Interim Results

RNS Number : 9746S

Asian Plantations Limited

30 September 2014

 



30 September 2014

Asian Plantations Ltd

("APL" or the "Company")

Interim Results for the Six Months ended 30 June 2014

Asian Plantations Limited (LSE: PALM), a palm oil plantation company with operations in Malaysia, is pleased to announce its unaudited results for the six month period ended 30 June 2014.

Highlights

·      US$18.89m of revenue reported (H1 2013: US$0.96m), a significant increase versus the previous period, predominantly from the sale of crude palm oil accounting for US$15,553,000 of total revenue.

·      Total assets of US$218.62mm (30 June 2013: US$217.37m)

Post-Balance Sheet Events

·      Voluntary conditional cash offer announced on 29 August 2014 from Merrill Lynch (Singapore) Pte Ltd, acting for and on behalf of FELDA Global Ventures Holdings Berhad ("FELDA"), for the entire issued share capital of the Company. FELDA has received irrevocable undertakings to accept the offer in respect of approximately 59.9 per cent. of the Company's currently issued share capital.

For further information contact:

Asian Plantations Limited Graeme Brown, Joint Chief Executive Officer Dennis Melka, Joint Chief Executive Officer	Tel: [phone]
Strand Hanson Limited James Harris James Spinney James Bellman	Tel: [phone]
Macquarie Capital (Europe) Limited Steve Baldwin	Tel: [phone]
Panmure Gordon (UK) Limited Charles Leigh-Pemberton Tom Nicholson	Tel: [phone] Tel: [phone]

Unaudited Interim Condensed Consolidated Income Statement

for the six-month period ended 30 June 2014

			Note		Six Months Ended 30.6.2014		Six Months Ended 30.6.2013
					USD'000		USD'000
					Unaudited		Unaudited
Revenue			6		18,893		963
Cost of sales			7		(20,495)		(3,444)
Gross loss					(1,602)		(2,481)
Other operating income			8		339		674
Administrative expenses			9		(3,016)		(1,774)
Other operating expenses			10		(733)		(709)
Operating loss					(5,012)		(4,290)
Finance costs			11		(6,070)		(3,622)
Loss before tax					(11,082)		(7,912)
Income tax benefit			12		470		991
Loss for the period					(10,612)		(6,921)
Attributable to :
Owners of the Company					(10,611)		(6,920)
Non-controlling interests					(1)		(1)
					(10,612)		(6,921)
Loss per share attributable to owners of the Company (cents per share)
Basic			13		(22.69)		(14.86)

Diluted			13		(22.69)		(14.86)

* Amount less than USD1,000

Unaudited Interim Condensed Consolidated Statement of Comprehensive Income

for the six-month period ended 30 June 2014

						Six Months Ended 30.6.2014		Six Months Ended 30.6.2013
						USD'000		USD'000
						Unaudited		Unaudited
Loss for the period						(10,612)		(6,921)
Other comprehensive income
Items that may be reclassified subsequently to profit or loss:
Foreign currency translation adjustments						940		(2,066)
Total comprehensive income for the period, net of tax						(9,672)		(8,987)
Attributable to:
Owners of the Company						(9,671)		(8,986)
Non-controlling interests						(1)		(1)
						(9,672)		(8,987)

* Amount less than USD1,000

Unaudited Interim Condensed Consolidated Statement of Financial Position as at 30 June 2014

				Note		30.6.2014		31.12.2013
						USD'000		USD'000
						Unaudited		Audited
ASSETS
Non-current assets
Deferred tax assets						611		511
Property, plant and equipment				14		65,818		63,823
Biological assets				15		75,126		66,994
Land use rights				16		58,063		58,042
Goodwill on consolidation						7,258		7,099
						206,876		196,469
Current assets
Inventories				17		1,562		1,542
Trade and other receivables						5,798		6,738
Income tax recoverable						35		36
Prepayments						330		1,776
Cash and bank balances						4,017		10,813
						11,742		20,905
Total assets						218,618		217,374
EQUITY AND LIABILITIES
Equity
Issued capital				18		89,731		89,731
Accumulated losses						(44,656)		(34,045)
Other reserves				19		(11,437)		(12,487)
Equity attributable to owners of the Company						33,638		43,199
Non-controlling interests						(5)		(4)
Total equity						33,633		43,195
Non-current liabilities
Loans and borrowings				20		133,157		129,123
Convertible bonds				21		18,723		17,420
Deferred tax liabilities						5,146		5,430
						157,026		151,973
Current liabilities
Trade and other payables						17,567		14,279
Other current financial liabilities						3,990		3,078
Income tax payable						10		-
Loans and borrowings				20		6,329		4,819
Derivative financial instruments				21		63		30
						27,959		22,206
Total liabilities						184,985		174,179
Total equity and liabilities						218,618		217,374

Unaudited Interim Condensed Consolidated Statement of Changes in Equity

for the six-month period ended 30 June 2014

	Attributable to the owners of the Company								Non-controlling interests		Total equity
	Share capital		Other reserves		Accumulated losses		Total
	USD'000		USD'000		USD'000		USD'000		USD'000		USD'000
For the six months ended 30.6.2014
Unaudited
At 1 January 2014	89,731		(12,487)		(34,045)		43,199		(4)		43,195
Loss for the period	-		-		(10,611)		(10,611)		(1)		(10,612)
Other comprehensive income
Foreign currency translation adjustments	-		940		-		940		-		940
Total comprehensive income for the period	-		940		(10,611)		(9,671)		(1)		(9,672)
Share-based payment transactions (Note 23)	-		110		-		110		-		110
At 30 June 2014	89,731		(11,437)		(44,656)		33,638		(5)		33,633

	Attributable to the owners of the Company								Non-controlling interests		Total equity
	Share capital		Other reserves		Accumulated losses		Total
	USD'000		USD'000		USD'000		USD'000		USD'000		USD'000
For the six months ended 30.6.2013
Unaudited
At 1 January 2013	88,594		(7,916)		(23,645)		57,033		(3)		57,030
Loss for the period	-		-		(6,920)		(6,920)		(1)		(6,921)
Other comprehensive income
Foreign currency translation adjustments	-		(2,066)		-		(2,066)		-		(2,066)
Total comprehensive income for the period	-		(2,066)		(6,920)		(8,986)		(1)		(8,987)
Issuance of ordinary shares pursuant to share-based payment plans	1,137		-		-		1,137		-		1,137
Share-based payment transactions (Note 23)	-		(727)		-		(727)		-		(727)
At 30 June 2013	89,731		(10,709)		(30,565)		48,457		(4)		48,453

Unaudited Interim Condensed Consolidated Statement of Cash Flows

for the six-month period ended 30 June 2014

		Six Months Ended 30.6.2014		Six Months Ended 30.6.2013
		USD'000		USD'000
		Unaudited		Unaudited
Operating activities
Loss before tax		(11,082)		(7,912)
Non-cash adjustment to reconcile loss before tax to    net cash flows:
Amortisation of land use rights		558		513
Depreciation of property, plant and equipment		1,628		539
Gain on disposal of property, plant and equipment		-		(6)
Inventories written down to net realisable value		75		-
(Loss)/gain arising from changes in fair value of convertible bonds		33		(420)
Interest income		(71)		(232)
Interest expense		6,070		3,622
Unrealised (gain)/loss on foreign exchange		(226)		168
Share-based payment transaction expense		36		30
Working capital adjustments:
Increase in inventories		(62)		(832)
Decrease/(increase) in trade and other receivables and prepayments		1,685		(48)
Increase in trade and other payables		3,731		585
		2,375		(3,993)
Income taxes paid, net of refund		(4)		(20)
Interest received		71		232
Interest paid		(4,544)		(3,066)
Net cash flows used in operating activities		(2,102)		(6,847)
Investing activities
Proceeds from disposal of property, plant and equipment		-		6
Purchase of property, plant and equipment		(2,163)		(11,884)
Refund for over payment of land use rights in previous years		707		-
Additions to biological assets		(5,693)		(5,869)
Partial settlement of purchase price for subsidiary acquired in previous year		(53)		-
Net cash flows used in investing activities		(7,202)		(17,747)

	Financing activities
	Proceeds from issuance of ordinary shares		-		311
	Proceeds from issuance of convertible bond		-		4,897
	Issuance expense on liability component of convertible bond		-		(522)
	Repayment of short term revolving credit		-		(1,888)
	Repayment of term loans		(860)		(39,705)
	Proceeds from term loans		3,418		3,557
	Proceeds from Bank Guaranteed Medium Term Notes Programme		-		48,192
	Repayment of finance lease liabilities		(310)		(257)
	Short-deposits pledged for a banking facility and supply of goods		(23)		79
	Net cash flows from financing activities		2,225		14,664
	Net decrease in cash and cash equivalents		(7,079)		(9,930)
	Net foreign exchange difference		62		8
	Cash and cash equivalents at 1 January		7,473		14,188
	Cash and cash equivalents at 30 June (Note 22)		456		4,266

Notes to the Unaudited Interim Condensed Consolidated Financial Statements - 30 June 2014

1.         Corporate information

The interim condensed consolidated financial statements of Asian Plantations Limited (the "Company") and its subsidiaries (collectively, the "Group") for the six months ended 30 June 2014 were authorised for issue in accordance with a resolution of the directors on 30 September 2014.

Asian Plantations Limited 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 and operating of an oil palm mill. 

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 2014 have been prepared in accordance with IAS 34 Interim Financial Reporting.

The interim condensed consolidated financial statements 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 2013.

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.

New standards, interpretations and amendments 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 2013.

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 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 periods.

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)        Fair value of biological assets (nursery)

Nurseries 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 30 June 2014 was USD2,362,000 (31 December 2013: USD1,294,000). 

(b)        Fair value of biological assets (mature and immature plantations)

Mature and immature plantations are stated at fair value. Management adopts the practice of determining the fair value of the mature and immature plantations of the Group on an annual basis. Management is of the view that changes in fair value of mature and immature plantations as at 30 June 2014 would not materially differ from 31 December 2013 as there are no changes to the key assumptions in the biological asset valuation model. The carrying amount of mature and immature plantations as at 30 June 2014 was USD72,764,000 (31 December 2013: USD65,700,000). 

3.2       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)        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 60 years.

(b)        Impairment of goodwill

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. Based on management's analysis, goodwill is not impaired as at 30 June 2014.

(c)        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 company's domicile.

The carrying amount of income tax recoverable at 30 June 2014 was USD35,000 (31 December 2013: USD36,000).

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.

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.         Segment information

The following tables present revenue and profit information about the Group's operating segments for the six months ended 30 June 2014 and 2013, respectively:

Six months ended 30 June 2014		Plantation activities		Oil palm milling activities		Investment holding		Total segments		Adjustments and eliminations		Consolidated
Unaudited		USD'000		USD'000		USD'000		USD'000		USD'000		USD'000
Revenue
External customers		878		18,015		-		18,893		-		18,893
Inter-segment		1,973		-		-		1,973		(1,973)		-
Total revenue		2,851		18,015		-		20,866		(1,973)		18,893
Results
Segment loss		(4,877)		(2,890)		(771)		(8,538)		-		(8,538)

Inter-segment revenues of USD1,973,000 are eliminated on consolidation.

Six months ended 30 June 2013		Plantation activities		Oil palm milling activities		Investment holding		Total segments		Adjustments and eliminations		Consolidated
Unaudited		USD'000		USD'000		USD'000		USD'000		USD'000		USD'000
Revenue
External customers		824		139		-		963		-		963
Inter-segment		419		-		-		419		(419)		-
Total revenue		1,243		139		-		1,382		(419)		963
Results
Segment loss		(5,230)		(421)		(1,222)		(6,873)		-		(6,873)

Inter-segment revenues of USD419,000 are eliminated on consolidation

The following table presents segment assets and liabilities of the Group's operating segments as at 30 June 2014 and 31 December 2013:

		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
Segment assets
30 June 2104 (Unaudited)		176,901		32,069		75,545		284,515		(73,801)		210,714
31 December 2013 (Audited)		170,877		34,598		76,817		282,292		(72,564)		209,728
Segment liabilities
30 June 2014 (Unaudited)		137,274		34,212		5,710		177,196		(62,925)		114,271
31 December 2013 (Audited)		137,021		34,886		5,084		176,991		(72,564)		104,427

            Adjustments and eliminations

Interest income, certain finance costs and 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.

	Six Months Ended 30.6.2014		Six Months Ended 30.6.2013
	USD'000		USD'000
	Unaudited		Unaudited
Reconciliation of loss before tax
Segment loss	(8,538)		(6,873)
Interest income	71		232
Interest expense	(2,579)		(1,689)
Share-based payment transaction	(3)		(2)
(Loss)/gain arising from changes in fair value of embedded derivative of the convertible bonds	(33)		420
Group loss	(11,082)		(7,912)
	30.6.2014		31.12.2013
Reconciliation of assets	USD'000		USD'000
Segment assets	210,714		209,728
Deferred tax assets	611		511
Goodwill arising on consolidation	7,258		7,099
Income tax recoverable	35		36
Total assets	218,618		217,374

	30.6.2014		31.12.2013
	USD'000		USD'000
Reconciliation of liabilities	Unaudited		Audited
Segment liabilities	114,271		104,427
Deferred tax liabilities	5,146		5,430
Loans and borrowings	46,772		46,872
Income tax payable	10		-
Derivative financial instruments	63		30
Convertible bonds	18,723		17,420
Total liabilities	184,985		174,179

6.         Revenue

		Six Months Ended 30.6.2014		Six Months Ended 30.6.2013
		USD'000		USD'000
Sale of crude palm oil ("CPO")		15,553		-
Sale of palm kernel ("PK")		2,462		-
Sale of fresh fruit bunches ("FFBs")		878		963
		18,893		963

7.         Cost of sales

		Six Months Ended 30.6.2014		Six Months Ended 30.6.2013
		USD'000		USD'000
		Unaudited		Unaudited
Cost of sales for oil palm:
Estates		3,177		3,365
Mill		17,318		79
		20,495		3,444

Included in cost of sales is share-based payment transaction expense of USD33,000 (six months ended 30 June 2013: USD27,000) related to the Company's share option scheme.

8.         Other operating income

		Six Months Ended 30.6.2014		Six Months Ended 30.6.2013
		USD'000		USD'000
		Unaudited		Unaudited
Short term deposits interest income		71		232
Sale of seedlings		2		-
Gain arising from changes in fair value of embedded derivative of the convertible bonds		-		420
Gain on disposal of property, plant and equipment		-		6
Other income		266		16
		339		674

9.         Administrative expenses

Included in administrative expenses are audit, tax, legal and other professional fees amounting to USD1,893,000 (six months ended 30 June 2013: USD542,000) and share-based payment transaction expense of USD3,000 (six months ended 30 June 2013: USD3,000) related to the Company's share option scheme. 

10.       Other operating expenses

		Six Months Ended 30.6.2014		Six Months Ended 30.6.2013
		USD'000		USD'000
		Unaudited		Unaudited
Net foreign exchange loss		-		113
Repair and maintenance		66		75
Amortisation of land use rights		558		513
Inventories written down to net realisable value		75		-
Cost of seedlings sold		1		8
Loss arising from changes in fair value of embedded derivative of the convertible bonds		33		-
		733		709

11.       Finance costs

		Six Months Ended 30.6.2014		Six Months Ended 30.6.2013
		USD'000		USD'000
		Unaudited		Unaudited
Interest expense on loans and borrowings		4,440		3,016
Interest expense on convertible bonds		198		88
Accretion of interest on convertible bonds		1,294		518
Other interest expense		138		-
		6,070		3,622

12.       Income tax benefit

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

		Six Months Ended 30.6.2014		Six Months Ended 30.6.2013
		USD'000		USD'000
		Unaudited		Unaudited
Current income tax expense		-		32
Deferred income tax expense related to origination and reversal of deferred taxes		(485)		(1,095)
Under provision of income tax expense in prior period		15		-
Under provision of deferred tax expense in prior period		-		72
Total income tax benefit		(470)		(991)

13.       Loss per share

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

Diluted loss per share amounts are calculated by dividing loss for the period, net of tax, attributable to owners of the Company by the weighted average number of ordinary shares outstanding during the financial period 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 are no dilutive potential ordinary shares as at period ended 30 June 2014 and 2013.

13.       Loss per share (cont'd)

The following tables reflect the loss and share data used in the computation of basic loss and diluted per share for the periods ended 30 June:

		Six Months Ended 30.6.2014		Six Months Ended 30.6.2013
		USD'000		USD'000
		Unaudited		Unaudited
Loss, net of tax, attributable to owners of the Company		(10,611)		(6,920))
-
		No. of shares		No. of shares
		'000		'000
Weighted average number of ordinary shares for basic and diluted loss per share computation*		46,761		46,564
-

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

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.

14.       Property, plant and equipment

		30.6.2014		31.12.2013
		USD'000		USD'000
		Unaudited		Audited
At 1 January		63,823		53,227
Additions		3,096		18,117
Depreciation		(2,529)		(3,220)
Exchange differences		1,428		(4,301)
At 30 June / 31 December		65,818		63,823

See Note 25(a) for capital commitments.

Capitalised borrowing costs

The amount of borrowing costs capitalised during the period ended 30 June 2014 was USD10,000 (31 December 2013: USD786,000).

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

Depreciation capitalised to biological assets

Depreciation of property, plant and equipment of the Group capitalised to biological assets for the financial period ended 30 June 2014 amounted to USD901,000 (31 December 2013: USD1,712,000).

Assets under construction

Included in property, plant and equipment are assets under construction amounted to USD5,774,000 (31 December 2013: USD16,853,000). The Group's assets under construction mainly includes a palm oil mill, a biogas plant, workers quarters, terraces, roads and bridges/culverts.

15.       Biological assets

		30.6.2014		31.12.2013
		USD'000		USD'000
		Unaudited		Audited
At fair value less cost to sell
At 1 January		66,994		55,287
Additions		6,678		12,867
Gain arising from changes in fair value		-		3,183
Exchange differences		1,454		(4,343)
At 30 June / 31 December		75,126		66,994
Represented by:
Mature plantation		41,660		40,750
Immature plantation		31,104		24,950
Nursery		2,362		1,294
At 30 June / 31 December		75,126		66,994

As disclosed in Note 3.1(b), there is no gain or loss arising from changes in fair value less estimated costs to sell during the financial period ended 30 June 2014 (31 December 2013: USD3,183,000) as the Group has adopted the practice of determining and accounting for the fair value changes to its biological assets on an annual basis.

		30.6.2014		31.12.2013
		Hectares		Hectares
Planted area:
Mature plantation		4,507		4,507
Immature plantation		7,654		7,654
Total		12,161		12,161

16.       Land use rights

		30.6.2014		31.12.2013
		USD'000		USD'000
		Unaudited		Audited
At 1 January		58,042		53,517
Additions		-		9,141
Refund for over-payment in previous years		(707)		-
Amortisation charge		(558)		(1,002)
Exchange differences		1,286		(3,614)
At 30 June / 31 December		58,063		58,042

Land use rights of the Group are pledged for banking facilities as disclosed in Note 20.

17.       Inventories

		30.6.2014		31.12.2013
		USD'000		USD'000
		Unaudited		Audited
Crude palm oil		166		223
Palm kernel		71		72
Chemicals and fertilisers		856		729
Consumables		469		518
		1,562		1,542

18.       Issued capital

		30.6.2014				31.12.2013
		No. of shares				No. of shares
		'000		USD'000		'000		USD'000
		Unaudited		Unaudited		Audited		Audited
At 1 January 2014 / 1 January 2013		46,761		89,731		46,511		88,594
Issuance during the period/year		-		-		250		1,137
At 30 June 2014 / 31 December 2013		46,761		89,731		46,761		89,731
		-		-		-		-

19.       Other reserves

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

	30.6.2014		31.12.2013
	USD'000		USD'000
	Unaudited		Audited
Merger reserve	(20,256)		(20,256)
Foreign currency translation reserve	(1,273)		(2,213)
Share-based payment transaction reserve	10,092		9,982
	(11,437)		(12,487)

20.       Loans and borrowings

		30.6.2014		31.12.2013
		USD'000		USD'000
		Unaudited		Audited
Bank overdraft		2,678		2,477
Term loans		56,508		52,741
Bank Guaranteed Medium Term Notes Programme		78,402		76,607
		137,588		131,825
Add: Obligations under finance leases (Note 25)		1,898		2,117
Total loans and borrowings		139,486		133,942

Loans and borrowings of the Group are secured either by a charge over the leased assets or leasehold land of the Group in which it has prepaid the rights to use the land as disclosed in Note 16.

The Group has secured a temporary relaxation from Malayan Banking Berhad to allow the Group up to 31 December 2014 to comply with the loan covenants for the Bank Guaranteed Medium Term Notes.

21.       Convertible bonds - Unsecured

	30.6.2014		31.12.2013
	USD'000		USD'000
	Unaudited		Audited
Face value of the convertible bonds	17,100		17,100
Less: Embedded derivative	(1,017)		(1,017)
Less: Transaction costs on liability component	(571)		(571)
Liability component at initial recognition	15,512		15,512
Add: Accretion of interest on the convertible bonds	3,211		1,904
Add: Exchange differences	-		4
	18,723		17,420

				30.6.2014		31.12.2013
Face value		Maturity		USD'000		USD'000
				Unaudited		Audited
USD2.1 million		8 August 2015		2,428		2,273
USD15.0 million		14 January 2016		16,295		15,147
				18,723		17,420

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 USD63,000 as at 30 June 2014 (31 December 2013: USD30,000).

The Group has obtained a waiver from OCBC Capital Investment I Pte. Ltd. on the requirement to meet the covenants specified for the USD15.0 million convertible bonds.

22.       Cash and bank balances

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

	30.6.2014		31.12.2013
	USD'000		USD'000
	Unaudited		Audited
Cash and short-term deposits	4,017		10,813
Less: Short-term deposits pledged	(883)		(863)
Less: Bank overdraft	(2,678)		(2,477)
	456		7,473

23.       Share-based payment plans

There has been no cancellation or modification to the Scheme during the period ended 30 June 2013.

Expense recognised for this equity-settled share-based payment transaction during the financial period amount to USD110,000 (30 June 2013: USD101,000), of which USD75,000 (30 June 2013: USD71,000 ) has been capitalised to biological assets.

            There was no new share options granted nor were there any share options exercised during the financial period.

24.       Fair value of assets and liabilities

(a)        Fair value hierarchy

The Group categories fair value measurements using a fair value hierarchy that is dependent on the valuation inputs used as follows:

-        Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Group can access at the measurement date,

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

-        Level 3 - Unobservable inputs for the asset or liability.

Fair value measurements that use inputs of different hierarchy levels are categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.

(b)        Assets and liabilities measured at fair value

The following table shows an analysis of each class of assets and liabilities measured at fair value at the end of the reporting period:

	Quoted prices in active markets for identical instruments		Significant other observable inputs		Significant unobservable inputs		Total
	(Level 1)		(Level 2)		(Level 3)
Group	US$'000		US$'000		US$'000		US$'000
30.6.2014
Unaudited
Recurring fair value measurements:
Assets
Non-financial assets
Biological assets	-		-		75,126		75,126
Liabilities
Financial liabilities
Embedded derivatives within convertible bonds	-		63		-		63
31.12.2013
Audited
Recurring fair value measurements:
Assets
Non-financial assets
Biological assets	-		-		66,994		66,994
Liabilities
Financial liabilities
Embedded derivatives within convertible bonds	-		30		-		30

(c)        Level 3 fair value measurements

(i)        Information about significant unobservable inputs used in Level 3 fair value measurements

As disclosed in Note 3.1(b) and Note 15, the Group has adopted the practice of determining the fair value of its biological assets on an annual basis. Management is of the view that there is no significant change in the key assumptions used in the biological asset valuation model.

The following table shows the information about fair value measurements using significant unobservable inputs (Level 3) for biological assets as at 31 December 2013:

Description	Fair value (US$'000)		Valuation techniques		Unobservable inputs		Range
Biological assets	66,994		Discounted cash flow		Discount rate		9.5% - 10.5%
					Projected selling price of CPO		USD868 per tonne
					FFB yield		0.0 - 21.6 tonnes per hectare

For biological assets, a significant increase/(decrease) in discount rate would result in a significantly lower/(higher) fair value. Changes in projected selling price of CPO and FFB yield will result in directionally similar changes in fair value.

(ii)        Movements in Level 3 assets measured at fair value

The movements in biological assets measured at fair value are disclosed in Note 15.

(iii)       Valuation policies and procedures

To determine the fair value of biological assets, the Group engages external valuation experts to perform the valuation. The corporate finance team is responsible for selecting and engaging valuation experts that possess the relevant credentials and knowledge on the subject of valuation, valuation methodologies, and IFRS 13 fair value measurement guidance.

The corporate finance team reviews the appropriateness of the valuation methodologies and assumptions adopted by the external valuation experts. The corporate finance team also evaluates the appropriateness and reliability of the inputs (including those developed internally by the Group) used in the valuations.

Significant changes in fair value measurements from period to period are evaluated by the corporate finance team for reasonableness. Key drivers of the changes are identified and assessed for reasonableness against relevant information from independent sources, or internal sources if necessary and appropriate.

(d)        Assets and liabilities not carried at fair value but for which fair value is disclosed

The following table shows an analysis of the assets and liabilities not measured at fair value but for which fair value is disclosed:

	Fair value measurements at the end of the reporting period using
Group	Quoted prices in active market for identical instruments		Significant other observable inputs		Significant unobservable inputs		Total		Carrying amount
	(Level 1)		(Level 2)		(Level 3)
	US$'000		US$'000		US$'000		US$'000		US$'000
30.6.2014
Unaudited
Liabilities
Loans and borrowings
-  Obligations under finance leases	-		-		1,871		1,871		1,898
-  Bank Guarantee Medium Term Notes Programme	-		-		79,717		79,717		78,402
31 December 2013
Audited
Liabilities
Loans and borrowings
-  Obligations under finance leases	-		-		2,098		2,098		2,117
-  Bank Guarantee Medium Term Notes Programme	-		-		77,775		77,775		76,607

(d)        Assets and liabilities not carried at fair value but for which fair value is disclosed (cont'd)

Determination of fair value

The following table shows the significant unobservable inputs and the valuation techniques used in determining the fair value of of the assets and liabilities not measured at fair value but for which fair value is disclosed:

Description	Fair value (US$'000)		Valuation techniques		Unobservable inputs		Range
Obligations under finance lease	1,871		Discounted cash flow		Discount rate		2.50% - 3.30%
Bank Guarantee Medium Term Notes Programme	77,775		Discounted cash flow		Discount rate		4.09% - 4.30%

(e)        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:

	30.6.2014				31.12.2013
-	Carrying amount		Fair value		Carrying amount		Fair value
	USD'000		USD'000		USD'000		USD'000
	Unaudited		Unaudited		Audited		Audited
Financial liabilities
Loans and borrowings
- Obligations under finance leases	1,898		1,871		2,117		2,098
- Convertible bonds	18,723		*		17,420		*
- Bank Guarantee Medium Term Notes Programme	78,402		79,717		76,607		77,775

*     Convertible bonds

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

25.       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:

		30.6.2014		31.12.2013
		USD'000		USD'000
		Unaudited		Audited
Approved and contracted for:
-    property, plant and equipment		3,929		5,878
Approved and not contracted for:
-    property, plant and equipment		13,197		9,221
-    biological assets		7,900		4,093
		25,026		19,192

(b)        Operating lease commitments

As lessee

In addition to the land use rights disclosed in Note 16, the Group has no other operating leases.

(c)        Finance leases

As lessee

The Group has finance leases for certain property, plant and equipment. 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.

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

(d)        Finance leases (cont'd)

	30.6.2014					31.12.2013
	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	732		634				724		610
Later than one year but not more than five years	1,351		1,264				1,630		1,507
Total minimum lease payments	2,083		1,898				2,354		2,117
Less: Amount representing finance charges	(185)		-				(237)		-
Present value of minimum lease payments	1,898		1,898				2,117		2,117

26.       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 2014 and 30 June 2013 at the terms agreed between the parties, which are conducted at mutually agreed terms between the parties.

		Six Months Ended		Six Months Ended
		30.6.2014		30.6.2013
		USD'000		USD'000
		Unaudited		Unaudited
Transactions with related parties
- Rental expenses		26		29
- Administrative costs charged		111		88
		137		117
		30.6.2014		30.12.2013
		USD'000		USD'000
		Unaudited		Audited
Amount due from related parties		23		1
Amount due to related parties		768		150

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

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

		Six Months Ended		Six Months Ended
		30.6.2014		30.6.2013
		USD'000		USD'000
		Unaudited		Unaudited
Directors' salaries		238		241
Directors' fees		92		95
Short term employee benefits		176		174
Contribution to defined contribution plans		22		22
Share-based payment transactions (Note 23)		42		38
		570		570

Compensation of key management personnel (cont'd)

		Six Months Ended		Six Months Ended
		30.6.2014		30.6.2013
		USD'000		USD'000
		Unaudited		Unaudited
Compensation comprise
Amounts paid to:
- Directors of the Company		327		333
- Directors of a subsidiary company		3		3
- Other key management personnel		198		196
		528		532
Share-based payment transactions expense:
- Other key management personnel		42		38
		570		570

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

 

END

 

 

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