Nature of Relationship and Transactions with Related Parties Nature of Relationship

PT SINAR MAS MULTIARTHA Tbk AND ITS SUBSIDIARIES Notes to Consolidated Financial Statements For the Years Ended December 31, 2014 and 2013 Figures are Presented in Millions of Rupiah,unless Otherwise Stated The table below shows consolidated statement of financial position exposures related to credit risk: Gross amount Net amount Gross amount Net amount At fair value through profit and loss Short-term investment - securities - shares and warrants 145,711 145,711 661,283 661,283 Short-term investment - securities - bonds - - 20,000 20,000 Short-term investment - securities - units of mutual fund 7,441,934 7,441,934 7,409,910 7,409,910 Short-term investment - securities - unit link - units of mutual fund 1,722,475 1,722,475 2,413,715 2,413,715 Other assets - derivative assets - - 28 28 Available for sale Short-term investment - securities - shares 53,260 53,260 553,537 553,537 Short-term investment - securities - bonds 1,496,138 1,496,138 5,565,819 5,565,819 Short-term investment - securities - units of mutual fund 6,629,792 6,629,792 1,571,472 1,571,472 Investment in shares 69,706 69,706 67,529 67,529 Investments based on sharia - at cost Short-term investment - securities - bonds 243,962 243,962 630,637 630,637 Investments based on sharia - fair value Short-term investment - securities - shares 11,566 11,566 11,381 11,381 Short-term investment - securities - bonds 31,197 31,197 39,154 39,154 Short-term investment - securities - units of mutual fund 76,954 76,954 31,496 31,496 Held to maturity Short-term investment - securities - bonds 20,000 20,000 - - Fair value - temporary investment Temporary investment - investment in shares 173,800 173,800 - - Loans and receivables Cash and cash in banks 730,243 730,243 759,936 759,936 Securitiies purchased under agreements to resell - - 139,211 139,211 Short-term investment - placement with other banks 308,569 308,569 593,813 593,813 Short-term investment - time deposits 3,767,547 3,767,547 1,950,998 1,950,998 Short-term investment - securities - export bill receivables 170,213 170,213 207,001 207,001 Net investment in finance lease 97,661 95,863 122,625 120,458 Consumer financing receivables 605,398 597,058 898,716 895,987 Factoring receivables 1,403,269 1,398,689 1,147,087 1,144,066 Receivables from brokers 263,426 263,426 378,544 378,544 Other accounts receivable - net 2,105,447 2,105,313 623,890 623,751 Acceptances receivable 67,836 67,837 238,324 238,324 Loans - net 14,298,435 14,223,357 10,966,071 10,909,738 Other assets 33,264 33,264 25,940 25,940 Total Financial Assets 41,967,803 41,877,874 37,028,117 36,963,728 2014 2013 Market Risk Market risk is the risk that the fair value or future contractual cash flows of a financial instrument held by the Group will be affected due to changes in market variables such as interest rates, exchange rates, including derivatives of both risks risks of derivative instruments. a. Interest rate risk The Group’s interest rate risk arises from loans, deposits and deposits from other banks and loans received. Loans, deposits and deposits from other banks and loans received at floating rates expose the Group to cash flow interest rate risk. Financial assets and financial liabilities at fixed rates expose the Group to fair value interest rate risk. - 115 - PT SINAR MAS MULTIARTHA Tbk AND ITS SUBSIDIARIES Notes to Consolidated Financial Statements For the Years Ended December 31, 2014 and 2013 Figures are Presented in Millions of Rupiah,unless Otherwise Stated As of the end of the reporting period, the Group has the following floating rate loans, deposits and deposits from other banks and loans received. 2014 2013 Asset Loans 9,417,314 6,436,172 Liabilities Deposits and deposits from other banks 8,165,523 8,872,985 Loans received 485,650 469,692 The Group analyzes its interest rate exposure on a dynamic basis. Various scenarios are simulated taking into consideration refinancing, renewal of existing positions, alternative financing. For each simulation, the same interest rate is used for all currencies. Based on these scenarios, the Group calculates the impact on profit or loss of a defined interest rate shift. The scenarios are applied only for liabilities that represent the major interest-bearing positions. As of December 31, 2014 and 2013, if interest rates on loans, deposits and deposits from other banks and loans received had been 1 higherlower with all other variables held constant, post-tax profit for the year would have been higherlower amounting to Rp 575 and Rp 2,181, respectively, mainly as a result of higherlower interest income and interest expense on loans and loans received with floating interes rates. b. Foreign currency risk The Group is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the U.S. Dollar. Foreign exchange risk arises from future commercial transactions and recognized assets and liabilities. Management has set up a policy to require Group to manage the foreign exchange risk against their functional currency. Foreign exchange risk arises when future commercial transactions or recognized assets or liabilities are denominated in a currency that is not the entity’s functional currency. The risk is measured using cash flow forecasts. As of December 31, 2014 and 2013, if the currency had weakenedstrengthened by 5, against the U.S. Dollar with all other variables held constant, post-tax profit for the year would have been higherlower amounting to Rp 7,984 and Rp 7,986, respectively, mainly as a result of foreign exchange gains losses on translation of financial assets and liabilities. c. Price risk The Group is exposed to equity and debt securities price risk because of investments held by the Group and classified on the consolidated statements of financial position either as available-for-sale or at fair value through profit or loss. To manage its price risk arising from investments in equity securities, the Group diversifies its portfolio. Diversification of the portfolio is done in accordance with the limits set by the Group. - 116 -