Anglo-Eastern Plantations Regulatory News (AEP)

27 August 2013

Anglo-Eastern Plantations Plc

("AEP", "Group" or "Company")

Announcement of interim results for six months ended 30 June 2013

Anglo-Eastern Plantations Plc, and its subsidiaries are a major producer of palm oil and rubber with plantations across Indonesia and Malaysia amounting to some 126,000 hectares, has today released its results for the six months ended 30 June 2013.

Financial Highlights

Enquiries:

Chairman's statement

I am pleased to present the interim results for the Company for the six months to 30 June 2013. This has been a challenging period for the Company as Palm Oil prices have remained subdued while rising operating costs and poor weather conditions have impacted upon profitability. Nevertheless the Group continues with its programme of investment to support the Group's long term growth.

Operational and financial performance

For the six months ended 30 June 2013, revenue was $83.5 million, (H1 2012: $116.0 million). Gross margins for the period fell from 34% to 25% reflecting a 23% drop in average Crude Palm Oil ("CPO") price in the first half of 2013 compared to the previous year. This was coupled with a 6% weakening of Indonesian Rupiah against the US Dollar for the same period.

The Group benefited from a $16.6 million revaluation of its biological assets ("BA valuation") (1H 2012: $0.7 million). Despite this contribution operating profits for the period fell by 14% to $31.9 million (1H 2012: $37.3 million) while profit before tax was $32.4 million, 16% lower than the $38.5 million achieved for the same period in 2012.

The resulting earnings per share for the period were down 10% at 46.14cts (1H 2012: 51.24cts).

During the first six months of 2013 the CPO price averaged at $847/mt compared to $1,095/mt for 1H 2012. Fresh fruit bunch ("FFB") production for the first six months of 2013 was 335,901mt, 1% lower compared to 340,350mt for 1H 2012. Increasing competition from local oil milling facilities meant that bought-in crops for the same period was 191,859mt, 25% lower than last year of 255,386mt.

The Group's balance sheet remains strong and cash flow remains healthy even after our continuing expenditure necessary to maintain immature trees and for new planting.

The BA valuation is determined using discounted cash flow over the expected 20-year economic life of the assets. Among the assumption used in the valuation includes the 10-year average CPO price. The BA valuation increased by $16.6m for 30 June 2013 was due primarily to the increase in the 10-year average CPO price from $675/mt to $700/mt.

As at 30 June 2013 the Group's total cash balance was $98.7 million (1H 2012: $71.5 million) with total borrowings of $35.0 million (1H 2012: $1.6 million), giving a net cash position of $63.7 million, compared to $69.9 million as at 30 June 2012.

Operating costs

The operating costs for the Indonesian operations were higher in 1H 2013 compared to the same period in 2012 mainly due to the increase in wages, fertilisers, fuel and general upkeep of plantations. Fertiliser cost was higher due to increase in matured areas. In June 2013, the Indonesian government raised fuel prices for the first time since 2008 in its effort to curb rising fuel subsidy. Plantation costs will increase as the price of fuel is expected to increase on average 33%.

The Group's five mills processed a total of 515,444mt in FFB for the 1H 2013, a 12% decrease compared to 584,542mt for the same period last year.

Internal crop production was lower by 1% despite a 9% increase in matured plantations mainly due to higher rainfall in the Bengkulu region and a lower yield from old palms in North Sumatra.

The Group will be making a significant capital commitment to improve road conditions in Bengkulu, to ease the FFB transportation especially during rainy season. Further significant expenditure is also being incurred through the necessary replanting and replacing of 400ha of mature palms in North Sumatra.

Bought-in crops on the other hand were 25% lower than last year due to more intense competition for FFB supply from local millers.

Commodity prices

CPO price remains soft for the 1H 2013 after dropping to a new low of $810/mt in January 2013. The average CPO price for 1H 2013 was $847/mt (1H 2012: $1,095/mt)on the back of concerns over a slowing economy in China and a weakening of Indian currency which may curb imports by the world's two largest consumers of CPO.

Rubber price averaged $2,599/mt, 22% lower than 2012 (1H 2012: $3,346/mt).

Development

The Group's planted areas at 30 June 2013 comprised:

The Group's new planting for the first six months ended 30 June 2013 totalled 738ha. The slower rate of new planting is due to a host of reasons including delays in the issuance of the High Conservation Value (Environmental) permit for Kalimantan Project and land compensation challenges.

The Group is optimistic that planting will pick up in the second half of 2013. The Group's total landholding comprises some 126,000ha, of which the planted area stands around 59,715ha (1H 2012: 58,198ha).

The biogas and biomass project for the mill in North Sumatra is in progress and is expected to be commissioned in Q4 2013. This mill will enhance the treatment of the effluent at the same time mitigate the emission of biogas. Under this project, the empty fruit bunches will be processed into dried long fibres for export.

The construction of a 45mt/hr palm oil mill in Central Kalimantan previously announced commenced in Q4 2012. Earthwork for another palm oil mill in North Sumatra is delayed to Q4 2013.

Dividend

As in previous years no interim dividend has been declared. A final dividend of 4.5 cents per share in respect of the year to 31 December 2012 was paid on 5 July 2013.

Outlook

Slowing economic growth and tight bank lending in China, combined with a chronically weak Indian Rupee, continue to raise concerns that pivotal demand from these two largest palm oil importers could stagnate.

Increasing supplies of soybean oil will add to the glut of vegetable oils, with US growers expected to reap their biggest ever soya bean crop starting from September 2013.

Furthermore seasonal weather improvements during the second half of the year typically leads to higher CPO production through the more efficient harvesting of FFB, which we expect would lead to the CPO price remaining soft for the remainder of 2013. As a result the Board anticipates that revenue and profitability will be below that achieved in 2012. However cash generation is expected to remain strong and the Board looks forward to reporting further progress in its next Interim Managements Statement.

Principal risks and uncertainties

The directors do not consider that the principal risks and uncertainties have changed since the publication of the annual report for the year ended 31 December 2012.

A more detailed explanation of the risks relevant to the Group is on pages 21 to 24 and from pages 66 to 69 of the 2012 annual report which is available at www.angloeastern.co.uk.

As disclosed in Note 11 of the 2012 Annual Report, the Company is currently in the process of resolving a query from the Financial Reporting Council ("FRC") regarding the determination of the fair value of the Company's biological assets. The resolution of this matter may have a material effect on the amounts recorded in the Company's accounts. The Directors remain confident that the methodology which has been applied is in accordance with IAS 41.

Madam Lim Siew Kim 27 August 2013

Chairman

Responsibility Statements

We confirm that to the best of our knowledge:

a) The interim financial statements have been prepared in accordance with IAS34:Interim Reporting as adopted by the European Union;

b) The Chairman's statement includes a fair review of the information required by DTR 4.2.7R (an indication of important events during the first six months and a description of the principal risks and uncertainties for the remaining six months of the year); and

c) The interim financial statements include a fair review of the information required by DTR 4.2.8R (material related party transactions in the six months ended 30 June 2013 and any material changes in the related party transactions described in the last Annual Report).

By order of the Board

Dato' John Lim Ewe Chuan 27 August 2013

Condensed Consolidated Income Statement

Condensed Consolidated Statement of Comprehensive Income

Condensed Consolidated Statement of Financial Position

Condensed Consolidated Statement of Changes in Equity

Condensed Consolidated Statement Cash Flows

Notes to the interim statements

1. Basis of preparation of interim financial statements

These interim consolidated financial statements have been prepared in accordance with IAS 34,"Interim Financial Reporting", as adopted by the European Union. They do not include all disclosures that would otherwise be required in a complete set of financial statements and should be read in conjunction with the 2012 Annual Report. The financial information for the half years ended 30 June 2013 and 30 June 2012 does not constitute statutory accounts within the meaning of Section 434(3) of the Companies Act 2006 and has been neither audited nor reviewed pursuant to guidance issued by the Auditing Practices Board.

Basis of preparation

The annual financial statements of Anglo-Eastern Plantations Plc are prepared in accordance with IFRSs as adopted by the European Union. The comparative financial information for the year ended 31 December 2012 included within this report does not constitute the full statutory accounts for that period. The statutory Annual Report and Financial Statements for 2012 have been filed with the Registrar of Companies. The Independent Auditors' Report on that Annual Report and Financial Statement for 2012 was qualified on the basis of a limitation in scope in connection with the valuation under IAS 41 of the group's biological assets, did not draw attention to any matters by way of emphasis, and contained statements under 498(2) or 498(3) of the Companies Act 2006.

Changes in accounting standards

The same accounting policies, presentation and methods of computation are followed in these condensed consolidated financial statements as were applied in the Group's latest annual audited financial statements except for the following new standards that have come into effect from the previous reporting date:

- IAS 1 Amendments - Presentation of Items of Other Comprehensive Income

- IFRS 13 Fair Value Measurement

- IAS 19 Amendments - Employee Benefits

The nature and the impact of each new standard/amendment are described below.

IAS 1 Amendments - Presentation of Items of Other Comprehensive Income

The amendments to IAS 1 introduce a grouping of items presented in other comprehensive income (OCI). Items that could be reclassified to profit or loss at a future point in time have to be presented separately from items that will never be reclassified to profit and loss. The amendment affected presentation only and had no impact on the Group's financial position or performance.

IFRS 13 Fair Value Measurement

IFRS 13 measurement and disclosure requirements are applicable for the December 2013 year end. The application of IFRS 13 has not materially impacted the fair value measurements carried out by the Group. The Group has included the disclosures required by IAS 34 para 16A(j). See Note 8.

IAS 19 Amendments - Employee Benefits

IAS 19 amends the accounting for employment benefits and the impact on the Group has been in the following areas:

- The standard requires past service cost to be recognised immediately in profit or loss. This has resulted in unrecognised past service cost at 1 January 2013 of $42,000 being expensed to Income Statement during the period.

- The standard introduces a new term called ''remeasurements''. This is made up of actuarial gains and losses, the difference between actual investment returns and the return implied by the net interest cost which should be recognised in Other Comprehensive Income. This has resulted in actuarial loss on defined benefit plan at 1 January 2013 of $1,523,000 and expected returned on asset of $109,000being charged / credited to Other Comprehensive Income respectively during the period.

After making enquiries, the directors have a reasonable expectation that the Company and the Group have adequate resources to continue operations for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the financial statements.

2. Foreign exchange

3. Finance costs

4. Segment information

In the 6 months to 30 June 2013, revenues from 4 customers of the Indonesian segment represent approximately $45.8m of the Group's total revenues. In year 2012, revenues from 4 customers of the Indonesian segment represent approximately $128.1m of the Group's total revenues. An analysis of these revenues is provided below:

5. Tax

6. Dividend

The final and only dividend in respect of 2012, amounting to 4.5cts per share, or $1,783,637 was paid on 5 July 2013 (2011: 6.0cts per share, or $2,372,344, paid on 9 July 2012). As in previous years no interim dividend has been declared.

7. Earnings per ordinary share (EPS)

8. Fair value measurement of financial instruments

IAS 34 requires that interim financial statements include certain of the disclosures about fair value of financial instruments set out in IFRS 13 and IFRS 7 'Financial Instruments: Disclosures' (IFRS 7). These disclosures include the classification of fair values within a three-level hierarchy. The three levels are defined based on the observability of significant inputs to the measurement, as follows:

- 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.

There is no financial instrument that is measured at fair value on the balance sheet date.

The fair value of the following financial assets and liabilities approximate their carrying amount as at the balance sheet date:

- Non-current receivables

- Trade and other receivables

- Cash and cash equivalents

- Borrowings

- Trade and other payables

9. Report and financial information

Copies of the interim report for the Group for the period ended 30 June 2013 are available on the AEP website at www.angloeastern.co.uk.