PERUSAHAAN PERSEROAN PERSERO PT TELEKOMUNIKASI INDONESIA Tbk AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As of December 31, 2013 and for the Year Then Ended
Figures in tables are expressed in billions of rupiah, unless otherwise stated
113
44. FINANCIAL RISK MANAGEMENT continued
1. Financial risk management continued a. Foreign exchange risk continued
The following table presents the Company and subsidiaries’ financial assets and financial liabilities exposure to foreign currency risk:
2013 2012
U.S. dollar Japanese yen
U.S. dollar Japanese yen
in billions in billions
in billions in billions
Financial assets 0.48
0.00 0.51
0.00 Financial liabilities
0.48 8.47
0.61 9.25
Net exposure 0.00
8.47 0.10
9.25
Sensitivity analysis
A strengthening of the U.S. dollar and Japanese yen, as indicated below, against the rupiah at December 31, 2013 would have decreased equity and profit or loss by the amounts shown
below. This analysis is based on foreign currency exchange rate variances that the Company and subsidiaries considered to be reasonably possible at the reporting date. The analysis
assumes that all other variables, in particular interest rates, remain constant.
Equityprofit loss December 31, 2013
U.S. dollar 1 strengthening Japanese yen 5 strengthening
48 A weakening of the U.S. dollar and Japanese yen against the rupiah at December 31, 2013
would have had an equal but opposite effect on the above currencies to the amounts shown above, on the basis that all other variables remain constant.
b. Market price risk
The Company and subsidiaries are exposed to changes in debt and equity market prices related to available-for-sale investments carried at fair value. Gains and losses arising from
changes in the fair value of available-for-sale investments are recognized in equity. The performance of the Company and subsidiaries’ available-for-sale investments is
monitored periodically, together with a regular assessment of their relevance to the Company and subsidiaries’ long-term strategic plans.
As of December 31, 2013, management considered the price risk for the Company’s available-for-sale investments to be immaterial in terms of the possible impact on profit or loss
and total equity from a reasonably possible change in fair value.
c. Interest rate risk
Interest rate fluctuation is monitored to minimize any negative impact to financial position. Borrowings at variable interest rates expose the Company and subsidiaries to interest rate
risk Notes 17, 18, 19, 20 and 21. To measure market risk pertaining to fluctuations in interest rates, the Company and subsidiaries primarily use interest margin and maturity profile of the
financial assets and liabilities based on changing schedule of the interest rate.
PERUSAHAAN PERSEROAN PERSERO PT TELEKOMUNIKASI INDONESIA Tbk AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As of December 31, 2013 and for the Year Then Ended
Figures in tables are expressed in billions of rupiah, unless otherwise stated
114
44. FINANCIAL RISK MANAGEMENT continued
1. Financial risk management continued c.
Interest rate risk continued At reporting date, the interest rate profile of the Company and subsidiaries’ interest-bearing
borrowings was as follows:
2013 2012
Fixed rate borrowings 9,591
7,025 Variable rate borrowings
10,665 12,250
Sensitivity analysis for variable rate borrowings
At December 31, 2013, a decrease increase by 25 basis points in interest rates of variable rate borrowings would have increased decreased equity and profit or loss by Rp27 billion,
respectively. This analysis assumes that all other variables, in particular foreign currency rates, remain constant.
d. Credit risk The following table presents the maximum exposure to credit risk of the Company and
subsidiaries’ financial assets:
2013 2012
Cash and cash equivalents 14,696
13,118 Other current financial assets
6,872 4,338
Trade and other receivables, net 6,421
5,409 Long-term investments
21 21
Advances and other non-current assets 685
614
Total 28,695
23,500
The Company and subsidiaries are exposed to credit risk primarily from trade receivables and other receivables. The credit risk is managed by continuous monitoring of outstanding
balances and collection.
Trade and other receivables do not have any major concentration risk whereas no customers. receivables balance exceeds 2 of trade receivables at December 31, 2013.
Management is confident in its ability to continue to control and sustain minimal exposure to credit risk given that the Company and subsidiaries have provided sufficient provision for
impairment of receivables to cover incurred loss arising from uncollectible receivables based on existing historical data on credit losses.
e. Liquidity risk Liquidity risk arises in situations where the Company and subsidiaries have difficulties in
fulfilling financial liabilities when they become due. Prudent liquidity risk management implies maintaining sufficient cash in order to meet the
Company and subsidiaries’ financial obligations. The Company and subsidiaries continuously perform an analysis to monitor financial position ratios, such as liquidity ratios, and debt equity
ratios, against debt covenant requirements.
