i ## 2021 Annual Report ## Anglo-Eastern Plantations Plc ## Company Number: 1884630 ANNUAL REPORT ## Contents About AEP Financial Highlights Key Information Shareholder Information Chairman's Statement Strategic Report Financial Record Estate Areas Location of Estates and Mills Directors' Report Directors' Responsibilities Directors Statement on Corporate Governance Audit Committee Report Directors' Remuneration Report Auditor's Report Consolidated Income Statement Consolidated Statement of Comprehensive Income Consolidated Statement of Financial Position Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows Notes to the Consolidated Financial Statements Company Statement of Financial Position Company Statement of Changes in Equity Notes to the Company Financial Statements Notice of Annual General Meeting Company addresses, advisers and website Inside Back Cover 139 140 141 145 12 52 53 54 55 59 60 61 67 72 79 90 92 93 95 97 99 2 4 6 7 9 ## About Anglo-Eastern Plantations The group comprising Anglo-Eastern Plantations Plc (“AEP”) and its subsidiaries (the “Group”), is a major producer of palm oil and to a lesser extent rubber with plantations across Indonesia and Malaysia, amounting to some 128,000 ha. Biogas plant in North Sumatera • AEP has a Premium Listing on the London Stock Exchange. The Company was listed in 1985. • Primary activities are the crop production and processing of palm oil and some rubber. • Palm oil is an important commodity and the industry reportedly employs millions of workers directly and indirectly across Indonesia and Malaysia. It is used extensively in food, cosmetics, other Collection of fresh fruit bunches (“FFB”) consumer products and biofuel. • The Group is committed to the responsible development of its plantations and facilities with particular attention to both the environment and society in which it operates. • AEP mitigates the impact on the environment by capturing methane gas emissions from its mills and generating renewable energy though its biogas plants. It also operates a biomass plant Annual Report 2021 | Anglo-Eastern Plantations Plc 2 which converts empty fruit bunches (“EFB”) to dried long fibres. Matured plantation ## About Anglo-Eastern Plantations ![img-0.jpeg](img-0.jpeg) ### Oil Palm Plantations The Group has developed over 62,600 ha of mature oil palm in sixteen plantations across Indonesia, together with one plantation in Malaysia. The weighted average age of the trees in the Group is about 13 years. In Indonesia the trees averaged about 12 years old while in Malaysia the trees are older at 24 years. The Group's FFB production in 2021 reached 1.19 million mt. ![img-1.jpeg](img-1.jpeg) ### Oil Palm Development An Oil Palm tree usually takes about three years from planting to harvest of the first crop and will reach full production after a further five years. The Group has approximately 7,900 ha of immature plantations of which 1,701 ha were planted in 2021. ![img-2.jpeg](img-2.jpeg) ### Palm Oil Mills The Group operates six palm oil mills processing up to a combined 310 mt of FFB per hour. One of the mills has a biomass plant which processes EFB into dried long fibres for export. The construction of the seventh mill in North Sumatera is in progress with completion delayed due to the pandemic. Completion is scheduled for the latter part of 2022, which together with the upgrade of two other mills would increase the Group's processing capacity to 400 mt per hour. Combined oil extraction rate ("OER") averaged 20.5% in 2021. ![img-3.jpeg](img-3.jpeg) ### Third Party Crop Purchases In 2021 the Group purchased approximately 1.14 million mt of FFB from third party producers, comprising small plantations and local farmers, for processing through its mills. The total FFB throughput at the Group's mills in 2021 was 2.31 million mt producing 473,200 mt of crude palm oil ("CPO"). The Group has the capacity to store up to 52,400 mt of CPO at its six mills. ![img-4.jpeg](img-4.jpeg) ### Rubber Plantations In 2021 the 262 ha of established rubber plantations produced 425 mt of raw latex and rubber lumps. The size of the rubber plantations will reduce in the coming years as the Group replaces ageing rubber trees with oil palm. The average age of the rubber trees is 14 years. The yield in 2021 was 1.62 mt/ha. ![img-5.jpeg](img-5.jpeg) ### Biogas Plants Four mills are equipped with biogas plants to capture the methane gas emission to generate electricity for its own consumption, with the surplus being sold to the Indonesian state authorities. This reduces the mills' our reliance on fossil fuels and improves the Group's carbon footprint. The Group sold 20,300 MWh of surplus electricity in 2021. Annual Report 2021 | Anglo-Eastern Plantations Plc 3 # Financial Highlights The Group key performance indicators ("KPI") as required in accordance with the requirements of s414C, Companies Act 2006 are as follows: | Continuing operations | 2021 $m | 2020 $m | Change % | | --- | --- | --- | --- | | Revenue | 433.4 | 263.8 | +64 | | Profit before tax: | | | | | - before biological assets ("BA") movement | 132.7 | 56.9 | +133 | | - after BA movement | 137.1 | 58.1 | +136 | | Basic Earnings per ordinary share ("EPS"): | | | | | - before BA movement | 235.25cts | 89.31cts | +163 | | - after BA movement | 242.34cts | 91.82cts | +164 | | Dividend (cents) | 5.0cts | 1.0cts | | Anglo-Eastern Plantations Plc ![img-6.jpeg](img-6.jpeg) Source: Financial Times Annual Report 2021 | Anglo-Eastern Plantations Plc 4 ## Financial Highlights ![img-7.jpeg](img-7.jpeg) ![img-8.jpeg](img-8.jpeg) ![img-9.jpeg](img-9.jpeg) ![img-10.jpeg](img-10.jpeg) * Restated to exclude discontinued operations. Annual Report 2021 | Anglo-Eastern Plantations Plc 5 ## Key Information ### Crude Palm Oil & Palm Kernel Production (mt) 500,000 ### Own FFB Production & Outside Purchase (mt) 450,000 1,200,000 400,000 1,000,000 350,000 (as at 31/12/21) (as at 31/12/20) 300,000 800,000 250,000 600,000 11% 13% 200,000 24% 25% Immature 150,000 400,000 Young 100,000 200,000 Prime 50,000 40% 42%20% 0 0 25% Old Annual Report 2021 | Anglo-Eastern Plantations Plc 6 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 Own FFB Production Outside Purchase CPO Palm Kernel Age of Palm Trees mt mt # Shareholder Information ## Market capitalisation The market capitalisation of Anglo-Eastern Plantations Plc in the United Kingdom ("UK") at 31 December 2021 was £285 million (2020: £231 million), the ordinary share price at the close of business on 22 April 2022 was 808 pence giving a market capitalisation of £320 million. ## Website https://www.angloeastern.co.uk/ contains various details and information on the Company and its operations, together with all the key historical financial and regulatory information on the Company. The website is updated on a continuing basis incorporating all Company announcements and other relevant developments, including environment, social and governance matters ("ESG") and share price movements. The website allows shareholders and investors to select and receive e-mail alerts from the Company on selected regulatory news. Shareholders are encouraged to use e-mail alerts to follow the development of the Company. ## Investor relations Investors requiring further information on the Company are invited to contact: Dato' John Lim Ewe Chuan Executive Director, Corporate Finance and Corporate Affairs Anglo-Eastern Plantations Plc Quadrant House, 6$^{th}$ Floor 4 Thomas More Square London E1W 1YW United Kingdom Tel: 44 (0) 20 7216 4621 Fax: 44 (0) 20 7767 2602 Email: datojohnlim@angloeastern.co.uk ## Registrar Administrative queries about holdings of AEP shares can be directed to the Company's Registrar: Computershare Investor Services PLC The Pavilions Bridgwater Road Bristol BS99 6ZY United Kingdom Tel: +44 (0) 370 703 0164 Email: web.corres@computershare.co.uk Shareholders can view and update their account details via the Computershare website, details of which can be found at https://www-uk.computershare.com/investor/. Annual Report 2021 | Anglo-Eastern Plantations Plc 7 ## Shareholder Information Annual General Meeting With the reopening of borders, together with the lifting of quarantine requirements in the UK and in Malaysia, the 37th Annual General Meeting (“AGM”) of the Company will be held at the offices of UHY Hacker Young LLP, 6th floor Quadrant House, 4 Thomas More Square, London E1W 1YW on Monday, 27 June 2022 at 11 am (UK time). Notice of the meeting is set out at the end of this Annual Report on pages 145 to 148. Submission of proxy voting Shareholders will not receive a hard copy of the proxy form for the 2022 AGM. Instead, shareholders will be able to vote electronically using the link https://www-uk.computershare.com/investor/. Shareholders will need to log into their Investor Centre account or register if shareholders have not previously done so. To register, shareholders will need their Shareholder Reference Number (“SRN”) which is detailed on their share certificates. The SRN is also available from the Registrar, Computershare Investor Services PLC (please see their contact details below). Proxy votes must be received no later than 9.30 am (UK time) on Thursday, 23 June 2022. To be effective, all proxy appointments must be lodged with the Company’s Registrars at Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol BS99 6ZY. Shareholders may request a hard copy of the proxy form directly from the Registrar, Computershare Investor Services PLC on Tel: +44 (0) 370 703 0164. Lines are open between 9am to 5.30pm from Monday to Friday excluding public holidays in England and Wales. Amalgamation of accounts Shareholders receiving multiple copies of Company mailings as a result of several accounts being maintained in their name are invited to write to the Company's Registrar at the above address to request that their accounts be amalgamated. Payment of dividends While the dividend is declared in US Dollars, shareholders can choose to receive their dividends in Pounds Sterling. In the absence of any specific instruction up to the date of closing of the register, shareholders with addresses in the UK will be deemed to have elected to receive their dividends in Pounds Sterling and those with addresses outside the UK will be deemed to have elected to receive their dividends in US Dollars. The Pounds Sterling equivalent dividend will be paid at the exchange rate prevailing at the date of closing of the register. Electronic communications Computershare Investor Services PLC offers AEP shareholders the opportunity to manage their shareholding online, through the Investor Centre. Registration is free and can be used to manage shareholdings quickly and securely. To register for this service, please go to https://www-uk.computershare.com/investor/ and follow the instructions. Annual Report 2021 | Anglo-Eastern Plantations Plc 8 # Chairman's Statement I am pleased that the UK has lifted all the restrictions relating to Covid-19 and that Malaysia is in a state of endemic rather than pandemic resulting in its borders being open to foreign visitors and a more relaxed set of Standard Operating Procedures ("SOPs"). All these have been made possible due to the very high fully vaccinated rate of the adult population of both these countries, who are now focusing on vaccinating the population of children. Indonesia is lagging slightly behind in its vaccination programme with about 76% of its adult population fully vaccinated due to an earlier reported shortage of vaccines. There is also a stark gap in vaccination rates among the 34 provinces in Indonesia with the population in remote and less developed regions having difficulty in reaching vaccination centres. I am confident that the Indonesian government will achieve full vaccination for its adult population within a reasonable time. Many countries have witnessed the effect that the prolonged lockdown has caused on mental and financial distress and are now adapting to coexist with Covid-19 rather than a zero tolerance strategy of eliminating Covid-19. Borders are beginning to open with the focus on reviving the economy which in turn leads to a gradual return of international air travel. 2021 was a year in which Indonesia and Malaysia went through either full lockdowns or partial lockdowns and the Group was fortunate that it was allowed to continue its operations as the food industry was an essential service. During this time management has drawn up strict SOPs for the staff to work safely and I am pleased to say that there was no major outbreak of Covid-19 cases in any of the plantations. However, we did have 5 fatalities due to Covid-19 in four of our plantations which must have been traumatic for the deceased loved ones and their colleagues. I and the rest of the Board shared their grief and we have ensured that the welfare of the affected families were appropriately looked after. The emergence of a new variant, Omicron, which is more transmissible but less deadly may, however, set back the progress made to date. Our management remains watchful and continues to observe strict safety protocols in its operations. I am pleased that given the plantations have to operate within the constraints of Covid-19, the management and staff have delivered a very good set of results, partly due to the high price of CPO for the year and I thank them for their diligence and effort. Having said that the Group has been hampered for a number of years by three plantations in South Sumatera which have not contributed to the profitability of the Group, notwithstanding the time and investments incurred over the years. Accordingly, the Board has made a commercial decision to sell PT Riau Agrindo Agung, PT Empat Lawang Agro Perkasa and PT Karya Kencana Sentosa Tiga, all in South Sumatera, as going concern at a realistic achievable price. The Board is working with a consulting firm in Indonesia with a view to conclude the sale by the end of 2022. The Group's FFB production in 2021 reached 1.19 million mt, 8% higher than last year of 1.10 million mt due to improved weather. Other than South Sumatera, rainfalls were satisfactory in all regions that the Group operated in. With mostly favourable weather, all regions except for Malaysia reported higher FFB production of between 1% to 28%. FFB bought-in from surrounding smallholders and plasma was 1.14 million mt (2020: 913,200 mt), 25% more than 2020. The mills processed a combined 2.31 million mt of FFB, 17% more than last year of 1.97 million mt. CPO production, as a result, was 17% higher at 473,200 mt, compared to 406,100 mt in 2020. CPO prices had been on a tear for most of the year. The surge in prices was unprecedented especially when consumption of palm oil was expected to be weaker due to the economic lockdown caused by the Coronavirus. A combination of factors however contributed to the spectacular rise in prices. Unfavourable weather conditions in prime soybean producing countries, which had adversely affected the supply of soybean oil, of which palm oil is the closest substitute was a likely cause. This together with a tight supply of palm oil due to labour, fertiliser issues and improved demand prospects for vegetable oils as global economies reopen drove CPO prices higher. A more detailed explanation is provided in the Strategic Report under Commodity Prices. The average CPO price ex-Rotterdam ended the year 67% higher at $1,211/mt, compared to $723/mt in 2020. The higher FFB production and elevated CPO prices meant that the Group's revenue from continuing operation reached a record high of $433.4 million, 64% higher compared to $263.8 million achieved in 2020. The operating profit for the Group from continuing operations in 2021, before biological asset ("BA") movement more than doubled to $129.3 million, from $54.6 million reported in 2020. The earnings per share, before BA movement from continuing Annual Report 2021 | Anglo-Eastern Plantations Plc 9 # Chairman's Statement operations, increased by 163% to 235.25cts, from 89.31cts in 2020. The Group's operating profit after BA movement from continuing operation for 2021 was at $133.7 million after an upward BA movement of $4.3 million as compared to 2020 operating profit of $55.8 million after an upward BA movement of $1.2 million. The mills briefly enjoyed improved processing margins as the Indonesian government lowered the CPO export tax in July 2021 from $255/mt to $175/mt when the CPO price exceeded $1,000/mt. However, in November 2021 the export tax was revised upwards to $200/mt when the CPO price exceeded $1,283/mt. The Indonesian government in its effort to curb soaring prices of domestic cooking oil in February 2022 imposed a domestic market obligation ("DMO") rule which made it mandatory for palm oil producers to sell 20% (and then subsequently 30%) of their output to domestic refiners at fixed prices representing a steep discount to the current CPO price, eroding the profit margin of planters. The DMO has since been aborted and replaced by a maximum CPO export tax and levy at $575/mt. This is further explained in the Outlook of the Strategic Report on page 50. Furthermore, on 27 April 2022 the Indonesian government banned the export of CPO to try to stem the rising cost of cooking oil in Indonesia. News reports have generally indicated that this is a temporary measure as CPO is one of Indonesia's largest export revenues, and also Indonesia cannot consume or utilise all the CPO it produces. The ban on the export of CPO, whilst it is in place, will affect the tender price AEP will achieve as the CPO is sold locally. The Group's new planting for oil palm including plasma for 2021 totalled 1,701 ha compared to 2,190 ha last year. Please see page 21 under Corporate Social Responsibility for Plasma obligation of the Group. The new planting was mostly concentrated in the Kalimantan regions where negotiations with owners over land compensation were concluded more efficiently. The land compensation process suffered as the pandemic restricted travel and social contact. Many landowners also demanded better land prices due to record CPO prices. Furthermore, the local authorities stopped all land compensation for three months in Bangka to resolve some complaints from local villages. Replanting of some 900 ha of oil palms in Bengkulu was accelerated during the year to replace trees with poor yield. In 2022, the Group plans to plant 2,500 ha of oil palm which includes replanting of another 1,200 ha in Bengkulu. Plasma planting for 2022 is estimated at 400 ha. The Group has four biogas plants with a combined capacity of slightly above five megawatts. The Group sold surplus electricity of 20,300 MWh in 2021 compared to 18,900 MWh last year in our efforts to reduce the Group's carbon footprint. The biogas plants help trap and burn the more toxic methane gas emission from palm oil mill effluent ("POME") to generate green electricity and produce less harmful carbon dioxide. Methane has a higher heat-trapping potential than carbon dioxide and cutting its emission can have a positive impact on mining in global warming. The revenue from the sale of surplus electricity to the national grid was $999,000 (2020: $970,000) EU threat to reduce the use of palm oil for biofuel in 2024 and to completely phase it out by the year 2030 remains a potential risk. 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, most of which affect climate change. 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. We are aware of growing pressure from buyers to avoid CPO with NDPE and High Conservation Values ("HCV") issues. A resurgence of the Covid-19 and its variants including Omicron, remains a potential major risk to palm oil demand in both the food and energy sectors. Inequitable access to vaccines, tests and treatments amongst the rich and poor countries could possibly prolong the pandemic and continue to hurt the economies, risking the emergence of more dangerous variants resulting in weaker trade and commodity prices. The war in Ukraine has caused another round of global uncertainty. Any further escalation of the war in Ukraine will no doubt create additional uncertainties impacting the major economies of the world which in turn could affect the demand for palm oil in both the food and energy sectors. More comments relating to the effects on CPO prices and fertilisers supply chain can be found in the Commodity Prices and Outlook sections of the Strategic Report on pages 19 and 50 respectively. 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' Annual Report 2021 | Anglo-Eastern Plantations Plc 10 ## Chairman’s Statement 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 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 and to a lesser extent the war in Ukraine. With the rising Coronavirus cases in Europe in early 2022, the Board felt justified in its opinion that the pandemic is far from over especially 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 continues to adopt a prudent view and in the light of the exceptional profit achieved in the year has declared a final dividend of 5.0cts per share, in line with our reporting currency, in respect of the year to 31 December 2021 (2020: 1.0cts). In the absence of any specific instructions up to the date of closing of the register on 10 June 2022, 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 15 July 2022 to those shareholders on the register on 10 June 2022. 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. 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 29 April 2022 Annual Report 2021 | Anglo-Eastern Plantations Plc 11 # 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 manner. 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 100,000 ha 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 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 as well as the weather. 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 ten times as much land to produce an equivalent weight of palm oil. It has been reported that one hectare of land can produce up to 4 mt of CPO, much higher than rapeseed of 0.7 mt, sunflowers of 0.6 mt or even soybeans of 0.4 mt. In this regard, palm oil is far more sustainable than other edible vegetable oils. The Group's strategies, therefore, focus on maximising yield per hectare above 22 mthha, minimum mill production efficiency of 110%, minimising production costs below $300/mt and streamlining estate management. For the year under review, the Indonesian operations achieved an FFB yield of 19.8 mthha, 155% mill efficiency and production cost of $296/mt. This compared favourably to 2020 where the Group achieved a yield of 18.9 mthha, 133% mill efficiency, except for production cost which was lower at $280/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 is deemed to achieve 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 its mills to trap the methane gas emitted from the treatment of palm mill effluents to generate electricity to power its boilers to 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 is looking at more biogas projects as demand for electricity recovered after the pandemic. The Group will continue to engage and offer competitive and fair compensation to the villagers so that land can be cleared and be planted. Annual Report 2021 | Anglo-Eastern Plantations Plc 12 # Strategic Report ## Non-financial reporting statement The Group has complied with the requirements of Section 414CB of the Companies Act 2006 by providing a wide range of non-financial information about employees, environmental and social matters in the table below and in our website: | Non-financial matter | Policies and standards which govern our approach | Page | | --- | --- | --- | | Business model | Business model and strategy Principal risks and uncertainties | 12 42 to 47 | | Environmental matters | Principal risks and uncertainties: Country, regulatory and governance practices Principal risks and uncertainties: Weather and Environmental and conservation practices Indonesian Sustainable Palm Oil Environmental, Social and Governance practices Management of Climate Risks Decarbonisation modelling and high level target setting Carbon Reporting Corporate Governance: Environmental and corporate responsibility Other responsible agricultural practices and sustainable policies can be found on our website | 43 to 44 47 25 to 26 26 to 29 29 to 34 35 35 to 42 66 | | Employees and Health & Safety | Employees: Employment policies Directors' Remuneration Report: Employees engagement Workers are protected from exposure to occupational health and safety hazards that are likely to pose immediate risk of permanent injury, illness or fatality. Proper signages are in place at relevant spots to alert employees of safety. Workshops and training sessions on occupational safety and health care are regularly conducted. | 48 to 50 72 | | Social matters | Principal risks and uncertainties: Covid-19 AEP has established clear policies and strict protocols for the control and prevention of the spread of Covid-19 within the workplace environment. There are requirements for mask wearing, social distancing and sanitising of the workplace regularly. AEP also privately funded vaccination programme within its plantations and employees are required to be compulsorily vaccinated. AEP also has strict procedures on testing at work and self isolation of its employees when necessary, together with home support for the affected ones to ensure full recovery before they resumed work. | 46 | | Respect for human rights | AEP has clear policies of no exploitation of its employees, including complying with paying minimum wage. It does not practise child or forced labour in line with the Modern Slavery Statement referred to on its website. In addition, a whistle blowing policy is in place to allow any employee to raise concerns about unethical, illegal or questionable practices without the risk of reprisal and in full confidence. | 49 to 50 | | Anti-corruption and anti-bribery matters | Directors' report: Political donations, anti-corruption and anti-bribery matters | 55 | ## Financial Review *Performance of the business during the year* For the year ended 31 December 2021, revenue for the Group from continuing operation was $433.4 million, 64% higher than $263.8 million reported in 2020 due primarily to the higher CPO prices and higher production. The Group's operating profit from continuing operation for 2021, before biological asset movement, was $129.3 million, 137% better than last year of $54.6 million. FFB production for continuing operations for 2021 reached 1.15 million mt, 7% higher than the 1.07 million mt produced in 2020. The overall yield for the Indonesian plantations was higher at 21.1 mt/ha (2020: 20.4 mt/ha) due to more consistent and better rainfall throughout the year coupled with an increase in matured areas to harvest. Except for Malaysia, all regions in Indonesia in which the Group operated show improvement in crop harvest. Young matured oil palms in North Sumatera and Kalimantan grew well and reported a 13% higher crop production. With replanting in progress, crop production in Bengkulu region, increased marginally by 1%. FFB bought-in from local smallholders and plasma in 2021 was 1.14 million mt (2020: 913,200 mt), 25% more compared to 2020. As explained earlier, a more consistent weather with no extended period of dryness meant that Annual Report 2021 | Anglo-Eastern Plantations Plc 13 ## Strategic Report there was an abundance of external crops to purchase especially in the first half of the year. Crop purchases by our mills in North Sumatera, Riau, Bengkulu and Kalimantan grew by between 9% and 64% in comparison to last year. During the year, the Group's mills processed a combined 2.31 million mt of FFB, 17% more than last year of 1.97 million mt. CPO production, as a result, was 17% higher at 473,200 mt, compared to 406,100 mt in 2020. Profit before tax and after BA movement from continuing operation for the Group was $137.1 million, 136% higher compared to a profit of $58.1 million in 2020. The BA movement was a credit of $4.3 million, compared to a credit of $1.2 million in 2020. The BA movement was mainly due to higher FFB price in 2021. The profit before tax included a reversal of impairment charge on plantations and impairment of land amounting to $5.0 million compared to a reversal of impairment on land amounting to $2.2 million in 2020. Net finance income recognised in the income statement increased from $2.6 million in 2020 to $3.2 million in 2021 due to higher time deposits and absence of interest expense. The tax expense increased from $15.2 million in 2020 to $25.7 million in 2021 due to the increase in profit before tax. The total loss on the discontinued operations during the year was $28.5 million, made up of operating loss of $6.7 million and a further write down of the three plantations assets net of liabilities of $21.8 million. The loss from the discontinued operation was also impacted by the expected credit loss from Plasma receivables amounting to $1.2 million in 2021 (2020: $1.4 million) attributed to the additional amounts allocated for plasma development during the year. The average CPO price ex-Rotterdam for 2021 was $1,211/mt, 67% higher than 2020 of $723/mt. The ex-mill price for 2021 averaged $776/mt, 37% higher than last year of $567/mt. Earnings per share before BA movement from continuing operations increased by 163% to 235.25cts compared to 89.31cts in 2020. Earnings per share after BA movement from continuing operations increased from 91.82cts to 242.34cts. Earnings per share have increased mainly due to the increase in profit after tax. There was a loss of exchange in translation of foreign operations, recognised in other comprehensive income, totalling $6.3 million for 2021 against an exchange loss of $5.4 million in the previous year due to the slight weakening of the Indonesian rupiah at the year end. The retirement benefits due to the employees at 31 December 2021, as calculated by a third party actuary, decreased to $11.5 million from $13.4 million last year due to the impact from the job creation law. Position of the business at the end of the year The Group's statement of financial position remains strong, with a cash and cash equivalents balance of USD218.2 million and no external borrowing at the end of 2021. All material changes in statement of financial position and cash flows are listed in the following table: | | Note | 31.12.2021 $000 | 31.12.2020 $000 | | --- | --- | --- | --- | | Property, plant and equipment | i | 260,532 | 280,831 | | Deferred tax assets | ii | 4,324 | 14,389 | | Income tax liabilities | iii | (13,139) | (5,981) | | Cash and cash equivalents | v, vi, vii | 218,249 | 115,211 | | Assets in disposal groups classified as held for sale | iv | 13,210 | - | | Net cash generated from operating activities | v | 131,346 | 65,353 | | Purchase of property, plant and equipment | vi | (26,374) | (18,965) | | Net cash used in financing activities | vii | (1,028) | (9,039) | i. The reduction in property, plant and equipment from $280.8 million in 2020 to $260.5 million was due to the reclassification of the assets in South Sumatera to assets held for sale in current assets. ii. The movement in deferred tax assets was due to the utilisation of some of the losses against taxable profits during the year. Annual Report 2021 | Anglo-Eastern Plantations Plc 14 # Strategic Report iii. The income tax liabilities are higher principally as a result of higher profits in 2021. A detailed explanation of income tax, including other taxes, is provided in note 9. iv. Assets in disposal groups classified as held for sale reflects the reclassification of the assets in South Sumatera, net of an impairment adjustment. v. As at 31 December 2021, the Group had cash and cash equivalents of $218.2 million (2020: $115.2 million). The cash position was higher in 2021 principally due to the significant increase in profitability during the year and to a lesser extent the recovery of $14.8 million from the over payment of VAT, together with the benefit of part of the current year corporate income tax of $13.1 million being retained as at year end. The net cash inflow from operating activities during the year was higher at $131.3 million by 101% compared to $65.4 million in 2020 mainly due to the more robust CPO prices and higher production. vi. The higher additions to development costs for property, plant and equipment ("PPE") amounting to $26.4 million in 2021 (2020: $19.0 million) was due to increase in construction costs. vii. The net cash used in financing activities during the year was lower by 89% at $1.0 million compared to $9.0 million in 2020 due to no repayment of borrowings during the year. ## Viability Statement The viability assessment considers solvency and liquidity over a longer period than for the purposes of the going concern assessment made on pages 15 and 16. Inevitably, the degree of certainty reduces over a 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 the review of the Group's performance in 2021, 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 to five-year periods. The process involved a detailed review of the 2022 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 believes that to project beyond five years has more elements of uncertainties and therefore less reliable for making informed decisions. The Board also considered the five-year cash flow projection under various severe but plausible scenarios, including the financial impact on the Group due to partial or total shutdown of its operations and the contraction of demand for palm oil resulting from the Coronavirus pandemic, as outlined in the Strategic Report under Going Concern, and the need to support if any financially loss-making newly matured estates, together with the projected capital expenditure. The Group also factored in the impact of the price increase of materials and fertilisers primarily as a result of the conflict in Ukraine. In arriving at the conclusion that the Group has adequate resources to continue in operation and meet its liabilities in the next five years the Board has assumed a worst case scenario of CPO price at its lowest average of $500/mt and that demand for CPO dropped by 50%. The Board has also factored in that half of the total plantations could be shut down for six months due to infectious disease such as Covid19. The assumptions applied are linked to risk of CPO price fluctuation, risk of a substitute for oil palm and a pandemic from an infectious disease. 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 2022 to 2026. ## 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 Annual Report 2021 | Anglo-Eastern Plantations Plc 15 # Strategic Report at least twelve months from the date of approval of these financial statements. For these reasons, the Directors adopted a going concern basis in the 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 six 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 400,800 mt in 2021 about 13% above last year (2020: 354,900 mt). The increase in matured areas to 18,047 ha from 16,238 ha contributed to this higher production. A more consistent rainfall pattern with no prolonged period of dryness and better harvest from young matured palms in Tasik also improved the annual yield to 22.2 mt/ha from the previous year of 21.6 mt/ha. Higher production can be expected in the coming years due to new planting and recently replanted areas of 546 ha maturing next year and starting to bear fruits. In 2021, the two mills in North Sumatera produced 136,900 mt of CPO (2020:124,900 mt) from a throughput of 698,800 mt (2020: 629,200 mt). Tasik Raja mill had another stellar year, processing 10% more FFB in 2021 at 501,900 mt (2020: 455,000 mt) due mainly to better internal crop production, raising the mill utilization to 174% from 158% the previous year. OER, however, was lower at 19.9% (2020: 20.0%) possibly due to the dura contamination from external crops that made up 35% of the total crops processed. Dura crops with thinner mesocarp normally have an oil content of 18% or lower. The Blankahan mill showed some improvement by processing 13% more FFB at 196,900 mt (2020: 174,200 mt) due to higher external crop purchases increasing mill utilization from 91% to 103% this year. Outside crops that made up 58% of the total crops processed by the mill in the previous year increased to 61% in 2021. Internal crop production was marginally higher as the average age of trees reached 27 years with replanting to be carried out when necessary. Replanting in Blankahan was 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 as expected in 2021, but are expected to perform better going forward. The state electric company resumed the uptake of electricity from the Blankahan biogas plant in 3Q 2021 as commercial activities pick-up steam. It sold about 1,900 MWh (2020: 2,500 MWh) of surplus electricity and generated $114,100 (2020: $151,800) in revenue. The contract to supply electricity was finally signed for two years. As for Tasik biogas plant, the authorities are currently evaluating its power production capacity and the local consumption. There is a realistic chance that the authorities will purchase the surplus electricity as the economy recovers from the lockdown. It also helps that the Indonesian government is promoting the use of green energy going forwards as part of its efforts to achieve the climate change mitigation promises. The sales from the biomass plant were lower in 2021 at $335,800 compared to $427,100 last year, as the plant exported 4% less dried long fibres at 4,710 mt compared to 4,930 mt last year. Average selling prices had fallen by 18% as foreign buyers had to contend with lack of containers as well as higher shipment costs. The production at the plant was temporarily halted in the last month of the year as it ran out of storage facilities as inventory built up due to logistic problems. This was the second time in the year where production had to stop due to high inventory and storage constraint. #### Bengkulu FFB production in Bengkulu, which aggregates the estates of Puding Mas ("MPM") and Alno produced 307,400 mt (2020: 304,000 mt), 1% more than 2020. Production from Bengkulu region has improved despite some areas being recently replanted as rainfall normalised to 3,500 mm in 2021 (2020: 4,000mm) with higher yield at 19.6 mt/ha from 18.2 mt/ha last year. Annual Report 2021 | Anglo-Eastern Plantations Plc 16 ## Strategic Report MPM and Sumindo mills processed a combined 807,000 mt (2020: 672,200 mt) of FFB in 2021 due to higher internal crop production as well as higher external crop purchases. External crop purchases increased by 35% to 464,800 mt from 344,700 mt last year due to better weather conditions increasing mill utilization to 160% from 133% in the prior year. CPO production for the year was 19% higher at 164,300 mt (2020: 138,200 mt) with OER for the two mills averaging 20.4%, lower from 20.6% last year. External crops made up 58% of the throughput compared to 51% in 2020. The remaining processed crop was purchased from other group companies. 900 ha palms were replanted in 2021 with good planting material. Another 3,200 ha of palms will be replanted from 2022 to 2024 as the matured palms in Aino and MPM reached the average age of 18 and 22 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 10,300 MWh (2020: 9,600 MWh) of surplus electricity, 7% higher and generated $484,900 in revenue (2020: $444,300). One of the engines in the plant was shut down for up to two months for repairs as delivery of service parts was delayed due to Covid-19 travel restriction. Occasional breakdown of transmission lines also meant that the biogas plant did not perform to its optimum capacity of two megawatt. ### South Sumatera FFB production in South Sumatera, which aggregates the estates of Karya Kencana ("KKST"), Empat Lawang ("ELAP") and Riau Agrindo ("RAA") produced 37,200 mt (2020: 34,200 mt), 9% higher than 2020. Better rainfall and more matured palms contributed to a higher harvest. While rainfall during the year improved in KKST and South ELAP, low annual moisture remains a real threat in this region which retards growth as the plantations are located behind a mountain range sheltered from the Indian Ocean. Annual rainfall in North ELAP decreased to 1,095 mm (2020: 1,861 mm) which also experienced ten months where rainfall fell below the minimum of 150 mm per month for healthy crop production. The yield of 6.5 mt/ha in South Sumatera reflected the improved conditions from 6.3 mt/ha the previous year. During the year about 17,100 new palms were spot planted in South Sumatera boosting the stems per hectare to 103 trees from the target of 105 trees. It incurred higher planting cost as frequent resupply of young palms was needed due to damage incurred by the freely roaming cattle owned by local villagers. Trenching and fencing the plantation were explored but were deemed uneconomical. Discussions with the local villagers were not productive and to avoid any strained relationship which can be detrimental in the long run, management decided instead to fence individual young plants to protect them from the cattle. With higher CPO prices, more FFB thefts were reported in 2021 as the region faced high unemployment during the pandemic. The management has also stepped-up security patrols. With the inherent problems of rainfall, terrains, security and non productive dialogues with the local villages, the Board arrived at a decision in the last quarter of 2021 to discontinue its operations in South Sumatera and has put the three plantations for sale in the open market as a going concern during the 1Q of 2022. The Board has arrived at its decision as a result of the low crop yield which is unlikely to improve and the continuing losses incurred in the region, notwithstanding the significant investments and efforts over the years. ### Riau FFB production in the Riau region, comprising Bina Piri estates, produced 139,600 mt in 2021 (2020: 133,200 mt) 5% higher than 2020. Rainfall was lower at 2,620 mm (2020: 2,850 mm) but was consistently above 150 mm per month except for February 2021. The yield for the year was slightly higher at 28.7 mt/ha from last year of 27.3 mt/ha. As 78% of the palms are between the ages of 24 to 27 years, there is a planned replanting process of 2,800 ha of palms from 2023 to 2026. The mill external crop purchase was higher by 18% at 266,600 mt compared to 225,300 mt last year, with the mill utilization rate improved to 141% from 125% last year. Overall the CPO production was higher by 12% to 77,500 mt compared to 69,100 mt in 2020. Despite the high yield, the region is contaminated by dura palms which made up 66% Annual Report 2021 | Anglo-Eastern Plantations Plc 17 ## Strategic Report ![img-11.jpeg](img-11.jpeg) FFB production in the Bangka region, of the crops processed by the mill. The mill therefore had a low OER of 19.1% compared to 19.3% in the previous year. ### Bangka FFB production in the Bangka region, comprising Bangka Malindo Lestari estates, produced 11,100 mt in 2021 (2020: 8,700 mt), 28% higher than 2020. Higher crop was due to a larger harvestable area and more palms having reached peak maturity. Rainfall averaged 2,370 mm in the year compared to 3,043 mm previous year. Yield declined slightly from 13.5 mt/ha to 13.4 mt/ha in 2021. With new planting in 2021 totalling 160 ha (2020: 706 ha), the total planting including plasma in Bangka has reached 3,036 ha (2020: 2,856 ha). The land compensation dialogue in Bangka was briefly interrupted for three months after local authorities requested the company to stop the process to facilitate an investigation following complaints against the village head. ### Kalimantan FFB production in Kalimantan which comprises the Sawit Graha Manunggal ("SGM") and Kahayan Agro Plantation ("KAP") estates was 281,500 mt in 2021 (2020: 249,500 mt) 13% higher than 2020 as more palms matured and reached the peak production age. The average age of palms in SGM and KAP were nine and five years respectively. During the year 767 ha of palms matured in SGM and KAP leading to its first harvest. The yield in Kalimantan recovered to 19.8 mt/ha from 18.6 mt/ha last year. Wetter-than normal weather prevailed in KAP at 4,490 mm (2020: 4,350 mm) while rainfall in SGM was lower at 2,320 mm (2020: 2,870 mm). New planting in SGM and KAP is expected to reach 1,000 ha next year. The long-term prospect for Kalimantan remains bright. ![img-12.jpeg](img-12.jpeg) Harvesting of tall palms The purchase of external and plasma crops in SGM reached 112,800 mt in 2021 which was higher by 64% compared to 68,900 mt last year. The total external and plasma crop at the SGM mill made up 29% of the total crops processed from 22% last year. With the throughput at the mill reaching 393,300 mt (2020: 312,000 mt), the mill utilization rate increased to 182% from 144% last year producing 94,500 mt of CPO, 28% more than 2020 of 73,900 mt. OER for the mill averaged 24.0% for the year compared to 23.7% last year and continue to outperform the rest of the mills in the Group. The SGM biogas plant generated 19% more electricity in 2021 at over 8,100 MWh (2020: 6,800 MWh) worth $399,900 (2020: $373,700). Negotiation has started with the state authorities to extend the contract to sell electricity, which is due to expire before the 2Q of 2022. Annual Report 2021 | Anglo-Eastern Plantations Plc 18 # Strategic Report As international borders remained mostly closed to non-essential travelling during the year, 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. Overall bought-in crops for Indonesian operations including plasma were 25% higher at 1.14 million mt for the year 2021 (2020: 913,200 mt). The average OER for our mills was marginally lower in 2021 at 20.5% in 2021 (2020: 20.6%). ## Malaysia The La Nina weather pattern towards the end of 2020 caused massive flooding and landslides which affected the evacuation of crops for the 1Q 2021 as internal roads and bridges badly damaged were repaired. FFB production in 2021 was 35% lower at 12,000 mt, compared to 18,600 mt in 2020. The plantation continued to experience a substantial shortage of workers which hampered not only field maintenance and application of fertilisers but harvesting resulting in crop losses. Due to international border closure throughout the year the attrition of workers for the past two years since the pandemic started could not be replaced. In addition, the under application of fertilisers at 10% of the recommended dosage resulted in undernourished plants and poor yield. To compound the problem further, supplier of fertilisers could not deliver for most part of the year as their manufacturing activities were forced to shut down during the lockdown. Although there was a partial lifting of the freeze on recruitment of foreign workers in late 2021, it will still take some time before any replacement workers can be found. In December 2021, parts of the plantation were closed for three weeks as seven of its foreign workers were infected with the Coronavirus. The palms, with an average age of 24 years, faced declining yield and stems per hectare steadily declined due to damage by wild elephants. The Malaysian plantation in 2021 generated a profit before tax after BA movement of $0.4 million compared to a marginal loss in 2020. The plantation obtained its mandatory Malaysian Sustainable Palm Oil ("MSPO") certification in January 2021. The financial performance of the various regions is reported in note 7 on segmental information. ## Commodity Prices The CPO ex-Rotterdam price started the year at $1,014/mt (2020: $878/mt) and trended upwards for most part of the year. The price was lowest at the beginning of March 2021 at $900/mt and peaked in November 2021 at $1,435/mt before ending the year at $1,305/mt (2020: $1,014/mt), averaging $1,211/mt for the year, 67% higher than last year (2020: $723/mt). While the FFB production in Indonesia as a country was marginally down from last year, the Malaysian's palm oil yields as a country dropped to nearly 40-year lows in 2021 as the plantation industry struggled with a shortage of workers and devastating floods in several parts of the country. It was reported that the Food and Agriculture Organisation's global edible oil index was up 91% and is expected to climb further as economies reopen following the Covid-19 lockdowns, boosting food and fuel consumption of edible oils. Besides labour shortages, many producers at the same time have been battling a range of impediments including heatwaves and vermin infestation that is driving collective stocks of world's most consumed edible oils - palm, soybean, canola and sunflower seed to their lowest levels in a decade. The pressure on stocks led to higher consumer prices. In the last one year, India has revised downwards its taxes on CPO, palm products and other vegetable oils several times to tame domestic inflation caused by rising prices of edible oils. The current market prices have been shaped by higher anticipated demand, slower growth in palm oil production and market dynamics of vegetable oils. Ukraine and Russia are major producers of sunflower oil and jointly export up to 70% of the worldwide production. The disruption in harvesting and planting caused by the current conflict between Ukraine and Russia would likely result in a higher demand for CPO and would sustain the current high prices. The export and movement in CPO prices are also influenced by Indonesian government policies. This is covered extensively in the Outlook section of the Strategic Report on page 50. Over a period of ten years, CPO price has touched a monthly average high of $1,395/mt in November 2021 and a monthly average low of $472/mt in November 2018. The monthly average price over the ten years is about $779/mt. Annual Report 2021 | Anglo-Eastern Plantations Plc 19 ## Strategic Report CPO CIF Rotterdam ![img-13.jpeg](img-13.jpeg) Rubber prices averaged $1,637/mt for 2021 (2020: $1,356/mt). Our small area of 262 ha of mature rubber contributed a revenue of $0.7 million in 2021 (2020: $0.6 million). Rubber continues to struggle with low prices. Lower tappable trees due to wind damage and dry bark were the main cause for lower rubber production. ### Corporate Development In 2021, the Group opened up new land and planted 1,701 ha (2020: 2,190 ha) of oil palm mainly in Kalimantan and South Sumatera, boosting planted area including the smallholder cooperative scheme, known as Plasma, by 2% to 75,204 ha (2020: 73,600 ha). Another 900 ha was replanted in Bengkulu. In 2022, the Group plans to plant 2,500 ha of oil palm which includes replanting of 1,200 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. Old quarters for workers throughout the plantations will be upgraded in 2022. New quarters together with recreation facilities will be added to accommodate more workers and families at the cost of $2.3 million. A further $420,000 will be spent to connect the plantations in Bina Pitri, MPM and SGM to the national electric grids as part of the Group's effort to reduce carbon emissions. This is expected to reduce fossil fuel consumed by the generators in the remote plantations. The construction of the seventh mill in HPP, North Sumatera has been delayed by frequent lockdowns caused by the pandemic, affecting the deployment of manpower at the construction site, as well as fabrication of mechanical works, interruption of supply chain and the transport of building materials. During the year, the concrete piling has completed together with the fabrication of a loading ramp, clarification tanks and conveyors. Cost of construction has spiralled to about $22 million as the mill, located on peat area, has to be built according to strict specifications laid out by environmental laws in Indonesia. The conventional anaerobic lagoon constructed from earth is not permitted on peat land due to possible seepage of effluent and contamination of ground water. A purpose-built treatment plant is required to treat the effluent from the mill to a quality specified for discharge to the water course. The effluent plant also includes two 4,000 mt anaerobic digesters and two 1,200 mt aeration tanks. A decanter for solid removal and oil recovery was also added to reduce the number of tanks required which in turn reduced the high cost of concrete piles for its foundation. Steel, which constituted a major part of the building and equipment appreciated by 15% during the construction period putting further pressure on project costs. The project is earmarked for completion by the 3Q of 2022. Our feasibility study concluded that it is more profitable to build a mill in KAP in Kalimantan to support its operation due to high logistic costs. KAP is currently transporting the FFB some 600km to SGM mill or, when this becomes too Annual Report 2021 | Anglo-Eastern Plantations Plc 20 ## Strategic Report arduous 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 4,000 mt each with minimum spare machineries at an estimated cost of $13 million. Due to the hilly terrain and steep ravines, the choice for a mill site is limited. Nevertheless a few possible sites were identified and geological survey and onsite inspections are in progress. Construction is expected to start next year as soon as formal approval from the authorities is received. To improve transport of FFB in our plantations and help deliver the FFB to the mills, the Group has budgeted to buy more dump trucks costing more than $1 million in 2022. This is necessary amidst rising logistic cost as independent transport companies especially in Kalimantan cannot supply adequate trucks to transport our harvest as many trucks are diverted to carry coal which pay better transport rates. In addition, the Group is expected to spend $1.2 million to improve the field roads and connectivity between estates and mills by building new bridges. The two vertical sterilisers/pressure vessels in Bina Pitri mill are 12 years old and are scheduled to be replaced, for safety reasons, at a cost of $370,000 in 2022. The fabrication and installation of an additional 45,000 kg/hour steam boiler in SGM mill costing $980,000 is expected to be completed in 2022 after a long delay caused by the pandemic. A second boiler is required to back-up the mill operation and to avoid any disruption as it enters its sixth year of operation. The mill is projected to process up to 380,000 mt of FFB in 2022. Upgrading works at SGM and Sumindo mills which started three years ago involving the addition of boilers, steam turbines, screw press, digester, CPO and kernel storages, clarification station, water and effluent treatment plants and sterilizer at a combined cost of $4.5 million are expected to be completed this year increasing their milling capacity to 60 mt/hr from 45 mt/hr. The Group plans to install an oil recovery system for its MPM mill at a cost of $1 million. This system extracts oil from its raw effluent as well as reducing the solid content of the effluent. The system, when fully operational is reportedly able to improve the OER by 0.2% to 0.3%. As the mill processes up to 420,000 mt of FFB annually, it could potentially recover up to 1,000 mt of CPO per year. Reducing the solids in the raw effluent will result in less silting in the ponds after extraction of biogas in the anaerobic lagoon. Corporate Social Responsibility Corporate Social Responsibility (“CSR”) is an integral part of corporate self-regulation incorporated into our business model. Law 40/2007 of the Indonesian Limited Liability Companies Article 1 Paragraph 3 defines corporate social and environmental responsibility as the company’s commitment to participate in sustainable economic development in order to enhance the quality of life and environment to benefit the company, local communities and the general public. Our Group embraces this responsibility for the impact of its activities on the environment, consumers, employees, communities, stakeholders and all other members of the public sphere. In engaging the social dimension of CSR, the Group’s business has taken cognizance of the contribution and further enrichment of its employees while continuing to make contributions to improve the well-being of the surrounding community. The Group sustainability policy and commitment to no deforestation and development on peat land, no open burning, no exploitation, no forced or child labour and other best management practices can be downloaded from the Annual Report 2021 | Anglo-Eastern Plantations Plc 21 Testing for river water pollution ## Strategic Report ![img-14.jpeg](img-14.jpeg) Vaccination at mill website under Corporate Governance. The Group also released a statement on the UK Modern Slavery Act 2015 which was published on the website under the same section. The majority of employees and their dependents in the plantations and mills are housed in self-contained communities built by the Group. The employees and their dependents are provided with free housing, clean water and electricity. The Group also builds, provides and repairs places of worship for workers of different religious faiths as well as schools and sports facilities in these communities. Over the years, the Group has built a total of seventy-seven mosques and nineteen churches across its estates. During the fasting month, the management team frequently broke fast with the employees from the estates and mills as well as with surrounding villagers. The Group has also sponsored and donated cows for sacrifice to celebrate religious festivals. The Group spent $221,300 (2020: $248,100) in 2021 to maintain these amenities and to support the communal activities. The Group provides free education for all employees' children in the local plantations and communities where they work. The access to education and the spread of knowledge to hundreds of children across remote locations provide a chance to overcome poverty, whom otherwise may be deprived and without prospect for the future. In addition, the Group provides computers and funding to construct educational facilities including laboratories and libraries. The salaries of teachers in the estates and the cost of buying and running the school buses to transport employees' children are provided by the Group. Over the years a total of thirty-nine schools, which comprised of twenty-two pre-schools, eleven primary schools, five secondary schools and one high school were built with a combined current enrolment of over 4,369 students. It currently employs one hundred and sixty-three teachers on the estates. The Group operated forty-one vehicles and spent some $793,100 (2020: $691,000) in running the schools and operating the buses in 2021. As part of the Group's contribution to education, it provides scholarships to qualified students from the communities as well as our employees' children to pursue tertiary education. One hundred and twenty-nine children of our employees were sponsored in 2021 at a cost of $160,350 (2020: $139,600) since its introduction in 1999, to study in various universities in Indonesia. The popular courses range from Engineering, Education, Economics to Agriculture. Sixty-two of these children have successfully graduated from the universities with a number of them now working for the Group. ![img-15.jpeg](img-15.jpeg) Waste water treatment plant The Group continues to provide free comprehensive health care for all its workers as we believe that every employee and their dependents should have easy access to health services. We have established twenty-three clinics operated by qualified doctors, nurses and hospital assistants in the estates. The Group upgraded two of its clinics in North Sumatera and Bengkulu to meet the minimum standard required by the government under the country's Health and Social Security Agency. The upgraded clinics also provide health care services to the surrounding community without the need to travel to Annual Report 2021 | Anglo-Eastern Plantations Plc 22 ## Strategic Report faraway cities for medical treatment. With the pandemic on our doorsteps, management have equipped all the clinics, particularly those in remote locations, with personal protection equipment, ventilators, oxygen tanks and oximeters. The Group also operates 16 ambulances to support emergency transportation needs within the estates, mills and surrounding villages. In addition, the Group organised fogging to prevent the spread of dengue mosquitoes. The world has been ravaged by the uncertainty brought about by the Covid- 19 pandemic since the end of 2019. To prevent the spread of its infection within our operations, the Group has put into place stringent precautionary measures to protect all our personnel. Mass testing was, and continues to be, conducted at the Indonesian operations to check for infection. A Standard Operating Procedure was also established to dictate the day-to-day operations at the office which includes temperature checks, social distancing measures and alternate working day arrangements. A specialist consultant was engaged to review safety measures in the office and plantations and put in place additional protocols to educate workers to combat the spread of the virus. Movements within the Group’s estates have been tightly restricted and, unless in cases of emergency, access has been denied for external visitors. All our estates have appropriate plans to isolate and quarantine individuals, even whole divisions or estates, including stopping all field work if situations require it. Remote working arrangements are in place for all offices, and travel by the Group’s staff has been reduced to essential travel only. Due to the large workforce employed in the plantations, routine retesting with rapid virus test-kits is conducted by qualified nurses for all the office and plantation workers to ensure early detection leading to isolation. While the Indonesian government continues to prioritise vaccine distribution to high risks populated regions, the management continues to engage and work with relevant authorities as part of its moral and ethical responsibility to help speed up vaccination rates for its employees and their families especially in remote locations where accessibility is a problem and vaccination rates are low. The Group spent a total of $987,000 (2020: $98,600) in 2021 to help surrounding communities, clinics, and public hospitals with donations in the form of staple food, oxygen tubes, essential medicines, masks, vitamins and other items related to Covid-19. The Group is particularly concerned for employees in one remote location in South Sumatera where less than 20% of its employees had completed the vaccination programme. The Group briefly participated in the government vaccine “gotong royong” a public-private partnership whereby private companies could purchase the vaccine for its employees. This programme was however cancelled after strong objections were raised by people over the fairness of this practice and complaints of diverting the vaccines to the privileged over the poor who has little access. The Group maintains a register of all employees who had been vaccinated and also identified high risk employees with comorbidities for counselling. Given the higher risk of contracting the Coronavirus for the Annual Report 2021 | Anglo-Eastern Plantations Plc 23 Disinfection of estate church premises Donating oxygen tanks to hospitals ## Strategic Report ![img-16.jpeg](img-16.jpeg) Upgrade of public roads employees are valuable assets in order to run an efficient, effective, profitable and sustainable business and operations. Selected employees are given the opportunity to attend seminars and external training to enhance their working skills and capability. The Group constantly recruits potential field employees who are sent to the Group's central training facilities in Blankahan, set up in 2014, to undergo a rigorous twelve-month training programme which includes theory and practical fieldwork. A total of five hundred and eleven employees have participated in the programme since its inception in 1993 with 35% of participants still working for the Group. Over the years, one employee has successfully been promoted to General Manager level with another twenty-four being employed in various senior positions in the head office, plantations and mills. Separately, the Group also sends their security personnel regularly to training facilities organised by the Police to be certified. The Group also recognises its obligations to the wider farming communities in which it operates. The Indonesian authorities have established that not less than 20% of the newly planted areas acquired from 2007 onwards are to be reserved for the benefit of the smallholder cooperative scheme, known as Plasma, and the Group is integrating such smallholder developments alongside its estates. The Plasma development has commenced in stages for its estates in ![img-17.jpeg](img-17.jpeg) Donation to orphanage unvaccinated employees, the Group has restricted all business related travel for the unvaccinated. In remote and isolated locations where piped water is not available, the Group drilled tube wells to provide clean water. Related healthcare expenses for full and part-time field workers including monthly contributions to Health and Social Security Agency in 2021 were $1.6 million (2020: $1.5 million). A strong commitment to CSR has a positive impact on employees' attitudes and boosts employee recruitment. The Group realises that emphasize and sustainable business and external training to enhance their employees who are sent to the Group's twelve-month training programme which participates in the Group. Over the years, one employee has successfully been promoted to General Manager level with another twenty-four being employed in various senior positions in the head office, plantations and mills. Separately, the Group also sends their security personnel regularly to training facilities organised by the Police to be certified. The Indonesian authorities have established that not less than 20% of the newly planted areas acquired from 2007 onwards are to be reserved for the benefit of the smallholder cooperative scheme, known as Plasma, and the Group is integrating such smallholder developments alongside its estates. The Plasma development has commenced in stages for its estates in Sumatera and Kalimantan. Out of the 8,382 ha plasma commitment, the Group has planted oil palm in 4,500 ha. In 2021 the Group received 43,300 mt of FFB from Plasma schemes compared to 37,700 mt the previous year. Total revenue generated by Plasma cooperatives was $6.5 million in 2021 against $3.8 million in 2020. In order to aid the development of Plasma schemes, the Group provided corporate guarantees of over $16 million through its subsidiaries to local banks to cover loans raised by the cooperatives. The Group also assisted the cooperatives to obtain the proper Annual Report 2021 | Anglo-Eastern Plantations Plc 24 ## Strategic Report land rights certification from the local land office, in which 1,431 ha were approved and certified until 2021. The Group supported the Kas Desa smallholder village development programme to supplement the livelihood of the villages. The Group has to-date financed, developed and managed twenty-three smallholder village schemes of oil palm across four companies. In 2021, two of these smallholders’ village schemes decided to self-manage and exited from the programme. In addition, the Group also develops infrastructure such as the construction and repair of bridges and maintained over 282 km of external roads in 2021 at a cost of $3.7 million (2020: $5.0 million). The Group also provided initial aid and seed capital to villagers such as fruit seedlings, fish fry, cattle and ducks to start community sustainable programs. The Group started a vegetable farm in a one-hectare site in North Sumatera in 2018 where it planted various organic vegetables. The produce was sold to employees at subsidized prices to reduce their cost of living as well as to promote heathy living. It also donated some of the produce to local charitable homes. The Group leased eight hectares of land just outside Kuala Lumpur, Malaysia and started to clear the land in 2020 to build greenhouses for organic farming. It aims to produce organic vegetables and fruits in an environmentally sustainable manner and make them available to consumers at affordable prices as part of its corporate social responsibility. Substantial part of the produce is donated to orphanages and retirement homes. Indonesian Sustainable Palm Oil (“ISPO”) The ISPO certification is legally mandatory for all plantations in Indonesia. In March 2012, ISPO, which is fundamentally aligned to Roundtable on Sustainable Palm Oil (“RSPO”) principles, has become the mandatory standard for Indonesian planters. In comparison, RSPO has the most comprehensive social impact assessment requirements and the strongest measures for biodiversity protection. Even though the Presidential Decree 8/2018 that imposed a moratorium on forest clearance had expired in 2021, we continue to practise strict protection of primary forest areas as outlined in our Sustainability policy. A Steering Committee was established to work out a roadmap to support the ISPO implementation at mills and estates. Workshops and training sessions on occupational safety and healthcare were carried out to inculcate a safety culture in workplaces at all the estates and mills. The Group compiles and reviews statistics on work related accidents in its operations. Any incident resulting in fatality or serious injury will be rigorously investigated to identify the cause so that corrective action can be implemented to prevent future incident. In 2021 the Ministry of Labour awarded six of our operating companies the Zero Accident Awards in North Sumatera in recognition of the companies’ effort to reduce accidents at workplaces. The Group continued to upgrade its agricultural chemical stores and diesel fuel storage tanks in various plantations and mills to meet safety and environmental standards. Every estate under ISPO is required to have a fire team with each personnel fully trained and equipped with certificate of competence issued by the fire departments. Our Group conducts a fire drill at least once a year. Watch towers are constructed in every estate to monitor fire outbreaks. Standard operating procedures were refined and documented based on sustainable oil palm best practices. The Group also conducts internal audits using an audit checklist adopted from the above practices to determine the level of compliance. Annual Report 2021 | Anglo-Eastern Plantations Plc 25 Build river crossing ## Strategic Report The Group has worked closely with appointed certification consultants in the implementation of ISPO standard. To- date twelve companies have been ISPO certified. The certification audits for the remaining four companies have started. The second stage of the certification process however cannot proceed until the companies obtain their land titles or Hak Guna Usaha (“HGU”). ISPO certification provides third party verification and confirmation that the companies are operating according to national and international standards. During the year, ISPO certification in two companies were renewed after independent audits were carried. The Group targets full ISPO compliance by 2022. The Group intends to embark on RSPO certification once all the companies in the Group are ISPO compliant. The Group has engaged a third-party consultant to study the feasibility, obstacles, gaps and costs towards a RSPO compliance. Once completed the detailed report will be uploaded on our website. At the same time the Malaysian plantation has obtained its MSPO certification in January 2021. Environmental, Social and Governance (“ESG”) Practices AEP believes that the responsible stewardship of our environment is critical in benefiting our consumers, employees, shareholders and society in general, thus maintaining the industry’s long-term prospects. The Group has a dedicated sustainability manager based in Medan, Indonesia within an Environmental Health and Safety (“EHS”) and sustainability department overseen by our Indonesian President Director. On the ground, the sustainability team is assisted by a team of staff in each of our estates. A group sustainability policy was published in 2019 to underline our commitment to sustainable practices within our estates. This policy covers responsible development, environmental protection, conservation of biodiversity, workers’ rights and safety, emissions and business ethics, among others. The group also participates in the Sustainable Palm Oil Transparency Toolkit (“SPOTT”) assessment by the Zoological Society of London (“ZSL”) that uses publicly available information to annually assess palm oil producers on the transparency of their commitments to environmental, social and governmental best practice. The palm oil industry has continuously received close scrutiny in the media due to concerns on global warming and rainforest destruction. Realising this, the Group has adopted a zero deforestation, zero peat planting and zero burning policy throughout our group. When it comes to replanting, felled palm trunks are chipped, shredded and left to decompose on the site. This mitigates the release of greenhouse gases commonly associated with open burning through the traditional land-clearing method of slash-and- burn. Chipping and shredding palm trunks also enriches soil organic Annual Report 2021 | Anglo-Eastern Plantations Plc 26 Wildlife in and surrounding our estates Wildlife in and surrounding our estates ## Strategic Report matter and recycles nutrients back onto the soil. Where land is sloping, terraces are built which helps to prevent landslides and soil erosion, conserve the water and nutrients and provide better accessibility for operations. Conservation pits and sumps are also constructed to harvest and contain rainwater. Legume cover crops are planted to minimise soil erosion, preserve the soil moisture and improve soil chemical and physical properties, thus reducing the use of chemical fertilisers. In mature areas, fronds and EFB are neatly stacked on the inter-rows to allow for the slow release of organic nutrients while minimising soil erosion. Estates with sandy areas use soft grass, Nephrolepis biserrata ferns and cut fronds to cover bare ground to increase soil moisture and improve organic matter contents. The effluents discharged from our mills are fully treated in anaerobic lagoons and aerobic tanks to reduce its biological oxygen demand (“BOD”). The final discharge is applied to the estate’s land as fertilisers and the BOD is tested regularly to ensure that it is below the legal limit for land application in Indonesia. The Group is working towards a zero-effluent policy whereby no by-products from the production of CPO are discharged into rivers. The Group’s four biogas plants further enhance the treatment of effluents in the mills and at the same time mitigate greenhouse emissions. The trapped biogas is used to generate and supply power to its biomass plant, as well as to the national grid to reduce dependency on fossil fuels. Similar undertakings for the Group’s mills are planned and shall be implemented in stages. The Group intends to equip all our mills with biogas facilities and sell the surplus power generated from them. The Group is committed to implementing good agricultural practices as spelt out in its standard operating procedures for all activities. An Integrated Pest Management system has been adopted to control the population of damaging pests and to improve biological balance while reducing dependency on chemical pesticides. Barn owls, which are natural predators, have been introduced to control the rat population, replacing the use of rat baits. Beneficial plants such as Turnera subulata, Cassia cobanensis and Antigonon leptopus were planted to attract natural predators for biological control of bagworms and leaf-eating caterpillars. Annual Report 2021 | Anglo-Eastern Plantations Plc 27 Staff housing/community cleaning Health and CPR training ## Strategic Report We are committed to minimise the usage of toxic pesticides and herbicides and will not hesitate to phase them out once suitable substitutes are available. Our sprayers are regularly trained in the safety and proper spraying techniques by using judicious dosages. The chemicals are kept in designated storage and examined at regular intervals. Employees who handle the use of chemicals are provided with on-site washing facilities and undergo medical examination routinely. The Group enforces standard occupational safety measures like the use of protective suits and equipment when mixing, loading and applying pesticides which is mandatory by the Manpower and Transmigration Ministerial Decree No. 08/2010. Managers and employees risk being penalized and disciplined as safety standards compliance is audited from time to time. ISPO certified companies are also prohibited from using 36 banned active ingredients used in pesticides which can cause various health issues in humans and the environment. Highly toxic pesticides such as Paraquat have been completely eliminated in our practice. Pesticides that fall under the WHO Class 1A and 1B classification, as well as those that fall under the Stockholm and Rotterdam Conventions are used only under exceptional circumstances and under strict supervision. In the meantime, different cocktails of safer pesticides are being evaluated as alternatives. The Group has in place a standard operating procedure that requires the management to be informed of instances of pesticide poisoning among its pesticide applicators. In order to minimise accidents at workplaces, regular training and refresher courses are held to instill the importance of safe working practices. Warnings and reminders are displayed at the mills and estates to remind the workers on their safety. Warning signs are placed at strategic locations such as speed limits in housing estates and warning against crossing Irish bridges when river water is at a dangerous level. The Group continues to comply and preserve High Conservative Value (“HCV”) areas recognised by the Department of Forestry. Every development has gone through the proper environmental impact analysis. Environmental impact assessment studies, environment management and monitoring efforts are retained under the Indonesia Omnibus Law passed in 2020, companies are however no longer required to obtain environmental license. All HCV areas were mapped with boundaries clearly marked by independent surveyors to ensure that the Group does not plant in these sensitive areas. The Group patrols these protected areas to ensure no encroachment and maintain regular monitoring and management plans to preserve the flora and fauna of these sensitive areas. The Group has identified about 7,831 ha as riparian reserves and another 5,105 ha as areas of HCV within its land. Natural vegetation on uncultivable lands such as deep peat, very steep areas and riparian zones along watercourses and mangroves are spared from planting in order to preserve biodiversity and wildlife corridors as well as to check erosion. Peatland is considered to be one of the most efficient carbon sinks and any burning or drying will release the sequestered carbon dioxide into the air contributing to global warming. The Group has a strict no-peat policy and no longer plant in peat areas since 2019. Degradation of the mangroves on the other hand causes coastal erosion and harm biodiversity and economic losses for communities that depend on them for a living. Progress has been made in recent years to step up environmental protection in Indonesia, though implementation and monitoring is still weak. In Indonesia where drought occurs regularly, an emergency response team is set up in every estate armed with the proper equipment and gear to put out fire and prevent them from spreading during the dry months. Regular training on fire-fighting techniques and safety is provided by the fire departments. Our estates have also invested in modern technology by utilising drones to pinpoint areas of fire outbreak whenever they are detected by the watchtowers. These drones are particularly useful in remote areas where accessibility is restricted. According to Indonesian Law No. 41/1999 on forestry, a deliberate act of forest burning could lead to 15 years imprisonment and a fine of up to Rp5 billion or about $350,000, while negligence act that leads to a forest fire is punishable by a 5 year imprisonment and a fine of up to Rp1.5 billion or $105,000 for environmental crime. The government is stepping up its enforcement. All sacred and customary lands are set aside and also preserved by the Group out of respect for the local tribes and customs to pray and conduct their ritual ceremonies. Some of these locations are posted on the company’s websites. The six mills in the Group are operating in compliance with criteria set by the Program for Pollution Control Evaluation and Rating (“PROPER”) overseen by the Indonesian Department of Environment. Many of the criteria set by PROPER are also part of the ISPO requirement. Four of the mills are officially graded Blue and rated to adhere to the criteria set for the management of waste and compliance to environmental conservation over water resources, land development, air and sea pollution and dangerous and toxic waste treatment which impact the environment. The certification of another mill is currently under the review by the new head of the Indonesian Environmental department. Although no official grading is required for the remaining one mill, it is in full compliance of the PROPER criteria. By 2022 the six Annual Report 2021 | Anglo-Eastern Plantations Plc 28 ## Strategic Report mills will be certified to ISO 14001:2015 (Environmental Management System) standard. Implementing an environmental management system can provide the mills, the ability to manage environmental performance through more efficient use of resources and will also increase the confidence of internal and external parties that the environmental impacts of its activities have been measured, managed and continuously improved. The International Sustainability and Carbon Certification (“ISCC”) is issued by ISCC System GmbH, a global certification body based in Cologne, Germany. The criteria used in the certification process are: • Implement social and ecological sustainability criteria • Monitor deforestation-free supply chains • Avoid conversion of biodiverse grassland • Calculate and reduce greenhouse gas (“GHG”) emissions • Establish traceability in global supply chains The estates and mill in Tasik Raja were ISCC certified in 2021 and will be re-certified in 2022. A certification identifies a company as a responsible player in the industry that has taken efforts to produce sustainable CPO. We have continued to increase the traceability of our external FFB processed in our Group’s mills and have finally achieved 100% traceability to farm. The Group maintains a complete database of every one of our smallholders within our supply chain and know their precise locations, with each arrival to the Group’s mills recorded and its origin verified. By keeping a close relationship with our suppliers, we are able to not only support them with technical and management expertise, but also to inculcate our sustainability policies in their practices. More details may be obtained from the Company’s website under our Sustainability dashboard which covers the Environment, CSR, Workers’ rights and safety, Corporate Governance and Sustainability certification. Management for Climate Risk Global concerns about sustainability are steadily rising. Many countries are working to prevent climate change with various targets set to minimise the effects of global warming. A report by the World Resources Institute (“WRI”) calculates that agriculture contributes more than 11% of global greenhouse gas (“GHG”) emissions with most agricultural emissions coming from soil erosion and land clearance. Indonesia, where AEP predominately operates sits between the Pacific and Indian oceans, which exposes it to the naturally occurring El Nino and La Nina climate pattern, globally the most significant cause of extreme weather. Climate change is expected to increase the frequency of more severe weather ranging from frequent drought and severe floods in the coming years. In this regard the Group has expanded its climate-related disclosures and is taking initial steps towards aligning with the recommendations of the Task Force on Climate-related Financial Disclosure (“TCFD”), for which a disclosure table has been added on page 39. Identifying and assessing risk Executive staff and Directors are responsible for implementation of control procedures and for identifying and managing business risks. The Executive Committee meets monthly to discuss the operation of the business as well as all strategic risks, and is chaired by the Senior General Manager from Malaysia who reports to the Board of Directors. The EHS and Sustainability Department reports to the Executive Committee on material local risks and periodically updates on the monitoring of these risks, identified by representatives of the Department based at each of our estates. Any plans, objectives and targets related to climate risk are discussed annually, as well as when the need arises. In 2021 we consulted with our external sustainability Partners, Avieco, to prioritise Group-level climate-related risks and opportunities identified previously, as detailed in the table below. During this process, senior managers and Directors from across the business were surveyed to understand the relative materiality of a range of physical and transition risks. Materiality was defined by calculating a risk score based on the relative frequency or likelihood of a risk materialising in a 12-month period, and the potential magnitude of impact based on change in operating profit. A workshop with senior managers and Directors was facilitated by Avieco to determine how the business expects these Annual Report 2021 | Anglo-Eastern Plantations Plc 29 ## Strategic Report risks to change over time, with the relevant risk mitigation/adaptation measures identified. Similar assessment was not repeated for the year 2021 as we do not believe the risks to be materially different from what was assessed previously. Influence of climate-related risks and opportunities on strategy • Products The adverse perception of palm oil as an environmentally unfriendly and non-renewable source, particularly in EU, continues to feature in recent years, touching on issues including deforestation, emission of greenhouse gases, planting on peatland and land rights. AEP is committed to ensuring that our products are produced in a sustainable way. This is realised by not clearing forests (zero deforestation), not planting on peat (zero peat) going forward, respecting and protecting human rights, and committing towards the traceability of our products. • Supply chain Severe adverse weather conditions, such as tropical storms, can result in extended business interruption through disruption to our supply chain and to local transportation services. For example, FFB produced in KAP are sold to local millers (rather than primary customers more than 600km away) during the wet season. This is because transport time more than doubles as lorries are frequently stuck in mud as untarred public roads are easily damaged by incessant rain and floods. The Group has completed its site selection to build the KAP mill and has prepared to apply for the relevant approvals and permits required to build the mill in 2022. • Operations To progressively reduce the greenhouse gas emissions per metric ton of CPO produced in the next few years, the Group plans to construct biogas plants at our remaining palm oil mills, on top of our four existing biogas plants. Our plants will be used to trap the biogas from the anaerobic treatment of the palm oil mill effluent and generate electrical power. In addition, the Group consistently practices good agricultural practices such as zero burning, integrated pest management, soil and water conservation and recycling of biomass. When it comes to replanting, the old palms felled are chipped and shredded and left to decompose at the site. This mitigates the greenhouse gas emissions commonly associated with open burning when land is cleared through the traditional method of slash-and-burn. It also enriches the organic matter in the soil and recycles nutrients back onto the soil. Annual Report 2021 | Anglo-Eastern Plantations Plc 30 ## Strategic Report Material Climate-Related Risks and Opportunities For AEP | Policy & Compliance Import tariffs and taxes and All of our Indonesian No significant | | --- | | Legal Market & with changing other import restrictions plantations are currently Changes in Negative perceptions about palm As tenders are performed change. The Group has | | Reputation regulations imposed by importing countries certified under ISPO, buyer oil and its links to deforestation on a weekly basis we do not commissioned | | will affect the demand for CPO except those for which we preferences / can affect market find ourselves overly reliant an external | | and its derivative products, and are awaiting land titles. Our Difficulty access/demand and possibly on a single customer. We consultant to | | can encourage substitution by Malaysian plantation has accessing lead to changes in international ensure transparency in our conduct an | | other vegetable oils. The ISPO also received the Malaysian capital legislation or regulations. Many palm oil production RSPO gap | | certification, which requires Sustainable Palm Oil large buyers have targets to practices through annual analysis report. | | producers to mitigate their certification. Our mill in Alno source a certain % of palm oil disclosure to Sustainability The objectives | | from RSPO certified producers. Policy Transparency Toolkit environmental impacts, is has received The are to | | The loss of a major customer (“SPOTT”) and certification legally mandatory for all International Sustainability determine the | | through a lack of RSPO as detailed above. plantations in Indonesia and and Carbon Certification, Group’s | | therefore noncompliance and we are in the process of certification may impact eligibility for | | profitability. We communicate regularly presents a financial risk through gaining ISO 14001 certification | | with buyers and capital fines. In addition, we expect certification to improve our and costs to | | additional climate-related PROPER rating. Through Access to capital, through providers, to understand close the gap. | | disclosure, aligned with the this report we have also banks and investors, is also their changing RSPO | | recommendations of the TCFD, begun the process of increasingly tied to the ability to expectations, and are certification | | to present both a risk and an aligning with the TCFD evidence the sustainability of investigating the value of may increase | | opportunity to the business by recommendations. palm oil products, with several RSPO to the business. Our opportunities | | strengthening resilience to large banks and investors financial position also and reduce | Annual Report 2021 | Anglo-Eastern Plantations Plc 31 | ongoing changes in regulatory RSPO members. currently negates the need Type Primary risk/ Rationale for inclusion as Management approach reputation and Changes from | | --- | | expectations. for financing through bank opportunity priority risk /opportunity demand risks. 2020 to 2021 | | driver loans. Key = Opportunity / Risk | ## Strategic Report | Products & Development Palm oil can be used to One of our mills possesses No significant | | --- | | Energy Use of lower Palm oil mill effluent Four of our mills are Services of new produce a range of products, a biomass plant which The Group is change. | | Source emission (“POME”) is used as a equipped with biogas plants products including low-carbon converts “empty fruit pursuing a | | sources of feedstock in anaerobic to capture biogas and alternative fuels and bunches” into dried long Clean | | energy digesters to produce biogas generate electricity for sale materials. The development fibres to be exported to Development | | of new products can provide China for use in mattresses which contains about 60% to the state authorities. This Mechanism | | both reputational and and products such as methane. The biogas is also reduces the need to (“CDM”) | | financial opportunities, furniture. We are also purified and used as a fuel in purchase diesel for our project at two | | biogas engines to generate estates, as they are instead despite in many instances exploring commercial mills which | | being expensive to produce. avenues for bottled electrical power which supplied power by the grid, have no biogas | | For example, increasing methane gas (“Bio-CNG”), reduces our reliance on therefore reducing our plant. Awaiting | | diesel. emissions. demand for biodiesel in which we can also use as a Indonesia | | markets such as China offers source of renewable fuel in regulation on | | additional sources of boilers, or as a replacement carbon credit | | revenue. However, policies in for diesel fuel for our FFB trading. These | | the EU to reduce and phase carrying trucks within the projects are | | out the use of palm oil in estates. This can provide a expected to | | biodiesel by 2030 means that reputational benefit, provide | | this opportunity may be increased operational significant new | Annual Report 2021 | Anglo-Eastern Plantations Plc 32 Type Primary risk/ Rationale for inclusion as Management approach limited. resilience, and new Changes from opportunities opportunity priority risk /opportunity revenue streams. 2020 to 2021 for the Group. driver ## Strategic Report | Droughts Dry periods affect palm oil Legume cover crops are | | --- | | Physical Heavy rainfall Excessive rainfall generally Where appropriate, Moderate La | | yields in the short and medium planted to minimise soil | | & flooding leads to poor pollination of bunding is built around Nina brought | | term through moisture stress erosion, preserve soil | | palms and reduces the flood prone areas and more rain to | | and can result in wildfires that moisture and improve soil | | effectiveness of fertilisers. High canals/drainage/retention most estates. | | may damage the palms. chemical and physical | | levels of rainfall can also disrupt ponds and water gates are However no | | Drought events are localised to properties. In mature areas, | | estate operations and result in constructed and adapted to major | | our Kalimantan and South fronds and EFB are placed | | harvesting delays with loss of evacuate surplus water. flooding was | | Sumatera estates, where long inter-rows to allow the slow | | FFB or deterioration in fruit Riparian reserves are also reported, and | | droughts (>3 months) can release of organic nutrients | | quality. Where leading to a protected to mitigate flood the risks | | affect soil quality and lead to a while minimising soil | | reduction in revenues, risks. Where the land is remained | | lower yield the following year erosion. Conservation pits | | insurance cover may not be undulating, we build similar to | | (~10-15% decrease at most). and sumps are constructed | | available or may be terraces for planting which those | | Lower rainfall provides to harvest and contain | | disproportionately expensive. helps to prevent landslides, previously | | opportunities, however, to rainwater, whilst the | | Periods of more intense ensures that water runs off assessed. | | repair and realign roads to spreading of oil mill effluent | | precipitation can also benefit into groundwater stores, | | improve the transport of crops. in lines provides a water | | AEP, by enabling the conserves nutrients | storage medium. conservation of more water to effectively, and provides ‘Terracing’ also ensures mediate dry periods. better accessibility for that water runs off into operations. Where groundwater stores. We are practical, natural disasters also closely following No Annual Report 2021 | Anglo-Eastern Plantations Plc 33 | Type Primary risk/ Rationale for inclusion as Management approach are also covered by Changes | | --- | | developments of drought- significant | | opportunity priority risk /opportunity insurance policies. from 2020 to | | resistant oil palm varieties. change. | | driver 2021 | ## Strategic Report Pests & Rhinoceros beetle or Oryctes Pest and disease events No significant disease damage has been observed in are localised, with early- change. areas of large-scale replanting, warning provided by whilst plantations have supervision and monitoring, previously been detrimentally and generally impact impacted by stem rot. More immature palms. Outbreaks extreme fluctuations in are managed through Physical Fires During drought season the risk Fire response crews are No of fire is present at several stationed in each estate, precipitation may drive biological controls, such as significant estates, especially where with regular training on increased damage from the planting of beneficial change. neighbouring land is burnt for firefighting techniques and bagworms and leaf beetles. plants that host natural crop cultivation by locals. El safety provided by local fire predators to divert There is evidence that bagworms from oil palms, Nino weather events can departments. Ditches and indirectly drive widespread boundaries are created to pollinating weevils, which help and the introduction of barn forest fires and haze, although prevent the spread of fire, to pollinate palm trees, are owls to control rats. the severity of El Nino events whilst watch towers have showing smaller flight Individual estates have also appears to be decreasing as a been built in every estate to capabilities and pollinating less been replanted with more result of changing climatic pinpoint outbreaks of fire as because of changing climatic resistant anti-Ganoderma conditions. material to reduce the conditions. The financial soon as smoke is detected. threat of stem rot. A variety impact of fire damage is The Group has also of planting materials are relatively low to the Group due invested in drones to to the diverse geographical pinpoint outbreaks of fire also being considered to spread of plantations. where accessibility is provide variability and The full climate risk report can be downloaded from the AEP website. pollens, to mitigate changes restricted. Where practical, natural disasters are also to pollinating insects, and Annual Report 2021 | Anglo-Eastern Plantations Plc 34 | Type Primary risk/ Rationale for inclusion as Management approach covered by insurance hand pollination can also be Changes | | --- | | opportunity priority risk /opportunity policies. carried out where required. from 2020 to | | driver 2021 | # Strategic Report ## Carbon Reporting AEP recognises that our global operations have an environmental impact and we are committed to monitoring and reducing our emissions year-on-year. We are also aware of our reporting obligations under The Companies (Directors' Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018. As such, we continue to report on our energy and carbon performance and are committed to transparent communication about our environmental impact to our stakeholders. ### 2021 Performance Summary AEP's total carbon emissions have reduced by 15% in 2021. This is primarily due to a reduction in land clearance activities (-26% drop in emissions). As an agricultural business our carbon footprint is closely linked to our land management and planting practices. This is currently exacerbated by the lack of amortisation (the period over which land clearance emissions should be distributed) of our land-based emissions. The sequestration across our estates balances some of the increases in emissions, though the amount of carbon dioxide sequestered has reduced by 14% in 2021. This is due to the age profile of our estates, as oil palm at the beginning and nearing the end of its crop cycle does not have as great a sequestration potential as those in the middle of the lifecycle. Our operational emissions have increased by 8% in 2021, driven primarily by an increase in fuel use (diesel and biomass) and Palm Oil Mill Effluent ("POME") treatment. Our overall production of CPO increased by 17%, which has driven the increase in emissions from the treatment of the effluent. Our overall transport emissions have decreased both onsite (-44%) and for third party (-13%) transport. This comes despite an increase in FFB production, highlighting the increases in efficiency of our transport planning. ### Energy and Carbon Action In the period covered by the report AEP has not undertaken specific emissions and energy reduction initiatives. However, we have reviewed our past carbon footprint performance and conducted an exercise to establish specific emissions reduction targets for the business. We are aware of upcoming changes in best practice guidance, both in the form of the GHG Protocol land sector and removals standard and across wider target setting guidance. We will review our approach once this guidance has been finalised and released over the course of 2022. ### Metrics and Targets AEP commits to a reduction in absolute scope 1 and 2 emissions by 20.5% by 2030 from a 2019 baseline. This target does not include the impact of sequestration on site, as activity on this is limited by the age profile of our crop. In 2021 our scope 1 and 2 emissions (excluding sequestration) were 6% higher than in 2019. We have identified the key areas we need to take action as a business to achieve this target, including the conversion of our remaining mills to biogas plants from anaerobic lagoons, limiting our land clearance levels, implementing a no new peat policy and investigating our peat management processes, particularly regarding management of drainage depths. We commit to reporting progress towards this target each year, and revisiting its appropriateness and ambition on a regular basis to maintain its value to our business and stakeholders. Annual Report 2021 | Anglo-Eastern Plantations Plc 35 ## Strategic Report 2021 Results Methodology The methodology used to calculate the GHG emissions is in accordance with the requirements of the following standards: • World Resources Institute (“WRI”) Greenhouse Gas (GHG) Protocol (revised version) • Defra’s Environmental Reporting Guidelines: Including Streamlined Energy and Carbon Reporting requirements (March 2019). Following an operational control approach to defining our organisational boundary, our calculated GHG emissions from business activities fall within the reporting period of 1st January 2021 to 31st December 2021 and use the reporting period of January 2020 to December 2020 for comparison. Note on agricultural emissions Emissions from agricultural cultivation form the most significant part of our carbon footprint. As such we have assessed these emissions in line with the methodology development by the Roundtable for Sustainable Palm Oil (RSPO). Version 4 of the RSPO’s PalmGHG application has been used to source relevant emission factors and provide a sense check of calculations. We include emissions from agricultural cultivation on our own estates within our direct scope 1 and estimate these agricultural emissions from any outgrower crops processed in our mills, included within our scope 3. This is consistent with previous years reporting and is aligned to the WRI reporting principles of completeness and relevance, whereby scope 1 are the direct emissions sources that we own and control. As mentioned above, we will review our approach upon the release of the new GHG Protocol guidance. Emissions from land clearance are only reported for the land clearance occurring during the reporting year in question due to lack of industry acknowledged guidance on amortisation. We review industry guidance each year and update our methodology as appropriate. There has been no further guidance throughout 2021, thus the approach taken this year is in line with our previous years reporting. Annual Report 2021 | Anglo-Eastern Plantations Plc 36 # Strategic Report Energy and carbon disclosures for reporting year ² | | Emissions Source | Global Emissions tCO₂e | | Variance | UK Emissions tCO₂e* | | Variance | | --- | --- | --- | --- | --- | --- | --- | --- | | | | 2021 | 2020 | | 2021 | 2020 | | | Scope 1 | Fuels | 25,058 | 19,613 | 28% | 0 | 0 | 0% | | | Plantation vehicles | 8,077 | 14,442 | -44% | 0 | 0 | 0% | | | Fertiliser use | 18,531 | 19,719 | -6% | 0 | 0 | 0% | | | POME Treatment | 142,262 | 124,429 | 14% | 0 | 0 | 0% | | | Sequestration | (458,738) | (531,479) | -14% | 0 | 0 | 0% | | | Land clearance | 459,740 | 617,678 | -26% | 0 | 0 | 0% | | | Peat soil cultivation | 486,436 | 488,858 | 0% | 0 | 0 | 0% | | Total Scope 1 | | 681,366 | 753,260 | -10% | 0 | 0 | 0% | | Total Scope 2 | Electricity | 2,657 | 2,657 | 0% | 0 | 0 | 0% | | Total Scope 1 & 2 | | 684,023 | 755,917 | -10% | 0 | 0 | 0% | | Scope 3 | Electricity transmission and distribution | 211 | 211 | 0% | 0 | 0 | 0% | | | 3rd party vehicles | 7,254 | 8,317 | -13% | 0 | 0 | 0% | | | Outgrower land clearance | 441,247 | 510,467 | -14% | 0 | 0 | 0% | | | Outgrower peat soil cultivation | 59,146 | 51,241 | 15% | 0 | 0 | 0% | | | Outgrower sequestration | (440,333) | (439,239) | 0% | 0 | 0 | 0% | | Total Scope 3 | | 67,525 | 130,997 | -48% | 0 | 0 | 0% | | Total (Location Based) | | 751,548 | 886,914 | -15% | 0 | 0 | 0% | | Total Energy Usage (kWh) ¹ | | 1,465,500,566 | 1,289,300,798 | 14% | 0 | 0 | 0% | | Intensity ratio | tCO₂e per hectare of planted area | 10.6 | 12.7 | -17% | 0 | 0 | 0% | | Intensity ratio | tCO₂e per tonne CPO production | 1.6 | 2.2 | -27% | 0 | 0 | 0% | | Intensity ratio | tCO₂e per tonne FFB production | 0.6 | 0.8 | -25% | 0 | 0 | 0% | * Note AEP Plc is a UK registered company. However, the business does not have any physical presence within the UK, hence the 0% contribution of UK emissions. It is shown in the table for transparency. ¹ Energy reporting includes kWh from scope 1, scope 2 and scope 3 3rd party vehicles only (as required by the SECR regulation) ² This work is partially based on the country-specific CO₂ emission factors developed by the International Energy Agency, © OECD/IEA 2020 but the resulting work has been prepared by AEP and does not necessarily reflect the views of the International Energy Agency. AEP are required to report to the UK Streamlined Energy and Carbon Reporting ("SECR") regulations. To provide comparison with our reporting for 2019 and earlier the data is also provided in a similar format below. Annual Report 2021 | Anglo-Eastern Plantations Plc 37 ## Strategic Report 2021 vs 2020 emissions comparison | Emissions source | 2021 Emissions in tCO_{2}e | | 2020 Emissions in tCO_{2}e | | | --- | --- | --- | --- | --- | | POME treatment | 142,262 | | 124,429 | | | Fertiliser application | 18,531 | | 19,719 | | | Fuel use | 25,058 | | 19,613 | | | Electricity consumption | 2,657 | | 2,657 | | | Electricity T&D | 211 | | 211 | | | Company owned vehicles | 8,077 | | 14,442 | | | Third party vehicle use | 7,254 | | 8,317 | | | **Total operational emissions** | **204,050** | | **189,388** | | | | **Own crop** | **Outgrower crop** | **Own crop** | **Outgrower crop** | | Land clearance | 459,740 | 441,247 | 617,678 | 510,467 | | Carbon sequestered | (458,738) | (440,333) | (531,479) | (439,239) | | Peat soils cultivation | 486,436 | 59,146 | 488,858 | 51,241 | | **Total land use emissions** | **547,498** | | **697,526** | | | **Overall emissions** | **751,548** | | **886,914** | | The normaliser reported within the main report is calculated using total CO$_{2}$e emissions. In previous years the normaliser has also been calculated on operational emissions only. This reduces the influence of the fluctuations in agricultural emissions. As such, the operational normalisers are also reported below. The operational planted area intensity has increased because the increase in operational emissions (8%) exceeds to increase in planted area (1%). 2021 vs 2020 Operational emissions intensity (excluding land use change emissions) (tCO$_{2}$e) | Operational emissions reporting metric | 2021 in tCO_{2}e | 2020 in tCO_{2}e | | --- | --- | --- | | Per hectare of planted area | 2.89 | 2.72 | | Per tonne CPO production | 0.42 | 0.47 | | Per tonne FFB production | 0.17 | 0.17 | ![img-18.jpeg](img-18.jpeg) Annual Report 2021 | Anglo-Eastern Plantations Plc 38 ## Strategic Report Response to TCFD AEP acknowledges and welcomes the TCFD and its recommendations as an effective global framework for disclosing climate-related risks and opportunities and improving strategic resilience to companies in the face of climate change. This year is our first year disclosing against the eleven TCFD recommended disclosures and we recognise that we are at the beginning of this journey. The table below signposts where our disclosures currently align with the recommendations, and the following content highlights our plans to move towards integration and alignment over the short term (1 to 5 years). Over the next year AEP intend to conduct a TCFD gap analysis and develop a roadmap of the steps required to further satisfy the eleven recommendations. Following on from this, AEP will conduct an initial scope 3 emissions screening to enhance its level of disclosure on sustainability metrics. New guidance on Forest, Land and Agriculture (“FLAG”) may have a material impact in how AEP assess risk, opportunity and wider business performance. The business will follow the emergence of this guidance over the course of 2022. In 2023 AEP anticipate using this guidance to close some of the alignment gaps across the relevant TCFD recommendation areas, including conducting a climate scenario analysis of its key risks and opportunities which will build climate-related strategic resilience. Summary TCFD alignment table Annual Report 2021 | Anglo-Eastern Plantations Plc 39 b. Describe the impact of climate-related risks and opportunities on the organisations Page 30 b. Describe management’s role in assessing and managing climate-related risks and Page 30 a. Describe the climate-related risks and opportunities the organisation has identified Pages 31 to 34 c. Describe the resilience of the organisations strategy, taking into consideration different Page 40 a. Describe the organisations processes for identifying and assessing climate-related Pages 29 to 34 c. Describe how processes for identifying, assessing, and managing climate-related risks Page 41 b. Disclose Scope 1, Scope 2 and, if appropriate, Scope 3 GHG emissions and the related Pages 35 to 38 a. Disclose the metrics used by the organisation to assess climate-related risks and Pages 35 to 38 c. Describe the targets used by the organisation to manage climate-related risks and Page 35 b. Describe the organisations processes for managing climate-related risks Pages 31 to 34 opportunities over the short, medium and long term businesses, strategy and financial planning climate-related scenarios, including a 2°C or lower scenario risks are integrated into the organisations overall risk management a. Describe the Boards oversight of climate-related risks and opportunities Page 30 risks Governance Strategy Risk Management Metrics and Targets opportunities in line with its strategy and risk management process opportunities and performance against targets ## Strategic Report Current and future steps on TCFD Governance Executive staff and Directors are responsible for the implementation of control procedures and for identifying and managing business risks, including climate-related risk. Further information on the Executive Committee oversight and role in climate-risk management can be found on page 29 of this report. The Board discusses climate-related risk on at least an annual basis and considers these risks in relevant areas of the business strategy, including major capital projects such as the decision to continue to invest in new biogas plants at our remaining mills. This year a new carbon reduction target was approved by the Board (page 35). Progress towards this target will be monitored and reviewed by the Board on an annual basis. Strategy Climate-related risks and opportunities In last years’ Annual Report AEP published the results of a consultation with our external sustainability partners, Avieco, to identify and prioritise Group-level climate-related risks and opportunities. Although the assessment was not repeated for 2021, the risks identified through this work have been reviewed and remain relevant to the business. The defined management approach continues to reflect current business practice. The risks and opportunities identified through this assessment relate to ongoing immediate term risk (likelihood of a risk materialising within a 12-month time frame). As AEP progresses towards full alignment with the TCFD recommendations the next scheduled overhaul of this risk assessment will include medium and long term horizons. However, many of AEP’s key risks relate to physical climate change impacts which are already being seen today. We are already taking action to mitigate these within our business decision making in terms of crop variety, land management and plantation monitoring through use of drones. Please refer to the material climate-related risks and opportunities table on pages 31 to 34 of this report. Impact of climate-related risks and opportunities Climate-related risks and opportunities impact three key areas of the business: our products, our supply chain and our operations. Details can be found on page 30 of this report. Our sustainability policy also provides additional information on the commitments AEP has made which will reduce the likelihood or impact in some of our key risk areas. Our sustainability policy can be found in https://angloeastern.co.uk/sustainability/corporate-governance. As we undertake TCFD alignment the emergence of new risks and opportunities will be reflected in our policy as relevant. This year AEP are not disclosing the impact of climate-related issues on our financial performance due to the complexity involved which would require further consultation with external experts. However, the Board intends to analyse this further together with the scenario analysis exercise plan and enhance this disclosure area over the short- term horizon. However, the action we have taken this year has improved our score in the ZSL Sustainability Policy Transparency Toolkit (SPOTT) assessment by 6.9%. This is an external assessment that investors and buyers use to assess their investments or purchasing decisions. This increasing score enhances AEP’s position in the market. Resilience of our climate strategy AEP have not yet conducted a climate scenario analysis exercise. The majority of our own climate-related impact is driven by AEP’s use of FLAG. Over the course of 2021 and continuing into 2022 there has been new accounting and target setting guidance under development, both from the Greenhouse Gas Protocol and the Science Based Targets Initiative. These new standards will likely shift how our competitors and customers view and account for climate change impact, thereby potentially changing the context in which we operate as a business. Developments in this new FLAG guidance may impact how AEP construct a climate scenario analysis given that the majority of our exposure is expected to be physical FLAG risks. We are keen to see the latest guidance unfold throughout 2022, with the anticipation of integrating this into the business strategy and planning over the following year if the timelines coalesce. Annual Report 2021 | Anglo-Eastern Plantations Plc 40 ## Strategic Report Risk Management Identifying and assessing climate-related risk The climate-related risks and opportunities that AEP disclose on pages 31 to 34 of our report were identified through a cross-functional working group involving senior managers and Directors from across the business. This process is described further on page 30. Materiality was defined based on the relative frequency or likelihood of an event occurring in a given 12-month period and the potential magnitude of impact based on change in operating profit. AEP intend to conduct a formal re-evaluation of this climate risk assessment every 3 years, with a review and qualitative assessment occurring in the intervening years. Regulatory changes are reviewed annually as we recognise that these are faster moving than many of our other risks. As detailed in our Strategy disclosure above we intend to include a view of medium and longer term risk horizons within the next review of this climate risk assessment. Managing climate-related risks A management approach for each of the key climate-related risks and opportunities is detailed in the table on pages 31 to 34 These management approaches, including mitigation activities, are implemented on a site-by-site basis dictated by their individual risk (e.g. individual estate risk of flooding or drought which varies by geographic location). Our Engineering Director has oversight of the management approach across all of our mills and our Chief Operating Officer has oversight across all of our plantations. This ensures that any progress towards these management activities and any change in risk profile are brought up to Group Management and integrated into Executive Committee updates. The Executive Committee, comprising of all senior executives of the Group meets monthly to discuss any arising issues related to climate risk and is chaired by the Senior General Manager, who in turns report to the Board of Directors. AEP is committed to improving the transparency of our climate risk management approach and in the short-term will review and update this to include additional detail on how and where these management activities have been implemented, changing the inherent risk and potentially materiality of each risk and opportunity identified. Integration of climate-related risk into overall risk management Climate-related risk management is not yet fully integrated into AEP’s overall risk management processes due to the complexity involved as explained above, however the same stakeholders are involved with both processes and both processes have Board oversight. In the short-term AEP commit to reviewing and updating business risk management processes to fully integrate climate-related risks. This will include agreeing a broader frequency for review and update, which will be brought to the Board on at least an annual basis in future years. Metrics and Targets Metrics to assess climate-related risks and opportunities AEP utilise a number of key metrics to manage risk and opportunity within the business. We use our annual GHG reporting to assess the impact of business decisions (in metric tonnes CO 2 e). This is evaluated in line with the Greenhouse Gas Protocol Corporate Accounting Standard, alongside other industry standards and guidance as referenced in our SECR report (pages 35 to 38) Our carbon intensity metrics (metric tonnes CO 2 e per hectare of planted area, per tonne FFB produced and per tonne CPO produced) are useful to indicate the impact on business efficiency throughout the year. These intensity metrics also indirectly indicate the potential impact of certain physical risks such as droughts or excessive rainfall. The Board will look at developing further metrics beyond the GHG emissions going forward to enhance future disclosure. We evaluate global cost premiums for RSPO certified palm oil products to evaluate the risk or opportunity of changing market preferences. AEP do not currently employ an internal carbon price. Scope 1, Scope 2 and limited Scope 3 GHG emissions and related risks AEP report our scope 1, 2 and selected scope 3 emissions in line with the SECR regulation (see page 37). Annual Report 2021 | Anglo-Eastern Plantations Plc 41 ## Strategic Report We do not yet report on our full scope 3 emissions, but intend to complete a scope 3 screening exercise with our rd external consultant in 2022. Currently our scope 3 emissions include electricity transmission and distribution, 3 party vehicles and the land-related emissions from the outgrower crops that we purchase and process in our mills. The new GHG Protocol guidance on land sector is likely to change how these land-related emissions should be reported (including in our scope 1) so we have planned to undertake a review of our methodology following the release of the draft guidance later this year. Targets for climate-related risks and opportunities This year AEP conducted an exercise to investigate different routes to setting a carbon reduction target. The target has been reviewed by the Board and committed within our Strategic Report (Page 35). AEP will report progress towards this target on an annual basis. Principal and emerging risks and uncertainties The Board members have sound knowledge of the palm oil industry, including sustainability, and are also aware of the politics and economics of the business world, especially in the countries where AEP operates. The Board carried out a robust assessment of the principal and emerging risks facing the Group on an annual basis. A board paper on risk management, with contributions from Board members on emerging significant business risks, if any, is discussed at least once a year in conjunction with the risk register. Significant emerging business risks identified and actions agreed thereon, together with the management of other business risks will be monitored by the Executive Director who is regularly briefed by the senior management of the Group. The Executive Director in turn briefs the Audit Committee and the Board whenever they meet. The Group’s business involves risks and uncertainties of which the Directors currently consider the following to be material. There are or may be other risks and uncertainties faced by the Group that the Directors currently deem immaterial, or of which they are unaware, that may have a material adverse impact on the Group. ### PRINCIPAL RISKS AT A GLANCE 9 Produce prices High Covid-19 6 Environmental & Currency exchange rates Weather and natural Country, regulatory and Medium governance practices 3 Social, community and human rights issues IMPACT ON BUSINESS Low 0 Annual Report 2021 | Anglo-Eastern Plantations Plc 42 | 0 3 6 9 | Low Medium High | | | | | --- | --- | --- | --- | --- | | | | disasters | | LIKELIHOOD | | | Conservation Practice | | Information Technology | | ## Strategic Report | Changes in land legislation. Based Could force divestment of The Group realises that there is a | | | --- | --- | | on National Land Agency Law 2 / interests in Indonesia at below possibility that foreign owners may be The Group’s operations are located Political upheaval and The country has recently benefited | | | substantially in Indonesia and deterioration in the security from a period of relative political 1999, mandatory restriction to land market values. required over time to partially divest | | | therefore significantly rely on situation may cause disruption on stability, steady economic growth and ownership by non-state plantation ownership of Indonesia oil palm | | | economic and political stability in the operation, loss of stable financial system. But during the Introduction of measures to rein in Transfer of profit from Indonesia The Board is not aware of any attempt companies and companies not listed operations but has no reason to believe | | | Indonesia. management control and Asian financial crisis in the late 1990s, the country’s fiscal deficits. This to the UK will be restricted by the government to impose exchange in Indonesia to 20,000 ha per that such divestment would be anything | | | province and a total of 100,000 ha in other than at market value. If there is a consequently financial loss. there was civil unrest attributed to included the exchange controls and affecting servicing of UK controls that would restrict the transfer | | | ethnic tensions in some parts of Group failure to meet the standards Reputational damage and criminal The Group continues to maintain strong restriction on repatriation of profit obligations and payment of of profits from Indonesia to the UK. The Indonesia. Mandatory reduction of need for further divestment, the Group | | | Indonesia. The Group’s operations expected in relation to bribery and sanctions. controls in this area as Indonesia has through payment of dividends. dividends to shareholders. Board perceives that the Group will be foreign ownership of Indonesian intends to approach the current | | | were not interrupted by the regional corruption. been classified as relatively high risk by able to continue to extract profits from plantations. minority shareholders to invest, failing | | | Nature of the risk and its origin Circumstances under which the Mitigating or other relevant | Annual Report 2021 \| Anglo-Eastern Plantations Plc 43 | | security problems including occasional its subsidiaries in Indonesia for the which would approach other the International Transparency | | | risk might be most relevant to considerations | | | appropriate local partners. racial conflicts. foreseeable future. Corruption Perceptions index. | | | the Company Country, regulatory and governance practices | | ## Strategic Report | CPO and palm kernel are primary This may lead to significant price Directors believe that such swings | | | --- | --- | | commodities and is affected by the swings. The profitability and cash should be moderated by continuous Imposition of import controls or taxes Reduced revenue and reduction The Indonesian government allows | | | world economy, levels of inflation, and flow of the plantation operations demand in economies like China, in consuming and exporting countries. in cash flow and profit. The higher free export of CPO up to 80% of local | | | availability of alternative soft oils such depend upon world prices of CPO India and Indonesia. Larger exports Efforts by EU to restrict the use of import levy will raise the price of production but applies a sliding scale | | | as soybean oil. CPO price also moves and palm kernel and upon the would lead to a lower inventory of palm oil and palm biodiesel either by CPO and make it less competitive of duties on exports which allows | | | historically in tandem with crude oil Group’s ability to sell CPO and CPO which augurs well for future trade barriers or increased tariffs in the global oil market, thus producers economic margins. The | | | prices which determine the palm kernel at price levels produce price. In the short term, the including export levy and export tax. reducing demand. Trade barriers export levy collected to fund local | | | competitiveness of CPO as a source comparable with world prices, prices and demand will be volatile due CPO is a US Dollar denominated Adverse movements of Rupiah The Board has taken the view that and increased tariffs will make it biodiesel subsidies is designed to | | | commodity and a significant against US Dollar will increase these risks are inherent in the of biodiesel. unlike soybean which is sown to the pandemic and the ongoing more difficult to export palm oil to support the CPO prices. Higher tariffs | | | proportion of operating costs in operating costs and will have a business and feels that adopting annually and production can be conflict in Ukraine. Indonesia EU either for food or palm and trade barriers in EU will result in | | | Indonesia (such as fertiliser and fuel) negative effect on the profitability hedging mechanisms to counter the increased or decreased to match imposition for local producer to sell biodiesel and will hurt the demand higher consumption of alternative | | | and development costs (such as and raise funding costs. negative effects of foreign exchange demand and prevailing prices. 20% of their output to domestic of CPO in EU which is the third vegetable oils despite CPO remaining | | | heavy machinery and mill equipment) volatility are both difficult to achieve refiners will reduce supply for export largest consumer of CPO. amongst the cheapest source and | | | Nature of the risk and its origin Circumstances under which the Mitigating or other relevant | Annual Report 2021 \| Anglo-Eastern Plantations Plc 44 | | are imported and are US Dollar and would not be cost effective. possibility helping to sustain CPO most productive of vegetable oil in a | | | risk might be most relevant to considerations | | | related. prices growing population. | | | Produce prices the Company Currency exchange rates | | Country, regulatory and governance practices - continued ## Strategic Report Any material breakdown in relations Communication breakdown would The Group mitigates this risk by liaising between the Group and the host cause disruption on the operation regularly with village representatives to population in the vicinity of the and consequently financial loss. mediate on disputes including some operations could disrupt the Group’s Access to areas in estates and land compensation matters and rights. operations. The plantations hire mills of disputed compensation is It develops a close relationship with large numbers of people and have restricted due to blockages and villagers by improving local living significant economic importance for illegal encroachment by the standards through mutually beneficial local communities in the areas of the communities. economic and social interaction. The Group’s operations. Disputes over Group, when possible, gives priority to compensation and rights for land applications for employment from the allocated to the Group through local population and supports specific location permits granted by the initiatives to encourage local farmers Indonesian government which were and tradesmen to act as suppliers to the previously used by the communities Group, its employees and their for their livelihood. dependents. The Group spends considerable money constructing new roads and bridges and maintaining existing roads used by villagers. The Group also provides technical and | management expertise to villagers to Deterioration or disputes in Seek Indonesian courts for The Group endeavours to maintain | | | --- | --- | | develop oil palm plots and Plasma relationships with the local enforcement of shareholders’ cordial relations with local shareholders | | | shareholders in the Group’s agreements and resolving by seeking their support for decisions schemes surrounding the operating | | | Indonesian subsidiaries. disputes. Uncertainties over affecting their interests and responding estates. The returns from these plots | | | Nature of the risk and its origin Circumstances under which the Mitigating or other relevant | Annual Report 2021 \| Anglo-Eastern Plantations Plc 45 | | are used to improve villages’ judicial process may result in constructively to any concerns that they | | | risk might be most relevant to considerations | | | community welfare. financial loss to the Group. may have. | | | the Company Social, community and human rights issues | | ## Strategic Report | The Covid-19 pandemic as we are Our plantations and mills could be The Group continued to impose travel | | --- | | experiencing has affected national seriously infected which may restrictions, unless fully vaccinated, | | and world economies, although the require a total shut down of the and strict movement on workers | | pandemic seemed to be receding infected part of our operations to housed in our mills and estates. | | because of the availability of contain and eradicate the infection. Workers leaving the housing and | | vaccines. Covid-19 and similar However, as the vaccination rate workplace must seek prior approval | | pandemics could disrupt the Group’s increased both in Indonesia and from management and will be | | operation. Malaysia the risk of a total subjected to quarantine upon return. | | shutdown is reduced. All outside casual workers hired are | assigned to different parts of the estates isolated and with minimum contact with our regular workers. Wearing a face mask is mandatory. Additional facilities are provided for workers to wash their hands with soaps and apply sanitizers. Temperatures of all workers are taken daily before they start work. Workers with high temperature will be quarantined and undertake necessary tests conducted by qualified doctors to determine their condition. Medan administration and finance staff are divided into two teams with each team working from home on an alternative basis to reduce exposure to the virus and mitigate disruption. Routine retesting is conducted for all workers. The Group also stock up on essential goods and spare parts to minimise disruption to estate and mills operation should the government order a lockdown or impose further movement control. With the reduced Covid-19 cases as a result of the increased vaccination rate, the Group is looking into gradually soften the existing SOPs to reflect the sentiments of coexisting with Covid- 19. | The local governments where the The Group has budgeted cash | | | --- | --- | | Group operates could enforce a requirements on a minimum spend | | | total lockdown requiring a total basis that would sustain the continuity | | | Nature of the risk and its origin Circumstances under which the Mitigating or other relevant | Annual Report 2021 \| Anglo-Eastern Plantations Plc 46 | | shutdown of the Group’s of the Group for at least twelve months. | | | risk might be most relevant to considerations | | operations. the Company Covid-19 ## Strategic Report | Oil palms rely on regular sunshine Dry periods, in particular, will affect Bunding is built around flood prone | | | --- | --- | | and rainfall but these weather yields in the short and medium areas. Canals/drainage/retention ponds | | | patterns can vary and extremes term. It may result in wildfire that are constructed and adapted either to | | | such as unusual dry periods or, may damage and destroy the evacuate surplus water or to maintain | | | conversely, heavy rainfall leading palms. Drought induces moisture water levels in areas quick to dry out. | | | to flooding in some locations can stress in palm trees. Conversely Operations located in and near the tropic | | | occur. Indonesia, where most of its high levels of rainfall can disrupt can expect adequate amount of | | | plantations are located, frequently estate operations and result in sunshine regularly. Where practical, | | | experience natural disasters like harvesting delays with loss of FFB natural disasters are covered by | | | earthquake, forest fire and or deterioration in fruit quality. insurance policies. Certain risks | | | tsunami. Delay in collection of harvested (including the risk of crop loss through | | | FFB could raise the level of free fire, earthquake and flood potentially | | | fatty acid (“FFA”) in the CPO. CPO affecting the planted areas on the | | | with high FFA would be sold at a Group’s estates) if they materialise | | | discount to market prices. Low could dent the potential revenues, for Failure to comply and observe Reputational and financial damage The Group is committed to sustainable | | | level of sunshine could result in which insurance cover is either not environmental and conservation through criticisms by conservation development of oil palm and maintains | | | delay in formation of FFB resulting available or would in the opinion of the practices in its oil palm cultivation groups and boycott of the Group’s substantial conservation reserves to The security threats faced by the Failure to combat cyberattack The Group has measures in place | | | in potential loss of revenue. Any Directors be disproportionately as detailed in the management for produces. safeguard biodiversity. It has obtained Group include threats to its IT could cause disruption to our including appropriate tools and | | | natural disaster could result in a expensive, are not insured. Risks of Climate Risk in the Directors’ ISPO and MSPO certifications for most infrastructure, unlawful attempts to business operations. Potential loss techniques to monitor and mitigate this | | | shortage of workers and incur floods, earthquake, fires or haze are Report. of its operations. The Group funds gain access to classified including loss of financial records risk. The Group through its IT Consultant | | | temporary work stoppage due to mitigated by the geographical spread of information and potential for leading to error or misstatement in has in place antivirus, threat detection, independent environmental impact | | | damage to the plantation or mill. the plantations but an occurrence of an business disruptions associated financial statements. log analysis, Distributed denial-of- assessment studies and complies with | | | Nature of the risk and its origin Circumstances under which the Mitigating or other relevant | Annual Report 2021 \| Anglo-Eastern Plantations Plc 47 | | adverse uninsured event could result in its recommendation before any with IT failures. service (“DDOS”) attacks protection and | | | risk might be most relevant to considerations | | | material losses. development begins. Firewalls. | | the Company Information Technology (“IT”) security risk Environmental and conservation practices Weather and natural disasters # Strategic Report ## Diversity The AEP Plc Board is composed of three men and one woman with extensive knowledge in their respective fields of experience. The Board has taken note of the recent legislative initiatives with regards to the representation of women on the boards of Directors of listed companies and will make every effort to conform based on legislative requirement. | | 2021 average employed during the year | | | | --- | --- | --- | --- | | | Women | Men | Total | | Group Headcount | | | | | Board (Company and subsidiaries) | 3 | 14 | 17 | | Senior Management (GM and above) | 1 | 5 | 6 | | Managers & Executives | 33 | 412 | 445 | | Full Time / Field Workers | 273 | 6,877 | 7,150 | | Part-time / Field Workers * | 2,408 | 3,783 | 6,191 | | Total | 2,718 | 11,091 | 13,809 | | % | 20% | 80% | 100% | | | 2020 average employed during the year | | | | --- | --- | --- | --- | | | Women | Men | Total | | Group Headcount | | | | | Board (Company and subsidiaries) | 3 | 14 | 17 | | Senior Management (GM and above) | - | 5 | 5 | | Managers & Executives | 33 | 412 | 445 | | Full Time / Field Workers | 260 | 6,515 | 6,775 | | Part-time / Field Workers* | 3,049 | 4,159 | 7,208 | | Total | 3,345 | 11,105 | 14,450 | | % | 23% | 77% | 100% | *Part-time / Field workers Headcounts based on full time equivalent of 8 hours per day Although the Group provides equal opportunities for female workers in the plantations, the male workers make up a majority of the field workers due to the nature of work and the remote location of plantations from the towns and cities. The number of female part-time field workers decreased by 21% from 3,049 to 2,408 in 2021. The pandemic has reduced the availability of female workforce in general as many prioritised domestic household demand especially with many of their children studying online and staying at home. Overall, the number of female workers within the Group decreased from 3,345 (23%) in 2020 to 2,718 (20%) in 2021. More details on gender diversity can be found on our website under Workers' rights and safety / Exploitation / Fair place to work. The Board continues to monitor the structure and composition of the Group's management team linking it to the balance of age, social and ethnic backgrounds, together with relevant qualifications and experience. To date, the Board believes that the composition of the Group's management team is fairly balanced in respect of all the elements of diversity as mentioned above. ## Employees Oil palm cultivation is a labour-intensive industry. In 2021, the number of full-time workers averaged 7,618 (2020: 7,242), a 5% increase while the part-time labour averaged 6,191 (2020: 7,208), a 14% reduction. Many part-timers were promoted to full employment upon maturity of the field. The total headcount of field workers in 2021 however was lower by 5% due to improved productivity and better supervision in Indonesia despite increased in matured area while acute shortage of workers still persists in Malaysia. See explanation on page 19. The Group has introduced some mechanisation in the field to boost productivity. Mechanisation though has its limits but where possible could help relieve the acute shortage of labour and reduce the cost pressure from rising minimum wages. Annual Report 2021 | Anglo-Eastern Plantations Plc 48 ## Strategic Report It was reported elsewhere that foreign workers are frequently subjected to high recruitment fees that kept them in debt bondage and are forced to work overtime and in dangerous conditions under the threat of penalties, namely withholding of salaries and identification documents and restricted movement. AEP adopts a zero-cost recruitment policy towards all its local and foreign employees. About 247 of our employees were infected by Covid-19 representing less than 2% of our overall workforce. We are however sad to report that five of our employees succumbed to the infection since the pandemic started. The Group will continue to do routine retesting to screen the workers for the virus. Staff were reminded to observe social distancing and personal hygiene. During the height of the pandemic, administrative staff were further divided into two teams and rotated between working from home and office on alternative weeks to minimise disruption and the chances of catching the virus through travelling on public transport. At the end of 2021, 89.6% of our employees have received their first dose of vaccine while 71.4% have completed their vaccination programme. More details are provided under CSR of the Strategic Report. The Group has formal processes for recruitment, particularly for key managerial positions, where psychometric testing is conducted to support the selection and hiring decisions. Exit interviews are also conducted with departing employees to ensure that management can address any significant issues. Existing employees are selected on a regular basis for training programmes organised by the Group’s training centre that provide grounding and refresher courses in technical aspects of oil palm estate and mill management. The training centre also conducts regular programmes for all levels of employees to raise the competency and quality of employees in general. These programmes are often supplemented by external management development courses including attending industry conferences for technical updates. A wide variety of topics are covered including work ethics, motivation, self-improvement, company values and health and safety. The Group spent $33,200 on staff training and professional development in 2021 against $26,000 for the previous year. The Group operates a cadet program where graduates from local universities are selected to undergo theory and field training over a twelve-month period. On successful completion, they are assigned as assistants to various mills and estates. A large workforce and their families are housed across the Group’s plantations. The benefits provided to them were extensively covered under CSR in the Strategic Report. On top of competitive salaries and bonuses, these extensive benefits and privileges help the Group to retain and motivate its employees. The Group complied with the minimum wage policy issued by the Indonesian government. It respects the rights of employees and does not exploit workers, use child or forced labour and is not involved in human trafficking as described in the UK’s Modern Slavery Act 2015, of which a full statement is provided on our website under Corporate Governance. The employees are covered by Governmental mandatory personal accident scheme with death benefits covering up to forty-eight months of workers’ monthly salaries. The spouses and children of fulltime employees are also privately insured for death benefits by the Group. The rights of employees and their extensive benefits covering every aspect of employment from salary review, allowance, bonus, housing, study and training for improvement, work safety and health and code of conduct are contained in the Company’s handbook which is available and accessible to all employees. The Group promotes a policy for the creation of equal and ethnically diverse employment opportunities including with respect to gender. The Group has in place key performance-linked indicators to determine increment and bonus entitlements for its employees. The human resources and a member of the Remuneration Committee engage members of the labour unions representing full-time workers at least once a year on their yearly performance bonuses and grievances. A whistle-blower policy was introduced in 2019 to allow workforce to raise concerns in confidence and if they wish anonymously to the Board of the holding company for independent investigations and follow-up actions. The full details of the policy can be downloaded from the Company’s website. Annual Report 2021 | Anglo-Eastern Plantations Plc 49 ## Strategic Report The Group promotes and encourages employee involvement in every aspect wherever practical as it recognises employees as a valuable asset and is one of the key contributions to the Group’s success. The employees contribute their ideas, feedback and voice out their concerns through formal and informal meetings including meeting with the Chairman of the Remuneration Committee annually, discussions and annual performance appraisals. In addition, various work related and personal training programmes are carried out annually for employees to promote employee engagement and interaction. The Group organises an annual dinner to recognise high achievers in the plantation and mill operations. It also has an annual family gathering to foster camaraderie among its employees. Unfortunately, these events where employees always look forward to, have to be suspended during the pandemic for the safety of the employees and their families. Although the Group does not have a specific policy on the employment of disabled persons, it, however, employs disabled persons as part of its workforce. The Group welcomes disabled persons joining the Group based on their suitability. Outlook FFB production for the three months to March 2022 was 5% lower against the same period in 2021 mainly due to the drop in production from Bengkulu and Kalimantan regions. It is too early to forecast whether the production will improve for the rest of the year. The CPO price ex-Rotterdam opened the year at $1,320/mt and averaged about $1,592/mt for the first three months of 2022. Despite the robust CPO prices in 1Q 2022, we expect lower prices in 2022 as tight supply normalises. We anticipated a stronger recovery of palm oil output in second half of 2022. This is aided by the recent good rainfall brought about by a moderate La Nina weather phenomenon. The present high prices are unlikely to be sustainable when supply normalises. Barring any further surprises, CPO prices appeared to have peaked in early March 2022. This was after the Indonesian government removed the mandatory domestic market obligations, about two months after introduction whereby exporters were required to sell 20% which was then raised to 30% of their produce to domestic markets. At the same time the Indonesian government has raised the maximum export tax and levy of CPO from $375/mt to $575/mt to subsidise domestic cooking oil is likely to adversely affect the Group’s ex-mill prices. The growth in palm oil production has slowed in the last few years due to a more stringent regulatory environment and robust industry standards on new plantation development. The expiration of Indonesia’s moratorium on new plantings is not expected to have an immediate impact on the supply of CPO in the market as the Indonesian government balance the commitment to reduce carbon emission and the need to create jobs and investments. It was reported by Oil World that in 2020, palm oil accounted for 32% and soya 25% of the global vegetable oil production. The outlook on CPO prices remain positive as the increasing world population will further boost demands, while palm oil production may remain stagnant due to strict regulatory and sustainability standards. The sharp rise in fertilisers cost may see a reduction in its application especially for smaller plantations potentially affecting future yield and production of CPO. The conflict between Ukraine and Russia has not only affected the demand and prices of CPO (see Commodity Prices of Strategic Report on page 19) but also on fertilisers which have seen a sharp increase in prices. The international sanctions have affected the supply of fertilisers from Russia which is a major producer of urea, potash and rock phosphate, the main ingredients of fertilisers used. Any potential rise in material costs including fertilisers and wages in Indonesia will increase the overall production costs in 2022 and offset higher earnings from better CPO prices. A record-breaking trade surplus in Indonesia as global commodity prices rallied and strong exports numbers would likely result in a stronger Indonesian Rupiah in the coming year. Nevertheless, barring any unforeseen circumstances, the Group is confident that CPO demand will be sustainable in the long-term and we can expect a satisfactory trading outturn and cash flow for 2022. Annual Report 2021 | Anglo-Eastern Plantations Plc 50 # Strategic Report ## Statement by Directors In Performance Of Their Statutory Duties In Accordance With Section 172 (1) Of The Companies Act 2006 Section 172 of the Companies Act 2006 requires a director of a company to act in the way he or she considers, in good faith, would most likely promote the success of the company for the benefit of its members as a whole, having regard to a range of factors set out in Section 172(1)(a) – (f) in the Companies Act 2006. In discharging our Section 172 duty, we have regard for these factors, taking them into consideration when decisions are made. All the directors recognise their responsibilities to promote the success of the Company for its shareholders, other investors, its employees, customers, suppliers and the wider community. The Board acknowledges the importance of climate change and seeks to mitigate the negative impacts of the business on the environment through its sustainable practices, including engaging a firm of environmental and climate related expertise on this matter. During the year the Board approved the change in land valuation policy of the Group from fair / market value to historical cost. The reasons for the change are covered on page 68 of the Audit Committee Report. This change was made after discussions with management and consultation with an external valuer to align AEP with its peers in the UK who adopt the historical cost accounting convention when valuing land. The Board, having had consultations with the minority shareholder of the plantations in South Sumatera, also approved the appointment of an external consulting firm to advise on the disposal of operations in three loss making plantations in South Sumatera. The three plantations have incurred a combined loss of $76.0 million since inception despite robust CPO prices due to low rainfall and geographical constraints. Some of the operational problems were also highlighted in the Business Review of the Strategic Report on page 16. The Board, following a review of its industry peers and the available research data, has decided to refine the valuation technique applied to its biological assets in order to provide a more comparable result. It now uses one-month FFB production instead of previously 2-months to arrive at its biological assets value for reporting purposes. This Strategic report, including the non-financial reporting statement in Page 13, which has been prepared in accordance with these requirements of the Companies Act 2006, has been approved and signed on behalf of the Board. On behalf of the Board Executive Director, Corporate Finance and Corporate Affairs 29 April 2022 Annual Report 2021 | Anglo-Eastern Plantations Plc 51 ## Financial Record Annual Report 2021 | Anglo-Eastern Plantations Plc 52 (Restated) | Income statement | | 2021 2020 2019 2018 2017 | | | --- | --- | --- | --- | | Equity attributable to shareholders’ funds | 440,030 375,433 440,030 375,433 401,157 371,980 385,092 | | | | Net worth Non-current assets & long-term receivables Revaluation reserves Basic EPS after BA movement (US cents) RM: $ Rp : $ Continuing operations Revenue Operating profit before BA Profit attributable to shareholders after BA Dividend proposed for year Financial position Cash net of short-term borrowings Long-term loans and borrowings Other working capital Deferred tax Non-controlling interests Share capital Treasury shares Share premium and capital redemption reserve Exchange reserves Retained earnings Ordinary shares in issue (‘000s) Basic EPS before BA movement (US cents) Dividend per share for year (US cents) Asset value per share (US cents) Exchange rates - year end $ : £ Exchange rates - average Rp : $ $ : £ RM: $ 242.34cts 235.25cts | (102,078) (241,907) (237,599) (229,026) (245,170) (221,435) 1,110cts 91.82cts 40.61cts 28.79cts 91.37cts 89.31cts 35.37cts 32.50cts 91.80cts 1,012cts 401,157 371,980 385,092 282,581 303,067 384,391 351,387 362,038 542,108 464,308 495,818 464,581 476,891 433,421 263,818 219,136 250,859 291,907 129,332 218,249 115,211 101,134 130,895 642,582 573,677 542,415 526,487 515,884 (19,281) (13,081) (88,875) (94,661) (92,601) (91,799) 48,413 51,288 13,901 13,548 12,178 66,676 16,096 36,214 76,643 40,580 16,320 15,504 15,504 25,022 25,022 39,976 39,976 14,146 13,383 51,308 14,269 14,105 14,481 54,599 30,928 96,054 36,393 11,413 38,284 32,423 29,156 13,607 15,504 15,504 15,504 25,022 25,022 25,022 39,976 39,976 39,976 947cts 938cts 972cts 14,312 14,572 14,246 | (1,982) (1,189) (1,585) (8,203) (5,796) (8,893) (1,171) (1,171) (1,171) (1,171) (1,171) 5.0cts 1.0cts 0.5cts 3.0cts 4.0cts 2,994 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 4.17 4.02 4.09 4.13 4.05 (396) (198) 1.35 1.36 1.32 1.28 1.35 1.38 1.28 1.28 1.33 1.29 4.15 4.20 4.14 4.04 4.30 | - - - - - | ## Estate Areas | | GROUP TOTAL | MALAYSIA | INDONESIA TOTAL | NORTH SUMATERA | BENGKULU | SOUTH SUMATERA | RIAU | BANGKA | KALIMANTAN | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | **Mills / Biogas Plants** | | | | | | | | | | | Number of Mills | 6 | - | 6 | 2 | 2 | - | 1 | - | 1 | | Number of Biogas Plants | 4 | - | 4 | 2 | 1 | - | - | - | 1 | | Combined Mills Capacities | 310 mth | - | 310 mth | 100 mth | 105 mth | - | 60 mth | - | 45 mth | | **Planted as at 31 Dec 2021** | Ha | Ha | Ha | Ha | Ha | Ha | Ha | Ha | Ha | | Oil Palm | | | | | | | | | | | Mature | 62,582 | 3,453 | 59,129 | 18,047 | 15,463 | 5,742 | 4,836 | 833 | 14,208 | | Immature | 7,860 | - | 7,860 | 802 | 1,453 | 895 | - | 1,720 | 2,990 | | **Total Oil Palm** | **70,442** | **3,453** | **66,989** | **18,849** | **16,916** | **6,637** | **4,836** | **2,553** | **17,198** | | Rubber | | | | | | | | | | | Mature | 262 | - | 262 | 262 | - | - | - | - | - | | Immature | - | - | - | - | - | - | - | - | - | | **Total Rubber** | **262** | **-** | **262** | **262** | **-** | **-** | **-** | **-** | **-** | | Plasma Mature | 3,077 | - | 3,077 | 93 | - | 982 | - | 202 | 1,800 | | Plasma Immature | 1,423 | - | 1,423 | - | - | 64 | - | 281 | 1,058 | | **Total Plasma** | **4,500** | **-** | **4,500** | **93** | **-** | **1,066** | **-** | **483** | **2,858** | | **Total Planted area** | **75,204** | **3,453** | **71,751** | **19,204** | **16,916** | **7,703** | **4,836** | **3,036** | **20,056** | | Others | | | | | | | | | | | Plantable Reserve/Oil Palm | 16,866 | 1,607 | 15,259 | 677 | - | 6,162 | - | 1,532 | 6,888 | | Unplantable Areas | 32,688 | 1,236 | 31,452 | 1,492 | 1,016 | 23,314 | 84 | 3,666 | 1,880 | | Oil Palm Nursery/Mill/Infrastructure | 3,229 | 72 | 3,157 | 1,026 | 593 | 121 | 75 | 20 | 1,322 | | **Total Others** | **52,783** | **2,915** | **49,868** | **3,195** | **1,609** | **29,597** | **159** | **5,218** | **10,090** | | **Total Land as at 31 Dec 2021** | **127,987** | **6,368** | **121,619** | **22,399** | **18,525** | **37,300** | **4,995** | **8,254** | **30,146** | Annual Report 2021 | Anglo-Eastern Plantations Plc 53 ## Location of Estates and Mills Annual Report 2021 | Anglo-Eastern Plantations Plc 54 # Directors' Report The Directors present their annual report on the affairs of the Group, together with the financial statements and auditor's report, for the year ended 31 December 2021. The Directors performance in relation to their statutory duties, together with the principal decisions taken during the year are detailed in the Strategy Report under Statements by Directors In Performance Of Their Statutory Duties In Accordance With Section 172 (1) Of The Companies Act 2006 on page 51. ## Accountability and audit AEP is committed to ensure that the quality of its financial reporting is of a high standard. The Board continually reviews its internal controls and risk management systems to ensure the Group's affairs and the Group's financial reporting comply with the applicable accounting standards as well as good corporate governance. The main features of the Group's internal controls and risk management systems are further disclosed on page 70 to 71. The Board considers the annual report and accounts including the Strategic Report when taken as a whole, is fair, balanced and understandable as it provides the information necessary for shareholders to assess the Group's position and performance, business model and strategy. ## Results and dividends The audited financial statements for the year ended 31 December 2021 are set out on pages 90 to 144 The Group's profit for the year on ordinary activities before taxation from continuing operations was $137,083,000 (2020: profit $58,114,000) and the profit attributable to ordinary shareholders from continuing operations was $96,054,000 (2020: profit $36,393,000). No interim dividend was paid. The Directors recommend a final dividend of 5.0cts (2020: 1.0cts) to be paid to shareholders on 15 July 2022. Shareholders may elect to receive their dividend in Pounds Sterling as described on page 57. ## Future developments The future developments of the Group are reported on page 20 to 21 of the Strategic Report under corporate development. ## Research and Development The Group did not undertake any research and development activities. It relies on third parties to conduct research and development of new disease resistant and higher yield oil palm seeds. ## Political donations, anti-bribery and anti-corruption The Group made no political donation during the year. The Group has in place policies and procedures in respect of bribery and corruption, with detailed guidelines and reporting requirements for its UK, Indonesian and Malaysian operations which may be viewed from the Company's website. The whistle-blowers and grievance mechanism policies which include reporting on corruption practices are also highlighted in Company's handbook. Management and senior staff have had training programmes and updates as part of their responsibility to ensure that bribery and corruption do not exist in the Group's operation. New employees are also briefed on anti-corruption practices during their orientation. The Group has in place a communication channel for employees reporting to the Senior Independent Non-Executive Director on incidences of bribery and corruption on a strictly confidential basis. There are stipulated steps and procedures for the Senior Independent Non-Executive Director to address the reported issues appropriately and to take the necessarily actions, if relevant. The Group uses its best endeavour to ensure that its business partners are in compliance with the anti-bribery and anti-corruption regulations. ## Carbon Reporting A comprehensive carbon report is detailed as part of the Strategic Report on page 35 to page 42. ## Principal risks The material risks faced by the Group, including any climate change related risks, and actions taken to mitigate those risks are set out in the Principal Risks and Uncertainties section of the Strategic Report. Annual Report 2021 | Anglo-Eastern Plantations Plc 55 ## Directors’ Report Information on financial instruments risks is set out in note 28 to the consolidated financial statements. Property, plant and equipment Information relating to changes in property, plant and equipment and capitalised interest, as required pursuant to Listing Rule 9.8.4R, are given in note 13 to the consolidated financial statements. Directors Madam Lim Siew Kim, Dato’ John Lim Ewe Chuan, Mr. Lim Tian Huat and Mr. Jonathan Law Ngee Song will be submitting themselves for re-appointment at the forthcoming annual general meeting. Brief profiles of all Directors are set out on page 60 of this Annual Report. Substantial share interests As at 22 April 2022 and 31 December 2021, the following interests had been notified to the Company in accordance with Chapter 5 of the Disclosure Rules and Transparency Rules of the Financial Conduct Authority, being interests in excess of 3% of the issued ordinary share capital of the Company: * Madam Lim Siew Kim is the controlling shareholder of Genton International Limited. Share capital, restrictions on transfer of shares, arrangements affected by change of control and other additional information The Company has one class of share capital, ordinary shares. All the shares rank pari passu. The articles of association of the Company contain provisions governing the transfer of shares, voting rights, the appointment and replacement of Directors and amendments to the articles of association. This accords with usual English company law provisions. There are no special control rights in relation to the Company’s shares. There are no significant agreements to which the Company is a party which take effect, alter or terminate in the event of a change of control of the Company. There are no agreements providing for compensation for Directors or employees on change of control. Auditor All of the current Directors have taken all the steps to make themselves aware of any information needed by the Company’s auditor for the purposes of their audit and to establish that the auditor is aware of the information. The Directors are not aware of any relevant audit information of which the auditor is unaware. BDO LLP have expressed their willingness to continue in office and a resolution to re-appoint them will be proposed as Resolution 8 at the forthcoming annual general meeting. Authority to allot shares At the annual general meeting held on 28 June 2021 shareholders authorised the Board under the provisions of section 551 of the Companies Act 2006 to allot relevant securities within specified limits for a period of five years. Renewal of this authority is being sought under Resolution 10 at the forthcoming annual general meeting. The aggregate nominal value which can be allotted under the authority set out in paragraph (i) of the resolution is limited to £3,303,031 (representing 13,212,124 ordinary shares of 25p each) which is approximately one third of the issued ordinary capital of the Company as at 29 April 2022 (being the latest practicable date before publication of this Annual Report 2021 | Anglo-Eastern Plantations Plc 56 | | | | % of | % of | | --- | --- | --- | --- | --- | | | voting rights voting rights | | | | | Genton International Limited* Nokia Bell Pensioenfonds Spencer Nicholas Roditi 20,247,814 20,247,814 7,015,000 | 7,015,000 1,366,900 550,000 | | 51.08% 17.70% 1.39% 51.08% 17.70% | 3.45% | | Name of holder Number | Number | As at 31.12.2021 | As at 22.4.2022 | held held | # Directors' Report notice). In accordance with guidance issued by The Investment Association, the authority in paragraph (ii) of the resolution will authorise the Directors to allot shares, or to grant rights to subscribe for or convert any security into shares, only in connection with a fully pre-emptive rights issue, up to a further nominal value of £3,303,031 (representing 13,212,124 ordinary shares). This amount (together with the authority provided under paragraph (a) of the resolution) represents approximately two thirds of the Company's issued ordinary share capital (excluding treasury shares) as at 29 April 2022. This authority will expire at the conclusion of the next annual general meeting of the Company. The Directors have no present intention of issuing new shares, or of granting rights to subscribe for or to convert any security into shares. ## Disapplication of pre-emption rights A fresh authority is also being sought under the provisions of sections 570 and 573 of the Companies Act 2006 to enable the Board to make an issue to existing shareholders without being obliged to comply with certain technical requirements of the Companies Act, which create problems with regard to fractional entitlements and overseas shareholders. In addition, the authority will empower the Board to make issues of shares for cash to persons other than existing shareholders up to a maximum aggregate nominal amount of £495,454 representing 5% of the current issued share capital. The authority will be expiring at the forthcoming annual general meeting or on 30 June 2022, whichever is earlier. Renewal of this authority on similar terms is being sought under Resolution 11 at the forthcoming annual general meeting. The Company does not intend to issue more than 7.5% of the issued share capital on a non pre-emptive basis in any three-year period. ## Acquisition of the Company's own shares and authority to purchase own shares At 29 April 2022, the Directors had remaining authority under the shareholders' resolution of 28 June 2021, to make purchases of 3,963,637 of the Company's ordinary shares. This authority expires on 30 June 2022. All such purchases will be market purchases made through the London Stock Exchange. Companies can hold their own shares which have been purchased in this way in treasury rather than having to cancel them. The Directors would, therefore, consider holding the Company's own shares which have been purchased by the Company as treasury shares as this would give the Company the flexibility of being able to sell such shares quickly and effectively where it considers it in the interests of shareholders to do so. Whilst any such shares are held in treasury, no dividends will be payable on them and they will not carry any voting rights. Resolution 12 to be proposed at the forthcoming annual general meeting seeks renewed authority to purchase up to a maximum of 3,963,637 ordinary shares of 25p each on the London Stock Exchange, representing 10% of the Company's issued ordinary share capital. The minimum price which may be paid for an ordinary share is 25p. The maximum price which may be paid for an ordinary share on any exercise of the authority will be restricted to the highest of (i) an amount equal to 5% above the average middle market quotations for such shares as derived from the London Stock Exchange Daily Official List for the five business days before the purchase is made and (ii) the higher of price of the last independent trade and the highest current independent bid on the London Stock Exchange. The maximum number of shares and the price range are stated for the purpose of compliance with statutory requirements in seeking this authority and should not be taken as an indication of the level of purchases, or the prices thereof, that the Company would intend to make. ## Dividends The Board has declared a final dividend of 5.0cts per share (2020: 1.0cts), in line with our reporting currency, in respect of the year to 31 December 2021. Subject to shareholders approval of Resolution 3 at the annual general meeting, the final dividend will be paid on 15 July 2022 to those shareholders on the register on 10 June 2022. While the dividend is declared in US Dollar, as mentioned in the Shareholders Information section of the Annual Report, shareholders can choose to receive the dividends in Pounds Sterling. In the absence of any specific instruction up to the date of closing of the register on 10 June 2022, shareholders with addresses in the UK are deemed to have elected to receive their dividends in Sterling and those with addresses outside of UK in US Dollar. Shareholders who choose to receive the dividends in Pounds Sterling will do so at the exchange rate ruling on 10 June 2022, being the dividend record date. Based on the exchange rate at 22 April 2022 of $1.28 / £, the proposed dividend would be equivalent to 3.9p (2020: 0.8p). Shareholders are reminded that the last day to revoke a currency election is on 24 June 2022. Annual Report 2021 | Anglo-Eastern Plantations Plc 57 ## Directors’ Report AEP operates a dividend reinvestment plan (“DRIP”). Holders of the shares may elect to reinvest their final dividend. The latest election date is 24 June 2022. Please note, if a holder makes a partial DRIP election for shares, then the dividend for the remaining shares will be paid in Pound Sterling. Liability insurance for Company officers As permitted by the Companies Act 2006 the Company has maintained insurance cover for the Directors against liabilities in relation to the Company which remains in force at the date of this report. Post balance sheet events On 27 April 2022 the Indonesian government banned the export of CPO to try to stem the rising cost of cooking oil in Indonesia. News reports have generally indicated that this is a temporary measure as CPO is one of Indonesia’s largest export revenues, and also Indonesia cannot consume or utilise all the CPO it produces. The ban on the export of CPO, whilst it is in place, will affect the tender price AEP will achieve as the CPO is sold locally. On behalf of the Board Dato’ John Lim Ewe Chuan Executive Director, Corporate Finance and Corporate Affairs 29 April 2022 Annual Report 2021 | Anglo-Eastern Plantations Plc 58 ## Directors’ Responsibilities The Directors are responsible for preparing the annual report and the financial statements in accordance with UK adopted international accounting standards and 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 UK adopted International Accounting Standards ("IAS") and have elected to prepare the company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law) ("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 profit or loss for the Group for that period. In preparing these financial statements, the Directors are required to: • select suitable accounting policies and then apply them consistently; • make judgements and accounting estimates that are reasonable and prudent; • state whether they have been prepared in accordance with UK adopted international accounting standards, subject to any material departures disclosed and explained in the financial statements; • prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and the Company will continue in business; and • prepare a Directors’ Report, a Strategic Report and Directors’ Remuneration Report which comply with the requirements of the Companies Act 2006. 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. 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. The Directors are responsible for ensuring that the annual report and accounts, taken as a whole, are fair, balanced, and understandable and provides the information necessary for shareholders to assess the group’s performance, business model and strategy. 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”) The Directors confirm to the best of their knowledge: • The financial statements have been prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit and loss of the Group. • The annual report includes a fair review of the development and performance of the business and the financial position of the Group and Company, together with a description of the principal risks and uncertainties that they face. On behalf of the Board Dato’ John Lim Ewe Chuan Executive Director, Corporate Finance and Corporate Affairs 29 April 2022 Annual Report 2021 | Anglo-Eastern Plantations Plc 59 # Directors ### **Madam Lim Siew Kim** (Non-Executive Chairman, age 73). Non-Executive Director since 29 November 1993 and was appointed as Non-Executive Chairman on 31 January 2011. Madam Lim does not hold any directorship in other public listed company. ### **Dato' John Lim Ewe Chuan** (Executive Director, Corporate Finance and Corporate Affairs, member of Audit, Nomination and Corporate Governance and Remuneration Committees, age 72). Appointed on 26 April 2008. On 1 September 2010 he was appointed as the Executive Director. Prior to 1 September 2010, Dato' John Lim was the Senior Independent Non-Executive Director. Chartered Certified Accountant; Retired as a Partner with UHY Hacker Young LLP, London on 30 April 2019 where he was a Partner since 1998; previously he had a professional accounting career in Singapore and the UK. ### **Lim Tian Huat** (Senior Independent Non-Executive Director, Chairman of Audit Committee, Chairman of Nomination & Corporate Governance Committee and member of Remuneration Committee, age 67). Appointed on 8 May 2015. Fellow of the Association of Chartered Certified Accountants and member of the Malaysian Institute of Accountants and Malaysian Institute of Certified Public Accountants. He is the founding President of Insolvency Practitioners Association of Malaysia. He holds a degree in Bachelor of Arts in Economics. Mr. Lim is a practising Chartered Accountant with his own Corporate Restructuring and Insolvency practice, Rodgers Reidy & Co and his Audit and Advisory practice, Lim Tian Huat & Co. He is also the Managing Director of Andersen Corporate Restructuring Sdn. Bhd. He was previously a Partner at Arthur Andersen & Co Malaysia from 1990 to 2002 and a Partner at Ernst & Young Malaysia from 2002 to 2009. Mr. Lim also served as the Commissioner of the United Nations Compensations Commission for a period of five years. He co-authored a book entitled "The Law and Practice of Corporate Receivership in Malaysia and Singapore". Mr. Lim is a Non-Independent Non-Executive Director of Malaysia Building Society Berhad and is the Senior Independent Non-Executive Director of Majuperak Holdings Berhad, both are listed on Bursa Malaysia. He is an Independent Non-Executive Director of DUET Acquisition Corp, listed in Nasdaq. He is also an Independent Non-Executive Director of PLUS Malaysia Berhad and Pacific & Orient Insurance Co. Berhad. ### **Jonathan Law Ngee Song** (Independent Non-Executive Director, Chairman of Remuneration Committee, member of Audit and Nomination & Corporate Governance Committees, age 56). Appointed on 4 July 2013. Mr. Law graduated from Australia National University in 1989 with a Bachelor of Commerce and Bachelor of Laws. He was admitted as an Advocate and Solicitor, to the High Court of Malaya in 1991. He is in legal practice and currently a Partner in Messrs. Azmi & Associates handling merger and acquisitions and corporate practice. He was previously a Partner in Messrs. Nik Saghir & Ismail (1996 to 2019) and Allen & Gledhill (1991 to 1995). Mr. Law is the Independent Non-Executive Chairman of Evergreen Fibreboard Berhad, listed on Bursa Malaysia. He is also the Chairman of the Remuneration Committee and a member of the Nomination Committee of Evergreen Fibreboard Berhad. He is also a Non-Independent and Non-Executive Director of Pimpinan Ehsan Berhad (appointed on 25 February 2021). Annual Report 2021 | Anglo-Eastern Plantations Plc 60 ## Statement on Corporate Governance I am pleased to report on the activities of the Nomination and Corporate Governance Committee for the year ended 31 December 2021. This Statement on Corporate Governance forms part of the Directors’ Report. Compliance with the UK Corporate Governance Code AEP is committed to business integrity, appropriately high ethical standards and professionalism in all its activities and operations. This includes a commitment to high standards in corporate governance relating in particular to appropriate systems and controls adopted at a senior level of management of the Group and operation of the Board. The benchmark standards in this regard are set out in the UK Corporate Governance Code 2018 (‘the Code’), which was published in July 2018 which forms part of the Listing Rules of the London Stock Exchange. The Code is available from the Financial Reporting Council’s (“FRC”) website at www.frc.org.uk. The following provisions of the Code were not met throughout the financial year ended 31 December 2021: • Provision 19 relating to the Chairman in her role for more than nine years is fully explained on page 62; • Provision 21 relating to a regular formal and rigorous externally facilitated board evaluation on page 65 • Provision 24 and 32 relating to the Executive Director inclusion as a member of the Audit and Remuneration Committees is fully explained on page 65. Monitoring compliance with the Code is the responsibility of the Nominations and Governance Committee. All Committee terms of reference have been reviewed to reflect the requirements in the Code. The core objective of the Board is to create and deliver the long- The Board is accountable to stakeholders for ensuring that the term sustainable success of the Company, generating value for Group is appropriately managed. The Board sets the Group’s risk shareholders and contributing to the wider society in a way that appetite and satisfies itself that financial controls and risk is supported by the right culture and behaviours. management systems are robust, while ensuring the Group is adequately resourced. The Board receives regular updates on See page 12 for more details on the business model and audit, risk and internal control matters with detailed oversight strategy. undertaken by the Audit Committee and its findings are reported to the Board. See pages 67 to 71 for more details on audit, risk management The Board has agreed a clear division of responsibilities and internal control and the work of the Audit Committee. between the running of the Board and running the business of the Group, which is supported by the corporate governance framework. Responsibilities are clearly defined in role statements to ensure that no one individual has unrestricted The Board, supported by the Remuneration Committee, ensures powers of decision-making and no small group of Directors can that the remuneration policies are designed to support strategy dominate the Board’s decision-making. and promote long-term sustainable success. Executive remuneration is aligned to the successful delivery of the Committee terms of reference determine the authority given to Company’s long-term strategy. each of the Board’s Committees. See pages 74 to 75 for more details on the remuneration policy For more details on Board composition, leadership and role and implementation of the policy. statements see pages 60, 62 to 66. Further details demonstrating how the Principles and Provisions of the Code have been applied can be found throughout the Corporate governance report, the Directors’ report, each of the The Board, with the support of the Nominations and Governance Board Committee reports and the Strategic report. Committee, keeps under constant review the composition of the Board and its Committees, succession planning, diversity, The Financial Reporting Council (“FRC”) is responsible for the inclusion and governance-related matters. publication and periodic review of the UK Corporate Governance Code and this can be found on the FRC website www.frc.org.uk. The Board undertakes a review of its effectiveness and that of its Committees and Directors annually. See page 62 for more details on Board effectiveness. The activities of the Nominations and Governance Committee can be found on page 65. Annual Report 2021 | Anglo-Eastern Plantations Plc 61 Board leadership and company purpose. Remuneration. Audit, risk and internal control. Composition, succession and evaluation. Division of responsibilities. ## Statement on Corporate Governance Relationship Agreement with Controlling Shareholder The UK Listing Rules require a premium listed issuer with a controlling shareholder to have in place a relationship agreement with the controlling shareholder. The mandatory requirement for the relationship agreement is intended to prevent controlling shareholders from exercising their influence in a way that is improper or unfair to minority shareholders. The requirement is not intended to prevent a controlling shareholder from engaging fairly with an issuer or legitimately disagreeing with the issuer and neither are they intended to prevent shareholders from holding board positions. AEP Plc has identified all controlling shareholders and regarded its major shareholder, Genton International Limited (“Genton”) as the only controlling shareholder. In this respect, the Company entered into a relationship agreement with Genton on 14 November 2014. The agreement is available for inspection by the shareholders upon request from the Company Secretary. The Board has reviewed this agreement with the controlling shareholder in 2020 and concluded that AEP Plc has complied with the independence provisions included in the agreement and that, in so far as it is aware, those independence provisions have been complied with by Genton. The Board The Board is responsible for the proper leadership of the Company for the long-term success of the Company and Group. The Board is supplied with relevant, timely and accurate information for review prior to each meeting to enable them to discharge their duties. The Audit Committee is responsible for the integrity of the financial information and this is achieved by interacting with the management and with the internal auditors. The Board has identified and formally adopted a schedule of key matters that are reserved for its decision, including the annual fiscal and capital budgets, interim, preliminary and final results announcements, final dividends, the appointment of Directors and the Company Secretary, circulars to shareholders, Group treasury policies and acquisitions. Other matters are delegated to Board committees, the details of which are set out below. AEP is led by a strong and experienced Board of Directors (see biographical details set out on page 60). During 2021 the Board comprised the Non-Executive Chairman, one Executive Director and two Non-Executive Directors, both of whom are considered by the Board to be Independent. Dato’ John Lim Ewe Chuan was appointed as the Executive Director, Corporate Finance and Corporate Affairs on 1 September 2010. Prior to 1 September 2010, Dato’ John Lim was the Senior Independent Non-Executive Director. The Executive Director in his capacity is the de-facto Chief Executive Officer (“CEO”). Madam Lim Siew Kim was appointed as the Non-Executive Chairman on 31 January 2011. Neither external search consultancy nor open advertising was used for the appointment. Although Madam Lim has been the Chairman for more than nine years which is not in compliance with Provision 19 of the Code, the Nomination and Corporate Governance Committee, however, is of the view that Madam Lim, who indirectly owns 52% of the Company’s shares, together with her experience in the palm oil plantation business since 1993 is an appropriate candidate for the position. The other members of the Board are satisfied that through the specific powers reserved for the Board, and given the presence of the Independent Non-Executive Directors, there is a reasonable balance of influence. AEP has complied with the Provision 11 of the Code which provides that at least half the Board, excluding the Chair, should be Non- Executive Directors whom the Board considers to be independent. The Board ensures that the Company’s purpose, values, strategy and culture are aligned to cater for the community at large, as fully explained in the CSR section of the Strategic Report. The Nomination and Corporate Governance Committee will monitor continuously the future leader and talents within the Group as well as outside the Group. This is essential to ensuring a continuous level of quality in management, in avoiding instability by helping to mitigate the risks which may be associated with unforeseen events, such as the departure of a key individual, and in promoting diversity and inclusion. The Company continues to have a systematic approach to succession planning for Non-Executive Directors. The Chairman has a personal dialogue with individual directors at least once a year to discuss the business of the Group in general and their plans, if any, to facilitate succession planning especially where the director has served for more than nine years. Annual Report 2021 | Anglo-Eastern Plantations Plc 62 ## Statement on Corporate Governance Independence of the Non-Executive Directors The Board has evaluated the independence of each of its Non-Executive Directors. Following this assessment, the Board has determined that, throughout the reporting period, both of its Non-Executive Directors, who were appointed for specified terms of office, were independent, based above all on their objectivity and integrity. The terms and conditions relating to the appointment of the Non-Executive Directors are available from the Company Secretary. In arriving at its conclusion, the Board considered the factors set out in Provision 10 of the UK Corporate Governance Code including, inter alia, whether any of the Non-Executive Directors: • has been an employee of the Group within the last five years; • has, or had within the last three years, a material business relationship with the Group; • receives additional remuneration from the Group apart from a Director’s fee; • has close family ties with any of the Group’s advisors, Directors or senior employees; • holds cross-directorships or has significant links with other Directors through involvement in other companies or bodies; • has served more than nine years on the Board; or • represents a significant shareholder. The UK Corporate Governance Code acknowledges that a Director may be regarded as independent notwithstanding the existence of any of the above factors, provided a clear explanation is given. The Independent Non-Executive Directors have a wide range of business interests beyond their position with the Company and the rest of the Board agree unanimously that they have shown themselves to be fully independent. Senior Independent Non-Executive Director Mr. Lim Tian Huat, an experienced Chartered Accountant acted in the capacity of Senior Independent Non-Executive Director from 8 May 2015. Operation of the Board A schedule of duties and decisions reserved for the Board and management respectively has been adopted. The Audit, Nomination & Corporate Governance and Remuneration Committees have written terms of reference which are available for inspection upon request from the Company Secretary. The terms of reference are also available for download from the Company’s website under Sustainability - Corporate Governance section. Unless warranted by unusual matters, the Board normally meets two to three times each year. Otherwise, all other matters are dealt with by written resolution and telephone conference. During 2021 there were two formal Board meetings attended as follows: Attendance Madam Lim Siew Kim 1/2 Dato’ John Lim Ewe Chuan 2/2 Lim Tian Huat 2/2 Jonathan Law Ngee Song 2/2 Agenda and minutes of previous meetings were circulated prior to meetings. The Independent Non-Executive Directors met on their own during 2021. Telephone discussions between the Chairman and the Non-Executive Directors also took place outside these meetings. During 2021, the Board followed the Group results and the development of the activities of the various subsidiaries by means of monthly reports prepared by the management in Malaysia and Indonesia. It deliberated on the periodic results and measured its performance against other plantation companies. The annual budget for 2021 was tabled for the Board discussion and subsequent approval. The Executive Director received further monthly reports and minutes of the Executive Committee meetings in Indonesia chaired by the Group senior general manager from Malaysia and briefed the Board accordingly. Meetings were conducted online during the year as international borders were closed due to the Coronavirus pandemic. The objectives of the Executive Committee among others are to resolve operational Annual Report 2021 | Anglo-Eastern Plantations Plc 63 ## Statement on Corporate Governance issues and to drive the performance budget set at the beginning of every year by the Board. Besides the senior general manager from Malaysia, the Executive Committee is made up of senior members of the management team based in Indonesia which includes the President Director, the Chief Operating Officer, the Finance Director and the Engineering Director. The Senior Internal Audit Manager was regularly invited to attend and briefed the Executive Committee of significant audit findings and follow-up. The Board deliberated on the format and the venue for the forthcoming AGM on the 27 June 2022. As in previous years, the Board sought advice from its professional advisers and discussed several options. The Board is aware that shareholders wish to physically interact with Board members especially after two years of online AGMs where opportunities to discuss matters after the AGMs were limited. In order for the AEP to meet its responsibilities to shareholders and stakeholders through effective regular engagement and participation, the Board therefore approved to hold the up-and-coming AGM in London subject to no change in travel restrictions and international borders remain open, especially in the UK and in Malaysia. In addition, the Board deliberated on the dividend rate for the year. The Board was aware that some shareholders have requested for a higher dividend in view of the substantial cash balance in the Group. The Board reiterated that the Group should exercise prudence in these uncertain times and in view of the emergence of new virus variant which may cause a shutdown in our Indonesian operation. The Board is conscious of its obligations in respect of the viability statement in relation to going concern that the Group needs to have a cash buffer of at least twelve months from the date of the Annual Report and in the context of a possible shutdown the Board has taken a prudent and contingent view that the shutdown could be more than a year. The Board also believe that there should be a cash balance earmarked for attractive opportunities that may come along. The Board nevertheless raised the dividend to 5.0cts (2020: 1.0cts) in view of the better performance, together with an improved economic outlook for 2022. The issue of share buyback was also discussed and the Board after discussion with advisors was of the consensus that shares buyback does not necessarily improve the share price in the long term. Other contributing factors including economic cycle and governance are equally likely to influence the share price movement. The Board was also informed that recent market research concluded that share price of plantation companies is no longer driven by profitability due to ESG issues. The Board during the year also deliberated and approved a change in accounting policy to value land at historical cost rather than at valuation. This is explained in detail in the Audit Committee Report on page 69. The Board also approved the Audit Committee’s recommendation to dispose or discontinue the operations of the three plantations in South Sumatera in view of the continuing losses despite record CPO prices which is detailed in page 70. The Board during the year invited various fund managers to submit investment proposals to manage its funds, seeking a higher return and to hedge against a potentially volatile Indonesian Rupiah. The Board deliberated on the proposals and requested for the terms to be further refined. The Board reviewed the risks management process and noted the probable financial impact of the Covid-19 pandemic on the operation of the Group should the risks materialised. The Board was updated on various standard operating procedures put in place in Indonesia and Malaysia to ensure the safety of workers. Each Board member has access to the impartial advice and services of the Company Secretary, who is responsible to the Board for ensuring that appropriate procedures are followed. Where necessary, the Board members may seek independent advice from the Company’s brokers, including legal counsel at the Company’s expense. The Company maintained Directors’ and officers’ liability insurance throughout 2021. Non-Executive Directors are normally appointed for two-year terms renewable on the recommendation of the Board. To maintain the vitality of the Board, the Directors specify fixed terms of office for Non-Executives. However, the Board will review the position of each Director for the yearly re-election under the Code. The re-election of the independent Non-Executive Directors has always been on the basis of gaining a majority of the independent shareholders vote in addition to the total shareholders vote since this requirement was first introduced. Annual Report 2021 | Anglo-Eastern Plantations Plc 64 ## Statement on Corporate Governance Dato’ John Lim, the only Executive Director on the Board, sits on the Audit, Nomination and Remuneration Committees for 2021. Provision 24 and 32 of the UK Corporate Governance Code provide for smaller companies like AEP to have two independent Non-Executive Directors in the Audit and Remuneration Committees and a majority independent Non-Executive Directors in the Nomination and Corporate Governance Committee. In practice, companies would normally exclude the Executive Director from membership so as not to taint the independence of both the Audit and Remuneration Committees. However, the Board felt strongly that given the small composition of the various Committees, they would benefit from Dato’ John Lim’s wealth of commercial and audit experience. It was also felt that Dato’ John Lim being the only Director based in London could only adequately represent the Company in any shareholder and investor meetings if he sits in the three Committees. The Board also believes that the Non-Executive Directors, being professionals in their own areas of expertise would maintain their impartiality and independence by their majority presence in all three Committees. In 2021 the Board conducted a review of its performance by discussion. It concluded that the Board was performing effectively and that the Board members have the complementary skills appropriate to propel the Group in its strategic direction and for challenges ahead. No other major issues arose from this review. The Company does not appoint an external consultant to conduct a formal and rigorous evaluation of the Board’s performance as the Board believes that it had performed commendably going by the financial results achieved over the years when compared to its peers. Following a review of the internal control and risks management in April 2022 and in the absence of any reported failure and weaknesses which the Board considered significant, it concluded that these remain effective and sufficient for their purpose. In connection with the statutory provisions regarding directors’ conflict of interest, the Directors must avoid a situation in which the Directors have, or can have a direct or indirect interest that conflicts, or possibly may conflict with the interests of the Company. The duty is not infringed if the matter has been authorised by the Directors. Under the Articles, the Board has the power to authorise potential or actual conflict situations. The Board maintains effective procedures to enable the Directors to notify the Company of any actual or potential conflict situations and of those situations to be reviewed and, if appropriate, to be authorised by the Board. Directors’ conflicts situation if it arises is reviewed annually and authorisation is recorded in the Board minutes. Nomination and Corporate Governance Committee The Nomination and Corporate Governance Committee currently comprises Mr. Lim Tian Huat (Chairman), Dato’ John Lim Ewe Chuan and Mr. Jonathan Law Ngee Song. The committee had two meetings during 2021, attended by all members. The policy on diversity is described on page 48 of the Strategic Report. During the year, the Nomination Committee reviewed and deliberated on the Statement of Corporate Governance for inclusion in the Annual Report. It also met to recommend and extend the contract of three directors. Whilst no formal training programme was arranged for the year, the Board received periodic briefings on legal, regulatory, operational and political developments affecting the Group. As in the past the Board will not hesitate to arrange training on specific matters where it is thought to be required. Relations with shareholders All shareholders may attend the Company’s AGM and put questions to the Board and such questions must be with at least twenty working days’ notice. At the conclusion of the AGM, a summary of votes for each resolution is reported and made available at the company’s website as soon as practicable after the meeting. Shareholders will not receive a hard copy of the proxy form for the 2022 AGM. Instead shareholders will be able to vote electronically using the link https://www-uk.computershare.com/investor/. For more details please refer to online submission of proxy voting on page 8 of the Annual Report. In a typical year, the Executive Director would have contacted and met certain principal shareholders during the year to understand their concerns and views on governance and performance. The views of the shareholders are Annual Report 2021 | Anglo-Eastern Plantations Plc 65 ## Statement on Corporate Governance communicated to the Board to ensure that it is mindful of the shareholders’ sentiment and issues arising at all times. It is the intention of the Board to engage with identifiable shareholders who have voted against Company’s resolutions in the past. Despite the easing of the travel restriction and reopening of international borders, the Executive Director was not able to meet any of the principal shareholders during the year other than via telephone calls and email correspondence. Some shareholders declined to meet in person due to continuing concerns over the virus. The Executive Director was nevertheless able to meet up with some significant shareholders during the 1Q of 2022. The annual report, interim report and trading statements are intended to keep the shareholders informed as to the progress in the operational and financial performance of the Group. The Company maintains a corporate website at https://www.angloeastern.co.uk/. This website has detailed information on various aspects of the Group’s operations. The website is updated regularly and includes latest Company announcements, information on the Company’s share price, the price of crude palm oil, foreign currency movement of Indonesian Rupiah against US dollar and environmental, social and governance matters. The Company’s results and other news releases issued via the London Stock Exchange’s Regulatory News Service are published on the “Investors Information” and “News” sections of the website and together with other relevant information concerning the Company and the Industry, are available for downloading. The website was upgraded recently to enable shareholders and investors to select and receive e-mail alerts from the Company on the selected regulatory news to follow the development of the Company. Environmental and corporate responsibility In 2004 a group of growers, processors, retailers and wildlife and conservation groups founded the “Roundtable for Sustainable Palm Oil”, known as RSPO, to codify and promote best practices in the industry. Although AEP is not a member of the RSPO, the Group’s management and Directors take a serious view of their environmental and social responsibilities and are fully committed to the principles developed by RSPO. Many of these principles overlap with ISPO and MSPO of which compliance is mandatory for AEP. These principles cover eight headings as follows: • Transparency; • Compliance with local laws and regulations; • Commitment to long-term economic and financial viability; • Use of appropriate best practices by growers and millers; • Environmental responsibility and conservation of natural resources and biodiversity; • Responsible consideration of individuals and communities affected by growers and mills; • Responsible development of new plantings; and • Commitment to continuous improvement in key areas of activity. Within these headings are 40 detailed principles. Among the most important are: • Not to remove primary forest; • Not to use fire for clearing areas designated for new or replanting; • To follow accepted soil and water conservation practices; • To use agrochemicals in ways that do not endanger health or the environment and to promote non-chemical methods of pest management; • To leave wild areas for wildlife corridors, water catchment and riparian protection; • Provide full treatment of mill effluent water; • Ensure the wishes of local communities and individuals are taken account of; and • To pay to individuals with residual rights over land only freely agreed compensation, in addition to following government land regulations. AEP seeks to comply with these principles in all areas of its activities. Some of the measures taken for environmental protection are disclosed and updated in the company’s website from time to time. Lim Tian Huat Chairman, Nomination and Corporate Governance Committee 29 April 2022 Annual Report 2021 | Anglo-Eastern Plantations Plc 66 ## Audit Committee Report Composition The Audit Committee comprises Mr. Lim Tian Huat (Chairman), Dato’ John Lim Ewe Chuan and Mr. Jonathan Law Ngee Song, all of whom are considered by the Directors to have relevant financial and professional experiences to discharge their specific duties with respect to the Audit Committee. Please see their qualifications in page 60. Mr. Lim participated in four external courses and seminars in 2021 organised by Malaysian Institute of Accountants. Topics covered were cyber security awareness, the role of directors and senior management in maximising integrity, anti-money laundering and counter financing for terrorism, code of ethics when exercising judgement, reporting standards and forum for audit practitioners. Dato’ John Lim attended several recorded webinars on IFRS and UK GAAP updates, sustainability and climate change reporting update including streamlined energy and carbon reporting (“SECR”), FCA listing rule on TCFD disclosure and European Single Electronic Format (“ESEF”) reporting. Mr. Jonathan Law attended two webinar training covering topics on sustainability reporting ensuring relevance to the financial market and rescue mechanisms for financially distressed companies facing liquidation organised jointly by Rating Agency of Malaysia and Malaysian Investor Relations Association and a local law firm. Both Mr. Lim and Dato’ John Lim have recent and relevant financial experience in their discharge of duties on the Audit Committee. Roles of the Audit Committee Audit Committee is responsible for: • Monitoring the integrity of the financial statements and reviewing formal announcements of financial performance and significant reporting issues and judgements that such statements and announcements are fair, balanced and understandable for shareholders to assess the company’s financial position and performance, business model and strategy; • Monitoring and reviewing the effectiveness of internal financial controls, internal controls and risk management systems; • Making recommendations to the Board in relation to the appointment, reappointment and removal of the external auditor, their remuneration and terms of engagement; • Reviewing and monitoring the independence and objectivity of the external auditor and the effectiveness of the audit process; • Developing and implementing policy on the engagement of the external auditor to supply non-audit services, ensuring there is prior approval of non-audit services, considering the impact this may have on independence, taking into account the relevant regulations and ethical guidance in this regard, and reporting to the Board on any improvement or action required; • Reporting to the Board on how it has discharged its responsibilities; • Providing advice to the Board on the assessment of the principal risks facing the Group; and • Providing advice to the Board on the form and basis underlying the longer-term viability statement and going concern statement in the Annual Reports. The Committee monitors the engagement of the auditor to perform non-audit work. The ethical standard of International Standards on Auditing requires the external auditor to evaluate threats to independence and discuss this with the Audit Committee. The external auditor will be responsible for maintaining a record of all non-audit services undertaken and for ensuring that they do not undertake any of the prohibited services. To ensure that the external auditor satisfies these ethical standards on auditing, the Group had decided not to engage the external auditor for non-audit services for the Company and its affiliates except for the review of the interim report for compliance before announcement. The Committee considered that the nature and limited scope of, and remuneration payable in respect of, this engagement was such that the independence and objectivity of the auditor were not impaired. The members of the Committee discharge their responsibilities by formal meetings and informal discussions between themselves, by meeting with the external auditor, the internal auditors and management and by consideration of reports by management and by holding at least two formal meetings in each year. Annual Report 2021 | Anglo-Eastern Plantations Plc 67 ## Audit Committee Report It receives reports from executive management in Indonesia and Malaysia and focuses principally on reviewing reports from management and considers whether significant risks in the Group are identified, evaluated, managed and whether significant weaknesses are promptly remedied including, but not limited to, commodity price movements, exchange rate movements, political and social change and government legislation. Where necessary the Committee also seek independent advice from professionals and experts. Overview The Audit Committee met prior to the completion of the 2021 accounts and five times during 2021 with full attendance in all meetings. st During the year, the Committee reviewed and discussed the 2020 Annual Report, 2021 Interim Results, 1 Quarter rd and 3 Quarter Trading Statement for 2021. The Committee also deliberated and recommended to the Board the dividend rate for the Company. The Committee updated the risks register chart annually and deliberated on the probability of various material risks from occurring and the resulting financial impact should the risks materialise. The Committee concluded that produce prices are the biggest risks with high probability of occurring and with high financial impact. The risks of Coronavirus affecting a major part of business are low considering the geographical spread of its operations but if it does materialised, the financial impact would be high. With the Group holding a high amount of Indonesian Rupiah, the risks of currency exchange rates movement are high with medium financial impact. The country, regulatory and governance practices together information technology security risks have medium likelihood of happening with medium to low financial impacts. All other risks are generally low in financial impact. See page 42 for the map of principal risks. The Audit Committee deliberated and set the budget targets for 2021 for the Board’s approval. The Audit Committee have regular dialogues, both formal and informal with the senior management in Indonesia and Malaysia and the discussions are open and constructive. During the year the Audit Committee decided to change the current land valuation policy from fair/market value to historical cost. An analysis was conducted of AEP's peers in the UK which showed that the majority reported their land at historical cost therefore it was agreed that this change in policy would provide a more readily comparable result and improve the quality of the financial information provided. The Audit Committee evaluated the performance of the three plantations in South Sumatera and recommended to the Board to appoint a consulting firm in Indonesia to dispose off the three plantations in South Sumatera. The three plantations have been incurring losses since inception despite the record CPO prices due to continuous low rainfall and geographical constraints. The performance of these plantations in South Sumatera is provided in the Business review section of the Strategic report on page 17. The Audit Committee streamlined the calculation and valuation methodology of biological assets (“BA”) based on industrial practice. It now uses one-month FFB production instead of two months to arrive at its BA value for reporting purposes. The Audit Committee scrutinised the items in the financial statements which required management judgements, including in the change in land value to historical cost and the assets held for sale and discontinued operations and was satisfied that they are appropriately reflected in the financial statements. The Senior Internal Audit Manger presented his Internal Audit plan for the year which was approved by the Audit Committee. He also presented his audit findings and interacted with members of the Audit Committee in one of the meetings. Internal audit reports were tabled and discussed in detail in three of the Audit Committee meetings in 2021. Following the Quality Assurance Review on the internal audit department last year, the Board has appointed Deloitte Indonesia to co-source the internal audit and to conduct audit workshop for our internal audit team starting from next year. This hopefully will provide the Board with further assurance and comfort as to the effectiveness of the internal Annual Report 2021 | Anglo-Eastern Plantations Plc 68 ## Audit Committee Report audit functions and to satisfy itself on the integrity of the financial statements. Under the co-sourcing arrangement, Deloitte will assign experienced personnel to work with AEP internal audit team in performing audit review in five significant component companies in Indonesia. The audit will focus on areas such as procure to pay, inventory management, cash and bank management, fixed asset and bearer plant management and payroll. Co-sourcing allows the Group to access specialists and industry leaders in best practice guidelines to effectively improve our internal audit methodology and approach used in planning, execution and reporting which could enrich the internal audit team capabilities. It will also organise an audit workshop for the internal audit team which will touch on internal audit methodology and cycle, common mistakes in internal audit, introduction to data analytics and how to apply these tools in executing internal audit projects and reporting management. External Audit BDO LLP are the external auditors. The engagement Partner who has overall responsibility for the audit is Nigel Harker who is in his second year of engagement with the Group. The external auditor BDO LLP have been appointed as the Company’s external auditors since the financial year ended 2001. In accordance with good governance, the audit services were competitively tendered in 2014, whereby BDO LLP was reappointed. The Group intends to put the statutory audit out to tender in 2023 when BDO LLP are mandated to be rotated under the independence rule after the audit of the Group’s financial statements for the year ending 31 December 2023. The Committee formally met online with the external auditor twice in 2021 to discuss the audit findings and to plan the audit for 2021 financial year. The external auditor, during the audit planning, highlighted to the Audit Committee their scope of audit and their assessment of areas of audit risks. The significant risks include impairment of bearer plants, recoverability of plasma scheme receivables, management override of controls, revenue recognition, completeness of related party transactions and accounting for assets held for sale and discontinued operations. Bearer plants, held as property, plant and equipment, together with estate land are valued at historical cost (IAS 16). Under IAS 36 - Impairment of Assets, an entity is required, at the end of each reporting period, to assess whether there is any indication that an asset may be impaired, or if a previously recognised impairment should be reversed. The palm oil industry is likely to be heavily impacted by climate change and sustainability which will need to be factored into any impairment considerations. This would include the physical risks such as flooding and the impact on plantation growth of rapid changes in weather patterns, as well as the transitional risks such as changes in government policy on the use of palm oil. In addition, several of the Group’s land leases in Indonesia are nearing expiry and, although renewal is expected to be granted, it will involve the Group needing to incur expenditure to support plasma programmes or other assistance to the local community such as through education or machinery. Those costs will be incorporated into the impairment model where appropriate. There is an inherent risk that the valuation of these assets may be materially misstated given the significant judgement involved in assessing whether there are indicators of impairment or impairment reversal and subsequently, the quantum of any such charge. Having considered all the factors that could affect the carrying value of Bearer plants held as property plant and equipment, together with the estate land, the Audit Committee is of the view that the Bearer plants are fairly stated after recognising a reversal of impairment of $5.4 million as at the year end. AEP hold amounts due from cooperatives under the plasma programmes within non-current receivables on the statement of financial position. In some instances where the cooperatives are granted a loan, AEP will provide the guarantee for that loan, in which case AEP will assess the likelihood of their ability to repay this loan in order to determine the correct accounting treatment. There is a risk that the receivables due from cooperatives may not be recoverable and an additional risk that, where a guarantee is given against a loan and there is a default, in which case AEP will become liable. In both cases expected credit losses (“ECL”) may be recognised in accordance with IFRS 9 - Financial instruments. The risk of fraud due to management override of controls and revenue recognition due potentially to performance obligations linked to compensation or shareholders’ expectations could be achieved by manipulating judgements and estimates or through the posting of journals in accounting records. The Audit Committee ensured completeness of related party transactions by requiring all Directors and key personnel to disclose any related party relationships, transactions, outstanding balances including financial commitments directly Annual Report 2021 | Anglo-Eastern Plantations Plc 69 ## Audit Committee Report or indirectly with the Group via a signed prescribed form for this purpose. The Audit Committee may carry out third party search, if applicable. As explained earlier, the Board has appointed a consulting firm in Indonesia to dispose three of the Group’s lesser performing plantations located in South Sumatera. Under IFRS 5 - Non-current assets held for sale and discontinued operations sets out specific criteria which, if met prior to 31 December 2021, would mean that those assets and liabilities to be transferred to a buyer would be entered into a disposal group and recognised in current assets and current liabilities as “held for sale”. These specific considerations include effective date, cease of depreciation on assets classified as held for sale, impairment of assets prior to reclassification and to recognise impairment loss on plasma receivables as they are unlikely to be recovered. IFRS 5 states that, if a disposal group represents a separate major line of business or geographical area of operations which can be clearly distinguished, operationally and for financial reporting purposes, from the rest of the entity then it should be classified as a discontinued operation and disclosed separately as such in the income statement for both the current and prior year. The Audit Committee concluded that the criteria to categorise the sale of the three plantations as assets held for sale have been met, as the Board has set a realistic achievable price for the three plantations to be sold by the end of 2022. Other risks identified include valuation of biological assets, valuation of defined benefit obligation and recoverability of income tax receivables. The auditor continued to stress on directors’ responsibilities under the UK Corporate Governance Code, definition and application of materiality, impact of climate change on financial statements through the fair value of assets, asset impairments, or reductions in the useful economic lives of assets. The auditors reiterated the need for proper disclosure consistent with the recommendations of the TCFD for 2021. Due to the travel restriction and quarantine requirement in Indonesia, the audit engagement team BDO LLP, from the UK reviewed the work of the component auditors remotely. Before finalizing the accounts, the Audit Committee conducted a stress test premise on the shutdown of the entire Group’s estates and mills operation for a year as a result of Covid-19. Based on this scenario, the cash flow projections showed that the Group has sufficient resources to continue operating as a going concern for the next five years. During the year the Committee carried out an assessment of the effectiveness of the external audit process. The assessment was led by the Chairman of the Audit Committee, assisted by the Senior General Manager and the Group Accountant and focused on certain criteria which the Committee considered to be important factors in demonstrating an effective audit process. These factors included the quality of audit staff, the planning and execution of the audit according to agreed plans and timeline, provision of sound advice on technical issues and degree of independence and professionalism displayed during the audit for 2020. The tenure of audit and extent of non-audit work that will affect the independence of the auditor were reviewed. During 2021, the non-audit work undertaken by BDO LLP (UK) was on the review of the interim report for compliance before the announcement. The Committee considered the nature, limited scope of engagement and remuneration paid were such that the independence and objectivity of the auditor were not impaired. Fees paid for audit and non-audit services are provided in note 6. The Committee considered the key members of the audit engagement team and component auditors involved in the Group Audit. This includes the Audit Partner and the Audit Manager from BDO LLP (UK) and the various Partners from BDO in Malaysia and Indonesia. Broadly, the same team from last year conducted the audit except for the new Audit partner from BDO Indonesia. Following this assessment, the Committee concluded that the external audit process remained effective, and that the objectivity of the external auditor was not impaired and that it provides an appropriate independent challenge of the senior management of the Group. Internal control The Company has followed the Code provisions on internal control since 1999 and the Guidance on Risk Management, Internal Control and Related Financial and Business Reporting issued by the Financial Reporting Council in 2014. The Board has overall responsibility for the Group’s systems of internal control and risk management and for reviewing its effectiveness. Such a system is designed to manage, rather than eliminate, the risk of failure to achieve business objectives and can only provide reasonable and not absolute assurance against material misstatement or loss. The Audit Committee reviews and monitors specific risks and internal control procedures and reports to the Board where appropriate. Executive staff and Directors are responsible for implementation of control procedures and for identifying and managing business risks. Annual Report 2021 | Anglo-Eastern Plantations Plc 70 ## Audit Committee Report The Group has in-house internal auditors who visit operating sites in Indonesia regularly based on an approved Internal Audit Plan and provide summarized internal audit reports to the Audit Committee on a regular basis. The Internal Audit also conducts special audits throughout the year as and when required by management. The internal audit team provides objective assurance as to the effectiveness of the Group’s systems of internal control and risk management of the Group’s operating management to the Committee. Follow-up audits and discussions are also held to ensure remedial actions are taken promptly. The internal audit review is a continuous and sequential process and in any one year does not necessarily cover all risks which are significant to the Group. The process aims to provide reasonable assurance against material misstatement or loss but cannot eliminate the risk of loss. Lim Tian Huat Chairman, Audit Committee 29 April 2022 Annual Report 2021 | Anglo-Eastern Plantations Plc 71 ## Directors’ Remuneration Report Overview I am pleased to report on the activities of the Remuneration Committee for the year ended 31 December 2021. It sets out the remuneration policy and remuneration details for the Executive and Non-Executive directors of the Group. It has been prepared in accordance with Schedule 8 of SI 2008/410 Large and Medium-sized Companies and Groups (Accounts and reports) Regulations 2008. The Companies Act 2006 requires the auditor to report to the shareholders on certain parts of the Directors’ Remuneration Report and to state whether, in their opinion, those parts of the report have been properly prepared in accordance with the Regulations. The parts of the annual report on remuneration that are subject to audit are indicated in that report. The report by the Chairman of the Remuneration Committee and the policy statement are not subject to audit. During the year the Remuneration Committee reviewed the annual increment and bonus entitlement of senior management in Indonesia. In considering the bonus for 2021, the Committee took into account the achievement of the key performance criteria related to crop production, rate of new planting, oil extraction rates and implementation of cost reduction measures. It also made an informal comparison with other plantation companies for bonus payment. In addition, it also took into consideration the hardship caused by the pandemic in evaluating the related incentives given to the employees. The Remuneration Committee also considered the impact and significance made by changes to the Indonesian Manpower Law with the introduction of the Omnibus Law in November 2020 as majority of the Group’s operations are based in Indonesia. According to our actuary, the impact of the new law has resulted in a reduction on the retirement benefit liabilities of $2.2 million. The new law was introduced to stimulate the local economy and job creation in Indonesia by increasing its competitiveness and making it easier to do business. Primarily, the Omnibus Law streamlines complex regulatory environment and eased restrictions in critical areas which includes labour laws, capital investment, business licensing, corporate tax and land acquisition. This new law has made labour laws in Indonesia more flexible and investor-friendly and would impact the Group in the following areas: • Easier to recruit and replace foreign workers/managers. • Revokes the maximum time limit on fixed term employment contracts. The Law however requires the employer to pay compensation to a fixed term employee upon expiry of the fixed term contract. Plantation normally hire casual workers on short, fixed term contracts for seasonal upkeep and maintenance work to keep payroll costs low. • Implementation of working hours may be stipulated and agreed within the employment contract, company regulation or collective labour agreement. • Maximum overtime hours are increased to four hours per day and eighteen hours per week from the current three hour per day or fourteen hours per week. • Removes the long service leave unless agreed within the employment contract, company regulation or collective labour agreement. Previously workers who had worked continuously for six years or more were entitled to two months long service leave. • Simplifies the regulation of wages through the minimum provincial wage and minimum regency wage. The minimum sectoral wage is removed and small business are now exempted from the regulated wage tiers. • Provides additional grounds for termination of employees on grounds of efficiency if employer has incurred losses in operation or entered into suspension of debt payment obligation. Termination is also permitted if an employee violates the employment agreement, company regulation or collective labour agreement without need for warning letter if such termination for cause is specified in the relevant employment document or employees handbook. • Removes the employer obligation to pay 15% of the employee’s severance and long service pay in the form of housing and medication compensation. The employer only needs to pay one times severance, regardless of the reason for the termination. However, severance pay is maintained at two times when termination is due to prolong illness for at least twelve months. • Companies which do not provide annual leave to their workers may be subject to criminal sanctions. • Introduces new social security programmes, dealing with job loss security so as to provide a decent standard of living. Annual Report 2021 | Anglo-Eastern Plantations Plc 72 # Directors' Remuneration Report In addition, the Committee deliberated and renewed the contracts of three senior management personnel and three directors. The contracts for the directors were renewed with no change in their remuneration. None of the directors were involved in deciding the renewal and the compensation of their own contract. Measures to avoid or manage conflicts of interest are in the declarations of all Directors and senior managers in respect of related party transactions as detailed on page 69. The Committee believes that the remuneration packages should continue to motivate and reward individual performance in a way consistent with the best interest of the Company and its stakeholders. The Committee also deliberated on the 2021 Remuneration Report and recommended to the Board for acceptance. As part of the engagement of workforce, the Chairman of Remuneration Committee conducted two online meetings with employees' representatives and heads of employees' cooperatives in Sumatera and Kalimantan to discuss and obtain feedback on issues relating to their safety and welfare, working conditions, remuneration and ways to improve productivity. The meetings were productive and concluded that workers were generally happy and satisfied. Several representatives expressed their appreciation to AEP for the financial assistance provided during the period of lockdown and pandemic. Nevertheless, several issues were raised that need to be looked into. Staffs lamented on the rate of inflation in Indonesia and hope that AEP would pay better bonus on a timely basis with increment that matches the industrial standards. They also requested for additional deep wells to facilitate easier access to clean water in Bengkulu and Riau instead of buying bottled water. Staff working in mills also asked for a variety of food to be provided at staff canteen during their overtime. Management was also asked to review the number of school buses deployed in Riau plantation due to increasing number of students. There were also health concerns in two estates caused by dust pollution during the dry seasons affecting their homes and schools. A representative in one estate requested additional technical training for mill workers as well as to upgrade harvesting tools which he alleged to damage easily. The Committee would welcome your support for our Remuneration Report. The Remuneration Policy was previously voted and approved by the shareholders at the 2020 AGM and shall be effective from 1 January 2020 for three years. There is no change in the policy since September 2014. ## Composition The Remuneration Committee comprises of Mr. Jonathan Law Ngee Song (Chairman), Dato' John Lim Ewe Chuan and Mr. Lim Tian Huat. The Committee had two meetings in 2021, attended by all members. ## Voting at Annual General Meeting There was no change in the Remuneration policy which was last voted and approved in 2020. In that meeting, the shareholders voted in the following manner: | | Shares For | Shares Against | % Shares For | % Shares Against | | --- | --- | --- | --- | --- | | To approve Remuneration policy | 23,029,499 | 703,113 | 97.0% | 3.0% | It is the Company's policy to vote on the Remuneration policy once every three years or if there is a change in the policy within the three years. The Director's Remuneration report was last approved at Company's AGM on 28 June 2021. In the meeting, the shareholders voted in the following manner: | | Shares For | Shares Against | % Shares For | % Shares Against | | --- | --- | --- | --- | --- | | To approve Directors' Remuneration Report | 23,645,841 | 170,006 | 99.3% | 0.7% | The Company pays due attention to the results of voting. When there is substantial vote against any resolution in relation to Directors' Remuneration, the reasons for any such vote is sought and any action in response will be reported in the following year. Annual Report 2021 | Anglo-Eastern Plantations Plc 73 ## Directors’ Remuneration Report The Listing Rules require the re-election of independent directors in companies with a controlling shareholder to be voted separately by independent minority shareholders in addition to the approval of all shareholders. The results of the re-election of the independent directors in the 2021 AGM were: Policy of the Remuneration Committee The Committee sets the remuneration and benefits of the Executive Director. The Executive Director’s compensation is not linked to the profitability of the Group. It is linked to his role in respect of activities relating to corporate finance and corporate affairs, including liaising with the Company’s advisers and regulators and interaction with shareholders. When determining Executive Director’s remuneration, the Committee reviews the pay policy and levels for executives below the Board, as well as pay and conditions of employees throughout the Group. Other factors considered are individual performance, market conditions, the Company’s performance, pay and employment conditions of its other employees in the organisation and the need to maintain an economic operation. This policy which is similar to the previous approved policy will continue to be consistently applied in the next financial year. This policy including capping the remuneration at £90,000 per annum as set out below will continue to be applied for any new appointment. The table below summarises the key aspects of the Group’s Remuneration Policy for the Executive Director since September 2014 and has remained unchanged since that date. There is no bonus, fringe benefits, employee share option scheme or any other variable remuneration for the Executive Director. The table below summarises the key aspects of the Group’s Remuneration Policy for the Non-Executive Directors. The Committee periodically assesses the remuneration of the Non-Executive Directors and submits a proposal to the Board. Non-Executive Directors’ remuneration consists exclusively of a fixed payment. The Non-Executive Directors receive no benefit such as share options or other performance-related elements. The Committee makes recommendations on senior management pay and conditions, after consultation with the Chairman. In determining the remuneration policy of senior management, the Committee takes into account the need to attract, retain and motivate employees. To promote long-term sustainable success, the Committee makes external comparison with the current market trends and practices of equivalent roles considering the size, business complexity Base salary - fixed pay. To contain fixed costs. Capped at £90,000. The cap is reviewed periodically. The Fees. To attract and retain Determined by the Board within the limits set by the Annual Report 2021 | Anglo-Eastern Plantations Plc 74 | policy permits the cap to be changed if this is deemed individuals with suitable articles of association and by reference to comparable | | | | | | --- | --- | --- | --- | --- | | necessary to meet business, legislative or regulatory knowledge and organisations and to the time commitment expected. | | | | | | % Shares For % Shares Against Shares Against % Shares Against Shares For By independent shareholders: Re-election of Mr Jonathan Law Ngee Song By all shareholders: Re-election of Mr. Lim Tian Huat 23,528,702 Re-election of Mr Jonathan Law Ngee Song 23,798,952 Re-election of Mr. Lim Tian Huat requirements. experience. Shares Against % Shares For Shares For | 3,247,038 2,976,788 16,938 99.5% 105,545 96.6% 105,545 16,938 | 99.6% 99.9% 0.5% 3.4% 0.4% 0.1% Purpose Purpose | Type Type | Maximum payment Maximum payment | ## Directors’ Remuneration Report and relative performance. The following is a summary of the key components of remuneration packages of senior management: Base salary Base salaries of senior management are reviewed on an annual basis by the Remuneration Committee or when there is a change in the individual’s responsibilities. The Group does not seek the advice of an external consultant in determining the salaries of senior management and directors. Bonus The Group operates a bonus scheme for senior executives and managers of operating units, which is determined by weighted performance criteria including crop production, external crop purchase, increases in planted area, efficiency of mill performance and overall profitability. There is however no bonus scheme for any of the Directors. The operating units in Indonesia and Malaysia have in place a variable compensation policy which over the recent years rewarded senior executives and employees with bonuses ranging from one to seven months’ pay based on the individual’s and operating units’ performance. The key criteria used in the determination of the variable compensation policy for the bonus was revised in 2014 following discussion and consultation with the Company’s Chairman. Share options The UK and overseas executive share option schemes of the Company are administered and supervised by a committee consisting, in the majority, of Non-Executive Directors. These schemes are limited over their ten-year life to issuing no more than 10% of the issued ordinary share capital of the Company from time to time. They provide for options to be granted over treasury shares as well as over new shares. To avoid dilution, the Board intends generally to follow the treasury share route. Individual grants vest over three years. The total grant to each holder is determined by seniority and total market value at the date of grant is normally limited to two times base salary. Exercise of options is only permitted three years after grant, provided that the holder remains an employee of the Group throughout the period. There are no other performance criteria for exercise of options granted so far. The Company has not issued any share options to any Directors after 2004. No one in the Company has vested or unvested shares. Pensions The operating units in Indonesia participate in mandatory pension schemes for their local executives and management. There is no company-sponsored scheme for senior executives outside of Indonesia. No employees or shareholders are specifically consulted on the remuneration policy of the Company. If a significant shareholder expresses a particular concern regarding any aspect of the policy, the views expressed would be carefully weighed. Annual Report 2021 | Anglo-Eastern Plantations Plc 75 ## Directors’ Remuneration Report Annual Report on Remuneration Directors’ remuneration (audited) The following part provides details of the remuneration of all the Directors for the year ended 31 December 2021. The numerical components of these disclosures have been audited in accordance with Section 421 of the UK Companies Act 2006. The remuneration of all Directors who served during the year was: Executive Director’s/de-facto CEO’s Remuneration over 10 Years * The Executive Director’s basic salary on renewal of contract in September 2020 was revised from £7,500 per month (or £90,000 per annum) to £5,250 per month (or £63,000 per annum). The Executive Director’s salary from 2015 to 2019 was £90,000 per annum. The fluctuations during this period were the result of exchange translations. Annual Report 2021 | Anglo-Eastern Plantations Plc 76 Directors’ remuneration comprises of directors’ fees only. There were no other benefits, pensions, bonuses or share option expenses in | Year ended 31 Dec % of maximum | Benefit Pension Total 2020 Fixed Total 2021 Fixed Bonus Salary | Total | | | | | | --- | --- | --- | --- | --- | --- | --- | | respect of the Directors. Unaudited information | | | | | | | | (2) (1) (3) (4) | | | | | (2) (3) | (4) (1) | | Executive: Dato' John Lim Ewe Chuan Non-Executive: Lim Siew Kim Lim Tian Huat Jonathan Law Ngee Song 2020 2016 Audited information Name of Directors Total 2021 2019 2018 2017 2015 2014 2013 2012 Notes: | Appointed on 29 November 1993 and appointed as Non-Executive Chairman on 31 January 2011. Appointed as Executive Director on 1 September 2010. Previously was the Senior Independent Non-Executive Director. Appointed on 8 May 2015. Appointed on 4 July 2013. $103,000* $127,000* payment cap $116,000* $123,000* $113,000* $137,000* $133,000 $117,000 $105,000 $103,000 $127,000 Remuneration Remuneration $87,000* $116,000 $123,000 $113,000 $137,000 $133,000 $117,000 $105,000 | $87,000 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - | $000 $000 100% 100% 100% 100% 100% 100% | 103 187 200 90% 70% 89% 89% 87 58 55 21 21 21 21 | | | # Directors' Remuneration Report ## Relative importance of spend on pay ![img-19.jpeg](img-19.jpeg) ### Directors' interests The interests of the Directors together with those of their immediate families in the securities of the Company were as shown below: | Directors' beneficial interests at 31 December: | 2021 Ordinary shares | 2020 Ordinary shares | | --- | --- | --- | | Madam Lim Siew Kim | 20,551,914 | 20,551,914 | | Dato' John Lim Ewe Chuan | - | - | | Lim Tian Huat | - | - | | Jonathan Law Ngee Song | - | - | The beneficial interests disclosed for Madam Lim are held by Genton International Ltd and certain other companies of which Madam Lim is the controlling shareholder. There has been no change in the interests of the Directors in the securities of the Company between 31 December 2021 and the date of this report. Other than Madam Lim, none of the Directors had any interest in the securities of the Company between the date of their appointments and the date of this report. There is no requirement for Directors to hold shares in the Company. Other than as set out in notes 8 and 25 to the consolidated financial statements, no Director had a material interest in any contract of the Company subsisting during, or at the end of the financial year. No directors had any share options in the current or prior year. Annual Report 2021 | Anglo-Eastern Plantations Plc 77 ## Directors’ Remuneration Report Percentage annual change in Directors’ remuneration and for employees over FY2021 (not subject to audit) The Directors have service agreements with AEP Plc, the parent company. The Company has no employees other than the directors therefore voluntary disclosure has been given based on the Group’s employee information. The table below shows the annual change in the Directors’ pay compared with the Group’s average pay for an employee for 2019 to 2021. 1. Directors’ remuneration comprises of Directors’ fees only. 2. All Directors fees are paid in other currencies and the annual amount remains unchanged in 2020 and 2021. Service contracts All Directors, Executive and Non-Executive, have formal appointment letters. The Executive and Non-Executives are appointed normally on a one to two-year term with notice periods of one month to two months. The service contracts are kept at the registered office and may be inspected by shareholders on request. Notice periods for all other senior management are generally two months. Therefore, any remuneration payment for loss of office will be capped at a maximum of two months. It is not the Company policy to include provisions in directors’ service contracts for compensation for early termination beyond providing for an entitlement to payment in lieu of notice if due notice is not given. The unexpired term of the retiring Directors are: Madam Lim Siew Kim Expiry 30 January 2023 Dato’ John Lim Ewe Chuan Expiry 31 August 2022 Lim Tian Huat Expiry 7 May 2023 Jonathan Law Ngee Song Expiry 3 July 2022 Performance Graph The performance graph is set out on page 4 and shows the Company’s share price performance compared to the FTSE 100 index for the period of 2012 to 2021 (last ten years) to indicate the volatility and trend of the market generally. Except for one period, our share price had underperformed the FTSE 100 index. In determining senior management compensation, the Remuneration Committee is influenced by the operating performance of the Company and not directly by the share price. The FTSE 100 index has been selected for this comparison as there is no index available that is specific to the activities of the Company. Despite reporting stellar earnings, the share performance is likely held back by ESG concerns, reflecting a disconnection between earnings, CPO prices and company’s valuation. Investors see plantation companies as contributing to deforestation, open burning, high carbon emissions and labour related issues. Jonathan Law Ngee Song Chairman, Remuneration Committee 29 April 2022 Annual Report 2021 | Anglo-Eastern Plantations Plc 78 | | Group’s Group’s | | | | | --- | --- | --- | --- | --- | | Jonathan Law Jonathan Law | Dato’ John Lim Dato’ John Lim Average Average Madam Lim Madam Lim | | | | | 2020/2021 Bonus Benefits Executive Director Base Salary/fees Benefits 2019/2020 Executive Director Base Salary/fees Bonus Employees Employees Lim Tian Huat Lim Tian Huat | Ngee Song Ngee Song Ewe Chuan Ewe Chuan Siew Kim +32% +13% +12% Siew Kim -13% | -5% -6% Annual change in pay for Directors compared with the Group’s average employees Annual change in pay for Directors compared with the Group’s average employees +5% -16% -11% -4% | - - - - - - - - - - - - - - - - - - - - | Non-Executive Directors Non-Executive Directors | ## Auditor’s Report INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ANGLO-EASTERN PLANTATIONS PLC Opinion on the financial statements In our opinion: • the financial statements give a true and fair view of the state of the Group’s and of the Parent Company’s affairs as at 31 December 2021 and of the Group’s profit for the year then ended; • the Group financial statements have been properly prepared in accordance with UK adopted international accounting standards; • the Parent Company financial statements have been properly prepared in accordance with UK Generally Accepted Accounting Practice; and • the financial statements have been prepared in accordance with the requirements of the Companies Act 2006. We have audited the financial statements of Anglo-Eastern Plantations Plc (the ‘Parent Company’) and its subsidiaries (the ‘Group’) for the year ended 31 December 2021 which comprise the consolidated income statement, the consolidated statement of comprehensive income, the consolidated statement of financial position, the consolidated statement of changes in equity, the consolidated statement of cash flows, notes to the consolidated financial statements, the company statement of financial position, the company statement of changes in equity and notes to the company financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in the preparation of the Group financial statements is applicable law and UK adopted international accounting standards. The financial reporting framework that has been applied in the preparation of the Parent Company financial statements is applicable law and UK Accounting Standards, including Financial Reporting Standard 101 Reduced Disclosure Framework (United Kingdom Generally Accepted Accounting Practice). Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Our audit opinion is consistent with the additional report to the audit committee. Independence Following the recommendation of the audit committee, we were appointed by the Board of Directors on 14 June 2001 to audit the financial statements for the year ended 31 December 2001 and subsequent financial periods. The period of total uninterrupted engagement including retenders and reappointments is 21 years, covering the years ended 31 December 2001 to 31 December 2021. We remain independent of the Group and the Parent Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. The non-audit services prohibited by that standard were not provided to the Group or the Parent Company. Conclusions relating to going concern In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the Directors’ assessment of the Group and the Parent Company’s ability to continue to adopt the going concern basis of accounting included: Annual Report 2021 | Anglo-Eastern Plantations Plc 79 # Auditor's Report ## INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF ANGLO-EASTERN PLANTATIONS PLC (continued) - A review of management's assessment of going concern, including various stress test scenarios, challenge of the key assumptions used to make this assessment, such as Crude Palm Oil ('CPO') price and Fresh Fruit Bunch ('FFB') production tonnage, and the impact of a potential shut down of operations related to the Covid-19 pandemic and any potential impact of the conflict in Ukraine. These were assessed by reference to external market forecasts, industry production trends and experience to date of the impact of Covid-19 on the Group's operations; - A review of the Group's available cash resources as at 31 March 2022; and - A review of the adequacy and consistency of disclosures in relation to going concern in the Group financial statements with reference to management's going concern assessment. Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group and the Parent Company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue. In relation to the Parent Company's reporting on how it has applied the UK Corporate Governance Code, we have nothing material to add or draw attention to in relation to the Directors' statement in the financial statements about whether the Directors considered it appropriate to adopt the going concern basis of accounting. Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report. ### Overview | **Coverage** | 100% (2020: 100%) of Group revenue 96% (2020: 95%) of Group total assets | | | --- | --- | --- | | **Key audit matters** | **2021** | **2020** | | 1. Impairment of land and plantation assets | ✓ | ✓* | | 2. Accounting for assets held for sale and discontinued operations | ✓ | | | 3. Recoverability of amounts due from cooperatives under Plasma scheme | | ✓ | | 4. Valuation of leasehold land | | ✓ | | * Impairment of plantations classified as PPE is included as a key audit matter in both the current and prior period but has been expanded to include impairment of land following the change in accounting policy in the period to recognise land under the cost model rather than the revaluation model. This has also resulted in the key audit matter for the valuation of leasehold land no longer being applicable. | | | | Recoverability of amounts due from cooperatives under Plasma scheme is no longer considered to be a key audit matter as the balances with the most significant concerns over their recoverability reside within the companies that are held for sale and are therefore addressed by another key audit matter. | | | | **Materiality** | Group financial statements as a whole US$6.6m (2020: US$2.5m) based on 5% (2020: 5%) of profit before tax before biological asset movement. | | Annual Report 2021 | Anglo-Eastern Plantations Plc 80 ## Auditor’s Report INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ANGLO-EASTERN PLANTATIONS PLC (continued) An overview of the scope of our audit Our Group audit was scoped by obtaining an understanding of the Group and its environment, including the Group’s system of internal control, and assessing the risks of material misstatement in the financial statements. We also addressed the risk of management override of internal controls, including assessing whether there was evidence of bias by the Directors that may have represented a risk of material misstatement. The Group financial statements are a consolidation of twenty seven companies made up of the Parent Company, a principal sub-holding company, three management companies, four dormant companies and eighteen operating companies. Sixteen of the operating companies are located in Indonesia and two in Malaysia. The head office and main accounting function is located in Kuala Lumpur, Malaysia, with a second accounting function located in Medan, Indonesia, both at separate locations from the plantations. Based on our risk assessment we identified five operating companies which, in our view, are significant components and required a full scope audit of their complete financial information due to their size and a further twelve operating companies which required audit procedures on specific areas due to their risk characteristics. These audits were performed by BDO network firms in Indonesia and Malaysia which, together with additional procedures performed at Group level in respect of the impairment reviews of land and plantation assets, the recoverability of amounts due from cooperatives under the Plasma scheme and the accounting for assets held for sale and discontinued operations, gave us the evidence we needed to form our opinion on the Group financial statements as a whole. The audits and specific audit procedures performed on each of the operating companies identified above were performed largely by BDO Malaysia and BDO Indonesia, with additional work on the specific risk areas identified as Key Audit Matters, together with audit procedures over the Group consolidation and UK components, performed by BDO UK. The remaining components of the Group were not identified as being significant to the Group and these components were principally subject to analytical review procedures performed by the Group audit team. As part of the audit strategy, senior members of the Group audit team attended a number of meetings with management via video conference. The Senior Statutory Auditor met with the Executive Director in the UK and members of senior and Board management, including the Audit Committee, in Kuala Lumpur. Annual Report 2021 | Anglo-Eastern Plantations Plc 81 ## Auditor’s Report INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ANGLO-EASTERN PLANTATIONS PLC (continued) Our involvement with component auditors For the work performed by component auditors, we determined the level of involvement needed in order to be able to conclude whether sufficient appropriate audit evidence has been obtained as a basis for our opinion on the Group financial statements as a whole. In light of the international travel restrictions imposed as a result of the Covid-19 pandemic, the Group audit team was unable to travel to Indonesia or Malaysia, however were able to communicate effectively with component auditors and local management remotely in order to direct the component auditor’s work and review and evaluate the results of their work as necessary. Our involvement with component auditors included the following: • As part of our audit planning, we issued group audit instructions to both the Indonesian and Malaysian component teams and held remote planning meetings via video conference to discuss the Group and local risks identified and to agree the testing approach and audit timelines. The planning documentation on the respective audit files was also reviewed. • We performed a remote review of the complete audit files for the five operating companies in Indonesia considered to be significant by size and reviewed the audit work in relation to the specific areas identified for the remaining twelve companies, in both Indonesia and Malaysia, considered to be significant due to their risk characteristics. Following the review, any further work required by the Group audit team was performed by the component auditors. The component auditors visit the plantation estates on a rotational basis so that each estate is visited at least once every three years and this was still permissible for the current year audit under local Covid-19 restrictions. • At the completion stage, we attended closing meetings with local audit teams via video conference and reviewed component audit teams’ reporting, addressing risks and specific procedures raised. Discussions were held with Group management on the findings from our audit, including adjustments raised. Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit, and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Annual Report 2021 | Anglo-Eastern Plantations Plc 82 ## Auditor’s Report INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ANGLO-EASTERN PLANTATIONS PLC (continued) Impairment of land and plantation assets We performed our own assessment for indicators of (note 2(g), note 2(j) and note 13) impairment or impairment reversal across all plantations based on performance against production budget. Land and plantation assets (‘bearer plants’) fall within We assessed the independence, capabilities, objectivity the scope of IAS 16 Property, Plant and Equipment and competence of management’s expert. and are held at historical cost less depreciation. At the end of each reporting period, the Directors are We challenged the assumptions in the underlying data required to assess whether there is any indication that made by the expert and management, including the an asset may be impaired, or whether there is an possible impacts of climate change, through discussions, indication that a previously recognised impairment corroboration to independent external data sources in may be reversed. If any such indication exists, the respect of CPO price and, where available, through Directors shall estimate the recoverable amount of corroboration to supporting documentation and historical the asset. trends. The Directors have identified five estates with such With the use of our internal expert we recalculated the indicators and, having engaged an external expert, discount rate to determine an acceptable range which was have carried out an impairment review for those compared to the rate calculated by management’s expert. plantations, calculating the recoverable amount to be the asset’s value in use. The Directors exercise We performed sensitivity analysis on the CPO price and significant judgement in determining the underlying discount rate assumptions. assumptions used in this calculation, considered to be The calculations to support the disclosures given in respect Crude Palm Oil (‘CPO’) price and the discount rate, of the sensitivity of CPO price, discount rate and inflation for which disclosure is given around their sensitivity. rate were re-performed. We identified the impairment of land and plantation assets as a key audit matter due to the significant Annual Report 2021 | Anglo-Eastern Plantations Plc 83 How the scope of our audit addressed the key audit Key audit matter judgement and assumptions involved in its Key observations: Based on the procedures we performed, we found the key assumptions used by the Directors matter assessment. in assessing any impairment losses to be recognised or reversed to be appropriate. ## Auditor’s Report INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ANGLO-EASTERN PLANTATIONS PLC (continued) Accounting for assets held for sale and We reviewed the IFRS 5 criteria assessment prepared by discontinued operations management and compared this with our understanding of the facts and circumstances to determine whether the (note 2(r) and note 10) requirements of IFRS 5 to disclose the assets as held for The Directors have identified three of the Group’s sale and the operations as discontinued had been met. subsidiary companies for a planned disposal through sale and have categorised the appropriate assets as We gained an understanding of the sales process through held for sale in accordance with IFRS 5 Non-current discussion with the third party sales agent engaged by the Assets Held for Sale and Discontinued Operations. Group to facilitate the sale to corroborate the planned These companies have also been deemed to meet timeline for completion and its status. the criteria for discontinued operations and have been We identified all assets and liabilities within the three presented as such in the consolidated income subsidiary companies planned for sale at the date if initial statement. classification which were not included within the disposal We identified the accounting for assets held for sale group and considered for completeness. and discontinued operations as a key audit matter due We confirmed the appropriateness of all items which were to the significant judgement involved in assessing included within the disposal group and agreed their carrying whether the IFRS 5 criteria for held for sale and values prior to initial classification to underlying component discontinued operations have been met and the records. significant assumptions involved in determining the fair value less costs to sell of the relevant non-current We checked the arithmetic accuracy of management’s assets immediately before initial classification as held calculation of impairment losses on subsequent for sale and on subsequent remeasurement. remeasurement. We considered the reasonableness of the assumptions made by management in determining the likely proceeds achievable from a sale of the assets held for sale and corroborated these against valuation reports and analysis prepared by the advisors supporting management in their planned sale of the assets. We confirmed the appropriate extraction of data from Key observations: Based on the procedures we performed, we found the classification of assets held for sale and Annual Report 2021 | Anglo-Eastern Plantations Plc 84 Key audit matter How the scope of our audit addressed the key audit financial records for disclosure as held for sale and discontinued operations and the key assumptions used by the Directors in assessing any impairment losses prior matter discontinued operations. to and subsequent to initial classification to be appropriate. ## Auditor’s Report INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ANGLO-EASTERN PLANTATIONS PLC (continued) Our application of materiality We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements. We consider materiality to be the magnitude by which misstatements, including omissions, could influence the economic decisions of reasonable users that are taken on the basis of the financial statements. In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower materiality level, performance materiality, to determine the extent of testing needed. Importantly, misstatements below these levels will not necessarily be evaluated as immaterial as we also take account of the nature of identified misstatements, and the particular circumstances of their occurrence, when evaluating their effect on the financial statements as a whole. Based on our professional judgement, we determined materiality for the financial statements as a whole and performance materiality as follows: Component materiality We set materiality for each component of the Group based on a percentage of between 30% and 76% (2020: 21% and 88%) of Group materiality dependent on the size and our assessment of the risk of material misstatement of that component. Component materiality ranged from US$2,000,000 to US$5,000,000 (2020: US$500,000 to US$2,200,000). In the audit of each component, we further applied performance materiality levels of 75% of the component materiality to our testing to ensure that the risk of errors exceeding component materiality was appropriately mitigated. | Rationale for the Profit before tax before biological asset Total assets was selected as the | | --- | | benchmark applied movement was selected as the benchmark for determining materiality | | benchmark for determining materiality for the Parent Company’s financial | | for the Group financial statements as it statements since it is held primarily for Basis for determining 75% of materiality having considered a number of aspects including the expected | Annual Report 2021 | Anglo-Eastern Plantations Plc 85 | Basis for determining 5% of profit before tax before biological | | | 2% of total assets | | | --- | --- | --- | --- | --- | | is considered to be the key indicator of investment purposes. performance materiality total value of known and likely misstatements based on previous assurance | | | | | | Materiality materiality Performance materiality | US$6,600,000 US$2,500,000 US$1,200,000 US$1,200,000 US$4,950,000 US$1,900,000 US$900,000 US$900,000 | Group financial statements Parent Company financial | asset movement | | | the Group’s financial performance. engagements and other factors. | | | | | | | | 2021 2020 2021 2020 | | statements | ## Auditor’s Report INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ANGLO-EASTERN PLANTATIONS PLC (continued) Reporting threshold We agreed with the Audit Committee that we would report to them all individual audit differences in excess of US$132,000 (2020: US$50,000). We also agreed to report differences below this threshold that, in our view, warranted reporting on qualitative grounds. Other information The Directors are responsible for the other information. The other information comprises the information included in the annual report other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Corporate governance statement The Listing Rules require us to review the Directors’ statement in relation to going concern, longer-term viability and that part of the Corporate Governance Statement relating to the parent company’s compliance with the provisions of the UK Corporate Governance Code specified for our review. Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate Governance Statement is materially consistent with the financial statements or our knowledge obtained during the audit. Other Code • Directors' statement on fair, balanced and understandable set out on page 59; provisions Going concern • Board’s confirmation that it has carried out a robust assessment of the emerging and • The Directors' statement with regards to the appropriateness of adopting the going and longer-term principal risks set out on page 42; concern basis of accounting and any material uncertainties identified set out on pages viability • The section of the annual report that describes the review of effectiveness of risk 15 and 16; and Annual Report 2021 | Anglo-Eastern Plantations Plc 86 • The Directors’ explanation as to their assessment of the Group’s prospects, the period management and internal control systems set out on pages 70 and 71; and • The section describing the work of the audit committee set out on pages 67 to 71. this assessment covers and why the period is appropriate set out on page 15. ## Auditor’s Report INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ANGLO-EASTERN PLANTATIONS PLC (continued) Other Companies Act 2006 reporting Based on the responsibilities described below and our work performed during the course of the audit, we are required by the Companies Act 2006 and ISAs (UK) to report on certain opinions and matters as described below. Responsibilities of Directors As explained more fully in the “Directors’ Responsibilities” statement, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the Directors are responsible for assessing the Group’s and the Parent Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or the Parent Company or to cease operations, or have no realistic alternative but to do so. Strategic report In our opinion, based on the work undertaken in the course of the audit: and Directors’ Matters on We have nothing to report in respect of the following matters in relation to which the • the information given in the Strategic report and the Directors’ report for the financial year report which we are Companies Act 2006 requires us to report to you if, in our opinion: for which the financial statements are prepared is consistent with the financial statements; required to and report by • adequate accounting records have not been kept by the Parent Company, or returns • the Strategic report and the Directors’ report have been prepared in accordance with exception adequate for our audit have not been received from branches not visited by us; or applicable legal requirements. • the Parent Company financial statements and the part of the Directors’ remuneration report to be audited are not in agreement with the accounting records and returns; or In the light of the knowledge and understanding of the Group and Parent Company and its Annual Report 2021 | Anglo-Eastern Plantations Plc 87 Directors’ In our opinion, the part of the Directors’ remuneration report to be audited has been properly • certain disclosures of Directors’ remuneration specified by law are not made; or environment obtained in the course of the audit, we have not identified material misstatements remuneration prepared in accordance with the Companies Act 2006. • we have not received all the information and explanations we require for our audit. in the Strategic report or the Directors’ report. ## Auditor’s Report INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ANGLO-EASTERN PLANTATIONS PLC (continued) Auditor’s responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. Extent to which the audit was capable of detecting irregularities, including fraud Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, at both the Group and component levels is detailed below: • We gained an understanding of the legal and regulatory framework applicable to the Group and the industry in which it operates through enquiry of Group management and review of internal audit reports, and considered the risk of acts by the Group that were contrary to applicable laws and regulations, including fraud. • We considered the Group’s compliance with laws and regulations that have a direct impact on the financial statements including, but not limited to, the Companies Act 2006, the UK Listing Rules, certain requirements from the UK, Indonesia and Malaysia Finance Acts, the requirements of the Anti-Bribery and Corruption Acts in the UK, Indonesia and Malaysia, taxation laws in the UK, Indonesia and Malaysia, Indonesian land laws and the Indonesian Sustainable Palm Oil (ISPO) and Malaysian Sustainable Pail Oil (MSPO) certification schemes, and we considered the extent to which non-compliance might have a material effect on the Group financial statements. • We designed audit procedures at both the Group level and at the significant component level, through specific procedures included in the group audit instructions, to identify instances of non-compliance with such laws and regulations. Our procedures included reviewing the financial statement disclosures and agreeing to underlying supporting documentation where necessary, reviewing internal audit reports and minutes of all Board and Committee meetings held throughout the year and subsequent to the year end for any indicators of non-compliance and making enquiries of management and of the Directors as to the risks of non- compliance and any instances thereof. • We discussed among the engagement team and relevant internal technical experts how and where non- compliance with laws and regulations and fraud might occur in the financial statements and any potential indicators of fraud. The Engagement Partner satisfied himself that the engagement team have the appropriate competence and capabilities to identify and recognise non-compliance with laws and regulations. • We considered the valuation of land and plantation assets and the valuation of assets held for sale to be the main areas where fraud could occur. Our audit response to these areas has been addressed in the Key Audit Matters above. • We addressed the risk of management override of internal controls, considered to be in connection with the posting of inappropriate journals and bias in significant management estimates and judgements, through testing journal entries processed during the year and subsequent to the year end which met a specific criteria, particularly with regard to revenue postings with unusual account combinations and consolidation journals, and evaluating whether there was evidence of bias in setting significant estimates and judgements by the Directors that represented a risk of material misstatement due to fraud (refer to Key Audit Matters above). Annual Report 2021 | Anglo-Eastern Plantations Plc 88 ## Auditor’s Report INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ANGLO-EASTERN PLANTATIONS PLC (continued) Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery, misrepresentations or through collusion. There are inherent limitations in the audit procedures performed and the further removed non- compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we are to become aware of it. A further description of our responsibilities is available on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report. Use of our report This report is made solely to the Parent Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Parent Company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Parent Company and the Parent Company’s members as a body, for our audit work, for this report, or for the opinions we have formed. Nigel Harker (Senior Statutory Auditor) For and on behalf of BDO LLP, Statutory Auditor London United Kingdom 29 April 2022 BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127). Annual Report 2021 | Anglo-Eastern Plantations Plc 89 ## Consolidated Income Statement For the year ended 31 December 2021 Earnings per share before BA movement are shown in note 11. | | Result Result | | Annual Report 2021 \| Anglo-Eastern Plantations Plc 90 | | | --- | --- | --- | --- | --- | | Earnings per share attributable | before before | | | | | Reversal / (Provision) for Profit for the year from continuing (Loss) / gain on discontinued Profit for the year from to the owners of the parent | | BA BA BA BA | | | | Reversal of impairment Continuing operations Revenue Cost of sales Gross profit Administration expenses Impairment losses Operating profit Exchange gains / (losses) Finance income Finance expense Profit before tax Tax expense Profit for the year attributable to: - Owners of the parent - Non-controlling interests - Owners of the parent - Non-controlling interests Profit - basic and diluted Profit from continuing operations - basic and diluted (296,005) 111,341 433,421 137,416 133,681 137,083 111,341 172.42cts 242.34cts 6, 18 6, 13 6, 13 (28,421) (25,742) | 10 (300,354) (203,326) 82,920 68,341 14,579 82,920 96,054 15,287 11 11 4 (8,764) 5 5 6 9 263,818 107,950 5,437 433,421 133,067 129,332 3,214 132,734 107,950 (28,471) (24,784) (15,103) 41,808 (202,123) 60,492 54,599 56,911 36,533 30,653 36,533 35,399 41,808 (585) 79,479 65,485 13,994 79,479 93,245 14,705 (5,275) 3,391 1,148 263,818 4,349 1,203 4,349 1,203 (8,764) (7,768) 4,349 1,203 4,349 1,203 3,441 1,208 2,856 1,051 3,441 1,208 2,809 3,391 1,148 177 212 (15,158) 79.99cts 91.82cts 2,165 2,873 (24) 5,880 6,409 | 5,437 3,214 (958) 42,956 61,695 55,802 58,114 37,741 31,704 37,741 36,393 42,956 (102) (5,215) (7,768) (585) (188) (269) (292) 585 157 994 582 154 (55) 2,165 2,873 6,037 6,563 177 212 50 60 (24) (102) (188) (269) (292) - - - - - - - - - - - - - - - - | | | | movement* movement movement* movement operations attributable to: Note continuing operations operation, net of tax during the year expected credit loss | Total $000 $000 | $000 $000 $000 Total $000 | (Restated) 2021 | 2020 | ## Consolidated Income Statement For the year ended 31 December 2021 * The total column represents the IFRS figures and the result before BA movement is an Alternative Performance Measure (“APM”) which reflects the Group's results before the movement in fair value of biological assets has been applied. We have opted to additionally disclose this APM as the BA movement is considered to be a fair value calculation which does not appropriately represent the Group’s result for the year. The accompanying notes are an integral part of this consolidated income statement. Annual Report 2021 | Anglo-Eastern Plantations Plc 91 ## Consolidated Statement of Comprehensive Income For the year ended 31 December 2021 The accompanying notes are an integral part of this consolidated statement of comprehensive income. Annual Report 2021 | Anglo-Eastern Plantations Plc 92 | | | 2021 2020 | | --- | --- | --- | | Total comprehensive income for the year Total comprehensive income for the year attributable to: - Owners of the parent - Non-controlling interests | | 78,577 32,291 64,993 27,269 13,584 78,577 32,291 5,022 | | Profit for the year Other comprehensive expenses: Items may be reclassified to profit or loss: Loss on exchange translation of foreign operations Net other comprehensive expenses may be reclassified to profit or loss Items not to be reclassified to profit or loss: Remeasurement of retirement benefits plan, net of tax Net other comprehensive income / (expenses) not being reclassified to profit or loss Total other comprehensive expenses for the year, net of tax | (Restated) | 82,920 37,741 (5,429) (4,801) (5,429) (4,801) (4,343) (5,450) 1,086 1,086 $000 $000 (649) (649) | ## Consolidated Statement of Financial Position As at 31 December 2021 Company Number: 1884630 Annual Report 2021 | Anglo-Eastern Plantations Plc 93 | 31.12.2020 | 31.12.2021 1.1.2020 | | | | --- | --- | --- | --- | | Net current assets Net assets Inventories Biological assets Cash and cash equivalents Loans and borrowings Other tax liabilities Non-current liabilities Lease liabilities Non-current assets Property, plant and equipment Investments Receivables Deferred tax assets Current assets Income tax receivables Other tax receivable Trade and other receivables Short-term investments Assets in disposal groups classified as held for sale Current liabilities Trade and other payables Income tax liabilities Dividend payables Lease liabilities Deferred tax liabilities Retirement benefits - net liabilities 16 17 19 21 13 31 14 15 18 10 20 21 15 22 9 9 9 9 | 317,456 315,594 194,874 156,473 161,234 129,017 464,308 432,375 115,211 280,831 281,287 194,874 156,473 (27,456) (12,236) (16,110) (11,338) (33,640) (14,382) (26,310) (13,383) 12,541 84,846 22,236 16,500 14,389 17,807 10,071 14,348 41,618 35,179 | (8,203) (1,089) (1,386) (5,981) (1,512) 286,905 315,694 268,142 542,108 218,249 260,532 302,484 (47,552) (12,939) 8,752 8,783 7,574 4,693 5,774 1,957 (32,533) (13,139) (11,499) 14,316 12,803 22,000 45,423 13,210 (1,615) (217) (456) (236) (222) (1,330) (782) (442) 4,324 5,072 5,182 1,439 (24) (23) | (110) (240) (25) - - - - - - 49 - | | Note (Restated)* (Restated) | | $000 $000 | $000 | ## Consolidated Statement of Financial Position As at 31 December 2021 Company Number: 1884630 The financial statements were approved and authorised for issue by the Board of Directors on 29 April 2022 and were signed on its behalf by: Dato’ John Lim Ewe Chuan Executive Director, Corporate Finance and Corporate Affairs *The details of prior year restatement are disclosed in note 3. The accompanying notes are an integral part of this consolidated statement of financial position. Annual Report 2021 | Anglo-Eastern Plantations Plc 94 | 31.12.2020 | 31.12.2021 1.1.2020 | | | --- | --- | --- | | Issued capital and reserves attributable to owners of the parent Total equity | 375,433 348,362 464,308 432,375 | 440,030 542,108 | | Non-controlling interests Share capital Treasury shares Share premium Capital redemption reserve Exchange reserves Retained earnings Note (Restated)* 23 23 (Restated) | (237,599) (233,723) 573,677 542,730 88,875 84,013 15,504 15,504 23,935 23,935 (241,907) | (1,171) (1,171) 102,078 642,582 1,087 1,087 $000 $000 15,504 23,935 (1,171) 1,087 $000 | ## Consolidated Statement of Changes in Equity For the year ended 31 December 2021 Annual Report 2021 | Anglo-Eastern Plantations Plc 95 | | | Non- Capital | | | | --- | --- | --- | --- | --- | | Revaluation controlling Treasury | redemption Retained Exchange Share | Share Total | | | | Balance at 31 December 2020 after restatement Items of other comprehensive expenses Balance at 31 December 2019 Restatement (note 3) Balance at 31 December 2019 after restatement -Remeasurement of retirement benefit plan, net of tax -Loss on exchange translation of foreign operations Total other comprehensive expenses Profit for the year Total comprehensive (expenses) / income for the year Dividends paid | (237,599) (229,026) (233,723) (1,171) 573,677 375,433 (1,171) 542,415 401,157 (10,648) (1,171) 542,730 348,362 23,935 464,308 23,935 495,818 (52,795) 23,935 432,375 22 88,875 94,661 (48,413) (63,443) 84,013 31,704 27,269 | (1,015) 31,704 31,145 48,413 (3,876) (4,435) 37,741 32,291 (4,801) (5,450) (4,697) (3,876) (3,876) 6,037 (3,876) 5,022 15,504 15,504 15,504 (559) (925) (198) (160) (559) (559) (198) (649) (358) 315 (90) | 1,087 1,087 1,087 - - - - - - - - - - - - - - - - - - - - - - - - - - | - - - - - - - - - - - - - - | | premium | Note earnings interests shares reserves reserves | $000 capital $000 reserve Total equity $000 $000 $000 $000 $000 $000 $000 | $000 | | ## Consolidated Statement of Changes in Equity For the year ended 31 December 2021 Annual Report 2021 | Anglo-Eastern Plantations Plc 96 | | | Non- Capital | | | | --- | --- | --- | --- | --- | | controlling | Treasury Exchange Retained redemption | Share Total Share | | | | | Balance at 31 December 2020 after restatement Total other comprehensive (expenses) / income Profit for the year Balance at 31 December 2021 Items of other comprehensive (expenses) / income -Remeasurement of retirement benefit plan, net of tax -Loss on exchange translation of foreign operations Total comprehensive (expenses) / income for the year Dividends paid (237,599) (241,907) 102,078 (1,171) 573,677 375,433 (1,171) 642,582 440,030 23,935 464,308 23,935 542,108 22 | 88,875 14,579 13,584 68,341 64,993 68,341 (1,121) 69,301 (3,348) 82,920 (4,308) 78,577 (4,343) $000 (5,429) (4,308) $000 (4,308) (4,308) 15,504 15,504 $000 $000 $000 1,086 (995) (396) (381) $000 $000 (396) (777) 960 126 | 960 $000 960 1,087 1,087 $000 - - - - - - - - - - - - | - - - - - - - - - - - - - - - - | | | premium Note interests earnings reserves shares | equity capital reserve Total | | | ## Consolidated Statement of Cash Flows For the year ended 31 December 2021 Annual Report 2021 | Anglo-Eastern Plantations Plc 97 | | | 2021 2020 | | | --- | --- | --- | --- | | Operating cash flows from continuing operations Operating cash flows (used in) / from discontinued operations Net cash generated from operating activities Cash used in investing activities from continuing operations Net cash used in investing activities Cash used in investing activities from discontinued operations Cash flows from operating activities Profit before tax from continuing operations Operating cash flows before changes in working capital Cash inflows from operations Investing activities Property, plant and equipment Interest received Increase in receivables from cooperatives under plasma scheme Investment in share equity Placement of fixed deposits with original maturity of more than three months Withdrawal of fixed deposits with original maturity of more than three months Adjustments for: | Increase in inventories Increase in non-current, trade and other receivables BA movement Loss / (Gain) on disposal of property, plant and equipment Retirement benefit provisions Net finance income Property, plant and equipment written off Reversal of impairment Increase in trade and other payables Retirement benefits paid Overseas tax paid - purchases - sales Depreciation Unrealised (gain) / loss in foreign exchange (Reversal) / Provision for expected credit loss 132,167 131,346 137,083 141,496 145,013 (24,263) (25,857) (12,359) (26,374) (21,848) (24,838) (13,246) (18,965) | 55,124 10,229 65,353 58,114 70,741 10,485 64,035 16,994 16,177 (1,594) (2,990) (4,349) (1,203) (3,190) (2,581) (4,852) (1,977) (2,649) (3,945) (8,559) (1,985) (3,826) (1,439) (1,957) 6,683 3,214 1,957 1,564 2,873 (821) (517) (487) (212) (177) (352) 103 413 274 269 124 (49) (20) | 24 72 27 - - | | | (Restated) | $000 $000 | | ## Consolidated Statement of Cash Flows For the year ended 31 December 2021 The accompanying notes are an integral part of this consolidated statement of cash flows. . Annual Report 2021 | Anglo-Eastern Plantations Plc 98 | | | 2020 2021 | | | --- | --- | --- | --- | | Comprising: Cash and cash equivalents At beginning of year At end of year Exchange losses Cash at end of year Cash used in financing activities from discontinued operations Financing activities Dividends paid to the holders of the parent Dividends paid to non-controlling interests Interest paid Repayment of existing long-term loans Repayment of lease liabilities - principal Repayment of lease liabilities - interest Cash used in financing activities from continuing operations Net cash used in financing activities Net increase in cash and cash equivalents | (Restated) 19 115,211 115,211 | 115,211 218,249 218,249 104,461 84,846 31,476 (1,111) (8,167) (9,039) (9,039) (1,423) (1,028) (1,028) (197) (160) (258) (223) (395) (381) (228) (34) | (24) - - - - | | Note | | $000 $000 | | # Notes to the Consolidated Financial Statements ## 1 Basis of preparation AEP is a company incorporated in the UK under the Companies Act 2006 and is listed on the London Stock Exchange. The registered office of AEP is located at Quadrant House, 6$^{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 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 note 3. ### Basis of preparation The consolidated financial statements have been prepared in accordance with UK adopted International Accounting Standards and with the requirements of the Companies Act 2006 as applicable to companies reporting under those standards. On 31 December 2020, IFRS as adopted by the European Union at that date was brought into the UK law and became UK adopted International Accounting Standards, with future changes being subject to endorsement by the UK Endorsement Board. The Group transitioned to UK adopted International Accounting Standards in its consolidated financial statements on 1 January 2021. There was no impact or changes in accounting from the transition. The Directors have a reasonable expectation, having made the appropriate enquiries, that the Group has control of the monthly cash flows and that the Group has sufficient cash resources to cover the fixed cash flows for a period of at least twelve months from the date of approval of these financial statements. For these reasons, the Directors adopted a going concern basis in preparation of the financial statements. The Directors have made this assessment after consideration of the Group's budgeted cash flows and related assumptions including appropriate stress testing of identified uncertainties, specifically on the potential shut down of the entire operations from three to twelve months if all the plantations are infected with Coronavirus as well as the impact on the demand for palm oil with decreases of 50% to 100%. Stress testing of other identified uncertainties and risks such as commodity prices and currency exchange rates were also undertaken. ### Changes in accounting standards (a) New standards, interpretations and amendments effective in the current year There are no new and amended standards and interpretations that apply for the first time in these financial statements. (b) New standards, interpretations and amendments not yet effective. The following new standards, interpretations and amendments are effective for future periods (as indicated) and have not been applied in these financial statements: - • Annual improvements to IFRS Standards 2018-2020 (1 January 2022, not yet adopted) - • IAS 1 (amendments) Classification of liabilities as current or non-current (1 January 2023, not yet adopted) - • IAS 1 (amendments) and IFRS Practice Statement 2 Disclosure of Accounting Policies (1 January 2023, not yet adopted) - • IAS 8 (amendments) Definition of Accounting Estimates (1 January 2023, not yet adopted) - • IAS 12 (amendments) Deferred Tax related to Assets and Liabilities arising from a Single Transaction (1 January 2023, not yet adopted) None of the above new standards, interpretations and amendments are expected to have a material effect on the Group's future financial statements. ## 2 Accounting policies ### (a) Basis of consolidation The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries) made up to 31 December each year. The Company controls a subsidiary if all three of the following elements are present; power over the subsidiary, exposure to variable returns from the subsidiary, and the ability of the investor to use its power to affect those variable returns. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date control ceases. In respect of cooperatives under the Plasma scheme, the Group has not consolidated these results on the basis that the Company does not have control over those entities. ### (b) Business combinations The consolidated financial statements incorporate the results of business combinations using the purchase method. In the consolidated statement of financial position, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. Acquisitions of entities that comprise principally land with no active plantation business do not represent business combinations, in such cases, the amount paid for each acquisition is allocated between the identifiable assets/liabilities at the acquisition date. Annual Report 2021 | Anglo-Eastern Plantations Plc 99 ## Notes to the Consolidated Financial Statements 2 Accounting policies - continued (c) Foreign currency The individual financial statements of each subsidiary are presented in the currency of the country in which it operates (its functional currency), being the currency in which the majority of their transactions are denominated, with the exception of the Company and its UK subsidiaries which are presented in US Dollar. The presentation currency for the consolidated financial statements is also US Dollar, chosen because, as internationally traded commodities, the price of the bulk of the Group’s products are ultimately linked to the US Dollar. On consolidation, the results of overseas operations are translated into US Dollar at average exchange rates for the year unless exchange rates fluctuate significantly in which case the actual rate is used. All assets and liabilities of overseas operations are translated at the rate ruling at the balance sheet date. Exchange differences arising on re-translating the opening net assets at opening rate and the results of overseas operations at actual rate are recognised directly in equity (the “exchange reserves”). Exchange differences recognised in the income statement of Group entities’ separate financial statements on the translation of long-term monetary items forming part of the Group’s net investment in the overseas operation concerned are reclassified to the exchange reserves if the item is denominated in the presentational currency of the Group or of the overseas operation concerned. On disposal of a foreign operation, the cumulative exchange differences recognised in the exchange reserves relating to that operation up to the date of disposal are transferred to the income statement as part of the profit or loss on disposal. All other exchange profits or losses are credited or charged to the income statement. (d) Revenue recognition The Group derives its revenue from the sale of CPO, palm kernel, FFB, shell nut, biomass products, biogas products and rubber slab. Revenue for CPO, palm kernel, FFB, shell nut, biomass and biogas products are recorded net of sales and related taxes and levies, including export taxes and recognised when the customer has taken delivery of the goods. The collection/delivery of the goods will not take place until the goods are paid for. 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. Advance receipts represent the Group's obligation to transfer goods to a customer for which the Group has received consideration but the goods have yet to be delivered to/collected by the customer. (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 some 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 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 except the leasehold land in Malaysia which is depreciated over the term of the lease as its renewal cannot be guaranteed. 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. Annual Report 2021 | Anglo-Eastern Plantations Plc 100 ## Notes to the Consolidated Financial Statements 2 Accounting policies - continued (g) Property, plant and equipment - continued Construction in progress is stated at cost. The accumulated costs will be reclassified to the appropriate class of assets when construction is completed and the asset is ready for its intended use. Construction in progress is also not depreciated until such time when the asset is available for use. Plantations, buildings and oil mills are depreciated using the straight-line method. The yearly rates of depreciation are as follows: Leasehold land in Malaysia - over the term of the lease 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) Leases 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 “Impairment” policy. Land rights are recognised at historical cost without depreciation at the balance sheet date except for leasehold land in Malaysia is recognised at historical cost and depreciated over the term of the lease. The details of the change in accounting policy are disclosed in note 3. Annual Report 2021 | Anglo-Eastern Plantations Plc 101 ## Notes to the Consolidated Financial Statements 2 Accounting policies - continued (j) Impairment An assessment of indicators of impairment over the Group’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 statement of financial position. 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 statement of financial position differs from its tax base except for differences in the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction affects neither accounting nor taxable profit. The Group recognises deferred tax liabilities arising from taxable temporary differences on investments in subsidiaries, except where the Group is able to control the reversal of the temporary differences and it is probable that the temporary difference will not reverse in the foreseeable future. Recognition of deferred tax assets is restricted to those instances where it is possible that taxable profit will be available against which the difference can be utilised. Deferred tax is recognised on temporary differences arising from property revaluation surpluses or deficits. Deferred tax is determined using the tax rates that are enacted or substantively enacted at the balance sheet date. Deferred tax is charged or credited in the income statement, except when it relates to items charged to other comprehensive income, such as revaluations, in which case the deferred tax is also dealt with in other comprehensive income. Annual Report 2021 | Anglo-Eastern Plantations Plc 102 ## Notes to the Consolidated Financial Statements 2 Accounting policies - continued (o) Retirement benefits Defined contribution schemes Contributions to defined contribution pension schemes are charged to the consolidated income statement in the year to which they relate. Defined benefit schemes The Group operates a number of defined benefit schemes in respect of its Indonesian operations. These schemes’ surpluses and deficits are measured at: • The fair value of plan assets at the reporting date; less • Plan liabilities calculated using the projected unit credit method discounted to its present value using yields available on Indonesian Government 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 the income statement 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 27. (r) Non-current assets held for sale and disposal groups Non-current assets and disposal groups are classified as held for sale when: • They are available for immediate sale; • Management is committed to a plan to sell; • It is unlikely that significant changes to the plan will be made or that the plan will be withdrawn; • An active programme to locate a buyer has been initiated; • The asset or disposal group is being marketed at a reasonable price in relation to its fair value; and • A sale is expected to complete within 12 months from the date of classification. Non-current assets and disposal groups classified as held for sale are measured at the lower of: • Their carrying amount immediately prior to being classified as held for sale in accordance with the group's accounting policy; and • Fair value less costs of disposal. Following their classification as held for sale, non-current assets (including those in a disposal group) are not depreciated. A discontinued operation is a component of the Group's business that represents a separate major line of business or geographical area of operations or is a subsidiary acquired exclusively with a view to resale, that has been disposed of, has been abandoned or that meets the criteria to be classified as held for sale. Discontinued operations are presented in the consolidated statement of comprehensive income as a single line which comprises the profit or loss after tax of the discontinued operation along with the gain or loss after tax recognised on the re-measurement to fair value less costs to sell or on disposal of the assets or disposal groups constituting discontinued operations. Annual Report 2021 | Anglo-Eastern Plantations Plc 103 ## Notes to the Consolidated Financial Statements 2 Accounting policies - continued (s) 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 29) • Classification of land as leasehold with no depreciation charged (see note 13) • Classification of assets as held for sale and discontinued operations (see note 10) Estimates and assumptions • Impairment of plantation assets - estimate of future cash flows and determination of the discount rate and other assumptions (see note 13) • Expected credit losses (“ECL”) on amounts due from cooperatives under Plasma scheme - determination of possible outcomes and their weighted probability (see note 14) • Carrying value of income tax receivables - determination of historic recovery rates (see note 9) • Income taxes and deferred tax - provisions for income taxes in various jurisdictions (see note 9 and note 15) • Valuation of assets classified as held for sale (see note 10) • Recognition of deferred tax on losses - estimate of future profitability of respective entities (see note 15) • Retirement benefits - actuarial assumptions (see note 22) • 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: - Biological assets (note 17) 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 14) - Non-current receivables due from cooperatives under Plasma scheme (note 14) For more detailed information in relation to the fair value measurement of the items above, please refer to the applicable notes. 3 Prior year restatement With effect from 31 December 2021 and applied retrospectively, the Group have opted for a change in accounting policy in respect of the treatment of land in the Group’s financial statements which is accounted for in accordance with IAS 16 Property, Plant and Equipment. The Group has historically recognised land under the revaluation model however, following an analysis of the Group's peers in the UK, it was apparent that the majority reported their land at historical cost and therefore the decision was made to change the accounting policy to make the financial information more comparable and provide a more relevant result. Land has always been recognised in the local Indonesian financial statements at historical cost. The Group now recognises land at cost initially and is not depreciated except for the land in Malaysia as the possibility to renew the leasehold land in Malaysia is minimal, the details are disclosed in note 13. Annual Report 2021 | Anglo-Eastern Plantations Plc 104 ## Notes to the Consolidated Financial Statements 3 Prior year restatement - continued The effects of the restatements are summarised as follows: The effect of the prior year adjustments had a negative impact on the earnings per share before BA of 0.33cts and a negative impact on the earnings per share after BA of 0.33cts for the year to 31 December 2020. The following table summarises the impact of this prior year restatement on the Consolidated Statement of Financial Position: The restatement of land from fair value to historical cost has decreased the value of the property, plant and equipment and eliminated the revaluation reserves. Deferred tax liabilities previously recognised on the revaluation of land have been reversed resulting in a decrease in deferred tax liabilities, but also an increase in deferred tax assets where individual entities have moved from a net deferred tax liability position to a net deferred tax asset position. Depreciation of the land in Malaysia recognised retrospectively and the reversal of the deferred tax liabilities previously recognised has resulted in a small increase in retained earnings. All entities for which these adjustments relate have non-controlling interests and therefore the impact on those non-controlling interests has also been recognised. | Balance as | Balance as Restated Restated | | | | | | --- | --- | --- | --- | --- | --- | | | balance at reported balance at reported | | | Annual Report 2021 \| Anglo-Eastern Plantations Plc 105 | | | 31 December 31 December 1 January | 1 January Effect of Effect of | | | | | | restatement restatement | 2020 | 2020 2020 2020 | | | 2020 2020 | | Impact on consolidated income statement Profit for the year before restatement Effect of change in restatement: Profit for the year after restatement Impact on consolidated statement of comprehensive income Other comprehensive expenses for the year before restatement Effect of change in restatement: Other comprehensive expenses for the year after restatement Impact on consolidated statement of financial position $000 Impact on consolidated statement of financial position Property, plant and equipment Cost of sales Tax expense Unrealised loss on revaluation of leasehold land, net of tax Gain on exchange translation of foreign operations Deferred tax assets Deferred tax liabilities Revaluation reserves Exchange reserves Retained earnings Non-controlling interests Property, plant and equipment Deferred tax assets Deferred tax liabilities Revaluation reserves Exchange reserves Retained earnings Non-controlling interests | (229,026) 367,891 542,415 (17,047) 11,251 48,413 (233,723) 94,661 (233,534) (237,599) 281,287 542,730 365,353 280,831 573,493 573,677 (84,522) (49,367) (11,017) (86,604) (48,413) (10,648) (15,467) 14,685 $000 17,807 16,605 84,013 | 14,389 49,367 99,892 88,875 (4,065) (4,697) 8,817 5,572 6,556 $000 $000 $000 $000 (442) (782) 184 315 | - - | | 37,943 37,741 (4,830) (1,309) (5,450) $000 $000 (620) (202) (124) 689 (78) | # Notes to the Consolidated Financial Statements ## 4 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 7. There is no right of return and warranty provided to the customers on the sale of products and services rendered. | | CPO, palm kernel and FFB $000 | Rubber $000 | Shell nut $000 | Biomass products $000 | Biogas products $000 | Others $000 | Total $000 | | --- | --- | --- | --- | --- | --- | --- | --- | | **Year to 31 December 2021** | | | | | | | | | **Contract counterparties** | | | | | | | | | Government | - | - | - | - | 999 | - | 999 | | Non-government | | | | | | | | | - Wholesalers | 426,436 | 695 | 4,036 | 336 | - | 919 | 432,422 | | | 426,436 | 695 | 4,036 | 336 | 999 | 919 | 433,421 | | **Timing of transfer of goods** | | | | | | | | | Delivery to customer premises | 4,995 | 695 | - | - | - | - | 5,690 | | Delivery to port of departure | - | - | - | 336 | - | - | 336 | | Customer collect from our mills / estates | 421,441 | - | 4,036 | - | - | - | 425,477 | | Upon generation / others | - | - | - | - | 999 | 919 | 1,918 | | | 426,436 | 695 | 4,036 | 336 | 999 | 919 | 433,421 | | **Year to 31 December 2020** | | | | | | | | | **Contract counterparties** | | | | | | | | | Government | - | - | - | - | 970 | - | 970 | | Non-government | | | | | | | | | - Wholesalers | 257,282 | 631 | 3,959 | 427 | - | 549 | 262,848 | | | 257,282 | 631 | 3,959 | 427 | 970 | 549 | 263,818 | | **Timing of transfer of goods** | | | | | | | | | Delivery to customer premises | 4,052 | 631 | - | - | - | - | 4,683 | | Delivery to port of departure | - | - | - | 427 | - | - | 427 | | Customer collect from our mills / estates | 253,230 | - | 3,959 | - | - | - | 257,189 | | Upon generation / others | - | - | - | - | 970 | 549 | 1,519 | | | 257,282 | 631 | 3,959 | 427 | 970 | 549 | 263,818 | ## 5 Finance income and expense | | 2021 $000 | 2020 $000 | | --- | --- | --- | | **Finance income** | | | | Interest receivable on: | | | | Credit bank balances and time deposits | 3,214 | 2,873 | | **Finance expense** | | | | Interest payable on: | | | | Development loans | - | (257) | | Interest expense on lease liabilities (note 21) | (24) | (35) | | | (24) | (292) | | Net finance income recognised in income statement | 3,190 | 2,581 | Annual Report 2021 | Anglo-Eastern Plantations Plc 106 # Notes to the Consolidated Financial Statements ## 6 Expenses by nature | | 2021 $000 | (Restated) 2020 $000 | | --- | --- | --- | | Expenses by nature: | | | | Purchase of FFB | 191,915 | 110,225 | | Depreciation (note 13): | | | | - continuing operations | 16,994 | 16,177 | | - discontinued operations | 1,978 | 2,090 | | | 18,972 | 18,267 | | Reversal of impairment (note 13): | | | | - continuing operations | (5,437) | (2,165) | | - discontinued operations | - | (31) | | | (5,437) | (2,196) | | Impairment losses (note 13): | | | | - continuing operations | 585 | 188 | | - discontinued operations | 716 | - | | | 1,301 | 188 | | Impairment loss on adjustment to fair value | 21,772 | - | | Provision for expected credit loss (note 18): | | | | - continuing operations | (177) | 102 | | - discontinued operations | 1,231 | 1,383 | | | 1,054 | 1,485 | | Exchange (gains) / loss | (213) | 268 | | Legal and professional fees | 945 | 834 | | Staff costs (note 8) | 51,431 | 48,103 | | 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 | 209 | 146 | | - Audit of consolidated financial statements (prior year) | - | - | | - Audit related assurance service | 7 | 6 | | - Audit of UK subsidiaries | 13 | 13 | | Total audit services | 234 | 170 | | Audit of overseas subsidiaries | | | | - Malaysia | 22 | 21 | | - Indonesia | 116 | 76 | | Total audit services | 138 | 97 | | Total auditor's remuneration | 372 | 267 | ## 7 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. Annual Report 2021 | Anglo-Eastern Plantations Plc 107 ## Notes to the Consolidated Financial Statements 7 Segment information - continued * South Sumatera represents the operations which have been discontinued and have therefore been separated from the continuing operations. The details of discontinued operations for South Sumatera are disclosed in note 10. Annual Report 2021 | Anglo-Eastern Plantations Plc 108 | Total from | South* North Total | | | | --- | --- | --- | --- | | continuing Sumatera Indonesia Sumatera | Profit / (loss) for the year before tax per consolidated income | | | | Kalimantan Malaysia (1,325) (1,325) operations Bangka 7,152 (11,754) 75,356 Bengkulu $000 73,827 20,555 21,129 34,580 17,095 13,758 14,960 (219) | (2,153) 129,627 142,766 430,628 433,421 127,216 141,070 423,761 426,436 134,576 132,734 138,894 137,083 252,633 117,748 145,578 567,634 588,544 108,844 251,752 260,532 2,194 2,702 2,178 2,675 1,440 (16,323) (15,069) (25,411) 8,751 8,780 1,600 UK (16,994) (14,519) (25,742) Total revenue $000 $000 $000 2021 Total sales revenue (all external) - CPO, palm kernel and FFB - Rubber - Shell nut - Biomass products - Biogas products - Others Profit / (loss) before tax BA movement Interest income Interest expense Depreciation Reversal of impairment Impairment losses (Provision) / Reversal for expected credit loss Inter-segment transactions Inter-segmental revenue Tax expense Total assets Non-current assets Non-current assets - additions 80,685 91 Riau 79,470 91 40,160 35,769 37,539 41,820 36,469 38,812 74 42,566 54,638 77,170 42,027 22,497 (517) (486) (5,270) (4,132) (905) (356) (671) (133) (2,001) (282) 14,519 54,638 (8,939) (7,831) (109) (112) 14,055 27,425 23,014 553 (4,786) 574 111 664 (4,722) 133 (5,660) (1,978) (1,231) (1,934) 476 (6,379) (1,927) 608 517 1,173 1,191 4,036 1,660 1,273 4,318 2,323 3,199 5,437 5,437 1 2,641 9,431 8,490 4,727 7,072 | 8,269 7,999 4,036 4,349 3,214 5,437 7,438 3,424 $000 $000 $000 - - - - - - - - - - - - - - $000 $000 $000 89 16 27 31 15 (452) (452) (9) (585) (716) 695 695 336 336 114 485 999 801 700 720 176 902 695 232 336 400 999 583 919 270 180 177 1 (15) (15) (24) - - - - - - - - - - - statement - - - - - - - - - - - - - | 93 20 64 22 (4) 5 - - - - - - - - - - - - - - - - - | ## Notes to the Consolidated Financial Statements 7 Segment information - continued * South Sumatera represents the operations which have been discontinued and have therefore been separated from the continuing operations. The details of discontinued operations for South Sumatera are disclosed in note 10. Annual Report 2021 | Anglo-Eastern Plantations Plc 109 | Total from | South* North Total | | | | --- | --- | --- | --- | | continuing Sumatera Indonesia Sumatera | Profit / (loss) for the year before tax per consolidated income statement | | | | Kalimantan Malaysia (1,447) (1,447) operations Bangka 5,978 48,451 Bengkulu $000 46,865 12,341 12,467 25,798 15,872 14,405 13,872 | (2,742) 261,475 263,818 254,952 257,282 168 194,269 135,624 454,901 475,284 104,098 244,336 253,726 1,042 2,336 1,026 2,330 1,586 (15,575) (14,334) (87) 9,184 9,390 4,474 UK (16,177) (15,158) Total revenue Reversal / (Provision) for expected credit loss $000 $000 $000 2020 (restated) Total sales revenue (all external) - CPO, palm kernel and FFB - Rubber - Shell nut - Biomass products - Biogas products - Others Profit / (loss) before tax BA movement Interest income Interest expense Depreciation Reversal of impairment Impairment losses Inter-segment transactions Inter-segmental revenue Tax expense Total assets Non-current assets Non-current assets - additions 84,266 83,699 44,017 Riau 81,764 82,194 43,103 18,916 16,809 11,174 59,164 19,466 16,939 11,518 60,350 58,114 27,668 35,128 83,338 75,004 42,178 18,679 (806) 56,911 (789) (4,741) (4,253) (886) (308) (5,387) (602) (188) (1,966) (564) (195) (1,913) 35,128 (6,734) (3,218) (1,665) (737) 37,046 27,105 18,806 (1,383) (6,640) 126 (6,569) (2,090) 467 342 127 7 1 1,232 3,959 7 1,186 2,121 2,850 1 2,165 2,165 4,744 3,293 4,167 4,582 2,413 6,868 | 5,242 5,066 3,959 (76) 1,203 (40) 2,873 (10) 2,165 3,505 1,354 2,319 $000 $000 $000 - - - - - - - - - - - - - $000 (167) (104) $000 $000 16 36 17 34 22 (257) (282) 25 (1) (102) (292) (188) (741) 631 631 956 427 427 152 444 970 105 536 550 130 670 106 631 185 427 374 970 355 549 176 344 741 1 6 (25) - - - - - - - - - - - - - - - - - - - - - - - - | 65 (1) 60 71 25 31 3 - - - - - - - - - - - - - - - - - | # Notes to the Consolidated Financial Statements ## 7 Segment information - continued Below is an analysis of revenue from the Group's top 4 customers, incorporating all those contributing greater than 10% of the Group's external revenue in accordance with the requirements of IFRS 8. In year 2021, revenue from top 4 customers of the Indonesian segment represents approximately $266.3m (2020: $130.8m) of the Group's total revenue. Although Customer 1 to 4 made up over 10% of the Group's total revenue, there was no over reliance on these Customers as tenders were performed on a weekly basis. Two of the top four customers were the same as in the prior year. | | North Sumatera $000 | Bengkulu $000 | Riau $000 | Bangka $000 | Kalimantan $000 | Total Indonesia $000 | Malaysia $000 | UK $000 | Total $000 | South Sumatera $000 | Total $000 | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | **2021** | | | | | | | | | | | | | Customer 1 | 2,203 | 36,104 | 36,909 | - | 45,655 | 120,871 | - | - | 120,871 | - | 120,871 | | Customer 2 | - | 31,431 | - | - | 19,335 | 50,766 | - | - | 50,766 | - | 50,766 | | Customer 3 | 48,333 | - | - | - | - | 48,333 | - | - | 48,333 | - | 48,333 | | Customer 4 | - | 46,324 | - | - | - | 46,324 | - | - | 46,324 | - | 46,324 | | | **50,536** | **113,859** | **36,909** | **-** | **64,990** | **266,294** | **-** | **-** | **266,294** | **-** | **266,294** | | **2020** | | | | | | | | | | | | | Customer 1 | 819 | 22,558 | 7,164 | - | 23,075 | 53,616 | - | - | 53,616 | - | 53,616 | | Customer 2 | 31,556 | - | - | - | - | 31,556 | - | - | 31,556 | - | 31,556 | | Customer 3 | - | - | 25,042 | - | - | 25,042 | - | - | 25,042 | - | 25,042 | | Customer 4 | - | 15,977 | - | - | 4,584 | 20,561 | - | - | 20,561 | - | 20,561 | | | **32,375** | **38,536** | **32,206** | **-** | **27,659** | **130,775** | **-** | **-** | **130,775** | **-** | **130,775** | | | % | % | % | % | % | % | % | % | % | % | % | | **2021** | | | | | | | | | | | | | Customer 1 | 0.5 | 8.2 | 8.4 | - | 10.3 | 27.4 | - | - | 27.4 | - | 27.4 | | Customer 2 | - | 7.1 | - | - | 4.4 | 11.5 | - | - | 11.5 | - | 11.5 | | Customer 3 | 10.9 | - | - | - | - | 10.9 | - | - | 10.9 | - | 10.9 | | Customer 4 | - | 10.5 | - | - | - | 10.5 | - | - | 10.5 | - | 10.5 | | | **11.4** | **25.8** | **8.4** | **-** | **14.7** | **60.3** | **-** | **-** | **60.3** | **-** | **60.3** | | **2020** | | | | | | | | | | | | | Customer 1 | 0.3 | 8.4 | 2.7 | - | 8.6 | 20.0 | - | - | 20.0 | - | 20.0 | | Customer 2 | 11.7 | - | - | - | - | 11.7 | - | - | 11.7 | - | 11.7 | | Customer 3 | - | - | 9.3 | - | - | 9.3 | - | - | 9.3 | - | 9.3 | | Customer 4 | - | 5.9 | - | - | 1.7 | 7.6 | - | - | 7.6 | - | 7.6 | | | **12.0** | **14.3** | **12.0** | **-** | **10.3** | **48.6** | **-** | **-** | **48.6** | **-** | **48.6** | 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. Annual Report 2021 | Anglo-Eastern Plantations Plc 110 # Notes to the Consolidated Financial Statements ## 8 Employees' and Directors' remuneration | | 2021 Number | 2020 Number | | --- | --- | --- | | Average numbers employed (primarily overseas) during the year: | | | | - full-time | 7,618 | 7,242 | | - part-time field workers* | 6,191 | 7,208 | | | **13,809** | **14,450** | | * Part-time field workers headcounts based on full time equivalent of 8 hours per day. | | | | | 2021 | 2020 | | | **$000** | **$000** | | Staff costs (including Directors and discontinued operations) comprise: | | | | Wages and salaries | 47,628 | 43,129 | | Social security costs | 3,342 | 2,921 | | Retirement benefit costs | | | | - United Kingdom | - | - | | - Indonesia (note 22) | 411 | 2,003 | | - Malaysia | 50 | 50 | | | **51,431** | **48,103** | The information required by the Companies Act is contained in the Directors' remuneration report on pages 72 - 78 of which certain information on page 76 has been audited. | | 2021 $000 | 2020 $000 | | --- | --- | --- | | Directors emoluments | 187 | 200 | | | 2021 | 2020 | | | **$000** | **$000** | | Remuneration expense for key management personnel comprise: | | | | Short-term employee benefits | 1,835 | 1,499 | | Post-employment benefits | - | - | | | **1,835** | **1,499** | The Executive Director, Non-Executive Directors and senior management (general managers and above) are considered to be the key management personnel. The remuneration of Executive Director and Non-Executive Directors is shown on page 76. Annual Report 2021 | Anglo-Eastern Plantations Plc 111 # Notes to the Consolidated Financial Statements ## 9 Tax expense | | 2021 $000 | (Restated) 2020 $000 | | --- | --- | --- | | Foreign corporation tax - current year | 20,404 | 9,920 | | Foreign corporation tax - prior year | 258 | 287 | | Deferred tax adjustment - origination and reversal of temporary differences (note 15) | 5,080 | 4,264 | | Recognition of previously unrecognised deferred tax (note 15) | - | 687 | | Total tax charge for year | 25,742 | 15,158 | Corporation tax rate in Indonesia is at 22% (2020: 22%) whereas Malaysia is at 24% (2020: 24%). The standard rate of corporation tax in the UK for the current year is 19% (2020: 19%). The Group's charge for the year differs from the standard Indonesian rate of corporation tax as explained below: | | 2021 $000 | (Restated) 2020 $000 | | --- | --- | --- | | Profit before tax from continuing operations | 137,083 | 58,114 | | Profit before tax multiplied by standard rate of Indonesia corporation tax of 22% (2020: 22%) | 30,158 | 12,785 | | Effects of: | | | | Rate adjustment relating to overseas profits | (30) | (17) | | Group accounting adjustments not subject to tax | (1,023) | (9) | | Expenses not allowable for tax | 263 | 640 | | Deferred tax assets not recognised | (10) | - | | Income not subject to tax | (659) | (646) | | Under provision of prior year income tax | 258 | 287 | | Utilisation of tax losses not previously recognised | (3,215) | - | | Under provision of prior year deferred tax | - | 687 | | Change in tax rate | - | 1,431 | | Total tax charge for year | 25,742 | 15,158 | 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 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: | | 2021 $000 | 2020 $000 | | --- | --- | --- | | Tax Receivables | | | | Income tax | 5,072 | 10,071 | | Other taxes | 45,481 | 41,618 | | | 50,553 | 51,689 | | Transfer to assets held for sale (note 10) | (58) | - | | | 50,495 | 51,689 | | Tax Liabilities | | | | Income tax | (13,139) | (5,981) | | Other taxes | (1,615) | (1,089) | | | (14,754) | (7,070) | Annual Report 2021 | Anglo-Eastern Plantations Plc 112 ## Notes to the Consolidated Financial Statements 10 Assets held for sale and discontinued operations In October 2021, the Board approved to dispose of the operations of KKST, ELAP and RAA to cut losses. The Group has engaged Helios Capital as our Financial Advisor for disposal of the three companies and an active programme to locate a buyer was initiated. The proposed disposal of the operations are expected to be completed within 12 months and as a result the assets of KKST, ELAP and RAA have been classified as held for sale in the consolidated statement of financial position from 31 December 2021. The entire operations of the disposal group are presented within the South Sumatera operating segment disclosed in Note 7 and represent a separate geographical area of operations. The activities for the financial years ending 31 December 2021 and 31 December 2020 have been classified as discontinued operations in the consolidated income statement as a single line. The post-tax loss on disposal of discontinued operations was determined as follows: | | Result Result | | | Annual Report 2021 \| Anglo-Eastern Plantations Plc 113 | | | | --- | --- | --- | --- | --- | --- | --- | | Earnings per share attributable | before before | | | | | | | (Impairment loss) / Reversal of (Loss) / Profit for the year from Impairment loss on adjustment to to the owners of the parent | | BA BA BA BA | | | | | | Discontinued operations Revenue Cost of sales Gross (loss) / profit Administration expenses Provision for expected credit loss Operating (loss) / profit Exchange gains Finance income Finance expense (Loss) / Profit before tax Tax expense Attributable to: - Owners of the parent - Non-controlling interests - Basic and diluted EPS before BA movement - Basic and diluted EPS after BA movement (69.92)cts (69.92)cts (10,988) (28,421) (27,713) (28,421) | 13 18 (6,649) 4 (2,719) (1,231) (4,728) 6 (4,722) (1,927) 8,269 (11,052) (10,168) (28,471) (27,760) (28,471) (11.83)cts (11.83)cts (716) (708) (6,699) (5,275) (2,783) (4,926) (1,231) (1,383) (4,792) (6,644) (4,786) (6,640) (1,913) (5,275) (4,746) (5,275) (10,097) 5,242 (62) 1,365 | 8,269 (716) (5,215) (4,855) (366) (1,383) (6,573) (6,569) (5,215) (4,689) (711) (529) (5,215) (14) (11) 5,242 1,354 1 5 50 60 64 71 64 71 (62) 64 71 64 71 50 60 47 57 50 60 - 31 (366) (526) | 3 3 - - - - - - - - - - - - - - 1 3 1 5 - 31 - 1 3 - | | | | | movement movement movement movement discontinued operations fair value during the year (21,772) impairment | Total (21,772) $000 $000 | $000 $000 $000 Total $000 | - - - - | | 2021 | 2020 | ## Notes to the Consolidated Financial Statements 10 Assets held for sale and discontinued operations - continued Statement of cash flows The statement of cash flows includes the following amounts relating to discontinued operations: The following major classes of assets relating to the discontinued operations have been classified as held for sale in the consolidated statement of financial position on 31 December: An impairment loss of $21,772,000 on the measurement of the disposal group to fair value less cost to sell has been recognised and is included in discontinued operations. The fair value less cost to sell has been determined from a valuation range obtained through the sales marketing process, through discussion with potential buyers and review of internal forecasts. Management do not expect the final amount realised to be materially different from this. They are categorised as level 3 non-recurring fair value measurements. The fair value measurement is based on the above items’ highest and best uses, which do not differ from their actual use. At 31 December 2021, the expected loss provision for receivables in assets held for sale is as follows: Annual Report 2021 | Anglo-Eastern Plantations Plc 114 | Gross carrying | Net carrying | Loss | | | --- | --- | --- | --- | | | provision 2020 | amount 2021 amount | 2021 | | 2021 Trade receivable Other receivables (note 18) Receivables: non-current (note 14) - Due from cooperatives under Plasma scheme | 10,229 (2,990) Operating activities Investing activities Financing activities Net increase in cash and cash equivalents from discontinued operations Property, plant and equipment (note 13) Impairment loss on adjustment to fair value Property, plant and equipment net of impairment losses Non-current receivables (note 14) Deferred tax assets (note 15) Inventories (note 16) Income tax receivable (note 9) Other tax receivable (note 9) Biological assets (note 17) Trade and other receivables (note 18) Exchange differences Total assets held for sale 7,239 $000 (21,772) 27,425 13,210 (8,798) (8,798) | $000 5,653 3,338 3,124 12,136 12,171 $000 (1,594) (2,415) 3,338 3,373 729 303 $000 - (63) $000 | $000 (821) 46 12 68 12 23 12 - 23 - - | # Notes to the Consolidated Financial Statements ## 11 Earnings per ordinary share ("EPS") | | 2021 $000 | (Restated) 2020 $000 | | --- | --- | --- | | **Total operations** | | | | Profit for the year attributable to owners of the Company before BA movement | 65,485 | 30,653 | | BA movement | 2,856 | 1,051 | | Earnings used in basic and diluted EPS | 68,341 | 31,704 | | **Continuing operations** | | | | Profit for the year attributable to owners of the Company before BA movement | 93,245 | 35,399 | | BA movement | 2,809 | 994 | | Earnings used in basic and diluted EPS | 96,054 | 36,393 | | **Discontinued operations** | | | | Profit for the year attributable to owners of the Company before BA movement | (27,760) | (4,746) | | BA movement | 47 | 57 | | Earnings used in basic and diluted EPS | (27,713) | (4,689) | | | **Number '000** | **Number '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 | | **Total operations** | | | | - Basic and diluted EPS before BA movement | 165.22cts | 77.34cts | | - Basic and diluted EPS after BA movement | 172.42cts | 79.99cts | | **Continuing operations** | | | | - Basic and diluted EPS before BA movement | 235.25cts | 89.31cts | | - Basic and diluted EPS after BA movement | 242.34cts | 91.82cts | | **Discontinued operations** | | | | - Basic and diluted EPS before BA movement | (70.04)cts | (11.97)cts | | - Basic and diluted EPS after BA movement | (69.92)cts | (11.83)cts | | **12 Dividends** | | | | | **2021 $000** | **2020 $000** | | Paid during the year | | | | Final dividend of 1.0cts per ordinary share for the year ended 31 December 2020 (2019: 0.5cts) | 396 | 198 | | Proposed final dividend of 5.0cts per ordinary share for the year ended 31 December 2021 (2020: 1.0cts) | 1,982 | 396 | The proposed dividend for 2021 is subject to shareholders' approval at the forthcoming annual general meeting and has not been included as a liability in these financial statements. Annual Report 2021 | Anglo-Eastern Plantations Plc 115 ## Notes to the Consolidated Financial Statements 13 Property, plant and equipment Annual Report 2021 | Anglo-Eastern Plantations Plc 116 | Right-of-use Leasehold Construction | | Estate plant, Office plant, | | | | | --- | --- | --- | --- | --- | --- | | At 31 December 2021 260,532 | 47,908 35,117 118,752 48,739 | 5,708 150 | | 3,340 | 818 | | Additions (Reversal of impairment) / Impairment losses Exchange translations Cost At 1 January 2020 (restated) Exchange translations Reclassification Additions Development costs capitalised Disposal / Written off At 31 December 2020 (restated) Exchange translations Reclassification Development costs capitalised Disposals / Written off Transfer to assets held for sale (note 10) At 31 December 2021 Accumulated depreciation and impairment At 1 January 2020 (restated) Reclassification Charge for the year Disposal / Written off At 31 December 2020 (restated) Exchange translations Reclassification Charge for the year (Reversal of impairment) / Impairment losses Disposal / Written off Transfer to assets held for sale (note 10) At 31 December 2021 Carrying amount At 31 December 2019 (restated) At 31 December 2020 (restated) equipment & vehicle equipment & vehicle in progress Plantations Buildings 433,389 445,592 411,347 152,102 164,761 150,815 281,287 280,831 | (51,236) (23,811) 15,982 11,507 10,456 18,267 18,972 (2,008) (1,240) (4,903) (4,019) (5,657) (3,790) (2,360) (2,245) (4,136) (2,726) 9,618 (10,963) 78,359 62,828 78,780 64,883 79,657 60,863 25,843 21,288 28,649 24,456 31,749 25,746 52,516 41,540 50,131 40,427 Total $000 214,050 (1,085) 219,735 193,866 129,216 127,256 56,978 61,272 (6,067) 52,485 (1,782) 51,332 57,754 2,495 (2,196) 2,572 1,946 2,909 (31,888) 3,587 3,476 3,873 3,523 (19,225) 3,512 $000 3,821 10,451 1,037 10,456 84,834 5,646 92,479 3,518 1,168 75,114 3,746 $000 (272) (165) $000 (2,486) (774) (2,447) (510) (239) (2,753) (899) (768) (1,684) (700) (208) (1,166) (509) (143) (1,297) (318) (296) (5,437) (1,313) (455) (155) | assets (2,642) (2,909) (321) (243) (957) (379) 9,450 (108) 9,907 (957) 114 8,095 land 1,061 496 2,263 5,708 1,061 Mill $000 (19) 124 125 (639) (56) $000 $000 70 (127) - 167 - - - 133 188 846 841 642 959 187 148 534 153 133 809 659 307 642 (28) (12) (15) (11) | - - - - - - - - - - - - - - 11 - - - - - - - (5) - - - 7 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - | 17,990 18,034 15,847 13,295 14,034 12,507 (2,191) (1,847) 1,041 1,277 1,405 1,962 1,009 1,400 1,091 1,309 1,144 4,695 4,000 $000 $000 (122) (209) (563) (242) (814) (539) (191) (798) | 592 816 109 268 314 (30) (24) 19 19 82 82 (5) (5) (3) (5) 3 5 - - - - - - - - - - - - - - - - | # Notes to the Consolidated Financial Statements ## 13 Property, plant and equipment - continued The Group had changed the measurement of leasehold land from fair value to historical cost, the details are disclosed in note 3. The capitalisation rate used to determine the amount of borrowing costs eligible for capitalisation is based on the percentage of immature area of each estate against total planted area in the estate. The average capitalisation rate was 0% (2020: 8.6%) due to no borrowing cost in 2021. The estates included $nil (2020: $24,000) of interest and $181,000 (2020: $64,000) 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 2056 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 with rights of renewal thereafter. In Kalimantan, land titles were issued between 2015 and 2020 and expire between 2049 and 2054 with rights of renewal thereafter. In Bangka, land titles were issued in 2018 and expire in 2053. The rights and permits for South Sumatera were renewed in 2020. Some of the land is still in application progress to obtain the land title. 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 except leasehold land in Malaysia. The land title of the estate in Malaysia is a long-term lease expiring in 2084. There is an impairment of land for $1,168,000 recognised in 2021 based on the land valuation in 2020, which there is no material change within one year. The total value of the Group's land carried at fair value which was lower than original cost was $13,861,000 (2020: $9,584,000). The land cost of $6,450,000 relates to the land which has been transferred to assets held for sale, the details are disclosed in note 10. The total value of the Group's right-of-use assets carried at value in use which was lower than original cost was $322,000 (2020: $196,000). For right-of-use assets, the impairment is recognized for $133,000 (2020: $188,000) due to no future economic benefits. 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. The reversal of impairment loss of $5,437,000 recognised in 2021 was primarily due to the increase in CPO price. In 2020, no impairment loss or reversal of impairment loss of plantations had been recognised. The recoverable amount of the Group's plantations in 2021 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 $12,899,000 (2020: $33,429,000). The plantations cost of $12,663,000 relates to the plantations which have been transferred to assets held for sale, the details are disclosed in note 10. 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 14.8% (2020: 16.0%). 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 has been performed to show the reasonably possible changes in the key assumptions which would have a material impact on the impairment losses: | | 2021 | | | --- | --- | --- | | | Assumption applied | Increase in impairment $000 | | CPO price - decrease of 8% | $1,000/mt | 1,325 | | Pre-tax discount rate - increase by 300 bps | 14.76% | 1,771 | | Inflation rate - increase by 200 bps | 2.73% | 1,152 | | | 2020 | | | | Assumption applied | Increase in impairment $000 | | CPO price - decrease of 1% | $650/mt | - | | Pre-tax discount rate - increase by 100 bps | 15.98% | 383 | | Inflation rate - increase by 100 bps | 3.12% | 609 | Annual Report 2021 | Anglo-Eastern Plantations Plc 117 ## Notes to the Consolidated Financial Statements 14 Receivables: non-current The non-controlling interests in PT Chaya Pelita Andhika, PT Sawit Graha Manunggal, PT Empat Lawang Agro Perkasa, PT Karya Kencana Sentosa Tiga, PT Riau Agrindo Agung and PT Kahayan Agro Plantation have acquired their interests on deferred terms (see note 28, 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 $16,612,000 (2020: $24,632,000) which is recoverable from the cooperatives, the details with ECL are disclosed in note 10 and note 18. 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: 15 Deferred tax The movement on the deferred tax account as shown below: The most significant movement in deferred tax was due to the utilisation of some of the losses against taxable profits during the year. Annual Report 2021 | Anglo-Eastern Plantations Plc 118 | Due from cooperatives Based on cash flows discounted using Discount rate The higher the discount rate, the lower the Item Valuation approach Inputs used Inter-relationship between key (Restated) | | | | | | --- | --- | --- | --- | --- | | unobservable inputs and fair value Due from non-controlling Based on cash flows discounted using Discount rate The higher the discount rate, the lower the under Plasma scheme an estimated current lending rate of fair value. | 2020 2021 | | | | | Fair value interests current lending rate of 6% (2020: 6%). fair value. 7.00% (2020: 6.75%). Fair value 17,907 14,857 17,907 | Book value 3,050 (2,079) 14,085 $000 13,122 16,164 Recognised in income statement from continuing operations At 1 January 13,607 17,365 Recognised in other comprehensive income Transfer to assets held for sale (note 10) Exchange differences At 31 December 13,607 (7,005) (3,597) Due from non-controlling interests Due from cooperatives under Plasma scheme Transfer to assets held for sale (note 10) (3,124) 3,042 2,994 $000 $000 $000 (306) (178) (291) 22,236 16,743 22,236 130 | Book value 5,493 - $000 - | 2020 (3,338) 22,000 19,879 25,338 - 5,459 | $000 2021 | ## Notes to the Consolidated Financial Statements 15 Deferred tax - continued The deferred tax asset and liability, together with the amounts recognised in income statement and other comprehensive income are detailed as follows: 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 2021, the relevant time limits are 5 years in Indonesia, 7 years in Malaysia and unlimited in UK. At 31 December 2021, all unutilised tax losses were recognised in Indonesia. The unutilised tax losses will expire as per below: 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 $750,462,000 (2020: $689,666,000). 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 2021 by the subsidiaries. (Charged)/ | (Charged)/ | credited to | | | Annual Report 2021 \| Anglo-Eastern Plantations Plc 119 | | --- | --- | --- | --- | --- | | | credited | income | | | | | to equity statement Liability | Asset Net | | | | | Impairment of land Net tax assets / (liabilities) 2021 Retirement benefits BA movement Unutilised tax losses Unremitted earnings Other temporary differences Tax assets / (liabilities) Set off of tax Net tax assets / (liabilities) 2020 (restated) Impairment of land Retirement benefits BA movement Unutilised tax losses Unremitted earnings Other temporary differences Tax assets / (liabilities) Set off of tax A deferred tax asset has not been recognised for the following items: Unutilised tax losses Year 2022 2023 2024 2025 15,532 14,389 13,607 (280) (280) (280) 11,360 11,360 15,884 13,607 (2,819) (2,819) (3,162) (1,832) (1,330) (1,934) (1,934) (2,277) (1,495) 2020 $000 116 $000 116 116 | 2,495 3,713 2,304 3,713 2,994 2,994 2,944 1,488 2,304 3,713 6,156 1,832 4,324 2,944 1,488 1,495 $000 $000 $000 $000 16,780 (782) (132) (132) (211) (211) (343) (343) (4,951) (4,303) (5,080) (5,080) (3,780) (4,951) 139 139 651 476 2021 $000 - $000 - - - - - - - - - - - 91 (957) 92 92 (468) (665) | 100 158 (78) (51) - - - - - - - - - - - - - - 13 - - - - | | ## Notes to the Consolidated Financial Statements 16 Inventories 17 Biological assets Following a review of its industry peers and the available research data, the Group has decided to refine the valuation technique applied to its biological assets in order to provide a more comparable result. The refinement recognises that there is insignificant value in the FFB prior to 4 weeks before harvest and therefore the weight of FFB has been calculated based on one month’s production rather than two. The impact of this change is immaterial and has been applied prospectively. 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 one month after the 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: 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 $131,000 decrease in the valuation. 18 Trade and other receivables The carrying amount of trade and other receivables classified as amortised cost approximates fair value. | Biological assets - Based on FFB weight The higher the weight, the higher the fair value FFB weight | | | | | --- | --- | --- | --- | | Unharvested produce multiplied by the sum of FFB | | | Annual Report 2021 \| Anglo-Eastern Plantations Plc 120 | | Item Valuation approach Inter-relationship between key unobservable inputs selling price less harvesting The higher the selling price, the higher the fair value Inputs used FFB selling price | | | | | and fair value cost | 2021 2021 2020 2021 2020 2020 | | | | The higher the harvesting cost, the lower the fair value Harvesting cost | 15,045 14,316 12,803 12,541 12,541 Transfer to assets held for sale (note 10) Estate and mill consumables Processed produce for sale Transfer to assets held for sale (note 10) At 1 January Fair value gain recognised in the income statement for continuing operations Fair value gain recognised in the income statement for discontinued operations Transfer to assets held for sale (note 10) Exchange translations At 31 December Trade receivables Other receivables Prepayments and accrued income 8,433 6,873 6,612 5,668 8,783 7,574 4,349 1,203 8,783 1,308 1,354 1,457 1,551 2,485 1,788 5,250 4,693 5,182 4,693 $000 (729) $000 $000 $000 $000 $000 (303) | (68) (90) (65) 64 71 - - - | | ## Notes to the Consolidated Financial Statements 18 Trade and other receivables - continued Trade receivables The Group applies the IFRS 9 simplified approach to measure ECL using a lifetime ECL provision for trade receivables. To measure ECL on a collective basis, trade receivables are grouped based on similar credit risk and age. The expected loss rate is based on a combination of the Group’s historical credit losses experienced over the 5-year period prior to the year end and forward-looking information on macroeconomic factors affecting the Group’s customers. The ECL has been calculated at 1% on trade receivables balances. Other receivables The Group assesses the ECL associated with its debt instruments carried at amortised cost on a forward-looking basis using the three stage approach. The impairment methodology applied depends on whether there has been a significant increase in credit risk. The Group considers the probability of default upon initial recognition of an asset and whether there has been significant increase in credit risk on an on-going basis at each reporting date. To assess whether there is a significant increase in credit risk, the Group compares the risk of default occurring on the asset as at the reporting date with the risk of default as at the date of initial recognition. The Group considers available, reasonable and supportable forward-looking information, such as: - internal credit rating; - external credit rating (as far as available); - actual or expected significant adverse changes in business, financial or economic conditions that are expected to cause a significant change to the debtor’s ability to meet its obligation; - significant changes in the value of the collateral supporting the obligation or in the quality of third-party guarantees or credit enhancements; or - significant changes in the expected performance or behaviour of the debtor, including changes in the payment status of the debtor. There has not been a significant increase in credit risk since initial recognition on any of the group’s financial assets therefore 12-month ECL have continued to be recognised on all balances other than trade receivables which are discussed above. Due from cooperatives under Plasma scheme The Group assesses the ECL on amounts due from cooperatives under Plasma scheme by considering various probability weighted outcomes. The three possible outcomes are considered to be: - recovery is limited to the value of the land and bearer plants on which the plantation is situated; - recovery is limited to the future cashflows of the cooperative, being the FFB revenue less development costs; and - recovery in full via bank financing obtained by the cooperative. Movements on the Group’s loss provision on current and non-current other receivables and financial guarantee contracts are as follows: At 31 December 2021, the expected loss provision for receivables and financial guarantee contracts is as follows: Annual Report 2021 | Anglo-Eastern Plantations Plc 121 | Gross carrying | Net carrying | Loss | | | --- | --- | --- | --- | | | provision 2021 2020 | amount amount | | | Other receivables (note 18) 2021 Trade receivable Receivables: non-current (note 14) - Due from non-controlling interests - Due from cooperatives under Plasma scheme Financial guarantee contracts (note 27) | (8,798) At 1 January Loss provision during the year Transfer to assets held for sale (note 10) Exchange difference At 31 December 8,011 6,273 1,054 1,485 8,011 $000 $000 | 253 180 (87) 16,541 24,730 24,695 16,612 24,875 (145) 24,875 (180) $000 1,434 1,296 5,459 1,448 (14) $000 1,301 5,514 (55) (71) (35) - $000 (5) (35) | - | ## Notes to the Consolidated Financial Statements 18 Trade and other receivables - continued 19 Notes supporting statement of cash flows Cash and cash equivalents for purposes of the statement of cash flows comprised: Non-cash transactions from financing activities are shown in the reconciliation of liabilities from financing transactions as follows: Annual Report 2021 | Anglo-Eastern Plantations Plc 122 | Non-current - Loans and borrowings classified as non- Gross carrying - Lease liabilities classified as non- Non-current | Net carrying Current Current | Current Current | Loss | | | --- | --- | --- | --- | --- | | | current at 31 December 2019 becoming loans and current at 31 December 2020 loans and | provision lease lease lease amount lease | amount | | | At 1 January 2021 Cash at bank available on demand Short-term deposits Cash in hand As reported in statement of financial position Significant non-cash transactions from investing activities are as follows: Property, plant and equipment purchased but not yet paid at year end Repaid through purchase of FFB Cash Flows Non-cash flows - Effect of foreign exchange - New lease - Interest accruing during the year - Write off At 1 January 2020 Cash Flows Non-cash flows - Effect of foreign exchange - New lease - Interest accruing during the year 2020 Trade receivables Other receivables (note 18) Receivables: non-current (note 14) - Due from non-controlling interests - Due from cooperatives under Plasma scheme Financial guarantee contracts (note 27) borrowings liabilities (8,881) | borrowings liabilities 8,424 current during 2020 174,766 218,249 115,211 becoming current during 2021 (453) Total $000 (223) (350) (453) liabilities Total $000 43,464 41,029 74,164 252 (24) (35) | liabilities 6,374 3,849 90 (8,203) 39 2021 $000 2021 $000 $000 $000 8,167 2020 $000 2020 $000 (236) (113) (240) (222) (236) (236) (8,011) (7,889) (7,968) 8 25,098 16,743 25,141 - - - 222 160 257 (46) (24) (35) | 1,354 1,551 5,493 $000 $000 33,109 24,632 33,109 19 18 $000 85 90 $000 (217) $000 (110) (110) (456) (217) 36 $000 4 236 1,363 1,566 (15) 5,548 (55) (43) 167 - - $000 (43) | - (9) - - - - - - - - - - 46 3 4 - - - - - - | # Notes to the Consolidated Financial Statements ## 20 Trade and other payables | | 2021 $000 | 2020 $000 | | --- | --- | --- | | Trade payables | 8,821 | 6,254 | | Other payables | 1,305 | 1,387 | | Advance receipts | 10,237 | 7,070 | | Accruals | 12,170 | 11,599 | | | **32,533** | **26,310** | 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. The advance receipts at 31 December 2020 have been recognised in revenue in the current period. ## 21 Leases | | 2021 $000 | 2020 $000 | | --- | --- | --- | | Lease liabilities analysed as: | | | | Non-current | (110) | (217) | | Current | (240) | (236) | | | **(350)** | **(453)** | The weighted average incremental borrowing rate per annum was 5.5% (2020: 6.8%). Maturity analysis for the lease liabilities has been given in note 28. Amounts recognised in income statement: | | 2021 $000 | 2020 $000 | | --- | --- | --- | | Depreciation expense on right-of-use assets (note 13) | (153) | (148) | | Interest expense on lease liabilities | (24) | (35) | | Expense relating to short-term leases | (353) | (386) | | Expense relating to leases of low value assets | (6) | (6) | | | **(536)** | **(575)** | At 31 December 2021, the Group is committed to $0.01 million (2020: $0.01 million) for short-term leases. All the leases are fixed payments. The total cash outflow for leases amount to $0.62 million (2020: $0.65 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. (2020: 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 13. Annual Report 2021 | Anglo-Eastern Plantations Plc 123 # Notes to the Consolidated Financial Statements ## 21 Leases - continued ### Right-of-Use assets | | Land $000 | Building $000 | Total $000 | | --- | --- | --- | --- | | At 1 January 2021 | - | 307 | 307 | | Additions | 133 | - | 133 | | Amortisation | - | (153) | (153) | | Impairment losses | (133) | - | (133) | | Effect of foreign exchange | - | (4) | (4) | | At 31 December 2021 | - | 150 | 150 | | | Land $000 | Building $000 | Total $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 | ### Lease liabilities | | Land $000 | Building $000 | Total $000 | | --- | --- | --- | --- | | At 1 January 2021 | (126) | (327) | (453) | | Additions | (133) | - | (133) | | Interest expense | (9) | (15) | (24) | | Lease payments | 81 | 171 | 252 | | Effect of foreign exchange | 4 | 4 | 8 | | At 31 December 2021 | (183) | (167) | (350) | | | Land $000 | Building $000 | Total $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) | 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 13. Annual Report 2021 | Anglo-Eastern Plantations Plc 124 # Notes to the Consolidated Financial Statements ## 22 Retirement benefits The Group provides Post-Employment Benefit plans to its employees in Indonesia in accordance with Job Creation Law No.11/2020, Government Regulation No.35/2021 effective since February 2021 and Collective Labour Agreements. The impact of the implementation of this regulation based on the calculation by actuarial is reduction in retirement benefits of $2,212,000 due to change on benefit scheme of post-employment benefit program for non-staff employee. 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: | | 2021 | 2020 | | --- | --- | --- | | Rate of increase in wages | 8.0% | 8.0% | | Discount rate | 7.5% | 7.0% | | Mortality rate* | 100% TM14 | 100% TM14 | | Disability rate | 10% TM14 | 10% TM14 | | | 2021 | 2020 | | | $000 | $000 | | Service cost | | | | Current service cost | 1,660 | 1,555 | | Past service cost | (2,121) | 313 | | Settlement (gain) / loss | - | (930) | | Net interest expense | 735 | 825 | | Actuarial (gain) / loss | (102) | 30 | | **Total employee benefits expense** | **172** | **1,793** | | The reconciliation on the remeasurement of retirement benefit plan as shown below: | | | | | 2021 | 2020 | | | $000 | $000 | | Included in other comprehensive income: | | | | Continuing operations | 995 | (613) | | Discontinued operations | 91 | (36) | | Remeasurement of retirement benefit plan, net of tax recognised in other comprehensive income | 1,086 | (649) | | Included in other comprehensive income: | | | | Remeasurement of retirement benefit plan | 1,392 | (779) | | Deferred tax on retirement benefits | (306) | 130 | | Remeasurement of retirement benefit plan, net of tax recognised in other comprehensive income / (expenses) | 1,086 | (649) | Annual Report 2021 | Anglo-Eastern Plantations Plc 125 # Notes to the Consolidated Financial Statements ## 22 Retirement benefits - continued ### (i) Reconciliation of defined benefit obligation and fair value of scheme assets including discontinued operations | | Defined benefit obligation | | | Fair value of scheme assets | | | Net defined scheme liability | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Funded scheme $000 | Unfunded scheme $000 | Total $000 | Funded scheme $000 | Unfunded scheme $000 | Total $000 | Funded scheme $000 | Unfunded scheme $000 | Total $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 | | 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) | Annual Report 2021 | Anglo-Eastern Plantations Plc 126 # Notes to the Consolidated Financial Statements ## 22 Retirement benefits - continued ### (i) Reconciliation of defined benefit obligation and fair value of scheme assets (continued) | | Defined benefit obligation | | | Fair value of scheme assets | | | Net defined scheme liability | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Funded scheme $000 | Unfunded scheme $000 | Total $000 | Funded scheme $000 | Unfunded scheme $000 | Total $000 | Funded scheme $000 | Unfunded scheme $000 | Total $000 | | **At 1 January 2021** | **(4,674)** | **(9,943)** | **(14,617)** | **1,234** | **-** | **1,234** | **(3,440)** | **(9,943)** | **(13,383)** | | Service cost - current | (439) | (1,221) | (1,660) | - | - | - | (439) | (1,221) | (1,660) | | Service cost - past | (91) | 2,212 | 2,121 | - | - | - | (91) | 2,212 | 2,121 | | Interest (cost) / income | (290) | (532) | (822) | 87 | - | 87 | (203) | (532) | (735) | | Actuarial gain | - | 102 | 102 | - | - | - | - | 102 | 102 | | Included in income statement | (820) | 561 | (259) | 87 | - | 87 | (733) | 561 | (172) | | **Remeasurement (loss) / gain** | | | | | | | | | | | Actuarial (loss) / gain from: | | | | | | | | | | | Adjustments (experience) | 452 | 370 | 822 | - | - | - | 452 | 370 | 822 | | Financial assumptions | 180 | 450 | 630 | - | - | - | 180 | 450 | 630 | | Return on plan assets (exclude interest) | - | - | - | (60) | - | (60) | (60) | - | (60) | | Included in other comprehensive income | 632 | 820 | 1,452 | (60) | - | (60) | 572 | 820 | 1,392 | | Effect of movements in exchange rates | 54 | 119 | 173 | (14) | - | (14) | 40 | 119 | 159 | | Benefits paid | 239 | 266 | 505 | - | - | - | 239 | 266 | 505 | | Other movements | 293 | 385 | 678 | (14) | - | (14) | 279 | 385 | 664 | | **At 31 December 2021** | **(4,569)** | **(8,177)** | **(12,746)** | **1,247** | **-** | **1,247** | **(3,322)** | **(8,177)** | **(11,499)** | Annual Report 2021 | Anglo-Eastern Plantations Plc 127 ## Notes to the Consolidated Financial Statements 22 Retirement benefits - continued (ii) Disaggregation of defined benefit scheme assets The fair value of the funded assets is analysed as follows: 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: The weighted average duration of the defined benefit obligation is 11.10 years (2020: 15.57 years). The total contribution paid into the defined contribution plan in 2021 amounted to $239,000. The Group expects to pay contributions of $202,000 to the funded plans in 2022. For the unfunded plans, the Group pays the benefits directly to the individuals; the Group expects to make direct benefit payments of $330,000 for defined benefit plan and $246,000 for defined contribution plan in 2022. 23 Share capital and treasury shares No treasury share was purchased in 2021 (2020: 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. 24 Ultimate controlling shareholder At 31 December 2021, Genton International Limited (“Genton”), a company registered in Hong Kong, held 20,247,814 (2020: 20,247,814) shares of the Company representing 51.1% (2020: 51.1%) of the issued share capital of the Company. Together with other deemed interested parties, Genton‘s shareholding totals 20,551,914 or 51.9%. Madam Lim Siew Kim, a Director of the Company, has advised the Company that she is the controlling shareholder of Genton International Limited. Annual Report 2021 | Anglo-Eastern Plantations Plc 128 | Issued and Issued and Issued and | | | | | | | --- | --- | --- | --- | --- | --- | | Authorised Authorised Authorised | fully paid fully paid fully paid | | | | | | Ordinary shares of 25p each Beginning and end of year Treasury shares: Beginning of year Share options exercised End of year Market value of treasury shares: Beginning of year (583.0p/share) End of year (720.0p/share) Bonds - Government bonds - Corporate bonds - Mutual fund bonds Cash / deposits Discount rate Growth in wages Future mortality rate 60,000,000 39,976,272 | Reasonably Number Number 339,900 339,900 339,900 339,900 Number Number (+ / - 10%) 15,000 23,865 (+ / - 1%) Decrease (+ / - 1%) (1,171) (1,171) | Possible 9,994 1,234 15,504 2021 $’000 £000 2020 2020 $000 Change £000 Cost 2021 (1,171) (1,171) 1,247 $’000 $’000 2,705 3,298 $000 289 2021 $000 282 945 $000 2020 Cost | 277 275 970 (1,244) 1,384 Increase 7 $000 - - - Defined benefit obligation - 2 - | - (63) (1,192) 1,421 $000 | 63 | # Notes to the Consolidated Financial Statements ## 25 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 $352,180 (2020: $345,559). There was no balance outstanding at the year end (2020: Nil). In 2019, a land lease agreement was entered with Kuang Rong Holdings Sdn Bhd, company controlled by Madam Lim Siew Kim. The lease agreement was terminated in 2021. The rental paid during the year was $33,589 (2020: $79,914). There was no balance outstanding at the year end (2020: Nil). In 2021, a land lease agreement was entered with Hana Bestari Sdn Bhd, company controlled by Madam Lim Siew Kim. The rental paid during the year was $46,325. There was no balance outstanding at the year end. In 2021, the final dividend paid to Genton International Limited, a company controlled by Madam Lim Siew Kim, was $202,478 for the year ended 31 December 2020 (2020: $107,239 for the year ended 31 December 2019). The final dividend paid to other companies controlled by Madam Lim Siew Kim was $3,041 for the year ended 31 December 2020 (2020: $1,521 for the year ended 31 December 2019). There was no balance outstanding at the year end (2020: Nil). ## 26 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. | ## 27 Guarantees and other financial commitments | | 2021 $000 | 2020 $000 | | --- | --- | --- | | Capital commitments at 31 December | | | | Contracted but not provided - normal estate operations | 979 | 29 | | Contracted but not provided - mill development | 22,352 | - | | Authorised but not contracted - plantation and mill development | 26,517 | 49,721 | 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 14, in relation to a loan taken by KBSS from PT Bank Mandiri (Persero) Tbk. of Rp226.02 billion ($15.8 million) (2020: Rp226.02 billion, $16.0 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 $11.7 million as at 31 December 2021 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) (2020: Rp8.75 billion, $0.6 million), with 10 (Ten) years maturity period effective from 24 July 2017 with an interest rate of 13.25% per annum and in 2021 decreased to 12.5% per annum. This loan is collateralized by 125.4 hectares of KPPM's land 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 2021 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 $35,000 (2020: $43,000). The details of the ECL were disclosed in note 18. Annual Report 2021 | Anglo-Eastern Plantations Plc 129 ## Notes to the Consolidated Financial Statements 28 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 excluding advance receipts 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 2021 and 2020 were: 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 14 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 14); and 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 $52,710,000 (2020: $54,573,000), while the statement of financial position value of the Group's share of underlying assets at 31 December 2021 amounted to $440,030,000 (2020: $375,433,000). | | | Financial Financial | | Annual Report 2021 \| Anglo-Eastern Plantations Plc 130 | | --- | --- | --- | --- | --- | | Total carrying Total carrying | Amortised liabilities at | liabilities at | | | | Amortised cost amortised cost | amortised cost | value value | cost | | | 2021 Non-current receivables Trade and other receivables Short-term investments Cash and cash equivalent Trade and other payables 2020 Non-current receivables Trade and other receivables Short-term investments Cash and cash equivalent Trade and other payables | | 142,309 123,069 218,249 218,249 244,418 222,122 115,211 115,211 (22,296) (19,240) 22,000 22,000 22,236 22,236 2,730 1,439 2,905 1,957 2,730 1,439 2,905 1,957 (19,240) (22,296) (22,296) (19,240) | $000 $000 $000 $000 $000 $000 - - | - - - - - - - - | # Notes to the Consolidated Financial Statements ## 28 Disclosure of financial instruments and other risks - continued ### Currency risk - continued All the Group's sales are made in local currency and any trade receivables are therefore denominated in local currency. No hedging is therefore necessary. Selling prices of the Group's produce are directly related to the US Dollar denominated world prices. Appreciation of local currencies, therefore, reduces profits and cash flow of the Indonesian and Malaysian subsidiaries in US Dollar terms and vice versa. All remaining borrowings of the Group's subsidiaries had been fully paid in 2020 and therefore there was no longer any currency risk for the Group in respect of this. The average interest rate on local currency deposits was 2.74% higher (2020: 4.02% higher) than on US Dollar deposits. The unmatched balance at 31 December 2021 is represented by the $13,504,000 shown in the table below (2020: $13,803,000). The table below shows the net monetary assets and liabilities of the Group as at 31 December 2021 and 2020 that were not denominated in the operating or functional currency of the operating unit involved. | Functional currency of Group operation | Net foreign currency assets/(liabilities) | | | | --- | --- | --- | --- | | | US Dollar $000 | Sterling $000 | Total $000 | | **2021** | | | | | Rupiah | 12,397 | - | 12,397 | | US Dollar | - | 996 | 996 | | Ringgit | 1,107 | - | 1,107 | | **Total** | **13,504** | **996** | **14,500** | | **2020** | | | | | Rupiah | 12,086 | - | 12,086 | | US Dollar | - | 259 | 259 | | Ringgit | 1,717 | - | 1,717 | | **Total** | **13,803** | **259** | **14,062** | The following table summarises the sensitivity of the Group's financial assets and financial liabilities to foreign exchange risk. The impact on profit before tax and equity if Ringgit or Rupiah strengthen or weaken by 10% against US Dollar is: | | 2021 | | | 2020 | | | | --- | --- | --- | --- | --- | --- | --- | | | Carrying Amount US$ $000 | -10% in Rp : $ and RM : $ $000 | +10% in Rp : $ and RM : $ $000 | Carrying Amount US$ $000 | -10% in Rp : $ and RM : $ $000 | +10% in Rp : $ and RM : $ $000 | | **Financial Assets** | | | | | | | | Non-current receivables | 22,000 | (1,504) | 1,838 | 22,236 | (1,522) | 1,860 | | Trade and other receivables | 2,730 | (244) | 298 | 2,905 | (261) | 319 | | Short-term investments | 1,439 | (131) | 160 | 1,957 | (178) | 217 | | Cash and cash equivalents | 218,249 | (19,695) | 24,072 | 115,211 | (10,433) | 12,752 | | **Financial Liabilities** | | | | | | | | Trade and other payables | (22,296) | 1,914 | (2,339) | (19,240) | 1,636 | (2,000) | | Total (decrease) / increase | | (19,660) | 24,029 | | (10,758) | 13,148 | ### 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 2021, the Group had no external loans and facilities. Annual Report 2021 | Anglo-Eastern Plantations Plc 131 # Notes to the Consolidated Financial Statements ## 28 Disclosure of financial instruments and other risks - continued Liquidity risk - continued The following table sets out the undiscounted contractual cashflows of financial liabilities: | | Less than 1 year $000 | Between 1 and 2 years $000 | Between 2 and 5 years $000 | More than 5 years $000 | Total $000 | | --- | --- | --- | --- | --- | --- | | **At 31 December 2021** | | | | | | | Trade and other payables | (10,013) | (31) | (22) | (60) | (10,126) | | Accruals | (8,450) | (135) | (243) | (3,343) | (12,171) | | Lease liabilities | (252) | (81) | (34) | - | (367) | | | **(18,715)** | **(247)** | **(299)** | **(3,403)** | **(22,664)** | | Financial guarantee contracts provided to Plasma | | | | | | | - loan repayment by Plasma | (1,142) | (1,759) | (628) | - | (3,529) | | | **(19,857)** | **(2,006)** | **(927)** | **(3,403)** | **(26,193)** | | **At 31 December 2020** | | | | | | | Trade and other payables | (7,641) | - | - | - | (7,641) | | Accruals | (7,850) | (112) | (243) | (3,394) | (11,599) | | Lease liabilities | (257) | (222) | - | - | (479) | | | **(15,748)** | **(334)** | **(243)** | **(3,394)** | **(19,719)** | | Financial guarantee contracts provided to Plasma | | | | | | | - loan repayment by Plasma | (773) | (2,535) | (928) | (107) | (4,343) | | | **(16,521)** | **(2,869)** | **(1,171)** | **(3,501)** | **(24,082)** | 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 2021, so the effect of variations in borrowing rates is more than offset. A 1% change in the deposit interest rate would not have a significant impact on the Group's reported results as shown in the table below. | | 2021 | | | 2020 | | | | --- | --- | --- | --- | --- | --- | --- | | | Carrying amount $000 | -1% in interest rate $000 | +1% in interest rate $000 | Carrying amount $000 | -1% in interest rate $000 | +1% in interest rate $000 | | **Financial Assets** | | | | | | | | Short-term investments | 1,439 | (12) | 14 | 1,957 | (18) | 16 | | Cash and cash equivalents | 218,249 | (2,112) | 2,135 | 115,211 | (1,102) | 1,118 | | Total (decrease) / increase | | **(2,124)** | **2,149** | | **(1,120)** | **1,134** | There is no policy to hedge interest rates, partly because of the net cash position and the net interest income position of the Group. Annual Report 2021 | Anglo-Eastern Plantations Plc 132 # Notes to the Consolidated Financial Statements ## 28 Disclosure of financial instruments and other risks - continued Interest rate risk - continued Interest rate profiles of the Group's financial assets (comprising non-current receivables, trade and other receivables, cash and cash equivalent and short-term investments) at 31 December were: | | Total $000 | Fixed rate $000 | Variable rate $000 | No interest $000 | | --- | --- | --- | --- | --- | | **2021** | | | | | | Sterling | 996 | - | 63 | 933 | | US Dollar | 18,504 | 5,459 | 9,131 | 3,914 | | Rupiah | 220,238 | - | 202,442 | 17,796 | | Ringgit | 4,680 | - | 3,250 | 1,430 | | **Total** | **244,418** | **5,459** | **214,886** | **24,073** | | **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** | Long-term receivables of $5,514,000 (2020: $5,548,000) comprise US Dollar denominated amounts due from non-controlling interests as described in note 14 on which interest is due at a fixed rate of 6%. Average US Dollar deposit rate in 2021 was 0.30% (2020: 1.75%) and Rupiah deposit rate was 3.04% (2020: 5.77%). Interest rate profiles of the Group's financial liabilities (comprising bank loans and other financial liabilities and trade and other payables excluding advance receipts) at 31 December were: | | Total $000 | Fixed rate $000 | Variable rate $000 | No interest $000 | | --- | --- | --- | --- | --- | | **2021** | | | | | | Sterling | - | - | - | - | | US Dollar | (1,110) | - | - | (1,110) | | Rupiah | (20,864) | - | - | (20,864) | | Ringgit | (322) | - | - | (322) | | **Total** | **(22,296)** | **-** | **-** | **(22,296)** | | **2020** | | | | | | Sterling | - | - | - | - | | US Dollar | (1,109) | - | - | (1,109) | | Rupiah | (17,676) | - | - | (17,676) | | Ringgit | (455) | - | - | (455) | | **Total** | **(19,240)** | **-** | **-** | **(19,240)** | Weighted average interest rate on variable rate borrowings was nil in 2021 (2020: 6.75%). Credit risk The Group has two types of financial assets that are subject to the ECL model: - Current and non-current receivables carried at amortised cost. The Group also has financial guarantee contracts for which the ECL model is also applicable. While cash and cash equivalents are also subject to the impairment requirements as set out in IFRS 9, there is no impairment loss identified given the financial strength of the financial institutions in which the Group have a relationship with. Credit risk arises from cash and cash equivalents and deposits with banks and financial institutions. The Group has taken necessary steps and precautions in minimising the credit risk by lodging cash and cash equivalents only with reputable licensed banks, and particularly in Indonesia, independently rated banks with a minimum rating of "A". The cash and cash equivalents are in US dollars, Rupiah, Ringgit and Sterling according to the requirements of the Group. The list of the principal banks used by the Group is given on the inside of the back cover of this report. Annual Report 2021 | Anglo-Eastern Plantations Plc 133 ## Notes to the Consolidated Financial Statements 28 Disclosure of financial instruments and other risks - continued Credit risk - continued The Group use three categories for those receivables which reflect their credit risk and how the loss provision is determined for those categories. (i) Trade receivables using the simplified approach The Group applies the simplified approach under IFRS 9 to measure ECL, which uses a lifetime expected loss provision for all trade receivables. To measure the expected losses, trade receivables have been grouped based on shared credit risk characteristics and days past due. The expected loss rates are based on historical payment profiles of sales and the corresponding historical credit losses experienced during these periods. The historical loss rates are adjusted to reflect current and forward-looking information on macroeconomic factors (such as palm product prices and crude oil price) affecting the ability of the customers to settle the receivables. The historical loss rates will be adjusted based on the expected changes in these factors. No significant changes to estimation techniques or assumptions were made during the reporting period. In determining the expected loss rates, the Group also takes into consideration the collateral or payments received in advance, as set out below: Receivables are generally collected within the credit term and therefore there is minimal exposure to doubtful debts. Upfront payments are also collected for certain sales made by the Group’s subsidiaries in Indonesia. The Group’s maximum exposure to credit risk and loss provision recognised as at 31 December 2020 is disclosed in note 18. 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. (ii) 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. (iii) 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 27. Information regarding other non-current assets and trade and other receivables is disclosed in notes 14 and 18 respectively. Amounts receivable from local partners before ECL, amounting to $5,514,000 (2020: $5,548,000), 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 14, 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 18 and note 10. Annual Report 2021 | Anglo-Eastern Plantations Plc 134 ## Notes to the Consolidated Financial Statements 28 Disclosure of financial instruments and other risks - continued Credit risk - continued Deposits with banks and other financial institutions and investment securities 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 27. 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 $440,030,000 at 31 December 2021 (2020: $375,433,000). 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 2021, the Group had no borrowings (2020: Nil) but, depending on market conditions, the Board is prepared for the Group to have net borrowings. Plantation industry risk Please refer to pages 43 - 47. Annual Report 2021 | Anglo-Eastern Plantations Plc 135 ## Notes to the Consolidated Financial Statements 29 Subsidiary companies The principal subsidiaries of the Company all of which have been included in these consolidated financial statements are as follows: 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: | th | | | | th | | --- | --- | --- | --- | --- | | UK registered subsidiaries Quadrant House, 6 Malaysia registered subsidiaries 7 Floor, Wisma Equity | | | | Floor | | rd | | | | Annual Report 2021 \| Anglo-Eastern Plantations Plc 136 | | Indonesia registered subsidiaries 3 4 Thomas More Square 150 Jalan Ampang Floor, Wisma HSBC, Jalan Diponegoro, Kav 11 | | Country of Non-controlling | | | | Medan 20152 London E1W 1YW 50450 Kuala Lumpur incorporation and | interests ownership / | Proportion of | | | | North Sumatera United Kingdom Malaysia ownership interest at principal place of | voting interest at 31 | | | | | Subsidiaries by country Registered address Indonesia | Operating companies PT Tasik Raja Principal sub-holding company Anglo-Indonesian Oil Palms Limited United Kingdom Management company Indopalm Services Limited United Kingdom Anglo-Eastern Plantations Management Sdn Bhd PT Anglo-Eastern Plantations Management Indonesia Anglo-Eastern Plantations (M) Sdn Bhd All For You Sdn Bhd PT Alno Agro Utama PT Anak Tasik PT Bangka Malindo Lestari PT Bina Pitri Jaya PT Cahaya Pelita Andhika PT Empat Lawang Agro Perkasa PT Hijau Pryan Perdana PT Kahayan Agro Plantation PT Karya Kencana Sentosa Tiga PT Mitra Puding Mas PT Musam Utjing PT Riau Agrindo Agung PT Sawit Graha Manunggal PT Simpang Ampat PT United Kingdom Indonesia Plantations United Kingdom United Kingdom United Kingdom United Kingdom 2021 Name Dormant companies 2020 20% 100% 100% 100% 100% 45% 100% 10% 100% 20% 10% 20% 22% 10% 25% 18% 100% 25% 100% 100% 100% 100% | 2020 2021 100% 100% 100% 100% 100% 100% 100% The Ampat (Sumatra) Rubber Estate (1913) Limited 100% Gadek Indonesia (1975) Limited 100% Mergerset (1980) Limited 100% Musam Indonesia Limited 100% 80% 55% 90% 95% 5% 80% 90% 95% 5% 80% 78% 95% 5% 90% 75% 95% 5% 82% 75% 20% 45% 10% 20% 10% 20% 22% 10% 25% 18% 25% 80% 55% 90% 95% 80% 90% 95% 80% 78% 95% 90% 75% 95% 82% 75% 31 December Indonesia Indonesia Indonesia Indonesia Indonesia 5% Indonesia Indonesia Indonesia 5% Indonesia Indonesia Indonesia 5% Indonesia Indonesia Indonesia 5% Indonesia Indonesia Indonesia - - Malaysia - - Malaysia Malaysia - - - - - - - business - - - - - - - - - - - | December | | # Notes to the Consolidated Financial Statements ## 30 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 Piti Jaya | | PT Sawit Graha Manunggal | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | NCI percentage | 20% | | 10% | | 10% | | 20% | | 18% | | | **Summarised income statement** | | | | | | | | | | | | For the year ended 31 December | 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | | | $000 | $000 | $000 | $000 | $000 | $000 | $000 | $000 | $000 | $000 | | Revenue | 91,945 | 59,166 | 64,374 | 37,492 | 87,259 | 51,944 | 73,827 | 46,865 | 79,728 | 42,782 | | Profit after tax | 16,771 | 8,554 | 12,276 | 5,236 | 15,747 | 6,381 | 7,192 | 9,162 | 22,384 | 6,394 | | Other comprehensive (expense) / income | (1,623) | (1,845) | (878) | (960) | (695) | (1,028) | (1,722) | (1,950) | 15 | 100 | | Total comprehensive income | 15,148 | 6,709 | 11,398 | 4,276 | 15,052 | 5,353 | 5,470 | 7,212 | 22,399 | 6,494 | | Profit allocated to NCI | 3,354 | 1,711 | 1,228 | 524 | 1,575 | 638 | 1,438 | 1,832 | 4,075 | 1,164 | | Other comprehensive (expenses) / income allocated to NCI | (325) | (369) | (88) | (96) | (70) | (103) | (344) | (390) | 3 | 18 | | Total comprehensive income allocated to NCI | 3,029 | 1,342 | 1,140 | 428 | 1,505 | 535 | 1,094 | 1,442 | 4,078 | 1,182 | | Dividends paid to NCI | 17 | 3 | 144 | 35 | 12 | 2 | 46 | 24 | - | - | | **Summarised statement of financial position** | | | | | | | | | | | | As at 31 December | 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | | | $000 | $000 | $000 | $000 | $000 | $000 | $000 | $000 | $000 | $000 | | Non-current assets | 73,334 | 102,162 | 64,458 | 69,152 | 51,237 | 50,533 | 123,967 | 127,717 | 80,093 | 81,287 | | Current assets | 78,140 | 32,177 | 27,153 | 11,033 | 48,527 | 32,217 | 25,392 | 16,029 | 19,394 | 16,456 | | Non-current liabilities | (749) | (1,122) | (1,329) | (1,405) | (2,759) | (2,912) | (1,251) | (1,470) | (52,557) | (74,902) | | Current liabilities | (7,555) | (5,395) | (6,263) | (4,801) | (9,829) | (7,670) | (5,873) | (5,593) | (9,567) | (7,896) | | Net assets | 143,170 | 127,822 | 84,019 | 73,979 | 87,176 | 72,168 | 142,235 | 136,683 | 37,363 | 14,945 | | Accumulated NCI | 28,634 | 25,564 | 8,402 | 7,398 | 8,718 | 7,217 | 28,447 | 27,337 | 6,800 | 2,720 | | **Summarised cash flows** | | | | | | | | | | | | For the year ended 31 December | 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | | | $000 | $000 | $000 | $000 | $000 | $000 | $000 | $000 | $000 | $000 | | Cash flows from operating activities | 25,736 | 8,297 | 19,297 | 1,650 | 16,547 | 10,133 | 7,282 | 3,792 | 27,075 | 15,853 | | Cash flows (used in) / from investing activities | (1,221) | 2,641 | (1,707) | (996) | (3,028) | (2,559) | (587) | (344) | (4,355) | (4,145) | | Cash flows from / (used in) financing activities | 22,413 | (13) | (1,553) | (343) | (41) | (483) | (150) | (33) | (21,689) | (11,297) | | Net cash inflows | 46,928 | 10,925 | 16,037 | 511 | 13,478 | 7,091 | 6,545 | 3,415 | 1,031 | 411 | Annual Report 2021 | Anglo-Eastern Plantations Plc 137 ## Notes to the Consolidated Financial Statements 31 Investments 32 Events after the reporting period On 27 April 2022 the Indonesian government banned the export of CPO to try to stem the rising cost of cooking oil in Indonesia. This export ban will be reviewed monthly, or as often as needed, and whilst in place, will affect the tender price AEP will achieve as the CPO is sold locally. Annual Report 2021 | Anglo-Eastern Plantations Plc 138 2021 2020 Financial assets at fair value through profit or loss (listed) At 1 January Addition Revaluation gain Exchange differences At 31 December $000 49 49 - - - $000 - - - - - ## Company Statement of Financial Position As at 31 December 2021 Company Number: 1884630 The loss after tax for the year for the Company dealt with in the consolidated financial statements of the Company was $1,796,000 (2020: profit after tax $4,853,000). The financial statements were approved and authorised for issue by the Board of Directors on 29 April 2022 and were signed on its behalf by: Dato’ John Lim Ewe Chuan Executive Director, Corporate Finance and Corporate Affairs The accompanying notes are an integral part of this statement of financial position. Annual Report 2021 | Anglo-Eastern Plantations Plc 139 | | 2020 Note | 2021 | | --- | --- | --- | | 11,896 54,536 54,536 55,123 15,504 23,935 55,123 | (3,542) (1,171) 7,241 4,853 3,681 4,129 1,087 3,872 (198) 448 587 | 11,896 52,673 52,722 52,931 15,504 23,935 52,931 (3,544) (1,171) (1,796) 6 9,704 4 5 2,154 1,599 3,753 7 7 1,087 3,872 - (396) 209 49 | | Other payables Investments Current assets Receivables Cash at bank and in hand Net assets Capital and reserves Share capital Retained earnings at 1 January Profit / (Loss) for the year Dividends paid Non-current assets Investments in subsidiaries Current liabilities Net current assets Treasury shares Share premium Capital redemption reserve Exchange reserves Retained earnings Shareholders' funds | | | | | $000 | $000 | ## Company Statement of Changes in Equity For the year ended 31 December 2021 The accompanying notes are an integral part of this statement of changes in equity. Annual Report 2021 | Anglo-Eastern Plantations Plc 140 Capital | | redemption Treasury Retained Share Exchange | Share | | | | --- | --- | --- | --- | --- | | Balance at 31 December 2020 Comprehensive loss for the year Dividends paid Balance at 31 December 2021 Total comprehensive loss for the year Balance at 31 December 2019 Comprehensive income for the year Total comprehensive income for the year Dividends paid Loss for the year Profit for the year | 15,504 15,504 15,504 | (1,171) (1,171) (1,171) 23,935 11,896 23,935 23,935 (1,796) (1,796) 9,704 7,241 4,853 4,853 55,123 (1,796) 52,931 (1,796) 50,468 | (396) (198) 1,087 1,087 1,087 4,853 4,853 3,872 3,872 3,872 - - - - - - (396) (198) | - - - - - - - - - - - - - - - - - - - - - - - - | | | capital premium earnings | shares reserves $000 reserve $000 $000 $000 | Total $000 $000 $000 | | # Notes to the Company Financial Statements # 1 Basis of preparation The financial statements have been prepared in accordance with Financial Reporting Standard 100 Application of Financial Reporting Requirements ("FRS 100") and Financial Reporting Standard 101 Reduced Disclosure Framework ("FRS 101"). Disclosure exemptions adopted In preparing these financial statements the Company has taken advantage of all disclosure exemptions conferred by FRS 101. Therefore, these financial statements do not include: - certain comparative information as otherwise required by IFRS; - certain disclosures regarding the Company's capital; - a statement of cash flows; - the effect of future accounting standards not yet adopted; - the disclosure of the remuneration of key management personnel; and - disclosure of related party transactions with other wholly owned members of Anglo-Eastern Plantations Plc group of companies. In addition, and in accordance with FRS 101 further disclosure exemptions have been adopted because equivalent disclosures are included in the Company's consolidated financial statements. These financial statements do not include certain disclosures in respect of: - Share based payments; - Financial instruments (other than certain disclosures required as a result of recording financial instruments at fair value); or - Fair value measurement (other than certain disclosures required as a result of recording financial instruments at fair value). # 2 Accounting policies The principal accounting policies adopted in the preparation of the financial statements are set out below. The policies have been consistently applied to all the years presented unless otherwise stated. (a) Basis of accounting The separate financial statements of the Company are presented as required by the Companies Act 2006. They have been prepared under the historical cost convention. The presentation currency used is US Dollar and amounts have been presented in round thousands ("$000"). The principal accounting policies are summarised below. (b) Foreign currency The functional currency of the Company is US Dollar, chosen to reflect the primary economic environment in which the Company operates. Transactions in sterling are translated to US Dollar at the actual exchange rate and exchange losses recognised in income statement. Sterling denominated assets and liabilities are converted to US Dollar at the rate ruling at the balance sheet date. Exchange differences arising on the retranslation of unsettled monetary assets and liabilities are recognised immediately in income statement. (c) Investments Investments in subsidiaries are stated at cost less provision for any impairment. (d) Property, plant and equipment All items of property, plant and equipment are initially measured at cost. Cost includes expenditure that is directly attributable to the acquisition of the items. After initial recognition, all items of property, plant and equipment are stated at cost less accumulated depreciation and any accumulated impairment losses. Office plant and equipment is depreciated using the straight-line method. The yearly rate of depreciation is as follows: Office plant, equipment & vehicle - 20% per annum (e) Dividends 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. (f) Deferred taxation A deferred tax asset has not been recognised in relation to brought forward tax losses of $11.0m (2020: $9.8m) because it is not certain those losses can be utilised in the foreseeable future. (g) 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. (h) Financial guarantee contracts Where the Company enters into financial guarantee contracts and guarantees the indebtedness of other companies within the Group, these are accounted for under IFRS 9. The details of financial guarantee contracts are disclosed in note 27 of the consolidated financial statements. Annual Report 2021 | Anglo-Eastern Plantations Plc 141 ## Notes to the Company Financial Statements 2 Accounting policies – continued (i) Critical accounting estimates and judgements The Company makes certain estimates and assumptions regarding the future. Estimates and judgements are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In the future, actual experience may differ from these estimates and assumptions. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below. Estimates and assumptions Recoverability of investments and ECL on intercompany balances - estimate of future cash flows and liquid assets (note 5) 3 Income statement As permitted by section 408 of the Companies Act 2006, a separate income statement dealing with the results of the Company has not been presented. The loss before tax for the year for the Company dealt with in the consolidated financial statements of the Company was $1,792,000 (2020: profit before tax $4,855,000) and loss after tax for the year was $1,796,000 (2020: profit after tax $4,853,000). The remuneration of the directors of the Company is disclosed in note 8 to the consolidated financial statements. Auditor's remuneration is disclosed in note 6 to the consolidated financial statements. 4 Investments in subsidiaries Loans to subsidiary companies do not have fixed repayment terms and are repayable on demand. In practice, they are effectively long-term in nature and therefore classified as investments in subsidiaries. The details of the ECL is disclosed in note 5. The details of the subsidiaries are disclosed in note 29 of the consolidated financial statements. 5 Receivables The amounts owed by group undertakings arise as a result of advances to subsidiary companies and expenses paid on their behalf. The amounts are unsecured, interest free and do not have fixed repayment terms. Annual Report 2021 | Anglo-Eastern Plantations Plc 142 | | Investments in | Loans to | | | | | --- | --- | --- | --- | --- | --- | | | subsidiaries 2021 2020 | subsidiaries | | | | | Net carrying amount At 1 January 2020 Movements during the year Repayment Reversal of loss provision At 31 December 2020 Movements during the year: Repayment Loss provision At 31 December 2021 At 31 December | undertakings 2,092 2,612 2,109 3,643 2,154 3,681 $000 $000 PT Hijau Pyran Perdana Amounts owed by group undertakings: Anglo-Eastern Plantations Management Sdn Bhd PT Sawit Graha Manunggal PT Anglo-Eastern Plantations Management Indonesia Other receivables | undertakings 183 831 49,973 54,536 52,673 (1,224) (1,863) 52,673 54,536 17 17 45 38 37,720 42,283 40,420 5,787 Total $000 (1,224) (1,863) | 5,787 2021 2020 $000 $000 - - $000 12,253 12,253 12,253 | - $000 - | - - - - | ## Notes to the Company Financial Statements 5 Receivables - continued For intercompany balances that are repayable on demand, the Company’s ECL is based on the following assumptions: - If the borrower has sufficient accessible highly liquid assets in order to repay the loan if demanded at the reporting date, the ECL is likely to be immaterial. - If the borrower could not repay the loan if demanded at the reporting date, the Company considers the expected manner of recovery to measure the ECL. The recovery manner could be either through ‘repayment over time’ or a fire sale of less liquid assets by the borrower. - If the recovery strategies indicate that the Company would fully recover the outstanding balance of the loan, the ECL would be limited to the effect of the discounting of the amount due on the loan, at the loan’s effective interest rates, over the period until the amount is fully recovered. The details of other receivables related to ECL were disclosed in note 18 and note 28 of the consolidated financial statements. Movements on the Company’s loss provision on both current and non-current other receivables were as follows: At 31 December 2021, the expected loss provision for receivables was as follows: 6 Other payables The amounts owed to group undertakings arise as a result of advances from subsidiary companies and expenses paid on our behalf. The amounts are unsecured, interest free and do not have fixed repayment terms. 7 Share capital and treasury shares The details of the share capital and treasury shares are disclosed in note 23 of the consolidated financial statements. | | | Gross | | Annual Report 2021 \| Anglo-Eastern Plantations Plc 143 | | --- | --- | --- | --- | --- | | Gross carrying | Net carrying Net carrying carrying | Loss | | | | Other receivables Other receivables Loss provision | 2021 2020 2021 2020 provision | amount amount amount amount | 53 45 46 38 (8) (8) | | | 2021 Amounts owed by group undertakings Investments in subsidiaries (note 4) - Loans to subsidiaries undertakings 2020 Amounts owed by group undertakings: Investments in subsidiaries (note 4) - Loans to subsidiaries undertakings | (5,134) 1,515 6,649 2,149 3,544 3,542 1,515 2,163 2,163 2,409 2,409 1,135 1,133 $000 $000 $000 $000 At 31 December At 1 January Loss provision / (Reversal of loss provision) during the year Amounts owed to group undertakings: Mergerset (1980) Limited Musam Indonesia Limited Accruals 634 246 246 | 40,457 44,723 42,320 47,479 (2,104) 40,420 (2,149) 42,574 (1,470) 42,283 (1,515) 45,964 4,213 2,109 5,113 3,643 $000 $000 $000 $000 $000 $000 | (37) (37) | | ## Notes to the Company Financial Statements 8 Related party transactions An office premises lease agreement was entered with Infra Sari Sdn Bhd, a company controlled by Madam Lim Siew Kim. The rental paid during the year was $262,237 (2020: $255,616). There was no balance outstanding at the year end (2020: Nil). This has been classified as a short term lease and therefore lease payments have been recognised directly as an operating expense in the income statement. The details of the dividend payment to the related parties controlled by Madam Lim Siew Kim are disclosed in note 25 of the consolidated financial statements. Transactions between the Company and its subsidiaries are disclosed below: The details of the intercompany receivables and payables are disclosed in note 5 and note 6 of the Company financial statements respectively. 9 Employees' and Directors' remuneration The information required by the Companies Act and the Listing Rules of the Financial Conduct Authority are contained in the Directors' remuneration report on pages 72 - 78 of which certain information on page 76 has been audited. 10 Dividends The details of the dividends are disclosed in note 12 of the consolidated financial statements. 11 Guarantees and other financial commitments The Company has provided nil guarantees for loans to subsidiaries (2020: nil) as set out in note 27 of the consolidated financial statements. Annual Report 2021 | Anglo-Eastern Plantations Plc 144 | | 2021 2020 2021 2020 2021 2020 2021 2020 | | | --- | --- | --- | | Name Nature of transactions | | | | Subsidiaries (note 6) Anglo-Eastern Plantations Malaysia Sdn Bhd PT Anglo-Eastern Plantations Management Indonesia PT Sawit Graha Manunggal Subsidiaries (note 5) Number Number Payable to Management fees from Commissioner services income Corporate guarantee fees from Receivable from Average numbers employed during the year - directors - staff Staff costs Wages and salaries Social security costs Retirement benefits Directors' emoluments | 2,409 2,409 4,213 5,113 $000 $000 $000 $000 $000 $000 131 187 200 | 57 17 20 17 4 4 4 4 - - - - - - - - - - - | # Notice of Annual General Meeting Notice is hereby given that the thirty-seventh Annual General Meeting of Anglo-Eastern Plantations Plc will be held at the office of UHY Hacker Young LLP, 6th Floor, Quadrant House, 4 Thomas More Square, London E1W 1YW on Monday 27 June 2022 at 11.00am (UK time) for the following purposes: 1 To receive and consider the accounts and the reports of the directors and auditor thereon for the year ended 31 December 2021. 2 To approve the Directors' Remuneration Report (excluding the part containing the remuneration policy) as set out in the Company's annual report and accounts for the year ended 31 December 2021. 3 To declare a final dividend. 4 To re-elect Madam Lim Siew Kim, a Non-Executive Director, who has served more than nine years. 5 To re-elect Dato' John Lim Ewe Chuan as a director. 6 To re-elect Mr Lim Tian Huat as a Non-Executive Director. 7 To re-elect Mr Jonathan Law Ngee Song as a Non-Executive Director 8 To re-appoint BDO LLP as auditor. 9 To authorise the directors to fix the remuneration of the auditor. 10 To consider the following resolution as an ordinary resolution: That the directors be generally and unconditionally authorised in accordance with section 551 of the Companies Act 2006, in substitution for all existing authorities to the extent unused, to exercise all the powers of the Company to allot: (i) shares in the Company up to an aggregate nominal amount of £3,303,031 (representing 13,212,124 ordinary shares of 25p each) which is equal to one third of the issued ordinary share capital (excluding treasury shares) at the date of this resolution; and in addition (ii) equity securities of the Company (within the meaning of section 560(1) of the Companies Act 2006) in connection with an offer of such securities by way of a rights issue up to an aggregate nominal amount of £3,303,031 provided that this authority shall expire on the date of the next annual general meeting after the passing of this resolution or 30 June 2023 whichever is earlier save that the Company may before such expiry make an offer or agreement which would or might require relevant securities to be allotted after such expiry and the directors may allot relevant securities in pursuance of such an offer or agreement as if the authority conferred hereby had not expired. "rights issue" means an offer of equity securities open for acceptance for a period fixed by the directors to holders of equity securities (other than the Company) on the register on a fixed record date in proportion to their respective holdings of such securities or in accordance with the rights attached thereto (but subject to such exclusions or other arrangements as the directors may deem necessary or expedient in relation to fractional entitlements or legal or practical problems under the laws of, or the requirements of any recognised regulatory body or any stock exchange in, any territory). 11 To consider the following resolution as a special resolution: That subject to and conditional on the passing of Resolution 10, the directors be empowered pursuant to section 570 of the Companies Act 2006) to allot equity securities (within the meaning of section 560 of that Act) for cash pursuant to the authority conferred by Resolution 10 and/or by way of sale of treasury shares as if section 561(1) of that Act did not apply to any such allotment or sale, provided that this authorisation shall be limited to: (i) the allotment of equity securities and sale of treasury shares for cash in connection with an offer or issue of, or invitation to apply for, equity securities made to (but in the case of the authority granted under paragraph (ii) of Resolution 10 by way of a rights issue only); (a) ordinary shareholders in proportion (as nearly may be practicable) to their existing holdings; and (b) holders of other equity securities, as required by the rights of those securities, or as the directors otherwise consider necessary, and permitting the directors to impose any limit or restrictions and make any arrangements which they consider necessary or appropriate to deal with treasury shares, fractional entitlement, record dates, legal regulatory or practical problems in, or under, the laws of any territory, or any other matter; and Annual Report 2021 | Anglo-Eastern Plantations Plc 145 ## Notice of Annual General Meeting (ii) in the case of the authority granted under paragraph (i) of Resolution 10 and/or the sale of treasury shares for cash, to the allotment of equity shares or sale of treasury shares up to an aggregate nominal amount of £495,454. Such power shall apply during the period expiring on the date of the next annual general meeting or on 30 June 2023 (whichever shall be earlier) but the directors may during such periods make offers or agreements which would or might require equity securities to be allotted (and treasury shares to be sold) after the expiry of such period. 12 To consider the following as a special resolution: That the Company be generally and unconditionally authorised to make market purchases (within the meaning of section 693(4) of the Companies Act 2006) of ordinary shares of 25p each in the capital of the Company on such terms as the directors think fit, provided that: (a) the maximum number of ordinary shares hereby authorised to be purchased is 3,963,637 (representing 10% of the issued ordinary share capital); (b) the minimum price (exclusive of expenses) which may be paid for each ordinary share is 25p; (c) the maximum price (exclusive of expenses) which may be paid for each ordinary share is the higher of: (i) an amount equal to 105% of the average of the middle market quotations for such share as derived from the Daily Official List of the London Stock Exchange for the five business days immediately preceding the date of purchase; and (ii) the price of the last independent trade and the highest current independent bid on the London Stock Exchange; and (d) the authority hereby conferred shall expire on 30 June 2023 or, if earlier, at the conclusion of the next annual general meeting of the Company save that the Company may before the expiry of this authority make a contract of purchase which will or may be executed wholly or partly after such expiry and may make a purchase of shares pursuant to any such contract. 13 To consider and if thought fit to pass the following resolution as a special resolution: That a general meeting of the Company other than an annual general meeting may be called on not less than 14 clear days’ notice. By order of the Board CETC (Nominees) Limited Company Secretary 24 May 2022 Annual Report 2021 | Anglo-Eastern Plantations Plc 146 # Notice of Annual General Meeting Notes: 1. Pursuant to regulation 41 of the Uncertificated Securities Regulations 2001, the Company has specified that only those shareholders on the register of members of the Company at close of business on 23 June 2022 shall be entitled to vote in respect of the number of shares registered in their name at that time. Changes to the register of members after 23 June 2022 or, if the meeting is adjourned, in the register of members at close of business on the date which is two days before the day of the adjourned meeting shall be disregarded in determining the rights of any person to vote at the meeting by proxy. 2. As at 20 May 2022 (being the latest practicable date prior to the publication of this notice), the Company's issued share capital comprised 39,976,272 Ordinary Shares of 25p each. Each share carries one vote except 339,900 shares held as treasury shares and therefore the total number of voting rights in the Company as at 9.00 am on 20 May 2022 is 39,636,372. 3. A member of the Company may appoint one or more proxies to vote at the meeting. Where more than one proxy is appointed in relation to the meeting, each proxy must be appointed to exercise rights attaching to a different share or shares. You may not appoint more than one proxy to exercise rights attached to any one share. A proxy need not be a member of the Company. Members are encouraged to appoint the Chairman of the meeting as their proxy and all 4. The instrument appointing a proxy must be deposited at the office of the Registrar by 9.30 a.m. (UK time) on 23 June 2022 not less than forty-eight hours before the time appointed for holding the meeting (or any adjournment thereof). 5. In the case of joint holders, where more than one of the joint holders purports to appoint a proxy, only the appointment submitted by the most senior holder will be accepted. Seniority is determined by the order in which the names of the joint holders appear in the Company's register of members in respect of the joint holding (the first-named being the most senior). 6. CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so for the annual general meeting to be held on 27 June 2022 and any adjournment thereof by using the procedures described in the CREST Manual on the Euroclear website (www.euroclear.com/CREST). CREST personal members or other CREST sponsored members and those CREST members who have appointed a voting service provider should refer to their CREST sponsor or voting service provider, who will be able to take the appropriate action on their behalf. In order for a proxy appointment or instruction made using the CREST service to be valid, the appropriate CREST message (a "CREST Proxy Instruction") must be properly authenticated in accordance with Euroclear's specifications and must contain the information required for such instructions, as described in the CREST Manual. All messages relating to the appointment of a proxy or an instruction to a previously appointed proxy must be transmitted so as to be received by Computershare Investor Services PLC (CREST ID: 3RA00) by 9.30 a.m. on 25 June 2022. It is the responsibility of the CREST member concerned to take such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In this connection, CREST members and, where applicable, their CREST sponsors or voting service providers are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings. The Company may treat a CREST Proxy Instruction as invalid in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001. 7. You may submit your proxy electronically using the link https://www.uk.computershare.com/investor/. If not already registered, you will need your Shareholder Reference Number ("SRN") which is detailed on your share certificates. 8. The statement of the rights of shareholders in relation to the appointment of proxies does not apply to a person who receives this notice of general meeting as a person nominated to enjoy "information rights" under section 146 of the Companies Act 2006. If you have been sent this notice of meeting because you are such a nominated person the following statements apply: (i) you may have a right under an agreement between you and the registered shareholder by whom you were nominated to be appointed (or to have someone else appointed) as a proxy for this general meeting and (ii) if you have no such a right, or do not wish to exercise it, you may have a right under such an agreement to give instructions to that registered shareholder as to the exercise of voting rights. Nominated persons should contact the registered member by whom they were nominated in respect of these arrangements. 9. A member of the Company which is a corporation may authorise a person or persons to act as its representative(s) at the meeting. In accordance with the provisions of the Companies Act 2006, each such representative may exercise (on behalf of the corporation) the same powers as the corporation could exercise if it were an individual member of the Company, provided that they do not do so in relation to the same shares. It is no longer necessary to nominate a designated corporate representative. 10. Members satisfying the requirements of section 527 of the Companies Act 2006 may require the Company to publish on a website a statement by them (at the Company's cost) relating to the audit of the Company's accounts which are being laid before the meeting (including the auditor's report and the conduct of the audit) or, where applicable, any circumstances connected with an auditor of the Company ceasing to hold office since the previous general meeting at which accounts were laid. Should such a statement be received, it will be published on the Company's website at https://www.angloeastern.co.uk/. In those circumstances the Company would be under an obligation to forward a copy of the statement to the auditor forthwith and the statement would form part of the business which may be dealt with at this meeting. 11. Shareholders are welcomed to submit questions to the Board by email to datajohnlim@angloeastern.co.uk by 23 June 2022 and they will be answered after the AGM or at the AGM for those shareholders who are in attendance. The Company must cause to be answered any such questions relating to the business being dealt with at the meeting but no such answer need be given if (a) to do so would interfere unduly with the preparation of the meeting or involve the disclosure of confidential information, (b) the answer has already been given on a website in the form of an answer to a question, or (c) it is undesirable in the interests of the Company or the good order of the meeting that the question be answered. 12. A copy of this notice and the other information required by section 311A of the Companies Act 2006 can be found at https://www.angloeastern.co.uk/. Annual Report 2021 | Anglo-Eastern Plantations Plc 147 ## Notice of Annual General Meeting 13. If you are in any doubt as to any aspect of Resolutions 10 to 13 or as to the action you should take, you should immediately take your own advice from a stockbroker, solicitor, accountant or other independent financial advisor authorised under the Financial Services and Markets Act 2000. The Board believes that these Resolutions are in the best interests of the Company and shareholders as a whole. 14. If you have sold or otherwise transferred all your shares in the Company, please hand this document and the accompanying form of proxy to the purchaser or transferee, or to the bank, stockbroker or other agent through whom the sale or transfer was effected, for transmission to the purchaser or transferee. If you sell or have sold or otherwise transferred only part of your holding of existing shares please consult the bank, stockbroker or other agent through whom the sale or transfer was effected. 15. The following documents are available for inspection by members at the registered office of the Company during normal business hours (except Bank Holidays) and at the place of the meeting not less than 15 minutes prior to and during the meeting. The documents can also be obtained by email to datojohnlim@angloeastern.co.uk: (a) a copy of the Executive Director’s service agreement; (b) copies of Non-Executive Directors’ letters of appointment; (c) relationship agreement with the majority shareholder; and (d) a copy of the Company’s Articles of Association. Annual Report 2021 | Anglo-Eastern Plantations Plc 148 ### Company addresses Company advisers London Office Auditor Anglo-Eastern Plantations Plc BDO LLP th | Quadrant House, 6 | Floor | 55 Baker Street | | --- | --- | --- | | 4 Thomas More Square | | London W1U 7EU | | London E1W 1YW | | United Kingdom | United Kingdom Tel: 44 (0)20 7216 4621 Principal Bankers Fax: 44 (0)20 7767 2602 National Westminster Bank Plc Liverpool Street Station 216 Bishopsgate Malaysian Office London EC2M 4QB Anglo-Eastern Plantations Management Sdn Bhd United Kingdom th 7 Floor, Wisma Equity 150 Jalan Ampang The Hong Kong and Shanghai Banking Corporation 50450 Kuala Lumpur Limited Malaysia Wisma HSBC Tel: 60 (0)3 2162 9808 Jalan Diponegoro, Kav 11 Fax: 60 (0)3 2164 8922 Medan 20152 North Sumatera Indonesian Office Indonesia PT Anglo-Eastern Plantations Management Indonesia rd 3 Floor, Wisma HSBC, Jalan Diponegoro, Kav 11 PT Bank DBS Indonesia Medan 20152 Uniplaza Building North Sumatera Jalan Letjen MT Haryono A-1 Indonesia Medan 20231 Tel: 62 (0)61 452 0107 North Sumatera Fax: 62 (0)61 452 0029 Indonesia RHB Bank Bhd Secretary and registered office Podium Block, Plaza OSK Anglo-Eastern Plantations Plc Jalan Ampang (Number 1884630) 50450 Kuala Lumpur (Registered in England and Wales) Malaysia CETC (Nominees) Limited th Quadrant House, 6 Floor 4 Thomas More Square Registrars London E1W 1YW Computershare Investor Services PLC United Kingdom The Pavilions Tel: 44 (0)20 7216 4600 Bridgwater Road Fax: 44 (0)20 7767 2602 Bristol BS99 6ZY United Kingdom Solicitors Withers LLP 20 Old Bailey London EC4M 7AN United Kingdom Broker Panmure Gordon (UK) Limited One New Change Company website London EC4M 9AF United Kingdom https://www.angloeastern.co.uk/