Provision for employee benefits continued

152 Adaro Energy Annual Report 2009 From Us to Y ou Running Adaro Management Report Owning Adaro Governing Adaro Financial Report Contact Us Corporate Social Responsibility Adaro in Summary www.adaro.com PT ADARO ENERGY Tbk AND SUBSIDIARIES Schedule 514 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 DECEMBER 2009 AND 2008 Expressed in million Rupiah, unless otherwise stated

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued

u. Segment reporting continued

The Group segments its financial reporting as follows: i business segments primary, where the Group’s business activities are classified into coal mining and trading, mining services and others coal handling and barging services, power plant services, channel dredg ing and maintenance and building management; and ii geographical segments secondary in which sales are classified based on target market areas.

v. Share issuance costs

Incremental costs directly attributable to the issuance of new shares are shown in equity as a deduction, net of tax, from the proceeds.

w. Difference in value from restructuring transactions of entities under common control

Restructuring transactions among entities under common control are accounted for using the pooling-of-interests method. The difference between the transfer price and the book value of each restructuring transaction among entities under common control is recorded under the account “difference in value from restructuring transactions of entities under common control” in the equity section of the consolidated balance sheet. The balance of the account “difference in value from restructuring transactions of entities under common control” can change when: i there are reciprocal transactions between entities under common control; ii there is quasi-reorganisation; iii under common control status is lost between transacting entities; or iv there is a transfer of the assets, liabilities, share or other ownership instruments that has caused the difference from restructuring transactions of entities under common to another party that is not under common control. When changes in the balance of this account result from point i, the existing balance is netted-off with the new transaction, hence creating a new balance for the account. When changes in the balance of the account come from point ii, the balance is used to eliminate or add to the negative retained earnings balance. When changes in the balance of the account come from points iii or iv, the balance is recognised as realised gain or loss.

x. Dividends

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

y. Use of estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in Indonesia requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Although these estimates are based on management’s best knowledge of current events and activities, actual results could differ from those estimates.