Final Results and Notice of AGM

RNS Number : 5821D

Asian Plantations Limited

30 April 2013

Asian Plantations Ltd

("APL" or the "Company")

Final Results for the year ended 31 December 2012

& Notice of Annual General Meeting

Asian Plantations Limited (LSE: PALM), a palm oil plantation company with operations in Malaysia, is pleased to announce its audited results for the year ended 31 December 2012.

Highlights

§ Approximately 13,627 hectares of land planted as at year-end, with a further 157 hectares being used for the mill site, seedling nurseries, staff housing, quarry and related infrastructure works.

§ Milling complex completed and fully operational. Significant third party fresh fruit bunches ("FFB") contracts have been secured for processing into crude palm oil.

§ US$2,820,000 of revenue reported (2011: US$578,000), an increase of 388%, based on production and sale of 17,838 tonnes of fresh fruit bunches (FFB). The Company expects to process over 200,000 tonnes of third-party and internally produced FFB in 2013.

§ Announcement of an attractively priced green-field land acquisition to complement the Company's existing estates.

Post-Balance Sheet Events

§ Successful issuance of the second and final tranche of the RM255,000,000 bond programme.

§ Successful issuance of a US$5,000,000 convertible bond, with an implied conversion price of 286 pence per share, to OCBC Bank.

Graeme Brown, APL's Joint Chief Executive Officer, commented:

"We are pleased with the results for 2012 which culminated in the completion of our milling facilities. As an integrated palm oil estate, we are now looking forward to substantially increasing our in-house production of FFB and third party processing volumes."

In addition to its final results for 2012, the Company announces that the Annual General Meeting ("AGM") relating to its financial year ended 31 December 2012 will be held at The American Club at 10 Claymore Hill, Singapore 229573 on 14 June 2013 at 9:30 am (local time). The AGM notice has been published and is available for download from the Company's website at www.asianplantations.com.

-END-

For further information contact:

Asian Plantations Limited

Graeme Brown, Co-Founder & Joint Chief Executive Officer

Dennis Melka, Co-Founder & Joint Chief Executive Officer

Tel: +65 6325 0970

Strand Hanson Limited

James Harris

James Spinney

Tel: +44 (0) 20 7409 3494

Macquarie Capital (Europe) Limited

Steve Baldwin

Dan Iacopetti

Tel: +44 (0) 203 037 2000

Panmure Gordon (UK) Limited

Tom Nicholson

Callum Stewart

Tel: +65 6824 8204

Tel: +44 (0) 20 7459 3600

Bankside Consultants

Simon Rothschild

Tel: +44 (0) 20 7367 8871

CHAIRMAN'S STATEMENT

As per previous Annual Statements, we will update the Company's shareholders with some macro level observations which, in our opinion, create and validate the investment thesis for our corporate investment activities.

SOUTHEAST ASIAN PALM OIL AS AN ESSENTIAL FOOD INGREDIENT TO THE WORLD

Humans require edible oils and fats to survive (in particular saturated fats). In the simplest of terms, as the world's human population continues to rise, so does demand for edible oils; a process further accelerated by rising income levels. This equation has driven the global vegetable oil industry for the last four decades, particularly as butter and animal fats were proved insufficient to meet demand or were shunned by consumers in the post-WWII period. In 1970, based on the USDA's annual reports (which detail the world's nine major edible oils), there were 3.7bn humans consuming 15.7m tonnes of vegetable oil (of which 1.9m was palm oil, approximately 13% market share). In 2012, 7.0bn humans consumed 150.3m tonnes of vegetable oils (of which 54.8m was palm oil, now approximately 36% market share). This represents a compound annual growth rate (CAGR) for the edible oil sector of 5.5% over four decades, versus a population growth CAGR of 1.5%.

Whilst palm oil's continuing growth and increase in market share is impressive, it is important to realize the crop's critical importance in the global export markets. Palm oil now dominates over 60% of the world's trade in edible oil, virtually all of which originates from Malaysia and Indonesia. These two countries are essential in the world supply chain for edible oils and fats and provide a reliable, naturally produced source of cost-effective calories for billions of people annually.

Whilst critics of our industry live comfortably in their city homes, far from the realities of the billions of working poor seeking a better life and improved diets in the emerging markets, we continually remind people that we are fundamentally in the business of producing affordable food for the world in a socially responsible and environmentally sustainable manner. Palm oil is: (i) largely produced on land owned by small-holders (nearly 50%), contrary to public opinion, with the remainder in corporate ownership such as Asian Plantations' estates; (ii) not subsidized by the government (compared with western agriculture which often relies heavily on redistributive government policies or "mandates" to survive), and is furthermore a significant taxpayer to the Malaysian and Indonesian governments; (iii) non-genetically modified (GM), as there is no GM in the palm oil industry in contrast to western cereal crops; (iv) naturally irrigated, compared with many forms of agriculture which deplete natural aquifiers; (v) non-mechanized, thereby creating tremendous employment requirements (a 10,000 ha palm oil estate will create on average 1,500 direct full-time positions, compared with a mechanized corn or soya farm which will employ less then 20 staff); and (vi) environmentally sustainable in that one hectare of mature palm can annually produce over six tonnes of oil per hectare, compared with a half tonne of oil from competing cereal crops. Per tonne, palm oil has the smallest environmental footprint with respect to land, fertilizer and chemical usage, a fact conveniently ignored by our industry's critics.

SOUTHEAST ASIAN PALM OIL IS THE GLOBAL LOW COST COMPETITOR

As mentioned above, the palm oil tree's immense productivity gives it the lowest cost of production for all edible oil crops. It is for this reason that palm oil plantations in Southeast Asia have a global competitive and comparative advantage in the production of edible oils. The cash cost of production (excluding taxes) is approximately USD375 per tonne of crude palm oil (CPO), compared with a current market selling price of approximately USD750 per tonne. Whilst CPO price has been negatively impacted over the last two years, it is important to note that even at these current prices, palm oil remains a highly profitable agricultural crop.

IN 10 YEARS FROM NOW…

By 2021 (only nine years from now), the United Nations estimates that the global population will rise to 7.7bn, an increase of over 700m people. Based on the historical correlation between population, emerging market incomes and edible oils, global edible oil production needs to rise to over 230m tonnes per annum in 2021 of which palm oil would be over 100m tonnes, and this assumes soya oil would be over 60m tonnes. To put these figures in context, all of Malaysia produced approximately only 18.2m tonnes of palm oil in 2012 on 5m ha of palm oil estates. Thus, in less than nine years, the world needs the productive palm oil output of more than two additional "Malaysias" - implying a planting requirement rate of nearly 1m hectares per annum. Whilst it is clear that Indonesia will cover a portion of this requirement, it can not meet this need in its entirety.

Historically, Malaysia has planted over 100,000 ha per annum for the last 30 years, but this is widely acknowledged to be likely to fall to negligible levels in the next few years as Malaysian agricultural land inventories near depletion. Indonesian planting rates have historically been over 350,000 ha per annum for the last decade but have recently reset to a 200,000 - 250,000 ha per annum rate due to increased environmental protection and government regulation. Despite the recent downward trend in CPO price, we remain of the opinion that a long-term imbalance is building in the global edible oil complex in favour of the producers, particularly the low cost palm oil producers in Southeast Asia.

The human population continues to grow and palm oil is the only crop that can satisfy our society's requirements for edible oils. We remain confident that patient investors will be well rewarded in our industry despite the recent down-turn in commodity prices. Since the Company's inception, we have experienced two volatile price cycles; we encourage investors to see through this short term volatilty and take a medium term view on CPO price.

INVESTMENT THESIS & STRATEGIC OBJECTIVES

Due to Malaysia's strict land titling and zoning regulations, which protect over 60% of the country's land mass as a Forest or Forest Reserve, the supply of agriculturally titled land for the development of palm oil is nearly exhausted in Malaysia. There is some titled land available for purchase in the State of Sarawak; yet, we estimate this purchasable supply will also be depleted by 2015, resulting in a situation similar to that of Peninsular Malaysia and the State of Sabah. Over the last two years, we have seen first hand a dramatic tightness in the availability, or lack thereof, in agriculturally titled land for palm oil development.

Due to our on-the-ground presence in Kuching (the capital of the State of Sarawak), we have a unique opportunity to acquire, consolidate and develop this remaining land supply in Sarawak. All land parcels that we purchase are mineral soil and have full agriculture title (i.e. "bankable" titles). We will not consider peat soil opportunities due to the higher development costs and negative environmental impact. Since our Admission on the London Stock Exchange's AIM Market ("AIM") on 30 November 2009, we have completed three acquisitions, taking our total land resource to 20,770 ha (51,323 acres) and exceeding our original listing target. We continue to review select acquisition opportunities which will complement the Company's existing estates.

We are of the opinion that the development of properly titled green-field palm oil estates provides a highly attractive return on equity over the medium term. Current all-in-cost of acquisition, ownership and development in Sarawak, over a four year period, is approximately USD9,500 per ha (excluding mill construction costs and assuming a land acquisition price of USD2,500 per ha). Of this gross investment per hectare, we are able to leverage approximately two-thirds from the local banks in local currency under long term (+10 years) financing arrangements.

Research shows that well-run, mature Malaysian palm oil plantations are consistently valued at up to USD25,000 to USD30,000 per ha in the public equity markets; this presents a meaningful premium when compared to valuations in other palm oil producing countries. As such, the Directors believe that green-field land acquisitions in Malaysia, at valuations of approximately USD2,500 per ha, are accretive in value to all shareholders of the Company.

MALAYSIA

We are of the opinion that Malaysia represents a superior location for the development of palm oil estates due to a variety of legal, operational, financial and valuation considerations. Malaysia is an "A-" rated country that has welcomed foreign investment since the 1960s. It benefits from a stable, multi-racial democratic political system and an advanced land titling system for agriculture that protects the nation's forest reserves and indigenous land rights. Malaysia's banking system is generally regarded as stable and liquid; for example, no Malaysian bank was bailed-out by the government in the last global financial crisis. Borrowing costs are approximately six per cent for our loan facilities compared with corporate borrowing costs of mid-teens in Indonesia and the non-availability of leverage in other countries on the Equator. The Company enjoys strong relations with its funding banks. The availability of low-cost bank finance for plantation development in Malaysia dramatically enhances the Company's long-term equity returns, comparing most favourably with alternative destinations in the emerging markets suitable for the cultivation of palm oil. Equally important, most of the largest, best capitalized plantations companies in the world are based in Malaysia.

FINANCIAL PERFOMANCE

For 2012, the Company reported increased revenue and substantially reduced operating loss per share.

	31.12.12 (USD)	31.12.11 (USD)
Revenue	2,820,000	578,000
Other Income	2,507,000	4,190,000
Administrative Expenses	5,139,000	12,676,000
Other Expenses	1,554,000	819,000
Finance Expenses	3,481,000	1,732,000
Loss before Taxation	7,072,000	10,833,000
Income Tax (Expense) / Benefit	193,000	(722,000)
Loss for the Year	6,879,000	11,555,000
Loss per share Basic and diluted	14.8	28.2

FINANCIAL POSITION

The Company is pleased to report revenue of USD2,820,000 in 2012, an increase of 388% over the 2011 result. The Company's balance sheet as at 31 December 2012 shows a net assets position of USD57,030,000 (2011: USD59,122,000). The Company has gross indebtedness of USD123,468,000 (2011: USD44,342,000); a large portion of this increase in indebtedness was related to construction of the Company's recently opened state-of-the-art crushing mill complex. Cash balances were USD15,785,000 at year-end 2012. During 2013, the Company expects to process and sell over 200,000 tonnes of fresh fruit bunches (FFB) consisting of approximately 150,000 tonnes of third party FFB and approximately 50,000 tonnes of internally produced FFB; this represents a substantial increase over the 17,838 tonnes of FFB sold in 2012.

FINANCING ACTIVITIES

On 10 May 2012, the Company issued the Initial Tranche of notes under a RM255,000,000 bond programme. The Initial Tranche was composed of a RM65,000,000 (approximately USD21,200,000) ten year maturity note (due 2022) and a RM35,000,000 (approximately USD11,400,000) nine year maturity note (due 2021). The all-in interest cost to the Company, including the annual bank guarantee fee, is 6.00% and 6.10% for the nine and ten year notes, respectively. This represents a 244 basis point ("bps") premium for the nine year tranche over the equivalent nine year Malaysian Government Securities (MGS), then trading at 3.56% and a 252 bps premium over the equivalent ten year MGS trading at 3.58%.

The Second Tranche of the bond program totalling RM155,000,000 (USD49,800,000) was issued on 15 March 2013. The successful issuance of the bond programme better matches the Company's liabilities with its long-term asset base.

By year-end 2013, we expect the Company to have gross cash (equity and debt) invested in excess of USD250,000,000.

OPERATIONS & PLANTING STRATEGY

We have four wholly-owned estates:

BJ Corporation	4,795	ha
Incosetia	5,839	ha (acquired 30^th December 2009)
Fortune	5,136	ha (acquired 30^th December 2010)
Dulit	5,000	ha (acquired 28^th February 2012)
Total	20,770	ha (approximately 51,323 acres)

As at year-end 2012, the Company had approximately 13,627 hectares of land planted, with a further 157 hectares being used for the mill site, seedling nurseries, staff housing, quarry and related infrastructure works essential for plantation operations. This compares favourably with 9,322 hectares planted as at year-end 2011. As at year-end 2012, the Company had four seedling nurseries in operation on its estates and collectively employed over 1,200 people. Subject to the successful closing of the Grand Performance acquisition, the Company expects to have over 18,000 hectares planted by year-end 2013 and planting works fully completed by year-end 2014 with an estimated 22,000 ha planted (pro forma for the pending acquisition).

Our FFB processing mill opened in the first quarter of 2013, thereby enabling the Company to maximise operating margins. The mill complex has a total potential capacity of 120 tonnes per hour, provided via two lines of 60 tonnes per hour. The first line opened in first quarter 2013 and the second line will be turned on, with minimal additional capital expenditures, once fruit volumes are sufficient which is most likely in 2014. We are using vertical sterilizer technology, with certain proprietary elements, coupled with methane recapture for processing of the effluent water. Through the combination of these two technologies, we are of the opinion that the Company has one of the most advanced processing mill complexes in the palm oil plantation industry globally. Compared to the industry standard "horizontal sterilizer" mill (which is effectively pre-WWII British era technology), the Company's mill has a lower all-in construction cost and higher oil extraction ratio (OER).

It is important to note that the Company's estates are in close proximity to each other, thereby simplifying operations and management. Further, the estates are only 2.5 hours away, on a combination of paved and unpaved roads, from the deep-water port of Bintulu. This port is the only deep-water port in Sarawak and the transit point for virtually all of Sarawak's CPO exports and refining.

CLOSING COMMENTS

We wish to thank all our staff, who have worked to make the Company the success that it is today. We wish to thank our shareholders, who share our vision of creating a best-of-breed, sustainable palm oil company in Malaysia, and we also take this opportunity to thank our bankers at Malayan Banking Berhad for their continued support of our operations. Founded in 2008, the Company is now in its sixth year of heavy capital investment. We expect this investment to yield substantial cash flows to shareholders in the medium to long term, as our planting works are completed and estates mature.

The remainder of 2013 will be an exciting period for the Company, as we continue to plant out the estates and increase volumes at our milling facility. We look forward to updating you on our process in the months ahead.

TAN SRI Datuk Linggi
Non-Executive Chairman
30 April 2013

CORPORATE PHILOSOPHY

As a Company, we are committed to improving the lives of the rural communities living in the general vicinity of our estates, with approximately three villages and 200 people within 20km of the Company's plantations. It is important to note that no native communities live, or previously lived, on the Company's land.

Malaysia has an advanced titling regime, established by the British government prior to Malaysia's independence, which protects local and indigenous peoples' land rights under Native Customary Rights (NCR) zoning. Agriculturally titled land in Malaysia dedicated for palm oil development cannot overlap with NCR Land.

In addition, Malaysia has protected, via federal zoning, over 60% of its entire land mass as a "Forest" or "Forest Reserve". In Western European countries, such as the United Kingdom or France, less than 30% of land is protected under a similar designation. "Forest" and "Forest Reserve Land" does not overlap with agricultural land and it is illegal to plant an agricultural crop, such as palm oil, on "Forest" land. As such, we feel it is important to re-iterate that there is no "clearing the virgin rainforest for palm oil" in Malaysia - this practice stopped nearly two decades ago.

Further to adhering fully with the agricultural regime outlined above, we have undertaken a variety of CSR initiatives:

CLEAN WATER SUPPLY

Each of the communities now has a consistent, year-round, clean water supply for the first time in their existence due to our construction of clean water systems. Our gravity-fed water system utilizes mini-reservoirs and a piping system to the villages. The Company provides all equipment and materials to staff, who work hand-in-hand with the residents to build and maintain the water delivery system.

EMPLOYMENT OPPORTUNITIES & IMPROVED ACCESS

We employ all village residents who seek to work with the Company. Approximately 83 residents are currently employed in a variety of field and office roles.

In the first quarter of 2013, the Company also initiated construction of its own bridge across the Tinjar River to provide improved access between the Fortune and BJ Estates. The bridge will also serve to: (i) provide certain isolated communities greatly improved access to the regional town of Lapok which has government schools and medical facilities; and, (ii) encourage palm oil plantings by these communities as they will for the first time ever have access to a milling facility (the Company's). The bridge will open in the second half of 2013.

MEDICAL SERVICES

The Company's medical specialist visits each community on a monthly basis. Services provided include general medical treatment, vaccinations for newborns, provision of antibiotics and emergency medical evacuation when required. Prior to the Company's involvement, there was no regular medical service in these communities.

SUSTAINABLE COMMUNITY DEVELOPMENT THROUGH AGRICULTURE

As part of Company's continued efforts to combat rural poverty and to improve the lives of small villages in the vicinity of our estates, the Company has developed an innovative joint-venture model with several indigenous Kenyah villages. With local native rights lawyers, we have assisted two Kenyah villages in forming their first-ever palm oil co-operative, entitled Koperasi Majumung Luyang Lemeting Baram Berhad ("Koperasi"). On 23 February 2012, the Company signed a joint venture agreement (the "JV Agreeement") with Koperasi to develop a palm oil estate on native owned land (the "Koperasi Estate") which was witnessed by nearly all members of the villages, community leaders, state officials and representatives of
the Company.

The innovative joint venture is 60% owned by the Company and 40% by Koperasi, which has contributed the land for development for minimal financial consideration. As at year-end 2012, 200 hectares have been planted. The Company believes that the Koperasi Estate is an important development that will substantially improve the lives of several hundred rural families and assist with the Company's RSPO certification process. This planting is in addition to the Company's primary and proprietary planting programme described above.

Our staff are regularly invited to all local celebrations and community events; some of the residents have also participated in a video documentary which is available on www.asianplantations.com.

We strongly believe the foundation has been laid for closer cooperation in the years ahead. All aspects of our community outreach have been and will be guided by our desire to improve local lives in a sustainable and respectful manner.

Our Community Outreach Programme is also important for the Company as it prepares for the Roundtable on Sustainable Palm Oil ("RSPO") certification process. RSPO certification is a multi-year process which includes many audits, including on the Company's community and village relations.

ROUNDTABLE ON SUSTAINABLE PALM OIL

On 15 March 2012, the Executive Board of the Roundtable on Sustainable Palm Oil accepted Asian Plantations Limited as an Ordinary Member. The Company is committed to ensuring best practice at its estate with a view towards eventually securing field level certification of its estates.

Consolidated Income Statement

For the year ended 31 December 2012

	Note	2012	2011
		USD'000	USD'000

Revenue	6	2,820	578

Cost of sales	7	(2,225)	(374)


Gross profit		595	204

Other operating income	8	2,507	4,190
Administrative expenses	9	(5,139)	(12,676)
Other operating expenses	10	(1,554)	(819)


Operating loss		(3,591)	(9,101)

Finance costs	11	(3,481)	(1,732)


Loss before tax		(7,072)	(10,833)

Income tax benefit/(expense)	13	193	(722)


Loss for the year		(6,879)	(11,555)


Attributable to:

Owners of the Company		(6,879)	(11,555)
Non-controlling interests		-*	-


		(6,879)	(11,555)



Loss per share attributable to owners of the Company (cents per share)

Basic	14	(14.8)	(28.2)

Diluted	14	(14.8)	(28.2)

* Amount less than USD1,000

The accompanying accounting policies and explanatory notes form an integral part of the financial statements.

Consolidated Statement of Comprehensive Income

For the year ended 31 December 2012

	2012	2011
	USD'000	USD'000

Loss for the year	(6,879)	(11,555)

Other comprehensive income
Foreign currency translation adjustments	2,453	(1,978)


Total comprehensive income for the year, net of tax	(4,426)	(13,533)


Attributable to:

Owners of the Company	(4,426)	(13,533)
Non-controlling interests	-*	-


	(4,426)	(13,533)

* Amount less than USD1,000

The accompanying accounting policies and explanatory notes form an integral part of the financial statements.

Consolidated Statement of Financial Position

As at 31 December 2012

	Note	2012	2011
		USD'000	USD'000

Assets

Non-current assets

Deferred tax assets	13	178	-
Property, plant and equipment	15	53,227	15,600
Biological assets	16	55,287	22,811
Land use rights	17	53,517	32,158
Goodwill on consolidation	18	7,619	7,335


		169,828	77,904


Current assets

Inventories	19	1,724	345
Trade and other receivables	20	6,714	4,780
Income tax recoverable		99	7
Prepayments	21	2,308	1,575
Cash and short-term deposits	22	15,785	28,052


		26,630	34,759


Total assets		196,458	112,663


Equity and liabilities

Equity

Issued capital	23	88,594	87,321
Accumulated losses		(23,645)	(16,769)
Other reserves	24	(7,916)	(11,430)


Equity attributable to owners of the Company		57,033	59,122
Non-controlling interests		(3)	-


Total equity		57,030	59,122


Non-current liabilities

Loans and borrowings	25	102,709	38,942
Convertible bonds	26	1,995	2,681
Deferred tax liabilities	13	6,556	6,325


		111,260	47,948

Consolidated Statement of Financial Position

As at 31 December 2012 (cont'd)

	Note	2012	2011
		USD'000	USD'000

Current liabilities

Trade and other payables	27	6,810	1,271
Other current financial liabilities	28	2,464	1,086
Loans and borrowings	25	18,764	2,719
Derivative financial instruments	26	130	517


		28,168	5,593


Total liabilities		139,428	53,541


Total equity and liabilities		196,458	112,663

The accompanying accounting policies and explanatory notes form an integral part of the financial statements.

Consolidated Statement of Changes in Equity

For the year ended 31 December 2012

	Attributable to the owners of the Company				Non-controlling interests	Total equity
	Share Capital	Other reserves	Accumulated losses	Total	Non-controlling interests	Total equity
	USD'000	USD'000	USD'000	USD'000	USD'000	USD'000

At 1 January 2012	87,321	(11,430)	(16,769)	59,122	-	59,122


Loss for the year	-	-	(6,879)	(6,879)	- *	(6,879)

Other comprehensive income
Foreign currency translation adjustments	-	2,453	-	2,453	-	2,453


Total comprehensive income for the year	-	2,453	(6,879)	(4,426)	- *	(4,426)

Issuance of ordinary shares pursuant to share-based payment plans	97	(67)	-	30	-	30

Share-based payment transactions (Note 29)	-	1,128	-	1,128	-	1,128

Issuance of ordinary shares pursuant to conversion of convertible bond	1,176	-	-	1,176	-	1,176

Dilution of interest in a subsidiary	-	-	3	3	(3)	-


At 31 December 2012	88,594	(7,916)	(23,645)	57,033	(3)	57,030

* Amount less than USD1,000

Consolidated Statement of Changes in Equity

For the year ended 31 December 2012 (cont'd)

	Attributable to the owners of the Company				Non-controlling interests	Total equity
	Share capital	Other reserves	Accumulated losses	Total	Non-controlling interests	Total equity
	USD'000	USD'000	USD'000	USD'000	USD'000	USD'000

At 1 January 2011	42,211	(18,995)	(5,214)	18,002	-	18,002


Loss for the year	-	-	(11,555)	(11,555)	-	(11,555)

Other comprehensive income
Foreign currency translation adjustments	-	(1,978)	-	(1,978)	-	(1,978)


Total comprehensive income for the year	-	(1,978)	(11,555)	(13,533)	-	(13,533)

Issuance of ordinary shares for cash	46,252	-	-	46,252	-	46,252

Share issuance expenses	(1,142)	-	-	(1,142)	-	(1,142)

Share-based payment transactions (Note 29)	-	9,543	-	9,543	-	9,543


At 31 December 2011	87,321	(11,430)	(16,769)	59,122	-	59,122

The accompanying accounting policies and explanatory notes form an integral part of the financial statements.

Consolidated Statement of Cash Flows

For the year ended 31 December 2012

	2012	2011
	USD'000	USD'000

Operating activities
Loss before tax	(7,072)	(10,833)

Adjustments to reconcile loss before tax to net cash flows:
Amortisation of land use rights	924	624
Depreciation of property, plant and equipment	251	140
Gain arising on fair value changes in biological assets	(1,989)	(3,499)
Gain arising from changes in fair value of embedded derivative of the convertible bonds	(172)	(109)
Loss/(gain) on disposal of property, plant and equipment	1	(6)
Impairment of goodwill	5	37
Interest income	(280)	(93)
Interest expense	3,481	1,732
Share-based payment transaction expense	1,001	9,866
Unrealised (gain)/loss on foreign exchange	(159)	191

Working capital adjustments:
Increase in inventories	(1,366)	(223)
Increase in trade and other receivables and prepayments	(2,417)	(6,030)
Increase in trade and other payables	6,822	1,314


Cash flows used in operating activities	(970)	(6,889)

Income taxes paid, net of refund	(89)	(1)
Interest received	280	93
Interest paid	(3,190)	(1,514)


Net cash flows used in operating activities	(3,969)	(8,311)


Investing activities

Purchase of property, plant and equipment	(37,056)	(6,423)
Proceeds from sale of property, plant and equipment	20	18
Purchase of land use rights	(21,044)	(196)
Additions to biological assets	(27,912)	(8,297)
Acquisition of a subsidiary (Note 1(b))	(3)	-


Net cash flows used in investing activities	(85,995)	(14,898)

Consolidated Statement of Cash Flows

For the year ended 31 December 2012 (cont'd)

	2012	2011
	USD'000	USD'000

Financing activities

Proceeds from exercise of share options	30	-
Proceeds from issuance of ordinary shares	-	46,252
Share issuance expenses	-	(1,142)
Repayment of term loan	(5)	(5)
Proceeds from term loans	45,349	3,111
Proceeds from Bank Guaranteed Medium Term Notes Programme	31,954	-
Short-term deposit pledged for a banking facility and supply of goods	(888)	(96)
Payment of finance lease liabilities	(380)	(128)
Proceeds from issuance of convertible bonds	-	3,100
Issuance expense on liability of convertible bonds	-	(27)


Net cash flows from financing activities	76,060	51,065


Net (decrease)/increase in cash and cash equivalents	(13,904)	27,856
Net foreign exchange difference	714	(1,497)
Cash and cash equivalents at 1 January	27,378	1,019


Cash and cash equivalents at 31 December (Note 22)	14,188	27,378

The accompanying accounting policies and explanatory notes form an integral part of the financial statements.

1. General

(a) Corporate information

Asian Plantations Limited (the "Company") is a limited liability company incorporated and domiciled in the Republic of Singapore and listed on the Alternative Investment Market ("AIM") of the London Stock Exchange.

The registered office of the Company is located at No. 14 Ann Siang Road, #02-01, Singapore 069694.

The principal activity of the Company is that of investment holding. The principal activities of the subsidiaries are as disclosed in Note 1(b).

(b) Subsidiaries

As of 31 December 2012, the details of subsidiaries are as follows:

			Proportion of ownership interest
Subsidiaries	Country of incorporation	Activities	2012	2011
			%	%

Asian Plantations (Sarawak) Sdn. Bhd. ("APS") ⁽¹⁾	Malaysia	Investment holding	100	100

Asian Plantations (Sarawak) II Sdn. Bhd. ("APS II") ⁽¹⁾	Malaysia	Investment holding	100	100

Asian Plantations (Sarawak) III Sdn. Bhd. ("APS III") ⁽¹⁾	Malaysia	Investment holding	100	100

South Asian Farms Sdn. Bhd. ("SAF") ⁽¹⁾	Malaysia	Dormant	100	-

Held through APS:
BJ Corporation Sdn. Bhd. ("BJ") ⁽¹⁾	Malaysia	Oil-palm plantation	100	100

Incosetia Sdn. Bhd. ("Incosetia") ⁽¹⁾	Malaysia	Oil-palm plantation	100	100

Fortune Plantation Sdn. Bhd. ("Fortune") ⁽¹⁾	Malaysia	Oil-palm plantation	100	100

Asian Plantations Milling Sdn. Bhd. ("APM") ⁽¹⁾	Malaysia	Oil-palm milling	100	100

Held through APS II :
Kronos Plantation Sdn. Bhd. ("KP") ⁽¹⁾	Malaysia	Oil-palm plantation	100	100

Held through APS III :
Jubilant Paradise Sdn. Bhd. ("JP") ⁽¹⁾	Malaysia	Oil-palm plantation	60	100

⁽¹⁾Audited by member firm of Ernst & Young Global in Malaysia.

1. General (cont'd)

(b) Subsidiaries (cont'd)

Acquisition in 2012

On 24 September 2012, the Group acquired a new subsidiary, SAF, which is a dormant company, and therefore does not have a material effect on the financial results and financial position of the Group. There are no acquisition related expenses arising from the acquisition of this subsidiary. As SAF is a dormant company, there is no fair value adjustment to be recognised. At the date of acquisition of SAF, the only identifiable assets and liabilities are payables of USD2,000. Goodwill arising on initial recognition of USD5,000 was subsequently impaired in view of the inactivity of this company. The purchase consideration for the acquisition of SAF amounted to USD3,000.

Acquisitions in 2011

In the previous financial year, the Group acquired three new subsidiaries, APS II, APS III and KP. The acquisition dates were 17 March 2011, 21 April 2011 and 25 October 2011, respectively. The three subsidiaries are dormant companies at acquisition date and therefore do not have a material effect on the financial results and financial position of the Group. There are no acquisition related expenses arising from the acquisition of these subsidiaries. There is no fair value adjustment as these companies are dormant. Goodwill arising on initial recognition of USD37,000 was subsequently impaired in view of the inactivity of these subsidiaries.

On 11 June 2012, the Group's equity interest in JP was diluted from 100% to 60% equity interest pursuant to a Shareholders' Agreement with a Malaysian entity to mutually develop oil palm plantation land. The dilution was effected via the issuance of 98 new ordinary shares of RM1 each by JP of which the Group only took up the allotment to achieve a 60% equity interest in JP. Prior to the allotment of new ordinary shares, the Group held 2 ordinary shares of RM1 each in JP.

The following summarises the effect of the change in the Group's ownership interest in JP on the equity attributable to owners of the Company:

		USD
Increase in equity attributable to owners of the Company		3,000

Decrease in equity attributable to non-controlling		3,000

2. Fundamental accounting concept

The Group incurred a loss of USD6,879,000 for the financial year ended 31 December 2012 and as at that date, the Group's current liabilities exceeded its current assets by USD1,538,000. The consolidated financial statements have been prepared under the going concern basis as subsequent to year end, the Directors have successfully refinanced loans and borrowings amounting to USD43,229,400 (of which USD17,644,000 are due within one year) through the issuance of the second tranche of a bank guaranteed medium term notes programme (the "MTN Programme") in 2013, as announced by the Company on 15 March 2013. Further details on the MTN Programme are elaborated in Note 25.

3.1 Basis of preparation

The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB").

The consolidated financial statements have been prepared on a historical cost basis, except as disclosed in the accounting policies below.

The consolidated financial statements are presented in United States Dollars ("USD") to facilitate the comparison of financial results with companies in the oil-palm industry and all values are rounded to the nearest thousand ("USD'000"), except where otherwise indicated.

3.2 Basis of consolidation

The consolidated financial statements comprise the financial statements of the Group and its subsidiaries as at 31 December 2012.

Subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date on which such control ceases. The financial statements of the subsidiaries are prepared for the same reporting period as the Company, using consistent accounting policies. All intra-group balances, transactions, unrealised gains and losses resulting from intra-group transactions and dividends are eliminated in full.

Total comprehensive income within a subsidiary is attributed to the non-controlling interest even if it results in a deficit balance.

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group loses control over a subsidiary, it:

- Derecognises the assets (including goodwill) and liabilities of the subsidiary

- Derecognises the carrying amount of any non-controlling interest

- Derecognises the cumulative translation differences recorded in equity

- Recognises the fair value of the consideration received

- Recognises the fair value of any investment retained

- Recognises any surplus or deficit in profit or loss

- Reclassifies the Company's share of components previously recognised in other comprehensive income to profit or loss or retained earnings, as appropriate.

3.3 Summary of significant accounting policies

a) Business combinations and goodwill

Other than business combinations involving entities under common control, business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred measured at acquisition date fair value and the amount of any non-controlling interest in the acquiree. For each business combination, the Group elects whether to measures the non-controlling interest in the acquiree at fair value or at the proportionate share of the acquiree's identifiable net assets. Acquisition-related costs are expensed as incurred and included in other operating expenses.

3.3 Summary of significant accounting policies (cont'd)

a) Business combinations and goodwill (cont'd)

When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree.

If the business combination is achieved in stages, the previously held equity interest is remeasured at its acquisition date fair value and any resulting gain or loss is recognised in profit or loss.

Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Contingent consideration classified as an asset or liability that is a financial instrument and within the scope of IAS 39 Financial Instruments: Recognition and Measurement, is measured at fair value with changes in fair value recognised either in profit or loss or as a change to other comprehensive income. If the contingent consideration is not within the scope of IAS 39, it is measured in accordance with the appropriate IFRS. Contingent consideration that is classified as equity is not remeasured and subsequent settlement is accounted for within equity.

Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognised for non-controlling interest over the net identifiable assets acquired and liabilities assumed. If the fair value of the net assets acquired is in excess of the aggregate consideration transferred, the gain is recognised in profit or loss.

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group's cash-generating units that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.

Where goodwill has been allocated to a cash-generating unit and part of the operation within that unit is disposed of, the goodwill associated with disposed operation is included in the carrying amount of the operation when determining the gain or loss on disposal. Goodwill disposed in this circumstance is measured based on the relative values of the disposed operation and the portion of the cash-generating unit retained.

Goodwill and fair value adjustments arising on the acquisition of foreign operations are treated as assets and liabilities of the foreign operations and are recorded in the functional currency of the foreign operations and translated in accordance with the accounting policy set out in Note 3.3(c).

3.3 Summary of significant accounting policies (cont'd)

a) Business combinations and goodwill (cont'd)

Business combinations involving entities under common control: Pooling of interest method

Business combinations involving entities under common control are accounted for by applying the pooling of interest method. The assets and liabilities of the combining entities are reflected at their carrying amounts reported in the consolidated financial statements of the controlling holding company. No adjustments are made to reflect the fair values or recognise any new assets or liabilities. No goodwill is recognised as a result of the combination. Any difference between the consideration paid and the equity of the "acquired" entity is reflected within equity as "merger reserve". The statement of comprehensive income reflects the results of the combining entities for the full year, irrespective of when the combination took place. Comparatives are presented as if the entities had always been combined since the date the entities had come under common control.

b) Transactions with non-controlling interests

Non-controlling interest represents the equity in subsidiaries not attributable, directly or indirectly, to owners of the Company, and are presented separately in the consolidated statement of comprehensive income and within equity in the consolidated statement of financial position, separately from equity attributable to owners of the Company.

Changes in the Company's ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. In such circumstances, the carrying amounts of the controlling and non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiary. Any difference between the amount by which the non-controlling interest is adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the Company.

c) Foreign currency

Management has determined the currency of the primary economic environment in which the Company operates i.e. functional currency, to be in Ringgit Malaysia ("RM"). Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency. The Group has elected to recycle the gain or loss that arises from the direct method of consolidation, which is the method the Group uses to complete its consolidation.

i) Transactions and balances

Transactions in foreign currencies are initially recorded by the Group entities at their respective functional currency spot rates at the date the transaction first qualifies for recognition.

Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency spot rate of exchange at the reporting date.

3.3 Summary of significant accounting policies (cont'd)

c) Foreign currency (cont'd)

i) Transactions and balances (cont'd)

Differences arising on settlement or translation of monetary items are recognised in profit or loss with the exception of monetary items that are designated as part of the hedge of the Group's net investment of a foreign operation. These are recognised in other comprehensive income until the net investment is disposed of, at which time, the cumulative amount is reclassified to profit or loss. Tax charges and credits attributable to exchange differences on those monetary items are also recorded in other comprehensive income.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. The gain or loss arising on retranslation of non-monetary items measured at fair value is treated in line with the recognition of gain or loss on change in fair value of the item (i.e., translation differences on items whose fair value gain or loss is recognised in other comprehensive income or profit or loss is also recognised in other comprehensive income or profit or loss, respectively).

ii) Group companies

On consolidation the assets and liabilities of foreign operations are translated into USD at the rate of exchange prevailing at the reporting date and their income statements are translated at exchange rates prevailing at the dates of the transactions. The exchange differences arising on translation for consolidation are recognised in other comprehensive income. On disposal of a foreign operation, the component of other comprehensive income relating to that particular foreign operation is recognised in profit or loss.

Any goodwill arising on the acquisition of foreign operation and any fair value adjustments to the carrying amounts of assets and liabilities arising on the acquisition are treated as assets and liabilities of the foreign operation and translated at the spot rate of exchange at the reporting date.

In the case of a partial disposal without loss of control of a subsidiary that includes a foreign operation, the proportionate share of the cumulative amount of the exchange differences are re-attributed to non-controlling interest and are not recognised in profit or loss.

d) Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured, regardless of when the payment is made. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding discounts, rebates, and sales taxes or duty. The Group assesses its revenue arrangements against specific criteria to determine if it is acting as principal or agent. The Group has concluded that it is acting as a principal in all of its revenue arrangements. The specific recognition criteria described below must also be met before revenue is recognised:

3.3 Summary of significant accounting policies (cont'd)

d) Revenue recognition (cont'd)

Sale of goods

Revenue from sale of goods is recognised upon the transfer of significant risk and rewards of ownership of the goods to the customer, usually on delivery of goods. Revenue is not recognised to the extent where there are significant uncertainties regarding recovery of the consideration due, associated costs or the possible return of goods.

Interest income

For all financial instruments measured at amortised cost and interest bearing financial assets, interest income is recorded using the effective interest rate (EIR). EIR is the rate that exactly discounts the estimated future cash payments or receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the net carrying amount of the financial asset or liability. Interest income is included in other operating income in profit or loss.

e) Taxes

Current income tax

Current income tax assets and liabilities for the current period are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date, in the countries where the Group operates and generates taxable income.

Current income tax relating to items recognised directly in equity is recognised in equity and not in profit or loss. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

Deferred tax

Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.

Deferred tax liabilities are recognised for all temporary differences, except:

- when the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

- in respect of temporary differences associated with investments in subsidiaries, when the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

3.3 Summary of significant accounting policies (cont'd)

e) Taxes (cont'd)

Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised, except:

- when the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

- in respect of deductible temporary differences associated with investments in subsidiaries, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has became probable that future taxable profits will allow the deferred tax assets to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.

Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity.

Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current income tax assets against current income tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

Tax benefits acquired as part of a business combination, but not satisfying the criteria for separate recognition at that date, are recognised subsequently if new information about facts and circumstances changed. The adjustment is either treated as a reduction to goodwill (as long as it does not exceed goodwill) if it incurred during the measurement period or recognised in profit or loss.

3.3 Summary of significant accounting policies (cont'd)

e) Taxes (cont'd)

Sales tax

Expenses and assets are recognised net of the amount of sales tax, except:

- when the sales tax incurred on a purchase of assets or services is not recoverable from the taxation authority, in which case, the sales tax is recognised as part of the cost of acquisition of the asset or as part of the expense item, as applicable; and

- when receivables and payables are stated with the amount of sales tax included

The net amount of sales tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the statement of financial position.

f) Property, plant and equipment

All items of property, plant and equipment are initially recorded at cost. Subsequent to initial recognition, property, plant and equipment are measured at cost less accumulated depreciation and any accumulated impairment losses. Such cost includes the cost of replacing part of the property, plant and equipment and borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying property, plant and equipment. The accounting policy for borrowing costs is set out in Note 3.3(h). The cost of an item of property, plant and equipment is recognised as an asset if, and only if, it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably.

When significant parts of property, plant and equipment are required to be replaced at intervals, the Group recognises such parts as individual assets with specific useful lives and depreciates them accordingly. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognised in profit or loss as incurred.

Depreciation of an asset begins when it is available for use and is computed on a straight-line basis over the estimated useful life of the asset at the following annual rates:

Building	-	1.67% to 20%
Renovation	-	20%
Infrastructure	-	4%
Office equipment, computers, furniture and fittings	-	10% to 20%
Plant and machinery	-	20%
Motor vehicles	-	20%

Depreciation of property, plant and equipment related to the plantations are allocated proportionately based on the area of mature and immature plantations.

Assets under construction included in property, plant and equipment is stated at cost and not depreciated as these assets are not yet available for use.

3.3 Summary of significant accounting policies (cont'd)

f) Property, plant and equipment (cont'd)

The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable.

An item of property, plant and equipment and any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the year the asset is derecognised.

The residual values, useful lives and methods of depreciation are reviewed at each financial year end and adjusted prospectively, if appropriate.

g) Leases

The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at inception date. The arrangement is assessed for whether fulfillment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement.

Group as a lessee

Finance leases that transfer substantially all the risks and benefits incidental to ownership of the leased item to the Group, are capitalised at the commencement of the lease at the fair value of the leased asset or, if lower, at the present value of the minimum lease payments. Any initial direct costs are also added to the amount capitalised. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognised in finance costs in profit or loss. Contingent rents, if any, are charged as expenses in the period in which they are incurred.

A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Group will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and the lease term.

Operating lease payments are recognised as an operating expense in profit or loss on a straight-line basis over the lease term. The aggregate benefit of incentives provided by the lessor is recognised as a reduction of rental expense over the lease term on a straight-line basis.

3.3 Summary of significant accounting policies (cont'd)

h) Borrowing costs

Borrowing costs are capitalised as part of the cost of a qualifying asset if they are directly attributable to the acquisition, construction or production of that asset. Capitalisation of borrowing costs commences when the activities to prepare the asset for its intended use or sale are in progress and the expenditures and borrowing costs are incurred. Borrowing costs are capitalised until the assets are substantially completed for their intended use or sale. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.

i) Financial instruments - initial recognition and subsequent measurement

i) Financial assets

Initial recognition and measurement

Financial assets within the scope of IAS 39 are classified as financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, available-for-sale financial assets, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. The Group determines the classification of its financial assets at initial recognition.

All financial assets are recognised initially at fair value plus transaction costs, except in the case of financial assets recorded at fair value through profit or loss.

Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognised on the trade date, i.e., the date that the Group commits to purchase or sell the asset.

The Group has only one class of financial assets, namely loans and receivables.

Subsequent measurement

The subsequent measurement of loans and receivables is as follows:

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial measurement, such financial assets are subsequently measured at amortised cost using the EIR method, less impairment. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in profit or loss. The losses arising from impairment are recognised in profit or loss in finance costs for loans and in cost of sales or other operating expenses for receivables.

3.3 Summary of significant accounting policies (cont'd)

i) Financial instruments - initial recognition and subsequent measurement (cont'd)

i) Financial assets (cont'd)

Derecognition

A financial asset (or, where applicable a part of a financial asset or part of a group of similar financial assets) is derecognised when:

- The rights to receive cash flows from the asset have expired

- The Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a 'pass-through' arrangement; and either (a) the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

When the Group has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the asset is recognised to the extent of the Group's continuing involvement in the asset. In that case, the Group also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Group has retained.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Group could be required to repay.

All regular way purchases and sales of financial assets are recognised or derecognised on the trade date i.e., the date that the Group commits to purchase or sell the asset. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace concerned.

3.3 Summary of significant accounting policies (cont'd)

i) Financial instruments - initial recognition and subsequent measurement (cont'd)

ii) Impairment of financial assets

The Group assesses, at each reporting date, whether there is objective evidence that a financial asset or a group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if there is objective evidence of impairment as a result of one or more events that has occurred since the initial recognition of the asset (an incurred 'loss event') and that loss event has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation and observable data indicating that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.

Financial assets carried at amortised cost

For financial assets carried at amortised cost, the Group first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant, or collectively for financial assets that are not individually significant. If the Group determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or continues to be, recognised are not included in a collective assessment of impairment.

If there is objective evidence that an impairment loss has been incurred, the amount of the loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows (excluding future expected credit losses that have not yet been incurred). The present value of the estimated future cash flows is discounted at the financial asset's original effective interest rate. If a loan has a variable interest rate, the discount rate for measuring any impairment loss is the current EIR.

The carrying amount of the asset is reduced through the use of an allowance account and the loss is recognised in profit or loss. Interest income continues to be accrued on the reduced carrying amount and is accrued using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss. The interest income is recorded as part of finance income in profit or loss. Loans together with the associated allowance are written off when there is no realistic prospect of future recovery and all collateral has been realised or has been transferred to the Group. If, in a subsequent period, the amount of the estimated impairment loss increases or decreases because of an event occurring after the impairment was recognised, the previously recognised impairment loss is increased or reduced by adjusting the allowance account. If a future write-off is later recovered, the recovery is credited to finance costs in profit or loss.

3.3 Summary of significant accounting policies (cont'd)

i) Financial instruments - initial recognition and subsequent measurement (cont'd)

iii) Financial liabilities

Initial recognition and measurement

Financial liabilities within the scope of IAS 39 are classified as financial liabilities at fair value through profit or loss, other financial liabilities, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. Financial liabilities are recognised when, and only when, the Group becomes a party to the contractual provisions of the financial instrument. The Group determines the classification of its financial liabilities at initial recognition.

All financial liabilities are recognised initially at fair value and, in the case of financial liabilities not at fair value through profit or loss, net of directly attributable transaction costs.

Subsequent measurement

The measurement of financial liabilities depends on their classification as described below:

Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss.

Financial liabilities are classified as held for trading if they are acquired for the purpose of selling in the near term. This category includes derivative financial instruments entered into by the Group that are not designated as hedging instruments in hedge relationships as defined by IAS 39. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments.

Gains or losses on liabilities held for trading are recognised in profit or loss.

Financial liabilities designated upon initial recognition at fair value through profit and loss are designated at the initial date of recognition, and only if criteria of IAS 39 are satisfied.

Subsequent to initial recognition, financial liabilities at fair value through profit or loss are measured at fair value. Any gains or losses arising from changes in fair value of the financial liabilities are recognised in profit or loss.

3.3 Summary of significant accounting policies (cont'd)

i) Financial instruments - initial recognition and subsequent measurement (cont'd)

iii) Financial liabilities (cont'd)

Subsequent measurement (cont'd)

Other financial liabilities

After initial recognition, other financial liabilities are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR amortisation process.

Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in profit or loss.

Derecognition

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expired.

When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in profit or loss.

iv) Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount reported in the consolidated statement of financial position if, and only if:

- there is a currently enforceable legal right to offset the recognised amounts; and

- there is an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously.

v) Fair value of financial instruments

The fair value of financial instruments that are traded in active markets at each reporting date is determined by reference to quoted market prices or dealer price quotations (bid price for long positions and ask price for short positions), without any deduction for transaction costs.

3.3 Summary of significant accounting policies (cont'd)

i) Financial instruments - initial recognition and subsequent measurement (cont'd)

v) Fair value of financial instruments (cont'd)

For financial instruments not traded in an active market, the fair value is determined using appropriate valuation techniques. Such techniques may include:

- Using recent arm's length market transactions

- Reference to the current fair value of another instrument that is substantially the same

- A discounted cash flow analysis or other valuation models.

An analysis of fair values of financial instruments and further details as to how they are measured are provided in Note 32.

j) Inventories

Inventories are valued at the lower of cost and net realisable value.

Inventories comprise consumable supplies, chemicals and fertilisers. Cost is determined using the weighted average method. The cost of the consumable supplies, chemicals and fertilisers includes expenses incurred in bringing them into store.

Where necessary, allowance is provided for damaged, obsolete and slow moving items to adjust the carrying value of inventories to the lower of cost and net realisable value.

Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

k) Impairment of non-financial assets

The Group assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Group estimates the asset's recoverable amount. An asset's recoverable amount is the higher of an asset's or cash-generating unit's ("CGU") fair value less costs to sell and its value in use. Recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs to sell, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples or other available fair value indicators.

3.3 Summary of significant accounting policies (cont'd)

k) Impairment of non-financial assets (cont'd)

The Group bases its impairment calculation on detailed budgets and forecast calculations, which are prepared separately for each of the Group's CGUs to which the individual assets are allocated. These budgets and forecast calculations generally cover a period of five years. For longer periods, a long-term growth rate is calculated and applied to project future cash flows after the fifth year.

Impairment losses, are recognised in profit or loss in expense categories consistent with the function of the impaired asset.

For assets excluding goodwill, an assessment is made at each reporting date to determine whether there is an indication that previously recognised impairment losses no longer exist or have decreased. If such indication exists, the Group estimates the asset's or CGUs recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset's recoverable amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in profit or loss.

The following asset has specific characteristics for impairment testing:

Goodwill

Goodwill is tested for impairment annually as at 31 December and when circumstances indicate that the carrying value may be impaired.

Impairment is determined for goodwill by assessing the recoverable amount of each CGU (or group of CGUs) to which the goodwill relates. When the recoverable amount of the CGU is less than its carrying amount, an impairment loss is recognised. Impairment losses relating to goodwill cannot be reversed in future periods.

l) Cash and short-term deposits

Cash and short-term deposits in the statement of financial position comprise cash at banks and on hand, and short-term deposits with a maturity of three months or less.

For the purpose of the consolidated statement of cash flows, cash and cash equivalents consist of cash and short-term deposits as defined above, net of outstanding bank overdrafts.

m) Convertible bonds and embedded derivatives

When convertible bonds are issued, the total proceeds are allocated to the liability component and conversion option, which are separately presented on the statements of financial position. The conversion option is recognised initially at its fair value and is accounted for as a derivative liability. The difference between the total proceeds and the conversion option is allocated to the liability component. The liability component is subsequently carried at amortised cost using EIR method until the liability is extinguished on conversion or redemption of the bonds.

3.3 Summary of significant accounting policies (cont'd)

m) Convertible bonds and embedded derivatives (cont'd)

Derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value. Derivative financial instruments are carried as assets when the fair value is positive and as liabilities when the fair value is negative. Any gain or losses arising from changes in fair value on derivative financial instruments are taken to profit or loss for the financial year.

n) Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of obligation.

Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of resources embodying economic benefits will be required to settle the obligation, the provision is reversed. If the effect of time value of money is material, provisions are discounted using a current pre tax rate that, reflects where appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

o) Employee benefits

i) Defined contribution plans

The Group participates in the national pension schemes as defined by the laws of the countries in which it has operations. In particular, the Singapore company in the Group makes contribution to the Central Provident Fund scheme in Singapore, a defined contribution scheme. Subsidiary companies in Malaysia make contribution to the Employees Provident Fund. Such contributions to defined contribution pension schemes are recognised as an expense in the period in which the related service is performed.

ii) Employee leave entitlement

Employee entitlements to annual leave are recognised as a liability when they accrue to the employees. The estimated liability for leave is recognised for services rendered by employees up to each reporting date.

iii) Bonus plans

The expected cost of bonus plans is recognised as a liability when the Group has a present legal or constructive obligation as a result of services rendered by the employees and a reliable estimate of the obligation can be made. Liabilities for bonus plans are expected to be settled within 12 months of each reporting date and are measured at the amounts expected to be paid when they are settled.

3.3 Summary of significant accounting policies (cont'd)

p) Share-based payment

Directors, employees and consultants of the Group receive remuneration in the form of share-based payment transactions, whereby the directors, employees and consultants render services as consideration for equity instruments (equity-settled transactions).

The cost of equity-settled transactions is recognised, together with a corresponding increase in share-based payment transaction reserve in equity, over the period in which the performance and/or service conditions are fulfilled. The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Group's best estimate of the number of equity instruments that will ultimately vest. The expense or credit in profit or loss for a period represents the movement in cumulative expense recognised as at the beginning and end of that period and is recognised, depending on type of services rendered, as part of professional fees or employee benefits expense, and if related to the development of biological assets, the expense are allocated proportionately based on the area of mature and immature plantations.

No expense is recognised for awards that do not ultimately vest, except for equity-settled transaction for which vesting is conditional upon a market or non-vesting condition. These are treated as vesting irrespective of whether or not the market or non-vesting condition is satisfied, provided that all other performance and/or service conditions are satisfied.

When the terms of an equity-settled transaction award are modified, the minimum expense recognised is the expense as if the terms had not been modified, if the original terms of the award are met. An additional expense is recognised for any modification that increases the total fair value of the share-based payment transaction, or is otherwise beneficial to the employee as measured at the date of modification.

When an equity-settled award is cancelled, it is treated as if it vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. This includes any award where non-vesting conditions within the control of either the entity or the employee are not met. However, if a new award is substituted for the cancelled award, and designated as a replacement award on the date that it is granted, the cancelled and new awards are treated as if they were a modification of the original award, as described in the previous paragraph.

The dilutive effect of outstanding options is reflected as additional share dilution in the computation of diluted earnings per share (further details are given in Note 14).

3.3 Summary of significant accounting policies (cont'd)

q) Biological assets

Biological assets, which include mature and immature oil palm plantations, are stated at fair value less estimated costs to sell. Gains or losses arising on initial recognition of plantations at fair value less estimated costs to sell and from the changes in fair value less estimated costs to sell of plantations at each reporting date are included in profit or loss for the period in which they arise.

Oil palm trees have an average life of 28 years; with the first three years as immature and the remaining as mature. Oil palm plantation is classified as mature when 60% of oil palm per block is bearing fruits with an average weight of 3 kilograms or more per bunch. Biological assets also include land preparation costs which is the cost incurred to clear the land and to ensure that the plantations are in a state ready for the planting of seedlings.

The fair value of the oil palm plantation is estimated by using the discounted cash flows of the underlying biological assets. The expected cash flows from the whole life cycle of the oil palm plantations is determined using the market price and the estimated yield of the agricultural produce, being fresh fruit bunches ("FFB"), net of maintenance and harvesting costs and any costs required to bring the oil palm plantations to maturity. The estimated yield of the oil palm plantations is affected by the age of the oil palm trees, the location, soil type and infrastructure. The market price of the fresh fruit bunches is largely dependent on the prevailing market price of the processed products after harvest, being crude palm oil and palm kernel.

Cost is taken to approximate fair value when little biological transformation has taken place since initial cost incurrence and the impact of the biological transformation on price is not expected to be material. Cost includes employee benefits expenses and depreciation of certain property, plant and equipment.

r) Land use rights

Land use rights are initially measured at cost. Following initial recognition, land use rights are measured at cost less accumulated amortisation. The land use rights are amortised on a straight line basis over the period of 60 years.

s) Share capital and share issuance expenses

Proceeds from issuance of ordinary shares are recognised as share capital in equity. Incremental costs directly attributable to the issuance of ordinary shares are deducted against share capital.

3.3 Summary of significant accounting policies (cont'd)

t) Contingencies

A contingent liability is:

(a) a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group; or

(b) a present obligation that arises from past events but is not recognised because:

(i) it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or

(ii) the amount of the obligation cannot be measured with sufficient reliability.

A contingent asset is a possible asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group.

Contingent liabilities and assets are not recognised on the statement of financial position, except for contingent liabilities assumed in a business combination that are present obligations and which the fair values can be reliably determined.

u) Related parties

A related party is defined as follows:

(a) A person or a close member of that person's family is related to the Group and the Company if that person:

(i) has control or joint control over the Company;

(ii) has significant influence over the Company; or

(iii) is a member of the key management personnel of the company or of a parent of the Company.

3.3 Summary of significant accounting policies (cont'd)

u) Related parties (cont'd)

(b) An entity is related to the Group and the Company if any of the following conditions applies:

(i) The entity and the Company are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others).

(ii) One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member).

(iii) Both entities are joint ventures of the same third party.

(iv) One entity is a joint venture of a third entity and the other entity is an associate of the third entity.

(v) The entity is a post-employment benefit plan for the benefit of employees of either the Company or an entity related to the Company. If the Company is itself such a plan, the sponsoring employers are also related to the Company.

(vi) The entity is controlled or jointly controlled by a person identified in (a).

(vii) A person identified in (a) (i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity).

3.4 Changes in accounting policies and disclosures

New and amended standards and interpretations

The accounting policies adopted are consistent with those of the previous financial year except in the current financial year, the Group has adopted all the new and revised standards that are effective for annual periods beginning as of 1 January 2012. The adoption of these standards did not have any effect on the financial performance or position of the Group and the Company except for the following amendments to IFRS:

· IFRS 7 Financial Instruments: Disclosures - Enhanced Derecognition Disclosure Requirements

The adoption of the standards is described below:

IFRS 7 Financial Instruments: Disclosures - Enhanced Derecognition Disclosure Requirements

The amendment requires additional disclosure about financial assets that have been transferred but not derecognised to enable the user of the Group's financial statements to understand the relationship with those assets that have not been derecognised and their associated liabilities. In addition, the amendment requires disclosures about the entity's continuing involvement in derecognised assets to enable the users to evaluate the nature of, and risks associated with, such involvement. The amendment is effective for annual periods beginning on or after 1 July 2011. The Group does not have any assets with these characteristics so there has been no effect on the presentation of its financial statements.

4. Significant accounting judgements and estimates

The preparation of the consolidated financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the end of the reporting period. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the future period.

4.1 Judgements made in applying accounting policies

In the process of applying the Group's accounting policies, management has made the following judgements, apart from those involving estimations, which has the most significant effect on the amounts recognised in the consolidated financial statements:

Fair value of biological assets (nursery)

The biological assets are stated at fair value. Management made the judgement that cost approximates fair value of the biological asset for nursery because little biological transformation has taken place since its initial cost incurrence. The carrying amount of nursery as at 31 December 2012 is USD1,742,000 (2011: USD1,053,000) as disclosed in Note 16.

4.2 Estimates and assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are described below. The Group based its assumptions and estimates on parameters available when the consolidated financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising beyond the control of the Group. Such changes are reflected in the assumptions when they occur.

(a) Biological assets (mature and immature plantation)

As at 31 December 2012, the Group measured its mature and immature plantation included in the biological assets at fair value less estimated costs to sell, based on a discounted cash flow model by engaging a professional valuer. The inputs to the cash flow model are derived from the professional valuer's assumptions of the crude palm oil prices, fresh fruit bunches yield and oil extraction ratio based on observable market data over the remaining useful life of the mature and immature plantation. The cash flow model does not include cash flows from financing assets, taxation or re-establishing biological assets after harvest.

The amount of changes in fair values would differ if there are changes to the assumptions used. Any changes in fair values of these plantations would affect the profit or loss. The total carrying amount of the mature and immature plantation as at 31 December 2012 was USD27,442,000 (2011: USD1,628,000) and USD26,103,000 (2011: USD20,130,000) respectively. Further details of the key assumptions used and the sensitivity analysis are disclosed in Notes 16 and 33(d), respectively.

4. Significant accounting judgements and estimates (cont'd)

4.2 Estimates and assumptions (cont'd)

(b) Useful lives of property, plant and equipment

The cost of property, plant and equipment is depreciated on a straight-line basis over the property, plant and equipment's estimated economic useful lives. Management estimates the useful lives of these property, plant and equipment to be within 5 to 60 years. These are common life expectancies applied in the oil palm industry. Changes in the expected level of usage and technological developments could impact the economic useful lives of these assets, therefore, future depreciation charges could be revised. The carrying amount of the property, plant and equipment as at 31 December 2012 is disclosed in Note 15. A 5% difference in the expected useful lives of these assets from management's estimates would result in less than 1% (2011: less than 1%) variance in the Group's loss for the year.

An impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs to sell and its value in use. The value in use calculation is based on a discounted cash flow model. The cash flows are derived from projected net cash flows over a period of 25 productive years of oil palms from financial budgets approved by management and do not include restructuring activities that the Group is not yet committed to or significant future investments that will enhance the asset's performance of the cash generating unit being tested. The recoverable amount is most sensitive to the discount rate used for the discounted cash flow model as well as the expected future cash inflows. Further details of the key assumptions applied in the impairment assessment of goodwill, are given in Note 18.

(d) Taxes

Uncertainties exist with respect to the interpretation of complex tax regulations, changes in tax laws, and the amount and timing of future taxable income. Given the wide range of international business relationships and the long-term nature and complexity of existing contractual agreements, differences arising between the actual results and the assumptions made, or future changes to such assumptions, could necessitate future adjustments to tax income and expense already recorded. The Group establishes provisions, based on reasonable estimates, for possible consequences of audits by the tax authorities of the respective counties in which it operates. The amount of such provisions is based on various factors, such as experience of previous tax audits and differing interpretations of tax regulations by the taxable entity and the responsible tax authority. Such differences of interpretation may arise on a wide variety of issues depending on the conditions prevailing in the respective domicile of the Group of companies.

The carrying amount of income tax recoverable at 31 December 2012 was USD99,000 (2011: USD7,000).

4. Significant accounting judgements and estimates (cont'd)

4.2 Estimates and assumptions (cont'd)

(d) Taxes (cont'd)

Deferred tax assets are recognised for all unused tax losses, unabsorbed capital and agricultural allowances to the extent that it is probable that taxable profit will be available against which the losses, unabsorbed capital and agricultural allowances can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.

Further details on taxes are disclosed in Note 13.

(e) Share-based payment

The Group measures the cost of equity-settled transactions with directors, employees and consultants by reference to the fair value of the equity instruments at the date at which they are granted. Estimating fair value for share-based payment transactions requires determination of the most appropriate valuation model, which is dependent on the terms and conditions of the grant. This estimate also requires determinination the most appropriate inputs to the valuation model including the expected life of the share option, volatility and dividend yield and making assumptions about them. The assumptions and models used for estimating fair value for share-based payment transactions are disclosed in Note 29.

5. Standards issued but not yet effective

The standards and interpretations that are issued, but not yet effective, up to the date of issuance of the Group's financial statements are disclosed below. The Group intends to adopt these standards, if applicable, when they become effective.

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

The amendments to IAS 1 change the grouping of items presented in other comprehensive income (OCI). Items that could be reclassified (or 'recycled') to profit or loss at a future point in time (for example, actuarial gains and losses on defined benefit plans and revaluation of land and buildings) would be presented separately from items that will never be reclassified (for example, net gain on hedge of net investment, exchange differences on translation of foreign operations, net movement on cash flow hedges and net loss or gain on available-for-sale financial assets). The amendment affects presentation only and has no impact on the Group's financial position or performance. The amendment becomes effective for annual periods beginning on or after 1 July 2012.

IAS 32 Offsetting Financial Assets and Financial Liabilities - Amendments to IAS 32

These amendments clarify the meaning of "currently has a legally enforceable right to set-off". The amendments also clarify the application of the IAS 32 offsetting criteria to settlement systems (such as central clearing house systems) which apply gross settlement mechanisms that are not simultaneous. These amendments are not expected to impact the Group's financial position or performance and become effective for annual periods beginning on or after 1 January 2014.

5. Standards issued but not yet effective (cont'd)

IFRS 7 Disclosures - Offsetting Financial Assets and Financial Liabilities - Amendments to IFRS 7

These amendments require an entity to disclose information about rights to set-off and related arrangements (e.g., collateral agreements). The disclosures would provide users with information that is useful in evaluating the effect of netting arrangements on an entity's financial position. The new disclosures are required for all recognised financial instruments that are set off in accordance with IAS 32 Financial Instruments: Presentation. The disclosures also apply to recognised financial instruments that are subject to an enforceable master netting arrangement or similar agreement, irrespective of whether they are set off in accordance with IAS 32. These amendments will not impact the Group's financial position or performance and become effective for annual periods beginning on or after 1 January 2013.

IFRS 9 Financial Instruments: Classification and Measurement

IFRS 9, as issued, reflects the first phase of the IASB's work on the replacement of IAS 39 and applies to classification and measurement of financial assets and financial liabilities as defined in IAS 39. The standard was initially effective for annual periods beginning on or after 1 January 2013, but Amendments to IFRS 9 Mandatory Effective Date of IFRS 9 and Transition Disclosures, issued in December 2011, moved the mandatory effective date to 1 January 2015. In subsequent phases, the IASB will address hedge accounting and impairment of financial assets. The adoption of the first phase of IFRS 9 will have an effect on the classification and measurement of the Group's financial assets, but will not have an impact on classification and measurements of financial liabilities. The Group will quantify the effect in conjunction with the other phases, when the final standard including all phases is issued.

IFRS 10 Consolidated Financial Statements, IAS 27 Separate Financial Statements

IFRS 10 replaces the portion of IAS 27 Consolidated and Separate Financial Statements that addresses the accounting for consolidated financial statements. It also addresses the issues raised in SIC-12 Consolidation - Special Purpose Entities.

IFRS 10 establishes a single control model that applies to all entities including special purpose entities. The changes introduced by IFRS 10 will require management to exercise significant judgement to determine which entities are controlled and therefore are required to be consolidated by a parent, compared with the requirements that were in IAS 27. Based on the preliminary analyses performed, IFRS 10 is not expected to have any impact on the currently held investments of the Group.

IFRS 12 Disclosure of Interests in Other Entities

IFRS 12 includes all of the disclosures that were previously in IAS 27 related to consolidated financial statements, as well as all of the disclosures that were previously included in IAS 31 and IAS 28. These disclosures relate to an entity's interests in subsidiaries, joint arrangements, associates and structured entities. A number of new disclosures are also required, but has no impact on the Group's financial position or performance. This standard becomes effective for annual periods beginning on or after 1 January 2013.

5. Standards issued but not yet effective (cont'd)

IFRS 13 Fair Value Measurement

IFRS 13 establishes a single source of guidance under IFRS for all fair value measurements. IFRS 13 does not change when an entity is required to use fair value, but rather provides guidance on how to measure fair value under IFRS when fair value is required or permitted. The Group is currently assessing the impact that this standard will have on the financial position and performance, but based on the preliminary analyses, no material impact is expected. This standard becomes effective for annual periods beginning on or after 1 January 2013.

Annual Improvements May 2012

These improvements will not have an impact on the Group but include:

IAS 1 Presentation of Financial Statements

This improvement clarifies the difference between voluntary additional comparative information and the minimum required comparative information. Generally, the minimum required comparative information is the previous period.

IAS 16 Property Plant and Equipment

This improvement clarifies that major spare parts and servicing equipment that meet the definition of property, plant and equipment are not inventory.

IAS 32 Financial Instruments, Presentation

This improvement clarifies that income taxes arising from distributions to equity holders are accounted for in accordance with IAS 12 Income Taxes.

IAS 34 Interim Financial Reporting

The amendment aligns the disclosure requirements for total segment assets with total segment liabilities in interim financial statements. This clarification also ensures that interim disclosures are aligned with annual disclosures.

These improvements are effective for annual periods beginning on or after 1 January 2013.

6. Revenue

	2012	2011
	USD'000	USD'000

Sale of fresh fruit bunches ("FFBs")	2,820	578

7. Cost of sales

	2012	2011
	USD'000	USD'000

FFBs harvesting	351	61
FFBs external transportation	245	17
Field upkeep and maintenance	766	165
Estate general charges	228	45
Mill overheads	92	-
Employee benefits expense (Note 12)	432	58
Depreciation of property, plant and equipment	100	25
Rental expense	11	3


	2,225	374

8. Other operating income

	2012	2011
	USD'000	USD'000

Interest income	280	93
Gain on disposal of property, plant and equipment	-	6
Net foreign exchange gain	-	413
Sale of seedlings	66	70
Gain arising on fair value changes in biological assets	1,989	3,499
Gain arising from changes in fair value of embedded derivative of the convertible bonds	172	109


	2,507	4,190

9. Administrative expenses

	2012	2011
	USD'000	USD'000

Professional fees:
- audit fee	129	74
- share-based payment transaction for consultants (Note 29)	-	147
- consultancy	631	31
- MTN Programme	195	-
- others	391	374
Stamp duty on agreements	2	-
Bank charges	29	59
Employee benefits expense (Note 12)	2,812	11,075
Directors' fees (Note 31)	187	172
Loss on disposal of property, plant and equipment	1	-
Depreciation of property, plant and equipment	151	115
Rental expense	55	49
Others	556	580


	5,139	12,676

10. Other operating expenses

	2012	2011
	USD'000	USD'000

Amortisation of land use rights (Note 17)	924	624
Repair and maintenance	117	104
Motor vehicle running expenses	10	3
Cost of seedlings sold	54	51
Impairment of goodwill (Note 1(b))	5	37
Net foreign exchange loss	444	-


	1,554	819

11. Finance costs

	2012	2011
	USD'000	USD'000

Interest expense on loans and borrowings	3,115	1,476
Interest expense on convertible bonds	75	38
Accretion of interest on the convertible bonds	291	218


	3,481	1,732

12. Employee benefits expense

	2012	2011
	USD'000	USD'000

Included in cost of sales (Note 7):
Salaries, bonus and allowances	342	51
Contributions to defined contribution plans	50	6
Social security costs	2	1
Share-based payment transaction (Note 29)	38	-


	432	58


Included in cost of biological assets (Note 16):
Salaries, bonus and allowances	1,461	1,285
Contributions to defined contribution plans	173	146
Social security costs	10	8
Share-based payment transaction (Note 29)	150	25


	1,794	1,464


Included in cost of administrative expenses (Note 9):
Salaries, bonus and allowances	1,738	1,288
Contributions to defined contribution plans	107	65
Social security costs	4	3
Share-based payment transaction (Note 29)	963	9,719


	2,812	11,075


Total employee benefits expense	5,038	12,597

13. Income tax (benefit)/expense

Major components of income tax (benefit)/expense

The major components of income tax (benefit)/expense for the financial years ended 31 December are as follows:

	2012	2011
	USD'000	USD'000

Income tax:
- Based on current year results	-	20
- Over provision in prior year	(3)	(10)


	(3)	10

13. Income tax (benefit)/expense (cont'd)

Major components of income tax (benefit)/expense (cont'd)

	2012	2011
	USD'000	USD'000
Deferred tax:
- relating to origination and reversal of temporary differences	(242)	601
- Under provision in prior year	52	111


	(190)	712


	(193)	722

Relationship between tax (benefit)/expense and accounting loss

The reconciliation between income tax (benefit)/expense and the product of accounting loss multiplied by the applicable corporate tax rate for the financial years ended 31 December is as follows:

	2012	2011
	USD'000	USD'000

Accounting loss before tax	(7,072)	(10,833)


Tax benefit at domestic rate applicable to losses in the countries where the Group operates	(1,461)	(1,791)
Adjustments:
Income not subject to tax	-	(94)
Non-deductible expenses	1,219	2,506
Over provision of income tax in prior year	(3)	(10)
Under provision of deferred tax in prior year	52	111


	(193)	722

For the current financial year, the corporate income tax rate applicable to the Singapore and Malaysian companies in the Group was 17% (2011: 17%) and 25% (2011: 25%) respectively.

The above reconciliation is prepared by aggregating separate reconciliations for each national jurisdiction.

Included in non-deductible expenses is the tax effects of share-based payment transaction of USD173,000 (2011: USD1,677,000).

13. Income tax (benefit)/expense (cont'd)

Deferred tax

Deferred tax relates to the following:

	Consolidated statement of financial position		Consolidated income statement
	2012	2011		2012	2011
	USD'000	USD'000		USD'000	USD'000

Accelerated depreciation for tax purposes	(3,765)	(2,055)		1,619	1,111
Biological assets	(7,987)	(4,372)		3,419	2,734
Revaluation of land use rights to fair value	(7,245)	(7,108)		(137)	(139)
Unutilised tax losses	4,649	2,593		(1,941)	(1,100)
Unabsorbed capital and agricultural allowances	7,970	4,617		(3,150)	(1,894)


Deferred tax (benefit)/ expense				(190)	712


Net deferred tax liabilities	(6,378)	(6,325)


Reflected in the statement of financial position as follows:
Deferred tax assets	178	-
Deferred tax liabilities	(6,556)	(6,325)

Deferred tax liabilities, net	(6,378)	(6,325)

Reconciliation of deferred tax liabilities, net

	2012	2011
	USD'000	USD'000

Opening balance as of 1 January	(6,325)	(5,810)
Recognised in profit or loss	190	(712)
Exchange differences	(243)	197


Closing balance as at 31 December	(6,378)	(6,325)

13. Income tax (benefit)/expense (cont'd)

Reconciliation of deferred tax liabilities, net (cont'd)

The Group offsets tax assets and liabilities if and only if it has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority.

The Group has unutilised tax losses and unabsorbed capital and agricultural allowances totaling USD50,476,000 (2011: USD28,800,000). The availability of the unutilised tax losses and unabsorbed capital and agricultural allowances for offsetting against future taxable profits of the subsidiaries are subject to the provisions of the Malaysian Income Tax Act, 1967.

14. Loss per share

Basic loss per share amounts are calculated by dividing loss for the year, net of tax, attributable to owners of the Company by the weighted average number of ordinary shares outstanding during the financial year.

Diluted loss per share amounts are calculated by dividing loss for the year, net of tax, attributable to owners of the Company by the weighted average number of ordinary shares outstanding during the financial year plus the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares. There is no dilutive potential ordinary share as at year ended 2012 and 2011.

The following tables reflect the loss and share data used in the computation of basic loss and diluted per share for the years ended 31 December:

	2012	2011
	USD'000	USD'000

Loss, net of tax, attributable to owners of the Company	(6,879)	(11,555)
-

	No. of shares	No. of shares
	'000	'000

Weighted average number of ordinary shares for basic and diluted loss per share computation*	46,382	40,937
-

* The weighted average number of ordinary shares takes into account the weighted average effect of changes in ordinary shares transactions during the year

The potential ordinary shares from unsecured convertible bonds and options granted pursuant to the Company's share option scheme have not been included in the calculation of diluted loss per share because they are anti-dilutive.

15. Property, plant and equipment

	Building	Motor vehicles	Office equipment, computers, furniture and fittings	Renovation	Plant and machinery	Infrastructure	Assets under construction	Total
	USD'000	USD'000	USD'000	USD'000	USD'000	USD'000	USD'000	USD'000

Cost
At 1 January 2011	850	402	255	33	539	1,913	6,179	10,171
Additions	139	267	92	6	1,115	3,526	2,193	7,338
Disposal	-	-	(3)	-	(34)	-	-	(37)
Reclassifications	1,378	45	4	-	-	5,045	(6,414)	58
Exchange differences	(29)	7	(8)	-	(72)	(311)	(102)	(515)


At 31 December 2011 and 1 January 2012	2,338	721	340	39	1,548	10,173	1,856	17,015
Additions	220	396	261	-	1,799	9,823	25,817	38,316
Disposal	-	(24)	-	-	-	-	-	(24)
Reclassifications	2,640	1	32	-	(37)	1	(2,637)	-
Exchange differences	90	35	18	2	75	484	292	996


At 31 December 2012	5,288	1,129	651	41	3,385	20,481	25,328	56,303

15. Property, plant and equipment (cont'd)

	Building	Motor vehicles	Office equipment, computers, furniture and fittings	Renovation	Plant and machinery	Infrastructure	Assets under construction	Total
	USD'000	USD'000	USD'000	USD'000	USD'000	USD'000	USD'000	USD'000

Accumulated depreciation
At 1 January 2011	61	93	41	1	106	293	-	595
Charge for the year	112	128	54	8	179	352	-	833
Disposals	-	-	(1)	-	(22)	-	-	(23)
Reclassifications	3	45	4	-	-	6	-	58
Exchange differences	(6)	(17)	(2)	-	(1)	(22)	-	(48)


At 31 December 2011 and 1 January 2012	170	249	96	9	262	629	-	1,415
Charge for the year	273	164	83	8	452	614	-	1,594
Disposals	-	(3)	-	-	-	-	-	(3)
Reclassifications	10	-	-	-	(10)	-	-	-
Exchange differences	10	12	4	-	14	30	-	70


At 31 December 2012	463	422	183	17	718	1,273	-	3,076


Net carrying amount
At 31 December 2012	4,825	707	468	24	2,667	19,208	25,328	53,227


At 31 December 2011	2,168	472	244	30	1,286	9,544	1,856	15,600

15. Property, plant and equipment (cont'd)

Capitalised borrowing costs

The Group started the construction of the vertical sterilizer crushing mill and the mill is expected to be completed and commence operations in early year 2013. The carrying amount of the mill at 31 December 2012 included in assets under construction was USD21,428,000 (2011: USD605,000). The construction of this mill is financed by a bridging loan and Bank Guaranteed Medium Term Notes Programme. Details of these borrowings are disclosed in Note 25.

The amount of borrowing costs capitalised during the year ended 31 December 2012 was USD1,208,000 (2011: Nil). The rates used to determine the amount of borrowing costs eligible for capitalisation range from 1.65% per annum to 5.95% per annum ("p.a.") (2011: Nil), depending on the source of financing.

Assets held under finance leases

During the financial year, the Group acquired property, plant and equipment at an aggregate cost of USD38,316,000 (2011: USD7,338,000) of which USD1,260,000 (2011: USD915,000) were acquired by means of finance leases. Leased assets are pledged as security for the related finance lease liabilities.

Net carrying amount of property, plant and equipment held under finance leases arrangements which comprise plant and machinery and motor vehicles amounted to USD969,000 (2011: USD1,063,000) and USD457,000 (2011: USD269,000), respectively.

Assets pledged for banking facilities

A building of the Group with net carrying amount of USD318,000 (2011: USD305,000) is pledged for banking facilities as disclosed in Note 25.

Assets under construction

The Group's assets under construction mainly included a palm oil mill, workers quarters, terraces, roads and bridges/culverts with total net carrying amount of USD25,328,000 (2011: USD1,856,000). The construction of the oil palm mill as mentioned above represent the main asset under construction as at the reporting date.

Depreciation capitalised to biological assets

Depreciation of property, plant and equipment of the Group capitalised to biological assets for the financial year ended 31 December 2012 amounted to USD1,343,000 (2011: USD693,000) (Note 16).

16. Biological assets

Biological assets comprise primarily development activities for oil palm plantations and maintenance of nurseries with the following movements in their carrying value:

	2012	2011
	USD'000	USD'000
At fair value

At 1 January	22,811	11,022
Additions	29,405	9,011
Gain arising from changes in fair value	1,989	3,499
Exchange differences	1,082	(721)


At 31 December	55,287	22,811


Represented by:
Mature plantation	27,442	1,628
Immature plantation	26,103	20,130
Nursery	1,742	1,053


Total	55,287	22,811

Mature oil palm trees produce FFBs which are used to produce Crude Palm Oil ("CPO"). The fair values of oil palm plantations are determined by using the discounted future cash flows of the underlying plantations. The expected future cash flows of the oil palm plantations are determined using long term average CPO price in the market.

Significant assumptions made in determining the fair values of the mature and immature oil palm plantations, using a discounted cash flow model, are as follows:

(a) no new planting or re-planting activities are assumed;

(b) oil palm trees have an average life of 28 years (2011: 28 years), with the first three years as immature and the remaining years as mature;

(c) discount rate used for the Group's plantation operations which is applied in the discounted future cash flows calculation range from 10.5% to 11.3% (2011: 10.0% to 11.0%);

(d) FFB price is derived by applying the oil extraction rate to the estimated long term average CPO price of USD907 (2011: USD867) per metric tonne; and

(e) yield per hectare of oil palm trees is based on the standard yield profile of the industry.

16. Biological assets (cont'd)

Gain arising from changes in fair value less estimated costs to sell during the financial year ended 2012 amount to USD1,989,000 (2011: USD3,499,000).

	2012	2011
	Hectares	Hectares
Planted area:
Mature plantation	3,559	230
Immature plantation	4,591	4,180


Total	8,150	4,410

Depreciation of property, plant and equipment capitalised to biological assets for the financial year ended 31 December 2012 amounted to USD1,343,000 (2011: USD693,000) (Note 15).

Employee benefit expenses capitalised to biological assets for the financial year ended 31 December 2012 amounted to USD1,794,000 (2011: USD1,464,000) (Note 12).

The plantations have not been insured against the risks of fire, diseases and other possible risks.

The Group is exposed to a number of risks related to its oil-palm plantations:

Regulatory and environmental risks

The Group is subject to laws and regulations in Malaysia. The Group has established environmental policies and procedures aimed at compliance with local environmental and other laws. Management performs regular reviews to identify environmental risks and to ensure that the systems in place are adequate to manage those risks.

Climate and other risks

The Group's oil palm tree plantations are exposed to the risk of damage from climatic changes, diseases and other natural forces. The Group has extensive processes in place aimed at monitoring and mitigating those risks, including regular tree health inspections and industry pest and disease surveys.

17. Land use rights

	2012	2011
	USD'000	USD'000

At 1 January	32,158	33,546
Additions	21,044	196
Amortisation charge for the year (Note 10)	(924)	(624)
Exchange differences	1,239	(960)


At 31 December	53,517	32,158


Amount to be amortised
- Not later than one year	1,040	535
- Later than one year but not more than five years	4,160	2,140
- Later than five years	48,317	29,483


	53,517	32,158

Land use rights are in respect of:

(a) cost of land use rights over six pieces (2011: five pieces) of long-term leasehold land owned by the Group, for the oil palm plantation development activities of the Group. The land use rights are transferable and have a remaining tenure of 51 to 60 years (2011: 52 to 60 years). The Group was granted a provisional registered lease in accordance with the provisions of the Land Code of Sarawak, Malaysia, for the use of the agricultural land for a period of 60 years by the relevant government agency. As has been the practice in East Malaysia to date, registered leases are able to be renewed at expiry for a further period of 60 years with the payment of a modest land premium per acre set annually by the State Government of Sarawak.

(b) deferred land rights acquisition costs representing the cost associated with the legal transfer or renewal for titles of land rights such as, among others, legal fees, land survey and re-measurement fees, taxes and other related expenses. Such costs are also deferred and amortised on a straight-line basis over the tenure of the related land rights.

Acquisition during the financial year:

On 28 February 2012, the Group completed the acquisition of 5,000 hectares of semi-developed plantation land for a total consideration of RM102 million (approximately USD34 million). As this acquisition represents purchase of assets by the Group, at initial recognition the purchase price was allocated between land use rights for the amount of USD18 million and fair value of biological assets acquired of USD16 million.

Assets pledged as security

The land use rights were pledged to secure the bank overdrafts, short term revolving credit, term loans facilities and the MTN Programme as disclosed in Note 25.

18. Goodwill on consolidation

	2012	2011
	USD'000	USD'000

At 1 January	7,335	7,560
Arising from the acquisition of a subsidiary (Note 1(b))	5	37
Impairment of goodwill	(5)	(37)
Exchange differences	284	(225)


At 31 December	7,619	7,335

Goodwill has an indefinite useful life and is subject to annual impairment testing.

(a) Impairment testing of goodwill

Goodwill arising from business combinations is allocated to the cash-generating unit for the purpose of impairment testing. The cash-generating unit is as follows:

	2012	2011
	USD'000	USD'000

Plantation Estates
Goodwill	7,619	7,335

The recoverable value of the goodwill of plantation estates as at 31 December 2012 was determined based on value-in-use calculations using cash flow projections, covering a period of 25 productive years of oil palms, from financial budgets approved by management. The calculations were based on the following key assumptions:

	2012	2011

Discount rate (pre-tax)	10.5% to 11.3%	10.0% to 11.0%

Projected CPO price	USD907/tonne	USD867/tonne

(b) Key assumptions used in value-in-use calculations

The calculations of value-in-use are most sensitive to the following assumptions:

CPO price - The long term average CPO price is based on delivered price as published by the Malaysia Palm Oil Board.

Discount rate - The discounted rate reflects the current market assessment of the risk specific to palm oil industry. The discount rate applied to the cash flow projection is pre-tax and derived from the weighted average cost of equity and cost of debt, calculated based on the subsidiaries' actual composition of the equity and debt of the plantation estates.

18. Goodwill on consolidation (cont'd)

(b) Key assumptions used in value-in-use calculations (cont'd)

Based on the above analysis, management has assessed that the goodwill is not impaired as at 31 December 2012 and 2011. Changes to the assumptions used by management to determine the recoverable amounts can have an impact on the results of the assessment. Management is of the opinion that no reasonably possible change in any of the key assumptions stated above would cause the carrying amount of the goodwill for each of the CGUs to materially exceed their recoverable amount.

During the financial year, an impairment loss was recognised on the initial recognition of goodwill due to the inactivity of newly acquired subsidiary as described in Note 1(b).

19. Inventories

	2012	2011
	USD'000	USD'000
At cost:

Chemicals and fertilisers	1,020	140
Consumable supplies	704	205


	1,724	345

20. Trade and other receivables

	2012	2011
	USD'000	USD'000

Trade receivables	259	49
Other receivables:
Deposits	5,820	4,529
Sundry receivables	635	202


Total trade and other receivables	6,714	4,780

Add: Cash and short-term deposits (Note 22)	15,785	28,052


Total loans and receivables carried at amortised cost	22,499	32,832

Trade receivables

Trade receivables are non-interest bearing and are generally 30 days' (2011: 30 days') terms. They are recognised at their original invoice amounts which represent their fair values on initial recognition.

20. Trade and other receivables (cont'd)

Deposits

Included in deposits is amount totalling USD4,828,000 (2011: USD4,351,000) paid for the proposed acquisition of Malaysian companies and land use rights.

Other receivables that are not denominated in the functional currencies of the respective entities are as follows:

	2012	2011
	USD'000	USD'000

Singapore Dollars ("SGD")	25	22

Other information on financial risk of trade and other receivables is disclosed in Note 33(a).

21. Prepayments

Prepayments comprise prepaid operating expenses.

22. Cash and short-term deposits

	2012	2011
	USD'000	USD'000

Cash at banks and on hand	5,255	25,438
Short-term deposits	10,530	2,614


	15,785	28,052

Short-term deposits earn interest at 3% (2011: 3%) p.a..

As at 31 December 2012, the amount of undrawn borrowing facilities that may be available in the future amounts to USD53,609,000 (2011: USD7,176,000).

The Group has pledged a part of its short-term deposits amounting to USD149,000 (2011: USD96,000) to fulfil collateral requirements for supply of goods and USD835,000 (2011: Nil) as security for a term loan facility as disclosed in Note 25.

Cash and bank balances that are not denominated in the functional currencies of the respective entities are as follows:

	2012	2011
	USD'000	USD'000

SGD	1,188	308
USD	2,088	17,499
GBP	1,725	7,239

22. Cash and short-term deposits (cont'd)

For the purpose of the consolidated statement of cash flows, cash and cash equivalents comprise the following at the end of the reporting period:

	2012	2011
	USD'000	USD'000

Cash and short-term deposits	15,785	28,052
Less: Short-term deposits pledged for supply of goods	(149)	(96)
Less: Short-term deposits pledged for a banking facility (Note 25)	(835)	-


	14,801	27,956
Bank overdraft (Note 25)	(613)	(578)


	14,188	27,378

23. Issued capital

	2012		2011
	No. of shares '000	USD'000	No. of shares '000	USD'000

Issued and fully paid ordinary shares
At 1 January	46,175	87,321	33,445	42,211
Issuance during the year	336	1,273	12,730	46,252
Share issuance expenses	-	-	-	(1,142)


At 31 December	46,511	88,594	46,175	87,321

The holders of ordinary shares are entitled to receive dividends as and when declared by the Company. Each ordinary share carries one vote per share without restriction. The ordinary shares have no par value.

Issuance of shares

On 16 April 2012, the Board approved the allotment of 23,000 shares pursuant to the exercise of initial options granted to a consultant in accordance with the Company's share option scheme and these shares were subsequently listed on AIM on 30 April 2012.

On 28 May 2012, the Board approved the conversion of the convertible bond with face value of USD1,000,000 to 313,383 ordinary shares of the Company and these shares were subsequently listed on AIM on 7 June 2012.

24. Other reserves

The composition of other components of other reserves is as follows:

	2012	2011
	USD'000	USD'000

Merger reserve	(20,256)	(20,256)
Foreign currency translation reserve	1,736	(717)
Share-based payment transaction reserve (Note 29)	10,604	9,543


	(7,916)	(11,430)

Merger reserve

Pursuant to an agreement dated 9 November 2009, the Company acquired the entire issued and paid-up capital of APS at par, comprising 22,500,000 ordinary shares of RM1 each, in exchange for 22,500,000 shares of the Company. As this arrangement constitutes a combination of entities under common control, the pooling of interest method of accounting was adopted in the preparation of the consolidated financial statements of the Group. Under this method of accounting, the results and cash flows of the Company and its subsidiaries and their assets and liabilities are combined at the amounts at which they were previously recorded as if they had been part of the Group for the whole of the current and preceding periods.

Merger reserve represents the difference between the consideration paid and the share capital of the "acquired" entity, APS.

Foreign currency translation reserve

The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of companies in the Group whose functional currencies are different from that of the Group's presentation currency.

	2012	2011
	USD'000	USD'000

At 1 January	(717)	1,261
Foreign currency translation adjustments	2,453	(1,978)


At 31 December	1,736	(717)

24. Other reserves (cont'd)

Share-based payment transaction reserve

The share-based payment transaction reserve is used to recognise the value of equity-settled share-based payment transaction provided to directors, employees and consultants as part of their remuneration or compensation for services rendered. Refer Note 29 for further details of these plans.

	2012	2011
	USD'000	USD'000

At 1 January	9,543	-
Expense recognised during the year	1,128	9,543
Pursuant to issuance of ordinary shares (Note 23)	(67)	-


At 31 December	10,604	9,543

25. Loans and borrowings

	2012	2011
	USD'000	USD'000

Bank overdraft	613	578
Short term revolving credit	1,962	1,889
Bank Guaranteed Medium Term Notes Programme	31,954	-
Term loans	84,821	38,007


	119,350	40,474
Add: Obligations under finance leases (Note 30(c))	2,123	1,187


	121,473	41,661

25. Loans and borrowings (cont'd)

		2012	2011
	Maturity	USD'000	USD'000

Current
Bank overdraft BLR* + 1.0% p.a.	On demand	613	578
Short term revolving credit COF** + 2.5% p.a.	On demand	1,962	1,889
Term loan BLR - 1.5%	2013	5	5
Term loans BLR + 1.0% p.a.	2013	2,292	-
Term loans COF + 2.5% p.a.	2013	964	-
Bridging loan COF + 1.75% p.a.	2013	12,426	-
Obligations under finance leases (Note 30(c))	2013	502	247


		18,764	2,719


Non-current
Term loan BLR - 1.5% p.a.	2014 - 2031	177	177
Term loans BLR + 1.0% p.a.	2014 - 2020	46,947	25,106
Term loans COF + 2.0% p.a.	2014 - 2020	12,118	2,268
Term loans COF + 2.5% p.a.	2014 - 2019	9,892	10,451
Bank Guaranteed Medium Term Notes Programme	2017 - 2020	31,954	-
Obligations under finance leases (Note 30(c))	2014 - 2017	1,621	940


		102,709	38,942


Total loans and borrowings		121,473	41,661

* BLR refers to Base Lending Rate

** COF refers to Cost of Fund

Details of the loans and borrowings, which are all denominated in RM, are as follows:

Obligations under finance leases

These obligations are secured by a charge over the leased assets (Note 15). Interest rates of the leases range from 4.68% to 6.23% (2011: 4.97% to 7.95%) p.a.. Future minimum lease payments under finance leases together with the present value of the net minimum lease payments are disclosed Note 30(c).

Short-term revolving credit COF + 2.5% p.a.

The short-term revolving credit is repayable on demand with a six months rollover period. It is secured over a leasehold land of the Group in which it has prepaid the rights to use the land as disclosed in Note 17. This revolving credit includes a financial covenant which requires the subsidiary company to maintain a gearing ratio not exceeding 70%. This short-term revolving credit will be wholly re-financed through the MTN Programme in Year 2013 as elaborated below.

25. Loans and borrowings (cont'd)

Bank overdrafts BLR + 1.0% p.a.

There are three (2011: two) bank overdrafts facilities which bear interest of BLR + 1% p.a. and with a total combined amount of USD2.6 million (2011: USD1.7 million) are currently available for use by the Group. As at the reporting date, the Group has only utilised one of these facilities. The bank overdrafts are secured over leasehold lands of the Group in which it has prepaid the rights to use the lands as disclosed in Note 17. This bank overdraft includes a financial covenant which requires the subsidiary company to maintain a gearing ratio not exceeding 70%.

Term loan BLR - 1.5% p.a.

This term loan which is obtained for the purchase of a building is secured over the said building as disclosed in Note 15 and is repayable over a period of 22 years.

Term loans BLR + 1.0% p.a.

There are three (2011: two) term loans which bear interest of BLR + 1% p.a. obtained for the purpose of acquisition of subsidiaries and land use rights. One of the term loans amounting to USD18 million which is due to commence repayment in Year 2013 will be wholly re-financed through the MTN Programme in Year 2013 as elaborated below. The second term loan amounting to USD8 million is due to commence repayment in Year 2014. During the year, the Group has also drawn down a third term loan of USD23.4 million being partial financing for the acquisition of a semi-developed plantation land as disclosed in Note 17 and repayment will commence in Year 2015.

All term loans are repayable over a period of six years and are secured over certain leasehold land of the Group in which the Group has prepaid the rights to use the land as disclosed in Note 17. The third term loan of USD23.4 million is further secured by a fixed deposit of USD835,000 (2011: Nil) as disclosed in Note 22 and a corporate guarantee provided by the Company. These loans include financial covenants which require the subsidiary company to maintain a gearing ratio not exceeding 70%.

Term loan COF + 2.0% p.a

There are two (2011: one) term loans which bear interest of COF + 2.0% p.a. obtained for the purpose of oil palm development activities. The total facility amount available from the term loans is USD27 million (2011: USD14 million), and is to be drawn down in four tranches. As at the reporting date, the Group has only drawn down USD12 million, and the balance is available for further draw down until 31 December 2016. The term loans will commence repayment in Year 2014 and Year 2015, respectively, for a period of six years.

The term loans are secured over leasehold land of the Group in which the Group has prepaid the rights to use the land as disclosed in Note 17. This loan includes a financial covenant which requires the subsidiary company to maintain a gearing ratio not exceeding 70%.

25. Loans and borrowings (cont'd)

Term loans COF + 2.5% p.a

There are two term loans which bear interest of COF + 2.5% p.a. obtained for the purpose of partial financing of acquisition of a subsidiary and land use rights, and oil palm development activities. The total amount of loan obtained for these term loans amounted to USD11 million and the Group has fully drawn down this amount in previous years. Both term loans which are due to commence repayment in Year 2013 will be wholly re-financed through the MTN Programme in Year 2013 as elaborated below.

The term loans are secured over a leasehold land of the Group in which the Group has prepaid the rights to use the land as disclosed in Note 17. These loans include financial covenants which require the subsidiary company to maintain a gearing ratio not exceeding 70%.

Bank Guaranteed Medium Term Notes Programme

During the year, the Group completed the issuance of the MTN Programme of up to RM255 million (approximately USD85 million) in nominal value. The guarantor for MTN Programme is Malayan Banking Berhad, who guarantees the full principal redemption of up to RM255 million and one semi-annual coupon payment. The proceeds from this programme will be utilised towards the construction of the Group's first vertical steriliser oil palm mill, refinancing of the Group's certain loans and borrowings that are due for repayment as mentioned in the preceding paragraphs, and to also finance the plantation development expenditure including working capital requirements for BJ.

As at 31 December 2012, the Group has drawn down the first tranche of the MTN Programme amounting to RM100 million (USD33 million). The second tranche totaling RM155 million (USD52 million) is drawn down on 15 March 2013.

Of the first tranche of the MTN Programme, RM35 million (USD12 million) bears a coupon rate of 4.35% p.a., while the balance of RM65 million (USD21 million) bears a coupon rate of 4.45% p.a.. Tenure of the MTN Programme is up to 10 years from the date of the first issuance and repayment is to commence 5 years from the date of first issue.

The MTN Programme is secured over all the leasehold land of the Group in which the Group has prepaid rights to use the land as disclosed in Note 17 and a corporate guarantee provided by the Company.

The MTN Programme includes the financial covenants which require the Group on a consolidated level, to maintain the following:

(a) Maximum Debt to Equity ratio of 2.25:1

(b) Minimum Debt Service Cover Ratio of 1.50:1

Bridging Loan COF + 1.75% p.a.

In the interim period to the drawdown of the MTN Programme, the Group obtained a bridging loan facility from Malayan Banking Berhad to part finance the construction of the vertical sterilizer oil palm mill and BJ's development expenditure. This bridging loan will be repaid in 2013 upon the issuance of the second tranche of the MTN Programme. This loan is secured over all the leasehold land of the Group in which the Group has prepaid rights to use the land as disclosed in Note 17 and a corporate guarantee provided by the Company.

26. Convertible bonds

		2012	2011
	Maturity	USD'000	USD'000

USD1.0 million	18 November 2014	-	926
USD2.1 million	8 August 2015	1,995	1,755


		1,995	2,681

On 28 May 2012, the unsecured convertible bond of USD1 million, which bears a cash interest coupon of 1.75% p.a., was converted to 313,383 ordinary shares of no par value in the Company, representing a conversion price of 201 pence per share.

The unsecured convertible bonds of USD2.1 million bear a cash interest coupon of 2.5% per annum and is payable semi-annually. The convertible bonds may be converted, in whole only, into 434,700 new ordinary shares of no par value in the Company. This represents a conversion price 294 pence per share, at any time until the maturity date at the bondholder's election. In the event of non-conversion, the Company shall redeem the convertible bonds, in whole, on maturity date such that the amount paid by the Company on redemption results in the bondholder having achieved, in respect of the convertible bonds, including coupon payments, an internal rate of return of 10%.

The carrying amount of liability component of the convertible bonds at reporting date is as follows:

	2012	2011
	USD'000	USD'000

Face value of the convertible bonds	2,100	3,100
Less: Embedded derivative	(403)	(606)
Less: Transaction costs on liability component	(27)	(27)


Liability component at initial recognition	1,670	2,467
Add: Accretion of interest on the convertible bonds	325	214


	1,995	2,681

Embedded derivative relating to the conversion option of the convertible bond is recorded as a "fair value through profit or loss" financial instrument with a balance of USD130,000 as at 31 December 2012 (2011: USD517,000).

27. Trade and other payables

	2012	2011
	USD'000	USD'000

Trade payables	3,776	784
Other payables	3,034	487


Total trade and other payables	6,810	1,271
Add:
- Other liabilities (Note 28)	2,464	1,086
- Loans and borrowings (Note 25)	121,473	41,661
- Convertible bonds (Note 26)	1,995	2,681


Total financial liabilities carried at amortised cost	132,742	46,699

Other payables that are not denominated in the functional currencies of the respective entities are as follows:

	2012	2011
	USD'000	USD'000

SGD	135	68
USD	75	3
GBP	1	1

Trade and other payables

These amounts are non-interest bearing. Trade payables are normally settled on 60 days (2011: 60 days) terms while other payables have an average term of 150 days (2011: 150 days).

Other information on financial risks of trade and other payables is disclosed in Note 33(b).

Included in other payables are amounts of USD1.1 million (2011: Nil) payable to contractors for the construction of mill and USD1 million (2011: Nil) payable for the construction of infrastructures, respectively.

28 Other current financial liabilities

	2012	2011
	USD'000	USD'000

Accrued operating expenses	1,118	785
Retention monies	1,346	285
Deposits received	-	16


	2,464	1,086

Retention monies represent a 5% deduction of each progress payment claimed by contractors and it shall be payable to the contractors four months after completion of work, less any deductions for breaches of contracts.

29. Share-based payment plans

The Company's share option scheme (the "Scheme"), as outlined and adopted in the Extraordinary General Meeting on 22 February 2011 (the "Adoption Date"), is a share incentive scheme to retain and to give recognition to employees, consultants and directors of the Group, and to recognise their contributions to the success and development of the Group. The Scheme also promotes an ownership culture by giving employees, consultants and directors an opportunity to have a real and personal direct interest in the Group and to align the interests of such persons with those of the shareholders so as to motivate them to contribute to the future growth and profitability of the Group. There are no cash settlement alternatives for this Scheme.

The Scheme will be administered by a committee comprising directors of the Company, duly authorised and appointed by the Board of Directors (the "Committee"). There are two categories of options namely Initial Option and Additional Option. Initial Option refers to options that are to be granted to the directors, employees, and consultants to subscribe for up to 3,568,000 shares whereas Additional Option refers to the additional options granted or to be granted pursuant to the Scheme subsequent to the grant of the Initial Option.

The aggregate amount of shares granted under the Scheme, when added to the amount of shares issued and issuable in respect of all options granted under the Scheme, shall not exceed 10% of the issued share capital of the Company (on a fully diluted basis) on the day preceding the Date of Grant.

Subscription Price for each share underlying the Initial Options shall equal SGD1.55 (approximately the equivalent of 75 pence). Subject to a non-cash variation condition in the issued ordinary share capital of the Company, Subscription Price for each share underlying the Additional Options shall be the higher of:

(i) the prevailing Market Price (converted to Singapore Dollars on the relevant date at the prevailing spot rate) on the Date of Grant of such Additional Options; and

(ii) the aggregate of (a) 1 pence and (b) the highest placement price per share (converted to Singapore Dollars on the relevant date at the prevailing spot rate) of any placement effected by the Company.

The Scheme shall continue to be in force at the absolute discretion of the Committee, subject to a maximum period of 10 years, commencing on the Adoption Date, provided always that the Scheme may continue beyond the above stipulated period with the approval of the Shareholders by ordinary resolution in a general meeting and of any relevant authorities which may then be required.

The vesting conditions for the grant of Additional Options shall be determined by the Committee prior to the Date of Grant of Additional Options. Vesting conditions on Initial Options are outlined as follows:

29. Share-based payment plans (cont'd)

Vesting conditions

(a) Directors

The Options granted to each director, both executive and non-executive, under the Scheme shall, subject to certain performance criteria being fulfilled, be granted in four tranches as follows:

1) the first tranche of the Initial Options comprising 25% of the award shall vest to such director when

a) the average market price of the Shares is not less than 205 pence for 30 consecutive Market Days; and

b) the CPO Crushing Mill license has been issued to the Company by the Malaysian Palm Oil Board, or similar related regulatory authority, in the course of 2011.

2) the second tranche of the Initial Options comprising a further 25% of the award shall be granted to such director when

a) the average Market Price of the Shares is not less than 205 pence for 30 consecutive Market Days; and

b) the BJ Plantation is fully planted by 31 March 2012;

3) the third tranche of Options under the Scheme comprising a further 25% of the Earmarked Director Shares shall be granted to such director when, in 2012, the average Market Price of the Shares is not less than 225 pence for 30 consecutive Market Days; and

4) in relation to each director, the fourth tranche of Options granted under the Scheme comprising the final 25% of the Earmarked Director Shares shall be granted to such director when the average Market Price of the Shares is not less than 300 pence for 30 consecutive Market Days.

As at 31 December 2011, the directors were granted a total of 2,850,000 Initial Options, in cumulative for all four tranches and 800,000 Additional Options. The contractual term of each option granted is 10 years. The first tranche comprising 712,500 shares (or 25% of the award) from Initial Options are vested as at 31 December 2011. The remaining Initial Options and Additional Options were granted but not vested.

As at 31 December 2012, the first, second and third tranches totalling 2,137,500 Initial Options and 800,000 Additional Options, that were granted in year 2011, are vested. The remaining fourth tranche of 712,500 shares (or 25% of the award) from Initial Options are not vested due to vesting conditions not met.

29. Share-based payment plans (cont'd)

Vesting conditions (cont'd)

(b) Employees

Any confirmed full time employee of the Group, excluding executive directors, the Initial Options which is granted to an employee are exercisable on or after 1 January 2015; however options granted for the calendar year 2010 are exercisable on or after 31 January 2013 if the BJ, Fortune and Incosetia estates are fully planted by end of calendar year 2012.

As at 31 December 2011, certain employees were granted a total of 48,000 Initial Options and these options will only vest on or after 1 January 2015. The contractual term of each option granted is 10 years.

As at 31 December 2012, certain employees were granted a total of 220,000 Initial Options and these options will only vest on or after 1 January 2015. The contractual term of each option granted is 10 years.

An Option granted to a consultant is exercisable in accordance with the Scheme.

On 26 May 2011, certain consultants were granted a total of 49,000 Initial Options and these options vested on 1 October 2011. The contractual term of each option granted is 10 years.

On 16 April 2012, a consultant has exercised 23,000 Initial Options (Note 23).

Fair value of share options

The fair value of share options granted is estimated at the date of the grant using a Monte-Carlo simulation model, taking into account the terms and conditions upon which the share options were granted. The model takes into account historic and expected dividends, and share price fluctuations covariance of the Group and companies in similar industries to predict the distribution of relative share performance.

The expense recognised for this equity-settled share-based payment transaction amount to USD1,151,000 (2011: USD9,891,000), of which USD150,000 (2011: USD25,000) has been capitalised to biological assets.

There has been no cancellation or modification to the Scheme during the years ended 31 December 2012 or 2011.

29. Share-based payment plans (cont'd)

Movements in the year

The following table illustrates the number and weighted average exercise prices (WAEP) of, and movements in, share options during the year:

	2012	2012	2011	2011
	Number	WAEP	Number	WAEP
		USD		USD
Outstanding at 1 January	3,747,000	1.83	-	-
Granted during the year	220,000	2.51	3,747,000	1.83
Exercised during the year	(23,000)*	1.27	-	-


Outstanding at 31 December	3,944,000	1.92	3,747,000	1.83


Exercisable at 31 December	2,963,500	2.05	761,500	1.19

* The weighted average share price at the date of exercise of this option was USD4.22

The weighted average remaining contractual life for the share options outstanding as at 31 December 2012 is 7.39 years (2011: 8.29 years).

The range of exercise price for options outstanding at the end of the year was SGD1.55 (approximately USD1.27) to SGD5.07 (approximately USD4.15) per share (2011: SGD1.55 (approximately USD1.19) per share).

The weighted average fair value of options granted during the year, estimated by using a Monte-Carlo simulation model was USD2.30 (2011: USD1.96).

The following table list the inputs to the Monte-Carlo simulation model:

	2012	2011

Dividend yield (%)	0	0
Expected volatility (%)	36.98	35.9 - 41.3
Risk-free rate	*	*
Expected life of share options (years)	10	5 - 10
Share price (pence) (%)	247	249 - 278.5

* Based on GBP Libor rates and Swap rates at valuation date

The expected life of the share options is based on historical data and current expectations and is not necessarily indicative of exercise patterns that may occur. The expected volatility reflects the assumption that the historical volatility over a period similar to the life of the options is indicative of future trends, which may also not necessarily be the actual outcome.

30. Commitments

(a) Capital commitments

Capital commitments contracted for at the end of the reporting period not recognised in the financial statements are as follows:

	2012	2011
	USD'000	USD'000

Approved and contracted for:
- property, plant and equipment	10,434	3,526
- biological assets	-	-

Approved and not contracted for:
- property, plant and equipment	19,970	40,910
- biological assets	10,162	7,975


	40,566	52,411

(b) Operating lease commitments

As lessee

In addition to the land use rights disclosed in Note 17, the Group has no other operating leases.

As lessee

The Group has finance leases for various items of plant and equipment and motor vehicles. These leases have terms of renewal but no purchase options and escalation clauses. Renewals are at the option of the specific entity that holds the lease.

30. Commitments (cont'd)

Future minimum lease payments under finance leases together with the present value of the net minimum lease payments are as follows:

	2012			2011
	Minimum lease payments	Present value of minimum lease payments	Minimum lease payments		Present value of minimum lease payments
	USD'000	USD'000	USD'000		USD'000

Not later than one year	622	502	318		247
Later than one year but not more than five years	1,782	1,621	952		844
More than five years	-	-	99		96


Total minimum lease payments	2,404	2,123	1,369		1,187
Less: Amount representing finance charges	(281)	-	(182)		-


Present value of minimum lease payments	2,123	2,123	1,187		1,187

31. Related party disclosures

In addition to those related party information provided elsewhere in the relevant notes to the consolidated financial statements, the following are the significant transactions between the Group and related parties (who are not members of the Group) that took place during the financial years ended 31 December 2012 and 2011, which are conducted at mutually agreed terms between the parties.

	2012	2011
	USD'000	USD'000

Transactions with related parties
- Rental expense	42	-
- Payment of expenses on behalf of related parties	9	-
- Construction of building	-	308
- Administrative costs charged	157	124



Amount due from related parties	2	-



Amount due to related parties	42	5

31. Related party disclosures (cont'd)

Amounts due from/(to) related parties are non-trade related, unsecured, non-interest bearing and are repayable in cash on demand.

Amount due from/(to) related parties are included within the line items in Notes 20 and 27.

Related parties represent companies in which certain directors of the Group have financial interest and are also directors of these companies.

Compensation of key management personnel

	2012	2011
	USD'000	USD'000

Directors' salaries	723	662
Directors' fees (Note 9)	187	172
Short term employee benefits	532	388
Contributions to defined contribution plans	86	44
Share-based payment transactions	1,032	9,735


	2,560	11,001


Compensation comprise

Amounts paid to:
- Directors of the Company	904	827
- Directors of a subsidiary company	6	6
- Other key management personnel	618	433


	1,528	1,266


Share-based payment transactions expense:
- Directors of the Company	958	9,716
- Other key management personnel	74	19


	1,032	9,735


	2,560	11,001

The amounts disclosed above are the amounts recognised as an expense during the reporting period related to key management personnel.

31. Related party disclosures (cont'd)

Compensation of key management personnel (cont'd)

Directors' and other key management personnel interests in the Company's share option scheme ("the Scheme")

Share options held by directors (Note 29) and other key management personnel under the Scheme have the following expiry dates and exercise price:

	Expiry date	Exercise price	Number outstanding
Directors			2012	2011
Issue date:
- 2011	2021	SGD1.55	2,850,000	2,850,000
- 2011	2021	SGD5.07	800,000	800,000


Other key management personnel
Issue date:
- 2011	2021	SGD1.55	32,000	32,000
- 2012	2022	SGD4.89	100,000	-

32. Fair value of financial instruments

Fair value hierarchy

The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:

Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities

Level 2: other techniques for which all inputs that have a significant effect on the recorded fair value are observable, either directly or indirectly

Level 3: techniques that use inputs that have a significant effect on the recorded fair value

that are not based on observable market data

As at 31 December, the Group held the following financial instruments carried at fair value in the statements of financial position:

(a) Fair value of financial instruments that are carried at fair value

The Group does not have any financial instruments carried at fair value other than the derivative component of the unquoted convertible bonds. Fair value of the derivative component is valued using a binomial model based on both observable data and non-observable data. The non-observable inputs to the model include assumptions regarding the future financial performance of the investee, its risk profile, and economic assumptions regarding the industry and geographical jurisdiction in which the investee operates.

32. Fair value of financial instruments (cont'd)

Fair value hierarchy (cont'd)

(b) Fair value of financial instruments by classes that are not carried at fair value and whose carrying amounts are reasonable approximation of fair value

Trade and other receivables, Cash and bank balances, Trade and other payables, Other liabilities and Loans and borrowings (excluding obligations under finance leases and MTN Programme)

The carrying amounts of these financial assets and liabilities are reasonable approximation of fair values, either due to their short-term nature or they are floating rate instruments that are re-priced to market interest rates on or near the end of the reporting period.

(c) Fair value of financial instruments by classes that are not carried at fair value and whose carrying amounts are not reasonable approximation of fair value

The fair value of financial assets and liabilities by classes that are not carried at fair value and whose carrying amounts are not reasonable approximation of fair value are as follows:

	Carrying Amount		Fair Value
	2012	2011	2012	2011
	USD'000	USD'000	USD'000	USD'000

Financial liabilities:
- Obligations under finance leases	2,123	1,187	2,129	1,194

- Convertible bonds	1,995	2,681	*	*

- Bank Guarantee Medium
Term Notes Programme	31,954	-	31,938	-

* It is not practicable and cost outweighs benefits to determine the fair value of the unquoted convertible bonds

33. Financial risk management objectives and policies

The Group is exposed to financial risks arising from its operations and the use of financial instruments. The key financial risks include credit risk, liquidity risk and interest rate risk. The Board of Directors reviews and agrees policies and procedures for the management of these risks. It is, and has been throughout the current and previous financial year, that the Group's policy is that no derivatives shall be undertaken except for the use as hedging instruments where appropriate and cost-efficient.

The following sections provide details regarding the Group's exposure to the above-mentioned financial risks and the objectives, policies and processes for the management of these risks.

There has been no change to the Group's exposure to these financial risks or the manner in which it manages and measures the risks.

33. Financial risk management objectives and policies (cont'd)

(a) Credit risk

Credit risk the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Group is exposed to credit risk from its operating activities (primarily trade and other receivables) and from its financing activities, mainly deposits with banks.

Trade and other receivables

The Group managed customer credit risk through the Group's established policy, procedures and control relating to customer credit risk management. Credit quality of a customer is assessed based on an extensive credit worthiness assessment. Credit risk for the Group is also minimised by the oil palm industry norm whereby all trade debtors (i.e., mill operators) are required to settle their outstanding balances within 14 days from date FFBs are received by the mill. The limited supply of FFBs in the Group's area of operations for mill consumption had also encouraged mill operators to make settlement within the industry norm to ensure continuous supply of FFBs by oil palm developers to their respective mills.

Currently, the Group does not have significant exposure to credit risk in trade receivables as majority of the oil palm plantation is still in development stage.

There is minimal credit risk arising from other receivables as the amount is mainly on advance of diesel to contractors and will be set off against services provided by those contractors (or debtors) to the Group.

Cash deposits

Deposits placed have minimal credit risk as these are placed with creditworthy counterparties and are refundable. Cash and short-term deposits are placed in accounts with licensed banks.

Exposure to credit risk

At the end of the reporting period, the Group's maximum exposure to credit risk is represented by the carrying amount of each class of financial assets recognised in the statement of financial position.

Credit risk concentration profile

The Group determines concentrations of credit risk by monitoring individual customers' outstanding balances on an ongoing basis. The trade receivables at the end of reporting period relates to three customers (2011: two customers).

Financial assets that are neither past due nor impaired

Trade and other receivables that are neither past due nor impaired are due from creditworthy debtors with good payment record with the Group. Cash at banks and short-term deposits that are neither past due nor impaired are placed with or entered into with reputable financial institutions or companies with high credit ratings and no history of default.

Financial assets that are either past due or impaired

The Group does not have any financial assets that are either past due or impaired.

33. Financial risk management objectives and policies (cont'd)

(b) Liquidity risk

Liquidity risk is the risk that the Group will encounter difficulty in meeting obligations associated with financial liabilities.

The Group's exposure to liquidity risk arises primarily from mismatches of the maturities of financial assets and liabilities.

To manage the liquidity risk, the Group actively monitors its cash flows and reduces unnecessary operational expenditure and limits capital expenditure to key assets. Sufficient banking facilities are maintained to meet the Group's liquidity requirements. The Group is given three to four years moratorium period for its loan repayment which will only commence when the Group is able to generate steady income from crop sale in the fifth year from planting. Short term revolving credit was drawn for a period of six months and can be rolled over upon maturity as it is an ongoing working capital facility offered by the bank. In addition, the Company will increase equity through share placement as and when required.

Analysis of financial instruments by remaining contractual maturities

The table below summarises the financial assets and liabilities at the end of the reporting period based on contractual undiscounted repayment obligations.

	1 year or less	1 to 5 Years	Over 5 years	Total
	USD'000	USD'000	USD'000	USD'000
2012

Financial assets:
Trade and other receivables	6,714	-	-	6,714
Cash and bank balances	15,785	-	-	15,785


Total undiscounted financial assets	22,499	-	-	22,499


Financial liabilities:
Trade and other payables	(6,810)	-	-	(6,810)
Other liabilities	(2,464)	-	-	(2,464)
Loans and borrowings*	(26,323)	(73,672)	(65,318)	(165,313)
Derivative financial instruments	(130)	-	-	(130)
Convertible bonds**	-	(1,995)	-	(1,995)


Total undiscounted financial liabilities	(35,727)	(75,667)	(65,318)	(176,712)


Total net undiscounted financial liabilities	(13,228)	(75,667)	(65,318)	(154,213)

33. Financial risk management objectives and policies (cont'd)

(b) Liquidity risk (cont'd)

Analysis of financial instruments by remaining contractual maturities (cont'd)

	1 year or less	1 to 5 Years	Over 5 years	Total
	USD'000	USD'000	USD'000	USD'000
2011

Financial assets:
Trade and other receivables	4,780	-	-	4,780
Cash and bank balances	28,052	-	-	28,052


Total undiscounted financial assets	32,832	-	-	32,832


Financial liabilities:
Trade and other payables	(1,271)	-	-	(1,271)
Other liabilities	(1,086)	-	-	(1,086)
Loans and borrowings*	(5,630)	(29,879)	(19,346)	(54,855)
Derivative financial instruments	(517)	-	-	(517)
Convertible bonds**	-	(3,319)	-	(3,319)


Total undiscounted financial liabilities	(8,504)	(33,198)	(19,346)	(61,048)


Total net undiscounted financial assets/(liabilities)	24,328	(33,198)	(19,346)	(28,216)

* The contractual undiscounted repayment obligations is assumed based on the bankers' BLR and COF as at the reporting date

** Assuming the convertible bonds are redeemed on maturity rather than converted to shares during period of issue

33. Financial risk management objectives and policies (cont'd)

Interest rate risk is the risk that the fair value or future cash flows of the Group's financial instruments will fluctuate because of changes in market interest rates.

The Group's exposure to interest rate risk mainly arises from its financial assets and liabilities which bear interest at floating rates.

Borrowings with floating interest rates expose the Group to certain elements of risk when there are unexpected adverse interest rate movements. The Group's policy is to manage its interest rate risk on an on-going basis, decision on whether to borrow at fixed or floating interest rates depends on the situation and the outlook of the financial market.

Sensitivity analysis for interest rate risk

As at 31 December 2012, had the interest rates of the financial assets and liabilities which are at floating rates been 1% higher/lower (2011: 1%), ceteris paribus, the impact would be as follows:

	2012	2011
	USD'000	USD'000

Effect on total borrowing cost:
- +1%	618	314
- -1%	(618)	(314)

The assumed movement in percentage for interest rate sensitivity analysis is based on the currently observable market environment.

(d) Commodity price risk

The Group's fair value measurement of its biological assets is susceptible to the volatility in the crude palm oil ("CPO") prices in Malaysia. The Group's policy in measuring fair value of the biological assets is to adopt an average CPO price over a period of five years given CPO trend over the last 30 years has been significantly volatile. This average CPO price will also be more relevant as it is reflective of the increase in production cost and impact of inflation in recent years.

Sensitivity analysis for commodity price risk

As at 31 December 2012, had the average CPO price used in measuring fair value of the biological assets been 3% higher/lower (2011: 3%), ceteris paribus, the impact on loss before tax would be as follows:

	2012	2011
	USD'000	USD'000

Effect on fair value changes in biological assets:
- +3%	5,666	3,057
- -3%	(6,478)	(3,057)

34. Capital management

The primary objective of the Group's capital management is to ensure that it maintains healthy capital ratios in order to support its business and maximise shareholder value.

The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. No changes were made in the objectives, policies or processes during the financial years ended 31 December 2012 and 2011.

The Group monitors capital using a gearing ratio, which is loans and borrowings divided by total equity plus loans and borrowings. The Group's policy is to keep the gearing ratio below 80%.

	2012	2011
	USD'000	USD'000

Loans and borrowings (Note 25)	121,473	41,661
Total equity	57,030	59,122

Gearing ratio	68%	41%

The Group has complied with financial loan covenants for all the loans and borrowings as at 31 December 2012 and 2011.

35. Segment information

For management purposes, the Group is organised into business units based on its products and services and has three reportable segments as follows:

· The oil palm plantation segment, which produces FFBs and develop oil palm plantation;

· The oil palm mill segment, which, when the vertical sterilizer crushing mill is operational, produces CPOs and PKs; and

· Investment holding segment, which provides corporate services to the Group.

No operating segments have been aggregated to form the above reportable operating segments.

The Executive Management Committee monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss and is measured consistently with operating profit or loss in the consolidated financial statements. However, certain Group financing (including the interest expense and interest income) and income taxes are managed on a Group basis and are not allocated to operating segments. Financing obtained for the specific purpose of each segment is recognised within the segment itself.

Transfer prices between operating segments are on an arm's length basis in a manner similar to transactions with third parties.

No segmental information is prepared based on geographical area as all operations are located within one location, Malaysia.

35. Segment information (cont'd)

Year ended 31 December 2012	Plantation activities	Oil palm milling activities	Investment holding	Total segments	Adjustments and eliminations	Consolidated
	USD'000	USD'000	USD'000	USD'000	USD'000	USD'000

Revenue
External customers	2,820	-	-	2,820	-	2,820
Inter-segment	-	-	-	-	-	-


Total revenue	2,820	-	-	2,820	-	2,820


Results
Depreciation and amortisation	1,038	21	116	1,175	-	1,175
Gain arising on fair value changes in biological assets	1,989	-	-	1,989	-	1,989
Interest expense	2,065	2	-	2,067	-	2,067

Segment loss	(1,943)	(341)	(2,858)	(5,142)	-	(5,142)


Segment assets	148,734	30,987	75,988	255,709	(67,147)	188,562


Segment liabilities	117,777	29,594	1,020	148,391	(67,147)	81,244


Other disclosures
Capital expenditure	67,643	21,090	32	88,765	-	88,765

Inter-segment revenues are eliminated upon consolidation and reflected in the "adjustments and eliminations" column. All other adjustments and eliminations are part of detailed reconciliations presented further below.

35. Segment information (cont'd)

Year ended 31 December 2011	Plantation activities	Oil palm milling activities	Investment holding	Total segments	Adjustments and eliminations	Consolidated
	USD'000	USD'000	USD'000	USD'000	USD'000	USD'000

Revenue
External customers	578	-	-	578	-	578
Inter-segment	-	-	-	-	-	-


Total revenue	578	-	-	578	-	578


Results
Depreciation and amortisation	654	-	110	764	-	764
Gain arising on fair value changes in biological assets	3,499	-	-	3,499	-	3,499
Interest expense	188	-	-	188	-	188

Segment profit/(loss)	2,033	(21)	(1,600)	412	-	412


Segment assets	71,501	1,576	55,129	128,206	(22,885)	105,321


Segment liabilities	40,996	24	6,895	47,915	(22,885)	25,030


Other disclosures
Capital expenditure	15,776	624	145	16,545	-	16,545

35. Segment information (cont'd)

Interest income and certain finance costs, gain arising from changes in fair value of embedded derivative of the convertible bonds are not allocated to individual segments as the underlying instruments are managed on a group basis.

Current taxes, deferred taxes, share-based payment transaction expense, goodwill on consolidation and certain liabilities are not allocated to those segments as they are also managed on a group basis.

Capital expenditure consists of additions to property, plant and equipment, biological assets and land use rights.

Inter-segment revenues are eliminated on consolidation.

	2012	2011
Reconciliation of loss before tax	USD'000	USD'000

Segment (loss)/profit	(5,142)	412
Interest income	280	93
Interest expense	(1,414)	(1,544)
Share-based payment transaction	(963)	(9,866)
Gain arising from changes in fair value of embedded derivative of the convertible bonds	172	109
Impairment of goodwill	(5)	(37)


Group loss	(7,072)	(10,833)


	2012	2011
Reconciliation of assets	USD'000	USD'000

Segment assets	188,562	105,321
Deferred tax assets	178	-
Goodwill arising on consolidation	7,619	7,335
Income tax recoverable	99	7


Total assets	196,458	112,663


	2012	2011
Reconciliation of liabilities	USD'000	USD'000

Segment liabilities	81,244	25,030
Deferred tax liabilities	6,556	6,325
Loans and borrowings	49,503	18,988
Derivative financial instruments	130	517
Convertible bonds	1,995	2,681


Total liabilities	139,428	53,541

Information about major customer

Revenue from one major customer amounted to USD2,165,000 (2011: USD535,000), arising from sales by the plantation activities.

36. Significant event

Proposed acquisition of 100% equity interest in a Malaysian Company

On 28 September 2012, a subsidiary of the Group entered into a conditional agreement for the proposed acquisition of a Malaysian company to acquire the entire issued share capital of Grand Performance Sdn. Bhd. ("GP") (the "Proposed Acquisition"), which owns approximately 7,000 hectares of land zoned for the development of palm oil in Sarawak, Malaysia (the "GP Estate"). The GP Estate is adjacent to the Group's Incosetia Estate and ideally located to generate additional volume for the Group's vertical sterilizer crushing mill.

The total consideration for the Proposed Acquisition is RM45 million (approximately USD14.7 million). As a condition to enter into the Proposed Acquisition, the Group paid a refundable deposit of RM1.7 million (approximately USD0.5 million).

The Proposed Acquisition is subject to a number of conditions precedent, which include, inter alia, various regulatory approvals, completion of legal and financial due diligence in respect of the GP Estate and approval by the board of directors of GP.

It is envisaged that the Proposed Acquisition will be completed in the near future, and as such the Group will seek to secure the required funding via a combination of an equity fund raise and/or a new debt facility (Note 37).

37. Event occurring after the reporting period

Issuance of USD15 million convertible unsecured bonds

On 9 January 2013, the Company entered into an agreement to issue convertible unsecured bonds ("Convertible Bonds") totalling up to USD15 million, via a Company sponsored placing, to OCBC Capital Investment I Pte. Ltd., a wholly owned subsidiary of OCBC Bank. The Convertible Bonds bear a cash interest coupon of 3 months Libor + 2.00% p.a., which is payable quarterly in arrears until the three year maturity is reached in 2016 (the "Maturity Date"). Proceeds from the issuance of the Convertible Bonds will be applied to the Group's general working capital requirements.

The Convertible Bonds, if fully issued to USD15 million, may be converted at any time, in aggregate, into a maximum of 3,260,041 new ordinary shares of no par value in the Company (the "Ordinary Shares"), representing approximately 7.01% of the Company's currently issued share capital, until the Maturity Date at the individual bondholder's election. This implies a conversion price of 286 pence per Ordinary Share, based on the current exchange rate (the "Conversion Price"). The Conversion Price represents a 25% premium to the 20 day volume weighted average price.

The Company shall redeem all outstanding, non-converted Convertible Bonds, in whole, on the Maturity Date, such that the amounts paid by the Company on redemption result in the bondholders having achieved, in respect of the Convertible Bonds, including coupon payments and issuance fees, an internal rate of return of 15%.

On 14 January 2013, the first tranche of USD5 million was disbursed to the Company. The remaining USD10 million is subject to certain conditions precedent including, inter alia, completion of the proposed acquisition of Grand Performance Sdn. Bhd. as mentioned in Note 36. The Company expects the issuance of the remaining tranche in the near future.

38. Authorisation of financial statements for issue

The consolidated financial statements for the financial year ended 31 December 2012 were authorised for issue in accordance with a resolution of the Directors made on 30 April 2013.

This information is provided by RNS

The company news service from the London Stock Exchange

END

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