HALF YEAR REPORT 2017 - GlobeNewswire...Aug 21, 2017 · In the first half of 2017, the fair value...

HALF YEAR REPORT 2017

21 August 2017

UIE in brief 3Key Figures – Business Performance 4UIE’s Strategic Investments 5

DIRECTORS’ REPORT

Financial Review - Business Reporting 6-9UP 10-13MSAB 14-16Risk Factors 17Outlook 18Consolidated Key Figures 19

FINANCIAL SECTION

Consolidated Financial Statements 21-24Notes to Consolidated Financial Statements 25-29Statement by the Board of Directors and the Management 30Company Information 31Abbreviations & Definitions 32

CONTENTS

6-20

21-33


UNITED INTERNATIONAL ENTERPRISES LIMITED

CONTENTS 2

UIE MELKER SCHÖRLING AB1.7 %

UNITED PLANTATIONS

BERHAD47.3 %

UIE IN BRIEF

United International Enterprises Limited (“UIE”) is a holding company which primarily invests in the agro-industrial sector.

UIE exercises long-term and active ownership via involvement at board level and via close dialogue with the management about operational and strategic issues.

UIE is committed to invest in companies that are operated and developed in a sustainable as well as socially responsible way.

UIE was founded in 1982 and is listed on NASDAQ Copenhagen.

The investment portfolio mainly consists of the following two companies:

3


UIE IN BRIEFHALF YEAR REPORT 2017 3

UIE KEY FIGURES BUSINESS PERFORMANCE1

CASHAS AT 30 JUNE 2017

99USD MILLION

3% ON YEAR-END 2016

EARNINGS PER SHAREH1 2017

8.9USD

197% ON H1 2016

SHARE PRICE AS AT 30 JUNE 2017

1,360DKK

10% ON YEAR-END 2016

NET PROFIT H1 2017

USD MILLION

SHAREHOLDERS’ EQUITY

USD MILLION

MARKET VALUE OF UIE’S ASSETS AS AT 30 JUNE 2017

USD MILLION

2013 2014 20162015 20170

8

16

24

32

40

2013 2014 20162015 H1 20170

125

250

375

500

625

NET PROFIT IN H1 2017USD MILLION

UIE’s net profit in the first half of 2017 amounted to USD 30.9 million compared to USD 10.6 million in the first half of 2016.

When comparing the two periods under review, it should be noted that the fair value change of the in-vestment in MSAB increased by USD 9.4 million in the first half of 2017, whereas it decreased by USD 5.5 mil-lion in the first half of 2016.

UIE’s share of UP’s net profit was USD 20.2 million, which is an increase of 32% compared to the first half of 2016.

UIE’s marketvalue

Market value ofUIE’s Assets

0

200

400

600

800

1,000

118

134

639

612

220

HoldingDiscount

19%

722

Share ofnet profit

in UP

Fair valuechange and

dividend, MSAB

Fair valuechange

Greenbridge

Admin. costs

NetProfit

Otheritems

0

5

10

15

20

25

30

35

UP MSAB/Greenbridge Cash & Other

1) See page 6 for further explanation of Business Reporting and Accounting Policies.



UIE IN BRIEF 4

UP PROFIT BEFORE TAX BY SEGMENT

%MYR million H1 2017 H1 2016 Change

Plantation 212.2 138.4 53%Refining 35.1 34.5 2%Other (1.5) (1.8) N/ATotal profit before tax 245.8 171.1 44%

30 June 31 Dec. %SEK million 2017 2016 Change

Net Asset Value of Investments 65,520 56,909 15%Net Cash 2,424 1,677 45%Total Net Asset Value 67,944 58,586 16%

MSAB NET ASSET VALUE

Profit before tax in the first half of 2017 was MYR 245.8 mil-lion (USD 56.1 million); an increase of 44% compared to the first half of 2016.

In the plantation division, profit before tax increased by 53% due to a higher production of CPO and PK as well as improved selling prices.

Net profit in the first half of 2017 was MYR 188.5 million (USD 43.0 million); an increase of 42% compared to the first half of 2016.

UIE’S STRATEGIC INVESTMENTS FINANCIAL PERFORMANCE

UNITED PLANTATIONS BERHAD

Net profit in the first half of 2017 was SEK 9,787 million (USD 1,109 million), which relates to dividends received and a change in the fair value of the Company’s portfolio of invest-ments.

Net asset value per share increased from SEK 492 at the end of 2016 to SEK 570 on 30 June 2017, representing an increase of 16%.

MELKER SCHÖRLING AB

HALF YEAR REPORT 2017 5


UIE IN BRIEF5

BUSINESS REPORTING - MEASUREMENT OF PERFORMANCE

According to IFRS, UIE is deemed to have de facto control of UP (even though it holds less than 50% of UP’s voting rights). Hence, UP’s result is now consolidated in UIE’s consolidated financial statements.

However, as UIE is a non-operating holding company, the Board of UIE is of the view that a more appropriate measurement of the performance of the investment in UP is to equity account (monitoring UIE’s share of the profit). Accordingly, this measurement is used in the in- ternal reporting as well as in the reporting to shareholders, referred to as “Business Reporting” in the Directors’ Report.

The performance of other investments is 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. Net profit in the Business Reporting is substantially the same as the amount at-tributable to the owners of the Company in the consoli-dated financial statements.

U IE’s net profit amounted to USD 30.9 million in the first half of 2017 - almost triple the net profit report-

ed in the first half of 2016 - due to strong performance in UP and an increase in the fair value of MSAB, primarily due to the strengthening of the SEK.

BUSINESS PERFORMANCE REVIEWUIE’s operating income amounted to USD 30.4 million in the first half of 2017, which is 156% higher than the operating income reported in the first half of 2016.

The improvement is primarily due to the fair value change of the investment in MSAB increasing by USD 9.4 million in the first half of 2017 compared to a loss of USD 5.5 million in the corresponding period in 2016. Furthermore, UIE’s share of the net profit of UP in-creased by USD 4.9 million in the first half of 2017 rel-ative to the result in the corresponding period in 2016.

UIE’s net profit in the first half of 2017 amounted to USD 30.9 million, which is 191% above the USD 10.6 million reported in the first half of 2016.

FINANCIAL REVIEW - BUSINESS REPORTING

INCOME IN UIEUSD million

H1 2017 H1 2016-10

-5

0

5

10

15

20

25

30

35

Share of UP’s net profit Change in fair value of MSAB Change in fair value Other

of Greenbridge

DIRECTORS’ REPORT HALF YEAR REPORT 20176


BUSINESS PERFORMANCE

USD ‘000 Q1 2017 Q2 2017 H1 2017 Q1 2016 Q2 2016 H1 2016

Share of UP’s net profit 8,272 11,964 20,236 6,858 8,498 15,356Change in fair value of MSAB 2,664 6,758 9,422 (2,775) (2,690) (5,465)Change in fair value of Greenbridge (760) (861) (1,621) 115 1,595 1,710Dividend income MSAB - 824 824 - 730 730 Other 831 739 1,570 (378) (66) (444)Total operating income 11,007 19,424 30,431 3,820 8,067 11,887Administrative expenses (722) (662) (1,384) (405) (652) (1,057)Net interest income 198 234 432 74 109 183Net foreign exchange 1,337 305 1,642 1,737 (1,930) (193)Profit before tax 11,820 19,301 31,121 5,226 5,594 10,820Income tax (28) (166) (194) (15) (161) (176)Profit after tax 11,792 19,135 30,927 5,211 5,433 10,644

UPUP’s net profit, measured in MYR (UP’s financial currency), increased by 42% in the first half of 2017. How-ever, measured in USD (UIE’s functional currency), net profit increased by 32% due to the depreciation of the MYR against the USD. UIE’s share of UP’s net profit amounted to USD 20.2 million, an increase of USD 4.9 million compared to the first half of 2016.

MSABUIE’s investment in MSAB is accounted for at fair value with movements being recognised in the Income State-ment.

The share price of MSAB increased by 1%, from SEK 537.5 on 31 December 2016 to SEK 541.5 on 30 June 2017. During the same period, the NASDAQ Stockholm All-Share PI index increased by 8%.

On 30 June 2017, MSAB was trading at a discount of 5% compared to its net asset value (as opposed to a premi-um of 9% on 31 December 2016).

In the first half of 2017, the fair value of UIE’s investment in MSAB increased by SEK 7.9 million, or 1%, but the fair value, in USD, increased by 8% (USD 9.4 million) due to a strengthening of the SEK against the USD during the first half of 2017. UIE received a dividend from MSAB in the second quarter of 2017, amounting to USD 0.8 million less withholding dividend tax of USD 0.1 million.

MSAB SHARE PRICE DEVELOPMENTSEK

MSAB share price Dates of aquisition Reporting date 30 June 2017

2012 2013 20152014 2017100

200

300

400

500

600

2016

DIRECTORS’ REPORTHALF YEAR REPORT 2017 7


GREENBRIDGEUIE’s investment in Greenbridge is accounted for at fair value, with movements being recognised in the Income Statement.

During the first half of 2017, the fair value of UIE’s in-vestment in Greenbridge decreased by USD 1.6 mil-lion compared to an increase of USD 1.7 million in the corresponding period in 2016. The fair value change in the first half of 2017 relates mainly to a share price de-crease of Greenbridge’s investment in NEXT Biometrics Group.

OTHER INCOME AND ADMINISTRATION COSTSApproximately USD 18 million representing less than 20% of UIE’s cash reserve is invested in a liquid and diversified portfolio of equities, fixed income products as well as in trading of soft commodities. The result of these activities, together with other income, produced a gain of USD 1.6 million in the first half of 2017 (loss of USD 0.4 million in the corresponding period in 2016).

In the first half of 2017, general and administrative ex-penses totalled USD 1.4 million, compared to USD 1.1 million in the first half of 2016.

FINANCIAL POSITION

The development in the value of UIE’s investment in UP, MSAB and Greenbridge is shown in the table below. The total value of the investments recognised in the fi-nancial position increased by USD 21.5 million during the period under review. The increase primarily derived from UIE’s share of UP’s result (offset by dividend re-ceived from UP), a strengthening of the MYR against the USD during the first half of 2017 and positive fair value adjustments relating to MSAB, offset by a negative fair value adjustment of the investment in Greenbridge.

Shareholders’ equity increased from USD 520.4 million on 31 December 2016 to USD 542.6 million on 30 June 2017. The increase comprised net profit of USD 30.9 million and an increase of translation reserves of USD 12.9 million (primarily a positive equity adjustment arising from the conversion of UIE’s interests in UP from MYR into USD), offset by dividends and share buy-backs of USD 17.4 million and USD 4.2 million, respectively.

Total net cash reserves in UIE increased from USD 96.4 million on 31 December 2016 to USD 99.3 million on 30 June 2017. The increase was mainly due to the net effect of a tax refund of USD 9.5 million received from the Malaysian Tax Authorities in February 2017 and USD 19.2 million in dividend income from UP, less divi-dends to UIE shareholders and share buy-backs, which amounted to USD 21.6 million.

VALUE OF UIE’S INVESTMENTS

UP MSAB Greenbridge TotalUSD ‘000 Equity method Fair value Fair value

Balance at 1 January 2017 279,448 116,774 9,065 405,287Change in fair value - 9,422 (1,621) 7,801Investments during the period - - 219 219UIE share of results 20,236 - - 20,236 Dividend received (19,212) - - (19,212) Equity adjustments on foreign currency translation 12,419 - - 12,419Total on 30 June 2017 292,891 126,196 7,663 426,750

ASSETS, LIABILITIES AND SHAREHOLDERS’ EQUITY AS AT 30 JUNE 2017USD million

Assets Liabilities andshareholders’ equity

0

100

200

300

400

500

600

UP MSAB Greenbridge Cash Other assets Shareholders’ equity Other liabilities



SHARE BUY-BACK PROGRAMME

In June 2016, UIE initiated a new share buy-back programme with the intention of acquiring up to 5% of its share capital before the end of December 2017, so long as the shares continue to be traded at a significant holding discount.

As reported in Company Announcement no. 6 2016, UIE initiated its share buy-back in two parallel pro-grammes; one under the Safe Harbour regulation with a maximum outlay of DKK 100 million and one Block trade programme carried out outside the safe Harbour regulation. The total number of shares acquired under the two programmes may not exceed 5% of the share capital.

Further information on the share buy-back programme is contained in Company Announcement no. 6 2016.

As at 30 June 2017, a total of 97,659 shares, corresponding to 2.75% of the share capital, had been acquired, of which 21,837 shares were acquired during the first half of 2017 for a total consideration of DKK 28.6 million (USD 4.2 million).

OVERALL STRATEGY OF UIE

UIE’s Board is actively searching for operational investment opportunities to broaden the Company’s invest-ment portfolio. UIE is a long-term investor focusing on value creation and as follows, the Board will regularly assess potential acquisitions that align with the Com-pany’s investment criteria. The emphasis and focus will primarily be on investments within the agro-industrial sector.

UIE’S INVESTMENT PORTFOLIO

There was only one minor change to UIE’s investment portfolio in the first half of 2017.

In March 2017, a third drawdown was made in relation to Greenbridge amounting to SEK 2 million (USD 0.2 million) and related to working capital requirements. UIE’s remaining commitment to invest in Greenbridge amounts to SEK 137.8 million (USD 16.3 million).

On 30 June 2017, the investment portfolio accounted for 78% of UIE’s total assets (based on Business Report-ing) and the remaining assets primarily comprised cash reserves and the short-term investments in a portfolio of equities and fixed income products.

On 30 June 2017, UIE owned 98,356,277 shares in UP and 1,968,705 shares in MSAB.

Cash1 Jan. 2017

One-off tax

settlement

Net cashused in

operations

Investedin

Greenbridge

Purchase oftreasury

shares

Dividend from MSAB,

net of tax

Cash30 June 2017

96.4

0.719.2

1.5

9.7

4.2 0.2

3.499.3

80

85

90

95

100

105

110

115

120

Dividendfrom UP

Other(net)

Dividendspaid

17.4

CASH FLOW IN H1 2017USD million



2013 2014 20162015 H1 20170

200

400

600

800

1,000

UP KEY FIGURES

KEY FIGURES - PRODUCTION IN H1 2017

FINANCIAL PERFORMANCE

NET PROFIT H1 2017

188MYR MILLION

42% ON H1 2016

CASH AS AT 30 JUNE 2017

749MYR MILLION

8% ON YEAR-END 2016

SHARE PRICE AS AT 30 JUNE 2017

27.90MYR

4% ON YEAR-END 2016

UIE OWNERSHIP

47.3% UNCHANGED ON YEAR-END 2016

NET PROFIT H1 2017

MYR MILLION

CASH AND SHORT TERM DEPOSITS

MYR MILLION

SHAREHOLDERS’ EQUITY

MYR MILLION

2013 2014 20162015 20170

50

100

150

200

PKPRODUCTION

21.5THOUSAND TONNES

22% ON H1 2016

CPOPRODUCTION

101.1THOUSAND TONNES

23% ON H1 2016

COCONUT PRODUCTION

39.3MILLION NUTS

14% ON H1 2016

2013 2014 20162015 H1 20170

125

250

375

500

625



UP’s net profit increased by 42% in the first half of 2017. The significant increase is primarily due to higher

CPO and PK production as well as high-er sales prices as compared to the corre-sponding period in 2016.

BUSINESS PERFORMANCE REVIEWNet profit amounted to MYR 188.5 million (USD 43.0 million) in the first half of 2017, an increase of 42% compared to the net profit of MYR 132.4 million (USD 32.5 million) achieved in the first half of 2016. However, measured in USD, the net profit did not increase to the same extent (increased by 32% or USD 10.5 million) due to the depreciation of the MYR against the USD com-pared to the first half of 2016.

PLANTATION OPERATIONSUP’s main activity, its plantation operations, recorded a profit before tax of MYR 212.2 million, reflecting a significant increase of 53% compared to the MYR 138.4 million reported in the first half of 2016. The increase is due to higher production, lower costs of production per tonne and higher selling prices.

When comparing the two periods under review, it should be noted that the result from the plantation

operation in H1 2016 includes a non-recurring gain of MYR 15.2 million related to the disposal of UP’s minor-ity stake in AAK’s refinery in Mexico. Adjusted for this non-recurring event, profit before tax in the plantation division in H1 2017 and H1 2016 were MYR 212.2 mil-lion and MYR 123.2 million, respectively – an increase of 72%.

In accordance with its replanting policy, UP will contin-ue to replant large areas of its older and less productive oil palm stands in Malaysia during 2017. Cost efficien-cies and improved productivity will therefore continue as a vital part of sustaining UP’s positive development.

UP SEGMENT

BUSINESS REPORTING - UP SEGMENTIn the following section, the description of developments within UP is based on figures reported by UP in MYR, UP’s functional currency. However, the UP figures in the table below have been con-verted to USD and are used in the financial report-ing for UIE.

UP’S BUSINESS PERFORMANCE IN H1 2017

H1 2017 H1 2016 ‘000 in MYR in USD in MYR in USD

Revenue 734,495 167,538 537,314 131,964Other income 12,088 2,757 48,188 11,835Operating expenses (512,529) (116,908) (428,375) (105,209)Operating income 234,054 53,387 157,127 38,590Net finance income 11,729 2,676 13,983 3,434Profit before tax 245,783 56,063 171,110 42,024Tax (57,318) (13,074) (38,693) (9,503)Net profit 188,465 42,989 132,417 32,521



CPO AND PK PRICE DEVELOPMENTSAlong with production volumes, UP’s profitability is highly dependent on sales prices. In the first half of 2017, UP achieved an average selling price of MYR 2,536 per tonne of CPO, corresponding to an increase of 13%, whilst the average selling price of PK increased by 66% compared to the first half of 2016.

THE AVERAGE SELLING PRICES OF CPO AND PKMYR H1 H1 Change per tonne 2017 2016 % CPO Malaysia 2,486 2,282 9%Indonesia 2,701 2,132 27%Average 2,536 2,245 13%

PK Malaysia 3,181 1,854 72%Indonesia 2,162 1,602 35%Average 2,989 1,800 66%

PLANTATION OPERATIONS - PRODUCTIONUP’s profitability is highly dependent on production volumes as well as on the selling prices of CPO and PK. In the first half of 2017, UP’s overall production of CPO and PK increased both by 22%.

The coconut production decreased by 14% compared to the first half of 2016.

OWN PRODUCTION H1 H1 Change Tonnes 2017 2016 %

CPO 101,079 82,526 22%PK 21,532 17,629 22%Coconut (million nuts) 39.29 45.49 (14%)

CPO PRODUCTION‘000 tonnes

PK PRODUCTION‘000 tonnes

COCONUT PRODUCTIONMillion nuts

4

5

6

7

8

9

Jan Mar JulMay NovSep10

13

16

19

22

Jan Mar JulMay NovSep2.00

2.75

3.50

4.25

5.00

Jan Mar JulMay NovSep

2015 2016 2017

AVERAGE SELLING PRICE CPOMYR

AVERAGE SELLING PRICE PKMYR

UP Malaysia UP Indonesia UP Group UP Malaysia UP Indonesia UP Group

2013 2014 20162015 H1 2017500

1,000

1,500

2,000

2,500

3,000

3,500

2013 2014 20162015 H1 2017500

1,000

1,500

2,000

2,500

3,000

3,500



PRODUCTION COSTSIn the first half of 2017, production costs per tonne of CPO and PK decreased by 22% and 4%, respectively, primarily due to higher production volumes.

REFINERY OPERATIONSIn the first half of 2017, profit before tax at the refinery increased marginally to MYR 35.1 million from MYR 34.5 million reported in the corresponding period of 2016.

OTHERCurrent intercompany loans to the Indonesian subsidi-ary are denominated in Indonesian Rupiah. During the first half of 2017, the MYR strengthened against the Indonesian currency, leading to an unrealised foreign exchange loss of MYR 5.3 million, compared to an un-realised foreign exchange loss of MYR 4.1 million in the first half of 2016.

Palm oil prices can fluctuate significantly and it is the policy of UP to hedge a proportion of future production revenues to mitigate the impact of spot price volatility.

In the first half of 2017, the selling prices achieved for Malaysia were marginally lower than the market prices due to certain CPO quantities having been sold earlier, based on UP’s forward sales policy.

FINANCIAL POSITION AND CASH FLOW

On 30 June 2017, UP’s current assets amounted to MYR 1,138.7 million (31 December 2016: MYR 1,186.3 mil-lion), of which cash, cash equivalents and short-term funds amounted to MYR 749.4 million (31 December 2016: MYR 690.9 million).

Total non-current assets amounted to MYR 1,490.8 mil-lion (31 December 2016: MYR 1,455.6 million), of which biological assets and property, plant and equipment amounted to MYR 1,454.6 million (31 December 2016: MYR 1,419.4 million).

Total equity increased from MYR 2,367.6 million on 31 December 2016 to MYR 2,375.5 million at the end of June 2017. The increase relates mainly to the net profit of MYR 187.4 million for the period under review offset by dividend payments of MYR 176.6 million.

Positive cash flow from operating activities amounted to MYR 324.2 million, compared to MYR 138.4 million in the first half of 2016. Negative cash flow from in-vestments, excluding net change in short-term funds, amounted to MYR 89.0 million (first half of 2016: MYR 40.7 million negative). Net change in cash, cash equiva-lents and short- term funds amounted to MYR 58.5 mil-lion positive in the first half of 2017 (first half of 2016: MYR 47.8 million negative).

UP’S SEGMENTAL INFORMATION FOR THE FIRST HALF OF 2017

Other Elimi- MYR ‘000 Plantations Refining segments nation Total

Segment Revenue External Sales 202,782 531,018 695 - 734,495 Intersegment Sales 192,696 - - (192,696) - 395,478 531,018 695 (192,696) 734,495

Segment Results Operating profit (EBIT) 204,581 34,820 (5,347) - 234,054 Profit before tax 212,166 35,076 (1,459) - 245,783



NET PROFIT H1 2017

9,787SEK MILLION

NET ASSET VALUE AS AT 30 JUNE 2017

67.9SEK BILLION

16% ON YEAR-END 2016

SHARE PRICEAS AT 30 JUNE 2017

541.5SEK

1% ON YEAR-END 2016

NET ASSET VALUE DISCOUNT AS AT 30 JUNE 2017

5%

PREMIUM OF 9% AT YEAR-END 2016

The performance of the UIE’s investment in MSAB is measured by changes in fair value.

MSAB KEY FIGURES

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MSAB KEY INVESTMENTS

HEXPOL

HEXPOL is a world-leading polymer group with strong global positions in advanced polymer compounds, gas-kets for plate heat exchangers and wheels made of plastic and rubber ma-terials for truck and castor wheel appli-cations.

HEXAGON

HEXAGON is a leading global supplier of design, measurement and visuali-sation 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.

SECURITAS

SECURITAS is a global knowledge lead-er in security. They provide a broad range of services of specialised guard-ing, technology solutions and consult-ing and investigations that are suited to the individual customer’s needs.

ASSA ABLOY

ASSA ABLOY is the world’s leading lock group and offers a more complete product range for lock and door solu-tions than any other company on the market, incl. access control, identifica-tion technology, entrance automation, hotel security.

LOOMIS

LOOMIS offers safe and effective com-prehensive solutions for the distribu-tion, handling and recycling of cash for banks, retailers and other commercial companies via an international net-work consisting of almost 400 branch offices in 16 countries.

AAK

AAK is one of the world’s leading pro-ducers 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.

OWNERSHIP 26%

OWNERSHIP 26%

OWNERSHIP 33%

OWNERSHIP 1%

OWNERSHIP 4%

OWNERSHIP 5%



MSAB HOLDINGS AND NET ASSET VALUE

30 June 2017 31 Dec. 2016 No. of Share Price SEK No. of Share Price SEK shares (SEK) million shares (SEK) million

Hexagon 93,679,899 401.70 37,631 93,679,899 326.10 30,549HEXPOL 89,298,779 91.70 8,189 89,298,779 84.50 7,546AAK 13,899,301 615.00 8,548 13,899,301 599.50 8,333ASSA ABLOY 42,812,848 185.30 7,933 42,812,848 169.50 7,257Securitas 19,734,600 142.10 2,805 19,734,600 143.50 2,832Loomis 900,000 302.30 272 900,000 270.80 244Other - - 142 - - 148Total 65,520 56,909Net cash 2,424 1,677Net asset value 67,944 58,586No. of shares 119,097,595 119,097,595Net asset value per share (SEK) 570 492

FINANCIAL HIGHLIGHTS

MSAB’s net result amounted to a gain of SEK 9,787 mil-lion (USD 1,109 million) in the first half of 2017, which relates to the change in the fair value of the company’s portfolio of investments and dividends received.

The net asset value is MSAB’s most important key indi-cator since it reflects the value of MSAB’s assets, which comprise the underlying share portfolio at fair value and the company’s net cash reserves.

On 30 June 2017, the market value of MSAB’s portfo-lio amounted to SEK 65,520 million (USD 7,756 million); net cash amounted to SEK 2,424 million (USD 287 mil-lion) and therefore the net asset value amounted to SEK 67,944 million (USD 8,042 million) compared to SEK 58,586 million (USD 6,465 million) at the end of 2016.

Net asset value per share increased from SEK 492 at the end of 2016 to SEK 570 per share on 30 June 2017, rep-resenting an increase of 16% (during the same period, the NASDAQ Stockholm All-Share PI index increased by 8%).

SHARE OF TOTAL ASSETS ON 30 JUNE 2017

Hexagon AAK HEXPOL ASSA ABLOY Securitas Loomis Other

59%

12%

12%

0%0%

4%

13%

The weighted average organic growth in MSAB’s port-folio companies was 4% (first half of 2016: 3%). The weighted average growth in operating profit (EBIT) in the portfolio companies was 11% (first half of 2016: 6%).



Net asset value

31 Dec. 2016

SecuritasHexagon AAKLoomisASSAABLOY

Net assetvalue

30 June 2017

492

66

59

00 25 570

470480490500510520530540550560570

HEXPOL Net cash and

other holdings

CHANGE IN NET ASSET VALUE PER MSAB SHARE PER INVESTMENT - H1 2017SEK

Q12014

Q32013

0

100

200

300

400

500

600

Q12013

Q22013

Q42013

Q22014

Q32014

Q42014

Q12015

Q22015

Q32015

Q42015

Q12016

Q22016

Q32016

Q42016

Q12017

Q22017

DEVELOPMENT IN NET ASSET VALUE PER SHARESEK



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 decision- making 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 invest-ments are in listed companies (UP and MSAB), the man-agement of these companies is consequently account-able for identifying and controlling their risks.

COMMERCIAL RISKSDue to the nature of UIE’s business, the Company is in-directly 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 the palm oil industry, which, through UP, accounts for approximately 67% of UIE’s total consolidated assets of USD 908 million.

The following is a brief description of the most signifi-cant commercial risks of UIE.

UPUP’s income is highly dependent on both production volume and commodity prices.

Production is influenced by local and global weather patterns, such as El Niño, and is highly dependent on the seasonal and cyclical conditions of the plantation operations as well as the age profile of the oil and coco-nut palms. UP’s production of CPO and PK is generally higher from March to September (peaking around July), then declining from October to February. Commodi-ty prices are determined by the global supply and de-mand 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 affect the profits of UP accordingly.

Other risk factors include the availability and cost of labour, changes in tax/duty structures and impact of the biodiesel demand on commodity prices.

See UP’s Annual Report 2016 for further information regarding UP’s risk factors.

MSABMSAB is a holding company which primarily invests in the industrial sector. MSAB’s current portfolio primarily consists of investments in six publicly listed companies, and MSAB’s risks are significantly linked to the risk fac-tors in the respective companies.

See MSAB’s Annual Report 2016 for further information on MSAB’s risk factors.

FINANCIAL RISKS In the ordinary course of business, the Group is ex-posed to a variety of financial risks, which include mar-ket risks, credit risks as well as interest rate risks.

The Group is primarily exposed to the following market risks:

• Share price risk which is the risk that the value of the investments will fluctuate due to changes in the share prices

• Commodity price risk arises from fluctuations in the price of palm and palm kernel oil

• Foreign currency risks arising from investments and commodity sales in foreign currencies as the val-ue of investments and cash flows fluctuates due to changes in foreign currency rates

In relation to credit risk, the primary risk is related to 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 Note 4.6 in UIE’s Annual Report 2016 for further information on UIE’s financial risk management and exposure.



OUTLOOK

The outlook for UIE remains significantly dependent on the performance of UP, which does not release a for-mal profit estimate. The contribution from MSAB is a function of movements in its fair value, which mainly reflects 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.

The first half of 2017 saw a significant recovery in palm oil production in both Malaysia and Indonesia. This re-sulted in palm oil prices decreasing by more than 20% during the first half of 2017 (a price of MYR 2,400 per MT for CPO was tested).

However, whilst the setback in FFB production arising from the impact of the El Niño experienced in 2015 and the first part of 2016 has come to an end, it is now an-ticipated that the recovery in overall palm oil production for the full year 2017 may not be as large as initially ex-pected. This has triggered a recent price increase and CPO is currently trading at around MYR 2,675 per MT.

The main risk for lower-than-anticipated production is the continued labour shortages, especially in relation to crop harvesting and evacuation. This will undoubted-ly have a negative impact on all plantation companies during the forthcoming peak crop expected in the peri-od July to September 2017.

Global vegetable oil stocks are still historically low and therefore any disruption of global vegetable oil produc-tion, including palm oil, would be a bullish factor on prices as the expected stock build would not materi-alize.

Nevertheless, with historically high U.S. soybean plant-ings that took place in early 2017, and which will be harvested from September onwards, there will most likely be a large recovery in global vegetable oil stocks. Whilst this will be a limiting factor for price increases, the weather across the farming regions of the U.S. will be a significant price driver during the coming quarter and must be a factor closely watched.

Based on the above and the prices contracted under UP’s forward sales policy, coupled with large areas steadily coming into maturity from the replanted areas

in Malaysia, UP projects the results for 2017 to be satis-factory.

If the current share price of MSAB as well as the SEK/USD exchange rate were to remain unchanged during the remaining part of 2017, the fair value adjustment recognised in UIE’s Income Statement for 2017 would be positive compared to a loss of USD 9 million report-ed in 2016.

Based on the above, the Board is of the view that UIE’s net profit attributable to equity holders of the Compa- ny for 2017 will be higher than the result reported in 2016.

UIE UP Malaysia



CONSOLIDATED KEY FIGURES

Q2 Q2 H1 H1 Full Year USD ‘000 2017 2016 2017 2016 2016

Revenue 82,211 69,016 167,538 131,964 296,409 Profit before income tax 40,825 19,538 67,785 38,908 93,162Net Profit 33,102 15,706 54,455 29,110 82,204Net profit attributable to owners of the Company 19,447 6,198 31,409 11,946 39,459

Current assets 383,355 377,296 383,355 377,296 381,201Cash and bank balances 191,484 162,043 191,484 162,043 157,094Short-term funds 82,477 119,734 82,477 119,734 93,311Non-current assets 524,671 527,222 524,671 527,222 493,756Total assets 908,026 904,518 908,026 904,518 874,957

Total liabilities 71,117 70,990 71,117 70,990 74,434Equity attributable to owners of the Company 532,004 519,434 532,004 519,434 510,179Non-controlling interests 304,905 314,094 304,905 314,094 290,344Total equity 836,909 833,528 836,909 833,528 800,523

Earnings per share attributable to owners of the Company (USD) 5.6 1.7 9.0 3.4 11.2

Share price, end of period (USD) 209 174 209 174 176Share price, end of period (DKK) 1,360 1,165 1,360 1,165 1,241

Return on equity n/a n/a 6.0% 2.3% 7.8%Solvency ratio 92.2% 92.1% 92.2% 92.1% 91.5%

CASH, BANK BALANCES AND SHORT-TERM FUNDSUSD million

EQUITY ATTRIBUTABLE TO OWNERS VS. NCIUSD million

UIE UP Malaysia

30 June2017

30 June2016

FY2016

0

50

100

150

200

250

300

30 June2017

30 June2016

FY2016

0

200

400

600

800

1,000

Owners of the Company (UIE) Non-controlling Interests (NCI)



Consolidated Income Statement 21Consolidated Statement of Comprehensive Income 21Consolidated Statement of Financial Position 22Consolidated Statement of Changes in Equity 23Consolidated Statement of Cash Flows 24Notes to the Consolidated Financial Statements 25-29

CONTENTS

FINANCIAL STATEMENTS HALF YEAR REPORT 2017


20

CONSOLIDATED INCOME STATEMENTFOR THE PERIOD ENDED 30 JUNE 2017

Q2 Q2 H1 H1 Full YearUSD ‘000 2017 2016 2017 2016 2016

Revenue 82,211 69,016 167,538 131,964 296,409Costs of goods sold (52,813) (52,917) (117,403) (104,846) (219,266)Other income 2,042 4,032 2,757 11,878 8,928Profit from operations before financial items 31,440 20,131 52,892 38,996 86,071 Changes in fair value of MSAB 6,758 (2,690) 9,422 (5,465) (9,062)Changes in fair value of Greenbridge (861) 1,595 (1,621) 1,710 2,133Dividend income MSAB 824 730 824 730 730Results from investing activities - portfolio investments 711 (109) 1,518 (487) 93Interest income 1,650 1,814 3,112 3,620 6,998Interest expense (2) (2) (4) (3) (5)Net foreign exchange gain/(loss) 305 (1,931) 1,642 (193) 6,204Profit before income tax 40,825 19,538 67,785 38,908 93,162Income tax (7,723) (3,832) (13,330) (9,798) (20,906)One-off settlement of tax position - - - - 9,948Net profit 33,102 15,706 54,455 29,110 82,204 Profits attributable to Owners of the Company 19,447 6,198 31,409 11,946 39,459Non-controlling interests 13,655 9,508 23,046 17,164 42,745 33,102 15,706 54,455 29,110 82,204 Earnings per share attributable to owners of the Company (USD) 5.6 1.7 9.0 3.4 11.2

OTHER COMPREHENSIVE INCOMEFOR THE PERIOD ENDED 30 JUNE 2017

Q2 Q2 H1 H2 Full YearUSD ‘000 2017 2016 2017 2016 2016

Net profit 33,102 15,706 54,455 29,110 82,204 Items that are or may be reclassified to the Income Statement Equity adjustment on foreign currency translation, net of tax of USD nil 17,176 (16,446) 24,713 42,130 (24,474)Other comprehensive income 17,176 (16,446) 24,713 42,130 (24,474)

Total comprehensive income 50,278 (740) 79,168 71,240 57,730 Total comprehensive income attributable to Owners of the Company 27,923 569 43,389 33,827 35,706Non-controlling interests 22,355 (1,309) 35,779 37,413 22,024 50,278 (740) 79,168 71,240 57,730

FINANCIAL STATEMENTSHALF YEAR REPORT 2017 21


CONSOLIDATED STATEMENT OF FINANCIAL POSITIONFOR THE PERIOD ENDED 30 JUNE 2017

30 June 30 June 31 Dec. USD ‘000 2017 2016 2016

AssetsCurrent assets:Inventories 40,396 28,917 42,342Cash and bank balances 191,484 162,043 157,094Short-term funds 82,477 119,734 93,311Trade and other receivables 50,546 51,037 75,042Derivatives - 441 770Portfolio investments 18,420 11,159 11,216 Current tax receivable 32 3,965 1,426Total current assets 383,355 377,296 381,201

Non-current assets:Goodwill 7,096 7,096 7,096Bearer plants 108,666 113,410 104,212Biological assets 7,771 6,871 6,301Property, plant and equipment 258,851 262,420 239,883Land use rights 8,415 8,810 8,067Deferred tax assets - - 2,346Strategic investments 133,859 125,855 125,839Other financial assets 13 13 12Non-current derivatives - 2,747 -Total non-current assets 524,671 527,222 493,756 Total assets 908,026 904,518 874,957 Liabilities and shareholders’ equityCurrent liabilities:Current tax liability 6,344 2,248 3,640Trade and other payables 21,808 24,699 27,268Derivatives 784 - 3,190Other current liabilities 180 259 191Total current liabilities 29,116 27,206 34,289

Total non-current liabilities 42,001 43,784 40,145

Total liabilities 71,117 70,990 74,434

Share capital 35,556 35,556 35,556Treasury shares (17,860) (2,429) (13,646)Other reserves 514,308 486,307 488,269Equity attributable to owners of the Company 532,004 519,434 510,179Non-controlling interests 304,905 314,094 290,344Total equity 836,909 833,528 800,523

Total liabilities and shareholders’ equity 908,026 904,518 874,957



22

CONSOLIDATED STATEMENT OF CHANGES IN EQUITYFOR THE PERIOD ENDED 30 JUNE 2017

Trans- Non- Share Share Treasury lation Other Retained controlling Total USD ‘000 capital premium shares Reserves Reserves profits Total interests equity On 1 January 2017 35,556 9,159 (13,646) (69,736) - 548,846 510,179 290,344 800,523

Total comprehensive income for the period

Profit for the period - - - - - 31,409 31,409 23,046 54,455Equity adjustment on foreign currency translation - - - 11,980 - - 11,980 12,733 24,713Total comprehensive income for the year - - - 11,980 - 31,409 43,389 35,779 79,168

Transactions with owners

Treasury shares purchased - - (4,214) - - - (4,214) - (4,214)Dividends paid - - - - - (17,350) (17,350) (21,218) (38,568)

Total transactions with owners - - (4,214) - - (17,350) (21,564) (21,218) (42,782)

On 30 June 2017 35,556 9,159 (17,860) (57,756) - 562,905 532,004 304,905 836,909

Trans- Non- Share Share Treasury lation Other Retained controlling Total USD ‘000 capital premium shares Reserves Reserves profits Total interests equity On 1 January 2016 35,556 9,159 - (66,081) 98 520,053 498,785 296,370 795,155

Total comprehensive income for the period

Profit for the period - - - - - 11,946 11,946 17,164 29,110Equity adjustment on foreign currency translation - - - 21,979 (98) - 21,881 20,249 42,130Total comprehensive income for the year - - - 21,979 (98) 11,946 33,827 37,413 71,240

Transactions with owners

Treasury shares purchased - - (2,429) - - - (2,429) - (2,429)Dividends paid - - - - - (10,749) (10,749) (19,689) (30,438)

Total transactions with owners - - (2,429) - - (10,749) (13,178) (19,689) (32,867)

On 30 June 2016 35,556 9,159 (2,429) (44,102) - 521,250 519,434 314,094 833,528

FINANCIAL STATEMENTSHALF YEAR REPORT 2017


23

CONSOLIDATED STATEMENT OF CASH FLOWSFOR THE PERIOD ENDED 30 JUNE 2017

H1 H1 Full Year USD ‘000 2017 2016 2016

Cash flows from operating activitiesReceipts from customers 172,969 127,652 276,306Payment to suppliers - - (142,790)Payment of operating expenses (93,561) (84,640) (73,969)Payment of taxes 1,512 (10,544) (19,388)Other receipts 1,461 884 9,021Net cash generated from operating activities 82,381 33,352 49,180

Cash flows from investing activitiesProceeds from sale of property, plant and equipment 34 16 2,119Interest income 2,916 4,237 7,787Proceeds from sale of shares available for sale - - 5,075Investment in Greenbridge (219) - (3,158)Dividend income 779 701 862Portfolio investments, net (5,593) (487) (1,455)Pre-cropping expenditure incurred (4,379) (4,772) (10,657)Purchase of property, plant and equipment (18,214) (9,169) (19,932)Land use rights payments (212) (158) (362)Net change in deposits with a tenure more than 3 months (3,316) 44,527 44,307Net change in short-term funds 14,746 (30,299) (15,872)Net cash (used in)/generated from investing activities (13,458) 4,596 8,714

Cash flows from financing activitiesInterest paid (4) (3) (5)Dividends paid (38,726) (30,438) (38,716)Purchase of treasury shares (4,214) (2,429) (13,646)Movement in associated company balances - - (1)Net cash used in financing activities (42,944) (32,870) (52,368)

Net change in cash and cash equivalents 25,979 5,078 5,526

Cash and cash equivalents at the beginning of year 122,238 117,709 117,709

Foreign exchange adjustment 3,466 92 (997)

Cash and cash equivalents at end of period 151,683 122,879 122,238

Cash and cash equivalents 151,683 122,879 122,238Bank overdrafts included in cash and cash equivalents (4) (3) (24) 151,687 122,882 122,262Deposits with a tenure more than 3 months 39,797 39,161 34,832Total cash and bank balances 191,484 162,043 157,094Short-term funds 82,477 119,734 93,311Cash and short-term funds 273,961 281,777 250,405



24

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1: SEGMENTATION

The segment reporting includes the following two seg-ments:

• UIE• UP

UIE: a holding company which primarily invests in com-panies in the agro-industrial sector. UIE exercises long-term and active ownership via involvement at board level and via close dialogue with the management about operational and strategic issues. Its current port-folio is built around the world of vegetable oils and is primarily involved in the first and second phases 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 busi-ness 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 the manufacturing and processing of oils and fats in Malaysia.

In the UP segment, the results, assets and liabilities are based on translation of UP’s reported figures from Ma-laysian Ringgit to USD.

DIFFERENCE BETWEEN BUSINESS REPORTING AND CONSOLIDATED FINANCIAL STATEMENTS

Both of the segments exclude the fair value adjust-ments of UP’s assets, related to the retrospective acqui-sition accounting of UP in 2003, the adoption of amend-ed IAS 41, which are recognised in UIE’s consolidated financial statements, and changes due to translation of UP figures from Malaysian GAAP to IFRS.




SECTION 1: OPERATING ACTIVITIES – CONTINUED

Adjustments Elimi- UIE Con- USD ‘000 UIE UP Total to IFRS nations solidated

INCOME STATEMENT FOR THE PERIOD ENDED 30 JUNE 2017

Revenue - 167,538 167,538 - - 167,538Other income 52 2,757 2,809 - (52) 2,757Changes in fair value of MSAB 9,422 - 9,422 - - 9,422Changes in fair value of Greenbridge (1,621) - (1,621) - - (1,621)Dividend income MSAB 824 - 824 - - 824Results from investing activities - portfolio 1,518 - 1,518 - - 1,518Share of results of equity-accounted investments 20,236 - 20,236 - (20,236) -Total operating income 30,431 170,295 200,726 - (20,288) 180,438Operating expenses (1,384) (116,908) (118,292) 837 52 (117,403)Interest income 434 2,678 3,112 - - 3,112Interest expense (2) (2) (4) - - (4)Foreign exchange gain/(loss) 1,642 - 1,642 - - 1,642Profit before tax 31,121 56,063 87,184 837 (20,236) 67,785Income tax (194) (13,074) (13,268) (62) - (13,330)Net profit 30,927 42,989 73,916 775 (20,236) 54,455

Profits attributable toOwners of the Company 30,927 42,751 73,678 367 (42,636) 31,409Non-controlling interests - 238 238 408 22,400 23,046

STATEMENT OF FINANCIAL POSITION FOR THE PERIOD ENDED 30 JUNE 2017

AssetsCash & short-terms funds 99,345 174,616 273,961 - - 273,961Other current assets 18,705 90,689 109,394 - - 109,394Strategic investments 426,750 - 426,750 - (292,891) 133,859Other non-current assets 111 347,351 347,462 36,254 7,096 390,812Total assets 544,911 612,656 1,157,567 36,254 (285,795) 908,026

Liabilities and shareholders’ equityTotal liabilities 2,346 59,166 61,512 9,605 - 71,117Shareholders’ equity: Equity attributable to owners 542,565 552,045 1,094,610 12,615 (575,221) 532,004 Non-controlling interest - 1,445 1,445 14,034 289,426 304,905Total shareholders’ equity 542,565 553,490 1,096,055 26,649 (285,795) 836,909 Total liabilities and shareholders’ equity 544,911 612,656 1,157,567 36,254 (285,795) 908,026

STATEMENT OF CASH FLOWS FOR THE PERIOD ENDED 30 JUNE 2017

Operating activities 8,435 73,946 82,381 - - 82,381Investing activities 14,613 (8,859) 5,754 - (19,212) (13,458)Financing activities (21,566) (40,590) (62,156) - 19,212 (42,944)




SECTION 1: OPERATING ACTIVITIES – CONTINUED

Adjustments Elimi- UIE Con- USD ‘000 UIE UP Total to IFRS nations solidated

INCOME STATEMENT FOR THE PERIOD ENDED 30 JUNE 2016

Revenue - 131,964 131,964 - - 131,964Other income 43 11,835 11,878 - - 11,878Changes in fair value of MSAB (5,465) - (5,465) - - (5,465) Changes in fair value of Greenbridge 1,710 - 1,710 - - 1,710Dividend income MSAB 730 - 730 - - 730Results from investing activities - portfolio (487) - (487) - - (487)Share of results of equity-accounted investments 15,356 - 15,356 - (15,356) -Total operating income 11,887 143,799 155,686 - (15,356) 140,330Operating expenses (1,057) (105,209) (106,266) 1,420 - (104,846)Interest income 183 3,437 3,620 - - 3,620Interest expense - (3) (3) - - (3)Foreign exchange gain/(loss) (193) - (193) - - (193)Profit before tax 10,820 42,024 52,844 1,420 (15,356) 38,908Tax (176) (9,503) (9,679) (119) - (9,798)Net profit 10,644 32,521 43,165 1,301 (15,356) 29,110

Profits attributable toOwners of the Company 10,644 32,445 43,089 (15,787) (15,356) 11,946Non-controlling interests - 76 76 17,088 - 17,164

STATEMENT OF FINANCIAL POSITION FOR THE PERIOD ENDED 30 JUNE 2016

AssetsCash & short-terms funds 105,100 176,677 281,777 - - 281,777Other current assets 11,372 84,147 95,519 - - 95,519Strategic investments 423,091 - 423,091 - (297,236) 125,855Other non-current assets 153 355,839 355,992 38,282 7,093 401,367Total assets 539,716 616,663 1,156,379 38,282 (290,143) 904,518

Liabilities and shareholders’ equityTotal liabilities 1,308 59,492 60,800 10,190 - 70,990Shareholders’ equity: Equity attributable to owners 538,408 556,224 1,094,632 (342,595) (232,603) 519,434 Non-controlling interest - 947 947 370,687 (57,540) 314,094Total shareholders’ equity 538,408 557,171 1,095,579 28,092 (290,143) 833,528 Total liabilities and shareholders’equity 539,716 616,663 1,156,379 38,282 (290,143) 904,518

STATEMENT OF CASH FLOWS FOR THE PERIOD ENDED 30 JUNE 2016

Operating activities (628) 33,980 33,352 - - 33,352Investing activities 18,013 4,228 22,241 - (17,645) 4,596Financing activities (13,178) (37,337) (50,515) - 17,645 (32,870)



UIE’s interim report is presented in accordance with IAS 34 ”Interim Financial Reporting” as adopted by the EU and additional Danish disclosure requirements re-garding interim reporting for listed companies. The ac-counting policies applied in these financial statements are the same as those applied in UIE’s consolidated fi-nancial statements 2016. See the Annual Report 2016 for a comprehensive description of the accounting pol-icies applied.

Amendments to IAS 41, as adopted by the EU, was ear-ly implemented by the Group in 2015. The implemen-tation of the amendments has resulted in biological assets (fruit bunches and nuts) growing on palms and trees (bearer biological assets) being measured at fair value less cost of sales. The change in the fair value of the biological assets in each accounting period is rec-ognised in the consolidated income statements. In the first quarter of 2017, the change in the fair value of the biological assets amounted to USD 0.4 million and is recognised in the consolidated financial statements.

Please see pages 57-58 in the Annual Report 2016 for further explanation.

CHANGES TO ACCOUNTING POLICYThe Group has with effect from 1 January 2017 imple-mented the Standards and Interpretations that became effective in the EU from 2017. None of these Standards and Interpretations have had material impact on profit or loss, assets, liabilities or equity.

JUDGMENTS AND ESTIMATESThe preparation of interim reports requires manage-ment to make accounting judgments as well as esti-mates that affect the use of accounting policies and recognized assets, liabilities, income and expenses. Ac-tual 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 here-to are the same for the preparation of the interim re-port as for the preparation of the Annual Report 2016.

DEFINING MATERIALITYThe consolidated financial statements are a result of processing large numbers of transactions and aggre-gating those transactions into classes according to their nature or function. When aggregated, the transactions are presented in classes of similar items in the consol-idated financial statements. If a line item is not indi-vidually material, it is aggregated with other items of a similar nature in the consolidated financial statements or in the notes.


NOTE 2: ACCOUNTING POLICIES

NOTE 3: SEASONAL AND CYCLICAL

NATURE OF UP’S PRODUCTS AND OPERATIONSThe prices of UP segment’s products are not controlled entirely by UP, but are determined by the global supply and demand situation for edible oils, which is some-what related to the price of mineral oil.

Crop production is seasonal. Based on statistics, the Group’s production of CPO and PK gradually increases from March, peaking around July to September, and then declines from October to February. This pattern can, however, be affected by severe global weather conditions, such as El Niño.

The prices obtainable for UP’s products as well as the volume of production, which is cyclical in nature, will affect the profits for the Group.



No material events occurred after the reporting date.


NOTE 4: EVENTS AFTER THE REPORTING DATE

NOTE 5: FAIR VALUE OF FINANCIAL INSTRUMENTS

The Group’s financial instruments measured at fair value consist of investments in quoted and unquoted shares and bonds amounting to USD 152.3 million and derivatives amounting to negative USD 2.2 million.

Other financial instruments include receivables and payables, which are measured at amortised cost. The fair value is approximately equal to amortised cost.

The fair value of investments in quoted shares is de-termined based on quoted prices in active markets. The fair value of derivatives and debt instruments is determined by discounted cash flow models, which are based on oberservable market data, such as interest and currency rates.

FAIR VALUE HIERARCHYThe Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:

Level 1: Quoted (unadjusted) prices in active markets for identical assets and liabilities.

Level 2: Other techniques for which all inputs that have a significant effect on the recorded fair value are observable, either directly or indirectly.

Level 3: Techniques that use inputs, which have a sig-nificant effect on the recorded fair value that are not based on observable market data.



STATEMENT BY THE BOARD OF DIRECTORS AND THE MANAGEMENT

The Board of Directors and the Management have today discussed and approved the Company’s report for the pe-riod 1 January - 30 June 2017.

The interim report, which has not been audited or reviewed by the Company’s auditor, has been prepared in ac-cordance with IAS 34, “Interim Financial Reporting”, as adopted by the EU, and additional Danish interim reporting requirements for listed companies.

In our opinion, the consolidated financial statements give a true and fair view of the Group’s assets, liabilities and financial position as at 30 June 2017, and of the results of the Group’s operations and cash flow for the period 1 January - 30 June 2017.

In our opinion, the Directors’ Report gives a true and fair account of the developments in the operations and financial circumstances of the Group, of the results for the period and of the financial position of the Group. It also gives a fair account of the significant risks and uncertainty factors that may affect the Group.

Kuala Lumpur, 21 August 2017

BOARD OF DIRECTORS

Carl Bek-Nielsen Martin Bek-Nielsen John A. Goodwin Chairman Deputy Chairman

Bent Mahler Jørgen Balle Frederik Steen Westenholz

MANAGEMENT

Ulrik Juul Østergaard Managing Director



STATEMENT BY THE BOARD

COUNTRY OF INCORPORATIONThe Commonwealth of The Bahamas

BOARD OF DIRECTORSCarl Bek-Nielsen, ChairmanMartin Bek-Nielsen, Deputy ChairmanJohn A. GoodwinBent MahlerJørgen BalleFrederik Steen Westenholz

AUDIT COMMITTEEJohn Goodwin, ChairmanJørgen BalleAppalanaidu Ganapathy

MANAGING DIRECTORUlrik Juul Østergaard

COMPANY SECRETARYAlison Treco

REGISTERED OFFICE2nd Floor, One Montague PlaceEast Bay StreetNassau, Bahamas

COPENHAGEN REPRESENTATIVE OFFICEInternational PlantationServices LimitedPlantations House49 H.C. Andersens Boulevard, 3rd Floor1553 Copenhagen V, DenmarkPhone: +45 33933330

AUDITORSErnst & YoungKuala Lumpur, Malaysia

ATTORNEYSMcKinney, Bancroft & HughesNassau, Bahamas

Bech-BruunCopenhagen, Denmark

Shearn Delamore & Co.Kuala Lumpur, Malaysia

BANKERSDanske Bank A/S

Handelsbanken A/S

Hongkong & Shanghai Banking Corp.

Maybank Berhad

CONTACT PERSONUlrik Juul ØstergaardPhone: +45 33933330E-mail: [email protected]

LINKSwww.uie.dkwww.unitedplantations.comwww.melkerschorlingab.com

COMPANY INFORMATION

HALF YEAR REPORT 2017 31


COMPANY INFORMATION

COMPANY ABBREVIATIONS

Company Name Abbreviation

Greenbridge Investment Limited Partnership GreenbridgeMelker Schörling AB MSABUnited International Enterprises Limited UIE or the CompanyUnited Plantations Berhad UP

CURRENCY ABBREVIATIONS

Currency Abbreviation

Danish Kroner DKKEuros EURIndonesian Rupia IDRMalaysian Ringgits MYRSwedish Kroner SEKUnited States Dollars USD

ABBREVIATIONS & DEFINITIONS

OTHER ABBREVIATIONS

Others Abbreviation

Crude Palm Oil CPOInternational Accounting Standards IASInternational Financial Reporting Standards as adopted by the EU IFRSInternational Accounting Standards Board IASBNon-controlling interests NCIPalm Kernel PKPalm Kernel Oil PKO

COMPARATIVE FIGURES

The USD comparatives are expressed at the foreign exchange rates that applied at the date on which these were originally reported. (All figures are converted at average exchange rates for the period/year except balance sheet figures, which are converted at period/year end exchange rates.)

DEFINITIONS

Earnings per share Net profit for the period attributable to equity holders of the company Weighted average number of shares, excluding treasury shares

Book value per share Equity at the end of the period, excluding minority interests Number of shares at the end of the period, excluding treasury shares

Return on equity Net profit for the year attributable to equity holders of the company Average equity, excluding minority interests

Solvency ratio Equity at the end of the period Total assets at the end of the period



ABBREVIATIONS & DEFINITIONS

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