TIDMAEP
RNS Number : 4250Y
Anglo-Eastern Plantations PLC
12 May 2021
Anglo-Eastern Plantations Plc
("AEP", "Group" or "Company")
Final results for year ended 31 December 2020
The group comprising Anglo-Eastern Plantations Plc ("AEP") and
its subsidiaries (the "Group"), is a major producer of palm oil and
to a lesser extent rubber with plantations across Indonesia and
Malaysia, amounting to some 128,000 hectares, has today released
its results for the year ended 31 December 2020.
Financial Highlights
2020 2019
$m $m
Revenue 269.1 219.1
Profit before tax:
- before biological asset ("BA")
movement 50.4 15.6
- after BA movement 51.7 18.9
Basic Earnings per ordinary share
("EPS"):
- before BA movement 77.67cts 35.37cts
- after BA movement 80.32cts 40.61cts
Dividend (cents) 1.0cts 0.5cts
Enquiries:
Anglo-Eastern Plantations Plc
Dato' John Lim Ewe Chuan +44 (0)20 7216 4621
Panmure Gordon (UK) Limited
Dominic Morley +44 (0)20 7886 2954
Chairman's Statement
The Covid-19 pandemic, as declared by the World Health
Organisation in early 2020, escalated into a worldwide crisis which
has upended many lives and businesses. At the time of writing, more
than three million deaths and over approximately one hundred and
fifty million infections were recorded worldwide. At the peak of
the pandemic, economic activities almost grounded to a halt as many
people were forced to stay at home under strict measures imposed to
curb the spread of the virus. In some countries where restrictions
were eased to allow people to work and travel, second and third
waves of infections have soared. Countries in Europe and South East
Asia, facing the next wave of infections were forced to reintroduce
stringent controls including lockdowns to slow the spread which
threaten to overload their hospitals. Masks and social distancing
are now part of everyday life. In Indonesia where most of AEP
plantations are based, the number of people infected has exceeded
one million while in Malaysia, the number of infections is still
low comparatively but infections have surged from the third quarter
of 2020. The significant upsurge of cases and the high fatalities
in India, reported as a crisis, is of grave concern as it has
spilled into the neighbouring countries and Indonesia and Malaysia
are not far off logistically. Vaccination programmes have started
in many countries and it will take enormous efforts on all fronts
to recover from this global calamity.
Most businesses across Indonesia and Malaysia were adversely
affected by the pandemic in 2020 and the upsurge including
emergence of new variants of coronaviruses at the start of 2021 of
which our operations in Indonesia and Malaysia are no exception.
Although currently, the affected numbers of staff and field workers
are not alarming, it is prudent to continue imposing vigilant
measures, especially in Indonesia where our plantations are located
in scattered regions, provinces and islands.
The Group's fresh fruit bunches ("FFB") production in 2020
reached 1.10 million mt, 7% higher than last year of 1.03 million
mt due to improved weather. Rainfalls were satisfactory in most of
the regions that the Group operated other than the first three
months of the year. A moderate La Nina weather phenomenon brought
heavy rainfall to coastal estates in North Sumatera and Malaysia
towards the end of the year causing flash floods and some
landslides. With mostly favourable weather, all regions reported
between 6% to 12% higher FFB production. Production in South
Sumatera was the exception where harvest declined sharply by 13%
due to poor rainfall distribution. FFB bought-in from surrounding
smallholders and plasma was 913,200 mt (2019: 907,100 mt),
marginally more than 2019. The mills processed 1.97 million mt of
FFB, 5% more than last year of 1.87 million mt. crude palm oil
("CPO") production, as a result, was 3% higher at 406,100 mt,
compared to 394,700 mt in 2019.
CPO prices for the first half of the year were weak as expected
due to the low economic activities during the pandemic which
adversely affected demand. As the lockdown eased and international
trade gradually resumed, prices rallied in the second half of the
year. The export of Indonesian palm oil to the three key markets of
India, China and European Union ("EU") in 2020 was reported to drop
substantially during the pandemic. Despite the drop in
international consumption, the strong rebound in prices was due to
a combination of reasons. The continuation of Indonesian B30
biodiesel programme despite low crude oil prices, the low inventory
caused by a lower FFB production and soaring soybean prices were
the main contributors to the rally. A more detailed explanation is
provided in the Strategic Report under Commodity Prices. The
average CPO price ex-Rotterdam ended the year 28% higher at
$723/mt, compared to $565/mt in 2019.
The higher FFB production and higher CPO prices meant that the
Group's revenue was higher by 23% at $269.1 million, compared to
$219.1 million achieved in 2019. The operating profit for the Group
in 2020, before biological asset ("BA") movement almost quadrupled
to $48.1 million, from $12.2 million reported in 2019. The earnings
per share, before BA movement, increased by 120% to 77.67cts, from
35.37cts in 2019. The Group's operating profit after BA movement
for 2020 was at $49.4 million after an upward BA movement of $1.3
million as compared to 2019 operating profit of $15.4 million after
an upward BA movement of $3.3 million.
The Group's new planting for oil palm including plasma for 2020
totalled 2,190 ha compared to 1,757 ha last year. The new planting
was mostly concentrated in the Bangka and Kalimantan regions where
negotiations with owners over land compensation were concluded more
efficiently. Another 785 ha was replanted in North Sumatera and
Bengkulu during the year to replace trees with poor yield. In 2021,
the Group plans to plant 3,800 ha of oil palm which includes
replanting of 950 ha in Bengkulu.
The Group has four biogas plants with a combined capacity of
slightly above five megawatts. The latest addition, Tasik Raja
biogas plant, was commissioned in the fourth quarter of 2020. The
Group generated 18,900 MWh of electricity in 2020 compared to
17,200 MWh last year. The revenue from the sale of surplus
electricity was $970,000, 7% higher than last year of $908,000. The
biogas operations were not spared by the pandemic as demand for
power in Indonesia diminished with many businesses scaling or
shutting down. They underperformed as the state owned company
suspended the uptake of electricity from two of our plants while
reducing the unit rate it purchased from another. The Group will
continue the use of clean energy where possible to further reduce
the mills' reliance on fossil fuels and to address growing calls to
reduce greenhouse gas emissions which could threaten the long-term
social acceptability and profitability of a palm oil company.
With many countries battling against the pandemic, headlines and
attention have been drawn away from EU threat to reduce the use of
palm oil for biofuel in 2024 and to completely phase it out by the
year 2030. The adverse perception of palm oil as an environmentally
unfriendly and non-renewable source particularly in the EU has
continued to feature in recent years, touching on issues including
deforestation, emission of greenhouse gases, planting on peatland
and land rights. AEP remains committed to No Deforestation, No
Peatland, No Exploitation ("NDPE") policies. All supplies of FFB to
our mills are traceable to their origins of supply chains and are
not linked to illegal deforestation. There is growing pressure from
buyers to avoid CPO with NDPE and High Conservation Values ("HCV")
issues.
A prolonged resurgence of the Covid-19 pandemic, especially with
many countries already on recession watch, remains a potential
major risk to palm oil demand in both the food and energy sectors.
Despite the availability of vaccines, a slower than expected
rollout or a reduction in the effectiveness of vaccines could
weaken consumer and business confidence and dampen economic
recovery resulting in weaker trade and commodity prices.
I have mentioned earlier that one of the main reasons for the
high CPO prices was the high domestic demand in Indonesia created
by the government B30 biodiesel programme whereby it uses 30% fatty
acid methyl esters made from palm oil to blend with the traditional
fossil fuel. The soaring CPO prices meant that the Indonesian
government had to pay ballooning biodiesel subsidies. It was
inevitable that in December 2020, the Indonesian government raised
the exports levy and tax on CPO. The export levy for palm oil
exports was revised from a fixed rate of $55/mt to progressive
rates linked to CPO prices. Under the new structure, export levy is
payable from a minimum of $55/mt to $255/mt when the CPO prices
range from $670/mt to above $995/mt. On top of this, the government
also collects export tax of $33/mt up from $3/mt previously.
Without the revision, the long term economic viability of the
biodiesel programme in Indonesia is questionable amidst the low
crude oil prices. This new structure would, at the same time, cap
the exponential growth of profit due to soaring CPO prices.
Brexit became a reality as the UK exited the EU single market
with an EU tariff and quota-free trade deal sealed to avert
potential business chaos and uncertainties in the immediate future,
although it maybe unlikely that AEP's business will be
significantly affected by this. At present, I believe that people
are generally more concerned about the continuing Coronavirus
pandemic which has claimed many lives and disrupted the economy and
livelihood not just in the UK but across the globe. With the
availability of vaccine some communities believe there is hope that
the world can gradually combat Covid-19 and over time will bring
back normality or close to normality to our lives. However, it is
unknown when will be the time or year that the above will come into
reality.
In determining the amount of dividends to be paid to our
shareholders, the Board in previous years had been consistent with
a balanced approach to the requirement of funds in the Company in
order to expand and enhance shareholders' value but at the same
time cognisant of shareholders' wishes to have dividends as a form
of income. As with last year the Board continues to have the
regulatory obligation to ensure that the Group has adequate funds
to continue as a going concern for the foreseeable future in a near
worst-case scenario because of the uncertainty due to Covid-19. As
a result of the current crisis in India, as well as the
precautionary measures in Indonesia, the Board is of the opinion
that the pandemic is far from over in the region where the Group's
operations are, due to the mutations and variants more infectious
than the initial virus that the world has been combating. With this
in mind the Board has adopted a prudent view for the time being and
has declared a final dividend of 1.0cts per share, in line with our
reporting currency, in respect of the year to 31 December 2020
(2019: 0.5cts). In the absence of any specific instructions up to
the date of closing of the register on 11 June 2021, shareholders
with addresses in the UK will be deemed to have elected to receive
their dividends in Pounds Sterling and those with addresses outside
of UK will be deemed to have elected to receive their dividends in
US Dollars. Subject to the approval by shareholders at the AGM, the
final dividend will be paid on 16 July 2021 to those shareholders
on the register on 11 June 2021.
This year's Annual General Meeting ("AGM") scheduled on 28 June
2021 will be held in Kuala Lumpur again because of practical
reasons linked to this pandemic. Although shareholders are able to
participate via Zoom, the Board is, nevertheless, conscious that
shareholders would want to have personal interaction with Board
members, normally at the AGM and therefore a meeting will be
organised in London when it is appropriate to do so, with less
formality, for shareholders to meet with some of the Board
members.
On behalf of the Board of Directors, I would like to convey our
sincere thanks to our management and employees of the Group for
their dedication, loyalty, resourcefulness, commitment and
contribution to the preservation of the Group's operation as a
going concern during this extremely difficult and trying period. We
would appreciate that they would continue to do so if local and
global adversity were to worsen.
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
12 May 2021
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 the economic and business risks faced by the
Group.
Business Model
The Group will continue to focus on its strength and expertise,
which is planting more oil palms and production of CPO. 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 limit of 20,000 ha
per province and a national total of 100,000ha on the licensed
development of oil palms for companies that are not listed in
Indonesia or with less than a 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 return to the investors and to enhance shareholder value.
Profitability, however, is very much dependent on the CPO price,
which is volatile and is 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. Soybean crops would require up to eight times as much
land to produce an equivalent weight of palm oil. It was reported
that amongst the major oilseeds, oil palm occupies about 10% of the
total agricultural land but contributes more than 40% of the
world's supply of oils and fats.
The Group's strategies, therefore, focus on maximising yield per
hectare above 22 mt/ha, minimum mill production efficiency of 110%
, minimising production costs below $300/mt and streamlin e estate
management . For the year under review, the Indonesian operations
achieved a yield of 18.9 mt/ha, 133% mill efficiency and production
cost of $280/mt. This compared favourably to 2019 where the Group
achieved a yield of 18.1 mt/ha, 132% mill efficiency and production
cost of $285/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 the 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. It is
commonly accepted that failure to address growing calls to reduce
greenhouse gas emissions could threaten the long-term social
acceptability and profitability of a palm oil company. The Group,
however, has to put on hold future biogas projects as the state
authorities have suspended the uptake of electricity from two of
our biogas plants and reduced the electricity rate for the purchase
from another plant due to a drastic drop in demand during the
pandemic.
The Group will continue to engage and offer competitive and fair
compensation to the villagers so that land can be cleared and be
planted.
Financial Review
Performance of the business during the year
For the year ended 31 December 2020, revenue for the Group was
$269.1 million, 23% higher than $219.1 million reported in 2019 due
primarily to the higher CPO prices and higher production.
The Group's operating profit for 2020, before biological asset
movement, almost quadrupled to $48.1 million, from last year of
$12.2 million.
FFB production for 2020 reached 1.10 million mt, 7% higher than
the 1.03 million mt produced in 2019. The overall yield for the
Indonesian plantations was higher at 18.9 mt/ha (2019: 18.1 mt/ha)
due to more consistent and better rainfall throughout the year
coupled with an increased in matured areas to harvest. La Nina
weather patterns brought flash floods to many areas towards the end
of the year but the permanent damage to the trees was minimal,
while damages to infrastructure such as roads and bridges were
manageable. Young matured oil palms in North Sumatera grew well and
reported a 13% higher crop production. Bengkulu region, which
suffered the most from the effect of drought last year, recovered
partially with production up by 6%.
FFB bought-in from local smallholders and plasma in 2020 was
913,200 mt (2019: 907,100 mt), 0.7% more compared to 2019. The
supply of external crops was affected by greater competition from
new mills in North Sumatera and lower productivity amongst smaller
plantations as they reduced the fertilizer application during the
period of low CPO prices. During the year, the Group's mills
processed a combined 1.97 million mt of FFB, 5% more than last year
of 1.87 million mt. CPO production, as a result, was 3% higher at
406,100 mt, compared to 394,700 mt in 2019.
Profit before tax and after BA movement for the Group was $51.7
million, 174% higher compared to a profit of $18.9 million in 2019.
The BA movement was a credit of $1.3 million, compared to a credit
of $3.3 million in 2019. The BA movement was mainly due to a change
in FFB price which was higher in 2020. The profit before tax was
affected by reversal of impairment charge on land amounting to $2.0
million compared to a reversal of impairment charge on the
development cost of the plantation amounting to $7.6 million and
impairment on land amounting to $1.0 million in 2019. The profit
before tax was also impacted by the expected credit loss from
Plasma receivables amounting to $1.5 million in 2020 (2019: $6.1
million) attributed to the additional amounts allocated for plasma
development during the year. Net finance income recognised in the
income statement decreased from $3.2 million in 2019 to $2.6
million in 2020 due to lower interest rate. The tax expense
increased from $2.7 million in 2019 to $13.7 million in 2020 mainly
due to the increase in profit before tax. There was a loss of
exchange in translation of foreign operations, recognised in other
comprehensive income, totalling $5.5 million for 2020 against an
exchange gain of $18.7 million in the previous year due to the
slight weakening of Indonesian rupiah at the year end. The
retirement benefits due to the employees at 31 December 2020, as
calculated by a third party actuary, increased to $13.4 million
from $11.3 million last year due to an increase in the number of
full-time workers.
The average CPO price ex-Rotterdam for 2020 was $723/mt, 28%
higher than 2019 of $565/mt.
Earnings per share before BA movement increased by 120% to
77.67cts compared to 35.37cts in 2019. Earnings per share after BA
movement increased from 40.61cts to 80.32cts. Earnings per share
have increased compared to 2019 due mainly to the increase in
profit after tax.
Position of the business at the end of the year
The Group's balance sheet remains strong. As at 31 December
2020, the Group had cash and cash equivalents, net of borrowing of
$115.2 million (2019: $76.6 million). The external bank borrowings
as at the end of 2019 of $8.2 million were fully repaid in the year
and the Group has no reliance on external financing. The net cash
inflow from operating activities during the year was higher at
$65.1 million by 346% compared to $14.6 million in 2019 due mainly
to the more robust CPO prices and higher production. The net cash
used in financing activities during the year was lower by 30% at
$8.8 million compared to $12.5 million in 2019 due to the reduced
level of borrowings at the beginning of the year to repay and the
lesser amount of dividends paid. The cash position was higher in
2020 due to lower capex and development costs.
The lower additions to development costs for property, plant and
equipment ("PPE") amounting to $21.1 million in 2020 (2019: $34.0
million) was due to reduced construction costs. The impairment
reversal of $2.0 million in 2020 was related to land, whilst the
impairment reversal in 2019 of $6.6 million was mainly related to
the plantations. Amounts due from cooperatives under the Plasma
scheme before expected credit loss was $24.6 million (2019: $19.1
million), an increase of 29% mainly due to the new planted area for
Plasma during the year. Deferred tax assets reduced from $11.3
million in 2019 to $8.8 million and deferred tax liabilities
reduced from $17.0 million in 2019 to $15.5 million mainly due to
the reduction of tax rate from 25% to 22% in Indonesia. Inventories
increased from $8.8 million in 2019 to $12.5 million in 2020
because of logistic problem in Bengkulu and Kalimantan which has
since been resolved. Other working capital for trade and other
receivables and payables increased by $10.5 million mainly due to
more advances received from customers.
The tax recoverable for 2021 amounted to $51.7 million, 4%
higher over the previous year of $49.5 million. The substantial tax
recoverable is due to value added tax ("VAT") and corporate income
tax ("CIT") paid which is refundable by the Indonesian tax
authority after their tax audit. A detailed description is provided
in note 8.
The Directors carried out assessments of our significant assets
to determine whether such assets showed indicators of impairment as
a result of the pandemic or wider climate change issues.
Viability Statement
The viability assessment considers solvency and liquidity over a
longer period than for the purposes of the going concern assessment
made. Inevitably, the degree of certainty reduces over this longer
period.
The Group's business activities, financial performance,
corporate development and principal risks associated with the local
operating environment are covered under the various sections of
this strategic report. In undertaking its review of the Group's
performance in 2020, the Board considered the prospects of the
Company, focusing on the strategy for growth via the expansion of
its planted area in tandem with forecasting demand for CPO, over
one and five-year periods. The process involved a detailed review
of the 2021 detailed budget and the five-year income and cash flow
projection. The one-year budget has a greater level of certainty
and is used to set detailed budgetary targets at all levels across
the Group. It is also used by the Remuneration Committee to set
targets for the annual incentive. The five-year income and cash
flow projection contains less certainty of the outcome but provides
a robust planning tool against which strategic decisions can be
made. The Board believed that to project beyond five years has more
elements of uncertainties and therefore less reliable for making
informed decisions.
The Board also considered the five-year cash flow projection
under various severe but plausible scenarios, including the
financial impact on the Group due to partial or total shutdown of
its operations and the contraction of demand for palm oil resulting
from the Coronavirus pandemic, and the need to support financially
loss-making newly matured estates, together with the projected
capital expenditure. On this basis and other matters considered and
reviewed by the Board during the year, the Board has a reasonable
expectation that the Group has adequate resources to continue in
operation and meet its liabilities over the five years from 2021 to
2025.
Going Concern
As the Group is still facing a period of uncertainty due to the
Coronavirus pandemic, the Directors carried out stress tests as
required, to ensure that the Group has adequate resources in a
worst-case scenario to remain as a going concern for at least
twelve months from the date of this report.
The Directors have a reasonable expectation, having made the
appropriate enquiries, that the Group has control of the monthly
cash flows and that the Group has sufficient cash resources to
cover the fixed cash flows for a period of at least twelve months
from the date of approval of these financial statements. For these
reasons, the Directors adopted a going concern basis in preparation
of the financial statements. The Directors have made this
assessment after consideration of the Group's budgeted cash flows
and related assumptions including appropriate stress testing of
identified uncertainties, specifically on the potential shut down
of the entire operations from three to twelve months if all the
plantations are infected with Coronavirus as well as the impact on
the demand for palm oil with decreases of 50% to 100%. Stress
testing of other identified uncertainties and risks such as
commodity prices and currency exchange rates were also
undertaken.
Business Review
Indonesia
The performance of the Indonesian operations is divided into
five geographical regions.
North Sumatera
FFB production in North Sumatera, which aggregates the estates
of Tasik, Anak Tasik, Labuhan Bilik ("HPP"), Blankahan, Rambung, Sg
Musam and Cahaya Pelita ("CPA") produced 354,900 mt in 2020 about
13% above last year (2019: 314,600 mt). The increase in matured
areas to 16,238 ha from 15,025 ha contributed to this higher
production. A more consistent rainfall pattern and better harvest
from young matured palms in Tasik also improved the annual yield to
21.6 mt/ha from the previous year of 20.9 mt/ha.
Implementation of integrated pest management ("IPM") in
largescale replanting has sharply reduced the number of incidents
of Rhinoceros beetle or Oryctes damage in Tasik and Anak Tasik. It
was also observed that the average bunch weight for 2020 was
significantly higher than the prior year which correlates with
having fewer parthenocarpic and abnormal bunches.
Higher production can be expected in coming years due to new
planting and recently replanted areas of 1,808 ha maturing next
year and starting to bear fruits. In HPP, oil palms continued to
recover from the desiccation of fronds as the affected area has
reduced significantly to 98 ha from about 185 ha due to improved
rainfall. Water gates and canals also provide better water
management. About 232 ha in CPA was replanted in 2020 with raised
platforms in flood prone areas to improve growth and help in the
evacuation of fruits.
In 2020, the two mills in North Sumatera produced 124,900 mt of
CPO (2019:138,000 mt) from a throughput of 629,200 mt (2019:
680,900 mt). Tasik Raja mill broke its record by processing almost
10% higher FFB in 2020 at 455,000 mt (2019: 415,400 mt) due mainly
to better internal crop production, raising the mill utilization to
158%. Oil Extraction Rate ("OER"), however, was lower at 20.02%
(2019: 20.12%) possibly due to the dura contamination from external
crops that made up 38% of the total crops processed. Dura crops
with thinner mesocarp normally have an oil content of 18% or lower.
The operation at this mill was briefly interrupted when two workers
tested positive for Covid-19 which resulted in mass precautionary
screening and a reduction in staffing levels. The Blankahan mill on
the other hand had a bad year processing 34% less FFB at 174,200 mt
(2019: 265,600 mt) due to lower external crop purchases reducing
mill utilization from 138% to 91% this year. The emergence of new
mills in the region posted intense competition. Outside crops that
made up 73% of the total crops processed by the mill in the
previous year dropped to 58% in 2020. Internal crop production was
also lower as the average age of trees reached 26 years with
replanting to be carried out soon. Replanting in Blankahan is
delayed as the yield had been consistently high in the past years
averaging 26 mt/ha due to good soil condition.
The two biogas plants in North Sumatera did not perform up to
expectation in 2020. Blankahan biogas plant had a disappointing
year. It sold about 2,500 MWh (2019: 2,200 MWh) of surplus
electricity and generated $151,800 (2019: $140,800) in revenue
before state authorities suspended the uptake of electricity from
the middle of the second quarter of the year. Tasik biogas plant,
which was commissioned in the fourth quarter of 2020, was unable to
sell the surplus electricity as the national grid suspended the
uptake following the shutdown of many economic activities during
the Coronavirus pandemic.
The sales from the biomass plant were also lower in 2020 at
$427,100 compared to $733,100 last year, as the plant exported 26%
less dried long fibres at 4,930 mt compared to 6,690 mt last year.
The drop in demand due to the pandemic had also dampened selling
prices which had fallen by as much as 55%. Buyers also complained
about higher shipment cost as containers were stuck at port due to
shortage of manpower to clear them.
Bengkulu
FFB production in Bengkulu, which aggregates the estates of
Puding Mas ("MPM") and Alno produced 304,000 mt (2019: 287,300 mt),
6% more than 2019. Production from Bengkulu region has improved by
6% as rainfall normalised to 4,000mm in 2020 (2019: 2,860mm) with
higher yield at 18.2 mt/ha from 16.9 mt/ha last year.
MPM and Sumindo mills processed a combined 672,200 mt (2019:
587,000 mt) of FFB in 2020 due to higher internal crop production
as well as higher external crop purchases. External crop purchases
increased by 22% to 344,700 mt from 283,200 mt last year as
production in the region recovered from moisture stress the
previous year increasing mill utilization to 133% from 116% last
year. CPO production for the year was 10% higher at 138,200 mt
(2019: 125,300 mt) with OER for the two mills averaging 20.6%,
lower from 21.4% last year. External crops made up 51% of the
throughput compared to 48% in 2019.
About 1,000 ha of palms will be replanted from next year as the
palms in Alno and MPM reached the average age of 18 and 21 years
respectively. The replanting is also fast tracked as the dura palms
constituted a significant portion of the planted areas. Fruits from
dura palms have thin mesocarp which ultimately produce less
oil.
The MPM biogas plant sold over 9,600 MWh (2019: 9,300 MWh) of
surplus electricity, 3% higher and generated $444,300 in revenue
(2019: $442,400). The biogas plant performed below its optimum two
megawatt capacity due to frequent breakdowns in the old
transmission lines and also lower demand. The authorities renewed
the contract to purchase electricity from the biogas plant for
another two years to 2023 with the same rate. It was due to expire
in the first quarter of next year.
South Sumatera
FFB production in South Sumatera, which aggregates the estates
of Karya Kencana ("KKST"), Empat Lawang ("ELAP") and Riau Agrindo
("RAA") produced 34,200 mt (2019: 39,400 mt), 13% lower than 2019.
In South Sumatera, the drought unfortunately continued from last
year. Annual rainfall in South ELAP was 1,530 mm (2019: 1,330 mm)
which also experienced eight months where rainfall fell below the
minimum of 150 mm per month for healthy crop production. The yield
in South Sumatera reflected the dry conditions which diminished
further to 6.3 mt/ha from 7.4 mt/ha the previous year.
During the year about 16,600 new palms were spot planted in
South Sumatera boosting the stems per hectare to 101 trees from the
target of 105 trees. It incurred higher planting cost as frequent
resupply of young palms was needed due to damages by cattle owned
by local villagers that roam the plantation freely for grazing.
Trenching and fencing the plantation were explored but were deemed
as not economical. Discussions with the local villagers were not
productive and, as any strained relationship can be detrimental in
the long run, the management decided instead to fence individual
young plants to protect them. With higher CPO prices, more FFB
thefts were reported in 2020 as the region faced high unemployment
during the pandemic. The management has stepped up increased
security patrols.
Riau
FFB production in the Riau region, comprising Bina Pitri
estates, produced 133,200 mt in 2020 (2019: 129,400 mt), 3% higher
than 2019. Rainfall was higher at 2,850 mm (2019: 2,649 mm). The
yield for the year was slightly higher at 27.3 mt/ha from last year
of 26.6 mt/ha. Over 2,800 ha would be replanted from 2023 to 2026
as 78% of the palms are between the ages of 23 to 26 years. Flash
floods interrupted harvesting towards the end of the year as heavy
rain burst the river banks.
Despite the 8% higher external crop purchase at the mill at
225,300 mt compared to 208,600 mt last year, the mill utilization
rate dropped to 125% from 156% last year. The mill upgrade was
finally completed in 2020 with the milling capacity improved to 60
mt/hr from 45 mt/hr previously. Overall CPO production was higher
by 3% to 69,100 mt compared to 66,800 mt in 2019. Despite the high
yield, the region is contaminated by dura palms which made up 63%
of the crops processed by the mill. The mill therefore had a low
OER of 19.3% compared to 19.8% in the previous year.
Bangka
FFB production in the Bangka region, comprising Bangka Malindo
Lestari estates, produced 8,700 mt in 2020 (2019: 6,000 mt), 45%
higher than 2019. Higher crop was due to a larger harvestable area
and more palms having reached peak maturity. Yield improved from
11.2 mt/ha to 13.5 mt/ha in 2020. With new planting in 2020
totalling 706 ha (2019: 651 ha), the total planting including
plasma in Bangka has reached 2,856 ha (2019: 1,994 ha).
Kalimantan
FFB production in Kalimantan which comprises of the Sawit Graha
Manunggal ("SGM") and Kahayan Agro Plantation ("KAP") estates was
249,500 mt in 2020 (2019: 231,400 mt) 8% higher than 2019 as more
palms matured and reached the peak production age. The average age
of palms in SGM and KAP were nine and four years respectively.
During the year 583 ha of palms matured in SGM and KAP leading to
its first harvest. The yield in Kalimantan recovered to 18.6 mt/ha
from a low of 18.0 mt/ha last year as rainfall was consistent
throughout the year at 3,448 mm per annum an improvement from last
year of 2,864 mm. Lower yield was experienced last year due to
prolonged drought and haze in the region which shifted crop pattern
especially on sandy soil dominated areas. SGM experienced several
occasions of flash flood with no lasting damages as it cleared
within days.
New planting in SGM and KAP is expected to reach 1,000 ha next
year. The long-term prospect for Kalimantan remains bright.
SGM continued with its mechanization of infield collection of
harvested crops by the purchase of light all-terrain vehicles
called Quick which are cheaper and easier to maintain. Additional
units will be added to the current fleet to help with the crops
evacuation.
The purchase of external and plasma crops in SGM reached 68,900
mt in 2020 which was higher by 41% compared to 49,000 mt last year.
The total external and plasma crop at the SGM mill made up 22% of
the total crops processed from 18% last year. With the throughput
at the mill reaching 312,000 mt (2019: 268,700 mt), the mill
utilization rate increased to 144% from 124% last year producing
73,900 mt of CPO, 14% more than 2019 of 64,600 mt. OER for the mill
averaged 23.7% for the year compared to 24.1% last year and
continue to outperform the rest of the mills in the Group. The
lower OER for the year was likely due to parthenocarpic bunches and
forced ripening of the fruits after long periods of hot weather
followed by rain showers. Under such condition the mesocarp of the
fruits turned yellow with lower oil content.
The SGM biogas plant generated 19% more electricity in 2020 at
over 6,800 MWh (2019: 5,700 MWh) worth $373,700 (2019: $325,100).
The contract to purchase electricity, which will expire in the
first quarter of next year, was extended by the authorities to 2022
with the electricity rate reduced by 12% due to a drop in power
demand in the region.
During the year, with international borders mostly closed to
non-essential travelling, the Malaysian based agronomist could not
make monthly field visits to underperforming estates in Indonesia
to provide advice on optimizing field disciplines and improving
crop yields. The Board believes that the closer monitoring of field
performance once international travel restriction relax will result
in improvements in the crop yield.
Overall bought-in crops for Indonesian operations including
plasma were 0.7% higher at 913,200 mt for the year 2020 (2019:
907,100 mt). The average OER for our mills was marginally lower in
2020 at 20.6% in 2020 (2019: 21.1%).
Malaysia
FFB production in 2020 was 11% higher at 18,600 mt, compared to
16,700 mt in 2019. Several other plantations in East Malaysia had
to stop operations temporarily as their workers tested positive for
Covid-19 however we are pleased to say that our operation was not
affected. The Malaysian government imposed a freeze on the intake
of foreign workers from March 2020 to prevent the spread of the
virus and to encourage displaced locals to fill vacancies in the
plantation. The situation was exacerbated as foreign workers who
returned home after their work contracts expired could not be
replaced. Substantial shortage of workers hampered not only field
maintenance and application of fertilisers but harvest resulting in
crop losses. Towards the end of the year end, the La Nina weather
pattern brought heavy rain resulting in massive flooding and
landslides damaging roads and bridges which needed costly repairs.
The palms, with an average age of 23 years, faced declining yield
as the fertiliser program was not followed. The Malaysian
plantation in 2020 generated a profit before tax after BA movement
of $0.1 million compared to loss before tax after BA movement of
$0.9 million in 2019. The plantation obtained its Malaysian
Sustainable Palm Oil ("MSPO") certification in January 2021.
The financial performance of the various regions are reported in
note 6 on segmental information.
Commodity Prices
The CPO ex-Rotterdam price started the year at $878/mt (2019:
$517/mt) and trended downward for the first five months of the year
as international borders were closed and Coronavirus induced
lockdown of major economic activities spread across the world
dampening demand. The price was lowest in May 2020 at $496/mt
before a sharp turnaround as major economies reopened after the
first wave of the pandemic. The price peaked in December 2020 at
$1,029/mt before ending the year at $1,014/mt (2019: $856/mt),
averaging $723/mt for the year, 28% higher than last year (2019:
$565/mt). The strong rebound in prices was due to a combination of
reasons. The Indonesian B30 biodiesel programme continues to be the
main driver of CPO prices. The increase in domestic absorption of
CPO through biodiesel mandate reduces global supply and eventually
boosts prices. The pent up demand for palm products after the
initial lockdown amidst an environment of lower crop production and
lower CPO inventory also pushed prices higher. At the end of
November 2020, the Indian government reduced temporarily the import
duty on CPO by 10% which made palm oil more competitive against
alternative soft oils. This was short lived as the government in
February 2021 revamped its tax structure for import of major
vegetable oils with additional tax of 5.5% imposed on palm oil
which made it less competitive going forward. Stronger soy bean
prices due to uncertain weather conditions in soybean producing
countries also helped to lift CPO prices higher. The strong CPO
prices are expected to last at least until the end of first quarter
2021 as potential pullback is expected from rising vegetable oil
production. The high prices, however, could lower demand and
encourages a shift to alternative vegetable oils. The Chairman's
Statement earlier mentioned major changes made by the Indonesian
government in CPO export tax levy and tax in December 2020. Palm
oil's discount to its main rival, soybean oil, has contracted to
the smallest margin in a decade for the major part of the year
reducing its traditional appeal as a cheaper vegetable oil
especially in price sensitive markets. The discount, however,
widened in the first quarter of 2021 as soybean prices soar again.
It has been reported that palm oil will face more headwinds in the
coming year as China imports more soybean to power an aggressive
expansion of the country's hog industry recently devastated by the
African swine fever. The crushing of soybeans produces soybean oil
and meals, the latter being used to feed the hogs.
Over a period of ten years, CPO price has touched a monthly
average high of $1,284/mt in 2011 and a monthly average low of
$472/mt in 2018. The monthly average price over the ten years is
about $771/mt.
Rubber prices averaged $1,356/mt for 2020 (2019: $1,272/mt). Our
small area of 262 ha of mature rubber contributed a revenue of $0.6
million in 2020 (2019: $0.7 million). Rubber continues to struggle
with low prices. Our rubber trees are also affected by fungus
disease called Pestalotiopasis sp fungus which causes abnormal
defoliation that severely lowers latex production. Production in
the year was also affected by the uneven wintering which caused the
under application of ethereal to simulate latex production.
Corporate Development
In 2020, the Group opened up new land and planted 2,190 ha
(2019: 1,757 ha) of oil palm mainly in Kalimantan and Bangka,
boosting planted area including the smallholder cooperative scheme,
known as Plasma, by 3% to 73,600 ha (2019: 71,481 ha). Another 785
ha was replanted in North Sumatera and Bengkulu. In 2021, the Group
plans to plant 3,800 ha of oil palm which includes replanting of
950 ha in Bengkulu. Opening of new land for planting can be
cumbersome and requires written approval from local authorities,
submission of environment impact assessments and meetings with
local communities.
As mentioned in the Business Review, the fourth biogas plant in
Rantau Prapat costing $3.8 million was commissioned in the fourth
quarter of 2020. Unfortunately, it was unable to sell the surplus
electricity as the national grid has suspended the uptake following
the shutdown of many economic activities during the Coronavirus
pandemic. An appeal, however, has been made to the ministry in
charge of renewable energy. The management is exploring all
opportunities to maximise the use of the biogas plant including
bottling the BioCNG for Indonesian domestic consumption.
The civil and structural works for the seventh mill in North
Sumatera costing $6.7 million has been awarded and mobilization
work started towards the end of the year. The contractor has
started to build a temporary jetty and housing at the site.
Mechanical works estimated to cost another $6 million are expected
to be tendered by early next year. The project is earmarked for
completion by 2022.
The upgrade of the Bina Pitri mill was finally completed in 2020
improving its milling capacity from 45 mt/hr to 60 mt/hr at a cost
of $2.3 million.
Our feasibility study concluded that it is more profitable to
build a mill in KAP to support its operation due to high logistics
costs. KAP is currently transporting the FFB some 600km to SGM mill
or, when this becomes too arduous such as during the monsoon
season, the fruits are sold locally to third parties. The Group
plans to build a 45 mt/hr mill with two storage tanks of 5,000 mt
each with minimum spare machineries costing an estimated $12
million.
On behalf of the Board
Dato' John Lim Ewe Chuan
Executive Director, Corporate Finance and Corporate Affairs
12 May 2021
Directors' Responsibilities
The Directors are responsible for preparing the annual report
and the financial statements in accordance with applicable law and
regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law, the Directors
are required to prepare the Group financial statements in
accordance with International Accounting Standards ("IAS") in
conformity with the requirements of the Companies Act 2006 and in
accordance with International Financial Reporting Standards
("IFRSs") adopted pursuant to Regulation (EC) No 1606/2002 as it
applies in the EU. The Directors have elected to prepare the
Company financial statements in accordance with FRS 101 Reduced
Disclosure Framework under the UK Generally Accepted Accounting
Practice ("UK GAAP"). Under company law, the Directors must not
approve the financial statements unless they are satisfied that
they give a true and fair view of the state of affairs of the Group
and Company and of the income statement for the Group for that
period.
In preparing these financial statements, the Directors are
required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and accounting estimates that are reasonable and prudent;
-- state whether they have been prepared in accordance with
applicable accounting standards, subject to any material departures
disclosed and explained in the financial statements;
-- prepare a Strategic Report, a Directors' Report and
Directors' Remuneration report which comply with the requirements
of the Companies Act 2006; and
-- make an assessment of the Company and Group's ability to continue as a going concern.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the financial statements comply with the Companies Act 2006 and, as
regards the Group financial statements, Article 4 of the IAS
Regulation. They are also responsible for safeguarding the assets
of the Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
After making enquiries, the Directors have a reasonable
expectation that the Company and the Group have adequate resources
to continue operations for the foreseeable future.
Website publication
The Directors are responsible for ensuring the annual report and
the financial statements are made available on a website. Financial
statements are published on the Company's website in accordance
with the legislation in the UK governing the preparation and
dissemination of financial statements, which may vary from
legislation in other jurisdictions. The maintenance and integrity
of the Company's website is the responsibility of the Directors.
The Directors' responsibility also extends to the ongoing integrity
of the financial statements contained therein.
Directors' responsibilities pursuant to Disclosure and
Transparency Rules 4 ("DTR4")
All of the Directors confirm to the best of their knowledge:
-- The Group financial statements have been prepared in
accordance with IFRSs as adopted pursuant to Regulation (EC) No
1606/2002 as it applies in the EU and Article 4 of the IAS
Regulation and give a true and fair view of the assets,
liabilities, financial position and income statement of the
Group.
-- The Strategic Report in the annual report includes a fair
review of the development and performance of the business and the
financial position of the Group, together with a description of the
principal risks and uncertainties that they face.
-- The annual report and financial statements, taken as a whole,
are fair, balanced and understandable and provide the information
necessary for shareholders to assess the Company's performance,
business model and strategy.
On behalf of the Board
Dato' John Lim Ewe Chuan
Executive Director, Corporate Finance and Corporate Affairs
12 May 2021
Consolidated Income Statement
For the year ended 31 December 2020
2020 2019
Result Result
before before
Continuing BA movement* BA movement BA movement BA movement
operations Note Total Total
$000 $000 $000 $000 $000 $000
------------------ ------- -------------- -------------- ---------- ------------- -------------- ------------
Revenue 3 269,060 - 269,060 219,136 - 219,136
Cost of sales (213,370) 1,274 (212,096) (199,515) 3,255 (196,260)
------------------ ------- -------------- -------------- ---------- ------------- -------------- ------------
Gross profit 55,690 1,274 56,964 19,621 3,255 22,876
Administration
expenses (8,134) - (8,134) (8,068) - (8,068)
Reversal of
impairment 11 2,008 - 2,008 6,590 - 6,590
Provision for
expected
credit loss 15 (1,485) - (1,485) (5,965) - (5,965)
------------------ ------- -------------- -------------- ---------- ------------- -------------- ------------
Operating profit 48,079 1,274 49,353 12,178 3,255 15,433
Exchange (losses)
/ gains (268) - (268) 251 - 251
Finance income 4 2,876 - 2,876 4,169 - 4,169
Finance expense 4 (292) - (292) (980) - (980)
------------------ ------- -------------- -------------- ---------- ------------- -------------- ------------
Profit before tax 5 50,395 1,274 51,669 15,618 3,255 18,873
Tax expense 8 (13,660) (66) (13,726) (1,885) (814) (2,699)
------------------ ------- -------------- -------------- ---------- ------------- -------------- ------------
Profit for the
year 36,735 1,208 37,943 13,733 2,441 16,174
------------------ ------- -------------- -------------- ---------- ------------- -------------- ------------
Attributable to:
- Owners of the
parent 30,784 1,051 31,835 14,019 2,077 16,096
-
Non-controlling
interests 5,951 157 6,108 (286) 364 78
------------------ ------- -------------- -------------- ---------- ------------- -------------- ------------
36,735 1,208 37,943 13,733 2,441 16,174
------------------ ------- -------------- -------------- ---------- ------------- -------------- ------------
Earnings per
share
for profit
attributable
to the owners of
the parent
during
the year
9 80.32cts 40.61cts
* basic
9 80.32cts 40.61cts
* diluted
* The total column represents the IFRS figures and the result
before BA movement is an Alternative Performance Measure ("APM").
We have opted to additionally disclose this APM as the BA movement
is considered to be a fair value calculation which does not
appropriately represent the Group's result for the year.
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2020
2020 2019
$000 $000
------------------------------------------------ --------- ---------
Profit for the year 37,943 16,174
------------------------------------------------ --------- ---------
Other comprehensive (expenses) / income:
Items may be reclassified to profit or loss:
(Loss) / Gain on exchange translation of
foreign operations (5,490) 18,680
Net other comprehensive (expenses) / income
may be reclassified to profit or loss (5,490) 18,680
------------------------------------------------ --------- ---------
Items not to be reclassified to profit or
loss:
Unrealised gain / (loss) on revaluation
of leasehold land, net of tax 1,309 (1,715)
Remeasurement of retirement benefits plan,
net of tax (649) (768)
Net other comprehensive income / (expenses)
not being reclassified to profit or loss 660 (2,483)
------------------------------------------------ --------- ---------
Total other comprehensive (expenses) / income
for the year, net of tax (4,830) 16,197
Total comprehensive income for the year 33,113 32,371
Attributable to:
- Owners of the parent 27,722 28,550
- Non-controlling interests 5,391 3,821
------------------------------------------------ --------- ---------
33,113 32,371
------------------------------------------------ --------- ---------
Consolidated Statement of Financial Position
As at 31 December 2020
Company Number: 1884630
31.12.2020 31.12.2019
Note $000 $000
------------------------------------------- ------ ------------- ------------
Non-current assets
Property, plant and equipment 11 365,353 367,891
Receivables 12 22,236 16,500
Deferred tax assets 18 8,817 11,251
396,406 395,642
------------------------------------------- ------ ------------- ------------
Current assets
Inventories 13 12,541 8,752
Income tax receivables 8 10,071 14,348
Other tax receivable 8 41,618 35,179
Biological assets 14 8,783 7,574
Trade and other receivables 15 4,693 5,774
Short-term investments 1,957 -
Cash and cash equivalents 28 115,211 84,846
194,874 156,473
------------------------------------------- ------ ------------- ------------
Current liabilities
Loans and borrowings 16 - (8,203)
Trade and other payables 17 (26,310) (16,110)
Income tax liabilities 8 (5,981) (1,512)
Other tax liabilities 8 (1,089) (1,386)
Dividend payables (24) (23)
Lease liabilities 29 (236) (222)
(33,640) (27,456)
------------------------------------------- ------ ------------- ------------
Net current assets 161,234 129,017
------------------------------------------- ------ ------------- ------------
Non-current liabilities
Deferred tax liabilities 18 (15,467) (17,047)
Retirement benefits - net liabilities 19 (13,383) (11,338)
Lease liabilities 29 (217) (456)
------------------------------------------- ------ ------------- ------------
(29,067) (28,841)
------------------------------------------- ------ ------------- ------------
Net assets 528,573 495,818
------------------------------------------- ------ ------------- ------------
Issued capital and reserves attributable
to owners of the parent
Share capital 20 15,504 15,504
Treasury shares 20 (1,171) (1,171)
Share premium 23,935 23,935
Capital redemption reserve 1,087 1,087
Revaluation reserves 49,367 48,413
Exchange reserves (233,534) (229,026)
Retained earnings 573,493 542,415
------------------------------------------- ------ ------------- ------------
428,681 401,157
Non-controlling interests 99,892 94,661
------------------------------------------- ------ ------------- ------------
Total equity 528,573 495,818
------------------------------------------- ------ ------------- ------------
Consolidated Statement of Changes in Equity
For the year ended 31 December 2020
Capital
Share Treasury Share redemption Revaluation Exchange Retained Non-controlling Total
capital shares premium reserve reserves reserves earnings Total interests equity
$000 $000 $000 $000 $000 $000 $000 $000 $000 $000
Balance at 31 December 2018 15,504 (1,171) 23,935 1,087 51,308 (245,170) 526,487 371,980 92,601 464,581
Items of other comprehensive
income
* Unrealised (loss) / gain on revaluation of leasehold
land, net of tax - - - - (3,040) 1,211 - (1,829) 114 (1,715)
-Remeasurement of retirement
benefit plan, net of tax - - - - - - (650) (650) (118) (768)
-Gain on exchange translation
of foreign operations - - - - - 14,933 - 14,933 3,747 18,680
------------------------------------------------------------ -------- --------- -------- ----------- ------------ ---------- --------- ---------- ---------------- ----------
Total other comprehensive (expenses)
/ income - - - - (3,040) 16,144 (650) 12,454 3,743 16,197
Profit for the year - - - - - - 16,096 16,096 78 16,174
------------------------------------------------------------ -------- --------- -------- ----------- ------------ ---------- --------- ---------- ---------------- ----------
Total comprehensive (expenses)
/ income for the year - - - - (3,040) 16,144 15,446 28,550 3,821 32,371
Issue of subsidiaries shares
to non-controlling interests - - - - - - - - 512 512
Accretion from change in stake - - - - 145 - 1,671 1,816 (1,816) -
Dividends paid - - - - - - (1,189) (1,189) (457) (1,646)
------------------------------------------------------------ -------- --------- -------- ----------- ------------ ---------- --------- ---------- ---------------- ----------
Balance at 31 December 2019 15,504 (1,171) 23,935 1,087 48,413 (229,026) 542,415 401,157 94,661 495,818
------------------------------------------------------------ -------- --------- -------- ----------- ------------ ---------- --------- ---------- ---------------- ----------
Items of other comprehensive
income
* Unrealised gain on revaluation of leasehold land, ne
t
of tax - - - - 954 - - 954 355 1,309
* Remeasurement of retirement benefit plan, net of tax - - - - - - (559) (559) (90) (649)
-Loss on exchange translation
of foreign operations - - - - - (4,508) - (4,508) (982) (5,490)
------------------------------------------------------------ -------- --------- -------- ----------- ------------ ---------- --------- ---------- ---------------- ----------
Total other comprehensive income
/ (expenses) - - - - 954 (4,508) (559) (4,113) (717) (4,830)
Profit for the year - - - - - - 31,835 31,835 6,108 37,943
------------------------------------------------------------ -------- --------- -------- ----------- ------------ ---------- --------- ---------- ---------------- ----------
Total comprehensive income /
(expenses) for the year - - - - 954 (4,508) 31,276 27,722 5,391 33,113
Dividends paid - - - - - - (198) (198) (160) (358)
------------------------------------------------------------ -------- --------- -------- ----------- ------------ ---------- --------- ---------- ---------------- ----------
Balance at 31 December 2020 15,504 (1,171) 23,935 1,087 49,367 (233,534) 573,493 428,681 99,892 528,573
------------------------------------------------------------ -------- --------- -------- ----------- ------------ ---------- --------- ---------- ---------------- ----------
Consolidated Statement of Cash Flows
For the year ended 31 December 2020
2020 2019
Note $000 $000
--------------------------------------------------- ------ --------- ---------
Cash flows from operating activities
Profit before tax 51,669 18,873
Adjustments for:
BA movement (1,274) (3,255)
Gain on disposal of property, plant and
equipment (2) (83)
Depreciation 18,143 18,590
Retirement benefit provisions 1,793 2,152
Net finance income (2,584) (3,189)
Unrealised loss / (gain) in foreign exchange 268 (251)
Property, plant and equipment written
off 587 261
Reversal of impairment (2,008) (6,590)
Provision for expected credit loss 1,485 5,965
Operating cash flows before changes in
working capital 68,077 32,473
(Increase) / Decrease in inventories (3,915) 1,185
Increase in non-current, trade and other
receivables (12) (1,586)
Increase / (Decrease) in trade and other
payables 10,554 (4,629)
--------------------------------------------------- ------ --------- ---------
Cash inflows from operations 74,704 27,443
Interest paid (258) (939)
Retirement benefits paid (434) (475)
Overseas tax paid (8,917) (11,438)
--------------------------------------------------- ------ --------- ---------
Net cash flows from operating activities 65,095 14,591
--------------------------------------------------- ------ --------- ---------
Investing activities
Property, plant and equipment
* purchases (21,277) (33,169)
* sales 83 135
Interest received 2,876 4,169
Increase in receivables from cooperatives
under plasma scheme (4,563) (5,116)
Placement of fixed deposits with original (1,957) -
maturity of more than three months
--------------------------------------------------- ------ --------- ---------
Net cash used in investing activities (24,838) (33,981)
--------------------------------------------------- ------ --------- ---------
Financing activities
Dividends paid to the holders of the
parent (197) (1,240)
Dividends paid to non-controlling interests (160) (457)
Issue of subsidiaries shares to non-controlling
interests - 512
Repayment of existing long-term loans (8,167) (11,078)
Repayment of lease liabilities - principal (223) (169)
Repayment of lease liabilities - interest (34) (41)
--------------------------------------------------- ------ --------- ---------
Net cash used in financing activities (8,781) (12,473)
--------------------------------------------------- ------ --------- ---------
Net increase / (decrease) in cash and
cash equivalents 31,476 (31,863)
Cash and cash equivalents
At beginning of year 84,846 112,212
Exchange (losses) / gains (1,111) 4,497
--------------------------------------------------- ------ --------- ---------
At end of year 115,211 84,846
--------------------------------------------------- ------ --------- ---------
Comprising:
Cash at end of year 28 115,211 84,846
--------------------------------------------------- ------ --------- ---------
Notes
1 Basis of preparation
AEP is a company incorporated in the UK 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, UK. The principal activity of the
Group is plantation agriculture, mainly in the cultivation of oil
palm in Indonesia and Malaysia, of which Indonesia is the principal
place of business.
The financial information does not constitute the company's
statutory accounts for the years ended 31 December 2020 or 2019.
Statutory accounts for the years ended 31 December 2020 and 31
December 2019 have been reported on by the Independent Auditor. The
Independent Auditor's Reports on the Annual Report and Financial
Statements for the years ended 31 December 2020 and 31 December
2019 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 2019 have been
filed with the Registrar of Companies. The statutory accounts for
the year ended 31 December 2020 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 accounting standards in conformity with the
requirements of the Companies Act 2006 and in accordance with
International Financial Reporting Standards ("IFRSs") adopted
pursuant to Regulation (EC) No 1606/2002 as it applies in the
EU.
The Directors have a reasonable expectation, having made the
appropriate enquiries, that the Group has control of the monthly
cash flows and that the Group has sufficient cash resources to
cover the fixed cash flows for a period of at least twelve months
from the date of approval of these financial statements. For these
reasons, the Directors adopted a going concern basis in preparation
of the financial statements. The Directors have made this
assessment after consideration of the Group's budgeted cash flows
and related assumptions including appropriate stress testing of
identified uncertainties, specifically on the potential shut down
of the entire operations from three to twelve months if all the
plantations are infected with Coronavirus as well as the impact on
the demand for palm oil with decreases of 50% to 100%. Stress
testing of other identified uncertainties and risks such as
commodity prices and currency exchange rates were also
undertaken.
Changes in accounting standards
a) New standards, interpretations and amendments effective in the current year
The following amendments are effective for the first time for
accounting periods beginning on or after 1 January 2020 in these
financial statements:
-- Amendments to references in the conceptual framework in IFRS Standards
-- IAS 1 and IAS 8 (amendments) Definition of material
These new and amended standards and Interpretations that apply
for the first time in these financial statements have not
significantly impacted the Group as they are either not relevant to
the Group's current activities or require accounting which is
consistent with the Group's existing accounting policies.
b) New standards, interpretations and amendments not yet effective.
T he following new standards, interpretations and amendments are
effective for future periods (as indicated) and have not been
applied in these financial statements:
-- Annual improvements to IFRS Standards 2018-2020 (1 January 2022, not yet endorsed)
-- IAS 1 (amendments) Classification of liabilities as current
or non-current (1 January 2023, not yet endorsed)
-- IAS 1 (amendments) and IFRS Practice Statement 2 Disclosure
of Accounting Policies (1 January 2023, not yet endorsed)
-- IAS 8 (amendments) Definition of Accounting Estimates (1 January 2023, not yet endorsed)
None of the above new standards, interpretations and amendments
are expected to have a material effect on the Group's future
financial statements.
2 Accounting policies
(a) 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.
In respect of cooperatives under the Plasma scheme, the Group has
not consolidated these results on the basis that the Company does
not have control over those entities.
(b) 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.
(c) Foreign currency
The individual financial statements of each subsidiary are
presented in the currency of the country in which it operates (its
functional currency), being the currency in which the majority of
their transactions are denominated, 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 linked 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.
(d) Revenue recognition
The Group derives its revenue from the sale of CPO, palm kernel,
FFB, shell nut, biomass products, biogas products and rubber slab.
Revenue for CPO, palm kernel and shell nut are recorded net of
sales and related taxes and levies, including export taxes and
recognised when the delivery order is issued to a purchaser. The
delivery order is not issued until goods are paid for. Revenue for
FFB, biomass and biogas are recognised upon delivery. Sales of
rubber slab are recognised on signing of the sales contract, this
being the point at which control is transferred to the buyer.
The transacted price for each product is based on the market
price or predetermined monthly contract value. There is no right of
return nor warranty provided to the customers on the sale of
products and services rendered.
(e) 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.
(f) 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 annual general meeting.
(g) 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 of
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. 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 CPO 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. The
leasehold land is recognised at cost initially and is not
depreciated. Costs include the initial cost of obtaining the
location permits and subsequent payments to compensate existing
land owners plus any legal costs incurred to acquire the necessary
land exploitation rights. Location permits are subsequently carried
at fair value while the subsequent amounts are carried at cost
until the exploitation rights have been awarded, at which point
they will also be carried at fair value. Fair value is determined
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% per annum
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
(h) 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.
(i) Leased assets
The Group assesses whether a contract is or contains a lease, at
inception of the contract. The Group recognises a right-of-use
asset and a corresponding lease liability with respect to all lease
arrangements in which it is the lessee, except for short-term
leases (defined as leases with a lease term of 12 months or less)
and leases of low value assets (such as tablets and personal
computers, small items of office furniture and telephones). For
these leases, the Group recognises the lease payments as an
operating expense on a straight-line basis over the term of the
lease unless another systematic basis is more representative of the
time pattern in which economic benefits from the leased assets are
consumed.
The lease liability is initially measured at the present value
of the lease payments that are not paid at the commencement date,
discounted by using the rate implicit in the lease. If this rate
cannot be readily determined, the lessee uses its incremental
borrowing rate.
Lease payments included in the measurement of the lease
liability comprise:
Fixed lease payments (including in-substance fixed payments),
less any lease incentives receivable.
The lease liability is presented as a separate line in the
consolidated statement of financial position.
The lease liability is subsequently measured by increasing the
carrying amount to reflect interest on the lease liability (using
the effective interest method) and by reducing the carrying amount
to reflect the lease payments made.
The right-of-use assets comprise the initial measurement of the
corresponding lease liability, lease payments made at or before the
commencement day, less any lease incentives received and any
initial direct costs. They are subsequently measured at cost less
accumulated depreciation and impairment losses.
Right-of-use assets are depreciated over the shorter period of
lease term and useful life of the underlying asset. If a lease
transfers ownership of the underlying asset or the cost of the
right-of-use asset reflects that the Group expects to exercise a
purchase option, the related right-of-use asset is depreciated over
the useful life of the underlying asset. The depreciation starts at
the commencement date of the lease.
The right-of-use assets are presented together in property,
plant and equipment in the consolidated statement of financial
position. The Group applies IAS 36 to determine whether a
right-of-use asset is impaired and accounts for any identified
impairment loss as described in the 'Property, Plant and Equipment'
policy.
Land rights are held at fair value and revalued at the balance
sheet date.
(j) Impairment
An assessment of indicators of impairment over the Company's
assets is 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
income statement, except to the extent they reverse gains
previously recognised in other comprehensive income. Reversal on
impairment loss would be recognised if, and only if, there has been
a change in the estimates used to determine the asset's recoverable
amount since the last impairment test was carried out. Reversal on
impairment losses will be immediately recognised in the income
statement.
(k) 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.
(l) Financial assets
The Group's financial assets measured at amortised cost comprise
trade and other receivables and cash and cash equivalents in the
consolidated statement of financial position. All the Group's
receivables and loans are non-derivative financial assets with cash
flows that are solely payments of principal and interest. They are
recognised at fair value at inception and subsequently at amortised
cost as this is what the Group considers to be most representative
of the business model for these assets.
Cash and cash equivalents consist of cash in hand and short-term
deposits at banks with an original maturity not exceeding three
months. Bank overdrafts are shown within loans and borrowings under
current liabilities on the balance sheet.
The Group considers a trade receivable or other receivable as
credit impaired when one or more events that have a detrimental
impact on the estimated cash flow have occurred. Trade and other
receivables are written off when there is no expectation of
recovery based on the assessment performed. If the receivables are
subsequently recovered, these are recognised in income
statement.
The Group use three categories for those receivables which
reflect their credit risk and how the loss provision is determined
for those categories. These include trade receivables using the
simplified approach and debt instruments at amortised costs other
than trade receivables and financial guarantee contracts using the
three-stage approach.
(m) 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 in the property, plant and equipment policy.
Trade and other payables are shown at fair value at recognition
and subsequently at amortised cost.
(n) 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 to other comprehensive income, such as
revaluations, in which case the deferred tax is also dealt with in
other comprehensive income.
(o) 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
-- Past service costs; less
-- The effect of minimum funding requirements agreed with scheme trustees.
Remeasurements of the net defined benefit obligation are
recognised in other comprehensive income. The remeasurements
include:
-- Actuarial gains and losses;
-- Return on plan assets (interest exclusive); and
-- Any asset ceiling effects (interest inclusive).
Service costs are recognised in other comprehensive income and
include current and past service costs as well as gains and losses
on curtailments.
Net interest expense / (income) is recognised in the income
statement, 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 the income
statement. Settlements of defined benefit schemes are recognised in
the period in which the settlement occurs.
(p) 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.
(q) 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, these are
accounted for under IFRS 9. The details of financial guarantee
contracts are disclosed in note 25.
(r) Critical accounting estimates and judgements
The Group makes certain estimates and assumptions regarding the
future. Estimates and judgements are continually evaluated based on
historical experience and other factors, including expectations of
future events that are believed to be reasonable under the
circumstances. In the future, actual experience may differ from
these estimates and assumptions. The estimates and assumptions that
have a significant risk of causing a material adjustment to the
carrying amounts of assets and liabilities within the next
financial year are discussed below.
Judgements
-- Assessment of de-facto control of cooperatives under Plasma
scheme (see note 2(a) and note 26)
-- Classification of land as leasehold with no depreciation charged (see note 11)
Estimates and assumptions
-- Impairment of plantation assets - estimate of future cash
flows and determination of the discount rate and other assumptions
(see note 11)
-- Expected credit losses ("ECL") on amounts due from
cooperatives under Plasma scheme - determination of possible
outcomes and their weighted probability (see note 12)
-- Carrying value of income tax receivables - determination of
historic recovery rates (see note 8)
-- Income taxes and deferred tax - provisions for income taxes
in various jurisdictions (see note 8 and note 18)
-- Recognition of deferred tax on losses - estimate of future
profitability of respective entities (see note 18)
-- Retirement benefits - actuarial assumptions (see note 19)
-- 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; and
- 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 11)
- Biological assets (note 14)
The Group measures the following assets at amortised cost,
however disclosure of fair value is given in accordance with IFRS7
and IFRS 13:
- Non-current receivables due from non-controlling interests (note 12)
- Non-current receivables due from cooperatives under Plasma scheme (note 12)
For more detailed information in relation to the fair value
measurement of the items above, please refer to the applicable
notes.
3 Revenue
Disaggregation of Revenue
The Group has disaggregated revenue into various categories in
the following table which is intended to:
-- Depict how the nature, amount and uncertainty of revenue and
cash flows are affected by timing of revenue recognition; and
-- Enable users to understand the relationship with revenue
segment information provided in note 6.
There is no right of return and warranty provided to the
customers on the sale of products and services rendered.
CPO,
palm
Year to 31 December kernel Rubber Shell Biomass Biogas Others
2020 and FFB nut products products Total
$000 $000 $000 $000 $000 $000 $000
Contract counterparties
Government - - - - 970 - 970
Non-government
* Wholesalers 262,348 631 3,959 427 - 725 268,090
262,348 631 3,959 427 970 725 269,060
---------- --------- -------- ------------ ------------ --------- ----------
Timing of transfer
of goods
Delivery to customer
premises 5,613 631 - - - - 6,244
Delivery to port of
departure - - - 427 - - 427
Customer collect from
our mills / estates 256,735 - 3,959 - - - 260,694
Upon generation / others - - - - 970 725 1,695
262,348 631 3,959 427 970 725 269,060
---------- --------- -------- ------------ ------------ --------- ----------
CPO,
palm
Year to 31 December kernel Rubber Shell Biomass Biogas Others
2019 and FFB nut products products Total
$000 $000 $000 $000 $000 $000 $000
Contract counterparties
Government - - - - 908 - 908
Non-government
* Wholesalers 214,416 653 2,224 733 - 202 218,228
214,416 653 2,224 733 908 202 219,136
---------- --------- -------- ------------ ------------ --------- ------------
Timing of transfer
of goods
Delivery to customer
premises 5,624 653 - - - - 6,277
Delivery to port of
departure - - - 733 - - 733
Customer collect from
our mills / estates 208,792 - 2,224 - - - 211,016
Upon generation / others - - - - 908 202 1,110
214,416 653 2,224 733 908 202 219,136
---------- --------- -------- ------------ ------------ --------- ------------
4 Finance income and expense
2020 2019
$000 $000
Finance income
Interest receivable on:
Credit bank balances and time deposits 2,876 4,169
Finance expense
Interest payable on:
Development loans (note 16) (257) (939)
Interest expense on lease liabilities (note
29) (35) (41)
-------- --------
(292) (980)
--------
Net finance income recognised in income statement 2,584 3,189
-------- --------
5 Profit before tax
2020 2019
$000 $000
Profit before tax is stated after charging
Purchase of FFB 110,225 92,004
Depreciation (note 11) 18,143 18,590
Reversal of impairment (note 11) (2,196) (8,868)
Impairment losses (note 11) 188 2,278
Provision for expected credit loss (note
15) 1,485 5,965
Exchange losses / (gains) 268 (251)
Legal and professional fees 834 1,236
Staff costs (note 7) 48,103 41,668
Remuneration received by the Group's auditor
or associates of the Group's auditor:
- Audit of parent company 5 5
- Audit of consolidated financial statements 146 140
- Audit of consolidated financial statements
(prior year) - 5
- Audit related assurance service 6 6
- Audit of UK subsidiaries 13 13
------------- ---------------
Total audit services 170 169
------------- ---------------
Audit of overseas subsidiaries
- Malaysia 21 21
- Indonesia 76 78
------------- -------------
Total audit services 97 99
------------- -------------
Total auditor's remuneration 267 268
------------- -------------
6 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 cultivation of
plantation, the Group produced the crude palm oil and associated
products such as palm kernel, shell nut, biomass products, biogas
products and rubber.
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 President
Director, the Chief Operating Officer, 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 before tax calculated in accordance with IFRS but excluding
BA movement.
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.
North South Total
Sumatera Bengkulu Sumatera Riau Bangka Kalimantan Indonesia Malaysia UK Total
$000 $000 $000 $000 $000 $000 $000 $000 $000 $000
2020
Total sales revenue
(all external)
* CPO, palm kernel
and FFB 81,764 85,698 1,561 46,865 1,026 43,103 260,017 2,333 - 262,350
* Rubber 631 - - - - - 631 - - 631
* Shell nut 1,232 956 - 1,587 - 185 3,960 - - 3,960
* Biomass products 427 - - - - - 427 - - 427
* Biogas products 152 444 - - - 374 970 - - 970
* Others 60 105 176 - 16 355 712 3 7 722
--------- --------- ---------- --------- ------- ----------- ---------- ---------- ---------- ---------
Total revenue 84,266 87,203 1,737 48,452 1,042 44,017 266,717 2,336 7 269,060
--------- --------- ---------- --------- ------- ----------- ---------- ---------- ---------- ---------
Profit / (loss) before
tax 18,915 16,809 (6,639) 12,341 (76) 11,174 52,524 (682) (1,447) 50,395
BA movement 550 130 71 126 36 344 1,257 17 - 1,274
--------- --------- ---------- --------- ------- ----------- ---------- ---------- ---------- ---------
Profit / (loss) for the
year before
tax per consolidated
income statement 19,465 16,939 (6,568) 12,467 (40) 11,518 53,781 (665) (1,447) 51,669
--------- --------- ---------- --------- ------- ----------- ---------- ---------- ---------- ---------
Interest income 2,121 670 3 34 - 25 2,853 22 1 2,876
Interest expense (25) - - - - (257) (282) (10) - (292)
Depreciation (4,741) (4,253) (2,090) (886) (308) (5,387) (17,665) (478) - (18,143)
Reversal of
impairment - - 31 - - 2,165 2,196 - - 2,196
Impairment losses - - - - - - - (188) - (188)
Reversal /
(Provision) for
expected
credit loss 65 (1) (1,383) - (1) (167) (1,487) 1 1 (1,485)
Inter-segment
transactions 4,744 (1,966) (741) (564) (195) (1,913) (635) 467 168 -
Inter-segmental
revenue 27,668 3,293 3,505 - - 4,167 38,633 - - 38,633
Tax expense (6,734) (3,218) 1,361 (2,742) 25 (1,594) (12,902) (737) (87) (13,726)
Total assets 227,471 111,470 39,554 33,572 16,580 134,973 563,620 21,682 5,978 591,280
Non-current assets 111,483 70,332 30,320 17,543 14,713 104,295 348,686 16,667 - 365,353
Non-current assets -
additions 4,582 2,413 2,319 342 4,474 6,868 20,998 127 - 21,125
North South Total
Sumatera Bengkulu Sumatera Riau Bangka Kalimantan Indonesia Malaysia UK Total
$000 $000 $000 $000 $000 $000 $000 $000 $000 $000
2019
Total sales revenue
(all external)
* CPO, palm kernel
and FFB 75,933 65,102 2,487 36,060 513 32,679 212,774 1,642 - 214,416
* Rubber 653 - - - - - 653 - - 653
* Shell nut 674 582 - 929 - 39 2,224 - - 2,224
* Biomass products 733 - - - - - 733 - - 733
* Biogas products 141 442 - - - 325 908 - - 908
* Others 25 57 32 - - 88 202 - - 202
--------- --------- ---------- --------- ------- ----------- ---------- ---------- ---------- ---------
Total revenue 78,159 66,183 2,519 36,989 513 33,131 217,494 1,642 - 219,136
--------- --------- ---------- --------- ------- ----------- ---------- ---------- ---------- ---------
Profit / (loss) before
tax 6,174 7,727 (8,933) 8,514 244 4,868 18,594 (1,264) (1,712) 15,618
BA movement 927 1,086 108 307 23 806 3,257 (2) - 3,255
--------- --------- ---------- --------- ------- ----------- ---------- ---------- ---------- ---------
Profit / (loss) for the
year before
tax per consolidated
income statement 7,101 8,813 (8,825) 8,821 267 5,674 21,851 (1,266) (1,712) 18,873
--------- --------- ---------- --------- ------- ----------- ---------- ---------- ---------- ---------
Interest income 1,921 1,789 3 299 - 29 4,041 124 4 4,169
Interest expense (73) - - - - (901) (974) (6) - (980)
Depreciation (4,791) (4,470) (2,465) (916) (281) (5,146) (18,069) (521) - (18,590)
Reversal of
impairment - - 5,151 - 600 3,117 8,868 - - 8,868
Impairment losses - - (1,595) - - (431) (2,026) (252) - (2,278)
(Provision) /
Reversal for
expected
credit loss (124) 4 (5,998) - 4 163 (5,951) - (14) (5,965)
Inter-segment
transactions (40,471) (2,027) 25,745 (581) 1,198 15,760 (376) 153 223 -
Inter-segmental
revenue 23,395 1,981 1,847 - - 1,274 28,497 - - 28,497
Tax expense 8,851 (995) (3,418) (2,009) (234) (4,884) (2,689) 186 (196) (2,699)
Total assets 206,764 104,756 39,151 31,083 14,667 127,746 524,167 21,678 6,270 552,115
Non-current assets 121,161 73,106 37,553 18,166 13,970 111,159 375,115 16,944 3,583 395,642
Non-current assets -
additions 10,342 3,950 2,919 333 4,265 11,881 33,690 351 - 34,041
Below is an analysis of revenue from the Group's top 4
customers, incorporating all those contributing greater than 10% of
the Group's external revenue in accordance with the requirements of
IFRS 8. In year 2020, revenue from top 4 customers of the
Indonesian segment represents approximately $130.8m (2019: $113.6m)
of the Group's total revenue. Although Customer 1 and 2 made up
over 10% of the Group's total revenue, there was no over reliance
on these Customers as tenders were performed on a weekly basis.
Three of the top four customers were the same as in the prior
year.
North South Total
Sumatera Bengkulu Sumatera Riau Bangka Kalimantan Indonesia Malaysia UK Total
$000 $000 $000 $000 $000 $000 $000 $000 $000 $000
2020
Customer 1 819 22,558 - 7,164 - 23,075 53,616 - - 53,616
Customer 2 31,556 - - - - - 31,556 - - 31,556
Customer 3 - - - 25,042 - - 25,042 - - 25,042
Customer 4 - 15,977 - - - 4,584 20,561 - - 20,561
---------- --------- ---------- ------- ------- ----------- ----------- --------- ----- --------
32,375 38,535 - 32,206 - 27,659 130,775 - - 130,775
---------- --------- ---------- ------- ------- ----------- ----------- --------- ----- --------
2019
Customer 1 3,107 20,376 - 6,091 - 13,228 42,802 - - 42,802
Customer 2 27,751 - - - - - 27,751 - - 27,751
Customer 3 9,657 8,345 - 4,965 - - 22,967 - - 22,967
Customer 4 - - - 20,036 - - 20,036 - - 20,036
---------- --------- ---------- ------- ------- ----------- ----------- --------- ----- --------
40,515 28,721 - 31,092 - 13,228 113,556 - - 113,556
---------- --------- ---------- ------- ------- ----------- ----------- --------- ----- --------
% % % % % % % % % %
2020
Customer 1 0.3 8.4 - 2.7 - 8.6 20.0 - - 20.0
Customer 2 11.7 - - - - - 11.7 - - 11.7
Customer 3 - - - 9.3 - - 9.3 - - 9.3
Customer 4 - 5.9 - - - 1.7 7.6 - - 7.6
---------- --------- ---------- ------- ------- ----------- ----------- --------- ----- --------
12.0 14.3 - 12.0 - 10.3 48.6 - - 48.6
---------- --------- ---------- ------- ------- ----------- ----------- --------- ----- --------
2019
Customer 1 1.4 9.3 - 2.8 - 6.0 19.5 - - 19.5
Customer 2 12.7 - - - - - 12.7 - - 12.7
Customer 3 4.4 3.8 - 2.3 - - 10.5 - - 10.5
Customer 4 - - - 9.1 - - 9.1 - - 9.1
---------- --------- ---------- ------- ------- ----------- ----------- --------- ----- --------
18.5 13.1 - 14.2 - 6.0 51.8 - - 51.8
---------- --------- ---------- ------- ------- ----------- ----------- --------- ----- --------
Save for a small amount of rubber, all the Group's operations
are devoted to oil palm. The Group's report is by geographical
area, as each area tends to have different agricultural
conditions.
7 Employees' and Directors' remuneration
2020 2019
Number Number
Average numbers employed (primarily overseas)
during the year:
- full time 7,242 6,925
- part-time field workers 9,311 9,285
--------- ---------
16,553 16,210
--------- ---------
2020 2019
$000 $000
Staff costs (including Directors) comprise:
Wages and salaries 43,129 45,756
Social security costs 2,921 2,090
Retirement benefit costs
- United Kingdom - -
- Indonesia (note 19) 2,003 2,784
- Malaysia 50 56
--------- ---------
48,103 50,686
--------- ---------
2020 2019
$000 $000
Directors emoluments 200 215
2020 2019
$000 $000
Remuneration expense for key management personnel
comprise:
Short-term employee benefits 1,499 1,742
Post-employment benefits - -
-------- --------
1,499 1,742
-------- --------
The Executive Director, Non-Executive Directors and senior
management (general managers and above) are considered to be the
key management personnel.
8 Tax expense
2020 2019
$000 $000
Foreign corporation tax - current year 9,920 5,222
Foreign corporation tax - prior year 287 12
Deferred tax adjustment - origination and
reversal of temporary differences (note 18) 2,832 (2,439)
Recognition of previously unrecognised deferred
tax assets (note 18) 687 (96)
Total tax charge for year 13,726 2,699
--------- ---------
Corporation tax rate in Indonesia is at 22% (2019: 25%) whereas
Malaysia is at 24% (2019: 24%). The standard rate of corporation
tax in the UK for the current year is 19% (2019: 19%). The Group's
charge for the year differs from the standard Indonesian rate of
corporation tax as explained below:
2020 2019
$000 $000
Profit before tax 51,669 18,873
--------- ----------
Profit before tax multiplied by standard rate
of Indonesia corporation tax of 22% (2019:
25%) 11,367 4,718
Effects of:
Rate adjustment relating to overseas profits (14) (24)
Group accounting adjustments not subject to
tax (245) (2,116)
Expenses not allowable for tax 613 544
Deferred tax assets not recognised - 48
Income not subject to tax (647) (1,223)
Under provision of prior year income tax 287 12
Utilisation of tax losses not previously recognised - 836
Under / (Over) provision of prior year deferred
tax assets 687 (96)
Change in tax rate 1,678 -
--------- ----------
Total tax charge for year 13,726 2,699
--------- ----------
The above reconciliation has been prepared by reference to the
Indonesian tax rate rather than the UK tax rate as, in accordance
with IAS 12, this is the applicable tax rate that provides the most
meaningful information, given this is the country in which the
majority of tax arises. The reconciliation for the year ended 31
December 2019 has also been prepared on the same basis for
comparative purposes.
The tax receivables represent the corporate income tax ("CIT")
and value added tax ("VAT") that have yet to be refunded by the
Indonesia tax authority. The tax receivables relating to CIT arose
due to over payment of tax. The tax receivables relating to VAT
arose because the majority of the Groups' CPO was sold to bonded
zones which do not attract output VAT and thus the input VAT
incurred is claimable. Upon submission of a tax return (for CIT) or
a request letter (for VAT refund), a tax audit will be conducted by
the tax authority and whilst every effort is made to resolve this
quickly, the process can sometimes take more than 12 months.
The breakdown of the tax receivables and tax liabilities is as
follows:
31 December 31 December 1 January
2020 2019* 2019*
$000 $000 $000
Tax Receivables
Income tax 10,071 14,348 7,110
Other taxes 41,618 35,179 37,200
------------- -------------- ---------------
51,689 49,527 44,310
------------- -------------- ---------------
Tax Liabilities
Income tax (5,981) (1,512) (1,094)
Other taxes (1,089) (1,386) (4,532)
------------- -------------- ---------------
(7,070) (2,898) (5,626)
------------- -------------- ---------------
* In order to better represent these balances in accordance with
IAS 1, the income tax and other tax balances have been shown
separately on the Consolidated Statement of Financial Position. The
impact on 1 January 2019 and 31 December 2019 is shown in the table
above.
9 Earnings per ordinary share ("EPS")
2020 2019
$000 $000
Profit for the year attributable to owners
of the Company before BA movement 30,784 14,019
BA movement 1,051 2,077
---------- ----------
Earnings used in basic and diluted EPS 31,835 16,096
---------- ----------
Number Number
'000 '000
Weighted average number of shares in issue
in the year
- used in basic EPS 39,636 39,636
- dilutive effect of outstanding share options - -
---------- ----------
- used in diluted EPS 39,636 39,636
---------- ----------
Basic and diluted EPS before BA movement 77.67cts 35.37cts
Basic and diluted EPS after BA movement 80.32cts 40.61cts
10 Dividends
2020 2019
$000 $000
Paid during the year
Final dividend of 0.5cts per ordinary share
for the year ended 31 December 2019 (2018:
3.0cts) 198 1,189
------- ---------
Proposed final dividend of 1.0cts per ordinary
share for the year ended 31 December 2020 (2019:
0.5cts) 396 198
------- ---------
The proposed dividend for 2020 is subject to shareholders'
approval at the forthcoming annual general meeting and has not been
included as a liability in these financial statements.
11 Property, plant and equipment
Estate Office Right-of-use
Plantations plant, plant, assets
Leasehold equipment equipment Construction
Mill land Buildings & vehicle & vehicle in progress Total
$000 $000 $000 $000 $000 $000 $000 $000 $000
Cost or valuation
At 1 January 2019 199,877 68,120 133,256 53,138 16,858 1,093 - 2,731 475,073
Exchange translations 8,110 2,970 5,135 2,307 669 34 14 83 19,322
Reclassification - 143 - 7,557 26 (2) - (7,724) -
Revaluations - - (2,292) - - - - - (2,292)
Additions 411 7,732 5,861 45 1,562 193 832 5,971 22,607
Development costs
capitalised 11,434 - - - - - - - 11,434
Disposal / Written off (5,782) (606) (1,297) (219) (1,125) (41) - - (9,070)
At 31 December 2019 214,050 78,359 140,663 62,828 17,990 1,277 846 1,061 517,074
Exchange translations (2,486) (1,085) (1,441) (774) (209) 5 (5) (28) (6,023)
Reclassification - 70 - 2,572 - - - (2,642) -
Revaluations - - (1,142) - - - - - (1,142)
Additions 167 1,946 3,821 496 816 109 - 2,263 9,618
Development costs
capitalised 10,451 - 1,037 - - 19 - - 11,507
Disposals / Written off (2,447) (510) (243) (239) (563) (5) - (12) (4,019)
At 31 December 2020 219,735 78,780 142,695 64,883 18,034 1,405 841 642 527,015
------------- -------- ----------- ---------- ---------- ---------- ------------- ------------- --------
Accumulated depreciation
and impairment
At 1 January 2019 80,782 21,638 1,659 17,436 12,249 942 - - 134,706
Exchange translations 3,098 960 87 753 481 26 3 - 5,408
Reclassification - (15) - - 15 - - - -
Charge for the year 9,646 3,850 - 3,222 1,625 63 184 - 18,590
(Reversal of impairment)
/ Impairment losses (7,571) - 981 - - - - - (6,590)
Disposal / Written off (1,121) (590) - (123) (1,075) (22) - - (2,931)
At 31 December 2019 84,834 25,843 2,727 21,288 13,295 1,009 187 - 149,183
Exchange translations (639) (272) (112) (165) (122) 3 11 - (1,296)
Reclassification - - - - - - - - -
Charge for the year 9,450 3,587 - 3,476 1,400 82 148 - 18,143
(Reversal of impairment)
/ Impairment losses - - (2,196) - - - 188 - (2,008)
Disposal / Written off (1,166) (509) - (143) (539) (3) - - (2,360)
-------- ----------- ---------- ---------- ---------- ------------- -------------
At 31 December 2020 92,479 28,649 419 24,456 14,034 1,091 534 - 161,662
------------- -------- ----------- ---------- ---------- ---------- ------------- ------------- --------
Carrying amount
At 31 December 2018 119,095 46,482 131,597 35,702 4,609 151 - 2,731 340,367
At 31 December 2019 129,216 52,516 137,936 41,540 4,695 268 659 1,061 367,891
At 31 December 2020 127,256 50,131 142,276 40,427 4,000 314 307 642 365,353
The Group engaged Muttaqin Bambang Purwanto Rozak Uswatun &
Rekan ("MBPRU") with its head office located in Jakarta, Indonesia
to undertake the land valuation for the Group. The valuation was
carried out independently by MBPRU who has the appropriate
professional qualifications and recent experience in the location
and category of the properties being valued. Further information of
MBPRU can be obtained from ' www.kjpp-mbpru.com '. For the year
ended 31 December 2020, valuations were undertaken on the land of
eight subsidiaries in Indonesia. The quantum per hectare derived
from the current valuation was then applied to the land value of
the remaining companies in the same geographical location to derive
the fair value of land as at 31 December 2020. For the year ended
31 December 2019, independent land valuations were undertaken for
nine subsidiary companies in Indonesia and Malaysia. The same
methodology to fair value land has been applied each year.
Unplantable land was excluded in this exercise since it has zero
value. Land is valued on a rotational basis and all the land is
valued by qualified valuers every two years. Had the revalued land
been measured on a historical cost basis, their net book value
would have been $61,272,000 (2019: $56,978,000). Impairment of land
if measured by comparing its historical cost with its fair value.
The reversal of impairment loss of $2,196,000 recognised in 2020
(2019: impairment loss of $981,000) was due to a general increase
in the fair value of land in Indonesia.
The reconciliation on the unreallised gain / (loss) on
revaluation of leasehold land as shown below:
2020 2019
$000 $000
Included in other comprehensive income:
Unreallised gain on revaluation of leasehold
land (1,142) (2,292)
Deferred tax on revaluation (note 18) 2,451 577
---------- --------------
Unrealised gain / (loss) on revaluation
of leasehold land, net of tax recognised
in other comprehensive income 1,309 (1,715)
---------- --------------
PT Simpang Ampat's land was valued on the basis that its highest
and best use is oil palm plantation. At present sections of the
land is planted with rubber trees, however, the Group has the
intention to replace the ageing rubber trees with palm oil
trees.
Details of the information about the fair value hierarchy in
relation to land at 31 December are as follows:
Level Level Level Fair value
1 2 3
$000 $000 $000 $000
Land
At 31 December 2020 - - 142,276 142,276
At 31 December 2019 - - 137,936 137,936
There was no item classified under Level 1 and Level 2 and thus
there was no transfer between Level 1 and Level 2 during the
year.
The valuation techniques and significant unobservable inputs
used in determining the fair value measurement of land and the
inter-relationship between key unobservable inputs and fair value
are set out in the table below:
Item Valuation approach Inputs used Inter-relationship
between key unobservable
inputs and fair value
Land Selling prices of Selling prices The higher the selling
comparable bare of comparable price, the higher
land in similar land. the fair value.
location adjusted
for differences Location, legal These are qualitative
in key attributes. title, land area, inputs which require
The valuation model land type and significant judgement
is based on price topography. by professional valuer,
per hectare. MBPRU.
--------------------- ------------------- --------------------------
There was no change to the valuation techniques during the
year.
The fair value measurement is based on the above items' highest
and best use, which does not differ from their actual use, other
than PT Simpang Ampat as stated above.
Th e capitalisation rate used to determine the amount of
borrowing costs eligible for capitalisation is based on the
percentage of immature area of each estate against total planted
area in the estate. The average capitalisation rate was 8.6% (2019:
9.6%). The estates included $24,000 (2019: $96,000) of interest and
$64,000 (2019: $74,000) of overheads capitalised during the year in
respect of expenditure on estates under development.
The Indonesian authorities have granted certain land
exploitation rights and operating permits for the estates. In the
case of established estates in North Sumatera, these rights and
permits expire between 2023 and 2054 with rights of renewal
thereafter. As of estates in Bengkulu land titles were issued
between 1994 and 2016 and the titles expire between 2028 and 2051
with rights of renewal thereafter for two consecutive periods of 25
and 35 years respectively. In Riau, land titles were issued in 2003
and expire in 2033. In Kalimantan, land titles were issued between
2015 and 2020 and expire between 2023 and 2054. In Bangka, land
titles were issued in 2018 and expire between 2021 and 2053. The
rights and permits for South Sumatera were renewed in 2020.
Subject to compliance with the laws and regulations of
Indonesia, land rights are usually renewed. The cost of renewing
the land rights is not significant. On the basis that the Group has
an indefinite right to renew, leasehold land is not
depreciated.
The land title of the estate in Malaysia is a long-term lease
expiring in 2084.
Impairment for plantations is measured by comparing its carrying
amount with its recoverable amount, which is the higher of the fair
value less cost to sell and its value in use. The impairment
assessment is based on each cash generating unit ("CGU") which is
defined as each estate. In 2020, no impairment loss or reversal of
impairment loss had been recognised. The reversal of impairment
loss of $7,571,000 recognised in 2019 was primarily due to the
increase in CPO price, previously impaired amounts being
reclassified to plasma receivables during the year and decreases in
the pre-tax discount rates .
The recoverable amount of the Group's plantations in 2020 was
based on value in use calculations, which due to the nature of the
cashflows, will be higher than fair value less cost to sell. The
total value of the Group's plantations carried at value in use
which was lower than original cost was $33,429,000 (2019:
$32,962,000).
The value in use, computed by the professional valuer MBPRU
using a discounted cash flow ("DCF") model, is the net present
value of the projected future cash flows over the expected 20-year
economic life of the asset discounted at 16.0% (2019: 16.6%).
Projected future cash flows are calculated based on historical
data, industry performance, economic conditions and any other
readily available information including the impact of climate
change. The compliance with changing regulations, changes in buyer
preferences, development of new products and use of lower emission
sources of energy will affect the FFB production, CPO price and its
growth. Heavy rainfall & flooding, droughts and fires will have
an effect on company specific risk within the calculation of our
discount rate as well as potential impacts on the ability of our
plants to produce FFB. Pests & disease will impact the
upkeeping cost.
The sensitivity analysis below had been performed for 1% changes
in the key assumptions, chosen as being reasonably possible changes
which will have a material impact on the impairment. The following
table sets out the key assumptions in the valuation along with the
impact on the impairment charge of a 1% change:
2020 2019
--------------------- ------------------- --------
Assumption Increase Assumption Increase
applied in impairment applied in impairment
$000 $000
CPO price - decrease
of 1% $650/mt - $635/mt 1,459
Pre-tax discount rate 16.51%
- increase by 100 bps 15.98% 383 - 16.60% 2,600
Inflation rate - increase
by 100 bps 3.12% 609 3.38% 2,241
The plantations carried at value in use are classified as Level
3 in the fair value hierarchy.
12 Receivables: non-current
2020 2019
-------------- ---------------------
Book Fair Book value Fair
value value value
$000 $000 $000 $000
Due from non-controlling interests 5,493 3,050 3,571 1,994
Due from cooperatives under
Plasma scheme 16,743 14,857 12,929 11,924
22,236 17,907 16,500 13,918
------ ------ ------------ ---------
The non-controlling interests in PT Alno Agro Utama and PT
Cahaya Pelita Andhika have acquired their interests on deferred
terms (see note 25 , Credit risk). In 2017, there was a change in
the ownership of the non-controlling interests in PT Sawit Graha
Manunggal, PT Karya Kencana Sentosa Tiga, PT Riau Agrindo Agung and
PT Empat Lawang Agro Plantation which was similarly acquired on
deferred terms (see note 25, Credit risk).
Plasma scheme is an initiative by the Indonesian Government that
mandated plantation owners to allocate a percentage of their land
acquired to the surrounding community and to further provide
financial and technical assistance to cultivate oil palm on that
land to improve the income and welfare of the community or
cooperatives. During the year, certain subsidiary companies have
funded plasma with a cumulative gross amount before ECL for
$24,632,000 (2019: $19,078,000) which is recoverable from the
cooperatives, the details with ECL are disclosed in note 15.
The fair values disclosed above are for disclosure purposes and
all non-current receivables are classified as Level 3 in the fair
value hierarchy.
The valuation techniques and significant unobservable inputs
used in determining the fair value measurement of non-current
receivables, as well as the inter-relationship between key
unobservable inputs and fair value, are set out in the table
below:
Item Valuation approach Inputs used Inter-relationship
between key unobservable
inputs and fair value
Due from non-controlling Based on cash flows Discount The higher the discount
interests discounted using rate rate, the lower the
current lending rate fair value.
of 6% (2019: 6%).
----------------------- ------------ --------------------------
Due from cooperatives Based on cash flows Discount The higher the discount
under Plasma discounted using rate rate, the lower the
scheme an estimated current fair value.
lending rate of 6.75%
(2019: 6.78%).
----------------------- ------------ --------------------------
13 Inventories
2020 2019
$000 $000
Estate and mill consumables 6,873 5,332
Processed produce for sale 5,668 3,420
-------- -------
12,541 8,752
-------- -------
14 Biological assets
2020 2019
$000 $000
At 1 January 7,574 4,093
Fair value gain recognised in the income
statement 1,274 3,255
Exchange translations (65) 226
-------
At 31 December 8,783 7,574
------- -------
The valuation of the unharvested FFB was carried out internally
for each plantation of the Group. It involved an estimation of the
weight of unharvested FFB at balance sheet date multiplied by the
sum of average FFB selling price less average harvesting cost of
the last month prior to the balance sheet date. The weight was
derived from the computation of the percentage of growth based on
the data extracted from the research reference "The Reflection of
Moisture Content on Palm Oil Development during the Ripening
Process of Fresh Fruits" multiplied with the estimated FFB
harvested two months' post balance sheet date. The impacts of
climate change on the weather will impact the levels and quality of
production of FFB so this has been taken into consideration when
determining the fair value of biological assets.
The fair value of biological assets is classified as Level 3 in
the fair value hierarchy.
The valuation techniques and significant unobservable inputs
used in determining the fair value measurement of biological
assets, as well as the inter-relationship between key unobservable
inputs and fair value, are set out in the table below:
Item Valuation approach Inputs used Inter-relationship between
key unobservable inputs
and fair value
Biological Based on FFB FFB weight The higher the weight, the
assets - weight multiplied higher the fair value
Unharvested by the sum of
produce FFB selling FFB selling The higher the selling price,
price less harvesting price the higher the fair value
cost
Harvesting The higher the harvesting
cost cost, the lower the fair
value
----------------------- --------------- -------------------------------
The key assumptions are considered to be FFB weight, selling
price less harvesting costs and FFB production and a decrease of 1%
in any of these would result in an $88,000 decrease in the
valuation.
15 Trade and other receivables
2020 2019
$000 $000
Trade receivables 1,354 1,775
Other receivables 1,551 2,935
Prepayments and accrued income 1,788 1,064
--------
4,693 5,774
-------- --------
The carrying amount of trade and other receivables classified as
amortised cost approximates fair value.
Trade receivables
The Group applies the IFRS 9 simplified approach to measure ECL
using a lifetime ECL provision for trade receivables. To measure
ECL on a collective basis, trade receivables are grouped based on
similar credit risk and age.
The expected loss rate is based on a combination of the Group's
historical credit losses experienced over the 5-year period prior
to the year end and forward-looking information on macroeconomic
factors affecting the Group's customers. The ECL has been
calculated at 1% on trade receivables balances.
Other receivables
The Group assesses the ECL associated with its debt instruments
carried at amortised cost on a forward-looking basis using the
three stage approach. The impairment methodology applied depends on
whether there has been a significant increase in credit risk.
The Group considers the probability of default upon initial
recognition of an asset and whether there has been significant
increase in credit risk on an on-going basis at each reporting
date. To assess whether there is a significant increase in credit
risk, the Group compares the risk of default occurring on the asset
as at the reporting date with the risk of default as at the date of
initial recognition. The Group considers available, reasonable and
supportable forward-looking information, such as:
- internal credit rating;
- external credit rating (as far as available);
- actual or expected significant adverse changes in business,
financial or economic conditions that are expected to cause a
significant change to the debtor's ability to meet its
obligation;
- significant changes in the value of the collateral supporting
the obligation or in the quality of third-party guarantees or
credit enhancements; or
- significant changes in the expected performance or behaviour
of the debtor, including changes in the payment status of the
debtor.
There has not been a significant increase in credit risk since
initial recognition on any of the group's financial assets
therefore 12-month ECL have continued to be recognised on all
balances other than trade receivables which are discussed
above.
Due from cooperatives under Plasma scheme
The Group assesses the ECL on amounts due from cooperatives
under Plasma scheme by considering various probability weighted
outcomes. The three possible outcomes are considered to be:
- recovery is limited to the value of the land and bearer plants
on which the plantation is situated;
- recovery is limited to the future cashflows of the
cooperative, being the FFB revenue less development costs; and
- recovery in full via bank financing obtained by the cooperative.
Movements on the Group's loss provision on current and
non-current other receivables and financial guarantee contracts are
as follows:
2020 2019
$000 $000
At 1 January 6,273 308
Loss provision during the year 1,485 5,965
Exchange difference 253 -
At 31 December 8,011 6,273
-------- --------
At 31 December 2020, the expected loss provision for receivables
and financial guarantee contracts is as follows:
Gross Loss Net carrying
carrying provision amount
amount $000 $000
$000
2020
Trade receivable 1,363 (9) 1,354
Other receivables (note 15) 1,566 (15) 1,551
Receivables: non-current (note
12)
- Due from non-controlling interests 5,548 (55) 5,493
- Due from cooperatives under
Plasma scheme 24,632 (7,889) 16,743
33,109 (7,968) 25,141
----------- ------------ --------------
Financial guarantee contracts
(note 24) - (43) (43)
----------- ------------ --------------
33,109 (8,011) 25,098
----------- ------------ --------------
Gross Loss Net carrying
carrying provision amount
amount $000 $000
$000
2019
Trade receivables 1,775 - 1,775
Other receivables (note 15) 2,979 (44) 2,935
Receivables: non-current (note
12)
- Due from non-controlling
interests 3,607 (36) 3,571
- Due from cooperatives under
Plasma scheme 19,078 (6,149) 12,929
27,439 (6,229) 21,210
----------- ------------ --------------
Financial guarantee contracts
(note 24) - (44) (44)
----------- ------------ --------------
27,439 (6,273) 21,166
----------- ------------ --------------
16 Loans and borrowings
2020 2019
---------------------- ----------------------
Book value Fair value Book value Fair value
$000 $000 $000 $000
Current
Long-term loan (a) - - 8,203 7,943
---------- ---------- ---------- ----------
- - 8,203 7,943
---------- ---------- ---------- ----------
Total loans and borrowings - - 8,203 7,943
(a) A subsidiary company, PT Sawit Graha Manunggal, obtained a
long-term loan of $35 million for a period of eight years
(including four years grace repayment period) to support the
capital expenditure requirement for planting, development and
maintenance of oil palm estate and to finance oil mill construction
and other property, plant and equipment owned by the subsidiary
company. It was secured by the subsidiary company's land with a
carrying amount of $6.7 million (2019: $5.8 million) measured at
fair value and its plantation with a carrying amount of $21.4
million (2019: $23.0 million) as at 31 December 2020 and was
guaranteed by the Company. This loan bore interest at a rate based
on SIBOR + 4.5% + Liquidity Premium payable quarterly in arrears.
Average interest rate in 2020 was about 6.75% (2019: 6.78%). The
loan was fully paid in 2020 and all security and guarantee
arrangements had been released.
All the loans and borrowings are denominated in USD. The effect
of changes in foreign exchange rates is disclosed in note 25.
The fair value of the items classified as loans and borrowings
is disclosed below and is classified as Level 3 in the fair value
hierarchy:
2020 2019
---------------------- ------------------
Book value Fair value Book value Fair
value
$000 $000 $000 $000
Loans and borrowings - - 8,203 7,943
The fair value for disclosure purposes has been determined using
discounted cash flows. Significant inputs include the discount rate
used to reflect the credit risk associated with the Group. The fair
value reduces as higher discount rate being used.
17 Trade and other payables
2020 2019
$000 $000
Trade payables 6,254 5,028
Other payables 1,387 994
Advance receipts 7,070 119
Accruals 11,599 9,969
--------- ---------
26,310 16,110
--------- ---------
The carrying amount of trade and other payables classified as
financial liabilities measured at amortised cost approximates fair
value. Advance receipts from customers increased significantly due
to logistic problem in Bengkulu and Kalimantan and it is expected
to be recognised in full as revenue in the subsequent year.
18 Deferred tax
The movement on the deferred tax account as shown below:
2020 2019
$000 $000
At 1 January (5,796) (8,893)
Recognised in income statement:
Tax expense (2,975) 3,220
BA movement (61) (930)
Revaluation of leasehold land (483) 245
Recognised in other comprehensive income:
Revaluation of leasehold land 2,451 577
Retirement benefits 130 256
Exchange differences 84 (271)
At 31 December (6,650) (5,796)
--------- ---------
The deferred tax asset and liability, together with the amounts
recognised in income statement and other comprehensive income are
detailed as follows:
(Charged)/
credited (Charged)/
to credited
Asset Liability Net income to equity
$000 $000 $000 statement $000
$000
2020
Revaluation surplus - (20,164) (20,164) (483) 2,451
Retirement benefits 2,944 - 2,944 16 130
BA movement - (1,934) (1,934) (61) -
Unutilised tax losses 11,360 - 11,360 (2,523) -
Unremitted earnings - (345) (345) - -
Other temporary differences 1,489 - 1,489 (468) -
-------- ------------ --------- ------------ -------------
Tax assets / (liabilities) 15,793 (22,443) (6,650) (3,519) 2,581
Set off of tax (6,976) 6,976 - - -
-------- ------------ --------- ------------ -------------
Net tax assets / (liabilities) 8,817 (15,467) (6,650) (3,519) 2,581
-------- ------------ --------- ------------ -------------
2019
Revaluation surplus - (22,479) (22,479) 245 577
Retirement benefits 2,834 - 2,834 420 256
BA movement - (2,010) (2,010) (930) -
Unutilised tax losses 14,170 - 14,170 1,152 -
Unremitted earnings - (319) (319) - -
Other temporary differences 2,008 - 2,008 1,648 -
-------- ------------ --------- ------------ -------------
Tax assets / (liabilities) 19,012 (24,808) (5,796) 2,535 833
Set off of tax (7,761) 7,761 - - -
-------- ------------ --------- ------------ -------------
Net tax assets / (liabilities) 11,251 (17,047) (5,796) 2,535 833
-------- ------------ --------- ------------ -------------
.
2020 2019
$000 $000
A deferred tax asset has not been
recognised for the following items:
Unutilised tax losses 15,532 19,142
The Group had recognised tax assets arising from the unutilised
tax losses of certain subsidiaries as the Group believes that the
tax assets of these subsidiaries can be realised in the future
periods based on their budget , due to their respective plantation
assets becoming more mature and historically this resulting in the
companies becoming profitable. However, the Group does not
recognise the tax losses in certain companies within the Group as
tax assets as the future recoverability of losses of these
companies cannot be certain. The time limit on utilisation of tax
losses is subject to the tax laws in various countries. As of 31
December 2020, the relevant time limits are 5 years in Indonesia, 7
years in Malaysia and unlimited in UK. At 31 December 2020, all
unutilised tax losses were recognised in Indonesia. The unutilised
tax losses will expire as per below:
Year $000
2021 -
2022 388
2023 2,324
2024 6,602
2025 2,046
---------
11,360
---------
At the balance sheet date, the aggregate amount of temporary
differences associated with undistributed earnings of subsidiaries
for which deferred tax liabilities have not been recognised was
$671,431,000 (2019 - $635,809,000). No liability has been
recognised in respect of these differences because either the Group
is in a position to control the timing of the reversal of the
temporary differences, or such a reversal would not give rise to an
additional tax liability. The deferred tax liability on unremitted
earnings recognised at the balance sheet date was related to the
estimated dividend declared for 2020 by the subsidiaries.
19 Retirement benefits
The Group provides Post-Employment Benefit plans to its
employees in Indonesia in accordance with Indonesian Labour Law No.
13/2003 and Collective Labour Agreements. These are defined benefit
plans and provide lump sum benefits to employees on retirement,
death, disability and voluntary resignation. There is no
requirement for the Group to advance fund these benefits.
The Group has set up a separate fund with PT Asuransi Allianz
Life Indonesia to fund the Post-Employment Benefit plan obligation
for Staff employees. The assets in the fund can only be used to pay
the employees' benefits.
Up until 2020, the Non-Staff employees of five of the Group's
subsidiaries in Indonesia participated in the SKU UKINDO Pension
Fund, a defined benefit plan. On retirement, death, disability or
voluntary resignation, participating employees would receive the
higher of the benefit from the Pension Fund and the Post-Employment
Benefit plan. In early 2020, the SKU UKINDO Pension Fund was
liquidated. Its assets were transferred to a new defined
contribution plan managed by Dana Pension Lembaga Keuangan AIA
Financial ("DPLK AIAF") and allocated to the individual
participants. From 2020 onwards, these employees will receive the
higher of the benefit from DPLK AIAF and the Post-Employment
Benefit plan. The liquidation of the SKU UKINDO Pension Fund led to
a settlement gain of $930,000 in 2020. It also resulted in a past
service cost of $569,000 in 2020 in the Post-Employment Benefit
plan for Non-Staff employees, as the DPLK AIAF plan covers a
smaller proportion of the overall Post-Employment Benefit
obligation than was previously provided by the SKU UKINDO Pension
Fund.
The Group provides other long-term employee benefits in the form
of Long Service Awards for Staff and Non-Staff employees in
Indonesia. The Long Service Awards are for amounts of up to 2
months of basic salary, paid on completion of 10 or 20 years'
continuous service (Staff) and on completion of 25, 30, 35, and 40
years' continuous service (Non-Staff). These benefits are
unfunded.
The defined benefit plans are valued by an actuary at the end of
each financial year. The major assumptions used by the actuary
were:
2020 2019
Rate of increase in wages 8.0% 8.0%
Discount rate 7.0% 8.0%
Mortality rate* 100% 100% TMI3
TMI4
Disability rate 10% TMI4 10% TMI3
2020 2019
$000 $000
Service cost
Current service cost 1,555 1,597
Past service cost 313 427
Settlement (gain) / loss (930) -
Net interest expense 825 734
Actuarial (gain) / loss 30 31
------ ------
Total employee benefits expense 1,793 2,789
------ ------
The reconciliation on the remeasurement of retirement benefit
plan as shown below:
2020 2019
$000 $000
Included in other comprehensive income:
Remeasurement of retirement benefit
plan (779) (1,024)
Deferred tax on retirement benefits 130 256
---------- ------------
Remeasurement of retirement benefit plan,
net of tax recognised in other comprehensive
income (649) (768)
---------- ------------
(i) Reconciliation of defined benefit obligation and fair value of scheme assets
Defined benefit obligation Fair value of scheme Net defined scheme
assets liability
Funded Unfunded Funded Unfunded Funded Unfunded
scheme scheme Total scheme scheme Total scheme scheme Total
$000 $000 $000 $000 $000 $000 $000 $000 $000
At 1 January 2019 (7,246) (5,321) (12,567) 4,323 - 4,323 (2,923) (5,321) (8,244)
Service cost -
current (675) (922) (1,597) - - - (675) (922) (1,597)
Service cost -
past (420) (7) (427) - - - (420) (7) (427)
Interest (cost) /
income (630) (485) (1,115) 381 - 381 (249) (485) (734)
Actuarial loss - (30) (30) - - - - (30) (30)
-------- --------- --------- -------- --------- ------- -------- --------- -----------
Included in
comprehensive
income (1,725) (1,444) (3,169) 381 - 381 (1,344) (1,444) (2,788)
Remeasurement (loss)
/ gain
Actuarial (loss)
/ gain from:
-------- --------- --------- -------- --------- ------- -------- --------- -----------
Adjustments
(experience) (144) 40 (104) - - - (144) 40 (104)
Financial
assumptions (391) (367) (758) - - - (391) (367) (758)
Return on plan
assets (exclude
interest) - - - (162) - (162) (162) - (162)
-------- --------- --------- -------- --------- ------- -------- --------- -----------
Included in other
comprehensive
income (535) (327) (862) (162) - (162) (697) (327) (1,024)
Effect of
movements in
exchange
rates (335) (250) (585) 192 - 192 (143) (250) (393)
Employer
contributions - - - 637 - 637 637 - 637
Benefits paid 475 198 673 (199) - (199) 276 198 474
-------- --------- --------- -------- --------- ------- -------- --------- -----------
Other movements 140 (52) 88 630 - 630 770 (52) 718
At 31 December 2019 (9,366) (7,144) (16,510) 5,172 - 5,172 (4,194) (7,144) (11,338)
-------- --------- --------- -------- --------- ------- -------- --------- -----------
Defined benefit obligation Fair value of scheme assets Net defined scheme liability
Funded Unfunded Funded Unfunded Funded Unfunded
scheme scheme Total scheme scheme Total scheme scheme Total
$000 $000 $000 $000 $000 $000 $000 $000 $000
At 1 January 2020 (9,366) (7,144) (16,510) 5,172 - 5,172 (4,194) (7,144) (11,338)
Service cost -
current (393) (1,162) (1,555) - - - (393) (1,162) (1,555)
Service cost -
past 256 (569) (313) - - - 256 (569) (313)
Settlement gain 4,742 - 4,742 (3,812) - (3,812) 930 - 930
Interest (cost)
/ income (307) (609) (916) 91 - 91 (216) (609) (825)
Actuarial loss - (30) (30) - - - - (30) (30)
-------- --------- --------- -------- ----------- -------- -------- --------- ----------
Included in income
statement 4,298 (2,370) 1,928 (3,721) - (3,721) 577 (2,370) (1,793)
Remeasurement
(loss) / gain
Actuarial (loss)
/ gain from:
-------- --------- --------- -------- ----------- -------- -------- --------- ----------
Adjustments
(experience) 245 37 282 - - - 245 37 282
Demographic
assumptions 89 207 296 - - - 89 207 296
Financial
assumptions (334) (1,004) (1,338) - - - (334) (1,004) (1,338)
Return on plan
assets (exclude
interest) - - - (19) - (19) (19) - (19)
-------- --------- --------- -------- ----------- -------- -------- --------- ----------
Included in other
comprehensive
income - (760) (760) (19) - (19) (19) (760) (779)
Effect of
movements in
exchange
rates 282 9 291 (198) - (198) 84 9 93
Employer - - - - - - - - -
contributions
Benefits paid 112 322 434 - - - 112 322 434
Other movements 394 331 725 (198) - (198) 196 331 527
At 31 December 2020 (4,674) (9,943) (14,617) 1,234 - 1,234 (3,440) (9,943) (13,383)
-------- --------- --------- -------- ----------- -------- -------- --------- ----------
(ii) Disaggregation of defined benefit scheme assets
The fair value of the funded assets is analysed as follows:
2020 2019
$000 $000
Bonds
- Corporate bonds 7 24
- Mutual fund bonds 282 288
------ ------
289 312
Cash / deposits 945 4,860
------ ------
1,234 5,172
------ ------
None of the plan assets are invested in the Group's own
financial instruments, property or other assets used by the Group.
All plan assets invested in bonds which have a quoted market price
in an active market.
(iii) Defined benefit obligation - sensitivity analysis
The following table exhibits the sensitivity of the Group's
retirement benefits to the fluctuation in the discount rate, wages
and mortality rate:
Reasonably Defined benefit obligation
Possible Increase Decrease
Change $000 $000
(+ / -
Discount rate 1%) (1,450) 1,686
(+ / -
Growth in wages 1%) 1,719 (1,504)
(+ / -
Future mortality rate 10%) 70 (70)
The weighted average duration of the defined benefit obligation
is 15.57 years (2019: 14.65 years).
The total contribution paid into the defined contribution plan
in 2020 amounted to $209,000. The Group expects to pay
contributions of $442,000 to the funded plans in 2021. For the
unfunded plans, the Group pays the benefits directly to the
individuals; the Group expects to make direct benefit payments of
$250,000 for defined benefit plan and $246,000 for defined
contribution plan in 2021.
20 Share capital and treasury shares
Issued Issued Issued
Authorised and Authorised and Authorised and
Number fully GBP000 fully $000 fully
paid paid paid
Number GBP000 $000
Ordinary shares of
25p each
Beginning and end
of year 60,000,000 39,976,272 15,000 9,994 23,865 15,504
------------ ---------- ------------ ------- ------------ ---------
Cost Cost
2020 2019 2020 2019
Treasury shares: Number Number $'000 $'000
Beginning of year 339,900 339,900 (1,171) (1,171)
Share options exercised - - - -
---------- ------------ ------------ ---------
End of year 339,900 339,900 (1,171) (1,171)
---------- ------------ ------------ ---------
Market value of treasury $'000
shares:
Beginning of year
(574.0p/share) 2,577
End of year (583.0p/share) 2,705
No treasury share was purchased in 2020 (2019: Nil).
All fully paid ordinary shares have full voting rights, as well
as to receive the distribution of dividends and repayment of
capital upon winding up of company.
21 Ultimate controlling shareholder
At 31 December 2020 , Genton International Limited ("Genton"), a
company registered in Hong Kong, held 20,247,814 (2019: 20,247,814)
shares of the Company representing 51.1% (2019: 51.1%) of the
issued share capital of the Company. Together with other deemed
interested parties, Genton's shareholding totals 20,551,914 or
51.9%. Madam Lim Siew Kim, a Director of the Company, has advised
the Company that she is the controlling shareholder of Genton
International Limited.
22 Related party transactions
Transactions between the Company and its subsidiaries, which are
related parties, have been eliminated on consolidation and are not
disclosed in this note.
An office premises lease agreement was entered with Infra Sari
Sdn Bhd, a company controlled by Madam Lim Siew Kim. The rental
paid during the year was $345,559 (2019: $352,845). There was no
balance outstanding at the year end (2019: Nil).
In 2019, a land lease agreement was entered with Kuang Rong
Holdings Sdn Bhd, company controlled by Madam Lim Siew Kim. The
rental paid during the year was $79,914 (2019: $33,871). There was
no balance outstanding at the year end.
In 2020, the final dividend paid to Genton International
Limited, a company controlled by Madam Lim Siew Kim, was $107,239
for the year ended 31 December 2019 (2019: $607,434 for the year
ended 31 December 2018). The final dividend paid to other companies
controlled by Madam Lim Siew Kim was $1,521 for the year ended 31
December 2019 (2019: $9,123 for the year ended 31 December 2018).
There was no balance outstanding at the year end.
23 Reserves
Nature and purpose of each reserve:
Share capital Amount of shares subscribed at nominal value.
Share premium Amount subscribed for share capital in excess of
nominal value.
Capital redemption reserve Amounts transferred from share
capital on redemption of issued shares.
Treasury shares Cost of own shares held in treasury.
Revaluation reserves Gains/losses arising on the revaluation of
the Group's property, net of tax.
Exchange reserves Gains/losses arising from translating the net
assets of overseas operations into US Dollar.
Retained earnings Cumulative net gains and losses recognised in
the consolidated income statement.
24 Guarantees and other financial commitments
2020 2019
$000 $000
Capital commitments at 31 December
Contracted but not provided - normal estate
operations 29 14
Authorised but not contracted - plantation
and mill development 49,721 13,073
A subsidiary company, PT Sawit Graha Manunggal ("SGM") has
provided a corporate guarantee to Koperasi Bartim Sawit Sejahtera
("KBSS"), a party under Plasma scheme as disclosed in note 12, in
relation to a loan taken by KBSS from PT Bank Mandiri (Persero)
Tbk. of Rp226.02 billion ($16.0 million) (2019: Rp226.02 billion,
$16.3 million). The corporate guarantee remains until the loan is
fully settled by 23 December 2027. The HGU (land right) that
belongs to the Plasma scheme is currently held under SGM's master
title. An application to separate the HGU was submitted to the Land
Office and the land and its plantation with a total carrying amount
of $10.5 million as at 31 December 2020 will be pledged to the bank
as security once the title separation approval is obtained. In
addition, the terms and conditions of the loan agreement also
require KBSS to sell all its FFB produce to SGM and the plantation
estate is to be managed by SGM. In view of these, the Group
exposure to this contingent liability is minimised.
On 3 February 2017, a subsidiary company, PT Alno Agro Utama and
Koperasi Perkebunan Plasma Maju Sejahtera ("KPPM") signed a
Refinancing Agreement with PT Bank Syariah Mandiri ("BSM") to fund
its plasma development. The Agreement provides a loan of Rp 8.75
billion ($0.6 million), with 10 (Ten) years maturity period
effective from 24 July 2017 with an interest rate of 13.25% per
annum. KPPM pledges its 147.04 hectares oil palm plantation located
in Desa Serami Baru, Kecamatan Malin Deman, Kabupaten Mukomuko,
Bengkulu and its plantation with a carrying amount of $0.7 million
as at 31 December 2020 as security under the agreement while the
Company provides corporate guarantee amounting to Rp 8.75 billion
($0.6 million).
The Group's loss provision on these financial guarantee
contracts was $43,000 (2019: $44,000). The details of the ECL were
disclosed in note 15.
25 Disclosure of financial instruments and other risks
The Group's principal financial instruments comprised cash,
short and long-term bank loans, trade receivables and payables and
receivables from local partners in respect of their
investments.
The Group's accounting classification of each class of financial
asset and liability at 31 December 2020 and 2019 were:
Financial
Amortised liabilities Total carrying
cost at value
$000 amortised $000
cost
$000
2020
Non-current receivables 22,236 - 22,236
Trade and other receivables 2,905 - 2,905
Short-term investments 1,957 - 1,957
Cash and cash equivalent 115,211 - 115,211
Loans and borrowings due within - - -
one year
Trade and other payables - (26,310) (26,310)
142,309 (26,310) 115,999
----------- ------------- ----------------
Financial
liabilities Total carrying
Amortised at amortised value
cost cost $000
$000 $000
2019
Non-current receivables 16,500 - 16,500
Trade and other receivables 4,710 - 4,710
Short-term investments - - -
Cash and cash equivalent 84,846 - 84,846
Loans and borrowings due within
one year - (8,203) (8,203)
Trade and other payables - (16,110) (16,110)
106,056 (24,313) 81,743
----------- ------------- ----------------
Financial instruments not measured at fair value
Financial instruments not measured at fair value include cash
and cash equivalents, trade and other receivables, trade and other
payables, borrowings due within one year and non-current
receivables.
Due to their short-term nature, the carrying value of cash and
cash equivalents, trade and other receivables, trade and other
payables approximates their fair value. The non-current receivables
were measured at cost less ECL however disclosure of fair value has
been given in note 12 for comparison purposes.
Please refer to the applicable notes for details of the fair
value hierarchy, valuation techniques, and significant unobservable
inputs related to determining the fair value of the following
items:
- Non-current receivables (note 12); and
- Loans and borrowings (note 16).
The principal financial risks to which the Group is exposed
are:
- commodity selling price changes; and
- exchange movements;
which, in turn, can affect financial instruments and/or
operating performance.
The Company does not hedge any of its risks. Its trade credit
risks are low. There are no financial assets or liabilities that
are held at fair value through the profit or loss.
The Board is directly responsible for setting policies in
relation to financial risk management and monitors the levels of
the main risks through review of regular operational reports.
Commodity selling prices
The Group does not normally contract to sell produce more than
one month ahead.
Currency risk
Most of the Group's operations are in Indonesia. The Company and
Group accounts are prepared in US Dollar which is not the
functional currency of the operating subsidiaries. The Group does
not hedge its net investment in its overseas subsidiaries and is
therefore exposed to a currency risk on that investment. The
historical cost of investment (including intercompany loans) by the
parent in its subsidiaries amounted to $54,573,000 (2019:
$55,797,000), while the balance sheet value of the Group's share of
underlying assets at 31 December 2020 amounted to $428,681,000
(2019: $401,157,000).
All the Group's sales are made in local currency and any trade
receivables are therefore denominated in local currency. No hedging
is therefore necessary.
Selling prices of the Group's produce are directly related to
the US Dollar denominated world prices. Appreciation of local
currencies, therefore, reduces profits and cash flow of the
Indonesian and Malaysian subsidiaries in US Dollar terms and vice
versa.
All remaining borrowings of the Group's subsidiaries had been
fully paid in 2020 and therefore there was no longer any currency
risk for the Group in respect of this. The average interest rate on
local currency deposits was 4.02% higher (2019: 4.44% higher) than
on US Dollar deposits whereas interest rate for local currency
borrowing was about 1.25% higher (2019: 2.72% higher) as compared
to US Dollar borrowing. The unmatched balance at 31 December 2020
is represented by the $13,803,000 shown in the table below (2019:
$5,910,000). If the Group's net cash position continues to improve,
then US Dollar cash balances will continue to increase through
2021.
The table below shows the net monetary assets and liabilities of
the Group as at 31 December 2020 and 2019 that were not denominated
in the operating or functional currency of the operating unit
involved.
Net foreign currency assets/(liabilities)
--------------------------------------------------
US Dollar Sterling Total
Functional currency of Group $000 $000 $000
operation
2020
Rupiah 12,086 - 12,086
US Dollar - 259 259
Ringgit 1,717 - 1,717
----------------- -------------- -----------
Total 13,803 259 14,062
----------------- -------------- -----------
2019
Rupiah 3,882 - 3,882
US Dollar - 475 475
Ringgit 2,028 - 2,028
----------------- -------------- -----------
Total 5,910 475 6,385
----------------- -------------- -----------
The following table summarises the sensitivity of the Group's
financial assets and financial liabilities to foreign exchange
risk. The impact on profit before tax and equity if Ringgit or
Rupiah strengthen or weaken by 10% against US Dollar is:
2020 2019
----------------- ----------------
-10% in +10% in Carrying -10% +10% in
Carrying in
Rp : $ Rp : $ Amount Rp : Rp : $
and and US$ $ and and
Amount RM : $ RM : $ RM : RM : $
US$ $
$000 $000 $000 $000 $000 $000
Financial Assets
Non-current receivables 22,236 (1,522) 1,860 16,500 (1,172) 1,432
Trade and other
receivables 2,905 (261) 319 4,710 (243) 297
Short-term investments 1,957 (178) 217 - - -
Cash and cash equivalents 115,211 (10,433) 12,752 84,846 (7,651) 9,352
Financial Liabilities
Borrowings due within
one year - - - (8,203) 746 (911)
Trade and other
payables (26,310) 2,279 (2,785) (16,110) 1,349 (1,649)
Total (decrease)
/ increase (10,115) 12,363 (6,971) 8,521
-------- ------- ------- -------
Liquidity risk
Profitability of new sizable plantations normally requires a
period of between six and seven years before cash flow turns
positive. Because oil palms do not begin yielding significantly
until four years after planting, this development period and the
cash requirement is affected by changes in commodity prices.
The Group attempts to ensure that it is likely to have either
self-generated funds or further loan/equity capital to complete its
development plans and to meet loan repayments. Long-term forecasts
are updated twice a year for review by the Board. In the event that
falling commodity prices reduce self-generated funds below
expectations and to a level where Group resources may be
insufficient, further new planting may be restricted. Consideration
is given to the funds required to bring existing immature plantings
to maturity.
The Group's trade and tax payables are all due for settlement
within a year. At 31 December 2020, the Group had no external loans
and facilities.
The total loan borrowings together with interest at current
rates are as follows:
2020 2019
$000 $000
Principal - 8,203
Interest - 278
------------------ ------
Total - 8,481
------------------ ------
Amount repayable within one year - 8,481
- 8,481
------------------ ------
All loans had been fully paid in 2020.
All the long-term loans include varying covenants covering
minimum net worth and cash balances, dividend and interest cover
and debt service ratios. The subsidiary companies concerned have
complied with the covenants as stated in the loan agreement.
The following table sets out the undiscounted contractual
cashflows of financial liabilities:
Less Between Between More than Total
than 1 and 2 and 5 years
1 year 2 years 5 years
$000 $000 $000 $000 $000
At 31 December 2020
Trade and other payables (7,641) - - - (7,641)
Lease liabilities (257) (222) - - (479)
(7,898) (222) - - (8,120)
Financial guarantee
contracts
provided to Plasma
- loan repayment
by Plasma (773) (2,535) (928) (107) (4,343)
(8,671) (2,757) (928) (107) (12,463)
At 31 December 2019
Trade and other payables (6,022) - - - (6,022)
Lease liabilities (258) (258) (224) - (740)
-------- --------- --------- ---------- ---------
(6,280) (258) (224) - (6,762)
Financial guarantee
contracts provided
to Plasma
- loan repayment
by Plasma (306) (1,956) (2,165) (284) (4,711)
-------- --------- --------- ---------- ---------
(6,586) (2,214) (2,389) (284) (11,473)
-------- --------- --------- ---------- ---------
The figures for trade and other payables excludes accruals and
advance receipts.
The Group does not face a significant liquidity risk with regard
to its financial liabilities.
Interest rate risk
Both the Group's surplus cash and its borrowings are subject to
variable interest rates. The Group had net cash throughout 2020, so
the effect of variations in borrowing rates is more than offset. A
1% change in the borrowing or deposit interest rate would not have
a significant impact on the Group's reported results as shown in
the table below. The rates on borrowings are set out in note
16.
2020 2019
--------------------- -------------------
Carrying -1% in +1% in Carrying -1% in +1% in
amount interest interest amount interest interest
rate rate rate rate
$000 $000 $000 $000 $000 $000
Financial Assets
Short-term investments 1,957 (18) 16 - - -
Cash and cash equivalents 115,211 (1,102) 1,118 84,846 (810) 810
Financial Liabilities
Borrowings due within
one year - - - (8,203) 82 (82)
Total (decrease)
/ increase (1,120) 1,134 (728) 728
--------- --------- --------- -----------
There is no policy to hedge interest rates, partly because of
the net cash position and the net interest income position of the
Group.
Interest rate profiles of the Group's financial assets
(comprising non-current receivables, trade and other receivables
and cash) at 31 December were:
Total Fixed rate Variable No interest
rate
$000 $000 $000 $000
2020
Sterling 259 - 21 238
US Dollar 17,805 5,493 8,782 3,530
Rupiah 119,483 - 101,089 18,394
Ringgit 4,762 - 3,546 1,216
------- ---------- -------- -----------
Total 142,309 5,493 113,438 23,378
------- ---------- -------- -----------
2019
Sterling 475 - 20 455
US Dollar 17,868 3,607 8,892 5,369
Rupiah 83,316 - 68,687 14,629
Ringgit 4,397 - 3,393 1,004
------- ---------- -------- -----------
Total 106,056 3,607 80,992 21,457
------- ---------- -------- -----------
Long-term receivables of $5,548,000 (2019: $3,607,000) comprise
US Dollar denominated amounts due from non-controlling interests as
described in note 12 on which interest is due at a fixed rate of
6%.
Average US Dollar deposit rate in 2020 was 1.75% (2019: 2.43%)
and Rupiah deposit rate was 5.77% (2019: 6.86%).
Interest rate profiles of the Group's financial liabilities
(comprising bank loans and other financial liabilities and trade
and other payables) at 31 December were:
Total Fixed rate Variable No interest
rate
$000 $000 $000 $000
2020
Sterling - - - -
US Dollar (1,109) - - (1,109)
Rupiah (24,746) - - (24,746)
Ringgit (455) - - (455)
-------- ---------- -------- -----------
Total (26,310) - - (26,310)
-------- ---------- -------- -----------
2019
Sterling - - - -
US Dollar (9,338) - (8,203) (1,135)
Rupiah (14,750) - - (14,750)
Ringgit (225) - - (225)
-------- ---------- -------- -----------
Total (24,313) - (8,203) (16,110)
-------- ---------- -------- -----------
Weighted average interest rate on variable rate borrowings was
6.75% in 2020 (2019: 6.78%).
Credit risk
The Group has two types of financial assets that are subject to
the ECL model:
-- Trade receivables for sales of goods and services; and
-- Current and non-current receivables carried at amortised cost.
The Group also has financial guarantee contracts for which the
ECL model is also applicable.
While cash and cash equivalents are also subject to the
impairment requirements as set out in IFRS 9, there is no
impairment loss identified given the financial strength of the
financial institutions in which the Group have a relationship with.
Credit risk arises from cash and cash equivalents and deposits with
banks and financial institutions. The Group has taken necessary
steps and precautions in minimising the credit risk by lodging cash
and cash equivalents only with reputable licensed banks, and
particularly in Indonesia, independently rated banks with a minimum
rating of "A". The cash and cash equivalents are in US dollars,
Rupiah, Ringgit and Sterling according to the requirements of the
Group. The list of the principal banks used by the Group is given
on the inside of the back cover of this report.
The Group use three categories for those receivables which
reflect their credit risk and how the loss provision is determined
for those categories.
(i) Trade receivables using the simplified approach
The Group applies the simplified approach under IFRS 9 to
measure ECL, which uses a lifetime expected loss provision for all
trade receivables. To measure the expected losses, trade
receivables have been grouped based on shared credit risk
characteristics and days past due.
The expected loss rates are based on historical payment profiles
of sales and the corresponding historical credit losses experienced
during these periods. The historical loss rates are adjusted to
reflect current and forward-looking information on macroeconomic
factors (such as palm product prices and crude oil price) affecting
the ability of the customers to settle the receivables. The
historical loss rates will be adjusted based on the expected
changes in these factors. No significant changes to estimation
techniques or assumptions were made during the reporting
period.
In determining the expected loss rates, the Group also takes
into consideration the collateral or payments received in advance,
as set out below:
Receivables are generally collected within the credit term and
therefore there is minimal exposure to doubtful debts. Upfront
payments are also collected for certain sales made by the Group's
subsidiaries in Indonesia.
The Group's maximum exposure to credit risk and loss provision
recognised as at 31 December 2020 is disclosed in note 15. The ECL
has been calculated at 1% on trade receivables balances while the
remaining amount in which no ECL provision was recognised is deemed
to be recoverable, with low probability of default. Default is
defined by the management as the non-repayment of the balance.
(i) Debt instruments at amortised costs other than trade
receivables using the three-stage approach
All of the Group's debt instruments at amortised costs other
than trade receivables are considered to have a low credit risk,
except amount due from cooperatives under Plasma scheme are
considered to have higher credit risk, as these were considered to
be performing, have low risks of default and historically there
were minimal instances where contractual cash flow obligations have
not been met. There has not been a significant increase in credit
risk since initial recognition.
The 12-month ECL has been calculated at 1% on the majority of
balances (unless it has been considered there to be no ECL), with
the exception of amounts due from cooperatives under Plasma scheme
where the ECL is largely calculated, having considered various
probability weighted outcomes, as being the balance of the
receivable in excess of the value of the associated land and
plantation assets on which the Plasma land resides which
effectively would be returned to the Company if the receivable is
not repaid.
The maximum exposure to credit risks for debt instruments at
amortised cost other than trade receivables are represented by the
carrying amounts recognised in the statements of financial
position.
(ii) Financial guarantee contracts using the three-stage approach
All of the financial guarantee contracts are considered to be
performing, have low risks of default and historically there were
no instances where these financial guarantee contracts were called
upon by the parties of which the financial guarantee contracts were
issued. Accordingly,12-month ECL have been recognised at 1% on the
financial guarantee contracts and disclosed in note 24.
Information regarding other non-current assets and trade and
other receivables that are neither past due nor impaired is
disclosed in notes 12 and 15 respectively. Amounts receivable from
local partners, amounting to $5,548,000 (2019: $3,607,000), in
relation to their investments in operating subsidiaries are secured
on those investments and are repayable from their share of
dividends from those subsidiaries.
Amounts receivable due from cooperatives under Plasma scheme, as
disclosed in note 12, are unsecured and are to be repaid from FFB
supplied by the cooperatives. The provision of ECL for amounts
receivable due from cooperatives under Plasma scheme had been
disclosed in note 15.
Deposits with banks and other financial institutions, investment
securities and derivatives that are neither past due nor impaired
are placed, or entered into, with reputable financial institutions
or companies with high credit ratings and no history of
default.
As the Group does not hold any collateral, the maximum exposure
to credit risk for each class of financial instrument is the
carrying amount presented on the statement of financial position,
except in the case of the financial guarantee contracts offered by
two subsidiaries to cooperatives in order for them to obtain bank
loans in 2013 and 2017, which are not held on the statement of
financial position of the Group. See note 24.
Capital
The Group defines its Capital as Share capital and Reserves,
shown in the statement of financial position as "Issued capital
attributable to owners of the parent" and amounting to $428,681,000
at 31 December 2020 (2019: $401,157,000).
Group policy presently attempts to fund development from
self-generated funds and loans and not from the issue of new share
capital. At 31 December 2020, the Group had no net borrowings
(2019: Nil) but, depending on market conditions, the Board is
prepared for the Group to have net borrowings.
Plantation industry risk
Please refer to principal and emerging risks and uncertainties
in the Strategic Report.
26 Subsidiary companies
The principal subsidiaries of the Company all of which have been
included in these consolidated financial statements are as
follows:
Country of Non-controlling
incorporation Proportion interests
and principal of ownership ownership
place of interest / voting interest
Name business at 31 December at 31 December
2020 2019 2020 2019
Principal sub-holding company
United
Anglo-Indonesian Oil Palms Limited Kingdom 100% 100% - -
Management company
United
Indopalm Services Limited Kingdom 100% 100% - -
Anglo-Eastern Plantations Management
Sdn Bhd Malaysia 100% 100% - -
PT Anglo-Eastern Plantations
Management Indonesia Indonesia 100% 100% - -
Operating companies
Anglo-Eastern Plantations (M)
Sdn Bhd Malaysia 55% 55% 45% 45%
All For You Sdn Bhd Malaysia 100% 100% - -
PT Alno Agro Utama Indonesia 90% 90% 10% 10%
PT Anak Tasik Indonesia 100% 100% - -
PT Bangka Malindo Lestari Indonesia 95% 95% 5% 5%
PT Bina Pitri Jaya Indonesia 80% 80% 20% 20%
PT Cahaya Pelita Andhika Indonesia 90% 90% 10% 10%
PT Empat Lawang Agro Perkasa Indonesia 95% 95% 5% 5%
PT Hijau Pryan Perdana Indonesia 80% 80% 20% 20%
PT Kahayan Agro Plantation Indonesia 78% 78% 22% 22%
PT Karya Kencana Sentosa Tiga Indonesia 95% 95% 5% 5%
PT Mitra Puding Mas Indonesia 90% 90% 10% 10%
PT Musam Utjing Indonesia 75% 75% 25% 25%
PT Riau Agrindo Agung Indonesia 95% 95% 5% 5%
PT Sawit Graha Manunggal Indonesia 82% 82% 18% 18%
PT Simpang Ampat Indonesia 100% 100% - -
PT Tasik Raja Indonesia 80% 80% 20% 20%
PT United Kingdom Indonesia
Plantations Indonesia 75% 75% 25% 25%
Dormant companies
The Ampat (Sumatra) Rubber Estate United
(1913) Limited Kingdom 100% 100% - -
United
Gadek Indonesia (1975) Limited Kingdom 100% 100% - -
United
Mergerset (1980) Limited Kingdom 100% 100% - -
United
Musam Indonesia Limited Kingdom 100% 100% - -
The principal United Kingdom sub-holding company, UK management
company and UK dormant companies are registered in England and
Wales and are direct subsidiaries of the Company. The Malaysian
operating companies and management company are incorporated in
Malaysia and are direct subsidiaries of the Company. The Indonesian
operating companies and management company are incorporated in
Indonesia and are direct subsidiaries of the principal sub-holding
company. The principal activity of the operating companies is
plantation agriculture. The registered office of the principal
subsidiaries are disclosed below:
Subsidiaries by country Registered address
UK registered subsidiaries Quadrant House, 6(th) Floor
4 Thomas More Square
London E1W 1YW
United Kingdom
Malaysia registered subsidiaries 7(th) Floor, Wisma Equity
150 Jalan Ampang
50450 Kuala Lumpur
Malaysia
Indonesia registered subsidiaries 3(rd) Floor, Wisma HSBC, Jalan Diponegoro,
Kav 11
Medan 20152
North Sumatera
Indonesia
27 Non-controlling interests
The Group identified subsidiaries with material non-controlling
interests ("NCI") based on the total assets in relation to the
Group. A subsidiary's NCI is material if the subsidiary contributed
more than 10% of the Group's total assets. The subsidiaries
identified and their summarised financial information, before
intra-group eliminations, are presented below:
Entity PT Tasik Raja PT Mitra Puding PT Alno Agro PT Bina Pitri PT Sawit Graha
Mas Utama Jaya Manunggal
18%
NCI percentage 20% 10% 10% 20%
Summarised income
statement
For the year 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019
ended
31 December
$000 $000 $000 $000 $000 $000 $000 $000 $000 $000
---------- ------------ -------- ----------- ---------- ------ ----------------- --------- ----------------- -----------
Revenue 59,166 45,786 37,492 27,121 51,944 40,403 46,865 36,060 42,782 32,022
Profit / (Loss)
after
tax 8,554 (31,473) 5,236 3,896 6,381 1,653 9,162 6,225 6,394 12,482
Other
comprehensive
(expense) /
income (1,693) 7,208 (761) 3,384 (556) 3,962 (1,729) 6,438 232 (21)
Total
comprehensive
income /
(expense) 6,861 (24,265) 4,475 7,280 5,825 5,615 7,433 12,663 6,626 12,461
Profit / (Loss)
allocated
to NCI 1,711 (6,295) 524 390 638 165 1,832 1,245 1,164 2,272
Other
comprehensive
(expenses) /
income
allocated to
NCI (339) 1,442 (76) 338 (56) 396 (346) 1,288 42 (4)
Total
comprehensive
income /
(expenses)
allocated to
NCI 1,372 (4,853) 448 728 582 561 1,486 2,533 1,206 2,268
Dividends paid
to NCI 3 - 35 56 2 3 24 32 - -
Summarised
statement
of financial
position
As at 31 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019
December
$000 $000 $000 $000 $000 $000 $000 $000 $000 $000
---------- ------------ -------- ----------- ---------- ------------- ---------- ------------- ------------- -----------
Non-current
assets 116,199 123,795 77,561 76,145 70,280 66,899 136,076 129,742 81,483 81,655
Current assets 32,177 15,948 11,033 7,158 32,217 25,386 16,029 12,927 16,456 14,941
Non-current
liabilities (4,210) (4,686) (3,674) (3,807) (7,966) (8,088) (3,594) (3,561) (74,945) (77,001)
Current
liabilities (5,395) (3,600) (4,801) (3,656) (7,670) (3,377) (5,593) (3,915) (7,896) (11,089)
Net assets 138,771 131,457 80,119 75,840 86,861 80,820 142,918 135,193 15,098 8,506
Accumulated NCI 27,754 26,291 8,012 7,584 8,686 8,082 28,584 27,039 2,748 1,548
Summarised cash
flows
For the year 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019
ended
31 December
$000 $000 $000 $000 $000 $000 $000 $000 $000 $000
---------- ------------ -------- ----------- ---------- ------------- ---------- ------------- ------------- -----------
Cash flows from
/ (used
in) operating
activities 8,297 (505) 1,850 (13,443) 10,133 9,688 3,792 4,158 15,853 15,404
Cash flows from
/ (used
in) investing
activities 2,641 103,978 (996) (631) (2,559) (17,593) (344) (12,654) (4,145) (5,285)
Cash flows (used
in)
/ from
financing
activities (13) (122,378) (343) (557) (483) (5) (33) (45) (11,297) (10,575)
Net cash inflows
/
(outflows) 10,925 (18,905) 511 (14,631) 7,091 (7,910) 3,415 (8,541) 411 (456)
28 Notes supporting statement of cash flows
Cash and cash equivalents for purposes of the statement of cash
flows comprised:
2020 2019
$000 $000
Cash at bank available on demand 41,029 29,443
Short-term deposits 74,164 55,381
Cash in hand 18 22
-------- -------
As reported in statement of financial position 115,211 84,846
-------- -------
Significant non-cash transactions from investing 2020 2019
activities are as follows:
$000 $000
Property, plant and equipment purchased
but not yet paid at year end 160 312
Repaid through purchase of FFB 3,849 2,728
Non-cash transactions from financing activities are shown in the
reconciliation of liabilities from financing transactions as
follows:
Non-current Current Non-current Current
loans and loans and lease lease
borrowings borrowings liabilities liabilities Total
$000 $000 $000 $000 $000
At 1 January 2020 - (8,203) (456) (222) (8,881)
Cash Flows - 8,167 - 257 8,424
Non-cash flows
- Effect of
foreign
exchange - 36 3 - 39
- New lease - - - - -
- Lease
liabilities
classified as
non-current
at 31 December
2019
becoming
current
during 2020 - - 236 (236) -
- Interest
accruing
during the year - - - (35) (35)
------------ ---------------- -------------------- --------------- -----------
- - (217) (236) (453)
------------ ---------------- -------------------- --------------- -----------
Non-current Current Non-current Current
loans and loans and lease liabilities lease
borrowings borrowings liabilities Total
$000 $000 $000 $000 $000
At 1 January 2019 (8,203) (11,078) - - (19,281)
Cash Flows - 11,096 - 210 11,306
Non-cash flows
- Effect of
foreign
exchange (169) 151 (9) (4) (31)
- New lease - - (474) (464) (938)
-Loans and
borrowings
classified as
non-current
at 31 December
2018
becoming
current
during 2019 8,372 (8,372) - - -
- Interest
accruing
during the year - - 27 36 63
- (8,203) (456) (222) (8,881)
------------ ---------------- -------------------- --------------- -----------
29 Leases
2020 2019
$000 $000
Lease liabilities analysed as:
Non-current (217) (456)
Current (236) (222)
------ ------
(453) (678)
------ ------
The weighted average incremental borrowing rate per annum was
6.8% (2019: 6.8%).
Maturity analysis for the lease liabilities has been given in
Note 25.
Amounts recognised in income statement:
2020 2019
$000 $000
Depreciation expense on right-of-use assets (153) (184)
Interest expense on lease liabilities (35) (41)
Expense relating to short-term leases (386) (403)
Expense relating to leases of low value assets (6) (6)
--------
(580) (634)
-------- -------
At 31 December 2020, the Group is committed to $0.01 million
(2019: $0.01 million) for short-term leases.
All the leases are fixed payments. The total cash outflow for
leases amount to $0.65 million (2019: $0.61 million).
The Group leases a piece of land and office under the
right-of-use assets. The lease term is between 3 to 4 years. (2019:
3 to 4 years). On expiry the Group has the options to renew based
on mutually agreed future rental. The right-of-use assets is
classified as part of property, plant and equipment in note 11.
Right-of-Use assets
Land Building Total
$000 $000 $000
At 1 January 2020 193 466 659
Additions - - -
Amortisation - (148) (148)
Impairment losses (188) - (188)
Effect of foreign exchange (5) (11) (16)
At 31 December 2020 - 307 307
------- --------- --------
Land Building Total
$000 $000 $000
At 1 January 2019 - - -
Additions 221 611 832
Amortisation (31) (153) (184)
Effect of foreign exchange 3 8 11
------- --------- --------
At 31 December 2019 193 466 659
------- --------- --------
Lease liabilities
Land Building Total
$000 $000 $000
At 1 January 2020 (196) (482) (678)
Additions - - -
Interest expense (10) (25) (35)
Lease payments 84 173 257
Effect of foreign exchange (4) 7 3
At 31 December 2020 (126) (327) (453)
------ --------- ------
Land Building Total
$000 $000 $000
At 1 January 2019 - - -
Additions (224) (622) (846)
Interest expense (6) (35) (41)
Lease payments 34 176 210
Effect of foreign exchange - (1) (1)
------ --------- ------
At 31 December 2019 (196) (482) (678)
------ --------- ------
The tables above do not include the leasehold land which is also
classified as a right of use asset as this information is already
presented in Note 11.
30 Event after reporting period
In November 2020, the President of Republic of Indonesia enacted
a Job Creation Law that will have an impact on employee benefit
obligations. As at 31 December 2020, the Group has calculated the
employee benefit obligation based on the law that was in effect
prior to this Job Creation Law, namely UU No. 13/2003, due to the
fact that the basis of the calculation for employee benefit
obligations is further regulated in an implementing regulation
which was only enacted on 16 February 2021. Until the completion
date of this report, the Group is still calculating the impact of
the implementation of this regulation, and its effect on the
Group's financial statements.
31 Posting of annual financial report
The Annual Financial Report will be posted to shareholders on or
before 3 June 2021. Copies of the Annual Financial Report will then
be available from the offices of the Company Secretary, CETC
(Nominees) Limited, Quadrant House, 6th Floor, 4 Thomas More
Square, London E1W 1YW and on the Company's website at
www.angloeastern.co.uk .
Copies of this announcement are available from the offices of
the Company Secretary, CETC (Nominees) Limited, Quadrant House, 6th
Floor, 4 Thomas More Square, London E1W 1YW and on the Company's
website.
Note: The information communicated in this announcement is
inside information for the purposes of Article 7 of Market Abuse
Regulation 596/2014.
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FR FLFSVEEIFLIL
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