TIDMPAL
RNS Number : 0304D
Equatorial Palm Oil plc
10 May 2012
10 May 2012
EQUATORIAL PALM OIL PLC
("EPO" or the "Company")
Audited Results for the year ended 31 December 2011
Notice of Annual General Meeting
Equatorial Palm Oil plc, (AIM: PAL) the AIM listed palm oil
production and development company with operations in Liberia, West
Africa announces its audited annual results for the year ended 31
December 2011.
Financial Highlights:
-- Maiden revenues achieved from the Company's first crude palm oil ("CPO") sales.
-- Loss of US$2,167,000 (2010: US$4,401,000).
-- Cash held by EPO at year end was US$1,329,000 (2010: US$6,760,000).
-- Cash held by Liberian Palm Developments Ltd. ("LPD"), EPO's
50% joint venture company which holds the oil palm assets, was
US$7,854,000 (2010: n/a), excluding a US$10m loan LPD made in
October 2011 which has now been repaid in full.
Operational Highlights:
-- Successfully planted 1,100 hectares of new oil palms, having
re-habilitated over 3,500 hectares of existing palms to provide
interim mill feed.
-- Completed the implementation of the joint venture agreement
with BioPalm Energy Limited ("BioPalm"), a subsidiary of the Siva
Group, an Indian conglomerate. BioPalm also committed to a cash
injection of US$30m and an additional US$30m loan facility
guarantee.
-- Strengthened management team with the appointments of Mr.
Declan Griffin as Head of Country - Liberia and Mr. Sashi Nambiar
as Head of Operations, both with extensive experience managing oil
palm estates and large-scale operations.
-- Continued progress on local infrastructure including roads,
bridges, housing, schools and health clinics.
Outlook:
-- Continued expansion of the Palm Bay and Butaw nursery sites
to accommodate an increased planting schedule.
-- CPO price widely expected to remain strong in the face of
production shortfalls and increased demand for sustainable CPO.
Michael Frayne, Executive Chairman of Equatorial Palm Oil
commented:
"I am pleased to report on the excellent growth that EPO has
achieved in 2011. The Company continues to progress from strength
to strength at a time of increasing palm oil prices amid a louder
calling for sustainable production. The inauguration and final
commissioning of Liberia's only commercial palm oil mill at the
Palm Bay Estate puts EPO in a strong position to not only enhance
cash flow but to train our employees for future expansion.
Furthermore, our progress in planting at the Palm Bay Estate and
the expansion of nurseries provides the basis for successful
operations in years to come.
Thank you to all of our employees for their hard work and
dedication. I look forward to updating the market on continued
progress."
Notice of Annual General Meeting
Notice is hereby given that the Annual General Meeting of
Equatorial Palm Oil plc (the "Company") will be held at the offices
of SGH Martineau LLP, 5th Floor, One America Square, Crosswall,
London EC3N 2SG on Monday 18(th) June2012 at 11am.
Equatorial Palm Oil plc
Michael Frayne (Executive Chairman) +44 (0) 20 7766
www.epoil.co.uk 7555
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
PR) +44 (0) 20 7861
Archie Berens / Philippe Polman 3232
CHAIRMAN'S STATEMENT
2011 has been another year of significant progression for
Equatorial Palm Oil plc ("EPO" or the "Company").
In February 2011, EPO announced the completion of the
implementation of the Joint Venture ("JV") arrangement between
Equatorial Biofuels (Guernsey) Limited, a subsidiary of EPO, and
BioPalm Energy Limited ("BioPalm"), a subsidiary of Indian
conglomerate, the Siva Group. The arrangement injected US$30
million into Liberian Palm Developments Limited ("LPD"), the JV
company in which Equatorial Biofuels (Guernsey) Limited and BioPalm
each hold 50%. Additionally, BioPalm will arrange and guarantee a
US$30 million loan facility to LPD.
As the operator of LPD, EPO is applying the US$60 million in JV
funding to accelerate its strategic development plan in respect of
its c.169,000 hectare land position at Palm Bay, Butaw and River
Cess.
2011 saw us entering into a new stage of development, marked by
the planting of 1,100 hectares of new oil palms and the
commencement of production of crude palm oil ("CPO") following the
construction and commissioning of the state-of-the-art palm oil
mill at Palm Bay.
Liberia is attracting a significant amount of foreign
investment, including in the agriculture sector, as the country
benefits from further stability in the country's political process.
During the period Liberia held its second successful democratic
election with the incumbent President, Ellen Johnson Sirleaf, being
elected for a further five year term.
Operational Review
Palm Bay Estate
The Palm Bay Estate is located 25 kilometres from the deep-water
port of Buchanan. LPD will be relocating its head office to
Buchanan, given its proximity to Palm Bay and the importance of
future operations at the port, where LPD plans to establish a
storage tank farm.
During the financial year, LPD achieved the significant
milestone of completing the first 1,100 hectares of new planting.
This planting has provided an additional benefit in strengthening
the skills base of the planting staff in preparation for a
significant increase in planting rates in the years to come. This
important employee development and training provides a key
foundation to the successful expansion of operations.
The capacity of the nursery on Palm Bay Estate has been
significantly increased to over 60 hectares, to support the 2012
and 2013 planting schedule.
Oil Palm Mill
In May 2011, the oil palm mill at Palm Bay Estate was
inaugurated following eight months of construction and testing. The
small but state-of-the-art mill is capable of processing five
tonnes of fresh fruit bunches ("FFB") per hour and is processing
the FFB harvested from some of the 3,500 hectares of rehabilitated
palms on Palm Bay.
The mill is strategically important to us for several reasons
including:
-- training and development of staff - the technology is very
similar to that in larger mills, providing staff with a solid
foundation in technology and processes for the acquisition and
implementation of larger capacity mills to service the future
growth in operations and production; and
-- early cash flows and establishment of a route to market - as
the only commercial operating mill in Liberia, this will facilitate
the establishment of key CPO marketing channels and customer
relationships, which will be of importance when larger volume
production comes on stream.
We were honoured to have the mill inaugurated by the Liberian
President, Ellen Johnson Sirleaf, reflecting the importance to
Liberia of the development of LPD's project and the implementation
of such value adding processing technology.
First Sales of CPO
First sales of CPO into the Liberian market occurred during the
year and a larger sales process is on-going as the volumes of CPO
production ramp up.
Butaw Estate
The main activity at Butaw consisted of the establishment of the
first nursery and the upgrading of essential facilities including
roads, bridges, housing, power and schools.
The nursery was established in September 2011 and now covers
over 40 hectares, to support the 2012 and 2013 planting
schedule.
As the second development site, Butaw is progressing well and
the Company is excited about the excellent future potential of this
Estate. Our current strategy is for Butaw to be planting at a
similar rate to Palm Bay by 2013.
Butaw is located 42 kilometres from the deep water port of
Greenville where LPD intends to establish a storage tank farm.
River Cess
In 2010 we signed a Memorandum of Understanding ("MOU") with the
elected representatives of the people of River Cess County in order
to work with them to develop a significant oil palm concession. The
leaders of River Cess County are very supportive towards the
establishment of commercial oil palm agriculture in their county,
given the considerable employment and other economic benefits it
will bring to this region.
The expansion potential is up to 80,000 hectares and River Cess
is ideally located in-between our existing estates, allowing these
projects to benefit from infrastructure works at both Butaw and
Palm Bay and more importantly access to deep water ports at
Buchanan and Greenville.
We are now working with local officials in order to convert the
MOU into a full concession with the Liberian government.
Financial Review
The loss of the Group for the 12 months ended 31 December 2011
of $2,167,000 (2010: $4,401,000) was in line with expectations.
Cash held by the Group as at 31 December 2011 was $1,329,000 (2010:
$6,760,000), which did not include cash held by LPD.
In October 2011, LPD entered into a US$10 million term loan
facility agreement for 6 months with two companies affiliated with
JV partner BioPalm. This loan to BioPalm of cash that was surplus
to the requirements of the JV for the period of the loan, provided
the benefit of significantly greater rate of return than is
available from deposit with the major banks. The loan was repaid on
time and in full on 5 April 2012, together with accrued interest
and an arrangement fee totalling US$350,684.93.
As at 31 December 2011, cash held by LPD was $7,854,000 (2010:
n/a), which does not include the above US$10 million loan to
BioPalm which has now been fully repaid.
The Community
We have always been committed to the social and economic
development of the local communities in which we operate. Having an
operating mill in place provides a very important and valuable
platform to train local workers and increase the skills base for
future development. Now that the mill is producing at full
capacity, the employees are gaining first-hand experience in the
operation and management of a palm oil mill. Not only will this
offset training costs in the future when production will increase
significantly, but it will also be a direct influence on the
practical engineering, technical skills and operational knowledge
gained by the employees.
Furthermore, we continue to support the education of local
children, requiring the school attendance of employee's children,
whilst also opening the classrooms to children in the area
neighbouring the estates. Our schools now have approximately 580
students with a curriculum covering a range of disciplines.
All of these initiatives mean we are playing a significant part
in creating a new generation of skilled workers to develop the
Liberian economy.
Personnel
During the period, we were pleased to announce the addition of
two key senior personnel in Liberia, Mr Declan Griffin as Head of
Country - Liberia, and Mr Sashi Nambiar as Head of Operations.
Mr Griffin has the overall responsibility for all in-country
operations, including the finance and administration functions, and
has almost 30 years of global experience working in similar
roles.
Mr Nambiar has 32 years' experience in all aspects of oil palm
estates and has supervised the establishment and development of
estates with a combined area of more than 100,000 hectares,
including managing over 20,000 hectares of new planting development
at Ketapang, Indonesia.
During the period, Mr Peter Bayliss resigned from his position
as Managing Director of the Company in order to pursue other
business interests, with his Director functions assumed by Mr
Geoffrey Brown, the Company's Executive Plantations Director. Mr
Brown has been an integral part of the Company's leadership team
since the initial involvement in the Liberian project, and he
brings almost 40 years' experience in the development and
management of oil palm estates around the world. The Board would
like to thank Mr Bayliss for his significant contribution to the
Company.
On behalf of the Board I would like to welcome Mr Griffin and Mr
Nambiar to our team and to thank all our employees for the
tremendous progress that has been achieved during the year.
Outlook
The palm oil market fundamentals continue to look positive, with
significant shortfalls in production at a time when demand is
expected to continue increasing. The palm oil price continues to
strengthen, pushing towards the highest recorded pricing in the
last twelve months.
I would like to thank all those involved in the Company for
their significant contribution as well as shareholders for their
support, and I look forward to updating you on the continued
progress in the year ahead and the creation of value for all
stakeholders.
Michael Frayne
Executive Chairman
GROUP Statement OF COMPREHENSIVE INCOME
Year ended 31 December 2011
Note 2011 2010
$'000 $'000
Revenue 385 -
Administrative expenses (2,279) (3,538)
Share options expense (15) (694)
--------- -------------
Operating loss (1,909) (4,232)
Interest payable - (169)
Share of operating loss of joint (1,010) -
venture
Profit on disposal of assets to 752 -
joint venture
--------- -------------
Loss for the year before and after
taxation (2,167) (4,401)
--------- -------------
Other comprehensive income
Exchange gains/(losses) arising
on translation of foreign operations 60 (295)
--------- -------------
Total comprehensive income for
the year (2,107) (4,696)
--------- -------------
Loss per share expressed in cents
per share
- Basic & diluted (1.7) (4.7) cents
cents
Group STATEMENT OF FINANCIAL POSITION
As at 31 December 2011
Registered Number 5555087
2011 2010
Note $'000 $'000
ASSETS
Non-current assets
Investment in joint venture 20,982 -
Property, plant and equipment - 15,554
---------- ----------
20,982 15,554
Current assets
Inventories - 508
Receivables 602 490
Cash & cash equivalents 1,329 6,760
---------- ----------
1,931 7,758
LIABILITIES
Current liabilities
Trade and other payables 175 545
175 545
Net current assets 1,756 7,213
NET ASSETS 22,738 22,767
---------- ----------
SHAREHOLDERS' EQUITY
Share capital 1,914 1,796
Share premium 29,489 27,544
Warrant and option reserve 2,092 2,237
Foreign exchange reserve (26) (86)
Retained loss (10,731) (8,724)
---------- ----------
Total equity 22,738 22,767
---------------------------------------- ---------- ----------
STATEMENT OF Cash FlowS
For the year to 31 December 2011
Group Group Company Company
2011 2010 2011 2010
$'000 $'000 $'000 $'000
---------------------------------- ---- --------- --------- --------- ---------
Cash flows from operating
activities
Loss for the year before
and after taxation (2,167) (4,401) (2,154) (3,693)
Interest payable - 169 - 169
Decrease/(increase) in
receivables (111) 63 (408) 355
Decrease in payables (370) (2,654) (221) (2,779)
Increase in inventories - (508) - -
Depreciation 2 494 2 31
Share options expensed 15 694 15 694
Share of operating loss
of joint venture 1,010 - 1,010 -
Profit on disposal of assets (752) - - -
to joint venture
Net cash outflow from operating
activities (2,373) (6,143) (1,756) (5,223)
Cash flows from investing
activities
Loans to subsidiaries - - - (6,053)
Investment in joint venture (4,658) - (4,658) -
Payments to acquire property, - (5,001) - -
plant and equipment
--------- --------- --------- ---------
Net cash outflow from investing
activities (4,658) (5,001) (4,658) (6,053)
Cash flows from financing
activities
Repayment of short term
borrowings - (1,040) - (1,040)
Issue of ordinary share
capital 2,063 19,960 2,063 19,960
Share issue costs - (655) - (655)
Interest paid - (169) - (169)
--------- --------- --------- ---------
Net cash inflow from financing
activities 2,063 18,096 2,063 18,096
Net (decrease)/increase
in cash and cash equivalents (4,968) 6,952 (4,351) 6,820
Cash and cash equivalents
at beginning of period 6,760 100 6,443 53
Exchange (losses)/gains
on cash and cash equivalents (463) (292) (763) (430)
--------- --------- --------- ---------
Cash and cash equivalents
at end of period 1,329 6,760 1,329 6,443
---------------------------------------- --------- --------- --------- ---------
GROUP Statement of Changes IN EQUITY
For the period ended 31 December 2011
Called Share Foreign Warrant
up share premium exchange and option Retained Total
capital reserve reserve reserve earnings equity
----------------------- ----------- ---------- ----------- ------------- ----------- ---------
GROUP $'000 $'000 $'000 $'000 $'000 $'000
----------------------- ----------- ---------- ----------- ------------- ----------- ---------
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
----------------------- ----------- ---------- ----------- ------------- ----------- ---------
As at 1 January
2011 1,796 27,544 (86) 2,237 (8,724) 22,767
----------------------- ----------- ---------- ----------- ------------- ----------- ---------
Share capital
issued 118 1,945 - - - 2,063
----------------------- ----------- ---------- ----------- ------------- ----------- ---------
Exercise of warrants
and options - - - (160) 160 -
----------------------- ----------- ---------- ----------- ------------- ----------- ---------
Share based payments - - - 15 - 15
----------------------- ----------- ---------- ----------- ------------- ----------- ---------
Total comprehensive
income for the
period - - 60 - (2,167) (2,107)
----------------------- ----------- ---------- ----------- ------------- ----------- ---------
As at 31 December
2011 1,914 29,489 (26) 2,092 (10,731) 22,738
----------------------- ----------- ---------- ----------- ------------- ----------- ---------
Notes to financial statements
For the period 1 January 2011 to 31 December 2011
Basis of preparation
These financial statements have been prepared under the
historical cost convention and in accordance with International
Financial Reporting Standards ("IFRS") as adopted by the European
Union and IFRIC interpretations and with those parts of the
Companies Act, 2006 applicable to companies reporting under
IFRS.
These financial statements have been prepared on a going concern
basis.
Investment in joint venture
On 3 February 2011 the Group 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:
$'000 $'000
50% share of the net assets of Liberian
Palm Developments Limited 21,992
Less net assets transferred to Liberian
Palm Developments Limited:
Cash (4,658)
Assets under construction (3,222)
Leasehold concession (7,644)
Plant and equipment (527)
Plantation development (4,679)
Other (510)
(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 method or the proportionate consolidation
method. However the latter may cease to be an option in the future
due to IFRS 11 becoming effective. Due to these changes the
Directors have decided to adopt the equity method for the Group's
interest in Liberian Palm Developments Limited. The results of the
joint venture for the year to 31 December 2011 were as follows:
31 December
2011
$'000
Non-current assets 22,083
Current assets 20,989
Non-current liabilities -
Current liabilities (1,106)
TOTAL NET ASSETS 41,966
Income 229
Expenses (2,249)
Loss after tax (2,020)
The Company, through its investment in Equatorial Biofuels
(Guernsey) Limited, owns a 50% interest in Liberian Palm
Developments Limited. The Group's interest in Liberian Palm
Developments Limited is as follows:
31 December
2011
$'000
Interest in joint venture at 1 January
2011 -
Transfer of assets to joint venture 21,992
Share of losses of joint venture (1,010)
Dividend received from Liberian Palm
Developments Limited -
Interest in joint venture at 31 December
2011 20,982
Availability of accounts
The audited Annual Report and Financial Statements for the 12
months ended 31 December 2011 will shortly be sent to shareholders
and published at www.epoil.co.uk.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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