PT INDOCEMENT TUNGGAL PRAKARSA Tbk. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2004 and 2003 Expressed in rupiah, unless otherwise stated
48
22. SIGNIFICANT AGREEMENTS, COMMITMENTS AND CONTINGENCIES continued
m. The Company is exposed to market risks, primarily changes in currency exchange rates, and uses derivative instruments to hedge the risks in such exposures in connection with its risk management
activities. The Company does not hold or issue derivative instruments for trading purposes. As of December 31, 2004, the Company has outstanding forward exchange contracts with Standard
Chartered Bank, Jakarta Branch, JPMorgan Chase Bank , N.A., Jakarta Branch JPMorgan and ABN-AMRO Bank N.V., Jakarta Branch, with notional amounts aggregating to JP¥1,975 million and
US25 million which will mature in various dates in 2005, at fixed exchange rates ranging from Rp85.43 to Rp89.24 to JP¥1 and Rp8,990 to Rp9,477 to US1. In addition, the Company also has
outstanding option contracts with JPMorgan, with notional amounts aggregating to JP¥105 million and US1.5 million, whereby JPMorgan and the Company have the right to “call and put” at the
exchange rates of Rp8,500 and Rp9,800 to US1 and Rp79.4 and Rp90.29 to JP¥1 see Note 26c. As of December 31, 2004, the Company recognized the net receivables on the forward and option
contracts at market value of Rp11,541,667,148, which is presented as part of “Other Receivables from Third Parties” in the 2004 consolidated balance sheet .
The gain arising from the derivative transactions amounted to Rp18,812,439,398 and is recorded as part of “Foreign Exchange Gain Loss - Net” in the 2004 consolidated statement of income.
23. LITIGATION
On February 24, 2004, Ati binti Sadim dkk “Plaintiffs”, who represented themselves as the heirs of the owners of land with an area of 2,665,044 square meters located in Cipulus and Pasir Kores, Lulut
Village - West Java, filed a lawsuit against the Company for alleged unfair practices employed by the Company in acquiring the aforementioned land, specifically for the following reasons:
•
The land price is too low and inappropriate.
•
The purchase price was determined only by the Company.
•
The Company did not involve the Plaintiffs in the land measurement process.
• The Company has not paid the price for land with an area of approximately 934,111 square meters
which it has taken possession. The total loss being claimed by the Plaintiffs due to their inability to use the land for a 30-year period
amounts to Rp41,103,585,000. Based on the decision of the District Court of Cibinong the “Court” dated August 10, 2004, the Court
rejected all of the above claims. The Plaintiffs have submitted an appeal to the High Court of West Java and as of the independent auditors’ report date, the High Court of West Java has not yet rendered its
final decision. Management believes that the outcome of the lawsuit will be in favor of the Company since the claims have no basis and are invalid.
24. ECONOMIC CONDITIONS The operations of the Company and its Subsidiaries may be affected by future economic conditions in
Indonesia that may contribute to volatility in currency values and negatively impact economic growth. Economic improvements and sustained recovery are dependent upon several factors such as fiscal and
monetary actions being undertaken by the Government and others, actions that are beyond the control of the Company and its Subsidiaries.
PT INDOCEMENT TUNGGAL PRAKARSA Tbk. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 2004 and 2003 Expressed in rupiah, unless otherwise stated
49
25. MONETARY ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES
