PT XL AXIATA Tbk AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 DECEMBER 2007, 2008 AND 2009; AND 31 MARCH 2009 AND 2010
Expressed in millions of Rupiah, unless otherwise stated
Page 64
35. SUBSEQUENT EVENTS continued
The Composition of the Company’s shareholders after Prívate Placement are as follows:
Number of shares
Amount Rp
Indocel Holding Sdn. Bhd. formerly Nynex Indocel Holding Sdn.
5,674,125,290 567,412
66.70 Emirates Telecommunications
Corporation Etisalat International Indonesia Ltd.
1,132,497,500 113,250
13.30 Public
1,701,377,210 170,138
20.00 8,508,000,000
850,800 100.00
c. On 9 April 2010, the Company cancelled the remaining EKN loan under Facilty B amounted to USD 35,718,521.
36. FINANCIAL ASSETS AND LIABILITIES
Financial risk management
The Company’s activities expose it to variety of financial risks: market risk including foreign exchange risk and interest rate risk, credit risk and liquidity risk. The Company’s overall financial risk
management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the financial performance of the Company. The Company uses derivative
financial instruments such as foreign exchange forward contracts, cross currency swap and interest rate swaps to hedge certain risk exposures. Derivatives are exclusively used for hedging purposes,
i.e. not as trading or other speculative instruments.
Financial risk management is carried out by a central treasury department under policies approved by the Board of Directors. Treasury department identifies, evaluates and hedges financial risks.
Foreign exchange risk Changes in exchange rates have affected and may continue to affect the Company’s results of
operations and cash flows. Some of the Company’s debt obligations and capital expenditures are, and expected will continue to be, denominated in U.S. dollars. Most of the Company’s revenues are
denominated in Rupiah.
The Company currently hedge a portion of its foreign currency exposure principally because the annual USD-denominated operating revenue is less than the sum of USD-denominated capital
expenditures, annual payments of USD-denominated principal and interest payments. In an effort to manage foreign currency exposure, the Company enters into forward contracts currency contracts
and cross currency swap contracts with international financial institutions. For the forward contracts, the Company typically pays a fixed rate premium. As a result of these contractual arrangements, the
Company believes that it has reduced some of foreign exchange risk exposure although not all of our foreign exchange exposure is hedged and replacement hedging agreements may not be available
when the current hedging agreements expire.
PT XL AXIATA Tbk AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 DECEMBER 2007, 2008 AND 2009; AND 31 MARCH 2009 AND 2010
Expressed in millions of Rupiah, unless otherwise stated
Page 65
36. FINANCIAL ASSETS AND LIABILITIES continued
Interest rate risk Interest rate exposure is monitored to minimise any negative impact to the Company. Borrowings
issued at variable rates expose the Company to cash flow interest rate risk. To measure market risk fluctuations in interest rates, the Company primarily uses interest margin and
spread analysis, and enters into cross currency and interest rate swap contracts to hedge the foreign currency interest loans from interest rate uncertainty.
The following table represents a breakdown of the Company’s financial asset and financial liabilities which are impacted by interest rates.
31032010 Floating rate
Fixed Rate Non
Less than More than
Less than More than
interest one year
one year one year
one year bearing
Total Asset
Cash and cash equivalents
1,383,405 -
- -
- 1,383,405
Trade receivables -
- -
- 696,482
696,482 Other receivables
- -
- -
17,101 17,101
Derivative receivables -
- -
50,125 -
50,125 Other assets
- -
36,036 296,568
- 332,604
Total financial assets 1,383,405
- 36,036
346,693 713,583
2,479,717
Liabilities Trade payables
- -
- -
2,167,645 2,167,645
Accrued expenses -
- -
- 567,755
567,755 Derivative payables
- -
151,062 106,811
- 257,873
Long-term l oans 3,081,980
8,526,796 -
- -
11,608,776 Long-term bonds
- -
- 1,496,723
- 1,496,723
Total financial liabilites 3,081,980
8,526,796 151,062
1,603,534 2,735,400
16,098,772 Total interest repricing gap
1,698,575 8,526,796
115,026 1,256,841
- 11,597,238
Credit risk Credit risk arises from favourable derivatives financial instruments with banks and financial
institutions, as well as credit exposures to customers, including outstanding receivables. For banks, only independent parties with a good rating are accepted. The compliance with a credit
limits by customers is regularly monitored by line management. Sales to retailers are required to be settled in cash. For derivative financial instruments, management has established criteria such that,
only independent parties with a good rating are accepted.