134.
INDOFOOD AGRI RESOURCES LTD
ANNUAL REPORT 2015
N
O
T
E
S
T
O
T
H
E
F
I
N
A
N
C
I
AL
S
TA
TE
M
ENTS
For the financial year ended 31 December 2015
31.
COMMITMENTS AND CONTINGENCIES
(a)
Plasma receivables
The Indonesian government requires oil palm plantation companies to develop new plantations together with the
local small landholders. This form of assistance to local small landholders is generally known as the “Plasma
Scheme”. Once developed, the plasma plantations are transferred to the small landholders who then operate
the plasma plantations under the supervision of the developer. In line with this requirement, certain subsidiary
companies of the Group have commitments to develop plantations under the Plasma Scheme. The funding for
the development of the plantations under the Plasma Scheme is provided by the designated banks and/or by
the subsidiary companies. This includes the subsidiary companies providing corporate guarantees for the loans
advanced by the banks.
When the plasma plantations start to mature, the plasma farmers are obliged to sell all their harvests to the
subsidiary companies and a portion of the resulting proceeds will be used to repay the loans from the banks
or the subsidiary companies. In situations where the sales proceeds are insufficient to meet the repayment
obligations to the banks, the subsidiary companies also provide temporary funding to the plasma farmers to
develop the plasma plantations and to repay the instalment and interest payments to the banks. The plasma
farmers will repay the temporary funding to the subsidiary companies once the plantations have positive cash
flows.
The loans advanced by the banks under the Plasma Scheme are secured by the sales proceeds of FFB of the
respective plasma plantations and corporate guarantees from certain subsidiary companies for a maximum
amount of Rp1,012.6 billion (2014: Rp1,132.7 billion) as at 31 December 2015.
The Group recorded an allowance for uncollectible plasma receivables in its consolidated balance sheet
amounting to Rp160.1 billion (2014: Rp160.9 billion). Based on a review of the plasma receivables of each project
as at 31 December 2015, management believes that the above-mentioned allowance for uncollectible plasma
receivables is sufficient to cover possible losses arising from the uncollectible plasma receivables.
An analysis of the movement in allowance for uncollectible plasma receivables is as follows:
Group
2015
2014
Rp million
Rp million
At 1 January
160,931
170,356
Allowance for the year
–
167
Write-off
(561)
(9,440)
Reversal of allowance
(235)
(152)
At 31 December
160,135
160,931
