INDOFOOD AGRI RESOURCES LTD
ANNUAL REPORT 2015
99.
N
O
T
E
S
T
O
T
H
E
F
IN
A
N
CI
AL
S
TA
TE
M
ENTS
For the financial year ended 31 December 2015
13.
BIOLOGICAL ASSETS
Biological assets primarily comprise oil palm, rubber, sugar cane and timber plantations. The following shows the
movement in their carrying value:
Group
2015
2014
Rp million
Rp million
At fair value
At 1 January
15,060,646
13,893,246
Additions
1,038,636
1,242,758
Disposal
(135)
(4,197)
Write-off
(189)
–
Realisation of deferred cost
(176,578)
(143,427)
Reclassifications (to)/from other non-current assets
(23,589)
12,674
15,898,791
15,001,054
(Loss)/gain arising from changes in fair value of biological assets
(19,851)
59,592
At 31 December
15,878,940
15,060,646
The fair values of biological assets are determined by an independent valuer using the discounted future cash flows of
the underlying plantations.
Oil Palm Plantations
Mature oil palm trees produce Fresh Fruit Bunches (“FFB”), which are used to produce CPO, PK and other PK related
products. The expected future cash flows of the oil palm plantations are determined using the forecast market price of
FFB, which is largely dependent on the projected selling prices of CPO and PKO in the market.
Significant assumptions made in determining the fair values of the oil palm plantations are as follows:
(a)
oil palm trees have an average maturity life of 25 years, with the first 3 to 4 years as immature and the remaining
years as mature stage;
(b)
estimated FFB yield per hectare of oil palm trees between 5 – 31 tonnes/hectare (2014: 9 – 30 tonnes/hectare)
is determined in reference to guidelines issued by the Indonesian Oil Palm Research Institute (“Pusat Penelitian
Kelapa Sawit”) in Indonesia, which varies with the average age of oil palm trees, as well as internal standards
and results of internal assessments of other relevant factors;
(c)
the discount rate used in 2015 is 13.99% (2014: 13.55%). Such a discount rate represents the asset specific rate
for the Group’s oil palm plantation operations which is applied in the discounted future cash flows calculation;
and
(d)
the projected price of CPO between US$0.63/kg – US$0.70/kg (2014: US$0.81/kg – US$0.82/kg) is based on
forecast of the World Bank.
