PERUSAHAAN PERSEROAN PERSERO PT TELEKOMUNIKASI INDONESIA Tbk AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As of March 31, 2014 and for three months period then ended unaudited
Figures in tables are expressed in billions of rupiah, unless otherwise stated
110
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:
March 31, 2014 December 31, 2013
U.S. dollar Japanese yen
U.S. dollar Japanese yen in billions in billions in billions
in billions
Financial assets 0.49
0.00 0.48
0.00 Financial liabilities
0.51 9.08
0.48 8.47
Net exposure 0.02
9.08 0.00
8.47
Sensitivity analysis
A strengthening of the U.S.dollar and Japanese yen, as indicated below, against the rupiah at March 31, 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 March 31, 2014
U.S. dollar 1 strengthening 3
Japanese yen 5 strengthening 51
A weakening of the U.S.dollar and Japanese yen against the rupiah at March 31, 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 March 31, 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 March 31, 2014 and for three months period then ended unaudited
Figures in tables are expressed in billions of rupiah, unless otherwise stated
111
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:
March 31, December 31,
2014 2013
Fixed rate borrowings 9,557
9,591 Variable rate borrowings
10,081 10,665
Sensitivity analysis for variable rate borrowings
At March 31, 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 Rp25 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:
March 31, December 31,
2014 2013
Cash and cash equivalents 20,700
14,696 Other current financial assets
2,655 6,872
Trade and other receivables, net 6,794
6,421 Long-term investments
21 21
Advances and other non-current assets 563
685
Total 30,733
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. receivablesbalance exceeds 1 of trade receivables at March 31, 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.
