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General information

This General Information is intended to help readers understand the bases of our financial reporting and analysis contained in this Annual Report 2016.

Important changes
Change in fiscal year-end to 31 December

In 2015, the Company (Olam International Limited) changed its fiscal year-end from 30 June to 31 December. With this change, the Company’s fiscal year 2015 (FY2015) was an 18-month period from 1 July 2014 to 31 December 2015. Starting with 2016 (FY2016), the Company follows a January to December fiscal year. To facilitate like-for-like comparison,the financial results for the 12-month FY2016 are presented in the Financial and performance highlights (pages 8 to 11) and the Group COO’s review against those for the same corresponding 12-month period in 2015, as well as 2012 to 2014, unless otherwise indicated.

The audited statutory accounts on pages 1 to 86 of the Financial Report present the Financial Statements and Notes for the 12-month FY2016 against the preceding the 18-month FY2015. The financial statements presented in this section are therefore not comparable between the two periods.

Changes in accounting standards, policies and restatements

The Group has adopted all the new and revised standards which are effective for annual financial periods beginning on or after 1 January 2016. These include Amendments to FRS 16 and FRS 41 Agriculture: Bearer Plants and early adoption of FRS 109 Financial Instruments. As a result of these amendments, the Consolidated Balance Sheet of the Group as at 1 July 2014 and 31 December 2015 as well as the Consolidated Profit and Loss Account and Consolidated Cash Flow Statement for the 18 months ended 31 December 2015 have been restated. These amendments and other changes in accounting standards and their impact are detailed in the Notes to Financial Statements.

Business segmentation and reporting

For financial reporting purposes, we organise our 18 business platforms into five segments – Edible Nuts, Spices and Vegetable Ingredients; Confectionery and Beverage Ingredients; Food Staples and Packaged Foods; Industrial Raw Materials, Ag Logistics and Infrastructure (renamed from Industrial Raw Materials to reflect the principal activities of the Gabon Special Economic Zone within the segment); and Commodity Financial Services. The table below shows the distribution of platforms across these 5 segments.

General information segment table

In addition, we report our financial performance on the various value chain initiatives across 3 value chain segments as follows:

3 value chain segments

Definitions of key financial metrics

The definitions for the key financial metrics are as follows:

Sales Volume: Sale of goods in metric tonne equivalent. There are no associated volumes for CFS and GSEZ platforms

Revenue: Sale of goods and services

Other Income: Includes sale of scrap materials, commissions and claims income and fair value gain on investments held for trading. Negative goodwill, gain on sale of assets and other non-recurring items which are part of Other Income in the financial statements are treated as Exceptional Items.

Costs of Sales: Cost of goods sold, shipping and logistics, commissions and claims expenses and the net measurement of derivative assets

Overhead Expenses: Employee benefit costs, manufacturing overheads, travel expenses and other direct expenses

Other Operating Expenses: Unrealised foreign exchange gain/loss and other expenses

Net Changes in Fair VAlue of Biological Assets: Records changes in the fair value of agricultural produce growing on bearer plants and livestock

Exceptional Items: One-off, non-recurring items, including negative goodwill and related transaction costs, gain/loss on sale of assets/business, gain/loss on buyback of bonds, impairment loss, finance charges on pre-payment of loans and non-recurring business restructuring expenses. Tax expenses associated with these items are also presented as Exceptional Items.

PAT: Net profit after tax

PATMI: PAT less minority interest

Operational PATMI: PATMI excluding Exceptional Items

EBITDA: Earnings Before Interest, Tax, Depreciation and Amortisation which includes results of jointly controlled entitles and associates, minority interest, and excludes Exceptional Items

Invested Capital (IC): Excludes cash and bank balances, deferred tax assets, fixed deposits, other current/non-current assets (other than option premiums payable/receivable) and fair value of derivative assets on bonds

EBITDA/IC: EBITDA on average invested capital based on beginning and end-of-period invested capital

Net Gearing: Ratio of Net Debt (gross debt less cash) to Equity (before fair value adjustment reserves)

Net Gearing (adjusted): Net gearing adjusted for readily marketable inventories that are liquid, hedged and/or sold forward, operating as near-cash assets on the balance sheet, and secured receivables are supported by letters of credit or documents through banks

Free Cash Flow to Firm (FCFF): Operating cash flow less changes in working capital, cash taxes, capital expenditures and investments

Free Cash Flow to Equity (FCFE): FCFF less net interest paid

Disclaimer

Certain sections of our Annual Report 2016 have been audited. The sections that have been audited are set out on pages 1 to 86 of the Financial Report. Readers should note that legislation in Singapore governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Except where you are a shareholder, this material is provided for information only and is not, in particular, intended to confer any legal rights on you. This Annual Report does not constitute an invitation to invest in the Company’s shares. Any decision you make relying on this information is solely your responsibility. The information given is as of the dates specified, is not updated and any forward looking statement is made subject to the reservation specified in the following paragraph.

Cautionary statement

This Annual Report may contain forward-looking statements. Words such as ‘expect’, ‘anticipate’, ‘intend’ or the negative use of these terms and other similar expressions of future performance or results and their negatives are intended to identify such forward-looking statements. These forwardlooking statements are based upon current expectations and assumptions regarding anticipated developments and other factors affecting the Group. They are not historical facts, nor are they guarantees of future performance.

Because these forward-looking statements involve risks and uncertainties, there are important factors that could cause actual reports to differ materially from those expressed or implied by these forward looking statements, including among others, competitive pricing and activity, demand levels for the products that we supply, cost variances, the ability to maintain and manage key supplier and customer relationships, supply chain sources, currency values, interest rates, the ability to integrate acquisitions and complete planned divestitures, physical risks, environmental risks, the ability to manage regulatory, tax and legal matters and resolve pending matters within current estimates, legislative, fiscal and regulatory developments, political, economic and social conditions in the geographic markets where the Group operates and new or changed priorities of the Company’s or its subsidiaries’ Boards. Further details of potential risks and uncertainties affecting the Group are updated in the Group’s Offering Circular on its US$5.0 billion Euro Medium Term Note Programme dated 23 November 2016.

These forward-looking statements speak only as of the date of this Annual Report. Except as required by any applicable law or regulation, the Group expressly disclaims any obligation or undertaking to release publicly any updates or revision to any forward-looking statements contained herein to reflect any change in the Group’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.