i
2020 Annual Report
ANNUAL REPORT
Anglo-Eastern Plantations Plc
Company Number: 1884630
Contents
About AEP
Financial Highlights
Key Information
Shareholder Information
Chairman's Statement
Strategic Report
Financial Record
Estate Areas
Location of Estates and Mills
Directors' Report
Directors' Responsibilities
Directors
Statement on Corporate Governance
Audit Committee Report
Directors' Remuneration Report
Auditor's Report
Consolidated Income Statement
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
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
2
4
6
7
10
13
45
46
47
48
52
53
54
60
65
71
82
83
84
85
86
88
125
126
127
131
Company addresses, advisers and website
Inside Back Cover
About Anglo-Eastern Plantations
The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major
producer of palm oil and to a lesser extent rubber with plantations across Indonesia and Malaysia, amounting
to some 128,000 ha.
Kalimantan mill at night
• 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
Indonesia and
Malaysia.
its operations
in
• The Group is committed to responsible
its
development and management of
plantations and
facilities with particular
attention to both the environment and society
in which it operates. Oil palms yield five to ten
times more than other vegetable oil crops
enabling the Group to have more efficient use
of land.
• Palm oil is an important commodity and the
industry reportedly employs
four million
people directly and millions more indirectly in
Indonesia alone. It is used extensively in food,
cosmetics, other consumer products and
biofuel.
Immature oil palms
Water treatment plant
Annual Report 2020 | Anglo-Eastern Plantations Plc
2
About Anglo-Eastern Plantations
Oil Palm Plantations
The Group has developed over 60,500 ha of mature oil palm in sixteen plantations
across Indonesia, together with one plantation in Malaysia. The weighted average
age of the trees in the Group is about 13 years. In Indonesia the trees averaged
about 12 years old while in Malaysia the trees are older at 23 years.
Oil Palm Development
An Oil Palm tree usually takes about three years from planting to harvest of the
first crop and will reach full production after a further five years. The Group has
approximately 8,800 ha of immature plantations of which 2,190 ha were planted in
2020.
Palm Oil Mills
The Group operates six palm oil mills in Indonesia processing up to a combined
310 mt of fresh fruit bunches (“FFB”) per hour. One of the mills has a biomass plant
which processes empty fruit bunches (“EFB”) into dried long fibres for export. The
construction of its seventh mill in North Sumatera is delayed and upon completion
by the year 2022 would increase processing capacity to 370 mt per hour.
Third Party Crop Purchases
In 2020 the Group purchased approximately 913,200 mt of FFB from third party
producers, comprising small plantations and local farmers, for processing through
its mills. The total FFB throughput at the Group’s mills in 2020 was 1.97 million mt
producing 406,100 mt of crude palm oil (“CPO”). The Group has the capacity to
store up to 52,400 mt of CPO at its six mills.
Rubber Plantations
In 2020 the 262 ha of established rubber plantations produced 465 mt of raw latex
and rubber lumps. The size of rubber plantations will reduce further as the Group
replaces ageing rubber trees with oil palm. The average age of the rubber trees is
13 years.
Biogas Plants
Four mills are equipped with biogas plants to capture the methane gas emission
to generate electricity which is expected to be sold to the Indonesian state
authorities. This reduces our reliance on fossil fuels and improves the Group’s
carbon footprint.
Annual Report 2020 | Anglo-Eastern Plantations Plc
3
Financial Highlights
The Group key performance indicators (“KPI”) as required in accordance with the requirement of S414C,
Company Act 2006 are as follows:
Revenue
Profit before tax:
- before biological assets (“BA”) movement
- after BA movement
Basic Earnings per ordinary share (“EPS”):
- before BA movement
- after BA movement
Dividend (cents)
2020
$m
2019
$m
269.1
219.1
50.4
51.7
15.6
18.9
77.67cts
80.32cts
1.0cts
35.37cts
40.61cts
0.5cts
Anglo-Eastern Plantations Plc
%
FTSE 100
Share Price
Turnover by volume
Source: Financial Times
Annual Report 2020 | Anglo-Eastern Plantations Plc
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Financial Highlights
Revenue ($000)
Profit Before Tax Before BA
($000)
80,000
60,000
40,000
20,000
0
300,000
250,000
200,000
150,000
100,000
50,000
0
2016 2017 2018 2019 2020
2016 2017 2018 2019 2020
Basic Earnings Per Share
Before BA ($, cents)
Asset Value Per Share
($, cents)
100.00
90.00
80.00
70.00
60.00
50.00
40.00
30.00
20.00
10.00
0.00
1,200
1,000
800
600
400
200
0
2016 2017 2018 2019 2020
2016 2017 2018 2019 2020
Annual Report 2020 | Anglo-Eastern Plantations Plc
5
Key Information
Own FFB Production & Outside Purchase (mt)
2016
2017
2018
2019
2020
Own FFB Production
Outside Purchase
Crude Palm Oil & Palm Kernel Production (mt)
mt
1,200,000
1,000,000
800,000
600,000
400,000
200,000
0
mt
450,000
400,000
350,000
300,000
250,000
200,000
150,000
100,000
50,000
0
2016
2017
2018
2019
2020
CPO
Palm Kernel
Annual Report 2020 | Anglo-Eastern Plantations Plc
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12%43%22%23%(as at 31/12/19)ImmatureYoungPrimeOld13%42%20%25%(as at 31/12/20)Ageof Palm Trees
Shareholder Information
Market capitalisation
The market capitalisation of Anglo-Eastern Plantations Plc in United Kingdom (“UK”) at 31 December 2020 was £231
million, the ordinary share price at the close of business on 6 May 2021 was 649 pence giving a market capitalisation
of £257 million.
Website
https://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 environment, social and
governance matters (“ESG”) and share price movements.
The website allows shareholders and investors to select and receive e-mail alerts from the Company on selected
regulatory news. Shareholders are encouraged to use 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
44 (0) 20 7216 4621
44 (0) 20 7767 2602
Tel:
Fax:
Email: datojohnlim@angloeastern.co.uk
Registrar
Administrative queries about holdings of AEP shares can be directed to the Company's Registrar:
Computershare Investor Services PLC
The Pavilions
Bridgwater Road
Bristol BS99 6ZY
United Kingdom
+44 (0) 370 703 0164
Tel:
Email: web.corres@computershare.co.uk
Shareholders can view and update their account details via the Computershare website, details of which can be
found at https://www-uk.computershare.com/investor/.
Annual Report 2020 | Anglo-Eastern Plantations Plc
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Shareholder Information
Annual General Meeting
The 36th Annual General Meeting (“AGM”) of the Company will be held at the Company’s office in Malaysia at 7th
Floor, Wisma Equity, 150 Jalan Ampang, 50450 Kuala Lumpur, Malaysia on Monday, 28 June 2021 at 4.30 pm
(Malaysia time). Notice of the meeting is set out at the end of this Annual Report on pages 131 to 134.
Although there has been some relaxation of international air travel and border controls because of the vaccination
programmes in the UK and in Malaysia, it is by no means certain that the Directors, who are currently in Malaysia, can
travel to the UK on 28 June 2021 without having to comply with self isolation or quarantine requirements which is
currently the case. Given these circumstances, the Board has decided to hold the meeting in Kuala Lumpur, Malaysia
for another year, so that the legal requirement that AEP’s AGM be held by 30 June 2021 is complied with.
The Board anticipates that it is unlikely that shareholders will be attending the AGM due to travel restrictions and self
isolation or quarantine requirements and, therefore, the AGM will be quorate by two Board members who are also
proxy shareholders.
Please note that the format of this year’s AGM will be similar as last year as follows:
i) No presentations will be made at the AGM itself.
ii) All shareholders are encouraged to submit their votes by proxy for Resolutions 1 to 13.
iii) Shareholders are welcomed to submit questions to the Board by email to datojohnlim@angloeastern.co.uk by 24
June 2021 and they will be answered after the AGM.
Shareholders are invited to attend a shareholder question and answer session by Zoom or at the AGM if they are in
attendance. This session will be held shortly after the close of the AGM.
Any member wishing to join the question and answer session remotely should use the Zoom App or website at
https://zoom.us. Use meeting ID: 986 0924 0807 and meeting passcode: 753309. Click on ‘Join a Meeting’ and enter
the Meeting ID. The question and answer session is scheduled to commence at 5.00 pm (Malaysia time) on Monday
28 June 2021, or such later time as the AGM closes.
As in previous years, the results of the AGM will be announced by the close of business in the UK on 28 June 2021.
As it is unlikely that shareholders will make it to the AGM due to travel restrictions and quarantine requirements, we
therefore strongly encourage shareholders to vote on all resolutions by completing the proxy appointment form (see
further details below on how to access this form online) appointing the Chairman of the meeting as your proxy, to
register any questions in advance.
Guidance on how to exercise your rights in light of the changes to the format of the AGM are set out below.
If you appoint another person as your proxy that person is unlikely to attend the AGM and vote on your behalf and
therefore you are strongly encouraged to appoint the Chairman of the meeting as your proxy.
How will my shares be voted if I appoint a proxy?
The person you name on your proxy form must vote in accordance with your instructions. If you do not give them any
instructions, a proxy may vote or not vote as he or she sees fit on any business of the AGM. Please see the explanatory
notes on the reverse of the proxy form.
Can I appoint anyone to be proxy?
You can appoint your own choice of proxy or you can appoint the Chairman of the meeting as your proxy (which we
strongly encourage). Your proxy does not need to be a shareholder. However, if you appoint anyone other than the
Chairman of the meeting as your proxy, to vote on your behalf, that person may not be able to attend the AGM and
vote on your behalf because of travelling restrictions and quarantine requirements and therefore you are strongly
encouraged to appoint the Chairman of the meeting as your proxy. To be valid, proxy appointments must be received
no later than 9.30 am (UK time) on 24 June 2021.
Annual Report 2020 | Anglo-Eastern Plantations Plc
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Shareholder Information
Can I appoint more than one proxy?
Yes. You may appoint more than one proxy, provided that each proxy is appointed to exercise rights attached to
different shares. You may not appoint more than one proxy to exercise rights attached to the same share. To appoint
more than one proxy you should photocopy the proxy form and indicate in the relevant box that this is one of multiple
instructions. However, if you appoint anyone other than the Chairman of the meeting as your proxy, that person may
not be able to attend and vote on your behalf, as previously explained.
Can I change my mind once I have appointed a proxy?
Yes. If you change your mind, you can send a written statement to that effect to our Registrar, Computershare Investor
Services PLC. The statement must arrive with Computershare Investor Services PLC at The Pavilions, Bridgwater
Road, Bristol BS99 6ZY, United Kingdom by 9.30 am (UK time) on 24 June 2021.
Submission of proxy voting
Shareholders will not receive a hard copy of the proxy form for the 2021 AGM. Instead shareholders will be able to
vote electronically using the link https://www-uk.computershare.com/investor/. Shareholders will need to log into their
Investor Centre account or register if shareholders have not previously done so. To register, shareholders will need
their Shareholder Reference Number (“SRN”) which is detailed on their share certificates. The SRN is also available
from the Registrar, Computershare Investor Services PLC (please see their contact details below). Proxy votes must
be received no later than 9.30 am (UK time) on Thursday, 24 June 2021. To be effective, all proxy appointments must
be lodged with the Company’s Registrars at Computershare Investor Services PLC, The Pavilions, Bridgwater Road,
Bristol BS99 6ZY.
Shareholders may request a hard copy of the proxy form directly from the Registrar, Computershare Investor Services
PLC on Tel: +44 (0) 370 703 0164. Lines are open between 9am to 5.30pm from Monday to Friday excluding public
holidays in England and Wales.
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 Dollars, 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 will
be deemed to have elected to receive their dividends in Pounds Sterling and those with addresses outside the UK will
be deemed to have elected to receive their dividends in US Dollars.
The Pounds Sterling equivalent dividend will be paid at the exchange rate prevailing at the date of closing of the
register.
Electronic communications
Computershare Investor Services PLC offers AEP shareholders the opportunity to manage their shareholding online,
through the Investor Centre.
Registration is free and can be used to manage shareholdings quickly and securely. To register for this service, please
go to https://www-uk.computershare.com/investor/ and follow the instructions.
Annual Report 2020 | Anglo-Eastern Plantations Plc
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Chairman’s Statement
The Covid-19 pandemic, as declared by the World Health Organisation in early 2020, escalated into a worldwide crisis
which has upended many lives and businesses. At the time of writing, more than three million deaths and over
approximately one hundred and fifty million infections were recorded worldwide. At the peak of the pandemic, economic
activities almost grounded to a halt as many people were forced to stay at home under strict measures imposed to
curb the spread of the virus. In some countries where restrictions were eased to allow people to work and travel,
second and third waves of infections have soared. Countries in Europe and South East Asia, facing the next wave of
infections were forced to reintroduce stringent controls including lockdowns to slow the spread which threaten to
overload their hospitals. Masks and social distancing are now part of everyday life. In Indonesia where most of AEP
plantations are based, the number of people infected has exceeded one million while in Malaysia, the number of
infections is still low comparatively but infections have surged from the third quarter of 2020. The significant upsurge
of cases and the high fatalities in India, reported as a crisis, is of grave concern as it has spilled into the neighbouring
countries and Indonesia and Malaysia are not far off logistically. Vaccination programmes have started in many
countries and it will take enormous efforts on all fronts to recover from this global calamity.
Most businesses across Indonesia and Malaysia were adversely affected by the pandemic in 2020 and the upsurge
including emergence of new variants of coronaviruses at the start of 2021 of which our operations in Indonesia and
Malaysia are no exception. Although currently, the affected numbers of staff and field workers are not alarming, it is
prudent to continue imposing vigilant measures, especially in Indonesia where our plantations are located in scattered
regions, provinces and islands.
The Group’s FFB production in 2020 reached 1.10 million mt, 7% higher than last year of 1.03 million mt due to
improved weather. Rainfalls were satisfactory in most of the regions that the Group operated other than the first three
months of the year. A moderate La Nina weather phenomenon brought heavy rainfall to coastal estates in North
Sumatera and Malaysia towards the end of the year causing flash floods and some landslides. With mostly favourable
weather, all regions reported between 6% to 12% higher FFB production. Production in South Sumatera was the
exception where harvest declined sharply by 13% due to poor rainfall distribution. FFB bought-in from surrounding
smallholders and plasma was 913,200 mt (2019: 907,100 mt), marginally more than 2019. The mills processed 1.97
million mt of FFB, 5% more than last year of 1.87 million mt. CPO production, as a result, was 3% higher at 406,100
mt, compared to 394,700 mt in 2019.
CPO prices for the first half of the year were weak as expected due to the low economic activities during the pandemic
which adversely affected demand. As the lockdown eased and international trade gradually resumed, prices rallied in
the second half of the year. The export of Indonesian palm oil to the three key markets of India, China and European
Union (“EU”) in 2020 was reported to drop substantially during the pandemic. Despite the drop in international
consumption, the strong rebound in prices was due to a combination of reasons. The continuation of Indonesian B30
biodiesel programme despite low crude oil prices, the low inventory caused by a lower FFB production and soaring
soybean prices were the main contributors to the rally. A more detailed explanation is provided in the Strategic Report
under Commodity Prices. The average CPO price ex-Rotterdam ended the year 28% higher at $723/mt, compared to
$565/mt in 2019.
The higher FFB production and higher CPO prices meant that the Group’s revenue was higher by 23% at $269.1
million, compared to $219.1 million achieved in 2019. The operating profit for the Group in 2020, before biological
asset (“BA”) movement almost quadrupled to $48.1 million, from $12.2 million reported in 2019. The earnings per
share, before BA movement, increased by 120% to 77.67cts, from 35.37cts in 2019. The Group’s operating profit after
BA movement for 2020 was at $49.4 million after an upward BA movement of $1.3 million as compared to 2019
operating profit of $15.4 million after an upward BA movement of $3.3 million.
The Group’s new planting for oil palm including plasma for 2020 totalled 2,190 ha compared to 1,757 ha last year.
Please see page 22 under Corporate Social Responsibility for Plasma obligation of the Group. The new planting was
mostly concentrated in the Bangka and Kalimantan regions where negotiations with owners over land compensation
were concluded more efficiently. Another 785 ha was replanted in North Sumatera and Bengkulu during the year to
replace trees with poor yield. In 2021, the Group plans to plant 3,800 ha of oil palm which includes replanting of 950
ha in Bengkulu.
Annual Report 2020 | Anglo-Eastern Plantations Plc
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Chairman’s Statement
The Group has four biogas plants with a combined capacity of slightly above five megawatts. The latest addition, Tasik
Raja biogas plant, was commissioned in the fourth quarter of 2020. The Group generated 18,900 MWh of electricity in
2020 compared to 17,200 MWh last year. The revenue from the sale of surplus electricity was $970,000, 7% higher
than last year of $908,000. The biogas operations were not spared by the pandemic as demand for power in Indonesia
diminished with many businesses scaling or shutting down. They underperformed as the state owned company
suspended the uptake of electricity from two of our plants while reducing the unit rate it purchased from another. The
Group will continue the use of clean energy where possible to further reduce the mills’ reliance on fossil fuels and to
address growing calls to reduce greenhouse gas emissions which could threaten the long-term social acceptability
and profitability of a palm oil company.
With many countries battling against the pandemic, headlines and attention have been drawn away from EU threat to
reduce the use of palm oil for biofuel in 2024 and to completely phase it out by the year 2030. The adverse perception
of palm oil as an environmentally unfriendly and non-renewable source particularly in the EU has continued to feature
in recent years, touching on issues including deforestation, emission of greenhouse gases, planting on peatland and
land rights. AEP remains committed to No Deforestation, No Peatland, No Exploitation (“NDPE”) policies. All supplies
of FFB to our mills are traceable to their origins of supply chains and are not linked to illegal deforestation. There is
growing pressure from buyers to avoid CPO with NDPE and High Conservation Values (“HCV”) issues.
A prolonged resurgence of the Covid-19 pandemic, especially with many countries already on recession watch,
remains a potential major risk to palm oil demand in both the food and energy sectors. Despite the availability of
vaccines, a slower than expected rollout or a reduction in the effectiveness of vaccines could weaken consumer and
business confidence and dampen economic recovery resulting in weaker trade and commodity prices.
I have mentioned earlier that one of the main reasons for the high CPO prices was the high domestic demand in
Indonesia created by the government B30 biodiesel programme whereby it uses 30% fatty acid methyl esters made
from palm oil to blend with the traditional fossil fuel. The soaring CPO prices meant that the Indonesian government
had to pay ballooning biodiesel subsidies. It was inevitable that in December 2020, the Indonesian government raised
the exports levy and tax on CPO. The export levy for palm oil exports was revised from a fixed rate of $55/mt to
progressive rates linked to CPO prices. Under the new structure, export levy is payable from a minimum of $55/mt to
$255/mt when the CPO prices range from $670/mt to above $995/mt. On top of this, the government also collects
export tax of $33/mt up from $3/mt previously. Without the revision, the long term economic viability of the biodiesel
programme in Indonesia is questionable amidst the low crude oil prices. This new structure would, at the same time,
cap the exponential growth of profit due to soaring CPO prices.
Brexit became a reality as the UK exited the EU single market with an EU tariff and quota-free trade deal sealed to
avert potential business chaos and uncertainties in the immediate future, although it maybe unlikely that AEP’s
business will be significantly affected by this. At present, I believe that people are generally more concerned about the
continuing Coronavirus pandemic which has claimed many lives and disrupted the economy and livelihood not just in
the UK but across the globe. With the availability of vaccine some communities believe there is hope that the world
can gradually combat Covid-19 and over time will bring back normality or close to normality to our lives. However, it is
unknown when will be the time or year that the above will come into reality.
In determining the amount of dividends to be paid to our shareholders, the Board in previous years had been consistent
with a balanced approach to the requirement of funds in the Company in order to expand and enhance shareholders’
value but at the same time cognisant of shareholders’ wishes to have dividends as a form of income. As with last year
the Board continues to have the regulatory obligation to ensure that the Group has adequate funds to continue as a
going concern for the foreseeable future in a near worst-case scenario because of the uncertainty due to Covid-19. As
a result of the current crisis in India, as well as the precautionary measures in Indonesia, the Board is of the opinion
that the pandemic is far from over in the region where the Group’s operations are, due to the mutations and variants
more infectious than the initial virus that the world has been combating. With this in mind the Board has adopted a
prudent view for the time being and has declared a final dividend of 1.0cts per share, in line with our reporting currency,
in respect of the year to 31 December 2020 (2019: 0.5cts). In the absence of any specific instructions up to the date
of closing of the register on 11 June 2021, shareholders with addresses in the UK will be deemed to have elected to
receive their dividends in Pounds Sterling and those with addresses outside of UK will be deemed to have elected to
Annual Report 2020 | Anglo-Eastern Plantations Plc
11
Chairman’s Statement
receive their dividends in US Dollars. Subject to the approval by shareholders at the AGM, the final dividend will be
paid on 16 July 2021 to those shareholders on the register on 11 June 2021.
This year’s AGM scheduled on 28 June 2021 will be held in Kuala Lumpur again because of practical reasons linked
to this pandemic, as explained in more detail on page 8 and 9. Although shareholders are able to participate via Zoom,
the Board is, nevertheless, conscious that shareholders would want to have personal interaction with Board members,
normally at the AGM and therefore a meeting will be organised in London when it is appropriate to do so, with less
formality, for shareholders to meet with some of the Board members.
On behalf of the Board of Directors, I would like to convey our sincere thanks to our management and employees of
the Group for their dedication, loyalty, resourcefulness, commitment and contribution to the preservation of the Group’s
operation as a going concern during this extremely difficult and trying period. We would appreciate that they would
continue to do so if local and global adversity were to worsen.
I would also like to take this opportunity to thank shareholders, business associates, government authorities and all
other stakeholders for their continued confidence, understanding and support for the Group.
Madam Lim Siew Kim
Chairman
12 May 2021
Annual Report 2020 | Anglo-Eastern Plantations Plc
12
Strategic Report
Introduction
The Strategic Report has been prepared to provide shareholders with information to complement the financial
statements. This report may contain forward-looking statements, which have been included by the Board in good faith
based on information available up to the time of approval of this report. Such statements should be treated with caution
going forward given the uncertainties inherent with the economic and business risks faced by the Group.
Business Model
The Group will continue to focus on its strength and expertise, which is planting more oil palms and production of CPO.
This includes replanting old palms with low yield, replacing old rubber trees with palm trees and building more mills to
process the FFB. The Group has, over the years, created value to shareholders through expansion in a responsible
way.
The Group remains committed to use its available resources to develop the land bank in Indonesia as regulatory
constraints permit. The Indonesian government has, in recent years, passed laws to prioritise domestic investments
and to limit foreign direct investments over national interest, including a limit of 20,000 ha per province and a national
total of 100,000ha on the licensed development of oil palms for companies that are not listed in Indonesia or with less
than a majority local ownership.
The Group’s objectives are to provide appropriate returns to investors in the long-term from its operations as well as
through the expansion of the Group’s business, to foster economic progress in localities of the Group’s activities and
to develop the Group’s operations in accordance with the best corporate social responsibility and sustainability
standards.
We believe that sustainable success for the Group is best achieved by acting in the long-term interests of our
shareholders, our partners and society.
Our Strategy
One of the Group’s objectives is to provide an appropriate level of return to the investors and to enhance shareholder
value. Profitability, however, is very much dependent on the CPO price, which is volatile and is determined by supply
and demand. The Group believes in the long-term viability of palm oil as it can be produced more economically than
other competing oils and remains the most productive source of vegetable oil in a growing population. Soybean crops
would require up to eight times as much land to produce an equivalent weight of palm oil. It was reported that amongst
the major oilseeds, oil palm occupies about 10% of the total agricultural land but contributes more than 40% of the
world’s supply of oils and fats.
The Group’s strategies, therefore, focus on maximising yield per hectare above 22 mt/ha, minimum mill production
efficiency of 110%, minimising production costs below $300/mt and streamline estate management. For the year under
review, the Indonesian operations achieved a yield of 18.9 mt/ha, 133% mill efficiency and production cost of $280/mt.
This compared favourably to 2019 where the Group achieved a yield of 18.1 mt/ha, 132% mill efficiency and production
cost of $285/mt. Despite stiff competition for external crops from surrounding millers, the Group is committed to
purchasing more external crops from third parties at competitive, yet fair prices, to maximise the production efficiency
of the mills. With higher throughput, the mills would achieve economies of scale in production. A mill achieves 100%
mill efficiency when it operates 16 hours a day for 300 days per annum.
In line with the commitment to reduce its carbon footprint, the Group plans to construct, in stages, biogas plants at all
of its mills to trap the methane gas emitted from the treatment of palm mill effluents to generate electrical power and
at the same time reduce the consumption of fossil fuel. It plans to sell the surplus electricity and progressively reduce
the greenhouse gas emissions per metric ton of CPO produced in the next few years. It is commonly accepted that
failure to address growing calls to reduce greenhouse gas emissions could threaten the long-term social acceptability
and profitability of a palm oil company. The Group, however, has to put on hold future biogas projects as the state
authorities have suspended the uptake of electricity from two of our biogas plants and reduced the electricity rate for
the purchase from another plant due to a drastic drop in demand during the pandemic.
The Group will continue to engage and offer competitive and fair compensation to the villagers so that land can be
cleared and be planted.
Annual Report 2020 | Anglo-Eastern Plantations Plc
13
Strategic Report
Financial Review
Performance of the business during the year
For the year ended 31 December 2020, revenue for the Group was $269.1 million, 23% higher than $219.1 million
reported in 2019 due primarily to the higher CPO prices and higher production.
The Group’s operating profit for 2020, before biological asset movement, almost quadrupled to $48.1 million, from last
year of $12.2 million.
FFB production for 2020 reached 1.10 million mt, 7% higher than the 1.03 million mt produced in 2019. The overall
yield for the Indonesian plantations was higher at 18.9 mt/ha (2019: 18.1 mt/ha) due to more consistent and better
rainfall throughout the year coupled with an increased in matured areas to harvest. La Nina weather patterns brought
flash floods to many areas towards the end of the year but the permanent damage to the trees was minimal, while
damages to infrastructure such as roads and bridges were manageable. Young matured oil palms in North Sumatera
grew well and reported a 13% higher crop production. Bengkulu region, which suffered the most from the effect of
drought last year, recovered partially with production up by 6%.
FFB bought-in from local smallholders and plasma in 2020 was 913,200 mt (2019: 907,100 mt), 0.7% more compared
to 2019. The supply of external crops was affected by greater competition from new mills in North Sumatera and lower
productivity amongst smaller plantations as they reduced the fertilizer application during the period of low CPO prices.
During the year, the Group’s mills processed a combined 1.97 million mt of FFB, 5% more than last year of 1.87 million
mt. CPO production, as a result, was 3% higher at 406,100 mt, compared to 394,700 mt in 2019.
Profit before tax and after BA movement for the Group was $51.7 million, 174% higher compared to a profit of $18.9
million in 2019. The BA movement was a credit of $1.3 million, compared to a credit of $3.3 million in 2019. The BA
movement was mainly due to a change in FFB price which was higher in 2020. The profit before tax was affected by
reversal of impairment charge on land amounting to $2.0 million compared to a reversal of impairment charge on the
development cost of the plantation amounting to $7.6 million and impairment on land amounting to $1.0 million in 2019.
The profit before tax was also impacted by the expected credit loss from Plasma receivables amounting to $1.5 million
in 2020 (2019: $6.1 million) attributed to the additional amounts allocated for plasma development during the year. Net
finance income recognised in the income statement decreased from $3.2 million in 2019 to $2.6 million in 2020 due to
lower interest rate. The tax expense increased from $2.7 million in 2019 to $13.7 million in 2020 mainly due to the
increase in profit before tax. There was a loss of exchange in translation of foreign operations, recognised in other
comprehensive income, totalling $5.5 million for 2020 against an exchange gain of $18.7 million in the previous year
due to the slight weakening of Indonesian rupiah at the year end. The retirement benefits due to the employees at 31
December 2020, as calculated by a third party actuary, increased to $13.4 million from $11.3 million last year due to
an increase in the number of full-time workers.
The average CPO price ex-Rotterdam for 2020 was $723/mt, 28% higher than 2019 of $565/mt.
Earnings per share before BA movement increased by 120% to 77.67cts compared to 35.37cts in 2019. Earnings per
share after BA movement increased from 40.61cts to 80.32cts. Earnings per share have increased compared to 2019
due mainly to the increase in profit after tax.
Position of the business at the end of the year
The Group’s balance sheet remains strong. As at 31 December 2020, the Group had cash and cash equivalents, net
of borrowing of $115.2 million (2019: $76.6 million). The external bank borrowings as at the end of 2019 of $8.2 million
were fully repaid in the year and the Group has no reliance on external financing. The net cash inflow from operating
activities during the year was higher at $65.1 million by 346% compared to $14.6 million in 2019 due mainly to the
more robust CPO prices and higher production. The net cash used in financing activities during the year was lower by
30% at $8.8 million compared to $12.5 million in 2019 due to the reduced level of borrowings at the beginning of the
year to repay and the lesser amount of dividends paid. The cash position was higher in 2020 due to lower capex and
development costs.
The lower additions to development costs for property, plant and equipment (“PPE”) amounting to $21.1 million in 2020
(2019: $34.0 million) was due to reduced construction costs. The impairment reversal of $2.0 million in 2020 was
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related to land, whilst the impairment reversal in 2019 of $6.6 million was mainly related to the plantations. Amounts
due from cooperatives under the Plasma scheme before expected credit loss was $24.6 million (2019: $19.1 million),
an increase of 29% mainly due to the new planted area for Plasma during the year. Deferred tax assets reduced from
$11.3 million in 2019 to $8.8 million and deferred tax liabilities reduced from $17.0 million in 2019 to $15.5 million
mainly due to the reduction of tax rate from 25% to 22% in Indonesia. Inventories increased from $8.8 million in 2019
to $12.5 million in 2020 because of logistic problem in Bengkulu and Kalimantan which has since been resolved. Other
working capital for trade and other receivables and payables increased by $10.5 million mainly due to more advances
received from customers.
The tax recoverable for 2021 amounted to $51.7 million, 4% higher over the previous year of $49.5 million. The
substantial tax recoverable is due to value added tax (“VAT”) and corporate income tax (“CIT”) paid which is refundable
by the Indonesian tax authority after their tax audit. A detailed description is provided in note 8.
The Directors carried out assessments of our significant assets to determine whether such assets showed indicators
of impairment as a result of the pandemic or wider climate change issues.
Viability Statement
The viability assessment considers solvency and liquidity over a longer period than for the purposes of the going
concern assessment made on page 15. Inevitably, the degree of certainty reduces over this longer period.
The Group’s business activities, financial performance, corporate development and principal risks associated with the
local operating environment are covered under the various sections of this strategic report. In undertaking its review
of the Group’s performance in 2020, the Board considered the prospects of the Company, focusing on the strategy for
growth via the expansion of its planted area in tandem with forecasting demand for CPO, over one and five-year
periods. The process involved a detailed review of the 2021 detailed budget and the five-year income and cash flow
projection. The one-year budget has a greater level of certainty and is used to set detailed budgetary targets at all
levels across the Group. It is also used by the Remuneration Committee to set targets for the annual incentive. The
five-year income and cash flow projection contains less certainty of the outcome but provides a robust planning tool
against which strategic decisions can be made. The Board believed that to project beyond five years has more
elements of uncertainties and therefore less reliable for making informed decisions.
The Board also considered the five-year cash flow projection under various severe but plausible scenarios, including
the financial impact on the Group due to partial or total shutdown of its operations and the contraction of demand for
palm oil resulting from the Coronavirus pandemic, as outlined on page 15 of the Strategic Report under Going Concern,
and the need to support financially loss-making newly matured estates, together with the projected capital expenditure.
On this basis and other matters considered and reviewed by the Board during the year, the Board has a reasonable
expectation that the Group has adequate resources to continue in operation and meet its liabilities over the five years
from 2021 to 2025.
Going Concern
As the Group is still facing a period of uncertainty due to the Coronavirus pandemic, the Directors carried out stress
tests as required, to ensure that the Group has adequate resources in a worst-case scenario to remain as a going
concern for at least twelve months from the date of this report.
The Directors have a reasonable expectation, having made the appropriate enquiries, that the Group has control of
the monthly cash flows and that the Group has sufficient cash resources to cover the fixed cash flows for a period of
at least twelve months from the date of approval of these financial statements. For these reasons, the Directors
adopted a going concern basis in preparation of the financial statements. The Directors have made this assessment
after consideration of the Group’s budgeted cash flows and related assumptions including appropriate stress testing
of identified uncertainties, specifically on the potential shut down of the entire operations from three to twelve months
if all the plantations are infected with Coronavirus as well as the impact on the demand for palm oil with decreases of
50% to 100%. Stress testing of other identified uncertainties and risks such as commodity prices and currency
exchange rates were also undertaken.
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Business Review
Indonesia
The performance of the Indonesian operations is divided into five geographical regions.
North Sumatera
FFB production in North Sumatera, which aggregates the estates of Tasik, Anak Tasik, Labuhan Bilik (“HPP”),
Blankahan, Rambung, Sg Musam and Cahaya Pelita (“CPA”) produced 354,900 mt in 2020 about 13% above last year
(2019: 314,600 mt). The increase in matured areas to 16,238 ha from 15,025 ha contributed to this higher production.
A more consistent rainfall pattern and better harvest from young matured palms in Tasik also improved the annual
yield to 21.6 mt/ha from the previous year of 20.9 mt/ha.
Implementation of integrated pest management (“IPM”) in largescale replanting has sharply reduced the number of
incidents of Rhinoceros beetle or Oryctes damage in Tasik and Anak Tasik. It was also observed that the average
bunch weight for 2020 was significantly higher than the prior year which correlates with having fewer parthenocarpic
and abnormal bunches.
Higher production can be expected in coming years due to new planting and recently replanted areas of 1,808 ha
maturing next year and starting to bear fruits. In HPP, oil palms continued to recover from the desiccation of fronds as
the affected area has reduced significantly to 98 ha from about 185 ha due to improved rainfall. Water gates and canals
also provide better water management. About 232 ha in CPA was replanted in 2020 with raised platforms in flood
prone areas to improve growth and help in the evacuation of fruits.
In 2020, the two mills in North Sumatera produced 124,900 mt of CPO (2019:138,000 mt) from a throughput of
629,200 mt (2019: 680,900 mt). Tasik Raja mill broke its record by processing almost 10% higher FFB in 2020 at
455,000 mt (2019: 415,400 mt) due mainly to better internal crop production, raising the mill utilization to 158%. Oil
Extraction Rate (“OER”), however, was lower at 20.02% (2019: 20.12%) possibly due to the dura contamination from
external crops that made up 38% of the total crops processed. Dura crops with thinner mesocarp normally have an oil
content of 18% or lower. The operation at this mill was briefly interrupted when two workers tested positive for Covid-
19 which resulted in mass precautionary screening and a reduction in staffing levels. The Blankahan mill on the other
hand had a bad year processing 34% less FFB at 174,200 mt (2019: 265,600 mt) due to lower external crop purchases
reducing mill utilization from 138% to 91% this year. The emergence of new mills in the region posted intense
competition. Outside crops that made up 73% of the total crops processed by the mill in the previous year dropped to
58% in 2020. Internal crop production was also lower as the average age of trees reached 26 years with replanting to
be carried out soon. Replanting in Blankahan is delayed as the yield had been consistently high in the past years
averaging 26 mt/ha due to good soil condition.
The two biogas plants in North Sumatera did not perform up to expectation in 2020. Blankahan biogas plant had a
disappointing year. It sold about 2,500 MWh (2019: 2,200 MWh) of surplus electricity and generated $151,800 (2019:
$140,800) in revenue before state authorities suspended the uptake of electricity from the middle of the second quarter
of the year. Tasik biogas plant, which was commissioned in the fourth quarter of 2020, was unable to sell the surplus
electricity as the national grid suspended the uptake following the shutdown of many economic activities during the
Coronavirus pandemic.
The sales from the biomass plant were also lower in 2020 at $427,100 compared to $733,100 last year, as the plant
exported 26% less dried long fibres at 4,930 mt compared to 6,690 mt last year. The drop in demand due to the
pandemic had also dampened selling prices which had fallen by as much as 55%. Buyers also complained about
higher shipment cost as containers were stuck at port due to shortage of manpower to clear them.
Bengkulu
FFB production in Bengkulu, which aggregates the estates of Puding Mas (“MPM”) and Alno produced 304,000 mt
(2019: 287,300 mt), 6% more than 2019. Production from Bengkulu region has improved by 6% as rainfall normalised
to 4,000mm in 2020 (2019: 2,860mm) with higher yield at 18.2 mt/ha from 16.9 mt/ha last year.
MPM and Sumindo mills processed a combined 672,200 mt (2019: 587,000 mt) of FFB in 2020 due to higher internal
crop production as well as higher external crop purchases. External crop purchases increased by 22% to 344,700 mt
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from 283,200 mt last year as production in the region recovered from moisture stress the previous year increasing mill
utilization to 133% from 116% last year. CPO production for the year was 10% higher at 138,200 mt (2019: 125,300
mt) with OER for the two mills averaging 20.6%, lower from 21.4% last year. External crops made up 51% of the
throughput compared to 48% in 2019.
About 1,000 ha of palms will be replanted from next year as the palms in Alno and MPM reached the average age of
18 and 21 years respectively. The replanting is also fast tracked as the dura palms constituted a significant portion of
the planted areas. Fruits from dura palms have thin mesocarp which ultimately produce less oil.
The MPM biogas plant sold over 9,600 MWh (2019: 9,300 MWh) of surplus electricity, 3% higher and generated
$444,300 in revenue (2019: $442,400). The biogas plant performed below its optimum two megawatt capacity due to
frequent breakdowns in the old transmission lines and also lower demand. The authorities renewed the contract to
purchase electricity from the biogas plant for another two years to 2023 with the same rate. It was due to expire in the
first quarter of next year.
South Sumatera
FFB production in South Sumatera, which aggregates the estates of Karya Kencana (“KKST”), Empat Lawang
(“ELAP”) and Riau Agrindo (“RAA”) produced 34,200 mt (2019: 39,400 mt), 13% lower than 2019. In South Sumatera,
the drought unfortunately continued from last year. Annual rainfall in South ELAP was 1,530 mm (2019: 1,330 mm)
which also experienced eight months where rainfall fell below the minimum of 150 mm per month for healthy crop
production. The yield in South Sumatera reflected the dry conditions which diminished further to 6.3 mt/ha from 7.4
mt/ha the previous year.
During the year about 16,600 new palms were spot planted in South Sumatera boosting the stems per hectare to 101
trees from the target of 105 trees. It incurred higher planting cost as frequent resupply of young palms was needed
due to damages by cattle owned by local villagers that roam the plantation freely for grazing. Trenching and fencing
the plantation were explored but were deemed as not economical. Discussions with the local villagers were not
productive and, as any strained relationship can be detrimental in the long run, the management decided instead to
fence individual young plants to protect them. With higher CPO prices, more FFB thefts were reported in 2020 as the
region faced high unemployment during the pandemic. The management has stepped up increased security patrols.
Riau
FFB production in the Riau region, comprising Bina Pitri estates, produced 133,200 mt in 2020 (2019: 129,400 mt),
3% higher than 2019. Rainfall was higher at 2,850 mm (2019: 2,649 mm). The yield for the year was slightly higher at
27.3 mt/ha from last year of 26.6 mt/ha. Over 2,800 ha would be replanted from 2023 to 2026 as 78% of the palms are
between the ages of 23 to 26 years. Flash floods interrupted harvesting towards the end of the year as heavy rain
burst the river banks.
Despite the 8% higher external crop purchase at the mill at 225,300 mt compared to 208,600 mt last year, the mill
utilization rate dropped to 125% from 156% last year. The mill upgrade was finally completed in 2020 with the milling
capacity improved to 60 mt/hr from 45 mt/hr previously. Overall CPO production was higher by 3% to 69,100 mt
compared to 66,800 mt in 2019. Despite the high yield, the region is contaminated by dura palms which made up 63%
of the crops processed by the mill. The mill therefore had a low OER of 19.3% compared to 19.8% in the previous
year.
Bangka
FFB production in the Bangka region, comprising Bangka Malindo Lestari estates, produced 8,700 mt in 2020 (2019:
6,000 mt), 45% higher than 2019. Higher crop was due to a larger harvestable area and more palms having reached
peak maturity. Yield improved from 11.2 mt/ha to 13.5 mt/ha in 2020. With new planting in 2020 totalling 706 ha (2019:
651 ha), the total planting including plasma in Bangka has reached 2,856 ha (2019: 1,994 ha).
Kalimantan
FFB production in Kalimantan which comprises of the Sawit Graha Manunggal (“SGM”) and Kahayan Agro Plantation
(“KAP”) estates was 249,500 mt in 2020 (2019: 231,400 mt) 8% higher than 2019 as more palms matured and reached
the peak production age. The average age of palms in SGM and KAP were nine and four years respectively. During
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the year 583 ha of palms matured in SGM and KAP leading to its first harvest. The yield in Kalimantan recovered to
18.6 mt/ha from a low of 18.0 mt/ha last year as rainfall was consistent throughout the year at 3,448 mm per annum
an improvement from last year of 2,864 mm. Lower yield was experienced last year due to prolonged drought and
haze in the region which shifted crop pattern especially on sandy soil dominated areas. SGM experienced several
occasions of flash flood with no lasting damages as it cleared within days.
New planting in SGM and KAP is expected to reach 1,000 ha next year. The long-term prospect for Kalimantan remains
bright.
SGM continued with its mechanization of infield collection of harvested crops by the purchase of light all-terrain vehicles
called Quick which are cheaper and easier to maintain. Additional units will be added to the current fleet to help with
the crops evacuation.
The purchase of external and plasma crops in SGM reached 68,900 mt in 2020 which was higher by 41% compared
to 49,000 mt last year. The total external and plasma crop at the SGM mill made up 22% of the total crops processed
from 18% last year. With the throughput at the mill reaching 312,000 mt (2019: 268,700 mt), the mill utilization rate
increased to 144% from 124% last year producing 73,900 mt of CPO, 14% more than 2019 of 64,600 mt. OER for the
mill averaged 23.7% for the year compared to 24.1% last year and continue to outperform the rest of the mills in the
Group. The lower OER for the year was likely due to parthenocarpic bunches and forced ripening of the fruits after
long periods of hot weather followed by rain showers. Under such condition the mesocarp of the fruits turned yellow
with lower oil content.
The SGM biogas plant generated 19% more electricity in 2020 at over 6,800 MWh (2019: 5,700 MWh) worth $373,700
(2019: $325,100). The contract to purchase electricity, which will expire in the first quarter of next year, was extended
by the authorities to 2022 with the electricity rate reduced by 12% due to a drop in power demand in the region.
During the year, with international borders mostly closed to non-essential travelling, the Malaysian based agronomist
could not make monthly field visits to underperforming estates in Indonesia to provide advice on optimizing field
disciplines and improving crop yields. The Board believes that the closer monitoring of field performance once
international travel restriction relax will result in improvements in the crop yield.
Overall bought-in crops for Indonesian operations including plasma were 0.7% higher at 913,200 mt for the year 2020
(2019: 907,100 mt). The average OER for our mills was marginally lower in 2020 at 20.6% in 2020 (2019: 21.1%).
Replanting in progress FFB evacuation using MF tractor
Malaysia
FFB production in 2020 was 11% higher at 18,600 mt, compared to 16,700 mt in 2019. Several other plantations in
East Malaysia had to stop operations temporarily as their workers tested positive for Covid-19 however we are pleased
to say that our operation was not affected. The Malaysian government imposed a freeze on the intake of foreign
workers from March 2020 to prevent the spread of the virus and to encourage displaced locals to fill vacancies in the
plantation. The situation was exacerbated as foreign workers who returned home after their work contracts expired
could not be replaced. Substantial shortage of workers hampered not only field maintenance and application of
fertilisers but harvest resulting in crop losses. Towards the end of the year end, the La Nina weather pattern brought
heavy rain resulting in massive flooding and landslides damaging roads and bridges which needed costly repairs. The
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palms, with an average age of 23 years, faced declining yield as the fertiliser program was not followed. The Malaysian
plantation in 2020 generated a profit before tax after BA movement of $0.1 million compared to loss before tax after
BA movement of $0.9 million in 2019. The plantation obtained its Malaysian Sustainable Palm Oil (“MSPO”) certification
in January 2021.
The financial performance of the various regions are reported in note 6 on segmental information.
Commodity Prices
The CPO ex-Rotterdam price started the year at $878/mt (2019: $517/mt) and trended downward for the first five
months of the year as international borders were closed and Coronavirus induced lockdown of major economic
activities spread across the world dampening demand. The price was lowest in May 2020 at $496/mt before a sharp
turnaround as major economies reopened after the first wave of the pandemic. The price peaked in December 2020
at $1,029/mt before ending the year at $1,014/mt (2019: $856/mt), averaging $723/mt for the year, 28% higher than
last year (2019: $565/mt). The strong rebound in prices was due to a combination of reasons. The Indonesian B30
biodiesel programme continues to be the main driver of CPO prices. The increase in domestic absorption of CPO
through biodiesel mandate reduces global supply and eventually boosts prices. The pent up demand for palm products
after the initial lockdown amidst an environment of lower crop production and lower CPO inventory also pushed prices
higher. At the end of November 2020, the Indian government reduced temporarily the import duty on CPO by 10%
which made palm oil more competitive against alternative soft oils. This was short lived as the government in February
2021 revamped its tax structure for import of major vegetable oils with additional tax of 5.5% imposed on palm oil which
made it less competitive going forward. Stronger soy bean prices due to uncertain weather conditions in soybean
producing countries also helped to lift CPO prices higher. The strong CPO prices are expected to last at least until the
end of first quarter 2021 as potential pullback is expected from rising vegetable oil production. The high prices,
however, could lower demand and encourages a shift to alternative vegetable oils. The Chairman’s Statement earlier
mentioned major changes made by the Indonesian government in CPO export tax levy and tax in December 2020.
Palm oil’s discount to its main rival, soybean oil, has contracted to the smallest margin in a decade for the major part
of the year reducing its traditional appeal as a cheaper vegetable oil especially in price sensitive markets. The discount,
however, widened in the first quarter of 2021 as soybean prices soar again. It has been reported that palm oil will face
more headwinds in the coming year as China imports more soybean to power an aggressive expansion of the country’s
hog industry recently devastated by the African swine fever. The crushing of soybeans produces soybean oil and
meals, the latter being used to feed the hogs.
Over a period of ten years, CPO price has touched a monthly average high of $1,284/mt in 2011 and a monthly average
low of $472/mt in 2018. The monthly average price over the ten years is about $771/mt.
CPO CIF Rotterdam
$/mt
1,400
1,200
1,000
800
600
400
200
0
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
source: IEG Vu
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Rubber prices averaged $1,356/mt for 2020 (2019: $1,272/mt). Our small area of 262 ha of mature rubber contributed
a revenue of $0.6 million in 2020 (2019: $0.7 million). Rubber continues to struggle with low prices. Our rubber trees
are also affected by fungus disease called Pestalotiopasis sp fungus which causes abnormal defoliation that severely
lowers latex production. Production in the year was also affected by the uneven wintering which caused the under
application of ethereal to simulate latex production.
Corporate Development
In 2020, the Group opened up new land and planted 2,190 ha (2019: 1,757 ha) of oil palm mainly in Kalimantan and
Bangka, boosting planted area including the smallholder cooperative scheme, known as Plasma, by 3% to 73,600 ha
(2019: 71,481 ha). Another 785 ha was replanted in North Sumatera and Bengkulu. In 2021, the Group plans to plant
3,800 ha of oil palm which includes replanting of 950 ha in Bengkulu. Opening of new land for planting can be
cumbersome and requires written approval from local authorities, submission of environment impact assessments and
meetings with local communities.
As mentioned in the Business Review, the fourth biogas plant in Rantau Prapat costing $3.8 million was commissioned
in the fourth quarter of 2020. Unfortunately, it was unable to sell the surplus electricity as the national grid has
suspended the uptake following the shutdown of many economic activities during the Coronavirus pandemic. An
appeal, however, has been made to the ministry in charge of renewable energy. The management is exploring all
opportunities to maximise the use of the biogas plant including bottling the BioCNG for Indonesian domestic
consumption.
The civil and structural works for the seventh mill in North Sumatera costing $6.7 million has been awarded and
mobilization work started towards the end of the year. The contractor has started to build a temporary jetty and housing
at the site. Mechanical works estimated to cost another $6 million are expected to be tendered by early next year. The
project is earmarked for completion by 2022.
The upgrade of the Bina Pitri mill was finally completed in 2020 improving its milling capacity from 45 mt/hr to 60 mt/hr
at a cost of $2.3 million.
Our feasibility study concluded that it is more profitable to build a mill in KAP to support its operation due to high
logistics costs. KAP is currently transporting the FFB some 600km to SGM mill or, when this becomes too arduous
such as during the monsoon season, the fruits are sold locally to third parties. The Group plans to build a 45 mt/hr mill
with two storage tanks of 5,000 mt each with minimum spare machineries costing an estimated $12 million.
Corporate Social Responsibility
Corporate Social Responsibility (“CSR”) is an integral part of corporate self-regulation incorporated into our business
model. Our Group embraces responsibility for the impact of its activities on the environment, consumers, employees,
communities, stakeholders and all other members of the public sphere. In engaging the social dimension of CSR, the
Group’s business has taken cognizance of the contribution and further enrichment of its employees while continuing
to make contributions to improve the well-being of the surrounding community.
The Group sustainability policy and commitment to no deforestation and development on peat land, no open burning,
no exploitation, no forced or child labour and other best management practices can be downloaded from the website
under Corporate Governance. The Group also released a statement on the UK Modern Slavery Act 2015 for the
financial year 2020 which is also published on the website under the same section.
The majority of employees and their dependents in the plantations and mills are housed in self-contained communities
built by the Group. The employees and their dependents are provided with free housing, clean water and electricity.
The Group also builds, provides and repairs places of worship for workers of different religious faiths as well as schools
and sports facilities in these communities. Over the years, the Group has built a total of seventy-seven mosques and
nineteen churches across its estates. During the fasting month, the management team frequently broke fast with the
employees from the estates and mills as well as with surrounding villagers. It also sponsored and donated cows for
sacrifice to celebrate religious festivals. The Group spent $248,100 (2019: $254,600) in 2020 to maintain these
amenities and to support the communal activities.
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The Group provides free education for all employees’ children in the local plantations and communities where they
work. The access to education and the spread of knowledge to hundreds of children across remote locations provide
a chance to overcome poverty, whom otherwise may be deprived and without prospect for the future. 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 buying and running the school buses to transport employees’ children
are provided by the Group. Over the years a total of thirty-nine schools which comprised of twenty-two pre-schools,
eleven primary schools, five secondary schools and one high school were built with a combined enrolment of over
4,380 students. It currently employs one hundred and sixty-two teachers in the estates. The Group operated forty
vehicles and spent some $691,000 (2019: $906,000) on running the schools and operating the buses in 2020.
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. One hundred and nineteen children of our employees
were sponsored in 2020 at a cost of $139,600 (2019: $119,300) since its introduction in 1999, to study in various
universities in Indonesia. The popular courses ranged from Engineering, Education, Economics to Agriculture. Sixty-
two of them had successfully graduated from the universities with some of them now working for the Group.
Vaccination of children Covid-19 safety regulations
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 twenty-three clinics operated
by qualified doctors, nurses and hospital assistants in the estates. The Group upgraded two of its clinics in North
Sumatera and Bengkulu to meet the minimum standard required by the government under the country’s Health and
Social Security Agency. The upgraded clinics also provided health care services to the surrounding community without
the need to travel to faraway cities for medical treatment. The Group also operates 16 ambulances to support
emergency transportation needs within the estates, mills and surrounding villages. In addition, the Group organised
fogging to prevent the spread of dengue mosquitoes.
The world has been ravaged by the uncertainty brought about by the Covid-19 pandemic since the end of 2019. To
prevent the spread of its infection within our operations, the Group has put into place stringent precautionary measures
to protect all our personnel. Mass testing was, and continues to be, conducted at the Indonesian operations to check
for infection. A Standard Operating Procedure was also established to dictate the day-to-day operations at the office
which include temperature checks, social distancing measures and alternate working day arrangements. A specialist
consultant was engaged to review safety measures in the office and plantations and put in place additional protocols
to educate workers to combat the spread of the virus. Movements within the Group’s estates have been tightly
restricted and, unless in cases of emergency, access has been denied for external visitors. All our estates have
appropriate plans to isolate and quarantine individuals, even whole divisions or estates, including stopping all field
work if situations require it. Remote working arrangements are in place for all offices, and travel by the Group’s staff
has been reduced to essential travel only. Due to the large workforce employed in the plantations, routine retesting
with rapid virus test-kits is conducted by qualified nurses for all the office and plantation workers to ensure early
detection leading to isolation.
In remote and isolated locations where piped water is not available, the Group drilled tube wells to provide clean water.
Related healthcare expenses for full and part-time field workers including monthly contributions to Health and Social
Security Agency in 2020 were $1.5 million (2019: $884,000).
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A strong commitment to CSR has a positive impact on employees’ attitudes and boosts employee recruitment. The
Group realises that employees are valuable assets in order to run an efficient, effective, profitable and sustainable
business and operations. Selected employees are given the opportunity to attend seminars and external training to
enhance their working skills and capability. The Group constantly recruits potential field employees who are sent to
the Group’s central training facilities in Blankahan, set up in 2014, to undergo a rigorous twelve-month training
programme which includes theory and practical fieldwork. A total of four hundred and ninety-six employees have
participated in the programme since its inception in 1993 with 35% of participants still working for the Group. Over the
years, one employee has successfully been promoted to General Manager level with another twenty-four being
employed in various senior positions in the head office, plantations and mills.
The Group also recognises its obligations to the wider farming communities in which it operates. The Indonesian
authorities have established that not less than 20% of the newly planted areas acquired from 2007 onwards are to be
reserved for the benefit of the smallholder cooperative scheme, known as Plasma, and the Group is integrating such
smallholder developments alongside its estates. The Plasma development has commenced in stages for its estates in
Sumatera and Kalimantan. Out of the 8,166 ha plasma commitment, the Group has planted oil palm in 4,004 ha. In
2020 the Group received 34,900 mt of FFB from Plasma schemes compared to 31,000 mt the previous year. Total
revenue generated by Plasma cooperatives was $3.8 million in 2020 against $3.1 million in 2019.
In order to aid the development of Plasma schemes, the Group provided corporate guarantees of over $17 million
through its subsidiaries to local banks to cover loans raised by the cooperatives. The Group also assisted the
cooperatives to obtain the proper land rights certification from the local land office, in which 1,431 ha were approved
and certified in 2020.
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 twenty-three smallholder village schemes of oil
palm across four companies.
In addition, the Group also develops infrastructure such as the construction and repair of bridges and maintained over
202 km of external roads in 2020 at a cost of $5.0 million (2019: $5.2 million). The Group also provides initial aid and
seed capital to villagers such as fruit seedlings, fish fry, cattle and ducks to start community sustainable programs.
The Group started a vegetable farm in a one-hectare site in North Sumatera in 2018 where it planted various organic
vegetables. The produce was sold to employees at subsidized prices to reduce their cost of living as well as to promote
heathy living. It also donated some vegetables to local charitable homes.
The Group leased eight hectares of land just outside Kuala Lumpur, Malaysia and started to clear the land in 2020 to
build greenhouses for organic farming. It aims to produce organic vegetables and fruits in an environmentally
sustainable manner and make them available to consumers at affordable prices as part of its corporate social
responsibility. Some of the production will also be earmarked for donation to orphanages and retirement homes.
Donation of organic vegetable to Medan Orphanage Plasma planting
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Bridge repair Staff housing
Indonesian Sustainable Palm Oil (“ISPO”)
The ISPO certification is legally mandatory for all plantations in Indonesia. In March 2012, ISPO, which is fundamentally
aligned to Roundtable on Sustainable Palm Oil (“RSPO”) principles, has become the mandatory standard for
Indonesian planters. In comparison, RSPO has the most comprehensive social impact assessment requirements and
the strongest measures for biodiversity protection. While ISPO may be less stringent, protection for biodiversity was
enhanced through the Presidential Decree 8/2018 that imposed a three-year moratorium on the clearance of primary
forest for plantations.
A Steering Committee was established to work out a roadmap to support the ISPO implementation at mills and estates.
Workshops and training sessions on occupational safety and healthcare were carried out to inculcate a safety culture
in workplaces at all the estates and mills. The Group compiles and reviews statistics on work related accidents in its
operations. Any incident resulting in fatality or serious injury will be rigorously investigated to identify the cause so that
corrective action can be implemented to prevent future incident. In 2020 the Ministry of Labour awarded seven of our
operating companies the Zero Accident Awards in North Sumatera in recognition of the companies’ effort to reduce
accidents at workplaces. 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.
Every estate under ISPO is required to have a fire team with each personnel fully trained and equipped with certificate
of competence issued by the fire departments. Our Group conducts a fire drill at least once a year. Watch towers are
constructed in every estate to monitor fire outbreaks. The watch towers are manned constantly particularly during the
dry weather. Standard operating procedures were refined and documented based on sustainable oil palm best
practices. It also conducts internal audits using an audit checklist adopted from the above practices to determine the
level of compliance.
The Group worked closely with appointed certification consultants in the implementation of ISPO standard. BML was
awarded the ISPO certification in 2020. To-date twelve companies have been ISPO certified. The certification audits
for the remaining four companies have started. The second stage of certification process however cannot proceed
until the companies obtain their land titles or Hak Guna Usaha (“HGU”). 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 2022. The Group intends to embark on full RSPO compliance once all the
companies in the Group are ISPO compliant.
At the same time the Malaysian plantation has obtained its MSPO certification in January 2021.
Environmental, Social and Governance (“ESG”) Practices
AEP believes that the responsible stewardship of our environment is critical in benefiting our consumers, employees,
shareholders and society in general, thus maintaining the industry’s long-term prospects. The Group has a dedicated
sustainability manager based in Medan, Indonesia within an Environmental Health and Safety (“EHS”) and
sustainability department overseen by our Indonesian President Director. On the ground, the sustainability team is
assisted by a team of staff in each of our estates. A group sustainability policy was published in 2019 to underline our
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commitment to sustainable practices within our estates. This policy covers responsible development, environmental
protection, conservation of biodiversity, workers’ rights and safety, emissions and business ethics, among others. The
group also participates in the Sustainable Palm Oil Transparency Toolkit (“SPOTT”) assessment by the Zoological
Society of London (“ZSL”) that uses publicly available information to annually assess palm oil producers on the
transparency of their commitments to environmental, social and governmental best practice.
The palm oil industry has continuously received close scrutiny in the media due to concerns on global warming and
rainforest destruction. Realising this, the Group has adopted a zero deforestation, zero peat planting and zero burning
policy throughout our group. When it comes to replanting, felled palm trunks are chipped, shredded and left to
decompose on the site. This mitigates the release of greenhouse gases commonly associated with open burning
through the traditional land-clearing method of slash-and-burn. Besides, smoke from open burning also poses a health
hazard. Chipping and shredding palm trunks also enriches soil organic matter and recycles nutrients back onto the
soil. Where land is sloping, terraces are built which helps to prevent landslides and soil erosion, conserve the water
and nutrients and provide better accessibility for operations. Conservation pits and sumps are also constructed to
harvest and contain rainwater. Legume cover crops are planted to minimise soil erosion, preserve the soil moisture
and improve soil chemical and physical properties, thus reducing the use of chemical fertilisers. In mature areas, fronds
and EFB are neatly stacked on the inter-rows to allow for the slow release of organic nutrients while minimising soil
erosion. Estates with sandy areas use soft grass, Nephrolepis biserrata ferns and cut fronds to cover bare ground to
increase soil moisture and improve organic matter contents.
The effluents discharged from our mills are fully treated in anaerobic lagoons and aerobic tanks to reduce its biological
oxygen demand (“BOD”). The final discharge is applied to the estate’s land as fertilisers and the BOD is tested regularly
to ensure that it is below the legal limit for land application in Indonesia. The Group is working towards a zero-effluent
policy whereby no by-products from the production of CPO is discharged into rivers.
The Group’s four biogas plants further enhance the treatment of effluents in the mills and at the same time mitigate
greenhouse emissions. The trapped biogas is used to generate and supply power to its biomass plant, as well as to
the national grid to reduce dependency on fossil fuels. Similar undertakings for the Group’s mills are planned and shall
be implemented in stages. The Group intends to equip all our mills with biogas facilities and sell the surplus power
generated from them.
The Group is committed to implementing good agricultural practices as spelt out in its standard operating procedures
for all activities. An Integrated Pest Management system has been adopted to control the population of damaging pests
and to improve biological balance while reducing dependency on chemical pesticides. Barn owls, which are natural
predators, have been introduced to control the rat population, replacing the use of rat baits. Beneficial plants such as
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 a broader spectrum of environmentally friendly weed control herbicides.
Some of the flora and fauna in our estates
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We are committed to minimize the usage of toxic pesticides and herbicides and will not hesitate to phase them out
once suitable substitutes are available. Our sprayers are regularly trained in the safety and proper spraying techniques
by using judicious dosages. The chemicals are kept in designated storage and examined at regular intervals.
Employees who handle the use of chemicals are provided with convenient on-site washing facilities, and undergo
medical examination routinely. The Group enforces standard occupational safety measures like the use of protective
suits and equipment when mixing, loading and applying pesticides which is mandatory by the Manpower and
Transmigration Ministerial Decree No. 08/2010. Managers and employees risk being penalized and disciplined as
safety standards compliance is audited from time to time. ISPO certified companies are also prohibited from using 36
banned active ingredients used in pesticides which can cause various health issues in humans and the environment.
Highly toxic pesticides such as Paraquat have been completely eliminated in our practice. Pesticides that fall under
the WHO Class 1A and 1B classification, as well as those that fall under the Stockholm and Rotterdam Conventions
are used only under exceptional circumstances and under strict supervision. In the meantime, different cocktails of
safer pesticides are being evaluated as alternatives. The Group has in place a standard operating procedure that
requires the management to be informed of instances of pesticide poisoning among its pesticide applicators.
In order to minimize accidents at workplaces, regular training and refresher courses are held to instill the importance
of safe working practices. Warnings and reminders are displayed at the mills and estates to remind the workers on
their safety. Warning signs are placed at strategic locations such as speed limits in housing estates and warning
against crossing Irish bridges when river water is at a dangerous level.
Monitoring hot spots from fire tower Fire training
The Group continues to comply and preserve High Conservative Value (“HCV”) areas recognised by the Department
of Forestry. Every development has gone through the proper environmental impact analysis as mandated by the
Indonesian government. All HCV areas were mapped with boundaries clearly marked by independent surveyors to
ensure that the Group does not plant in these sensitive areas. The Group patrols these protected areas to ensure no
encroachment and maintain regular monitoring and management plans to preserve the flora and fauna of these
sensitive areas. The Group has identified about 7,831 ha as riparian reserves and another 5,105 ha as areas of HCV
within its land. Natural vegetation on uncultivable lands such as deep peat, very steep areas and riparian zones along
watercourses and mangroves are spared from planting in order to preserve biodiversity and wildlife corridors as well
as to check erosion. Peatland is considered to be one of the most efficient carbon sinks and any burning or drying will
release the sequestered carbon dioxide into the air contributing to global warming. Degradation of the mangroves on
the other hand causes coastal erosion and harm biodiversity and economic losses for communities that depend on
them for a living. Progress has been made in recent years to step up environmental protection in Indonesia, though
implementation and monitoring is still weak.
In Indonesia where drought occurs regularly, an emergency response team is set up in every estate armed with the
proper equipment and gear to put out fire and prevent them from spreading during the dry months. Regular training on
fire-fighting techniques and safety is provided by the fire departments. Our estates have also invested in modern
technology by utilising drones to pinpoint areas of fire outbreak whenever they are detected by the watchtowers. These
drones are particularly useful in remote areas where accessibility is restricted. According to Indonesian Law No.
41/1999 on forestry, a deliberate act of forest burning could lead to 15 years imprisonment and a fine of up to Rp5
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Strategic Report
billion or about $350,000, while negligence act that leads to a forest fire is punishable by a 5 year imprisonment and a
fine of up to Rp1.5 billion or $105,000 for environmental crime. The government is stepping up its enforcement.
All sacred and customary lands are set aside and also preserved by the Group out of respect for the local tribes and
customs to pray and conduct their ritual ceremonies. Some of these locations are posted on the company’s websites.
The six mills in the Group are operating in compliance with criteria set by the Program for Pollution Control Evaluation
and Rating (“PROPER”) overseen by the Indonesian Department of Environment. Many of the criteria set by PROPER
are also part of the ISPO requirement. Five of the mills are officially graded Blue 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 and dangerous and toxic waste treatment which impact the environment. Although no official
grading is required for the remaining one mill, it is in full compliance of the PROPER criteria.
Implement social and ecological sustainability criteria
The International Sustainability and Carbon Certification (“ISCC”) is issued by ISCC System GmbH, a global
certification body based in Cologne, Germany. The criteria used in the certification process are:
•
• Monitor deforestation-free supply chains
• Avoid conversion of biodiverse grassland
• Calculate and reduce greenhouse gas (“GHG”) emissions
• Establish traceability in global supply chains
A mill in Rantau Prapat together with its three estates were audited for ISCC certification in 2020. They are expected
to obtain the certification by early next year.
A certification identifies a company as a responsible player in the industry that has taken efforts to produce sustainable
CPO.
We have continued to increase the traceability of our external FFB processed in our Group’s mills, and have finally
achieved 100% traceability to farm. The Group maintains a complete database of each and every one of our
smallholders within our supply chain and know their precise locations, with each arrival to the Group’s mills recorded
and its origin verified. By keeping a close relationship with our suppliers, we are able to not only support them with
technical and management expertise, but also to inculcate our sustainability policies in their practices.
More details may be obtained from the Company’s website under our Sustainability dashboard which covers the
Environment, CSR, Workers’ rights and safety, Corporate Governance and Sustainability certification.
Management for Climate Risk
The Group has expanded its climate-related disclosures and is taking initial steps towards aligning with the
recommendations of the Task Force on Climate-related Financial Disclosure (“TCFD”), for which disclosure will be
required on a comply or explain basis in our Annual Report for the year ending 31 December 2021.
Identifying and assessing risk
Executive staff and Directors are responsible for implementation of control procedures and for identifying and
managing business risks. The Executive Committee meets monthly to discuss the operation of the business and is
chaired by the senior general manager from Malaysia. The EHS and Sustainability Department reports to the Executive
Committee on material local risks, identified by representatives of the Department based at each of our estates.
In addition, in 2021 we consulted with our external sustainability Partners, Avieco, to identify and prioritise Group-level
climate-related risks and opportunities. During this process, senior managers and Directors from across the business
were surveyed to understand the relative materiality of a range of physical and transition risks. Materiality was defined
by calculating a risk score based on the relative frequency or likelihood of a risk materialising in a 12-month period,
and the potential magnitude of impact based on change in operating profit. The climate-related risks and opportunities
assessed as being material to the Group are detailed in the table below. A workshop with senior managers and
Directors was facilitated by Avieco to determine how the business expects these risks to change over time, and relevant
risk mitigation/adaptation measures.
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Strategic Report
Influence of climate-related risks and opportunities on strategy
• Products
The adverse perception of palm oil as an environmentally unfriendly and non-renewable source, particularly in
EU, continues to feature in recent years, touching on issues including deforestation, emission of greenhouse
gases, planting on peatland and land rights. AEP is committed to ensuring that our products are produced in a
sustainable way. This is realised by not clearing forests (zero deforestation), not planting on peat (zero peat) going
forward, respecting and protecting human rights, and committing towards the traceability of our products.
• Supply chain
Severe adverse weather conditions, such as tropical storms, can result in extended business interruption through
disruption to our supply chain and to local transportation services. For example, FFB produced in KAP are sold to
local millers (rather than primary customers more than 600km away) during the wet season. This is because
transport time more than doubles as lorries are frequently stuck in mud as untarred public roads are easily
damaged by incessant rain and floods. The Group is therefore conducting a feasibility study to build a 45 MT
FFB/hr mill in KAP to reduce high logistic costs.
• Operations
To progressively reduce the greenhouse gas emissions per metric ton of CPO produced in the next few years, the
Group plans to construct biogas plants at our remaining palm oil mills, on top of our four existing biogas plants.
Our plants will be used to trap the biogas from the anaerobic treatment of the palm oil mill effluent and generate
electrical power.
In addition, the Group consistently practices good agricultural practices such as zero burning, integrated pest
management, soil and water conservation and recycling of biomass. When it comes to replanting, the old palms felled
are chipped and shredded 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 and recycles nutrients back onto the soil.
Material Climate-Related Risks and Opportunities For AEP
Type
Primary risk/
opportunity
driver
Key = Opportunity / Risk
Policy
Legal
&
Compliance
with changing
regulations
Rationale for inclusion as priority risk Management approach
Import tariffs and taxes and other import
restrictions imposed by importing countries
will affect the demand for CPO and its
derivative products, and can encourage
substitution by other vegetable oils. The
ISPO
requires
certification, which
producers to mitigate their environmental
impacts,
for all
plantations in Indonesia and therefore non-
compliance presents a
risk
through fines. In addition, we expect
additional
disclosure,
climate-related
aligned with the recommendations of the
TCFD, to be made mandatory for the
Group in the UK by the end of 2022.
legally mandatory
financial
is
received
in Alno has
All of our Indonesian plantations are
currently certified under ISPO, except
those for which we are awaiting land
titles. Our Malaysian plantation has
the Malaysian
also
Sustainable Palm Oil certification. Our
mill
received The
International Sustainability and Carbon
Certification, and we are in the process
of gaining ISO 14001 certification to
improve our PROPER rating. Through
this report we have also begun the
process of aligning with the TCFD
recommendations.
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Strategic Report
Type
Market &
Reputation
Primary risk/
opportunity
driver
in
Changes
buyer
preferences /
Difficulty
accessing
capital
Development
new
of
products
Rationale for inclusion as priority risk Management approach
lead
Negative perceptions about palm oil and
its links to deforestation can affect market
access/demand and possibly
to
changes in international legislation or
regulations. Many
large buyers have
targets to source a certain % of palm oil
from RSPO certified producers. The loss
of a major customer through a lack of
RSPO
impact
certification may
profitability.
Access to capital, through banks and
investors, is also increasingly tied to the
ability to evidence the sustainability of
palm oil products, with several large banks
and investors RSPO members.
As tenders are performed on a weekly
basis we do not find ourselves overly
reliant on a single customer. We ensure
transparency in our palm oil production
practices through annual disclosure to
Sustainability Policy Transparency
Toolkit (“SPOTT”) and certification as
detailed above.
We communicate regularly with buyers
and capital providers, to understand
their changing expectations, and are
investigating the value of RSPO to the
business. Our financial position also
currently negates the need for financing
through bank loans.
and
including
products,
reputational
Palm oil can be used to produce a range
low-carbon
of
alternative
fuels and materials. The
development of new products can provide
both
financial
opportunities, despite in many instances
being expensive to produce. For example,
increasing demand
in
markets such as China offers additional
sources of revenue. However, policies in
the EU to reduce and phase out the use of
palm oil in biodiesel by 2030 means that
this opportunity may be limited.
for biodiesel
“empty
One of our mills possesses a biomass
fruit
plant which converts
bunches” into dried long fibres to be
exported to China for use in mattresses
and products such as furniture. We are
also exploring commercial avenues for
bottled methane gas
(“Bio-CNG”),
which we can also use as a source of
renewable fuel in boilers, or as a
replacement for diesel fuel for our FFB
carrying trucks within the estates. This
can provide a reputational benefit,
increased operational resilience, and
new revenue streams.
Technology Use of lower
emission
sources
energy
of
Palm oil mill effluent (“POME”) is used as
a feedstock in anaerobic digesters to
produce biogas which contains about 60%
methane. The biogas is purified and used
as a fuel in biogas engines to generate
reduces our
electrical power which
reliance on diesel.
Four of our mills are equipped with
biogas plants to capture biogas and
generate electricity for sale to the state
authorities. This also reduces the need
to purchase diesel for our estates, as
they are instead supplied power by the
grid, therefore reducing our emissions.
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Strategic Report
Type
Physical
Primary risk/
opportunity
driver
Heavy rainfall
& flooding
Rationale for inclusion as priority risk Management approach
Excessive rainfall generally leads to poor
pollination of palms and reduces the
effectiveness of fertilisers. High levels of
rainfall can also disrupt estate operations
and result in harvesting delays with loss of
FFB or deterioration in fruit quality. Where
leading
in revenues,
insurance cover may not be available or
may be disproportionately expensive.
Periods of more intense precipitation can
also benefit AEP, by enabling
the
conservation of more water to mediate dry
periods.
to a reduction
Where appropriate, bunding is built
around
flood prone areas and
canals/drainage/retention ponds and
water gates are constructed and
adapted to evacuate surplus water.
Riparian reserves are also protected to
mitigate flood risks. Where the land is
for
terraces
undulating, we build
planting which helps
to prevent
landslides, ensures that water runs off
into groundwater stores, conserves
nutrients effectively, and provides better
accessibility
for operations. Where
practical, natural disasters are also
covered by insurance policies.
Droughts
Dry periods affect palm oil yields in the
short and medium term through moisture
stress and can result in wildfires that may
damage the palms. Drought events are
localised to our Kalimantan and South
Sumatera estates, where long droughts
(>3 months) can affect soil quality and
lead to a lower yield the following year
(~10-15% decrease at most). Lower
rainfall provides opportunities, however, to
repair and realign roads to improve the
transport of crops.
Legume cover crops are planted to
minimise soil erosion, preserve soil
moisture and improve soil chemical and
physical properties. In mature areas,
fronds and EFB are placed inter-rows to
allow
the slow release of organic
nutrients while minimising soil erosion.
Conservation pits and sumps are
constructed to harvest and contain
rainwater, whilst the spreading of oil mill
lines provides a water
in
effluent
‘Terracing’ also
storage medium.
ensures
into
groundwater stores. We are also closely
following developments of drought-
resistant oil palm varieties.
that water
runs off
Fires
During drought season the risk of fire is
present at several estates, especially
where neighbouring land is burnt for crop
cultivation by locals. El Nino weather
events can indirectly drive widespread
forest fires and haze, although the severity
of El Nino events appears
to be
decreasing as a result of changing climatic
conditions. The financial impact of fire
damage is relatively low to the Group due
to the diverse geographical spread of
plantations.
Fire response crews are stationed in
each estate, with regular training on
firefighting
techniques and safety
provided by local fire departments.
Ditches and boundaries are created to
prevent the spread of fire, whilst watch
towers have been built in every estate
to pinpoint outbreaks of fire as soon as
smoke is detected. The Group has also
invested in drones to pinpoint outbreaks
of fire where accessibility is restricted.
Where practical, natural disasters are
also covered by insurance policies.
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Strategic Report
Type
Primary
risk/
opportunity
driver
Physical
Pests
disease
&
Rationale for inclusion as priority risk Management approach
Rhinoceros beetle or Oryctes damage has
been observed in areas of large-scale
have
replanting, whilst
previously been detrimentally impacted by
stem rot. More extreme fluctuations in
precipitation may drive increased damage
from bagworms and leaf beetles.
plantations
There is evidence that pollinating weevils,
which help to pollinate palm trees, are
showing smaller flight capabilities and
pollinating
less because of changing
climatic conditions.
provided
early-warning
Pest and disease events are localised,
with
by
supervision and monitoring, and
immature palms.
generally
impact
Outbreaks are managed
through
biological controls, such as the planting
of beneficial plants that host natural
predators to divert bagworms from oil
palms, and the introduction of barn owls
to control rats. Individual estates have
also been replanted with more resistant
anti-Ganoderma material to reduce the
threat of stem rot. A variety of planting
materials are also being considered to
to
provide variability and pollens,
mitigate changes to pollinating insects,
and hand pollination can also be carried
out where required.
The full climate risk report can be downloaded from the AEP website.
Carbon Reporting
AEP is committed to managing our impact on the environment through a robust sustainability reporting process. The
Group has calculated and reported our greenhouse gas (“GHG”) emissions each year since 2013, complying with the
reporting requirements of the UK’s Companies (Directors’ Report) and Limited Liability Partnerships (Energy and
Carbon Report) Regulations 2018 and following internationally recognised best practice in this area.
AEP recognises that our global operations have an environmental impact and we are committed to monitoring and
reducing our emissions year-on-year. We are also aware of our reporting obligations under The Companies (Directors’
Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018. As such, this year we have
upgraded our energy and carbon reporting to meet these new requirements and increase the transparency with which
we communicate about our environmental impact to our stakeholders.
2020 Performance Summary
AEP’s total carbon emissions have more than doubled in 2020 (+106%). This is primarily due to significant shifts in
land use emissions, explained by the lack of amortisation, meaning that all emissions from land clearance are captured
and reported in the year that the clearance occurs as there is currently no industry wide guidance on the time period
over which clearance emissions may be distributed. There was a 92% increase in the area of land cleared in 2020
compared to 2019. All land cleared in 2020 was secondary regrowth or oil palm (e.g. clearing old oil palm nurseries).
Carbon sequestration does not face the same amortisation issues therefore the shift in land clearance is not balanced
by any corresponding improvement in sequestration capacity. The sequestration capacity of oil palms varies by age,
with old plants (28 years) and new plants (1 year) having similarly low sequestration capacity. Therefore, whilst much
old oil palm was cleared in 2020, this was replaced with 1 year old plants who have not yet reached sequestering age.
Operational emissions have decreased by almost a third (31%) in 2020. This is driven by the reduction in POME
treatment emissions, due to the switch from anaerobic lagoon to a new biogas plant at Tasik Mill. Over the course of
2020 fertiliser application has shifted based on recommendations from our agronomist. This has resulted in lower
emissions due to fertiliser use, whilst ensuring that FFB production remains high.
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Energy and Carbon Action
In the period covered by the report the Company has undertaken the following emissions and energy reduction
initiatives:
• Switching POME treatment to biogas plants
In Q1 2020 we began operation of our biogas plant at the Tasik Oil Mill. This resulted in all palm oil mill effluent
(POME) being processed through this plant, reducing the need for anaerobic lagoons whilst simultaneously
generating energy. This energy is partially used on site, and shall partially be exported back to the grid. The
renewable energy is not captured within the Streamlined Energy and Carbon Reporting (“SECR”) table as the
energy is generated by AEP’s own sites. Generally renewable energy is reported only where purchased
separately. This is because AEP already report on the emissions from the biogas plant under POME treatment.
We estimate that the operation of this biogas has resulted in the avoidance of 101,800 tCO2e in 2020. This is the
fourth of our six mills to have this technology operational. We aim to continue the roll out of biogas plants to the
remaining mills in coming years.
2020 Results
Methodology
The methodology used to calculate the GHG emissions is in accordance with the requirements of the following
standards:
• World Resources Institute (“WRI”) GHG Protocol (revised version)
• Defra’s Environmental Reporting Guidelines: Including Streamlined Energy and Carbon Reporting requirements
(March 2019).
Following an operational control approach to defining our organisational boundary, our calculated GHG emissions from
business activities fall within the reporting period of 1st January 2020 to 31st December 2020 and using the comparable
reporting period of 1 January 2019 to 31 December 2019 for comparison.
Note on agricultural emissions
Emissions from agricultural cultivation form the most significant part of our carbon footprint. As such we have assessed
these emissions in line with the methodology developed by the RSPO. Version 4 of the RSPO’s PalmGHG application
has been used to source relevant emission factors and provide a sense check of calculations.
We include emissions from agricultural cultivation on our own estates within our direct scope 1 and estimate these
agricultural emissions from any outgrower crops processed in our mills, included within our scope 3. This is consistent
with previous years reporting and is aligned to the WRI reporting principles of completeness and relevance, whereby
scope 1 are the direct emissions sources that we own and control. The WRI Greenhouse Gas Protocol is due to issue
further guidance on carbon reporting within the agricultural sector in 2022. As draft guidance is made available we will
review our reporting approach and make any changes to align as necessary.
Emissions from land clearance are only reported for the land clearance occurring during the reporting year in question
due to lack of industry acknowledged guidance on amortisation (the period over which land clearance emissions should
be distributed). We review industry guidance each year and update our methodology as appropriate. There has been
no further guidance throughout 2020, thus the approach taken this year is in line with our previous years reporting.
Annual Report 2020 | Anglo-Eastern Plantations Plc
31
Strategic Report
Energy and carbon disclosures for reporting year
Emissions Source
Variance
Global Emissions tCO2e
Scope 1
Fuels
Plantation vehicles
Fertiliser use
POME Treatment
Sequestration
Land clearance
Peat soil cultivation
Total Scope 1
Total Scope 2
Total Scope 1 & 2
Electricity
Scope 3
Electricity transmission and
distribution
3rd party vehicles
Outgrower land clearance
Outgrower peat soil
cultivation
Outgrower sequestration
Total Scope 3
Total (Location Based)
Total Energy Usage (kWh)
Intensity ratio
Intensity ratio
Intensity ratio
tCO2e per hectare of
planted area
tCO2e per tonne CPO
production
tCO2e per tonne FFB
production
2020
2019
19,613
14,442
19,719
124,429
(531,479)
617,678
488,858
753,260
2,657
755,917
211
8,317
510,467
18,650
9,399
26,614
212,215
(549,475)
322,182
488,823
528,408
1,984
530,392
188
7,367
285,094
51,241
(439,239)
130,997
886,914
1,289,300,798
54,790
(446,388)
(98,949)
431,443
1,210,757,362
+5%
+54%
-26%
-41%
+3%
+92%
+0.01%
+43%
+34%
+43%
+12%
+13%
+79%
-6%
+2%
-232%
+106%
+6%
12.7
2.2
0.8
6.4
+98%
1.1
+100%
0.4
+100%
Variance
UK
Emissions
tCO2e*
2020 2019
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
* Note AEP Plc is a UK registered company. However, the business does not have any physical presence within the
UK, hence the 0% contribution of UK emissions. It is shown in the table for transparency.
AEP has not yet conducted a full assessment across all 15 categories of scope 3. However, we do incorporate an
estimation of emissions from the cultivation of outgrower crops we procure for processing within our mills. We anticipate
this to be the greatest impact area within our scope 3, given the materiality of the cultivation emissions within our own
operations. We plan to conduct a full scope 3 screening to assess materiality and routes to measurement and reporting
within the next two years. This forms part of our ongoing commitment to sustainability and improving the quality of
information we can provide to our stakeholders.
This is the first year that AEP are required to report to the UK SECR regulations. As such, the format of the report has
changed. To provide comparison with previous years the data is also provided in a similar format below.
Annual Report 2020 | Anglo-Eastern Plantations Plc
32
Strategic Report
2020 vs 2019 emissions comparison
Emissions source
POME treatment
Fertiliser application
Fuel use
Electricity consumption
Electricity T&D
Company owned vehicles
Third party vehicle use
Total operational emissions
Land clearance
Carbon sequestered
Peat soils cultivation
2020 Emissions in tCO2e
124,429
19,719
19,613
2,657
211
14,442
8,317
189,388
Outgrower crop
510,467
(439,239)
51,241
Own crop
617,678
(531,479)
488,858
Total land use emissions
Overall emissions
697,526
886,914
2019 Emissions in tCO2e
212,215
26,614
18,650
1,984
188
9,399
7,367
276,417
Outgrower crop
285,094
(446,388)
54,790
155,026
431,443
Own crop
322,182
(549,475)
488,823
The normaliser reported within the main report is calculated using total CO2e emissions. In previous years the
normaliser has been calculated on operational emissions only. This reduces the influence of the fluctuations in
agricultural emissions. As such, the operational normalisers are also reported below.
2020 vs 2019 Operational emissions intensity (excluding land use change emissions) (tCO2e)
Operational emissions reporting metric
Per hectare of planted area
Per tonne CPO production
Per tonne FFB production
2020 in tCO2e
2.72
0.47
0.17
2019 in tCO2e (restated)
4.07
0.70
0.27
AEP’s operational emissions include POME treatment, which have decreased significantly in 2020 due to the change
of treatment from anaerobic lagoons to a biogas plant. These process efficiencies are being realised even as
production increases. The change in fertiliser application upon recommendation from AEP’s agronomist is equally
yielding higher production with lower carbon impact.
Annual Report 2020 | Anglo-Eastern Plantations Plc
33
Strategic Report
Comparison of 2020 and 2019 GHG emissions
800,000
600,000
400,000
200,000
e
2
O
C
t
0
-200,000
-400,000
-600,000
Electricity Other fuel
types
Company
owned
vehicles
Third party
vehicle use
Fertiliser
application
Own crop
land
clearance
Own crop
carbon
sequestered
Own crop
peat soils
cultivation
Outgrower
land
clearance
Outgrower
carbon
sequestered
Outgrower
peat soils
cultivation
POME
treatment
2020
2019
Principal and emerging risks and uncertainties
The Board members have sound knowledge of the palm oil industry, including sustainability, and are also aware of the
politics and economics of the business world, especially in the countries where AEP operates.
The Board carried out a robust assessment of the principal and emerging risks facing the Group on an annual basis.
A board paper on risk management, with contributions from Board members on emerging significant business risks, if
any, is discussed at least once a year in conjunction with the risk register. Significant emerging business risks identified
and actions agreed thereon, together with the management of other business risks will be monitored by the Executive
Director who is regularly briefed by the senior management of the Group. The Executive Director in turn briefs the
Audit Committee and the Board whenever they meet.
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.
PRINCIPAL RISKS AT A GLANCE
Environmental and
Conservation Pracitce
Weather and natural
disasters
Social, community and
human rights issues
Covid-19
Produce prices
Country, regulatory and
governance practices
Information Technology security risk
Currency exchange rates
9
h
g
H
i
6
m
u
d
e
M
i
3
w
o
L
0
I
S
S
E
N
S
U
B
N
O
T
C
A
P
M
I
0
Low
3
Medium
LIKELIHOOD
6
9
High
There has been no changes since the prior year.
Annual Report 2020 | Anglo-Eastern Plantations Plc
34
Strategic Report
Nature of the risk and its origin
Circumstances under which the
risk might be most relevant to
the Company
Mitigating
or
considerations
other
relevant
Country, regulatory and governance practices
in
The Group’s operations are located
Indonesia and
substantially
therefore
rely on
significantly
economic and political stability in
Indonesia.
and
upheaval
Political
the security
in
deterioration
situation may cause disruption on
of
the
management
and
consequently financial loss.
operation,
control
loss
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
restricted
the UK will be
to
affecting
of UK
servicing
obligations and payment of
dividends to shareholders.
force
divestment
Could
of
interests in Indonesia at below
market values.
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
to 20,000ha per
province and a total of 100,000ha in
Indonesia. Mandatory reduction of
foreign ownership of
Indonesian
plantations.
Indonesia
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 the late 1990s,
there was civil unrest attributed to
ethnic
in some parts of
Indonesia. The Group’s operations
were not interrupted by the regional
security problems including occasional
racial conflicts.
tensions
The Board is not aware of any attempt
by the government to 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 from
its subsidiaries in Indonesia for the
foreseeable future.
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. If there is a
need for further divestment, the Group
intends
the current
minority shareholders to invest, failing
other
would
which
appropriate local partners.
to approach
approach
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 relatively high risk by
the
Transparency
International
Corruption Perceptions index.
Annual Report 2020 | Anglo-Eastern Plantations Plc
35
Strategic Report
Nature of the risk and its origin
Circumstances under which the
risk might be most relevant to
the Company
Mitigating
or
considerations
other
relevant
Country, regulatory and governance practices - continued
Reduced revenue and reduction
in cash flow and profit. The higher
import levy will raise the price of
CPO and make it less competitive
in the global oil market, thus
reducing demand. Trade barriers
and increased tariffs will make it
more difficult to export palm oil to
EU either
food or palm
biodiesel and will hurt the demand
of CPO in EU which is the third
largest consumer of CPO.
for
Adverse movements of Rupiah
against US Dollar will increase
operating costs and will have a
negative effect on the profitability
and raise funding costs.
Imposition of import controls or taxes
in consuming and exporting countries.
Efforts by EU to restrict the use of
palm oil and palm biodiesel either by
trade barriers or increased tariffs
including export levy and export tax.
Currency exchange rates
a
CPO is a US Dollar denominated
significant
commodity
and
proportion of operating costs
in
Indonesia (such as fertiliser and fuel)
and development costs (such as
heavy machinery and mill equipment)
are imported and are US Dollar
related.
Produce prices
local biodiesel subsidies
The Indonesian government allows
free export of CPO but applies a
sliding scale of duties on exports
which allows producers economic
margins. The export levy collected to
is
fund
designed to support the CPO prices.
Higher tariffs and trade barriers in EU
will result in higher consumption of
alternative vegetable oils despite
CPO
the
cheapest source and most productive
of vegetable oil
in a growing
population.
remaining
amongst
inherent
risks are
The Board has taken the view that
these
the
in
business and
that adopting
feels
hedging mechanisms to counter the
negative effects of foreign exchange
volatility are both difficult to achieve
and would not be cost effective.
CPO and palm kernel are primary
commodities and is affected by the
world economy, levels of inflation, and
availability of alternative soft oils such
as soybean oil. CPO price also moves
historically in tandem with crude oil
prices
the
competitiveness of CPO as a source
of biodiesel.
determine
which
This may lead to significant price
swings. The profitability and cash
flow of the plantation operations
depend upon world prices of CPO
and palm kernel and upon the
Group’s ability to sell CPO and
palm kernel at price
levels
comparable with world prices,
unlike soybean which is sown
annually and production can be
increased or decreased to match
demand and prevailing prices.
Directors believe that such swings
should be moderated 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. In the short term, the
prices and demand will be volatile due
to the pandemic.
Annual Report 2020 | Anglo-Eastern Plantations Plc
36
Strategic Report
Nature of the risk and its origin
Circumstances under which the
risk might be most relevant to
the Company
Mitigating
or
considerations
other
relevant
Social, community and human rights issues
Communication breakdown would
cause disruption on the operation
and consequently financial loss.
Access to areas in estates and
mills of disputed compensation is
restricted due to blockages by the
communities.
Any material breakdown in relations
between the Group and the host
population in the vicinity of the
operations could disrupt the Group’s
operations. The plantations hire
large numbers of people and have
significant economic importance for
local communities in the areas of the
Group’s operations. Disputes over
compensation for land allocated to
the Group through location permits
granted
Indonesian
government which were previously
used by the communities for their
livelihood.
the
by
Deterioration
relationships
shareholders
Indonesian subsidiaries.
or
with
in
disputes
the
in
local
the Group’s
courts
Indonesian
for
Seek
shareholders’
enforcement of
resolving
agreements
over
disputes. Uncertainties
judicial process may result in
financial loss to the Group.
and
initiatives
to applications
The Group mitigates this risk by liaising
regularly with village representatives to
mediate on disputes including some
land compensation matters. It develops
a close relationship with villagers by
improving local living standards through
mutually beneficial economic and social
interaction. The Group, when possible,
gives priority
for
employment from the local population
and supports specific
to
encourage local farmers and tradesmen
to act as suppliers to the Group, its
employees and their dependents. The
Group spends considerable 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 and
Plasma schemes surrounding
the
operating estates. The returns from
these plots are used to improve villages’
community welfare.
The Group endeavours to maintain
cordial relations with local shareholders
by seeking their support for decisions
affecting their interests and responding
constructively to any concerns that they
may have.
Annual Report 2020 | Anglo-Eastern Plantations Plc
37
Strategic Report
Nature of the risk and its origin
Circumstances under which the
risk might be most relevant to
the Company
Mitigating
or
considerations
other
relevant
Covid-19
The Covid-19 pandemic as we are
experiencing has affected national
and world economies. Covid-19 and
similar pandemics could disrupt the
Group’s operation.
Our plantations and mills could be
infected which may
seriously
require a total shut down of the
infected part of our operations to
contain and eradicate the infection.
to different parts of
The Group imposed travel restrictions
and strict movement on workers
in our mills and estates.
housed
Workers
the housing and
leaving
workplace must seek prior approval
from management and will be
subjected to quarantine upon return.
All outside casual workers hired are
assigned
the
estates isolated and with minimum
contact with our regular workers.
Wearing a face mask is mandatory.
Additional facilities are provided for
workers to wash their hands with soaps
and apply sanitizers. Temperatures of
all workers are taken daily before they
start work. Workers with high
temperature will be quarantined and
undertake necessary tests conducted
by qualified doctors to determine their
condition. Medan administration and
finance staff are divided into two teams
with each team working from home on
an alternative basis
reduce
exposure to the virus and mitigate
is
disruption. Routine
conducted for all workers. The Group
also stock up on essential goods and
spare parts to minimise disruption to
estate and mills operation should the
government order a
lockdown or
impose further movement control.
retesting
to
The local governments where the
Group operates could enforce a
total lockdown requiring a total
shutdown
the Group’s
operations.
of
The Group has budgeted cash
requirements on a minimum spend
basis that would sustain the continuity
of the Group for at least twelve months.
Annual Report 2020 | Anglo-Eastern Plantations Plc
38
Strategic Report
Nature of the risk and its origin Circumstances under which the
risk might be most relevant to
the Company
Mitigating
or
considerations
other
relevant
Weather and natural disasters
Oil palms rely on regular sunshine
and rainfall but these weather
patterns can vary and extremes
such as unusual dry periods or,
conversely, heavy rainfall leading
to flooding in some locations can
occur. Indonesia, where most of its
plantations are located, frequently
experience natural disasters like
and
forest
earthquake,
tsunami.
fire
can
disrupt
Dry periods, in particular, will affect
yields in the short and medium
term. It may result in wildfire that
may damage and destroy
the
palms. Drought induces moisture
stress in palm trees. High levels of
rainfall
estate
operations and result in harvesting
delays with
loss of FFB or
deterioration in fruit quality. Delay
in collection of harvested FFB
could raise the level of free fatty
acid (“FFA”) in the CPO. CPO with
high FFA would be sold at a
discount to market prices. Low
level of sunshine could result in
delay in formation of FFB resulting
in potential loss of revenue. Any
natural disaster could result in a
shortage of workers and incur
temporary work stoppage due to
damage to the plantation or mill.
Certain
Bunding is built around flood prone
areas. Canals/drainage/retention ponds
are constructed and adapted either to
evacuate surplus water or to maintain
water levels in areas quick to dry out.
Operations located in and near the tropic
can expect adequate amount of
sunshine regularly. Where practical,
natural disasters are covered by
risks
insurance policies.
(including the risk of crop loss through
fire, earthquake and flood potentially
affecting
the
they materialise
if
Group’s estates)
could dent the potential revenues, for
which insurance cover is either not
available or would in the opinion of the
disproportionately
Directors
expensive, are not insured. Risks of
floods, earthquake, fires or haze are
mitigated by the geographical spread of
the plantations but an occurrence of an
adverse uninsured event could result in
material losses.
the planted areas on
be
Environmental and conservation practices
Failure to comply and observe
environmental and conservation
practices in its oil palm cultivation
as detailed in the management for
Climate Risk
the Directors’
in
Report.
Reputational and financial damage
through criticisms by conservation
groups and boycott of the Group’s
produces.
Information Technology (“IT”) security risk
The Group is committed to sustainable
development of oil palm and maintains
to
substantial conservation reserves
safeguard biodiversity. It has obtained
ISPO and MSPO certifications for most
of its operations. The Group funds
impact
independent
assessment studies and complies with
its
any
development begins.
recommendation
environmental
before
The security threats faced by the
Group include threats to its IT
infrastructure, unlawful attempts to
classified
gain
information and potential
for
business disruptions associated
with IT failures.
access
to
Failure
to combat cyberattack
to our
could cause disruption
business operations. Potential loss
of financial records leading to error
or misstatement
financial
statements.
in
tools
appropriate
The Group has measures in place
and
including
techniques to monitor and mitigate this
risk. The Group through its IT Consultant
has in place antivirus, threat detection,
log analysis, Distributed denial-of-
service (“DDOS”) attacks protection and
Firewalls.
Annual Report 2020 | Anglo-Eastern Plantations Plc
39
Strategic Report
Diversity
The AEP Plc Board is composed of three men and one woman with extensive knowledge in their respective fields of
experience. The Board has taken note of the recent legislative initiatives with regard to the representation of women
on the boards of Directors of listed companies and will make every effort to conform based on legislative requirement.
Group Headcount
Board (Company and subsidiaries)
Senior Management (GM and above)
Managers & Executives
Full Time
Part-time Field Workers
Total
%
Group Headcount
Board (Company and subsidiaries)
Senior Management (GM and above)
Managers & Executives
Full Time
Part-time Field Workers
Total
%
2020 average employed during the year
Total
Women
Men
3
-
33
260
3,957
4,253
26%
14
5
412
6,515
5,354
12,300
74%
17
5
445
6,775
9,311
16,553
100%
2019 average employed during the year
Women
3
-
34
245
3,969
4,251
26%
Men
12
5
426
6,200
5,316
11,959
74%
Total
15
5
460
6,445
9,285
16,210
100%
Although the Group provides equal opportunities for female workers in the plantations, the male workers make up a
majority of the field workers due to the nature of work and the remote location of plantations from the towns and cities.
The number of female part-time field workers decreased by 0.3% from 3,969 to 3,957 in 2020. Overall, the number of
female workers within the Group increased from 4,251 (26%) in 2019 to 4,253 (26%) in 2020.
The Board continues to monitor the structure and composition of the Group’s management team linking it to the
balance of age, social and ethnic backgrounds, together with relevant qualifications and experience. To date, the Board
believes that the composition of the Group’s management team is fairly balanced in respect of all the elements of
diversity as mentioned above.
Employees
Oil palm cultivation is a labour-intensive industry. In 2020, the number of full-time workers averaged 7,242 (2019:
6,925) while the part-time labour averaged 9,311 (2019: 9,285). The total headcount in 2020 was higher by 2.1% due
to additional matured and planted area requiring additional harvesting workforce. The Group has introduced
mechanisation in the field to boost productivity. Mechanisation though has its limits but where possible could help
relieve the acute shortage of labour and reduce the cost pressure from rising minimum wages.
It was reported elsewhere that foreign workers are frequently subjected to high recruitment fees that kept them in debt
bondage and are forced to work overtime and in dangerous conditions under the threat of penalties, namely withholding
of salaries and identification documents and restricted movement. AEP adopts a zero cost recruitment policy towards
all its local and foreign employees.
Annual Report 2020 | Anglo-Eastern Plantations Plc
40
Strategic Report
During the year all staff at its Indonesian office and plantations and mills were tested for Covid-19. Several staff tested
positive and were subjected to strict quarantine and treatment. They had since recovered. Routine retesting was
introduced to screen the workers for the virus. Staff were reminded to observe social distancing and personal hygiene.
Administrative staff were further divided into two teams and rotated between working from home and office on
alternative weeks to minimise disruption and the chances of catching the virus through travelling on public transport.
More details are provided under CSR of the Strategic Report.
The Group has formal processes for recruitment, particularly for key managerial positions, where psychometric testing
is conducted to support the selection and hiring decisions. Exit interviews are also conducted with departing employees
to ensure that management can address any significant issues.
Existing employees are selected on a regular basis for training programmes organised by the Group’s training centre
that provide grounding and refresher courses in technical aspects of oil palm estate and mill management. The training
centre also conducts regular programmes for all levels of employees to raise the competency and quality of employees
in general. These programmes are often supplemented by external management development courses including
attending industry conferences for technical updates. A wide variety of topics are covered including work ethics,
motivation, self-improvement, company values and health and safety. The Group spent $26,000 on staff training and
professional development in 2020 against $106,700 for the previous year.
The Group operates a cadet program where graduates from local universities are selected to undergo theory and field
training over a twelve-month period. On successful completion, they are assigned as assistants to various mills and
estates.
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 across the Group’s plantations. The benefits provided to them were
extensively covered under CSR in the Strategic Report. On top of competitive salaries and bonuses, these extensive
benefits and privileges help the Group to retain and motivate its employees. The Group complied with the minimum
wage policy issued by the Indonesian government. It respects the rights of employees and does not exploit workers,
use child or forced labour and is not involved in human trafficking as described in the UK’s Modern Slavery Act 2015,
of which a full statement is provided on our website under Corporate Governance.
The employees are covered by Governmental mandatory personal accident scheme with death benefits covering up
to forty-eight months of workers’ monthly salaries. The employees’ spouses and children are also privately insured for
death benefits by the Group.
The rights of employees and their extensive benefits covering every aspect of employment from salary review,
allowance, bonus, housing, study and training for improvement, work safety and health and code of conduct are
contained in the Company’s handbook which is available and accessible to all 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 human resources and a member of the Remuneration Committee engage members of the labour
unions representing full-time workers at least once a year on their yearly performance bonuses and grievances.
A whistle-blower policy was introduced in 2019 to allow workforce to raise concerns in confidence and if they wish
anonymously to the Board of the holding company for independent investigations and follow-up actions. The full details
of the policy can be downloaded from the Company’s website.
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
Annual Report 2020 | Anglo-Eastern Plantations Plc
41
Strategic Report
performance appraisals. In addition, various work related and personal training programmes are carried out annually
for employees to promote employee engagement and interaction. The Group organises an annual dinner to recognise
high achievers in the plantation and mill operations. It also has an annual family gathering to foster camaraderie among
its employees.
Although the Group does not have a specific policy on the 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 2021 was 14% higher against the same period in 2020 mainly due to
the increase in production from North Sumatera and Kalimantan regions. It is too early to forecast whether the
production will be better for the rest of the year.
The CPO price ex-Rotterdam opened the year at $1,050/mt and averaged about $1,078/mt for the first three months
of 2021. Despite the robust CPO prices, we expect lower prices in 2021 as tight supply normalises. We anticipated a
stronger recovery of palm oil output in 2021. This will be aided by the recent good rainfall brought about by La Nina
and a normalisation of fertiliser application encouraged by high CPO prices. The present high prices are unlikely to be
sustainable when supply normalises.
In February 2021, the Indian government imposed additional tax on crude palm oil. With the hike, palm oil has lost a
big advantage over other edible oils hurting its combativeness and continuing future import into price sensitive market
like India.
A continual high spread between the CPO and gas oil prices may also reduce the discretionary usage for palm biodiesel
as the cost of blending palm biodiesel is more expensive than the traditional fossil fuel. It was reported that in Indonesia
alone, 14% of the palm oil supply was used as biodiesel feedstock in 2020.
Any potential rise in material costs and wages in Indonesia will increase the overall production costs in 2021.
Nevertheless, barring any unforeseen circumstances, the Group is confident that CPO demand will be sustainable in
the long-term and we can expect a satisfactory trading outturn and cash flow for 2021.
Annual Report 2020 | Anglo-Eastern Plantations Plc
42
Strategic Report
Statement by directors in performance of their statutory duties in accordance with Sec 172 (1) of the
Companies Act 2006
The Board of Directors of Anglo-Eastern Plantations Plc consider, both individually and collectively, that they have
acted in good faith, in the way they consider would be most likely to promote the success of the Company for the
benefit of its members as a whole, having regard to the stakeholders and matters set out in Sec 172 (1) (a) to (f) of the
Act in decisions taken during the year ended 31 December 2020.
• Our business model and strategy as highlighted in the Strategic Report are designed to have a long-term
beneficial impact on the Company and contribute to its success in delivering consistent and appropriate returns
to the shareholders. We will continue to operate our business within tight budgetary controls and regulatory
targets. To deliver these goals, the Company continues to work in close partnership with local communities to
bring development and economic progress as well as generate goodwill in the localities in which it operates. The
Group is looking forward to expanding its processing capacity of FFB in North Sumatera by the year 2022 after
it has awarded civil and structural works of $6.7 million. Mechanical works estimated at $6 million will be awarded
by early next year. The Board further plans to build a 45mt/hr mill in Kalimantan after a feasibility study concluded
that it is more profitable to build a mill in KAP to support its plantation operations due to the high logistics cost,
as detailed in the report on Corporate Development. The Board after consideration delayed the replanting of
some old dura palms which have high yield but low OER to extract the maximum benefit from the prevailing high
CPO prices which may not last.
• Our employees are fundamental to the delivery of our business goals. We aim to be a responsible employer in
our approach to the wages and benefits our employees receive. The health, safety and well-being of our
employees is one of our primary considerations in the way we do business, including establishing the standard
operating procedures for its employees and management to deal with Covid-19 which is covered in the CSR and
Employees sections of the Strategic Report. An online meeting with heads of employees’ cooperatives was held
as part of the engagement of workforce to ensure that the safety and welfare of the employees are not in any
way compromised at the expense of profitability, the details of which are in the Remuneration Report. During the
year the Board also published on its website a statement under the UK’s Modern Slavery Act 2015 that sets forth
the Group’s commitment to ensure that modern slavery does not take place in the Group’s operations in respect
of, among others: child labour, involuntary labour, coercion, abuse and harassment, working hours and
compensation and workers health and safety.
• We aim to act responsibly and fairly in how we engage with our suppliers, creditors and customers, all of whom
are integral to the successful delivery of our business plan. The Company adopts a transparent approach in price
negotiation, tenders and observe the credit terms. The Board provides a channel of communication and feedback
from suppliers and customers to voice their concerns through the whistle-blowers policy which is displayed in the
Company’s website. Separate Anti-Corruption and Bribery policies were introduced for its operations in the UK,
Indonesia and Malaysia to comply with local laws as well as to make local directors responsible and accountable
to policing any incidence of corruption or bribery locally.
• Our business plan takes into account the impact of the Company’s operations on the community and environment
and our wider social responsibilities, and in particular how we impact the regions we operate. CSR is part of the
Company’s culture which includes responsibility to safeguard the environment and is highlighted in the Strategic
Report. Several of our measures to deliver environmental improvements are covered in detail in the Sustainable
Palm Oil Certification and Environmental Social and Governance Practices sections of the same report.
• As the Board of Directors, our intention is to behave responsibly and ensure that management operates the
business in a responsible manner, operating within the high standards of business conduct and good governance
expected for a business such as ours and in doing so, will contribute to the delivery of our business goals. See
Corporate Governance and Audit Committee Report. The intention is to nurture our reputation that reflects our
responsible behaviour.
Annual Report 2020 | Anglo-Eastern Plantations Plc
43
Strategic Report
•
It is the intention of the Board of Directors, to behave responsibly toward our shareholders and treat them fairly
and equally, so that they too may benefit from the successful delivery of our business plan.
On behalf of the Board
Dato’ John Lim Ewe Chuan
Executive Director, Corporate Finance and Corporate Affairs
12 May 2021
Annual Report 2020 | Anglo-Eastern Plantations Plc
44
Financial Record
Income statement
Revenue
Operating profit before BA
Profit attributable to shareholders after BA
2020
$000
2019
$000
2018
$000
2017
$000
2016
$000
269,060
219,136
250,859
291,907
246,210
48,079
31,835
12,178
16,096
30,928
11,413
66,676
36,214
52,480
34,713
Dividend proposed for year
(396)
(198)
(1,189)
(1,585)
(1,463)
Financial position
$000
$000
$000
$000
$000
Non-current assets & long-term receivables
387,589
384,391
351,387
362,038
360,681
Cash net of short-term borrowings
115,211
76,643
101,134
130,895
111,973
Long-term loans and borrowings
-
-
(8,203)
(19,281)
(27,875)
Other working capital
Deferred tax
Non-controlling interests
Net worth
Share capital
Treasury shares
Share premium and capital redemption reserve
Revaluation reserves
Exchange reserves
Retained earnings
32,423
40,580
29,156
16,320
17,094
(6,650)
528,573
(99,892)
(5,796)
495,818
(94,661)
(8,893)
464,581
(92,601)
(13,081)
476,891
(91,799)
(16,612)
445,261
(82,150)
428,681
401,157
371,980
385,092
363,111
15,504
15,504
15,504
15,504
15,504
(1,171)
(1,171)
(1,171)
(1,171)
(1,171)
25,022
49,367
25,022
48,413
25,022
51,308
25,022
51,288
25,022
61,038
(233,534)
(229,026)
(245,170)
(221,435)
(219,570)
573,493
542,415
526,487
515,884
482,288
Equity attributable to shareholders’ funds
428,681
401,157
371,980
385,092
363,111
Ordinary shares in issue (‘000s)
39,976
39,976
39,976
39,976
39,976
Basic EPS before BA movement (US cents)
77.67cts
35.37cts
32.50cts
91.80cts
82.16cts
Basic EPS after BA movement (US cents)
80.32cts
40.61cts
28.79cts
91.37cts
87.58cts
Dividend per share for year (US cents)
1.0cts
0.5cts
Asset value per share (US cents)
1,082cts
1,012cts
3.0cts
938cts
4.0cts
972cts
3.8cts
916cts
Exchange rates - year end
Rp : $
$ : £
RM: $
Exchange rates - average
Rp : $
$ : £
RM: $
Annual Report 2020 | Anglo-Eastern Plantations Plc
14,105
13,901
14,481
13,548
13,436
1.36
4.02
1.32
4.09
1.28
4.13
1.35
4.05
1.23
4.49
14,572
14,146
14,246
13,383
13,307
1.28
4.20
1.28
4.14
1.33
4.04
1.29
4.30
1.35
4.14
45
Estate Areas
Annual Report 2020 | Anglo-Eastern Plantations Plc
46
GROUPMALAYSIAINDONESIASOUTHRIAUBANGKATOTALTOTALSUMATERASUMATERAMills / Biogas PlantsNumber of Mills6-622-1-1Number of Biogas Plants4-421---1Combined Mills Capacities310 mt/h310 mt/h100 mt/h105 mt/h60 mt/h45 mt/hPlanted as at 31 Dec 2020HaHaHaHaHaHaHaHaHaOil Palm Mature60,540 3,453 57,087 16,238 16,422 5,466 4,873 647 13,441 Immature8,794 - 8,794 2,597 553 935 - 1,746 2,963 Total Oil Palm69,334 3,453 65,881 18,835 16,975 6,401 4,873 2,393 16,404 Rubber Mature262 - 262 262 - - - - - Immature - - - - - - - - - Total Rubber262 - 262 262 - - - - Plasma Mature2,612 - 2,612 93 - 942 - 102 1,475 Plasma Immature1,392 - 1,392 - - 98 - 361 933 Total Plasma4,004 - 4,004 93 - 1,040 - 463 2,408 Total Planted area73,600 3,453 70,147 19,190 16,975 7,441 4,873 2,856 18,812 Others Plantable Reserve/Oil Palm16,894 1,607 15,287 678 - 6,421 - 135 8,053 Unplantable Areas34,289 1,236 33,053 1,491 961 23,315 84 5,244 1,958 Oil Palm Nursery/Mill/Infrastructure3,240 72 3,168 1,040 589 123 75 19 1,322 Total Others54,423 2,915 51,508 3,209 1,550 29,859 159 5,398 11,333 Total Land as at 31 Dec 2020128,023 6,368 121,655 22,399 18,525 37,300 5,032 8,254 30,145 NORTHBENGKULUKALIMANTAN
Location of Estates and Mills
Annual Report 2020 | Anglo-Eastern Plantations Plc
47
Directors’ Report
The Directors present their annual report on the affairs of the Group, together with the financial statements and
auditor’s report, for the year ended 31 December 2020.
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 63 to 64.
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 2020 are set out on pages 82 to 130 The Group’s
profit for the year on ordinary activities before taxation was $51,669,000 (2019: profit $18,873,000) and the profit
attributable to ordinary shareholders was $31,835,000 (2019: profit $16,096,000). No interim dividend was paid. The
Directors recommend a final dividend of 1.0cts (2019: 0.5cts) to be paid to shareholders on 16 July 2021. Shareholders
may elect to receive their dividend in Pounds Sterling as described on page 50.
Future developments
The future developments of the Group are reported on page 20 of the Strategic Report under corporate development.
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.
Political donations, anti-bribery and anti-corruption
The Group made no political donation during the year.
The Group has in place policies and procedures in respect of bribery and corruption, with detailed guidelines and
reporting requirements for its UK, Indonesian and Malaysian operations which may be viewed from the Company’s
website. The whistle-blowers and grievance mechanism policies which include reporting on corruption practices are
also highlighted in Company’s handbook. Management and senior staff have had training programmes and updates
as part of their responsibility to ensure that bribery and corruption do not exist in the Group’s operation. New employees
are also briefed on anti-corruption practices during their orientation. The Group has in place a communication channel
for employees reporting to the Senior Independent Non-Executive Director on incidences of bribery and corruption on
a strictly confidential basis. There are stipulated steps and procedures for the Senior Independent Non-Executive
Director to address the reported issues appropriately and to take the necessarily actions, if relevant. The Group uses
its best endeavour to ensure that its business partners are in compliance with the anti-bribery and anti-corruption
regulations.
Carbon Reporting
A comprehensive carbon report is detailed as part of the Strategic Report on page 30 to page 34.
Principal risks
The material risks faced by the Group, including any climate change related risks, and actions taken to mitigate those
risks are set out in the Principal Risks and Uncertainties section of the Strategic Report.
Information on financial instruments risks is set out in note 25 to the consolidated financial statements.
Property, plant and equipment
Information relating to changes in property, plant and equipment and capitalised interest, as required pursuant to
Listing Rule 9.8.4R, are given in note 11 to the consolidated financial statements.
Annual Report 2020 | Anglo-Eastern Plantations Plc
48
Directors’ Report
Directors
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.
Brief profiles of all Directors are set out on page 53 of this Annual Report.
Substantial share interests
As at 30 April 2021 and 31 December 2020, the following interests had been notified to the Company in accordance
with Chapter 5 of the Disclosure Rules and Transparency Rules of the Financial Conduct Authority, being interests in
excess of 3% of the issued ordinary share capital of the Company:
Name of holder
Number
Percentage of
voting rights
held
Percentage of
voting rights
held
Number
As at 30.4.2021
As at 31.12.2020
Genton International Limited*
20,247,814
51.08%
20,247,814
Nokia Bell Pensioenfonds
7,015,000
17.70%
7,015,000
Spencer Nicholas Roditi
1,366,900
3.45%
1,366,900
KBC Securities NV
1,093,238
2.76%
1,539,184
51.08%
17.70%
3.45%
3.88%
* Madam Lim Siew Kim is the controlling shareholder of Genton International Limited.
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.
Auditor
All of the current Directors have taken all the steps to make themselves aware of any information needed by the
Company’s auditor for the purposes of their audit and to establish that the auditor is aware of the information. The
Directors are not aware of any relevant audit information of which the auditor is unaware.
BDO LLP have expressed their 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 29 June 2020 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 12 May 2021 (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 12 May 2021. This authority will expire at the conclusion of the next annual general meeting of the
Annual Report 2020 | Anglo-Eastern Plantations Plc
49
Directors’ Report
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.
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 2021,
whichever is earlier. Renewal of this authority on similar terms is being sought under Resolution 11 at the forthcoming
annual general meeting. The Company does not intend to issue more than 7.5% of the issued share capital on a non
pre-emptive basis in any three-year period.
Acquisition of the Company’s own shares and authority to purchase own shares
At 12 May 2021, the Directors had remaining authority under the shareholders’ resolution of 29 June 2020, to make
purchases of 3,963,637 of the Company’s ordinary shares. This authority expires on 30 June 2021. 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.
Dividends
The Board has declared a final dividend of 1.0cts per share (2019: 0.5cts), in line with our reporting currency, in respect
of the year to 31 December 2020. Subject to shareholders approval of Resolution 3 at the annual general meeting, the
final dividend will be paid on 16 July 2021 to those shareholders on the register on 11 June 2021.
While the dividend is declared in US Dollar, as mentioned in the Shareholders Information section of the Annual Report,
shareholders can choose to receive the dividends in Pounds Sterling. In the absence of any specific instruction up to
the date of closing of the register on 11 June 2021, shareholders with addresses in the UK are deemed to have elected
to receive their dividends in Sterling and those with addresses outside of UK in US Dollar. Shareholders who choose
to receive the dividends in Pounds Sterling will do so at the exchange rate ruling on 15 June 2021, being the dividend
record date. Based on the exchange rate at 5 May 2021 of $1.39 / £, the proposed dividend would be equivalent to
0.8p (2019: 0.4p). Shareholders are reminded that the last day to revoke a currency election is on 17 June 2021.
AEP operates a dividend reinvestment plan (“DRIP”). Holders of the shares may elect to reinvest their final dividend.
The latest election date is 25 June 2021.
Please note, if a holder makes a partial DRIP election for shares, then the dividend for the remaining shares will be
paid in Pound Sterling.
Annual Report 2020 | Anglo-Eastern Plantations Plc
50
Directors’ Report
Liability insurance for Company officers
As permitted by the Companies Act 2006 the Company has maintained insurance cover for the Directors against
liabilities in relation to the Company which remains in force at the date of this report.
On behalf of the Board
Dato’ John Lim Ewe Chuan
Executive Director, Corporate Finance and Corporate Affairs
12 May 2021
Annual Report 2020 | Anglo-Eastern Plantations Plc
51
Directors’ Responsibilities
The Directors are responsible for preparing the annual report and the financial statements in accordance with
applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law, the
Directors are required to prepare the Group financial statements in accordance with International Accounting
Standards (“IAS”) in conformity with the requirements of the Companies Act 2006 and in accordance with International
Financial Reporting Standards (“IFRSs”) adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the EU.
The Directors have elected to prepare the Company financial statements in accordance with FRS 101 Reduced
Disclosure Framework under the UK Generally Accepted Accounting Practice (“UK GAAP”). Under company law, the
Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the
state of affairs of the Group and Company and of the income statement for the Group for that period.
In preparing these financial statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and accounting estimates that are reasonable and prudent;
• state whether they have been prepared in accordance with applicable accounting standards, subject to any material
departures disclosed and explained in the financial statements;
• prepare a Strategic Report, a Directors’ Report and Directors’ Remuneration report which comply with the
requirements of the Companies Act 2006; and
• make an assessment of the Company and Group’s ability to continue as a going concern.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the
Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and
enable them to ensure that the financial statements comply with the Companies Act 2006 and, as regards the Group
financial statements, Article 4 of the IAS Regulation. They are also responsible for safeguarding the assets of the
Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
After making enquiries, the Directors have a reasonable expectation that the Company and the Group have adequate
resources to continue operations for the foreseeable future.
Website publication
The Directors are responsible for ensuring the annual report and the financial statements are made available on a
website. Financial statements are published on the Company’s website in accordance with the legislation in the UK
governing the preparation and dissemination of financial statements, which may vary from legislation in other
jurisdictions. The maintenance and integrity of the Company's website is the responsibility of the Directors. The
Directors' responsibility also extends to the ongoing integrity of the financial statements contained therein.
Directors’ responsibilities pursuant to Disclosure and Transparency Rules 4 (“DTR4”)
All of the Directors listed on page 53 confirm to the best of their knowledge:
• The Group financial statements have been prepared in accordance with IFRSs as adopted pursuant to Regulation
(EC) No 1606/2002 as it applies in the EU and Article 4 of the IAS Regulation and give a true and fair view of the
assets, liabilities, financial position and income statement of the Group.
• The Strategic Report in the annual report includes a fair review of the development and performance of the business
and the financial position of the Group, together with a description of the principal risks and uncertainties that they
face.
• The annual report and financial statements, taken as a whole, are fair, balanced and understandable and provide
the information necessary for shareholders to assess the Company’s performance, business model and strategy.
On behalf of the Board
Dato’ John Lim Ewe Chuan
Executive Director, Corporate Finance and Corporate Affairs
12 May 2021
Annual Report 2020 | Anglo-Eastern Plantations Plc
52
Directors
Madam Lim Siew Kim
(Non-Executive Chairman, age 72).
Non-Executive Director since 29 November 1993 and was appointed as Non-Executive Chairman on 31 January 2011.
Madam Lim does not hold any directorship in other public listed company.
Dato’ John Lim Ewe Chuan
(Executive Director, Corporate Finance and Corporate Affairs, member of Audit, Nomination and Corporate
Governance and Remuneration Committees, age 71).
Appointed on 26 April 2008. On 1 September 2010 he was appointed as the Executive Director. Prior to 1 September
2010, Dato’ John Lim was the Senior Independent Non-Executive Director.
Chartered Certified Accountant; Retired as a Partner with UHY Hacker Young LLP, London on 30 April 2019 where he
was a Partner since 1998; previously he had a professional accounting career in Singapore and the UK.
Lim Tian Huat
(Senior Independent Non-Executive Director, Chairman of Audit Committee, Chairman of Nomination & Corporate
Governance Committee and member of Remuneration Committee, age 66).
Appointed on 8 May 2015.
Fellow 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 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
Reidy & Co and his Audit and Advisory practice, Lim Tian Huat & Co. He is also the Managing Director of Andersen
Corporate Restructuring Sdn. Bhd. He was previously a Partner at Arthur Andersen & Co Malaysia from 1990 to 2002
and a Partner at Ernst & Young Malaysia from 2002 to 2009.
Mr. Lim also served as the 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 under
the purview of the Companies Commission of Malaysia. He co-authored a book entitled “The Law and Practice of
Corporate Receivership in Malaysia and Singapore”.
Mr. Lim is a Non-Independent Non-Executive Director of Malaysia Building Society Berhad and is the Senior
Independent Non-Executive Director of Majuperak Holdings Berhad, both are listed on Bursa Malaysia. He is also an
Independent Non-Executive Director of PLUS Malaysia Berhad and Pacific & Orient Insurance Co. Berhad.
Jonathan Law Ngee Song
(Independent Non-Executive Director, Chairman of Remuneration Committee, member of Audit and Nomination &
Corporate Governance Committees, age 55).
Appointed on 4 July 2013.
Mr. Law graduated from Australia National University in 1989 with a Bachelor of Commerce and Bachelor of Laws. He
was admitted as an Advocate and Solicitor, to the High Court of Malaya in 1991. He is in legal practice and currently
a Partner in Messrs. Azmi & Associates handling merger and acquisitions and corporate practice. He was previously
a Partner in Messrs. Nik Saghir & Ismail (1996 to 2019) and Allen & Gledhill (1991 to 1995).
Mr. Law is the Independent Non-Executive Chairman of Evergreen Fibreboard Berhad, listed on Bursa Malaysia. He
is also the Chairman of the Remuneration Committee and a member of the Nomination Committee of Evergreen
Fibreboard Berhad. He is also a Non-Independent and Non-Executive Director of Pimpinan Ehsan Berhad (appointed
on 25 February 2021).
Annual Report 2020 | Anglo-Eastern Plantations Plc
53
Statement on Corporate Governance
I am pleased to report on the activities of the Nomination and Corporate Governance Committee for the year ended
31 December 2020. This Statement on Corporate Governance forms part of the Directors’ Report.
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 2018 (‘the Code’), which was
published in July 2018 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. The following provisions of the Code were
not met throughout the financial year ended 31 December 2020:
• Provision 19 relating to the Chairman in her role for more than nine years is fully explained on page 54;
• Provision 24 and 32 relating to the Executive Director of his inclusion as a member of the Audit and Remuneration
Committees is fully explained on page 57.
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. The Board has reviewed this agreement with the controlling shareholder in 2020
and concluded that AEP Plc has complied with the independence provisions included in the agreement and that, in so
far as it is aware, those independence provisions have been complied with by Genton.
The Board
The Board is responsible for the proper leadership of the Company for the long-term success of the Company and
Group. 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.
AEP is led by a strong and experienced Board of Directors (see biographical details set out on page 53). During 2020
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.
The Executive Director in his capacity is the de-facto Chief Executive Officer (“CEO”).
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. Although Madam Lim has been the Chairman for
more than nine years which is not in compliance with Provision 19 of the Code, the Nomination and Corporate
Governance Committee, however, is of the view that Madam Lim, who indirectly owns 52% of the Company’s shares,
together with her experience in the palm oil plantation business since 1993 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. AEP has complied
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Statement on Corporate Governance
with the Provision 11 of the Code which provides that at least half the Board, excluding the Chair, should be Non-
Executive Directors whom the Board considers to be independent.
The Board ensures that the Company’s purpose, values, strategy and culture are aligned to cater for the community
at large, as fully explained in the CSR section of the Strategic Report.
The Nomination and Corporate Governance Committee will monitor continuously the future leader and talents within
the Group as well as outside the Group. This is essential to ensuring a continuous level of quality in management, in
avoiding instability by helping to mitigate the risks which may be associated with unforeseen events, such as the
departure of a key individual, and in promoting diversity and inclusion. The Company continues to have a systematic
approach to succession planning for Non-Executive Directors. The Chairman has a personal dialogue with individual
directors at least once a year to discuss the business of the Group in general and their plans, if any, to facilitate
succession planning.
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.
In arriving at its conclusion, the Board considered the factors set out in the 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 additional remuneration from the Group apart from 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 UK Corporate Governance Code acknowledges that a Director may be regarded as independent notwithstanding
the existence of any of the above factors, provided a clear explanation is given.
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. The terms of reference are also available for
download from the Company’s website under Sustainability - Corporate Governance section.
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 2020 there were two formal Board
meetings attended as follows:
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Statement on Corporate Governance
Attendance
2/2
Madam Lim Siew Kim
2/2
Dato’ John Lim Ewe Chuan
Lim Tian Huat
2/2
Jonathan Law Ngee Song 2/2
Agenda and minutes of previous meetings were circulated prior to meetings.
The Independent Non-Executive Directors met on their own during 2020. Telephone discussions between the
Chairman and the Non-Executive Directors also took place outside these meetings.
During 2020, the Board followed the Group results and the development of the activities of the various subsidiaries by
means of monthly reports prepared by the management in Malaysia and Indonesia. It deliberated on the periodic
results and measured its performance against other plantation companies. The annual budget for 2020 was tabled for
the Board discussion and subsequent approval. The Executive Director received further monthly reports and minutes
of the Executive Committee meetings in Indonesia chaired by the Group senior general manager from Malaysia and
briefed the Board accordingly. Meetings were conducted online from late March 2020 as international borders were
closed due to the Coronavirus pandemic. 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. Besides the senior general
manager from Malaysia, the Executive Committee is made up of senior members of the management team based in
Indonesia which includes the President Director, the Chief Operating Officer, the Finance Director and the Engineering
Director. The Senior Internal Audit Manager was regularly invited to attend and briefed the Executive Committee of
significant audit findings and follow-up.
The Board again deliberated on the format and the venue for the forthcoming AGM on the 28 June 2021. The Board
sought advice from its sponsor and legal advisor and discussed options including a hybrid meeting and a closed AGM.
A hybrid AGM would involve two venues in Kuala Lumpur and London where the meeting is conducted simultaneously
and broadcast online to the shareholders while in a closed meeting only the Chairman of AGM and another director
will be given the proxy to attend so that the meeting is quorate, but it will not be broadcast online. A closed AGM in
Kuala Lumpur again was ultimately decided as the Board noted the reservation of its legal advisor on the legality of an
online video conference as it is not provided in the Company’s articles and also because there is no certainty, as of
now, that the Directors can be in the UK on 28 June 2021 because of the current travel restrictions and quarantine
requirements. In a closed AGM the shareholders are required to vote on all resolutions by proxy. At this juncture, the
Board decided to seek shareholders’ approval at the forthcoming AGM to make relevant changes to AEP’s articles to
facilitate online meetings.
The Board is conscious that shareholders would want to interact with Board members, normally at the AGM, and
therefore a meeting will be organised in London when it is appropriate to do so, with less formality, for shareholders to
meet with some of the Board members.
In addition, the Board deliberated on the dividend rate for the year and raised the dividend to 1.0cts (2019: 0.5cts) in
view of the better performance, together with an improved economic outlook for 2021. Last year the Board took the
tough decision to reduce the dividend in order to preserve cash to ride out uncertainties during the pandemic.
The Board reviewed the risks management and noted the probability and financial impact of the Covid-19 pandemic
on the operation of the Group should the risks materialise. The Board approved various standard operating procedures
put in place in Indonesia and Malaysia to ensure the safety of workers including quarantine, restriction of movement
in and out of estates and mills, alternate working days for administration staff, daily temperature taking, wearing of
masks, social distancing, encouragement to wash hands and use sanitizers frequently, avoid crowded places, cancel
all travel to Jakarta, switch to online meetings where possible, management approval for any travel, minimum contact
between casual and full time workers housed in the estates and mills, reporting to health authorities if any staff is down
with fever and virus symptoms and regular virus testing for operational workers. An external consultant was hired to
make improvements to operating procedures to minimise the chances of contracting the virus through contact. Notices
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Statement on Corporate Governance
of safety procedures were also put up at strategic locations in the offices, estates and mills to remind employees to
keep safe at all times.
The Board approved the budget for the development of an organic farm in Malaysia which started on an exploratory
basis in 2019. The project involved planting organic fruits and vegetables on 8 hectares of land leased from the
Chairman at open market value. The produce from the organic farm are to be sold in local supermarkets at affordable
prices, as part of the Company’s corporate social responsibility.
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 from the Company’s sponsor, including legal counsel at the Company’s expense. The Company
maintained Directors’ and officers’ liability insurance throughout 2020.
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. The re-election of the independent Non-
Executive Directors has always been on the basis of gaining a majority of the independent shareholders vote in addition
to the total shareholders vote since this requirement was first introduced.
Dato’ John Lim, the only Executive Director on the Board, sits on the Audit, Nomination and Remuneration Committees
for 2020. Provision 24 and 32 of the UK Corporate Governance Code provide 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 and Corporate Governance Committee. 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 represent the Company in any
shareholder 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 2020 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 2021 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.
In connection with the statutory provisions regarding directors’ conflict of interest, the Directors must avoid a situation
in which the Directors have, or can have a direct or indirect interest that conflicts, or possibly may conflict with the
interests of the Company. The duty is not infringed if the matter has been authorised by the Directors. Under the
Articles, the Board has the power to authorise potential or actual conflict situations. The Board maintains effective
procedures to enable the Directors to notify the Company of any actual or potential conflict situations and of those
situations to be reviewed and, if appropriate, to be authorised by the Board. Directors’ conflicts situations are reviewed
annually and authorisation is recorded in the Board minutes.
Nomination and Corporate Governance 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 three meetings during 2020, attended by all members.
The policy on diversity is described on page 40 of the Strategic Report.
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Statement on Corporate Governance
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 recommend and extend the contract of two directors. Whilst no formal
training programme was arranged for the year, the Board received periodic briefings on legal, regulatory, operational
and political developments affecting the Group. As in the past the Board will not hesitate to arrange training on specific
matters where it is thought to be required.
Relations with shareholders
All shareholders may attend the Company’s AGM and put questions to the Board and such questions must be with at
least twenty working days’ notice. At the conclusion of the AGM, a summary of votes for each resolution is reported
and made available at the company’s website as soon as practicable after the meeting. Shareholders will not receive
a hard copy of the proxy form for the 2021 AGM. Instead shareholders will be able to vote electronically using the link
https://www-uk.computershare.com/investor/. For more details please refer to online submission of proxy voting on
page 9 of the Annual Report.
In a typical year, the Executive Director would have contacted and met certain principal shareholders during the year
to understand their concerns and at all times is pleased to speak to and meet any shareholder. The views of the
shareholders are communicated to the Board to ensure that it is mindful of the shareholders’ sentiment and issues
arising at all times. It is the intention of the Board to engage with identifiable shareholders who have voted against
Company’s resolutions in the past. However, with the travel restriction and international borders remaining closed for
almost ten months of the year, the Executive Director was not able to meet any of the principal shareholders other
than via telephone calls and email correspondence.
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
https://www.angloeastern.co.uk/. This website has detailed information on various aspects of the Group’s operations.
The website is updated regularly and includes latest Company announcements, information on the Company’s share
price, the price of crude palm oil, foreign currency movement of Indonesian Rupiah against US dollar and
environmental, social and governance matters.
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 and MSPO 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; and
• 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;
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Statement on Corporate Governance
• 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. Some of the measures taken for environmental
protection are disclosed and updated in the company’s website from time to time.
Lim Tian Huat
Chairman, Nomination and Corporate Governance Committee 12 May 2021
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Audit Committee Report
Composition
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. In addition to in-house training, he participated in five external courses and seminars in 2020, three of
which were organised by Malaysian Institute of Accountants. Topics covered were Anti-Money Laundering Act,
business restructuring and rescue option under the Companies Act, adaptation of work norm and transformative
technologies to build sustainable business for small and medium practices during time of pandemic, Inter-bank offered
rates reform and Covid-19 impact on financial instruments.
Dato’ John Lim attended five recorded webinars on the impact of Covid-19 on accounting and corporate financial
reporting and resolving related governance, business disruption and financial solvency issues that arise, applying IFRS
9 under the pandemic and other corporate financial reporting updates.
Mr. Jonathan Law attended four trainings and webinars covering topics on Covid-19 on cross border transactions,
corporate liability under the Malaysian Anti-Corruption Act, Sustainability – beyond reporting requirements and what
need to be done under corporate liability.
Both Mr. Lim and Dato’ John Lim have recent and relevant financial experience in their discharge of duties on the Audit
Committee.
Roles of the Audit Committee
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, balanced and
understandable for shareholders to assess the company’s financial position and performance, business model and
strategy;
• Monitoring and reviewing the effectiveness of internal financial controls, internal controls and risk management
systems;
• Making recommendations to the Board in relation to the appointment, reappointment and removal of the external
auditor, their remuneration and terms of engagement;
• Reviewing and monitoring the independence and objectivity of the external auditor and the effectiveness of the
audit process;
• Developing and implementing policy on the engagement of the external auditor to supply non-audit services,
ensuring there is prior approval of non-audit services, considering the impact this may have on independence,
taking into account the relevant regulations and ethical guidance in this regard, and reporting to the Board on any
improvement or action required;
• Reporting to the Board on how it has discharged its responsibilities;
• 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 in the Annual Reports.
The Committee monitors the engagement of the auditor to perform non-audit work. The ethical standard of International
Standards on Auditing requires the external auditor to evaluate threats to independence and discuss this with the Audit
Committee. The external auditor will be responsible for maintaining a record of all non-audit services undertaken and
for ensuring that they do not undertake any of the prohibited services. To ensure that the external auditor satisfies
these ethical standards on auditing, the Group decided not to engage the external auditor for non-audit services for
the Company and its affiliates except for the review of the interim report for compliance before announcement. The
Committee considered that the nature and limited scope of, and remuneration payable in respect of, this engagement
was such that the independence and objectivity of the auditor were not impaired.
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Audit Committee Report
The members of the Committee discharge their responsibilities by formal meetings and informal discussions between
themselves, by meeting with the external auditor, the internal auditors and management and by consideration of reports
by management and by holding at least two formal meetings in each year.
It 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. Where necessary the Committee also seek
independent advice from professionals and experts.
Overview
The Audit Committee met prior to the completion of the 2020 accounts and four times during 2020 with full attendance
in all meetings.
During the year, the Committee reviewed and discussed the 2019 Annual Report, 2020 Interim Results, 1st Quarter
and 3rd Quarter Trading Statement for 2020. The Committee also deliberated and recommended to the Board the
dividend rate for the Company.
The Committee updated the risks register chart and deliberated on the probability of various material risks from
occurring and the resulting financial impact should the risks materialise. The Committee concluded that produce prices
are the biggest risks with high probability of occurring and with high financial impact, while Coronavirus and imposition
of import controls and taxes are rated with medium chance of occurrence with medium to high financial impact. All
other risks are generally low in financial impact.
The Committee deliberated extensively before recommending the 2020 Budget to the Board.
Following the advice of the Company legal advisor, the Audit Committee resolved to set up different and separate Anti-
Corruption and Bribery policies for the UK, Indonesia and Malaysia operations to comply with local laws as well as to
make local directors responsible and accountable to policing any incidence of corruption or bribery locally. Local
compliance managers were nominated in line with this set up.
The Audit Committee have regular dialogues, both formal and informal with the senior management in Indonesia and
Malaysia and the discussions are open and constructive.
The Internal Audit plan for the year was approved by the Committee. The internal audit reports were tabled and
discussed in detail in three of the Audit Committee meetings in 2020. The Senior Internal Audit Manager presented his
audit findings and interacted with members of the Audit Committee in two of the meetings.
During the year Deloitte Risks Advisory in Kuala Lumpur presented its findings and recommendation to the Audit
Committee following a Quality Assurance Review (“QAR”) on the Internal Audit Department. The QAR encompassed
the following:
• Assessed and provided recommendations of the Internal Audit activities’ conformity with the Institute of Internal
Auditors (“IIA”) Standards, the Code of Ethics and the Definition of Internal Auditing and with applicable legislative
and regulatory requirements and
• Assessed the internal audit activities’ efficiency and effectiveness in meeting the objectives and mission as defined
in the Charter, expressed in the expectations of the Audit Committee and the Company’s senior management
Deloitte reported that the Internal Audit activities partially conform with the IIA’s Standards and Code of Ethics, as well
as its Definition of Internal Auditing, Internal Audit Charter, Policies, Manual and Procedures. The Audit Committee
discussed in detail the QAR scorecard and deficiency over priority areas like the IT risks assessment, mapping of
company risks, documentation of Internal Audit methodology and technology, the quality of communications and
reporting delivery to management that needed improvement.
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Audit Committee Report
External Audit
BDO LLP are the external auditors. The engagement Partner who has overall responsibility for the audit is Nigel Harker
who is in the role for the first year. The external auditor BDO LLP have been appointed as the Company’s external
auditors since the financial year ended 2001. In accordance with good governance, the audit services were
competitively tendered in 2014, whereby BDO LLP was reappointed. It is our intention that the audit will be re-tendered
in 2024 when BDO LLP are mandated to rotate after the audit of the Group’s financial statements for the year ending
31 December 2023 under the independence rule.
The Committee met online with the external auditor twice in 2020 to discuss the audit findings and to plan the audit for
2020 financial year. The external auditor, during the audit planning, highlighted to the Audit Committee their scope of
audit and their assessment of areas of audit risks. The significant risks include valuation of estate land, impairment of
bearer plants, recoverability of plasma scheme receivables, management override of controls, revenue recognition
and completeness of related party transactions.
The valuation of estate land is considered a significant risk due to its size and the subjective judgements involved in
the estimation, together with the volatility of land market prices within Indonesia in particular. The Group engaged a
qualified valuer to value approximately half the estate to benchmark the valuation of the entire estate. The Audit
Committee reviewed in detail the workings of the external valuer and the assumptions applied to satisfy themselves
that the estate land are fairly stated. To provide indicative fair values and to support the valuation of the estate land,
eight companies located across North Sumatera, Bengkulu, Riau and Kalimantan were valued by qualified valuers in
2020. The land held in the remaining companies, which was valued externally in the previous year, have been valued
by the Directors by reference to the changes in value of externally valued estates, taking note of their geographical
location and applying them as considered appropriate. 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 in note 11 of the
consolidated financial statements.
The bearer plants are held as property, plant and equipment at depreciated cost (IAS16). The Group is required under
IAS 36, to assess whether there is any indication that the bearer plants may have been impaired, or if a previously
recognised impairment should be reversed at the end of each reporting period. Given the subjective nature and
complexity of these calculations, there is an inherent risk that the valuations may be materially misstated. The Group
engaged an external valuer to conduct the required impairment review based on the value in use of the bearer plants.
The Audit Committee reviewed in detail the calculations of value in use and the assumptions applied to satisfy
themselves that the bearer plants are fairly stated. Under IAS 36, an entity is required at the end of each reporting
period to assess whether there is any indication that any bearer plant held as property, plant and equipment including
plantations may be impaired. In 2020 the management took reasonable steps including external valuation of five
companies to independently assess whether their bearer plants need to be impaired. Impairment for plantations is
measured by calculating the value in use and comparing the carrying amount with their recoverable amount, which is
the higher of the fair value less cost to sell and its value in use. Given the nature of the business, recoverable amount
was based on the value in use calculation on the basis that it will be higher than fair value less cost to sell. This requires
the management to exercise significant judgement in determining the underlying assumptions used in the calculation
of the recoverable amount. In 2020, there is no additional impairment loss of the plantations of the Group (2019:
reversal of impairment loss of $7.6 million). The details of the calculation of the recoverable amount are disclosed in
note 11 - Property, plant and equipment to the consolidated financial statements.
AEP has amounts due from cooperatives under the plasma programme on the balance sheet. The balances are repaid
by the cooperatives if and when they manage to obtain bank financing, which would need to be secured by a guarantee
from AEP, or via the sale of the FFB they produce to AEP. There is a risk that the receivables due from cooperatives
may not be recoverable and where applicable the exposure of guarantees given to secure the cooperatives loans.
Accordingly, the Audit Committee ensures that IFRS 9 has been appropriately applied and that any expected credit
losses are recognised.
The risk of fraud due to management override of controls and revenue recognition due potentially to performance
obligations linked to compensation or shareholders’ expectations could be achieved by manipulating judgements and
estimates or through the posting of journals. The above mentioned risks are mitigated through the internal audit
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Audit Committee Report
function which reviews journals of material amounts and participate in period end cut-off to ensure that the proper
procedures are adhered to. The internal audit function reports to the Audit Committee specifically on these two areas,
in addition to other exception reports.
The Audit Committee ensured completeness of related party transactions by requiring all Directors and senior
managers to disclose any transactions directly or indirectly with the Group via a signed prescribed form for this purpose.
The Audit Committee may carry out third party search, if applicable.
Other risks rated as medium to low impact include valuation of biological assets, valuation of defined benefit obligation
and recoverability of income tax receivables. The auditor continued to stress on the directors’ responsibilities, the
effects of coronavirus on year-end corporate reporting and auditing, definition and application of materiality and shared
with the Committee new accounting and auditing standards and other financial reporting developments. Due to the
travel restriction, the audit engagement team from BDO LLP, from the UK, used remote review to review the work of
the component auditors.
Before finalizing the accounts, the Audit Committee conducted a stress test premise on stoppage of Group’s estates
and mills operation for a year as a result of Covid-19. Based on this scenario, the cash flow projections showed that
the Group has sufficient resources to continue operating as a going concern for the next five years.
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 2019. The tenure of audit and extent of non-audit work that will
affect the independence of the auditor were reviewed. During 2020, the non-audit work undertaken by BDO LLP (UK)
was on the review of the interim report for compliance before the announcement. The Committee considered the
nature, limited scope of engagement and remuneration paid were such that the independence and objectivity of the
auditor were not impaired. Fees paid for audit and non-audit services are provided in note 5. The Committee considered
the key members of the audit engagement team and component auditors involved in the Group Audit. This includes
the Audit Partner and the Audit Manager from BDO LLP (UK) and the various Partners from BDO in Malaysia and
Indonesia. New Audit Partners for the UK and Indonesia were assigned for the 2020 audit while in Malaysia, the same
engagement Partner has been involved in the audit for the last two years. Following this assessment, the Committee
concluded that the external audit process remained effective, and that the objectivity of the external auditor was not
impaired and that it provides an appropriate independent challenge of the senior management of the Group.
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.
Annual Report 2020 | Anglo-Eastern Plantations Plc
63
Audit Committee Report
The Group has in-house 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 12 May 2021
Annual Report 2020 | Anglo-Eastern Plantations Plc
64
Directors’ Remuneration Report
Annual Statement
I am pleased to report on the activities of the Remuneration Committee for the year ended 31 December 2020. 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 SI 2008/410 Large and Medium-sized Companies and Groups
(Accounts and reports) Regulations 2008.
The Companies Act 2006 requires the auditor 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.
During the year the Remuneration Committee reviewed the annual increment and bonus entitlement of senior
management in Indonesia. In considering the bonus for 2019, the Committee took into account the achievement of the
key performance criteria related to crop production, rate of new planting, oil extraction rates and implementation of
cost reduction measures. The Committee also took into account the reduction and rotation of the administrative and
supporting departments with half of the departments working from home to mitigate the risks of contracting
Coronavirus. It also made an informal comparison with other plantation companies for bonus payment. In addition, the
Committee deliberated and renewed the contracts of five senior management personnel and two directors. The Board
of Directors decided to renew the contract of the Executive Director annually and in this instance his contract was
extended to 31 August 2021 at a reduced fee of £63,000 per annum in line with reduced working days. The contract
of the Chairman/Director was renewed with no change in remuneration. None of the directors were involved in deciding
the renewal and the compensation of their own contract. Measures to avoid or manage conflicts of interest are in the
declarations of all Directors and senior managers in respect of related party transactions as detailed on page 63. The
Committee believes that the remuneration packages should continue to motivate and reward individual performance
in a way consistent with the best interest of the Company and its stakeholders. The Committee also deliberated on the
2020 Remuneration Report and recommended to the Board for acceptance.
As part of the engagement of workforce, the Chairman of Remuneration Committee conducted an online meeting with
heads of employees’ cooperatives in North Sumatera and Kalimantan to discuss and obtain feedback on issues relating
to their safety and welfare, working conditions, remuneration and ways to improve productivity. The meeting was
productive and concluded that workers were generally happy and satisfied. There were however several minor
requests that need to be addressed pertaining to additional replacement of worn out safety shoes, separate uniforms
for supervisors for recognition and better bonuses.
The Committee would welcome your support for our Remuneration Report.
The Remuneration Policy was previously voted and approved by the shareholders at the 2020 AGM and shall be
effective from 1 January 2020 for three years. There is no change in the policy since September 2014.
Composition
The Remuneration Committee comprises of Mr. Jonathan Law Ngee Song (Chairman), Dato’ John Lim Ewe Chuan
and Mr. Lim Tian Huat.
The Committee had three meetings in 2020, attended by all members.
Voting at Annual General Meeting
There was no change in the Remuneration policy which was last voted and approved in 2020. In that meeting, the
shareholders voted in the following manner:
To approve Remuneration policy
Shares For
23,029,499
Shares Against % Shares For % Shares Against
703,113
97.0%
3.0%
It is the Company’s policy to vote on the Remuneration policy once every three years or if there is a change in the
policy within the three years.
Annual Report 2020 | Anglo-Eastern Plantations Plc
65
Directors’ Remuneration Report
The Director’s Remuneration report was last approved at Company’s AGM on 29 June 2020. In the meeting, the
shareholders voted in the following manner:
To approve Directors’ Remuneration Report
Shares For Shares Against % Shares For % Shares Against
23,594,749
137,813
99.4%
0.6%
The Company pays due attention to the results of voting. When there is substantial vote against any resolution in
relation to Directors’ Remuneration, the reasons for any such vote is sought and any action in response will be reported
in the following year.
The Listing Rules require the re-election of independent directors in companies with a controlling shareholder to be
voted separately by independent minority shareholders in addition to the approval of all shareholders. The results of
the re-election of the independent directors in the last AGM were:
Shares For Shares Against % Shares For % Shares Against
By all shareholders:
Re-election of Mr. Lim Tian Huat
Re-election of Mr Jonathan Law Ngee Song
23,729,349
23,726,133
3,309
6,525
99.9%
99.9%
0.1%
0.1%
By independent shareholders:
Re-election of Mr. Lim Tian Huat
Re-election of Mr Jonathan Law Ngee Song
3,177,435
3,174,219
3,309
6,525
99.9%
99.8%
0.1%
0.2%
Shares For Shares Against % Shares For % Shares Against
Policy of the Remuneration Committee
The Committee sets the remuneration and benefits of the Executive Director. 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.
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 which is similar to the
previous approved policy will continue to be consistently applied in the next financial year. This policy including capping
the remuneration at £90,000 per annum as set out below will continue to be applied for any new appointment.
The table below summarises the key aspects of the Group’s Remuneration Policy for the Executive Director since
September 2014 and has remained unchanged since that date.
Type
Purpose
Maximum payment
Base salary - fixed pay.
To contain fixed costs. Capped at £90,000. The cap is reviewed periodically. The
policy permits the cap to be changed if this is deemed
necessary to meet business, legislative or regulatory
requirements.
There is no bonus, fringe benefits, employee share option scheme or any other variable remuneration for the Executive
Director.
The table below summarises the key aspects of the Group’s Remuneration Policy for the Non-Executive Directors.
Type
Fees.
Purpose
To attract and retain
individuals with suitable
knowledge
and
experience.
Maximum payment
Determined by the Board within the limits set by the
articles of association and by reference to comparable
organisations and to the time commitment expected.
Annual Report 2020 | Anglo-Eastern Plantations Plc
66
Directors’ Remuneration Report
The Committee periodically assesses the remuneration of the Non-Executive Directors and submits a proposal to the
Board. Non-Executive Directors’ remuneration consists exclusively of a fixed payment. The Non-Executive Directors
receive no benefit such as share options or other performance-related elements.
The Committee makes recommendations on senior management pay and conditions, after consultation with the
Chairman. In determining the remuneration policy of senior management, the Committee takes into account the need
to attract, retain and motivate employees. To promote long-term sustainable success, the Committee makes external
comparison with the current market trends and practices of equivalent roles taking into account the size, business
complexity and relative performance. The following is a summary of the key components of remuneration packages of
senior management:
Base salary
Base salaries of senior management are reviewed on an annual basis by the Remuneration Committee or when there
is a change in the individual’s responsibilities.
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 however no bonus scheme for any of the Directors.
The operating units in Indonesia and Malaysia have in place a variable compensation policy which over the recent
years rewarded senior executives and employees with bonuses ranging from one to seven months’ pay based on the
individual’s and operating units’ performance. The key criteria used in the determination of the variable compensation
policy for the bonus was revised in 2014 following discussion and consultation with the Company’s Chairman.
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. The Company has not issued any share options to any
Directors after 2004. No one in the Company has vested or unvested shares.
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.
The Group does not seek the advice of an external consultant in determining the salaries of senior management and
directors.
No employees or shareholders are specifically consulted on the remuneration policy of the Company. If a significant
shareholder expresses a particular concern regarding any aspect of the policy, the views expressed would be carefully
weighed.
Annual Report 2020 | Anglo-Eastern Plantations Plc
67
Directors’ Remuneration Report
Annual Report on Remuneration
Directors’ remuneration (audited)
The following part provides details of the remuneration of all the Directors for the year ended 31 December 2020. 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 2020 Fixed
Remuneration
Total 2019 Fixed
Remuneration
$000
$000
103
55
21
21
200
116
57
21
21
215
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.
Executive Director’s/de-facto CEO’s Remuneration over 10 Years
Year ended 31 Dec
2020
2019
2018
2017
2016
2015
2014
2013
2012
2011
Salary
$103,000*
$116,000*
$123,000*
$113,000*
$127,000*
$137,000*
$133,000
$117,000
$105,000
$83,000
Benefit
-
-
-
-
-
-
-
-
-
-
Pension
-
-
-
-
-
-
-
-
-
-
Bonus
-
-
-
-
-
-
-
-
-
-
Total
$103,000
$116,000
$123,000
$113,000
$127,000
$137,000
$133,000
$117,000
$105,000
$83,000
* The Executive Director’s basic salary on renewal of contract in September 2020 was revised from £7,500 per month
(or £90,000 per annum) to £5,250 per month (or £63,000 per annum). The Executive Director’s salary from 2015 to
2019 was £90,000 per annum. The fluctuations shown above during this period were the result of exchange
translations.
Annual Report 2020 | Anglo-Eastern Plantations Plc
68
Directors’ Remuneration Report
Relative importance of spend on pay
60,000
50,000
40,000
$'000
30,000
20,000
10,000
-
50,686
48,103
1,189
198
2019 2020 2019
2020
Total Group Employee Remuneration
Total Dividend Paid
Percentage annual change in Directors’ remuneration and for employees as a whole over FY2020 (not subject
to audit)
The Directors have service agreements with AEP Plc, the parent company. The Company has no employees other
than the directors therefore voluntary disclosure has been given based on the Group’s employee information.
The table below shows the annual change in the Directors’ pay compared with the Group’s average pay for an
employee for 2019 to 2020.
Annual change in pay for Directors compared with the Group’s average employees
Non-Executive Directors
Executive Director
Dato’ John Lim
Ewe Chuan
2020
-11%
Base Salary/fees
-
Benefits
Bonus
-
1. Directors’ remuneration comprises of Directors’ fees only.
2. All Directors fees are paid in other currencies and the annual amount remains unchanged in 2020.
Jonathan Law
Ngee Song
-
-
-
Madam Lim
Siew Kim
-4%
-
-
Lim Tian Huat
-
-
-
Group’s
Average
Employees
-6%
+13%
-13%
Service contracts
All Directors, Executive and Non-Executive, have formal appointment letters. The Executive and Non-Executives are
appointed normally on a one to two-year term 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. It is not the Company policy to include provisions in directors’ service contracts for
compensation for early termination beyond providing for an entitlement to payment in lieu of notice if due notice is not
given.
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 2023
Expiry 31 August 2021
Expiry 7 May 2023
Expiry 3 July 2022
Annual Report 2020 | Anglo-Eastern Plantations Plc
69
Directors’ Remuneration Report
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 2011 to 2020 (last ten years) to indicate the volatility and trend of the market generally.
Except for two periods, our share price had underperformed the FTSE 100 index. In determining senior management
compensation, the Remuneration Committee is influenced by the operating performance of the Company and not
directly by the share price. The FTSE 100 index has been selected for this comparison as there is no index available
that is specific to the activities of the Company.
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
2020
Ordinary shares
20,551,914
2019
Ordinary shares
20,551,914
-
-
-
-
-
-
The beneficial 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 change in the interests of the Directors in the securities of the Company between 31 December
2020 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 7 and 22 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.
Jonathan Law Ngee Song
Chairman, Remuneration Committee 12 May 2021
Annual Report 2020 | Anglo-Eastern Plantations Plc
70
Auditor’s Report
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ANGLO-EASTERN PLANTATIONS PLC
Opinion on the financial statements
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 as at 31 December 2020 and of the Group’s profit for the year then ended;
the Group financial statements have been properly prepared in accordance with international accounting
standards in conformity with the requirements of the Companies Act 2006;
the Group financial statements have been properly prepared in accordance with international financial
reporting standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union;
the Parent Company financial statements have been properly prepared in accordance with United Kingdom
Generally Accepted Accounting Practice; and
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.
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 2020 which comprise the consolidated income statement, 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 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 the preparation of the Group financial statements
is applicable law and international accounting standards in conformity with the requirements of the Companies Act
2006 and international financial reporting standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies
in the European Union., The financial reporting framework that has been applied in the preparation of the Parent
Company financial statements is applicable law and United Kingdom Accounting Standards including Financial
Reporting Standard 101 Reduced Disclosure Framework (United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
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
financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion. Our audit opinion is consistent with the additional report to the audit
committee.
Independence
Following the recommendation of the audit committee, we were appointed by the Board in 2001 to audit the financial
statements for the year ended 31 December 2001 and subsequent financial periods. The period of total uninterrupted
engagement including retenders and reappointments is 20 years, covering the years ended 31 December 2001 to 31
December 2020. We remain 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 Ethical Standard
as applied to listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with
these requirements. The non-audit services prohibited by that standard were not provided to the Group or the Parent
Company.
Annual Report 2020 | Anglo-Eastern Plantations Plc
71
Auditor’s Report
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ANGLO-EASTERN PLANTATIONS PLC
(continued)
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting
in the preparation of the financial statements is appropriate. Our evaluation of the Directors’ assessment of the Group
and the Parent Company’s ability to continue to adopt the going concern basis of accounting included:
• A review of management’s assessment of going concern, including various stress test scenarios, challenge
of the key assumptions used to make this assessment, such as Crude Palm Oil (‘CPO’) price and Fresh Fruit
Bunch (‘FFB’) production tonnage, and the impact of a potential shut down of operations related to the Covid-
19 pandemic. These were assessed by reference to external market forecasts, industry production trends
and experience to date of the impact of Covid-19 on the Group’s operations; and
• A review of the adequacy and consistency of disclosures in relation to going concern in the Group financial
statements with reference to management’s going concern assessment.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions
that, individually or collectively, may cast significant doubt on the Group or Parent Company’s ability to continue as a
going concern for a period of at least twelve months from when the financial statements are authorised for issue.
In relation to the Parent Company’s reporting on how it has applied the UK Corporate Governance Code, we have
nothing material to add or draw attention to in relation to the Directors’ statement in the financial statements about
whether the Directors considered it appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant
sections of this report.
Overview
Coverage
Key audit matters
100% (2019: 100%) of Group revenue
95% (2019: 88%) of Group total assets
1. Valuation of estate land
2. Impairment of plantations classified as PPE
3. Recoverability of amounts due from cooperatives under Plasma
scheme
2020
2019
✓
✓
✓
✓
✓
Recoverability of amounts due from cooperatives under Plasma scheme has been considered
to be a key audit matter for the current period due to the increasing balance year on year and
the judgement involved in determining any expected credit losses.
Materiality
Group financial statements as a whole
US$2.5m (2019: US$0.8m) based on 5% (2019: 5%) of profit before tax before biological asset
movement.
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72
Auditor’s Report
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ANGLO-EASTERN PLANTATIONS PLC
(continued)
An overview of the scope of our audit
Our Group audit was scoped by obtaining an understanding of the Group and its environment, including the Group’s
system of internal control, and assessing the risks of material misstatement in the financial statements. We also
addressed the risk of management override of internal controls, including assessing whether there was evidence of
bias by the Directors that may have represented a risk of material misstatement.
The Group financial statements are a consolidation of twenty seven companies made up of the Parent Company, a
principal sub-holding company, three management companies, four dormant companies and eighteen operating
companies. Sixteen of the trading companies are located in Indonesia and two in Malaysia. The head office and main
accounting function is located in Kuala Lumpur, Malaysia, with a second accounting function located in Medan,
Indonesia, both at separate locations from the plantations.
Based on our risk assessment we identified six operating plantation companies which, in our view, are significant
components and required a full scope 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 characteristics. These audits were performed by
BDO network firms in Indonesia and Malaysia which, together with additional procedures performed at Group level in
respect of 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.
The audits and specific audit procedures performed on each of the operating companies identified above were
performed largely by BDO Malaysia and BDO Indonesia, with additional work on the specific risk areas identified as
Key Audit Matters, together with audit procedures over the Group consolidation, performed by BDO UK. The remaining
components of the Group were not identified as being significant to the Group and these components were principally
subject to analytical review procedures performed by the Group audit team.
As part of the audit strategy, senior members of the Group audit team attended a number of meetings with management
via videoconference.
Our involvement with component auditors
For the work performed by component auditors, we determined the level of involvement needed in order to be able to
conclude whether sufficient appropriate audit evidence has been obtained as a basis for our opinion on the Group
financial statements as a whole. In light of the international travel restrictions imposed as a result of the Covid-19
pandemic, the Group audit team was unable to travel to Indonesia or Malaysia, however were able to communicate
effectively with component auditors and local management remotely in order to direct the component auditor’s work
and review and evaluate the results of their work as necessary. Our involvement with component auditors included the
following:
• As part of our audit planning, we held remote planning meetings via video conference with both the Indonesian
and Malaysian component teams to discuss the Group and local risks identified and to agree the testing
approach and audit timelines. The planning documentation on the respective audit files was also reviewed.
Annual Report 2020 | Anglo-Eastern Plantations Plc
73
Auditor’s Report
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ANGLO-EASTERN PLANTATIONS PLC
(continued)
• We performed a remote review of the complete audit files for the six operating plantation companies in
Indonesia considered to be significant by size and focused on the audit work in relation to the specific areas
identified for the remaining eleven companies, in both Indonesia and Malaysia, considered to be significant
due to their risk characteristics. Following the review, any further work required by the Group audit team was
performed by the component auditors. The component auditors visit the plantation estates on a rotational
basis so that each estate is visited at least once every three years and this was still permissible for the current
year audit under local Covid-19 restrictions.
• At the completion stage, we attended meetings with local audit teams and reviewed component audit teams’
reporting, addressing risks and specific procedures raised. Discussions were held with Group management
to discuss the findings from our audit, including adjustments raised.
Key audit matters
Key audit matters are those matters that, in our professional judgement, 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, including 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
Valuation of
leasehold
land
(note 2(g) and
note 11)
Leasehold land is carried at fair value, based on
valuations performed rotationally by management’s
external expert on an open market basis. Where
land was not valued externally at the year end date,
the Directors performed their own valuation by
considering the movements on the independently
valued land from the prior year and applying those
same movements to land in the same geographical
region. All land has been professionally valued at
least once at the current or previous financial year
end.
We identified the valuation of leasehold land as a risk
due to the subjective judgements involved in the
estimation, the differing categories of land title that
can be applied and the potential for management
bias..
How the scope of our audit addressed
the key audit matter
assessed
We
independence,
the
capabilities, objectivity and competence of
management’s expert.
We challenged the assumptions applied
by management’s expert, verified, on a
sample basis, input data relating to land
area and title to title documentation and
assessed
the
movements in the valuation on an estate
by estate basis in light of market valuation
trends.
the reasonableness of
their rationale
We challenged the assumptions applied
by the Directors in their own valuation,
most notably
the
application of the movements determined
by management’s expert to the remaining
estates, based on
their geographical
location.
for
Key observations: Based on the procedures we performed, we identified no changes to key assumptions that
would result in material changes to the valuation.
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74
Auditor’s Report
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ANGLO-EASTERN PLANTATIONS PLC
(continued)
Key audit matter
Impairment of
plantations
classified as
PPE
(note 2(g) and
note 11)
Plantations, or 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, or whether there is
an
recognised
impairment may be reversed. If any such indication
exists, the Directors shall estimate the recoverable
amount of the asset.
than a previously
indication
review
impairment
identified an
The Directors have
indicator of
impairment on two plantations and an indicator of
impairment reversal on a further two plantations and
having engaged an external expert, have carried out
an
those plantations,
calculating the recoverable amount to be the asset’s
value in use. The Directors exercise significant
judgement
underlying
determining
assumptions used in this calculation, considered to
be CPO price and the discount rate, for which
disclosure is given around their sensitivity.
the
for
in
How the scope of our audit addressed
the key audit matter
assessed
independence,
the
We
capabilities, objectivity and competence of
management’s expert.
We performed our own assessment for
indicators of
impairment across all
plantations based on performance against
production budget.
We challenged the assumptions in the
underlying data made by the expert and
management
discussions,
through
corroboration
independent external
data sources in respect of CPO price and
FFB production and, where available,
through corroboration
to supporting
documentation and historical trends.
to
the discount
With the use of our internal expert we
recalculated
to
determine an acceptable range which was
the rate calculated by
compared
management’s expert.
rate
to
We identified the impairment of plantations as a key
audit matter due to the significant judgement and
assumptions involved in its assessment.
We performed sensitivity analysis on the
CPO price assumption.
to
the
The
calculations
disclosures given
the
in
sensitivity of CPO price, discount rate and
inflation rate were re-performed.
support
respect of
Key observations: Based on the procedures we performed, we found the key assumptions used by the Directors
in assessing any impairment losses to be recognised or reversed to be appropriate.
Annual Report 2020 | Anglo-Eastern Plantations Plc
75
Auditor’s Report
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ANGLO-EASTERN PLANTATIONS PLC
(continued)
Key audit matter
Recoverability
amounts
of
due
from
cooperatives
under Plasma
scheme
(note 2(l), note
12 and note 15)
In accordance with Indonesian Law, the Group is
required to facilitate the development of community
gardens, in this case palm oil plantations, in
partnership with cooperatives under the Plasma
scheme. The associated costs incurred by the Group
in developing plantations on behalf of, and repayable
by, the Plasma scheme are held as non-current
receivables. In some instances, the Group will assist
the Plasma cooperatives in obtaining a bank loan
and will provide any necessary guarantee.
Both the receivables themselves and the guarantees
fall within the scope of IFRS 9 for assessment under
the expected credit loss model.
The Directors have measured the expected credit
losses as the excess of the receivable above the fair
value of the land and bearer plants operated by the
Plasma cooperative, being the minimum recoverable
amount. The greatest risk of expected credit loss is
with those companies that have also recognised
impairment on their own bearer plants due to
underperformance.
We identified the recoverability of amounts due from
cooperatives under Plasma scheme as a key audit
judgement and
the significant
matter due
assumptions involved in determining the expected
credit losses.
to
How the scope of our audit addressed
the key audit matter
We obtained direct confirmation from each
of the respective cooperatives of the
balance owing
them as at 31
from
December 2020.
We checked the arithmetic accuracy of the
model and verified the significant inputs,
being the fair value of the land and bearer
plants attributed to the Plasma area,
which apply the same assumptions that
have been tested in the other Key Audit
Matters above.
possible
outcomes
We discussed the reasonableness of
other
with
management regarding the recoverability
of the non-current receivables, including
staged repayment through the purchase
of the Plasma scheme’s FFB produce and
full
the Plasma
cooperative obtaining a bank loan, with a
probability weighting given to each.
repayment
through
Key observations: Based on the procedures we performed, we identified no changes to probability weighted
outcomes that would result in a material change to the expected credit losses recognised.
Our application of materiality
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
influence the economic decisions of reasonable users that are taken on the basis of the financial statements.
In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a
lower materiality level, performance materiality, to determine the extent of testing needed. Importantly, misstatements
below these levels will not necessarily be evaluated as immaterial as we also take account of the nature of identified
misstatements, and the particular circumstances of their occurrence, when evaluating their effect on the financial
statements as a whole.
Annual Report 2020 | Anglo-Eastern Plantations Plc
76
Auditor’s Report
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ANGLO-EASTERN PLANTATIONS PLC
(continued)
Based on our professional judgement, we determined materiality for the financial statements as a whole and
performance materiality as follows:
Materiality
Basis for determining
materiality
Rationale for the
benchmark applied
Group financial statements
2019
US$800,000
2020
US$2,500,000
Parent Company financial statements
2020
US$1,200,000
2019
US$720,000
5% of profit before
before
tax
biological
asset
movement
5% of profit before
before
tax
biological
asset
movement
Profit before tax before biological asset
movement was selected as
the
benchmark for determining materiality
for the Group financial statements as it
is considered to be the key indicator of
the Group’s financial performance.
2% of total assets
capped at 90% of
Group materiality
Capped at 90% of
Group materiality
the
given
assessment of the
components’
aggregation risk
Total assets was
the
selected as
for
benchmark
determining
materiality for the
Parent Company’s
financial
statements since it
is held primarily for
investment
purposes.
Performance materiality
US$1,900,000
US$600,000
US$900,000
US$540,000
Basis for determining
performance materiality
75% of materiality having considered a number of aspects including the expected
total value of known and likely misstatements based on previous assurance
engagements and other factors.
Component materiality
We set materiality for each component of the Group based on a percentage of between 0.16% and 88% (2019: 0.5%
and 90%) of Group materiality dependent on the size and our assessment of the risk of material misstatement of that
component. Component materiality ranged from US$4,000 to US$2,200,000 (2019: US$4,000 to US$720,000). In the
audit of each component, we further applied performance materiality levels of 75% of the component materiality to our
testing to ensure that the risk of errors exceeding component materiality was appropriately mitigated.
Reporting threshold
We agreed with the Audit Committee that we would report to them all individual audit differences in excess of
US$50,000 (2019: US$16,000). We also agreed to report differences below this threshold that, in our view, warranted
reporting on qualitative grounds.
Annual Report 2020 | Anglo-Eastern Plantations Plc
77
Auditor’s Report
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ANGLO-EASTERN PLANTATIONS PLC
(continued)
Other information
The Directors are responsible for the other information. The other information comprises the information included in
the annual report other than the financial statements and our auditor’s report thereon. Our 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. 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 course of the audit, or otherwise appears to be materially misstated. If we identify such
material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to
a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude
that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Corporate governance statement
The Listing Rules require us to review the Directors’ statement in relation to going concern, longer-term viability and
that part of the Corporate Governance Statement relating to the Parent Company’s compliance with the provisions of
the UK Corporate Governance Statement specified for our review.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the
Corporate Governance Statement is materially consistent with the financial statements or our knowledge obtained
during the audit.
Going concern
and longer-term
viability
• The Directors' statement with regards to the appropriateness of adopting the going
concern basis of accounting and any material uncertainties identified set out on page
15; and
• The Directors’ explanation as to its assessment of the entity’s prospects, the period
this assessment covers and why the period is appropriate set out on page 15.
Other
provisions
Code
• Directors' statement on fair, balanced and understandable set out on page 52;
• Board’s confirmation that it has carried out a robust assessment of the emerging and
principal risks set out on page 34;
• The section of the annual report that describes the review of effectiveness of risk
management and internal control systems set out on pages 63 and 64; and
• The section describing the work of the audit committee set out on pages 60 to 64.
Annual Report 2020 | Anglo-Eastern Plantations Plc
78
Auditor’s Report
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ANGLO-EASTERN PLANTATIONS PLC
(continued)
Other Companies Act 2006 reporting
Based on the responsibilities described below and our work performed during the course of the audit, we are required
by the Companies Act 2006 and ISAs (UK) to report on certain opinions and matters as described below.
Strategic report
and Directors’
report
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
the Strategic report and the Directors’ report have been prepared in accordance with
applicable legal requirements.
•
In the light of the knowledge and understanding of the Group and 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.
Directors’
remuneration
In our opinion, the part of the Directors’ remuneration report to be audited has been properly
prepared in accordance with the Companies Act 2006.
Matters on
which we are
required to
report by
exception
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, 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.
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.
Annual Report 2020 | Anglo-Eastern Plantations Plc
79
Auditor’s Report
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ANGLO-EASTERN PLANTATIONS PLC
(continued)
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.
Extent to which the audit was capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in
line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including
fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
• We gained an understanding of the legal and regulatory framework applicable to the Group and the industry
in which it operates, and considered the risk of acts by the Group that were contrary to applicable laws and
regulations, including fraud.
• We considered the Group’s compliance with laws and regulations that have a direct impact on the financial
statements including, but not limited to, the Companies Act 2006, the UK Listing Rules, certain requirements
from the UK, Indonesia and Malaysia Finance Acts, the requirements of the Anti-Bribery and Corruption Acts
in the UK, Indonesia and Malaysia, taxation laws in the UK, Indonesia and Malaysia, Indonesian land laws
and the Indonesian Sustainable Palm Oil (ISPO) and Malaysian Sustainable Pail Oil (MSPO) certification
schemes, and we considered the extent to which non-compliance might have a material effect on the Group
financial statements.
• We designed audit procedures to identify instances of non-compliance with such laws and regulations. Our
procedures included reviewing the financial statement disclosures and agreeing to underlying supporting
documentation where necessary. We reviewed internal audit reports and minutes of all Board and Committee
meetings held throughout the year and subsequent to the year end for any indicators of non-compliance and
made enquiries of management and of the Directors as to the risks of non-compliance and any instances
thereof.
• We discussed among the engagement team and relevant internal technical experts how and where non-
compliance with laws and regulations and fraud might occur in the financial statements and any potential
indicators of fraud.
• We addressed the risk of management override of internal controls, considered to be in connection with the
posting of inappropriate journals and bias in significant management estimates and judgements, through
testing journal entries processed during the year and subsequent to the year end which met a specific criteria,
particularly with regard to revenue postings with unusual account combinations and consolidation journals,
and evaluating whether there was evidence of bias in setting significant estimates and judgements by the
Directors that represented a risk of material misstatement due to fraud (refer to Key Audit Matter above).
Our audit procedures were designed to respond to risks of material misstatement in the financial statements,
recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting
one resulting from error, as fraud may involve deliberate concealment by, for example, forgery, misrepresentations or
through collusion. There are inherent limitations in the audit procedures performed and the further removed non-
compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less
likely we are to become aware of it.
A further description of our responsibilities is available on the Financial Reporting Council’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Annual Report 2020 | Anglo-Eastern Plantations Plc
80
Auditor’s Report
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ANGLO-EASTERN PLANTATIONS PLC
(continued)
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
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 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.
Nigel Harker (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
London
United Kingdom
12 May 2021
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
Annual Report 2020 | Anglo-Eastern Plantations Plc
81
Consolidated Income Statement
For the year ended 31 December 2020
Continuing operations
Note
2020
Result
before
BA
movement*
BA
movement
Total
Result
before
BA
movement
2019
BA
movement
Revenue
Cost of sales
Gross profit
Administration expenses
Reversal of impairment
Provision for expected credit loss
Operating profit
Exchange (losses) / gains
Finance income
Finance expense
Profit before tax
Tax expense
Profit for the year
Attributable to:
- Owners of the parent
- Non-controlling interests
Earnings per share for profit
attributable to the owners of the
parent during the year
- basic
- diluted
3
11
15
4
4
5
8
9
9
$000
269,060
$000
$000
$000
-
269,060
219,136
(213,370)
1,274
(212,096)
(199,515)
55,690
1,274
56,964
(8,134)
2,008
(1,485)
-
-
-
(8,134)
2,008
(1,485)
48,079
1,274
49,353
(268)
2,876
(292)
-
-
-
(268)
2,876
(292)
50,395
1,274
51,669
(13,660)
(66)
(13,726)
36,735
1,208
37,943
19,621
(8,068)
6,590
(5,965)
12,178
251
4,169
(980)
15,618
(1,885)
13,733
30,784
5,951
36,735
1,051
31,835
14,019
157
6,108
(286)
1,208
37,943
13,733
$000
-
3,255
3,255
-
-
-
3,255
-
-
-
3,255
(814)
2,441
2,077
364
2,441
80.32cts
80.32cts
Total
$000
219,136
(196,260)
22,876
(8,068)
6,590
(5,965)
15,433
251
4,169
(980)
18,873
(2,699)
16,174
16,096
78
16,174
40.61cts
40.61cts
Earnings per share before BA movement are shown in note 9.
* The total column represents the IFRS figures and the result before BA movement is an Alternative Performance Measure (“APM”). We have
opted to additionally disclose this APM as the BA movement is considered to be a fair value calculation which does not appropriately represent
the Group’s result for the year.
The accompanying notes are an integral part of this consolidated income statement.
Annual Report 2020 | Anglo-Eastern Plantations Plc
82
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2020
Profit for the year
Other comprehensive (expenses) / income:
Items may be reclassified to profit or loss:
(Loss) / Gain on exchange translation of foreign operations
Net other comprehensive (expenses) / income may be reclassified to profit or loss
Items not to be reclassified to profit or loss:
Unrealised gain / (loss) on revaluation of leasehold land, net of tax
Remeasurement of retirement benefits plan, net of tax
Net other comprehensive income / (expenses) not being reclassified to profit or loss
Total other comprehensive (expenses) / income for the year, net of tax
2020
$000
2019
$000
37,943
16,174
(5,490)
(5,490)
1,309
(649)
660
(4,830)
18,680
18,680
(1,715)
(768)
(2,483)
16,197
Total comprehensive income for the year
33,113
32,371
Attributable to:
- Owners of the parent
- Non-controlling interests
27,722
5,391
33,113
28,550
3,821
32,371
The accompanying notes are an integral part of this consolidated statement of comprehensive income.
Annual Report 2020 | Anglo-Eastern Plantations Plc
83
Consolidated Statement of Financial Position
As at 31 December 2020
Company Number: 1884630
Non-current assets
Property, plant and equipment
Receivables
Deferred tax assets
Current assets
Inventories
Income tax receivables
Other tax receivable
Biological assets
Trade and other receivables
Short-term investments
Cash and cash equivalents
Current liabilities
Loans and borrowings
Trade and other payables
Income tax liabilities
Other tax liabilities
Dividend payables
Lease liabilities
Net current assets
Non-current liabilities
Deferred tax liabilities
Retirement benefits - net liabilities
Lease liabilities
Net assets
Issued capital and reserves attributable to owners of the parent
Share capital
Treasury shares
Share premium
Capital redemption reserve
Revaluation reserves
Exchange reserves
Retained earnings
Non-controlling interests
Total equity
Note
31.12.2020
$000
31.12.2019
$000
11
12
18
13
8
8
14
15
28
16
17
8
8
29
18
19
29
20
20
365,353
22,236
8,817
396,406
12,541
10,071
41,618
8,783
4,693
1,957
115,211
194,874
-
(26,310)
(5,981)
(1,089)
(24)
(236)
(33,640)
161,234
(15,467)
(13,383)
(217)
(29,067)
528,573
15,504
(1,171)
23,935
1,087
49,367
(233,534)
573,493
428,681
99,892
528,573
367,891
16,500
11,251
395,642
8,752
14,348
35,179
7,574
5,774
-
84,846
156,473
(8,203)
(16,110)
(1,512)
(1,386)
(23)
(222)
(27,456)
129,017
(17,047)
(11,338)
(456)
(28,841)
495,818
15,504
(1,171)
23,935
1,087
48,413
(229,026)
542,415
401,157
94,661
495,818
The financial statements were approved and authorised for issue by the Board of Directors on 12 May 2021 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 consolidated statement of financial position.
Annual Report 2020 | Anglo-Eastern Plantations Plc
84
Consolidated Statement of Changes in Equity For the year ended 31 December 2020 Annual Report 2020 | Anglo-Eastern Plantations Plc 85 Note Share capital Treasury shares Share premium Capital redemption reserve Revaluation reserves Exchange reserves Retained earnings Total Non-controlling interests Total equity $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 Balance at 31 December 2018 15,504 (1,171) 23,935 1,087 51,308 (245,170) 526,487 371,980 92,601 464,581 Items of other comprehensive (expenses) / income -Unrealised (loss) / gain on revaluation of leasehold land, net of tax 11 - - - - (3,040) 1,211 - (1,829) 114 (1,715) -Remeasurement of retirement benefit plan, net of tax 19 - - - - - - (650) (650) (118) (768) -Gain on exchange translation of foreign operations - - - - - 14,933 - 14,933 3,747 18,680 Total other comprehensive (expenses) / income - - - - (3,040) 16,144 (650) 12,454 3,743 16,197 Profit for the year - - - - - - 16,096 16,096 78 16,174 Total comprehensive (expenses) / income for the year - - - - (3,040) 16,144 15,446 28,550 3,821 32,371 Issue of subsidiaries shares to non-controlling interests - - - - - - - - 512 512 Accretion from change in stake - - - - 145 - 1,671 1,816 (1,816) - Dividends paid - - - - - - (1,189) (1,189) (457) (1,646) Balance at 31 December 2019 15,504 (1,171) 23,935 1,087 48,413 (229,026) 542,415 401,157 94,661 495,818 Items of other comprehensive income -Unrealised gain on revaluation of leasehold land, net of tax 11 - - - - 954 - - 954 355 1,309 -Remeasurement of retirement benefit plan, net of tax 19 - - - - - - (559) (559) (90) (649) -Loss on exchange translation of foreign operations - - - - - (4,508) - (4,508) (982) (5,490) Total other comprehensive income / (expenses) - - - - 954 (4,508) (559) (4,113) (717) (4,830) Profit for the year - - - - - - 31,835 31,835 6,108 37,943 Total comprehensive income / (expenses) for the year - - - - 954 (4,508) 31,276 27,722 5,391 33,113 Dividends paid - - - - - - (198) (198) (160) (358) Balance at 31 December 2020 15,504 (1,171) 23,935 1,087 49,367 (233,534) 573,493 428,681 99,892 528,573 Consolidated Statement of Changes in Equity For the year ended 31 December 2020 Annual Report 2020 | Anglo-Eastern Plantations Plc 85 Note Share capital Treasury shares Share premium Capital redemption reserve Revaluation reserves Exchange reserves Retained earnings Total Non-controlling interests Total equity $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 Balance at 31 December 2018 15,504 (1,171) 23,935 1,087 51,308 (245,170) 526,487 371,980 92,601 464,581 Items of other comprehensive (expenses) / income -Unrealised (loss) / gain on revaluation of leasehold land, net of tax 11 - - - - (3,040) 1,211 - (1,829) 114 (1,715) -Remeasurement of retirement benefit plan, net of tax 19 - - - - - - (650) (650) (118) (768) -Gain on exchange translation of foreign operations - - - - - 14,933 - 14,933 3,747 18,680 Total other comprehensive (expenses) / income - - - - (3,040) 16,144 (650) 12,454 3,743 16,197 Profit for the year - - - - - - 16,096 16,096 78 16,174 Total comprehensive (expenses) / income for the year - - - - (3,040) 16,144 15,446 28,550 3,821 32,371 Issue of subsidiaries shares to non-controlling interests - - - - - - - - 512 512 Accretion from change in stake - - - - 145 - 1,671 1,816 (1,816) - Dividends paid - - - - - - (1,189) (1,189) (457) (1,646) Balance at 31 December 2019 15,504 (1,171) 23,935 1,087 48,413 (229,026) 542,415 401,157 94,661 495,818 Items of other comprehensive income -Unrealised gain on revaluation of leasehold land, net of tax 11 - - - - 954 - - 954 355 1,309 -Remeasurement of retirement benefit plan, net of tax 19 - - - - - - (559) (559) (90) (649) -Loss on exchange translation of foreign operations - - - - - (4,508) - (4,508) (982) (5,490) Total other comprehensive income / (expenses) - - - - 954 (4,508) (559) (4,113) (717) (4,830) Profit for the year - - - - - - 31,835 31,835 6,108 37,943 Total comprehensive income / (expenses) for the year - - - - 954 (4,508) 31,276 27,722 5,391 33,113 Dividends paid - - - - - - (198) (198) (160) (358) Balance at 31 December 2020 15,504 (1,171) 23,935 1,087 49,367 (233,534) 573,493 428,681 99,892 528,573 Consolidated Statement of Changes in Equity For the year ended 31 December 2020 Annual Report 2020 | Anglo-Eastern Plantations Plc 85 Note Share capital Treasury shares Share premium Capital redemption reserve Revaluation reserves Exchange reserves Retained earnings Total Non-controlling interests Total equity $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 Balance at 31 December 2018 15,504 (1,171) 23,935 1,087 51,308 (245,170) 526,487 371,980 92,601 464,581 Items of other comprehensive (expenses) / income -Unrealised (loss) / gain on revaluation of leasehold land, net of tax 11 - - - - (3,040) 1,211 - (1,829) 114 (1,715) -Remeasurement of retirement benefit plan, net of tax 19 - - - - - - (650) (650) (118) (768) -Gain on exchange translation of foreign operations - - - - - 14,933 - 14,933 3,747 18,680 Total other comprehensive (expenses) / income - - - - (3,040) 16,144 (650) 12,454 3,743 16,197 Profit for the year - - - - - - 16,096 16,096 78 16,174 Total comprehensive (expenses) / income for the year - - - - (3,040) 16,144 15,446 28,550 3,821 32,371 Issue of subsidiaries shares to non-controlling interests - - - - - - - - 512 512 Accretion from change in stake - - - - 145 - 1,671 1,816 (1,816) - Dividends paid - - - - - - (1,189) (1,189) (457) (1,646) Balance at 31 December 2019 15,504 (1,171) 23,935 1,087 48,413 (229,026) 542,415 401,157 94,661 495,818 Items of other comprehensive income -Unrealised gain on revaluation of leasehold land, net of tax 11 - - - - 954 - - 954 355 1,309 -Remeasurement of retirement benefit plan, net of tax 19 - - - - - - (559) (559) (90) (649) -Loss on exchange translation of foreign operations - - - - - (4,508) - (4,508) (982) (5,490) Total other comprehensive income / (expenses) - - - - 954 (4,508) (559) (4,113) (717) (4,830) Profit for the year - - - - - - 31,835 31,835 6,108 37,943 Total comprehensive income / (expenses) for the year - - - - 954 (4,508) 31,276 27,722 5,391 33,113 Dividends paid - - - - - - (198) (198) (160) (358) Balance at 31 December 2020 15,504 (1,171) 23,935 1,087 49,367 (233,534) 573,493 428,681 99,892 528,573 Consolidated Statement of Cash Flows
For the year ended 31 December 2020
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
Provision for expected credit loss
Operating cash flows before changes in working capital
(Increase) / Decrease in inventories
Increase in non-current, trade and other receivables
Increase / (Decrease) in trade and other payables
Cash inflows from operations
Interest paid
Retirement benefits paid
Overseas tax paid
Net cash flows from operating activities
Investing activities
Property, plant and equipment
- purchases
- sales
Interest received
Increase in receivables from cooperatives under plasma scheme
Placement of fixed deposits with original maturity of more than three months
2020
$000
2019
$000
51,669
18,873
(1,274)
(2)
18,143
1,793
(2,584)
268
587
(2,008)
1,485
68,077
(3,915)
(12)
10,554
74,704
(258)
(434)
(8,917)
65,095
(3,255)
(83)
18,590
2,152
(3,189)
(251)
261
(6,590)
5,965
32,473
1,185
(1,586)
(4,629)
27,443
(939)
(475)
(11,438)
14,591
(21,277)
(33,169)
83
2,876
(4,563)
(1,957)
135
4,169
(5,116)
-
Net cash used in investing activities
(24,838)
(33,981)
Annual Report 2020 | Anglo-Eastern Plantations Plc
86
Consolidated Statement of Cash Flows
For the year ended 31 December 2020
Financing activities
Dividends paid to the holders of the parent
Dividends paid to non-controlling interests
Issue of subsidiaries shares to non-controlling interests
Repayment of existing long-term loans
Repayment of lease liabilities - principal
Repayment of lease liabilities - interest
Net cash used in financing activities
Net increase / (decrease) in cash and cash equivalents
Cash and cash equivalents
At beginning of year
Exchange (losses) / gains
At end of year
Comprising:
Cash at end of year
Note
2020
$000
(197)
(160)
-
(8,167)
(223)
(34)
(8,781)
31,476
2019
$000
(1,240)
(457)
512
(11,078)
(169)
(41)
(12,473)
(31,863)
84,846
(1,111)
115,211
112,212
4,497
84,846
28
115,211
84,846
The accompanying notes are an integral part of this consolidated statement of cash flows.
.
Annual Report 2020 | Anglo-Eastern Plantations Plc
87
Notes to the Consolidated Financial Statements
1 Basis of preparation
AEP is a company incorporated in the UK under the Companies Act 2006 and is listed on the London Stock Exchange. The registered office
of AEP is located at Quadrant House, 6th Floor, 4 Thomas More Square, London E1W 1YW, UK. The principal activity of the Group is plantation
agriculture, mainly in the cultivation of oil palm in Indonesia and Malaysia, of which Indonesia is the principal place of business.
The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have
been consistently applied to all years presented, except as detailed in the following paragraph.
Basis of preparation
The financial statements have been prepared in accordance with international accounting standards in conformity with the requirements of the
Companies Act 2006 and in accordance with International Financial Reporting Standards (“IFRSs”) adopted pursuant to Regulation (EC) No
1606/2002 as it applies in the EU.
The Directors have a reasonable expectation, having made the appropriate enquiries, that the Group has control of the monthly cash flows
and that the Group has sufficient cash resources to cover the fixed cash flows for a period of at least twelve months from the date of approval
of these financial statements. For these reasons, the Directors adopted a going concern basis in preparation of the financial statements. The
Directors have made this assessment after consideration of the Group’s budgeted cash flows and related assumptions including appropriate
stress testing of identified uncertainties, specifically on the potential shut down of the entire operations from three to twelve months if all the
plantations are infected with Coronavirus as well as the impact on the demand for palm oil with decreases of 50% to 100%. Stress testing of
other identified uncertainties and risks such as commodity prices and currency exchange rates were also undertaken.
Changes in accounting standards
(a) New standards, interpretations and amendments effective in the current year
The following amendments are effective for the first time for accounting periods beginning on or after 1 January 2020 in these financial
statements:
•
•
Amendments to references in the conceptual framework in IFRS Standards
IAS 1 and IAS 8 (amendments) Definition of material
These new and amended standards and Interpretations that apply for the first time in these financial statements have not significantly
impacted the Group as they are either not relevant to the Group’s current activities or require accounting which is consistent with the
Group’s existing accounting policies.
(b) New standards, interpretations and amendments not yet effective.
The following new standards, interpretations and amendments are effective for future periods (as indicated) and have not been applied
in these financial statements:
•
•
•
•
Annual improvements to IFRS Standards 2018-2020 (1 January 2022, not yet endorsed)
IAS 1 (amendments) Classification of liabilities as current or non-current (1 January 2023, not yet endorsed)
IAS 1 (amendments) and IFRS Practice Statement 2 Disclosure of Accounting Policies (1 January 2023, not yet endorsed)
IAS 8 (amendments) Definition of Accounting Estimates (1 January 2023, not yet endorsed)
None of the above new standards, interpretations and amendments are expected to have a material effect on the Group's future financial
statements.
2 Accounting policies
(a) Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its
subsidiaries) made up to 31 December each year. The Company controls a subsidiary if all three of the following elements are present;
power over the subsidiary, exposure to variable returns from the subsidiary, and the ability of the investor to use its power to affect those
variable returns. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control
commences until the date control ceases. In respect of cooperatives under the Plasma scheme, the Group has not consolidated these
results on the basis that the Company does not have control over those entities.
(b) Business combinations
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the consolidated
statement of financial position, the acquiree’s identifiable assets, liabilities and contingent liabilities are initially recognised at their fair
values at the acquisition date. Acquisitions of entities that comprise principally land with no active plantation business do not represent
business combinations, in such cases, the amount paid for each acquisition is allocated between the identifiable assets/liabilities at the
acquisition date.
Annual Report 2020 | Anglo-Eastern Plantations Plc
88
Notes to the Consolidated Financial Statements
2 Accounting policies - continued
(c)
Foreign currency
The individual financial statements of each subsidiary are presented in the currency of the country in which it operates (its functional
currency), being the currency in which the majority of their transactions are denominated, with the exception of the Company and its UK
subsidiaries which are presented in US Dollar. The presentation currency for the consolidated financial statements is also US Dollar,
chosen because, as internationally traded commodities, the price of the bulk of the Group’s products are ultimately linked to the US
Dollar.
On consolidation, the results of overseas operations are translated into US Dollar at average exchange rates for the year unless
exchange rates fluctuate significantly in which case the actual rate is used. All assets and liabilities of overseas operations are translated
at the rate ruling at the balance sheet date. Exchange differences arising on re-translating the opening net assets at opening rate and
the results of overseas operations at actual rate are recognised directly in equity (the “exchange reserves”). Exchange differences
recognised in the income statement of Group entities’ separate financial statements on the translation of long-term monetary items
forming part of the Group’s net investment in the overseas operation concerned are reclassified to the exchange reserves if the item is
denominated in the presentational currency of the Group or of the overseas operation concerned.
On disposal of a foreign operation, the cumulative exchange differences recognised in the exchange reserves relating to that operation
up to the date of disposal are transferred to the income statement as part of the profit or loss on disposal.
All other exchange profits or losses are credited or charged to the income statement.
(d) Revenue recognition
The Group derives its revenue from the sale of CPO, palm kernel, FFB, shell nut, biomass products, biogas products and rubber slab.
Revenue for CPO, palm kernel and shell nut are recorded net of sales and related taxes and levies, including export taxes and recognised
when the delivery order is issued to a purchaser. The delivery order is not issued until goods are paid for. Revenue for FFB, biomass
and biogas are recognised upon delivery. Sales of rubber slab are recognised on signing of the sales contract, this being the point at
which control is transferred to the buyer.
The transacted price for each product is based on the market price or predetermined monthly contract value. There is no right of return
nor warranty provided to the customers on the sale of products and services rendered.
(e)
Tax
UK and foreign corporation tax are provided at amounts expected to be paid or recovered using the tax rates and laws that have been
enacted or substantively enacted by the balance sheet date.
The directors consider that the carrying amount of tax receivables approximates its fair value.
(f)
Dividends
Equity dividends are recognised when they become legally payable. The Company pays only one dividend each year as a final dividend
which becomes legally payable when approved by the shareholders at the next annual general meeting.
(g) Property, plant and equipment
All items of property, plant and equipment are initially measured at cost. Cost includes expenditure that is directly attributable to the
acquisition of the items. After initial recognition, all items of property, plant and equipment except land and construction in progress, are
stated at cost less accumulated depreciation and any accumulated impairment losses.
Plantations comprise of the cost of planting and development of oil palm and other plantation crops. Costs of new planting and
development of plantation crops are capitalised from the stage of land clearing up to the stage of maturity. The costs of immature
plantations consist mainly of the accumulated cost of land clearing, planting, fertilising and maintaining the plantation, borrowing costs
and other indirect overhead costs up to the time the trees are harvestable and to the extent appropriate. Oil palm plantations are
considered mature within three to four years after planting and generating average annual CPO of four to six metric tons per hectare.
Immature plantations are not depreciated.
The Indonesian authorities have granted certain land exploitation rights and operating permits for the estates. The land rights are usually
renewed without significant cost subject to compliance with the laws and regulations of Indonesia therefore, the Group has classified the
land rights as leasehold land. The leasehold land is recognised at cost initially and is not depreciated. Costs include the initial cost of
obtaining the location permits and subsequent payments to compensate existing land owners plus any legal costs incurred to acquire
the necessary land exploitation rights. Location permits are subsequently carried at fair value while the subsequent amounts are carried
at cost until the exploitation rights have been awarded, at which point they will also be carried at fair value. Fair value is determined based
on periodic valuations on an open market basis by a professionally qualified valuer. These revaluations are made with sufficient regularity
to ensure that the carrying amount does not differ materially from that which would be determined using fair value at the end of the
reporting period. Changes in fair value are recognised in other comprehensive income and accumulated in the revaluation reserve
except to the extent that any decrease in value in excess of the credit balance on the revaluation reserve, or reversal of such a
transaction, is recognised in income statement. On the disposal of a revalued estate, any related balance remaining in the revaluation
reserve is transferred to retained earnings as a movement in reserves.
Annual Report 2020 | Anglo-Eastern Plantations Plc
89
Notes to the Consolidated Financial Statements
2 Accounting policies - continued
(g) Property, plant and equipment - continued
Construction in progress is stated at cost. The accumulated costs will be reclassified to the appropriate class of assets when construction
is completed and the asset is ready for its intended use. Construction in progress is also not depreciated until such time when the asset
is available for use.
Interest on third party loans directly related to field development is capitalised in the proportion that the opening immature area bears to
the total planted area of the relevant estate. Interest on loans related to construction in progress (such as an oil mill) is capitalised up to
the commissioning of that asset. These interest rates are booked at the rate prevailing at the time.
Plantations, buildings and oil mills are depreciated using the straight-line method. All other property, plant and equipment items are
depreciated using the double-declining-balance method. The yearly rates of depreciation are as follows:
Plantations - 5% per annum
Buildings - 5% to 10% per annum
Oil Mill - 5% per annum
Estate plant, equipment & vehicle - 12.5% to 50% per annum
Office plant, equipment & vehicle - 25% to 50% per annum
(h) Biological assets
Biological assets comprise an estimation of the fair value less costs to sell of unharvested FFB at balance sheet date. Changes in the
fair value of biological assets are charged or credited to the income statement within the cost of sales.
(i)
Leased assets
The Group assesses whether a contract is or contains a lease, at inception of the contract. The Group recognises a right-of-use asset
and a corresponding lease liability with respect to all lease arrangements in which it is the lessee, except for short-term leases (defined
as leases with a lease term of 12 months or less) and leases of low value assets (such as tablets and personal computers, small items
of office furniture and telephones). For these leases, the Group recognises the lease payments as an operating expense on a straight-
line basis over the term of the lease unless another systematic basis is more representative of the time pattern in which economic
benefits from the leased assets are consumed.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date,
discounted by using the rate implicit in the lease. If this rate cannot be readily determined, the lessee uses its incremental borrowing
rate.
Lease payments included in the measurement of the lease liability comprise:
• Fixed lease payments (including in-substance fixed payments), less any lease incentives receivable.
The lease liability is presented as a separate line in the consolidated statement of financial position.
The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability (using the effective
interest method) and by reducing the carrying amount to reflect the lease payments made.
The right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payments made at or before the
commencement day, less any lease incentives received and any initial direct costs. They are subsequently measured at cost less
accumulated depreciation and impairment losses.
Right-of-use assets are depreciated over the shorter period of lease term and useful life of the underlying asset. If a lease transfers
ownership of the underlying asset or the cost of the right-of-use asset reflects that the Group expects to exercise a purchase option, the
related right-of-use asset is depreciated over the useful life of the underlying asset. The depreciation starts at the commencement date
of the lease.
The right-of-use assets are presented together in property, plant and equipment in the consolidated statement of financial position. The
Group applies IAS 36 to determine whether a right-of-use asset is impaired and accounts for any identified impairment loss as described
in the ‘Property, Plant and Equipment’ policy.
Land rights are held at fair value and revalued at the balance sheet date.
Annual Report 2020 | Anglo-Eastern Plantations Plc
90
Notes to the Consolidated Financial Statements
2 Accounting policies - continued
(j)
(k)
(l)
Impairment
An assessment of indicators of impairment over the Company’s assets is undertaken annually on 31 December. Where the carrying
value of an asset exceeds its recoverable amount (i.e. the higher of value in use or fair value, less costs to sell), the asset is written
down accordingly. Impairment charges are included in the income statement, except to the extent they reverse gains previously
recognised in other comprehensive income. Reversal on impairment loss would be recognised if, and only if, there has been a change
in the estimates used to determine the asset’s recoverable amount since the last impairment test was carried out. Reversal on
impairment losses will be immediately recognised in the income statement.
Inventories
Inventories are initially recognised at cost, and subsequently at the lower of cost and net realisable value. In the case of processed
produce for sale which comprises palm oil and kernel, cost represents the monthly weighted-average cost of production and appropriate
production overheads. Estate and mill consumables are valued on a weighted average cost basis.
Financial assets
The Group's financial assets measured at amortised cost comprise trade and other receivables and cash and cash equivalents in the
consolidated statement of financial position. All the Group's receivables and loans are non-derivative financial assets with cash flows
that are solely payments of principal and interest. They are recognised at fair value at inception and subsequently at amortised cost as
this is what the Group considers to be most representative of the business model for these assets.
Cash and cash equivalents consist of cash in hand and short-term deposits at banks with an original maturity not exceeding three
months. Bank overdrafts are shown within loans and borrowings under current liabilities on the balance sheet.
The Group considers a trade receivable or other receivable as credit impaired when one or more events that have a detrimental impact
on the estimated cash flow have occurred. Trade and other receivables are written off when there is no expectation of recovery based
on the assessment performed. If the receivables are subsequently recovered, these are recognised in income statement.
The Group use three categories for those receivables which reflect their credit risk and how the loss provision is determined for those
categories. These include trade receivables using the simplified approach and debt instruments at amortised costs other than trade
receivables and financial guarantee contracts using the three-stage approach.
(m) Financial liabilities
All the Group's financial liabilities are non-derivative financial liabilities.
Bank borrowings and long-term development loans are initially recognised at fair value and subsequently at amortised cost, which is the
total of proceeds received net of issue costs. Finance charges are accounted for on an accruals basis and charged in the income
statement unless capitalised according to the policy as set out in the property, plant and equipment policy.
Trade and other payables are shown at fair value at recognition and subsequently at amortised cost.
(n) Deferred tax
Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability in the balance sheet differs from its
tax base except for differences in the initial recognition of an asset or liability in a transaction which is not a business combination and
at the time of the transaction affects neither accounting nor taxable profit.
The Group recognises deferred tax liabilities arising from taxable temporary differences on investments in subsidiaries, except where
the Group is able to control the reversal of the temporary differences and it is probable that the temporary difference will not reverse in
the foreseeable future.
Recognition of deferred tax assets is restricted to those instances where it is possible that taxable profit will be available against which
the difference can be utilised.
Deferred tax is recognised on temporary differences arising from property revaluation surpluses or deficits.
Deferred tax is determined using the tax rates that are enacted or substantively enacted at the balance sheet date. Deferred tax is
charged or credited in the income statement, except when it relates to items charged to other comprehensive income, such as
revaluations, in which case the deferred tax is also dealt with in other comprehensive income.
Annual Report 2020 | Anglo-Eastern Plantations Plc
91
Notes to the Consolidated Financial Statements
2 Accounting policies - continued
(o) Retirement benefits
Defined contribution schemes
Contributions to defined contribution pension schemes are charged to the consolidated income statement in the year to which they
relate.
Defined benefit schemes
The Group operates a number of defined benefit schemes in respect of its Indonesian operations. These schemes’ surpluses and deficits
are measured at:
•
•
•
•
The fair value of plan assets at the reporting date; less
Plan liabilities calculated using the projected unit credit method discounted to its present value using yields available on high
quality corporate bonds that have maturity dates approximating to the terms of the liabilities; plus
Past service costs; less
The effect of minimum funding requirements agreed with scheme trustees.
Remeasurements of the net defined benefit obligation are recognised in other comprehensive income. The remeasurements include:
•
•
•
Actuarial gains and losses;
Return on plan assets (interest exclusive); and
Any asset ceiling effects (interest inclusive).
Service costs are recognised in other comprehensive income and include current and past service costs as well as gains and losses on
curtailments.
Net interest expense / (income) is recognised in the income statement, and is calculated by applying the discount rate used to measure
the defined benefit obligation / (asset) at the beginning of the annual period to the balance of the net defined benefit obligation / (asset),
considering the effects of contributions and benefit payments during the period.
Gains or losses arising from changes to scheme benefits or scheme curtailment are recognised immediately in the income statement.
Settlements of defined benefit schemes are recognised in the period in which the settlement occurs.
Treasury shares
Consideration paid or received for the purchase or sale of the Company’s own shares for holding in treasury is recognised directly in
equity, where the cost is presented as the treasury shares. Any excess of the consideration received on the sale of treasury shares over
the weighted average cost of shares sold is taken to the share premium account.
Any shares held in treasury are treated as cancelled for the purpose of calculating earnings per share.
Financial guarantee contracts
Where the Company and its subsidiaries enter into financial guarantee contracts and guarantee the indebtedness of other companies
within the Group and/or third party entities, these are accounted for under IFRS 9. The details of financial guarantee contracts are
disclosed in note 25.
(p)
(q)
Annual Report 2020 | Anglo-Eastern Plantations Plc
92
Notes to the Consolidated Financial Statements
2 Accounting policies - continued
(r)
Critical accounting estimates and judgements
The Group makes certain estimates and assumptions regarding the future. Estimates and judgements are continually evaluated based
on historical experience and other factors, including expectations of future events that are believed to be reasonable under the
circumstances. In the future, actual experience may differ from these estimates and assumptions. The estimates and assumptions that
have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are
discussed below.
Judgements
•
•
Assessment of de-facto control of cooperatives under Plasma scheme (see note 2(a) and note 26)
Classification of land as leasehold with no depreciation charged (see note 11)
Estimates and assumptions
•
•
•
•
•
•
•
Impairment of plantation assets - estimate of future cash flows and determination of the discount rate and other assumptions (see
note 11)
Expected credit losses (“ECL”) on amounts due from cooperatives under Plasma scheme - determination of possible outcomes
and their weighted probability (see note 12)
Carrying value of income tax receivables - determination of historic recovery rates (see note 8)
Income taxes and deferred tax - provisions for income taxes in various jurisdictions (see note 8 and note 18)
Recognition of deferred tax on losses - estimate of future profitability of respective entities (see note 18)
Retirement benefits - actuarial assumptions (see note 19)
Fair value measurement - a number of assets and liabilities included in the Group’s financial statements require measurement at,
and/or disclosure of, fair value. The fair value measurement of the Group’s financial and non-financial assets and liabilities utilises
market observable inputs and data as far as possible. Inputs used in determining fair value measurements are categorised into
different levels based on how observable the inputs used in the valuation technique utilised are (the ‘fair value hierarchy’):
-
-
Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2 - inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or
indirectly; and
Level 3 - unobservable inputs for the asset or liability.
-
The classification of an item into the above levels is based on the lowest level of the inputs used that has a significant effect on
the fair value measurement of the item. Transfers of items between levels are recognised in the period they occur.
The Group measures the following assets at fair value:
-
-
Revalued land - Property, plant and equipment (note 11)
Biological assets (note 14)
The Group measures the following assets at amortised cost, however disclosure of fair value is given in accordance with IFRS7
and IFRS 13:
-
-
Non-current receivables due from non-controlling interests (note 12)
Non-current receivables due from cooperatives under Plasma scheme (note 12)
For more detailed information in relation to the fair value measurement of the items above, please refer to the applicable notes.
Annual Report 2020 | Anglo-Eastern Plantations Plc
93
Notes to the Consolidated Financial Statements
3 Revenue
Disaggregation of Revenue
The Group has disaggregated revenue into various categories in the following table which is intended to:
• Depict how the nature, amount and uncertainty of revenue and cash flows are affected by timing of revenue recognition; and
• Enable users to understand the relationship with revenue segment information provided in note 6.
There is no right of return and warranty provided to the customers on the sale of products and services rendered.
CPO, palm
kernel and
FFB
$000
Rubber
$000
Shell nut
$000
Biomass
products
$000
Biogas
products
$000
Others
$000
Total
$000
Year to 31 December 2020
Contract counterparties
Government
Non-government
- Wholesalers
Timing of transfer of goods
Delivery to customer premises
Delivery to port of departure
Customer collect from our mills /
estates
Upon generation / others
Year to 31 December 2019
Contract counterparties
Government
Non-government
- Wholesalers
Timing of transfer of goods
Delivery to customer premises
Delivery to port of departure
Customer collect from our mills / estates
Upon generation / others
4 Finance income and expense
-
262,348
262,348
5,613
-
256,735
-
262,348
-
214,416
214,416
5,624
-
208,792
-
214,416
-
631
631
631
-
-
-
631
-
653
653
653
-
-
-
653
-
3,959
3,959
-
-
3,959
-
3,959
-
2,224
2,224
-
-
2,224
-
2,224
-
427
427
-
427
-
-
427
-
733
733
-
733
-
-
733
Finance income
Interest receivable on:
Credit bank balances and time deposits
Finance expense
Interest payable on:
Development loans (note 16)
Interest expense on lease liabilities (note 29)
Net finance income recognised in income statement
970
-
970
-
-
-
970
970
908
-
908
-
-
-
908
908
-
970
725
725
268,090
269,060
-
-
-
725
725
6,244
427
260,694
1,695
269,060
-
908
202
202
-
-
-
202
202
218,228
219,136
6,277
733
211,016
1,110
219,136
2020
$000
2019
$000
2,876
4,169
(257)
(35)
(292)
2,584
(939)
(41)
(980)
3,189
Annual Report 2020 | Anglo-Eastern Plantations Plc
94
Notes to the Consolidated Financial Statements
5 Profit before tax
Profit before tax is stated after charging:
Purchase of FFB
Depreciation (note 11)
Reversal of impairment (note 11)
Impairment losses (note 11)
Provision for expected credit loss (note 15)
Exchange losses / (gains)
Legal and professional fees
Staff costs (note 7)
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 auditor’s remuneration
6 Segment information
2020
$000
110,225
18,143
(2,196)
188
1,485
268
834
48,103
5
146
-
6
13
170
21
76
97
267
2019
$000
92,004
18,590
(8,868)
2,278
5,965
(251)
1,236
50,686
5
140
5
6
13
169
21
78
99
268
Description of the types of products and services from which each reportable segment derives its revenues
In the opinion of the Directors, the operations of the Group comprise one class of business which is the cultivation of plantation in Indonesia
and Malaysia. From the cultivation of plantation, the Group produced the crude palm oil and associated products such as palm kernel, shell
nut, biomass products, biogas products and rubber.
Factors that management used to identify reportable segments in the Group
The reportable segments in the Group are strategic business units based on the geographical spread. Operating segments are consistent with
the internal reporting provided to the Board of Directors. The Board of Directors is responsible for allocating resources and assessing the
performance of the operating segments. The Board decision is implemented by the Executive Committee, that is made up of a Senior General
Manager in Malaysia, the President Director, the Chief Operating Officer, Finance Director and the Engineering Director.
Measurement of operating segment profit or loss, assets and liabilities
The Group evaluates segmental performance on the basis of profit or loss before tax calculated in accordance with IFRS but excluding BA
movement.
Inter-segment transactions are made based on terms mutually agreed by the parties to maximise the utilisation of Group’s resources at a rate
acceptable to local tax authorities. This policy was applied consistently throughout the current and prior period.
The Group’s assets are allocated to segments based on geographical location.
Annual Report 2020 | Anglo-Eastern Plantations Plc
95
Notes to the Consolidated Financial Statements Annual Report 2020 | Anglo-Eastern Plantations Plc 96 6 Segment information - continued North Sumatera Bengkulu South Sumatera Riau Bangka Kalimantan Total Indonesia Malaysia UK Total $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 2020 Total sales revenue (all external) - CPO, palm kernel and FFB 81,764 85,698 1,561 46,865 1,026 43,103 260,017 2,333 - 262,350 - Rubber 631 - - - - - 631 - - 631 - Shell nut 1,232 956 - 1,587 - 185 3,960 - - 3,960 - Biomass products 427 - - - - - 427 - - 427 - Biogas products 152 444 - - - 374 970 - - 970 - Others 60 105 176 - 16 355 712 3 7 722 Total revenue 84,266 87,203 1,737 48,452 1,042 44,017 266,717 2,336 7 269,060 Profit / (loss) before tax 18,915 16,809 (6,639) 12,341 (76) 11,174 52,524 (682) (1,447) 50,395 BA movement 550 130 71 126 36 344 1,257 17 - 1,274 Profit / (loss) for the year before tax per consolidated income statement 19,465 16,939 (6,568) 12,467 (40) 11,518 53,781 (665) (1,447) 51,669 Interest income 2,121 670 3 34 - 25 2,853 22 1 2,876 Interest expense (25) - - - - (257) (282) (10) - (292) Depreciation (4,741) (4,253) (2,090) (886) (308) (5,387) (17,665) (478) - (18,143) Reversal of impairment - - 31 - - 2,165 2,196 - - 2,196 Impairment losses - - - - - - - (188) - (188) Reversal / (Provision) for expected credit loss 65 (1) (1,383) - (1) (167) (1,487) 1 1 (1,485) Inter-segment transactions 4,744 (1,966) (741) (564) (195) (1,913) (635) 467 168 - Inter-segmental revenue 27,668 3,293 3,505 - - 4,167 38,633 - - 38,633 Tax expense (6,734) (3,218) 1,361 (2,742) 25 (1,594) (12,902) (737) (87) (13,726) Total assets 227,471 111,470 39,554 33,572 16,580 134,973 563,620 21,682 5,978 591,280 Non-current assets 111,483 70,332 30,320 17,543 14,713 104,295 348,686 16,667 - 365,353 Non-current assets - additions 4,582 2,413 2,319 342 4,474 6,868 20,998 127 - 21,125 Notes to the Consolidated Financial Statements Annual Report 2020 | Anglo-Eastern Plantations Plc 96 6 Segment information - continued North Sumatera Bengkulu South Sumatera Riau Bangka Kalimantan Total Indonesia Malaysia UK Total $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 2020 Total sales revenue (all external) - CPO, palm kernel and FFB 81,764 85,698 1,561 46,865 1,026 43,103 260,017 2,333 - 262,350 - Rubber 631 - - - - - 631 - - 631 - Shell nut 1,232 956 - 1,587 - 185 3,960 - - 3,960 - Biomass products 427 - - - - - 427 - - 427 - Biogas products 152 444 - - - 374 970 - - 970 - Others 60 105 176 - 16 355 712 3 7 722 Total revenue 84,266 87,203 1,737 48,452 1,042 44,017 266,717 2,336 7 269,060 Profit / (loss) before tax 18,915 16,809 (6,639) 12,341 (76) 11,174 52,524 (682) (1,447) 50,395 BA movement 550 130 71 126 36 344 1,257 17 - 1,274 Profit / (loss) for the year before tax per consolidated income statement 19,465 16,939 (6,568) 12,467 (40) 11,518 53,781 (665) (1,447) 51,669 Interest income 2,121 670 3 34 - 25 2,853 22 1 2,876 Interest expense (25) - - - - (257) (282) (10) - (292) Depreciation (4,741) (4,253) (2,090) (886) (308) (5,387) (17,665) (478) - (18,143) Reversal of impairment - - 31 - - 2,165 2,196 - - 2,196 Impairment losses - - - - - - - (188) - (188) Reversal / (Provision) for expected credit loss 65 (1) (1,383) - (1) (167) (1,487) 1 1 (1,485) Inter-segment transactions 4,744 (1,966) (741) (564) (195) (1,913) (635) 467 168 - Inter-segmental revenue 27,668 3,293 3,505 - - 4,167 38,633 - - 38,633 Tax expense (6,734) (3,218) 1,361 (2,742) 25 (1,594) (12,902) (737) (87) (13,726) Total assets 227,471 111,470 39,554 33,572 16,580 134,973 563,620 21,682 5,978 591,280 Non-current assets 111,483 70,332 30,320 17,543 14,713 104,295 348,686 16,667 - 365,353 Non-current assets - additions 4,582 2,413 2,319 342 4,474 6,868 20,998 127 - 21,125 Notes to the Consolidated Financial Statements Annual Report 2019 | Anglo-Eastern Plantations Plc 83 6 Segment information - continued North Sumatera Bengkulu South Sumatera Riau Bangka Kalimantan Total Indonesia Malaysia UK Total $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 2019 Total sales revenue (all external) - CPO, palm kernel and FFB 75,933 65,102 2,487 36,060 513 32,679 212,774 1,642 - 214,416 - Rubber 653 - - - - - 653 - - 653 - Shell nut 674 582 - 929 - 39 2,224 - - 2,224 - Biomass products 733 - - - - - 733 - - 733 - Biogas products 141 442 - - - 325 908 - - 908 - Others 25 57 32 - - 88 202 - - 202 Total revenue 78,159 66,183 2,519 36,989 513 33,131 217,494 1,642 - 219,136 Profit / (loss) before tax 6,174 7,727 (8,933) 8,514 244 4,868 18,594 (1,264) (1,712) 15,618 BA movement 927 1,086 108 307 23 806 3,257 (2) - 3,255 Profit / (loss) for the year before tax per consolidated income statement 7,101 8,813 (8,825) 8,821 267 5,674 21,851 (1,266) (1,712) 18,873 Interest income 1,921 1,789 3 299 - 29 4,041 124 4 4,169 Interest expense (73) - - - - (901) (974) (6) - (980) Depreciation (4,791) (4,470) (2,465) (916) (281) (5,146) (18,069) (521) - (18,590) Reversal of impairment - - 5,151 - 600 3,117 8,868 - - 8,868 Impairment losses - - (1,595) - - (431) (2,026) (252) - (2,278) (Provision) / Reversal for expected credit loss (124) 4 (5,998) - 4 163 (5,951) - (14) (5,965) Inter-segment transactions (40,471) (2,027) 25,745 (581) 1,198 15,760 (376) 153 223 - Inter-segmental revenue 23,395 1,981 1,847 - - 1,274 28,497 - - 28,497 Tax expense 8,851 (995) (3,418) (2,009) (234) (4,884) (2,689) 186 (196) (2,699) Total assets 206,764 104,756 39,151 31,083 14,667 127,746 524,167 21,678 6,270 552,115 Non-current assets 121,161 73,106 37,553 18,166 13,970 111,159 375,115 16,944 3,583 395,642 Non-current assets - additions 10,342 3,950 2,919 333 4,265 11,881 33,690 351 - 34,041 Notes to the Consolidated Financial Statements Annual Report 2020 | Anglo-Eastern Plantations Plc 97 6 Segment information - continued North Sumatera Bengkulu South Sumatera Riau Bangka Kalimantan Total Indonesia Malaysia UK Total $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 2019 Total sales revenue (all external) - CPO, palm kernel and FFB 75,933 65,102 2,487 36,060 513 32,679 212,774 1,642 - 214,416 - Rubber 653 - - - - - 653 - - 653 - Shell nut 674 582 - 929 - 39 2,224 - - 2,224 - Biomass products 733 - - - - - 733 - - 733 - Biogas products 141 442 - - - 325 908 - - 908 - Others 25 57 32 - - 88 202 - - 202 Total revenue 78,159 66,183 2,519 36,989 513 33,131 217,494 1,642 - 219,136 Profit / (loss) before tax 6,174 7,727 (8,933) 8,514 244 4,868 18,594 (1,264) (1,712) 15,618 BA movement 927 1,086 108 307 23 806 3,257 (2) - 3,255 Profit / (loss) for the year before tax per consolidated income statement 7,101 8,813 (8,825) 8,821 267 5,674 21,851 (1,266) (1,712) 18,873 Interest income 1,921 1,789 3 299 - 29 4,041 124 4 4,169 Interest expense (73) - - - - (901) (974) (6) - (980) Depreciation (4,791) (4,470) (2,465) (916) (281) (5,146) (18,069) (521) - (18,590) Reversal of impairment - - 5,151 - 600 3,117 8,868 - - 8,868 Impairment losses - - (1,595) - - (431) (2,026) (252) - (2,278) (Provision) / Reversal for expected credit loss (124) 4 (5,998) - 4 163 (5,951) - (14) (5,965) Inter-segment transactions (40,471) (2,027) 25,745 (581) 1,198 15,760 (376) 153 223 - Inter-segmental revenue 23,395 1,981 1,847 - - 1,274 28,497 - - 28,497 Tax expense 8,851 (995) (3,418) (2,009) (234) (4,884) (2,689) 186 (196) (2,699) Total assets 206,764 104,756 39,151 31,083 14,667 127,746 524,167 21,678 6,270 552,115 Non-current assets 113,064 72,886 31,824 18,166 13,200 101,807 350,947 16,944 - 367,891 Non-current assets - additions 10,342 3,950 2,919 333 4,265 11,881 33,690 351 - 34,041 Notes to the Consolidated Financial Statements Annual Report 2020 | Anglo-Eastern Plantations Plc 97 6 Segment information - continued North Sumatera Bengkulu South Sumatera Riau Bangka Kalimantan Total Indonesia Malaysia UK Total $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 2019 Total sales revenue (all external) - CPO, palm kernel and FFB 75,933 65,102 2,487 36,060 513 32,679 212,774 1,642 - 214,416 - Rubber 653 - - - - - 653 - - 653 - Shell nut 674 582 - 929 - 39 2,224 - - 2,224 - Biomass products 733 - - - - - 733 - - 733 - Biogas products 141 442 - - - 325 908 - - 908 - Others 25 57 32 - - 88 202 - - 202 Total revenue 78,159 66,183 2,519 36,989 513 33,131 217,494 1,642 - 219,136 Profit / (loss) before tax 6,174 7,727 (8,933) 8,514 244 4,868 18,594 (1,264) (1,712) 15,618 BA movement 927 1,086 108 307 23 806 3,257 (2) - 3,255 Profit / (loss) for the year before tax per consolidated income statement 7,101 8,813 (8,825) 8,821 267 5,674 21,851 (1,266) (1,712) 18,873 Interest income 1,921 1,789 3 299 - 29 4,041 124 4 4,169 Interest expense (73) - - - - (901) (974) (6) - (980) Depreciation (4,791) (4,470) (2,465) (916) (281) (5,146) (18,069) (521) - (18,590) Reversal of impairment - - 5,151 - 600 3,117 8,868 - - 8,868 Impairment losses - - (1,595) - - (431) (2,026) (252) - (2,278) (Provision) / Reversal for expected credit loss (124) 4 (5,998) - 4 163 (5,951) - (14) (5,965) Inter-segment transactions (40,471) (2,027) 25,745 (581) 1,198 15,760 (376) 153 223 - Inter-segmental revenue 23,395 1,981 1,847 - - 1,274 28,497 - - 28,497 Tax expense 8,851 (995) (3,418) (2,009) (234) (4,884) (2,689) 186 (196) (2,699) Total assets 206,764 104,756 39,151 31,083 14,667 127,746 524,167 21,678 6,270 552,115 Non-current assets 113,064 72,886 31,824 18,166 13,200 101,807 350,947 16,944 - 367,891 Non-current assets - additions 10,342 3,950 2,919 333 4,265 11,881 33,690 351 - 34,041 Notes to the Consolidated Financial Statements Annual Report 2019 | Anglo-Eastern Plantations Plc 84 6 Segment information - continued North Sumatera Bengkulu South Sumatera Riau Bangka Kalimantan Total Indonesia Malaysia UK Total $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 2018 Total sales revenue (all external) - CPO, palm kernel and FFB 84,771 79,652 1 43,970 261 34,848 243,503 2,092 - 245,595 - Rubber 792 - - - - - 792 - - 792 - Shell nut 651 432 - 930 - 34 2,047 - - 2,047 - Biomass products 914 - - - - - 914 - - 914 - Biogas products 417 446 - - - - 863 - - 863 - Others 519 38 18 - - 73 648 - - 648 Total revenue 88,064 80,568 19 44,900 261 34,955 248,767 2,092 - 250,859 Profit / (loss) before tax 12,993 18,753 (7,445) 13,112 (531) (557) 36,325 (894) (2,216) 33,215 BA movement (296) (1,074) (93) (272) (4) (479) (2,218) (68) - (2,286) Profit / (loss) for the year before tax per consolidated income statement 12,697 17,679 (7,538) 12,840 (535) (1,036) 34,107 (962) (2,216) 30,929 Interest income 1,594 2,978 3 318 - 20 4,913 133 2 5,048 Interest expense (141) - - - - (1,370) (1,511) - - (1,511) Depreciation (4,031) (4,120) (2,530) (900) (234) (4,425) (16,240) (512) - (16,752) Impairment losses - - (914) - - (3,425) (4,339) - - (4,339) Provision for expected credit loss (10) (13) (24) - (4) (206) (257) (1) (50) (308) Inter-segment transactions 4,887 (2,021) (700) (579) (94) (1,870) (377) 103 274 - Inter-segmental revenue 24,409 1,608 3,710 - - 1,049 30,776 - - 30,776 Tax expense (7,872) (2,994) 1,862 (5,351) 151 1,154 (13,050) 19 (31) (13,062) Total assets 188,266 118,098 41,074 36,900 11,815 113,186 509,339 22,347 6,206 537,892 Non-current assets 103,648 70,237 39,672 17,884 11,588 99,738 342,767 16,783 2,984 362,534 Non-current assets - additions 8,578 4,460 3,753 472 1,647 11,355 30,265 110 - 30,375 Notes to the Consolidated Financial Statements Annual Report 2020 | Anglo-Eastern Plantations Plc 98 6 Segment information - continued Below is an analysis of revenue from the Group’s top 4 customers, incorporating all those contributing greater than 10% of the Group’s external revenue in accordance with the requirements of IFRS 8. In year 2020, revenue from top 4 customers of the Indonesian segment represents approximately $130.8m (2019: $113.6m) of the Group’s total revenue. Although Customer 1 and 2 made up over 10% of the Group’s total revenue, there was no over reliance on these Customers as tenders were performed on a weekly basis. Three of the top four customers were the same as in the prior year. North Sumatera Bengkulu South Sumatera Riau Bangka Kalimantan Total Indonesia Malaysia UK Total $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 2020 Customer 1 819 22,558 - 7,164 - 23,075 53,616 - - 53,616 Customer 2 31,556 - - - - - 31,556 - - 31,556 Customer 3 - - - 25,042 - - 25,042 - - 25,042 Customer 4 - 15,977 - - - 4,584 20,561 - - 20,561 32,375 38,535 - 32,206 - 27,659 130,775 - - 130,775 2019 Customer 1 3,107 20,376 - 6,091 - 13,228 42,802 - - 42,802 Customer 2 27,751 - - - - - 27,751 - - 27,751 Customer 3 9,657 8,345 - 4,965 - - 22,967 - - 22,967 Customer 4 - - - 20,036 - - 20,036 - - 20,036 40,515 28,721 - 31,092 - 13,228 113,556 - - 113,556 % % % % % % % % % % 2020 Customer 1 0.3 8.4 - 2.7 - 8.6 20.0 - - 20.0 Customer 2 11.7 - - - - - 11.7 - - 11.7 Customer 3 - - - 9.3 - - 9.3 - - 9.3 Customer 4 - 5.9 - - - 1.7 7.6 - - 7.6 12.0 14.3 - 12.0 - 10.3 48.6 - - 48.6 2019 Customer 1 1.4 9.3 - 2.8 - 6.0 19.5 - - 19.5 Customer 2 12.7 - - - - - 12.7 - - 12.7 Customer 3 4.4 3.8 - 2.3 - - 10.5 - - 10.5 Customer 4 - - - 9.1 - - 9.1 - - 9.1 18.5 13.1 - 14.2 - 6.0 51.8 - - 51.8 Save for a small amount of rubber, all the Group’s operations are devoted to oil palm. The Group’s report is by geographical area, as each area tends to have different agricultural conditions. Notes to the Consolidated Financial Statements Annual Report 2020 | Anglo-Eastern Plantations Plc 98 6 Segment information - continued Below is an analysis of revenue from the Group’s top 4 customers, incorporating all those contributing greater than 10% of the Group’s external revenue in accordance with the requirements of IFRS 8. In year 2020, revenue from top 4 customers of the Indonesian segment represents approximately $130.8m (2019: $113.6m) of the Group’s total revenue. Although Customer 1 and 2 made up over 10% of the Group’s total revenue, there was no over reliance on these Customers as tenders were performed on a weekly basis. Three of the top four customers were the same as in the prior year. North Sumatera Bengkulu South Sumatera Riau Bangka Kalimantan Total Indonesia Malaysia UK Total $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 2020 Customer 1 819 22,558 - 7,164 - 23,075 53,616 - - 53,616 Customer 2 31,556 - - - - - 31,556 - - 31,556 Customer 3 - - - 25,042 - - 25,042 - - 25,042 Customer 4 - 15,977 - - - 4,584 20,561 - - 20,561 32,375 38,535 - 32,206 - 27,659 130,775 - - 130,775 2019 Customer 1 3,107 20,376 - 6,091 - 13,228 42,802 - - 42,802 Customer 2 27,751 - - - - - 27,751 - - 27,751 Customer 3 9,657 8,345 - 4,965 - - 22,967 - - 22,967 Customer 4 - - - 20,036 - - 20,036 - - 20,036 40,515 28,721 - 31,092 - 13,228 113,556 - - 113,556 % % % % % % % % % % 2020 Customer 1 0.3 8.4 - 2.7 - 8.6 20.0 - - 20.0 Customer 2 11.7 - - - - - 11.7 - - 11.7 Customer 3 - - - 9.3 - - 9.3 - - 9.3 Customer 4 - 5.9 - - - 1.7 7.6 - - 7.6 12.0 14.3 - 12.0 - 10.3 48.6 - - 48.6 2019 Customer 1 1.4 9.3 - 2.8 - 6.0 19.5 - - 19.5 Customer 2 12.7 - - - - - 12.7 - - 12.7 Customer 3 4.4 3.8 - 2.3 - - 10.5 - - 10.5 Customer 4 - - - 9.1 - - 9.1 - - 9.1 18.5 13.1 - 14.2 - 6.0 51.8 - - 51.8 Save for a small amount of rubber, all the Group’s operations are devoted to oil palm. The Group’s report is by geographical area, as each area tends to have different agricultural conditions. Notes to the Consolidated Financial Statements Annual Report 2019 | Anglo-Eastern Plantations Plc 85 6 Segment information - continued Below is an analysis of revenue from the Group’s top 4 customers, incorporating all those contributing greater than 10% of the Group’s external revenue in accordance with the requirements of IFRS 8. In year 2019, revenue from top 4 customers of the Indonesian segment represents approximately $113.6m (2018: $115.4m) of the Group’s total revenue. Although Customer 1 to 4 made up over 10% of the Group’s total revenue, there was no over reliance on these Customers as tenders were performed on a weekly basis. Two of the top four customers were the same as in the prior year. North Sumatera Bengkulu South Sumatera Riau Bangka Kalimantan Total Indonesia Malaysia UK Total $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 2019 Customer 1 3,107 20,376 - 6,091 - 13,228 42,802 - - 42,802 Customer 2 27,751 - - - - - 27,751 - - 27,751 Customer 3 9,657 8,345 - 4,965 - - 22,967 - - 22,967 Customer 4 - - - 20,036 - - 20,036 - - 20,036 40,515 28,721 - 31,092 - 13,228 113,556 - - 113,556 2018 Customer 1 1,909 17,768 - 6,613 - 10,806 37,096 - - 37,096 Customer 2 - 29,604 - - - - 29,604 - - 29,604 Customer 3 24,933 - - - - - 24,933 - - 24,933 Customer 4 21,042 - - - - 2,735 23,777 - - 23,777 47,884 47,372 - 6,613 - 13,541 115,410 - - 115,410 % % % % % % % % % % 2019 Customer 1 1.4 9.3 - 2.8 - 6.0 19.5 - - 19.5 Customer 2 12.7 - - - - - 12.7 - - 12.7 Customer 3 4.4 3.8 - 2.3 - - 10.5 - - 10.5 Customer 4 - - - 9.1 - - 9.1 - - 9.1 18.5 13.1 - 14.2 - 6.0 51.8 - - 51.8 2018 Customer 1 0.8 7.1 - 2.6 - 4.3 14.8 - - 14.8 Customer 2 - 11.8 - - - - 11.8 - - 11.8 Customer 3 9.9 - - - - - 9.9 - - 9.9 Customer 4 8.4 - - - - 1.1 9.5 - - 9.5 19.1 18.9 - 2.6 - 5.4 46.0 - - 46.0 Save for a small amount of rubber, all the Group’s operations are devoted to oil palm. The Group’s report is by geographical area, as each area tends to have different agricultural conditions. Notes to the Consolidated Financial Statements
7 Employees' and Directors' remuneration
Average numbers employed (primarily overseas) during the year:
- full-time
- part-time field workers
Staff costs (including Directors) comprise:
Wages and salaries
Social security costs
Retirement benefit costs
- United Kingdom
- Indonesia (note 19)
- Malaysia
2020
Number
7,242
9,311
16,553
2020
$000
43,129
2,921
-
2,003
50
48,103
2019
Number
6,925
9,285
16,210
2019
$000
45,756
2,090
-
2,784
56
50,686
The information required by the Companies Act is contained in the Directors' remuneration report on pages 65 - 70 of which certain information
on page 68 has been audited.
Directors emoluments
Remuneration expense for key management personnel comprise:
Short-term employee benefits
Post-employment benefits
2020
$000
200
2020
$000
1,499
-
1,499
2019
$000
215
2019
$000
1,742
-
1,742
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 68.
8 Tax expense
Foreign corporation tax - current year
Foreign corporation tax - prior year
Deferred tax adjustment - origination and reversal of temporary differences (note 18)
Recognition of previously unrecognised deferred tax assets (note 18)
Total tax charge for year
2020
$000
9,920
287
2,832
687
13,726
2019
$000
5,222
12
(2,439)
(96)
2,699
Corporation tax rate in Indonesia is at 22% (2019: 25%) whereas Malaysia is at 24% (2019: 24%). The standard rate of corporation tax in the
UK for the current year is 19% (2019: 19%). The Group’s charge for the year differs from the standard Indonesian rate of corporation tax as
explained below:
Profit before tax
Profit before tax multiplied by standard rate of Indonesia corporation tax of 22% (2019: 25%)
Effects of:
Rate adjustment relating to overseas profits
Group accounting adjustments not subject to tax
Expenses not allowable for tax
Deferred tax assets not recognised
Income not subject to tax
Under provision of prior year income tax
Utilisation of tax losses not previously recognised
Under / (Over) provision of prior year deferred tax assets
Change in tax rate
Total tax charge for year
Annual Report 2020 | Anglo-Eastern Plantations Plc
2020
$000
51,669
11,367
(14)
(245)
613
-
(647)
287
-
687
1,678
13,726
2019
$000
18,873
4,718
(24)
(2,116)
544
48
(1,223)
12
836
(96)
-
2,699
99
Notes to the Consolidated Financial Statements
8 Tax expense - continued
The above reconciliation has been prepared by reference to the Indonesian tax rate rather than the UK tax rate as, in accordance with IAS 12,
this is the applicable tax rate that provides the most meaningful information, given this is the country in which the majority of tax arises. The
reconciliation for the year ended 31 December 2019 has also been prepared on the same basis for comparative purposes.
The tax receivables represent the corporate income tax (“CIT”) and value added tax (“VAT”) that have yet to be refunded by the Indonesia tax
authority. The tax receivables relating to CIT arose due to over payment of tax. The tax receivables relating to VAT arose because the majority
of the Groups’ CPO was sold to bonded zones which do not attract output VAT and thus the input VAT incurred is claimable. Upon submission
of a tax return (for CIT) or a request letter (for VAT refund), a tax audit will be conducted by the tax authority and whilst every effort is made to
resolve this quickly, the process can sometimes take more than 12 months.
The breakdown of the tax receivables and tax liabilities is as follows:
Tax Receivables
Income tax
Other taxes
Tax Liabilities
Income tax
Other taxes
31 December
2020
$000
31 December
2019*
$000
1 January
2019*
$000
10,071
41,618
51,689
(5,981)
(1,089)
(7,070)
14,348
35,179
49,527
(1,512)
(1,386)
(2,898)
7,110
37,200
44,310
(1,094)
(4,532)
(5,626)
* In order to better represent these balances in accordance with IAS 1, the income tax and other tax balances have been shown separately on
the Consolidated Statement of Financial Position. The impact on 1 January 2019 and 31 December 2019 is shown in the table above.
9 Earnings per ordinary share (“EPS”)
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 the year
- used in basic EPS
- dilutive effect of outstanding share options
- used in diluted EPS
Basic and diluted EPS before BA movement
Basic and diluted EPS after BA movement
10
Dividends
Paid during the year
Final dividend of 0.5cts per ordinary share for the year ended 31 December 2019
(2018: 3.0cts)
Proposed final dividend of 1.0cts per ordinary share for the year ended 31 December 2020
(2019: 0.5cts)
2020
$000
30,784
1,051
31,835
Number
‘000
39,636
-
39,636
77.67cts
80.32cts
2020
$000
198
396
2019
$000
14,019
2,077
16,096
Number
‘000
39,636
-
39,636
35.37cts
40.61cts
2019
$000
1,189
198
The proposed dividend for 2020 is subject to shareholders’ approval at the forthcoming annual general meeting and has not been included as
a liability in these financial statements.
Annual Report 2020 | Anglo-Eastern Plantations Plc
100
Notes to the Consolidated Financial Statements Annual Report 2020 | Anglo-Eastern Plantations Plc 101 11 Property, plant and equipment Plantations Mill Leasehold land Buildings Estate plant, equipment & vehicle Office plant, equipment & vehicle Right-of-use assets Construction in progress Total $000 $000 $000 $000 $000 $000 $000 $000 $000 Cost or valuation At 1 January 2019 199,877 68,120 133,256 53,138 16,858 1,093 - 2,731 475,073 Exchange translations 8,110 2,970 5,135 2,307 669 34 14 83 19,322 Reclassification - 143 - 7,557 26 (2) - (7,724) - Revaluations - - (2,292) - - - - - (2,292) Additions 411 7,732 5,861 45 1,562 193 832 5,971 22,607 Development costs capitalised 11,434 - - - - - - - 11,434 Disposal / Written off (5,782) (606) (1,297) (219) (1,125) (41) - - (9,070) At 31 December 2019 214,050 78,359 140,663 62,828 17,990 1,277 846 1,061 517,074 Exchange translations (2,486) (1,085) (1,441) (774) (209) 5 (5) (28) (6,023) Reclassification - 70 - 2,572 - - - (2,642) - Revaluations - - (1,142) - - - - - (1,142) Additions 167 1,946 3,821 496 816 109 - 2,263 9,618 Development costs capitalised 10,451 - 1,037 - - 19 - - 11,507 Disposals / Written off (2,447) (510) (243) (239) (563) (5) - (12) (4,019) At 31 December 2020 219,735 78,780 142,695 64,883 18,034 1,405 841 642 527,015 Accumulated depreciation and impairment At 1 January 2019 80,782 21,638 1,659 17,436 12,249 942 - - 134,706 Exchange translations 3,098 960 87 753 481 26 3 - 5,408 Reclassification - (15) - - 15 - - - - Charge for the year 9,646 3,850 - 3,222 1,625 63 184 - 18,590 (Reversal of impairment) / Impairment losses (7,571) - 981 - - - - - (6,590) Disposal / Written off (1,121) (590) - (123) (1,075) (22) - - (2,931) At 31 December 2019 84,834 25,843 2,727 21,288 13,295 1,009 187 - 149,183 Exchange translations (639) (272) (112) (165) (122) 3 11 - (1,296) Reclassification - - - - - - - - - Charge for the year 9,450 3,587 - 3,476 1,400 82 148 - 18,143 (Reversal of impairment) / Impairment losses - - (2,196) - - - 188 - (2,008) Disposal / Written off (1,166) (509) - (143) (539) (3) - - (2,360) At 31 December 2020 92,479 28,649 419 24,456 14,034 1,091 534 - 161,662 Carrying amount At 31 December 2018 119,095 46,482 131,597 35,702 4,609 151 - 2,731 340,367 At 31 December 2019 129,216 52,516 137,936 41,540 4,695 268 659 1,061 367,891 At 31 December 2020 127,256 50,131 142,276 40,427 4,000 314 307 642 365,353 Notes to the Consolidated Financial Statements Annual Report 2020 | Anglo-Eastern Plantations Plc 101 11 Property, plant and equipment Plantations Mill Leasehold land Buildings Estate plant, equipment & vehicle Office plant, equipment & vehicle Right-of-use assets Construction in progress Total $000 $000 $000 $000 $000 $000 $000 $000 $000 Cost or valuation At 1 January 2019 199,877 68,120 133,256 53,138 16,858 1,093 - 2,731 475,073 Exchange translations 8,110 2,970 5,135 2,307 669 34 14 83 19,322 Reclassification - 143 - 7,557 26 (2) - (7,724) - Revaluations - - (2,292) - - - - - (2,292) Additions 411 7,732 5,861 45 1,562 193 832 5,971 22,607 Development costs capitalised 11,434 - - - - - - - 11,434 Disposal / Written off (5,782) (606) (1,297) (219) (1,125) (41) - - (9,070) At 31 December 2019 214,050 78,359 140,663 62,828 17,990 1,277 846 1,061 517,074 Exchange translations (2,486) (1,085) (1,441) (774) (209) 5 (5) (28) (6,023) Reclassification - 70 - 2,572 - - - (2,642) - Revaluations - - (1,142) - - - - - (1,142) Additions 167 1,946 3,821 496 816 109 - 2,263 9,618 Development costs capitalised 10,451 - 1,037 - - 19 - - 11,507 Disposals / Written off (2,447) (510) (243) (239) (563) (5) - (12) (4,019) At 31 December 2020 219,735 78,780 142,695 64,883 18,034 1,405 841 642 527,015 Accumulated depreciation and impairment At 1 January 2019 80,782 21,638 1,659 17,436 12,249 942 - - 134,706 Exchange translations 3,098 960 87 753 481 26 3 - 5,408 Reclassification - (15) - - 15 - - - - Charge for the year 9,646 3,850 - 3,222 1,625 63 184 - 18,590 (Reversal of impairment) / Impairment losses (7,571) - 981 - - - - - (6,590) Disposal / Written off (1,121) (590) - (123) (1,075) (22) - - (2,931) At 31 December 2019 84,834 25,843 2,727 21,288 13,295 1,009 187 - 149,183 Exchange translations (639) (272) (112) (165) (122) 3 11 - (1,296) Reclassification - - - - - - - - - Charge for the year 9,450 3,587 - 3,476 1,400 82 148 - 18,143 (Reversal of impairment) / Impairment losses - - (2,196) - - - 188 - (2,008) Disposal / Written off (1,166) (509) - (143) (539) (3) - - (2,360) At 31 December 2020 92,479 28,649 419 24,456 14,034 1,091 534 - 161,662 Carrying amount At 31 December 2018 119,095 46,482 131,597 35,702 4,609 151 - 2,731 340,367 At 31 December 2019 129,216 52,516 137,936 41,540 4,695 268 659 1,061 367,891 At 31 December 2020 127,256 50,131 142,276 40,427 4,000 314 307 642 365,353 Notes to the Consolidated Financial Statements Annual Report 2019 | Anglo-Eastern Plantations Plc 88 11 Property, plant and equipment Plantations Mill Leasehold land Buildings Estate plant, equipment & vehicle Office plant, equipment & vehicle Right-of-use assets Construction in progress Total $000 $000 $000 $000 $000 $000 $000 $000 $000 Cost or valuation At 1 January 2018 201,097 68,406 138,348 51,384 15,536 1,088 - 1,179 477,038 Exchange translations (12,641) (4,475) (8,308) (3,336) (981) (51) - (102) (29,894) Reclassification 138 - (138) 5,180 27 - - (5,207) - Revaluations - - 182 - - - - - 182 Additions 29 5,467 3,172 30 2,686 57 - 6,861 18,302 Development costs capitalised 12,073 - - - - - - - 12,073 Disposal / Written off (819) (1,278) - (120) (410) (1) - - (2,628) At 31 December 2018 199,877 68,120 133,256 53,138 16,858 1,093 - 2,731 475,073 Exchange translations 8,110 2,970 5,135 2,307 669 34 14 83 19,322 Reclassification - 143 - 7,557 26 (2) - (7,724) - Revaluations - - (2,292) - - - - - (2,292) Additions 411 7,732 5,861 45 1,562 193 832 5,971 22,607 Development costs capitalised 11,434 - - - - - - - 11,434 Disposals / Written off (5,782) (606) (1,297) (219) (1,125) (41) - - (9,070) At 31 December 2019 214,050 78,359 140,663 62,828 17,990 1,277 846 1,061 517,074 Accumulated depreciation and impairment At 1 January 2018 73,277 20,775 805 15,581 12,000 920 - - 123,358 Exchange translations (4,531) (1,374) (67) (1,010) (733) (41) - - (7,756) Charge for the year 8,926 3,462 - 2,939 1,361 64 - - 16,752 Impairment losses 3,418 - 921 - - - - - 4,339 Disposal / Written off (308) (1,225) - (74) (379) (1) - - (1,987) At 31 December 2018 80,782 21,638 1,659 17,436 12,249 942 - - 134,706 Exchange translations 3,098 960 87 753 481 26 3 - 5,408 Reclassification - (15) - - 15 - - - - Charge for the year 9,646 3,850 - 3,222 1,625 63 184 - 18,590 (Reversal of impairment) / Impairment losses (7,571) - 981 - - - - - (6,590) Disposal / Written off (1,121) (590) - (123) (1,075) (22) - - (2,931) At 31 December 2019 84,834 25,843 2,727 21,288 13,295 1,009 187 - 149,183 Carrying amount At 31 December 2017 127,820 47,631 137,543 35,803 3,536 168 - 1,179 353,680 At 31 December 2018 119,095 46,482 131,597 35,702 4,609 151 - 2,731 340,367 At 31 December 2019 129,216 52,516 137,936 41,540 4,695 268 659 1,061 367,891 Notes to the Consolidated Financial Statements
11 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 2020, valuations were undertaken on the land of eight subsidiaries in
Indonesia. The quantum per hectare derived from the current valuation was then applied to the land value of the remaining companies in the
same geographical location to derive the fair value of land as at 31 December 2020. For the year ended 31 December 2019, independent land
valuations were undertaken for nine subsidiary companies in Indonesia and Malaysia. The same methodology to fair value land has been
applied each year. Unplantable land was excluded in this exercise since it has zero value. Land is valued on a rotational basis and all the land
is valued by qualified valuers every two years. Had the revalued land been measured on a historical cost basis, their net book value would
have been $61,272,000 (2019: $56,978,000). Impairment of land if measured by comparing its historical cost with its fair value. The reversal
of impairment loss of $2,196,000 recognised in 2020 (2019: impairment loss of $981,000) was due to a general increase in the fair value of
land in Indonesia.
The reconciliation on the unreallised gain / (loss) on revaluation of leasehold land as shown below:
Included in other comprehensive income:
Unreallised gain on revaluation of leasehold land
Deferred tax on revaluation (note 18)
Unrealised gain / (loss) on revaluation of leasehold land, net of tax recognised in
other comprehensive income
2020
$000
(1,142)
2,451
1,309
2019
$000
(2,292)
577
(1,715)
PT Simpang Ampat’s land was valued on the basis that its highest and best use is oil palm plantation. At present sections of the land is planted
with rubber trees, however, the Group has the intention to replace the ageing rubber trees with palm oil trees.
Details of the information about the fair value hierarchy in relation to land at 31 December are as follows:
Land
At 31 December 2020
At 31 December 2019
Level 1
$000
Level 2
$000
Level 3
$000
Fair value
$000
-
-
-
-
142,276
137,936
142,276
137,936
There was no item classified under Level 1 and Level 2 and thus there was no transfer between Level 1 and Level 2 during the year.
The valuation techniques and significant unobservable inputs used in determining the fair value measurement of land and the inter-relationship
between key unobservable inputs and fair value are set out in the table below:
Item
Valuation approach
Inputs used
Land
Selling prices of comparable bare land
location adjusted
in similar
for
differences
in key attributes. The
valuation model is based on price per
hectare.
Selling prices of comparable land.
Location, legal title, land area,
land type and topography.
Inter-relationship
unobservable inputs and fair value
between
key
The higher the selling price, the higher
the fair value.
These are qualitative
require
significant
professional valuer, MBPRU.
inputs which
by
judgement
There was no change to the valuation techniques during the year.
The fair value measurement is based on the above items’ highest and best use, which does not differ from their actual use, other than PT
Simpang Ampat as stated above.
The capitalisation rate used to determine the amount of borrowing costs eligible for capitalisation is based on the percentage of immature area
of each estate against total planted area in the estate. The average capitalisation rate was 8.6% (2019: 9.6%). The estates included $24,000
(2019: $96,000) of interest and $64,000 (2019: $74,000) of overheads capitalised during the year in respect of expenditure on estates under
development.
Annual Report 2020 | Anglo-Eastern Plantations Plc
102
Notes to the Consolidated Financial Statements
11 Property, plant and equipment - continued
The Indonesian authorities have granted certain land exploitation rights and operating permits for the estates. In the case of established estates
in North Sumatera, these rights and permits expire between 2023 and 2054 with rights of renewal thereafter. As of estates in Bengkulu land
titles were issued between 1994 and 2016 and the titles expire between 2028 and 2051 with rights of renewal thereafter for two consecutive
periods of 25 and 35 years respectively. In Riau, land titles were issued in 2003 and expire in 2033. In Kalimantan, land titles were issued
between 2015 and 2020 and expire between 2023 and 2054. In Bangka, land titles were issued in 2018 and expire between 2021 and 2053.
The rights and permits for South Sumatera were renewed in 2020.
Subject to compliance with the laws and regulations of Indonesia, land rights are usually renewed. The cost of renewing the land rights is not
significant. On the basis that the Group has an indefinite right to renew, leasehold land is not depreciated.
The land title of the estate in Malaysia is a long-term lease expiring in 2084.
Impairment for plantations is measured by comparing its carrying amount with its recoverable amount, which is the higher of the fair value less
cost to sell and its value in use. The impairment assessment is based on each cash generating unit (“CGU”) which is defined as each estate.
In 2020, no impairment loss or reversal of impairment loss had been recognised. The reversal of impairment loss of $7,571,000 recognised in
2019 was primarily due to the increase in CPO price, previously impaired amounts being reclassified to plasma receivables during the year
and decreases in the pre-tax discount rates.
The recoverable amount of the Group’s plantations in 2020 was based on value in use calculations, which due to the nature of the cashflows,
will be higher than fair value less cost to sell. The total value of the Group’s plantations carried at value in use which was lower than original
cost was $33,429,000 (2019: $32,962,000).
The value in use, computed by the professional valuer MBPRU using a discounted cash flow (“DCF”) model, is the net present value of the
projected future cash flows over the expected 20-year economic life of the asset discounted at 16.0% (2019: 16.6%). Projected future cash
flows are calculated based on historical data, industry performance, economic conditions and any other readily available information including
the impact of climate change. The compliance with changing regulations, changes in buyer preferences, development of new products and
use of lower emission sources of energy will affect the FFB production, CPO price and its growth. Heavy rainfall & flooding, droughts and fires
will have an effect on company specific risk within the calculation of our discount rate as well as potential impacts on the ability of our plants to
produce FFB. Pests & disease will impact the upkeeping cost.
The sensitivity analysis below had been performed for 1% changes in the key assumptions, chosen as being reasonably possible changes
which will have a material impact on the impairment. The following table sets out the key assumptions in the valuation along with the impact
on the impairment charge of a 1% change:
2020
Assumption
applied
Increase in
impairment
$000
2019
Assumption
applied
Increase in
impairment
$000
CPO price - decrease of 1%
Pre-tax discount rate - increase by 100 bps
Inflation rate - increase by 100 bps
$650/mt
15.98%
3.12%
-
383
609
$635/mt
16.51% - 16.60%
3.38%
1,459
2,600
2,241
The plantations carried at value in use are classified as Level 3 in the fair value hierarchy.
12 Receivables: non-current
Due from non-controlling interests
Due from cooperatives under Plasma scheme
2020
Book value
$000
5,493
16,743
22,236
Fair value
$000
3,050
14,857
17,907
2019
Book value
$000
3,571
12,929
16,500
Fair value
$000
1,994
11,924
13,918
The non-controlling interests in PT Alno Agro Utama and PT Cahaya Pelita Andhika have acquired their interests on deferred terms (see note
25, Credit risk). In 2017, there was a change in the ownership of the non-controlling interests in PT Sawit Graha Manunggal, PT Karya Kencana
Sentosa Tiga, PT Riau Agrindo Agung and PT Empat Lawang Agro Plantation which was similarly acquired on deferred terms (see note 25,
Credit risk).
Plasma scheme is an initiative by the Indonesian Government that mandated plantation owners to allocate a percentage of their land acquired
to the surrounding community and to further provide financial and technical assistance to cultivate oil palm on that land to improve the income
and welfare of the community or cooperatives. During the year, certain subsidiary companies have funded plasma with a cumulative gross
amount before ECL for $24,632,000 (2019: $19,078,000) which is recoverable from the cooperatives, the details with ECL are disclosed in
note 15.
Annual Report 2020 | Anglo-Eastern Plantations Plc
103
Notes to the Consolidated Financial Statements
12 Receivables: non-current - continued
The fair values disclosed above are for disclosure purposes and all non-current receivables are classified as Level 3 in the fair value hierarchy.
The valuation techniques and significant unobservable inputs used in determining the fair value measurement of non-current receivables, as
well as the inter-relationship between key unobservable inputs and fair value, are set out in the table below:
Item
Valuation approach
Inputs used
Due from non-controlling
interests
Due
under Plasma scheme
from cooperatives
Based on cash flows discounted using
current lending rate of 6% (2019: 6%).
Based on cash flows discounted using
an estimated current lending rate of
6.75% (2019: 6.78%).
Discount rate
Discount rate
Inter-relationship
unobservable inputs and fair value
between
key
The higher the discount rate, the lower the
fair value.
The higher the discount rate, the lower the
fair value.
13 Inventories
Estate and mill consumables
Processed produce for sale
14 Biological assets
At 1 January
Fair value gain recognised in the income statement
Exchange translations
At 31 December
2020
$000
6,873
5,668
12,541
2020
$000
7,574
1,274
(65)
8,783
2019
$000
5,332
3,420
8,752
2019
$000
4,093
3,255
226
7,574
The valuation of the unharvested FFB was carried out internally for each plantation of the Group. It involved an estimation of the weight of
unharvested FFB at balance sheet date multiplied by the sum of average FFB selling price less average harvesting cost of the last month prior
to the balance sheet date. The weight was derived from the computation of the percentage of growth based on the data extracted from the
research reference "The Reflection of Moisture Content on Palm Oil Development during the Ripening Process of Fresh Fruits" multiplied with
the estimated FFB harvested two months’ post balance sheet date. The impacts of climate change on the weather will impact the levels and
quality of production of FFB so this has been taken into consideration when determining the fair value of biological assets.
The fair value of biological assets is classified as Level 3 in the fair value hierarchy.
The valuation techniques and significant unobservable inputs used in determining the fair value measurement of biological assets, as well as
the inter-relationship between key unobservable inputs and fair value, are set out in the table below:
Item
Valuation approach
Inputs used
Inter-relationship between key unobservable inputs
and fair value
Biological assets
-
Unharvested produce
Based on FFB weight
multiplied by the sum of FFB
selling price less harvesting
cost
FFB weight
The higher the weight, the higher the fair value
FFB selling price
The higher the selling price, the higher the fair value
Harvesting cost
The higher the harvesting cost, the lower the fair value
The key assumptions are considered to be FFB weight, selling price less harvesting costs and FFB production and a decrease of 1% in any of
these would result in an $88,000 decrease in the valuation.
Annual Report 2020 | Anglo-Eastern Plantations Plc
104
Notes to the Consolidated Financial Statements
15 Trade and other receivables
Trade receivables
Other receivables
Prepayments and accrued income
2020
$000
1,354
1,551
1,788
4,693
2019
$000
1,775
2,935
1,064
5,774
The carrying amount of trade and other receivables classified as amortised cost approximates fair value.
Trade receivables
The Group applies the IFRS 9 simplified approach to measure ECL using a lifetime ECL provision for trade receivables. To measure ECL on
a collective basis, trade receivables are grouped based on similar credit risk and age.
The expected loss rate is based on a combination of the Group’s historical credit losses experienced over the 5-year period prior to the year
end and forward-looking information on macroeconomic factors affecting the Group’s customers. The ECL has been calculated at 1% on trade
receivables balances.
Other receivables
The Group assesses the ECL associated with its debt instruments carried at amortised cost on a forward-looking basis using the three stage
approach. The impairment methodology applied depends on whether there has been a significant increase in credit risk.
The Group considers the probability of default upon initial recognition of an asset and whether there has been significant increase in credit risk
on an on-going basis at each reporting date. To assess whether there is a significant increase in credit risk, the Group compares the risk of
default occurring on the asset as at the reporting date with the risk of default as at the date of initial recognition. The Group considers available,
reasonable and supportable forward-looking information, such as:
-
-
-
internal credit rating;
external credit rating (as far as available);
actual or expected significant adverse changes in business, financial or economic conditions that are expected to cause a significant
change to the debtor’s ability to meet its obligation;
significant changes in the value of the collateral supporting the obligation or in the quality of third-party guarantees or credit
enhancements; or
significant changes in the expected performance or behaviour of the debtor, including changes in the payment status of the debtor.
-
-
There has not been a significant increase in credit risk since initial recognition on any of the group’s financial assets therefore 12-month ECL
have continued to be recognised on all balances other than trade receivables which are discussed above.
Due from cooperatives under Plasma scheme
The Group assesses the ECL on amounts due from cooperatives under Plasma scheme by considering various probability weighted outcomes.
The three possible outcomes are considered to be:
-
-
-
recovery is limited to the value of the land and bearer plants on which the plantation is situated;
recovery is limited to the future cashflows of the cooperative, being the FFB revenue less development costs; and
recovery in full via bank financing obtained by the cooperative.
Movements on the Group’s loss provision on current and non-current other receivables and financial guarantee contracts are as follows:
At 1 January
Loss provision during the year
Exchange difference
At 31 December
2020
$000
6,273
1,485
253
8,011
2019
$000
308
5,965
-
6,273
Annual Report 2020 | Anglo-Eastern Plantations Plc
105
Notes to the Consolidated Financial Statements
15 Trade and other receivables - continued
At 31 December 2020, the expected loss provision for receivables and financial guarantee contracts is as follows:
2020
Trade receivable
Other receivables (note 15)
Receivables: non-current (note 12)
- Due from non-controlling interests
- Due from cooperatives under Plasma scheme
Financial guarantee contracts (note 24)
2019
Trade receivables
Other receivables (note 15)
Receivables: non-current (note 12)
- Due from non-controlling interests
- Due from cooperatives under Plasma scheme
Financial guarantee contracts (note 24)
Gross carrying
amount
$000
1,363
1,566
5,548
24,632
33,109
-
33,109
Gross carrying
amount
$000
1,775
2,979
3,607
19,078
27,439
-
27,439
Loss
provision
$000
(9)
(15)
(55)
(7,889)
(7,968)
(43)
(8,011)
Loss
provision
$000
-
(44)
(36)
(6,149)
(6,229)
(44)
(6,273)
Net carrying
amount
$000
1,354
1,551
5,493
16,743
25,141
(43)
25,098
Net carrying
amount
$000
1,775
2,935
3,571
12,929
21,210
(44)
21,166
16 Loans and borrowings
Current
Long-term loan
Total loans and borrowings
2020
2019
Book value
$000
Fair value
$000
Book value
$000
Fair value
$000
-
-
-
-
-
-
8,203
8,203
8,203
7,943
7,943
7,943
A subsidiary company, PT Sawit Graha Manunggal, obtained a long-term loan of $35 million for a period of eight years (including four years
grace repayment period) to support the capital expenditure requirement for planting, development and maintenance of oil palm estate and to
finance oil mill construction and other property, plant and equipment owned by the subsidiary company. It was secured by the subsidiary
company’s land with a carrying amount of $6.7 million (2019: $5.8 million) measured at fair value and its plantation with a carrying amount of
$21.4 million (2019: $23.0 million) as at 31 December 2020 and was guaranteed by the Company. This loan bore interest at a rate based on
SIBOR + 4.5% + Liquidity Premium payable quarterly in arrears. Average interest rate in 2020 was about 6.75% (2019: 6.78%). The loan was
fully paid in 2020 and all security and guarantee arrangements had been released.
All the loans and borrowings are denominated in USD. The effect of changes in foreign exchange rates is disclosed in note 25.
The fair value of the items classified as loans and borrowings is disclosed below and is classified as Level 3 in the fair value hierarchy:
2020
2019
Book value
$000
Fair value
$000
Book value
$000
Fair value
$000
Loans and borrowings
-
-
8,203
7,943
The fair value for disclosure purposes has been determined using discounted cash flows. Significant inputs include the discount rate used to
reflect the credit risk associated with the Group. The fair value reduces as higher discount rate being used.
Annual Report 2020 | Anglo-Eastern Plantations Plc
106
Notes to the Consolidated Financial Statements
17 Trade and other payables
Trade payables
Other payables
Advance receipts
Accruals
2020
$000
6,254
1,387
7,070
11,599
26,310
2019
$000
5,028
994
119
9,969
16,110
The carrying amount of trade and other payables classified as financial liabilities measured at amortised cost approximates fair value. Advance
receipts from customers increased significantly due to logistic problem in Bengkulu and Kalimantan and it is expected to be recognised in full
as revenue in the subsequent year.
18 Deferred tax
The movement on the deferred tax account as shown below:
At 1 January
Recognised in income statement:
Tax expense
BA movement
Revaluation of leasehold land
Recognised in other comprehensive income:
Revaluation of leasehold land
Retirement benefits
Exchange differences
At 31 December
2020
$000
(5,796)
(2,975)
(61)
(483)
2,451
130
84
(6,650)
2019
$000
(8,893)
3,220
(930)
245
577
256
(271)
(5,796)
The deferred tax asset and liability, together with the amounts recognised in income statement and other comprehensive income are detailed
as follows:
2020
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)
2019
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
-
2,944
-
11,360
-
1,489
15,793
(6,976)
8,817
-
2,834
-
14,170
-
2,008
19,012
(7,761)
11,251
Liability
$000
(20,164)
-
(1,934)
-
(345)
-
(22,443)
6,976
(15,467)
(22,479)
-
(2,010)
-
(319)
-
(24,808)
7,761
(17,047)
Net
$000
(20,164)
2,944
(1,934)
11,360
(345)
1,489
(6,650)
-
(6,650)
(22,479)
2,834
(2,010)
14,170
(319)
2,008
(5,796)
-
(5,796)
(Charged)/
credited to
income
statement
$000
(Charged)/
credited
to equity
$000
(483)
16
(61)
(2,523)
-
(468)
(3,519)
-
(3,519)
245
420
(930)
1,152
-
1,648
2,535
-
2,535
2,451
130
-
-
-
-
2,581
-
2,581
577
256
-
-
-
-
833
-
833
Annual Report 2020 | Anglo-Eastern Plantations Plc
107
Notes to the Consolidated Financial Statements
18 Deferred tax - continued
A deferred tax asset has not been recognised for the following items:
Unutilised tax losses
2020
$000
2019
$000
15,532
19,142
The Group had recognised tax assets arising from the unutilised tax losses of certain subsidiaries as the Group believes that the tax assets of
these subsidiaries can be realised in the future periods based on their budget, due to their respective plantation assets becoming more mature
and historically this resulting in the companies becoming profitable. However, the Group does not recognise the tax losses in certain companies
within the Group as tax assets as the future recoverability of losses of these companies cannot be certain. The time limit on utilisation of tax
losses is subject to the tax laws in various countries. As of 31 December 2020, the relevant time limits are 5 years in Indonesia, 7 years in
Malaysia and unlimited in UK. At 31 December 2020, all unutilised tax losses were recognised in Indonesia. The unutilised tax losses will expire
as per below:
Year
2021
2022
2023
2024
2025
$000
-
388
2,324
6,602
2,046
11,360
At the balance sheet date, the aggregate amount of temporary differences associated with undistributed earnings of subsidiaries for which
deferred tax liabilities have not been recognised was $671,431,000 (2019 - $635,809,000). No liability has been recognised in respect of these
differences because either the Group is in a position to control the timing of the reversal of the temporary differences, or such a reversal would
not give rise to an additional tax liability. The deferred tax liability on unremitted earnings recognised at the balance sheet date was related to
the estimated dividend declared for 2020 by the subsidiaries.
Annual Report 2020 | Anglo-Eastern Plantations Plc
108
Notes to the Consolidated Financial Statements
19 Retirement benefits
The Group provides Post-Employment Benefit plans to its employees in Indonesia in accordance with Indonesian Labour Law No. 13/2003 and
Collective Labour Agreements. These are defined benefit plans and provide lump sum benefits to employees on retirement, death, disability
and voluntary resignation. There is no requirement for the Group to advance fund these benefits.
The Group has set up a separate fund with PT Asuransi Allianz Life Indonesia to fund the Post-Employment Benefit plan obligation for Staff
employees. The assets in the fund can only be used to pay the employees’ benefits.
Up until 2020, the Non-Staff employees of five of the Group’s subsidiaries in Indonesia participated in the SKU UKINDO Pension Fund, a
defined benefit plan. On retirement, death, disability or voluntary resignation, participating employees would receive the higher of the benefit
from the Pension Fund and the Post-Employment Benefit plan. In early 2020, the SKU UKINDO Pension Fund was liquidated. Its assets were
transferred to a new defined contribution plan managed by Dana Pension Lembaga Keuangan AIA Financial (“DPLK AIAF”) and allocated to
the individual participants. From 2020 onwards, these employees will receive the higher of the benefit from DPLK AIAF and the Post-
Employment Benefit plan. The liquidation of the SKU UKINDO Pension Fund led to a settlement gain of $930,000 in 2020. It also resulted in a
past service cost of $569,000 in 2020 in the Post-Employment Benefit plan for Non-Staff employees, as the DPLK AIAF plan covers a smaller
proportion of the overall Post-Employment Benefit obligation than was previously provided by the SKU UKINDO Pension Fund.
The Group provides other long-term employee benefits in the form of Long Service Awards for Staff and Non-Staff employees in Indonesia.
The Long Service Awards are for amounts of up to 2 months of basic salary, paid on completion of 10 or 20 years’ continuous service (Staff)
and on completion of 25, 30, 35, and 40 years’ continuous service (Non-Staff). These benefits are unfunded.
The defined benefit plans are valued by an actuary at the end of each financial year. The major assumptions used by the actuary were:
Rate of increase in wages
Discount rate
Mortality rate*
Disability rate
Service cost
Current service cost
Past service cost
Settlement (gain) / loss
Net interest expense
Actuarial (gain) / loss
Total employee benefits expense
The reconciliation on the remeasurement of retirement benefit plan as shown below:
Included in other comprehensive income:
Remeasurement of retirement benefit plan
Deferred tax on retirement benefits
Remeasurement of retirement benefit plan, net of tax recognised in other
comprehensive income
2020
2019
8.0%
7.0%
100% TMI4
10% TMI4
8.0%
8.0%
100% TMI3
10% TMI3
2020
$000
1,555
313
(930)
825
30
1,793
2020
$000
(779)
130
(649)
2019
$000
1,597
427
-
734
31
2,789
2019
$000
(1,024)
256
(768)
Annual Report 2020 | Anglo-Eastern Plantations Plc
109
Notes to the Consolidated Financial Statements Annual Report 2020 | Anglo-Eastern Plantations Plc 110 19 Retirement benefits - continued (i) Reconciliation of defined benefit obligation and fair value of scheme assets Defined benefit obligation Fair value of scheme assets Net defined scheme liability Funded scheme Unfunded scheme Total Funded scheme Unfunded scheme Total Funded scheme Unfunded scheme Total $000 $000 $000 $000 $000 $000 $000 $000 $000 At 1 January 2019 (7,246) (5,321) (12,567) 4,323 - 4,323 (2,923) (5,321) (8,244) Service cost – current (675) (922) (1,597) - - - (675) (922) (1,597) Service cost - past (420) (7) (427) - - - (420) (7) (427) Interest (cost) / income (630) (485) (1,115) 381 - 381 (249) (485) (734) Actuarial gain - (30) (30) - - - - (30) (30) Included in income statement (1,725) (1,444) (3,169) 381 - 381 (1,344) (1,444) (2,788) Remeasurement (loss) / gain Actuarial (loss) / gain from: Adjustments (experience) (144) 40 (104) - - - (144) 40 (104) Financial assumptions (391) (367) (758) - - - (391) (367) (758) Return on plan assets (exclude interest) - - - (162) - (162) (162) - (162) Included in other comprehensive income (535) (327) (862) (162) - (162) (697) (327) (1,024) Effect of movements in exchange rates (335) (250) (585) 192 - 192 (143) (250) (393) Employer contributions - - - 637 - 637 637 - 637 Benefits paid 475 198 673 (199) - (199) 276 198 474 Other movements 140 (52) 88 630 - 630 770 (52) 718 At 31 December 2019 (9,366) (7,144) (16,510) 5,172 - 5,172 (4,194) (7,144) (11,338) Notes to the Consolidated Financial Statements Annual Report 2020 | Anglo-Eastern Plantations Plc 110 19 Retirement benefits - continued (i) Reconciliation of defined benefit obligation and fair value of scheme assets Defined benefit obligation Fair value of scheme assets Net defined scheme liability Funded scheme Unfunded scheme Total Funded scheme Unfunded scheme Total Funded scheme Unfunded scheme Total $000 $000 $000 $000 $000 $000 $000 $000 $000 At 1 January 2019 (7,246) (5,321) (12,567) 4,323 - 4,323 (2,923) (5,321) (8,244) Service cost – current (675) (922) (1,597) - - - (675) (922) (1,597) Service cost - past (420) (7) (427) - - - (420) (7) (427) Interest (cost) / income (630) (485) (1,115) 381 - 381 (249) (485) (734) Actuarial gain - (30) (30) - - - - (30) (30) Included in income statement (1,725) (1,444) (3,169) 381 - 381 (1,344) (1,444) (2,788) Remeasurement (loss) / gain Actuarial (loss) / gain from: Adjustments (experience) (144) 40 (104) - - - (144) 40 (104) Financial assumptions (391) (367) (758) - - - (391) (367) (758) Return on plan assets (exclude interest) - - - (162) - (162) (162) - (162) Included in other comprehensive income (535) (327) (862) (162) - (162) (697) (327) (1,024) Effect of movements in exchange rates (335) (250) (585) 192 - 192 (143) (250) (393) Employer contributions - - - 637 - 637 637 - 637 Benefits paid 475 198 673 (199) - (199) 276 198 474 Other movements 140 (52) 88 630 - 630 770 (52) 718 At 31 December 2019 (9,366) (7,144) (16,510) 5,172 - 5,172 (4,194) (7,144) (11,338) Notes to the Consolidated Financial Statements Annual Report 2019 | Anglo-Eastern Plantations Plc 98 19 Retirement benefits - continued (i) Reconciliation of defined benefit obligation and fair value of scheme assets (continued) Defined benefit obligation Fair value of scheme assets Net defined scheme liability Funded scheme Unfunded scheme Total Funded scheme Unfunded scheme Total Funded scheme Unfunded scheme Total $000 $000 $000 $000 $000 $000 $000 $000 $000 At 31 December 2018 (7,246) (5,321) (12,567) 4,323 - 4,323 (2,923) (5,321) (8,244) Service cost - current (675) (922) (1,597) - - - (675) (922) (1,597) Service cost - past (420) (7) (427) - - - (420) (7) (427) Interest (cost) / income (630) (485) (1,115) 381 - 381 (249) (485) (734) Actuarial loss - (31) (31) - - - - (31) (31) Included in comprehensive income (1,725) (1,445) (3,170) 381 - 381 (1,344) (1,445) (2,789) Remeasurement (loss) / gain Actuarial (loss) / gain from: Adjustments (experience) (144) 41 (103) - - - (144) 41 (103) Financial assumptions (391) (367) (758) - - - (391) (367) (758) Return on plan assets (exclude interest) - - - (162) - (162) (162) - (162) Included in other comprehensive income (535) (326) (861) (162) - (162) (697) (326) (1,023) Effect of movements in exchange rates (335) (250) (585) 192 - 192 (143) (250) (393) Employer contributions - - - 637 - 637 637 - 637 Benefits paid 475 198 673 (199) - (199) 276 198 474 Other movements 140 (52) 88 630 - 630 770 (52) 718 At 31 December 2019 (9,366) (7,144) (16,510) 5,172 - 5,172 (4,194) (7,144) (11,338) Notes to the Consolidated Financial Statements Annual Report 2020 | Anglo-Eastern Plantations Plc 111 19 Retirement benefits - continued (i) Reconciliation of defined benefit obligation and fair value of scheme assets (continued) Defined benefit obligation Fair value of scheme assets Net defined scheme liability Funded scheme Unfunded scheme Total Funded scheme Unfunded scheme Total Funded scheme Unfunded scheme Total $000 $000 $000 $000 $000 $000 $000 $000 $000 At 1 January 2020 (9,366) (7,144) (16,510) 5,172 - 5,172 (4,194) (7,144) (11,338) Service cost - current (393) (1,162) (1,555) - - - (393) (1,162) (1,555) Service cost - past 256 (569) (313) - - - 256 (569) (313) Settlement gain 4,742 - 4,742 (3,812) - (3,812) 930 - 930 Interest (cost) / income (307) (609) (916) 91 - 91 (216) (609) (825) Actuarial loss - (30) (30) - - - - (30) (30) Included in income statement 4,298 (2,370) 1,928 (3,721) - (3,721) 577 (2,370) (1,793) Remeasurement (loss) / gain Actuarial (loss) / gain from: Adjustments (experience) 245 37 282 - - - 245 37 282 Demographic assumptions 89 207 296 - - - 89 207 296 Financial assumptions (334) (1,004) (1,338) - - - (334) (1,004) (1,338) Return on plan assets (exclude interest) - - - (19) - (19) (19) - (19) Included in other comprehensive income - (760) (760) (19) - (19) (19) (760) (779) Effect of movements in exchange rates 282 9 291 (198) - (198) 84 9 93 Employer contributions - - - - - - - - - Benefits paid 112 322 434 - - - 112 322 434 Other movements 394 331 725 (198) - (198) 196 331 527 At 31 December 2020 (4,674) (9,943) (14,617) 1,234 - 1,234 (3,440) (9,943) (13,383) Notes to the Consolidated Financial Statements Annual Report 2020 | Anglo-Eastern Plantations Plc 111 19 Retirement benefits - continued (i) Reconciliation of defined benefit obligation and fair value of scheme assets (continued) Defined benefit obligation Fair value of scheme assets Net defined scheme liability Funded scheme Unfunded scheme Total Funded scheme Unfunded scheme Total Funded scheme Unfunded scheme Total $000 $000 $000 $000 $000 $000 $000 $000 $000 At 1 January 2020 (9,366) (7,144) (16,510) 5,172 - 5,172 (4,194) (7,144) (11,338) Service cost - current (393) (1,162) (1,555) - - - (393) (1,162) (1,555) Service cost - past 256 (569) (313) - - - 256 (569) (313) Settlement gain 4,742 - 4,742 (3,812) - (3,812) 930 - 930 Interest (cost) / income (307) (609) (916) 91 - 91 (216) (609) (825) Actuarial loss - (30) (30) - - - - (30) (30) Included in income statement 4,298 (2,370) 1,928 (3,721) - (3,721) 577 (2,370) (1,793) Remeasurement (loss) / gain Actuarial (loss) / gain from: Adjustments (experience) 245 37 282 - - - 245 37 282 Demographic assumptions 89 207 296 - - - 89 207 296 Financial assumptions (334) (1,004) (1,338) - - - (334) (1,004) (1,338) Return on plan assets (exclude interest) - - - (19) - (19) (19) - (19) Included in other comprehensive income - (760) (760) (19) - (19) (19) (760) (779) Effect of movements in exchange rates 282 9 291 (198) - (198) 84 9 93 Employer contributions - - - - - - - - - Benefits paid 112 322 434 - - - 112 322 434 Other movements 394 331 725 (198) - (198) 196 331 527 At 31 December 2020 (4,674) (9,943) (14,617) 1,234 - 1,234 (3,440) (9,943) (13,383) Notes to the Consolidated Financial Statements Annual Report 2019 | Anglo-Eastern Plantations Plc 108 27 Non-controlling interests The Group identified subsidiaries with material non-controlling interests (“NCI”) based on the total assets in relation to the Group. A subsidiary's NCI is material if the subsidiary contributed more than 10% of the Group's total assets. The subsidiaries identified and their summarised financial information, before intra-group eliminations, are presented below: Entity PT Tasik Raja PT Mitra Puding Mas PT Alno Agro Utama PT Bina Pitri Jaya PT Sawit Graha Manunggal 18% NCI percentage 20% 10% 10% 20% Summarised income statement For the year ended 31 December 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 Revenue 45,786 47,054 27,121 32,557 40,403 49,149 36,060 43,970 32,022 34,507 (Loss) / Profit after tax (31,473) 12,043 3,898 6,689 1,653 5,632 6,225 16,158 12,482 (3,458) Other comprehensive income / (expense) 7,208 (12,219) 3,384 (4,845) 3,962 (5,205) 6,438 (8,953) (21) 203 Total comprehensive (expenses) / income (24,265) (176) 7,280 1,844 5,615 427 12,663 7,205 12,461 (3,255) (Loss) / Profit allocated to NCI (6,295) 2,409 390 669 165 563 1,245 3,232 2,272 (629) Other comprehensive income / (expenses) allocated to NCI 1,442 (2,444) 338 (485) 396 (521) 1,288 (1,791) (4) 37 Total comprehensive (expenses) / income allocated to NCI (4,853) (35) 728 184 561 42 2,533 1,441 2,268 (592) Dividends paid to NCI - - 56 8 3 11 32 32 - - Summarised statement of financial position As at 31 December 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 Non-current assets 123,795 252,877 76,145 35,923 66,899 49,829 129,742 106,720 81,655 80,325 Current assets 15,948 40,901 7,158 41,094 25,386 36,560 12,927 25,233 14,941 40,137 Non-current liabilities (4,686) (123,803) (3,807) (3,332) (8,088) (7,069) (3,561) (3,209) (77,001) (82,382) Current liabilities (3,600) (12,912) (3,656) (4,183) (3,377) (3,575) (3,915) (4,917) (11,089) (42,033) Net assets 131,457 157,063 75,840 69,502 80,820 75,745 135,193 123,827 8,506 (3,953) Accumulated NCI 26,291 31,413 7,584 6,950 8,082 7,575 27,039 24,765 1,548 (719) Summarised cash flows For the year ended 31 December 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 Cash flows (used in) / from operating activities (505) 16,548 (13,443) (13,805) 9,688 (2,308) 4,158 16,591 15,404 (942) Cash flows from / (used in) investing activities 103,978 (21,005) (631) (1,958) (17,593) (3,187) (12,654) (20,502) (5,285) (7,519) Cash flows (used in) / from financing activities (122,378) 25,697 (557) (77) (5) (21) (45) (159) (10,575) 9,247 Net cash (outflows) / inflows (18,905) 21,240 (14,631) (15,840) (7,910) (5,516) (8,541) (4,070) (456) 786 Notes to the Consolidated Financial Statements
19 Retirement benefits - continued
(ii) Disaggregation of defined benefit scheme assets
The fair value of the funded assets is analysed as follows:
Bonds
- Corporate bonds
- Mutual fund bonds
Cash / deposits
2020
$000
7
282
289
945
1,234
2019
$000
24
288
312
4,860
5,172
None of the plan assets are invested in the Group’s own financial instruments, property or other assets used by the Group. All plan assets
invested in bonds which have a quoted market price in an active market.
(iii) Defined benefit obligation - sensitivity analysis
The following table exhibits the sensitivity of the Group’s retirement benefits to the fluctuation in the discount rate, wages and mortality rate:
Discount rate
Growth in wages
Future mortality rate
Reasonably
Possible
Change
(+ / - 1%)
(+ / - 1%)
(+ / - 10%)
Defined benefit obligation
Decrease
Increase
$000
$000
(1,450)
1,719
70
1,686
(1,504)
(70)
The weighted average duration of the defined benefit obligation is 15.57 years (2019: 14.65 years).
The total contribution paid into the defined contribution plan in 2020 amounted to $209,000. The Group expects to pay contributions of $442,000
to the funded plans in 2021. For the unfunded plans, the Group pays the benefits directly to the individuals; the Group expects to make direct
benefit payments of $250,000 for defined benefit plan and $246,000 for defined contribution plan in 2021.
20 Share capital and treasury shares
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 (574.0p/share)
End of year (583.0p/share)
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
2020
Number
339,900
-
339,900
2019
Number
339,900
-
339,900
Cost
2020
$’000
(1,171)
-
(1,171)
Cost
2019
$’000
(1,171)
-
(1,171)
$’000
2,577
2,705
No treasury share was purchased in 2020 (2019: Nil).
All fully paid ordinary shares have full voting rights, as well as to receive the distribution of dividends and repayment of capital upon winding up
of company.
21 Ultimate controlling shareholder
At 31 December 2020, Genton International Limited (“Genton”), a company registered in Hong Kong, held 20,247,814 (2019: 20,247,814)
shares of the Company representing 51.1% (2019: 51.1%) of the issued share capital of the Company. Together with other deemed interested
parties, Genton‘s shareholding totals 20,551,914 or 51.9%. Madam Lim Siew Kim, a Director of the Company, has advised the Company that
she is the controlling shareholder of Genton International Limited.
Annual Report 2020 | Anglo-Eastern Plantations Plc
112
Notes to the Consolidated Financial Statements
22 Related party transactions
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed
in this note.
An office premises lease agreement was entered with Infra Sari Sdn Bhd, a company controlled by Madam Lim Siew Kim. The rental paid
during the year was $345,559 (2019: $352,845). There was no balance outstanding at the year end (2019: Nil).
In 2019, a land lease agreement was entered with Kuang Rong Holdings Sdn Bhd, company controlled by Madam Lim Siew Kim. The rental
paid during the year was $79,914 (2019: $33,871). There was no balance outstanding at the year end.
In 2020, the final dividend paid to Genton International Limited, a company controlled by Madam Lim Siew Kim, was $107,239 for the year
ended 31 December 2019 (2019: $607,434 for the year ended 31 December 2018). The final dividend paid to other companies controlled by
Madam Lim Siew Kim was $1,521 for the year ended 31 December 2019 (2019: $9,123 for the year ended 31 December 2018). There was
no balance outstanding at the year end.
23 Reserves
Nature and purpose of each reserve:
Share capital
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, net of tax.
Exchange reserves
Gains/losses arising from translating the net assets of overseas operations into US Dollar.
Retained earnings
Cumulative net gains and losses recognised in the consolidated income statement.
24 Guarantees and other financial commitments
Capital commitments at 31 December
Contracted but not provided - normal estate operations
Authorised but not contracted - plantation and mill development
2020
$000
29
49,721
2019
$000
14
13,073
A subsidiary company, PT Sawit Graha Manunggal (“SGM”) has provided a corporate guarantee to Koperasi Bartim Sawit Sejahtera (“KBSS”),
a party under Plasma scheme as disclosed in note 12, in relation to a loan taken by KBSS from PT Bank Mandiri (Persero) Tbk. of Rp226.02
billion ($16.0 million) (2019: Rp226.02 billion, $16.3 million). The corporate guarantee remains until the loan is fully settled by 23 December
2027. The HGU (land right) that belongs to the Plasma scheme is currently held under SGM’s master title. An application to separate the HGU
was submitted to the Land Office and the land and its plantation with a total carrying amount of $10.5 million as at 31 December 2020 will be
pledged to the bank as security once the title separation approval is obtained. In addition, the terms and conditions of the loan agreement also
require KBSS to sell all its FFB produce to SGM and the plantation estate is to be managed by SGM. In view of these, the Group exposure to
this contingent liability is minimised.
On 3 February 2017, a subsidiary company, PT Alno Agro Utama and Koperasi Perkebunan Plasma Maju Sejahtera (“KPPM”) signed a
Refinancing Agreement with PT Bank Syariah Mandiri ("BSM") to fund its plasma development. The Agreement provides a loan of Rp 8.75
billion ($0.6 million), with 10 (Ten) years maturity period effective from 24 July 2017 with an interest rate of 13.25% per annum. KPPM pledges
its 147.04 hectares oil palm plantation located in Desa Serami Baru, Kecamatan Malin Deman, Kabupaten Mukomuko, Bengkulu and its
plantation with a carrying amount of $0.7 million as at 31 December 2020 as security under the agreement while the Company provides
corporate guarantee amounting to Rp 8.75 billion ($0.6 million).
The Group’s loss provision on these financial guarantee contracts was $43,000 (2019: $44,000). The details of the ECL were disclosed in note
15.
Annual Report 2020 | Anglo-Eastern Plantations Plc
113
Notes to the Consolidated Financial Statements
25 Disclosure of financial instruments and other risks
The Group's principal financial instruments comprised cash, short and long-term bank loans, trade receivables and payables and receivables
from local partners in respect of their investments.
The Group’s accounting classification of each class of financial asset and liability at 31 December 2020 and 2019 were:
2020
Non-current receivables
Trade and other receivables
Short-term investments
Cash and cash equivalent
Loans and borrowings due within one year
Trade and other payables
2019
Non-current receivables
Trade and other receivables
Short-term investments
Cash and cash equivalent
Loans and borrowings due within one year
Trade and other payables
Amortised
cost
$000
22,236
2,905
1,957
115,211
-
-
142,309
Amortised cost
$000
16,500
4,710
-
84,846
-
-
106,056
Financial
liabilities at
amortised cost
$000
Total carrying
value
$000
-
-
-
-
-
(26,310)
(26,310)
22,236
2,905
1,957
115,211
-
(26,310)
115,999
Financial
liabilities at
amortised cost
$000
Total carrying
value
$000
-
-
-
-
(8,203)
(16,110)
(24,313)
16,500
4,710
-
84,846
(8,203)
(16,110)
81,743
Financial instruments not measured at fair value
Financial instruments not measured at fair value include cash and cash equivalents, trade and other receivables, trade and other payables,
borrowings due within one year and non-current receivables.
Due to their short-term nature, the carrying value of cash and cash equivalents, trade and other receivables, trade and other payables
approximates their fair value. The non-current receivables were measured at cost less ECL however disclosure of fair value has been given in
note 12 for comparison purposes.
Please refer to the applicable notes for details of the fair value hierarchy, valuation techniques, and significant unobservable inputs related to
determining the fair value of the following items:
- Non-current receivables (note 12); and
- Loans and borrowings (note 16).
The principal financial risks to which the Group is exposed are:
- commodity selling price changes; and
- exchange movements;
which, in turn, can affect financial instruments and/or operating performance.
The Company does not hedge any of its risks. Its trade credit risks are low. There are no financial assets or liabilities that are held at fair value
through the profit or loss.
The Board is directly responsible for setting policies in relation to financial risk management and monitors the levels of the main risks through
review of regular operational reports.
Commodity selling prices
The Group does not normally contract to sell produce more than one month ahead.
Currency risk
Most of the Group's operations are in Indonesia. The Company and Group accounts are prepared in US Dollar which is not the functional
currency of the operating subsidiaries. The Group does not hedge its net investment in its overseas subsidiaries and is therefore exposed to a
currency risk on that investment. The historical cost of investment (including intercompany loans) by the parent in its subsidiaries amounted to
$54,573,000 (2019: $55,797,000), while the balance sheet value of the Group's share of underlying assets at 31 December 2020 amounted to
$428,681,000 (2019: $401,157,000).
Annual Report 2020 | Anglo-Eastern Plantations Plc
114
Notes to the Consolidated Financial Statements
25 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.
All remaining borrowings of the Group’s subsidiaries had been fully paid in 2020 and therefore there was no longer any currency risk for the
Group in respect of this. The average interest rate on local currency deposits was 4.02% higher (2019: 4.44% higher) than on US Dollar
deposits whereas interest rate for local currency borrowing was about 1.25% higher (2019: 2.72% higher) as compared to US Dollar borrowing.
The unmatched balance at 31 December 2020 is represented by the $13,803,000 shown in the table below (2019: $5,910,000). If the Group’s
net cash position continues to improve, then US Dollar cash balances will continue to increase through 2021.
The table below shows the net monetary assets and liabilities of the Group as at 31 December 2020 and 2019 that were not denominated in
the operating or functional currency of the operating unit involved.
Functional currency of Group operation
2020
Rupiah
US Dollar
Ringgit
Total
2019
Rupiah
US Dollar
Ringgit
Total
Net foreign currency assets/(liabilities)
US Dollar
$000
Sterling
$000
12,086
-
1,717
13,803
3,882
-
2,028
5,910
-
259
-
259
-
475
-
475
Total
$000
12,086
259
1,717
14,062
3,882
475
2,028
6,385
The following table summarises the sensitivity of the Group’s financial assets and financial liabilities to foreign exchange risk. The impact on
profit before tax and equity if Ringgit or Rupiah strengthen or weaken by 10% against US Dollar is:
2020
2019
Carrying
Amount
US$
$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
22,236
2,905
1,957
115,211
-
(26,310)
(1,522)
(261)
(178)
(10,433)
-
2,279
(10,115)
1,860
319
217
12,752
-
(2,785)
12,363
16,500
4,710
-
84,846
(8,203)
(16,110)
(1,172)
(243)
-
(7,651)
746
1,349
(6,971)
1,432
297
-
9,352
(911)
(1,649)
8,521
Financial Assets
Non-current receivables
Trade and other receivables
Short-term investments
Cash and cash equivalents
Financial Liabilities
Borrowings due within one year
Trade and other payables
Total (decrease) / increase
Liquidity risk
Profitability of new sizable plantations normally requires a period of between six and seven years before cash flow turns positive. Because oil
palms do not begin yielding significantly until four years after planting, this development period and the cash requirement is affected by changes
in commodity prices.
The Group attempts to ensure that it is likely to have either self-generated funds or further loan/equity capital to complete its development plans
and to meet loan repayments. Long-term forecasts are updated twice a year for review by the Board. In the event that falling commodity prices
reduce self-generated funds below expectations and to a level where Group resources may be insufficient, further new planting may be
restricted. Consideration is given to the funds required to bring existing immature plantings to maturity.
The Group’s trade and tax payables are all due for settlement within a year. At 31 December 2020, the Group had no external loans and
facilities.
Annual Report 2020 | Anglo-Eastern Plantations Plc
115
Notes to the Consolidated Financial Statements
25 Disclosure of financial instruments and other risks - continued
Liquidity risk - continued
The total loan borrowings together with interest at current rates are as follows:
Principal
Interest
Total
Amount repayable within one year
All loans had been fully paid in 2020.
2020
$000
-
-
-
-
-
2019
$000
8,203
278
8,481
8,481
8,481
All the long-term loans include varying covenants covering minimum net worth and cash balances, dividend and interest cover and debt service
ratios. The subsidiary companies concerned have complied with the covenants as stated in the loan agreement.
The following table sets out the undiscounted contractual cashflows of financial liabilities:
Less than
1 year
$000
Between 1
and 2 years
$000
Between 2
and 5 years
$000
More than 5
years
$000
At 31 December 2020
Trade and other payables
Lease liabilities
Financial guarantee contracts
provided to Plasma
- loan repayment by Plasma
At 31 December 2019
Trade and other payables
Lease liabilities
Financial guarantee contracts provided
to Plasma
- loan repayment by Plasma
(7,641)
(257)
(7,898)
(773)
(8,671)
(6,022)
(258)
(6,280)
(306)
(6,586)
-
(222)
(222)
(2,535)
(2,757)
-
(258)
(258)
(1,956)
(2,214)
The figures for trade and other payables excludes accruals and advance receipts.
The Group does not face a significant liquidity risk with regard to its financial liabilities.
Total
$000
(7,641)
(479)
(8,120)
-
-
-
(107)
(107)
(4,343)
(12,463)
-
-
-
(6,022)
(740)
(6,762)
-
-
-
(928)
(928)
-
(224)
(224)
(2,165)
(2,389)
(284)
(284)
(4,711)
(11,473)
Interest rate risk
Both the Group's surplus cash and its borrowings are subject to variable interest rates. The Group had net cash throughout 2020, so the effect
of variations in borrowing rates is more than offset. A 1% change in the borrowing or deposit interest rate would not have a significant impact
on the Group’s reported results as shown in the table below. The rates on borrowings are set out in note 16.
2020
2019
Carrying
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
Financial Assets
Short-term investments
Cash and cash equivalents
Financial Liabilities
Borrowings due within one year
Total (decrease) / increase
1,957
115,211
-
(18)
(1,102)
-
(1,120)
16
1,118
-
1,134
-
84,846
(8,203)
-
(810)
82
(728)
There is no policy to hedge interest rates, partly because of the net cash position and the net interest income position of the Group.
Annual Report 2020 | Anglo-Eastern Plantations Plc
-
810
(82)
728
116
Notes to the Consolidated Financial Statements
25 Disclosure of financial instruments and other risks - 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 December
were:
2020
Sterling
US Dollar
Rupiah
Ringgit
Total
2019
Sterling
US Dollar
Rupiah
Ringgit
Total
Total
$000
Fixed rate
$000
Variable rate
$000
No interest
$000
259
17,805
119,483
4,762
142,309
475
17,868
83,316
4,397
106,056
-
5,493
-
-
5,493
-
3,607
-
-
3,607
21
8,782
101,089
3,546
113,438
20
8,892
68,687
3,393
80,992
238
3,530
18,394
1,216
23,378
455
5,369
14,629
1,004
21,457
Long-term receivables of $5,548,000 (2019: $3,607,000) comprise US Dollar denominated amounts due from non-controlling interests as
described in note 12 on which interest is due at a fixed rate of 6%.
Average US Dollar deposit rate in 2020 was 1.75% (2019: 2.43%) and Rupiah deposit rate was 5.77% (2019: 6.86%).
Interest rate profiles of the Group's financial liabilities (comprising bank loans and other financial liabilities and trade and other payables) at 31
December were:
2020
Sterling
US Dollar
Rupiah
Ringgit
Total
2019
Sterling
US Dollar
Rupiah
Ringgit
Total
Total
$000
Fixed rate
$000
Variable rate
$000
No interest
$000
-
(1,109)
(24,746)
(455)
(26,310)
-
(9,338)
(14,750)
(225)
(24,313)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(8,203)
-
-
(8,203)
-
(1,109)
(24,746)
(455)
(26,310)
-
(1,135)
(14,750)
(225)
(16,110)
Weighted average interest rate on variable rate borrowings was 6.75% in 2020 (2019: 6.78%).
Credit risk
The Group has two types of financial assets that are subject to the ECL model:
•
•
Trade receivables for sales of goods and services; and
Current and non-current receivables carried at amortised cost.
The Group also has financial guarantee contracts for which the ECL model is also applicable.
While cash and cash equivalents are also subject to the impairment requirements as set out in IFRS 9, there is no impairment loss identified
given the financial strength of the financial institutions in which the Group have a relationship with. Credit risk arises from cash and cash
equivalents and deposits with banks and financial institutions. The Group has taken necessary steps and precautions in minimising the credit
risk by lodging cash and cash equivalents only with reputable licensed banks, and particularly in Indonesia, independently rated banks with a
minimum rating of “A”. The cash and cash equivalents are in US dollars, Rupiah, Ringgit and Sterling according to the requirements of the
Group. The list of the principal banks used by the Group is given on the inside of the back cover of this report.
Annual Report 2020 | Anglo-Eastern Plantations Plc
117
Notes to the Consolidated Financial Statements
25 Disclosure of financial instruments and other risks - continued
Credit risk – continued
The Group use three categories for those receivables which reflect their credit risk and how the loss provision is determined for those categories.
(i)
Trade receivables using the simplified approach
The Group applies the simplified approach under IFRS 9 to measure ECL, which uses a lifetime expected loss provision for all trade
receivables. To measure the expected losses, trade receivables have been grouped based on shared credit risk characteristics and
days past due.
The expected loss rates are based on historical payment profiles of sales and the corresponding historical credit losses experienced
during these periods. The historical loss rates are adjusted to reflect current and forward-looking information on macroeconomic factors
(such as palm product prices and crude oil price) affecting the ability of the customers to settle the receivables. The historical loss rates
will be adjusted based on the expected changes in these factors. No significant changes to estimation techniques or assumptions were
made during the reporting period.
In determining the expected loss rates, the Group also takes into consideration the collateral or payments received in advance, as set
out below:
Receivables are generally collected within the credit term and therefore there is minimal exposure to doubtful debts. Upfront payments
are also collected for certain sales made by the Group’s subsidiaries in Indonesia.
The Group’s maximum exposure to credit risk and loss provision recognised as at 31 December 2020 is disclosed in note 15. The ECL
has been calculated at 1% on trade receivables balances while the remaining amount in which no ECL provision was recognised is
deemed to be recoverable, with low probability of default. Default is defined by the management as the non-repayment of the balance.
(i)
Debt instruments at amortised costs other than trade receivables using the three-stage approach
All of the Group’s debt instruments at amortised costs other than trade receivables are considered to have a low credit risk, except
amount due from cooperatives under Plasma scheme are considered to have higher credit risk, as these were considered to be
performing, have low risks of default and historically there were minimal instances where contractual cash flow obligations have not
been met. There has not been a significant increase in credit risk since initial recognition.
The 12-month ECL has been calculated at 1% on the majority of balances (unless it has been considered there to be no ECL), with the
exception of amounts due from cooperatives under Plasma scheme where the ECL is largely calculated, having considered various
probability weighted outcomes, as being the balance of the receivable in excess of the value of the associated land and plantation assets
on which the Plasma land resides which effectively would be returned to the Company if the receivable is not repaid.
The maximum exposure to credit risks for debt instruments at amortised cost other than trade receivables are represented by the carrying
amounts recognised in the statements of financial position.
(ii)
Financial guarantee contracts using the three-stage approach
All of the financial guarantee contracts are considered to be performing, have low risks of default and historically there were no instances
where these financial guarantee contracts were called upon by the parties of which the financial guarantee contracts were issued.
Accordingly,12-month ECL have been recognised at 1% on the financial guarantee contracts and disclosed in note 24.
Information regarding other non-current assets and trade and other receivables that are neither past due nor impaired is disclosed in notes 12
and 15 respectively. Amounts receivable from local partners, amounting to $5,548,000 (2019: $3,607,000), in relation to their investments in
operating subsidiaries are secured on those investments and are repayable from their share of dividends from those subsidiaries.
Amounts receivable due from cooperatives under Plasma scheme, as disclosed in note 12, are unsecured and are to be repaid from FFB
supplied by the cooperatives. The provision of ECL for amounts receivable due from cooperatives under Plasma scheme had been disclosed
in note 15.
Annual Report 2020 | Anglo-Eastern Plantations Plc
118
Notes to the Consolidated Financial Statements
25 Disclosure of financial instruments and other risks - continued
Credit risk – continued
Deposits with banks and other financial institutions, investment securities and derivatives that are neither past due nor impaired are placed, or
entered into, with reputable financial institutions or companies with high credit ratings and no history of default.
As the Group does not hold any collateral, the maximum exposure to credit risk for each class of financial instrument is the carrying amount
presented on the statement of financial position, except in the case of the financial guarantee contracts offered by two subsidiaries to
cooperatives in order for them to obtain bank loans in 2013 and 2017, which are not held on the statement of financial position of the Group.
See note 24.
Capital
The Group defines its Capital as Share capital and Reserves, shown in the statement of financial position as "Issued capital attributable to
owners of the parent" and amounting to $428,681,000 at 31 December 2020 (2019: $401,157,000).
Group policy presently attempts to fund development from self-generated funds and loans and not from the issue of new share capital. At 31
December 2020, the Group had no net borrowings (2019: Nil) but, depending on market conditions, the Board is prepared for the Group to
have net borrowings.
Plantation industry risk
Please refer to pages 34 - 39.
Annual Report 2020 | Anglo-Eastern Plantations Plc
119
Notes to the Consolidated Financial Statements
26 Subsidiary companies
The principal subsidiaries of the Company all of which have been included in these consolidated financial statements are as follows:
Name
Principal sub-holding company
Anglo-Indonesian Oil Palms Limited
Country of
incorporation and
principal place of
business
Proportion of
ownership interest at
31 December
2019
2020
Non-controlling
interests ownership /
voting interest at 31
December
2019
2020
United Kingdom
100%
100%
Management company
Indopalm Services Limited
Anglo-Eastern Plantations Management Sdn Bhd
PT Anglo-Eastern Plantations Management Indonesia
United Kingdom
Malaysia
Indonesia
Operating companies
Anglo-Eastern Plantations (M) Sdn Bhd
All For You Sdn Bhd
PT Alno Agro Utama
PT Anak Tasik
PT Bangka Malindo Lestari
PT Bina Pitri Jaya
PT Cahaya Pelita Andhika
PT Empat Lawang Agro Perkasa
PT Hijau Pryan Perdana
PT Kahayan Agro Plantation
PT Karya Kencana Sentosa Tiga
PT Mitra Puding Mas
PT Musam Utjing
PT Riau Agrindo Agung
PT Sawit Graha Manunggal
PT Simpang Ampat
PT Tasik Raja
PT United Kingdom Indonesia Plantations
Malaysia
Malaysia
Indonesia
Indonesia
Indonesia
Indonesia
Indonesia
Indonesia
Indonesia
Indonesia
Indonesia
Indonesia
Indonesia
Indonesia
Indonesia
Indonesia
Indonesia
Indonesia
Dormant companies
The Ampat (Sumatra) Rubber Estate (1913) Limited
Gadek Indonesia (1975) Limited
Mergerset (1980) Limited
Musam Indonesia Limited
United Kingdom
United Kingdom
United Kingdom
United Kingdom
100%
100%
100%
55%
100%
90%
100%
95%
80%
90%
95%
80%
78%
95%
90%
75%
95%
82%
100%
80%
75%
100%
100%
100%
100%
100%
100%
100%
55%
100%
90%
100%
95%
80%
90%
95%
80%
78%
95%
90%
75%
95%
82%
100%
80%
75%
100%
100%
100%
100%
-
-
-
-
45%
-
10%
-
5%
20%
10%
5%
20%
22%
5%
10%
25%
5%
18%
-
20%
25%
-
-
-
-
-
-
-
-
45%
-
10%
-
5%
20%
10%
5%
20%
22%
5%
10%
25%
5%
18%
-
20%
25%
-
-
-
-
The principal United Kingdom sub-holding company, UK management company and UK dormant companies are registered in England and
Wales and are direct subsidiaries of the Company. The Malaysian operating companies and management company are incorporated in
Malaysia and are direct subsidiaries of the Company. The Indonesian operating companies and management company are incorporated in
Indonesia and are direct subsidiaries of the principal sub-holding company. The principal activity of the operating companies is plantation
agriculture. The registered office of the principal subsidiaries are disclosed below:
Subsidiaries by country
UK registered subsidiaries
Malaysia registered subsidiaries
Indonesia registered subsidiaries
Registered address
Quadrant House, 6th Floor
4 Thomas More Square
London E1W 1YW
United Kingdom
7th Floor, Wisma Equity
150 Jalan Ampang
50450 Kuala Lumpur
Malaysia
3rd Floor, Wisma HSBC, Jalan Diponegoro, Kav 11
Medan 20152
North Sumatera
Indonesia
Annual Report 2020 | Anglo-Eastern Plantations Plc
120
Notes to the Consolidated Financial Statements Annual Report 2020 | Anglo-Eastern Plantations Plc 121 27 Non-controlling interests The Group identified subsidiaries with material non-controlling interests (“NCI”) based on the total assets in relation to the Group. A subsidiary's NCI is material if the subsidiary contributed more than 10% of the Group's total assets. The subsidiaries identified and their summarised financial information, before intra-group eliminations, are presented below: Entity PT Tasik Raja PT Mitra Puding Mas PT Alno Agro Utama PT Bina Pitri Jaya PT Sawit Graha Manunggal 18% NCI percentage 20% 10% 10% 20% Summarised income statement For the year ended 31 December 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 Revenue 59,166 45,786 37,492 27,121 51,944 40,403 46,865 36,060 42,782 32,022 Profit / (Loss) after tax 8,554 (31,473) 5,236 3,896 6,381 1,653 9,162 6,225 6,394 12,482 Other comprehensive (expense) / income (1,693) 7,208 (761) 3,384 (556) 3,962 (1,729) 6,438 232 (21) Total comprehensive income / (expense) 6,861 (24,265) 4,475 7,280 5,825 5,615 7,433 12,663 6,626 12,461 Profit / (Loss) allocated to NCI 1,711 (6,295) 524 390 638 165 1,832 1,245 1,164 2,272 Other comprehensive (expenses) / income allocated to NCI (339) 1,442 (76) 338 (56) 396 (346) 1,288 42 (4) Total comprehensive income / (expenses) allocated to NCI 1,372 (4,853) 448 728 582 561 1,486 2,533 1,206 2,268 Dividends paid to NCI 3 - 35 56 2 3 24 32 - - Summarised statement of financial position As at 31 December 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 Non-current assets 116,199 123,795 77,561 76,145 70,280 66,899 136,076 129,742 81,483 81,655 Current assets 32,177 15,948 11,033 7,158 32,217 25,386 16,029 12,927 16,456 14,941 Non-current liabilities (4,210) (4,686) (3,674) (3,807) (7,966) (8,088) (3,594) (3,561) (74,945) (77,001) Current liabilities (5,395) (3,600) (4,801) (3,656) (7,670) (3,377) (5,593) (3,915) (7,896) (11,089) Net assets 138,771 131,457 80,119 75,840 86,861 80,820 142,918 135,193 15,098 8,506 Accumulated NCI 27,754 26,291 8,012 7,584 8,686 8,082 28,584 27,039 2,748 1,548 Summarised cash flows For the year ended 31 December 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 Cash flows from / (used in) operating activities 8,297 (505) 1,850 (13,443) 10,133 9,688 3,792 4,158 15,853 15,404 Cash flows from / (used in) investing activities 2,641 103,978 (996) (631) (2,559) (17,593) (344) (12,654) (4,145) (5,285) Cash flows (used in) / from financing activities (13) (122,378) (343) (557) (483) (5) (33) (45) (11,297) (10,575) Net cash inflows / (outflows) 10,925 (18,905) 511 (14,631) 7,091 (7,910) 3,415 (8,541) 411 (456) Notes to the Consolidated Financial Statements Annual Report 2020 | Anglo-Eastern Plantations Plc 121 27 Non-controlling interests The Group identified subsidiaries with material non-controlling interests (“NCI”) based on the total assets in relation to the Group. A subsidiary's NCI is material if the subsidiary contributed more than 10% of the Group's total assets. The subsidiaries identified and their summarised financial information, before intra-group eliminations, are presented below: Entity PT Tasik Raja PT Mitra Puding Mas PT Alno Agro Utama PT Bina Pitri Jaya PT Sawit Graha Manunggal 18% NCI percentage 20% 10% 10% 20% Summarised income statement For the year ended 31 December 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 Revenue 59,166 45,786 37,492 27,121 51,944 40,403 46,865 36,060 42,782 32,022 Profit / (Loss) after tax 8,554 (31,473) 5,236 3,896 6,381 1,653 9,162 6,225 6,394 12,482 Other comprehensive (expense) / income (1,693) 7,208 (761) 3,384 (556) 3,962 (1,729) 6,438 232 (21) Total comprehensive income / (expense) 6,861 (24,265) 4,475 7,280 5,825 5,615 7,433 12,663 6,626 12,461 Profit / (Loss) allocated to NCI 1,711 (6,295) 524 390 638 165 1,832 1,245 1,164 2,272 Other comprehensive (expenses) / income allocated to NCI (339) 1,442 (76) 338 (56) 396 (346) 1,288 42 (4) Total comprehensive income / (expenses) allocated to NCI 1,372 (4,853) 448 728 582 561 1,486 2,533 1,206 2,268 Dividends paid to NCI 3 - 35 56 2 3 24 32 - - Summarised statement of financial position As at 31 December 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 Non-current assets 116,199 123,795 77,561 76,145 70,280 66,899 136,076 129,742 81,483 81,655 Current assets 32,177 15,948 11,033 7,158 32,217 25,386 16,029 12,927 16,456 14,941 Non-current liabilities (4,210) (4,686) (3,674) (3,807) (7,966) (8,088) (3,594) (3,561) (74,945) (77,001) Current liabilities (5,395) (3,600) (4,801) (3,656) (7,670) (3,377) (5,593) (3,915) (7,896) (11,089) Net assets 138,771 131,457 80,119 75,840 86,861 80,820 142,918 135,193 15,098 8,506 Accumulated NCI 27,754 26,291 8,012 7,584 8,686 8,082 28,584 27,039 2,748 1,548 Summarised cash flows For the year ended 31 December 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 Cash flows from / (used in) operating activities 8,297 (505) 1,850 (13,443) 10,133 9,688 3,792 4,158 15,853 15,404 Cash flows from / (used in) investing activities 2,641 103,978 (996) (631) (2,559) (17,593) (344) (12,654) (4,145) (5,285) Cash flows (used in) / from financing activities (13) (122,378) (343) (557) (483) (5) (33) (45) (11,297) (10,575) Net cash inflows / (outflows) 10,925 (18,905) 511 (14,631) 7,091 (7,910) 3,415 (8,541) 411 (456) Notes to the Consolidated Financial Statements Annual Report 2020 | Anglo-Eastern Plantations Plc 121 27 Non-controlling interests The Group identified subsidiaries with material non-controlling interests (“NCI”) based on the total assets in relation to the Group. A subsidiary's NCI is material if the subsidiary contributed more than 10% of the Group's total assets. The subsidiaries identified and their summarised financial information, before intra-group eliminations, are presented below: Entity PT Tasik Raja PT Mitra Puding Mas PT Alno Agro Utama PT Bina Pitri Jaya PT Sawit Graha Manunggal 18% NCI percentage 20% 10% 10% 20% Summarised income statement For the year ended 31 December 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 Revenue 59,166 45,786 37,492 27,121 51,944 40,403 46,865 36,060 42,782 32,022 Profit / (Loss) after tax 8,554 (31,473) 5,236 3,896 6,381 1,653 9,162 6,225 6,394 12,482 Other comprehensive (expense) / income (1,693) 7,208 (761) 3,384 (556) 3,962 (1,729) 6,438 232 (21) Total comprehensive income / (expense) 6,861 (24,265) 4,475 7,280 5,825 5,615 7,433 12,663 6,626 12,461 Profit / (Loss) allocated to NCI 1,711 (6,295) 524 390 638 165 1,832 1,245 1,164 2,272 Other comprehensive (expenses) / income allocated to NCI (339) 1,442 (76) 338 (56) 396 (346) 1,288 42 (4) Total comprehensive income / (expenses) allocated to NCI 1,372 (4,853) 448 728 582 561 1,486 2,533 1,206 2,268 Dividends paid to NCI 3 - 35 56 2 3 24 32 - - Summarised statement of financial position As at 31 December 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 Non-current assets 116,199 123,795 77,561 76,145 70,280 66,899 136,076 129,742 81,483 81,655 Current assets 32,177 15,948 11,033 7,158 32,217 25,386 16,029 12,927 16,456 14,941 Non-current liabilities (4,210) (4,686) (3,674) (3,807) (7,966) (8,088) (3,594) (3,561) (74,945) (77,001) Current liabilities (5,395) (3,600) (4,801) (3,656) (7,670) (3,377) (5,593) (3,915) (7,896) (11,089) Net assets 138,771 131,457 80,119 75,840 86,861 80,820 142,918 135,193 15,098 8,506 Accumulated NCI 27,754 26,291 8,012 7,584 8,686 8,082 28,584 27,039 2,748 1,548 Summarised cash flows For the year ended 31 December 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 Cash flows from / (used in) operating activities 8,297 (505) 1,850 (13,443) 10,133 9,688 3,792 4,158 15,853 15,404 Cash flows from / (used in) investing activities 2,641 103,978 (996) (631) (2,559) (17,593) (344) (12,654) (4,145) (5,285) Cash flows (used in) / from financing activities (13) (122,378) (343) (557) (483) (5) (33) (45) (11,297) (10,575) Net cash inflows / (outflows) 10,925 (18,905) 511 (14,631) 7,091 (7,910) 3,415 (8,541) 411 (456) Notes to the Consolidated Financial Statements
28 Notes supporting statement of cash flows
Cash and cash equivalents for purposes of the statement of cash flows comprised:
Cash at bank available on demand
Short-term deposits
Cash in hand
As reported in statement of financial position
Significant non-cash transactions from investing activities are as follows:
Property, plant and equipment purchased but not yet paid at year end
Repaid through purchase of FFB
2020
$000
41,029
74,164
18
115,211
2020
$000
160
3,849
Non-cash transactions from financing activities are shown in the reconciliation of liabilities from financing transactions as follows:
Non-current
loans and
borrowings
$000
Current
loans and
borrowings
$000
Non-current
lease
liabilities
$000
Current
lease
liabilities
$000
-
-
-
-
-
-
-
Non-current
loans and
borrowings
$000
(8,203)
-
(169)
-
8,372
-
-
(8,203)
8,167
36
-
-
-
-
Current
loans and
borrowings
$000
(11,078)
11,096
151
-
(8,372)
-
(8,203)
At 1 January 2020
Cash Flows
Non-cash flows
- Effect of foreign exchange
- New lease
- Lease liabilities classified as non-
current at 31 December 2019
becoming current during 2020
- Interest accruing during the year
At 1 January 2019
Cash Flows
Non-cash flows
- Effect of foreign exchange
- New lease
- Loans and borrowings classified as non-
current at 31 December 2018 becoming
current during 2019
- Interest accruing during the year
29 Leases
Lease liabilities analysed as:
Non-current
Current
The weighted average incremental borrowing rate per annum was 6.8% (2019: 6.8%).
Maturity analysis for the lease liabilities has been given in Note 25.
(456)
-
3
-
236
-
(217)
(222)
257
-
-
(236)
(35)
(236)
Non-current
lease
liabilities
$000
Current
lease
liabilities
$000
-
-
(9)
(474)
-
27
(456)
-
210
(4)
(464)
-
36
(222)
2020
$000
(217)
(236)
(453)
2019
$000
29,443
55,381
22
84,846
2019
$000
312
2,728
Total
$000
(8,881)
8,424
39
-
-
(35)
(453)
Total
$000
(19,281)
11,306
(31)
(938)
-
63
(8,881)
2019
$000
(456)
(222)
(678)
Annual Report 2020 | Anglo-Eastern Plantations Plc
122
Notes to the Consolidated Financial Statements
29 Leases - continued
Amounts recognised in income statement:
Depreciation expense on right-of-use assets
Interest expense on lease liabilities
Expense relating to short-term leases
Expense relating to leases of low value assets
2020
$000
(153)
(35)
(386)
(6)
(580)
2019
$000
(184)
(41)
(403)
(6)
(634)
At 31 December 2020, the Group is committed to $0.01 million (2019: $0.01 million) for short-term leases.
All the leases are fixed payments. The total cash outflow for leases amount to $0.65 million (2019: $0.61 million).
The Group leases a piece of land and office under the right-of-use assets. The lease term is between 3 to 4 years. (2019: 3 to 4 years). On
expiry the Group has the options to renew based on mutually agreed future rental. The right-of-use assets is classified as part of property,
plant and equipment in note 11.
Right-of-Use assets
At 1 January 2020
Additions
Amortisation
Impairment losses
Effect of foreign exchange
At 31 December 2020
At 1 January 2019
Additions
Amortisation
Effect of foreign exchange
At 31 December 2019
Lease liabilities
At 1 January 2020
Additions
Interest expense
Lease payments
Effect of foreign exchange
At 31 December 2020
At 1 January 2019
Additions
Interest expense
Lease payments
Effect of foreign exchange
At 31 December 2019
Land
$000
193
-
-
(188)
(5)
-
Land
$000
-
221
(31)
3
193
Land
$000
(196)
-
(10)
84
(4)
(126)
Land
$000
-
(224)
(6)
34
-
(196)
Building
$000
466
-
(148)
-
(11)
307
Building
$000
-
611
(153)
8
466
Building
$000
(482)
-
(25)
173
7
(327)
Building
$000
-
(622)
(35)
176
(1)
(482)
Total
$000
659
-
(148)
(188)
(16)
307
Total
$000
-
832
(184)
11
659
Total
$000
(678)
-
(35)
257
3
(453)
Total
$000
-
(846)
(41)
210
(1)
(678)
The tables above do not include the leasehold land which is also classified as a right of use asset as this information is already presented in
Note 11.
Annual Report 2020 | Anglo-Eastern Plantations Plc
123
Notes to the Consolidated Financial Statements
30 Event after reporting period
In November 2020, the President of Republic of Indonesia enacted a Job Creation Law that will have an impact on employee benefit obligations.
As at 31 December 2020, the Group has calculated the employee benefit obligation based on the law that was in effect prior to this Job Creation
Law, namely UU No. 13/2003, due to the fact that the basis of the calculation for employee benefit obligations is further regulated in an
implementing regulation which was only enacted on 16 February 2021. Until the completion date of this report, the Group is still calculating the
impact of the implementation of this regulation, and its effect on the Group’s financial statements.
Annual Report 2020 | Anglo-Eastern Plantations Plc
124
Company Balance Sheet
As at 31 December 2020
Company Number: 1884630
Non-current assets
Investments in subsidiaries
Current assets
Receivables
Cash at bank and in hand
Current liabilities
Other payables
Net current assets
Net assets
Capital and reserves
Share capital
Treasury shares
Share premium
Capital redemption reserve
Exchange reserves
Retained earnings at 1 January
Profit / (Loss) for the year
Dividends paid
Retained earnings
Shareholders' funds
Note
4
5
6
7
7
2020
$000
54,536
54,536
3,681
448
4,129
(3,542)
587
55,123
15,504
(1,171)
23,935
1,087
3,872
7,241
4,853
(198)
11,896
55,123
2019
$000
49,973
49,973
3,381
681
4,062
(3,567)
495
50,468
15,504
(1,171)
23,935
1,087
3,872
16,192
(7,762)
(1,189)
7,241
50,468
The profit after tax for the year for the Company dealt with in the consolidated financial statements of the Company was $4,853,000 (2019: loss
after tax $7,762,000).
The financial statements were approved and authorised for issue by the Board of Directors on 12 May 2021 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 2020 | Anglo-Eastern Plantations Plc
125
Company Statement of Changes in Equity For the year ended 31 December 2020 Annual Report 2020 | Anglo-Eastern Plantations Plc 126 Share capital Treasury shares Share premium Capital redemption reserve Exchange reserves Retained earnings Total $000 $000 $000 $000 $000 $000 $000 Balance at 31 December 2018 15,504 (1,171) 23,935 1,087 3,872 16,192 59,419 Comprehensive expense for the year Loss for the year - - - - - (7,762) (7,762) Total comprehensive expense for the year - - - - - (7,762) (7,762) Dividends paid - - - - - (1,189) (1,189) Balance at 31 December 2019 15,504 (1,171) 23,935 1,087 3,872 7,241 50,468 Comprehensive income for the year Profit for the year - - - - - 4,853 4,853 Total comprehensive income for the year - - - - - 4,853 4,853 Dividends paid - - - - - (198) (198) Balance at 31 December 2020 15,504 (1,171) 23,935 1,087 3,872 11,896 55,123 The accompanying notes are an integral part of this statement of changes in equity. Company Statement of Changes in Equity For the year ended 31 December 2020 Annual Report 2020 | Anglo-Eastern Plantations Plc 126 Share capital Treasury shares Share premium Capital redemption reserve Exchange reserves Retained earnings Total $000 $000 $000 $000 $000 $000 $000 Balance at 31 December 2018 15,504 (1,171) 23,935 1,087 3,872 16,192 59,419 Comprehensive expense for the year Loss for the year - - - - - (7,762) (7,762) Total comprehensive expense for the year - - - - - (7,762) (7,762) Dividends paid - - - - - (1,189) (1,189) Balance at 31 December 2019 15,504 (1,171) 23,935 1,087 3,872 7,241 50,468 Comprehensive income for the year Profit for the year - - - - - 4,853 4,853 Total comprehensive income for the year - - - - - 4,853 4,853 Dividends paid - - - - - (198) (198) Balance at 31 December 2020 15,504 (1,171) 23,935 1,087 3,872 11,896 55,123 The accompanying notes are an integral part of this statement of changes in equity. Company Statement of Changes in Equity For the year ended 31 December 2020 Annual Report 2020 | Anglo-Eastern Plantations Plc 126 Share capital Treasury shares Share premium Capital redemption reserve Exchange reserves Retained earnings Total $000 $000 $000 $000 $000 $000 $000 Balance at 31 December 2018 15,504 (1,171) 23,935 1,087 3,872 16,192 59,419 Comprehensive expense for the year Loss for the year - - - - - (7,762) (7,762) Total comprehensive expense for the year - - - - - (7,762) (7,762) Dividends paid - - - - - (1,189) (1,189) Balance at 31 December 2019 15,504 (1,171) 23,935 1,087 3,872 7,241 50,468 Comprehensive income for the year Profit for the year - - - - - 4,853 4,853 Total comprehensive income for the year - - - - - 4,853 4,853 Dividends paid - - - - - (198) (198) Balance at 31 December 2020 15,504 (1,171) 23,935 1,087 3,872 11,896 55,123 The accompanying notes are an integral part of this statement of changes in equity. Notes to the Company Financial Statements
1 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).
2 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.
(a) 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.
(b)
Foreign currency
The functional currency of the Company is US Dollar, chosen to reflect the primary economic environment in which the Company
operates. Transactions in sterling are translated to US Dollar at the actual exchange rate and exchange losses recognised in income
statement. 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 income statement.
(c)
Investments
Investments in subsidiaries are stated at cost less provision for any impairment.
(d) 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 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
(e) Dividends
(f)
(g)
(h)
Equity dividends are recognised when they become legally payable. The Company pays only one dividend each year as a final dividend
which becomes legally payable when approved by the shareholders at the next annual general meeting.
Deferred taxation
A deferred tax asset has not been recognised in relation to brought forward tax losses of $9.8m (2019: 13.7m) 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.
Financial guarantee contracts
Where the Company enters into financial guarantee contracts and guarantees the indebtedness of other companies within the Group,
these are accounted for under IFRS 9. The details of financial guarantee contracts are disclosed in note 25 of the consolidated financial
statements.
Annual Report 2020 | Anglo-Eastern Plantations Plc
127
Notes to the Company Financial Statements
2 Accounting policies – continued
(i)
Critical accounting estimates and judgements
The Company makes certain estimates and assumptions regarding the future. Estimates and judgements are continually evaluated
based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the
circumstances. In the future, actual experience may differ from these estimates and assumptions. The estimates and assumptions that
have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are
discussed below.
Estimates and assumptions
Recoverability of investments and ECL on intercompany balances - estimate of future cash flows and liquid assets (note 5)
3
Income statement
As permitted by section 408 of the Companies Act 2006, a separate income statement dealing with the results of the Company has not been
presented. The profit before tax for the year for the Company dealt with in the consolidated financial statements of the Company was $4,855,000
(2019: loss before tax $7,761,000) and profit after tax for the year was $4,853,000 (2019: loss after tax $7,762,000).
The remuneration of the directors of the Company is disclosed in note 7 to the consolidated financial statements. Auditor's remuneration is
disclosed in note 5 to the consolidated financial statements.
4
Investments in subsidiaries
At 1 January 2019
Movements during the year
Repayment
Loss provision
At 31 December 2019
Movements during the year:
Repayment
Reversal of loss provision
At 31 December 2020
Net carrying amount
At 31 December
Investments in
subsidiaries
undertakings
$000
Loans to
subsidiaries
undertakings
$000
Total
$000
12,253
-
-
12,253
-
-
12,253
45,690
57,943
(2,192)
(5,778)
37,720
(1,224)
5,787
42,283
2020
$000
(2,192)
(5,778)
49,973
(1,224)
5,787
54,536
2019
$000
54,536
49,973
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. The details of the ECL is disclosed in note 5.
The details of the subsidiaries are disclosed in note 26 of the consolidated financial statements.
5 Receivables
Amounts owed by group undertakings:
Anglo-Eastern Plantations Management Sdn Bhd
PT Hijau Pyran Perdana
PT Sawit Graha Manunggal
PT Anglo-Eastern Plantations Management Indonesia
Other receivables
2020
$000
2,612
183
831
17
3,643
38
3,681
2019
$000
2,457
183
700
-
3,340
41
3,381
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.
Annual Report 2020 | Anglo-Eastern Plantations Plc
128
Notes to the Company Financial Statements
5 Receivables - continued
For intercompany balances that are repayable on demand, the Company’s ECL is based on the following assumptions:
-
If the borrower has sufficient accessible highly liquid assets in order to repay the loan if demanded at the reporting date, the ECL is likely
to be immaterial.
If the borrower could not repay the loan if demanded at the reporting date, the Company considers the expected manner of recovery to
measure the ECL. The recovery manner could be either through ‘repayment over time’ or a fire sale of less liquid assets by the borrower.
If the recovery strategies indicate that the Company would fully recover the outstanding balance of the loan, the ECL would be limited to
the effect of the discounting of the amount due on the loan, at the loan’s effective interest rates, over the period until the amount is fully
recovered.
-
-
The details of other receivables related to ECL were disclosed in note 15 and note 25 of the consolidated financial statements.
Movements on the Company’s loss provision on both current and non-current other receivables were as follows:
At 1 January
(Reversal of loss provision) / loss provision during the year
At 31 December
At 31 December 2020, the expected loss provision for receivables was as follows:
Gross
carrying
amount
$000
5,113
46
42,320
47,479
Gross carrying
amount
$000
4,157
49
43,544
47,750
2020
Amounts owed by group undertakings
Other receivables
Investments in subsidiaries (note 4)
- Loans to subsidiaries undertakings
2019
Amounts owed by group undertakings:
Other receivables
Investments in subsidiaries (note 4)
- Loans to subsidiaries undertakings
6 Other payables
Amounts owed to group undertakings:
Mergerset (1980) Limited
Musam Indonesia Limited
Accruals
2020
$000
6,649
(5,134)
1,515
Loss
provision
$000
(1,470)
(8)
(37)
(1,515)
Loss provision
$000
(817)
(8)
(5,824)
(6,649)
2020
$000
2,163
246
2,409
1,133
3,542
2019
$000
444
6,205
6,649
Net carrying
amount
$000
3,643
38
42,283
45,964
Net carrying
amount
$000
3,340
41
37,720
41,101
2019
$000
2,163
246
2,409
1,158
3,567
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.
7 Share capital and treasury shares
The details of the share capital and treasury shares are disclosed in note 20 of the consolidated financial statements.
Annual Report 2020 | Anglo-Eastern Plantations Plc
129
Notes to the Company Financial Statements
8 Related party transactions
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 $255,616 (2019: $260,971). There was no balance outstanding at the year end (2019: Nil). This has been classified as a
short term lease and therefore lease payments have been recognised directly as an operating expense in the income statement.
The details of the dividend payment to the related parties controlled by Madam Lim Siew Kim are disclosed in note 22 of the consolidated
financial statements.
Transactions between the Company and its subsidiaries are disclosed below:
Nature of transactions
Name
Management fees from
Commissioner services income
Corporate guarantee fees from
Corporate guarantee fees from
Receivable from
Payable to
Anglo-Eastern Plantations Malaysia Sdn Bhd
PT Anglo-Eastern Plantations Management Indonesia
PT Hijau Pryan Perdana
PT Sawit Graha Manunggal
Subsidiaries (note 5)
Subsidiaries (note 6)
2020
$000
20
17
-
131
5,113
2,409
2019
$000
15
-
33
175
4,157
2,409
The details of the intercompany receivables and payables are disclosed in note 5 and note 6 of the Company financial statements respectively.
9 Employees' and Directors' remuneration
Average numbers employed during the year
- directors
- staff
Staff costs
Wages and salaries
Social security costs
Retirement benefits
2020
Number
2019
Number
4
-
4
2020
$000
-
-
-
-
4
-
4
2019
$000
-
-
-
-
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 65 - 70 of which certain information on page 68 has been audited.
Directors' emoluments
10 Dividends
2020
$000
200
2019
$000
215
The details of the dividends are disclosed in note 10 of the consolidated financial statements.
11 Guarantees and other financial commitments
The Company has provided nil guarantees for loans to subsidiaries (2019: $35,000,000) as set out in note 16 of the consolidated financial
statements.
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130
Notice of Annual General Meeting
Notice is hereby given that the thirty-sixth Annual General Meeting of Anglo-Eastern Plantations Plc will be held at the Company’s office in Malaysia
at 7th Floor, Wisma Equity, 150 Jalan Ampang, 50450 Kuala Lumpur, Malaysia on Monday 28 June 2021 at 4.30 pm (Malaysia time) 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 auditor thereon for the year ended 31 December 2020.
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 2020.
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 auditor.
To authorise the directors to fix the remuneration of the auditor.
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 2022
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)
ordinary shareholders in proportion (as nearly may be practicable) to their existing holdings: and
(b)
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 limit 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 2020 | Anglo-Eastern Plantations Plc
131
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 2022 (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 2022 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 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
3 June 2021
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132
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 24 June 2021 shall be entitled to vote in respect of the number of shares registered in their name at that
time. Changes to the register of members after 24 June 2021 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 vote at the meeting by proxy.
As at 20 May 2021 (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 20 May 2021 is 39,636,372.
A member of the Company may appoint one or more proxies to 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. Members are encouraged to appoint the Chairman of the meeting as their proxy and all
Members should take note that these Notes should be read subject to the commentary regarding Covid-19 on page 8 and 9 of the Annual Report.
The instrument appointing a proxy must be deposited at the office of the Registrar by 9.30 a.m. (UK time) on 24 June 2021 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 28 June 2021 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
Computershare Investor Services PLC [CREST ID: 3RA50] by 9.30 a.m. on 24 June 2021. 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 link https://www-uk.computershare.com/investor/. If not already registered, you will need your Shareholder
Reference Number (“SRN”) which is detailed on your share certificates.
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 https://www.angloeastern.co.uk/. In those
circumstances the Company would be under an obligation to forward a copy of the statement to the auditor forthwith and the statement would form part of the
business which may be dealt with at this meeting.
11.
Shareholders are welcomed to submit questions to the Board by email to datojohnlim@angloeastern.co.uk by 24 June 2021 and they will be answered after
the AGM or at the AGM for those shareholders who are in attendance. 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 https://www.angloeastern.co.uk/.
Annual Report 2020 | Anglo-Eastern Plantations Plc
133
Notice of Annual General Meeting
13.
14.
15.
If you are in any doubt as to any aspect of Resolutions 10 to 13 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.
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. The documents can also be obtained by email to
datojohnlim@angloeastern.co.uk if the registered office is not accessible because of Covid-19:
(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 Company’s Articles of Association.
Annual Report 2020 | Anglo-Eastern Plantations Plc
134
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
60 (0)3 2162 9808
Tel:
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
https://www.angloeastern.co.uk/
Company advisers
Auditor
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
Computershare Investor Services PLC
The Pavilions
Bridgwater Road
Bristol BS99 6ZY
United Kingdom
Solicitors
Withers LLP
20 Old Bailey
London EC4M 7AN
United Kingdom
Sponsor/Broker
Panmure Gordon (UK) Limited
One New Change
London EC4M 9AF
United Kingdom