Group Overview Operation and Financial Review Financials Other Information Sustainability and Governance 75 Annual Report 2025 Notes to the financial statements For the financial year ended 31 December 2025 2. Summary of material accounting policies information (cont’d) 2.8 Biological assets The Group’s biological assets comprise timber plantations and agricultural produce of the bearer plants, which primarily comprise of fresh fruit bunches, oil palm seeds, latex and sugar cane. The Group recognised the fair value of biological assets in accordance with SFRS(I) 1-41. Biological assets are stated at fair value less costs to sell. Gains or losses arising on initial recognition of biological assets and from the change in fair value of biological assets at each reporting date are recognised in the profit or loss for the period in which they arise. Agricultural produce The Group adopted the income approach to measure the fair value of the biological assets. For the valuation of unharvested produce of oil palm and rubber trees, the Group has applied the estimated harvest data subsequent to year end to derive the fair value of unharvested produce of oil palm and rubber trees at year end. For the valuation of unharvested produce of mother palm trees and sugar cane, the Group has applied discounted cash flow models to derive its fair value. Timber plantations The Group appoints an independent valuer to determine the fair value of timber at year end and any resultant gains or losses arising from the changes in fair value is recognised in the profit or loss. The independent valuer adopts the income approach for the fair valuation of timber using a discounted cash flow model. The cash flow models estimate the relevant future cash flows which are expected to be generated in the future, and are discounted to the present value by using a discount rate. Please refer to Note 13 for more information. 2.9 Plasma receivables Certain subsidiaries within the Group (collectively referred to as the “Nucleus Companies”), have commitments with several rural cooperatives (“KUD” or Koperasi Unit Desa) representing plasma farmers to develop plantations as required by the Indonesian government. The Nucleus Companies are to provide guidance and sharing of knowledge in developing the oil palm plasma plantations up to the productive stage. The financing of these plasma plantations are mainly provided by the banks. In the situation where the plasma farmers’ plantations have yet to generate positive cashflows to meet its repayment obligations to the banks, the Nucleus Companies provide temporary loans to help the plasma farmers to develop the plantation and to repay the principal and interest. Several Nucleus Companies provide corporate guarantees to the related credit facilities provided by the banks. The plasma receivables presented in the consolidated balance sheet consist of accumulated development costs incurred and the funding provided by the Nucleus Companies to the KUD or plasma farmers less the funds received from banks on behalf of the KUD or plasma farmers and accumulated impairment loss. Plasma receivables also include advances to plasma farmers for topping up the loan interest and instalment payments to banks, and advances for fertilisers and other agriculture supplies. These advances shall be reimbursed by the plasma farmers. Plasma receivables are classified as financial assets held at amortised cost under SFRS(I) 9. The accounting policy for financial instruments is set out in Note 2.15.
RkJQdWJsaXNoZXIy NTkwNzg=