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
118
44. FINANCIAL RISK MANAGEMENT continued
2. Fair value of financial assets and financial liabilities continued c.
Fair value hierarchy continued Available-for-sale financial assets primarily consist 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 requires 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 investment measured at fair value using significant unobservable inputs level 3 as of December 31, 2013 and 2012 are as
follows:
2013 2012
Balance at January 1 48
64 Purchase
- 8
Put Option 289
- Included in consolidated statement of comprehensive
income Realized loss - recognized in profit or loss
- 1
Unrealized loss - recognized in other comprehensive income
8 2
Redemption 48
21
Balance at December 31 297
48
45. CAPITAL MANAGEMENT
The capital structure of the Company and subsidiaries is as follows:
2013 2012
Amount Portion
Amount Portion
Short-term debts 432
0.53 37
0.05 Long-term debts
19,824 24.54
19,238 27.17
Total debts 20,256
25.07 19,275
27.22 Equity attributable to owners
60,542 74.93
51,541 72.78
Total 80,798
100.00 70,816
100.00
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
119
45. CAPITAL MANAGEMENT continued
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 stakeholders and
to maintain an optimum capital structure to minimize the cost of capital.
Periodically, the Company conducts debt valuation to assess possibilities of refinancing existing debts with new ones which have more efficient cost that will lead to more optimized cost-of-debt. In case of
idle cash with limited investment opportunities, the Company will consider buying back its shares of stock 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 is comparable 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 those of regional area entities in the telecommunications industry.
The Company’s debt to equity ratio as of December 31, 2013 and 2012 is as follows:
2013 2012
Total interest-bearing debts 20,256
19,275 Less cash and cash equivalents
14,696 13,118
Net debts 5,560
6,157 Total equity attributable to owners
60,542 51,541
Net debt to equity ratio 9.18
11.95 As stated in Notes 19, 20 and 21, the Company is required to maintain a certain debt to equity ratio
and debt service coverage ratio by the lenders. During the years ended December 31, 2013 and 2012, the Company has complied with the externally imposed capital requirements.
46. SUPPLEMENTAL CASH FLOWS INFORMATION
The non-cash investing activities for the years ended December 31, 2013 and 2012 are as follows:
2013 2012
Acquisition of property and equipment credited to: Trade payables
6,412 4,627
Obligations under finance leases 3,201
2,588 Non-monetary exchange
268 1,686
Acquisition of data center business -
150
