Taxation continued SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued

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 22

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued

p. Financial assets and liabilities continued Financial liabilities continued

There are no financial liabilities categorised as held for trading except for derivative payables. Gain and losses arising from changes in the fair value of derivatives that are managed in conjunction with designated financial liabilities are included in “foreign exchange gainloss”. ii Financial liabilities measured at amortised cost Financial liabilities that are not classified as at fair value through profit and loss fall into this category and are measured at amortised cost. Financial liabilities measured at amortised cost are other payables, accrued expenses, loans and bonds. Fair value estimation The fair value of financial instruments traded in active markets is determined based on quoted market prices at the balance sheet date. The quoted market price used for financial assets held by the Company is the current bid price. While for financial liabilities it uses offer price. The fair value of financial instruments that are not traded in active markets is determined by using valuation technique. The Company uses discounted cashflows methods and makes assumptions that are based on market conditions existing at each balance sheet date which are used to determine fair value for the remaining financial instruments.

q. Earningloss per share

Basic earningloss per share is calculated by dividing net incomeloss by the weighted average number of ordinary shares outstanding during the year. Diluted earningloss per share is calculated by dividing net incomeloss by the weighted average number of ordinary shares outstanding during the year, adjusted to assume conversion of all potential dilutive ordinary shares.

r. Dividends

Dividend distribution to the Company’s shareholders is recognised as a liability in the consolidated financial statements in the period in which the dividends are approved by the Company’s shareholders.

s. Use of estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in Indonesia requires the management to use of estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities as at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.