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CSS Industries Inc.2017 Annual Report Anglo-Eastern Plantations Plc Company Number: 1884630 l A n g o - E a s t e r n P a n t a t i l o n s P l c 2 0 1 7 A n n u a l R e p o r t About Anglo-Eastern Plantations Contents The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. About AEP 2 Financial Highlights Key Information Shareholder Information Chairman's Statement Strategic Report Financial Record Estate Areas Location of Estates Directors' Report Directors' Responsibilities Directors Statement on Corporate Governance Audit Committee Report Directors' Remuneration Report Auditors' Report Consolidated Income Statement Consolidated Statement of Comprehensive Income 4 6 7 9 11 27 28 29 30 38 39 40 44 47 52 60 61 Consolidated Statement of Financial Position Consolidated Statement of Changes in Equity AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. 62 63 Consolidated Statement of Cash Flows 64 Notes to the Consolidated Financial Statements Company Balance Sheet Company Statement of Changes in Equity Notes to the Company Financial Statements Notice of Annual General Meeting Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. 66 96 The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. 102 98 97 Form of Proxy and Attendance Card Company addresses, advisers and website Separate Attachment Inside Back Cover Annual Report 2017 | Anglo-Eastern Plantations Plc 2 Company addresses London Office Anglo-Eastern Plantations Plc Quadrant House, 6th Floor 4 Thomas More Square London E1W 1YW United Kingdom Tel: 44 (0)20 7216 4621 Fax: 44 (0)20 7767 2602 Malaysian Office Anglo-Eastern Plantations Management Sdn Bhd 7th Floor, Wisma Equity 150 Jalan Ampang 50450 Kuala Lumpur Malaysia Tel: 60 (0)3 2162 9808 Fax: 60 (0)3 2164 8922 Indonesian Office PT Anglo-Eastern Plantations Management Indonesia 3rd Floor, Wisma HSBC, Jalan Diponegoro, Kav 11 Medan 20152 North Sumatera Indonesia Tel: 62 (0)61 452 0107 Fax: 62 (0)61 452 0029 Secretary and registered office Anglo-Eastern Plantations Plc (Number 1884630) (Registered in England and Wales) CETC (Nominees) Limited Quadrant House, 6th Floor 4 Thomas More Square London E1W 1YW United Kingdom Tel: 44 (0)20 7216 4600 Fax: 44 (0)20 7767 2602 Company website www.angloeastern.co.uk Company advisers Auditors BDO LLP 55 Baker Street London W1U 7EU United Kingdom Principal Bankers National Westminster Bank Plc Liverpool Street Station 216 Bishopsgate London EC2M 4QB United Kingdom The Hong Kong and Shanghai Banking Corporation Limited Wisma HSBC Jalan Diponegoro, Kav 11 Medan 20152 North Sumatera Indonesia PT Bank DBS Indonesia Uniplaza Building Jalan Letjen MT Haryono A-1 Medan 20231 North Sumatera Indonesia RHB Bank Bhd Podium Block, Plaza OSK Jalan Ampang 50450 Kuala Lumpur Malaysia Registrars Link Asset Services The Registry 34 Beckenham Road Beckenham Kent BR3 4TU United Kingdom Solicitors Withers LLP 16 Old Bailey London EC4M 7EG United Kingdom Sponsor/Broker Panmure Gordon (UK) Limited One New Change London EC4M 9AF United Kingdom About Anglo-Eastern Plantations About Anglo-Eastern Plantations About Anglo-Eastern Plantations The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. 128,200ha. 128,200ha. AEP has a Premium Listing on the London Stock AEP has a Premium Listing on the London Stock AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in Exchange. The Company was formed and floated in Exchange. The Company was formed and floated in 1985. 1985. 1985. Primary activities are Primary activities are Primary activities are the crop production and the crop production and the crop production and processing of palm oil and some rubber through processing of palm oil and some rubber through processing of palm oil and some rubber through operations in Indonesia and Malaysia. operations in Indonesia and Malaysia. operations in Indonesia and Malaysia. The Group is committed to responsible development The Group is committed to responsible development The Group is committed to responsible development and management of its plantations and facilities for the and management of its plantations and facilities for the and management of its plantations and facilities for the benefit of the environment and society in which it benefit of the environment and society in which it benefit of the environment and society in which it operates. operates. operates. Annual Report 2017 | Anglo-Eastern Plantations Plc Annual Report 2017 | Anglo-Eastern Plantations Plc Annual Report 2017 | Anglo-Eastern Plantations Plc 2 2 2 2 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. About Anglo-Eastern Plantations About Anglo-Eastern Plantations Oil Palm Plantations Oil Palm Plantations The Group has developed 53,000ha of mature oil palm in 17 plantations across The Group has developed 53,000ha of mature oil palm in 17 plantations across Indonesia and Malaysia. Indonesia and Malaysia. Oil Palm Development Oil Palm Development An Oil Palm tree usually takes about three years from planting to harvest of the An Oil Palm tree usually takes about three years from planting to harvest of the first crop and will reach full production after five years. The Group has first crop and will reach full production after five years. The Group has approximately 12,000ha of recently planted immature plantations of which approximately 12,000ha of recently planted immature plantations of which 3,500ha were planted in 2017, including replanting of 1,694ha. 3,500ha were planted in 2017, including replanting of 1,694ha. Palm Oil Mills Palm Oil Mills The Group operates 6 palm oil mills in Indonesia processing up to a combined The Group operates 6 palm oil mills in Indonesia processing up to a combined 295mt of fresh fruit bunches (“FFB”) per hour. Besides processing the FFB, three 295mt of fresh fruit bunches (“FFB”) per hour. Besides processing the FFB, three of its mills have biogas plants equipped to capture methane gas emissions to of its mills have biogas plants equipped to capture methane gas emissions to generate electricity. In addition, one of the mills has a biomass plant which generate electricity. In addition, one of the mills has a biomass plant which processes the empty fruit bunches (“EFB”) into dried long fibres for export to processes the empty fruit bunches (“EFB”) into dried long fibres for export to China. China. Third Party Palm Oil Processing Third Party Palm Oil Processing In 2017 the Group purchased approximately 998,400mt of FFB from third party In 2017 the Group purchased approximately 998,400mt of FFB from third party producers comprising of small plantations and local farmers, for processing producers comprising of small plantations and local farmers, for processing through its mills. The total FFB throughput at the Group’s mills in 2017 was 1.9 through its mills. The total FFB throughput at the Group’s mills in 2017 was 1.9 million mt producing 390,600mt of crude palm oil (“CPO”). million mt producing 390,600mt of crude palm oil (“CPO”). Rubber Plantations Rubber Plantations The Group has 425ha of established rubber plantations which in 2017, produced The Group has 425ha of established rubber plantations which in 2017, produced 812mt of raw latex and rubber lumps. The size of rubber plantations will reduce 812mt of raw latex and rubber lumps. The size of rubber plantations will reduce further as the Group replaces ageing rubber trees with oil palm. further as the Group replaces ageing rubber trees with oil palm. Annual Report 2017 | Anglo-Eastern Plantations Plc Annual Report 2017 | Anglo-Eastern Plantations Plc 3 3 3 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Financial Highlights Financial Highlights Revenue Revenue Profit before tax: Profit before tax: - before biological assets (“BA”) movement - before biological assets (“BA”) movement - after BA movement - after BA movement Basic Earnings per ordinary share (“EPS”): Basic Earnings per ordinary share (“EPS”): - before BA movement - before BA movement - after BA movement - after BA movement Dividend (cents) Dividend (cents) Anglo-Eastern Plantations Plc Anglo-Eastern Plantations Plc 2017 2017 $m $m 2016 2016 $m $m 291.9 291.9 246.2 246.2 70.0 70.0 69.7 69.7 57.5 57.5 60.8 60.8 91.80cts 91.80cts 91.37cts 91.37cts 4.0cts 4.0cts 82.16cts 82.16cts 87.58cts 87.58cts 3.8cts 3.8cts % % FTSE 100 FTSE 100 Share Price Share Price Turnover by volume Turnover by volume Annual Report 2017 | Anglo-Eastern Plantations Plc Annual Report 2017 | Anglo-Eastern Plantations Plc 4 4 4 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Financial Highlights Financial Highlights 300,000 300,000 250,000 250,000 200,000 200,000 150,000 150,000 100,000 100,000 50,000 50,000 0 0 Revenue ($000) Revenue ($000) Profit Before Tax Before BA Profit Before Tax Before BA ($000) ($000) 100,000 100,000 80,000 80,000 60,000 60,000 40,000 40,000 20,000 20,000 0 0 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 Basic Earnings Per Share Basic Earnings Per Share Before BA ($, cents) Before BA ($, cents) Asset Value Per Share Asset Value Per Share ($, cents) ($, cents) 140.00 140.00 120.00 120.00 100.00 100.00 80.00 80.00 60.00 60.00 40.00 40.00 20.00 20.00 0.00 0.00 1,200 1,200 1,000 1,000 800 800 600 600 400 400 200 200 0 0 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 Annual Report 2017 | Anglo-Eastern Plantations Plc Annual Report 2017 | Anglo-Eastern Plantations Plc 5 5 5 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Key Information Key Information Age of Palm Trees Age of Palm Trees (as at 31/12/17) (as at 31/12/17) (as at 31/12/16) (as at 31/12/16) 13% 13% 18% 18% 13% 13% 18% 18% 27% 27% 26% 26% 42% 42% 43% 43% Immature Immature Young Young Prime Prime Old Old Own FFB & Outside Purchase (mt) Own FFB & Outside Purchase (mt) 1,200,000 1,200,000 1,000,000 1,000,000 800,000 800,000 600,000 600,000 400,000 400,000 200,000 200,000 - - 450,000 450,000 400,000 400,000 350,000 350,000 300,000 300,000 250,000 250,000 200,000 200,000 150,000 150,000 100,000 100,000 50,000 50,000 - - 2013 2013 2014 2014 2015 2015 2016 2016 2017 2017 Own FFB Own FFB Outside Purchase Outside Purchase Crude Palm Oil & Palm Kernel Production (mt) Crude Palm Oil & Palm Kernel Production (mt) 2013 2013 2014 2014 2015 2015 2016 2016 2017 2017 CPO CPO Palm Kernel Palm Kernel Annual Report 2017 | Anglo-Eastern Plantations Plc Annual Report 2017 | Anglo-Eastern Plantations Plc 6 6 6 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Shareholder Information Market capitalisation The market capitalisation of Anglo-Eastern Plantations Plc at 31 December 2017 was £305 million, the ordinary share price at the close of business on 19 April 2018 was 760 pence giving a market capitalisation of £301 million. Website www.angloeastern.co.uk contains various details and information on the Company and its operations, together with all the key historical financial and regulatory information on the Company. The website is updated on a continuing basis for all Company announcements and other relevant developments, including share price movements. The website was upgraded to enable shareholders and investors to select and receive e-mail alerts from the Company on selected regulatory news. Shareholders are encouraged to use the e-mail alerts to follow the development of the Company. Investor relations Investors requiring further information on the Company are invited to contact: Dato’ John Lim Ewe Chuan Executive Director, Corporate Finance and Corporate Affairs Anglo-Eastern Plantations Plc Quadrant House, 6th Floor 4 Thomas More Square London E1W 1YW United Kingdom Tel: Fax: 44 (0) 20 7216 4621 44 (0) 20 7767 2602 Registrar Administrative queries about holdings of AEP can be directed to the Company's registrar: Link Asset Services The Registry 34 Beckenham Road Beckenham Kent BR3 4TU United Kingdom Tel: Tel: 0871 664 0300 (UK) +44 371 664 0300 (international) In November 2017, the Link Group completed the takeover of Capita Plc including Capita Assets Services, the provider of registry services to AEP. Capita Assets Services has since been renamed as Link Asset Services. Shareholders can view and update their account details via the Link website, details of which can be found at www.signalshares.com. Annual General Meeting The 33rd Annual General Meeting of the Company will be held at the offices of UHY Hacker Young LLP, 6th floor Quadrant House, 4 Thomas More Square, London E1W 1YW on 25 June 2018. Notice of the meeting is set out at the end of this Annual Report on pages 102 to 105. Annual Report 2017 | Anglo-Eastern Plantations Plc 7 7 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Shareholder Information Amalgamation of accounts Shareholders receiving multiple copies of Company mailings as a result of a number of accounts being maintained in their name are invited to write to the Company's registrar at the above address to request that their accounts be amalgamated. Payment of dividends While the dividend is declared in US Dollar, shareholders can choose to receive dividends in Pounds Sterling. In the absence of any specific instruction up to the date of closing of the register, shareholders with addresses in the UK are deemed to have elected to receive their dividends in Sterling and those with addresses outside the UK in US Dollar. The Pounds Sterling equivalent dividend will be paid at the exchange rate ruling at the date of closing of the register. Electronic communications Link Asset Services offer AEP shareholders the opportunity to manage their shareholding through the Signal shares portal. Registration is free and can be used to manage shareholdings quickly and securely. To register for this service, please go to www.signalshares.com and follow the instructions. Annual Report 2017 | Anglo-Eastern Plantations Plc 8 8 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Chairman’s Statement The Group’s FFB production in 2017 was 929,600mt, 4% higher than the previous year of 897,700mt. The better crop production was attributed primarily to the recovery of yield in the Riau region following a sharp drop last year and a higher yield from maturing trees in Kalimantan. The throughput at the six mills in 2017 was at a record high as the Group purchased more external crops. External crops were in abundance and readily available, especially in the first half of the year, due to a strong recovery of FFB production after the El-Nino weather disruption. FFB bought-in from surrounding smallholders was 998,400mt (2016: 813,700mt), 23% higher, due to the Group’s favourable purchasing policy. The mills, as a result, processed 12% more FFB and increased CPO production by 11% to 390,600mt (2016: 353,100mt). Revenue and profitability were in line with increased CPO production and better prices. The average CPO price ex- Rotterdam in 2017 was 2% higher at $718/mt, compared to $706/mt in 2016. The Group’s revenue was higher by 19% at $291.9 million, compared to $246.2 million achieved in 2016. The operating profit for the Group in 2017, before the biological asset (“BA”) movement was $66.7 million, 27% higher compared to $52.5 million achieved in 2016. Earnings per share, before BA movement, increased by 12% to 91.80cts, from 82.16cts in 2016. The Group’s operating profit after BA for 2017 was at $66.4 million after a downward BA movement of $0.3 million as compared to 2016 operating profit of $55.9 million after an upward BA movement of $3.4 million. The Group planted 3,500ha of oil palms in 2017 of which 1,694ha comprised of replanting. Replanting is expected to continue this year in the 480ha of older plantations where the palm trees have reached the end of their productive life with dropping yield. New planting did not pick up in 2017 due primarily to delays in finalising agreements with villagers for land compensation payments in South Sumatera, Bangka and Kalimantan. This issue is likely to continue as villagers demand higher compensation for their land. The Group has two biogas plants in commercial operation and generated over 11,500MWh of electricity in 2017. The revenue from the sale of surplus electricity to the national grid was $0.87 million. The 2 megawatt biogas plant in Bengkulu has underperformed since it started operation in May 2017 due to frequent power blackouts in the state electricity supply caused by faulty transmission lines and unstable power voltage. The situation, however, is expected to improve in the second half of 2018 after government upgrade and repairs of transmission lines are completed. In the coming years, revenue from the sale of surplus electricity is expected to increase further as the third biogas plant in Kalimantan has been completed and has been operating since the first quarter of 2018. The use of clean energy in the mills will further reduce their reliance on fossil fuels and improve the Group’s carbon footprint. In 2018 the Group will embark on the development of its seventh mill and its fourth biogas plant in North Sumatera. The 60mt/hr mill is estimated to cost approximately $19 million which is higher than the cost of the existing mills, as it is expected that the civil and structural work including earthwork will be much greater due to the condition of the soil. The timing of construction of the mill in Labuhan Bilik coincides with the maturity of the trees as the FFB production is projected to peak in the next two years and an in-house mill would cut down the transport cost on the 180 km journey to the currently utilised mill. The biogas plant is estimated to cost an additional $3.8 million. After an absence of one year, AEP, with effect from 1 June 2017, has been included in the Financial Times Stock Exchange (“FTSE”) Small Cap and FTSE All Shares Index. The Indian government in March 2018 raised import tax on both CPO and refined palm oil, the fourth increase in less than six months and the highest level in more than a decade, this increase was designed to protect the local refineries and support local oilseeds production. This may make CPO and refined palm oil more expensive and may impact negatively on the consumption in India, the largest consumer of CPO. Annual Report 2017 | Anglo-Eastern Plantations Plc 9 9 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Chairman’s Statement In Europe, which is the second largest consumer of palm oil, the European Parliament’s introduction of a single certification scheme for palm oil entering the European Union (“EU”) market and the phase out of the use of palm biodiesel by year 2020 may decrease the demand for CPO. The adverse perception of palm oil continues to feature in recent years, touching on issues including deforestation, emission of greenhouse gases, planting on peatland and land rights. Notwithstanding the aforementioned, global demand for palm oil should continue to be strong given the CPO’s attractive price discount to soybean oil. The Board is mindful that given the anticipated further capital commitments, the level of dividend needs to be balanced against the planned expenditure, as well as other viable investment opportunities in the countries where the Group operates. The Board is also mindful of shareholders’ sentiment and therefore declared a final dividend of 4.0cts per share, in line with our reporting currency, in respect of the year to 31 December 2017 (2016: 3.8cts equivalent). Subject to the approval by shareholders at the Annual General Meeting, the final dividend will be paid on 13 July 2018 to those shareholders on the register on 8 June 2018. On behalf of the Board of Directors, I would like to convey our sincere thanks to our management and all employees of the Group for their dedication, loyalty, resourcefulness, commitment and contribution to the success of the Group. I would also like to take this opportunity to thank shareholders, business associates, government authorities and all other stakeholders for their continued confidence, understanding and support for the Group. Madam Lim Siew Kim Chairman 24 April 2018 Annual Report 2017 | Anglo-Eastern Plantations Plc 10 10 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Strategic Report Introduction The strategic report has been prepared to provide shareholders with information to complement the financial statements. This report may contain forward-looking statements, which have been included by the Board in good faith based on information available up to the time of approval of this report. Such statements should be treated with caution going forward given the uncertainties inherent with economic and business risks of the Group. Business Model The Group will continue to focus on its strength and expertise, which is planting more oil palms. This includes replanting old palms with low yield, replacing old rubber trees with palm trees and building more mills to process the FFB. The Group has, over the years, created value to shareholders through expansion in a responsible way. The Group remains committed to use its available resources to develop the land bank in Indonesia as regulatory constraints permit. The Indonesian government has, in recent years, passed laws to prioritise domestic investments and to limit foreign direct investments over national interest, including a 100,000 ha limit on licensed development of oil palms for companies that are not listed in Indonesia or under majority local ownership. The Group’s objectives are to provide appropriate returns to investors in the long-term from its operations as well as through the expansion of the Group’s business, to foster economic progress in localities of the Group’s activities and to develop the Group’s operations in accordance with the best corporate social responsibility and sustainability standards. We believe that sustainable success for the Group is best achieved by acting in the long-term interests of our shareholders, our partners and society. Our Strategy One of the Group’s objectives is to provide an appropriate level of returns to the investors and to enhance shareholders’ value. Profitability however is very much dependent on the CPO price, which is volatile and determined by supply and demand. The Group believes in the long-term viability of palm oil as it can be produced more economically than other competing oils and remains the most productive source of vegetable oil in a growing population. The Group’s strategies therefore focus on maximising yield per hectare above 22mt/ha, mill production efficiency of 110%, minimising production costs below $300/mt and streamlining estate management. For the year under review, the Group achieved a yield of 17.9mt/ha, 134% mill efficiency and production cost of $281/mt on Indonesian operations. This compared to 2016 where the Group achieved a yield of 17.3mt/ha, 119% mill efficiency and production cost of $275/mt. Despite stiff competition for external crops from surrounding millers, the Group is committed to purchasing more external crops from third parties at competitive, yet fair prices, to maximise the production efficiency of the mills. With higher throughput, the mills would achieve economies of scale in production. A mill achieves 100% mill efficiency when it operates 16 hours a day for 300 days per annum. In line with the commitment to reduce its carbon footprint, the Group plans to construct, in stages, biogas plants at all of its mills to trap the methane gas emitted from treatment of palm mill effluents to generate electrical power and at the same time reduce the consumption of fossil fuel. It plans to sell the surplus electricity and progressively reduce the greenhouse gas emissions per metric ton of CPO produced in the next few years. The Group will continue to follow-up and offer competitive and fair compensation to villagers so that land can be cleared and can be planted on. Financial Review The financial statements have been prepared in accordance with International Financial Reporting Standards and its interpretations (IFRS and IFRIC interpretations) issued by the International Accounting Standards Board (“IASB”) as adopted by the EU and with those parts of the Companies Act 2006 applicable to companies preparing their accounts under IFRS. Annual Report 2017 | Anglo-Eastern Plantations Plc 11 11 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Strategic Report For the year ended 31 December 2017, revenue for the Group was $291.9 million, 19% higher than $246.2 million reported in 2016 due primarily to higher CPO production and a higher CPO price. The Group’s operating profit for 2017, before biological asset movement, was $66.7 million, 27% more than $52.5 million in 2016. FFB production for 2017 was 929,600mt, 4% higher than the 897,700mt produced in 2016. The yield for 2017 improved marginally due to strong recovery of production in Riau and higher yield from maturing trees in Kalimantan. FFB bought-in from local smallholders in 2017 was 998,400mt (2016: 813,700mt), 23% higher compared to 2016. During the year, the Group’s mills processed 1.9 million mt of FFB, 12% higher than last year of 1.69 million mt. CPO production as a result was 11% higher at 390,600mt, compared to 353,100mt in 2016. Profit before tax and after BA movement for the Group was $69.7 million, 15% higher compared to a profit of $60.8 million in 2016. The BA movement was a debit of $0.3 million, compared to a credit of $3.4 million in 2016. The average CPO price ex-Rotterdam for 2017 was $718/mt, 2% higher than 2016 of $706/mt. Earnings per share before BA movement increased by 12% to 91.80cts compared to 82.16cts in 2016. Earnings per share after BA movement increased from 87.58cts to 91.37cts. Going Concern The Group’s balance sheet remains strong. As at 31 December 2017, the Group had cash and cash equivalents of $139.5 million and borrowings of $27.9 million, giving it a net cash position of $111.6 million, compared to $84.1 million in 2016. The Group’s borrowings in the year reduced to $27.9 million (2016: $34.1 million). For these reasons, the Directors adopt a going concern basis of accounting and believe the Group will continue in operation and meet its liabilities for a period of at least twelve months from the date of approval of the financial statements. Business Review Indonesia FFB production in North Sumatera, which aggregates the estates of Tasik, Anak Tasik, Labuhan Bilik, Blankahan, Rambung, Sg Musam and Cahaya Pelita (“CPA”), produced 289,900mt in 2017 (2016: 303,500mt), 4% lower than 2016. Replanting of over 1,600ha of oil palm in Tasik Raja and Anak Tasik contributed to the overall lower production. During the year, 82ha of old rubber trees in Rambung were also replanted with oil palm. The average yield in CPA remains low at 16.8mt/ha as the FFB production during the year was disrupted by flash floods caused by heavy rain exceeding 4,500mm per annum that regularly occurred over 2,000ha of low laying plantation. The frequent and prolonged flooding also resulted in an incomplete manuring program which caused the palm growth to be retarded in some 500ha. To minimise disruption caused by flooding, new planting in some 100ha was carried out on a raised platform of one metre high and four metres wide, which was completed in August 2017. In some low laying areas, mounding of palm was carried out to minimise the impact of flooding on existing palms. In 2018 CPA is expected to construct more water gates, mud bunds and dredging of rivers and drains to reduce the impact of flash floods. Ganoderma fungus and Upper Stem Rot which attack about 10% of the productive palms in Anak Tasik remain a serious threat. Water management, good sanitation and high standards of agronomic practices remain the main priority to avoid spreading the diseases, including proper disposal of severely diseased palms after detection. Soil mounding on infected palms was carried out to lengthen the economic lifespan of oil palms, and the continuation of replanting in 2017 and 2018 in Anak Tasik will significantly reduce the threat of Ganoderma attack. There was no serious insect damage by the Oryctes beetle, other leaf eating pests, wild animals or rats. The Blankahan biogas plant sold over 6,700 MWh of surplus electricity since it started commercial operation early this year and generated $0.53 million in revenue. The biomass plant also exported 7,228mt of dried long fibres worth over $0.64 million in 2017 compared to 4,000mt last year at $0.32 million. Annual Report 2017 | Anglo-Eastern Plantations Plc 12 12 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Strategic Report FFB production in Bengkulu and South Sumatera, which aggregates the estates of Puding Mas (“MPM”), Alno, KKST, ELAP and RAA produced 334,000mt (2016: 337,100mt), 1% lower than 2016. Exceptionally high rainfall of over 5,500mm in Bengkulu has affected the collection of crops and quality of oil. Resurfacing of damaged roads using sirtu was delayed until August 2017 until the contractors were able to obtain stone mining licenses from the local authorities. In total 375km of roads were either resurfaced, graded or compacted in 2017. Some remote locations can only be accessed by tractors and four-wheel drive vehicles for transport of FFB, in-filling and maintenance work. A total of approximately 22,000 trees were planted at vacant spots in ELAP and KKST which were previously damaged by wildlife. As most of the estates are situated close to forest reserves, wild boars and herds of elephants continued to damage palm trees. Deep trenches and fencing provide temporary relief. The replanting exercise has raised the stems per ha in both ELAP and KKST estates to about 94 palms/ha. Over 71,000mt of EFB was applied to over 1,000ha of oil palm field to improve the soil condition. The protracted negotiation with the villagers over land compensation will have an effect on the future planting in Bengkulu and South Sumatera. The MPM biogas plant which began commercial operation in May 2017 sold over 4,800 MWh of surplus electricity and generated $0.3 million in revenue in 2017. FFB production in the Riau region, comprising Bina Pitri estates, produced 124,500mt in 2017 (2016: 111,100mt), 12% higher than 2016. Conducive rainfall patterns have resulted in higher yield and rapid recovery from the severe drought and haze in 2015. External crop purchase at the mill also exceeded last year’s purchase by 29%. Overall CPO production improved by 20% to 69,200mt compared to 57,800mt in 2016. Going forward competition for external crops will remain a challenge due to more up and coming mills in the surrounding areas of Bina Pitri. FFB production in Kalimantan which comprises of the Sawit Graha Manunggal (“SGM”) and Kahayan Agro Plantation (“KAP”) estates produced 158,000mt in 2017 (2016: 121,800mt) 30% higher than 2016 as more trees matured and reached peak production age. However, exceptionally high rainfall in March and April 2017 had affected the harvest of fruits and quality of oil produced in SGM. In the months that followed, SGM incurred considerably higher costs to resurface roads using RT20 chemicals, sirtu and laterite. The height of some low laying access roads was raised to counter floods during the rainy season and to ensure efficient evacuation of FFB. Bagworm attack in SGM was under control and was below the 5% threshold of its planting. Pesticide containing Klorantraniliprol and Achepate was sprayed bi-monthly until infestation was eradicated. In the year, over 400ha of palm trees in KAP matured leading to its first harvest. The FFB from KAP was transported over 600km to SGM mill for processing. Over 4,000ha has been planted with oil palm in KAP. CPO sold in Kalimantan, however, fetched a lower price and is at a discount to mills in Sumatera due to higher logistics costs caused by the distance to the refinery and poor road infrastructure. During the year the Group engaged an independent agronomic consultant to make field visits for underperforming estates in Indonesia to provide advice on optimizing field disciplines and improving crop yields. The Board believes that with closer monitoring of field performance and improvements made, the crop yield should further improve in the coming years. Overall bought-in crops for Indonesian operations were 23% higher at 998,400mt for the year 2017 (2016: 813,700mt). The average oil extraction rate from our mills was 20.5% in 2017 (2016: 20.9%). Malaysia FFB production in 2017 was 9% lower at 21,900mt, compared to 24,000mt in 2016. The Malaysian operations continued to face a severe shortage of workers due to difficulty in recruiting foreign workers which hampered harvesting and estate maintenance work such as fertilizing, pruning, weeding and replanting. Despite the increase in wages and various cash incentives introduced by management, the estate continued to lose its foreign workers who left for better wages and working conditions in the city. The shortage of labour is the biggest challenge facing the industry in Malaysia. In 2018, the Group has begun to recruit workers from other countries to complement its Indonesian workforce. In 2017, the Malaysian plantations had $0.6 million pre-tax profit after BA movement compared to $0.8 million in 2016. Annual Report 2017 | Anglo-Eastern Plantations Plc 13 13 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Strategic Report Commodity Prices The CPO ex-Rotterdam price started the year at a high of $790mt (2016: $570/mt) but softened as production in both Indonesia and Malaysia recovered from the low of last year. It dipped to its lowest level at $640/mt in the middle of June 2017, before increasing to the $700/mt range before news of a steep levy imposed by the Indian government on the import of CPO and refined oil into India brought the price down again. Its peak at $852/mt in the middle of January 2017 was due to low stock inventory. It ended the year at $670/mt (2016: $795/mt), averaging $718/mt for the year, 2% higher than last year (2016: $706/mt). The CPO inventory was at the highest in two years. CPO CIF Rotterdam Over a period of ten years, CPO price has touched a high of $1,400/mt and a low of just above $400/mt. The average price over the ten years is about $837/mt. CPO price is under tremendous pressure and remains unpredictable due to the impending ban on import of palm biodiesel into the EU by 2020 and the high levy of CPO imports into India. It was reported that about 46% of total palm oil imports of 6.5 million metric tonnes into the EU were used in biofuels. Weather remains an important factor that will affect not just the production of CPO but other oilseeds. Rubber prices averaged $1,607/mt for 2017 (2016: $1,324/mt). Our small area of 425ha of mature rubber contributed a revenue of $1.3 million in 2017 (2016: $1.1 million). Corporate Development In 2017, the Group opened up new land and planted 1,808ha of oil palm mainly in Kalimantan, boosting planted area including the smallholder cooperative scheme, known as Plasma, by 2.5% to 68,310ha (2016: 66,670ha). This excludes the replanting of 1,694ha of oil palm in North Sumatera. New plantings remain behind schedule due to delays in finalising settlement of land compensation with villagers in South Sumatera, Bangka and Kalimantan. The villagers seek compensation beyond what the Group considered fair and reasonable resulting in protracted negotiations. Annual Report 2017 | Anglo-Eastern Plantations Plc 14 14 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Strategic Report Strategic Report Strategic Report The 2 megawatt biogas plant in Bengkulu is supplying electricity to the State Electricity Company. In the eight The 2 megawatt biogas plant in Bengkulu is supplying electricity to the State Electricity Company. In the eight The 2 megawatt biogas plant in Bengkulu are supplying electricity to the State Electricity Company. In the eight months of operation, it generated 4,807MWh of electricity worth $0.3 million. The sale of electricity is, however, months of operation, it generated 4,807MWh of electricity worth $0.3 million. The sale of electricity is, however, months of operation, it generated 4,807MWh of electricity worth $0.3 million. The sale of electricity is, however, frequently interrupted by power blackouts in the state electricity supply caused by faulty transmission lines and frequently interrupted by power blackouts in the state electricity supply caused by faulty transmission lines and frequently interrupted by power blackouts in the state electricity supply caused by faulty transmission lines and unstable power voltage. The situation is likely to improve in the second half of 2018 after upgrade and repairs of unstable power voltage. The situation is likely to improve in the second half of 2018 after upgrade and repairs of unstable power voltage. The situation is likely to improve in the second half of 2018 after upgrade and repairs of transmission lines are completed. The third biogas plant in Kalimantan has been completed and is ready for transmission lines are completed. The third biogas plant in Kalimantan has been completed and is ready for transmission lines are completed. The third biogas plant in Kalimantan has been completed and is ready for commissioning. The three biogas plants will further reduce the mills’ reliance on fossil fuels and improve the Group’s commissioning. The three biogas plants will further reduce the mills’ reliance on fossil fuels and improve the Group’s commissioning. The three biogas plants will further reduce the mills’ reliance on fossil fuels and improve the Group’s carbon footprint. With the current shortage of power supply in North Sumatera, the Group is conducting a feasibility carbon footprint. With the current shortage of power supply in North Sumatera, the Group is conducting a feasibility carbon footprint. With the current shortage of power supply in North Sumatera, the Group is conducting a feasibility study to build its fourth biogas plant in Rantau Prabat which is expected to cost up to $3.8 million. The state study to build its fourth biogas plant in Rantau Prabat which is expected to cost up to $3.8 million. The state study to build its fourth biogas plant in Rantau Prabat which is expected to cost up to $3.8 million. The state electricity company has reacted positively to the proposal to build a biogas plant in North Sumatera. electricity company has reacted positively to the proposal to build a biogas plant in North Sumatera. electricity company has reacted positively to the proposal to build a biogas plant in North Sumatera. The Group will start construction of its seventh mill in North Sumatera in 2018. The 60mt/hr mill is expected to cost The Group will start construction of its seventh mill in North Sumatera in 2018. The 60mt/hr mill is expected to cost The Group will start construction of its seventh mill in North Sumatera in 2018. The 60mt/hr mill is expected to cost $19 million and will be substantially funded by internal cash flows. Costs of civil and structural works including $19 million and will be substantially funded by internal cash flows. Costs of civil and structural works including $19 million and will be substantially funded by internal cash flows. Costs of civil and structural works including earthworks would be higher as the mill is built on shallow peat soil. The site needs to be compacted with mineral soil earthworks would be higher as the mill is built on shallow peat soil. The site needs to be compacted with mineral soil earthworks would be higher as the mill is built on shallow peat soil. The site needs to be compacted with mineral soil and 38 metre long concrete piles to support the construction of the mill and storage facilities. The Group has over the and 38 metre long concrete piles to support the construction of the mill and storage facilities. The Group has over the and 38 metre long concrete piles to support the construction of the mill and storage facilities. The Group has over the past three years explored various sites outside the plantation and along the Barumun river for the construction of a past three years explored various sites outside the plantation and along the Barumun river for the construction of a past three years explored various sites outside the plantation and along the Barumun river for the construction of a mill, however, it was not able to obtain the necessary permit which allows conversion of agricultural into industrial mill, however, it was not able to obtain the necessary permit which allows conversion of agricultural into industrial mill, however, it was not able to obtain the necessary permit which allows conversion of agricultural into industrial land. land. land. New Biogas Plant New Biogas Plant New Biogas Plant Corporate Social Responsibility Corporate Social Responsibility Corporate Social Responsibility Corporate Social Responsibility (“CSR”) is an integral part of corporate self-regulation incorporated into our business Corporate Social Responsibility (“CSR”) is an integral part of corporate self-regulation incorporated into our business Corporate Social Responsibility (“CSR”) is an integral part of corporate self-regulation incorporated into our business model. Our Group embraces responsibility for the impact of its activities on the environment, consumers, employees, model. Our Group embraces responsibility for the impact of its activities on the environment, consumers, employees, model. Our Group embraces responsibility for the impact of its activities on the environment, consumers, employees, communities, stakeholders and all other members of the public sphere. In engaging the social dimension of CSR, the communities, stakeholders and all other members of the public sphere. In engaging the social dimension of CSR, the communities, stakeholders and all other members of the public sphere. In engaging the social dimension of CSR, the Group’s business has taken cognizance of the contribution and further enrichment of its employees while continuing Group’s business has taken cognizance of the contribution and further enrichment of its employees while continuing Group’s business has taken cognizance of the contribution and further enrichment of its employees while continuing to make contributions to improve the well-being of the surrounding community. to make contributions to improve the well-being of the surrounding community. to make contributions to improve the well-being of the surrounding community. Annual Report 2017 | Anglo-Eastern Plantations Plc Annual Report 2017 | Anglo-Eastern Plantations Plc Annual Report 2017 | Anglo-Eastern Plantations Plc 15 15 15 15 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Strategic Report Strategic Report Strategic Report The majority of employees and their dependents in the plantations and mills are housed in self-contained The majority of employees and their dependents in the plantations and mills are housed in self-contained The majority of employees and their dependents in the plantations and mills are housed in self-contained communities built by the Group. The employees and their dependents are provided with free housing, clean water communities built by the Group. The employees and their dependents are provided with free housing, clean water communities built by the Group. The employees and their dependents are provided with free housing, clean water and electricity. The Group also builds, provides and repairs places of worship for workers of different religious faiths and electricity. The Group also builds, provides and repairs places of worship for workers of different religious faiths and electricity. The Group also builds, provides and repairs places of worship for workers of different religious faiths as well as schools and sports facilities in these communities. Over the years, the Group has built a total of 73 as well as schools and sports facilities in these communities. Over the years, the Group has built a total of 73 as well as schools and sports facilities in these communities. Over the years, the Group has built a total of 73 mosques and 18 churches across its estates. During the fasting month, the management team frequently broke fast mosques and 18 churches across its estates. During the fasting month, the management team frequently broke fast mosques and 18 churches across its estates. During the fasting month, the management team frequently broke fast with the employees from the estates and mills as well as with surrounding villagers. It also sponsored and donated with the employees from the estates and mills as well as with surrounding villagers. It also sponsored and donated with the employees from the estates and mills as well as with surrounding villagers. It also sponsored and donated cows for sacrifice to celebrate religious festivals. The Group spent $326,000 in 2017 to maintain these amenities and cows for sacrifice to celebrate religious festivals. The Group spent $326,000 in 2017 to maintain these amenities and cows for sacrifice to celebrate religious festivals. The Group spent $326,000 in 2017 to maintain these amenities and support the communal activities. support the communal activities. support the communal activities. The Group provides free education for all employees’ children in the local plantations and communities where they The Group provides free education for all employees’ children in the local plantations and communities where they The Group provides free education for all employees’ children in the local plantations and communities where they work. In addition, the Group provides computers and funding to construct educational facilities including laboratories work. In addition, the Group provides computers and funding to construct educational facilities including laboratories work. In addition, the Group provides computers and funding to construct educational facilities including laboratories and libraries. The salaries of teachers in the estates and the cost of school buses to transport employees’ children to and libraries. The salaries of teachers in the estates and the cost of school buses to transport employees’ children to and libraries. The salaries of teachers in the estates and the cost of school buses to transport employees’ children to schools are provided by the Group. Over the years a total of 37 schools which comprised of 20 pre-schools, 11 schools are provided by the Group. Over the years a total of 37 schools which comprised of 20 pre-schools, 11 schools are provided by the Group. Over the years a total of 37 schools which comprised of 20 pre-schools, 11 primary schools, 5 secondary schools and 1 high school have been built with a combined enrolment of over 4,000 primary schools, 5 secondary schools and 1 high school have been built with a combined enrolment of over 4,000 primary schools, 5 secondary schools and 1 high school have been built with a combined enrolment of over 4,000 students. It currently employs 150 teachers in the estates. The Group bought an additional school bus in Tasik Raja students. It currently employs 150 teachers in the estates. The Group bought an additional school bus in Tasik Raja students. It currently employs 150 teachers in the estates. The Group bought an additional school bus in Tasik Raja taking the tally of school buses operated by the Group in 2017 to 35 vehicles. In the year, the Group spent some taking the tally of school buses operated by the Group in 2017 to 35 vehicles. In the year, the Group spent some taking the tally of school buses operated by the Group in 2017 to 35 vehicles. In the year, the Group spent some $693,000 on running the schools and operating the buses. $693,000 on running the schools and operating the buses. $693,000 on running the schools and operating the buses. As part of the Group’s contribution to education, it provides scholarships to qualified students from the communities As part of the Group’s contribution to education, it provides scholarships to qualified students from the communities As part of the Group’s contribution to education, it provides scholarships to qualified students from the communities as well as our employees’ children to pursue tertiary education. It started a partnership with a university in North as well as our employees’ children to pursue tertiary education. It started a partnership with a university in North as well as our employees’ children to pursue tertiary education. It started a partnership with a university in North Bengkulu in 2013 to sponsor and provide students with the chance to pursue higher education. During 2017, over Bengkulu in 2013 to sponsor and provide students with the chance to pursue higher education. During 2017, over Bengkulu in 2013 to sponsor and provide students with the chance to pursue higher education. During 2017, over 300 scholarships had been awarded at a cost of $115,000. Similarly, 92 children of our employees were sponsored, 300 scholarships had been awarded at a cost of $115,000. Similarly, 92 children of our employees were sponsored, 300 scholarships had been awarded at a cost of $115,000. Similarly, 92 children of our employees were sponsored, which cost over $80,000 since its introduction in 1999, to study in various universities in Indonesia. The popular which cost over $80,000 since its introduction in 1999, to study in various universities in Indonesia. The popular which cost over $80,000 since its introduction in 1999, to study in various universities in Indonesia. The popular courses taken ranged from Engineering, Education, Economics to Agriculture. 36 of them had successfully courses taken ranged from Engineering, Education, Economics to Agriculture. 36 of them had successfully courses taken ranged from Engineering, Education, Economics to Agriculture. 36 of them had successfully graduated from the universities with some of them now working for the Group. graduated from the universities with some of them now working for the Group. graduated from the universities with some of them now working for the Group. Professional healthcare for employees Staff houses Professional healthcare for employees Staff houses Professional healthcare for employees Staff houses The Group continues to provide free comprehensive health care for all its workers as we believe that every employee The Group continues to provide free comprehensive health care for all its workers as we believe that every employee The Group continues to provide free comprehensive health care for all its workers as we believe that every employee and their dependents should have easy access to health services. We have established 22 clinics operated by and their dependents should have easy access to health services. We have established 22 clinics operated by and their dependents should have easy access to health services. We have established 22 clinics operated by qualified doctors, nurses and hospital assistants in the estates. The Group upgraded two of its clinics in North qualified doctors, nurses and hospital assistants in the estates. The Group upgraded two of its clinics in North qualified doctors, nurses and hospital assistants in the estates. The Group upgraded two of its clinics in North Sumatera and Bengkulu to meet the minimum standard required by the government under the country’s Health and Sumatera and Bengkulu to meet the minimum standard required by the government under the country’s Health and Sumatera and Bengkulu to meet the minimum standard required by the government under the country’s Health and Social Security Agency. The upgraded clinics also provided health care services to the surrounding community Social Security Agency. The upgraded clinics also provided health care services to the surrounding community Social Security Agency. The upgraded clinics also provided health care services to the surrounding community without the need to travel to faraway cities for medical treatment. In addition, the Group organised fogging to prevent without the need to travel to faraway cities for medical treatment. In addition, the Group organised fogging to prevent without the need to travel to faraway cities for medical treatment. In addition, the Group organised fogging to prevent the spread of dengue mosquitoes. the spread of dengue mosquitoes. the spread of dengue mosquitoes. Annual Report 2017 | Anglo-Eastern Plantations Plc Annual Report 2017 | Anglo-Eastern Plantations Plc Annual Report 2017 | Anglo-Eastern Plantations Plc 16 16 16 16 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Strategic Report Strategic Report Strategic Report Annual family gathering Scholarship program for employees’ children Annual family gathering Scholarship program for employees’ children Annual family gathering Scholarship program for employees’ children In remote and isolated locations where piped water is not available, the Group drilled tube wells to provide clean In remote and isolated locations where piped water is not available, the Group drilled tube wells to provide clean In remote and isolated locations where piped water is not available, the Group drilled tube wells to provide clean water. This year it built a water treatment plant in Bengkulu to provide clean water to workers and staff at a cost of water. This year it built a water treatment plant in Bengkulu to provide clean water to workers and staff at a cost of water. This year it built a water treatment plant in Bengkulu to provide clean water to workers and staff at a cost of over $40,000. Related healthcare expenses including monthly contribution to Health and Social Security Agency in over $40,000. Related healthcare expenses including monthly contribution to Health and Social Security Agency in over $40,000. Related healthcare expenses including monthly contribution to Health and Social Security Agency in 2017 were $518,000. 2017 were $518,000. 2017 were $518,000. A strong commitment to CSR has a positive impact on employees’ attitudes and boosts employee recruitment. The A strong commitment to CSR has a positive impact on employees’ attitudes and boosts employee recruitment. The A strong commitment to CSR has a positive impact on employees’ attitudes and boosts employee recruitment. The Group realises that employees are valuable assets in order to run an efficient, effective, profitable and sustainable Group realises that employees are valuable assets in order to run an efficient, effective, profitable and sustainable Group realises that employees are valuable assets in order to run an efficient, effective, profitable and sustainable business and operations. Selected employees are given the opportunity to attend seminars and external training to business and operations. Selected employees are given the opportunity to attend seminars and external training to business and operations. Selected employees are given the opportunity to attend seminars and external training to enhance their working skills and capability. The Group constantly recruits potential field employees who are now sent enhance their working skills and capability. The Group constantly recruits potential field employees who are now sent enhance their working skills and capability. The Group constantly recruits potential field employees who are now sent to the Group’s central training facilities in Blankahan, set up in 2014, to undergo a rigorous twelve month training to the Group’s central training facilities in Blankahan, set up in 2014, to undergo a rigorous twelve month training to the Group’s central training facilities in Blankahan, set up in 2014, to undergo a rigorous twelve month training programme which includes theory and practical field work. A total of 303 employees have participated in the programme which includes theory and practical field work. A total of 303 employees have participated in the programme which includes theory and practical field work. A total of 303 employees have participated in the programme since its inception in 1993 with 35% still working for the Group. Over the years, one employee has programme since its inception in 1993 with 35% still working for the Group. Over the years, one employee has programme since its inception in 1993 with 35% still working for the Group. Over the years, one employee has successfully been promoted to General Manager level with another 17 being employed in various senior positions in successfully been promoted to General Manager level with another 17 being employed in various senior positions in successfully been promoted to General Manager level with another 17 being employed in various senior positions in the head office, plantations and mills. the head office, plantations and mills. the head office, plantations and mills. The Group also recognises its obligations to the wider farming communities in which it operates. The Indonesian The Group also recognises its obligations to the wider farming communities in which it operates. The Indonesian The Group also recognises its obligations to the wider farming communities in which it operates. The Indonesian authorities have established that not less than 20% of the newly planted areas acquired from 2007 onwards are to be authorities have established that not less than 20% of the newly planted areas acquired from 2007 onwards are to be authorities have established that not less than 20% of the newly planted areas acquired from 2007 onwards are to be reserved for the benefit of the smallholder cooperative scheme, known as Plasma, and the Group is integrating such reserved for the benefit of the smallholder cooperative scheme, known as Plasma, and the Group is integrating such reserved for the benefit of the smallholder cooperative scheme, known as Plasma, and the Group is integrating such smallholder developments alongside its estates. The Plasma development has commenced in stages for its estates smallholder developments alongside its estates. The Plasma development has commenced in stages for its estates smallholder developments alongside its estates. The Plasma development has commenced in stages for its estates in Sumatera and Kalimantan. Out of the 5,795ha of land compensated for Plasma, the Group has planted oil palm in in Sumatera and Kalimantan. Out of the 5,795ha of land compensated for Plasma, the Group has planted oil palm in in Sumatera and Kalimantan. Out of the 5,795ha of land compensated for Plasma, the Group has planted oil palm in 2,862ha. In 2017 the Group received 16,400mt of FFB from Plasma schemes compared to 12,300mt the previous 2,862ha. In 2017 the Group received 16,400mt of FFB from Plasma schemes compared to 12,300mt the previous 2,862ha. In 2017 the Group received 16,400mt of FFB from Plasma schemes compared to 12,300mt the previous year. Total revenue after deduction of management fees received by Plasma cooperatives was $1.6 million in 2017 year. Total revenue after deduction of management fees received by Plasma cooperatives was $1.6 million in 2017 year. Total revenue after deduction of management fees received by Plasma cooperatives was $1.6 million in 2017 against $1.2 million in 2016. There is a substantial increase in Plasma planting from 2016 of 1,712ha which is in line against $1.2 million in 2016. There is a substantial increase in Plasma planting from 2016 of 1,712ha which is in line against $1.2 million in 2016. There is a substantial increase in Plasma planting from 2016 of 1,712ha which is in line with the Group commitment. with the Group commitment. with the Group commitment. In order to aid the development of Plasma schemes, the Group provided corporate guarantees of over $17 million In order to aid the development of Plasma schemes, the Group provided corporate guarantees of over $17 million In order to aid the development of Plasma schemes, the Group provided corporate guarantees of over $17 million through its subsidiaries to local banks to cover loans raised by the cooperatives. The Group also assisted the through its subsidiaries to local banks to cover loans raised by the cooperatives. The Group also assisted the through its subsidiaries to local banks to cover loans raised by the cooperatives. The Group also assisted the cooperatives to obtain the proper land right certification from the local land office. cooperatives to obtain the proper land right certification from the local land office. cooperatives to obtain the proper land right certification from the local land office. The Group supported the Kas Desa smallholder village development programme to supplement the livelihood of the The Group supported the Kas Desa smallholder village development programme to supplement the livelihood of the The Group supported the Kas Desa smallholder village development programme to supplement the livelihood of the villages. The Group has to-date financed, developed and managed 22 smallholder village schemes of palm oil villages. The Group has to-date financed, developed and managed 22 smallholder village schemes of palm oil villages. The Group has to-date financed, developed and managed 22 smallholder village schemes of palm oil across four companies. across four companies. across four companies. In addition, the Group also develops infrastructure, such as the construction and repair of bridges maintained over In addition, the Group also develops infrastructure, such as the construction and repair of bridges maintained over In addition, the Group also develops infrastructure, such as the construction and repair of bridges maintained over 400km of external roads in 2017. The Group also provides initial aid and seed capital to villagers such as fruit 400km of external roads in 2017. The Group also provides initial aid and seed capital to villagers such as fruit 400km of external roads in 2017. The Group also provides initial aid and seed capital to villagers such as fruit seedlings, fish fries, cattle and ducks to start community sustainable programs. seedlings, fish fries, cattle and ducks to start community sustainable programs. seedlings, fish fries, cattle and ducks to start community sustainable programs. Annual Report 2017 | Anglo-Eastern Plantations Plc Annual Report 2017 | Anglo-Eastern Plantations Plc Annual Report 2017 | Anglo-Eastern Plantations Plc 17 17 17 17 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Strategic Report Strategic Report Strategic Report Road upgrade in Kalimantan Road upgrade in Kalimantan Road upgrade in Kalimantan Indonesian Sustainable Palm Oil (“ISPO”) Indonesian Sustainable Palm Oil (“ISPO”) Indonesian Sustainable Palm Oil (“ISPO”) The ISPO certification is legally mandatory for all plantations in Indonesia. In March 2012, ISPO, which is The ISPO certification is legally mandatory for all plantations in Indonesia. In March 2012, ISPO, which is The ISPO certification is legally mandatory for all plantations in Indonesia. In March 2012, ISPO, which is fundamentally aligned to RSPO (Roundtable on Sustainable Palm Oil) principles, has become the mandatory fundamentally aligned to RSPO (Roundtable on Sustainable Palm Oil) principles, has become the mandatory fundamentally aligned to RSPO (Roundtable on Sustainable Palm Oil) principles, has become the mandatory standard for Indonesian planters. standard for Indonesian planters. standard for Indonesian planters. A Steering Committee was established to work out a roadmap to support the ISPO implementation at mills and A Steering Committee was established to work out a roadmap to support the ISPO implementation at mills and A Steering Committee was established to work out a roadmap to support the ISPO implementation at mills and estates. Workshops and training sessions on occupational safety and healthcare were carried out to inculcate a estates. Workshops and training sessions on occupational safety and healthcare were carried out to inculcate a estates. Workshops and training sessions on occupational safety and healthcare were carried out to inculcate a safety culture in workplaces at all the estates and mills. In 2017 the regional government in North Sumatera awarded safety culture in workplaces at all the estates and mills. In 2017 the regional government in North Sumatera awarded safety culture in workplaces at all the estates and mills. In 2017 the regional government in North Sumatera awarded two operating companies in the Group Zero Accident Awards for 2016 in recognition of the companies’ effort to two operating companies in the Group Zero Accident Awards for 2016 in recognition of the companies’ effort to two operating companies in the Group Zero Accident Awards for 2016 in recognition of the companies’ effort to reduce accidents at the work place. The Group continued to upgrade its agricultural chemical stores and diesel fuel reduce accidents at the work place. The Group continued to upgrade its agricultural chemical stores and diesel fuel reduce accidents at the work place. The Group continued to upgrade its agricultural chemical stores and diesel fuel storage tanks in various plantations and mills to meet safety and environmental standards. Standard operating storage tanks in various plantations and mills to meet safety and environmental standards. Standard operating storage tanks in various plantations and mills to meet safety and environmental standards. Standard operating procedures were refined and documented based on sustainable oil palm best practices. It also conducts internal procedures were refined and documented based on sustainable oil palm best practices. It also conducts internal procedures were refined and documented based on sustainable oil palm best practices. It also conducts internal audits using an audit checklist adopted from the above practices to determine the level of compliance. The Group audits using an audit checklist adopted from the above practices to determine the level of compliance. The Group audits using an audit checklist adopted from the above practices to determine the level of compliance. The Group worked closely with appointed certification consultants in the implementation of ISPO standard. To-date eight worked closely with appointed certification consultants in the implementation of ISPO standard. To-date eight worked closely with appointed certification consultants in the implementation of ISPO standard. To-date eight companies have been ISPO certified including two in 2017. Another three companies have completed the second companies have been ISPO certified including two in 2017. Another three companies have completed the second companies have been ISPO certified including two in 2017. Another three companies have completed the second stage of ISPO audit while the certification audit has progressed to the second stage for another five companies. stage of ISPO audit while the certification audit has progressed to the second stage for another five companies. stage of ISPO audit while the certification audit has progressed to the second stage for another five companies. ISPO certification provides third party verification and confirmation that the companies are operating according to ISPO certification provides third party verification and confirmation that the companies are operating according to ISPO certification provides third party verification and confirmation that the companies are operating according to national and international standards. The Group targets full ISPO compliance by 2020. national and international standards. The Group targets full ISPO compliance by 2020. national and international standards. The Group targets full ISPO compliance by 2020. Annual Report 2017 | Anglo-Eastern Plantations Plc Annual Report 2017 | Anglo-Eastern Plantations Plc Annual Report 2017 | Anglo-Eastern Plantations Plc 18 18 18 18 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Strategic Report Care for the Environment and Sustainable Practices As a Group, we highlight the importance of creating awareness and implementation of good environmental management practices throughout the organisation. The Group has been consistently practising good agricultural practices such as zero burning, integrated pest management, land terracing and recycling of biomass. When it comes to replanting, the old palms felled are chipped and left to decompose at the site. This mitigates the greenhouse gas emissions commonly associated with open burning when land is cleared through the traditional method of slash-and-burn. It also enriches the organic matter in the soil. Where the land is undulating, we build terraces for planting which helps to prevent landslides, conserve the water and nutrients effectively and provide better accessibility for employees. Legume cover crops are planted to minimise soil erosion and preserve the soil moisture. In mature areas, fronds and EFB are placed inter-rows to allow the slow release of organic nutrients while minimising soil erosion especially sandy soil and degradation. Estates with sandy areas use soft grass, ferns and cut fronds to cover bare ground which increase soil moisture. Conservation drains are constructed to harvest and contain rainwater. The effluents discharged from the mills are fully treated in anaerobic lagoons and in some mills, there are extended aeration tanks for further treatment of the effluent. The final discharge is applied to the estate’s land where it is used as fertilisers. The Group’s three biogas plants will enhance the effluent treatment in the mills and at the same time mitigate greenhouse biogas emissions. The trapped biogas will be used to generate and supply power to its biomass plant and national grid without dependency on fossil fuels. Similar undertakings for the Group’s mills are planned and shall be implemented in stages. The Group intends to sell the surplus power generated. The Group is committed to implementing good agricultural practices as spelt out in its standard operating procedures for the planting of oil palm. Integrated Pest Management has been adopted to control the population of damaging pests and to improve biological balance. Barn Owls were introduced to control rats. Beneficial plants of Turnera subulata, Cassia cobanensis and Antigonon leptopus were planted to attract natural predators for biological control of bagworms and leaf-eating caterpillars. Weeds are controlled selectively by using more environmentally friendly and broad spectrum weed control herbicides such as Glyphosate which is also less costly. The use of Paraquat herbicide and chemicals has been reduced and minimised to control weeds and vermin.The sprayers are also trained in safety and spraying techniques. The chemicals are kept in designated storage and examined at regular intervals. Employees who handle the use of chemicals undergo medical examination routinely. Natural vegetation on uncultivable lands such as deep peat, very steep areas and riparian zones along watercourses are maintained to preserve biodiversity and wildlife corridors. The Group continues to comply and preserve the High Conservative Value (“HCV”) areas recognised by the Department of Forestry. All sacred and customary lands are also preserved by the Group out of respect for the local tribes and customs to pray and conduct their ritual ceremonies. The six mills in the Group are operating in compliance with criteria set by Program Penelitian Peringkat Kinerja Perusahaan (“PROPER”) overseen by the Indonesian Department of Environment. Many of the criteria set by PROPER are also part of the ISPO requirement. Three of the mills are officially graded and rated to adhere to the criteria set for the management of waste and compliance to environmental conservation over water resources, land development, air and sea pollution, dangerous and toxic waste treatment which impact the environment. No official grading is required for the rest of its mills even though they are in compliance. Principal risks and uncertainties The Group’s business involves risks and uncertainties of which the Directors currently consider the following to be material. There are or may be other risks and uncertainties faced by the Group that the Directors currently deem immaterial, or of which they are unaware, that may have a material adverse impact on the Group. The Board carries out a robust assessment of the principal risks facing the Group on an annual basis. Annual Report 2017 | Anglo-Eastern Plantations Plc 19 19 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Strategic Report Nature of the risk and its origin Country and regulatory The likelihood and impact of the the circumstances risk and under which the risk might be most relevant to the Company Mitigating or other considerations relevant in The Group’s operations are located Indonesia and substantially therefore rely on significantly economic and political stability in Indonesia. and upheaval Political deterioration security the in situation may cause disruption on the operation and consequently financial loss. The country has recently benefited from a period of relative political stability, steady economic growth and stable financial system. But during the Asian financial crisis in late 1990, there was civil unrest attributed to ethnic tensions in Indonesia. The some parts of Group’s operations were not interrupted by the regional security problems including occasional racial conflicts. Introduction of measures to rein in the country’s fiscal deficits. This included the exchange controls and restriction on repatriation of profit through payment of dividends. Transfer of profit from Indonesia to the United Kingdom (“UK”) will be restricted affecting servicing of UK obligations of dividends to shareholders. payment and the government The Board is not aware of any to attempt by impose exchange controls that would restrict the transfer of profits from Indonesia to the UK. The Board perceives that the Group will be able to continue to extract profits in Indonesia foreseeable future. its subsidiaries from the for Changes in land legislation. Based on National Land Agency Law 2 / 1999, mandatory restriction to land ownership by non-state plantation companies and companies not listed in Indonesia to 20,000ha per province and a total of 100,000ha in Indonesia. Mandatory reduction of foreign Indonesian in ownership plantations could force divestment of interests in Indonesia at below market values. The Group realises that there is a possibility that foreign owners may be required over time to partially divest ownership of Indonesia oil palm operations but has no reason to believe that such divestment would be anything other than at market value. Group failure to meet the standards expected in relation to bribery and corruption. Reputational damage and criminal sanctions. The Group continues to maintain strong controls in this area as Indonesia has been classified as by relatively the International Transparency Corruption Perceptions index. high risk Annual Report 2017 | Anglo-Eastern Plantations Plc 20 20 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Strategic Report Nature of the risk and its origin Exchange rates a and revenue costs CPO is a US Dollar denominated significant commodity proportion of in Indonesia (such as fertiliser and fuel) and development costs (such as heavy machinery and mill equipment) are imported and are US Dollar related. The likelihood and impact of the risk and the circumstances under which the risk might be most relevant to the Company Mitigating or other considerations relevant Adverse movements of Rupiah against US Dollar can have a negative effect on the operating costs and raise funding costs. The Board has taken the view that these risks are inherent in the business and feels that adopting hedging mechanisms to counter foreign the negative effects of exchange both are volatility difficult to achieve and would not be cost effective. Weather and natural disasters rainfall but Oil palms rely on regular sunshine and these weather patterns can vary and extremes such as unusual dry periods or, conversely, heavy rainfall leading to flooding locations can occur. in some in particular, will Dry periods, the short and in affect yields term. Drought induces medium moisture stress trees. in palm High levels of rainfall can disrupt estate operations and result in harvesting delays with loss of FFB or deterioration in fruit quality. Any delay in collection of harvested FFB during the rainy season could raise the level of free fatty acid (“FFA”) in the CPO. CPO with high FFA will be sold at a discount to market prices. Low level of sunshine could result in delay in in formation of FFB potential loss of revenue. resulting levels is Where appropriate, bunding built around flood prone areas and canals/drainage/retention ponds constructed and adapted either to to evacuate surplus water or maintain water in areas quick to dry out. Where practical, natural disasters are covered by insurance policies. Certain risks (including the risk of crop loss through fire, earthquake, flood and other perils potentially affecting the planted areas on the Group’s estates) if they materialise could dent the potential revenues, for which insurance cover is either not available or would in the opinion of the Directors be disproportionately expensive, are not insured. These floods or haze are risks of mitigated by the geographical spread of the plantations but an occurrence adverse uninsured event could result in the Group sustaining material losses. an of Annual Report 2017 | Anglo-Eastern Plantations Plc 21 21 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Strategic Report Nature of the risk and its origin Produce prices CPO is a primary commodity and is affected by the world economy, levels of inflation, and availability of such as soft oils alternative soybean oils. CPO price also moves in tandem with crude oil prices which the competitiveness of CPO as a source of biodiesel. determine Imposition of import controls or taxes in consuming and exporting Indonesian The countries. government in July 2015 imposed a $50/mt export levy to fund biodiesel subsidies. Indian In November 2017, government imposed a steep levy on the import of CPO and refined oil into India. single introduction of a The certification scheme for palm oil entering the EU market and phase out of the use of palm biodiesel by year 2020. the Hedging risk The Group's subsidiaries have borrowings in US Dollar. The likelihood and impact of the risk and the circumstances under which the risk might be most relevant to the Company Mitigating or other considerations relevant This may lead to significant price swings. The profitability and cash flow of the plantation operations depend upon world prices of CPO and upon the Group’s ability to sell CPO at price levels comparable with world prices, unlike soybean is sown annually and which production can be increased or decreased to match demand and prevailing prices. be moderated Directors believe that such swings should by continuous demand in economies like China, India and Indonesia. Larger exports would lead to a lower inventory of CPO which augurs well for future produce price. Indonesian The government allows free export of CPO but applies a sliding scale of duties on exports which allows producers economic margins. The export regarded as a levy may be CPO support to measure producers through an increase in biodiesel consumption. Despite the increase in levy in India and the ban on use of palm biodiesel in EU from 2020, CPO remains amongst the cheapest source of vegetable oil in a growing population. July 2015, levy will impact upon Reduced revenue and reduction in cash flow and profit. When CPO price is below $750/mt, the export tax the Group’s profit. When CPO price recovers to above $750/mt, the effective tax rate will be lower providing some relief to planters. Effective the Indonesian government imposed a progressive export tax from $3/mt for CPO exported above $750/mt. The higher import levy in India will raise the price of CPO and make it less competitive in the global oil market, thus reducing demand. The single certification plan for palm oil will make it more difficult to export palm oil to EU and the ban of palm biodiesel will hurt the demand of CPO in EU. The Group could face significant exchange losses in the event of depreciation of their local currency (i.e. Strengthening of US Dollar) - and vice versa. The risk is partially mitigated by US Dollar denominated cash balances and the higher average interest rate on Rupiah deposits which is 3.31% higher than on US the Dollar deposits whereas interest rate for Rupiah borrowings is about 4.84% higher compared to US Dollar borrowings. Annual Report 2017 | Anglo-Eastern Plantations Plc 22 22 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Strategic Report Nature of the risk and its origin The likelihood and impact of the risk and the circumstances under which the risk might be most relevant to the Company Mitigating or other considerations relevant Social, community and human rights issues could Any material breakdown in relations between the Group and the host population in the vicinity of the the operations Group’s operations. The plantations hire large numbers of people and have economic importance for local communities in the areas of the Group’s operations. significant disrupt Communication breakdown would cause disruption on the operation and consequently financial loss. local living standards The Group endeavours to mitigate this risk by liaising regularly with representatives of surrounding villages and by seeking to improve local through mutually beneficial economic and social interaction with the local villages. In particular, the Group, when possible, gives priority to applications for employment from members of the local population and supports specific initiatives to encourage farmers and tradesmen to act as suppliers to the Group, its employees and their dependents. The Group spends considerable sums of money constructing new roads and bridges and maintaining existing roads used by villagers. The Group also provides technical and management expertise to villagers to develop oil palm plots or Kebun Kas Desa (village’s scheme) and Plasma schemes surrounding the returns operating estates. The from to community improve welfare. these plots are used villages’ Information Technology (“IT”) security risk to its threats include The security threats faced by the Group IT infrastructure, unlawful attempts to gain access to classified information business and disruptions associated with IT failures. potential for to combat cyberattack to our Failure could cause disruption business operations. The Group has measures in place including appropriate tools and techniques to monitor and mitigate this risk. The Group through its IT Consultant has in place antivirus, threat detection, log analysis, DDOS protection and Firewalls. Annual Report 2017 | Anglo-Eastern Plantations Plc 23 23 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Strategic Report Strategic Report Gender diversity The AEP Plc Board is composed of three men and one woman with extensive knowledge in their respective fields of Gender diversity experience. The Board has taken note of the recent legislative initiatives with regard to the representation of women The AEP Plc Board is composed of three men and one woman with extensive knowledge in their respective fields of on the boards of Directors of listed companies and will make every effort to conform to its composition based on experience. The Board has taken note of the recent legislative initiatives with regard to the representation of women legislative requirement. on the boards of Directors of listed companies and will make every effort to conform to its composition based on legislative requirement. Group Headcount Group Headcount Board (Company and subsidiaries) Board (Company and subsidiaries) Senior Management (GM and above) Senior Management (GM and above) Managers & Executives Managers & Executives Full Time Full Time Part-time Field Workers Part-time Field Workers Total Total % % 2017 average employed during the year 2017 average employed during the year Total Total 16 16 6 6 410 410 5,262 5,262 9,997 9,997 15,691 15,691 100% 100% Women Women 2 2 - - 31 31 200 200 4,244 4,244 4,477 4,477 29% 29% Men Men 14 14 6 6 379 379 5,062 5,062 5,753 5,753 11,214 11,214 71% 71% 2016 average employed during the year 2016 average employed during the year Men Men 14 14 6 6 390 390 5,215 5,215 6,516 6,516 12,141 12,141 72% 72% Total Total 16 16 6 6 420 420 5,396 5,396 10,934 10,934 16,772 16,772 100% 100% Group Headcount Women Women Group Headcount 2 Board (Company and subsidiaries) 2 Board (Company and subsidiaries) - Senior Management (GM and above) - Senior Management (GM and above) Managers & Executives 30 30 Managers & Executives 181 Full Time 181 Full Time 4,418 Part-time Field Workers 4,418 Part-time Field Workers Total 4,631 4,631 Total 28% % 28% % Although the Group provides equal opportunities for female workers in the plantations, the male workers make up a majority of the field workers due to the nature of work and the remote location of plantations from the towns and Although the Group provides equal opportunities for female workers in the plantations, the male workers make up a cities. Nevertheless, the percentage of female workers within the Group increased from 28% in 2016 to 29% in 2017. majority of the field workers due to the nature of work and the remote location of plantations from the towns and cities. Nevertheless, the percentage of female workers within the Group increased from 28% in 2016 to 29% in 2017. Employees In 2017, the number of full time workers averaged 5,694 (2016: 5,838) while the part-time labour averaged 9,997 Employees (2016: 10,934). The headcount in 2017 was lower by 6% as the resignation and retirement in certain estates have In 2017, the number of full time workers averaged 5,694 (2016: 5,838) while the part-time labour averaged 9,997 not been replaced and some positions have been streamlined. Moreover, fewer harvesters were required due to the (2016: 10,934). The headcount in 2017 was lower by 6% as the resignation and retirement in certain estates have replanting exercise. not been replaced and some positions have been streamlined. Moreover, fewer harvesters were required due to the replanting exercise. The Group has formal processes for recruitment, particularly for key managerial positions, where psychometric testing is conducted to support the selection and hiring decisions. Exit interviews are also conducted with departing The Group has formal processes for recruitment, particularly for key managerial positions, where psychometric employees to ensure that management can address any significant issues. testing is conducted to support the selection and hiring decisions. Exit interviews are also conducted with departing employees to ensure that management can address any significant issues. The Group has a programme for recruiting graduates from Indonesian universities to join existing employees, selected on a regular basis, on training programmes organised by the Group’s training centre that provide grounding The Group has a programme for recruiting graduates from Indonesian universities to join existing employees, and refresher courses in technical aspects of oil palm estate and mill management. The training centre also conducts selected on a regular basis, on training programmes organised by the Group’s training centre that provide grounding regular programmes for all levels of employees to raise the competency and quality of employees in general. These and refresher courses in technical aspects of oil palm estate and mill management. The training centre also conducts programmes are often supplemented by external management development courses including attending industry regular programmes for all levels of employees to raise the competency and quality of employees in general. These conferences for technical updates. A wide variety of topics are covered including work ethics, motivation, self- programmes are often supplemented by external management development courses including attending industry improvement, company values and health and safety. conferences for technical updates. A wide variety of topics are covered including work ethics, motivation, self- improvement, company values and health and safety. Annual Report 2017 | Anglo-Eastern Plantations Plc Annual Report 2017 | Anglo-Eastern Plantations Plc 24 24 24 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Strategic Report All the plantations are at various stages of introducing finger printing to record and mark attendance of daily workers and to pay all workers through bank transfer to improve the efficiency of estate operations. A large workforce and their families are housed in the Group’s housing across the Group’s plantations. The Group further provides at its own cost water and electricity and a host of other amenities including places of worship, schools and clinics. On top of competitive salaries and bonuses, extensive benefits and privileges help the Group to retain and motivate its employees. The Group promotes a policy for the creation of equal and ethnically diverse employment opportunities including with respect to gender. The Group has in place key performance linked indicators to determine increment and bonus entitlements for its employees. The Group promotes and encourages employee involvement in every aspect wherever practical as it recognises employees as a valuable asset and is one of the key contributions to the Group’s success. The employees contribute their ideas, feedback and voice out their concerns through formal and informal meetings, discussions and annual performance appraisals. In addition, various work related and personal training programmes are carried out annually for employees to promote employee engagement and interaction. Although the Group does not have a specific policy on employment of disabled persons, it, however, employs disabled persons as part of its workforce. The Group welcomes disabled persons joining the Group based on their suitability. Outlook FFB production for the three months to March 2018 was 4% higher against the same period in 2017 mainly due to the increase in production from the Riau and Kalimantan regions. It is too early to forecast whether the production will be better for the rest of the year. In 2018 the Group will see ongoing benefit from a range of sustainable investments made in recent years and capital expenditure, including planting, is expected to increase to $41.6m (2017: $27.4m). The CPO price ex-Rotterdam opened in 2018 at $678/mt and prices are expected to be in the range of $600/mt to $700/mt for the first half of 2018. The temporary suspension of CPO export duty by the Malaysian government and the increase of biodiesel mandate by the Indonesian government may not sustain the price in view of the sharp increase in import tax on CPO and refined palm oil in India. A higher import tax would narrow the price difference between CPO and competing soft oils. The US Dollar appreciated by approximately 1% (2016: -3%) against the Indonesian Rupiah in 2017 in anticipation of interest rate hikes in the United States and the weak emerging economies. The Rupiah has further depreciated by 2% in 2018. The rising material costs and wages in Indonesia are expected to increase the overall production cost in 2018. The Indonesian government recently announced in 2018 regional increases in minimum wage averaging 8.7%. These wage hikes will raise overall estate costs and may erode profit margins. Annual Report 2017 | Anglo-Eastern Plantations Plc 25 25 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Strategic Report Nevertheless, barring any unforeseen circumstances, the Group is confident that CPO demand will be sustainable in the long term on the backdrop of global economic recovery and we can expect a satisfactory trading outturn and cash flow for 2018. On behalf of the Board Dato’ John Lim Ewe Chuan Executive Director, Corporate Finance and Corporate Affairs 24 April 2018 Annual Report 2017 | Anglo-Eastern Plantations Plc 26 26 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Financial Record Income statement Revenue Operating profit before BA Profit attributable to shareholders after BA 2017 $000 2016 $000 2015 $000 2014 $000 2013 $000 291,907 246,210 196,451 251,258 201,917 66,676 36,214 52,480 34,713 23,667 9,775 78,845 30,762 59,619 93,521 Dividend proposed for year (1,585) (1,463) (1,028) (1,854) (1,969) Financial position $000 $000 $000 $000 $000 Non-current assets & long term receivables 362,038 360,681 340,099 481,761 484,826 Cash net of short term borrowings 130,895 111,973 102,864 125,624 98,654 Long term loans and borrowings (19,281) (27,875) (32,875) (34,625) (34,937) Other working capital Deferred tax Non-controlling interests Net worth Share capital Treasury shares 16,320 17,094 3,898 (10,343) 765 (13,081) 476,891 (91,799) (16,612) 445,261 (82,150) (19,373) 394,613 (73,598) (44,368) 518,049 (90,813) (55,298) 494,010 (85,964) 385,092 363,111 321,015 427,236 408,046 15,504 15,504 15,504 15,504 15,504 (1,171) (1,171) (1,171) (1,171) (1,171) Share premium and capital redemption reserve 25,022 25,022 25,022 25,022 25,022 Revaluation and exchange reserves (170,147) (158,532) (167,402) (133,474) (124,340) Retained earnings 515,884 482,288 449,062 521,355 493,031 Equity attributable to shareholders’ funds 385,092 363,111 321,015 427,236 408,046 Ordinary shares in issue (‘000s) 39,976 39,976 39,976 39,976 39,976 Basic EPS before BA movement (US cents) 91.80cts 82.16cts 25.89cts 132.26cts 90.70cts Basic EPS after BA movement (US cents) 91.37cts 87.58cts 24.66cts 77.61cts 235.95cts Dividend per share for year (US cents) Asset value per share (US cents) Exchange rates - year end Rp : $ $ : £ RM: $ Exchange rates - average Rp : $ $ : £ RM: $ Annual Report 2017 | Anglo-Eastern Plantations Plc 4.0cts 972cts 3.8cts 916cts 2.5cts 4.5cts 5.0cts 810cts 1,078cts 1,029cts 13,548 13,436 13,795 12,385 12,170 1.35 4.05 1.23 4.49 1.48 4.29 1.56 3.50 1.66 3.28 13,383 13,307 13,392 11,861 10,445 1.29 4.30 1.35 4.14 1.53 3.91 1.65 3.27 1.56 3.15 27 27 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Estate Areas N A T N A M L A K I A K G N A B U A R I A R E T A M U S U L U K G N E B A R E T A M U S L A T O T I A S Y A L A M H T U O S H T R O N I A S E N O D N I P U O R G L A T O T 1 h / t m 5 4 - - 1 h / t m 5 4 - - 2 2 6 h / t m 5 0 1 h / t m 0 0 1 h / t m 5 9 2 - - 6 h / t m 5 9 2 s e i t i c a p a C s l l i M d e n i b m o C s l l i m f o r e b m u N s l l i M a H a H a H a H a H a H a H a H a H 7 1 0 2 c e D 1 3 t a s a d e t n a l P 4 8 6 , 9 4 4 5 , 4 8 2 2 , 4 1 - - - 0 8 5 9 6 1 , 1 9 4 7 , 1 7 7 9 , 5 1 2 9 7 , 1 1 1 7 5 , 1 7 2 0 , 1 0 9 3 , 4 1 7 6 3 , 0 3 6 3 2 9 5 5 5 9 7 - - - - 4 3 1 4 3 1 9 2 9 2 6 0 , 2 4 4 2 , 5 9 1 5 2 3 , 7 4 5 2 , 8 3 7 8 , 4 - 3 7 8 , 4 - - - - - - 3 7 8 , 4 4 8 5 7 - 9 5 1 2 3 0 , 5 1 5 8 7 3 0 , 5 8 8 8 , 5 - - 7 3 8 9 4 6 8 8 4 7 7 , 6 0 9 0 , 7 5 0 3 , 3 2 1 3 1 6 2 5 , 0 3 0 0 3 , 7 3 6 9 9 , 6 1 - 6 9 9 , 6 1 - - - - - - 6 9 9 , 6 1 5 5 9 4 7 5 - 9 2 5 , 1 5 2 5 , 8 1 2 7 7 2 1 , 1 6 9 5 , 3 3 7 8 1 , 5 2 4 - 5 2 4 - 3 9 3 9 1 5 2 9 1 , 3 4 7 5 1 3 1 , 6 5 0 1 , 4 1 1 3 , 5 6 3 2 2 , 8 9 5 , 9 4 5 1 9 , 1 1 0 5 0 6 4 , 3 8 5 0 , 3 5 5 6 9 , 1 1 3 1 5 , 1 6 0 1 5 , 3 3 2 0 , 5 6 5 2 4 - 5 2 4 7 1 4 , 1 5 4 4 , 1 2 6 8 , 2 - - - - - - 5 2 4 - 5 2 4 7 1 4 , 1 5 4 4 , 1 2 6 8 , 2 0 0 8 , 4 6 0 1 5 , 3 0 1 3 , 8 6 7 8 6 , 1 2 4 7 4 , 2 3 2 8 8 , 2 3 4 0 , 7 5 3 4 8 , 1 2 1 2 7 0 5 5 , 1 6 3 2 , 1 8 5 8 , 2 8 6 3 , 6 7 3 2 , 3 2 0 1 7 , 3 3 4 5 9 , 2 1 0 9 , 9 5 1 1 2 , 8 2 1 m l a P l i O l a t o T r e b b u R l a t o T e r u t a m m I e r u t a M r e b b u R e r u t a m m I a m s a P l e r u t a M a m s a P l a e r a d e t n a l P l a t o T a m s a l P l a t o T s e v r e s e R e r u t a m m I e r u t a M m l a P l i O l e b a t n a P l 7 1 0 2 c e D 1 3 t a s a d n a L l a t o T e l b a t n a l p n U r e h t O s e v r e s e R l a t o T 28 28 Annual Report 2017 | Anglo-Eastern Plantations Plc About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Location of Estates Location of Estates Annual Report 2017 | Anglo-Eastern Plantations Plc Annual Report 2017 | Anglo-Eastern Plantations Plc 29 29 29 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Directors’ Report The Directors present their annual report on the affairs of the Group, together with the financial statements and auditors’ report, for the year ended 31 December 2017. Accountability and audit AEP is committed to ensure that the quality of its financial reporting is of a high standard. The Board continually reviews its internal controls and risk management systems to ensure the Group’s affairs and the Group’s financial reporting comply with the applicable accounting standards as well as good corporate governance. The main features of the Group’s internal controls and risk management systems are further disclosed on page 46. The Board considers the annual report and accounts including the strategic report when taken as a whole, is fair, balanced and understandable as it provides the information necessary for shareholders to assess the Group’s position and performance, business model and strategy. Results and dividends The audited financial statements for the year ended 31 December 2017 are set out on pages 60 to 101. The Group’s profit for the year on ordinary activities before taxation was 69,691,000 (2016: profit $60,846,000) and the profit attributable to ordinary shareholders was $36,214,000 (2016: profit $34,713,000). No interim dividend was paid. The Directors recommend a final dividend of 4.0cts (2016: 3.8cts equivalent) to be paid to shareholders on 13 July 2018. Shareholders may elect to receive their dividend in Pounds Sterling as described on page 37. Viability Statement The viability assessment considers solvency and liquidity over a longer period than for the purposes of the going concern assessment made on page 12. 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 Strategic Report. In undertaking its review of the Group’s performance in 2017, the Board considered the prospects of the Company over the one and five-year periods. The process involved a detailed review of the 2018 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 also considered the five-year cash flow projection under various scenarios, including the need to support financially loss-making newly matured estates together with the projected capital expenditure. On the basis of this and other matters considered and reviewed by the Board during the year, the Board concluded and believed that the Group has adequate resources to continue in operation and meet its liabilities over the five years from 2018 to 2022. Accordingly, the Directors adopt the going concern basis of accounting in preparing the financial statements. Research and Development The Group did not undertake any research and development activities. It relies on third parties to conduct research and development of new disease resistant and higher yield oil palm seeds. Land Valuation Twelve companies located across North Sumatera, Bengkulu, Riau, Kalimantan and Malaysia were valued by qualified valuers in 2017 to provide indicative fair values and support the valuation for the estate land. The Directors revalued the estate land not covered by the valuation exercise based on the regional appreciation rate quantified by the qualified valuers. Annual Report 2017 | Anglo-Eastern Plantations Plc 30 30 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Directors’ Report Due to the slow rate of planting and land compensation, the Group engaged qualified independent surveyors to carry out a detailed field survey and in-depth analysis on plantable land using satellite imagery remote sensing. The determined large tracts of land within the location permit of four companies, the directors had previously estimated to be plantable cannot be planted on for a variety of reasons. Large areas now have established oil palm, pepper, rice fields, coffee and rubber small holdings which land owners depend on for their livelihood which means that it is probable the four companies will not be able to compensate and use the land in the foreseeable future. The directors have therefore revisited their estimated split of plantable and unplantable land and have reclassified some land from plantable to unplantable which affects the fair value of the land. The reclassification has reduced the fair value of land by $15.5 million, of which $14.9 million and $3.7 million was set off against revaluation reserves and deferred tax respectively with $0.6 million recognised as part of impairment losses for the year. Political donations, anti-bribery and anti-corruption The Group made no political donations during the year. The Group has in place policies and procedures in respect of bribery and corruption, with detailed guidelines and reporting requirements. Management and senior staff have had training programmes and updates as part of their responsibility to ensure that bribery and corruption does not exist in the Group’s operation. The Group uses its best endeavour to seek that it’s business partners are in compliance with the anti-bribery and anti-corruption regulations. Carbon Reporting A greenhouse gas (“GHG”) emissions assessment quantifies greenhouse gases produced directly and indirectly from the Group’s agricultural activities. Also known as a carbon footprint, it is an essential tool in the process of understanding, monitoring, managing and reducing the Group’s climate change impact. The emissions sources included in this report were fuel and electricity consumption at the mills, palm oil mill effluent (“POME”) treatment, nitrogen emissions from mineral fertiliser use, company owned vehicle use, third party vehicle fuel use, electricity consumption in employee housing and emissions associated with land use change and carbon sequestration. The report identifies and quantifies GHG emissions in the production of CPO at the Group’s mills and related estate supply base and planting activities. The Board believes that this report will help the Group plan and facilitate the design and implementation of effective strategies for reducing the Group’s GHG emissions in the future as well as providing a benchmark to monitor the reduction of similar gas. We understand the urgent need for the industry to identify and respond to reducing the environmental risk and impact by developing appropriate sustainable practices. We remain committed to monitoring, targeting and reducing all our environmental impact across the Group. This assessment has been carried out in accordance with the World Business Council for Sustainable Development and World Resources Institute’s (WBCSD/WRI) Greenhouse Gas Protocol; a Corporate Accounting and Reporting Standard, together with the latest emission factors from recognised public sources including, but not limited to, Defra, the International Energy Agency, the US Energy Information Association, the US Environmental Protection Agency and the Intergovernmental Panel on Climate Change. The values for the amount of carbon sequestered by the oil palm have been taken from the OPRODSIM and OPCABSIM average growth models provided in the PalmGHG Tool. GHG emissions have been reported by the three WBCSD/WRI scopes. Land use emissions and carbon sequestration results were calculated in line with the methodology used by The Roundtable for Sustainable Palm Oil (“RSPO”) GHG Working Group 2 throughout the PalmGHG Calculator. The carbon stock values were derived by the RSPO based on a review of relevant literature and satellite images for land use changes associated with oil palm plantations in Indonesia and Malaysia. An estimate of CO2 emissions from cultivation of peat soils has been included in this report. The detailed methodology in the calculation the GHG emissions under the three scopes can be viewed at www.ghgprotocol.org. Cultivation of peat soils results in CO2 emissions due to oxidation of organic carbon; therefore an estimate of these emissions from AEP’s peat soil estates has been included in this report. There is a lot of uncertainty regarding the determination of emission factors for peat cultivation and the methodology used in the PalmGHG Tool is based on a report by Hooijer et al (2010) which determines emissions based on the drainage depth of the soil. Annual Report 2017 | Anglo-Eastern Plantations Plc 31 31 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Directors’ Report Directors’ Report Directors’ Report Directors’ Report Directors’ Report The gross overall emissions computed by the outsourced agent were 1,180,752 tCO2e for 2017 compared to The gross overall emissions computed by the outsourced agent were 1,180,752 tCO2e for 2017 compared to The gross overall emissions computed by the outsourced agent were 1,180,752 tCO2e for 2017 compared to The gross overall emissions computed by the outsourced agent were 1,180,752 tCO2e for 2017 compared to 903,684 tCO2e for 2016. The overall emissions have increased by 277,068 tCO2e, or 31%, during the 2016 to 2017 903,684 tCO2e for 2016. The overall emissions have increased by 277,068 tCO2e, or 31%, during the 2016 to 2017 The gross overall emissions computed by the outsourced agent were 1,180,752 tCO2e for 2017 compared to 903,684 tCO2e for 2016. The overall emissions have increased by 277,068 tCO2e, or 31%, during the 2016 to 2017 903,684 tCO2e for 2016. The overall emissions have increased by 277,068 tCO2e, or 31%, during the 2016 to 2017 assessment period. This increase was mainly due to an increase in emissions associated with land clearance by assessment period. This increase was mainly due to an increase in emissions associated with land clearance by 903,684 tCO2e for 2016. The overall emissions have increased by 277,068 tCO2e, or 31%, during the 2016 to 2017 assessment period. This increase was mainly due to an increase in emissions associated with land clearance by assessment period. This increase was mainly due to an increase in emissions associated with land clearance by AEP and out-growers where AEP mills bought the crops from. AEP and out-growers where AEP mills bought the crops from. assessment period. This increase was mainly due to an increase in emissions associated with land clearance by AEP and out-growers where AEP mills bought the crops from. AEP and out-growers where AEP mills bought the crops from. AEP and out-growers where AEP mills bought the crops from. Emissions source Emissions source Emissions source Emissions source POME treatment Emissions source POME treatment POME treatment POME treatment Fertiliser application POME treatment Fertiliser application Fertiliser application Fertiliser application Premises energy consumption Fertiliser application Premises energy consumption Premises energy consumption Premises energy consumption Company owned vehicles Premises energy consumption Company owned vehicles Company owned vehicles Company owned vehicles Third party vehicle use Company owned vehicles Third party vehicle use Third party vehicle use Third party vehicle use Employee housing Third party vehicle use Employee housing Employee housing Employee housing Employee housing 2017 Emissions in tCO2e 2017 Emissions in tCO2e 2017 Emissions in tCO2e 2017 Emissions in tCO2e 2017 Emissions in tCO2e 2016 Emissions in tCO2e 2016 Emissions in tCO2e 2016 Emissions in tCO2e 2016 Emissions in tCO2e 2016 Emissions in tCO2e 204,771 204,771 204,771 204,771 25,952 204,771 25,952 25,952 25,952 14,800 25,952 14,800 14,800 14,800 6,361 14,800 6,361 6,361 6,361 7,110 6,361 7,110 7,110 7,110 1,736 7,110 1,736 1,736 1,736 260,730 1,736 260,730 260,730 260,730 Own crop Out-grower crop 260,730 Own crop Out-grower crop Own crop Out-grower crop Own crop Out-grower crop 780,038 Own crop Out-grower crop 780,038 780,038 780,038 -588,675 780,038 -588,675 -588,675 -588,675 58,838 -588,675 58,838 58,838 58,838 920,022 58,838 920,022 920,022 920,022 1,180,752 920,022 1,180,752 1,180,752 1,180,752 1,180,752 708,166 708,166 708,166 708,166 -534,435 708,166 -534,435 -534,435 -534,435 496,090 -534,435 496,090 496,090 496,090 496,090 235,069 235,069 235,069 235,069 28,510 235,069 28,510 28,510 28,510 14,499 28,510 14,499 14,499 14,499 6,022 14,499 6,022 6,022 6,022 7,667 6,022 7,667 7,667 7,667 1,581 7,667 1,581 1,581 1,581 293,348 1,581 293,348 293,348 293,348 Out-grower crop 293,348 Out-grower crop Out-grower crop Out-grower crop 445,778 Out-grower crop 445,778 445,778 445,778 -404,103 445,778 -404,103 -404,103 -404,103 28,516 -404,103 28,516 28,516 28,516 610,336 28,516 610,336 610,336 610,336 903,684 610,336 903,684 903,684 903,684 903,684 Own crop Own crop Own crop Own crop Own crop 571,623 571,623 571,623 571,623 -518,184 571,623 -518,184 -518,184 -518,184 486,706 -518,184 486,706 486,706 486,706 486,706 Total operational emissions Total operational emissions Total operational emissions Total operational emissions Total operational emissions Land clearance Land clearance Land clearance Land clearance Carbon sequestered by standing crop Land clearance Carbon sequestered by standing crop Carbon sequestered by standing crop Carbon sequestered by standing crop Peat soils cultivation Carbon sequestered by standing crop Peat soils cultivation Peat soils cultivation Peat soils cultivation Peat soils cultivation Total land use emissions Total land use emissions Total land use emissions Total land use emissions Overall emissions Total land use emissions Overall emissions Overall emissions Overall emissions Overall emissions 2017 and 2016 emissions in tCO2e 2017 and 2016 emissions in tCO2e 2017 and 2016 emissions in tCO2e 2017 and 2016 emissions in tCO2e Operational emissions (Exc. POME) combined Operational emissions (Exc. POME) combined 2017 and 2016 emissions in tCO2e Operational emissions (Exc. POME) combined Operational emissions (Exc. POME) combined Operational emissions (Exc. POME) combined POME treatment POME treatment POME treatment POME treatment POME treatment Operational Operational Operational emissions Operational emissions emissions Operational emissions emissions Land clearance Land clearance Land clearance Land clearance Land clearance Carbon sequestered Carbon sequestered Carbon sequestered by standing crop Carbon sequestered by standing crop by standing crop Carbon sequestered by standing crop by standing crop Peat soils Peat soils Peat soils cultivation Peat soils cultivation cultivation Peat soils cultivation cultivation 2017 2017 2017 2017 2016 2017 2016 2016 2016 2016 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000 1,500,000 1,500,000 1,500,000 1,500,000 1,500,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 500,000 500,000 500,000 500,000 500,000 0 0 0 0 0 e e 2 e 2 O e 2 O C 2 O e C t O C 2 t C t O t C t -500,000 -500,000 -500,000 -500,000 -500,000 -1,000,000 -1,000,000 -1,000,000 -1,000,000 -1,000,000 -1,500,000 -1,500,000 -1,500,000 -1,500,000 -1,500,000 The following chart displays 2016 and 2017 overall emissions by scope. The following chart displays 2016 and 2017 overall emissions by scope. The following chart displays 2016 and 2017 overall emissions by scope. The following chart displays 2016 and 2017 overall emissions by scope. The following chart displays 2016 and 2017 overall emissions by scope. Scope 1 are direct GHG emissions from sources owned and controlled by the Company which cover emissions Scope 1 are direct GHG emissions from sources owned and controlled by the Company which cover emissions Scope 1 are direct GHG emissions from sources owned and controlled by the Company which cover emissions Scope 1 are direct GHG emissions from sources owned and controlled by the Company which cover emissions associated with own cropland clearance, natural gas combustion and company owned vehicles. This made up the associated with own cropland clearance, natural gas combustion and company owned vehicles. This made up the Scope 1 are direct GHG emissions from sources owned and controlled by the Company which cover emissions associated with own cropland clearance, natural gas combustion and company owned vehicles. This made up the associated with own cropland clearance, natural gas combustion and company owned vehicles. This made up the majority of the GHG emissions. This has increased in 2017 due primarily to an increase in land clearance emissions. majority of the GHG emissions. This has increased in 2017 due primarily to an increase in land clearance emissions. associated with own cropland clearance, natural gas combustion and company owned vehicles. This made up the majority of the GHG emissions. This has increased in 2017 due primarily to an increase in land clearance emissions. majority of the GHG emissions. This has increased in 2017 due primarily to an increase in land clearance emissions. Scope 2 accounts for GHG emissions from purchased electricity, heat and steam generated off-site. Scope 3 Scope 2 accounts for GHG emissions from purchased electricity, heat and steam generated off-site. Scope 3 majority of the GHG emissions. This has increased in 2017 due primarily to an increase in land clearance emissions. Scope 2 accounts for GHG emissions from purchased electricity, heat and steam generated off-site. Scope 3 Scope 2 accounts for GHG emissions from purchased electricity, heat and steam generated off-site. Scope 3 includes all other indirect emissions such as out-grower crop, waste disposal, business travel and staff commuting. includes all other indirect emissions such as out-grower crop, waste disposal, business travel and staff commuting. Scope 2 accounts for GHG emissions from purchased electricity, heat and steam generated off-site. Scope 3 includes all other indirect emissions such as out-grower crop, waste disposal, business travel and staff commuting. includes all other indirect emissions such as out-grower crop, waste disposal, business travel and staff commuting. The increase in 2017 was due to the increase in emissions associated with out-grower crop land clearance. The increase in 2017 was due to the increase in emissions associated with out-grower crop land clearance. includes all other indirect emissions such as out-grower crop, waste disposal, business travel and staff commuting. The increase in 2017 was due to the increase in emissions associated with out-grower crop land clearance. The increase in 2017 was due to the increase in emissions associated with out-grower crop land clearance. The increase in 2017 was due to the increase in emissions associated with out-grower crop land clearance. Annual Report 2017 | Anglo-Eastern Plantations Plc Annual Report 2017 | Anglo-Eastern Plantations Plc Annual Report 2017 | Anglo-Eastern Plantations Plc Annual Report 2017 | Anglo-Eastern Plantations Plc Annual Report 2017 | Anglo-Eastern Plantations Plc 32 32 32 32 32 32 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Directors’ Report Directors’ Report Directors’ Report Directors’ Report 2017 and 2016 Emissions in tCO2e by Scope 2017 and 2016 Emissions in tCO2e by Scope 2017 and 2016 Emissions in tCO2e by Scope 2017 and 2016 Emissions in tCO2e by Scope 1,000,000 1,000,000 1,000,000 1,000,000 e e e e 2 2 2 2 O O O O C C C C t t t t 900,000 900,000 900,000 900,000 800,000 800,000 800,000 800,000 700,000 700,000 700,000 700,000 600,000 600,000 600,000 600,000 500,000 500,000 500,000 500,000 400,000 400,000 400,000 400,000 300,000 300,000 300,000 300,000 200,000 200,000 200,000 200,000 100,000 100,000 100,000 100,000 0 0 0 0 Scope 1 Scope 1 Scope 1 Scope 1 Scope 2 Scope 2 Scope 2 Scope 2 Scope 3 Scope 3 Scope 3 Scope 3 Comparison of GHG emissions per production metrics (excluding land use change emissions): Comparison of GHG emissions per production metrics (excluding land use change emissions): Comparison of GHG emissions per production metrics (excluding land use change emissions): Comparison of GHG emissions per production metrics (excluding land use change emissions): Operational emissions reporting metric Operational emissions reporting metric Operational emissions reporting metric Operational emissions reporting metric 2017 in tCO2e 2017 in tCO2e 2017 in tCO2e 2017 in tCO2e 2016 in tCO2e 2016 in tCO2e 2016 in tCO2e 2016 in tCO2e GHG per tonne of CPO production GHG per tonne of CPO production GHG per tonne of CPO production GHG per tonne of CPO production GHG per tonne of FFB production GHG per tonne of FFB production GHG per tonne of FFB production GHG per tonne of FFB production GHG per tonne of FFB processed GHG per tonne of FFB processed GHG per tonne of FFB processed GHG per tonne of FFB processed GHG per hectare of planted area GHG per hectare of planted area GHG per hectare of planted area GHG per hectare of planted area 0.67 0.67 0.67 0.67 0.28 0.28 0.28 0.28 0.14 0.14 0.14 0.14 3.92 3.92 3.92 3.92 0.83 0.83 0.83 0.83 0.33 0.33 0.33 0.33 0.17 0.17 0.17 0.17 4.43 4.43 4.43 4.43 t t t t i i i n i n n n u u u u r r r r e e e e p p p p e e e e 2 2 2 2 O O O O C C C C t t t t 4.5 4.5 4.5 4.5 4 4 4 4 3.5 3.5 3.5 3.5 3 3 3 3 2.5 2.5 2.5 2.5 2 2 2 2 1.5 1.5 1.5 1.5 1 1 1 1 0.5 0.5 0.5 0.5 0 0 0 0 2017 and 2016 emissions per reporting metric in tCO2e 2017 and 2016 emissions per reporting metric in tCO2e 2017 and 2016 emissions per reporting metric in tCO2e 2017 and 2016 emissions per reporting metric in tCO2e (excluding land use change emissions) (excluding land use change emissions) (excluding land use change emissions) (excluding land use change emissions) per tonne of CPO per tonne of CPO per tonne of CPO per tonne of CPO production production production production per tonne of FFB per tonne of FFB per tonne of FFB per tonne of FFB production production production production per tonne of FFB per tonne of FFB per tonne of FFB per tonne of FFB processed processed processed processed per hectare of planted per hectare of planted per hectare of planted per hectare of planted area area area area Annual Report 2017 | Anglo-Eastern Plantations Plc Annual Report 2017 | Anglo-Eastern Plantations Plc Annual Report 2017 | Anglo-Eastern Plantations Plc Annual Report 2017 | Anglo-Eastern Plantations Plc 2017 2017 2017 2017 2016 2016 2016 2016 2017 2017 2017 2017 2016 2016 2016 2016 33 33 33 33 33 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Directors’ Report Directors’ Report Directors’ Report Comparison of GHG total emissions per production metrics (including land use change emissions): Comparison of GHG total emissions per production metrics (including land use change emissions): Comparison of GHG total emissions per production metrics (including land use change emissions): Operational emissions reporting metric Operational emissions reporting metric Operational emissions reporting metric 2017 in tCO2e 2017 in tCO2e 2017 in tCO2e 2016 in tCO2e 2016 in tCO2e 2016 in tCO2e GHG per tonne of CPO production GHG per tonne of CPO production GHG per tonne of CPO production GHG per tonne of FFB production GHG per tonne of FFB production GHG per tonne of FFB production GHG per tonne of FFB processed GHG per tonne of FFB processed GHG per tonne of FFB processed GHG per hectare of planted area GHG per hectare of planted area GHG per hectare of planted area 3.02 3.02 3.02 1.27 1.27 1.27 0.62 0.62 0.62 17.77 17.77 17.77 2.56 2.56 2.56 1.01 1.01 1.01 0.54 0.54 0.54 13.65 13.65 13.65 2017 and 2016 total emissions per reporting metric in tCO2e 2017 and 2016 total emissions per reporting metric in tCO2e 2017 and 2016 total emissions per reporting metric in tCO2e (including land use change emissions) (including land use change emissions) (including land use change emissions) 2017 2017 2017 2016 2016 2016 t t t i i i n n n u u u r r r e e e p p p e e e 2 2 2 O O O C C C t t t 18 18 18 16 16 16 14 14 14 12 12 12 10 10 10 8 8 8 6 6 6 4 4 4 2 2 2 0 0 0 per tonne of CPO per tonne of CPO per tonne of CPO production production production per tonne of FFB per tonne of FFB per tonne of FFB production production production per tonne of FFB per tonne of FFB per tonne of FFB processed processed processed per hectare of planted per hectare of planted per hectare of planted area area area Principal risks Principal risks Principal risks Information on financial instruments risks is set out in note 24 to the consolidated financial statements and Information on financial instruments risks is set out in note 24 to the consolidated financial statements and Information on financial instruments risks is set out in note 24 to the consolidated financial statements and information on other risks is set out in Strategic Report. information on other risks is set out in Strategic Report. information on other risks is set out in Strategic Report. Property, plant and equipment Property, plant and equipment Property, plant and equipment Information relating to changes in property, plant and equipment is given in note 10 to the consolidated financial Information relating to changes in property, plant and equipment is given in note 10 to the consolidated financial Information relating to changes in property, plant and equipment is given in note 10 to the consolidated financial statements. statements. statements. Directors Directors Directors Madam Lim Siew Kim, Dato’ John Lim Ewe Chuan, Mr. Lim Tian Huat and Mr. Jonathan Law Ngee Song will be Madam Lim Siew Kim, Dato’ John Lim Ewe Chuan, Mr. Lim Tian Huat and Mr. Jonathan Law Ngee Song will be Madam Lim Siew Kim, Dato’ John Lim Ewe Chuan, Mr. Lim Tian Huat and Mr. Jonathan Law Ngee Song will be submitting themselves for re-appointment at the forthcoming annual general meeting. submitting themselves for re-appointment at the forthcoming annual general meeting. submitting themselves for re-appointment at the forthcoming annual general meeting. Brief profiles of all Directors are set out on page 39 of this Annual Report. Brief profiles of all Directors are set out on page 39 of this Annual Report. Brief profiles of all Directors are set out on page 39 of this Annual Report. Annual Report 2017 | Anglo-Eastern Plantations Plc Annual Report 2017 | Anglo-Eastern Plantations Plc Annual Report 2017 | Anglo-Eastern Plantations Plc 34 34 34 34 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Directors’ Report Substantial share interests As at 19 April 2018 and 31 December 2017, the following interests had been notified to the Company, being interests in excess of 3% of the issued ordinary share capital of the Company: Name of holder As at 19.4.2018 As at 31.12.2017 Number Percentage of voting rights held Number Percentage of voting rights held Genton International Limited 20,247,814 51.08% 20,247,814 Nokia Bell Pensioenfonds Ofp 7,015,000 17.70% 7,000,000 KBC Securities 1,551,464 3.91% 1,517,498 Value Square Asset Management 1,193,506 3.01% 1,167,774 51.08% 17.66% 3.83% 2.95% Share capital, restrictions on transfer of shares, arrangements affected by change of control and other additional information The Company has one class of share capital, ordinary shares. All the shares rank pari passu. The articles of association of the Company contain provisions governing the transfer of shares, voting rights, the appointment and replacement of Directors and amendments to the articles of association. This accords with usual English company law provisions. There are no special control rights in relation to the Company’s shares. There are no significant agreements to which the Company is a party which take effect, alter or terminate in the event of a change of control of the Company. There are no agreements providing for compensation for Directors or employees on change of control. Auditors All of the current Directors have taken all the steps to make themselves aware of any information needed by the Company’s auditors for the purposes of their audit and to establish that the auditors are aware of the information. The Directors are not aware of any relevant audit information of which the auditors are unaware. BDO LLP has expressed its willingness to continue in office and a resolution to re-appoint them will be proposed as Resolution 8 at the forthcoming annual general meeting. Authority to allot shares At the annual general meeting held on 27 June 2017 shareholders authorised the Board under the provisions of section 551 of the Companies Act 2006 to allot relevant securities within specified limits for a period of five years. Renewal of this authority is being sought under Resolution 10 at the forthcoming annual general meeting. The aggregate nominal value which can be allotted under the authority set out in paragraph (i) of the resolution is limited to £3,303,031 (representing 13,212,124 ordinary shares of 25p each) which is approximately one third of the issued ordinary capital of the Company as at 24 April 2018 (being the latest practicable date before publication of this notice). In accordance with guidance issued by The Investment Association, the authority in paragraph (ii) of the resolution will authorise the Directors to allot shares, or to grant rights to subscribe for or convert any security into shares, only in connection with a fully pre-emptive rights issue, up to a further nominal value of £3,303,031 (representing 13,212,124 ordinary shares). This amount (together with the authority provided under paragraph (a) of the resolution) represents approximately two thirds of the Company’s issued ordinary share capital (excluding treasury shares) as at 24 April 2018. This authority will expire at the conclusion of the next annual general meeting of the Company. The Directors have no present intention of issuing new shares, or of granting rights to subscribe for or to convert any security into shares. Annual Report 2017 | Anglo-Eastern Plantations Plc 35 35 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Directors’ Report Disapplication of pre-emption rights A fresh authority is also being sought under the provisions of sections 570 and 573 of the Companies Act 2006 to enable the Board to make an issue to existing shareholders without being obliged to comply with certain technical requirements of the Companies Act, which create problems with regard to fractional entitlements and overseas shareholders. In addition, the authority will empower the Board to make issues of shares for cash to persons other than existing shareholders up to a maximum aggregate nominal amount of £495,454 representing 5% of the current issued share capital. The authority will be expiring at the forthcoming annual general meeting or on 30 June 2018, whichever is earlier. Renewal of this authority on similar terms is being sought under Resolution 11 at the forthcoming annual general meeting. Acquisition of the Company’s own shares and authority to purchase own shares At 24 April 2018, the Directors had remaining authority under the shareholders’ resolution of 27 June 2017, to make purchases of 3,963,637 of the Company’s ordinary shares. This authority expires on 30 June 2018. The Board will only make purchases if they believe the earnings or net assets per share of the Company would be improved by such purchases. All such purchases will be market purchases made through the London Stock Exchange. Companies can hold their own shares which have been purchased in this way in treasury rather than having to cancel them. The Directors would, therefore, consider holding the Company’s own shares which have been purchased by the Company as treasury shares as this would give the Company the flexibility of being able to sell such shares quickly and effectively where it considers it in the interests of shareholders to do so. Whilst any such shares are held in treasury, no dividends will be payable on them and they will not carry any voting rights. Resolution 12 to be proposed at the forthcoming annual general meeting seeks renewed authority to purchase up to a maximum of 3,963,637 ordinary shares of 25p each on the London Stock Exchange, representing 10% of the Company’s issued ordinary share capital. The minimum price which may be paid for an ordinary share is 25p. The maximum price which may be paid for an ordinary share on any exercise of the authority will be restricted to the highest of (i) an amount equal to 5% above the average middle market quotations for such shares as derived from the London Stock Exchange Daily Official List for the five business days before the purchase is made and (ii) the higher of price of the last independent trade and the highest current independent bid on the London Stock Exchange. The maximum number of shares and the price range are stated for the purpose of compliance with statutory requirements in seeking this authority and should not be taken as an indication of the level of purchases, or the prices thereof, that the Company would intend to make. Adoption of new articles of association Resolution 13 to be proposed at the forthcoming annual general meeting proposes that the Company's articles of association (the 'Existing Articles') be replaced by new articles of association (the 'New Articles'). In accordance with section 21 of the Companies Act 2006, shareholder approval will be sought for the adoption of the New Articles. Some of the defined terms have been updated to ensure consistency with changes to the law (and a number of articles have been amended to ensure consistent use of definitions throughout the New Articles). For example, article 12 relating to bearer shares has been deleted entirely as the use of bearer shares was abolished on 26 May 2015. Additionally, the language contained in article 9.2 regarding the disapplication of pre-emption rights has been amended to include a reference to treasury shares and to be set out in a more common format and article 79 (defining 'mental incapacity') and article 103 (relating to a director's termination) have been amended to comply with the Equality Act 2010 and the discrimination provisions relating to mental health. A number of formatting changes have also been made. Full details of the main amendments to the Existing Articles are set out in Note 15 of the notes to the Notice of Annual General Meeting. In accordance with Listing Rule 13.8.10, a copy of the Company's Existing Articles and the proposed New Articles marked to show all the changes (as described above) will be available for inspection during normal business hours (excluding Saturdays, Sundays and bank holidays) at Quadrant House, Floor 6, 4 Thomas More Square, London, E1W 1YW from the date of the notice of the annual general meeting until the close of the annual general meeting. The proposed New Articles will also be available for inspection at the annual general meeting at least 15 minutes prior to the start of the meeting and up until the close of the meeting. Annual Report 2017 | Anglo-Eastern Plantations Plc 36 36 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Directors’ Report Dividends The Board is mindful that given the anticipated further capital commitments, the level of dividend needs to be balanced against the planned expenditure, as well as other viable investment opportunities in the countries where the Group operates. The Board is also mindful of shareholders’ sentiment and therefore declared a final dividend of 4.0cts per share, in line with our reporting currency, in respect of the year to 31 December 2017 (2016: 3.8cts equivalent). Subject to shareholders approval of Resolution 3 at the annual general meeting, the final dividend will be paid on 13 July 2018 to those shareholders on the register on 8 June 2018. In addition, shareholders can choose to receive the dividends in Pounds Sterling and they can do so at the rate ruling on 8 June 2018, being the dividend record date. Based on the exchange rate at 18 April 2018 of $1.42/£, the proposed dividend would be equivalent to 2.8p (2016: 3.0p). The last day to elect to receive or revoke a currency election is 18 June 2018. AEP operates a dividend reinvestment plan (“DRIP”). Holders of the shares may elect to reinvest their final dividend. The latest election date is 18 June 2018. Liability insurance for Company officers As permitted by the Companies Act the Company has maintained insurance cover for the Directors against liabilities in relation to the Company. On behalf of the Board Dato’ John Lim Ewe Chuan Executive Director, Corporate Finance and Corporate Affairs 24 April 2018 Annual Report 2017 | Anglo-Eastern Plantations Plc 37 37 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Directors’ Responsibilities Directors’ Responsibilities The Directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations. 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 Financial Reporting Company law requires the Directors to prepare financial statements for each financial year. Under that law, the Standards (“IFRSs”) as adopted by the European Union. The Directors have elected to prepare the Company Directors are required to prepare the Group financial statements in accordance with International Financial Reporting financial statements in accordance with FRS 101 Reduced Disclosure Framework under the UK Generally Accepted Standards (“IFRSs”) as adopted by the European Union. The Directors have elected to prepare the Company Accounting Practice (UK GAAP). Under company law, the Directors must not approve the financial statements financial statements in accordance with FRS 101 Reduced Disclosure Framework under the UK Generally Accepted unless they are satisfied that they give a true and fair view of the state of affairs of the Group and Company and of Accounting Practice (UK GAAP). Under company law, the Directors must not approve the financial statements the profit or loss for the Group for that period. 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 profit or loss 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; In preparing these financial statements, the Directors are required to: make judgements and accounting estimates that are reasonable and prudent; select suitable accounting policies and then apply them consistently; state whether they have been prepared in accordance with applicable accounting standards, subject to any make judgements and accounting estimates that are reasonable and prudent; material departures disclosed and explained in the financial statements; state whether they have been prepared in accordance with applicable accounting standards, subject to any prepare a Strategic Report, a Director’s Report and Director’s Remuneration report which comply with the material departures disclosed and explained in the financial statements; requirements of the Companies Act 2006; prepare a Strategic Report, a Director’s Report and Director’s Remuneration report which comply with the make an assessment of the Company and Group’s ability to continue as a going concern. requirements of the Companies Act 2006; 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 The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the and enable them to ensure that the financial statements comply with the Companies Act 2006 and, as regards the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company Group financial statements, Article 4 of the IAS Regulation. They are also responsible for safeguarding the assets of and enable them to ensure that the financial statements comply with the Companies Act 2006 and, as regards the the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. 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. 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 publication website. Financial statements are published on the Company’s website in accordance with the legislation in the UK The Directors are responsible for ensuring the annual report and the financial statements are made available on a governing the preparation and dissemination of financial statements, which may vary from legislation in other website. Financial statements are published on the Company’s website in accordance with the legislation in the UK jurisdictions. The maintenance and integrity of the Company's website is the responsibility of the Directors. The governing the preparation and dissemination of financial statements, which may vary from legislation in other Directors' responsibility also extends to the ongoing integrity of the financial statements contained therein. 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 DTR4 All of the Directors listed on page 39 confirm to the best of their knowledge: Directors’ responsibilities pursuant to DTR4 The Group financial statements have been prepared in accordance with IFRSs as adopted by the European All of the Directors listed on page 39 confirm to the best of their knowledge: Union and Article 4 of the IAS Regulation and give a true and fair view of the assets, liabilities, financial position The Group financial statements have been prepared in accordance with IFRSs as adopted by the European and profit and loss of the Group. Union and Article 4 of the IAS Regulation and give a true and fair view of the assets, liabilities, financial position The Strategic Report in the annual report includes a fair review of the development and performance of the and profit and loss of the Group. business and the financial position of the Group, together with a description or the principal risks and The Strategic Report in the annual report includes a fair review of the development and performance of the uncertainties that they face. business and the financial position of the Group, together with a description or the principal risks and The annual report and financial statements, taken as a whole, are fair, balanced and understandable and provide uncertainties that they face. the information necessary for shareholders to assess the Company’s performance, business model and strategy. 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 On behalf of the Board Dato’ John Lim Ewe Chuan Executive Director, Corporate Finance and Corporate Affairs Dato’ John Lim Ewe Chuan Executive Director, Corporate Finance and Corporate Affairs Annual Report 2017 | Anglo-Eastern Plantations Plc Annual Report 2017 | Anglo-Eastern Plantations Plc 24 April 2018 24 April 2018 38 38 38 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Directors Directors Directors Directors Directors Directors Directors Madam Lim Siew Kim Madam Lim Siew Kim Madam Lim Siew Kim Madam Lim Siew Kim Madam Lim Siew Kim Madam Lim Siew Kim Madam Lim Siew Kim (Non-Executive Chairman, age 69) (Non-Executive Chairman, age 69) (Non-Executive Chairman, age 69) (Non-Executive Chairman, age 69) (Non-Executive Chairman, age 69) (Non-Executive Chairman, age 69) (Non-Executive Chairman, age 69) Non-Executive Director since 29 November 1993 and appointed as Non-Executive Chairman on 31 January 2011. Non-Executive Director since 29 November 1993 and appointed as Non-Executive Chairman on 31 January 2011. Non-Executive Director since 29 November 1993 and appointed as Non-Executive Chairman on 31 January 2011. Non-Executive Director since 29 November 1993 and appointed as Non-Executive Chairman on 31 January 2011. Non-Executive Director since 29 November 1993 and appointed as Non-Executive Chairman on 31 January 2011. Non-Executive Director since 29 November 1993 and appointed as Non-Executive Chairman on 31 January 2011. Non-Executive Director since 29 November 1993 and appointed as Non-Executive Chairman on 31 January 2011. Madam Lim does not hold any directorship in other public listed company. Madam Lim does not hold any directorship in other public listed company. Madam Lim does not hold any directorship in other public listed company. Madam Lim does not hold any directorship in other public listed company. Madam Lim does not hold any directorship in other public listed company. Madam Lim does not hold any directorship in other public listed company. Madam Lim does not hold any directorship in other public listed company. Dato’ John Lim Ewe Chuan Dato’ John Lim Ewe Chuan Dato’ John Lim Ewe Chuan Dato’ John Lim Ewe Chuan Dato’ John Lim Ewe Chuan Dato’ John Lim Ewe Chuan Dato’ John Lim Ewe Chuan (Executive Director, Corporate Finance and Corporate Affairs, member of Audit, Nomination and Corporate (Executive Director, Corporate Finance and Corporate Affairs, member of Audit, Nomination and Corporate (Executive Director, Corporate Finance and Corporate Affairs, member of Audit, Nomination and Corporate (Executive Director, Corporate Finance and Corporate Affairs, member of Audit, Nomination and Corporate (Executive Director, Corporate Finance and Corporate Affairs, member of Audit, Nomination and Corporate (Executive Director, Corporate Finance and Corporate Affairs, member of Audit, Nomination and Corporate (Executive Director, Corporate Finance and Corporate Affairs, member of Audit, Nomination and Corporate Governance and Remuneration Committees, age 68) Governance and Remuneration Committees, age 68) Governance and Remuneration Committees, age 68) Governance and Remuneration Committees, age 68) Governance and Remuneration Committees, age 68) Governance and Remuneration Committees, age 68) Governance and Remuneration Committees, age 68) Appointed 26 April 2008. On 1 September 2010 appointed as Executive Director. Prior to 1 September 2010, Dato’ Appointed 26 April 2008. On 1 September 2010 appointed as Executive Director. Prior to 1 September 2010, Dato’ Appointed 26 April 2008. On 1 September 2010 appointed as Executive Director. Prior to 1 September 2010, Dato’ Appointed 26 April 2008. On 1 September 2010 appointed as Executive Director. Prior to 1 September 2010, Dato’ Appointed 26 April 2008. On 1 September 2010 appointed as Executive Director. Prior to 1 September 2010, Dato’ Appointed 26 April 2008. On 1 September 2010 appointed as Executive Director. Prior to 1 September 2010, Dato’ Appointed 26 April 2008. On 1 September 2010 appointed as Executive Director. Prior to 1 September 2010, Dato’ John Lim was the Senior Independent Non-Executive Director. John Lim was the Senior Independent Non-Executive Director. John Lim was the Senior Independent Non-Executive Director. John Lim was the Senior Independent Non-Executive Director. John Lim was the Senior Independent Non-Executive Director. John Lim was the Senior Independent Non-Executive Director. John Lim was the Senior Independent Non-Executive Director. Chartered Certified Accountant; partner with UHY Hacker Young LLP, London, since 1998; previously he had a Chartered Certified Accountant; partner with UHY Hacker Young LLP, London, since 1998; previously he had a Chartered Certified Accountant; partner with UHY Hacker Young LLP, London, since 1998; previously he had a Chartered Certified Accountant; partner with UHY Hacker Young LLP, London, since 1998; previously he had a Chartered Certified Accountant; partner with UHY Hacker Young LLP, London, since 1998; previously he had a Chartered Certified Accountant; partner with UHY Hacker Young LLP, London, since 1998; previously he had a Chartered Certified Accountant; partner with UHY Hacker Young LLP, London, since 1998; previously he had a professional accounting career in Singapore and the UK. professional accounting career in Singapore and the UK. professional accounting career in Singapore and the UK. professional accounting career in Singapore and the UK. professional accounting career in Singapore and the UK. professional accounting career in Singapore and the UK. professional accounting career in Singapore and the UK. Lim Tian Huat Lim Tian Huat Lim Tian Huat Lim Tian Huat Lim Tian Huat Lim Tian Huat Lim Tian Huat (Senior Independent Non-Executive Director, Chairman of Audit Committee, Chairman of Nomination & Corporate (Senior Independent Non-Executive Director, Chairman of Audit Committee, Chairman of Nomination & Corporate (Senior Independent Non-Executive Director, Chairman of Audit Committee, Chairman of Nomination & Corporate (Senior Independent Non-Executive Director, Chairman of Audit Committee, Chairman of Nomination & Corporate (Senior Independent Non-Executive Director, Chairman of Audit Committee, Chairman of Nomination & Corporate (Senior Independent Non-Executive Director, Chairman of Audit Committee, Chairman of Nomination & Corporate (Senior Independent Non-Executive Director, Chairman of Audit Committee, Chairman of Nomination & Corporate Governance Committee and member of Remuneration Committee, age 63) Governance Committee and member of Remuneration Committee, age 63) Governance Committee and member of Remuneration Committee, age 63) Governance Committee and member of Remuneration Committee, age 63) Governance Committee and member of Remuneration Committee, age 63) Governance Committee and member of Remuneration Committee, age 63) Governance Committee and member of Remuneration Committee, age 63) Appointed 8 May 2015. Appointed 8 May 2015. Appointed 8 May 2015. Appointed 8 May 2015. Appointed 8 May 2015. Appointed 8 May 2015. Appointed 8 May 2015. Fellow member of the Association of Chartered Certified Accountants and member of the Malaysian Institute of Fellow member of the Association of Chartered Certified Accountants and member of the Malaysian Institute of Fellow member of the Association of Chartered Certified Accountants and member of the Malaysian Institute of Fellow member of the Association of Chartered Certified Accountants and member of the Malaysian Institute of Fellow member of the Association of Chartered Certified Accountants and member of the Malaysian Institute of Fellow member of the Association of Chartered Certified Accountants and member of the Malaysian Institute of Fellow member of the Association of Chartered Certified Accountants and member of the Malaysian Institute of Accountants and Malaysian Institute of Certified Public Accountants. He is the founding President of Insolvency Accountants and Malaysian Institute of Certified Public Accountants. He is the founding President of Insolvency Accountants and Malaysian Institute of Certified Public Accountants. He is the founding President of Insolvency Accountants and Malaysian Institute of Certified Public Accountants. He is the founding President of Insolvency Accountants and Malaysian Institute of Certified Public Accountants. He is the founding President of Insolvency Accountants and Malaysian Institute of Certified Public Accountants. He is the founding President of Insolvency Accountants and Malaysian Institute of Certified Public Accountants. He is the founding President of Insolvency Practitioners Association of Malaysia. He holds a degree in Bachelor of Arts in Economics. Practitioners Association of Malaysia. He holds a degree in Bachelor of Arts in Economics. Practitioners Association of Malaysia. He holds a degree in Bachelor of Arts in Economics. Practitioners Association of Malaysia. He holds a degree in Bachelor of Arts in Economics. Practitioners Association of Malaysia. He holds a degree in Bachelor of Arts in Economics. Practitioners Association of Malaysia. He holds a degree in Bachelor of Arts in Economics. Practitioners Association of Malaysia. He holds a degree in Bachelor of Arts in Economics. Mr. Lim is a practising Chartered Accountant with his own Corporate Restructuring and Insolvency practice Rodgers Mr. Lim is a practising Chartered Accountant with his own Corporate Restructuring and Insolvency practice Rodgers Mr. Lim is a practising Chartered Accountant with his own Corporate Restructuring and Insolvency practice Rodgers Mr. Lim is a practising Chartered Accountant with his own Corporate Restructuring and Insolvency practice Rodgers Mr. Lim is a practising Chartered Accountant with his own Corporate Restructuring and Insolvency practice Rodgers Mr. Lim is a practising Chartered Accountant with his own Corporate Restructuring and Insolvency practice Rodgers Mr. Lim is a practising Chartered Accountant with his own Corporate Restructuring and Insolvency practice Rodgers Reidy & Co. He is also the Managing Director of Andersen Corporate Restructuring Sdn. Bhd. He was previously a Reidy & Co. He is also the Managing Director of Andersen Corporate Restructuring Sdn. Bhd. He was previously a Reidy & Co. He is also the Managing Director of Andersen Corporate Restructuring Sdn. Bhd. He was previously a Reidy & Co. He is also the Managing Director of Andersen Corporate Restructuring Sdn. Bhd. He was previously a Reidy & Co. He is also the Managing Director of Andersen Corporate Restructuring Sdn. Bhd. He was previously a Reidy & Co. He is also the Managing Director of Andersen Corporate Restructuring Sdn. Bhd. He was previously a Reidy & Co. He is also the Managing Director of Andersen Corporate Restructuring Sdn. Bhd. He was previously a partner at Ernst & Young from 2002 to 2009 and prior to that, partner at Arthur Andersen & Co from 1990 to 2002. partner at Ernst & Young from 2002 to 2009 and prior to that, partner at Arthur Andersen & Co from 1990 to 2002. partner at Ernst & Young from 2002 to 2009 and prior to that, partner at Arthur Andersen & Co from 1990 to 2002. partner at Ernst & Young from 2002 to 2009 and prior to that, partner at Arthur Andersen & Co from 1990 to 2002. partner at Ernst & Young from 2002 to 2009 and prior to that, partner at Arthur Andersen & Co from 1990 to 2002. partner at Ernst & Young from 2002 to 2009 and prior to that, partner at Arthur Andersen & Co from 1990 to 2002. partner at Ernst & Young from 2002 to 2009 and prior to that, partner at Arthur Andersen & Co from 1990 to 2002. He co-authored a book entitled “The Law and Practice of Corporate Receivership in Malaysia and Singapore”. He co-authored a book entitled “The Law and Practice of Corporate Receivership in Malaysia and Singapore”. He co-authored a book entitled “The Law and Practice of Corporate Receivership in Malaysia and Singapore”. He co-authored a book entitled “The Law and Practice of Corporate Receivership in Malaysia and Singapore”. He co-authored a book entitled “The Law and Practice of Corporate Receivership in Malaysia and Singapore”. He co-authored a book entitled “The Law and Practice of Corporate Receivership in Malaysia and Singapore”. He co-authored a book entitled “The Law and Practice of Corporate Receivership in Malaysia and Singapore”. Mr. Lim also served as Commissioner of the United Nations Compensations Commission for a period of five years. Mr. Lim also served as Commissioner of the United Nations Compensations Commission for a period of five years. Mr. Lim also served as Commissioner of the United Nations Compensations Commission for a period of five years. Mr. Lim also served as Commissioner of the United Nations Compensations Commission for a period of five years. Mr. Lim also served as Commissioner of the United Nations Compensations Commission for a period of five years. Mr. Lim also served as Commissioner of the United Nations Compensations Commission for a period of five years. Mr. Lim also served as Commissioner of the United Nations Compensations Commission for a period of five years. He was also appointed by the Domestic Trade Minister to be a member of the Corporate Law Reform Committee He was also appointed by the Domestic Trade Minister to be a member of the Corporate Law Reform Committee He was also appointed by the Domestic Trade Minister to be a member of the Corporate Law Reform Committee He was also appointed by the Domestic Trade Minister to be a member of the Corporate Law Reform Committee He was also appointed by the Domestic Trade Minister to be a member of the Corporate Law Reform Committee He was also appointed by the Domestic Trade Minister to be a member of the Corporate Law Reform Committee He was also appointed by the Domestic Trade Minister to be a member of the Corporate Law Reform Committee under the purview of the Companies Commission of Malaysia. under the purview of the Companies Commission of Malaysia. under the purview of the Companies Commission of Malaysia. under the purview of the Companies Commission of Malaysia. under the purview of the Companies Commission of Malaysia. under the purview of the Companies Commission of Malaysia. under the purview of the Companies Commission of Malaysia. Independent Non-Executive Director of Malaysia Building Society Berhad and UEM Sunrise Berhad, both of which Independent Non-Executive Director of Malaysia Building Society Berhad and UEM Sunrise Berhad, both of which Independent Non-Executive Director of Malaysia Building Society Berhad and UEM Sunrise Berhad, both of which Independent Non-Executive Director of Malaysia Building Society Berhad and UEM Sunrise Berhad, both of which Independent Non-Executive Director of Malaysia Building Society Berhad and UEM Sunrise Berhad, both of which Independent Non-Executive Director of Malaysia Building Society Berhad and UEM Sunrise Berhad, both of which Independent Non-Executive Director of Malaysia Building Society Berhad and UEM Sunrise Berhad, both of which are listed on Bursa Malaysia. are listed on Bursa Malaysia. are listed on Bursa Malaysia. are listed on Bursa Malaysia. are listed on Bursa Malaysia. are listed on Bursa Malaysia. are listed on Bursa Malaysia. Jonathan Law Ngee Song Jonathan Law Ngee Song Jonathan Law Ngee Song Jonathan Law Ngee Song Jonathan Law Ngee Song Jonathan Law Ngee Song Jonathan Law Ngee Song (Independent Non-Executive Director, Chairman of Remuneration Committee, member of Audit Committee and (Independent Non-Executive Director, Chairman of Remuneration Committee, member of Audit Committee and (Independent Non-Executive Director, Chairman of Remuneration Committee, member of Audit Committee and (Independent Non-Executive Director, Chairman of Remuneration Committee, member of Audit Committee and (Independent Non-Executive Director, Chairman of Remuneration Committee, member of Audit Committee and (Independent Non-Executive Director, Chairman of Remuneration Committee, member of Audit Committee and (Independent Non-Executive Director, Chairman of Remuneration Committee, member of Audit Committee and Nomination & Corporate Governance Committees, age 52) Nomination & Corporate Governance Committees, age 52) Nomination & Corporate Governance Committees, age 52) Nomination & Corporate Governance Committees, age 52) Nomination & Corporate Governance Committees, age 52) Nomination & Corporate Governance Committees, age 52) Nomination & Corporate Governance Committees, age 52) Appointed 4 July 2013. Appointed 4 July 2013. Appointed 4 July 2013. Appointed 4 July 2013. Appointed 4 July 2013. Appointed 4 July 2013. Appointed 4 July 2013. He was admitted as an Advocate and Solicitor, to the High Court of Malaya in 1991. He was admitted as an Advocate and Solicitor, to the High Court of Malaya in 1991. He was admitted as an Advocate and Solicitor, to the High Court of Malaya in 1991. He was admitted as an Advocate and Solicitor, to the High Court of Malaya in 1991. He was admitted as an Advocate and Solicitor, to the High Court of Malaya in 1991. He was admitted as an Advocate and Solicitor, to the High Court of Malaya in 1991. He was admitted as an Advocate and Solicitor, to the High Court of Malaya in 1991. Following his graduation from Australia National University in 1989 with a Bachelor of Commerce and Bachelor of Following his graduation from Australia National University in 1989 with a Bachelor of Commerce and Bachelor of Following his graduation from Australia National University in 1989 with a Bachelor of Commerce and Bachelor of Following his graduation from Australia National University in 1989 with a Bachelor of Commerce and Bachelor of Following his graduation from Australia National University in 1989 with a Bachelor of Commerce and Bachelor of Following his graduation from Australia National University in 1989 with a Bachelor of Commerce and Bachelor of Following his graduation from Australia National University in 1989 with a Bachelor of Commerce and Bachelor of Laws, he practised as a legal assistant in Allen & Gledhill (1991 to 1995) and was promoted to a partner (1995 to Laws, he practised as a legal assistant in Allen & Gledhill (1991 to 1995) and was promoted to a partner (1995 to Laws, he practised as a legal assistant in Allen & Gledhill (1991 to 1995) and was promoted to a partner (1995 to Laws, he practised as a legal assistant in Allen & Gledhill (1991 to 1995) and was promoted to a partner (1995 to Laws, he practised as a legal assistant in Allen & Gledhill (1991 to 1995) and was promoted to a partner (1995 to Laws, he practised as a legal assistant in Allen & Gledhill (1991 to 1995) and was promoted to a partner (1995 to Laws, he practised as a legal assistant in Allen & Gledhill (1991 to 1995) and was promoted to a partner (1995 to 1996). In 1996 he joined the Malaysian law firm Messrs Nik Saghir & Ismail as a partner of the firm. 1996). In 1996 he joined the Malaysian law firm Messrs Nik Saghir & Ismail as a partner of the firm. 1996). In 1996 he joined the Malaysian law firm Messrs Nik Saghir & Ismail as a partner of the firm. 1996). In 1996 he joined the Malaysian law firm Messrs Nik Saghir & Ismail as a partner of the firm. 1996). In 1996 he joined the Malaysian law firm Messrs Nik Saghir & Ismail as a partner of the firm. 1996). In 1996 he joined the Malaysian law firm Messrs Nik Saghir & Ismail as a partner of the firm. 1996). In 1996 he joined the Malaysian law firm Messrs Nik Saghir & Ismail as a partner of the firm. Independent Non-Executive Director of Karex Berhad and Evergreen Fibreboard Berhad, public listed companies in Independent Non-Executive Director of Karex Berhad and Evergreen Fibreboard Berhad, public listed companies in Independent Non-Executive Director of Karex Berhad and Evergreen Fibreboard Berhad, public listed companies in Independent Non-Executive Director of Karex Berhad and Evergreen Fibreboard Berhad, public listed companies in Independent Non-Executive Director of Karex Berhad and Evergreen Fibreboard Berhad, public listed companies in Independent Non-Executive Director of Karex Berhad and Evergreen Fibreboard Berhad, public listed companies in Independent Non-Executive Director of Karex Berhad and Evergreen Fibreboard Berhad, public listed companies in Malaysia. Appointed Independent Non-Executive Chairman of Evergreen Fibreboard Berhad on 22 February Malaysia. Appointed Independent Non-Executive Chairman of Evergreen Fibreboard Berhad on 22 February Malaysia. Appointed Independent Non-Executive Chairman of Evergreen Fibreboard Berhad on 22 February Malaysia. Appointed Independent Non-Executive Chairman of Evergreen Fibreboard Berhad on 22 February Malaysia. Appointed Independent Non-Executive Chairman of Evergreen Fibreboard Berhad on 22 February Malaysia. Appointed Independent Non-Executive Chairman of Evergreen Fibreboard Berhad on 22 February Malaysia. Appointed Independent Non-Executive Chairman of Evergreen Fibreboard Berhad on 22 February 2010. He is also the Chairman of Remuneration Committee and a member of Nomination Committee of Evergreen 2010. He is also the Chairman of Remuneration Committee and a member of Nomination Committee of Evergreen 2010. He is also the Chairman of Remuneration Committee and a member of Nomination Committee of Evergreen 2010. He is also the Chairman of Remuneration Committee and a member of Nomination Committee of Evergreen 2010. He is also the Chairman of Remuneration Committee and a member of Nomination Committee of Evergreen 2010. He is also the Chairman of Remuneration Committee and a member of Nomination Committee of Evergreen 2010. He is also the Chairman of Remuneration Committee and a member of Nomination Committee of Evergreen Fibreboard Berhad. Fibreboard Berhad. Fibreboard Berhad. Fibreboard Berhad. Fibreboard Berhad. Fibreboard Berhad. Fibreboard Berhad. Annual Report 2017 | Anglo-Eastern Plantations Plc Annual Report 2017 | Anglo-Eastern Plantations Plc Annual Report 2017 | Anglo-Eastern Plantations Plc Annual Report 2017 | Anglo-Eastern Plantations Plc Annual Report 2017 | Anglo-Eastern Plantations Plc Annual Report 2017 | Anglo-Eastern Plantations Plc Annual Report 2017 | Anglo-Eastern Plantations Plc 39 39 39 39 39 39 39 39 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Statement on Corporate Governance Application of the UK Corporate Governance Code AEP is committed to business integrity, appropriately high ethical standards and professionalism in all its activities and operations. This includes a commitment to high standards in corporate governance relating in particular to appropriate systems and controls adopted at a senior level of management of the Group and operation of the Board. The benchmark standards in this regard are set out in the UK Corporate Governance Code (‘the Code’), as most recently revised in June 2016 which forms part of the Listing Rules of the London Stock Exchange. The Code is available from the Financial Reporting Council’s (“FRC”) website at www.frc.org.uk. Where provisions of the Code were not met during 2017, the particular comment is made in the statements below and in the Directors’ remuneration report on pages 47 to 51. Relationship Agreement with Controlling Shareholder The UK Listing Rules require a premium listed issuer with a controlling shareholder to have in place a relationship agreement with the controlling shareholder. The mandatory requirement for the relationship agreement is intended to prevent controlling shareholders from exercising their influence in a way that is improper or unfair to minority shareholders. The requirement is not intended to prevent a controlling shareholder from engaging fairly with an issuer or legitimately disagreeing with the issuer and neither are they intended to prevent shareholders from holding board positions. AEP Plc has identified all controlling shareholders and regarded its major shareholder, Genton International Limited (“Genton”) as the only controlling shareholder. In this respect, the Company entered into a relationship agreement with Genton on 14 November 2014. The agreement is available for inspection by the shareholders upon request from the Company Secretary. AEP Plc has complied with the independence provisions included in the agreement and that, so far as it is aware, those independence provisions have been complied with by Genton. The Board AEP is led by a strong and experienced Board of Directors (see biographical details set out on page 39). During 2017 the Board comprised the Non-Executive Chairman, one Executive Director and two Non-Executive Directors, both of whom are considered by the Board to be Independent. Dato’ John Lim Ewe Chuan was appointed as the Executive Director, Corporate Finance and Corporate Affairs on 1 September 2010. Prior to 1 September 2010, Dato’ John Lim was the Senior Independent Non-Executive Director. Madam Lim Siew Kim was appointed as the Non-Executive Chairman on 31 January 2011. Neither external search consultancy nor open advertising was used for the appointment. The Nomination and Corporate Governance Committee is of the view that Madam Lim, who indirectly owns 52% of the Company’s shares, with her experience in plantation as she was the Chairman of the Company from 1993 to 1998 is an appropriate candidate for the position. The other members of the Board are satisfied that through the specific powers reserved for the Board, and given the presence of the Independent Non-Executive Directors, there is a reasonable balance of influence. Independence of the Non-Executive Directors The Board has evaluated the independence of each of its Non-Executive Directors. Following this assessment, the Board has determined that, throughout the reporting period, both of its Non-Executive Directors, who were appointed for specified terms of office, were independent, based above all on their objectivity and integrity. The terms and conditions relating to the appointment of the Non-Executive Directors are available from the Company Secretary. Annual Report 2017 | Anglo-Eastern Plantations Plc 40 40 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Statement on Corporate Governance In arriving at its conclusion, the Board considered the factors set out in the FRC’s UK Corporate Governance Code including, inter alia, whether any of the Non-Executive Directors: • has been an employee of the Group within the last five years; • has, or had within the last three years, a material business relationship with the Group; • receives remuneration from the Group other than a Director’s fee; • has close family ties with any of the Group’s advisors, Directors or senior employees; • holds cross-directorships or has significant links with other Directors through involvement in other companies or bodies; • has served more than nine years on the Board; or • represents a significant shareholder The FRC’s UK Corporate Governance Code acknowledges that a Director may be regarded as independent notwithstanding the existence of any of the above factors. The Independent Non-Executive Directors have a wide range of business interests beyond their position with the Company and the rest of the Board agree unanimously that they have shown themselves to be fully independent. Senior Independent Non-Executive Director Mr. Lim Tian Huat, an experienced Chartered Accountant acted in the capacity of Senior Independent Non-Executive Director from 8 May 2015. Operation of the Board A schedule of duties and decisions reserved for the Board and management respectively has been adopted. The Audit, Nomination & Corporate Governance and Remuneration Committees have written terms of reference which are available for inspection upon request from the Company Secretary. Unless warranted by unusual matters, the Board normally meets two to three times each year. Otherwise, all other matters are dealt with by written resolution and telephone conference. During 2017 there were two Board meetings and were attended by all directors except for Mr Lim Tian Huat who attended only one Board meeting. Agenda and minutes of previous meetings were circulated prior to meetings. The Independent Non-Executive Directors met on their own during 2017. Telephone discussions between the Chairman and the Non-Executive Directors also took place outside these meetings. The Board is supplied with relevant, timely and accurate information for review prior to each meeting to enable them to discharge their duties. The Audit Committee is responsible for the integrity of the financial information and this is achieved by interacting with the management and with the internal auditors. The Board has identified and formally adopted a schedule of key matters that are reserved for its decision, including the annual fiscal and capital budgets, interim, preliminary and final results announcements, final dividends, the appointment of Directors and the Company Secretary, circulars to shareholders, Group treasury policies and acquisitions. Certain other matters are delegated to Board committees, the details of which are set out below. During 2017, the Board followed the Group results and the development of the activities of the various subsidiaries by means of reports prepared by the management in Malaysia and Indonesia. It received further reports and minutes of Executive Committee meetings in Indonesia chaired by a senior manager from Malaysia. The objectives of the Executive Committee are to resolve operational issues and to drive the performance budget set at the beginning of every year by the Board. The other members of the Executive Committee are made up of senior members of the management team based in Indonesia which amongst others includes the Chief Executive Officer, the two Chief Operating Officers, the Finance Director and the Engineering Director. Annual Report 2017 | Anglo-Eastern Plantations Plc 41 41 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Statement on Corporate Governance Each Board member has access to the impartial advice and services of the Company Secretary, who is responsible to the Board for ensuring that appropriate procedures are followed. Where necessary the Board members may seek independent advice including legal counsel at the Company’s expense. The Company maintained Directors’ and officers’ liability insurance throughout 2017. Non-Executive Directors are appointed for two year terms renewable on the recommendation of the Board. To maintain the vitality of the Board, the Directors specify fixed terms of office for Non-Executives. However, the Board will review the position of each Director for the yearly re-election under the Code. Dato’ John Lim, the only Executive Director on the Board, sits on the Audit, Nomination and Remuneration Committees for 2017. The UK Corporate Governance Code provides for smaller companies like AEP to have two independent Non-Executive Directors in the Audit and Remuneration Committees and a majority independent Non- Executive Directors in the Nomination Committee. The Code does not expressly provide for the exclusion of the Executive Director in the Audit and Remuneration Committees. In practice, companies would normally exclude the Executive Director from membership so as not to taint the independence of both the Audit and Remuneration Committees. However, the Board felt strongly that given the small composition of the various Committees, they would benefit from Dato’ John Lim’s wealth of commercial and audit experience. It was also felt that Dato’ John Lim being the only Director based in London could only adequately represents the Company in any shareholders and investor meetings if he sits in the three Committees. The Board also believes that the Non-Executive Directors, being professionals in their own areas of expertise would maintain their impartiality and independence by their majority presence in all three Committees. In 2017 the Board conducted a review of its performance by discussion. It concluded that the Board is performing effectively and that the Board members have the complementary skills appropriate to propel the Group in its strategic direction and for challenges ahead. No other major issues arose from this review. Following a review of the internal control and risks management in April 2018 and in the absence of any reported failure and weaknesses which the Board considered significant, it concluded that these remain effective and sufficient for their purpose. Nomination Committee The Nomination and Corporate Governance Committee currently comprises Mr. Lim Tian Huat (Chairman), Dato’ John Lim Ewe Chuan and Mr. Jonathan Law Ngee Song. The committee had two meetings during 2017, attended by all members. The policy on gender diversity is described on page 24 of the Strategic Report. During the year, the Nomination Committee reviewed and deliberated on the Statement of Corporate Governance for inclusion in the Annual Report. It also met to discuss and approve the extension of the contract of three of its Directors. Relations with shareholders The Executive Director contacted and met certain principal shareholders during the year to understand their concerns and at all times are pleased to speak to and meet any shareholder. The views of the shareholders were communicated to the Board to ensure that it is mindful of the shareholders’ sentiment and issues arising at all times. Given the dispersion of Directors and shareholders, it is not possible for every Director to meet shareholders. A member of the Audit, Nomination and Remuneration Committees will be available at the 2018 AGM. It is the intention of the Board that the Company would engage with identifiable shareholders who have voted against Company’s resolutions in the past. Annual Report 2017 | Anglo-Eastern Plantations Plc 42 42 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Statement on Corporate Governance The annual report, interim report and trading statements are intended to keep the shareholders informed as to the progress in the operational and financial performance of the Group. The Company maintains a corporate website at http://www.angloeastern.co.uk. This website has detailed information on various aspects of the Group’s operations. The website is updated regularly and includes information on the Company’s share price and the price of crude palm oil. The Company’s results and other news releases issued via the London Stock Exchange’s Regulatory News Service are published on the “Investors Information” and “News” sections of the website and together with other relevant information concerning the Company and the Industry, are available for downloading. The website was upgraded recently to enable shareholders and investors to select and receive e-mail alerts from the Company on the selected regulatory news to follow the development of the Company. Environmental and corporate responsibility In 2004 a group of growers, processors, retailers and wildlife and conservation groups founded the “Roundtable for Sustainable Palm Oil”, known as RSPO, to codify and promote best practices in the industry. Although AEP is not a member of the RSPO, the Group’s management and Directors take a serious view of their environmental and social responsibilities and are fully committed to the principles developed by RSPO. Many of these principles overlap with ISPO of which compliance is mandatory for AEP. These principles cover eight headings as follows: • Transparency • Compliance with local laws and regulations • Commitment to long term economic and financial viability • Use of appropriate best practices by growers and millers • Environmental responsibility and conservation of natural resources and biodiversity • Responsible consideration of individuals and communities affected by growers and mills • Responsible development of new plantings • Commitment to continuous improvement in key areas of activity. Within these headings are 40 detailed principles. Among the most important are: • Not to remove primary forest • Not to use fire for clearing areas designated for new or replanting • To follow accepted soil and water conservation practices • To use agrochemicals in ways that do not endanger health or the environment and to promote non-chemical methods of pest management • To leave wild areas for wildlife corridors, water catchment and riparian protection • Provide full treatment of mill effluent water • Ensure the wishes of local communities and individuals are taken account of, and • To pay to individuals with residual rights over land only freely agreed compensation, in addition to following government land regulations. AEP seeks to comply with these principles in all areas of its activities. Lim Tian Huat Chairman, Nomination and Corporate Governance Committee 24 April 2018 Annual Report 2017 | Anglo-Eastern Plantations Plc 43 43 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Audit Committee Report Audit Committee The Audit Committee comprises Mr. Lim Tian Huat (Chairman), Dato’ John Lim Ewe Chuan and Mr. Jonathan Law Ngee Song, all of whom are considered by the Directors to have relevant financial and professional experiences to discharge their specific duties with respect to the Audit Committee. Mr. Lim is a Fellow member of the Association of Chartered Certified Accountants and a member of the Malaysian Institute of Accountants and Malaysian Institute of Certified Public Accountants. He is also the founding President of Insolvency Practitioners of Malaysia. He has extensive experience in accounting, auditing, finance and corporate insolvency. He attended and participated in eight courses and seminars in 2017, three of which were organised by Malaysian Institute of Accountants. Topics covered training for directors, risk management, trends, insolvency, review and update of accounting standards. Dato’ John Lim attended webinars hosted by UHY Hacker Young LLP on the update of accounting and auditing standards. Mr. Jonathan Law attended two seminars covering topics on impact and compliance of new regulations under the Malaysian Companies Act 2016 and also the Fintech legality. Both Mr. Lim and Dato’ John Lim have recent and relevant financial experience in their discharge of duties on the Audit Committee. Overview The Audit Committee met prior to the completion of the 2017 accounts and five times during 2017 with full attendance. During the year, the Committee reviewed and discussed the 2016 Annual Report, Interim Results, 1st Quarter and 3rd Quarter Trading Statement for 2017. The Committee also deliberated and recommended to the Board the dividend rate for AEP and the Indonesian subsidiaries. It also assessed the risks management report and concluded that the risks generally remained unchanged. The industry continues to face many challenges and uncertainties over sustainable issues and governmental protective policies. The internal audit reports were tabled bi-annually at the Audit Committee meetings and were discussed in detail. In its effort to improve yield, the Committee also recommended the appointment of external agronomists to make field visits for underperforming estates in Indonesia to provide advice on optimizing field disciplines and improving crop yields. Due to the slower than expected progress in new planting, the Committee approved an independent survey of some estates to map out areas that can be planted expediently. In line with the recommendation of the Committee, the Group in 2017 recruited additional manpower and reorganized the internal audit teams with separate team leaders to spearhead and focus on financial and operational audits respectively. It also approved the Internal Audit Plan for the year. The Committee also deliberated extensively and made changes before recommending the Budget for 2017 to the Board. In May 2017, Audit Committee held its meeting in Medan and took the opportunities to meet the key managers of the Indonesian operations. There are regular dialogues, both formal and informal between the Audit Committee and the senior management in Indonesia and Malaysia and the discussions are open and constructive. The Committee met with the external auditors twice in 2017 to discuss and to agree the 2016 Group accounts for the Board’s approval and another meeting to plan the audit for 2017. In the audit planning meeting, the external auditors updated the Audit Committee on directors’ responsibilities and stressed on the UK Corporate Governance Code relating to audit partners’ rotation and independence. During the year the audit engagement team from BDO (UK) visited Indonesia and Malaysia to review the work of the component auditors. Annual Report 2017 | Anglo-Eastern Plantations Plc 44 44 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Audit Committee Report In the 2017 Annual Report, the management has taken reasonable steps to assess whether there is any indication that an asset may be impaired, in particular, the plantations. 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 used. Its recoverable amount was based on value in use calculation on the basis that it will be higher than fair value less cost to sell, given the mechanics of the two calculations and the nature of the business. This requires the management to exercise significant judgement in determining the underlying assumptions used in the calculation of the recoverable amount. In 2017, the reversal of impairment loss of the plantations of the Group was $1.7 million (2016: impairment loss of $2.7 million). The details of the calculation of the recoverable amount are disclosed in note 10 - Property, plant and equipment to the consolidated financial statements. To provide indicative fair values and to support the valuation of the estate land, twelve companies located across North Sumatera, Bengkulu, Riau, Kalimantan and Malaysia were valued by qualified valuers in 2017. The Directors revalued the estate land not covered by the valuation exercise based on the regional appreciation rate quantified by the qualified valuers. The land is valued on a rotational basis and all the land is valued by qualified valuers every two years. More details on land valuation work are covered on page 30 to 31. The Committee also reviewed the policy on revenue recognition and believes that revenue is recognized when significant risks and rewards of ownership of the FFB and CPO have been transferred to the buyers. The Group generates revenue predominantly from the sale of CPO from processed FFB. The Board receives reports from executive management in Indonesia and Malaysia and focuses principally on reviewing reports from management and considers whether significant risks in the Group are identified, evaluated, managed and whether significant weaknesses are promptly remedied including, but not limited to, commodity price movements, exchange rate movements, political and social change and government legislation. During the year the Committee carried out an assessment of the effectiveness of the external audit process. The assessment was led by the Chairman of the Audit Committee, assisted by the Senior General Manager and the Group Accountant and focused on certain criteria which the Committee considered to be important factors in demonstrating an effective audit process. These factors included the quality of audit staff, the planning and execution of the audit according to agreed plans and timeline, provision of sound advice on technical issues and degree of independence and professionalism displayed during the audit for 2016. The tenure of audit and extent of non-audit work that will affect the independence of the auditors were reviewed. During 2017, the non-audit work undertaken by BDO (UK) was on the review of the interim report for compliance before the announcement. The Committee considered the nature, scope of engagement and remuneration paid were such that the independence and objectivity of the auditors were not impaired. Fees paid for audit and non-audit services are provided in Note 4. The Committee considered the key members of the audit engagement team and component auditors involved in the Group Audit. This includes the Audit Partner, the Audit Senior Manager and the Audit Manager from BDO (UK) and the various partners from BDO in Malaysia and Indonesia. The current Audit Partner from BDO (UK) has been the Company’s audit engagement partner for four years since 2014 and the Audit Partner for Malaysia audit has completed one year. The Audit Partner for the Indonesian audit has been involved for two years since 2015. Following this assessment, the Committee concluded that the external audit process remained effective, and that the objectivity of the external auditors was not impaired and that it provides an appropriate independent challenge of the senior management of the Group. Annual Report 2017 | Anglo-Eastern Plantations Plc 45 45 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Audit Committee Report Responsibility Audit Committee is responsible for: Monitoring the integrity of the financial statements and reviewing formal announcements of financial performance and significant reporting issues and judgements that such statements and announcements are fair and balanced; Reviewing the effectiveness of the internal control functions (including the internal financial controls and the internal audit function); Making recommendations to the Board in relation to the appointment, reappointment and removal of the external auditors, their remuneration and terms of engagement; Reviewing and monitoring the independence of the external auditors and the effectiveness of the audit process; Providing advice to the Board on the assessment of the principal risks facing the Group; and Providing advice to the Board on the form and basis underlying the longer term viability statement and going concern statement to be contained in Annual Reports. The Committee also monitors the engagement of the auditors to perform non-audit work. The Committee considered that the nature and scope of, and remuneration payable in respect of, these engagements were such that the independence and objectivity of the auditors were not impaired. The members of the Committee discharge their responsibilities by informal discussions between themselves, by meeting with the external auditors, the internal auditors and management and by consideration of reports by management and by holding at least one formal meeting in each year. Internal control The Company has followed the Code provisions on internal control since 1999 and the Guidance on Risk Management, Internal Control and Related Financial and Business Reporting issued by the Financial Reporting Council in 2014.The Board has overall responsibility for the Group’s systems of internal control and risk management and for reviewing its effectiveness. Such a system is designed to manage, rather than eliminate, the risk of failure to achieve business objectives and can only provide reasonable and not absolute assurance against material misstatement or loss. The Audit Committee reviews and monitors specific risks and internal control procedures and reports to the Board where appropriate. Executive staff and Directors are responsible for implementation of control procedures and for identifying and managing business risks. The Group has internal auditors who visit operating sites in Indonesia and Malaysia regularly based on an approved Internal Audit Plan and provide summarized internal audit reports to the Audit Committee on a regular basis. The Internal Audit also conducts special audits throughout the year as and when required by management. The internal audit team provides objective assurance as to the effectiveness of the Group’s systems of internal control and risk management of the Group’s operating management to the Committee. Follow-up audits and discussions are also held to ensure remedial actions are taken promptly. The internal audit review is a continuous and sequential process and in any one year does not necessarily cover all risks which are significant to the Group. The process aims to provide reasonable assurance against material misstatement or loss but cannot eliminate the risk of loss. Lim Tian Huat Chairman, Audit Committee 24 April 2018 Annual Report 2017 | Anglo-Eastern Plantations Plc 46 46 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Directors’ Remuneration Report I am pleased to report on the activities of the Remuneration Committee for the year ended 31 December 2017. It sets out the remuneration policy and remuneration details for the Executive and Non-Executive directors of the Group. It has been prepared in accordance with Schedule 8 of The Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 as amended in August 2013. The Companies Act 2006 requires the auditors to report to the shareholders on certain parts of the Directors’ Remuneration Report and to state whether, in their opinion, those parts of the report have been properly prepared in accordance with the Regulations. The parts of the annual report on remuneration that are subject to audit are indicated in that report. The report by the Chairman of the Remuneration Committee and the policy statement are not subject to audit. The Executive Director’s compensation is not linked to the profitability of the Group. It is linked to his role in respect of activities relating to corporate finance and corporate affairs, including liaising with the Company’s advisers and regulators and interaction with shareholders. The Executive Director basic salary remains and is capped at £90,000 per annum until August 2018. The operating units in Indonesia and Malaysia, however, have in place a variable compensation policy that rewards senior executives and employees with bonuses ranging from two to seven months’ pay based on individual’s and operating units’ performance. The key criteria used in the determination of the variable compensation policy for the bonus was revised in May 2014 following discussion and consultation with the Company’s Chairman. The Remuneration policy and the Director’s remuneration report was last approved at Company’s AGM on 27 June 2017. In the meeting, the shareholders voted in the following manner: To approve Directors’ Remuneration Report For 44 Against 12 % For 98.94% % Against 1.06% The Committee would welcome your support for our Remuneration Report. The report excluding the policy statement will be subject to the shareholder vote in 2018 AGM. Remuneration Committee The Remuneration Committee comprises of Mr. Jonathan Law Ngee Song (Chairman), Dato’ John Lim Ewe Chuan and Mr. Lim Tian Huat. The Committee had one meeting in 2017, attended by all members. Besides formal meetings, it also has informal discussions and consultation with the Company’s Chairman in relation to the variable bonuses for operational staff in Indonesia. During the year the Remuneration Committee reviewed the annual the necessary recommendation to the Board after making an informal comparison with other plantation companies. The Committee also deliberated on the 2017 Remuneration Report and recommended to the Board for acceptance. increment and bonus entitlement of senior management Indonesia. It made in Policy The Remuneration Committee makes recommendations on senior management pay and conditions, after consultation with the Chairman, and recommends to the Board the terms for the Executive Director. It periodically assesses the remuneration of the Non-Executive Directors and submits a proposal to the Board. In determining the remuneration policy of senior management, the Committee takes into account the need to attract, retain and motivate employees. It also makes external comparison with the current market trends and practices of equivalent roles taking into account the size, business complexity and relative performance. Non-Executive Directors’ remuneration is considered by the Board and consists exclusively of a fixed payment. Annual Report 2017 | Anglo-Eastern Plantations Plc 47 47 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Directors’ Remuneration Report When determining Executive Director’s remuneration, the Committee reviews the pay policy and levels for executives below the Board, as well as pay and conditions of employees throughout the Group. Other factors considered are individual performance, market conditions, the Company’s performance, pay and employment conditions of its other employees in the organisation and the need to maintain an economic operation. This policy continues to be consistently applied. Components Base salary Base salaries of senior management are reviewed on an annual basis by the Remuneration Committee or when an individual changes his responsibilities. Non-Executive Directors receive no benefit other than a fee. Bonus The Group operates a bonus scheme for senior executives and managers of operating units, which is determined by weighted performance criteria including crop production, external crop purchase, increases in planted area, efficiency of mill performance and overall profitability. There is no bonus scheme for the Executive Director. Share options The UK and overseas executive share option schemes of the Company are administered and supervised by a committee consisting, in the majority, of Non-Executive Directors. These schemes are limited over their ten year life to issuing no more than 10% of the issued ordinary share capital of the Company from time to time. They provide for options to be granted over treasury shares as well as over new shares. To avoid dilution, the Board intends generally to follow the treasury share route. Individual grants vest over three years. The total grant to each holder is determined by seniority and total market value at the date of grant is normally limited to two times base salary. Exercise of options is only permitted three years after grant, provided that the holder remains an employee of the Group throughout the period. There are no other performance criteria for exercise of options granted so far. Pensions The operating units in Indonesia participate in mandatory pension schemes for their local executives and management. There is no company-sponsored scheme for senior executives outside of Indonesia. Remuneration Policy Table for Executive Director The table below summarises the key aspects of the Group’s Remuneration Policy for Executive Director effective 1 January 2015. Type Purpose Base salary - fixed pay To contain fixed costs Maximum payment Capped at £90,000. The cap is reviewed periodically. The policy permits the cap to be changed if this is deemed necessary to meet regulatory business, requirements. legislative or There is no bonus, fringe benefits or employee share option scheme for the Executive Director. Annual Report 2017 | Anglo-Eastern Plantations Plc 48 48 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Directors’ Remuneration Report Directors’ Remuneration Report Executive Director’s Remuneration over 9 Years Executive Director’s Remuneration over 9 Years Benefit Benefit - - - - - - - - - - - - - - - - - - Year ended 31 Dec Year ended 31 Dec 2017 2017 2016 2016 2015 2015 2014 2014 2013 2013 2012 2012 2011 2011 2010 2010 2009 2009 * The Executive Director’s basic salary from 2015 to 2017 was £90,000 per annum. The fluctuations shown above * The Executive Director’s basic salary from 2015 to 2017 was £90,000 per annum. The fluctuations shown above during this period were the result of exchange translations. during this period were the result of exchange translations. Salary Salary $113,000* $113,000* $127,000* $127,000* $137,000* $137,000* $133,000 $133,000 $117,000 $117,000 $105,000 $105,000 $83,000 $83,000 $114,000 $114,000 $137,000 $137,000 Total Total $113,000 $113,000 $127,000 $127,000 $137,000 $137,000 $133,000 $133,000 $117,000 $117,000 $105,000 $105,000 $83,000 $83,000 $114,000 $114,000 $137,000 $137,000 Pension Pension - - - - - - - - - - - - - - - - - - Bonus Bonus - - - - - - - - - - - - - - - - - - Percentage change of remuneration Percentage change of remuneration The following table shows a comparison of the percentage change in salaries of the Executive Director, senior The following table shows a comparison of the percentage change in salaries of the Executive Director, senior management in Indonesia and total wages and salaries between 2016 and 2017. management in Indonesia and total wages and salaries between 2016 and 2017. Percentage change in Executive Director’s salary Percentage change in Executive Director’s salary Salary Salary $113,000 $113,000 $127,000 $127,000 -11.0% -11.0% 2017 2017 2016 2016 Change Change Percentage change in selected Group senior management salaries Percentage change in selected Group senior management salaries Salaries Salaries $1,587,000 $1,587,000 $1,816,000 $1,816,000 -12.6% -12.6% Percentage change in total wages and salaries Percentage change in total wages and salaries Total wages and salaries Total wages and salaries Relative importance of spend on pay Relative importance of spend on pay $31,608,000 $31,608,000 $28,764,000 $28,764,000 +9.9% +9.9% $'000 $'000 35,000 35,000 30,000 30,000 25,000 25,000 20,000 20,000 15,000 15,000 10,000 10,000 5,000 5,000 - - 34,926 34,926 31,564 31,564 1,003 1,003 1,515 1,515 2016 2017 2016 2017 2016 2017 2016 2017 Total Group Employee Remuneration Total Group Employee Remuneration Total Dividend Paid Total Dividend Paid Annual Report 2017 | Anglo-Eastern Plantations Plc Annual Report 2017 | Anglo-Eastern Plantations Plc 49 49 49 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Directors’ Remuneration Report Service contracts All Directors, Executive and Non-Executive, have formal appointment letters. The Executive and Non-Executives are appointed normally on two year terms with notice periods of one month to two months. The service contracts are kept at the registered office and may be inspected by shareholders on request. Notice periods for all other senior management are generally two months. Therefore any remuneration payment for loss of office will be capped at a maximum of two months. At 31 December 2017, the unexpired term of the retiring Directors are: Madam Lim Siew Kim Dato’ John Lim Ewe Chuan Lim Tian Huat Jonathan Law Ngee Song Expiry 30 January 2019 Expiry 31 August 2018 Expiry 7 May 2019 Expiry 3 July 2019 Performance Graph The performance graph is set out on page 4 and shows the Company’s share price performance compared to the FTSE 100 index for the period of 2009 to 2017 (last nine years) to indicate the volatility and trend of the market generally. Our share price performance consistently outperformed the FTSE 100 index throughout these periods. In determining senior management compensation, the Remuneration Committee is influenced by the operating performance of the Company and not directly by the share price. AEP was removed from the FTSE All Share Index in June 2016 resulting in a large sell down of its shares as index related funds reweighted their holdings. The drop in AEP share price coincided with the sell down. The removal was primarily based on the liquidity of the shares after it failed to meet the monthly median of 0.015% of the stock for eight out of twelve months. However, after an absence of one year, AEP with effect from 1 June 2017, has been included in the FTSE Small Cap and FTSE All Share Index. Directors’ interests (audited) The interests of the Directors together with those of their immediate families in the securities of the Company were as shown below: Directors' beneficial interests at 31 December: Madam Lim Siew Kim Dato' John Lim Ewe Chuan Lim Tian Huat Jonathan Law Ngee Song 2017 Ordinary shares 20,551,914 2016 Ordinary shares 20,551,914 - - - - - - The interests disclosed for Madam Lim are held by Genton International Ltd and certain other companies of which Madam Lim is the controlling shareholder. There have been no changes in the interests of the Directors in the securities of the Company between 31 December 2017 and the date of this report. Other than Madam Lim, none of the Directors had any interest in the securities of the Company between the date of their appointments and the date of this report. There is no requirement for Directors to hold shares in the Company. Other than as set out in notes 6 and 21 to the consolidated financial statements, no Director had a material interest in any contract of the Company subsisting during, or at the end of the financial year. Annual Report 2017 | Anglo-Eastern Plantations Plc 50 50 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Directors’ Remuneration Report Directors’ remuneration (audited) The following part provides details of the remuneration of all the Directors for the year ended 31 December 2017. The numerical components of these disclosures have been audited in accordance with Section 421 of the UK Companies Act 2006. The remuneration of all Directors who served during the year was: Audited information Name of Directors Executive: Dato' John Lim Ewe Chuan (1) Non-Executive: Lim Siew Kim (2) Lim Tian Huat (3) Jonathan Law Ngee Song (4) Total Total 2017 Fees Total 2016 Fees $000 $000 113 55 20 20 208 127 59 21 21 228 Directors’ remuneration comprises of directors fees only. Unaudited information Notes: (1) Appointed as Executive Director on 1 September 2010. Previously was the Senior Independent Non-Executive Director. (2) Appointed on 29 November 1993 and appointed as Non-Executive Chairman on 31 January 2011. (3) Appointed on 8 May 2015. (4) Appointed on 4 July 2013. Jonathan Law Ngee Song Chairman, Remuneration Committee 24 April 2018 Annual Report 2017 | Anglo-Eastern Plantations Plc 51 51 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Auditors’ Report Auditors’ Report Auditors’ Report Auditors’ Report Auditors’ Report Auditors’ Report INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ANGLO-EASTERN PLANTATIONS PLC INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ANGLO-EASTERN PLANTATIONS PLC INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ANGLO-EASTERN PLANTATIONS PLC INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ANGLO-EASTERN PLANTATIONS PLC INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ANGLO-EASTERN PLANTATIONS PLC INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ANGLO-EASTERN PLANTATIONS PLC Opinion Opinion Opinion Opinion Opinion Opinion We have audited the financial statements of Anglo Eastern Plantations Plc (the ‘parent company’) and its We have audited the financial statements of Anglo Eastern Plantations Plc (the ‘parent company’) and its We have audited the financial statements of Anglo Eastern Plantations Plc (the ‘parent company’) and its subsidiaries (the ‘group’) for the year ended 31 December 2017 which comprise the consolidated income statement, We have audited the financial statements of Anglo Eastern Plantations Plc (the ‘parent company’) and its subsidiaries (the ‘group’) for the year ended 31 December 2017 which comprise the consolidated income statement, We have audited the financial statements of Anglo Eastern Plantations Plc (the ‘parent company’) and its subsidiaries (the ‘group’) for the year ended 31 December 2017 which comprise the consolidated income statement, We have audited the financial statements of Anglo Eastern Plantations Plc (the ‘parent company’) and its the consolidated statement of comprehensive income, the consolidated statement of financial position, the subsidiaries (the ‘group’) for the year ended 31 December 2017 which comprise the consolidated income statement, the consolidated statement of comprehensive income, the consolidated statement of financial position, the subsidiaries (the ‘group’) for the year ended 31 December 2017 which comprise the consolidated income statement, the consolidated statement of comprehensive income, the consolidated statement of financial position, the subsidiaries (the ‘group’) for the year ended 31 December 2017 which comprise the consolidated income statement, consolidated statement of changes in equity, the consolidated statement of cash flows, the Company balance sheet, the consolidated statement of comprehensive income, the consolidated statement of financial position, the consolidated statement of changes in equity, the consolidated statement of cash flows, the Company balance sheet, the consolidated statement of comprehensive income, the consolidated statement of financial position, the consolidated statement of changes in equity, the consolidated statement of cash flows, the Company balance sheet, the consolidated statement of comprehensive income, the consolidated statement of financial position, the the Company statement of changes in equity and notes to the financial statements, including a summary of consolidated statement of changes in equity, the consolidated statement of cash flows, the Company balance sheet, the Company statement of changes in equity and notes to the financial statements, including a summary of consolidated statement of changes in equity, the consolidated statement of cash flows, the Company balance sheet, the Company statement of changes in equity and notes to the financial statements, including a summary of consolidated statement of changes in equity, the consolidated statement of cash flows, the Company balance sheet, significant accounting policies. The financial reporting framework that has been applied in their preparation of the the Company statement of changes in equity and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation of the the Company statement of changes in equity and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation of the the Company statement of changes in equity and notes to the financial statements, including a summary of group financial statements is applicable law and International Financial Reporting Standards (IFRSs) as adopted by significant accounting policies. The financial reporting framework that has been applied in their preparation of the group financial statements is applicable law and International Financial Reporting Standards (IFRSs) as adopted by significant accounting policies. The financial reporting framework that has been applied in their preparation of the group financial statements is applicable law and International Financial Reporting Standards (IFRSs) as adopted by significant accounting policies. The financial reporting framework that has been applied in their preparation of the the European Union. The financial reporting framework that has been applied in respect of the parent company group financial statements is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union. The financial reporting framework that has been applied in respect of the parent company group financial statements is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union. The financial reporting framework that has been applied in respect of the parent company group financial statements is applicable law and International Financial Reporting Standards (IFRSs) as adopted by financial statements is applicable law and United Kingdom Accounting Standards including Financial Reporting the European Union. The financial reporting framework that has been applied in respect of the parent company financial statements is applicable law and United Kingdom Accounting Standards including Financial Reporting the European Union. The financial reporting framework that has been applied in respect of the parent company financial statements is applicable law and United Kingdom Accounting Standards including Financial Reporting the European Union. The financial reporting framework that has been applied in respect of the parent company Standard 101 ‘Reduced reporting Framework’ (United Kingdom Generally Accepted Accounting Practice). financial statements is applicable law and United Kingdom Accounting Standards including Financial Reporting Standard 101 ‘Reduced reporting Framework’ (United Kingdom Generally Accepted Accounting Practice). financial statements is applicable law and United Kingdom Accounting Standards including Financial Reporting Standard 101 ‘Reduced reporting Framework’ (United Kingdom Generally Accepted Accounting Practice). financial statements is applicable law and United Kingdom Accounting Standards including Financial Reporting Standard 101 ‘Reduced reporting Framework’ (United Kingdom Generally Accepted Accounting Practice). Standard 101 ‘Reduced reporting Framework’ (United Kingdom Generally Accepted Accounting Practice). Standard 101 ‘Reduced reporting Framework’ (United Kingdom Generally Accepted Accounting Practice). In our opinion: In our opinion: In our opinion: In our opinion: In our opinion: In our opinion: The financial statements give a true and fair view of the state of the group’s and of the parent company’s affairs The financial statements give a true and fair view of the state of the group’s and of the parent company’s affairs The financial statements give a true and fair view of the state of the group’s and of the parent company’s affairs as at 31 December 2017 and of the group’s profit for the year then ended; The financial statements give a true and fair view of the state of the group’s and of the parent company’s affairs The financial statements give a true and fair view of the state of the group’s and of the parent company’s affairs as at 31 December 2017 and of the group’s profit for the year then ended; The financial statements give a true and fair view of the state of the group’s and of the parent company’s affairs as at 31 December 2017 and of the group’s profit for the year then ended; as at 31 December 2017 and of the group’s profit for the year then ended; as at 31 December 2017 and of the group’s profit for the year then ended; as at 31 December 2017 and of the group’s profit for the year then ended; the group financial statements have been properly prepared in accordance with IFRSs as adopted by the the group financial statements have been properly prepared in accordance with IFRSs as adopted by the the group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union; the group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union; the group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union; the group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union; European Union; European Union; the parent company financial statements have been properly prepared in accordance with United Kingdom the parent company financial statements have been properly prepared in accordance with United Kingdom the parent company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and the parent company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and the parent company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and the parent company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and Generally Accepted Accounting Practice; and Generally Accepted Accounting Practice; and the financial statements have been prepared in accordance with the requirements of the Companies Act 2006; the financial statements have been prepared in accordance with the requirements of the Companies Act 2006; the financial statements have been prepared in accordance with the requirements of the Companies Act 2006; and, as regards the group financial statements, Article 4 of the IAS Regulation. the financial statements have been prepared in accordance with the requirements of the Companies Act 2006; and, as regards the group financial statements, Article 4 of the IAS Regulation. the financial statements have been prepared in accordance with the requirements of the Companies Act 2006; and, as regards the group financial statements, Article 4 of the IAS Regulation. the financial statements have been prepared in accordance with the requirements of the Companies Act 2006; and, as regards the group financial statements, Article 4 of the IAS Regulation. and, as regards the group financial statements, Article 4 of the IAS Regulation. and, as regards the group financial statements, Article 4 of the IAS Regulation. Basis for opinion Basis for opinion Basis for opinion Basis for opinion Basis for opinion Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. financial statements section of our report. We are independent of the group and the parent company in accordance Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the group and the parent company in accordance Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the group and the parent company in accordance Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s financial statements section of our report. We are independent of the group and the parent company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s financial statements section of our report. We are independent of the group and the parent company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s financial statements section of our report. We are independent of the group and the parent company in accordance Ethical Standard as applied to listed public interest entities, and we have fulfilled our other ethical responsibilities in with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed public interest entities, and we have fulfilled our other ethical responsibilities in with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed public interest entities, and we have fulfilled our other ethical responsibilities in with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and Ethical Standard as applied to listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and Ethical Standard as applied to listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and Ethical Standard as applied to listed public interest entities, and we have fulfilled our other ethical responsibilities in appropriate to provide a basis for our opinion. accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. appropriate to provide a basis for our opinion. appropriate to provide a basis for our opinion. Use of our report Use of our report Use of our report Use of our report Use of our report Use of our report This report is made solely to the parent company’s members, as a body, in accordance with Chapter 3 of Part 16 of This report is made solely to the parent company’s members, as a body, in accordance with Chapter 3 of Part 16 of This report is made solely to the parent company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the parent company’s This report is made solely to the parent company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the parent company’s This report is made solely to the parent company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the parent company’s This report is made solely to the parent company’s members, as a body, in accordance with Chapter 3 of Part 16 of members those matters we are required to state to them in an auditor’s report and for no other purpose. To the the Companies Act 2006. Our audit work has been undertaken so that we might state to the parent company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the the Companies Act 2006. Our audit work has been undertaken so that we might state to the parent company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the the Companies Act 2006. Our audit work has been undertaken so that we might state to the parent company’s fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the parent company members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the parent company members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the parent company members those matters we are required to state to them in an auditor’s report and for no other purpose. To the and the parent company’s members as a body, for our audit work, for this report, or for the opinions we have formed. fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the parent company and the parent company’s members as a body, for our audit work, for this report, or for the opinions we have formed. fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the parent company and the parent company’s members as a body, for our audit work, for this report, or for the opinions we have formed. fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the parent company and the parent company’s members as a body, for our audit work, for this report, or for the opinions we have formed. and the parent company’s members as a body, for our audit work, for this report, or for the opinions we have formed. and the parent company’s members as a body, for our audit work, for this report, or for the opinions we have formed. Conclusions relating to principal risks, going concern and viability statement Conclusions relating to principal risks, going concern and viability statement Conclusions relating to principal risks, going concern and viability statement Conclusions relating to principal risks, going concern and viability statement Conclusions relating to principal risks, going concern and viability statement Conclusions relating to principal risks, going concern and viability statement We have nothing to report in respect of the following information in the annual report, in relation to which the ISAs We have nothing to report in respect of the following information in the annual report, in relation to which the ISAs We have nothing to report in respect of the following information in the annual report, in relation to which the ISAs (UK) require us to report to you whether we have anything material to add or draw attention to: We have nothing to report in respect of the following information in the annual report, in relation to which the ISAs (UK) require us to report to you whether we have anything material to add or draw attention to: We have nothing to report in respect of the following information in the annual report, in relation to which the ISAs (UK) require us to report to you whether we have anything material to add or draw attention to: We have nothing to report in respect of the following information in the annual report, in relation to which the ISAs (UK) require us to report to you whether we have anything material to add or draw attention to: (UK) require us to report to you whether we have anything material to add or draw attention to: (UK) require us to report to you whether we have anything material to add or draw attention to: the disclosures in the annual report set out on pages 20-23 that describe the principal risks and explain how the disclosures in the annual report set out on pages 20-23 that describe the principal risks and explain how the disclosures in the annual report set out on pages 20-23 that describe the principal risks and explain how they are being managed or mitigated; the disclosures in the annual report set out on pages 20-23 that describe the principal risks and explain how they are being managed or mitigated; the disclosures in the annual report set out on pages 20-23 that describe the principal risks and explain how they are being managed or mitigated; the disclosures in the annual report set out on pages 20-23 that describe the principal risks and explain how they are being managed or mitigated; they are being managed or mitigated; they are being managed or mitigated; Annual Report 2017 | Anglo-Eastern Plantations Plc Annual Report 2017 | Anglo-Eastern Plantations Plc Annual Report 2017 | Anglo-Eastern Plantations Plc Annual Report 2017 | Anglo-Eastern Plantations Plc Annual Report 2017 | Anglo-Eastern Plantations Plc Annual Report 2017 | Anglo-Eastern Plantations Plc 52 52 52 52 52 52 52 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Auditors’ Report INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ANGLO-EASTERN PLANTATIONS PLC (continued) the directors’ confirmation set out on page 19 in the annual report that they have carried out a robust assessment of the principal risks facing the group, including those that would threaten its business model, future performance, solvency or liquidity; the directors’ statement set out on page 12 in the financial statements about whether the directors considered it appropriate to adopt the going concern basis of accounting in preparing the financial statements and the directors’ identification of any material uncertainties to the group and the parent company’s ability to continue to do so over a period of at least twelve months from the date of approval of the financial statements; whether the directors’ statement relating to going concern required under the Listing Rules in accordance with Listing Rule 9.8.6R(3) is materially inconsistent with our knowledge obtained in the audit; or the directors’ explanation set out on page 30 in the annual report as to how they have assessed the prospects of the group, over what period they have done so and why they consider that period to be appropriate, and their statement as to whether they have a reasonable expectation that the group will be able to continue in operation and meet its liabilities as they fall due over the period of their assessment, including any related disclosures drawing attention to any necessary qualifications or assumptions. Key audit matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified. These matters included those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Key audit matter Revenue recognition Our audit response Substantially all revenue is derived from the sale of crude palm oil and palm kernel, the revenue from which is recognised when the goods are delivered or allocated to a purchaser subsequent to payment as detailed in note 1. Revenue is calculated as the quantity of crude palm oil multiplied by the crude palm oil price, net of processing and transportation charges. We consider there to be a risk over the accuracy of the recorded weight of crude palm oil sales and therefore the completeness of revenue. We tested, on a sample basis, that sale invoices were raised on the delivery date based on the goods dispatched note and that the total weight stated in the goods dispatched note agreed with that in the delivery order. We identified revenue from sales of crude palm oil and palm kernel at the end of the current financial year and the beginning of the new financial year and tested a sample to ensure that revenue had been recognised in the correct period. Annual Report 2017 | Anglo-Eastern Plantations Plc 53 53 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Auditors’ Report INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ANGLO-EASTERN PLANTATIONS PLC (continued) Key audit matter Valuation of biological assets The unharvested fresh fruit bunches (FFB) on the bearer plants at the year-end remain within the scope of IAS 41 Biological assets and are therefore held at fair value less costs to sell determined on the basis of the net present value of expected the future cash production of FFB. Management exercise significant judgement in determining the underlying assumptions used in the calculation of fair value. These assumptions include the estimation of the weight of unharvested FFB at the balance sheet date, FFB production, FFB selling price and costs to sell. We identified this as a risk due to the inherent uncertainty around the future estimates. flows arising in Valuation of estate land Estate land is carried at fair value, based on periodic valuations on an open market basis by an independent professionally qualified valuer. The directors obtain a professional valuation on land on a rotational basis and all land has been professionally valued at least once at the current or previous financial year end. We identified the valuation of estate land as a risk due to the subjective judgements involved in the estimation and the volatility of land market prices within Indonesia. Our audit response The directors performed the valuation exercise internally. We challenged the assumptions in the underlying data input by management at the balance to sheet date industry peers, independent external data sources and where available to corroboration with supporting documentation and historical trends. through discussions, comparisons to in which the current year the prior year and applying the other the directors engaged an In independent valuer to perform a market-based valuation on all land that was not independently valued in the prior year along with a selection of land which had been, to ensure geographical coverage of all areas they operate. The directors performed their own valuation on the remaining land by considering the movements on the valued land those same from movements the same geographical region. We assessed the capabilities, objectivity and competence of the independent valuer and considered to be satisfactory. We challenged the assumptions applied by the valuer, verified the input data utilised and assessed the reasonableness of the movements the valuation on an estate by estate basis in light of movements in plantation land area and market valuation trends. We challenged the assumptions applied by the Directors in their own valuation, most notably their rationale for the application of the movements determined by the independent valuers to the remaining estates. them land in Impairment of bearer plants classified as PPE Bearer plants fall within the scope of IAS 16 – Property, Plant and Equipment and are therefore held at historical cost less depreciation. At the end of each reporting period, the directors are required to assess whether there is any indication that an asset may be impaired. If any such indication exists, the recoverable amount of the asset. the directors shall estimate We considered the various indicators of impairment listed in IAS 36 to determine whether any additional plantations to those already identified by the directors should be reviewed for impairment at 31 December 2017. Annual Report 2017 | Anglo-Eastern Plantations Plc 54 54 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Auditors’ Report Auditors’ Report INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ANGLO-EASTERN PLANTATIONS PLC INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ANGLO-EASTERN PLANTATIONS PLC (continued) (continued) Key audit matter Key audit matter Impairment of bearer plants classified as PPE Impairment of bearer plants classified as PPE (continued) (continued) The directors have identified an indicator of impairment on The directors have identified an indicator of impairment on five plantations and have carried out an impairment review five plantations and have carried out an impairment review for those plantations, calculating the recoverable amount for those plantations, calculating the recoverable amount to be the asset’s value in use. The directors exercise to be the asset’s value in use. The directors exercise significant the underlying judgement the underlying judgement significant assumptions used in this calculation. assumptions used in this calculation. in determining in determining Our audit response Our audit response comparisons comparisons The directors engaged an independent valuer to The directors engaged an independent valuer to determine the value in use using data provided by determine the value in use using data provided by management. We challenged the assumptions in the management. We challenged the assumptions in the through underlying data made by through underlying data made by discussions, peers, peers, discussions, independent external data sources and where independent external data sources and where supporting available supporting available documentation and historical trends. We performed documentation and historical trends. We performed sensitivity analysis on the key assumptions in the sensitivity analysis on the key assumptions in the value in use calculation which were considered to be value in use calculation which were considered to be CPO price and discount rate. CPO price and discount rate. the valuer the valuer industry to industry to corroboration corroboration through through to to Our application of materiality Our application of materiality We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements. We consider materiality to be the magnitude by which misstatements, including omissions, could misstatements. We consider materiality to be the magnitude by which misstatements, including omissions, could influence the economic decisions of reasonable users that are taken on the basis of the financial statements. influence the economic decisions of reasonable users that are taken on the basis of the financial statements. We determined materiality for the group financial statements We determined materiality for the group financial statements as a whole to be US$3.00 million (2016: US$2.00 million) as a whole to be US$3.00 million (2016: US$2.00 million) which approximates to 4.3% of profit before tax (2016: which approximates to 4.3% of profit before tax (2016: 3.3%). In previous years, materiality has been based on 3.3%). In previous years, materiality has been based on revenue but in the current year we have based materiality on revenue but in the current year we have based materiality on profit before tax. We consider profit before tax to be a more profit before tax. We consider profit before tax to be a more appropriate basis for materiality as it is a key indicator of the appropriate basis for materiality as it is a key indicator of the Group’s financial performance. Performance materiality was Group’s financial performance. Performance materiality was set at 75% of the above materiality levels (2016: 75%). set at 75% of the above materiality levels (2016: 75%). Performance materiality is applied at the individual account Performance materiality is applied at the individual account or balance level set at an amount to reduce to an or balance level set at an amount to reduce to an appropriately low level the probability that the aggregate of appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds uncorrected and undetected misstatements exceeds materiality for the financial statements as a whole. Where materiality for the financial statements as a whole. Where from components was audited financial from components was audited financial separately, component materiality was set at lower levels separately, component materiality was set at lower levels varying up to 50% of group materiality. Materiality levels are varying up to 50% of group materiality. Materiality levels are higher than in previous years due to the change in basis and higher than in previous years due to the change in basis and the improvement in results for the year. the improvement in results for the year. information information We agreed with the Audit Committee that we would report to the Committee all individual audit differences identified We agreed with the Audit Committee that we would report to the Committee all individual audit differences identified during the course of our audit in excess of US$60,000 (2016: US$50,000). We also agreed to report differences during the course of our audit in excess of US$60,000 (2016: US$50,000). We also agreed to report differences below this threshold that, in our view, warranted reporting on qualitative grounds. below this threshold that, in our view, warranted reporting on qualitative grounds. We determined materiality for the parent company financial statements to be US$1.13 million (2016: US$1.38 We determined materiality for the parent company financial statements to be US$1.13 million (2016: US$1.38 million) which is based on 2% of gross assets as the entity does not trade and acts as a holding company. million) which is based on 2% of gross assets as the entity does not trade and acts as a holding company. Annual Report 2017 | Anglo-Eastern Plantations Plc Annual Report 2017 | Anglo-Eastern Plantations Plc 55 55 55 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Auditors’ Report Auditors’ Report INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ANGLO-EASTERN PLANTATIONS PLC INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ANGLO-EASTERN PLANTATIONS PLC (continued) (continued) An overview of the scope of our audit An overview of the scope of our audit The Group financial statements are a consolidation of twenty six companies made up of the parent company, four The Group financial statements are a consolidation of twenty six companies made up of the parent company, four management companies, four dormant companies and seventeen trading companies, all of which now contain management companies, four dormant companies and seventeen trading companies, all of which now contain mature plantations. Sixteen of the plantations are located in Indonesia and one in Malaysia. The head office and mature plantations. Sixteen of the plantations are located in Indonesia and one in Malaysia. The head office and main accounting location is located in Kuala Lumpur, Malaysia, at a separate location from the plantations. Our main accounting location is located in Kuala Lumpur, Malaysia, at a separate location from the plantations. Our Group audit scope focused on the group’s principal operating companies and based on our risk assessment we Group audit scope focused on the group’s principal operating companies and based on our risk assessment we identified six operating plantation companies which, in our view, required an audit of their complete financial identified six operating plantation companies which, in our view, required an audit of their complete financial information due to their size and a further eleven which required audit procedures on specific areas due to their risk information due to their size and a further eleven which required audit procedures on specific areas due to their risk characteristics. This, together with additional procedures performed at Group level in respect of the audit of biological characteristics. This, together with additional procedures performed at Group level in respect of the audit of biological assets, leasehold land and the impairment reviews of bearer plants classified as property plant and equipment, gave assets, leasehold land and the impairment reviews of bearer plants classified as property plant and equipment, gave us the evidence we needed to form our opinion on the Group financial statements as a whole. us the evidence we needed to form our opinion on the Group financial statements as a whole. Audits of the subsidiary companies were performed at materiality levels lower than Group materiality and determined Audits of the subsidiary companies were performed at materiality levels lower than Group materiality and determined by us to be appropriate to the relative size of the company concerned. The audits of each of the operating by us to be appropriate to the relative size of the company concerned. The audits of each of the operating companies were performed entirely in Malaysia and Indonesia. All audits were conducted by BDO network firms with companies were performed entirely in Malaysia and Indonesia. All audits were conducted by BDO network firms with teams drawn from the UK, Malaysia and Indonesia. As part of our audit strategy, the Senior Statutory Auditor and teams drawn from the UK, Malaysia and Indonesia. As part of our audit strategy, the Senior Statutory Auditor and other senior members of the team between them visit Malaysia and Indonesia every year. During these visits the other senior members of the team between them visit Malaysia and Indonesia every year. During these visits the Group audit team reviewed the complete audit files for the six operating plantation companies considered to be Group audit team reviewed the complete audit files for the six operating plantation companies considered to be significant by size and focused on the audit work in relation to the specific areas identified for the remaining eleven significant by size and focused on the audit work in relation to the specific areas identified for the remaining eleven companies considered to be significant by risk. Following the review, any further work required by the Group audit companies considered to be significant by risk. Following the review, any further work required by the Group audit team was performed by the component auditor. The component auditors visit the plantation estates on a rotational team was performed by the component auditor. The component auditors visit the plantation estates on a rotational basis so that each estate is visited at least once every three years. basis so that each estate is visited at least once every three years. The remaining components of the Group include non-significant holding companies and these components were The remaining components of the Group include non-significant holding companies and these components were principally subject to analytical review procedures performed by the Group audit team. principally subject to analytical review procedures performed by the Group audit team. Total assets Total assets Annual Report 2017 | Anglo-Eastern Plantations Plc Annual Report 2017 | Anglo-Eastern Plantations Plc 56 56 56 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Auditors’ Report Auditors’ Report Auditors’ Report INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ANGLO-EASTERN PLANTATIONS PLC INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ANGLO-EASTERN PLANTATIONS PLC INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ANGLO-EASTERN PLANTATIONS PLC (continued) (continued) (continued) Profit before tax Profit before tax Profit before tax Revenue Revenue Revenue Other information Other information Other information The other information comprises the information included in the annual report, set out on pages 2 to 51, other than The other information comprises the information included in the annual report, set out on pages 2 to 51, other than The other information comprises the information included in the annual report, set out on pages 2 to 51, other than the financial statements and our auditor’s report thereon. The directors are responsible for the other information. Our the financial statements and our auditor’s report thereon. The directors are responsible for the other information. Our the financial statements and our auditor’s report thereon. The directors are responsible for the other information. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. In connection with our audit of the stated in our report, we do not express any form of assurance conclusion thereon. In connection with our audit of the stated in our report, we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other financial statements, our responsibility is to read the other information and, in doing so, consider whether the other financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or information is materially inconsistent with the financial statements or our knowledge obtained in the audit or information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or misstatements, we are required to determine whether there is a material misstatement in the financial statements or misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of the other information, we are required to report that fact. a material misstatement of the other information, we are required to report that fact. a material misstatement of the other information, we are required to report that fact. We have nothing to report in this regard. We have nothing to report in this regard. We have nothing to report in this regard. In this context, we also have nothing to report in regard to our responsibility to specifically address the following In this context, we also have nothing to report in regard to our responsibility to specifically address the following In this context, we also have nothing to report in regard to our responsibility to specifically address the following items in the other information and to report as uncorrected material misstatements of the other information where we items in the other information and to report as uncorrected material misstatements of the other information where we items in the other information and to report as uncorrected material misstatements of the other information where we conclude that those items meet the following conditions: conclude that those items meet the following conditions: conclude that those items meet the following conditions: Annual Report 2017 | Anglo-Eastern Plantations Plc Annual Report 2017 | Anglo-Eastern Plantations Plc Annual Report 2017 | Anglo-Eastern Plantations Plc 57 57 57 57 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Auditors’ Report INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ANGLO-EASTERN PLANTATIONS PLC (continued) Fair, balanced and understandable – the statement given by the directors that they consider the annual report and financial statements taken as a whole is fair, balanced and understandable and provides the information necessary for shareholders to assess the group’s performance, business model and strategy, is materially inconsistent with our knowledge obtained in the audit; or Audit committee reporting – the section describing the work of the audit committee does not appropriately address matters communicated by us to the audit committee; or Directors’ statement of compliance with the UK Corporate Governance Code – the parts of the directors’ statement required under the Listing Rules relating to the company’s compliance with the UK Corporate Governance Code containing provisions specified for review by the auditor in accordance with Listing Rule 9.8.10R(2) do not properly disclose a departure from a relevant provision of the UK Corporate Governance Code. Opinions on other matters prescribed by the Companies Act 2006 In our opinion, the part of the directors’ remuneration report to be audited has been properly prepared in accordance with the Companies Act 2006. In our opinion, based on the work undertaken in the course of the audit the information given in the strategic report and the directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements and those reports have been prepared in accordance with applicable legal requirements. Matters on which we are required to report by exception In the light of the knowledge and understanding of the group and the parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors’ report. We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion: adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or the parent company financial statements and the part of the directors’ remuneration report to be audited are not in agreement with the accounting records and returns; or certain disclosures of directors’ remuneration specified by law are not made; or we have not received all the information and explanations we require for our audit. Responsibilities of directors As explained more fully in the directors’ responsibilities statement set out on page 38, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Annual Report 2017 | Anglo-Eastern Plantations Plc 58 58 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Auditors’ Report INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ANGLO-EASTERN PLANTATIONS PLC (continued) In preparing the financial statements, the directors are responsible for assessing the group’s and the parent company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or the parent company or to cease operations, or have no realistic alternative but to do so. Auditor’s responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report. Other matters which we are required to address Following the recommendation of the audit committee, we were appointed by the Chairman in 2001 to audit the financial statements for the year ending 31 December 2001 and subsequent financial periods. The period of total uninterrupted engagement is 17 years, covering the years ending 31 December 2001 to 31 December 2017. The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the group or the parent company and we remain independent of the group and the parent company in conducting our audit. Our audit opinion is consistent with the additional report to the audit committee. Anna Draper (Senior Statutory Auditor) For and on behalf of BDO LLP, Statutory Auditor London United Kingdom 24 April 2018 BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127). Annual Report 2017 | Anglo-Eastern Plantations Plc 59 59 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Consolidated Income Statement For the year ended 31 December 2017 Consolidated Income Statement For the year ended 31 December 2017 Continuing operations Continuing operations Revenue Cost of sales Revenue Gross profit Cost of sales Administration expenses Gross profit Reversal of impairment / (impairment Administration expenses losses) Reversal of impairment / (impairment Operating profit losses) Exchange (losses) / gains Operating profit Finance income Exchange (losses) / gains Finance expense Finance income Profit before tax Finance expense Tax expense Profit before tax Profit for the year Tax expense Attributable to: Profit for the year - Owners of the parent Attributable to: - Non-controlling interests - Owners of the parent - Non-controlling interests Earnings per share for profit Earnings per share for profit attributable to the owners of the parent during the year attributable to the owners of the parent during the year - basic - diluted - basic - diluted Result before BA Result before movement BA movement $000 291,907 $000 (217,543) 291,907 74,364 (217,543) Note Note 2 2 (8,611) 74,364 923 (8,611) 66,676 923 (272) 66,676 5,337 (272) (1,753) 5,337 69,988 (1,753) (23,451) 69,988 46,537 (23,451) 46,537 36,386 10,151 36,386 46,537 10,151 46,537 3 3 3 4 3 7 4 7 8 8 8 8 2017 2017 BA movement BA movement $000 Result before BA Result before movement BA movement $000 2016 2016 BA movement BA movement $000 Total Total $000 - $000 3,383 - 3,383 3,383 - 3,383 - - 3,383 - - 3,383 - - - - 3,383 - (844) 3,383 2,539 (844) 2,539 2,150 389 2,150 2,539 389 2,539 - $000 (297) - (297) (297) - (297) - - (297) - - (297) - - - - (297) - 73 (297) (224) 73 (224) (172) (52) (172) (224) (52) 291,907 $000 (217,840) 291,907 246,210 $000 (184,337) 246,210 74,067 (217,840) 61,873 (184,337) (8,611) 74,067 923 (8,611) 66,379 923 (272) 66,379 5,337 (272) (1,753) 5,337 69,691 (1,753) (23,378) 69,691 46,313 (23,378) 46,313 36,214 10,099 36,214 46,313 10,099 (6,653) 61,873 (2,740) (6,653) 52,480 (2,740) 845 52,480 5,881 845 (1,743) 5,881 57,463 (1,743) (16,021) 57,463 41,442 (16,021) 41,442 32,563 8,879 32,563 41,442 8,879 (224) 46,313 41,442 91.37cts 91.29cts 91.37cts 91.29cts Total Total $000 246,210 $000 (180,954) 246,210 65,256 (180,954) (6,653) 65,256 (2,740) (6,653) 55,863 (2,740) 845 55,863 5,881 845 (1,743) 5,881 60,846 (1,743) (16,865) 60,846 43,981 (16,865) 43,981 34,713 9,268 34,713 43,981 9,268 43,981 87.58cts 87.58cts 87.58cts 87.58cts Earnings per share before BA movement are shown in note 8. Earnings per share before BA movement are shown in note 8. The accompanying notes are an integral part of this consolidated income statement. The accompanying notes are an integral part of this consolidated income statement. Annual Report 2017 | Anglo-Eastern Plantations Plc Annual Report 2017 | Anglo-Eastern Plantations Plc 60 60 60 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Consolidated Statement of Comprehensive Income For the year ended 31 December 2017 Consolidated Statement of Comprehensive Income Profit for the year For the year ended 31 December 2017 46,313 2017 $000 Other comprehensive (expenses) / income: Items may be reclassified to profit or loss: (Loss) / Gain on exchange translation of foreign operations Profit for the year Net other comprehensive (expenses) / income may be reclassified to profit or loss Other comprehensive (expenses) / income: Items not to be reclassified to profit or loss: Items may be reclassified to profit or loss: Unrealised (loss) / gain on revaluation of leasehold land, net of tax (Loss) / Gain on exchange translation of foreign operations Remeasurement of retirement benefits plan, net of tax Net other comprehensive (expenses) / income may be reclassified to profit or loss Net other comprehensive (expenses) / income not being reclassified to profit or loss Items not to be reclassified to profit or loss: Total other comprehensive (expenses) / income for the year, net of tax Unrealised (loss) / gain on revaluation of leasehold land, net of tax Total comprehensive income for the year Remeasurement of retirement benefits plan, net of tax Attributable to: Net other comprehensive (expenses) / income not being reclassified to profit or loss - Owners of the parent Total other comprehensive (expenses) / income for the year, net of tax - Non-controlling interests Total comprehensive income for the year Attributable to: - Owners of the parent - Non-controlling interests 2017 $000 (1,718) 46,313 (1,718) (9,948) (1,718) (1,271) (1,718) (11,219) (12,937) (9,948) 33,376 (1,271) (11,219) 23,496 (12,937) 9,880 33,376 33,376 23,496 9,880 33,376 2016 $000 43,981 2016 $000 8,860 43,981 8,860 1,752 8,860 (567) 8,860 1,185 10,045 1,752 54,026 (567) 1,185 43,099 10,045 10,927 54,026 54,026 43,099 10,927 54,026 The accompanying notes are an integral part of this consolidated statement of comprehensive income. The accompanying notes are an integral part of this consolidated statement of comprehensive income. Annual Report 2017 | Anglo-Eastern Plantations Plc Annual Report 2017 | Anglo-Eastern Plantations Plc 61 61 61 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Consolidated Statement of Financial Position Consolidated Statement of Financial Position As at 31 December 2017 As at 31 December 2017 Company Number: 1884630 Company Number: 1884630 Non-current assets Non-current assets Property, plant and equipment Property, plant and equipment Receivables Receivables Deferred tax assets Deferred tax assets Current assets Current assets Inventories Inventories Tax receivables Tax receivables Biological assets Biological assets Trade and other receivables Trade and other receivables Cash and cash equivalents Cash and cash equivalents Current liabilities Current liabilities Loans and borrowings Loans and borrowings Trade and other payables Trade and other payables Tax liabilities Tax liabilities Dividend payables Dividend payables Net current assets Net current assets Non-current liabilities Non-current liabilities Loans and borrowings Loans and borrowings Deferred tax liabilities Deferred tax liabilities Retirement benefits - net liabilities Retirement benefits - net liabilities Net assets Net assets Issued capital and reserves attributable to owners of the parent Issued capital and reserves attributable to owners of the parent Share capital Share capital Treasury shares Treasury shares Share premium Share premium Capital redemption reserve Capital redemption reserve Revaluation reserves Revaluation reserves Exchange reserves Exchange reserves Retained earnings Retained earnings Non-controlling interests Non-controlling interests Total equity Total equity Note Note 31.12.2017 $000 31.12.2017 $000 31.12.2016 $000 31.12.2016 $000 10 10 11 11 17 17 12 12 7 7 13 13 14 14 15 15 16 16 15 15 17 17 18 18 19 19 19 19 353,680 353,680 8,358 8,358 9,309 9,309 371,347 371,347 9,398 9,398 29,430 29,430 6,772 6,772 5,184 5,184 139,489 139,489 190,273 190,273 (8,594) (8,594) (16,805) (16,805) (8,637) (8,637) - - (34,036) (34,036) 156,237 156,237 (19,281) (19,281) (22,390) (22,390) (9,022) (9,022) (50,693) (50,693) 476,891 476,891 15,504 15,504 (1,171) (1,171) 23,935 23,935 1,087 1,087 51,288 51,288 (221,435) (221,435) 515,884 515,884 385,092 385,092 91,799 91,799 476,891 476,891 356,790 356,790 3,891 3,891 13,451 13,451 374,132 374,132 9,219 9,219 26,695 26,695 7,107 7,107 5,767 5,767 118,176 118,176 166,964 166,964 (6,203) (6,203) (16,054) (16,054) (8,974) (8,974) - - (31,231) (31,231) 135,733 135,733 (27,875) (27,875) (30,063) (30,063) (6,666) (6,666) (64,604) (64,604) 445,261 445,261 15,504 15,504 (1,171) (1,171) 23,935 23,935 1,087 1,087 61,038 61,038 (219,570) (219,570) 482,288 482,288 363,111 363,111 82,150 82,150 445,261 445,261 The financial statements were approved by the Board of Directors and authorised for issue on 24 April 2018 and were signed on its behalf by The financial statements were approved by the Board of Directors and authorised for issue on 24 April 2018 and were signed on its behalf by Dato’ John Lim Ewe Chuan Executive Director, Corporate Finance and Corporate Affairs Dato’ John Lim Ewe Chuan Executive Director, Corporate Finance and Corporate Affairs The accompanying notes are an integral part of this consolidated statement of financial position. The accompanying notes are an integral part of this consolidated statement of financial position. Annual Report 2017 | Anglo-Eastern Plantations Plc Annual Report 2017 | Anglo-Eastern Plantations Plc 62 62 62 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. l a t o T y t i u q e 0 0 0 $ - n o N 0 0 0 $ s t s e r e t n i g n i l l o r t n o c l a t o T 0 0 0 $ l a t i p a C 0 0 0 $ d e n i a t e R i s g n n r a e 0 0 0 $ s e v r e s e r e g n a h c x E 0 0 0 $ s e v r e s e r 0 0 0 $ e v r e s e r n o i t a u l a v e R n o i t p m e d e r 0 0 0 $ e r a h S i m u m e r p 0 0 0 $ s e r a h s y r u s a e r T e r a h S l a t i p a c 0 0 0 $ 3 1 6 , 4 9 3 8 9 5 , 3 7 5 1 0 , 1 2 3 2 6 0 , 9 4 4 ) 4 7 9 , 6 2 2 ( 2 7 5 , 9 5 7 8 0 , 1 5 3 9 , 3 2 ) 1 7 1 , 1 ( 4 0 5 , 5 1 2 5 7 , 1 ) 7 6 5 ( 0 6 8 , 8 5 4 0 , 0 1 1 8 9 , 3 4 6 2 0 , 4 5 6 8 2 ) 3 8 ( 6 5 4 , 1 9 5 6 , 1 8 6 2 , 9 7 2 9 , 0 1 ) 8 7 3 , 3 ( ) 5 7 3 , 2 ( ) 4 8 4 ( 6 6 4 , 1 4 0 4 , 7 6 8 3 , 8 3 1 7 , 4 3 9 9 0 , 3 4 ) 3 0 0 , 1 ( - ) 4 8 4 ( - ) 4 8 4 ( 3 1 7 , 4 3 9 2 2 , 4 3 ) 3 0 0 , 1 ( - - - 4 0 4 , 7 4 0 4 , 7 - 4 0 4 , 7 - - 6 6 4 , 1 - - 6 6 4 , 1 6 6 4 , 1 - - - - - - - - - - - - - - - - - - - - - - - - - - - - 7 1 0 2 r e b m e c e D 1 3 d e d n e r a e y e h t r o F e m o c n i i e v s n e h e r p m o c r e h t o f o s m e t I 5 1 0 2 r e b m e c e D 1 3 t a e c n a a B l x a t f o t e n , d n a l l d o h e s a e l f o n o i t a u a v e r l n o n a g i d e s i l a e r n U - x a t f o t e n , n a p l t i f e n e b t n e m e r i t e r f o t n e m e r u s a e m e R - s n o i t a r e p o i n g e r o f f o n o i t a s n a r t l e g n a h c x e n o n a G i - ) s e s n e p x e ( / e m o c n i i e v s n e h e r p m o c r e h t o l a t o T r a e y e h t r o f e m o c n i i e v s n e h e r p m o c l a t o T r a e y e h t r o f t i f o r P i d a p s d n e d v D i i y t i u q E n i s e g n a h C f o t n e m e t a t S d e t a d i l o s n o C 1 6 2 , 5 4 4 0 5 1 , 2 8 1 1 1 , 3 6 3 8 8 2 , 2 8 4 ) 0 7 5 , 9 1 2 ( 8 3 0 , 1 6 7 8 0 , 1 5 3 9 , 3 2 ) 1 7 1 , 1 ( 4 0 5 , 5 1 6 1 0 2 r e b m e c e D 1 3 t a e c n a l a B ) 8 4 9 , 9 ( ) 1 7 2 , 1 ( ) 8 1 7 , 1 ( ) 8 9 1 ( ) 8 6 1 ( 7 4 1 ) 0 5 7 , 9 ( ) 3 0 1 , 1 ( ) 5 6 8 , 1 ( - - ) 3 0 1 , 1 ( ) 7 3 9 , 2 1 ( ) 9 1 2 ( ) 8 1 7 , 2 1 ( ) 3 0 1 , 1 ( 3 1 3 , 6 4 9 9 0 , 0 1 6 7 3 , 3 3 0 8 8 , 9 4 1 2 , 6 3 6 9 4 , 3 2 4 1 2 , 6 3 1 1 1 , 5 3 - - - ) 5 6 8 , 1 ( ) 5 6 8 , 1 ( - - ) 0 5 7 , 9 ( - ) 0 5 7 , 9 ( ) 5 6 8 , 1 ( ) 0 5 7 , 9 ( ) 6 4 7 , 1 ( ) 1 3 2 ( ) 5 1 5 , 1 ( ) 5 1 5 , 1 ( - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 1 9 8 , 6 7 4 9 9 7 , 1 9 2 9 0 , 5 8 3 4 8 8 , 5 1 5 ) 5 3 4 , 1 2 2 ( 8 8 2 , 1 5 7 8 0 , 1 5 3 9 , 3 2 ) 1 7 1 , 1 ( 4 0 5 , 5 1 x a t f o t e n , d n a l l d o h e s a e l f o n o i t a u l a v e r n o s s o l d e s i l a e r n U - x a t f o t e n , n a l p t i f e n e b t n e m e r i t e r f o t n e m e r u s a e m e R - s n o i t a r e p o n g i e r o f f o n o i t a l s n a r t e g n a h c x e n o n i a G / ) s s o L ( - e m o c n i e v i s n e h e r p m o c r e h t o f o s m e t I r a e y e h t r o f e m o c n i / ) s e s n e p x e ( e v i s n e h e r p m o c l a t o T s e s n e p x e e v i s n e h e r p m o c r e h t o l a t o T r a e y e h t r o f t i f o r P 7 1 0 2 r e b m e c e D 1 3 t a e c n a l a B d i a p s d n e d i v i D 3 6 c l P s n o i t a t n a l P n r e t s a E - o g n A l | 7 1 0 2 t r o p e R l a u n n A 63 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Consolidated Statement of Cash Flows For the year ended 31 December 2017 Cash flows from operating activities Profit before tax Adjustments for: BA movement Gain on disposal of property, plant and equipment Depreciation Retirement benefit provisions Net finance income Unrealised loss / (gain) in foreign exchange Property, plant and equipment written off (Reversal of impairment) / impairment losses Operating cash flow before changes in working capital Increase in inventories Increase in non-current, trade and other receivables Decrease / (Increase) in trade and other payables Cash inflow from operations Interest paid Retirement benefits paid Overseas tax paid Net cash flow from operations Investing activities Property, plant and equipment - purchases - sales Interest received Net cash used in investing activities 2017 $000 2016 $000 69,691 60,846 297 (18) 16,284 1,520 (3,584) 272 585 (923) 84,124 (252) (4,413) 837 80,296 (1,753) (774) (26,412) 51,357 (3,383) (13) 15,677 1,700 (4,138) (845) 731 2,740 73,315 (2,353) (1,460) (1,749) 67,753 (1,743) (250) (27,133) 38,627 (27,192) (30,484) 267 5,337 931 5,881 (21,588) (23,672) Annual Report 2017 | Anglo-Eastern Plantations Plc 64 64 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Consolidated Statement of Cash Flows For the year ended 31 December 2017 Financing activities Dividends paid by Company Consolidated Statement of Cash Flows For the year ended 31 December 2017 Dividends paid to non-controlling interests Drawdown of long term loans Repayment of existing long term loans Net cash used in financing activities Increase in cash and cash equivalents Financing activities Dividends paid by Company Cash and cash equivalents Dividends paid to non-controlling interests At beginning of year Drawdown of long term loans Foreign exchange Repayment of existing long term loans At end of year Net cash used in financing activities Increase in cash and cash equivalents Comprising: Cash at end of year Cash and cash equivalents At beginning of year Foreign exchange At end of year Comprising: Cash at end of year Note Note 2017 $000 (1,515) (231) - (6,197) 2017 (7,943) $000 21,826 (1,515) (231) 118,176 - (513) (6,197) 139,489 (7,943) 21,826 2016 $000 (1,003) (2,375) 1,250 (1,797) 2016 (3,925) $000 11,030 (1,003) (2,375) 104,614 1,250 2,532 (1,797) 118,176 (3,925) 11,030 27 139,489 118,176 118,176 (513) 139,489 104,614 2,532 118,176 27 139,489 118,176 The accompanying notes are an integral part of this consolidated statement of cash flows. . The accompanying notes are an integral part of this consolidated statement of cash flows. . Annual Report 2017 | Anglo-Eastern Plantations Plc Annual Report 2017 | Anglo-Eastern Plantations Plc 65 65 65 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements 1 Accounting policies 1 Accounting policies 1 Accounting policies 1 Accounting policies 1 Accounting policies 1 Accounting policies 1 Accounting policies Anglo-Eastern Plantations Plc (“AEP”) is a company incorporated in the United Kingdom under the Companies Act 2006 and is listed on the Anglo-Eastern Plantations Plc (“AEP”) is a company incorporated in the United Kingdom under the Companies Act 2006 and is listed on the Anglo-Eastern Plantations Plc (“AEP”) is a company incorporated in the United Kingdom under the Companies Act 2006 and is listed on the Anglo-Eastern Plantations Plc (“AEP”) is a company incorporated in the United Kingdom under the Companies Act 2006 and is listed on the Anglo-Eastern Plantations Plc (“AEP”) is a company incorporated in the United Kingdom under the Companies Act 2006 and is listed on the Anglo-Eastern Plantations Plc (“AEP”) is a company incorporated in the United Kingdom under the Companies Act 2006 and is listed on the Anglo-Eastern Plantations Plc (“AEP”) is a company incorporated in the United Kingdom under the Companies Act 2006 and is listed on the London Stock Exchange. The registered office of AEP is located at Quadrant House, 6th Floor, 4 Thomas More Square, London E1W 1YW, London Stock Exchange. The registered office of AEP is located at Quadrant House, 6th Floor, 4 Thomas More Square, London E1W 1YW, London Stock Exchange. The registered office of AEP is located at Quadrant House, 6th Floor, 4 Thomas More Square, London E1W 1YW, London Stock Exchange. The registered office of AEP is located at Quadrant House, 6th Floor, 4 Thomas More Square, London E1W 1YW, London Stock Exchange. The registered office of AEP is located at Quadrant House, 6th Floor, 4 Thomas More Square, London E1W 1YW, London Stock Exchange. The registered office of AEP is located at Quadrant House, 6th Floor, 4 Thomas More Square, London E1W 1YW, London Stock Exchange. The registered office of AEP is located at Quadrant House, 6th Floor, 4 Thomas More Square, London E1W 1YW, United Kingdom. The principal activity of the Group is plantation agriculture, mainly in the cultivation of oil palm. United Kingdom. The principal activity of the Group is plantation agriculture, mainly in the cultivation of oil palm. United Kingdom. The principal activity of the Group is plantation agriculture, mainly in the cultivation of oil palm. United Kingdom. The principal activity of the Group is plantation agriculture, mainly in the cultivation of oil palm. United Kingdom. The principal activity of the Group is plantation agriculture, mainly in the cultivation of oil palm. United Kingdom. The principal activity of the Group is plantation agriculture, mainly in the cultivation of oil palm. United Kingdom. The principal activity of the Group is plantation agriculture, mainly in the cultivation of oil palm. The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have 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. been consistently applied to all years presented, except as detailed in the following paragraph. been consistently applied to all years presented, except as detailed in the following paragraph. been consistently applied to all years presented, except as detailed in the following paragraph. been consistently applied to all years presented, except as detailed in the following paragraph. been consistently applied to all years presented, except as detailed in the following paragraph. been consistently applied to all years presented, except as detailed in the following paragraph. Basis of preparation Basis of preparation Basis of preparation Basis of preparation Basis of preparation Basis of preparation Basis of preparation The financial statements have been prepared in accordance with International Financial Reporting Standards and its interpretations (IFRS The financial statements have been prepared in accordance with International Financial Reporting Standards and its interpretations (IFRS The financial statements have been prepared in accordance with International Financial Reporting Standards and its interpretations (IFRS The financial statements have been prepared in accordance with International Financial Reporting Standards and its interpretations (IFRS The financial statements have been prepared in accordance with International Financial Reporting Standards and its interpretations (IFRS The financial statements have been prepared in accordance with International Financial Reporting Standards and its interpretations (IFRS The financial statements have been prepared in accordance with International Financial Reporting Standards and its interpretations (IFRS and IFRIC interpretations) issued by the International Accounting Standards Board (“IASB”) as adopted by the European Union (“EU”) and and IFRIC interpretations) issued by the International Accounting Standards Board (“IASB”) as adopted by the European Union (“EU”) and and IFRIC interpretations) issued by the International Accounting Standards Board (“IASB”) as adopted by the European Union (“EU”) and and IFRIC interpretations) issued by the International Accounting Standards Board (“IASB”) as adopted by the European Union (“EU”) and and IFRIC interpretations) issued by the International Accounting Standards Board (“IASB”) as adopted by the European Union (“EU”) and and IFRIC interpretations) issued by the International Accounting Standards Board (“IASB”) as adopted by the European Union (“EU”) and and IFRIC interpretations) issued by the International Accounting Standards Board (“IASB”) as adopted by the European Union (“EU”) and with those parts of the Companies Act 2006 applicable to companies preparing their accounts under IFRS as adopted by the EU. with those parts of the Companies Act 2006 applicable to companies preparing their accounts under IFRS as adopted by the EU. with those parts of the Companies Act 2006 applicable to companies preparing their accounts under IFRS as adopted by the EU. with those parts of the Companies Act 2006 applicable to companies preparing their accounts under IFRS as adopted by the EU. with those parts of the Companies Act 2006 applicable to companies preparing their accounts under IFRS as adopted by the EU. with those parts of the Companies Act 2006 applicable to companies preparing their accounts under IFRS as adopted by the EU. with those parts of the Companies Act 2006 applicable to companies preparing their accounts under IFRS as adopted by the EU. Changes in accounting standards Changes in accounting standards Changes in accounting standards Changes in accounting standards Changes in accounting standards Changes in accounting standards Changes in accounting standards a) a) a) a) a) a) a) Amendments to IAS 12 Recognition of deferred tax assets for unrealised losses (effective for accounting periods beginning on Amendments to IAS 12 Recognition of deferred tax assets for unrealised losses (effective for accounting periods beginning on Amendments to IAS 12 Recognition of deferred tax assets for unrealised losses (effective for accounting periods beginning on Amendments to IAS 12 Recognition of deferred tax assets for unrealised losses (effective for accounting periods beginning on Amendments to IAS 12 Recognition of deferred tax assets for unrealised losses (effective for accounting periods beginning on Amendments to IAS 12 Recognition of deferred tax assets for unrealised losses (effective for accounting periods beginning on Amendments to IAS 12 Recognition of deferred tax assets for unrealised losses (effective for accounting periods beginning on or after 1 January 2017) or after 1 January 2017) or after 1 January 2017) or after 1 January 2017) or after 1 January 2017) or after 1 January 2017) or after 1 January 2017) Disclosure Initiative: Amendments to IAS 7 (effective for accounting periods beginning on or after 1 January 2017) Disclosure Initiative: Amendments to IAS 7 (effective for accounting periods beginning on or after 1 January 2017) Disclosure Initiative: Amendments to IAS 7 (effective for accounting periods beginning on or after 1 January 2017) Disclosure Initiative: Amendments to IAS 7 (effective for accounting periods beginning on or after 1 January 2017) Disclosure Initiative: Amendments to IAS 7 (effective for accounting periods beginning on or after 1 January 2017) Disclosure Initiative: Amendments to IAS 7 (effective for accounting periods beginning on or after 1 January 2017) Disclosure Initiative: Amendments to IAS 7 (effective for accounting periods beginning on or after 1 January 2017) The following amendments are effective for the first time in these financial statements: The following amendments are effective for the first time in these financial statements: The following amendments are effective for the first time in these financial statements: The following amendments are effective for the first time in these financial statements: The following amendments are effective for the first time in these financial statements: The following amendments are effective for the first time in these financial statements: The following amendments are effective for the first time in these financial statements: • • • • • • • • • • • • • • New standards, interpretations and amendments not yet effective. New standards, interpretations and amendments not yet effective. New standards, interpretations and amendments not yet effective. New standards, interpretations and amendments not yet effective. New standards, interpretations and amendments not yet effective. New standards, interpretations and amendments not yet effective. New standards, interpretations and amendments not yet effective. The following new standards, interpretations and amendments are effective for periods beginning after 1 January 2018 and have not The following new standards, interpretations and amendments are effective for periods beginning after 1 January 2018 and have not The following new standards, interpretations and amendments are effective for periods beginning after 1 January 2018 and have not The following new standards, interpretations and amendments are effective for periods beginning after 1 January 2018 and have not The following new standards, interpretations and amendments are effective for periods beginning after 1 January 2018 and have not The following new standards, interpretations and amendments are effective for periods beginning after 1 January 2018 and have not The following new standards, interpretations and amendments are effective for periods beginning after 1 January 2018 and have not been applied in these financial statements: been applied in these financial statements: been applied in these financial statements: been applied in these financial statements: been applied in these financial statements: been applied in these financial statements: been applied in these financial statements: • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • IFRS 9 Financial Instruments (effective for accounting periods beginning on or after 1 January 2018) IFRS 9 Financial Instruments (effective for accounting periods beginning on or after 1 January 2018) IFRS 9 Financial Instruments (effective for accounting periods beginning on or after 1 January 2018) IFRS 9 Financial Instruments (effective for accounting periods beginning on or after 1 January 2018) IFRS 9 Financial Instruments (effective for accounting periods beginning on or after 1 January 2018) IFRS 9 Financial Instruments (effective for accounting periods beginning on or after 1 January 2018) IFRS 9 Financial Instruments (effective for accounting periods beginning on or after 1 January 2018) IFRS 15 Revenue from Contracts with Customers (effective for accounting periods beginning on or after 1 January 2018) IFRS 15 Revenue from Contracts with Customers (effective for accounting periods beginning on or after 1 January 2018) IFRS 15 Revenue from Contracts with Customers (effective for accounting periods beginning on or after 1 January 2018) IFRS 15 Revenue from Contracts with Customers (effective for accounting periods beginning on or after 1 January 2018) IFRS 15 Revenue from Contracts with Customers (effective for accounting periods beginning on or after 1 January 2018) IFRS 15 Revenue from Contracts with Customers (effective for accounting periods beginning on or after 1 January 2018) IFRS 15 Revenue from Contracts with Customers (effective for accounting periods beginning on or after 1 January 2018) IFRS 16 Leases (effective for accounting periods beginning on or after 1 January 2019) IFRS 16 Leases (effective for accounting periods beginning on or after 1 January 2019) IFRS 16 Leases (effective for accounting periods beginning on or after 1 January 2019) IFRS 16 Leases (effective for accounting periods beginning on or after 1 January 2019) IFRS 16 Leases (effective for accounting periods beginning on or after 1 January 2019) IFRS 16 Leases (effective for accounting periods beginning on or after 1 January 2019) IFRS 16 Leases (effective for accounting periods beginning on or after 1 January 2019) Classifications to IFRS 15 revenue from Contracts with Customers (effective for accounting periods beginning on or after 1 Classifications to IFRS 15 revenue from Contracts with Customers (effective for accounting periods beginning on or after 1 Classifications to IFRS 15 revenue from Contracts with Customers (effective for accounting periods beginning on or after 1 Classifications to IFRS 15 revenue from Contracts with Customers (effective for accounting periods beginning on or after 1 Classifications to IFRS 15 revenue from Contracts with Customers (effective for accounting periods beginning on or after 1 Classifications to IFRS 15 revenue from Contracts with Customers (effective for accounting periods beginning on or after 1 Classifications to IFRS 15 revenue from Contracts with Customers (effective for accounting periods beginning on or after 1 January 2018) January 2018) January 2018) January 2018) January 2018) January 2018) January 2018) Amendments to IFRS 2 Classification and Measurement of Share-based Payment Transactions (effective for accounting Amendments to IFRS 2 Classification and Measurement of Share-based Payment Transactions (effective for accounting Amendments to IFRS 2 Classification and Measurement of Share-based Payment Transactions (effective for accounting Amendments to IFRS 2 Classification and Measurement of Share-based Payment Transactions (effective for accounting Amendments to IFRS 2 Classification and Measurement of Share-based Payment Transactions (effective for accounting Amendments to IFRS 2 Classification and Measurement of Share-based Payment Transactions (effective for accounting Amendments to IFRS 2 Classification and Measurement of Share-based Payment Transactions (effective for accounting periods beginning on or after 1 January 2018) periods beginning on or after 1 January 2018) periods beginning on or after 1 January 2018) periods beginning on or after 1 January 2018) periods beginning on or after 1 January 2018) periods beginning on or after 1 January 2018) periods beginning on or after 1 January 2018) Amendments to IFRS 4 Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts (effective for accounting Amendments to IFRS 4 Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts (effective for accounting Amendments to IFRS 4 Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts (effective for accounting Amendments to IFRS 4 Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts (effective for accounting Amendments to IFRS 4 Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts (effective for accounting Amendments to IFRS 4 Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts (effective for accounting Amendments to IFRS 4 Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts (effective for accounting periods beginning on or after 1 January 2018) periods beginning on or after 1 January 2018) periods beginning on or after 1 January 2018) periods beginning on or after 1 January 2018) periods beginning on or after 1 January 2018) periods beginning on or after 1 January 2018) periods beginning on or after 1 January 2018) Annual Improvements to IFRSs (2014 – 2016 Cycle) Annual Improvements to IFRSs (2014 – 2016 Cycle) Annual Improvements to IFRSs (2014 – 2016 Cycle) Annual Improvements to IFRSs (2014 – 2016 Cycle) Annual Improvements to IFRSs (2014 – 2016 Cycle) Annual Improvements to IFRSs (2014 – 2016 Cycle) Annual Improvements to IFRSs (2014 – 2016 Cycle) IFRIC 22 Foreign Currency Transactions and Advance Consideration (effective for accounting periods beginning on or after 1 IFRIC 22 Foreign Currency Transactions and Advance Consideration (effective for accounting periods beginning on or after 1 IFRIC 22 Foreign Currency Transactions and Advance Consideration (effective for accounting periods beginning on or after 1 IFRIC 22 Foreign Currency Transactions and Advance Consideration (effective for accounting periods beginning on or after 1 IFRIC 22 Foreign Currency Transactions and Advance Consideration (effective for accounting periods beginning on or after 1 IFRIC 22 Foreign Currency Transactions and Advance Consideration (effective for accounting periods beginning on or after 1 IFRIC 22 Foreign Currency Transactions and Advance Consideration (effective for accounting periods beginning on or after 1 January 2018) January 2018) January 2018) January 2018) January 2018) January 2018) January 2018) IFRIC 23 Uncertainty over Income Tax Treatments (effective for accounting periods beginning on or after 1 January 2019) IFRIC 23 Uncertainty over Income Tax Treatments (effective for accounting periods beginning on or after 1 January 2019) IFRIC 23 Uncertainty over Income Tax Treatments (effective for accounting periods beginning on or after 1 January 2019) IFRIC 23 Uncertainty over Income Tax Treatments (effective for accounting periods beginning on or after 1 January 2019) IFRIC 23 Uncertainty over Income Tax Treatments (effective for accounting periods beginning on or after 1 January 2019) IFRIC 23 Uncertainty over Income Tax Treatments (effective for accounting periods beginning on or after 1 January 2019) IFRIC 23 Uncertainty over Income Tax Treatments (effective for accounting periods beginning on or after 1 January 2019) b) b) b) b) b) b) b) None of the above new standards, interpretations and amendments are expected to have a material effect on the Group's future financial None of the above new standards, interpretations and amendments are expected to have a material effect on the Group's future financial None of the above new standards, interpretations and amendments are expected to have a material effect on the Group's future financial None of the above new standards, interpretations and amendments are expected to have a material effect on the Group's future financial None of the above new standards, interpretations and amendments are expected to have a material effect on the Group's future financial None of the above new standards, interpretations and amendments are expected to have a material effect on the Group's future financial None of the above new standards, interpretations and amendments are expected to have a material effect on the Group's future financial statements except IFRS 9 and IFRS 15 which the Group provides the following information regarding their likely impact: statements except IFRS 9 and IFRS 15 which the Group provides the following information regarding their likely impact: statements except IFRS 9 and IFRS 15 which the Group provides the following information regarding their likely impact: statements except IFRS 9 and IFRS 15 which the Group provides the following information regarding their likely impact: statements except IFRS 9 and IFRS 15 which the Group provides the following information regarding their likely impact: statements except IFRS 9 and IFRS 15 which the Group provides the following information regarding their likely impact: statements except IFRS 9 and IFRS 15 which the Group provides the following information regarding their likely impact: IFRS 9 Financial instruments replaces IAS 39 and introduces some new requirements in relation to impairment based on an expected credit IFRS 9 Financial instruments replaces IAS 39 and introduces some new requirements in relation to impairment based on an expected credit IFRS 9 Financial instruments replaces IAS 39 and introduces some new requirements in relation to impairment based on an expected credit IFRS 9 Financial instruments replaces IAS 39 and introduces some new requirements in relation to impairment based on an expected credit IFRS 9 Financial instruments replaces IAS 39 and introduces some new requirements in relation to impairment based on an expected credit IFRS 9 Financial instruments replaces IAS 39 and introduces some new requirements in relation to impairment based on an expected credit IFRS 9 Financial instruments replaces IAS 39 and introduces some new requirements in relation to impairment based on an expected credit loss model. The Group is still assessing the impact of this new standard. loss model. The Group is still assessing the impact of this new standard. loss model. The Group is still assessing the impact of this new standard. loss model. The Group is still assessing the impact of this new standard. loss model. The Group is still assessing the impact of this new standard. loss model. The Group is still assessing the impact of this new standard. loss model. The Group is still assessing the impact of this new standard. IFRS 16 provides a single lessee accounting model, requiring lessees to recognise right of use assets and lease liabilities for all applicable IFRS 16 provides a single lessee accounting model, requiring lessees to recognise right of use assets and lease liabilities for all applicable IFRS 16 provides a single lessee accounting model, requiring lessees to recognise right of use assets and lease liabilities for all applicable IFRS 16 provides a single lessee accounting model, requiring lessees to recognise right of use assets and lease liabilities for all applicable IFRS 16 provides a single lessee accounting model, requiring lessees to recognise right of use assets and lease liabilities for all applicable IFRS 16 provides a single lessee accounting model, requiring lessees to recognise right of use assets and lease liabilities for all applicable IFRS 16 provides a single lessee accounting model, requiring lessees to recognise right of use assets and lease liabilities for all applicable leases. The Group is still assessing the impact of this new standard. leases. The Group is still assessing the impact of this new standard. leases. The Group is still assessing the impact of this new standard. leases. The Group is still assessing the impact of this new standard. leases. The Group is still assessing the impact of this new standard. leases. The Group is still assessing the impact of this new standard. leases. The Group is still assessing the impact of this new standard. Basis of consolidation Basis of consolidation Basis of consolidation Basis of consolidation Basis of consolidation Basis of consolidation Basis of consolidation The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its 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; subsidiaries) made up to 31 December each year. The Company controls a subsidiary if all three of the following elements are present; subsidiaries) made up to 31 December each year. The Company controls a subsidiary if all three of the following elements are present; subsidiaries) made up to 31 December each year. The Company controls a subsidiary if all three of the following elements are present; subsidiaries) made up to 31 December each year. The Company controls a subsidiary if all three of the following elements are present; subsidiaries) made up to 31 December each year. The Company controls a subsidiary if all three of the following elements are present; 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 power over the subsidiary, exposure to variable returns from the subsidiary, and the ability of the investor to use its power to affect those power over the subsidiary, exposure to variable returns from the subsidiary, and the ability of the investor to use its power to affect those power over the subsidiary, exposure to variable returns from the subsidiary, and the ability of the investor to use its power to affect those power over the subsidiary, exposure to variable returns from the subsidiary, and the ability of the investor to use its power to affect those power over the subsidiary, exposure to variable returns from the subsidiary, and the ability of the investor to use its power to affect those 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 variable returns. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control variable returns. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control variable returns. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control variable returns. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control variable returns. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control 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. commences until the date control ceases. commences until the date control ceases. commences until the date control ceases. commences until the date control ceases. commences until the date control ceases. commences until the date control ceases. Business combinations Business combinations Business combinations Business combinations Business combinations Business combinations Business combinations The consolidated financial statements incorporate the results of business combinations using the purchase method. In the consolidated The consolidated financial statements incorporate the results of business combinations using the purchase method. In the consolidated The consolidated financial statements incorporate the results of business combinations using the purchase method. In the consolidated The consolidated financial statements incorporate the results of business combinations using the purchase method. In the consolidated The consolidated financial statements incorporate the results of business combinations using the purchase method. In the consolidated The consolidated financial statements incorporate the results of business combinations using the purchase method. In the consolidated 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 statement of financial position, the acquiree’s identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values statement of financial position, the acquiree’s identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values statement of financial position, the acquiree’s identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values statement of financial position, the acquiree’s identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values statement of financial position, the acquiree’s identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values 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 at the acquisition date. Acquisitions of entities that comprise principally land with no active plantation business do not represent business at the acquisition date. Acquisitions of entities that comprise principally land with no active plantation business do not represent business at the acquisition date. Acquisitions of entities that comprise principally land with no active plantation business do not represent business at the acquisition date. Acquisitions of entities that comprise principally land with no active plantation business do not represent business at the acquisition date. Acquisitions of entities that comprise principally land with no active plantation business do not represent business 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 combinations, in such cases, the amount paid for each acquisition is allocated between the identifiable assets/liabilities at the acquisition combinations, in such cases, the amount paid for each acquisition is allocated between the identifiable assets/liabilities at the acquisition combinations, in such cases, the amount paid for each acquisition is allocated between the identifiable assets/liabilities at the acquisition combinations, in such cases, the amount paid for each acquisition is allocated between the identifiable assets/liabilities at the acquisition combinations, in such cases, the amount paid for each acquisition is allocated between the identifiable assets/liabilities at the acquisition combinations, in such cases, the amount paid for each acquisition is allocated between the identifiable assets/liabilities at the acquisition date. date. date. date. date. date. date. Foreign currency Foreign currency Foreign currency Foreign currency Foreign currency Foreign currency Foreign currency The individual financial statements of each subsidiary are presented in the currency of the country in which it operates (its functional The individual financial statements of each subsidiary are presented in the currency of the country in which it operates (its functional The individual financial statements of each subsidiary are presented in the currency of the country in which it operates (its functional The individual financial statements of each subsidiary are presented in the currency of the country in which it operates (its functional The individual financial statements of each subsidiary are presented in the currency of the country in which it operates (its functional The individual financial statements of each subsidiary are presented in the currency of the country in which it operates (its functional The individual financial statements of each subsidiary are presented in the currency of the country in which it operates (its functional currency) with the exception of the Company and its UK subsidiaries which are presented in US Dollar. The presentation currency for the currency) with the exception of the Company and its UK subsidiaries which are presented in US Dollar. The presentation currency for the currency) with the exception of the Company and its UK subsidiaries which are presented in US Dollar. The presentation currency for the currency) with the exception of the Company and its UK subsidiaries which are presented in US Dollar. The presentation currency for the currency) with the exception of the Company and its UK subsidiaries which are presented in US Dollar. The presentation currency for the currency) with the exception of the Company and its UK subsidiaries which are presented in US Dollar. The presentation currency for the currency) with the exception of the Company and its UK subsidiaries which are presented in US Dollar. The presentation currency for the consolidated financial statements is also US Dollar, chosen because, as internationally traded commodities, the price of the bulk of the consolidated financial statements is also US Dollar, chosen because, as internationally traded commodities, the price of the bulk of the consolidated financial statements is also US Dollar, chosen because, as internationally traded commodities, the price of the bulk of the consolidated financial statements is also US Dollar, chosen because, as internationally traded commodities, the price of the bulk of the consolidated financial statements is also US Dollar, chosen because, as internationally traded commodities, the price of the bulk of the consolidated financial statements is also US Dollar, chosen because, as internationally traded commodities, the price of the bulk of the consolidated financial statements is also US Dollar, chosen because, as internationally traded commodities, the price of the bulk of the Group’s products are ultimately link to the US Dollar. Group’s products are ultimately link to the US Dollar. Group’s products are ultimately link to the US Dollar. Group’s products are ultimately link to the US Dollar. Group’s products are ultimately link to the US Dollar. Group’s products are ultimately link to the US Dollar. Group’s products are ultimately link to the US Dollar. Annual Report 2017 | Anglo-Eastern Plantations Plc Annual Report 2017 | Anglo-Eastern Plantations Plc Annual Report 2017 | Anglo-Eastern Plantations Plc Annual Report 2017 | Anglo-Eastern Plantations Plc Annual Report 2017 | Anglo-Eastern Plantations Plc Annual Report 2017 | Anglo-Eastern Plantations Plc Annual Report 2017 | Anglo-Eastern Plantations Plc 66 66 66 66 66 66 66 66 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Notes to the Consolidated Financial Statements 1 Accounting policies - continued Foreign currency - continued On consolidation, the results of overseas operations are translated into US Dollar at average exchange rates for the year unless exchange rates fluctuate significantly in which case the actual rate is used. All assets and liabilities of overseas operations are translated at the rate ruling at the balance sheet date. Exchange differences arising on re-translating the opening net assets at opening rate and the results of overseas operations at actual rate are recognised directly in equity (the “exchange reserves”). Exchange differences recognised in the income statement of Group entities’ separate financial statements on the translation of long-term monetary items forming part of the Group’s net investment in the overseas operation concerned are reclassified to the exchange reserves if the item is denominated in the presentational currency of the Group or of the overseas operation concerned. On disposal of a foreign operation, the cumulative exchange differences recognised in the exchange reserves relating to that operation up to the date of disposal are transferred to the income statement as part of the profit or loss on disposal. All other exchange profits or losses are credited or charged to the income statement. Revenue recognition Revenue includes - - amounts receivable for produce provided in the normal course of business, net of sales related taxes and levies, including export taxes; amounts received for sales of palm kernel shell, rubber wood, biomass products, biogas products and other income of an operating nature. Sales of CPO, palm kernel, FFB, shell nut, biomass products, biogas products and rubber slab are recognised when goods are delivered or allocated to a purchaser. Delivery or allocation does not take place until contracts are paid for. Sales of latex are recognised on signing of sales contract, this being the point at which the significant risks and rewards of ownership are passed over to the buyer. Share based payments Share options are measured at fair value (excluding the effect of non market-based vesting conditions) at the date of grant. This fair value is expensed on a straight-line basis over the vesting period, based on the Group’s estimate of shares that will eventually vest and adjusted for the effect of non market-based vesting conditions. Fair value is measured by use of a binomial model. The expected life used in the model has been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions, and behavioural considerations. Provided that all other vesting conditions are satisfied, a charge is made irrespective of whether the market vesting conditions are satisfied. Tax UK and foreign corporation tax are provided at amounts expected to be paid or recovered using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date. The directors consider that the carrying amount of tax receivables approximates its fair value. Dividends Equity dividends are recognised when they become legally payable. The Company pays only one dividend each year as a final dividend which becomes legally payable when approved by the shareholders at the next following annual general meeting. Fair value measurement A number of assets and liabilities included in the Group’s financial statements require measurement at, and/or disclosure of, fair value. The fair value measurement of the Group’s financial and non-financial assets and liabilities utilises market observable inputs and data as far as possible. Inputs used in determining fair value measurements are categorised into different levels based on how observable the inputs used in the valuation technique utilised are (the ‘fair value hierarchy’): • Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities; • Level 2 - inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; • Level 3 - unobservable inputs for the asset or liability. The classification of an item into the above levels is based on the lowest level of the inputs used that has a significant effect on the fair value measurement of the item. Transfers of items between levels are recognised in the period they occur. The Group measures the following assets at fair value: • Revalued land - Property, plant and equipment (note 10) • Biological assets (note 13) For more detailed information in relation to the fair value measurement of the items above, please refer to the applicable notes. Annual Report 2017 | Anglo-Eastern Plantations Plc 67 67 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Notes to the Consolidated Financial Statements 1 Accounting policies - continued Property, plant and equipment All items of property, plant and equipment are initially measured at cost. Cost includes expenditure that is directly attributable to the acquisition of the items. After initial recognition, all items of property, plant and equipment except land and construction in progress, are stated at cost less accumulated depreciation and any accumulated impairment losses. Plantations comprise of the cost of planting and development on oil palm and other plantation crops. Costs of new planting and development of plantation crops are capitalised from the stage of land clearing up to the stage of maturity or subject to certificate of Land Exploitation Rights (HGU) being obtained, whichever is earlier. The costs of immature plantations consist mainly of the accumulated cost of land clearing, planting, fertilising and maintaining the plantation, borrowing costs and other indirect overhead costs up to the time the trees are harvestable and to the extent appropriate. Oil palm plantations are considered mature within three to four years after planting and generating average annual FFB of four to six metric tons per hectare. Immature plantations are not depreciated. The Indonesian authorities have granted certain land exploitation rights and operating permits for the estates. The land rights are usually renewed without significant cost subject to compliance with the laws and regulations of Indonesia. Therefore, the Group has classified the land rights as leasehold land and accounted for as an indefinite finance lease. The leasehold land is recognised at cost initially and is not depreciated. The land is subsequently carried at fair value, based on periodic valuations on an open market basis by a professionally qualified valuer. These revaluations are made with sufficient regularity to ensure that the carrying amount does not differ materially from that which would be determined using fair value at the end of the reporting period. Changes in fair value are recognised in other comprehensive income and accumulated in the revaluation reserve except to the extent that any decrease in value in excess of the credit balance on the revaluation reserve, or reversal of such a transaction, is recognised in income statement. On the disposal of a revalued estate, any related balance remaining in the revaluation reserve is transferred to retained earnings as a movement in reserves. Construction in progress is stated at cost. The accumulated costs will be reclassified to the appropriate class of assets when construction is completed and the asset is ready for its intended use. Construction in progress is also not depreciated until such time when the asset is available for use. Interest on third party loans directly related to field development is capitalised in the proportion that the opening immature area bears to the total planted area of the relevant estate. Interest on loans related to construction in progress (such as an oil mill) is capitalised up to the commissioning of that asset. These interest rates are booked at the rate prevailing at the time. Plantations, buildings and oil mills are depreciated using the straight-line method. All other property, plant and equipment items are depreciated using the double-declining-balance method. The yearly rates of depreciation are as follows: Plantations - 5% Buildings - 5% to 10% per annum Oil Mill - 5% per annum Estate plant, equipment & vehicle - 12.5% to 50% per annum Office plant, equipment & vehicle - 25% to 50% per annum Biological assets Biological assets comprise an estimation of the fair value less costs to sell of unharvested FFB at balance sheet date. Changes in the fair value of biological assets are charged or credited to the income statement within the cost of sales. Leased assets Assets financed by leasing agreements which give rights approximating to ownership (finance leases) are capitalised at amounts equal to the original cost of the asset to the lessors and depreciation is provided on the asset over the shorter of the lease term or its useful economic life in accordance with Group depreciation policy for those held at cost. Land rights are held at fair value and revalued at the balance sheet date. The capital elements of future obligations under finance leases are included as liabilities in the balance sheet and the current year’s interest element is charged to the income statement to produce a constant rate of charge on the balance of capital repayments outstanding. All other leases are treated as operating leases. Their annual rentals are charged to the income statement on a straight line basis over the term of the lease. Impairment Impairment tests on property, plant and equipment are undertaken annually on 31 December. Where the carrying value of an asset exceeds its recoverable amount (i.e. the higher of value in use or fair value, less costs to sell), the asset is written down accordingly. Impairment charges are included in the administrative expenses in the income statement, except to the extent they reverse gains previously recognised in the statement of recognised income and expense. Inventories Inventories are initially recognised at cost, and subsequently at the lower of cost and net realisable value. In the case of processed produce for sale which comprises palm oil and kernel, cost represents the monthly weighted-average cost of production and appropriate production overheads. Estate and mill consumables are valued on a weighted average cost basis. Annual Report 2017 | Anglo-Eastern Plantations Plc 68 68 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Notes to the Consolidated Financial Statements 1 Accounting policies - continued Financial assets All the Group's receivables and loans are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are recognised at fair value at inception and subsequently at amortised cost. No impairment provisions have been considered necessary. Cash and cash equivalents consist of cash in hand and short term deposits at banks with an original maturity of not exceeding three months. Bank overdrafts are shown within loans and borrowings under current liabilities on the balance sheet. There are no assets in hedging relationships and no financial assets or liabilities available for sale. Financial liabilities All the Group's financial liabilities are non-derivative financial liabilities. Bank borrowings and long term development loans are initially recognised at fair value and subsequently at amortised cost, which is the total of proceeds received net of issue costs. Finance charges are accounted for on an accruals basis and charged in the income statement unless capitalised according to the policy as set out under Interest capitalisation above. Trade and other payables are shown at fair value at recognition and subsequently at amortised cost. Deferred tax Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability in the balance sheet differs from its tax base except for differences in the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction affects neither accounting nor taxable profit. The Group recognises deferred tax liabilities arising from taxable temporary differences on investments in subsidiaries, except where the Group is able to control the reversal of the temporary differences and it is probable that the temporary difference will not reverse in the foreseeable future. Recognition of deferred tax assets is restricted to those instances where it is possible that taxable profit will be available against which the difference can be utilised. Deferred tax is recognised on temporary differences arising from property revaluation surpluses or deficits. Deferred tax is determined using the tax rates that are enacted or substantively enacted at the balance sheet date. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, such as revaluations, in which case the deferred tax is also dealt with in other comprehensive income; in this case assets and liabilities are offset. Retirement benefits Defined contribution schemes Contributions to defined contribution pension schemes are charged to the consolidated income statement in the year to which they relate. Defined benefit schemes The Group operates a number of defined benefit schemes in respect of its Indonesian operations. These schemes’ surpluses and deficits are measured at: • The fair value of plan assets at the reporting date; less • Plan liabilities calculated using the projected unit credit method discounted to its present value using yields available on high quality corporate bonds that have maturity dates approximating to the terms of the liabilities; plus • Unrecognised past service costs; less • The effect of minimum funding requirements agreed with scheme trustees. Remeasurements of the net defined obligation are recognised directly within equity. The remeasurements include: • Actuarial gains and losses; • Return on plan assets (interest exclusive); • Any asset ceiling effects (interest inclusive). Service costs are recognised in comprehensive income and include current and past service costs as well as gains and losses on curtailments. Annual Report 2017 | Anglo-Eastern Plantations Plc 69 69 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements 1 Accounting policies - continued 1 Accounting policies - continued 1 Accounting policies - continued Retirement benefits - continued Retirement benefits - continued Retirement benefits - continued Defined benefit schemes - continued Defined benefit schemes - continued Defined benefit schemes - continued Net interest expense / (income) is recognised in comprehensive income, and is calculated by applying the discount rate used to measure the Net interest expense / (income) is recognised in comprehensive income, and is calculated by applying the discount rate used to measure the Net interest expense / (income) is recognised in comprehensive income, and is calculated by applying the discount rate used to measure the defined benefit obligation / (asset) at the beginning of the annual period to the balance of the net defined benefit obligation / (asset), defined benefit obligation / (asset) at the beginning of the annual period to the balance of the net defined benefit obligation / (asset), 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. considering the effects of contributions and benefit payments during the period. considering the effects of contributions and benefit payments during the period. Gains or losses arising from changes to scheme benefits or scheme curtailment are recognised immediately in comprehensive income. Gains or losses arising from changes to scheme benefits or scheme curtailment are recognised immediately in comprehensive income. Gains or losses arising from changes to scheme benefits or scheme curtailment are recognised immediately in comprehensive income. Settlements of defined benefit schemes are recognised in the period in which the settlement occurs. Settlements of defined benefit schemes are recognised in the period in which the settlement occurs. Settlements of defined benefit schemes are recognised in the period in which the settlement occurs. Treasury shares Treasury shares 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, Consideration paid or received for the purchase or sale of the Company’s own shares for holding in treasury is recognised directly in equity, 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 where the cost is presented as the treasury shares. Any excess of the consideration received on the sale of treasury shares over the 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. weighted average cost of shares sold is taken to the share premium account. 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. Any shares held in treasury are treated as cancelled for the purpose of calculating earnings per share. Any shares held in treasury are treated as cancelled for the purpose of calculating earnings per share. Financial guarantee contracts Financial guarantee contracts Financial guarantee contracts Where the Company and its subsidiaries enter into financial guarantee contracts and guarantee the indebtedness of other companies within Where the Company and its subsidiaries enter into financial guarantee contracts and guarantee the indebtedness of other companies within Where the Company and its subsidiaries enter into financial guarantee contracts and guarantee the indebtedness of other companies within the Group and/or third party entities, the Group considers these to be insurance arrangements and accounts for them as such. In this the Group and/or third party entities, the Group considers these to be insurance arrangements and accounts for them as such. In this the Group and/or third party entities, the Group considers these to be insurance arrangements and accounts for them as such. In this respect, the Group treats the guarantee contract as a contingent liability until such time that it becomes probable that the Group will be respect, the Group treats the guarantee contract as a contingent liability until such time that it becomes probable that the Group will be respect, the Group treats the guarantee contract as a contingent liability until such time that it becomes probable that the Group will be required to make a payment under the guarantee. required to make a payment under the guarantee. required to make a payment under the guarantee. Critical accounting estimates and judgements Critical accounting estimates and judgements Critical accounting estimates and judgements The preparation of the Group financial statements in conformity with IFRS requires the use of estimates and assumptions that affect the The preparation of the Group financial statements in conformity with IFRS requires the use of estimates and assumptions that affect the The preparation of the Group financial statements in conformity with IFRS requires the use of estimates and assumptions that affect the reported assets and liabilities and reported revenue and expenses. Actual results could differ from those estimates and accordingly, they are reported assets and liabilities and reported revenue and expenses. Actual results could differ from those estimates and accordingly, they are reported assets and liabilities and reported revenue and expenses. Actual results could differ from those estimates and accordingly, they are reviewed on an on-going basis. The main areas in which estimates are used are the fair value of biological assets, property, plant and reviewed on an on-going basis. The main areas in which estimates are used are the fair value of biological assets, property, plant and reviewed on an on-going basis. The main areas in which estimates are used are the fair value of biological assets, property, plant and equipment, deferred tax and retirement benefits. equipment, deferred tax and retirement benefits. equipment, deferred tax and retirement benefits. Revisions to accounting estimates are recognised in the period in which the estimate is revised or the revision affects only that period, or in Revisions to accounting estimates are recognised in the period in which the estimate is revised or the revision affects only that period, or in Revisions to accounting estimates are recognised in the period in which the estimate is revised or the revision affects only that period, or in the period of revision and future periods if the revision affects both current and future periods. the period of revision and future periods if the revision affects both current and future periods. the period of revision and future periods if the revision affects both current and future periods. Assumptions regarding the valuation of property, plant and equipment and biological assets are set out in note 10 and note 13 respectively. Assumptions regarding the valuation of property, plant and equipment and biological assets are set out in note 10 and note 13 respectively. Assumptions regarding the valuation of property, plant and equipment and biological assets are set out in note 10 and note 13 respectively. The Group's policy with regard to impairment of such assets is set out above. The Group's policy with regard to impairment of such assets is set out above. The Group's policy with regard to impairment of such assets is set out above. Details on deferred tax are given in note 17 and retirement benefits in note 18. Details on deferred tax are given in note 17 and retirement benefits in note 18. Details on deferred tax are given in note 17 and retirement benefits in note 18. 2 Revenue 2 Revenue 2 Revenue Sales of produce: Sales of produce: Sales of produce: - CPO, palm kernel and FFB - CPO, palm kernel and FFB - CPO, palm kernel and FFB - Rubber - Rubber - Rubber - Shell nut - Shell nut - Shell nut - Biomass products - Biomass products - Biomass products - Biogas products - Biogas products - Biogas products - Others - Others - Others 3 Finance income and expense 3 Finance income and expense 3 Finance income and expense Finance income Finance income Finance income Interest receivable on: Interest receivable on: Interest receivable on: Credit bank balances and time deposits Credit bank balances and time deposits Credit bank balances and time deposits Finance expense Finance expense Finance expense Interest payable on: Interest payable on: Interest payable on: Development loans - (note 15) Development loans - (note 15) Development loans - (note 15) Net finance income recognised in income statement Net finance income recognised in income statement Net finance income recognised in income statement Annual Report 2017 | Anglo-Eastern Plantations Plc Annual Report 2017 | Anglo-Eastern Plantations Plc Annual Report 2017 | Anglo-Eastern Plantations Plc 2017 2017 2017 $000 $000 $000 286,164 286,164 286,164 1,305 1,305 1,305 2,214 2,214 2,214 644 644 644 865 865 865 715 715 715 291,907 291,907 291,907 2017 2017 2017 $000 $000 $000 5,337 5,337 5,337 (1,753) (1,753) (1,753) 3,584 3,584 3,584 2016 2016 2016 $000 $000 $000 243,020 243,020 243,020 1,149 1,149 1,149 1,717 1,717 1,717 324 324 324 - - - - - - 246,210 246,210 246,210 2016 2016 2016 $000 $000 $000 5,881 5,881 5,881 (1,743) (1,743) (1,743) 4,138 4,138 4,138 70 70 70 70 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Notes to the Consolidated Financial Statements 4 Profit before tax Profit before tax is stated after charging Depreciation (note 10) (Reversal of impairment) / impairment losses (note 10) Exchange losses / (gains) Movement of inventories Operating lease expense - Property Professional fees Staff costs (note 6) Remuneration received by the group’s auditor or associates of the group’s auditor: - Audit of parent company - Audit of consolidated financial statements - Audit of consolidated financial statements (prior year) - Audit related assurance service - Audit of UK subsidiaries Total audit services Audit of overseas subsidiaries - Malaysia - Indonesia Total audit services Total auditors’ remuneration 5 Segment information 2017 $000 16,284 (923) 272 (179) 388 1,211 34,926 5 118 13 6 13 155 17 83 100 255 2016 $000 15,677 2,740 (845) (2,526) 515 760 31,564 5 132 - 6 13 156 21 70 91 247 Description of the types of products and services from which each reportable segment derives its revenues In the opinion of the Directors, the operations of the Group comprise one class of business which is the cultivation of plantation in Indonesia and Malaysia. From the result of the cultivation of plantation, the Group has produced the crude palm oil and associated products such as palm kernel, shell nut, biomass products, and biogas products. Factors that management used to identify reportable segments in the Group The reportable segments in the Group are strategic business units based on the geographical spread. Operating segments are consistent with the internal reporting provided to the Board of Directors. The Board of Directors is responsible for allocating resources and assessing the performance of the operating segments. The Board decision is implemented by the Executive Committee, that is made up of a Senior General Manager in Malaysia, the Chief Executive Officer, the Chief Operating Officers, Finance Director and the Engineering Director. Measurement of operating segment profit or loss, assets and liabilities The Group evaluates segmental performance on the basis of profit or loss from operations calculated in accordance with IFRS but excluding non-recurring losses, such as share based payments. Inter-segment transactions are made based on terms mutually agreed by the parties to maximise the utilisation of Group’s resources at a rate acceptable to local tax authorities. This policy was applied consistently throughout the current and prior period. The Group’s assets are allocated to segments based on geographical location. Annual Report 2017 | Anglo-Eastern Plantations Plc 71 71 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. l a t o T 0 0 0 $ K U 0 0 0 $ 0 0 0 $ 0 0 0 $ 0 0 0 $ i a s y a a M l l a t o T i a s e n o d n I n a t n a m i l a K 0 0 0 $ a k g n a B u a R i 0 0 0 $ 0 0 0 $ h t u o S a r e t a m u S 0 0 0 $ l u u k g n e B 0 0 0 $ h t r o N a r e t a m u S - - - - - 9 5 1 , 3 4 4 6 5 6 8 9 9 6 5 0 3 , 1 4 1 2 , 2 5 0 0 , 3 8 2 9 5 1 , 3 2 3 7 , 8 8 2 7 5 8 , 1 3 8 2 8 , 1 3 7 4 1 4 4 6 5 6 8 5 1 7 5 0 3 , 1 4 1 2 , 2 4 6 1 , 6 8 2 ) 7 9 2 ( 8 8 9 , 9 6 7 0 9 , 1 9 2 - - - - - 6 1 6 1 1 9 6 , 9 6 ) 1 9 5 , 1 ( 9 1 - 3 2 9 ) 4 8 2 , 6 1 ( 9 2 3 , 7 3 ) 8 7 3 , 3 2 ( 0 2 6 , 1 6 5 7 4 3 , 1 7 3 5 8 3 , 7 2 - - - 9 6 2 ) 2 4 1 ( 3 1 5 4 0 , 7 3 7 1 , 3 ) 1 6 5 ( - - 2 1 1 ) 5 5 1 ( 8 5 4 6 4 , 4 2 6 8 9 , 7 1 - ) 1 9 5 , 1 ( ) 4 8 ( 3 0 1 ) 3 1 2 ( 6 7 4 , 1 7 3 6 2 , 1 7 3 2 9 ) 1 8 3 ( ) 3 2 7 , 5 1 ( 9 2 3 , 7 3 ) 1 8 0 , 3 2 ( 1 1 1 , 0 3 5 8 8 1 , 0 5 3 4 1 3 , 7 2 - 9 2 - - - 2 7 4 2 5 5 , 6 4 2 0 , 7 ) 5 2 8 , 3 ( ) 9 8 1 ( ) 5 4 8 , 1 ( 1 2 7 ) 3 0 2 ( - - - - - 7 4 1 2 1 ) 7 1 3 ( ) 5 0 3 ( ) 9 5 1 ( - ) 0 8 ( - 9 8 2 9 6 , 0 1 1 0 9 9 , 0 0 1 9 7 7 , 1 1 4 1 8 , 1 1 7 8 5 , 1 1 0 3 0 , 1 - - - - 7 9 8 4 7 0 , 4 5 1 7 9 , 4 5 ) 1 9 ( 5 9 7 , 5 1 - - - - - 4 4 ) 4 1 ( ) 4 8 2 , 4 ( - 9 5 5 - 3 6 8 3 3 6 6 6 , 8 9 6 2 6 , 9 9 ) 4 1 1 ( 2 5 9 , 8 2 9 2 7 4 4 6 7 2 5 2 3 6 5 0 3 , 1 0 9 2 , 8 9 ) 8 7 4 ( 8 7 7 , 4 2 7 2 1 , 2 0 1 4 0 7 , 5 1 ) 8 9 2 , 4 ( 8 3 8 , 8 2 0 0 3 , 4 2 - ) 0 4 9 ( ) 0 1 6 ( - ) 4 6 5 , 5 ( 4 5 5 4 4 5 , 1 4 8 5 2 , 9 1 ) 0 3 7 , 2 ( 2 1 1 , 1 ) 6 0 8 ( 3 4 6 , 3 ) 9 6 ( 9 7 4 , 0 4 2 2 2 , 9 3 3 8 3 , 2 ) 4 1 1 , 4 ( - ) 3 2 1 , 2 ( 9 6 4 , 1 ) 4 2 1 , 6 ( 9 5 9 , 2 8 8 8 , 3 7 1 4 7 , 6 4 1 - ) 5 5 9 , 3 ( 3 8 0 , 5 6 9 4 , 1 3 ) 0 1 2 , 1 1 ( 9 0 6 , 8 1 4 8 , 8 7 1 3 4 2 , 5 0 1 e m o c n i d e t a d i l o s n o c r e p x a t e r o f e b r a e y e h t r o f ) s s o l ( / t i f o r P ) s e s s o l t n e m r i a p m i ( / t n e m r i a p m i f o l a s r e v e R t n e m e t a t s n o i t a i c e r p e D s n o i t c a s n a r t t n e m g e s - r e t n I e u n e v e r l a t n e m g e s - r e t n I e s n e p x e x a T s n o i t i d d a - s t e s s a t n e r r u c - n o N s t e s s a t n e r r u c - n o N s t e s s a l a t o T d e u n i t n o c – n o i t a m r o f n i t n e m g e S 5 ) l a n r e t x e l l a ( e u n e v e r s e l a s l a t o T 7 1 0 2 B F F d n a l e n r e k m l a p , O P C s t c u d o r p s s a m o B i s t c u d o r p s a g o B i s r e h t O t u n l l e h S r e b b u R - - - - - - x a t e r o f e b ) s s o l ( / t i f o r P t n e m e v o m A B e u n e v e r l a t o T s t n e m e t a t S i l a i c n a n F d e t a d i l o s n o C e h t o t s e t o N 2 7 c l P s n o i t a t n a l P n r e t s a E - o g n A l | 7 1 0 2 t r o p e R l a u n n A 72 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. l a t o T 0 0 0 $ K U 0 0 0 $ 9 4 1 , 1 7 1 7 , 1 4 2 3 0 2 0 , 3 4 2 0 1 2 , 6 4 2 3 8 3 , 3 3 6 4 , 7 5 6 4 8 , 0 6 - ) 0 4 7 , 2 ( ) 7 7 6 , 5 1 ( 6 4 5 , 5 3 ) 5 6 8 , 6 1 ( 6 9 0 , 1 4 5 2 3 1 , 4 7 3 4 8 4 , 0 3 - - - - - - ) 4 2 ( ) 4 2 ( - - - 5 9 3 ) 8 7 3 , 1 ( - 8 7 5 7 8 5 , 3 0 0 0 $ 0 0 0 $ 0 0 0 $ - - - 9 4 1 , 1 7 1 7 , 1 4 2 3 - - 7 4 1 0 5 4 , 3 0 7 5 , 9 3 2 2 4 3 , 4 2 0 5 4 , 3 0 6 7 , 2 4 2 9 8 4 , 4 2 i a s y a a M l l a t o T i a s e n o d n I n a t n a m i l a K 6 9 2 4 0 1 0 0 4 ) 0 5 6 ( - - 4 0 6 ) 1 8 ( 1 6 4 4 9 , 0 2 3 6 2 , 6 1 9 7 2 , 3 1 9 1 , 7 5 0 7 4 , 0 6 ) 9 9 9 ( ) 0 4 7 , 2 ( ) 7 2 0 , 5 1 ( 6 4 5 , 5 3 ) 6 0 4 , 5 1 ( 5 6 5 , 6 1 5 1 9 2 , 7 5 3 3 2 4 , 0 3 1 3 4 3 2 6 , 1 4 5 0 , 2 ) 4 1 4 , 3 ( ) 8 9 0 , 3 ( ) 4 3 3 , 1 ( 4 2 4 4 6 - - - 7 2 7 2 2 ) 2 0 6 ( ) 0 0 6 ( ) 5 8 ( ) 5 3 3 ( - - 0 9 4 7 9 , 4 9 1 7 7 , 2 1 6 0 9 , 3 0 1 7 5 6 2 3 7 , 1 1 0 2 5 , 1 1 0 0 0 $ a k g n a B u a R i 0 0 0 $ 0 0 0 $ h t u o S a r e t a m u S 0 0 0 $ l u u k g n e B 0 0 0 $ h t r o N a r e t a m u S d e u n i t n o c – n o i t a m r o f n i t n e m g e S 5 ) l a n r e t x e l l a ( e u n e v e r l s e a s l a t o T 6 1 0 2 s t n e m e t a t S i l a i c n a n F d e t a d i l o s n o C e h t o t s e t o N - - 5 0 2 9 6 1 , 0 4 4 7 3 , 0 4 3 5 6 1 6 8 , 2 1 4 1 5 , 3 1 ) 8 9 8 ( - ) 9 0 6 ( - ) 1 3 5 , 4 ( 7 5 8 7 8 8 , 1 4 4 4 0 , 0 2 3 - 1 - 4 4 4 1 ) 5 9 6 , 4 ( ) 1 5 5 , 4 ( 3 9 6 ) 7 6 7 ( ) 5 0 5 , 2 ( 4 7 1 , 3 0 1 4 , 3 0 8 2 , 4 5 2 6 8 , 2 5 8 3 6 , 2 - - 6 3 7 4 6 5 , 6 8 0 0 3 , 7 8 1 2 4 , 1 5 8 7 , 4 2 6 0 2 , 6 2 ) 6 9 0 , 4 ( - ) 7 1 1 , 2 ( 5 6 2 , 1 ) 4 4 7 , 5 ( 8 2 6 4 2 3 9 4 1 , 1 5 6 4 , 8 8 6 6 5 , 0 9 8 2 6 9 1 2 , 3 2 7 4 8 , 3 2 - ) 9 2 0 , 4 ( 8 2 8 , 3 3 8 0 , 1 3 ) 5 7 2 , 9 ( 4 4 5 , 5 8 4 0 , 6 7 8 2 4 , 9 2 1 6 5 9 , 7 2 3 3 , 5 7 1 3 4 8 , 1 0 1 t n e m e t a t s e m o c n i d e t a d i l o s n o c r e p x a t e r o f e b r a e y e h t r o f ) s s o l ( / t i f o r P x a t e r o f e b ) s s o l ( / t i f o r P t n e m e v o m A B e u n e v e r l a t o T ) s e s s o l t n e m r i a p m i ( / t n e m r i a p m i f o l a s r e v e R i n o i t a c e r p e D s n o i t c a s n a r t t n e m g e s - r e t n I e u n e v e r l a t n e m g e s - r e t n I e s n e p x e x a T s n o i t i d d a - s t e s s a t n e r r u c - n o N s t e s s a t n e r r u c - n o N s t e s s a l a t o T B F F d n a l e n r e k m a p l , O P C s t c u d o r p s s a m o B i t u n l l e h S r e b b u R - - - - 3 7 c l P s n o i t a t n a l P n r e t s a E - o g n A l | 7 1 0 2 t r o p e R l a u n n A 73 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. r e m o t s u C h g u o h t l A . w o e b l s a d e d v o r p s i i e u n e v e r i s h t f o i l s s y a n a n A . e u n e v e r l a t o t ’ s p u o r G e h t f o ) m 1 . 4 1 1 $ : 6 1 0 2 ( m 0 . 1 3 1 $ l i y e t a m x o r p p a s t n e s e r p e r t n e m g e s n a s e n o d n I i e h t f o s r e m o t s u c 4 m o r f e u n e v e r , 7 1 0 2 r a e y n I d e u n i t n o c - n o i t a m r o f n i t n e m g e S 5 s t n e m e t a t S i l a i c n a n F d e t a d i l o s n o C e h t o t s e t o N . r a e y r o i r p e h t n i s a e m a s e h t e r a s r e m o t s u c r u o f p o t e h t f o o w T i . s s a b l y h t n o m a n o d e m r o f r e p e r a s r e d n e t s a s r e m o t s u C e s e h t n o e c n a i l e r r e v o o n s i e r e h t , e u n e v e r l a t o t p u o r G e h t f o % 0 1 r e v o e r a 4 o t 1 l a t o T 0 0 0 $ 6 3 9 , 4 4 6 3 5 , 0 3 6 5 5 , 8 2 8 9 9 , 6 2 6 2 0 , 1 3 1 1 0 1 , 9 3 9 0 0 , 7 2 2 2 2 , 4 2 6 9 7 , 3 2 8 2 1 , 4 1 1 % 4 . 5 1 5 . 0 1 8 . 9 2 . 9 9 . 4 4 9 . 5 1 0 . 1 1 9 . 9 7 . 9 5 . 6 4 - - - - - - - - - - K U 0 0 0 $ - - - - - - - - - - % % - - - - - - - - - - - - - - - - - - - - 0 0 0 $ 0 0 0 $ i a s y a a M l l a t o T i a s e n o d n I n a t n a m i l a K 6 3 9 , 4 4 6 3 5 , 0 3 6 5 5 , 8 2 8 9 9 , 6 2 6 2 0 , 1 3 1 1 0 1 , 9 3 9 0 0 , 7 2 2 2 2 , 4 2 6 9 7 , 3 2 8 2 1 , 4 1 1 % 4 . 5 1 5 . 0 1 8 . 9 2 . 9 9 . 4 4 9 . 5 1 0 . 1 1 9 . 9 7 . 9 5 . 6 4 0 0 0 $ - - 5 7 0 , 4 5 5 4 , 1 0 3 5 , 5 - - - 9 1 2 , 8 1 9 1 2 , 8 1 % - 4 . 1 5 . 0 - 9 . 1 - - - 4 . 7 4 . 7 - - - - - - - - - - % - - - - - - - - - - 0 0 0 $ a k g n a B u a R i 0 0 0 $ - 7 0 2 , 2 - - 7 0 2 , 2 - - 2 3 8 , 9 2 2 5 , 8 4 5 3 , 8 1 % - 8 . 0 - - 8 . 0 - 0 . 4 5 . 3 - 5 . 7 h t u o S h t r o N 0 0 0 $ 0 0 0 $ 0 0 0 $ a r e t a m u S l u u k g n e B a r e t a m u S - - - - - - - - - - % - - - - - - - - - - - - 6 3 9 , 4 4 5 6 5 , 1 2 1 0 5 , 6 6 - - 1 0 1 , 9 3 7 7 5 , 5 8 7 6 , 4 4 % 4 . 7 4 . 5 1 - - 8 . 2 2 - - 9 . 5 1 3 . 2 2 . 8 1 - 9 8 6 , 2 1 0 1 , 7 2 8 9 9 , 6 2 8 8 7 , 6 5 - - 7 7 1 , 7 1 0 0 7 , 5 1 7 7 8 , 2 3 % - 9 . 0 3 . 9 2 . 9 4 . 9 1 - 0 . 7 4 . 6 - 4 . 3 1 1 r e m o t s u C 2 r e m o t s u C 3 r e m o t s u C 4 r e m o t s u C 7 1 0 2 1 r e m o t s u C 2 r e m o t s u C 3 r e m o t s u C 4 r e m o t s u C 6 1 0 2 1 r e m o t s u C 2 r e m o t s u C 3 r e m o t s u C 4 r e m o t s u C 7 1 0 2 1 r e m o t s u C 2 r e m o t s u C 3 r e m o t s u C 4 r e m o t s u C 6 1 0 2 . s n o i t i d n o c l a r u t l u c i r g a t n e r e f f i d e v a h o t s d n e t a e r a h c a e s a , a e r a l i a c h p a r g o e g y b s i t r o p e r ’ s p u o r G e h T . l m a p l i o o t d e t o v e d e r a s n o i t a r e p o ’ s p u o r G e h t l l a , r e b b u r f o t n u o m a l l a m s a r o f e v a S 74 4 7 c l P s n o i t a t n a l P n r e t s a E - o g n A l | 7 1 0 2 t r o p e R l a u n n A About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements 6 Employees' and Directors' remuneration 6 Employees' and Directors' remuneration 6 Employees' and Directors' remuneration 6 Employees' and Directors' remuneration Average numbers employed (primarily overseas) during the year: Average numbers employed (primarily overseas) during the year: - full time Average numbers employed (primarily overseas) during the year: Average numbers employed (primarily overseas) during the year: - full time - part-time field workers - full time - full time - part-time field workers - part-time field workers - part-time field workers Staff costs (including Directors) comprise: Staff costs (including Directors) comprise: Wages and salaries Staff costs (including Directors) comprise: Staff costs (including Directors) comprise: Wages and salaries Social security costs Wages and salaries Wages and salaries Social security costs Retirement benefit costs Social security costs Social security costs Retirement benefit costs Retirement benefit costs Retirement benefit costs - Indonesia (note 18) - Indonesia (note 18) - Malaysia - Indonesia (note 18) - Indonesia (note 18) - Malaysia - Malaysia - Malaysia - United Kingdom - United Kingdom - United Kingdom - United Kingdom The information required by the Companies Act and the Listing Rules of the Financial Conduct Authority are contained in the Directors' The information required by the Companies Act and the Listing Rules of the Financial Conduct Authority are contained in the Directors' remuneration report on pages 47 – 51 of which certain information on page 51 has been audited. The information required by the Companies Act and the Listing Rules of the Financial Conduct Authority are contained in the Directors' The information required by the Companies Act and the Listing Rules of the Financial Conduct Authority are contained in the Directors' remuneration report on pages 47 – 51 of which certain information on page 51 has been audited. remuneration report on pages 47 – 51 of which certain information on page 51 has been audited. remuneration report on pages 47 – 51 of which certain information on page 51 has been audited. Directors emoluments Directors emoluments Directors emoluments Directors emoluments Remuneration expense for key management personnel comprise: Remuneration expense for key management personnel comprise: Salaries Remuneration expense for key management personnel comprise: Remuneration expense for key management personnel comprise: Salaries Social security costs Salaries Salaries Social security costs Retirement benefit costs Social security costs Social security costs Retirement benefit costs Retirement benefit costs Retirement benefit costs The Executive Director, Non-Executive Directors and senior management (general managers and above) are considered to be the key The Executive Director, Non-Executive Directors and senior management (general managers and above) are considered to be the key management personnel. The remuneration of Executive Director and Non-Executive Directors is shown on page 51. The Executive Director, Non-Executive Directors and senior management (general managers and above) are considered to be the key The Executive Director, Non-Executive Directors and senior management (general managers and above) are considered to be the key management personnel. The remuneration of Executive Director and Non-Executive Directors is shown on page 51. management personnel. The remuneration of Executive Director and Non-Executive Directors is shown on page 51. management personnel. The remuneration of Executive Director and Non-Executive Directors is shown on page 51. 7 Tax expense 7 Tax expense 7 Tax expense 7 Tax expense Foreign corporation tax - current year Foreign corporation tax - current year Foreign corporation tax - prior year Foreign corporation tax - current year Foreign corporation tax - current year Foreign corporation tax - prior year Deferred tax adjustment - origination and reversal of temporary differences Foreign corporation tax - prior year Foreign corporation tax - prior year Deferred tax adjustment - origination and reversal of temporary differences Total tax charge for year Deferred tax adjustment - origination and reversal of temporary differences Deferred tax adjustment - origination and reversal of temporary differences Total tax charge for year Total tax charge for year Total tax charge for year Corporation tax rate in Indonesia is at 25% whereas Malaysia is at 24%. The standard rate of corporation tax in the UK for the current year is Corporation tax rate in Indonesia is at 25% whereas Malaysia is at 24%. The standard rate of corporation tax in the UK for the current year is 19%. The Group’s charge for the year differs from the standard UK rate of corporation tax is explained below. Corporation tax rate in Indonesia is at 25% whereas Malaysia is at 24%. The standard rate of corporation tax in the UK for the current year is Corporation tax rate in Indonesia is at 25% whereas Malaysia is at 24%. The standard rate of corporation tax in the UK for the current year is 19%. The Group’s charge for the year differs from the standard UK rate of corporation tax is explained below. 19%. The Group’s charge for the year differs from the standard UK rate of corporation tax is explained below. 19%. The Group’s charge for the year differs from the standard UK rate of corporation tax is explained below. 2017 2017 Number 2017 2017 Number Number Number 5,694 5,694 9,997 5,694 5,694 9,997 15,691 9,997 9,997 15,691 15,691 15,691 2017 2017 $000 2017 2017 $000 $000 $000 31,608 31,608 1,282 31,608 31,608 1,282 1,282 1,282 62 62 1,922 62 62 1,922 52 1,922 1,922 52 34,926 52 52 34,926 34,926 34,926 2017 2017 $000 2017 2017 $000 $000 $000 208 208 208 208 2017 2017 $000 2017 2017 $000 $000 $000 1,790 1,790 - 1,790 1,790 - 5 - - 5 1,795 5 5 1,795 1,795 1,795 2017 2017 $000 2017 2017 $000 $000 $000 22,796 22,796 365 22,796 22,796 365 217 365 365 217 23,378 217 217 23,378 23,378 23,378 2017 2017 $000 2017 2017 $000 $000 $000 69,691 69,691 69,691 69,691 13,241 13,241 13,241 13,241 4,093 4,093 167 4,093 4,093 167 4,474 167 167 4,474 (1,473) 4,474 4,474 (1,473) 365 (1,473) (1,473) 365 36 365 365 36 2,475 36 36 2,475 23,378 2,475 2,475 23,378 23,378 23,378 2016 2016 Number 2016 2016 Number Number Number 5,838 5,838 10,934 5,838 5,838 10,934 16,772 10,934 10,934 16,772 16,772 16,772 2016 2016 $000 2016 2016 $000 $000 $000 28,764 28,764 773 28,764 28,764 773 773 773 64 64 1,911 64 64 1,911 52 1,911 1,911 52 31,564 52 52 31,564 31,564 31,564 2016 2016 $000 2016 2016 $000 $000 $000 228 228 228 228 2016 2016 $000 2016 2016 $000 $000 $000 1,888 1,888 - 1,888 1,888 - 156 - - 156 2,044 156 156 2,044 2,044 2,044 2016 2016 $000 2016 2016 $000 $000 $000 20,438 20,438 (30) 20,438 20,438 (30) (3,543) (30) (30) (3,543) 16,865 (3,543) (3,543) 16,865 16,865 16,865 2016 2016 $000 2016 2016 $000 $000 $000 60,846 60,846 60,846 60,846 12,169 12,169 12,169 12,169 2,301 2,301 4,810 2,301 2,301 4,810 309 4,810 4,810 309 (2,656) 309 309 (2,656) (30) (2,656) (2,656) (30) (38) (30) (30) (38) - (38) (38) - 16,865 - - 16,865 16,865 16,865 75 75 75 75 75 Profit before tax Profit before tax Profit before tax Profit before tax Profit before tax multiplied by standard rate of UK corporation tax of 19% (2016: 20%) Profit before tax multiplied by standard rate of UK corporation tax of 19% (2016: 20%) Effects of: Profit before tax multiplied by standard rate of UK corporation tax of 19% (2016: 20%) Profit before tax multiplied by standard rate of UK corporation tax of 19% (2016: 20%) Effects of: Rate adjustment relating to overseas profits Effects of: Effects of: Rate adjustment relating to overseas profits Group accounting adjustments not subject to tax Rate adjustment relating to overseas profits Rate adjustment relating to overseas profits Group accounting adjustments not subject to tax Expenses not allowable for tax Group accounting adjustments not subject to tax Group accounting adjustments not subject to tax Expenses not allowable for tax Income not subject to tax Expenses not allowable for tax Expenses not allowable for tax Income not subject to tax Under / (Over) provision of prior year income tax Income not subject to tax Income not subject to tax Under / (Over) provision of prior year income tax Utilisation of tax losses brought forward Under / (Over) provision of prior year income tax Under / (Over) provision of prior year income tax Utilisation of tax losses brought forward Under provision of prior year deferred tax assets Utilisation of tax losses brought forward Utilisation of tax losses brought forward Under provision of prior year deferred tax assets Total tax charge for year Under provision of prior year deferred tax assets Under provision of prior year deferred tax assets Total tax charge for year Total tax charge for year Total tax charge for year Annual Report 2017 | Anglo-Eastern Plantations Plc Annual Report 2017 | Anglo-Eastern Plantations Plc Annual Report 2017 | Anglo-Eastern Plantations Plc Annual Report 2017 | Anglo-Eastern Plantations Plc About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Notes to the Consolidated Financial Statements 7 Tax expense - continued 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 payments 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 the refund process takes up to 12 months. 8 Earnings per ordinary share (“EPS”) Profit for the year attributable to owners of the Company before BA movement BA movement Earnings used in basic and diluted EPS Weighted average number of shares in issue in year - used in basic EPS - dilutive effect of outstanding share options - used in diluted EPS Basic EPS before BA movement Basic EPS after BA movement Dilutive EPS before BA movement Dilutive EPS after BA movement 9 Dividends Paid during the year Final dividend of 3.0p per ordinary share for the year ended 31 December 2016 (2015: 1.75p) 2017 $000 36,386 (172) 36,214 Number ‘000 39,636 33 39,669 91.80cts 91.37cts 91.72cts 91.29cts 2016 $000 32,563 2,150 34,713 Number ‘000 39,636 - 39,636 82.16cts 87.58cts 82.16cts 87.58cts 2017 $000 2016 $000 1,515 1,003 Proposed final dividend of 4.0cts per ordinary share for the year ended 31 December 2017 (2016: 3.8cts equivalent) 1,585 1,463 The proposed dividend for 2017 is subject to shareholders’ approval at the forthcoming annual general meeting and has not been included as a liability in these financial statements. Annual Report 2017 | Anglo-Eastern Plantations Plc 76 76 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. l a t o T 0 0 0 $ - 6 5 2 , 9 0 0 2 , 8 2 4 6 4 2 , 2 7 9 2 , 5 1 7 8 1 , 5 1 ) 3 4 2 , 3 ( 3 4 9 , 6 6 4 - ) 8 0 9 ( ) 3 7 2 , 3 1 ( 4 4 7 , 1 1 1 4 6 , 5 1 ) 9 0 1 , 3 ( 8 3 0 , 7 7 4 6 5 7 , 1 9 4 7 5 , 1 0 4 7 , 2 7 7 6 , 5 1 ) 4 9 5 , 1 ( 3 5 1 , 0 1 1 9 1 1 ) 3 2 9 ( ) 5 7 2 , 2 ( 4 8 2 , 6 1 8 5 3 , 3 2 1 - - - - - - - - - - - 4 4 4 , 6 3 3 0 9 7 , 6 5 3 0 8 6 , 3 5 3 0 4 3 , 1 5 7 4 , 1 9 7 1 , 1 7 3 0 4 3 , 1 ) 9 0 6 , 3 ( - - 1 6 8 6 4 8 , 2 ) 9 ( 5 7 4 , 1 ) 2 8 6 , 4 ( - 5 9 3 , 4 - - 0 0 0 $ s s e r g o r p n i n o i t c u r t s n o C 0 0 0 $ 8 8 0 , 1 1 - - - 6 3 ) 2 4 1 ( 6 3 3 8 9 - - - 5 8 ) 6 1 ( l i e c h e v & 9 7 1 , 1 8 8 0 , 1 ) 2 ( 5 7 - 3 9 8 ) 6 3 1 ( 0 3 8 5 3 6 6 - ) 1 1 ( 0 2 9 5 9 1 3 5 1 8 6 1 t n e m p u q e i i l e c h e v & - - 0 0 0 $ 7 8 2 4 5 1 , 4 1 - 7 2 9 ) 0 4 5 ( 8 2 8 , 4 1 8 1 - - 0 0 1 , 1 ) 1 0 4 ( 6 3 5 , 5 1 2 8 1 6 8 2 , 1 2 5 1 , 0 1 - ) 6 6 4 ( - 2 3 8 6 1 , 1 4 5 1 , 1 1 ) 4 5 3 ( 0 0 0 , 2 1 2 0 0 , 4 4 7 6 , 3 6 3 5 , 3 t n e m p u q e i s g n d i l i u B 0 0 0 $ 8 9 9 8 0 6 , 3 2 0 1 , 2 4 - - 5 6 7 ) 9 2 2 ( ) 6 0 3 ( 1 8 6 , 4 4 4 2 , 7 4 - 2 6 - ) 7 9 2 ( 4 8 3 , 1 5 - 0 9 1 5 8 6 , 2 9 1 2 , 0 1 ) 1 4 1 ( ) 4 4 ( 4 5 8 , 2 3 5 9 , 2 1 - ) 2 8 1 ( 1 8 5 , 5 1 3 8 8 , 1 3 1 9 2 , 4 3 3 0 8 , 5 3 l , t n a p e c i f f O l , t n a p e t a t s E s t n e m e t a t S i l a i c n a n F d e t a d i l o s n o C e h t o t s e t o N d n a l 0 0 0 $ l d o h e s a e L 3 7 7 , 2 9 8 6 , 0 4 1 - 6 4 2 , 2 1 0 0 , 2 ) 5 6 ( 3 3 9 - 9 5 4 7 7 5 , 8 4 1 5 8 5 , 2 ) 3 7 2 , 3 1 ( - - 8 4 3 , 8 3 1 - - - - - - ) 0 1 ( - - 5 1 8 5 0 8 9 8 6 , 0 4 1 7 7 5 , 8 4 1 3 4 5 , 7 3 1 1 - l l i M 0 0 0 $ 0 4 4 , 1 2 1 9 , 6 5 - 5 6 6 , 8 ) 5 2 2 ( ) 0 8 5 ( 3 9 7 , 6 6 - - - 6 8 4 , 3 ) 3 9 2 , 1 ( 6 0 4 , 8 6 - 1 7 3 1 7 3 , 3 1 3 0 , 5 1 ) 5 1 2 ( ) 3 8 1 ( 2 6 4 , 3 8 5 5 , 8 1 - ) 2 6 0 , 1 ( 5 7 7 , 0 2 1 8 8 , 1 4 5 3 2 , 8 4 1 3 6 , 7 4 - - 7 5 0 2 7 , 3 5 1 9 , 1 7 1 ) 6 1 5 ( ) 2 4 0 , 2 ( 3 9 3 , 3 1 3 4 0 , 7 8 1 - - 1 3 ) 2 0 1 , 1 ( 1 4 6 , 5 1 7 9 0 , 1 0 2 3 3 8 0 6 2 , 8 0 4 7 , 2 1 6 4 , 5 5 ) 6 3 6 ( 9 8 2 4 3 7 , 8 8 5 6 , 6 6 ) 6 6 6 ( ) 8 3 7 , 1 ( 7 7 2 , 3 7 4 5 4 , 6 1 1 5 8 3 , 0 2 1 0 2 8 , 7 2 1 0 0 0 $ s n o i t a t n a P l i t n e m p u q e d n a t n a l p , y t r e p o r P 0 1 d e s i l a t i p a c s t s o c t n e m p o e v e D l l s n o i t a s n a r t e g n a h c x E 6 1 0 2 y r a u n a J 1 t A n o i t a u a v l r o t s o C n o i t a c i f i s s a c e R l s n o i t a u a v e R l s n o i t i d d A f f o n e t t i r W / l a s o p s D i d e s i l a t i p a c s t s o c t n e m p o l e v e D f f o n e t t i r W / s l a s o p s i D 7 1 0 2 r e b m e c e D 1 3 t A s n o i t a l s n a r t e g n a h c x E 6 1 0 2 r e b m e c e D 1 3 t A n o i t a c i f i s s a l c e R s n o i t a u l a v e R s n o i t i d d A t n e m r i a p m i d n a i n o i t a c e r p e d d e t a u m u c c A l l s n o i t a s n a r t e g n a h c x E 6 1 0 2 y r a u n a J 1 t A r a e y e h t r o f e g r a h C s e s s o l t n e m r i a p m I s e s s o l t n e m r i a p m i f f o n e t t i r W / l a s o p s D i / ) t n e m r i a p m i f o l a s r e v e R ( f f o n e t t i r W / l a s o p s i D 7 1 0 2 r e b m e c e D 1 3 t A s n o i t a l s n a r t e g n a h c x E 6 1 0 2 r e b m e c e D 1 3 t A r a e y e h t r o f e g r a h C 5 1 0 2 r e b m e c e D 1 3 t A 6 1 0 2 r e b m e c e D 1 3 t A 7 1 0 2 r e b m e c e D 1 3 t A t n u o m a g n y r r a C i 77 7 7 c l P s n o i t a t n a l P n r e t s a E - o g n A l | 7 1 0 2 t r o p e R l a u n n A About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Notes to the Consolidated Financial Statements 10 Property, plant and equipment - continued 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 2017, valuations were undertaken on the land of twelve subsidiaries. The increase 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 2017. For the year ended 31 December 2016, independent land valuations were undertaken for eight subsidiary companies in Indonesia and Malaysia. The same methodology to fair value land was adopted to value the land of the remaining companies as at 31 December 2016. 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 $50,336,000 (2016: $46,982,000). PT Simpang Ampat’s land was valued on the basis that its highest and best use is oil palm plantation. At present the land is planted with rubber trees, however, the Group has the intention to replace the ageing rubber trees with oil palm trees. Details of the information about the fair value hierarchy in relation to land at 31 December are as follows: Land At 31 December 2017 At 31 December 2016 Level 1 $000 Level 2 $000 Level 3 $000 Fair value $000 - - - - 137,543 148,577 137,543 148,577 There were no items classified under Level 1 and Level 2 and thus there were no transfers 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 unobservable inputs and fair value between key Land location Selling prices of comparable land in for similar differences in key attributes. The valuation model is based on price per hectare. adjusted Selling prices of comparable land The higher the selling price, the higher the fair value Location, legal title, land area, land type and topography These are qualitative require significant professional valuer, MBPRU inputs which by judgement There were no changes 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. The estates include $235,000 (2016: $325,000) of interest and $3,727,000 (2016: $3,930,000) 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 2038 with rights of renewal thereafter. As of estates in Bengkulu land titles were issued between 1994 and 2008 and the titles expire between 2028 and 2034 with rights of renewal thereafter for two consecutive periods of 25 and 35 years respectively. In Riau, land titles were issued in 2004 and expire in 2033. In the case of PT Cahaya Pelita Andhika’s estate acquired in 2007 land titles were issued in 1996 to expire in 2029. 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. 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 loss of $2,740,000 recognised in 2016 was primarily due to the higher cost of new planting. In 2017, the impairment surplus of $1,738,000 was due to the increase in CPO price. Annual Report 2017 | Anglo-Eastern Plantations Plc 78 78 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Notes to the Consolidated Financial Statements 10 Property, plant and equipment - continued The recoverable amount of the Group’s plantations in 2017 was based on value in use calculation on the basis that it will be higher than fair value less cost to sell, given the mechanics of the two calculations and the nature of the business. The recoverable amount of the Group’s plantations carried at value in use was $27,224,000 (2016: $19,739,000). The value in use is the net present value of the projected future cash flows over the expected 20-year economic life of the asset discounted at 17.4% (2016: 15.0%). Projected future cash flows are calculated based on historical data, industry performance, economic conditions and any other readily available information. The value in use is computed by the professional valuer, MBPRU using discounted cash flow (“DCF”) over the expected 20-year economic life of the asset. The assumptions applied in the valuation are, inter-alia, listed as below: CPO selling price Inflation rate Overhead cost as a percentage of revenue Income tax rate Pre-tax discount rate The plantations carried at value in use are classified as Level 3 in the fair value hierarchy. 2017 $725/mt 5.41% 10% 25% 17.4% 2016 $700/mt 5.2% 10% 25% 15.0% 11 Receivables: non-current Due from non-controlling interests Due from cooperatives under Plasma scheme 2017 2016 Book value $000 Fair value $000 Book value $000 Fair value $000 3,161 5,197 8,358 1,882 4,621 6,503 578 3,313 3,891 424 2,973 3,397 The non-controlling interests in PT Alno Agro Utama and PT Cahaya Pelita Andhika have acquired their interests on deferred terms (see note 24, Credit risk). In 2017, there is 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. The non-controlling interests have acquired their interests on deferred terms (see note 24, Credit risk). Plasma scheme is an initiative by the Indonesian Government that seeks to encourage plantation owners in Indonesia to provide economic and social assistance to surrounding villagers by helping them improve their income and welfare. During the year, certain subsidiary companies have funded the plantation development cost of $5,197,000 (2016: $3,313,000) for the land allocated to the cooperatives which the cooperatives will repay. The fair value 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 interests Based on cash flows discounted using current lending rate of 6% (2016: 6%) Discount rate The higher the discount rate, the lower the fair value from cooperatives Due under Plasma scheme Based on cash flows discounted using an estimated current lending rate of 6.05% (2016: 5.56%) Discount rate The higher the discount rate, the lower the fair value Annual Report 2017 | Anglo-Eastern Plantations Plc 79 79 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements 12 Inventories 12 Inventories Estate and mill consumables Estate and mill consumables Processed produce for sale Processed produce for sale 13 Biological assets 13 Biological assets At 1 January At 1 January Changes in fair value less cost to sell Changes in fair value less cost to sell Decreases due to harvest Decreases due to harvest Exchange translations Exchange translations At 31 December At 31 December 2017 2017 $000 $000 4,252 4,252 5,146 5,146 9,398 9,398 2017 2017 $000 $000 7,107 7,107 111,419 111,419 (111,716) (111,716) (38) (38) 6,772 6,772 2016 2016 $000 $000 4,720 4,720 4,499 4,499 9,219 9,219 2016 2016 $000 $000 3,673 3,673 108,013 108,013 (104,630) (104,630) 51 51 7,107 7,107 The valuation of the unharvested FFB was carried out internally for each plantation of the Group. It involved an estimation of the weight of 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 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 derived from the computation of the percentage of growth based on the data extracted from the prior to the balance sheet date. The weight 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 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. with the estimated FFB harvested two months’ post balance sheet date. The fair value of biological assets is classified as Level 3 in the fair value hierarchy. 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 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: the inter-relationship between key unobservable inputs and fair value, are set out in the table below: Item Item Valuation approach Valuation approach Biological assets - - Biological assets Unharvested produce Unharvested produce Based on FFB weight multiply by the Based on FFB weight multiply by the sum of FFB selling price less less sum of FFB selling price harvesting cost harvesting cost Inputs used Inputs used FFB weight FFB weight FFB selling price FFB selling price Harvesting cost Harvesting cost key key between between Inter-relationship Inter-relationship unobservable inputs and fair value unobservable inputs and fair value The higher the weight, the higher the fair The higher the weight, the higher the fair value value The higher the selling price, the higher The higher the selling price, the higher the fair value the fair value The higher the harvesting cost, the lower The higher the harvesting cost, the lower the fair value the fair value 14 Trade and other receivables 14 Trade and other receivables Trade receivables Trade receivables Other receivables Other receivables Prepayments and accrued income Prepayments and accrued income 2017 2017 $000 $000 1,574 1,574 3,308 3,308 302 302 5,184 5,184 2016 2016 $000 $000 778 778 4,683 4,683 306 306 5,767 5,767 The carrying amount of trade and other receivables classified as loans and receivables approximates fair value. The carrying amount of trade and other receivables classified as loans and receivables approximates fair value. As at 31 December 2017, trade receivables of $637,000 (2016: $114,000) were past due but not impaired. They were related to the As at 31 December 2017, trade receivables of $637,000 (2016: $114,000) were past due but not impaired. They were related to the customers with no default history. The ageing analysis of trade receivables of the Group are as follows: customers with no default history. The ageing analysis of trade receivables of the Group are as follows: Neither past due nor impaired Neither past due nor impaired Past due but not impaired Past due but not impaired 31 to 60 days 31 to 60 days 61 to 90 days 61 to 90 days 91 to 120 days 91 to 120 days Annual Report 2017 | Anglo-Eastern Plantations Plc Annual Report 2017 | Anglo-Eastern Plantations Plc 2017 2017 $000 $000 937 937 2016 2016 $000 $000 664 664 378 378 259 259 - - 637 637 1,574 1,574 52 52 62 62 - - 114 114 778 778 80 80 80 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Notes to the Consolidated Financial Statements 15 Loans and borrowings Non-current Long term loan (a) Long term loan (b) Current Long term loan (a) Long term loan (b) 2017 2016 Book value $000 Fair value $000 Book value $000 Fair value $000 1,312 17,969 19,281 1,563 7,031 8,594 1,233 17,428 18,661 1,563 7,031 8,594 2,875 25,000 27,875 1,125 5,078 6,203 2,782 24,426 27,208 1,125 5,078 6,203 Total loans and borrowings 27,875 27,255 34,078 33,411 Amounts repayable after more than one year, as follows: in more than one year but not more than two years in more than two years but not more than five years 11,078 8,203 19,281 8,594 19,281 27,875 (a) (b) A subsidiary company, PT Hijau Pryan Perdana, has obtained a long term loan of $10,000,000 for a period of seven years (including two years grace repayment period) to support the capital expenditures requirement for planting, development and maintenance of oil palm estate and to finance mill construction and other property, plant and equipment owned by the subsidiary company as well to utilise for repayment of amount due to related parties. It is secured by the subsidiary company’s land with a carrying amount of $6.3 million measured in fair value and its plantation with a carrying amount of $7.7 million as at 31 December 2017 and is guaranteed by PT Tasik Raja and by the Company. This loan bears interest rate based on Base Lending Rate which is payable quarterly in arrears. Average interest rate in 2017 was about 5.91% (2016: 5.38%). The loan is repayable from 30 November 2014 to 30 August 2019. Another subsidiary company, PT Sawit Graha Manunggal, has obtained a long term loan of $35,000,000 for a period of eight years (including four years grace repayment period) to support the capital expenditures 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 is secured by the subsidiary company’s land with a carrying amount of $5.7 million measured in fair value and its plantation with a carrying amount of $25.5 million as at 31 December 2017 and is guaranteed by the Company. This loan bears interest rate based on SIBOR + 4.5% + Liquidity Premium which is payable quarterly in arrears. Average interest rate in 2017 was about 6.18% (2016: 5.73%). The loan is repayable from 30 December 2016 to 30 September 2020. All the loans and borrowings are denominated in USD, hence, no effect of changes in foreign exchange rates. 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: 2017 2016 Book value $000 Fair value $000 Book value $000 Fair value $000 Loans and borrowings 27,875 27,255 34,078 33,411 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. 16 Trade and other payables Trade payables Other payables Accruals 2017 $000 6,028 3,443 7,334 16,805 2016 $000 5,950 3,234 6,870 16,054 The carrying amount of trade and other payables classified as financial liabilities measured at amortised cost approximates fair value. Annual Report 2017 | Anglo-Eastern Plantations Plc 81 81 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Notes to the Consolidated Financial Statements 17 Deferred tax The movement on the deferred tax account is as shown below: At 1 January Recognised in profit and loss: Tax expense BA movement Revaluation of leasehold land Recognised in other comprehensive income: Revaluation of leasehold land Retirement benefits Exchange differences At 31 December 2017 $000 (16,612) (494) 73 204 3,325 424 (1) (13,081) 2016 $000 (19,373) 4,387 (844) - (494) 188 (476) (16,612) The deferred tax asset and liability, together with the amounts recognised in profit or loss and other comprehensive income are detailed as follows: 2017 Revaluation surplus Retirement benefits BA movement Unutilised tax losses Unremitted earnings Other temporary differences Tax assets / (liabilities) Set off of tax Net tax assets / (liabilities) 2016 Revaluation surplus Retirement benefits BA movement Unutilised tax losses Unremitted earnings Other temporary differences Tax assets / (liabilities) Set off of tax Net tax assets / (liabilities) Asset $000 - 2,250 - 10,524 - 194 12,968 (3,659) 9,309 - 1,661 - 11,558 - 232 13,451 - 13,451 Liability $000 (23,953) - (1,692) - (403) (1) (26,049) 3,659 (22,390) (27,585) - (1,775) - (545) (158) (30,063) - (30,063) Net $000 (23,953) 2,250 (1,692) 10,524 (403) 193 (13,081) - (13,081) (27,585) 1,661 (1,775) 11,558 (545) 74 (16,612) - (16,612) A deferred tax asset has not been recognised for the following items: Unutilised tax losses (Charged)/ credited to profit or loss $000 (Charged)/ credited to equity $000 204 187 73 (950) - 269 (217) - (217) - 320 (844) 4,444 (545) 168 3,543 - 3,543 2017 $000 2,892 3,325 424 - - - - 3,749 - 3,749 (494) 188 - - - - (306) - (306) 2016 $000 2,832 The Groups 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 its budget. However, the Group does not recognise the tax losses of certain companies in the Group as tax assets as the future recoverability of losses of these companies cannot be certain. Annual Report 2017 | Anglo-Eastern Plantations Plc 82 82 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Notes to the Consolidated Financial Statements 18 Retirement benefits The Group operates two defined benefit schemes in respect of its Indonesian operations in accordance with Indonesia Labour Law No. 13/2003 ("the Law") dated 25 March 2003. The law does not impose funding requirement on the Company to create fund asset to pay the defined benefit obligations. The first scheme is defined benefit pension scheme offered to certain employees. This scheme is funded and managed by SKU UKINDO Pension Fund authorised by the Ministry of Finance of the Republic of Indonesia. When an employee reaches normal retirement age, dies or becomes disabled, the Group shall pay the higher of the benefit from the pension scheme and the benefit calculated under the Law. The asset value of the pension scheme is adequate to fund the annual payment of benefits. The Group also established a funding programme through a savings plan managed by PT Asuransi Allianz Life Indonesia for the payment of severance / pension for eligible staff. The assets of the fund are to be used only to settle defined benefit obligations. The asset value of the funding programme is adequate to fund the annual payment of benefits. The scheme is valued by an actuary at the end of each financial year. The major assumptions used by the actuary were: Rate of increase in wages Rate of return on scheme assets Discount rate Mortality rate* Disability rate 2017 2016 8.0% 8.5% 7.5% 100% TMI3 10% TMI3 8.0% 9.0% 8.5% 100% TMI3 10% TMI3 * Mortality rate was derived from observation of Indonesian life insurance policyholders released in 2011 and load 10% to allow for disability. The Group also operates a non-contributory non-funded retirement plan for staff in Indonesia. Retirement benefits are paid to employees in a single lump sum at the time of retirement. Retirement benefits are accrued by the Group and charged in the income statement based on individual employee’s service up to the end of the financial year. The Group provides other long-term employee benefits in form of Long Service Award. Long Service Award is eligible for staff employees who have 10 and 20 years of service and non-staff employees who have 25 years of service and every 5 years after. Service cost Current service cost Past service cost Net interest expense Actuarial gain Total employee benefits expense 2017 $000 1,339 (71) 587 67 1,922 2016 $000 1,076 385 465 (15) 1,911 Annual Report 2017 | Anglo-Eastern Plantations Plc 83 83 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. l a t o T 0 0 0 $ ) 8 2 5 , 4 ( ) 5 8 3 ( ) 5 6 4 ( 5 1 ) 6 7 0 , 1 ( ) 1 1 9 , 1 ( ) 1 6 1 ( ) 5 9 4 ( ) 9 9 ( ) 5 5 7 ( ) 1 0 1 ( 7 7 3 2 5 2 8 2 5 0 0 0 $ e m e h c s d e d n u f n U ) 8 0 4 , 2 ( ) 1 6 5 ( ) 6 8 3 ( ) 5 8 2 ( 5 1 ) 7 1 2 , 1 ( - 2 ) 7 1 2 ( ) 5 1 2 ( ) 1 5 ( - 5 8 4 3 0 0 0 $ d e d n u F e m e h c s ) 0 2 1 , 2 ( 1 ) 5 1 5 ( ) 0 8 1 ( - ) 4 9 6 ( ) 3 6 1 ( ) 8 7 2 ( ) 9 9 ( ) 0 4 5 ( ) 0 5 ( 7 7 3 7 6 1 4 9 4 l a t o T 0 0 0 $ 6 9 4 , 3 - - - 1 3 3 1 3 3 - - ) 9 9 ( ) 9 9 ( 9 8 7 7 3 ) 3 8 1 ( 3 8 2 ) 6 6 6 , 6 ( ) 6 0 8 , 3 ( ) 0 6 8 , 2 ( 1 1 0 , 4 - - - - - - - - - - - - - - - 0 0 0 $ e m e h c s d e d n u f n U 0 0 0 $ d e d n u F e m e h c s 6 9 4 , 3 - - - 1 3 3 1 3 3 - - ) 9 9 ( ) 9 9 ( 9 8 7 7 3 ) 3 8 1 ( 3 8 2 l a t o T 0 0 0 $ ) 4 2 0 , 8 ( ) 5 8 3 ( ) 6 9 7 ( 5 1 ) 6 7 0 , 1 ( ) 2 4 2 , 2 ( - ) 1 6 1 ( ) 5 9 4 ( ) 6 5 6 ( ) 0 9 1 ( - 5 3 4 5 4 2 0 0 0 $ e m e h c s d e d n u f n U ) 8 0 4 , 2 ( ) 1 6 5 ( ) 6 8 3 ( ) 5 8 2 ( 5 1 ) 7 1 2 , 1 ( - 2 ) 7 1 2 ( ) 5 1 2 ( ) 1 5 ( - 5 8 4 3 d e d n u F e m e h c s 0 0 0 $ ) 6 1 6 , 5 ( 1 ) 5 1 5 ( ) 1 1 5 ( - ) 5 2 0 , 1 ( - ) 3 6 1 ( ) 8 7 2 ( ) 1 4 4 ( ) 9 3 1 ( - 0 5 3 1 1 2 1 1 0 , 4 ) 7 7 6 , 0 1 ( ) 6 0 8 , 3 ( ) 1 7 8 , 6 ( y t i l i b a i l e m e h c s d e n i f e d t e N s t e s s a e m e h c s f o e u a v l r i a F n o i t a g i l b o t i f e n e b d e n i f e D t n e r r u c – t s o c e c v r e S i t s a p - t s o c e c v r e S i e m o c n i / ) t s o c ( t s e r e t n I i n a g l a i r a u t c A e m o c n i i e v s n e h e r p m o c n i d e d u c n I l ) e c n e i r e p x e ( s t n e m t s u d A j : m o r f i n a g / ) s s o l ( l a i r a u t c A i n a g / ) s s o l ( t n e m e r u s a e m e R 6 1 0 2 y r a u n a J 1 t A s n o i t p m u s s a l i a c n a n F i ) t s e r e t n i l e d u c x e ( s t e s s a l n a p n o n r u t e R e m o c n i i e v s n e h e r p m o c r e h t o n i d e d u c n I l s e t a r e g n a h c x e n i s t n e m e v o m f o t c e f f E s n o i t u b i r t n o c l r e y o p m E 6 1 0 2 r e b m e c e D 1 3 t A i d a p s t i f e n e B s t n e m e v o m r e h t O 84 4 8 c l P s n o i t a t n a l P n r e t s a E - o g n A l | 7 1 0 2 t r o p e R l a u n n A s t n e m e t a t S i l a i c n a n F d e t a d i l o s n o C e h t o t s e t o N s t e s s a e m e h c s f o e u a v l r i a f d n a n o i t a g i l b o t i f e n e b d e n i f e d f o n o i t a i l i c n o c e R ) i ( d e u n i t n o c - s t i f e n e b t n e m e r i t e R 8 1 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. y t i l i b a i l e m e h c s d e n i f e d t e N s t e s s a e m e h c s f o e u a v l r i a F n o i t a g i l b o t i f e n e b d e n i f e D s t n e m e t a t S i l a i c n a n F d e t a d i l o s n o C e h t o t s e t o N ) d e u n i t n o c ( s t e s s a e m e h c s f o e u a v l r i a f d n a n o i t a g i l b o t i f e n e b d e n i f e d f o n o i t a i l i c n o c e R ) i ( d e u n i t n o c – s t i f e n e b t n e m e r i t e R 8 1 l a t o T 0 0 0 $ ) 6 6 6 , 6 ( 1 7 ) 7 6 ( ) 7 8 5 ( ) 9 3 3 , 1 ( ) 2 2 9 , 1 ( ) 6 0 3 ( ) 8 1 1 ( ) 1 7 2 , 1 ( ) 5 9 6 , 1 ( 5 8 2 0 4 4 7 7 1 6 2 , 1 0 0 0 $ e m e h c s d e d n u f n U ) 6 0 8 , 3 ( 8 1 ) 0 4 7 ( ) 7 6 ( ) 7 4 3 ( ) 6 3 1 , 1 ( - ) 7 7 ( ) 5 9 5 ( ) 2 7 6 ( - 1 5 4 8 1 5 3 2 0 0 0 $ d e d n u F e m e h c s ) 0 6 8 , 2 ( 3 5 ) 9 9 5 ( ) 0 4 2 ( - ) 6 8 7 ( ) 9 2 2 ( ) 6 7 6 ( ) 8 1 1 ( ) 3 2 0 , 1 ( 4 3 2 0 4 0 9 5 6 2 0 , 1 l a t o T 0 0 0 $ 1 1 0 , 4 - - - 7 4 3 7 4 3 - - ) 8 1 1 ( ) 8 1 1 ( ) 7 3 ( 2 0 4 ) 1 9 2 ( 4 7 ) 2 2 0 , 9 ( ) 9 7 3 , 5 ( ) 3 4 6 , 3 ( 4 1 3 , 4 - - - - - - - - - - - - - - - 0 0 0 $ e m e h c s d e d n u f n U 0 0 0 $ d e d n u F e m e h c s l a t o T 0 0 0 $ 1 1 0 , 4 ) 7 7 6 , 0 1 ( - - - 7 4 3 7 4 3 - - ) 8 1 1 ( ) 8 1 1 ( ) 7 3 ( 2 0 4 ) 1 9 2 ( 4 7 1 7 ) 7 6 ( ) 4 3 9 ( ) 9 3 3 , 1 ( ) 9 6 2 , 2 ( - ) 6 0 3 ( ) 1 7 2 , 1 ( ) 7 7 5 , 1 ( - 2 2 1 5 6 0 , 1 7 8 1 , 1 0 0 0 $ e m e h c s d e d n u f n U ) 6 0 8 , 3 ( 8 1 ) 0 4 7 ( ) 7 6 ( ) 7 4 3 ( ) 6 3 1 , 1 ( - ) 7 7 ( ) 5 9 5 ( ) 2 7 6 ( - 1 5 4 8 1 5 3 2 d e d n u F e m e h c s 0 0 0 $ ) 1 7 8 , 6 ( 3 5 ) 9 9 5 ( ) 7 8 5 ( - ) 3 3 1 , 1 ( - ) 9 2 2 ( ) 6 7 6 ( ) 5 0 9 ( - 1 7 1 8 8 2 5 9 e m o c n i e v i s n e h e r p m o c n i d e d u l c n I n i a g / ) s s o l ( t n e m e r u s a e m e R ) e c n e i r e p x e ( s t n e m t s u d A j s n o i t p m u s s a l a i c n a n F i : m o r f n i a g / ) s s o l ( l a i r a u t c A t n e r r u c - t s o c e c i v r e S t s a p - t s o c e c i v r e S e m o c n i / ) t s o c ( t s e r e t n I s s o l l a i r a u t c A 6 1 0 2 r e b m e c e D 1 3 t A ) t s e r e t n i e d u l c x e ( s t e s s a n a l p n o n r u t e R e m o c n i e v i s n e h e r p m o c r e h t o n i d e d u l c n I s e t a r e g n a h c x e n i s t n e m e v o m f o t c e f f E s n o i t u b i r t n o c r e y o p m E l d i a p s t i f e n e B s t n e m e v o m r e h t O 4 1 3 , 4 ) 6 3 3 , 3 1 ( ) 9 7 3 , 5 ( ) 7 5 9 , 7 ( 7 1 0 2 r e b m e c e D 1 3 t A 5 8 c l P s n o i t a t n a l P n r e t s a E - o g n A l | 7 1 0 2 t r o p e R l a u n n A 85 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Notes to the Consolidated Financial Statements 18 Retirement benefits - continued (ii) Disaggregation of defined benefit scheme assets The fair value of the funded assets is analysed as follows: Bonds - Corporate bonds - Government bonds - Mutual fund bonds Cash / deposits 2017 $000 108 80 233 421 3,893 4,314 2016 $000 73 51 216 340 3,671 4,011 (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: Discount rate Growth in wages Future mortality rate Reasonably Possible Change (+ / - 1.00%) (+ / - 1.00%) (+ / - 10.00%) Defined benefit obligation Decrease Increase $000 $000 (1,311) 1,545 56 1,509 (1,363) (57) The following contributions, which reflect expected future service, as appropriate are expected to be paid: Year 2018 2019 to 2022 2023 to 2027 after 2027 Total 19 Share capital and treasury shares Ordinary shares of 25p each Beginning and end of year Treasury shares: Beginning of year Share options exercised End of year Market value of treasury shares: Beginning of year (674.5p/share) End of year (769.0p/share) $000 509 3,737 10,185 102,577 117,008 Authorised Number Issued and fully paid Number Authorised £000 Issued and fully paid £000 Authorised $000 Issued and fully paid $000 60,000,000 39,976,272 15,000 9,994 23,865 15,504 2017 Number 339,900 - 339,900 2016 Number 339,900 - 339,900 Cost 2017 $’000 (1,171) - (1,171) Cost 2016 $’000 (1,171) - (1,171) $’000 2,821 3,531 No treasury shares were purchased in 2017 (2016: Nil). All the 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. Annual Report 2017 | Anglo-Eastern Plantations Plc 86 86 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Notes to the Consolidated Financial Statements 20 Ultimate controlling shareholder At 31 December 2017, Genton International Limited, a company registered in Hong Kong, held 20,247,814 (2016: 20,247,814) shares of the Company representing 51.1% (2016: 51.1%) of the issued share capital of the Company. Together with other deemed interested parties, the Genton‘s shareholding totals 20,551,914 or 51.9%. Madam Lim, a Director of the Company, has advised the Company that she is the controlling shareholder of Genton International Limited. 21 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. During the year the Company engaged UHY Hacker Young LLP, an accounting firm of which Dato’ John Lim Ewe Chuan is a partner, to provide company secretarial and taxation services for a fee of $34,809 (2016: $21,348). The fee for the services provided is on an arm’s length basis. There was no outstanding fee at the year end (2016: Nil). 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 $281,664 (2016: $275,610). There was no balance outstanding at the year end (2016: Nil). 22 Reserves Nature and purpose of each reserve: Share capital Share premium Amount of shares subscribed at nominal value. 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. 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. 23 Guarantees and other financial commitments Capital commitments at 31 December Contracted but not provided - normal estate operations Authorised but not contracted - plantation and mill development 2017 $000 183 41,583 2016 $000 755 32,034 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 11, in relation to a loan taken by KBSS from PT Bank Mandiri (Persero) Tbk. of Rp226.02 billion ($16.7 million) (2016: Rp226.02 billion, $16.8 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 carrying amount of $13.4 million as at 31 December 2017 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 require KBSS to sell all the FFB produce to SGM and its 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 $0.8 million as at 31 December 2017 as security under the agreement while the Company provides corporate guarantee amounting to Rp 8.75 billion ($0.6 million). Annual Report 2017 | Anglo-Eastern Plantations Plc 87 87 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements 24 Disclosure of financial instruments and other risks 24 Disclosure of financial instruments and other risks The Group's principal financial instruments comprise cash, short and long term bank loans, trade receivables and payables and receivables from local partners in respect of their investments. The Group's principal financial instruments comprise 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 2017 and 2016 were: The Group’s accounting classification of each class of financial asset and liability at 31 December 2017 and 2016 were: 2017 Non-current receivables 2017 Trade and other receivables Non-current receivables Cash and cash equivalent Trade and other receivables Loans and borrowings due within one year Cash and cash equivalent Trade and other payables Loans and borrowings due within one year Loans and borrowings due after one year Trade and other payables Loans and borrowings due after one year 2016 Non-current receivables 2016 Trade and other receivables Non-current receivables Cash and cash equivalent Trade and other receivables Loans and borrowings due within one year Cash and cash equivalent Trade and other payables Loans and borrowings due within one year Loans and borrowings due after one year Trade and other payables Loans and borrowings due after one year Loans and receivables Loans and $000 receivables $000 8,358 4,882 8,358 139,489 4,882 - 139,489 - - - - 152,729 - 152,729 Loans and receivables Loans and $000 receivables $000 3,891 5,461 3,891 118,176 5,461 - 118,176 - - - - 127,528 - 127,528 Financial liabilities at Financial amortised cost liabilities at $000 amortised cost $000 - - - - - (8,594) - (16,805) (8,594) (19,281) (16,805) (44,680) (19,281) (44,680) Financial liabilities at Financial amortised cost liabilities at $000 amortised cost $000 - - - - - (6,203) - (16,054) (6,203) (27,875) (16,054) (50,132) (27,875) (50,132) Total carrying value Total carrying $000 value $000 8,358 4,882 8,358 139,489 4,882 (8,594) 139,489 (16,805) (8,594) (19,281) (16,805) 108,049 (19,281) 108,049 Total carrying value Total carrying $000 value $000 3,891 5,461 3,891 118,176 5,461 (6,203) 118,176 (16,054) (6,203) (27,875) (16,054) 77,396 (27,875) 77,396 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, Financial instruments not measured at fair value and borrowings due within one year. Financial instruments not measured at fair value include cash and cash equivalents, trade and other receivables, trade and other payables, and borrowings due within one year. 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. 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. 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: Please refer to the applicable notes for details of the fair value hierarchy, valuation techniques, and significant unobservable inputs related to - Non-current receivables (note 11); and determining the fair value of the following items: - Loans and borrowings (note 15). - Non-current receivables (note 11); and - Loans and borrowings (note 15). The principal financial risks to which the Group is exposed are: - commodity selling price changes; The principal financial risks to which the Group is exposed are: - exchange movements; and - commodity selling price changes; which, in turn, can affect financial instruments and/or operating performance. - exchange movements; and which, in turn, can affect financial instruments and/or operating performance. With the exception described below, 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 and loss. With the exception described below, 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 and 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. 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. 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 risk currency of the operating subsidiaries. The Group does not hedge its net investment in its overseas subsidiaries and is therefore exposed to Most of the Group's operations are in Indonesia. The Company and Group accounts are prepared in US Dollar which is not the functional a currency risk on that investment. The historical cost of investment (including intercompany loans) by the parent in its subsidiaries amounted currency of the operating subsidiaries. The Group does not hedge its net investment in its overseas subsidiaries and is therefore exposed to to $61,876,000 (2016: $66,971,000), while the balance sheet value of the Group's share of underlying assets at 31 December 2017 a currency risk on that investment. The historical cost of investment (including intercompany loans) by the parent in its subsidiaries amounted amounted to $385,092,000 (2016: $363,111,000). to $61,876,000 (2016: $66,971,000), while the balance sheet value of the Group's share of underlying assets at 31 December 2017 amounted to $385,092,000 (2016: $363,111,000). Annual Report 2017 | Anglo-Eastern Plantations Plc Annual Report 2017 | Anglo-Eastern Plantations Plc 88 88 88 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Notes to the Consolidated Financial Statements 24 Disclosure of financial instruments and other risks - continued Currency risk - continued 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. The Group's subsidiaries which are borrowing in US Dollar, as set out under Liquidity Risk below could face significant exchange losses in the event of depreciation of their local currency - and vice versa. This risk is mitigated to some extent by US Dollar denominated cash balances in those subsidiaries. The Company will continue to partially match US Dollar cash balances with US Dollar financial liabilities. The average interest rate on local currency deposits was 3.31% higher than on US Dollar deposits whereas interest rate for local currency borrowing was about 4.84% higher as compared to US Dollar borrowing. The unmatched balance at 31 December 2017 is represented by the $11,619,000 shown in the table below (2016: $20,991,000). If the Group's net cash position continues to improve then US Dollar cash balances will continue to increase through 2018. The table below shows the net monetary assets and liabilities of the Group as at 31 December 2017 and 2016 that were not denominated in the operating or functional currency of the operating unit involved. Functional currency of Group operation 2017 Indonesian Rupiah US Dollar Total 2016 Indonesian Rupiah US Dollar Total Net foreign currency assets/(liabilities) US Dollar $000 (11,619) - (11,619) (20,991) - (20,991) Sterling $000 - 1,663 1,663 - 63 63 Total $000 (11,619) 1,663 (9,956) (20,991) 63 (20,928) The following table summarises the sensitivity of the Group’s financial assets and financial liabilities to foreign exchange risk. The impact on profit before tax and equity if Ringgit or Rupiah strengthen or weaken by 10% against US Dollar is: 2017 2016 Carrying Amount US$ $000 -10% in Rp : $ and RM : $ $000 +10% in Rp : $ and RM : $ $000 Carrying Amount US$ $000 -10% in Rp : $ and RM : $ $000 +10% in Rp : $ and RM : $ $000 8,358 4,882 139,489 (472) (261) (12,512) (8,594) (16,805) (19,281) 781 1,425 1,753 (9,286) 577 319 15,292 (955) (1,742) (2,142) 11,349 3,891 5,461 118,176 (301) (245) (10,721) (6,203) (16,054) (27,875) 564 1,373 2,534 (6,796) 368 300 13,103 (689) (1,679) (3,097) 8,306 Financial Assets Non-current receivables Trade and other receivables Cash and cash equivalents Financial Liabilities Borrowings due within one year Trade and other payables Borrowings due after one year Total (decrease) / increase Liquidity risk Profitability of new sizable plantations 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. Annual Report 2017 | Anglo-Eastern Plantations Plc 89 89 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Notes to the Consolidated Financial Statements 24 Disclosure of financial instruments and other risks - continued Liquidity risk - continued The Group's trade and tax payables are all due for settlement within a year. At 31 December 2017, the Group had the following loans and facilities. Indonesia: US Dollar denominated - long term loan 27,875 45,000 2018 - 2020 (note 15) Borrowings $000 Facilities $000 Repayable The total loan borrowings together with interest at current rates are as follows: Principal Interest Total Amount repayable within one year Amount repayable after one year but not more than two years Amount repayable after two years but not more than five years Amount repayable after five years 2017 $000 27,875 2,710 30,585 9,121 1,003 20,461 - 30,585 2016 $000 34,078 3,890 37,968 6,555 1,388 30,025 - 37,968 Forecasts prepared in December 2017 indicate that the Group has sufficient funds to meet its development plans and financial commitments through 2018. 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. Interest rate risk Both the Group's surplus cash and its borrowings are subject to variable interest rates. The Group had net cash throughout 2017, 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 15. Financial Assets Cash and cash equivalents Financial Liabilities Borrowings due within one year Borrowings due after one year Total (decrease) / increase 2017 2016 Carrying amount $000 -1% in interest rate $000 +1% in interest rate $000 Carrying amount $000 -1% in interest rate $000 +1% in interest rate $000 139,489 (987) 1,046 118,176 (820) 865 (8,594) (19,281) - 279 (708) - (279) 767 (6,203) (27,875) - 341 (479) - (341) 524 There is no policy to hedge interest rates, partly because of the net cash position and the net interest income position of the Group. Annual Report 2017 | Anglo-Eastern Plantations Plc 90 90 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements 24 Disclosure of financial instruments and other risks - continued 24 Disclosure of financial instruments and other risks - continued Interest rate risk - continued Interest rate risk - continued Interest rate profiles of the Group's financial assets (comprising non-current receivables, trade and other receivables and cash) at 31 Interest rate profiles of the Group's financial assets (comprising non-current receivables, trade and other receivables and cash) at 31 December were: December were: 2017 2017 Sterling Sterling US Dollar US Dollar Rupiah Rupiah Ringgit Ringgit Total Total 2016 2016 Sterling Sterling US Dollar US Dollar Rupiah Rupiah Ringgit Ringgit Total Total Total Total $000 $000 1,663 1,663 20,214 20,214 124,648 124,648 6,204 6,204 152,729 152,729 64 64 15,922 15,922 107,162 107,162 4,380 4,380 127,528 127,528 Fixed rate Fixed rate $000 $000 Variable rate Variable rate $000 $000 No interest No interest $000 $000 - - 3,161 3,161 - - - - 3,161 3,161 - - 578 578 - - - - 578 578 20 20 6,042 6,042 93,698 93,698 4,867 4,867 104,627 104,627 19 19 4,652 4,652 77,897 77,897 3,959 3,959 86,527 86,527 1,643 1,643 11,011 11,011 30,950 30,950 1,337 1,337 44,941 44,941 45 45 10,692 10,692 29,265 29,265 421 421 40,423 40,423 Long term receivables of $3,161,000 (2016: $578,000) comprise US Dollar denominated amounts due from non-controlling interests as Long term receivables of $3,161,000 (2016: $578,000) comprise US Dollar denominated amounts due from non-controlling interests as described in note 11 on which interest is due at a fixed rate of 6%. described in note 11 on which interest is due at a fixed rate of 6%. Average US Dollar deposit rate in 2017 was 1.25% (2016: 1.25%) and Rupiah deposit rate was 4.56% (2016: 5.15%). Average US Dollar deposit rate in 2017 was 1.25% (2016: 1.25%) and Rupiah deposit rate was 4.56% (2016: 5.15%). Interest rate profiles of the Group's financial liabilities (comprising bank loans and other financial liabilities and trade and other payables) at 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: 31 December were: 2017 2017 Sterling Sterling US Dollar US Dollar Rupiah Rupiah Ringgit Ringgit Total Total 2016 2016 Sterling Sterling US Dollar US Dollar Rupiah Rupiah Ringgit Ringgit Total Total Total Total $000 $000 Fixed rate Fixed rate $000 $000 Variable rate Variable rate $000 $000 No interest No interest $000 $000 - - (28,869) (28,869) (15,470) (15,470) (341) (341) (44,680) (44,680) - - (34,890) (34,890) (14,942) (14,942) (300) (300) (50,132) (50,132) - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - (27,875) (27,875) (27,875) (27,875) (34,078) (34,078) (34,078) (34,078) - - (994) (994) (15,470) (15,470) (341) (341) (16,805) (16,805) - - (812) (812) (14,942) (14,942) (300) (300) (16,054) (16,054) Weighted average interest rate on variable rate borrowings was 6.16% in 2017 (2016: 5.69%). Weighted average interest rate on variable rate borrowings was 6.16% in 2017 (2016: 5.69%). Credit risk Credit risk Sales of CPO and kernel are not despatched unless payment has been received in advance. Remaining sales are on credit for about 30 Sales of CPO and kernel are not despatched unless payment has been received in advance. Remaining sales are on credit for about 30 days. No provisions were considered necessary at 31 December 2017 (2016: Nil). days. No provisions were considered necessary at 31 December 2017 (2016: Nil). Credit risk arises from cash and cash equivalents and deposits with banks and financial institutions. The Group has taken necessary steps 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 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 minimum rating of “A”. The cash and cash equivalents are in US dollars, Rupiah, Ringgit and Indonesia independently rated banks with 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 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. of this report. Amounts receivable from local partners, amounting to $3,161,000 (2016: $578,000), in relation to their investments in operating subsidiaries Amounts receivable from local partners, amounting to $3,161,000 (2016: $578,000), in relation to their investments in operating subsidiaries are secured on those investments and are repayable from their share of dividends from those subsidiaries. are secured on those investments and are repayable from their share of dividends from those subsidiaries. Amount receivable due from cooperatives under Plasma scheme as disclosed in note 11, are unsecured and are to be repaid from FFB Amount receivable due from cooperatives under Plasma scheme as disclosed in note 11, are unsecured and are to be repaid from FFB supplied by the cooperatives. Two subsidiaries have provided corporate guarantee for two cooperatives in obtaining bank loans in 2013 and supplied by the cooperatives. Two subsidiaries have provided corporate guarantee for two cooperatives in obtaining bank loans in 2013 and 2017. The amount drawdown from this loan was used to repay the advances made by the subsidiaries. See note 23. 2017. The amount drawdown from this loan was used to repay the advances made by the subsidiaries. See note 23. Annual Report 2017 | Anglo-Eastern Plantations Plc Annual Report 2017 | Anglo-Eastern Plantations Plc 91 91 91 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Notes to the Consolidated Financial Statements 24 Disclosure of financial instruments and other risks – continued 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 $385,092,000 at 31 December 2017 (2016: $363,111,000). The Board is mindful that the Group’s development programme will require a considerable capital commitment. In this respect, the dividend level needs to be balanced against the planned capital expenditure. Group policy presently to attempt to fund development from self-generated funds and loans and not from the issue of new share capital. At 31 December 2017 (2016: Nil) the Group had no net borrowings but, depending on market conditions, the Board is prepared for the Group to have net borrowings. Plantation industry risk Please refer to pages 19 - 23. Annual Report 2017 | Anglo-Eastern Plantations Plc 92 92 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements 25 Subsidiary companies 25 Subsidiary companies 25 Subsidiary companies 25 Subsidiary companies The principal subsidiaries of the Company all of which have been included in these consolidated financial statements are as follows: The principal subsidiaries of the Company all of which have been included in these consolidated financial statements are as follows: The principal subsidiaries of the Company all of which have been included in these consolidated financial statements are as follows: The principal subsidiaries of the Company all of which have been included in these consolidated financial statements are as follows: Name Name Name Name Principal sub-holding company Principal sub-holding company Principal sub-holding company Anglo-Indonesian Oil Palms Limited Principal sub-holding company Anglo-Indonesian Oil Palms Limited Anglo-Indonesian Oil Palms Limited Anglo-Indonesian Oil Palms Limited Management company Management company Management company Management company Indopalm Services Limited Indopalm Services Limited Indopalm Services Limited Indopalm Services Limited Operating companies Operating companies Operating companies Anglo-Eastern Plantations (M) Sdn Bhd Operating companies Anglo-Eastern Plantations (M) Sdn Bhd Anglo-Eastern Plantations (M) Sdn Bhd Anglo-Eastern Plantations Management Sdn Bhd Anglo-Eastern Plantations (M) Sdn Bhd Anglo-Eastern Plantations Management Sdn Bhd Anglo-Eastern Plantations Management Sdn Bhd PT Alno Agro Utama Anglo-Eastern Plantations Management Sdn Bhd PT Alno Agro Utama PT Alno Agro Utama PT Anak Tasik PT Alno Agro Utama PT Anak Tasik PT Anak Tasik PT Bangka Malindo Lestari PT Anak Tasik PT Bangka Malindo Lestari PT Bangka Malindo Lestari PT Bina Pitri Jaya PT Bangka Malindo Lestari PT Bina Pitri Jaya PT Bina Pitri Jaya PT Cahaya Pelita Andhika PT Bina Pitri Jaya PT Cahaya Pelita Andhika PT Cahaya Pelita Andhika PT Empat Lawang Agro Perkasa PT Cahaya Pelita Andhika PT Empat Lawang Agro Perkasa PT Empat Lawang Agro Perkasa PT Hijau Pryan Perdana PT Empat Lawang Agro Perkasa PT Hijau Pryan Perdana PT Hijau Pryan Perdana PT Kahayan Agro Plantation PT Hijau Pryan Perdana PT Kahayan Agro Plantation PT Kahayan Agro Plantation PT Karya Kencana Sentosa Tiga PT Kahayan Agro Plantation PT Karya Kencana Sentosa Tiga PT Karya Kencana Sentosa Tiga PT Mitra Puding Mas PT Karya Kencana Sentosa Tiga PT Mitra Puding Mas PT Mitra Puding Mas PT Musam Utjing PT Mitra Puding Mas PT Musam Utjing PT Musam Utjing PT Riau Agrindo Agung PT Musam Utjing PT Riau Agrindo Agung PT Riau Agrindo Agung PT Sawit Graha Manunggal PT Riau Agrindo Agung PT Sawit Graha Manunggal PT Sawit Graha Manunggal PT Simpang Ampat PT Sawit Graha Manunggal PT Simpang Ampat PT Simpang Ampat PT Tasik Raja PT Simpang Ampat PT Tasik Raja PT Tasik Raja PT United Kingdom Indonesia Plantations PT Tasik Raja PT United Kingdom Indonesia Plantations PT United Kingdom Indonesia Plantations PT Anglo-Eastern Plantations Management PT United Kingdom Indonesia Plantations PT Anglo-Eastern Plantations Management PT Anglo-Eastern Plantations Management PT Anglo-Eastern Plantations Management Indonesia Indonesia Indonesia Indonesia Dormant companies Dormant companies Dormant companies Dormant companies Limited Limited Limited Limited The Ampat (Sumatra) Rubber Estate (1913) The Ampat (Sumatra) Rubber Estate (1913) The Ampat (Sumatra) Rubber Estate (1913) The Ampat (Sumatra) Rubber Estate (1913) Gadek Indonesia (1975) Limited Gadek Indonesia (1975) Limited Gadek Indonesia (1975) Limited Mergerset (1980) Limited Gadek Indonesia (1975) Limited Mergerset (1980) Limited Mergerset (1980) Limited Musam Indonesia Limited Mergerset (1980) Limited Musam Indonesia Limited Musam Indonesia Limited Musam Indonesia Limited Country of Country of Country of incorporation and Country of incorporation and incorporation and principal place of incorporation and principal place of principal place of business principal place of business business business United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom Malaysia Malaysia Malaysia Malaysia Malaysia Malaysia Malaysia Indonesia Malaysia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom Proportion of Proportion of Proportion of ownership interest at Proportion of ownership interest at ownership interest at 31 December ownership interest at 31 December 31 December 31 December 2016 2016 2016 2016 100% 100% 100% 100% 2017 2017 2017 2017 100% 100% 100% 100% 100% 100% 100% 100% 55% 55% 55% 100% 55% 100% 100% 90% 100% 90% 90% 100% 90% 100% 100% 95% 100% 95% 95% 80% 95% 80% 80% 90% 80% 90% 90% 95% 90% 95% 95% 80% 95% 80% 80% 95% 80% 95% 95% 95% 95% 95% 95% 90% 95% 90% 90% 75% 90% 75% 75% 95% 75% 95% 95% 82% 95% 82% 82% 100% 82% 100% 100% 80% 100% 80% 80% 75% 80% 75% 75% 100% 75% 100% 100% 100% 100% 100% 100% 100% 55% 55% 55% 100% 55% 100% 100% 90% 100% 90% 90% 100% 90% 100% 100% 95% 100% 95% 95% 80% 95% 80% 80% 90% 80% 90% 90% 95% 90% 95% 95% 80% 95% 80% 80% 95% 80% 95% 95% 95% 95% 95% 95% 90% 95% 90% 90% 75% 90% 75% 75% 95% 75% 95% 95% 82% 95% 82% 82% 100% 82% 100% 100% 80% 100% 80% 80% 75% 80% 75% 75% 100% 75% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% Non-controlling Non-controlling Non-controlling interests ownership / Non-controlling interests ownership / interests ownership / voting interest at 31 interests ownership / voting interest at 31 voting interest at 31 December voting interest at 31 December December December 2016 2016 2016 2016 - - - - 2017 2017 2017 2017 - - - - - - - - 45% 45% 45% - 45% - - 10% - 10% 10% - 10% - - 5% - 5% 5% 20% 5% 20% 20% 10% 20% 10% 10% 5% 10% 5% 5% 20% 5% 20% 20% 5% 20% 5% 5% 5% 5% 5% 5% 10% 5% 10% 10% 25% 10% 25% 25% 5% 25% 5% 5% 18% 5% 18% 18% - 18% - - 20% - 20% 20% 25% 20% 25% 25% - 25% - - - - - - - 45% 45% 45% - 45% - - 10% - 10% 10% - 10% - - 5% - 5% 5% 20% 5% 20% 20% 10% 20% 10% 10% 5% 10% 5% 5% 20% 5% 20% 20% 5% 20% 5% 5% 5% 5% 5% 5% 10% 5% 10% 10% 25% 10% 25% 25% 5% 25% 5% 5% 18% 5% 18% 18% - 18% - - 20% - 20% 20% 25% 20% 25% 25% - 25% - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - The principal United Kingdom sub-holding company, UK management company and UK dormant companies are registered in England and The principal United Kingdom sub-holding company, UK management company and UK dormant companies are registered in England and 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 are incorporated in Malaysia and are direct 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 are incorporated in Malaysia and are direct Wales and are direct subsidiaries of the Company. The Malaysian operating companies are incorporated in Malaysia and are direct subsidiaries of the Company. The Indonesian operating companies are incorporated in Indonesia and are direct subsidiaries of the principal Wales and are direct subsidiaries of the Company. The Malaysian operating companies are incorporated in Malaysia and are direct subsidiaries of the Company. The Indonesian operating companies are incorporated in Indonesia and are direct subsidiaries of the principal subsidiaries of the Company. The Indonesian operating companies 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 of the Company. The Indonesian operating companies 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 sub-holding company. The principal activity of the operating companies is plantation agriculture. The registered office of the principal subsidiaries are disclosed below: sub-holding company. The principal activity of the operating companies is plantation agriculture. The registered office of the principal subsidiaries are disclosed below: subsidiaries are disclosed below: subsidiaries are disclosed below: Subsidiaries by country Subsidiaries by country Subsidiaries by country UK registered subsidiaries Subsidiaries by country UK registered subsidiaries UK registered subsidiaries UK registered subsidiaries Malaysia registered subsidiaries Malaysia registered subsidiaries Malaysia registered subsidiaries Malaysia registered subsidiaries Indonesia registered subsidiaries Indonesia registered subsidiaries Indonesia registered subsidiaries Indonesia registered subsidiaries Registered address Registered address Registered address Quadrant House, 6th Floor Registered address Quadrant House, 6th Floor Quadrant House, 6th Floor 4 Thomas More Square Quadrant House, 6th Floor 4 Thomas More Square 4 Thomas More Square London E1W 1YW 4 Thomas More Square London E1W 1YW London E1W 1YW United Kingdom London E1W 1YW United Kingdom United Kingdom United Kingdom 7th Floor, Wisma Equity 7th Floor, Wisma Equity 7th Floor, Wisma Equity 150 Jalan Ampang 7th Floor, Wisma Equity 150 Jalan Ampang 150 Jalan Ampang 50450 Kuala Lumpur 150 Jalan Ampang 50450 Kuala Lumpur 50450 Kuala Lumpur Malaysia 50450 Kuala Lumpur Malaysia Malaysia Malaysia 3rd Floor, Wisma HSBC, Jalan Diponegoro, Kav 11 3rd Floor, Wisma HSBC, Jalan Diponegoro, Kav 11 3rd Floor, Wisma HSBC, Jalan Diponegoro, Kav 11 Medan 20152 3rd Floor, Wisma HSBC, Jalan Diponegoro, Kav 11 Medan 20152 Medan 20152 North Sumatera Medan 20152 North Sumatera North Sumatera Indonesia North Sumatera Indonesia Indonesia Indonesia Annual Report 2017 | Anglo-Eastern Plantations Plc Annual Report 2017 | Anglo-Eastern Plantations Plc Annual Report 2017 | Anglo-Eastern Plantations Plc Annual Report 2017 | Anglo-Eastern Plantations Plc 93 93 93 93 93 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. 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) 9 4 ( ) 2 3 1 ( ) 1 8 1 ( 6 1 0 2 0 0 0 $ 1 7 3 , 7 9 5 5 , 9 7 ) 5 4 2 , 8 ( ) 4 9 5 , 8 7 ( 1 9 7 1 6 1 0 2 0 0 0 $ ) 4 1 2 ( ) 6 1 2 , 9 ( 8 6 0 , 1 8 9 4 , 0 1 7 1 0 2 0 0 0 $ 8 2 8 , 1 3 ) 3 7 2 ( ) 1 9 4 ( ) 4 6 7 ( - ) 0 5 ( ) 9 8 ( ) 9 3 1 ( 7 1 0 2 0 0 0 $ 1 4 1 , 8 1 5 6 , 1 8 ) 1 5 9 , 9 ( ) 7 1 5 , 0 8 ( ) 6 7 6 ( 6 1 0 2 0 0 0 $ 9 6 1 , 0 4 1 1 0 , 4 1 4 2 8 , 2 5 3 8 , 6 1 2 0 8 , 2 5 6 5 1 4 4 7 6 3 , 3 6 1 0 2 0 0 0 $ 0 8 7 , 8 7 1 4 5 , 8 2 ) 4 0 2 , 3 ( ) 3 7 8 , 4 ( 4 4 2 , 9 9 a y a J % 0 2 7 1 0 2 0 0 0 $ 4 7 0 , 4 5 8 5 1 , 7 1 ) 3 3 0 , 1 ( 5 2 1 , 6 1 ) 7 0 2 ( 2 3 4 , 3 5 2 2 , 3 5 9 % 0 1 6 1 0 2 0 0 0 $ 3 4 9 , 3 5 7 2 3 , 0 1 1 6 4 , 2 8 8 7 , 2 1 3 3 0 , 1 6 4 2 0 0 3 9 7 2 , 1 7 1 0 2 0 0 0 $ 1 9 2 , 3 9 9 2 9 , 8 2 ) 0 0 6 , 3 ( ) 5 0 5 , 3 ( 5 1 1 , 5 1 1 6 1 0 2 0 0 0 $ 9 5 0 , 4 5 0 8 5 , 2 2 ) 2 6 4 , 7 ( ) 3 0 6 , 5 ( 4 7 5 , 3 6 7 1 0 2 0 0 0 $ 5 7 6 , 1 6 6 8 0 , 2 1 ) 0 4 6 ( 6 4 4 , 1 1 ) 4 6 ( 9 0 2 , 1 5 4 1 , 1 0 5 7 1 0 2 0 0 0 $ 6 8 5 , 2 5 5 7 2 , 5 3 ) 3 2 0 , 8 ( ) 0 1 2 , 5 ( 8 2 6 , 4 7 % 0 1 6 1 0 2 0 0 0 $ 9 5 9 , 7 3 7 9 , 1 2 3 9 , 9 5 8 8 , 3 3 6 9 7 7 9 1 3 9 9 5 7 4 6 1 0 2 0 0 0 $ 5 3 5 , 8 3 9 2 9 , 0 3 ) 1 0 6 , 3 ( ) 7 2 9 , 5 ( 6 3 9 , 9 5 7 1 0 2 0 0 0 $ 8 1 2 , 8 8 9 7 , 8 3 ) 2 7 5 ( 6 4 6 , 7 2 2 8 ) 7 5 ( 5 6 7 0 5 7 1 0 2 0 0 0 $ 4 9 2 , 8 3 7 8 0 , 8 3 ) 8 6 7 , 3 ( ) 5 5 4 , 5 ( 8 5 1 , 7 6 % 0 2 6 1 0 2 0 0 0 $ 0 0 6 , 8 4 5 6 0 , 3 1 5 0 5 , 4 0 7 5 , 7 1 3 1 6 , 2 1 0 9 1 0 5 4 1 5 , 3 7 1 0 2 0 0 0 $ 5 9 8 , 3 5 8 2 2 , 3 1 ) 7 2 7 , 1 ( 1 0 5 , 1 1 - ) 5 4 3 ( 6 4 6 , 2 1 0 3 , 2 6 1 0 2 0 0 0 $ 8 8 1 , 8 1 3 8 4 , 7 1 2 ) 2 4 3 , 6 ( ) 7 5 1 , 6 8 ( 2 7 1 , 3 4 1 7 1 0 2 0 0 0 $ 9 9 8 , 5 1 5 1 2 , 9 4 2 ) 1 7 3 , 5 0 1 ( ) 1 7 7 , 4 ( 2 7 9 , 4 5 1 ) 3 2 1 ( 9 4 8 , 9 1 3 2 0 , 3 2 7 5 3 , 6 3 6 4 , 7 4 9 9 , 5 6 1 7 , 6 4 3 6 , 8 2 4 9 9 , 0 3 7 1 0 2 0 0 0 $ 5 3 5 , 2 ) 0 5 4 , 7 ( 4 2 3 , 4 ) 1 9 5 ( 6 1 0 2 0 0 0 $ ) 5 0 1 ( 3 6 5 , 1 1 ) 7 6 1 , 8 2 ( ) 9 0 7 , 6 1 ( 7 1 0 2 0 0 0 $ 4 9 1 2 8 4 , 8 1 3 5 4 , 1 ) 3 2 2 , 7 1 ( 6 1 0 2 0 0 0 $ 0 9 2 , 1 6 1 7 , 3 1 ) 3 1 5 , 1 ( 3 9 4 , 3 1 7 1 0 2 0 0 0 $ 0 8 3 , 6 1 ) 2 7 8 , 1 ( ) 9 3 5 , 1 ( 9 6 9 , 2 1 6 1 0 2 0 0 0 $ 0 1 9 , 9 ) 8 5 7 , 3 ( 0 3 6 , 9 2 8 7 , 5 1 7 1 0 2 0 0 0 $ 1 0 0 , 8 ) 2 5 0 , 1 ( 4 9 8 , 2 3 4 8 , 9 6 1 0 2 0 0 0 $ 2 9 4 , 3 0 8 1 , 8 1 2 5 6 , 2 ) 0 2 0 , 9 1 ( 7 1 0 2 0 0 0 $ ) 7 4 4 , 6 ( ) 6 5 3 , 8 ( ) 6 1 5 , 2 ( 7 8 2 , 2 1 I C N o t d e t a c o l l a e m o c n i / ) s e s n e p x e ( e v s n e h e r p m o c i r e h t O I C N o t d e t a c o l l a ) s e s n e p x e ( / e m o c n i i e v s n e h e r p m o c l a t o T I C N o t d e t a c o l l a ) s s o L ( / t i f o r P e m o c n i / ) s e s n e p x e ( e v s n e h e r p m o c i r e h t O ) s e s n e p x e ( / e m o c n i i e v s n e h e r p m o c l a t o T x a t r e t f a ) s s o L ( / t i f o r P e u n e v e R r e b m e c e D 1 3 d e d n e r a e y e h t r o F t n e m e t a t s e m o c n i d e s i r a m m u S e g a t n e c r e p I C N y t i t n E I C N o t d a p i s d n e d v D i i n o i t i s o p l a i c n a n i f f o t n e m e t a t s d e s i r a m m u S r e b m e c e D 1 3 t a s A s t e s s a t n e r r u c - n o N s t e s s a t n e r r u C s e i t i l i b a i l t n e r r u c - n o N s e i t i l i b a i l t n e r r u C s t e s s a t e N I C N d e t a u m u c c A l r e b m e c e D 1 3 d e d n e r a e y e h t r o F s w o l f h s a c d e s i r a m m u S s e i t i v i t c a g n i t a r e p o ) n i d e s u ( s e i t i v i t c a g n i t s e v n i s e i t i v i t c a i g n c n a n i f ) n i ) n i d e s u ( d e s u ( / / / m o r f m o r f m o r f s w o l f h s a C s w o l f h s a C s w o l f h s a C ) s w o l f t u o ( / s w o l f n i h s a c t e N 94 4 9 c l P s n o i t a t n a l P n r e t s a E - o g n A l | 7 1 0 2 t r o p e R l a u n n A About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Notes to the Consolidated Financial Statements 27 Notes supporting statement of cash flows Cash and cash equivalents for purposes of the statement of cash flows comprises: Cash at bank available on demand Short-term deposits Cash in hand Significant non-cash transactions from investing activities are as follows: Property, plant and equipment purchased but not yet paid at year end 2017 $000 26,533 112,937 19 139,489 2017 $000 193 Non-cash transactions from financing activities are shown in the reconciliation of liabilities from financing transactions as follows: At 1 January 2017 Cash Flows Non-cash flows - Effect of foreign exchange - New finance lease - Loans and borrowings classified as non-current at 31 December 2016 becoming current during 2017 -Interest accruing during the year Non-current loans and borrowings $000 Current loans and borrowings $000 Total $000 (27,875) - (6,203) 6,197 (34,078) 6,197 - - 8,594 - (19,281) 6 - (8,594) - (8,594) 6 - - - (27,875) Annual Report 2017 | Anglo-Eastern Plantations Plc 95 95 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Company Balance Sheet As at 31 December 2017 Company Number: 1884630 Non-current assets Property, plant & equipment Investments in subsidiaries Current assets Debtors Cash at bank and in hand Creditors: amount falling due within one year Net current assets / (liabilities) Net assets Capital and reserves Share capital Treasury shares Share premium Capital redemption reserve Exchange reserves Retained earnings at 1 January Loss for the year Dividends paid Retained earnings Shareholders' funds Note 3 4 5 6 6 2017 $000 12 61,876 61,888 2,797 1,860 4,657 (3,403) 1,254 63,142 15,504 (1,171) 23,935 1,087 3,872 22,605 (1,175) (1,515) 19,915 63,142 2016 $000 - 66,971 66,971 1,837 245 2,082 (3,221) (1,139) 65,832 15,504 (1,171) 23,935 1,087 3,872 23,719 (111) (1,003) 22,605 65,832 The loss after tax for the year for the Company dealt with in the consolidated financial statements of the Company was $1,175,000 (2016: $111,000). The financial statements were approved by the Board of Directors and authorised for issue on 24 April 2018 and were signed on its behalf by Dato’ John Lim Ewe Chuan Executive Director, Corporate Finance and Corporate Affairs The accompanying notes are an integral part of this balance sheet. Annual Report 2017 | Anglo-Eastern Plantations Plc 96 96 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. l a t o T 0 0 0 $ 6 4 9 , 6 6 ) 1 1 1 ( ) 1 1 1 ( ) 3 0 0 , 1 ( 2 3 8 , 5 6 ) 5 7 1 , 1 ( ) 5 7 1 , 1 ( ) 5 1 5 , 1 ( 2 4 1 , 3 6 ) 1 1 1 ( ) 1 1 1 ( ) 3 0 0 , 1 ( 5 0 6 , 2 2 ) 5 7 1 , 1 ( ) 5 7 1 , 1 ( ) 5 1 5 , 1 ( 5 1 9 , 9 1 0 0 0 $ 9 1 7 , 3 2 d e n i a t e R i s g n n r a e 0 0 0 $ 2 7 8 , 3 s e v r e s e r e g n a h c x E - - - - - - 0 0 0 $ e v r e s e r 7 8 0 , 1 l a t i p a C n o i t p m e d e r 0 0 0 $ 5 3 9 , 3 2 e r a h S i m u m e r p 0 0 0 $ s e r a h s ) 1 7 1 , 1 ( y r u s a e r T 0 0 0 $ e r a h S l a t i p a c 4 0 5 , 5 1 - - - - - - - - - r a e y e h t r o f e s n e p x e e v s n e h e r p m o c i l a t o T r a e y e h t r o f e m o c n i i e v s n e h e r p m o C 5 1 0 2 r e b m e c e D 1 3 t a e c n a a B l r a e y e h t r o f s s o L i d a p s d n e d v D i i y t i u q E n i s e g n a h C f o t n e m e t a t S y n a p m o C 7 1 0 2 r e b m e c e D 1 3 d e d n e r a e y e h t r o F 2 7 8 , 3 7 8 0 , 1 5 3 9 , 3 2 ) 1 7 1 , 1 ( 4 0 5 , 5 1 - - - - - - - - - - - - - - - 2 7 8 , 3 7 8 0 , 1 5 3 9 , 3 2 ) 1 7 1 , 1 ( 4 0 5 , 5 1 r a e y e h t r o f e s n e p x e e v i s n e h e r p m o c l a t o T r a e y e h t r o f e m o c n i e v i s n e h e r p m o C 6 1 0 2 r e b m e c e D 1 3 t a e c n a l a B r a e y e h t r o f s s o L 7 1 0 2 r e b m e c e D 1 3 t a e c n a l a B d i a p s d n e d i v i D . y t i u q e n i s e g n a h c f o t n e m e t a t s i s h t f o t r a p l a r g e t n i n a e r a s e t o n g n y n a p m o c c a e h T i 97 7 9 c l P s n o i t a t n a l P n r e t s a E - o g n A l | 7 1 0 2 t r o p e R l a u n n A About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Notes to the Company Financial Statements 1 Accounting policies Basis of preparation The financial statements have been prepared in accordance with Financial Reporting Standard 100 Application of Financial Reporting Requirements ("FRS 100") and Financial Reporting Standard 101 Reduced Disclosure Framework ("FRS 101"). Disclosure exemptions adopted In preparing these financial statements the Company has taken advantage of all disclosure exemptions conferred by FRS 101. Therefore these financial statements do not include: • • • • • • certain comparative information as otherwise required by EU endorsed IFRS; certain disclosures regarding the Company's capital; a statement of cash flows; the effect of future accounting standards not yet adopted; the disclosure of the remuneration of key management personnel; and disclosure of related party transactions with other wholly owned members of Anglo-Eastern Plantations Plc group of companies. In addition, and in accordance with FRS 101 further disclosure exemptions have been adopted because equivalent disclosures are included in the Company's consolidated financial statements. These financial statements do not include certain disclosures in respect of: • Share based payments; • Financial instruments (other than certain disclosures required as a result of recording financial instruments at fair value); or • Fair value measurement (other than certain disclosures required as a result of recording financial instruments at fair value). Principal accounting policies The principal accounting policies adopted in the preparation of the financial statements are set out below. The policies have been consistently applied to all the years presented unless otherwise stated. Basis of accounting The separate financial statements of the Company are presented as required by the Companies Act 2006. They have been prepared under the historical cost convention. The presentation currency used is US Dollar and amounts have been presented in round thousands ("$000"). The principal accounting policies are summarised below. Foreign currency The functional currency of the Company is US Dollar, chosen because the prices of the bulk of the Group’s products are ultimately denominated in US Dollar. Transactions in sterling are translated to US Dollar at the actual exchange rate and exchange losses recognised in profit and loss. Sterling denominated assets and liabilities are converted to US Dollar at the rate ruling at the balance sheet date. Exchange differences arising on the retranslation of unsettled monetary assets and liabilities are recognised immediately in profit or loss. Investments Investments in subsidiaries are stated at cost less provision for any permanent diminution in value. 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. Office plant and equipment is depreciated using the straight-line method. The yearly rate of depreciation is as follows: Office plant, equipment & vehicle - 20% per annum Dividends Equity dividends are recognised when they become legally payable. The Company pays only one dividend each year as a final dividend which becomes legally payable when approved by the shareholders at the next following annual general meeting. Share based payments As set out under Group accounting policies on page 67. Deferred taxation A deferred tax asset has not been recognised in relation to brought forward tax losses of $10.7m (2016: 9.5m) because it is not certain those losses can be utilised in the foreseeable future. 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. Annual Report 2017 | Anglo-Eastern Plantations Plc 98 98 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Notes to the Company Financial Statements 1 Accounting policies - continued Financial guarantee contracts Where the Company enters into financial guarantee contracts and guarantees the indebtedness of other companies within the Group, the Company considers these to be insurance arrangements and accounts for them as such. In this respect, the Company treats the guarantee contract as a contingent liability until such time that it becomes probable that the Company will be required to make a payment under the guarantee. 2 Profit and loss account As permitted by section 408 of the Companies Act 2006, a separate profit and loss account dealing with the results of the Company has not been presented. The loss before tax for the year for the Company dealt with in the consolidated financial statements of the Company was $1,172,000 (2016: $97,000) and loss after tax for the year was $1,175,000 (2016: $111,000). The remuneration of the directors of the Company is disclosed in note 6 to the consolidated financial statements. Auditor's remuneration is disclosed in note 4 to the consolidated financial statements. 3 Investments in subsidiaries At 1 January 2016 Movements during the year Reclassification Repayment At 31 December 2016 Movements during the year: Repayment At 31 December 2017 Net carrying amount At 31 December Investments in subsidiaries undertakings $000 Loans to subsidiaries undertakings $000 Total $000 2,810 64,781 67,591 11,378 - 14,188 - 14,188 (11,378) (620) 52,783 (5,095) 47,688 2017 $000 - (620) 66,971 (5,095) 61,876 2016 $000 61,876 66,971 Loans to subsidiary companies do not have fixed repayment terms and are repayable on demand. In practice, they are effectively long term in nature and therefore classified as investments in subsidiaries. On 5 December 2017, the shareholders of Anglo-Eastern Plantations (M) Sdn Bhd, subject to the approval from the Companies Commission of Malaysia, resolved to fully redeemed the 8.4% Cumulative Preference Shares of 7,356,000 issued to Anglo-Eastern Plantation Plc for $1,818,000. The details of the subsidiaries are disclosed in Note 25 of the consolidated financial statements. Annual Report 2017 | Anglo-Eastern Plantations Plc 99 99 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Notes to the Company Financial Statements 4 Debtors Amounts owed by group undertakings: Anglo-Eastern Plantations Management Sdn Bhd Anglo-Eastern Plantations (M) Sdn Bhd PT Hijau Pyran Perdana PT Sawit Graha Manunggal Other debtors 2017 $000 2,319 - 100 350 2,769 28 2,797 2016 $000 1,299 291 50 175 1,815 22 1,837 The amounts owed by group undertakings arise as a result of advances to subsidiary companies and expenses paid on their behalf. The amounts are unsecured, interest free and do not have fixed repayment terms. 5 Creditors: amounts falling due within one year Amounts owed to group undertakings Mergerset (1980) Limited Musam Indonesia Limited Accruals 2017 $000 2,163 246 2,409 994 3,403 2016 $000 2,163 246 2,409 812 3,221 The amounts owed to group undertakings arise as a result of advances from subsidiary companies and expenses paid on our behalf. The amounts are unsecured, interest free and do not have fixed repayment terms. 6 Share capital and treasury shares The details of the share capital and treasury shares are disclosed in Note 19 of the consolidated financial statements. 7 Related party transactions The details of the related party transactions for UHY Hacker Young LLP are disclosed in Note 21 of the consolidated financial statements. 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 $210,264 (2016: $203,896). There was no balance outstanding at the year end (2015: Nil). Transactions between the Company and its subsidiaries are disclosed below: Nature of transactions Name Management fees from Corporate guarantee fees from Corporate guarantee fees from Receivable from Payable to Anglo-Eastern Plantations Malaysia Sdn Bhd PT Hijau Pryan Perdana PT Sawit Graha Manunggal Subsidiaries (note 4) Subsidiaries (note 5) 2017 $000 44 50 175 2,769 2,409 2016 $000 65 50 175 1,815 2,409 The details of the intercompany receivables and payables are disclosed in note 4 and note 5 of the Company financial statements respectively. Annual Report 2017 | Anglo-Eastern Plantations Plc 100 100 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Notes to the Company Financial Statements 8 Employees' and Directors' remuneration Average numbers employed during the year - directors - staff Staff costs Wages and salaries Social security costs Retirement benefits 2017 Number 2016 Number 4 - 4 2017 $000 - - 62 62 4 - 4 2016 $000 (481) - 64 (417) The information required by the Companies Act and the Listing Rules of the Financial Conduct Authority are contained in the Directors' remuneration report on pages 47 - 51 of which certain information on page 51 has been audited. Directors' emoluments 9 Dividends 2017 $000 208 2016 $000 228 The details of the dividends are disclosed in Note 9 of the consolidated financial statements. 10 Guarantees and other financial commitments The Company has provided guarantees for loans to subsidiaries totalling $45,000,000 (2016: $45,000,000) as set out in note 15 of the consolidated financial statements. Annual Report 2017 | Anglo-Eastern Plantations Plc 101 101 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Notice of Annual General Meeting Notice is hereby given that the thirty-third Annual General Meeting of Anglo-Eastern Plantations Plc will be held at the offices of UHY Hacker Young LLP, Quadrant House, 4 Thomas More Square, London E1W 1YW on Monday 25 June 2018 at 11.00 a.m. for the following purposes: 1 2 3 4 5 6 7 8 9 To receive and consider the accounts and the reports of the directors and auditors thereon for the year ended 31 December 2017. To approve the Directors' Remuneration Report (excluding the part containing the remuneration policy) as set out in the Company’s annual report and accounts for the year ended 31 December 2017. To declare a final dividend. To re-elect Madam Lim Siew Kim, a Non-Executive Director, who has served more than nine years. To re-elect Dato’ John Lim Ewe Chuan as a director. To re-elect Mr Lim Tian Huat as a Non-Executive Director. To re-elect Mr Jonathan Law Ngee Song as a Non-Executive Director To re-appoint BDO LLP as auditors. To authorise the directors to fix the remuneration of the auditors. 10 To consider the following resolution as an ordinary resolution: That the directors be generally and unconditionally authorised in accordance with section 551 of the Companies Act 2006, in substitution for all existing authorities to the extent unused, to exercise all the powers of the Company to allot: (i) (ii) shares in the Company up to an aggregate nominal amount of £3,303,031 (representing 13,212,124 ordinary shares of 25p each) which is equal to one third of the issued ordinary share capital (excluding treasury shares) at the date of this resolution: and in addition equity securities of the Company (within the meaning of section 560(1) of the Companies Act 2006) in connection with an offer of such securities by way of a rights issue up to an aggregate nominal amount of £3,303,031 provided that this authority shall expire on the date of the next annual general meeting after the passing of this resolution or 30 June 2019 whichever is earlier save that the Company may before such expiry make an offer or agreement which would or might require relevant securities to be allotted after such expiry and the directors may allot relevant securities in pursuance of such an offer or agreement as if the authority conferred hereby had not expired. "rights issue" means an offer of equity securities open for acceptance for a period fixed by the directors to holders of equity securities (other than the Company) on the register on a fixed record date in proportion to their respective holdings of such securities or in accordance with the rights attached thereto (but subject to such exclusions or other arrangements as the directors may deem necessary or expedient in relation to fractional entitlements or legal or practical problems under the laws of, or the requirements of any recognised regulatory body or any stock exchange in, any territory). 11 To consider the following resolution as a special resolution: That subject to and conditional on the passing of Resolution 10, the directors be empowered pursuant to section 570 of the Companies Act 2006) to allot equity securities (within the meaning of section 560 of that Act) for cash pursuant to the authority conferred by Resolution 10 and/or by way of sale of treasury shares as if section 561(1) of that Act did not apply to any such allotment or sale, provided that this authorisation shall be limited to: (i) the allotment of equity securities and sale of treasury shares for cash in connection with an offer or issue of, or invitation to apply for, equity securities made to (but in the case of the authority granted under paragraph (ii) of Resolution 10 by way of a rights issue only); (a) (b) ordinary shareholders in proportion (as nearly may be practicable) to their existing holdings: and holders of other equity securities, as required by the rights of those securities, or as the directors otherwise consider necessary, and permitting the directors to impose any limited or restrictions and make any arrangements which they consider necessary or appropriate to deal with treasury shares, fractional entitlement, record dates, legal regulatory or practical problems in, or under, the laws of any territory, or any other matter; and Annual Report 2017 | Anglo-Eastern Plantations Plc 102 102 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Notice of Annual General Meeting (ii) in the case of the authority granted under paragraph (i) of Resolution 10 and/or the sale of treasury shares for cash, to the allotment of equity shares or sale of treasury shares up to an aggregate nominal amount of £495,454. Such power shall apply during the period expiring on the date of the next annual general meeting or on 30 June 2019 (whichever shall be earlier) but the directors may during such periods make offers or agreements which would or might require equity securities to be allotted (and treasury shares to be sold) after the expiry of such period. 12 To consider the following as a special resolution: That the Company be generally and unconditionally authorised to make market purchases (within the meaning of section 693(4) of the Companies Act 2006) of ordinary shares of 25p each in the capital of the Company on such terms as the directors think fit, provided that: (a) the maximum number of ordinary shares hereby authorised to be purchased is 3,963,637 (representing 10% of the issued ordinary share capital); (b) the minimum price (exclusive of expenses) which may be paid for each ordinary share is 25p; (c) the maximum price (exclusive of expenses) which may be paid for each ordinary share is the higher of: (i) an amount equal to 105% of the average of the middle market quotations for such share as derived from the Daily Official List of the London Stock Exchange for the five business days immediately preceding the date of purchase; and (ii) the price of the last independent trade and the highest current independent bid on the London Stock Exchange; and (d) the authority hereby conferred shall expire on 30 June 2019 or, if earlier, at the conclusion of the next annual general meeting of the Company save that the Company may before the expiry of this authority make a contract of purchase which will or may be executed wholly or partly after such expiry and may make a purchase of shares pursuant to any such contract. 13 To consider the following resolution as a special resolution: That with effect from the conclusion of the meeting the draft articles of association produced to the meeting and, for the purposes of identification, initialled by the Chairman be adopted as the articles of association of the Company in substitution for, and to the exclusion of, the Company's existing articles of association. 14 To consider and if thought fit to pass the following resolution as a special resolution: That a general meeting of the Company other than an annual general meeting may be called on not less than 14 clear days’ notice. By order of the Board CETC (Nominees) Limited Company Secretary 18 May 2018 Annual Report 2017 | Anglo-Eastern Plantations Plc 103 103 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Notice of Annual General Meeting Notes: 1. 2. 3. 4. 5. 6. 7. 8. 9. Pursuant to regulation 41 of the Uncertificated Securities Regulations 2001, the Company has specified that only those shareholders on the register of members of the Company at close of business on 21 June 2018 shall be entitled to attend and vote at the meeting in respect of the number of shares registered in their name at that time. Changes to the register of members after 21 June 2018 or, if the meeting is adjourned, in the register of members at close of business on the date which is two days before the day of the adjourned meeting shall be disregarded in determining the rights of any person to attend and vote at the meeting. As at 18 May 2018 (being the latest practicable date prior to the publication of this notice), the Company’s issued share capital comprised 39,976,272 Ordinary Shares of 25p each. Each share carries one vote except 339,900 shares held as treasury shares and therefore the total number of voting rights in the Company as at 9.00 am on 18 May 2018 is 39,636,372. A member of the Company entitled to attend and vote at the meeting may appoint one or more proxies to attend, speak and vote at the meeting. Where more than one proxy is appointed in relation to the meeting, each proxy must be appointed to exercise rights attaching to a different share or shares. You may not appoint more than one proxy to exercise rights attached to any one share. A proxy need not be a member of the Company. The instrument appointing a proxy must be deposited at the office of the registrars by 11.00 a.m. on 21 June 2018 not less than forty-eight hours before the time appointed for holding the meeting (or any adjournment thereof). In the case of joint holders, where more than one of the joint holders purports to appoint a proxy, only the appointment submitted by the most senior holder will be accepted. Seniority is determined by the order in which the names of the joint holders appear in the Company’s register of members in respect of the joint holding (the first-named being the most senior). CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so for the annual general meeting to be held on 25 June 2018 and any adjournment thereof by using the procedures described in the CREST Manual on the Euroclear website (www.euroclear.com/CREST). CREST personal members or other CREST sponsored members and those CREST members who have appointed a voting service provider should refer to their CREST sponsor or voting service provider, who will be able to take the appropriate action on their behalf. In order for a proxy appointment or instruction made using the CREST service to be valid, the appropriate CREST message (a “CREST Proxy Instruction”) must be properly authenticated in accordance with Euroclear’s specifications and must contain the information required for such instructions, as described in the CREST Manual. All messages relating to the appointment of a proxy or an instruction to a previously appointed proxy must be transmitted so as to be received by Link Asset Services [CREST ID: RA10] by 11.00 a.m. on 21 June 2018. It is the responsibility of the CREST member concerned to take such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In this connection, CREST members and, where applicable, their CREST sponsors or voting service providers are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings. The Company may treat a CREST Proxy Instruction as invalid in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001. You may submit your proxy electronically using The Share Portal service at www.signalshares.com. If not already registered for The Share Portal you will need your Investor Code which can be found on your share certificate. The statement of the rights of shareholders in relation to the appointment of proxies does not apply to a person who receives this notice of general meeting as a person nominated to enjoy “information rights” under section 146 of the Companies Act 2006. If you have been sent this notice of meeting because you are such a nominated person the following statements apply: (i) you may have a right under an agreement between you and the registered shareholder by whom you were nominated to be appointed (or to have someone else appointed) as a proxy for this general meeting and (ii) if you have no such a right, or do not wish to exercise it, you may have a right under such an agreement to give instructions to that registered shareholder as to the exercise of voting rights. Nominated persons should contact the registered member by whom they were nominated in respect of these arrangements. A member of the Company which is a corporation may authorise a person or persons to act as its representative(s) at the meeting. In accordance with the provisions of the Companies Act 2006, each such representative may exercise (on behalf of the corporation) the same powers as the corporation could exercise if it were an individual member of the Company, provided that they do not do so in relation to the same shares. It is no longer necessary to nominate a designated corporate representative. 10. Members satisfying the requirements of section 527 of the Companies Act 2006 may require the Company to publish on a website a statement by them (at the Company’s cost) relating to the audit of the Company’s accounts which are being laid before this meeting (including the auditor’s report and the conduct of the audit) or, where applicable, any circumstances connected with an auditor of the Company ceasing to hold office since the previous general meeting at which accounts were laid. Should such a statement be received, it will be published on the Company’s website at www.angloeastern.co.uk. In those circumstances the Company would be under an obligation to forward a copy of the statement to the auditors forthwith and the statement would form part of the business which may be dealt with at this meeting. 11. Any member attending the meeting has the right to ask questions. The Company must cause to be answered any such questions relating to the business being dealt with at the meeting but no such answer need be given if (a) to do so would interfere unduly with the preparation of the meeting or involve the disclosure of confidential information, (b) the answer has already been given on a website in the form of an answer to a question, or (c) it is undesirable in the interests of the Company or the good order of the meeting that the question be answered. 12. A copy of this notice and the other information required by section 311A of the Companies Act 2006 can be found at www.angloeastern.co.uk. Annual Report 2017 | Anglo-Eastern Plantations Plc 104 104 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. Notice of Annual General Meeting 13. 14. If you are in any doubt as to any aspect of Resolutions 11 to 14 or as to the action you should take, you should immediately take your own advice from a stockbroker, solicitor, accountant or other independent financial advisor authorised under the Financial Services and Markets Act 2000. The Board believes that these Resolutions are in the best interests of the Company and shareholders as a whole. If you have sold or otherwise transferred all your shares in the Company, please hand this document and the accompanying form of proxy to the purchaser or transferee, or to the bank, stockbroker or other agent through whom the sale or transfer was effected, for transmission to the purchaser or transferee. If you sell or have sold or otherwise transferred only part of your holding of existing shares please consult the bank, stockbroker or other agent through whom the sale or transfer was effected. 15. Resolution 13 proposes that the Company's articles of association (the 'Existing Articles') be replaced by new articles of association (the 'New Articles'). Some of the defined terms have been updated to ensure consistency with changes to the law (and a number of articles have been amended to ensure consistent use of definitions throughout the New Articles). For example, article 12 relating to bearer shares has been deleted entirely as the use of bearer shares was abolished on 26 May 2015. Additionally, the language contained in article 9.2 regarding the disapplication of pre-emption rights has been amended to include a reference to treasury shares and to be set out in a more common format and article 79 (defining 'mental incapacity') and article 103 (relating to a director's termination) have been amended to comply with the Equality Act 2010 and the discrimination provisions relating to mental health. A number of formatting changes have also been made. Further to the above explanation of the proposed changes, the main amendments to the Existing Articles are as follows: 1.1 deleting the whole of Article 9.2 and replacing it with a new Article 9.2 as follows: 9.2 Subject to the provisions of this Article 9, and where the Board has general authority under Article 9.1, the Company may pass a special resolution in accordance with section 570 of the Companies Act 2006 authorising the Directors to allot equity securities (as defined in section 560 of the Companies Act 2006) for cash: in connection with a rights issue; and (a) (b) otherwise than in connection with a rights issue up to an aggregate nominal value not exceeding the sum specified in the special resolution, as if section 561 of the Companies Act 2006 (existing shareholders' right of pre-emption) did not apply to the allotment or applied to the allotment with such modifications as the directors may determine. 1.2 deleting the whole of Article 9.3 and replacing it with a new Article 9.3 as follows: 9.3 For the purposes of this Article 9: (a) rights issue means an offer of equity securities (as defined by the Companies Act 2006) open for acceptance for a period fixed by the Board to holders of equity securities on the Register on a fixed record date in proportion to their respective holdings of such securities or in accordance with the rights attached to them but subject to such exclusions or other arrangements as the Board may deem necessary or expedient with regard to treasury shares, fractional entitlements or legal or practical problems under the laws of any territory or under the requirements of any recognised regulatory body or stock exchange in any territory; and the nominal value of any securities shall be taken to be, in the case of rights to subscribe for or to convert any securities into shares of the Company, the nominal amount of such shares which may be allotted pursuant to such rights. (b) 1.3 deleting the whole of Article 12 (Issue of share warrants to the bearer) and re-numbering all the subsequent Articles and cross-references accordingly, 1.4 deleting the whole of Article 79 (formerly Article 80) and replacing it with a new Article 79 as follows: 79. Member who lacks mental capacity A Member who is a patient for any purpose of any statute relating to mental health or in respect of whom an order has been made by any court having jurisdiction for the protection or management of the affairs of Persons incapable of managing their own affairs may vote, whether on a show of hands or on a poll, by his committee, deputy, receiver, curator bonis or other Person appointed by that court. That committee, deputy, receiver, curator bonis or other Person may on a poll vote by proxy. The right to vote is exercisable only if evidence satisfactory to the Board of the authority of the Person claiming to vote has been deposited at the Office or at such other place within the United Kingdom as is specified in the notice of meeting not less than 48 hours before the time for holding the meeting or adjourned meeting at which that Person claims to vote. 1.5 1.6 replacing the word "insanity" wherever it occurs in Article 87 (formerly Article 88) with the words "mental incapacity", deleting Article 103 (d) (formerly Article 104 (d)) in its entirety and replacing it with a new Article 103 (d) as follows: (d) a registered medical practitioner who is treating that person gives a written opinion to the Company stating that person has become physically or mentally incapable of acting as a director and may remain so for more than three months, or he is or has been suffering from mental or physical ill health and the Board resolves that his office be vacated; 16. The following documents are available for inspection by members at the registered office of the Company during normal business hours (except Bank Holidays) and at the place of the meeting not less than 15 minutes prior to and during the meeting: (a) a copy of the Executive Director’s service agreement; (b) copies of Non-Executive Directors’ letters of appointment; (c) relationship agreement with the majority shareholder; and (d) a copy of the Existing Articles and the New Articles and a blackline showing the amendments made to the Existing Articles. Annual Report 2017 | Anglo-Eastern Plantations Plc 105 105 About Anglo-Eastern Plantations Annual Report 2017 | Anglo-Eastern Plantations Plc 2 The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. About Anglo-Eastern Plantations Contents The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and rubber with plantations across Indonesia and Malaysia, amounting to some 128,200ha. About AEP 2 Financial Highlights Key Information Shareholder Information Chairman's Statement Strategic Report Financial Record Estate Areas Location of Estates Directors' Report Directors' Responsibilities Directors Statement on Corporate Governance Audit Committee Report Directors' Remuneration Report Auditors' Report Consolidated Income Statement Consolidated Statement of Comprehensive Income 4 6 7 9 11 27 28 29 30 38 39 40 44 47 52 60 61 Consolidated Statement of Financial Position Consolidated Statement of Changes in Equity AEP has a Premium Listing on the London Stock Exchange. The Company was formed and floated in 1985. 63 62 Consolidated Statement of Cash Flows 64 Notes to the Consolidated Financial Statements Company Balance Sheet Company Statement of Changes in Equity Notes to the Company Financial Statements Notice of Annual General Meeting Primary activities are the crop production and processing of palm oil and some rubber through operations in Indonesia and Malaysia. 66 96 The Group is committed to responsible development and management of its plantations and facilities for the benefit of the environment and society in which it operates. 102 98 97 Form of Proxy and Attendance Card Company addresses, advisers and website Separate Attachment Inside Back Cover Annual Report 2017 | Anglo-Eastern Plantations Plc 2 Company addresses London Office Anglo-Eastern Plantations Plc Quadrant House, 6th Floor 4 Thomas More Square London E1W 1YW United Kingdom Tel: 44 (0)20 7216 4621 Fax: 44 (0)20 7767 2602 Malaysian Office Anglo-Eastern Plantations Management Sdn Bhd 7th Floor, Wisma Equity 150 Jalan Ampang 50450 Kuala Lumpur Malaysia Tel: 60 (0)3 2162 9808 Fax: 60 (0)3 2164 8922 Indonesian Office PT Anglo-Eastern Plantations Management Indonesia 3rd Floor, Wisma HSBC, Jalan Diponegoro, Kav 11 Medan 20152 North Sumatera Indonesia Tel: 62 (0)61 452 0107 Fax: 62 (0)61 452 0029 Secretary and registered office Anglo-Eastern Plantations Plc (Number 1884630) (Registered in England and Wales) CETC (Nominees) Limited Quadrant House, 6th Floor 4 Thomas More Square London E1W 1YW United Kingdom Tel: 44 (0)20 7216 4600 Fax: 44 (0)20 7767 2602 Company website www.angloeastern.co.uk Company advisers Auditors BDO LLP 55 Baker Street London W1U 7EU United Kingdom Principal Bankers National Westminster Bank Plc Liverpool Street Station 216 Bishopsgate London EC2M 4QB United Kingdom The Hong Kong and Shanghai Banking Corporation Limited Wisma HSBC Jalan Diponegoro, Kav 11 Medan 20152 North Sumatera Indonesia PT Bank DBS Indonesia Uniplaza Building Jalan Letjen MT Haryono A-1 Medan 20231 North Sumatera Indonesia RHB Bank Bhd Podium Block, Plaza OSK Jalan Ampang 50450 Kuala Lumpur Malaysia Registrars Link Asset Services The Registry 34 Beckenham Road Beckenham Kent BR3 4TU United Kingdom Solicitors Withers LLP 16 Old Bailey London EC4M 7EG United Kingdom Sponsor/Broker Panmure Gordon (UK) Limited One New Change London EC4M 9AF United Kingdom
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