TIDMPAL
RNS Number : 3942P
Equatorial Palm Oil plc
18 August 2014
18 August 2014
EQUATORIAL PALM OIL PLC
("EPO" or the "Company")
Interim Results for the six months ended 30 June 2014
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 2014 (the "Period").
Highlights for the Period:
-- Full activities resumed at both Palm Bay and Butaw estates
following the provision of funding from KL-Kepong International
Ltd., a wholly owned subsidiary of Kuala Lumpur Kepong Berhad
("KLK"), to Liberian Palm Developments ("LPD")
-- KLK is the largest shareholder in EPO and the 50:50 joint
venture partner with EPO in the operating company LPD
-- EPO Board strengthened by the appointment of KLK personnel
-- Joint venture agreement signed with KLK Agro Plantations Pte
Ltd ("KLK Agro"), a wholly owned subsidiary of KLK for the
operation and funding of LPD
-- Additional funding of up to US$35.5m available to LPD,
through the issue of equity and funding commitments from KLK Agro,
of which US$15m has been provided to date
-- Change of accounting reference date from 31 December to 30 September
Michael Frayne, Non-executive Chairman of Equatorial Palm Oil
plc commented:
"The first half of 2014 has been very much part of rebuilding
the Company as we welcome KLK as our largest shareholder and joint
venture partner in LPD. Our Liberian oil palm development is once
again fully operational and the securing of up to $35.5m in funding
was a significant milestone for the business.
We welcome to the Board our KLK colleagues led by Lee Oi Hian,
the Chief Executive Officer of KLK. The expertise not only at Board
level but also at operational level in Liberia has been
significantly enhanced with KLK's involvement.
Our goal of becoming a sustainable and efficient producer of oil
palm products is on track and we are encouraged by the continual
support of the communities in which we operate who want to
re-invigorate the Liberian agricultural industry through the
development of oil palm."
For further information, please contact:
Equatorial Palm Oil plc
Geoffrey Brown (Executive Director) +44 (0) 20 7493
www.epoil.co.uk 7671
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
CHAIRMAN'S STATEMENT
Joint Venture Agreement
During the period under review, the Company signed a joint
venture agreement ("JVA") with KLK Agro for the funding and
operation of LPD.
Funding
Under the terms of the JVA, LPD will receive up to US$35.5m in
cash and funding commitments, of which US15m was received in April
2014 as a result of the issue of new equity in LPD to KLK Agro and
EPO (through its wholly owned subsidiary Equatorial Biofuels
(Guernsey) Limited ("EBGL")), which have each subscribed for
US$7.5m of such new equity in LPD (the "Initial Funding").
In addition to the Initial Funding, KLK Agro has agreed to
provide any further funding required by LPD up to a maximum of
US$20.5m (the "KLK Funding Commitment") which may, at the
discretion of KLK Agro, be provided by way of debt or preferential
equity finance which will incur interest or preferential dividends
(as appropriate) at USD LIBOR plus a maximum of 500 basis points.
LPD also has the option to obtain financing from parties other than
KLK irrespective of whether or not the KLK Funding Commitment has
been fully invested in LPD and provided that the terms of such
external financing are better than that of KLK's Funding
Commitment.
The Initial Funding and the KLK Funding Commitment were also
achieved with no further dilution for EPO shareholders.
Under the terms of the JVA, it has been agreed that certain
matters can only be approved with the unanimous consent of the
shareholders of LPD or the directors of LPD (as appropriate). The
JVA also sets out standard warranties and indemnities which EPO and
EBGL have been required to give to KLK Agro in relation to LPD's
business and assets.
On 23 April 2014, the Company announced that it had issued
1,950,000 new ordinary shares of 1p each in the Company pursuant to
the exercise of warrants at a price of 8 pence per Ordinary Share,
raising GBP156,000 (US$262,275).
Operations of LPD
LPD has entered into an agreement with Taiko Plantations Sdn.
Bhd. ("Taiko"), a wholly owned subsidiary of KLK (the "Management
Agreement"), under the terms of which Taiko has been appointed to
manage and conduct LPD's operations. The Management Agreement can
be terminated by either party giving three months' written notice
to the other party.
Under the terms of the Management Agreement, Taiko shall be paid
a management fee by LPD as follows:
i. US$1m per annum for the first four years from the date of
signing of the Management Agreement; and
ii. thereafter, a fee equivalent to 2.0 per cent. of the gross
sale proceeds of palm products achieved by LPD.
EPO Board Changes
During the Period the following appointments were made to the
EPO Board:
Mr Lee Oi Hian, aged 63
Mr Lee Oi Hian has been the Chief Executive Officer of KLK since
2001. He joined the Company in 1974 as an executive and was
appointed to the Board of KLK in 1985. In 1988, he was appointed as
Managing Director and became Chairman of KLK Group in 1993. He
subsequently held the post of joint Chairman and Chief Executive
Officer until 2008, when he relinquished his role as Chairman,
remaining as Chief Executive Officer of the Group.
Mr Teh Sar Moh Nee, aged 58
Mr Teh Sar Moh Nee started his planting career in 1976 in Sime
Darby Plantation Berhad before joining the KLK Group in 1984. He
serves as Regional Director (Peninsular Malaysia) of the KLK Group
and has also held the position of Chief Executive Officer at Ladang
Perbadanan-Fima Berhad since May 2008.
Ms Yap Miow Kien, aged 45
Ms Yap Miow Kien joined KLK in 2002 and is currently its Company
Secretary and Senior General Manager (Legal and Secretarial).
In addition, Mr Joseph Jaoudi and Mr Anthony Samaha resigned
from the Board during the Period. Mr Michael Frayne became the
Non-executive Chairman with Mr Geoffrey Brown continuing as
Executive Director.
Port Access
LPD is in final negotiations with the National Port Authority of
Liberia ("NPA") regarding a lease for land at the Port of Buchanan
which is 24 kilometres from the Palm Bay estate. This port land has
been identified as suitable to build a tank farm and storage
facility for oil palm products. Once the tank farm facility has
been built, LPD will use road tankers to transport its products
from Palm Bay estate to the Port of Buchanan. The products will be
stored in tanks of suitable size from where they will then be
transferred onto parcel tankers that can berth at the port.
LPD has also entered into discussions with the NPA in respect to
securing land in the Port of Greenville, which is close to Butaw
estate, for the establishment of a tank farm and storage
facility.
River Cess
In 2010, a Memorandum of Understanding ("MOU") was signed with
the elected representatives of the people of River Cess County in
order to work with them to develop a significant palm oil
concession. With an expansion potential of up to 80,000 hectares
and an optimum location between our two existing estates, River
Cess remains a key development for the Company. Discussions are
ongoing with local officials in order to convert the MOU into a
full concession with the Liberian Government.
The Community and Sustainability
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.
The communities in which we operate are truly supportive of
developing agriculture as a sustainable livelihood for all their
people. We only operate within the vicinity of consenting
communities (free, prior and informed consent).
In addition, social responsibility remains a key commitment for
us, and we continue to invest in the social and economic
development of the local communities in and outside of our estates.
The skills of the local workforce are imperative to the efficiency
of our oil palm development and we have recruited a number of
experts from Indonesia and Malaysia who are working on the estates
and bring with them their considerable knowledge and expertise of
palm oil operations. Currently, we have over 1,200 workers with
approximately 50% being women.
LPD continues to provide schools, health clinics, housing,
roads, infrastructure and drinking water for citizens and
communities who live both on and outside the Palm Bay and Butaw
estates.
Ebola Update
At present there are no known occurrences of the Ebola virus on
or near our estates. We have introduced a number of preventative
measures at all of our sites, including hand washing and sanitation
at multiple points, screening/barrier points in our health clinics,
ongoing education and briefings to staff/workers and our local
communities about hygiene and the precautionary measures that
should be taken to minimise the possibility of becoming infected
with the virus. LPD is also donating necessary medical equipment
and supplies to the local authority medical clinics.We are closely
monitoring the situation on and around our estates and working in
conjunction with the Liberian government and other relevant local
and international authorities to support all efforts to deal with
this crisis.
Outlook
EPO now sits in a significantly stronger position as opposed to
the same time last year. The signing of the JVA and securing the
$35.5m of cash and funding commitments was the key for resumption
of normal operations at the Liberian estates.
The growth in the palm oil market continues to be underpinned by
compelling demographic and macro-economic trends. We remain
confident that palm oil prices will improve as a result of limited
supply and continuing strong demand.
Liberia remains politically stable under democratic rule and we
are proud to be playing a part in the continuing programme of
redevelopment in the Liberian agriculture industry and look forward
to a successful 2014, delivering on our strategic objectives and
creating shareholder value.
Michael Frayne
Chairman
18 August 2014
EQUATORIAL PALM OIL PLC
GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIOD ENDED 30 JUNE 2014
Period ended Period ended Year ended
30 June 2014 30 June 2013 31 December
2013
Note (unaudited) (unaudited) (audited)
$'000 $'000 $'000
Revenue - 35 36
Administrative expenses (628) (898) (3,282)
Share options expense 5 - (97) (98)
Operating loss (628) (959) (3,344)
--------------- --------------- --------------
Interest income 206 108 366
Write down of loan to joint
venture - - (3,828)
Share of operating loss
of associate (2013 - joint
venture) 3 (323) (805) (1,395)
Loss for the period before
and after taxation attributable
to owners of the parent (745) (1,656) (8,201)
--------------- --------------- --------------
Other comprehensive income
Exchange gains/(losses)
arising on translation
of foreign operations 316 (46) 541
--------------- --------------- --------------
Total comprehensive income
for the period attributable
to owners of the parent (429) (1,702) (7,660)
--------------- --------------- --------------
Loss per share expressed
in cents per share
- Basic & diluted 2 (0.2) cents (1.1) cents (4.4) cents
EQUATORIAL PALM OIL PLC
GROUP STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2014
30 June 2014 31 December
2013
(unaudited) (audited)
Note
$'000 $'000
ASSETS
Non-current assets
Investment in associate
(2013 - joint venture) 3 25,015 17,708
Receivables from associate
(2013 - joint venture) 5,356 5,150
30,371 22,858
-------------- -------------
Current assets
Trade and other receivables 58 128
Cash & cash equivalents 2,658 10,364
-------------- -------------
2,716 10,492
LIABILITIES
Current liabilities
Trade and other payables 298 394
298 394
-------------- -------------
Net current assets 2,418 10,098
-------------- -------------
NET ASSETS 32,789 32,956
============== =============
SHAREHOLDERS' EQUITY
Share capital 4 5,598 5,565
Share premium 46,791 46,562
Warrant and option reserve 5 729 1,810
Foreign exchange reserve 937 621
Retained loss (21,266) (21,602)
Total equity 32,789 32,956
============== =============
EQUATORIAL PALM OIL PLC
GROUP CASH FLOW STATEMENT
FOR THE PERIOD ENDED 30 JUNE 2014
Period ended Period ended Year ended
30 June 2014 30 June 2013 31 December
2013
(unaudited) (unaudited) (audited)
$'000 $'000 $'000
Cash flows from operating activities
Loss for the year before and
after taxation (745) (1,656) (8,201)
Decrease/(increase) in receivables 70 546 (31)
Increase/(decrease) in payables (96) 185 211
Write down of loan to joint venture - - 3,828
Share options expensed - 97 98
Interest income (206) - (366)
Operating expenses settled in
shares - - 375
Share of operating loss of joint
venture 323 805 1,395
--------------- --------------- --------------
Net cash outflow from operating
activities (654) (23) (2,691)
--------------- --------------- --------------
Cash flows from investing activities
Funds invested in and loaned
to associate/joint venture (7,630) (5,656) (9,045)
Proceeds from assignment of loan - - 2,000
Net cash outflow from investing
activities (7,630) (5,656) (7,045)
--------------- --------------- --------------
Cash flows from financing activities
Issue of ordinary share capital 262 4,976 19,701
Share issue costs - (129) (693)
Loan funds received - 335 -
--------------- --------------- --------------
Net cash inflow from financing
activities 262 5,182 19,008
--------------- --------------- --------------
Net (decrease)/increase in cash
and cash equivalents (8,022) (497) 9,272
Cash and cash equivalents at
beginning of period 10,364 551 551
Exchange gains/(losses) on cash
and cash equivalents 316 (45) 541
Cash and cash equivalents at
end of period 2,658 9 10,364
--------------- --------------- --------------
EQUATORIAL PALM OIL PLC
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 30 JUNE 2014
Called Foreign Warrant
up share Share premium exchange and option Retained Total equity
capital reserve reserve reserve earnings
$'000 $'000 $'000 $'000 $'000 $'000
As at 1 January
2013 1,969 30,402 80 1,466 (13,881) 20,036
Share capital issued 476 4,500 - - - 4,976
Cost of share issue
including warrants
issued - (404) - 275 - (129)
Expiry of warrants - - - (480) 480 -
Share based payments - - - 97 - 97
Total comprehensive
income for the period - - (46) - (1,656) (1,702)
As at 30 June 2013 2,445 34,498 34 1,358 (15,057) 23,278
----------- --------------- ----------- -------------- ----------- ----------------
As at 1 January
2013 1,969 30,402 80 1,466 (13,881) 20,036
Share capital issued 3,596 17,579 - - - 21,175
Cost of share issue
including warrants
issued - (1,419) - 726 664 (693)
Expiry of warrants - - - (480) 480 -
Share based payments - - - 98 - 98
Total comprehensive
income for the period - - 541 - (8,201) (7,660)
As at 31 December
2013 5,565 46,562 621 1,810 (21,602) 32,956
----------- --------------- ----------- -------------- ----------- ----------------
Share capital issued 33 229 - - - 262
Exercise and expiry
of warrants and
options - - - (1,081) 1,081 -
Total comprehensive
income for the period - - 316 - (745) (429)
As at 30 June 2014 5,598 46,791 937 729 (21,266) 32,789
----------- --------------- ----------- -------------- ----------- ----------------
EQUATORIAL PALM OIL PLC
NOTES TO THE INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 JUNE 2014
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 2013 Annual Report. The financial information
for the half year ended 30 June 2014 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 2013 included within this report does not constitute the
full statutory accounts for that period. The statutory Annual
Report and Financial Statements for 2013 have been filed with the
Registrar of Companies. The Independent Auditors' Report on that
Annual Report and Financial Statement for 2013 was unqualified and
did not contain a statement under 498(2) or 498(3) of the Companies
Act 2006.
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 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 2014 30 June 2013 31 December 2013
(unaudited) (unaudited) (audited)
$'000 $'000 $'000
Loss for the period (745) (1,656) (8,201)
Weighted average number of Ordinary
shares of 1p in issue 355.0 million 145.7 million 184.8 million
Loss per share - basic (0.2) cents (1.1) cents (4.4) cents
3. Investment in associate (2013 - joint venture)
The Company, through its investment in Equatorial Biofuels
(Guernsey) Limited, owns a 50% interest in Liberian Palm
Developments Limited ("LPD").
During the period, a new Joint Venture Agreement ("JVA") was
signed pursuant to which cash and funding commitments of up to
$35.5m is being made available to be provided to LPD. Under the
JVA, the Company retained a 50% economic and voting interest in
LPD. Also under the JVA, KLK has the power to appoint the Chairman
to the Board of LPD and in the case of a tied vote the Chairman has
the casting vote. For this reason, the Company accounts for its
investment in LPD as an equity investment in which it has
significant influence. There is no change to the recognition and
measurement of the Company's investment in LPD when compared to the
prior periods. However, the investment is now described within the
statement of comprehensive income and the statement of financial
position as "Investment in associate" rather than "Investment in
joint venture".
The Company's interest in LPD is as follows:
$'000
Interest in joint venture at 1 January
2013 19,103
Share of losses of joint venture (805)
Interest in joint venture at 30 June
2013 18,298
Interest in joint venture at 1 January
2013 19,103
Share of losses of joint venture (1,395)
Interest in joint venture at 31 December
2013 17,708
Interest in joint venture at 1 January
2014 17,708
Investment in associate 7,630
Share of losses of associate (323)
Interest in associate at 30 June 2014 25,015
The results of Liberian Palm Developments Limited for the period
of six months to 30 June 2014 were as follows:
30 June 31 December
30 June 2014 2013 2013
$'000 $'000 $'000
Non-current assets 49,100 37,322 40,155
Current assets 17,343 7,807 10,574
Current liabilities (16,413) (8.740) (15,313)
TOTAL NET ASSETS 50,030 36,389 35,416
Income 30 132 160
Expenses (675) (1,741) (2,949)
Loss after tax (645) (1,609) (2,789)
4. Called up share capital
Period ended Period ended Period ended
30 June 30 June 2013 31 December
2014 2013
Allotted, called up and fully paid $'000 $'000 $'000
-------------------------------------- -------------- --------------- --------------
356,277,502 (31 December 2013 -
354,327,502) Ordinary shares of
1p each 5,598 2,445 5,565
-------------------------------------- -------------- --------------- --------------
During the period the Group issued 1,950,000 shares at an
average price of 8 pence per share ($0.13 cents).
5. Share based payments
Warrants
Details of the warrants outstanding during the Period are as
follows:
Weighted
Number of average exercise
warrants price
Outstanding at 1 January 2013 8,188,928 17.5p
Issued during the period 28,716,590 8.3p
Expired during the period (5,990,171) 17.5p
-------------- -------------------
Outstanding and exercisable
at 1 January 2014 30,915,347 9.0p
Exercised during the period (1,950,000) 8.0p
Expired during the period (10,000,000) 8.0p
-------------- -------------------
Outstanding and exercisable
at 30 June 2014 18,965,347 9.6p
As at 30 June 2014 the following warrants to subscribe for
Ordinary shares were outstanding:
Category Over Number of Shares Expiry Date
Apr-15 Warrants, exercisable 11,950,000 6 April 2015
at 8.0p
Jul-16 Warrants, exercisable 4,816,590 16 July 2016
at 10.0p
5yr Warrants, exercisable 2,198,757 26 February 2015
at 17.5p
Total 18,965,347
Share options
Details of the options outstanding during the Period are as
follows:
Outstanding Expired Outstanding Exercisable
at during the at at
1 January period 30 June 2014 30 June
2014 2014
---------------------- ------------- ------------- --------------- -------------
Options exercisable
at 17.5p 9,770,200 (9,770,200) - -
6. Availability of financial information
Copies of this interim financial information will be available
on the Company's website.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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