TAXATION continued Transactions of entities under common control

PT SUMMARECON AGUNG Tbk AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2013 AND DECEMBER 31, 2012, 2011 AND 2010 AND FOR THE SIX-MONTH PERIODS ENDED JUNE 30, 2013 AND 2012 UNAUDITED AND YEARS ENDED DECEMBER 31, 2012, 2011 AND 2010 Expressed in thousands of rupiah, unless otherwise stated 106

36. FINANCIAL ASSETS AND LIABILITIES continued

The following table sets out the carrying values and estimated fair values of the Company’s and Subsidiaries’ financial instruments as of June 30, 2013 and December 31, 2012, 2011 and 2010 continued: December 31, June 30, 2013 2012 2011 2010 Carrying Values Fair Values Carrying Values Fair Values Carrying Values Fair Values Carrying Values Fair Values Financial Liabilities Financial liabilities at amortized costs Short-term loans from banks and financing institution 74,361,926 74,361,926 13,248,512 13,248,512 52,942,822 52,942,822 3,596,787 3,596,787 Trade payables to third parties 45,293,711 45,293,711 184,224,757 184,224,757 246,765,162 246,765,162 181,664,820 181,664,820 Other payables 407,969,462 407,969,462 95,282,200 95,282,200 54,591,942 54,591,942 26,790,622 26,790,622 Accrued expenses 680,404,665 680,404,665 313,974,574 313,974,574 166,605,190 166,605,190 157,399,494 157,399,494 Due to related parties 355,840,706 355,840,706 322,833,794 322,833,794 290,708,658 290,708,658 203,202,788 203,202,788 Deposits received - customer deposits 108,846,005 103,691,962 98,288,759 93,260,978 92,050,232 85,186,901 72,831,774 72,831,774 Long-term loans from banks and financing institutions 1,306,594,238 1,305,020,219 809,574,927 808,188,102 788,837,639 549,509,431 471,798,443 471,798,443 Obligations under finance lease 261,699 236,418 - - - - - - Bonds payable and sukuk ijarah - - 299,315,736 280,071,379 298,499,099 246,367,137 297,652,024 219,814,949 Short-term employee benefits liabilities - - 345,812 345,812 177,953 177,953 375,138 375,138 Other non-current financial liabilities 7,946,970 7,946,970 10,734,092 10,734,092 - - - - Total 2,987,519,382 2,980,766,039 2,147,823,163 2,122,164,200 1,991,178,697 1,692,855,196 1,415,311,890 1,337,474,815 Fair value is defined as the amount at which the instrument could be exchanged in a current transaction between knowledgeable willing parties in an arms length transaction, other than in a forced or liquidation sale. Fair values are obtained from quoted market prices, discounted cash flows models and option pricing models, as appropriate. The Company and Subsidiaries use the following hierarchy for determining the fair value of financial instruments: • Level 1: Fair values measured based on quoted prices unadjusted in active markets for identical assets or liabilities. • Level 2: Fair values measured based on valuation techniques for which all inputs which have a significant effect on the recorded fair values are observable, either directly or indirectly. • Level 3: Fair values measured based on valuation techniques for which inputs which have a significant effect on the recorded fair values are not based on observable market data. The following methods and assumptions are used to estimate the fair value of each class of financial instruments: a. Short-term financial assets and liabilities Short-term financial instruments with remaining maturities of one year or less cash and cash equivalents, trade receivables, other receivables, due from related parties, other current financial assets, short-term loans from banks and financing institution, trade payables to third parties, other payables, accrued expenses, due to related parties, deposits received - customer deposits and short-term employee benefits liabilities approximate their carrying amounts due to their short-term nature. PT SUMMARECON AGUNG Tbk AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2013 AND DECEMBER 31, 2012, 2011 AND 2010 AND FOR THE SIX-MONTH PERIODS ENDED JUNE 30, 2013 AND 2012 UNAUDITED AND YEARS ENDED DECEMBER 31, 2012, 2011 AND 2010 Expressed in thousands of rupiah, unless otherwise stated 107

36. FINANCIAL ASSETS AND LIABILITIES continued

b. Non-current financial assets and long-term financial liabilities Long-term financial instruments consist of investments in other entities, due from related parties, due to related parties and other non-current financial liabilities. The fair value of these financial instruments cannot be measured reliably since they have no fixed repayment dates, therefore, they are measured at cost. Meanwhile, the fair values of deposits received - customer deposits and other non-current financial assets are determined by discounting future cash flows using applicable rates from observable current market transactions for instruments with similar terms, credit risk and remaining maturities. Long-term loans from banks and financing institutions, bonds payable and sukuk ijarah are measured at amortized cost.

37. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Company’s and Subsidiaries’ principal financial liabilities consist of short-term loans from banks and financing institution, trade payables to third parties, other payables, accrued expenses, due to related parties, deposits received - customer deposits, long-term loans from banks and financing institutions, bonds payable and sukuk ijarah, short-term employee benefits liabilities and other current and non-current financial liabilities. The main purpose of the financial liabilities is to raise working capital for the Company’s and Subsidiaries’ operations and investment activities. The Company and Subsidiaries have various financial assets, such as cash and cash equivalents, trade receivables, other receivables, due from related parties and other current and non-current financial assets which arise directly from their operations. The main risks arising from the Company’s and Subsidiaries’ financial instruments are market risk including foreign currency risk and commodity price risk, interest rate risk, credit risk and liquidity risk. The management reviews and approves policies for managing each of these risks, which are described in more detail as follows: a. Foreign currency risk The Company and Subsidiaries do not significantly use foreign currencies because nearly all of their transactions, assets and liabilities are denominated in rupiah. The Company and Subsidiaries’ reporting currency is the rupiah. They face foreign exchange risk in cases of imported purchases of equipment and building equipment, but these are not material, so the effect of foreign currency risk, such as the U.S. dollar, European euro and Singapore dollar, is not significant. The Company and Subsidiaries do not have any formal hedging policy for foreign exchange exposure. If needed, hedging will be obtained to reduce risk to foreign currency risk. Transactions in foreign currencies other than in connection with regular operations is maintained at an acceptable minimum level.