PERUSAHAAN PERSEROAN PERSERO P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued JUNE 30, 2012 UNAUDITED AND DECEMBER 31, 2011 AUDITED
AND SIX MONTHS PERIOD ENDED JUNE 30, 2012 AND 2011 UNAUDITED Figures in tables are presented in billions of Rupiah, unless otherwise stated
108
43. FINANCIAL RISK MANAGEMENT continued
2 Fair value of financial assets and financial liabilities continued
c. Fair value hierarchy The table below presents the recorded amount of financial assets measured at fair value and
limited mutual funds participation unit for debt based securities where the Net Asset Value NAV per share of the investments information is not published are described below:
June 30, 2012 Fair value measurement at reporting date using
Quoted prices in active markets
for identical Significant
assets or Significant other
unobservable liabilities
observable inputs inputs
Balance level 1
level 2 level 3
Financial assets
Available-for-sale securities 349
48 251
51
Available-for-sale financial assets are primarily comprised of shares, mutual funds and Corporate and Government bonds. Corporate and Government bonds are stated at fair value
by reference to prices of similar securities at the reporting date. As they are not actively traded in an established market, these securities are classified as level 2.
Shares and mutual funds actively traded in an established market are stated at fair value using quoted market price and classified within level 1. The valuation of the mutual funds
invested in Corporate and Government bonds require significant management judgment due to the absence of quoted market prices, the inherent lack of liquidity and the long-term nature
of such assets. As these investments are subject to restrictions on redemption such as transfer restrictions and initial lock-up periods and observable activity for the investments is
limited, these investments are therefore classified within level 3 of the fair value hierarchy. Management considers among other assumptions, the valuation and quoted price of the
arrangement of the mutual funds.
Reconciliations of the beginning and ending balance for items measured at fair value using significant unobservable inputs level 3 as of June 30, 2012 are as follows:
June 30, 2012
Mutual funds Balance at January 1, 2012
64 Transfer to out of level 3
Limited mutual funds participation unit for debt based securities
- Purchase
8 Included in consolidated statement of comprehensive income
Realized loss-recognized in profit or loss Unrealized loss-recognized in other comprehensive income
Redemption 21
Balance at June 30, 2012 51
PERUSAHAAN PERSEROAN PERSERO P.T. TELEKOMUNIKASI INDONESIA Tbk AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued JUNE 30, 2012 UNAUDITED AND DECEMBER 31, 2011 AUDITED
AND SIX MONTHS PERIOD ENDED JUNE 30, 2012 AND 2011 UNAUDITED Figures in tables are presented in billions of Rupiah, unless otherwise stated
109
44. CAPITAL MANAGEMENT
The capital structure of the Company and its subsidiaries is as follows:
June 30, 2012 December 31, 2011
Amount Portion
Amount Portion
Short-term debts 284
0.45 100
0.15 Long-term debts
17,900 28.16
17,771 27.18
Total debts 18,184
28.61 17,871
27.33 Equity attributable to owners
45,385 71.39
47,510 72.67
Total 63,569
100.00 65,381
100.00
The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern in order to provide returns for stockholders and benefits to other stockholders and
to maintain an optimum capital structure to minimize the cost of capital. Periodically, the Company’s conducts debt valuation to assess possibilities of refinancing existing
debts with the new ones which have more efficient cost that will lead to more optimize cost-of-debt. In case of rich idle cash coupled with limited investment opportunities, the Company will consider of
buying back its stocks or paying dividend to its stockholders.
In addition to complying with loan covenants, the Company also maintains its capital structure at the level it believes will not risk its credit rating and that is roughly equal with its competitors.
Debt to equity ratio comparing net interest-bearing-debt to total equity is a ratio which is monitored by management to evaluate the Company’s capital structure and review the effectiveness of the
Company’s debts. The Company monitors its debt levels to ensure the debt to equity ratio complies with or is below the ratio set out in its contractual borrowings and that such ratios are comparable or
better than other regional area entities in the telecommunications industry. The Company debt to equity ratio as of June 30, 2012 and December 31, 2011 are as follows:
June 30, December 31,
2012 2011
Total interest bearing debts 18,184
17,871 Less: Cash and cash equivalents
8,582 9,634
Net debts 9,602
8,237 Total equity attributable to owners
45,385 47,510
Net debt to equity ratio 21.16
17.34 As stated in Notes 17, 18, 19, the Company is required to maintain a certain debt to equity ratio and
debt service coverage ratio by the lenders. During the six months period ended June 30, 2012 and the year ended December 31, 2011, the Company has complied with the externally imposed capital
requirements.
