Annual Report 2016
93
5. Prepaid lease payments (Cont’d)
Short-
term
leasehold
land*
RM’000
Group
Amortisation
At 1 April 2014 7,117
Amortisation for the year 1,232
At 31 March/1 April 2015 8,349
Amortisation for the year 1,705
Effect of movements in exchange rate (35)
At 31 March 2016 10,019
Carrying amounts
At 1 April 2014 58,694
At 31 March/1 April 2015 57,508
At 31 March 2016 58,342
* Unexpired period less than 50 years.
Included in the cost of prepaid lease payments is an amount of RM19,740,000 (equivalent to USD6,000,000) which
represents the valuation of the land use rights in respect of a subsidiary in Indonesia, as agreed in a master joint venture
agreement dated 16 August 2006. The land use rights represent the location permit, plantation license and the
cultivation right title over the plantation land of approximately 20,000 hectares.
The approval for the land utilisation rights measuring 14,177 hectares were granted in 2010 for a period of 35 years,
out of which title to 10,159 hectares were issued. The cultivation right title is extendable under Indonesian Land
Ordinance. The Group’s Indonesian partners are required to obtain additional land for the remaining cultivation right.
No additional land was identified during the financial year.
Under the Indonesian regulations, approximately 20% of the land use rights have to be set aside for Plasma Scheme.
This Scheme is a programme where oil palm plantation owners/operators are required to participate in selected
programmes to develop plantations to smallholders (herein referred to as plasma farmers)(see Note 12.2).
Notes to the Financial Statements
(Cont’d.)
