INDOFOOD AGRI RESOURCES LTD
ANNUAL REPORT 2015
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For the financial year ended 31 December 2015
33.
FAIR VALUE OF ASSETS AND LIABILITIES (CONT’D)
(b)
Valuation policy
The Group’s subsidiary company, PT SIMP’s financial reporting team in charge of valuation (“Valuation Team”)
determines the policies and procedures for recurring fair value measurement, such as biological assets and fair
value (less costs of disposal) of CGUs (for goodwill impairment test purpose).
External valuers are involved for valuation of significant assets, in particular, the biological assets. Involvement
of external valuers is decided annually by the Valuation Team after discussion with and approval by PT SIMP’s
Audit Committee and Board of Directors. Selection criteria include market knowledge, reputation, independence
and whether professional standards are maintained. Valuers normally rotate when required by local regulation
for independent valuers. The Valuation Team decides, after discussions with the Group’s external valuers, which
valuation techniques and inputs to use.
At each reporting date, the Valuation Team analyses the movements in the values of assets which are required
to be re-measured or re-assessed as per the Group’s accounting policies. For this analysis, the Valuation Team
verifies the major inputs applied in the latest valuation by agreeing the information in the valuation computation
to the relevant documents and data.
The Valuation Team, in conjunction with the Group’s external valuers, also compares each of the changes in the
fair value of each asset with relevant external sources to determine whether the change is reasonable. On an
interim basis, the Valuation Team and the Group’s external valuers present the valuation results to the audit
committee and the Group’s independent auditors. This includes a discussion of the major assumptions used in
the valuations as well as the integrity of the model and reasonableness of the key inputs.
For the purpose of fair value disclosures, the Group has determined classes of assets and liabilities on the
basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as
explained above.
(c)
Financial instruments carried at fair value or amortised cost
Plasma receivables and long-term loans to employees are carried at amortised cost using the effective interest
method and the discount rates used are the current market incremental lending rate for similar types of lending.
34.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group and the Company is exposed to financial risks arising from its operations and the use of financial instruments.
The key financial risks include interest rate risk, market risk (including currency risk and commodity price risk), credit
risk and liquidity risk. The Audit Committee provides independent oversight to the effectiveness of the risk management
process. It is, and has been throughout the current and previous financial year, the Group’s policy that no trading in
financial instruments shall be undertaken.
The following sections provide details regarding the Group and Company’s exposure to the above mentioned financial
risks and the objectives, policies and processes for the management of these risks.
There has been no change to the Group’s exposure to these financial risks or the manner in which it manages and
measures the risks.
