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INDOFOOD AGRI RESOURCES LTD
ANNUAL REPORT 2015
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For the financial year ended 31 December 2015
13.
BIOLOGICAL ASSETS (CONT’D)
Rubber Plantations
Mature rubber trees produce cup lump. The expected future cash flows of the rubber plantations are determined using
the forecast market price of cup lump which are based on the projected selling price of Rubber Smoke Sheet 1 (“RSS1”)
and other rubber products of the Group.
Significant assumptions made in determining the fair values of the rubber plantations are as follows:
(a)
rubber trees have an average maturity life of 25 years, with the first 5 to 6 years as immature and the remaining
years as mature stage;
(b)
discount rate used in 2015 is 14.25% (2014: 13.30%). Such a discount rate represents the asset specific rate for
the Group’s rubber plantations operations which are applied in the discounted future cash flows calculation; and
(c)
the projected selling prices of RSS1 between Rp19,822/kg – Rp29,670/kg (2014: Rp22,119/kg – Rp29,509/kg) and
other rubber products of the Group over the projection period are based on the extrapolation of historical selling
prices and the forecasted price trend from the World Bank.
Sugar Cane Plantations
The expected future cash flows of the sugar cane plantations are determined using the forecast market price of sugar
canes which are based on the projected selling price of sugar.
Significant assumptions made in determining the fair values of the sugar cane plantations are as follows:
(a)
Cane tree is available for annual harvest for an average of 4 years after initial planting;
(b)
discount rate used in 2015 is 11.89% (2014: 12.13%). Such discount rate represents the asset specific rate for the
Group’s sugar cane plantations operation which are applied in the discounted future cash flows calculation; and
(c)
the projected selling price of sugar at Rp9,392/kg – Rp10,140/kg (2014: Rp8,500/kg) over the projection period
are based on the extrapolation of historical selling prices and the forecasted price trend from the World Bank or
the minimum sugar price imposed by the Ministry of Trade of Indonesia, whichever is higher.
Timber Plantations (HTI)
The expected future cash flows of the timber plantations (HTI) are determined using the forecast market price of logs.
The key assumptions of timber plantations are as follows:
(a)
Timber tree is available for harvest only once about 8 years after initial planting.
(b)
Discount rate used in 2015 is 9.33% (FY2014: 8.76%) represents the asset specific rate for the Group’s timber
plantations operations which are applied in the discounted future cash flows calculation.
(c)
The projected selling price of logs at Rp529,687 to Rp590,712/m
3
(2014: Rp448,157 to Rp471,434/m
3
) over the
projection period are based on the extrapolation of domestic selling prices and the forecasted price trend from
the World Bank.
