CAPITAL METALS PLC

Earnings Release • May 18, 2015

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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) www.epoil.co.uk	+44 (0) 20 7493 7671
Strand Hanson Limited (Nominated Adviser) James Harris / James Bellman	+44 (0) 20 7409 3494
Mirabaud Securities LLP (Broker) Peter Krens	+44 (0) 20 7484 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

	Note	Period ended 31 March 2015 (unaudited)	Period ended 30 June 2014 (unaudited)	Period ended 30 September 2014 (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

	Note	31 March 2015 (unaudited)	30 September 2014 (audited)
		$'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 31 March 2015 (unaudited)	Period ended 30 June 2014 (unaudited)	Period ended 30 September 2014 (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 up share capital	Share premium reserve	Foreign exchange reserve	Warrant and option reserve	Retained earnings	Total equity
	$'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 31 March 2015 (unaudited)	Period ended 30 June 2014 (unaudited)	Period ended 30 September 2014 (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 2015	30 June 2014	30 September 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

Allotted, called up and fully paid	Period ended 31 March 2015 $'000	Period ended 30 June 2014 $'000	Period ended 30 September 2014 $'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:

		Number of warrants		Weighted average exercise 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 Shares	Expiry Date
Apr-15 Warrants, exercisable at 8.0p	11,950,000	6 April 2015
Jul-16 Warrants, exercisable at 10.0p	4,816,590	16 July 2016
Total	16,766,590

Share options

Details of the expired options during the Period are as follows:

	Outstanding at 1 October 2014	Expired during the period	Outstanding at 31 March 2015	Exercisable at 31 March 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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