STATEMENTS

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1 Financial STATEMENTS 98 Directors Report and Statement 104 Statements of Comprehensive Income 105 Balance Sheets 107 Consolidated Statement of Changes in Equity 109 Statement of Changes in Equity 110 Statements of Cash Flows 111 Summary of Significant Accounting Policies 128 Notes to the Financial Statements 166 Supplementary Information 167 Statutory Declaration 168 Independent Auditors Report

2 Directors Report AND STATEMENT The Directors have pleasure in presenting their report and statement together with the audited financial statements of the and of the for the financial year ended 31 March PRINCIPAL ACTIVITIES The principal activities of the are the cultivation of oil palms, investment holding, trading of crude palm oil and provision of management services to the subsidiaries. The principal activities of the subsidiaries are stated in Note 17 to the financial statements. There have been no significant changes in the nature of the principal activities of the and its subsidiaries during the financial year. FINANCIAL RESULTS RM 000 RM 000 Net profit for the financial year 22,043 26,261 Attributable to: Owners of the 24,197 26,261 Non-controlling interests (2,154) 22,043 26,261 DIVIDENDS Dividends paid or declared since the end of the previous financial year are as follows: RM 000 In respect of the financial year ended 31 March 2015 as reported in the Directors Report and Statement of that year: A single tier interim dividend of 6 sen per share, on 880,580,460 ordinary shares, paid on 7 July ,835 On 26 May 2016, the Directors declared a single tier interim dividend amounting to 5 sen per share in respect of the financial year ended 31 March The single tier interim dividend will be paid on 13 July 2016 to every member who is entitled to receive the dividend as at 5.00 p.m. on 24 June The Directors do not recommend the payment of any final dividend for the financial year ended 31 March RESERVES AND PROVISIONS All material transfers to or from reserves or provisions during the financial year are disclosed in the financial statements. SHARE CAPITAL There was no change in the authorised and paid-up share capital of the during the financial year. 98 IJM PLANTATIONS BERHAD ANNUAL REPORT 2016

3 DIRECTORS The Directors in office since the date of the last report and statement are: Tan Sri Dato Wong See Wah Joseph Tek Choon Yee + Purushothaman a/l Kumaran M. Ramachandran a/l V.D. Nair * # + Tan Sri Dato Tan Boon Krishnan Pushpanathan a/l S A Kanagarayar * # Dato Soam Heng Choon * # + * Members of Nomination and Remuneration Committee # Members of Audit Committee + Members of Securities and Options Committee DIRECTORS BENEFITS During and at the end of the financial year, no arrangements subsisted to which the is a party, being arrangements with the object or objects of enabling Directors of the to acquire benefits by means of the acquisition of shares in, or debentures of, the or any other body corporate, other than the shares and options over ordinary shares of the ultimate holding company awarded under the Long Term Incentive Plan, which comprises ESOS and ESGP. Since the end of the previous financial year, no Director has received or become entitled to receive a benefit (other than the remuneration shown in the financial statements of the and its related corporations) by reason of a contract made by the or a related corporation with the Director or with a firm of which he is a member, or with a company in which he has a substantial financial interest. DIRECTORS INTERESTS According to the Register of Directors Shareholdings, particulars of interests of Directors in office at the end of the financial year in shares and options over ordinary shares of the and its ultimate holding company during the financial year are as follows: IJM Plantations Berhad Number of ordinary shares of RM0.50 each At At Name of Directors Acquired Disposed Direct interest: Purushothaman a/l Kumaran 877, ,500 Tan Sri Dato Tan Boon Krishnan 716, ,060 Indirect interest: M. Ramachandran a/l V.D. Nair 25,000¹ 25,000¹ Tan Sri Dato Tan Boon Krishnan 481,033¹ 481,033¹ ANNUAL REPORT 2016 IJM PLANTATIONS BERHAD 99

4 DIRECTORS REPORT AND STATEMENT DIRECTORS INTERESTS (cont d) Ultimate holding company IJM Corporation Berhad Number of ordinary shares of RM1.00 each At At Name of Directors Acquired Disposed Direct interest: Joseph Tek Choon Yee 126,200 26, ,000 Purushothaman a/l Kumaran 45, ,000 Tan Sri Dato Tan Boon Krishnan 3,173,528 3,644,238^@ 1,024,100 5,793,666 Dato Soam Heng Choon 248, ,900 Indirect interest: M. Ramachandran a/l V.D. Nair 33,000¹ 53,000^@ 86,000¹ Tan Sri Dato Tan Boon Krishnan 139,036¹ 282,936^@ 50, ,972¹ Ultimate holding company IJM Corporation Berhad Options over ordinary shares of RM1 each ( Options ) under Employee Share Option Scheme ( ESOS ) Provisional Number of Options + Number of Options Bonus Issue adjustment on At At At unexercised At Name of Director option Vested Exercised First ESOS Awarded on Joseph Tek Choon Yee 52,500 # # 98,700 98,700 Purushothaman a/l Kumaran 52,500 # # 49,400 98,700 49,400 98,700 Dato Soam Heng Choon 57,750 # # 134, , , ,900 Second ESOS Awarded on Joseph Tek Choon Yee 105, ,000 # # 98,700 98,700 Purushothaman a/l Kumaran 105, ,000 # # 65,800 65,800 98, ,300 Third ESOS Awarded on Joseph Tek Choon Yee 75,000 90,000 # # 56,400 56,400 Dato Soam Heng Choon 467, ,000 # # 374, ,000 Fourth ESOS Awarded on Dato Soam Heng Choon 1,320, IJM PLANTATIONS BERHAD ANNUAL REPORT 2016

5 DIRECTORS INTERESTS (cont d) Ultimate holding company IJM Corporation Berhad Number of ordinary share of RM1 each ( Shares ) under Employee Share Grant Plan ( ESGP ) Performance Share Plan ++ Retention Share Plan Provisional + Provisional + Provisional + Provisional number number number number as at as at as at as at Name of Director Vested Vested First ESGP Award on Joseph Tek Choon Yee 48,500 48,500 # # 48,500 19,400 19,400 # # 14,600 Purushothaman a/l Kumaran 48,500 48,500 # # 48,500 19,400 19,400 # # 14,600 Tan Sri Dato Tan Boon Krishnan 196, ,500 # # 99,300 50,600 50,600 # # 25,600 Dato Soam Heng Choon 48,500 48,500 # # 48,500 19,400 19,400 # # 14,600 Second ESGP Award on Joseph Tek Choon Yee 48,500 97,000 # 19,400 38,800 # Purushothaman a/l Kumaran 48,500 97,000 # 19,400 38,800 # Third ESGP Award on Joseph Tek Choon Yee 48,500 97,000 # 19,400 38,800 # Purushothaman a/l Kumaran 48,500 97,000 # 19,400 38,800 # Dato Soam Heng Choon 196, ,000 # 50, ,200 # Notes: ¹ Through a family member Including shares acquired pursuant to the privatisation of IJM Land Berhad ( IJML ) by IJM Corporation Berhad ( IJM ) undertaken by way of a scheme of arrangement under Section 176 of the Companies Act, 1965 between IJM and all shareholders of IJML other than IJM Including shares acquired by way of 1:1 Bonus Issue + The vesting of the Options and/or Shares to the eligible Director is subject to the fulfillment of the relevant vesting conditions as at the relevant vesting dates. ++ The quantum of shares to be vested may vary from 0% to 200% of the number of shares provisionally awarded +++ The quantum of shares to be vested may vary from 0% to 150% of the number of shares provisionally awarded # After Bonus Issue adjustment on 1:1 basis on 11 September 2015 # # After Bonus Issue adjustment on 1:1 basis on 11 September 2015 and vesting of Options/Shares None of the other Directors in office at the end of the financial year had any interest in shares or Options of the and its ultimate holding company during the financial year. ANNUAL REPORT 2016 IJM PLANTATIONS BERHAD 101

6 DIRECTORS REPORT AND STATEMENT OTHER STATUTORY INFORMATION Before the financial statements of the and of the were made out, the Directors took reasonable steps: (a) to ascertain the action taken in relation to the writing off of bad debts and the making of allowance for doubtful debts and satisfied themselves that all known bad debts had been written off and no allowance for doubtful debts were necessary; and (b) to ensure that any current assets, other than debts, which were unlikely to realise their book values in the ordinary course of business had been written down to their estimated realisable values. At the date of this report and statement, the Directors are not aware of any circumstances: (a) which would render the amounts written off for bad debts or the allowance for doubtful debts of the and of the inadequate to any material extent or the values attributed to current assets of the and of the misleading; or (b) which have arisen which render adherence to the existing method of valuation of assets or liabilities of the and of the misleading or inappropriate; or (c) not otherwise dealt with in this report and statement or in the financial statements that would render any amount stated in the financial statements of the and of the misleading. In the interval between the end of the financial year and the date of this report and statement: (a) no item, transaction or other event of a material and unusual nature has arisen which, in the opinion of the Directors, would substantially affect the results of the operations of the and of the for the current financial year; or (b) no charge has arisen on the assets of any company in the which secures the liability of any other person nor has any contingent liability arisen in any company in the. No contingent or other liability of any company in the has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which, in the opinion of the Directors, will or may affect the ability of the and its subsidiaries to meet their obligations when they fall due. In the opinion of the Directors: (a) other than as disclosed in the financial statements, the results of the operations of the and of the during the financial year have not been substantially affected by any item, transaction or event of a material and unusual nature; (b) the financial statements of the and of the set out on pages 104 to 166 are drawn up so as to give a true and fair view of the state of affairs of the and of the as at 31 March 2016 and of the results and cash flows of the and of the for the financial year ended on that date in accordance with the Financial Reporting Standards in Malaysia and the provisions of the Companies Act, 1965; and (c) the information set out in Note 36 to the financial statements have been prepared in accordance with the Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants. 102 IJM PLANTATIONS BERHAD ANNUAL REPORT 2016

7 HOLDING COMPANY The Directors regard IJM Corporation Berhad, a company incorporated in Malaysia and listed on the Main Market of Bursa Malaysia Securities Berhad, as the ultimate holding company. AUDITORS The auditors, PricewaterhouseCoopers, have expressed their willingness to continue in office. Signed on behalf of the Board in accordance with a resolution of the Directors dated 26 May TAN SRI DATO WONG SEE WAH Director JOSEPH TEK CHOON YEE Director 26 May 2016 ANNUAL REPORT 2016 IJM PLANTATIONS BERHAD 103

8 Statements of COMPREHENSIVE INCOME for the financial year ended 31 March Note RM 000 RM 000 RM 000 RM 000 Revenue 4 557, , , ,594 Cost of sales 5 (383,493) (428,439) (70,911) (73,424) Gross profit 174, ,227 42,266 92,170 Other income and net gains/(losses) 6 4,716 10,483 3,701 5,730 Selling and distribution expenses (78,991) (82,955) (5,532) (6,717) Administrative expenses (28,076) (26,128) (10,265) (7,684) Operating profit 71, ,627 30,170 83,499 Finance costs 7 (21,358) (51,220) Profit before tax 8 50,411 89,407 30,170 83,499 Income tax expense 11 (28,368) (7,110) (3,909) (9,393) Net profit for the financial year 22,043 82,297 26,261 74,106 Other comprehensive income: Items that may be reclassified subsequently to profit or loss: currency translation differences arising from translation of net investments in subsidiaries 35,453 (12,436) Total comprehensive income for the financial year 57,496 69,861 26,261 74,106 Net profit attributable to: Owners of the 24,197 90,422 26,261 74,106 Non-controlling interests (2,154) (8,125) Net profit for the financial year 22,043 82,297 26,261 74,106 Total comprehensive income attributable to: Owners of the 60,139 78,071 26,261 74,106 Non-controlling interests (2,643) (8,210) Total comprehensive income for the financial year 57,496 69,861 26,261 74,106 Earnings per share attributable to owners of the (sen): Basic IJM PLANTATIONS BERHAD ANNUAL REPORT 2016

9 Balance SHEETS as at 31 March Note RM 000 RM 000 RM 000 RM 000 ASSETS NON-CURRENT ASSETS Property, plant and equipment , , , ,705 Land use rights , ,731 26,220 24,255 Plantation expenditure 16 1,088, , , ,591 Interests in subsidiaries 17 1,041, ,752 Other receivable 19(b) 28,222 21,048 Deposit 21 92,569 Deferred tax assets 26 19,927 33,037 2,156,705 2,063,488 1,453,163 1,401,303 CURRENT ASSETS Inventories 18 73,469 58,311 5,486 4,752 Amounts due from subsidiaries 19(a) 6,346 15,377 Trade and other receivables 19(b) 67,690 62,637 1, Derivative financial instruments Tax recoverable 19,683 9,844 12,021 5,329 Deposits, cash and bank balances , ,438 8, , , ,612 33, ,732 TOTAL ASSETS 2,590,423 2,570,100 1,486,677 1,529,035 EQUITY AND LIABILITIES Capital and reserves attributable to owners of the Share capital , , , ,290 Share premium 482, , , ,240 Equity contribution reserve 23 9,064 6,390 7,558 5,352 Other reserves 24 (24,955) (60,897) 4,945 4,945 Retained profits , , , ,716 1,617,875 1,607,897 1,381,175 1,405,543 Non-controlling interests (12,585) (9,942) TOTAL EQUITY 1,605,290 1,597,955 1,381,175 1,405,543 ANNUAL REPORT 2016 IJM PLANTATIONS BERHAD 105

10 BALANCE SHEETS Note RM 000 RM 000 RM 000 RM 000 NON-CURRENT LIABILITIES Deferred tax liabilities , ,719 34,919 34,893 Retirement benefits 27 4,526 2,394 Borrowings , ,576 Other payables 29(b) 18,531 17, , ,689 53,450 52,092 CURRENT LIABILITIES Derivative financial instruments 20 10,158 Borrowings , ,059 Amounts due to subsidiaries 29(a) 41,534 44,719 Trade and other payables 29(b) 76,770 89,950 10,518 26,681 Current tax liabilities , ,456 52,052 71,400 TOTAL LIABILITIES 985, , , ,492 TOTAL EQUITY AND LIABILITIES 2,590,423 2,570,100 1,486,677 1,529, IJM PLANTATIONS BERHAD ANNUAL REPORT 2016

11 Consolidated Statement OF CHANGES IN EQUITY for the financial year ended 31 March 2016 Attributable to owners of the Equity Share contribution Other Retained Non capital Share reserve reserves profits controlling- Total (Note 22) premium (Note 23) (Note 24) (Note 25) Total interests equity Note RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 At 1 April , ,240 6,390 (60,897) 739,874 1,607,897 (9,942) 1,597,955 Comprehensive income: Net profit/(loss) for the financial year 24,197 24,197 (2,154) 22,043 Other comprehensive income: Currency translation differences arising from translation of net investments in subsidiaries 24 35,942 35,942 (489) 35,453 Total comprehensive income for the financial year 35,942 24,197 60,139 (2,643) 57,496 Transactions with owners: Capital contribution by ultimate holding company, net 23 2,674 2,674 2,674 Dividends 13 (52,835) (52,835) (52,835) Total transactions with owners 2,674 (52,835) (50,161) (50,161) At 31 March , ,240 9,064 (24,955) 711,236 1,617,875 (12,585) 1,605,290 ANNUAL REPORT 2016 IJM PLANTATIONS BERHAD 107

12 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Attributable to owners of the Equity Share contribution Other Retained Non capital Share reserve reserves profits controlling- Total (Note 22) premium (Note 23) (Note 24) (Note 25) Total interests equity Note RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 At 1 April , ,696 3,693 (13,091) 706,034 1,384,532 (2,537) 1,381,995 Comprehensive income: Net profit/(loss) for the financial year 90,422 90,422 (8,125) 82,297 Other comprehensive income: Currency translation differences arising from translation of net investments in subsidiaries 24 (12,351) (12,351) (85) (12,436) Total comprehensive income for the financial year (12,351) 90,422 78,071 (8,210) 69,861 Transactions with owners: Capital contribution by ultimate holding company, net 23 2,697 2,697 2,697 Dividends 13 (56,994) (56,994) (56,994) Issuance of ordinary shares pursuant to exercise of Warrants 2009/ , ,544 (35,043) 199, ,591 Transfer to retained profits upon expiry of Warrants 2009/ (412) 412 Issuance of shares to non-controlling interest Total transactions with owners 38, ,544 2,697 (35,455) (56,582) 145, ,099 At 31 March , ,240 6,390 (60,897) 739,874 1,607,897 (9,942) 1,597, IJM PLANTATIONS BERHAD ANNUAL REPORT 2016

13 Statement OF CHANGES IN EQUITY for the financial year ended 31 March 2016 Non-distributable Distributable Equity Share contribution Other Retained capital Share reserves reserves profits Total (Note 22) premium (Note 23) (Note 24) (Note 25) equity Note RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 At 1 April , ,240 5,352 4, ,716 1,405,543 Total comprehensive income for the financial year 26,261 26,261 Transactions with owners: Capital contribution by ultimate holding company, net 23 2,206 2,206 Dividends 13 (52,835) (52,835) Total transactions with owners 2,206 (52,835) (50,629) At 31 March , ,240 7,558 4, ,142 1,381,175 At 1 April , ,696 3,693 40, ,192 1,187,181 Total comprehensive income for the financial year 74,106 74,106 Transactions with owners: Capital contribution by ultimate holding company, net 23 1,659 1,659 Dividends 13 (56,994) (56,994) Issuance of ordinary shares pursuant to exercise of Warrants 2009/ , ,544 (35,043) 199,591 Transfer to retained profits upon expiry of Warrants 2009/ (412) 412 Total transactions with owners 38, ,544 1,659 (35,455) (56,582) 144,256 At 31 March , ,240 5,352 4, ,716 1,405,543 ANNUAL REPORT 2016 IJM PLANTATIONS BERHAD 109

14 Statements of CASH FLOWS for the financial year ended 31 March Note RM 000 RM 000 RM 000 RM 000 OPERATING ACTIVITIES Receipts from customers 566, ,265 92, ,148 Payments to contractors, suppliers and employees (468,829) (404,749) (90,271) (65,039) Interest paid (12,239) (8,750) Income tax paid (28,170) (29,276) (10,575) (11,924) Net cash flows generated from/(used in) operating activities 57, ,490 (8,264) 41,185 INVESTING ACTIVITIES Net repayment (to)/from subsidiaries (185) 51,221 Advances to subsidiaries (42,169) (180,603) Additions to property, plant and equipment (131,340) (137,894) (4,912) (10,432) Additions to land use rights (7,010) (26,935) (2,841) (6,492) Additions to plantation expenditure (52,198) (117,302) (11) (579) Proceeds from disposal of property, plant and equipment Uplifting/(placement) of deposit 105,386 (95,147) Dividends received 16,500 10,000 Interest received 8,169 8,592 1,499 3,527 Net cash flows used in investing activities (76,783) (368,616) (32,046) (133,241) FINANCING ACTIVITIES Issuance of ordinary shares pursuant to exercise of warrants 199, ,591 Drawdown of borrowings 98,165 Repayment of borrowings (27,481) (72,296) Dividends paid (52,835) (56,994) (52,835) (56,994) Net cash flows (used in)/generated from financing activities (80,316) 168,466 (52,835) 142,597 NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (100,079) 33,340 (93,145) 50,541 FOREIGN EXCHANGE DIFFERENCES (2,821) (4,456) CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 371, , ,374 50,833 CASH AND CASH EQUIVALENTS AT END OF YEAR , ,420 8, ,374 SIGNIFICANT NON-CASH TRANSACTION During the financial year, dividends from subsidiaries amounting to RM3,000,000 (2015: RM40,000,000) were offset against advances from subsidiaries. 110 IJM PLANTATIONS BERHAD ANNUAL REPORT 2016

15 Summary of Significant ACCOUNTING POLICIES for the financial year ended 31 March 2016 The following accounting policies have been applied consistently to all the years presented in dealing with items which are considered material in relation to the financial statements, unless otherwise stated. 1 BASIS OF PREPARATION The financial statements of the and of the have been prepared in accordance with the Financial Reporting Standards ( FRS ) and the requirements of the Companies Act, 1965 in Malaysia. The includes transitioning entities and has elected to continue to apply FRS during the current and next financial year. The will be adopting the new IFRS-compliant framework, Malaysian Financial Reporting Standards ( MFRS ) for annual period beginning on 1 April In adopting the new framework, the will be applying MFRS 1 First-time adoption of MFRS. The financial statements have been prepared under the historical cost convention, unless otherwise indicated in this summary of significant accounting policies. The preparation of financial statements in conformity with FRS requires the use of certain critical accounting estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported period. It also requires Management to exercise their judgement in the process of applying the s and the s accounting policies. Although these estimates and judgement are based on the Management s best knowledge of current events and actions, actual results may differ from those estimates. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in Note 2 to the financial statements. (a) Amendments to published standards that are effective The amendments to published standards that are effective for the s and the s financial year beginning on 1 April 2015 and applicable to the and the are as follows: Annual Improvements to FRSs Cycle Annual Improvements to FRSs Cycle Amendments to FRS 119 Defined Benefit Plans: Employees Contributions The amendments to published standards do not result in a significant change to the accounting policies and do not have a material impact on the financial statements of the and of the. (b) Standards and amendments to published standards that are applicable to the and the, but are not yet effective and have not been early adopted (i) The new standard and amendments to published standards that are mandatory for the s and the s financial year beginning on 1 April 2016 and the and the have not early adopted, are as follows: FRS 14 Regulatory Deferral Accounts Amendments to FRS 11 Accounting for Acquisition of Interest in Joint Operations Amendments to FRS 116 and FRS 138 Clarification of Acceptable Methods of Depreciation and Amortisation Amendment to FRS 127 Separate Financial Statements Equity method in Separate Financial Statements Annual improvements to FRSs Cycle, which include Amendments to FRS 5 Non-current Assets Held for Sale and Discontinued Operations, FRS 7 Financial Instruments: Disclosures, FRS 119 Employee Benefits and FRS 134 Interim Financial Reporting Amendments to FRS 101 Presentation of Financial Statements Disclosure Initiative Amendments to FRS 10, FRS 12 and FRS 128 Investment Entities: Applying the Consolidation Exception ANNUAL REPORT 2016 IJM PLANTATIONS BERHAD 111

16 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 1 BASIS OF PREPARATION (cont d) (b) Standards and amendments to published standards that are applicable to the and the, but are not yet effective and have not been early adopted (cont d) (ii) The new amendments to published standards that are mandatory for the s and the s financial year beginning on 1 April 2017 and the and the have not early adopted are as follows: Amendments to FRS 107 Statement of Cash Flows Disclosure Initiative Amendments to FRS 112 Income Taxes Recognition of Deferred Tax Assets for Unrealised Losses (iii) The new standards that are mandatory for the s and the s financial year beginning on 1 April 2018 and the and the have not early adopted are as follows*: MFRS 9 Financial instruments MFRS 9 Financial instruments will replace FRS 139 Financial Instruments: Recognition and Measurement. MFRS 9 retains but simplifies the mixed measurement model in FRS 139 and establishes three primary measurement categories for financial assets: amortised cost, fair value through profit or loss and fair value through other comprehensive income ( OCI ). The basis of classification depends on the entity s business model and the contractual cash flow characteristics of the financial asset. Investments in equity instruments are always measured at fair value through profit or loss with an irrevocable option at inception to present changes in fair value in OCI (provided the instrument is not held for trading). A debt instrument is measured at amortised cost only if the entity is holding it to collect contractual cash flows and the cash flows represent principal and interest. For liabilities, the standard retains most of the FRS 139 requirements. These include amortised cost accounting for most financial liabilities, with bifurcation of embedded derivatives. The main change is that, in cases where the fair value option is taken for financial liabilities, the part of a fair value change due to an entity s own credit risk is recorded in other comprehensive income rather than the income statement, unless this creates an accounting mismatch. MFRS 9 applies the expected credit losses model that is forward looking on impairment for all financial asset and eliminates the need for a trigger event before credit losses are recognised. MFRS 15 Revenue from Contracts with Customers MFRS 15 Revenue from contracts with customers deals with revenue recognition and establishes principles for reporting useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity s contracts with customers. Revenue is recognised when a customer obtains control of a good or service and thus has the ability to direct the use and obtain the benefits from the good or service. Transfer of control is not the same as transfer of risks and rewards as currently considered for revenue recognition. A company would recognise revenue when (or as) it satisfies a performance obligation by transferring a promised good or service to a customer (which is when the customer obtains control of that good or service). A performance obligation may be satisfied at a point in time (typically for promises to transfer goods to a customer) or over time (typically for promises to transfer services to a customer). Extensive disclosures are required to provide greater insight into both revenue that has been recognised, and revenue that is expected to be recognised in the future from existing contracts. Significant management judgments and changes in those judgments that management made to determine revenue are also required to be disclosed. The standard replaces MFRS 118 Revenue, MFRS 111 Construction Contracts and related interpretations. 112 IJM PLANTATIONS BERHAD ANNUAL REPORT 2016

17 1 BASIS OF PREPARATION (cont d) (b) Standards and amendments to published standards that are applicable to the and the, but are not yet effective and have not been early adopted (cont d) (iii) The new standards that are mandatory for the s and the s financial year beginning on 1 April 2018 and the and the have not early adopted are as follows*: (cont d) Amendments to MFRS 116 Property, Plant and Equipment and MFRS 141 Agriculture: Bearer Plants Amendments to MFRS 116 Property, Plant and Equipment and MFRS 141 Agriculture: Bearer Plants introduce a new category of biological assets i.e. bearer plants. A bearer plant is a living plant that is used in the production and supply of agricultural produce, is expected to bear produce for more than one period, and has remote likelihood of being sold as agricultural produce. Bearer plants are accounted for under MFRS 116 as an item of property, plant and equipment. Agricultural produce growing on bearer plants continue to be measured at fair value less costs to sell under MFRS 141, with fair value changes recognised in profit or loss as the produce grows. (iv) The new standard that is mandatory for the s and the s financial year beginning on 1 April 2019 and the and the have not early adopted is as follows*: MFRS 16 Leases MFRS 16 Leases supersedes MFRS 117 Leases and the related interpretations. Under MFRS 16, a lease is a contract (or part of a contract) that conveys the right to control the use of an identified asset for a period of time in exchange for consideration. MFRS 16 eliminates the classification of leases by the lessee as either finance leases (on balance sheet) or operating leases (off balance sheet). MFRS 16 requires a lessee to recognise a right-of-use of the underlying asset and a lease liability reflecting future lease payments for most leases. The right-of-use asset is depreciated in accordance with the principle in MFRS 116 Property, Plant and Equipment and the lease liability is accreted over time with interest expense recognised in the income statement. For lessors, MFRS 16 retains most of the requirements in MFRS 117. Lessors continue to classify all leases as either operating leases or finance leases, and account for them differently. MFRS 16 is likely to have a significant impact on lessees that have significant number of off balance sheet operating leases under MFRS 117. * These standards and amendments to published standards will be adopted on the respective effective date upon the adoption of the MFRS framework. The is in the process of assessing the full impact of the above standards and amendments to published standards on the financial statements of the and the in the year of initial application. ANNUAL REPORT 2016 IJM PLANTATIONS BERHAD 113

18 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 2 ECONOMIC ENTITIES IN THE GROUP (a) Subsidiaries Subsidiaries are those corporations, partnerships or other entities (including structured entities) over which the has control. The controls an entity when the is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The existence and effect of potential voting rights are considered when assessing whether the controls another entity. In assessing whether potential voting rights contribute to control, the examines all facts and circumstances (including the terms of exercise of the potential voting rights and any other contractual arrangements whether considered individually or in combination) that affect potential voting rights. Subsidiaries are fully consolidated from the date on which control is transferred to the and are deconsolidated from the date that control ceases. Subsidiaries are consolidated using the acquisition method of accounting, except for business combinations involving entities or businesses under common control, which are accounted for using the predecessor basis of accounting. Under the acquisition method of accounting, the consideration transferred is measured as the fair value of the assets given, equity instruments issued and liabilities incurred to the former owners of the acquiree at the date of exchange. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. The costs directly attributable to the acquisition are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the date of acquisition. The excess of the consideration transferred, the amount of any noncontrolling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the identifiable net assets acquired is recognised as goodwill. If the total of consideration transferred, non-controlling interest recognised and previously held interest measured is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognised directly in profit or loss. If the business combination is achieved in stages, the acquisition date fair value of the acquirer s previously held equity interest in the acquiree is remeasured to fair value at the successive acquisition dates, and any gains or losses arising from such remeasurement are recognised in profit or loss. Under the predecessor basis of accounting, assets and liabilities acquired are not restated to their respective fair values but at the carrying amounts in the consolidated financial statements of the ultimate holding company of the and adjusted to ensure uniform accounting policies of the. The difference between any consideration given and the aggregate carrying amounts of the assets and liabilities (as of the date of transaction) of the acquired entity is recorded as a reserve. No additional goodwill is recognised. The acquired entity s results, assets and liabilities are consolidated as if both the acquirer and the acquiree had always been combined. Consequently, the consolidated financial statements reflect both entities full year s results. The corresponding amounts for the previous year reflect the combined results of both entities. Non-controlling interest represents that portion of profit or loss and net assets of a subsidiary attributable to equity interests that are not owned, directly or indirectly through subsidiaries, by the. It is measured on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest s proportionate share of the recognised amounts of acquiree s identifiable net assets at the date of acquisition and the non-controlling interests share of changes in the subsidiaries equity since that date. All earnings and losses of the subsidiary are attributed to the owners of the and the non-controlling interests, even if the attribution of losses to the non-controlling interests results in a debit balance in the total equity. All inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated except for contracted finished goods which are stated at net realisable value. Unrealised losses are also eliminated but considered as an impairment indicator of the asset transferred. Where necessary, adjustments are made to the financial statements of subsidiaries to ensure consistency of accounting policies with those of the. 114 IJM PLANTATIONS BERHAD ANNUAL REPORT 2016

19 2 ECONOMIC ENTITIES IN THE GROUP (cont d) (b) Changes in ownership interests in subsidiaries without change of control Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions that is, as transactions with the owners in their capacity as owners. For purchases from noncontrolling interests, the difference between any consideration paid and the relevant share of the carrying value of net assets of the subsidiary acquired is deducted from equity. For disposals to non-controlling interests, differences between any proceeds received and the relevant share of non-controlling interests are also recognised in equity. (c) Disposal of subsidiaries When the ceases to have control over a subsidiary, any retained interest in the entity is re-measured to its fair value at the date when control is lost, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the had directly disposed of the related assets and liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss. 3 PROPERTY, PLANT AND EQUIPMENT AND DEPRECIATION All property, plant and equipment are stated at cost or at valuation less accumulated depreciation and accumulated impairment except for freehold land and capital work-in-progress which are not depreciated. Freehold land is not depreciated as it has an infinite life. The cost is net of the amount of goods and services tax ( GST ), except where the amount of GST incurred is not recoverable from the government. When the amount of GST incurred is not recoverable from the government, the GST is recognised as part of the cost of acquisition of the property, plant and equipment. Cost includes expenditure that is directly attributable to the acquisition of the asset. Subsequent costs are included in the asset s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are recognised as expenses in profit or loss during the financial year in which they are incurred. Spares and parts, stand-by-equipment and servicing equipment which meets the definition of property, plant and equipment are classified under property, plant and equipment and depreciated accordingly. The amortises plantation infrastructure in equal annual instalments over the period of the respective leases ranging from 21 to 81 years. Leasehold lands classified as finance leases are amortised in equal instalments over the remaining period of the respective leases that range from 72 to 883 years. Other property, plant and equipment are depreciated on a straight-line basis to write-off the cost of the assets, or their revalued amounts, to their residual values over their estimated useful lives. The annual rates of depreciation are: Buildings 2 to 10% Plant, machinery and equipment and motor vehicles 4 to 20% Office equipment, furniture and fittings 10 to 33.3% Capital work-in-progress comprising mainly building, plant, machinery and equipment which are stated at cost are not depreciated until the assets are ready for their intended use. The Directors have applied the transitional provisions of International Accounting Standards ( IAS ) 16 Property, Plant and Equipment, which has been adopted by the MASB, which allows the assets to be stated at their last revalued amounts less accumulated depreciation and accumulated impairment. Accordingly, these valuations have not been updated. ANNUAL REPORT 2016 IJM PLANTATIONS BERHAD 115

20 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 3 PROPERTY, PLANT AND EQUIPMENT AND DEPRECIATION (cont d) When an asset s carrying amount is increased as a result of a revaluation, the increase is recognised in other comprehensive income as a revaluation surplus reserve. When the asset s carrying amount is decreased as a result of a revaluation, the decrease is recognised in other comprehensive income to the extent of any credit balance existing in the revaluation surplus reserve of that asset; all other decreases are recognised in profit or loss. The residual values and useful lives of property, plant and equipment are reviewed, and adjusted as appropriate, at each balance sheet date. The effects of any revision of the residual values and useful lives are included in profit or loss for the financial year in which the changes arise. At each balance sheet date, the assesses whether there is any indication of impairment. Where an indication of impairment exists, the carrying value of the asset is assessed and written down immediately to its recoverable amount. See accounting policy Note 6 on impairment of non-financial assets. Gains and losses on disposals are determined by comparing proceeds with carrying amounts and are included in profit or loss. On disposal of revalued assets, amounts in the revaluation reserve relating to those assets are transferred to retained profits. Where applicable, the fair value of property, plant and equipment at the date of acquisition of subsidiaries is carried forward in place of cost. 4 PLANTATION EXPENDITURE Plantation expenditure comprises new planting expenditure, estate administration, finance costs relating to qualifying expenditure, depreciation of property, plant and equipment, amortisation of land use rights and upkeep of plantation up to its maturity and are stated at cost or valuation. All expenditure incurred subsequent to maturity, replanting expenditure and upkeep and maintenance expenditure including fertilising costs are charged to profit or loss when incurred. Plantation expenditure of the and of certain subsidiaries of the had been revalued in The Directors have not adopted a policy of regular revaluations of such assets and no later valuation has been recorded. 5 INVESTMENTS In the s separate financial statements, investments in subsidiaries are carried at cost less accumulated impairment. Where an indication of impairment exists, the carrying amount of the investment is assessed and written down immediately to its recoverable amount. See accounting policy Note 6 on impairment of non-financial assets. On disposal of investments in subsidiaries, the difference between disposal proceeds and the carrying amounts of the investments are recognised in profit or loss. 6 IMPAIRMENT OF NON-FINANCIAL ASSETS Assets (including goodwill and intangible assets not ready for use) that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Other non-financial assets (including those which are subject to amortisation) are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. An impairment is recognised for the amount by which the carrying value of the asset exceeds its recoverable amount. The recoverable amount is the higher of an asset s fair value less costs of disposal and value-in-use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets, other than goodwill, that suffered impairment are reviewed for possible reversal of the impairment at each reporting date. The impairment is charged to profit or loss unless it reverses a previous revaluation, in which case it is charged to the revaluation surplus. Impairment of goodwill is not reversed. In respect of other assets, any subsequent increase in recoverable amount is recognised in profit or loss unless it reverses an impairment of a revalued asset, in which case it is taken to revaluation surplus reserve. 116 IJM PLANTATIONS BERHAD ANNUAL REPORT 2016

21 7 LEASES A lease is an agreement whereby the lessor conveys to the lessee in return for a payment, or series of payments, the right to use an asset for an agreed period of time. Accounting as lessee Finance leases Leases of property, plant and equipment where the assumes substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the lease s commencement at the lower of the fair value of the leased assets and the present value of the minimum lease payments. Each lease payment is allocated between the liability and finance charges so as to achieve a periodic constant rate of interest on the lease principal outstanding. The corresponding rental obligations, net of finance charges, are included in borrowings. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. Property, plant and equipment acquired under finance lease contracts are depreciated over the useful lives of the asset. If there is no reasonable certainty that the ownership will be transferred to the, the asset is depreciated over the shorter of the lease term and its useful life. Operating leases Leases of assets where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to profit or loss over the lease period. 8 LAND USE RIGHTS Land use rights where a significant portion of the risks and rewards of ownership are not expected to pass to the lessee by the end of the lease term is treated as an operating lease. Land use rights are carried at cost or surrogate carrying amount and are amortised on a straight line basis over the lease terms. Land use rights are amortised over the land use rights periods ranging from 15 to 99 years. 9 INVENTORIES Inventories are stated at the lower of cost and net realisable value, other than for contracted crude palm oil, crude palm kernel oil and palm kernel expellers which are stated at net realisable value. Cost comprises the original cost of purchase plus the cost of bringing the inventories to their intended location and condition. The costs are determined at weighted average basis and include the cost of raw materials, direct labour and a portion of production overheads. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. ANNUAL REPORT 2016 IJM PLANTATIONS BERHAD 117

22 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 10 RECEIVABLES (a) Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business. Other receivables generally arise from transactions outside the usual operating activities of the. If collection is expected in one year or less (or in the normal operating cycle of the business, if longer), they are classified as current assets. If not, they are presented as non-current assets. Trade and other receivables are recognised initially at fair value. After recognition, trade and other receivables are subsequently measured at amortised cost using the effective interest method, less provision for impairment. (b) Advances for plasma schemes represent accumulated plantation development cost including borrowing costs and indirect overheads less repayments todate and provisions for impairment, which are recoverable from plasma farmers. See Note 19(b)(iv) to the financial statements on other receivables. In the event the or the provides corporate guarantees to the plasma schemes to obtain loans from financial institutions, it will be accounted for as a financial guarantee contract. See accounting policy Note 22 on financial guarantee contracts. See accounting policy Note 19(d) on impairment of financial assets. 11 CASH AND CASH EQUIVALENTS For the purpose of statements of cash flows, cash equivalents are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes. Cash and cash equivalents comprise cash in hand, deposits held at call with financial institutions, other short term, highly liquid investments with original maturities of three months or less that are readily convertible to known amount of cash and which are subject to insignificant risk of changes in value, and bank overdrafts. Bank overdrafts if any are included within borrowings in current liabilities on the balance sheets. 12 SHARE CAPITAL (i) Classification Ordinary shares are classified as equity. (ii) Share issue costs External costs directly attributable to the issue of new shares are shown as a deduction from the share premium account. In other cases, they are charged to profit or loss when incurred. (iii) Dividends Liability is recognised for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the, on or before the end of the reporting period but not distributed at the end of the reporting period. Distributions to holders of an equity instrument is recognised directly in equity. 13 BORROWINGS AND BORROWING COSTS Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost; any difference between initial recognised amount and the redemption value is recognised in profit or loss over the period of the borrowings using the effective interest method, except for borrowing costs incurred for the acquisition, construction or production of any qualifying assets. Borrowings are classified as current liabilities unless the has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date. 118 IJM PLANTATIONS BERHAD ANNUAL REPORT 2016

23 13 BORROWINGS AND BORROWING COSTS (cont d) General and specific borrowing costs, including exchange differences to the extent that they are regarded as an adjustment to interest costs, directly attributable to the acquisition, construction or production of qualifying assets which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. Borrowing costs incurred on borrowings to finance the property, plant and equipment and plantation expenditure during the period that is required to complete and prepare the asset for its intended use are capitalised as part of the cost of the asset and presented as part of the cash flows used in investing activities. All other borrowing costs are charged to profit or loss in the period in which they are incurred. 14 INCOME TAXES The income tax expense for the period comprises current and deferred tax. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case the tax is also recognised in other comprehensive income or directly in equity, respectively. Current tax expense is determined according to the tax laws of each jurisdiction in which the operates and includes all taxes based upon the taxable profits, including withholding taxes payable by a foreign subsidiary, associate or joint venture on distributions of retained earnings to companies in the. Deferred tax is recognised, using the liability method, on temporary differences arising between the amounts attributed to assets and liabilities for tax purposes and their carrying amounts in the financial statements. Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which the deductible temporary differences, unused tax losses or unused tax credits can be utilised. Deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill. Deferred tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit. Deferred tax is recognised on temporary differences arising on investments in subsidiaries, associates and joint ventures, except where the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax is determined using tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled. Deferred tax is recognised in profit or loss, except when it arises from a transaction which is recognised directly in equity, in which case the deferred tax is also charged or credited directly to equity, or when it arises from a business combination that is an acquisition, in which case the deferred tax is adjusted against goodwill on acquisition. Deferred and income tax assets and liabilities are offset when the enterprise has a legally enforceable right to offset and intends to settle either on a net basis or to realise the asset and settle the liability simultaneously. ANNUAL REPORT 2016 IJM PLANTATIONS BERHAD 119

24 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 15 EMPLOYEE BENEFITS (a) Short term employee benefits The recognises a liability and an expense for bonuses based on a formula that takes into consideration the profit attributable to the owners of the after certain adjustments. The recognises a provision where there is a contractual obligation or where there is a past practice that has created a constructive obligation. Wages, salaries, bonuses and non-monetary benefits are accrued in the period in which the associated services are rendered by employees of the. (b) Post-employment benefits The has various post-employment benefit schemes in accordance with local conditions and practices in the countries in which it operates. These benefit plans are either defined contribution plans or defined benefit plans. A defined contribution plan is a pension plan under which the pays fixed contributions into a separate entity (a fund) in a mandatory, contractual or voluntary basis and the has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employee benefits relating to employees service in the current and prior periods. A defined benefit plan is a pension plan that defines an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service or compensation. (i) Defined contribution plan The s contributions to a defined contribution plan are charged to the profit or loss in the period to which they relate. Once the contributions have been paid, the has no further payment obligations. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available. As required by law, companies in Malaysia make contributions to the national pension scheme, the Employees Provident Fund ( EPF ), which is a defined contribution plan. (ii) Defined benefit plan The liability or asset recognised in the balance sheets in respect of a defined benefit plan is the present value of the defined benefit obligation at the balance sheet date, less the fair value of plan assets, together with adjustments for its actuarial gains/losses and past service costs. The defined benefit obligation, calculated using the projected unit credit method, is determined by independent actuaries, considering the estimated future cash outflows using market yields at balance sheet date on government bonds which have currency and terms to maturity approximating the terms of the related liability. Actuarial gains and losses arise mainly from the changes in actuarial assumptions and experience adjustments. Such gains and losses are credited or charged to equity in other comprehensive income in the period in which they arise. The actuarial gains and losses are not subsequently reclassified to profit or loss in subsequent periods. Past service costs are recognised immediately in profit or loss, unless the changes to the plan are conditional on the employees remaining in service for a specified period of time (the vesting period). In this case, the past service costs are amortised on a straight-line basis over the vesting period. 120 IJM PLANTATIONS BERHAD ANNUAL REPORT 2016

25 15 EMPLOYEE BENEFITS (cont d) (c) Share-based compensation The s ultimate holding company operates an equity-settled share-based compensation plan under which the receives services from employees as consideration for equity instruments (share options and share grants) of the ultimate holding company. The fair value of the employees services received in exchange for the grant of the share options and share grants is recognised as an expense in profit or loss. Non-market vesting conditions are included in assumptions about the number of share options and share grants that are expected to vest. The total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of the reporting period, the revises its estimates of the number of share options and share grants that are expected to vest based on the non-market vesting conditions. It recognises the impact of the revision to original estimates, if any, in profit or loss over the vesting period with a corresponding credit recognised in equity. The credit to equity is treated as a capital contribution as the ultimate holding company is compensating the s employees with no expense to the. If the terms of an equity-settled share-based compensation plans are modified, at a minimum an expense is recognised as if the terms had not been modified. An additional expense is recognised for any modification that increases the total fair value of the share-based payment arrangement, or is otherwise beneficial to the employee, as measured at the date of modification. When the ultimate holding company recharges the for the equity instruments granted, the recharge is treated as an adjustment to the equity contribution reserve from the ultimate holding company. 16 CONTINGENT LIABILITIES The does not recognise a contingent liability other than those arising from business combinations, but discloses its existence in the financial statements. A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the or a present obligation that is not recognised because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in the extremely rare circumstance where there is a liability that cannot be recognised because it cannot be measured reliably. Contingent liabilities do not include financial guarantee contracts. (see accounting policy Note 22 on financial guarantee contracts) In the acquisition of subsidiaries by the under a business combination, the contingent liabilities assumed are measured initially at their fair values at the acquisition date, irrespective of the extent of any non-controlling interest. The recognises separately the contingent liabilities of the acquirees as part of allocating the cost of a business combination where their fair values can be measured reliably. Where the fair values cannot be measured reliably, the resulting effect will be reflected in the goodwill arising from the acquisitions and the information about the contingent liabilities acquired are disclosed in the notes to the financial statements. Subsequent to the initial recognition, the measures the contingent liabilities that are recognised separately at the date of acquisition at the higher of the amount that would be recognised in accordance with the provisions of FRS 137 Provisions, Contingent Liabilities and Contingent Assets and the amount initially recognised less, when appropriate, cumulative amortisation recognised in accordance with FRS 118 Revenue. ANNUAL REPORT 2016 IJM PLANTATIONS BERHAD 121

26 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 17 REVENUE RECOGNITION Revenue comprises the fair value of the consideration received or receivable for the sale of goods and services in the ordinary course of the s activities. Revenue is shown net of sales taxes and discounts and after eliminating sales within the. The recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and specific criteria have been met for each of the s activities as described below. The amount of revenue is not considered to be reliably measurable until all contingencies relating to the sale have been resolved. The bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement. (i) Sale of goods Sales are recognised upon delivery of products and customer acceptance, and performance of after-sales services, if any, net of goods and services tax or sales tax and discounts and after eliminating sales within the. (ii) Dividend income Dividend income is recognised when the s right to receive payment is established. (iii) Plantation advisory and management fee services Revenue for services rendered is recognised upon performance of services. (iv) Interest income Interest income is recognised using the effective interest method, taking into account the principal outstanding and the effective rate over the period to maturity, unless collectibility is in doubt, in which case it is recognised on a cash receipt basis. (v) Rental income Rental income is recognised on an accrual basis unless collectibility is in doubt, in which case the recognition of such income is suspended. 18 FOREIGN CURRENCIES (a) Functional and presentation currency Items included in the financial statements of each of the s entities are measured using the currency of the primary economic environment in which the entity operates (the functional currency ). The financial statements are presented in Ringgit Malaysia, which is the s functional and presentation currency and the s presentation currency. (b) Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the date of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss, except that exchange differences arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs are classified as borrowing costs. Exchange differences are deferred in other comprehensive income when they arose from qualifying cash flow or net investment hedges or are attributable to items that form part of the net investment in a foreign operation. 122 IJM PLANTATIONS BERHAD ANNUAL REPORT 2016

27 18 FOREIGN CURRENCIES (cont d) (c) companies The results and financial position of all the group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows: Assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet; Income and expenses for each statement of comprehensive income presented are translated at the average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions); and All resulting exchange differences are recognised as a separate component of other comprehensive income. On consolidation, exchange differences arising from the translation of the net investment in foreign operations are taken to other comprehensive income. On the disposal of a foreign operation (that is, a disposal of the s entire interest in a foreign operation, or a disposal involving loss of control over a subsidiary that includes a foreign operation), all of the exchange differences relating to that foreign operation recognised in other comprehensive income and accumulated in the separate component of equity are reclassified to profit or loss, as part of the gain or loss on disposal. In the case of a partial disposal that does not result in the losing control over a subsidiary that includes a foreign operation, the proportionate share of accumulated exchange differences are reattributed to non-controlling interests and are not recognised in profit or loss. For all other partial disposals (that is, reductions in the s ownership interest in associates or joint ventures that do not result in the losing significant influence or joint control) the proportionate share of the accumulated exchange difference is reclassified to profit or loss. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and are translated at the closing rate at the date of the balance sheets. Exchange difference arising are recognised in other comprehensive income. 19 FINANCIAL INSTRUMENTS Financial instruments are contracts that give rise to both a financial asset of one enterprise and a financial liability or equity instrument of another enterprise. A financial asset is any asset that is cash, a contractual right to receive cash or another financial asset from another enterprise, a contractual right to exchange financial instruments with another enterprise under conditions that are potentially favourable, or an equity instrument of another enterprise. A financial liability is any liability that is a contractual obligation to deliver cash or another financial asset to another enterprise, or to exchange financial instruments with another enterprise under conditions that are potentially unfavourable. ANNUAL REPORT 2016 IJM PLANTATIONS BERHAD 123

28 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 19 FINANCIAL INSTRUMENTS (cont d) (a) Classification The classifies its financial assets in the following categories: at fair value through profit or loss and loans and receivables. The classification depends on the nature of the asset and the purpose for which the financial assets were acquired. Management determines the classification at initial recognition. (i) Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if it is acquired or incurred principally for the purpose of selling in the short term. Derivatives are also categorised as held for trading unless they are designated as hedges. Assets in this category are classified as current assets if expected to be settled within 12 months; otherwise, they are classified as non-current assets. (ii) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are presented as current assets, except for those expected to be realised later than 12 months after the balance sheet date which are presented as non-current assets. The s loans and receivables comprise trade and other receivables (other than prepayments and advances for land acquisition and plantation development expenditure) and deposits, cash and bank balances in the balance sheet. (b) Recognition and initial measurement Regular purchases and sales of financial assets are recognised on the trade-date, the date on which the commits to purchase or sell the asset. Financial assets are initially recognised at fair value plus transaction costs except for financial assets at fair value through profit or loss, which are recognised at fair value. Transaction costs for financial assets at fair value through profit or loss are expensed in profit or loss. (c) Subsequent measurement gains and losses Financial assets at fair value through profit or loss are subsequently carried at fair value. Loans and receivables are subsequently carried at amortised cost using the effective interest method. Changes in the fair values of financial assets at fair value through profit or loss, including the effects of currency translation, interest and dividend income, are recognised in profit or loss in the period in which the changes arise. (d) Subsequent measurement impairment of financial assets The assesses at each balance sheet date whether there is objective evidence that a financial asset or group of financial assets is impaired and recognises an allowance for impairment when such evidence exists. A financial asset or a group of financial assets is impaired and impairment is incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a loss event ) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. If any such evidence exists, the amount of the loss is measured as the difference between the asset s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset s original effective interest rate. The asset s carrying amount is reduced and the amount of the loss is recognised in profit or loss. The carrying amount of the financial assets is reduced by the impairment directly for all financial assets with the exception of trade and other receivables, where the carrying amount is reduced through the use of an allowance account. 124 IJM PLANTATIONS BERHAD ANNUAL REPORT 2016

29 19 FINANCIAL INSTRUMENTS (cont d) (d) Subsequent measurement impairment of financial assets (cont d) Loans and receivables Significant financial difficulties of the debtor, probability that the debtor will enter into bankruptcy, and default or significant delay in payments are objective evidence that these financial assets are impaired. When a receivable is uncollectible, it is written off against the related allowance account. Such receivables are written off after all the necessary procedures have been completed and the amount of the loss has been determined. If loans and receivables have variable interest rates, the discount rate for measuring any impairment is the current effective interest rate determined under the contract. As a practical expedient, the may measure impairment on the basis of an instrument s fair value using an observable market price. If, in a subsequent period, the amount of the impairment decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment is reversed to the extent that the carrying amount of the asset does not exceed its amortised cost at the reversal date. The amount of the reversal is recognised in profit or loss. (e) Derecognition Financial assets are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the has transferred substantially all risks and rewards of ownership. (f) Financial liabilities The classifies its financial liabilities as financial liabilities at fair value through profit or loss and other financial liabilities. The classification depends on the nature of the liabilities and the purpose for which the financial liabilities were incurred. Management determines the classification at initial recognition. Financial liabilities at fair value through profit or loss The classifies financial liabilities at fair value through profit or loss if they are acquired principally for the purpose of buying in the short term, i.e. are held for trading. They are presented as current liabilities if they are expected to be settled within 12 months after the end of the reporting period; otherwise they are presented as non-current liabilities. Derivatives are also categorised as held for trading unless they are designated as hedges. Other financial liabilities Other financial liabilities of the comprise borrowings and trade and other payables. When other financial liabilities are recognised initially, they are measured at fair value plus directly attributable transaction costs. Subsequent to initial recognition, other financial liabilities are measured at amortised cost using the effective interest method. Gains and losses are recognised in the statement of comprehensive income when the other financial liabilities are derecognised, and through the amortisation process. Financial liabilities are derecognised when the obligation specified in the contract is discharged, cancelled or expired. (g) Offsetting financial instruments Financial assets and liabilities are offset and the net amount presented on the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously. ANNUAL REPORT 2016 IJM PLANTATIONS BERHAD 125

30 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 19 FINANCIAL INSTRUMENTS (cont d) (h) Derivative financial instruments Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. (i) Fair value estimation The fair value of crude palm oil ( CPO ) pricing swap contracts is based on the average future CPO prices quoted on the Bursa Malaysia Derivative Exchange at the balance sheet date. The carrying values of financial assets and financial liabilities with a maturity period of less than one year are assumed to approximate their fair values. 20 TRADE AND OTHER PAYABLES Trade and other payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Trade and other payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method. Trade and other payables are classified as current liabilities if payment is due within one year, or in the normal operating cycle of the business if longer. If not, they are presented as non-current liabilities. 21 PROVISIONS Provisions are recognised when: the has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and a reliable estimate of the amount can be made. Provisions are measured at the present value of management s best estimate of the expenditure expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as finance cost. 22 FINANCIAL GUARANTEE CONTRACTS Financial guarantee contracts are contracts that require the or to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due, in accordance with the terms of the debt instrument. Financial guarantee contracts are recognised as financial liability at the time the guarantee is issued. The liability is initially measured at fair value and subsequently at the higher of the amount determined in accordance with FRS 137 Provisions, contingent liabilities and contingent assets and the amount initially recognised less accumulative amortisation, where appropriate. The fair value of a financial guarantee is determined as the present value of the difference in net cash flows between the contractual payments under the debt instrument and the payments that would be required without the guarantee, or the estimated amount that would be payable to a third party for assuming the obligations. When financial guarantees in relation to loans or payables of subsidiaries are provided by the for no compensation, the fair values are accounted for as contributions and recognised as part of the cost of investment in subsidiaries. 126 IJM PLANTATIONS BERHAD ANNUAL REPORT 2016

31 23 SEGMENTAL INFORMATION Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker ( CODM ). The Management Committee (MC), who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the CODM. Segment revenue, expenses, assets and liabilities are those amounts resulting from the operating activities of a segment that are directly attributable to the segment and the relevant portion that can be allocated on a reasonable basis to the segment. Segment revenue, expenses, assets and liabilities are determined before intragroup balances and intragroup transactions are eliminated as part of the consolidation process. The profit before tax for each operating segment is presented at net of adjustment for any relevant intersegment transactions. ANNUAL REPORT 2016 IJM PLANTATIONS BERHAD 127

32 Notes to the FINANCIAL STATEMENTS for the financial year ended 31 March GENERAL INFORMATION The principal activities of the are the cultivation of oil palms, investment holding, trading of crude palm oil and provision of management services to the subsidiaries. The principal activities of the subsidiaries are stated in Note 17 to the financial statements. There have been no significant changes in the nature of the principal activities of the and its subsidiaries during the financial year. The is a public limited liability company, incorporated and domiciled in Malaysia, and is listed on the Main Market of Bursa Malaysia Securities Berhad. The registered office of the is located at the 2nd Floor, Wisma IJM, Jalan Yong Shook Lin, Petaling Jaya, Selangor Darul Ehsan. The principal place of business of the is located at Wisma IJM Plantations, Lot 1, Jalan Bandar Utama, Batu 6, Jalan Utara, Sandakan, Sabah. The ultimate holding company is IJM Corporation Berhad, a company incorporated in Malaysia and listed on the Main Market of Bursa Malaysia Securities Berhad. The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the Directors on 26 May CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS Estimates and judgements are continually evaluated by the Directors and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, rarely equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are outlined below. (a) Deferred tax assets The reviews the carrying amounts of deferred tax assets at the end of each reporting period and reduces these to the extent that it is probable that sufficient taxable income will be available to allow all or part of the deferred tax assets to be utilised. The s assessment on the recognition of deferred tax assets on deductible temporary differences and unutilised tax losses is based on the level and timing of forecasted taxable income of the subsequent reporting periods. This forecast is based on the s past results and future expectations of fresh fruit bunches and crude palm oil prices and yields, estate operational costs, finance costs as well as foreign exchange differences. However, there is no certainty that the will generate sufficient taxable income to allow all or part of the deferred tax assets to be utilised as disclosed in Note 26. (b) Plantation expenditure There are certain parcels of land use rights where the remaining periods are less than 25 years as at 31 March The assumption of further extension of the land use rights periods to be granted on those lands involve judgement on the future decision by the local authority and the explicit terms and conditions imposed on the land titles. Based on the management s assessment of the assumed extension of the land use rights, management is of the view that there is no impairment indicator of the related plantation expenditure. 128 IJM PLANTATIONS BERHAD ANNUAL REPORT 2016

33 3 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES The s financial risk management policy seeks to ensure that adequate financial resources are available for the development of the s businesses whilst managing its market, credit liquidity and capital risks. The Board of Directors has set the policies to manage each of the financial risks and review them regularly throughout the financial year. The s financial risk management policies are summarised as follows: (a) Market risk (i) Cash flow interest rate risk Cash flow interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Fair value interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in market interest rates. As the has no significant interestbearing financial assets, the s income and operating cash flows are substantially independent of changes in market interest rates. The s interest-bearing financial assets are mainly short-term in nature and have been mostly placed in fixed deposits. The s interest rate risk arises primarily from interest-bearing borrowings at floating rates which expose the to cash flow interest rate risk. The manages its interest rate exposure by monitoring closely interest rate movements and maintaining the alternative to swap its floating rate borrowings to fixed rate borrowings. If the s borrowings at variable rates on which effective hedges have not been entered into changes by the following basis points, with all other variables being held constant, the effects on profit before tax would be as follows: The RM 000 RM 000 Effects to profit before tax if borrowings based on benchmark prime lending rate ( LIBOR ): increase by 50 basis points (3,943) (3,703) decrease by 50 basis points 3,943 3,703 (ii) Foreign currency exchange risk The maintains a hedge, whenever possible, by borrowing in the currency of the country in which the investment is located or by borrowing in currencies that match the future revenue stream to be generated from its investments. Foreign exchange exposures in transactional currencies other than functional currencies of the operating entities are kept to an acceptable level. The principally keeps cash and bank balances in their respective functional currencies except for certain fixed deposits which were kept in currencies other than their respective functional currencies (i.e. US Dollar fixed deposit). Entities in the primarily transact in their respective functional currencies except for certain borrowings which were denominated in currencies other than their respective functional currencies (i.e. US Dollar borrowings). ANNUAL REPORT 2016 IJM PLANTATIONS BERHAD 129

34 NOTES TO THE FINANCIAL STATEMENTS 3 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (cont d) (a) Market risk (cont d) (ii) Foreign currency exchange risk (cont d) Currency risks as defined by FRS 7 Financial Instruments: Disclosures arise on account of monetary assets and liabilities being denominated in a currency that is not the functional currency. As at balance sheet date, the s Ringgit Malaysia ( RM ) and Indonesian Rupiah ( IDR ) functional currency entities had US Dollar ( USD ) denominated net monetary liabilities. The effects to the s profit before tax if the USD had strengthened/weakened by 5% against IDR and RM are as follows: RM 000 RM 000 Net monetary liabilities denominated in USD 638, ,057 Effects to profit before tax if the USD had strengthened/weakened against IDR: strengthened (31,923) (27,853) weakened 31,923 27,853 As at the balance sheet date, there are no other significant monetary balances held by the and the that are denominated in non-functional currencies. (iii) Commodity price risk The is exposed to the price volatility risk due to fluctuation in the palm products commodity market. To manage and mitigate the risk on price volatility, the monitors the fluctuation of crude palm oil price on a daily basis and enters into physical forward selling commodity contracts or crude palm oil ( CPO ) pricing swap arrangements in accordance with guidelines set by the Board of Directors. The CPO swap contracts which are offered by the reputable banks in Malaysia, can be net settled during the period of the contracts. If average prices for crude palm oil change by 10% with all other variables being held constant, the effects on profit before tax would have been: RM 000 RM 000 Physical Forward Selling Commodity Contracts Effects to profit before tax if crude palm oil price increased by 10% 20,155 26,101 decreased by 10% (20,155) (26,101) CPO Swap Contracts Effects to profit before tax if crude palm oil price increased by 10% (8,594) (2,902) decreased by 10% 8,594 2, IJM PLANTATIONS BERHAD ANNUAL REPORT 2016

35 3 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (cont d) (b) Credit risk Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the. Credit risk arises from deposits, cash and bank balances with financial institutions, derivative financial instruments, as well as credit exposures to customers, including outstanding receivables. The s credit risk is primarily attributable to trade receivables, advances for plasma schemes and advances to non-controlling interests. For trade receivables, the trades only with creditworthy third parties. It is the s policy that all customers who wish to trade on credit terms are subject to credit verification procedures. The advances for plasma schemes are recoverable either through bank loans or direct repayments from plasma schemes when these plasma areas mature. For the advances to non-controlling interests, the non-controlling interests have pledged the shares of the subsidiaries as a security to the. In addition, receivable balances are monitored on an ongoing basis. The s exposure to bad debts is not significant. The s concentration of credit risk is within the trade receivables. To mitigate this risk, the only trades with the selected parties who are known to be creditworthy. The s credit risk from amounts due from subsidiaries is considered to be low. The credit risk of the s other financial assets, which comprise cash and cash equivalents, arises from default of the counterparty, with a maximum exposure equal to the carrying amount of these financial assets. However, the adopts the policy of dealing only with counterparties of high credibility (i.e. banks and financial institutions). The maximum exposure to credit risk for trade and other receivables is disclosed in Note 19 to the financial statements. (i) Financial assets that are neither past due nor impaired Deposits, cash and bank balances that are neither past due nor impaired are mainly deposits with banks with high credit-ratings. Trade and other receivables that are neither past due nor impaired are substantially companies with no history of default with the. (ii) Financial assets that are past due but not impaired There is no class of financial assets that is past due but not impaired except for certain trade and other receivables as disclosed in Note 19 to the financial statements. (c) Liquidity risk The actively manages its debt maturity profile, operating cash flows and the availability of funding so as to ensure that all refinancing, repayment and funding needs are met. As part of its overall prudent liquidity management, the maintains sufficient levels of cash or cash convertible investments to meet its working capital requirements. In addition, the strives to maintain available banking facilities of a reasonable level to its overall financial position. The is in the net current liabilities position as at 31 March 2016 as a result of funding arrangements indirectly made to Indonesian subsidiaries. However, the has the ability to generate sufficient cashflows from its operations and together with the dividends to be declared from its subsidiaries, the is able to meet its liabilities and obligations as and when they fall due. ANNUAL REPORT 2016 IJM PLANTATIONS BERHAD 131

36 NOTES TO THE FINANCIAL STATEMENTS 3 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (cont d) (c) Liquidity risk (cont d) The tables below analyse the financial liabilities of the and the into relevant maturity groupings based on the remaining period from the balance sheets date to the contractual maturity dates. The amounts disclosed in the table are the contractual undiscounted cash flows. Less than Between 1 Over 1 year and 5 years 5 years Total RM 000 RM 000 RM 000 RM 000 At 31 March 2016 Short term advance facility 79,487 79,487 Term loans 67, , ,004 Trade and other payables 76,770 76,770 Financial guarantee contract 362 7,490 16,646 24,498 Deposits with a licensed bank (Note 34(a) & (b)) 4,356 4,356 Derivative financial instruments 10,158 10, , ,076 16, ,273 At 31 March 2015 Short term advance facility 74,644 74,644 Term loans 146, , ,565 Trade and other payables 89,950 89,950 Financial guarantee contract 5,865 16,109 21,974 Deposits with a licensed bank (Note 34(a) & (b)) 4,018 4, , ,847 16, ,151 A subsidiary of the has provided corporate guarantees for a bank loan amounting to RM40.3 million (2015: RM RM40.3 million) to a cooperative in Indonesia in respect of plasma development. No loss is expected to arise from these corporate guarantees. As at 31 March 2016, RM24.5 million (2015: RM22.0 million) has been drawndown. PT Sinergi Agro Industri, a subsidiary of the has pledged restricted deposits as disclosed in Note 34(a) to the financial statements as security in respect of the said corporate guarantee facility amounting to RM2.1 million (2015: RM1.9 million) Less than Between 1 Over 1 year and 5 years 5 years Total RM 000 RM 000 RM 000 RM 000 At 31 March 2016 Amounts due to subsidiaries 41,534 41,534 Trade and other payables 10,518 10,518 Financial guarantee contract 67, , , , , ,056 At 31 March 2015 Amounts due to subsidiaries 44,719 44,719 Trade and other payables 26,681 26,681 Financial guarantee contract 146, , , , , , IJM PLANTATIONS BERHAD ANNUAL REPORT 2016

37 3 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (cont d) (c) Liquidity risk (cont d) The has guaranteed the term loans for certain subsidiaries under the terms of the financial guarantee contracts. Under the terms of the financial guarantee contracts, the will fulfil all the repayment obligations on behalf of the guaranteed subsidiaries to the lenders upon failure of the subsidiaries to make payments when they become due. The risk of default on the repayment obligations by the subsidiaries is minimal. The credit terms of financial liabilities are disclosed in Notes 28 and 29 to the financial statements. (d) Capital risk The considered equity capital and net debt as its primary definition of capital, which is further defined below. The s objectives when managing capital are to safeguard the s ability to continue as a going concern, to maintain an optimal capital structure so as to maximise shareholder value and to meet its externally imposed capital requirements. In order to maintain or achieve an optimal capital structure, the adjust the dividend payment, return capital to shareholders, issue new shares, buy back issued shares, obtain new financing facilities or dispose assets to reduce borrowings. Certain overseas subsidiaries of the are subject to externally imposed capital requirements and for which the has complied with those requirements as disclosed in Note 28 to the financial statements. Management monitors capital based on the s gearing ratio. The gearing ratio is calculated as net debt divided by equity capital. Net debt is calculated as total borrowings (excluding trade and other payables) less cash and cash equivalents. Equity capital is equivalent to capital and reserves attributable to owners of the. The and the monitor gearing ratios based on the terms of the respective loan agreement. The gearing ratio as at 31 March 2016 was 0.28 (2015: 0.21). (e) Fair value measurements The following table presents assets and liabilities measured at fair value and classified by level of the following fair value measurement hierarchy: (a) quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1); (b) inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly (Level 2); and (c) inputs for the asset or liability that are not based on observable market data (unobservable inputs) (Level 3) 2016 Level 1 Level 2 Level 3 Total RM 000 RM 000 RM 000 RM 000 Liabilities Derivative financial instruments (Note 20) (10,158) (10,158) Total (10,158) (10,158) 2015 Assets Derivative financial Instruments (Note 20) Total assets ANNUAL REPORT 2016 IJM PLANTATIONS BERHAD 133

38 NOTES TO THE FINANCIAL STATEMENTS 4 REVENUE RM 000 RM 000 RM 000 RM 000 Sale of: Crude palm oil 448, ,289 Crude palm kernel oil 62,574 73,444 Fresh fruit bunches 39,234 31,121 83, ,097 Palm kernel expellers 6,083 7,510 Palm kernel and other by-products 536 7,371 Oil palm seeds 1, , Plantation advisory fee Management fees from subsidiaries 8,627 9,566 Dividend income from subsidiaries 19,500 50, , , , ,594 5 COST OF SALES RM 000 RM 000 RM 000 RM 000 Consists of: Planting and operational costs 224, ,146 42,924 47,807 Raw materials 95, ,748 Amortisation of land use rights and depreciation of property, plant and equipment 52,447 46,627 10,139 8,976 Replanting cost 11,044 8,904 11,044 8,904 Services rendered 14 6,804 7, , ,439 70,911 73,424 6 OTHER INCOME AND NET GAINS/(LOSSES) RM 000 RM 000 RM 000 RM 000 (a) Other income and expenses Interest income 8,169 8,592 1,499 3,527 Rental income 1,867 2, Insurance claims Gain on disposal of property, plant and equipment Miscellaneous other income 2,143 1,961 1,145 1,453 Property plant and equipment scrapped (504) (277) (2) (15) 11,735 13,276 2,894 5, IJM PLANTATIONS BERHAD ANNUAL REPORT 2016

39 6 OTHER INCOME AND NET GAINS/(LOSSES) (cont d) RM 000 RM 000 RM 000 RM 000 (b) Other (losses)/gains net Financial assets at fair value through profit or loss: Fair value (losses)/gains on crude palm oil pricing swaps (15,324) 6,099 Financial liabilities at amortisation cost: Amortisation of financial guarantee contract (Note 29(b)) Forex exchange: Realised foreign exchange gains 700 Realised foreign exchange losses (1,183) Unrealised foreign exchange gains 7,605 Unrealised foreign exchange losses (7,709) 8,305 (8,892) 4,716 10,483 3,701 5,730 7 FINANCE COSTS RM 000 RM 000 RM 000 RM 000 Interest expense on: Term loans 13,382 10,318 Short term advance facility 1, Foreign exchange differences on borrowings 11,107 52,945 25,552 64,082 Less: Interest capitalised in plantation expenditure (Note 16(b)) (2,207) (2,387) Less: Foreign exchange differences capitalised in plantation expenditure (Note 16(b)) (1,987) (10,475) Total finance costs capitalised (4,194) (12,862) Recognised in statement of comprehensive income 21,358 51,220 ANNUAL REPORT 2016 IJM PLANTATIONS BERHAD 135

40 NOTES TO THE FINANCIAL STATEMENTS 8 PROFIT BEFORE TAX (a) The following amounts have been charged/(credited) in arriving at profit before tax: RM 000 RM 000 RM 000 RM 000 Employee benefits expense (Note 9) 111,567 96,813 30,083 32,662 Non-Executive Directors remuneration (Note 10) Auditors remuneration (Note 8(b)) Current year Under accrual in respect of prior year Amortisation of land use rights (Note 15) 3,774 2, Depreciation of property, plant and equipment (Note 14) 50,695 45,113 9,263 8,217 Property, plant and equipment scrapped Rental of premises Realised foreign exchange gains (1,286) (418) Realised foreign exchange losses 586 1,601 Unrealised foreign exchange losses ,668 Unrealised foreign exchange gains (8,041) (23,959) (b) Auditors remuneration statutory audit RM 000 RM 000 RM 000 RM 000 PricewaterhouseCoopers Malaysia Other auditors of subsidiaries EMPLOYEE BENEFITS EXPENSE RM 000 RM 000 RM 000 RM 000 Salaries, wages and bonuses 115, ,918 23,132 27,436 Contributions to defined contribution plan 6,369 5,563 1,979 2,265 Social security contributions 2, Share option expense 5,752 4,524 4,860 2,997 Defined benefit expense (Note 27) 1, , ,466 30,091 32,824 Less: Expenses capitalised in plantation expenditure (Note 16(b)) (19,307) (24,653) (8) (162) Recognised in statement of comprehensive income (Note 8) 111,567 96,813 30,083 32,662 Included in employee benefits expense of the and of the are Executive Directors remuneration amounting to RM3,474,000 (2015: RM2,696,000) and RM3,474,000 (2015: RM2,696,000) respectively as further disclosed in Note IJM PLANTATIONS BERHAD ANNUAL REPORT 2016

41 10 DIRECTORS REMUNERATION RM 000 RM 000 RM 000 RM 000 Executive: Salaries and other emoluments 1,980 1,790 1,980 1,790 Contributions to defined contribution plan Share option expense 1, , ,474 2,696 3,474 2,696 Non-Executive: Fees (Note 8) Other emoluments Total Directors remuneration 4,147 3,369 4,147 3,369 Benefits-in-kind Total Directors remuneration including benefits-in-kind 4,214 3,459 4,214 3, INCOME TAX EXPENSE RM 000 RM 000 RM 000 RM 000 Current tax: Current year 18,555 26,795 4,066 9,346 Over accrual in prior years (627) (169) (183) (2) 17,928 26,626 3,883 9,344 Deferred tax (Note 26): Relating to origination/(reversal) of temporary differences 10,440 (19,516) Total income tax expense 28,368 7,110 3,909 9,393 A reconciliation of income tax expense applicable to profit before tax at the statutory income tax rate to income tax expense at the effective income tax rate of the and of the is as follows: RM 000 RM 000 RM 000 RM 000 Profit before tax 50,411 89,407 30,170 83,499 Tax calculated at the Malaysian tax rate of 24% (2015: 25%) 12,099 22,352 7,241 20,875 Tax effects of: Different tax rate in other country (223) Income not subject to tax (16,527) (23,743) (4,912) (12,864) Deferred tax assets not recognised 321 5,501 Deferred tax assets derecognised 28,104 Expenses not deductible for tax purposes 5,221 3,169 1,763 1,384 Over accrual of current tax in prior years (627) (169) (183) (2) Total income tax expense 28,368 7,110 3,909 9,393 ANNUAL REPORT 2016 IJM PLANTATIONS BERHAD 137

42 NOTES TO THE FINANCIAL STATEMENTS 12 EARNINGS PER SHARE Basic earnings per share The basic earnings per share for the financial year is calculated by dividing the s net profit attributable to owners of the for the financial year by the weighted average number of ordinary shares in issue during the financial year Net profit attributable to owners of the (RM 000) 24,197 90,422 Weighted average number of ordinary shares in issue ( 000) 880, ,059 Basic earnings per share (sen) The does not have any dilutive impact on its earnings per share. 13 DIVIDENDS and Gross Gross dividend Amount of dividend Amount of per share dividend per share dividend Sen RM 000 Sen RM 000 In respect of financial year ended 31 March 2015: Single tier interim dividend on 880,580,460 ordinary shares 6 52,835 In respect of financial year ended 31 March 2014: Single tier interim dividend on 814,200,431 ordinary shares 7 56, , ,994 On 26 May 2016, the Directors declared a single tier interim dividend amounting to 5 sen per share in respect of the financial year ended 31 March The single tier interim dividend will be paid on 13 July 2016 to every member who is entitled to receive the dividend as at 5.00 p.m. on 24 June The interim dividend has not been recognised in the statement of changes in equity as it was declared subsequent to the financial year end. The Directors do not recommend the payment of any final dividend for the financial year ended 31 March 2016 (2015: Nil). 138 IJM PLANTATIONS BERHAD ANNUAL REPORT 2016

43 14 PROPERTY, PLANT AND EQUIPMENT Plant, Office, Plantation machinery, equipment, Capital Leasehold infra- equipment furniture work-inland structure Buildings and vehicles and fittings progress Total Note RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 At 31 March 2016 Cost or Valuation At 1 April 2015 At cost 56, , , ,970 23, ,021 1,149,780 At valuation 30,141 4,802 3,668 38,611 87, , , ,638 23, ,021 1,188,391 Exchange differences 9,247 4,493 5, ,403 24,787 Additions 28,980 1,918 13,788 1,839 84, ,340 Disposals (455) (8) (463) Scrapped (751) (1,180) (42) (1,973) Reclassifications 8,018 7,892 17,739 2,442 (36,091) At 31 March , , , ,792 28, ,148 1,342,082 Representing: At cost 56, , , ,124 28, ,148 1,303,471 At valuation 30,141 4,802 3,668 38,611 At 31 March , , , ,792 28, ,148 1,342,082 Accumulated depreciation At 1 April ,914 44,233 83, ,995 15, ,716 Exchange differences , ,290 Depreciation charge for the financial year ,032 13,461 27,780 3,056 57,202 Recognised in statement of comprehensive income ,950 12,940 25,136 2,797 50,695 Capitalised in plantation expenditure 16(b) 1 3, , ,507 Disposals (285) (6) (291) Scrapped (262) (1,176) (31) (1,469) At 31 March ,787 57,136 97, ,096 18, ,448 Net carrying amount At cost 48, , , ,696 9, , ,527 At valuation 26,107 * * 26,107 At 31 March , , , ,696 9, , ,634 * Below RM1,000 ANNUAL REPORT 2016 IJM PLANTATIONS BERHAD 139

44 NOTES TO THE FINANCIAL STATEMENTS 14 PROPERTY, PLANT AND EQUIPMENT (cont d) Plant, Office, Plantation machinery, equipment, Capital Leasehold infra- equipment furniture work-inland structure Buildings and vehicles and fittings progress Total Note RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 At 31 March 2015 Cost or Valuation At 1 April 2014 At cost 56, , , ,115 23,500 59,146 1,025,076 At valuation 30,141 4,802 3,668 38,611 87, , , ,783 23,500 59,146 1,063,687 Exchange differences (2,884) (2,076) (2,333) (154) (1,321) (8,768) Additions 40,797 2,220 15,477 3,524 75, ,894 Disposals (180) (180) Scrapped (307) (727) (3,208) (4,242) Reclassifications 2,080 15,978 1,618 4 (19,680) At 31 March , , , ,638 23, ,021 1,188,391 Representing: At cost 56, , , ,970 23, ,021 1,149,780 At valuation 30,141 4,802 3,668 38,611 At 31 March , , , ,638 23, ,021 1,188,391 Accumulated depreciation At 1 April ,045 33,952 71, ,011 16, ,197 Exchange differences (456) (263) (936) (73) (1,728) Depreciation charge for the financial year ,737 12,297 28,618 1,863 54,384 Recognised in statement of comprehensive income ,297 11,423 24,998 1,527 45,113 Capitalised in plantation expenditure 16(b) 1 4, , ,271 Disposals (172) (172) Scrapped (244) (526) (3,195) (3,965) At 31 March ,914 44,233 83, ,995 15, ,716 Net carrying amount At cost 48, , , ,623 8, , ,235 At valuation 26, ,440 At 31 March , , , ,643 8, , , IJM PLANTATIONS BERHAD ANNUAL REPORT 2016

45 14 PROPERTY, PLANT AND EQUIPMENT (cont d) Plant, Office, Plantation machinery, equipment, Capital Leasehold infra- equipment furniture work-inland structure Buildings and vehicles and fittings progress Total Note RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 At 31 March 2016 Cost or Valuation At 1 April 2015 At cost 48,188 60,308 64,306 16,997 12,884 2, ,607 At valuation 4,521 4,521 52,709 60,308 64,306 16,997 12,884 2, ,128 Additions 1,047 1, ,359 4,912 Disposals (206) (8) (214) Scrapped (2) (2) (11) (15) Reclassifications ,425 (3,364) At 31 March ,709 61,355 66,307 16,946 15,575 1, ,811 Representing: At cost 48,188 61,355 66,307 16,946 15,575 1, ,290 At valuation 4,521 4,521 At 31 March ,709 61,355 66,307 16,946 15,575 1, ,811 Accumulated depreciation At 1 April ,665 12,840 36,413 10,688 10,817 74,423 Depreciation charge for the financial year 435 1,793 4,036 1,612 1,390 9,266 Recognised in statement of comprehensive income ,792 4,034 1,612 1,390 9,263 Capitalised in plantation expenditure 16(b) * 1 2 * * 3 Disposals (166) (6) (172) Scrapped * (2) (11) (13) At 31 March ,100 14,633 40,449 12,132 12,190 83,504 Net carrying amount At cost 44,881 46,722 25,858 4,814 3,385 1, ,579 At valuation 3,728 3,728 At 31 March ,609 46,722 25,858 4,814 3,385 1, ,307 * Below RM1,000 ANNUAL REPORT 2016 IJM PLANTATIONS BERHAD 141

46 NOTES TO THE FINANCIAL STATEMENTS 14 PROPERTY, PLANT AND EQUIPMENT (cont d) Plant, Office, Plantation machinery, equipment, Capital Leasehold infra- equipment furniture work-inland structure Buildings and vehicles and fittings progress Total Note RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 At 31 March 2015 Cost or Valuation At 1 April 2014 At cost 48,188 59,190 59,467 15,805 11,683 1, ,899 At valuation 4,521 4,521 52,709 59,190 59,467 15,805 11,683 1, ,420 Additions 1, ,743 1,267 5,500 10,432 Disposals (284) (14) (298) Scrapped (59) (315) (52) (426) Reclassifications 37 4, (4,142) At 31 March ,709 60,308 64,306 16,997 12,884 2, ,128 Representing: At cost 48,188 60,308 64,306 16,997 12,884 2, ,607 At valuation 4,521 4,521 At 31 March ,709 60,308 64,306 16,997 12,884 2, ,128 Accumulated depreciation At 1 April ,229 11,073 32,535 9,590 10,378 66,805 Depreciation charge for the financial year 436 1,767 3,928 1, ,272 Recognised in statement of comprehensive income ,758 3,895 1, ,217 Capitalised in plantation expenditure 16(b) Disposals (234) (9) (243) Scrapped (50) (314) (47) (411) At 31 March ,665 12,840 36,413 10,688 10,817 74,423 Net carrying amount At cost 45,264 47,468 27,893 6,309 2,067 2, ,925 At valuation 3,780 3,780 At 31 March ,044 47,468 27,893 6,309 2,067 2, ,705 Property, plant and equipment of the and of the include leasehold land, buildings and plant which were last revalued in 1997 based on an open market value basis by firms of independent professional valuers. The Directors have applied the transitional provisions of International Accounting Standards ( IAS ) 16 Property, plant and equipment, which has been adopted by the MASB, which allows these assets to be stated at their last revalued amounts less accumulated depreciation. Accordingly, these valuations have not been updated. 142 IJM PLANTATIONS BERHAD ANNUAL REPORT 2016

47 14 PROPERTY, PLANT AND EQUIPMENT (cont d) Had the revalued property, plant and equipment been carried at the historical cost model, the carrying amounts would have been as follows: RM 000 RM 000 RM 000 RM 000 Leasehold land 19,193 19,356 4,205 4,263 Buildings Plant 17 19,243 19,438 4,205 4, LAND USE RIGHTS RM 000 RM 000 RM 000 RM 000 Cost At 1 April 2015/ , ,682 30,664 24,172 Additions 7,010 26,935 2,841 6,492 Exchange differences 3,880 (1,704) At 31 March 162, ,913 33,505 30,664 Accumulated amortisation At 1 April 2015/ ,182 20,404 6,409 5,649 Exchange differences 443 (227) Amortisation for the financial year 4,743 4, At 31 March 29,368 24,182 7,285 6,409 Net carrying amount At 31 March 133, ,731 26,220 24,255 The s land use rights with a carrying value of RM39.3 million (2015: RM39.3 million) are still in the process of being transferred to the. The amortisation for the financial year comprises: RM 000 RM 000 RM 000 RM 000 Recognised in statement of comprehensive income (Note 8) 3,774 2, Capitalised in plantation expenditure (Note 16(b)) 969 1, ,743 4, ANNUAL REPORT 2016 IJM PLANTATIONS BERHAD 143

48 NOTES TO THE FINANCIAL STATEMENTS 16 PLANTATION EXPENDITURE RM 000 RM 000 RM 000 RM 000 Cost or valuation At 1 April 2015/2014 At cost 828, , , ,058 At valuation 168, ,733 19,898 19, , , , ,956 Exchange differences 29,398 (11,005) Additions 61, , At 31 March 1,088, , , ,591 Representing: At cost 919, , , ,693 At valuation 168, ,733 19,898 19,898 1,088, , , ,591 (a) Certain plantation expenditure of the and certain subsidiaries were last revalued in 1997 based on an open market value basis by firms of independent professional valuers. Had the revalued plantation expenditure of the and of the been carried under the cost model, the carrying amount would have been RM64,117,000 (2015: RM64,117,000) and RM12,864,000 (2015: RM12,864,000) respectively. (b) Plantation expenditure capitalised during the financial year include the following: RM 000 RM 000 RM 000 RM 000 Cash items Employee benefits expense (Note 9) 19,307 24, Retirement benefits (Note 27) Payments to contractors and suppliers 29,777 89, Finance costs (Note 7) 2,207 2,387 52, , Non cash items Amortisation of land use rights (Note 15) 969 1,414 1 Depreciation of property, plant and equipment (Note 14) 6,507 9, Finance costs (Note 7) 1,987 10,475 9,463 21, Additions 61, , IJM PLANTATIONS BERHAD ANNUAL REPORT 2016

49 17 INTERESTS IN SUBSIDIARIES RM 000 RM 000 Investments in subsidiaries, at cost At 1 April 2015/2014 Unquoted shares in Malaysia 849, ,308 Unquoted shares outside Malaysia * * 849, ,308 At 31 March Unquoted shares in Malaysia 849, ,308 Unquoted shares outside Malaysia * * Less: Accumulated impairment Unquoted shares in Malaysia (74,927) (74,927) 774, ,381 Amounts due from subsidiaries 246, ,688 Financial guarantees extended to subsidiaries 19,822 17,683 * Below RM1,000 1,041, ,752 The amounts due from subsidiaries were denominated in Ringgit Malaysia, unsecured, interest free and had no fixed terms of repayment. The amounts due from subsidiaries which were classified as non-current were considered as part of the net investment in subsidiaries. (a) Details of subsidiaries are as follows: Country of Effective Name of subsidiaries incorporation Principal activities equity interest % % Held by the : Akrab Perkasa Sdn. Bhd. Malaysia Dormant Berakan Maju Sdn. Bhd. Malaysia Cultivation of oil palms Desa Talisai Sdn. Bhd. Malaysia Investment holding Desa Talisai Palm Oil Mill Sdn. Bhd. Malaysia Dormant Dynasive Enterprise Sdn. Bhd. Malaysia Investment holding Excellent Challenger (M) Sdn. Bhd. Malaysia Cultivation of oil palms Gunaria Sdn. Bhd. Malaysia Investment holding IJM Biofuel Sdn. Bhd. Malaysia Dormant IJM Edible Oils Sdn. Bhd. Malaysia Palm oil and kernel milling Minat Teguh Sdn. Bhd. Malaysia Investment holding Rakanan Jaya Sdn. Bhd. Malaysia Cultivation of oil palms Ratus Sempurna Sdn. Bhd. Malaysia Property holding Sabang Mills Sdn. Bhd. Malaysia Dormant Sijas Plantations Sdn. Bhd. Malaysia Dormant IJMP Investments (M) Limited* Republic of Under members Mauritius voluntary liquidation ANNUAL REPORT 2016 IJM PLANTATIONS BERHAD 145

50 NOTES TO THE FINANCIAL STATEMENTS 17 INTERESTS IN SUBSIDIARIES (cont d) (a) Details of subsidiaries are as follows: (cont d) Country of Effective Name of subsidiaries incorporation Principal activities equity interest % % Held by Minat Teguh Sdn. Bhd.: PT Primabahagia Permai* Indonesia Cultivation of oil palms Held by PT Primabahagia Permai: PT Prima Alumga* Indonesia Cultivation of oil palms PT Indonesia Plantation Synergy* Indonesia Cultivation of oil palms and milling Held by Gunaria Sdn. Bhd.: PT Sinergi Agro Industri* Indonesia Cultivation of oil palms PT Karya Bakti Sejahtera Agrotama* Indonesia Cultivation of oil palms * Audited by a firm other than PricewaterhouseCoopers, Malaysia. (b) In the previous financial year, PT Primabahagia Permai ( PTPP ) issued a total of 58,600 new ordinary shares of approximately RM each to its non-controlling interests and immediate holding company, Minat Teguh Sdn. Bhd. ( MTSB ), a wholly-owned subsidiary of the, which was settled through a set off against amount due to non-controlling interests and MTSB. 18 INVENTORIES RM 000 RM 000 RM 000 RM 000 Crude palm oil 23,429 18,728 Fertilisers and chemicals 19,357 13,128 2,862 2,326 Stores and spares 10,675 10, ,056 Oil palm nurseries 8,592 8,804 2,015 1,370 Crude palm kernel oil 8,402 3,264 Palm kernels 2,727 2,404 Palm kernel expellers Fresh fruit bunches ,469 58,311 5,486 4, IJM PLANTATIONS BERHAD ANNUAL REPORT 2016

51 19 TRADE AND OTHER RECEIVABLES (a) Amounts due from subsidiaries RM 000 RM 000 Trade 5,383 4,443 Non trade and non-interest bearing advances ,934 6,346 15,377 The amounts due from subsidiaries are denominated in Ringgit Malaysia, unsecured, interest free and repayable on demand. As at 31 March 2016, no amounts due from subsidiaries (2015: Nil) were past due and impaired. (b) Trade and other receivables RM 000 RM 000 RM 000 RM 000 Non-current Amounts due from non-controlling interests (Note v) 28,222 21,048 Current Trade receivables Third parties 12,289 20, Other receivables Other receivables 13,620 15, Advances for plasma schemes (Note iv) 25,136 14,214 Prepayments 15,234 8, Deposits 1,411 2, ,401 41,703 1, ,690 62,637 1, Total trade and other receivables 95,912 83,685 1, The currency exposure profile of the trade and other receivables (excluding deposits and prepayments) is as follows: RM 000 RM 000 United States Dollars 28,222 21,048 Trade and other receivables (excluding deposits and prepayments) is further analysed as follows: NOTE RM 000 RM 000 RM 000 RM 000 Neither past due nor impaired (i) 79,267 69, Past due but not impaired (ii) 2,700 Impaired (iii) 79,267 71, ANNUAL REPORT 2016 IJM PLANTATIONS BERHAD 147

52 NOTES TO THE FINANCIAL STATEMENTS 19 TRADE AND OTHER RECEIVABLES (cont d) (b) Trade and other receivables (cont d) (i) Trade and other receivables that are neither past due nor impaired The s trading terms with its customers are mainly on credit periods ranging from 1 to 30 days (2015: 1 to 30 days). Trade and other receivables, that are neither past due nor impaired, are substantially from companies with a good collection track record with the and the. Based on past experience, management believes that no impairment is necessary in respect of these balances as they are fully recoverable. (ii) Trade and other receivables that are past due but not impaired As at 31 March 2016, no trade receivables and other receivables of the (2015: RM2.70 million) were past due but not impaired. This related to customers for whom there is no recent history of default and no concern on the credit worthiness of the counter party. There is no objective evidence that the receivable is not fully recoverable. The ageing analysis of the receivables is as follows: The RM 000 RM 000 Up to 6 months 2,700 More than 6 months 2,700 (iii) Trade and other receivables that are impaired As at 31 March 2016, no receivables (2015: Nil) were impaired and provided for. (iv) Advances for plasma schemes RM 000 RM 000 At 1 April 2015/ ,214 22,655 Additions 12,070 3,969 Repayment (1,148) (12,410) At 31 March 25,136 14,214 The Government of the Republic of Indonesia requires companies involved in plantation development to provide support to develop and cultivate oil palm lands for local communities in oil palm plantations as part of their social obligation which are known as Plasma schemes. In line with this requirement, the s subsidiaries are involved in several cooperative programs for the development and cultivation of oil palm lands for local communities. The s subsidiaries supervise and manage the plasma schemes. Advances made by the s subsidiaries to the plasma schemes in the form of plantation development costs are recoverable either through bank loans obtained by the cooperatives or direct repayments from plasma schemes when these plasma areas come into production. The has carried out an assessment on the recoverability of its trade and other receivable balances and management believes that no impairment is required. Management expects the advances to be repaid within the next financial year. 148 IJM PLANTATIONS BERHAD ANNUAL REPORT 2016

53 19 TRADE AND OTHER RECEIVABLES (cont d) (b) Trade and other receivables (cont d) (v) The amounts due from non-controlling interests are denominated in United States Dollars. The amounts due from non-controlling interests are operational in nature on furtherance of the overseas subsidiaries business operations. These amounts due from non-controlling interests are currently interest free, secured over the related shares held by the non-controlling interests and repayable on demand. Management reserves the right to charge interest in the future. Management does not intend to demand for repayment of the amounts owing by the non-controlling interests within the period of twelve months. As a result, the amounts are reclassified as non-current assets. 20 DERIVATIVE FINANCIAL INSTRUMENTS Assets Liabilities Assets Liabilities RM 000 RM 000 RM 000 RM 000 Current: Crude palm oil ( CPO ) swap contracts 10, The entered into CPO swap contracts to mitigate the exposure of fluctuations in the price of crude palm oil. The change in fair value is due to the differences between fixed CPO prices as per the swap contracts and the average future CPO prices quoted on the Bursa Malaysia Derivative Exchange for the specific contracted period. As at the reporting date, the outstanding CPO swaps contracts are made up of notional amounts of 32,250 metric tonnes (2015: 13,500 metric tonnes) with contracted prices ranging from RM 2,065 to RM 2,510 per metric tonne (2015: RM2,100 to RM2,260 per metric tonne) commencing within the period from 1 September 2015 to 31 March 2017 (2015: 1 March 2015 to 31 March 2016). 21 DEPOSITS, CASH AND BANK BALANCES RM 000 RM 000 RM 000 RM 000 Non-current Deposit with a licensed bank (Note 34) 92,569 Current Cash and bank balances 41,478 71, Deposits with licensed banks (Note 34) 231, ,712 7, , , ,438 8, , , ,007 8, ,374 ANNUAL REPORT 2016 IJM PLANTATIONS BERHAD 149

54 NOTES TO THE FINANCIAL STATEMENTS 21 DEPOSITS, CASH AND BANK BALANCES (cont d) The effective interest rates per annum of deposits with licensed banks as at the end of the financial year for the and the are as follows: % % % % Deposits with licensed banks: Ringgit Malaysia Indonesian Rupiah US Dollar Deposits with licensed banks of the and of the have maturity periods ranging from 2 to 319 days (2015: 2 to 732 days) and 2 days (2015: 2 to 32 days) respectively. Except for the restricted deposits with licensed banks, the deposits with the maturities of more than 3 months are not restricted for use and can be withdrawn for use without incurring any penalty. Bank balances are deposits held at call with banks and earn no interest. 22 SHARE CAPITAL and Number of ordinary Nominal shares of RM0.50 each value RM 000 RM 000 Authorised: At beginning and end of financial year 2,000,000 2,000,000 1,000,000 1,000,000 Issued and fully paid: At beginning of financial year 880, , , ,200 Issuance of shares: Exercise of Warrants 2009/ ,180 38,090 At end of financial year 880, , , ,290 (a) In the previous financial year, the issued and paid-up ordinary share capital of the was increased from RM402,200,274 to RM440,290,230 by way of the issuance of 76,179,912 new ordinary shares of RM0.50 each arising from the exercise of Warrants 2009/2014 at the exercise price of RM2.62 per share. The new ordinary shares issued during the financial year rank pari passu in all respects with the existing ordinary shares of the. (b) Warrants 2009/2014 The Warrants 2009/2014 were constituted by a Deed Poll dated 30 September As at 7 November 2014, 896,603 Warrants 2009/2014 remained unexercised and had lapsed. 23 EQUITY CONTRIBUTION RESERVE The equity contribution reserve represents the equity-settled share options of the ultimate holding company, IJM Corporation Berhad that are granted to certain employees of the. The reserve is made up of the cumulative value of services received from employees recorded over the vesting period commencing from the grant date of the share options and is reduced by the recharge by the ultimate holding company upon exercise of the equity settled share options by the eligible employees. 150 IJM PLANTATIONS BERHAD ANNUAL REPORT 2016

55 24 OTHER RESERVES Foreign currency Capital Revaluation Warrant translation reserve reserve reserve reserve Total RM 000 RM 000 RM 000 RM 000 RM 000 At 1 April ,157 35,455 (102,903) (13,091) Currency translation differences arising from translation of net investments in subsidiaries (net of tax) (12,351) (12,351) Transfer to share premium upon exercise of Warrants 2009/2014 (35,043) (35,043) Transfer to retained profits upon expiry of Warrants 2009/2014 (412) (412) At 31 March ,157 (115,254) (60,897) Currency translation differences arising from translation of net investments in subsidiaries (net of tax) 35,942 35,942 At 31 March ,157 (79,312) (24,955) Revaluation Warrant reserve reserve Total RM 000 RM 000 RM 000 At 1 April ,945 35,455 40,400 Transfer to share premium upon exercise of Warrants 2009/2014 (35,043) (35,043) Transfer to retained profits upon expiry of Warrants 2009/2014 (412) (412) At 31 March ,945 4,945 At 1 April 2015/31 March ,945 4,945 The nature and purpose of each category of reserve are as follows: (a) Capital reserve This represents the amounts equivalent to the nominal value of the convertible cumulative redeemable preference shares redeemed by certain subsidiaries. (b) Revaluation reserve This represents the surplus on revaluation of plant, buildings, leasehold land and plantation expenditure. ANNUAL REPORT 2016 IJM PLANTATIONS BERHAD 151

56 NOTES TO THE FINANCIAL STATEMENTS 24 OTHER RESERVES (cont d) (c) Warrant reserve Proceeds from the issuance of warrants, net of issue costs, are credited to the warrant reserve which is non-distributable. Warrant reserve is transferred to the share premium account upon the exercise of the warrants and the warrant reserve in relation to unexercised warrants at the expiry, will be transferred to retained profits. The Warrants 2009/2014 had expired in the previous financial year. (d) Foreign currency translation reserve The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign entities whose functional currencies are different from that of the s presentation currency and the exchange differences arising from monetary items which form part of the s net investment in foreign entities. 25 RETAINED PROFITS The may distribute dividends out of its entire retained profits as at 31 March 2016 under the single-tier tax system. 26 DEFERRED TAXATION Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets and current tax liabilities and when the deferred taxes relate to the same tax authority. The following amounts, determined after appropriate offsetting, are shown in the balance sheets: RM 000 RM 000 RM 000 RM 000 Deferred tax assets 19,927 33,037 Deferred tax liabilities (160,244) (164,719) (34,919) (34,893) (140,317) (131,682) (34,919) (34,893) At beginning of financial year (131,682) (151,485) (34,893) (34,844) (Charged)/credited to statement of comprehensive income (Note 11): Property, plant and equipment (381) (2,966) Plantation expenditure (9,844) (14,534) (77) (140) Unutilised tax losses (2,744) 37, Derivatives 2,529 (10,440) 19,516 (26) (49) Exchange differences 1, At end of financial year (140,317) (131,682) (34,919) (34,893) 152 IJM PLANTATIONS BERHAD ANNUAL REPORT 2016

57 26 DEFERRED TAXATION (cont d) RM 000 RM 000 RM 000 RM 000 Subject to income tax: Deferred tax assets (before offsetting): Revaluation of leasehold land Unutilised tax losses 80,068 78, Derivatives 2,529 82,597 78, Offsetting (62,670) (45,252) (162) (125) Deferred tax assets (after offsetting) 19,927 33,037 Deferred tax liabilities (before offsetting): Property, plant and equipment (46,223) (45,840) (11,873) (11,887) Plantation expenditure (149,718) (137,158) (21,519) (21,442) Revaluation of plantation expenditure (25,022) (25,022) (1,689) (1,689) Revaluation of leasehold land and property, plant and equipment (1,951) (1,951) (222,914) (209,971) (35,081) (35,018) Offsetting 62,670 45, Deferred tax liabilities (after offsetting) (160,244) (164,719) (34,919) (34,893) (a) The following are amounts of deductible temporary differences on plantation expenditure and unutilised tax losses in certain Malaysian subsidiaries for which no deferred tax asset is recognised in the balance sheets where it is not probable that these subsidiaries will have future profitable operations RM 000 RM 000 RM 000 RM 000 Deductible temporary differences on plantation expenditure Unutilised tax losses ,076 1,076 Deferred tax assets not recognised of 24% (2015: 25%) ANNUAL REPORT 2016 IJM PLANTATIONS BERHAD 153

58 NOTES TO THE FINANCIAL STATEMENTS 26 DEFERRED TAXATION (cont d) (b) The unutilised tax losses and other deductible temporary differences in Indonesian subsidiaries not recognised as deferred tax assets at the end of the financial year will expire in the following financial years: RM 000 RM 000 Financial year: , , ,712 20, ,503 22, , ,206 43,506 Deferred tax assets derecognised and not recognised 39,302 10, RETIREMENT BENEFITS The subsidiaries in Indonesia operate an unfunded defined benefit scheme for qualified permanent employees who are eligible under the employment policy. There are no plan assets or actual returns on the plan assets. The level of benefits provided depends on the employees length of service and their salary in the final years leading up to retirement. The latest actuarial valuations of the plans in Indonesia were carried out on 31 March 2016 by a qualified actuary. The movements during the financial year in the amounts recognised in the balance sheets are as follows: RM 000 RM 000 At beginning of financial year 2,394 1,557 Recognised in statement of comprehensive income (Note 9) 1, Capitalised in plantation expenditure (Note 16(b)) Exchange differences 111 (27) At end of financial year 4,526 2,394 Analysed as: Non-current 4,526 2,394 The amount of unfunded defined benefits recognised in the balance sheets are determined as follows: RM 000 RM 000 Present value of unfunded defined benefit obligations 4,526 2,394 Liability in the balance sheets 4,526 2, IJM PLANTATIONS BERHAD ANNUAL REPORT 2016

59 27 RETIREMENT BENEFITS (cont d) The amounts recognised in the statement of comprehensive income are as follows: RM 000 RM 000 Current service cost Interest cost Total unfunded defined benefit plan (Note 9) 1, The charge to profit or loss was included in cost of sales. The expenses capitalised in plantation expenditure during the financial year were analysed as follows: RM 000 RM 000 Current service cost Interest cost Total unfunded defined benefit plan (Note 16(b)) The principal assumptions used in respect of the s unfunded defined benefit plan were as follows: % % Discount rate 8 7 Expected rate of salary increases 8 8 Based on the same method used to derive the present value of the defined benefit obligation using the projected unit credit method, it is estimated that a 1% change in the principal assumptions would not have a significant impact to the defined benefit obligation of the. Through the defined benefit plan, the is exposed to a number of risks, and the most significant risk is the change in bond yield whereby a decrease in corporate bond yield will increase the plan liabilities. The weighted average duration of the defined benefit obligation is 12.0 years for the (2015: 11.0 years). The expected maturity analysis of undiscounted retirement benefit is as follows: Less than 1 to 2 to Over 1 year 2 years 5 years 5 years Total RM 000 RM 000 RM 000 RM 000 RM Provision for defined benefit plan , , , Provision for defined benefit plan , ,288 ANNUAL REPORT 2016 IJM PLANTATIONS BERHAD 155

60 NOTES TO THE FINANCIAL STATEMENTS 28 BORROWINGS RM 000 RM 000 Unsecured Current 106, ,059 Non-current 626, , , ,635 The net exposure of borrowings to cash flow interest rate risk and the periods in which the borrowings mature are as follows: Effective Floating interest rate interest rate as at Total year end carrying < > 5 per annum amount year years years years years years % RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 At 31 March 2016 Term loan ,403 13,800 27,601 69,002 Term loan ,403 13,800 27,601 69,002 Term loan ,719 59,144 59,145 39,430 Term loan ,719 59,144 59,145 39,430 Term loan ,287 29,571 59,144 29,572 Short term advance facility ,860 78, , ,460 84, , ,862 78,860 At 31 March 2015 Term loan ,638 12,960 12,960 25,919 64,799 Term loan ,638 12,960 12,960 25,919 64,799 Term loan ,110 55,542 55,542 37,026 Term loan ,110 55,542 55,542 37,026 Term loan ,084 27,771 55,542 27,771 Short term advance facility ,055 74, , , , , ,140 27,771 The term loans drawndown by certain subsidiaries of the are denominated in US Dollars ( USD ) and are secured by way of corporate guarantees by the. 156 IJM PLANTATIONS BERHAD ANNUAL REPORT 2016

61 28 BORROWINGS (cont d) (a) Term loan 1 and term loan 2 of USD35.0 million each was drawndown on 13th October 2011 by PT Primabahagia Permai and PT Sinergi Agro Industri, subsidiaries of the, to finance plantation development costs in Indonesia and general working capital requirements. The term loans are repayable by semi-annual principal instalments commencing from the third anniversary and will mature at the seventh anniversary from the date of first drawdown. The term loans bear interest at a rate of London Interbank Offered Rate ( LIBOR ) plus 1.2% per annum. These term loans contain covenants which require these subsidiaries to maintain at all times a minimum Debt Service Reserve Account ( DSRA ) equivalent to six months of interest obligations under the term loans. As at 31 March 2016, these subsidiaries have complied with this covenant of the term loans by maintaining a fixed deposit of RM1.1 million (2015: RM1.0 million) each with the bank. (b) Term loan 3 and term loan 4 of USD40.0 million each was drawndown on 7th January 2013 by PT Prima Alumga and PT Indonesia Plantation Synergy, subsidiaries of the, to finance plantation development costs in Indonesia and general working capital requirements. During the year, the repayment terms and maturity periods of the term loans had been revised. The term loans are now repayable as follows: (i) USD30.0 million is to be repaid in 3 equal quarterly principal instalments of USD10.0 million each, with the first principal repayment commencing on 7th July 2018; (ii) USD30.0 million is to be repaid by 4 equal quarterly principal instalments of USD7.5 million each, with the first principal repayment commencing on 7th July 2019; and (iii) USD20.0 million is to be repaid by 4 equal quarterly principal instalments of USD5.0 million each with the first principal repayment commencing on 7th April The first USD30.0 million bears interest at a rate of LIBOR plus 1.5% per annum. The second USD30.0 million bears interest at a rate of LIBOR plus 1.65% per annum. The final USD20.0 million bears interest at a rate of LIBOR plus 1.8% per annum. The facility contains covenants which require these subsidiaries to maintain positive networth throughout the tenor of the term loans facility. Networth is defined as the sum of paid-up capital and retained profits. In the event the subsidiaries are not able to maintain the positive networth, the subsidiaries are required to ensure their adjusted networth (which include non-trade advances from related companies and shareholders loans) are maintained at a minimum of USD 1.0 million. The facility also requires that the s EBITDA to interest expense shall not be less than 2.5 times at all times and these subsidiaries shall not declare any dividend or other forms of distribution in excess of 75% of its consolidated net profits. EBITDA is defined as profit before tax, interest, depreciation and amortisation. Besides, the facility also requires the s leverage ratio not to exceed 1.0 time as at year end. Leverage ratio is defined as total liabilities against tangible net worth. As at 31 March 2016, these subsidiaries and the have complied with all the covenants of the term loans. (c) Term loan 5 of USD30.0 million was drawndown on 18th September 2014 by PT Sinergi Agro Industri, a subsidiary of the in Indonesia, to finance its mill construction plantation development costs and general working capital requirements during the financial year. The term loan is repayable by eight quarterly principal instalments commencing from the third anniversary and will mature at the fifth anniversary from the date of first drawdown. The term loans bear interest at a rate of LIBOR plus 1.55% per annum. (d) Short term advance facility of USD20.0 million was drawndown by a subsidiary, PT Karya Bakti Sejahtera Argotama during the previous financial year to finance general working capital requirements. The short term advance facility bears interest at a rate of LIBOR plus 0.9% per annum and is repayable on demand. ANNUAL REPORT 2016 IJM PLANTATIONS BERHAD 157

62 NOTES TO THE FINANCIAL STATEMENTS 29 TRADE AND OTHER PAYABLES (a) Amounts due to subsidiaries RM 000 RM 000 Current Non trade and non-interest bearing advances 41,534 44,719 The amounts due to subsidiaries are denominated in Ringgit Malaysia, unsecured, interest free and repayable on demand. (b) Trade and other payables Current RM 000 RM 000 RM 000 RM 000 Trade payables Third parties 42,782 48,393 5,102 11,340 Other payables Other payables 23,393 22, Accruals 10,271 15,522 4,660 10,707 Ultimate holding company 237 3, ,778 Fellow subsidiary Non-current 33,988 41,557 5,416 15,341 76,770 89,950 10,518 26,681 Other payables Financial guarantee contract 18,531 17,199 Total trade and other payables 76,770 89,950 29,049 43,880 (i) Trade and other payables Trade and other payables are non-interest bearing and the normal trade credit terms granted to the and the range from 45 to 60 days (2015: 45 to 60 days). (ii) Amount due to a fellow subsidiary The amount due to a fellow subsidiary is denominated in Ringgit Malaysia, interest free, unsecured and repayable on demand. (iii) Ultimate holding company The amount due to ultimate holding company is denominated in Ringgit Malaysia, interest free, unsecured and repayable on demand. 158 IJM PLANTATIONS BERHAD ANNUAL REPORT 2016

63 29 TRADE AND OTHER PAYABLES (cont d) (b) Trade and other payables (cont d) (iv) Financial guarantee contract RM 000 RM 000 At 1 April 2015/ ,199 16,541 Additions 2,139 1,142 Amortisation to profit and loss (Note 6(b)) (807) (484) At 31 March 18,531 17,199 The financial guarantee contract represents the fair value of corporate guarantees extended by the to its subsidiaries for financing of their term loans. 30 COMMITMENTS RM 000 RM 000 RM 000 RM 000 (a) Property, plant and equipment, land use rights and plantation expenditure: Approved and contracted for 139, ,652 2,055 Approved but not contracted for 168, ,902 18,992 17, , ,554 18,992 19,730 (b) Land use rights commitments Commitments under non-cancellable land use rights: Expiring not later than 1 year Expiring later than 1 year but not later than 5 years 3,395 2,645 1, Expiring later than 5 years 52,298 47,292 20,642 17,258 56,542 50,599 22,276 18,496 Apart from incurring additional land premiums for land use rights during the financial year, the and the have also agreed to pay annual commitments for the land use rights until the end of the respective land use rights periods. ANNUAL REPORT 2016 IJM PLANTATIONS BERHAD 159

64 NOTES TO THE FINANCIAL STATEMENTS 31 SIGNIFICANT RELATED PARTY DISCLOSURES (a) In addition to related party disclosures mentioned elsewhere in the financial statements, set out below are other significant related party transactions and balances. The following transactions with related parties were carried out under terms and conditions negotiated amongst the related parties: Related parties IJM Corporation Berhad IJM Properties Sdn. Bhd. Relationship Ultimate holding company A subsidiary of the ultimate holding company RM 000 RM 000 RM 000 RM 000 Transactions during the financial year: Ultimate holding company: Capital contribution via share-based payment 2,674 2,697 2,206 1,659 Management fee 2,801 2,801 2,801 2,801 Subsidiary of the ultimate holding company: Rental income Non-controlling interests: Advances to 7,174 3, RM 000 RM 000 Subsidiaries: Sale of fresh fruit bunches 83, ,097 Management fee income 8,627 9,566 Recovery of management fee charged by ultimate holding company Sale of property, plant and equipment 48 Purchase of property, plant and equipment (73) Purchase of compost (36) (127) Rental income Net (advance)/repayment from subsidiaries (185) 51,221 Advances to subsidiaries (42,169) (180,603) 160 IJM PLANTATIONS BERHAD ANNUAL REPORT 2016

65 31 SIGNIFICANT RELATED PARTY DISCLOSURES (cont d) (b) Key management compensation during the financial year Key management personnel comprise the Directors and certain management personnel of the, having authority and responsibility for planning, directing and controlling the activities of the entities directly or indirectly RM 000 RM 000 RM 000 RM 000 Wages, salaries and bonuses 4,401 5,358 1,980 1,790 Defined contribution plan Fees and other emoluments Other employee benefits Share option expense 3,196 1,134 1, ,041 8,045 4,214 3,459 Included in the total key management compensation is: Directors remuneration including benefits-in-kind (Note 10) 4,214 3,459 4,214 3, FINANCIAL INSTRUMENTS BY CATEGORY : Loans and receivables Note RM 000 RM 000 Assets as per balance sheets: Trade and other receivables (excluding prepayments and deposits) 19(b) 79,267 71,986 Deposits, cash and bank balances , ,007 Total 352, ,993 Fair value through profit or loss Note RM 000 RM 000 Derivative financial instruments Other financial liabilities at amortised cost Note RM 000 RM 000 Liabilities as per balance sheets: Trade and other payables 29(b) 76,770 89,950 Borrowings , ,635 Total 810, ,585 ANNUAL REPORT 2016 IJM PLANTATIONS BERHAD 161

66 NOTES TO THE FINANCIAL STATEMENTS 32 FINANCIAL INSTRUMENTS BY CATEGORY (cont d) Fair value through profit or loss Note RM 000 RM 000 Derivative financial instruments 20 10,158 : Loans and receivables Note RM 000 RM 000 Assets as per balance sheet: Amounts due from subsidiaries 19(a) 6,346 15,377 Trade and other receivables (excluding prepayments, and deposits) 19(b) Deposits, cash and bank balances 21 8, ,374 Total 15, ,996 Other financial Financial guarantee liabilities at contracts amortised cost Note RM 000 RM 000 RM 000 RM 000 Liabilities as per balance sheet: Amounts due to subsidiaries 29(a) 41,534 44,719 Trade and other payables 29(b) 18,531 17,199 10,518 26,681 Total 18,531 17,199 52,052 71, SEGMENTAL REPORTING Management has determined the operating segments based on the reports reviewed by the Management Committee ( MC ) of the that are used to make strategic decisions for allocating resources and assessing performance. The MC considers the business from a country perspective and assesses the performance of the operating segments based on a measure of profit before taxation. The principally operates cultivation of oil palms and milling of fresh fruit bunches which is geographically located in Malaysia and Indonesia. The segment information provided to the MC for the reportable segments is as follows: Malaysia Indonesia 2016 RM 000 RM 000 RM 000 Revenue Total revenue 369, , ,613 Results Profit before tax 50, ,411 Income tax expense (28,368) Net profit for the financial year 22, IJM PLANTATIONS BERHAD ANNUAL REPORT 2016

67 33 SEGMENTAL REPORTING (cont d) Malaysia Indonesia 2016 RM 000 RM 000 RM 000 Assets Segment assets 1,007,887 1,542,926 2,550,813 Unallocated assets: Deferred tax assets 19,927 Tax recoverable 19,683 Total assets 2,590,423 Liabilities Segment liabilities 39, , ,845 Unallocated liabilities: Deferred tax liabilities 160,244 Current tax liabilities 44 Total liabilities 985,133 Other information Capital expenditure: property, plant and equipment 14 9, , ,340 land use rights 15 6, ,010 plantation expenditure ,315 61,661 Depreciation of property, plant and equipment charged to statement of comprehensive income 14 27,081 23,614 50,695 Amortisation of land use rights charged to statement of comprehensive income 15 1,871 1,903 3,774 Malaysia Indonesia 2015 RM 000 RM 000 RM 000 Revenue Total revenue 475, , ,666 Results Profit/(loss) before tax 123,690 (34,283) 89,407 Income tax expense (7,110) Net profit for the financial year 82,297 Assets Segment assets 1,083,347 1,443,872 2,527,219 Unallocated assets: Deferred tax assets 33,037 Tax recoverable 9,844 Total assets 2,570,100 Liabilities Segment liabilities 43, , ,979 Unallocated liabilities: Deferred tax liabilities 164,719 Current tax liabilities 447 Total liabilities 972,145 ANNUAL REPORT 2016 IJM PLANTATIONS BERHAD 163

68 NOTES TO THE FINANCIAL STATEMENTS 33 SEGMENTAL REPORTING (cont d) Malaysia Indonesia 2015 RM 000 RM 000 RM 000 Other information Capital expenditure: property, plant and equipment 14 20, , ,894 land use rights 15 17,376 9,559 26,935 plantation expenditure , ,462 Depreciation of property, plant and equipment charged to statement of comprehensive income 14 27,738 17,375 45,113 Amortisation of land use rights charged to statement of comprehensive income 15 1,585 1,006 2,591 Revenues of approximately RM338,346,000 (2015: RM418,532,000) are derived from 2 major external customers in Malaysia. Revenues of approximately RM129,055,000 (2015: RM80,903,000) are derived from 2 major external customers in Indonesia. Revenue from external customers reported to the MC is measured in a manner consistent with that in the statement of comprehensive income. Revenue from operating segments is disclosed in Note 4 to the financial statements. The amounts provided to the MC with respect to total assets and total liabilities are measured in a manner consistent with that of the financial statements. These assets and liabilities are allocated based on the geographical operations of the segment. Segment assets comprise property, plant and equipment, land use rights, plantation expenditure, receivables, deposits, cash and bank balances. Segment liabilities comprise payables, borrowings and retirement benefits. The MC evaluates the performance of the operating segments excluding the foreign exchange gains and losses arising from the intersegment loans denominated in United State Dollars. The net unrealised foreign exchange gains and losses arising from the intersegment loans are included in the s comprehensive income statements. 164 IJM PLANTATIONS BERHAD ANNUAL REPORT 2016

69 34 CASH AND CASH EQUIVALENTS Cash and cash equivalents included in the s and the s statements of cash flows comprise the following: Note RM 000 RM 000 RM 000 RM 000 Cash and bank balances 21 41,478 71, Deposits with licensed banks , ,281 7, , , ,007 8, ,374 Less: Restricted deposits with licensed banks (a)&(b) (4,356) (4,018) Fixed deposit pledged (c) (92,569) 268, ,420 8, ,374 (a) The restricted deposit with a licensed bank relates to a deposit by PT Sinergi Agro Industri, a subsidiary of the, which was assigned to the bank as security in respect of a corporate guarantee facility to a cooperative in Indonesia as referred to in Note 3(c) to the financial statements. (b) Term loan 1 and term loan 2 contain covenants which require the subsidiaries concerned to maintain at all times a minimum Debt Service Reserve Account ( DSRA ) equivalent to six months of interest obligations under the term loans as referred to in Note 3(c) to the financial statements. (c) In the previous financial year, PT Primabahagia Permai ( PTPP ), a subsidiary of the had pledged a fixed deposit amounting to RM92,569,000 (equivalent to USD25.0 million) to an Indonesian bank to guarantee the payment to a turnkey contractor upon completion and acceptance of satisfactory delivery of a mill under construction. The pledge of a fixed deposit was uplifted during the financial year as the contractor opted for the conventional payment method. 35 SIGNIFICANT EVENT DURING THE FINANCIAL YEAR In the previous financial year, Gunaria Sdn. Bhd. ( Gunaria ), a wholly-owned subsidiary of the, had on 21 November 2014 entered into a Conditional Share Subscription Agreement ( CSSA ) with KL-Kepong Plantation Holdings Sdn. Bhd. ( KLKP ), a wholly-owned subsidiary of Kuala Lumpur Kepong Berhad, and two (2) existing shareholders for the subscription of 25,600 new shares of IDR1,000,000 each in PT Perindustrian Sawit Sinergi ( PT PSS ) for a total cash consideration of IDR25,600,000,000 (approximately RM6,900,000) ( the Proposed Subscription ). Pursuant to the CSSA, the shareholding ratio of Gunaria, KLKP and the existing shareholders will be 32:63:5. PT PSS will be a joint venture vehicle of the parties to establish an integrated palm oil refinery complex, kernel crushing plant, sale of refined or processed oil palm products or its derivative. On 20 November 2015, all parties to the agreement had agreed to extend the expiry date of the CSSA up to 21 November At the date of this report, the Proposed Subscription is pending completion. ANNUAL REPORT 2016 IJM PLANTATIONS BERHAD 165

70 Supplementary INFORMATION 36 DISCLOSURE OF REALISED AND UNREALISED RETAINED PROFITS/(ACCUMULATED LOSSES) The following analysis is prepared in accordance with the Guidance on Special Matter No.1, Determination of Realised and Unrealised Profits or Losses in the context of disclosure pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants ( MIA Guidance ) and the directive of Bursa Malaysia Securities Berhad RM 000 RM 000 RM 000 RM 000 Total retained profits/(accumulated losses) of the and its subsidiaries: Realised 1,070,491 1,099, , ,045 Unrealised (Note 1) (261,455) (292,292) (33,355) (33,329) Less: Consolidation adjustments (Note 2) (97,800) (66,887) Total retained profits 711, , , ,716 Note 1 Note 2 The unrealised retained profits/(accumulated losses) are mainly deferred tax provisions, and translation gains/losses on monetary items denominated in a currency other than the functional currency. Consolidation adjustments are mainly elimination of pre-acquisition profits or losses, fair value adjustments arising from business combinations and non-controlling interests share of retained profits or accumulated losses. 166 IJM PLANTATIONS BERHAD ANNUAL REPORT 2016

71 Statutory DECLARATION pursuant to Section 169(16) of The Companies Act, 1965 I, Purushothaman a/l Kumaran, being the Director primarily responsible for the financial management of IJM Plantations Berhad, do solemnly and sincerely declare that, to the best of my knowledge and belief, the financial statements set out on pages 104 to 166 are correct and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act, PURUSHOTHAMAN A/L KUMARAN Subscribed and solemnly declared at Petaling Jaya on 26 May 2016 Before me: ANNUAL REPORT 2016 IJM PLANTATIONS BERHAD 167

72 Independent AUDITORS REPORT to the members of IJM Plantations Berhad REPORT ON THE FINANCIAL STATEMENTS We have audited the financial statements of IJM Plantations Berhad on pages 104 to 165 which comprise the balance sheets as at 31 March 2016 of the and of the, and the statements of comprehensive income, statements of changes in equity and statements of cash flows of the and of the for the year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on Notes 1 to 35. Directors Responsibility for the Financial Statements The Directors of the are responsible for the preparation of financial statements so as to give a true and fair view in accordance with Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia. The Directors are also responsible for such internal control as the Directors determine are necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgement, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the s preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Directors as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements give a true and fair view of the financial position of the and of the as of 31 March 2016 and of their financial performance and cash flows for the year then ended in accordance with Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia. REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the following: (a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the and its subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the Act. (b) We have considered the financial statements and the auditors reports of all the subsidiaries of which we have not acted as auditors, which are indicated in Note 17 to the financial statements. (c) We are satisfied that the financial statements of the subsidiaries that have been consolidated with the s financial statements are in form and content appropriate and proper for the purposes of the preparation of the financial statements of the and we have received satisfactory information and explanations required by us for those purposes. (d) The audit reports on the financial statements of the subsidiaries did not contain any qualification or any adverse comment made under Section 174(3) of the Act. 168 IJM PLANTATIONS BERHAD ANNUAL REPORT 2016

73 OTHER REPORTING RESPONSIBILITIES The supplementary information set out in Note 36 on page 166 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad and is not part of the financial statements. The Directors are responsible for the preparation of the supplementary information in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants ( MIA Guidance ) and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad. OTHER MATTERS This report is made solely to the members of the, as a body, in accordance with Section 174 of the Companies Act, 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report. PRICEWATERHOUSECOOPERS (No. AF: 1146) Chartered Accountants LOH LAY CHOON (No. 2497/03/18 (J)) Chartered Accountant Kuala Lumpur 26 May 2016 ANNUAL REPORT 2016 IJM PLANTATIONS BERHAD 169