Final Results

RNS Number : 3078E

Anglo-Eastern Plantations PLC

08 April 2014

Anglo-Eastern Plantations Plc

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

Preliminary announcement of results for year ended 31 December 2013

Anglo-Eastern Plantations Plc, and its subsidiaries are a major producer of palm oil and rubber with plantations across Indonesia and Malaysia amounting to some 127,800 hectares, has today released its results for the year ended 31 December 2013.

Financial Highlights

	2013 $m	Restated 2012 $m
Revenue	201.9	237.4
Profit before tax
- before biological asset ("BA") adjustment	59.7	88.6
- after biological asset adjustment	153.4	81.9


EPS before BA adjustment	90.70cts	133.99cts
EPS after BA adjustment	235.95cts	119.41cts
Dividend (pence)	3.0p	2.9p
Dividend (cents)	5.0*cts	4.5cts

Note: * Based on exchange rate at 1 April 2014 of $1.6638/£

Enquiries:

Anglo-Eastern Plantations Plc
Dato' John Lim Ewe Chuan	020 7216 4621

Charles Stanley Securities
Russell Cook / Karri Vuori	020 7149 6000

Chairman's Statement

The past year has been extremely challenging. Crude Palm Oil ("CPO") price declined to a 3-year low in January 2013 on expectation of a bumper soybean harvest and rising palm oil inventories. It experienced further volatility as the Indian Rupee tumbled past 64 Rupee per dollar on concerns that foreign outflows would accelerate as the US Federal Reserve prepared to trim monetary stimulus. The depreciation in Rupee put some pressure on the imports of palm oil of which India is the largest importer. The Indian government also raised import duties on CPO and refined bleached and deodorized palm oils ("RBD") after much lobbying by local refiners as former tariffs encouraged the import of larger volumes of RBD for direct sale than CPO for domestic processing.

CPO price gradually recovered some ground in the last quarter of 2013 as higher seasonal rainfall interrupted Fresh Fruit Bunch ("FFB") production in Indonesia and Malaysia resulting in lower CPO inventory.

The Group's revenue was $201.9 million, compared to $237.4 million achieved in 2012, a decline of 15% which was accounted largely by the decline in CPO price over the period. The average CPO price in 2013 was $857/mt, 14% lower than the figure of $995/mt in 2012, but ended the year at $905/mt.

FFB production for 2013 was 787,500mt, 1% higher than the previous year (2012: 783,400mt) with a 5% increase in matured trees. Yields remained low due primarily to the lagged effect from dry weather in 2011 affecting trees over 15 years and also heavy monsoon rain in the early and later part of 2013 which caused logistical problems. Lorries were unable to transport FFB to mills as roads were either cut off from flooding or too muddy. FFB bought-in from surrounding smallholders during 2013 was 496,600mt (2012: 537,100mt), 8% lower compared to 2012, due to competition from other millers despite the Group increasing its purchase price of external crops. The unfavourable weather also contributed to a lower crop production in the vicinity of the mills. The Group's mills processed 5% less FFB, but increased CPO production to 262,600mt (2012: 260,500mt) due to higher oil extraction rate from a better quality crop.

The Group operating profit for 2013, before biological asset ("BA") adjustment was $59.6 million, 30% down on $85.4 million achieved in 2012. Earnings per share, before BA adjustment decreased to 90.70cts, compared to 133.99cts in 2012 and post BA adjusted earnings per share were 235.95cts compared to 119.41cts for the previous year. The higher biological asset adjustment was due to an increase in the 10 year average CPO price and a reduction in discount rate applied. With the weakening of Rupiah, a foreign exchange loss of $2.8 million in 2013 (2012: nil) also contributed to a lower profitability.

As at 31 December 2013, the Group had cash and cash equivalents of $98.7 million and borrowings of $35.0 million, resulting in a net cash position of $63.7 million, compared to $91.2 million at 31 December 2012.

In spite of the challenging market conditions the Board has continued to invest in the development of new assets. The Group planted 2,522ha of oil palms in 2013 of which 400ha comprised of replanting. This was less than planned, due primarily to delays in finalising agreement with villagers for land compensation payments in Bengkulu and Bangka and in securing the necessary land release permits in Kalimantan. The Indonesian government issued a decree effective on 2 October 2013 restricting plantation permits for oil palm planting to 100,000ha for plantation companies that are not state owned, cooperatives or majority publicly owned companies. According to the Indonesian Palm Oil Association, the decree would curtail the expansion and growth of plantation companies in Indonesia. However, based on the lawyers' opinions, it would appear that the decree would not apply to the Group as the Group's ownership of its land bank precedes the issuing of the decree.

Despite the heavy rainfall also disrupting the earthworks for construction of the mill in Central Kalimantan in second quarter of 2013, the earthworks are now almost completed and the construction of mill buildingsis in progress. Thismill with an initial capacity of 45mt/hr is expected to be operational in second quarter of 2015. As previously reported the construction of another mill in North Sumatera is deferred while the Board considers further the relative cost advantages of two selected sites.

AEP embraces the Group's responsibility for the impact of its activities on the environment, consumers, employees, communities, stakeholders and all other members of wider society. In meeting the Group's Corporate Social Responsibility ("CSR") obligations it is cognisant of the contribution and welfare of its employees while continuing to contribute to improve the well-being of the community.

The $5 million biogas and biomass project for one of the mills in North Sumatera is nearing completion with the installation of equipment and commissioning expected in the second quarter of 2014. Redesign of some equipment as well as inclement weather delayed the external works and implementation. When the plant is fully operational, it will result in a significant reduction in the greenhouse gas emissions which are presently discharged from the effluent treatment in the anaerobic lagoons. The biogas reactor tank and covered lagoons will trap the biogas which will be used to generate power in place of fossil fuel. The biomass plant will utilize this power to process the empty fruit bunches into dried long fibres for export. The successful implementation and running of this project will pave the way for further similar undertaking in the Group's other palm oil mills. Although the biogas and biomas project is not a requirement of ISPO, it is nevertheless environmental friendly and is expected to have a return on investment of about six years.

The Indonesian Sustainable Palm Oil ("ISPO") certification of the Group estates and mills will continue in 2014. In 2013 the Group completed and submitted the certification audit of 3 plantations to the ISPO Committee. At the time of reporting, ISPO Committee has approved the certification of the 3 plantations.

The majority of our employees working at the Group's plantations and mills, together with their families and dependents, are housed in self-contained communities constructed by the Group. Employees and their dependents are provided with free housing, clean water and electricity. Within these communities we also build and maintain places of worship, schools and sports facilities. In 2013, the Group spent $212,000 to build additional facilities and maintain these amenities and will continue to incur community development expenditure in 2014.

The Group also recognises its obligations to the wider farming communities in which it operates. The Indonesian authorities have established that not less than 20% of the new planted areas acquired from 2007 onwards are to be reserved for the benefit of smallholder cooperatives, known as Plasma Scheme and the Group is integrating such smallholder developments alongside its estates. In order to aid the development of Plasma Scheme, a subsidiary provided a corporate guarantee during the year to a local bank in excess of $18 million to cover loans raised by cooperatives.

The Board supported Kebun Kas Desa (village's scheme) development programme to supplement the livelihood of the villages. The Group provides technical and management expertise to villagers and has to-date financed, developed and managed 22 smallholder village schemes across four companies.

The Board is mindful that given the anticipated further capital commitments the level of dividend needs to be balanced against the planned expenditure. The Board is also mindful of shareholders' sentiment and therefore declared a final dividend of 3.0p per share in respect of the year to 31 December 2013 (2012: 4.5cts) notwithstanding the Group achieved a lower profitability. Subject to approval by shareholders at the Annual General Meeting, the final dividend will be paid on 17 June 2014 to those shareholders on the register on 16 May 2014.

The Board views the prospects for 2014 with cautious optimism. As the continuing rise in income levels and population growth in China, India and Indonesia would be expected to drive the consumption of CPO and likely lead to a gradual recovery in CPO prices. The price differential between CPO and soya oil which has narrowed from a near four-year high of over $300/mt to just over $67/mt would nevertheless remain a concern as a smaller spread could prompt CPO buyers to switch to rival soya oil. However, as reported, the Indonesian government efforts to rein in fiscal deficits by introducing mandatory blending of biodiesel up to 10% effective from 1 January 2014 for industrial and commercial purposes may provide some price support.

Rising fertiliser consumption and increasing wage inflation in Indonesia are expected to increase the overall production cost in 2014.

The Board nevertheless hopes that, against a backdrop of a global economic recovery, trading prospects will improve in 2014.

The year saw the resignation of a Board member Drs. Kanaka Puradiredja. The Board thanked him and wish him the best. Mr. Jonathan Law Ngee Song, a lawyer by profession was appointed to the Board on 4 July 2013.

On behalf of the Board of Directors, I would like to convey our sincere thanks to our management and all employees of the Group for their dedication, loyalty, resourcefulness, commitment and contribution to the success of the Group.

I would also like to take this opportunity to thank shareholders, business associates, government authorities and all other stakeholders for their continued confidence, understanding and support for the Group.

Madam Lim Siew Kim

Chairman

8 April 2014

Strategic Report

Business Model

The Group will continue to focus on planting oil palm trees and building mills to process the FFB, its area of strength and expertise. The Group has over the years created value to shareholders through expansion in a responsible way. We have in the last few years bought and invested in new tracts of land and a portion remains to be planted. The Board feels vindicated as price of land appreciates substantially and the Indonesian government has recently moved to introduce law to cap the size of new plantations. The Group remains committed to use its available resources to develop the land bank in Indonesia as regulatory constraints permit.

The Group's objectives are to provide appropriate returns to investors in the long term from operation as well as expansion of the Group's business, to foster economic progress in the localities of the Group's activities and to develop the Group's operations in accordance with the best corporate social responsibility and sustainability standards.

We believe that sustainable success for the Group is best achieved by acting in the long-term interests of our shareholders, our partners and society.

Our Strategy

The Group's objectives are to provide an appropriate level of returns to the investors and to enhance shareholder value. Profitability however is very much dependent on the CPO price which is volatile and determined by world supply and demand.

The Group's strategies therefore focus on maximising yield per hectare above 22mt/ha, mill production efficiency of 110%, minimising production costs below $300/mt and streamlining estate management. For the year under review, the Group achieved a yield of 19.5mt/ha, 102% mill efficiency and production cost of $276/mt. Despite stiff competition for external crops from surrounding millers, the Group is committed to purchase more external crops from third parties at competitive yet fair prices to maximise the efficiency of the mills.

In line with the commitment to reduce its carbon foot prints, the Group plans for progressive introduction of biogas projects at all its mills to tap methane gas to power its own boilers and at the same time reduces its consumption of fossil fuel. It plans to reduce greenhouse gas emissions per CPO produced.

The Group will continue to follow-up and offer competitive and fair compensation to villagers so that land can be cleared and planted.

Financial Review

The financial statements have been prepared in accordance with International Financial Reporting Standards and its interpretations (IFRS and IFRIC interpretations) issued by the International Accounting Standards Board ("IASB") as adopted by the European Union ("EU") and with those parts of the Companies Act 2006 applicable to companies preparing their accounts under IFRS.

For the year ended 31 December 2013, revenue for the Group was $201.9 million, 15% lower than $237.4 million reported in 2012 due primarily to lower CPO prices. Expectation of plentiful harvest of soybean, the main competing oil for CPO coupled with a high CPO inventory at the beginning of the year drove CPO prices downward for most of 2013. The price gradually recovered some lost ground in the last quarter of 2013 as higher seasonal rainfall interrupted production in Indonesia and Malaysia resulting in lower CPO inventory.

Group operating profit for 2013 before biological asset adjustment was $59.6 million, 30% less than $85.4 million in 2012.

FFB production for 2013 was 787,500mt, 1% higher than the 783,400mt produced in 2012. The yield remains low and was primarily due to the lagged effect from dry weather in 2011 affecting trees over 15 years and also heavy monsoon rain in the early and later part of 2013 which caused logistical problems. FFB bought-in from local smallholders for 2013 was 496,600mt (2012: 537,100mt), 8% lower compared to 2012. During the year, FFB processed by the Group's mills was 1.2 million mt, 5% lower but CPO production was 1% higher at 262,600mt, compared to 260,500mt in 2012 due to higher oil extraction rate a from better quality crop.

Profit before tax and after BA adjustment for the Group was $153.4 million, 87% higher compared to $81.9 million in 2012. The BA adjustment was a credit of $93.7 million, compared to a debit of $6.7 million in 2012, reflecting higher biological value. The higher biological value was due to an increase in the 10 year average CPO price to $700/mt from $675/mt and a reduction in discount rate applied from 17.5% to 15.8%.

The average CPO price for 2013 was $857/mt, 14% lower than 2012 of $995/mt.

Earnings per share before BA adjustment decreased by 32% to 90.70cts compared to 133.99cts in 2012.

The Group's balance sheet remains strong notwithstanding an unrealised exchange loss on translation of foreign subsidiaries of $112.8 million compensated by a land revaluation gain of $23.9 million net of deferred tax. As at 31 December 2013, the Group had cash and cash equivalents of $98.7 million and borrowings of $35.0 million, giving it a net cash position of $63.7 million, compared to $91.2 million in 2012. Net Group's borrowings in the year rose by $9.9 million to $35.0 million (2012: $25.1 million).

On 28 February 2014, the Group restated its prior year operating results for 2012 and 2011 following the conclusion of its discussions with the Financial Reporting Council ("FRC") on the use of current market data to estimate notional rent for the use of land in its discounted cash flow for the determination of biological assets. The following is a chronology of the FRC enquiry.

The FRC wrote to the Company on 14 November 2011 in respect of its policies and methodologies for valuing and accounting for its biological assets and non-biological assets in its accounts for the year ended 31 December 2010.

As a result of discussions with the FRC, the Company's interim accounts for the period ended 30 June 2012, announced on 30 August 2012, stated that the Company had revisited its policies and methodologies for valuing and accounting for its estate assets. The Directors had concluded that the biological and non-biological assets needed to be restated.

Between 19 October 2012 and 14 February 2014 the FRC and the Company exchanged correspondence. Additional information and explanations were provided to the FRC in respect of the restatement of biological assets and land at 31 December 2010 and 2011, including in respect of the measurement of notional rent. In October 2013, the Company engaged a specialist valuation firm in the UK to determine the basis for the measurement of the notional charge for its land. As a result, the Company applied a notional rent equivalent to 9% of the value of planted land in the valuation of its biological assets and this has resulted in a reduction in the valuation of those assets, although the profit before biological asset adjustment of the Group remained unchanged. In February 2014 the FRC confirmed that it regarded its enquiries into the Company's annual report and accounts for the year ended 31 December 2010 as concluded.

Business Review

Indonesia

FFB production in North Sumatera, which aggregates the estates of Tasik, Anak Tasik, Labuhan Bilik, Blankahan, Rambung, Sg Musam and CPA, produced 339,093mt in 2013 (2012: 346,329mt), 2% lower than 2012. The lower yield was most likely attributed to the lagged effect from the prolonged drought in 2011 affecting trees over 15 years. In 2013, Sg Musam also experienced extreme heavy rain of over 4,000 mm per annum when the ideal rainfall is between 2,500 to 3,000 mm in a year. Ganoderma fungus which attacks the root system of palm oil was discovered in Anak Tasik covering 766ha. Good sanitation and high standards of agronomic practices remain the main priority to avoid spreading of the infection. There were two incidences of insect damage by Oryctes beetle and termites resulting in significant loss of newly planted palm in Labuhan Bilik. Combination of treatment with pheromone-trap and insecticide were carried out to control the insect population. A replanting programme covering 400ha in Tasik was completed in December 2013.

FFB production in Bengkulu (South Sumatera), which aggregates the estates of Puding Mas, Alno, KKST, ELAP and RAA produced 277,831mt (2012: 284,794mt), 2% lower than 2012. Unusual heavy rain at the beginning and later part of the year damaged roads and affected the transport of FFB to the mills. With the delay in processing of FFB, the mills in Bengkulu also faced high Free Fatty Acid ("FAA") which resulted in lower selling price of its CPO. The protracted negotiation with the villagers over land compensation will have an effect on the future planting in Bengkulu.

FFB production in the Riau region, comprising Bina Pitri estates, produced 116,200mt in 2013 (2012: 119,671mt), 3% lower than 2012. Although FFB production is down only marginally, CPO production dropped 16% due to the lower purchase of FFB from smallholders due to the competitiveness for external crops from millers. Our mill has since offered a higher price for external crops raising the mill utilization rate at the expense of a lower operating margin.

FFB production in Kalimantan comprising Sawit Graha Manunggal estates produced 25,395mt in 2013 (2012: 3,574mt) mainly from newly matured oil palm area of 500ha.

Overall bought-in crops for Indonesian operations were 8% lower at 496,600mt for the year 2013 (2012: 537,100mt). The average oil extraction rate from our mills was 21.4% in 2013 (2012: 20.2%). The extraction rate was higher due to better quality crops and implementation of a stricter sorting process.

Malaysia

FFB production in 2013 was marginally lower at 28,950mt, compared to 29,000mt in 2012. The Malaysian operations faced difficulty in recruiting foreign workers hampering harvesting and estate work. In December 2013, the harvest was interrupted for over a week as the estates were inaccessible due to flooding and landslide from incessant rain. The Malaysian plantations was breakeven in 2013 as compared to 2012 of $0.4 million pre-tax loss.

Commodity Prices

The CPO CIF Rotterdam price started the year at $835/mt (2012: $1,045/mt) and reached a low point of $805/mt in October 2013 before picking some lost ground in the final quarter of 2013. It ended the year at $905/mt (2012: $810/mt), averaging $857/mt for the year (2012: $995/mt).

The continuing rise in income levels and population growth in China, India and Indonesia would be expected to drive the consumption of CPO and likely lead to a gradual recovery in CPO prices. The price differential between CPO and soya oil which has narrowed from a near four-year high of over $300/mt to just over $67/mt would nevertheless remain a concern as a smaller spread could prompt CPO buyers to switch to rival soy oil. However the Indonesian government efforts to rein in fiscal deficits by introducing mandatory blending of biodiesel up to 10% effective from 1 January 2014 for industrial and commercial purposes may provide some price support.

Rubber prices averaged $2,361/mt for 2013 (2012: $2,967/mt). Our small area of 668ha of mature rubber contributed a revenue of $2.5 million in 2013 (2012: $2.5 million).

Corporate Development

In 2013, the Group opened up new land and planted 2,122ha of oil palm mainly in Kalimantan, boosting planted area by 3.6% to 61,099ha (2012: 59,000ha). This excludes the replanting of 400ha of oil palm in North Sumatera. New plantings remain behind schedule due to protracted negotiations over settlement of land compensation with villagers in Bengkulu and Bangka and with delay in the issuance of land release permit (Izin Pelepasan) in Kalimantan. However, the plantation has since obtained the necessary permit and shall proceed to negotiate with villagers for compensation of land before clearing for planting.

The earthworks for construction of the mill in Central Kalimantan were disrupted by heavy rainfall in the second quarter of 2013. The earthworks are now almost completed and construction of mill buildings is in progress. This mill with an initial capacity of 45mt/hr is expected to be operational in second quarter of 2015. As previously reported the construction of another mill in North Sumatera is deferred while the board considers further the relative cost advantages of two selected sites.

The successful implementation and running of this project will pave the way for further similar undertakings for the rest of the Group's mills.

Corporate Social Responsibility

Corporate Social Responsibility ("CSR") is an integral part of corporate self-regulation incorporated into our business model. Our Group embraces responsibility for the impact of its activities on the environment, consumers, employees, communities, stakeholders and all other members of the public sphere. In engaging the social dimension of CSR, the Group's business has taken cognizance of the contribution and further enrichment of its employees while continuing to make contributions to improve the well-being of the surrounding community.

The majority of employees and their dependents in the plantations and mills are housed in self-contained communities built by the Group. The employees and theirdependents are provided with free housing, clean water and electricity. The Group also builds, provides and repair places of worship for workers of different religious faith as well as schools and sports facilities in these communities.In 2013, the Group spent $212,000 to build additional facilities and maintain these amenities in 2013 and will continue to incur community development expenditure in 2014.

Staff and selected employees are given the opportunity to be trained and to attend seminars to enhance their working skills and capacity. The Group provides free education for allemployees' childrenin the local plantations and communities where they work. In 2013, 25 scholarships amounting to $21,000 were provided tochildren in surrounding villages and selected employees' children to further their tertiary education in collabration with a university in Bengkulu. In addition the Group provides funding to construct educational facilities such as laboratories, libraries, and computers. The salaries of teachers in the estates and the cost ofschool buses to transport employees' children to the school are provided by the Group. Over the years a total of 33 schools have been built with 125 teachers currently employed within our Group estates. In 2013, the Groupspentsome $574,000 on running the schools.

The Group continues to provide free comprehensive health care for all its workers as we believe that every employee and their dependents should have easy access to health services. We have established 21 clinicsoperated by qualified doctors, nurses and hospital assistants in the estates.Related healthcare expenses for 2013 were $696,000.

A strong commitment to CSR has a positive impact on employees' attitudes and boosts employee engagement. The Group realizes that employees are valuable assets in order to run an efficient, effective, profitable and sustainable business and operations.

The Group also recognises its obligations to the wider farming communities in which it operates. The Indonesian authorities have established that not less than 20% of the new planted areas acquired from 2007 onwards are to be reserved for the benefit of smallholder scheme cooperatives, known as Plasma scheme and the Group is integrating such smallholder developments alongside its estates. In order to aid the development of Plasma scheme, a subsidiary provided a corporate guarantee during the year to a local bank in excess of $18 million to cover loans raised by cooperatives.

The Board supported Kas Desa smallholder village development programme to supplement the livelihood of the villages. The Group has to-date financed, developed and managed 22 smallholder village schemes across four companies.

In addition to education and healthcare which includes the construction of schools, provision of scholarships, books, the Group also develops infrastructure such as construction and repair of bridges and roads. The Group also provides aid to villagers such as fruit seedlings and fish fries to start community sustaining programs.

Indonesian Sustainable Palm Oil

The Indonesian Sustainable Palm Oil ("ISPO") certification is legally mandatory for all plantations in Indonesia. In March 2012, ISPO, which is fundamentally aligned to RSPO (Roundtable on Sustainable Palm Oil) principles, has become the mandatory standard for Indonesian planters.

A Steering Committee was established to work out a roadmap to support the ISPO implementation at mills and estates. Workshops and training sessions on occupational safety and healthcare were carried out to inculcate a safety culture in workplaces at the estates and mills in North Sumatera and Riau. During the year the Group continued to upgrade its agricultural chemical stores and diesel fuel storage tanks in various plantations and mills to meet safety and environmental standards. Standard operating procedures were refined and documented based on sustainable oil palm best practices. The Group also conducts internal audits using an audit checklist adopted from the above practices to determine level of compliance. The Group worked closely with appointed certification consultants in the implementation of ISPO standard. In 2013, the consultants have completed and submitted the audit of 3 plantations to the ISPO Committee for evaluation. At the time of reporting, ISPO Committee has approved the certification of the 3 plantations. In the first and second quarter of 2014, the consultants will begin certification audits for another 8 plantations.

Care For The Environment and Sustainable Practices

As a Group, we highlight the importance of creating awareness and implementation of good environmental management practices throughout the organisation. The Group has been consistently practising good agricultural practices such as zero burning, integrated pest management, land terracing and recycling of biomass. Where the land is undulating, we build terraces for planting which helps to prevent landslides and provide less hazardous accessibility for employees.

Effluent discharged from some mills is initially treated in lagoons before being applied to trenches located between rows of palm trees. Once the effluent dries up, it becomes organic fertilizer for the oil palm and reduces the application and buying of inorganic fertilizers. Composting of processing waste produces a nutrient rich compost that can be applied in the oil palm in substitution of inorganic fertilizer. In some estates, empty bunches are applied to land where it biodegrades to fertilizers.

On completion of the Group's first biogas and biomass project in North Sumatera, it will enhance the waste management treatment in the mill and at the same time mitigate greenhouse biogas emissions. Under this project, the methane gas will be trapped and will be used to generate and supply power to its biomass plant without dependency on fossil fuel. Further similar undertakings for the Group's mills are planned and shall be implemented in stages.

The Group is committed to implementing good agricultural practices as spelled out in its standard operating procedures for the planting of oil palm. Integrated Pest Management has been adopted to control pests and to improve biological balance.

Barn Owls were introduced to control rats. Beneficial plants of Turnera sp, Cassia cobannesisand Antigonon leptosus were planted to attract predator insects of caterpillar pests. Weeds are controlled selectively by using more environmental friendly herbicide such as Glyphosate.

The usage of Paraquat herbicide and chemicals has been reduced and minimized to control weeds and vermins.The sprayers are also trained insafety and spraying techniques. The chemicals are kept in designated storage and examined at regular intervals. Employees who handled the use of chemicals undergo medical examination. Natural vegetation on uncultivable land such as deep peat, very steep areas and riparian zones along watercourses are maintained to preserve biodiversity and wildlife corridors.

Two mills in Bengkulu region will be installed with Extended Aeration to enhance treatment of the mill effleunts by mechanical aeration. The construction works for these plants are expected to cost more than $500,000 and will be operational in 2014.

Some of our mills utilize the waste mesocarp fibre from the oil palm fruits as fuel to generate steam from boilers to produce power. The power generated drives all of the processing equipment in mills and estate housing. This helps to reduce reliance on fossil fuel such as diesel in our milling operations.

The Group continues to comply and preserve the High Conservative Value (HCV) areas recognised by the Department of Forestry.

Principal risks and uncertainties

The Group's business involves risks and uncertainties of which the Directors currently consider the following to be material. There are or may be other risks and uncertainties faced by the Group that the Directors currently deem immaterial, or of which they are unaware, that may have a material adverse impact on the Group. The Board reviews risk management on an annual basis.

Country

The Group's operations are located substantially in Indonesia and therefore significantly rely on economic and political stability in Indonesia. The country has recently benefited from a period of relative political stability, steady economic growth and stable financial system. Whilst the risks may exist with the impending Presidential election in 2014, the Board perceives that the Group will be able to continue to extract profits from its subsidiaries in Indonesia for the foreseeable future.

The Group acquires the land exploitation rights ("HGU") after paying land acquisition and HGU processing costs. These costs are capitalized as land asset costs since the asset characteristics fulfill the recognition criteria. The Group holds its land under 25 or 35 year renewable leases (HGU's) which the Directors believe will be renewed when due by complying with existing law and regulations. Any changes in law and regulations relating to land tenure could have negative impact on the Group's activities.

Exchange Rates

CPO is a US-Dollar-denominated commodity and a significant proportion of revenue costs in Indonesia (such as fertiliser and fuel) and development costs (such as heavy machinery and mills equipment) are imported and are US-Dollar related. Adverse movements of Rupiah against US Dollar can have a negative effect on the operating costs. The Rupiah has depreciated by 26% against US dollar since the beginning of 2013. The Board has taken the view that these risks are inherent in the business and feels that adopting hedging mechanisms to counter the negative effects of exchange controls are both difficult to achieve and would not be cost effective.

Weather and natural disasters

Oil palms rely on regular sunshine and rainfall but these weather patterns can vary and extremes such as unusual dry periods or, conversely, heavy rainfall leading to flooding in some locations do occur. Dry periods, in particular, will affect yields in the short and medium terms but any deficits so caused tend to be made up at a later date. High levels of rainfall can disrupt estate operations and result in harvesting delays with loss of oil palm fruits or deterioration in fruit quality. This high rainfall was experienced by the plantations in Bengkulu at the first and last two months of 2013. It caused floods and damaged the roads resulting in difficulty in transportation of FFB to the mills. Where appropriate, bunding is built around flood prone areas and drainage constructed and adapted either to evacuate surplus water or to maintain water levels in areas quick to dry out. Where practical, natural disasters are covered by insurance policy.

Cultivation risks

As in any plantations business, there are risks that crops from the Group's estate operations may be affected by pests and diseases. Agricultural best practice and husbandry can to some extent mitigate these risks but they cannot be entirely eliminated.

Other operational factors

The Group's plantation productivity is dependent upon necessary inputs, including, in particular fertilizer, spare-parts, chemicals and fuel. Whilst the Directors have no reason to anticipate shortages of such inputs, Group's operations could be materially disrupted should such shortages occur over an extended period. Increase in prices would significantly increase production costs. The average price of diesel has increased by 13% to Rp10,668/litre from Rp9,417/litre in 2013 and will continue to put pressure on other production inputs.

The Group has bulk storage facilities located within its mills which are adequate to meet the Group's requirements for CPO storage. Nevertheless, delays in collection of CPO sold could result in CPO production exceeding the available CPO storage capacity. This would likely force a temporary halt in FFB processing resulting in loss of crop.

The Group maintains insurance to cover those risks against which the Directors consider it economical to insure. Certain risks (including the risk of crop loss through fire, earthquake and other perils potentially affecting the planted areas on the Group's estates), for which insurance cover is either not available or would in the opinion of the Directors be disproportionately expensive, are not insured. These risks are mitigated by the geographical spread of the plantations and to the extent feasible by management practices but an occurrence of an adverse uninsured event could result in the Group sustaining material losses.

There have been substantial increases in governmental directed minimum wage levels in Indonesia. The Group pays not less than the minimum wage and the increase will result in a significant rise in Group's employment costs. The regional hikes in minimum wages for 2014 ranges from 7.1% in Bengkulu to 29.6% in Bangka.

Produce prices

The profitability and cash flow of the plantation operations depend upon world prices of CPO and upon the Group's ability to sell CPO at price levels comparable with world prices.

CPO is a primary commodity and is affected by the world economy, including levels of inflation. This may lead to significant price swings although, the Directors believe that such swings should be moderated by continuous demand in economies like China, India and Indonesia.

Expansion

The Group is planning to plant more oil palm. In areas where the Group holds the land rights (or Izin lokasi), the settlers and land owners are compensated before land is cleared for planting. The Group compensates the settlers and land owners in a transparent and fair way. The negotiation for compensation can, however, involve a considerable number of local individuals with differing views and this can cause difficulties in reaching agreement with all affected parties. Such difficulties have in the past caused delays to the planting programmes. It is rather difficult to foretell with reliable accuracy what area will be available for planting out of the total area covered by land rights. Much depends upon the success of negotiations with settlers and land owners and satisfactory resolution of land title issue. The Group has to-date mixed success in managing such periodic delays and disruptions especially in Bengkulu, Bangka and Kalimantan.

The Directors believe that when the land become available for planting, the development programmes can be funded from available Group cash resources and future operational cash flows, supplemented with external debt funding. Should, however, land or cash availability fall short of expectations and the Group is unable to secure alternative land or funding, the Group's continued growth may be delayed or curtailed.

Environmental and governance practices

The Group's management and Directors take seriously their environmental and social responsibilities. The ISPO which fundamentally aligns with RSPO principles became the mandatory standard for all Indonesian planters in March 2012.

The estates in North Sumatera are long established. Management follows industry best-practice guidelines and abides by Indonesian law with regard to such matters as application of fertilisers, health and safety. The Group has started to use empty fruit bunches for mulching in the estates which is a form of fertiliser and reduces the consumption of inorganic fertilisers. The liquid effluent from the mills after treatment is applied to trenches in the estates as a form of fertiliser. The Group's $5 million investment in the biogas and biomass project started for one of the mills in North Sumatera which is expected to be completed in the second quarter of 2014 will enhance the waste management treatment of that mill and at the same time mitigate emissions of biogas. The project is also expected to generate economic returns by the sale of dried long fibres which is processed from empty fruits bunches. The successful implementation and running of this project will pave the way for further similar undertakings for the rest of the Group's mills.

The Group has had an environmental impact assessment undertaken by independent consultant for its new project in Kalimantan.

The Group recognises that its plantations hire large numbers of people and have significant economic importance for local communities in the areas of the Group's operations. This imposes social and governance obligations which bring with them risks that any failure by the Group to meet the standards expected of it may result in reputational and financial damage. The Group seeks to mitigate such risks by establishing standard procedures to ensure that it meets its obligations, monitoring performance against those standards and investigating thoroughly and taking action to prevent recurrence in respect of any failures identified. The Group undertakes periodic reviews of its management performance in relation to various matters and this review pays particular attention to the manner in which the Group has discharged its corporate social responsibilities including setting up of plasma schemes for its new plantations.

Social, community and human rights issues

Any material breakdown in relations between the Group and the host population in the vicinity of the operations could disrupt the Group's operations. The Group therefore endeavours to mitigate this risk by liaising regularly with representatives of surrounding villages and by seeking to improve local living standards through mutually beneficial economic and social interaction with the local villages. In particular, the Group, when possible, gives priority to applications for employment from members of the local population and supports specific initiatives to encourage local farmers and tradesmen to act as suppliers to the Group, its employees and their dependents. The Group spends considerable sums of money constructing new roads and bridges and maintaining existing roads used by villagers and the Group for the transportation of FFB. The Group also provides technical and management expertise to villagers to develop oil palm plots or Kebun Kas Desa (village's scheme) surrounding the operating estates. The returns from these plots are used to improve villages' community welfare. As at end of 2013, a total of 22 Kebun Kas Desa plots have been developed. The Group also provides corporate guarantee to cooperatives who borrow from local bank to finance the development of the Plasma scheme mandated by the government.

Gender diversity

The AEP Plc Board is composed of three men and one woman with extensive knowledge in their respective fields of experience. The Board has taken note of the recent legislative initiatives with regard to the representation of women on the boards of Directors of listed companies and will make every effort to conform to its composition based on legislative requirement.

	2013 average employed during the year
Group Headcount		Women	Men	Total
Board		2	9	11
Senior Management (GM and Above)		1	13	14
Managers & Executive		32	360	392
Full Time		152	4,878	5,030
Part-time Field Workers		2,968	7,854	10,822
Total		3,155	13,114	16,269
%		19.4%	80.6%	100%

Although the Group provides equal opportunities for female workers in the plantations, due to the nature of work and the remote location of plantations from the towns and cities, the male workers make up a majority of the field workers.

Employees

In 2013, the number of full time workforce averaged 5,447 while the part-time labour averaged 10,822.

The Group has formal processes for recruitment particularly key managerial positions, where psychometric testing is conducted to support the selection and hiring decisions. Exit interviews are also conducted with departing employees to ensure that management can address any significant issues.

The Group has a programme for recruiting graduates from Indonesian universities to join existing employees selected on regular basis to training programmes organised by the Group's training centre that provides grounding and refresher courses in technical aspects of oil palm estate management. The training centre also conducts regular programmes for all levels of employees to raise the competency and quality of employees in general. These programmes are often supplemented by external management development courses including attending industry conferences for technical updates. A wide variety of topics is covered including work ethics, motivation, self-improvement, company values, health and safety.

A large workforce and their families are housed in the Group's housing across the Group's plantations. The Group further provides at its own cost water and electricity and a host of other amenities including places of worship, schools and clinics. On top of competitive salaries and bonuses, extensive benefits and privileges help the Group to retain and motivate its employees.

The Group promotes a policy for creation of equal and ethnically diverse employment opportunities including with respect to gender.

The Group has in place key performance linked indicators to determine increment and bonus entitlements for its employees.

Outlook

FFB production for two months to February 2014 was 11% higher against the same period in 2013. Although the weather has been relatively dry so far this year, it is too early to forecast whether the production will be better for the rest of the year.

The CIF (Cost, Insurance, Freight) Rotterdam CPO price opened the year 2014 at $905/mt and prices are expected to be in the range of $800/mt to $1,000/mt for the first half of 2014.

The US dollar appreciated by approximately 26% (2012: 10%) against the Indonesian Rupiah in 2013. There was no adverse fluctuation against the US dollar in early 2014. The Rupiah may be subjected to some degree of volatility with the Presidential election in 2014.

The continuing rise in income levels and population growth in China, India and Indonesia would expected to drive the consumption of CPO and likely lead to a gradual recovery in CPO prices. The price differential between CPO and soya oil which has narrowed from a near four-year high of over $300/mt to just over $67/mt would nevertheless remain a concern as a smaller spread could prompt CPO buyers to switch to rival soya oil. However the Indonesian government efforts to rein in fiscal deficits by introducing mandatory blending of biodiesel up to 10% effective from 1 January 2014 for industrial and commercial purposes would provide some price support.

The rising material costs and wages in Indonesia are expected to increase the overall production cost in 2014. Indonesia's minimum wage has increased at an average rate of between 10% and 15% per annum over the last few years. The Indonesian government recently announced regional hikes in 2014 minimum wage ranging from 7.1% in Bengkulu to 29.6% for Bangka province. These wage hikes will raise overall estate costs and erode profit margins.

Nevertheless barring any unforeseen circumstances, the Group is confident that CPO demand will be sustainable in the long term on the backdrop of global economic recovery and we can expect a satisfactory profit level and cash flow for 2014.

By order of the Board

Dato' John Lim Ewe Chuan

Executive Director, Corporate Finance and Corporate Affairs

8 April 2014

Consolidated Income Statement

For the year ended 31 December 2013

			2013					(Restated) 2012
Continuing operations	Note	Result before BA adjustment		BA adjustment	Total	Result before BA adjustment				BA adjustment		Total
		$000		$000	$000	$000				$000		$000
Revenue	3	201,917		-	201,917		237,352		-			237,352
Cost of sales		(133,400)		-	(133,400)		(142,755)		-			(142,755)
Gross profit		68,517		-	68,517		94,597		-			94,597
Biological asset revaluation movement		-		93,661	93,661		-		(6,729)			(6,729)
Administration expenses		(8,898)		-	(8,898)		(9,201)		-			(9,201)
Operating profit		59,619		93,661	153,280		85,396		(6,729)			78,667
Exchange losses		(2,781)		-	(2,781)		(24)		-			(24)
Finance income	4	4,676		-	4,676		3,336		-			3,336
Finance expense	4	(1,774)		-	(1,774)		(117)		-			(117)
Profit before tax	5	59,740		93,661	153,401		88,591		(6,729)			81,862
Tax expense		(16,178)		(23,415)	(39,593)		(22,476)		1,682			(20,794)
Profit for the year		43,562		70,246	113,808		66,115		(5,047)			61,068
Attributable to:
- Owners of the parent		35,950		57,571	93,521		53,108		(5,777)			47,331
- Non-controlling interests		7,612		12,675	20,287		13,007		730			13,737
		43,562		70,246	113,808		66,115		(5,047)			61,068
Earnings per share for profit attributable to the owners of the parent during the year
- basic	7				235.95cts						119.41cts
- diluted	7				235.67cts						119.27cts

Consolidated Statement of Comprehensive Income

For the year ended 31 December 2013

	2013 $000	(Restated) 2012 $000

Profit for the year	113,808		61,068

Other comprehensive income:

Items may be reclassified to profit or loss:

Loss on exchange translation of foreign operations	(112,824)		(25,337)

Net other comprehensive expense may be reclassified to profit or loss	(112,824)		(25,337)

Items not to be reclassified to profit or loss:

Unrealised gain / (loss) on revaluation of the estates	31,807		(4,064)

Deferred tax on revaluation of assets	(7,951)		1,015

Remeasurement of retirement benefit plan	278		-

Deferred tax on retirement benefit	(71)		-

Net other comprehensive income / (expense) not being reclassified to profit or loss	24,063		(3,049)
Total other comprehensive expenses for the year, net of tax	(88,761)		(28,386)
Total comprehensive income for the year	25,047		32,682

Attributable to:
- Owners of the parent	21,508		23,172
- Non-controlling interests	3,539		9,510
	25,047		32,682

Consolidated Statement of Financial Position

As at 31 December 2013

	Note	2013 $000	(Restated) 2012 $000	(Restated) 2011 $000
Non-current assets
Biological assets	10	265,835	207,679	197,410
Property, plant and equipment	10	213,342	212,177	214,840
Receivables		5,649	5,033	1,551

		484,826	424,889	413,801
Current assets
Inventories		8,448	6,075	9,439
Tax receivables		8,464	4,734	5,098
Trade and other receivables		7,271	7,419	4,877
Cash and cash equivalents		98,738	116,250	90,482

		122,921	134,478	109,896
Current liabilities
Loans and borrowings		(84)	(52)	(6,465)
Trade and other payables		(15,331)	(15,635)	(20,878)
Tax liabilities		(4,988)	(6,996)	(11,019)
		(20,403)	(22,683)	(38,362)
Net current assets		102,518	111,795	71,534
Non- current liabilities
Loans and borrowings		(34,937)	(25,026)	(58)
Deferred tax liabilities		(55,298)	(37,236)	(43,098)
Retirement benefits - net liabilities		(3,099)	(3,057)	(1,593)
Net assets		494,010	471,365	440,586
Issued capital and reserves attributable to owners of the parent
Share capital		15,504	15,504	15,504
Treasury shares		(1,171)	(1,171)	(1,507)
Share premium		23,935	23,935	23,935
Capital redemption reserve		1,087	1,087	1,087
Revaluation reserves		56,767	36,799	39,480
Exchange reserves		(181,107)	(88,838)	(67,360)
Retained earnings		493,031	401,006	355,914
		408,046	388,322	367,053
Non-controlling interests		85,964	83,043	73,533
Total equity		494,010	471,365	440,586

Consolidated Statement of Changes in Equity

For the year ended 31 December 2013

	Share capital	Treasury shares	Share premium	Capital redemption reserve	Revaluation reserve	Foreign exchange reserve	Retained earnings	Total	Non-controlling interests	Total equity
	$000	$000	$000	$000	$000	$000	$000	$000	$000	$000
Balance as at 31 December 2011	15,504	(1,507)	23,935	1,087	39,480	(67,602)	380,633	391,530	77,369	468,899
Restatement (note 2)	-	-	-	-	-	242	(24,719)	(24,477)	(3,836)	(28,313)
Balance at 31 December 2011 after restatement	15,504	(1,507)	23,935	1,087	39,480	(67,360)	355,914	367,053	73,533	440,586
Items of other comprehensive income
-Unrealised loss on revaluation of estates, net of tax	-	-	-	-	(2,681)	-	-	(2,681)	(368)	(3,049)
-Loss on exchange translation	-	-	-	-	-	(21,478)	-	(21,478)	(3,859)	(25,337)
Total other comprehensive expenses	-	-	-	-	(2,681)	(21,478)	-	(24,159)	(4,227)	(28,386)
Profit for year	-	-	-	-	-	-	47,331	47,331	13,737	61,068
Total comprehensive income and expenses for the year	-	-	-	-	(2,681)	(21,478)	47,331	23,172	9,510	32,682
Share options exercised	-	336	-	-	-	-	133	469	-	469
Dividends paid	-	-	-	-	-	-	(2,372)	(2,372)	-	(2,372)
Balance at 31 December 2012 after restatement	15,504	(1,171)	23,935	1,087	36,799	(88,838)	401,006	388,322	83,043	471,365
Items of other comprehensive income
-Unrealised gain on revaluation of estates, net of tax	-	-	-	-	20,062	-	-	20,062	3,794	23,856
-Disposal of land	-	-	-	-	(94)	-	94	-	-	-
-Remeasurement of retirement benefit plan, net of tax	-	-	-	-	-	-	194	194	13	207
-Loss on exchange translation of foreign operations	-	-	-	-	-	(92,269)	-	(92,269)	(20,555)	(112,824)
Total other comprehensive income / (expenses)	-	-	-	-	19,968	(92,269)	288	(72,013)	(16,748)	(88,761)
Profit for year	-	-	-	-	-	-	93,521	93,521	20,287	113,808
Total comprehensive income and expenses for the year	-	-	-	-	19,968	(92,269)	93,809	21,508	3,539	25,047
Dividends paid	-	-	-	-	-	-	(1,784)	(1,784)	(618)	(2,402)
Balance at 31 December 2013	15,504	(1,171)	23,935	1,087	56,767	(181,107)	493,031	408,046	85,964	494,010

Consolidated Statement of Cash Flows

For the year ended 31 December 2013

	2013 $000	(Restated) 2012 $000
Cash flows from operating activities
Profit before tax	153,401	81,862
Adjustments for:
BA adjustment	(93,661)	6,729
(Profit) / Loss on disposal of tangible fixed assets	(319)	19
Depreciation	6,406	6,135
Retirement benefit provisions	1,325	1,898
Net finance income	(2,902)	(3,219)
Unrealised loss in foreign exchange	2,781	24
Property, plant and equipment written off	97	-
Operating cash flow before changes in working capital	67,128	93,448
(Increase) / Decrease in inventories	(3,591)	2,821
Decrease / (Increase) in non-curent, trade and other receivables	2,456	(6,646)
Increase / (Decrease) in trade and other payables	2,400	(4,143)
Cash inflow from operations	68,393	85,480
Interest paid	(1,774)	(144)
Retirement benefit paid	(244)	(294)
Overseas tax paid	(23,981)	(26,622)
Net cash flow from operations	42,394	58,420

Investing activities
Property, plant and equipment
- purchase	(49,938)	(49,054)
- sale	641	786
Interest received	4,676	3,336
Net cash used in investing activities	(44,621)	(44,932)

	2013 $000		(Restated) 2012 $000
Financing activities
Dividends paid by Company	(1,784)	(2,372)
Drawdown of long term loans	10,000	25,000
Finance lease repayment	(30)	(27)
Dividends paid to minority shareholders	(618)	-
Repayment of existing long term loans	-	(6,438)
Share options exercised	-	469
Net cash used in financing activities	7,568	16,632
Increase in cash and cash equivalents	5,341	30,120

Cash and cash equivalents
At beginning of year	116,250	90,482
Foreign exchange	(22,853)	(4,352)
At end of year	98,738	116,250
Comprising:
Cash at end of year	98,738	116,250

1 Accounting policies

Anglo-Eastern Plantations Plc ("AEP") is a company incorporated in the United Kingdom under the Companies Act 2006 and is listed on the London Stock Exchange. The registered office of AEP is located at Quadrant House, 6^th Floor, 4 Thomas More Square, London E1W 1YW, United Kingdom. The principal activity of the Group is plantation agriculture.

The financial information set out below does not constitute the Company's statutory accounts for 2013 or 2012. Statutory accounts for the year 31 December 2012 have been reported on by the Independent Auditors. The Independent Auditors' Report on that Annual Report and Financial Statement for 2012 was qualified on the basis of a limitation in scope, did not draw attention to any matters by way of emphasis, and contained statements under 498(2) or 498(3) of the Companies Act 2006.

The results for 2013 are audited and are based on the information presented in this announcement. The Independent Auditors' Report on the Annual Report and Financial Statements for 2013 is unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.

Statutory accounts for the year ended 31 December 2012 have been filed with the Registrar of Companies. The statutory accounts for the year ended 31 December 2013, prepared under IFRS, will be delivered to the Registrar in due course.

The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all years presented, except as detailed in the following paragraph.

The 2012 Annual Report stated that the Company was in the process of resolving a query from the Financial Reporting Council ("FRC") concerning the measurement of the notional rent used in the valuation of the Group's biological assets. Following further discussion with the FRC, the Group has changed the determination of notional rent, one of the assumptions used in the valuation of the Group's biological assets in accordance with its stated policy to reflect current market data in the estimate of the cost for the use of the land. The change in measurement of the notional rent has significant impact on the carrying amount of biological asset and thus the accounts for the years ended 31 December 2012 and 2011 were restated. The restatements and related adjustments are disclosed in these accounts in note 2.

Basis of preparation

The financial statements have been prepared in accordance with International Financial Reporting Standards and its interpretations (IFRS and IFRIC interpretations) issued by the International Accounting Standards Board ("IASB") as adopted by the EU and with those parts of the Companies Act 2006 applicable to companies preparing their accounts under IFRS.

Changes in accounting standards

a) The following new standards, interpretations and amendments are effective for the first time in these financial statements.

• IFRS 13 Fair Value Measurement

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

• IAS 19 Amendments - Employee Benefits

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

IAS 1 Amendments - Presentation of Items of Other Comprehensive Income

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

IFRS 13 Fair Value Measurement

The application of IFRS 13 has not materially impacted the fair value measurements carried out by the Group but has resulted in additional disclosures. See note 9.

IAS 19 Amendments - Employee Benefits

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

• The standard requires past service cost to be recognised immediately in profit or loss. This has resulted in unrecognised past service cost at 1 January 2013 of $197,000 being recognised in Income Statement during the period.

Reconciliation of current service cost:

	$000
Current service cost - prior year	197
Current service cost - current	936
Current service cost - total	1,133

• The standard introduces a new term called ''remeasurements''. This is made up of actuarial gains and losses, the difference between actual investment returns and the return implied by the net interest cost which should be recognised in Other Comprehensive Income. This has resulted in actuarial loss on defined benefit plan at 1 January 2013 of $1,839,000 and return on plan asset of $70,000 being charged to other comprehensive income during the period.

Reconciliation of remeasurement of retirement benefit plan:

	$000
Actuarial loss / (gain) - prior year	1,839
Actuarial loss / (gain) - current	(1,413)
Actuarial loss / (gain) - total	426
Return on plan asset - prior year	70
Return on plan asset - current	(218)
Return on plan asset - total	(148)
Remeasurement of retirement benefit plan as per other comprehensive income	278

The impact on the prior year's comprehensive income and other comprehensive income (as shown in previous page) as a result of the change in accounting policy is immaterial. Thus, the comparative figures have not been restated and the impact has been accounted for in the current year.

b) New standards, interpretations and amendments not yet effective.

The following new standards, interpretations and amendments, which have not been applied in these financial statements, will or may have an effect on the Group's future financial statements but this is not expected to be material:

• IFRS 9 Financial Instruments (effective for accounting periods beginning on or after 1 January 2015)*

• IFRS 10 Consolidated Financial Statements (effective for accounting periods beginning on or after 1 January 2014)

• IFRS 11 Joint Arrangements (effective for accounting periods beginning on or after 1 January 2014)

• IFRS 12 Disclosures of Interest in Other Entities (effective for accounting periods beginning on or after 1 January 2014)

• IAS 27 Separate Financial Statements (effective for accounting periods beginning on or after 1 January 2014)

• IAS 28 Investments in Associates and Joint Ventures (effective for accounting periods beginning on or after 1 January 2014)

• IAS 32 Amendments - Offsetting Financial Assets and Financial Liabilities (effective for accounting periods beginning on or after 1 January 2014)

• IAS 36 Amendments - Recoverable Amounts Disclosures for Non-financial Assets (effective for accounting periods beginning on or after 1 January 2014)

• IAS 39 Amendments - Defined Benefit Plans: Employee Contributions (effective for accounting periods beginning on or after 1 July 2014)

• IFRIC 21 Levies (effective for accounting periods beginning on or after 1 January 2014)

*These standards and interpretations are not endorsed by the EU at present.

None of the new standards, interpretations and amendments, which are effective for periods beginning after 1 January 2014 and which have not been adopted early, are expected to have a material effect on the Group's future financial statements.

Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries) made up to 31 December each year. Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities.

Business combinations

The consolidated financial statements incorporate the results of business combinations using the purchase method. In the consolidated statement of financial position, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. Acquisitions of entities that comprise principally land with no active plantation business do not represent business combinations, in such cases, the amount paid for each acquisition is allocated between the identifiable assets/liabilities at the acquisition date.

Foreign currency

The individual financial statements of each subsidiary are presented in the currency of the country in which it operates (its functional currency) with the exception of the Company and its UK subsidiaries which are presented in US dollars. The presentation currency for the consolidated financial statements is also US dollars, chosen because, as internationally traded commodities, the price of the bulk of the Group's products are ultimately link to the US dollar.

On consolidation, the results of overseas operations are translated into US dollars at average exchange rates for the year unless exchange rates fluctuate significantly in which case the actual rate is used. All assets and liabilities of overseas operations are translated at the rate ruling at the balance sheet date. Exchange differences arising on re-translating the opening net assets at opening rate and the results of overseas operations at actual rate are recognised directly in equity (the "foreign exchange reserve"). Exchange differences recognised in the income statement of Group entities' separate financial statements on the translation of long-term monetary items forming part of the Group's net investment in the overseas operation concerned are reclassified to the foreign exchange reserve if the item is denominated in the presentational currency of the Group or of the overseas operation concerned.

On disposal of a foreign operation, the cumulative exchange differences recognised in the foreign exchange reserve relating to that operation up to date of disposal are transferred to the income statement as part of the profit or loss on disposal.

All other exchange profits or losses are credited or charged to the income statement.

Revenue recognition

Revenue includes

- amounts receivable for produce provided in the normal course of business, net of sales related taxes and levies, including export taxes;

- amounts received for sales of palm kernel shell, rubber wood and other income of an operating nature.

Sales of CPO, palm kernel and rubber slab are recognised when goods are delivered or allocated to a purchaser. Delivery or allocation does not take place until contracts are paid for. Sales of latex are recognised on signing of sales contract, this being the point at which the significant risks and rewards of ownership are passed over to the buyer. Other income mainly consists of amounts received from sales of nut shell, which is recognised when the goods are delivered.

Share based payments

Share options are measured at fair value (excluding the effect of non market-based vesting conditions) at the date of grant. This fair value is expensed on a straight-line basis over the vesting period, based on the Group's estimate of shares that will eventually vest and adjusted for the effect of non market-based vesting conditions.

Fair value is measured by use of a binomial model. The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions, and behavioural considerations.

Provided that all other vesting conditions are satisfied, a charge is made irrespective of whether the market vesting conditions are satisfied.

Capitalisation on development activities

Interest capitalisation

Interest on third party loans directly related to field development is capitalised in the proportion that the opening immature area bears to the total planted area of the relevant estate. Interest on loans related to construction in progress (such as an oil mill) is capitalised up to the commissioning of that asset. These interest rates are booked at the rate prevailing at the time.

Plantation development

Plantation development comprises cost of planting and development on oil palm and other plantation crops. Costs of new planting and development of plantation crops are capitalised from the stage of land clearing up to the stage of maturity or subject to certificate of Land Exploitation Rights (HGU) being obtained, whichever is earlier. The costs of immature plantations consist mainly of the accumulated cost of land clearing, planting, fertilising and maintaining the plantation, borrowing costs and other indirect overhead costs up to the time the trees are harvestable and to the extent appropriate.

Tax

UK and foreign corporation tax is provided at amounts expected to be paid or recovered using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date.

Dividends

Equity dividends are recognised when they become legally payable. The Company pays only one dividend each year as a final dividend which becomes legally payable when approved by the shareholders at the next following annual general meeting.

Property, plant and equipment

All items of property, plant and equipment are initially measured at cost. Cost includes expenditure that is directly attributable to the acquisition of the items. After initial recognition, all items of property, plant and equipment except land and construction in progress, are stated at cost less accumulated depreciation and any accumulated impairment losses.

The Indonesian authorities have granted certain land exploitation rights and operating permits for the estates. The land rights are usually renewed without significant cost subject to compliance with the laws and regulations of Indonesia. Therefore, the Group has classified the land rights as leasehold land and accounted for as an indefinite finance lease. Estate land is subsequently carried at fair value, based on periodic valuations on an open market basis by a professionally qualified valuer. These revaluations are made with sufficient regularity to ensure that the carrying amount does not differ materially from that which would be determined using fair value at the end of the reporting period. Changes in fair value are recognised in other comprehensive income and accumulated in the revaluation reserve except to the extent that any decrease in value in excess of the credit balance on the revaluation reserve, or reversal of such a transaction, is recognised in income statement. On the disposal of a revalued estate, any related balance remaining in the revaluation reserve is transferred to retained earnings as a movement in reserves.

Construction in progress is stated at cost. The accumulated costs will be reclassified to the appropriate class of assets when construction is completed and the asset is ready for its intended use. Construction in progress is also not depreciated until such time when the asset is available for use.

Buildings and oil mills are depreciated using the straight-line method. All other property, plant and equipment items are depreciated using the double-declining-balance method. The yearly rates of depreciation are as follows:

Buildings - 5% to 10% per annum

Oil Mill - 5% per annum

Estate plant, equipment & vehicle - 12.5% to 50% per annum

Office plant, equipment & vehicle - 25% to 50% per annum

Biological assets

During the year the Company has changed one of its assumptions, notional rent, used in the valuation of the Group's biological assets. The details of the change are disclosed in note 2 - Prior year restatement.

Biological assets comprise oil palm trees and nurseries. The biological process commences with the initial preparation of land and planting of seedlings and ceases with the delivery of crop in the form of fresh fruit bunches ("FFB") to the manufacturing process in which crude palm oil and palm kernel are extracted from the FFB.

Biological assets are carried at fair value less costs to sell determined on the basis of the net present value of cash flows arising in producing FFB. No account is taken in the valuation of future replanting. Biological assets are valued at each accounting date based upon a valuation of the planted areas using a discounted cash flow method by reference to the FFB expected to be harvested over the full remaining productive life of the trees up to 20 years. Areas are included in the valuation once they are planted. However oil palm which are not yet mature at the accounting date, and hence are not producing FFB, are valued on a similar basis but with the discounted value of the estimated cost to complete planting and to maintain the assets to maturity being deducted from the discounted FFB value. Movement in valuation surplus of biological assets is charged or credited to the income statement for the relevant period (BA adjustment).

Leased assets

Assets financed by leasing agreements which give rights approximating to ownership (finance leases) are capitalised at amounts equal to the original cost of the asset to the lessors and depreciation is provided on the asset over the shorter of the lease term or its useful economic life in accordance with Group depreciation policy for those held at cost. Land rights are held at fair value and revalued at the balance sheet date. The capital elements of future obligations under finance leases are included as liabilities in the balance sheet and the current year's interest element is charged to the income statement to produce a constant rate of charge on the balance of capital repayments outstanding. There are no operating leases.

Impairment

Impairment tests on tangible assets are undertaken annually on 31 December. Where the carrying value of an asset exceeds its recoverable amount (i.e. the higher of value in use or fair value, less costs to sell), the asset is written down accordingly. Impairment charges are included in the administrative expenses in the income statement, except to the extent they reverse gains previously recognised in the statement of recognised income and expense.

Inventories

FFB harvested from the biological assets are stated at fair value less costs to sell at the point of harvest. The fair value gain arising on the initial recognition of harvested produce is the result of the FFB weight produced multiplied by the FFB price adjusted for transportation costs to sell. There is an active market for FFB and the price is based on statistics provided by the government for each region.

The gain/(loss) arising on the initial recognition at the point of harvest is recognised in the income statement within the biological asset revaluation. The FFB is transferred to the mill, processed in to CPO and sold within 24 hours so the write off of the FFB is netted off against the initial recognition within the biological asset revaluation.

All other inventories are initially recognised at cost, and subsequently at the lower of cost and net realisable value. In the case of processed produce for sale which comprises palm oil and kernel, cost represents the monthly weighted-average cost of production, and appropriate production overheads. Estate and mill consumables are valued on a weighted average cost basis.

Financial assets

All the Group's receivables and loans are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are recognised at fair value at inception and subsequently at amortised cost. No impairment provisions have been considered necessary.

Cash and cash equivalents consist of cash in hand and short term deposits at banks with an original maturity of not exceeding three months. Bank overdrafts are shown within loans and borrowings under current liabilities on the balance sheet.

There are no assets in hedging relationships and no financial assets or liabilities available for sale.

Financial liabilities

All the Group's financial liabilities are non-derivative financial liabilities.

Bank borrowings and long term development loans are initially recognised at fair value and subsequently at amortised cost, which is the total of proceeds received net of issue costs. Finance charges are accounted for on an accruals basis and charged in the income statement, unless capitalised according to the policy as set out under Interest capitalisation above.

Trade and other payables are shown at fair value at recognition and subsequently at amortised cost.

Deferred tax

Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability in the balance sheet differs from its tax base except for differences in the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction affects neither accounting nor taxable profit.

The Group recognises deferred tax liabilities arising from taxable temporary differences on investments in subsidiaries, except where the Group is able to control the reversal of the temporary differences and it is probable that the temporary difference will not reverse in the foreseeable future.

Recognition of deferred tax assets is restricted to those instances where it is possible that taxable profit will be available against which the difference can be utilised.

Deferred tax is recognised on temporary differences arising on property revaluation surpluses.

Deferred tax is determined using the tax rates that are enacted or substantively enacted at the balance sheet date. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, such as revaluations, in which case the deferred tax is also dealt with in equity; in this case assets and liabilities are offset.

Retirement benefits

Defined contribution schemes

Contributions to defined contribution pension schemes are charged to the consolidated income statement in the year to which they relate.

Defined benefit schemes

The Group operates a number of defined benefit schemes in respect of its Indonesian operations. These schemes' surpluses and deficits are measured at:

• The fair value of plan assets at the reporting date; less

• Plan liabilities calculated using the projected unit credit method discounted to its present value using yields available on high quality corporate bonds that have maturity dates approximating to the terms of the liabilities; plus

• Unrecognised past service costs; less

• The effect of minimum funding requirements agreed with scheme trustees.

Remeasurements of the net defined obligation are recognised directly within equity. The remeasurements include:

• Actuarial gains and losses;

• Return on plan assets (interest exclusive);

• Any asset ceiling effects (interest inclusive).

Service costs are recognised in comprehensive income, and include current and past service costs as well as gains and losses on curtailments.

Net interest expense / (income) is recognised in comprehensive income, and is calculated by applying the discount rate used to measure the defined benefit obligation / (asset) at the beginning of the annual period to the balance of the net defined benefit obligation / (asset), considering the effects of contributions and benefit payments during the period.

Gains or losses arising from changes to scheme benefits or scheme curtailment are recognised immediately in comprehensive income.

Settlements of defined benefit schemes are recognised in the period in which the settlement occurs.

Prior to 1 January 2013, the difference between the fair value of the assets held in the Group's defined benefit schemes and the schemes' liabilities measured on an actuarial basis using the projected unit method are recognised in the Group's balance sheet as retirement benefits assets or liabilities as appropriate. The carrying value of any resulting defined benefit schemes' assets is restricted to the extent that the Group is able to recover the surplus either through reduced contributions in the future or through refunds from the schemes. Changes in the defined benefit schemes' assets or liabilities arising from factors other than cash contribution by the Group are charged to the comprehensive income.

Treasury shares

Consideration paid or received for the purchase or sale of the Company's own shares for holding in treasury is recognised directly in equity, where the cost is presented as the treasury share reserve. Any excess of the consideration received on the sale of treasury shares over the weighted average cost of shares sold, is taken to the share premium account.

Any shares held in treasury are treated as cancelled for the purpose of calculating earnings per share.

Critical accounting estimates and judgements

The preparation of the Group financial statements in conformity with IFRS requires the use of estimates and assumptions that affect the reported assets and liabilities and reported revenue and expenses. Actual results could differ from those estimates and accordingly they are reviewed on an on-going basis. The main areas in which estimates are used are: fair value of biological assets, property, plant and equipment, deferred tax and retirement benefits.

Revisions to accounting estimates are recognised in the period in which the estimate is revised or the revision affects only that period, or in the period of revision and future periods if the revision affects both current and future periods.

Assumptions regarding the valuation of biological assets, property, plant and equipment are set out in note 10. Assumptions regarding the valuation of agricultural produce at the point of harvest less costs to sell are set out in the inventories accounting policy. The Group's policy with regard to impairment of such assets is set out above.

Financial guarantee contracts

Where the Company enters into financial guarantee contracts and guarantees the indebtedness of other companies within the Group, the Company considers these to be insurance arrangements and accounts for them as such. In this respect, the Company treats the guarantee contract as a contingent liability until such time that it becomes probable that the Company will be required to make a payment under the guarantee.

2 Prior year restatement

The 2012 Annual Report stated that the Company was in the process of resolving a query from the Financial Reporting Council ("FRC") concerning the measurement of the notional rent used in the valuation of the Group's biological assets. In October 2013, the Group engaged a professional valuer in United Kingdom ("UK valuer") for an independent opinion on the measurement of the notional rent. As a result, the Group has adopted a notional rent equivalent to 9% of the value of planted land as proposed by the UK valuer in valuing its biological asset. This resulted in the accounts for the years ended 31 December 2012 and 2011 being restated and the closure of the discussions with the FRC. The effect of the restatements is summarised below.

The impact of these prior year adjustments:- After Biological Assets	$000	(Restated) 2012 $000
Profit for the year before restatement		62,703
Effect of change in restatement:
Biological asset revaluation movement	(2,180)
Tax expense	545
		(1,635)
Profit for the year after restatement		61,068

Other comprehensive expenses for the year before restatement		(30,108)
Effect of change in restatement:
Profit on exchange translation of foreign operations		1,722
Other comprehensive expenses for the year after restatement		(28,386)

The effect of these prior year adjustments had a negative impact on the earnings per share of 3.69cts for the year to 31 December 2012.

The following table summarises the impact of these prior year adjustments on the Consolidated Statement of Financial Position:

	Biological assets	Deferred tax liabilities	Exchange reserve	Retained earnings	Non-controlling interest
	$000	$000	$000	$000	$000
Balance as reported 1 January 2012	235,158	(52,533)	(67,602)	380,633	77,369
Effect of restatement	(37,748)	9,435	242	(24,719)	(3,836)
Restated balance as at 1 January 2012	197,410	(43,098)	(67,360)	355,914	73,533

Balance as reported 31 December 2012	245,313	(46,644)	(90,571)	427,186	86,822
Effect of restatement up to 1 January 2012	(37,748)	9,435	242	(24,719)	(3,836)
Effect of restatement during the year	114	(27)	1,491	(1,461)	57
Restated balance as at 31 December 2012	207,679	(37,236)	(88,838)	401,006	83,043

3 Revenue

		2013 $000	2012 $000

Sales of produce:	-
- CPO		198,803	232,717
- Rubber		2,497	2,527
Other income		617	2,108
		201,917	237,352

4 Finance income and expense

	2013 $000	2012 $000

Finance income
Interest receivable on:
Credit bank balances and time deposits	4,676	3,336

Finance expense
Interest payable on:
Development loans	(1,774)	(117)
Net finance income recognised in income statement	2,902	3,219

5 Profit before tax

	2013 $000	2012 $000

Profit before tax is stated after charging
Depreciation (note 10)	6,406	6,135
Exchange losses	2,781	24
Operating lease expense
- Property	410	429
Professional fees	1,015	2,080
Staff costs	28,698	23,545
Remuneration received by the group's auditor or associates of the group's auditor:
Audit of parent company	6	6
Audit of consolidated financial statement	155	151
Total audit services	161	157

Audit of overseas subsidiaries
- Malaysia	23	22
- Indonesia	71	64
Total audit services	94	86

Fees payable to the group's auditor for other services	170	59

Total auditors' remuneration	425	302

6 Segment information

Measurement of operating segment profit or loss, assets and liabilities

The Group evaluates segmental performance on the basis of profit or loss from operations calculated in accordance with IFRS but excluding non-recurring losses, such as share based payments.

Inter-segment transactions are made based on terms mutually agreed by the parties to maximise the utilisation of Group's resources at a rate acceptable to local tax authorities. This policy was applied consistently throughout the current and prior period.

The Group's assets and liabilities are allocated to segments based on geographical location.

	North Sumatra	Bengkulu	South Sumatra		Riau	Bangka	Kalimantan		Total Indonesia		Malaysia		UK		Total
	$000	$000	$000		$000	$000	$000		$000		$000		$000		$000
2013
Total sales revenue (all external)
- CPO	90,764	63,019		18	38,166	-		2,516		194,483		4,318		2		198,803
- Rubber	2,497	-		-	-	-		-		2,497		-		-		2,497
Other income	827	112		6	91	-		(419)		617		-		-		617
Total revenue	94,088	63,131		24	38,257	-		2,097		197,597		4,318		2		201,917

Profit/(loss) before tax	33,879	15,700		(443)	19,017	1		(6,633)		61,521		206		(1,987)		59,740
BA movement																93,661
Profit for the year before tax per consolidated income statement																153,401

Depreciation	(2,248)	(2,268)		(475)	(585)	(32)		(540)		(6,148)		(258)		-		(6,406)
Inter-Segment Transactions	2,821	(2,236)		(242)	(656)	-		(1,512)		(1,825)		845		980		-
Income tax	(24,567)	(8,086)		(554)	(6,542)	79		(288)		(39,958)		585		(220)		(39,593)

Total Assets	195,447	148,268		59,285	67,739	12,744		89,882		573,365		29,720		4,662		607,747
Non-Current Assets	153,524	122,485		57,673	38,726	12,462		76,259		461,129		22,334		1,363		484,826
Non-Current Assets - Additions	13,164	5,952		10,172	1,513	1,069		17,828		49,698		240		-		49,938


2012 (restated)
Total sales revenue (all external)
- CPO	95,755	78,385		-	52,915	-		322		227,377		5,340		-		232,717
- Rubber	2,527	-		-	-	-		-		2,527		-		-		2,527
Other income	1,030	359		-	712	-		7		2,108		-		-		2,108
Total revenue	99,312	78,744		-	53,627	-		329		232,012		5,340		-		237,352

Profit/(loss) before tax	44,456	25,609		(52)	20,422	(2)		(73)		90,360		555		(2,324)		88,591
BA movement																(6,729)
Profit for the year before tax per consolidated income statement																81,862

Depreciation	(1,899)	(2,430)		(489)	(629)	(19)		(421)		(5,887)		(248)		-		(6,135)
Inter-Segment Transactions	1,487	(1,714)		(168)	(503)	-		(1,123)		(2,021)		1,771		250		-
Income tax	(12,637)	(2,052)		645	(7,932)	115		887		(20,974)		180		-		(20,794)

Total Assets	170,233	138,552		54,889	72,908	11,495		83,405		531,482		22,577		5,308		559,367
Non-Current Assets	120,603	118,984		52,770	38,959	10,960		66,104		408,380		15,146		1,363		424,889
Non-Current Assets - Additions	9,770	7,615		14,168	1,409	497		15,229		48,688		390		-		49,078

In year 2013, revenues from 4 customers of the Indonesian segment represent approximately $110.1m (2012: $128.1m) of the Group's total revenue. An analysis of these revenues is provided as below. Although customer 1 to 4 are over 10% of the Group total revenue, there is no over reliance on these Customers as tenders are performed on a monthly basis.

	North Sumatra	Bengkulu	South Sumatra	Riau	Bangka	Kalimantan	Total Indonesia	Malaysia	UK	Total
	$000	$000	$000	$000	$000	$000	$000	$000	$000	$000
2013
Customer 1	22,958	-	-	8,408	-	-	31,366	-	-	31,366
Customer 2	9,100	16,139	-	5,270	-	-	30,509	-	-	30,509
Customer 3	23,617	1,182	-	813	-	-	25,612	-	-	25,612
Customer 4	11,206	-	-	11,374	-	-	22,580	-	-	22,580
	66,881	17,321	-	25,865	-	-	110,067	-	-	110,067

2012
Customer 1	-	33,999	-	-	-	-	33,999	-	-	33,999
Customer 2	15,976	1,890	-	13,749	-	-	31,615	-	-	31,615
Customer 3	17,907	-	-	13,326	-	-	31,233	-	-	31,233
Customer 4	31,205	-	-	-	-	-	31,205	-	-	31,205
	65,088	35,889	-	27,075	-	-	128,052	-	-	128,052

	%	%	%	%	%	%	%	%	%	%
2013
Customer 1	11.4	-	-	4.2	-	-	15.6	-	-	15.6
Customer 2	4.5	8.0	-	2.6	-	-	15.1	-	-	15.1
Customer 3	11.7	0.6	-	0.4	-	-	12.7	-	-	12.7
Customer 4	5.5	-	-	5.6	-	-	11.1	-	-	11.1
	33.1	8.6	-	12.8	-	-	54.5	-	-	54.5

2012
Customer 1	-	14.3	-	-	-	-	14.3	-	-	14.3
Customer 2	6.7	0.8	-	5.8	-	-	13.3	-	-	13.3
Customer 3	7.5	-	-	5.6	-	-	13.1	-	-	13.1
Customer 4	13.1	-	-	-	-	-	13.1	-	-	13.1
	27.3	15.1	-	11.4	-	-	53.8	-	-	53.8

Save for a small amount of rubber, all the Group's operations are devoted to oil palm. The Group's report is by geographical area, as each area tends to have different agricultural conditions.

7 Earnings per ordinary share (EPS)

		(Restated)
	2013 $000	2012 $000

Profit for the year attributable to owners of the Company before BA adjustment	35,950	53,108
Net BA adjustment	57,571	(5,777)
Earnings used in basic and diluted EPS	93,521	47,331

	Number	Number
	'000	'000

Weighted average number of shares in issue in year
- used in basic EPS	39,636	39,636
- dilutive effect of outstanding share options	48	48
- used in diluted EPS	39,684	39,684

Basic EPS before BA adjustment	90.70cts	133.99cts
Basic EPS after BA adjustment	235.95cts	119.41cts

Dilutive EPS before BA adjustment	90.59cts	133.83cts
Dilutive EPS after BA adjustment	235.67cts	119.27cts

8 Dividends

	2013 $000	2012 $000

Paid during the year
Final dividend of 4.5cts per ordinary share for the year ended 31 December 2012 (2011: 6.0cts)	1,784	2,372

Proposed final dividend of 3.0p per ordinary share for the year ended 31 December 2013 (2012: 4.5cts)	1,969	1,784

The proposed dividend for 2013 is subject to shareholders' approval at the forthcoming annual general meeting and has not been included as a liability in these financial statements.

9 Fair value measurement of financial instruments

IFRS 7 'Financial Instruments: Disclosures' (IFRS 7) requires certain disclosures which require the classification of financial assets and financial liabilities measured at fair value using a fair value hierarchy that reflects the significance of the inputs used in making the fair value measurement. These disclosures include the classification of fair values within a three-level hierarchy. The three levels are defined based on the observability of significant inputs to the measurement, as follows:

• Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities;

• Level 2 - inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly;

• Level 3 - unobservable inputs for the asset or liability.

The Group's biological assets and land are stated at fair value. Details of the information about the fair value hierarchy in relation to biological assets and land at 31 December 2013 are as follows:

	Level 1	Level 2	Level 3	Fair value
	$000	$000	$000	$000

Biological assets	-	-	265,835	265,835
Land	-	-	149,871	149,871

There were no items classified under Level 1 and Level 2 and thus there were no transfers between Level 1 and Level 2 during the year.

The following table set out the valuation technique used in determination of the fair value of the land including the key inputs used:

Item

Valuation approach and inputs used

Land

The fair values of the land for five major companies in Indonesia and a Malaysia company are derived using the sale comparison approach. Although there is observable market data, there is a significant degree of judgement in determining the adjustments required in deriving at the final land valuation. Sale prices of comparable land in similar location are adjusted for differences in key attributes such as location, legal title, land area, land type and topography. The valuation model is based on price per hectare. The growth rates per hectare obtained by comparing the current valuation against the valuation undertaken in year 2011 were then applied to the 2011 land value of the remaining companies in the same geographical location to derive year 2013 fair value of land. Unplantable land was excluded in this exercise since it has zero value.

The valuation methodology of biological assets is disclosed in note 10. The significant unobservable inputs used in the fair value measurement of biological assets and its relationship to fair value are exhibited below:

Significant unobservable inputs	Relationship of unobservable inputs to fair value
CPO selling price	The higher the CPO selling price, the higher the fair value
Discount rate	The higher the discount rate, the lower the fair value
Notional rent	The higher the notional rent, the lower the fair value

The derivation of the above unobservable inputs and the sensitivity of the Group's biological assets to the fluctuation in these unobservable inputs are disclosed in note 10.

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

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

• Non-current receivables

• Trade and other receivables

• Cash and cash equivalents

• Borrowings

• Trade and other payables

10 Biological assets, property, plant and equipment

	Biological assets	Mill	Land	Buildings	Estate plant, equipment & vehicle	Office plant, equipment & vehicle	Construction in progress	PPE Total	Total
	$000	$000	$000	$000	$000	$000	$000	$000	$000
Cost or valuation
At 1 January 2012 (restated)	197,410	41,887	157,390	22,574	14,251	1,351	2,979	240,432	437,842
Exchange translations	(11,531)	(2,546)	(8,643)	(1,527)	(769)	(30)	(156)	(13,671)	(25,202)
Reclassification	848	-	(848)	4,350	-	-	(4,350)	(848)	-
Decrease due to harvest	(20,522)	-	-	-	-	-	-	-	(20,522)
Revaluations	13,793	-	(4,064)	-	-	-	-	(4,064)	9,729
Additions	3,749	2,509	4,246	7,674	2,571	81	2,165	19,246	22,995
Development costs capitalised	23,932	-	-	-	-	-	2,151	2,151	26,083
Disposals	-	(97)	-	(142)	(462)	(2)	(690)	(1,393)	(1,393)
At 31 December 2012 (restated)	207,679	41,753	148,081	32,929	15,591	1,400	2,099	241,853	449,532
Exchange translations	(58,857)	(9,762)	(33,978)	(8,011)	(3,354)	(228)	(505)	(55,838)	(114,695)
Reclassification	(1,194)	106	(2)	9,991	-	-	(10,095)	-	(1,194)
Decrease due to harvest	(14,092)	-	-	-	-	-	-	-	(14,092)
Revaluations	107,753	-	31,807	-	-	-	-	31,807	139,560
Additions	105	6,546	2,712	53	2,383	125	7,157	18,976	19,081
Development costs capitalised	24,770	1,206	1,460	-	-	-	3,421	6,087	30,857
Disposals / Written off	(329)	(286)	(209)	(226)	23	(1)	-	(699)	(1,028)
At 31 December 2013	265,835	39,563	149,871	34,736	14,643	1,296	2,077	242,186	508,021
Accumulated depreciation and impairment
At 1 January 2012	-	10,812	-	5,599	8,437	744	-	25,592	25,592
Exchange translations	-	(704)	-	(305)	(431)	(23)	-	(1,463)	(1,463)
Charge for the year	-	2,344	-	1,640	1,963	188	-	6,135	6,135
Disposal	-	(77)	-	(102)	(408)	(1)	-	(588)	(588)
At 31 December 2012	-	12,375	-	6,832	9,561	908	-	29,676	29,676
Exchange translations	-	(2,864)	-	(1,573)	(2,031)	(161)	-	(6,629)	(6,629)
Charge for the year	-	2,305	-	2,044	1,867	190	-	6,406	6,406
Disposal / Written off	-	(264)	-	(118)	(226)	(1)	-	(609)	(609)
At 31 December 2013	-	11,552	-	7,185	9,171	936	-	28,844	28,844
Carrying amount
At 31 December 2011 (restated)	197,410	31,075	157,390	16,975	5,814	607	2,979	214,840	412,250
At 31 December 2012 (restated)	207,679	29,378	148,081	26,097	6,030	492	2,099	212,177	419,856
At 31 December 2013	265,835	28,011	149,871	27,551	5,472	360	2,077	213,342	479,177
Net (loss) / gain arising from changes in fair value of biological assets
At 31 December 2012 (restated)	(6,729)	-	-	-	-	-	-	-	(6,729)
At 31 December 2013	93,661	-	-	-	-	-	-	-	93,661

The fair value less costs to sell of FFB harvested during the period, determined at the point of harvest is exhibited below:

	2013	2012
Fair value of FFB
Crop production and yield - FFB (mt)	787,000	783,000
Fair value of FFB ($000)	116,578	128,750
Fair value of FFB less costs to sell ($000)	106,889	122,783

The gain arising on the fair value of FFB at the point of harvest is recognised in the income statement within the biological asset revaluation. A reconciliation of the amount included within the income statement and the biological asset has been included below:

		(Restated)
	2013 $000		2012 $000

Harvest included in the biological asset valuation from estimated production and pricing assumptions less costs to sell in the prior year	14,092		20,522
Gain from actual production and pricing	92,797		102,261
Fair value of FFB harvested from own production	106,889		122,783

The decrease of $14,092,000 (2012: $20,522,000) from harvest was included in the prior year valuation for the current year and is therefore deducted from biological asset valuation in the current year as the FFB is harvested. The actual fair value of harvested FFB varies to forecast due to the changes in actual production, actual FFB price and actual costs incurred. The gain on fair value of the harvested FFB is written off as the FFB is processed in to CPO.

The biological asset revaluation movement included within the income statement is calculated as follows:

		(Restated)
	2013 $000		2012 $000

Decrease due to harvest	(14,092)		(20,522)
Revaluations	107,753		13,793
Net gain / (loss) arising in the income statement from changes in fair value of biological assets	93,661		(6,729)

During the year, the Group has engaged a new firm, Muttaqin Bambang Purwanto Rozak Uswatun & Rekan with its head office located in Jakarta, Indonesia, to undertake the valuation of biological assets. The carrying amount of the Group's biological assets as at 31 December 2012 was based on valuations undertaken by independent valuers, Doli Siregar & Rekan with its head office located in Jakarta, Indonesia. Except for an adjustment on discount rate and the measurement of the notional rent which is determined by the Directors and the UK valuer respectively, the valuation was carried out independently by the Indonesian valuers. All the three firms have the appropriate professional qualifications and recent experience in the location and category of the properties being valued. Further information of the Indonesian firms can be obtained from 'www.ds-r.co.id' and 'www.kjpp-mbpru.com' respectively. In the year 2013, independent land valuation was undertaken for five major companies in Indonesia and a Malaysia company. The growth rates per hectare obtained by comparing the current valuation against the valuation undertaken in year 2011 were then applied to the 2011 land value of the remaining companies in the same geographical location to derive year 2013 fair value of land. Unplantable land was excluded in this exercise since it has zero value. The Group's land as at 31 December 2012 has been valued by the Directors with reference to independent valuation undertaken as at 31 December 2011. Had the revalued land been measured on a historical cost basis, their net book value would have been US$44,848,000 (2012: US$49,853,000). Refer to note 9 for further disclosure of the fair value measurement of land.

The methodology of the biological asset valuations was using discounted cash flow ("DCF") over the expected 20-year economic life of the asset. The assumption applied in the valuation were, inter alia, an assumed CPO selling price of $700/mt (2012: $675/mt), discount rate of 15.8% (2012: 17.5%) and notional rent equivalent to 9% (2012: 9%) of the value of planted land. The discount rates were determined by the Directors based on their assessment of various risks including financial, business and country risk of where the plantations are located as well as taking into account the Company's weighted average cost of capital. The CPO price is taken to be the 10-year average (2012: 10-year average) rounded to the nearest $25 based on historical widely-quoted commodity price for CPO and represents the Directors' best estimate of the price sustainable over the longer term. An inflation rate of 5% (2012: 5%) was applied to the second to sixth years of the DCF. The notional rent charge is based on key capital market and property indicators in the countries and regions of operations. Refer to note 9 for further disclosure of the fair value measurement of biological asset.

The following table exhibits the sensitivity of the Group's biological assets to the fluctuation in CPO price, discount rate and notional rent:

		(Restated)
	2013 $000		2012 $000
A change of $50 in the price assumption for CPO
-$50 in the price assumption	(53,411)		(43,991)
+$50 in the price assumption	53,381		45,273
A change of 1% in the discount rate
-1% in the discount rate	15,687		12,079
+1% in the discount rate	(14,363)		(11,084)
A change of notional rent equivalent to 1% of the value of planted land
-1% in the value of planted land	5,192		4,840
+1% in the value of planted land	(5,192)		(4,716)

Included within reclassifications in the current year is an amount of $1,194,000 in biological assets that has been reclassified to non-current receivables - Due from cooperatives under Plasma Programme in relation to planted land transferred to smallholders under the plasma scheme.

The estates include $1,427,000 (2012: $276,000) of interest and $5,606,000 (2012: $9,308,000) of overheads capitalised during the year in respect of expenditure on estates under development.

The Indonesian authorities have granted certain land exploitation rights and operating permits for the estates. In the case of established estates in North Sumatra these rights and permits expire between 2023 and 2038 with rights of renewal thereafter. As of estates in Bengkulu land titles were issued between 1994 and 2008 and the titles expire between 2028 and 2034 with rights of renewal thereafter for two consecutive periods of 25 and 35 years respectively. In Riau, land titles were issued in 2004 and expire in 2033. In the case of PT Cahaya Pelita Andhika's estate acquired in 2007 land titles were issued in 1996 to expire in 2029.

Subject to compliance with the laws and regulations of Indonesia, land rights are usually renewed. The cost of renewing the land rights is not significant.

The land title of the estate in Malaysia is a long-term lease expiring in 2084.

11 Posting of Annual Financial Report

The Annual Financial Report will be posted to shareholders in due course. Copies of this announcement are available from the offices of the Company Secretary, CETC (Nominees) Limited, Quadrant House, 6^th Floor, 4 Thomas More Square, London E1W 1YW and on the Company's website at www.angloeastern.co.uk.

This information is provided by RNS

The company news service from the London Stock Exchange

END

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