PT BANK MANDIRI PERSERO TBK. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2004 and 2003, and April 30, 2003 Expressed in millions of Rupiah, unless otherwise stated
159
60. IMPLEMENTATION OF QUASI-REORGANIZATION continued
Before Quasi- Reorganization
After Quasi- Reorganization
SHAREHOLDER’S EQUITY
Share capital 4,251,000
4,251,000 Additional paid-in capitalagio
173,550,319 10,675,418
Differences arising from translation of foreign currency financial statements
48,498 48,498
Unrealized gains on available-for-sale securities and Government Recapitalization Bonds
1,299,676 1,299,676
Premises and equipment revaluation increment 9,788
9,788 Retained earningsaccumulated losses:
Appropriated 3,155,386
1,000,000 Unappropriated
165,030,287 -
161,874,901 1,000,000
Total Shareholder’s Equity 17,284,380
17,284,380 TOTAL LIABILITIES AND SHAREHOLDER’S EQUITY
261,285,909 261,285,909
At the date of the quasi-reorganization, the Bank did not eliminate appropriated retained earnings amounting to Rp1,000,000 because the Minister of State-Owned Enterprises, as the Bank’s
shareholder, through Decision Letter No. Kep-154M-MBU2002 dated October 29, 2002 approved an increase in the Bank’s issued and fully paid-up capital of Rp1,000,000. This increase would be
effected through the conversion of the balance of appropriated retained earnings to issued and fully paid-up capital. In addition, based on deed No. 2 of the Shareholder’s Meeting regarding Changes in
the Articles of Association dated June 1, 2003, prepared in front of Aulia Taufani, SH, as a replacement of Sutjipto, S.H., notary in Jakarta, and Government Regulation No. 26 year 2003 dated
May 29, 2003 which included the approval for the increase of the said issued and fully paid-up capital, Bank Mandiri has recorded the transfer of the balance of appropriated retained earnings of
Rp1,000,000 to issued and fully paid-up capital.
61. SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN ACCOUNTING PRINCIPLES FOLLOWED BY THE BANK “INDONESIAN GAAP” AND INTERNATIONAL FINANCIAL REPORTING
STANDARDS “IFRS” The accompanying consolidated financial statements have been prepared in accordance with
Indonesian GAAP, which varies in certain significant respects from IFRS. The significant differences relate to the items in the following paragraphs:
a. Allowance for Possible Losses on Earning Assets Under Indonesian GAAP, the Bank records allowances for possible losses on earning assets using
general and specific allowances based on management’s estimates and using the guidelines prescribed by Bank Indonesia BI.
PT BANK MANDIRI PERSERO TBK. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2004 and 2003, and April 30, 2003 Expressed in millions of Rupiah, unless otherwise stated
160
61. SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN ACCOUNTING PRINCIPLES FOLLOWED BY THE BANK “INDONESIAN GAAP” AND INTERNATIONAL FINANCIAL REPORTING
STANDARDS “IFRS” continued a. Allowance for Possible Losses on Earning Assets continued
Under IAS No. 39 - “Financial Instruments: Recognition and Measurement”, the Bank calculates allowances for possible losses on earning assets based on the difference between the carrying
amount of an impaired earning asset and the present value of expected future cash flows discounted at the earning assets original effective interest rate. An earning asset is considered
impaired when it becomes probable that the Bank will be unable to collect all amounts due according to contractual terms. In addition, the Bank also recognizes allowance for possible losses
on unimpaired loans in accordance with BI guidelines on minimum provisions.
b. Estimated Losses on Commitments and Contingencies Under Indonesian GAAP, the Bank records estimated losses on commitments and contingencies
using general and specific allowances based on management’s estimates and using the guidelines prescribed by BI.
Under IFRS, the Bank does not recognize certain of the estimated losses on commitments and contingencies in accordance with the provisions of IAS No. 37 - “Estimated Liabilities, Contingent
Liabilities and Contingent Assets”.
c. Derivative Instruments Under Indonesian GAAP, the Bank applies SFAS Statements of Financial Accounting Standard
No. 55 - “Accounting for Derivative Instruments and Hedging Activities” which requires that derivative instruments be measured and recognized at their fair values. Prior to October 23, 2003,
the fair value of the foreign currency forward transactions has been determined based on Reuters spot rates at the reporting dates in accordance with the reporting guidelines prescribed by Bank
Indonesia. On October 23, 2003, Bank Indonesia issued a letter to amend the guidelines and waived the requirement to use spot rates of exchange to revalue foreign currency forward
transactions.
Under IAS No. 39 - “Financial Instruments: Recognition and Measurement”, the Bank calculates the fair values of foreign currency forward derivative instruments based on forward rates of
exchange at the balance sheet date. The Bank classifies Government Bonds Note 7 as originated loans under IFRS and therefore no
separate measurement and recognition is required for indexation derivatives that are embedded in the hedge bonds. Originated loans are characterized by assets for which the Bank provided the
original funding and are not determined by the form of the instrument that results from the loan origination.
d. Employee Benefits Under Indonesian GAAP, prior to December 31, 2004, the Bank recognized a provision for
employee entitlements under Labor Law No. 132003 equal to the present value of the obligation as determined by actuarial reports in accordance with SFAS No. 57 - “Estimated Liabilities,
Contingent Liabilities and Contingent Assets”. In October 2004, the Indonesian Institute of Accountants IAI published revised SFAS No 24 - “Employee Benefits” which aligned the
accounting treatment for employee benefits with IAS No. 19 - “Employee Benefits”. Therefore, upon the adoption of this revised standard on December 31, 2004, the accounting treatment for
employee benefits is the same under IFRS and Indonesian GAAP.
