PAL.L Regulatory News (PAL)

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF EU REGULATION 596/2014 ("MAR"). UPON PUBLICATION OF THIS ANNOUNCEMENT, THIS INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.

 14 December 2020 

EQUATORIAL PALM OIL PLC

("EPO" or the "Company")

Audited Results for the year ended 30 September 2020

Equatorial Palm Oil plc (AIM: PAL), the Rule 15 cash shell, is pleased to announce its audited results for the year ended 30 September 2020.

Notice is hereby given that the Annual General Meeting of EPO will be held at the offices of Hill Dickinson LLP, 8th Floor, The Broadgate Tower, 20 Primrose Street, London, EC2A 2EW on 28th January 2021 at 11.00 a.m.

The Company's Annual Report and Notice of Annual General Meeting will shortly be posted to shareholders and made available on the Company's website at www.epoil.co.uk.

For further information, please visit www.epoil.co.uk or contact:

CHAIRMAN'S STATEMENT

Introduction

Equatorial Palm Oil plc ("EPO or "the Company") is an AIM listed company which, following the disposal of its 50 per cent. interest in Liberian Palm Developments Limited ("LPD") and receipt of shareholders' approval, became an AIM Rule 15 cash shell.

Operational Review

As announced on 18 May 2020, the Company's 100 per cent owned subsidiary, Equatorial Biofuels (Guernsey) Limited ("Equatorial Biofuels") entered into a Sale and Purchase Agreement ("SPA") to dispose of its 50 per cent. interest in LPD to Kuala Lumpur Kepong Berhad ("KLK") for nominal consideration. Under the terms of the SPA, at completion:

- Equatorial Biofuels transferred its 50 per cent equity interest in LPD to KLK Agro Plantations Pte Ltd (KLK Agro Plantations"), a wholly-owned subsidiary of KLK ("Sale Shares");

- EPO transferred its circa $6.2 million of outstanding debt owed to EPO by LPD ("Loan Novation"), to KLK Agro Plantations; and

- The consideration of the Sale Shares and the Loan Novation was £1.

Shareholders approved the disposal on 9 June 2020, with completion occurring on 11 June 2020, after which the Company sought to identify a suitable reverse takeover transaction.

On 20 August 2020, the Company announced that it had completed a placing of 100,000,000 shares ("Placing Shares") at 0.4 pence ("Placing Price") per share to raise £400,000. The placing of the shares was conditional on approval being given for a re-organisation of the Company's share capital to reduce the nominal of value of the Company's ordinary shares to 0.01 pence per ordinary share at a general meeting of the Company. Approval was given by shareholders at the general meeting on 8 September 2020. Pursuant to the placing Brandon Hill Capital Ltd was appointed as joint broker. Brandon Hill has been issued with 5,000,000 broker warrants exercisable at the Placing Price for a period of 3 years from Admission of the Placing Shares.

Net proceeds from the placing were to be used by the Company to explore corporate opportunities and for working capital purposes.

Board and Advisor Changes

With the Company becoming an AIM Rule 15 cash shell, it was deemed prudent to reduce the number of board members of the Company. Accordingly, on 18 June 2020, Mr Lee Oi Hian and Mr Lee Guo Zhang and on 3 September 2020 Ms Yap Miow Kien and Mr Patrick Kee Chuan Peng, all Non-Executive Directors of the Company resigned as Directors.

On 3 September 2020, the Company appointed Mr Teh Kwan Wey as a Non-Executive Director. Kwan Wey is a Malaysian National and graduated with a Masters of Engineering, in Chemical Engineering from Imperial College London in 2006. After graduating, Kwan Wey remained in the UK and worked in investment banking before returning to Malaysia to join Kuala Lumpur Kepong Berhad ("KLK") in 2009. He is currently the General Manager (Corporate) of KLK and holds multiple corporate related responsibilities within KLK. Kwan Wey is also a director of many of KLK's subsidiaries. KLK is the major shareholder in the Company.

The Company expresses its gratitude to the recently retired directors for all their support and guidance over the years and wishes them well in their future endeavours. We welcome Kwan Wey as a director of the Company.

On 26 June 2020, SPARK Advisory Partners Limited were appointed as the Company's nominated adviser.

Financial Review

The loss of the Group for the year ended 30 September 2020 was $6,211,000 (year ended 30 September 2019: US$15,131,000). The majority of the loss comprised the disposal of the interest in its investment in associate LPD, of $6,037,000. In the prior year, the majority of the loss was the Company's share of the loss in associate, LPD, of $15,090,000 (which was predominantly the impairment of assets at Butaw Estate).

Cash held by the Group as at 30 September 2020 was US$1,172,000 (30 September 2019: US$651,000).

Post period end

On 21 October 2020, the Company announced that it has reached conditional agreement with parties holding a majority of the shares (51.4 per cent.) ("CML Majority") of Capital Metals Limited ("CML"), a company developing a high grade mineral sands project in Sri Lanka, to acquire their shares in CML ("CML Shares") in exchange for ordinary shares in the Company ("Ordinary Shares").

In accordance with Rule 14 of the AIM Rules, the Company's Ordinary Shares were suspended from trading on AIM with effect from 7.30 a.m. on 21 October 2020. Trading in the Company's Ordinary Shares will remain suspended until the time at which shareholders approve the acquisition in General Meeting, subject to the provisions of AIM Rule 15.

Outlook

The Company is looking forward to completing the proposed share-for-share acquisition of Capital Metals Limited and we believe this acquisition will prove very attractive for all shareholders. The mineral sands market is robust and the CML project has a high grade resource in comparison to its peers.

The Company believes that the current COVID-19 situation globally will have nil effect to the Company.

The next 12 months should prove to be an exciting time for the Company and I look forward to updating our shareholders on further progress and developments. I would like to take this opportunity to thank my fellow directors, advisers, stakeholders and all our shareholders for their continued support.

Michael Frayne

CHAIRMAN

13 December 2020

STRATEGIC REPORT

Performance and Outlook

The development, performance, financial position and outlook of the Company are discussed in the Chairman's Statement on pages 3 to 4

Key performance indicators and milestones

The key performance indicators and milestones for EPO and its subsidiaries (the "Group") provide a measure of our performance against the key drivers of our strategy.

The key performance indicators of the Group for the reported period include:

· The Company overheads being kept minimal upon the Company becoming an AIM Rule 15 cash shell.

The milestones of the Group for the reported period was;

· £400,000 raised from sophisticated shareholders to further corporate actions

Section 172 Statement

Section 172 of the Companies Act 2006 requires Directors to take into consideration the interests of stakeholders and other matters in their decision making. The Directors continue to have regard to the interests of the Company's employees and other stakeholders, the impact of its activities on the community, the environment and the Company's reputation for good business conduct, when making decisions. In this context, acting in good faith and fairly, the Directors consider what is most likely to promote the success of the Company for its members in the long term. We explain in this annual report, and reference below, how the Board engages with stakeholders.

Likely consequences of any decisions in the long term

The Chairman's Statements at pages 3-4 in this Annual Report, set out the Company's long-term rationale and strategy.

Interests of Employees

The Company's Corporate Governance Statement at pages 10-14 of this Annual Report sets out (under board responsibilities) the processes in place to safeguard the interests of employees.

Foster business relationships with suppliers, joint venture partners and others

Potential suppliers and joint venture partners are considered in the light of their suitability to comply with the Company's policies.

Impact of operations on the community and environment

The Company has no current operations that impact upon the community or environment. However, prior to the disposal of its interest in LPD, through its partner KLK, produced Sustainability Reports, that described the Company's ongoing community work and illustrated its corporate social responsibility ("CSR") policies.

If completion of the transaction with CML occurs, the Company has a commitment to ensure future operations are conducted with as limited as possible environmental impact, with CML in continual discussions with all stakeholders with respect to the Sri Lankan project.

The Company regularly reviews its Health, Safety & Environment ('HSE') and other policies and works responsibly with suppliers, and performance is monitored on an on-going basis.

Maintain a reputation for high standards of business conduct

The Corporate Governance section of this Annual Report at pages 10-14 sets out the Board and Committee structures and extensive Board and Committee meetings held during the year, together with the experience of executive management and the Board and the Company's policies and procedures.

Act fairly as between members of the Company

The Board takes feedback from a wide range of shareholders (large and small) and endeavours at every opportunity to pro‐actively engage with all shareholders (via regular news reporting‐RNS) and engage with any specific shareholders in response to particular queries they may have from time to time. The Board considers that its key decisions during the year have impacted equally on all members of the Company.

Business Risks and Uncertainties

Going concern and financial risks are discussed in Note 1 and Note 7 respectively. Going concern is also set out in the Directors' Report on page 9-10.

Although the acquisition of CML has not completed and is conditional on a number of matters, the Group has set out some risks relating to the Company and CML ("Enlarged Group").

If the acquisition of CML did not proceed the risks primarily relate to

Financing

The Company is to remain cashflow negative for some time and the Company may need to raise additional funds for working capital purposes.

AIM Listing Status

If the Company does not complete the proposed acquisitions, or a subsequent acquisition, within the time specified by the AIM Rules the Company may become delisted from AIM.

If the transaction completes, the Company and CML ("Enlarged Group") has identified certain other risks to the Enlarged Group's business including:

COVID-19

The COVID-19 outbreak in 2020 could have an adverse effect on the Company's business. Concerns are rapidly growing about the global outbreak of COVID-19. The virus has spread rapidly across the globe, including in the continents of Europe and North America. The pandemic is having an unprecedented impact on the global economy as the respective levels of government react to this public health crisis, which has created significant uncertainties. As the pandemic continues to grow, consumer fears about becoming ill with the virus and recommendations and/or mandates from authorities to avoid large gatherings of people or self-quarantine may continue to increase, which has already affected, and may continue to affect economic activity generally. The extent of the impact of the pandemic on the Company's business, results of operations, financial condition or prospects will depend largely on future developments, including the duration of the spread of the outbreak, the impact on capital and financial markets and the related impact on consumer behaviour, all of which are highly uncertain and cannot be predicted. This situation is changing rapidly, and additional impacts may arise of which the Company is not aware currently, however as at the date of the signing of the financial statement has not had any impact on the Company.

Government regulation and political risk

CML's operating activities are subject to laws and regulations governing expropriation of property, health and worker safety, employment standards, waste disposal, protection of the environment, mine development, land and water use, prospecting, mineral production, exports, taxes, labour standards, occupational health standards, toxic wastes, the protection of endangered and protected species and other matters in Sri Lanka. While CML believes that it is in substantial compliance with all material current laws and regulations affecting its activities, future changes in applicable laws, regulations, agreements or changes in their enforcement or regulatory interpretation could result in changes in legal requirements or in the terms of existing permits and agreements applicable to the CML or its properties, which could have a material adverse impact on the CML's current operations or planned exploration and development projects. Where required, obtaining necessary permits and licenses can be a complex, time consuming process and CML cannot assure whether any necessary permits will be obtainable on acceptable terms, in a timely manner or at all. The costs and delays associated with obtaining necessary permits and complying with these permits and applicable laws and regulations could stop or materially delay or restrict CML from proceeding with any future exploration or development of its properties. Any failure to comply with applicable laws and regulations or permits, even if inadvertent, could result in interruption or closure of exploration, development or mining operations or material fines, penalties or other liabilities. The CML project is located in Sri Lanka. CML's activities may be affected in varying degrees by political stability and governmental regulations. Any changes in regulations or shifts in political attitudes in these countries or any other countries in which CML may operate are beyond the control of CML and may adversely affect its operations.

Early stage of operations

CML's operations are at an early stage of development. The success of CML will depend on its ability to manage the project in Sri Lanka and to take advantage of further opportunities which may arise. On Admission, the CML will have no properties producing positive cash flow and its ultimate success will depend on its ability to generate cash flow from active mining operations in the future and its ability to access capital markets for its significant funding requirements. Significant capital investment will be required to achieve commercial production. Losses are likely to occur in the near future and there can be no assurance that CML will be profitable in the future.

Mineral, metallurgical, and geological risks

Heavy minerals have been exploited in several areas of Sri Lanka, however limited exploration has been undertaken in the South East region of Sri Lanka, where the Project Licenses are located. There is limited additional information on the mineralogy of heavy minerals within the Project area other than that acquired by CML. To date, most of the exploration has been undertaken by auger drilling to a maximum depth of three metres and only recent drilling has indicated to what depth the valuable mineral sands extend. The assumptions currently adopted by engaged consultants in the Mineral Resource Estimate for the Project may prove to be wrong; impacting the proposed development programme accordingly.

Environmental regulation

Environmental and safety legislation (e.g. in relation to reclamation, disposal of waste products, protection of wildlife and otherwise relating to environmental protection) may change in a manner that may require stricter or additional standards than those now in effect, a heightened degree of responsibility for companies and their directors and employees and more stringent enforcement of existing laws and regulations. There may also be unforeseen environmental liabilities resulting from exploration or mining activities, which may be costly to remedy. If CML is unable to fully remedy an environmental problem, it may be required to stop or suspend operations or enter into interim compliance measures pending completion of the required remedy. The potential exposure may be significant and could have a material adverse effect on CML. CML has not purchased insurance for environmental risks (including potential liability for pollution or other hazards as a result of the disposal of waste products occurring from exploration and production) as it is not generally available at a price which CML regards as reasonable.

Financing

CML is also likely to remain cash flow negative for some time and, although the Directors have confidence in the future revenue earning potential of CML from its interests in the Project, there can be no certainty that CML will achieve or sustain profitability or positive cash flow from its operating activities.

CML will need to raise additional capital to fund the development of the Project to the point at which it becomes operational, and future heavy mineral prices, revenues, taxes, capital expenditures and operating expenses and geological success will all be factors which will have an impact on the amount of additional capital required. Additionally, if CML acquires further exploration assets or is granted additional permits, exploration licenses this may increase its financial commitments in respect of the Enlarged Group's exploration activities.

If CML is unable to obtain additional financing as and when needed, it could result in a delay or postponement of the Project.

This financing risk should be read in conjunction with the Going Concern note 1 in the financial statements.

This report was approved by order of the board on 13 December 2020.

Michael Frayne

Chairman

Directors' Report

The Directors present their report together with the audited financial statements of Equatorial Palm Oil plc and its subsidiaries (the "Group") for the year ended 30 September 2020.

Principal Activities

Up until the disposal of the Company's interest in LPD, the principal activity of the Group was the cultivation of oil palms for the production of crude palm oil and associated products in Liberia.

Subsequent to the disposal of the Company's interest in LPD, The principal activity of the Company would be classified as an AIM Rule 15 cash shell and, as such, the Company is required to make an acquisition or acquisitions which constitute a reverse takeover under AIM Rule 14 (or seek re-admission as an investing company (as defined under the AIM Rules)), on or before the date falling six months from completion of the Disposal, failing which, the Company's Ordinary Shares would be suspended from trading on AIM pursuant to AIM Rule 40. Admission of the Company's Ordinary Shares to trading on AIM would be cancelled six months from the date of suspension should the Company not complete such a transaction during this time.

Results and Dividends

The loss of the Group after taxation for the 12 months ended 30 September 2020 amounted to $6,211,000 (12 months ended 30 September 2019: Loss of $15,131,000).

The Directors do not propose the payment of a dividend (2019: nil).

Directors

The Directors who served during the year ended 30 September 2020 are as follows:

· Michael Frayne

· Geoffrey Brown

· Teh Kwan Wey - appointed 3 September 2020

· Lee Oi Hian - resigned 18 June 2020

· Yap Miow Kien - resigned 3 September 2020

· Lee Guo Zhang - resigned 18 June 2020

· Patrick Kee Chuan Peng - resigned 3 September 2020

Insurance

The Group maintained insurance in respect of its Directors and Officers against liabilities in relation to the Group.

Financial Instruments

Financial instrument risks are discussed in Note 7.

Events after the Reporting Period

Significant events after the reporting period, being 30 September 2020, but before the approval of these financial statements, are set out in Note 21.

Going Concern

The financial statements have been prepared on a going concern basis.

The Directors have prepared a cash flow forecast for the period ending 31 March 2022, which considers the cash held by the Group at the year end, less future administrative and planned expenditure.

The forecasts do not assume that additional cash will be raised by the Company or that the CML transaction will complete. These forecasts show that the Company currently has sufficient cash to pay the overheads of a cash shell throughout the forecast period.

On 21 October 2020, the Company announced that it has reached conditional agreement with parties holding a majority of the shares (51.4 per cent.) ("CML Majority") of Capital Metals Limited ("CML"), a company developing a high grade mineral sands project in Sri Lanka, to acquire their shares in CML ("CML Shares") in exchange for ordinary shares in the Company ("Ordinary Shares").

In accordance with Rule 14 of the AIM Rules, the Company's Ordinary Shares were suspended from trading on AIM with effect from 7.30 a.m. on 21 October 2020. Trading in the Company's Ordinary Shares will remain suspended until the time at which shareholders approve the acquisition in General Meeting, subject to the provisions of AIM Rule 15.

The Board are planning to raise sufficient funds to cover the working capital requirements of CML before they complete the transaction. There is a risk that the transaction will not complete if there is no successful fundraising. As the Board will have to approve the finalisation of the transaction, there is currently no commitment to make this acquisition. Management have therefore prepared the base cash flow forecast on the basis that the CML transaction will not complete. If the Board were to approve the acquisition, the Group and Company would require additional funding.

Based upon the Group and Company's current cash balance and forecast expenditure, the Directors consider that the Group and Company will have sufficient cash to fund ongoing commitments for a period of at least a year after the approval of these financial statements.

Employment Policies and Remuneration

The Group is committed to promoting policies which ensure that high calibre employees are attracted, retained and motivated, to ensure ongoing success for the business. Employees and those who seek to work with the Group are treated equally regardless of sex, marital status, creed, age, colour, race or ethnic origin.

The Company remunerates the Directors at a level commensurate with the size of the Company and the experience of its Directors. The Remuneration Committee has reviewed the Directors' remuneration and believes it upholds the objectives of the Company with regards to this issue.

Details of Directors' emoluments and payments made for professional services rendered are set out in Note 4 of the financial statements.

Health & Safety

The Group's aim is to maintain its record of workplace safety. In order to achieve this objective, the Group provides training and support to employees and sets demanding standards for workplace safety.

Auditors

The Company's auditor, BDO LLP, will be proposed for reappointment in accordance with Section 485 of the Companies Act 2006. BDO has signified its willingness to continue in office as auditor.

Corporate Governance

The Directors are committed to maintaining high standards of corporate governance. The Directors have established procedures, so far as is practicable given the Company's size, to comply with the QCA Corporate Governance Code (the "QCA Code"). The Board recognises the principles of the QCA Code, which focus on the creation of medium to long-term value for shareholders without stifling the entrepreneurial spirit in which small to medium sized companies, such as EPO, have been created. The specific areas of the QCA Code with which the Company does not apply are set out below (and within the Corporate Governance section on the Company's website - www.epoil.co.uk).

The Company has adopted and operates a share dealing code for Directors and senior employees on substantially the same terms as the Model Code, which is appended to the Listing Rules of the UKLA.

The Board

The Board holds regular meetings and is responsible for formulating, reviewing and approving EPO's strategy, budgets and corporate actions and overseeing the Company's progress towards its goals. To enable the Board to perform its duties, each of the Directors has full access to all relevant information and to the services of the Company Secretary. If necessary, the Non-Executive Directors may take independent professional advice at the Company's expense. The Board currently includes two Non-Executive Directors. Full biographies for each Director are as follows:

Mr Michael Frayne

Executive Chairman

Michael holds a Bachelor of Commerce Degree majoring in accounting and finance, a Bachelor of Science Degree majoring in Geology and a Postgraduate Diploma in Applied Finance and Investment from the Securities Institute of Australia. He is a Chartered Accountant and a member of the Australian Institute of Mining and Metallurgy. Michael previously worked for Ernst & Young and consulted to a number of resource and commodity companies. Following this, he worked directly in the resource industry and spent time at Great Central Mines Ltd (now part of Newmont Ltd) and in the corporate team at Minara Resources Ltd (formerly Anaconda Nickel Ltd). Since 2002, Michael has provided corporate management and advice to the resource, commodity and energy sectors, successfully listing several companies with projects in Australia, Southern Africa, Asia, North and South America, onto AIM and the Australian Stock Exchange.

Mr Geoffrey Brown

Non-Executive Director

Geoffrey Brown has over 55 years' experience in the plantation sector. He joined Harrisons & Crosfield plc in Malaysia in 1962 where he was employed on various estates growing oil palm and rubber. He moved to Indonesia in 1976 and was made responsible for Harrisons & Crosfield's interests in that country. He was appointed Executive Chairman of London Sumatra Indonesia in 1982 and remained Managing Director of this large Indonesian plantation company until 1998. In 1990, he was appointed an Executive Director of Harrisons & Crosfield plc, responsible for the plantation division. Harrisons & Crosfield plc owned and managed plantations of rubber, oil palms, cocoa, coffee and tea in Indonesia, and oil palm and coffee in Papua New Guinea. He remained an Executive Director of Harrisons & Crosfield plc until the company divested itself of its plantation interests in 1994. In 1999 and 2000, he co-ordinated the expansion of oil palm plantations belonging to the Musim Mas Group in Indonesia and then became a consultant specialising in plantation management. In 2006 he joined the EPO group of companies and has been an Executive Director of EPO since the company was listed on the AIM market of the London Stock Exchange in in 2010. He became a non-executive director of the Company on 1 November 2019

Mr Teh Kwan Wey - appointed 3 September 2020

Non-Executive Director

Mr Teh Kwan Wey was appointed as a Non-Executive Director of the Company in September 2020. He is General Manager (Corporate) for KLK in Malaysia where he is responsible for in house corporate finance advisory and execution including acquisitions, divestments, fund raising and due diligence. Prior to this Mr Teh spent three years at Lazard in the London Financial Advisory team where he worked on a number of equity capital, M&A and LBO transactions for clients across Europe, North America, the Middle East and Asia. Mr Teh holds a Master of Engineering degree from Imperial College London.

Mr Lee Oi Hian - resigned 18 June 2020

Non-Executive Director

Mr Lee Oi Hian has been the Chief Executive Officer of KLK since 2001. He joined the Company in 1974 as an executive and was appointed to the Board of KLK in 1985. In 1988, he was appointed as Managing Director and became Chairman of KLK Group in 1993. He subsequently held the post of joint Chairman and Chief Executive Officer until 2008, when he relinquished his role as Chairman, remaining as Chief Executive Officer of the Group. He has served in various positions in the plantations industry, including the Malaysian Palm Oil Council, the Malaysian Palm Oil Board and the Malaysian Cocoa Board. He is also currently the Chairman of Batu Kawan Berhad, and a trustee of several charitable organisations. Mr Lee Oi Hian is also an Honorary Fellow of the Malaysian Oil Scientists' and Technologies' Association (MOSTA) and Honorary Fellow of the Incorporated Society of Planters (FISP).

Ms Yap Miow Kien - resigned 3 September 2020

Non-Executive Director

Ms Yap Miow Kien joined KLK in 2002 and is currently its Company Secretary and Senior General Manager (Legal and Secretariat). Prior to joining KLK, Ms Yap was a partner in a law firm. She is an Associate of the Malaysian Institute of Chartered Secretaries and Administrators. She was called to the bar at Middle Temple and completed a Bachelor of Law (Hons) at the University of Leeds.

Mr Lee Guo Zhang - resigned 18 June 2020

Non-Executive Director

Mr Lee Guo Zhang graduated with a bachelor's degree in Medicinal & Biological Chemistry from the University of Nottingham in 2009. He joined KLK in 2010 as an executive and has experience across various departments in the Company. He is currently Assistant General Manager in the Plantations Division.

Mr Patrick Kee Chuan Peng - resigned 3 September 2020

Non-Executive Director

Mr Patrick Kee Chuan Peng has served KLK's subsidiaries in various capacities from Assistant, Manager, General Manager to Regional Director in West Malaysia, Sabah and Indonesia. He is an Associate Member of the Incorporated Society of Planters. He has also attended the Senior Management Development Programme conducted by Harvard Business School and Advance Management Programme of INSEAD.

The Board is satisfied that it has a suitable balance between independence on the one hand, and knowledge of the Company on the other, to enable it to discharge its duties and responsibilities effectively, and that all Directors have adequate time to fill their roles.

The role of the Chairman is to provide leadership of the Board and ensure its effectiveness on all aspects of its remit to maintain control of the Group. In addition, the Chairman is responsible for the implementation and practice of sound corporate governance.

The Board has delegated specific responsibilities to the committees, with clearly defined terms of reference which are set out by the Board, as described below.

The Audit Committee

The Company has established an Audit Committee, which comprises three Directors, Mr Teh Kwan Wey, Mr Michael Frayne and is chaired by Mr Geoffrey Brown. The Audit Committee meets at least twice each year and at any other time when it is appropriate to consider and discuss audit and accounting related issues. The Audit Committee is responsible for monitoring the quality of internal controls and for ensuring that the financial performance of the Company is properly monitored, controlled and reported on. It reviews a wide range of matters, including half-year and annual results before their submission to the Board. It also meets the Company's auditor without the executive Board members present and reviews reports from the auditor relating to accounts and internal control systems.

The Remuneration Committee

The Company has established a Remuneration Committee, which comprises two Directors, Mr Geoffrey Brown and is chaired by Mr Teh Kwan Wey. The Remuneration Committee reviews the performance of the Executive Director(s) and sets the scale and structure of their remuneration and the basis of their service agreements with due regard to the interests of shareholders. In determining the remuneration of Executive Directors, the Remuneration Committee seeks to enable the Company to attract and retain executives of the highest calibre. The Remuneration Committee also makes recommendations to the Board concerning the allocation of share options, bonus schemes, pension rights and compensation payments. No Director is permitted to participate in discussions or decisions concerning their own remuneration.

The Nominations Committee

The Company has established a Nominations Committee, which comprises two Directors, Mr Geoffrey Brown and is chaired by Mr Teh Kwan Wey. This Committee reviews the structure, size and composition (including the skills, knowledge and experience) required of the Board compared to its current position and makes recommendations to the Board with regard to any changes. In addition, it gives full consideration to succession planning for Directors and other senior executives, and is responsible for identifying, evaluating and nominating Board candidates. It also reviews annually the time required from Non-Executive Directors.

Application of the QCA Code

In the spirit of the QCA Code, it is the Board's job to ensure that the Group is managed for the long-term benefit of all shareholders and other stakeholders with effective and efficient decision-making. Corporate governance is an important part of that job, reducing risk and adding value to the Group. The Board will continue to monitor the governance framework of the Group as it grows.

The Company remains committed to listening to, and communicating openly with, its shareholders to ensure that its strategy, business model and performance are clearly understood. The AGM is a forum for shareholders to engage in dialogue with the Board. The results of the AGM will be published via RNS and on the Company's website. In addition, the Board organises update meetings with both the shareholders and the Company's joint brokers. Progress reports are also made via RNS.

The Directors are responsible for EPO's system of internal controls and reviewing its effectiveness. Although, no system of internal control can completely eliminate the risk of failure to achieve business objectives or provide absolute assurance against material misstatement or loss, the Company's controls are designed to provide reasonable assurance over the reliability of financial information and EPO's assets.

Departure from the QCA Code:

In accordance with the AIM Rules for Companies, EPO departs from the QCA Code in the following ways:

Principle 5 - "Maintain the board as a well-functioning, balanced team led by the chair"

The QCA Code recommends that the Board has at least two independent Non-Executive Directors. EPO only has one non-executive director who is deemed by the Board to be independent, being Geoffrey Brown, notwithstanding his prior tenure as an executive director.

The Board strives to foster an attitude of independence of character and judgement. An example of this is where there is a related party transaction. In this instance a detailed Working Paper is drawn up for the Non-Related Directors to ensure that the transaction is fair and reasonable in all respects. Both the Company's lawyers and the Nomad are also consulted as part of the Non-Related Directors' deliberations.

The QCA Code recommends the Remuneration Committee should be comprised of independent directors. The Company's Remuneration Committee is currently made up of one independent non-executive director and one non-executive director from KLK. The Board believes the composition of the Remuneration Committee is suitable.

Principle 7 - "Evaluate board performance based on clear and relevant objectives, seeking continuous improvement"

EPO's Board is small and extremely focussed on implementing the Company's strategy. However, given the size and nature of EPO, the Board does not consider it appropriate to have a formal performance evaluation procedure in place, as described and recommended in Principle 7 of the QCA Code. The Board will closely monitor the need for formal performance evaluation, in light of Principle 7 of the QCA Code, as the Company develops.

Control Procedures

The Board has approved financial budgets and cash forecasts. In addition, it has implemented procedures to ensure compliance with accounting standards and effective reporting.

Provision of information to auditor

As far as the Directors are aware, there is no relevant audit information of which the Company's auditor is unaware. Each Director has taken appropriate steps to ensure that they are aware of such relevant information, and that the Company's auditors is aware of that information.

Annual General Meeting

This report and financial statements will be presented to shareholders for their approval at an Annual General Meeting ("AGM"). The Notice of the AGM will be distributed to shareholders together with the Annual Report.

By order of the Board

Michael Frayne

Chairman

 13 December 2020

STATEMENT OF Directors' RESPONSIBILITIES

The directors are responsible for preparing the Strategic Report, the Directors Report of the directors and the Financial Statements of the Group and the Company 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 have elected to prepare both the Group and parent Company Financial Statements in accordance with International Financial Reporting Standards ("IFRSs"), as adopted by the European Union. 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 and profit or loss of the Company and of 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 applicable IFRS's have been followed in the Group Financial Statements, subject to any material departures disclosed and explained in the Financial Statements; and

· prepare the Financial Statements on the going concern basis unless it is inappropriate to presume that the Company and the Group will continue in business.

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 the Group and to enable them to ensure that Financial Statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Directors confirm that:

· so far as each Director is aware, there is no relevant audit information of which the Group's auditor is unaware, and

· the directors have taken all steps that they ought to have taken as Directors in order to make themselves aware of any relevant audit information and to establish that the auditor is aware of that information.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the EPO website. Legislation in the United Kingdom governing the preparation and dissemination of the Financial Statements may differ from legislation in other jurisdictions. The work carried out by the auditor does not involve the consideration of the maintenance and integrity of the website and, accordingly, the auditor accepts no responsibility for any changes that may have occurred in the Financial Statements since they were initially presented on the Company's website.

They are further responsible for ensuring that the Strategic Report and the Directors' Report and other information included in the Annual Report and Financial Statements is prepared in accordance with applicable law in the United Kingdom.

By order of the Board

Michael Frayne

Chairman

13 December 2020

Independent auditor's report to the members of Equatorial Palm Oil plc

Opinion

We have audited the financial statements of Equatorial Palm Oil plc (the 'parent Company') and its subsidiaries (the 'Group') for the year ended 30 September 2020 which comprise the Group Statement of Comprehensive Income, the Group Statement of Financial Position, the Company Statement of Financial Position, the Group and Company Statement of Cash Flows, the Group Statement of Changes in Equity, the Company Statement of Changes in Equity and notes to the financial statements, including a summary of significant accounting policies.

The financial reporting framework that has been applied in the preparation of the financial statements is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union and, as regards the parent Company financial statements, as applied in accordance with the provisions of the Companies Act 2006.

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 30 September 2020 and of the Group's loss for the year then ended;

· the Group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union;

· the parent Company financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006; and

· the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the Group and the parent Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you were:

· the directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or

· the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the Group's or the parent Company's ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

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 based on the financial statements. Importantly, misstatements below these levels will not necessarily be evaluated as immaterial as we also take into account the nature of identified misstatements, and the particular circumstances of their occurrence, when evaluating their effect on the financial statements as a whole.

EPO disposed of their interest in Liberian Palm Development Limited (LPD) during the year and became a cash shell. Based on this we consider the total assets of the Group to be an appropriate basis of materiality for the current year.

The materiality for the Financial Statements as a whole was USD 24,000 (FY 2019: USD 1.5 million), and the Group has one significant component, the parent Company, whose materiality was set at USD 23,000 (FY 2019: USD 1 million) using a benchmark of 96% of Group materiality,

Performance materiality is the application of materiality at the individual account or balance level set at an amount to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality for the financial statements as a whole. Performance materiality for the Group and parent Company was set at USD 18,000 (2019: USD 1.1million) and USD 17,000 (2019: USD 750,000) respectively. This was based on 75% of materiality.

We agreed with the audit committee that we would report to them all individual audit differences identified during the course of our audit in excess of USD 480 (2019: USD 75,000). 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

Our Group audit was scoped by obtaining an understanding of the Group and its environment, including the Group's system of internal control, and assessing the risks of material misstatement in the financial statements. We also addressed the risk of management override of internal controls, including assessing whether there was evidence of bias by the Directors that may have represented a risk of material misstatement.

Whilst EPO is an AIM listed company, the Group disposed of their interest in Liberian Palm Development Limited (LPD) during the year and became a cash shell. We assessed there to be one significant component being the parent Company.

A full scope audit was performed on the significant component by BDO LLP.

Other components, prior to disposal of LPD, were assessed as non-significant and subject to analytical review procedures carried out by BDO LLP.

Other information

The directors are responsible for the other information. The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, 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

· the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.

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 or the directors' report.

We have nothing to report in respect of the following matters in relation to which 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 are not in agreement with the accounting records and returns; or

· certain disclosures of directors' remuneration specified by law are not made; or

· we have not received all the information and explanations we require for our audit.

Responsibilities of directors

As explained in more fully in the statement of directors' responsibilities set out on page 17, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the Group's and the parent Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or the parent Company or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.

Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

Use of our report

This report is made solely to the Parent 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 Parent 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 Parent Company and the Parent Company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Jack Draycott (Senior Statutory Auditor)

For and on behalf of BDO LLP, Statutory Auditor

London, United Kingdom

13 December 2020

BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).

GROUP Statement OF COMPREHENSIVE INCOME

The notes on pages 27 to 47 form part of these financial statements.

Group STATEMENT OF FINANCIAL POSITION

Registered Number 05555087

The financial statements were approved by the Board of Directors on 13 December 2020 and were signed on its behalf by:

Michael Frayne

Chairman

The notes on pages 27 to 47 form part of these financial statements.

COmpany STATEMENT OF FINANCIAL POSITION

Registered Number 05555087

As permitted by section 408 of the Companies Act 2006, the statement of comprehensive income of the Company has not been separately presented in these financial statements. The Company loss for the year was $6,367,000 (2019: $15,534,000).

The financial statements were approved by the Board of Directors on 13 December 2020 and were signed on its behalf by:

Michael Frayne

Chairman

The notes on pages 27 to 47 form part of these financial statements.

GROUP AND COMPANY STATEMENT OF Cash FlowS

The notes on pages 27 to 47 form part of these financial statements.

GROUP Statement of Changes IN EQUITY

The following describes the nature and purpose of each reserve within owners' equity:

The notes on pages 27 to 47 form part of these financial statements.

COMPANY Statement of Changes IN EQUITY

The following describes the nature and purpose of each reserve within owners' equity:

The notes on pages 27 to 47 form part of these financial statements.

1. Summary of Significant Accounting Policies

The principal accounting policies are summarised below. They have all been applied consistently throughout the period.

Authorisation of financial statements

The consolidated financial statements of EPO, a company registered in England and Wales with registered address being 6th Floor, 60 Gracechurch Street, London, United Kingdom, EC3V 0HR, for the year ended 30 September 2020 were authorised for issue by the Board of Directors on 13 December 2020 and the statements of financial position signed on the Board's behalf by Michael Frayne.

Basis of preparation

These financial statements have been prepared under the historical cost convention and in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union and IFRIC interpretations and with those parts of the Companies Act, 2006 applicable to companies reporting under IFRS.

The financial statements have been prepared to the nearest $'000.

These financial statements have been prepared on a going concern basis, as disclosed in the Directors' Report.

Going concern

The financial statements have been prepared on a going concern basis.

The Directors have prepared a cash flow forecast for the period ending 31 March 2022, which considers the cash held by the Group at the year end, less future administrative and planned expenditure.

The forecasts do not assume that additional cash will be raised by the Company or that the CML transaction will complete. These forecasts show that the Company currently has sufficient cash to pay the overheads of a cash shell throughout the forecast period.

On 21 October 2020, the Company announced that it has reached conditional agreement with parties holding a majority of the shares (51.4 per cent.) ("CML Majority") of Capital Metals Limited ("CML"), a company developing a high grade mineral sands project in Sri Lanka, to acquire their shares in CML ("CML Shares") in exchange for ordinary shares in the Company ("Ordinary Shares").

In accordance with Rule 14 of the AIM Rules, the Company's Ordinary Shares were suspended from trading on AIM with effect from 7.30 a.m. on 21 October 2020. Trading in the Company's Ordinary Shares will remain suspended until the time at which shareholders approve the acquisition in General Meeting, subject to the provisions of AIM Rule 15.

The Board are planning to raise sufficient funds to cover the working capital requirements of CML before they complete the transaction. There is a risk that the transaction will not complete if there is no successful fundraising. As the Board will have to approve the finalisation of the transaction, there is currently no commitment to make this acquisition. Management have therefore prepared the base cash flow forecast on the basis that the CML transaction will not complete. If the Board were to approve the acquisition, the Group and Company would require additional funding.

Based upon the Group and Company's current cash balance and forecast expenditure, the Directors consider that the Group and Company will have sufficient cash to fund ongoing commitments for a period of at least a year after the approval of these financial statements.

Basis of consolidation

Where the Company has control over an investee, it is classified as a subsidiary. The Company controls an investee if all three of the following elements are present: power over the investee; exposure to variable returns from the investee; and the ability of the investor to use its power to affect those variable returns. Control is reassessed whenever facts and circumstances indicate that there may be a change in any of these elements of control. The consolidated financial statements comprise the financial statements of the Company and its subsidiaries (the "Group"). The financial statements of the subsidiaries are prepared for the same reporting period as the parent Company, using consistent accounting policies.

All intra-group balances, transactions, income and expenses and profits and losses resulting from intra-group transactions, are eliminated in full.

Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases.

Foreign currency translation

(i) Functional and presentation currency

Items included in the individual financial statements of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operated ('the functional currency') for the majority of the current year up until the time of the disposal of its interest in LPD. The consolidated financial statements are presented in US Dollars, which is EPO's presentation currency and differs from its functional currency, which is Sterling. The Company's strategy was focused on developing its investment in Liberian oil palm funded by shareholder equity which are principally denominated in Sterling. The Company's associate operations were funded by shareholder equity and other financial liabilities, which were principally denominated in US dollars. Following on the conversion of the Company to an AIM Rule 15 cash shell as approved by shareholders during the year, the Company announced the proposed RTO of Capital Metals Limited ("CML"), a company developing a mineral sands project in Sri Lanka. CML's functional currency is US Dollars, hence the Company will maintain the US dollar as its functional currency.

(ii) Transactions and balances

Transactions denominated in a foreign currency are translated into the functional currency at the exchange rate at the date of the transaction. Assets and liabilities in foreign currencies are translated to the functional currency at rates of exchange ruling at the reporting date. Gains or losses arising from settlement of transactions and from translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the statement of comprehensive income for the period.

(iii) Group companies

The results and financial position of all the Group entities that have a functional currency different from the presentation currency were translated into the presentation currency as follows:

- assets and liabilities for each statement of financial position presented were translated at the closing rate at the date of the statement of financial position;

- income and expenses for each statement of comprehensive income were translated at the average exchange rate; and

- all resulting exchange differences were recognised as a separate component of equity.

On consolidation, exchange differences arising from the translation of the net investment in foreign operations was taken to shareholders' equity. When a foreign operation is partially disposed or sold, exchange differences that were recorded in equity were recognised in the statement of comprehensive income as part of the gain or loss on sale.

Investment in associate

The Group's interest in LPD is disclosed in Note 8. This investment was included in the financial statements and accounted for using the equity method. The Group's share of the gains or losses of LPD were included within the statement of comprehensive income, except for exchange gains and losses on translation. Where the Group's share of the loss of LPD is in excess of the carrying value of the Group's investment in LPD, the share of the Group's loss that is recognised by the Group was limited to the total carrying value of its investment. LPD prepared financial statements in accordance with the Group's accounting policies.

In the Company only financial statements investments in subsidiary undertakings are stated at cost less any provision for impairment in value.

During the year, the Group disposed of its interest in LPD, hence as at 30 September 2020, there was no investment in associate, which had been impaired fully during the prior year.

Impairment of non-financial assets

Non-financial assets are subject to impairment tests whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. Where the carrying value of an asset exceeds its recoverable amount (i.e. the higher of value in use and fair value less costs to sell), the asset is written down accordingly.

Where it is not possible to estimate the recoverable amount of an individual asset, the impairment test is carried out on the smallest group of assets to which it belongs for which there are separately identifiable cash flows/ its cash generating units ('CGUs').

Impairment charges are included in profit or loss, except to the extent they reverse gains previously recognised in other comprehensive income.

Property, plant and equipment

The accounting policies of the Group's associate in respect of property, plant and equipment were:

Property, plant and equipment were stated at cost less accumulated depreciation and any accumulated impairment losses.

Up until the disposal of its 50% interest in LPD during the current year, Palm oil trees before maturity were measured at accumulated cost, and depreciation commenced upon reaching maturity.

Oil palms which were not yet harvestable or not producing fresh fruit bunches ("FFB"), were classified as immature and were valued at cost. This was comprised of all costs such as direct materials, labour and an appropriate proportion of overheads incurred to bring the oil palms to maturity. Once classified as mature, these costs were recognised through profit or loss.

Depreciation was provided on all plant and equipment to write off the cost less estimated residual value of each asset over its expected useful economic life at the following annual rates:

Straight-Line

Bulking Station / Kernel Crusher Plant 10%

Buildings 7%

Plant and Equipment 20% - 33%

Vehicles 20% - 33%

Palm Oil Mill 10%

Palm Oil Trees 5%

Assets under construction were carried within a separate category of property, plant and equipment at cost and were not depreciated until commissioned.

Liberian leasehold (concession) land was depreciated on a straight-line basis over the term of the agreement being 55 years.

Plantation development comprised all plantation development costs such as direct materials, labour and an appropriate proportion of fixed overheads.

Biological Assets

The accounting policies of the Group's associate in respect of Biological assets were:

Up until the disposal of its 50% interest in LPD during the current year, the FFB on the mature oil palms was carried at fair value less cost to sell. Fair value of FFB was determined using the income approach which considers the net cash flow that would be generated from the unharvested FFB. To arrive at the fair value, management considered the oil content of unharvested FFB to be at its highest 15 days prior to harvest, those unharvested FFB more than 15 days prior to harvest were excluded from the valuation as their oil content was considered immaterial.

Revenue Recognition

Up until the disposal of its 50% interest in LPD during the current year, the accounting policies of the Company and Group's associate in respect of revenue recognition are:

IFRS 15 was adopted from 1 October 2018. There were no material changes to the revenue arising from the adoption.

Performance obligations and timing of revenue recognition

EPO's revenue was derived from management services provided to the associate LPD. This revenue was recognised when the management services are provided as per the signed agreement on a quarterly basis.

The associate's revenue was derived from its subsidiary selling oil palm products with revenue recognised at a point in time when control of the oil palm products has transferred to the customer.

This is generally when the products are delivered to the customer. However, for export sales, control is transferred when delivered to the port of departure. This depends on the specific terms of the contract with a customer. There is limited judgement needed in identifying the point control passes: once physical delivery of the products to the agreed location has occurred, the associate no longer has physical possession and retains none of the significant risks and rewards of the products in question.

Determining the transaction price

The Company's and associate's revenue was derived from fixed price contracts, i.e. management fees agreement and oil palm product sale agreements respectively. Therefore, the amount of revenue to be earned from each contract was determined by reference to those fixed prices.

Allocating amounts to performance obligations

For both the management fee agreement and oil palm product sales contract, there was a fixed unit price for services rendered and product sold respectively. Therefore, there was no judgement involved in allocating the contract price to the management services rendered or each oil palm product unit ordered in such contracts of EPO and the associate respectively.

Taxation

The tax expense represents the sum of the tax currently payable and deferred tax. The tax currently payable is based on taxable profit for the period. The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting date.

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit and is accounted for using the statement of financial position liability method. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled, or the asset is realised.

Financial Instruments

The standard requires an entity to address the classification, measurement and recognition of financial assets and liabilities.

a) Classification

The Group classifies its financial assets in the following measurement categories:

· those to be measured subsequently at fair value (either through OCI or through profit or loss); and

· those to be measured at amortised cost.

The classification depends on the Group's business model for managing the financial assets and the contractual terms of the cash flows.

Amortised cost

Management accounts for loan receivables at amortised cost as the objective is to hold these assets in order to collect contractual cash flows and the contractual cash flows are solely payments of principal and interest. They are initially recognised at fair value plus transaction costs that are directly attributable to their acquisition or issue and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment.

Impairment provisions for receivables from related parties and loans to related parties are recognised based on a forward-looking expected credit loss model. The methodology used to determine the amount of the provision is based on whether there has been a significant increase in credit risk since initial recognition of the financial asset.

For those where the credit risk has not increased significantly since initial recognition of the financial asset, twelve month expected credit losses along with gross interest income are recognised. For those for which credit risk has increased significantly, lifetime expected credit losses along with the gross interest income are recognised.

For those that are determined to be credit impaired, lifetime expected credit losses along with interest income on a net basis are recognised.

For assets measured at fair value, gains and losses will be recorded either in profit or loss or in OCI. For investments in equity instruments that are not held for trading, this will depend on whether the Group has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income (FVOCI).

Recognition

Purchases and sales of financial assets are recognised on trade date (that is, the date on which the Group commits to purchase or sell the asset). Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership.

b) Measurement

At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss (FVPL), transaction costs that are directly attributable to the acquisition of the financial asset.

Transaction costs of financial assets carried at FVPL are expensed in profit or loss.

Debt instruments

Amortised cost: Assets that are held for collection of contractual cash flows, where those cash flows represent solely payments of principal and interest, are measured at amortised cost. Interest income from these financial assets is included in finance income using the effective interest rate method. Any gain or loss arising on derecognition is recognised directly in profit or loss and presented in other gains/ (losses) together with foreign exchange gains and losses. Impairment losses are presented as a separate line item in the statement of profit or loss.

Equity instruments

The Group subsequently measures all equity investments at fair value. Where the Group's management has elected to present fair value gains and losses on equity investments in OCI, there is no subsequent reclassification of fair value gains and losses to profit or loss following the derecognition of the investment. Dividends from such investments continue to be recognised in the statement of comprehensive income as other income when the Group's right to receive payments is established. Changes in the fair value of financial assets at FVPL are recognised in other gains/ (losses) in the statement of comprehensive income as applicable. Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not reported separately from other changes in fair value.

Leases

Leases are recognised as a right-of-use asset and a corresponding lease liability at the date at which the leased asset is available for use by the Group.

Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments:

- Fixed payments (including in-substance fixed payments), less any lease incentives receivable;

- Variable lease payments that are based on an index or a rate, initially measured using the index or rate as at the commencement date;

- Amounts expected to be payable by the Group under residual value guarantees;

- The exercise price of a purchase option if the Group is reasonably certain to exercise that option; and

- Payments of penalties for terminating the lease, if the lease term reflects the Group exercising that option.

Lease payments to be made under reasonably certain extension options are also included in the measurement of the liability.

The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, which is generally the case for leases in the Group, the lessee's incremental borrowing rate is used, being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security and conditions.

Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss over the lease period. Right-of-use assets are measured at cost which comprises the following:

- The amount of the initial measurement of the lease liability;

- Any lease payments made at or before the commencement date less any lease incentives received;

- Any initial direct costs; and

- Restoration costs.

Right-of-use assets are depreciated over the shorter of the asset's useful life and the lease term on a straight line basis. If the Group is reasonably certain to exercise a purchase option, the right-of-use asset is depreciated over the underlying asset's useful life.

Payments associated with short-term leases (term less than 12 months) and all leases of low-value assets (generally less than $5k) are recognised on a straight-line basis as an expense in profit or loss.

Segment information

The Group complies with IFRS 8 Operating Segments, which requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the chief operating decision maker to allocate resources to the segments and to assess their performance.

In the opinion of the Directors, the operations of the Group comprised one class of business, being the cultivation of oil palms for the production of crude palm oil and associated products in Liberia, up until the disposal of its 50% interest in LPD during the current year.

Critical accounting estimates and judgements

The preparation of the consolidated financial statements in conformity with IFRSs requires management to make estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income, expenses and related disclosures. The estimates and underlying assumptions are based on practical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making the judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Changes in accounting estimates may be necessary, if there are changes in the circumstances on which the estimate was based or as a result of new information. Such changes are made in the period in which the estimate is revised.

Critical accounting judgements

In the process of applying the Company and Group accounting policies, management has made the following judgements based on the relevant facts and circumstances including macro-economic circumstances and, where applicable, interpretation of underlying agreements, which have the most significant effect on the amounts recognised in the financial statements.

(i) Determination of control of subsidiaries and joint arrangements (Note 8)

The Company, through its investment in Equatorial Biofuels (Guernsey) Limited, owned a 50% interest in LPD for part of the reporting period.

In the period ended 30 September 2014, a Joint Venture Agreement ("JVA") was signed pursuant to which cash and funding commitments of up to $35.5m were made available to LPD. Under the JVA, the Company retained a 50% economic and voting interest in LPD. Also, under the JVA, KLK has the power to appoint the Chairman to the Board of LPD and in the case of a tied vote the Chairman has the casting vote. For this reason, the Company accounted for its investment in LPD as an equity investment in which it has significant influence, up until the time of disposal of its 50% interest in LPD during the current year.

Key sources of estimation uncertainty

In the process of applying the Company and Group's accounting policies, management has made key estimates and assumptions concerning the future and other key sources of estimation uncertainty. The key areas where management have made estimates and assumptions are:

Adoption of new and amended Accounting Standards

a) New standards, interpretations and amendments effective from 1 January 2019

New standards impacting the Group that will be adopted in the annual financial statements for the year ended 31 December 2019, and which have given rise to changes in the Group's accounting policies are:

• IFRS 16 Leases (IFRS 16); and

• IFRIC 23 Uncertainty over Income Tax Treatments (IFRIC 23)

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.

b) New standards, interpretations and amendments not yet effective

There are a number of standards, amendments to standards, and interpretations which have been issued by the IASB that are effective in future accounting periods that the group has decided not to adopt early. The following amendments are effective for the period beginning 1 January 2020:

· IAS 1 Presentation of Financial Statements and IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors (Amendment - Definition of Material)

· IFRS 3 Business Combinations (Amendment - Definition of Business)

· Revised Conceptual Framework for Financial Reporting

In January 2020, the IASB issued amendments to IAS 1, which clarify the criteria used to determine whether liabilities are classified as current or non-current. These amendments clarify that current or non-current classification is based on whether an entity has a right at the end of the reporting period to defer settlement of the liability for at least twelve months after the reporting period. The amendments also clarify that 'settlement' includes the transfer of cash, goods, services, or equity instruments unless the obligation to transfer equity instruments arises from a conversion feature classified as an equity instrument separately from the liability component of a compound financial instrument. The amendments are effective for annual reporting periods beginning on or after 1 January 2022.

Management is currently assessing the impact of these new accounting standards and amendments.

2. Operating Loss

The operating loss is stated after charging:

In addition to the above, the Auditors charged $9,000 (2019 - $54,500) in relation to the associate. The costs were borne by the associate.

* Given the short-term nature of the operating lease relating to the rental of office it has been recognised on a straight line basis charge to the profit or loss and not accounted for under IFRS 16 Leases.

3. Taxation

No deferred tax assets have been recognised (2019: nil). The Group has total carried forward losses of $7,731,000 (2018: $7,357,000). The taxed value of the unrecognised deferred tax asset is $1,451,000 (2019: $1,390,000) and these losses do not expire.

4. Directors' emoluments

(1) KLK representatives are not remunerated by the Company

(2) Appointed 3 September 2020

(3) Resigned 18 June 2020

(4) Resigned 3 September 2020

(5) Resigned 8 May 2019

5. Staff Costs (including Directors and Key Management Personnel)

The total social security cost on directors' remuneration was $25,000 (30 September 2019: $39,000) which is included in short term employee benefits.

Key Management Personnel includes the Directors of the Company and senior management. Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Group, including the directors of the Company listed on pages 11 to 12.

The Group and Company averaged 3 employees during the year ended 30 September 2020 of which all were involved in administration activities (30 September 2019: 3).

6. Loss Per Share

The basic loss per share is derived by dividing the loss for the year attributable to ordinary shareholders by the weighted average number of shares in issue.

As inclusion of the potential ordinary shares would result in a decrease in the loss per share they are considered to be anti-dilutive, as such, diluted earnings per share is equivalent to basic earnings per share.

7. Financial Instruments

The Group (including the Company, its subsidiary and its interest in LPD) is exposed through its operations to the following risks:

· Credit risk

· Liquidity risk

· Foreign exchange risk

In common with all other businesses, the Group is exposed to risks that arise from its use of financial instruments. This note describes the Group's objectives, policies and processes for managing those risks and the methods used to measure them. Further quantitative information in respect of these risks is presented throughout these financial statements.

Principal financial instruments

The principal financial instruments used by the Group, and classified as loans and receivables, from which financial instrument risk arises are as follows:

· Receivables from associate;

· Trade and other receivables;

· Cash and cash equivalents;

· Loans to associates; and

· Loans to subsidiaries.

Financial instruments by category

Financial assets:

Financial liabilities:

General objectives, policies and processes

The Board has overall responsibility for the determination of the Group's risk management objectives and policies and, whilst retaining responsibility for them, it has delegated the authority for designing and operating processes that ensure the effective implementation of the objectives and policies to the Group's finance function. The overall objective of the Board is to set policies that seek to reduce risk exposure as far as possible without unduly affecting the Group's competitiveness and flexibility. Further details regarding these policies are set out below:

Credit risk

The Company is exposed to credit risk from its cash deposits which are held with HSBC UK which has a credit rating of A2 from Moody's. Management has assessed no expected credit losses on these deposits.

The Group was exposed to credit risk from its loans to LPD. The ability of LPD to repay its debts is supported by a joint venture agreement between the Company and KLK (refer Note 8) and the projected future cash flows from the plantation.

The Group does not enter into derivatives to manage credit risk.

At the reporting date the Group does not envisage any losses from non-performance of counterparties.

The maximum exposure to credit risk at the reporting date from the Group's financial assets is the carrying value of each financial asset. The Group does not hold any collateral as security.

Interest rate risk

The Group is exposed to fluctuations of the LIBOR rate on the interest accrued relating to its receivable due from associate. The Group measures its risk through a sensitivity analysis considering 10% favourable and adverse changes in the LIBOR rate. As at 30 September 2020 a movement in the LIBOR (which was

Liquidity risk

Liquidity risk arises from the Group's management of working capital and the finance charges and principal repayments on its debt instruments. It is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due.

The Group's policy is to ensure that it will always have sufficient cash to allow it to meet its liabilities when they become due.

The Directors receive information regarding cash balances on a monthly basis. As soon as funding shortfalls are identified, the Directors take action to identify and subsequently secure the necessary funds from existing or new investors or in the form of short and long term borrowings. Further disclosure of going concern is given in Note 1 and the Directors' Report.

Foreign exchange risk

Foreign exchange risk arises because the Group has operations located in the UK and prior to the disposal of LPD, Liberia, which enter into transactions in currencies which are not the same as the functional currency of the Company. Only in exceptional circumstances will the Group consider hedging its net investments in overseas operations, as generally it does not consider that the reduction in foreign currency exposure warrants the cash flow risk created from such hedging techniques. Wherever possible in order to monitor the continuing effectiveness of this policy, the Board, through their approval of capital expenditure budgets and review of the monthly management accounts, considers the effectiveness of the policy on an ongoing basis.

Foreign currency sensitivity analysis

The Group is mainly exposed to currency rate fluctuations of the UK Pound versus the US Dollar, and measures its foreign currency risk through a sensitivity analysis considering 10% favourable and adverse changes in market rates on exposed monetary assets and liabilities denominated in UK Pounds. At 30 September 2020 a 10% revaluation of the Pound against the Dollar would have resulted in a $115,708 increase or decrease in the net assets of the Group (30 September 2019: $67,281).

Capital management policies

The Group considers its capital to be its ordinary share capital, share premium, other reserves, and retained deficit. The Board of Directors has established principles for the management of the Group's capital resources based on a long-term strategy that continually evaluates and monitors the achievement of corporate objectives. Specific capital management policies set forth include the following:

§ Sufficient resources to maintain and develop its concessions and to maximise discretionary spending on further accelerating its plantation development;

§ The reinvestment of profits into new and existing assets that fit the corporate objectives;

§ To identify the appropriate mix of debt, equity and partner sharing opportunities in order to maintain and comply with its growth and development plans alongside those commitments of its concession agreements with a view of generating the highest returns to shareholders overall with the most advantageous timing of investment flows;

§ Retain maximum flexibility to allocate capital resources between new planting and production of CPO enhancing projects based on available funds and the quality of opportunities.

On a regular basis, management receives financial and operational performance reports that enable continuous management of assets, liabilities and liquidity.

The above policies and practices are consistent with strategies and objectives employed in prior years and are expected to remain consistent in the extension of future resource allocation objectives.

8. Investment in associate & subsidiaries

Up until the disposal during the year, the Company, through its investment in Equatorial Biofuels (Guernsey) Limited, held a 50% interest in LPD.

In the period ended 30 September 2014, a Joint Venture Agreement ("JVA") was signed pursuant to which cash and funding commitments of up to $35.5m were made available to LPD. Under the JVA, the Company retained a 50% economic and voting interest in LPD. Also, under the JVA, KLK has the power to appoint the Chairman to the Board of LPD and in the case of a tied vote the Chairman has the casting vote. For this reason, the Company accounted for its investment in LPD as an equity investment in which it had significant influence.

The Group and Company's interest in LPD is as follows:

The Group's 50% share in the loss for the year ended 30 September 2019 of $25,838,000 was in excess of the Company's carrying value of LPD of $15,090,000 resulting in just the amount of the carrying value being recognised as the Group's share of the loss in LPD as shown below:

In June 2020, EPO Plc disposed-off its 50% interest in LPD to KLK, its JV partner at the time. At the point of disposal, LPD had generated revenue of $5,354,000 (2019: $1,470,000), with no reversal of previous impairments. The Group has not recognising its share of losses for the 9 months period, as LPD had not generated sufficient income that exceeds the unrecognised losses brought forward of 10,748,000.

Subsidiaries and associates of EPO

(1) 50% held by Equatorial Biofuels (Guernsey) Limited

(2) 100% held by Liberian Palm Developments Limited

(3) 100% held by EPO (Mauritius) Limited

(4) 100% held by EBF (Mauritius) Limited

The Company's investment in Equatorial Biofuels (Guernsey) Limited is as follows:

Management has assessed the recoverable amount of the Company's investment at year end and concluded the carrying amount is fully impaired. Refer to the critical accounting estimates above for the inputs in management's impairment assessment.

9. Loans to subsidiaries

The loan to the subsidiary is interest free and has no fixed repayment date.- During the year the loan to subsidiary was written down to nil following the disposal of the Company's interest in LDP. It is denominated in UK Pounds. Repayment of loans is subject to the Directors' assessment of the Group's requirements and availability of appropriate liquid resources.

10. Non-current receivables

The receivable due from the associate related to a loan, denominated in US Dollar. On 7 November 2018, the Company extended the loan for an additional five-year term concluding on 6 November 2023, that will accrue interest at a rate of LIBOR + 4% or 8% per annum, whichever is higher. Interest will accrue on the principal amount of the loan (including any accrued interest) and is repayable in full at the end of the five-year term or earlier at the discretion of LPD.

The loan receivable from associated was classified as a financial asset in accordance with IFRS 9 and measured at amortised cost.

On 11 June 2020, the Company completed the disposal of its 50 per cent. in Liberian Palm Developments Limited ("LPD) to Kuala Lumpur Kepong ("KLK") which resulted in a loss on disposal of $6,037,000.

Loss on disposal

The receivable due from associate was assessed for impairment in line with the requirements of IFRS 9 prior to the disposal of the Company's interest in LPD and no impairment was recognised.

Interest on term deposits earned during the year was $3,000 (2019: nil). Making total interest income for the year of $358,000 (2019: $503,000).

11. Revenue and other income

12. Trade and other receivables

The fair value of all receivables is the same as their carrying values stated above and there are no expected losses on other receivables to be recognised under IFRS 9. No ageing analysis is considered necessary as the Group has no trade receivable which would require analysis to be disclosed under the requirements of IFRS 7.

The carrying amounts of the Group and Company's trade and other receivables are denominated in the following currencies:

13. Trade and other payables

14. Called up share capital

During the year, the Company created a new class of share: deferred shares. The existing ordinary shares were subdivided into equal numbers of both ordinary and deferred shares. The value of the shares was split in a ratio of 9:1 such that in addition to the ordinary shares noted above, the Company now has 356,277,502 deferred shares with a value of £5,552,000.

The deferred shares do not have any voting rights but do carry dividend and capital distribution rights to the extent of £1.00 in aggregate over the class at the discretion of management.

Additionally, at the same time as the subdivision of ordinary shares referred above, the Company issued 100,000,000 shares at 0.04p each to raise £400,000 before costs.

15. Warrants to subscribe for ordinary shares

In connection with the placing of 100,000,000 shares at 0.4p in August 2020, 5,000,000 broker warrants to subscribe for shares in the Company were issued to Brandon Hill at an exercise price of 0.4p per share with an expiry date of three years from the date of issue of the share placement.

* representing 0.62% of the issued share capital of the Company.

The estimated fair values of the Brandon Hill warrants, calculated using the Black-Scholes model was $25,000 which was changed to the share premium account to recognise the cost of issuing the warrants.

The inputs to the model were as follows:

Expected volatility was determined by reference to the historical volatility of the Company's share price.

16. Cash

The Group and Company's breakdown of cash held is as follows:

There are no restrictions, collateral or guarantees on the cash and cash equivalents.

17. Related Party Transactions

Disposal of interest in LPD

On 11 June 2020, the Company completed the disposal of its 50 per cent in Liberian Palm Developments Limited ("LPD) to Kuala Lumpur Kepong ("KLK") for nominal consideration which resulted in a loss of disposal of $5,933,000.

Recharges between EPO and LPD

For the year ended 30 September 2020, EPO recharged LPD $11,000 (2019: $167,000) with $nil outstanding at year end (2019: $41,000).

Loans to subsidiaries and receivables from associates

Details of loans to subsidiaries are disclosed in Note 9 and receivables from associates in Note 10.

18. Capital commitments

There were no capital commitments at 30 September 2020 (2019: None)

19. Contingent liabilities

There were no contingent liabilities at 30 September 2020 (2019: None)

20. Controlling entity

The parent company and ultimate controlling company is Kuala Lumpur Kepong Berhad ("KLK"), a company incorporated in Malaysia, the financial statements of which are available from www.klk.com.my. KLK own and control 49.08% of the Company's share capital as at 30 September 2020 (2019: 62.86%) and they are deemed to be the ultimate controlling entity.

21. Events after the reporting period

On 21 October 2020 the Company announced that it had reached conditional agreement with parties holding a majority of the shares (51.4 per cent.) ("CML Majority") of Capital Metals Limited ("CML"), a company developing a mineral sands project in Sri Lanka, to acquire their shares in CML ("CML Shares") in exchange for ordinary shares in the Company.

The proposed acquisition ("Proposed Acquisition") would constitute a reverse takeover transaction pursuant to the AIM Rules for Companies (the "AIM Rules"). Following the Proposed Acquisition, the CML business would constitute all of the Company's business. The conditional offer agreement was signed with the CML Majority.

The Company issued the same conditional offer agreement to the remaining shareholders in CML ("CML Minority") which, if accepted, will result in the acquisition (subject to the conditions set out below) of up to 100 per cent. of the entire issued share capital of CML ("CML Shares") for an aggregate total consideration of £15.84 million by the issue of up to 132,000,000 new Ordinary Shares in the Company ("Consideration Shares"). This equates to a price of 12 pence per Consideration Share ("Issue Price") to be issued following the proposed 20:1 share consolidation (equivalent to 0.6 pence per existing Ordinary Share).

The conditional offer agreement specified, inter alia, the following terms:

- In consideration for the acquisition of the CML Shares, the Company proposed to issue 1 Consideration Share for every 1.235 CML Shares sold.

- That completion of the Proposed Acquisition is conditional, amongst other things, on

o the passing of resolutions at a general meeting to be convened by the Company, to approve the Proposed Acquisition, a 20:1 share consolidation, and a placing of new ordinary shares ("Placing Shares") in the Company ("the Placing"); and

o admission of the Placing Shares and Consideration Shares to trading on AIM ("Admission") becoming effective on or before 31 March 2021.

Completion of the conditional offer agreement is conditional on acceptances being received from the holders of CML Shares holding more than 75 per cent. of the issued CML Shares (unless otherwise agreed between CML and the Company, with the approval of the Company's Nominated Adviser). On 12 November 2020, the Company agreed with CML to provide a loan of $50,000 for CML working capital purposes. The loan attracts an interest rate of 1% per month which will compound monthly. The loan is repayable within 12 months of 12 November 2020.

22. Availability of financial statements

The audited Annual Report and Financial Statements for the period ended 30 September 2020 will shortly be sent to shareholders and published at www.epoil.co.uk .