Last checked at 30 Apr 2012 07:00
30 April 2012
Anglo-Eastern Plantations Plc
("AEP", "Group" or "Company")
Preliminary announcement of results for year ended 31 December 2011
Anglo-Eastern Plantations Plc, which owns, operates and develops plantations in Indonesia and Malaysia, amounting to some 130,000 hectares producing mainly palm oil and some rubber has today released its results for the year ended 31 December 2011.
Financial Highlights
2011 $ m | 2010 $ m | ||
Revenue | 259.0 | 187.2 | |
Profit before tax | |||
- before biological asset ("BA") adjustment | 99.4 | 66.6 | |
- after BA adjustment | 108.8 | 85.0 | |
EPS before BA adjustment | 149.73cts | 99.59cts | |
EPS after BA adjustment | 164.30cts | 129.82cts | |
Dividend (cents) | 6.0cts | 5.0cts | |
Dividend (pence) | 3.7p* | 3.1p |
Note: * Based on exchange rate at 23 April 2012 of $1.6080/£
Enquiries:
Anglo-Eastern Plantations Plc | |
Dato' John Lim Ewe Chuan | 020 7216 4621 |
Charles Stanley Securities | |
Russell Cook Luke Webster | 020 7149 6000 |
Chairman's statement
On behalf of the Board of Directors of Anglo-Eastern Plantations Plc, I am pleased to present to you the 2011 Annual Report and Audited Financial Statements on the performance and operations of the Group and the Company for the year ended 31 December 2011.
Financial Performance
For the year ended 31 December 2011, revenue was $259.0 million, 38% higher than $187.2 million reported in 2010. This is due primarily to higher production of estates fresh fruit bunch ("FFB") and a higher CPO price. The Group operating profit for 2011, before biological asset ("BA") adjustment was $96.0 million, 48% more than $64.9 million in 2010. FFB output for 2011 was 707,000mt, 18% higher than previous year (2010: 599,200mt). FFB bought in from surrounding smallholders for 2011 was 546,800mt (2010: 432,800mt), 26% higher compared to 2010. With a higher FFB processed by the mills, Crude Palm Oil ("CPO") production in 2011 was 248,000mt, 21% higher compared to 204,600mt in 2010.
Profit before tax and after BA adjustment was $108.8 million, compared to $85.0 million in 2010. The BA adjustment was a credit of $9.4 million, compared to a credit of $18.4 million in 2010, reflecting higher biological value.
The average CPO price for 2011 was $1,124/mt, 26% higher than 2010 of $892/mt.
Earnings per share before BA adjustment increased by 50% to 149.73cts, compared to 99.59cts in 2010.
The Group's balance sheet remains strong. The Group continued to experience positive cash flow generation for 2011, enabling it to build up cash reserves and reduce its borrowings. As at 31 December 2011, the Group had a cash position of $90.5 million and lower borrowings of $6.5 million, giving it a net cash position of $84.0 million, compared to $48.8 million in 2010.
During the year, we repaid $15.6 million (2010: $4.9 million) out of our existing borrowings of $22.1 million (2010: $27.0 million).
Corporate Development
In 2011, we planted 4,800 hectares of oil palm mainly in Kalimantan, boosting our planted area by 9% to 57,100 hectares (2010: 52,300 hectares). New plantings remain behind planned schedule due to adverse dry weather conditions in South Sumatra and Central Kalimantan, alongside with certain hold-up in issuing of necessary permits due to the recently introduced timber cutting licenses ("IPK"). In anticipation of the March 2012 Indonesian Sustainable Palm Oil ("ISPO") standards becoming mandatory, the Group has reviewed our planting programme, which at present can be prudently estimated to increase our planted area by 9,000 hectares over the next two years.
Following the retirement of the Chief Executive Officer for the Indonesian operations after 12 years with the Group, the Group rationalized its management structure in Indonesia with the incorporation of a local management company. A new Chief Executive Officer was recruited locally to focus on streamlining and revamping its Indonesian operations with the objective of enhancing and/or maximizing the profitability of each of the Group's Indonesian oil palm estates which are spread out across six different provinces in Indonesia, each of which is subjected to its own provincial and local government's style, efficiency and accuracy in interpreting and implementing the applicable laws and regulations.
The tender process for the construction of new palm oil mills in Central Kalimantan and North Sumatra will begin in 3Q2012. The upgrading of Blankahan palm oil mill from rated throughput of 25mt/hr to 40mt/hr was completed at a cost of $1.5 million.
Directors
Drs. Kanaka Puradiredja's appointment as Independent Non-Executive Director expired on 31 July 2011 and was extended for another two years by the Board.
Mr. Nik Din Bin Nik Sulaiman's appointment as Independent Non-Executive Director expired on 31 March 2011 and was extended for another two years by the Board. Mr. Nik Din will be submitting himself for re-appointment at the forthcoming annual general meeting.
I will be submitting myself for re-election at the same annual general meeting.
Corporate Social Responsibility
Corporate social responsibility("CSR") is an integral part of corporate self-regulation incorporated into our business model. Our Group embraces responsibility for the impact of its activities on the environment, consumers, employees, communities, stakeholders and all other members of the public sphere. In engaging the social dimension of CSR, the Group's business has taken cognizance of the contribution and further enrichment of its employees while continuing to make contributions to improve the well being of the surrounding community.
The majority of employees and their dependents in the plantations and mills are housed in self-contained communities built by the Group. The employees and their dependents are provided with free housing, clean water and electricity. The Group also builds and provides places of worship for workers of different religious faith as well as schools and sports facilities in these communities. The Group spent $2.2 million to build and maintain these amenities in 2011 and this is expected to increase further in 2012.
Staff and selected employees are given the opportunity to follow training and seminars to enhance their working skills and capacity. The Group provides free education for allemployees' childrenin the local plantations and communities where they work. In some cases, scholarships were provided to selected employees' children to further their tertiary education. In addition the Group provides funding to construct educational facilities such as laboratories, libraries, and computers. The salaries of teachers in estates and school buses to transport employees' children to school are provided by the Group. Over the years a total of 23 schools have been built with 95 teachers currently employed within our Group estates. In 2011, the Groupspentsome $300,000 for running the schools alone.
The Group continues to providefree comprehensive health care for all its workers as we believe that every employee and their dependents should have easy access to health services. The medical facilities currently comprise of 20 clinics, 28 nurses and hospital assistants and 10 units of ambulances. Related health expenses for 2011 were $400,000.
A strong commitment to corporate social responsibility (CSR) has a positive impact on employees attitudes and boosts employee engagement. The Group realizes that employees are valuable assets in order to run an efficient, effective, profitable and sustainable business and operations.
For plantations acquired from 2007 onwards, the Group has an obligation to develop not less than 20% of the new planted area for benefit of smallholder scheme cooperatives. The smallholder scheme or commonly known as Plasma schemein Indonesia will be developed alongside the Group's estates. This smallholder scheme cooperative will be managed by the Group which involves 7 companies covering an area of 5,379 hectares. The Group is negotiating external finance for a plasma scheme with a local bank secured by land and assets of the scheme and guaranteed by the Group.
Indonesian Sustainable Palm Oil
The Indonesian Sustainable Palm Oil ("ISPO") is legally mandatory for all plantations in Indonesia. In March 2012, ISPO which fundamentally aligns to RSPO (Roundtable on Sustainable Palm Oil) principles has become the mandatory standard for Indonesian planters.
A Steering Committee was established to work out a roadmap to support the ISPO implementation at mills and estates. Workshops and training sessions on occupational safety and health were carried out to inculcate a safety culture in workplaces at the estates and mills in North Sumatra. The Group is currently upgrading its agricultural chemical stores and diesel fuel storage tanks to meet safety and environmental standards. Standard operating procedures are being refined and documented based on sustainable oil palm best practices. The Group also conducts internal audit using audit checklist adopted from the above practices to determine level of compliance.
Care For The Environment and Sustainable Practices
As a Group, we highlight the importance of creating awareness and implementation of good environmental management practices throughout the organisation. The Group has been consistently practising good agricultural practices such as zero burning, integrated pest management, land terracing and recycling of biomass and reducing fossil fuel consumption.
Effluent discharged from some mills is initially treated in lagoons before they are applied to trenches located between rows of palm trees. Once the effluent dries up, it becomes organic fertilizer for the oil palm and reduces the application and buying of inorganic fertilizers. In some estates, empty bunches are shredded and applied to land where it biodegrades to fertilizers.
The Group has future plans to mitigate the emissions of biogas from the lagoons by trapping it. The methane gas will then be used to generate electricity to partially power its mills.
The Group is committed to implementing good agricultural practices as spelled out in its standard operating procedures for the planting of oil palm. Integrated Pest Management has been adopted to control pests and to improve biological balance. Barn Owl was introduced to control rats. Beneficial plants of Turnera sp, Cassia cobannesisand Antigonon leptosus were planted to attract predator insects of caterpillar pests. Weeds are controlled selectively by using more environmental friendly herbicide such as Glyphosate. The usage of Paraquat herbicide has been reduced and minimized.The sprayers are also trained insafety and spraying techniques. Natural vegetation on uncultivable land such as deep peat, very steep area and riparian zones along watercourses are maintained to preserve biodiversity and wildlife corridor.
Our mills utilize the waste mesocarp fibre from the oil palm fruits as fuel to generate steam from boilers to produce power. The power generated drives some of the processing equipment in mills and estate housing. This helps to reduce reliance on fossil fuels such as diesel in our milling operations.
Outlook
FFB production for two months to February 2012 was 13% higher against the same period in 2011. Although we have been spared extreme weather patterns so far this year, it is too early to forecast whether the production will be better for the rest of the year.
Weather experts have however expressed concerns that La Nina which returned in September 2011 would disrupt global edible oil production. It is typified by wetter-than-usual weather in Malaysia and Indonesia and could lead to prolonged drought in South America and parts of North America. On the bright side, La Nina would help replenish the moisture in the soil. It is too early to predict this outcome as it is highly dependent on the strength of the La Nina.
Oil World expects global consumption for oils & fats to rise by 7mt in 2012, above the 10-year average of 5.8mt. It also expects global oils and fats production to increase by 6.7mt, above the 10 year average of 5.9mt. Based on its early estimates, demand will exceed supply and would certainly help support the CPO price.
The CIF (Cost, Insurance, Freight) Rotterdam CPO price opened the year 2012 at $1,045/mt and prices are expected to be in the range of $900/mt to $1,200/mt for 1H 2012.The fundamentals for palm oil remain bright due to expectations of tighter supplies and growing dependence on palm oil to raise edible oil supplies. Various factors like weather, crude oil price, government policies and global liquidity will influence CPO price movement. Global demand for CPO and other edible oils are vulnerable to economic setbacks and linked to the world economic health particularly the continued growth in China and India, its two largest consumers of CPO. While it is difficult to forecast the CPO price in 2012, it should remain satisfactory.
The US dollar appreciated by approximately 1% (2010: US dollar depreciated by approximately 4%) against the Indonesian Rupiah in 2011. There was no adverse fluctuation against the US dollar in early 2012. We expect a stable currency exchange level to be attainable for the rest of the year.
The prospects for 2012 should be cautiously optimistic in view of higher CPO price during 1Q2012 on the back of robust growth of emerging markets. We remain bullish on the demand for edible oil in view of the rising income levels and population growth in China, India and Indonesia. However, the continued economic crisis in Europe and North America may dent the growth of Asian economies, slowing the increase in the income levels of the low- to medium-income groups thus curbing demand for edible oils.
The rising fertiliser costs and wages in Indonesia are expected to increase the overall production cost in 2012.
Barring any unforeseen circumstances, the Group is confident that CPO demand will be sustainable in view of global economic recovery and we can expect a satisfactory profit level and cash flow for 2012.
Dividends
The Board is mindful that the Group's development programme will require a considerable capital commitment. In this respect, the dividend level needs to be balanced against the planned capital expenditure. The Board is proposing to declare a final dividend of 6.0cts in respect of 2011 (2010: 5.0cts). The final dividend will be paid on 9 July 2012 to those shareholders on the register on 8 June 2012. Shareholders choosing to receive their dividend in Sterling will do so at the rate ruling on 8 June 2012, when the register closes. Based on the exchange rate at 23 April 2012 of $1.6080/£, the proposed dividend would be equivalent to 3.7p, compared to 3.1p declared in respect of 2010.
Acknowledgment
On behalf of the Board of Directors, I would like to convey our sincere thanks to our Directors, management and all employees of the Group for their dedication, loyalty, resourcefulness, commitment and contribution to the success of the Group.
I would also like to take this opportunity to thank the shareholders, business associates, government authorities and all other stakeholders for their continued confidence, understanding and support for the Group.
Madam Lim Siew Kim
Chairman
30 April 2012
Business Review
Commodity Prices
2011 has been a good year for vegetable oil prices, including CPO. The CPO CIF Rotterdam price opened the year 2011 at $1,195/mt (2010: $780/mt) and ended the year at $1,045/mt (2010: $1,195/mt), averaging $1,124/mt for the year (2010: $892/mt). Palm oil prices remained favourable after hitting a low in 2H2008. The increasing world population leading to higher demand and consumption, lack of agricultural land due to competition among other grains, increasing renewable biofuel demand from Europe and USA due to higher crude oil price, shortfall in soybean production together with the increased demand from China and India helped support the commodity prices.
Rubber prices averaged $4,300/mt for 2011 (2010: $3,300/mt). Our small area of 506 ha of mature rubber contributed a gross profit of $3.6 million in 2011 (2010: $2.2 million).
Valuation
In 2011, the Group's estates were valued by qualified valuers, except for PT Bangka Malindo and PT Kahayan Agro Plantation which were valued in January 2012. The valuation methodology is disclosed in note 10 of the consolidated financial statements. The assumptions used by the valuer in the valuation methodology were revised and streamlined for all estates in 2011 to reflect a realistic and consistent approach to the valuation of biological assets throughout the Group.
Although higher CPO price of $625/mt has been assumed in the discounted cash flows for the purpose of valuation, the value of the non-biological plantation assets has reduced by $77 million as compared to year 2010 due to significant reduction of plantable areas for the oil palm trees. The ratio of plantable against unplantable areas was 70% in 2011 as compared to 92% in 2010. Land surveys including one carried out by the Ministry of Forestry on undeveloped land in the newer estates in 2011 in accordance with sustainable palm oil best practices confirmed that some areas of the land were not suitable for planting of oil palm trees whereas the plantable areas in 2010 was based on historic estimates.
Indonesia
FFB production in North Sumatra, which aggregates the estates of Tasik, Anak Tasik, Labuhan Bilik, Blankahan, Rambung, Sungai Musam and CPA, produced 298,100mt in 2011 (2010: 258,000mt), 16% higher than 2010. An additional 1,900 hectares of newly matured oil palm in Labuhan Bilik and CPA together with higher yield from trees between the age group of 12 to 20 years contributed to the improved performance.
FFB production in Bengkulu (South Sumatra), which aggregates the estates of Puding Mas, Alno, KKST, ELAP and RAA produced 264,200mt (2010: 211,200mt), 25% higher than 2010. Higher yield was achieved in Bengkulu region due to moderate weather pattern and improvement of infrastructure like roads and bridges which leads to more efficient transportation of FFB. Also 2,000 hectares of oil palm reached its prime production age significantly increasing its yield.
FFB production in the Riau region, comprising Bina Pitri estates, produced 110,400mt in 2011 (2010: 96,000mt), 15% higher than 2010. The improved performance was attributable to favourable weather and higher yield from fertilisation and rehabilitation programme.
Overall bought-in crops for Indonesian operations were 26% higher at 546,800mt for the year 2011 (2010: 432,800mt). The average oil extraction rate from our mills was 20.3% in 2011 (2010: 20.5%). The extraction rate was diluted by higher percentage of bought-in crops as well many young oil palm trees which reached maturity in 2011.
Malaysia
FFB production in 2011 was marginally higher at 34,300mt, compared to 34,000mt in 2010. Unfavourable weather for the last two months of the year together with lack of manpower affected the harvesting and transportation of FFB. Malaysian estates contributed a pre-tax profit of $3.5 million, 94% higher than 2010.
Development
In 2011, the Group planted another 4,800 hectares mainly in Kalimantan compared to 7,580 hectares in 2010.
New plantings remain behind planned schedule due to adverse dry weather conditions in South Sumatra and Central Kalimantan, alongside with certain hold-up in issuing of necessary permits due to the recently introduced timber cutting licenses ("IPK"). In anticipation of the March 2012 Indonesian Sustainable Palm Oil ("ISPO") standards becoming mandatory, the Group has reviewed our planting programme, which at present can be prudently estimated to increase our planted area by 9,000 hectares over the next two years.
Consolidated income statement
for the year ended 31 December 2011
2011 | 2010 |
| ||||||||
Continuing operations |
Notes | Result before BA adjustment |
BA adjustment |
Total | Result before BA adjustment |
BA adjustment |
Total |
| ||
$000 | $000 | $000 | $000 | $000 | $000 |
| ||||
Revenue | 259,037 | - | 259,037 | 187,233 | - | 187,233 |
| |||
Cost of sales | (157,644) | (1,153) | (158,797) | (118,641) | (1,377) | (120,018) |
| |||
Gross profit | 101,393 | (1,153) | 100,240 | 68,592 | (1,377) | 67,215 |
| |||
Biological asset revaluation movement | - | 10,511 | 10,511 | - | 19,806 | 19,806 |
| |||
Administration expenses | (5,372) | - | (5,372) | (3,655) | - | (3,655) |
| |||
Operating profit | 96,021 | 9,358 | 105,379 | 64,937 | 18,429 | 83,366 |
| |||
Exchange profits | 213 | - | 213 | 657 | - | 657 |
| |||
Finance income | 3,891 | - | 3,891 | 2,220 | - | 2,220 |
| |||
Finance expense | (707) | - | (707) | (1,205) | - | (1,205) |
| |||
Profit before tax | 99,418 | 9,358 | 108,776 | 66,609 | 18,429 | 85,038 |
| |||
Tax expense | 2 | (26,809) | (2,339) | (29,148) | (17,984) | (4,589) | (22,573) |
| ||
Profit for the year | 72,609 | 7,019 | 79,628 | 48,625 | 13,840 | 62,465 |
| |||
Attributable to: |
| |||||||||
- Owners of the parent | 59,201 | 5,763 | 64,964 | 39,375 | 11,954 | 51,329 |
| |||
- Non-controlling interests | 13,408 | 1,256 | 14,664 | 9,250 | 1,886 | 11,136 |
| |||
72,609 | 7,019 | 79,628 | 48,625 | 13,840 | 62,465 |
| ||||
Earnings per share for profit attributable to the owners of the parent during the year |
| |||||||||
- basic | 3 | 164.30cts | 129.82cts | |||||||
- diluted | 3 | 163.72cts | 129.27cts | |||||||
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2011
2011 $000 | 2010 $000 | ||
Profit for the year | 79,628 | 62,465 | |
Other comprehensive income: | |||
Unrealised (loss)/surplus on revaluation of the estates | (76,649) | 121,908 | |
Profit/(loss) on exchange translation of foreign operations | (4,471) | 14,193 | |
Deferred tax on revaluation | 27,234 | (26,482) | |
Other comprehensive income for the year | (53,886) | 109,619 | |
Total comprehensive income for the year | 25,742 | 172,084 | |
Attributable to: | |||
- Owners of the parent | 23,442 | 144,823 | |
- Non-controlling interests | 2,300 | 27,261 | |
25,742 | 172,084 |
Consolidated Statement of Financial Position
As at 31 December 2011
2011 $000 | 2010 $000 | |||
Non-current assets | ||||
Biological assets | 77,066 | 68,593 | ||
Property, plant and equipment | 340,786 | 376,173 | ||
Receivables | 1,551 | 1,494 | ||
419,403 | 446,260 | |||
Current assets | ||||
Inventories | 9,439 | 6,820 | ||
Tax receivables | 5,098 | 7,342 | ||
Trade and other receivables | 4,877 | 3,356 | ||
Cash and cash equivalents | 90,482 | 70,871 | ||
109,896 | 88,389 | |||
Current liabilities | ||||
Loans and borrowings | (6,465) | (15,650) | ||
Trade and other payables | (20,878) | (15,170) | ||
Tax liabilities | (11,019) | (5,130) | ||
(38,362) | (35,950) | |||
Net current assets | 71,534 | 52,439 | ||
Non- current liabilities | ||||
Loans and borrowings | (58) | (6,438) | ||
Deferred tax liabilities | (37,299) | (61,293) | ||
Retirement benefits - net liabilities | (1,593) | (2,305) | ||
Net assets | 451,987 | 428,663 | ||
Issued capital and reserves attributable to owners of the parent | ||||
Share capital | 15,504 | 15,504 | ||
Treasury shares | (1,507) | (1,507) | ||
Share premium | 23,935 | 23,935 | ||
Capital redemption reserve | 1,087 | 1,087 | ||
Revaluation and exchange reserves | 44,567 | 86,089 | ||
Retained earnings | 292,092 | 229,060 | ||
375,678 | 354,168 | |||
Non-controlling interests | 76,309 | 74,495 | ||
Total equity | 451,987 | 428,663 |
Consolidated Statement of Changes in Equity
For the year ended 31 December 2011
Share capital | Treasury shares | Share premium | Capital redemption reserve | Revaluation reserve | Foreign exchange reserve | Retained earnings | Total | Non-controlling interests | Total equity | |||||||||
$000 | $000 | $000 | $000 | $000 | $000 | $000 | $000 | $000 | $000 | |||||||||
Balance as at 1 January 2010 | 15,504 | (1,744) | 23,935 | 1,087 | 67,179 | (74,584) | 179,594 | 210,971 | 46,989 | 257,960 | ||||||||
Items of other comprehensive income | ||||||||||||||||||
-Unrealised gain on revaluation of estates | - | - | - | - | 105,296 | - | - | 105,296 | 16,612 | 121,908 | ||||||||
-Deferred tax on revaluation of assets | - | - | - | - | (23,079) | - | - | (23,079) | (3,403) | (26,482) | ||||||||
-Gain on exchange translation | - | - | - | - | - | 11,277 | - | 11,277 | 2,916 | 14,193 | ||||||||
Total other comprehensive income | - | - | - | - | 82,217 | 11,277 | - | 93,494 | 16,125 | 109,619 | ||||||||
Profit for year | - | - | - | - | - | - | 51,329 | 51,329 | 11,136 | 62,465 | ||||||||
Total comprehensive income and expense for the year | - | - | - | - | 82,217 | 11,277 | 51,329 | 144,823 | 27,261 | 172,084 | ||||||||
Acquisition of subsidiary | - | - | - | - | - | - | - | - | 245 | 245 | ||||||||
Share options exercised / Share based payment expense | - | 237 | - | - | - | - | 110 | 347 | - | 347 | ||||||||
Dividends paid | - | - | - | - | - | - | (1,973) | (1,973) | - | (1,973) | ||||||||
Balance at 31 December 2010 | 15,504 | (1,507) | 23,935 | 1,087 | 149,396 | (63,307) | 229,060 | 354,168 | 74,495 | 428,663 | ||||||||
Items of other comprehensive income | ||||||||||
-Unrealised loss on revaluation of estates | - | - | - | - | (59,991) | - | - | (59,991) | (16,658) | (76,649) |
-Deferred tax on revaluation of assets | - | - | - | - | 22,055 | - | - | 22,055 | 5,179 | 27,234 |
-Loss on exchange translation | - | - | - | - | - | (3,586) | - | (3,586) | (885) | (4,471) |
Total other comprehensive income | - | - | - | - | (37,936) | (3,586) | - | (41,522) | (12,364) | (53,886) |
Profit for year | - | - | - | - | - | - | 64,964 | 64,964 | 14,664 | 79,628 |
Total comprehensive income and expense for the year | - | - | - | - | (37,936) | (3,586) | 64,964 | 23,442 | 2,300 | 25,742 |
Issue of subsidiary shares to minority shareholder | - | - | - | - | - | - | - | - | 2,054 | 2,054 |
Share based payment expense | - | - | - | - | - | - | 45 | 45 | - | 45 |
Dividends paid | - | - | - | - | - | - | (1,977) | (1,977) | (2,540) | (4,517) |
Balance at 31 December 2011 | 15,504 | (1,507) | 23,935 | 1,087 | 111,460 | (66,893) | 292,092 | 375,678 | 76,309 | 451,987 |
Consolidated Statement of Cash Flows
For the year ended 31 December 2011
Note | 2011 $000 | 2010 $000 | |||
Cash flows from operating activities | |||||
Profit before tax | 108,776 | 85,038 | |||
Adjustments for: | |||||
BA adjustment | (10,511) | (18,429) | |||
(Profit) / Loss on disposal of tangible fixed assets | 68 | (50) | |||
Depreciation | 8,060 | 8,953 | |||
Retirement benefit provisions | 536 | 334 | |||
Net finance income | (3,184) | (1,015) | |||
Tangible fixed assets written off | - | 12 | |||
Unrealised gain in foreign exchange | (213) | (755) | |||
Share based payments expense | 45 | 112 | |||
Operating cash flow before changes in working capital | 103,577 | 74,200 | |||
Increase in inventories | (2,665) | (2,937) | |||
Increase in trade and other receivables | (1,578) | (591) | |||
Increase in trade and other payables | 4,818 | 5,939 | |||
Cash inflow from operations | 104,152 | 76,611 | |||
Interest paid | (759) | (1,254) | |||
Retirement benefit paid | (1,289) | (63) | |||
Overseas tax paid | (17,917) | (18,959) | |||
Net cash flow from operations | 84,187 | 56,335 | |||
Investing activities | |||||
Acquisition of subsidiary | - | (4,645) | |||
Property, plant and equipment | |||||
- purchase | (50,086) | (43,540) | |||
- sale | 237 | 222 | |||
Interest received | 3,891 | 2,220 | |||
Net cash used in investing activities | (45,958) | (45,743) | |||
Financing activities | |||||
Dividends paid by Company | 4 | (1,977) | (1,973) | ||
Share options exercised | - | 235 | |||
Issue of subsidiary shares to minority shareholder | 2,054 | - | |||
Repayment of existing long term loans | (15,555) | (4,925) | |||
Dividends paid to minority shareholders | (2,540) | - | |||
Net cash used in financing activities | (18,018) | (6,663) | |||
Increase in cash and cash equivalents | 20,211 | 3,929 | |||
Cash and cash equivalents | |||||
At beginning of year | 70,871 | 63,761 | |||
Foreign exchange | (600) | 3,181 | |||
At end of year | 90,482 | 70,871 | |||
Comprising: | |||||
Cash at end of year | 90,482 | 70,871 |
Notes
1. Basis of preparation
The financial statements have been prepared in accordance with International Financial Reporting Standards and its interpretations (IFRS and IFRIC interpretations) issued by the International Accounting Standards Board ("IASB") as adopted by the EU and with those parts of the Companies Act 2006 applicable to companies preparing their accounts under IFRS.
Changes in accounting standards
a) The following new standards, amendments and interpretations are also effective for the first time in these financial statements but none have had a material effect on the Group.
- IFRS 1 Amendments - First-time Adoption of International Financial Standards
- IFRS 2 Amendments - Group Cash-settled Share-based Payment Transactions
- IFRS 7 Amendments - Disclosures - Transfer of Financial Assets
- IAS 24 Amendments - Related Party Disclosures
- IAS 32 Amendments - Classification of Right Issues
- IAS 39 Amendments - Financial Instruments: Recognition and Measurement: Eligible Hedged Items
- IFRIC 14Amendments - Prepayments of Minimum Funding Requirement
- IFRIC 17 Interpretations - Distributions of Non-cash Assets to Owners
- IFRIC 18 Interpretations - Transfer of Assets from Customers
- IFRIC 19Interpretations - Extinguishing Financial Liabilities with Equity Instruments
- Improvements to IFRSs (May 2010)
None of the new standards, interpretations and amendments effective for the first time from 1 January 2011, have had a material effect on the financial statements.
b) New standards, interpretations and amendments not yet effective.
The following new standards, interpretations and amendments, which have not been applied in these financial statements, will or may have an effect on the Group's future financial statements:
- IFRS 9 Financial Instruments (effective for accounting periods beginning on or after 1 January 2013)
- IFRS 10Consolidated Financial Statements (effective for accounting periods beginning on or after 1 January 2013)
- IFRS 11Joint Arrangements (effective for accounting periods beginning on or after 1 January 2013)
- IFRS 12Disclosures of Interest in Other Entities (effective for accounting periods beginning on or after 1 January 2013)
- IFRS 13Fair Value Measurement (effective for accounting periods beginning on or after 1 January 2013)
- IAS 27 Separate Financial Statements (effective for accounting periods beginning on or after 1 January 2013)
- IAS 28 Investments in Associates and Joint Ventures (effective for accounting periods beginning on or after 1 January 2013)
- IFRIC 20Interpretations - Stripping Costs in the Production Phase of a Surface Mine (effective for accounting periods beginning on or after 1 January 2013)
- IFRS 1 Amendments - Severe Hyperinflation and Removal of Fixed Dates for First Time Adopters (effective for accounting periods beginning on or after 1 July 2011)
- IFRS 7 Amendments - Offsetting Financial Assets and Financial Liabilities (effective for accounting periods beginning on or after 1 January 2013)
- IAS 1 Amendments - Presentation of Items of Other Comprehensive Income (effective for accounting periods beginning on or after 1 July 2012)
- IAS 19 Amendments - Employee Benefits (effective for accounting periods beginning on or after 1 January 2013)
- IAS 32 Amendments - Offsetting Financial Assets and Financial Liabilities (effective for accounting periods beginning on or after 1 January 2014)
- IAS 12 Amendments - Deferred tax : Recovery of Underlying Assets (effective for accounting periods beginning on or after 1 January 2012)
Other than IAS 12, which will impact the level of disclosure, none of the other new standards, interpretations and amendments, which are effective for periods beginning after 1 January 2012 and which have not been adopted early, are expected to have a material effect on the Group's future financial statements.
2 Tax expense
2011 $000 | 2010 $000 | |||
Foreign corporation tax - current year | 26,318 | 18,017 | ||
Deferred tax adjustment - current year | 2,830 | 4,556 | ||
Total tax charge for year | 29,148 | 22,573 |
Both corporation tax rates in Indonesia and Malaysia are at 25%. The standard rate of corporation tax in the UK for the current year is 26%. The Group's charge for the year differs from the standard UK rate of corporation tax for the reasons below.
2011 $000 | 2010 $000 | |||
Profit before tax | 108,776 | 85,038 | ||
Profit before tax multiplied by standard rate of UK corporation tax of 26% (2010: 28%) | 28,282 | 23,811 | ||
Effects of: | ||||
Rate adjustment relating to overseas profits | (1,153) | (2,719) | ||
Group accounting adjustments not subject to tax | 1,229 | 1,522 | ||
Expenses not allowable for tax | 1,339 | 176 | ||
Temporary differences | (73) | 85 | ||
Utilisation of tax losses brought forward | (409) | (65) | ||
Income not subject to tax | (67) | (237) | ||
Total tax charge for year | 29,148 | 22,573 |
3 Earnings per ordinary share (EPS)
2011 $000 | 2010 $000 | ||
Profit for the year attributable to owners of the Company before BA adjustment | 59,201 | 39,375 | |
Net BA adjustment | 5,763 | 11,954 | |
Earnings used in basic and diluted EPS | 64,964 | 51,329 | |
Number | Number | ||
'000 | '000 | ||
Weighted average number of shares in issue in year | |||
- used in basic EPS | 39,539 | 39,539 | |
- dilutive effect of outstanding share options | 141 | 166 | |
- used in diluted EPS | 39,680 | 39,705 | |
Basic EPS before BA adjustment | 149.73cts | 99.59cts | |
Basic EPS after BA adjustment | 164.30cts | 129.82cts | |
Dilutive EPS before BA adjustment | 149.20cts | 99.17cts | |
Dilutive EPS after BA adjustment | 163.72cts | 129.27cts |
4 Dividends
2011 $000 | 2010 $000 | |||
Paid during the year Final dividend of 5.0 cts for the year ended 31 December 2010 (2009: 5.0cts) |
1,977 |
1,973 | ||
Proposed final dividend of 6.0cts for the year ended 31 December 2011 (2010: 5.0cts) | 2,372 | 1,977 |
The proposed dividend for 2011 is subject to shareholder's approval at the forthcoming annual general meeting and has not been included as a liability in these financial statements.
5 Posting of Annual Financial Report
The Annual Financial Report will be posted to shareholders in due course. Copies of this announcement are available from the offices of the Company Secretary, CETC (Nominees) Limited, Quadrant House, 6th Floor, 4 Thomas More Square, London E1W 1YW and on the Company's website at www.angloeastern.co.uk.
6 Status of financial information
The financial information set out above does not constitute the company's statutory accounts for 2011 or 2010. Statutory accounts for the years ended 31 December 2011 and 31 December 2010 have been reported on by the Independent Auditors. The Independent Auditors' Reports on the Annual Report and Financial Statements for the years ended 31 December 2011 and 31 December 2010 were unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.
Statutory accounts for the year ended 31 December 2010 have been filed with the Registrar of Companies. The statutory accounts for the year ended 31 December 2011 will be delivered to the Registrar in due course.