Liability for Future Policy Benefits

PT SINAR MAS MULTIARTHA Tbk AND ITS SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2011 and 2010 and For the Years then Ended - 47 - af. Earnings Per Share Earnings per share are computed by dividing net income by the weighted average number of shares outstanding during the year. Diluted earnings per share are computed by dividing net income by the weighted average number of shares outstanding during the year as adjusted for the effects of all potentially dilutive ordinary shares. ag. Segment Information Segment information is prepared using the accounting policies adopted for preparing and presenting the consolidated financial statements. Effective January 1, 2011, PSAK No. 5 Revised 2009 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the chief operating decision maker in order to allocate resources to the segments and to assess their performances. In contrast, the predecessor standard required the Group to identify two sets of segments business and geographical, using a risks and returns approach. An operating segment is a component of an entity: a. That engages in business activities which it may earn revenue and incur expenses including revenue and expenses relating to the transcation with other components of the same entity; b. Whose operating results are reviewed regularly by the entity’s chief operating decision maker to make decision about resources to be allocated to the segments and assess its performance; and c. For which discrete financial information is available. Information reported to the chief operating decision maker for the purpose of resources allocation and assessment of its performance is more specifically focused on the category of each product, which is similar to the business segment information reported in the prior period. ah. Provisions Provisions are recognized when the Group has present obligation legal or constructive as a result of a past event, it is proable that the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognized as a provision is the best estimate of the consideration required to settle the obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows. When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognized as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably. PT SINAR MAS MULTIARTHA Tbk AND ITS SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2011 and 2010 and For the Years then Ended - 48 - ai. Events after the Reporting Period Post year-end events that provide additional information about the Group’s financial position at the date of the consolidated statement of financial position adjusting events, if any, are reflected in the consolidated financial statements. Post year-end events that are not adjusting events are disclosed in the notes to consolidated financial statements when material.

3. Management Use of Estimates, Judgments and Assumptions

In the application of the Group’s accounting policies, which are described in Note 2 to the consolidated financial statements, managements is required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and assumptions are based on historical experience and other factors that are considered to be relevant. Management believes that the following represent a summary of the significant estimates, judgments and assumptions made that affected certain reported amounts of and disclosures in the consolidated financial statements: Judgments The following judgments are made by management in the process of applying the Group’s accounting policies that have the most significant effects on the amounts recognized in the consolidated financial statements: a. Classification of Financial Assets and Financial Liabilities The Group determines the classifications of certain assets and liabilities as financial assets and financial liabilities by judging if they meet the definition set forth in PSAK No. 55 Revised 2006. Accordingly, the financial assets and financial liabilities are accounted for in accordance with the Group’s accounting policies disclosed in Note 2i. b. Financial Assets Not Quoted in Active Market The Group classifies financial assets by evaluating, among others, whether the asset is quoted or not in an active market. Included in the evaluation on whether a financial asset is quoted in an active market is the determination on whether quoted prices are readily and regularly available, and whether those prices represent actual and regularly occurring market transactions on an arm’s length basis. c. Allowance for Impairment of Financial Instruments The Group assesses specifically at each financial position date whether there is objective evidence that a financial asset is impaired uncollectible. The level of allowance is based on past collection experience and other factors that may affect collectability such as the probability of insolvency or significant financial difficulties of the debtor or significant delay in payments. PT SINAR MAS MULTIARTHA Tbk AND ITS SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2011 and 2010 and For the Years then Ended - 49 - If there is an objective evidence of impairment, timing and collectible amounts are estimated based on historical loss data. Provision for doubtful accounts is provided on accounts specifically identified as impaired. Allowance is based on historical collection performance and other factors which might influence collectability such as liquidity matter and other financial difficulties suffered by debtors or significant delay in payment. Loans and receivables written off are based on management’s decisions that the financial assets are uncollectible or cannot be realized in whatsoever actions will be taken. Evaluation of receivables to determine the total allowance to be provided, is performed periodically during the year. Therefore, the timing and amount of provision for doubtful accounts recorded at each period might differ based on the judgments and estimates that have been used. The carrying value of the Group’s loans and receivables as of December 31, 2011 and 2010 are as follows: 2011 2010 Rp 000,000 Rp 000,000 Cash and cash equivalents 8,523,794 1,980,945 Securities purchased under agreements to resell 39,627 107,141 Short-term investment - placement with other banks 561,609 706,189 Short-term investment - time deposits 17,341 33,543 Net investment in finance lease 126,256 163,869 Consumer financing receivables 624,198 376,961 Factoring receivables 424,863 187,558 Short-term investment - export bill receivables 824,597 - Segregated funds net assets unit link - time deposits - 984,135 Segregated funds net assets unit link - cash in banks 39,859 35,927 Segregated funds net assets unit link - investment receivables 2,090 2,271 Segregated funds net assets sharia - time deposits 7,500 3,000 Segregated funds net assets sharia - cash in banks 21,351 4,599 Segregated funds net assets sharia - investment receivables 690 504 Securities agent receivables 245,369 165,481 Other receivables - net 762,746 542,356 Loans - net 10,135,442 6,934,157 Investment in shares 244,231 337,182 Other assets 21,746 22,496 Total 22,623,309 12,588,314 d. Lease Commitments Group as lessee The Group has entered into various lease agreements and has determined that these are operating lease since the Group does not bear substantially all the significant risks and rewards of ownership of the related assets. Group as lessor The Group has entered into various lease agreements and has determined that these are operating lease since the Group bears substantially all the significant risks and rewards of ownership of the related assets. PT SINAR MAS MULTIARTHA Tbk AND ITS SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2011 and 2010 and For the Years then Ended - 50 - Estimates and Assumptions The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial period are disclosed below. The Group based its assumptions and estimates on parameters available when the consolidated financial statements were prepared. Existing circumstances and assumptions about future developments may change due to market changes on circumstances arising beyond the control of the Group. Such changes are reflected in the assumptions when they occur: a. Fair Value of Financial Assets and Financial Liabilities Indonesian Financial Accounting Standards require measurement of certain financial assets and liabilities at fair values, and the disclosure requires the use of estimates. Significant component of fair value measurement is determined based on objective evidence derived from diversification i.e. foreign exchange, interest rate, while timing and amount of changes in fair value might differ due to different valuation method used. The fair value of financial assets and financial liabilities are set out in Note 55. b. Estimated Useful Lives of Investment Properties, Property and Equipment, Assets for Lease, and Property Under Build, Operate and Transfer Agreement The useful lives of each of the item of the Group’ investment properties, property and equipment, assets for lease and property under build, operate and transfer agreement are estimated based on the period over which the asset is expected to be available for use. Such estimation is based on a collective assessment of similar business, internal technical evaluation and experience with similar assets. The estimated useful life of each asset is reviewed periodically and updated if expectations differ from previous estimates due to physical wear and tear, technical or commercial obsolescence and legal or other limits on the use of the asset. It is possible, however, that future results of operations could be materially affected by changes in the amounts and timing of recorded expenses brought about by changes in the factors mentioned above. A reduction in the estimated useful life of any item of investment properties, property and equipment, property under build, operate and transfer agreement and assets for lease would increase the recorded depreciation and decrease the carrying values of these assets. There is no change in the estimated useful lives of investment properties, property and equipment, property under build, operate and transfer agreement and assets for lease during the period. The carrying value of these assets are dislosed in Notes 18, 19, 20, and 21. c. Valuation of Insurance Contract Liabilities Life Insurance and Non-Life Insurance Liability for Future Policy Benefits The reserve was calculated based on certain data using the prospective net premium pure methods andor zilmer modification with maximum of 30 for the first year costs of sum insured, using the actuarial assumptions that were reported to the Minister of Finance, the assumptions used related to mortality and interest rate. PT SINAR MAS MULTIARTHA Tbk AND ITS SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2011 and 2010 and For the Years then Ended - 51 - Estimated Own Retention Claim and Unearned Premium The Group record estimated claims incurred but not reported and unearned premiums based on specific calculation method that is generally aplied in Indonesia. Estimated claims incurred but not reported is part of estimated own retention claims. The assumption underlying the method for claims incurred but not reported are past claim experience. While the calculation method for unearned premiums is based on the percentage determined per Ministry of Finance of Republic of Indonesia Decision Letter No. 424KMK.062003. The carrying values of liability for future policy benefits, estimated own retention claim and unearned premium are disclosed in Notes 28 and 29. d. Post-employment Benefits The determination of the obligation and post-employment benefits is dependent on the selection of certain assumptions used by actuary in calculating such amounts. Those assumptions are described in Note 50 and include, among others, discount rate and rate of salary increase. Actual results that differ from the Group’ assumptions are accumulated and amortized over future periods and therefore, generally affect the recognized expense and recorded obligation in such future periods. While it is believed that the Group’ assumptions are reasonable and appropriate, significant differences in actual experience or significant changes in assumptions may materially affect the amount of Group’ defined benefit post- employment reserve. The carrying value of defined-benefit post-employment reserve is disclosed in Note 50. e. Deferred Tax Assets Deferred tax assets are recognized for all temporary differences between the financial statement’s carrying amounts of existing assets and liabilities and their respective tax bases to the extent that it is probable that taxable profit will be available against which the temporary differences can be utilized. Significant management estimates are required to determine the amount of deferred tax assets that can be recognized, based upon the likely timing and the level of future taxable profits together with future tax planning strategies. The carrying value of deferred tax assets is disclosed in Note 52. f. Impairment of Non-Financial Assets Impairment review is performed when certain impairment indicators are present. Determining the fair value of assets requires the estimation of cash flows expected to be generated from the continued use and ultimate disposition of such assets. Any significant changes in the assumptions used in determining the fair value may materially affect the assessment of recoverable values and any resulting impairment loss could have a material impact on results of operations. The carrying value of these assets in form of Investment in shares at acquisition cost investment property, property and equipment, poperty under build, operate, and transfer, assets for lease and foreclosed properties are as disclosed in Notes 17, 18, 19, 20, 21, and 22. PT SINAR MAS MULTIARTHA Tbk AND ITS SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2011 and 2010 and For the Years then Ended - 52 -

4. Cash and Cash Equivalents

This account consists of: 2011 2010 Rp 000,000 Rp 000,000 Cash on hand Rupiah 414,168 211,139 Foreign currencies Note 59 54,300 59,484 Total - Cash on hand 468,468 270,623 Cash in banks Related party Note 54 Foreign currencies Note 59 Bank International Ningbo, China 22,742 277 Third parties Rupiah PT Bank Central Asia Tbk 32,091 15,922 PT Bank Internasional Indonesia Tbk 7,665 7,752 PT Bank Negara Indonesia Persero Tbk 2,003 707 PT Bank CIMB Niaga Tbk 1,337 1,578 PT Bank Mandiri Persero Tbk 3,142 2,352 PT Bank Danamon Indonesia Tbk 246 10,120 PT BPR Modern Express - 1,414 PT BPR Irian Sentosa Pusat - 1,041 Others below Rp 1,000 million each 7,304 7,743 Total 53,788 48,629 Foreign currencies Note 59 PT Bank Mandiri Persero Tbk 19,338 21,662 Wells Fargo Bank, N.A, England 15,522 2,464 PT Bank Central Asia Tbk 14,731 33,471 United Overseas Bank, Singapore 12,947 4,730 OCBC, Singapore 7,035 3,153 Deutsche Bank Trust Company Americas, USA 4,608 - Bank of China, China 4,103 - Sumitomo Mitsui Banking Corporation, Japan 3,538 423 Deutsche Bank AG, Germany 3,193 - PT Bank Internasional Indonesia Tbk 2,653 4,833 Standard Chartered Bank, USA 1,723 1,705 Wells Fargo Bank, N.A, USA 1,433 1,402 DBS Bank, Hongkong 1,250 532 PT Bank CIMB Niaga Tbk 575 1,756 UBS AG, Switzerland 9 1,817 Others below Rp 1,000 million each 3,671 2,041 Total 96,329 79,989 Total - Cash in banks 172,859 128,895