PERUSAHAAN PERSEROAN PERSERO PT TELEKOMUNIKASI INDONESIA Tbk AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As of March 31, 2014 and for three months period then ended unaudited
Figures in tables are expressed in billions of rupiah, unless otherwise stated
109
43. ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES continued
December 31, 2013 Rupiah
U.S. dollar Japanese yen
Others equivalent
in millions in millions
in millions in billions
Liabilities Trade payables
Related parties 1.40
- -
17 Third parties
275.35 -
4.33 3,409
Other payables 7.62
- 0.09
94 Accrued expenses
51.41 18.63
0.01 629
Short-term bank loan -
- -
- Advances from customers and suppliers
1.60 -
0.01 20
Current maturities of long-term liabilities 34.85
767.90 -
514 Promissory notes
28.67 -
- 349
Long-term liabilities - net of current maturities 78.82
7,678.98 -
1,850 Total liabilities
479.72 8,465.51
4.44 6,882
Liabilities - net 0.51
8,464.28 7.28
893
Assets and liabilities denominated in other foreign currencies are presented as U.S. dollar equivalents using the buy and sell rates quoted by Reuters prevailing at the end of the reporting period.
The Company and subsidiaries’ activities expose them to a variety of financial risks, including the effects of changes in debt and equity market prices, foreign currency exchange rates, and interest
rates. If the Company and subsidiaries report monetary assets and liabilities in foreign currencies as of
March 31, 2014 using the exchange rates on April 25, 2014, the unrealized foreign exchange gain will increase by Rp63 billion.
44. FINANCIAL RISK MANAGEMENT
1. Financial risk management The Company and subsidiaries activities expose them 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 program is intended to
minimize losses on the financial assets and financial liabilities arising from fluctuation of foreign currency exchange rates and the fluctuation of interest rates. Management has a written policy for
foreign currency risk management mainly on time deposit placements and hedging to cover foreign currency risk exposures for periods ranging from 3 up to 12 months.
Financial risk management is carried out by the Corporate Finance unit under policies approved by the Board of Directors. The Corporate Finance unit identifies, evaluates and hedges financial
risks.
a. Foreign exchange risk The Company and subsidiaries are exposed to foreign exchange risk on sales, purchases
and borrowings that are denominated in foreign currencies. The foreign currency denominated transactions are primarily in U.S. dollar and Japanese yen. The Company and
subsidiaries’ exposures to other foreign exchange rates are not material.
Increasing risks of foreign currency exchange rates on the obligations of the Company and subsidiaries are expected to be offset by the effects of the exchange rates on time deposits
and receivables in foreign currencies that are equal to at least 25 of the outstanding current liabilities.
PERUSAHAAN PERSEROAN PERSERO PT TELEKOMUNIKASI INDONESIA Tbk AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As of March 31, 2014 and for three months period then ended unaudited
Figures in tables are expressed in billions of rupiah, unless otherwise stated
110
44. FINANCIAL RISK MANAGEMENT continued
1. Financial risk management continued a. Foreign exchange risk continued
The following table presents the Company and subsidiaries’ financial assets and financial liabilities exposure to foreign currency risk:
March 31, 2014 December 31, 2013
U.S. dollar Japanese yen
U.S. dollar Japanese yen in billions in billions in billions
in billions
Financial assets 0.49
0.00 0.48
0.00 Financial liabilities
0.51 9.08
0.48 8.47
Net exposure 0.02
9.08 0.00
8.47
Sensitivity analysis
A strengthening of the U.S.dollar and Japanese yen, as indicated below, against the rupiah at March 31, 2014 would have decreased equity and profit or loss by the amounts shown below.
This analysis is based on foreign currency exchange rate variances that the Company and subsidiaries considered to be reasonably possible at the reporting date. The analysis
assumes that all other variables, in particular interest rates, remain constant.
Equityloss March 31, 2014
U.S. dollar 1 strengthening 3
Japanese yen 5 strengthening 51
A weakening of the U.S.dollar and Japanese yen against the rupiah at March 31, 2014 would have had an equal but opposite effect on the above currencies to the amounts shown above,
on the basis that all other variables remain constant.
b. Market price risk The Company and subsidiaries are exposed to changes in debt and equity market prices
related to available-for-sale investments carried at fair value. Gains and losses arising from changes in the fair value of available-for-sale investments are recognized in equity.
The performance of the Company andsubsidiaries’ available-for-sale investments is monitored periodically, together with a regular assessment of their relevance to the Company
and subsidiaries’ long-term strategic plans.
As of March 31, 2014, management considered the price risk for the Company’s available-for- sale investments to be immaterial in terms of the possible impact on profit or loss and total
equity from a reasonably possible change in fair value.
c. 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 subsidiaries to interest rate risk Notes 17, 18, 19, 20 and 21. To measure market risk pertaining to fluctuations in interest
rates, the Company and subsidiaries primarily use interest margin and maturity profile of the financial assets and liabilities based on changing schedule of the interest rate.
