PERUSAHAAN PERSEROAN PERSERO P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
continued
DECEMBER 31, 2010 AUDITED AND MARCH 31, 2011 UNAUDITED AND THREE MONTHS PERIOD ENDED MARCH 31, 2010 AND 2011 UNAUDITED
Figures in tables are presented in millions of Rupiah, unless otherwise stated
125
51. FINANCIAL ASSETS AND LIABILITIES
1. Financial risk management The Company and its subsidiaries’ activities expose it to a variety of financial risks such as
market risks including foreign exchange risk and interest rate risk, credit risk and liquidity risk. Overall, the Company and subsidiaries’ financial risk management programme is intended for
minimizing lossess on the financial assets and liabilities arising from fluctuation of foreign currency exchange rate and the fluctuation of interest rate. Management provides written policy
for foreign currency risk management mainly through time deposits placements and hedging to cover foreign currency risk exposures for the time range of 3 up to 12 months.
Financial risk management is carried out by the Treasury Management unit under policies approved by the Board of Directors. The Treasury Management unit identifies, evaluates and
hedges financial risks. a. Foreign exchange risk
The Company and its subsidiaries have significant receivables, payables and liabilities balance denominated in foreign currencies which include the United States Dollar, Japanese
Yen, Euro, Singapore Dollar and Great Britain Pound sterling. Increasing risks of foreign currency exchange rates on the obligations of the Company and its subsidiaries are expected
to be offset by time deposits and receivables in foreign currencies are set at least 25 of the liabilities and will mature in less than 1 one year with respect to the tendency of changes
exchange rates in the future.
b. Interest rate risk Interest rate fluctuation is monitored to minimize any negative impact to financial position.
Borrowings at variable interest rates expose the Company and its subsidiaries to interest rate risk Notes 18,20,21 and 22. To measure market risk fluctuations in interest rates, the
Company and its subsidiaries primarily use interest margin and maturity profile of the financial assets and liabilities based on changing schedule of the interest rate.
The following table represents a breakdown of the Company and subsidiaries’ financial assets and liabilities which are impacted by interest rates.
March 31, 2011 Non
One year More than
interest or less
one year bearing
Total Assets
Cash and cash equivalents 10,620,990
- 24,486
10,645,476 Temporary investments
265,148 -
114,899 380,047
Other current assets 1,175
- -
1,175 Other non-current assets
- 169,193
47,277 216,470
Total financial assets
10,887,313 169,193
186,662 11,243,168
PERUSAHAAN PERSEROAN PERSERO P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
continued
DECEMBER 31, 2010 AUDITED AND MARCH 31, 2011 UNAUDITED AND THREE MONTHS PERIOD ENDED MARCH 31, 2010 AND 2011 UNAUDITED
Figures in tables are presented in millions of Rupiah, unless otherwise stated
126
51. FINANCIAL ASSETS AND LIABILITIES
continued 1. Financial risk management continued
b. Interest rate risk continued
March 31, 2011 Non
One year More than
interest or less
one year bearing
Total Liabilities
Short-term bank loans 66,440
- -
66,440 Two-step loans
816,101 2,100,743
- 2,916,844
Bonds and notes 423,019
3,022,700 -
3,445,719 Bank loans
12,472,080 258,892
- 12,730,972
Total financial liabilities
13,777,640 5,382,335
- 19,159,975
Total interest repricing gap 2,890,327
5,213,142 8,103,469
c. Credit risks The Company and its subsidiaries are exposed to credit risk primarily from trade receivables
and other receivables. Credit risk is managed by continuous monitoring outstanding balance and collection of trade and other receivables.
The following table sets out the maximum exposure of credit risk and concentration risk of the Company and its subsidiaries :
Credit risk concentration Maximum
Corporate Others
exposure
Trade receivables 2,649,710
3,635,786 6,285,496
Other receivables 71,526
18,544 90,070
2,721,236 3,654,330
6,375,566
Management is confident in its ability to continue to control and sustain minimal exposure of credit risk given that the Company and its subsidiaries have provided sufficient allowance for
doubtful accounts to cover incurred loss arising from uncollectible receivables based on existing historical loss.
d. Liquidity risks Liquidity risk arises in situations where the Company and its subsidiaries have difficulties in
fulfilling financial liabilities when they become due. Prudent liquidity risk management implies maintaining sufficient cash and cash equivalents in order to fullfil the Company and its
subsidiaries’ financial liabilities. The Company and its subsidiaries continuously perform an analysis to monitor statement of financial position ratios, such as among other things, liquidity
ratios, debt equity ratios against debt covenant requirements.
