Final Results for year ended 31 December 2020

RNS Number : 4250Y

Anglo-Eastern Plantations PLC

12 May 2021

Anglo-Eastern Plantations Plc

("AEP", "Group" or "Company")

Final results for year ended 31 December 2020

The group comprising Anglo-Eastern Plantations Plc ("AEP") and its subsidiaries (the "Group"), is a major producer of palm oil and to a lesser extent rubber with plantations across Indonesia and Malaysia, amounting to some 128,000 hectares, has today released its results for the year ended 31 December 2020.

Financial Highlights

	2020 $m	2019 $m

Revenue	269.1	219.1
Profit before tax:
- before biological asset ("BA") movement	50.4	15.6
- after BA movement	51.7	18.9

Basic Earnings per ordinary share ("EPS"):
- before BA movement	77.67cts	35.37cts
- after BA movement	80.32cts	40.61cts
Dividend (cents)	1.0cts	0.5cts

Enquiries:

Anglo-Eastern Plantations Plc
Dato' John Lim Ewe Chuan	+44 (0)20 7216 4621

Panmure Gordon (UK) Limited
Dominic Morley	+44 (0)20 7886 2954

Chairman's Statement

The Covid-19 pandemic, as declared by the World Health Organisation in early 2020, escalated into a worldwide crisis which has upended many lives and businesses. At the time of writing, more than three million deaths and over approximately one hundred and fifty million infections were recorded worldwide. At the peak of the pandemic, economic activities almost grounded to a halt as many people were forced to stay at home under strict measures imposed to curb the spread of the virus. In some countries where restrictions were eased to allow people to work and travel, second and third waves of infections have soared. Countries in Europe and South East Asia, facing the next wave of infections were forced to reintroduce stringent controls including lockdowns to slow the spread which threaten to overload their hospitals. Masks and social distancing are now part of everyday life. In Indonesia where most of AEP plantations are based, the number of people infected has exceeded one million while in Malaysia, the number of infections is still low comparatively but infections have surged from the third quarter of 2020. The significant upsurge of cases and the high fatalities in India, reported as a crisis, is of grave concern as it has spilled into the neighbouring countries and Indonesia and Malaysia are not far off logistically. Vaccination programmes have started in many countries and it will take enormous efforts on all fronts to recover from this global calamity.

Most businesses across Indonesia and Malaysia were adversely affected by the pandemic in 2020 and the upsurge including emergence of new variants of coronaviruses at the start of 2021 of which our operations in Indonesia and Malaysia are no exception. Although currently, the affected numbers of staff and field workers are not alarming, it is prudent to continue imposing vigilant measures, especially in Indonesia where our plantations are located in scattered regions, provinces and islands.

The Group's fresh fruit bunches ("FFB") production in 2020 reached 1.10 million mt, 7% higher than last year of 1.03 million mt due to improved weather. Rainfalls were satisfactory in most of the regions that the Group operated other than the first three months of the year. A moderate La Nina weather phenomenon brought heavy rainfall to coastal estates in North Sumatera and Malaysia towards the end of the year causing flash floods and some landslides. With mostly favourable weather, all regions reported between 6% to 12% higher FFB production. Production in South Sumatera was the exception where harvest declined sharply by 13% due to poor rainfall distribution. FFB bought-in from surrounding smallholders and plasma was 913,200 mt (2019: 907,100 mt), marginally more than 2019. The mills processed 1.97 million mt of FFB, 5% more than last year of 1.87 million mt. crude palm oil ("CPO") production, as a result, was 3% higher at 406,100 mt, compared to 394,700 mt in 2019.

CPO prices for the first half of the year were weak as expected due to the low economic activities during the pandemic which adversely affected demand. As the lockdown eased and international trade gradually resumed, prices rallied in the second half of the year. The export of Indonesian palm oil to the three key markets of India, China and European Union ("EU") in 2020 was reported to drop substantially during the pandemic. Despite the drop in international consumption, the strong rebound in prices was due to a combination of reasons. The continuation of Indonesian B30 biodiesel programme despite low crude oil prices, the low inventory caused by a lower FFB production and soaring soybean prices were the main contributors to the rally. A more detailed explanation is provided in the Strategic Report under Commodity Prices. The average CPO price ex-Rotterdam ended the year 28% higher at $723/mt, compared to $565/mt in 2019.

The higher FFB production and higher CPO prices meant that the Group's revenue was higher by 23% at $269.1 million, compared to $219.1 million achieved in 2019. The operating profit for the Group in 2020, before biological asset ("BA") movement almost quadrupled to $48.1 million, from $12.2 million reported in 2019. The earnings per share, before BA movement, increased by 120% to 77.67cts, from 35.37cts in 2019. The Group's operating profit after BA movement for 2020 was at $49.4 million after an upward BA movement of $1.3 million as compared to 2019 operating profit of $15.4 million after an upward BA movement of $3.3 million.

The Group's new planting for oil palm including plasma for 2020 totalled 2,190 ha compared to 1,757 ha last year. The new planting was mostly concentrated in the Bangka and Kalimantan regions where negotiations with owners over land compensation were concluded more efficiently. Another 785 ha was replanted in North Sumatera and Bengkulu during the year to replace trees with poor yield. In 2021, the Group plans to plant 3,800 ha of oil palm which includes replanting of 950 ha in Bengkulu.

The Group has four biogas plants with a combined capacity of slightly above five megawatts. The latest addition, Tasik Raja biogas plant, was commissioned in the fourth quarter of 2020. The Group generated 18,900 MWh of electricity in 2020 compared to 17,200 MWh last year. The revenue from the sale of surplus electricity was $970,000, 7% higher than last year of $908,000. The biogas operations were not spared by the pandemic as demand for power in Indonesia diminished with many businesses scaling or shutting down. They underperformed as the state owned company suspended the uptake of electricity from two of our plants while reducing the unit rate it purchased from another. The Group will continue the use of clean energy where possible to further reduce the mills' reliance on fossil fuels and to address growing calls to reduce greenhouse gas emissions which could threaten the long-term social acceptability and profitability of a palm oil company.

With many countries battling against the pandemic, headlines and attention have been drawn away from EU threat to reduce the use of palm oil for biofuel in 2024 and to completely phase it out by the year 2030. The adverse perception of palm oil as an environmentally unfriendly and non-renewable source particularly in the EU has continued to feature in recent years, touching on issues including deforestation, emission of greenhouse gases, planting on peatland and land rights. AEP remains committed to No Deforestation, No Peatland, No Exploitation ("NDPE") policies. All supplies of FFB to our mills are traceable to their origins of supply chains and are not linked to illegal deforestation. There is growing pressure from buyers to avoid CPO with NDPE and High Conservation Values ("HCV") issues.

A prolonged resurgence of the Covid-19 pandemic, especially with many countries already on recession watch, remains a potential major risk to palm oil demand in both the food and energy sectors. Despite the availability of vaccines, a slower than expected rollout or a reduction in the effectiveness of vaccines could weaken consumer and business confidence and dampen economic recovery resulting in weaker trade and commodity prices.

I have mentioned earlier that one of the main reasons for the high CPO prices was the high domestic demand in Indonesia created by the government B30 biodiesel programme whereby it uses 30% fatty acid methyl esters made from palm oil to blend with the traditional fossil fuel. The soaring CPO prices meant that the Indonesian government had to pay ballooning biodiesel subsidies. It was inevitable that in December 2020, the Indonesian government raised the exports levy and tax on CPO. The export levy for palm oil exports was revised from a fixed rate of $55/mt to progressive rates linked to CPO prices. Under the new structure, export levy is payable from a minimum of $55/mt to $255/mt when the CPO prices range from $670/mt to above $995/mt. On top of this, the government also collects export tax of $33/mt up from $3/mt previously. Without the revision, the long term economic viability of the biodiesel programme in Indonesia is questionable amidst the low crude oil prices. This new structure would, at the same time, cap the exponential growth of profit due to soaring CPO prices.

Brexit became a reality as the UK exited the EU single market with an EU tariff and quota-free trade deal sealed to avert potential business chaos and uncertainties in the immediate future, although it maybe unlikely that AEP's business will be significantly affected by this. At present, I believe that people are generally more concerned about the continuing Coronavirus pandemic which has claimed many lives and disrupted the economy and livelihood not just in the UK but across the globe. With the availability of vaccine some communities believe there is hope that the world can gradually combat Covid-19 and over time will bring back normality or close to normality to our lives. However, it is unknown when will be the time or year that the above will come into reality.

In determining the amount of dividends to be paid to our shareholders, the Board in previous years had been consistent with a balanced approach to the requirement of funds in the Company in order to expand and enhance shareholders' value but at the same time cognisant of shareholders' wishes to have dividends as a form of income. As with last year the Board continues to have the regulatory obligation to ensure that the Group has adequate funds to continue as a going concern for the foreseeable future in a near worst-case scenario because of the uncertainty due to Covid-19. As a result of the current crisis in India, as well as the precautionary measures in Indonesia, the Board is of the opinion that the pandemic is far from over in the region where the Group's operations are, due to the mutations and variants more infectious than the initial virus that the world has been combating. With this in mind the Board has adopted a prudent view for the time being and has declared a final dividend of 1.0cts per share, in line with our reporting currency, in respect of the year to 31 December 2020 (2019: 0.5cts). In the absence of any specific instructions up to the date of closing of the register on 11 June 2021, shareholders with addresses in the UK will be deemed to have elected to receive their dividends in Pounds Sterling and those with addresses outside of UK will be deemed to have elected to receive their dividends in US Dollars. Subject to the approval by shareholders at the AGM, the final dividend will be paid on 16 July 2021 to those shareholders on the register on 11 June 2021.

This year's Annual General Meeting ("AGM") scheduled on 28 June 2021 will be held in Kuala Lumpur again because of practical reasons linked to this pandemic. Although shareholders are able to participate via Zoom, the Board is, nevertheless, conscious that shareholders would want to have personal interaction with Board members, normally at the AGM and therefore a meeting will be organised in London when it is appropriate to do so, with less formality, for shareholders to meet with some of the Board members.

On behalf of the Board of Directors, I would like to convey our sincere thanks to our management and employees of the Group for their dedication, loyalty, resourcefulness, commitment and contribution to the preservation of the Group's operation as a going concern during this extremely difficult and trying period. We would appreciate that they would continue to do so if local and global adversity were to worsen.

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

Madam Lim Siew Kim

Chairman

12 May 2021

Strategic Report

Introduction

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

Business Model

The Group will continue to focus on its strength and expertise, which is planting more oil palms and production of CPO. This includes replanting old palms with low yield, replacing old rubber trees with palm trees and building more mills to process the FFB. The Group has, over the years, created value to shareholders through expansion in a responsible way.

The Group remains committed to use its available resources to develop the land bank in Indonesia as regulatory constraints permit. The Indonesian government has, in recent years, passed laws to prioritise domestic investments and to limit foreign direct investments over national interest, including a limit of 20,000 ha per province and a national total of 100,000ha on the licensed development of oil palms for companies that are not listed in Indonesia or with less than a majority local ownership.

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

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

Our Strategy

One of the Group's objectives is to provide an appropriate level of return to the investors and to enhance shareholder value. Profitability, however, is very much dependent on the CPO price, which is volatile and is determined by supply and demand. The Group believes in the long-term viability of palm oil as it can be produced more economically than other competing oils and remains the most productive source of vegetable oil in a growing population. Soybean crops would require up to eight times as much land to produce an equivalent weight of palm oil. It was reported that amongst the major oilseeds, oil palm occupies about 10% of the total agricultural land but contributes more than 40% of the world's supply of oils and fats.

The Group's strategies, therefore, focus on maximising yield per hectare above 22 mt/ha, minimum mill production efficiency of 110% , minimising production costs below $300/mt and streamlin e estate management . For the year under review, the Indonesian operations achieved a yield of 18.9 mt/ha, 133% mill efficiency and production cost of $280/mt. This compared favourably to 2019 where the Group achieved a yield of 18.1 mt/ha, 132% mill efficiency and production cost of $285/mt. Despite stiff competition for external crops from surrounding millers, the Group is committed to purchasing more external crops from third parties at competitive, yet fair prices, to maximise the production efficiency of the mills. With higher throughput, the mills would achieve economies of scale in production. A mill achieves 100% mill efficiency when it operates 16 hours a day for 300 days per annum.

In line with the commitment to reduce its carbon footprint, the Group plans to construct, in stages, biogas plants at all of its mills to trap the methane gas emitted from the treatment of palm mill effluents to generate electrical power and at the same time reduce the consumption of fossil fuel. It plans to sell the surplus electricity and progressively reduce the greenhouse gas emissions per metric ton of CPO produced in the next few years. It is commonly accepted that failure to address growing calls to reduce greenhouse gas emissions could threaten the long-term social acceptability and profitability of a palm oil company. The Group, however, has to put on hold future biogas projects as the state authorities have suspended the uptake of electricity from two of our biogas plants and reduced the electricity rate for the purchase from another plant due to a drastic drop in demand during the pandemic.

The Group will continue to engage and offer competitive and fair compensation to the villagers so that land can be cleared and be planted.

Financial Review

Performance of the business during the year

For the year ended 31 December 2020, revenue for the Group was $269.1 million, 23% higher than $219.1 million reported in 2019 due primarily to the higher CPO prices and higher production.

The Group's operating profit for 2020, before biological asset movement, almost quadrupled to $48.1 million, from last year of $12.2 million.

FFB production for 2020 reached 1.10 million mt, 7% higher than the 1.03 million mt produced in 2019. The overall yield for the Indonesian plantations was higher at 18.9 mt/ha (2019: 18.1 mt/ha) due to more consistent and better rainfall throughout the year coupled with an increased in matured areas to harvest. La Nina weather patterns brought flash floods to many areas towards the end of the year but the permanent damage to the trees was minimal, while damages to infrastructure such as roads and bridges were manageable. Young matured oil palms in North Sumatera grew well and reported a 13% higher crop production. Bengkulu region, which suffered the most from the effect of drought last year, recovered partially with production up by 6%.

FFB bought-in from local smallholders and plasma in 2020 was 913,200 mt (2019: 907,100 mt), 0.7% more compared to 2019. The supply of external crops was affected by greater competition from new mills in North Sumatera and lower productivity amongst smaller plantations as they reduced the fertilizer application during the period of low CPO prices. During the year, the Group's mills processed a combined 1.97 million mt of FFB, 5% more than last year of 1.87 million mt. CPO production, as a result, was 3% higher at 406,100 mt, compared to 394,700 mt in 2019.

Profit before tax and after BA movement for the Group was $51.7 million, 174% higher compared to a profit of $18.9 million in 2019. The BA movement was a credit of $1.3 million, compared to a credit of $3.3 million in 2019. The BA movement was mainly due to a change in FFB price which was higher in 2020. The profit before tax was affected by reversal of impairment charge on land amounting to $2.0 million compared to a reversal of impairment charge on the development cost of the plantation amounting to $7.6 million and impairment on land amounting to $1.0 million in 2019. The profit before tax was also impacted by the expected credit loss from Plasma receivables amounting to $1.5 million in 2020 (2019: $6.1 million) attributed to the additional amounts allocated for plasma development during the year. Net finance income recognised in the income statement decreased from $3.2 million in 2019 to $2.6 million in 2020 due to lower interest rate. The tax expense increased from $2.7 million in 2019 to $13.7 million in 2020 mainly due to the increase in profit before tax. There was a loss of exchange in translation of foreign operations, recognised in other comprehensive income, totalling $5.5 million for 2020 against an exchange gain of $18.7 million in the previous year due to the slight weakening of Indonesian rupiah at the year end. The retirement benefits due to the employees at 31 December 2020, as calculated by a third party actuary, increased to $13.4 million from $11.3 million last year due to an increase in the number of full-time workers.

The average CPO price ex-Rotterdam for 2020 was $723/mt, 28% higher than 2019 of $565/mt.

Earnings per share before BA movement increased by 120% to 77.67cts compared to 35.37cts in 2019. Earnings per share after BA movement increased from 40.61cts to 80.32cts. Earnings per share have increased compared to 2019 due mainly to the increase in profit after tax.

Position of the business at the end of the year

The Group's balance sheet remains strong. As at 31 December 2020, the Group had cash and cash equivalents, net of borrowing of $115.2 million (2019: $76.6 million). The external bank borrowings as at the end of 2019 of $8.2 million were fully repaid in the year and the Group has no reliance on external financing. The net cash inflow from operating activities during the year was higher at $65.1 million by 346% compared to $14.6 million in 2019 due mainly to the more robust CPO prices and higher production. The net cash used in financing activities during the year was lower by 30% at $8.8 million compared to $12.5 million in 2019 due to the reduced level of borrowings at the beginning of the year to repay and the lesser amount of dividends paid. The cash position was higher in 2020 due to lower capex and development costs.

The lower additions to development costs for property, plant and equipment ("PPE") amounting to $21.1 million in 2020 (2019: $34.0 million) was due to reduced construction costs. The impairment reversal of $2.0 million in 2020 was related to land, whilst the impairment reversal in 2019 of $6.6 million was mainly related to the plantations. Amounts due from cooperatives under the Plasma scheme before expected credit loss was $24.6 million (2019: $19.1 million), an increase of 29% mainly due to the new planted area for Plasma during the year. Deferred tax assets reduced from $11.3 million in 2019 to $8.8 million and deferred tax liabilities reduced from $17.0 million in 2019 to $15.5 million mainly due to the reduction of tax rate from 25% to 22% in Indonesia. Inventories increased from $8.8 million in 2019 to $12.5 million in 2020 because of logistic problem in Bengkulu and Kalimantan which has since been resolved. Other working capital for trade and other receivables and payables increased by $10.5 million mainly due to more advances received from customers.

The tax recoverable for 2021 amounted to $51.7 million, 4% higher over the previous year of $49.5 million. The substantial tax recoverable is due to value added tax ("VAT") and corporate income tax ("CIT") paid which is refundable by the Indonesian tax authority after their tax audit. A detailed description is provided in note 8.

The Directors carried out assessments of our significant assets to determine whether such assets showed indicators of impairment as a result of the pandemic or wider climate change issues.

Viability Statement

The viability assessment considers solvency and liquidity over a longer period than for the purposes of the going concern assessment made. Inevitably, the degree of certainty reduces over this longer period.

The Group's business activities, financial performance, corporate development and principal risks associated with the local operating environment are covered under the various sections of this strategic report. In undertaking its review of the Group's performance in 2020, the Board considered the prospects of the Company, focusing on the strategy for growth via the expansion of its planted area in tandem with forecasting demand for CPO, over one and five-year periods. The process involved a detailed review of the 2021 detailed budget and the five-year income and cash flow projection. The one-year budget has a greater level of certainty and is used to set detailed budgetary targets at all levels across the Group. It is also used by the Remuneration Committee to set targets for the annual incentive. The five-year income and cash flow projection contains less certainty of the outcome but provides a robust planning tool against which strategic decisions can be made. The Board believed that to project beyond five years has more elements of uncertainties and therefore less reliable for making informed decisions.

The Board also considered the five-year cash flow projection under various severe but plausible scenarios, including the financial impact on the Group due to partial or total shutdown of its operations and the contraction of demand for palm oil resulting from the Coronavirus pandemic, and the need to support financially loss-making newly matured estates, together with the projected capital expenditure. On this basis and other matters considered and reviewed by the Board during the year, the Board has a reasonable expectation that the Group has adequate resources to continue in operation and meet its liabilities over the five years from 2021 to 2025.

Going Concern

As the Group is still facing a period of uncertainty due to the Coronavirus pandemic, the Directors carried out stress tests as required, to ensure that the Group has adequate resources in a worst-case scenario to remain as a going concern for at least twelve months from the date of this report.

The Directors have a reasonable expectation, having made the appropriate enquiries, that the Group has control of the monthly cash flows and that the Group has sufficient cash resources to cover the fixed cash flows for a period of at least twelve months from the date of approval of these financial statements. For these reasons, the Directors adopted a going concern basis in preparation of the financial statements. The Directors have made this assessment after consideration of the Group's budgeted cash flows and related assumptions including appropriate stress testing of identified uncertainties, specifically on the potential shut down of the entire operations from three to twelve months if all the plantations are infected with Coronavirus as well as the impact on the demand for palm oil with decreases of 50% to 100%. Stress testing of other identified uncertainties and risks such as commodity prices and currency exchange rates were also undertaken.

Business Review

Indonesia

The performance of the Indonesian operations is divided into five geographical regions.

North Sumatera

FFB production in North Sumatera, which aggregates the estates of Tasik, Anak Tasik, Labuhan Bilik ("HPP"), Blankahan, Rambung, Sg Musam and Cahaya Pelita ("CPA") produced 354,900 mt in 2020 about 13% above last year (2019: 314,600 mt). The increase in matured areas to 16,238 ha from 15,025 ha contributed to this higher production. A more consistent rainfall pattern and better harvest from young matured palms in Tasik also improved the annual yield to 21.6 mt/ha from the previous year of 20.9 mt/ha.

Implementation of integrated pest management ("IPM") in largescale replanting has sharply reduced the number of incidents of Rhinoceros beetle or Oryctes damage in Tasik and Anak Tasik. It was also observed that the average bunch weight for 2020 was significantly higher than the prior year which correlates with having fewer parthenocarpic and abnormal bunches.

Higher production can be expected in coming years due to new planting and recently replanted areas of 1,808 ha maturing next year and starting to bear fruits. In HPP, oil palms continued to recover from the desiccation of fronds as the affected area has reduced significantly to 98 ha from about 185 ha due to improved rainfall. Water gates and canals also provide better water management. About 232 ha in CPA was replanted in 2020 with raised platforms in flood prone areas to improve growth and help in the evacuation of fruits.

In 2020, the two mills in North Sumatera produced 124,900 mt of CPO (2019:138,000 mt) from a throughput of 629,200 mt (2019: 680,900 mt). Tasik Raja mill broke its record by processing almost 10% higher FFB in 2020 at 455,000 mt (2019: 415,400 mt) due mainly to better internal crop production, raising the mill utilization to 158%. Oil Extraction Rate ("OER"), however, was lower at 20.02% (2019: 20.12%) possibly due to the dura contamination from external crops that made up 38% of the total crops processed. Dura crops with thinner mesocarp normally have an oil content of 18% or lower. The operation at this mill was briefly interrupted when two workers tested positive for Covid-19 which resulted in mass precautionary screening and a reduction in staffing levels. The Blankahan mill on the other hand had a bad year processing 34% less FFB at 174,200 mt (2019: 265,600 mt) due to lower external crop purchases reducing mill utilization from 138% to 91% this year. The emergence of new mills in the region posted intense competition. Outside crops that made up 73% of the total crops processed by the mill in the previous year dropped to 58% in 2020. Internal crop production was also lower as the average age of trees reached 26 years with replanting to be carried out soon. Replanting in Blankahan is delayed as the yield had been consistently high in the past years averaging 26 mt/ha due to good soil condition.

The two biogas plants in North Sumatera did not perform up to expectation in 2020. Blankahan biogas plant had a disappointing year. It sold about 2,500 MWh (2019: 2,200 MWh) of surplus electricity and generated $151,800 (2019: $140,800) in revenue before state authorities suspended the uptake of electricity from the middle of the second quarter of the year. Tasik biogas plant, which was commissioned in the fourth quarter of 2020, was unable to sell the surplus electricity as the national grid suspended the uptake following the shutdown of many economic activities during the Coronavirus pandemic.

The sales from the biomass plant were also lower in 2020 at $427,100 compared to $733,100 last year, as the plant exported 26% less dried long fibres at 4,930 mt compared to 6,690 mt last year. The drop in demand due to the pandemic had also dampened selling prices which had fallen by as much as 55%. Buyers also complained about higher shipment cost as containers were stuck at port due to shortage of manpower to clear them.

Bengkulu

FFB production in Bengkulu, which aggregates the estates of Puding Mas ("MPM") and Alno produced 304,000 mt (2019: 287,300 mt), 6% more than 2019. Production from Bengkulu region has improved by 6% as rainfall normalised to 4,000mm in 2020 (2019: 2,860mm) with higher yield at 18.2 mt/ha from 16.9 mt/ha last year.

MPM and Sumindo mills processed a combined 672,200 mt (2019: 587,000 mt) of FFB in 2020 due to higher internal crop production as well as higher external crop purchases. External crop purchases increased by 22% to 344,700 mt from 283,200 mt last year as production in the region recovered from moisture stress the previous year increasing mill utilization to 133% from 116% last year. CPO production for the year was 10% higher at 138,200 mt (2019: 125,300 mt) with OER for the two mills averaging 20.6%, lower from 21.4% last year. External crops made up 51% of the throughput compared to 48% in 2019.

About 1,000 ha of palms will be replanted from next year as the palms in Alno and MPM reached the average age of 18 and 21 years respectively. The replanting is also fast tracked as the dura palms constituted a significant portion of the planted areas. Fruits from dura palms have thin mesocarp which ultimately produce less oil.

The MPM biogas plant sold over 9,600 MWh (2019: 9,300 MWh) of surplus electricity, 3% higher and generated $444,300 in revenue (2019: $442,400). The biogas plant performed below its optimum two megawatt capacity due to frequent breakdowns in the old transmission lines and also lower demand. The authorities renewed the contract to purchase electricity from the biogas plant for another two years to 2023 with the same rate. It was due to expire in the first quarter of next year.

South Sumatera

FFB production in South Sumatera, which aggregates the estates of Karya Kencana ("KKST"), Empat Lawang ("ELAP") and Riau Agrindo ("RAA") produced 34,200 mt (2019: 39,400 mt), 13% lower than 2019. In South Sumatera, the drought unfortunately continued from last year. Annual rainfall in South ELAP was 1,530 mm (2019: 1,330 mm) which also experienced eight months where rainfall fell below the minimum of 150 mm per month for healthy crop production. The yield in South Sumatera reflected the dry conditions which diminished further to 6.3 mt/ha from 7.4 mt/ha the previous year.

During the year about 16,600 new palms were spot planted in South Sumatera boosting the stems per hectare to 101 trees from the target of 105 trees. It incurred higher planting cost as frequent resupply of young palms was needed due to damages by cattle owned by local villagers that roam the plantation freely for grazing. Trenching and fencing the plantation were explored but were deemed as not economical. Discussions with the local villagers were not productive and, as any strained relationship can be detrimental in the long run, the management decided instead to fence individual young plants to protect them. With higher CPO prices, more FFB thefts were reported in 2020 as the region faced high unemployment during the pandemic. The management has stepped up increased security patrols.

Riau

FFB production in the Riau region, comprising Bina Pitri estates, produced 133,200 mt in 2020 (2019: 129,400 mt), 3% higher than 2019. Rainfall was higher at 2,850 mm (2019: 2,649 mm). The yield for the year was slightly higher at 27.3 mt/ha from last year of 26.6 mt/ha. Over 2,800 ha would be replanted from 2023 to 2026 as 78% of the palms are between the ages of 23 to 26 years. Flash floods interrupted harvesting towards the end of the year as heavy rain burst the river banks.

Despite the 8% higher external crop purchase at the mill at 225,300 mt compared to 208,600 mt last year, the mill utilization rate dropped to 125% from 156% last year. The mill upgrade was finally completed in 2020 with the milling capacity improved to 60 mt/hr from 45 mt/hr previously. Overall CPO production was higher by 3% to 69,100 mt compared to 66,800 mt in 2019. Despite the high yield, the region is contaminated by dura palms which made up 63% of the crops processed by the mill. The mill therefore had a low OER of 19.3% compared to 19.8% in the previous year.

Bangka

FFB production in the Bangka region, comprising Bangka Malindo Lestari estates, produced 8,700 mt in 2020 (2019: 6,000 mt), 45% higher than 2019. Higher crop was due to a larger harvestable area and more palms having reached peak maturity. Yield improved from 11.2 mt/ha to 13.5 mt/ha in 2020. With new planting in 2020 totalling 706 ha (2019: 651 ha), the total planting including plasma in Bangka has reached 2,856 ha (2019: 1,994 ha).

Kalimantan

FFB production in Kalimantan which comprises of the Sawit Graha Manunggal ("SGM") and Kahayan Agro Plantation ("KAP") estates was 249,500 mt in 2020 (2019: 231,400 mt) 8% higher than 2019 as more palms matured and reached the peak production age. The average age of palms in SGM and KAP were nine and four years respectively. During the year 583 ha of palms matured in SGM and KAP leading to its first harvest. The yield in Kalimantan recovered to 18.6 mt/ha from a low of 18.0 mt/ha last year as rainfall was consistent throughout the year at 3,448 mm per annum an improvement from last year of 2,864 mm. Lower yield was experienced last year due to prolonged drought and haze in the region which shifted crop pattern especially on sandy soil dominated areas. SGM experienced several occasions of flash flood with no lasting damages as it cleared within days.

New planting in SGM and KAP is expected to reach 1,000 ha next year. The long-term prospect for Kalimantan remains bright.

SGM continued with its mechanization of infield collection of harvested crops by the purchase of light all-terrain vehicles called Quick which are cheaper and easier to maintain. Additional units will be added to the current fleet to help with the crops evacuation.

The purchase of external and plasma crops in SGM reached 68,900 mt in 2020 which was higher by 41% compared to 49,000 mt last year. The total external and plasma crop at the SGM mill made up 22% of the total crops processed from 18% last year. With the throughput at the mill reaching 312,000 mt (2019: 268,700 mt), the mill utilization rate increased to 144% from 124% last year producing 73,900 mt of CPO, 14% more than 2019 of 64,600 mt. OER for the mill averaged 23.7% for the year compared to 24.1% last year and continue to outperform the rest of the mills in the Group. The lower OER for the year was likely due to parthenocarpic bunches and forced ripening of the fruits after long periods of hot weather followed by rain showers. Under such condition the mesocarp of the fruits turned yellow with lower oil content.

The SGM biogas plant generated 19% more electricity in 2020 at over 6,800 MWh (2019: 5,700 MWh) worth $373,700 (2019: $325,100). The contract to purchase electricity, which will expire in the first quarter of next year, was extended by the authorities to 2022 with the electricity rate reduced by 12% due to a drop in power demand in the region.

During the year, with international borders mostly closed to non-essential travelling, the Malaysian based agronomist could not make monthly field visits to underperforming estates in Indonesia to provide advice on optimizing field disciplines and improving crop yields. The Board believes that the closer monitoring of field performance once international travel restriction relax will result in improvements in the crop yield.

Overall bought-in crops for Indonesian operations including plasma were 0.7% higher at 913,200 mt for the year 2020 (2019: 907,100 mt). The average OER for our mills was marginally lower in 2020 at 20.6% in 2020 (2019: 21.1%).

Malaysia

FFB production in 2020 was 11% higher at 18,600 mt, compared to 16,700 mt in 2019. Several other plantations in East Malaysia had to stop operations temporarily as their workers tested positive for Covid-19 however we are pleased to say that our operation was not affected. The Malaysian government imposed a freeze on the intake of foreign workers from March 2020 to prevent the spread of the virus and to encourage displaced locals to fill vacancies in the plantation. The situation was exacerbated as foreign workers who returned home after their work contracts expired could not be replaced. Substantial shortage of workers hampered not only field maintenance and application of fertilisers but harvest resulting in crop losses. Towards the end of the year end, the La Nina weather pattern brought heavy rain resulting in massive flooding and landslides damaging roads and bridges which needed costly repairs. The palms, with an average age of 23 years, faced declining yield as the fertiliser program was not followed. The Malaysian plantation in 2020 generated a profit before tax after BA movement of $0.1 million compared to loss before tax after BA movement of $0.9 million in 2019. The plantation obtained its Malaysian Sustainable Palm Oil ("MSPO") certification in January 2021.

The financial performance of the various regions are reported in note 6 on segmental information.

Commodity Prices

The CPO ex-Rotterdam price started the year at $878/mt (2019: $517/mt) and trended downward for the first five months of the year as international borders were closed and Coronavirus induced lockdown of major economic activities spread across the world dampening demand. The price was lowest in May 2020 at $496/mt before a sharp turnaround as major economies reopened after the first wave of the pandemic. The price peaked in December 2020 at $1,029/mt before ending the year at $1,014/mt (2019: $856/mt), averaging $723/mt for the year, 28% higher than last year (2019: $565/mt). The strong rebound in prices was due to a combination of reasons. The Indonesian B30 biodiesel programme continues to be the main driver of CPO prices. The increase in domestic absorption of CPO through biodiesel mandate reduces global supply and eventually boosts prices. The pent up demand for palm products after the initial lockdown amidst an environment of lower crop production and lower CPO inventory also pushed prices higher. At the end of November 2020, the Indian government reduced temporarily the import duty on CPO by 10% which made palm oil more competitive against alternative soft oils. This was short lived as the government in February 2021 revamped its tax structure for import of major vegetable oils with additional tax of 5.5% imposed on palm oil which made it less competitive going forward. Stronger soy bean prices due to uncertain weather conditions in soybean producing countries also helped to lift CPO prices higher. The strong CPO prices are expected to last at least until the end of first quarter 2021 as potential pullback is expected from rising vegetable oil production. The high prices, however, could lower demand and encourages a shift to alternative vegetable oils. The Chairman's Statement earlier mentioned major changes made by the Indonesian government in CPO export tax levy and tax in December 2020. Palm oil's discount to its main rival, soybean oil, has contracted to the smallest margin in a decade for the major part of the year reducing its traditional appeal as a cheaper vegetable oil especially in price sensitive markets. The discount, however, widened in the first quarter of 2021 as soybean prices soar again. It has been reported that palm oil will face more headwinds in the coming year as China imports more soybean to power an aggressive expansion of the country's hog industry recently devastated by the African swine fever. The crushing of soybeans produces soybean oil and meals, the latter being used to feed the hogs.

Over a period of ten years, CPO price has touched a monthly average high of $1,284/mt in 2011 and a monthly average low of $472/mt in 2018. The monthly average price over the ten years is about $771/mt.

Rubber prices averaged $1,356/mt for 2020 (2019: $1,272/mt). Our small area of 262 ha of mature rubber contributed a revenue of $0.6 million in 2020 (2019: $0.7 million). Rubber continues to struggle with low prices. Our rubber trees are also affected by fungus disease called Pestalotiopasis sp fungus which causes abnormal defoliation that severely lowers latex production. Production in the year was also affected by the uneven wintering which caused the under application of ethereal to simulate latex production.

Corporate Development

In 2020, the Group opened up new land and planted 2,190 ha (2019: 1,757 ha) of oil palm mainly in Kalimantan and Bangka, boosting planted area including the smallholder cooperative scheme, known as Plasma, by 3% to 73,600 ha (2019: 71,481 ha). Another 785 ha was replanted in North Sumatera and Bengkulu. In 2021, the Group plans to plant 3,800 ha of oil palm which includes replanting of 950 ha in Bengkulu. Opening of new land for planting can be cumbersome and requires written approval from local authorities, submission of environment impact assessments and meetings with local communities.

As mentioned in the Business Review, the fourth biogas plant in Rantau Prapat costing $3.8 million was commissioned in the fourth quarter of 2020. Unfortunately, it was unable to sell the surplus electricity as the national grid has suspended the uptake following the shutdown of many economic activities during the Coronavirus pandemic. An appeal, however, has been made to the ministry in charge of renewable energy. The management is exploring all opportunities to maximise the use of the biogas plant including bottling the BioCNG for Indonesian domestic consumption.

The civil and structural works for the seventh mill in North Sumatera costing $6.7 million has been awarded and mobilization work started towards the end of the year. The contractor has started to build a temporary jetty and housing at the site. Mechanical works estimated to cost another $6 million are expected to be tendered by early next year. The project is earmarked for completion by 2022.

The upgrade of the Bina Pitri mill was finally completed in 2020 improving its milling capacity from 45 mt/hr to 60 mt/hr at a cost of $2.3 million.

Our feasibility study concluded that it is more profitable to build a mill in KAP to support its operation due to high logistics costs. KAP is currently transporting the FFB some 600km to SGM mill or, when this becomes too arduous such as during the monsoon season, the fruits are sold locally to third parties. The Group plans to build a 45 mt/hr mill with two storage tanks of 5,000 mt each with minimum spare machineries costing an estimated $12 million.

On behalf of the Board

Dato' John Lim Ewe Chuan

Executive Director, Corporate Finance and Corporate Affairs

12 May 2021

Directors' Responsibilities

The Directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law, the Directors are required to prepare the Group financial statements in accordance with International Accounting Standards ("IAS") in conformity with the requirements of the Companies Act 2006 and in accordance with International Financial Reporting Standards ("IFRSs") adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the EU. The Directors have elected to prepare the Company financial statements in accordance with FRS 101 Reduced Disclosure Framework under the UK Generally Accepted Accounting Practice ("UK GAAP"). Under company law, the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and Company and of the income statement for the Group for that period.

In preparing these financial statements, the Directors are required to:

· select suitable accounting policies and then apply them consistently;

· make judgements and accounting estimates that are reasonable and prudent;

· state whether they have been prepared in accordance with applicable accounting standards, subject to any material departures disclosed and explained in the financial statements;

· prepare a Strategic Report, a Directors' Report and Directors' Remuneration report which comply with the requirements of the Companies Act 2006; and

· make an assessment of the Company and Group's ability to continue as a going concern.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006 and, as regards the Group financial statements, Article 4 of the IAS Regulation. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

After making enquiries, the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue operations for the foreseeable future.

Website publication

The Directors are responsible for ensuring the annual report and the financial statements are made available on a website. Financial statements are published on the Company's website in accordance with the legislation in the UK governing the preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the Company's website is the responsibility of the Directors. The Directors' responsibility also extends to the ongoing integrity of the financial statements contained therein.

Directors' responsibilities pursuant to Disclosure and Transparency Rules 4 ("DTR4")

All of the Directors confirm to the best of their knowledge:

· The Group financial statements have been prepared in accordance with IFRSs as adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the EU and Article 4 of the IAS Regulation and give a true and fair view of the assets, liabilities, financial position and income statement of the Group.

· The Strategic Report in the annual report includes a fair review of the development and performance of the business and the financial position of the Group, together with a description of the principal risks and uncertainties that they face.

· The annual report and financial statements, taken as a whole, are fair, balanced and understandable and provide the information necessary for shareholders to assess the Company's performance, business model and strategy.

On behalf of the Board

Dato' John Lim Ewe Chuan

Executive Director, Corporate Finance and Corporate Affairs

12 May 2021

Consolidated Income Statement

For the year ended 31 December 2020

		2020			2019
Continuing operations	Note	Result before BA movement*	BA movement	Total		Result before BA movement	BA movement	Total
		$000	$000	$000		$000	$000	$000
Revenue	3	269,060	-	269,060		219,136	-	219,136
Cost of sales		(213,370)	1,274	(212,096)		(199,515)	3,255	(196,260)
Gross profit		55,690	1,274	56,964		19,621	3,255	22,876
Administration expenses		(8,134)	-	(8,134)		(8,068)	-	(8,068)
Reversal of impairment	11	2,008	-	2,008		6,590	-	6,590
Provision for expected credit loss	15	(1,485)	-	(1,485)		(5,965)	-	(5,965)
Operating profit		48,079	1,274	49,353		12,178	3,255	15,433
Exchange (losses) / gains		(268)	-	(268)		251	-	251
Finance income	4	2,876	-	2,876		4,169	-	4,169
Finance expense	4	(292)	-	(292)		(980)	-	(980)
Profit before tax	5	50,395	1,274	51,669		15,618	3,255	18,873
Tax expense	8	(13,660)	(66)	(13,726)		(1,885)	(814)	(2,699)
Profit for the year		36,735	1,208	37,943		13,733	2,441	16,174
Attributable to:
- Owners of the parent		30,784	1,051	31,835		14,019	2,077	16,096
- Non-controlling interests		5,951	157	6,108		(286)	364	78
		36,735	1,208	37,943		13,733	2,441	16,174
Earnings per share for profit attributable to the owners of the parent during the year
- basic	9			80.32cts				40.61cts
- diluted	9			80.32cts				40.61cts

* The total column represents the IFRS figures and the result before BA movement is an Alternative Performance Measure ("APM"). We have opted to additionally disclose this APM as the BA movement is considered to be a fair value calculation which does not appropriately represent the Group's result for the year.

Consolidated Statement of Comprehensive Income

For the year ended 31 December 2020

	2020 $000	2019 $000

Profit for the year	37,943	16,174

Other comprehensive (expenses) / income:

Items may be reclassified to profit or loss:

(Loss) / Gain on exchange translation of foreign operations	(5,490)	18,680

Net other comprehensive (expenses) / income may be reclassified to profit or loss	(5,490)	18,680

Items not to be reclassified to profit or loss:

Unrealised gain / (loss) on revaluation of leasehold land, net of tax	1,309	(1,715)

Remeasurement of retirement benefits plan, net of tax	(649)	(768)

Net other comprehensive income / (expenses) not being reclassified to profit or loss	660	(2,483)
Total other comprehensive (expenses) / income for the year, net of tax	(4,830)	16,197

Total comprehensive income for the year	33,113	32,371
Attributable to:
- Owners of the parent	27,722	28,550
- Non-controlling interests	5,391	3,821
	33,113	32,371

Consolidated Statement of Financial Position

As at 31 December 2020

Company Number: 1884630

	Note	31.12.2020 $000	31.12.2019 $000
Non-current assets
Property, plant and equipment	11	365,353	367,891
Receivables	12	22,236	16,500
Deferred tax assets	18	8,817	11,251

		396,406	395,642
Current assets
Inventories	13	12,541	8,752
Income tax receivables	8	10,071	14,348
Other tax receivable	8	41,618	35,179
Biological assets	14	8,783	7,574
Trade and other receivables	15	4,693	5,774
Short-term investments		1,957	-
Cash and cash equivalents	28	115,211	84,846

		194,874	156,473
Current liabilities
Loans and borrowings	16	-	(8,203)
Trade and other payables	17	(26,310)	(16,110)
Income tax liabilities	8	(5,981)	(1,512)
Other tax liabilities	8	(1,089)	(1,386)
Dividend payables		(24)	(23)
Lease liabilities	29	(236)	(222)
		(33,640)	(27,456)
Net current assets		161,234	129,017
Non-current liabilities
Deferred tax liabilities	18	(15,467)	(17,047)
Retirement benefits - net liabilities	19	(13,383)	(11,338)
Lease liabilities	29	(217)	(456)
		(29,067)	(28,841)
Net assets		528,573	495,818
Issued capital and reserves attributable to owners of the parent
Share capital	20	15,504	15,504
Treasury shares	20	(1,171)	(1,171)
Share premium		23,935	23,935
Capital redemption reserve		1,087	1,087
Revaluation reserves		49,367	48,413
Exchange reserves		(233,534)	(229,026)
Retained earnings		573,493	542,415
		428,681	401,157
Non-controlling interests		99,892	94,661
Total equity		528,573	495,818

Consolidated Statement of Changes in Equity

For the year ended 31 December 2020

	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 income
-Unrealised (loss) / gain on revaluation of leasehold land, net of tax	-	-	-	-	(3,040)	1,211	-	(1,829)	114	(1,715)
-Remeasurement of retirement benefit plan, net of tax	-	-	-	-	-	-	(650)	(650)	(118)	(768)
-Gain on exchange translation of foreign operations	-	-	-	-	-	14,933	-	14,933	3,747	18,680
Total other comprehensive (expenses) / income	-	-	-	-	(3,040)	16,144	(650)	12,454	3,743	16,197
Profit for the year	-	-	-	-	-	-	16,096	16,096	78	16,174
Total comprehensive (expenses) / income for the year	-	-	-	-	(3,040)	16,144	15,446	28,550	3,821	32,371
Issue of subsidiaries shares to non-controlling interests	-	-	-	-	-	-	-	-	512	512
Accretion from change in stake	-	-	-	-	145	-	1,671	1,816	(1,816)	-
Dividends paid	-	-	-	-	-	-	(1,189)	(1,189)	(457)	(1,646)
Balance at 31 December 2019	15,504	(1,171)	23,935	1,087	48,413	(229,026)	542,415	401,157	94,661	495,818
Items of other comprehensive income
-Unrealised gain on revaluation of leasehold land, net of tax	-	-	-	-	954	-	-	954	355	1,309
-Remeasurement of retirement benefit plan, net of tax	-	-	-	-	-	-	(559)	(559)	(90)	(649)
-Loss on exchange translation of foreign operations	-	-	-	-	-	(4,508)	-	(4,508)	(982)	(5,490)
Total other comprehensive income / (expenses)	-	-	-	-	954	(4,508)	(559)	(4,113)	(717)	(4,830)
Profit for the year	-	-	-	-	-	-	31,835	31,835	6,108	37,943
Total comprehensive income / (expenses) for the year	-	-	-	-	954	(4,508)	31,276	27,722	5,391	33,113
Dividends paid	-	-	-	-	-	-	(198)	(198)	(160)	(358)
Balance at 31 December 2020	15,504	(1,171)	23,935	1,087	49,367	(233,534)	573,493	428,681	99,892	528,573

Consolidated Statement of Cash Flows

For the year ended 31 December 2020

	Note	2020 $000	2019 $000
Cash flows from operating activities
Profit before tax		51,669	18,873
Adjustments for:
BA movement		(1,274)	(3,255)
Gain on disposal of property, plant and equipment		(2)	(83)
Depreciation		18,143	18,590
Retirement benefit provisions		1,793	2,152
Net finance income		(2,584)	(3,189)
Unrealised loss / (gain) in foreign exchange		268	(251)
Property, plant and equipment written off		587	261
Reversal of impairment		(2,008)	(6,590)
Provision for expected credit loss		1,485	5,965
Operating cash flows before changes in working capital		68,077	32,473
(Increase) / Decrease in inventories		(3,915)	1,185
Increase in non-current, trade and other receivables		(12)	(1,586)
Increase / (Decrease) in trade and other payables		10,554	(4,629)
Cash inflows from operations		74,704	27,443
Interest paid		(258)	(939)
Retirement benefits paid		(434)	(475)
Overseas tax paid		(8,917)	(11,438)
Net cash flows from operating activities		65,095	14,591

Investing activities
Property, plant and equipment
- purchases		(21,277)	(33,169)
- sales		83	135
Interest received		2,876	4,169
Increase in receivables from cooperatives under plasma scheme		(4,563)	(5,116)
Placement of fixed deposits with original maturity of more than three months		(1,957)	-
Net cash used in investing activities		(24,838)	(33,981)

Financing activities
Dividends paid to the holders of the parent		(197)	(1,240)
Dividends paid to non-controlling interests		(160)	(457)
Issue of subsidiaries shares to non-controlling interests		-	512
Repayment of existing long-term loans		(8,167)	(11,078)
Repayment of lease liabilities - principal		(223)	(169)
Repayment of lease liabilities - interest		(34)	(41)
Net cash used in financing activities		(8,781)	(12,473)
Net increase / (decrease) in cash and cash equivalents		31,476	(31,863)

Cash and cash equivalents
At beginning of year		84,846	112,212
Exchange (losses) / gains		(1,111)	4,497
At end of year		115,211	84,846
Comprising:
Cash at end of year	28	115,211	84,846

Notes

1 Basis of preparation

AEP is a company incorporated in the UK under the Companies Act 2006 and is listed on the London Stock Exchange. The registered office of AEP is located at Quadrant House, 6^th Floor, 4 Thomas More Square, London E1W 1YW, UK. The principal activity of the Group is plantation agriculture, mainly in the cultivation of oil palm in Indonesia and Malaysia, of which Indonesia is the principal place of business.

The financial information does not constitute the company's statutory accounts for the years ended 31 December 2020 or 2019. Statutory accounts for the years ended 31 December 2020 and 31 December 2019 have been reported on by the Independent Auditor. The Independent Auditor's Reports on the Annual Report and Financial Statements for the years ended 31 December 2020 and 31 December 2019 were unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.

Statutory accounts for the year ended 31 December 2019 have been filed with the Registrar of Companies. The statutory accounts for the year ended 31 December 2020 will be delivered to the Registrar in due course.

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

Basis of preparation

The financial statements have been prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006 and in accordance with International Financial Reporting Standards ("IFRSs") adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the EU.

Changes in accounting standards

a) New standards, interpretations and amendments effective in the current year

The following amendments are effective for the first time for accounting periods beginning on or after 1 January 2020 in these financial statements:

• Amendments to references in the conceptual framework in IFRS Standards

• IAS 1 and IAS 8 (amendments) Definition of material

These new and amended standards and Interpretations that apply for the first time in these financial statements have not significantly impacted the Group as they are either not relevant to the Group's current activities or require accounting which is consistent with the Group's existing accounting policies.

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

T he following new standards, interpretations and amendments are effective for future periods (as indicated) and have not been applied in these financial statements:

• Annual improvements to IFRS Standards 2018-2020 (1 January 2022, not yet endorsed)

• IAS 1 (amendments) Classification of liabilities as current or non-current (1 January 2023, not yet endorsed)

• IAS 1 (amendments) and IFRS Practice Statement 2 Disclosure of Accounting Policies (1 January 2023, not yet endorsed)

• IAS 8 (amendments) Definition of Accounting Estimates (1 January 2023, not yet endorsed)

None of the above new standards, interpretations and amendments are expected to have a material effect on the Group's future financial statements.

2 Accounting policies

(a) Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries) made up to 31 December each year. The Company controls a subsidiary if all three of the following elements are present; power over the subsidiary, exposure to variable returns from the subsidiary, and the ability of the investor to use its power to affect those variable returns. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date control ceases. In respect of cooperatives under the Plasma scheme, the Group has not consolidated these results on the basis that the Company does not have control over those entities.

(b) Business combinations

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

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

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

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

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

(d) Revenue recognition

The Group derives its revenue from the sale of CPO, palm kernel, FFB, shell nut, biomass products, biogas products and rubber slab. Revenue for CPO, palm kernel and shell nut are recorded net of sales and related taxes and levies, including export taxes and recognised when the delivery order is issued to a purchaser. The delivery order is not issued until goods are paid for. Revenue for FFB, biomass and biogas are recognised upon delivery. Sales of rubber slab are recognised on signing of the sales contract, this being the point at which control is transferred to the buyer.

The transacted price for each product is based on the market price or predetermined monthly contract value. There is no right of return nor warranty provided to the customers on the sale of products and services rendered.

(e) Tax

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

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

(f) Dividends

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

(g) Property, plant and equipment

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

Plantations comprise of the cost of planting and development of oil palm and other plantation crops. Costs of new planting and development of plantation crops are capitalised from the stage of land clearing up to the stage of maturity. The costs of immature plantations consist mainly of the accumulated cost of land clearing, planting, fertilising and maintaining the plantation, borrowing costs and other indirect overhead costs up to the time the trees are harvestable and to the extent appropriate. Oil palm plantations are considered mature within three to four years after planting and generating average annual CPO of four to six metric tons per hectare. Immature plantations are not depreciated.

The Indonesian authorities have granted certain land exploitation rights and operating permits for the estates. The land rights are usually renewed without significant cost subject to compliance with the laws and regulations of Indonesia therefore, the Group has classified the land rights as leasehold land. The leasehold land is recognised at cost initially and is not depreciated. Costs include the initial cost of obtaining the location permits and subsequent payments to compensate existing land owners plus any legal costs incurred to acquire the necessary land exploitation rights. Location permits are subsequently carried at fair value while the subsequent amounts are carried at cost until the exploitation rights have been awarded, at which point they will also be carried at fair value. Fair value is determined based on periodic valuations on an open market basis by a professionally qualified valuer. These revaluations are made with sufficient regularity to ensure that the carrying amount does not differ materially from that which would be determined using fair value at the end of the reporting period. Changes in fair value are recognised in other comprehensive income and accumulated in the revaluation reserve except to the extent that any decrease in value in excess of the credit balance on the revaluation reserve, or reversal of such a transaction, is recognised in income statement. On the disposal of a revalued estate, any related balance remaining in the revaluation reserve is transferred to retained earnings as a movement in reserves.

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

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

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

Plantations - 5% per annum

Buildings - 5% to 10% per annum

Oil Mill - 5% per annum

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

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

(h) Biological assets

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

(i) Leased assets

The Group assesses whether a contract is or contains a lease, at inception of the contract. The Group recognises a right-of-use asset and a corresponding lease liability with respect to all lease arrangements in which it is the lessee, except for short-term leases (defined as leases with a lease term of 12 months or less) and leases of low value assets (such as tablets and personal computers, small items of office furniture and telephones). For these leases, the Group recognises the lease payments as an operating expense on a straight-line basis over the term of the lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased assets are consumed.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted by using the rate implicit in the lease. If this rate cannot be readily determined, the lessee uses its incremental borrowing rate.

Lease payments included in the measurement of the lease liability comprise:

Fixed lease payments (including in-substance fixed payments), less any lease incentives receivable.

The lease liability is presented as a separate line in the consolidated statement of financial position.

The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability (using the effective interest method) and by reducing the carrying amount to reflect the lease payments made.

The right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payments made at or before the commencement day, less any lease incentives received and any initial direct costs. They are subsequently measured at cost less accumulated depreciation and impairment losses.

Right-of-use assets are depreciated over the shorter period of lease term and useful life of the underlying asset. If a lease transfers ownership of the underlying asset or the cost of the right-of-use asset reflects that the Group expects to exercise a purchase option, the related right-of-use asset is depreciated over the useful life of the underlying asset. The depreciation starts at the commencement date of the lease.

The right-of-use assets are presented together in property, plant and equipment in the consolidated statement of financial position. The Group applies IAS 36 to determine whether a right-of-use asset is impaired and accounts for any identified impairment loss as described in the 'Property, Plant and Equipment' policy.

Land rights are held at fair value and revalued at the balance sheet date.

(j) Impairment

An assessment of indicators of impairment over the Company's assets is undertaken annually on 31 December. Where the carrying value of an asset exceeds its recoverable amount (i.e. the higher of value in use or fair value, less costs to sell), the asset is written down accordingly. Impairment charges are included in the income statement, except to the extent they reverse gains previously recognised in other comprehensive income. Reversal on impairment loss would be recognised if, and only if, there has been a change in the estimates used to determine the asset's recoverable amount since the last impairment test was carried out. Reversal on impairment losses will be immediately recognised in the income statement.

(k) Inventories

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

(l) Financial assets

The Group's financial assets measured at amortised cost comprise trade and other receivables and cash and cash equivalents in the consolidated statement of financial position. All the Group's receivables and loans are non-derivative financial assets with cash flows that are solely payments of principal and interest. They are recognised at fair value at inception and subsequently at amortised cost as this is what the Group considers to be most representative of the business model for these assets.

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

The Group considers a trade receivable or other receivable as credit impaired when one or more events that have a detrimental impact on the estimated cash flow have occurred. Trade and other receivables are written off when there is no expectation of recovery based on the assessment performed. If the receivables are subsequently recovered, these are recognised in income statement.

The Group use three categories for those receivables which reflect their credit risk and how the loss provision is determined for those categories. These include trade receivables using the simplified approach and debt instruments at amortised costs other than trade receivables and financial guarantee contracts using the three-stage approach.

(m) Financial liabilities

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

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

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

(n) Deferred tax

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

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

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

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

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

(o) Retirement benefits

Defined contribution schemes

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

Defined benefit schemes

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

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

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

• Past service costs; less

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

Remeasurements of the net defined benefit obligation are recognised in other comprehensive income. The remeasurements include:

• Actuarial gains and losses;

• Return on plan assets (interest exclusive); and

• Any asset ceiling effects (interest inclusive).

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

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

Gains or losses arising from changes to scheme benefits or scheme curtailment are recognised immediately in the income statement. Settlements of defined benefit schemes are recognised in the period in which the settlement occurs.

(p) Treasury shares

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

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

(q) Financial guarantee contracts

Where the Company and its subsidiaries enter into financial guarantee contracts and guarantee the indebtedness of other companies within the Group and/or third party entities, these are accounted for under IFRS 9. The details of financial guarantee contracts are disclosed in note 25.

(r) Critical accounting estimates and judgements

The Group makes certain estimates and assumptions regarding the future. Estimates and judgements are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In the future, actual experience may differ from these estimates and assumptions. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

Judgements

• Assessment of de-facto control of cooperatives under Plasma scheme (see note 2(a) and note 26)

• Classification of land as leasehold with no depreciation charged (see note 11)

Estimates and assumptions

• Impairment of plantation assets - estimate of future cash flows and determination of the discount rate and other assumptions (see note 11)

• Expected credit losses ("ECL") on amounts due from cooperatives under Plasma scheme - determination of possible outcomes and their weighted probability (see note 12)

• Carrying value of income tax receivables - determination of historic recovery rates (see note 8)

• Income taxes and deferred tax - provisions for income taxes in various jurisdictions (see note 8 and note 18)

• Recognition of deferred tax on losses - estimate of future profitability of respective entities (see note 18)

• Retirement benefits - actuarial assumptions (see note 19)

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

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

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

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

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

The Group measures the following assets at fair value:

- Revalued land - Property, plant and equipment (note 11)

- Biological assets (note 14)

The Group measures the following assets at amortised cost, however disclosure of fair value is given in accordance with IFRS7 and IFRS 13:

- Non-current receivables due from non-controlling interests (note 12)

- Non-current receivables due from cooperatives under Plasma scheme (note 12)

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

3 Revenue

Disaggregation of Revenue

The Group has disaggregated revenue into various categories in the following table which is intended to:

• Depict how the nature, amount and uncertainty of revenue and cash flows are affected by timing of revenue recognition; and

• Enable users to understand the relationship with revenue segment information provided in note 6.

There is no right of return and warranty provided to the customers on the sale of products and services rendered.

Year to 31 December 2020	CPO, palm kernel and FFB	Rubber	Shell nut	Biomass products	Biogas products	Others	Total
	$000	$000	$000	$000	$000	$000	$000

Contract counterparties
Government	-	-	-	-	970	-	970
Non-government - Wholesalers	262,348	631	3,959	427	-	725	268,090
	262,348	631	3,959	427	970	725	269,060

Timing of transfer of goods
Delivery to customer premises	5,613	631	-	-	-	-	6,244
Delivery to port of departure	-	-	-	427	-	-	427
Customer collect from our mills / estates	256,735	-	3,959	-	-	-	260,694
Upon generation / others	-	-	-	-	970	725	1,695
	262,348	631	3,959	427	970	725	269,060

Year to 31 December 2019	CPO, palm kernel and FFB	Rubber	Shell nut	Biomass products	Biogas products	Others	Total
	$000	$000	$000	$000	$000	$000	$000

Contract counterparties
Government	-	-	-	-	908	-	908
Non-government - Wholesalers	214,416	653	2,224	733	-	202	218,228
	214,416	653	2,224	733	908	202	219,136

Timing of transfer of goods
Delivery to customer premises	5,624	653	-	-	-	-	6,277
Delivery to port of departure	-	-	-	733	-	-	733
Customer collect from our mills / estates	208,792	-	2,224	-	-	-	211,016
Upon generation / others	-	-	-	-	908	202	1,110
	214,416	653	2,224	733	908	202	219,136

4 Finance income and expense

	2020 $000	2019 $000

Finance income
Interest receivable on:
Credit bank balances and time deposits	2,876	4,169

Finance expense
Interest payable on:
Development loans (note 16)	(257)	(939)
Interest expense on lease liabilities (note 29)	(35)	(41)
	(292)	(980)
Net finance income recognised in income statement	2,584	3,189

5 Profit before tax

	2020 $000	2019 $000

Profit before tax is stated after charging
Purchase of FFB	110,225		92,004
Depreciation (note 11)	18,143		18,590
Reversal of impairment (note 11)	(2,196)		(8,868)
Impairment losses (note 11)	188		2,278
Provision for expected credit loss (note 15)	1,485		5,965
Exchange losses / (gains)	268		(251)
Legal and professional fees	834		1,236
Staff costs (note 7)	48,103		41,668
Remuneration received by the Group's auditor or associates of the Group's auditor:
- Audit of parent company	5		5
- Audit of consolidated financial statements	146		140
- Audit of consolidated financial statements (prior year)	-		5
- Audit related assurance service	6		6
- Audit of UK subsidiaries	13		13
Total audit services	170		169

Audit of overseas subsidiaries
- Malaysia	21			21
- Indonesia	76			78
Total audit services	97			99

Total auditor's remuneration	267			268

6 Segment information

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

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

Factors that management used to identify reportable segments in the Group

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

Measurement of operating segment profit or loss, assets and liabilities

The Group evaluates segmental performance on the basis of profit or loss before tax calculated in accordance with IFRS but excluding BA movement.

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

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

	North 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

	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

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.

7 Employees' and Directors' remuneration

	2020 Number	2019 Number
Average numbers employed (primarily overseas) during the year:
- full time	7,242	6,925
- part-time field workers	9,311	9,285
	16,553	16,210

	2020 $000	2019 $000
Staff costs (including Directors) comprise:
Wages and salaries	43,129	45,756
Social security costs	2,921	2,090
Retirement benefit costs
- United Kingdom	-	-
- Indonesia (note 19)	2,003	2,784
- Malaysia	50	56
	48,103	50,686

	2020 $000	2019 $000

Directors emoluments	200	215

	2020 $000	2019 $000
Remuneration expense for key management personnel comprise:
Short-term employee benefits	1,499	1,742
Post-employment benefits	-	-
	1,499	1,742

The Executive Director, Non-Executive Directors and senior management (general managers and above) are considered to be the key management personnel.

8 Tax expense

	2020 $000	2019 $000

Foreign corporation tax - current year	9,920	5,222
Foreign corporation tax - prior year	287	12
Deferred tax adjustment - origination and reversal of temporary differences (note 18)	2,832	(2,439)
Recognition of previously unrecognised deferred tax assets (note 18)	687	(96)
Total tax charge for year	13,726	2,699

Corporation tax rate in Indonesia is at 22% (2019: 25%) whereas Malaysia is at 24% (2019: 24%). The standard rate of corporation tax in the UK for the current year is 19% (2019: 19%). The Group's charge for the year differs from the standard Indonesian rate of corporation tax as explained below:

	2020 $000	2019 $000

Profit before tax	51,669	18,873

Profit before tax multiplied by standard rate of Indonesia corporation tax of 22% (2019: 25%)	11,367	4,718
Effects of:
Rate adjustment relating to overseas profits	(14)	(24)
Group accounting adjustments not subject to tax	(245)	(2,116)
Expenses not allowable for tax	613	544
Deferred tax assets not recognised	-	48
Income not subject to tax	(647)	(1,223)
Under provision of prior year income tax	287	12
Utilisation of tax losses not previously recognised	-	836
Under / (Over) provision of prior year deferred tax assets	687	(96)
Change in tax rate	1,678	-
Total tax charge for year	13,726	2,699

The above reconciliation has been prepared by reference to the Indonesian tax rate rather than the UK tax rate as, in accordance with IAS 12, this is the applicable tax rate that provides the most meaningful information, given this is the country in which the majority of tax arises. The reconciliation for the year ended 31 December 2019 has also been prepared on the same basis for comparative purposes.

The tax receivables represent the corporate income tax ("CIT") and value added tax ("VAT") that have yet to be refunded by the Indonesia tax authority. The tax receivables relating to CIT arose due to over payment of tax. The tax receivables relating to VAT arose because the majority of the Groups' CPO was sold to bonded zones which do not attract output VAT and thus the input VAT incurred is claimable. Upon submission of a tax return (for CIT) or a request letter (for VAT refund), a tax audit will be conducted by the tax authority and whilst every effort is made to resolve this quickly, the process can sometimes take more than 12 months.

The breakdown of the tax receivables and tax liabilities is as follows:

	31 December 2020 $000	31 December 2019* $000	1 January 2019* $000

Tax Receivables
Income tax	10,071	14,348	7,110
Other taxes	41,618	35,179	37,200
	51,689	49,527	44,310

Tax Liabilities
Income tax	(5,981)	(1,512)	(1,094)
Other taxes	(1,089)	(1,386)	(4,532)
	(7,070)	(2,898)	(5,626)

* In order to better represent these balances in accordance with IAS 1, the income tax and other tax balances have been shown separately on the Consolidated Statement of Financial Position. The impact on 1 January 2019 and 31 December 2019 is shown in the table above.

9 Earnings per ordinary share ("EPS")

	2020 $000	2019 $000

Profit for the year attributable to owners of the Company before BA movement	30,784	14,019
BA movement	1,051	2,077
Earnings used in basic and diluted EPS	31,835	16,096

	Number	Number
	'000	'000

Weighted average number of shares in issue in the year
- used in basic EPS	39,636	39,636
- dilutive effect of outstanding share options	-	-
- used in diluted EPS	39,636	39,636

Basic and diluted EPS before BA movement	77.67cts	35.37cts
Basic and diluted EPS after BA movement	80.32cts	40.61cts

10 Dividends

	2020 $000	2019 $000

Paid during the year
Final dividend of 0.5cts per ordinary share for the year ended 31 December 2019 (2018: 3.0cts)	198	1,189

Proposed final dividend of 1.0cts per ordinary share for the year ended 31 December 2020 (2019: 0.5cts)	396	198

The proposed dividend for 2020 is subject to shareholders' approval at the forthcoming annual general meeting and has not been included as a liability in these financial statements.

11 Property, plant and equipment

	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

The Group engaged Muttaqin Bambang Purwanto Rozak Uswatun & Rekan ("MBPRU") with its head office located in Jakarta, Indonesia to undertake the land valuation for the Group. The valuation was carried out independently by MBPRU who has the appropriate professional qualifications and recent experience in the location and category of the properties being valued. Further information of MBPRU can be obtained from ' www.kjpp-mbpru.com '. For the year ended 31 December 2020, valuations were undertaken on the land of eight subsidiaries in Indonesia. The quantum per hectare derived from the current valuation was then applied to the land value of the remaining companies in the same geographical location to derive the fair value of land as at 31 December 2020. For the year ended 31 December 2019, independent land valuations were undertaken for nine subsidiary companies in Indonesia and Malaysia. The same methodology to fair value land has been applied each year. Unplantable land was excluded in this exercise since it has zero value. Land is valued on a rotational basis and all the land is valued by qualified valuers every two years. Had the revalued land been measured on a historical cost basis, their net book value would have been $61,272,000 (2019: $56,978,000). Impairment of land if measured by comparing its historical cost with its fair value. The reversal of impairment loss of $2,196,000 recognised in 2020 (2019: impairment loss of $981,000) was due to a general increase in the fair value of land in Indonesia.

The reconciliation on the unreallised gain / (loss) on revaluation of leasehold land as shown below:

	2020 $000	2019 $000
Included in other comprehensive income:
Unreallised gain on revaluation of leasehold land	(1,142)	(2,292)
Deferred tax on revaluation (note 18)	2,451	577
Unrealised gain / (loss) on revaluation of leasehold land, net of tax recognised in other comprehensive income	1,309	(1,715)

PT Simpang Ampat's land was valued on the basis that its highest and best use is oil palm plantation. At present sections of the land is planted with rubber trees, however, the Group has the intention to replace the ageing rubber trees with palm oil trees.

Details of the information about the fair value hierarchy in relation to land at 31 December are as follows:

	Level 1	Level 2	Level 3	Fair value
	$000	$000	$000	$000

Land
At 31 December 2020	-	-	142,276	142,276
At 31 December 2019	-	-	137,936	137,936

There was no item classified under Level 1 and Level 2 and thus there was no transfer between Level 1 and Level 2 during the year.

The valuation techniques and significant unobservable inputs used in determining the fair value measurement of land and the inter-relationship between key unobservable inputs and fair value are set out in the table below:

Item

Valuation approach

Inputs used

Inter-relationship between key unobservable inputs and fair value

Land

Selling prices of comparable bare land in similar location adjusted 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.

The higher the selling price, the higher the fair value.

These are qualitative inputs which require significant judgement by professional valuer, MBPRU.

There was no change to the valuation techniques during the year.

The fair value measurement is based on the above items' highest and best use, which does not differ from their actual use, other than PT Simpang Ampat as stated above.

Th e capitalisation rate used to determine the amount of borrowing costs eligible for capitalisation is based on the percentage of immature area of each estate against total planted area in the estate. The average capitalisation rate was 8.6% (2019: 9.6%). The estates included $24,000 (2019: $96,000) of interest and $64,000 (2019: $74,000) of overheads capitalised during the year in respect of expenditure on estates under development.

The Indonesian authorities have granted certain land exploitation rights and operating permits for the estates. In the case of established estates in North Sumatera, these rights and permits expire between 2023 and 2054 with rights of renewal thereafter. As of estates in Bengkulu land titles were issued between 1994 and 2016 and the titles expire between 2028 and 2051 with rights of renewal thereafter for two consecutive periods of 25 and 35 years respectively. In Riau, land titles were issued in 2003 and expire in 2033. In Kalimantan, land titles were issued between 2015 and 2020 and expire between 2023 and 2054. In Bangka, land titles were issued in 2018 and expire between 2021 and 2053. The rights and permits for South Sumatera were renewed in 2020.

Subject to compliance with the laws and regulations of Indonesia, land rights are usually renewed. The cost of renewing the land rights is not significant. On the basis that the Group has an indefinite right to renew, leasehold land is not depreciated.

The land title of the estate in Malaysia is a long-term lease expiring in 2084.

Impairment for plantations is measured by comparing its carrying amount with its recoverable amount, which is the higher of the fair value less cost to sell and its value in use. The impairment assessment is based on each cash generating unit ("CGU") which is defined as each estate. In 2020, no impairment loss or reversal of impairment loss had been recognised. The reversal of impairment loss of $7,571,000 recognised in 2019 was primarily due to the increase in CPO price, previously impaired amounts being reclassified to plasma receivables during the year and decreases in the pre-tax discount rates .

The recoverable amount of the Group's plantations in 2020 was based on value in use calculations, which due to the nature of the cashflows, will be higher than fair value less cost to sell. The total value of the Group's plantations carried at value in use which was lower than original cost was $33,429,000 (2019: $32,962,000).

The value in use, computed by the professional valuer MBPRU using a discounted cash flow ("DCF") model, is the net present value of the projected future cash flows over the expected 20-year economic life of the asset discounted at 16.0% (2019: 16.6%). Projected future cash flows are calculated based on historical data, industry performance, economic conditions and any other readily available information including the impact of climate change. The compliance with changing regulations, changes in buyer preferences, development of new products and use of lower emission sources of energy will affect the FFB production, CPO price and its growth. Heavy rainfall & flooding, droughts and fires will have an effect on company specific risk within the calculation of our discount rate as well as potential impacts on the ability of our plants to produce FFB. Pests & disease will impact the upkeeping cost.

The sensitivity analysis below had been performed for 1% changes in the key assumptions, chosen as being reasonably possible changes which will have a material impact on the impairment. The following table sets out the key assumptions in the valuation along with the impact on the impairment charge of a 1% change:

	2020		2019
	Assumption applied	Increase in impairment		Assumption applied	Increase in impairment
		$000			$000

CPO price - decrease of 1%	$650/mt	-		$635/mt	1,459
Pre-tax discount rate - increase by 100 bps	15.98%	383		16.51% - 16.60%	2,600
Inflation rate - increase by 100 bps	3.12%	609		3.38%	2,241

The plantations carried at value in use are classified as Level 3 in the fair value hierarchy.

12 Receivables: non-current

	2020		2019
	Book value	Fair value		Book value	Fair value
	$000	$000		$000	$000

Due from non-controlling interests	5,493	3,050		3,571	1,994
Due from cooperatives under Plasma scheme	16,743	14,857		12,929	11,924
	22,236	17,907		16,500	13,918

The non-controlling interests in PT Alno Agro Utama and PT Cahaya Pelita Andhika have acquired their interests on deferred terms (see note 25 , Credit risk). In 2017, there was a change in the ownership of the non-controlling interests in PT Sawit Graha Manunggal, PT Karya Kencana Sentosa Tiga, PT Riau Agrindo Agung and PT Empat Lawang Agro Plantation which was similarly acquired on deferred terms (see note 25, Credit risk).

Plasma scheme is an initiative by the Indonesian Government that mandated plantation owners to allocate a percentage of their land acquired to the surrounding community and to further provide financial and technical assistance to cultivate oil palm on that land to improve the income and welfare of the community or cooperatives. During the year, certain subsidiary companies have funded plasma with a cumulative gross amount before ECL for $24,632,000 (2019: $19,078,000) which is recoverable from the cooperatives, the details with ECL are disclosed in note 15.

The fair values disclosed above are for disclosure purposes and all non-current receivables are classified as Level 3 in the fair value hierarchy.

The valuation techniques and significant unobservable inputs used in determining the fair value measurement of non-current receivables, as well as the inter-relationship between key unobservable inputs and fair value, are set out in the table below:

Item

Valuation approach

Inputs used

Inter-relationship between key unobservable inputs and fair value

Due from non-controlling interests

Based on cash flows discounted using current lending rate of 6% (2019: 6%).

Discount rate

The higher the discount rate, the lower the fair value.

Due from cooperatives under Plasma scheme

Based on cash flows discounted using an estimated current lending rate of 6.75% (2019: 6.78%).

Discount rate

The higher the discount rate, the lower the fair value.

13 Inventories

	2020 $000	2019 $000

Estate and mill consumables	6,873	5,332
Processed produce for sale	5,668	3,420
	12,541	8,752

14 Biological assets

	2020 $000	2019 $000

At 1 January	7,574	4,093
Fair value gain recognised in the income statement	1,274	3,255
Exchange translations	(65)	226
At 31 December	8,783	7,574

The valuation of the unharvested FFB was carried out internally for each plantation of the Group. It involved an estimation of the weight of unharvested FFB at balance sheet date multiplied by the sum of average FFB selling price less average harvesting cost of the last month prior to the balance sheet date. The weight was derived from the computation of the percentage of growth based on the data extracted from the research reference "The Reflection of Moisture Content on Palm Oil Development during the Ripening Process of Fresh Fruits" multiplied with the estimated FFB harvested two months' post balance sheet date. The impacts of climate change on the weather will impact the levels and quality of production of FFB so this has been taken into consideration when determining the fair value of biological assets.

The fair value of biological assets is classified as Level 3 in the fair value hierarchy.

The valuation techniques and significant unobservable inputs used in determining the fair value measurement of biological assets, as well as the inter-relationship between key unobservable inputs and fair value, are set out in the table below:

Item

Valuation approach

Inputs used

Inter-relationship between key unobservable inputs and fair value

Biological assets - Unharvested produce

Based on FFB weight multiplied by the sum of FFB selling price less harvesting cost

FFB weight

FFB selling price

Harvesting cost

The higher the weight, the higher the fair value

The higher the selling price, the higher the fair value

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.

15 Trade and other receivables

	2020 $000	2019 $000

Trade receivables	1,354	1,775
Other receivables	1,551	2,935
Prepayments and accrued income	1,788	1,064
	4,693	5,774

The carrying amount of trade and other receivables classified as amortised cost approximates fair value.

Trade receivables

The Group applies the IFRS 9 simplified approach to measure ECL using a lifetime ECL provision for trade receivables. To measure ECL on a collective basis, trade receivables are grouped based on similar credit risk and age.

The expected loss rate is based on a combination of the Group's historical credit losses experienced over the 5-year period prior to the year end and forward-looking information on macroeconomic factors affecting the Group's customers. The ECL has been calculated at 1% on trade receivables balances.

Other receivables

The Group assesses the ECL associated with its debt instruments carried at amortised cost on a forward-looking basis using the three stage approach. The impairment methodology applied depends on whether there has been a significant increase in credit risk.

The Group considers the probability of default upon initial recognition of an asset and whether there has been significant increase in credit risk on an on-going basis at each reporting date. To assess whether there is a significant increase in credit risk, the Group compares the risk of default occurring on the asset as at the reporting date with the risk of default as at the date of initial recognition. The Group considers available, reasonable and supportable forward-looking information, such as:

- internal credit rating;

- external credit rating (as far as available);

- actual or expected significant adverse changes in business, financial or economic conditions that are expected to cause a significant change to the debtor's ability to meet its obligation;

- significant changes in the value of the collateral supporting the obligation or in the quality of third-party guarantees or credit enhancements; or

- significant changes in the expected performance or behaviour of the debtor, including changes in the payment status of the debtor.

There has not been a significant increase in credit risk since initial recognition on any of the group's financial assets therefore 12-month ECL have continued to be recognised on all balances other than trade receivables which are discussed above.

Due from cooperatives under Plasma scheme

The Group assesses the ECL on amounts due from cooperatives under Plasma scheme by considering various probability weighted outcomes. The three possible outcomes are considered to be:

- recovery is limited to the value of the land and bearer plants on which the plantation is situated;

- recovery is limited to the future cashflows of the cooperative, being the FFB revenue less development costs; and

- recovery in full via bank financing obtained by the cooperative.

Movements on the Group's loss provision on current and non-current other receivables and financial guarantee contracts are as follows:

	2020 $000	2019 $000

At 1 January	6,273	308
Loss provision during the year	1,485	5,965
Exchange difference	253	-
At 31 December	8,011	6,273

At 31 December 2020, the expected loss provision for receivables and financial guarantee contracts is as follows:

	Gross carrying amount $000	Loss provision $000	Net carrying amount $000
2020
Trade receivable	1,363	(9)	1,354
Other receivables (note 15)	1,566	(15)	1,551
Receivables: non-current (note 12)
- Due from non-controlling interests	5,548	(55)	5,493
- Due from cooperatives under Plasma scheme	24,632	(7,889)	16,743
	33,109	(7,968)	25,141
Financial guarantee contracts (note 24)	-	(43)	(43)
	33,109	(8,011)	25,098

	Gross carrying amount $000	Loss provision $000	Net carrying amount $000
2019
Trade receivables	1,775	-	1,775
Other receivables (note 15)	2,979	(44)	2,935
Receivables: non-current (note 12)
- Due from non-controlling interests	3,607	(36)	3,571
- Due from cooperatives under Plasma scheme	19,078	(6,149)	12,929
	27,439	(6,229)	21,210
Financial guarantee contracts (note 24)	-	(44)	(44)
	27,439	(6,273)	21,166

16 Loans and borrowings

	2020		2019
	Book value	Fair value	Book value	Fair value
	$000	$000	$000	$000

Current
Long-term loan (a)	-	-	8,203	7,943
	-	-	8,203	7,943

Total loans and borrowings	-	-	8,203	7,943

(a) A subsidiary company, PT Sawit Graha Manunggal, obtained a long-term loan of $35 million for a period of eight years (including four years grace repayment period) to support the capital expenditure requirement for planting, development and maintenance of oil palm estate and to finance oil mill construction and other property, plant and equipment owned by the subsidiary company. It was secured by the subsidiary company's land with a carrying amount of $6.7 million (2019: $5.8 million) measured at fair value and its plantation with a carrying amount of $21.4 million (2019: $23.0 million) as at 31 December 2020 and was guaranteed by the Company. This loan bore interest at a rate based on SIBOR + 4.5% + Liquidity Premium payable quarterly in arrears. Average interest rate in 2020 was about 6.75% (2019: 6.78%). The loan was fully paid in 2020 and all security and guarantee arrangements had been released.

All the loans and borrowings are denominated in USD. The effect of changes in foreign exchange rates is disclosed in note 25.

The fair value of the items classified as loans and borrowings is disclosed below and is classified as Level 3 in the fair value hierarchy:

	2020		2019
	Book value	Fair value	Book value	Fair value
	$000	$000	$000	$000

Loans and borrowings	-	-	8,203	7,943

The fair value for disclosure purposes has been determined using discounted cash flows. Significant inputs include the discount rate used to reflect the credit risk associated with the Group. The fair value reduces as higher discount rate being used.

17 Trade and other payables

	2020 $000	2019 $000

Trade payables	6,254	5,028
Other payables	1,387	994
Advance receipts	7,070	119
Accruals	11,599	9,969
	26,310	16,110

The carrying amount of trade and other payables classified as financial liabilities measured at amortised cost approximates fair value. Advance receipts from customers increased significantly due to logistic problem in Bengkulu and Kalimantan and it is expected to be recognised in full as revenue in the subsequent year.

18 Deferred tax

The movement on the deferred tax account as shown below:

	2020 $000	2019 $000

At 1 January	(5,796)	(8,893)
Recognised in income statement:
Tax expense	(2,975)	3,220
BA movement	(61)	(930)
Revaluation of leasehold land	(483)	245
Recognised in other comprehensive income:
Revaluation of leasehold land	2,451	577
Retirement benefits	130	256
Exchange differences	84	(271)
At 31 December	(6,650)	(5,796)

The deferred tax asset and liability, together with the amounts recognised in income statement and other comprehensive income are detailed as follows:

	Asset $000	Liability $000	Net $000	(Charged)/ credited to income statement $000	(Charged)/ credited to equity $000
2020
Revaluation surplus	-	(20,164)	(20,164)	(483)	2,451
Retirement benefits	2,944	-	2,944	16	130
BA movement	-	(1,934)	(1,934)	(61)	-
Unutilised tax losses	11,360	-	11,360	(2,523)	-
Unremitted earnings	-	(345)	(345)	-	-
Other temporary differences	1,489	-	1,489	(468)	-
Tax assets / (liabilities)	15,793	(22,443)	(6,650)	(3,519)	2,581
Set off of tax	(6,976)	6,976	-	-	-
Net tax assets / (liabilities)	8,817	(15,467)	(6,650)	(3,519)	2,581

2019
Revaluation surplus	-	(22,479)	(22,479)	245	577
Retirement benefits	2,834	-	2,834	420	256
BA movement	-	(2,010)	(2,010)	(930)	-
Unutilised tax losses	14,170	-	14,170	1,152	-
Unremitted earnings	-	(319)	(319)	-	-
Other temporary differences	2,008	-	2,008	1,648	-
Tax assets / (liabilities)	19,012	(24,808)	(5,796)	2,535	833
Set off of tax	(7,761)	7,761	-	-	-
Net tax assets / (liabilities)	11,251	(17,047)	(5,796)	2,535	833

	2020	2019
	$000	$000
A deferred tax asset has not been recognised for the following items:
Unutilised tax losses	15,532	19,142

The Group had recognised tax assets arising from the unutilised tax losses of certain subsidiaries as the Group believes that the tax assets of these subsidiaries can be realised in the future periods based on their budget , due to their respective plantation assets becoming more mature and historically this resulting in the companies becoming profitable. However, the Group does not recognise the tax losses in certain companies within the Group as tax assets as the future recoverability of losses of these companies cannot be certain. The time limit on utilisation of tax losses is subject to the tax laws in various countries. As of 31 December 2020, the relevant time limits are 5 years in Indonesia, 7 years in Malaysia and unlimited in UK. At 31 December 2020, all unutilised tax losses were recognised in Indonesia. The unutilised tax losses will expire as per below:

Year			$000

2021			-
2022			388
2023			2,324
2024			6,602
2025			2,046
			11,360

At the balance sheet date, the aggregate amount of temporary differences associated with undistributed earnings of subsidiaries for which deferred tax liabilities have not been recognised was $671,431,000 (2019 - $635,809,000). No liability has been recognised in respect of these differences because either the Group is in a position to control the timing of the reversal of the temporary differences, or such a reversal would not give rise to an additional tax liability. The deferred tax liability on unremitted earnings recognised at the balance sheet date was related to the estimated dividend declared for 2020 by the subsidiaries.

19 Retirement benefits

The Group provides Post-Employment Benefit plans to its employees in Indonesia in accordance with Indonesian Labour Law No. 13/2003 and Collective Labour Agreements. These are defined benefit plans and provide lump sum benefits to employees on retirement, death, disability and voluntary resignation. There is no requirement for the Group to advance fund these benefits.

The Group has set up a separate fund with PT Asuransi Allianz Life Indonesia to fund the Post-Employment Benefit plan obligation for Staff employees. The assets in the fund can only be used to pay the employees' benefits.

Up until 2020, the Non-Staff employees of five of the Group's subsidiaries in Indonesia participated in the SKU UKINDO Pension Fund, a defined benefit plan. On retirement, death, disability or voluntary resignation, participating employees would receive the higher of the benefit from the Pension Fund and the Post-Employment Benefit plan. In early 2020, the SKU UKINDO Pension Fund was liquidated. Its assets were transferred to a new defined contribution plan managed by Dana Pension Lembaga Keuangan AIA Financial ("DPLK AIAF") and allocated to the individual participants. From 2020 onwards, these employees will receive the higher of the benefit from DPLK AIAF and the Post-Employment Benefit plan. The liquidation of the SKU UKINDO Pension Fund led to a settlement gain of $930,000 in 2020. It also resulted in a past service cost of $569,000 in 2020 in the Post-Employment Benefit plan for Non-Staff employees, as the DPLK AIAF plan covers a smaller proportion of the overall Post-Employment Benefit obligation than was previously provided by the SKU UKINDO Pension Fund.

The Group provides other long-term employee benefits in the form of Long Service Awards for Staff and Non-Staff employees in Indonesia. The Long Service Awards are for amounts of up to 2 months of basic salary, paid on completion of 10 or 20 years' continuous service (Staff) and on completion of 25, 30, 35, and 40 years' continuous service (Non-Staff). These benefits are unfunded.

The defined benefit plans are valued by an actuary at the end of each financial year. The major assumptions used by the actuary were:

	2020	2019

Rate of increase in wages	8.0%	8.0%
Discount rate	7.0%	8.0%
Mortality rate*	100% TMI4	100% TMI3
Disability rate	10% TMI4	10% TMI3

	2020	2019
	$000	$000
Service cost
Current service cost	1,555	1,597
Past service cost	313	427
Settlement (gain) / loss	(930)	-
Net interest expense	825	734
Actuarial (gain) / loss	30	31
Total employee benefits expense	1,793	2,789

The reconciliation on the remeasurement of retirement benefit plan as shown below:

	2020 $000	2019 $000
Included in other comprehensive income:
Remeasurement of retirement benefit plan	(779)	(1,024)
Deferred tax on retirement benefits	130	256
Remeasurement of retirement benefit plan, net of tax recognised in other comprehensive income	(649)	(768)

(i) Reconciliation of defined benefit obligation and fair value of scheme assets

	Defined benefit obligation			Fair value of scheme 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 loss	-	(30)	(30)	-	-	-	-	(30)	(30)
Included in comprehensive income	(1,725)	(1,444)	(3,169)	381	-	381	(1,344)	(1,444)	(2,788)
Remeasurement (loss) / gain
Actuarial (loss) / gain from:
Adjustments (experience)	(144)	40	(104)	-	-	-	(144)	40	(104)
Financial assumptions	(391)	(367)	(758)	-	-	-	(391)	(367)	(758)
Return on plan assets (exclude interest)	-	-	-	(162)	-	(162)	(162)	-	(162)
Included in other comprehensive income	(535)	(327)	(862)	(162)	-	(162)	(697)	(327)	(1,024)

Effect of movements in exchange rates	(335)	(250)	(585)	192	-	192	(143)	(250)	(393)
Employer contributions	-	-	-	637	-	637	637	-	637
Benefits paid	475	198	673	(199)	-	(199)	276	198	474
Other movements	140	(52)	88	630	-	630	770	(52)	718

At 31 December 2019	(9,366)	(7,144)	(16,510)	5,172	-	5,172	(4,194)	(7,144)	(11,338)

	Defined benefit obligation			Fair value of scheme assets			Net defined scheme liability
	Funded 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)

(ii) Disaggregation of defined benefit scheme assets

The fair value of the funded assets is analysed as follows:

	2020	2019
	$000	$000
Bonds
- Corporate bonds	7	24
- Mutual fund bonds	282	288
	289	312

Cash / deposits	945	4,860
	1,234	5,172

None of the plan assets are invested in the Group's own financial instruments, property or other assets used by the Group. All plan assets invested in bonds which have a quoted market price in an active market.

(iii) Defined benefit obligation - sensitivity analysis

The following table exhibits the sensitivity of the Group's retirement benefits to the fluctuation in the discount rate, wages and mortality rate:

	Reasonably	Defined benefit obligation
	Possible	Increase	Decrease
	Change	$000	$000

Discount rate	(+ / - 1%)	(1,450)	1,686
Growth in wages	(+ / - 1%)	1,719	(1,504)
Future mortality rate	(+ / - 10%)	70	(70)

The weighted average duration of the defined benefit obligation is 15.57 years (2019: 14.65 years).

The total contribution paid into the defined contribution plan in 2020 amounted to $209,000. The Group expects to pay contributions of $442,000 to the funded plans in 2021. For the unfunded plans, the Group pays the benefits directly to the individuals; the Group expects to make direct benefit payments of $250,000 for defined benefit plan and $246,000 for defined contribution plan in 2021.

20 Share capital and treasury shares

	Authorised Number	Issued and fully paid Number	Authorised £000	Issued and fully paid £000	Authorised $000	Issued and fully paid $000
Ordinary shares of 25p each
Beginning and end of year	60,000,000	39,976,272	15,000	9,994	23,865	15,504

					Cost	Cost
		2020	2019		2020	2019
Treasury shares:		Number	Number		$'000	$'000
Beginning of year		339,900	339,900		(1,171)	(1,171)
Share options exercised		-	-		-	-
End of year		339,900	339,900		(1,171)	(1,171)

Market value of treasury shares:						$'000
Beginning of year (574.0p/share)						2,577
End of year (583.0p/share)						2,705

No treasury share was purchased in 2020 (2019: Nil).

All fully paid ordinary shares have full voting rights, as well as to receive the distribution of dividends and repayment of capital upon winding up of company.

21 Ultimate controlling shareholder

At 31 December 2020 , Genton International Limited ("Genton"), a company registered in Hong Kong, held 20,247,814 (2019: 20,247,814) shares of the Company representing 51.1% (2019: 51.1%) of the issued share capital of the Company. Together with other deemed interested parties, Genton's shareholding totals 20,551,914 or 51.9%. Madam Lim Siew Kim, a Director of the Company, has advised the Company that she is the controlling shareholder of Genton International Limited.

22 Related party transactions

Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note.

An office premises lease agreement was entered with Infra Sari Sdn Bhd, a company controlled by Madam Lim Siew Kim. The rental paid during the year was $345,559 (2019: $352,845). There was no balance outstanding at the year end (2019: Nil).

In 2019, a land lease agreement was entered with Kuang Rong Holdings Sdn Bhd, company controlled by Madam Lim Siew Kim. The rental paid during the year was $79,914 (2019: $33,871). There was no balance outstanding at the year end.

In 2020, the final dividend paid to Genton International Limited, a company controlled by Madam Lim Siew Kim, was $107,239 for the year ended 31 December 2019 (2019: $607,434 for the year ended 31 December 2018). The final dividend paid to other companies controlled by Madam Lim Siew Kim was $1,521 for the year ended 31 December 2019 (2019: $9,123 for the year ended 31 December 2018). There was no balance outstanding at the year end.

23 Reserves

Nature and purpose of each reserve:

Share capital Amount of shares subscribed at nominal value.

Share premium Amount subscribed for share capital in excess of nominal value.

Capital redemption reserve Amounts transferred from share capital on redemption of issued shares.

Treasury shares Cost of own shares held in treasury.

Revaluation reserves Gains/losses arising on the revaluation of the Group's property, net of tax.

Exchange reserves Gains/losses arising from translating the net assets of overseas operations into US Dollar.

Retained earnings Cumulative net gains and losses recognised in the consolidated income statement.

24 Guarantees and other financial commitments

	2020 $000	2019 $000
Capital commitments at 31 December
Contracted but not provided - normal estate operations	29	14
Authorised but not contracted - plantation and mill development	49,721	13,073

A subsidiary company, PT Sawit Graha Manunggal ("SGM") has provided a corporate guarantee to Koperasi Bartim Sawit Sejahtera ("KBSS"), a party under Plasma scheme as disclosed in note 12, in relation to a loan taken by KBSS from PT Bank Mandiri (Persero) Tbk. of Rp226.02 billion ($16.0 million) (2019: Rp226.02 billion, $16.3 million). The corporate guarantee remains until the loan is fully settled by 23 December 2027. The HGU (land right) that belongs to the Plasma scheme is currently held under SGM's master title. An application to separate the HGU was submitted to the Land Office and the land and its plantation with a total carrying amount of $10.5 million as at 31 December 2020 will be pledged to the bank as security once the title separation approval is obtained. In addition, the terms and conditions of the loan agreement also require KBSS to sell all its FFB produce to SGM and the plantation estate is to be managed by SGM. In view of these, the Group exposure to this contingent liability is minimised.

On 3 February 2017, a subsidiary company, PT Alno Agro Utama and Koperasi Perkebunan Plasma Maju Sejahtera ("KPPM") signed a Refinancing Agreement with PT Bank Syariah Mandiri ("BSM") to fund its plasma development. The Agreement provides a loan of Rp 8.75 billion ($0.6 million), with 10 (Ten) years maturity period effective from 24 July 2017 with an interest rate of 13.25% per annum. KPPM pledges its 147.04 hectares oil palm plantation located in Desa Serami Baru, Kecamatan Malin Deman, Kabupaten Mukomuko, Bengkulu and its plantation with a carrying amount of $0.7 million as at 31 December 2020 as security under the agreement while the Company provides corporate guarantee amounting to Rp 8.75 billion ($0.6 million).

The Group's loss provision on these financial guarantee contracts was $43,000 (2019: $44,000). The details of the ECL were disclosed in note 15.

25 Disclosure of financial instruments and other risks

The Group's principal financial instruments comprised cash, short and long-term bank loans, trade receivables and payables and receivables from local partners in respect of their investments.

The Group's accounting classification of each class of financial asset and liability at 31 December 2020 and 2019 were:

	Amortised cost $000	Financial liabilities at amortised cost $000	Total carrying value $000
2020
Non-current receivables	22,236	-	22,236
Trade and other receivables	2,905	-	2,905
Short-term investments	1,957	-	1,957
Cash and cash equivalent	115,211	-	115,211
Loans and borrowings due within one year	-	-	-
Trade and other payables	-	(26,310)	(26,310)
	142,309	(26,310)	115,999

	Amortised cost $000	Financial liabilities at amortised cost $000	Total carrying value $000
2019
Non-current receivables	16,500	-	16,500
Trade and other receivables	4,710	-	4,710
Short-term investments	-	-	-
Cash and cash equivalent	84,846	-	84,846
Loans and borrowings due within one year	-	(8,203)	(8,203)
Trade and other payables	-	(16,110)	(16,110)
	106,056	(24,313)	81,743

Financial instruments not measured at fair value

Financial instruments not measured at fair value include cash and cash equivalents, trade and other receivables, trade and other payables, borrowings due within one year and non-current receivables.

Due to their short-term nature, the carrying value of cash and cash equivalents, trade and other receivables, trade and other payables approximates their fair value. The non-current receivables were measured at cost less ECL however disclosure of fair value has been given in note 12 for comparison purposes.

Please refer to the applicable notes for details of the fair value hierarchy, valuation techniques, and significant unobservable inputs related to determining the fair value of the following items:

- Non-current receivables (note 12); and

- Loans and borrowings (note 16).

The principal financial risks to which the Group is exposed are:

- commodity selling price changes; and

- exchange movements;

which, in turn, can affect financial instruments and/or operating performance.

The Company does not hedge any of its risks. Its trade credit risks are low. There are no financial assets or liabilities that are held at fair value through the profit or loss.

The Board is directly responsible for setting policies in relation to financial risk management and monitors the levels of the main risks through review of regular operational reports.

Commodity selling prices

The Group does not normally contract to sell produce more than one month ahead.

Currency risk

Most of the Group's operations are in Indonesia. The Company and Group accounts are prepared in US Dollar which is not the functional currency of the operating subsidiaries. The Group does not hedge its net investment in its overseas subsidiaries and is therefore exposed to a currency risk on that investment. The historical cost of investment (including intercompany loans) by the parent in its subsidiaries amounted to $54,573,000 (2019: $55,797,000), while the balance sheet value of the Group's share of underlying assets at 31 December 2020 amounted to $428,681,000 (2019: $401,157,000).

All the Group's sales are made in local currency and any trade receivables are therefore denominated in local currency. No hedging is therefore necessary.

Selling prices of the Group's produce are directly related to the US Dollar denominated world prices. Appreciation of local currencies, therefore, reduces profits and cash flow of the Indonesian and Malaysian subsidiaries in US Dollar terms and vice versa.

All remaining borrowings of the Group's subsidiaries had been fully paid in 2020 and therefore there was no longer any currency risk for the Group in respect of this. The average interest rate on local currency deposits was 4.02% higher (2019: 4.44% higher) than on US Dollar deposits whereas interest rate for local currency borrowing was about 1.25% higher (2019: 2.72% higher) as compared to US Dollar borrowing. The unmatched balance at 31 December 2020 is represented by the $13,803,000 shown in the table below (2019: $5,910,000). If the Group's net cash position continues to improve, then US Dollar cash balances will continue to increase through 2021.

The table below shows the net monetary assets and liabilities of the Group as at 31 December 2020 and 2019 that were not denominated in the operating or functional currency of the operating unit involved.

	Net foreign currency assets/(liabilities)
Functional currency of Group operation	US Dollar $000	Sterling $000	Total $000
2020
Rupiah	12,086	-	12,086
US Dollar	-	259	259
Ringgit	1,717	-	1,717
Total	13,803	259	14,062
2019
Rupiah	3,882	-	3,882
US Dollar	-	475	475
Ringgit	2,028	-	2,028
Total	5,910	475	6,385

The following table summarises the sensitivity of the Group's financial assets and financial liabilities to foreign exchange risk. The impact on profit before tax and equity if Ringgit or Rupiah strengthen or weaken by 10% against US Dollar is:

		2020			2019
	Carrying	-10% in	+10% in	Carrying	-10% in	+10% in
	Amount US$	Rp : $ and RM : $	Rp : $ and RM : $	Amount US$	Rp : $ and RM : $	Rp : $ and RM : $
	$000	$000	$000	$000	$000	$000
Financial Assets
Non-current receivables	22,236	(1,522)	1,860	16,500	(1,172)	1,432
Trade and other receivables	2,905	(261)	319	4,710	(243)	297
Short-term investments	1,957	(178)	217	-	-	-
Cash and cash equivalents	115,211	(10,433)	12,752	84,846	(7,651)	9,352

Financial Liabilities
Borrowings due within one year	-	-	-	(8,203)	746	(911)
Trade and other payables	(26,310)	2,279	(2,785)	(16,110)	1,349	(1,649)
Total (decrease) / increase		(10,115)	12,363		(6,971)	8,521

Liquidity risk

Profitability of new sizable plantations normally requires a period of between six and seven years before cash flow turns positive. Because oil palms do not begin yielding significantly until four years after planting, this development period and the cash requirement is affected by changes in commodity prices.

The Group attempts to ensure that it is likely to have either self-generated funds or further loan/equity capital to complete its development plans and to meet loan repayments. Long-term forecasts are updated twice a year for review by the Board. In the event that falling commodity prices reduce self-generated funds below expectations and to a level where Group resources may be insufficient, further new planting may be restricted. Consideration is given to the funds required to bring existing immature plantings to maturity.

The Group's trade and tax payables are all due for settlement within a year. At 31 December 2020, the Group had no external loans and facilities.

The total loan borrowings together with interest at current rates are as follows:

	2020 $000	2019 $000

Principal	-	8,203
Interest	-	278
Total	-	8,481

Amount repayable within one year	-	8,481
	-	8,481

All loans had been fully paid in 2020.

All the long-term loans include varying covenants covering minimum net worth and cash balances, dividend and interest cover and debt service ratios. The subsidiary companies concerned have complied with the covenants as stated in the loan agreement.

The following table sets out the undiscounted contractual cashflows of financial liabilities:

	Less than 1 year	Between 1 and 2 years	Between 2 and 5 years	More than 5 years	Total
	$000	$000	$000	$000	$000

At 31 December 2020
Trade and other payables	(7,641)	-	-	-	(7,641)
Lease liabilities	(257)	(222)	-	-	(479)
	(7,898)	(222)	-	-	(8,120)
Financial guarantee contracts provided to Plasma
- loan repayment by Plasma	(773)	(2,535)	(928)	(107)	(4,343)
	(8,671)	(2,757)	(928)	(107)	(12,463)

At 31 December 2019
Trade and other payables	(6,022)	-	-	-	(6,022)
Lease liabilities	(258)	(258)	(224)	-	(740)
	(6,280)	(258)	(224)	-	(6,762)
Financial guarantee contracts provided to Plasma
- loan repayment by Plasma	(306)	(1,956)	(2,165)	(284)	(4,711)
	(6,586)	(2,214)	(2,389)	(284)	(11,473)

The figures for trade and other payables excludes accruals and advance receipts.

The Group does not face a significant liquidity risk with regard to its financial liabilities.

Interest rate risk

Both the Group's surplus cash and its borrowings are subject to variable interest rates. The Group had net cash throughout 2020, so the effect of variations in borrowing rates is more than offset. A 1% change in the borrowing or deposit interest rate would not have a significant impact on the Group's reported results as shown in the table below. The rates on borrowings are set out in note 16.

		2020				2019
	Carrying amount		-1% in interest rate	+1% in interest rate	Carrying amount		-1% in interest rate	+1% in interest rate
	$000		$000	$000	$000		$000	$000
Financial Assets
Short-term investments	1,957		(18)	16	-		-	-
Cash and cash equivalents	115,211		(1,102)	1,118	84,846		(810)	810

Financial Liabilities
Borrowings due within one year	-		-	-	(8,203)		82	(82)
Total (decrease) / increase			(1,120)	1,134			(728)	728

There is no policy to hedge interest rates, partly because of the net cash position and the net interest income position of the Group.

Interest rate profiles of the Group's financial assets (comprising non-current receivables, trade and other receivables and cash) at 31 December were:

	Total	Fixed rate	Variable rate	No interest
	$000	$000	$000	$000
2020
Sterling	259	-	21	238
US Dollar	17,805	5,493	8,782	3,530
Rupiah	119,483	-	101,089	18,394
Ringgit	4,762	-	3,546	1,216
Total	142,309	5,493	113,438	23,378

2019
Sterling	475	-	20	455
US Dollar	17,868	3,607	8,892	5,369
Rupiah	83,316	-	68,687	14,629
Ringgit	4,397	-	3,393	1,004
Total	106,056	3,607	80,992	21,457

Long-term receivables of $5,548,000 (2019: $3,607,000) comprise US Dollar denominated amounts due from non-controlling interests as described in note 12 on which interest is due at a fixed rate of 6%.

Average US Dollar deposit rate in 2020 was 1.75% (2019: 2.43%) and Rupiah deposit rate was 5.77% (2019: 6.86%).

Interest rate profiles of the Group's financial liabilities (comprising bank loans and other financial liabilities and trade and other payables) at 31 December were:

	Total	Fixed rate	Variable rate	No interest
	$000	$000	$000	$000
2020
Sterling	-	-	-	-
US Dollar	(1,109)	-	-	(1,109)
Rupiah	(24,746)	-	-	(24,746)
Ringgit	(455)	-	-	(455)
Total	(26,310)	-	-	(26,310)

2019
Sterling	-	-	-	-
US Dollar	(9,338)	-	(8,203)	(1,135)
Rupiah	(14,750)	-	-	(14,750)
Ringgit	(225)	-	-	(225)
Total	(24,313)	-	(8,203)	(16,110)

Weighted average interest rate on variable rate borrowings was 6.75% in 2020 (2019: 6.78%).

Credit risk

The Group has two types of financial assets that are subject to the ECL model:

• Trade receivables for sales of goods and services; and

• Current and non-current receivables carried at amortised cost.

The Group also has financial guarantee contracts for which the ECL model is also applicable.

While cash and cash equivalents are also subject to the impairment requirements as set out in IFRS 9, there is no impairment loss identified given the financial strength of the financial institutions in which the Group have a relationship with. Credit risk arises from cash and cash equivalents and deposits with banks and financial institutions. The Group has taken necessary steps and precautions in minimising the credit risk by lodging cash and cash equivalents only with reputable licensed banks, and particularly in Indonesia, independently rated banks with a minimum rating of "A". The cash and cash equivalents are in US dollars, Rupiah, Ringgit and Sterling according to the requirements of the Group. The list of the principal banks used by the Group is given on the inside of the back cover of this report.

The Group use three categories for those receivables which reflect their credit risk and how the loss provision is determined for those categories.

(i) Trade receivables using the simplified approach

The Group applies the simplified approach under IFRS 9 to measure ECL, which uses a lifetime expected loss provision for all trade receivables. To measure the expected losses, trade receivables have been grouped based on shared credit risk characteristics and days past due.

The expected loss rates are based on historical payment profiles of sales and the corresponding historical credit losses experienced during these periods. The historical loss rates are adjusted to reflect current and forward-looking information on macroeconomic factors (such as palm product prices and crude oil price) affecting the ability of the customers to settle the receivables. The historical loss rates will be adjusted based on the expected changes in these factors. No significant changes to estimation techniques or assumptions were made during the reporting period.

In determining the expected loss rates, the Group also takes into consideration the collateral or payments received in advance, as set out below:

Receivables are generally collected within the credit term and therefore there is minimal exposure to doubtful debts. Upfront payments are also collected for certain sales made by the Group's subsidiaries in Indonesia.

The Group's maximum exposure to credit risk and loss provision recognised as at 31 December 2020 is disclosed in note 15. The ECL has been calculated at 1% on trade receivables balances while the remaining amount in which no ECL provision was recognised is deemed to be recoverable, with low probability of default. Default is defined by the management as the non-repayment of the balance.

(i) Debt instruments at amortised costs other than trade receivables using the three-stage approach

All of the Group's debt instruments at amortised costs other than trade receivables are considered to have a low credit risk, except amount due from cooperatives under Plasma scheme are considered to have higher credit risk, as these were considered to be performing, have low risks of default and historically there were minimal instances where contractual cash flow obligations have not been met. There has not been a significant increase in credit risk since initial recognition.

The 12-month ECL has been calculated at 1% on the majority of balances (unless it has been considered there to be no ECL), with the exception of amounts due from cooperatives under Plasma scheme where the ECL is largely calculated, having considered various probability weighted outcomes, as being the balance of the receivable in excess of the value of the associated land and plantation assets on which the Plasma land resides which effectively would be returned to the Company if the receivable is not repaid.

The maximum exposure to credit risks for debt instruments at amortised cost other than trade receivables are represented by the carrying amounts recognised in the statements of financial position.

(ii) Financial guarantee contracts using the three-stage approach

All of the financial guarantee contracts are considered to be performing, have low risks of default and historically there were no instances where these financial guarantee contracts were called upon by the parties of which the financial guarantee contracts were issued. Accordingly,12-month ECL have been recognised at 1% on the financial guarantee contracts and disclosed in note 24.

Information regarding other non-current assets and trade and other receivables that are neither past due nor impaired is disclosed in notes 12 and 15 respectively. Amounts receivable from local partners, amounting to $5,548,000 (2019: $3,607,000), in relation to their investments in operating subsidiaries are secured on those investments and are repayable from their share of dividends from those subsidiaries.

Amounts receivable due from cooperatives under Plasma scheme, as disclosed in note 12, are unsecured and are to be repaid from FFB supplied by the cooperatives. The provision of ECL for amounts receivable due from cooperatives under Plasma scheme had been disclosed in note 15.

Deposits with banks and other financial institutions, investment securities and derivatives that are neither past due nor impaired are placed, or entered into, with reputable financial institutions or companies with high credit ratings and no history of default.

As the Group does not hold any collateral, the maximum exposure to credit risk for each class of financial instrument is the carrying amount presented on the statement of financial position, except in the case of the financial guarantee contracts offered by two subsidiaries to cooperatives in order for them to obtain bank loans in 2013 and 2017, which are not held on the statement of financial position of the Group. See note 24.

Capital

The Group defines its Capital as Share capital and Reserves, shown in the statement of financial position as "Issued capital attributable to owners of the parent" and amounting to $428,681,000 at 31 December 2020 (2019: $401,157,000).

Group policy presently attempts to fund development from self-generated funds and loans and not from the issue of new share capital. At 31 December 2020, the Group had no net borrowings (2019: Nil) but, depending on market conditions, the Board is prepared for the Group to have net borrowings.

Plantation industry risk

Please refer to principal and emerging risks and uncertainties in the Strategic Report.

26 Subsidiary companies

The principal subsidiaries of the Company all of which have been included in these consolidated financial statements are as follows:

Name	Country of incorporation and principal place of business		Proportion of ownership interest at 31 December		Non-controlling interests ownership / voting interest at 31 December
			2020	2019	2020	2019
Principal sub-holding company
Anglo-Indonesian Oil Palms Limited	United Kingdom	100%		100%	-	-

Management company
Indopalm Services Limited	United Kingdom	100%		100%	-	-
Anglo-Eastern Plantations Management Sdn Bhd	Malaysia	100%		100%	-	-
PT Anglo-Eastern Plantations Management Indonesia	Indonesia	100%		100%	-	-

Operating companies
Anglo-Eastern Plantations (M) Sdn Bhd	Malaysia	55%		55%	45%	45%
All For You Sdn Bhd	Malaysia	100%		100%	-	-
PT Alno Agro Utama	Indonesia	90%		90%	10%	10%
PT Anak Tasik	Indonesia	100%		100%	-	-
PT Bangka Malindo Lestari	Indonesia	95%		95%	5%	5%
PT Bina Pitri Jaya	Indonesia	80%		80%	20%	20%
PT Cahaya Pelita Andhika	Indonesia	90%		90%	10%	10%
PT Empat Lawang Agro Perkasa	Indonesia	95%		95%	5%	5%
PT Hijau Pryan Perdana	Indonesia	80%		80%	20%	20%
PT Kahayan Agro Plantation	Indonesia	78%		78%	22%	22%
PT Karya Kencana Sentosa Tiga	Indonesia	95%		95%	5%	5%
PT Mitra Puding Mas	Indonesia	90%		90%	10%	10%
PT Musam Utjing	Indonesia	75%		75%	25%	25%
PT Riau Agrindo Agung	Indonesia	95%		95%	5%	5%
PT Sawit Graha Manunggal	Indonesia	82%		82%	18%	18%
PT Simpang Ampat	Indonesia	100%		100%	-	-
PT Tasik Raja	Indonesia	80%		80%	20%	20%
PT United Kingdom Indonesia Plantations	Indonesia	75%		75%	25%	25%

Dormant companies
The Ampat (Sumatra) Rubber Estate (1913) Limited	United Kingdom	100%		100%	-	-
Gadek Indonesia (1975) Limited	United Kingdom	100%		100%	-	-
Mergerset (1980) Limited	United Kingdom	100%		100%	-	-
Musam Indonesia Limited	United Kingdom	100%		100%	-	-

The principal United Kingdom sub-holding company, UK management company and UK dormant companies are registered in England and Wales and are direct subsidiaries of the Company. The Malaysian operating companies and management company are incorporated in Malaysia and are direct subsidiaries of the Company. The Indonesian operating companies and management company are incorporated in Indonesia and are direct subsidiaries of the principal sub-holding company. The principal activity of the operating companies is plantation agriculture. The registered office of the principal subsidiaries are disclosed below:

Subsidiaries by country	Registered address
UK registered subsidiaries	Quadrant House, 6^th Floor 4 Thomas More Square London E1W 1YW United Kingdom
Malaysia registered subsidiaries	7^th Floor, Wisma Equity 150 Jalan Ampang 50450 Kuala Lumpur Malaysia
Indonesia registered subsidiaries	3^rd Floor, Wisma HSBC, Jalan Diponegoro, Kav 11 Medan 20152 North Sumatera Indonesia

27 Non-controlling interests

The Group identified subsidiaries with material non-controlling interests ("NCI") based on the total assets in relation to the Group. A subsidiary's NCI is material if the subsidiary contributed more than 10% of the Group's total assets. The subsidiaries identified and their summarised financial information, before intra-group eliminations, are presented below:

Entity	PT Tasik Raja		PT Mitra Puding 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)

28 Notes supporting statement of cash flows

Cash and cash equivalents for purposes of the statement of cash flows comprised:

	2020	2019
	$000	$000

Cash at bank available on demand	41,029	29,443
Short-term deposits	74,164	55,381
Cash in hand	18	22
As reported in statement of financial position	115,211	84,846

Significant non-cash transactions from investing activities are as follows:	2020	2019
	$000	$000

Property, plant and equipment purchased but not yet paid at year end	160	312
Repaid through purchase of FFB	3,849	2,728

Non-cash transactions from financing activities are shown in the reconciliation of liabilities from financing transactions as follows:

		Non-current loans and borrowings		Current loans and borrowings		Non-current lease liabilities	Current lease liabilities	Total
	$000		$000		$000		$000	$000

At 1 January 2020	-		(8,203)		(456)		(222)	(8,881)
Cash Flows	-		8,167		-		257	8,424
Non-cash flows
- Effect of foreign exchange	-		36		3		-	39
- New lease	-		-		-		-	-
- Lease liabilities classified as non-current at 31 December 2019 becoming current during 2020	-		-		236		(236)	-
- Interest accruing during the year	-		-		-		(35)	(35)
	-		-		(217)		(236)	(453)

	Non-current loans and borrowings		Current loans and borrowings		Non-current lease liabilities		Current lease liabilities	Total
	$000		$000		$000		$000	$000

At 1 January 2019	(8,203)		(11,078)		-		-	(19,281)
Cash Flows	-		11,096		-		210	11,306
Non-cash flows
- Effect of foreign exchange	(169)		151		(9)		(4)	(31)
- New lease	-		-		(474)		(464)	(938)
-Loans and borrowings classified as non-current at 31 December 2018 becoming current during 2019	8,372		(8,372)		-		-	-
- Interest accruing during the year	-		-		27		36	63
	-		(8,203)		(456)		(222)	(8,881)

29 Leases

	2020	2019
	$000	$000
Lease liabilities analysed as:
Non-current	(217)	(456)
Current	(236)	(222)
	(453)	(678)

The weighted average incremental borrowing rate per annum was 6.8% (2019: 6.8%).

Maturity analysis for the lease liabilities has been given in Note 25.

Amounts recognised in income statement:

	2020 $000	2019 $000

Depreciation expense on right-of-use assets	(153)	(184)
Interest expense on lease liabilities	(35)	(41)
Expense relating to short-term leases	(386)	(403)
Expense relating to leases of low value assets	(6)	(6)
	(580)	(634)

At 31 December 2020, the Group is committed to $0.01 million (2019: $0.01 million) for short-term leases.

All the leases are fixed payments. The total cash outflow for leases amount to $0.65 million (2019: $0.61 million).

The Group leases a piece of land and office under the right-of-use assets. The lease term is between 3 to 4 years. (2019: 3 to 4 years). On expiry the Group has the options to renew based on mutually agreed future rental. The right-of-use assets is classified as part of property, plant and equipment in note 11.

Right-of-Use assets

	Land	Building	Total
	$000	$000	$000

At 1 January 2020	193	466	659
Additions	-	-	-
Amortisation	-	(148)	(148)
Impairment losses	(188)	-	(188)
Effect of foreign exchange	(5)	(11)	(16)
At 31 December 2020	-	307	307

	Land	Building	Total
	$000	$000	$000

At 1 January 2019	-	-	-
Additions	221	611	832
Amortisation	(31)	(153)	(184)
Effect of foreign exchange	3	8	11
At 31 December 2019	193	466	659

Lease liabilities

	Land	Building	Total
	$000	$000	$000

At 1 January 2020	(196)	(482)	(678)
Additions	-	-	-
Interest expense	(10)	(25)	(35)
Lease payments	84	173	257
Effect of foreign exchange	(4)	7	3
At 31 December 2020	(126)	(327)	(453)

	Land	Building	Total
	$000	$000	$000

At 1 January 2019	-	-	-
Additions	(224)	(622)	(846)
Interest expense	(6)	(35)	(41)
Lease payments	34	176	210
Effect of foreign exchange	-	(1)	(1)
At 31 December 2019	(196)	(482)	(678)

The tables above do not include the leasehold land which is also classified as a right of use asset as this information is already presented in Note 11.

30 Event after reporting period

In November 2020, the President of Republic of Indonesia enacted a Job Creation Law that will have an impact on employee benefit obligations. As at 31 December 2020, the Group has calculated the employee benefit obligation based on the law that was in effect prior to this Job Creation Law, namely UU No. 13/2003, due to the fact that the basis of the calculation for employee benefit obligations is further regulated in an implementing regulation which was only enacted on 16 February 2021. Until the completion date of this report, the Group is still calculating the impact of the implementation of this regulation, and its effect on the Group's financial statements.

31 Posting of annual financial report

The Annual Financial Report will be posted to shareholders on or before 3 June 2021. Copies of the Annual Financial Report will then be available from the offices of the Company Secretary, CETC (Nominees) Limited, Quadrant House, 6th Floor, 4 Thomas More Square, London E1W 1YW and on the Company's website at www.angloeastern.co.uk .

Copies of this announcement are available from the offices of the Company Secretary, CETC (Nominees) Limited, Quadrant House, 6th Floor, 4 Thomas More Square, London E1W 1YW and on the Company's website.

Note: The information communicated in this announcement is inside information for the purposes of Article 7 of Market Abuse Regulation 596/2014.

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