PERUSAHAAN PERSEROAN PERSERO PT TELEKOMUNIKASI INDONESIA Tbk AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As of September 30, 2014 and for the Nine months Period Then Ended unaudited
Figures in tables are expressed in billions of rupiah, unless otherwise stated
117
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:
September 30, 2014 December 31, 2013
U.S. dollar Japanese yen U.S. dollar Japanese yen in billions in billions in billions in billions
Financial assets 0.48
0.01 0.48
0.00 Financial liabilities
0.63 8.17
0.48 8.47
Net exposure 0.15
8.16 0.00
8.47
Sensitivity analysis
A strengthening of the U.S.dollar and Japanese yen, as indicated below, against the rupiah at September 30, 2014 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.
Equityloss September 30, 2014
U.S. dollar 1 strengthening 28
Japanese yen 5 strengthening 45
A weakening of the U.S.dollar and Japanese yen against the rupiah at September 30, 2014 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 andsubsidiaries’ 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 September 30, 2014, 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 September 30, 2014 and for the Nine months Period Then Ended unaudited
Figures in tables are expressed in billions of rupiah, unless otherwise stated
118
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:
September 30, December 31, 2014
2013
Fixed rate borrowings 9,948
9,591 Variable rate borrowings
14,942 10,665
Sensitivity analysis for variable rate borrowings
At September 30, 2014, a decrease increase by 25 basis points in interest rates of variable rate borrowings would have increased decreased equity and profit or loss by Rp37 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:
September 30, December 31, 2014
2013
Cash and cash equivalents 17,834
14,696 Other current financial assets
1,584 6,872
Trade and other receivables, net 8,060
6,421 Long-term investments
21 21
Advances and other non-current assets 641
685
Total 28,140
28,695
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 1 of trade receivables at September 30, 2014. 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 andsubsidiaries continuously
perform an analysis to monitor financial position ratios, such as liquidity ratios, and debt equity ratios, against debt covenant requirements.
