What is the difference between immature and mature plantations?

We only harvest from mature plantations. A plantation is immature either because it doesn’t have the appropriate age profile and density of the trees or because the lease was recently signed and some preparatory work has to be completed before harvesting begins. All our plantations are classified as immature when they are being leased until harvesting begins.

What is the valuation method for biological asset valuations?

Our biological assets are valued in accordance with international accounting standards (IAS 41). In summary, immature plantations are valued at cost and mature plantations using a net present value calculation.

Most of the gains in biological assets are created when previously immature plantations begin generating an income and are reclassified as mature plantations.

A deferred tax of 25% is calculated on the gains in biological assets. This is written back if the actual tax paid is less than the calculated tax. Currently our effective tax rate is very low as we only pay tax on the profits generated from the processed bamboo shoots.

The leases are amortised over the life of the lease, which is on average 20 years. Consequently, at the end of the lease, the plantation does not carry any value on the balance sheet.

Why are you calculating the adjusted net profit and how is the calculation done?

As the gains in the fair value of biological assets and the deferred tax calculated on these gains do not result in any actual cash flow, we recommend investors focus on the adjusted net profit which is the net profit excluding these items.

The adjusted net profit is calculated as follows:

Net profit
Deduct: Gains in the fair value of biological assets
Add: Deferred tax calculated on gains in the fair value of biological assets
= Adjusted net profit

How much tax are you paying?

As a National Key Flagship Enterprise, we are tax exempt for agricultural produce, which includes all our products except for processed bamboo shoots, for a period of at least four years.

What are your key costs and how are they developing?

The majority of our costs are in the areas of harvesting, amortisation of plantations and processing, packaging and storing. The amortisation cost is fixed over the lease period of the plantation whereas most of the other costs are variable. We do not expect our costs to rise at a faster pace than our revenues.

Legals | © 2015 Asian Bamboo AG

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