UNAUDITED FINANCIAL STATEMENT ANNOUNCEMENT FOR THE FINANCIAL YEAR ENDED 30 JUNE 2011 1 (a) (i) Income statement (for the Group) together with a comparative statement for the corresponding period of the immediately preceding financial year. Income Statement 2nd Quarter 1st Half 2011 2010 Change 2011 2010 Change US$'000 US$'000 % US$'000 US$'000 % Revenue 93,336 25,226 270% 141,343 48,118 194% Cost of sales (82,842) (20,554) 303% (119,681) (38,099) 214% Gross profit 10,494 4,672 125% 21,662 10,019 116% Distribution costs (394) (433) -9% (2,150) (1,103) 95% Administrative expenses (3,230) (2,067) 56% (6,023) (3,957) 52% Other credits, net 1,254 401 213% 2,927 1,175 149% Operating profit 8,124 2,573 216% 16,416 6,134 168% Financial income 40 11 264% 70 17 312% Financial expense (2,031) (978) 108% (4,055) (2,077) 95% Share of results of equity-accounted joint ventures (149) 24 n/m (77) 37 n/m Profit before income tax 5,984 1,630 267% 12,354 4,111 201% Income tax expense (1,493) (382) 291% (3,219) (826) 290% Net profit for the period 4,491 1,248 260% 9,135 3,285 178% n/m : not meaningful 1
1 (a) (ii) Net profit is arrived at after charging / (crediting) the following significant items: 2nd Quarter 1st Half 2011 2010 Change 2011 2010 Change US$'000 US$'000 % US$'000 US$'000 % Depreciation expense 1,345 937 44% 2,510 1,859 35% Amortisation of land rights 49 41 20% 97 82 18% Foreign exchange gain (1,067) (285) 274% (2,681) (951) 182% Interest expense 2,031 978 108% 4,055 2,077 95% Interest income (40) (11) 264% (70) (17) 312% Gain on disposal of property, plant, and equipment (11) - n/m (11) (113) -90% Additional information : EBITDA 9,369 3,575 162% 18,946 8,112 134% n/m : not meaningful 1 (a) (iii) statement of comprehensive income (for the Group) together with a comparative statement for the corresponding period of the immediately preceding financial year. Statement of comprehensive income 2nd Quarter 1st Half 2011 2010 Change 2011 2010 Change US$'000 US$'000 % US$'000 US$'000 % Net profit for the period 4,491 1,248 260% 9,135 3,285 178% Other comprehensive income Exchange differences on translating IDR functional currency to US dollar presentation currency and foreign operation's financial statements 2,832 436 550% 9,667 5,027 92% Share of other comprehensive income from equity-accounted joint ventures - - n/m - 75 n/m Total comprehensive income for the period 7,323 1,684 335% 18,802 8,387 124% n/m : not meaningful 2
1 (b) (i) Statement of financial position (for the Company and Group), together with a comparative statement as at the end of the immediately preceding financial year. Group Company As at 30/6/2011 As at 31/12/2010 As at 30/6/2011 As at 31/12/2010 US$'000 US$'000 US$'000 US$'000 ASSETS Current assets: Cash and cash equivalents 26,226 24,748 917 294 Trade and other receivables 41,861 40,928 39,832 41,932 Inventories 14,840 10,598 - - Other assets 24,698 9,875 11 3 Financial assets - 31 - - Total current assets 107,625 86,180 40,760 42,229 Non-current assets: Investments in Subsidiaries - - 68,270 65,278 Investments in Joint Ventures 3,346 3,158 3,269 3,125 Other receivables 3,191 3,256 - - Property, plant and equipment 87,337 72,961 - - Biological assets 229,875 208,285 - - Land rights 21,517 12,528 - - Other assets 1,213 1,175 - - Total non-current assets 346,479 301,363 71,539 68,403 TOTAL ASSETS 454,104 387,543 112,299 110,632 LIABILITIES AND EQUITY Current liabilities: Income tax payables 4,739 1,664 - - Trade and other payables 34,870 15,811 433 305 Finance lease 1,202 938 - - Other financial liabilities 34,994 20,847 - - Total current liabilities 75,805 39,260 433 305 Non-current liabilities: Deferred tax liabilities 28,191 27,531 - - Finance leases 1,544 1,144 - - Other financial liabilities 120,555 108,379 - - Other liabilities 1,428 1,111 - - Total non-current liabilities 151,718 138,165 - - Capital and reserves: Share capital 93,860 93,860 93,860 93,860 Other reserves 2,628 2,628 - - Retained earnings 116,006 109,210 727 4,231 Translation reserves 14,087 4,420 17,279 12,236 Total equity 226,581 210,118 111,866 110,327 Total liabilities and equity 454,104 387,543 112,299 110,632 3
1 (b) (ii) Aggregate amount of the Group s borrowings and debt securities. As at 30/6/2011 As at 31/12/2010 US$'000 US$'000 Amount due within one year Secured 25,125 14,007 Unsecured 11,071 4,699 Total 36,196 18,706 Amount due more than one year Secured 122,099 109,523 Total 122,099 109,523 The unsecured borrowings are covered by corporate guarantees of the Company whereas the secured borrowings are secured by certain inventories, trade receivables, land rights, and property, plant and equipment of the Group. In addition, certain loan of a subsidiary is also personal guaranteed by certain shareholders. 4
1 (c) A cash flow statement (for the Group), together with a comparative statement for the corresponding period of the immediately preceding financial period. 2nd Quarter 1st Half 2011 2010 2011 2010 US$'000 US$'000 US$'000 US$'000 Cash flows from operating activities Profit before tax 5,984 1,630 12,354 4,111 Adjustments for : Depreciation expense 1,345 937 2,510 1,859 Amortisation of land rights 49 41 97 82 Interest expense 2,031 978 4,055 2,077 Interest income (40) (11) (70) (17) Gain on disposal of property, plant and equipment (11) - (11) (113) Share of results of equity-accounted joint ventures 149 (24) 77 (37) Post employment benefits 133 95 262 189 Operating profit before changes in working capital 9,640 3,646 19,274 8,151 Inventories (1,734) 54 (4,242) (2,412) Trade and other receivables (8,759) (4,857) 478 (3,400) Other assets (2,840) (1,129) (10,046) (2,231) Trade and other payables 13,029 1,134 20,821 (58) Net Cash flows from operations before interest and tax 9,336 (1,152) 26,285 50 Income taxes paid (2,271) (1,692) (2,898) (2,060) Net cash flows from/(used in) operating activities 7,065 (2,844) 23,387 (2,010) Cash flows used in investing activities Investments in joint ventures - - - (3,006) Purchase of property, plant and equipment (11,674) (5,798) (16,226) (6,102) Acquisitions of subsidiaries (7,326) - (7,326) - Additions to biological assets (5,289) (5,107) (12,647) (10,977) Purchase of land rights (763) (511) (1,051) (980) Interest received 40 11 70 17 Proceed from disposals of property, plant, and equipment 23 61 23 289 Net cash flows used in investing activities (24,989) (11,344) (37,157) (20,759) Cash flows from financing activities Increase in borrowings, net 18,864 20,888 24,403 29,578 Finance lease payment (507) (158) (601) (310) Dividend paid (2,339) (1,430) (2,339) (1,430) Interest paid (3,597) (2,362) (5,980) (4,343) Net cash flows from financing activities 12,421 16,938 15,483 23,495 Net effect of exchange rate changes in consolidating entities 1,142 147 (410) 178 Net (decrease)/increase in cash and cash equivalents (4,361) 2,897 1,303 904 Cash and cash equivalents at the beginning of period 29,880 2,699 24,216 4,692 Cash and cash equivalents at the end of period 25,519 5,596 25,519 5,596 Cash and cash equivalents included in consolidated cash flow consist of the following: Balance as in balance sheet 26,226 6,270 26,226 6,270 Less : Bank overdrafts (707) (674) (707) (674) Cash and cash equivalents at the end of period 25,519 5,596 25,519 5,596 5
The fair values of assets acquired and liabilities from the acquisition of subsidiary companies and the cashflow effects of the acquisition were as follows: * less than US$ 1,000 30/06/2011 US$ 000 Land Rights 7,315 Trade and other receivables 105 Cash and cash equivalents 2 Trade and other payables (94) Tax payable -* Fair value of net assets acquired 7,328 Minority interests -* Total Purchase Consideration 7,328 Cash and cash equivalents on acquisitions (2) Cash flow on acquisition, net cash acquired 7,326 6
1 (d) (i) A statement (company and Group) showing either (i) all the changes in equity or (ii) changes in equity other than those arising from capitalization issues and distributions to shareholders together with a comparative statement for the corresponding period of the immediately preceding financial year. Translation Reserves Other Reserves Total Non-Controlling Interests * Total Equity GROUP Share Capital Retained Earnings US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 Balance as at 1/1/2011 93,860 109,210 4,420 2,628 210,118-210,118 Total comprehensive income - 9,135 9,667-18,802-18,802 Dividend - (2,339) - - (2,339) - (2,339) Balance as at 30/6/2011 93,860 116,006 14,087 2,628 226,581-226,581 Balance as at 1/1/2010 55,774 87,858 (2,483) 2,553 143,702-143,702 Total comprehensive income - 3,285 5,027 75 8,387-8,387 Dividend - (1,430) - - (1,430) - (1,430) Balance as at 30/6/2010 55,774 89,713 2,544 2,628 150,659-150,659 Translation COMPANY Share Capital Retained Earnings Reserves Total Equity US$'000 US$'000 US$'000 US$'000 Balance as at 1/1/2011 93,860 4,231 12,236 110,327 Total comprehensive income - (1,165) 5,043 3,878 Dividend - (2,339) - (2,339) Balance as at 30/6/2011 93,860 727 17,279 111,866 Balance as at 1/1/2010 55,774 784 9,052 65,610 Total comprehensive income - 1,036 2,285 3,321 Dividend - (1,430) - (1,430) Balance as at 30/6/2010 55,774 390 11,337 67,501 *Less than US$1,000 7
1 (d) (ii) Details of any changes in the company s share capital arising from rights issue, bonus issue, share buy-backs, exercise of share options or warrants, conversion of other issues of equity securities, issue of shares for cash or as consideration for acquisition or for any other purpose since the end of the previous period reported on. State also the number of shares that may be issued on conversion of all the outstanding convertibles as at the end of the current financial period reported on and as at the end of the corresponding period of the immediately preceding financial year. Not Applicable 1 (d) (iii) To show the total number of issued shares excluding treasury shares as at the end of the current financial period and as at the end of the immediately preceding year. Total number of issued shares (the Company has not held any treasury shares): As at 30 June 2011 As at 31 December 2010 1,148,044,720 1,148,044,720 1 (d) (iv) A statement showing all sales, transfers, disposal, cancellation and/or use of treasury shares as at the end of the current financial period reported on. Not applicable. 2. Whether the figures have been audited or reviewed, and in accordance with which auditing standard or practice. The financial statements have not been audited or reviewed by the auditor. 3. Where the figures have been audited or reviewed, the auditors report (including any qualifications or emphasis of a matter). Not applicable. 8
4. Whether the same accounting policies and methods of computation as in the issuer s most recently audited financial statements have been applied. The same accounting policies and methods of computation have been applied in these unaudited financial statements as those applied in the most recently audited financial statements as at 31 December 2010, except for the adoption of the new and revised FRS which became effective for our financial year beginning on 1 January 2011. The adoption of the accounting standards (including its consequential amendments) and interpretations is not expected to have any significant impact on the Group s financial statements. 5. If there are any changes in the accounting policies and methods of computation, including any required by an accounting standard, what has changes as well as the reason for, and the effect of, the change. Not Applicable. 6. Earnings per ordinary share of the Group for the current financial period reported on and the corresponding period of the immediately preceding year, after deducting any provision for the preference dividends; (a) Based on weighted average number of shares and (b) On a fully diluted basis (detailing any adjustments made to the earnings) 2nd Quarter 1st Half 2011 2010 2011 2010 US Cents US Cents US Cents US Cents Earnings per share for the period (a) based on weighted average number of share 0.39 0.13 0.80 0.33 (b) based on a fully diluted basis 0.39 0.13 0.80 0.33 Weighted number of shares 1,148,044,720 998,044,720 1,148,044,720 998,044,720 9
7. Net asset value (for the Company and Group) per ordinary share based on issued share capital for the issuer at the end of the (a) current period reported on and (b) immediately preceding financial year. Group Company As at 30/6/2011 As at 31/12/2010 As at 30/6/2011 As at 31/12/2010 US Cents US Cents US Cents US Cents Net asset value per ordinary share 19.74 18.30 9.74 9.61 Number of shares outstanding 1,148,044,720 1,148,044,720 1,148,044,720 1,148,044,720 Net assets value per ordinary share for 30 June 2011 and 31 December 2010 are calculated based on value of net assets as at 30 June 2011 and 31 December 2010 respectively, divided by the total number of issued shares of 1,148,044,720. 8. A review of the performance of the Group, to the extent necessary for a reasonable understanding of the Group s business. It must include a discussion of (a) any significant factors that affected the turnover, costs, and earnings, of the Group for the current financial period reported on, including (where applicable) seasonal or cyclical factors,and (b) any material factors that affected the cash flow, working capital, assets or liabilities of the Group during the current financial period reported on. Review of Group performance 2Q2011 vs 2Q2010 Revenue and profit The Group revenue increased by 270% from US$25.2 million in 2Q2010 to US$93.3 million in 2Q2011. The increase came mainly from: a) higher CPO sales volume (increased from 22,850MT to 86,280MT). The surge in CPO sales volume was the result of higher CPO production and third party purchases, and b) higher average selling price ( ASP ) for CPO (increased from US$710 to US$980). The Group operating profit ( OP ) and net profit after tax ( NPAT ) increased to US$8.1 million and US$4.5 million representing an increase of 216% and 260% respectively over those of 2Q2010. Those increases were spurred by higher revenue and an exchange gain of US$1.1 million in 2Q2011. Costs of Operation The Group cost of sales increased by 303% over that of the same period last year. This increase in cost of sales outpaced the increase in revenue as we have a higher proportion of third party CPO purchases. In spite of the higher revenue, our distribution costs decreased by 9% as a result of less CIF sales in this quarter as compared to that of 2Q2010. 10
The administrative expenses were up by 56% over those of 2Q2010. The increase came mainly from higher headcounts as the operations expanded and the strengthening of IDR over US dollar. Other credits, net comprises movement of foreign exchange, insurance claim and gain on disposal of fixed assets. Our foreign exchange gain for the quarter which amounted to US$1.1million, came mainly from the translation of US$ borrowings (due to strengthening of IDR against US$). The Group interest expense increased by 108% as compared to that in 2Q2010. This was mainly due to the higher charge of borrowing cost to the income statement for mature planted area. Under the accounting treatment, interest cost pertaining to mature planted area is expensed whereas interest cost is capitalised during the immature planting phase. 1H2011 vs 1H2010 Revenue and Profit The Group reported revenue of US$141.3 million, which is almost double the revenue achieved in the same period last year. This was due mainly to the higher CPO sales volume (increased from 46,600MT to 126,200MT) as well as higher ASP for CPO (increased from US$720 to US$980). For the period under review, the Group reported OP and NPAT of US$16.4 million and US$9.1 million respectively as compared to US$6.1 million and US$3.3 million respectively in 1H2010. The increase is due mainly to the higher revenue and the exchange gain of US$2.7million in 1H2011. Cost of Operation Total cost of sales was up by 214% to US$119.7 million. This outpaced the increase in revenue as we have a higher proportion of third party CPO purchases during 1H2011. The 95% increase in distribution cost was mainly due to higher CIF sales made in 1Q2011. The administrative expenses were up by 52% over those for 1H2010. The increase came mainly from higher headcounts as the operations expanded and the strengthening of IDR over US dollar. The increase in Other credits, net was due to a US$2.7 million foreign exchange gain. The Group interest expense increased by 95% as compared to that in 1H2010. This was mainly due to the higher charge of borrowing cost to the income statement for mature planted area. For 1H2011, the effective tax rate was relatively higher as losses of certain subsidiaries cannot be off set against the profit of the other entities in the Group. 11
Review of financial position The Group Shareholders equity increased to US$226 million as at 30 June 2011. The increase was due to profit generated in the period (net of payment of US$2.3 million dividend) and gain in translation (due to the strengthening of IDR against US dollar, from US$1: Rp8,991 to US$1: Rp8,597). Total non-current assets increased to US$346 million from US$301 million. This was mainly due to: a) US$21.6 million increase in the value of the biological assets, attributable mainly to expenditure incurred on new planting and on maintenance of immature plantations totalling US$9.4 million, capitalisation of interest and depreciation amounting to US$1.9 million and a foreign exchange translation gain of US$9.8 million (as a result of strengthening of IDR), b) the increase of US$14.4 million in property, plant and equipment. This was mainly due to construction of our 4th CPO mill, spending on infrastructure, buildings, heavy equipment in our plantations and a translation gain of US$3.4 million, and c) US$9.0 million increase in the value of land rights. The increase came mainly from the Group acquisition in 2Q2011, of 2 new subsidiaries which own the land. Total current assets increased by US$21 million to US$108 million as at 30 June 2011. The increase was mainly due to: a) increase in advance payment (under Other Assets ) of US$14.9 million. This comprises payment for the development of new planted area of US$2.3 million, purchase of raw materials amounting to US$7.9 million and prepayment of development for the new mill of US$1.8 million, and b) increase in inventories of CPKO and spare parts amounting to US$3.7 million. The US$36.5 million increase in current liabilities was mainly due to: a) increase in trade payables by US$19.1 million as a result of the purchase of palm oil products towards end June 2011, and b) US$17.4 million increase in short term working capital loan and trade facility which is in line with increase in sales volume. The long-term borrowings increased by US$12.6 million, which were used mainly for additional development of plantations and construction of a new CPO mill. 12
Review of Group Cash flow Our operating cash flow grew by US$9.9 million and US$25.3 million over those of 2Q2010 and 1H2010 respectively. This improvement was principally due to higher revenue achieved in 2011. For the periods ended 2Q2011 and 1H2011, our capital expenditure was US$25.0 million and US$37.2 million respectively, up 120% and 79% respectively over those pertaining to the same periods last year. In 2011, we have higher capital expenditure as we expanded our planting program as well as acquired more land bank. Our cash from financing activities decreased 35% and 40% respectively as compared to those of previous periods. This was principally due to lower drawdown of the bank loan, higher repayment of loan including interest in 2011. 9. Where a forecast, or a prospect statement, has been previously disclosed to shareholders, any variance between it and the actual results. Not applicable. 10. A commentary at the date of the announcement of the significant trends and competitive conditions of the industry in which the Group operates and any known factors or events that may affect the Group in the next reporting period and the next 12 months. The adverse effects of the last El Nino and La Nina are fading. Weather conditions have improved in 1H2011. With the improved weather conditions, palm oil production in both Indonesia and Malaysia (world's major producers) has recovered in the 1H2011. With the expected continuing favourable weather conditions, the global supply outlook for palm oil in the 2H2011 is expected to remain good which may in turn put some pressure on prices of palm oil in 2H2011. However, we believe that the relatively low stocks of oilseeds in several major countries may alleviate the price pressure and provide some support to the prices of vegetable oils. Global demand for vegetable oils is strong this season and is likely to continue to be so in the 2H2011. The supply and demand scenario for vegetable oils is expected to remain robust until end of 2011. In particular, the demand for palm oil will remain strong, with the current higher prices for soy-oil. Given the above, barring any unforeseen circumstances, the Company is expected to perform well in 2011. The increasing mature area and yield will also help the Company to weather some challenges which may occur from time to time in the near future. 11. If a decision regarding dividend has been made. (a) Current Financial Period Reported On Nil. (b) Corresponding Period of the Immediately Preceding Financial Year Nil. 13
12. If no dividend has been declared (recommended), a statement to that effect. Not applicable. 13. Interested persons transactions disclosure Name of interested person Aggregate value of all interested person transactions during the financial year under review (excluding transactions less than S$100,000 and transactions conducted under shareholders mandate pursuant to Rule 920) Aggregate value of all interested person transactions conducted under shareholders mandate pursuant to Rule 920 (excluding transactions less than S$100,000) 2Q 1H 2Q 1H US$ 000 US$ 000 US$ 000 US$ 000 Wilmar Group (Sales) - - 17,174 42,277 Wilmar Group (Purchases) - - 6,635 9,538 PT Berkat Wahana Sukses (Services) 380 1,611 - - PT Alamindo Sejahtera Persada (Services) 1,036 4,012 - - 14. CONFIRMATION PURSUANT TO THE RULE 705(5) OF THE LISTING MANUAL The Directors do hereby confirm that to the best of their knowledge, nothing has come to their attention which would render the unaudited financial statements for the period ended 30 June 2011 to be false or misleading in any material aspect. BY ORDER OF THE BOARD Kent Surya Finance Director 13 August 2011 14