Half Yearly Report

RNS Number : 1794P

Asian Plantations Limited

29 September 2011

 



29 September 2011

Asian Plantations Limited

("APL" or the "Company")

Interim Results for the Six Months ended 30 June 2011 &

Proposed Acquisition

Asian Plantations Limited (LSE: PALM), a palm oil plantation company with operations in Malaysia, is pleased to announce its unaudited interim results for the six month period ending 30 June 2011.

Highlights

·      Sale of 1,233 tonnes fresh fruit bunches ("FFB") sold at an average price of RM671 (circa. US$221) per tonne.

·      Fundraise of £16 million (circa. US$25 million) on 28 February 2011, via an institutional placing at 220 pence per share, representing a premium of 193 per cent. to the Company's admission price of 75 pence per share on 30 November 2009. 

·      Subsequent to the end of the period under review, on 17 August 2011, the Company raised an additional US$2.1 million, via the issuance of a convertible bond with an effective conversion price of 309 pence per share based on current exchange rates.

·      On 25 August 2011, the announcement of the acquisition of the partly developed 5,000 hectare Dulit estate adjacent to the Company's existing Incosetia estate. The Dulit estate is expected to generate in excess of 22,000 tonnes of FFB in 2012. This acquisition brings the Company's total land resource to 20,645 hectares, in line with its growth objectives stated at admission.

·      Aggressive planting programme remains on track and the Company expects its current land resource, including that of the Dulit estate, to be fully planted by early 2014.

·      The Company's mill is currently under construction and the requisite state approvals have been secured. The mill is expected to be operational in 4Q 2012.

Tan Sri Datuk Linggi, Non-Executive Chairman of APL, commented:

"We are now into our fourth year of significant investment and land development. Based on the current planting schedule and pro forma for the closing of the recently announced Dulit acquisition, we expect to harvest approximately 50,000 tonnes of FFB in 2012, with an eventual target of over 500,000 tonnes per annum, as all four existing fields fully mature in the years ahead.

"The recently announced Dulit acquisition achieves our previously stated strategy to achieve a land resource of titled, Malaysian agricultural land in excess of 20,000 hectares by November 2011, two years following the Company's admission to AIM.  Further, we anticipate that at the time the Dulit acquisition successfully completes, three of the Company's four estates will be revenue producing.

"All indicators point to increased scarcity for Malaysian titled land, a relative tightness in global edible oil inventories and rising global awareness about the importance of palm oil in the global food supply chain. Coupling these trends with a healthy edible oil price environment, the board of APL (the "Board") believes that its strategy of assembling properly titled, land parcels in Malaysia, an investment grade rated country, will generate long term substantial value for the Company's shareholders."

Proposed Acquisition

In addition, the Board announces that a subsidiary of the Company has recently entered into a conditional agreement for the proposed acquisition of a Malaysian company (the "Proposed Target") for a total maximum consideration of up to US$22 million.  The Proposed Target holds a 60 per cent. equity interest in a joint venture company that will have ownership over two distinct land parcels in Sarawak, Malaysia (the "Proposed Acquisition").  The land parcels, the size of which remains subject to a land survey but which the Board estimates to aggregate up to approximately 20,000 hectares, are to be jointly developed pursuant to a joint venture agreement between the Proposed Target and a Sarawak Government-linked entity.  In respect of the Proposed Acquisition, the completion of which remains subject to Board approval, the Company has paid a refundable deposit of RRM7.9 million (US$2.5 million) to the Proposed Target until completion of APL's due diligence exercise, expected to be within two to three months, at which point the Board will decide whether to further pursue the opportunity.  In the event that the Board decides to pursue the Proposed Acquisition, APL will seek to secure the required funding via a combination of an equity fundraise and/or a new debt facility. A further announcement will be made in due course. 

For further information contact:

Asian Plantations Limited Dennis Melka, Joint Chief Executive Officer Graeme Brown, Joint Chief Executive Officer	Tel:  [phone]
Strand Hanson Limited James Harris Paul Cocker Liam Buswell	Tel: [phone]
Panmure Gordon (UK) Limited Tom Nicholson Callum Stewart	Tel:   [phone] Tel: [phone]
Bankside Consultants Simon Rothschild	Tel: [phone]

Interim Condensed Consolidated Income Statement

for the six-month period ended 30 June 2011

			Note		Six Months Ended 30.6.2011		Six Months Ended 30.6.2010
					USD'000		USD'000
					Unaudited		Unaudited
Revenue					274		101
Cost of sales					(167)		(78)
Gross profit					107		23
Other income			6		141		18
Other items of expenses
Administrative expenses			7		(1,296)		(942)
Other expenses			8		(1,334)		(543)
Finance expenses			9		(802)		(565)
Loss before taxation					(3,184)		(2,009)
Income tax expense			10		209		-
Loss for the period					(2,975)		(2,009)
Loss attributable to :
Owners of the Company					(2,975)		(2,009)
Loss per share attributable to owners of the Company (cents per share)
Basic			11		(7.7)		(6.8)

Diluted			11		(7.7)		(6.8)

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

Interim Condensed Consolidated Statement of Comprehensive Income

for the six-month period ended 30 June 2011

						Six Months Ended 30.6.2011			Six Months Ended 30.6.2010
						USD'000			USD'000
						Unaudited			Unaudited
Loss for the period						(2,975)			(2,009)
Other comprehensive income:
Foreign currency translation adjustments						764			612
Total comprehensive income for the period						(2,211)			(1,397)
Total comprehensive income attributable to:
Owners of the Company						(2,211)			(1,397)

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

Interim Condensed Consolidated Statement of Financial Position as at 30 June 2011

				Note		30.6.2011		31.12.2010
						USD'000		USD'000
						Unaudited		Audited
Non-current assets
Property, plant and equipment				12		11,904		9,576
Biological assets				13		14,365		11,022
Land use rights				14		33,933		33,546
Goodwill on consolidation						7,726		7,560
Total non-current assets						67,928		61,704
Current assets
Inventories						238		122
Trade and other receivables						464		193
Prepaid operating expenses						674		165
Cash and cash equivalents				15		22,438		1,247
Total current assets						23,814		1,727
Total assets						91,742		63,431
Current liabilities
Trade and other payables						820		795
Other liabilities						515		253
Loans and borrowings Derivative financial instruments				16 17		2,156 502		2,267 -
Total current liabilities						3,993		3,315
Non-current liabilities
Loans and borrowings				16		40,614		36,304
Convertible bonds				17		865		-
Deferred tax liabilities						5,734		5,810
Total non-current liabilities						47,213		42,114
Total liabilities						51,206		45,429
Net assets						40,536		18,002

Interim Condensed Consolidated Statement of Financial Position as at 30 June 2011 (cont'd)

				Note		30.6.2011		31.12.2010
						USD'000		USD'000
						Unaudited		Audited
Attributable to owners of the Company
Share capital				18		66,956		42,211
Other reserves						(18,231)		(18,995)
Accumulated losses						(8,189)		(5,214)
Total equity						40,536		18,002

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

Interim Condensed Consolidated Statement of Changes in Equity

for the six-month period ended 30 June 2011

	Attributable to equity holders of the Company
	Share capital		Other reserves		Accumulated losses		Total equity
	USD'000		USD'000		USD'000		USD'000
For the six months ended 30.6.2011
Unaudited
At 1 January 2011	42,211		(18,995)		(5,214)		18,002
Loss for the period	-		-		(2,975)		(2,975)
Other comprehensive income
Foreign currency translation adjustments	-		764		-		764
Total comprehensive income for the period	-		764		(2,975)		(2,211)
Issuance of ordinary shares for cash	25,752		-		-		25,752
Share issuance expenses	(1,007)		-		-		(1,007)
At 30 June 2011	66,956		(18,231)		(8,189)		40,536
For the six months ended 30.6.2010
Unaudited
At 1 January 2010	35,459		(20,452)		(1,748)		13,259
Loss for the period	-		-		(2,009)		(2,009)
Other comprehensive income
Foreign currency translation adjustments	-		738		(126)		612
Total comprehensive income for the period	-		738		(2,135)		(1,397)
At 30 June 2010	35,459		(19,714)		(3,883)		11,862

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

Interim Condensed Consolidated Statement of Cash Flows

for the six-month period ended 30 June 2011

			Six Months Ended 30.6.2011		Six Months Ended 30.6.2010
			USD'000		USD'000
			Unaudited		Unaudited
Cash flows from operating activities
Loss before taxation			(3,184)		(2,009)
Adjustments for:
Amortisation of land use rights			315		198
Depreciation of property, plant and equipment			68		22
Gain on disposal of property, plant and equipment			(1)		-
Loss arising from changes in fair value of convertible bond			299		-
Interest income			(59)		-
Interest expense			802		565
Unrealised gain on foreign exchange			(51)		-
Currency realignment			-		(38)
Operating cash flows before changes in working capital			(1,811)		(1,262)
Increase in inventories			(114)		(38)
(Increase)/decrease in trade and other receivables			(287)		1
Increase in other assets			(506)		(51)
Increase/(decrease) in trade and other payables			268		(316)
Cash flows used in operations			(2,450)		(1,666)
Tax refund			20		-
Interest received			59		-
Interest paid			(1,346)		(638)
Net cash used in operating activities			(3,717)		(2,304)
Cash flows from investing activities
Proceeds from disposal of property, plant and equipment			3		-
Purchase of property, plant and equipment			(2,074)		(1,169)
Additions to biological assets			(2,204)		(1,387)
Net cash used in investing activities			(4,275)		(2,556)

Interim Condensed Consolidated Statement of Cash Flows 

for the six-month period ended 30 June 2011 (cont'd)

			Six Months Ended 30.6.2011		Six Months Ended 30.6.2010
			USD'000		USD'000
			Unaudited		Unaudited
Cash flows from financing activities
Proceeds from issuance of ordinary shares			25,752		-
Share issuance expenses			(1,007)		-
Proceed from convertible bond			1,000		-
Repayment of term loan			(3)		-
Drawdown of term loans			3,268		2,226
Repayment of finance lease			(49)		(18)
Net cash generated from financing activities			28,961		2,208
Net increase/(decrease) in cash and cash equivalents			20,969		(2,652)
Effect of exchange rates on cash and cash equivalents			450		214
Cash and cash equivalents, beginning balance			1,019		4,174
Cash and cash equivalents, ending balance (Note 15)			22,438		1,736

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

1.         General Information

(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 development of oil palm plantation. 

(b)    Subsidiaries

As disclosed in the Group's annual financial statements as at 31 December 2010, the Group acquired Fortune Plantation Sdn. Bhd on 31 December 2010. The goodwill on acquisition of USD2,712,000 continues to be determined on a provisional basis as the purchase price allocation has not been completed by the date the interim financial statements was authorised for issue.  

During the financial period, the Company acquired two new subsidiaries. The two new subsidiaries are dormant companies and therefore do not have a material effect on the financial results and financial position of the Group. There is no acquisition related expenses arising from the acquisition of these subsidiaries.

2.         Basis of preparation and changes to the Group's accounting policies

Basis of preparation

The interim condensed consolidated financial statements for the six months ended 30 June 2011 are unaudited and do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Group's annual financial statements as at 31 December 2010.

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

The accounting policies, presentation and methods of computation have been followed in these unaudited financial statements as were applied in the preparation of the Group's annual financial statements for the year ended 31 December 2010.

The 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 when otherwise indicated.

The interim condensed consolidated financial statements for the six months ended 30 June 2011 was approved by the Directors on 30 September 2011.

2.         Basis of preparation and changes to the Group's accounting policies (cont'd)

New standards, interpretations and amendments thereof, adopted by the Group

The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the Group's annual financial statements for the year ended 31 December 2010, except for the adoption of new standards and interpretations as of 1 January 2011, noted below:

IAS 24 Related Party Transactions (Amendment)

The IASB has issued an amendment to IAS 24 that clarifies the definitions of a related party.  The new definitions emphasise a symmetrical view of related party transactions as well as clarifying in which circumstances persons and key management personnel affect related party relationships of an entity. Secondly, the amendment introduces an exemption from the general related party disclosure requirements for transactions with a government and entities that are controlled, jointly controlled or significantly influenced by the same government as the reporting entity. The adoption of the amendment did not have any impact on the financial position or performance of the Group.

IAS 32 Financial Instruments: Presentation (Amendment)

The amendment alters the definition of a financial liability in IAS 32 to enable entities to classify rights issues and certain options or warrants as equity instruments. The amendment is applicable if the rights are given pro rate to all the existing owners of the same class of an entity's non-derivative equity instruments, to acquire a fixed number of the entity's own equity instruments for a fixed amount in any currency. The amendment has no effect on the financial position or performance of the Group.

IFRIC 14 Prepayments of a Minimum Funding Requirements (Amendment)

The amendment removes an unintended consequence when an entity is subject to minimum funding requirements ("MFR") and makes an early payment of contributions to cover such requirements. The amendment permits a prepayment of future service cost by the entity to be recognised as pension asset. The Group is not subject to minimum funding requirements in the Republic of Singapore. The amendment to the interpretation therefore had no effect on the financial position or performance of the Group. 

Improvements to IFRS (issued May 2010)

In May 2010, the IASB issued its third omnibus of amendments to its standards, primarily with a view to removing inconsistencies and clarifying wording. There are separate transitional provisions for each standard. The adoption of the following amendments resulted in changes to accounting policies, but did not have any impact on the financial position or performance of the Group.

IFRS 3 Business combinations: The measurement options available for non-controlling interest ("NCI") have been amended. Only components of NCI that constitute a present ownership interest that entitles their holder to a proportionate share of the entity's net assets in the event of liquidation shall be measured at either fair value or at the present ownership instruments' proportionate share of the acquiree's identifiable net assets. All other components are to be measured at their acquisition date fair value.

2.         Basis of preparation and changes to the Group's accounting policies (cont'd)

New standards, interpretations and amendments thereof, adopted by the Group (cont'd)

IFRS 7 Financial Instruments - Disclosures:  The amendment was intended to simplify the disclosures provided by reducing the volume of disclosures around collateral held and improving disclosures by requiring qualitative information to put the quantitative information in context. 

IAS 1 Presentation of Financial Statements:  The amendment clarifies that an option to present an analysis of each component of other comprehensive income may be included either in the statement of changes in equity or in the notes to the financial statements.

IAS 34 Interim Financial Statements:  The amendment requires additional disclosures for fair values and changes in classification of financial assets, as well as changes to contingent assets and liabilities in interim condensed financial statements. 

Other amendments resulting from improvements to IFRS to the following standards did not have any impact on the accounting policies, financial position or performance of the Group:

IFRS 3 Business Combinations - Clarification that contingent consideration arising from business combination prior to adoption of IFRS 3 (as revised in 2008) are accounted for in accordance with IFRS 3 (2005).

IFRS 3 Business Combinations - Unreplaced and voluntarily replaced share-based payment awards and its accounting treatment within a business combination.

IAS 27 Consolidated and Separate Financial Statements - applying the IAS 27 (as revised in 2008) transition requirements to consequentially amended standards.

IFRIC 13 Customer Loyalty Programmes - in determining the fair value of award credits, an entity shall consider discounts and incentives that would otherwise be offered to customers not participating in the loyalty programme. 

Standards, interpretation or amendment issued but not yet effective

The Group has not early adopted any standard, interpretation or amendment that has been issued but is not yet effective. 

3.         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 date. 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.

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

3.1       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:

(a)  Determination of functional currency

The Group continues to determine its functional currencies to be RM based on management's assessment of the economic environment in which the entities operate and the entities' process of determining sales prices.

(b) Fair value of biological assets (immature plantation)

Biological assets are stated at fair value. Management maintain the judgement that cost approximates fair value of the biological asset for immature plantation because it involved a new oil palm plantation and that little biological transformation has taken place since its initial cost incurrence. The carrying amount of the immature plantation as at 30 June 2011 is USD12,278,000 (31 December 2010: USD8,927,000).

3.2       Key sources of estimation uncertainty

The key assumptions concerning the future and other key sources of estimation uncertainty at the end of each 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 discussed below:

(a) Biological assets (mature plantation)

The Group continues to measure its mature plantation included in the biological assets at fair value less estimated costs to sell, based on discounted cash flow model. The carrying amount of the mature plantation as at 30 June 2011 is USD960,000 (31 December 2010: USD940,000). Further details of the key assumptions used are disclosed in Note 13.

(b) Useful lives of property, plant and equipment

There are no changes to the estimated economic useful life of property, plant and equipment of within 5 to 25 years.

(c) Impairment of non-financial assets

Goodwill arising from business combinations is allocated to the cash-generating unit, namely the plantation estate, for the purpose of impairment testing. Management continues to assess for impairment based on value-in-use calculations using cash flow projections, covering a period of 25 productive years of oil palms, based on financial budgets approved by management. Based on management's analysis, goodwill is not impaired as at 30 June 2011.

4.         Seasonality of operations         

The Group's plantation operations are affected by seasonal crop production, weather conditions and fluctuating commodity prices. As a result, the comparison of half-year to half-year results may not be a good indicator of the overall trend of the Group's plantation operations or of the results for the whole of the financial period. 

5.         Operating segment information           

The Group continues to be organised as one segment and the Chief Operating Decision Makers review the profit or loss of the entity as a whole, which is the plantation segment and in one geographical location, Malaysia.

6.         Other income  

				Six Months Ended 30.6.2011		Six Months Ended 30.6.2010
				USD'000		USD'000
				Unaudited		Unaudited
Short term deposits interest income				60		18
Sale of seedlings				81		-
				141		18

7.         Administrative expenses

Included in administrative expenses are audit, tax, legal and other professional fees amounting to USD345,000 (six months ended 30.6.2010: USD464,000). 

8.         Other expenses

			Six Months Ended 30.6.2011		Six Months Ended 30.6.2010
			USD'000		USD'000
			Unaudited		Unaudited
Loss arising from changes in fair value of embedded derivative of the convertible bond			299		-
Net foreign exchange loss			493		-
Repair and maintenance			164		133
Motor vehicle running expenses			1		-
Amortisation of land use rights			315		198
Cost of seedlings sold			62		-
Acquisition of subsidiary related expenses			-		212
			1,334		543

9.         Finance expenses

				Six Months Ended 30.6.2011		Six Months Ended 30.6.2010
				USD'000		USD'000
				Unaudited		Unaudited
Interest expense on loans and borrowings				726		565
Interest expense on convertible bond				9
Accretion of interest on the convertible bond				67		-
				802		565

10.       Income tax expense     

The major components of income tax expense in the interim consolidated income statement are:

				Six Months Ended 30.6.2011		Six Months Ended 30.6.2010
				USD'000		USD'000
				Unaudited		Unaudited
Over provision of income tax expense in prior period				(11)		-
Deferred income tax expense related to origination and reversal of deferred taxes				(198)		-
Total income tax expense				(209)		-

11.       Loss per share

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

The following tables reflect the loss and share data used in the computation of basic loss per share for the respective periods: 

				Six Months Ended 30.6.2011		Six Months Ended 30.6.2010
				USD'000		USD'000
				Unaudited		Unaudited
Loss for the period attributable to owners of the Company				(2,975)		(2,009)

11.       Loss per share (cont'd)

				Six Months Ended 30.6.2011		Six Months Ended 30.6.2010
				Number of shares		Number of shares
				'000		'000
Weighted average number of ordinary shares for basic and diluted loss per share computation*				38,387		29,577

  * The weighted average number of ordinary shares takes into account the weighted average  

effect of changes in ordinary shares transactions during the period.

The unsecured convertible bonds of USD1 million issued during the period have not been included in the calculation of diluted earnings per share because they are anti-dilutive.

12.       Property, plant and equipment

					30.6.2011		31.12.2010
					USD'000		USD'000
					Unaudited		Audited
At cost
At 1 January					9,576		5,063
Additions					2,482		2,950
Disposal					(2)		-
Acquisition of subsidiaries					-		1,286
Depreciation					(363)		(355)
Exchange differences					211		632
					11,904		9,576
Depreciation of property, plant and equipment capitalised to biological assets:					295		312

13.       Biological assets

					30.6.2011		31.12.2010
					USD'000		USD'000
					Unaudited		Audited
At fair value
At 1 January					11,022		6,093
Additions					3,110		4,121
Exchange differences					233		808
					14,365		11,022

13.       Biological assets (cont'd)

					30.6.2011		31.12.2010
					USD'000		USD'000
					Unaudited		Audited
Represented by:
Mature plantation					960		940
Immature plantation					12,278		8,927
Nursery					1,127		1,155

					14,365		11,022

Mature oil palm trees produce fresh fruit bunches("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 the projected selling prices of CPO in the market.

Significant assumptions made in determining the fair values of the mature 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 that ranges from 28 years (31.12.2010: 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 is 9.1% (31.12.2010: 9.6%);

(d)        FFB price is derived by applying the oil extraction rate to the estimated CPO price of USD735 (31.12.2010: USD741) per metric tonne; and

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

14.       Land use rights

					30.6.2011		31.12.2010
					USD'000		USD'000
					Unaudited		Audited
At cost
At 1 January					33,546		20,950
Acquisition of subsidiaries					-		10,702
Amortisation charge					(315)		(406)
Exchange differences					702		2,300
					33,933		33,546

15.       Cash and cash equivalents

For the purpose of the interim condensed consolidated statement of cash flows, cash and cash equivalents comprised the following:

					30.6.2011		30.6.2010
					USD'000		USD'000
					Unaudited		Unaudited
Cash at bank					18,051		508
Short term deposits					4,387		1,228
					22,438		1,736

16.       Loans and borrowings

					30.6.2011		31.12.2010
					USD'000		USD'000
					Unaudited		Audited
Current
Bank overdraft					-		228
Short term revolving credit					1,987		1,946
Term loans					5		6
Obligation under finance leases					164		87
					2,156		2,267
Non-current
Term loans					39,969		35,950
Obligation under finance leases					645		354
					40,614		36,304
Total loans and borrowings
Bank overdraft					-		228
Short term revolving credit					1,987		1,946
Term loans					39,974		35,956
Obligation under finance leases					809		441
					42,770		38,571

16.       Loans and borrowings (cont'd)

					30.6.2011		31.12.2010
					USD'000		USD'000
					Unaudited		Audited
Maturity of borrowings (excluding   obligations under finance leases)
Within one year					1,992		2,180
After one year but not more than five   years					19,453		4,086
More than five years					20,516		31,864
					41,961		38,130

Short-term revolving credit and term loans

The short term revolving credit is denominated in RM and bears interest at the rate of the bank's cost of fund plus 2.5%. It is repayable on demand and has a six months' rollover period upon maturity.

The term loans are denominated in RM and bear interest ranging from the rate of the bank's cost of fund plus 2% to 2.5% per annum to base lending rate plus 1% per annum. They are repayable over 6 years after moratorium periods of 3 to 4 years.

The short term revolving credit and term loans are secured by legal charges over the rights to use the long term leasehold land of which the Group has prepaid the lease payments relating to the land as disclosed in Note 14.

17.       Convertible bond

					30.6.2011		31.12.2010
		Maturity			USD'000		USD'000
					Unaudited		Audited
USD1 million		18 November 2014			865		-

The unsecured convertible bond of USD1 million, bears a cash interest coupon of 1.75% per annum which is payable semi-annually and has a maturity period of four years. The convertible bond may be converted, in whole only, into 313,383 new ordinary shares of no par value in the Company. This represents a conversion price of 201 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 bond, 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 bond, including coupon payments, an internal rate of return of 10%. 

17.       Convertible bond (cont'd)

The carrying amount of liability component of the convertible bond at end of reporting period at as follows:

					30.6.2011		31.12.2010
					USD'000		USD'000
					Unaudited		Audited
Face value of the convertible bond					1,000		-
Less: Embedded derivative					(203)		-
Liability component at initial recognition					797		-
Add: Accretion of interest on the convertible bond					68
					865		-

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 USD502,000 as at 30 June 2011.

18.       Share capital

				30.6.2011		30.6.2011		31.12.2010		31.12.2010
				No. of shares				No. of shares
				'000		USD'000		'000		USD'000
				Unaudited		Unaudited		Audited		Audited
At 1 January 2011 / 1 January 2010				33,445		42,211		29,577		35,459
Issuance during the period/year				7,272		25,752		3,868		6,752
Share issuance expense				-		(1,007)		-		-
At 30 June 2011 / 31 December 2010				40,717		66,956		33,445		42,211
				-		-		-		-

            Issuance of shares

On 28 February 2011, the Company has issued an additional 7,272,728 shares amounting to GBP16,000,001 (equivalent to USD25,752,000) via shares placement.  

19.       Commitments and contingencies

(a)   Capital commitments

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

					30.6.2011		31.12.2010
					USD'000		USD'000
					Unaudited		Audited
Approved and contracted for:
-    property, plant and equipment					909		337
Approved and not contracted for:
-    property, plant and equipment					647		17,157
-    biological assets					5,261		6,546
					6,817		24,040

(b)    Contingencies

The Group does not have contingent liabilities as at 30 June 2011 and 31 December 2010.

(c)    Operating lease commitments

As lessee

The Group has no operating lease commitments other than the land use rights as mentioned in Note 14.

19.       Commitments and contingencies (cont'd)

(d)   Finance leases

		30.6.2011				31.12.2010
		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
		Unaudited		Unaudited		Audited		Audited
Not later than one year		212		164		115		87
Later than one year but not more than five years		712		634		329		287
More than five years		11		11		67		67
Total minimum lease payments		935		809		511		441
Less: Amount representing finance charges		(126)		-		(70)		-
Present value of minimum lease payments		809		809		441		441

20.       Related party disclosures

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 period ended 30 June 2011 and 30 June 2010 at the terms agreed between the parties, which are conducted at arm's length.

					Six Months Ended		Six Months Ended
					30.6.2011		30.6.2010
					USD'000		USD'000
					Unaudited		Unaudited
Transactions with related parties
- Construction of estate housing					186		200
- Expenses payable					68		51
					254		251

20.       Related party disclosures (cont'd)

Compensation of key management personnel

					Six Months Ended		Six Months Ended
					30.6.2011		30.6.2010
					USD'000		USD'000
					Unaudited		Unaudited
Directors' salaries					254		55
Directors' fees					97		15
Short term employee benefits					76		48
Contribution to defined contribution plans					9		6
					436		124

Comprise amounts paid to:
- Directors of the Company					351		70
- Other key management personnel					85		54
					436		124

21.       Events occuring after the reporting period

(a)   Convertible unsecured bond

On 15 August 2011, the Company has issued convertible unsecured bonds ("Convertible Bonds") amounting to USD2.1 million to an existing shareholder of the Company and other investors. The convertible bond bears a cash interest coupon of 2.50% per annum, repayable semi-annually until the four year maturity in 2015 (the "maturity date"). The Convertible Bonds may be converted, in aggregate, into 434,700 new ordinary shares of no par value in the Company. This represents a conversion price of 294 pence per share, based on the current exchange rate, at any time until the Maturity Date at the individual bondholder's election. This conversion price represents a 17% premium to the closing price on 16 August 2011. In the event of non-conversion, 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, an internal rate of return of 10%.   

(b)   Proposed acquisition of semi-developed plantation land

On 25 August 2011, a subsidiary of the Group has entered into a conditional agreement to acquire 5,000 hectares of semi-developed plantation land (the "Dulit Estate") in Sarawak, Malaysia (the "Proposed Acquisition"). The Dulit Estate, which shares a common border with the Company's Incosetia Estate, consists of planted area of 2,543 hectares with palms that are approximately 3 to 5 years old, with the remainder unplanted. The total maximum consideration for the Proposed Acquisition, which is subject to, inter alia, certain regulatory conditions and potential purchase price adjustments amount to RM102 million (USD34.4 million).     

21.       Events occuring after the reporting period (cont'd)

(c)    Proposed acquisition of 100% equity interest in a Malaysian company

On 21 September 2011, a subsidiary of the Group has entered into a conditional agreement for the proposed acquisition of a Malaysian company (the "Proposed Target") for a total maximum consideration of up to US$22 million.  The Proposed Target holds a 60 per cent. equity interest in a joint venture company that will have ownership over two distinct land parcels in Sarawak, Malaysia (the "Proposed Acquisition").  The land parcels, the size of which remains subject to a land survey but which the Board estimates to aggregate up to approximately 20,000 hectares, are to be jointly developed pursuant to a joint venture agreement between the Proposed Target and a Sarawak Government-linked entity. 

In respect of the Proposed Acquisition, the completion of which remains subject to Board approval, the Company has paid a refundable deposit of RRM7.9 million (US$2.5 million) to the Proposed Target until completion of APL's due diligence exercise, expected to be within two to three months, at which point the Board will decide whether to further pursue the opportunity.  In the event that the Board decides to pursue the Proposed Acquisition, APL will seek to secure the required funding via a combination of an equity fundraise and/or a new debt facility. A further announcement will be made in due course. 

-END-

 

END

 

 

IR LIFETAVIAFIL