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.
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 66
36. FINANCIAL ASSETS AND LIABILITIES continued
Credit risk continued The following table sets out the maximum exposure of credit risk and concentration risk of the
Company:
Credit Risk Concentration Corporate
Others Maximum
exposure
Trade receivables 575,329
121,153 696,482
Other receivables -
17,101 17,101
Derivative receivables -
50,125 50,125
Other assets 332,604
- 332,604
907,933 188,379
1,096,312 The above table represents a maximum of credit risk exposure to the Company at 31 March 2010.
The exposures set out above are based on net carrying amounts as reported in the balance sheet. Liquidity risk
Liquidity risk arises in situations where the Company has difficulties in obtaining funding. Prudent liquidity risk management implies maintaining sufficient cash and cash equivalents. The Company
manages liquidity risk by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities.
Management is confident in its ability to continue to control and sustain minimal exposure of credit risk given that the Company have provided sufficient allowance for doubtful accounts to cover incurred
losses arising from uncollectible receivables based on existing historical loss.
Fair value of financial assets and liabilities
Fair value is the amount for which an asset could be exchanged, or a liability settled, in an arms- length transaction basis.
The table below sets out the carrying amounts and fair value of those financial assets and liabilities not presented on the Company’s balance sheets at their fair values:
31032010 Carrying Value
Fair Value
Long-term loans 11,608,776
11,668,699 Long-term bonds
1,496,723 1,492,973