Benefiting People. and the. Planet

Transcription

1 Benefiting People and the Planet Annual Report 2009

2 Contents 1 About our logo 2 Corporate profile 3 Corporate milestones 4 At a glance 6 A message from our chairman and CEO 8 Board of directors 10 Key executives 12 Spotlight on CSR 14 Operational highlights 16 Operational and financial review 24 Corporate information

3 About our logo Our corporate logo features a circular formation of five symbols in different colours, each representing the natural resources and gifts that we depend on for the growth of our oil palms. Starting at the top, the golden symbol represents sunshine, which is freely given to us. The sun s light, beaming down on our oil palms over time, produces the photosynthesis that allows them to grow from a small seed to a giant, fruit bearing tree. To the left, the blue symbol represents the natural watering of our plants that occur through the abundant rainfall our plantation receives each year. The third symbol in green serves to depict the natural environment around our plantation. Lush with life and resplendent with the ability to produce healthy vegetation, it is in this environment that our oil palms thrive and bear fruit. The red symbol represents the nutrient-rich soil that we inherit with the land. With the capacity to fertilise and serve as a catalyst for growth, this soil is yet another reminder of how strategically located our oil palm operations are in Indonesia. Each of these natural resources, freely provided to us, contributes to the success of our business. This success is displayed by the last golden symbol which not only represents our golden palm oil but also alludes to our core value of excellence. To whom much is given, much is required. We aim to be responsible with all that has been entrusted to us. We see ourselves as stewards of these articles, and believe that it is our duty to act on them in an excellent, responsible and sustainable way; producing maximum fruit. This final symbol, completing the cycle with gold, represents the role that Global Palm Resources is committed to play. Though small in comparison to the generosity given to us, the role we aspire to play is just as critical. We are firmly committed to take what we have and manage it in an efficient, environmentally and socially responsible way. In the process, we aim to deliver long-term sustainable value to our investors and stakeholders. Inspired to humility by the external generosity of the entire process, we are committed to leave the land and its inhabitants better off than we found them. Global Palm Resources Holdings Limited Benefiting People and the Planet. Global Palm Resources Annual Report 2009 Global Palm AR indd /06/2010 5:36:12 PM

4 Corporate profile mefifmmfkbp jéç~å j~ä~óëá~ hì~ä~ iìãéìê hçí~ háå~ä~äì p~ä~ü _~åç~ê péêá _ÉÖ~ï~å _êìåéá p~ê~ï~â páåö~éçêé hìåüáåö pìã~íê~ mçåíá~å~â p~åç~á _~äáâé~é~å h~äáã~åí~å _~åà~êã~ëáå fåççåéëá~ g~â~êí~ g~î~ Global Palm Resources Holdings Limited is a growing oil palm producer in Indonesia engaged in cultivating oil palms, harvesting its fruits and processing them into crude palm oil (CPO) and palm kernel for sale. With its plantation and mill strategically located in West Kalimantan, the Group has a land bank of 16,079 hectare (ha), of which about 72% is currently under cultivation. As at 31 December 2009, about 87% of the Group s oil palms are in their peak production stage. An integral aspect of Global Palm Resources business is its unwavering focus on Corporate Social Responsibility. Not only is the Group committed to improving the quality of life of the local communities, it is also dedicated to sustainable development of its business, with the view to conserve and preserve the natural environment. 2 Global Palm Resources Annual Report 2009

5 Corporate milestones 1991 Commenced palm oil business in West Kalimantan 1992 Set up our first plantation ation nursery 1993 Received Hak Guna Usaha for (land right) 5,477 ha for palm oil cultivation in October; and cultivated our first batch of oil palms over an area of 1,600 ha in September 1994 Received Hak Guna Usaha for another 10,602 ha of land 1996 Entered Cooperation Agreements under the Plasma Programme; and achieved bulk of planting by 1996 which amounted to approximately 7,000 ha, including Plasma Programme 2000 Entered Cooperation Agreements under the Plasma Programme 2007 Between 1997 and 2007, an additional 3,296 ha of land was cultivated 2008 Increased FFB processing capacity to 60 tons per hour in February 2009 Held Hak Guna Usaha to a total of 16,079 ha of land as at 30 September 2010 Successfully listed on the Main Board of the Singapore Exchange in April; Received approval from Roundtable on Sustainable Palm Oil to be a member in May 1997 Completed mill with FFB processing capacity of 40 tons per hour in September and subsequently recorded ed our first CPO sale in October Global Palm Resources Annual Report

6 At a glance Plantation: cultivation and harvesting Overview Location of plantation: Ketapang Regency of West Kalimantan, Indonesia, where the climatic conditions are suitable for the cultivation of oil palms. We have 16,079 ha of plantation land with 11,535 ha currently under cultivation under Nucleus and Plasma plantings. Weighted average age of our oil palms: 12.7 years. Currently, 87% of our oil palms are in their peak production stage, capable of producing a yield of between 15 to 22 tons of FFB per ha. Future plans / key growth drivers 4,544 ha of plantation land available for future cultivation. We plan to double the size of our current cultivated land within the next three years via organic growth and acquisitions. Operational highlights as at 31 December 2009 Land bank (ha) FFB production volume (tons) Average FFB yield (tons/ha) For future cultivation 4, , , , Under cultivation 11, 535 FY2007 FY2008 FY2009 FY2007 FY2008 FY2009 Average age profile CPO production output (tons) Palm kernels production output (tons) Immature (1st 3 years) 1,235 ha / 10.7% Mature (4th 6th years) 318 ha / 2.8% Prime (7th 18th years) 9,982 ha / 86.5% 39,086 38,565 46,850 FY2007 FY2008 FY2009 8,202 8,347 8,902 FY2007 FY2008 FY Global Palm Resources Annual Report 2009

7 Mill: processing Our oil palm mill has a maximum FFB processing capability of 60 tons per hour, equivalent to 360,000 tons per year. We process FFB harvested from Nucleus and purchased from Plasma farmers and other nearby plantations into CPO and palm kernels. Maximum FFB processing capability per annum (tons) / utilisation rate (%) 75.5% FY2007 FY % FY % 240, , ,000 Products Our CPO and palm kernels are sold domestically within Indonesia either on a spot or forward basis of up three months. Our CPO customers comprise Indonesian palm oil refineries, palm oil bulking facilities and commodity traders. Our palm kernels customers comprise processing plants. Construction of a co-composting plant is currently underway to generate organic compost fertilisers from production waste of milling process such as empty palm fruit bunches (EFB) and palm oul mill effluent(pome). Upon completion, this plant will result in savings on our current expenditure on fertilisers and reduce emission of methane gases. Palm oil is the most productive and cost-effective oil yielding crop. Palm oil production has enjoyed the strongest growth among 17 major oils and fats with a CAGR of 9.7% from 1998 to Rising world demand for palm oil driven by both food and non-food uses. FY2009 financial highlights Revenue (Rp billion) Net profit attributable to shareholders (Rp billion) FY2007 FY2008 FY2009 FY2007 FY2008 FY2009 Gross profit (Rp billion) and margin (%) FY2009 revenue by products 44% 35% 34% Palm kernels Rp19.3 bil 6% FY2007 FY2008 FY2009 CPO Rp282.2 bil 94% Global Palm Resources Annual Report

8 A message from our chairman & CEO Dear Shareholders, On 29 April 2010, Global Palm Resources crossed a significant milestone in our corporate history with the Group s listing on the Main Board of the Singapore Exchange. Our initial public offering, which involved the sale of 110 million New Shares at S$0.46 each, was approximately 2.5 times subscribed, having received strong interest from investors. We are pleased that our investors appreciate the growth prospects of the palm oil industry in Indonesia which is today, the world s largest producer of palm oil. We are extremely grateful for the response and would like to thank all of you for choosing to invest in Global Palm Resources growth. Financial performance and business prospects On behalf of the Board of Global Palm Resources, I am pleased to report a sparkling set of results for the 12 months ended 31 December Fuelled by strong crude palm oil (CPO) demand, the Group achieved a 107% rise in net profit attributable to shareholders to Rp145.0 billion in FY2009 on the back of Rp301.5 billion in revenue. While we are proud of what the Group accomplished in 2009, we are also looking with optimism and excitement toward our future where, we believe, many growth opportunities await us. One of the key growth drivers for our Group continues to be the rising demand for oils and fats particularly from Asia, Central and South America. Driven by world population growth and the increasing demand for palm oil for food and industrial applications, the consumption of palm oil registered the highest growth rate amongst other vegetable oils. We believe that we are in the right industry at the right time, and we expect CPO prices to maintain around FY2009 levels in FY2010. To ensure the Group s sustainable growth, it is important that we continue with our land bank expansion and development. Raising net proceeds of approximately S$46.5 million for our future expansion in our IPO, the Group will be using more than half of the funds in developing existing uncultivated land banks into oil palm plantations and acquisition of other oil palm plantations and land banks. The rest will be used to construct a co-composting plant, repay bank loans and for working capital. Doubling current cultivated oil palm plantation land within the next 3 years Indonesia and Malaysia are the top producers of palm oil in the world. However, unlike Malaysia, Indonesia still has lots of potential to grow in terms of land available for oil palm plantation. In West Kalimantan alone, 4.1 million ha of arable land are zoned for oil palm plantation. Within Global Palm Resources alone, we have 11,535 ha under cultivation at our plantation, whilst another 4,544 ha of land is available for immediate cultivation. 6 Global Palm Resources Annual Report 2009

9 Our top priority is to increase land banks for future development and secure higher levels of production and CPO sales. We are actively sourcing for potential acquisition targets. What we are looking for are oil palm plantations that are revenue generating; have at least 3,000 ha of land under cultivation and at least 4,000 ha of suitable, uncultivated land banks, preferably located in Kalimantan. Already, we have secured a call option for a 95% interest in PT Cemaru Lestari which holds rights to 6,429 ha of land, of which 1,384 ha has been cultivated. Corporate social responsibility Corporate Social Responsibility plays an essential role in the long-term success of our business. It is important that we align our interests with that of the communities in which we operate in order to have the support of the local communities and government agencies. We believe that our initiatives and emphasis on returning to the community and looking after the welfare of our staff have translated into goodwill for our Group, contributing to high employee retention rate and staff morale. The Group has, on 11 March 2010, applied for membership to the Roundtable of Sustainable Palm Oil (RSPO), a not-for-profit association which promotes the production and use of palm oil in a sustainable manner. I am pleased to report that Global Palm Resources had received approval from the RSPO on our membership application on 26 May As part of our continuing efforts to trim operating costs and reduce the pollution caused to the environment, the Group has commenced the construction of a co-composting plant to generate organic compost fertilisers from empty palm fruit bunches (EFB) and palm oil mill effluent (POME), which are production waste from the milling process. This co-composting method of treatment of EFB and POME will also help to significantly reduce the amount of methane gases released to the environment compared to the existing traditional method of disposal. More importantly, they contribute significant cost savings by reducing our reliance on commercial fertilisers for our plantation. n. Acknowledgments Our first Annual Report is a tribute to our managers and staff who have worked hard to build the strong foundation on which Global Palm Resources stands. We would like to thank the Joint Issue Managers, Underwriters and Placement Agents for the IPO AmFraser Securities Pte Ltd and Oversea-Chinese Banking Corporation Limited for guiding us through the rigorous process, and to the various professional parties in the IPO team a big Thank You for being there for us. I would also like to thank my fellow Directors on the Board for their strong support and invaluable advice as we forge ahead to our next phase of growth. We bid a warm welcome to our shareholders and investors and look forward to your continued confidence and trust as we execute our growth strategy for Global Palm Resources. We believe that there are investors out there who are looking for a small company with strong potential for growth, stable earnings and a proven track record. Being small also means we can double our size, and we are committed to doing just that by I assure you that we will continue to focus our efforts to deliver more value to all of our shareholders, and we look forward to meeting you at our upcoming Annual General Meeting. Dr Tan Hong Suparno Adijanto Executive Chairman & CEO Global Palm Resources Annual Report

10 Board of directors Dr Suparno Adijanto Executive Chairman and CEO Dr Suparno Adijanto was appointed to our Board on 13 November 2009 and oversees the overall operations of our Group. He is also a managing director of the Bumi Raya Group since 1992 and is in charge of the plantation division. Prior to this appointment, Dr Suparno Adijanto held several positions in the Bumi Raya Group, as a Manager in charge of finance and business development from 1990 to 1992, and as a management trainee from 1989 to From 1987 to 1989, Dr Suparno Adijanto was the President of Westpont International Trading Company, a US trading company that deals in commodities between S.E.A and the USA. From 1994 to 2006, he was the non-executive director of Australia-listed Energy World Corporation Limited. Dr Suparno Adijanto is currently a Commissioner for Indonesia-listed PT Resource Alam Indonesia Tbk, where his responsibilities relate mainly to the supervision of its directors in ensuring that the company s mission, vision and objectives are met. Dr Suparno Adijanto graduated with a Bachelor of Science, Economics (Honours) from the University College London, University of London. He holds a Masters in Business Administration from the Bradford Management Centre, University of Bradford, England and a Doctor of Philosophy from the College of Business Administration, Georgia State University, USA. Thomas Agap Lim Chief Operating Officer and Executive Director Mr Lim was appointed to our Board on 16 March 2010 and has been overseeing the cultivation of our palm oil plantation and the daily operations of our palm oil mill since Mr Lim is also the regional managing director of the Bumi Raya Group s operations in West Kalimantan, Indonesia, where he was in charge of the timber estate business of PT Sinar Kalbar Raya since From 1990 to 1994, Mr Lim was the president director of our Group s subsidiary PT Prakarsa. He is also a Commissioner for Indonesia-listed PT Resource Alam Indonesia Tbk. Mr Lim graduated with a Bachelor of Laws from the University of Tanjungpura, Pontianak. He also holds a Master in Management from University of Tanjungpura, Pontianak. 8 Global Palm Resources Annual Report 2009

11 Yee Kit Hong Lead Independent Director Mr Yee was appointed to our Board on 16 March He is an auditor by profession and has been an audit partner with Kit Yee & Co, a firm of certified public accountants providing audit, accountancy and taxation services since From 1982 to 1989, Mr Yee was an audit/ tax manager with Ernst & Young in Singapore, where he was responsible for the audit and taxation for small and medium size enterprises. He was conferred the Public Service Medal for public service in Mr Yee graduated with a Bachelor in Accountancy from the National University of Singapore and is an associate member of the Institute of Chartered Accountants, England & Wales and a member of the Institute of Certified Public Accountants of Singapore (ICPAS). He is also currently a full member of the Singapore Institute of Directors. M. Rajaram Independent Director Mr Rajaram was appointed to our Board on 16 March He is a lawyer by profession and is currently the Senior Director of Straits Law Practice LLC, where he heads the banking and corporate finance department and the India practice group. Mr Rajaram is an Advocate and Solicitor of the Supreme Court of Singapore, a Solicitor of England and Wales and a Fellow in the Singapore Institute of Arbitrators and the Chartered Institute of Arbitrators. From 2004 to 2008, he was the chairman of the Singapore Indian Chamber of Commerce and Industry. In 2009, Mr Rajaram was awarded the Public Service Medal by the President of the Republic of Singapore. He has been the Honorary Consul of the Republic of Mali in Singapore since 1999, and is currently the vice-chairman of International Relations in the Singapore Business Federation. Mr Rajaram graduated with a Bachelor of Laws (LLB) (Honours) from the National University of Singapore in 1978 and obtained a Masters in Business Administration from the Maastricht School of Management in Guok Chin Huat Samuel Independent Director Mr Guok was appointed to our Board on 16 March Since 1995, he has been a director of Starhealth Pte. Ltd, a Singaporebased company specialising in the import and distribution of health and medical products and currently sits on the boards of two Singaporelisted companies, Bukit Sembawang Estates Limited and Japan Land Limited. He has approximately 20 years of experience in investment banking, venture capital and private equity businesses, having sat on the board of Seed Venture Limited, a venture capital fund from 1993 to 2002, held the positions of CEO and director of Time Watch Investments Limited (then known as Wee Poh Holdings Limited), a company listed on the Catalist Bourse of the SGX-ST from 1998 to 2001, and worked at Nomura Singapore Limited from 1986 to Mr Guok holds a Bachelor of Science degree in Business Administration from Boston University with Majors in Finance and International Economics, Minor in Chemistry. Global Palm Resources Annual Report

12 Key executives Ge Luiyanto Yamin Chief Financial Officer Mr Luiyanto joined our Group as CFO in January With over 27 years of experience in finance and accounting work, he oversees the internal control, project management, human resources, strategic planning and advisory-related matters of our Group s Indonesian operations. Mr Luiyanto was the Group Finance Manager of the Bumi Raya Group from 2000 to 2010 and the Finance Director and Corporate Secretary of PT Resource Alam Indonesia Tbk from 2007 to He also has accumulated extensive experience in finance and accounting from his past appointments, as director of operation in PT Nusadana Investama from 1997 to 1998, as director of finance in PT Jakartabaru Cosmopolitan in 1997, and as director of finance and administration in PT Asia Perintis Contindo from 1993 to From 1984 to 1993, he held several appointments within the Dharmala Group and subsequently took on the position of assistant financial controller of Dharmala s listed subsidiary PT Dharmala Sakti Sejahtera Tbk. Mr Luiyanto graduated from the Faculty of Economics, University of Indonesia with a Bachelor s degree (Sarjana Ekonomi) in Accounting. He also holds a Master of Science (Administrative Science) from the Faculty of Social and Political Science, University of Indonesia. Lim Ardi Dharma Head of Project Development Mr Lim joined our Group in 2008 and is in charge of the identification, planning and execution of the effective development and implementation of projects relating to our Group s growth and expansion. Prior to his current role, Mr Lim joined the Bumi Raya Group in 1991 as a general manager in PT Bumiraya Utama Wood Industries and was responsible for its operations which included liaising with Indonesian governmental authorities for application for various licenses necessary for its business. From 1989 to 1991, Mr Lim was the vice-president of Thai Cane Paper Co Bangkok, a papermill, where his responsibilities included overseeing its finance and administrativerelated matters. From 1977 to 1989, Mr Lim worked as a branch manager of PT Bir Banjarmasin, a company which held logging concessions. From 1975 to 1976, he had worked as a rice distributor with PT Daya Kapuas Pontianak. Mr Lim graduated from the Secondary Economic School in 1975 where he specialised in book keeping. From 1982 to 1984, Mr Lim studied economics at the Lambung Mangkurat University. Berlino Mahendra Head of General Affairs Mr Mahendra joined our Group in 1991 and is in charge of human resources, coordination of our plasma programme, administration and licensing issues in PT Prakarsa as well as liaising and maintaining good relations with Indonesian governmental authorities. Prior to joining our Group, Mr Mahendra worked in the industrial timber estate of PT Sinar Kalbar Raya as a coordinator from 1989 to 1991, where he was responsible for licensing matters. Mr Mahendra studied Forestry at the Institute of Agriculture of Bogor from 1984 to 1988, and graduated with a Bachelor s degree in Forest Management. 10 Global Palm Resources Annual Report 2009

13 Chua Cheng Hian Financial Controller Mr Chua joined our Group in 2009 and his responsibilities include taking charge of corporate activities and finance-related matters such as management reporting, group budgeting and forecasting as well as internal control and risk management. Prior to joining our Group, Mr Chua was a deputy finance manager at leading global port operator PSA Corporation Ltd from 2004 to 2009, where he was the financial controller for some of its subsidiaries and his responsibilities included management and financial reporting, as well as budgeting and forecasting. From 2000 to 2004, Mr Chua was a senior accountant at Hitachi Chemical Asia Pacific Pte Ltd, a printed circuit board manufacturer in Singapore, where his responsibilities included cost accounting and management reporting. Mr Chua graduated with a Bachelor of Accountancy degree from the Nanyang Technological University of Singapore in He is a member of the Institute of Certified Public Accountants of Singapore (ICPAS). Cheong Meng Chit Head of Plantation Estate Mr Cheong joined our Group in 2004 and is responsible for overseeing the cultivation of our oil palm plantation, palm field maintenance as well as the maintenance of FFB yields from our oil palm plantation. Mr Cheong has approximately 38 years of experience in the area of oil palm plantation cultivation and field maintenance. Prior to joining our Group, he was a plantation manager with Wawasan Sdn. and Pelita Cergas Sdn. Bhd. from 2002 to During his tenure with Lyman Agro Group, an oil palm cultivation and palm oil milling company located in West Kalimantan, Mr Cheong served as a senior plantation manager from 1999 to 2000 and as a plantation manager from 1994 to From 1970 to 1994, Mr Cheong worked in the Federal Land Development Authority of Malaysia where he rose through the ranks to become a manager in 1985 where his responsibilities included overseeing the operations of rubber and oil palm nurseries and the maintenance of the consistency of FFB yields. Sofian Masroeddin Head of Palm Oil Mill Mr Masroeddin joined our Group in 2005 and is responsible for the daily operations and maintenance of our palm oil mill. He rose through the ranks in PT Prakarsa before taking on his current appointment as Head of our Palm Oil Mill. Mr Masroeddin was the deputy mill manager and assisted in the overall operation of the mill from 2007 to 2009, and served as deputy head of the transport and field engineering unit where he was responsible for the operation of transport and heavy equipment from 2005 to Prior to joining our Group, Mr Masroeddin was deputy head of the high pressure laminate unit in PT Resource Alam Indonesia Tbk, where he was responsible for the production of high pressure laminated products from 1993 to From 1988 to 1993, Mr Masreoddin was a controller of plywood products with PT Ketapang Indah Plywood, where he was responsible for product quality. Mr Masroeddin graduated with a Bachelor of Economy degree from Universitas Tanjungpura in Global Palm Resources Annual Report

14 Spotlight on CSR Benefiting people and Environmental policy At Global Palm Resources, we recognise the importance of being a responsible steward of the land we manage. With this in mind, it is our privilege to leave the land and its inhabitants better off than we found them. Sustainable development is our only option Our ongoing Environmental Policy commits us to the following: 1) Zero Burning for cultivating and planting of new oil palms: We strictly adhere to our policy to never use burning to clear land being prepared for oil palm cultivation. We clear trees and vegetation using chain saws and machinery instead of the traditional slash-and-burn methods that cause air pollution and risk forest fires. 2) Zero waste management on CPO production waste: The production of crude palm oil (CPO) naturally leaves behind empty fruit bunches (EFB) and palm oil mill effluent (POME). EFB left to decompose in landfills can produce environmentally damaging methane gases. POME is typically treated, then released into local rivers and streams. Neither of the above is ideal for an environmentally conscious company like Global Palm Resources. We are in the process of constructing a sizable co-composting plant which will propel Global Palm Resources towards being a Zero Waste Management company once it is operational. Significant cost savings will also be realised through the creation of natural, organic fertilisers made with our EFB and POME. The targeted completion date of this plant is by end Roundtable of Sustainable Palm Oil (RSPO) membership We have recently received approval for membership to the RSPO, a not-for-profit association whose main purpose is to promote the production and use of palm oil in a sustainable manner. Membership to the RSPO facilitates contribution to the coalition s efforts to promote the growth and use of sustainable palm oil. Members will be able to participate and vote on discussions and initiatives by the RSPO. Admission to the RSPO will increase public and industry awareness of our commitment to sustainable palm oil development. This will serve as a positive reinforcement, pushing us further toward sustainable development. 12 Global Palm Resources Annual Report 2009

15 the planet Community care policies and initiatives Though caring for the planet is critical, we would be remiss to not demonstrate the same care and concern for the people surrounding our plantation. Whether they are employees, small landholders, or neighbours, we believe that they too should benefit from our presence. It is this philosophy that fuels our commitment to the improvement of the social and economic welfare of local communities. In furtherance of such commitment, we have participated in the Indonesian government-initiated Plasma Programme while simultaneously providing employment opportunities, education, and general welfare (social and cultural) for local communities. 1. Plasma Programme: Out of a desire to encourage partnerships between big plantation companies and their surrounding communities, the Indonesian government initiated the Plasma Programme. This involves the development of new plantations by oil palm plantation companies that will then be operated by local small landholders. As at 31 December 2009, 2,834 ha of Global Palm Resources plantation land is cultivated under this Plasma Programme, benefitting approximately 1,400 small landholders. They have been transferred the management of plantation land we developed, have received our training on plantation management practices and oil palm cultivation. Small landholders, through participation in our Plasma Programme, me, will benefit economically from this partnership. 2. Employment: Local residents greatly benefit from the employment opportunities we create. Locals typically receive priority during staff recruitment. The standard of living for our employees in our palm oil plantation and palm oil mill has also been improved. As at the end of 2009, more than 10% of our total workforce is from the local communities. 3. Education, social and cultural welfare: Our contributions in the areas of education and social and cultural welfare have also made positive waves. Global Palm Resources is currently providing kindergarten and primary school education to about 430 children of our workers. By extending scholarships to local children, we are investing in the next generation. We have also provided clean water, electricity, proper sanitation, medical treatment, housing, community halls, infrastructure for education and religious places of worship as part of our staff benefits. On top of it all, we are thrilled to sponsor and participate in various local cultural and religious celebrations. Global Palm Resources Annual Report

16 Operational highlights Financial year ended 31 December FY2007 FY2008 FY2009 Plantation statistics Total planted area (ha) 10,306 10,958 11,535 Mature 10,289 10,300 10,300 Immature ,235 Nucleus planted area (ha) 7,472 8,124 8,701 Mature 7,456 7,466 7,466 Immature ,235 Plasma planted area (ha) 2,834 2,834 2,834 Mature 2,834 2,834 2,834 Immature Production Output FFB production volume from Nucleus (tons) 127, , ,949 FFB production volume from Plasma (tons) 54,081 51,437 56,277 FFB processed (tons) 181, , ,203 CPO production (tons) 39,086 38,565 46,850 Palm kernels production (tons) 8,202 8,347 8,902 Productivity FFB yield (tons/ha) CPO extraction rate (%) Palm kernels extraction rate (%) Global Palm Resources Annual Report 2009

17 FFB processed (tons) 181,244 FY2007 FFB yield (tons/ha) 176,974 FY ,203 FY2009 CPO production (tons) 39,086 FY ,850 FY2009 Palm kernels production (tons) 8,202 FY2007 8,347 FY2008 FY FY FY2009 CPO extraction rate (%) 38,565 FY FY FY FY2009 Palm kernels extraction rate (%) 8,902 FY FY FY FY2009 Global Palm Resources Annual Report 2009 Global Palm AR indd /06/2010 5:55:14 PM

18 Operational and financial review Key highlights in 2009 Delivering sustainable earnings: We achieved 13% rise in revenue to Rp301.5 billion, fuelled largely by a 16% improvement in CPO sales to Rp282.2 billion, while profit attributable to equity holders of the company surged 107% to Rp145.0 billion. Gaining momentum in sales volume: We achieved 30% and 19% increase in CPO and palm kernel sales volume to 47,627 tons and 8,886 tons respectively. This was, however, offset by lower average sales prices during the year. Maintaining our profitability: Our gross profit rose 9% to Rp101.3 billion, while gross profit margin dipped marginally to 34%, from 35% in FY2008, impacted by increase in purchase cost of FFB, carriage, handling and field upkeeping and harvesting costs. Keeping our balance sheet healthy: We ended FY2009 with a cash balance of Rp2.5 billion and a gearing ratio of 26%. Expanding our plantation: We cultivated an additional 577 ha of nucleus plantation land during the year, expanding our total planted area to 11,535 ha as at 31 December With this, we increased our total FFB output by 16% to 130,949 tons and achieved a FFB yield of 17.5 tons/ha in FY2009, from 15.1 tons/ha in FY2008. Healthy age profile of our oil palms: As at 31 December 2009, the oldest of our oil palms are about 17 years of age and the weighted average age of our oil palms is 12.7 years. Right now, approximately 87% of our oil palms are in their peak production stage of between 7 to 18 years old and able to produce tons of FFB per ha. Record production output: At our mill, which has a maximum processing capacity of 60 tons of FFB per hour, we processed 218,203 tons of FFB in FY2009, 23% more than the previous year. At the same time, production of CPO and palm kernels increased 21% and 7% to 46,850 tons and 8,902 tons respectively. Maintaining healthy productivity: In FY2009, we maintained our CPO extraction rate at 21.47%, just slightly lower than 21.79% achieved in FY2008. Our palm kernels extraction rate, however, declined marginally to 4.08%, from 4.72% in FY2008, due to our machinery operating at a less than optimal level for approximately three months following a fire in our press station in February Clear cut growth strategy: Currently, we have a land bank of 4,544 ha of land available for future cultivation. We plan to double the size of our cultivated plantation land within the next three years by developing our existing uncultivated land banks and through acquisition of other oil palm plantations or additional land banks. 16 Global Palm Resources Annual Report 2009

19 Business overview Global Palm Resources Holdings Limited is a growing oil palm producer in Indonesia engaged in cultivating oil palms, harvesting its fruits and processing them into crude palm oil (CPO) and palm kernel for sale in Indonesia. Our plantation and mill is strategically located in West Kalimantan, where the Group holds Hak Guna Usaha to a land bank of 16,079 ha. As at 31 December 2009, approximately 11,535 ha, representing about 72% of our land bank, is under cultivation including 2,834 ha cultivated under our Plasma Programme. Currently, approximately 87% of our oil palms are in their peak production stage. Moving forward, the Group has a land bank of 4,544 ha of land available for future cultivation. We are also aiming to increase our land bank via acquisitions. Our products are CPO and palm kernels which we produce primarily from three sources, namely from the FFB harvested from our oil palm plantation, FFB purchased from local farmers under our Plasma Programme and other oil palm plantations close to our palm oil mill. In FY2009, CPO and palm kernels accounted for 94% and 6% respectively of our revenue. Crude palm oil The processing of FFB produces CPO and palm kernels, the latter of which can be further processed to produce palm kernel oil. CPO is used throughout the world for many food and non-food products including cooking oil, margarine, ice cream, bio-fuels, lubricant, alcohol and pharmaceuticals. Approximately 77% to 80% of CPO is used in edible products and the other 20% to 23% in industrial applications. The Group s CPO is sold to customers in Indonesia, such as palm oil refineries, palm oil bulking facilities and commodity traders. After processing, the produced CPO is then quickly transported from the palm oil mill to the port for shipment to customers. This is necessary because Free Fatty Acids (FFA) will build up in CPO over time, which results in the decline in product quality. Currently, the industry standard of FFA content allowed in CPO is approximately 5%. All of the Group s CPO sold are quality-checked and validated by an independent surveyor, PT Superintending Company of Indonesia (Sucofindo), by way of sampling of FFA-content. To ensure the quality of its product, the Group s quality control team monitors and conducts random sample checks which include the monitoring and testing on amount of FFA, moisture level and impurities on an hourly basis during the milling process. Similar tests are also conducted on three separate occasions, at the end of the milling process, CPO in storage tanks and before loading products onto barges for shipment. Palm kernels Palm kernels and palm kernel oil are also used in many food and non-food applications such as, non-dairy creamer, confectionery fats, soap, animal feed, paint, shampoo and cosmetics. Approximately 25% of palm kernel oil derivatives are used for edible products while the other 75% are used for industrial purposes. The Group s palm kernels are sold domestically to palm kernels processing plants located mainly in Sumatra. Similarly, quality checks are also conducted to ensure the quality of its palm kernels. The Group conducts testing for FFA levels, moisture contents and impurities as well for palm kernels at the end of the milling process, on storage and before loading the products onto barges for delivery. Global Palm Resources Annual Report

20 Operational and financial review FY2009 financial review Profit and loss statement For the 12 months ended 31 December 2009 (FY2009), Global Palm Resources achieved a 13% rise in revenue to Rp301.5 billion from Rp267.7 billion in FY2008. In line with the revenue growth, the Group reported a 107% surge in profit attributable to equity holders of the company to Rp145.0 billion versus Rp70.0 billion a year ago. The growth was achieved on the back of higher sales volumes of the Group s CPO and palm kernels, partially offset by lower average sales prices of the products which dropped around 10% and 35% respectively during the year. Balance sheet On the balance sheet front, Global Palm Resources ended the year with Rp2.5 billion in cash and a gearing ratio of 26%. Total borrowings and debt securities in FY2009 lowered by 18% year on year to Rp112.5 billion. Over the same period, the Group s net asset value rose from Rp290 billion to Rp422 billion. Notwithstanding a dip in the Group s CPO price year-onyear, the average selling price of CPO has witnessed a 81% increase in the last four years from Rp3,270/kg in FY2006 to Rp5,925/kg in FY2009. Looking ahead, in FY2010, with continuing global and Indonesian domestic demand for CPO, driven by rising population particularly in India and China, constant demand for palm oil for bio diesel production and oleochemicals, the Group expects its CPO selling price to maintain around FY2009 levels and palm kernels selling price to move in tandem. 18 Global Palm Resources Annual Report 2009

21 Income statement Revenue: Despite lower selling prices of CPO and palm kernels in FY2009, the Group managed to record a 13% rise in sales on the back of higher sales volume of CPO & palm kernels. Cost of sales: Increased by 15% due to a rise in costs of FFB purchased, carriage and handling/ field upkeeping/harvesting costs, which was offset by a decline in indirect material cost and cost of fuel and lubricants. Gross profit: Gross profit increased 9% in tandem with higher sales revenue. However, overall gross margin declined from 35% in FY2008 to 34% in FY2009 due to higher cost of sales and lower average selling prices of CPO and palm kernels. Other income: Increased by approximately 5.5 times largely due to higher foreign exchange gain in FY2009, of which a large proportion of Rp18.7 billion was mainly due to unrealised translation gain for the balance of the Niaga US$ bank loan arising from the appreciation of the Rp against US$. Gains from changes in fair value of biological assets: Increased 63% largely attributable to the decrease in discount rate, which is used to calculate the fair value of biological assets, from 15.5% in FY2008 to 11.3% in FY2009. Income tax expense: Increase of 61% is mainly in line with higher profit but offset by a decrease in deferred tax for FY2009. The decrease in deferred tax expense is due to a change in corporate tax rate, from flat rate of 28% to 25% in FY2009 versus progressive tax rate up to 30% to flat rate of 28% in FY Rp 000 GROUP 2008 Rp 000 Change % Revenue 301,521, ,675, Cost of sales (200,234,891) (174,592,729) Gross profit 101,286,967 93,082,750 9 Other income 21,321,194 3,319,701 n.m Other income - gains from changes in fair value of biological assets ,784,000 63,573, Distribution expenses (3,364,223) (5,406,758) (38) Administrative expenses (16,015,758) (25,623,788) (37) Other expenses (2,607,685) (18,000,707) (86) Finance costs (12,704,702) (12,593,488) 1 Profit before income tax 191,699,793 98,351, Income tax expense (38,986,949) (24,265,668) 61 Profit after income tax 152,712,844 74,085, Other comprehensive income Foreign currency translation differences on consolidation Total comprehensive income for the year Profit attributable to: 327,777 - n.m 153,040,621 74,085, Equity holders of the Company 144,986,045 70,021, Minority interest 7,726,799 4,064, ,712,844 74,085, Total comprehensive income attributable to: Equity holders of the Company 145,313,822 70,021, Minority interest 7,726,799 4,064, ,040,621 74,085, n.m. : Not meaningful Global Palm Resources Annual Report

22 Operational and financial review Segmental revenue FY2009 FY2008 Change (%) Revenue (Rp billion) CPO Palm Kernels (23) Sales Volume (tons) CPO 47,627 36, Palm Kernels 8,886 7, Average Selling Price (Rp/kg) CPO 5,925 6,611 (10) Palm Kernels 2,176 3,373 (35) FY2009 FY2008 Palm Kernels 6% Palm Kernels 9% CPO 94% CPO 91% CPO sales accounted for 94% of the Group s revenue in FY2009. During the year, the Group sold 47,627 tons of CPO, 30% more than FY2008 s and, in spite of a 10% drop in average selling price to Rp5,925/kg, achieved a 16% increase in segment sales revenue to Rp282.2 billion as compared to Rp242.5 billion previously. The Group s CPO selling prices, which are pegged to the market, are determined with reference to international prices of CPO trading on Bursa Malaysia Derivatives Berhad in Kuala Lumpur, as well as published CPO tender prices of other major Indonesian CPO producers. Palm kernels sales accounted for 6% of the Group s revenue in FY2009. In FY2009, even though the volume of palm kernels sold by the Group increased 19% to 8,886 tons, revenue contribution from this segment declined 23% to Rp19.3 billion. This was largely due to a 35% decrease in average selling price, from Rp3,373/kg in FY2008 to Rp5,925/kg in FY Global Palm Resources Annual Report 2009

23 Balance sheet Total assets: Increased by 19% to Rp724 billion as at 31 December Biological assets increased by 25% mainly due to the net gain arising from changes in fair value and additional planted hectares during the year. Property, plant and equipment rose 8% due to replacement of equipment used in the plantation. Trade and other receivables declined by 45% mainly due to a debt restructuring exercise in the year, where amount owing by related company was offset against the holding company purchase consideration of the subsidiaries. Total liabilities: Dipped 5% to Rp302.3 billion as at 31 December Trade and other payables declined 38% due to a debt restructuring exercise in the year, where amount owing by related company was offset against the holding company purchase consideration of the subsidiaries. Borrowings and debt securities decreased by 18% due to repayment of bank loan in accordance with the repayment schedule. FY2009 Rp billion FY2008 Rp billion Change (%) Total assets Biological assets Property, plant and equipment Trade and other receivables (45) Total liabilities (5) - Trade and other payables (38) - Borrowings and debt securities (18) Total shareholders fund % Total shareholders fund: Rose 46% to Rp393.4 billion from the strengthening of the Group s capital base from the restructuring exercise in preparation for listing. Global Palm Resources Annual Report

24 Operational and financial review Capital expenditures Plantation expenditures mainly consist of new plantings while property plant and equipment expenditures relate to palm oil mill capacity expansion, improvements in the infrastructure for the palm oil mill and purchase of heavy equipment. Capital expenditures incurred by the Group for the last four financial years are set out as follows: Plantation and property plant and equipment (Rp billion) 31,983 31,232 15,593 12,699 9,277 9,254 8,992 6,401 16,390 18, ,853 FY2006 FY2007 FY2008 FY2009 Plantation Property, plant and equipment 22 Global Palm Resources Annual Report 2009

25 Cash and cash equivalents The Group s overall cash and cash equivalents decreased by approximately Rp1.4 billion to Rp2.5 billion as at 31 December The movements in cash and cash equivalents during the period under review is set out as follows: Net cash from operating activities: Increased by 52% from Rp40.4 billion in FY2008 to Rp 61.3 billion in FY2009 due to higher profits for the year. Net cash used in investing activities: Net cash used in investing activities rose substantially to Rp420.3 billion mainly from the consideration for acquisition of subsidiaries, additional planting and replacement of old equipment used in the plantation. Net cash generated from financing activities: Net cash generated from financing of Rp357.5 billion was mainly for the issuance of shares and drawdown of Rupiah bank loan of Rp29.4 billion in the year. This was offset by bank loan and finance leases repayment. Rp billion FY2009 FY2008 Net cash from operating activities Net cash used in investing activities (420.3) (24.7) Net cash used in financing activities (17.6) Net change in cash and bank balances Cash and cash equivalents at the end of the financial year (1.5) (1.9) Use of IPO proceeds Global Palm was listed on the Main Board of SGX on 29 April The IPO net proceeds of approximately S$46.5 million would be utilised in the following manner: Approximately $15.0 million for the development of existing uncultivated land banks into oil palm plantations; Approximately S$15.0 million for acquiring other oil palm plantations and land banks; Approximately S$5.0 million for the repayment of loans outstanding to PT Bank CIMB Niaga Tbk; Approximately $2.0 million for the construction of its Co-composting Plant; and the remaining S$9.5 million for working capital. Global Palm Resources Annual Report

26 Corporate information Board of directors Dr Suparno Adijanto (Executive Chairman and CEO) Thomas Agap Lim (COO and Executive Director) Yee Kit Hong (Lead Independent Director) M. Rajaram (Independent Director) Guok Chin Huat Samuel (Independent Director) Audit committee Yee Kit Hong (Chairman) M. Rajaram Guok Chin Huat Samuel Nominating committee M. Rajaram (Chairman) Yee Kit Hong Guok Chin Huat Samuel Dr Suparno Adijanto Remuneration committee Guok Chin Huat Samuel (Chairman) Yee Kit Hong M. Rajaram Joint company secretaries Nicole Tan Siew Ping (LLB (Hons)) Nathaniel Chelvarajah Vanniasingham (LLB, ACIS, ACMA) Share registrar Boardroom Corporate & Advisory Services Pte. Ltd. 50 Raffles Place #32-01 Singapore Land Tower Singapore Auditors BDO LLP Public Accountants and Certified Public Accountants 19 Keppel Road #02-01 Jit Poh Building Singapore Partner-in-charge: Chia Soo Hien (Appointed since financial period ended 31 December 2009) Principal bankers PT Bank CIMB Niaga Tbk Graha Niaga Lt.6 JI. Jend. Sudirman Kav. 58 Jakarta Indonesia Company registration number M Registered office 105 Cecil Street #16-03 The Octagon Singapore The initial public offering of Global Palm Resources Holdings Limited was sponsored by AmFraser Securities Pte. Ltd. (a member of AmInvestment Bank Group) and Oversea-Chinese Banking Corporation Limited (collectively, the Joint Issue Managers ). The Joint Issue Managers assume no responsibility for the contents of this annual report. 24 Global Palm Resources Annual Report 2009

27 Corporate Governance Report The Board recognises the importance of corporate transparency and is strongly committed to high standards of corporate governance to protect shareholders interests and enhance shareholders value. This report describes the Company s corporate governance policies and practices with specific reference made to each of the principles of the Code of Corporate Governance 2005 (the Code ). BOARD MATTERS Principle 1: Board s Conduct of its Affairs The Board s primary role is to protect and enhance long-term shareholders value and returns. The Board meets quarterly and as warranted by particular circumstances, as deemed appropriate by the members of the Board. The principal functions of the Board include, amongst other things, the following: - - providing entrepreneurial leadership, setting strategic directions, overseeing management effectiveness and ensuring proper conduct of the Group s business; - providing the overall strategy of the Group; - ensuring that policies and processes are in place for evaluating the adequacy of internal controls financial reporting, financial performance, risk management and compliance; and - assuming responsibility of corporate governance framework of the Group. To assist the Board in the execution of its responsibilities, the Board is supported by 3 Board committees, namely the Nominating Committee, the Remuneration Committee and the Audit Committee. Each Board committee has its own defined terms of reference. The Company has taken steps to ensure participation of all Directors when selecting directors to the 3 committees so as to maximize their effectiveness. All Board committees are headed by Independent Directors. The Company was listed on the Singapore Exchange Securities Trading Limited (SGX-ST) on 29 April The number of Board and Board committee meetings held and attended by each Board member as at the date of this report since 29 April 2010 is set out as follows: Meetings Board Audit Committee Nominating Committee Remuneration Committee Meetings Meetings Meetings Meetings Meetings Meetings Meetings Meetings Directors Held Attended Held Attended Held Attended Held Attended Dr Suparno Adijanto 2 2 2* 2* 2 2 2* 2* Thomas Agap Lim 2 2 2* 2* 2* 2* 2* 2* Yee Kit Hong M. Rajaram Guok Chin Huat Samuel * By invitation The Company s Articles of Association provide for the Directors to participate in Board and Board Committee meetings by means of telephone conference, video conference or in such manner as the Board may determine. The Board has received relevant training to familiarise themselves with the roles and responsibilities of a director of a public listed company in Singapore. Global Palm Resources Annual Report

28 Corporate Governance Report Principle 2: Board Composition and Balance The Board consists of 5 members, the majority of whom are Independent Directors. Executive Directors Dr Suparno Adijanto Thomas Agap Lim Independent Directors Yee Kit Hong M. Rajaram Guok Chin Huat Samuel The Board considers a Director independent if he has no relationship with the Company, its related corporations or its officers that could interfere, or be reasonably perceived to interfere, with the exercise of the Director s independent business judgment in the best interests of the Company. The independence of each Director will be reviewed annually by the Nominating Committee in accordance with the Code s definition of independence. Each Director is required to complete a Confirmation of Independence return to confirm his independence. The said return, which was drawn up based on the definitions and guidelines set forth in Guideline 2.1 in the Code and the Guidebook for Audit Committees in Singapore issued by Audit Committee Guidance Committee, requires each Director to assess whether he considers himself independent despite not having any of the relationships identified in the Code. The Nominating Committee has reviewed the forms completed by each Director and is satisfied that at least one-third of the Board comprises Independent Directors. The Nominating Committee is of the view that the Board comprises Directors who have the appropriate mix of expertise and experience, and collectively possess the necessary core competencies to function effectively and make informed decisions overseeing the Company s business. The Board takes into account the scope and nature of the Company s operations and is of the opinion that the size is ideal to facilitate for effective deliberations and decision making of the Board. Principle 3: Role of Chairman and Chief Executive Officer ( CEO ) The Chairman and CEO of the Group is Dr Suparno Adijanto. As the CEO, he oversees the overall operations of the Group such that its vision, mission and objectives are achieved. He plays an instrumental role in charting the direction and strategic development of the Group and formulates business strategies, merger and acquisition initiatives and promoting high standards of corporate governance. As the Chairman, he exercises control over the quality, quantity and timeliness of information flow between Management and the Board. He ensures that the Board receives accurate, timely and clear information, ensures that Board meetings are held as and when necessary; and sets the Board s meeting agenda. He ensures that effective communication is maintained with the shareholders. Although the roles and responsibilities of the Chairman and CEO are vested in Dr Suparno Adijanto, major decisions are made in consultation with the Board, the majority of which are Independent Directors. The Board is of the opinion that the process of decision making by the Board was independent and based on collective decisions without any individual or small group of individuals dominating the Board s decision making. To strengthen corporate governance, the Company appointed Yee Kit Hong as its Lead Independent Director with effect from 16 March The Lead Independent Director will lead and coordinate the activities of the Independent Directors and serve as a principal liaison on Board issues between the Independent Directors and the Chairman of the Board. The Lead Independent Director is available to shareholders who have concerns which contact through the normal channels of the Chairman, CEO, Executive Directors or Chief Financial Officer ( CFO ) have failed to resolve or for which such contact is inappropriate. 26 Global Palm Resources Annual Report 2009

29 Corporate Governance Report Principle 4: Board Membership The Nominating Committee ( NC ) comprises 3 Independent Directors and an Executive Director. The members of the NC are: M. Rajaram (Chairman) Yee Kit Hong Dr Suparno Adijanto Guok Chin Huat Samuel The NC is governed by its written terms of reference. In accordance with the requirement of the Code, the Chairman of the NC is also not directly associated with a substantial shareholder of the Company. The NC makes recommendation to the Board on all nominations for appointment and re-appointment to the Board, and the Board committees. It ascertains the independence of Directors and evaluates the Board s performance. The NC assesses the independence of Directors, based on the guidelines set out in the Code, the Guidebook for Audit Committees in Singapore issued by Audit Committee Guidance Committee and any other salient factors. Following its annual review, the NC has affirmed the independence of M. Rajaram, Yee Kit Hong and Guok Chin Huat Samuel. The NC, in recommending the nomination of any Director for a re-election, considers the contribution of the Director, which includes his attendance record, overall participation, expertise, strategic vision, business judgment and sense of accountability. The NC ensures that the Board and the Board committee members are best suited for their respective appointments and able to discharge their responsibilities as such members of the Board and/or Board committees. In addition, the selection of Directors requires careful management to ensure there is an equitable distribution of responsibilities amongst the Directors. In the nomination and selection process, the NC reviews the composition of the Board, including the mix of expertise, skills and attributes of existing Board members, to identify desirable competencies for a particular appointment. In so doing, it strives to source for candidates who possess the skills and experience that will further strengthen the Board, and are able to contribute to the Company in relevant strategic business areas, in line with the growth and development of the Group. The NC is satisfied that sufficient time and attention are being given by the Directors to the affairs of the Group, notwithstanding that some of the Directors have multiple board representations, and there is presently no need to implement internal guidelines to address the competing time commitments. Pursuant to the Company s Articles of Association, every Director (other than a Director holding office as managing Director) must retire from office at least once every 3 years by rotation. Directors who retire are eligible to offer themselves for re-election. Each member of the NC shall abstain from voting on any resolutions in respect of the assessment of his performance, independence or re-nomination as a Director. The NC has reviewed and recommended the re-election of Thomas Agap Lim, Yee Kit Hong, M. Rajaram and Guok Chin Huat Samuel who are retiring at the forthcoming Annual General Meeting to be held on 24 June 2010 (the forthcoming AGM ). The Board has accepted the recommendations and the retiring directors will be offering themselves for re-election. Global Palm Resources Annual Report

30 Corporate Governance Report Key information regarding the Directors is set out below: Director Dr Suparno Adijanto Date of First Appointment Date of Last Re-election Present Directorships and Chairmanships in Other Listed Companies and Major Appointments 13 November 2009 Not Applicable Listed Companies 1. PT Resource Alam Indonesia Tbk Thomas Agap Lim 16 March 2010 Not Applicable Listed Companies 1. PT Resource Alam Indonesia Tbk Yee Kit Hong 16 March 2010 Not Applicable Listed Companies 1. Scorpio East Holdings Ltd M. Rajaram 16 March 2010 Not Applicable Listed Companies 1. United Fiber System Limited 2. Hiap Seng Engineering Ltd 3. Hitech Metalplast Limited Guok Chin Huat Samuel 16 March 2010 Not Applicable Listed Companies 1. Japan Land Limited 2. Bukit Sembawang Estates Limited Past 3 Years Directorships and Chairmanships in Other Listed Companies and Major Appointments Nil Nil Nil Nil Listed Companies Singxpress Ltd Note: The academic and professional qualifications of the members of the Board are set on pages 8 to 9 of the Annual Report. The Directors interests in shares are as disclosed in paragraph 3 of the Report of the Directors. Principle 5: Board Performance With the approval of the Board, the NC had established the evaluation procedures for the assessment of the effectiveness and performance of the Board as a whole. The NC has decided unanimously, that the Directors will not be evaluated individually but factors taken into consideration for their re-nomination are the extent of their attendance, participation and contribution in the proceedings of the meetings. The NC has decided that a Board evaluation should be done for the year ending 31 December 2010 after taking consideration that this is the first year of operation of the Company since being admitted to listing on the SGX-ST. The NC, in considering the re-appointment of any Director, had considered but not limited to the attendance record at meetings of the Board and Board Committees, the intensity of participation in the proceedings at meetings and quality of contribution. Principle 6: Access to Information To enable the Board to fulfil its responsibility, the Board is provided with management reports containing complete, adequate and timely information prior to Board meetings and on an on-going basis. The Directors are given separate and independent access to the Group s senior management and the Company Secretaries to address any enquiries. 28 Global Palm Resources Annual Report 2009

31 Corporate Governance Report The Company Secretaries or their representatives attend Board and Board Committees meetings and are responsible for ensuring that proper Board procedures at such meetings are followed. Together with the Management, they are responsible for ensuring that the Company complies with the requirements of the Singapore Companies Act, the Listing Manual of the SGX-ST and other rules and regulations that are applicable to the Company. The Directors may seek professional advice in the furtherance of their duties and the costs will be borne by the Company. REMUNERATION MATTERS Principle 7: Procedures for Developing Remuneration Policies The Remuneration Committee ( RC ) comprises 3 Independent Directors, namely: Guok Chin Huat Samuel (Chairman) Yee Kit Hong M. Rajaram The RC is governed by its written terms of reference. The RC will review the framework of remuneration for the Directors and key executives, and determine specific remuneration packages for the CEO and Executive Directors. The recommendations of the RC is made in consultation with the Chairman and submitted for endorsement by the entire Board. All aspects of remuneration, including but not limited to Directors fees, salaries, allowances, bonuses, options and benefits-in-kind shall be covered by the RC. Each member of the RC shall abstain from voting on any resolutions and making any recommendations and/or participating in any deliberations of the RC in respect of his remuneration package. The total remuneration of the employees who are related to our Directors will be reviewed annually by the RC to ensure that their remuneration packages are in line with our staff remuneration guidelines and commensurate with their respective job scopes and level of responsibilities. In the event that a member of the RC is related to the employee under review, he will abstain from voting on the matter. In structuring and reviewing the remuneration packages, the RC seeks to align interests of Directors with those of shareholders and link rewards to corporate and individual performance as well as roles and responsibilities of each Director. The Directors fee to be paid to Directors are subject to shareholders approval at the Annual General Meeting ( AGM ). The RC has full authority to engage any external professional advice on matters relating to remuneration as and when the need arises. The objective is to ensure competitive compensation is in place to build and retain capable and committed Management. Principle 8: Level and Mix of Remuneration In setting remuneration packages, the Company will take into consideration pay and employment conditions within the industry and in comparable companies. The remuneration packages should take into account the Group s relative performance and the performance of individual Directors. Executive Directors do not receive directors fees. The remuneration for the Executive Directors comprise a basic salary component and a variable component, namely the annual incentive bonus. The latter is based on the performance of the Group as a whole and their individual performances. The Company entered into separate service agreements with each of the Executive Directors, namely Dr Suparno Adijanto and Thomas Agap Lim. The service agreements are for an initial period of 3 years commencing from the date of the listing of the Company on the SGX-ST, subject to an automatic renewal for a 3 year term on the same terms and conditions upon the expiry thereof. During the initial period of 3 years, the parties may terminate the respective service agreement by either party giving not less than 6 months notice in writing to the other. These agreements currently provide for performance-related elements of remuneration. Global Palm Resources Annual Report

32 Corporate Governance Report Principle 9: Disclosure of Remuneration The Directors and key executive officers receiving remuneration from the Group for the financial year ended 31 December 2009 are as follows: Remuneration Band Number of Directors 2009 Executive Directors S$250,000 to below S$500,000 0 Below S$250,000 2 Total 2 Key Executives Below S$250,000 6 Total 6 A breakdown of each individual Director s and key executive s remuneration, in percentage terms showing the level and mix for the financial year ended 31 December 2009, is as follows: Fees Salary / Bonus / Others Total Allowance Benefit % % % % % Directors Below S$250,000 Dr Suparno Adijanto Thomas Agap Lim Yee Kit Hong M. Rajaram Guok Chin Huat Samuel Key Executives Below S$250,000 Ge Luiyanto Yamin Lim Ardi Dharma Berlino Mahendra Chua Cheng Hian Cheong Meng Chit Sofian Masroeddin Other than the Chairman and CEO, Dr Suparno Adijanto who is the brother-in-law of Thomas Agap Lim, an Executive Director and COO, there is no employee of the Group who is an immediate family member of a Director or substantial shareholder whose remuneration exceeds S$150,000 for the financial year ended 31 December The RC has reviewed and approved the remuneration packages of the Executive Directors, having regard to their contributions as well as the financial performance and commercial needs of the Group and has ensured that the Directors are adequately but not excessively remunerated. Principle 10: Accountability The Board understands its accountability to the shareholders on the Group s position and performance. In this respect, in the discharge of its duties to the shareholders, the Board, when presenting the annual audited financial statements and quarterly announcements, seeks to provide the shareholders with a detailed analysis, explanation and assessment of the Group s financial position and prospects. Management currently provides the Board with relevant information on the Group s performance, financial position and prospects on a regular basis. 30 Global Palm Resources Annual Report 2009

33 Corporate Governance Report Principle 11: Audit Committee The Audit Committee ( AC ) comprises the Independent Directors, namely: Yee Kit Hong (Chairman) M. Rajaram Guok Chin Huat Samuel The members of the AC are appropriately qualified, having the necessary experience in business management, finance, audit and law. The Board is of the view that the members of the AC have sufficient financial management expertise and experience to discharge the AC s functions. In October 2008, the Audit Committee Guidance Committee issued the Guidebook for Audit Committees in Singapore. The terms of reference of the AC, where appropriate, adopts relevant best practices set out in the Guidebook, which will be used as a reference to assist the AC in discharging its responsibilities and duties. The AC will assist the Board in discharging its responsibility to safeguard the Group s assets, maintain adequate accounting records, and develop and maintain effective systems of internal control, with the overall objective of ensuring that the Management creates and maintains an effective control environment in the Group. The AC will provide a channel of communication between the Board of Directors, the Management and the external auditors on matters relating to audit. The AC has explicit authority to investigate any matter within its terms of reference, full access to and co-operation by Management and full discretion to invite any Director or executive officer to attend its meetings, and reasonable resources to enable it to discharge its functions properly. The AC has, within its terms of reference, the authority to obtain independent professional advice at the Company s expense as and when the need arises. The AC will meet at least 4 times a year and its principal duties include: (a) (b) (c) (d) (e) (f) (g) (h) (i) review the audit plans of the external auditors and internal auditors, including the results of the external and internal auditors review and evaluation of the system of internal accounting controls; review the annual consolidated financial statements and the external auditors report on such financial statements, and discuss any significant adjustments, major risk areas, changes in accounting policies, compliance with SFRS, concerns and issues arising from their audits including any matters which the auditors may wish to discuss in the absence of the Management. Where necessary, before submission to the Board for approval; review the scope and results of the internal audit procedures; consider the appointment or re-appointment of the external auditors and matters relating to resignation or dismissal of the auditors; review the cooperation given by the officers to external auditors; review and approve any Interested Person Transactions, related person transactions and/or potential conflicts of interest; monitor the undertakings described in its Prospectus dated 21 April 2010 under the section entitled Interested Person Transactions and Conflicts of Interest, if any; undertake such other reviews and projects as may be requested by the Board, and will report to the Board its findings from time to time on matters arising and requiring the attention of the AC; and generally undertake such other functions and duties as may be required by law or the Listing Manual, or by such amendments as may be made thereto from time to time. Global Palm Resources Annual Report

34 Corporate Governance Report The AC has undertaken a review of the independence and objectivity of the external auditors. The AC is satisfied that the external auditors is independent and has recommended to the Board, the nomination of the external auditors for re-appointment at the forthcoming AGM. As the Company was recently listed, the AC did not meet with the external auditors without the presence of Management for the financial year ended 31 December The Group has implemented a whistle blowing policy whereby accessible channels are provided for employees to raise concerns about possible improprieties in matters of financial reporting or other matters which they become aware and to ensure that: (i) (ii) (iii) independent investigations are carried out in an appropriate and timely manner; appropriate action is taken to correct the weakness in internal controls and policies which allowed the perpetration of fraud and/or misconduct and to prevent a recurrence; and administrative, disciplinary, civil and/or criminal actions that are initiated following the completion of investigations are appropriate, balance and fair, while providing reassurance that employees will be protected from reprisals or victimisation for whistle-blowing in good faith and without malice. As of to-date, there were no reports received through the whistle-blowing mechanism. Each member of the AC shall abstain from voting any resolutions in respect of matters in which he is interested. Principle 12: Internal Controls The Board is responsible for the overall internal control framework and is fully aware of the need to put in place a management structure with defined roles and responsibilities, reporting lines of business and support functions, and delegation of functions to safeguard shareholders interest and the Group s assets, and to manage risks. The Board recognises that no cost effective internal control system will preclude all errors and irregularities, as a system is designed to manage rather than eliminate the risk of failure to achieve business objectives, and can provide only reasonable but not absolute assurance against material misstatement or loss. The AC will ensure that a review of the effectiveness of the Group s system of internal controls, including financial, operational and compliance controls, and risk management, is conducted at least annually. Principle 13: Internal Audit The Group intends to outsource the performance of the internal audit function to an internal audit firm for the financial year ending 31 December Once the function is outsourced, the Internal Auditors primary line of reporting would be to the Chairman of the AC. To ensure the adequacy of the internal audit function, the AC will review and approve the internal audit plan on an annual basis. The AC will ensure that the internal auditors meet or exceed the standards set by recognised professional bodies including the Standards for the Professional Practice of Internal Auditing set by the Institute of Internal Auditors. The AC, on an annual basis, will assess the effectiveness of the Internal Audit by examining the scope of the Internal Audit work and its independence, the internal auditor s reports and its relationship with the external auditors. 32 Global Palm Resources Annual Report 2009

35 Corporate Governance Report Principle 14: Communication with Shareholders In line with the continuous disclosure obligations of the Company, it is committed and engages in regular and effective communication with shareholders. It is the Board s policy that shareholders be informed of all major developments that may have an impact on the Group. Information is communicated to shareholders on a timely basis and is made through: (i) (ii) (iii) (iv) its first annual report since its admission to the Official List of the SGX-ST; quarterly results announcements; press releases; and disclosures via SGXNET. The Company does not practice selective disclosure as all material and price-sensitive information is released through SGXNET. Principle 15: Greater Shareholders Participation The shareholders are encouraged to attend the Company s AGMs and Extraordinary General Meetings to ensure a high level of accountability by the Board and Management and to stay informed of the Group s strategies and growth plans. The chairpersons and/or members of the Board, AC, NC and RC and the external auditors will be available at the forthcoming AGM to address any relevant queries from the shareholders. If any shareholder is unable to attend, he/she is allowed to appoint up to 2 proxies to vote on his behalf at the meeting through proxy forms sent in advance. Each item of special business included in the notice of the general meetings will be accompanied by an explanation of the effects of a proposed resolution. Separate resolutions are proposed for substantially separate issues at general meetings. DEALING IN SECURITIES The Company is guided by Rule 1207(18) of the Listing Manual of the SGX-ST in relation to the dealings in the securities of the Company to its Directors and Management. The Company and its officers are not allowed to deal in the Company s shares (i) during the periods commencing 2 weeks before the announcement of the Company s financial results for each of the first 3 quarters of its financial year and 1 month before the full financial year results, ending on the date of the announcement of the relevant results, and (ii) if they are in possession of unpublished price-sensitive information of the Group. In addition, Directors and key executives are expected to observe insider trading laws at all times even when dealing in securities within the permitted trading period. They are also discouraged from dealing in the Company s shares on short-term considerations. MATERIAL CONTRACTS There is no material contracts entered into by the Company or any of its subsidiaries involving the interest of any Director or controlling shareholder during the year under review save for the following: (a) On 7 January 2008, in connection with the Company s proposed listing on the SGX-ST, our Company and Good View Realty, an investment holding and real estate development company, majority owned by the executive chairman and CEO, Dr. Suparno Adijanto and his siblings Tan Hong Swan@Tan Hong Whan@Swandono Adijanto, Tan Hong Pang@Pandjijono Adijanto, Tan Hong Pheng@Pintarso Adijanto, Tan Hung Hwie@Winoto Adijanto, Tan Phe Phe@Muriati Adijanto, and Tan Phwe Leng@Tan Phe Lin@Mariana Adijanto (the Adijanto Siblings ) have entered into a lease agreement in respect of the office space of approximately 1,500 sq ft (the Octagon Premises ) situated within the office unit at 105 Cecil Street #16-03/04, The Octagon, Singapore , which is owned by Good View Realty for a lease term of 3 years that had commenced on 8 January 2008 (the Octagon Lease ). Under the Octagon Lease, a monthly rental of S$11,250 together with utilities fees, is payable by the Company to Good View Realty for lease of the Octagon Premises; Global Palm Resources Annual Report

36 Corporate Governance Report (b) (c) (d) (e) On 6 July 2009, PT Prakarsa Tani Sejati ( PT Prakarsa ) provided a cash pledge of Rp 3.0 billion to The Hong Kong Shanghai Banking Corporation Limited, Indonesia ( HSBC Indonesia ) to secure a loan of Rp 6.0 billion from HSBC Indonesia granted to PT Slumberland Indonesia, a company in the business of manufacture and sale of mattresses, pillows and bolsters that is 49.9% owned by PT Multi Matics Indonesia, a company controlled by the Adijanto Siblings. The loan was fully settled on 2 October 2009 and the cash pledge provided by PT Prakarsa was discharged accordingly; On 28 December 2009, a call option agreement was entered into between the Company and the shareholders of PT Cemaru Lestari, namely PT Bumiraya Utama( BRU ), PT Ketapang Indah Plywood Industries (KIPI) and PT Bumisubur Lestaritani, each of which are controlled by the Adijanto Siblings, for the Company to acquire an aggregate of 95% of their interests in PT Cemaru for a purchase consideration based on a valuation of PT Cemaru to be conducted by an independent valuer who shall be appointed by the Company and approved by its Audit Committee; On 28 December 2009, a share swap agreement was entered into between our Company and our controlling shareholder, GPR Investment Holdings Limited ( GPR Investment ), where our Company acquired from GPR Investment the entire issued share capital of GPR, comprising one (1) ordinary share in the capital of GPR, for an aggregate consideration of approximately S$57.68 million; and On 28 December 2009, a novation and set-off agreement was entered into between, our controlling shareholder, GPR Investment, our Company, PT Prakarsa, KIPI and PT Bumi Raya Putera ( BRP ) for the settlement of approximately S$3.12 million of the purchase consideration for the share swap agreement regarding the acquisition of the Company s subsidiary, by way of set-off against an equivalent amount owing by GPR Investment to our Company. RISK MANAGEMENT Management reviews on an on-going basis, the Group s business and operational activities to identify areas of significant business risks as well as appropriate measures to control and mitigate these risks within the Group s policies and strategy. The Group has also considered the various financial risks, details of which are disclosed in the notes to the accompanying audited financial statements on pages 78 to 83. INTERESTED PERSON TRANSACTIONS The Company has, in its Prospectus dated 21 April 2010, set out procedures for review and approval of the Group s IPTs. To ensure compliance with the relevant rules under Chapter 9 of the Listing Manual, the Board and AC regularly reviews if the Group will be entering into any IPT and if it does, to ensure that the Group complies with the requisite rules under Chapter 9 in that all the IPTs are conducted at arm s length and on normal commercial terms and ensuring that it will not be prejudicial to the interest of the Company and its minority shareholders. 34 Global Palm Resources Annual Report 2009

37 Corporate Governance Report The aggregate values of interested person transactions for the financial year ended 31 December 2009 is : Aggregate value of all interested person transactions Name of interested person during the financial year under review (excluding transactions less than S$100,000 and transactions conducted under shareholders mandate pursuant to Rule 920) (Rp million) Aggregate value of all interested person transactions conducted under shareholders mandate pursuant to Rule 920 (excluding transactions less than S$100,000) (Rp million) PT Bumi Raya Putera* 4,779 NA PT Ketapang Indah Plywood Industries* 29,960 NA PT Insani Baraperkasa* 1,247 NA PT Bumiraya Utama Lines* 4,064 NA Tai Kuang Hang Co. (Pte) Ltd* 3,798 NA Goodwin Investment Private Limited# 667 NA Goodview Realty Pte Ltd* 904 NA * Companies controlled by the Executive Chairman and CEO, Dr. Suparno Adijanto and his siblings Mr Tan Hong Tan Hong Swandono Adijanto, Tan Hong Pandjijono Adijanto, Tan Hong Pintarso Adijanto, Tan Hung Winoto Adijanto, Tan Phe Muriati Adijanto, and Tan Phwe Tan Phe Mariana Adijanto (the Adijianto Siblings ), whether individually or collectively having (directorly or indirectly) interests of more than 15%. # Company wholly-owned by the Adijanto Siblings and their immediate family member. UPDATE ON THE USE OF IPO PROCEEDS As at 31 May 2010, the use of net proceeds from the IPO is as follows: Use of net proceeds Amount allocated (S$ million) Amount utilised (S$ million) Balance (S$ million) Development of existing uncultivated land banks into oil palm plantations Acquisition of other oil palm plantations and land banks Repayment of the loans to PT Bank CIMB Niaga Tbk ( Bank Niaga ) Construction of the co-composting plant Working capital Invitation expenses Total Global Palm Resources Annual Report

38 Report of the Directors The Directors of the Company present their report to the members together with the audited financial statements of the Group for the financial year ended 31 December 2009 and the statement of financial position of the Company as at 31 December 2009 and the statement of changes in equity of the Company for the financial period from 13 November 2009 (date of incorporation) to 31 December Directors The Directors in office at the date of this report are: Tan Hong Suparno Adijanto (Appointed on 13 November 2009) Thomas Agap Lim (Appointed on 16 March 2010) Yee Kit Hong (Appointed on 16 March 2010) M. Rajaram (Appointed on 16 March 2010) Guok Chin Huat Samuel (Appointed on 16 March 2010) 2. Arrangements to enable Directors to acquire shares or debentures Neither at the end of nor at any time during the financial period was the Company a party to any arrangement whose object is to enable the Directors to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate. 3. Directors interests in shares or debentures According to the register of Directors shareholdings kept by the Company for the purposes of Section 164 of the Singapore Companies Act, Cap. 50 (the Act ), the particular of interest of the Directors of the Company holding office at the end of the financial period in the shares of the Company and its related corporations at any time during the financial period was as follows: Balance as at or date of appointment, if later Balance as at Ultimate holding company Number of ordinary shares of US$1 each GPR Investment Holdings Limited Tan Hong Suparno Adijanto 1,428 2, Directors contractual benefits Since the date of incorporation, no Director has received or become entitled to receive a benefit by reason of a contract made by the Company or by a related corporation with the Director, or with a firm of which he is a member, or with a company in which he has a substantial financial interest, except as disclosed in the financial statements and except for remuneration received from related corporations in their capacity as executives of the related corporations. 5. Share options There were no share options granted by the Company or its subsidiaries during the financial period. There were no shares issued during the financial period by virtue of the exercise of options to take up unissued shares of the Company or its subsidiaries. There were no unissued shares of the Company or its subsidiaries under options as at the end of the financial period. 36 Global Palm Resources Annual Report 2009

39 Report of the Directors 6. Audit committee The Audit Committee ( AC ) comprises the following Directors, who are independent: Yee Kit Hong M. Rajaram Guok Chin Huat Samuel Chairman of the Committee The AC performs the functions specified in Section 201B(5) of the Act, the SGX Listing Manual and the Code of Corporate Governance. The AC will meet at least four times a year primarily to review the Group s and the Company s financial performance, projections and announcements of each quarter which are tabled to the Board of Directors. The AC meets on other occasions to deliberate on matters within its purview. The AC will also review the financial reporting process, the system of internal control and the audit process and reports table to it. Specifically, the AC undertakes the following: (a) (b) (c) (d) Review of the external auditors proposed audit scope and approach and ensure no restrictions or limitations have been placed on the scope. The AC also considers the independence of the external auditors, including reviewing the range of services provided in the context of all non-audit services provided to the Company, seeking to balance maintenance of objectivity and value for money; Review of the Group s financial, operating results and accounting policies; Review of the financial statements of the Company and the consolidated financial statements of the Group before their submission to the Directors of the Company and external auditors report on those financial statements; and Make recommendations to the Board of Directors on the nomination of BDO LLP for re-appointment as external auditors of the Company at the forthcoming Annual General Meeting of the Company. 7. Auditors The auditors, BDO LLP, have expressed their willingness to accept re-appointment. On behalf of the Board of Directors Tan Hong Suparno Adijanto Director Thomas Agap Lim Director Singapore 2 June 2010 Global Palm Resources Annual Report

40 Statement by Directors In the opinion of the Board of Directors, (a) (b) the accompanying financial statements comprising the statements of financial position, consolidated statement of comprehensive income, statements of changes in equity and consolidated statement of cash flows together with the notes thereon are properly drawn up in accordance with the provisions of the Act and Singapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31 December 2009 and of the results, changes in equity and cash flows of the Group and changes in equity of the Company for the financial period ended on that date; and at the date of this statement, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they fall due. On behalf of the Board of Directors Tan Hong Suparno Adijanto Director Thomas Agap Lim Director Singapore 2 June Global Palm Resources Annual Report 2009

41 We have audited the accompanying financial statements of Global Palm Resources Holdings Limited (the Company ) and its subsidiaries (the Group ) as set out on pages 41 to 85, which comprise the statements of financial position of the Group and of the Company as at 31 December 2009, the statement of comprehensive income, statement of changes in equity and statement of cash flows of the Group and the statement of changes in equity of the Company for the financial period then ended, and a summary of significant accounting policies and other explanatory notes. Management s Responsibility for the Financial Statements Independent Auditors Report to the Members of Global Palm Resources Holdings Limited Management is responsible for the preparation and fair presentation of these financial statements in accordance with the provisions of the Singapore Companies Act, Cap. 50 (the Act ) and Singapore Financial Reporting Standards. This responsibility includes: (a) (b) (c) devising and maintaining a system of internal accounting controls sufficient to provide a reasonable assurance that assets are safeguarded against loss from unauthorised use or disposition; and transactions are properly authorised and that they are recorded as necessary to permit the preparation of true and fair profit and loss accounts and balance sheets and to maintain accountability of assets; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditors Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Singapore Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Global Palm Resources Annual Report

42 Independent Auditors Report to the Members of Global Palm Resources Holdings Limited Opinion In our opinion, (a) (b) the consolidated financial statements of the Group and the statement of financial position and statement of changes in equity of the Company are properly drawn up in accordance with the provisions of the Act and Singapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31 December 2009 and of the results, changes in equity and cash flows of the Group and the changes in equity of the Company for the financial period ended on that date; and the accounting and other records required by the Act to be kept by the Company and by the subsidiary incorporated in Singapore of which we are the auditors, have been properly kept in accordance with the provisions of the Act. BDO LLP Public Accountants and Certified Public Accountants Singapore 2 June Global Palm Resources Annual Report 2009

43 Statements of Financial Position As at 31 December 2009 Group Company Note Rp 000 Rp 000 Rp 000 Non-current assets Biological assets 5 606,951, ,634,422 - Property, plant and equipment 6 81,977,043 75,796,457 - Investments in subsidiaries ,753,115 Operating use rights 8 915, , ,843, ,390, ,753,115 Current assets Inventories 9 19,735,290 19,732,053 - Trade and other receivables 10 12,043,049 21,775,341 16,715,936 Financial assets at fair value through profit or loss 11 69,300 17,500 - Cash and bank balances 12 2,468,811 3,947, ,316,450 45,472,532 16,715,943 Less: Current liabilities Trade and other payables 13 39,474,314 63,542,801 40,116,558 Bank borrowings 14 43,600,000 38,325,000 - Finance lease payables 15 2,351,245 2,101,633 - Current income tax payable 17,185, , ,610, ,119,434 40,116,558 Net current liabilities (68,294,343) (58,646,902) (23,400,615) Non-current liabilities Bank borrowings 14 (65,700,000) (93,075,000) - Finance lease payables 15 (834,520) (2,948,532) - Provision for post-employment benefits 16 (5,567,972) (4,302,150) - Deferred tax liabilities 17 (127,600,904) (112,514,405) - (199,703,396) (212,840,087) - Net assets 421,845, ,903, ,352,500 Capital and reserves Share capital ,655, ,655,142 Foreign currency translation reserve , ,777 Accumulated profits/(loss) 24,449, ,216,431 (2,630,419) Total attributable to owners of the Company 393,432, ,216, ,352,500 Minority interest 28,413,617 20,686,818 - Total equity 421,845, ,903, ,352,500 The accompanying notes form an integral part of these financial statements. Global Palm Resources Annual Report

44 Consolidated Statement of Comprehensive Income for the financial year ended 31 December 2009 Note Rp 000 Rp 000 Revenue ,521, ,675,479 Cost of sales 21 (200,234,891) (174,592,729) Gross profit 101,286,967 93,082,750 Other income 22 21,321,194 3,319,701 Other income - gain from changes in fair value of biological assets 5 103,784,000 63,573,919 Distribution expenses (3,364,223) (5,406,758) Administrative expenses (16,015,758) (25,623,788) Other expenses (2,607,685) (18,000,707) Finance costs 23 (12,704,702) (12,593,488) Profit before income tax ,699,793 98,351,629 Income tax expense 25 (38,986,949) (24,265,668) Profit after income tax 152,712,844 74,085,961 Other comprehensive income Foreign currency translation differences on consolidation 327,777 - Total comprehensive income for the financial year 153,040,621 74,085,961 Profit attributable to: Owners of the Company 144,986,045 70,021,839 Minority interest 7,726,799 4,064, ,712,844 74,085,961 Total comprehensive income attributable to: Owners of the Company 145,313,822 70,021,839 Minority interest 7,726,799 4,064, ,040,621 74,085,961 Earnings per share (in Rp 000) 26 - Basic and diluted 6 70,021,839 The accompanying notes form an integral part of these financial statements. 42 Global Palm Resources Annual Report 2009

45 Statements of Changes in Equity for the financial year ended 31 December 2009 Attributable to owners of the Company Merger reserve* Foreign currency translation reserve Accumulated profits Total Minority interest Total equity Note Share capital Group Rp 000 Rp 000 Rp 000 Rp 000 Rp 000 Rp 000 Rp 000 Balance at ,194, ,194,598 16,622, ,817,294 Total comprehensive income recognised for the financial year ,021,839 70,021,839 4,064,122 74,085,961 Balance at ,216, ,216,437 20,686, ,903,255 Issuance of shares at date of incorporation Restructuring exercise (6) (389,753,109) - - (389,753,115) - (389,753,115) Issuance of shares for restructuring ,655, ,655, ,655,136 Transfer from accumulated profits to merger reserve - 389,753,109 - (389,753,109) Total comprehensive income recognised for the financial year , ,986, ,313,822 7,726, ,040,621 Balance at ,655, ,777 24,449, ,432,286 28,413, ,845,903 * Merger reserve arises from the difference between the consideration paid for the subsidiary and the nominal value of shares of subsidiary acquired under the pooling-of-interest method of accounting. The accompanying notes form an integral part of these financial statements. Global Palm Resources Annual Report

46 Statements of Changes in Equity for the financial year ended 31 December 2009 Foreign currency Note Share capital translation reserve Accumulated loss Total Company Rp 000 Rp 000 Rp 000 Rp 000 Balance at (date of incorporation) Issuance of shares for restructuring ,655, ,655,136 Total comprehensive income recognised for the financial period - 327,777 (2,630,419) (2,302,642) Balance at ,655, ,777 (2,630,419) 366,352,500 The accompanying notes form an integral part of these financial statements. 44 Global Palm Resources Annual Report 2009

47 Consolidated Statement of Cash Flows for the financial year ended 31 December 2009 Note Rp 000 Rp 000 Cash flows from operating activities Profit before income tax 191,699,793 98,351,629 Adjustments for: Amortisation of operating use rights 8 44,161 44,161 Depreciation of property, plant and equipment 6 6,269,043 5,555,124 Gain from changes in fair value of biological assets 5 (103,784,000) (63,573,919) Loss/(Gain) from changes in fair value of financial assets at fair value through profit or loss 11 2,450 (8,900) Gain on disposal of plant and equipment (164,283) (7,330) (Gain)/Loss on foreign exchange difference (12,847,223) 18,372,000 Interest expense 12,704,702 12,593,488 Interest income (162,559) (55,384) Provision for post-employment benefits 16 1,448,615 1,540,040 Operating cash flows before working capital changes 95,210,699 72,810,909 Working capital changes: Inventories (3,237) (7,460,474) Trade and other receivables 9,732, ,376,984 Trade and other payables (24,068,487) (106,653,873) Provision for post-employment benefits (182,793) (139,390) Cash generated from operations 80,688,474 75,934,156 Interest paid (12,704,702) (12,593,488) Interest received 162,559 55,384 Income tax paid (6,865,216) (22,962,381) Net cash from operating activities 61,281,115 40,433,671 Cash flows from investing activities Acquisition of biological assets 5 (18,532,973) (16,390,452) Purchase of plant and equipment 6 (12,360,921) (8,473,563) Acquisition of subsidiaries 7 (389,753,115) - Purchase of financial assets at fair value through profit or loss 11 (54,250) - Proceeds from disposal of plant and equipment 413, ,053 Net cash used in investing activities (420,288,084) (24,712,962) Cash flows from financing activities Proceeds from bank borrowings 29,400,000 - Proceeds from issuance of shares 368,655,142 - Repayments of bank borrowings (38,325,000) (14,128,500) Repayments of obligations under finance leases (2,202,000) (3,501,399) Net cash from/(used in) financing activities 357,528,142 (17,629,899) Net change in cash and bank balances (1,478,827) (1,909,190) Cash and bank balances at beginning of financial year 3,947,638 5,856,828 Cash and bank balances at end of financial year 12 2,468,811 3,947,638 The accompanying notes form an integral part of these financial statements. Global Palm Resources Annual Report

48 Notes to the Financial Statements for the financial year ended 31 December 2009 These notes form an integral part and should be read in conjunction with the financial statements. 1. General corporate information The statement of financial position and statement of changes in equity of Global Palm Resources Holdings Limited (the Company ) and the consolidated financial statements of the Company and its subsidiaries (the Group ) for the financial year ended 31 December 2009 were authorised for issue in accordance with a Directors resolution dated 2 June The Company was incorporated in the Republic of Singapore on 13 November 2009 under the Singapore Companies Act, Cap. 50 (the Act ) as a private limited company under the name of Global Palm Resources Holdings Pte. Ltd. The Company changed its name to Global Palm Resources Holdings Limited on 15 March 2010 in connection with its conversion into a public company limited by shares. The Company was admitted to the official list of the Singapore Exchange Securities Trading Limited on 29 April The address of the Company s registered office and principal place of business is at 105 Cecil Street, #16-03 The Octagon, Singapore The Company s registration number is M. The Company is a wholly-owned subsidiary of GPR Investment Holdings Limited (formerly known as Investments International Limited), a Seychelles-domiciled company, which is also its ultimate holding company. The principal activity of the Company is that of an investment holding company. The principal activities of the subsidiaries are set out in Note 7 to the financial statements. 2. Summary of significant accounting policies 2.1. Basis of preparation of financial statements The restructuring exercise involved companies which are under common control. The combined financial statements of the Group for the financial year ended 31 December 2008 have been prepared in a manner similar to the pooling-of-interest method. Such manner of presentation reflects the economic substance of the combining companies as a single economic enterprise, although the legal parent-subsidiary relationship was not established until after the date of the end of the reporting period. The financial statements are prepared in accordance with the provisions of the Act and Singapore Financial Reporting Standards ( FRS ) and are prepared under the historical cost convention, except as disclosed in the accounting policies below and on a going concern basis as referred to in Note 3 to the financial statements. The preparation of financial statements in conformity with FRS requires the management to exercise judgement in the process of applying the Group's and the Company s accounting policies and requires the use of accounting estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the end of the reporting period, and the reported amounts of revenue and expenses during the financial year. Although these estimates are based on the management s best knowledge of historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances, actual results may differ from those estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. 46 Global Palm Resources Annual Report 2009

49 Notes to the Financial Statements 2. Summary of significant accounting policies (Continued) 2.1. Basis of preparation of financial statements (Continued) for the financial year ended 31 December 2009 Critical accounting judgements and key sources of estimation uncertainty used that are significant to the financial statements are disclosed in Note 4 to the financial statements. During the financial year, the Group adopted the new or revised FRS and Interpretations of FRS ( INT FRS ) that are relevant to its operations and effective for the current financial year. Changes to the Group s accounting policies have been made as required, in accordance with the relevant transitional provisions in the respective FRS and INT FRS. The adoption of the new or revised FRS and INT FRS did not result in any substantial changes to the Group s accounting policies except as indicated below. FRS 1 Presentation of Financial Statements (Revised) FRS 1 (Revised) requires an entity to present, in a statement of changes in equity, all owner changes in equity. All non-owner changes in equity (i.e. comprehensive income) are required to be presented in one statement of comprehensive income or in two statements (a separate income statement and a statement of comprehensive income). Components of comprehensive income are not permitted to be presented in the statement of changes in equity. In addition, a statement of financial position is required at the beginning of the earliest comparative period following a retrospective application of an accounting policy, a retrospective restatement of items in its financial statements or a reclassification of items in the financial statements. FRS 1 (Revised) does not have any impact on the Group s financial position or results. FRS 23 Borrowing Costs (Revised) FRS 23 requires an entity to capitalise borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset as part of the cost of that asset. FRS Operating Segments FRS 108 requires an entity to adopt a management perspective approach in reporting financial and descriptive information about its reportable segment. Financial information is required to be reported on the basis that it is used internally for evaluation operating segment performance and deciding how to allocate resources to operating segments. FRS 108 introduces additional segment disclosures to be made to improve the information about operating segments. FRS and INT FRS issued but not yet effective As at 31 December 2009, the Group and the Company have not adopted the following FRS and INT FRS that have been issued but not yet effective: Effective date (Annual periods beginning on or after) FRS 24 : Related Party Disclosures (Revised) FRS 27 : Consolidated and Separate Financial Statements (Revised) FRS 32 : Amendment to FRS 32 Classification of Rights Issues Global Palm Resources Annual Report

50 Notes to the Financial Statements for the financial year ended 31 December Summary of significant accounting policies (Continued) 2.1. Basis of preparation of financial statements (Continued) FRS and INT FRS issued but not yet effective (Continued) Effective date (Annual periods beginning on or after) FRS 39 : Amendments to FRS 39 Financial Instruments: Recognition and Measurement Eligible Hedged Items FRS 39 & : Amendments to INT FRS 109 and FRS 39 Embedded INT FRS 109 Derivatives FRS 102 : Amendments to FRS Group Cash-settled Share-based Payment Transactions FRS 103 : Business Combinations (Revised) INT FRS 114 : Amendments to INT FRS 114 Prepayments of a Minimum Funding Requirement INT FRS 117 : Distributions of Non-cash Assets to Owners INT FRS 118 : Transfer of Assets from Customers INT FRS 119 : Extinguishing Financial Liabilities with Equity Instruments Consequential amendments were also made to various standards as a result of these new/revised standards. The Group and the Company expect that the adoption of the above pronouncements, if applicable, will have no material impact on the financial statements in the period of initial application, except as disclosed below. FRS 27 Consolidated and Separate Financial Statements (Revised) The amendments in FRS 27 (Revised) are principally in respect of the accounting treatment for transactions that result from changes in a parent s interest in a subsidiary. These amendments will significantly affect the accounting for such transactions in future accounting periods, but the extent of the impact on the financial statements will depend on the nature and type of the transactions, which cannot be anticipated. The changes will be adopted prospectively for transactions after the date of adoption of the revised standard and, therefore, no restatements will be required in respect of transactions prior to the date of adoption. FRS Business Combination (Revised) The amendments in FRS 103 (Revised) on accounting for business combination transactions are significant and the main changes relate to measurement of all items of consideration transferred by acquirer at fair value at the acquisition date, the election of measuring non-controlling interest at fair value or at its proportionate interest in fair value of identifiable assets and liabilities at acquisition date and the transaction costs incurred in connection with the business combination is expensed as and when they are incurred and cannot be capitalised. The impact of FRS 103 (Revised) can only be determined once the detail of future business combination transactions is known. The amendments to this revised standard will be adopted prospectively for transactions after the date of adoption of the revised standard and, therefore, no restatements will be required in respect of transactions prior to the date of adoption. The Group and the Company will apply FRS 27 (Revised) and FRS 103 (Revised) from annual period beginning 1 January Global Palm Resources Annual Report 2009

51 Notes to the Financial Statements 2. Summary of significant accounting policies (Continued) 2.2. Basis of consolidation Acquisition under common control for the financial year ended 31 December 2009 Business combination arising from transfers of interest in entities that are under common control are accounted for as if the acquisition had occurred at the beginning of the earliest comparative period presented or, if later, at the date that common control was established. For this purpose, comparatives are restated. The assets and liabilities acquired are recognised at the carrying amounts recognised previously in the Group s controlling shareholders financial statements. The components of equity of the acquired entities are added to the same components within the Group equity. Any difference between the cash paid for the acquisition and net assets acquired is recognised directly to equity. Transaction eliminated on combination Intra-group balances and any unrealised income or expenses arising from intra-group transactions are eliminated in preparing the consolidated financial statements. Minority interest Minority interests are that part of the net results of operations and of net assets of a subsidiary attributable to equity interests which are not owned directly or indirectly by the Group. It is measured at the minority interests share of the fair value of the subsidiary s identifiable assets and liabilities at the date of acquisition by the Group and the minorities share of changes in equity since the date of acquisition, except when the losses applicable to the minority in a subsidiary exceed the minority interests in the equity of that subsidiary. In such cases, the excess and further losses applicable to the minority are allocated against the owners of the Company, unless the minorities have a binding obligation to, and are able to, make and additional investment to cover the losses. When that subsidiary subsequently reports profits, the profits applicable to the minority interests are allocated to the owners of the Company until the minorities share of losses previously absorbed by the owners of the Company has been recovered. Minority interests are presented in the statement of financial position of the Group within equity, separately from the owners of the Company, and are separately disclosed in the statement of comprehensive income of the Group Biological assets Biological assets, which include mature and immature oil palm plantations, are stated at fair value less estimated point-of-sale costs. Oil palm trees have an average life that ranges from 23 to 25 years, with the first three years as immature and the remaining years as mature. As market determined prices or values are not readily available for plantations in its present condition, the Group uses the present value of expected net future cash flows (excluding any future cash flows for financing the assets, taxation, or re-establishing plantations after harvest) from the asset, discounted at a current market determined pre-tax rate in determining fair values. Gains or losses arising on initial recognition of plantations at fair value less estimated point-of-sale costs and from the change in fair value less estimated point-of-sale costs of plantations at the date of the end of each reporting period are included in profit or loss in the financial year in which they arise. Oil palm plantation is classified as mature plantation if 70 % of total plants per block are ready to be harvested with the average fresh fruit bunch weight of at least 3.5 kg or with the plant age of minimum of 36 months. Biological assets also include land preparation costs which is the cost incurred to clear the land and to ensure that the plantations are in a state ready for the planting of seedlings. Global Palm Resources Annual Report

52 Notes to the Financial Statements for the financial year ended 31 December Summary of significant accounting policies (Continued) 2.4. Property, plant and equipment Property, plant and equipment are initially recorded at cost. Subsequent to initial recognition, property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment in value, if any. The cost of property, plant and equipment includes its purchase price and any costs directly attributable to bringing the property, plant and equipment to the location and condition necessary for it to be capable of operating in the manner intended by the management. Dismantlement, removal or restoration costs are included as part of the cost of property, plant and equipment if the obligation for dismantlement, removal or restoration is incurred as a consequence of acquiring or using the property, plant and equipment. Subsequent expenditure relating to the property, plant and equipment that has already been recognised is added to the carrying amount of the property, plant and equipment when it is probable that the future economic benefits, in excess of the standard of performance of the asset before the expenditure was made, will flow to the Group and the Company, and the cost can be reliably measured. Other subsequent expenditure is recognised as an expense during the financial year in which it is incurred. On disposal of an item of property, plant and equipment, the difference between the net disposal proceeds and its carrying amount is recognised in profit or loss. Depreciation is provided using the straight-line method so as to allocate the depreciable amount of the property, plant and equipment over their estimated useful lives as follows: Years Buildings and infrastructure 25 Machinery and equipment 4-10 Transportation equipment and motor vehicles 4-10 Office equipment 10 The cost of construction-in-progress represents all costs incurred on the construction of the property, plant and equipment. The accumulated costs will be reclassified to the appropriate property, plant and equipment account when the construction is completed. No depreciation is provided on constructionin-progress as these property, plant and equipment are not yet available for use. The residual values, estimated useful life and depreciation method are reviewed at each financial year-end to ensure that the residual values, period of depreciation and depreciation method are consistent with previous estimates and expected pattern of consumption of the future economic benefits embodied in the items of the property, plant and equipment Investments in subsidiaries Subsidiary is an entity over which the Group has power to govern the financial and operating policies, generally accompanying a shareholding, of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. Investments in subsidiaries are stated at cost on the Company s statement of financial position less accumulated impairment in value, if any. 50 Global Palm Resources Annual Report 2009

53 Notes to the Financial Statements 2. Summary of significant accounting policies (Continued) 2.6. Operating use rights for the financial year ended 31 December 2009 Operating use rights represent deferred expenses incurred related to the legal arrangement of land rights and are stated at cost less accumulated amortisation and accumulated impairment in value. The right is amortised on a straight-line basis over the estimated useful life, being the legal age of land rights and amortisation method are reviewed at the each financial year-end, with the effect of any changes in estimates being accounted for on a prospective basis Impairment of non-financial assets The carrying amounts of the non-financial assets are reviewed at each reporting date to determine whether there is any indication of impairment in value. If any such indication exists, the assets recoverable amount is estimated. An impairment in value is recognised whenever the carrying amount of the asset or its cash-generating unit exceeds its recoverable amount. A cash-generating unit is the smallest identifiable asset group that generates cash flows that largely are independent from other assets and groups of assets. Impairment in value is recognised in profit or loss unless it reverses a previous revaluation, credited to equity, in which case it is charged to equity. The recoverable amount of an asset or cash-generating unit is the higher of its fair value less costs to sell and its value in use. Recoverable amount is determined for individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. If this is the case, the recoverable amount is determined for the cash-generating unit to which the asset belongs. The fair value less cost to sell is the amount obtainable from the sale of an asset or cash-generating unit in an arm s length transaction between knowledgeable, willing parties, less costs of disposal. Value in use is the present value of estimated future cash flows expected to be derived from the continuing use of an asset and from its disposal at the end of its useful life, discounted at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the asset or cash-generating unit for which the future cash flow estimates have not been adjusted.. An assessment is made at each reporting date as to whether there is any indication that an impairment in value recognised in prior periods for an asset may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. An impairment in value recognised in prior periods is reversed only if there has been a change in the estimates used to determine the recoverable amount since the last impairment in value was recognised. If that is the case, the carrying amount of the asset is increased to its recoverable amount. An impairment in value is reversed only to the extent that the asset s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment in value has been recognised. Reversals of impairment in value are recognised in profit or loss unless the asset is carried at revalued amount, in which case the reversal in excess of impairment in value recognised in profit or loss in prior periods is treated as a revaluation increase. After such a reversal, the depreciation or amortisation is adjusted in future periods to allocate the asset s revised carrying amount, less any residual value, on a systematic basis over its remaining useful life. Global Palm Resources Annual Report

54 Notes to the Financial Statements for the financial year ended 31 December Summary of significant accounting policies (Continued) 2.8. Inventories Inventories are stated at the lower of cost and net realisable value. Cost is determined on the weighted average method and includes all costs of purchase and other cost incurred in bringing the inventories to their present location and condition. Net realisable value is the estimated selling price at which the inventories can be realised in the normal course of business after allowing for the costs of realisation. Allowance is made for obsolete, slow-moving and defective inventories Financial assets The Group and the Company classify their financial assets as financial assets at fair value through profit or loss and loans and receivables. The classification depends on the purpose of which the assets are acquired. The management determines the classification of its financial assets at initial recognition and re-evaluate this designation at the date of the end of the reporting period, where allowed and appropriate. (i) Financial assets at fair value through profit or loss Financial assets classified as held for trading are included in the category financial assets at fair value through profit or loss. Financial assets are classified as held for trading if they are acquired for the purpose of selling in the near term. Derivative financial instruments are also classified as held for trading unless they are designated as effective hedging instruments. (ii) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables are classified within trade and other receivables and cash and bank balances on the statements of financial position. Recognition and derecognition Regular way purchases of financial assets are recognised on trade-date, the date on which the Group and the Company commit to purchase or sell the asset. Financial assets are recognised on the statements of financial position when, and only when, the Group and the Company become a party to the contractual provisions of the financial instrument. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group and the Company have transferred substantially all risks and rewards of ownership. On sale of a financial asset, the difference between the carrying amount and the net sale proceeds is recognised in profit or loss. Any amount in the fair value reserve relating to the asset is also recognised in profit or loss. Initial and subsequent measurement Financial assets are initially recognised at fair value plus transaction costs, except for financial assets at fair value through profit or loss, which are recognised at fair value. Transaction costs for financial assets at fair value through profit or loss are recognised in profit or loss. 52 Global Palm Resources Annual Report 2009

55 Notes to the Financial Statements 2. Summary of significant accounting policies (Continued) 2.9. Financial assets (Continued) Initial and subsequent measurement (Continued) for the financial year ended 31 December 2009 After initial recognition, loans and receivables are carried at amortised cost using the effective interest rate method, less impairment in value, if any. The effective interest method is a method of calculating the amortised cost of a financial instrument and of allocating interest income or expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts or payments through the expected life of the financial instrument, or where appropriate, a shorter period. Income and expense are recognised on an effective interest basis for debt instruments other than those financial instruments at fair value through profit or loss. Financial assets at fair value through profit or loss are subsequently carried at fair value with changes in the fair value of the financial assets including the effects of dividend are recognised in profit or loss when the changes arise. Impairment The Group and the Company assess at the date of the end of each reporting period whether there is objective evidence that a financial asset or a group of financial assets is impaired. (i) Loans and receivables An allowance for impairment of loans and receivables is recognised when there is objective evidence that the Group and the Company will not be able to collect all amounts due according to the original terms of the receivables. The amount of allowance is the difference between the asset s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account. The amount of the loss is recognised in profit or loss. If, in a subsequent period, the amount of the impairment in value decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment in value is reversed to the extent that the carrying amount of the asset does not exceed its amortised cost at the reversal date. The amount of reversal is recognised in profit or loss Financial liabilities The accounting policies adopted for specific financial liabilities are set out below. (i) Trade and other payables Trade and other payables are recognised initially at cost which represents the fair value of the consideration to be paid in the future, less transaction cost, for goods received or services rendered, whether or not billed to the Group and the Company, and are subsequently measured at amortised cost using the effective interest method. Gains or losses are recognised in profit or loss when the liabilities are derecognised as well as through the amortisation process. Global Palm Resources Annual Report

56 Notes to the Financial Statements for the financial year ended 31 December Summary of significant accounting policies (Continued) Financial liabilities (Continued) (ii) Bank borrowings Provisions Borrowings are initially recognised at the fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption value is recognised in profit or loss over the period of the borrowings using the effective interest method. Borrowings which are due to be settled within 12 months after the date of the end of the reporting period are presented as current borrowings even though the original term was for a period longer than 12 months and an agreement to refinance, or to reschedule payments, on a long-term basis is completed after the date of the end of the reporting period and before the financial statements are authorised for issue. Other borrowings due to be settled more than 12 months after the date of the end of the reporting period are presented as non-current borrowings in the statements of financial position. Recognition and derecognition Financial liabilities are recognised on the statements of financial position when, and only when, the Group and the Company become a party to the contractual provisions of the financial instrument. Financial liabilities are derecognised when the contractual obligation has been discharged or cancelled or expired. On derecognition of a financial liability, the difference between the carrying amount and the consideration paid is recognised in profit or loss. Provisions are recognised when the Group and the Company have a present legal or constructive obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable can be made of the amount of the obligation. Provisions are measured at the management s best estimate of the expenditure required to settle the obligation at the date of the end of the reporting period, and if the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects the current market assessment of the time value of money and the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a borrowing cost. Provisions are reviewed at the date of the end of each reporting period and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of economic resources will be required to settle the obligation, the provision is reversed Equity instruments An equity instrument is any contract that evidences a residual interest in the assets of the Group and the Company after deducting all of the liabilities. Ordinary shares are classified as equity and recognised at the fair value of the consideration received by the Company. Incremental costs directly attributable to the issuance of new shares are shown in the equity as a deduction from the proceeds. 54 Global Palm Resources Annual Report 2009

57 Notes to the Financial Statements 2. Summary of significant accounting policies (Continued) Revenue recognition for the financial year ended 31 December 2009 Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable for the sale of goods in the ordinary course of business. Revenue is presented, net of rebates and discounts and sales related taxes. Revenue from sale of goods is recognised upon passage of title to the customer which coincides with the delivery and acceptance. Interest income is recognised on a time-proportion basis using the effective interest rate method Employee benefits (i) Defined contribution plans The Group and the Company participate in the national pension schemes as defined by the laws of the countries in which it has operations. In particular, the Company makes contributions to the Central Provident Fund scheme in Singapore, a defined contribution pension scheme. Contributions to national pension schemes are recognised as expense in the period in which the related service is performed. (ii) Defined benefit plans The Group also provides additional provisions for employee service entitlements in order to meet the minimum benefits required to be paid to qualified employees, as required under the Indonesian Labour Law No. 13/2003 (the Labour Law ). The said additional provisions, which are unfunded, are estimated using actuarial calculations based on the report prepared by an independent firm of actuaries. Actuarial gains or losses are recognised in profit or loss when the net cumulative unrecognised actuarial gains or losses at the date of the end of the previous reporting period exceed the defined benefit obligation on that date. Such gains or losses are amortised on a straight-line method over the expected average remaining service years of the covered employees. Past services cost is recognised as an expense on a straight-line basis over the average period until the benefit becomes vested. To the extent that the benefit is already vested immediately following the introduction of, or changes to, the employee benefit program, the Group recognised past service cost immediately. The related estimated liability for employee benefit is the aggregate of the present value of the defined benefit obligation at the date of the end of the reporting period and actuarial gains and losses not recognised, less past service cost not yet recognised. Global Palm Resources Annual Report

58 Notes to the Financial Statements for the financial year ended 31 December Summary of significant accounting policies (Continued) Leases When the Group is the lessor a finance lease Leases in which the Group assumes substantially the risks and rewards of ownership are classified as finance lease. Upon initial recognition, the property, plant and equipment acquired through finance leases are capitalised at the lower of its fair value and the present value of the minimum lease payment. Any initial direct costs are also added to the amount capitalised. Subsequent to initial recognition, the property, plant and equipment is accounted for in accordance with the accounting policy applicable to that property, plant and equipment. Lease payments are apportioned between finance charge and reduction of the lease liability. The finance charge is allocated to each period during the lease term so as to achieve a constant periodic rate of interest on the remaining balance of the finance lease liability. Finance charge is recognised in profit or loss. Contingent lease payments are recognised as an expense in profit or loss in the financial year in which they are incurred. When the Group is the lessee of an operating lease Leases of assets in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are recognised in profit or loss on a straight-line basis over the period of the lease. When an operating lease is terminated before the lease period has expired, any payment required to be made to the lessor by way of penalty is recognised as an expense in the financial year in which termination takes place Borrowing costs Borrowing costs are recognised as an expense in profit or loss in the financial year in which they are incurred. Borrowing costs are recognised on a time-proportion basis in profit or loss using the effective interest method Income tax expense Income tax expense for the financial year comprises current and deferred taxes. Income tax expense is recognised in profit or loss except to the extent that it relates to items recognised directly in equity, in which case such income tax expense is recognised in equity. Current tax expense is the expected tax payable on the taxable income for the financial year, using tax rates enacted or substantively enacted by the date of the end of the reporting period, and any adjustment to income tax payable in respect of previous financial years. Deferred tax is provided, using the liability method, for temporary differences at the date of the end of the reporting period between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax is measured using the tax rates expected to be applied to the temporary differences when they are realised or settled, based on tax rates enacted or substantively enacted by the date of the end of the reporting period. 56 Global Palm Resources Annual Report 2009

59 Notes to the Financial Statements 2. Summary of significant accounting policies (Continued) Income tax expense (Continued) for the financial year ended 31 December 2009 Deferred tax assets are recognised only to the extent that it is probable that future taxable profits will be available against which temporary differences can be utilised. Deferred tax assets are reviewed at the date of the end of each reporting period and reduced to the extent that it is no longer probable that the related tax benefits will be realised. Unrecognised deferred tax assets are reassessed at the date of the end of each reporting period and are recognised to the extent that it has become probable that future taxable profits will be available against which the temporary differences can be utilised. Deferred tax assets and liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same tax authority and that there is intention to settle its current tax assets and liabilities on a net basis. Deferred tax liabilities are recognised for all taxable temporary differences associated with investments in subsidiaries, except where the timing of the reversal of the temporary difference can be controlled by the Group and it is probable that the temporary difference will not reverse in foreseeable future Foreign currencies The individual financial statements of each entity in the Group are measured using the currency of the primary economic environment in which the entity operates ( functional currency ). The financial statements of the Company are measured in Singapore dollar, the functional currency of the Company. The consolidated financial statements of the Group, the statement of financial position and the statement of changes in the equity of the Company are presented in Indonesian rupiah as the Group s main operations are in Indonesia. In preparing the financial statements, transactions in currencies other than the entity s functional currency ( foreign currency ) are recorded at the rates of exchange prevailing on the date of the transaction. At the date of the end of each reporting period, monetary items denominated in foreign currencies are re-translated at the rates prevailing on the date of the end of the reporting period. Non-monetary items carried at fair value that are denominated in foreign currencies are re-translated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not re-translated. Exchange differences arising on the settlement of monetary items and on re-translation of monetary items are included in profit or loss for the financial year. Exchange differences arising on the retranslation of non-monetary items carried at fair value are included in profit or loss for the financial years except for differences arising on the re-translation of non-monetary items in respect of which gains and losses are recognised directly in equity. For such non-monetary items, any exchange component of that gain or loss is also recognised directly in equity. Global Palm Resources Annual Report

60 Notes to the Financial Statements for the financial year ended 31 December Summary of significant accounting policies (Continued) Foreign currencies (Continued) For the purpose of presenting consolidated financial statements of the Group, the statement of financial position and statement of changes in equity of the Company, the results and financial position of all the Group s entities that have a functional currency different from the presentation currency are translated into the presentation currency as follows: (i) (ii) (iii) assets and liabilities are translated at the closing exchange rate at the date of the end of the reporting period; income and expenses are translated at average exchange rate for the financial year (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated using the exchange rates at the dates of the transactions); and all resulting exchange differences are recognised in the foreign currency translation account within equity. 3. Going concern basis As at 31 December 2009, the Group s and the Company s current liabilities exceeded the current assets by approximately Rp68,294,343,000 and Rp23,400,615,000 respectively. The management is of the view that it is appropriate for the financial statements of the Group and the Company to be prepared on a going concern basis as the Group and the Company would be able to meet working capital needs and service debt obligations as and when they fall due without foregoing any necessary future capital expenditure based on positive cash flows from operations and net proceeds from the invitation. 4. Critical accounting judgements and key sources of estimation uncertainty 4.1. Critical judgements in applying the Group s and the Company s accounting policies In the process of applying the Group s and the Company s accounting policies, the management is of the opinion that there are no critical judgements involved that have a significant effect on the amounts recognised in the financial statements except as discussed below. (i) Impairment of investments in subsidiaries or financial assets The Group and the Company follow the guidance of FRS 36 and FRS 39 on determining when investments in subsidiaries or a financial asset is impaired. This determination requires significant judgement. The Group and the Company evaluate, among other factors, the duration and extent to which the fair value of investments in subsidiaries or a financial asset is less than its cost and the financial health of and near-term business outlook for the financial asset, including factors such as industry and sector performance, changes in technology and operational and financing cash flow. 58 Global Palm Resources Annual Report 2009

61 Notes to the Financial Statements for the financial year ended 31 December Critical accounting judgements and key sources of estimation uncertainty (Continued) 4.2. Key sources of estimation uncertainty The key assumptions concerning the future, and other key sources of estimation uncertainty at the date of the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities and reported amounts of revenue and expenses within the next financial year, are discussed below. (i) Depreciation of property, plant and equipment Property, plant and equipment are depreciated on a straight-line method over their estimated useful lives. The management estimates the useful lives of these property, plant and equipment to be within 4 to 25 years. The carrying amount of property, plant and equipment of the Group as at 31 December 2009 was approximately Rp81,977,043,000 (2008: Rp75,796,457,000). Changes in the expected level of usage and technological developments could impact the economic useful lives and the residual values of these property, plant and equipment, therefore future depreciation charges could be revised. (ii) Allowance for impairment in value of receivables The management of the Group and of the Company establish allowance for impairment in value of receivables on a case-by-case basis when they believe that payment of amounts owed is unlikely to occur. In establishing these allowances, the management considers its historical experience and changes to its customers financial position. If the financial conditions of receivables were to deteriorate, resulting in impairment of their ability to make the required payments, additional allowances may be required. The carrying amounts of trade and other receivables of the Group and of the Company as at 31 December 2009 were approximately Rp12,043,049,000 (2008: Rp21,775,341,000) and Rp16,715,936,000 respectively. (iii) Income taxes Significant judgements are involved in determining the provision for income taxes. There are certain transactions and computations for which the ultimate tax determination is uncertain during the ordinary course of business. Where the final tax outcome of these matters differs from the amounts that were initially recognised, such differences will impact the income tax and deferred tax provisions in the financial years in which such determination is made. The carrying amount of current income tax payable of the Group as at 31 December 2009 was approximately Rp17,185,234,000 (2008: Rp150,000,000). The carrying amount of deferred tax liabilities of the Group as at 31 December 2009 was approximately Rp127,600,904,000 (2008: Rp 112,514,405,000). (iv) Biological assets The Group s biological assets are stated at fair value less point-of-sale costs. This requires independent valuer s assessment of the fair value of the biological assets. Changes in conditions of the biological assets could impact the fair value of the assets. The carrying amount of the biological assets at 31 December 2009 was approximately Rp606,951,395,000 (2008: Rp484,634,422,000). Global Palm Resources Annual Report

62 Notes to the Financial Statements for the financial year ended 31 December Critical accounting judgements and key sources of estimation uncertainty (Continued) 4.2. Key sources of estimation uncertainty (Continued) (v) Pension and employee benefits The determination of the Group s obligations and cost for pension and employee benefits liability is dependent on its selection of certain assumptions used by the independent actuaries in calculating such amounts. Those assumptions include among others, discount rates, wages and salary increase, retirement age and mortality rate. Actual results that differ from the Group s assumptions are recognised immediately in profit or loss as and when they occur. While the Group believes that its assumptions are reasonable and appropriate, significant differences in the Group s actual experience or significant changes in the Group s assumptions may materially affect its estimated liabilities for pensionable and employee benefits and net employee benefits expense. The carrying amount of the Group s estimated liabilities for employee benefits as at 31 December 2009 was approximately Rp5,567,972,000 (2008: Rp4,302,150,000). 5. Biological assets Group Rp 000 Rp 000 At fair value Balance at beginning of financial year 484,634, ,670,051 Additions 18,532,973 16,390, ,167, ,060,503 Gains arising from changes in fair value less estimated point-of-sale costs 103,784,000 63,573,919 Balance at end of financial year 606,951, ,634,422 (a) Analysis of biological assets At the date of the end of the reporting period, the Group s biological assets comprised oil palm trees, which range from newly established plantations to plantations that are 25 years old. Group Ha* Rp 000 Ha* Rp 000 Planted area: - Mature 7, ,890,000 7, ,106,000 - Immature 1,235 22,730, ,659,400 Field preparation cost - 12,295,341-8,060,255 Nurseries - 3,035,633-2,808,767 8, ,951,395 8, ,634,422 * Ha: Hectares (b) Analysis of oil palm produce During the financial year, the Group harvested approximately 130,948 (2008: 112,790) tons of fresh palm fruit bunches, which had a fair value less estimated point-of-sale cost of approximately Rp69,865,505,000 (2008: Rp69,014,628,000). The fair value of fresh palm fruit bunches was determined with reference to their market prices. 60 Global Palm Resources Annual Report 2009

63 Notes to the Financial Statements for the financial year ended 31 December Property, plant and equipment Group Buildings and infrastructure Machinery and equipment Transportation equipment and motor vehicles Office equipment Constructionin-progress Total Rp 000 Rp 000 Rp 000 Rp 000 Rp 000 Rp 000 Cost Balance at ,004,162 46,332,115 32,798,892 1,203, , ,111,047 Additions 1,484, ,960 5,557,312 21,692 5,255,244 12,698,521 Disposals - - (905,153) - - (905,153) Reclassifications 441, (441,667) - Balance at ,930,142 46,712,075 37,451,051 1,225,152 5,585, ,904,415 Accumulated depreciation Balance at ,837,759 12,576,282 16,061, ,412-38,314,590 Depreciation for the financial year 1,367,671 1,848,615 2,956,414 96,343-6,269,043 Disposals - - (656,261) - - (656,261) Balance at ,205,430 14,424,897 18,361, ,755-43,927,372 Net book value Balance at ,724,712 32,287,178 19,089, ,397 5,585,995 81,977,043 Global Palm Resources Annual Report

64 Notes to the Financial Statements for the financial year ended 31 December Property, plant and equipment (Continued) Group Buildings and infrastructure Machinery and equipment Transportation equipment and motor vehicles Office equipment Constructionin-progress Total Rp 000 Rp 000 Rp 000 Rp 000 Rp 000 Rp 000 Cost Balance at ,649,981 36,187,965 23,050,783 1,150,092 6,768,117 98,806,938 Additions 1,354, ,996 10,037,836 53,368 3,931,455 15,593,836 Disposals - - (289,727) - - (289,727) Reclassifications - 9,927, (9,927,154) - Balance at ,004,162 46,332,115 32,798,892 1,203, , ,111,047 Accumulated depreciation Balance at ,549,395 10,940,088 13,669, ,234-32,905,470 Depreciation for the financial year 1,288,364 1,636,194 2,537,388 93,178-5,555,124 Disposals - - (146,004) - - (146,004) Balance at ,837,759 12,576,282 16,061, ,412-38,314,590 Net book value Balance at ,166,403 33,755,833 16,737, , ,418 75,796, Global Palm Resources Annual Report 2009

65 6. Property, plant and equipment (Continued) Notes to the Financial Statements for the financial year ended 31 December 2009 As at 31 December 2009, the net book values of property, plant and equipment which have been mortgaged as security for the bank facilities as set out in Note 14 to the financial statements are as follows: Group Rp 000 Rp 000 Machinery and equipment 32,287,178 33,755,833 Transportation equipment and motor vehicles 19,089,761 16,737,755 51,376,939 50,493,588 As at 31 December 2009, the net book values of property, plant and equipment which were acquired under finance lease agreements were as follows: Group Rp 000 Rp 000 Transportation equipment and motor vehicles 6,194,063 7,350,815 Finance leased assets are pledged as security for the related finance lease liabilities. For the purpose of consolidated statement of cash flows, the Group s additions to property, plant and equipment during the financial year comprised: Group Rp 000 Rp 000 Additions of property, plant and equipment 12,698,521 15,593,836 Acquired under finance lease agreements (337,600) (7,120,273) Cash payments to acquire property, plant and equipment 12,360,921 8,473, Investments in subsidiaries Company 2009 Rp 000 Unquoted equity shares in corporation, at cost 389,753,115 Global Palm Resources Annual Report

66 Notes to the Financial Statements for the financial year ended 31 December Investments in subsidiaries (Continued) Details of the subsidiaries are as follows: Name of company (country of incorporation) Effective equity interest % % Principal activities Held by the Company Global Palm Resources Private Limited ( Global Palm ) 1 (Singapore) Investment holding company Held by Global Palm PT Prakarsa Tani Sejati ( PT Prakarsa ) 2 (Indonesia) Palm oil plantations and manufacturing of plantation products (Crude Palm Oil) and Palm Kernels 1 Audited by BDO LLP, Singapore 2 Audited by KAP Tanubrata Sutanto & Rekan, Indonesia, a member firm of BDO International Limited Acquisition of subsidiaries On 28 December 2009, the Company acquired 100% equity interests in Global Palm from GPR Investment Holdings Limited, for a consideration of S$57,683,461 (approximately Rp389,753,115,000) satisfied by issuance of 297,109,999 ordinary shares of S$54,560,960 by the Company and set-off against amount owing by GPR Investment Holdings Limited of S$3,122, Operating use rights Group Rp 000 Rp 000 Cost Balance at beginning and end of financial year 1,400,873 1,400,873 Accumulated amortisation Balance at beginning of financial year 441, ,347 Amortisation for the financial year 44,161 44,161 Balance at end of financial year 485, ,508 Carrying amount Balance at end of financial year 915, , Global Palm Resources Annual Report 2009

67 8. Operating use rights (Continued) Notes to the Financial Statements for the financial year ended 31 December 2009 As at the date of the end of the reporting period, the carrying amount of operating use rights which have been mortgaged as security for the bank facilities as set out in Note 14 to the financial statements are approximately Rp1,264,510,000 (2008: Rp862,372,000). The remaining amortisation period for operating use rights are as follows: Group Years Years Remaining amortisation period In 2003, the Group provided provision for operating use rights of Kredit Koperasi Primer untuk Anggotanya ( KKPA ) projects that is operating use rights to be transferred to farmers who are members of partnership Koperasi Unit Desa ( KUD ) under the schemes of Perkebunan Inti Rakyat Transmigrasi ( Plasma Farmers ) in accordance with the Cooperation Agreement between the Group and KUD Prakati in the Framework of Establishment and Management of Palm Oil Plantation Project with KKPA and the Amendment of the Cooperation Agreement. The provision for operating use rights shall be written-off from the Group s assets when the certificate of operating use rights is issued and handed over to each Plasma Farmer. 9. Inventories Group Rp 000 Rp 000 Finished goods 6,275,272 12,649,099 Materials - 1,053,881 Production supplies 13,460,018 6,029,073 19,735,290 19,732,053 Global Palm Resources Annual Report

68 Notes to the Financial Statements for the financial year ended 31 December Trade and other receivables Group Company Rp 000 Rp 000 Rp 000 Trade receivables 3,155, ,570 - Other receivables - related parties - 9,549, subsidiaries ,172,158 - ultimate holding company - 9,008, third parties 3,008,891 1,687,310-3,008,891 20,244,834 13,172,158 Prepaid listing expenses 5,171,183-3,538,079 Refundable deposits 48,703 45,724 - Tax recoverable 47,694 47,694 - Advances and prepaid expenses - related party - 138, third parties 610, ,640 5, , ,519 5,699 12,043,049 21,775,341 16,715,936 Trade receivables are non-interest bearing and generally on 30 days (2008: 30 days ) credit terms. The amounts due from related parties, subsidiaries and ultimate holding company are unsecured, interestfree and repayable on demand. Trade and other receivables are denominated in the following currencies: Group Company Rp 000 Rp 000 Rp 000 Indonesian rupiah 6,857,515 12,767,039 - Singapore dollar 5,185,534 9,008,302 3,543,778 United States dollar ,172,158 12,043,049 21,775,341 16,715, Global Palm Resources Annual Report 2009

69 Notes to the Financial Statements 11. Financial assets at fair value through profit or loss for the financial year ended 31 December 2009 Group Rp 000 Rp 000 Balance at beginning of financial year 17,500 8,600 Additions 54,250 - (Decrease)/Increase in fair value (2,450) 8,900 Balance at end of financial year 69,300 17,500 Financial assets at fair value through profit or loss are denominated in Indonesian rupiah. 12. Cash and bank balances Cash and bank balances included in the statements of financial position are denominated in the following currencies: Group Company Rp 000 Rp 000 Rp 000 Indonesian rupiah 2,059,835 2,863,928 - Singapore dollar 289, ,329 7 United States dollar 119, ,381-2,468,811 3,947, Trade and other payables Group Company Rp 000 Rp 000 Rp 000 Trade payables - related parties 5,080,365 4,121, third parties 16,722,889 27,964,350-21,803,254 32,086,229 - Other payables - related parties 7,387,052 6,560, subsidiary ,438,571 - third parties 876,562 1,660,737-8,263,614 8,221,067 37,438,571 Value added tax 2,019,457 1,180,374 - Other taxes payable - 712,450 - Accruals 6,630,489 6,729,954 2,677,987 Advances from customers 757,500 14,612,727-39,474,314 63,542,801 40,116,558 Global Palm Resources Annual Report

70 Notes to the Financial Statements for the financial year ended 31 December Trade and other payables (Continued) Trade payables are non-interest bearing and are normally settled within 30 (2008: 30) days. The amounts due to related parties and subsidiary are unsecured, interest-free and repayable on demand. Trade and other payables are denominated in the following currencies: Group Company Rp 000 Rp 000 Rp 000 Indonesian rupiah 28,997,872 54,735,518 29,165,766 Singapore dollar 8,556,075 6,851,239 10,950,792 United States dollar 1,920,367 1,956,044-39,474,314 63,542,801 40,116, Bank borrowings Group Rp 000 Rp 000 Current liabilities Term loan I - secured 37,600,000 38,325,000 Term loan II - secured 6,000,000-43,600,000 38,325,000 Non-current liabilities Term loan I - secured 42,300,000 93,075,000 Term loan II - secured 23,400,000-65,700,000 93,075,000 Total 109,300, ,400,000 Non-current bank borrowings are repayable as follows: Group Rp 000 Rp 000 In the second year 50,300,000 43,800,000 In the third year 15,400,000 49,275,000 65,700,000 93,075,000 Term loan I is denominated in the United States dollar, repayable over 22 quarterly instalments commencing from September 2006 to December 2011 and bears interest of 8.5% (2008: 8.5%) per annum. 68 Global Palm Resources Annual Report 2009

71 14. Bank borrowings (Continued) Notes to the Financial Statements for the financial year ended 31 December 2009 Term loan II is denominated in Indonesian rupiah, repayable over 12 quarterly instalments commencing from Mar 2010 to December 2012 and bears interest of 15.0% (2008: Nil) per annum. As at the date of the end of the reporting period, the term loans is secured by: (a) (b) (c) (d) first ranked secured guarantee rights of approximately Rp179,000,000,000 (2008: Rp179,000,000,000) of several certificates of building use rights, operating use rights and ownership rights under the name of PT Prakarsa; fiduciary guarantees over the machinery, heavy equipment, current accounts of PT Prakarsa amounting to Rp65,000,000,000 (2008: Rp1,529,000,000,000); corporate guarantees from the Company and the minority shareholder; and personal guarantees, either individually or collectively, from certain of Directors of the Company and certain of the shareholders of the ultimate holding company amounting to Rp141,000,000,000 [US$15,000,000] (2008: Rp164,250,000,000 ([US$15,000,000]) and Rp30,000,000,000 (2008: Nil). During the financial year, the security on all of PT Prakarsa s shares owned by Global Palm and the minority shareholder and a portion of shares of PT Resources Alam Indonesia Tbk has been discharged. The carrying amounts of current bank borrowings approximate their fair values. The fair value of non-current bank borrowings as at 31 December 2009 was approximately Rp57,587,309,000 (2008: Rp90,454,060,000). The management estimates the fair value of the bank borrowings from a discounted cash flow analysis, using a discount rate based on a prevailing available market borrowing rates at the financial year-end. As at the date of the end of the reporting period, the Group has banking facilities as follows: Group Rp 000 Rp 000 Facilities granted 109,900, ,400,000 Facilities utilised 109,300, ,400,000 Global Palm Resources Annual Report

72 Notes to the Financial Statements for the financial year ended 31 December Finance lease payables Minimum lease payments Future finance charges Present value of minimum lease payments Group Rp 000 Rp 000 Rp Current liabilities Not later than one year 2,652,084 (300,839) 2,351,245 Non-current liabilities Later than one year but not later than five years 874,501 (39,981) 834,520 3,526,585 (340,820) 3,185, Current liabilities Not later than one year 2,680,905 (579,272) 2,101,633 Non-current liabilities Later than one year but not later than five years 3,244,025 (295,493) 2,948,532 5,924,930 (874,765) 5,050,165 Finance lease payables are denominated in Indonesian rupiah. The leases have a term of 3 years. The effective interest rates charged during the financial year range between 5.5% to 13.5% (2008: 5.5% to 13.5%) per annum. Interest rates are fixed at contract date. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments. The fair values of the lease obligations approximate their carrying amount. The obligations under finance leases are secured by the lessors title to the leased assets as set out in Note 6 to the financial statements. 16. Provision for post-employment benefits The Group recognises provision for post-employment benefits for all its permanent employees in accordance with Indonesian Labour Law No. 13/2003 dated 25 March The provision is based on an actuarial calculation by an independent actuary using the Projected Unit Credit Method. Actuarial gains or losses are recognised as income or expenses when the cumulative actuarial gains or losses exceed 10% of the defined benefit obligation. These gains or losses are recognised over the expected remaining working lives of employees. Past service cost is amortised over the remaining working lives of each employee. 70 Global Palm Resources Annual Report 2009

73 Notes to the Financial Statements 16. Provision for post-employment benefits (Continued) for the financial year ended 31 December 2009 The provision for post-employment benefit recognised by the Group amounted to approximately Rp5,567,972,000 as at 31 December 2009 (2008: Rp4,302,150,000). The related expense recognised in the current financial year was approximately Rp1,328,774,000 (2008: Rp1,540,040,000). The estimated liabilities for post-employment benefits based on the actuary reports have been determined using the following assumptions: Discount rate 10% per annum 12% per annum Wages and salary increase 8% per annum 8% per annum Retirement age 55 years of age 55 years of age Method Projected credit unit Projected credit unit The details of the post-employment expenses recognised in profit or loss were as follows: Group Rp 000 Rp 000 Current service costs 534, ,641 Interest costs 692, ,628 Amortised past service cost - 49,542 Unamortised past service cost 354, ,462 Recognised actuarial loss (132,002) 24,767 Expenses recognised in profit or loss 1,448,615 1,540,040 The details of the provision for post-employment benefits as at the date of the end of the reporting period were as follows: Group Rp 000 Rp 000 Present value of benefit obligation 9,553,637 7,838,126 Unamortised past service cost (2,258,353) (2,612,815) Unrecognised actuarial loss (1,727,312) (923,161) Provision for post-employment benefits 5,567,972 4,302,150 Global Palm Resources Annual Report

74 Notes to the Financial Statements for the financial year ended 31 December Provision for post-employment benefits (Continued) Movements in provision for post-employment benefits during the financial year were as follows: Group Rp 000 Rp 000 Balance at beginning of financial year 4,302,150 2,901,500 Provision made 1,448,615 1,540,040 Provision utilised (182,793) (139,390) Balance at end of financial year 5,567,972 4,302, Deferred tax liabilities Group Rp 000 Rp 000 Balance at beginning of financial year 112,514, ,047,695 Transfer from profit or loss 15,086,499 12,466,710 Balance at end of financial year 127,600, ,514,405 Deferred tax liabilities arise as a result of temporary differences between the tax written down values and carrying amount of the following computed at statutory income tax rate: Group Rp 000 Rp 000 Biological assets 125,260, ,846,052 Property, plant and equipment 3,732,017 3,872,955 Provision for post-employment benefits (1,391,993) (1,204,602) 127,600, ,514, Share capital Group Company Rp 000 Rp 000 Rp 000 Issued and fully paid 1 (2008: 1) ordinary share at beginning of financial year / date of incorporation Issuance of 297,109,999 ordinary shares pursuant to the restructuring exercise 368,655, ,655, ,110,000 (2008: 1) ordinary shares at end of financial year 368,655, ,655, Global Palm Resources Annual Report 2009

75 18. Share capital (Continued) Notes to the Financial Statements for the financial year ended 31 December 2009 The holders of ordinary shares are entitled to receive dividends as and when declared by the Company. All ordinary shares have no par value and carry one vote per share without restriction. On the date of incorporation, the Company issued one subscriber s share at S$1 (approximately Rp6,000) for cash. On 28 December 2009, the Company issued additional shares of 297,109,999 ordinary shares at S$54,560,960 (approximately Rp368,655,136,000) as part of the acquisition of the subsidiaries. 19. Foreign currency translation reserve Foreign currency translation reserve comprises all foreign exchange differences arising from the translation of the financial statements of the Company from non-indonesian rupiah to Indonesian rupiah (presentation currency) and is non-distributable. Movements in foreign currency translation reserve were shown in the statements of changes in equity. 20. Revenue Group Rp 000 Rp 000 Crude palm oil 282,187, ,459,908 Palm kernels 19,334,059 25,215, ,521, ,675, Cost of sales Group Rp 000 Rp 000 Cost of inventories recognised as expense 107,199,366 77,859,360 Labour costs and other overheads 93,035,525 96,733, ,234, ,592,729 Global Palm Resources Annual Report

76 Notes to the Financial Statements for the financial year ended 31 December Other income Group Rp 000 Rp 000 Gain from changes in fair value of financial assets at fair value through profit or loss - 8,900 Gain on disposal of plant and equipment 164,283 7,330 Gain on foreign exchange 18,700,423 2,345,277 Interest income 162,559 55,384 Sundry income 2,293, ,810 21,321,194 3,319, Finance costs Group Rp 000 Rp 000 Term loan interest 11,527,739 10,960,595 Interest on overdue trade payables - 229,991 Finance lease interest 587, ,910 Others 589, ,992 12,704,702 12,593, Profit before income tax The above is arrived at after charging: Group Rp 000 Rp 000 Selling expenses Claims for sales 737,902 2,220,038 Freight and stevedoring 2,121,696 2,464,478 Administrative expenses Professional fees 472,474 8,576,272 Operating lease - rental of premises 1,346,985 2,064,604 Transportation, travelling and accommodation 530, ,940 Bank charges 114, ,502 Tax penalty 138, ,409 Employment benefits expenses - salaries, wages and bonuses 8,819,753 8,524,728 - post-employment benefits 1,463,965 1,598, Global Palm Resources Annual Report 2009

77 Notes to the Financial Statements for the financial year ended 31 December Profit before income tax (Continued) The above is arrived at after charging: Group Rp 000 Rp 000 Other expenses Loss on foreign exchange 2,605,235 18,000, Income tax expense Group Rp 000 Rp 000 Current tax - current financial year 23,900,450 11,798,958 Deferred tax - current financial year 15,086,499 12,466,710 Total income tax expense 38,986,949 24,265,668 Reconciliation of effective income tax rate Group Rp 000 Rp 000 Profit before income tax 191,699,793 98,351,629 Income tax calculated at Singapore statutory income tax rate of 17% (2008: 18%) 32,588,965 17,703,293 Effect of income not subject to tax (3,207,000) (256,805) Effect of expenses not deductible for income tax purposes 3,280,914 2,390,061 Effect of different tax rates of subsidiary operating in other jurisdiction 21,287,522 12,665,772 Effect in change in deferred tax rate of subsidiary (14,963,452) (8,236,653) 38,986,949 24,265, Earnings per share The calculation for basic earnings per share is based on the profit attributable to owner of the Company for the financial year by the weighted average (2008: actual) number of ordinary shares in issue during the financial year. As the Group has no dilutive potential ordinary shares, the diluted earnings per share are equivalent to basic earnings per share. Global Palm Resources Annual Report

78 Notes to the Financial Statements for the financial year ended 31 December Commitments and contingencies (a) Capital commitments As at the date of the end of the reporting period, the Group has the following capital expenditure contracted for but not recognised in the financial statements is as follows: Group Rp 000 Rp 000 Property, plant and equipment 3,621,437 4,322,391 (b) Operating lease commitments - Group as a lessee As at the date of the end of the reporting period, there were operating lease commitments for rental of premises payable and maintenance service in subsequent accounting periods as follows: Group Rp 000 Rp 000 Not later than one year 963,342 1,107,381 Later than one year but not later than five years 16,950 1,058, ,292 2,165,400 The above operating lease commitments are based on existing rental rates as at each respective date of the end of the reporting period. (c) Commitment for sales contracts The Group has the following contractual amounts of the committed contracts with fixed pricing terms that were outstanding as at the date of the end of the reporting period: Group Rp 000 Rp 000 Sales 2,777,000 18,052, Global Palm Resources Annual Report 2009

79 28. Significant related party transactions Notes to the Financial Statements for the financial year ended 31 December 2009 For the purpose of these financial statements, parties are considered to be related to the Group or the Company if the Group or the Company has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Group or the Company and the party are subject to common control or common significant influence. Related parties may be individuals or other entities. In addition to the information disclosed elsewhere in the financial statements, the following are significant related party transactions during the financial years at rates and terms agreed between the parties: Group Rp 000 Rp 000 With certain Directors of the Company Group s banking facilities supported by a personal guarantee given by certain Directors of the Company 171,000, ,400,000 With related parties Purchase of iron plate - 728,521 Transportation charges 3,883,114 5,675,036 Disposal of property, plant and equipment - - Purchase of plant and equipment 431,288 - Rental of premises 1,375,182 1,743,575 Late interest charged on trade payables - 229,991 Advances made by related parties to the Group 875,841 8,605,000 Repayment made the Group to related parties 1,793,038 1,444,209 Advances made by the Group to related parties 22,988,957 8,160,561 Repayment made by related parties to the Group 1,793,038 16,166,574 With ultimate holding company Assignment of debts 22,391,455 84,367,644 Company Rp 000 Rp 000 With subsidiaries Advances made by the subsidiary to the Company 8,272,804 - Assignment of debts 22,391,455 - Global Palm Resources Annual Report

80 Notes to the Financial Statements for the financial year ended 31 December Significant related party transactions (Continued) Compensation of key management personnel The remuneration of the Directors and other key management of the Group for the financial year ended 31 December 2009 were as follows: Group Rp 000 Rp 000 Short-term benefits 5,051,129 4,087,579 Analysed into: Directors of the Company 2,144,022 1,099,319 Directors of the subsidiary 1,293, ,439 Other key management personnel 1,614,103 1,989,821 5,051,129 4,087, Segment reporting The Group operates only in one business segment, which is the plantation segment and in one geographical location, Indonesia. Accordingly, no segmental information is prepared based on business segment or on geographical distribution as it is not meaningful. 30. Financial instruments, financial risk and capital management The Group s and the Company s activities expose them to financial risks (including credit risk, foreign currency risk, Interest rate risk and liquidity risk) arising in the normal course of business. The Group s and the Company s overall risk management strategy seeks to minimise adverse effects from the volatility of financial markets on the Company s financial performance. The management is responsible for setting the objectives and underlying principles of financial risk management for the Group and the Company. The management continually monitors the Group s and the Company s financial risk management process to ensure that an appropriate balance between risk and control is achieved. There has been no change to the Group s and the Company s exposure to these financial risks or the manner in which it manages and measures the risk. The Group and the Company does not hold or issue derivative financial instruments for trading purposes. 78 Global Palm Resources Annual Report 2009

81 Notes to the Financial Statements for the financial year ended 31 December Financial instruments, financial risk and capital management (Continued) Credit risk The Group and the Company have a credit policy in place and the exposure to credit risk is monitored on an on-going basis. The Group and the Company do not require collateral in respect of financial assets. Cash and cash equivalents are placed with banks and financial institutions which are regulated. The Group and the Company have no significant concentration of credit risk except for the amounts due from related parties and ultimate holding company. As at the date of the end of the reporting period, the Group s and the Company s maximum exposure to credit risk are represented by the carrying amount of the financial assets on the statements of financial position. The Group s and the Company s major classes of financial assets are financial assets at fair value through profit or loss, cash and cash equivalents and trade and other receivables. Trade receivables that are neither past due nor impaired are substantially companies with good collection track record with the Group. The Group s historical experience in the collection of receivables falls within the recorded allowances. The Group does not have past due receivables as at the date of the end of the reporting period Market risk Foreign currency risk The Group incurs foreign currency risk on transactions and balances that are denominated in a currency other than Indonesian rupiah. The currency giving rise to this risk is primarily United States dollar. Exposure to foreign currency risk is monitored on an on-going basis to ensure that the net exposure is at an acceptable level. As at the date of the end of the reporting period, the carrying amounts of monetary assets and monetary liabilities denominated in currencies other than the respective entity s functional currency are disclosed in the respective notes to the financial statements. The Group has not entered into any currency forward exchange contracts during the financial year. (i) Foreign currency sensitivity analysis The Group transacts business mainly in Indonesian rupiah. The following table details the Group s sensitivity to a 5% change in Indonesian rupiah against the United States dollar. The sensitivity analysis assumes an instantaneous 5% change in the foreign currency exchange rates from the date of the end of the reporting period, with all other variables held constant. The results of the model are also constrained by the fact that only monetary items, which are denominated in United States dollar are included in the analysis. Global Palm Resources Annual Report

82 Notes to the Financial Statements for the financial year ended 31 December Financial instruments, financial risk and capital management (Continued) Market risk (Continued) Foreign currency risk (Continued) (i) Foreign currency sensitivity analysis (Continued) Group Rp 000 Rp 000 Profit or loss Singapore dollar Strengthened against Indonesian rupiah (154,033) 113,820 Weakened against Indonesian rupiah 154,033 (113,820) United States dollar Strengthened against Indonesian rupiah (4,085,063) (6,619,583) Weakened against Indonesian rupiah 4,085,063 6,619,583 The potential impact of foreign exchange rate fluctuation on the combined statements of comprehensive income as described in the sensitivity analysis above is attributable mainly to foreign exchange rate fluctuations the Group s foreign exchange exposure on non-reporting currency receivables and payables at the date of the end of the reporting period. Interest rate risk The Group s exposure to market risk for changes in interest rates relates primarily to fixed deposits, bank borrowings and finance lease obligations with financial institutions. The Group maintains an efficient and optimal interest cost structure using a combination of fixed and variable rate debts, and long and short term borrowings. The Company does not have exposure to market risk for changes in interest rates. (i) Interest rate sensitivity analysis The sensitivity analysis below has been determined based on the exposure to interest rate risks for financial liabilities at the date of the end of reporting period. For floating rate liabilities, the analysis is prepared assuming the amount of liability outstanding at the date of the end of the reporting period was outstanding for the whole year. The sensitivity analysis assumes an instantaneous 5% change in the interest rates from the date of the end of the reporting period, with all variables held constant. 80 Global Palm Resources Annual Report 2009

83 Notes to the Financial Statements for the financial year ended 31 December Financial instruments, financial risk and capital management (Continued) Market risk (Continued) Interest rate risk (Continued) (i) Interest rate sensitivity analysis If the interest rate increases/decreases by 5%, profit before income tax of the Group, will decrease/increase by: Rp 000 Rp Liquidity risk Bank borrowings 576, ,030 Finance lease payables 29,374 31, , ,326 Liquidity risks refer to the risks in which the Group and the Company encounter difficulties in meeting short-term obligations. Liquidity risks are managed by matching the payment and receipt cycle. The Group and the Company manages their debt maturity profile, operating cash flows and the availability of funding so as to ensure that all repayment and funding needs are met. As part of the overall prudent liquidity management, the Group and the Company maintain sufficient levels of cash and cash equivalents to meet their working capital requirements. The following table details the Group s and the Company s remaining contractual maturity for its nonderivative financial instruments. The table has been drawn up based on undiscounted cash flows of financial instruments based on the earlier of the contractual date or when the Group and the Company are expected to receive or (pay). Within one financial year After one financial year but within five financial years Total Rp 000 Rp 000 Rp 000 Group 2009 Financial assets Non-interest bearing 12,717,461-12,717,461 Fixed interest bearing 1,863,699-1,863,699 14,581,160-14,581,160 Financial liabilites Non-interest bearing 39,474,314-39,474,314 Fixed interest bearing 45,951,245 66,534, ,485,765 85,425,559 66,534, ,960,079 Global Palm Resources Annual Report

84 Notes to the Financial Statements for the financial year ended 31 December Financial instruments, financial risk and capital management (Continued) Liquidity risk (Continued) Within one financial year After one financial year but within five financial years Total Rp 000 Rp 000 Rp 000 Group 2008 Financial assets Non-interest bearing 22,189,271-22,189,271 Fixed interest bearing 3,551,208-3,551,208 25,740,479-25,740,479 Financial liabilities Non-interest bearing 63,542,801-63,542,801 Fixed interest bearing 40,426,633 96,023, ,450, ,969,434 96,023, ,992,966 Company 2009 Financial assets Non-interest bearing 16,715,943-16,715,943 Fixed interest bearing ,715,943-16,715,943 Financial liabilities Non-interest bearing 40,116,558-40,116,558 Fixed interest bearing ,116,558-40,116, Capital management policies and objectives The Group and the Company manage their capital to ensure that the Group and the Company are able to continue as a going concern and maintains an optimal capital structure so as to maximise shareholder s values. The management monitors capital based on gearing ratio. The gearing ratio is calculated as net debt divided by total capital. Net debt is calculated as borrowings plus trade and other payables less cash and cash equivalents. Total capital is calculated as equity plus net debt. The management constantly reviews the capital structure to ensure the Group and the Company are able to service any debt obligations (include principal repayment and interests) based on its operating cash flows. The Group s and the Company s overall strategy remains unchanged from the previous financial year. 82 Global Palm Resources Annual Report 2009

85 Notes to the Financial Statements for the financial year ended 31 December Financial instruments, financial risk and capital management (Continued) Capital management policies and objectives (Continued) Group Company Rp 000 Rp 000 Rp 000 Net debt 149,491, ,045,328 40,116,551 Total equity 421,845, ,903, ,352,500 Total capital 571,337, ,948, ,469,051 Gearing ratio 26% 40% 10% The Group and the Company are in compliance with all externally imposed capital requirements for the financial years ended 31 December 2009 and Fair values The carrying amounts of the Group s and the Company s current financial assets and financial liabilities approximate their respective fair values due to the relatively short-term maturity of these financial instruments. The fair values of other classes of financial assets and liabilities are disclosed in the respective notes to the financial statements. 31. Events subsequent to the date of the end of the reporting period 31.1 The ultimate holding company has on 10 March 2010 and 20 April 2010, resolved and approved, inter alia, the following: (a) (b) (c) (d) (e) the conversion of the Company into a public limited company and the change of the Company s name to Global Palm Resources Holdings Limited; the adoption of a new set of Articles of Association; the allotment and issue of 110,000,000 ordinary shares ( New Shares ) pursuant to the invitation. The New Shares, when allotted, issued and fully paid-up, will rank pari passu in all respects with the existing issued and fully paid-up ordinary shares ( Shares ); the dealing and quotation of all of the Company s Shares (including the incentive shares as well as the New Shares to be allotted and issued) on the official list of Singapore Exchange Securities Trading Limited ( SGX-ST ); and the authorisation of the Directors, pursuant to Section 161 of the Companies Act, to: (a) (i) issue shares whether by way of rights (including renounceable and nonrenounceable rights), bonus or otherwise; and/or (ii) make or grant offers, agreements or options (collectively, Instruments ) that might or would require Shares to be issued, including but not limited to the creation and issue (as well as adjustments to) warrants, debentures or other instruments convertible into Shares, at any time and upon such terms and conditions and for such purposes and to such persons as the Directors may in their absolute discretion deemed fit, and Global Palm Resources Annual Report

86 Notes to the Financial Statements for the financial year ended 31 December Events subsequent to the date of the end of the reporting period (Continued) 31.1 The ultimate holding company has on 10 March 2010 and 20 April 2010, resolved and approved, inter alia, the following: (Continued) (e) the authorisation of the Directors, pursuant to Section 161 of the Companies Act, to: (Continued) (b) (notwithstanding the authority conferred by this resolution may have ceased to be in force) issue Shares in pursuance of any Instrument made or granted by the Directors while this resolution was in force, provided that: (i) (ii) (iii) (iv) (subject to sub-paragraph (ii) below pertaining to pro rata renounceable rights issue) the aggregate number of Shares to be issued pursuant to this resolution (including Shares to be issued pursuant to Instruments made or granted pursuant to this resolution) does not exceed 50% of the total number of issued Shares (excluding treasury Shares) in the capital of the Company (as calculated in accordance with sub-paragraph (iii) below), of which the aggregate number of Shares to be issued other than on a pro rata basis to shareholders of the Company (including Shares to be issued in pursuance of Instruments made or granted pursuant to this resolution) does not exceed 20% of the total number of issued Shares (excluding treasury Shares) in the capital of the Company (as calculated in accordance with sub-paragraph (iii) below); in relation to pro rata renounceable rights issue, the aggregate number of Shares to be issued pursuant to this resolution does not exceed 100% of the total number of issued Shares (excluding treasury Shares) in the capital of the Company (as calculated in accordance with sub-paragraph (iii) below); (subject to such manner of calculation as may be prescribed by the SGX-ST) for the purpose of determining the aggregate number of Shares that may be issued under sub-paragraphs (i) and (ii) above, the percentage of issued share capital shall be based on the post invitation share capital of the Company immediately following the close of the invitation, after adjusting for new shares arising from the conversion or exercise of any convertible securities or share options or vesting of share awards which are outstanding or subsisting at the time this resolution is passed, and any subsequent bonus issue or consolidation or subdivision of Shares; in exercising the authority conferred by this resolution, the Company shall comply with the provisions of the Listing Manual of the SGX-ST (including supplemental measures thereto) for the time being in force (unless such compliance has been waived by the SGX-ST) and the Articles of Association for the time being of the Company; and (v) (unless revoked or varied by the Company in general meeting) the authority (1) conferred by this resolution shall continue in force until the conclusion of the next annual general meeting of the Company or the date by which the next annual general meeting of the Company is required by law to be held, whichever is the earlier; and (c) the authorisation of the Directors to issue Shares other than on a pro rata basis at a discount exceeding 10% but not more than 20%, which discount is calculated based on the weighted average price for trades done on the SGX-ST on the full market date on which the agreement relating to such issue of Shares is executed (or if trading is not available for a full market day, on the preceding market day up to the time such agreement is executed). 84 Global Palm Resources Annual Report 2009

87 Notes to the Financial Statements for the financial year ended 31 December Events subsequent to the date of the end of the reporting period (Continued) 31.1 The ultimate holding company has on 10 March 2010 and 20 April 2010, resolved and approved, inter alia, the following: (Continued) Note: (1) The authorisation of the Directors to issue New Shares up to 100% of the Company s issued share capital (excluding treasury shares) via a pro rata renounceable rights issue is in furtherance of one of the measures introduced by the SGX-ST, in consultation with the Monetary Authority of Singapore, with effect from 20 February 2009 to accelerate and facilitate listed issuers fundraising efforts, such measure will be in effect until 31 December On 13 January 2010, the Company incorporated a subsidiary, Ecogreen Resources Investments Limited in the Cayman Islands with a capital of US$ Comparative figures As described in Note 2.1. to the financial statements, the comparative figures of the Group for the preceding financial year have been presented under pooling-of-interest manner. The effective date of the pooling-ofinterest for accounting purposes predates 1 January 2008, the beginning of the financial year for which the comparative figures are presented, as the Group have been under common control prior to 1 January There are no comparative figures for the Company as it was incorporated on 13 November Global Palm Resources Annual Report

88 Statistics of Shareholdings As at 19 May 2010 DISTRIBUTION OF SHAREHOLDINGS Size of Shareholdings No. of Shareholders % No. of Shares % ,000-10,000 1, ,174, ,001-1,000,000 1, ,198, ,000,001 and above ,596, Total 2, ,968, TWENTY LARGEST SHAREHOLDERS No. Name No. of Shares % 1 GPR Investment Holdings Limited 297,110, OCBC Securities Private Ltd 16,608, Lim Kui Teng 4,500, Amfraser Securities Pte. Ltd. 2,929, Oversea-Chinese Banking Corporation Limited 2,929, Citibank Nominees Singapore Pte Ltd 1,320, Lim Chye Bobby Lim Chye Huat 1,200, Lee Ai Leng 1,000, Western Properties Pte Ltd 1,000, Phillip Securities Pte Ltd 917, Heng Jee Kian 900, Lin Yucheng 900, Joyce Tan Geok Eng 800, UOB Kay Hian Pte Ltd 795, Kim Eng Securities Pte. Ltd. 730, Ngo Yuen Yin 666, Bank of Singapore Nominees Pte Ltd 610, Wong Hein Jee 600, Tan Tan Hun Seng 569, Singapore Nominees Pte Ltd 550, Total 336,633, Global Palm Resources Annual Report 2009

89 Statistics of Shareholdings As at 19 May 2010 SHAREHOLDERS INFORMATION Class of Equity Securities Number of Equity Securities Voting Rights Ordinary Shares 412,968,000 One vote per share (excluding treasury shares) Treasury Shares Nil Nil SUBSTANTIAL SHAREHOLDERS (As recorded in the Register of Substantial Shareholders) Direct Interest % Deemed Interest % GPR Investment Holdings Limited (1) 297,110, Notes: (1) GPR Investment Holdings Limited ( GPR Investment ), a Seychelles-domiciled company, is the private investment vehicle of the Adijanto Family Shareholders (which includes our Executive Chairman and CEO, Dr. Suparno Adijanto) through which they hold interests in our Company. GPR Investment is wholly-owned by the Adijanto Family Shareholders, and none of them exercises control over GPR Investment or dominates decision-making, whether directly or indirectly, in relation to the financial and operating policies of GPR Investment. GPR Investment s board of directors comprises entirely of all of the Adijanto Siblings, each of whom has an equal vote. Our COO and Executive Director, Thomas Agap Lim is the spouse of one of the Adijanto Siblings, Tan Phe Phe@ Muriati Adijanto. Save for Tan Phwe Leng@Tan Phe Lin@Mariana Adijanto, Tan Phe Phe@Muriati Adijanto, Dr. Suparno Adijanto and Chen Ying Zhong Freddy (who each hold 14.28%, 14.28%, 14.28% and 7.18% of the shareholdings in GPR Investment respectively), the Adijanto Family Shareholders each hold 7.14% shareholdings in GPR Investment. The percentage of shareholding above is computed based on the total issued shares of 412,968,000. PERCENTAGE OF SHAREHOLDING IN PUBLIC S HANDS Based on information available to the Company as at 19 May 2010, approximately 28.05% of the Company s shares listed on the Singapore Exchange Securities Trading Limited were held in the hands of the public. Accordingly, the Company has complied with Rule 723 of the Listing Manual of the SGX-ST. Global Palm Resources Annual Report

90 Notice of Annual General Meeting NOTICE IS HEREBY GIVEN that the Annual General Meeting of GLOBAL PALM RESOURCES HOLDINGS LIMITED (the Company ) will be held at Raffles City Convention Centre - Orchard Room, Level 4, 252 North Bridge Road, Singapore on 24 June 2010 at 3.00pm for the following purposes:- To consider and if thought fit, to pass the following resolutions as Ordinary Resolutions, with or without any modifications: AS ORDINARY BUSINESS 1. To receive and adopt the Directors Report and the Audited Accounts of the Company and the Group for the financial year ended 31 December 2009 together with the Auditors Report thereon. (Resolution 1) 2. To re-elect the following Directors of the Company retiring pursuant to Article 88 of the Company s Articles of Association of the Company: Thomas Agap Lim (Resolution 2) Yee Kit Hong (Resolution 3) M. Rajaram (Resolution 4) Guok Chin Huat Samuel (Resolution 5) [See Explanatory Note (i)] 3. To approve the payment of Directors fees of S$155,000 for the financial year ending 31 December 2010, to be paid quarterly in arrears. (Resolution 6) 4. To re-appoint Messrs BDO LLP as the Auditors of the Company and to authorise the Directors of the Company to fix their remuneration. (Resolution 7) 5. To transact any other ordinary business which may properly be transacted at an Annual General Meeting. AS SPECIAL BUSINESS 6. Authority to issue shares in the capital of the Company pursuant to Section 161 of the Companies Act, Cap. 50 and Rule 806 of the Listing Manual of the Singapore Exchange Securities Trading Limited That pursuant to Section 161 of the Companies Act, Cap. 50, and Rule 806 of the Listing Manual of the Singapore Exchange Securities Trading Limited ( SGX-ST ), the Directors of the Company be authorised and empowered to: (a) (i) issue shares in the Company ( shares ) whether by way of rights or otherwise; and/or (ii) make or grant offers, agreements or options (collectively, Instruments ) that might or would require shares to be issued, including but not limited to the creation and issue of (as well as adjustments to) options, warrants, debentures or other instruments convertible into shares, at any time and upon such terms and conditions and for such purposes and to such persons as the Directors of the Company may in their absolute discretion deem fit; and (b) (notwithstanding the authority conferred by this Resolution may have ceased to be in force) issue shares in pursuance of any Instrument made or granted by the Directors of the Company while this Resolution was in force, (the Share Issue Mandate ) 88 Global Palm Resources Annual Report 2009

91 Notice of Annual General Meeting provided that: (1) Save for sub-paragraph (2) below, the aggregate number of shares (including shares to be issued in pursuance of the Instruments, made or granted pursuant to this Resolution) and Instruments to be issued pursuant to this Resolution shall not exceed 50% of the total number of issued shares (excluding treasury shares) in the capital of the Company (as calculated in accordance with sub-paragraph (3) below), of which the aggregate number of shares and Instruments to be issued other than on a pro rata basis to existing shareholders of the Company shall not exceed 20% of the total number of issued shares (excluding treasury shares) in the capital of the Company (as calculated in accordance with sub-paragraph (3) below); (2) the aggregate number of shares (including shares to be issued in pursuance of the Instruments, made or granted pursuant to this Resolution) and Instruments to be issued to existing shareholders via a pro rata renounceable rights issue pursuant to this Resolution shall not (i) if issued on or before 31 December 2010, exceed 100% of the total number of issued shares (excluding treasury shares) in the capital of the Company (as calculated in accordance with sub-paragraph (3) below); or (ii) if issued after 31 December 2010, exceed 50% of the total number of issued shares (excluding treasury shares) in the capital of the Company (as calculated in accordance with sub-paragraph (3) below); (3) (subject to such calculation as may be prescribed by the SGX-ST) for the purpose of determining the aggregate number of shares and Instruments that may be issued under sub-paragraphs (1) and (2) above, the percentage of issued shares and Instruments shall be based on the total number of issued shares (excluding treasury shares) in the capital of the Company at the time of the passing of this Resolution, after adjusting for: (a) (b) (c) new shares arising from the conversion or exercise of the Instruments or any convertible securities; new shares arising from exercising share options or vesting of share awards outstanding and subsisting at the time of the passing of this Resolution; and any subsequent consolidation or subdivision of shares; (4) in exercising the Share Issue Mandate conferred by this Resolution, the Company shall comply with the provisions of the Listing Manual of the SGX-ST for the time being in force (unless such compliance has been waived by the SGX-ST) and the Articles of Association of the Company; and (5) unless revoked or varied by the Company in a general meeting, the Share Issue Mandate shall continue in force (i) until the conclusion of the next Annual General Meeting of the Company or the date by which the next Annual General Meeting of the Company is required by law to be held, whichever is earlier or (ii) in the case of shares to be issued in pursuance of the Instruments, made or granted pursuant to this Resolution, until the issuance of such shares in accordance with the terms of the Instruments. [See Explanatory Note (ii)] (Resolution 8) Global Palm Resources Annual Report

92 Notice of Annual General Meeting 7. Authority to allot and issue shares and Instruments other than on a pro rata basis at a discount not exceeding 20 per centum (20%) That subject to and pursuant to the Share Issue Mandate being obtained in Resolution 8 above, approval be and is hereby given to the Directors of the Company to allot and issue shares (including shares to be issued in pursuance of the Instruments, made or granted pursuant to the Share Issue Mandate) other than on a pro rata basis at an issue price per share as the Directors of the Company may in their absolute discretion deem fit provided that such price shall not (i) if the issue was made on or before 31 December 2010, represent a discount of more than 20% to the weighted average price per share or (ii) if the issue was made after 31 December 2010, represent a discount of more than 10% to the weighted average price per share, determined in accordance with the requirements of the SGX-ST; and unless revoked or varied by the Company in a general meeting, such authority shall continue in force until the conclusion of the next Annual General Meeting of the Company or the date by which the next Annual General Meeting of the Company is required by law to be held or 31 December [See Explanatory Note (iii)] (Resolution 9) By Order of the Board Nicole Tan Siew Ping / Nathaniel Chelvarajah Vanniasingham Company Secretaries Singapore, 9 June 2010 Explanatory Notes: (i) Mr Yee Kit Hong will, upon re-election as a Director of the Company, remain as Chairman of Audit Committee, member of Nominating Committee and Remuneration Committee. Mr Yee Kit Hong will be considered independent. Mr M. Rajaram will, upon re-election as a Director of the Company, remain as Chairman of Nominating Committee, member of Audit Committee and Remuneration Committee. Mr M. Rajaram will be considered independent. Mr Guok Chin Huat Samuel will, upon re-election as a Director of the Company, remain as Chairman of Remuneration Committee, member of Audit Committee and Nominating Committee. Mr Guok Chin Huat Samuel will be considered independent. (ii) Resolution 8, if passed, will empower the Directors of the Company from the date of this Meeting until the date of the next Annual General Meeting of the Company, or the date by which the next Annual General Meeting of the Company is required by law to be held or such authority is varied or revoked by the Company in a general meeting, whichever is the earlier, to issue shares, make or grant instruments convertible into shares and to issue shares pursuant to such instruments, up to a number not exceeding, in total, 50% of the total number of issued shares (excluding treasury shares) in the capital of the Company, of which up to 20% may be issued other than on a pro rata basis to existing shareholders of the Company save that such number shall be up to 100% of the total number of issued shares (excluding treasury shares) in the capital of the Company in relation to a pro rata renounceable rights issue to existing shareholders for issue on or before 31 December Global Palm Resources Annual Report 2009

93 Notice of Annual General Meeting For determining the aggregate number of shares that may be issued, the percentage of issued shares in the capital of the Company will be calculated based on the total number of issued shares (excluding treasury shares) in the capital of the Company at the time the Resolution is passed after adjusting for new shares arising from the conversion or exercise of the Instruments or any convertible securities, the exercise of share options or the vesting of share awards outstanding or subsisting at the time when this Resolution is passed and any subsequent consolidation or subdivision of shares. The 100% renounceable pro rata rights issue limit was a measure implemented by the Singapore Exchange Securities Trading Limited (the SGX-ST ) as stated in a press release entitled SGX introduces further measures to facilitate fund raising dated 19 February 2009 which became effective on 20 February 2009 and will expire on 31 December 2010 (the Press Release ). The measure provides directors with an opportunity to raise funds and avoid prolonged market exposure by reducing the time taken for shareholders approval, in the event the need arises. Minority shareholders interests are mitigated as all shareholders have equal opportunities to participate and can dispose their entitlements through trading of nil-paid rights if they do not wish to subscribe for their rights shares. It is subject to the condition that the company makes periodic announcements on the use of the proceeds as and when the funds are materially disbursed and provides a status report on the use of proceeds in the annual report. (iii) Another measure implemented by the SGX-ST stated in the Press Release empowers directors to issue shares other than on a pro rata basis at a discount of not more than 20% to the weighted average price per share determined in accordance with the requirements of the SGX-ST. Notes: 1. A Member shall not be entitled to appoint more than 2 proxies to attend and vote at the Annual General Meeting ( AGM ), provided that if the Member is a Depositor, the Company shall be entitled and bound: (a) (b) to reject any instrument of proxy lodged if the Depositor, is not shown, to have any shares entered against his name in the Depository Register as at 48 hours before the time of the AGM as certified by The Central Depository (Pte) Limited ( CDP ) to the Company; and to accept as the maximum number of votes which in aggregate the proxy or proxies appointed by the Depositor is or are able to cast on a poll a number which is the number of shares entered into against the name of that Depositor in the Depository Register as at 48 hours before the time of the AGM as certified by CDP to the Company, whether that number is greater or smaller than the number specified in any instrument of proxy executed by or on behalf of that Depositor. Where a Member appoints more than one proxy, the Member shall specify the proportion of his shares to be represented by each such proxy, failing which the nomination shall be deemed to be alternative. A proxy need not be a Member of the Company. 2. An instrument appointing a proxy must be left at the registered office, 105 Cecil Street, #16-03, The Octagon, Singapore , not less than 48 hours before the time appointed for the holding of the AGM or adjourned meeting or (in the case of a poll taken otherwise than at or on the same day as the meeting or adjourned meeting) for the taking of the poll at which it is to be used, and in default shall not be treated as valid. Global Palm Resources Annual Report

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95 GLOBAL PALM RESOURCES HOLDINGS LIMITED (Company Registration No M) (Incorporated In the Republic of Singapore) PROXY FORM (Please see notes overleaf before completing this Form) IMPORTANT: 1. For investors who have used their CPF monies to buy Global Palm Resources Holdings Limited s shares, this Report is forwarded to them at the request of the CPF Approved Nominees and is sent solely FOR INFORMATION ONLY. 2. This Proxy Form is not valid for use by CPF investors and shall be ineffective for all intents and purposes if used or purported to be used by them. 3. CPF investors who wish to attend the Meeting as an observer must submit their requests through their CPF Approved Nominees within the time frame specified. If they also wish to vote, they must submit their voting instructions to the CPF Approved Nominees within the time frame specified to enable them to vote on their behalf. I/We, of being a member/members* of Global Palm Resources Holdings Limited (the Company ), hereby appoint: Name NRIC/Passport No. Proportion of Shareholdings No. of Shares % Address and/or (delete as appropriate) Name NRIC/Passport No. Proportion of Shareholdings No. of Shares % Address or failing the person, or either or both of the persons, referred to above, the Chairman of the Meeting as my/our* proxy/proxies* to vote for me/us on my/our behalf at the Annual General Meeting (the Meeting ) of the Company to be held at Raffles City Convention Centre - Orchard Room, Level 4, 252 North Bridge Road, Singapore on 24 June 2010 at 3.00pm and at any adjournment thereof. I/We* direct my/our* proxy/proxies* to vote for or against the Resolutions proposed at the Meeting as indicated hereunder. If no specific direction as to voting is given or in the event of any other matter arising at the Meeting and at any adjournment thereof, the proxy/proxies will vote or abstain from voting at his/her* discretion. The authority herein includes the right to demand or to join in demanding a poll and to vote on a poll. (Please indicate your vote For or Against with a tick [ ] within the box provided.) No. Resolutions relating to: For Against 1 Directors Report and Audited Accounts for the year ended 31 December Re-election of Thomas Agap Lim as a Director 3 Re-election of Yee Kit Hong as a Director 4 Re-election of M. Rajaram as a Director 5 Re-election of Guok Chin Huat Samuel as a Director 6 Approval of Directors fees amounting to S$155,000 for financial year ending 31 December Re-appointment of Messrs BDO LLP as Auditors 8 Authority to issue new shares 9 Authority to issue new shares other than pro-rata at a discount Dated this day of 2010 Signature of Shareholder(s) or Common Seal of Corporate Shareholder Total number of Shares in: (a) CDP Register (b) Register of Members No. of Shares *Delete where inapplicable

96 Notes: 1. Please insert the total number of shares held by you. If you have shares entered against your name in the Depository Register (as defined in Section 130A of the Companies Act, Chapter 50 of Singapore), you should insert that number of shares. If you have shares registered in your name in the Register of Members, you should insert that number of shares. If you have shares entered against your name in the Depository Register and shares registered in your name in the Register of Members, you should insert the aggregate number of shares entered against your name in the Depository Register and registered in your name in the Register of Members. If no number is inserted, the instrument appointing a proxy or proxies shall be deemed to relate to all the shares held by you. 2. A Member shall not be entitled to appoint more than 2 proxies to attend and vote at the Annual General Meeting ( AGM ), provided that if the Member is a Depositor, the Company shall be entitled and bound: (a) (b) to reject any instrument of proxy lodged if the Depositor, is not shown, to have any shares entered against his name in the Depository Register as at 48 hours before the time of the AGM as certified by The Central Depository (Pte) Limited ( CDP ) to the Company; and to accept as the maximum number of votes which in aggregate the proxy or proxies appointed by the Depositor is or are able to cast on a poll a number which is the number of shares entered into against the name of that Depositor in the Depository Register as at 48 hours before the time of the AGM as certified by CDP to the Company, whether that number is greater or smaller than the number specified in any instrument of proxy executed by or on behalf of that Depositor. Where a Member appoints more than one proxy, the Member shall specify the proportion of his shares to be represented by each such proxy, failing which the nomination shall be deemed to be alternative. A proxy need not be a Member of the Company. 3. An instrument appointing a proxy must be left at the registered office, 105 Cecil Street, #16-03, The Octagon, Singapore , not less than 48 hours before the time appointed for the holding of the AGM or adjourned meeting or (in the case of a poll taken otherwise than at or on the same day as the meeting or adjourned meeting) for the taking of the poll at which it is to be used, and in default shall not be treated as valid. 4. An instrument appointing a proxy for any Member shall be in writing in any usual or common form or in any other form which the Directors may approve and: (a) (b) in the case of an individual Member, shall be signed by the Member or his attorney duly authorised in writing; and in the case of a Member which is a corporation shall be either given under its common seal or signed on its behalf by an attorney duly authorised in writing or a duly authorised officer of the corporation. The signatures on an instrument of proxy need not be witnessed. Where an instrument appointing a proxy is signed on behalf of a Member by an attorney, the letter or power of attorney or a duly certified copy thereof shall (failing previous registration with the Company) be lodged with the instrument of proxy pursuant to the Articles of Association of the Company, failing which the instrument of proxy may be treated as invalid. 5. Any corporation which is a Member of the Company may by resolution of its Directors or other governing body authorize such person as it thinks fit to act as its representative at the AGM. The person so authorised shall be entitled to exercise the same powers on behalf of such corporation as the corporation could exercise if it were an individual Member of the Company. General: The Company shall be entitled to reject the instrument appointing a proxy or proxies if it is incomplete, improperly completed or illegible, or where the true intentions of the appointor are not ascertainable from the instructions of the appointor specified in the instrument appointing a proxy or proxies.