INDEPENDENT AUDITOR’S REPORT For the financial year ended 31 December 2024 To the Members of Indofood Agri Resources Ltd. Key audit matters (cont’d) (ii) Impairment assessment of property, plant and equipment SFRS(I) 1-36 Impairment of Assets requires the Group to assess at the end of each reporting period whether there is any indication that an asset may be impaired. If any such indication exists, the entity shall estimate the recoverable amount of the asset. During the year, the Group identified the existence of impairment indicators on all the rubber plantations under Lonsum, upon consideration of the market environment, production yield and the outlook of these plantation estates. The recoverable amount was determined internally by management based on fair value less costs of disposal (“FVLCD”), using discounted cash flow method. During the financial year ended 31 December 2024, the Group recorded an impairment loss of Rp296.2 billion to reduce the carrying amount of the rubber bearer plants, and the underlying fixed assets associated with these rubber plantations to their estimated recoverable amounts. As at 31 December 2024, the carrying amount of the Group’s property, plant and equipment amounted to Rp16,404.1 billion, net of impairment loss recognised during the financial year. The impairment loss recorded is material to the financial statements and the recoverable amount of the rubber plantations is determined using discounted cash flow method, which is complex, highly judgemental and subjective. Accordingly, we identified this as a key audit matter. Under the income approach, the expected future cash flows are discounted to the present value by using a discount rate. The estimation of future cash flows requires management to make various key operational assumptions, such as projected production yield, and predictive assumptions such as projected rubber selling price, inflation rate, exchange rate and terminal growth rate. We reviewed the discounted cash flow model to assess the appropriateness of the methodology adopted by management, the arithmetical accuracy of the FVLCD calculations and the reasonableness of the key assumptions made. We reviewed the valuer’s and the management’s budgeting process by comparing the actual financial performance against previous forecast and projections. We compared the operational assumptions against historical data and trend to assess their reasonableness. We engaged the assistance of our internal valuation specialist to assess the reasonableness of the key predictive assumptions (among others, discount rate, inflation rate, exchange rate, projected rubber selling price and terminal growth rate) used and determined the recoverable amount of the rubber bearer plants and the underlying fixed assets associated with these rubber plantations with impairment indicators. We also reviewed the adequacy of the Group’s disclosures in Note 14 to the consolidated financial statements. Group Overview Financials Other information Sustainability and Governance Operation and Financial Review Indofood Agri Resources Ltd. 60
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