TIDMPAL
RNS Number : 3110K
Equatorial Palm Oil plc
29 July 2013
29 July 2013
EQUATORIAL PALM OIL PLC
("EPO" or the "Company")
Audited Results for the year ended 31 December 2012
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 2012.
Financial Highlights:
-- Loss of US$3,814,000 (2011: US$2,167,000)
-- Cash held by EPO at year end was US$551,000 (2011: US$1,329,000)
-- Liberian Palm Developments Ltd. ("LPD"), EPO's 50% joint
venture company which holds the oil palm assets, appointed AfriExim
Bank to arrange long term funding of the project
-- Final ESHIA studies completed at Palm Bay Estate by Coastal
and Environmental Services - this was a key milestone in relation
to our long term funding strategy
-- Discussions progressing with Biopalm Energy Limited
("Biopalm") regarding the delay in the provision of funding under
the joint venture agreement between EPO and Biopalm
-- Interim placing successfully completed to provide short term funding to LPD
Operational Highlights:
-- First oil palms planted at Butaw Estate
-- Appointment of OSC - the internationally accredited land clearing contractors
-- Suitable land identified at Buchannan Port for storage facility and tank farm
-- Head office moved from Monrovia to Buchanan to be closer to operations
Outlook:
-- The key objective for LPD in 2013 is to secure funding to
reactivate planting and ramp up the planting rate year on year with
a forward combined target of planting over 100,000 hectares by
2021.
-- LPD is positioned to produce its first commercial production
in 2014 from the oil palms planted in 2011, subject to the
availability of funding
Restoration of Trading:
Following completion of the placing announced this morning and
publication of the Company's Annual Report, trading of the
Company's Ordinary Shares on AIM will be restored at 7.45a.m
today.
Fundraising:
The Company is pleased to announce, following completion of the
placing being announced today and on 24 July 2013 that it will have
raised, in aggregate, funds of GBP2,481,946 from new and existing
institutional investors and directors of the Company.
Enquiries:
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 / Andrew Emmott 3494
Mirabaud Securities LLP (Broker) +44 (0) 20 7484
Peter Krens 3510
Pelham Bell Pottinger (Financial / Corporate
PR) +44 (0) 20 7861
Charlie Vivian / Joanna Boon 3232
CHAIRMAN'S STATEMENT
During 2012, Equatorial Palm Oil ("EPO") focussed on further
progress of its oil palm assets in Liberia, West Africa, and
setting the foundations for its large scale development. EPO has a
50:50 joint venture ("JV") share with Biopalm Energy Limited
("Biopalm") in all the oil palm assets held by Liberian Palm
Developments Limited ("LPD"), the JV company that EPO manages on
behalf of the JV partners.
Liberian Palm Developments Limited - Operational Review
Palm Bay
Land preparation remained a key focus throughout 2012 at Palm
Bay. LPD appointed Ore Search Civil Liberia, a South African-based
international earthmoving contractor, to assist in the land
preparation at Palm Bay. Ore Search Civil is an experienced
earthmoving contractor with many years of experience in West
Africa. In addition to building an accommodation camp for its
workers, the contractor set up a workshop to ensure that all its
machinery is both serviced and repaired in an expeditious manner so
as to ensure minimum downtime.
LPD planted 1,000 ha at Palm Bay in 2012 and is looking to
significantly increase this rate of planting given the progress
made by Ore Search Civil. LPD believes that it can comfortably
plant 3,000 ha per annum from 2014 onwards.
The production from the oil palms planted by LPD in 2011 is due
to come on-stream in Q4 of 2014, when those palms will yield
sufficient fruit to begin harvest. This will mark a significant
milestone for LPD. The workforce at Palm Bay Estate is already
trained to manage the entire end-to-end process of harvesting,
production and dispatch for sale, given that small volumes of crude
palm oil ("CPO") have already been sold from oil palms that were
existing on the estate when the concession was renewed in 2008.
However given that these older palms were planted in the 1970s,
their yield has reduced over their lifespan as would be expected in
the oil palm lifecycle. It is the intention of LPD to replant all
these older palms in 2013 and 2014.
Palm Oil Mill
LPD's oil mill at Palm Bay is the only commercial scale mill in
Liberia. The current capacity of the mill is 5 metric tonnes ("MT")
of fresh fruit bunches ("FFB") per hour, which will be increased to
10MT of FFB per hour in 2014 to accommodate the new production from
2011 plantings coming on-stream.
As production continues to increase and the palm oil from the
new harvest is produced, larger mills are planned to be installed
at both Palm Bay and Butaw which will enable 60MT of FFB to be
processed per hour. In essence, a new 60MT mill is planned to be
installed for every 10,000 ha of oil palms planted.
CPO will be sold in both the domestic and international market.
The current market provides favourable conditions due to an
increasing demand for CPO from both India and China. LPD is also
well placed to deliver CPO to key European and US markets through
achieving reduced transport costs in comparison to producers in
Indonesia and Malaysia.
Harvesting of FFB continued from our 30 year or more old oil
palms on Palm Bay, which produced small volumes of CPO that was
then sold into both international markets and locally in
Liberia.
The importance of having a working mill for the purpose training
of staff cannot be under-estimated. As our new production comes
on-stream and volumes ramp up, we have the comfort of knowing that
our Liberian staff will have been sufficiently trained to run
larger milling operations where the technology and know-how is the
same as that of our existing mill.
Port Access
LPD has identified suitable land at the Port of Buchanan in
order to set up a tank farm facility. Accordingly, LPD is in
discussions with the National Port Authority of Liberia ("NPA")
regarding a lease for this land at the Port of Buchanan. Once the
planned tank farm facility has been built, LPD will use CPO tankers
to transport its products by road from Palm Bay Estate to the Port
of Buchanan. The products will be stored in tanks of suitable size
where they will then be transferred onto parcel tanker ships that
can berth at the port.
The Port of Buchanan has been operating well for the last two
years and is also the place of export for iron ore, logs, rubber
and wood chips.
LPD will also enter into discussions with the NPA about securing
land in the Port of Greenville, which is close to the Butaw Estate,
for the establishment of a tank farm and storage facility.
During the period LPD moved its head office from Monrovia to
Buchanan in order to be closer to its operations, and the office at
Buchanan has suitable land to operate as a logistics hub whilst
also being conveniently located near the Port of Buchanan.
Butaw Estate
The Butaw Estate achieved a major milestone whereby the first
plantings of oil palms were made in 2012. In addition to the 250 ha
planted in the last few months of 2012, LPD continued to clear land
to enable further plantings to continue into 2013. Butaw remains a
very attractive place to grow oil palm and work is on-going so as
to ramp up the planting rate in 2013.
The Butaw Estate is conveniently located 42km from the deep
water port of Greenville from which LPD intends to export its
products. The Port of Greenville is in the process of being
upgraded by the NPA and will allow ships to berth of a size
suitable for LPD's needs.
River Cess Expansion Area
With an expansion potential of up to 80,000 ha and an optimum
location between our two existing estates, River Cess Expansion
Area remains a key development for LPD. Detailed business plans
have been submitted to the National Investment Commission of
Liberia whereby a Joint Ministerial Committee will be formed by the
Liberian Government in order to draw up a concession agreement.
LPD has strong support from the local communities in River Cess
County for a concession to be granted to LPD. There is no industry
of any magnitude in River Cess County such that the development of
an oil palm industry will bring great benefits to the local
population whilst helping to reinvigorate the Liberian agricultural
industry.
Funding of LPD
In December 2010, the Company entered into and announced a joint
venture with Biopalm. As agreed under the terms of the joint
venture agreement dated 10 December 2010 entered into between
Biopalm and EPO (the "Investment Agreement"), EPO, in February
2011, transferred its oil palm assets in Liberia together with
US$7.5m to LPD and Biopalm transferred US$22.5 million to LPD.
Under the Investment Agreement, Biopalm committed to provide a
guarantee against external funding raised by LPD up to US$30m (the
"External Funding"). It was stipulated that in the event that the
External Funding is not arranged within agreed timelines, Biopalm
shall contribute any amounts required by LPD up to US$30m.
On 8 July 2013, the Company announced that it issued a written
notice to Biopalm setting out that Biopalm is in material breach of
its obligations under the Investment Agreement.
As a result, EPO has advanced $6.0m to LPD to date (excluding
the Loan referred to below), in anticipation of the provision of
the External Funding by Biopalm
On 23 July 2013, Biopalm loaned US$400,000 to LPD as part of its
obligations under the Investment Agreement ("Biopalm Loan"). Under
the Investment Agreement the Biopalm Loan will be provided to LPD
at a fixed rate of 8 per cent per annum.
EPO continues to negotiate and work with Biopalm regarding
Biopalm's commitment to provide the External Funding, with a view
to an amicable solution being reached.
Towards the provision of the long term funding of LPD, African
Export-Import Bank ("AfrExim Bank") was appointed in February 2013
as a corporate advisory partner for the purpose of securing funding
of up to $140 million, which is expected to be sufficient to fund
the Palm Bay oil palm project.
AfrExim Bank was established in October 1993 by African
governments, African private and institutional investors, as well
as non-African financial institutions and private investors, for
the purpose of financing, promoting and expanding intra-African and
extra-African trade. The objectives of AfrExim Bank are to
stimulate consistent expansion, diversification and development of
African trade while operating as a profit-orientated, socially
responsible financial institution and as a centre of excellence in
African trade. AfrExim Bank has successfully led the financing for
another oil palm operation in West Africa.
Until the External Funding or long term funding of LPD is
secured, the operations of LPD will continue predominantly on a
care and maintenance basis. LPD has the foundations, infrastructure
and team in place to ramp up planting again upon this funding being
in place.
Financial review and EPO Fund Raising
The loss of the Group for the 12 months ended 31 December 2012
of $3,814,000 (2011: $2,167,000) was in line with expectations.
Cash held by the Group as at 31 December 2012 was $551,000 (2011:
$1,329,000).
On 28 March 2013, the Company announced the placement to new
institutional investors of 23,900,000 new ordinary shares to raise
gross proceeds of GBP2.39 million. These funds were applied to
working capital and to support LPD for the ongoing development of
its palm oil projects.
On 16 July 2013, the Company announced it had entered into short
term loan agreements with Adelise Services Limited ("Adelise"), a
company associated with Michael Frayne, Executive Chairman of EPO,
for the advance of GBP29,745 and US$425,000 to the Company (the
"Adelise Loans").
On 24 July 2013, the Company announced the placement to existing
and new shareholders of 37,637,000 ordinary shares for an aggregate
consideration of GBP2,258,220 (US$3,465,239) ("the Placing").
On 29 July 2013 the Company will announce an increase in the
size of the placing announced on 24 July 2013 by a further
3,728,762 ordinary shares for an additional aggregate consideration
of GBP223,726. As part of the placing to be announced on 29 July
2013, Adelise will convert GBP108,900 of the Adelise Loans into
ordinary shares.
The proceeds received by EPO from the placings announced on 24
July 2013 and to be announced 29 July 2013, will be used to advance
a loan of up to US$2.7m (the "Loan") to LPD. The Loan will be
provided on a short-term basis and the interest accrued on the Loan
will be payable at a fixed rate of 8 per cent per annum. The Loan
is repayable on demand and will be secured against the assets of
LPD. The Loan will provide short-term financing to support LPD's
ongoing development of its oil palm projects in Liberia, West
Africa, in advance of the resolution of Biopalm's External Funding
obligation and the anticipated long term debt funding being sourced
for LPD by AfrExim Bank.
The Company will also announce on 29 July 2013 that Adelise has
granted a US$500,000 revolving loan facility to the Company for the
purpose of the Company's general working capital ("the Adelise
Facility").
The placings announced on 24 July 2013 and to be announced 29
July 2013, the Biopalm Loan, the Adelise Facility and other loan
facilities provide funds, in aggregate, of US$4,828,546 (the "July
Raise").
The July Raise will clear current creditors and fund JV
operations on a care and maintenance basis for a period in excess
of 3 months. In addition to this a number of short term facilities
are at an advanced stage of negotiations but not yet finalised. The
Company is progressing discussions with additional providers of
funding, including Afriexim Bank, and is confident that additional
funding will be secured in the near term.
The Company will also announce on 29 July 2013 that Adelise has
granted a US$500,000 revolving loan facility to the Company for the
purpose of the Company's general working capital.
Community Development
Community development remains a key commitment for LPD and
during 2012 we continued to develop and invest in the social,
health and economic development of the local communities in which
we operate.
Coastal & Environmental Services ("CES"), the
internationally accredited environmental consultants based in South
Africa, were appointed in 2012 to conduct Environmental and Social
Impact Assessment ("ESIA") studies.
CES, established in 1990, is an independent specialist
environmental consultancy whose principal area of expertise lies in
assessing the various impacts of development on the natural, social
and economic environments through, among other instruments, the
environmental impact assessment process, and in so doing contribute
towards sustainable development.
The studies that are being undertaken by CES will contribute to
the social and environmental assessments that LPD has already
undertaken in order to ensure the development of its large-scale,
sustainable palm oil estates in line with international
guidelines.
Final ESIA reports for Palm Bay Estate have been submitted to
LPD by CES in June 2013. This is a key milestone for the Company,
being the culmination of over 2 years of work.
The environmental studies concluded, inter alia, that the oil
palm development at the Palm Bay Estate is acceptable from an
environmental and social perspective, and will result in
sustainable benefits to the area.
LPD provides training through a number of oil palm experts,
recruited from Indonesia and Malaysia, in order to enhance the
technical, operational and engineering skills of the workforce.
Circa 40% of our workforce is women. The workforce is learning
skills in nursery, field work, GIS, harvesting and mill
operations.
In working towards reinvigorating the agricultural industry in
Liberia, LPD, together with the Liberian Government, will introduce
an Out Growers Programme designed to facilitate small land holders
ability to grow oil palm and thereby support increased self
sufficiency within local communities.
In addition, LPD continues to provide health clinics, schools,
housing, roads, infrastructure and clean drinking water to the
communities in the areas where we operate.
Sustainability is a long term objective for EPO. Having become a
member of the Roundtable on Sustainable Palm Oil ("RSPO") in 2007,
EPO has consistently adopted best practices and procedures to
ensure that the CPO produced from our new plantings will meet with
international sustainability standards, thereby enabling our CPO to
be labelled "sustainable" palm oil.
Personnel
LPD have strengthened the team in Liberia by appointing Mr
Jasvinder Singh as Environmental and RSPO Compliance Officer.
Jasvinder previously worked with a major palm oil producer in
Malaysia where he helped them obtain RSPO certification in 2008 and
lead the team through surveillance and audit of an RSPO
process.
We have a very strong management team in Liberia. They have the
oil palm experience necessary to facilitate large-scale
developments. In addition we have a small number of Indonesian
estate staff that we have employed on short term contracts to train
our Liberian workforce. This has proved to be very effective.
I would like take this opportunity to thank all our staff for
their hard work and dedication over the last year. There is much to
do in the future, but we are confident in our ability to achieve
our objectives given the quality of our employees.
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. There is also strong interest in
oil palm development in West Africa given the lack of available and
suitable land in South-East Asia.
Liberia remains politically stable under democratic rule and is
a fast growing investment destination for multi nationals with
growth in the oil palm and resources market being underpinned by
the compelling demographic and macro-economic trends.
The key objective for LPD in 2013 is to secure funding to
reactivate planting and ramp up the planting rate year on year with
a forward combined target of planting over 100,000 hectares by
2021. LPD is positioned to produce its first commercial production
in 2014 from the oil palms planted in 2011. With the experienced
management team, robust economics and a strong investment case, EPO
can continue to deliver value and growth to shareholders.
I would like to thank our shareholders for their continued
support, and I look forward to updating you on our 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 2012
Note 2012 2011
$'000 $'000
Revenue 420 385
Administrative expenses (2,316) (2,279)
Share options expense (38) (15)
--------- -------------
Operating loss (1,934) (1,909)
Share of operating loss of joint
venture (1,880) (1,010)
Profit on disposal of assets to
joint venture - 752
--------- -------------
Loss for the year before and after
taxation (3,814) (2,167)
--------- -------------
Other comprehensive income
Exchange gains arising on translation
of foreign operations 106 60
--------- -------------
Total comprehensive income for
the year (3,708) (2,107)
--------- -------------
Loss per share expressed in cents
per share
- Basic & diluted 7 (3.0) (1.7) cents
cents
Group STATEMENT OF FINANCIAL POSITION
As at 31 December 2012
Registered Number 5555087
2012 2011
Note $'000 $'000
ASSETS
Non-current assets
Investment in joint venture 19,103 20,982
19,103 20,982
Current assets
Receivables 565 602
Cash & cash equivalents 551 1,329
---------- -----------
1,116 1,931
LIABILITIES
Current liabilities
Trade and other payables 183 175
183 175
Net current assets 933 1,756
NET ASSETS 20,036 22,738
---------- -----------
SHAREHOLDERS' EQUITY
Share capital 1,969 1,914
Share premium 30,402 29,489
Warrant and option reserve 1,466 2,092
Foreign exchange reserve 80 (26)
Retained loss (13,881) (10,731)
---------- -----------
Total equity 20,036 22,738
--------------------------------------- ---------- -----------
STATEMENT OF Cash FlowS
For the year to 31 December 2012
Group Group Company Company
2012 2011 2012 2011
$'000 $'000 $'000 $'000
---------------------------------- ---- --------- --------- --------- ---------
Cash flows from operating
activities
Loss for the year before
and after taxation (3,814) (2,167) (3,806) (2,154)
Decrease/(increase) in
receivables 37 (111) 36 (408)
Increase/(decrease) in
payables 8 (370) 8 (221)
Depreciation - 2 - 2
Share options expensed 38 15 38 15
Share of operating loss
of joint venture 1,880 1,010 1,880 1,010
Profit on disposal of assets - (752) - -
to joint venture
Net cash outflow from operating
activities (1,851) (2,373) (1,844) (1,756)
Cash flows from investing
activities
Investment in joint venture - (4,658) - (4,658)
Net cash outflow from investing
activities - (4,658) - (4,658)
Cash flows from financing
activities
Issue of ordinary share
capital 968 2,063 968 2,063
Net cash inflow from financing
activities 968 2,063 968 2,063
Net (decrease)/increase
in cash and cash equivalents (883) (4,968) (876) (4,351)
Cash and cash equivalents
at beginning of period 1,329 6,760 1,329 6,443
Exchange gains/(losses)
on cash and cash equivalents 105 (463) 98 (763)
--------- --------- --------- ---------
Cash and cash equivalents
at end of period 551 1,329 551 1,329
---------------------------------------- --------- --------- --------- ---------
GROUP Statement of Changes IN EQUITY
For the period ended 31 December 2012
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
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 and 1
January 2012 1,914 29,489 (26) 2,092 (10,731) 22,738
----------------------- ----------- ----------- ----------- ------------- ----------- ---------
Share capital
issued 55 913 - - - 968
----------------------- ----------- ----------- ----------- ------------- ----------- ---------
Exercise and
expiry of warrants
and options - - - (664) 664 -
----------------------- ----------- ----------- ----------- ------------- ----------- ---------
Share based
payments - - - 38 - 38
----------------------- ----------- ----------- ----------- ------------- ----------- ---------
Total comprehensive
income for
the period - - 106 - (3,814) (3,708)
----------------------- ----------- ----------- ----------- ------------- ----------- ---------
As at 31 December
2012 1,969 30,402 80 1,466 (13,881) 20,036
----------------------- ----------- ----------- ----------- ------------- ----------- ---------
Notes to financial statements
For the period 1 January 2011 to 31 December 2012
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.
Going concern
In December 2010, the Company entered into and announced a joint
venture with Biopalm Energy Limited ("Biopalm"), a subsidiary of
the SIVA Group, an Indian conglomerate. As agreed under the terms
of the joint venture agreement dated 10 December 2010 entered into
between Biopalm and EPO (the "JV Agreement"), EPO, in February
2011, transferred its oil palm assets in Liberia together with
US$7.5m to LPD and Biopalm transferred US$22.5 million to LPD.
Under the JV Agreement, Biopalm committed to provide a guarantee
(the "Guarantee") against external funding raised by LPD up to
US$30m (the "External Funding"). It was stipulated that in the
event that the External Funding is not arranged Biopalm shall
contribute any amounts required by LPD up to US$30m as debt on
commercial terms. To date this External Funding has not been
provided.
As a result, EPO has advanced $6.0m to LPD to date, excluding
the Loan of up to US$2.7m to be announced 29 July 2013, in
anticipation of the provision of the External Funding by
Biopalm.
On 8 July 2013, the Company announced that it issued a written
notice to Biopalm setting out that Biopalm is in material breach of
its obligations under the Investment Agreement. EPO continues to
negotiate and work with Biopalm regarding Biopalm's commitment to
provide the External Funding, with a view to an amicable solution
being reached.
On 24 July 2013, the Company announced that a loan of US$400,000
was made by the Company's joint venture partner Biopalm to LPD
("the Biopalm Loan").
On 24 July 2013, the Company announced the placement to existing
and new shareholders of 37,637,000 ordinary shares for an aggregate
consideration of GBP2,258,220 (US$3,465,239) ("the Placing").
On 29 July 2013 the Company will announce an increase in the
size of the placing announced on 24 July 2013 by a further
3,728,762 ordinary shares for an additional aggregate consideration
of GBP223,726. As part of the placing to be announced on 29 July
2013, Adelise will convert GBP108,900 of the Adelise Loans into
ordinary shares.
The proceeds received by EPO from the placings announced on 24
July 2013 and to be announced 29 July 2013 will be used to advance
a loan of up to US$2.7m (the "Loan") to LPD. The Loan will be
provided on a short-term basis and the interest accrued on the Loan
will be payable at a fixed rate of 8 per cent per annum. The Loan
is repayable on demand and will be secured against the assets of
LPD. The Loan will provide short-term financing to support LPD's
ongoing development of its oil palm projects in Liberia, West
Africa, in advance of the resolution of Biopalm's External Funding
obligation and the anticipated long term debt funding being sourced
for LPD by AfrExim Bank.
The Company will also announce on 29 July 2013 that Adelise has
granted a US$500,000 revolving loan facility to the Company for the
purpose of the Company's general working capital ("the Adelise
Facility").
The placings announced on 24 July 2013 and to be announced 29
July 2013, the Biopalm Loan, the Adelise Facility and other loan
facilities provide funds, in aggregate, of US$4,828,546 (the "July
Raise").
The July Raise will clear current creditors and fund JV
operations on a care and maintenance basis for a period in excess
of 3 months. In addition to this a number of short term facilities
are at an advanced stage of negotiations but not yet finalised.
Whilst there can be no certainty that these debt and equity
facilities will formally complete, the Directors remain confident
that these facilities combined with the July Raise will provide
sufficient funds to cover costs on a care and maintenance basis for
12 months if required.
Once the short term funding position is secured the Directors
plan to work with its JV partner Biopalm to find a longer term
funding solution such that returns planting levels of oil palms to
those originally planned. It is too early at this stage to indicate
what form this longer term funding solution may take.
These conditions indicate the existence of a material
uncertainty which may cast significant doubt about the Group's
ability to continue as a going concern. The financial statements do
not include the adjustments that would result if the Group was
unable to continue as a going concern, which would principally
relate to the impairment of the investment in the JV.
Investment in joint venture
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 31 December
2012 2011
$'000 $'000
Interest in joint venture at beginning
of year 20,982 -
Transfer of assets to joint venture - 21,992
Share of losses of joint venture (1,879) (1,010)
Dividend received from Liberian Palm
Developments Limited - -
Interest in joint venture at end of
year 19,103 20,982
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).
These assets were transferred into the joint venture in 2011.
Upon acquiring a 50% interest in Liberian Palm Developments
Limited in exchange for the transfer of assets, the following gain
arose:
2011 2011
$'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 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 2012 were as
follows:
31 December 31 December
2012 2011
$'000 $'000
Non-current assets 31,693 22,083
Current assets 8,089 20,989
Non-current liabilities - -
Current liabilities (1,576) (1,106)
TOTAL NET ASSETS 38,206 41,966
Income 1,693 229
Expenses (5,453) (2,249)
Loss after tax (3,760) (2,020)
Availability of accounts
The audited Annual Report and Financial Statements for the 12
months ended 31 December 2012 have today been 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
FR DBGDRCUDBGXI
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