Corporation operated a $1.6 million overdraft facility

By Lanuola Tusani Tupufia – Ah Tong 24 February 2019, 12:00AM

The Samoa Trust Estate Corporation operated a $1.6 million overdraft facility with the Samoa Commercial Bank in 2016-2017.

The credit agreement with the bank is recorded in the Samoa Trust Estate Corporation (S.T.E.C.) Annual Report for June 30, 2016 to June 30, 2017.

An overdraft facility is a credit agreement made with a financial institution that permits an account holder to use or withdraw more money than they have in their account.  

In 2016 the corporation had a $526,620 overdraft facility and the following year it doubled that amount – recording $1,171,148 with the Samoa Commercial Bank to reach $1.697,768.00 in total.  

“The Corporation operates an overdraft facility with the Samoa Commercial Bank with a limit of $1,200,000 at an interest rate of 10.5% per annum,” stated the annual report. 

“The overdraft is secured with half acres land at Vaitele, Plan 7924, and three quarter acres at Vaitele Plan 10263 with the office building.”

Under the Extraordinary Item of the annual report it stated, “the Cabinet at its meeting held on the 11 January 2006 FK(06)01 approved the writing off of the Samoa Trust Estates Corporation’s debt with the Samoa Land Corporation of $2,557,377.00.”

The report highlighted additional funds were given to the corporation as additional capital contribution, to assist with the settlement of its debt with the Unit Trust of Samoa (U.T.O.S) and the overdraft with Samoa Commercial Bank Limited. 

Under the section Summary of Significant Accounting Policies there was an “additional government contribution” of $1,700,000 in 2016. 

The terms and conditions of the term loan from UTOS is for five years with an interest of 9.5 per cent per annum. The first repayment of the principal for year 1 is $300,000, the second year $500,000 tala, the third year $800,000 and the fourth year $900,000 and final year principal repayment is $1 million tala. The loan is guaranteed by the government of Samoa. 

In total the corporation will pay $3.5million to UTOS for the term of five years. 

A Restatement of 2016 Accounts in the report shows that “the 2016 accounts have been restated to reflect the write-off of crop development costs related to previous years for clearance, maintenance and replanting of cocoa, coconut, coffee and avocado.

“The total cost of the write-off is $529,485 in which $349,199 have been written off from M.C.I.L. E.I.F. project income and $180,286 from salaries and wages for cost of labour.”

The report stated “the write-off is a result of a site visit which concluded that the related area of crops are all covered with weeds and is assessed to be unhealthy and would not be harvested in the next 3-4 years. 

“A significant cost will be spent to maintain the farm to produce the required results to produce cash flow.” 

Under the section Going Concern, the report states the corporation’s continuation as a going concern is dependent on the ability of the board and management to achieve the corporation’s planned activities for the coming years. 

“The results for the year ended 30 June 2017 showed trading loss of $885,962 and added to the profits and loss appropriation accounts, it shows accumulated loss of $3,403,535 at 30 June 2017,” according to the annual report.  

“The financial statements show working, capital deficit of $3,934,513 (2016: $3,254,426). These factors which raise doubts that the corporation will be able to continue as a going concern, and therefore whether it will realise its assets and extinguish its liabilities in the normal course of the business and at amounts stated in the financial statements.” 

S.T.E.C’s main activities are the development and management of plantations on Upolu, wholesaling and retailing cattle, producing and selling coconuts, fire woods and dried copra. The activities that are still in operation as at 30 June 2016 are coconuts, copra, fire woods, taro, banana and livestock. The corporation’s current project of long term crops commenced at the end of May 2011. 

By Lanuola Tusani Tupufia – Ah Tong 24 February 2019, 12:00AM

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