TIDMPAL
RNS Number : 3907N
Equatorial Palm Oil plc
18 May 2015
18 May 2015
EQUATORIAL PALM OIL PLC
("EPO" or the "Company")
Interim Results for the six months ended 31 March 2015
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 31
March 2015 (the "Period").
Highlights for the Period:
-- Liberia was declared free from Ebola by the Government of
Liberia and the World Health Organisation on 9 May 2015
-- No instances of Ebola occurred on any of the Company sites in Liberia
-- EPO continues to work with all stakeholders for the prevention of Ebola
-- US$20.5m loan secured for the Company's 50 per cent. owned
joint venture operating company, Liberian Palm Developments Limited
("LPD")
-- EPO commits to High Carbon Stock ("HCS") Study to provide
clear parameters for the establishment of new plantations
Michael Frayne, Non-executive Chairman of Equatorial Palm Oil
plc commented:
"The outbreak of Ebola in 2014 made it a very challenging time
for our business. It is a credit to all the hard work of our
employees that we had no instances of Ebola on our estates, and we
are delighted to hear that the World Health Organisation has now
declared Liberia as free from Ebola. Working with the government
and the health NGOs we will continue with all the necessary
precautions to combat this disease.
"We are delighted to have signed a loan agreement with KLK Agro
Plantations Pte Ltd for the provision of US$20.5m in loan funding
to LPD. This funding will allow us to continue with the large scale
planting program at both our estates.
"Our goal of becoming a sustainable and efficient producer of
oil palm products is back on track and we are encouraged from the
continual support of the communities in which we operate who want
to re-invigorate the Liberian agricultural industry through the
development of the oil palm industry."
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 / James Bellman 3494
Mirabaud Securities LLP (Broker) +44 (0) 20 7484
Peter Krens 3510
CHAIRMAN'S STATEMENT
The Company 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
Kuala Lumpur Kepong Berhad ("KLK") in all the oil palm assets held
by Liberian Palm Developments Limited ("LPD"), the JV company.
Liberian Palm Developments Limited
Ebola
On 9 May 2015, Liberia was declared free from Ebola by the
Government of Liberia and the World Health Organisation after 42
days without a new case of the virus which killed more than 4,700
people in Liberia during the year-long epidemic.
Celebrations were somewhat muted by thoughts for those affected
by the terrible disease, and medical charity Medecins Sans
Frontieres has urged vigilance until the Ebola outbreak, the worst
in recorded history, has also been extinguished in neighbouring
Guinea and Sierra Leone.
EPO had no instances of Ebola on or around our operations at
Palm Bay and Butaw estates. EPO will continue to communicate with
the Government of Liberia and major health NGO's in relation to the
virus, in addition to taking a proactive role to ensure the Ebola
outbreak does not reappear. The Company has contributed medical
supplies to key health agencies in Liberia and, locally, has
engaged in information and education campaigns run from the two
health clinics established at our sites.
EPO is mindful of the significant impact the Ebola virus has had
throughout West Africa, with at least 10,000 people having died
since the outbreak first began last year. Although there has been a
significant reduction in the number of instances of infection from
the virus, the biggest risk perceived by governments and health
organisations is now one of complacency, and EPO is continuing to
adhere to stringent preventative and precautionary measures at all
our sites in accordance with guidelines set by the Government of
Liberia in order to prevent both the introduction of the disease
and the prevention of infection.
Despite the stringent precautions taken and avoidance of the
Ebola virus at our estates, the Ebola crisis had a significant
impact on the operations at our concessions due to restrictions on
the free movement of people implemented by the Government of
Liberia in order to contain the virus and closure of the schools we
operate on our estates, which were only reopened on 23 March
2015.
We currently have over 1,500 persons employed of whom 12 are
expatriate staff. No expatriate employees requested to leave the
country because of Ebola. During the height of the Ebola crisis all
our staff were kept in employment even though our operations were
very much restricted.
Funding of LPD
On 27 January 2015, EPO announced that LPD had entered into a
US$20.5m loan agreement with KLK Agro Plantations Pte Ltd ("KLK
Agro") (the "Loan Agreement"), a wholly owned subsidiary of KLK,
for the operations and funding for LPD. The term of the Loan
Agreement is 5 years and the interest rate is 3-months USD LIBOR +
5 per cent. per annum.
LPD will commence discussions with development funding
institutions and other commercial banks to secure longer term debt
funding in due course.
HCS Study
Alongside other major industry groups including KLK and Sime
Darby, EPO, as a subsidiary of KLK, is taking part in a global
independent study focussing on responsible land usage by palm oil
operators.
Study conclusions are expected to provide clear parameters for
the establishment of new plantations in non-arable areas. The key
objectives of the study are to:
(i) clearly define what constitutes a HCS forest;
(ii) provide practical guidance on how to delineate HCS forests on the ground; and
(iii) establish thresholds for HCS that take account of regional
socio-economic conditions and opportunities.
As part of our commitment to the global process, EPO will not
develop any new areas of land during the period of the study.
EPO still intends to plant 1,000 hectares before the end of
September 2015. This land was previously planted with oil palm
before the Liberian civil wars and cleared for replanting in 2014,
but due to the outbreak of the Ebola virus has not yet been
planted.
Corporate social responsibility ("CSR") and Sustainability
During the Period, EPO launched a dedicated micro website for
its sustainability and CSR activities. The micro website link can
be found on the home page of the EPO website (www.epoil.co.uk) and
will allow users to keep abreast of EPO's commitment to
sustainability and CSR. Relevant articles, photos and videos are
posted and updated, including information on EPO's reaction to the
Ebola crisis.
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 ("Crude Palm Oil") produced from our new
plantings will meet with international sustainability standards,
thereby enabling our CPO to be labelled "sustainable" palm oil.
LPD continues to provide health clinics, schools, housing,
roads, infrastructure and clean drinking water to the communities
in and around the areas where we operate.
Financial review
The loss of the Group for the six months ended 31 March 2015 of
US$439,000 (30 June 2014: US$745,000) was in line with
expectations. Cash held by the Group as at 31 March 2015 was US$1.4
million (30 September 2014: US$2.1 million).
Summary and Outlook
The Company is in a strong position, being well funded in order
to pursue its long-term strategy of becoming a leading producer of
palm oil in West Africa.
The key to the real growth of our business going forward is to
strive to consistently plant up to 3,000 ha each year. I have the
utmost confidence in the senior management team of LPD to drive
forward this major objective and to deliver value and growth to
shareholders.
Michael Frayne
Chairman
18 May 2015
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 31 March 2015 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 31 March 2015
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).
EQUATORIAL PALM OIL PLC
GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIOD ENDED 31 MARCH 2015
Period ended Period ended Period ended
31 March 30 June 2014 30 September
2015 2014
Note (unaudited) (unaudited) (audited)
$'000 $'000 $'000
Revenue - - -
Administrative expenses (458) (628) (858)
Share options expense 5 - - -
Operating loss (458) (628) (858)
-------------- --------------- ---------------
Interest income 230 206 313
Other income 34 - -
Share of operating loss
of associate (2013 - joint
venture) 3 (245) (323) (598)
Loss for the period before
and after taxation attributable
to owners of the parent (439) (745) (1,143)
-------------- --------------- ---------------
Other comprehensive income
Exchange gains/(losses)
arising on translation
of foreign operations (65) 316 88
-------------- --------------- ---------------
Total comprehensive income
for the period attributable
to owners of the parent (504) (429) (1,055)
-------------- --------------- ---------------
Loss per share expressed
in cents per share
- Basic & diluted 2 (0.1) cents (0.2) cents (0.3) cents
EQUATORIAL PALM OIL PLC
GROUP STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH 2015
31 March 2015 30 September
2014
(unaudited) (audited)
Note
$'000 $'000
ASSETS
Non-current assets
Investment in associate
(2013 - joint venture) 3 24,366 24,611
Receivables from associate
(2013 - joint venture) 5,826 5,537
30,192 30,148
--------------- --------------
Current assets
Trade and other receivables 80 67
Cash & cash equivalents 1,400 2,061
--------------- --------------
1,480 2,128
LIABILITIES
Current liabilities
Trade and other payables 13 113
13 113
--------------- --------------
Net current assets 1,467 2,015
--------------- --------------
NET ASSETS 31,659 32,163
=============== ==============
SHAREHOLDERS' EQUITY
Share capital 4 5,598 5,598
Share premium 46,791 46,791
Warrant and option reserve 5 490 729
Foreign exchange reserve 644 709
Retained loss (21,864) (21,664)
Total equity 31,659 32,163
=============== ==============
EQUATORIAL PALM OIL PLC
GROUP CASH FLOW STATEMENT
FOR THE PERIOD ENDED 31 MARCH 2015
Period ended Period ended Period ended
31 March 2015 30 June 2014 30 September
2014
(unaudited) (unaudited) (audited)
$'000 $'000 $'000
Cash flows from operating activities
Loss for the year before and
after taxation (439) (745) (1,143)
Decrease/(increase) in receivables 7 70 61
Increase/(decrease) in payables (100) (96) (282)
Write down of loan to joint venture - - -
Share options expensed - - -
Interest income (230) (206) (313)
Other income (34) - -
Operating expenses settled in - - -
shares
Share of operating loss of joint
venture 245 323 598
Net cash outflow from operating
activities (551) (654) (1,079)
---------------- --------------- ---------------
Cash flows from investing activities
Funds invested in and loaned
to associate/joint venture (61) (7,630) (7,574)
Interest income received 2 - -
Other income received 14 - -
Net cash outflow from investing
activities (45) (7,630) (7,574)
---------------- --------------- ---------------
Cash flows from financing activities
Issue of ordinary share capital - 262 262
Net cash inflow from financing
activities - 262 262
---------------- --------------- ---------------
Net (decrease)/increase in cash
and cash equivalents (596) (8,022) (8,391)
Cash and cash equivalents at
beginning of period 2,061 10,364 10,364
Exchange gains/(losses) on cash
and cash equivalents (65) 316 88
Cash and cash equivalents at
end of period 1,400 2,658 2,061
---------------- --------------- ---------------
EQUATORIAL PALM OIL PLC
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 31 MARCH 2015
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
2014 5,565 46,562 621 1,810 (21,602) 32,956
Share capital issued 33 229 - - - 262
Cost of share issue
including warrants
issued - - - (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
----------- --------------- ----------- -------------- ----------- ----------------
As at 1 January
2014 5,565 46,562 621 1,810 (21,602) 32,956
Share capital issued 33 229 - - - 262
Cost of share issue
including warrants
issued - - - (1,081) 1,081 -
Total comprehensive
income for the period - - 88 - (1,143) (1,055)
As at 30 September
2014 5,598 46,791 709 729 (21,664) 32,163
----------- --------------- ----------- -------------- ----------- ----------------
Share capital issued - - - - - -
Expiry of warrants
and options - - - (239) 239 -
Total comprehensive
income for the period - - (65) - (439) (504)
As at 31 March 2015 5,598 46,791 644 490 (21,864) 31,659
----------- --------------- ----------- -------------- ----------- ----------------
EQUATORIAL PALM OIL PLC
NOTES TO THE INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 MARCH 2015
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 2014 Annual Report. The financial information
for the half year ended 31 March 2015 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 period ended 30
September 2014 included within this report does not constitute the
full statutory accounts for that period. The statutory Annual
Report and Financial Statements for 2014 have been filed with the
Registrar of Companies. The Independent Auditors' Report on that
Annual Report and Financial Statement for 2014 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 Period ended
31 March 2015 30 June 2014 30 September 2014
(unaudited) (unaudited) (audited)
$'000 $'000 $'000
Loss for the period (439) (745) (1,143)
Weighted average number of Ordinary
shares of 1p in issue 356.3 million 355.0 million 355.4 million
Loss per share - basic (0.1) cents (0.2) cents (0.3) 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 prior period, a new Joint Venture Agreement ("JVA")
was signed pursuant to which cash and funding commitments of up to
$35.5m were 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.
During the period LPD entered into a $20.5m loan agreement
("Loan Agreement") with KLK Agro Plantations Pte Ltd ("KLK Agro"),
a wholly owned subsidiary of KLK, for operations and funding. The
term of the Loan Agreement is 5 years and the interest rate is
3-months USD LIBOR plus 5 per cent per annum.
The Company's interest in LPD is as follows:
$'000
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
Interest in joint venture at 1 January
2014 17,708
Investment in associate 7,500
Share of losses of joint venture (598)
Interest in joint venture at 30 September
2014 24,611
Interest in joint venture at 1 October
2014 24,611
Share of losses of associate (245)
Interest in associate at 31 March 2015 24,366
The results of Liberian Palm Developments Limited for the period
of six months to 31 March 2015 were as follows:
31 March 30 June 30 September
2015 2014 2014
$'000 $'000 $'000
Non-current assets 67,814 49,100 54,903
Current assets 5,475 17,343 11,989
Non-current liabilities - - (14,884)
Current liabilities (24,763) (16,413) (1,976)
TOTAL NET ASSETS 48,526 50,030 49,222
Income 15 30 105
Expenses (506) (675) (1,300)
Loss after tax (491) (645) (1,195)
4. Called up share capital
Period ended Period ended Period ended
31 March 30 June 2014 30 September
2015 2014
Allotted, called up and fully paid $'000 $'000 $'000
-------------------------------------- -------------- --------------- ---------------
356,277,502 (30 September 2014 -
356,277,502) Ordinary shares of
1p each 5,598 5,598 5,598
-------------------------------------- -------------- --------------- ---------------
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 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 September 2014 18,965,347 9.6p
Outstanding and exercisable
at 1 October 2014 18,965,347 9.6p
Exercised during the period - -
Expired during the period (2,198,757) 17.5p
-------------- -------------------
Outstanding and exercisable
at 31 March 2015 16,766,590 8.6p
As at 31 March 2015 the following warrants to subscribe for
Ordinary Shares were outstanding:
Category Over Number of Ordinary Expiry Date
Shares
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
Total 16,766,590
Share options
Details of the expired options during the Period are as
follows:
Outstanding Expired Outstanding Exercisable
at during the at at
1 October period 31 March 31 March
2014 2015 2015
---------------------- ------------- ------------- ------------- -------------
Options exercisable
at 17.5p 2,198,757 (2,198,757) - -
6. Availability of financial information
Copies of this interim financial information will be available
on the Company's website 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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