Changes of Accounting Policies continued Changes of Accounting Policies continued

134 Laporan Tahunan 2012 • Annual Report 2012 • PT. ERATEX DJAJA Tbk 135 Laporan Tahunan 2012 • Annual Report 2012 • PT. ERATEX DJAJA Tbk SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued 02

u. Changes of Accounting Policies continued

The remeasured accounts mentioned in the preceding paragraph are then translated into Rupiah, being the presentation currency, using the following procedures: a. Assets and liabilities for each statement of financial position presented i.e. including comparatives are translated at the closing rate at the date of such statement of financial position; b. Income and expenses for each statement of comprehensive income presented i.e. including comparatives are translated at exchange rates at the dates of the transactions; and c. All resulting exchange differences are recognized in other comprehensive income under Exchange Differences due to Translation of Financial Statements referred to as “CTA” account. The balance of CTA resulted from the translation procedure above item c at January 1, 2011December 31, 2010, being the earliest comparative period, is not presented as part of CTA account at such date, but is included in the Retained Earnings. The management has assessed that the balance of CTA at such date is impracticable to be exercised to the date of establishment of the Entity. Accordingly, the CTA arising from the translation of the Entity’s functional currency accounts to presentation currency in Rupiah reflects only the CTA movements since January 1, 2011December 31, 2010 to subsequent reporting dates. As this PSAK has been applied retrospectively, the comparative consolidated financial statements have been restated. The accounts affected are summarized as follows: December 31, 2011 and the year then ended Previously reported Effect of change As restated FINANCIAL POSITION Inventories, net of allowance for loss of impairment value 78,434,313 672,665 79,106,978 Prepaid expenses 919,948 27,903 947,851 Fixed assets, net of accumulated depreciation 33,638,279 18,015,780 51,654,059 Intangible assets, net of accumulated amortization 1,160,058 66,754 1,093,304 EQUITY Other equity components 623,702 1,822,975 2,446,677 Deficits 171,914,266 33,165,765 138,748,501 COMPREHENSIVE INCOME Revenue 259,370,954 1,854,451 257,516,503 Cost of revenue 226,804,967 966,422 225,838,545 Selling expenses 13,365,811 26,721,569 13,355,758 General and administration expenses 20,292,245 40,599,376 20,307,131 Interest income 104,804 1,322 103,482 Interest expense 13,437,986 13,437,986 - Gain from investments 957,845 31,882 925,963 Foreign exchange, net 2,361,187 2,547,360 186,173 Gain on disposal of fixed assets 37,500 1,248 36,252 Realization loss on declining in inventories value 563,797 18,766 545,031 Loss on declining in receivables value 52,349 1,742 50,607 Claim 297,780 9,911 287,869 Effect of implementation PSAK 5055 8,920,589 296,923 8,623,666 Loan waiver 90,568,616 3,921,019 86,647,597 Others 3,131,641 142,703 2,988,938 02 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued

u. Changes of Accounting Policies continued

December 31, 2011 and the year then ended Previously reported Effect of change As restated Current tax 161,354 - 161,354 Deferred tax 2,277,028 79,001 2,198,027 Net income from continuing operation 84,605,039 2,531,862 82,073,177 Net income from discontinuing operation 18,731 5,862 24,593 Net income from all operations 84,586,308 2,537,724 82,048,584 Comprehensive income 67,389 5,609,713 5,677,102 December 31, 2010 and the year then ended Previously reported Effect of change As restated FINANCIAL POSITION Inventories, net of allowance for loss of impairment value 50,464,150 353,384 50,110,766 Prepaid expenses 988,788 16,743 972,045 Fixed assets, net of accumulated depreciation 31,628,427 16,221,138 47,849,565 Intangible assets, net of accumulated amortization 1,290,928 79,239 1,211,689 EQUITY Other equity components 371,470 8,496,152 8,124,682 Deficits 257,354,293 36,766,953 220,587,340 The Entity and Subsidiaries also applied the following revised PSAK and Interpretations ISAK effective on January 1, 2012, which were considered relevant to the consolidated financial statements: - PSAK No. 13 Revised 2011 “Property Investment”. - PSAK No. 16 Revised 2011, “Fixed Assets”. - PSAK No. 24 Revised 2010, “Employee Benefits”. - PSAK No. 30 Revised 2011, “Leases”. - PSAK No. 46 Revised 2010, “Accounting for Income Taxes”. - PSAK No. 50 Revised 2010, “Financial Instruments: Presentation”. - PSAK No. 53 Revised 2010, “Share-Based Payment”. - PSAK No. 55 Revised 2011, “Financial Instruments: Recognition and Measurement”. - PSAK No. 56 Revised 2011, “Earnings per Share”. - PSAK No. 60 “Financial Instruments: Disclosure”. - ISAK No. 15 “PSAK No. 24 - The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction”. - ISAK No. 20, “Income Taxes - Changes in the Tax Status of an Entity or its Shareholder”. - ISAK No. 25, ”Land Rights”. The substance of the revised PSAKs and ISAKs are mentioned in the respective accounting policies within this Note. PT ERATEX DJAJA Tbk AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued For the years ended December 31, 2012 and 2011 Expressed in thousands of Rupiah and in thousands of United States Dollars, unless otherwise stated PT ERATEX DJAJA Tbk AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued For the years ended December 31, 2012 and 2011 Expressed in thousands of Rupiah and in thousands of United States Dollars, unless otherwise stated 136 Laporan Tahunan 2012 • Annual Report 2012 • PT. ERATEX DJAJA Tbk 137 Laporan Tahunan 2012 • Annual Report 2012 • PT. ERATEX DJAJA Tbk 03 SOURCE OF ESTIMATION OF UNCERTAINTY Judgements The preparation of the financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities, at the end of the reporting period. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of the asset and liability affected in future periods. The following judgments are made by management in the process for applying the accounting policies having most significant effects on the amounts recognized in the financial statements. Classification of financial assets and financial liabilities The Entity determines the classifications of certain assets and liabilities as financial assets and financial liabilities by judging if they meet the definition set forth in PSAK No. 55 Revised 2011. Accordingly, the financial assets and financial liabilities are accounted for in accordance with the Entitys accounting policies disclosed in Note 2.g. Income tax Significant judgment is involved in determining the provision for corporate income tax. There are certain transactions and computation for which the ultimate tax determination is uncertain during the ordinary course of business. The Entity recognizes liabilities for expected corporate income tax issues based on estimates of whether additional corporate income tax will become due. Estimates and Assumptions The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial periodyear are disclosed below. The Entity based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments may change due to market changes or circumstances arising beyond the control of the Entity. Such changes are reflected in the assumptions when they occur. Pension and employees benefits The determination of the Entitys obligations and cost for pension and employee benefits liabilities is dependent on its selection of certain assumptions used by the independent actuaries in calculating such amounts. Those assumptions include among others, discount rates, future annual salary increase, annual employee turnover rate, disability rate, retirement age and mortality rate. Actual results that differ from the Entitys assumptions are recognized immediately in the profit or loss as and when they occurred. While the Entity believes that its assumptions are reasonable and appropriate, significant differences in the Entitys actual experiences or significant changes in the Entitys in the Entitys assumptions may materially affect its estimated liabilities for pension and employees benefits and net employee benefits expenses. The carrying amount of the Entitys estimated liabilities for employee benefits as of December 31, 2012 amounted to Rp 11,677,688, December 31, 2011 amounted to Rp 10,893,257 and January 1, 2011 amounted to Rp 10,755,350 Note 22. Depreciation of fixed assets The costs of fixed assets are depreciated on a straight-line method over their estimated useful lives. Management estimates the useful lives of these fixed assets to be within 10 to 25 years. These are common life expectancies applied in the industries where the Entity conducts its businesses. Changes in the expected level of usage and technological development could impact the economic useful lives and the residual values of these assets, and therefore future depreciation charges could be revised. The net carrying amount of the Entitys fixed assets as of December 31, 2012 amounted to Rp 246,808,572, December 31, 2011 amounted to Rp 51,654,059 and January 1, 2011 amounted to Rp 47,849,565 Note 12. Financial instrument The Entity and its Subsidiaries carry certain financial assets and liabilities at fair value, which requires the use of accounting estimates. While significant components of fair value measurement were determined using verifiable objective evidences, the amount of changes in fair value would differ if the Entity and its Subsidiaries utilized a different valuation methodology. Any changes in a fair value of these financial assets and liabilities would directly affect the Entitys comprehensive profit or loss. The carrying amount of financial liability carried at fair value in the consolidated statement of financial position as of December 31, 2012 amounting to US 7,000 or equivalent to Rp 67,690,000, Desember 31, 2011 amounting to US 7,000 or equivalent to Rp 63,476,000, and January 1, 2011 amounted to nil Note 19. Based on Circular Resolutions in Lieu of Board of Commissioners Meeting of PT Eratex Djaja Tbk on July 14, 2008, the Entitys President Director gained authority to discontinue the operation of textile division and announce that discontinuing. The textile division operation has been stopped for unlimited period of time, in terms of decreasing economic stability, weaker prospect of the current business and the loss impact of the whole Entitys performance. The operation of textile division was officially discontinued in August 2008. The main classifications of assets and liabilities of the discontinued operations are listed below: 04 DISCONTINUING OPERATION ASSETS Trade receivables - third parties Note 6 - - - - - Other receivables - third parties Note 7 - - - - - Inventories, net Note 8 168,097 157,632 156,768 17 17 Deferred tax assets Note 21d 192,019 103,668 103,668 20 11 Fixed assets, net Note 12 163,530 31,735,050 19,716,855 17 3,500 Guarantee deposits 250,000 250,000 250,000 26 28 Total 773,646 32,246,350 20,227,291 80 3,556 REVENUE Operating expenses Notes 30 - - - - - Operating loss - - - - - OTHER INCOME EXPENSES Interest income - - - - - Foreign exchange gain, net - 8,809 8,809 - 1 Loss on declining in receivables value - 33,402 33,402 - 4 Total other expenses, net - 24,593 24,593 - 3 Income before corporate income tax - 24,593 24,593 - 3 Income tax expense - - - - Dec 31, 2012 Dec 31, 2011 Dec 31, 2011 Dec 31, 2012 Dec 31, 2011 Rp After quasi Before quasi After quasi Rp Rp US US NET LOSS - 24,593 24,593 - 3 PT ERATEX DJAJA Tbk AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued For the years ended December 31, 2012 and 2011 Expressed in thousands of Rupiah and in thousands of United States Dollars, unless otherwise stated PT ERATEX DJAJA Tbk AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued For the years ended December 31, 2012 and 2011 Expressed in thousands of Rupiah and in thousands of United States Dollars, unless otherwise stated 138 Laporan Tahunan 2012 • Annual Report 2012 • PT. ERATEX DJAJA Tbk 139 Laporan Tahunan 2012 • Annual Report 2012 • PT. ERATEX DJAJA Tbk CASH AND CASH EQUIVALENTS 05 CONTINUING OPERATION Cash on hand 71,744 91,675 91,675 7 11 Cash in banks: Rupiah: The Hongkong and Shanghai Banking Corporation Ltd 24,767 1,914,336 1,914,336 3 211 PT Bank Mandiri Persero Tbk 452,995 17,925 17,925 47 2 PT Bank Tabungan Pensiunan Nasional Tbk - 10,370 10,370 - 1 PT Bank Central Asia Tbk - 676 676 - US Dollar: The Hongkong and Shanghai Banking Corporation Ltd 11,283 12,160 12,160 1 1 PT Bank Mandiri Persero Tbk 8,425 7,236 7,236 1 1 Others - 107 107 - Euro: The Hongkong and Shanghai Banking Corporation Ltd 257,704 2,403 2,403 27 HK Dollar: The Hongkong and Shanghai Banking Corporation Ltd - 290,175 290,175 - 32 Total cash equivalents 755,174 2,255,388 2,255,388 79 248 Total cash and cash equivalents 826,918 2,347,063 2,347,063 86 259 There is no balance of cash and cash equivalents to related parties. Rp Rp Rp US US After quasi Before quasi After quasi Dec 31, 2012 Dec 31, 2011 Dec 31, 2011 Dec 31, 2012 Dec 31, 2011 TRADE RECEIVABLES - THIRD PARTIES continued Details of trade receivables from third parties are as follows: Aging analysis of trade receivables from third parties since issuance of invoices is as follows: 06 CONTINUING OPERATION Export customers 64,834,637 42,138,533 42,138,533 6,704 4,647 PT Dwi Putra Sakti 122,707 201,690 201,690 13 22 Other customers below Rp 500,000 each 579 444,657 444,657 49 Total 64,957,923 42,784,880 42,784,880 6,717 4,718 DISCONTINUING OPERATION Mr. Deddy 606,952 606,952 606,952 63 67 Other customers below Rp 500,000 each 8,155 8,155 8,155 1 1 Total Note 4 615,107 615,107 615,107 64 68 Dec 31, 2012 Dec 31, 2011 Dec 31, 2011 Dec 31, 2012 Dec 31, 2011 Rp Rp Rp US US After quasi Before quasi After quasi CONTINUING OPERATION Less than 1 month 49,843,965 30,405,166 30,405,166 5,154 3,353 1 - less than 3 months 15,067,237 12,379,714 12,379,714 1,558 1,365 3 - less than 6 months 46,721 - - 5 - Total DISCONTINUING OPERATION 1 - less than 3 months - - - - - 3 - less than 6 months - - - - - More than 12 months 615,107 615,107 615,107 64 68 Total Note 4 615,107 615,107 615,107 64 68 Dec 31, 2012 Dec 31, 2011 Dec 31, 2011 Dec 31, 2012 Dec 31, 2011 Rp Rp Rp US US After quasi Before quasi After quasi 64,957,923 42,784,880 42,784,880 6,717 4,718 Details of trade receivables from third parties based on currency are as follows: CONTINUING OPERATION Rupiah 123,007 201,690 201,690 13 22 Foreign currencies 64,834,916 42,583,190 42,583,190 6,704 4,696 Total 64,957,923 42,784,880 42,784,880 6,717 4,718 DISCONTINUING OPERATION Rupiah 615,107 615,107 615,107 64 68 Total Note 4 615,107 615,107 615,107 64 68 Dec 31, 2012 Dec 31, 2011 Dec 31, 2011 Dec 31, 2012 Dec 31, 2011 Rp Rp Rp US US After quasi Before quasi After quasi PT ERATEX DJAJA Tbk AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued For the years ended December 31, 2012 and 2011 Expressed in thousands of Rupiah and in thousands of United States Dollars, unless otherwise stated PT ERATEX DJAJA Tbk AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued For the years ended December 31, 2012 and 2011 Expressed in thousands of Rupiah and in thousands of United States Dollars, unless otherwise stated TRADE RECEIVABLES - THIRD PARTIES This account consists of: 06 CONTINUING OPERATION Export sales 64,834,917 42,583,190 42,583,190 6,704 4,696 Local sales 123,006 201,690 201,690 13 22 Total trade receivables - third parties 64,957,923 42,784,880 42,784,880 6,717 4,718 Less: Allowance for loss of impairment value - - - - - Total trade receivables - third parties, net 64,957,923 42,784,880 42,784,880 6,717 4,718 DISCONTINUING OPERATION Local sales 615,107 615,107 615,107 64 68 Total trade receivables - third parties 615,107 615,107 615,107 64 68 Less: Allowance for loss of impairment value 615,107 615,107 615,107 64 68 Total trade receivables - third parties, net Note 4 - - - - - Dec 31, 2012 Dec 31, 2011 Dec 31, 2011 Dec 31, 2012 Dec 31, 2011 Rp Rp Rp US US After quasi Before quasi After quasi 140 Laporan Tahunan 2012 • Annual Report 2012 • PT. ERATEX DJAJA Tbk 141 Laporan Tahunan 2012 • Annual Report 2012 • PT. ERATEX DJAJA Tbk TRADE RECEIVABLES - THIRD PARTIES continued Movement in allowance for loss of impairment value is as follows: As on December 31, 2012, these receivables are pledged as collateral for bank loan Note 14, whereas as on December 31, 2011, receivables were not pledged as collateral for any loan. Management believes that the allowance for loss of impairment value of trade receivables is adequate to cover possible losses due to uncollectible accounts. 06 DISCONTINUING OPERATION Balance at beginning of the year 615,107 615,107 615,107 64 68 Add: Allowance during the year - - - - - Less: Receivables payment - - - - - Balance at end of the year Note 4 615,107 615,107 615,107 64 68 Dec 31, 2012 Dec 31, 2011 Dec 31, 2011 Dec 31, 2012 Dec 31, 2011 Rp Rp Rp US US After quasi Before quasi After quasi OTHER RECEIVABLES - THIRD PARTIES This account consists of: 07 CONTINUING OPERATION Temporary advances 361,574 123,965 123,965 37 14 Others 677,368 610,718 610,718 70 67 Total other receivables - third parties 1,038,942 734,683 734,683 107 81 Less: Allowance for loss of impairment value Balance at beginning of the year 390,367 335,401 335,401 40 37 Add: Allowance during the year 103,175 52,349 52,349 11 6 Add less: Foreign exchange revaluation - 2,617 2,617 - Balance at end of year 493,542 390,367 390,367 51 43 Total other receivables - third parties, net 545,400 344,316 344,316 56 38 DISCONTINUING OPERATION Others 25,440 25,440 25,440 3 3 Total other receivables - third parties 25,440 25,440 25,440 3 3 Balance at beginning of the year 25,440 - - 3 - Add: Allowance during the year - 25,440 25,440 - 3 Less: Write off receivables - - - - - Balance at end of year 25,440 25,440 25,440 3 3 Total other receivables - third parties Note 4 - - - - - Management believes that the allowance for loss of impairment value of other receivables is adequate to cover possible losses due to uncollectible accounts. Dec 31, 2012 Dec 31, 2011 Dec 31, 2011 Dec 31, 2012 Dec 31, 2011 Rp Rp Rp US US After quasi Before quasi After quasi INVENTORIES This account consist of: 08 CONTINUING OPERATION Finished goods 34,359,718 21,724,580 21,971,822 3,553 2,396 Goods in process 22,843,119 15,746,340 15,897,256 2,362 1,736 Raw materials 37,730,749 31,307,080 31,542,888 3,902 3,452 Sundry stores 15,129,650 10,493,412 10,503,593 1,565 1,157 Inventory in transit 715,694 3,090,412 3,090,412 74 341 Total inventories 110,778,930 82,361,824 83,005,971 11,456 9,083 Less: Allowance for loss of impairment value 5,748,885 3,927,511 3,898,993 595 433 Total inventories, net 105,030,045 78,434,313 79,106,978 10,861 8,650 DISCONTINUING OPERATION Sundry stores 316,965 297,232 295,603 33 33 Total inventories 316,965 297,232 295,603 33 33 Less: Allowance for loss of impairment value 148,868 139,600 138,835 16 16 Total inventories, net Note 4 168,097 157,632 156,768 17 17 Dec 31, 2012 Dec 31, 2011 Dec 31, 2011 Dec 31, 2012 Dec 31, 2011 Rp Rp Rp US US After quasi Before quasi After quasi Movements in allowance for loss of impairment value of inventories are as follows: CONTINUING OPERATION Balance at beginning of the year 3,927,511 4,491,307 4,447,284 406 495 Add: Allowance during the year 4,763,396 768,309 754,775 493 85 Less: Utilization of allowance during the year 2,949,810 1,332,105 1,299,806 305 147 Exchange difference due to translation of financial statements 7,788 - 3,260 1 - Balance at end of the year 5,748,885 3,927,511 3,898,993 595 433 DISCONTINUING OPERATION Balance at beginning of the year 139,600 139,600 138,835 16 16 Add: Allowance during the year - - - - - Less: Utilization of allowance during the year - - - - - Exchange difference due to translation of financial statements 9,268 - - - - Balance at end of the year Note 4 148,868 139,600 138,835 16 16 Dec 31, 2012 Dec 31, 2011 Dec 31, 2011 Dec 31, 2012 Dec 31, 2011 Rp Rp Rp US US After quasi Before quasi After quasi PT ERATEX DJAJA Tbk AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued For the years ended December 31, 2012 and 2011 Expressed in thousands of Rupiah and in thousands of United States Dollars, unless otherwise stated PT ERATEX DJAJA Tbk AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued For the years ended December 31, 2012 and 2011 Expressed in thousands of Rupiah and in thousands of United States Dollars, unless otherwise stated 142 Laporan Tahunan 2012 • Annual Report 2012 • PT. ERATEX DJAJA Tbk 143 Laporan Tahunan 2012 • Annual Report 2012 • PT. ERATEX DJAJA Tbk PREPAID EXPENSES This account consist of: 10 CONTINUING OPERATION Insurance 241,191 82,368 85,853 25 9 Others 808,086 837,580 861,998 84 92 Total prepaid expenses 1,049,277 919,948 947,851 109 101 Dec 31, 2012 Dec 31, 2011 Dec 31, 2011 Dec 31, 2012 Dec 31, 2011 Rp Rp Rp US US After quasi Before quasi After quasi PT ERATEX DJAJA Tbk AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued For the years ended December 31, 2012 and 2011 Expressed in thousands of Rupiah and in thousands of United States Dollars, unless otherwise stated PT ERATEX DJAJA Tbk AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued For the years ended December 31, 2012 and 2011 Expressed in thousands of Rupiah and in thousands of United States Dollars, unless otherwise stated INVENTORIES continued Inventories as of December 31, 2012 have been insured for fire and other risks for a total coverage of Rp 77 Billion full Rupiah amount and Rp 38 Billion full Rupiah amount for 2010. Management believes that this insurance is adequate to cover the possibility of losses. As on December 31, 2012, these inventories are pledged as collateral for bank loan, whereas as on December 31, 2011, inventories were not pledged as collateral for any loan. Management believes that the allowance for loss of impairment value is adequate to cover the possible losses due to decrease in value of inventory. 08 Details of allowance for loss of impairment value of inventories as of statements of financial position dates are as follows: CONTINUING OPERATION Raw materials 125,104 1,944,546 1,941,976 13 214 Finished goods 5,623,781 1,982,965 1,957,017 582 219 Total allowance for loss of impairment value 5,748,885 3,927,511 3,898,993 595 433 DISCONTINUING OPERATION Sundry stores 148,868 139,600 138,835 16 16 Total allowance for loss of impairment value Note 4 148,868 139,600 138,835 16 16 Dec 31, 2012 Dec 31, 2011 Dec 31, 2011 Dec 31, 2012 Dec 31, 2011 Rp Rp Rp US US After quasi Before quasi After quasi ADVANCE PAYMENTS This account consists of: 09 CONTINUING OPERATION Raw materials and sundry stores 2,856,543 1,823,739 1,823,739 295 201 Machinery 3,965,351 1,068,942 1,068,942 410 118 Others 1,039,672 631,414 631,414 108 70 Total advance payments 7,861,566 3,524,095 3,524,095 813 389 Dec 31, 2012 Dec 31, 2011 Dec 31, 2011 Dec 31, 2012 Dec 31, 2011 Rp Rp Rp US US After quasi Before quasi After quasi LONG-TERM INVESTMENTS 11 The balances of long-term investments as of December 31, 2012 and 2011 are as follows: Investment in associates at cost: PT Pasifik Marketama less than 20 295,923 277,500 277,500 31 31 Less: Allowance for loss of impairment value of investment 295,923 277,500 277,500 31 31 Total long-term investments - - - - - The Entity has also invested shares in PT Pasifik Marketama, which is engaged in the marketing of garment products. Dec 31, 2012 Dec 31, 2011 Dec 31, 2011 Dec 31, 2012 Dec 31, 2011 Rp Rp Rp US US After quasi Before quasi After quasi FIXED ASSETS 12 CONTINUING OPERATION 2012 MOVEMENTS ACQUISITION COST: Direct ownership: Land leasehold 100,320,000 - - - 6,659,974 106,979,974 Buildings and structures 48,959,200 2,854,187 - 30,493,900 5,292,151 87,599,438 Machineries and equipment 29,847,681 16,127,228 20,880 75,100 2,645,116 48,674,245 Vehicles 1,866,500 2,084,426 271,000 935,000 661,903 5,276,829 Furniture and fixtures 2,216,655 1,328,737 445,763 22,700 468,289 3,590,618 Sub-total 183,210,036 22,394,578 737,643 31,526,700 15,727,433 252,121,104 Construction in progress - 1,118,084 - - - 1,118,084 Total acquisition cost 183,210,036 23,512,661 737,643 31,526,700 15,727,433 253,239,188 ACCUMULATED DEPRECIATION: Direct ownership: Land leasehold - - - - - - Buildings and structures - 2,275,504 - - 63,798 2,339,302 Machineries and equipment 492,349 2,586,134 928 - 296,795 3,374,350 Vehicles - 395,720 5,234 - 18,779 409,265 Furniture and fixtures 445,763 246,382 445,763 - 61,317 307,699 Total accumulated depreciation 938,112 5,503,740 451,925 - 440,689 6,430,616 NET BOOK VALUE 182,271,924 246,808,572 EQUIVALENT US 20,101 25,523 Exchange difference due to translation Balance of financial Balance Jan 1, 2012 Additions Disposals Reclassification statements Dec 31, 2012 144 Laporan Tahunan 2012 • Annual Report 2012 • PT. ERATEX DJAJA Tbk 145 Laporan Tahunan 2012 • Annual Report 2012 • PT. ERATEX DJAJA Tbk FIXED ASSETS continued 12 DISCONTINUING OPERATION 2012 MOVEMENTS AT COST OR REVALUATION: Land leasehold - - - - - - Buildings and structures 30,493,900 - - 30,493,900 - - Machineries and equipment 228,450 - - 75,100 10,180 163,530 Vehicles 990,000 - 55,000 935,000 - - Furniture and fixtures 22,700 - - 22,700 - - Sub-total 31,735,050 - 55,000 31,526,700 10,180 163,530 Total acquisition cost 31,735,050 - 55,000 31,526,700 10,180 163,530 ACCUMULATED DEPRECIATION: Land leasehold - - - - - - Buildings and structures - - - - - - Machineries and equipment - - - - - - Vehicles - - - - - - Furniture and fixture - - - - - - Total accumulated depreciation - - - - - - NET BOOK VALUE Note 4 31,735,050 163,530 EQUIVALENT US 3,500 17 Exchange difference due to translation Balance of financial Balance Jan 1, 2012 Additions Disposals Reclassification statements Dec 31, 2012 PT ERATEX DJAJA Tbk AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued For the years ended December 31, 2012 and 2011 Expressed in thousands of Rupiah and in thousands of United States Dollars, unless otherwise stated PT ERATEX DJAJA Tbk AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued For the years ended December 31, 2012 and 2011 Expressed in thousands of Rupiah and in thousands of United States Dollars, unless otherwise stated CONTINUING OPERATION 2011 MOVEMENTS ACQUISITION COST: Land leasehold 36,080 - - - 309 36,389 Buildings and structures 17,695,156 126,000 - - 25,544 17,846,700 Machineries and equipment 56,818,956 4,554,325 - - 484,759 61,858,040 Vehicles 4,461,070 - 108,500 - 146,705 4,499,275 Furniture and fixtures 12,159,288 344,384 - - 173,087 12,676,759 Sub-total 91,170,550 5,024,709 108,500 - 830,404 96,917,163 Construction in progress - - - - - - Total acquisition cost bf 91,170,550 5,024,709 108,500 - 830,404 96,917,163 ACCUMULATED DEPRECIATION: Land leasehold 15,619 - - - 134 15,753 Buildings and structures 6,985,962 340,747 - - 320,580 7,647,289 Machineries and equipment 23,558,025 2,077,263 - - 1,415,655 24,219,633 Vehicles 3,215,371 157,129 108,500 - 20,170 3,243,830 Furniture and fixtures 9,546,008 439,718 - - 150,873 10,136,599 Total accumulated depreciation 43,320,985 3,014,857 108,500 - 964,238 45,263,104 NET BOOK VALUE 47,849,565 51,654,059 EQUIVALENT US 5,322 5,696 Exchange difference due to translation Balance of financial Balance Jan 1, 2011 Additions Disposals Reclassification statements Dec 31, 2011 FIXED ASSETS continued 12 DISCONTINUING OPERATION 2011 MOVEMENTS ACQUISITION COST: Land leasehold 194,172 - - - 1,663 195,835 Buildings and structures 29,287,521 - - - 250,822 29,538,343 Machineries and equipment 24,402,350 - - - 208,985 24,611,335 Vehicles 3,311,436 - - - 28,359 3,339,795 Furniture and fixtures 4,437,831 - - - 38,006 4,475,837 Sub-total 61,633,310 - - - 527,835 62,161,145 Total acquisition cost 61,633,310 - - - 527,835 62,161,145 ACCUMULATED DEPRECIATION: Land leasehold 84,057 - - - 720 84,777 Buildings and structures 14,754,749 - - - 126,362 14,881,111 Machineries and equipment 19,946,061 - - - 170,820 20,116,881 Vehicles 2,958,914 - - - 25,340 2,984,254 Furniture and fixture 4,340,098 - - - 37,169 4,377,267 Total accumulated depreciation 42,083,879 - - - 360,411 42,444,290 NET BOOK VALUE Note 4 19,549,431 19,716,855 EQUIVALENT US 2,174 2,174 Exchange difference due to translation Balance of financial Balance Jan 1, 2011 Additions Disposals Reclassification statements Dec 31, 2011 Disposal represent sales of fixed assets, which can be summarized as follows: Depreciation expenses for the years ended December 31, 2012 and 2011 are Rp 5,503,740 and Rp 3,014,857, respectively, with the following allocations: CONTINUING OPERATION Net book value of disposals 285,718 - 30 - Sales price 285,050 37,500 29 4 Exchange difference due to translation of financial statements 20,192 1,248 1 - Gain loss on disposals of fixed assets 20,860 36,252 2 4 Dec 31, 2012 Dec 31, 2011 Dec 31, 2012 Dec 31, 2011 Rp Rp US US CONTINUING OPERATION Cost of revenue 5,214,342 2,555,776 554 291 General and administration expenses 289,398 459,081 31 52 Total 5,503,740 3,014,857 584 344 Dec 31, 2012 Dec 31, 2011 Dec 31, 2012 Dec 31, 2011 Rp Rp US US 146 Laporan Tahunan 2012 • Annual Report 2012 • PT. ERATEX DJAJA Tbk 147 Laporan Tahunan 2012 • Annual Report 2012 • PT. ERATEX DJAJA Tbk INTANGIBLE ASSETS This account consists of: 13 CONTINUING OPERATION ACQUISITION COST: Software 1,941,848 1,820,959 1,734,394 201 201 Land-rights 121,769 113,139 108,970 13 12 Total acquisition cost 2,063,617 1,934,098 1,843,364 214 213 ACCUMULATED AMORTIZATION: Software 921,218 742,976 719,740 95 82 Land-rights 40,084 31,064 30,320 4 3 Total accumulated amortization 961,302 774,040 750,060 100 85 BOOK VALUE 1,102,315 1,160,058 1,093,304 114 128 Dec 31, 2012 Dec 31, 2011 Dec 31, 2011 Dec 31, 2012 Dec 31, 2011 Rp Rp Rp US US After quasi Before quasi After quasi Fixed assets as of December 31, 2012 and 2011 have been insured for fire and other risks for a total coverage of Rp 137 Billion full Rupiah amount for the year 2012 and Rp 75 Billion full Rupiah amount for the year 2011. Management believes that this insurance is adequate to cover the possibility of losses. The Entitys management reviews estimated economic useful lives of fixed asset, depreciation method and residual value at the end of each reporting period. The Entitys management stated that there is no fixed assets having book value but discontinue to operate, except from discontinuing operation. As of December 31, 2012 and 2011, the Entitys management stated that there is no significant declining in carrying value of fixed assets. On 2012, fixed assets land, building and machineries are pledged as collateral for loan to The Hongkong and Shanghai Banking Corporation Limited Note 14 and 20. PT ERATEX DJAJA Tbk AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued For the years ended December 31, 2012 and 2011 Expressed in thousands of Rupiah and in thousands of United States Dollars, unless otherwise stated PT ERATEX DJAJA Tbk AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued For the years ended December 31, 2012 and 2011 Expressed in thousands of Rupiah and in thousands of United States Dollars, unless otherwise stated FIXED ASSETS continued 12 DISCONTINUING OPERATION ACQUISITION COST: Land-rights 23,868 21,558 21,558 2 2 Total acquisition cost 23,868 21,558 21,558 2 2 ACCUMULATED AMORTIZATION: Land-rights 23,868 21,558 21,558 2 2 Total accumulated amortization 23,868 21,558 21,558 2 2 BOOK VALUE Note 4 - - - - - SHORT-TERM LOANS This account consists of: The Hongkong and Shanghai Banking Corporation Limited In 2012, The Hongkong and Shanghai Banking Corporation Limited, Jakarta Branch HSBC provided trade and working capital financing facilities based on Corporate Facility Agreement No: JAK120426U120410. Changes to credit facilities recorded in the Amendment to Corporate Facility Agreement No: JAK121203U120926 which was effective until April 30, 2013. In the Amendment to Corporate Facility Agreement No: JAK121203U120926, the Entity obtained loan facilities as follows: • Overdraft 1 with a limit of US 1,000 with interest rate Best Lending Rate - 3.25 per annum floating; with sublimit of Rp 4.000.000 with interest rate Best Lending Rate - 3.5 per annum floating; • Combined Limit CBL 3 with a limit of US 8,800 with interest rate ranging from Best Lending Rate - 5-5.75 per annum floating; • Reducing Balance Loan with a limit of US 3,000 Note 19; • Exposure Risk Limit with a limit of US 200; Collateral for the loans are as follows: a. Fiduciary transfer of ownership over machineries for the amount of US 3,000. b. Fiduciary transfer of ownership over stocks and accounts receivable for the amount of US 18,000. c. Corporate Guarantee from PT Ungaran Sari Garment. d. Letter of Undertaking from PT Ungaran Sari Garment. e. First rank mortgage over land and building located in Probolinggo. On 2011, The Hongkong and Shanghai Banking Corporation Limited has transferred the entire loan amounted to US 24,427 and US 3,449 which taken over from PT Bank DBS Indonesia, including all rights, interests, and any benefits arising to Gillespie International Limited based on Transfer Notice Letter dated November 14, 2011. 14 CONTINUING OPERATION The Hongkong and Shanghai Banking Corp Ltd 60,969,019 62,383,824 62,383,824 6,305 6,880 Gillespie International Limited 7,252,500 27,204,000 27,204,000 750 3,000 Total short-term loans 68,221,519 89,587,824 89,587,824 7,055 9,880 Dec 31, 2012 Dec 31, 2011 Dec 31, 2011 Dec 31, 2012 Dec 31, 2011 Rp Rp Rp US US After quasi Before quasi After quasi Gillespie International Limited Based on loan transferred from The Hongkong and Shanghai Banking Corporation Limited with a total value of US 27,876, Gillespie International Limited made a Master Debt Restructuring Agreement with the Entity that was signed on November 24, 2011. In Master Debt Restructuring Agreement, Entity obtains facilities as follows: • Gillespie International Limited forgives loan amounted to US 9,876. Tranche A loan amounted to US 8,000 with interest rate LIBOR+3. Term of this loan is six years and will be due on November 30, 2017. Collateral for Tranche A Loan are as follows: a. Mortgage over land and building factory at Jl. Soekarno Hatta No 23 Probolinggo, East Java - Indonesia, under land certificate HGB no 1 Curahgrinting and HGB no 1 Kanigaran for the amount of US 15,000 registered under the name of PT Eratex Djaja Tbk. b. Fiduciary transfer of ownership over machineries and equipments listed in borrowers fixed asset list as per the Audited Financial Report of the Borrowers as of December 31, 2010 for the amount of US 5,000. 148 Laporan Tahunan 2012 • Annual Report 2012 • PT. ERATEX DJAJA Tbk 149 Laporan Tahunan 2012 • Annual Report 2012 • PT. ERATEX DJAJA Tbk Details of trade payables - third parties based on currency: CONTINUING OPERATION Sierradale Pte Ltd 56,536,042 5,179,813 5,179,813 5,847 571 Coats Rejo Indonesia 1,808,189 1,088,597 1,088,597 187 120 Bestwin 1,764,153 - - 182 - YKK Zipper Indonesia 1,179,489 1,146,705 1,146,705 122 126 Winnitex Investment Co Ltd 892,683 6,002,531 6,002,531 92 662 CV. Cipta Nusa 818,631 - - 85 - New Focus 734,711 - - 76 - Xing Tai 680,625 - - 70 - Artha Perdana 581,986 - - 60 - Ever Young Sejati 530,852 - - 55 - Far East - 3,598,237 3,598,237 - 397 Lai Tak - 1,246,745 1,246,745 - 137 China Dyeing - 372,415 372,415 - 41 CV. Surya Jaya - 160,204 160,204 - 18 Avery Dennisson - 20,773 20,773 - 2 SML Jakarta - 16,678 16,678 - 2 Other suppliers below Rp 500,000 each 13,077,710 5,661,681 5,661,681 1,353 625 Total 78,605,071 24,494,379 24,494,379 8,129 2,701 Dec 31, 2012 Dec 31, 2011 Dec 31, 2011 Dec 31, 2012 Dec 31, 2011 Rp Rp Rp US US After quasi Before quasi After quasi PT ERATEX DJAJA Tbk AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued For the years ended December 31, 2012 and 2011 Expressed in thousands of Rupiah and in thousands of United States Dollars, unless otherwise stated PT ERATEX DJAJA Tbk AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued For the years ended December 31, 2012 and 2011 Expressed in thousands of Rupiah and in thousands of United States Dollars, unless otherwise stated SHORT-TERM LOANS continued 14 Gillespie International Limited continued • Tranche B convertible loan amounted to US 3,000, non interest bearing. Term of this loan is one year and will be due on November 20, 2012. • Tranche C convertible loan amounted to US 7,000, non interest bearing. Term of this loan is five years and will be due on November 20, 2016 Note 19. On December 14, 2011 Gillesspie International Limited made a Sale and Purchase Agreement related to Tranche A loan of the Entity with PT Ungaran Sari Garments Note 20. On November 12, 2012, Gillespie International Limited has forgiven US 2,250 from Tranche B convertible loan effectively from November 20, 2012 and the remaining loan of US 750 will be converted into share capital by no later than July 31, 2013. Outstanding short term loan of Gillespie International Limited as of December 31, 2012 and 2011 amounted to US 750 or equivalent to Rp 7,252,500 and US 3,000 or equivalent to Rp 27,204,000. No collateral is pledged for Tranche B and Tranche C loans. TRADE PAYABLES - THIRD PARTIES This account represents payables for the purchase of raw and other materials as follows: 15 CONTINUING OPERATION Post dated cheque 640,290 799,360 799,360 66 88 Local suppliers 9,851,598 5,813,902 5,813,902 1,019 641 Foreign suppliers 68,113,183 17,881,117 17,881,117 7,044 1,972 Total trade payables - third parties 78,605,071 24,494,379 24,494,379 8,129 2,701 Dec 31, 2012 Dec 31, 2011 Dec 31, 2011 Dec 31, 2012 Dec 31, 2011 Rp Rp Rp US US After quasi Before quasi After quasi TRADE PAYABLES - THIRD PARTIES continued 15 Details of trade payables - third parties based on currency are as follows: No collateral is pledge for trade payables to third parties. CONTINUING OPERATION Rupiah 5,578,867 3,258,215 3,258,215 577 359 Foreign currencies 73,026,204 21,236,164 21,236,164 7,552 2,342 Total 78,605,071 24,494,379 24,494,379 8,129 2,701 Dec 31, 2012 Dec 31, 2011 Dec 31, 2011 Dec 31, 2012 Dec 31, 2011 Rp Rp Rp US US After quasi Before quasi After quasi OTHER PAYABLES - THIRD PARTIES 16 CONTINUING OPERATION Temporary receipts 164,583 254,658 254,658 17 28 Dividend 178,693 178,694 178,694 18 20 Others 147,366 - - 16 - Total other payables - third parties 490,642 433,352 433,352 51 48 Dec 31, 2012 Dec 31, 2011 Dec 31, 2011 Dec 31, 2012 Dec 31, 2011 Rp Rp Rp US US After quasi Before quasi After quasi 17 ACCRUED EXPENSES CONTINUING OPERATION Wages and allowances 7,563,328 4,067,121 4,067,121 782 449 Interest expenses 4,047,520 874,810 874,810 419 96 Processing charges 233,410 174,762 174,762 24 19 Insurance 222,516 162,835 162,835 23 18 Freight 188,394 - - 19 - Others 2,258,433 1,156,494 1,156,494 234 128 Total accrued expenses 14,513,601 6,436,022 6,436,022 1,501 710 Dec 31, 2012 Dec 31, 2011 Dec 31, 2011 Dec 31, 2012 Dec 31, 2011 Rp Rp Rp US US After quasi Before quasi After quasi This account consists of: This account consists of: 150 Laporan Tahunan 2012 • Annual Report 2012 • PT. ERATEX DJAJA Tbk 151 Laporan Tahunan 2012 • Annual Report 2012 • PT. ERATEX DJAJA Tbk CONSUMER FINANCE PAYABLE LONG-TERM LOANS 18 Total financing 1,245,706 205,590 205,590 129 22 Less : interest expenses 164,620 29,587 29,587 17 3 Current financing value 1,081,086 176,003 176,003 112 19 Current maturities portion 464,890 64,001 64,001 48 7 Total long-term portion, net 616,196 112,002 112,002 64 12 The Entity obtained loans from PT Astra Sedaya Finance amounting to Rp 777,906 with interest rates 5,6 per annum to finance purchase of vehicle . This financing will be due for repayment in September 2014 and August 2015. The Entity obtained loans from PT BII Finance amounting to Rp 467,900 with interest rates 4,99 per annum to finance purchase of vehicle This financing will be due for repayment in January 2015 and March 2015. Dec 31, 2012 Dec 31, 2011 Dec 31, 2011 Dec 31, 2012 Dec 31, 2011 Rp Rp Rp US US After quasi Before quasi After quasi 19 Gillespie International Limited Carrying amount US 7.000 67,690,000 63,476,000 63,476,000 7,000 7,000 Less: unamortised discount expense US 733 in Dec 31, 2012 and US 962 in Dec 31, 2011 7,091,500 8,721,961 8,721,961 733 962 Fair value US 6,267 in Dec 31, 2012 and US 6,038 in Dec 31, 2011 60,598,500 54,754,039 54,754,039 6,267 6,038 The Hongkong and Shanghai Banking Corp Ltd 26,868,659 - - 2,778 - Total loans 87,467,159 54,754,039 54,754,039 9,045 6,038 Current maturity portion: The Hongkong and Shanghai Banking Corp Ltd 5,473,245 - - 566 - Total long-term portion, net 81,993,914 54,754,039 54,754,039 8,479 6,038 Dec 31, 2012 Dec 31, 2011 Dec 31, 2011 Dec 31, 2012 Dec 31, 2011 Rp Rp Rp US US After quasi Before quasi After quasi 19 LONG-TERM LOANS continued The Hongkong and Shanghai Banking Corporation Limited In 2012, the Entity obtained a capex loan facility from The Hongkong and Shanghai Banking Corporation Limited Jakarta Branch HSBC to finance the purchase of machinery related to the garment operations. The maximum amount that can be withdrawn under this facility is US 3,000. The loan period under this facility is 5 years including grace period from the first drawdown to be paid over 54 monthly Installments after the completion of grace period which ends in February 2013. Interest rate on this loan facility is 4.5 per annum floating. Outstanding loan under this facility as of December 31, 2012 and 2011 amounting to US 2,779 or equivalent to Rp 26,868,659 and nil. PAYABLES TO RELATED PARTIES 20 Short term loan: PT Ungaran Sari Garments 6,285,500 - - 650 - PT Buana Indah Garments - 6,347,600 6,347,600 - 700 Sub total 6,285,500 6,347,600 6,347,600 650 700 Long term loan: PT Ungaran Sari Garments 77,360,000 72,544,000 72,544,000 8,000 8,000 PT Buana Indah Garments - 1,800,000 1,800,000 - 199 Sub total 77,360,000 74,344,000 74,344,000 8,000 8,199 Total loan 83,645,500 80,691,600 80,691,600 8,650 8,899 Dec 31, 2012 Dec 31, 2011 Dec 31, 2011 Dec 31, 2012 Dec 31, 2011 Rp Rp Rp US US After quasi Before quasi After quasi PT ERATEX DJAJA Tbk AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued For the years ended December 31, 2012 and 2011 Expressed in thousands of Rupiah and in thousands of United States Dollars, unless otherwise stated PT ERATEX DJAJA Tbk AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued For the years ended December 31, 2012 and 2011 Expressed in thousands of Rupiah and in thousands of United States Dollars, unless otherwise stated Gillespie International Limited In Gillespie International Limited Agreement, the Entity obtained long term loan Tranche C amounted to US 7,000 which will be due in November 20, 2016. Based on payment schedule, Tranche C loan payment will be starting on November 20, 2014 amounted to US 1,000, so theres no current maturity portion of long term loan and non interest bearing loan. The next four payments will be paid on semi annual basis amounted to US 1,500, respectively. Outstanding long term loan of Gillespie International Limited as of December 31, 2012 and 2011 amounted to US 6,267 or equivalent to Rp 60,598,500 and US 6,038 or equivalent to Rp 54,754,038 after reduced by unamortized discount expense. Assumption of discount rate is LIBOR+3 which is based on interest rate on a similar loan Tranche A loan taken over by PT Ungaran Sari Garments. No collateral is pledged for Tranche C loan. PT Ungaran Sari Garments On December 14, 2011, PT Ungaran Sari Garments took over Entitys Tranche A loan from Gillespie International Limited. Upon the loan transferred, Entity signed Credit Facility Agreement with PT Ungaran Sari Garments dated December 27, 2011. In the Agreement, the Entity obtained loan amounted to US 8,000 with interest rate LIBOR+3. Term of this loan is six years and will be due on November 30, 2017. Based on amendment to loan agreement dated May 23, 2012, installment will be paid each year and first payment starts on November 30, 2014 amounted to US 1,600. Collateral for this loan are as follows: • Second rank mortgage over land and building factory at Jl. Soekarno Hatta No 23 Probolinggo, East Java - Indonesia, under land certificate HGB no 1 Curahgrinting and HGB no 1 Kanigaran for the amount of US 15,000 registered under the name of PT Eratex Djaja Tbk. In addition, in 2012 the Entity obtained temporary short term-loan of US 650. Outstanding balance of PT Ungaran Sari Garments loans as of December 31, 2012 and 2011 amounted to US 8.650 or equivalent to Rp 83,645,500 and US 8,000 or equivalent to Rp 72,544,000, respectively. 152 Laporan Tahunan 2012 • Annual Report 2012 • PT. ERATEX DJAJA Tbk 153 Laporan Tahunan 2012 • Annual Report 2012 • PT. ERATEX DJAJA Tbk PAYABLES TO RELATED PARTIES continued 20 TAXATION 21

a. PREPAID TAXES