earlier save that the Company may before such expiry make an offer or agreement which would or might require rel evant whichever is earlier save that the Company may before such expiry make an offer or agreement which would or might require rel evant whichever is earlier save that the Company may before such expiry make an offer or agreement which would or might require rel evant securities to be allotted after such expiry and the directors may allot relevant securities in pursuance of such an offer or agreement as if the securities to be allotted after such expiry and the directors may allot relevant securities in pursuance of such an offer or agreement as if the securities to be allotted after such expiry and the directors may allot relevant securities in pursuance of such an offer or agreement as if the securities to be allotted after such expiry and the directors may allot relevant securities in pursuance of such an offer or agreement as if the securities to be allotted after such expiry and the directors may allot relevant securities in pursuance of such an offer or agreement as if the securities to be allotted after such expiry and the directors may allot relevant securities in pursuance of such an offer or agreement as if the securities to be allotted after such expiry and the directors may allot relevant securities in pursuance of such an offer or agreement as if the securities to be allotted after such expiry and the directors may allot relevant securities in pursuance of such an offer or agreement as if the securities to be allotted after such expiry and the directors may allot relevant securities in pursuance of such an offer or agreement as if the securities to be allotted after such expiry and the directors may allot relevant securities in pursuance of such an offer or agreement as if the authority conferred hereby had not expired. authority conferred hereby had not expired. authority conferred hereby had not expired. authority conferred hereby had not expired. authority conferred hereby had not expired. authority conferred hereby had not expired. authority conferred hereby had not expired. authority conferred hereby had not expired. authority conferred hereby had not expired. authority conferred hereby had not expired. "rights issue" means an offer of equity securities open for acceptance for a period fixed by the directors to holders of equity securities (other "rights issue" means an offer of equity securities open for acceptance for a period fixed by the directors to holders of equity securities (other "rights issue" means an offer of equity securities open for acceptance for a period fixed by the directors to holders of equity securities (other "rights issue" means an offer of equity securities open for acceptance for a period fixed by the directors to holders of equity securities (other "rights issue" means an offer of equity securities open for acceptance for a period fixed by the directors to holders of equity securities (other "rights issue" means an offer of equity securities open for acceptance for a period fixed by the directors to holders of equity securities (other "rights issue" means an offer of equity securities open for acceptance for a period fixed by the directors to holders of equity securities (other "rights issue" means an offer of equity securities open for acceptance for a period fixed by the directors to holders of equity securities (other "rights issue" means an offer of equity securities open for acceptance for a period fixed by the directors to holders of equity securities (other "rights issue" means an offer of equity securities open for acceptance for a period fixed by the directors to holders of equity securities (other than the Company) on the register on a fixed record date in proportion to their respective holdings of such securities or in accordance with than the Company) on the register on a fixed record date in proportion to their respective holdings of such securities or in accordance with than the Company) on the register on a fixed record date in proportion to their respective holdings of such securities or in accordance with than the Company) on the register on a fixed record date in proportion to their respective holdings of such securities or in accordance with than the Company) on the register on a fixed record date in proportion to their respective holdings of such securities or in accordance with than the Company) on the register on a fixed record date in proportion to their respective holdings of such securities or in accordance with than the Company) on the register on a fixed record date in proportion to their respective holdings of such securities or in accordance with than the Company) on the register on a fixed record date in proportion to their respective holdings of such securities or in accordance with than the Company) on the register on a fixed record date in proportion to their respective holdings of such securities or in accordance with than the Company) on the register on a fixed record date in proportion to their respective holdings of such securities or in accordance with the rights attached thereto (but subject to such exclusions or other arrangements as the directors may deem necessary or expedient in the rights attached thereto (but subject to such exclusions or other arrangements as the directors may deem necessary or expedient in the rights attached thereto (but subject to such exclusions or other arrangements as the directors may deem necessary or expedient in the rights attached thereto (but subject to such exclusions or other arrangements as the directors may deem necessary or expedient in the rights attached thereto (but subject to such exclusions or other arrangements as the directors may deem necessary or expedient in the rights attached thereto (but subject to such exclusions or other arrangements as the directors may deem necessary or expedient in the rights attached thereto (but subject to such exclusions or other arrangements as the directors may deem necessary or expedient in the rights attached thereto (but subject to such exclusions or other arrangements as the directors may deem necessary or expedient in the rights attached thereto (but subject to such exclusions or other arrangements as the directors may deem necessary or expedient in the rights attached thereto (but subject to such exclusions or other arrangements as the directors may deem necessary or expedient in relation to fractional entitlements or legal or practical problems under the laws of, or the requirements of any recognised regulatory body or relation to fractional entitlements or legal or practical problems under the laws of, or the requirements of any recognised regulatory body or relation to fractional entitlements or legal or practical problems under the laws of, or the requirements of any recognised regulatory body or relation to fractional entitlements or legal or practical problems under the laws of, or the requirements of any recognised regulatory body or relation to fractional entitlements or legal or practical problems under the laws of, or the requirements of any recognised regulatory body or relation to fractional entitlements or legal or practical problems under the laws of, or the requirements of any recognised regulatory body or relation to fractional entitlements or legal or practical problems under the laws of, or the requirements of any recognised regulatory body or relation to fractional entitlements or legal or practical problems under the laws of, or the requirements of any recognised regulatory body or relation to fractional entitlements or legal or practical problems under the laws of, or the requirements of any recognised regulatory body or relation to fractional entitlements or legal or practical problems under the laws of, or the requirements of any recognised regulatory body or any stock exchange in, any territory). any stock exchange in, any territory). any stock exchange in, any territory). any stock exchange in, any territory). any stock exchange in, any territory). any stock exchange in, any territory). any stock exchange in, any territory). any stock exchange in, any territory). any stock exchange in, any territory). any stock exchange in, any territory). 11 To consider the following resolution as a special resolution: 11 To consider the following resolution as a special resolution: 11 To consider the following resolution as a special resolution: 11 To consider the following resolution as a special resolution: 11 To consider the following resolution as a special resolution: 11 To consider the following resolution as a special resolution: 11 To consider the following resolution as a special resolution: 11 To consider the following resolution as a special resolution: 11 To consider the following resolution as a special resolution: 11 To consider the following resolution as a special resolution: That subject to and conditional on the passing of Resolution 10, the directors be empowered pursuant to section 570 of the Companies Act That subject to and conditional on the passing of Resolution 10, the directors be empowered pursuant to section 570 of the Companies Act That subject to and conditional on the passing of Resolution 10, the directors be empowered pursuant to section 570 of the Companies Act That subject to and conditional on the passing of Resolution 10, the directors be empowered pursuant to section 570 of the Companies Act That subject to and conditional on the passing of Resolution 10, the directors be empowered pursuant to section 570 of the Companies Act That subject to and conditional on the passing of Resolution 10, the directors be empowered pursuant to section 570 of the Companies Act That subject to and conditional on the passing of Resolution 10, the directors be empowered pursuant to section 570 of the Companies Act That subject to and conditional on the passing of Resolution 10, the directors be empowered pursuant to section 570 of the Companies Act That subject to and conditional on the passing of Resolution 10, the directors be empowered pursuant to section 570 of the Companies Act That subject to and conditional on the passing of Resolution 10, the directors be empowered pursuant to section 570 of the Companies Act 2006) to allot equity securities (within the meaning of section 560 of that Act) for cash pursuant to the authority conferred by Resolution 10 2006) to allot equity securities (within the meaning of section 560 of that Act) for cash pursuant to the authority conferred by Resolution 10 2006) to allot equity securities (within the meaning of section 560 of that Act) for cash pursuant to the authority conferred by Resolution 10 2006) to allot equity securities (within the meaning of section 560 of that Act) for cash pursuant to the authority conferred by Resolution 10 2006) to allot equity securities (within the meaning of section 560 of that Act) for cash pursuant to the authority conferred by Resolution 10 2006) to allot equity securities (within the meaning of section 560 of that Act) for cash pursuant to the authority conferred by Resolution 10 2006) to allot equity securities (within the meaning of section 560 of that Act) for cash pursuant to the authority conferred by Resolution 10 2006) to allot equity securities (within the meaning of section 560 of that Act) for cash pursuant to the authority conferred by Resolution 10 2006) to allot equity securities (within the meaning of section 560 of that Act) for cash pursuant to the authority conferred by Resolution 10 2006) to allot equity securities (within the meaning of section 560 of that Act) for cash pursuant to the authority conferred by Resolution 10 and/or by way of sale of treasury shares as if section 561(1) of that Act did not apply to any such allotment or sale, provided that this and/or by way of sale of treasury shares as if section 561(1) of that Act did not apply to any such allotment or sale, provided that this and/or by way of sale of treasury shares as if section 561(1) of that Act did not apply to any such allotment or sale, provided that this and/or by way of sale of treasury shares as if section 561(1) of that Act did not apply to any such allotment or sale, provided that this and/or by way of sale of treasury shares as if section 561(1) of that Act did not apply to any such allotment or sale, provided that this and/or by way of sale of treasury shares as if section 561(1) of that Act did not apply to any such allotment or sale, provided that this and/or by way of sale of treasury shares as if section 561(1) of that Act did not apply to any such allotment or sale, provided that this and/or by way of sale of treasury shares as if section 561(1) of that Act did not apply to any such allotment or sale, provided that this and/or by way of sale of treasury shares as if section 561(1) of that Act did not apply to any such allotment or sale, provided that this and/or by way of sale of treasury shares as if section 561(1) of that Act did not apply to any such allotment or sale, provided that this authorisation shall be limited to: authorisation shall be limited to: authorisation shall be limited to: authorisation shall be limited to: authorisation shall be limited to: authorisation shall be limited to: authorisation shall be limited to: authorisation shall be limited to: authorisation shall be limited to: authorisation shall be limited to: (i) (i) (i) (i) (i) (i) (i) (i) (i) (i) the allotment of equity securities and sale of treasury shares for cash in connection with an offer or issue of, or invitation to apply for, the allotment of equity securities and sale of treasury shares for cash in connection with an offer or issue of, or invitation to apply for, the allotment of equity securities and sale of treasury shares for cash in connection with an offer or issue of, or invitation to apply for, the allotment of equity securities and sale of treasury shares for cash in connection with an offer or issue of, or invitation to apply for, the allotment of equity securities and sale of treasury shares for cash in connection with an offer or issue of, or invitation to apply for, the allotment of equity securities and sale of treasury shares for cash in connection with an offer or issue of, or invitation to apply for, the allotment of equity securities and sale of treasury shares for cash in connection with an offer or issue of, or invitation to apply for, the allotment of equity securities and sale of treasury shares for cash in connection with an offer or issue of, or invitation to apply for, the allotment of equity securities and sale of treasury shares for cash in connection with an offer or issue of, or invitation to apply for, the allotment of equity securities and sale of treasury shares for cash in connection with an offer or issue of, or invitation to apply for, equity securities made to (but in the case of the authority granted under paragraph (ii) of Resolution 10 by way of a rights issue equity securities made to (but in the case of the authority granted under paragraph (ii) of Resolution 10 by way of a rights issue equity securities made to (but in the case of the authority granted under paragraph (ii) of Resolution 10 by way of a rights issue equity securities made to (but in the case of the authority granted under paragraph (ii) of Resolution 10 by way of a rights issue equity securities made to (but in the case of the authority granted under paragraph (ii) of Resolution 10 by way of a rights issue equity securities made to (but in the case of the authority granted under paragraph (ii) of Resolution 10 by way of a rights issue equity securities made to (but in the case of the authority granted under paragraph (ii) of Resolution 10 by way of a rights issue equity securities made to (but in the case of the authority granted under paragraph (ii) of Resolution 10 by way of a rights issue equity securities made to (but in the case of the authority granted under paragraph (ii) of Resolution 10 by way of a rights issue equity securities made to (but in the case of the authority granted under paragraph (ii) of Resolution 10 by way of a rights issue only); only); only); only); only); only); only); only); only); only); (a) (a) (a) (a) (a) (a) (a) (a) (a) (a) (b) (b) (b) (b) (b) (b) (b) (b) (b) (b) ordinary shareholders in proportion (as nearly may be practicable) to their existing holdings: and ordinary shareholders in proportion (as nearly may be practicable) to their existing holdings: and ordinary shareholders in proportion (as nearly may be practicable) to their existing holdings: and ordinary shareholders in proportion (as nearly may be practicable) to their existing holdings: and ordinary shareholders in proportion (as nearly may be practicable) to their existing holdings: and ordinary shareholders in proportion (as nearly may be practicable) to their existing holdings: and ordinary shareholders in proportion (as nearly may be practicable) to their existing holdings: and ordinary shareholders in proportion (as nearly may be practicable) to their existing holdings: and ordinary shareholders in proportion (as nearly may be practicable) to their existing holdings: and ordinary shareholders in proportion (as nearly may be practicable) to their existing holdings: and holders of other equity securities, as required by the rights of those securities, or as the directors otherwise consider holders of other equity securities, as required by the rights of those securities, or as the directors otherwise consider holders of other equity securities, as required by the rights of those securities, or as the directors otherwise consider holders of other equity securities, as required by the rights of those securities, or as the directors otherwise consider holders of other equity securities, as required by the rights of those securities, or as the directors otherwise consider holders of other equity securities, as required by the rights of those securities, or as the directors otherwise consider holders of other equity securities, as required by the rights of those securities, or as the directors otherwise consider holders of other equity securities, as required by the rights of those securities, or as the directors otherwise consider holders of other equity securities, as required by the rights of those securities, or as the directors otherwise consider holders of other equity securities, as required by the rights of those securities, or as the directors otherwise consider necessary, necessary, necessary, necessary, necessary, necessary, necessary, necessary, necessary, necessary, and permitting the directors to impose any limited or restrictions and make any arrangements which they consider necessary or and permitting the directors to impose any limited or restrictions and make any arrangements which they consider necessary or and permitting the directors to impose any limited or restrictions and make any arrangements which they consider necessary or and permitting the directors to impose any limited or restrictions and make any arrangements which they consider necessary or and permitting the directors to impose any limited or restrictions and make any arrangements which they consider necessary or and permitting the directors to impose any limited or restrictions and make any arrangements which they consider necessary or and permitting the directors to impose any limited or restrictions and make any arrangements which they consider necessary or and permitting the directors to impose any limited or restrictions and make any arrangements which they consider necessary or and permitting the directors to impose any limited or restrictions and make any arrangements which they consider necessary or and permitting the directors to impose any limited or restrictions and make any arrangements which they consider necessary or appropriate to deal with treasury shares, fractional entitlement, record dates, legal regulatory or practical problems in, or under, the appropriate to deal with treasury shares, fractional entitlement, record dates, legal regulatory or practical problems in, or under, the appropriate to deal with treasury shares, fractional entitlement, record dates, legal regulatory or practical problems in, or under, the appropriate to deal with treasury shares, fractional entitlement, record dates, legal regulatory or practical problems in, or under, the appropriate to deal with treasury shares, fractional entitlement, record dates, legal regulatory or practical problems in, or under, the appropriate to deal with treasury shares, fractional entitlement, record dates, legal regulatory or practical problems in, or under, the appropriate to deal with treasury shares, fractional entitlement, record dates, legal regulatory or practical problems in, or under, the appropriate to deal with treasury shares, fractional entitlement, record dates, legal regulatory or practical problems in, or under, the appropriate to deal with treasury shares, fractional entitlement, record dates, legal regulatory or practical problems in, or under, the appropriate to deal with treasury shares, fractional entitlement, record dates, legal regulatory or practical problems in, or under, the laws of any territory, or any other matter; and laws of any territory, or any other matter; and laws of any territory, or any other matter; and laws of any territory, or any other matter; and laws of any territory, or any other matter; and laws of any territory, or any other matter; and laws of any territory, or any other matter; and laws of any territory, or any other matter; and laws of any territory, or any other matter; and laws of any territory, or any other matter; and Annual Report 2015 | Anglo-Eastern Plantations Plc Annual Report 2015 | Anglo-Eastern Plantations Plc Annual Report 2015 | Anglo-Eastern Plantations Plc Annual Report 2015 | Anglo-Eastern Plantations Plc Annual Report 2015 | Anglo-Eastern Plantations Plc Annual Report 2015 | Anglo-Eastern Plantations Plc Annual Report 2015 | Anglo-Eastern Plantations Plc Annual Report 2015 | Anglo-Eastern Plantations Plc Annual Report 2015 | Anglo-Eastern Plantations Plc Annual Report 2015 | Anglo-Eastern Plantations Plc 100 100 100 100 100 100 100 100 100 100 100 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Notice of Annual General Meeting (ii) in the case of the authority granted under paragraph (i) of Resolution 10 and/or the sale of treasury shares for cash, to the allotment of equity shares or sale of treasury shares up to an aggregate nominal amount of £495,454. Such power shall apply during the period expiring on the date of the next annual general meeting or on 30 June 2017 (whichever shall be earlier) but the directors may during such periods make offers or agreements which would or might require equity securities to be allotted (and treasury shares to be sold) after the expiry of such period. 12 To consider the following as a special resolution: That the Company be generally and unconditionally authorised to make market purchases (within the meaning of section 693(4) of the Companies Act 2006) of ordinary shares of 25p each in the capital of the Company on such terms as the directors think fit, provided that: (a) the maximum number of ordinary shares hereby authorised to be purchased is 3,963,637 (representing 10% of the issued ordinary share capital); (b) the minimum price (exclusive of expenses) which may be paid for each ordinary share is 25p; (c) the maximum price (exclusive of expenses) which may be paid for each ordinary share is the higher of: (i) an amount equal to 105% of the average of the middle market quotations for such share as derived from the Daily Official List of the London Stock Exchange for the five business days immediately preceding the date of purchase; and (ii) the price of the last independent trade and the highest current independent bid on the London Stock Exchange; and (d) the authority hereby conferred shall expire on 30 June 2017 or, if earlier, at the conclusion of the next annual general meeting of the Company save that the Company may before the expiry of this authority make a contract of purchase which will or may be executed wholly or partly after such expiry and may make a purchase of shares pursuant to any such contract. 13 To consider and if thought fit to pass the following resolution as a special resolution: That a general meeting of the Company other than an annual general meeting may be called on not less than 14 clear days’ notice. By order of the Board CETC (Nominees) Limited Company Secretary 26 May 2016 Annual Report 2015 | Anglo-Eastern Plantations Plc 101 101 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Notice of Annual General Meeting Notes: 1. 2. 3. 4. 5. 6. 7. 8. 9. Pursuant to regulation 41 of the Uncertificated Securities Regulations 2001, the Company has specified that only those shareholders on the register of members of the Company on 23 June 2016 shall be entitled to attend and vote at the meeting in respect of the number of shares registered in their name at that time. Changes to the register of members after 23 June 2016 or, if the meeting is adjourned, in the register of members at 6.00 p.m. on the date which is two days before the day of the adjourned meeting shall be disregarded in determining the rights of any person to attend and vote at the meeting. As at 26 May 2016 (being the latest practicable date prior to the publication of this notice), the Company’s issued share capital comprised 39,976,272 Ordinary Shares of 25p each. Each share carries one vote except 339,900 shares held as treasury shares and therefore the total number of voting rights in the Company as at 9.00 am on 26 May 2016 is 39,636,372. A member of the Company entitled to attend and vote at the meeting may appoint one or more proxies to attend, speak and vote at the meeting. Where more than one proxy is appointed in relation to the meeting, each proxy must be appointed to exercise rights attaching to a different share or shares. You may not appoint more than one proxy to exercise rights attached to any one share. A proxy need not be a member of the Company. The instrument appointing a proxy must be deposited at the office of the registrars not less than forty-eight hours before the time appointed for holding the meeting (or any adjournment thereof). In the case of joint holders, where more than one of the joint holders purports to appoint a proxy, only the appointment submitted by the most senior holder will be accepted. Seniority is determined by the order in which the names of the joint holders appear in the Company’s register of members in respect of the joint holding (the first-named being the most senior). CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so for the annual general meeting to be held on 27 June 2016 and any adjournment thereof by using the procedures described in the CREST Manual on the Euroclear website (www.euroclear.com/CREST). CREST personal members or other CREST sponsored members and those CREST members who have appointed a voting service provider should refer to their CREST sponsor or voting service provider, who will be able to take the appropriate action on their behalf. In order for a proxy appointment or instruction made using the CREST service to be valid, the appropriate CREST message (a “CREST Proxy Instruction”) must be properly authenticated in accordance with Euroclear’s specifications and must contain the information required for such instructions, as described in the CREST Manual. All messages relating to the appointment of a proxy or an instruction to a previously appointed proxy must be transmitted so as to be received by Capita Registrars [CREST ID: RA10] by 11.00 a.m. on 23 June 2016. It is the responsibility of the CREST member concerned to take such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In this connection, CREST members and, where applicable, their CREST sponsors or voting service providers are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings. The Company may treat a CREST Proxy Instruction as invalid in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001. You may submit your proxy electronically using The Share Portal service at www.capitashareportal.com. If not already registered for The Share Portal you will need your Investor Code which can be found on your share certificate. The statement of the rights of shareholders in relation to the appointment of proxies does not apply to a person who receives this notice of general meeting as a person nominated to enjoy “information rights” under section 146 of the Companies Act 2006. If you have been sent this notice of meeting because you are such a nominated person the following statements apply: (i) you may have a right under an agreement between you and t he registered shareholder by whom you were nominated to be appointed (or to have someone else appointed) as a proxy for this general meeting and (ii) if you have no such a right, or do not wish to exercise it, you may have a right under such an agreement to give instructions to that registered shareholder as to the exercise of voting rights. Nominated persons should contact the registered member by whom they were nominated in respect of these arrangements. A member of the Company which is a corporation may authorise a person or persons to act as its representative(s) at the meeting. In accordance with the provisions of the Companies Act 2006, each such representative may exercise (on behalf of the corporation) the same powers as the corporation could exercise if it were an individual member of the Company, provided that they do not do so in relation to the same shares. It is no longer necessary to nominate a designated corporate representative. 10. Members satisfying the requirements of section 527 of the Companies Act 2006 may require the Company to publish on a website a statement by them (at the Company’s cost) relating to the audit of the Company’s accounts which are being laid before this meeting (including the auditor’s report and the conduct of the audit) or, where applicable, any circumstances connected with an auditor of the Company ceasing to hold office since the previous general meeting at which accounts were laid. Should such a statement be received, it will be published on the Company’s website at www.angloeastern.co.uk. In those circumstances the Company would be under an obligation to forward a copy of the statement to the auditors forthwith and the statement would form part of the business which may be dealt with at this meeting. 11. Any member attending the meeting has the right to ask questions. The Company must cause to be answered any such questions relating to the business being dealt with at the meeting but no such answer need be given if (a) to do so would interfere unduly with the preparation of the meeting or involve the disclosure of confidential information, (b) the answer has already been given on a website in the form of an answer to a question, or (c) it is undesirable in the interests of the Company or the good order of the meeting that the question be answered. Annual Report 2015 | Anglo-Eastern Plantations Plc 102 102 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. Notice of Annual General Meeting 12. The following documents are available for inspection by members at the registered office of the Company during normal busines s hours (except Bank Holidays) and at the place of the meeting not less than 15 minutes prior to and during the meeting: (a) a copy of the Executive Director’s service agreement; (b) (c) (d) a copy of the Company’s Articles of Association. copies of Non-Executive Directors’ letters of appointment; relationship agreement with the majority shareholder; and 13. A copy of this notice and the other information required by section 311A of the Companies Act 2006 can be found at www.angloeastern.co.uk. 14. 15. If you are in any doubt as to any aspect of Resolutions 10 to 13 or as to the action you should take, you should immediately take your own advice from a stockbroker, solicitor, accountant or other independent financial advisor authorised under the Financial Services and Markets Act 2000. The Board believes that these Resolutions are in the best interests of the Company and shareholders as a whole. If you have sold or otherwise transferred all your shares in the Company, please hand this document and the accompanying form of proxy to the purchaser or transferee, or to the bank, stockbroker or other agent through whom the sale or transfer was effected, for transmission to the purchaser or transferee. If you sell or have sold or otherwise transferred only part of your holding of existing shares please consult the bank, stockbroker or other agent through whom the sale or transfer was effected. Annual Report 2015 | Anglo-Eastern Plantations Plc 103 103 About Anglo-Eastern Plantations Annual Report 2015 | Anglo-Eastern Plantations Plc 2 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 128,600ha. 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 some 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. About Anglo-Eastern Plantations Contents 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 128,600ha. About AEP Financial Highlights Key Information Shareholder Information Chairman's Statement Strategic Report Financial Record Estate Areas Location of Estates Directors' Report Directors' Responsibilities Directors Statement on Corporate Governance Audit Committee Report Directors' Remuneration Report Auditors' Report Consolidated Income Statement Consolidated Statement of Comprehensive Income Consolidated Statement of Financial Position Consolidated Statement of Changes in Equity 2 4 6 7 9 11 29 30 31 32 38 39 40 44 47 52 59 60 61 62 Consolidated Statement of Cash Flows Notes to the Consolidated Financial Statements Company Balance Sheet Company Statement of Changes in Equity Notes to the Company Financial Statements Notice of Annual General Meeting Form of Proxy and Attendance Card AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. 65 63 Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. 94 95 93 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. Separate Attachment 100 Company addresses, advisers and website Inside Back Cover Annual Report 2015 | Anglo-Eastern Plantations Plc 2 Company addresses London Office 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 Malaysian Office Anglo-Eastern Plantations Management Sdn Bhd 7th Floor, Wisma Equity 150 Jalan Ampang 50450 Kuala Lumpur Malaysia Tel: 60 (0)3 2162 9808 Fax: 60 (0)3 2164 8922 Indonesian Office PT Anglo-Eastern Plantations Management Indonesia Wisma HSBC, Jalan Diponegoro, Kav 11 Medan 20152 North Sumatera Indonesia Tel: 62 (0)61 452 0107 Fax: 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: 44 (0)20 7216 4600 Fax: 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 Sumatera Indonesia PT Bank DBS Indonesia Uniplaza Building Jalan Letjen MT Haryono A-1 Medan 20231 North Sumatera 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 Panmure Gordon (UK) Limited One New Change London EC4M 9AF United Kingdom Anglo_EasternARcov 2015.indd 2 4/27/16 5:20 PM 2015 Annual Report Anglo-Eastern Plantations Plc l A n g o - E a s t e r n P a n t a t i l o n s P l c 2 0 1 5 A n n u a l R e p o r t Anglo_EasternARcov 2015.indd 1 4/27/16 5:20 PM
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