CONTINGENCIES continued FS TLKM Q3 2014engl

PERUSAHAAN PERSEROAN PERSERO PT TELEKOMUNIKASI INDONESIA Tbk AND ITS SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As of September 30, 2014 and for the Nine months Period Then Ended unaudited Figures in tables are expressed in billions of rupiah, unless otherwise stated 118

44. FINANCIAL RISK MANAGEMENT continued

1. Financial risk management continued c. Interest rate risk continued At reporting date, the interest rate profile of the Company and subsidiaries’ interest-bearing borrowings was as follows: September 30, December 31, 2014 2013 Fixed rate borrowings 9,948 9,591 Variable rate borrowings 14,942 10,665 Sensitivity analysis for variable rate borrowings At September 30, 2014, a decrease increase by 25 basis points in interest rates of variable rate borrowings would have increased decreased equity and profit or loss by Rp37 billion, respectively. This analysis assumes that all other variables, in particular foreign currency rates, remain constant. d. Credit risk The following table presents the maximum exposure to credit risk of the Company and subsidiaries’ financial assets: September 30, December 31, 2014 2013 Cash and cash equivalents 17,834 14,696 Other current financial assets 1,584 6,872 Trade and other receivables, net 8,060 6,421 Long-term investments 21 21 Advances and other non-current assets 641 685 Total 28,140 28,695 The Company and subsidiaries are exposed to credit risk primarily from trade receivables and other receivables. The credit risk is managed by continuous monitoring of outstanding balances and collection. Trade and other receivables do not have any major concentration risk whereas no customers’ receivables balance exceeds 1 of trade receivables at September 30, 2014. Management is confident in its ability to continue to control and sustain minimal exposure to credit risk given that the Company and subsidiaries have provided sufficient provision for impairment of receivables to cover incurred loss arising from uncollectible receivables based on existing historical data on credit losses. e. Liquidity risk Liquidity risk arises in situations where the Company and subsidiaries have difficulties in fulfilling financial liabilities when they become due. Prudent liquidity risk management implies maintaining sufficient cash in order to meet the Company and subsidiaries’ financial obligations. The Company andsubsidiaries continuously perform an analysis to monitor financial position ratios, such as liquidity ratios, and debt equity ratios, against debt covenant requirements.