Subsidiaries Companies Basis of Preparation of Consolidated Financial Statements

GENERAL continued

c. Subsidiaries Companies

The consolidated Subsidiaries and the percentage of equity held as of December 31, 2011 are as follows: PT Asiatex Garmindo PT Eratex Hongkong Ltd PT Eratex Garment Jakarta Hongkong Jakarta Integrated garment manufacturing General trading Integrated garment manufacturing 95.15 100 99 1999 2005 Pre-operating Subsidiaries Domicile Nature of business Percentage of ownership Year commencing of operation 01 PT Asiatex Garmindo ASA Partners Holdings Ltd PT Eratex Hongkong Ltd PT Eratex Garment Jakarta British Virgin Islands Hongkong Jakarta Integrated garment manufacturing Sub-holding company General trading Integrated garment manufacturing 93.55 100 100 99 1999 2000 2005 Pre-operating The consolidated Subsidiaries and the percentage of December 31, 2010 as follows: Subsidiaries Domicile Nature of business Percentage of ownership Year commencing of operation SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The significant accounting principles applied consistently in the preparation of the consolidated financial statements for the years ended December 31, 2011 and 2010 are as follows:

a. Basis of Preparation of Consolidated Financial Statements

The consolidated financial statements have been prepared in accordance with Indonesian Financial Accounting Standards in Indonesia “SAK” comprising of the Statements of Financial Accounting Standards PSAK and Interpretation Financial Accounting Standards ISAK issued by the Board of Financial Accounting Standards of the Indonesian Institute of Accountants and rules established by the Capital Market Supervisory Agency BAPEPAM-LK. As disclosed further in the relevant succeeding notes, several amended and published accounting standards were adopted effective January 1, 2011. Basic preparation of consolidated financial statements, except for the consolidated statement of cash flow is the accrual basis. The consolidated financial statements, presented in thousands of Rupiah and the translation in thousands of United States dollars, unless otherwise stated, have been prepared on the accrual basis using the historical costs, except for certain accounts which are measured on the basis described in accounting policies of the related accounts. The consolidated statements of cash flows have been prepared using the direct method in accordance with the decision letter No. Kep-06PM2000 dated March 13, 2000 of the Capital Market Supervisory Board.

b. Principles of Consolidation