Anglo Eastern Plantations : Preliminary Results

Anglo-Eastern Plantations Plc

('AEP', 'Group' or 'Company')

Preliminary announcement of results for year ended 31 December 2017

The group comprising Anglo-Eastern Plantations Plc and its subsidiaries (the 'Group'), a major producer of palm oil and rubber with plantations across Indonesia and Malaysia amounting to some 128,200 hectares, has today released its results for the year ended 31 December 2017.

Financial Highlights

Enquiries:

Chairman's Statement

The Group's Fresh Fruit Bunches ('FFB') production in 2017 was 929,600mt, 4% higher than the previous year of 897,700mt. The better crop production was attributed primarily to the recovery of yield in the Riau region following a sharp drop last year and a higher yield from maturing trees in Kalimantan. The throughput at the six mills in 2017 was at a record high as the Group purchased more external crops. External crops were in abundance and readily available, especially in the first half of the year, due to a strong recovery of FFB production after the El-Nino weather disruption. FFB bought-in from surrounding smallholders was 998,400mt (2016: 813,700mt), 23% higher, due to the Group's favourable purchasing policy. The mills, as a result, processed 12% more FFB and increased Crude Palm Oil ('CPO') production by 11% to 390,600mt (2016: 353,100mt).

Revenue and profitability were in line with increased CPO production and better prices. The average CPO price ex-Rotterdam in 2017 was 2% higher at $718/mt, compared to $706/mt in 2016.

The Group's revenue was higher by 19% at $291.9 million, compared to $246.2 million achieved in 2016. The operating profit for the Group in 2017, before the biological asset ('BA') movement was $66.7 million, 27% higher compared to $52.5 million achieved in 2016. Earnings per share, before BA movement, increased by 12% to 91.80cts, from 82.16cts in 2016. The Group's operating profit after BA for 2017 was at $66.4 million after a downward BA movement of $0.3 million as compared to 2016 operating profit of $55.9 million after an upward BA movement of $3.4 million.

The Group planted 3,500ha of oil palms in 2017 of which 1,694ha comprised of replanting. Replanting is expected to continue this year in the 480ha of older plantations where the palm trees have reached the end of their productive life with dropping yield. New planting did not pick up in 2017 due primarily to delays in finalising agreements with villagers for land compensation payments in South Sumatera, Bangka and Kalimantan. This issue is likely to continue as villagers demand higher compensation for their land.

The Group has two biogas plants in commercial operation and generated over 11,500MWh of electricity in 2017. The revenue from the sale of surplus electricity to the national grid was $0.87 million. The 2 megawatt biogas plant in Bengkulu has underperformed since it started operation in May 2017 due to frequent power blackouts in the state electricity supply caused by faulty transmission lines and unstable power voltage. The situation, however, is expected to improve in the second half of 2018 after government upgrade and repairs of transmission lines are completed. In the coming years, revenue from the sale of surplus electricity is expected to increase further as the third biogas plant in Kalimantan has been completed and has been operating since the first quarter of 2018. The use of clean energy in the mills will further reduce their reliance on fossil fuels and improve the Group's carbon footprint.

In 2018 the Group will embark on the development of its seventh mill and its fourth biogas plant in North Sumatera. The 60mt/hr mill is estimated to cost approximately $19 million which is higher than the cost of the existing mills, as it is expected that the civil and structural work including earthwork will be much greater due to the condition of the soil. The timing of construction of the mill in Labuhan Bilik coincides with the maturity of the trees as the FFB production is projected to peak in the next two years and an in-house mill would cut down the transport cost on the 180 km journey to the currently utilised mill. The biogas plant is estimated to cost an additional $3.8 million

After an absence of one year, AEP, with effect from 1 June 2017, has been included in the Financial Times Stock Exchange ('FTSE') Small Cap and FTSE All Shares Index.

The Indian government in March 2018 raised import tax on both CPO and refined palm oil, the fourth increase in less than six months and the highest level in more than a decade, this increase was designed to protect the local refineries and support local oilseeds production. This may make CPO and refined palm oil more expensive and may impact negatively on the consumption in India, the largest consumer of CPO.

In Europe, which is the second largest consumer of palm oil, the European Parliament's introduction of a single certification scheme for palm oil entering the European Union ('EU') market and the phase out of the use of palm biodiesel by year 2020 may decrease the demand for CPO. The adverse perception of palm oil continues to feature in recent years, touching on issues including deforestation, emission of greenhouse gases, planting on peatland and land rights.

Notwithstanding the aforementioned, global demand for palm oil should continue to be strong given the CPO's attractive price discount to soybean oil.

The Board is mindful that given the anticipated further capital commitments, the level of dividend needs to be balanced against the planned expenditure, as well as other viable investment opportunities in the countries where the Group operates. The Board is also mindful of shareholders' sentiment and therefore declared a final dividend of 4.0cts per share, in line with our reporting currency, in respect of the year to 31 December 2017 (2016: 3.8cts equivalent). Subject to the approval by shareholders at the Annual General Meeting, the final dividend will be paid on 13 July 2018 to those shareholders on the register on 8 June 2018.

On behalf of the Board of Directors, I would like to convey our sincere thanks to our management and all employees of the Group for their dedication, loyalty, resourcefulness, commitment and contribution to the success of the Group.

I would also like to take this opportunity to thank shareholders, business associates, government authorities and all other stakeholders for their continued confidence, understanding and support for the Group.

Madam Lim Siew Kim

Chairman

24 April 2018

Strategic Report

Introduction

The strategic report has been prepared to provide shareholders with information to complement the financial statements. This report may contain forward-looking statements, which have been included by the Board in good faith based on information available up to the time of approval of this report. Such statements should be treated with caution going forward given the uncertainties inherent with economic and business risks of the Group.

Business Model

The Group will continue to focus on its strength and expertise, which is planting more oil palms. This includes replanting old palms with low yield, replacing old rubber trees with palm trees and building more mills to process the FFB. The Group has, over the years, created value to shareholders through expansion in a responsible way. The Group remains committed to use its available resources to develop the land bank in Indonesia as regulatory constraints permit. The Indonesian government has, in recent years, passed laws to prioritise domestic investments and to limit foreign direct investments over national interest, including a 100,000 ha limit on licensed development of oil palms for companies that are not listed in Indonesia or under majority local ownership.

The Group's objectives are to provide appropriate returns to investors in the long-term from its operations as well as through the expansion of the Group's business, to foster economic progress in localities of the Group's activities and to develop the Group's operations in accordance with the best corporate social responsibility and sustainability standards.

We believe that sustainable success for the Group is best achieved by acting in the long-term interests of our shareholders, our partners and society.

Our Strategy

One of the Group's objectives is to provide an appropriate level of returns to the investors and to enhance shareholders' value. Profitability however is very much dependent on the CPO price, which is volatile and determined by supply and demand. The Group believes in the long-term viability of palm oil as it can be produced more economically than other competing oils and remains the most productive source of vegetable oil in a growing population.

The Group's strategies therefore focus on maximising yield per hectare above 22mt/ha, mill production efficiency of 110%, minimising production costs below $300/mt and streamlining estate management. For the year under review, the Group achieved a yield of 17.9mt/ha, 134% mill efficiency and production cost of $281/mt on Indonesian operations. This compared to 2016 where the Group achieved a yield of 17.3mt/ha, 119% mill efficiency and production cost of $275/mt. Despite stiff competition for external crops from surrounding millers, the Group is committed to purchasing more external crops from third parties at competitive, yet fair prices, to maximise the production efficiency of the mills. With higher throughput, the mills would achieve economies of scale in production. A mill achieves 100% mill efficiency when it operates 16 hours a day for 300 days per annum.

In line with the commitment to reduce its carbon footprint, the Group plans to construct, in stages, biogas plants at all of its mills to trap the methane gas emitted from treatment of palm mill effluents to generate electrical power and at the same time reduce the consumption of fossil fuel. It plans to sell the surplus electricity and progressively reduce the greenhouse gas emissions per metric ton of CPO produced in the next few years.

The Group will continue to follow-up and offer competitive and fair compensation to villagers so that land can be cleared and can be planted on.

Financial Review

The financial statements have been prepared in accordance with International Financial Reporting Standards and its interpretations (IFRS and IFRIC interpretations) issued by the International Accounting Standards Board ('IASB') as adopted by the EU and with those parts of the Companies Act 2006 applicable to companies preparing their accounts under IFRS.

For the year ended 31 December 2017, revenue for the Group was $291.9 million, 19% higher than $246.2 million reported in 2016 due primarily to higher CPO production and a higher CPO price.

The Group's operating profit for 2017, before biological asset movement, was $66.7 million, 27% more than $52.5 million in 2016.

FFB production for 2017 was 929,600mt, 4% higher than the 897,700mt produced in 2016. The yield for 2017 improved marginally due to strong recovery of production in Riau and higher yield from maturing trees in Kalimantan. FFB bought-in from local smallholders in 2017 was 998,400mt (2016: 813,700mt), 23% higher compared to 2016. During the year, the Group's mills processed 1.9 million mt of FFB, 12% higher than last year of 1.69 million mt. CPO production as a result was 11% higher at 390,600mt, compared to 353,100mt in 2016.

Profit before tax and after BA movement for the Group was $69.7 million, 15% higher compared to a profit of $60.8 million in 2016. The BA movement was a debit of $0.3 million, compared to a credit of $3.4 million in 2016.

The average CPO price ex-Rotterdam for 2017 was $718/mt, 2% higher than 2016 of $706/mt.

Earnings per share before BA movement increased by 12% to 91.80cts compared to 82.16cts in 2016. Earnings per share after BA movement increased from 87.58cts to 91.37cts.

Going Concern

The Group's balance sheet remains strong. As at 31 December 2017, the Group had cash and cash equivalents of $139.5 million and borrowings of $27.9 million, giving it a net cash position of $111.6 million, compared to $84.1 million in 2016. The Group's borrowings in the year reduced to $27.9 million (2016: $34.1 million). For these reasons, the Directors adopt a going concern basis of accounting and believe the Group will continue in operation and meet its liabilities for a period of at least twelve months from the date of approval of the financial statements.

Business Review

Indonesia

FFB production in North Sumatera, which aggregates the estates of Tasik, Anak Tasik, Labuhan Bilik, Blankahan, Rambung, Sg Musam and Cahaya Pelita ('CPA'), produced 289,900mt in 2017 (2016: 303,500mt), 4% lower than 2016. Replanting of over 1,600ha of oil palm in Tasik Raja and Anak Tasik contributed to the overall lower production. During the year, 82ha of old rubber trees in Rambung were also replanted with oil palm. The average yield in CPA remains low at 16.8mt/ha as the FFB production during the year was disrupted by flash floods caused by heavy rain exceeding 4,500mm per annum that regularly occurred over 2,000ha of low laying plantation. The frequent and prolonged flooding also resulted in an incomplete manuring program which caused the palm growth to be retarded in some 500ha. To minimise disruption caused by flooding, new planting in some 100ha was carried out on a raised platform of one metre high and four metres wide, which was completed in August 2017. In some low laying areas, mounding of palm was carried out to minimise the impact of flooding on existing palms. In 2018 CPA is expected to construct more water gates, mud bunds and dredging of rivers and drains to reduce the impact of flash floods.

Ganoderma fungusand Upper Stem Rotwhich attack about 10% of the productive palms in Anak Tasik remain a serious threat. Water management, good sanitation and high standards of agronomic practices remain the main priority to avoid spreading the diseases, including proper disposal of severely diseased palms after detection. Soil mounding on infected palms was carried out to lengthen the economic lifespan of oil palms, and the continuation of replanting in 2017 and 2018 in Anak Tasik will significantly reduce the threat of Ganodermaattack. There was no serious insect damage by the Oryctes beetle,other leaf eating pests, wild animals or rats.

The Blankahan biogas plant sold over 6,700 MWh of surplus electricity since it started commercial operation early this year and generated $0.53 million in revenue. The biomass plant also exported 7,228mt of dried long fibres worth over $0.64 million in 2017 compared to 4,000mt last year at $0.32 million.

FFB production in Bengkulu and South Sumatera, which aggregates the estates of Puding Mas ('MPM'), Alno, KKST, ELAP and RAA produced 334,000mt (2016: 337,100mt), 1% lower than 2016. Exceptionally high rainfall of over 5,500mm in Bengkulu has affected the collection of crops and quality of oil. Resurfacing of damaged roads using sirtu was delayed until August 2017 until the contractors were able to obtain stone mining licenses from the local authorities. In total 375km of roads were either resurfaced, graded or compacted in 2017. Some remote locations can only be accessed by tractors and four-wheel drive vehicles for transport of FFB, in-filling and maintenance work. A total of approximately 22,000 trees were planted at vacant spots in ELAP and KKST which were previously damaged by wildlife. As most of the estates are situated close to forest reserves, wild boars and herds of elephants continued to damage palm trees. Deep trenches and fencing provide temporary relief. The replanting exercise has raised the stems per ha in both ELAP and KKST estates to about 94 palms/ha. Over 71,000mt of EFB was applied to over 1,000ha of oil palm field to improve the soil condition. The protracted negotiation with the villagers over land compensation will have an effect on the future planting in Bengkulu and South Sumatera.

The MPM biogas plant which began commercial operation in May 2017 sold over 4,800 MWh of surplus electricity and generated $0.3 million in revenue in 2017.

FFB production in the Riau region, comprising Bina Pitri estates, produced 124,500mt in 2017 (2016: 111,100mt), 12% higher than 2016. Conducive rainfall patterns have resulted in higher yield and rapid recovery from the severe drought and haze in 2015. External crop purchase at the mill also exceeded last year's purchase by 29%. Overall CPO production improved by 20% to 69,200mt compared to 57,800mt in 2016. Going forward competition for external crops will remain a challenge due to more up and coming mills in the surrounding areas of Bina Pitri.

FFB production in Kalimantan which comprises of the Sawit Graha Manunggal ('SGM') and Kahayan Agro Plantation ('KAP') estates produced 158,000mt in 2017 (2016: 121,800mt) 30% higher than 2016 as more trees matured and reached peak production age. However, exceptionally high rainfall in March and April 2017 had affected the harvest of fruits and quality of oil produced in SGM. In the months that followed, SGM incurred considerably higher costs to resurface roads using RT20 chemicals, sirtu and laterite. The height of some low laying access roads was raised to counter floods during the rainy season and to ensure efficient evacuation of FFB. Bagworm attack in SGM was under control and was below the 5% threshold of its planting. Pesticide containing Klorantraniliproland Achepatewas sprayed bi-monthly until infestation was eradicated. In the year, over 400ha of palm trees in KAP matured leading to its first harvest. The FFB from KAP was transported over 600km to SGM mill for processing. Over 4,000ha has been planted with oil palm in KAP. CPO sold in Kalimantan, however, fetched a lower price and is at a discount to mills in Sumatera due to higher logistics costs caused by the distance to the refinery and poor road infrastructure.

During the year the Group engaged an independent agronomic consultant to make field visits for underperforming estates in Indonesia to provide advice on optimizing field disciplines and improving crop yields. The Board believes that with closer monitoring of field performance and improvements made, the crop yield should further improve in the coming years.

Overall bought-in crops for Indonesian operations were 23% higher at 998,400mt for the year 2017 (2016: 813,700mt). The average oil extraction rate from our mills was 20.5% in 2017 (2016: 20.9%).

Malaysia

FFB production in 2017 was 9% lower at 21,900mt, compared to 24,000mt in 2016. The Malaysian operations continued to face a severe shortage of workers due to difficulty in recruiting foreign workers which hampered harvesting and estate maintenance work such as fertilizing, pruning, weeding and replanting. Despite the increase in wages and various cash incentives introduced by management, the estate continued to lose its foreign workers who left for better wages and working conditions in the city. The shortage of labour is the biggest challenge facing the industry in Malaysia. In 2018, the Group has begun to recruit workers from other countries to complement its Indonesian workforce. In 2017, the Malaysian plantations had $0.6 million pre-tax profit after BA movement compared to $0.8 million in 2016.

Commodity Prices

The CPO ex-Rotterdam price started the year at a high of $790mt (2016: $570/mt) but softened as production in both Indonesia and Malaysia recovered from the low of last year. It dipped to its lowest level at $640/mt in the middle of June 2017, before increasing to the $700/mt range before news of a steep levy imposed by the Indian government on the import of CPO and refined oil into India brought the price down again. Its peak at $852/mt in the middle of January 2017 was due to low stock inventory. It ended the year at $670/mt (2016: $795/mt), averaging $718/mt for the year, 2% higher than last year (2016: $706/mt). The CPO inventory was at the highest in two years.

Over a period of ten years, CPO price has touched a high of $1,400/mt and a low of just above $400/mt. The average price over the ten years is about $837/mt. CPO price is under tremendous pressure and remains unpredictable due to the impending ban on import of palm biodiesel into the EU by 2020 and the high levy of CPO imports into India. It was reported that about 46% of total palm oil imports of 6.5 million metric tonnes into the EU were used in biofuels. Weather remains an important factor that will affect not just the production of CPO but other oilseeds.

Rubber prices averaged $1,607/mt for 2017 (2016: $1,324/mt). Our small area of 425ha of mature rubber contributed a revenue of $1.3 million in 2017 (2016: $1.1 million).

Corporate Development

In 2017, the Group opened up new land and planted 1,808ha of oil palm mainly in Kalimantan, boosting planted area including the smallholder cooperative scheme, known as Plasma, by 2.5% to 68,310ha (2016: 66,670ha). This excludes the replanting of 1,694ha of oil palm in North Sumatera. New plantings remain behind schedule due to delays in finalising settlement of land compensation with villagers in South Sumatera, Bangka and Kalimantan. The villagers seek compensation beyond what the Group considered fair and reasonable resulting in protracted negotiations.

The 2 megawatt biogas plant in Bengkulu is supplying electricity to the State Electricity Company. In the eight months of operation, it generated 4,807MWh of electricity worth $0.3 million. The sale of electricity is, however, frequently interrupted by power blackouts in the state electricity supply caused by faulty transmission lines and unstable power voltage. The situation is likely to improve in the second half of 2018 after upgrade and repairs of transmission lines are completed. The third biogas plant in Kalimantan has been completed and is ready for commissioning. The three biogas plants will further reduce the mills' reliance on fossil fuels and improve the Group's carbon footprint. With the current shortage of power supply in North Sumatera, the Group is conducting a feasibility study to build its fourth biogas plant in Rantau Prabat which is expected to cost up to $3.8 million. The state electricity company has reacted positively to the proposal to build a biogas plant in North Sumatera.

The Group will start construction of its seventh mill in North Sumatera in 2018. The 60mt/hr mill is expected to cost $19 million and will be substantially funded by internal cash flows. Costs of civil and structural works including earthworks would be higher as the mill is built on shallow peat soil. The site needs to be compacted with mineral soil and 38 metre long concrete piles to support the construction of the mill and storage facilities. The Group has over the past three years explored various sites outside the plantation and along the Barumun river for the construction of a mill, however, it was not able to obtain the necessary permit which allows conversion of agricultural into industrial land.

Corporate Social Responsibility

Corporate Social Responsibility ('CSR') is an integral part of corporate self-regulation incorporated into our business model. Our Group embraces responsibility for the impact of its activities on the environment, consumers, employees, communities, stakeholders and all other members of the public sphere. In engaging the social dimension of CSR, the Group's business has taken cognizance of the contribution and further enrichment of its employees while continuing to make contributions to improve the well-being of the surrounding community.

The majority of employees and their dependents in the plantations and mills are housed in self-contained communities built by the Group. The employees and their dependents are provided with free housing, clean water and electricity. The Group also builds, provides and repairs places of worship for workers of different religious faiths as well as schools and sports facilities in these communities. Over the years, the Group has built a total of 73 mosques and 18 churches across its estates. During the fasting month, the management team frequently broke fast with the employees from the estates and mills as well as with surrounding villagers. It also sponsored and donated cows for sacrifice to celebrate religious festivals. The Group spent $326,000 in 2017 to maintain these amenities and support the communal activities.

The Group provides free education for all employees' children in the local plantations and communities where they work. In addition, the Group provides computers and funding to construct educational facilities including laboratories and libraries. The salaries of teachers in the estates and the cost of school buses to transport employees' children to schools are provided by the Group. Over the years a total of 37 schools which comprised of 20 pre-schools, 11 primary schools, 5 secondary schools and 1 high school have been built with a combined enrolment of over 4,000 students. It currently employs 150 teachers in the estates. The Group bought an additional school bus in Tasik Raja taking the tally of school buses operated by the Group in 2017 to 35 vehicles. In the year, the Group spent some $693,000 on running the schools and operating the buses.

As part of the Group's contribution to education, it provides scholarships to qualified students from the communities as well as our employees' children to pursue tertiary education. It started a partnership with a university in North Bengkulu in 2013 to sponsor and provide students with the chance to pursue higher education. During 2017, over 300 scholarships had been awarded at a cost of $115,000. Similarly, 92 children of our employees were sponsored, which cost over $80,000 since its introduction in 1999, to study in various universities in Indonesia. The popular courses taken ranged from Engineering, Education, Economics to Agriculture. 36 of them had successfully graduated from the universities with some of them now working for the Group.

The Group continues to provide free comprehensive health care for all its workers as we believe that every employee and their dependents should have easy access to health services. We have established 22 clinics operated by qualified doctors, nurses and hospital assistants in the estates. The Group upgraded two of its clinics in North Sumatera and Bengkulu to meet the minimum standard required by the government under the country's Health and Social Security Agency. The upgraded clinics also provided health care services to the surrounding community without the need to travel to faraway cities for medical treatment. In addition, the Group organised fogging to prevent the spread of dengue mosquitoes.

In remote and isolated locations where piped water is not available, the Group drilled tube wells to provide clean water. This year it built a water treatment plant in Bengkulu to provide clean water to workers and staff at a cost of over $40,000. Related healthcare expenses including monthly contribution to Health and Social Security Agency in 2017 were $518,000.

A strong commitment to CSR has a positive impact on employees' attitudes and boosts employee recruitment. The Group realises that employees are valuable assets in order to run an efficient, effective, profitable and sustainable business and operations. Selected employees are given the opportunity to attend seminars and external training to enhance their working skills and capability. The Group constantly recruits potential field employees who are now sent to the Group's central training facilities in Blankahan, set up in 2014, to undergo a rigorous twelve month training programme which includes theory and practical field work. A total of 303 employees have participated in the programme since its inception in 1993 with 35% still working for the Group. Over the years, one employee has successfully been promoted to General Manager level with another 17 being employed in various senior positions in the head office, plantations and mills.

The Group also recognises its obligations to the wider farming communities in which it operates. The Indonesian authorities have established that not less than 20% of the newly planted areas acquired from 2007 onwards are to be reserved for the benefit of the smallholder cooperative scheme, known as Plasma, and the Group is integrating such smallholder developments alongside its estates. The Plasma development has commenced in stages for its estates in Sumatera and Kalimantan. Out of the 5,795ha of land compensated for Plasma, the Group has planted oil palm in 2,862ha. In 2017 the Group received 16,400mt of FFB from Plasma schemes compared to 12,300mt the previous year. Total revenue after deduction of management fees received by Plasma cooperatives was $1.6 million in 2017 against $1.2 million in 2016. There is a substantial increase in Plasma planting from 2016 of 1,712ha which is in line with the Group commitment.

In order to aid the development of Plasma schemes, the Group provided corporate guarantees of over $17 million through its subsidiaries to local banks to cover loans raised by the cooperatives. The Group also assisted the cooperatives to obtain the proper land right certification from the local land office.

The Group supported the Kas Desa smallholder village development programme to supplement the livelihood of the villages. The Group has to-date financed, developed and managed 22 smallholder village schemes of palm oil across four companies.

In addition, the Group also develops infrastructure, such as the construction and repair of bridges maintained over 400km of external roads in 2017. The Group also provides initial aid and seed capital to villagers such as fruit seedlings, fish fries, cattle and ducks to start community sustainable programs.

Indonesian Sustainable Palm Oil ('ISPO')

The ISPO certification is legally mandatory for all plantations in Indonesia. In March 2012, ISPO, which is fundamentally aligned to RSPO (Roundtable on Sustainable Palm Oil) principles, has become the mandatory standard for Indonesian planters.

A Steering Committee was established to work out a roadmap to support the ISPO implementation at mills and estates. Workshops and training sessions on occupational safety and healthcare were carried out to inculcate a safety culture in workplaces at all the estates and mills. In 2017 the regional government in North Sumatera awarded two operating companies in the Group Zero Accident Awards for 2016 in recognition of the companies' effort to reduce accidents at the work place. The Group continued to upgrade its agricultural chemical stores and diesel fuel storage tanks in various plantations and mills to meet safety and environmental standards. Standard operating procedures were refined and documented based on sustainable oil palm best practices. It also conducts internal audits using an audit checklist adopted from the above practices to determine the level of compliance. The Group worked closely with appointed certification consultants in the implementation of ISPO standard. To-date eight companies have been ISPO certified including two in 2017. Another three companies have completed the second stage of ISPO audit while the certification audit has progressed to the second stage for another five companies. ISPO certification provides third party verification and confirmation that the companies are operating according to national and international standards. The Group targets full ISPO compliance by 2020.

Care For The Environment and Sustainable Practices

As a Group, we highlight the importance of creating awareness and implementation of good environmental management practices throughout the organisation. The Group has been consistently practising good agricultural practices such as zero burning, integrated pest management, land terracing and recycling of biomass. When it comes to replanting, the old palms felled are chipped and left to decompose at the site. This mitigates the greenhouse gas emissions commonly associated with open burning when land is cleared through the traditional method of slash-and-burn. It also enriches the organic matter in the soil. Where the land is undulating, we build terraces for planting which helps to prevent landslides, conserve the water and nutrients effectively and provide better accessibility for employees. Legume cover crops are planted to minimise soil erosion and preserve the soil moisture. In mature areas, fronds and EFB are placed inter-rows to allow the slow release of organic nutrients while minimising soil erosion especially sandy soil and degradation. Estates with sandy areas use soft grass, ferns and cut fronds to cover bare ground which increase soil moisture. Conservation drains are constructed to harvest and contain rainwater.

The effluents discharged from the mills are fully treated in anaerobic lagoons and in some mills, there are extended aeration tanks for further treatment of the effluent. The final discharge is applied to the estate's land where it is used as fertilisers.

The Group's three biogas plants will enhance the effluent treatment in the mills and at the same time mitigate greenhouse biogas emissions. The trapped biogas will be used to generate and supply power to its biomass plant and national grid without dependency on fossil fuels. Similar undertakings for the Group's mills are planned and shall be implemented in stages. The Group intends to sell the surplus power generated.

The Group is committed to implementing good agricultural practices as spelt out in its standard operating procedures for the planting of oil palm. Integrated Pest Management has been adopted to control the population of damaging pests and to improve biological balance.

Barn Owls were introduced to control rats. Beneficial plants of Turnera subulata, Cassia cobanensis and Antigonon leptopus were planted to attract natural predators for biological control of bagworms and leaf-eating caterpillars. Weeds are controlled selectively by using more environmentally friendly and broad spectrum weed control herbicides such as Glyphosate which is also less costly.

The use of Paraquat herbicide and chemicals has been reduced and minimised to control weeds and vermin.The sprayers are also trained in safety and spraying techniques. The chemicals are kept in designated storage and examined at regular intervals. Employees who handle the use of chemicals undergo medical examination routinely. Natural vegetation on uncultivable lands such as deep peat, very steep areas and riparian zones along watercourses are maintained to preserve biodiversity and wildlife corridors.

The Group continues to comply and preserve the High Conservative Value ('HCV') areas recognised by the Department of Forestry. All sacred and customary lands are also preserved by the Group out of respect for the local tribes and customs to pray and conduct their ritual ceremonies.

The six mills in the Group are operating in compliance with criteria set by Program Penelitian Peringkat Kinerja Perusahaan ('PROPER') overseen by the Indonesian Department of Environment. Many of the criteria set by PROPER are also part of the ISPO requirement. Three of the mills are officially graded and rated to adhere to the criteria set for the management of waste and compliance to environmental conservation over water resources, land development, air and sea pollution, dangerous and toxic waste treatment which impact the environment. No official grading is required for the rest of its mills even though they are in compliance.

Principal risks and uncertainties

The Group's business involves risks and uncertainties of which the Directors currently consider the following to be material. There are or may be other risks and uncertainties faced by the Group that the Directors currently deem immaterial, or of which they are unaware, that may have a material adverse impact on the Group. The Board carries out a robust assessment of the principal risks facing the Group on an annual basis.

Gender diversity

The AEP Plc Board is composed of three men and one woman with extensive knowledge in their respective fields of experience. The Board has taken note of the recent legislative initiatives with regard to the representation of women on the boards of Directors of listed companies and will make every effort to conform to its composition based on legislative requirement.

Although the Group provides equal opportunities for female workers in the plantations, the male workers make up a majority of the field workers due to the nature of work and the remote location of plantations from the towns and cities. Nevertheless, the percentage of female workers within the Group increased from 28% in 2016 to 29% in 2017.

Employees

In 2017, the number of full time workers averaged 5,694 (2016: 5,838) while the part-time labour averaged 9,997 (2016: 10,934). The headcount in 2017 was lower by 6% as the resignation and retirement in certain estates have not been replaced and some positions have been streamlined. Moreover, fewer harvesters were required due to the replanting exercise.

The Group has formal processes for recruitment, particularly for key managerial positions, where psychometric testing is conducted to support the selection and hiring decisions. Exit interviews are also conducted with departing employees to ensure that management can address any significant issues.

The Group has a programme for recruiting graduates from Indonesian universities to join existing employees, selected on a regular basis, on training programmes organised by the Group's training centre that provide grounding and refresher courses in technical aspects of oil palm estate and mill management. The training centre also conducts regular programmes for all levels of employees to raise the competency and quality of employees in general. These programmes are often supplemented by external management development courses including attending industry conferences for technical updates. A wide variety of topics are covered including work ethics, motivation, self-improvement, company values and health and safety.

All the plantations are at various stages of introducing finger printing to record and mark attendance of daily workers and to pay all workers through bank transfer to improve the efficiency of estate operations.

A large workforce and their families are housed in the Group's housing across the Group's plantations. The Group further provides at its own cost water and electricity and a host of other amenities including places of worship, schools and clinics. On top of competitive salaries and bonuses, extensive benefits and privileges help the Group to retain and motivate its employees.

The Group promotes a policy for the creation of equal and ethnically diverse employment opportunities including with respect to gender.

The Group has in place key performance linked indicators to determine increment and bonus entitlements for its employees.

The Group promotes and encourages employee involvement in every aspect wherever practical as it recognises employees as a valuable asset and is one of the key contributions to the Group's success. The employees contribute their ideas, feedback and voice out their concerns through formal and informal meetings, discussions and annual performance appraisals. In addition, various work related and personal training programmes are carried out annually for employees to promote employee engagement and interaction.

Although the Group does not have a specific policy on employment of disabled persons, it, however, employs disabled persons as part of its workforce. The Group welcomes disabled persons joining the Group based on their suitability.

Outlook

FFB production for the three months to March 2018 was 4% higher against the same period in 2017 mainly due to the increase in production from the Riau and Kalimantan regions. It is too early to forecast whether the production will be better for the rest of the year. In 2018 the Group will see ongoing benefit from a range of sustainable investments made in recent years and capital expenditure, including planting, is expected to increase to $41.6m (2017: $27.4m).

The CPO price ex-Rotterdam opened in 2018 at $678/mt and prices are expected to be in the range of $600/mt to $700/mt for the first half of 2018. The temporary suspension of CPO export duty by the Malaysian government and the increase of biodiesel mandate by the Indonesian government may not sustain the price in view of the sharp increase in import tax on CPO and refined palm oil in India. A higher import tax would narrow the price difference between CPO and competing soft oils.

The US Dollar appreciated by approximately 1% (2016: -3%) against the Indonesian Rupiah in 2017 in anticipation of interest rate hikes in the United States and the weak emerging economies. The Rupiah has further depreciated by 2% in 2018.

The rising material costs and wages in Indonesia are expected to increase the overall production cost in 2018. The Indonesian government recently announced in 2018 regional increases in minimum wage averaging 8.7%. These wage hikes will raise overall estate costs and may erode profit margins.

Nevertheless, barring any unforeseen circumstances, the Group is confident that CPO demand will be sustainable in the long term on the backdrop of global economic recovery and we can expect a satisfactory trading outturn and cash flow for 2018.

On behalf of the Board

Dato' John Lim Ewe Chuan

Executive Director, Corporate Finance and Corporate Affairs

24 April 2018

Consolidated Statement of Cash Flows

For the year ended 31 December 2017

Notes

1 Accounting policies

Anglo-Eastern Plantations Plc ('AEP') is a company incorporated in the United Kingdom under the Companies Act 2006 and is listed on the London Stock Exchange. The registered office of AEP is located at Quadrant House, 6^th Floor, 4 Thomas More Square, London E1W 1YW, United Kingdom. The principal activity of the Group is plantation agriculture, mainly in the cultivation of oil palm.

The financial information set out below does not constitute the company's statutory accounts for 2017 or 2016. Statutory accounts for the years ended 31 December 2017 and 31 December 2016 have been reported on by the Independent Auditors. The Independent Auditors' Reports on the Annual Report and Financial Statements for the years ended 31 December 2017 and 31 December 2016 were unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.

Statutory accounts for the year ended 31 December 2016 have been filed with the Registrar of Companies. The statutory accounts for the year ended 31 December 2017 will be delivered to the Registrar in due course.

The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all years presented, except as detailed in the following paragraph.

Basis of preparation

The financial statements have been prepared in accordance with International Financial Reporting Standards and its interpretations (IFRS and IFRIC interpretations) issued by the International Accounting Standards Board ('IASB') as adopted by the European Union ('EU') and with those parts of the Companies Act 2006 applicable to companies preparing their accounts under IFRS as adopted by the EU.

Changes in accounting standards

a) The following amendments are effective for the first time in these financial statements:

• Amendments to IAS 12 Recognition of deferred tax assets for unrealised losses (effective for accounting periods beginning on or after 1 January 2017)

• Disclosure Initiative: Amendments to IAS 7 (effective for accounting periods beginning on or after 1 January 2017)

b) New standards, interpretations and amendments not yet effective.

The following new standards, interpretations and amendments are effective for periods beginning after 1 January 2018 and have not been applied in these financial statements:

• IFRS 9 Financial Instruments (effective for accounting periods beginning on or after 1 January 2018)

• IFRS 15 Revenue from Contracts with Customers (effective for accounting periods beginning on or after 1 January 2018)

• IFRS 16 Leases (effective for accounting periods beginning on or after 1 January 2019)

• Classifications to IFRS 15 revenue from Contracts with Customers (effective for accounting periods beginning on or after 1 January 2018)

• Amendments to IFRS 2 Classification and Measurement of Share-based Payment Transactions (effective for accounting periods beginning on or after 1 January 2018)

• Amendments to IFRS 4 Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts (effective for accounting periods beginning on or after 1 January 2018)

• Annual Improvements to IFRSs (2014 - 2016 Cycle)

• IFRIC 22 Foreign Currency Transactions and Advance Consideration (effective for accounting periods beginning on or after 1 January 2018)

• IFRIC 23 Uncertainty over Income Tax Treatments (effective for accounting periods beginning on or after 1 January 2019)

None of the above new standards, interpretations and amendments are expected to have a material effect on the Group's future financial statements except IFRS 9 and IFRS 15 which the Group provides the following information regarding their likely impact:

IFRS 9 Financial instruments replaces IAS 39 and introduces some new requirements in relation to impairment based on an expected credit loss model. The Group is still assessing the impact of this new standard.

IFRS 16 provides a single lessee accounting model, requiring lessees to recognise right of use assets and lease liabilities for all applicable leases. The Group is still assessing the impact of this new standard.

Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries) made up to 31 December each year. The Company controls a subsidiary if all three of the following elements are present; power over the subsidiary, exposure to variable returns from the subsidiary, and the ability of the investor to use its power to affect those variable returns. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date control ceases.

Business combinations

The consolidated financial statements incorporate the results of business combinations using the purchase method. In the consolidated statement of financial position, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. Acquisitions of entities that comprise principally land with no active plantation business do not represent business combinations, in such cases, the amount paid for each acquisition is allocated between the identifiable assets/liabilities at the acquisition date.

Foreign currency

The individual financial statements of each subsidiary are presented in the currency of the country in which it operates (its functional currency) with the exception of the Company and its UK subsidiaries which are presented in US Dollar. The presentation currency for the consolidated financial statements is also US Dollar, chosen because, as internationally traded commodities, the price of the bulk of the Group's products are ultimately link to the US Dollar.

On consolidation, the results of overseas operations are translated into US Dollar at average exchange rates for the year unless exchange rates fluctuate significantly in which case the actual rate is used. All assets and liabilities of overseas operations are translated at the rate ruling at the balance sheet date. Exchange differences arising on re-translating the opening net assets at opening rate and the results of overseas operations at actual rate are recognised directly in equity (the 'exchange reserves'). Exchange differences recognised in the income statement of Group entities' separate financial statements on the translation of long-term monetary items forming part of the Group's net investment in the overseas operation concerned are reclassified to the exchange reserves if the item is denominated in the presentational currency of the Group or of the overseas operation concerned.

On disposal of a foreign operation, the cumulative exchange differences recognised in the exchange reserves relating to that operation up to the date of disposal are transferred to the income statement as part of the profit or loss on disposal.

All other exchange profits or losses are credited or charged to the income statement.

Revenue recognition

Revenue includes

- amounts receivable for produce provided in the normal course of business, net of sales related taxes and levies, including export taxes;

- amounts received for sales of palm kernel shell, rubber wood, biomass products, biogas products and other income of an operating nature.

Sales of CPO, palm kernel, FFB, shell nut, biomass products, biogas products and rubber slab are recognised when goods are delivered or allocated to a purchaser. Delivery or allocation does not take place until contracts are paid for. Sales of latex are recognised on signing of sales contract, this being the point at which the significant risks and rewards of ownership are passed over to the buyer.

Share based payments

Share options are measured at fair value (excluding the effect of non market-based vesting conditions) at the date of grant. This fair value is expensed on a straight-line basis over the vesting period, based on the Group's estimate of shares that will eventually vest and adjusted for the effect of non market-based vesting conditions.

Fair value is measured by use of a binomial model. The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions, and behavioural considerations.

Provided that all other vesting conditions are satisfied, a charge is made irrespective of whether the market vesting conditions are satisfied.

Tax

UK and foreign corporation tax are provided at amounts expected to be paid or recovered using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date.

The directors consider that the carrying amount of tax receivables approximates its fair value.

Dividends

Equity dividends are recognised when they become legally payable. The Company pays only one dividend each year as a final dividend which becomes legally payable when approved by the shareholders at the next following annual general meeting.

Fair value measurement

A number of assets and liabilities included in the Group's financial statements require measurement at, and/or disclosure of, fair value. The fair value measurement of the Group's financial and non-financial assets and liabilities utilises market observable inputs and data as far as possible. Inputs used in determining fair value measurements are categorised into different levels based on how observable the inputs used in the valuation technique utilised are (the 'fair value hierarchy'):

• Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities;

• Level 2 - inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly;

• Level 3 - unobservable inputs for the asset or liability.

The classification of an item into the above levels is based on the lowest level of the inputs used that has a significant effect on the fair value measurement of the item. Transfers of items between levels are recognised in the period they occur.

The Group measures the following assets at fair value:

• Revalued land - Property, plant and equipment (note 9)

• Biological assets

For more detailed information in relation to the fair value measurement of the items above, please refer to the applicable notes.

Property, plant and equipment

All items of property, plant and equipment are initially measured at cost. Cost includes expenditure that is directly attributable to the acquisition of the items. After initial recognition, all items of property, plant and equipment except land and construction in progress, are stated at cost less accumulated depreciation and any accumulated impairment losses.

Plantations comprise of the cost of planting and development on oil palm and other plantation crops. Costs of new planting and development of plantation crops are capitalised from the stage of land clearing up to the stage of maturity or subject to certificate of Land Exploitation Rights (HGU) being obtained, whichever is earlier. The costs of immature plantations consist mainly of the accumulated cost of land clearing, planting, fertilising and maintaining the plantation, borrowing costs and other indirect overhead costs up to the time the trees are harvestable and to the extent appropriate. Oil palm plantations are considered mature within three to four years after planting and generating average annual FFB of four to six metric tons per hectare. Immature plantations are not depreciated.

The Indonesian authorities have granted certain land exploitation rights and operating permits for the estates. The land rights are usually renewed without significant cost subject to compliance with the laws and regulations of Indonesia. Therefore, the Group has classified the land rights as leasehold land and accounted for as an indefinite finance lease. The leasehold land is recognised at cost initially and is not depreciated. The land is subsequently carried at fair value, based on periodic valuations on an open market basis by a professionally qualified valuer. These revaluations are made with sufficient regularity to ensure that the carrying amount does not differ materially from that which would be determined using fair value at the end of the reporting period. Changes in fair value are recognised in other comprehensive income and accumulated in the revaluation reserve except to the extent that any decrease in value in excess of the credit balance on the revaluation reserve, or reversal of such a transaction, is recognised in income statement. On the disposal of a revalued estate, any related balance remaining in the revaluation reserve is transferred to retained earnings as a movement in reserves.

Construction in progress is stated at cost. The accumulated costs will be reclassified to the appropriate class of assets when construction is completed and the asset is ready for its intended use. Construction in progress is also not depreciated until such time when the asset is available for use.

Interest on third party loans directly related to field development is capitalised in the proportion that the opening immature area bears to the total planted area of the relevant estate. Interest on loans related to construction in progress (such as an oil mill) is capitalised up to the commissioning of that asset. These interest rates are booked at the rate prevailing at the time.

Plantations, buildings and oil mills are depreciated using the straight-line method. All other property, plant and equipment items are depreciated using the double-declining-balance method. The yearly rates of depreciation are as follows:

Plantations - 5%

Buildings - 5% to 10% per annum

Oil Mill - 5% per annum

Estate plant, equipment & vehicle - 12.5% to 50% per annum

Office plant, equipment & vehicle - 25% to 50% per annum

Biological assets

Biological assets comprise an estimation of the fair value less costs to sell of unharvested FFB at balance sheet date. Changes in the fair value of biological assets are charged or credited to the income statement within the cost of sales.

Leased assets

Assets financed by leasing agreements which give rights approximating to ownership (finance leases) are capitalised at amounts equal to the original cost of the asset to the lessors and depreciation is provided on the asset over the shorter of the lease term or its useful economic life in accordance with Group depreciation policy for those held at cost. Land rights are held at fair value and revalued at the balance sheet date. The capital elements of future obligations under finance leases are included as liabilities in the balance sheet and the current year's interest element is charged to the income statement to produce a constant rate of charge on the balance of capital repayments outstanding. All other leases are treated as operating leases. Their annual rentals are charged to the income statement on a straight line basis over the term of the lease.

Impairment

Impairment tests on property, plant and equipment are undertaken annually on 31 December. Where the carrying value of an asset exceeds its recoverable amount (i.e. the higher of value in use or fair value, less costs to sell), the asset is written down accordingly. Impairment charges are included in the administrative expenses in the income statement, except to the extent they reverse gains previously recognised in the statement of recognised income and expense.

Inventories

Inventories are initially recognised at cost, and subsequently at the lower of cost and net realisable value. In the case of processed produce for sale which comprises palm oil and kernel, cost represents the monthly weighted-average cost of production and appropriate production overheads. Estate and mill consumables are valued on a weighted average cost basis.

Financial assets

All the Group's receivables and loans are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are recognised at fair value at inception and subsequently at amortised cost. No impairment provisions have been considered necessary.

Cash and cash equivalents consist of cash in hand and short term deposits at banks with an original maturity of not exceeding three months. Bank overdrafts are shown within loans and borrowings under current liabilities on the balance sheet.

There are no assets in hedging relationships and no financial assets or liabilities available for sale.

Financial liabilities

All the Group's financial liabilities are non-derivative financial liabilities.

Bank borrowings and long term development loans are initially recognised at fair value and subsequently at amortised cost, which is the total of proceeds received net of issue costs. Finance charges are accounted for on an accruals basis and charged in the income statement unless capitalised according to the policy as set out under Interest capitalisation above.

Trade and other payables are shown at fair value at recognition and subsequently at amortised cost.

Deferred tax

Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability in the balance sheet differs from its tax base except for differences in the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction affects neither accounting nor taxable profit.

The Group recognises deferred tax liabilities arising from taxable temporary differences on investments in subsidiaries, except where the Group is able to control the reversal of the temporary differences and it is probable that the temporary difference will not reverse in the foreseeable future.

Recognition of deferred tax assets is restricted to those instances where it is possible that taxable profit will be available against which the difference can be utilised.

Deferred tax is recognised on temporary differences arising from property revaluation surpluses or deficits.

Deferred tax is determined using the tax rates that are enacted or substantively enacted at the balance sheet date. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, such as revaluations, in which case the deferred tax is also dealt with in other comprehensive income; in this case assets and liabilities are offset.

Retirement benefits

Defined contribution schemes

Contributions to defined contribution pension schemes are charged to the consolidated income statement in the year to which they relate.

Defined benefit schemes

The Group operates a number of defined benefit schemes in respect of its Indonesian operations. These schemes' surpluses and deficits are measured at:

• The fair value of plan assets at the reporting date; less

• Plan liabilities calculated using the projected unit credit method discounted to its present value using yields available on high quality corporate bonds that have maturity dates approximating to the terms of the liabilities; plus

• Unrecognised past service costs; less

• The effect of minimum funding requirements agreed with scheme trustees.

Remeasurements of the net defined obligation are recognised directly within equity. The remeasurements include:

• Actuarial gains and losses;

• Return on plan assets (interest exclusive);

• Any asset ceiling effects (interest inclusive).

Service costs are recognised in comprehensive income and include current and past service costs as well as gains and losses on curtailments.

Net interest expense / (income) is recognised in comprehensive income, and is calculated by applying the discount rate used to measure the defined benefit obligation / (asset) at the beginning of the annual period to the balance of the net defined benefit obligation / (asset), considering the effects of contributions and benefit payments during the period.

Gains or losses arising from changes to scheme benefits or scheme curtailment are recognised immediately in comprehensive income.

Settlements of defined benefit schemes are recognised in the period in which the settlement occurs.

Treasury shares

Consideration paid or received for the purchase or sale of the Company's own shares for holding in treasury is recognised directly in equity, where the cost is presented as the treasury shares. Any excess of the consideration received on the sale of treasury shares over the weighted average cost of shares sold is taken to the share premium account.

Any shares held in treasury are treated as cancelled for the purpose of calculating earnings per share.

Financial guarantee contracts

Where the Company and its subsidiaries enter into financial guarantee contracts and guarantee the indebtedness of other companies within the Group and/or third party entities, the Group considers these to be insurance arrangements and accounts for them as such. In this respect, the Group treats the guarantee contract as a contingent liability until such time that it becomes probable that the Group will be required to make a payment under the guarantee.

Critical accounting estimates and judgements

The preparation of the Group financial statements in conformity with IFRS requires the use of estimates and assumptions that affect the reported assets and liabilities and reported revenue and expenses. Actual results could differ from those estimates and accordingly, they are reviewed on an on-going basis. The main areas in which estimates are used are the fair value of biological assets, property, plant and equipment,deferred taxandretirement benefits.

Revisions to accounting estimates are recognised in the period in which the estimate is revised or the revision affects only that period, or in the period of revision and future periods if the revision affects both current and future periods.

Assumptions regarding the valuation of property, plant and equipment are set out in note 9. The Group's policy with regard to impairment of such assets is set out above.

2 Revenue

3 Finance income and expense

4 Profit before tax

5 Segment information

Description of the types of products and services from which each reportable segment derives its revenues

In the opinion of the Directors, the operations of the Group comprise one class of business which is the cultivation of plantation in Indonesia and Malaysia. From the result of the cultivation of plantation, the Group has produced the crude palm oil and associated products such as palm kernel, shell nut, biomass products, and biogas products.

Factors that management used to identify reportable segments in the Group

The reportable segments in the Group are strategic business units based on the geographical spread. Operating segments are consistent with the internal reporting provided to the Board of Directors. The Board of Directors is responsible for allocating resources and assessing the performance of the operating segments. The Board decision is implemented by the Executive Committee, that is made up of a Senior General Manager in Malaysia, the Chief Executive Officer, the Chief Operating Officers, Finance Director and the Engineering Director.

Measurement of operating segment profit or loss, assets and liabilities

The Group evaluates segmental performance on the basis of profit or loss from operations calculated in accordance with IFRS but excluding non-recurring losses, such as share based payments.

Inter-segment transactions are made based on terms mutually agreed by the parties to maximise the utilisation of Group's resources at a rate acceptable to local tax authorities. This policy was applied consistently throughout the current and prior period.

The Group's assets are allocated to segments based on geographical location.