Last checked at 20 Aug 2019 17:00
Anglo-Eastern Plantations PLC
("AEP", "Group" or "Company")
Announcement of interim results for the six months ended 30 June 2019
The group comprising Anglo-Eastern Plantations PLC and its subsidiaries (the "Group"), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200 hectares, and has today released its results for the six months ended 30 June 2019.
Financial Highlights
| 20196 monthsto 30 June$m (unaudited) |
| 20186 monthsto 30 June$m (unaudited) |
| 201812 monthsto 31 December$m (audited) |
Revenue | 97.9 |
| 133.3 |
| 250.9 |
(Loss) / Profit before tax |
|
|
|
|
|
- before biological assets ("BA") movement | (0.2) |
| 21.7 |
| 33.2 |
- after BA movement | 1.6 |
| 22.0 |
| 30.9 |
Basic Earnings per ordinary share ("EPS") |
|
|
|
|
|
- before BA movement | (6.72)cts |
| 30.37cts |
| 32.50cts |
- after BA movement | (3.74)cts |
| 30.90cts |
| 28.79cts |
Total net assets | 472.7 |
| 463.8 |
| 464.6 |
Enquiries:
Anglo-Eastern Plantations PLC |
|
Dato' John Lim Ewe Chuan | +44 (0)20 7216 4621 |
|
|
Panmure Gordon (UK) Limited |
|
Dominic Morley | +44 (0)20 7886 2954 |
Chairman's Interim Statement
The interim results for the Group for the six months to 30 June 2019 are as follows:
Revenue for the six months to 30 June was $97.9 million, 27% lower than $133.3 million reported for the first six months of 2018. The Group's gross profit was $5.3 million compared to $25.2 million for the first six months of 2018. Overall profit before tax for the first half of 2019 decreased by 93% to $1.6 million (after BA movement) versus $22.0 million for the corresponding period in 2018. This was attributed mainly to lower Crude Palm Oil ("CPO") prices.
Fresh Fruit Bunches ("FFB") production for the first half of 2019 was 1% lower at 470,300mt compared to 477,400mt in the same period last year. The decrease in production was due to a lower production trend observed in Riau, Bengkulu and South Sumatera which was similarly experienced by other planters in the region. Bought-in crops, however, decreased by 15% to 402,900mt from 473,100mt consistent with lower crop production by other planters in Riau and Bengkulu.
Operational and financial performance
For the six months ended 30 June 2019, gross profit margin decreased to 5.4% from 18.9% as the Group experienced lower CPO, palm kernel and rubber prices. Higher operational costs and the increase in newly matured areas also compressed the operating profit margin.
CPO price ex-Rotterdam averaged $527/mt for the first six months to 30 June 2019, 20% lower than $661/mt over the same period in 2018. Our Group's average ex-mill price for CPO was lower at $466/mt for the same period (1H 2018: $564/mt).
Profit after tax for the six months ended 30 June 2019 was $0.3 million, 98% lower compared to a profit of $16.2 million for the first six months of 2018.
The resulting basic earnings per share for the period decreased by 112% to a loss of 3.74cts (1H 2018: 30.90cts).
The Group's balance sheet remains strong. Net assets as at 30 June 2019 were $472.7 million compared to $463.8 million as at 30 June 2018 and $464.6 million as at 31 December 2018. The increase in net assets was attributed to a $10.5 million exchange translation gain for the first half of 2019 and similar gain of $8.1 million for the twelve months since June 2018. The Indonesian Rupiah has appreciated by 2% against the US dollar in each of the two respective periods.
As at 30 June 2019, the Group had cash and cash equivalents of $100.1 million (1H 2018: $130.1 million) and borrowings of $16.1 million (1H 2018: $25.6 million), giving it a net cash position of $84.0 million, compared to $104.5 million as at 30 June 2018. This is largely due to further investment in new planting, maintenance of immature areas and repayment of loans.
Operating costs
Operating costs per hectare for the Indonesian operations were higher in the first half of 2019 compared to the same period in 2018 mainly due to an increase in wages, estate upkeep and mill maintenance. Higher operating costs were also partly attributed to a 5% increase in newly matured areas where the yield remains relatively low.
Production and Sales
| 2019 | 2018 | 2018 |
| 6 months | 6 months | Year |
| to 30 June | to 30 June | to 31 December |
| mt | mt | mt |
Oil palm production |
|
|
|
FFB |
|
|
|
- all estates | 470,300 | 477,400 | 1,035,800 |
- bought-in from third parties | 402,900 | 473,100 | 1,010,000 |
Saleable CPO | 177,500 | 193,800 | 418,800 |
Saleable palm kernels | 42,300 | 46,700 | 99,200 |
|
|
|
|
Oil palm sales |
|
|
|
CPO | 182,600 | 195,500 | 418,800 |
Palm kernels | 41,200 | 45,000 | 99,900 |
FFB sold outside | 23,300 | 14,000 | 24,700 |
|
|
|
|
Rubber production | 202 | 291 | 637 |
The Group's six mills processed a total of 849,900mt in FFB for the first half of 2019, a 9% decrease compared to 936,500mt for the same period last year. The lower throughput was mainly due to lower production trend in Riau and Bengkulu. Production in Riau moderated after a bumper harvest last year when yield peaked at 29.4mt/ha while lower production in Bengkulu was likely weather induced. As a result of the low FFB prices, AEP estates in South Sumatera have started to sell their crops to local millers to save on the high transport costs to their own mills.
Overall CPO produced for the first half of 2019 was 8% lower at 177,500mt from 193,800mt. The oil extraction rate for the first half of 2019 improved marginally to 20.9% from 20.7% in the same period last year.
The Group continues to reduce its greenhouse gas ("GHG") emissions by capturing the methane gas released from its effluent treatment plants to produce electricity. The three biogas plants in the Group produced over 7,470 MWh of electricity compared to 7,060 MWh in the same period last year. The third biogas plant located in Kalimantan began commercial operation in February this year.
Commodity prices
The CPO price ex-Rotterdam for first half of 2019 averaged $527/mt, 20% lower than last year (1H 2018: $661/mt). The price has gradually trended downwards from the start of the year at $517/mt to close at $501/mt on 28 June 2019 and has since increased to $522/mt as at 14 August 2019. CPO prices are expected to remain subdued in the coming months due to oversupply, competitive pricing of other vegetable oils and projection of higher production in the second half of 2019.
Rubber price averaged $1,315/mt, 1% lower than 2018 (1H 2018: $1,329/mt).
Development
The Group's planted areas at 30 June 2019 comprised:
| Total | Mature | Immature |
| ha | ha | Ha |
North Sumatera | 19,194 | 15,311 | 3,883 |
Bengkulu | 16,981 | 16,981 | - |
Riau | 4,873 | 4,873 | - |
South Sumatera | 6,271 | 5,344 | 927 |
Kalimantan | 15,118 | 12,858 | 2,260 |
Bangka | 1,183 | 538 | 645 |
Plasma | 3,423 | 1,818 | 1,605 |
Indonesia | 67,043 | 57,723 | 9,320 |
Malaysia | 3,460 | 3,460 | - |
Total: 30 June 2019 | 70,503 | 61,183 | 9,320 |
Total: 31 December 2018 | 69,792 | 57,909 | 11,883 |
Total: 30 June 2018 | 68,703 | 58,266 | 10,437 |
The Group's new planting for the first six months of 2019 totalled 481ha compared to 427ha for the same period last year. New planting is delayed as the Group awaits results of a peer review of high carbon stock sustainability study which will determine areas in Central Kalimantan which cannot be planted with oil palm due to high conservation and high carbon stock values.
The Group remains optimistic that planting will continue to pick up in the second half of 2019. The Group's total landholding comprises some 128,200ha, of which the planted area stands around 70,503ha (1H 2018: 68,703ha) with the balance of estimated plantable land at 21,000ha.
The earthwork for the fourth biogas reactor lagoon has been completed. The contractor will begin civil works and the lining of the lagoon membrane which are expected to be completed by the fourth quarter of 2019.The sinking and uneven settlement of soil which have affected the progress of the construction of the seventh mill in North Sumetera have been addressed and the need for additional filling is being monitored. Tenders will be invited for the civil and mechanical works by the third quarter of 2019. The mill is scheduled for completion by 2021.
Dividend
As in previous years, no interim dividend has been declared. A final dividend of 3.0 cents per share in respect of the year ended 31 December 2018 was paid on 12 July 2019.
Outlook
The Group expects CPO prices to remain subdued due to likely higher output and inventories across the market in the second half of 2019. Analysts also highlighted the spread between CPO futures and spot prices has narrowed over the past months signalling the market's negative sentiments on CPO prices going forward. We expect production volumes in the second half of the year to improve.
Principal risks and uncertainties
We believe that the potential impact on the Group of Britain's vote to leave the European Union is limited, unless Brexit causes a worldwide recession. Other than maintaining its corporate presence and listing in United Kingdom, all plantation and mill operations together with marketing are primarily based in Indonesia. The principal risks and uncertainties have broadly remained the same since the publication of the annual report for the year ended 31 December 2018.
A more detailed explanation of the risks relevant to the Group is on pages 21 to 25 and from pages 92 to 97 of the 2018 annual report which is available at https://www.angloeastern.co.uk/.
The information communicated in this announcement is inside information for the purposes of Article 7 of Market Abuse Regulation 596/2014.
Madam Lim Siew Kim
Chairman
20 August 2019
Responsibility Statements
We confirm that to the best of our knowledge:
a) The unaudited interim financial statements have been prepared in accordance with IAS34: Interim Financial 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 2019 and any material changes in the related party transactions described in the last Annual Report) of the Disclosure and Transparency Rules of the United Kingdom Financial Services Authority.
By order of the Board
Dato' John Lim Ewe Chuan
Executive Director, Corporate Finance and Corporate Affairs
20 August 2019
Condensed Consolidated Income Statement
|
| 2019 6 months to 30 June (unaudited) |
2018 6 months to 30 June (unaudited) |
2018 Year to 31 December (audited) |
| ||||||||
Continuing operations
| Notes
| Result before BA movement$000 | BA movement$000 | Total$000 | Result before BA movement$000 | BA movement$000 | Total$000 | Result before BA movement$000 | BA movement$000 | Total$000 | |||
Revenue | 4 | 97,863 | - | 97,863 | 133,331 | - | 133,331 | 250,859 | - | 250,859 | |||
Cost of sales |
| (94,432) | 1,845 | (92,587) | (108,458) | 332 | (108,126) | (206,224) | (2,286) | (208,510) | |||
Gross profit |
| 3,431 | 1,845 | 5,276 | 24,873 | 332 | 25,205 | 44,635 | (2,286) | 42,349 | |||
Administration expenses |
| (3,190) | - | (3,190) | (3,544) | - | (3,544) | (9,368) | - | (9,368) | |||
Impairment losses |
| (2,337) | - | (2,337) | - | - | - | (4,339) | - | (4,339) | |||
Operating (loss) / profit |
| (2,096) | 1,845 | (251) | 21,329 | 332 | 21,661 | 30,928 | (2,286) | 28,642 | |||
Exchange gains / (losses) |
| 163 | - | 163 | (1,222) | - | (1,222) | (1,250) | - | (1,250) | |||
Finance income |
| 2,257 | - | 2,257 | 2,374 | - | 2,374 | 5,048 | - | 5,048 | |||
Finance expense | 3 | (569) | - | (569) | (793) | - | (793) | (1,511) | - | (1,511) | |||
(Loss) / Profit before tax | 4 | (245) | 1,845 | 1,600 | 21,688 | 332 | 22,020 | 33,215 | (2,286) | 30,929 | |||
Tax expense | 5 | (804) | (461) | (1,265) | (5,739) | (83) | (5,822) | (13,633) | 571 | (13,062) | |||
(Loss) / Profit for the period |
| (1,049) | 1,384 | 335 | 15,949 | 249 | 16,198 | 19,582 | (1,715) | 17,867 | |||
Attributable to: |
|
|
|
|
|
|
|
|
|
| |||
- Owners of the parent |
| (2,664) | 1,181 | (1,483) | 12,037 | 209 | 12,246 | 12,882 | (1,469) | 11,413 | |||
- Non-controlling interests |
| 1,615 | 203 | 1,818 | 3,912 | 40 | 3,952 | 6,700 | (246) | 6,454 | |||
|
| (1,049) | 1,384 | 335 | 15,949 | 249 | 16,198 | 19,582 | (1,715) | 17,867 | |||
Earnings per share for (loss) / profit attributable to the owners of the parent during the period |
|
|
|
|
|
|
|
|
|
|
| ||
- basic | 7 |
|
| (3.74)cts |
|
| 30.90cts |
|
| 28.79cts |
| ||
- diluted | 7 |
|
| (3.74)cts |
|
| 30.87cts |
|
| 28.79cts |
| ||
Condensed Consolidated Statement of Comprehensive Income
| 2019 | 2018 | 2018 |
| 6 months | 6 months | Year |
| to 30 June | to 30 June | to 31 December |
| (unaudited) | (unaudited) | (audited) |
| $000 | $000 | $000 |
Profit for the period | 335 | 16,198 | 17,867 |
Other comprehensive expenses: |
|
|
|
Items may be reclassified to profit or loss: |
|
|
|
Profit / (loss) on exchange translation of foreign operations | 10,523 | (27,093) | (29,550) |
Net other comprehensive income / (expenses) may be reclassified to profit or loss | 10,523 | (27,093) | (29,550) |
Items not to be reclassified to profit or loss: |
|
|
|
Unrealised (loss) / gain on revaluation of leasehold land, net of tax | (1,521) | (531) | 137 |
Remeasurement of retirement benefits plan, net of tax | - | - | 894 |
Net other comprehensive (expenses) / income not being reclassified to profit or loss | (1,521) | (531) | 1,031 |
Total other comprehensive income / (expenses) for the period, net of tax | 9,002 | (27,624) | (28,519) |
Total comprehensive income / (expenses) for the period | 9,337 | (11,426) | (10,652) |
Attributable to: |
|
|
|
- Owners of the parent | 5,475 | (10,906) | (11,527) |
- Non-controlling interests | 3,862 | (520) | 875 |
| 9,337 | (11,426) | (10,652) |
Condensed Consolidated Statement of Financial Position
|
| 2019 | 2018 | 2018 |
|
| as at 30 June | as at 30 June | as at 31 December |
|
| (unaudited) | (unaudited) | (audited) |
|
| $000 | $000 | $000 |
Non-current assets |
|
|
|
|
Property, plant and equipment |
| 350,914 | 337,719 | 340,367 |
Receivables |
| 13,343 | 8,746 | 11,020 |
Deferred tax assets |
| 15,318 | 10,857 | 11,147 |
|
| 379,575 | 357,322 | 362,534 |
Current assets |
|
|
|
|
Inventories |
| 10,015 | 10,718 | 9,540 |
Tax receivables |
| 38,521 | 34,327 | 44,310 |
Biological assets |
| 6,041 | 6,695 | 4,093 |
Trade and other receivables |
| 6,159 | 6,308 | 5,203 |
Cash and cash equivalents |
| 100,123 | 130,127 | 112,212 |
|
| 160,859 | 188,175 | 175,358 |
Current liabilities |
|
|
|
|
Loans and borrowings |
| (13,328) | (11,844) | (11,078) |
Trade and other payables |
| (17,452) | (20,553) | (20,083) |
Tax liabilities |
| (4,847) | (4,688) | (5,626) |
Dividend payables |
| (1,262) | (1,617) | (37) |
|
| (36,889) | (38,702) | (36,824) |
Net current assets |
| 123,970 | 149,473 | 138,534 |
Non-current liabilities |
|
|
|
|
Loans and borrowings |
| (2,734) | (13,719) | (8,203) |
Deferred tax liabilities |
| (19,032) | (20,023) | (20,040) |
Retirement benefits - net liabilities |
| (9,107) | (9,246) | (8,244) |
|
| (30,873) | (42,988) | (36,487) |
Net assets |
| 472,672 | 463,807 | 464,581 |
|
|
|
|
|
Issued capital and reserves attributable to owners of the parent |
|
|
|
|
Share capital |
| 15,504 | 15,504 | 15,504 |
Treasury shares |
| (1,171) | (1,171) | (1,171) |
Share premium |
| 23,935 | 23,935 | 23,935 |
Capital redemption reserve |
| 1,087 | 1,087 | 1,087 |
Revaluation reserves |
| 49,864 | 50,789 | 51,308 |
Exchange reserves |
| (236,768) | (244,088) | (245,170) |
Retained earnings |
| 523,815 | 526,545 | 526,487 |
|
| 376,266 | 372,601 | 371,980 |
Non-controlling interests |
| 96,406 | 91,206 | 92,601 |
Total equity |
| 472,672 | 463,807 | 464,581 |
Condensed Consolidated Statement of Changes in Equity
| Attributable to owners of the parent |
|
|
| |||||||
|
Share capital |
Treasury shares |
Share premium | Capital redemption reserve |
Revaluation reserves |
Exchange Reserves |
Retained earnings |
Total | Non-controlling interests |
Total equity |
|
| $000 | $000 | $000 | $000 | $000 | $000 | $000 | $000 | $000 | $000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 31 December 2017 | 15,504 | (1,171) | 23,935 | 1,087 | 51,288 | (221,435) | 515,884 | 385,092 | 91,799 | 476,891 | |
Items of other comprehensive income: |
|
|
|
|
|
|
|
|
|
| |
-Unrealised gain on revaluation of leasehold land, net of tax | - | - | - | - | 20 | - | - | 20 | 117 | 137 | |
-Remeasurement of retirement benefits plan, net of tax | - | - | - | - | - | - | 775 | 775 | 119 | 894 | |
-Loss on exchange translation of foreign operations | - | - | - | - | - | (23,735) | - | (23,735) | (5,815) | (29,550) | |
Total other comprehensive income / (expenses) | - | - | - | - | 20 | (23,735) | 775 | (22,940) | (5,579) | (28,519) | |
Profit for the year | - | - | - | - | - | - | 11,413 | 11,413 | 6,454 | 17,867 | |
Total comprehensive income / (expenses) for the year | - | - | - | - | 20 | (23,735) | 12,188 | (11,527) | 875 | (10,652) | |
Dividends paid | - | - | - | - | - | - | (1,585) | (1,585) | (73) | (1,658) | |
Balance at 31 December 2018 | 15,504 | (1,171) | 23,935 | 1,087 | 51,308 | (245,170) | 526,487 | 371,980 | 92,601 | 464,581 | |
Items of other comprehensive income: |
|
|
|
|
|
|
|
|
|
| |
-Unrealised loss on revaluation of leasehold land, net of tax | - | - | - | - | (1,444) | - | - | (1,444) | (77) | (1,521) | |
-Gain on exchange translation of foreign operations | - | - | - | - | - | 8,402 | - | 8,402 | 2,121 | 10,523 | |
Total other comprehensive (expenses) / income | - | - | - | - | (1,444) | 8,402 | - | 6,958 | 2,044 | 9,002 | |
(Loss) / Profit for the period | - | - | - | - | - | - | (1,483) | (1,483) | 1,818 | 335 | |
Total comprehensive (expenses) / income for the period | - | - | - | - | (1,444) | 8,402 | (1,483) | 5,475 | 3,862 | 9,337 | |
Dividends payable | - | - | - | - | - | - | (1,189) | (1,189) | (57) | (1,246) | |
Balance at 30 June 2019 | 15,504 | (1,171) | 23,935 | 1,087 | 49,864 | (236,768) | 523,815 | 376,266 | 96,406 | 472,672 | |
| Attributable to owners of the parent |
|
|
| |||||||||||||||
|
Share capital |
Treasury shares |
Share premium | Capital redemption reserve |
Revaluation reserves |
Exchange reserves |
Retained earnings |
Total | Non-controlling interests |
Total Equity | |||||||||
| $000 | $000 | $000 | $000 | $000 | $000 | $000 | $000 | $000 | $000 | |||||||||
|
|
|
|
|
|
|
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| |||||||||
Balance at 31 December 2017 | 15,504 | (1,171) | 23,935 | 1,087 | 51,288 | (221,435) | 515,884 | 385,092 | 91,799 | 476,891 | |||||||||
Items of other comprehensive income: |
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|
|
|
|
|
|
|
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| |||||||||
-Unrealised loss on revaluation of leasehold land, net of tax | - | - | - | - | (499) | - | - | (499) | (32) | (531) | |||||||||
-Gain on exchange translation of foreign operations | - | - | - | - | - | (22,653) | - | (22,653) | (4,440) | (27,093) | |||||||||
Total other comprehensive (expenses) / income | - | - | - | - | (499) | (22,653) | - | (23,152) | (4,472) | (27,624) | |||||||||
Profit for the period | - | - | - | - | - | - | 12,246 | 12,246 | 3,952 | 16,198 | |||||||||
Total comprehensive (expenses) / income for the period | - | - | - | - | (499) | (22,653) | 12,246 | (10,906) | (520) | (11,426) | |||||||||
Dividends payable | - | - | - | - | - | - | (1,585) | (1,585) | (73) | (1,658) | |||||||||
Balance at 30 June 2018 | 15,504 | (1,171) | 23,935 | 1,087 | 50,789 | (244,088) | 526,545 | 372,601 | 91,206 | 463,807 | |||||||||
Condensed Consolidated Statement of Cash Flows
| 2019 |
2018 | 2018 |
| 6 months | 6 months | Year |
| to 30 June | to 30 June | to 31 December |
| (unaudited) | (unaudited) | (audited) |
| $000 | $000 | $000 |
Cash flows from operating activities |
|
|
|
Profit before tax | 1,600 | 22,020 | 30,929 |
Adjustments for: |
|
|
|
Biological assets movement | (1,845) | (332) | 2,286 |
Gains on disposal of property, plant and equipment | (21) | (8) | (21) |
Depreciation | 8,511 | 8,375 | 16,752 |
Retirement benefit provisions | 764 | 878 | 1,250 |
Net finance income | (1,688) | (1,581) | (3,537) |
Unrealised (gains) / losses in foreign exchange | (163) | 1,222 | 1,250 |
Property, plant and equipment written off | 46 | 17 | 620 |
Impairment losses | 2,337 | - | 4,339 |
Operating cash flows before changes in working capital | 9,541 | 30,591 | 53,868 |
Increase in inventories | (246) | (1,877) | (746) |
Increase in non-current, trade and other receivables | (3,383) | (1,062) | (2,173) |
(Decrease) / Increase in trade and other payables | (2,774) | 4,629 | 4,148 |
Cash inflows from operations | 3,138 | 32,281 | 55,097 |
Interest paid | (569) | (793) | (1,511) |
Retirement benefits paid | (103) | (83) | (257) |
Overseas tax paid | (162) | (19,636) | (36,508) |
Net cash flows from operating activities | 2,304 | 11,769 | 16,821 |
|
|
|
|
Investing activities |
|
|
|
Property, plant and equipment |
|
|
|
- purchases | (15,992) | (13,279) | (30,282) |
- sales | 52 | 41 | 42 |
Interest received | 2,257 | 2,374 | 5,048 |
Net cash used in investing activities | (13,683) | (10,864) | (25,192) |
Financing activities |
|
|
|
| ||
Dividends paid to the holders of the parent | - | - | (1,585) | |||
Dividends paid to non-controlling interests | (57) | (73) | (73) |
| ||
Repayment of existing long-term loans | (3,219) | (2,313) | (8,594) |
| ||
Net cash used in financing activities | (3,276) | (2,386) | (10,252) |
| ||
Net decrease in cash and cash equivalents | (14,655) | (1,481) | (18,623) |
| ||
|
|
|
|
| ||
Cash and cash equivalents |
|
|
|
| ||
At beginning of period | 112,212 | 139,489 | 139,489 |
| ||
Exchange gains / (losses) | 2,566 | (7,881) | (8,654) |
| ||
At end of period | 100,123 | 130,127 | 112,212 |
| ||
Comprising: |
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|
|
| ||
Cash at end of period | 100,123 | 130,127 | 112,212 |
| ||
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 2018 Annual Report. The financial information for the half years ended 30 June 2019 and 30 June 2018 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 2018 included within this report does not constitute the full statutory accounts for that period. The statutory Annual Report and Financial Statements for 2018 have been filed with the Registrar of Companies. The Independent Auditors' Report on the Annual Report and Financial Statements for 2018 was 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.
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.
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 those that relate to new standards and interpretations effective for the first time for periods beginning on 1 January 2019 and will be adopted in the 2019 annual financial statements. The new standard impacting the Group that will be adopted in the annual financial statements for the year ended 31 December 2019, and which has given rise to changes in the Group's accounting policies is IFRS 16 Leases.
Details of the impact of this standard are given below. Other new and amended standards and Interpretations issued by the IASB that will apply for the first time in the next annual financial statements are not expected to impact the Group as they are either not relevant to the Group's activities or require accounting which is consistent with the Group's current accounting policies.
IFRS 16 Leases
IFRS 16 introduces a single lessee accounting model and requires a lessee to recognise assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value. A lessee is required to recognise a right-of-use asset representing its right to use the underlying leased asset and a leased liability representing its obligation to make lease payments. The impact to the Group is immaterial.
2. Foreign exchange
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| 2019 | 2018 | 2018 |
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| 6 months | 6 months | Year |
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| to 30 June | to 30 June | to 31 December |
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| (unaudited) | (unaudited) | (audited) |
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Closing exchange rates |
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Rp : $ |
| 14,141 | 14,404 | 14,481 |
$ : £ |
| 1.27 | 1.32 | 1.28 |
RM : $ |
| 4.13 | 4.04 | 4.13 |
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Average exchange rates |
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Rp : $ |
| 14,197 | 13,753 | 14,246 |
$ : £ |
| 1.29 | 1.38 | 1.33 |
RM : $ |
| 4.12 | 3.94 | 4.04 |
3. Finance expense
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| 2019 | 2018 | 2018 |
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| 6 months | 6 months | Year |
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| to 30 June | to 30 June | to 31 December |
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| (unaudited) | (unaudited) | (audited) |
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| $000 | $000 | $000 |
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Payable |
| 569 | 793 | 1,511 |
4. Segment information
| North Sumatera | Bengkulu | South Sumatera | Riau | Bangka | Kalimantan | Total Indonesia | Malaysia | UK | Total | ||||||
| $000 | $000 | $000 | $000 | $000 | $000 | $000 | $000 | $000 | $000 | ||||||
6 months to 30 June 2019 (unaudited) |
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Total sales revenue (all external) |
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- CPO, palm kernel and FFB | 34,900 | 28,837 | 813 | 15,902 | 217 | 14,474 | 95,143 | 854 | - | 95,997 | ||||||
- Rubber | 266 | - | - | - | - | - | 266 | - | - | 266 | ||||||
- Shell nut | 189 | 242 | - | 290 | - | 17 | 738 | - | - | 738 | ||||||
- Biomass products | 303 | - | - | - | - | - | 303 | - | - | 303 | ||||||
- Biogas products | 33 | 229 | - | - | - | 123 | 385 | - | - | 385 | ||||||
- Others | 34 | 29 | 25 | - | - | 28 | 116 | 58 | - | 174 | ||||||
Total revenue | 35,725 | 29,337 | 838 | 16,192 | 217 | 14,642 | 96,951 | 912 | - | 97,863 | ||||||
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Profit / (loss) before tax | 701 | 1,509 | (3,533) | 3,941 | (242) | (1,451) | 925 | (401) | (769) | (245) | ||||||
BA movement | 805 | 651 | 50 | (42) | 13 | 348 | 1,825 | 20 | - | 1,845 | ||||||
Profit / (loss) for the period before tax per consolidated income statement |
1,506 | 2,160 | (3,483) | 3,899 | (229) | (1,103) | 2,750 | (381) | (769) | 1,600 | ||||||
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Interest income | 1,012 | 962 | 2 | 180 | - | 16 | 2,172 | 83 | 2 | 2,257 | ||||||
Depreciation | (2,026) | (2,142) | (1,205) | (447) | (135) | (2,306) | (8,261) | (250) | - | (8,511) | ||||||
impairment losses | - | - | (115) | - | - | (2,222) | (2,337) | - | - | (2,337) | ||||||
Inter-segment transactions | 2,514 | (1,010) | (367) | (290) | (61) | (972) | (186) | 58 | 128 | - | ||||||
Inter-segment revenue | 10,314 | 560 | 622 | - | - | 624 | 12,120 | - | - | 12,120 | ||||||
Tax expense | (2,730) | (59) | 2,155 | (2,216) | 154 | 1,593 | (1,103) | (117) | (45) | (1,265) | ||||||
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Total assets | 176,332 | 120,118 | 45,785 | 33,772 | 12,600 | 124,385 | 512,992 | 21,553 | 5,889 | 540,434 | ||||||
Non-current assets | 108,550 | 71,925 | 43,493 | 17,975 | 12,238 | 105,731 | 359,912 | 16,630 | 3,033 | 379,575 | ||||||
Non-current assets - additions | 4,377 | 2,127 | 1,521 | 111 | 1,935 | 5,540 | 15,611 | 95 | - | 15,706 | ||||||
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| North Sumatera | Bengkulu | South Sumatera | Riau | Bangka | Kalimantan | Total Indonesia | Malaysia | UK | Total | ||||||
| $000 | $000 | $000 | $000 | $000 | $000 | $000 | $000 | $000 | $000 | ||||||
6 months to 30 June 2018 (unaudited) |
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Total sales revenue (all external) |
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- CPO, palm kernel and FFB | 43,054 | 44,177 | - | 22,318 | 143 | 19,597 | 129,289 | 1,234 | - | 130,523 | ||||||
- Rubber | 393 | - | - | - | - | - | 393 | - | - | 393 | ||||||
- Shell nut | 289 | 281 | - | 421 | - | 12 | 1,003 | - | - | 1,003 | ||||||
- Biomass products | 310 | - | - | - | - | - | 310 | - | - | 310 | ||||||
- Biogas products | 226 | 266 | - | - | - | - | 492 | - | - | 492 | ||||||
- Others | 531 | - | 10 | 18 | - | 51 | 610 | - | - | 610 | ||||||
Total revenue | 44,803 | 44,724 | 10 | 22,757 | 143 | 19,660 | 132,097 | 1,234 | - | 133,331 | ||||||
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Profit / (loss) before tax | 5,191 | 10,303 | (2,694) | 7,208 | (226) | 3,121 | 22,903 | (57) | (1,158) | 21,688 | ||||||
BA movement | 583 | 80 | (56) | (28) | (2) | (241) | 336 | (4) | - | 332 | ||||||
Profit / (loss) for the period before tax per consolidated income statement | 5,774 | 10,383 | (2,750) | 7,180 | (228) | 2,880 | 23,239 | (61) | (1,158) | 22,020 | ||||||
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Interest income | 788 | 1,309 | 1 | 182 | - | 11 | 2,291 | 82 | 1 | 2,374 | ||||||
Depreciation | (2,008) | (2,033) | (1,276) | (463) | (119) | (2,215) | (8,114) | (261) | - | (8,375) | ||||||
impairment losses | - | - | - | - | - | - | - | - | - | - | ||||||
Inter-segment transactions | 2,569 | (1,051) | (364) | (301) | (49) | (880) | (76) | 46 | 30 | - | ||||||
Inter-segment revenue | 11,867 | 568 | 1,959 | - | - | 194 | 14,588 | - | - | 14,588 | ||||||
Tax expense | (3,613) | (2,177) | 2,077 | (2,802) | 133 | 641 | (5,741) | (52) | (29) | (5,822) | ||||||
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Total assets | 168,247 | 147,978 | 40,952 | 34,332 | 11,305 | 111,967 | 514,781 | 24,261 | 6,455 | 545,497 | ||||||
Non-current assets | 100,619 | 69,203 | 39,232 | 17,973 | 11,038 | 98,390 | 336,455 | 17,869 | 2,998 | 357,322 | ||||||
Non-current assets - additions | 3,786 | 1,597 | 1,382 | 315 | 677 | 5,417 | 13,174 | 105 | - | 13,279 | ||||||
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| North Sumatera | Bengkulu | South Sumatera | Riau | Bangka | Kalimantan | Total Indonesia | Malaysia | UK | Total | ||||||
| $000 | $000 | $000 | $000 | $000 | $000 | $000 | $000 | $000 | $000 | ||||||
Year to 31 December 2018 (audited) |
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Total sales revenue (all external) |
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- CPO, palm kernel and FFB | 84,771 | 79,652 | 1 | 43,970 | 261 | 34,848 | 243,503 | 2,092 | - | 245,595 | ||||||
- Rubber | 792 | - | - | - | - | - | 792 | - | - | 792 | ||||||
- Shell nut | 651 | 432 | - | 930 | - | 34 | 2,047 | - | - | 2,047 | ||||||
- Biomass products | 914 | - | - | - | - | - | 914 | - | - | 914 | ||||||
- Biogas products | 417 | 446 | - | - | - | - | 863 | - | - | 863 | ||||||
- Others | 519 | 38 | 18 | - | - | 73 | 648 | - | - | 648 | ||||||
Total revenue | 88,064 | 80,568 | 19 | 44,900 | 261 | 34,955 | 248,767 | 2,092 | - | 250,859 | ||||||
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Profit / (loss) before tax | 12,993 | 18,753 | (7,445) | 13,112 | (531) | (557) | 36,325 | (894) | (2,216) | 33,215 | ||||||
BA movement | (296) | (1,074) | (93) | (272) | (4) | (479) | (2,218) | (68) | - | (2,286) | ||||||
Profit / (loss) for the period before tax per consolidated income statement | 12,697 | 17,679 | (7,538) | 12,840 | (535) | (1,036) | 34,107 | (962) | (2,216) | 30,929 | ||||||
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Interest income | 1,594 | 2,978 | 3 | 318 | - | 20 | 4,913 | 133 | 2 | 5,048 | ||||||
Depreciation | (4,031) | (4,120) | (2,530) | (900) | (234) | (4,425) | (16,240) | (512) | - | (16,752) | ||||||
impairment losses | - | - | (914) | - | - | (3,425) | (4,339) | - | - | (4,339) | ||||||
Inter-segment transactions | 4,887 | (2,021) | (700) | (579) | (94) | (1,870) | (377) | 103 | 274 | - | ||||||
Inter-segment revenue | 24,409 | 1,608 | 3,710 | - | - | 1,049 | 30,776 | - | - | 30,776 | ||||||
Tax expense | (7,872) | (2,994) | 1,862 | (5,351) | 151 | 1,154 | (13,050) | 19 | (31) | (13,062) | ||||||
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Total assets | 188,266 | 118,098 | 41,074 | 36,900 | 11,815 | 113,186 | 509,339 | 22,347 | 6,206 | 537,892 | ||||||
Non-current assets | 103,648 | 70,237 | 39,672 | 17,884 | 11,588 | 99,738 | 342,767 | 16,783 | 2,984 | 362,534 | ||||||
Non-current assets - additions | 8,578 | 4,460 | 3,753 | 472 | 1,647 | 11,355 | 30,265 | 110 | - | 30,375 | ||||||
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In the 6 months to 30 June 2019, revenues from 4 customers of the Indonesian segment represent approximately $57.2m (1H 2018: $60.1m) of the Group's total revenues. In year 2018, revenues from 4 customers of the Indonesian segment represent approximately $115.4m of the Group's total revenues. An analysis of this revenue is provided below. Although Customer 1 to 3 each contribute over 10% of the Group's 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 year to 31 December 2018.
| 2019 | 2018 | 2018 | |||
| 6 months | 6 months | Year | |||
| to 30 June | to 30 June | to 31 December | |||
| (unaudited) | (unaudited) | (audited) | |||
| $m | % | $m | % | $m | % |
Major Customers |
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Customer 1 | 21.8 | 22.3 | 18.6 | 14.0 | 37.1 | 14.8 |
Customer 2 | 16.9 | 17.2 | 15.3 | 11.5 | 29.6 | 11.8 |
Customer 3 | 10.4 | 10.6 | 14.7 | 11.0 | 24.9 | 9.9 |
Customer 4 | 8.1 | 8.3 | 11.5 | 8.6 | 23.8 | 9.5 |
Total | 57.2 | 58.4 | 60.1 | 45.1 | 115.4 | 46.0 |
5. Tax expense
| 2019 | 2018 | 2018 |
| 6 months | 6 months | Year |
| to 30 June | to 30 June | to 31 December |
| (unaudited) | (unaudited) | (audited) |
| $000 | $000 | $000 |
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Foreign corporation tax - current year | 6,087 | 9,043 | 16,852 |
Foreign corporation tax - prior year | - | 6 | 70 |
Deferred tax adjustment - origination and reversal of temporary differences | (4,822) | (3,227) |
(3,860) |
| 1,265 | 5,822 | 13,062 |
6. Dividend
The final and only dividend in respect of 2018, amounting to 3.0 cents per share, or $1,189,091 was paid on 12 July 2019 (2017: 4.0 cents per share, or $1,585,455, paid on 13 July 2018). As in previous years, no interim dividend has been declared.
7. Earnings per ordinary share ("EPS")
| 2019 | 2018 | 2018 |
| 6 months | 6 months | Year |
| to 30 June | to 30 June | to 31 December |
| (unaudited) | (unaudited) | (audited) |
| $000 | $000 | $000 |
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(Loss) / Profit for the period attributable to owners of the Company before BA movement | (2,664) | 12,037 | 12,882 |
BA movement | 1,181 | 209 | (1,469) |
Earnings used in basic and diluted EPS | (1,483) | 12,246 | 11,413 |
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| Number | Number | Number |
| '000 | '000 | '000 |
Weighted average number of shares in issue in the period |
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- used in basic EPS | 39,636 | 39,636 | 39,636 |
- dilutive effect of outstanding share options | - | 33 |
- |
- used in diluted EPS | 39,636 | 39,669 | 39,636 |
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Basic EPS before BA movement | (6.72)cts | 30.37cts | 32.50cts |
Basic EPS after BA movement | (3.74)cts | 30.90cts | 28.79cts |
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Dilutive EPS before BA movement | (6.72)cts | 30.34cts | 32.50cts |
Dilutive EPS after BA movement | (3.74)cts | 30.87cts | 28.79cts |
8. Fair value measurement of financial instruments
The carrying amounts and fair values of the financial instruments which are not recognised at fair value in the Statement of Financial Position are exhibited below:
| 2019 | 2018 | 2018 |
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| 6 months | 6 months | Year |
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| to 30 June | to 30 June | to 31 December |
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| (unaudited) | (unaudited) | (audited) |
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| Carrying amount | Fair value | Carrying amount | Fair value | Carrying amount | Fair value |
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| $000 | $000 | $000 | $000 | $000 | $000 |
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Non-current receivables |
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Due from non-controlling interests | 3,022 | 1,850 | 2,977 | 1,837 | 2,965 | 1,833 |
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Due from cooperatives under Plasma scheme | 10,321 | 7,407 | 5,769 | 5,495 | 8,055 | 6,240 |
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| 13,343 | 9,257 | 8,746 | 7,332 | 11,020 | 8,073 |
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Borrowings due after one year |
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Long-term loan | 2,734 | 2,473 | 13,719 | 13,403 | 8,203 | 7,742 |
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Financial instruments not measured at fair value include 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 and borrowings due within one year approximates their fair value.
All non-current receivables and long-term loan 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 and borrowings due after one year, as well as the inter-relationship between key unobservable inputs and fair value, are set out in the table below:
Item | Valuation approach | Inputs used | Inter-relationship between key unobservable inputs and fair value
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Non-current receivables | |||
Due from non-controlling interests | Based on cash flows discounted using current lending rate of 6% (1H 2018 and 2018: 6%).
| Discount rate | The higher the discount rate, the lower the fair value.
|
Due from cooperatives under Plasma scheme | Based on cash flows discounted using an estimated current lending rate of 6.58% (1H 2018: 6.05%, 2018: 6.58%).
| Discount rate | The higher the discount rate, the lower the fair value.
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Borrowings due after one year | |||
Long-term loan | Based on cash flows discounted using an estimated current lending rate of 6.58% (1H 2018: 6.05%, 2018: 6.58%).
| Discount rate | The higher the discount rate, the lower the fair value.
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9. Report and financial information
Copies of the interim report for the Group for the period ended 30 June 2019 are available on the AEP website at https://www.angloeastern.co.uk/.