DJ REA Finance B.V.: Annual accounts for 2019
REA Finance B.V. (RE20)
REA Finance B.V.: Annual accounts for 2019
16-Jun-2020 / 14:13 GMT/BST
Dissemination of a Regulatory Announcement that contains inside information
according to REGULATION (EU) No 596/2014 (MAR), transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
Report of the management
Management herewith presents to the shareholder the audited accounts of REA
Finance B.V. (hereinafter "the Company") for the year 2019.
General
The Company is a private company with limited liability incorporated under
the laws of the Netherlands and acts as a finance company. The ultimate
holding company is R.E.A. Holdings plc (hereinafter "REAH"), London, United
Kingdom. The REAH group is principally engaged in the cultivation of oil
palms in the province of East Kalimantan in Indonesia and in the production
of crude palm oil ("CPO") and by-products from fruit harvested from its oil
palms.
The annual accounts have been prepared in British Pounds ("GBP"). The reason
for using GBP instead of euros, is that the majority of the transactions
within the Company occur in GBP. However, the 2019 REAH Annual Report
sections contain United States dollars ("USD") numbers as that is the
reporting currency of the group.
Overview of the activities
At 1 January 2019 the Company had outstanding GBP30,852,000 8.75 per cent
guaranteed sterling notes 2020 (the "2020 sterling notes").
At 1 January 2019 the Company also had a loan receivable from REAH (the
"Loan") of GBP31,327,000 bearing interest at 8.9283 per cent and repayable on
20 August 2020.
During the period under review the Company received interest on the Loan
from the Company to REAH and paid interest to the noteholders of the 2020
sterling notes.
At 31 December 2019 the Company had outstanding GBP30,852,000 2020 sterling
notes and the Loan of GBP31,327,000 to REAH bearing interest at 8.9283 per
cent. The 2020 sterling notes and the Loan are repayable on 20 August 2020.
On 31 March 2020, a general meeting of holders of the sterling notes agreed
proposals to extend the repayment date of the sterling notes to 31 August
2025. As consideration for this, the sterling notes will now be repayable at
GBP1.04 per GBP1.00 nominal on 31 August 2025 and REAH has issued to noteholders
4,010,760 warrants each such warrant entitling the holder to subscribe, for
a period of five years, one new ordinary share in the capital of REAH at a
subscription price of GBP1.26 per share.
As a consequence the Company has agreed with REAH that the Loan will be
repayable on the same date. The terms and conditions have not changed in
comparison with the previous version.
Results
The net asset value of the Company as at 31 December 2019 amounts to
GBP1,012,473 (31 December 2018: GBP964,105). The result for 2019 is a profit of
GBP48,368 (2018: profit of GBP43,955).
Going concern
Finance section of the Strategic report
In the Finance and Governance sections of the Strategic Report included in
the 2019 Annual Report of REAH the directors have made the following
statements regarding future viability:
"Liquidity and financing adequacy
The group reported an operational loss for 2019 of $9.1 million compared
with $10.7 million in 2018. In operational terms, performance was
satisfactory with crops slightly below budget but nevertheless at acceptable
levels. However, for most of the year the group had to contend with a low
CPO price. Steps were taken to reduce costs and, whilst these had a limited
impact in 2019, the group is aiming for a reduction in 2020 of some $10
million against the level of costs that would have been incurred without the
cost saving measures.
The last quarter of 2019 saw the beginning of a long awaited recovery in CPO
prices and moving into January 2020 the price continued to firm. With
vegetable oil consumption exceeding supply and stocks of CPO falling, the
group was optimistic that CPO prices would continue at higher levels and
that this would enable it to rebuild much needed liquidity. Unfortunately,
this was not to be because with the arrival of Covid-19, prices of CPO
started to fall away to the extent that the price CIF Rotterdam now stands
at $525 per tonne at 5 May 2020 against $860 per tonne at the beginning of
January 2020.
Crop production in 2020 is slightly ahead of budget. The group's extension
planting programme has been deferred and the group is planning to minimise
capital expenditure in 2020. At current CPO prices the group would hope to
be able to operate at slightly above a cash break even position over the
year as a whole, excluding debt repayments and preference dividends. With
crops weighted to the July to December period, unit cash costs are normally
lower in the second half of each year than in the first half, but average
selling prices for the first half of 2020 will benefit from the higher CPO
prices prevailing at the start of the year, see page 7 of the Group
financial statements. As noted under "Capital structure" above, the group
has recently agreed to postpone the repayment date of the sterling notes to
2025 and has also agreed to defer all loan repayments due to the
non-controlling shareholder until 2025. The dollar notes are not due to be
repaid until 2022. However, the group does have repayments falling due on
its indebtedness to Mandiri.
The group has had extensive negotiations with Mandiri over the past twelve
months with a view to obtaining additional loans sufficient to finance the
repayments falling due on its existing Indonesian rupiah borrowings.
However, following measures to control the spread of Covid-19 (including the
closure of bank offices), the group has been informed that all state banks
have ceased new lending. The group is therefore now seeking the agreement of
Mandiri to reschedule repayments due on the group's existing loans from
Mandiri. The latter has confirmed its willingness to discuss such
rescheduling.
In order to ensure availability of sufficient mill capacity to meet
projected increases in FFB mill throughput, the group is proceeding with
completion of the extension of its newest oil mill and the works to enhance
the efficiency of the two older mills. Following the sale of PBJ, no further
mills will be required for the foreseeable future. This should mean that as
cash flows recover, increased cash generation can be used to reduce debt
levels. Commencement of quarrying of the andesite stone concession and
possible resumption of mining at the Kota Bangun coal concession may provide
additional sources of cash through the repayment of loans due to the group.
For some time, the group has been hoping to reorganise its local bank
borrowings by converting Indonesian rupiah borrowings to dollar borrowings
which attract a lower rate of interest than rupiah borrowings. In the event,
this has not to-date proved possible which, as it transpires, is fortuitous
because in the period since 1 January, the rupiah fell from $1 = Rp13,901 to
$1 = Rp16,500, though has since recovered to $1 = Rp15,000. Based on the
group's opening balances due to Mandiri equivalent to $126.9 million, at an
exchange rate of $1 = Rp15,000, the group's indebtedness to Mandiri will
have been reduced by approximately $9 million. Moreover, the dollar
equivalent of the rupiah interest cost will have been reduced
proportionately.
As noted under "Capital structure" above, as at 31 December 2019, the group
held cash of $9.5 million but against that had material indebtedness, in the
form of bank loans and listed notes. Unless postponed as proposed above,
some $19.2 million of bank term indebtedness falls due for repayment during
2020 and a further $40.4 million over the period 2021 and 2022. In June
2022, $27.0 million of dollar notes will become repayable and in August
2025, GBP30.9 million ($40.5 million at current exchange rates) of sterling
notes will become repayable at a premium of 4 per cent of par.
Provided that CPO prices recover back to the levels prevailing at the start
of 2020, the directors believe that the group's cash generation capabilities
can be aligned with its cash requirements. However, the group faces serious
risks not only in relation to the timing of a recovery in CPO prices, but
also in relation to the possible operational impacts of Covid-19 which may
restrict estate operations and the group's ability to deliver CPO and CPKO
to its buyers although this is not currently an issue.
The group's oil palms fruit continuously throughout the year and there is
therefore no material seasonality in the funding requirements of the
agricultural operations in their ordinary course of business. It is not
expected that development of the stone and coal interests will cause any
material swings in the group's utilisation of cash for the funding of its
routine activities.
Going concern (excerpt)
However, following the recent Covid-19 pandemic, the CPO price has fallen
from $860 per tonne CIF Rotterdam at 1 January 2020 to $540 on 30 April
2020. Further there is the possibility of operational disruption should the
existing lockdown in Indonesia be extended in a way that would reduce or
halt group production or restrict the group's ability to deliver its
production to customers (although it should be noted that the current
lockdown in Indonesia explicitly excludes agricultural business). In these
circumstances, the group could experience liquidity issues and might require
waivers from Mandiri to avoid breaching bank covenants. However, in this
downside scenario, the directors expect that Mandiri would be receptive to
requests to adjust the terms of its loans to the group to an extent that
reflects the fact that the issues to be addressed will have arisen as a
result of Covid-19 and will be short term in nature, especially given that
Covid-19 should not impact on the group's longer-term prospects once the CPO
price returns to pre Covid-19 levels.
For these reasons, the directors have concluded that it is appropriate to
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prepare the financial statements on a going concern basis. However, as the
CPO price and prospective liquidity issues under the downside scenario are
not wholly within management's control, these factors represent a material
uncertainty which may cast significant doubt upon the group's and the
company's continued ability to operate as a going concern, such that they
may be unable to realise their assets and discharge their liabilities in the
normal course of business."
Accordingly, the directors have a reasonable expectation that the group and
the Company have adequate resources to continue in operational existence for
the period to 31 December 2022 and to remain viable during that period.
Risks and uncertainties
The principal risks and uncertainties facing the Company relate to the due
performance by REAH of its obligations under the loan agreement with the
Company. Any shortfall in performance would impact negatively on the
Company's ability to meet its obligations to the holders of the 2020
sterling notes. The exposure of the Company towards the sterling noteholders
in the event of any shortfall in the collection of the loan to REAH is
limited by:
· the guarantee given by REAH and R.E.A. Services Limited ("REAS"), a
subsidiary company of REAH incorporated in the United Kingdom, in favour
of the noteholders; and
· the Limited Recourse Agreement dated 29 November 2010 and made between
the Company, REAH and REAS (the "LRA").
The LRA reflects the intention of the parties thereto that the Company, in
relation to its financing activities, should (i) meet the minimum risk
requirements of article 8c, paragraph 2, of the Dutch Corporate Income Tax
Act and (ii) not be exposed to risk in excess of the Minimum Risk Amount
("MRA"). For these purposes the MRA is 1 per cent of the aggregate amounts
outstanding under the loan agreement between the Company and REAH. In
relation to point (i) above, the Company's capital and reserves as at 31
December 2018 and as at 31 December 2019 complied with the minimum risk
requirements of article 8c, paragraph 2, of the Dutch Corporate Income Tax
Act. In addition, pursuant to the LRA, REAH and REAS limited their rights of
recourse against the Company in respect of any calls upon their guarantee of
the 2020 sterling notes.
In the Risks and uncertainties section of the Strategic Report included in
the 2019 Annual Report of REAH the directors have made the following
statement:
"In addition to the risks that have long been normal aspects of its
business, the group currently faces potential impacts from the Covid-19
pandemic. This pandemic is unprecedented in the history of the group and
there are therefore no precedents against which the risks that it entails
can be assessed. At this juncture, there has been no material adverse impact
on the group's day to day operations although there has been a negative
impact on markets for CPO and CPKO, the extent of which is covered elsewhere
in this "Strategic report". Potential further consequences of Covid-19 could
include adverse effects on employee health, loss of production and inability
to make deliveries of palm products. Each of these could then negatively
affect the group's finances. The group's ability to withstand such negative
financial impact will be dependent upon the continuing support of its
stakeholders which cannot be predicted.
The risks detailed below as relating to "Agricultural operations -
Expansion" and "Stone and coal interests" are prospective rather than
immediate material risks because the group is currently not expanding its
agricultural operations and the stone and coal concessions in which the
group holds interests are not currently being mined. However, such risks
will apply when, as is contemplated, expansion and mining are resumed or
commence. The effect of an adverse incident relating to the stone and coal
interests, as referred to below, could impact the ability of the stone and
coal companies to repay their loans.
Material risks, related policies and the group's successes and failures with
respect to environmental, social and governance matters and the measures
taken in response to any failures are described in more detail under
"Sustainability" in the annual report.
Where risks are reasonably capable of mitigation, the group seeks to
mitigate them. Beyond that, the directors endeavour to manage the group's
finances on a basis that leaves the group with some capacity to withstand
adverse impacts from identified areas of risk but such management cannot
provide insurance against every possible eventuality.
The directors have carefully reviewed the potential impact on its operations
of the various possible outcomes to the current discussions on the
termination of UK membership of the European Union ("Brexit"). The directors
expect that certain outcomes may result in a movement in sterling against
the US dollar and Indonesian rupiah with consequential impact on the group
dollar translation of its sterling costs and sterling liabilities. The
directors do not believe that such impact (which could be positive or
negative) would be material in the overall context of the group. Were there
to be an outcome that resulted in a reduction in UK interest rates, this may
negatively impact the level of the technical provisions of the REA Pension
Scheme but given the Scheme's estimated funding position, the directors do
not expect that this impact would be material in the overall context of the
group. Beyond this, and considering that the group's entire operations are
in Indonesia, the directors do not see Brexit as posing a significant risk
to the group.
The directors have considered the potential impact on the group of global
climate change. Between 5 and 10 per cent of the group's existing plantings
are in areas that are low lying and prone to flooding if not protected by
bunding. Were climate change to cause an increase in water levels in the
rivers running though the estates, this could be expected to increase the
requirement for bunding or, if the increase was so extreme that bunding
became impossible, could lead to the loss of low lying plantings. Changes to
levels and regularity of rainfall and sunlight hours could also adversely
affect production. However, it seems likely that any climate change impact
negatively affecting group production would similarly affect many other oil
palm growers in South East Asia leading to a reduction in CPO and CPKO
supply. This would be likely to result in higher prices for CPO and CPKO
which should provide at least some offset against reduced production."
Financial instruments
In carrying out its financing activities, it is the policy of the Company to
minimise exposure to interest and exchange rate fluctuations by ensuring
that loans are denominated in the same currency as the financing sources
from which such loans are funded and that interest receivable on such loans
is based on a formula from which the Company derives a fixed margin over the
cost of funding. In addition, the Company relies on the arrangements
described under "Risks and uncertainties" above to limit its exposure to
loss.
The Company does not enter into or trade other financial instruments for any
purpose.
The Company's overheads are denominated mostly in euros and GBP. The fixed
margin referred to above, which is derived in GBP, is formulated to cover
all the overheads and to leave a residual margin as compensation for
assuming the limited risk under the LRA. The Company does not seek to hedge
the minimal foreign currency risk implicit in these arrangements.
The principal credit risk is described below. Deposits of surplus cash
resources are only made with banks with high credit ratings.
Credit risk
All borrowings are lent to REAH the parent company, see Risks and
uncertainties page 7 as respects the guarantee from the parent.
The loan to REAH is GBP31.3 million (2018: GBP31.3 million). The remuneration of
the Company on the loan is consistent with the arm's length principle. The
level of remuneration reflects the functions performed and risk assumed by
the Company in relation to the interest payments. The interest receivable on
the loan is based on a formula from which the Company derives a fixed margin
over the cost of funding. The credit risk is monitored on a regular basis by
the Company. The risk is monitored by assessing on a regular basis whether
the future cash flows from the plantation subsidiaries of the group are
sufficient to repay the loan to REAH or not, which is explained in detail in
Estimate, note no. 2.3 of the financial statement.
Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in
meeting the obligations associated with its financial liabilities that are
settled by delivering cash or another financial asset. The Company's
approach to managing liquidity is to ensure, as far as possible, that it
will always have sufficient liquidity to meet its liabilities when due,
under both normal and stressed conditions, without incurring unacceptable
losses or risking damage to the Company's financial results.
Cashflow risk
Cash flow risk relates to the risks regarding cash flows during the period.
By managing the liquidity risk the cash flow risk is covered as well.
Currency risk
Currency risk is the risk that the value of financial instruments will
fluctuate due to changes in foreign exchange rates. Currency risk arises
when future commercial transactions and recognised assets and liabilities
are denominated in a currency that is not the Company's measurement
currency. Since the main transactions of the Company occur in GBP, the
currency risk is considered to be low.
Interest rate risk
The Company's interest rate risk is the risk which relates to the interest
percentages used for the sterling notes and loan to the parent company.
Since the interest rate on the notes as well as the loan is fixed and the
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Company earns a margin on the loan, the interest rate risk is considered to
be limited.
Fair value of the notes
The fair value of the sterling notes has been estimated by management to be
GBP27.8 million (2018: GBP31.3 million) based on the latest price at which the
sterling notes were traded prior to the balance date. This price was 90
percent of the current value of the notes of GBP30.9 million. The value of the
sterling notes was therefore determined by prevailing market conditions at
the time of such trades.
Fair value of the loan to the parent company
The fair value of the loan to the parent company is based on the same
valuation as the sterling notes, the fair value is GBP28.2 million (2018:
GBP31.8 million).
Employees
During 2019, the Company did not employ personnel nor in the previous years.
Research and development
The Company does not perform any research and development.
Audit Committee
In August 2008 the Dutch Act on the Supervision of Accounting Firms (Wet
Toezicht Accountantsorganisaties) ("ASAF") was amended. This resulted in a
wider definition of a public interest entity (organisatie van openbaar
belang) ("PIE"). All Dutch entities which have issued listed debt are now
considered to be PIEs. In addition on August 8, 2008, an implementing
regulation (algemene maatregel van bestuur) ("IR") came into force in the
Netherlands, enacting Article 41 of European Directive no. 2006/43/EG (the
"ED"), regarding legislative supervision of annual reports and consolidated
financial statements. This IR obliges all PIEs to establish an audit
committee ("AC").
The AC is formed by members of the Company's supervisory board ("SB") or by
non-executive management board members. Because the Company falls within the
definition of a PIE it is in principle obliged to establish an AC. Although
the ED provides certain exemptions for establishing an AC. One of those
exceptions can be applied if REA Holdings plc has an audit committee that
applies Directive 2006/43 / EC and Regulation 537/2014. Also, the audit
committee must further supervise REA Finance B.V. on the elements referred
to in article 2 paragraph of the Besluit instelling auditcommissie. Since
REA Holdings plc has an audit committee in place, the Company does not have
to have an audit committee in place.
In view of the above reasons, management currently does not consider it to
be in the Company's best interest, nor has it taken steps, to implement an
AC.
Future outlook
Management is of the opinion that the present level of activities will be
maintained during the next financial year. Management expects that the
average number of employees will not change during the next financial year.
Management representation statement
Management declares that, to the best of its knowledge, the annual accounts
prepared in accordance with the applicable set of accounting standards give
a true and fair view of the assets, liabilities, financial position and
profit or loss of the Company and that the Report of the management includes
a fair review of the development and performance of the business and the
financial position of the Company, together with a description of the
principal risks and uncertainties it faces.
Amstelveen, 12 June 2020
The executive board:
Apex Financial Services B.V.
FINANCIAL STATEMENTS
Balance sheet as of 31 December 2019
(After result appropriation)
ASSETS Notes 2019 2018
GBP GBP
Fixed assets
Financial fixed assets 1
Loan to parent - 31,3
company 27,0
00
- 31,3
27,0
00
Current assets
Receivables
Loan to parent company 2 31,3 -
27,0
00
Receivable from parent company 3 537, 418,
801 167
Taxes 4 4,96 11,8
8 56
31,8 430,
69,7 023
69
Cash 5 40,1 87,9
23 35
Total assets 31,9 31,8
09,8 44,9
92 58
SHAREHOLDER'S EQUITY AND
LIABILITIES
Shareholder's 6
equity
Issued share 15,3 16,2
capital 73 10
Share premium 475, 475,
reserve 000 000
Translation (3,1 (3,9
reserve 49) 86)
Other reserves 525, 476,
249 881
1,01 964,
2,47 105
3
Long term 7
liabilities
Other debts - 30,8
52,0
00
- 30,8
52,0
00
Current liabilities
Accounts 8 471 471
payable
Taxes 9 264 300
Other debts 10 30,8 -
52,0
00
Accrued liabilities 11 44,6 28,0
84 82
30,8 28,8
97,4 53
19
Total shareholder's equity and 31,9 31,8
liabilities 09,8 44,9
92 58
Profit and loss account 2019
Notes 2019 2018
GBP GBP
Other operating income 12 54,5 23,7
10 65
Gross operating result 54,5 23,7
10 65
Other operating costs 13 97,2 67,6
13 17
Total operating costs 97,2 67,6
13 17
Operating result (42, (43,
703) 852)
Interest income 14 2,80 2,86
2,47 5,16
9 0
Interest expenses 15 (2,6 (2,7
99,5 66,3
50) 64)
Total financial income and expenses 102, 98,7
929 96
Result before taxation 60,2 54,9
26 44
Taxation 16 (11, (10,
858) 989)
Result after taxation 48,3 43,9
68 55
NOTES TO THE FINANCIAL STATEMENTS
General
REA Finance B.V. (the "Company") is a private company with limited
liability, incorporated under Dutch law on 7 November 2006, having its
corporate seat at Amsterdam, the Netherlands with offices at Van Heuven
Goedhartlaan 935A, 1181 LD Amstelveen.
The Company has been registered at the Chamber of Commerce under file number
34259527.
Basis of preparation
The accounts have been prepared on a going concern basis. However, following
the recent Covid-19 pandemic, the CPO price has fallen from $860 per tonne
CIF Rotterdam at 1 January 2020 to $540 on 30 April 2020. Further there is
the possibility of operational disruption should the existing lockdown in
Indonesia be extended in a way that would reduce or halt group production or
restrict the group's ability to deliver its production to customers
(although it should be noted that the current lockdown in Indonesia
explicitly excludes agricultural business). In these circumstances, the
group could experience liquidity issues and might require waivers from
Mandiri to avoid breaching bank covenants. However, in this downside
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scenario, the directors expect that Mandiri would be receptive to requests
to adjust the terms of its loans to the group to an extent that reflects the
fact that the issues to be addressed will have arisen as a result of
Covid-19 and will be short term in nature, especially given that Covid-19
should not impact on the group's longer-term prospects once the CPO price
returns to pre Covid-19 levels.
For these reasons, the directors have concluded that it is appropriate to
prepare the financial statements on a going concern basis. However, as the
CPO price and prospective liquidity issues under the downside scenario are
not wholly within management's control, these factors represent a material
uncertainty which may cast significant doubt upon the group's and the
company's continued ability to operate as a going concern, such that they
may be unable to realise their assets and discharge their liabilities in the
normal course of business.
Activities
The principal activity of the Company is to act as a finance company.
The Company has received proceeds from the issue of sterling notes which
have been used to grant a loan to its parent company, R.E.A. Holdings plc
("REAH").
Staff members
During the year 2019 an average of nil employees has been in service on base
of a fulltime employment. The year 2018 counted nil employees.
Group structure
The Company is wholly owned by its parent company, REAH, United Kingdom.
Estimates
In the application of the Company's accounting policies management are
required to make judgements, estimates and assumptions; these are based on
historical experience and other factors that are considered to be relevant,
and are reviewed on a regular basis. Actual values of assets and amounts of
liabilities may differ from estimates. Revisions to estimates are recognised
in the period in which the estimates are revised. The key source of
estimation uncertainty at the balance sheet date which has a significant
risk of causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year is the loan to REAH.
Management make considered assessments in terms of the recoverability of the
GBP31.3 million intercompany loan (2018: GBP31.3 million) and whether impairment
is required. The key tool used in this assessment is the annual impairment
review of plantation assets disclosed in the 2019 Annual Report of REAH, as
the loan will ultimately be repaid from funds lent to the plantation
subsidiaries.
Plantation assets (including property plant and equipment, land, intangible
assets and goodwill) are carried at $444.0 million in the consolidated
balance sheet. At 31 December 2019 each plantation company in the REAH group
has been identified as a cash generating unit and tested for impairment by
calculating the value in use over a 25 year plantation cycle and deriving a
net present value. The key assumptions in the model used are the CPO selling
prices assumed and the discount rate applied. The base model assumed average
selling prices based on World Bank forecasts for the next 10 years
extrapolated for 25 years and adjusted to FOB Samarinda (commencing with a
price of $560 per tonne in 2020). Viewing the group's plantation assets as a
whole if there was an expectation that the price would be $550 per tonne
over the next 25 years then an impairment of $6 million would be required
being the difference between the carrying value of the assets and the value
in use. The average price in 2019 was $460 per tonne while the average price
of the past ten years was $628. The average price from 1 January 2020 to 30
April 2020 was $692. The discount rate applied was 10.7 per cent (on a
pre-tax basis). Using the base model projection to CPO selling prices, if a
2 per cent higher discount rate was assumed, there would be no impairment
when viewing the group's plantation assets as a whole but there would be
impairments against certain of the individual plantations in aggregate of $5
million.
Whilst any restriction on harvesting, processing and evacuation of palm
products as a result of Covid-19 would have a negative impact on the group's
cash flow, in the opinion of the directors it would be unlikely to require
impairment of the plantations because plantation assets are generally valued
by reference to their long term potential not short term factors and any
such restriction would be unlikely to damage the productive capacity of the
estates.
Based on assessment carried out by management, the underlying cash flows
from the plantation business will be sufficient to repay the aforesaid
intercompany loan, hence no impairment on the intercompany loan is
necessary.
Related parties
All legal entities that can be controlled, jointly controlled or
significantly influenced are considered to be a related party. Also entities
which can control the Company are considered to be a related party. In
addition, statutory directors, other key management of REA Finance B.V. or
the ultimate parent company of the Company and close relatives are regarded
as related parties.
Foreign currency
Functional currency
The annual accounts have been prepared in British pounds ("GBP"). The reason
for using GBP instead of euros, is that the majority of the transactions
within the Company occur in GBP. Receivables, debts and obligations in
foreign currencies are converted at the rate as of the balance sheet date.
Foreign currency transactions during the reporting period are processed in
the annual accounts at the settlement rate. Any rate differences are
incorporated in the profit and loss account, except the exchange result on
the shares of the Company. These are being accounted for through the
translation reserve.
Cash flow statement
The annual accounts for 2019 of the Company's ultimate holding company
(REAH) include a consolidated
cash flow statement for the group as a whole. Accordingly, the Company has
elected to use the exemption
provided under RJ 360.104 and does not present its own cash flow statement.
The annual report of REAH can
be obtained from the website www.rea.co.uk [1].
ACCOUNTING POLICIES APPLIED TO THE VALUATION OF ASSETS AND LIABILITIES
General
The Company applies Dutch Accounting standards, and complies with the
financial reporting requirements included in Part 9 of Book 2 of the Dutch
Civil code. The financial statements are prepared under the historical cost
convention and presented in British pounds (GBP).
Valuation of assets and liabilities and determination of the result take
place under the historical cost convention. Unless mentioned otherwise at
the relevant principle for the specific balance sheet item, assets and
liabilities are presented at face value.
Loan to parent company and receivables
Receivables recognised under financial fixed assets and current assets are
initially measured at the fair value less transaction cost (if material).
These receivables are subsequently measured at amortised cost. For
determining the value, any impairments are is taken into account.
The receivables from and loans to participants and companies, as well as
other receivables, are measured at amortised cost, after deduction of
provisions deemed necessary.
Impairment of loans and receivables
The Company assesses at the end of each reporting period whether there is
objective evidence that a financial asset or a group of financial assets is
impaired. A financial asset or a group of financial assets is impaired and
impairment losses are incurred only if there is objective evidence of
impairment as a result of one or more events that occurred after the initial
recognition of assets ('a loss event') and the loss event has an impact on
the estimated future cash flows of the financial assets or group of
financial assets that can be reliably estimated.
The Company first assesses whether objective evidence of impairment exists.
The amount of loss is measured as the difference between the asset's
carrying amount and the present value of estimated future cash flows
(excluding future losses that have not been incurred) discounted at the
financial asset's original effective interest rate. The carrying amount of
the assets is reduced and the amount of the loss is recognised in the profit
and loss account.
If in the subsequent period the amount of the impairment loss decreases, and
the decreases can be related objectively to an event occurring after the
impairment was recognised, the reversal of the previously recognised
impairment loss is recognised in the statement of profit and loss account.
Cash
Cash is measured at nominal value and, insofar as not stated otherwise, is
at the free disposal of the company. Cash relates to immediately due and
payable withdrawal claims against credit institutions and cash resources.
Shareholder's equity
Share premium reserve
The share premium concerns the part of issued and paid-up capital that
exceeds the nominal value of issued shares.
Translation reserve
The revaluation of the issued share capital will be added/deducted to the
translation reserve.
Long-term liabilities
Long-term liabilities concern loans with a term of longer than one year. The
part of the loans that are repayable in the coming financial year, are
included under current liabilities.
On initial recognition long-term debts are recorded at fair value. After
initial recognition, non-current liabilities are measured at amortised cost.
Current liabilities
Current liabilities concern debts with a term of less than one year. Upon
initial recognition the current liabilities are recorded at the fair value
and subsequently measured at the amortised cost.
PRINCIPLES FOR THE DETERMINATION OF THE RESULT
General
The result is the difference between the realisable value of the services
provided and the costs and other charges during the year. The results on
transactions are recognised in the year in which they are realised.
Other operating income
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DJ REA Finance B.V.: Annual accounts for 2019 -5-
The other operating income relates to the reimbursement of expenses which
have been recharged to its parent company.
Operating costs
Costs are attributed to the financial year to which they relate. Profits are
accounted for in the year in which services have been performed. Losses are
assumed in the year in which these are foreseeable.
Financial income and expense
Interest income and interest expenses
Interest income and expenses are recognised on a pro rata basis, taking
account of the effective interest rate of the assets and liabilities to
which they relate.
Exchange differences
Currency translation differences arising upon the settlement or conversion
of monetary items are recognised in the income statement in the period that
they are realised.
Taxation
Tax on the result is calculated based on the result before tax in the profit
and loss account, taking account of the losses available for set-off from
previous financial years (to the extent that they have not already been
included in the deferred tax assets) and exempt profit components and after
the addition of non-deductible costs.
NOTES TO THE BALANCE SHEET
ASSETS
FIXED ASSETS
Financial fixed assets [1]
31 Dec 2019 31 Dec 2018
GBP GBP
Loan to parent company
Loan to R.E.A. Holdings plc - 31,327,000
2019 2018
GBP GBP
Loan to R.E.A. Holdings plc
Balance as of 1 January 31,327,000 32,327,000
Repayments - (1,000,000)
Reclassification to current assets (31,327,000) -
Balance as of 31 December - 31,327,000
The loan to REAH bears interest at 8.9283 per cent and is repayable on 20
August 2020. The loan represents the on-lending of proceeds from the issue
of the 2020 sterling notes on such terms that permit the Company to earn
such interest margin as is specified by the Advance Pricing Agreement. This
agreement was valid until 2018 and the same model has been used consistently
in 2019.
On 31 March 2020, a general meeting of holders of the sterling notes agreed
proposals to extend the repayment date of the sterling notes to 31 August
2025. As a consequence the Company has agreed with REAH to extend the loan
to 31 August 2025. The terms and conditions have not changed in comparison
with the previous version.
CURRENT ASSETS
Receivables
31 Dec 2019 31 Dec 2018
GBP GBP
Loan to parent company [2]
Loan to R.E.A. Holdings plc 31,327,000 -
2019 2018
GBP GBP
Loan to R.E.A. Holdings plc
Balance as of 1 January - -
Reclassification from fixed assets 31,327,000 -
Balance as of 31 December 31,327,000 -
31 Dec 2019 31 Dec 2018
GBP GBP
Receivable from parent company [3]
Current account receivable from 537,801 418,167
R.E.A. Holdings plc
The current account receivable from REAH is due within one year and bears no
interest.
Taxes [4] 2019 2018
GBP GBP
Corporate income tax 4,968 11,856
31 Dec 2019 31 Dec 2018
GBP GBP
Corporate income tax
Corporate income tax 2019 4,968 -
Corporate income tax 2018 - 11,856
4,968 11,856
Cash [5] 31 Dec 2019 31 Dec 2018
GBP GBP
Current account bank GBP 39,996 82,334
Current account bank EUR 127 5,601
40,123 87,935
The balance of the cash is available to the Company without any
restrictions.
SHAREHOLDER'S EQUITY AND LIABILITIES
SHAREHOLDER'S EQUITY [6]
2019 2018
GBP GBP
Issued shared capital
Balance as of 1 January 16,210 15,025
Revaluation (837) 1,185
Balance as of 31 December 15,373 16,210
The authorised share capital of the Company amounts to EUR 90,000 divided
into 90,000 shares of EUR 1 each, of which 18,000 shares have been issued
and fully paid-up. The share capital is recorded at the rate of exchange at
the balance sheet date. At 31 December 2019 the rate was GBP1 = EUR 1.17
(2018: GBP1 = EUR 1.11).
2019 2018
GBP GBP
Share premium reserve
Balance as of 31 December 475,000 475,000
2019 2018
GBP GBP
Translation reserve
Balance as of 1 January (3,986) (2,801)
Revaluation 837 (1,185)
Balance as of 31 December (3,149) (3,986)
2019 2018
GBP GBP
Other reserves
Balance as of 1 January 476,881 432,926
From proposal profit appropriation 48,368 43,955
Balance as of 31 December 525,249 476,881
Appropriation of result for the financial year 2018
The annual accounts for 2018 were adopted at the general meeting held on 29
April 2019. The general meeting determined the appropriation of the result
in accordance with the motion tabled for that purpose.
Proposed appropriation of result for the financial year 2019
The board of directors proposes to the general meeting concerning the result
for the financial year 2019 the next result appropriation:
2019 2018
GBP GBP
Result after taxation 48,368 43,955
Additive to the other reserves 48,368 43,955
This proposal has been already incorporated in the financial statements.
LONG-TERM LIABILITIES [7]
31 Dec 2019 31 Dec
2018
GBP GBP
Other debts
Sterling notes - 30,852,000
2019 2018
GBP GBP
Balance as of 1 January 30,852,000 31,852,000
Repayments - (1,000,000
)
Reclassification to current (30,852,000) -
liabilities
Balance as of 31 December - 30,852,000
The 8.75 per cent guaranteed sterling notes 2020 (the "2020 sterling notes")
are repayable on 31 August 2020. The guarantees have been given by REAH and
R.E.A. Services Limited in favour of the noteholders.
On 31 March 2020, a general meeting of holders of the sterling notes agreed
proposals to extend the repayment date of the sterling notes to 31 August
2025. As consideration for this, the sterling notes will now be repayable at
GBP1.04 per GBP1.00 nominal on 31 August 2025 and REAH has issued to noteholders
4,010,760 warrants each such warrant entitling the holder to subscribe, for
a period of five years, one new ordinary share in the capital of REAH at a
subscription price of GBP1.26 per share.
CURRENT LIABILITIES
31 Dec 2019 31 Dec 2018
GBP GBP
Accounts payable [8]
Accounts payable 471 471
31 Dec 2019 31 Dec 2018
GBP GBP
Taxes [9]
Value added tax 264 300
31 Dec 2019 31 Dec
2018
GBP GBP
Other debts [10]
Sterling notes 30,852,000 -
2019 2018
GBP GBP
Sterling notes
Balance as of 1 January - -
Reclassification from long-term 30,852,000 -
liabilities
Balance as of 31 December 30,852,000 -
Accrued liabilities [11] 31 Dec 2019 31 Dec 2018
GBP GBP
Accrual audit fees 42,684 25,743
Accrual tax advisory fees 2,000 2,339
44,684 28,082
FINANCIAL RISK MANAGEMENT
Financial instruments
In carrying out its financing activities, it is the policy of the Company to
minimise exposure to interest and exchange rate fluctuations by ensuring
that loans are denominated in the same currency as the financing sources
from which such loans are funded and that interest receivable on such loans
is based on a formula from which the Company derives a fixed margin over the
cost of funding. In addition, the Company relies on the arrangements
described under "Risks and uncertainties" above to limit its exposure to
loss.
The Company does not enter into or trade other financial instruments for any
purpose.
The Company's overheads are denominated mostly in euros and GBP. The fixed
margin referred to above, which is derived in GBP, is formulated to cover
all the overheads and to leave a residual margin as compensation for
assuming the limited risk under the LRA. The Company does not seek to hedge
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the minimal foreign currency risk implicit in these arrangements.
The principal credit risk is described below. Deposits of surplus cash
resources are only made with banks with high credit ratings.
Credit risk
All borrowings are lent to REAH the parent company. The principal risks and
uncertainties facing the Company relate to the due performance by REAH of
its obligations under the loan agreement with the Company. Any shortfall in
performance would impact negatively on the Company's ability to meet its
obligations to the holders of the 2020 sterling notes. The exposure of the
Company towards the sterling noteholders in the event of any shortfall in
the collection of the loan to REAH is limited by:
· the guarantee given by REAH and R.E.A. Services Limited ("REAS"), a
subsidiary company of REAH incorporated in the United Kingdom, in favour
of the noteholders; and
· the Limited Recourse Agreement dated 29 November 2010 and made between
the Company, REAH and REAS (the "LRA").
The loan to REAH is GBP31.3 million (2018; GBP31.3 million). The remuneration of
the Company on the loan to REAH is consistent with the arm's length
principle. The level of remuneration reflects the functions performed and
risk assumed by the Company in relation to the interest payments. The
interest receivable on the loan is based on a formula from which the Company
derives a fixed margin over the cost of funding. The credit risk is
monitored on a regular basis by the Company. The risk is monitored by
assessing on a regular basis whether the future cash flows from the
plantation subsidiaries of the group are sufficient to repay the loan to
REAH or not, which is explained in detail in Estimate, note no. 2.3 of the
financial statement.
Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in
meeting the obligations associated with its financial liabilities that are
settled by delivering cash or another financial asset. The Company's
approach to managing liquidity is to ensure, as far as possible, that it
will always have sufficient liquidity to meets its liabilities when due,
under both normal and stressed conditions, without incurring unacceptable
losses or risking damage to the Company's financial results.
Cash flow risk
Cash flow risk relates to the risks regarding cash flows during the period.
By managing the liquidity risk the cash flow risk is covered as well.
Currency risk
Currency risk is the risk that the value of financial instruments will
fluctuate due to changes in foreign exchange rates. Currency risk arises
when future commercial transactions and recognised assets and liabilities
are denominated in a currency that is not the Company's measurement
currency. Since the main transactions of the Company occur in GBP, the
currency risk is considered to be low.
Interest rate risk
The Company's interest rate risk is the risk which relates to the interest
percentages used for the sterling notes and loan to the parent company.
Since the interest rate on the notes as well as the loan is fixed and the
Company earns a margin on the loan, the interest rate risk is considered to
be limited.
Fair value of the notes
The fair value of the sterling notes has been estimated by management at
GBP27.8 million (2018: GBP31.3 million) based on the latest price at which the
sterling notes were traded prior to the balance date. This price was 90
percent of the current value of the notes of GBP30.9 million. The value of the
sterling notes was therefore determined by prevailing market conditions at
the time of such trades.
Fair value of the loan to parent company
The fair value of the loan to the parent company is based on the same
valuation as the sterling notes, the fair value is GBP28.2 million (2018:
GBP31.8 million).
NOTES TO THE PROFIT AND LOSS ACCOUNT
2019 2018
GBP GBP
Other operating income [12]
Other income 54,510 23,765
Operating costs [13]
General costs 97,213 67,617
General costs
Auditor's costs 41,299 26,897
Administrative costs 38,395 23,429
Notary costs 8,033 7,770
Tax advisory costs 5,575 5,498
Bank costs 2,609 2,614
VAT costs 1,302 1,409
97,213 67,617
Financial income and expenses
Interest income [14] 2019 2018
GBP GBP
Interest income from loan to 2,796,969 2,865,144
R.E.A. Holdings plc
Exchange differences 5,510 16
2,802,479 2,865,160
Interest
expenses [15]
Interest 2,699,550 2,766,364
expenses
sterling notes
Taxation [16]
Corporate 11,858 10,989
income tax
Subsequent events [17]
On 31 March 2020, a general meeting of holders of the sterling notes agreed
proposals to extend the repayment date of the sterling notes to 31 August
2025. As consideration for this, the sterling notes will now be repayable at
GBP1.04 per GBP1.00 nominal on 31 August 2025 and REAH has issued to noteholders
4,010,760 warrants each entitling the warrant holder to subscribe, for a
period of five years, one new ordinary share in the capital of the company
at a subscription price of GBP1.26 per share.
As a consequence of the sterling note repayment date extension the Company
has agreed with REAH that the loan will be repayable on the same date. The
loan agreement has been extended under the same terms.
Since the year end, the impact of the Covid-19 has had a significant impact
on the group in terms of the reduction in the CPO price from $860, CIF
Rotterdam, at 1 January 2020 to $540 on 30 April 2020. The directors
consider the Covid-19 pandemic to be a non-adjusting post balance sheet
event. However, should the pandemic result in a depressed CPO price for a
prolonged period, this could impact the directors' assessment of the
valuation of group assets. Further there is the possibility of operational
disruption should the existing lockdown in Indonesia be extended in a way
that would reduce or halt group production or restrict the group's ability
to deliver its production to customers (although it should be noted that the
current lockdown in Indonesia explicitly excludes agricultural business). In
these circumstances, the group could experience liquidity issues and might
require waivers from Mandiri to avoid breaching bank covenants. However, in
this downside scenario, the directors expect that Mandiri would be receptive
to requests to adjust the terms of its loans to the group to an extent that
reflects the fact that the issues to be addressed will have arisen as a
result of Covid-19 and will be short term in nature, especially given that
Covid-19 should not impact on the group's longer-term prospects once the CPO
price returns to pre Covid-19 levels.
Amstelveen, 12 June 2020
REA Finance B.V.
Apex Financial Services B.V.
OTHER INFORMATION
Independent auditor's report
The independent auditor's report is set out on the next page.
Statutory rules relating to the appropriation of results
In accordance with article 18 of the Company's articles of association, and
Book 2 of the Dutch Civil Code, the allocation of profits accrued in a
financial year shall be determined by the general meeting. If the general
meeting does not adopt a resolution regarding the allocation of the profits
prior to or at latest immediately after the adoption of the annual accounts,
the profits will be reserved.
The general meeting has the authority to make distributions. If the Company
is required by law to maintain reserves, this authority only applies to the
extent that the equity exceeds these reserves. No resolution of the general
meeting to distribute shall have effect without the consent of the
management board. The management board may withhold such consent only if it
knows or reasonably should expect that after the distribution, the Company
will be unable to continue the payment of its debts as they fall due.
INDEPENDENT AUDITOR'S REPORT
To: the shareholder of REA Finance B.V.
Report on the audit of the financial statements 2019 included in the annual
report
Our opinion
We have audited the financial statements 2019 of REA Finance B.V., based in
Amsterdam.
In our opinion the accompanying financial statements give a true and fair
view of the financial position of REA Finance B.V. as at 31 December 2019,
and of its result for 2019 in accordance with Part 9 of Book 2 of the Dutch
Civil Code.
The financial statements comprise:
· The balance sheet as at 31 December 2019
· The profit and loss account for 2019
· The notes comprising a summary of the accounting policies and other
explanatory information
Basis for our opinion
We conducted our audit in accordance with Dutch law, including the Dutch
Standards on Auditing. Our responsibilities under those standards are
further described in the Our responsibilities for the audit of the financial
statements section of our report.
We are independent of REA Finance B.V. (the Company) in accordance with the
EU Regulation on specific requirements regarding statutory audit of
public-interest entities, the Wet toezicht accountantsorganisaties (Wta,
Audit firms supervision act), the Verordening inzake de onafhankelijkheid
van accountants bij assurance-opdrachten (ViO, Code of Ethics for
Professional Accountants, a regulation with respect to independence) and
other relevant independence regulations in the Netherlands. Furthermore, we
have complied with the Verordening gedrags- en beroepsregels accountants
(VGBA, Dutch Code of Ethics).
We believe the audit evidence we have obtained is sufficient and appropriate
to provide a basis for our opinion.
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Material uncertainty relating to Corona and Going Concern
The developments surrounding the Corona ("Covid-19") virus have a profound
impact on people's health and on our society as a whole, as well as on the
operational and financial performance of organizations and the assessment of
the ability to continue as a going concern. The financial statements and our
auditor's report thereon reflect the conditions at the time of preparations.
The situation changes on a daily basis giving rise to inherent uncertainty.
REA Finance B.V. is confronted with this uncertainty as well, which is
disclosed in the Section Director's report; Going Concern, basis of
preparation and note 17 Subsequent events of the financial statement
indicating that due to the recent Covid-19 pandemic the palm oil price has
fallen considerably and that the possibility exists that the pandemic could
cause operational issues, which could result in liquidity issues at its
parent company R.E.A. Holdings plc and its plantation subsidiaries
(together: the Group), triggering the need to request the Group's bank to
extend the dates on which loan repayments are required or waive covenants.
We draw attention to these disclosures. These conditions indicate the
existence of a material uncertainty which may cast significant doubt about
the Company's ability to continue as a going concern.
Our opinion is not modified in respect of this matter.
Materiality
We start by determining materiality and identifying and assessing the risks
of material misstatement of the financial statements, whether due to fraud,
non-compliance with laws and regulations or error in order to design audit
procedures responsive to those risks, and to obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of
not detecting a material misstatement resulting from fraud is higher than
for one resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal
control.
Materiality GBP159,000
Benchmark applied 0.5% for total assets as at 31 December 2019
Explanation We have applied total assets as measurement
basis for our materiality as the Company's
main activity is lending. The Company
facilitates R.E.A. Holdings plc and its
plantation subsidiaries in their financing
activities. The holders of the Sterling notes
issued by the Company are most interested in
the recoverability of the loan granted to the
parent company, R.E.A. Holdings plc, of which
the total nominal amount almost represents
the total assets of the Company.
We have also taken into account misstatements and/or possible misstatements
that in our opinion are material for the users of the financial statements
for qualitative reasons.
We agreed with the management that misstatements in excess of GBP8,000, which
are identified during the audit, would be reported to them, as well as
smaller misstatements that in our view must be reported on qualitative
grounds.
Our key audit matters
In addition to the matter described in the 'Material uncertainty relating to
Corona and Going
Concern' section of our report we selected the following key audit matters.
Key audit matters are those matters that, in our professional judgment, were
of most significance in our audit of the financial statements. We have
communicated the key audit matters to the board of directors. The key audit
matters are not a comprehensive reflection of all matters discussed.
These matters were addressed in the context of our audit of the financial
statements as a whole and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
Estimation uncertainty regarding valuation of loan to parent
company
Risk The principal activity of the Company is to
act as a finance company for the Group. The
Company issued Sterling notes which proceeds
were used in the Group for financing the
plantation subsidiaries through a loan to its
parent company R.E.A. Holdings plc. As of 31
December 2019, the loan to parent company
amounted to GBP31.3 million.
The valuation of the loan to parent company
relies on certain assumptions and estimates
in relation to the likelihood of the
plantation assets in the Group to generate
and upstream suitable future cash flows for
servicing the loan. The key input to the
valuation calculation is the Crude Palm Oil
(CPO) price and discount rate which require
the judgement of management. The use of an
inappropriate CPO price and discount rate
could have a material impact on the valuation
of the plantation subsidiaries and
consequently impact on the valuation of the
loan to parent company.
We consider the recoverability of the loan to
parent company a key audit matter because
this determines the ability of REA Finance
B.V. to fulfil its obligations and to
continue as a going concern.
We refer to Sections Impairment of loans and
receivables and Estimates of Note 2.3, where
management has disclosed its critical
accounting judgements and key sources of
estimation uncertainty in respect of the
valuation of the loan to parent company.
Our audit Management concluded that there is no
impairment on the loan to parent company as
at 31 December 2019 as the long-term cash
flows from the Group are being sufficient to
approach recover the loan to parent company. In order
to obtain sufficient audit evidence on the
recoverability of the loan, our audit
procedures included, amongst others,
assessing the existence of relevant internal
controls related to the valuation of assets
as part of the financial statement closing
process. Furthermore, we performed
substantive audit procedures on the
appropriateness of management's impairment
assessment on the valuation of the loan to
parent company. These include amongst others
audit procedures focussing on, both, the
Company and the parent company:
· Assessed the loan agreement and
reconciled the critical terms and
conditions to the financial statements.
· Assessed managements' impairment
assessment on the loan to parent company,
including key estimation uncertainties
relevant for the recoverability.
· Reviewed the Group's cash flow forecast
models, in close cooperation with the group
auditor, including instructions sent
detailing specific procedures and a process
of file review and periodically calls for
assessing the adequacy of the audit
procedures performed.
· Reviewed the disclosure on events after
the reporting period, including CPO-price
developments following the Covid-19
pandemic and negotiations with the
Indonesian banker Mandiri.
· Assessed whether the disclosure included
in the financial statement is consistent
with the audited financial statements of
R.E.A. Holdings plc.
Key observations Based on the procedures performed we consider
the valuation of loan to parent company and
the related disclosures thereon to be
reasonable. However, the valuation is
critically dependent on the assumptions
relating to the CPO price and discount rate
and therefore this sensitivity is disclosed
in the accounts. We noted that on 31 March
2020 the loan was extended from 20 August
2020 to 31 August 2025 as the repayment terms
are linked to the Sterling notes, which also
got extended to that date.
Transition as auditor including the audit of opening balances
Risk In conducting an initial audit engagement, the
auditor is required to obtain sufficient and
appropriate audit evidence on the opening
balances to ensure that the opening balances
do not contain misstatements that materially
affect the current period's financial
statements and appropriateness of accounting
policies applied in the previous year and
appropriate disclosure of change in accounting
policy, if any in the current year financial
statement.
We therefor consider the audit of opening
balances a key audit matter.
Our audit In order to obtain sufficient and appropriate
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