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Saka Indonesia Pangkah Limited
Registered number: 03076063
Annual Report
For the year ended 31 December 2022
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SAKA INDONESIA PANGKAH LIMITED
COMPANY INFORMATION
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Accomplish Secretaries Limited
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Chartered Accountants & Statutory Auditor
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SAKA INDONESIA PANGKAH LIMITED
CONTENTS
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Independent auditor's report
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Statement of comprehensive income
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Statement of financial position
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Statement of changes in equity
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Notes to the financial statements
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SAKA INDONESIA PANGKAH LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
The directors present their strategic report for Saka Indonesia Pangkah Limited (the 'company') for the year ended 31 December 2022.
The company's principal activity is, and will continue to be, the exploration for and the production of oil, natural gas and natural gas liquids in Indonesia.
The company has a 65% interest in the Ujung Pangkah field, which is being developed in a staged manner with initial gas production followed by liquids development. The onshore facilities have been completed with the first gas sales achieved in April 2007, first oil in December 2008 and first Liquefied Petroleum Gas (LPG) in March 2009.
One offshore platform (namely WHP A) has been in service since first production and a total of 15 wells have been drilled from this platform. Construction of the second well platform (namely WHP B) was completed and installed in January 2010. The drilling program from this platform commenced in October 2010 and at the end of 2020, a total of 19 production wells and 1 water injection well had been drilled. In 2021, the company has completed to drill 1 development well (WPA-1). SIPL has continued to drill 1 development well (WPA-04), completing 3 well services (UPB11-ST2, SID-4V Re-Entry, Sid-3ST1 Re-Entry).
In January 2014, the company was acquired by Saka Indonesia Pangkah B.V. a company incorporated in the Netherlands, and as a result, the holding company undertaking became PT Saka Energi Indonesia, a company incorporated in Indonesia.
In January 2014, as a result of the company being acquired by Saka Indonesia Pangkah B.V., the loan from the immediate parent undertaking amounting to $537,333,000 was novated from Hess Oil and Gas Holdings Inc. to PT Saka Energi Indonesia. At 31 December 2022, the balance on the loan was $347,798,000 (principal $296,851,000; accrued interest $50,947,000).
During the year, the directors reviewed the carrying value of tangible fixed assets and this led to a reversal of impairment of $18,443,000 (2021: no impairment or reversal of impairment). The recoverable amount has been calculated after considering future discounted cash flows of the producing fields over the next 25 years (2021: 26 years), using a WACC of 8.34% (2021: 8.00%). The expected future cash flows are estimated using management’s best estimate of future oil, natural gas and LPG prices and reserves volumes.
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SAKA INDONESIA PANGKAH LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
Key financial performance indicators
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Profit/(loss) for the financial year ($'000s)
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Production is measured in Thousands of Barrels of Oil Equivalent Per Day (MBOEPD) and unit costs are measured in US$ per Barrel of Oil Equivalent (BOE).
Production increased by 67.25% (2021: increase of 59.18%) as a result of a increased rate of production and higher results of the workover well and new wells. Unit costs increased by 13.60% (2021: decrease of 8.45%) mainly due to higher production volume.
Principal risks and uncertainties
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The company's future exploration and production earnings may be impacted by external factors, such as volatility in the selling prices of crude oil and natural gas, reserve and production changes, industry cost inflation, exploration expenses, changes in tax rates and licensing terms.
The company monitors the impact of these risks as part of its regular reviews of the performance of its assets against agreed performance indicators both short and long term. Where appropriate, plans are implemented to manage risks having an impact on the business performance.
During the coming year, the Directors of the company will propose to PT Saka Energi Indonesia for the amending and extension the Intra Group Fund agreement. This will provide an economic stimulus for Saka Indonesia Pangkah Ltd in the midst of the Covid-19 pandemic situation to help realize the economic recovery program. However, the company Directors remains committed to paying off this Intra Group Fund payable in the future.
Financial key performance indicators
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Key performance indicators for the company consist of revenue, profitability and carrying value of exploration and evaluation assets.
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SAKA INDONESIA PANGKAH LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
Directors' statement of compliance with duty to promote the success of the company
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Citing the Commodity Markets Outlook report released by the World Bank in August 2023, the average price of Brent crude oil was USD99.80 per barrel in 2022, an increase of 41.76% compared to the previous year’s average price of USD70.40 per barrel in 2021.
Those conditions also occurred domestically as the Ministry of Energy and Mineral Resources reported that the average price of Indonesian crude oil (ICP) touched USD76.77 per barrel in December 2022.
These conditions have helped SIPL operations grow and increase revenue in 2022.
SIPL has responded to this through multiple strategic initiatives executed by the management. SIPL still managed to demonstrate its capabilities to provide energy for the community and ample benefits for all stakeholders. Management performs operation excellence, which is supported by the cost-consciousness program, to establish an operation that can sustain the Company’s profitability. The achievement marked in 2022, is the foundation for the Company to achieve better performance in the upcoming years.
For SIPL, the sustainability of its operations is crucial. The operation and production processes must be carried out continually, especially in the fields operated by SIPL, even though the conditions of the oil and gas business and environment is very challenging. This policy is indeed different from most of the players in the oil and gas industry. The Company continued to operate as the budget for these operations was available.
In 2022, the Board performed its duties and responsibilities under the supervision of management. The Board ensured that the Company was in compliance with the applicable laws and regulations and with the principles of good Corporate Governance. The Board ensured that the Company is managed in accordance with the vision and mission of the Company, and the aspirations of the shareholders while paying attention to the aspirations of all stakeholders. Therefore, in doing so, had regard to other matters set out on Section 172 of the Companies Act 2006 as follows:
a. The likely consequence of any decision in the long-term
In 2022, SIPL continued to carry out several previously scheduled projects. The Company continued its development process in the West Pangkah and Sidayu fields. The West Pangkah onstream in Q1 2022 and Sidayu field onstream in Q4 2022. These two fields’ development served as part of the Company’s mid-term and long term plans to support the Company’s increased oil and gas production.
SIPL in 2022 carried out a cost consciousness program by boosting efficiency in various fields. This initiative was taken to maintain the Company’s profitability amidst weakening price pressures. The efficiency improvement carried out by SIPL in 2022 covered all processes in the organization, with the largest coming from operations in the field.
In the coming year, SIPL will continue to increase its reserve base and accelerate its development phase.
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SAKA INDONESIA PANGKAH LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
Directors' statement of compliance with duty to promote the success of the company (continued)
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b. The interest of the company’s employees
SIPL believes that achieving good performance can only be realised with the support of reliable human resources, both in terms of competence and attitude. Therefore, apart from creating a conducive workplace, SIPL also implements comprehensive HR management to create reliable human resources that can support the Company’s performance according to its vision.
SIPL’s corporate values are DEEPS: Drive for Results, Excellent Services, Ethics, Professionalism, and Safety. The Company’s Board of Directors first introduced DEEPS in July 2014, which has become a guideline for all SIPL’s employees in carrying out their activities within the Company. As a company that complies with laws and regulations, SIPL ensures all labour practices and human resource management in the Company are in accordance with the prevailing laws and regulations. The Company also ensures that all HR practices are transparent and free from conflicts of interest.
SIPL ensures that all employees are treated equally throughout all stages of recruitment, training, career development, and remuneration. The Company also continues to create a conducive working environment to motivate all employees to optimise their skills and develop their talents.
Employees’ competence becomes one of the critical elements in achieving the Company’s business objectives and targets. For that reason, SIPL encourages its employees and managers to conduct regular discussions about the development plans of each employee, every year. Afterward, related programs or activities for employee competency development will be agreed upon and implemented through job assignments, job enrichment, formal training, coaching, and mentoring in line with business demands.
The Company also prepares a structured career path for all employees based on SIPL’s grading system. Thus, they can choose a managerial career path or a technical career path depending on their competencies, interest, and SIPL’s assessments. The Company conducts a mapping of all employees’ potential to help the Company determine future competency requirements.
The Individual Development Plan (IDP) program manages employee competencies through assessments with a supervisor, gap identification, and development planning based on those gaps. The IDP program is carried out annually by HR for benchmarking of employee development. Since that moment, based on the competence gap identified in their IDPs, all SIPL’s employees are required to attend public training. Employees can also provide suggestions by selecting or even proposing the format of mentoring, assignment, project or others.
c. The need to foster the company’s business relationships with suppliers, customers and others
SIPL maintains a close cooperation with all business partners and stakeholders, specifically, in ensuring the availability of data and information to achieve accurate, relevant, effective and efficient implementation of the Company’s programs. This data and information covers strategic needs and issues concerning the social, economic, health and environmental aspects, as well as the development agenda of regions around SIPL’s operational area. Through these efforts, the Company expects to generate positive contributions which in the end can help strengthen the existing relationship.
On the social aspect side of things, the Company pays great attention to employees and society. The Company develops good industrial relations with employees by fulfilling employees’ normative rights. SIPL also collaborates with local government agencies and the community in the planning of its CSR programs, which have now been formulated in a CSR Roadmap. Through this collaboration, each of SIPL’s CSR programs are expected to further synergize and align with local development programs.
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SAKA INDONESIA PANGKAH LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
Directors' statement of compliance with duty to promote the success of the company (continued)
d. The impact of the company’s operations on the community and environment
SIPL is very aware that its oil and gas business activities have a big impact on the community and the environment and in the long run, can change the landscape. Therefore, in carrying out its business activities, SIPL continuously puts its best efforts to pay attention the social and environmental health conditions which focuses on environmental, social, and economic issues.
SIPL’s commitment is realized through the implementation of Corporate Social Responsibility (CSR) programs. These programs aim to contribute positively to the wellbeing of the community and to the environmental preservation.
To ensure that the implemented programs can bring real benefits to the community and related stakeholders, SIPL’s CSR programs are focused on the following activities:
a. Economic empowerment
Which includes establishing sustainable livelihood for the community through value chain creation as well as through development of social entrepreneurship in the community to achieve social justice.
b. Education
Which includes the development and improvement of access to good formal and informal education.
c. Health
Which includes the development and improvement of access to better health services.
d. Environment,
Which includes the preservation of the coastal environment and the conservation of marine ecosystem.
In 2022, SIPL received an award from the Indonesian Government relating to the program implemented for the prevention and control of COVID-19 in the workplace.
e. The desirability of the company maintaining a reputation for high standards of business conduct
The Pangkah PSC currently operates 41 production wells of oil, gas and LPG. Out of those numbers, 18 of the production wells of Pangkah PSC mostly produce gas and are in Platform-A (WHP-A). Meanwhile, the other 22 production wells and 1 disposal well that mostly produce oil are in Platform-B (WHP-B).
In 2022, the work programs in Pangkah emphasized maintaining existing wells, re-working wells and carrying out well intervention. SIPL managed to record good operational performance in 2022 by on streaming field development in West Pangkah and Sidayu in a relatively targeted time. These two fields’ development served as part of the Company’s mid-term and long-term plans to support the Company’s increased oil and gas production. Throughout 2022, SIPL has continued to workover 1 wells (UPB-14ST) and completing 1 development well (WPA-04). With these projects, SIPL hopes to recover in the oil prices and market demand.
In pursuit of its vision and mission, SIPL always adheres to the following values: committed to being the best in its class, working with high value for the benefit of stakeholders, providing the best service to stakeholders, maintaining ethical business practices throughout its operations, continuously enhancing competencies and taking responsibility for actions and decisions, and always prioritising safety, health, and environmental protection both inside and outside of work.
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SAKA INDONESIA PANGKAH LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
Directors' statement of compliance with duty to promote the success of the company (continued)
f. The need to act fairly between members of the company.
SIPL is committed to implementing Good Corporate Governance (GCG) in all aspects of its business. The Company believes that GCG is a mechanism that governs the good corporate management and is capable of fulfilling the stakeholders’ expectations. The GCG commitment is implemented in all aspects of business processes, both operational and financial activities to realize growth and the Company’s future business continuity.
SIPL puts forward the principles of GCG not only to be a guideline for the sustainable growth, but also to be a substantial aspect in achieving the Company’s strategic targets. Therefore, SIPL continuously ensures that the principles of transparency, accountability, responsibility, independence, and fairness are consistently enforced and implemented in all business aspects.
SIPL carries out intensive monitoring to ensure the conformity of GCG principles with the prevailing laws and regulations. These regulations include, among others, the Limited Liability Company Law (UU PT), tax regulations, and various other regulations related to the management of the Company’s business.
This report was approved by the board and signed on its behalf by:
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SAKA INDONESIA PANGKAH LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
The directors present their annual report and the audited financial statements for Saka Indonesia Pangkah (the 'company') for the year ended 31 December 2022.
The profit for the year, after taxation, amounted to $29,295,000 (2021: profit of $10,917,000).
The directors do not recommend the payment of a dividend (2021: $nil).
The directors who served during the year and to the date of this report were:
A Disasmita
H Suryanto
The company will continue to undertake the exploration for and the production of oil, natural gas and natural gas liquids in Indonesia. In 2023 SIPL will continue to completed drill four development well, two well workover, EPCI (Engineering, Procurement, Construction and Installation) project system in Tambakboyo by Second Quarter 2023.
Company's policy for payment of creditors
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It is the company's policy that payments to suppliers are made in accordance with those terms and conditions agreed between the company and its suppliers, providing that all trading terms and conditions have been complied with.
Engagement with employees
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The company places considerable value on the involvement of its employees and has continued to keep them informed on matters affecting them as employees and on the various factors affecting the performance of the company. This is achieved through formal and informal meetings and mailings. Employee representatives are consulted regularly on a wide range of matters affecting their current and future interests. Employees are eligible for various benefits (e.g. target related bonuses and pension plan).
Applications for employment by disabled persons are always fully considered, bearing in mind the abilities of the applicant concerned. In the event of members of staff becoming disabled every effort is made to ensure that their employment with the company continues and that the appropriate training is arranged. It is the policy of the company that the training, career development and promotion of disabled persons should, as far as possible, be identical to that of other employees.
A qualifying third party indemnity provision as defined in section 234 of the Companies Act 2006 is in force for the benefit of each of the directors in respect of liabilities incurred as a result of their office, to the extent permitted by law. In respect of those liabilities for which directors may not be indemnified, a directors' and officers' liability insurance policy was maintained by the holding company undertaking throughout the financial year.
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SAKA INDONESIA PANGKAH LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
Greenhouse gas emissions, energy consumption and energy efficiency action
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The company has not disclosed information in respect of greenhouse gas emissions, energy consumption and energy efficiency action as its energy consumption in the United Kingdom for the year is 40,000kWh or lower.
Matters covered in the strategic report
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As permitted by Paragraph 1A of Schedule 7 to the Large and Medium-sized Companies and Group (Accounts and Reports) Regulations 2008 certain matters which are required to be disclosed in the Directors' Report have been omitted as they are included in the Strategic Report on page 1 to 7. These matters relate to the principal risks and uncertainties facing the company and employee matters.
Directors' responsibilities statement
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The directors are responsible for preparing the strategic report, the directors' report and the 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 of the profit or loss of the company for that period.
In preparing these financial statements, the directors are required to:
∙select suitable accounting policies for the company's financial statements and then apply them consistently;
∙make judgements and accounting estimates that are reasonable and prudent;
∙state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and
∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company 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 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 hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Provision of information to auditor
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Each of the persons who are directors at the time when this directors' report is approved has confirmed that:
∙so far as the directors are aware, there is no relevant audit information of which the company's auditors are unaware; and
∙the directors have taken all the steps that ought to have been taken as a director in order to be aware of any relevant audit information and to establish that the company's auditors are aware of that information.
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SAKA INDONESIA PANGKAH LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
Post balance sheet events
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There have not been any post balance sheet events for the company at the year ended 31 December 2022.
The auditors, Mazars 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 by:
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SAKA INDONESIA PANGKAH LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF SAKA INDONESIA PANGKAH LIMITED
Opinion
We have audited the financial statements of Saka Indonesia Pangkah Limited (the ‘company’) for the year ended 31 December 2022 which comprise the statement of comprehensive income, the statement of financial position, the statement of changes in equity and notes to the financial statements, 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 FRS 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:
∙give a true and fair view of the state of the company’s affairs as at 31 December 2022 and of its profit for the year then ended;
∙have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
∙have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
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 company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’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.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. The directors are responsible for the other information contained within the annual report. 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.
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SAKA INDONESIA PANGKAH LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF SAKA INDONESIA PANGKAH LIMITED
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 course of 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 this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
∙the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the 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:
∙adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
∙the financial statements are not in agreement with the accounting records and returns; or
∙certain disclosures of directors' remuneration specified by law are not made; or
∙we have not received all the information and explanations we require for our audit.
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SAKA INDONESIA PANGKAH LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF SAKA INDONESIA PANGKAH LIMITED
Responsibilities of Directors
As explained more fully in the directors' responsibilities statement set out on page 9, 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 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 intend either to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
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 the financial statements.
The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud.
Based on our understanding of the company and its industry, we considered that non-compliance with the following laws and regulations might have a material effect on the financial statements: employment regulation, health and safety regulation and anti-money laundering regulation.
To help us identify instances of non-compliance with these laws and regulations, and in identifying and assessing the risks of material misstatement in respect to non-compliance, our procedures included, but were not limited to:
∙Inquiring of management and, where appropriate, those charged with governance, as to whether the company is in compliance with laws and regulations, and discussing their policies and procedures regarding compliance with laws and regulations;
∙Inspecting correspondence, if any, with relevant licensing or regulatory authorities;
∙Communicating identified laws and regulations to the engagement team and remaining alert to any indications of non-compliance throughout our audit; and
∙Considering the risk of acts by the company which were contrary to applicable laws and regulations, including fraud.
We also considered those laws and regulations that have a direct effect on the preparation of the financial statements, such as tax legislation, pension legislation and the Companies Act 2006.
In addition, we evaluated the directors' and management’s incentives and opportunities for fraudulent manipulation of the financial statements, including the risk of management override of controls, and determined that the principal risks were related to posting manual journal entries to manipulate financial performance, management bias through judgements and assumptions in significant accounting estimates, in particular in relation to loss reserves, revenue recognition (which we pinpointed to cut off), and significant one-off or unusual transactions.
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SAKA INDONESIA PANGKAH LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF SAKA INDONESIA PANGKAH LIMITED
Our audit procedures in relation to fraud included but were not limited to:
∙Making enquiries of the directors and management on whether they had knowledge of any actual, suspected or alleged fraud;
∙Gaining an understanding of the internal controls established to mitigate risks related to fraud;
∙Discussing amongst the engagement team the risks of fraud; and
∙Addressing the risks of fraud through management override of controls by performing journal entry testing.
There are inherent limitations in the audit procedures described above and the primary responsibility for the prevention and detection of irregularities including fraud rests with management. As with any audit, there remained a risk of non-detection of irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations or the override of internal controls.
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.
Use of the audit report
This report is made solely to the company's members as a body 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 as a body for our audit work, for this report, or for the opinions we have formed.
Thomas Cooke (Senior Statutory Auditor) for on and behalf of Mazars LLP
Chartered Accountants and Statutory Auditor
The Pinnacle
160 Midsummer Boulevard
Milton Keynes
MK9 1FF
8 December 2023
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SAKA INDONESIA PANGKAH LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2022
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Interest receivable and similar income
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Interest payable and similar expenses
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Profit for the financial year
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Re-measurement of net defined benefit pension scheme liability
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Total comprehensive income for the year
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The statement of comprehensive income has been prepared on the basis that all operations are continuing operations.
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The notes on pages 17 to 40 form part of these financial statements.
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SAKA INDONESIA PANGKAH LIMITED
REGISTERED NUMBER: 03076063
STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2022
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Debtors: amounts falling due after more than one year
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Debtors: amounts falling due within one year
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Creditors: amounts falling due within one year
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Total assets less current liabilities
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Creditors: amounts falling due after more than one year
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Provisions for liabilities
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Defined benefit pension liability
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The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 17 to 40 form part of these financial statements.
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SAKA INDONESIA PANGKAH LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022
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Comprehensive profit for the year
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Other comprehensive income
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Other comprehensive income for the year
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Total comprehensive income for the year
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Comprehensive profit for the year
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Other comprehensive expense
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Other comprehensive expense for the year
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Total comprehensive income for the year
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The notes on pages 17 to 40 form part of these financial statements.
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SAKA INDONESIA PANGKAH LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Saka Indonesia Pangkah Limited is a private company, limited by shares and incorporated in England and Wales. The address of its registered office is 7th Floor 50 Broadway, London, United Kingdom, SW1H 0DB.
The company's principal activity is the exploration for and the production of oil, natural gas and natural gas liquids in Indonesia.
2.Accounting policies
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Basis of preparation of financial statements
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The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006 and IFRS 6 Exploration for and Evaluation of Mineral Resources.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgement in applying the company's accounting policies (see note 3).
The financial statements have been presented in United Stated Dollar (USD) as this is the currency of the primary economic environment in which the company operates and is rounded to the nearest thousand dollars.
The following principal accounting policies have been applied:
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Financial reporting standard 102 - reduced disclosure exemptions
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The company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by the FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":
∙the requirements of Section 7 Statement of Cash Flows;
∙the requirements of Section 3 Financial Statement Presentation paragraph 3.17(d);
∙the requirements of Section 11 Financial Instruments paragraphs 11.42, 11.44 to 11.45, 11.47, 11.48(a)(iii), 11.48(a)(iv), 11.48(b) and 11.48(c);
∙the requirements of Section 12 Other Financial Instruments paragraphs 12.26 to 12.27, 12.29(a), 12.29(b) and 12.29A;
∙the requirements of Section 33 Related Party Disclosures paragraph 33.7.
This information is included in the consolidated financial statements of PT Saka Energi Indonesia as at 31 December 2021 and these financial statements may be obtained from 11-12 St. James's Square, London, SW1Y 4LB.
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SAKA INDONESIA PANGKAH LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
The year 2022 has challenged the SIPL business, exposed us outside of our comfort zone, demanded our agility to adapt to new ways of living and also instilled a new level of creativity and collaboration. The Covid-19 pandemic has been significantly impacting SIPL’s operational throughout the year. Not only for SIPL, but all sectors of business having difficulties in navigating through this labyrinth of a new normal.
In the midst of such unprecedented conditions, through the multiple strategic initiatives executed by management, SIPL still managed to demonstrate its capabilities to provide energy for the community and ample benefits for all stakeholders. Management performs operation excellence, which is supported by the cost-consciousness program, to establish an operation that can sustain SIPL profitability. The achievement marked in 2022 lays the foundation for SIPL to achieve better performance in the upcoming years.
In 2022, SIPL continued to carry out several previously scheduled projects. The Company continued its development process in the West Pangkah and Sidayu fields, the West Pangkah onstream in Q1 2022 and Sidayu field onstream in Q4 2022. These two fields’ development served as part of the Company’s mid-term and long-term plans to support the Company’s increased oil and gas production. In 2022, SIPL carried out a cost consciousness program by boosting efficiency in various fields. This initiative was taken to maintain the Company’s profitability amidst weakening price pressures. The efficiency improvement carried out by SIPL covered all processes in the organization, with the largest coming from operations in the field.
In 2022, the work programs in Pangkah emphasized maintaining existing wells, re-working wells, and carrying out well intervention. SIPL managed to record good operational performance by on streaming field development in West Pangkah and Sidayu in a relatively targeted time. Throughout 2022, SIPL has continued to workover 1 well (UPB-14ST), completing 1 development well (WPA-04). With these projects, SIPL hopes to recover in the oil prices and market demand.
In pursuit of its vision and mission, SIPL always adheres to the following values: committed to being the best in its class, working with high value for the benefit of stakeholders, providing the best service to stakeholders, maintaining ethical business practices throughout its operations, continuously enhancing competencies and taking responsibility for actions and decisions, and always prioritising safety, health, and environmental protection both inside and outside of work.
In the coming year, SIPL will continue to increase its reserve base and accelerate its development phase.
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SAKA INDONESIA PANGKAH LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
2023 & 2024 Events
The Board is very optimistic that SIPL’s operational and financial performance will be better in 2023. The Board will continue to carry out active supervision and provide advice and recommendations to achieve company targets.
Amidst such challenging conditions, SIPL still managed to run the Company favorably and prioritised employee safety and health. SIPL established a number of policies and procedures for implementing strict health protocols as recommended by the Government. Hence, employees can work safely, especially for operations employees, who still have to carry out activities at offshore and onshore processing facilities (OPF).
The Oil and Gas sector is always driven by changes in oil supply, demand, and price. These will have particular importance in the coming year as the market digests the magnitude of the recovery from Covid-19. Hence, SAKA will continue its cost-consciousness program that has become the Company’s best practice throughout 2022.
Other efforts that has been done by SIPL include acceleration of the West Pangkah and Sidayu projects to improve SIPL’s revenue, efficiency in capital expenditure, prioritise the budget of capital expenditure to expenditures that are directly related to production, reviewing business development project priorities, delaying capital expenditures for exploration activities and others.
In 2023 SIPL will continue to drill four development wells (SID-02, SIC-03, WPA-05 dan WPA-06), two well workovers (UPB-11 & UPB-12), and continue the exploration and exploitation study.
In the coming year, SIPL is committed to maintaining production levels by optimising its West Pangkah and Sidayu, which are expected to be the engines for boosting SIPL’s production. Other than that, SIPL will continue to carry out exploration efforts to increase production reserves. In addition, SIPL also will continue to strive for internal improvements plan program, which is believed to have a positive impact on the smooth operation of the Company’s operations and finances.
Turnover is recognised to the extent that it is probable that the economic benefits will flow to the company and the turnover can be reliably measured. Turnover is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. The following criteria must also be met before turnover is recognised:
The Company recognises turnover from the sale of crude oil, natural gas and natural gas liquids when the title passes to the customer.
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SAKA INDONESIA PANGKAH LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
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Exploration and development costs
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Oil and gas exploration, production and development activities are accounted for using the successful efforts method.
a) License and property acquisition costs
Costs of acquiring unproved and proved oil and gas leasehold acreage, including lease bonuses, brokers' fees and other related costs, are capitalised. These costs are amortised on a straight line basis over the life of the license.
b) Exploration costs
Annual lease rentals and exploration expenses, including geological and geophysical expenses and exploratory dry hole costs, are charged against income as incurred.
The costs of exploratory wells that find oil and gas reserves are capitalised pending determination of whether proved reserves have been found. In an area requiring major capital expenditure before production can begin, an exploration well is carried as an asset if sufficient reserves are discovered to justify its completion as production well, and sufficient progress is being made in assessing the reserves and the economic and operating viability of the project. If either of those criteria is not met, or if there is substantial doubt about the economic or operational viability of a project, the capitalised well costs are charged to expenses.
c) Development costs
Costs of drilling and equipping productive wells, including development dry holes, and related production facilities are capitalised.
The operation of all of the oil and gas exploration, development and production activity is conducted through joint arrangements that are not entities. The appropriate share of the revenues and costs of these joint arrangements are reflected in the company's financial statements.
Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and the assets are long lived with annual impairment charge. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
Depletion expense for acquisition costs of proved properties is calculated using the production method over the proved and probable oil and gas reserves.
Depreciation, depletion and amortisation for oil and gas production equipment, properties and wells is calculated on the unit of production method over proved and probable oil and gas reserves.
Depreciation of all other plant and equipment is determined on the straight line method based on estimated useful lives and is charged to 'administrative expenses' in the statement of comprehensive income.
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SAKA INDONESIA PANGKAH LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
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Impairment of fixed assets
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Assets that are subject to depreciation or amortisation are assessed at each reporting date to determine whether there is any indication that the assets are impaired. Where there is any indication that an asset may be impaired, the carrying value of the asset (or cash-generating unit to which the asset has been allocated) is tested for impairment. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's (or CGU's) fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (CGUs). Non-financial assets that have been previously impaired are reviewed at each reporting date to assess whether there is any indication that the impairment losses recognised in prior periods may no longer exist or may have decreased. The company reviews long-lived assets, including oil and gas properties at a field level.
Underlift or overlift production with the company's entitlement are stated at the lower of cost or net realisable value and the amounts are reflected in current assets or current liabilities respectively.
Stocks of warehouse materials are stated at the lower of weighted average and net realisable value and are reflected in fixed assets.
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 the statement of comprehensive income.
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Cash and cash equivalents
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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.
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SAKA INDONESIA PANGKAH LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
The company only enters into basic financial instrument transactions that result in the recognition of financial assets and liabilities like trade and other debtors and creditors, loans from banks and loans to related parties.
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.
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 statement of comprehensive income.
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 company 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.
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SAKA INDONESIA PANGKAH LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
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Foreign currency translation
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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 the statement of comprehensive income 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 statement of comprehensive income within 'finance income or costs'. All other foreign exchange gains and losses are presented in the statement of comprehensive income within 'administrative expenses'.
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Interest payable and similar expenses
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Interest payable and similar expenses are charged to the statement of comprehensive income 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.
Rentals paid under operating leases are charged to the statement of comprehensive income on a straight line basis over the lease term.
Benefits received and receivable as an incentive to sign an operating lease are recognised on a straight line basis over the lease term, unless another systematic basis is representative of the time pattern of the lessee's benefit from the use of the leased asset.
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SAKA INDONESIA PANGKAH LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
Defined contribution pension plan
The company operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the company pays fixed contributions into a separate entity. Once the contributions have been paid the company has no further payment obligations.
The contributions are recognised as an expense in the statement of comprehensive income 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 company in independently administered funds.
Defined benefit pension plan
The Group operates a defined benefit pension plan, the assets of which are held separately from those of the Group in an independently administered fund.
The liability recognised in the statement of financial position in respect of the defined benefit pension plan is the present value of the defined benefit obligation less the fair value of the plan assets at the reporting date. The defined benefit obligation is assessed using the projected unit of credit method and reviewed annually by independent actuaries.
Service costs are recognised in the within 'administrative expenses' in statement of comprehensive income so as to spread the costs over the service lives of employees.
Net interest on the net defined benefit liability is determined by multiplying the net defined benefit liability by the discount rate, as determined at the start of the annual reporting period, taking account of any changes arising during the period as a result of contribution and benefit payments. Net interest is recognised in the statement of comprehensive income in the period.
Re-measurement of the net defined benefit liability is recognised in other comprehensive income and comprises actuarial gains and losses and the return on plan assets, excluding amounts included in net interest expense.
Some defined benefit plans require employees or third parties to contribute to the cost of the plan. Contributions by employees reduce the cost of the benefits to the entity.
Re-measurement of the net defined benefit liability comprises:
(a) actuarial gains and losses;
(b) the return on plan assets, excluding amounts included in net interest on the net defined benefit liability; and
(c) any change in the amount of a defined benefit plan surplus that is not recoverable, excluding amounts included in net interest on the net defined benefit liability.
Re-measurement of the net defined benefit liability recognised in other comprehensive income shall not be reclassified to profit or loss in a subsequent period.
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SAKA INDONESIA PANGKAH LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
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Interest receivable and similar income
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Interest receivable and similar income is recognised in the statement of comprehensive income using the effective interest method.
All borrowing costs are recognised in the statement of comprehensive income in the year in which they are incurred.
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Provisions for liabilities
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Provisions are made where an event has taken place that gives the company 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 the statement of comprehensive income in the year that the company 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.
Decommissioning provision
Provision for decommissioning is recognised in full at the commencement of production. The amount recognised is the discounted value of the estimated future expenditure determined in accordance with local conditions and requirements. A corresponding tangible fixed asset is also created of an amount equal to the provision. This is subsequently depreciated as part of the capital costs of the production and transportation facilities. Any change in the present value of the estimated expenditure is reflected in an adjustment to the provision and the fixed asset.
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SAKA INDONESIA PANGKAH LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
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Current and deferred taxation
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The tax expense for the year comprises current and deferred tax. Tax is recognised in the statement of comprehensive income, except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.
The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the reporting date in the countries where the company operates and generates income.
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:
∙The recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits; and
∙Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met.
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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SAKA INDONESIA PANGKAH LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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Judgements in applying accounting policies and key sources of estimation uncertainty
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In applying the company’s accounting policies, the directors are required to make judgements, estimates and assumptions in determining the carrying amounts of assets and liabilities. The directors’ judgements, estimates and assumptions are based on the best and most reliable evidence available at the time when the decisions are made, and are based on historical experience and other factors that are considered to be applicable. Due to the inherent subjectivity involved in making such judgements, estimates and assumptions, the actual results and outcomes may differ.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the year in which the estimate is revised, if the revision affects only that year, or in the year of the revision and future years, if the revision affects both current and future years.
3.1 Critical judgements in applying the company’s accounting policies
The critical judgements that the directors have made in the process of applying the company’s accounting policies and that have the most significant effect on the amounts recognised in the statutory financial statements are discussed below.
(i) Assessing indicator of impairment
The company reviews long lived assets, including oil and gas properties at a group level, for impairment whenever events or changes in circumstances indicate that the carrying amounts may not be recovered. If the carrying amounts are not expected to be recovered by discounted future cash flows, assets are impaired and an impairment loss recorded.
Where the carrying amount of a previously impaired asset is lower than the recoverable amount, a reversal of impairment is booked, to the extent that it does not exceed the amount of the initial impairment.
3.2 Key sources of estimation uncertainty
The key assumptions concerning the future, and other key sources of estimation uncertainty, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.
(i) Depreciation, depletion and amortisation
Depletion expense for acquisition costs of proved properties is calculated using the production method over the proved and probable oil and gas reserves.
Depreciation, depletion and amortisation for oil and gas production equipment, properties and well is calculated on the unit of the production method over proved and probable oil and gas reserves.
(ii) Decommissioning provision
The company makes a provision for decommissioning costs relating to the future abandonment of field, based on the present value of expected expenditures required to settle the asset retirement obligation.
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SAKA INDONESIA PANGKAH LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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Turnover represents the invoiced amounts of goods sold during the year, stated net of any taxes.
The company's turnover is generated form the company's entitlement to hydrocarbons from properties held in Indonesia.
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An analysis of turnover by class of business is as follows:
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* Liquified petroleum gas
All turnover arose within Indonesia.
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The operating profit is stated after charging:
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Depreciation of tangible fixed assets
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Other operating lease rentals
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During the year, the directors did not receive or waive any emoluments in respect of their services to the company (2021: $nil).
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SAKA INDONESIA PANGKAH LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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Fees payable to the company's auditor for the audit of the company's annual accounts
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Fees payable to the company's auditor in respect of:
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Services relating to taxation
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Staff costs were as follows:
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Cost of defined contribution scheme
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The average monthly number of employees, including the directors, during the year was as follows:
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Exploration and production
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The directors did not receive remuneration in respect of their services to the Company (2021: $nil).
The directors are considered to be the only key personnel of the Company.
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SAKA INDONESIA PANGKAH LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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Interest receivable and similar income
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Interest on pension scheme assets
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Share of joint ventures' interest receivable
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Interest on ARO sinking fund
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Interest payable and similar expenses
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Loans from group undertakings
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Decommission provision - unwinding of discount
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Interest on pension scheme liabilities
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The interest on the loan has been waived in 2022, thus no interest expense has been charged in the period.
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Current tax on profit for the year
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Origination and reversal of timing differences
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Taxation charge on profit
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SAKA INDONESIA PANGKAH LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
10.Tax on profit (continued)
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Factors affecting tax charge for the year
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The tax assessed for the year is higher than (2021: lower than) the standard rate of corporation tax in the UK of 19% (2021: 19%). The differences are explained below:
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Profit multiplied by standard rate of corporation tax in the UK of 19% (2021: 19%)
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First Tranche Petroleum tax
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Total tax charge for the year
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Factors that may affect future tax charges
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The UK Government announced in the 2021 budget that from 1 April 2023, the rate of corporation tax in the United Kingdom will increase from 19% to 25%. Companies with profits of £50,000 or less will continue to be taxed at 19%, which is a new small profits rate. Where taxable profits are between £50,000 and £250,000, the higher 25% rate will apply but with a marginal relief applying as profits increase.
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SAKA INDONESIA PANGKAH LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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Changes in discount rate applied to decommissioning provision (see note 18)
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During the year the directors reviewed the carrying value of tangible fixed assets and this led to a reversal of impairment of $18,443,000 (2021: no reversal and no impairment). The recoverable amount has been calculated after considering future discounted cash flows of the producing fields over the next 26 years (2021: over the next 26 years), using a WACC of 8.34% (2021: 8.00%). The expected future cash flows are estimated using management’s best estimate of future oil, natural gas and LPG prices and reserves volumes.
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Stocks of crude oil and LPG
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Stock is stated after provisions for impairment of $178,000 (2021: $181,000).
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SAKA INDONESIA PANGKAH LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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Due after more than one year
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Amounts owed by group undertakings
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Included within debtors due after more than one year of $6,405,000 (2021: $6,405,000) is a restricted cash reserve relating to government funds.
Included within other debtors is an escrow account amounting to $63,369,000 (2021: $55,024,000) that is jointly controlled by the company and SKK Migas in accordance with SKK Migas Standard Operating Procedure No 040/PTK/X1/2010. The escrow account is held to fund the decommissioning provision relating to oil and gas operations in Indonesia. The JV cutback of this debtor is $22,179,000 (2021: $19,258,000) meaning the net balance for SIPL equates to $41,190,000 (2021: $35,765,000).
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Amounts owed by group undertakings
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Prepayments and accrued income
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Trade debtors are stated after a provision for bad debts of $580,000 (2021: $580,000).
Amounts owed by group undertakings are unsecured, interest free and repayable on demand.
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Cash and cash equivalents
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SAKA INDONESIA PANGKAH LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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Creditors: Amounts falling due within one year
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Amounts owed to group undertakings
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Accruals and deferred income
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At 31 December 2022, amounts owed to group undertakings included a balance on the loan from PT Saka Energi Indonesia amounting to $347,798,000, consisting of the principal amount of $296,851,000 and accrued interest $50,947,000 (2021: $464,780,000, principal $413,846,000 and accrued interest $50,947,000). The loan incurred interest using LIBOR rate for 12 months, and the maturity date is 31 December 2023.
The outstanding balance of amounts owed to group undertakings is unsecured, interest free and repayable on demand.
Included in other creditors is $2,046,000 (2021: $1,549,000) of defined benefit pension liabilities, please see note 23 for further information on this.
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Creditors: Amounts falling due after more than one year
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First Tranche Petroleum tax payable
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First Tranche Petroleum tax payable
At 31 December 2022, the First Tranche Petroleum (FTP) tax payable was $59,473,000 (2021: $71,165,000). These costs are expected to be incurred in 2046, at the end of the Production Sharing Contract. The amount payable is determined by the revenue earned by SIPL and therefore is accrued each period based on revenue earned in the corresponding period.
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SAKA INDONESIA PANGKAH LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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(Charge)/credit to the Statement of comprehensive income
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The deferred taxation balance is made up as follows:
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Capital allowances in excess of depreciation
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Deferred tax on pension scheme liability
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Short term timing differences
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Deferred tax has been provided at the Indonesian tax rate of 44% (2021: 44%).
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Decommissioning provision
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Changes due to increase in discount rate
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Decommissioning provision
At 31 December 2022, the provision for the costs of decommissioning the company's oil and gas and natural gas production facilities and pipelines at the end of their economic lives was $26,324,000 (2021: $35,398,000). These costs are expected to be incurred over the next twenty-five years (2021: twenty-six years). The provision has been estimated using existing technology, at future prices using nominal discount rates of 4.92% - 5.31% (2021: 3.85%).
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SAKA INDONESIA PANGKAH LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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The Company has 5,000,000 authorised $1 preference shares, none of which are allotted, called up or fully paid.
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Allotted, called up and fully paid
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2 (2021: 2) ordinary shares of £1.00 per share
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27,467,615 (2021: 27,467,615) ordinary shares of $1.00 each
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Ordinary shares carry voting rights, but no rights to fixed income.
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Other reserves
Other reserves represent capital contributions advanced by the company's former parent company.
Profit and loss account
This reserve represents the cumulative profits and losses.
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At 31 December 2022 the company had capital commitments as follows:
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Future capital expenditure authorised and contracted for in respect of:
- fields under development and producing fields
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The company has a defined contribution scheme. The pension cost charge represents contributions payable to the fund and amounted to $1,136,000 (2021: $1,640,000). As at the reporting date, amounts payable to the defined contribution plan are $3,340,000 (2021: $1,549,000).
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SAKA INDONESIA PANGKAH LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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Pension commitments (continued)
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The company operates a defined benefit pension plan. The scheme is a funded defined benefit pension plan in Indonesia, the assets of which are held as a segregated fund and administered by trustees.
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Change in defined benefit obligation
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Defined benefit obligation at end of prior year
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Past service cost amendment
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Benefit payments from plan assets
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Benefit payments from employer
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Adjustment of past services liabilities
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Actuarial charges - financial assumptions
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Actuarial charges - demographic assumptions
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Defined benefit obligation at end of year
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Change in value of plan assets
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Fair value of plan assets at the end of prior year
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Benefit payments from plan assets
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Return on plan assets (excluding interest income)
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Fair value of plan assets at the end of year
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SAKA INDONESIA PANGKAH LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
|
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Pension commitments (continued)
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Amount recognised in the statement of financial position
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Defined benefit obligation
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Net defined benefit liability
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The net defined liability consists of:
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Component of defined benefit cost
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Recognition of past services liabilities
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Remeasurement of other long term benefit
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Defined benefit cost included in P&L
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Remeasurements (recognised in other comprehensive income)
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Return on plan assets (excluding interest income)
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Total remeasurements included in OCI
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Total defined cost recognised in P&L and OCI
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|
SAKA INDONESIA PANGKAH LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
|
|
Pension commitments (continued)
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Net defined benefit liability reconciliation
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Net defined benefit liability
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Defined benefit cost included in P&L
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Total remeasurements included in OCI
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Employer direct benefit payments
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Employer direct settlement payments
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Net defined benefit liability as of end of year
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Defined benefit obligation
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Defined benefit obligation by participant status:
Actives
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Cumulative losses recognised in OCI
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Cumulative losses recognised in OCI at beginning of the year
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Cumulative gains recognised in OCI in period
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Cumulative losses recognised in OCI at the end of the year
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Cash and cash equivalents
|
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SAKA INDONESIA PANGKAH LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
|
|
Pension commitments (continued)
|
The principal reporting assumptions at the reporting date (expressed as weighted averages) were:
2022 2021
Discount rate 7.2% 7.0%
Future salary increases 4.0% 4.0% Inflation 7.0% 7.0%
Mortality rate TMI 2019 TMI 2019
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Commitments under operating leases
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At 31 December 2022 the company had future minimum lease payments under non-cancellable operating leases as follows:
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Later than 1 year and not later than 5 years
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Related party transactions
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The company is a wholly owned member of PT Saka Energi Indonesia group, and as such has taken advantage of the exemption, permitted by section 33 of FRS102, not to provide disclosures of transactions entered into with other wholly owned members of the Group.
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Post balance sheet events
|
There have not been any post balance sheet events for the company at the year ended 31 December 2022.
During the year, the immediate parent undertaking was Saka Indonesia Pangkah B.V., a company incorporated in The Netherlands.
During the year, the ultimate parent undertaking and controlling party was PT Perusahaan Gas Negara Tbk (PGN), a company incorporated in Indonesia.
PT Saka Energi Indonesia is the parent undertaking of the smallest and largest group to consolidate these financial statements and copies of its consolidated financial statements can be obtained from the company at 11-12 St James's Square, London, SW1Y 4LB.
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