Half Year Report 2015

Transcription

1 Half Year Report Company Announcement No August UNITED

2 HALF YEAR UNITED United International Enterprises Limited in Brief United International Enterprises Limited ( UIE ) is a holding company which primarily invests in companies in the agro-industrial sector. UIE exercises longterm and active ownership via involvement at board level and via close dialogue with the management about operational and strategic issues. UIE 46.3% 1.7% Highlights - Business Performance 1 United Plantations Berhad Melker Schörling AB Operating income amounted to USD 30.4 million in the first half of, which is 2% higher than in the first half of When comparing the two periods under review, it should be noted that the contribution from UP decreased by 12%, whilst the fair value change of the investment in MSAB was 71% higher in the first half of compared to the corresponding period in UIE s profit before tax in the first half of amounted to USD 25.5 million, which is 11% below the USD 28.7 million reported in the first half of The decrease is due to the strengthening of the USD relative to the MYR and SEK, which resulted in a net foreign exchange loss of USD 3.5 million. UIE sold its residual shareholding in AAK (456,453 shares) during January and the first week of February for a consideration of SEK million (USD 25.4 million). After the reporting date (on 21 July ), UIE acquired 2,161,200 shares in UP for a consideration of MYR 57.7 million (USD 15.3 million). UIE s ownership in UP accordingly went from 46.3% to 47.3%. The Board expects UIE s net profit attributable to equity holders of the Company for to be in line with the result reported in UIE s Strategic Investments Net profit in the first half of was MYR 132 million (USD 36 million); a marginal decrease of 2% compared to the first half of Profit before tax increased by 3% in the plantation division, which is UP s main activity. This was primarily the result of a non-recurring gain arising from a compulsory land acquisition by the government, a higher production and lower production costs partly offset by lower selling prices. Net profit in the first half of was SEK 9,490 million (USD 1,143 million), which substantially relates to a change in the fair value of the company s portfolio of investments and dividend income from these companies. Net asset value per share increased from SEK 367 at the end of 2014 to SEK 444 on 30 June, representing an increase of 21%. Although the MSAB share price increased by 19% in the first half of, the fair value, in USD, of UIE s investment in MSAB did not increase to the same extent, as the SEK weakened towards the USD in the period under review (leading to the fair value increasing by 12% or USD 11.8 million). 1) Highlights - Business Performance is presented as if UP was recognised using the equity-method. 2/28 UIE Half Year Report

3 UNITED HALF YEAR Key Figures - Business Performance Net Profit in H1 USD million 40 Earnings per Share in H1 USD Cash (Net bank balances & short-term deposits) USD million H1 Shareholders Equity, Assets & Return on Equity USD million % 25% 20% 15% 10% 5% 0% H1 Market Value of UIE s Investments on 30 June USD million 1, Share Price 0 UP MSAB Total UIE UIE Half Year Report 3/28

4 HALF YEAR UNITED Directors Report Measurement of Performance According to IFRS, UIE is deemed to have de facto control of UP (even though UIE holds less than 50% of UP s voting rights). Hence, UP s result is fully consolidated in UIE s financial statements. However, as UIE is a holding and not an operating company, the Board of UIE is of the view that the most appropriate measurement of the performance of the investment in UP is to equity account for the investment (monitoring UIE s share of the profit). Accordingly, this measurement is used in the internal reporting as well as in the reporting to shareholders, referred to as Business Reporting in the Directors Report. Other investments (primarily MSAB) are measured by changes in their respective fair value. The difference between the Business Reporting in the Directors Report and the consolidated financial statements is described in note 1. The net profit in the Business Reporting is substantially equal to the amount attributable to the owners of the Company in the consolidated financial statements. UIE s Investment Portfolio Changes to UIE s investment portfolio in the first half of were as follows: In February, UIE ceased to be an investor in AAK, following the sale of its residual shareholding in AAK (456,453 shares) during January and the first week of February for a consideration of SEK million (USD 25.4 million). On 30 June, the investment portfolio accounted for 75% of UIE s total assets (based on Business Reporting), and the remaining assets primarily comprised cash reserves. As shown in the graph below, UP is by far UIE s largest investment, accounting for 73% of the total investment portfolio (using the equity method of accounting), whilst MSAB accounts for the balance (using fair value accounting). On 21 July (after the reporting date), UIE further consolidated its interest in UP by acquiring 2,161,200 shares in UP for a consideration of MYR 57.7 million (USD 15.3 million), whereby UIE s interest of UP increased by 1.04% to 47.26%. Total Assets in UIE USD million 600 Cash 500 AAK 400 MSAB Cash AAK MSAB Cash MSAB UP UP UP 30 June December June Split of Investments in UIE 100% 80% 60% 40% 20% 0% AAK MSAB AAK MSAB MSAB UP UP UP 30 June December June Future Investments UIE s Board is currently reviewing the possibility of broadening the Company s investment portfolio. UIE is a long-term investor focusing on value creation and the Board will thoroughly assess potential acquisitions that align with the Company s investment criteria. Emphasis will primarily be on investments within the agro-industrial sector. 4/28 UIE Half Year Report

5 UNITED HALF YEAR Financial Review - Business Reporting Business Performance Review UIE s operating income amounted to USD 30.4 million in the first half of, which is 2% higher than in the first half of When comparing the operating income for the two periods under review, it should be noted that the contribution from UP decreased by 12% or USD 2.2 million (primarily due to a weaker MYR), whilst the fair value change of the investment in MSAB was 71% or USD 4.9 million higher than the amount reported in the first half of Furthermore, the operating income in the first half of included a gain of USD 0.9 million as a result of the sale of the residual shareholding in AAK in January and February, whereas the operating income in the first half of 2014 included a fair value change of USD 2.8 million of the investment in AAK. UIE s profit before tax in the first half of amounted to USD 25.5 million, which is 11% below the USD 28.7 million reported in the first half of The decrease is due to the strengthening of the USD relative to the MYR and SEK, which resulted in a net foreign exchange loss of USD 3.5 million. Operating income for the first half of is illustrated in the graph below: Income in UIE USD million Other AAK MSAB UP Other AAK MSAB UP H H1 Share of UP's net profit Change in fair value of MSAB (incl. dividend received) 1 Gain on sale of AAK (incl. dividend received) Other 1) H1 2014: Including change in fair value of AAK shares Business Performance USD 000 Q1 Q2 H1 Q Q H Share of UP s net profit 7,838 8,835 16,673 12,294 6,576 18,870 Change in fair value of MSAB 17,548 (5,783) 11,765 10,980 (4,114) 6,866 Gain on sale of AAK shares , ,799 Dividend income (MSAB & AAK) ,042 1,042 Other Total operating income 26,797 3,567 30,364 25,092 4,628 29,720 Administrative expenses (593) (860) (1,453) (744) (757) (1,501) Net interest income Net foreign exchange (3,168) (323) (3,491) 613 (205) 408 Profit before tax 23,063 2,425 25,488 24,978 3,728 28,706 1) Q1, Q2 and H1 2014: Includes change in fair value of AAK. UIE Half Year Report 5/28

6 HALF YEAR UNITED UP Even though UP s net profit in the first half of was only marginally lower (2%) than in the equivalent period last year, the contribution from UP of USD 16.7 million in the first half of reflected a decrease of 12% or USD 2.2 million compared to the first half of 2014 due to a devaluation of the MYR (UP s functional currency). The marginal decrease in UP s net profit in the first half of was primarily a consequence of a 19% drop in the result of the refinery operations. MSAB UIE s investment in MSAB is accounted for at fair value, with movements being recognised in the Income Statement. The share price of MSAB increased from SEK on 31 December 2014 to SEK on 30 June, representing an increase of 19%. During the same period, the NASDAQ Stockholm All-Share PI index increased by 7%. On 30 June, the share price of MSAB was equal to the net asset value per share, whereas it was trading at a premium of 2% on 31 December Even though the MSAB share price increased by 19%, the fair value of UIE s investment in MSAB, expressed in USD, did not increase to the same extent, as the SEK weakened towards the USD in the period under review. The fair value of UIE s investment in MSAB increased by SEK 139 million or 19%, whereas the fair value in USD increased by 12% or USD 11.8 million. (During the first half of 2014, the MSAB share price increased by 11%, but as the SEK was marginally diluted relative to the USD, the fair value of the investment in MSAB, expressed in USD, increased by 7% or USD 6.9 million). AAK A gain of USD 0.9 million, relative to the fair value on 31 December 2014, was realised on the 456,453 AAK shares sold in the first quarter of. The shares were sold at an average price of SEK and generated proceeds of SEK million (USD 25.4 million). An overview of the return generated on the AAK investment (since the merger in 2005 and until the last shares were sold in February ) is included on page 15 in UIE s First Quarter Report announced on 28 May. Performance within UP and MSAB is reported in the sections UP Segment and Melker Schörling AB on pages Share Price Development - MSAB 6/28 UIE Half Year Report

7 UNITED HALF YEAR Other Income and Administration Costs A small proportion of UIE s cash reserve is invested in a portfolio of equities as well as in trading of soft commodities. The net effect of these activities produced a small gain of USD 0.2 million in the first half of. In the first half of, general and administrative expenses totaled USD 1.5 million, which is marginally lower than the expenses incurred in the first half of 2014, mainly due to the strengthening of the USD. Profit Before Tax in the first half of USD million Share of net profit in UP Fair value change 1 MSAB Gain on sale of AAK shares Other Income Administrative expenses Net foreign exchange loss Profit before tax 1) including dividend from MSAB Financial Position The development in the value of UIE s investment in UP, MSAB and AAK is shown in the table below. The total value of the investments decreased by USD 34.1 million during the period under review, mainly due to the sale of the remaining AAK shares and the weakening of the MYR to the USD, partially offset by the positive fair value change of MSAB. Shareholders equity decreased from USD million on 31 December 2014 to USD million on 30 June. The decrease comprised the dividend payment of USD 14.2 million and a reduction of other reserves of USD 21.5 million (primarily a negative equity arising from the conversion of UIE s interests in UP from MYR into USD), partly offset by the net profit of USD 25.5 million. Assets, Liabilities and Shareholder s Equity on 30 June Total net cash reserves in UIE increased from USD million on 31 December 2014 to USD million on 30 June, an increase of USD 21.8 million. Value of UIE s Investments USD 000 UP MSAB AAK Total Balance on 1 January 309,505 94,849 24, ,811 Change in fair value - 11, ,694 Proceeds from sale - - (25,386) (25,386) Share of net profit 16, ,673 Equity adjustment on foreign currency translation (21,874) - - (21,874) Dividends received (16,223) - - (16,223) Total on 30 June 288, , ,695 UIE Half Year Report 7/28

8 HALF YEAR UNITED Key Figures - UP Segment Net Profit in H1 MYR million Earnings per Share in H1 MYR Cash (Net bank balances & short-term deposits) MYR million H1 Book Value per Share MYR Shareholders Equity, Assets & Return on Equity MYR million Share Price H1 20% 16% 12% 8% 4% 0% H1 8/28 UIE Half Year Report

9 UNITED HALF YEAR UP Segment UP s principal business activity is the cultivation and processing of palm oil and coconuts in a sustainable manner in Malaysia and Indonesia. Globally, UP is amongst the most efficiently managed, eco-friendly and innovative plantation companies and is recognised for its sound agricultural practices and high quality standards. In the following section, the description of developments within UP is based on figures reported in MYR, UP s functional currency. However, the UP figures in the table above have been converted to USD and are used in the financial reporting for UIE. The fair value adjustment figures (in USD) relate to the amortisation of the fair value adjustment of UP s net assets as part of the acquisition accounting in 2003, when UP was retrospectively deemed to have been classified as a subsidiary of UIE. The fair value adjustments are explained in note 1. Business Performance Review In the first half of, UP reported a net profit of MYR 132 million (USD 36 million), 2% lower than the MYR 135 million (USD 41 million) reported in the first half of Plantation Operations Plantation operations (UP s main activity) recorded a profit before tax of MYR 163 million, reflecting an increase of 3% compared to the MYR 159 million reported in the first half of This was achieved despite decreasing CPO and PK selling prices and was primarily due to a non-recurring gain from land acquisition by the government, a higher production as well as lower production costs per tonne/nuts. Key Financial Figures Business Performance in the first half of Re- Fair UP UP IFRS allocated value UP figures figures Re- UP adjust- IFRS in in allocation Figures ments figures 000 MYR USD USD USD USD USD Revenue 489, , , ,789 Other income 16,768 4,616 2,872 7,488-7,488 Operating expenses (344,840) (94,935) (3,058) (97,993) (460) (98,453) Finance income 13,533 3, ,912-3,912 Share of net profit of equity-accounted investments (3,302) (909) - (909) - (909) Profit before tax 171,767 47,287-47,287 (460) 46,827 Tax (40,228) (11,075) - (11,075) 214 (10,861) Net profit 131,539 36,212-36,212 (246) 35,966 UIE Half Year Report 9/28

10 HALF YEAR UNITED CPO Production '000 tonnes PK Production '000 tonnes Coconut Production Million Nuts Jan Mar May Jul Sep Nov 2 Jan Mar May Jul Sep Nov 4 Jan Mar May Jul Sep Nov CPO and PK Price Developments UP s profitability is highly dependent on the selling prices of CPO and PK as well as production volumes. In the first half of, UP achieved an average selling price of MYR 2,131 per tonne of CPO, a decline of 14%, whilst the average selling price of PK decreased by 10%, compared to the average selling prices achieved in the first half of The Average Selling Prices of CPO and PK MYR Change per tonne Product H1 H % Malaysia CPO 2,153 2,508 (14.2%) Indonesia CPO 2,070 2,416 (14.3%) Average CPO 2,131 2,486 (14.3%) Malaysia PK 1,614 1,768 (8.7%) Indonesia PK 1,311 1,528 (14.2%) Average PK 1,546 1,722 (10.2%) The difference between CPO and PK prices in Malaysia and Indonesia is the result of variations in the respective duty structures. Palm oil prices can fluctuate significantly. In March 2014, the CPO price stood at MYR 2,900 but then fell considerably, to MYR 1,900, in September 2014 and thereafter, traded in a range between MYR 2,100 and 2,400 per tonne. The contributing factors to this decline were, amongst others, rising CPO stocks in Malaysia and Indonesia coupled with larger supplies of soya beans, following the large harvest in USA and, most importantly, the dramatic decline in mineral oil prices, which materially undermined the financial viability of the biodiesel industry. In the last few weeks, the CPO spot price has decreased further and broken the MYR 2,100 support level, currently trading at approximately MYR 1,800 per tonne, as a consequence of the continuing decline in mineral oil prices and better than expected CPO production; the latter caused by the El Niño weather phenomenon, which so far has not had any material impact on the weather and production. It is the policy of UP to hedge a proportion of future production revenues, resulting in the impact of spot price volatility being mitigated in the short term. Production Within the Plantation Operations Along with sales prices, UP s profitability is highly dependent on the production volume. In the first half of, UP s overall production of CPO and PK increased by 11% and 9%, respectively. In addition, the coconut production increased by 19% compared to the first half of Own Production Change Tonnes H1 H % CPO 98,448 88, % PK 20,797 19, % Coconut (million nuts) % Production Costs and the CPO Windfall Gain Tax in Malaysia Due to the increased production, production costs per tonne of CPO and PK decreased by 9%, while the production costs of coconuts decreased by 3% per nut. Malaysia s CPO windfall gain tax was not activated in the first half of as the average monthly market price of CPO was below the threshold price of MYR 2,500. In the first half of 2014, CPO windfall tax amounted to MYR 1.2 million. 10/28 UIE Half Year Report

11 UNITED HALF YEAR Refinery Operations Profit before tax in the refinery operations at Unitata was 19% lower in the first half of relative to the result achieved in the corresponding period in The decrease is mainly due to lower sales as the result of the increasing competition from local and Indonesian refiners (as a result of overcapacity) coupled with adjustments for the fair valuation of forward foreign exchange hedging positions, which will be routinely reversed in ensuing accounting periods. Other During the first half of, the Indonesian currency strengthened slightly against the MYR, leading to an unrealised foreign exchange gain of MYR 0.6 million on loans to the Indonesian subsidiary, compared to an unrealised foreign exchange gain of MYR 2.8 million in the first half of A non-recurring gain of MYR 9.9 million from a compulsory land acquisition by the government authorities in relation to a new West Coast Express way in Malaysia was recognised in the first quarter of. Financial Position and Cash Flow On 30 June, UP s current assets amounted to MYR 974 million (31 December 2014: MYR 960 million), of which cash balances amounted to MYR 703 million (31 December 2014: MYR 738 million). Total non-current assets amounted to MYR 1,392 million (31 December 2014: MYR 1,373 million), of which biological assets and property, plant and equipment amounted to MYR 1,339 million (31 December 2014: MYR 1,320 million). Shareholders equity increased from MYR 2,127 million on 31 December 2014 to MYR 2,134 million at the end of June. This increase mainly comprised the net profit for the period under review, less dividends paid. Positive cash flow from operating activities amounted to MYR 124 million, compared to MYR 163 million in the first half of Negative cash flow from investments amounted to MYR 34 million (H1 2014: negative MYR 35 million). Net change in cash and cash equivalents amounted to MYR 35 million negative in the first half of (H1 2014: MYR 4 million negative). Segmental Information for the First Half of : Other Elimi- MYR million Plantations Refining segments nation Total Segment Revenue External Sales Inter-segment Sales (101.1) (101.1) Segment Results Profit before tax (1.6) UIE Half Year Report 11/28

12 HALF YEAR UNITED Melker Schörling AB MSAB s Six Largest Investments: HEXAGON is a leading global supplier of design, measurement and visualisation technologies. The company s customers can design, measure and position objects as well as process and present data to stay one step ahead of a changing world. ASSA ABLOY is the world s leading lock group and offers a more complete product range for lock and door solutions than any other company on the market, including access control, identification technology, entrance automation and hotel security. AAK is one of the world s leading producers of high value-added speciality vegetable oils and fats solutions. These oils and fats solutions are characterised by a high level of technological content and innovation. AAK s solutions are used as substitutes for butter-fat and cocoa butter, trans-free and low saturated solutions but also addressing other needs of their customers. HEXPOL is a world-leading polymer group with strong global positions in advanced polymer compounds, gaskets for plate heat exchangers and wheels made of plastic and rubber materials for truck and castor wheel applications. SECURITAS is a global knowledge leader in security. They provide a broad range of services of specialised guarding, technology solutions and consulting and investigations that are suited to the individual customer s needs. LOOMIS offers safe and effective comprehensive solutions for the distribution, handling and recycling of cash for banks, retailers and other commercial companies via an international network consisting of almost 400 branch offices in 16 countries. Share of Total Assets on 30 June AAK 13% Securitas 4% ASSA ABLOY 13% HEXPOL 14% Financial Highlights Loomis 3% Other holdings 0% Hexagon 53% MSAB s net profit was SEK 9,490 million (USD 1,143 million) in the first half of, which fundamentally reflects the change in fair value of the company s portfolio of investments and dividend income from these companies. The net asset value is MSAB s most important key indicator, since it reflects the value of MSAB s assets, which consist of the underlying share portfolio at fair value less the company s net debt. On 30 June, the market value of MSAB s portfolio amounted to SEK 53,701 million (USD 6,521 million) and as the net debt amounted to SEK 846 million (USD 103 million), the net asset value amounted to SEK 52,855 million (USD 6,418 million) compared to SEK 43,680 million (USD 5,606 million) at the end of Net asset value per share increased from SEK 367 at the end of 2014 to SEK 444 per share on 30 June, representing an increase of 21% (during the same period, the NASDAQ Stockholm All-Share PI index increased by 7%). 12/28 UIE Half Year Report

13 UNITED HALF YEAR During the first half of, the portfolio of companies improved their competitiveness further through a combination of investments in new products/services, improved productivity and completion of strategic acquisitions. The weighted average organic growth in MSAB s portfolio companies was 4% (the first half of 2014: 4%) and in addition, certain portfolio companies completed acquisitions during the same period. The weighted average growth in operating profit (EBIT) in the portfolio companies was 25% (the first half of 2014: 9%). Net interest-bearing debt amounted to SEK 818 million on 30 June. MSAB Holdings and Net Asset Value 30 June 31 December 2014 Fair value SEK Fair value SEK No. of shares SEK/share million No. of shares SEK/share million Hexagon 94,461, ,377 94,461, ,841 HEXPOL 90,402, ,720 9,040, ,654 AAK 14,053, ,905 14,053, ,862 ASSA ABLOY 43,626, ,810 14,532, ,028 Securitas 20,501, ,247 20,501, ,935 Loomis 6,300, ,465 6,300, ,424 Other Total 53,701 44,903 Net debt (846) (1,223) Net asset value 52,855 43,680 No. of shares 119,097, ,097,595 Net asset value per share (SEK) Development in Net Asset Value Per Share UIE Half Year Report 13/28

14 HALF YEAR UNITED Risk Factors As a holding company, UIE is exposed to various general and specific commercial as well as financial risks. Risk management is an inherent part of the decisionmaking process in UIE, and the Board of Directors is responsible for identifying and controlling risks as well as establishing risk policies. As virtually all UIE s investments are in listed companies (UP and MSAB), the management of these companies is consequently accountable for identifying and controlling their risks. Commercial Risks Due to the nature of UIE s business, the Company is indirectly exposed to various commercial risks through its investments in UP and MSAB. The primary commercial risk of UIE is its high level of exposure to one particular industry, the palm oil industry, as UP accounts for approximately 71% of UIE s total consolidated assets of USD 907 million. The following is a brief description of the most significant commercial risks of UIE. UP UP s income is highly dependent on both production volume and commodity prices. Production is influenced by unfavourable local and global weather patterns, such as El Niño, and is highly dependent on seasonal and cyclical nature within the plantation operations as well as the age profile of the oil and coconut palms. UP s production of CPO and PK is generally higher from March to September (peaking around July), then declining from October to February. Commodity prices are determined by the global supply and demand for edible oils and are to some extent correlated to the price of mineral oil. The prices obtainable and the production volumes therefore fluctuate and may affect the profits of UP accordingly. Other risk factors include the availability and cost of labour, exchange rate fluctuations in relation to intercompany balances between the Malaysian and Indonesian operations, changes in tax/duty structures and impact of the biodiesel demand upon commodity prices. See UP s Annual Report 2014 for further information regarding the risk factors in UP. MSAB MSAB is a holding company which primarily invests in the industrial sector. MSAB s current portfolio primarily consists of investment in six publicly listed companies, and MSAB s risks are significantly linked to the risk factors in the respective companies. See MSAB s Annual Report 2014 for further information on the risk factors in MSAB. Financial Risks In the ordinary course of business, the Group is exposed to a variety of financial risks, which include market risks, credit risks as well as interest rate risks. The main market risks that the Group are exposed to are: 1. Share price risk, which is the risk that the value of the investments will fluctuate due to changes in the share prices 2. Commodity price risk, which arises from fluctuations in the price of palm and palm kernel oil 3. Foreign currency risks, which arises from investments and commodity sales in foreign currencies as the value of investments and cash flows fluctuate due to changes in foreign currency rates In relation to credit risk, the primary risk is on the Group s cash at bank. The Group manages its credit risk by ensuring that deposits are placed with a limited spread of highly rated banks. As the Group has no interest bearing debt, the interest rate risk arises on the interest earned on cash deposits. See UIE s Annual Report 2014 Note 4.6 on pages for further information on UIE s financial risk management and exposure. Financial Calendar 25 November Third Quarter Report Member to the Board of Directors To succeed Mr. Kjeld Ranum, the Board of Directors has resolved to elect Mr. Frederik Westenholz to the Board. Mr Westenholz s appointment will be presented to Shareholders for ratification at the Annual General Meeting in /28 UIE Half Year Report

15 UNITED HALF YEAR Outlook The outlook for UIE remains significantly reliant upon the performance of UP, which does not release a formal profit estimate. The contribution from MSAB, the second major contributor, is a function of movements in its fair value, which is substantially a reflection of the performance of the share price during the relevant period under review expressed in USD. Given these factors, it is not possible to provide shareholders with any more than a very general outlook statement. UP continues to replant a large proportion of its old and less productive oil palm areas in Malaysia in. The Indonesian operations are all in production, thus partly compensating for the lower crop from the replanted areas in Malaysia. The world vegetable oil markets, during the second quarter of, were heavily influenced by the anticipated return of the El Niño weather phenomenon, as well as the continued decline of mineral crude oil prices (which impacted negatively on biodiesel demand) coupled with fluctuating exchange rates. In May, it was officially announced that El Niño would return during second half of and possibly continue into the first half of However, to date, South East Asia has not experienced any material El Niño manifestations, which might have impacted negatively on production, and this, combined with significantly lower mineral oil prices, has exerted significant downward pressure on global vegetable oil prices. Nevertheless, the significant depreciation of the MYR against the USD of approximately 30% over the past year has supported CPO prices in MYR terms. The weakness in the MYR is expected to continue during the remaining part of especially if the US Federal Reserve resolves to increase interest rates. The Chinese central bank recently surprised the markets by devaluing its currency, after a period of weaker than expected economic data, with exports tumbling more than 8% in July. The aim is likely to boost China s competitiveness through devaluing its currency and this is expected to have a negative effect on both oils and grain imports. The improved climatic growing conditions for South East Asia s oil palm growers, coupled with expectation of a favourable soya bean harvest in the USA and South America, are likely to increase the supply of vegetable oils globally and, with that, world edible oil stocks as well. This is likely to exert a negative influence on prices in the absence of other factors that might serve to limit supply, adverse weather conditions included. Based on the above, and with the current prevailing prices of palm oil and palm kernel in the market, UP is of the view that the future looks more challenging. Nevertheless, with the prices contracted under UP s forward sales policy and with the Indonesian production partly compensating for the drop from replanted areas in Malaysia, UP projects the results for to be satisfactory. The weakening of the MYR against the USD will exert a negative impact on conversion of UP s results into USD. Since the start of, the SEK has continued to depreciate against the USD (7% from 1 January until today), exerting a negative impact on UIE s Income Statement as the market value of MSAB is denominated in SEK with any change in the market value of UIE s investment, converted to USD, being recognised in UIE s Income Statement. European equity markets (including Sweden), however, had strengthened during the first seven months of but the significant market reaction to the Chinese slow-down during the course of the past fortnight has reversed some of these gains. If the current share price of MSAB, as well as the SEK/USD exchange rate, were to remain stable during the remaining part of, the fair value adjustment recognised in UIE s Income Statement for the second half of will be negative. Based on the above, the Board is of the view that UIE s net profit attributable to equity holders of the Company for is expected to be in line with the result reported in UIE Half Year Report 15/28

16 HALF YEAR UNITED Key Figures - UIE Consolidated Financial Statements Q2 Q2 H1 H1 Full Year USD Revenue 70,018 76, , , ,253 Profit before tax 18,029 16,457 55,642 62, ,512 Net profit 12,694 11,442 44,769 50,865 77,731 Profits attributable to owners of the Company 2,211 3,674 25,167 28,640 31,471 Current assets 390, , , , ,349 Hereof cash 309, , , , ,825 Non-current assets 517, , , , ,989 Total assets 907,322 1,038, ,322 1,038, ,338 Total liabilities 76,344 77,908 76,344 77,908 70,764 Equity attributable to owners of the Company 486, , , , ,537 Non-controlling interests 344, , , , ,037 Total equity 830, , , , ,574 Q2 Q2 H1 H1 Full Year Earnings per share (USD) Share Price end of period (USD) Share Price end of period (DKK) 1, , , , Return on equity (%) n/a n/a Solvency ratio (%) Cash & Short Term Deposits USD million UP UP UP UIE UIE 30 June December 2014 UIE 30 June Equity Attributable to Owners of the Company versus Non-controlling Interests USD million 1, NCI NCI NCI UIE UIE UIE 30 June December 2014 Owners of the Company (UIE) Non controlling interests (NCI) 30 June 16/28 UIE Half Year Report

17 UNITED HALF YEAR Consolidated Income Statement for the Period Ended 30 June (The figures have not been audited) Q2 Q2 H1 H1 Full Year USD Revenue 70,018 76, , , ,253 Operating expenses (49,284) (52,195) (99,852) (111,627) (222,074) Other income 1,082 (3,558) 7,810 2,125 5,388 Profit from operations before financial items 21,816 20,722 42,747 46,194 94,567 Changes in fair value of MSAB (5,783) (4,114) 11,765 6,866 2,239 Gain on sale of AAK shares ,799 (5,889) Dividend income MSAB Dividend income AAK Results from investing activities - portfolio investments Interest income 1,989 1,884 3,984 4,173 11,302 Interest expense (2) (6) (4) (8) (11) Net foreign exchange (loss)/gain (323) (4,167) (3,491) 1,132 (2,209) Share of results in jointly controlled entity (163) 11 (909) 15 (654) Profit before tax 18,029 16,457 55,642 62, ,512 Tax (5,335) (5,015) (10,873) (11,411) (22,781) Net profit 12,694 11,442 44,769 50,865 77,731 Profits attributable to Owners of the Company 2,211 3,674 25,167 28,640 31,471 Non-controlling interests 10,483 7,768 19,602 22,225 46,260 12,694 11,442 44,769 50,865 77,731 Earnings per share attributable to owners of the Company (USD) Other Comprehensive Income Q2 Q2 H1 H1 Full Year USD Net profit 12,694 11,442 44,769 50,865 77,731 Items that are or may be reclassified to the Income Statement Equity adjustment on foreign currency translation, net of tax of USD nil (9,890) 9,978 (45,044) 17,732 (37,800) Other comprehensive income (9,890) 9,978 (45,044) 17,732 (37,800) Total comprehensive income 2,804 21,420 (275) 68,597 39,931 Total comprehensive income attributable to Owners of the Company (12,644) 8,291 (14,751) 36,657 14,658 Non-controlling interests 15,448 13,129 14,476 31,940 25,273 2,804 21,420 (275) 68,597 39,931 1) Q2 2014, H and full year 2014: Includes change in fair value UIE Half Year Report 17/28

18 HALF YEAR UNITED Consolidated Statement of Financial Position for the Period Ended 30 June (The figures have not been audited) 30 June 30 June 31 December USD Assets Current assets: Inventories 32,170 33,841 28,217 Cash at bank 309, , ,825 Trade and other receivables 39,085 47,059 33,512 Portfolio investments 9,156 2,009 2,980 Current tax receivable 733 1,783 1,815 Total current assets 390, , ,349 Non-current assets: Goodwill 7,096 7,096 7,096 Biological assets 115, , ,241 Property, plant and equipment 274, , ,151 Land use rights 8,790 9,964 9,154 Equity accounted investments 3,540-4,186 Strategic investments 106, , ,305 Other financial assets 1,723 8,599 1,856 Total non-current assets 517, , ,989 Total assets 907,322 1,038, ,338 Liabilities and shareholders equity Current liabilities: Current tax liability 3,425 7,309 3,431 Trade and other payables 28,832 22,620 18,437 Other current liabilities 2, ,404 Total current liabilities 35,199 30,416 24,272 Total non-current liabilities 41,145 47,492 46,492 Total liabilities 76,344 77,908 70,764 Shareholders equity: Equity attributable to owners of the Company 486, , ,537 Non-controlling interests 344, , ,037 Total equity 830, , ,574 Total liabilities and shareholders equity 907,322 1,038, ,338 18/28 UIE Half Year Report

19 UNITED HALF YEAR Consolidated Statement of Changes in Equity for the Period Ended 30 June (The figures have not been audited) Share Share Translation Other Retained controlling Total USD 000 capital premium reserves profits profits Total interests equity On 1 January 35,556 9,159 (11,489) , , , ,574 Total comprehensive income for the period Net profit for the period ,167 25,167 19,602 44,769 Other comprehensive income - - (39,918) - - (39,918) (5,126) (45,044) Total comprehensive income for the period - - (39,918) - 25,167 (14,751) 14,476 (275) Transactions with the owners of the Company Dividends paid (14,221) (14,221) (18,100) (32,321) Total contributions and distributions (14,221) (14,221) (18,100) (32,321) Total transactions with owners of the company - - (39,918) - 10,946 (28,972) (3,624) (32,596) On 30 June 35,556 9,159 (51,407) , , , ,978 Consolidated Statement of Changes in Equity for the Period Ended 30 June 2014 (The figures have not been audited) Non- Non- Share Share Treasury Other Retained controlling Total USD 000 capital premium shares Reserves profits Total interests equity On 1 January ,000 11,076 (77,146) 5, , , , ,588 Total comprehensive income for the period Net profit for the period ,640 28,640 22,225 50,865 Other comprehensive income ,017-8,017 9,715 17,732 Total comprehensive income for the period ,017 28,640 36,657 31,940 68,597 Transactions with the owners of the Company Treasury shares purchased - - (12,124) - - (12,124) - (12,124) Dividends paid (7,284) (7,284) (21,805) (29,089) Total contribution and distributions - - (12,124) - (7,284) (19,408) (21,805) (41,213) Total transactions with owners of the company - - (12,124) 8,017 21,356 17,249 10,135 27,384 On 30 June ,000 11,076 (89,270) 13, , , , ,972 UIE Half Year Report 19/28

20 HALF YEAR UNITED Consolidated Statement of Cash Flows for the Period Ended 30 June (The figures have not been audited) H1 H1 Full Year USD Cash flows from operating activities Receipts from customers 133, , ,916 Payments to suppliers - - (110,740) Payments of operating expenses (93,741) (83,325) (63,131) Payments of taxes (9,801) (8,833) (23,410) Other receipts 3,009 1,294 1,588 Net cash generated from operating activities 32,581 48, ,223 Cash flows from investing activities Proceeds from sale of property, plant and equipment 3, Interest income 3,906 4,157 8,361 Dividend income 493 1,067 1,073 Proceeds from sale of AAK 25,386 32,896 50,848 Purchase of AAK - - (966) Proceeds from sale of portfolio investments 1,819 1,665 2,612 Purchase of portfolio investments (7,929) (1,895) (3,749) Pre-cropping expenditure incurred (5,641) (6,803) (13,890) Purchase of property, plant and equipment (9,913) (6,441) (11,998) Land use rights payment made (29) (265) (436) Investment in jointly controlled entity (551) (1,408) (2,273) VAT received Net cash used in investing activities 10,590 23,210 30,003 Cash flows from financing activities Interest paid (4) (7) (11) Dividends paid (32,321) (29,089) (78,396) Purchase of treasury shares - (12,124) (29,304) Purchase of non-controlling interest - - (2,245) Associated company balances Net cash used in financing activities (32,325) (41,220) (109,954) Net increase in cash and cash equivalents 10,846 30,278 31,272 Cash and cash equivalents at the beginning of year 311, , ,522 Foreign exchange movement (13,315) 6,525 (14,196) Cash and cash equivalents at end of period 309, , ,598 Deposits with licensed banks 158,841 32, ,578 Cash at banks and on hand 150, , ,247 Bank overdrafts - (3) (227) 309, , ,598 20/28 UIE Half Year Report

21 UNITED HALF YEAR Note 1 - Segmentation The segment reporting includes the following two segments: UIE: a holding company which primarily invests in companies in the agro-industrial sector. UIE exercises long-term and active ownership via involvement at board level and through close dialogue with the management about operational and strategic issues. Its current portfolio is built around the world of vegetable oils and is primarily involved in the first and second stages of the vegetable oil value chain. In the UIE segment, the investment in UP is measured by UIE s share of UP s net profit (equity accounting), and the other investments are measured by changes in the fair value of the investments. UP: a company incorporated in Malaysia and its shares are publicly traded on Bursa Malaysia. Its primary business activity is cultivation and processing of oil palms and coconuts on plantations in Malaysia as well as palm oil cultivation and processing in Indonesia and manufacturing and processing of oils and fats in Malaysia. Statement of Financial Position, there is a net reduction in equity, which mainly arises from acquisitions of UP shares at fair value after The excess fair value compared to carrying amount of net assets is accounted for as a reduction of retained earnings. As UIE is a holding company, the Board of UIE is of the view that the best measurement of the performance of the investment in UP is to equity account for the investment (monitor UIE s share of the profit). Accordingly, this measurement is used in the internal reporting to the Management and the Board of UIE as well as in the reporting to shareholders, referred to as Business Reporting. Consequently, the figures for both segments exclude the fair value adjustments of UP s assets related to the acquisition accounting of UP, which are recognised in UIE s consolidated statement of financial position. The impact on equity and net profit can be seen in the tables on the following pages. In the UP segment, the results, assets and liabilities are based on translations of UP s reported figures from Malaysian Ringgit to USD. Difference between Business Reporting and Consolidated Financial Statements According to IFRS, UIE is deemed to have de facto control over UP and hence, UP s net assets recognised in UIE s Consolidated Statement of Financial Position on 31 December 2014, including USD 26.7 million of net fair value adjustments related to the acquisition accounting of UP in Based upon current exchange rates, the annual post tax amortisation of these fair value adjustments is estimated to be less than USD 1 million in the foreseeable future. The net impact on equity attributable to the shareholders of UIE is USD 16.1 million negative on 31 December Despite the positive fair value adjustments included in UP s net assets in UIE s Consolidated UIE Half Year Report 21/28

22 HALF YEAR UNITED Income Statement for the Period Ended 30 June Fair value UIE USD 000 UIE UP Total adjustments Eliminations Consolidated Revenue - 134, , ,789 Other income 376 7,488 7,864 - (54) 7,810 Changes in fair value of MSAB 11,765-11, ,765 Gain on sale of AAK shares Dividend income MSAB Results from investing activities - portfolio Share of results in equity-accounted investments 16,673 (909) 15,764 - (16,673) (909) Total operating income 30, , ,732 - (16,727) 155,005 Operating expenses (1,453) (97,993) (99,446) (460) 54 (99,852) Interest income 68 3,916 3, ,984 Interest expense - (4) (4) - - (4) Net foreign exchange loss (3,491) - (3,491) - - (3,491) Profit before tax 25,488 47,287 72,775 (460) (16,673) 55,642 Tax (12) (11,075) (11,087) (10,873) Net profit 25,476 36,212 61,688 (246) (16,673) 44,769 Profits attributable to Owners of the Company 25,476 36,019 61,495 (19,655) (16,673) 25,167 Non-controlling interests ,409-19,602 25,476 36,212 61,688 (246) (16,673) 44,769 Statement of Financial Position for the Period ended 30 June Fair value UIE USD 000 UIE UP Total adjustments Eliminations Consolidated Assets Cash and short-term deposits 122, , , ,129 Other current assets 9,248 71,896 81, ,144 Total non-current assets 394, , ,951 34,102 (281,004) 517,049 Total assets 526, ,546 1,154,224 34,102 (281,004) 907,322 Liabilities and shareholders equity Total liabilities 5,178 61,601 66,779 9,587 (22) 76,344 Shareholders equity: Equity attributable to owners 521, ,117 1,086,617 11,348 (611,400) 486,565 Non-controlling interest , , ,413 Total shareholders equity 521, ,945 1,087,445 24,515 (280,982) 830,978 Total liabilities and shareholders equity 526, ,546 1,154,224 34,102 (281,004) 907,322 Statement of Cash Flows for the Period ended 30 June Fair value UIE USD 000 UIE UP Total adjustments Eliminations Consolidated Net cash (used in)/generated from operating activities (1,492) 34,073 32, ,581 Net cash (used in)/ generated from investing activities 36,079 (9,266) 26,813 - (16,223) 10,590 Net cash used in financing activities (14,221) (34,327) (48,548) - 16,223 (32,325) 22/28 UIE Half Year Report

23 UNITED HALF YEAR Income Statement for the Period Ended 30 June 2014 Fair value UIE USD 000 UIE UP Total adjustments Eliminations Consolidated Revenue - 155, , ,696 Other income 80 2,122 2,202 - (77) 2,125 Changes in fair value of MSAB 6,866-6, ,866 Changes in fair value of AAK 2,799-2, ,799 Dividend income MSAB Dividend income AAK Results from investing activities - portfolio Share of results of equity-accounted investments 18, ,885 - (18,870) 15 Total operating income 29, , ,553 - (18,947) 168,606 Operating expenses (1,501) (109,919) (111,420) (284) 77 (111,627) Interest income 81 4,092 4, ,173 Interest expense (2) (6) (8) - - (8) Net foreign exchange gain , ,132 Profit before tax 28,706 52,724 81,430 (284) (18,870) 62,276 Tax - (11,653) (11,653) (11,411) Net profit 28,706 41,071 69,777 (42) (18,870) 50,865 Profits attributable to Owners of the Company 28,706 40,777 69,483 (21,972) (18,870) 28,641 Non-controlling interests ,930-22,224 Total 28,706 41,071 69,777 (42) (18,870) 50,865 Statement of Financial Position for the Period ended 30 June 2014 Fair value UIE USD 000 UIE UP Total adjustments Eliminations Consolidated Assets Cash and short-term deposits 90, , , ,328 Other current assets 2,274 82,490 84,764 - (72) 84,692 Non-current assets 494, , ,101 40,849 (338,090) 622,860 Total assets 587, ,868 1,336,193 40,849 (338,162) 1,038,880 Liabilities and shareholders equity Total liabilities 1,254 64,980 66,234 11,746 (72) 77,908 Shareholders equity: Equity attributable to owners 586, ,333 1,269,404 13,435 (712,917) 569,922 Non-controlling interest , , ,050 Total shareholders equity 586, ,888 1,269,959 29,103 (338,090) 960,972 Total liabilities and shareholders equity 587, ,868 1,336,193 40,849 (338,162) 1,038,880 Statement of Cash Flows for the Period Ended 30 June 2014 Fair value UIE USD 000 UIE UP Total adjustments Eliminations Consolidated Net cash (used in)/generated from operating activities (1,499) 49,787 48, ,288 Net cash (used in)/ generated from investing activities 52,525 (10,585) 41,940 - (18,730) 23,210 Net cash used in financing activities (19,409) (40,541) (59,950) - 18,730 (41,220) UIE Half Year Report 23/28

24 HALF YEAR UNITED Note 2 - Accounting Policies UIE s interim report is presented in accordance with IAS 34 Interim Financial Reporting as adopted by the EU and additional Danish disclosure requirements regarding interim reporting for listed companies. The accounting policies applied in these financial statements are the same as those applied in UIE s consolidated financial statements See the Annual Report 2014 for a comprehensive description of the accounting policies applied. It should be noted that UIE should apply IAS 41 in the case of UP s biological assets. This accounting standard applies to biological assets, such as UP s operations in Malaysia and Indonesia, which are required to be accounted for in a manner reflecting changes in their fair value. UP reports in accordance with the applicable Financial Reporting Standards in Malaysia. These standards do not require an entity to account for biological assets and agricultural produce in accordance with IFRS. However, UP has presented (in Note 10a in its Annual Report 2014) the financial effect on its financial statements if biological assets had been measured at fair value in accordance with IAS 41 Agriculture. The effect on UIE s financial statements is shown in UIE s Annual Report 2014, under Note 2.2 (page 61-62). The impact on net profit in 2014 would be USD 51.0 million, and the impact on equity (accumulated) would be USD million and would be included in equity adjustment on foreign currency translation. At the end of June, UP s Directors reassessed the assumptions on which the valuation is based, and they are of the opinion that these have not changed significantly. Therefore, there is no significant variation in the fair value from the valuation made on 31 December Changes to accounting policies With effect from 1 January, the Group has implemented parts of Annual Improvements to IFRSs Cycle and Annual Improvements to IFRSs Cycle. The adoption of these Standards and Interpretations did not affect recognition and measurement in the first half of. Judgments and estimates The preparation of interim reports requires management to make accounting judgments and estimates that affect the use of accounting policies and recognized assets, liabilities, income and expenses. Actual results may differ from these estimates. The most significant estimates made by management when using the Group s accounting policies and the most significant judgment uncertainties attached hereto are the same for the preparation of the interim report as for the preparation of the Annual Report Defining materiality The consolidated financial statements are a result of processing large numbers of transactions and aggregating those transactions into classes according to their nature or function. When aggregated, the transactions are presented in classes of similar items in the consolidated financial statements. If a line item is not individually material, it is aggregated with other items of a similar nature in the consolidated financial statements or in the notes. UP s Directors will continue to review these key assumptions every quarter. However, the valuation will only be updated at year end unless there are any significant changes to the assumptions, resulting in a material change to the valuation. 24/28 UIE Half Year Report