ACCOUNTS - Final Accounts preparation
ACCOUNTS - Final Accounts preparation
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Registered number:
FOR THE PERIOD ENDED 31 DECEMBER 2019
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SILVERBACK TEA COMPANY LIMITED
COMPANY INFORMATION
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SILVERBACK TEA COMPANY LIMITED
CONTENTS
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SILVERBACK TEA COMPANY LIMITED
GROUP STRATEGIC REPORT
FOR THE PERIOD ENDED 31 DECEMBER 2019
The directors present their strategic report for the period ended 31 December 2019.
The company was incorporated in February 2019 and during this first period of trading controlling stakes were acquired in three tea processing factories in Rwanda. Two are long established businesses where the focus has since been to improve the quality of the made tea being produced and therefore its marketability. The third factory opened its first phase in August 2019 and is processing tea from a significant new tea development, so will expand over time as production increases.
The profitability of the existing businesses was broadly in line with the previous year but significant preparatory improvement work both in the tea fields and in the factories took place in the period since acquisition which the company expects will improve the relative performance of these businesses in the future. As shown in the Consolidated Statement of Cashflows, the group profit of approximately $0.2 million is stated after charging $1.7 million on amortisation of intangible assets. Net cash generated from operating activities was approximately $2.3 million and cash in hand at 31 December 2019 was $10.1 million so with net current assets of approximately $10.8 million the board are satisfied that adequate reserves are held to meet the short-term cash requirements of the company.
The principal risks and uncertainties faced by the company relate to climatic conditions in Rwanda, global tea prices and political stability. These risks are mitigated by operating in areas with a good history of tea growing conditions, by applying our expertise in the tea industry to improve the made tea quality and market it appropriately.
The company is funded by a combination of equity and both shareholder and bank debt and so is reliant on the profitability of the subsidiary companies to generate income and cash to fund the bank debt repayment obligations in particular. Gisovu Tea Company Limited and Pfunda Tea Company Limited are well established and profitable businesses. Rugabano Tea Company Limited, acquired in December 2019, is a start-up company which will require further investment to increase capacity as Greenleaf supply from the new tea development increases, and this investment is also factored into the funding requirements of the company.
The key performance indicators for the subsidiary companies that drive their profitability are volume of made tea produced and the selling price. Whilst volumes are significantly influenced by climatic conditions, management are also tasked with implement good agricultural, agronomic and production practices to maximise yields.
The Board considers, both individually and together, that they have acted in the way they consider, in good faith, would most likely promote the success of the company for the benefit of its shareholders, and having regard to its various stakeholders including staff and smallholder tea farmer suppliers.
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SILVERBACK TEA COMPANY LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2019
This report was approved by the board and signed on its behalf.
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SILVERBACK TEA COMPANY LIMITED
DIRECTORS' REPORT
FOR THE PERIOD ENDED 31 DECEMBER 2019
The directors present their report and the financial statements for the period ended 31 December 2019.
The loss for the period, after taxation and minority interests, amounted to $591,100.
The directors who served during the period were:
The business plan for the coming year is to continue to improve the performance of the subsidiary tea factories, and expand the factory at Rugabano following the opening of the initial phase in 2019.
Significant efforts have been made during the financial year to engage with employees and other stakeholders including the smallholder farmer suppliers following the acquisition of the subsidiary companies. The directors seek to promote a safe working environment and a culture of shared-vision and cooperation to improve the performance of the company.
The company has not applied a particular corporate governance code due to the low complexity of the company structure and the representation of owners on the boards. Board meetings of the subsidiary companies are held quarterly and attended by their respective management plus representatives of the parent company. Management present a report of the business performance for the period and the proposed plan for the coming period and so are provided with clear actions and approval to deliver the objectives of the board. Quarterly parent company board meetings are also held.
Each of the persons who are directors at the time when this Directors' report is approved has confirmed that:
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SILVERBACK TEA COMPANY LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2019
There has been an outbreak of Corona Virus (COVID-19) worldwide since December 2019. Whilst various mitigation measures were implemented, the group’s operations experienced no significant business disruptions since agricultural activities were allowed to continue in Rwanda. However, delays in transporting tea to Mombasa auction and for direct export sales were experienced resulting in minimal reduction in the volume of tea sold during May and June 2020. Average prices also dropped slightly over the same period.
The situation of transport and prices dropping has now normalised. Further, given that in the region and internationally, many of the lockdown measures are being lifted, directors do not anticipate any shortage in supply of critical spares and consumables for the next twelve months. Directors will continue to monitor and assess the situation as it develops. As at the time of release of these financial statements, and based on the assessment made, directors are not aware of any material uncertainty related to these events or conditions that may cast doubt upon the group’s ability to continue as a going concern. Further, the directors consider the carrying values of assets held at 31 December 2019 to be fairly stated.
The auditor, Anderson Anderson & Brown Audit LLP, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
This report was approved by the board and signed on its behalf.
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SILVERBACK TEA COMPANY LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE PERIOD ENDED 31 DECEMBER 2019
The directors are responsible for preparing the Group strategic report, the Directors' report and the consolidated financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and the Group and of the profit or loss of the Group for that period.
In preparing these financial statements, the directors are required to:
∙select suitable accounting policies for the Group's financial statements and then apply them consistently;
∙make judgments and accounting estimates that are reasonable and prudent;
∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and the Group and to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
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SILVERBACK TEA COMPANY LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF SILVERBACK TEA COMPANY LIMITED
We have audited the financial statements of Silverback Tea Company Limited (the 'parent Company') and its subsidiaries (the 'Group') for the period ended 31 December 2019, which comprise the Group Profit and loss account, the Group Statement of comprehensive income, the Group and Company Statements of financial position, the Group Statement of cash flows, the Group and Company Statement of changes in equity and the related notes, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:
∙the directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or
∙the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the Group's or the parent Company's ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.
The directors are responsible for the other information. The other information comprises the information included in the Annual Report, other than the financial statements and our Auditor's report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are
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SILVERBACK TEA COMPANY LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF SILVERBACK TEA COMPANY LIMITED (CONTINUED)
required to report that fact.
We have nothing to report in this regard.
In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the Group strategic report and the Directors' report for the financial period for which the financial statements are prepared is consistent with the financial statements; and
∙the Group strategic report and the Directors' report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Group and the parent Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group strategic report or the Directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
As explained more fully in the Directors' responsibilities statement on page 5, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group's and the parent Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or the parent Company or to cease operations, or have no realistic alternative but to do so.
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SILVERBACK TEA COMPANY LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF SILVERBACK TEA COMPANY LIMITED (CONTINUED)
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an Auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditor's report.
This report is made solely to the Company's members in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an Auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members for our audit work, for this report, or for the opinions we have formed.
for and on behalf of
Statutory Auditor
Kingshill View
Prime Four Business Park
Kingswells
AB15 8PU
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SILVERBACK TEA COMPANY LIMITED
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE PERIOD ENDED 31 DECEMBER 2019
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SILVERBACK TEA COMPANY LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIOD ENDED 31 DECEMBER 2019
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SILVERBACK TEA COMPANY LIMITED
REGISTERED NUMBER: SC621502
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2019
The financial statements were approved and authorised for issue by the board and were signed on its behalf on
The notes on pages 16 to 37 form part of these financial statements.
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SILVERBACK TEA COMPANY LIMITED
REGISTERED NUMBER: SC621502
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2019
The financial statements were approved and authorised for issue by the board and were signed on its behalf on
The notes on pages 16 to 37 form part of these financial statements.
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SILVERBACK TEA COMPANY LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 31 DECEMBER 2019
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 31 DECEMBER 2019
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SILVERBACK TEA COMPANY LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIOD ENDED 31 DECEMBER 2019
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SILVERBACK TEA COMPANY LIMITED
CONSOLIDATED ANALYSIS OF NET DEBT
FOR THE PERIOD ENDED 31 DECEMBER 2019
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SILVERBACK TEA COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2019
Silverback Tea Company Limited is a private limited company incorporated in Scotland. The registered office address is Blenheim House, Fountainhall Road, Aberdeen. The principal activity of the group is the manufacture and sale of tea products through three trading subsidiaries.
2.Accounting policies
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires Group management to exercise judgment in applying the Group's accounting policies (see note 3).
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Profit and loss account in these financial statements.
The following principal accounting policies have been applied:
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the Statement of financial position, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the Consolidated profit and loss account from the date on which control is obtained. They are deconsolidated from the date control ceases.
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SILVERBACK TEA COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2019
2.Accounting policies (continued)
The directors, having made due and careful enquiry, are of the opinion that the group has adequate working capital to execute its operations over the next 12 months. The directors, therefore, have made an informed judgement, at the time of approving the financial statements, that there is a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future.
In arriving at this conclusion, the directors have given due consideration to the impact of the worldwide Covid-19 pandemic on future operations and the ability of the group to continue to operate as a going concern. Whilst various mitigation measures were implemented, the group’s operations experienced no significant business disruptions since agricultural activities were allowed to continue in Rwanda. However, delays in transporting tea to Mombasa auction and for direct export sales were experienced resulting in minimal reduction in the volume of tea sold during May and June 2020. Average prices also dropped slightly over the same period. The situation of transport and prices dropping has now normalised. Further, given that in the region and internationally, many of the lockdown measures are being lifted, directors do not anticipate any shortage in supply of critical spares and consumables for the next twelve months. Directors will continue to monitor and assess the situation as it develops. As at the time of release of these financial statements, and based on the assessment made, directors are not aware of any material uncertainty related to these events or conditions that may cast doubt upon the group’s ability to continue as a going concern and have therefore concluded that the group can continue to meet it’s obligations as they fall due and operate as a going concern. As a result, the directors have continued to adopt the going concern basis of accounting in preparing the annual financial statements.
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SILVERBACK TEA COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2019
2.Accounting policies (continued)
Functional and presentation currency
The Company's functional and presentational currency is USD.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions.
At each period end foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.
Foreign exchange gains and losses resulting from the settlement of transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss except when deferred in other comprehensive income as qualifying cash flow hedges.
Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the Consolidated profit and loss account within 'finance income or costs'. All other foreign exchange gains and losses are presented in profit or loss within 'other operating income'.
On consolidation, the results of overseas operations are translated into Dollars at rates approximating to those ruling when the transactions took place. All assets and liabilities of overseas operations are translated at the rate ruling at the reporting date. Exchange differences arising on translating the opening net assets at opening rate and the results of overseas operations at actual rate are recognised in other comprehensive income.
The group manufactures and sells a range of tea products in the wholesale and retail markets. Sales are recognised when control of the products has transferred, being when the products are delivered to the customer, the customer has full discretion over the channel and price to sell the products, and there is no unfulfilled obligation that could affect the customer’s acceptance of the products. Delivery occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have been transferred to the customer, and either the customer has accepted the products in accordance with the sales contract, the acceptance provisions have lapsed, or the Company has objective evidence that all criteria for acceptance have been satisfied.
A receivable is recognised when the goods are delivered as this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due.
Interest income is recognised in profit or loss using the effective interest method.
Finance costs are charged to profit or loss over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.
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SILVERBACK TEA COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2019
2.Accounting policies (continued)
All borrowing costs are recognised in profit or loss in the period in which they are incurred.
Defined contribution pension plan
The Group operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. Once the contributions have been paid the Group has no further payment obligations.
The contributions are recognised as an expense in profit or loss when they fall due. Amounts not paid are shown in accruals as a liability in the Statement of financial position. The assets of the plan are held separately from the Group in independently administered funds.
Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the Statement of financial position date, except that:
Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the reporting date.
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SILVERBACK TEA COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2019
2.Accounting policies (continued)
Goodwill
Other intangible assets
All intangible assets are considered to have a finite useful life. If a reliable estimate of the useful life cannot be made, the useful life shall not exceed ten years.
At each reporting date the company assesses whether there is any indication of impairment. If such indication exists, the recoverable amount of the asset is determined which is the higher of its fair value less costs to sell and its value in use. An impairment loss is recognised where the carrying amount exceeds the recoverable amount.
Depreciation is provided on the following basis:
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
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SILVERBACK TEA COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2019
2.Accounting policies (continued)
Investments in subsidiaries are measured at cost less accumulated impairment.
Investments in listed company shares are remeasured to market value at each Statement of financial position date. Gains and losses on remeasurement are recognised in profit or loss for the period.
Stocks are stated at the lower of cost and net realisable value. Cost is determined by the weighted Average method less provision for impairment. The cost of finished goods and work in progress comprises raw materials, direct labour, other direct costs and related production overheads (based on normal operating capacity). It excludes borrowing costs. Net realisable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses.
At each reporting date, stocks are assessed for impairment. If stock is impaired, the carrying amount is reduced to its selling price less costs to complete and sell. The impairment loss is recognised immediately in profit or loss.
Short term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.
Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.
In the Consolidated statement of cash flows, cash and cash equivalents are shown net of bank overdrafts that are repayable on demand and form an integral part of the Group's cash management.
Short term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.
Provisions are made where an event has taken place that gives the Group a legal or constructive obligation that probably requires settlement by a transfer of economic benefit, and a reliable estimate can be made of the amount of the obligation.
Provisions are charged as an expense to profit or loss in the year that the Group becomes aware of the obligation, and are measured at the best estimate at the Statement of financial position date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties. When payments are eventually made, they are charged to the provision carried in the Statement of financial position.
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SILVERBACK TEA COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2019
2.Accounting policies (continued)
Retirement benefit obligations
The group and some of its employees contribute to the Rwandan National Social Security Fund, which is a defined contribution retirement benefits scheme. A defined contribution scheme is a retirement benefits scheme under which the Company pays fixed contributions into a separate entity. The group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. The groups’s contributions to the defined contribution retirement benefits scheme are charged to the profit and loss account in the year to which they relate. Other entitlements The estimated monetary liability for employees’ accrued annual leave entitlement at the balance sheet date is recognised as an expense accrual. The fair value of the green leaf shoots on tea bushes is estimated as the present value of expected future cash flows.
Debt instruments (other than those wholly repayable or receivable within one year), including loans and other accounts receivable and payable, are initially measured at present value of the future cash flows and subsequently at amortised cost using the effective interest method. Debt instruments that are payable or receivable within one year, typically trade debtors and creditors, are measured, initially and subsequently, at the undiscounted amount of the cash or other consideration expected to be paid or received. However, if the arrangements of a short-term instrument constitute a financing transaction, like the payment of a trade debt deferred beyond normal business terms or in case of an out-right short-term loan that is not at market rate, the financial asset or liability is measured, initially at the present value of future cash flows discounted at a market rate of interest for a similar debt instrument and subsequently at amortised cost, unless it qualifies as a loan from a director in the case of a small company, or a public benefit entity concessionary loan.
Investments in non-derivative instruments that are equity to the issuer are measured:
Financial assets that are measured at cost and amortised cost are assessed at the end of each reporting period for objective evidence of impairment. If objective evidence of impairment is found, an impairment loss is recognised in the Consolidated profit and loss account.
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SILVERBACK TEA COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2019
2.Accounting policies (continued)
For financial assets measured at amortised cost, the impairment loss is measured as the difference between an asset's carrying amount and the present value of estimated cash flows discounted at the asset's original effective interest rate. If a financial asset has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract.
For financial assets measured at cost less impairment, the impairment loss is measured as the difference between an asset's carrying amount and best estimate of the recoverable amount, which is an approximation of the amount that the Group would receive for the asset if it were to be sold at the reporting date.
Financial assets and liabilities are offset and the net amount reported in the Statement of financial position when there is an enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or income as appropriate. The company does not currently apply hedge accounting for interest rate and foreign exchange derivatives.
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SILVERBACK TEA COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2019
The preparation of financial statements, requires management to make judgements, estimates and assumptions that affect the amounts reported for assets and liabilities as at the Statement of Financial Position date and the amounts reported during the year for revenue and costs. However, the nature of estimation means that actual outcomes could differ from those estimates. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The following judgements and estimates have had the most significant impact on amounts recognised in the financial statements.
Useful life of bearer assets Based on their knowledge of the business throughout the group the directors estimate the useful lives of trees and tea bushes at 100 years and 50 years respectively. If the directors had applied a useful life of 50 years for trees, there would be no significant change to the depreciation charge for the year since the carrying value of trees is not significant to the financial statements. If the directors had applied a useful life of 40 years for tea bushes, there would be no significant change to the depreciation charge for the year since the carrying value of tea bushes is not significant to the financial statements. Deferred tax Deferred tax assets are recognised in respect of tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Future taxable profits are estimated based on business plans which include estimates and assumptions regarding economic growth, interest, inflation, taxation rates and competitive forces. Judgment is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits, together with future tax planning strategies. Goodwill The Group establishes a reliable estimate of the useful life of goodwill arising on business combinations. This estimate is based on a variety of factors such as the expected use of the acquired business, the expected useful life of the cash generating units to which the goodwill is attributed, any legal, regulatory or contractual provisions that can limit useful life and assumptions that market participants would consider in respect of similar businesses.
The whole of the turnover is attributable to tea sales.
Analysis of turnover by country of destination:
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SILVERBACK TEA COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2019
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SILVERBACK TEA COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2019
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SILVERBACK TEA COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2019
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SILVERBACK TEA COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2019
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SILVERBACK TEA COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2019
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SILVERBACK TEA COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2019
12.Tangible fixed assets (continued)
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SILVERBACK TEA COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2019
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SILVERBACK TEA COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2019
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SILVERBACK TEA COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2019
Included with amounts owed to parent undertakings are amounts due to shareholders of the group with amounts being advanced under two formal lending arrangements.
One of the loans is included at $12,246,116 and allows for a maximum drawdown of $15,000,000, while the other is included at $4,626,445 and allows for a maximum drawdown of $5,000,000. Advances on both loans are repayable in full by 31 December 2027 but the loan agreements do allow for early repayment at Silverback Tea Company's discretion. Interest is charged on the loan at a rate 7% per annum and accrued interest totaling $910,395 is included within amounts due within one year. Loans from parent undertakings are unsecured
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SILVERBACK TEA COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2019
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SILVERBACK TEA COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2019
During the year 4,500 shares were issued at their nominal value of $1,000 per share.
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SILVERBACK TEA COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2019
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SILVERBACK TEA COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2019
The controlling party and ultimate parent entity of the group is Luxmi Tea Co Private Limited, a company incorporated in India.
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