23
Company is continually evaluating its estimates based on historical experience and on various assumptions including expectations of future events that are believed to be reasonable. The actual results may differ from these estimates. The
estimates and assumptions that have a significant effect on the carrying amount of assets and liabilities are discussed below.
Impairment of Non-Financial Assets
The Company annually tests whether goodwill has suffered any impairment. Fixed assets and other non-current assets, excluding goodwill, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying
amount of the asset exceeds its recoverable amount. The recoverable amount of an asset or cash generating unit is determined based on the higher of its fair value less costs to sell and its value in use, calculated on the basis of
managements assumptions and estimates.
Depreciation of Fixed Assets
The Company determines the estimated useful lives and related depreciation charges for fixed assets. The Company will revise the depreciation charge where useful lives are different from those previously estimated, or it will write off or
write down technically for obsolete or non-strategic assets that have been abandoned or sold.
Employee Benefits Obligation
The present value of the employee benefits obligation depends on a number of factors that are determined on a number of actuarial assumptions. The assumptions used in determining the net cost for pensions include the expected long-term
rate of return on investment of the defined contribution pension fund and the relevant discount rate. Any changes in these assumptions will impact the carrying amount of employee benefits obligations.
Other key assumptions for employee benefits obligations are based in part on current market conditions.
Income Taxes
Income tax expense is comprised of current and deferred income tax. Current income tax charge is calculated on the basis of the tax law enacted or substantially enacted at the report date.
Management periodically evaluates the position taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation.
Deferred income tax is determined using tax rates based on laws that have been enacted or substantially enacted by the reporting date and are expected to apply when the related deferred tax asset is recognised or the deferred tax
liabilities is settled.
Changes in Accounting Policies
Effective from January 1, 2012 until June 30, 2015, the Company adopted new and revised IFAS that are mandatory for application. The Companys accounting policies have been changed as required by IFAS in accordance with the
transitional provisions in the respective accounting standards.
B. PRINCIPAL COMPONENTS OF THE COMPANYS CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Net Revenues The Company derives substantially all of its revenues from sales of cigarettes. Cigarette sales form one single operating
segment, which consists of three product categories: SKM, SKT and SPM. Net revenues include excise tax attributable on cigarettes sold, net of returns and VAT on SKM and SKT. The Company derives 98.5 of its net revenues from
domestic cigarette sales in Indonesia. Other net revenues includes revenues from cigarette exports as well as revenues from the Companys non-tobacco operations.
The following table sets forth information about the Companys net revenues and the percentage breakdown of its net revenues by product categories for the yearsperiods indicated.
Keterangan Periode 6 enam bulan yang
berakhir pada tanggal 30 Juni Tahun yang berakhir pada tanggal 31 Desember
2015 2014
2014 2013
2012 Rp
Rp Rp
Rp Rp
SKT 9,098.3
20.8 9,294.5
23.8 18,645.2
23.1 21,993.8
29.3 23,783.9
35.7 SKM
27,456.9 62.8
23,103.5 59.1
48,722.0 60.4
40,838.9 54.4
33,150.3 49.7
SPM 6,473.0
14.8 6,011.2
15.3 12,149.4
15.1 10,997.7
14.7 8,984.4
13.5 Lainnya termasuk
ekspor 714.4
1.6 684.3
1.8 1,173.5
1.4 1,194.8
1.6 707.5
1.1
24 Jumlah
43,742.6 100.0
39,093.5 100.0
80,690.1 100.0
75,025.2 100.0
66,626.1 100.0
in billion Rupiah and percentage from total
Description For the 6 six months period ended
June 30 For the year ended December 31
2015 2014
2014 2013
2012 Rp
Rp Rp
Rp Rp
SKT 9,098.3
20.8 9,294.5
23.8 18,645.2
23.1 21,993.8
29.3 23,783.9
35.7 SKM
27,456.9 62.8
23,103.5 59.1
48,722.0 60.4
40,838.9 54.4
33,150.3 49.7
SPM 6,473.0
14.8 6,011.2
15.3 12,149.4
15.1 10,997.7
14.7 8,984.4
13.5 Other incluing export
714.4 1.6
684.3 1.8
1,173.5 1.4
1,194.8 1.6
707.5 1.1
Total 43,742.6
100.0 39,093.5
100.0 80,690.1
100.0 75,025.2
100.0 66,626.1
100.0
The following table shows a breakdown of the Companys sales volume and product categories for the yearsperiods indicated.
in million cigrattes
Description For the 6 six months period ended
June 30 For the year ended December 31
2015 2014
2014 2013
2012 Domestic Sales
SKT 11,264
12,568 24,619
31,926 36,611
SKM 36,143
33,378 68,969
63,268 56,588
SPM 7,936
8,188 16,106
16,138 14,519
Total Domestic Sales of Cigarette
55,343 54,134
109,694 111,332
107,718
Export
1
868 530
1,193 933
1,164
Total 56,211
54,664 110,887
112,265 108,882
Note: 1
The Company exports kretek cigarettes, cigarillos andor roll-your-own cigarettes to eleven countries, primarily in South-east Asia.
Cost of Goods Sold Cost of goods sold primarily represents the costs of excise tax stamps, raw materials and salaries, wages and employee
benefits and other overhead costs. The cost of excise tax stamps is the most significant component of the Companys cost of goods sold.
Gross Profit and Gross Profit Margin Gross profit is the Companys net revenues minus its cost of goods sold. Gross profit margin is calculated as gross profit
divided by the Companys net revenues. Selling Expenses
Selling expenses consist primarily of advertising and promotion expenses, salaries, wages and employee benefits, and transportation and distribution expenses.
General and Administrative Expenses General and administrative expenses consist primarily of salaries, wages and employee benefits, and management
services in relation to services primarily provided by Philip Morris International Management SA. Other Income and Expenses
Other income and expenses consist primarily of income from rent and royalties, gain or loss on sales of fixed assets and foreign exchange gain or loss, as well as one-off expenses.
Finance Income Finance income consists primarily of interest income generated from cash in banks and receivables from affiliated
parties. Finance Costs
Financing costs consist of interest expenses on short-term loans with affiliated parties, finance lease liabilities and a bank loan, as well as foreign currency swap transactions expenses.
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Share of Net Results of Associate Share of net results of associate consists of the Companys 49 interest in Vinataba-Philip Morris Limited.
Profit Before Income Tax Profit before income tax is the Companys profit before corporate income tax.
Income Tax Expense Income tax expense consists of current income tax expense and deferred income tax benefitsexpenses.
Cumulative Translation Adjustments Cumulative translation adjustments summarizes the gainslosses resulting from the changes in foreign exchange rates
over the years of the financial assets and financial liabilities of foreign subsidiaries. Total Comprehensive Income for the Year
Total comprehensive income for the yearperiod consists of profit for the year as well as cumulative translation adjustments and actuarial gain or loss from post-employment benefit net of tax.
Results of Operation
in billion Rupiah Description
For 6 six months period ended June 30
For the year ended December 31 2015
2014 2014
2013 2012
Consolidated Statements of Profit or Loss and Other Comprehensive
Income Net revenues
43,742.6 39,093.5
80,690.1 75,025.2
66,626.1 Cost of goods sold
33,482.3 29,241.1
60,190.0 54,953.9
48,118.8 Gross profit
10,260.3 9,852.4
20,500.1 20,071.3
18,507.3 Selling Expenses
2,753.1 2,360.1
5,295.4 4,027.6
3,732.3 Geneneral and administrative expenses
765.3 691.7
1,399.3 1,443.5
1,424.5 Other income
103.3 61.6
151.8 237.5
59.4 Other expenses
124.4 134.1
263.1 317.2
114.5 Finance income
25.3 31.5
57.5 48.9
120.0 Finance costs
52.4 19.0
47.4 69.1
34.7 Share of net results of associate
7.5 2.7
14.1 9.4
2.6 Profit before income tax
6,701.2 6,743.3
13,718.3 14,509.7
13,383.3 Income tax expense
1,689.4 1,712.0
3,537.2 3,691.2
3,438.0 Profit for the year period
5,011.8 5,031.3
10,181.1 10,818.5
9,945.3 LabaRugi Komprehensif Lain
Items that will not be reclassified to profit or loss
Actuarial loss from post-employment benefit
142.4 162.6
221.4 12.5
227.7 Related income tax expense
35.4 40.6
55.2 3.1
56.9 107.0
122.0 166.2
9.4 170.8
Items that may be subsequently reclassified to profit or loss
Cumulative translation adjustments 0.1
0.3 0.1
1.1 30.9
Other comprehensive losses, net of tax 106.9
121.7 166.1
10.5 139.9
Total comprehensive income for the yearperiod
4,904.9 4,909.6
10,015.0 10,808.0
9,805.4
1. For the six months ended June 30, 2015 compared to the six months ended June 30, 2014 Net Revenues
The Companys net revenues increased 11.9 to Rp43,742.6 billion in the six months ended June 30, 2015 from Rp39,093.5 billion in the six months ended June 30, 2014 primarily due to a combination of higher domestic sales
volumes during the period and increases in the prices of the Companys cigarettes [partially driven by an increase in excise tax, and a shift in the Companys price and product mix.
The Companys net revenues from SKM cigarettes increased 18.8 to Rp27,456.9 billion, which accounted for 62.8
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of its total net revenues in the six months ended June 30, 2015, compared to Rp23,103.5 billion, which accounted for 59.1 of its total net revenues in the six months ended June 30, 2014. Sales volumes of SKM cigarettes increased from
33.4 billion to 36.1 billion. Sampoerna A contributed 43.9 of the Companys net revenues in the six months ended June 30, 2015 as compared to 43.1 in the six months ended June 30, 2014, while the Companys Sampoerna U brand
contributed to 10.4 of the Companys net revenues in the six months ended June 30, 2015 compared to 10.8 in the six months ended June 30, 2014. The Companys Dji Sam Soe Magnum brand also significantly increased its contribution
to the Companys net revenues to 8.5 in the six months ended June 30, 2015 from 5.2 in the six months ended June 30, 2014.
The Companys net revenues from SKT cigarettes decreased 2.1 to Rp9,098.3 billion in the six months ended June 30, 2015 from Rp9,294.5 billion in the six months ended June 30, 2014 primarily due to the trend of adult smoker
preference shifting from SKT products to SKM products, reflecting the overall decline of the total SKT segment in the Indonesian market. Despite the trend of adult smokers moving away from SKT products to SKM products, the Companys
Dji Sam Soe brand saw net revenues increase from Rp7,872.6 billion in the six months ended June 30, 2014 to Rp9,506.8 billion in the six months ended June 30, 2015 driven by the strong sale of Dji Sam Soe Magnum and Dji Sam
Soe Magnum Blue, both of which are brands in the Companys SKM portfolio. The Companys Dji Sam Soe brand contributed to 21.7 of its net revenues in the six months ended June 30, 2015 as compared to 20.1 in the six months
ended June 30, 2014. The Companys Sampoerna Kretek brand contributed to 7.1 of its net revenues in the six months ended June 30, 2015 as compared to 8.2 in the six months ended June 30, 2014.
The Companys net revenues from SPM cigarettes increased 7.7 to Rp6,473.0 billion in the six months ended June 30, 2015 from Rp6,011.2 billion in the six months ended June 30, 2014, primarily due to an increase in prices, which
were partially offset by a decrease in SPM sales volume. Sales of SPM cigarettes contributed 14.8 to the Companys net revenues in the six months ended June 30, 2015 as compared to 15.4 in the six months ended June 30, 2014.
Cost of Goods Sold The Companys cost of goods sold increased 14.5 to Rp33,482.3 billion in the six months ended June 30, 2015 from
Rp29,241.1 billion in the six months ended June 30, 2014 primarily due to an increase in the amount of excise duties [due to the elimination of the SKM
– tax tier in 2015] and production costs due to salary increases and inflation. Contributing to the Companys increased cost of goods sold were amendments made to the contractual production
volume by the TPOs, driven by declining adult smoker demand for SKT cigarettes over the past few years, as consideration for which the Company paid Rp604.3 billion to the TPOs.
Selling Expenses The Companys selling expenses increased 16.7 to Rp2,753.1 billion in the six months ended June 30, 2015 from
Rp2,360.1 billion in the six months ended June 30, 2014 primarily driven by higher distribution costs in line with higher sales volume, higher inflation costs as a result of higher salaries and employee benefits for sales personnel and an
increase in investments for marketing and advertisements both for existing brands in the SKM and SKT portfolio as well as the launch of the new product U Bold.
General and Administrative Expenses The Companys general and administrative expenses increased 10.6 to Rp765.3 billion in the six months ended June
30, 2015 from Rp691.7 billion in the six months ended June 30, 2014 primarily due to inflation-driven cost increases reflected in higher salaries and employee benefits.
Other Income and Expenses Net Other Expenses Other income and expenses net other expenses decreased 70.8 to Rp21.1 billion in the six months ended June 30,
2015 from Rp72.5 billion in the six months ended June 30, 2014 primarily due to [gains from sales of fixed assets, partially offset by losses from foreign exchange transactions].
Finance Income The Companys finance income decreased 19.7 to Rp25.3 billion in the six months ended June 30, 2015 from Rp31.5
billion in the six months ended June 30, 2014 and mainly represented interest income generated from cash in bank and receivables from affiliated parties.
Finance Costs The Companys finance costs increased 175.8 to Rp52.4 billion in the six months ended June 30, 2015 from Rp19.0
billion in the six months ended June 30, 2014 primarily due to additional drawdowns on the Companys existing short- term borrowing facilities. In addition, the Companys total finance costs also increased as a result of increased costs on
foreign currency swap transactions to hedge intercompany borrowings with Philip Morris Finance SA.
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Share of Net Results of Associate Share of net results of associate was Rp7.5 billion in the six months ended June 30, 2015 compared to Rp2.7 billion in
the six months ended June 30, 2014. Profit Before Income Tax
As a result of the foregoing, the Companys profit before income tax decreased 0.6, to Rp6,701.2 billion in the six months ended June 30, 2015 from Rp6,743.3 billion in the six months ended June 30, 2014.
Income Tax Expense The Companys income tax expense decreased 1.3, to Rp1,689.4 billion in the six months ended June 30, 2015 from
Rp1,712.0 billion in the six months ended June 30, 2014 primarily as a result of the decrease in its profit before income tax.
Profit for the Period As a result of the foregoing, the Companys profit for the Period decreased 0.4, to Rp5,011.8 billion in the six months
ended June 30, 2015 from Rp5,031.3 billion in the six months ended June 30, 2014. Cumulative Translation Adjustments
Cumulative translation adjustmentsdecreased to Rp0.1 billion in the six months ended June 30, 2015 from Rp0.3 billion in the six months ended June 30, 2014 as a result of foreign exchange rate fluctuations.
Actuarial Loss from Post-Employment Benefit
– Net of Related Income Tax Expense
Actuarial loss from post-employment benefit net of related income tax expense was Rp107.0 billion in the six months ended June 30, 2015 compared to Rp122.0 billion in the six months ended June 30, 2014 due to changes in actuarial
assumption and experiences adjustments. Total Comprehensive Income for the Period
Total comprehensive income for the period decreased 0.1, to Rp4,904.9 billion in the six months ended June 30, 2015 from Rp4,909.6 billion in the six months ended June 30, 2014 primarily due to currency translation adjustments and
actuarial gain or loss on post-employment benefits. 2. For the year ended Decemeber 31, 2015 compared to the year ended Decemeber 31, 2014
Net Revenues The Companys net revenues increased 7.6 to Rp80,690.1 billion in 2014 from Rp75,025.2 billion in 2013, due to
increases in the prices of the Companys cigarettes, partially driven by an increase in excise tax, and a shift in the Companys price and product mix. Growth on account of price increases was partially offset by a decrease in overall
sales volumes. Overall domestic cigarette sales volume decreased by 1.5 to 109.7 billion cigarette units in 2014 from 111.3 billion
cigarette units in 2013 due to the discontinuance of two brands, Vegas Mild and Trend Mild, in response to changes in tax regulations, which decreased overall volume output by 2.2 billion units.
The Companys net revenues from SKM cigarettes increased by Rp7,883.1 billion or 19.3 to Rp48,722.0 billion, which accounted for 60.4 of its total net revenues in 2014, compared to Rp40,838.9 billion, which accounted for 54.4 of its
total net revenues in 2013. Sales volumes of SKM cigarettes increased from 63.3 billion to 69.0 billion. Sampoerna A contributed 43.3 of the Companys net revenues in 2014 as compared to 41.8 in 2013, while the Companys
Sampoerna U brand contributed to 10.9 of the Companys net revenues in 2014 compared to 8.2 in 2013. The Companys net revenues from SKT cigarettes decreased 15.2 to Rp18,645.2 billion in 2014 from Rp21,993.8
billion in 2013 primarily due to the trend of adult smoker preference shifting from SKT products to SKM products, reflecting the overall decline of the total SKT segment in the Indonesian market. The Companys Dji Sam Soe brand
contributed to 20.9 of its net revenues in 2014 as compared to 22.6 in 2013. However, the decline in net revenues of Dji Sam Soe was partially offset by both the positive sales volume of Dji Sam Soe Magnum and the successful launch
of Dji Sam Soe Magnum Blue, both of which are brands in the Companys SKM portfolio. The Companys Sampoerna Kretek brand contributed to 7.8 of its net revenues in 2014 as compared to 9.1 in 2013.
The Companys net revenues from SPM cigarettes increased 10.5 to Rp12,149.4 billion in 2014 from Rp10,997.7 billion in 2013, primarily due to an increase in prices, as sales volumes of SPM cigarettes stayed largely flat in 2014.
Sales of SPM cigarettes contributed 15.1 to the Companys net revenues in 2014 as compared to 14.7 in 2013.
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Cost of Goods Sold The Companys cost of goods sold increased 9.5 to Rp60,190.0 billion in 2014 from Rp54,953.9 billion in 2013 primarily
due to an increase in the amount of excise duties and production costs due to salary increases and inflation. Higher cost of clove inventories built up in 2012 continued to impact the cost of goods sold in 2014. The change in the Companys
product mix as a result of the continuing market trend away from SKT cigarettes to SKM cigarettes also resulted in an increase in excise tax, as SKM cigarettes are subject to higher excise tax per unit than SKT cigarettes, which was partly
offset by lower per-unit raw material and labor costs for SKM. Selling Expenses
Selling expenses increased 31.5 to Rp5,295.4 billion in 2014 from Rp4,027.6 billion in 2013 primarily due to higher distribution levels in the Java region and the timing of investments in sales and marketing, both for existing brands in the
SKM and SKT portfolio particularly Dji Sam Soe Magnum and A Mild and for the launch of a new product, Dji Sam Soe Magnum Blue.
General and Administrative Expenses General and administrative expenses decreased by 3.1 to Rp1,399.3 billion in 2014 from Rp1,443.5 billion in 2013, as
a result of a decrease in management services expenses, which was partially offset by inflation-driven cost increases reflected in higher salaries, wages and employee benefits.
Other Income and Expenses Net Other Expenses Other income and expenses net other expenses increased 39.6 to Rp111.3 billion in 2014 from Rp79.7 billion in 2013
primarily due to payments related to the discontinuation of SKT manufacturing facilities in the Companys Jember and Lumajang sites, partially offset by gains from the sale of fixed assets and gains from foreign exchange transactions.
Finance Income The Companys finance income increased 17.6 to Rp57.5 billion in 2014 from Rp48.9 billion in 2013 and was mainly
attributable to interest income generated from cash in bank and receivables from affiliated parties. Finance Costs
The Companys total finance costs of Rp47.4 billion were mainly generated from foreign currency swap transactions to hedge related-party borrowings with Philip Morris Finance SA. The Companys finance costs decreased 31.4 to Rp47.4
billion in 2014 from Rp69.1 billion in 2013 primarily due to a decrease in short-term related-party financing arrangements with Philip Morris Finance SA and PMID.
Share of Net Results of Associate Share of net results of associate was Rp14.1 billion in 2014 compared to Rp9.4 billion in 2013.
Profit Before Income Tax As a result of the foregoing, the Companys profit before income tax decreased 5.5 to Rp13,718.3 billion in 2014 from
Rp14,509.7 billion in 2013. Income Tax Expense
The Companys income tax expense decreased 4.2, to Rp3,537.2 billion in 2014 from Rp3,691.2 billion in 2013 primarily as a result of decrease in its profit before income tax.
Profit for the Year As a result of the foregoing, the Companys profit for the year decreased 5.9, to Rp10,181.1 billion in 2014 from
Rp10,818.5 billion in 2013. The profit for the year 2014 was in particular impacted by one-off costs related to the reduction of SKT production capacity.
Cumulative Translation Adjustments Cumulative translation adjustments changed to Rp0.1 billion gain in 2014 from a Rp1.1 billion loss in 2013 as a result of
foreign exchange rate fluctuations.
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Actuarial Loss from Post-Employment Benefit-Net Related Income Tax Expense Actuarial loss from post-employment benefit net related income tax expense was Rp166.2 billion in 2014 compared to
Rp9.4 billion in 2013 due to changes in actuarial assumptions and experiences adjustments. Total Comprehensive Income for the Year
Total comprehensive income for the year decreased 7.3 to Rp10,015.0 billion in 2014 from Rp10,808.0 billion in 2013 primarily due to currency translation adjustments and actuarial gain or loss on post-employment benefits.
3. For the year ended December 31, 2013 compared to year ended December 31, 2012 Net Revenues
