differences (230) (78) (55) (2) (262) (1,611) (2,379) (4,617)
At 31 December
2013 19,197 1,258 960 39 5,504 25,966 16,853 69,777
Office
equipment,
computers,
furniture
Motor and Plant and Assets under
Building vehicles fittings Renovation machinery Infrastructure construction Total
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
Accumulated
depreciation
At 1 January 2012 170 249 96 9 262 629 - 1,415
Charge for the
year 273 164 83 8 452 614 - 1,594
Disposals - (3) - - - - - (3)
Reclassifications 10 - - - (10) - - -
Exchange
differences 10 12 4 - 14 30 - 70
At 31 December
2012 and
1 January 2013 463 422 183 17 718 1,273 - 3,076
Charge for the
year 938 228 134 8 890 1,022 - 3,220
Disposals - (26) - - - - - (26)
Exchange
differences (66) (31) (15) (1) (80) (123) - (316)
At 31 December
2013 1,335 593 302 24 1,528 2,172 - 5,954
Net carrying
amount
At 31 December
2013 17,862 665 658 15 3,976 23,794 16,853 63,823
At 31 December
2012 4,825 707 468 24 2,667 19,208 25,328 53,227
Capitalised borrowing costs
The Group has substantially completed and commenced operation of
its vertical sterilizer crushing mill during the current year. The
carrying amount of the mill at 31 December 2013 included in assets
under construction was USD10,942,000 (2012: USD20,271,000). The
construction of this mill was financed by a bridging loan and Bank
Guaranteed Medium Term Notes Programme. Details of these borrowings
are disclosed in Note 25.
The amount of borrowing costs capitalised as part of the cost of
qualifying assets during the year ended 31 December 2013 was
USD786,000 (2012: USD1,208,000). The rates used to determine the
amount of borrowing costs eligible for capitalisation range from
1.65% per annum to 5.21% per annum ("p.a.") (2012: 1.65% p.a. to
5.95% p.a.), depending on the source of financing.
Assets held under finance leases
During the financial year, the Group acquired property, plant
and equipment at an aggregate cost of USD18,117,000 (2012:
USD38,316,000) of which USD691,000 (2012: USD1,260,000) were
acquired by means of finance leases. Leased assets are pledged as
security for the related finance lease liabilities.
Net carrying amount of property, plant and equipment held under
finance leases arrangements which comprise plant and machinery and
motor vehicles amounted to USD1,853,000 (2012: USD969,000) and
USD524,000 (2012: USD457,000), respectively.
Assets pledged for banking facilities
A building of the Group with net carrying amount of USD291,000
(2012: USD318,000) is pledged for banking facilities as disclosed
in Note 25.
Assets under construction
The Group's assets under construction mainly included a palm oil
mill, a biogas plant, workers quarters, terraces, roads and
bridges/culverts with total net carrying amount of USD16,853,000
(2012: USD25,328,000). The substantially completed oil palm mill as
mentioned above represent the main asset under construction as at
the reporting date.
Depreciation capitalised to biological assets
Depreciation of property, plant and equipment of the Group
capitalised to biological assets for the financial year ended 31
December 2013 amounted to USD1,712,000 (2012: USD1,343,000) (Note
16).
16. Biological assets
Biological assets comprise primarily development activities for
oil palm plantations and maintenance of nurseries with the
following movements in their carrying value:
2013 2012
USD'000 USD'000
At fair value less cost to sell
At 1 January 55,287 22,811
Additions 12,867 29,405
Gain arising from changes in fair
value 3,183 1,989
Exchange differences (4,343) 1,082
At 31 December 66,994 55,287
Represented by:
Mature plantation 40,750 27,442
Immature plantation 24,950 26,103
Nursery 1,294 1,742
Total 66,994 55,287
Mature oil palm trees produce FFBs which are used to produce
Crude Palm Oil ("CPO"). The fair values of oil palm plantations are
determined by using the discounted future cash flows of the
underlying plantations. The expected future cash flows of the oil
palm plantations are determined using long term average CPO price
in the market.
Significant assumptions made in determining the fair values of
the mature and immature oil palm plantations, using a discounted
cash flow model, are as follows:
(a) no new planting or re-planting activities are assumed;
(b) oil palm trees have an average life of 28 years (2012: 28
years), with the first three years as immature and the remaining
years as mature;
(c) discount rate used for the Group's plantation operations
which is applied in the discounted future cash flows calculation
range from 9.5% to 10.5% (2012: 10.5% to 11.3%);
(d) FFB price is derived by applying the oil extraction rate to
the estimated long term average CPO price of USD868 (2012: USD907)
per metric tonne; and
(e) yield per hectare of oil palm trees is based on the standard
yield profile of the industry.
Gain arising from changes in fair value less estimated costs to
sell during the financial year ended 2013 amount to USD636,000
(2012: USD1,989,000).
2013 2012
Hectares Hectares
Planted area:
Mature plantation 4,507 3,559
Immature plantation 7,654 4,591
Total 12,161 8,150
Depreciation of property, plant and equipment capitalised to
biological assets for the financial year ended 31 December 2013
amounted to USD1,712,000 (2012: USD1,343,000) (Note 15).
Employee benefit expenses capitalised to biological assets for
the financial year ended 31 December 2013 amounted to USD1,601,000
(2012: USD1,794,000) (Note 12).
The plantations have not been insured against the risks of fire,
diseases and other possible risks.
The Group is exposed to a number of risks related to its
oil-palm plantations:
Regulatory and environmental risks
The Group is subject to laws and regulations in Malaysia. The
Group has established environmental policies and procedures aimed
at compliance with local environmental and other laws. Management
performs regular reviews to identify environmental risks and to
ensure that the systems in place are adequate to manage those
risks.
Climate and other risks
The Group's oil palm tree plantations are exposed to the risk of
damage from climatic changes, diseases and other natural forces.
The Group has extensive processes in place aimed at monitoring and
mitigating those risks, including regular tree health inspections
and industry pest and disease surveys.
17. Land use rights
2013 2012
USD'000 USD'000
At 1 January 53,517 32,158
Additions 9,141 21,044
Amortisation charge for the year
(Note 10) (1,002) (924)
Exchange differences (3,614) 1,239
At 31 December 58,042 53,517
Amount to be amortised
- Not later than one year 1,119 1,040
- Later than one year but not more
than five years 4,477 4,160
* Later than five years 52,446 48,317
58,042 53,517
Land use rights are in respect of:
(a) cost of land use rights over seven pieces (2012: six pieces)
of long-term leasehold land owned by the Group, for the oil palm
plantation development activities of the Group. The land use rights
are transferable and have a remaining tenure of 50 to 60 years
(2012: 51 to 60 years). The Group was granted a provisional
registered lease in accordance with the provisions of the Land Code
of Sarawak, Malaysia, for the use of the agricultural land for a
period of 60 years by the relevant government agency. As has been
the practice in East Malaysia to date, registered leases are able
to be renewed at expiry for a further period of 60 years with the
payment of a modest land premium per acre set annually by the State
Government of Sarawak.
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