Interim / Quarterly Report • Aug 12, 2021
Interim / Quarterly Report
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Regulated information within the meaning of the Royal Decree of 14 November 2007
Press release Schoten, August 12, 2021
as per 30 June 2021 (6m/21)
* Recurring results are exclusive of the capital gain of KUSD 11 640 (of which KUSD 11 003 share of the Group) related to the sale of PT Melania.
| Group production | ||||||||
|---|---|---|---|---|---|---|---|---|
| 2021 (in tonnes) | Own | Third parties |
Q2/21 | YoY% | Own | Third parties |
YTD Q2/21 |
YoY% |
| Palm oil | 82 312 | 17 707 | 100 019 | 19.30% | 157 534 | 34 118 | 191 652 | 18.04% |
| Rubber* | 741 | 67 | 808 | -43.28% | 2 236 | 219 | 2 455 | -19.40% |
| Tea* | 182 | 45 | 227 | -66.02% | 829 | 136 | 965 | -34.71% |
| Bananas | 7 204 | 0 | 7 204 | 0.76% | 16 653 | 0 | 16 653 | 2.99% |
| 2020 (in tonnes) | Own | Third parties |
Q2/20 | Own | Third parties |
YTD Q2/20 |
||
| Palm oil | 67 752 | 16 083 | 83 835 | 130 894 | 31 474 | 162 368 | ||
| Rubber | 1 370 | 55 | 1 425 | 2 787 | 259 | 3 046 | ||
| Tea | 668 | 0 | 668 | 1 478 | 0 | 1 478 | ||
| Bananas | 7 150 | 0 | 7 150 | 16 169 | 0 | 16 169 | ||
| *PT Melania tea and rubber productions have only been included for 4 months due to sale of PT Melania per 30/04. |
The coronavirus continues to impose many business restrictions on SIPEF's overseas companies and complicate the management of the plantations and mills. Nevertheless, it has not had a substantial impact on the Group's production.
The Group's total palm oil production grew by 19.3% and 18.0% respectively, compared to the second quarter and the first half of last year.
In Indonesia, the exceptionally good start of the year, in agronomic and operational terms, continued in the second quarter. Thanks to the favourable impact of regular rainfall, the volumes of which approached or exceeded the long-term averages, yields per hectare increased. In all production centres, the volume of fruits harvested exceeded that of the second quarter of last year. As a result, for the whole of Indonesia's palm operations, including the increasing purchases from smallholders, fruit production exceeded that of the second quarter of 2020 by 13.5%, while that of the half-year increased by 13.0%.
Weather conditions in North Sumatra were conducive to palm growth and fruit development. As a result, for the first semester, the own production of both the mature plantations with mineral soil (+3.5%) and the UMW/TUM plantations with organic soil (+14.5%) increased. These latter plantations have meanwhile seen their yields rise again, thanks to the adjusted fertilisation programs.
In Bengkulu province, own fruit production for the first half of the year exceeded that of the same period in 2020 by 10.3%. Barring the effect of positive weather conditions, this growth is due to an increasing number of hectares coming into production after replanting in the second generation, with palms delivering higher yields per hectare.
In South Sumatra, more than 7 000 hectares of young plantings are already in production, resulting in increasing yields (+117.1%). However, the replanting in Dendymarker was temporarily taking more mature hectares out of production, resulting in a 36.6% drop in this production, compared with the first six months of last year. The combined production of palm fruits in South Sumatra still increased by 52.9%.
Due to generally favourable average oil extraction rates (OER) compared with last year, palm oil production in Indonesia rose, including that from the increasing purchases from smallholders. This rise was 14.9% and 12.9% for the second quarter and six months respectively, compared with those for the same periods last year.
After a relatively 'dry' rainy season in the first quarter in Papua New Guinea, normalised precipitation volumes in the second quarter provided agronomically good conditions in the region. In particular, the plantings recovering from the 2019 ash fall experienced almost a doubling of their production, compared with the first half of last year. As a result, own plantations recorded an overall growth of 38.1% on a half-year basis. The harvested fruit volumes of smallholders, who were much less affected by the volcanic eruptions two years ago, increased by only 2.1%.
Due to favourable oil extraction rates at the three palm oil extraction mills, (OER of 25.5% on average versus 24.4% last year), the palm oil production of Hargy Oil Palms in Papua New Guinea increased by 26.6% versus the first half of 2020.
Despite higher precipitation volumes, rubber production in the Group decreased by 8.8%, compared with the first half of last year. The main reasons for this decrease were, besides the sale of PT Melania, for which the rubber productions have only been included until 30 April 2021, the delayed leaf formation after the wintering period, combined with the effects of the Pestalotiopsisfungus. In addition, the productive hectares decreased in preparation for the divestment in natural rubber and conversion to oil palm plantations.
Due to the sale of PT Melania, tea production has only been included until 30 April 2021. During these four months in the Cibuni tea plantation in West Java, the production limiting effect of an intensive pruning was felt in the first semester, compensated by purchases from third parties. Even so, total production decreased by 34.7%. After the sale of PT Melania, no more additional tea production will be included in the group productions of the SIPEF group.
In Ivory Coast, the banana production at Plantations J. Eglin increased by 3.0%, compared with the first half of last year. A limited impact of the colder Harmattan wind at the start of the year, combined with good production cycles, resulted in more bunches with a higher average weight and a consequently better volume for export to Europe and Africa.
| Average market prices | |||||||
|---|---|---|---|---|---|---|---|
| In USD/tonne | YTD Q2/21 | YTD Q2/20 | YTD Q4/20 | ||||
| Palm oil | CIF Rotterdam* | 1 116 | 649 | 715 | |||
| Rubber | RSS3 FOB Singapore** | 2 263 | 1 479 | 1 728 | |||
| Bananas | CFR Europe*** | 641 | 671 | 628 | |||
| * Oil World Price Data *** CIRAD Price Data (in EUR) |
** World Bank Commodity Price Data (updated database) |
The second quarter in the palm oil market started off from a high price level and continued to rally until mid-May, where the market reached its highs. The massive inverses in the market, with the nearby prices at a USD 50 to USD 100 premium to the forward months, had taken their toll on demand. Slowly but surely, the origin stocks were also coming out of the ultra-low situation, albeit still in a very low stock-to-usage scenario.
Demand was particularly slow from India, where the covid-19-driven lockdowns were hurting demand and the Indian government was working towards an import duty reduction. Importers were waiting for this decision, which finally became effective late June. More countries were importing hand-to-mouth and destination pipelines remained rather thin.
June was a month where many price-determining factors were relatively bearish: palm production was picking up; demand was sluggish; US oilseed and Russian/Ukrainian sun seed crops were looking promising, facilitating a sell-off by financial investors; and the Indonesian government announced a change in the export levy system.
The Indonesian CPO fund had sufficient reserves built in the first six months to guarantee the B30 blending program. Therefore, it was considered fair to reduce the export levy as from 2 July onwards. The adjustment, where only USD 20 is taken as the levy for every USD 50 price increase instead of USD 30, with a cap at USD 175 instead of USD 255, is positive for growers, but it was viewed negatively by the market. Earlier in the year when the export levy and taxes went up, it triggered higher markets, so the tax changes are often quickly offset.
The palm oil traded from USD 1 000 in April to above USD 1 200 mid-May, but it was gradually sold off and settled just below USD 1 000 at the end of the quarter. The absolute spot premiums also reduced during the quarter.
Palm kernel oil (PKO) followed the palm market till mid-May, but struggled due to lack of demand. The tightness in coconut oil was certainly not felt in the PKO market, and the price dropped during the quarter to a relatively small premium over palm oil. The PKO prices hovered around USD 1 400, but dropped gradually to USD 1 200 at the end of June.
The natural rubber market seemed to be paralysed, due to the high container freight prices. The rates increased tenfold and it became a serious price element of the total price for delivered goods. If consumers were forced to pay that price, shipments were often pushed forward. On the other hand, covid-19 lockdowns have negative effects on the production front as well. They kept rubber prices in a headlock and little physical business was executed.
Prices of Sicom RSS3 traded gradually lower from USD 2 200 to USD 2 000 per tonne, with physical deliveries at a slight premium.
Encouraged by a relatively strong EUR/USD ratio, the second quarter saw a significant supply of 'dollar bananas', mainly from Colombia, resulting in gradually declining prices on the European spot market.
| Consolidated income statement | ||
|---|---|---|
| In KUSD (management presentation) | 30/06/2021 | 30/06/2020 |
| Revenue | 182 261 | 117 673 |
| Cost of sales | -116 376 | -96 938 |
| Changes in the fair value | 2 632 | -712 |
| Gross profit | 68 517 | 20 023 |
| General and administrative expenses | -17 007 | -15 515 |
| Other operating income/(charges) – excluding sale of PT Melania | -1 381 | 113 |
| Operating result | 50 129 | 4 621 |
| Financial income | 675 | 863 |
| Financial charges | -1 936 | -2 497 |
| Exchange differences | -609 | -519 |
| Financial result | -1 871 | -2 153 |
| Profit before tax | 48 258 | 2 468 |
| Tax expense | -13 159 | -1 686 |
| Profit after tax | 35 099 | 782 |
| Share of results of associated companies and joint ventures | -482 | -578 |
| Profit for the period | 34 617 | 204 |
| Gain on sale PT Melania | 11 640 | 0 |
| Result for the period after the sale of PT Melania | 46 257 | 204 |
| Attributable to: | ||
| - Equity holders of the parent – before sale of PT Melania | 32 516 | -712 |
| - Equity holders of the parent – after sale of PT Melania | 43 519 | -712 |
| Consolidated gross profit | ||||
|---|---|---|---|---|
| In KUSD (management presentation) | 30/06/2021 | % | 30/06/2020 | % |
| Palm oil | 66 382 | 96.9% | 19 823 | 99.0% |
| Rubber | -887 | -1.3% | -1 498 | -7.5% |
| Tea | 65 | 0.1% | -518 | -2.6% |
| Bananas and horticulture | 2 412 | 3.5% | 1 844 | 9.2% |
| Corporate | 545 | 0.8% | 373 | 1.9% |
| Total | 68 517 | 100% | 20 023 | 100% |
Total revenue increased by 54.8% versus the first semester of 2020 to USD 182 million. Palm oil revenue rose by 61.8%, due to a combination of higher volume and a higher world market price for crude palm oil (CPO). Rubber revenue increased by 60.3%, due to a higher unit selling price and higher sales volume. Tea revenue almost halved. Due to the deconsolidation of PT Melania from 2021, direct sales by this company to external customers will no longer be included in the Group's sales figures. Revenue in the banana segment, expressed in the functional currency euro, grew mainly due to a 4.0% increase in volumes sold. As bananas are traded in euro, USD revenue increased by 18.3%, due to the EUR/USD exchange rate evolution.
The total cost of sales increased by KUSD 19 438.
Purchases of fresh fruit bunches (FFB) from third parties increased by KUSD 19 227 or 28.8%, mainly due to increased purchase prices of FFB, the price of which is related to CPO.
The average unit cost price at mill gate for the mature oil palm plantations and the banana segment remained approximately identical compared with the first half of 2020. For the rubber activities, the unit cost prices increased significantly (21.20%); in preparation for the conversion of the rubber to palm, the depreciation of the remaining net book value is accelerated.
The changes in the fair value relate to the impact of valuing the hanging fruits at their fair value (IAS 41R).
The gross profit increased from KUSD 20 023 in June 2020 to KUSD 68 517 in June 2021.
The gross profit in the palm segment (96.9% of total gross profit) rose by KUSD 46 560, due to higher productions and especially higher net palm oil prices. The average world market price for CPO recorded USD 1 116 per tonne CIF Rotterdam during the past semester. This is 71.9% higher than for the same period last year. It should be noted, however, that in Indonesia the export levy and export tax have increased significantly compared with last year. For the first half of 2021, the average export levy and export tax was USD 345 per tonne, compared with USD 54 per tonne during the first six months of last year.
The chart below shows Indonesia's export levy and export tax by month:
In Papua New Guinea, the Group did benefit fully from the increase in CPO prices.
Despite this export levy and export tax, the total average sales price at mill gate (gross sales price reduced by local and international transport costs and export levy and export tax) for CPO increased. This evolved from USD 559 per tonne over the first six months of 2020, to USD 696 per tonne over the first six months of 2021, or an increase of 24.5%.
The negative contribution of the rubber segment to the gross margin improved compared with last year. This is due to the strong rebound in sales prices since the second half of last year.
The net result of the tea activities since 2021 exclusively represents the commissions received by SIPEF from the sale of tea volumes in the market.
In the banana and horticulture activities profitability was confirmed with a gross margin of KUSD 2 412.
General and administrative expenses increased compared with last year, mainly due to the increased bonus provision as a result of the better profit outlook.
Other operating charges and income included an exceptional write-off on earlier than foreseen replanting in PT Dendymarker (KUSD 1 580).
The recurring operating result amounted to KUSD 50 129 against KUSD 4 621 last year.
The financial income mainly comprised the positive time effect of the discount of the receivable from the sale of the SIPEF-CI oil palm plantation in Ivory Coast at the end of 2016 (KUSD 321) and interest income from the growing receivables on plasma holders in South Sumatra.
The financial charges were mainly related to long-term and short-term financing. Three causes were the basis for the interest costs decreasing by KUSD 561:
The recurring profit before tax was KUSD 48 258 compared with KUSD 2 468 in June 2020.
The recurring tax expense, including the usual tax-exempt expenses of approximately USD 1 million, amounted to 27.27%. This figure is in line with the theoretical recurring tax expense of 25.83%.
The 'share of results of associated companies and joint ventures' (KUSD -482) included the research activities centralised in PT Timbang Deli and Verdant Bioscience Pte Ltd (KUSD -423), and four months of results from PT Melania (KUSD -59).
The recurring profit for the period was KUSD 34 617.
The recurring net profit, share of the Group, came to KUSD 32 516 compared with a loss of KUSD 712 in June 2020.
On 30 April 2021, an agreement was signed with PT Shamrock regarding the sale of PT Melania for USD 36 million. The total capital gain of KUSD 11 640 (share of the Group KUSD 11 003) realised on this transaction is further detailed in annex 6.
The net profit, share of the Group, amounted to KUSD 43 519.
| Consolidated cash flow | ||
|---|---|---|
| In KUSD (management presentation) | 30/06/2021 | 30/06/2020 |
| Cash flow from operating activities | 72 576 | 26 416 |
| Change in net working capital | -32 877 | 160 |
| Income taxes paid | -4 897 | -3 821 |
| Cash flow from operating activities after tax | 34 802 | 22 755 |
| Acquisitions intangible and tangible assets | -23 433 | -21 948 |
| Selling price of PP&E and financial assets | 23 779 | 2 715 |
| Acquisition financial assets | 0 | -1 609 |
| Free cash flow | 35 147 | 1 913 |
| Other financing activities | -31 837 | 573 |
| Net movement in investments, cash and cash equivalents | 3 310 | 2 486 |
| In USD per share | 30/06/2021 | 30/06/2020 |
|---|---|---|
| Weighted average shares outstanding | 10 419 328 | 10 419 328 |
| Basic operating result | 5.93 | 0.44 |
| Basic/diluted net earnings | 4.18 | -0.07 |
| Recurring basic/diluted net earnings | 3.06 | -0.07 |
| Cash flow from operating activities after tax | 3.34 | 2.18 |
In line with the increase in operating result, the cash flow from operating activities increased from KUSD 26 416 for the first six months in 2020, to KUSD 72 576 over the same period this year.
The variation in working capital of KUSD -32 877 involved various elements:
The above use of working capital, with the exception of the increasing receivables from the plasma development, concerned the usual temporary variations.
In Indonesia and Papua New Guinea, in accordance with local legislation, the Group made tax prepayments. These were made partly based on the 2019 results and partly on the basis of the 2020 results, both of which are lower than the 2021 results. Therefore, the tax prepayments of KUSD 4 897 were significantly below the tax payable of KUSD 10 014.
Acquisitions in intangible and tangible assets (KUSD -23 433) were related to the usual replacement investments, but mainly to the expansions in South Sumatra (KUSD -12 835). Due to covid-19 related logistical and operational impediments, investments remained temporarily below expectations.
The selling price of PP&E and financial assets (KUSD 23 779) mainly related to funds received from 2 operations:
The free cash flow amounted to KUSD 35 147 compared with KUSD 1 913 during the same period last year.
Other financing activities (KUSD -31 837) include the partial repayment of long-term financing (KUSD -9 000 for the long-term loan and KUSD -123 for the lease debts), the repayment of the short-term financing (KUSD -18 744), dividend payments to minority shareholders (KUSD -2 306) and interest payments (KUSD -1 664).
| Consolidated balance sheet | ||
|---|---|---|
| In KUSD (management presentation) | 30/06/2021 | 31/12/2020 |
| Biological assets (depreciated costs) – bearer plants | 301 718 | 315 826 |
| Goodwill | 104 782 | 104 782 |
| Other fixed assets | 356 121 | 359 994 |
| Receivables > 1 year | 22 228 | 16 101 |
| Assets held for sale | 13 520 | 0 |
| Net current assets, net of cash | 100 888 | 86 137 |
| Net cash position | -119 989 | -151 165 |
| Total net assets | 779 269 | 731 675 |
| Shareholders' equity, Group share | 678 964 | 638 688 |
|---|---|---|
| Non-controlling interest | 35 893 | 35 862 |
| Provisions and deferred tax liabilities | 55 246 | 57 126 |
| Advances received > 1 year | 9 167 | 0 |
| Total net liabilities | 779 269 | 731 675 |
The main variations in the balance sheet positions were related to the deconsolidation of PT Melania. annex 6 summarises the impact on the various balance sheet items in addition to the impact on the income statement.
The reduction in biological assets (KUSD 14 108) is almost exclusively the result of the deconsolidation of PT Melania (KUSD 12 482). The other fixed assets showed a slight decrease, due to the slower than expected utilisation of the investment budget. As a result, the depreciations were higher than the investments.
The receivables after more than one year increased, due to the granting of loans to the plasma holders in South Sumatra for the financing of their new plantings, as well as an advance payment (KUSD 2 908) done for the acquisition, announced in June, of the assets of an existing insolvent banana plantation Wanita in Ivory Coast.
Net current assets, net of cash, increased by KUSD 14 751. The main movements (combined KUSD 12 178) were as follows:
The net financial debt decreased by KUSD 31 177 thanks to the positive cash flow, and amounts to KUSD 119 989 as of the end of June 2021.
The assets held for sale of KUSD 13 520 (55% of KUSD 24 582) are related to the estimated net sales value of the part of PT Melania that is still held by the Group until all terms and conditions for a final sale have been fulfilled.
The advances received on more than one year relates to the payment of the first instalment of KUSD 19 000 for 40% of the shares of PT Melania and includes the difference between the amount received (KUSD 19 000) and the value of 40% of the shares of PT Melania (KUSD 9 833) which were transferred. This amount was recorded as an advance payment received for the sale of PT Melania.
Once again, it has to be pointed out, that the Group did not experience any direct negative financial impact from the covid-19 pandemic. The consequences were mainly concentrated at the human and social level for the more than 21 000 employees employed in countries where local medical support is very limited. It was, and still is, SIPEF management's primary concern to protect these employees and their families from infection by limiting travel and business contacts. On the other hand, the Company has proactively started the gradual local provision of vaccines to all these people, if they wish.
Taking into account the outlook of the Company agronomists, based on representative counts in the field, the Group expects relatively more limited growth figures for palm oil for the third quarter. This will probably also dampen the annual figures for the growth in palm oil production. Moreover, this slight decline is in line with the expectations of other Indonesian producers. Although it is not easy to plan more than three months ahead, the SIPEF group is well on track, barring exceptional weather effects, to achieve the forecast annual production increase in 2021 of more than 10%.
Furthermore, it is expected that, during the remainder of the year, the Pestalotiopsis fungus will adversely affect rubber production, which is already in decline. The banana volumes produced to date are also fully in line with expectations. Consequently, the SIPEF group expects 2021 to be a year in which banana production will again pick up slightly. This outlook does not yet consider the additional plantings in the recently acquired Wanita project, as the harvests will only start from the second half of 2022 onwards.
Where June was fed with bearish inputs, it was July where most factors were bullish. It started off late June with the heat wave in western US and Canada, hurting the soybean and canola crops. The palm oil crops were slightly below expectation and the more positive forecasters had to make significant reductions in their total 2021 projections. The consumers were forced to buy into the strengthening markets, initiated by the Indian buyers who were benefitting from the lower import duties.
The palm oil supply and demand story will remain very tight till the end of the year, and with the current less than ideal weather circumstances in the US, Canada and also in Russia and Ukraine, it needs to be questioned as to what extent the new summer crops will bring any relief. If there is any major disturbance in the weather in the month of August, there will be a tight vegetable oil picture for the foreseeable future.
External factors can still play a role, and certainly the covid-19 impact in the growing nations is a threat to production, but the underlying fundamentals for vegetable oils are looking healthy, and SIPEF is looking forward to a high palm oil price environment with a degree of confidence.
The rubber market will be determined by the reaction of end-users to the disrupted supply chain. After months of receiving below par volumes, the Company foresees that the end receivers have to accept the extreme highly priced freight market. It is expected that more physical sales will be at a higher landed cost, though this does not necessarily translate into higher prices for the grower.
Summer is traditionally a period of lower banana consumption because of the school holidays across Europe. Due to the continuing large supply of 'dollar bananas', prices are currently falling sharply on the spot market. This malaise is likely to continue until the end of the third quarter.
In a continued strong market, which has been firm since the fourth quarter of last year, SIPEF has been able to sell its palm oil volumes at prices unprecedented in recent years. To date, 75% of the expected palm oil volumes have been sold at an average price of USD 1 005 per tonne CIF Rotterdam equivalent, including premiums for sustainability and origin. This is 45.2% higher than the average price of USD 692 per tonne at the same time last year, when 76% of the volumes had been sold.
In Papua New Guinea, the exceptionally high palm oil prices are fully benefiting the palm activities. But in Indonesia, sales prices are being significantly skimmed by a combined export levy and tax to finance the local biodiesel program strongly encouraged by the Indonesian government. Due to the continued rise in crude oil prices during the first semester, the export levy mechanism was eased from 2 July 2021 on. The levy and tax are calculated by the government on a monthly basis, according to the prevailing palm oil prices on the international markets. Given the uncertainty of determining the local reference price for palm oil, available palm oil volumes in Indonesia are placed on the market on a monthly basis. However, in Papua New Guinea, the expected volumes from the own plantations can be hedged over time.
Meanwhile, about three quarters of the expected rubber productions were sold at an average price of USD 2 057 per tonne FOB. This represents a price increase of 33.8% compared with the volumes sold at USD 1 537 per tonne at the same time last year.
Unit production cost prices, with the exception of those for the rubber activities, remain well under control. This is explained by the relative weakness of local currencies against the USD, which offset the limited increase in Group workers' wages, and by the strong increase in production volumes.
The combination of these positive elements with the unprecedentedly strong sales prices would make the recurring results, share of the Group, significantly better than the annual result for the fiscal year 2020 (KUSD 14 122). They would probably be in the range of USD 60 -70 million at the end of the year, despite the high levies on palm oil production in Indonesia. This figure will be increased by the exceptional capital gain, share of the Group, of KUSD 11 003 on the sale of PT Melania.
The remaining 25% of expected production should also benefit from these aforementioned price effects of the palm oil market. In addition, the final recurring result will largely be determined by the achievement of the expected production growth, the evolution of the relaxed policy on export levies and taxes in Indonesia and the evolution of cost prices.
In Musi Rawas in South Sumatra, during the month of May, the Group received a positive response from the Round Table on Sustainable Palm Oil (RSPO) for the development of AKL East, under the conditions of the New Planting Procedures (NPP). This concession of 3 090 hectares, acquired in 2018, will allow the Group to make additional plantings, which will be in line with the already developed AKL project of 4 748 hectares, thus optimising future profitability. Land compensation and preparation for oil palm planting started immediately.
Two additional concessions totalling 5 504 hectares are now pending with RSPO for potential development. These join the existing AMR project, of which 6 707 hectares have already been developed. SIPEF also expects a positive answer from the RSPO for these concessions by the end of August.
Of the previously approved concessions, already under development since 2013, 374 additional hectares were compensated in the first half of the year. 472 additional hectares were prepared for planting or planted, to reach a total of 14 490 cultivated hectares. This represents 81.4% of the total 17 798 compensated hectares. 2 331 hectares of these were provisionally acquired for planting for smallholders and 15 467 hectares for own development. Currently, 7 772 hectares are in production. Virtually all harvested fruits are processed in Dendymarker's own extraction mill. The expansion works of this mill, in order to increase its processing capacity from 20 to 60 tonnes of palm fruits per hour, are progressing well, despite the restrictions imposed by local corona measures. Replanting of the Dendymarker plantations, acquired in 2017, is also progressing steadily. Meanwhile, 5 832 hectares have been replanted, while 1 637 hectares have been prepared for replanting.
The acquisition of the assets of an existing insolvent banana plantation, Wanita in Ivory Coast, announced in June, has now been completed. Plantations J. Eglin will commence rehabilitation from September, expanding the banana business with 550 hectares of new plantings. The staggered investment of USD 8 million will increase production by nearly 80% over a period of three years, from 32 000 to 57 000 tonnes of bananas for export.
In addition to financing the comprehensive investment budget and the described expansion, thanks to the strongly increasing cash flow from operating activities and the proceeds from the sale of PT Melania, the Group will remain in a position to further reduce its net financial debt.
SIPEF is a Belgian agro-industrial company listed on Euronext Brussels.
The condensed financial statements of the Group for the first six months ended 30 June 2021 were established by the board of directors on 11 August 2021.
These financial statements are prepared in accordance with 'International Accounting Standard' IAS 34, 'Interim Financial Reporting' as adopted by the EU. This report should be read in conjunction with SIPEF group's annual financial statements as at 31 December 2020, because the financial statements herein do not include all the information and disclosures required in the annual financial statements.
The amounts in this document are presented in KUSD, unless noted otherwise.
A summary of the accounting standards can be found in the audited consolidated financial statements for the year ended 31 December 2020 (https://www.sipef.com/hq/investors/annual-reports). The accounting policies of the SIPEF group which are used as of 1 January 2021 are consistent with the accounting standards used for the audited consolidated financial statements of 31 December 2020, with the exception that the Group has applied the new accounting standards and interpretations applicable for annual periods beginning on or after 1 January 2021. These new standards and interpretations have a minimal impact.
The preparation of the consolidated financial statements in conformity with IFRS requires the Group to use accounting estimates and judgements and make assumptions that may affect the reported amounts of assets and liabilities at the date of the balance sheets and reported amounts of revenue and expense during the reporting periods. Actual results could differ from those estimates. We refer to Note 4 of the annual report of 2020.
Below we present an update of the most important estimates and judgement applicable in the half-year report:
The main areas in which estimates are used for the first 6 months of 2021 are:
The key estimates used in the calculation of deferred tax assets testing rely on making an estimate on commodity prices over a longer period. By nature, the commodity prices used in such estimates are volatile and will therefore in reality will be different from the estimated amounts.
The Group has made an estimation of the costs that will occur in order to fulfil the requirements included in the sale and purchase agreement for the sale of PT Melania with the Shamrock Group. Any difference between the estimated costs and actually incurred costs will result in an increase or decrease of the capital gain upon finalisation of the SPA, no later than 2024. We refer to annex 6 for more information on the sale of PT Melania.
Following the sale and purchase agreement with the Shamrock Group relating to the sale of PT Melania, PT Melania has been deconsolidated and included as a joint venture classified as held for sale and measured at it's fair value on the balance sheet. We refer to annex 6 for an overview of the impact of this transaction on the consolidated financial statements of the SIPEF group.
As shown in the table below, the effective tax rate depends to a large extent on other matters than the local results and the applicable local tax rates. The reconciliation can be presented as follows:
| In KUSD | 30/06/2021 | 30/06/2020 | 31/12/2020 |
|---|---|---|---|
| Result before tax | 59 898 | 2 468 | 28 064 |
| 25.1% | 12.3% | 23.3% | |
| Theoretical tax charge | -15 024 | -304 | -6 545 |
| Capital gain sale PT Melania | 2 561 | 0 | 0 |
| Impairment on deferred taxes for fiscal losses | 270 | -964 | -3 130 |
| Other non-deductible | -965 | -1 103 | -1 915 |
| Change in tax-% | 0 | +685 | 685 |
| Corrections on last year | 0 | 0 | 76 |
| Tax charge | -13 159 | -1 686 | -10 828 |
| Effective tax rate | 22.0% | 68.3% | 38.6% |
The capital gain on the sale of PT Melania (KUSD 11 640) is non-deductible income, resulting in a difference with the theoretical tax charge of KUSD 2 561.
Applying the principles of IAS 12, a total impairment of KUSD 270 on tax losses carried forward has been reversed per June 30, 2021. Based on the Group's latest estimations the Group expects to recover these fiscal losses before they expire.
The total tax charge of KUSD 13 159 (2019: KUSD -1 686) can be split into a current tax component of KUSD 10 014 (2020: KUSD 3 637) and a deferred tax component of KUSD 3 145 (2020: KUSD -1 952).
See annex 5.
More information relating to the turnover can be found in annex 5. The timing of the revenue recognition always takes place at a point in time.
The share of results of 'associated companies and joint ventures' contains the research activities which are centralised in PT Timbang Deli and Verdant Bioscience PTE Ltd, and also 4 months of results of PT Melania included as a joint – venture until the sale on April 30, 2021, after which it was classified as a joint-venture as held for sale. After April 30, 2021, no results of PT Melania have been included in the profit and loss of the SIPEF group.
On June 9, 2021, SIPEF shareholders approved the distribution of a EUR 0.35 gross dividend (coupon 13) for the financial year 2020, payable as from July 7, 2021. The total dividend paid amounts to EUR 3 646 765. Converted at the USD exchange rate of the day of the general assembly, this amounts to USD 4 442 940.
There were no changes in issued capital compared to 31 December 2020.
| In KUSD | 30/06/2021 | 31/12/2020 |
|---|---|---|
| Short-term obligations – credit institutions | -67 456 | -86 128 |
| Long-term obligations – credit institutions | -45 000 | -54 000 |
| Current portion of amounts payable after one year | -18 000 | -18 000 |
| Short-term leasing obligations | -471 | -543 |
| Long-term leasing obligations | -2 162 | -2 285 |
| Investments and deposits | 0 | 0 |
| Cash and cash equivalents | 13 100 | 9 790 |
| Net financial assets/(liabilities) | -119 989 | -151 165 |
The short-term liabilities have a term of less than twelve months and comprise of USD straight loans with bankers of KUSD 43 700, a 'commercial paper' debt of KUSD 23 756 and the current portion of KUSD 18 000 related to the long-term loan for a total amount of KUSD 63 000. The short-term and long-term leasing obligations are a result of the IFRS 16 – leasing standard.
At June 30, 2021, the Group had one financial covenant connected to the long-term obligations which states that the net financial debt may not exceed 2.75 times REBITDA ('recurring earnings before interest, tax and depreciations') of the financial year. At June 30, 2021 the Group has complied with the covenant (0.9978 times REBITDA).
The EBITDA of the Group consists of the operating results + profit/loss from equity companies + depreciation and additional impairment/increases on assets. The REBITDA consists of the same calculation, but excluding the one-off, non-recurring effects.
The current maximum credit lines available amount to KUSD 188 756 (2020: KUSD 198 528). Compared to the current total debt (excluding leasing) of KUSD 130 456, this leaves a freely available headroom of KUSD 58 300.
The financial instruments were categorised according to principles that are consistent with those applied for the preparation of note 26 of the 2020 financial statements. No transfer between levels occurred during the first six months of 2021.
All derivatives outstanding per 30 June 2021 measured at fair value relate to forward exchange contracts and interest rate swaps. The fair value of the forward exchange contracts is calculated as the discounted value of the difference between the contract rate and the current forward rate and is classified as level 2 (fair value determination based on observable inputs). As per 30 June 2021 the fair value amounts to KUSD -2 009 versus KUSD -793 per 31 December 2020.
The carrying amount of the other financial assets and liabilities approximates the fair value.
SIPEF has signed a sale and purchase agreement with Shamrock Group (SG) on the sale of 100% of the share capital of its Indonesian subsidiary, PT Melania. SG is an Indonesian group that runs several rubber plantations and factories, and specialises in the production and sale of latex gloves. SIPEF controls 95% of PT Melania through its Indonesian 95% subsidiary, PT Tolan Tiga, the remaining 5% being owned by an Indonesian pension fund.
As a reminder, PT Melania owns half of the Group's Indonesian rubber operations in Sumatra and the entire tea operations in Java. Initially, 40% of the shares was sold for a payment of USD 19 million. After this first stage the Shamrock Group will take over the management of the rubber activities. The second tranche of 60% of the shares (of which 55% are held by SIPEF) will be transferred no later than 2024 for USD 17 million, after the renewal of the permanent land rights (HGU) for the whole of the rubber and tea business. The gross transaction price for 100% of the shares is USD 36 million.
For more detail on the impact of the sale of PT Melania on the financial statements of the SIPEF group we refer to annex 6.
There are no changes to the transactions with associated companies with regard to the annual report of December 2020.
See management report.
There are no events after the balance sheet date that have a significant impact on the results and/or the shareholders' equity of the Group.
In accordance with Article 13 of the Royal Decree of 14 November 2007, SIPEF group states that the fundamental risks confronting the company are unchanged from those described in the 2020 annual report, and that no other risks nor uncertainties are expected for the remaining months of the financial year.
On a regular basis, the board of directors and company management evaluate the business risks that confront the SIPEF group.
We refer to 1.6.1 – Covid-19 effects of the management report.
Baron Bertrand, chairman of the board of directors, and François Van Hoydonck, managing director, confirm that to the best of their knowledge:
See annex 7.
Translation: this press release is available in Dutch and English. The Dutch version is the original; the English version is a free translation. We have made every reasonable effort to avoid any discrepancies between the different language versions. However, should such discrepancies exist, the Dutch version will take precedence.
Schoten, 12 August 2021
For more information, please contact:
* F. Van Hoydonck, managing director (GSM +32 478 92 92 82)
* J. Nelis, chief financial officer
Tel.: +32 3 641 97 00
[email protected] www.sipef.com (section 'investors')
SIPEF is a Belgian agro-industry group listed on Euronext Brussels and specialised in the – as sustainable certified - production of tropical agricultural commodities, primarily crude palm oil and palm products. These labour-intensive activities are consolidated in Indonesia, Papua New Guinea and Ivory Coast and are characterised by broad stakeholder involvement, which sustainably supports the long-term investments.
| ANNEX 1 In KUSD (condensed) |
30/06/2021 | 31/12/2020 |
|---|---|---|
| Non-current assets | 797 497 | 809 753 |
| Intangible assets | 449 | 473 |
| Goodwill | 104 782 | 104 782 |
| Biological assets - bearer plants | 301 718 | 315 826 |
| Other property, plant & equipment | 351 380 | 354 811 |
| Investment property | 0 | 0 |
| Investments in associated companies and joint ventures | 4 207 | 4 630 |
| Financial assets | 85 | 80 |
| Other financial assets | 85 | 80 |
| Receivables > 1 year | 22 228 | 16 101 |
| Other receivables | 22 228 | 16 101 |
| Deferred tax assets | 12 647 | 13 049 |
| Current assets | 177 287 | 136 888 |
| Inventories | 41 993 | 29 648 |
| Biological assets | 9 384 | 6 763 |
| Trade and other receivables | 83 748 | 76 877 |
| Trade receivables | 32 110 | 27 731 |
| Other receivables | 51 638 | 49 146 |
| Current tax receivables | 12 005 | 11 766 |
| Investments | 0 | 0 |
| Other investments and deposits | 0 | 0 |
| Derivatives | 0 | 0 |
| Cash and cash equivalents | 13 100 | 9 790 |
| Other current assets | 3 536 | 2 043 |
| Assets held for sale | 13 520 | 0 |
| Total assets | 974 783 | 946 641 |
| Total equity | 714 856 | 674 550 |
| Shareholders' equity | 678 964 | 638 688 |
| Issued capital | 44 734 | 44 734 |
| Share premium | 107 970 | 107 970 |
| Treasury shares (-) | -10 277 | -10 277 |
| Reserves | 546 782 | 507 299 |
| Translation differences | -10 244 | -11 038 |
| Non-controlling interests | 35 893 | 35 862 |
| Non-current liabilities | 124 222 | 126 460 |
| Provisions > 1 year | 1 113 | 1 354 |
| Provisions | 1 113 | 1 354 |
| Deferred tax liabilities | 47 909 | 44 010 |
| Trade and other liabilities > 1 year | 0 | 0 |
| Financial liabilities > 1 year | 45 000 | 54 000 |
| Leasing liabilities > 1 year | 2 162 | 2 285 |
| Pension liabilities | 18 871 | 24 810 |
| Advances received > 1 year | 9 167 | 0 |
| Current liabilities | 135 705 | 145 631 |
| Trade and other liabilities < 1 year | 41 476 | 35 947 |
| Trade payables | 15 573 | 21 384 |
| Advances received | 2 409 | 1 071 |
| Other payables | 13 241 | 8 805 |
| Income taxes | 10 253 | 4 687 |
| Financial liabilities < 1 year | 85 927 | 104 671 |
| Current portion of amounts payable > 1 year | 18 000 | 18 000 |
| Financial liabilities | 67 456 | 86 128 |
| Leasing liabilities < 1 year | 471 | 543 |
| Derivatives | 2 009 | 793 |
| 6 293 | 4 220 | |
| Other current liabilities Liabilities associated with assets held for sale |
0 | 0 |
In KUSD (condensed) 30/06/2021 30/06/2020 Revenue 182 261 117 673 Cost of sales -116 376 -96 938 Changes in the fair value of the biological assets 2 632 - 712 Gross profit 68 517 20 023 General and administrative expenses -17 007 -15 515 Other operating income/(charges) 10 258 113 Operating result 61 768 4 621 Financial income 675 863 Financial charges -1 936 -2 497 Exchange differences - 609 - 519 Financial result -1 871 -2 153 Result before tax 59 898 2 468 Tax expense -13 159 -1 686 Result after tax 46 739 782 Share of results of associated companies and joint ventures - 482 - 578 Result from continuing operations 46 257 204 Result from discontinued operations 0 0 Result for the period 46 257 204 Attributable to: - Non-controlling interests 2 738 916 - Equity holders of the parent 43 519 - 712 Earnings per share (in USD) From continuing and discontinued operations Basic earnings per share 4.18 -0.07 Diluted earnings per share 4.18 -0.07 From continuing operations Basic earnings per share 4.18 -0.07 Diluted earnings per share 4.18 -0.07
| In KUSD (condensed) | 30/06/2021 | 30/06/2020 |
|---|---|---|
| Result for the period | 46 257 | 204 |
| Other comprehensive income: | ||
| Items that may be reclassified to profit and loss | ||
| in subsequent periods | ||
| - Exchange differences on translating foreign operations | 793 | 13 |
| - Cash flow hedges - fair value result for the period | 423 | -2 155 |
| - Income tax effect | - 106 | 539 |
| Items that will not be reclassified to profit and loss | ||
| in subsequent periods | ||
| - Defined Benefit Plans - IAS 19R | 301 | 2 |
| - Income tax effect | - 66 | 0 |
| Total other comprehensive income: | 1 345 | -1 602 |
| Other comprehensive income for the year attributable to: | ||
| - Non-controlling interests | 25 | 0 |
| - Equity holders of the parent | 1 320 | -1 602 |
| Total comprehensive income for the year | 47 602 | -1 398 |
| Total comprehensive income attributable to: | ||
| - Non-controlling interests | 2 763 | 916 |
| - Equity holders of the parent | 44 840 | -2 314 |
| In KUSD (condensed) | 30/06/2021 | 30/06/2020 |
|---|---|---|
| Operating activities | ||
| Profit before tax | 59 898 | 2 468 |
| Result from discontinued operations before tax | ||
| Adjusted for: | ||
| Depreciation | 23 952 | 21 371 |
| Movement in provisions | - 46 | 400 |
| Stock options | 61 | 64 |
| Exchange results not yet realised | 0 | - 2 |
| Changes in fair value of biological assets | -2 632 | 712 |
| Other non-cash results | - 400 | - 545 |
| Hedge reserves and financial derivatives | 1 639 | - 141 |
| Financial income and charges | 1 657 | 2 343 |
| Capital (gain)/loss on receivables | 0 | 0 |
| Capital (gain)/loss on sale of investments | 0 | 0 |
| (Gain)/loss on disposal of property, plant and equipment | 86 | - 254 |
| (Gain)/loss on disposal of financial assets | -11 640 | 0 |
| Cash flow from operating activities before change in net working capital | 72 576 | 26 416 |
| Change in net working capital | -26 744 | 160 |
| Variation in long term receivables | -6 133 | 0 |
| Cash flow from operating activities after change in net working capital | 39 699 | 26 576 |
| Income taxes paid | -4 897 | -3 821 |
| Cash flow from operating activities | 34 802 | 22 755 |
| Investing activities | ||
| Acquisition intangible assets | - 17 | - 35 |
| Acquisition biological assets | -9 173 | -11 483 |
| Acquisition property, plant & equipment | -14 243 | -10 430 |
| Acquisition investment property | 0 | 0 |
| Acquisition subsidiaries | 0 | -1 609 |
| Dividends received from associated companies and joint ventures | 0 | 0 |
| Proceeds from sale of property, plant & equipment | 477 | 1 344 |
| Proceeds from sale of financial assets | 23 302 | 1 371 |
| Cash flow from investing activities | 346 | -20 842 |
| Free cash flow | 35 147 | 1 913 |
| Financing activities | ||
| Capital increase | 0 | 0 |
| Equity transactions with non-controlling parties | 0 | 0 |
| Decrease/(increase) of treasury shares | 0 | 0 |
| Decrease long-term financial borrowings | -9 123 | -4 500 |
| Increase long-term financial borrowings | 0 | 0 |
| Decrease short-term financial borrowings | -18 744 | 0 |
| Increase short-term financial borrowings | 0 | 7 932 |
| Last year's dividend paid during this bookyear | 0 | 0 |
| Dividends paid by subsidiaries to minorities | -2 306 | - 516 |
| Interest received - paid | -1 664 | -2 343 |
| Cash flow from financing activities | -31 837 | 573 |
| Net increase in investments, cash and cash equivalents | 3 310 | 2 486 |
| Investments and cash and cash equivalents (opening balance) | 9 790 | 10 653 |
| Effect of exchange rate fluctuations on cash and cash equivalents | 0 | 0 |
| Investments and cash and cash equivalents (closing balance) | 13 100 | 13 139 |
ANNEX 4
| In KUSD (condensed) | Issued capital |
Share premium |
Treasury shares |
Defined benefit plans - IAS 19R |
Reserves | Translation differences |
Shareholders' equity |
Non controlling interests |
Total equity |
|---|---|---|---|---|---|---|---|---|---|
| January 1, 2021 | 44 734 | 107 970 | -10 277 | -4 539 | 511 838 | -11 038 | 638 688 | 35 862 | 674 550 |
| Result for the period | 43 519 | 43 519 | 2 738 | 46 257 | |||||
| Other comprehensive income | 210 | 317 | 793 | 1 320 | 25 | 1 345 | |||
| Total comprehensive income | 210 | 43 836 | 793 | 44 840 | 2 763 | 47 602 | |||
| Last year's dividend paid | -4 443 | -4 443 | -2 306 | -6 749 | |||||
| PT Melania sale | 0 | - 559 |
- 559 |
||||||
| Other | - 120 |
- 120 |
133 | 13 | |||||
| June 30, 2021 | 44 734 | 107 970 | -10 277 | -4 329 | 551 111 | -10 245 | 678 963 | 35 893 | 714 856 |
| January 1, 2020 | 44 734 | 107 970 | -10 277 | -3 598 | 501 650 | -11 793 | 628 686 | 34 325 | 663 010 |
| Result for the period | - 712 |
- 712 |
916 | 204 | |||||
| Other comprehensive income | 1 | -1 617 | 13 | -1 602 | -1 602 | ||||
| Total comprehensive income | 1 | -2 329 | 13 | -2 314 | 916 | -1 398 | |||
| Last year's dividend paid | 0 | 0 | |||||||
| Other | - 585 |
- 585 |
- 585 |
||||||
| June 30, 2020 | 44 734 | 107 970 | -10 277 | -3 597 | 498 736 | -11 780 | 625 786 | 35 241 | 661 026 |
SIPEF's activities can be classified into segments based on the type of product. SIPEF has the following segments:
The overview of segments below is based on the SIPEF group's internal management reporting. The most important differences with IFRS consolidation are:
| In KUSD (condensed) | 30/06/2021 | 30/06/2020 |
|---|---|---|
| Gross margin per product | ||
| Palm | 66 383 | 19 823 |
| Rubber | - 887 | -1 498 |
| Tea | 65 | - 519 |
| Bananas and horticulture | 2 412 | 1 844 |
| Corporate | 545 | 373 |
| Total gross margin per product | 68 517 | 20 023 |
| General and administrative expenses | -17 007 | -15 515 |
| Other operating income/(charges) | -1 381 | 113 |
| Financial income/(charges) | -1 582 | -2 247 |
| Discounting Sipef-CI | 321 | 613 |
| Exchange differences | - 609 | - 519 |
| Result before tax | 48 258 | 2 468 |
| Tax expense | -13 159 | -1 686 |
| Effective tax rate | -27.3% | -68.3% |
| Result after tax | 35 099 | 782 |
| Share of results of associated companies | - 482 | - 578 |
| Result for the period before sale of PT Melania | 34 617 | 204 |
| Gain on sale PT Melania | 11 640 | 0 |
| Result for the period | 46 257 | 204 |
Below we present the segment information per product and per geographical region in accordance with the IFRS profit and loss accounts.
The segment result is revenue minus expense that is directly attributable to the segment and the relevant portion of income and expense that can be allocated on a reasonable basis to the segment.
| Revenue | Cost of sales | Changes in the fair value |
Gross profit | % of total | |
|---|---|---|---|---|---|
| 2021 - KUSD | |||||
| Palm | 162 198 | -98 686 | 2 870 | 66 382 | 96.9 |
| Rubber | 4 995 | -5 882 | 0 | - 887 | -1.3 |
| Tea | 1 475 | -1 410 | 0 | 65 | 0.1 |
| Bananas and horticulture | 13 048 | -10 398 | - 238 | 2 412 | 3.5 |
| Corporate | 545 | 0 | 0 | 545 | 0.8 |
| Total | 182 261 | -116 376 | 2 632 | 68 517 | 100.0 |
| 2020 - KUSD | |||||
| Palm | 100 229 | -80 011 | - 396 | 19 823 | 99.0 |
| Rubber | 3 116 | -4 614 | 0 | -1 498 | -7.5 |
| Tea | 2 922 | -3 408 | - 32 | - 518 | -2.6 |
| Bananas and horticulture | 11 033 | -8 905 | - 284 | 1 844 | 9.2 |
| Corporate | 373 | 0 | 0 | 373 | 1.9 |
| Total | 117 673 | -96 938 | - 712 | 20 023 | 100.0 |
The segment 'corporate' comprises the management fees received from non-group entities, additional commissions on sea freights and any other commissions that are not included in the sales contracts.
| Revenue | Cost of sales | Other Income |
Changes in the fair value |
Gross profit | % of total | |
|---|---|---|---|---|---|---|
| 2021 - KUSD | ||||||
| Indonesia | 87 526 | -55 816 | 193 | 2 475 | 34 377 | 50.1 |
| Papua New Guinea | 75 980 | -44 999 | 0 | 395 | 31 376 | 45.8 |
| Ivory Coast | 18 211 | -15 561 | 0 | -238 | 2 412 | 3.5 |
| Europe | 351 | 0 | 0 | 0 | 351 | 0.6 |
| Total | 182 068 | -116 376 | 193 | 2 632 | 68 517 | 100.0 |
| 2020 - KUSD | ||||||
| Indonesia | 67 015 | -53 654 | 68 | - 187 | 13 242 | 66.2 |
| Papua New Guinea | 37 813 | -33 009 | 0 | - 241 | 4 563 | 22.7 |
| Ivory Coast | 12 404 | -10 276 | 0 | -284 | 1 844 | 9.2 |
| Europe | 373 | 0 | 0 | 0 | 373 | 1.9 |
| Total | 117 605 | -96 938 | 68 | - 712 | 20 023 | 100.0 |
ANNEX 6
SIPEF has signed a sale and purchase agreement with Shamrock Group (SG) on the sale of 100% of the share capital of its Indonesian subsidiary, PT Melania. SG is an Indonesian group that runs several rubber plantations and factories, and specialises in the production and sale of latex gloves. SIPEF controls 95% of PT Melania through its Indonesian 95% subsidiary, PT Tolan Tiga, the remaining 5% being owned by an Indonesian pension fund.
As a reminder, PT Melania owns half of the Group's Indonesian rubber operations in Sumatra and the entire tea operations in Java. Initially, 40% of the shares was sold for a payment of USD 19 million. After this first stage the Shamrock Group has taken over the management of the rubber activities. The second tranche of 60% of the shares (of which 55% are held by SIPEF) will be transferred no later than 2024 for USD 17 million, after the renewal of the permanent land rights (HGU) for the whole of the rubber and tea business. The gross transaction price for 100% of the shares is USD 36 million. The final net sale price and any capital gain on the sale of PT Melania will depend largely on the cost of renewing the permanent land rights (HGU) and on the compensation for the accumulated social rights of the employed personnel, who will presumably be taken over almost entirely. The gain on the sale of PT Melania may be adjusted as per 31 December 2021 and going forward depending on revision of the estimate of these costs in the future.
SIPEF has made a best estimate of the costs related to the sale of PT Melania. Below we present the calculation of the net selling price
| In KUSD | Selling price |
|---|---|
| Total amount to be received | 36 000 |
| Estimated costs related to the sale | -11 418 |
| Net selling price (100% of the shares) | 24 582 |
| Net selling price for 95% | 23 353 |
| Net selling price for 40% of the shares | 9 833 |
| Net selling price for 55% of the shares | 13 520 |
Upon signing of the SPA, SIPEF has lost full control of PT Melania. Subsequently, PT Melania has been accounted for as a joint venture held for sale on 30 April 2021. The assets and liabilities of PT Melania have been measured at fair value, equaling the net selling price of KUSD 23 353.
The results of PT Melania have been included in the share of results of associated companies and joint ventures for the first four months of 2021. As of 30 April 2021, the results of PT Melania are no longer included in the consolidated profit and loss of the SIPEF group as PT Melania is classified as a joint venture held for sale.
The classification as a joint venture held for sale, including subsequent remeasurement at fair value, and sale of 40% of the shares of PT Melania has the following impact on the balance sheet and profit and loss accounts of the SIPEF group:
| In KUSD | Classification as JV | Sale of 40% | Total impact |
|---|---|---|---|
| Assets | |||
| Non-current assets | -17 319 | -17 319 | |
| Assets held for sale | 23 353 | -9 833 | 13 520 |
| Current assets | - 170 | - 170 | |
| Cash | - 1 | 19 000 | 18 999 |
| Total assets | 5 864 | 9 167 | 15 031 |
| Liabilities | |||
| Currency translation adjustments | 1 091 | 1 091 | |
| Minorities | - 559 | - 559 | |
| Non-current liabilities | -5 833 | -5 833 | |
| Non-current liabilities - advances received > 1 year | 0 | 9 167 | 9 167 |
| Current liabilities | - 475 | - 475 | |
| Total liabilities | -5 776 | 9 167 | 3 391 |
| Profit and loss | |||
| Other operating income/(charges) | 11 640 | 11 640 | |
| Of which: | |||
| Share of the group | 11 003 | 11 003 | |
| Minorities | 637 | 637 | |
| Total | 11 640 | 0 | 11 640 |
Upon classification as joint venture as held for sale, a capital gain of KUSD 11 640 is realised, being the difference between the net selling price for 95% of the shares (KUSD 23 353) and the value of the net assets of PT Melania in the consolidated financial statements of the SIPEF group (KUSD 11 713).
The sale of 40% of the shares of PT Melania for KUSD 19 000 has been recorded as a sale of 40% the value of the assets held for sale (KUSD 9 833) and the remaining part as a non-current advance received (KUSD 9 167).
Total cash received (KUSD 18 999) is included in the cash flow as part of the proceeds from sales of financial assets (KUSD 23 302)
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