Asian Plantations Limited Final Results & Notice -12-

 differences           (230)          (78)     (55)         (2)           (262)         (1,611)       (2,379)  (4,617) 
 
 
At 31 December 
 2013                 19,197         1,258      960          39        5,504             25,966        16,853   69,777 
 
 
 
                                              Office 
                                            equipment, 
                                            computers, 
                                             furniture 
                                 Motor          and                  Plant and                   Assets under 
                    Building    vehicles     fittings    Renovation   machinery  Infrastructure  construction   Total 
                    USD'000     USD'000       USD'000     USD'000     USD'000       USD'000        USD'000     USD'000 
 
Accumulated 
depreciation 
At 1 January 2012        170           249           96           9         262             629             -    1,415 
Charge for the 
 year                    273           164           83           8         452             614             -    1,594 
Disposals                  -           (3)            -           -           -               -             -      (3) 
Reclassifications         10             -            -           -        (10)               -             -        - 
Exchange 
 differences              10            12            4           -          14              30             -       70 
 
 
At 31 December 
 2012 and 
 1 January 2013          463           422          183          17         718           1,273             -    3,076 
Charge for the 
 year                    938           228          134           8         890           1,022             -    3,220 
Disposals                  -          (26)            -           -           -               -             -     (26) 
Exchange 
 differences            (66)          (31)         (15)         (1)        (80)           (123)             -    (316) 
 
 
At 31 December 
 2013                  1,335           593          302          24       1,528           2,172             -    5,954 
 
 
Net carrying 
amount 
At 31 December 
 2013                 17,862           665          658          15       3,976          23,794        16,853   63,823 
 
 
At 31 December 
 2012                  4,825           707          468          24       2,667          19,208        25,328   53,227 
 
 

Capitalised borrowing costs

The Group has substantially completed and commenced operation of its vertical sterilizer crushing mill during the current year. The carrying amount of the mill at 31 December 2013 included in assets under construction was USD10,942,000 (2012: USD20,271,000). The construction of this mill was financed by a bridging loan and Bank Guaranteed Medium Term Notes Programme. Details of these borrowings are disclosed in Note 25.

The amount of borrowing costs capitalised as part of the cost of qualifying assets during the year ended 31 December 2013 was USD786,000 (2012: USD1,208,000). The rates used to determine the amount of borrowing costs eligible for capitalisation range from 1.65% per annum to 5.21% per annum ("p.a.") (2012: 1.65% p.a. to 5.95% p.a.), depending on the source of financing.

Assets held under finance leases

During the financial year, the Group acquired property, plant and equipment at an aggregate cost of USD18,117,000 (2012: USD38,316,000) of which USD691,000 (2012: USD1,260,000) were acquired by means of finance leases. Leased assets are pledged as security for the related finance lease liabilities.

Net carrying amount of property, plant and equipment held under finance leases arrangements which comprise plant and machinery and motor vehicles amounted to USD1,853,000 (2012: USD969,000) and USD524,000 (2012: USD457,000), respectively.

Assets pledged for banking facilities

A building of the Group with net carrying amount of USD291,000 (2012: USD318,000) is pledged for banking facilities as disclosed in Note 25.

Assets under construction

The Group's assets under construction mainly included a palm oil mill, a biogas plant, workers quarters, terraces, roads and bridges/culverts with total net carrying amount of USD16,853,000 (2012: USD25,328,000). The substantially completed oil palm mill as mentioned above represent the main asset under construction as at the reporting date.

Depreciation capitalised to biological assets

Depreciation of property, plant and equipment of the Group capitalised to biological assets for the financial year ended 31 December 2013 amounted to USD1,712,000 (2012: USD1,343,000) (Note 16).

   16.        Biological assets 

Biological assets comprise primarily development activities for oil palm plantations and maintenance of nurseries with the following movements in their carrying value:

 
                                     2013     2012 
                                    USD'000  USD'000 
At fair value less cost to sell 
 
At 1 January                         55,287   22,811 
Additions                            12,867   29,405 
Gain arising from changes in fair 
 value                                3,183    1,989 
Exchange differences                (4,343)    1,082 
 
 
At 31 December                       66,994   55,287 
 
 
Represented by: 
Mature plantation                    40,750   27,442 
Immature plantation                  24,950   26,103 
Nursery                               1,294    1,742 
 
 
Total                                66,994   55,287 
 
 

Mature oil palm trees produce FFBs which are used to produce Crude Palm Oil ("CPO"). The fair values of oil palm plantations are determined by using the discounted future cash flows of the underlying plantations. The expected future cash flows of the oil palm plantations are determined using long term average CPO price in the market.

Significant assumptions made in determining the fair values of the mature and immature oil palm plantations, using a discounted cash flow model, are as follows:

   (a)        no new planting or re-planting activities are assumed; 

(b) oil palm trees have an average life of 28 years (2012: 28 years), with the first three years as immature and the remaining years as mature;

(c) discount rate used for the Group's plantation operations which is applied in the discounted future cash flows calculation range from 9.5% to 10.5% (2012: 10.5% to 11.3%);

(d) FFB price is derived by applying the oil extraction rate to the estimated long term average CPO price of USD868 (2012: USD907) per metric tonne; and

(e) yield per hectare of oil palm trees is based on the standard yield profile of the industry.

Gain arising from changes in fair value less estimated costs to sell during the financial year ended 2013 amount to USD636,000 (2012: USD1,989,000).

 
                        2013      2012 
                      Hectares  Hectares 
Planted area: 
Mature plantation        4,507     3,559 
Immature plantation      7,654     4,591 
 
 
Total                   12,161     8,150 
 
 

Depreciation of property, plant and equipment capitalised to biological assets for the financial year ended 31 December 2013 amounted to USD1,712,000 (2012: USD1,343,000) (Note 15).

Employee benefit expenses capitalised to biological assets for the financial year ended 31 December 2013 amounted to USD1,601,000 (2012: USD1,794,000) (Note 12).

The plantations have not been insured against the risks of fire, diseases and other possible risks.

The Group is exposed to a number of risks related to its oil-palm plantations:

Regulatory and environmental risks

The Group is subject to laws and regulations in Malaysia. The Group has established environmental policies and procedures aimed at compliance with local environmental and other laws. Management performs regular reviews to identify environmental risks and to ensure that the systems in place are adequate to manage those risks.

Climate and other risks

The Group's oil palm tree plantations are exposed to the risk of damage from climatic changes, diseases and other natural forces. The Group has extensive processes in place aimed at monitoring and mitigating those risks, including regular tree health inspections and industry pest and disease surveys.

   17.        Land use rights 
 
                                      2013     2012 
                                     USD'000  USD'000 
 
At 1 January                          53,517   32,158 
Additions                              9,141   21,044 
Amortisation charge for the year 
 (Note 10)                           (1,002)    (924) 
Exchange differences                 (3,614)    1,239 
 
 
At 31 December                        58,042   53,517 
 
 
Amount to be amortised 
- Not later than one year              1,119    1,040 
- Later than one year but not more 
 than five years                       4,477    4,160 
 
  *    Later than five years          52,446   48,317 
 
 
                                      58,042   53,517 
 
 

Land use rights are in respect of:

(a) cost of land use rights over seven pieces (2012: six pieces) of long-term leasehold land owned by the Group, for the oil palm plantation development activities of the Group. The land use rights are transferable and have a remaining tenure of 50 to 60 years (2012: 51 to 60 years). The Group was granted a provisional registered lease in accordance with the provisions of the Land Code of Sarawak, Malaysia, for the use of the agricultural land for a period of 60 years by the relevant government agency. As has been the practice in East Malaysia to date, registered leases are able to be renewed at expiry for a further period of 60 years with the payment of a modest land premium per acre set annually by the State Government of Sarawak.