TIDMPAL
RNS Number : 1517P
Equatorial Palm Oil plc
28 September 2011
29 September 2011
EQUATORIAL PALM OIL PLC
("EPO" or the "Company")
Interim Results for 6 months ended 30 June 2011
Equatorial Palm Oil plc, (AIM: PAL) the AIM listed palm oil
production company with operations in Liberia, West Africa
announces its unaudited interim results for the six months ended 30
June 2011.
Financial and corporate highlights:
-- Joint venture agreement with BioPalm Energy Limited ("BioPalm
Energy")(the "JV Agreement") fully implemented
-- A new palm oil mill (the "Mill") inaugurated by the President
of Liberia in May
Operational Highlights:
-- First sales of crude palm oil ("CPO")
-- On track to plant 1,200 hectares of oil palms by the end of
2011
-- Commencement of nursery at Butaw Estate and enlargement of
existing Palm Bay Estate nursery
-- Completed rehabilitation of 3,500 hectares of existing
palms
-- Mill in final stages of commissioning with full ramp up of
production expected Q4 2011
Michael Frayne, Executive Chairman of Equatorial Palm Oil
commented:
"The first half of 2011 has been another transformational period
for the Company following the full implementation of the JV
Agreement and we are delighted to have secured BioPalm Energy as a
long term partner to the Company. In addition we have seen the
inauguration of the Mill, and our first sales of CPO. We remain on
track to plant over 1,200 hectares of palms by the end of
2011."
"EPO is well funded to progress its development goals through
the establishment of nurseries and planting of palms for
sustainable palm oil production. The remainder of 2011 and 2012
will be an exciting time for the Company and I look forward to
updating shareholders as we continue to work towards our long term
strategic goals."
Equatorial Palm Oil plc +44 (0) 20 7766
Michael Frayne (Executive Chairman) 7555
www.epoil.co.uk
Strand Hanson Limited (Nominated Adviser) +44 (0) 20 7409
James Harris / Paul Cocker 3494
Mirabaud Securities LLP (Broker) +44 (0) 20 7484
Peter Krens 3510
Pelham Bell Pottinger (Financial / Corporate +44 (0) 20 7861
PR) 3232
Archie Berens / Philippe Polman
Chairman's statement
The first half of 2011 was another transformational period for
Equatorial Palm Oil. Via the joint venture ("the JV") entered into
with BioPalm Energy (part of the Siva Group), the Company has a 50%
interest in three significant defined areas, referred to as Palm
Bay, River Cess and Butaw, with a total land area of 169,000
hectares suitable for the cultivation of oil palms. This provides
the Company with the potential to become an internationally
competitive palm oil production company.
Joint Venture
On 3 February 2011, the Company announced that discussions with
BioPalm Energy had been successfully concluded and that the JV
Agreement had been fully implemented which represented a
significant milestone for the Company. The JV Agreement provided
for equity investment in the joint venture company ("Palm
Developments") of US$30.0 million, the cash balance as at 30 June
2011 was $25.8m.
Furthermore, BioPalm Energy will arrange and guarantee an
additional US$30.0 million loan facility (the "Loan Facility") to
Palm Developments and work is progressing in respect of this. As
the operator of Palm Developments, EPO will use the proceeds from
the Loan Facility, together with existing cash resources, to
accelerate its strategic development plan in respect of the 169,000
hectare land bank at Palm Bay, River Cess and Butaw.
Mill Inaugurated; First Sales of Crude Palm Oil
During the period, the Company celebrated the success of
inaugurating Liberia's only commercial palm oil mill at a total
cost of US$ 3 million. The Mill was inaugurated following eight
months of construction and testing, including the processing of oil
palm bunches. We were delighted and honoured to have the President
of Liberia, Ellen Johnson Sirleaf, attend the inauguration of the
Mill, reflecting the importance of EPO's investment both in the
Mill and the oil palm sector generally, with respect to the
economic and social goals of Liberia.
The plant is currently processing 30 tonnes of fresh oil palm
bunches ("FFB") daily, which is sourced from the surrounding 3,500
hectares of existing oil palms rehabilitated by the Company and the
JV over the past 12 months. Daily production is averaging 5 tonnes
of CPO at an average extraction rate of 17 per cent.
Final commissioning work is now being undertaken at the Mill and
this is expected to be completed during the fourth quarter of this
year. A small number of minor modifications have been made to the
original design specifications. The identified modifications are
being processed by Modipalm Sdn. Bhd. , the designers and
fabricators of the Mill, which will then enable the Mill to run at
its full capacity of 5 tonnes per hour. As at the date of this
announcement the JV has more than 600MT of CPO stored and a tender
process is underway for the sale of this CPO.
Corporate Social Responsibility
In addition to the production of palm oil, EPO recognises the
need to be socially engaged and community oriented. The JV employs
over 1,000 people across its operations. Over the period, the JV
has upgraded many of the older buildings on Palm Bay Estate and
these will be used as accommodation for its employees. In addition
a new polyclinic has been built to cope with the increased medical
demands of the employees and local villagers. Furthermore, the JV
donated US$25,000 for a new women's market in Buchanan, which is
the port town close to the Palm Bay Estate.
At the Butaw Estate the JV has spent significant time and
resources on improving roads and building bridges, which has
brought great benefits to the local villagers that live on or close
to the project. The nursery at Butaw has commenced with the
preparation of 20 hectares sufficient to propagate enough seedlings
to plant up to 2,000 hectares during 2012.
The Company has been a member of the Roundtable on Sustainable
Palm Oil ("RSPO") since 2006 and is working towards the development
of sustainable oil palm plantations. As the Company expands it will
implement its policies and procedures in line with RSPO approved
principles and criteria, which are recognised as being industry
best practises.
Conclusion
This half year has been marked with significant progress. For
the remainder of 2011, we will complete the planting of 1,200
hectares of new oil palms; in 2012, we will plant over 4,000
hectares of new oil palms and in 2013 we expect 6,000-8,000
hectares of new oil palms to be completed. The Company will begin
discussions with local communities who have small holdings of oil
palms for the sale of FFB that can be utilised by the Company at
its Mill in order to produce CPO.
Although much has been achieved so far, in particular the
implementation of the JV Agreement, the Company is continuously
striving to accelerate this momentum. With market prices for CPO
expected to remain strong, we continue to believe that the
commercial prospects for this unique opportunity are exciting.
Michael Frayne
Executive Chairman
29 September 2011
EQUATORIAL PALM OIL PLC
GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIOD ENDED 30 JUNE 2011
Year ended
Period ended Period ended 31 December
30 June 2011 30 June 2010 2010
Note (unaudited) (unaudited) (audited)
$'000 $'000 $'000
Revenue 175 - -
Administrative
expenses (1,306) (1,577) (3,538)
Share options
expensed 6 (125) (472) (694)
Operating loss (1,256) (2,049) (4,232)
--------------- --------------- --------------
Interest payable - (166) (169)
Share of operating
loss of joint
venture 3 (189) - -
Profit on disposal
of assets to
joint venture 3 752 - -
Loss before
taxation (693) (2,215) (4,401)
Taxation - - -
Loss for the
period after
taxation (693) (2,215) (4,401)
--------------- --------------- --------------
Other
comprehensive
income
Currency
translation
differences 194 251 (295)
--------------- --------------- --------------
Total
comprehensive
income for the
period (499) (1,964) (4,696)
--------------- --------------- --------------
Loss per share
expressed in
cents per share
- Basic & diluted 2 (0.6) cents (3.1) cents (4.7) cents
EQUATORIAL PALM OIL PLC
GROUP STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2011
31 December
30 June 2011 30 June 2010 2010
Note (unaudited) (unaudited) (audited)
$'000 $'000 $'000
ASSETS
Non-current assets
Investment in joint
venture 3 21,803 - -
Property, plant and
equipment - 12,005 15,554
21,803 12,005 15,554
-------------- -------------- -------------
Current assets
Inventories - - 508
Receivables 4 2,170 1,025 490
Cash & cash
equivalents 575 11,463 6,760
-------------- -------------- -------------
2,745 12,488 7,758
-------------- -------------- -------------
LIABILITIES
Current liabilities
Trade and other
payables 92 642 545
92 642 545
-------------- -------------- -------------
Net current
assets/(liabilities) 2,653 11,846 7,213
-------------- -------------- -------------
NET ASSETS 24,456 23,851 22,767
============== ============== =============
SHAREHOLDERS' EQUITY
Share capital 5 1,914 1,752 1,796
Share premium 29,619 26,163 27,544
Warrant and option
reserve 6 2,202 2,015 2,237
Foreign exchange
reserve 108 459 (86)
Retained loss (9,387) (6,538) (8,724)
Total equity 24,456 23,851 22,767
============== ============== =============
EQUATORIAL PALM OIL PLC
GROUP CASH FLOW STATEMENT
FOR THE PERIOD ENDED 30 JUNE 2011
Year ended
Period ended Period ended 31 December
30 June 2011 30 June 2010 2010
(unaudited) (unaudited) (audited)
$'000 $'000 $'000
Cash flows from operating
activities
Operating loss
(Increase)/decrease in
receivables
(Decrease)/increase in (1,256) (2,048) (4,232)
payables Increase in (1,875) (508) 63
inventories Depreciation (57) (2,416) (2,654)
Share options expensed - - (508)
Share of operating loss of 2 52 494
joint venture Profit on 125 472 694
disposal of assets to 189 - -
joint venture (752) - -
--------------- --------------- --------------
Net cash outflow from
operating activities (3,624) (4,448) (6,143)
--------------- --------------- --------------
Cash flows from investing
activities
Investment in joint
venture (4,658) - -
Payments to acquire
property, plant &
equipment - (971) (5,001)
Net cash outflow from
investing activities (4,658) (971) (5,001)
--------------- --------------- --------------
Cash flows from financing
activities
Repayment of short term
borrowings - (3,055) (1,040)
Issue of ordinary share
capital 2,063 20,683 19,960
Share issue costs - (655) (655)
Interest paid - (166) (169)
--------------- --------------- --------------
Net cash inflow from
financing activities 2,063 16,807 18,096
--------------- --------------- --------------
Net increase in cash and
cash equivalents (6,219) 11,388 6,952
Cash and cash equivalents
at beginning of period 6,760 100 100
Exchange (losses)/gains on
cash and cash
equivalents 34 (25) (292)
Cash and cash equivalents
at end of period 575 11,463 6,760
--------------- --------------- --------------
EQUATORIAL PALM OIL PLC
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 30 JUNE 2011
Called Warrant
up Share Foreign and
share premium exchange option Retained Total
capital reserve reserve reserve earnings equity
$ 000's $ 000's $ 000's $ 000's $ 000's $ 000's
As at 1
January 2010 463 8,937 208 30 (4,323) 5,315
Share capital
issued 1,289 17,881 - 1,513 - 20,683
Cost of share
issue - (655) - - - (655)
Issue of share
options - - - 472 - 472
Total
comprehensive
income for
the period - - 251 - (2,215) (1,964)
As at 30 June
2010 1,752 26,163 459 2,015 (6,538) 23,851
--------- --------- ---------- --------- ---------- ---------
As at 1
January 2010 463 8,937 208 30 (4,323) 5,315
Share capital
issued 1,333 19,262 - 1,513 - 22,108
Cost of share
issue - (655) - - - (655)
Issue of share
options - - - 694 - 694
Total
comprehensive
income for
the period - - (294) - (4,401) (4,695)
As at 31
December
2010 1,796 27,544 (86) 2,237 (8,724) 22,767
--------- --------- ---------- --------- ---------- ---------
Share capital
issued 118 1,945 - - - 2,063
Exercise of
warrants and
options - 130 - (160) 30 -
Share based
payments - - - 125 - 125
Total
comprehensive
income for
the period - - 194 - (693) (499)
As at 30 June
2011 1,914 29,619 108 2,202 (9,387) 24,456
--------- --------- ---------- --------- ---------- ---------
EQUATORIAL PALM OIL PLC
NOTES TO THE INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 JUNE 2011
1. Basis of preparation
These consolidated financial statements have been prepared using
policies based on International Financial Reporting Standards (IFRS
and IFRIC interpretations) issued by the International Accounting
Standards Board ("IASB") as adopted for use in the EU. They do not
include all disclosures that would otherwise be required in a
complete set of financial statements and should be read in
conjunction with the 2010 Annual Report. The financial information
for the half years ended 30 June 2011 and 30 June 2010 does not
constitute statutory accounts within the meaning of Section 434(3)
of the Companies Act 2006 and is unaudited.
The annual financial statements of Equatorial Palm Oil Plc are
prepared in accordance with IFRSs as adopted by the European Union.
The comparative financial information for the year ended 31
December 2010 included within this report does not constitute the
full statutory accounts for that period. The statutory Annual
Report and Financial Statements for 2010 have been filed with the
Registrar of Companies. The Independent Auditors' Report on that
Annual Report and Financial Statement for 2010 was unqualified, did
not draw attention to any matters by way of emphasis, and did not
contain a statement under 498(2) or 498(3) of the Companies Act
2006.
After making enquiries, the directors have a reasonable
expectation that the Company and the Group have adequate resources
to continue in operational existence for the foreseeable future.
Accordingly, they continue to adopt the going concern basis in
preparing the half-yearly consolidated financial statements.
The same accounting policies, presentation and methods of
computation are followed in these condensed consolidated financial
statements as were applied in the Group's latest annual audited
financial statements.
In the current financial period, the Group has adopted an
accounting policy for its joint venture interest in Palm
Developments Limited, as disclosed in note 3. This jointly
controlled entity is included in the financial statements as an
equity investment. The Group accounts for its share of the net
assets of the joint venture company as an investment within the
statement of financial position. The Group's share of the gains or
losses of the joint venture company are included within the income
statement.
In addition, the IASB has issued a number of IFRS and IFRIC
amendments or interpretations since the last annual report was
published. It is not expected that any of these will have a
material impact on the Group.
2. Loss per share
The basic loss per share is derived by dividing the loss for the
period attributable to ordinary shareholders by the weighted
average number of shares in issue.
As inclusion of the potential Ordinary shares would result in a
decrease in the loss per share they are considered to be
anti-dilutive, as such, a diluted earnings per share is not
included.
Period ended Period ended Year ended
30 June 2011 30 June 2010 31 December 2010
(unaudited) (unaudited) (audited)
$'000 $'000 $'000
Loss for
the
period (693) (2,215) (4,401)
Weighted
average
number
of
Ordinary
shares
of 1p in
issue 123.3 million 70.8 million 93.5 million
Loss (0.6) cents (3.1) cents (4.7) cents
per
share
-
basic
3. Investment in joint venture
On 3 February 2011 the Company completed a joint venture
agreement with BioPalm Energy Limited. The joint venture agreement
provides for equity investment in the Joint Venture Company
("Liberian Palm Developments Limited") of US$30.0 million (US$7.5
million from Equatorial Biofuels (Guernsey) Limited, a subsidiary
of EPO, on behalf of the Company and US$22.5 million from BioPalm
Energy). Furthermore, BioPalm Energy will arrange and guarantee an
additional US$30.0 million loan facility to the Joint Venture
Company.
Upon acquiring a 50% interest in Liberian Palm Developments
Limited in exchange for the transfer of assets, the following gain
arose:
30 June 2011
$'000
50% share of the net assets of Liberian
Palm Developments Limited 21,992
Less net assets transferred to Liberian
Palm Developments Limited 21,240
Profit on disposal of assets to JV 752
The Group's interest in the joint venture can be accounted for
either under the equity accounting or the proportionate
consolidation method. However the latter may cease to be an option
from 2013 due to IFRS 11 becoming effective. Due to these changes
the Directors have decided to equity account for the Group's
interest in Liberian Palm Developments Limited. The results of the
joint venture for the period of six months to 30 June 2011 were as
follows:
30 June 2011
$'000
Non-current assets 18,680
Current assets 27,420
Non-current liabilities -
Current liabilities (2,494)
TOTAL NET ASSETS 43,606
Income 10
Cost of sales (10)
Expenses (378)
Loss after tax (378)
The Company, through its investment in Equatorial Biofuels
(Guernsey) Limited, owns a 50% interest in Liberian Palm
Developments Limited. The Company's interest in Liberian Palm
Developments Limited is as follows:
30 June 2011
$'000
Interest in joint venture at 1 January
2011 -
Additions 21,992
Share of profits/(losses) of joint venture (189)
Dividend received from Liberian Palm
Developments Limited -
Interest in joint venture at 30 June
2011 21,803
4. Receivables
Period ended
Period ended Period ended 31 December
30 June 2011 30 June 2010 2010
$'000 $'000 $'000
-------------------------- --------------- --------------- --------------
Receivable due from the
Joint Venture* 2,105 - -
Other receivables 65 209 425
Prepayments - 816 65
-------------------------- --------------- --------------- --------------
2,170 1,025 490
-------------------------- --------------- --------------- --------------
* $1,817,715 was received by the Company from the Joint Venture
on 6 July 2011.
5. Called up share capital
Period ended Period ended Period ended
30 June 30 June 31 December
Allotted, called up and 2011 2010 2010
fully paid $'000 $'000 $'000
------------------------------ -------------- -------------- --------------
124,808,188 Ordinary shares
of 1p each (2010:
114,751,670) 1,914 1,752 1,796
------------------------------ -------------- -------------- --------------
During the period the Group issued 7,273,089 shares at an
average price of 17.5 pence per share ($0.28 cents).
6. Share based payments
Warrants
Details of the warrants outstanding during the period are as
follows:
Outstanding Expired
at 1 during Exercised Outstanding Exercisable
January the during at 30 June at 30 June Exercise Expiry
2011 period the period 2011 2011 price date
----------- ------------- ----------- ------------- ------------- ------------- ---------- --------
5yr 26 Feb
Warrants 2,198,757 - (203,500) 1,995,257 1,995,257 17.5p 2015
3yr 26 Feb
Warrants 5,817,742 - - 5,817,742 5,817,742 17.5p 2013
2yr 26 Feb
Warrants 25,651,957 - (2,787,446) 22,864,511 22,864,511 17.5p 2012
1yr 14 Feb
Warrants 300,000 (300,000) - - - 30.0p 2011
----------- ------------- ----------- ------------- ------------- ------------- ---------- --------
33,968,456 (300,000) (2,990,946) 30,677,510 30,677,510
Share options
Details of the options outstanding during the period are as
follows:
Outstanding
at Exercised Outstanding Exercisable
1 January during the at 30 June at
2011 period 2011 30 June 2011
--------------- ------------- ------------- -------------- ---------------
Options
exercisable
at 17.5p 8,050,000 - 8,050,000 2,087,500
Options
exercisable
at 30.0p 25,000 (25,000) - -
--------------- ------------- ------------- -------------- ---------------
8,075,000 (25,000) 8,050,000 2,087,500
7. Events after the reporting period
On 6 July 2011, $1,817,715 was received by the Company from the
Joint Venture as partial repayment of an intercompany loan. As at
30 June 2011, the Joint Venture owed the Company $2,104,582.
INDEPENDENT REVIEW REPORT TO EQUATORIAL PALM OIL PLC
Introduction
We have been engaged by the company to review the set of
financial statements in the half-yearly financial report for the
six months ended 30 June 2011 which comprises the group statement
of comprehensive income, the group statement of financial position,
the group cash flow statement, the group statement of changes in
equity and the related explanatory notes.
We have read the other information contained in the half-yearly
financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the set of financial statements.
Directors' responsibilities
The interim report, including the financial information
contained therein, is the responsibility of and has been approved
by the directors. The directors are responsible for preparing the
interim report in accordance with the rules of the London Stock
Exchange for companies trading securities on AIM which require that
the half-yearly report be presented and prepared in a form
consistent with that which will be adopted in the company's annual
accounts having regard to the accounting standards applicable to
such annual accounts.
Our responsibility
Our responsibility is to express to the company a conclusion on
the set of financial statements in the half-yearly financial report
based on our review.
Our report has been prepared in accordance with the terms of our
engagement to assist the company in meeting the requirements of the
rules of the London Stock Exchange for companies trading securities
on AIM and for no other purpose. No person is entitled to rely on
this report unless such a person is a person entitled to rely upon
this report by virtue of and for the purpose of our terms of
engagement or has been expressly authorised to do so by our prior
written consent. Save as above, we do not accept responsibility for
this report to any other person or for any other purpose and we
hereby expressly disclaim any and all such liability.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity", issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK and Ireland) and consequently does not enable us to
obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the set of financial statements in the
half-yearly financial report for the six months ended 30 June 2011
is not prepared, in all material respects, in accordance with the
rules of the London Stock Exchange for companies trading securities
on AIM.
BDO LLP
Chartered Accountants and Registered Auditors
London
United Kingdom
BDO LLP is a limited liability partnership registered in England
and Wales (with registered number OC305127).
This information is provided by RNS
The company news service from the London Stock Exchange
END
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