MKH Annual Report 2017

12. BIOLOGICAL ASSETS The Group 2017 2016 RM RM At cost: At beginning of year 304,826,120 247,069,607 Additions 5,693,703 5,535,606 In respect of subsidiaries acquired (Note 30) - 52,950,000 Amortisation for the financial year (16,719,899) (13,830,066) Written off (4,775,926) (1,574,617) Effect of movements in exchange rate (4,048,490) 14,675,590 At end of year 284,975,508 304,826,120 Biological assets represent the plantation development expenditure for oil palm in Indonesia. Expenses capitalised during the financial year include the following: The Group 2017 2016 RM RM Depreciation of property, plant and equipment 357,633 401,938 Interest capitalised 1,459,308 1,222,594 Personnel expenses: Wages, salaries and others 788,621 1,318,172 The interest on borrowing for the financial year is capitalised at rates ranging from 4.35% to 5.20% (2016: 3.80% to 5.50%) per annum. The biological assets have been pledged as security for credit facilities granted to a subsidiary and the Company as disclosed in Note 28. 13. PREPAID LEASE PAYMENTS The Group 2017 2016 RM RM At beginning of year 47,256,429 27,913,330 In respect of subsidiaries acquired (Note 30) - 20,580,000 Amortisation for the financial year (1,530,438) (992,441) Effect of movements in exchange rate (1,753) (244,460) At end of year 45,724,238 47,256,429 The above is short-term leasehold land with remaining unexpired lease period of less than 50 years. The short-term leasehold land of RM42,156,888 (2016: RM43,643,267) is pledged as security for credit facilities granted to the Group as disclosed in Note 28. Notes to the Financial Statements For the Financial Year ended 30 September 2017 135 MKH Berhad • Annual Report 2017