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2016 Annual Report
ANNUAL REPORT
Anglo-Eastern Plantations Plc
Company Number: 1884630
Contents
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
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
2
4
6
7
9
11
26
27
28
29
36
37
38
42
45
50
58
59
60
61
62
64
94
95
96
101
Form of Proxy and Attendance Card
Company addresses, advisers and website
Separate Attachment
Inside Back Cover
About Anglo-Eastern Plantations
Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”) is 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 in.
Annual Report 2016 | Anglo-Eastern Plantations Plc
2
About Anglo-Eastern Plantations
Oil Palm Plantations
The Group has developed 53,000ha of mature oil palm at 16 plantations across
Indonesia and Malaysia.
Oil Palm Development
An Oil Palm tree usually takes three years from planting to harvest of first crop
and will reach full production after five years. The Group has approximately
11,400ha of recently planted immature plantations of which 2,621ha were planted
in 2016, including replanting of 1,516ha.
Palm Oil Production
The Group operates 6 palm oil mills in Indonesia processing up to a combined
295mt of fresh fruit bunches (“FFB”) per hour. A mill in Northern Sumatera is
equipped with advanced waste management treatment for biomass disposal and
biogas emission capture. Two more biogas plants are nearing completion at the
Bengkulu and Central Kalimantan mills. They are expected to be commissioned
from the second quarter of 2017.
Third Party Palm Oil Processing
During 2016 the Group purchased approximately 813,700mt of FFB from third
party producers comprising of small plantations and local farmers for processing
through our own mills. The total FFB throughput at the Group’s mills in 2016 was
1.69 million mt producing 353,100mt of crude palm oil (“CPO”).
Rubber Plantations
The Group has 512ha of established rubber plantations which in 2016, produced
868mt of raw latex and rubber lumps. The size of rubber plantations will reduce
further as the Group replaces ageing rubber trees with oil palm.
Annual Report 2016 | Anglo-Eastern Plantations Plc
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Financial Highlights
Revenue
Profit before tax
- before biological asset (“BA”) movement
- after biological asset movement
EPS before BA movement
EPS after BA movement
Dividend (pence)
Dividend (cents)
Note: * Based on exchange rate at 19 April 2017 of $1.2811/£
Anglo-Eastern Plantations Plc
(Restated)
2015
$m
2016
$m
246.2
196.5
57.5
60.8
26.0
25.3
82.16cts
87.58cts
3.0p
3.8*cts
25.89cts
24.66cts
1.75p
2.5cts
%
FTSE 100
Share Price (p)
Turnover by volume ('000)
Annual Report 2016 | Anglo-Eastern Plantations Plc
4
Financial Highlights
Revenue ($000)
Profit Before Tax Before BA
($000)
100,000
80,000
60,000
40,000
20,000
0
300,000
250,000
200,000
150,000
100,000
50,000
0
2012 2013 2014 2015 2016
2012 2013 2014 2015 2016
Basic Earnings Per Share
Before BA ($, cents)
Asset Value Per Share
($, cents)
160.00
140.00
120.00
100.00
80.00
60.00
40.00
20.00
0.00
1,200
1,000
800
600
400
200
0
2012 2013 2014 2015 2016
2012 2013 2014 2015 2016
Note: The Financial Statements for the year 2015 were restated following the adoption of the amendments to IAS 16
and IAS 41 as disclosed in note 2 - Prior year restatement on pages 69 to 70 of these Financial Statements. The
Financial Statements for the years 2012 to 2014 were not restated and were based on the previous accounting
policies and measurements.
Annual Report 2016 | Anglo-Eastern Plantations Plc
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Key Information
Age of Palm Trees
(as at 31/12/16)
(as at 31/12/15)
13%
18%
12%
20%
26%
28%
43%
40%
Immature
Young
Prime
Old
Own FFB & Outside Purchase (mt)
1,000,000
900,000
800,000
700,000
600,000
500,000
400,000
300,000
200,000
100,000
-
2012
2013
2014
2015
2016
Own FFB
Outside Purchase
Crude Palm Oil Production (mt)
400,000
350,000
300,000
250,000
200,000
150,000
100,000
50,000
-
2012
2013
2014
2015
2016
Annual Report 2016 | Anglo-Eastern Plantations Plc
6
Shareholder Information
Market capitalisation
The market capitalisation of Anglo-Eastern Plantations Plc at 31 December 2016 was £267 million, the ordinary
share price at close of business on 18 April 2017 was 726 pence giving a market capitalisation of £288 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.
The website was upgraded during the year to enable shareholders and investors to select and receive e-mail alerts
from the Company on selected regulatory news. Shareholders are encouraged to use the e-mail alerts to follow the
development of the Company.
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 Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU
United Kingdom
Tel:
Tel:
0871 664 0300 (UK)
+44 371 664 0300 (international)
Shareholders can view and update their account details via the Capita website, details of which can be found at
www.capitashareportal.com.
Annual General Meeting
The 32nd Annual General Meeting of the Company will be held at the offices of UHY Hacker Young LLP, 6th floor
Quadrant House, 4 Thomas More Square, London E1W 1YW on 27 June 2017. Notice of the meeting is set out at
the end of this Annual Report on pages 101 to 104.
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 2016 | Anglo-Eastern Plantations Plc
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Shareholder Information
Payment of dividends
The Group's reporting currency is in 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 of 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 closing 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 2016 | Anglo-Eastern Plantations Plc
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Chairman’s Statement
The Group’s production of FFB in 2016 declined marginally to 897,700mt, from the previous year of 900,400mt. FFB
production has steadily increased since 2010 but declined for the first time in six years. The lower production of FFB
was primarily due to a sharp drop in yield in Riau region as palm trees took longer to recover from the prolonged
drought and haze of last year. However production in 2017 may quickly rebound as 82% of the Group’s palm trees
are matured and are in favourable production age. The current weighted average age of trees is about 11 years old.
The throughput at the six mills in 2016 however was at a record high as the Group purchased more external crops.
FFB bought-in from surrounding smallholders was 813,700mt (2015: 678,200mt), 20% higher, due to the Group’s
aggressive purchasing policy and competitive prices. The mills as a result processed 12% more FFB, and increased
CPO production by 10% to 353,100mt (2015: 321,400mt).
Revenue and profitability improved as CPO prices recovered to a three-year high on lower stocks due to the impact
of one of the strongest El Nino on record and biodiesel mandates in Indonesia and United States (“US”), which are
expected to boast consumption of edible oil. It was reported that many plantations were recovering from a low yields
due to the drought from last year. The B20 biodiesel programme in Indonesia which aims to raise the minimum bio-
content from the current 15% to 20% would use up more palm oil and increase demand for blending purposes. The
strength in vegetable oil prices received further support in the wake of recent plans by the US to raise its renewable
fuel standard which is likely to result in a higher demand of soybean oil for diesel. The average CPO Rotterdam price
in 2016 was 15% higher at $706/mt, compared to $613/mt in 2015.
The Group’s revenue was higher by 25% at $246.2 million, compared to $196.5 million achieved in 2015. The
operating profit for the Group in 2016, before the biological asset (“BA”) movement was $52.5 million, 122% higher
compared to $23.7 million achieved in 2015. Earnings per share, before BA movement increased to 82.16cts, from
25.89cts in 2015. The Group’s operating profit for 2016 was at $55.9 million after an upward BA movement of $3.4
million as compared to 2015 operating profit of $22.9 million after a downward BA movement of $0.7 million.
The financial statements for the comparative year of 2015 were restated with the adoption of new amendments to
IAS 16 and IAS 41 for bearer plants which were mandatory from 1 January 2016. The revised standards require
bearer plants to be treated as property, plant and equipment and to be valued at historical costs less depreciation or
deemed costs at last valuation. The amendment means that the previously recognised movement in the fair value of
biological assets in the financial statements is replaced by a depreciation charge and impairment loss, if any. In the
restated operating results for the year ended 31 December 2015, an impairment loss amounting to $12.5 million was
charged which was previously recognised under Biological Asset movement. The amendment also requires FFB
growing on the trees which are not due for harvest to be measured at fair value. The methodology and its impact are
explained in detail in note 2 - Prior year restatement.
The Group planted 2,621ha of oil palms in 2016 of which 1,516ha 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. This issue is likely to continue as villagers may demand higher compensation for their land
in view of higher CPO prices.
In addition to the current biogas and biomass plant in North Sumatera, two more biogas plants in Bengkulu and
Kalimantan are in the final stages of construction and are estimated to cost $6.8 million on completion. Biogas
engines have been installed with ancillary works covering gas piping and electrical works are in progress. The testing
and commissioning should begin shortly and biogas plants are expected to be operational from the second quarter of
2017. The plants when completed are expected to generate a combined 3 megawatt of electrical power. A surplus of
15.6 million kilowatt hour (“kWh”) of electricity worth $1.2 million is projected to be generated from these two plants
which the Group intends to sell to the state electricity company. The use of clean energy in the mills will further
reduce their reliance on fossil fuels and improve the Group’s carbon foot print.
AEP was removed from the Financial Times Stock Exchange (“FTSE”) All Shares Index in June 2016 resulting in a
large sell down of its shares as index related funds reweighted their holdings. The drop in Company’s share price
coincided with the sell down (Refer to Page 4). To remain in the index, AEP must achieve a monthly median
turnover of 0.015% of its shares for eight out of twelve months. The removal was primarily based on the liquidity of
the shares. FTSE will review the constituents of the index annually and the next review is due in June 2017.
Annual Report 2016 | Anglo-Eastern Plantations Plc
9
Chairman’s Statement
The Indian government in November 2016 abruptly demonetised the country’s large bank notes which has a knock-
on effect on consumer demand. Retail sales suffered as many do not have sufficient cash to buy and pay for
essentials resulting in a weaker demand for CPO. India is the largest consumer of CPO and in the first ten months of
this year, India makes up 19% of the total palm oil exports. It has been reported that palm oil exports to India will
normalise once the issues of insufficient cash in distribution are addressed.
Several EU countries including the UK signed the Amsterdam Declaration to support a fully sustainable palm oil
supply chain by the year 2020 of which sustainable development goals called for, among other things, sustainable
production and consumption, and ensuring food security and nutrition, ending poverty, halting biodiversity loss and
land degradation. It was reported that palm oil has over the years suffered from increasing negative image in Europe
due to issues related to deforestation which led to a decline in CPO use in the EU.
Despite all these challenges, palm oil prices have been strong with little prospect of real pickup in production until the
second half of 2017. The suspension of new plantation licenses in Indonesia demonstrates the Indonesian
government commitment to environmental stewardship and to protect the country’s remaining tropical forest. The
suspension augurs well for the CPO price. Nevertheless pressure continues from the larger global crops of soybeans
and sunflower seed which is expected to translate into bigger oil supplies at competitive prices against palm oil. This
tends to keep palm oil prices capped.
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 3.0p per share in respect of the year to 31 December 2016 (2015: 1.75p). Subject to the
approval by shareholders at the Annual General Meeting, the final dividend will be paid on 14 July 2017 to those
shareholders on the register on 9 June 2017.
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 2017
Annual Report 2016 | Anglo-Eastern Plantations Plc
10
Strategic Report
Business Model
The Group will continue to focus on its strength and expertise which is planting more oil palms. This includes
replanting old palms with low yield, replacing 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
bought and invested in new tracts of land and portions remain to be planted. Good land at a 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. The Group believes in the long-term viability of palm oil which remains 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 17mt/ha, 119% mill efficiency and production cost of $275/mt on Indonesia operations.
This compared to 2015 yield of 18.4mt/ha, 109% mill efficiency and production cost of $250/mt. Despite stiff
competition for external crops from surrounding millers, the Group is committed to purchasing 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 of 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 progressively reduce the greenhouse gas emissions per metric ton of CPO produced in the next
few 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 EU and with those parts of the Companies Act 2006 applicable to companies preparing their
accounts under IFRS.
For the year ended 31 December 2016, revenue for the Group was $246.2 million, 25% higher than $196.5 million
reported in 2015 due primarily to the higher CPO price. CPO price hit a three-year high on lower palm oil inventory
brought about by the prolonged drought last year.
The Group operating profit for 2016 before biological asset movement was $52.5 million, 122% more than $23.7
million in 2015.
Annual Report 2016 | Anglo-Eastern Plantations Plc
11
Strategic Report
FFB production for 2016 was 897,700mt, marginally lower than the 900,400mt produced in 2015. The yield remains
below expectation due to a sharp drop in yield for the planation in Riau brought about by the wide spread drought
and haze of last year. FFB bought-in from local smallholders for 2016 was 813,700mt (2015: 678,200mt), 20%
higher compared to 2015. During the year, FFB processed by the Group’s mills was 1.69 million mt, 12% higher than
last year of 1.51 million mt and CPO production was 10% higher at 353,100mt, compared to 321,400mt in 2015.
Profit before tax and after BA movement for the Group was $60.8 million, 141% higher compared to a profit of $25.3
million in 2015. The BA movement was a credit of $3.4 million, compared to a debit of $0.7 million in 2015.
The average CPO price for 2016 was $706/mt, 15% higher than 2015 of $613/mt.
Earnings per share before BA movement increased by 217% to 82.16cts compared to 25.89cts in 2015. Earnings
per share after BA movement increased from 24.66cts to 87.58cts.
Going Concern
The Group’s balance sheet remains strong. As at 31 December 2016, the Group had cash and cash equivalents of
$118.2 million and borrowings of $34.1 million, giving it a net cash position of $84.1 million, compared to $70.0
million in 2015. The Group’s borrowings in the year reduced to $34.1 million (2015: $34.6 million). For these reasons,
the Directors adopt a going concern basis of accounting and believe the Group will continue operation and meet its
liabilities for a period of at least twelve months from the date of approval of the financial statements.
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 303,500mt in 2016 (2015: 325,200mt), 7% lower than
2015. The prolonged dry weather from last year induced a higher development of abnormal and smaller FFB
bunches as well as male flowers in the Labuhan Bilik plantation. Replanting of over 1,500ha of oil palm in Tasik Raja
and Anak Tasik also contributed to the lower production. In the CPA which is located on the west coast of North
Sumatera, production was disrupted by flash floods that regularly occurred over 2,000ha of low laying plantation. As
safety of the workers is of paramount importance, the safe evacuation of FFB was not possible until the flood had
receded substantially. Canals and water gates built to mitigate the flood could not contain the heavy rain which is in
excess of 5,300mm per annum.
Ganoderma fungus and Upper Stem Rot which attacks the productive palms in AnakTasik, 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 in 2017
will continue in AnakTasik due to the 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 337,100mt (2015: 317,400mt), 6% higher than 2015. The higher production was due to higher
contribution from maturing estates in KKST, ELAP and RAA. 177km of roads were resurfaced with gravel and laterite
soil during the year 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.
FFB production in the Riau region, comprising Bina Pitri estates, produced 111,100mt in 2016 (2015: 122,500mt),
9% lower than 2015. The drop in yield was due to the severe drought and haze in 2015. Despite a 3% increase in
external crop purchase, CPO production declined by 7% due to the lower internal crop production.
Annual Report 2016 | Anglo-Eastern Plantations Plc
12
Strategic Report
FFB production in Kalimantan which comprises of the Sawit Graha Manunggal estates produced 121,800mt in 2016
(2015: 108,100mt) 13% higher than 2015 mainly from newly matured oil palm area of over 8,500ha. During the year
bagworms (Metisa plana) attacked 150ha of oil palm and damaged the fronds. The plantation sprayed Prevathon
systemic pesticide at 14 days interval until the infestation was completely eradicated. Outbreak of bagworms tends to
be associated with the combined effect of drought and excessive mortality of natural enemies. The palm trees are
expected to recover with no lasting damage.
Overall bought-in crops for Indonesian operations were 20% higher at 813,700mt for the year 2016 (2015:
678,200mt). The average oil extraction rate from our mills was 20.9% in 2016 (2015: 21.2%).
Malaysia
FFB production in 2016 was 12% lower at 24,000mt, compared to 27,200mt in 2015. The Malaysian operations
faced severe shortage in workers due to difficulty in recruiting foreign workers hampering harvesting and estate
work. The government froze the intake of foreign workers at the beginning of the year pending a review of its policy
on levy and rehiring programmes. After the freeze was lifted, the industry was hit by an increase in the minimum
wage by about 10%. Despite the increase in wages and various cash incentives introduced by management, the
estate continued to lose its foreign workers who absconded for better wages and working conditions in the cities. The
shortage of labour is the biggest challenge facing the industry in Malaysia. In 2016, the Malaysian plantations had
$0.8 million pre-tax profit after BA movement compared to a pre-tax profit of $0.2 million in 2015.
Commodity Prices
The CPO CIF Rotterdam price started the year at $570/mt (2015: $700/mt), it dipped to the lowest level of $535/mt in
the middle of January 2016 before trending upwards for the rest of the year. It reached a peak of $827/mt in late
December 2016. It ended the year at $795/mt (2015: $560/mt), averaging $706/mt for the year, 15% higher than last
year (2015: $613/mt).
CPO CIF Rotterdam
1600
1400
1200
1000
800
600
400
200
0
Annual Report 2016 | Anglo-Eastern Plantations Plc
13
Strategic Report
Despite a softer demand, CPO price has rallied since January 2016 reaching a three-year high due to lower stocks
and biodiesel mandates in Indonesia and United States, which both expected to increase consumption of edible oil.
Both Indonesia and Malaysia reported lower CPO production as the El Nino weather phenomenon caused extreme
drought which curbed CPO production in 2016. It was reported that production of CPO in Indonesia fell 3% to 31.5
million mt while production in Malaysia fell 13% to 17 million mt. The CPO production is however expected to
improve in 2017 as palm trees recovered from moisture stress and increased planting.
Rubber prices averaged $1,324/mt for 2016 (2015: $1,269/mt). Our small area of 512ha of mature rubber contributed
a revenue of $1.1 million in 2016 (2015: $1.1 million).
Corporate Development
In 2016, the Group opened up new land and planted 1,606ha of oil palm mainly in Kalimantan, boasting planted area
including Plasma by 2.4% to 66,670ha (2015: 65,100ha). This excludes the replanting of 1,516ha of oil palm in North
Sumatera. New plantings remain behind 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 protracted negotiations.
Two more biogas plants in Bengkulu and Kalimantan are in the final stages of construction and are estimated to cost
a total of $6.8 million. Biogas engines have been installed with the ancillary works covering gas piping and electrical
works still in progress. The testing and commissioning should be completed soon and the biogas plants are expected
to be operational from the second quarter of 2017. The plants when completed are expected to generate a combined
3 Megawatt of electrical power. A surplus of 15.6 million kWh of electricity worth $1.2 million is projected to be
generated per year which the Group intends to sell to the state electricity company. The use of clean energy in the
mills will further reduce their reliance on fossil fuels and improve the Group’s carbon foot print.
Biogas Plant in Bengkulu
Negotiations to sell the surplus power estimated in excess of 5 million kWh per year to the Indonesian National
Electricity Company from its new biogas plant in North Sumatera has been approved by the local authority in
January 2017 after the completion of a feasibility study and all the required permits.
Annual Report 2016 | Anglo-Eastern Plantations Plc
14
Strategic Report
Corporate Social Responsibility
Corporate Social Responsibility (“CSR”) is an integral part of corporate self-regulation incorporated into our business
model. Our Group embraces responsibility for the impact of its activities on the environment, consumers, employees,
communities, stakeholders and all other members of the public sphere. In engaging the social dimension of CSR, the
Group’s business has taken cognizance of the contribution and further enrichment of its employees while continuing
to make contributions to improve the well-being of the surrounding community.
The majority of employees and their dependents in the plantations and mills are housed in self-contained
communities built by the Group. The employees and their dependents are provided with free housing, clean water
and electricity. The Group also builds, 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 73
mosques and 18 churches in all its estates. In 2016, the Group spent $300,400 to build additional facilities and to
maintain these amenities.
Staff and selected employees are given the opportunity to be trained and to attend seminars to enhance their
working skills and capability. The Group provides free education for all employees’ children in the local plantations
and communities where they work. In 2016, scholarships amounting to $38,700 were provided to children in
surrounding villages and selected employees’ children to further their tertiary education in collaboration with
universities in Riau and Bengkulu. In total 97 scholarships were given out. Selected under graduates were given
opportunities for industrial training during semester breaks. In addition, the Group provides computers and funding to
construct educational facilities including laboratories and libraries. 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
total of 34 schools have been built with 150 teachers currently employed within our Group estates. In 2016, the
Group spent some $582,700 on running the schools. The Group bought two additional school buses in Kalimantan
taking the tally of school buses operated by the Group in 2016 to 34 vehicles.
New Classroom
Annual Report 2016 | Anglo-Eastern Plantations Plc
15
Strategic Report
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
qualified doctors, nurses and hospital assistants in the estates. The Group upgraded two of its clinics in North
Sumatera and Bengkulu to meet minimum standard required by the government under the country’s Health and
Social Security Agency. In addition, the Group organised fogging to prevent spread of dengue mosquitoes.
Employee in protective gear spraying weedicide Free healthcare for employees
In isolated locations, the Group drill tube wells to provide clean water. Related healthcare expenses for 2016 were
$254,700. In December 2016, a strong earthquake hit Aceh province and damaged roads and houses. The Group
made a contribution to rebuild houses and water tanks.
A strong commitment to CSR has a positive impact on employees’ attitudes and boosts employee recruitment. The
Group realises that employees are valuable assets in order to run an efficient, effective, profitable and sustainable
business and operations.
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
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
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.
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
companies.
In addition to education and healthcare which includes the construction of schools, provision of scholarships and
books, the Group also develops infrastructure such as the construction and repair of two bridges and maintain
240km of external roads in 2016. 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.
Annual Report 2016 | Anglo-Eastern Plantations Plc
16
Strategic Report
Plasma Development
Indonesian Sustainable Palm Oil (“ISPO”)
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
standard for Indonesian planters.
A Steering Committee was established to work out a roadmap to support the ISPO implementation at mills and
estates. Workshops and training sessions on occupational safety and healthcare were carried out to inculcate a
safety culture in workplaces at all the estates and mills. In 2016 the regional government in Bengkulu awarded two
operating companies the Zero Accident Awards for 2015 in recognition of the companies’ effort to reduce accident at
the workplace. During the 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 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 appointed certification consultants in the implementation of ISPO standard. To-date six
companies have been ISPO certified. Another four companies have completed the second stage of ISPO audit while
two companies are at second stage of certification audit.
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, the 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 empty fruit bunch (“EFB”) are placed inter-rows to allow the slow release of organic nutrients while
minimising soil erosion especially sandy soil and degradation. The Group does not incinerate EFB as it emits
unhealthy gases and smoke during burning at low temperatures.
Annual Report 2016 | Anglo-Eastern Plantations Plc
17
Strategic Report
The effluents discharged from the mills are fully treated in anaerobic lagoons and in some mills there are extended
aeration tanks for further treatment of the effluent. The final discharge is applied to the estates land where it is used
as fertilisers.
The Group’s three biogas plants will enhance the waste management treatment in the mill and at the same time
mitigate greenhouse biogas emissions. The trapped biogas will be used to generate and supply power to its biomass
plant and other needs without dependency on fossil fuels. Further similar undertakings for the Group’s mills are
planned and shall be implemented in stages. The Group intends to sell the 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 Turnera subulata, Cassia cobanensis and Antigonon
leptopus 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 which is also
less costly.
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 routinely.
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.
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.
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
Country and regulatory
in
The Group’s operations are located
Indonesia and
substantially
rely on
significantly
therefore
economic and political stability in
Indonesia.
upheaval
Political
and
deterioration in security situation
may cause disruption on operation
and consequently financial loss.
The country has recently benefited
from a period of relative political
stability, steady economic growth
and stable financial system. But
during the Asian financial crisis in
late 1990 there were civil unrest
attributed to ethnic tensions in
some parts of Indonesia. But the
Group
not
interrupted by the regional security
problems.
operations were
Annual Report 2016 | Anglo-Eastern Plantations Plc
18
Strategic Report
Nature of the risk and its origin
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
Country and regulatory (cont’d)
Introduction of measures to rein in
the country’s fiscal deficits. This
included the exchange controls and
restriction on repatriation of profit
through payment of dividend.
Transfer of profit from Indonesia to
UK will be restricted affecting
servicing of UK obligations and
payment
to
of
shareholders.
dividends
the government
The Board is not aware of any
to
attempt by
impose exchange controls
that
would restrict the transfer of profits
from Indonesia to the UK. The
Board perceives that the Group
will be able to continue to extract
profits
in
foreseeable
Indonesia
future.
its subsidiaries
from
the
for
rights
land
the
The Group acquires
exploitation
(“HGU”) after
paying land acquisition and HGU
processing costs. These costs are
land asset costs
capitalized as
since the asset characteristics fulfill
the recognition criteria. The Group
holds its land under 25 or 35 year
renewable leases.
Changes in land legislation. Based
on National Land Agency Law 2 /
1999, mandatory restriction to land
ownership by non-state plantation
companies and companies not
listed in Indonesia to 20,000ha per
province and a total of 100,000ha in
Indonesia.
in
law
changes
and
Any
regulations relating to land tenure
could have negative impact on the
Group’s activities.
There are several more years
before the first HGU is due for
renewal in 2023. There are no
reasons
to
believe that the HGU will not be
renewed upon expiration by
complying with existing law and
regulations.
the Directors
for
foreign
Mandatory reduction of
Indonesian
in
ownership
plantations. Forced divestment of
interests in Indonesia at below
market values.
The Group realise 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.
Group failure to meet the standards
expected in relation to bribery and
corruption.
Reputational damage and criminal
sanctions.
The Group continues to maintain
strong controls in this area as
Indonesia has been classified as
the
by
relatively
International
Transparency
Corruption Perceptions index.
high
risk
Annual Report 2016 | Anglo-Eastern Plantations Plc
19
Strategic Report
Nature of the risk and its origin
Exchange rates
a
and
revenue costs
CPO is a US Dollar denominated
significant
commodity
proportion of
in
Indonesia (such as fertiliser and
fuel) and development costs (such
as heavy machinery and mills
equipment) are imported and are
US Dollar related.
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
Adverse movements of Rupiah
against US Dollar can have a
negative effect on the operating
costs and raise funding cost.
The Board has taken the view that
these risks are inherent in the
business and feels that adopting
hedging mechanisms to counter
foreign
the negative effects of
exchange
volatility are both
difficult to achieve and would not
be cost effective.
Weather and natural disasters
rainfall but
Oil palms rely on regular sunshine
these weather
and
patterns can vary and extremes
such as unusual dry periods or,
conversely, heavy rainfall leading to
locations can
flooding
occur.
in some
in palm
in particular, will
Dry periods,
the short and
in
affect yields
medium terms. Drought induces
moisture stress
trees.
High levels of rainfall can disrupt
estate operations and result in
harvesting delays with loss of oil
palm fruits or deterioration in fruit
quality. Any delay in collection of
harvested FFB during the rainy
season could raise the level of
free fatty acid (“FFA”) in the CPO.
CPO with higher level of FFA will
be sold at a discount to market
prices. Low
level of sunshine
could result in delay in formation
of FFB resulting in potential loss of
revenue.
levels
Where appropriate, bunding
is
built around flood prone areas and
canals/drainage/retention
ponds
constructed and adapted either to
evacuate surplus water or
to
in areas
maintain water
quick to dry out. Where practical,
natural disasters are covered by
insurance policy. Certain risks
(including the risk of crop loss
through fire, earthquake, flood and
other perils potentially affecting
the planted areas on the Group’s
estates) if they materialise could
dent the potential revenues, for
which insurance cover is either not
available or would in the opinion of
the Directors be disproportionately
expensive, are not insured. These
floods or haze are
risks of
mitigated by
the geographical
spread of the plantations but an
occurrence
adverse
uninsured event could result in the
Group sustaining material losses.
an
of
Annual Report 2016 | Anglo-Eastern Plantations Plc
20
Strategic Report
Nature of the risk and its origin
Produce prices
CPO is a primary commodity and is
affected by the world economy,
levels of
inflation, availability of
alternative soft oils such as soya
in
oils. CPO price also moves
tandem with crude oil prices which
determines the competitiveness of
CPO as a source of biodiesel.
Imposition of
import controls or
taxes in consuming and exporting
Indonesian
The
countries.
government in July 2015 imposes a
$50/mt export levy to fund biodiesel
introduced a
subsidies.
system
tax
simpler
expressed in US Dollar instead of a
percentage of CPO price.
It also
export
Hedging risk
The Group's subsidiaries have
borrowing in US Dollar.
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
This may lead to significant price
swings. The profitability and cash
flow of the plantation operations
depend upon world prices of CPO
and upon the Group’s ability to sell
CPO at price levels comparable
with world prices.
be moderated
Directors believe that such swings
should
by
continuous demand in economies
like China, India and Indonesia.
Larger export would lead to lower
inventory of CPO which augurs
well for future produce price.
levy will
impact upon
Reduced revenue and reduction in
cash flow and profit. When CPO
price is below $750/mt, the export
tax
the
Group’s profit. When CPO price
recovers to above $750/mt, the
effective tax rate will be lower
providing some relief to planters.
Effective
the
Indonesian government imposed a
progressive export tax from $3/mt
for CPO exported above $750/mt.
2015,
July
Indonesian
The
government
allows free export of CPO but
applies a sliding scale of duties on
exports which allows producers
economic margins. The export
regarded as a
levy may be
CPO
support
to
measure
producers
in
through
biodiesel consumption.
increase
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 3.9% higher than
on US Dollar deposits whereas
interest rate for Rupiah borrowing
is about 5.31% higher as
compared to US Dollar borrowing.
Annual Report 2016 | Anglo-Eastern Plantations Plc
21
Strategic Report
Nature of the risk and its origin
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
Social, community and human rights issues
could
Any material breakdown in relations
between the Group and the host
population in the vicinity of the
operations
the
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
through
local
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
farmers and
encourage
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
improve
community
welfare.
these plots are used
villages’
Information Technology (“IT”) security risk
to
its
threats
include
The security threats faced by the
Group
IT
infrastructure, unlawful attempts to
gain access to classified information
business
and
disruptions associated with
IT
failures.
potential
for
to combat cyberattack
to our
Failure
could cause disruption
business operations.
The Group has measures in place
including appropriate
tools and
techniques to monitor and mitigate
this risk.
Annual Report 2016 | Anglo-Eastern Plantations Plc
22
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 (Company and subsidiaries)
Senior Management (GM and Above)
Managers & Executives
Full Time
Part-time Field Workers
Total
%
2016 average employed during the year
Women
2
-
30
181
4,418
4,631
28%
Men
14
6
390
5,215
6,516
12,141
72%
Total
16
6
420
5,396
10,934
16,772
100%
Group Headcount
Board (Company and subsidiaries)
Senior Management (GM and Above)
Managers & Executives
Full Time
Part-time Field Workers
Total
%
2015 average employed during the year
Women
2
-
30
314
4,745
5,091
30%
Men
14
8
369
5,095
6,235
11,721
70%
Total
16
8
399
5,409
10,980
16,812
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. The percentage of women workforce within the Group decreased from 30% in 2015 to 28% in 2016.
Employees
In 2016, the number of full time workforce averaged 5,838 (2015: 5,832) while the part-time labour averaged 10,934
(2015: 10,980).
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.
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.
Annual Report 2016 | Anglo-Eastern Plantations Plc
23
Strategic Report
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 appraisals. 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 2017 was 20% higher against the same period in 2016 mainly due to the
increase in production from Riau and 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 2017 at $790/mt and prices are expected
to be in the range of $650/mt to $850/mt for the first half of 2017.
The current high CPO price should sustain at least into the second quarter of 2017 underpinned by the carry-over
effect of previous El Nino and seasonally low production cycle. We do however expect the CPO price to trend lower
for the remaining of 2017 as production recovers. Furthermore Oil World, the independent forecasting service for
oilseeds and oils projected rival soybean output to increase by 7.3% to 334 million mt in 2017 on the back of higher
output from several major soybean producing countries. The US Department of Agriculture also projects record
soybean plantings in the US for the year 2017.
It was reported that the palm oil demand from India and China is unlikely to increase significantly in 2017 as
continued structural adjustment in China will continue to moderate China’s economy growth hence limiting palm oil
consumption. The current high CPO prices typically cap demand particularly from price-sensitive countries like India.
The recent demonetisation of the Indian Rupee may also continue to weigh on India’s palm oil imports at least in the
near term.
US Dollar depreciated by approximately 3% (2015: +13%) against the Indonesian Rupiah in 2016 in anticipation of
an interest rate hike in the United States and the weak emerging economies. The Rupiah has since strengthened by
1% in 2017 which makes palm oil more expensive for importers.
The rising material costs and wages in Indonesia are expected to increase the overall production cost in 2017. The
Indonesian government recently announced regional hikes in 2017 minimum wage averaging 8.2%. These wage
hikes will raise overall estate costs and erode profit margins.
Annual Report 2016 | Anglo-Eastern Plantations Plc
24
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 trading outturn and
cash flow for 2017.
On behalf of the Board
Dato’ John Lim Ewe Chuan
Executive Director, Corporate Finance and Corporate Affairs
26 April 2017
Annual Report 2016 | Anglo-Eastern Plantations Plc
25
Financial Record
Income statement
Revenue
(Restated)
2015
$000
2016
$000
2014
$000
(Restated)
2012
$000
2013
$000
246,210
196,451
251,258
201,917
237,352
Trading profit before BA
52,480
23,667
78,845
59,619
85,396
Profit attributable to shareholders after BA
34,713
9,775
30,762
93,521
47,331
Dividend proposed for year
(1,463)
(1,028)
(1,854)
(1,969)
(1,784)
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
360,681
111,973
(27,875)
17,094
(16,612)
445,261
(82,150)
$000
340,099
102,864
(32,875)
3,898
(19,373)
394,613
(73,598)
$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)
363,111
321,015
427,236
408,046
388,322
Share capital
Treasury shares
Share premium and capital redemption account
Revaluation and exchange reserve
Profit and loss account
15,504
(1,171)
25,022
(158,532)
482,288
15,504
(1,171)
25,022
(167,402)
449,062
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
Equity attributable to shareholders’ funds
363,111
321,015
427,236
408,046
388,322
Ordinary shares in issue (‘000s)
Earnings per share before BA movement (US
cents)
Earnings per share after BA movement (US
cents)
Dividend per share for year (US cents)
Asset value per share (US cents)
Earnings per share before BA movement
(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
39,976
39,976
39,976
39,976
82.16cts
25.89cts
132.26cts
90.70cts
133.99cts
87.58cts
24.66cts
77.61cts
235.95cts
119.41cts
3.8*cts
916cts
2.5cts
810cts
4.5cts
1,078cts
5.0cts
1,029cts
4.5cts
980cts
60.7p
3.0p
745p
13,436
1.23
4.49
13,307
1.35
4.14
16.9p
1.75p
547p
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 19 April 2017 of $1.2811/£
Annual Report 2016 | Anglo-Eastern Plantations Plc
84.5p
2.9p
603p
9,638
1.63
3.06
9,363
1.59
3.09
26
Estate Areas
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Annual Report 2016 | Anglo-Eastern Plantations Plc
27
Location of Estates
Annual Report 2016 | Anglo-Eastern Plantations Plc
28
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 2016.
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 44.
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 2016 are set out on pages 58 to 100. The Group’s
profit for the year on ordinary activities before taxation was $60,846,000 (2015: profit $25,254,000) and the profit
attributable to ordinary shareholders was $34,713,000 (2015: profit $9,775,000). No interim dividend was paid. The
Directors recommend a final dividend of 3.0p (2015: 1.75p) to be paid to shareholders on 14 July 2017.
Shareholders may elect to receive their dividend in US Dollar as described on page 34.
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 12. 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 2016, the Board considered the prospects of the Company over the one and five-year periods. The
process involved a detailed review of the 2017 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 believed that the Group has adequate resources to continue operation and meet its
liabilities over the five years from 2017 to 2021. 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
Eight companies located across North Sumatera, Bengkulu, Riau and Kalimantan were valued by qualified valuers in
2016 to provide indicative fair values and support the valuation for the estate land. 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 2016 | Anglo-Eastern Plantations Plc
29
Directors’ Report
Carbon Reporting
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 an essential tool in the process of
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,
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.
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
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
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.
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
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
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
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
(“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
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
www.ghgprotocol.org.
Cultivation of peat soils results in CO2 emissions due to oxidation of organic carbon; therefore an estimate of these
emissions from AEP’s peat soil estates has been included in this report. There is a lot of uncertainty regarding the
determination of emission factors for peat cultivation and the methodology used in the PalmGHG Tool is based on a
report by Hooijer et al (2010) which determines emissions based on the drainage depth of the soil.
The gross overall emissions computed by the outsourced agent were 903,684 tCO2e for 2016 compared to
1,477,208 tCO2e for 2015.
The overall emissions have decreased by 573,524 tCO2e, or 39%, from 1,477,208 tCO2e during the 2015 to 2016
assessment period. This decrease was mainly due to a decrease in emissions associated with land clearance.
Annual Report 2016 | Anglo-Eastern Plantations Plc
30
Directors’ Report
Emissions source
POME treatment
Fertiliser application
Premises energy consumption
Company owned vehicles
Third party vehicle use
Employee housing
Total operational emissions
Land clearance
Carbon sequestered by standing crop
2016 Emissions in tCO2e
2015 Emissions in tCO2e
235,069
28,510
14,499
6,022
7,667
1,581
293,348
Own crop Out-grower crop
445,778
-404,103
571,623
-518,184
249,327
25,202
13,513
5,828
8,121
1,123
303,114
Out-grower crop
722,408
-421,475
22,870
1,174,094
1,477,208
Own crop
889,867
-519,175
479,599
Peat soils cultivation
486,706
Total land use emissions
Overall emissions
28,516
610,336
903,684
2016 and 2015 emissions in tCO2e
Operational emissions (Exc. POME) combined
POME treatment
Operational emissions
Land clearance
Carbon sequestered by
standing crop
Peat soils cultivation
2016
2015
2,000,000
1,500,000
1,000,000
500,000
e
2
O
C
t
0
-500,000
-1,000,000
The following chart display 2015 and 2016 overall emissions by scope.
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
majority of the GHG emissions. This has decreased in 2016 due primarily to decrease in land clearance emissions.
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
decrease in 2016 was due to the decrease in emissions associated with out-grower crop land clearance.
Annual Report 2016 | Anglo-Eastern Plantations Plc
31
Directors’ Report
2016 and 2015 Emissions in tCO2e by Scope
1,200,000
1,000,000
800,000
e
2
O
C
t
600,000
400,000
200,000
0
Scope 1
Scope 2
Scope 3
Comparison of GHG emissions per production metrics:
Operational emissions reporting metric
2016 in tCO2e
2015 in tCO2e
GHG per tonne of CPO production
GHG per tonne of FFB production
GHG per tonne of FFB processed
GHG per hectare of planted area
0.83
0.33
0.17
4.43
0.95
0.34
0.20
4.72
2016 and 2015 emissions per reporting metric in tCO2e
t
i
n
u
r
e
p
e
2
O
C
t
5
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
2016
2015
2016
2015
per tonne of CPO production per tonne of FFB production
per tonne of FFB processed
per hectare of planted area
Annual Report 2016 | Anglo-Eastern Plantations Plc
32
Directors’ Report
Principal risks
Information on financial instruments risks is set out in note 25 to the consolidated financial statements and
information on other risks is set out in Strategic Report.
Property, plant and equipment
Information relating to changes in property, plant and equipment is given in note 11 to the consolidated financial
statements.
Directors
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.
Brief profiles of all Directors are set out on page 37 of this Annual Report.
Substantial share interests
As at 31 March 2017 and 31 December 2016, 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 31.3.2017
As at 31.12.2016
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
1,677,022
4.23%
1,695,963
51.08%
17.23%
4.28%
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 9 at the forthcoming annual general meeting.
Authority to allot shares
At the annual general meeting held on 27 June 2016 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 11 at the forthcoming annual general meeting.
Annual Report 2016 | Anglo-Eastern Plantations Plc
33
Directors’ Report
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 26 April 2017 (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 26 April 2017. This authority will expire at the conclusion of the next annual general meeting of
the Company. The Directors have no present intention of issuing new shares, or of granting rights to subscribe for or
to convert any security into shares.
Disapplication of pre-emption rights
A fresh authority is also being sought under the provisions of sections 570 and 573 of the Companies Act 2006 to
enable the Board to make an issue to existing shareholders without being obliged to comply with certain technical
requirements of the Companies Act, which create problems with regard to fractional entitlements and overseas
shareholders. In addition, the authority will empower the Board to make issues of shares for cash to persons other
than existing shareholders up to a maximum aggregate nominal amount of £495,454 representing 5% of the current
issued share capital. The authority will be expiring at the forthcoming annual general meeting or on 30 June 2017,
whichever is earlier. Renewal of this authority on similar terms is being sought under Resolution 12 at the
forthcoming annual general meeting.
Acquisition of the Company’s own shares and authority to purchase own shares
At 26 April 2017, the Directors had remaining authority under the shareholders’ resolution of 27 June 2016, to make
purchases of 3,963,637 of the Company’s ordinary shares. This authority expires on 30 June 2017. The Board will
only make purchases if they believe the earnings or net assets per share of the Company would be improved by
such purchases. All such purchases will be market purchases made through the London Stock Exchange.
Companies can hold their own shares which have been purchased in this way in treasury rather than having to
cancel them. The Directors would, therefore, consider holding the Company’s own shares which have been
purchased by the Company as treasury shares as this would give the Company the flexibility of being able to sell
such shares quickly and effectively where it considers it in the interests of shareholders to do so. Whilst any such
shares are held in treasury, no dividends will be payable on them and they will not carry any voting rights.
Resolution 13 to be proposed at the forthcoming annual general meeting seeks renewed authority to purchase up to
a maximum of 3,963,637 ordinary shares of 25p each on the London Stock Exchange, representing 10% of the
Company’s issued ordinary share capital. The minimum price which may be paid for an ordinary share is 25p. The
maximum price which may be paid for an ordinary share on any exercise of the authority will be restricted to the
highest of (i) an amount equal to 5% above the average middle market quotations for such shares as derived from
the London Stock Exchange Daily Official List for the five business days before the purchase is made and (ii) the
higher of price of the last independent trade and the highest current independent bid on the London Stock Exchange.
The maximum number of shares and the price range are stated for the purpose of compliance with statutory
requirements in seeking this authority and should not be taken as an indication of the level of purchases, or the
prices thereof, that the Company would intend to make.
Dividends
The Board is mindful that the Group’s development programme will require a considerable capital commitment. In
this respect, the dividend level needs to be balanced against the planned capital expenditure in view of weaker CPO
prices. The Board is also mindful of shareholders’ sentiment and declared a final dividend of 3.0p in respect of 2016
(2015: 1.75p). Subject to shareholders approval of Resolution 4 at the AGM, the final dividend will be paid on 14 July
2017 to those shareholders on the register on 9 June 2017. Shareholders choosing to receive their dividend in US
Dollar will do so at the rate ruling on 9 June 2017, when the register closes. Based on the exchange rate at 19 April
2017 of $1.2811/£, the proposed dividend would be equivalent to 3.8cts, compared to 2.5cts declared in respect of
2015.
Annual Report 2016 | Anglo-Eastern Plantations Plc
34
Directors’ Report
Liability insurance for Company officers
As permitted by the Companies Act the Company has maintained insurance cover for the Directors against liabilities
in relation to the Company.
On behalf of the Board
Dato’ John Lim Ewe Chuan
Executive Director, Corporate Finance and Corporate Affairs
26 April 2017
Annual Report 2016 | Anglo-Eastern Plantations Plc
35
Directors’ Responsibilities
The Directors are responsible for preparing the annual report and the financial statements in accordance with
applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the
Directors are required to prepare the Group financial statements in accordance with International Financial Reporting
Standards (“IFRSs”) as adopted by the European Union and have elected to prepare the Company financial
statements in accordance with FRS 101 Reduced Disclosure Framework under the UK Generally Accepted
Accounting Practice (UK GAAP). Under company law the Directors must not approve the financial statements unless
they are satisfied that they give a true and fair view of the state of affairs of the Group and Company and of the profit
or loss for the Group for that period.
In preparing these financial statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and accounting estimates that are reasonable and prudent;
• state whether they have been prepared in accordance with IFRSs as adopted by the European Union, subject to
any material departures disclosed and explained in the financial statements;
• prepare a Strategic Report, a Director’s Report and Director’s Remuneration report which comply with the
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
and enable them to ensure that the financial statements comply with the Companies Act 2006 and, as regards the
Group financial statements, Article 4 of the IAS Regulation. They are also responsible for safeguarding the assets of
the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
After making enquiries, the Directors have a reasonable expectation that the Company and the Group have
adequate resources to continue operations for the foreseeable future.
Website publication
The Directors are responsible for ensuring the annual report and the financial statements are made available on a
website. Financial statements are published on the Company’s website in accordance with legislation in the United
Kingdom governing the preparation and dissemination of financial statements, which may vary from legislation in
other jurisdictions. The maintenance and integrity of the Company's website is the responsibility of the Directors.
The Directors' responsibility also extends to the ongoing integrity of the financial statements contained therein.
Directors’ responsibilities pursuant to DTR4
All of the Directors listed on page 37 confirm to the best of their knowledge:
• The Group financial statements have been prepared in accordance with IFRSs as adopted by the European
Union and Article 4 of the IAS Regulation and give a true and fair view of the assets, liabilities, financial position
and profit and loss of the Group.
• The Strategic Report in annual report includes a fair review of the development and performance of the business
and the financial position of the Group, together with a description or the principal risks and uncertainties that
they face.
• 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
Dato’ John Lim Ewe Chuan
Executive Director, Corporate Finance and Corporate Affairs
26 April 2017
Annual Report 2016 | Anglo-Eastern Plantations Plc
36
Directors
Madam Lim Siew Kim
(Non-Executive Chairman, age 68)
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 67)
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 62)
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 51)
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 2016 | Anglo-Eastern Plantations Plc
37
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 2016, particular comment is made in the statements below and in the Directors’ remuneration
report on pages 45 to 49.
Relationship Agreement with Controlling Shareholder
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 37). During
2016 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 Ewe Chuan 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 10 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 2016 | Anglo-Eastern Plantations Plc
38
Statement on Corporate Governance
In arriving at its conclusion, the Board considered the factors set out in the Combined Code including, inter alia,
whether any of the Non-Executive Directors:
• has been an employee of the Group within the last five years;
• has, or had within the last three years, a material business relationship with the Group;
• receives remuneration from the Group other than a Director’s fee;
• has close family ties with any of the Group’s advisors, Directors or senior employees;
• holds cross-directorships or has significant links with other Directors through involvement in other companies or
bodies;
• has served more than nine years on the Board; or
• represents a significant shareholder
The Combined Code acknowledges that a Director may be regarded as independent notwithstanding the existence
of any of the above factors.
The Independent Non-Executive Directors have a wide range of business interests beyond their position with the
Company and the rest of the Board agree unanimously that they have shown themselves to be fully independent.
Senior 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.
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 2016 there were two Board meetings.
The meetings were attended by all directors except for Madam Lim who attended only one Board meeting. Agenda
and minutes of previous meetings were circulated prior to meetings.
The Independent Non-Executive Directors met on their own during 2016. 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 2016, 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 are 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 during the year sought recommendation from professionals on treasury function that may help enhance
the returns on its surplus cash.
Annual Report 2016 | Anglo-Eastern Plantations Plc
39
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 2016.
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 2016. 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 shareholders 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 2016 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 April 2017 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 Ewe Chuan and Mr. Jonathan Law Ngee Song. The committee had two meetings during 2016, attended by
all members.
The policy on gender diversity is described in page 23 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 contract of one Director. During
the year the Nomination Committee deliberated and recommended to the Board the adoption of the Dealing
Procedure Manual. This is in line with the Financial Conduct Authority announcement on 3 July 2016 that the Market
Abuse Regulation (“MAR”) will replace the Model Code. The dealing manual would assist the Company to comply
with its obligations under the MAR and to ensure that the Company has necessary systems and procedures in place
to assist persons discharging managerial responsibilities which include all directors and employees of the Company
and its subsidiaries. MAR prescribed specimen dealing code for companies to adopt which can be amended to
reflect their own individual circumstances and requirements in the buying and selling of Company’s shares. MAR
applies to all companies listed on the main market of London Stock Exchange and Alternative Investment Market.
MAR is designed to ensure that persons do not misuse or place themselves under suspicion of misusing information
about the Group which is not public.
Annual Report 2016 | Anglo-Eastern Plantations Plc
40
Statement on Corporate Governance
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. A
member of the Audit, Nomination and Remuneration Committees will be available at the 2017 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.
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. The website was upgraded during the year to enable
shareholders and investors to select and receive e-mail alerts from the Company on selected regulatory news to
follow the development of the Company.
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 2017
Annual Report 2016 | Anglo-Eastern Plantations Plc
41
Audit Committee Report
Audit Committee
The Audit Committee comprises Mr. Lim Tian Huat (Chairman), Dato’ John Lim Ewe Chuan 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 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 courses and seminars in 2016, one of which was organised by Malaysian Institute of
Accountants. Topics on governance, insolvency, Companies Act and regional business trends and trade
partnerships were covered.
Dato’ John Lim attended webinars hosted by UHY on update of accounting and auditing standards.
Mr. Jonathan Law attended two seminars covering topics on sustainability engagement for directors and Companies
Bill 2015 organised by the Malaysia Stock Exchange and Malaysian Institute of Accountants in 2016.
Both Mr. Lim and Dato’ John Lim have recent and relevant financial experience in their discharge of duties on the
Audit Committee.
Overview
The Audit Committee met prior to the completion of the 2016 accounts and five times during 2016 with full
attendance.
During the year, the Committee reviewed the 2015 Annual Report, Interim Results, 1st Quarter and 3rd Quarter
Trading Statement for 2016, dividend rate for the Group and Indonesian subsidiaries, 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 2016 to discuss the audit findings as well as the planning for
the 2016 audit. During the audit planning meeting for 2016, the external auditors updated the Audit Committee on
recent Financial Reporting Council advice on Annual Reporting, various revisions to the UK Corporate Governance
Code and related guidance. The audit engagement team from BDO (UK) visited Indonesia and Malaysia to review
the work of the component auditors as well as to visit a plantation and mill.
The amendments to IAS 16 and IAS 41, which came into effect on 1 January 2016, require previously recognised
Biological Assets that meet the definition of bearer plants to be accounted for as Property, Plant and Equipment in
accordance with IAS 16, adopting either a cost model or a revaluation model. The unharvested FFB, which is
agricultural produce under the revised IAS 41, are recognised as Biological Assets and are stated at fair value less
cost to sell at the point of harvest, with changes recognised in profit and loss. The Audit Committee deliberated on
the methodologies in the valuation of plantations (oil palm trees) and unharvested produce (FFB growing on the
trees) to be in line with the revised IAS 16 and IAS 41. The Committee agreed to recommend to the Board for the
Group to adopt a uniform policy to value the plantations at historical cost and to depreciate the trees over 20 years
when it becomes mature within three to four years after planting. The unharvested produce be valued based on an
estimation of the weight of unharvested FFB at balance sheet date multiplied with the sum of average FFB selling
price less average harvesting cost of the last month prior to the balance sheet date.
The adoption of the amendments to IAS 16 and IAS 41 required retrospective application which resulted in a prior
year restatement of its financial statements for 2015. Details of the restatement are disclosed in note 2 - Prior year
restatement to the consolidated financial statements.
Annual Report 2016 | Anglo-Eastern Plantations Plc
42
Audit Committee Report
The management has taken reasonable steps to assess whether there is any indication that an asset may be
impaired, in particular, the plantations. Impairment for plantations is measured by comparing its carrying amount with
its recoverable amount, which is the higher of the fair value less cost to sell and its value in use. The exercise
requires the management to exercise significant judgement in determining the underlying assumptions used in the
calculation of the recoverable amount. In 2016, the impairment loss of the plantations of the Group was $2.7 million
(2015: $12.5 million). The details of the calculation of the recoverable amount are disclosed in note 11 - Property,
plant and equipment to the consolidated financial statements.
To provide indicative fair values and to support the valuation for the estate land, eight companies located across
North Sumatera, Bengkulu, Riau and Kalimantan were valued by qualified valuers in 2016. 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.
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 Indonesia based
Finance Director and Internal Auditor to discuss the audit findings. No major fraud and theft were identified. Most of
the weaknesses were operational in nature and based on our discussions suggested improvement in internal
controls were satisfactorily implemented.
In November 2016, Audit Committee members made a field visit to an estate and biogas and biomass plant in North
Sumatera.
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.
Two members 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 for 2015. The tenure of audit and extent of non-audit
work that will affect the independence of the auditors were reviewed. The Committee considered the key members of
the audit engagement team and component auditors involved in the Group Audit. This includes the Audit Partner, the
Audit Senior Manager and the Audit Manager from BDO (UK) and the various partners from BDO in Malaysia and
Indonesia. The current Audit Partner from BDO (UK) has been the Company’s audit engagement partner since 2014
while the Audit Partner for the Malaysian audit and the Audit Partner for the Indonesian audit were involved since
2013 and 2015 respectively. Following this assessment, the Committee concluded that the external audit process
remained effective, and that the objectivity of the external auditors was not impaired and that it provides an
appropriate independent challenge of the senior management of the Group.
Annual Report 2016 | Anglo-Eastern Plantations Plc
43
Audit Committee Report
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.
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 themselves, by
meeting with the external auditors, the internal auditors and management and by consideration of reports by
management and by holding at least one formal meeting in each year.
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.
Lim Tian Huat
Chairman, Audit Committee 26 April 2017
Annual Report 2016 | Anglo-Eastern Plantations Plc
44
Directors’ Remuneration Report
I am pleased to report on the activities of the Remuneration Committee for the year ended 31 December 2016. 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 2018.
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 7 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 and was approved at the AGM on 29 June
2015. The policy remain unchanged. The Director’s remuneration report was last approved at Company’s AGM on
27 June 2016. In the meeting, the shareholders voted in the following manner:
To approve Directors’ Remuneration Report
For
55
Against
5
% For
99.85%
% Against
0.15%
The Committee would welcome your support for our Remuneration Report and Policy.
Remuneration Committee
The Remuneration Committee comprises of Mr. Jonathan Law Ngee Song (Chairman), Dato’ John Lim Ewe Chuan
and Mr. Lim Tian Huat.
The Committee had two meetings in 2016, 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
the necessary
annual
recommendation to the Board after making a comparison to other plantation companies. The Committee also
deliberated on the 2016 Remuneration Report and recommended to the Board for acceptance.
increment and bonus entitlement of senior management
Indonesia.
It made
in
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.
Non-Executive Directors’ remuneration is considered by the Board and consist exclusively of a fixed payment.
Annual Report 2016 | Anglo-Eastern Plantations Plc
45
Directors’ Remuneration Report
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 2015.
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 2016 | Anglo-Eastern Plantations Plc
46
Directors’ Remuneration Report
Executive Director’s Remuneration over 8 Years
Benefits
-
-
-
-
-
-
-
-
Year ended 31 Dec
2016
2015
2014
2013
2012
2011
2010
2009
Salary
$127,000
$137,000
$133,000
$117,000
$105,000
$83,000
$114,000
$137,000
Pension
-
-
-
-
-
-
-
-
Bonus
-
-
-
-
-
-
-
-
Total
$127,000
$137,000
$133,000
$117,000
$105,000
$83,000
$114,000
$137.000
Percentage change of remuneration
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 2015 and 2016.
2016
Percentage change in Executive Director’s salary
Salary
$127,000
2015
Change
$137,000
-7.3%
Percentage change in selected Group senior management salaries
Salaries
$1,811,000
$2,049,000
-11.6%
Percentage change in total wages and salaries
Total wages and salaries
Relative importance of spend on pay
$28,764,000
$26,691,000
+7.8%
$'000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
-
31,564
29,007
1,869
1,003
2015 2016 2015 2016
Total Group Employee Remuneration
Total Dividend Paid
Annual Report 2016 | Anglo-Eastern Plantations Plc
47
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 2016, the unexpired term of the retiring Directors are:
Madam Lim Siew Kim
Dato’ John Lim Ewe Chuan
Lim Tian Huat
Jonathan Law Ngee Song
Expiry 30 January 2017 (Renewed to 30 January 2019)
Expiry 31 August 2018
Expiry 7 May 2017
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 2016 (last 8 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. The share price of AEP Plc dropped after it was removed from the
FTSE All share Index on 17 June 2016 due to the liquidity of the shares. It was removed after it failed to meet the
monthly median of 0.015% of the stock for eight out of twelve months. The share price, however recovered due to
greater interest in the plantation shares following a hostile bid for another UK based plantation company.
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
2016
Ordinary shares
20,551,914
2015
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 between 31
December 2016 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 7 and 22 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 2016 | Anglo-Eastern Plantations Plc
48
Directors’ Remuneration Report
Directors’ remuneration (audited)
The following part provides details of the remuneration of all the Directors for the year ended 31 December 2016. 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 2016 Fees
Total 2015 Fees
$000
$000
127
59
21
-
21
228
137
56
15
9
23
240
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 2017
Annual Report 2016 | Anglo-Eastern Plantations Plc
49
Auditors’ Report
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ANGLO-EASTERN PLANTATIONS PLC
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 2016 and of the Group’s profit for the year then ended;
the Group financial statements have been properly prepared in accordance with IFRSs as adopted by the
European Union;
the Parent Company financial statements have been properly prepared in accordance with United Kingdom
Generally Accepted Accounting Practice; and
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006
and, as regards the Group financial statements, Article 4 of the IAS Regulation.
The financial statements 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).
Respective responsibilities of directors and auditor
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 (FRC’s)
Ethical Standards for Auditors.
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.
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 2016 | Anglo-Eastern Plantations Plc
50
Auditors’ Report
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ANGLO-EASTERN PLANTATIONS PLC
(continued)
Our application of materiality
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
influence the economic decisions of reasonable users that are taken on the basis of the financial statements.
3,000,000
indicator of
Materiality by financial year end ($)
We determined materiality for the group
to be
financial statements as a whole
US$2.00 million (2015: US$2.00 million),
which approximates
to 1% of revenues
(2015: 1%). We consider revenue to be a
financial
key
performance and therefore an appropriate
basis for materiality. Performance materiality
was set at 75% of the above materiality
financial
levels
information from components was audited separately, component materiality levels were set for this purpose at lower
levels varying from 2% to 27% of group materiality. Materiality levels are not significantly different from those applied
in previous years as illustrated above.
75%). Where
the Group’s
1,500,000
2,000,000
2,500,000
(2015:
2016
2014
2015
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 US$50,000 (2015: US$50,000). We also agreed to report differences
below this threshold that, in our view, warranted reporting on qualitative grounds.
An overview of the scope of our audit
Total assets
Group level procedures on the audit of biological assets and land - 29%
Total assets of the five companies significant by size, excluding land and
biological assets, subject to audit, and review by Group audit team - 39%
Audit procedures performed by component auditors on specific areas subject
to review by Group audit team - 34%
Other - (2%)
Annual Report 2016 | Anglo-Eastern Plantations Plc
51
Auditors’ Report
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ANGLO-EASTERN PLANTATIONS PLC
(continued)
Profit before tax
Total profit before tax of the five operating plantation companies significant
by size subject to audit, and review by Group audit team - profit $65,370m
Other - loss $4,524m
Revenue
Audit procedures performed by component auditors, and review by Group audit team covered 100% of revenue
(2015: 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 sixteen mature
plantations and one immature plantation. 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, leasehold land and the impairment reviews of bearer plants classified as property plant and
equipment, 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 the 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. During the year
members of the Group audit team also visited the plantation estate in PT United Kingdom Indonesia Plantations.
Annual Report 2016 | Anglo-Eastern Plantations Plc
52
Auditors’ Report
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ANGLO-EASTERN PLANTATIONS PLC
(continued)
Group audit team visit to PT United Kingdom Indonesia Plantations
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.
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. The amendments to IAS
16 and the amendments to IAS 41, which came into effect on 1 January 2016, remove Biological Assets that meet
the definition of bearer plants from the scope of IAS 41 into the scope of IAS 16. In these financial statements bearer
plants have been accounted for as Property, Plant and Equipment (PPE) in accordance with IAS 16, adopting either
a cost model or a revaluation model. This change in accounting policy has had a significant impact on the Group and
the key audit risks identified.
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 42 to 43.
Annual Report 2016 | Anglo-Eastern Plantations Plc
53
Auditors’ Report
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ANGLO-EASTERN PLANTATIONS PLC
(continued)
Our response to the risks identified
We tested, on a sample basis, that sale invoices were
raised on
the goods
the delivery date based on
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.
in which
In the current year the directors engaged an 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
they operate. The directors
of all areas
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 them to be satisfactory. We challenged the
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
movements in plantation land area and market 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.
The directors performed the valuation exercise internally.
We challenged the assumptions in the input data made by
management at each balance sheet date
through
industry peers and
discussions, comparisons
independent external data sources and where available to
corroboration with
supporting documentation and
historical trends.
to
Risk of material misstatement
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.
Valuation of biological assets
The unharvested fresh fruit bunches (FFB) growing
on the bearer plant at the year-end remains within the
scope of IAS 41 Biological assets and are held at fair
value less costs to sell determined on the basis of the
net present value of expected future cash flows arising
in the production of FFB. Management exercise
significant judgement in determining the underlying
assumptions used in the calculation of fair value.
These assumptions include the estimation of the
weight of unharvested FFB at the balance sheet date,
FFB production, FFB selling price and costs to sell.
We identified this as a risk due to the inherent
uncertainty around the future estimates.
Annual Report 2016 | Anglo-Eastern Plantations Plc
54
Auditors’ Report
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ANGLO-EASTERN PLANTATIONS PLC
(continued)
Risk of material misstatement
Impairment of bearer plants classified as PPE
Following the amendments to IAS 16 and IAS 41, the
bearer plants previously held at fair value under IAS 41
- Agriculture now fall within the scope of IAS 16 –
Property, Plant and Equipment and are held at
historical cost less depreciation. The directors are
required at the end of each reporting period to assess
whether there is any indication that an asset may be
impaired. If any such indication exists, the directors
shall estimate the recoverable amount of the asset.
The directors identified indicators of impairment on
some plantations and have carried out an impairment
review for these plantations by calculating the fair value
less costs to sell. If fair value less costs to sell indicates
an impairment, the directors have calculated the value
in use of the applicable plantations to ensure the
recoverable amount
two
the
significant
calculations. The directors exercise
judgement in determining the underlying assumptions
used in both calculations.
the higher of
is
Our response to the risks identified
We considered the indicators of impairment listed in IAS
36 to determine if any further plantations to those already
identified by the directors should be considered for
impairment at 31 December 2014, 31 December 2015 or
31 December 2016.
The directors engaged an
to
determine the fair value less costs to sell and calculated
the value in use internally using assumptions available to
them at that point in time.
independent valuer,
We challenged the assumptions in the input data made
by management and the valuer through discussions,
comparisons to industry peers and independent external
data sources and where available to corroboration with
supporting documentation and historical trends. We
performed sensitivity analysis on the key assumptions in
the impairment reviews which were considered to be the
CPO price and discount rate.
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
• based on the work undertaken in the course of the audit, 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 and has been prepared in accordance with applicable legal requirements.
Annual Report 2016 | Anglo-Eastern Plantations Plc
55
Auditors’ Report
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ANGLO-EASTERN PLANTATIONS PLC
(continued)
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
In the light of the knowledge and understanding of the group and the parent company and its environment obtained
in the course of the audit, we have not identified material misstatements in the strategic report and director’s report.
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 2016 | Anglo-Eastern Plantations Plc
56
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’ statements, set out on page 12, in relation to going concern and on page 29, 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 acquired 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 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 2017
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
Annual Report 2016 | Anglo-Eastern Plantations Plc
57
Consolidated Income Statement
For the year ended 31 December 2016
Continuing operations
Note
Revenue
Cost of sales
Gross profit
Administration expenses
Impairment losses
Operating profit
Exchange gains / (losses)
Finance income
Finance expense
Profit before tax
Tax expense
Profit for the year
Attributable to:
- Owners of the parent
- Non-controlling interests
Earnings per share for profit
attributable to the owners of the
parent during the year
- basic
- diluted
3
4
4
5
8
9
9
2016
BA
movement
$000
(Restated)
2015
BA
movement
Result
before
BA
movement
$000
$000
Total
$000
Total
$000
-
246,210
196,451
-
196,451
Result
before
BA
movement
$000
246,210
(184,337)
3,383
(180,954)
(152,684)
(732)
(153,416)
61,873
3,383
65,256
43,767
(732)
43,035
(6,653)
(2,740)
-
-
(6,653)
(7,630)
(2,740)
(12,470)
-
-
(7,630)
(12,470)
52,480
3,383
55,863
23,667
(732)
22,935
845
5,881
(1,743)
-
-
-
845
(2,354)
5,881
6,683
(1,743)
(2,010)
57,463
3,383
60,846
25,986
(16,021)
(844)
(16,865)
(10,385)
41,442
2,539
43,981
15,601
32,563
2,150
34,713
10,263
8,879
389
9,268
5,338
41,442
2,539
43,981
15,601
-
-
-
(732)
183
(549)
(488)
(61)
(549)
87.58cts
87.58cts
(2,354)
6,683
(2,010)
25,254
(10,202)
15,052
9,775
5,277
15,052
24.66cts
24.64cts
Earnings per share before BA movement are shown in note 9.
The accompanying notes are an integral part of this consolidated income statement.
Annual Report 2016 | Anglo-Eastern Plantations Plc
58
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2016
Profit for the year
Other comprehensive income / (expense):
Items may be reclassified to profit or loss:
Gain / (Loss) on exchange translation of foreign operations
Net other comprehensive income / (expense) may be reclassified to profit or loss
Items not to be reclassified to profit or loss:
Unrealised gain on revaluation of leasehold land, net of tax
Remeasurement of retirement benefits plan, net of tax
Net other comprehensive income not being reclassified to profit or loss
Total other comprehensive income / (expense) for the year, net of tax
Total comprehensive income / (expense) for the year
Attributable to:
- Owners of the parent
- Non-controlling interests
2016
$000
(Restated)
2015
$000
43,981
15,052
8,860
8,860
1,752
(567)
1,185
10,045
54,026
43,099
10,927
54,026
(45,737)
(45,737)
3,636
334
3,970
(41,767)
(26,715)
(23,850)
(2,865)
(26,715)
The accompanying notes are an integral part of this consolidated statement of comprehensive income and expense.
Annual Report 2016 | Anglo-Eastern Plantations Plc
59
Consolidated Statement of Financial Position
As at 31 December 2016
31.12.2016
Note
$000
(Restated)
31.12.2015
$000
(Restated)
1.1.2015
$000
Non-current assets
Property, plant and equipment
Receivables
Deferred tax assets
Current assets
Inventories
Tax receivables
Biological assets
Trade and other receivables
Cash and cash equivalents
Current liabilities
Loans and borrowings
Trade and other payables
Tax liabilities
Dividend payables
Net current assets
Non-current liabilities
Loans and borrowings
Deferred tax liabilities
Retirement benefits - net liabilities
Net assets
Issued capital and reserves attributable to owners of the parent
Share capital
Treasury shares
Share premium
Capital redemption reserve
Revaluation reserves
Exchange reserves
Retained earnings
Non-controlling interests
Total equity
11
12
18
13
8
14
15
16
17
16
18
19
20
20
356,790
3,891
13,451
374,132
9,219
26,695
7,107
5,767
118,176
166,964
(6,203)
(16,054)
(8,974)
-
(31,231)
135,733
(27,875)
(30,063)
(6,666)
(64,604)
445,261
15,504
(1,171)
23,935
1,087
61,038
(219,570)
482,288
363,111
82,150
445,261
336,444
3,655
8,311
348,410
6,693
16,679
3,673
4,704
104,614
136,363
(1,750)
(17,406)
(5,917)
-
(25,073)
111,290
(32,875)
(27,684)
(4,528)
(65,087)
394,613
15,504
(1,171)
23,935
1,087
59,572
360,424
3,007
3,982
367,413
7,846
9,231
4,895
8,807
125,937
156,716
(313)
(21,010)
(10,752)
(20)
(32,095)
124,621
(34,625)
(29,559)
(4,445)
(68,629)
423,405
15,504
(1,171)
23,935
1,087
57,029
(226,974)
(190,503)
449,062
321,015
73,598
394,613
440,853
346,734
76,671
423,405
The financial statements were approved by the Board of Directors and authorised for issue on 26 April 2017 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 consolidated statement of financial position.
Annual Report 2016 | Anglo-Eastern Plantations Plc
60
Consolidated Statement of Changes in Equity
For the year ended 31 December 2016
Balance at 31 December 2014
Restatement (note 2)
Share
capital
$000
15,504
-
Treasury
shares
$000
(1,171)
Share
premium
$000
23,935
Capital
redemption
reserve
$000
1,087
Revaluation
reserve
$000
57,029
Foreign
exchange
reserve
$000
(190,503)
Retained
earnings
$000
521,355
Non-
controlling
interests
$000
90,813
Total
equity
$000
518,049
Total
$000
427,236
-
-
-
-
-
(80,502)
(80,502)
(14,142)
(94,644)
Balance at 31 December 2014 after restatement
15,504
(1,171)
23,935
1,087
57,029
(190,503)
440,853
346,734
76,671
423,405
Items of other comprehensive income
-Unrealised gain on revaluation of leasehold land, net of tax
-Remeasurement of retirement benefit plan, net of tax
-Loss on exchange translation of foreign operations
Total other comprehensive income / (expenses)
Profit for the year
Total comprehensive income / (expenses) for the year
Dividends paid
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,543
-
-
2,543
-
-
-
(36,471)
(36,471)
-
2,543
(36,471)
-
303
-
303
9,775
10,078
2,543
303
(36,471)
(33,625)
1,093
31
3,636
334
(9,266)
(45,737)
(8,142)
(41,767)
9,775
5,277
15,052
(23,850)
(2,865)
(26,715)
-
-
(1,869)
(1,869)
(208)
(2,077)
Balance at 31 December 2015 after restatement
15,504
(1,171)
23,935
1,087
59,572
(226,974)
449,062
321,015
73,598
394,613
Items of other comprehensive income
-Unrealised gain on revaluation of leasehold land, net of tax
-Remeasurement of retirement benefit plan, net of tax
-Gain on exchange translation of foreign operations
Total other comprehensive income / (expenses)
Profit for the year
Total comprehensive income for the year
Dividends paid
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,466
-
-
1,466
-
-
-
7,404
7,404
-
1,466
7,404
-
(484)
-
(484)
34,713
34,229
1,466
(484)
7,404
8,386
34,713
43,099
286
(83)
1,456
1,659
9,268
1,752
(567)
8,860
10,045
43,981
10,927
54,026
-
-
(1,003)
(1,003)
(2,375)
(3,378)
Balance at 31 December 2016
15,504
(1,171)
23,935
1,087
61,038
(219,570)
482,288
363,111
82,150
445,261
Annual Report 2016 | Anglo-Eastern Plantations Plc
61
Consolidated Statement of Cash Flows
For the year ended 31 December 2016
Cash flows from operating activities
Profit before tax
Adjustments for:
BA movement
Profit on disposal of tangible fixed assets
Depreciation
Retirement benefit provisions
Net finance income
Unrealised (gain) / loss in foreign exchange
Property, plant and equipment written off
Impairment losses
Operating cash flow before changes in working capital
(Increase) / Decrease in inventories
(Increase) / Decrease in non-current, trade and other receivables
Decrease 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
2016
$000
(Restated)
2015
$000
60,846
25,254
(3,383)
(13)
15,677
1,700
(4,138)
(845)
731
2,740
73,315
(2,353)
(1,460)
(1,749)
67,753
(1,743)
(250)
(27,133)
38,627
732
(392)
13,556
973
(4,673)
2,354
163
12,470
50,437
341
4,425
(1,623)
53,580
(2,010)
(103)
(27,856)
23,611
(30,484)
(36,926)
931
5,881
979
6,683
(23,672)
(29,264)
Annual Report 2016 | Anglo-Eastern Plantations Plc
62
Consolidated Statement of Cash Flows
For the year ended 31 December 2016
Financing activities
Dividends paid by Company
Dividends paid to minority shareholders
Drawdown of long term loans
Repayment of existing long term loans
Net cash used in financing activities
Increase / (Decrease) in cash and cash equivalents
Cash and cash equivalents
At beginning of year
Foreign exchange
At end of year
Comprising:
Cash at end of year
2016
$000
(1,003)
(2,375)
1,250
(1,797)
(3,925)
11,030
(Restated)
2015
$000
(1,869)
(228)
-
(313)
(2,410)
(8,063)
104,614
2,532
118,176
125,937
(13,260)
104,614
118,176
104,614
The accompanying notes are an integral part of this consolidated statement of cash flows.
.
Annual Report 2016 | Anglo-Eastern Plantations Plc
63
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, mainly in the cultivation of oil palm.
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 amendments are effective for the first time in these financial statements:
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)*
•
The nature and the impact of the amendments to IAS 16 and IAS 41 are disclosed in note 2 - Prior year restatement.
b)
New standards, interpretations and amendments not yet effective.
The following new standards, interpretations and amendments are effective for periods beginning after 1 January 2017 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)
None of the above new standards, interpretations and amendments are expected to have a material effect on the Group's future financial
statements.
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.
Annual Report 2016 | Anglo-Eastern Plantations Plc
64
Notes to the Consolidated Financial Statements
1 Accounting policies - continued
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, FFB, 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.
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:
• Revalued land - Property, plant and equipment (note 11)
• Biological assets (note 14)
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.
Annual Report 2016 | Anglo-Eastern Plantations Plc
65
Notes to the Consolidated Financial Statements
1 Accounting policies - continued
Property, plant and equipment - continued
Plantations comprise of the 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. Oil palm plantations are considered mature within three to four years after planting and generating average
annual FFB of four to six metric tons per hectare. Immature plantations are not depreciated.
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.
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.
Plantations, 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:
Plantations - 5%
Buildings - 5% to 10% per annum
Oil Mill - 5% per annum
Estate plant, equipment & vehicle - 12.5% to 50% per annum
Office plant, equipment & vehicle - 25% to 50% per annum
Biological assets
Biological assets comprise an estimation of the fair value less costs to sell of unharvested FFB at balance sheet date. Changes in the fair
value of biological assets is charged or credited to the income statement within the cost of sales.
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 property, plant and equipment 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
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.
Annual Report 2016 | Anglo-Eastern Plantations Plc
66
Notes to the Consolidated Financial Statements
1 Accounting policies - continued
Financial assets
All the Group's receivables and loans are non-derivative financial assets with fixed or determinable payments that are not quoted in an active
market. They are recognised at fair value at inception and subsequently at amortised cost. No impairment provisions have been considered
necessary.
Cash and cash equivalents consist of cash in hand and short term deposits at banks with an original maturity of not exceeding three months.
Bank overdrafts are shown within loans and borrowings under current liabilities on the balance sheet.
There are no assets in hedging relationships and no financial assets or liabilities available for sale.
Financial liabilities
All the Group's financial liabilities are non-derivative financial liabilities.
Bank borrowings and long term development loans are initially recognised at fair value and subsequently at amortised cost, which is the total
of proceeds received net of issue costs. Finance charges are accounted for on an accruals basis and charged in the income statement,
unless capitalised according to the policy as set out under Interest capitalisation above.
Trade and other payables are shown at fair value at recognition and subsequently at amortised cost.
Deferred tax
Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability in the balance sheet differs from its tax
base except for differences in the initial recognition of an asset or liability in a transaction which is not a business combination and at the time
of the transaction affects neither accounting nor taxable profit.
The Group recognises deferred tax liabilities arising from taxable temporary differences on investments in subsidiaries, except where the
Group is able to control the reversal of the temporary differences and it is probable that the temporary difference will not reverse in the
foreseeable future.
Recognition of deferred tax assets is restricted to those instances where it is possible that taxable profit will be available against which the
difference can be utilised.
Deferred tax is recognised on temporary differences arising on property revaluation surpluses.
Deferred tax is determined using the tax rates that are enacted or substantively enacted at the balance sheet date. Deferred tax is charged
or credited in the income statement, except when it relates to items charged or credited directly to equity, such as revaluations, in which case
the deferred tax is also dealt with in other comprehensive income; 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.
Annual Report 2016 | Anglo-Eastern Plantations Plc
67
Notes to the Consolidated Financial Statements
1 Accounting policies - continued
Retirement benefits - continued
Defined benefit schemes - continued
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 and its subsidiaries enters into financial guarantee contracts and guarantees the indebtedness of other companies
within the Group and/or third party entities, the Group considers these to be insurance arrangements and accounts for them as such. In this
respect, the Group treats the guarantee contract as a contingent liability until such time that it becomes probable that the Group will be
required to make a payment under the guarantee.
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 property, plant and equipment and biological assets are set out in note 11 and note 14 respectively.
The Group's policy with regard to impairment of such assets is set out above.
Details on deferred tax are given in note 18 and retirement benefits in note 19.
Annual Report 2016 | Anglo-Eastern Plantations Plc
68
Notes to the Consolidated Financial Statements
2 Prior year restatement
The amendments to IAS 16 and the amendments to IAS 41, which came into effect on 1 January 2016, require Biological Assets that meet
the definition of bearer plants to be accounted for as Property, Plant and Equipment in accordance with IAS 16, adopting either a cost model
or a revaluation model. This required retrospective application.
As the Biological Assets of the Group fall within the definition of bearer plants, with effect from 1 January 2016 the immature plants are stated
at accumulated cost until maturity, subject to impairment reviews, and the mature plantations are stated at historical cost less accumulated
depreciation. The unharvested FFB, which is agricultural produce under the revised IAS 41, are recognised as Biological Assets and are
stated at fair value less cost to sell at the point of harvest, with changes recognised in profit and loss. This has resulted in the accounts for
the year ended 31 December 2015 being restated.
The effects of the restatements are summarised as follows:
Impact on consolidated income statement
Profit for the year before restatement
Effect of change in restatement:
Cost of sales
Biological asset movement
Administration expenses
Impairment loss
Tax expense
Profit for the year after restatement
(Restated)
2015
$000
(13,429)
(6,787)
63,389
196
(12,470)
(15,847)
28,481
15,052
The effect of the prior year adjustments had a negative impact on the earnings per share before BA of 43.50cts and a positive impact on the
earnings per share after BA of 62.24cts for the year to 31 December 2015.
Impact on consolidated statement of comprehensive income
Other comprehensive expenses for the year before restatement
Effect of change in restatement:
Loss on exchange translation of foreign operations
Deferred tax on revaluation
Other comprehensive expenses for the year after restatement
(Restated)
2015
$000
(50,585)
8,858
(40)
8,818
(41,767)
Annual Report 2016 | Anglo-Eastern Plantations Plc
69
Notes to the Consolidated Financial Statements
2 Prior year restatement - continued
Impact on consolidated statement of financial position
Non-current assets - Biological assets
Property, plant and equipment
Deferred tax
Current assets - Biological assets
Revaluation reserves
Exchange reserves
Retained earnings
Non-controlling interest
Impact on consolidated statement of financial position
Non-current assets - Biological assets
Property, plant and equipment
Deferred tax
Current assets - Biological assets
Retained earnings
Non-controlling interest
Balance as
reported
31 December
2015
$000
179,010
219,990
(20,911)
-
(59,594)
234,490
(504,892)
(82,607)
Balance as
reported
1 January
2015
$000
251,374
227,380
(44,368)
-
(521,355)
(90,813)
Effect of
restatement
$000
(179,010)
116,454
1,538
3,673
22
(7,516)
55,830
9,009
Effect of
restatement
$000
(251,374)
133,044
18,791
4,895
80,502
14,142
Restated
balance at
31 December
2015
$000
-
336,444
(19,373)
3,673
(59,572)
226,974
(449,062)
(73,598)
Restated
balance at
1 January
2015
$000
-
360,424
(25,577)
4,895
(440,853)
(76,671)
The prior year restatement has changed from that reported in the interim financial statements as the figures have now been subject to audit.
3 Revenue
Sales of produce:
- CPO, palm kernel and FFB
- Rubber
- Shell nut
- Biomass products
4 Finance income and expense
Finance income
Interest receivable on:
Credit bank balances and time deposits
Finance expense
Interest payable on:
Development loans - (note 16)
Net finance income recognised in income statement
2016
$000
243,020
1,149
1,717
324
246,210
2016
$000
2015
$000
193,364
1,075
1,685
327
196,451
2015
$000
5,881
6,683
(1,743)
4,138
(2,010)
4,673
Annual Report 2016 | Anglo-Eastern Plantations Plc
70
Notes to the Consolidated Financial Statements
5 Profit before tax
Profit before tax is stated after charging
Depreciation (note 11)
Impairment losses (note 11)
Exchange (gains) / losses
Movement of inventories
Operating lease expense
- Property
Professional fees
Staff costs (note 7)
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
6 Segment information
2016
$000
15,677
2,740
(845)
(2,526)
515
760
31,564
5
132
6
13
156
21
70
91
247
(Restated)
2015
$000
13,556
12,470
2,354
1,153
523
1,086
29,007
5
157
7
13
182
19
66
85
267
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 2016 | Anglo-Eastern Plantations Plc
71
Notes to the Consolidated Financial Statements
6 Segment information – continued
2016
Total sales revenue (all external)
- CPO, palm kernel and FFB
- Rubber
- Shell nuts
- Biomass products
Total revenue
Profit / (loss) before tax
BA movement
Profit for the year before tax per consolidated income statement
Depreciation
Impairment losses
Inter-segment transactions
Income tax
Total Assets
Non-Current Assets
Non-Current Assets - Additions
North
Sumatera
$000
Bengkulu
$000
South
Sumatera
$000
Riau
$000
Bangka
$000
Kalimantan
$000
Indonesia Malaysia
$000
$000
UK
$000
Total
$000
Total
88,465
1,149
628
324
90,566
23,219
628
23,847
(4,029)
-
3,828
(9,275)
86,564
-
736
-
87,300
24,785
1,421
26,206
(4,096)
-
(2,117)
(5,744)
175,332
101,843
7,956
129,428
76,048
5,544
3
-
1
-
4
(4,695)
144
(4,551)
(2,505)
693
(767)
3,410
54,280
52,862
2,638
40,169
-
205
-
40,374
12,861
653
13,514
(898)
-
(609)
(4,531)
41,887
20,044
857
27
-
-
-
27
(602)
2
(600)
(85)
(335)
-
90
24,342
-
147
-
24,489
1,623
431
2,054
(3,414)
(3,098)
(1,334)
644
11,732
11,520
657
103,906
94,974
12,771
239,570
1,149
1,717
324
242,760
57,191
3,279
60,470
(15,027)
(2,740)
(999)
(15,406)
516,565
357,291
30,423
3,450
-
-
-
3,450
296
104
400
(650)
-
604
(81)
-
-
-
-
-
(24)
-
(24)
-
-
395
(1,378)
20,944
16,263
61
3,587
578
-
243,020
1,149
1,717
324
246,210
57,463
3,383
60,846
(15,677)
(2,740)
-
(16,865)
541,096
374,132
30,484
Annual Report 2016 | Anglo-Eastern Plantations Plc
72
Notes to the Consolidated Financial Statements
6 Segment information – continued
2015 (Restated)
Total sales revenue (all external)
- CPO, palm kernel and FFB
- Rubber
- Shell nuts
- Biomass products
Total revenue
Profit / (loss) before tax
BA movement
Profit for the year before tax per consolidated income statement
Depreciation
Impairment losses
Inter-segment transactions
Income tax
Total Assets
Non-Current Assets
Non-Current Assets - Additions
North
Sumatera
$000
Bengkulu
$000
South
Sumatera
$000
Riau
$000
Bangka
$000
Kalimantan
$000
Indonesia Malaysia
$000
$000
UK
$000
Total
$000
Total
67,978
1,075
513
327
69,893
18,301
(147)
18,154
(3,911)
-
3,546
(7,273)
73,661
-
812
-
74,473
15,627
(612)
15,015
(3,840)
-
(2,169)
(2,900)
148,349
94,578
8,374
104,959
71,025
3,623
37
-
10
-
47
(13,360)
(21)
(13,381)
(1,197)
(10,945)
(765)
1,379
47,995
46,878
3,822
37,129
-
225
-
37,354
15,431
(214)
15,217
(842)
-
(624)
(3,814)
54,295
19,203
2,658
1
-
38
-
39
(433)
-
(433)
(26)
(301)
-
-
11,100
10,945
867
11,426
-
87
-
11,513
(7,742)
251
(7,491)
(2,986)
(1,224)
(1,427)
2,584
92,171
87,028
17,441
190,232
1,075
1,685
327
193,319
27,824
(743)
27,081
(12,802)
(12,470)
(1,439)
(10,024)
458,869
329,657
36,785
3,132
-
-
-
3,132
-
-
-
-
-
(795)
11
(784)
(1,043)
-
(1,043)
(754)
-
1,157
(73)
-
-
282
(105)
21,610
17,560
141
4,294
1,193
-
193,364
1,075
1,685
327
196,451
25,986
(732)
25,254
(13,556)
(12,470)
-
(10,202)
484,773
348,410
36,926
Annual Report 2016 | Anglo-Eastern Plantations Plc
73
Notes to the Consolidated Financial Statements
6 Segment information - continued
In year 2016, revenue from 4 customers of the Indonesian segment represent approximately $114.1m (2015: $107.2m) of the Group’s total revenue. An analysis of these revenue is provided as below. Although
Customer 1 to 4 are over 10% of the Group total revenue, there is no over reliance on these Customers as tenders are performed on a monthly basis. Two of the top four customers are the same as in the prior year.
2016
Customer 1
Customer 2
Customer 3
Customer 4
2015
Customer 1
Customer 2
Customer 3
Customer 4
2016
Customer 1
Customer 2
Customer 3
Customer 4
2015
Customer 1
Customer 2
Customer 3
Customer 4
North
Sumatera
$000
Bengkulu
$000
South
Sumatera
$000
Riau
$000
Bangka
$000
Kalimantan
$000
Indonesia Malaysia
$000
$000
UK
$000
Total
$000
Total
-
17,177
15,700
-
32,877
-
19,544
2,654
19,633
41,831
%
-
7.0
6.4
-
13.4
-
9.9
1.4
10.0
21.3
39,101
-
-
5,577
44,678
35,069
-
15,193
-
50,262
%
15.9
-
-
2.3
18.2
17.9
-
7.7
-
25.6
-
-
-
-
-
-
-
-
-
-
%
-
-
-
-
-
-
-
-
-
-
-
9,832
8,522
-
18,354
-
13,088
2,004
-
15,092
%
-
4.0
3.5
-
7.5
-
6.7
1.0
-
7.7
-
-
-
-
-
-
-
-
-
-
%
-
-
-
-
-
-
-
-
-
-
-
-
-
18,219
18,219
-
-
-
-
-
%
-
-
-
7.4
7.4
-
-
-
-
-
39,101
27,009
24,222
23,796
114,128
35,069
32,632
19,851
19,633
107,185
%
15.9
11.0
9.9
9.7
46.5
17.9
16.6
10.1
10.0
54.6
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
39,101
27,009
24,222
23,796
114,128
35,069
32,632
19,851
19,633
107,185
%
%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
%
15.9
11.0
9.9
9.7
46.5
17.9
16.6
10.1
10.0
54.6
Save for a small amount of rubber, all the Group’s operations are devoted to oil palm. The Group’s report is by geographical area, as each area tends to have different agricultural conditions.
Annual Report 2016 | Anglo-Eastern Plantations Plc
74
Notes to the Consolidated Financial Statements
7 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
- United Kingdom
- Indonesia (note 19)
- Malaysia
2016
Number
5,838
10,934
16,772
2016
$000
28,764
773
64
1,911
52
31,564
2015
number
5,832
10,980
16,812
2015
$000
26,691
880
-
1,378
58
29,007
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 45 - 49 of which certain information on page 49 has been audited.
Directors emoluments
Remuneration expense for key management personnel
2016
$000
228
2,039
2015
$000
240
2,289
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 49.
8 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
2016
$000
20,438
(30)
(3,543)
16,865
(Restated)
2015
$000
15,069
208
(5,075)
10,202
Corporation tax rate in Indonesia is at 25% whereas Malaysia is at 24%. 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% (2015: 20%)
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
(Over) / Under provision of prior year income tax
Utilisation of tax losses brought forward
Over provision of prior year deferred tax assets
Deferred tax assets not recognised
Total tax charge for year
Annual Report 2016 | Anglo-Eastern Plantations Plc
2016
$000
60,846
12,169
2,301
4,810
309
(2,656)
(30)
(38)
-
-
16,865
(Restated)
2015
$000
25,254
5,051
1,165
4,355
1,172
(1,737)
208
-
(40)
28
10,202
75
Notes to the Consolidated Financial Statements
8 Tax expense - continued
The tax receivables represent the corporate income tax (“CIT”) and value added tax (“VAT”) that have yet to be refunded by the Indonesia
tax authority. The tax receivables relating to CIT arose due to over payments of tax. The tax receivables relating to VAT arose because the
majority of the Groups’ CPO was sold to bonded zones which does not attract output VAT and thus the input VAT incurred is claimable.
Upon submission of tax return (for CIT) or request letter (for VAT refund), a tax audit will be conducted by the tax authority and the refund
process takes up to 12 months.
9 Earnings per ordinary share (EPS)
Profit for the year attributable to owners of the Company before BA movement
BA movement
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 movement
Basic EPS after BA movement
Dilutive EPS before BA movement
Dilutive EPS after BA movement
10 Dividends
Paid during the year
Final dividend of 1.75p per ordinary share for the year ended 31 December 2015
(2014: 3.0p)
Proposed final dividend of 3.0p per ordinary share for the year ended 31 December 2016
(2015: 1.75p)
2016
$000
32,563
2,150
34,713
Number
‘000
39,636
-
39,636
82.16cts
87.58cts
82.16cts
87.58cts
(Restated)
2015
$000
10,263
(488)
9,775
Number
‘000
39,636
38
39,674
25.89cts
24.66cts
25.87cts
24.64cts
2016
$000
2015
$000
1,003
1,869
1,463
1,028
The proposed dividend for 2016 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 2016 | Anglo-Eastern Plantations Plc
76
Notes to the Consolidated Financial Statements
11 Property, plant and equipment
Cost or valuation
At 1 January 2015 (restated)
Exchange translations
Reclassification
Revaluations
Additions
Development costs capitalised
Disposal / Written off
Conversion of rubber to oil palm
At 31 December 2015 (restated)
Exchange translations
Reclassification
Revaluations
Additions
Development costs capitalised
Disposals / Written off
At 31 December 2016
Accumulated depreciation and impairment
At 1 January 2015 (restated)
Exchange translations
Reclassification
Charge for the year
Impairment losses
Disposal / Written off
Conversion of rubber to oil palm
At 31 December 2015 (restated)
Exchange translations
Charge for the year
Impairment losses
Disposal / Written off
At 31 December 2016
Carrying amount
At 31 December 2014 (restated)
At 31 December 2015 (restated)
At 31 December 2016
Plantations
$000
174,905
(19,470)
-
-
63
17,104
(564)
(123)
171,915
3,720
-
-
57
13,393
(2,042)
187,043
41,861
(5,574)
-
6,788
12,470
-
(84)
55,461
833
8,260
2,740
(636)
66,658
133,044
116,454
120,385
Mill
$000
51,656
(5,596)
(11)
-
11,161
-
(298)
-
56,912
1,440
1
-
8,665
-
(225)
66,793
13,884
(1,496)
(11)
2,931
-
(277)
-
15,031
371
3,371
-
(215)
18,558
37,772
41,881
48,235
Leasehold
land
$000
Buildings
$000
Estate plant,
equipment & vehicle
$000
Office plant,
equipment & vehicle
$000
Construction
in progress
$000
150,982
(16,936)
-
4,902
1,727
14
-
-
140,689
2,773
-
2,246
2,001
933
(65)
148,577
-
-
-
-
-
-
-
-
-
-
-
-
-
150,982
140,689
148,577
39,043
(4,331)
7,477
-
32
-
(119)
-
42,102
998
3,608
-
765
-
(229)
47,244
9,075
(1,066)
-
2,270
-
(60)
-
10,219
190
2,685
-
(141)
12,953
29,968
31,883
34,291
15,515
(1,721)
11
-
702
-
(353)
-
14,154
287
-
-
927
-
(540)
14,828
10,181
(1,187)
11
1,432
-
(285)
-
10,152
182
1,286
-
(466)
11,154
5,334
4,002
3,674
1,202
(166)
-
-
58
-
(6)
-
1,088
1
-
-
36
-
(142)
983
898
(134)
-
135
-
(6)
-
893
(2)
75
-
(136)
830
304
195
153
3,020
(268)
(7,477)
-
5,402
663
-
-
1,340
37
(3,609)
-
2,846
861
-
1,475
-
-
-
-
-
-
-
-
-
-
-
-
-
3,020
1,340
1,475
Total
$000
436,323
(48,488)
-
4,902
19,145
17,781
(1,340)
(123)
428,200
9,256
-
2,246
15,297
15,187
(3,243)
466,943
75,899
(9,457)
-
13,556
12,470
(628)
(84)
91,756
1,574
15,677
2,740
(1,594)
110,153
360,424
336,444
356,790
Annual Report 2016 | Anglo-Eastern Plantations Plc
77
Notes to the Consolidated Financial Statements
11 Property, plant and equipment - continued
The Group engaged Muttaqin Bambang Purwanto Rozak Uswatun & Rekan (MBPRU) with its head office located in Jakarta, Indonesia to
undertake the land valuation for the Group. 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’. For the year ended 31 December 2016, valuations were undertaken on the land of eight
subsidiaries. The increase per hectare derived from the current valuation was then applied to the land value of the remaining companies in
the same geographical location to derive at the fair value of land as at 31 December 2016. For the year ended 31 December 2015,
independent land valuations were undertaken for nine subsidiary companies in Indonesia and Malaysia. The same methodology to fair value
land was adopted to value the land of the remaining companies as at 31 December 2015. 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 $46,982,000 (2015: $43,713,000).
PT Simpang Ampat’s land was valued on the basis that its highest and best use is oil palm plantation. At present the land is planted with
rubber trees, however the Group has the intention to replace the ageing rubber trees with oil palm trees.
Details of the information about the fair value hierarchy in relation to land at 31 December are as follows:
Land
At 31 December 2016
At 31 December 2015
Level 1
$000
Level 2
$000
Level 3
$000
Fair value
$000
-
-
-
-
148,577
140,689
148,577
140,689
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 land and the inter-
relationship between key unobservable inputs and fair value are set out in the table below:
Item
Valuation approach
Inputs used
Inter-relationship
unobservable inputs and fair value
between
key
Land
location
Selling prices of comparable land in
similar
for
in key attributes. The
differences
valuation model is based on price per
hectare.
adjusted
Selling prices of comparable land
The higher the selling price, the higher
the fair value
Location, legal title, land area,
land type and topography
These are qualitative
require
significant
professional valuer, MBPRU
inputs which
by
judgement
There were no changes to the valuation techniques during the year.
The fair value measurement is based on the above items’ highest and best use, which does not differ from their actual use.
The estates include $325,000 (2015: $483,000) of interest and $3,930,000 (2015: $4,909,000) 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.
Impairment for plantations is measured by comparing its carrying amount with its recoverable amount, which is the higher of the fair value
less cost to sell and its value in use. The impairment loss of $12,470,000 recognised in 2015 was primarily due to the lower CPO price and
higher cost of new planting. In 2016, although the CPO price has improved but the Group incurred higher cost for new planting hence there
was a further impairment of $2,740,000.
Annual Report 2016 | Anglo-Eastern Plantations Plc
78
Notes to the Consolidated Financial Statements
11 Property, plant and equipment - continued
The value in use is the net present value of the projected future cash flows over the expected 20-year economic life of the asset discounted
at 15.0% (2015: 15.5%). Projected future cash flows are calculated based on historical data, industry performance, economic conditions and
any other readily available information.
The fair value less cost to sell is computed by professional valuer, MBPRU using discounted cash flow (“DCF”) over the expected 20-year
economic life of the asset. The assumptions applied in the valuation are, inter-alia, listed as below:
CPO selling price
Cost of selling as a percentage of the asset’s fair value
Overhead cost as a percentage of revenue
Notional rent as a percentage of land value
Discount rate
2016
$700/mt
4.5%
10%
9%
17.4%
2015
$625/mt
4.5%
10%
9%
16.8%
The plantations carried at fair value less cost to sell are classified as Level 3 in the fair value hierarchy.
Changes to the assumptions adopted in the projected future cash flows would affect the amount of impairment. The recoverable amount of
the Group’s plantations carried at fair value less cost to sell was $2,099,000 (2015: $2,738,000) whereas the recoverable amount of the
Group’s plantations carried at value in use was $17,869,000 (2015:$23,654,000).
12 Receivables: non-current
Due from non-controlling interests
Due from cooperatives under Plasma scheme
Due from village smallholder schemes
2016
2015
Book value
$000
Fair value
$000
Book value
$000
Fair value
$000
578
3,313
-
3,891
424
2,973
-
3,397
1,193
2,231
231
3,655
924
2,056
213
3,193
The non-controlling interests in PT Alno Agro Utama and PT Cahaya Pelita Andhika have acquired their interests on deferred terms (see
note 25, Credit risk).
Plasma 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 $3,313,000 (2015: $2,231,000) for the land allocated to the cooperatives which
the cooperatives will repay.
In 2015, amount due from village smallholder schemes represents expenditure on planting and maintaining to maturity oil palms on
communal land owned by 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.
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% (2015: 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
5.56% (2015: 5.57%)
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% for year 2015.
Discount rate
The higher the discount rate, the
lower the fair value
Annual Report 2016 | Anglo-Eastern Plantations Plc
79
Notes to the Consolidated Financial Statements
13 Inventories
Estate and mill consumables
Processed produce for sale
14 Biological assets
At 1 January
Changes in fair value less cost to sell
Decreases due to harvest
Exchange translations
At 31 December
2016
$000
4,720
4,499
9,219
2016
$000
3,673
108,013
(104,630)
51
7,107
2015
$000
5,887
806
6,693
2015
$000
4,895
85,022
(85,754)
(490)
3,673
The valuation of the unharvested FFB was carried out internally for each plantation of the Group. It involved an estimation of the weight of
unharvested FFB at balance sheet date multiplied with the sum of average FFB selling price less average harvesting cost of the last month
prior to the balance sheet date. The weight derived from the computation of the percentage of growth based on the data extracted from the
research reference "The Reflection of Moisture Content on Palm Oil Development during the Ripening Process of Fresh Fruits" multiplied
with the estimated FFB harvested two months’ post balance sheet date.
The fair value of biological assets is classified as Level 3 in the fair value hierarchy.
The valuation techniques and significant unobservable inputs used in determining the fair value measurement of biological assets, as well as
the inter-relationship between key unobservable inputs and fair value, are set out in the table below:
Item
Valuation approach
Biological assets
-
Unharvested produce
Based on FFB weight multiply by the
less
sum of FFB selling price
harvesting cost
Inputs used
FFB weight
FFB selling price
Harvesting cost
15 Trade and other receivables
Trade receivables
Other receivables
Prepayments and accrued income
Inter-relationship
unobservable inputs and fair value
between
key
The higher the weight, the higher the fair
value
The higher the selling price, the higher
the fair value
The higher the harvesting cost, the lower
the fair value
2016
$000
778
4,683
306
5,767
2015
$000
271
4,211
222
4,704
The carrying amount of trade and other receivables classified as loans and receivables approximates fair value.
Annual Report 2016 | Anglo-Eastern Plantations Plc
80
Notes to the Consolidated Financial Statements
16 Loans and borrowings
Non-current
Long term loan (a)
Long term loan (b)
Current
Long term loan (a)
Long term loan (b)
2016
2015
Book value
$000
Fair value
$000
Book value
$000
Fair value
$000
2,875
25,000
27,875
1,125
5,078
6,203
2,782
24,055
26,837
1,125
5,078
6,203
4,000
28,875
32,875
625
1,125
1,750
3,899
28,407
32,306
625
1,125
1,750
Total loans and borrowings
34,078
33,040
34,625
34,056
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
8,594
19,281
27,875
12,750
20,125
32,875
(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 rate in
2016 was about 5.38% (2015: 5.38%). 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 rate in 2016 was about 5.73% (2015: 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:
2016
2015
Book value
$000
Fair value
$000
Book value
$000
Fair value
$000
Loans and borrowings
34,078
33,040
34,625
34,056
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.
17 Trade and other payables
Trade payables
Other payables
Accruals
2016
$000
5,950
3,234
6,870
16,054
2015
$000
7,732
2,956
6,718
17,406
The carrying amount of trade and other payables classified as financial liabilities measured at amortised cost approximates fair value.
Annual Report 2016 | Anglo-Eastern Plantations Plc
81
Notes to the Consolidated Financial Statements
18 Deferred tax
The movement on the deferred tax account is as shown below:
At 1 January
Recognised in profit and loss:
Tax expense
BA movement
Recognised in other comprehensive income:
Revaluation of leasehold land
Retirement benefits
Exchange differences
At 31 December
2016
$000
(19,373)
4,387
(844)
(494)
188
(476)
(16,612)
(Restated)
2015
$000
(25,577)
4,892
183
(1,266)
(111)
2,506
(19,373)
The deferred tax asset and liability, together with the amounts recognised in profit or loss and other comprehensive income are detailed as
follows:
2016
Revaluation surplus
Retirement benefits
BA movement
Unutilised tax losses
Unremitted earnings
Other temporary differences
Tax assets / (liabilities)
2015 (restated)
Revaluation surplus
Retirement benefits
BA movement
Unutilised tax losses
Other temporary differences
Tax assets / (liabilities)
Asset
$000
-
1,661
-
11,558
-
232
13,451
-
1,127
-
6,970
214
8,311
Liability
$000
(27,585)
-
(1,775)
-
(545)
(158)
(30,063)
(26,450)
-
(918)
-
(316)
(27,684)
Net
$000
(27,585)
1,661
(1,775)
11,558
(545)
74
(16,612)
(26,450)
1,127
(918)
6,970
(102)
(19,373)
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
-
320
(844)
4,444
(545)
168
3,543
24
249
183
4,386
233
5,075
2016
$000
2,832
(494)
188
-
-
-
-
(306)
(1,266)
(111)
-
-
-
(1,377)
2015
$000
2,842
The Groups recognised tax assets arising from the unutilised tax losses of certain subsidiaries as the Group believes that the tax assets of
these subsidiaries can be realised in the future periods based on its budget. However, the Group does not recognise the tax losses of certain
companies in the Group as tax assets as the future recoverability of losses of these companies cannot be certain.
Annual Report 2016 | Anglo-Eastern Plantations Plc
82
Notes to the Consolidated Financial Statements
19 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 the 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
asset 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 asset 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
2016
5.0%
8.0%
9.0%
8.5%
2015
5.0%
8.0%
8.3%
9.0%
The Group also operates a non-contributory non-funded retirement plan for staff in Indonesia. Retirement benefits are paid to employees in a
single lump sum at the time of retirement. Retirement benefit is accrued by the Group and charged in the income statement based on
individual employee’s service up to the end of the financial year.
The Group provides other long-term employee benefit in form of Long Service Award. Long Service Award is eligible for staff employees who
have 10 and 20 years of service and non-staff employees who have 25 years of service and every 5 years after.
Service cost
Current service cost
Past service cost
Net interest expense
Actuarial gain
Total employee benefits expense
2016
$000
1,076
385
465
(15)
1,911
2015
$000
1,016
20
342
-
1,378
Annual Report 2016 | Anglo-Eastern Plantations Plc
83
Notes to the Consolidated Financial Statements
19 Retirement benefits - continued
Reconciliation of defined benefit obligation and fair value of scheme assets:
At 1 January 2015
Service cost – current
Service cost - past
Interest (cost) / income
Included in comprehensive income
Remeasurement (loss) / gain
Actuarial (loss) / gain from:
Adjustments (experience)
Financial assumptions
Return on plan assets (exclude interest)
Included in other comprehensive income
Effect of movements in exchange rates
Employer contributions
Benefits paid
Other movements
At 31 December 2015
Defined benefit obligation
Unfunded
scheme
$000
(2,277)
Funded
scheme
$000
(5,674)
(492)
(20)
(417)
(929)
(180)
381
-
201
596
-
190
786
(5,616)
(524)
-
(197)
(721)
14
278
-
292
244
-
54
298
(2,408)
Total
$000
(7,951)
(1,016)
(20)
(614)
(1,650)
(166)
659
-
493
840
-
244
1,084
(8,024)
Fair value of scheme assets
Unfunded
scheme
$000
-
Funded
scheme
$000
3,506
-
-
272
272
-
-
(48)
(48)
(369)
274
(139)
(234)
3,496
-
-
-
-
-
-
-
-
-
-
-
-
-
Net defined scheme liability
Unfunded
scheme
$000
(2,277)
Funded
scheme
$000
(2,168)
(492)
(20)
(145)
(657)
(180)
381
(48)
153
227
274
51
552
(2,120)
(524)
-
(197)
(721)
14
278
-
292
244
-
54
298
(2,408)
Total
$000
(4,445)
(1,016)
(20)
(342)
(1,378)
(166)
659
(48)
445
471
274
105
850
(4,528)
Total
$000
3,506
-
-
272
272
-
-
(48)
(48)
(369)
274
(139)
(234)
3,496
Annual Report 2016 | Anglo-Eastern Plantations Plc
84
Notes to the Consolidated Financial Statements
19 Retirement benefits - continued
At 31 December 2015
Service cost - current
Service cost - past
Interest (cost) / income
Actuarial gain
Included in comprehensive income
Remeasurement (loss) / gain
Actuarial (loss) / gain from:
Adjustments (experience)
Financial assumptions
Return on plan assets (exclude interest)
Included in other comprehensive income
Effect of movements in exchange rates
Employer contributions
Benefits paid
Other movements
At 31 December 2016
Defined benefit obligation
Unfunded
scheme
$000
(2,408)
Funded
scheme
$000
(5,616)
(515)
1
(511)
-
(1,025)
(163)
(278)
-
(441)
(139)
-
350
211
(6,871)
(561)
(386)
(285)
15
(1,217)
2
(217)
-
(215)
(51)
-
85
34
(3,806)
Total
$000
(8,024)
(1,076)
(385)
(796)
15
(2,242)
(161)
(495)
-
(656)
(190)
-
435
245
(10,677)
Fair value of scheme assets
Unfunded
scheme
$000
-
Funded
scheme
$000
3,496
-
-
331
-
331
-
-
(99)
(99)
89
377
(183)
283
4,011
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Net defined scheme liability
Unfunded
scheme
$000
(2,408)
Funded
scheme
$000
(2,120)
(515)
1
(180)
-
(694)
(163)
(278)
(99)
(540)
(50)
377
167
494
(2,860)
(561)
(386)
(285)
15
(1,217)
2
(217)
-
(215)
(51)
-
85
34
(3,806)
Total
$000
(4,528)
(1,076)
(385)
(465)
15
(1,911)
(161)
(495)
(99)
(755)
(101)
377
252
528
(6,666)
Total
$000
3,496
-
-
331
-
331
-
-
(99)
(99)
89
377
(183)
283
4,011
Annual Report 2016 | Anglo-Eastern Plantations Plc
85
Notes to the Consolidated Financial Statements
19 Retirement benefits - continued
The following table exhibits the sensitivity of the Group’s retirement benefits to the fluctuation in the discount rate and wages:
A change of 1% in the discount rate
-1% in discount rate
+1% in discount rate
A change of 1% in wages
-1% in wages
+1% in wages
2016
$000
1,118
(1,001)
(1,052)
1,158
2015
$000
860
(758)
(799)
895
The following contributions, which reflect expected future service, as appropriate are expected to be paid:
Year
2017
2018 to 2021
2022 to 2026
after 2026
Total
20 Share capital and treasury shares
Ordinary shares of 25p each
Beginning and end of year
Treasury shares:
Beginning of year
Share options exercised
End of year
Market value of treasury shares:
Beginning of year (531.0p/share)
End of year (674.5p/share)
$000
759
3,095
8,940
93,434
106,228
Authorised
Number
Issued and
fully paid
Number
Authorised
£000
Issued and
fully paid
£000
Authorised
$000
Issued and
fully paid
$000
60,000,000
39,976,272
15,000
9,994
23,865
15,504
2016
Number
339,900
-
339,900
2015
Number
339,900
-
339,900
Cost
2016
$’000
(1,171)
-
(1,171)
Cost
2015
$’000
(1,171)
-
(1,171)
$’000
2,675
2,821
No treasury shares were purchased in 2016 (2015: Nil).
21 Ultimate controlling shareholder
At 31 December 2016, Genton International Limited, a company registered in Hong Kong, held 20,247,814 (2015: 20,247,814) shares of the
Company representing 51.1% (2015: 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
controlling shareholder of Genton International Limited.
22 Related party transactions
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not
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
company secretarial and taxation services for a fee of $21,348 (2015: $28,978). This contract is on an arm’s length basis.
There was no outstanding at year end (2015: $3,057).
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 $275,610 (2015: $307,567). There was no balance outstanding at year end (2015: Nil).
Annual Report 2016 | Anglo-Eastern Plantations Plc
86
Notes to the Consolidated Financial Statements
23 Reserves
Nature and purpose of each reserve:
Share capital
Share premium
Amount of shares subscribed at nominal value.
Amount subscribed for share capital in excess of nominal value.
Capital redemption reserve
Amounts transferred from share capital on redemption of issued shares.
Treasury shares
Cost of own shares held in treasury.
Revaluation reserve
Gains/losses arising on the revaluation of the Group's property.
Foreign exchange reserve
Gains/losses arising on translating the net assets of overseas operations into US Dollar.
Retained earnings
Cumulative net gains and losses recognised in the consolidated income statement.
24 Guarantees and other financial commitments
Capital commitments at 31 December
Contracted but not provided - normal estate operations
Authorised but not contracted - plantation and mill development
2016
$000
755
32,034
2015
$000
5,325
37,719
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 12, in relation to a loan taken by KBSS from PT Bank Mandiri (Persero) Tbk. of
Rp226.02 billion ($16.8 million) (2015: Rp226.02 billion, $16.4 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
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
estate is to be managed by SGM. In view of these, the Group exposure to this contingent liability is minimised.
25 Disclosure of financial instruments and other risks
The Group's principal financial instruments comprise cash, short and long term bank loans, trade receivables and payables and receivables
from local partners in respect of their investments.
The Group’s accounting classification of each class of financial asset and liability at 31 December 2016 and 2015 were:
2016
Non-current receivables
Trade and other receivables
Cash and cash equivalent
Borrowings due within one year
Trade and other payables
Borrowings due after one year
2015
Non-current receivables
Trade and other receivables
Cash and cash equivalent
Borrowings due within one year
Trade and other payables
Borrowings due after one year
Loans and
receivables
$000
Financial
liabilities at
amortised cost
$000
Total carrying
value
$000
3,891
5,461
118,176
-
-
-
127,528
Loans and
receivables
$000
3,655
4,482
104,614
-
-
-
112,751
-
-
-
(6,203)
(16,054)
(27,875)
(50,132)
3,891
5,461
118,176
(6,203)
(16,054)
(27,875)
77,396
Financial
liabilities at
amortised cost
$000
Total carrying
value
$000
-
-
-
(1,750)
(17,406)
(32,875)
(52,031)
3,655
4,482
104,614
(1,750)
(17,406)
(32,875)
60,720
Annual Report 2016 | Anglo-Eastern Plantations Plc
87
Notes to the Consolidated Financial Statements
25 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 12); and
- Loans and borrowings (note 16).
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 $66,971,000 (2015: $67,591,000), while the balance sheet value of the Group's share of underlying assets at 31 December 2016
amounted to $395,146,000 (2015: $350,734,000).
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 3.90% higher than on US Dollar deposits whereas interest rate for local currency
borrowing was about 5.31% higher as compared to US Dollar borrowing. The unmatched balance at 31 December 2016 is represented by
the $20,991,000 shown in the table below (2015: $26,397,000). If the Group's net cash position continues to improve then US Dollar cash
balances will continue to increase through 2017.
The table below shows the net monetary assets and liabilities of the Group at 31 December 2016 and 2015 that were not denominated in the
operating or functional currency of the operating unit involved.
Functional currency of Group operation
2016
Indonesian Rupiah
US Dollar
Total
2015
Indonesian Rupiah
US Dollar
Total
Net foreign currency assets/(liabilities)
US Dollar
$000
Sterling
$000
(20,991)
-
(20,991)
(26,397)
-
(26,397)
-
63
63
-
117
117
Total
$000
(20,991)
63
(20,928)
(26,397)
117
(26,280)
Annual Report 2016 | Anglo-Eastern Plantations Plc
88
Notes to the Consolidated Financial Statements
25 Disclosure of financial instruments and other risks - continued
The following table summarises the sensitivity of the Group’s financial assets and financial liabilities to foreign exchange risk. The impact on
profit before tax and equity if Ringgit or Rupiah strengthen or weaken by 10% against US Dollar is:
2016
2015
Carrying
Amount
US$
$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
3,891
5,461
118,176
(301)
(245)
(10,721)
(6,203)
(16,054)
(27,875)
-
1,373
-
(9,894)
368
300
13,103
-
(1,679)
-
12,092
3,655
4,482
104,614
(1,750)
(17,406)
(32,875)
(224)
(225)
(9,410)
-
1,458
-
(8,401)
274
276
11,502
-
(1,782)
-
10,270
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 2016 the Group had the following loans and
facilities.
Indonesia:
US Dollar denominated – long term loan
34,078
45,000
2017 – 2020 (note 16)
Borrowings
$000
Facilities
$000
Repayable
The total loan borrowings together with interest at current rates is as follows:
Principal
Interest
Total
Amount repayable within one year
Amount repayable after one year but not more than two years
Amount repayable after two years but not more than five years
Amount repayable after five years
2016
$000
34,078
3,890
37,968
6,555
1,388
30,025
-
37,968
2015
$000
34,625
6,140
40,765
1,848
2,279
28,650
7,988
40,765
Forecasts prepared in December 2016 indicate that the Group has sufficient funds to meet its development plans and financial commitments
through 2017.
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 2016 | Anglo-Eastern Plantations Plc
89
Notes to the Consolidated Financial Statements
25 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 2016, 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 16.
Financial Assets
Cash and cash equivalents
Financial Liabilities
Borrowings due within one year
Borrowings due after one year
Total increase / (decrease)
2016
2015
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
118,176
(820)
865
104,614
(797)
857
(6,203)
(27,875)
-
341
(479)
-
(341)
524
(1,750)
(32,875)
-
346
(451)
-
(346)
511
There is no policy to hedge interest rates, partly because of the net cash position and the net interest income position of the Group.
Interest rate profiles of the Group's financial assets (comprising non-current receivables, trade and other receivables and cash) at 31
December were:
2016
Sterling
US Dollar
Rupiah
Ringgit
Total
2015
Sterling
US Dollar
Rupiah
Ringgit
Total
Total
$000
Fixed rate
$000
Variable rate
$000
No interest
$000
64
15,922
107,162
4,380
127,528
117
11,423
97,568
3,643
112,751
-
578
-
-
578
-
1,193
-
-
1,193
19
4,652
77,897
3,959
86,527
22
6,108
76,202
3,361
85,693
45
10,692
29,265
421
40,423
95
4,122
21,366
282
25,865
Long term receivables of $578,000 (2015: $1,193,000) comprise US Dollar denominated amounts due from minority shareholders as
described in note 12 on which interest is due at a fixed rate of 6%.
Average US Dollar deposit rate in 2016 was 1.25% (2015: 1.50%) and Rupiah deposit rate was 5.15% (2015: 8.97%).
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:
2016
Sterling
US Dollar
Rupiah
Ringgit
Total
2015
Sterling
US Dollar
Rupiah
Ringgit
Total
Total
$000
Fixed rate
$000
Variable rate
$000
No interest
$000
-
(34,890)
(14,942)
(300)
(50,132)
-
(35,861)
(15,903)
(267)
(52,031)
-
-
-
-
-
-
-
-
-
-
-
(34,078)
-
-
(34,078)
-
(34,625)
-
-
(34,625)
-
(812)
(14,942)
(300)
(16,054)
-
(1,236)
(15,903)
(267)
(17,406)
Annual Report 2016 | Anglo-Eastern Plantations Plc
90
Notes to the Consolidated Financial Statements
25 Disclosure of financial instruments and other risks - continued
Weighted average interest rate on variable rate borrowings was 5.69% in 2016 (2015: 5.70%).
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 2016 (2015: Nil).
Credit risk arises from cash and cash equivalents and deposits with banks and financial institutions. The Group has taken necessary steps
and precautions in minimising the credit risk by lodging cash and cash equivalents only with reputable licensed banks, both local and foreign,
with geographical spread of the three jurisdictions in which the Group operates in. The cash and cash equivalents are in US dollars, Rupiah,
Ringgit and Sterling according to the requirements of the Group. 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 $578,000 (2015: $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 12, 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 24.
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 $363,111,000 at 31 December 2016 (2015: $321,015,000).
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 2016 (2015: 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 18 - 22.
Annual Report 2016 | Anglo-Eastern Plantations Plc
91
Notes to the Consolidated Financial Statements
26 Subsidiary companies
The principal subsidiaries of the Company all of which have been included in these consolidated financial statements are as follows:
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
Country of
incorporation and
principal place of
business
Proportion of
ownership interest at
31 December
Non-controlling
interests ownership /
voting interest at 31
December
2016
2015
2016
2015
United Kingdom
100%
100%
United Kingdom
100%
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%
-
-
-
-
-
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%
100%
100%
100%
100%
55%
100%
90%
100%
95%
80%
90%
95%
80%
95%
95%
90%
75%
95%
82%
100%
80%
75%
100%
100%
100%
100%
100%
The Ampat (Sumatra) Rubber Estate (1913)
United Kingdom
Limited
Gadek Indonesia (1975) Limited
Mergerset (1980) Limited
Musam Indonesia Limited
United Kingdom
United Kingdom
United Kingdom
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. The registered office of the principal
subsidiaries are disclosed below:
Subsidiaries by country
UK registered subsidiaries
Malaysia registered subsidiaries
Indonesia registered subsidiaries
Registered address
Quadrant House, 6th Floor
4 Thomas More Square
London E1W 1YW
United Kingdom
7th Floor, Wisma Equity
150 Jalan Ampang
50450 Kuala Lumpur
Malaysia
3rd Floor, Wisma HSBC, Jalan Diponegoro, Kav 11
Medan 20152
North Sumatera
Indonesia
Annual Report 2016 | Anglo-Eastern Plantations Plc
92
Notes to the Consolidated Financial Statements
27 Non-controlling interests
The Group identified subsidiaries with material non-controlling interests (NCI) based on profit contribution or percentage of net assets in relation to the Group. A subsidiary's NCI is material if the subsidiary contributed
more than 15% to the Group's profitability or it held more than 10% of the Group's net assets. The subsidiaries identified and their summarised financial information, before intra-group eliminations, are presented below:
Entity
NCI percentage
Summarised income statement
For the year ended 31 December
Revenue
Profit / (Loss) after tax
Other comprehensive income / (expense)
Total comprehensive income / (expense)
Profit / (Loss) allocated to NCI
Other comprehensive income / (expense) allocated to NCI
Total comprehensive income / (expense) allocated to NCI
Dividends paid to NCI
Summarised statement of financial position
As at 31 December
Non-current assets
Current assets
Non-current liabilities
Current liabilities
Net assets
Accumulated NCI
Summarised cash flows
For the year ended 31 December
Cash flows from / (used in) operating activities
Cash flows from / (used in) investing activities
Cash flows from / (used in) financing activities
Net cash inflows / (outflows)
PT Tasik Raja
20%
PT Mitra Puding Mas
10%
PT Alno Agro Utama
10%
PT Bina Pitri Jaya
20%
PT Sawit Graha Manunggal
18%
2016
$000
48,600
13,065
4,505
17,570
2,613
901
3,514
501
(Restated)
2015
$000
38,888
12,499
(15,923)
(3,424)
2,500
(3,185)
(685)
91
2016
$000
33,885
7,959
1,973
9,932
796
197
993
475
(Restated)
2015
$000
29,559
5,902
(6,295)
(393)
590
(630)
(40)
23
2016
$000
53,943
10,327
2,461
12,788
1,033
246
1,279
300
(Restated)
2015
$000
46,775
4,044
(6,547)
(2,503)
404
(655)
(251)
20
2016
$000
40,169
14,011
2,824
16,835
2,802
565
3,367
441
(Restated)
2015
$000
37,129
13,512
(10,021)
3,491
2,702
(2,004)
698
28
2016
$000
217,483
18,188
(86,157)
(6,342)
143,172
(Restated)
2015
$000
176,681
20,953
(63,448)
(5,320)
128,866
2016
$000
38,535
30,929
(3,601)
(5,927)
59,936
(Restated)
2015
$000
34,531
25,041
(3,076)
(1,544)
54,952
2016
$000
54,059
22,580
(7,462)
(5,603)
63,574
(Restated)
2015
$000
52,607
11,115
(6,401)
(3,277)
54,044
2016
$000
78,780
28,541
(3,204)
(4,873)
99,244
(Restated)
2015
$000
49,828
41,806
(2,687)
(3,848)
85,099
2016
$000
24,342
(725)
(268)
(993)
(132)
(49)
(181)
-
2016
$000
79,559
7,371
(78,594)
(8,245)
91
(Restated)
2015
$000
11,426
(8,826)
(1,471)
(10,297)
(1,606)
(268)
(1,874)
-
(Restated)
2015
$000
73,091
4,035
(71,068)
(4,960)
1,098
28,634
25,773
5,994
5,495
6,357
5,404
19,849
17,020
17
200
2016
$000
18,180
3,492
(19,020)
2,652
2015
$000
9,016
(10,506)
(10,452)
(11,942)
2016
$000
9,910
(3,758)
9,630
15,782
2015
$000
1,844
(1,098)
(7,715)
(6,969)
2016
$000
13,716
1,290
(1,513)
13,493
2015
$000
7,542
(5,411)
(196)
1,935
2016
$000
11,563
(105)
(28,167)
(16,709)
2015
$000
14.207
(3,405)
(17,895)
(7,093)
2016
$000
(214)
(9,216)
10,498
1,068
2015
$000
(1,834)
(12,930)
15,081
317
Annual Report 2016 | Anglo-Eastern Plantations Plc
93
Company Balance Sheet
As at 31 December 2016
Fixed assets
Investments in subsidiaries
Current assets
Debtors
Cash at bank and in hand
Creditors: amount falling due within one year
Net current liabilities
Net assets
Capital and reserves
Share capital
Treasury shares
Share premium
Capital redemption reserve
Exchange reserve
Retained earnings at 1 January
Loss for the year
Dividends paid
Retained earnings
Shareholders' funds
Note
3
4
5
6
6
2016
$000
66,971
66,971
1,837
245
2,082
(3,221)
(1,139)
65,832
15,504
(1,171)
23,935
1,087
3,872
23,719
(111)
(1,003)
22,605
65,832
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
26,499
(911)
(1,869)
23,719
66,946
The financial statements were approved by the Board of Directors and authorised for issue on 26 April 2017 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 2016 | Anglo-Eastern Plantations Plc
94
Company Statement of Changes in Equity
For the year ended 31 December 2016
Balance at 31 December 2014
Comprehensive income for the year
Loss for the year
Total comprehensive expense for the year
Dividends paid
Balance at 31 December 2015
Comprehensive income for the year
Loss for the year
Total comprehensive expense for the year
Dividends paid
Share
capital
$000
15,504
Treasury
shares
$000
(1,171)
Share
premium
$000
23,935
-
-
-
-
-
-
-
-
-
Capital
redemption
reserve
$000
1,087
-
-
-
Exchange
reserve
$000
3,872
Retained
earnings
$000
26,499
-
-
-
15,504
(1,171)
23,935
1,087
3,872
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(911)
(911)
(1,869)
23,719
(111)
(111)
(1,003)
22,605
Total
$000
69,726
(911)
(911)
(1,869)
66,946
(111)
(111)
(1,003)
65,832
Balance at 31 December 2016
15,504
(1,171)
23,935
1,087
3,872
The accompanying notes are an integral part of this statement of changes in equity.
Annual Report 2016 | Anglo-Eastern Plantations Plc
95
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.
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 65.
Deferred taxation
A deferred tax asset has not been recognised in relation to brought forward tax losses of $9.5m (2015: 9.5m) because it is not certain those
losses can be utilised in the foreseeable future.
Treasury shares
Consideration paid or received for the purchase or sale of the Company’s own shares for holding in treasury is recognised directly in equity,
where the cost is presented as the treasury share reserve. Any excess of the consideration received on the sale of treasury shares over the
weighted average cost of shares sold, is taken to the share premium account. Any shares held in treasury are treated as cancelled for the
purpose of calculating earnings per share.
Financial guarantee contracts
Where the Company enters into financial guarantee contracts and guarantees the indebtedness of other companies within the Group, the
Company considers these to be insurance arrangements and accounts for them as such. In this respect, the Company treats the guarantee
contract as a contingent liability until such time that it becomes probable that the Company will be required to make a payment under the
guarantee.
Annual Report 2016 | Anglo-Eastern Plantations Plc
96
Notes to the Company Financial Statements
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
$97,000 (2015: $906,000) and loss after tax for the year was $111,000 (2015: $911,000).
The remuneration of the directors of the Company is disclosed in note 7 to the consolidated financial statements. Auditor's remuneration is
disclosed in note 5 to the consolidated financial statements.
3
Investments in subsidiaries
At 1 January 2015
Movements during the year
At 31 December 2015
Movements during the year
At 31 December 2016
Net carrying amount
At 31 December
Investments in
subsidiary
undertakings
$000
Loans to
subsidiary
undertakings
$000
2,810
-
2,810
11,378
14,188
65,232
(451)
64,781
(11,998)
52,783
2016
$000
Total
$000
68,042
(451)
67,591
(620)
66,971
2015
$000
66,971
67,591
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 2016 | Anglo-Eastern Plantations Plc
97
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
Mergerset (1980) Limited
Musam Indonesia Limited
4 Debtors
Amounts owed by group undertakings:
Anglo-Eastern Plantations Management Sdn Bhd
Anglo-Eastern Plantations (M) Sdn Bhd
PT Hijau Pyran Perdana
PT Sawit Graha Manunggal
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
2016
$000
1,299
291
50
175
1,815
22
1,837
2015
$000
1,930
305
-
-
2,235
17
2,252
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
Mergerset (1980) Limited
Musam Indonesia Limited
PT Musam Utjing
PT Tasik Raja
Accruals
2016
$000
2,163
246
-
-
2,409
812
3,221
2015
$000
2,163
246
121
230
2,760
1,236
3,996
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 2016 | Anglo-Eastern Plantations Plc
98
Notes to the Company Financial Statements
6 Share capital and treasury shares
Ordinary shares of 25p each
Beginning and end of year
Treasury shares:
Beginning of year
Share options exercised
End of year
Market value of treasury shares:
Beginning of year (531.0p/share)
End of year (674.5p/share)
7 Related party transactions
Authorised
Number
Issued and
fully paid
Number
Authorised
£000
Issued and
fully paid
£000
Authorised
$000
Issued and
fully paid
$000
60,000,000
39,976,272
15,000
9,994
23,865
15,504
2016
Number
339,900
-
339,900
2015
Number
339,900
-
339,900
Cost
2016
$’000
(1,171)
-
(1,171)
Cost
2015
$’000
(1,171)
-
(1,171)
$’000
2,675
2,821
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 $21,348 (2015: $28,978). This contract is on an arm’s length basis. There was no
balance outstanding at year end (2015: $3,057).
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 $203,896 (2015: $227,318). There was no balance outstanding at year end (2015: Nil).
Transactions between the Company and its subsidiaries are disclosed below:
Nature of transactions
Name
Management fees from
Corporate guarantee fees from
Corporate guarantee fees from
Receivable from
Payable to
Anglo-Eastern Plantations Malaysia Sdn Bhd
PT Hijau Pryan Perdana
PT Sawit Graha Manunggal
Subsidiaries (note 4)
Subsidiaries (note 5)
2016
$000
65
50
175
1,815
2,409
2015
$000
57
50
175
2,235
2,760
The details of the intercompany receivables and payables are disclosed in note 4 and note 5 of the Company financial statements
respectively.
8 Employees' and Directors' remuneration
Average numbers employed during the year
- directors
- staff
Staff costs
Wages and salaries
Social security costs
2016
Number
2015
Number
4
-
4
2016
$000
(417)
-
(417)
4
-
4
2015
$000
-
-
-
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 45 - 49 of which certain information on page 49 has been audited.
Directors' emoluments
2016
$000
228
2015
$000
240
Annual Report 2016 | Anglo-Eastern Plantations Plc
99
Notes to the Company Financial Statements
9 Dividends
Paid during the year
Final dividend of 1.75p per ordinary share for the year ended 31 December 2015
(2014: 3.0p)
Proposed final dividend of 3.0p per ordinary share for the year ended 31 December 2016
(2015: 1.75p)
2016
$000
2015
$000
1,003
1,869
1,463
1,028
The proposed dividend for 2016 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 (2015: $45,000,000) as set out in note 16 of the
consolidated financial statements.
Annual Report 2016 | Anglo-Eastern Plantations Plc
100
Notice of Annual General Meeting
Notice is hereby given that the thirty-second Annual General Meeting of Anglo-Eastern Plantations Plc will be held at the offices of UHY Hacker
Young LLP, Quadrant House, 4 Thomas More Square, London E1W 1YW on Tuesday 27 June 2017 at 11.00 a.m. for the following purposes:
1
2
3
4
5
6
7
8
9
To receive and consider the accounts and the reports of the directors and auditors thereon for the year ended 31 December 2016.
To approve the Directors' Remuneration Report, other than the part containing the directors’ remuneration policy, in the form set out in the
Company’s annual report and accounts for the year ended 31 December 2016.
To approve the directors’ remuneration policy in the form set out in the Directors’ Remuneration Report in the Company’s annual report and
accounts for the year ended 31 December 2016.
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 Dato’ John Lim Ewe Chuan as a director.
To re-elect Lim Tian Huat as a Non-Executive Director.
To re-elect Jonathan Law Ngee Song as a Non-Executive Director
To re-appoint BDO LLP as auditors.
10 To authorise the directors to fix the remuneration of the auditors.
11 To consider the following resolution as an ordinary resolution:
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:
(i)
(ii)
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
addition
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
provided that this authority shall expire on the date of the next annual general meeting after the passing of this resolution or 30 June 2018
whichever is earlier save that the Company may before such expiry make an offer or agreement which would or might require relevant
securities to be allotted after such expiry and the directors may allot relevant securities in pursuance of such an offer or agreement as if the
authority conferred hereby had not expired.
"rights issue" means an offer of equity securities open for acceptance for a period fixed by the directors to holders of equity securities (other
than the Company) on the register on a fixed record date in proportion to their respective holdings of such securities or in accordance with
the rights attached thereto (but subject to such exclusions or other arrangements as the directors may deem necessary or expedient in
relation to fractional entitlements or legal or practical problems under the laws of, or the requirements of any recognised regulatory body or
any stock exchange in, any territory).
12 To consider the following resolution as a special resolution:
That subject to and conditional on the passing of Resolution 11, 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 11
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:
(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,
equity securities made to (but in the case of the authority granted under paragraph (ii) of Resolution 11 by way of a rights issue
only);
(a)
ordinary shareholders in proportion (as nearly may be practicable) to their existing holdings: and
(b)
holders of other equity securities, as required by the rights of those securities, or as the directors otherwise consider
necessary,
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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
laws of any territory, or any other matter; and
(ii)
in the case of the authority granted under paragraph (i) of Resolution 11 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 2018 (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.
13 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 2018 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.
14 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
25 May 2017
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Notice of Annual General Meeting
Notes:
1.
2.
3.
4.
5.
6.
7.
8.
9.
Pursuant to regulation 41 of the Uncertificated Securities Regulations 2001, the Company has specified that only those shareholders on the register of
members of the Company at close of business on 23 June 2017 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 2017 or, if the meeting is adjourned, in the register of members at
close of business 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 25 May 2017 (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 25 May 2017 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 by 11.00 a.m. on 23 June 2017 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 2017 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 2017. It is the responsibility of the CREST member concerned to take such
action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In this connection, CREST
members and, where applicable, their CREST sponsors or voting service providers are referred, in particular, to those sections of the CREST Manual
concerning practical limitations of the CREST system and timings. The Company may treat a CREST Proxy Instruction as invalid in the circumstances set
out in Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001.
You may submit your proxy electronically using The Share Portal service at www.capitashareportal.com. If not already registered for The Share Portal you
will need your Investor Code which can be found on your share certificate.
The statement of the rights of shareholders in relation to the appointment of proxies does not apply to a person who receives this notice of general meeting
as a person nominated to enjoy “information rights” under section 146 of the Companies Act 2006. If you have been sent this notice of meeting because
you are such a nominated person the following statements apply: (i) you may have a right under an agreement between you and the registered shareholder
by whom you were nominated to be appointed (or to have someone else appointed) as a proxy for this general meeting and (ii) if you have no such a right,
or do not wish to exercise it, you may have a right under such an agreement to give instructions to that registered shareholder as to the exercise of voting
rights. Nominated persons should contact the registered member by whom they were nominated in respect of these arrangements.
A member of the Company which is a corporation may authorise a person or persons to act as its representative(s) at the meeting. In accordance with the
provisions 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.
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12.
The following documents are available for inspection by members at the registered office of the Company during normal business hours (except Bank
Holidays) and at the place of the meeting not less than 15 minutes prior to and during the meeting:
(a) a copy of the Executive Director’s service agreement;
(b) copies of Non-Executive Directors’ letters of appointment;
(c)
relationship agreement with the majority shareholder; and
(d) a copy of the Company’s Articles of Association.
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 11 to 14 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.
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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
60 (0)3 2162 9808
Tel:
Fax: 60 (0)3 2164 8922
Indonesian Office
PT Anglo-Eastern Plantations Management Indonesia
3rd Floor, 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 Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU
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