PT Indosat Tbk and Subsidiaries
Interim consolidated financial statements
with independent accountants’ review report
as of March 31, 2012 and for the
three-month period then ended
with comparative figures as of
December 31, 2011
and January 1, 2011 / December 31, 2010
and for the three-month period ended March 31, 2011
These consolidated financial statements are originally issued in the Indonesian Language.
PT INDOSAT Tbk AND SUBSIDIARIES
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
WITH INDEPENDENT ACCOUNTANTS’ REVIEW REPORT
AS OF MARCH 31, 2012 AND FOR THE THREE-MONTH PERIOD THEN ENDED
WITH COMPARATIVE FIGURES AS OF DECEMBER 31, 2011
AND JANUARY 1, 2011 / DECEMBER 31, 2010 (AS RESTATED) (UNAUDITED)
AND FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2011 (AS RESTATED) (UNAUDITED)
Table of Contents
Page
Independent Accountants’ Review Report
Interim Consolidated Statements of Financial Position ……………………………………………….
1 - 4
Interim Consolidated Statements of Comprehensive Income ………………………………………..
5 - 6
Interim Consolidated Statements of Changes in Equity ………………………………………………
7
Interim Consolidated Statements of Cash Flows……………………………………………………….
8
Notes to the Interim Consolidated Financial Statements………………………………………………
9 - 134
***************************
This report is originally issued in the Indonesian language.
Independent Accountants’ Review Report
Report No. RPC-441/PSS/2012/DAU
The Stockholders and the Boards of Commissioners and Directors
PT Indosat Tbk
We have reviewed the interim consolidated statement of financial position of PT Indosat Tbk (the “Company”) and subsidiaries as of March 31, 2012, and the related interim consolidated statements of comprehensive income, changes in equity and cash flows for the three-month period then ended. These interim consolidated financial statements are the responsibility of the Company’s management. We did not make a similar review of the restated consolidated statements of financial position as of December 31, 2011 and January 1, 2011 / December 31, 2010, and of the restated interim consolidated statements of comprehensive income, changes in equity and cash flows for the three-month period ended March 31, 2011.
We conducted our review in accordance with the standards established by the Indonesian Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with auditing standards established by the Indonesian Institute of Certified Public Accountants, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should be made to the interim consolidated financial statements of the Company and subsidiaries as of March 31, 2012 and for the three-month period then ended for them to be in conformity with Indonesian Financial Accounting Standards.
This report is originally issued in the Indonesian language.
We have previously audited, in accordance with auditing standards established by the Indonesian Institute of Certified Public Accountants, the consolidated statements of financial position of the Company and subsidiaries as of December 31, 2011 and 2010, prior to the restatement discussed in the following sentence, not presented herein, and in our report dated February 20, 2012, we expressed an unqualified opinion on those statements and included an explanatory paragraph that describes the restatement of the consolidated statements of financial position as of December 31, 2010 and January 1, 2010 / December 31, 2009 as a result of the retrospective application of certain revised Indonesian Statements of Financial Accounting Standards that became effective January 1, 2011. As described in Note 2j to the interim consolidated financial statements, effective January 1, 2012, the Company and subsidiaries applied Indonesian Financial Accounting Standards No. 30 (Revised 2011), “Leases”, on a retrospective basis resulting in the restatement of the consolidated statements of financial position as of December 31, 2011 and January 1, 2011 / December 31, 2010, and of the consolidated statements of comprehensive income, changes in equity and cash flows for the three-month period ended March 31, 2011. We have not audited and reported on these restated statements.
Purwantono, Suherman & Surja
Roy Iman Wirahardja, CPA
Public Accountant Registration No. AP. 0699
May 3, 2012
The accompanying consolidated financial statements are not intended to present the consolidated financial position, results of operations, and cash flows in accordance with accounting principles and practices generally accepted in countries and jurisdictions other than Indonesia. The standards, procedures, and practices to review such consolidated financial statements are those generally accepted and applied in Indonesia.
See Independent Accountants’ Review Report on review of interim consolidated financial statements.
The accompanying notes form an integral part of these interim consolidated financial statements.
1
These consolidated financial statements are originally issued in the Indonesian language.
PT INDOSAT Tbk AND SUBSIDIARIES
INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
March 31, 2012 (Unaudited)
With Comparative Figures for December 31, 2011 and
January 1, 2011 / December 31, 2010 (as Restated) (Unaudited)
(Expressed in millions of rupiah, except share data)
March 31,
December 31,
January 1, 2011 /
Notes
2012
2011
December 31, 2010
ASSETS
CURRENT ASSETS
Cash and cash equivalents
2d,2n,2s,
4,21,30,36
1,860,054
2,224,206
2,075,270
Accounts receivable
2n
Trade
5,21,36
Related parties - net of
allowance for impairment
of Rp40,373 as of
March 31, 2012, Rp47,107
as of December 31, 2011
and Rp47,640 as of
January 1, 2011 /
December 31, 2010
2s,30
303,450
257,537
222,506
Third parties - net of
allowance for impairment
of Rp537,213 as of
March 31, 2012, Rp489,544
as of December 31, 2011
and Rp448,470 as of
January 1, 2011 /
December 31, 2010
1,272,399
1,183,532
1,325,920
Others - net of allowance
for impairment of
Rp16,953 as of
March 31, 2012,
Rp16,702 as of
December 31, 2011 and
Rp15,281 as of January 1, 2011 /
December 31, 2010
16
71,675
5,660
10,031
Inventories - net of allowance
for obsolescence of Rp17,011
as of March 31, 2012, Rp18,401
as of December 31, 2011
and Rp13,961 as of
January 1, 2011 /
December 31, 2010
2e
64,724
75,890
105,885
Derivative assets
2n,20,21,36
36,853
159,349
69,334
Advances
31h
50,480
48,865
67,273
Prepaid taxes
2p,6,16
906,950
893,216
701,560
Prepaid expenses
2f,2j,2m,2s,
29,30
1,443,541
1,705,652
1,527,254
Other current financial assets - net
2d,2j,2n,2s,7,
21,30,31g,36
30,139
29,833
56,279
Other current assets
36
685
742
702
Total Current Assets
6,040,950
6,584,482
6,162,014
See Independent Accountants’ Review Report on review of interim consolidated financial statements.
The accompanying notes form an integral part of these interim consolidated financial statements.
2
These consolidated financial statements are originally issued in the Indonesian language.
PT INDOSAT Tbk AND SUBSIDIARIES
INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (continued)
March 31, 2012 (Unaudited)
With Comparative Figures for December 31, 2011 and
January 1, 2011 / December 31, 2010 (as Restated) (Unaudited)
(Expressed in millions of rupiah, except share data)
March 31,
December 31,
January 1, 2011 /
Notes
2012
2011
December 31, 2010
NON-CURRENT ASSETS
Due from related parties - net of
allowance for impairment
of Rp15 as of March 31, 2012
and December 31, 2011
and Rp646 as of
January 1, 2011 /
December 31, 2010
2n,2s,21 30,36
8,504
10,654
8,421
Finance lease receivables
2j,2n1,21,31g
95,537
81,966
63,498
Deferred tax assets - net
2p,16
114,890
114,114
95,018
Property and equipment - net
2h,2i,2j,2l,8,
18,26
42,969,505
43,478,130
43,963,417
Goodwill and other
intangible assets - net
2c,2i,9
1,373,537
1,366,853
1,374,060
Long-term prepaid rentals -
net of current portion
2f,2s,10
,30
791,086
766,349
750,472
Long-term prepaid licenses -
net of current portion
2f,3a
315,408
331,868
397,708
Long-term advances
2s,11,30,31h
203,406
209,798
216,643
Long-term prepaid pension - net
of current portion
2m,2s,29,30
99,353
103,181
111,344
Long-term receivables
19,923
20,677
45,911
Other non-current financial
2d,2n,2s,12,
assets - net
21,30,31g,31h,36
91,589
90,416
80,405
Other non-current assets - net
2g,2s,13,30
24,756
5,593
8,341
Total Non-current Assets
46,107,494
46,579,599
47,115,238
TOTAL ASSETS
52,148,444
53,164,081
53,277,252
See Independent Accountants’ Review Report on review of interim consolidated financial statements.
The accompanying notes form an integral part of these interim consolidated financial statements.
3
These consolidated financial statements are originally issued in the Indonesian language.
PT INDOSAT Tbk AND SUBSIDIARIES
INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (continued)
March 31, 2012 (Unaudited)
With Comparative Figures for December 31, 2011 and
January 1, 2011 / December 31, 2010 (as Restated) (Unaudited)
(Expressed in millions of rupiah, except share data)
March 31,
December 31,
January 1, 2011 /
Notes
2012
2011
December 31, 2010
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Short-term loan
2n,2s,14,21
30,36
1,499,331
1,499,256
-
Accounts payable - trade
2n,2s,21,30,36
Related parties
7,963
23,581
22,260
Third parties
234,129
295,477
623,245
Procurement payable
2n,2s,15,21,30,36
3,049,936
3,429,921
3,644,467
Taxes payable
2p,16
91,478
88,563
169,445
Accrued expenses
2n,2s,17,21,30,36
1,543,199
1,891,477
1,710,885
Unearned income
2k,31g,31h
1,049,746
1,124,995
1,143,852
Deposits from customers
2n,21,36
42,995
37,265
50,279
Derivative liabilities
2n,20,21,36
145,999
138,189
215,403
Current maturities of:
Loans payable
2n,2s,18, 21,30,36
3,309,604
3,300,537
3,184,147
Bonds payable
2n,19,21,36
-
41,989
1,098,131
Other current financial
liabilities
2j,2n,2s,21,30,31i,36
88,850
73,201
44,880
Other current liabilities
2s,30,36
66,606
64,849
61,612
Total Current Liabilities
11,129,836
12,009,300
11,968,606
NON-CURRENT LIABILITIES
Due to related parties
2n,2s,21,30,36
15,068
15,480
22,099
Obligations under finance lease
2j,21,31i,36
717,617
692,907
286,279
Deferred tax liabilities - net
2j,2p,16
1,993,743
1,981,220
1,810,095
Loans payable - net of current
maturities
2n,2s,18,21,30,36
6,091,284
6,425,779
7,666,804
Bonds payable - net of current
maturities
2n,19,21,36
12,215,255
12,138,353
12,114,104
Employee benefit obligations -
net of current portion
2m,22
821,730
787,313
872,407
Other non-current liabilities
2s,30,31h
127,148
116,455
187,097
Total Non-current Liabilities
21,981,845
22,157,507
22,958,885
TOTAL LIABILITIES
33,111,681
34,166,807
34,927,491
See Independent Accountants’ Review Report on review of interim consolidated financial statements.
The accompanying notes form an integral part of these interim consolidated financial statements.
4
These consolidated financial statements are originally issued in the Indonesian language.
PT INDOSAT Tbk AND SUBSIDIARIES
INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (continued)
March 31, 2012 (Unaudited)
With Comparative Figures for December 31, 2011 and
January 1, 2011 / December 31, 2010 (as Restated) (Unaudited)
(Expressed in millions of rupiah, except share data)
March 31, December 31,
March 31,
December 31,
January 1, 2011 /
Notes
2012
2011
December 31, 2010
EQUITY
EQUITY ATTRIBUTABLE TO
OWNERS’ OF THE COMPANY
Capital stock - Rp100 par value
per A share and B share
Authorized - 1 A share and
19,999,999,999 B shares
Issued and fully paid - 1 A share
and 5,433,933,499 B shares
23
543,393
543,393
543,393
Premium on capital stock
1,546,587
1,546,587
1,546,587
Retained earnings
Appropriated
134,446
134,446
134,446
Unappropriated
2j
15,934,217
15,917,528
15,338,118
Difference in transactions of
equity changes in associated
companies/subsidiaries
2b,2g
404,104
404,104
404,104
Difference in foreign currency
translation
2b
(2,002
)
(2,326
)
(2,727
)
Total Equity Attributable to :
Owners of the Company
18,560,745
18,543,732
17,963,921
Non-controlling interests
2b
476,018
453,542
385,840
TOTAL EQUITY
19,036,763
18,997,274
18,349,761
TOTAL LIABILITIES AND EQUITY
52,148,444
53,164,081
53,277,252
See Independent Accountants’ Review Report on review of interim consolidated financial statements.
The accompanying notes form an integral part of these interim consolidated financial statements.
5
These consolidated financial statements are originally issued in the Indonesian language.
PT INDOSAT Tbk AND SUBSIDIARIES
INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Three-Month Period Ended March 31, 2012 (Unaudited)
With Comparative Figures for 2011 (as Restated) (Unaudited)
(Expressed in millions of rupiah, except share data)
Notes
2012
2011
OPERATING REVENUES
2j,2k,2s,24,30,
33,34,35
Cellular
4,079,811
3,960,583
Multimedia, Data
Communication,
Internet (“MIDI”)
31e
672,255
590,999
Fixed telecommunications
224,926
322,428
Total Operating Revenues
4,976,992
4,874,010
OPERATING EXPENSES
2s,30
Cost of services
2j,2k,25,31i,31j
31m,33,34
1,874,388
1,741,843
Depreciation and amortization
2h,2j,8,9
1,704,179
1,551,312
Personnel
2l,2m,26,
29
336,216
511,955
Marketing
2k
245,176
187,374
General and administration
2k,27
183,505
176,537
Total Operating Expenses
4,343,464
4,169,021
OPERATING INCOME
633,528
704,989
OTHER INCOME (EXPENSES)
Interest income
2j,2s,30,35
21,867
24,531
Loss on change in fair value
of derivatives - net
2n,20,35
(42,140
)
(34,901
)
Gain (loss) gain on foreign exchange - net
2n,2o,5,35
(144,733
)
459,257
Financing cost
2j,2s,18,19,
28,30,35
(469,029
)
(485,962
)
Others - net
2j,6,8,12,16,35
15,588
23,794
Other Expenses - net
(618,447
)
(13,281
)
PROFIT BEFORE INCOME TAX
15,081
691,708
INCOME TAX BENEFIT (EXPENSE)
2p,16,35
Current
34,870
(30,720
)
Deferred
2j
(10,836
)
(162,686
)
Income Tax Benefit (Expense) - net
24,034
(193,406)
PROFIT FOR THE PERIOD
39,115
498,302
See Independent Accountants’ Review Report on review of interim consolidated financial statements.
The accompanying notes form an integral part of these interim consolidated financial statements.
6
These consolidated financial statements are originally issued in the Indonesian language.
PT INDOSAT Tbk AND SUBSIDIARIES
INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (continued)
Three-Month Period Ended March 31, 2012 (Unaudited)
With Comparative Figures for 2011 (as Restated) (Unaudited)
(Expressed in millions of rupiah, except share data)
Notes
2012
2011
OTHER COMPREHENSIVE INCOME
Difference in foreign currency translation
2b
637
1,926
Income tax effect
(313
)
(482)
Difference in foreign currency
translation - net of tax
324
1,444
TOTAL COMPREHENSIVE INCOME
FOR THE PERIOD
39,439
499,746
PROFIT FOR THE PERIOD
ATTRIBUTABLE TO:
Owners of the Company
16,689
483,702
Non-controlling interests
2b
22,426
14,600
Total
39,115
498,302
OTHER COMPREHENSIVE INCOME -
NET OF TAX ATTRIBUTABLE TO:
Owners of the Company
324
1,444
Non-controlling interests
2b
-
-
Total
324
1,444
TOTAL COMPREHENSIVE INCOME
FOR THE PERIOD ATTRIBUTABLE TO:
Owners of the Company
17,013
485,146
Non-controlling interests
22,426
14,600
Total
39,439
499,746
BASIC EARNINGS PER SHARE
ATTRIBUTABLE TO OWNERS
OF THE COMPANY
2r,23
3.07
89.02
BASIC EARNINGS PER ADS
(50 SHARES PER ADS)
ATTRIBUTABLE TO OWNERS
OF THE COMPANY
2r,23
153.56
4,450.75
See Independent Accountants’ Review Report on review of interim consolidated financial statements.
The accompanying notes form an integral part of these interim consolidated financial statements.
7
These consolidated financial statements are originally issued in the Indonesian language.
PT INDOSAT Tbk AND SUBSIDIARIES
INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Three-Month Period Ended March 31, 2012 (Unaudited)
With Comparative Figures for 2011 (as Restated) (Unaudited)
(Expressed in millions of rupiah)
|
|
|
|
| Equity Attributable to Owners of the Company |
|
|
|
| ||||||||||||
Description |
| Notes |
| Capital Stock - Issued and Fully Paid |
| Premium of Capital Stock |
| Retained Earnings |
| Difference in Transactions of Equity Changes in Associated Companies/Subsidiaries |
| Difference in Foreign Currency Translation |
| Total |
| Non-controlling Interests |
| Total Equity | |||
|
|
|
| Appropriated |
| Unappropriated |
|
|
|
|
| ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of January 1, 2011 (previously reported) |
|
|
| 543,393 |
| 1,546,587 |
| 134,446 |
| 15,224,843 |
| 404,104 |
| (2,727) |
| 17,850,646 |
| 385,840 |
| 18,236,486 | |
Retrospective application in applying new accounting policy | 2j | - | - | - | 113,275 | - | - | 113,275 | - | 113,275 | |||||||||||
Balance as of January 1, 2011 (as restated) | 543,393 | 1,546,587 | 134,446 | 15,338,118 | 404,104 | (2,727) | 17,963,921 | 385,840 | 18,349,761 | ||||||||||||
Difference in foreign currency translation arising from the translation of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| the financial statements of Indosat Finance Company B.V., Indosat International Finance Company B.V. from euro, and Indosat Palapa Company B.V. and Indosat Singapore Pte. Ltd. from U.S.dollar to rupiah - net of applicable income tax benefit (expense) of (Rp143), (Rp53), (Rp584) and Rp298, respectively |
| 2b |
| - |
| - |
| - |
| - |
| - |
| 1,444 |
| 1,444 |
| - |
| 1,444 |
Profit for the period |
|
|
| - |
| - |
| - |
| 483,702 |
| - |
| - |
| 483,702 |
| 14,600 |
| 498,302 | |
Changes in non-controlling interests |
|
|
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| 2,660 |
| 2,660 | |
Balance as of March 31, 2011 |
|
|
| 543,393 |
| 1,546,587 |
| 134,446 |
| 15,821,820 |
| 404,104 |
| (1,283) |
| 18,449,067 |
| 403,100 |
| 18,852,167 | |
Balance as of January 1, 2012 (previously reported) |
|
|
| 543,393 |
| 1,546,587 |
| 134,446 |
| 15,736,227 |
| 404,104 |
| (2,326) |
| 18,362,431 |
| 453,542 |
| 18,815,973 | |
Retrospective application in applying new accounting policy | 2j | - | - | - | 181,301 | - | - | 181,301 | - | 181,301 | |||||||||||
Balance as of January 1, 2012 (as restated) | 543,393 | 1,546,587 | 134,446 | 15,917,528 | 404,104 | (2,326) | 18,543,732 | 453,542 | 18,997,274 | ||||||||||||
Difference in foreign currency translation arising from the translation of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| the financial statements of Indosat Finance Company B.V. and Indosat International Finance Company B.V. from euro to rupiah - net of applicable income tax expense of Rp225 and Rp88, respectively |
| 2b |
| - |
| - |
| - |
| - |
| - |
| 324 |
| 324 |
| - |
| 324 |
Profit for the period |
|
|
| - |
| - |
| - |
| 16,689 |
| - |
| - |
| 16,689 |
| 22,426 |
| 39,115 | |
Changes in non-controlling interests |
|
|
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| 50 |
| 50 | |
Balance as of March 31, 2012 |
|
|
| 543,393 |
| 1,546,587 |
| 134,446 |
| 15,934,217 |
| 404,104 |
| (2,002) |
| 18,560,745 |
| 476,018 |
| 19,036,763 | |
See Independent Accountants’ Review Report on review of interim consolidated financial statements.
The accompanying notes form an integral part of these interim consolidated financial statements.
8
These consolidated financial statements are originally issued in the Indonesian language.
PT INDOSAT Tbk AND SUBSIDIARIES
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
Three-Month Period Ended March 31, 2012 (Unaudited)
With Comparative Figures for 2011 (Unaudited)
(Expressed in millions of rupiah)
Notes
2012
2011
CASH FLOWS FROM OPERATING
ACTIVITIES
Cash received from:
Customers
4,714,088
4,605,145
Settlement from currency
forward contracts
20w-bm
82,907
-
Interest income
19,918
21,845
Cash paid to/for:
Authorities, other operators,
suppliers and others
(2,369,456
)
(1,887,729
)
Financing cost
(563,020
)
(574,761
)
Employees
(333,537
)
(548,661
)
Income taxes
(59,351
)
(101,982
)
Interest rate swap contracts
20i-v
(6,407
)
(29,848
)
Net Cash Provided by Operating Activities
1,485,142
1,484,009
CASH FLOWS FROM INVESTING
ACTIVITIES
Proceeds from sale of property
and equipment
8
2
113
Acquisitions of property and
equipment
8
(1,391,265
)
(1,204,752
)
Acquisitions of intangible assets
9
(11,222
)
(4,258
)
Net Cash Used in Investing Activities
(1,402,485
)
(1,208,897
)
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from long-term loans
18
200,000
522,900
Proceeds from short-term loan
14
200,000
-
Repayment of long-term loans
18
(601,410
)
(199,657
)
Repayment of short-term loans
14
(200,000
)
-
Repayment of bonds payable
19
(41,989
)
-
Net Cash Provided by (Used in)
Financing Activities
(443,399
)
323,243
Net Foreign Exchange Differences
from Cash and Cash Equivalents
(3,410
)
(17,210
)
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS
(364,152
)
581,145
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD
2,224,206
2,075,270
CASH AND CASH EQUIVALENTS
AT END OF PERIOD
4
1,860,054
2,656,415
DETAILS OF CASH AND CASH
EQUIVALENTS:
4
Time deposits with original maturities
of three months or less
and deposits on call
1,555,432
2,285,640
Cash on hand and in banks
304,622
370,775
Cash and cash equivalents as stated
in the
interim consolidated statements
of financial position
1,860,054
2,656,415
See Independent Accountants’ Review Report on review of interim consolidated financial statements.
The accompanying notes from an integral part of these interim consolidated financial statements.
9
These consolidated financial statements are originally issued in the Indonesian language.
PT INDOSAT Tbk AND SUBSIDIARIES
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
As of March 31, 2012 and for the Three-Month Period then Ended (Unaudited)
With Comparative Figures as of December 31, 2011 and
January 1, 2011 / December 31, 2010 (as Restated) (Unaudited)
and for the Three-Month Period Ended March 31, 2011 (as Restated) (Unaudited)
(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)
1.
GENERAL
a.
Company’s Establishment
PT Indosat Tbk (“the Company”) was established in the Republic of Indonesia on November 10, 1967 within the framework of the Indonesian Foreign Investment Law No. 1 of 1967 based on the notarial deed No. 55 of Mohamad Said Tadjoedin, S.H. The deed of establishment was published in Supplement No. 24 of State Gazette No. 26 dated March 29, 1968 of the Republic of Indonesia. In 1980, the Company was sold by American Cable and Radio Corporation, an International Telephone & Telegraph subsidiary, to the Government of the Republic of Indonesia (“the Government”) and became a State-owned Company (Persero).
On February 7, 2003, the Company received the approval from the Capital Investment Coordinating Board (“BKPM”) in its letter No. 14/V/PMA/2003 for the change of its legal status from a State-owned Company (Persero) to a Foreign Capital Investment Company. Subsequently, on March 21, 2003, the Company received the approval from the Ministry of Justice and Human Rights of the Republic of Indonesia on the amendment of its Articles of Association to reflect the change in its legal status.
The Company’s Articles of Association has been amended from time to time. The latest amendment was covered by notarial deed No. 123 dated January 28, 2010 of Aulia Taufani, S.H., (as a substitute notary of Sutjipto, S.H.) as approved in the Stockholders’ Extraordinary General Meeting held on January 28, 2010, in order to comply with the Indonesian Capital Market and Financial Institutions Supervisory Agency (“BAPEPAM-LK”) Rule No. IX.J.1 dated May 14, 2008 on the Principles of Articles of Association of Limited Liability Companies that Conduct Public Offering of Equity Securities and Public Companies and Rule No. IX.E.1 on Affiliate Transactions and Certain Conflict of Interests Transactions. The latest amendment of the Company’s Articles of Association has been approved by, and reported to, the Ministry of Law and Human Rights of the Republic of Indonesia based on its letters No. AHU-09555.AH.01.02 Year 2010 dated February 22, 2010 and No. AHU-AH.01.10-04964 dated February 25, 2010. The amendments relate to, among other matters, the changes in the Company’s purposes, objectives and business activities, appointment of acting President Director if the incumbent President Director is unavailable and definition of conflict of interests.
According to article 3 of its Articles of Association, the Company’s purposes and objectives are
to provide telecommunications networks, telecommunications services as well as information technology and/or convergence technology services by carrying out the following main business activities:
a.
To provide telecommunications networks, telecommunications services as well as information technology and/or convergence technology services, including but not limited to providing basic telephony services, multimedia services, internet telephony services, network access point service, internet services, mobile telecommunications networks and fixed telecommunications networks; and
b.
To engage in payment transactions and money transfer services through telecommunications networks as well as information technology and/or convergence technology.
The Company can provide supporting business activities in order to achieve the purposes and objectives, and to support its main businesses, as follows:
a.
To plan, to procure, to modify, to build, to provide, to develop, to operate, to lease, to rent, and to maintain infrastructures/facilities including resources to support the Company’s business in providing telecommunications networks, telecommunications services as well as information technology and/or convergence technology services;
10
These consolidated financial statements are originally issued in the Indonesian language.
PT INDOSAT Tbk AND SUBSIDIARIES
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
As of March 31, 2012 and for the Three-Month Period then Ended (Unaudited)
With Comparative Figures as of December 31, 2011 and
January 1, 2011 / December 31, 2010 (as Restated) (Unaudited)
and for the Three-Month Period Ended March 31, 2011 (as Restated) (Unaudited)
(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)
1.
GENERAL (continued)
a.
Company’s Establishment (continued)
b.
To conduct business and operating activities (including development, marketing and sales of telecommunications networks, telecommunications services as well as information technology and/or convergence technology services by the Company), including research, customer services, education and courses (both domestic and overseas); and
c.
To conduct other activities necessary to support and/or related to the provision of telecommunications networks, telecommunications services as well as information technology and/or convergence technology services including, but not limited to, electronic transactions and provision of hardware, software, content as well as telecommunications-managed services.
The Company started its commercial operations in 1969.
Based on Law No. 3 of 1989 on Telecommunications and pursuant to Government Regulation No. 77 of 1991, the Company had been re-confirmed as an Operating Body (“Badan Penyelenggara”) that provided international telecommunications services under the authority of the Government.
In 1999, the Government issued Law No. 36 on Telecommunications (“Telecommunications Law”) which took effect on September 8, 2000. Under the Telecommunications Law, telecommunications activities cover:
·
Telecommunications networks
·
Telecommunications services
·
Special telecommunications services
National state-owned companies, regional state-owned companies, privately-owned companies and cooperatives are allowed to provide telecommunications networks and services. Individuals, government institutions and legal entities, other than telecommunications networks and service providers, are allowed to render special telecommunications services.
The Telecommunications Law prohibits activities that result in monopolistic practices and unhealthy competition and expects to pave the way for market liberalization.
Based on the Telecommunications Law, the Company ceased as an Operating Body and has to obtain licenses from the Government for the Company to engage in the provision of specific telecommunications networks and services.
On August 14, 2000, the Government, through the Ministry of Communications (“MOC”), granted the Company an in-principle license as a nationwide Digital Communication System (“DCS”) 1800 telecommunications provider as compensation for the early termination effective August 1, 2003 of the exclusivity rights on international telecommunications services given to the Company prior to the granting of such license. On August 23, 2001, the Company obtained the operating license from the MOC. Subsequently, based on Decree No. KP.247 dated November 6, 2001 issued by the MOC, the operating license was transferred to the Company’s subsidiary, PT Indosat Multi Media Mobile (see “e” below).
On September 7, 2000, the Government, through the MOC, also granted the Company in-principle licenses for local and domestic long-distance telecommunications services as compensation for the termination of its exclusivity rights on international telecommunications services. On the other hand, PT Telekomunikasi Indonesia Tbk (“Telkom”) was granted an in-
1.
GENERAL (continued)
a.
Company’s Establishment (continued)
principle license for international telecommunications services as compensation for the early termination of Telkom’s rights on local and domestic long-distance telecommunications services.
Based on a letter dated August 1, 2002 from the MOC, the Company was granted an operating license for fixed local telecommunications network covering Jakarta and Surabaya. This operating license was converted to become a national license on April 17, 2003 based on Decree No. KP.130 Year 2003 of the MOC. The values of the above licenses granted to Telkom and the Company on the termination of their exclusive rights on local/domestic and international telecommunications services, respectively, have been determined by an independent appraiser.
The following are operating licenses obtained by the Company and PT Indosat Mega Media,
a subsidiary:
License No. | Date Issued | Issuing Body | Period of License | Description |
19/KEP/M.KOMINFO/ 02/2006 and 29/KEP/M.KOMINFO/ 03/2006 | February 14, 2006 and March 27, 2006 | Ministry of Communications and Information Technology (“MOCIT”) | 10 years | Determination of the winner and operating license for IMT-2000 cellular network provider using 2.1 GHz radio frequency spectrum (a third generation [“3G”] mobile communications technology) for 1 block (2 x 5 Mhz) of frequency (*) |
252/KEP/ M.KOMINFO/07/2011 (previously 102/KEP/M.KOMINFO/10/2006) | July 6, 2011 | MOCIT | Evaluated every 5 years | Amended operating license for nationwide GSM cellular mobile network (including its basic telephony services and the rights and obligations relating to 3G services), which replaces the previous license No. 102/KEP/M.KOMINFO/10/2006 dated October 11, 2006 |
181/KEP/M.KOMINFO/12/2006 | December 12, 2006 | MOCIT | - | Allocation of two nationwide frequency channels, i.e., channels 589 and 630 in the 800 MHz spectrum for Local Fixed Wireless Network Services with Limited Mobility |
01/DIRJEN/2008 | January 7, 2008 | Directorate General of Post and Telecommunications (“DGPT”) | Evaluated every 5 years | Operating license as internet service provider |
51/DIRJEN/2008 | January 9, 2008 | DGPT | Evaluated every 5 years | Operating license for internet interconnection services (Network Access Point/NAP), which replaces the previous license given to |
52/DIRJEN/2008 | January 9, 2008 | DGPT | Evaluated every 5 years | Operating license for telephony internet services which replaces the previous license No. 823/DIRJEN/2002 for Voice over Internet Protocol Service with national coverage that expired in 2007 |
237/KEP/M.KOMINFO/7/2009 | July 27, 2009 | MOCIT | 10 years | Operating license for “Packet Switched” local fixed telecommunications network using 2.3 GHz radio frequency spectrum of Broadband Wireless Access (BWA) (**) |
268/KEP/M.KOMINFO/9/2009 | September 1, 2009 | MOCIT | 10 years | Operating license for one additional block (2 x 5 Mhz) of 3G frequency (***) |
(*)
As one of the winners in the selection of IMT-2000 cellular providers, the Company was obliged to, among others, pay upfront fee of Rp320,000 (Note 3a) and radio frequency fee (Note 31j).
(**)
PT Indosat Mega Media was obliged to, among others, pay upfront fee of Rp18,408 (Note 3a) and radio frequency fee (Note 31j).
(***)
The Company was obliged to, among others, pay upfront fee of Rp320,000 (Note 3a) and radio frequency fee (Note 31j).
11
These consolidated financial statements are originally issued in the Indonesian language.
PT INDOSAT Tbk AND SUBSIDIARIES
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
As of March 31, 2012 and for the Three-Month Period then Ended (Unaudited)
With Comparative Figures as of December 31, 2011 and
January 1, 2011 / December 31, 2010 (as Restated) (Unaudited)
and for the Three-Month Period Ended March 31, 2011 (as Restated) (Unaudited)
(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)
1.
GENERAL (continued)
a.
Company’s Establishment (continued)
License No. | Date Issued | Issuing Body | Period of License | Description |
198/KEP/M.KOMINFO/05/2010 | May 27, 2010 | MOCIT | Evaluated every 5 years | Amended operating license for nationwide closed fixed communications network (e.g.,VSAT, frame relay, etc.), which replaces the previous license No.KP.69/Thn 2004 given to the Company |
311/KEP/M.KOMINFO/8/2010 312/KEP/M.KOMINFO/8/2010 and 313/KEP/M.KOMINFO/8/2010 | August 24, 2010 | MOCIT | Evaluated every 5 years | Amended operating license for fixed network and basic telephony service which covers the provision of local, national long-distance, and international long-distance telephony services, which replaces the previous license No. KP.203/Thn 2004 given to the Company |
On January 9, 2008, based on letter No. 10/14/DASP from Bank Indonesia (Central Bank), the Company obtained approval for“Indosat m-wallet” prepaid cards as a new means of making payments to certain merchants. The Company was also appointed as a special principal and technical acquirer for such prepaid cards. On November 19, 2009, the Company launched“Indosat m-wallet”to the public.
On March 17, 2008, the MOCIT issued Ministerial Decree No. 02/PER/M.KOMINFO/2008 on the Guidelines of Construction and Utilization of Sharing Telecommunications Towers. Based on this Decree, the construction of telecommunications towers requires permits from the relevant governmental institution and the local government determines the placement of the towers and the location in which the towers can be constructed. Furthermore, a telecommunications provider or tower provider which owns telecommunications towers is obliged to allow other telecommunications operators to utilize its telecommunications towers without any discrimination. The Decree also mandated that each of the tower contractor, provider and owner be 100% locally owned companies.
On March 30, 2009, the Ministry of Domestic Affairs, Ministry of Public Works, MOCIT and Head of BKPM jointly issued Decrees No. 18 Year 2009, No. 07/PRT/M/2009, No. 19/PER/M.KOMINFO/03/09 and No. 3/P/2009 on the Detailed Guidelines of Construction and Utilization of Sharing Telecommunications Towers. The Decrees define the requirements and procedures for tower construction. A tower provider can be either a telecommunications operator or a non-telecommunications operator. If a tower provider is a non-telecommunications operator, it is required to be a 100% locally owned company.
On September 3, 2010, based on letter No. 12/67/DASP/25 from Bank Indonesia (Central Bank), the Company obtained approval to become a “money remittance provider”to customers in the local and international markets.
On December 13, 2010, based on letter No. 2619/BSN/D3-d3/12/2010 from the Badan Standardisasi Nasional (National Standardization Bureau), the Company obtained Issuer Identification Number (IIN) on its applications for“Indosat m-wallet” and“money remittance”. On March 23, 2011, the President of the Republic of Indonesia issued Regulation orPeraturan Pemerintah (“PP”) No. 3 year 2011 regarding money remittance. This regulation becomes the operational guidance for the Company as a “money remittance provider”.
The Company is domiciled at Jalan Medan Merdeka Barat No. 21, Jakarta and has 4 regional offices located in Jakarta, Surabaya, Batam and Balikpapan.
Qatar Telecom QSC, Qatar (“Qatar Telecom”) is the ultimate parent company of the Company and subsidiaries. The immediate parent company of the Group is Qatar Telecom (Qtel Asia) Pte. Ltd., Singapore.
1.
GENERAL (continued)
b.
Company’s Public Offerings
All of the Company’s B shares have been registered with and traded on the Indonesia Stock Exchange (new entity after the merger of Jakarta Stock Exchange and Surabaya Stock Exchange in November 2007) since 1994. The Company’s American Depositary Shares (ADS, each representing 50 B shares), have also been traded on the New York Stock Exchange since 1994.
As of March 31, 2012, the outstanding bonds issued to the public by the Company and a subsidiary are as follows:
Bond (Note 19) | Effective Date | Registered with and Traded on: |
1. Second Indosat Bonds series B in Year 2002 with Fixed Rate | November 6, 2002 | Indonesia Stock Exchange |
2. Fifth Indosat Bonds in Year 2007 with Fixed Rates | May 29, 2007 | Indonesia Stock Exchange |
3. Indosat Sukuk Ijarah II in Year 2007 | May 29, 2007 | Indonesia Stock Exchange |
4. Sixth Indosat Bonds in Year 2008 with Fixed Rates | April 9, 2008 | Indonesia Stock Exchange |
5. Indosat Sukuk Ijarah III in Year 2008 | April 9, 2008 | Indonesia Stock Exchange |
6. Seventh Indosat Bonds in Year 2009 with Fixed Rates | December 8, 2009 | Indonesia Stock Exchange |
7. Indosat Sukuk Ijarah IV in Year 2009 | December 8, 2009 | Indonesia Stock Exchange |
8. Guaranteed Notes Due 2020 | July 29, 2010 | Singapore Exchange Securities Trading Limited |
c.
Directors, Commissioners and Audit Committee
Based on resolutions of the Annual Stockholders’ General Meetings held on June 24, 2011 and June 22, 2010 which are notarized under Deeds No. 148 and No. 164, respectively, of Aulia Taufani, S.H. (as substitute notary of Sutjipto, S.H.) on the same dates, the composition of the Company’s Board of Commissioners and Board of Directors as of March 31, 2012 and December 31, 2011 and 2010, respectively, is as follows:
March 31, 2012 and December 31, 2011 | December 31, 2010 | |||
Board of Commissioners: | ||||
President Commissioner | Abdulla Mohammed S.A Al Thani | Abdulla Mohammed S.A Al Thani | ||
Commissioner | Dr. Nasser Mohd. A. Marafih | Dr. Nasser Mohd. A. Marafih | ||
Commissioner | Rachmad Gobel | Rachmad Gobel | ||
Commissioner | Richard Farnsworth Seney | Richard Farnsworth Seney | ||
Commissioner | Rionald Silaban | Rionald Silaban | ||
Commissioner | Alexander Rusli* | Alexander Rusli* | ||
Commissioner | Chris Kanter* | Chris Kanter* | ||
Commissioner | Thia Peng Heok George* | Thia Peng Heok George* | ||
Commissioner | Soeprapto* | Soeprapto* | ||
Commissioner | -** | Jarman | ||
* Independent commissioner
** Parikesit Suprapto was appointed as commissioner on February 8, 2011 and submitted his resignation letter on October 14, 2011 with effective date of December 14, 2011. As of March 31, 2012, there has been no appointment of his replacement.
12
These consolidated financial statements are originally issued in the Indonesian language.
PT INDOSAT Tbk AND SUBSIDIARIES
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
As of March 31, 2012 and for the Three-Month Period then Ended (Unaudited)
With Comparative Figures as of December 31, 2011 and
January 1, 2011 / December 31, 2010 (as Restated) (Unaudited)
and for the Three-Month Period Ended March 31, 2011 (as Restated) (Unaudited)
(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)
1.
GENERAL (continued)
c.
Directors, Commissioners and Audit Committee (continued)
March 31, 2012 and December 31, 2011 | December 31, 2010 | ||||
Board of Directors: | |||||
President Director and Chief Executive Officer | Harry Sasongko Tirtotjondro | Harry Sasongko Tirtotjondro | |||
Director and Chief Financial Officer | Curt Stefan Carlsson | Peter Wladyslaw Kuncewicz | |||
Directorand Chief Commercial Officer | Laszlo Imre Barta | Laszlo Imre Barta | |||
Directorand Chief Technology Officer | Hans Christiaan Moritz | Stephen Edward Hobbs | |||
Directorand Chief Wholesale and Infrastructure Officer
| Fadzri Sentosa | Fadzri Sentosa | |||
The composition of the Company’s Audit Committee as of March 31, 2012, December 31, 2011 and 2010 is as follows:
Chairman
Thia Peng Heok George
Member
Chris Kanter
Member
Soeprapto
Member
Unggul Saut Marupa Tampubolon
Member
Kanaka Puradiredja
The Company and subsidiaries (collectively referred to hereafter as “the Group”) has approximately 4,383, 4,461 and 6,694 employees, including non-permanent employees, as of March 31, 2012, December 31, 2011 and 2010, respectively.
d.
Structure of the Company’s Subsidiaries
As of March 31, 2012, December 31, 2011 and 2010, the Company has direct and indirect ownership in the following Subsidiaries:
Name of Subsidiary | Location | Principal Activity | Start of Commercial Operations | |||||||||||||
Percentage of Ownership (%) March 31, 2012 and December 31, 2011 | Percentage of Ownership (%) December 31, 2010 | |||||||||||||||
Indosat Palapa Company B.V. (“IPBV”)(1) | Amsterdam | Finance | 2010 | 100.00 | 100.00 | |||||||||||
Indosat Mentari Company B.V. (“IMBV”)(1) | Amsterdam | Finance | 2010 | 100.00 |
| 100.00 | ||||||||||
Indosat Finance Company B.V. (“IFB”) | Amsterdam | Finance | 2003 | 100.00 | 100.00 | |||||||||||
Indosat International Finance Company B.V. (“IIFB”) | Amsterdam | Finance | 2005 | 100.00 | 100.00 | |||||||||||
Indosat Singapore Pte. Ltd. (“ISPL”) | Singapore | Telecommunication | 2005 | 100.00 | 100.00 | |||||||||||
PT Indosat Mega Media (“IMM”) | Jakarta | Multimedia | 2001 | 99.85 | 99.85 | |||||||||||
PT Interactive Vision Media (“IVM”)(2) | Jakarta | Pay TV | 2011 | 99.83 | - | |||||||||||
PT Starone Mitra Telekomunikasi (“SMT”) | Semarang | Telecommunication | 2006 | 72.54 | 72.54 | |||||||||||
PT Aplikanusa Lintasarta (“Lintasarta”) | Jakarta | Data Communication | 1989 | 72.36 | 72.36 | |||||||||||
PT Lintas Media Danawa (“LMD”) (3) | Jakarta | Information and Communication Services | 2008 | 50.65 | 50.65 | |||||||||||
PT Artajasa Pembayaran Elektronis (“APE”)(3) | Jakarta | Telecommunication | 2000 | 39.80 | 39.80 | |||||||||||
13
These consolidated financial statements are originally issued in the Indonesian language.
PT INDOSAT Tbk AND SUBSIDIARIES
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
As of March 31, 2012 and for the Three-Month Period then Ended (Unaudited)
With Comparative Figures as of December 31, 2011 and
January 1, 2011 / December 31, 2010 (as Restated) (Unaudited)
and for the Three-Month Period Ended March 31, 2011 (as Restated) (Unaudited)
(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)
1.
GENERAL (continued)
d.
Structure of the Company’s Subsidiaries (continued)
Total Assets (Before Eliminations)
January 1, 2011 /
March 31,
December 31,
December 31,
Name of Subsidiary
2012
2011
2010
IPBV(1)
5,982,675
6,015,894
5,966,764
IMBV(1)
5,977,069
6,010,359
5,946,885
IFB
21,180
20,923
21,876
IIFB
8,643
8,688
9,635
ISPL
82,681
78,264
54,353
IMM
759,016
746,404
815,130
IVM
(2)
5,257
5,198
-
SMT
224,410
209,651
155,297
Lintasarta
1,824,886
1,783,759
1,739,896
LMD(3)
5,005
5,199
2,671
APE(3)
295,474
258,745
221,297
(1)
IPBV and IMBV were incorporated in Amsterdam on April 28, 2010 to engage in treasury activities, to lend and borrow money, whether in the form of securities or otherwise, to finance enterprises and companies, and to grant security in respect of their respective obligations or those of their group companies and third parties.
(2)
IVM, a subsidiary of IMM, was established on April 21, 2009 to engage in Pay TV services. IMM made capital injections to IVM on March 9 and 30, 2011 totalling Rp4,999. On July 12, 2011, IVM got the license to conduct its Pay TV services. However, as of March 31, 2012, IVM has not started its commercial operations.
(3)
Lintasarta has direct 55% and 70% ownership in APE and LMD, respectively.
e.
Merger of the Company, Satelindo, Bimagraha and IM3
Based on Merger Deed No. 57 dated November 20, 2003 (“merger date”) of Poerbaningsih Adi Warsito, S.H., the Company, Satelindo, PT Bimagraha Telekomindo (“Bimagraha”) and PT Indosat Multi Media Mobile (“IM3”) agreed to merge, with the Company as the surviving entity. All assets and liabilities owned by Satelindo, Bimagraha and IM3 were transferred to the Company on the merger date. These three companies were dissolved by operation of law without the need to undergo the regular liquidation process.
The names “Satelindo” and “IM3” in the following notes refer to these entities before they were merged with the Company, or as the entities that entered into contractual agreements that were taken over by the Company as a result of the merger.
f.
Approval and Authorization for the Issuance of Consolidated Financial Statements
The issuance of the unaudited interim consolidated financial statements of the Group as of March 31, 2012 and for the three-month period then ended with comparative figures as of December 31, 2011 and January 1, 2011 / December 31,
2010 and for the three-month period ended March 31, 2011 was approved and authorized by the Board of Directors on May 3, 2012, as reviewed and recommended for approval by the Audit Committee.
14
These consolidated financial statements are originally issued in the Indonesian language.
PT INDOSAT Tbk AND SUBSIDIARIES
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
As of March 31, 2012 and for the Three-Month Period then Ended (Unaudited)
With Comparative Figures as of December 31, 2011 and
January 1, 2011 / December 31, 2010 (as Restated) (Unaudited)
and for the Three-Month Period Ended March 31, 2011 (as Restated) (Unaudited)
(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a.
Basis of Presentation of Interim Consolidated Financial Statements
The interim consolidated financial statements have been prepared in accordance with Indonesian Financial Accounting Standards which comprise the Statements and Interpretations issued by the Financial Accounting Standards Board of the Indonesian Institute of Accountants (“DSAK”) and the Regulations and the Guidelines on Financial Statement Presentation and Disclosures issued by BAPEPAM-LK. As disclosed further in the relevant succeeding notes to the interim consolidated financial statements, several amended and published accounting standards were adopted effective January 1, 2011.
The interim consolidated financial statements are prepared in accordance with Statement of Financial Accounting Standards (“PSAK”) 1 (Revised 2009), “Presentation of Financial Statements”, adopted on January 1, 2011.
PSAK 1 (Revised 2009) regulates presentation of financial statements as to, among others, the objective, component of financial statements, fair presentation, materiality and aggregation, offsetting, distinction between current and non-current assets and short-term and long-term liabilities, comparative information and consistency, and introduces new disclosures such as key estimations and judgements, capital management, other comprehensive income, departures from accounting standards and statement of compliance.
The adoption of PSAK 1 (Revised 2009) has significant impact on the related presentation and disclosures in the consolidated financial statements.
The accounting policies adopted in the preparation of the interim consolidated financial statements are consistent with those made in the preparation of the Group’s consolidated financial statements for the year ended December 31, 2011, except for the adoption of several amended PSAKs effective January 1, 2012 as disclosed in this note.
The interim consolidated financial statements have been prepared on the accrual basis using the historical cost concept of accounting, except as disclosed in the relevant notes herein.
The interim consolidated statements of cash flows, which have been prepared using the direct method, present receipts and disbursements of cash and cash equivalents classified into operating, investing and financing activities.
The reporting currency used in the interim consolidated financial statements is the Indonesian rupiah, which is the Company’s functional currency. Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency.
15
These consolidated financial statements are originally issued in the Indonesian language.
PT INDOSAT Tbk AND SUBSIDIARIES
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
As of March 31, 2012 and for the Three-Month Period then Ended (Unaudited)
With Comparative Figures as of December 31, 2011 and
January 1, 2011 / December 31, 2010 (as Restated) (Unaudited)
and for the Three-Month Period Ended March 31, 2011 (as Restated) (Unaudited)
(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
b.
Principles of Consolidation
From January 1, 2011
Effective January 1, 2011, the Group retrospectively adopted PSAK 4 (Revised 2009), “Consolidated and Separate Financial Statements”, except for the following items that were applied prospectively: (i) losses of a subsidiary that result in a deficit balance to non-controlling interests (“NCI”); (ii) loss of control over a subsidiary; (iii) change in the ownership interest in a subsidiary that does not result in a loss of control; (iv) potential voting rights in determining the existence of control; and (v) consolidation of a subsidiary that is subject to long-term restriction.
PSAK 4 (Revised 2009) provides for the preparation and presentation of consolidated financial statements for a group of entities under the control of a parent, and the accounting for investments in subsidiaries, jointly controlled entities and associated entities when separate financial statements are presented as additional information.
All material intercompany transactions and account balances (including the related significant unrealized gains or losses) have been eliminated.
The interim consolidated financial statements include the accounts of the Company and subsidiaries mentioned in Note 1d, in which the Company maintains (directly or indirectly) equity ownership of more than 50%.
Subsidiaries are fully consolidated from the date of acquisitions, being the date on which the Group obtains control, and continue to be consolidated until the date such control ceases. Control is presumed to exist if the Company owns, directly or indirectly through Subsidiaries, more than half of the voting power of an entity. Control also exists when the parent owns half or less of the voting power of an entity when there is:
a)
power over more than half of the voting rights by virtue of an agreement with other investors;
b)
power to govern the financial and operating policies of the entity under a statute or an agreement;
c)
power to appoint or remove the majority of the members of the board of directors or equivalent governing body and control of the entity is by that board or body; or
d)
power to cast the majority of votes at meetings of the board of directors or equivalent governing body and control of the entity is by that board or body.
Losses of a non-wholly owned subsidiary are attributed to the NCI even if they create an NCI deficit balance.
16
These consolidated financial statements are originally issued in the Indonesian language.
PT INDOSAT Tbk AND SUBSIDIARIES
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
As of March 31, 2012 and for the Three-Month Period then Ended (Unaudited)
With Comparative Figures as of December 31, 2011 and
January 1, 2011 / December 31, 2010 (as Restated) (Unaudited)
and for the Three-Month Period Ended March 31, 2011 (as Restated) (Unaudited)
(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
b.
Principles of Consolidation (continued)
From January 1, 2011 (continued)
In case of loss of control over a subsidiary, the Group:
·
derecognizes the assets (including goodwill) and liabilities of the subsidiary;
·
derecognizes the carrying amount of any NCI;
·
derecognizes the cumulative translation differences, recorded in equity, if any;
·
recognizes the fair value of the consideration received;
·
recognizes the fair value of any investment retained;
·
recognizes any surplus or deficit in profit or loss; and
·
reclassifies the parent’s share of components previously recognized in other comprehensive income to profit or loss or retained earnings, as appropriate.
NCI represent the portion of the profit or loss and net assets of the subsidiaries not attributable, directly or indirectly, to the Company, which are presented in the interim consolidated statements of comprehensive income and under the equity section of the interim consolidated statements of financial position, respectively, separately from the corresponding portion attributable to the equity holders of the parent company.
Prior to January 1, 2011
The proportionate shares of minority shareholders in net assets and net income or loss of the consolidated subsidiaries were previously presented as “Minority Interests” in the interim consolidated statements of financial position and as “Minority Interests in Net Loss (Income) of Subsidiaries” in the interim consolidated statements of comprehensive income.
The losses applicable to the minority interests in a subsidiary may have exceeded the minority interests in the equity of the subsidiary. The excess and any further losses applicable to the minority interests were absorbed by the Company as the majority shareholder, except to the extent that the minority interests had other long-term interest in the related subsidiary or had binding obligations for, and were able to make good of, the losses. If the subsidiary subsequently reported profits, all such profits were allocated to the majority interest holder, in this case, the Company, until the minority interests’ share of losses previously absorbed by the Company was recovered.
The accounts of IPBV, IMBV, IFB, IIFB and ISPL were translated into rupiah amounts at the middle rates of exchange prevailing at financial position date for financial position accounts and the average rates during the three-month period for profit and loss accounts. The resulting difference arising from the translations of the financial statements of IPBV, IMBV, IFB, IIFB and ISPL is presented as “Difference in Foreign Currency Translation” under the Equity section of the interim consolidated statements of financial position.
17
These consolidated financial statements are originally issued in the Indonesian language.
PT INDOSAT Tbk AND SUBSIDIARIES
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
As of March 31, 2012 and for the Three-Month Period then Ended (Unaudited)
With Comparative Figures as of December 31, 2011 and
January 1, 2011 / December 31, 2010 (as Restated) (Unaudited)
and for the Three-Month Period Ended March 31, 2011 (as Restated) (Unaudited)
(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
c.
Business Combinations
From January 1, 2011
Effective January 1, 2011, the Group prospectively adopted PSAK 22 (Revised 2010), “Business Combinations”, applicable for business combinations that occur on or after the beginning of a financial year commencing on or after January 1, 2011.
In accordance with the transitional provision of PSAK 22 (Revised 2010), starting January 1, 2011, the Group:
·
ceased the goodwill amortization (Note 9);
·
eliminated the carrying amount of the related accumulated amortization of goodwill; and
·
performed an impairment test of goodwill in accordance with PSAK 48 (Revised 2009), “Impairment of Assets”.
As described herein, the adoption of PSAK 22 (Revised 2010) has significant impact on the financial reporting, including for the related disclosures in the interim consolidated financial statements.
Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, measured at acquisition-date fair value and the amount of any NCI in the acquiree. For each business combination, the acquirer measures the NCI in the acquiree either at fair value or at the proportionate share of the acquiree’s identifiable net assets. Acquisition costs incurred are directly expensed and included in administrative expenses.
When the Group acquires a business, it assesses the financial assets acquired and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree.
If the business combination is achieved in stages, the acquisition-date fair value of the acquirer’s previously held equity interest in the acquiree is remeasured to fair value at the acquisition date through profit or loss.
Any contingent consideration to be transferred by the acquirer will be recognized at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration which is deemed to be an asset or liability, will be recognized in accordance with PSAK 55 (Revised 2006) either in profit or loss or as other comprehensive income. If the contingent consideration is classified as equity, it should not be remeasured until it is finally settled within equity.
At acquisition date, goodwill is initially measured at cost being the excess of the aggregate of the consideration transferred and the amount recognized for NCI over the net identifiable assets acquired and liabilities assumed. If this consideration is lower than the fair value of the net assets of the subsidiary acquired, the difference is recognized in profit or loss.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s cash-generating units (“CGUs”) that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those CGUs.
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
c.
Business Combinations (continued)
From January 1, 2011 (continued)
Where goodwill forms part of a CGU and part of the operations within that CGU is disposed of, the goodwill associated with the operations disposed of is included in the carrying amount of the operations when determining the gain or loss on disposal of the operations. Goodwill disposed of in this circumstance is measured based on the relative values of the operations disposed of and the portion of the CGU retained.
Prior to January 1, 2011
In comparison to the above, the following were the accounting policies applied on business combinations prior to January 1, 2011:
i.
Business combinations were accounted for using the purchase method. Transaction costs directly attributable to the acquisition formed part of the acquisition costs. The NCI (formerly known as minority interest) was measured at the book value of the proportionate share of the acquiree’s identifiable net assets.
ii.
Business combinations achieved in stages were accounted for as separate steps. Any additional acquired equity interest did not affect previously recognized goodwill.
iii.
When the Group acquired a business, embedded derivatives separated from the host contract by the acquiree were not reassessed on acquisition unless the business combination resulted in a change in the terms of the contract that significantly modified the cash flows that otherwise would have been required under the contract.
iv.
Contingent consideration was recognized if, and only if, the Group had a present obligation, the economic outflow was more likely than not and a reliable estimate was determinable. Subsequent adjustments to the contingent consideration were recognized as part of goodwill.
d.
Cash and Cash Equivalents
Time deposits with original maturities of three months or less at the time of placement and deposits on call are considered as “Cash Equivalents”.
Cash in banks and time deposits which are pledged as collateral for bank guarantees are not classified as part of “Cash and Cash Equivalents”. These are presented as part of either “Other Current Financial Assets” or “Other Non-current Financial Assets”.
e.
Inventories
Inventories, which mainly consist of SIM cards, broadband modems, starter packs, cellular handsets and pulse reload vouchers are valued at the lower of cost or net realizable value. Cost is determined using the weighted average method.
In accordance with PSAK 14 (Revised 2008), the Group applies the guidance on the determination of inventory cost and its subsequent recognition as an expense, including any write-down to net realizable value, as well as guidance on the cost formula used to assign costs to inventories.
18
These consolidated financial statements are originally issued in the Indonesian language.
PT INDOSAT Tbk AND SUBSIDIARIES
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
As of March 31, 2012 and for the Three-Month Period then Ended (Unaudited)
With Comparative Figures as of December 31, 2011 and
January 1, 2011 / December 31, 2010 (as Restated) (Unaudited)
and for the Three-Month Period Ended March 31, 2011 (as Restated) (Unaudited)
(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
f.
Prepaid Expenses
Prepaid expenses, which mainly consist of frequency fee, rentals, upfront fee of 3G and BWA licenses and insurance, are expensed as the related asset is utilized. The non-current portions of prepaid rentals and upfront fee of 3G and BWA licenses are shown as part of “Long-term Prepaid Rentals - Net of Current Portion” and “Long-term Prepaid Licenses - Net of Current Portion”, respectively.
g.
Investments in Associated Companies
Effective January 1, 2011, the Group applied PSAK 15 (Revised 2009), “Investments in Associates”. The revised PSAK is applied retrospectively and prescribes the accounting for investments in associated companies with respect to the determination of significant influence, accounting method to be applied, impairment in value of investments and separate financial statements.
The Group’s investment in its associated company is accounted for using the equity method. An associated company is an entity in which the Group has significant influence. Under the equity method, the cost of investment is increased or decreased by the Group’s share in net earnings or losses of, and dividends received from the associated company since the date of acquisition.
The interim consolidated statements of comprehensive income reflect the share of the results of operations of the associated company. Where there has been a change recognized directly in the equity of the associated company, the Group recognizes its share of any such changes and discloses this, when applicable, in the consolidated statements of changes in equity. Unrealized gains and losses resulting from transactions between the Group and the associated company are eliminated to the extent of the Group’s interest in the associated company.
The Group determines whether it is necessary to recognize an additional impairment loss on the Group’s investment in its associated company. The Group determines at each reporting date whether there is any objective evidence that the investment in the associated company is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the investment in associated company and its carrying value, and recognizes the amount in the interim consolidated statements of comprehensive income.
h.
Property and Equipment
Effective January 1, 2012, the Group implemented PSAK 16 (Revised 2011), “Property, Plant and Equipment”, which impacts recognition of the assets, the determination of their carrying amounts and the depreciation charges and impairment losses to be recognized in relation to them.
Property and equipment are stated at cost (which includes certain capitalized borrowing costs incurred during the construction phase), less accumulated depreciation and impairment in value.
Depreciation of property and equipment is computed using the straight-line method based on the estimated useful lives of the assets.
Property and equipment acquired in exchange for a non-monetary asset or for a combination of monetary and non-monetary assets are measured at fair values unless:
(i)
the exchange transaction lacks commercial substance, or
(ii)
the fair value of neither the assets received nor the assets given up can be measured reliably.
19
These consolidated financial statements are originally issued in the Indonesian language.
PT INDOSAT Tbk AND SUBSIDIARIES
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
As of March 31, 2012 and for the Three-Month Period then Ended (Unaudited)
With Comparative Figures as of December 31, 2011 and
January 1, 2011 / December 31, 2010 (as Restated) (Unaudited)
and for the Three-Month Period Ended March 31, 2011 (as Restated) (Unaudited)
(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
h.
Property and Equipment (continued)
The acquired assets are measured this way even if the Group cannot immediately derecognize the assets given up. If the acquired assets cannot be reliably measured at fair value, their value is measured at the carrying amount of the assets given up.
In accordance with PSAK 16 (Revised 2011), the Group has chosen the cost model for the measurement of its property and equipment. The Group performs periodic review and assessment of the economic useful lives of the assets. Below are the estimated useful lives (in years):
Years
Buildings
20 to 40
Information technology equipment
3 to 5
Office equipment
3 to 5
Building and leasehold improvements
3 to 25
Vehicles
5
Cellular technical equipment
10
Transmission and cross-connection equipment
10 to 15
Fixed Wireless Access (“FWA”) technical equipment
7 to 10
Operation and maintenance center and
measurement unit
3 to 5
Fixed access network equipment
10
In accordance with its policy, the Group reviews the estimated useful lives on its fixed assets on an ongoing basis. Based on such review, the Group changed its estimate of the useful lives to better reflect the estimated period during these assets remain in service. The Group changed its estimate of the useful lives of tower assets within Building and Leasehold Improvements from 15 years to 25 years. In addition, the Group changed its estimate of useful lives of its buildings from 20 years to 40 years, and Fixed Wireless Access (“FWA”) technical equipment from 10 years to 7 years, effective January 1, 2012.
Landrights are stated at cost.
The cost of maintenance and repairs is charged to income as incurred; significant renewals and betterments which enhance an asset’s condition on its initial performance are capitalized. When properties are retired or otherwise disposed of, their costs and the related accumulated depreciation are derecognized from the accounts, and any resulting gains or losses are recognized in the interim consolidated statement of comprehensive income for the period.
Properties under construction and installation are stated at cost. Effective January 1, 2012, the Group implemented PSAK 26 (Revised 2011), “Borrowing Costs”. All borrowing costs, which include interest, amortization of ancillary costs and foreign exchange differentials (estimated quarterly to the extent that they are regarded as an adjustment to interest costs by capping the exchange differences taken as borrowing costs at the amount of borrowing costs on the functional currency equivalent borrowings) that can be attributed to qualifying assets, are capitalized to the cost of properties under construction and installation. Other borrowing costs are recognized as an expense in the period in which they are incurred. Capitalization of borrowing costs ceases when the construction or installation is completed and the constructed or installed asset is ready for its intended use.
The residual values, useful lives and methods of depreciation of property and equipment are
reviewed and adjusted prospectively, if appropriate, at each financial year end.
20
These consolidated financial statements are originally issued in the Indonesian language.
PT INDOSAT Tbk AND SUBSIDIARIES
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
As of March 31, 2012 and for the Three-Month Period then Ended (Unaudited)
With Comparative Figures as of December 31, 2011 and
January 1, 2011 / December 31, 2010 (as Restated) (Unaudited)
and for the Three-Month Period Ended March 31, 2011 (as Restated) (Unaudited)
(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
i.
Impairment of Non-financial Assets
Prior to January 1, 2011
Based on accounting policy on impairment of non-financial assets prior to January 1, 2011, in accordance with PSAK 48, “Impairment of Assets Value”, the Group reviewed whether there was an indication of assets impairment at interim consolidated statements of financial position date. If there was an indication of assets impairment, the Group estimated the recoverable amount of the assets. Impairment loss was recognized as a charge to current operations.
From January 1, 2011
Effective January 1, 2011, the Group prospectively adopted PSAK 48 (Revised 2009), “Impairment of Assets”, including goodwill and assets acquired from business combinations before January 1, 2011.
PSAK 48 (Revised 2009) prescribes the procedures to be employed by an entity to ensure that its assets are carried at no more than their recoverable amount. An asset is carried at more than its recoverable amount if its carrying amount exceeds the amount to be recovered through use or sale of the asset. If this is the case, the asset is described as impaired and this revised PSAK requires the entity to recognize an impairment loss. This revised PSAK also specifies when an entity should reverse an impairment loss and prescribes disclosures.
As described herein, the adoption of PSAK 48 (Revised 2009) has a significant impact on financial reporting, including for the related disclosures, mainly on the impairment test of goodwill which is required at least once a year and more frequently when indications for impairment exist.
The Group assesses at each annual reporting period whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset (i.e., an intangible asset with an indefinite useful life, an intangible asset not yet available for use, or goodwill acquired in a business combination) is required, the Group makes an estimate of the asset’s recoverable amount.
An asset’s recoverable amount is the higher of the asset’s or CGU’s fair value less costs to sell and its value in use, and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. Impairment losses of continuing operations are recognized in the consolidated statements of comprehensive income as “impairment losses”. In assessing the value in use, the estimated net future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs to sell, recent market transactions are taken into account, if available. If no such transactions can be identified, an appropriate valuation model is used to determine the fair value of the asset. These calculations are corroborated by valuation multiples or other available fair value indicators.
Impairment losses of continuing operations, if any, are recognized in the interim consolidated statements of comprehensive income under expense categories that are consistent with the functions of the impaired assets.
21
These consolidated financial statements are originally issued in the Indonesian language.
PT INDOSAT Tbk AND SUBSIDIARIES
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
As of March 31, 2012 and for the Three-Month Period then Ended (Unaudited)
With Comparative Figures as of December 31, 2011 and
January 1, 2011 / December 31, 2010 (as Restated) (Unaudited)
and for the Three-Month Period Ended March 31, 2011 (as Restated) (Unaudited)
(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
i.
Impairment of Non-financial Assets (continued)
From January 1, 2011 (continued)
An assessment is made at each annual reporting period as to whether there is any indication that previously recognized impairment losses recognized for an asset other than goodwill may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognized impairment loss for an asset other than goodwill is reversed only if there has been a change in the assumptions used to determine the asset’s recoverable amount since the last impairment loss was recognized. If that is the case, the carrying amount of the asset is increased to its recoverable amount. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior periods. Reversal of an impairment loss is recognized in the interim consolidated statements of comprehensive income. After such a reversal, the depreciation charge on the said asset is adjusted in future periods to allocate the asset’s revised carrying amount, less any residual value, on a systematic basis over its remaining useful life.
Goodwill is tested for impairment annually and when circumstances indicate that the carrying value may be impaired. Impairment is determined for goodwill by assessing the recoverable amount of each CGU (or group of CGUs) to which the goodwill relates. Where the recoverable amount of the CGU is less than its carrying amount, an impairment loss is recognized. Impairment losses relating to goodwill cannot be reversed in future periods.
In accordance with PSAK 19 (Revised 2010), software that is not an integral part of the related hardware is amortized using the straight-line method over 5 years and assessed for impairment whenever there is indication of impairment. The Company reviews the amortization period and the amortization method for the software at least at each financial year end. Residual value of software is assumed to be zero.
j.
Leases
Group as a lessee
A finance lease that transfers to the Group substantially all the risks and benefits incidental to ownership of the leased item, is capitalized at the commencement of the lease at the fair value of the leased property or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognized in finance costs in the interim consolidated statements of comprehensive income.
A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Group will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and the lease term.
The current portion of obligations under finance lease is presented as part of Other Current Financial Liabilities.
Operating lease payments are recognized as an operating expense in the interim consolidated statements of comprehensive income on a straight-line basis over the lease term.
Group as a lessor
A lease in which the Group does not transfer substantially all the risks and benefits of the
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
j.
Leases
(continued)
Group as a lessor (continued)
ownership of an asset is classified as an operating lease. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognized over the lease term on the same basis as rental income. Contingent rents are recognized as revenue in the period which they are earned.
A lease in which the Group transfers substantially all the risks and benefits of the ownership of an asset is classified as a finance lease. Leased assets are recognized as assets held under a finance lease in the consolidated statements of financial position and are presented as a receivable at an amount equal to the net investment in the lease. Selling profit or loss is recognized in the period, in accordance with the policy followed by the Group for outright sales. Costs incurred by the Group in connection with negotiating and arranging a lease are recognized as an expense when the selling profit is recognized.
The current portion of finance lease receivables is presented as part of Other Current Financial Assets - Net.
Before January 1, 2012, there was no requirement to separately evaluate lease agreement that contained land and building elements. As such, the assessment was performed on a combined basis. One of the considerations in determining the lease classification was a comparison of the lease term with the economic life of the assets. Further, the land that could only be owned in the form of landrights which were not amortized and were considered as having an indefinite life. Therefore, a lease agreement that contained land and building elements would mostly be classified as an operating lease.
Starting January 1, 2012, based on PSAK 30 (Revised 2011), when a lease includes both land and building elements, an entity should assess the classification of each element separately whether as a finance or an operating lease. As a result of the separate assessment made by the Company taking into consideration comparison of the lease term with the reassessed economic life of the respective element and other relevant factors, each element might result in different lease classification. The Group changed its estimates of useful lives of the tower assets within Building and Leasehold Improvements classification taking into consideration the retrospective implementation of PSAK 30 (Revised 2011), “Leases”, starting from January 1, 2010, when the Company engaged significantly in tower lease transactions.
As a result of effective application of PSAK 30 (Revised 2011), “Leases”, the following retrospective application were made to the consolidated financial statements:
As of January 1, 2011 / December 31, 2010:
January 1, 2011 / December 31, 2010 (Previously Reported) | Adjustments - Increase | January 1, 2011 / December 31, 2010 (As Restated) | |||
ASSETS | |||||
Other current financial assets - net | 53,119 | 3,160 | 56,279 | ||
Finance lease receivables | - | 63,498 | 63,498 | ||
Property and equipment - net | 43,571,010 | 392,407 | 43,963,417 | ||
LIABILITIES | |||||
Other current financial liabilities | 23,127 | 21,753 | 44,880 | ||
Obligations under finance lease | - | 286,279 | 286,279 | ||
Deferred tax liabilities - net | 1,772,337 | 37,758 | 1,810,095 | ||
EQUITY | |||||
Retained earnings | |||||
Unappropriated | 15,224,843 | 113,275 | 15,338,118 | ||
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
j.
Leases
(continued)
As of December 31, 2011:
December 31, 2011 (Previously Reported) | Adjustments - Increase | December 31, 2011 (As Restated) | |||
ASSETS | |||||
Other current financial assets - net | 24,790 | 5,043 | 29,833 | ||
Finance lease receivables | - | 81,966 | 81,966 | ||
Property and equipment - net | 42,573,369 | 904,761 | 43,478,130 | ||
LIABILITIES | |||||
Other current financial liabilities | 16,072 | 57,129 | 73,201 | ||
Obligations under finance lease | - | 692,907 | 692,907 | ||
Deferred tax liabilities - net | 1,920,787 | 60,433 | 1,981,220 | ||
EQUITY | |||||
Retained earnings | |||||
Unappropriated | 15,736,227 | 181,301 | 15,917,528 | ||
For the three-month period ended March 31, 2011:
March 31, 2011 (Previously Reported) | Adjustments - Increase (Decrease) | March 31, 2011 (As Restated) | |||
OPERATING REVENUES | |||||
Cellular | 3,964,388 | (3,805) | 3,960,583 | ||
OPERATING EXPENSES | |||||
Cost of services | 1,778,217 | (36,374) | 1,741,843 | ||
Depreciation and amortization | 1,556,896 | (5,584) | 1,551,312 | ||
OTHER INCOME (EXPENSES) | |||||
Interest income | 21,830 | 2,701 | 24,531 | ||
Financing cost | (462,083) | (23,879) | (485,962) | ||
Others - net | 1,026 | 22,768 | 23,794 |
INCOME TAX EXPENSE | |||||
Deferred | (152,751) | (9,935) | (162,686) |
k.
Revenue and Expense Recognition
Effective January 1, 2011, the Group adopted PSAK 23 (Revised 2010), “Revenue”. This revised PSAK identifies the circumstances in which the criteria on revenue recognition is met and, therefore, revenue may be recognized, and prescribes the accounting treatment of revenue arising from certain types of transactions and events, and also provides practical guidance on the application of the criteria on revenue recognition. Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received, excluding discounts, rebates and Value Added Taxes (“VAT”). The following specific recognition criteria must also be met before revenue is recognized:
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
k.
Revenue and Expense Recognition (continued)
Cellular
Cellular revenues arising from airtime and roaming calls are recognized based on the duration of successful calls made through the Company’s cellular network and presented on a gross basis.
For post-paid subscribers, monthly service fees are recognized as the service is provided.
The activation component of starter package sales is deferred and recognized as revenue over the expected average period of the customer relationship. Sales of initial/reload vouchers are recorded as unearned revenue and recognized as revenue upon usage of the airtime or upon expiration of the airtime.
Sales of cellular handsets are recognized upon delivery to the customers.
Revenues from wireless broadband data communications are recognized based on the duration of usage or fixed monthly charges depending on the arrangement with the customers.
Cellular revenues are presented on a net basis, after compensation to value added service providers.
Customer Loyalty Program
The Company operates a customer loyalty program called“Poin Plus Plus”, which allows customers to accumulate points for every reload and payment by the Company’s prepaid and post-paid subscribers, respectively. The points can then be redeemed for free telecommunications and non-telecommunications products, subject to a minimum number of points being obtained. Starting July 29, 2011, the“Poin Plus Plus” program has been replaced with the“Indosat Senyum” program. Both programs have similarity in nature and scheme to redeem the points, except that under the new program, the Company no longer includes the subscription period as a variable item in calculating the points.
Customer loyalty credits are accounted for as a separate component of the sales transaction in which they are granted. The Company records a liability at the time of reload and payment by its prepaid and post-paid subscribers, respectively, based on the fair value expected to be incurred to supply products in the future. The consideration received is allocated between the cellular products sold and the points issued, with the consideration allocated to the points equal to their fair value. Fair value of the points issued is deferred and recognized as revenue when the points are redeemed or when the redemption period expires.
Dealer Commissions
Consideration in the form of sales discount given by the Company to a dealer is recognized as a reduction of revenue.
If the Company receives, or will receive, an identifiable benefit in exchange for a consideration given by the Company to a dealer, and the fair value of such benefit can be reasonably estimated, the consideration will be recorded as a marketing expense.
Tower Leasing
Revenue from tower leasing classified as operating leases is recognized on the straight-line basis over the lease term based on the amount stated in the agreement between the Group and the lessee.
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
k.
Revenue and Expense Recognition (continued)
Multimedia, Data Communication, Internet (“MIDI”)
Internet
Revenues from installation services are deferred and recognized over the expected average period of the customer relationship. Revenues from monthly service fees are recognized as the services are provided. Revenues from usage charges are recognized monthly based on the duration of internet usage or based on the fixed amount of charges, depending on the arrangement with the customers.
Frame Net, World Link and Direct Link
Revenues from installation services are deferred and recognized over the expected average period of the customer relationship. Revenues from monthly service fees are recognized as the services are provided.
Satellite Lease
Revenues are recognized on the straight-line basis over the lease term.
Revenues from other MIDI services are recognized when the services are rendered.
Fixed Telecommunications
International Calls
Revenue from outgoing international call traffic is reported on a gross basis.
Fixed Wireless
Fixed wireless revenues arising from usage charges are recognized based on the duration of successful calls made through the Company’s fixed network.
For post-paid subscribers, monthly service fees are recognized as the service is provided.
The activation component of starter package sales is deferred and recognized as revenue over the expected average period of the customer relationship. Sale of initial/reload vouchers is recorded as unearned income and recognized as income upon usage of the airtime or upon expiration of the airtime.
Fixed Line
Revenues from fixed line installations are deferred and recognized over the expected average period of the customer relationship. Revenues from usage charges are recognized based on the duration of successful calls made through the Company’s fixed network.
Interconnection Revenue
Revenues from network interconnection with other domestic and international telecommunications carriers are recognized monthly on the basis of the actual recorded traffic for the month.
Interest Income
Interest on finance leases and the excess of the minimum lease payment and unguaranteed residual value over its cost are credited to unearned lease income and amortized over the term of the lease using the effective interest rate method (“EIR”).
22
These consolidated financial statements are originally issued in the Indonesian language.
PT INDOSAT Tbk AND SUBSIDIARIES
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
As of March 31, 2012 and for the Three-Month Period then Ended (Unaudited)
With Comparative Figures as of December 31, 2011 and
January 1, 2011 / December 31, 2010 (as Restated) (Unaudited)
and for the Three-Month Period Ended March 31, 2011 (as Restated) (Unaudited)
(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
k.
Revenue and Expense Recognition (continued)
Expenses
Interconnection Expenses
Expenses from network interconnection with other domestic and international telecommunications carriers are accounted for as operating expenses in the period these are incurred.
Other Expenses
Expenses are recognized when incurred.
l.
Personnel Costs
Personnel costs which are directly related to the development, construction and installation of property and equipment are capitalized as part of the cost of such assets.
m.
Pension Plan and Employee Benefits
Pension costs under the Group’s defined benefit pension plans are determined by periodic actuarial calculation using the projected-unit-credit method and applying the assumptions on discount rate, expected return on plan assets and annual rate of increase in compensation.
Actuarial gains or losses from post-employment benefits are recognized as income or expense when the net cumulative unrecognized actuarial gains or losses for each individual plan at the end of the previous reporting year exceed the greater of 10% of the present value of the defined benefit obligation or 10% of the fair value of plan assets, at that date. These gains or losses in excess of the 10% corridor are recognized on a straight-line basis over the expected average remaining working lives of the employees. The past service costs from post-employment benefits are recognized as an expense on a straight-line basis over the average period until the benefits become vested. If the benefits have already vested, following the introduction of changes to a pension plan, past service costs are recognized immediately.
Actuarial gains or losses and past service costs from other long-term employee benefits are recognized immediately in the interim consolidated statements of comprehensive income.
The Group recognizes gains or losses on the curtailment of a defined benefit plan when the curtailment occurs (when there is a commitment to make a material reduction in the number of employees covered by a plan or when there is an amendment of the defined benefit plan terms such that a material element of future services to be provided by current employees will no longer qualify for benefits, or will qualify only for reduced benefits). The gain or loss on curtailment comprises any resulting change in the fair value of plan assets, change in the present value of defined benefit obligation and any related actuarial gains and losses and past service cost that had not previously been recognized.
Effective January 1, 2012, the Group follows PSAK 24 (Revised 2010), “Employee Benefits”, which regulates the accounting and disclosure for employee benefits, both short-term (e.g., paid annual leave, paid sick leave) and long-term (e.g., long-service leave, post-employment medical benefits). The Group has chosen the 10% corridor method for the recognition of actuarial gains and losses. The Group also requires recognition of liability and expense when an employee has provided service and the entity consumes economic benefit arising from the service.
n.
Financial Instruments
Effective January 1, 2012, the Group applied PSAK 50 (Revised 2010), “Financial Instruments: Presentation”, PSAK 55 (Revised 2011), “Financial Instruments: Recognition and Measurement”, and PSAK 60, “Financial Instruments: Disclosures”.
PSAK 50 (Revised 2010) contains the requirements for the presentation of financial instruments and identifies the information that should be disclosed. The presentation requirements apply to
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
n.
Financial Instruments (continued)
the classification of financial instruments, from the perspective of the issuer, into financial assets, financial liabilities and equity instruments; the classification of related interest, dividends, losses and gains; and the circumstances in which financial assets and financial liabilities should be offset. This PSAK requires the disclosure of, among others, information about factors that affect the amount, timing and certainty of an entity’s future cash flows relating to financial instruments and the accounting policies applied to those instruments.
PSAK 55 (Revised 2011) establishes the principles for recognizing and measuring financial assets, financial liabilities and some contracts to buy or sell non-financial items. This PSAK provides the definitions and characteristics of derivatives, the categories of financial instruments, recognition and measurement, hedge accounting and determination of hedging relationships, among others.
PSAK 60 requires disclosures of significance of financial instruments for financial position and performance; and the nature and extent of risks arising from financial instruments to which the Group is exposed during the period and at the end of the reporting period, and how the entity manages those risks.
n1.
Financial assets
Initial recognition
Financial assets within the scope of PSAK 55 (Revised 2011) are classified as financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, or available-for-sale financial assets, as appropriate. The Group determines the classification of its financial assets at initial recognition.
All financial assets are recognized initially at fair value plus transaction costs, except in the case of financial assets which are recorded at fair value through profit or loss.
Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the marketplace (regular way trades) are recognized on the trade date, i.e., the date that the Group commits to purchase or sell the assets.
The Group’s financial assets include cash and cash equivalents, trade and other accounts receivable, due from related parties, derivative financial instruments and other current and non-current financial assets (quoted and unquoted financial instruments).
Subsequent measurement
The subsequent measurement of financial assets depends on their classification as follows:
•
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss include financial assets held for trading and financial assets designated upon initial recognition at fair value through profit or loss.
Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near term. This category includes derivative financial instruments entered into by the Company that are not designated as hedging instruments in hedge relationships as defined by PSAK 55 (Revised 2011). Derivatives, including separated embedded derivatives, are also classified as held for trading unless they are designated as effective hedging instruments. Financial assets at fair value through profit
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
n.
Financial Instruments (continued)
n1.
Financial assets (continued)
Subsequent measurement (continued)
•
Financial assets at fair value through profit or loss (continued)
or loss are carried in the interim consolidated statements of financial position at fair value with changes in fair value recognized in the interim consolidated statements of comprehensive income.
Derivatives embedded in host contracts are accounted for as separate derivatives and recorded at fair value if their economic characteristics and risks are not closely related to those of the host contracts and the host contracts are not held for trading or designated at fair value through profit or loss. These embedded derivatives are measured at fair value with changes in fair value recognized in the interim consolidated statements of comprehensive income. Reassessment only occurs if there is a change in the terms of the contract that significantly modifies the cash flows that would otherwise be required.
The Group’s financial assets classified at fair value through profit or loss consist of derivative assets.
•
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial measurement, such financial assets are subsequently measured at amortized cost using the EIR, less impairment. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included in the interim consolidated statements of comprehensive income. The losses arising from impairment are also recognized in the interim consolidated statements of comprehensive income.
The Group’s cash and cash equivalents, trade and other accounts receivable, due from related parties, other current financial assets, and other non-current financial assets are included in this category.
•
Held-to-maturity (HTM) investments
Non-derivative financial assets with fixed or determinable payments and fixed maturities are classified as HTM when the Group has the positive intention and ability to hold them to maturity. After initial measurement, HTM investments are measured at amortized cost using the EIR method, less impairment. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included in the interim consolidated statements of comprehensive income. The losses arising from impairment are recognized in the interim consolidated statements of comprehensive income.
The Group did not have any HTM investments during the three months ended March 31, 2012 and 2011 and the year ended December 31, 2010.
•
Available-for-sale (AFS) financial assets
AFS financial assets are non-derivative financial assets that are designated as available-for-sale or are not classified in any of the three preceding categories. After initial
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
n.
Financial Instruments (continued)
n1.
Financial assets (continued)
Subsequent measurement (continued)
•
Available-for-sale (AFS) financial assets (continued)
measurement, AFS financial assets are measured at fair value with unrealized gains or losses recognized in equity until the investment is derecognized at which time the cumulative gain or loss is recognized or determined to be impaired, at which time the cumulative loss is reclassified from equity to comprehensive income. Interest earned on available-for-sale financial investments is reported as interest income using the EIR method.
The Group has the following investments classified as AFS:
-
Investments in shares of stock that do not have readily determinable fair value in which the equity interest is less than 20%, and other long-term investments. These are carried at cost less allowance for impairment.
-
Investments in equity shares that have readily determinable fair value in which the equity interest is less than 20%. These are recorded at fair value.
n2.
Financial liabilities
Initial recognition
Financial liabilities within the scope of PSAK 55 (Revised 2011) are classified as financial liabilities at fair value through profit or loss, loans and borrowings, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. The Group determines the classification of its financial liabilities at initial recognition.
All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings, inclusive of directly attributable transaction costs.
The Group’s financial liabilities include trade accounts payable, procurement payable, accrued expenses, deposits from customers, obligations under financial lease, loans and bonds payable, due to related parties, derivative financial instruments and other current financial liabilities.
Subsequent measurement
The measurement of financial liabilities depends on their classification as follows:
•
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition at fair value through profit or loss.
Financial liabilities are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near term. This category includes derivative financial instruments entered into by the Company that are not
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
n.
Financial Instruments (continued)
n2.
Financial liabilities (continued)
Subsequent measurement (continued)
designated as hedging instruments in hedge relationships as defined by PSAK 55 (Revised 2011). Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments.
Gains or losses on liabilities held for trading are recognized in the interim consolidated statements of comprehensive income.
•
Loans and borrowings
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortized cost using the EIR method.
Gains or losses are recognized in the interim consolidated statements of comprehensive income when the liabilities are derecognized as well as through the EIR amortization process.
n3.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount reported in the interim consolidated statements of financial position if, and only if, there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, or to realize the assets and settle the liabilities simultaneously.
n4.
Fair value of financial instruments
The fair value of financial instruments that are traded in active market at each reporting date is determined by reference to quoted market prices or dealer price quotations (bid price for long position and ask price for short position), without any deduction for transaction costs. For financial instruments where there is no active market, fair value is determined using valuation techniques. Such techniques may include using recent arm’s length market transactions, reference to the current fair value of another instrument that is substantially the same, discounted cash flow analysis, or other valuation models.
Credit risk adjustment
The Company adjusts the price in the more advantageous market to reflect any differences in counterparty credit risk between instruments traded in that market and the ones being valued for financial asset positions. In determining the fair value of financial liability positions, the Company's own credit risk associated with the instrument is taken into account.
n5.
Amortized cost of financial instruments
Amortized cost is computed using the EIR method less any allowance for impairment and principal repayment or reduction. The calculation takes into account any premium or discount on acquisition and includes transaction costs and fees that are an integral part of the EIR.
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
n.
Financial Instruments (continued)
n6.
Impairment of financial assets
The Group assesses at the end of each reporting period whether there is any objective evidence that a financial asset or a group of financial assets is impaired.
•
Financial assets carried at amortized cost
For loans and receivables carried at amortized cost, the Group first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant, or collectively for financial assets that are not individually significant. If the Group determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and the group is collectively assessed for impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or continues to be, recognized are not included in a collective assessment of impairment.
If there is objective evidence that an impairment loss has occurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future expected credit losses that have not yet been incurred). The present value of the estimated future cash flows is discounted at the financial asset’s original EIR. If a loan or receivable has a variable interest rate, the discount rate for measuring impairment loss is the current EIR.
The carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss is recognized in the interim consolidated statements of comprehensive income. Interest income continues to be accrued on the reduced carrying amount based on the rate of interest used to discount future cash flows for the purpose of measuring impairment loss. Loans and receivables, together with the associated allowance, are written off when there is no realistic prospect of future recovery and all collateral has been realized or has been transferred to the Group. If, in a subsequent period, the amount of the estimated impairment loss increases or decreases because of an event occurring after the impairment was recognized, the previously recognized impairment loss is increased or reduced by adjusting the allowance account. If a future write-off is later recovered, the recovery is recognized in the interim consolidated statements of comprehensive income.
•
AFS financial assets
In the case of an equity investment classified as an AFS financial asset, objective evidence would include a significant or prolonged decline in the fair value of the investment below its cost.
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
n.
Financial Instruments (continued)
n6.
Impairment of financial assets (continued)
•
AFS financial assets (continued)
Where there is objective evidence of impairment, the cumulative loss - measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that investment previously recognized in the interim consolidated statements of comprehensive income - is reclassified from equity to comprehensive income. Impairment loss on equity investment is not reversed through the interim consolidated statements of comprehensive income; increase in its fair value after impairment is recognized in equity.
In the case of a debt instrument classified as an AFS financial asset, impairment is assessed based on the same criteria as financial asset carried at amortized cost. Future interest income is based on the reduced carrying amount and is accrued based on the rate of interest used to discount future cash flows for the purpose of measuring impairment loss. Such accrual is recorded as part of the “Interest Income” account in the interim consolidated statements of comprehensive income. If, in a subsequent period, the fair value of a debt instrument increases and the increase can be objectively related to an event occurring after the impairment loss was recognized in the interim consolidated statements of comprehensive income, the impairment loss is reversed through the interim consolidated statements of comprehensive income.
n7.
Derecognition of financial assets and liabilities
Financial assets
A financial asset (or where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognized when: (1) the rights to receive cash flows from the asset have expired; or (2) the Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a “pass-through” arrangement; and either (a) the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
Financial liabilities
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or has expired.
When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognized in the interim consolidated statements of comprehensive income.
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
n.
Financial Instruments (continued)
n8.
Derivative financial instruments
The Company enters into and engages in cross currency swaps, interest rate swaps and other permitted instruments, if considered necessary, for the purpose of managing its foreign exchange and interest rate exposures emanating from the Company’s loans and bonds payable in foreign currencies. These derivative financial instruments, while providing effective economic hedges of specific interest rate and foreign exchange risks under the Company’s financial risk management objectives and policies, do not meet the criteria for hedge accounting as provided in PSAK 55 (Revised 2011) and are initially recognized at fair value on the date the derivative contract is entered into and are subsequently re-measured at fair value.
Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.
Any gains or losses arising from changes in fair value of derivatives during the period, which are entered into as economic hedges that do not qualify for hedge accounting, are taken directly to the interim consolidated statements of comprehensive income.
Derivative assets and liabilities are presented under current assets and liabilities, respectively. Embedded derivative is presented with the host contract in the interim consolidated statements of financial position which represents an appropriate presentation of overall future cash flows for the instrument taken as a whole.
The net changes in fair value of derivative instruments, swap cost or income, termination cost or income, and settlement of derivative instruments are credited (charged) to “Loss on Change in Fair Value of Derivatives - Net”, which is presented under Other Income (Expenses) in the interim consolidated statements of comprehensive income.
o.
Foreign Currency Transactions and Balances
Effective January 1, 2012, the Group applied PSAK 10 (Revised 2010), “The Effects of Changes in Foreign Exchange Rates”, which describes how to include foreign currency transactions and foreign operations in the financial statements of an entity and translate financial statements into a presentation currency. The Group considers the primary indicators and other indicators in determining its functional currency, if indicators are mixed and the functional currency is not obvious, management uses its judgments to determine the functional currency that most faithfully represents the economic effects of the underlying transactions, events and conditions.
The interim consolidated financial statements are presented in rupiah, which is the Company’s functional currency and the Group’s presentation currency. Transactions involving foreign currencies are recorded at the rates of exchange prevailing at the time the transactions are made. At interim consolidated statement of financial position date, monetary assets and liabilities denominated in foreign currencies are adjusted to reflect the prevailing exchange rates at such date and the resulting gains or losses are credited or charged to current operations, except for foreign exchange differentials that can be attributed to qualifying assets which are capitalized to properties under construction and installation.
For March 31, 2012 and 2011 and December 31, 2011, the foreign exchange rates used (in full amounts) were Rp9,180, Rp8,709 and Rp9,068, respectively, per US$1 computed by taking the average of the buying and selling rates of bank notes last published by Bank Indonesia for the period.
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
p.
Income Tax
Effective January 1, 2012, the Group applied PSAK 46 (Revised 2010), which requires the Group to account for the current and future tax consequences of the future recovery (settlement) of the carrying amount of assets (liabilities) that are recognized in the interim consolidated statements of financial position; and transactions and other events of the current period that are recognized in the financial statements.
Current tax expense is provided based on the estimated taxable income for the period. Deferred tax assets and liabilities are recognized for temporary differences between the financial and the tax bases of assets and liabilities at each reporting date. Future tax benefits, such as the carryover of unused tax losses, are also recognized to the extent that realization of such benefits is probable. The tax effects for the period are allocated to current operations, except for the tax effects from transactions which are directly charged or credited to equity.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in
the period when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the financial position date. Changes in the carrying amount of deferred tax assets and liabilities due to a change in tax rates are credited or charged to current operations, except to the extent that they relate to items previously charged or credited to equity.
The amounts of additional tax principal and penalty imposed through a tax assessment letter (“SKP”) shall be recognized as income or expense in the current period of the interim consolidated statement of comprehensive income, unless further settlement is submitted. The amounts of tax principal and penalty imposed through SKP are deferred as long as it meets the asset recognition criteria.
For each of the consolidated entities, the tax effects of temporary differences and tax loss
carryover, which individually are either assets or liabilities, are shown at the applicable net amounts.
q.
Segment Reporting
Effective January 1, 2011, the Group applied PSAK 5 (Revised 2009), “Operating Segments”. This revised PSAK requires disclosures that will enable users of financial statements to evaluate the nature and financial effects of business activities in which the entity engages and the economic environments in which it operates.
A segment is a distinguishable component of the Group that is engaged in providing certain products (business segment), which component is subject to risks and rewards that are different from those of other segments.
Segment revenue, expenses, results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis to that segment. They are determined before intra-group balances and intra-group transactions are eliminated.
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
r.
Basic Earnings per Share/ADS
Effective January 1, 2012, the Group applied PSAK 56 (Revised 2011), which requires performance comparisons between different entities in the same period and between different reporting periods for the Group.
The amount of basic earnings per share is computed by dividing profit for the period attributable to owners of the Company by the weighted-average number of shares outstanding during the period.
The amount of basic earnings per ADS attributable to owners of the Company is computed by multiplying basic earnings per share attributable to owners of the Company by 50, which is equal to the number of shares per ADS.
s.
Transactions with Related Parties
Effective January 1, 2011, the Group applied PSAK 7 (Revised 2010), “Related Party Disclosures”. This revised PSAK requires disclosure of related party relationships, transactions and outstanding balances, including commitments, in the consolidated and separate financial statements of a parent, and also applies to individual financial statements. The adoption of this revised PSAK has significant impact on the related disclosures in the interim consolidated financial statements.
The details of the accounts and the significant transactions entered into with related parties are presented in Note 30.
t.
Adoption of Other Revised Accounting Standards and Interpretations
Other than the revised accounting standards previously mentioned above, the Group also adopted the following revised accounting standards and interpretations on January 1, 2012, which were considered relevant to the interim consolidated financial statements but did not have significant impact except for the related disclosures:
·
PSAK 53 (Revised 2010), “Share-Based Payment”
·
PSAK 56 (Revised 2010), “Earnings Per Share”
·
ISAK 20 (2010), “Income Taxes - Changes in the Tax Status of an Entity or its Shareholder”
·
ISAK 23 (2011), “Operating Leases - Incentives”
·
ISAK 24 (2011), “Evaluating the Substance of Transactions Involving the Legal Form of a Lease”
·
ISAK 25 (2011), “Land Rights”
·
ISAK 26 (2011), “Reassessment of Embedded Derivatives”.
23
These consolidated financial statements are originally issued in the Indonesian language.
PT INDOSAT Tbk AND SUBSIDIARIES
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
As of March 31, 2012 and for the Three-Month Period then Ended (Unaudited)
With Comparative Figures as of December 31, 2011 and
January 1, 2011 / December 31, 2010 (as Restated) (Unaudited)
and for the Three-Month Period Ended March 31, 2011 (as Restated) (Unaudited)
(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)
3.
MANAGEMENT’S USE OF JUDGMENTS, ESTIMATES AND ASSUMPTIONS
The preparation of the Group’s consolidated financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities, at the end of the reporting period. However, uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in future periods.
a.
Judgments
In the process of applying the Group’s accounting policies, management has made the following judgments, apart from those including estimations and assumptions, which have the most significant effect on the amounts recognized in the interim consolidated financial statements:
·
Determination of functional currency
The currency of each of the entities under the Group are the currency of the primary economic environment in which each entity operates. It is the currency that mainly influences the revenue and cost of rendering services.
·
Leases
The Group has various lease agreements where the group acts as lessee or lessor in respect of certain properties and equipment. The Group evaluates whether significant risks and rewards of ownership of the leased properties are transferred to the lessee or retained by the Group based on PSAK30 (Revised 2011),“Leases”, which requires the Group to make judgments and estimates of transfer of risks and rewards of ownership of leased properties.
The Company is a party to various tower space lease agreements either as a lessor or a lessee. The Company has determined a number of tower space leases as finance leases based on an evaluation of the terms and conditions of arrangements in which these tower space leases transfer substantially all the risks and rewards incidental to ownership. For those tower space lease agreements that retain substantially all the risk and rewards incidental to ownership, the Company determined the arrangements as operating leases.
In 2006, the Company was granted a license to use 2.1 GHz radio frequency spectrum (a 3G mobile communications technology - Note 1a) by the MOCIT. The Company was obliged to, among others, pay upfront fee and annual radio frequency fee for 10 years (Note 31j). The upfront fee is recorded as part of Long-term Prepaid Licenses for the non-current portion and Prepaid Expenses for the current portion, and amortized over the 10-year license term using the straight-line method.
In 2009, the Company received additional 3G license (Note 1a), and IMM was granted an operating license for “Packet Switched” local telecommunications network using 2.3 GHz radio frequency spectrum of Broadband Wireless Access (“BWA”). The Company and IMM were obliged to, among others, pay upfront fee and annual radio frequency fee for 10 years (Note 31j). The upfront fee is recorded as part of Long-term Prepaid Licenses for the non-current portion and Prepaid Expenses for the current portion, and amortized over the 10-year license term using the straight-line method.
Management believes, as supported by written confirmation from the DGPT, that the 3G and BWA licenses may be returned at any time without any financial obligation to pay the remaining outstanding annual radio frequency fees (i.e., the license arrangement does not transfer substantially all the risks and rewards incidental to ownership). Accordingly, the Company and IMM recognize the annual radio frequency fee as prepaid operating lease expense, amortized using the straight-line method over the term of the rights to operate the 3G and BWA licenses. Management evaluates its plan to continue to use the licenses on an annual basis.
3.
MANAGEMENT’S USE OF JUDGMENTS, ESTIMATES AND ASSUMPTIONS (continued)
a.
Judgments (continued)
·
Impairment of non-financial assets
Impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs to sell and its value in use. The fair value less costs to sell calculation is based on available data from binding sales transactions in arm’s length transactions of similar assets or observable market prices less incremental costs for disposing of the asset. The value in use calculation is based on a discounted cash flow model. The cash flows are derived from the budget for the next five years and do not include restructuring activities that the Group is not yet committed to or significant future investments that will enhance the asset’s performance of the CGU being tested. The recoverable amount is most sensitive to the discount rate used for the discounted cash flow model as well as the expected future cash-inflows and the growth rate used for extrapolation purposes.
·
Exchange of asset transactions
During 2010 and 2011, the Group entered into several contracts for exchanging of asset for certain of its existing cellular technical equipment with third party supplier. For the exchange of asset transactions, the Group evaluates whether the transactions contain commercial substance based on PSAK 16 (Revised 2011)“Property, Plant, and Equipment”, which requires the Group to make judgments and estimates of the future cash flow and the fair value of the asset received and given up as a result of the transactions. Management considers the exchange of assets transactions to have met the criteria of commercial substance; however, the fair values of neither the assets received nor the asset given up could be measured reliably, hence, their values were measured at the carrying amounts of the asset given up.
b.
Estimates and Assumptions
The key assumptions concerning the future and other key sources of estimation uncertainty at the end of the reporting period that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial period are discussed below:
·
Determination of fair values of financial assets and financial liabilities
When the fair value of financial assets and financial liabilities recorded in the interim consolidated statements of financial position cannot be derived from active markets, their fair value is determined using valuation techniques, including the discounted cash flow model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgment is required in establishing fair values. The judgments include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments.
3.
MANAGEMENT’S USE OF JUDGMENTS, ESTIMATES AND ASSUMPTIONS (continued)
b.
Estimates and Assumptions (continued)
·
Estimating useful lives of property and equipment and intangible assets
The Group estimates the useful lives of its property and equipment and intangible assets based on expected asset utilization as anchored on business plans and strategies that also consider expected future technological developments and market behavior. The estimation of the useful lives of property and equipment is based on the Group’s collective assessment of industry practice, internal technical evaluation and experience with similar assets. The estimated useful lives are reviewed at least each financial year-end and are updated if expectations differ from previous estimates due to physical wear and tear, technical or commercial obsolescence and legal or other limitations on the use of the assets. It is possible, however, that future results of operations could be materially affected by changes in the estimates brought about by changes in the factors mentioned above.
The amounts and timing of recorded expenses for any period will be affected by changes in these factors and circumstances. A reduction in the estimated useful lives of the Group’s property and equipment will increase the recorded operating expenses and decrease non-current assets. An extension in the estimated useful lives of the Group’s property and equipment will decrease the recorded operating expenses and increase non-current assets.
·
Goodwill and intangible assets
The interim consolidated financial statements reflect acquired businesses after the completion of the respective acquisition. The Company accounts for the acquired businesses using the acquisition method starting January 1, 2011 and the purchase method for prior year acquisitions, which requires extensive use of accounting estimates and judgments to allocate the purchase price to the fair market values of the acquiree’s identifiable assets and liabilities at the acquisition date. Any excess in the purchase price over the estimated fair market values of the net assets acquired is recorded as goodwill in the interim consolidated statements of financial position. Thus, the numerous judgments made in estimating the fair market value to be assigned to the acquiree’s assets and liabilities can materially affect the Company’s financial performance.
·
Realizability of deferred income tax assets
The Group reviews the carrying amounts of deferred income tax assets at the end of each reporting period and reduces these to the extent that it is no longer probable that sufficient taxable income will be available to allow all or part of the deferred income tax assets to be utilized. The Group’s assessment on the recognition of deferred income tax assets on deductible temporary differences is based on the level and timing of forecasted taxable income of the subsequent reporting periods. This forecast is based on the Group’s past results and future expectations on revenues and expenses as well as future tax planning strategies. However, there is no assurance that the Group will generate sufficient taxable income to allow all or part of the deferred income tax assets to be utilized.
24
These consolidated financial statements are originally issued in the Indonesian language.
PT INDOSAT Tbk AND SUBSIDIARIES
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
As of March 31, 2012 and for the Three-Month Period then Ended (Unaudited)
With Comparative Figures as of December 31, 2011 and
January 1, 2011 / December 31, 2010 (as Restated) (Unaudited)
and for the Three-Month Period Ended March 31, 2011 (as Restated) (Unaudited)
(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)
3.
MANAGEMENT’S USE OF JUDGMENTS, ESTIMATES AND ASSUMPTIONS (continued)
b.
Estimates and Assumptions (continued)
·
Estimating allowance for impairment loss on receivables
If there is objective evidence that an impairment loss has been incurred on trade receivables, the Group estimates the allowance for impairment losses related to its trade receivables that are specifically identified as doubtful for collection. The level of allowance is evaluated by management on the basis of factors that affect the collectibility of the accounts. In these cases, the Group uses judgment based on the best available facts and circumstances, including but not limited to, the length of the Group’s relationship with the customers and the customers’ credit status based on third-party credit reports and known market factors, to record specific reserves for customers against amounts due in order to reduce the Group’s receivables to amounts that it expects to collect. These specific reserves are re-evaluated and adjusted as additional information received affects the amounts estimated.
In addition to specific allowance against individually significant receivables, the Group also assesses a collective impairment allowance against credit exposure of its debtors which are grouped based on common credit characteristic, which group, although not specifically identified as requiring a specific allowance, has a greater risk of default than when the receivables were originally granted to the debtors. This collective allowance is based on historical loss experience using various factors such as historical performance of the debtors within the collective group, deterioration in the markets in which the debtors operate, and identified structural weaknesses or deterioration in the cash flows of the debtors.
·
Estimation of pension cost and other employee benefits
The cost of defined benefit plan and present value of the pension obligation are determined using the projected-unit-credit method. Actuarial valuation includes making various assumptions which consist of, of among other things, discount rates, expected rates of return on plan assets, rates of compensation increases and mortality rates. Actual results that differ from the Group’s assumptions are recognized as income or expense when the net cumulative unrecognized actuarial gains and losses at the end of the previous reporting period exceed 10% of the higher of the present value of defined benefit obligation and the fair value of plan assets at that date. Due to the complexity of the valuation, the underlying assumptions and their long-term nature, a defined benefit obligation is highly sensitive to changes in assumptions.
While the Group believes that its assumptions are reasonable and appropriate, significant differences in the Group’s actual experience or significant changes in its assumptions may materially affect the costs and obligations of pension and other long-term employee benefits. All assumptions are reviewed at each reporting date.
·
Asset retirement obligations
Asset retirement obligations are recognized in the period in which they are incurred if a reasonable estimate of fair value can be made. The recognition of the obligations requires an estimation of the cost to restore/dismantle on a per location basis and is based on the best estimate of the expenditure required to settle the obligation at the future restoration/dismantlement date, discounted using a pre-tax rate that reflects the current market assessment of the time value of money and, where appropriate, the risk specific to the liability.
3.
MANAGEMENT’S USE OF JUDGMENTS, ESTIMATES AND ASSUMPTIONS (continued)
b.
Estimates and Assumptions (continued)
·
Revenue recognition
The Group’s revenue recognition policies require making use of estimates and assumptions that may affect the reported amounts of revenues and receivables.
The Company’s agreements with domestic and foreign carriers for inbound and outbound traffic subject to settlements require traffic reconciliations before actual settlement is done, which may not be the actual volume of traffic as measured by the Company. Initial recognition of revenues is based on observed traffic adjusted by the normal experience adjustments, which historically are not material to the interim consolidated statements of comprehensive income. Differences between the amounts initially recognized and the actual settlements are taken up in the account upon reconciliation. However, there is no assurance that the use of such estimates will not result in material adjustments in future periods.
The Group recognizes revenues from installation and activation-related fees and the corresponding costs over the expected average periods of customer relationship for cellular, MIDI and fixed telecommunications services. The Group estimates the expected average period of customer relationship based on the most recent churn-rate analysis.
·
Uncertain tax exposure
In certain circumstances, the Group may not be able to determine the exact amount of its current or future tax liabilities due to ongoing investigations by, or negotiations with, the taxation authority. Uncertainties exist with respect to the interpretation of complex tax regulations and the amount and timing of future taxable income. In determining the amount to be recognized in respect of an uncertain tax liability, the Group applies similar considerations as it would use in determining the amount of a provision to be recognized in accordance with PSAK 57, “Provisions, Contingent Liabilities and Contingent Assets”.The Group makes an analysis of all tax positions related to income taxes to determine if a tax liability for unrecognized tax benefit should be recognized.
As of March 31, 2012, the Company is subject to tax audit for fiscal year 2010.
Prior January 1, 2012, the Group presents interest and penalties for the underpayment of income tax, if any, under as part of “Others - net” as part of Other Income (Expenses) in the interim consolidated statements of comprehensive income.
Effective January 1, 2012, the Group applied PSAK 46 (Revised 2010), which requires the Group presents interest and penalties for the underpayment / overpayment of income tax, if any, as part of “Income Tax Benefit (Expense) - Current” in the interim consolidated statements of comprehensive income.
25
These consolidated financial statements are originally issued in the Indonesian language.
PT INDOSAT Tbk AND SUBSIDIARIES
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
As of March 31, 2012 and for the Three-Month Period then Ended (Unaudited)
With Comparative Figures as of December 31, 2011 and
January 1, 2011 / December 31, 2010 (as Restated) (Unaudited)
and for the Three-Month Period Ended March 31, 2011 (as Restated) (Unaudited)
(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)
4.
CASH AND CASH EQUIVALENTS
This account consists of the following:
January 1,
2011 /
March 31,
December 31,
December 31,
2012
2011
2010
Cash on hand
Rupiah
1,388
1,465
1,682
U.S. dollar (US$11 in 2012, US$13 in 2011 and
US$12 in 2010)
98
115
110
1,486
1,580
1,792
Cash in banks
Related parties (Note 30)
Rupiah
PT Bank Mandiri (Persero) Tbk (“Mandiri”)
37,128
45,441
45,792
PT Bank Negara Indonesia (Persero) Tbk (“BNI”)
3,590
3,022
4,461
PT Bank Syariah Mandiri (“Mandiri Syariah”)
1,802
719
1,215
PT Bank Pembangunan Daerah DKI Jakarta
1,572
1,110
935
PT Bank Rakyat Indonesia (Persero) Tbk (“BRI”)
1,269
1,409
11,345
PT Bank Pembangunan Daerah Sumatera Utara
1,142
1,134
662
PT Bank Pembangunan Daerah Yogyakarta
(“BPD - Yogyakarta”)
1,077
1,473
256
PT Bank Pembangunan Daerah
Nusa Tenggara Timur
721
1,033
4,476
PT Bank Tabungan Negara (Persero) Tbk (“BTN”)
126
500
1,270
PT Bank Pembangunan Daerah Papua
28
299
2,473
Others (each below Rp1,000)
1,859
3,234
720
U.S. dollar
Mandiri (US$3,291 in 2012, US$3,793 in 2011 and
US$4,606 in 2010)
30,215
34,397
41,412
Others (US$45 in 2012, US$12 in 2011 and
US$120 in 2010)
412
109
1,090
Third parties
Rupiah
Deutsche Bank AG, Jakarta Branch (“DB”)
25,094
2,614
2,153
PT Bank Mega Syariah (“Mega Syariah”)
16,304
1,398
1,521
PT Bank CIMB Niaga Tbk (“CIMB Niaga”)
13,090
4,828
21,845
PT Bank Bukopin Tbk (“Bukopin”)
6,967
1,242
9,308
PT Bank Danamon Indonesia Tbk
(including Danamon Syariah)
6,763
4,104
3,471
Citibank N.A., Jakarta Branch (“Citibank”)
6,004
52,768
2,848
PT Bank Central Asia Tbk (“BCA”)
5,853
13,247
2,284
Others (each below Rp5,000)
7,931
6,843
6,314
U.S. dollar
Fortis Bank N.V., The Netherlands (US$6,870 in 2012,
US$6,220 in 2011 and US$6,960 in 2010)
63,066
56,405
62,577
Citibank N.A., Singapore Branch
(US$5,603 in 2012, US$5,256 in 2011
and US$4,945 in 2010)
51,435
47,660
44,464
CIMB Niaga (US$1,100 in 2012, US$697 in 2011 and
US$160 in 2010)
10,101
6,323
1,435
Citibank (US$646 in 2012, US$790 in 2011 and
US$677 in 2010)
5,929
7,164
6,087
Others (US$399 in 2012, US$543 in 2011
and US$143 in 2010)
3,658
4,923
1,281
303,136
303, 399
281,695
26
These consolidated financial statements are originally issued in the Indonesian language.
PT INDOSAT Tbk AND SUBSIDIARIES
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
As of March 31, 2012 and for the Three-Month Period then Ended (Unaudited)
With Comparative Figures as of December 31, 2011 and
January 1, 2011 / December 31, 2010 (as Restated) (Unaudited)
and for the Three-Month Period Ended March 31, 2011 (as Restated) (Unaudited)
(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)
4.
CASH AND CASH EQUIVALENTS (continued)
January 1,
2011 /
March 31,
December 31,
December 31,
2012
2011
2010
Time deposits and deposits on call
Related parties (Note 30)
Rupiah
Mandiri
320,401
245,820
421,400
BNI
270,820
143,720
141,185
BRI
100,000
145,000
68,500
BTN
74,000
180,400
88,500
PT Bank Pembangunan Daerah Jawa Barat
dan Banten Tbk (“BPD - Jawa Barat”)
31,850
24,850
8,350
Mandiri Syariah
30,000
35,000
31,000
PT Bank BRI Syariah
7,500
7,500
5,000
BPD - Yogyakarta
1,000
1,000
1,000
U.S. dollar
BRI (US$5,000 in 2012 and 2011
and US$80,000 in 2010)
45,900
45,340
719,280
Mandiri (US$3,040 in 2012 and 2011 and
US$1,540 in 2010)
27,907
27,566
13,845
Mandiri Syariah (US$3,000)
-
27,204
-
BPD - Jawa Barat (US$75 in 2011 and US$165 in 2010)
-
680
1,484
Third parties
Rupiah
PT Bank Syariah Muamalat Indonesia Tbk
(“Muamalat”)
137,000
249,894
48,500
DB
65,356
79,354
5,232
CIMB Niaga
59,000
55,000
22,500
PT Bank Himpunan Saudara 1906 Tbk
39,000
32,100
15,400
PT Bank Tabungan Pensiunan Nasional Tbk
37,500
34,500
12,000
Bukopin
22,000
27,500
21,400
PT Bank ICB Bumiputera Tbk
13,500
9,500
-
PT Bank Internasional Indonesia Tbk
12,500
12,500
13,000
Mega Syariah
9,750
17,750
13,250
PT Bank Mega Tbk
2,000
5,000
3,000
PT Bank Danamon Indonesia Tbk
2,000
33,000
15,900
BCA
-
200,000
4,080
PT Bank DBS Indonesia (“DBS”)
-
50,000
-
Others (each below Rp5,000)
2,100
3,100
6,000
U.S. dollar
DB (US$12,617 in 2012, US$17,917 in 2011
and US$5,454 in 2010)
115,828
162,473
49,038
Muamalat (US$7,000 in 2012 and 2011
and US$5,000 in 2010)
64,260
63,476
44,955
DBS (US$5,000)
45,900
-
-
PT Bank Permata Tbk (US$2,000)
18,360
-
-
CIMB Niaga (US$2,000)
-
-
17,984
1,555,432
1,919,227
1,791,783
Total
1,860,054
2,224,206
2,075,270
4.
CASH AND CASH EQUIVALENTS (continued)
Time deposits and deposits on call denominated in rupiah earned interest at annual rates ranging from 2.00% to 9.75% in 2012, from 2.50% to 9.75% in 2011 and from 2.50% to 10.00% in 2010, while those denominated in U.S. dollar earned interest at annual rates ranging from 0.01% to 2.75% in 2012, from 0.01% to 2.75% in 2011 and from 0.05% to 4.75% in 2010.
The interest rates on deposits on call and time deposits in related parties are comparable to those offered by third parties.
5.
ACCOUNTS RECEIVABLE - TRADE
This account consists of the following:
January 1,
2011 /
March 31,
December 31,
December 31,
2012
2011
2010
Related parties (Note 30)
Telkom (including US$53 in 2012, US$51
in 2011 and US$55 in 2010)
35,768
19,977
56,108
Others (including US$4,809 in 2012, US$8,085
in 2011 and US$7,764 in 2010)
308,055
284,667
214,038
Sub-total
343,823
304,644
270,146
Less allowance for impairment
40,373
47,107
47,640
Net
303,450
257,537
222,506
Third parties
Local companies (including US$19,477 in 2012,
US$16,593 in 2011 and US$13,956 in 2010)
924,221
792,857
628,224
Overseas international carriers (US$63,851
in 2012, US$66,532 in 2011 and US$93,755 in 2010)
586,156
603,309
842,954
Post-paid subscribers from:
Cellular
277,200
254,565
255,973
Fixed telecommunications
22,035
22,345
47,239
Sub-total
1,809,612
1,673,076
1,774,390
Less allowance for impairment
537,213
489,544
448,470
Net
1,272,399
1,183,532
1,325,920
Total
1,575,849
1,441,069
1,548,426
5.
ACCOUNTS RECEIVABLE - TRADE (continued)
The aging schedule of the accounts receivable - trade is as follows:
March 31,
December 31,
January 1, 2011 /
2012
2011
December 31, 2010
Number of
Percentage
Percentage
Percentage
Months Outstanding
Amount
(%)
Amount
(%)
Amount
(%)
Related parties
0 - 6 months
277,771
80.79
196,642
64.55
201,256
74.50
7 - 12 months
5,503
1.60
35,252
11.57
47,973
17.76
13 - 24 months
43,286
12.59
64,498
21.17
6,913
2.56
Over 24 months
17,263
5.02
8,252
2.71
14,004
5.18
Total
343,823
100.00
304,644
100.00
270,146
100.00
Third parties
0 - 6 months
849,192
46.93
947,089
56.61
787,871
44.40
7 - 12 months
80,727
4.46
208,218
12.44
279,806
15.77
13 - 24 months
434,482
24.01
255,648
15.28
308,808
17.40
Over 24 months
445,211
24.60
262,121
15.67
397,905
22.43
Total
1,809,612
100.00
1,673,076
100.00
1,774,390
100.00
The changes in the allowance for impairment of accounts receivable - trade are as follows:
Related
Third
Total
Parties
Parties
March 31, 2012 (Three Months)
Balance at beginning of period
536,651
47,107
489,544
Provision (reversal) - net (Note 27)
40,694
(7,007
)
47,701
Net effect of foreign exchange adjustment
241
273
(32)
Write-offs
-
-
-
Balance at end of period
577,586
40,373
537,213
Individual impairment
196,100
37,547
158,553
Collective impairment
381,486
2,826
378,660
Total
577,586
40,373
537,213
Gross amount of receivables, individually impaired,
before deducting any individually assessed
impairment allowance
325,180
100,957
224,223
December 31, 2011 (One Year)
Balance at beginning of year
496,110
47,640
448,470
Provision (reversal) - net
41,051
(1,509
)
42,560
Net effect of foreign exchange adjustment
105
976
(871)
Write-offs
(615
)
-
(615)
Balance at end of year
536,651
47,107
489,544
Individual impairment
189,486
44,086
145,400
Collective impairment
347,165
3,021
344,144
Total
536,651
47,107
489,544
Gross amount of receivables, individually impaired,
before deducting any individually assessed
impairment allowance
309,556
117,572
191,984
27
These consolidated financial statements are originally issued in the Indonesian language.
PT INDOSAT Tbk AND SUBSIDIARIES
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
As of March 31, 2012 and for the Three-Month Period then Ended (Unaudited)
With Comparative Figures as of December 31, 2011 and
January 1, 2011 / December 31, 2010 (as Restated) (Unaudited)
and for the Three-Month Period Ended March 31, 2011 (as Restated) (Unaudited)
(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)
5.
ACCOUNTS RECEIVABLE - TRADE (continued)
Related
Third
Total
Parties
Parties
January 1, 2011 / December 31, 2010 (One Year)
Balance at beginning of year
461,810
57,538
404,272
Provision (reversal) - net
67,041
(9,712
)
76,753
Net effect of foreign exchange adjustment
(9,155)
(186
)
(8,969
)
Write-offs
(23,586
)
-
(23,586
)
Balance at end of year
496,110
47,640
448,470
Individual impairment
182,175
37,576
144,599
Collective impairment
313,935
10,064
303,871
Total
496,110
47,640
448,470
Gross amount of receivables, individually impaired,
before deducting any individually assessed
impairment allowance
405,926
118,486
287,440
The net effect of foreign exchange adjustment was due to the strengthening or weakening of the rupiah vis-à-vis the U.S. dollar in relation to U.S. dollar accounts previously provided with allowance and was credited or charged to “Gain (Loss) on Foreign Exchange - Net”.
There are no significant concentrations of credit risk.
Management believes the established allowance is sufficient to cover impairment losses from uncollectible accounts receivable.
6.
PREPAID TAXES
This account consists of the following:
January 1,
2011 /
March 31,
December 31,
December 31,
2012
2011
2010
Claims for tax refund
899,078
866,843
651,657
VAT
4,611
25,355
47,701
Others
3,261
1,018
2,202
Total
906,950
893,216
701,560
Claims for tax refund as of March 31, 2012, December 31, 2011 and January 1, 2011 / December 31, 2010 mainly consist of the Company’s corporate income tax for fiscal years 2006, 2009, 2010 and 2011 and for the first quarter of 2012, the Company’s income tax article 26 for fiscal years 2008 and 2009, and Satelindo’s corporate income tax for fiscal year 2002 and income tax article 26 for fiscal years 2002 and 2003.
28
These consolidated financial statements are originally issued in the Indonesian language.
PT INDOSAT Tbk AND SUBSIDIARIES
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
As of March 31, 2012 and for the Three-Month Period then Ended (Unaudited)
With Comparative Figures as of December 31, 2011 and
January 1, 2011 / December 31, 2010 (as Restated) (Unaudited)
and for the Three-Month Period Ended March 31, 2011 (as Restated) (Unaudited)
(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)
6.
PREPAID TAXES (continued)
On July 15, 2010, the Company received Decision Letter No. KEP-357/WPJ.19/BD.05/2010 from the Directorate General of Taxation (“DGT”) declining the Company’s objection to the correction on Satelindo’s corporate income tax for fiscal year 2002 amounting to Rp105,809 (including penalties and interest). On October 14, 2010, the Company submitted an appeal letter to the Tax Court concerning the Company’s objection to the correction on Satelindo’s corporate income tax for fiscal year 2002. As of May 3, 2012, the Company has not received any decision from the Tax Court on such appeal.
On October 12, 2010, the Company submitted appeal letters to the Tax Court concerning the Company’s objection to the correction of Satelindo’s 2002 and 2003 income tax article 26. As of May 3, 2012, the Company has not received any decision from the Tax Court on such appeals.
On October 29, 2010, the Company received the Decision Letter from the Tax Court which accepted the Company’s objection to the correction of the 2005 corporate income tax amounting to Rp38,155, which was offset against the underpayment of the Company’s 2008 and 2009 income tax article 26 based on Tax Collection Letters (“STPs”) received by the Company on September 17, 2010 (Note 16). On February 24, 2011, the Company received a copy of a Memorandum for Reconsideration Request (Memori Permohonan Peninjauan Kembali)from the Tax Court to the Supreme Court on the Tax Court’s Decision Letter dated October 29, 2010 for the 2005 corporate income tax. On March 25, 2011, the Company submitted a Counter-Memorandum for Reconsideration Request to the Supreme Court. As of May 3, 2012, the Company has not received any decision from the Supreme Court on such request.
On April 21, 2011, the Company received the assessment letter on tax overpayment (“SKPLB”) from the DGT for the Company’s 2009 corporate income tax amounting to Rp29,272, which amount is lower than the amount recognized by the Company in its financial statements. The Company accepted a part of the corrections amounting to Rp836, which was charged to current operations. On May 31, 2011, the Company received the tax refund of its claim for 2009 corporate income tax amounting to Rp23,695, after being offset with the accepted amount of tax correction of VAT for the period January - December 2009 (Note 16). On July 20, 2011, the Company submitted an objection letter to the Tax Office regarding the remaining correction on the Company’s 2009 corporate income tax. As of May 3, 2012, the Company has not received any decision from the Tax Office on such letter.
On April 25, 2011, IMM received SKPLB from the Tax Office for IMM’s 2009 corporate income tax amounting to Rp34,950, which amount is lower than the amount recognized by IMM in its financial statements. IMM charged the unapproved 2009 claim for tax refund amounting to Rp597 to current operations. On the same date, IMM also received the assessment letters on tax underpayment (“SKPKBs”) for IMM’s 2009 income tax articles 21, 23 and 26 and VAT totalling Rp4,512 (including penalties and interest). On May 26 2011, IMM received the refund of its claim for 2009 corporate income tax amounting to Rp30,438, after being offset with above underpayment of IMM’s 2009 income tax articles 21 and 23 and VAT.
29
These consolidated financial statements are originally issued in the Indonesian language.
PT INDOSAT Tbk AND SUBSIDIARIES
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
As of March 31, 2012 and for the Three-Month Period then Ended (Unaudited)
With Comparative Figures as of December 31, 2011 and
January 1, 2011 / December 31, 2010 (as Restated) (Unaudited)
and for the Three-Month Period Ended March 31, 2011 (as Restated) (Unaudited)
(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)
6.
PREPAID TAXES (continued)
On April 26, 2011, the Company received the Tax Court’s Decision Letter which accepted the Company’s appeal on the remaining correction of the 2006 corporate income tax. On June 21, 2011, the Company received the tax refund amounting to Rp82,626. On August 22, 2011, the Company received a copy of a Memorandum for Reconsideration Request (Memori Permohonan Peninjauan Kembali) from the Tax Court to the Supreme Court on the Tax Court’s Decision Letter dated April 26, 2011 for the 2006 corporate income tax. On September 21, 2011, the Company submitted a Counter-Memorandum for Reconsideration Request to the Supreme Court. As of May 3, 2012, the Company has not received any decision from the Supreme Court on such request.
7.
OTHER CURRENT FINANCIAL ASSETS - NET
This account consists of the following:
January 1,
2011 /
March 31,
December 31,
December 31,
2012
2011
2010
Short-term investments
25,395
25,395
25,395
Less allowance for impairment
25,395
25,395
25,395
Net
-
-
-
Restricted cash and cash equivalents (including
US$221 in 2012, US$168 in 2011 and
US$1,645 in 2010)
17,368
18,830
48,165
Finance lease receivables (Note 31g)
7,976
5,043
3,160
Others (including US$17 in 2012, US$10 in 2011 and
US$70 in 2010)
4,795
5,960
4,954
Total
30,139
29,833
56,279
30
These consolidated financial statements are originally issued in the Indonesian language.
PT INDOSAT Tbk AND SUBSIDIARIES
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
As of March 31, 2012 and for the Three-Month Period then Ended (Unaudited)
With Comparative Figures as of December 31, 2011 and
January 1, 2011 / December 31, 2010 (as Restated) (Unaudited)
and for the Three-Month Period Ended March 31, 2011 (as Restated) (Unaudited)
(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)
8.
PROPERTY AND EQUIPMENT
The details of property and equipment are as follows:
March 31, 2012 (Three Months)
Balance
Transactions during the Period
Balance
at Beginning
at End
of Period
Additions
Derecognitions
Reclassifications
of Period
Cost
Landrights
543,062
-
-
-
543,062
Buildings
867,712
-
-
136
867,848
Information technology equipment
3,395,355
66
-
42,283
3,437,704
Office equipment
1,234,758
5,870
-
19
1,240,647
Building and leasehold
improvements
13,008,550
63,657
(4,315)
82,009
13,149,901
Vehicles
23,794
933
-
-
24,727
Cellular technical equipment
37,413,004
44,987
(125,008
)
615,954
37,948,937
Transmission and cross-
connection equipment
19,735,033
45,662
-
202,928
19,983,623
FWA technical equipment
1,345,306
-
-
1,345,306
Operation and maintenance
center and measurement unit
1,452,593
-
-
3,827
1,456,420
Fixed access network
equipment
1,167,401
-
-
1,104
1,168,505
Properties under
construction and
installation
2,808,976
1,075,863
*
-
(948,260)
2,936,579
Total
82,995,544
1,237,038
(129,323)
-
84,103,259
Accumulated Depreciation
Buildings
348,244
4,352
-
-
352,596
Information technology
equipment
2,718,609
81,728
-
-
2,800,337
Office equipment
965,840
15,515
-
-
981,355
Building and leasehold
improvements
5,550,283
204,667
(3,280
)
-
5,751,670
5,751,670
Vehicles
20,431
529
-
-
20,960
Cellular technical equipment
17,535,524
851,998
(80,021
)
-
18,307,501
18,307,501
Transmission and cross-
connection equipment
9,493,456
383,757
-
-
9,877,213
FWA technical equipment
657,696
118,326
-
-
776,022
Operation and maintenance
center and measurement unit
1,219,365
21,632
-
-
1,240,997
Fixed access network equipment
909,355
17,137
-
-
926,492
Total
39,418,803
1,699,641
(83,301
)
-
41,035,143
Less Impairment in Value
98,611
-
-
-
98,611
Net Book Value
43,478,130
42,969,505
*including additional property and equipment purchased from Lintasarta amounting to Rp1,345 (net of intercompany profit of Rp834)
31
These consolidated financial statements are originally issued in the Indonesian language.
PT INDOSAT Tbk AND SUBSIDIARIES
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
As of March 31, 2012 and for the Three-Month Period then Ended (Unaudited)
With Comparative Figures as of December 31, 2011 and
January 1, 2011 / December 31, 2010 (as Restated) (Unaudited)
and for the Three-Month Period Ended March 31, 2011 (as Restated) (Unaudited)
(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)
8.
PROPERTY AND EQUIPMENT (continued)
December 31, 2011 (One Year)
Balance
Transactions during the Year
Balance
at Beginning
at End
of Year
Additions
Derecognitions
Reclassifications
of Year
Cost
Landrights
541,087
-
-
1,975
543,062
Buildings
814,191
2,518
-
51,003
867,712
Information technology equipment
3,046,084
16
(42,816)
392,071
3,395,355
Office equipment
1,232,237
37,596
(37,171)
2,096
1,234,758
Building and leasehold
improvements
12,283,317
491,985
(107,464)
340,712
13,008,550
Vehicles
24,700
160
(1,066)
-
23,794
Cellular technical equipment
34,850,044
400,956
(1,709,433
)
3,871,437
37,413,004
Transmission and cross-
connection equipment
18,329,220
122,992
(90,488)
1,373,309
19,735,033
FWA technical equipment
1,345,157
-
-
149
1,345,306
Operation and maintenance
center and measurement unit
1,355,263
-
(22)
97,352
1,452,593
Fixed access network
equipment
1,126,614
-
-
40,787
1,167,401
Properties under
construction and
installation
3,461,884
5,517,983
*
-
(6,170,891)
2,808,976
Total
78,409,798
6,574,206
(1,988,460)
-
82,995,544
Accumulated Depreciation
Buildings
313,721
34,523
-
-
348,244
Information technology
equipment
2,349,288
412,137
(42,816)
-
2,718,609
Office equipment
951,792
51,219
(37,171)
-
965,840
Building and leasehold
improvements
4,719,215
936,454
(105,386
)
-
5,550,283
Vehicles
18,646
2,852
(1,067
)
-
20,431
Cellular technical equipment
15,488,516
3,250,203
(1,203,195
)
-
17,535,524
Transmission and cross-
connection equipment
8,036,060
1,537,432
(80,036
)
-
9,493,456
FWA technical equipment
534,842
122,854
-
-
657,696
Operation and maintenance
center and measurement unit
1,093,598
125,789
(22
)
-
1,219,365
Fixed access network equipment
842,092
67,263
-
-
909,355
Total
34,347,770
6,540,726
(1,469,693
)
-
39,418,803
Less Impairment in Value
98,611
-
-
-
98,611
Net Book Value
43,963,417
43,478,130
*including additional property and equipment purchased from Lintasarta amounting to Rp88,371 (net of intercompany profit of Rp27,578)
32
These consolidated financial statements are originally issued in the Indonesian language.
PT INDOSAT Tbk AND SUBSIDIARIES
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
As of March 31, 2012 and for the Three-Month Period then Ended (Unaudited)
With Comparative Figures as of December 31, 2011 and
January 1, 2011 / December 31, 2010 (as Restated) (Unaudited)
and for the Three-Month Period Ended March 31, 2011 (as Restated) (Unaudited)
(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)
8.
PROPERTY AND EQUIPMENT (continued)
January 1, 2011 / December 31, 2010 (One Year)
Balance
Transactions during the Year
Balance
at Beginning
at End
of Year
Additions
Derecognitions
Reclassifications
of Year
Cost
Landrights
504,620
15,977
-
20,490
541,087
Buildings
652,677
4,088
-
157,426
814,191
Information technology
equipment
2,663,672
114
(14,159)
396,457
3,046,084
Office equipment
1,181,738
50,632
(14,998)
14,865
1,232,237
Building and leasehold
improvements
10,924,318
326,979
(88,693
)
1,120,713
12,283,317
Vehicles
24,389
635
(1,500)
1,176
24,700
Cellular technical
equipment
31,170,449
158,285
(1,741,072)
5,262,382
34,850,044
Transmission and cross-
connection equipment
16,349,982
205,849
(324,912)
2,098,301
18,329,220
FWA technical equipment
1,284,431
-
(22,070)
82,796
1,345,157
Operation and maintenance
center and measurement unit
1,286,658
-
(1,315)
69,920
1,355,263
Fixed access network
equipment
1,069,005
-
(1,851)
59,460
1,126,614
Properties under
construction and
installation
7,706,513
5,039,357*
-
(9,283,986)
3,461,884
Total
74,818,452
5,801,916
(2,210,570
)
-
78,409,798
Accumulated Depreciation
Buildings
283,781
29,940
-
-
313,721
Information technology
equipment
1,983,438
379,995
(14,145)
-
2,349,288
Office equipment
912,383
54,399
(14,990)
-
951,792
Building and leasehold
improvements
3,952,460
847,287
(80,532)
-4,719,215
Vehicles
15,761
3,588
(703
)
-
18,646
Cellular technical
equipment
14,044,917
3,026,386
(1,582,787
)
-
15,488,516
Transmission and cross-
connection equipment
6,925,779
1,435,193
(324,912
)
-
8,036,060
FWA technical equipment
434,990
121,922
(22,070
)
-
534,842
Operation and maintenance
center and measurement unit
959,924
134,989
(1,315
)
-
1,093,598
Fixed access network
equipment
777,601
66,342
(1,851)
-
842,092
Total
30,291,034
6,100,041
(2,043,305
)
-
34,347,770
Less Impairment in Value
98,611
-
-
-
98,611
Net Book Value
44,428,807
43,963,417
*including additional property and equipment purchased from Lintasarta amounting to Rp 71,423 (net of intercompany loss of Rp11,683)
8.
PROPERTY AND EQUIPMENT (continued)
Submarine cables represent the Company’s proportionate investment in submarine cable circuits jointly constructed, operated, maintained and owned with other countries, based on the respective contracts and/or the construction and maintenance agreements.
Depreciation expense charged to the interim consolidated statements of comprehensive income amounted to Rp1,699,641 and Rp1,547,054 for the three-month periods ended March 31, 2012 and 2011, respectively. As result of the change in estimate of useful lives as described in Note 2h, the depreciation expense for the three-month period ended March 31, 2012 decreased by Rp12,286.
Management believes that there is no impairment in asset value or recovery of the impairment reserve as contemplated in PSAK 48 (Revised 2009) for the three-month periods ended March 31, 2012 and 2011.
On August 31, 2009, the Company launched its Palapa D Satellite. The Satellite experienced an under-performance of the launch vehicle during the Satellite’s placement to its intended orbital position. Consequently, its orbital lifetime has been reduced. The insurance claim for the partial loss of the Satellite has been made and is recorded as a reduction of the cost of the Satellite. The Satellite has been in operation since November 2009 after going through the process of testing and arranging its orbital position in September and October 2009. On January 4 and 19, 2010, the Company collected the Palapa D Satellite insurance claim amounting to US$58,008 (equivalent to Rp537,657) as a loss compensation for the decrease in the Satellite’s useful life from 15 years to 10.77 years due to the under-performance of the launch vehicle in the Satellite’s orbital process.
As of March 31, 2012, approximately Rp14,179 of property and equipment are pledged as collateral to credit facilities obtained by Lintasarta.
As of March 31, 2012, the Group insured its property and equipment (except submarine cables and landrights) for US$215,654 and Rp40,471,593 including insurance amounting to US$132,800 on the Company‘s satellite. Management believes that the sum insured is sufficient to cover possible losses arising from fire, explosion, lightning, aircraft damage and other natural disasters.
The details of the Group’s properties under construction and installation as of March 31, 2012, December 31, 2011 and January 1, 2011 / December 31, 2010 are as follows:
Percentage of
Estimated Date
Completion
Cost
of Completion
March 31, 2012
Cellular technical equipment
8 - 99
1,721,258
April 2012 - December
2013
Transmission and cross-connection equipment
6 - 99
876,454
April 2012 - February
2013
Building and leasehold improvements
6 - 99
207,687
April - November 2012
Information technology equipment
19 - 98
115,679
April - June 2012
Others (each below Rp50,000)
40 - 80
15,501
June - December 2012
Total
2,936,579
33
These consolidated financial statements are originally issued in the Indonesian language.
PT INDOSAT Tbk AND SUBSIDIARIES
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
As of March 31, 2012 and for the Three-Month Period then Ended (Unaudited)
With Comparative Figures as of December 31, 2011 and
January 1, 2011 / December 31, 2010 (as Restated) (Unaudited)
and for the Three-Month Period Ended March 31, 2011 (as Restated) (Unaudited)
(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)
8.
PROPERTY AND EQUIPMENT (continued)
Percentage of
Estimated Date
Completion
Cost
of Completion
December 31, 2011
Cellular technical equipment
17 - 90
1,775,032
January - June 2012
Transmission and cross-connection equipment
18 - 98
799,321
January - June 2012
Building and leasehold improvements
20 - 95
141,022
January - June 2012
Information technology equipment
40 - 80
91,182
January 2012 -
January 2013
Others (each below Rp50,000)
40 - 90
2,419
January - September 2012
Total
2,808,976
January 1, 2011 / December 31, 2010
Cellular technical equipment
5 - 99
2,170,612
January - December 2011
Transmission and cross-connection equipment
5 - 99
955,425
January - December 2011
Building and leasehold improvements
6 - 95
242,194
January - December 2011
Others (each below Rp50,000)
5 - 95
93,653
January - December 2011
Total
3,461,884
Borrowing costs capitalized to properties under construction and installation for the three months ended March 31, 2011 amounted to Rp1,503.
For the three-month period ended March 31, 2012 and years ended December 31, 2011 and January 1, 2011 / December 31, 2010, exchanges and sales / outright sale of certain property and equipment were made as follows:
January 1,
2011 /
March 31,
December 31,
December 31,
2012
2011
2010
(Three Months)
(One Year)
(One Year)
Exchanges of Assets
Kalimantan Project (Note 31f)
Carrying amount of assets received
-
400,956
158,285
Carrying amount of assets given up
-
(400,956
)
(158,285
)
Sumatra and Java Project (Note 31d)
Carrying amount of assets received
44,987
115,734
-
Carrying amount of assets given up
(44,987
)
(115,734
)
-
Sales of Assets
Proceeds
2
6,708
7,741
Net book value
-
(76
)
(841
)
Outright sale of asset being leased
Fair value of asset being leased
18,612
27,529
66,658
Net book value
(1,035
)
(2,001
)
(8,139
)
Gain
17,579
32,160
65,419
In the above exchange of assets transactions, the fair values of neither the assets received nor the assets given up could be measured reliably, hence, their values were measured at the carrying amounts of the assets given up.
The carrying value of property and equipment held under finance lease contracts as of March 31, 2012, December 31, 2011 and January 1, 2011 / December 31, 2010 was Rp727,702, Rp695,426 and Rp145,666, respectively. Additions for the one year ended December 31, 2011 and three-month period ended March 31, 2012 included Rp439,743 and Rp63,656 of property and equipment under finance leases.
34
These consolidated financial statements are originally issued in the Indonesian language.
PT INDOSAT Tbk AND SUBSIDIARIES
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
As of March 31, 2012 and for the Three-Month Period then Ended (Unaudited)
With Comparative Figures as of December 31, 2011 and
January 1, 2011 / December 31, 2010 (as Restated) (Unaudited)
and for the Three-Month Period Ended March 31, 2011 (as Restated) (Unaudited)
(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)
9.
GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill arose from the acquisition of ownership in Bimagraha and Satelindo in 2001 and 2002, respectively, and from the acquisition of additional ownership in Lintasarta in 2005, in SMT in 2008 and LMD in 2010.
The details of the other intangible assets arising from the acquisition of Satelindo in 2002 are as follows:
Amount
Spectrum license
222,922
Customer base
- Post-paid
154,220
- Prepaid
73,128
Brand
147,178
Total
597,448
The changes in the goodwill and other intangible assets account for the three-month period ended March 31, 2012 and years ended December 31, 2011 and 2010 are as follows:
Non-integrated software | Other intangible asset | Goodwill | Total | ||||
Cost | |||||||
At January 1, 2010 | 235,577 | 597,448 | 2,944,362 | 3,777,387 | |||
Additions | 40,052 | - | - | 40,052 | |||
At December 31, 2010 | 275,629 | 597,448 | 2,944,362 | 3,817,439 | |||
Additions | 10,340 | 112 | - | 10,452 | |||
At December 31, 2011 | 285,969 | 597,560 | 2,944,362 | 3,827,891 | |||
Additions | 11,222 | - | - | 11,222 | |||
At March 31, 2012 | 297,191 | 597,560 | 2,944,362 | 3,839,113 | |||
Accumulated Amortization | |||||||
At January 1, 2010 | 215,357 | 588,351 | 1,393,599 | 2,197,307 | |||
Amortization | 10,595 | 9,097 | 226,380 | 246,072 | |||
At December 31, 2010 | 225,952 | 597,448 | 1,619,979 | 2,443,379 | |||
Amortization | 17,608 | 51 | - | 17,659 | |||
At December 31, 2011 | 243,560 | 597,499 | 1,619,979 | 2,461,038 | |||
Amortization | 4,536 | 2 | - | 4,538 | |||
At March 31, 2012 | 248,096 | 597,501 | 1,619,979 | 2,465,576 | |||
Net Book Value: | |||||||
At December 31, 2010 | 49,677 | - | 1,324,383 | 1,374,060 | |||
At December 31, 2011 | 42,409 | 61 | 1,324,383 | 1,366,853 | |||
At March 31, 2012 | 49,095 | 59 | 1,324,383 | 1,373,537 | |||
Goodwill acquired through business combination has been allocated to the cellular business unit, which is also considered as one of the Group’s operating segments.
9.
GOODWILL AND OTHER INTANGIBLE ASSETS (continued)
Goodwill is tested for impairment annually (as at December 31) and when circumstances indicate the carrying value may be impaired. The Company considers the relationship between its market capitalization and its book value, among other factors, when reviewing for indicators of impairment. As of December 31, 2011, the market capitalization of the Company was above the book value of its equity. The recoverable amount of the cellular business unit has been determined based on fair values less cost to sell (“FVLCTS”) calculation that uses the Income Approach (a Discounted Cash Flows Method) and the Market Approach (a Guideline Public Company Method).
Key assumptions used in the FVLCTS calculation at December 31, 2011:
Discount rates - The Company has chosen to use weighted average cost of capital (“WACC”) as the discount rate for the discounted cash flow. The estimated WACC applied in determining the recoverable amount of the cellular business unit is between 11% and 12%.
Compounded Annual Growth Rate (“CAGR”) - The CAGR projection for the 5-year budget period of the cellular business unit revenue based on the market analysts’ forecast is between 3.9% and 5.6%.
Cost to Sell - As the recoverable amount of the cellular business unit is determined using FVLCTS, the estimated cost to sell the business is based on a certain percentage of the equity value. The estimated cost to sell used for this calculation is at approximately 1.5% of the enterprise value.
The Company considers the relationship between its market capitalization and its book value, among other factors, when reviewing for indicators of impairment. As of March 31, 2012, the market capitalization of the Company was above the book value of its equity. As a result, management does not perform an impairment calculation as of March 31, 2012.
10.
LONG-TERM PREPAID RENTALS - NET OF CURRENT PORTION
This account represents mainly the long-term portion of prepaid rentals on sites and towers.
11.
LONG-TERM ADVANCES
This account represents advances to suppliers and contractors for the purchase and construction/ installation of property and equipment which will be reclassified to the related property and equipment accounts upon the receipt of the property and equipment purchased or after the construction/installation of the property and equipment has reached a certain percentage of completion.
12. OTHER NON-CURRENT FINANCIAL ASSETS - NET
This account consists of the following:
March 31,December 31,January 1,
January 1,
2011 /
March 31,
December 31,
December 31,
2012
2011
2010
Other long-term investments
116,307
116,307
102,707
Less allowance for impairment
113,577
113,577
99,977
Net
2,730
2,730
2,730
Restrictedcash and cash equivalents
(including US$273 in 2012, US$290 in 2011 and
US$155 in 2010)
50,708
50,826
39,595
Employee loans receivable
12,900
13,515
15,679
12. OTHER NON-CURRENT FINANCIAL ASSETS - NET (continued)
January 1,
2011 /
March 31,
December 31,
December 31,
2012
2011
2010
Others (including US$1,001 in 2012, US$1,288
in 2011 and US$1,272 in 2010)
25,251
23,345
22,401
Sub-total
88,859
87,686
77,675
Total
91,589
90,416
80,405
Other long-term investments - net consist of the following:
a.
Investments in shares of stock accounted under the cost method:
March 31, 2012
Location | Principal Activity | Ownership (%) | Cost/Carrying Value | ||||||||||||
PT First Media Tbk | Indonesia | Cable television and internet network service provider | 1.07 | 50,000 | |||||||||||
Pendrell Corporation [previously ICO Global Communication (Holdings) Limited*] | United States of America | Satellite service | 0.0067 | 49,977 | |||||||||||
Asean Cableship Pte. Ltd. (“ACPL”)** | Singapore | Repairs and maintenance of submarine cables | 16.67 | 1,265 | |||||||||||
Others | 12.80 - 18.89 | 14,966 | |||||||||||||
Total | 116,208 | ||||||||||||||
Less allowance for impairment | 113,577 | ||||||||||||||
Net | 2,631 | ||||||||||||||
December 31, 2011
PT First Media Tbk | Indonesia | Cable television and internet network service provider | 1.07 | 50,000 | ||||||||
Pendrell Corporation* | United States of America | Satellite service | 0.0067 | 49,977 | ||||||||
ACPL** | Singapore | Repairs and maintenance of submarine cables | 16.67 | 1,265 | ||||||||
Others | 12.80 - 18.89 | 14,966 | ||||||||||
Total | 116,208 | |||||||||||
Less allowance for impairment | 113,577 | |||||||||||
Net | 2,631 | |||||||||||
January 1, 2011 / December 31, 2010
PT First Media Tbk | Indonesia | Cable television and internet network service provider | 1.07 | 50,000 | |||||
Pendrell Corporation* | United States of America | Satellite service | 0.0087 | 49,977 | |||||
ACPL** | Singapore | Repairs and maintenance of submarine cables | 16.67 | 1,265 | |||||
Others | 12.80 - 14.29 | 1,366 | |||||||
Total | 102,608 | ||||||||
Less allowance for impairment | 99,977 | ||||||||
Net | 2,631 | ||||||||
*
On March 15, 2011, the Company’s ownership in ICO Global Communication (Holdings) Limited was diluted to 0.0068% since the Company did not exercise its right in relation to a right issue conducted by ICO Global Communication (Holdings) Limited. On July 21, 2011, ICO Global Communication changed its name to Pendrell Corporation. Furthermore, as of March 31, 2012 and December 31, 2011, the Company’s ownership in Pendrell has been diluted to 0.0067%.
**
The Company received dividend income from its investment in ACPL totaling US$1,574 (equivalent to Rp13,790) and US$2,140 (equivalent to Rp19,281) for years ended December 31, 2011 and 2010, respectively.
12. OTHER NON-CURRENT FINANCIAL ASSETS - NET (continued)
The Company has provided allowance for impairment of its investments in shares of stock accounted for under the cost method amounting to Rp113,577 as of March 31, 2012 and December 31, 2011 and Rp99,977 as of January 1, 2011 / December 31, 2010, which the Company believes is adequate to cover impairment losses on the investments.
b.
Equity securities from BNI of Rp89 and Telkom of Rp10 are both available for sale as of March 31, 2012, December 31, 2011 and January 1, 2011 / December 31, 2010.
13.
OTHER NON-CURRENT ASSETS - NET
As of March 31, 2012, December 31, 2011 and January 1, 2011 / December 31, 2010, this account consisted of the following:
January 1,
2011 /
March 31,
December 31,
December 31,
2012
2011
2010
Investment in an associated company
56,300
56,300
56,300
Less allowance for impairment
56,300
56,300
56,300
Net
-
-
-
Others
24,756
5,593
8,341
Total
24,756
5,593
8,341
14.
SHORT-TERM LOAN
The balance of this account as of March 31, 2012 of Rp1,499,331 (net of unamortized loan issuance cost of Rp669) and as of December 31, 2011 of Rp1,499,256 (net of unamortized loan issuance cost of Rp744) represents loan from Mandiri, a related party (Note 30).
On June 21, 2011, the Company entered into a Revolving Time Loan Facility agreement with Mandiri covering a maximum amount of Rp1,000,000 to finance the Company’s operational working capital, capital expenditure and/or refinancing requirements. This facility is available from June 21, 2011 to June 20, 2014 and drawdowns bear interest at 1-month Jakarta Inter-Bank Offered Rate (“JIBOR”) plus 1.4% per annum. Each drawdown matures 3 months from the drawdown date and can be extended for further 3-month periods by submitting a written request for such extension to Mandiri.
On August 2, 2011, the Company made the first drawdown amounting to Rp300,000 from the facility, which was extended to February 2, 2012 based on extended request letter dated October 25, 2011.
Subsequently, on December 5, 2011, the Company entered into an amendment of this agreement to cover the increase of the facility amount up to Rp1,500,000 and the change of the interest rate to 1-month JIBOR plus 1.25% per annum.
On December 14, 2011, the Company drew down Rp1,200,000 from this facility.
On February 2, 2012, the Company made partial payment of the loan amounting to Rp200,000.
On March 28, 2012, the Company drew down Rp200,000 from this facility.
35
These consolidated financial statements are originally issued in the Indonesian language.
PT INDOSAT Tbk AND SUBSIDIARIES
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
As of March 31, 2012 and for the Three-Month Period then Ended (Unaudited)
With Comparative Figures as of December 31, 2011 and
January 1, 2011 / December 31, 2010 (as Restated) (Unaudited)
and for the Three-Month Period Ended March 31, 2011 (as Restated) (Unaudited)
(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)
14.
SHORT-TERM LOAN (continued)
Voluntary early repayment is permitted subject to 3 days’ prior written notice. The Company may early repay the whole or any part of the loan.
Based on the facility agreement, the Company is required to comply with certain covenants such as maintaining financial ratios. As of March 31, 2012, the Company has complied with all the financial ratios required to be maintained.
The amortization of the loan issuance cost for the three months ended March 31, 2012 amounted to Rp75 (Note 28).
15.
PROCUREMENT PAYABLE
This account consists of amounts due for capital and operating expenditures procured from the following:
January 1,
2011 /
March 31,
December 31,
December 31,
2012
2011
2010
Related parties (Note 30) (including US$101
in 2012, US$114 in 2011 and US$404 in 2010)
52,694
36,073
68,681
Third parties (including US$173,199 in 2012,
US$220,674 in 2011 and US$246,211 in 2010)
2,997,242
3,393,848
3,575,786
Total
3,049,936
3,429,921
3,644,467
The billed and unbilled amounts of the procurement payable amounted to Rp419,028 and Rp2,630,908, respectively, as of March 31, 2012, Rp555,065 and Rp2,874,856, respectively, as of December 31, 2011 and Rp360,508 and Rp3,283,959, respectively, as of January 1, 2011 / December 31, 2010.
16.
TAXES PAYABLE
This account consists of the following:
January 1,
2011 /
March 31,
December 31,
December 31,
2012
2011
2010
Estimated corporate income tax payable,
less tax prepayments of Rp22,077 in 2012,
Rp106,847 in 2011 and Rp123,281 in 2010
3,727
13,330
4,890
Income tax:
Article 4(2)
9,515
10,624
14,299
Article 21
24,299
15,366
14,032
Article 23
4,390
4,107
9,177
Article 25
14,964
14,964
18,899
Article 26
12,084
18,863
88,787
Article 29
13,187
-
-
VAT
9,140
11,123
18,107
Others
172
186
1,254
Total
91,478
88,563
169,445
16.
TAXES PAYABLE (continued)
The reconciliation between profit before income tax and tax loss of the Company for the three-month periods ended March 31, 2012 and 2011 is as follows:
2012
2011
Profit before income tax per interim consolidated statements of comprehensive
income
15,081
691,708
Subsidiaries’ profit before income tax and effect of
inter-company consolidation eliminations
(47,285
)(42,483)
Profit (loss) before income tax of the Company
(32,204
)649,225
Positive adjustments
Interest compensation on the overpayment of 2004 corporate income tax
60,674
-
Provision for impairment of receivables - net
38,877
12,537
Accrual of employee benefits - net of realization
26,984
1,979
Gain on sale and exchange of property and equipment
23,870
107,348
Depreciation - net
15,497
-
Provision for termination, gratuity and compensation benefits
of employees - net of realization
11,942
3,501
Employee benefit
10,496
19,149
Charges from leasing transaction
7,616
9,477
Amortization of debt and bonds issuance costs,
consent solicitation fees and discount (Notes 14, 18 and 19)
7,269
6,162
Donations
3,087
2,920
Representation and entertainment
308
3,899
Others
31,809
396
Negative adjustments
Equity in net income of investees
(56,627
)
(42,272)
Amortization of goodwill and other intangible assets
(37,722
)(43,318)
Incomes from leasing transaction
(15,913
)
(22,027)
Interest income already subjected to final tax
(7,333
)(13,401)
Net periodic pension cost
(1,579
)(3,676)
Depreciation - net
-
(118,836
)
`
Other
(1,389
)(3,314)
Estimated taxable income of the Company - current period
85,662
569,749
Tax loss carryforward at beginning of period
(1,408,985
)
(1,142,061)
Tax loss carryforward at end of period
(1,323,323
)
(572,312
)
16.
TAXES PAYABLE (continued)
The computation of the income tax expense for the three-month periods ended March 31, 2012 and 2011 are as follows:
2012
2011
Income tax expense (benefit) - current (at statutory tax rates)
Company
-
-
Subsidiaries
25,804
30,720
Interest compensation on the overpayment of 2004 corporate
income tax (Notes 21 and 36)
(60,674
)
-
Income tax expense (benefit) - current - net
(34,870
)
30,720
Income tax expense (benefit) - deferred - effect
of temporary differences at applicable tax rate
Company
Tax loss
21,416
142,437
Equity in net income of investees
10,101
10,568
Amortization of goodwill and other intangible assets
9,430
10,829
Incomes from leasing transaction
3,978
5,507
Net periodic pension cost
395
919
Provision for impairment of receivables - net
(9,719
)
(3,134)
Accrual of employee benefits - net
(6,746
)
(495
)
Gain on sale and exchange of property
and equipment - net
(5,968
)
(26,837)
Depreciation - net
(3,874
)
29,709
Accrual of provision for termination, gratuity
and compensation benefits of
employees - net
(2,986
)
(875
)
Charges from leasing transaction
(1,904
)
(2,369
)
Amortization of debt and bonds issuance costs,
consent solicitation fees and discount (Notes 14, 18 and 19)
(1,817
)
(1,540
)
Others
(525
)
803
Net
11,781
165,522
Subsidiaries
(945
)
(2,836)
Net income tax expense - deferred
10,836
162,686
Income tax expense (benefit) - net
(24,034
)
193,406
16. TAXES PAYABLE (continued)
The computation of the estimated income tax payable for the three-month periods ended March 31, 2012 and 2011 is as follows:
2012
2011
Income tax expense (benefit) - current
Company
-
-
Subsidiaries
25,804
30,720
Interest compensation on the overpayment of 2004 corporate
income tax (Notes 21 and 36)
(60,674
)
-
Income tax expense (benefit) - current - net
(34,870
)
30,720
Less prepayments of income tax of the Company
Article 22
19,220
5,800
Article 23
21
38
Total prepayments of income tax of the Company
19,241
5,838
Less prepayments of income tax of Subsidiaries
Article 23
1,567
2,589
Article 25
44,891
105,331
Total prepayments of income tax of Subsidiaries
46,458
107,920
Total prepayments of income tax
65,699
113,758
Estimated income tax payable
ofSubsidiaries
3,727
1,887
Claims for tax refund (presented as part of “Prepaid Taxes”)
Company
19,241
5,838
Subsidiaries
24,381
79,087
Total
43,622
84,925
The reconciliation between the income tax expense (benefit) calculated by applying the applicable tax rate of 25% to the profit before income tax and the income tax expense (benefit) as shown in the interim consolidated statements of comprehensive income for the three-month periods ended March 31, 2012 and 2011 is as follows:
16. TAXES PAYABLE (continued)
2012
2011
Profit before income tax per interim consolidated statements
of comprehensive income
15,081
691,708
Income tax expense at the applicable tax rate
3,770
172,927
Company’s equity in Subsidiaries’ profit before income tax
and reversal of
inter-company consolidation eliminations
14,543
15,994
Tax effect on permanent differences
Employee benefits
3,779
5,213
Donations
1,244
730
Representation and entertainment
176
1,070
Interest income already subjected to final tax
(4,344
)
(5,352
)
Others
16,718
457
Interest compensation on the overpayment of 2004 corporate
income tax (Notes 21 and 36)
(60,674
)
-
Others
754
2,367
Income tax expense (benefit) per interim consolidated statements of
comprehensive income
(24,034
)
193,406
The tax effects of significant temporary differences between financial and tax reporting of the Company which are outstanding as of March 31, 2012, December 31, 2011 and January 1, 2011 / December 31, 2010 are as follows:
January 1,
2011 /
March 31,
December 31,
December 31,
2012
2011
2010
Deferred tax assets
Tax loss carryforward
330,831
352,246
285,515
Accrual of employee benefits - net
216,148
206,416
235,104
Allowance for impairment of receivables
134,792
125,073
118,195
Allowance for impairment of investment in an
associated company and
other long-term investments
42,469
42,469
39,069
Pension cost
17,901
18,296
22,143
Charges from leasing transaction
15,556
13,652
4,175
Allowance for impairment of short-term investment
6,349
6,349
6,349
Others
427
1,550
3,300
Total
764,473
766,051
713,850
Deferred tax liabilities
Property and equipment
2,490,094
2,499,934
2,247,179
Investments in subsidiaries/associated
company - net of amortization of goodwill
and other intangible assets
214,962
195,431
229,239
Income from leasing transaction
23,841
19,863
14,912
Long-term prepaid licenses
16,662
16,876
13,562
Deferred debt and bonds issuance costs,
consent solicitation fees and discount
5,039
6,856
10,526
Difference in transactions of equity changes in an
associated company
1,460
1,460
1,460
Others
136
659
659
Total
2,752,194
2,741,079
2,517,537
Deferred tax liabilities - net
1,987,721
1,975,028
1,803,687
16. TAXES PAYABLE (continued)
The breakdown by entity of the deferred tax assets and liabilities outstanding as of March 31, 2012, December 31, 2011 and January 1, 2011 / December 31, 2010 is as follows:
January 1, 2011 /
March 31, 2012
December 31, 2011
December 31, 2010
Deferred Tax
Deferred Tax
Deferred Tax
Deferred Tax
Deferred Tax
Deferred Tax
Assets
Liabilities
Assets
Liabilities
Assets
Liabilities
Company
-
1,987,721
-
1,975,028
-
1,803,687
Subsidiaries
Lintasarta
82,411
-
80,396
-
77,755
-
IMM
32,479
-
33,718
-
17,263
-
APE
-
4,995
-
5,165
-
4,383
ISPL
-
1,027
-
1,027
-
428
SMT
-
-
-
-
-
1,597
Total
114,890
1,993,743
114,114
1,981,220
95,018
1,810,095
The deferred tax assets of Lintasarta relate mainly to the deferred tax on the temporary difference in the recognition of depreciation on property and equipment.
The significant temporary differences on which deferred tax assets have been computed are not deductible for income tax purposes until the accrued employee benefits are paid, the allowance for impairment of receivables is realized upon the write-off of the receivables after fulfilling certain requirements under the Income Tax Law, the allowance for impairment of investments in associated company and other long-term investments is realized upon sale of the investments and the pension cost is paid.
The significant deferred tax liabilities relate to the differences in the book and tax bases of property and equipment, investments in subsidiaries/associated company, long-term prepaid licenses, debt and bonds issuance costs, consent solicitation fees and discount.
Prior to 2011, the Company provided for deferred tax liabilities and deferred tax assets relating to the book-versus-tax-basis differences in its investments in subsidiaries as the Company believed that it was probable the investments in certain subsidiaries would be recovered through the sale of the shares which is a taxable transaction, and for certain subsidiaries the differences would be deductible from ordinary income as a result of a merger. In 2011, the Company re-evaluated its investment strategy including the accounting treatment on the recognition of deferred tax liabilities and deferred tax assets relating to the book-versus-tax-basis differences in investments in subsidiaries and the evaluation of “forseeable future” and the “probable” judgements. Based on the Company’s evaluation, the deferred tax liabilities were not recognized for temporary differences between the tax and book bases in investments in certain subsidiaries (IMM, ISPL and IPBV) since the Company believed the timing of the reversal of the temporary differences could be controlled and it was probable that the temporary differences would not reverse in the foreseeable future. Hence, the balance of the deferred tax liabilities on the taxable temporary differences on the investments in IMM, ISPL and IPBV as of January 1, 2011 totalling Rp111,097 was reversed and credited to current deferred income tax benefit.
On September 17, 2010, the Company received STPs from the DGT for the underpayment of the Company’s 2008 and 2009 income tax article 26 totalling Rp80,018 (including interest). On October 13, 2010, the Company submitted cancellation letters to the Tax Office regarding such STPs. Subsequently, on November 16, 2010, the Company was required to pay a certain portion of these STPs by using the approved tax refund received on the Company’s corporate Income Tax for fiscal year 2005 amounting to Rp38,155 (Note 6). On January 7, 2011, the Company paid the remaining amount of Rp41,863 on the underpayment of the Company’s 2008 and 2009 income tax article 26 based on STPs from the DGT. On April 11, 2011, the Company received a letter from the Tax Office which declined the request for cancellation of such STPs. On May 5, 2011, the Company submitted an appeal letter to the Tax Court concerning these STPs. As of May 3, 2012, the Company has not yet received any decision from the Tax Court on such appeal.
36
These consolidated financial statements are originally issued in the Indonesian language.
PT INDOSAT Tbk AND SUBSIDIARIES
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
As of March 31, 2012 and for the Three-Month Period then Ended (Unaudited)
With Comparative Figures as of December 31, 2011 and
January 1, 2011 / December 31, 2010 (as Restated) (Unaudited)
and for the Three-Month Period Ended March 31, 2011 (as Restated) (Unaudited)
(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)
16. TAXES PAYABLE (continued)
On April 21, 2011, the Company received SKPKB from the DGT for the Company’s VAT for the period January - December 2009 totalling Rp182,800 (including penalties). The Company accepted a part of the corrections amounting to Rp4,160 which was charged to current operations (Note 6). On July 15, 2011, the Company paid the remaining underpayment amounting to Rp178,640 of the VAT for the period January - December 2009. On July 19, 2011, the Company submitted an objection letter to the Tax Office regarding the remaining correction on the Company’s VAT for the period January - December 2009. As of May 3, 2012, the Company has not yet received any decision from the Tax Office on such objection letter.
On March 13, 2012, the Company received the Tax Court’s Decision Letter accepting the Company’s request for interest compensation related to the issuance of 2004 SKPLB amounting to Rp60,674, which was credited to current income tax benefit in the Company’s statement of comprehensive income. As of May 3, 2012, the tax refund has not yet been received.
The tax losses carryover of SMT and the Company as of March 31, 2012 can be carried forward through 2017 based on the following schedule:
Year of Expiration
Amount
2013
26,660
2014
31,901
2015
1,107,288
2016
289,695
2017
5,626
Total
1,461,170
17.
ACCRUED EXPENSES
This account consists of the following:
January 1,
2011 /
March 31,
December 31,
December 31,
201220112010
Network repairs and maintenance
262,398
288,731
265,428
Marketing
239,961
214,907
120,092
Interest
206,487
319,880
339,957
Employee benefits (Notes 22 and 29)
152,703
180,441
216,732
Utilities
81,916
58,609
85,650
Universal Service Obligation (“USO”) (Note 33)
78,323
59,716
59,899
Dealer incentives (Note 2k)
70,817
82,615
125,836
Rental
69,959
59,929
28,090
Radio frequency fee (Note 33)
59,630
283,588
195,686
Link
57,357
55,593
31,111
Consultancy fees
52,707
35,309
65,288
Blackberry access fee
42,750
79,627
20,679
Concession fee (Note 33)
35,830
35,370
38,005
General and administration
26,418
31,119
27,706
Others (each below Rp20,000)
105,943
106,043
90,726
Total
1,543,199
1,891,477
1,710,885
18.
LOANS PAYABLE
This account consists of the following:
January 1,
2011 /
March 31,
December 31,
December 31,
2012
2011
2010
Third parties - net of unamortized debt issuance cost
and consent solicitation fees of Rp133,670 in 2012,
Rp146,511 in 2011 and Rp189,979 in 2010; unamortized
debt discount of Rp9,921 in 2012, Rp11,891
in 2011
and Rp19,267 in 2010
8,401,665
8,727,473
9,553,906
Related party (Note 30)
Mandiri - net of unamortized debt issuance cost
and consent solicitation fees of Rp777 in 2012,
Rp1,157 in 2011 and Rp2,955 in 2010
999,223
998,843
1,297,045
Total loans payable
9,400,888
9,726,316
10,850,951
Less current maturities (net of unamortized debt
issuance cost and consent solicitation fees
of Rp1,542 in 2012, Rp2,295 in 2011 and
Rp373 in 2010)
Third parties
2,310,381
2,301,694
2,884,147
Related party
999,223
998,843
300,000
Total current maturities
3,309,604
3,300,537
3,184,147
Long-term portion
Third parties
6,091,284
6,425,779
6,669,759
Related party
-
-
997,045
Total long-term portion
6,091,284
6,425,779
7,666,804
37
These consolidated financial statements are originally issued in the Indonesian language.
PT INDOSAT Tbk AND SUBSIDIARIES
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
As of March 31, 2012 and for the Three-Month Period then Ended (Unaudited)
With Comparative Figures as of December 31, 2011 and
January 1, 2011 / December 31, 2010 (as Restated) (Unaudited)
and for the Three-Month Period Ended March 31, 2011 (as Restated) (Unaudited)
(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)
18.
LOANS PAYABLE (continued)
The loans from third parties consist of the following:
January 1,
2011 /
March 31,
December 31,
December 31,
2012
2011
2010
Syndicated U.S. Dollar Loan Facility - net
of unamortized debt issuance cost and consent
solicitation fees of Rp8,156 in 2012, Rp11,621
in 2011
and Rp27,122 in 2010
2,098,654
2,069,484
4,018,828
AB Svensk Exportkredit, Sweden with Guarantee
from Exportkreditnamnden - net of unamortized debt
issuance cost of Rp24,096 in 2012, Rp26,434
in 2011 and Rp27,593 in 2010
2,054,518
2,127,216
1,972,905
BCA Revolving Time Loan - net of unamortized debt
issuance cost of Rp649 in 2012 and Rp736 in 2011
1,299,351
1,499,264
-
HSBC France - net of unamortized debt issuance cost
and consent solicitation fees of Rp98,148 in 2012,
Rp104,536 in 2011 and Rp129,167 in 2010
1,288,399
1,356,403
1,500,434
BCA - net of unamortized debt issuance cost
and consent solicitation fees of Rp764 in 2012,
Rp1,138 in 2011 and Rp2,903 in 2010
999,236
998,862
1,297,097
Goldman Sachs International
Principal, net of unamortized debt discount
of Rp9,921 in 2012, Rp11,891 in 2011
and Rp19,267 in 2010
424,379
422,409
415,033
Foreign Exchange (FX) Conversion Option
37,852
49,518
54,595
9-Year Commercial Loan - net of unamortized
debt issuance cost and consent solicitation fees
of Rp1,857 in 2012, Rp2,046 in 2011
and Rp2,821 in 2010
184,293
181,834
203,805
Investment Credit Facility 6 from CIMB Niaga
14,983
22,483
52,483
Finnish Export Credit Ltd. - net of unamortized
debt issuance cost and consent solicitation
fees of Rp373
-
-
33,793
Investment Credit Facility 5 from CIMB Niaga
-
-
4,933
Total
8,401,665
8,727,473
9,553,906
Less current maturities (net of unamortized debt
issuance costs and consent solicitation fees
totaling Rp764 in 2012, Rp2,295 in 2011
and Rp373 in 2010)
2,310,381
2,301,694
2,884,147
Long-term portion
6,091,284
6,425,779
6,669,759
38
These consolidated financial statements are originally issued in the Indonesian language.
PT INDOSAT Tbk AND SUBSIDIARIES
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
As of March 31, 2012 and for the Three-Month Period then Ended (Unaudited)
With Comparative Figures as of December 31, 2011 and
January 1, 2011 / December 31, 2010 (as Restated) (Unaudited)
and for the Three-Month Period Ended March 31, 2011 (as Restated) (Unaudited)
(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)
18. LOANS PAYABLE (continued)
The details of the loans from the related party and third parties are as follows:
Counterparties | Loan Type | Maturity | Amount | Interest Structure | Early Repayment | |
a. Mandiri* | § 5-year unsecured credit facility 1 § Loan drawdowns are payable annually | September 18, 2012 | Rp2,000,000 | § Year 1: 9.75% p.a. § Year 2: 10.5% p.a. § Years 3-5: Average 3-month JIBOR + 1.5% p.a. § Payable quarterly | § Without penalty if the repayment is made after the 24th month after the agreement date subject to 7 days’ prior written notice. § With penalty of 2% of the prepaid amount for repayment prior to the 24th month after the agreement date. | |
a. Syndicated U.S. Dollar Loan Facility - 12 Financial Institutions** Syndicated U.S. Dollar Loan Facility - 12 Financial Institutions** | § 5-year unsecured credit facility § Loan drawdowns are payable semi-annually | June 12, 2013 | US$450,000 | § USD London Inter-Bank Offered Rate (“LIBOR”) + 1.9% p.a. (onshore lenders); USD LIBOR + 1.85% p.a. (offshore lenders) § Payable semi-annually | § Permitted only after the 6th month from the date of loan agreement subject to 15 days’ prior written notice (in the minimum amount of US$10,000 and in an amount divisible by US$1,000). | |
a. AB Svensk Exportkredit (“SEK”), Sweden with Guarantee from Export- kreditnamnden (“EKN”) | § Credit facilities consisting of Facilities A, B and C with maximum amounts of US$100,000, US$155,000 and US$60,000, respectively § Loan drawdowns are payable semi-annually | May 31, 2016 for Facility A, February 28, 2017 for Facility B and November 30, 2017 for Facility C | US$315,000 | § Facility A: Margin of 0.25%, LIBOR, SEK Funding Cost of 1.05% and EKN Premium Margin of 1.57% § Facility B: Margin of 0.05%, Commercial Interest Reference Rate (“CIRR”) and EKN Premium Margin of 1.61% § Facility C: Margin of 0.05%, CIRR and EKN Premium Margin of 1.59% § Payable semi-annually | § Permitted only in proportionate amount for each of Facilities A, B and C, after the last day of the availability period and on a repayment date subject to 20 days’ prior written notice. § In minimum amount of US$5,000 and in an amount divisible by US$500. § Any repayment shall satisfy the obligations of loan repayment in inverse chronological order. | |
*
related party (Note 30)
**
On October 14, 2011, PT Bank UOB Indonesia (one of lenders under the Syndicated U.S. Dollar Loan Facility) transferred its portion of the loan to UOB Limited (another lender under the Syndicated U.S. Dollar Loan Facility), hence the number of lenders became 12.
18.
LOANS PAYABLE (continued)
Counterparties | Loan Type | Maturity | Amount | Interest Structure | Early Repayment |
d. BCA | § The revolving time loan with maximum amount of Rp1,000,000 § Each drawdown matures 1 month from the drawdown date. Subsequently, on August 9, 2011, the Company obtained an approval from BCA to amend the maturity date of each drawdown to become at the latest on February 10, 2014 § On December 1, 2011, the facility was amended to increase the facility amount up to Rp1,500,000 and change the interest rate. | February 10, 2014 | Rp1,500,000 | § JIBOR + 1.4% p.a. However, starting December 1, 2011, JIBOR + 1.25% p.a § Payable monthly | § Permitted subject to 1 day prior written notice. § The Company may repay the whole or any part of the loan. |
e. HSBC France | § 12 year - COFACE term facility § Payable in twenty semi-annual installments | September 30, 2019 | US$157,243 | § 5.69% p.a. § Payable semi-annually | § Permitted with a corresponding proportionate voluntary prepayment under the SINOSURE Facility after the last day of the availability period and on a repayment date subject to 30 days’ prior written notice. § In minimum amount of US$10,000 and in an amount divisible by US$1,000. § Any repayment shall satisfy the obligations of loan repayment in inverse chronological order. |
18.
LOANS PAYABLE (continued)
Counterparties | Loan Type | Maturity | Amount | Interest Structure | Early Repayment | |
e. HSBC France | § 12 year - SINOSURE term facility § Payable in twenty semi-annual installments | September 30, 2019 | US$44,200 | § USD LIBOR + 0.35% p.a. § Payable semi-annually | § Permitted with a corresponding proportionate voluntary prepayment under the COFACE Facility after the last day of the availability period and on a repayment date subject to 30 days’ prior written notice. § In minimum amount of US$10,000 and in an amount divisible by US$1,000. § Any repayment shall satisfy the obligations of loan repayment in inverse chronological order. | |
f. BCA | § 5-year unsecured credit facility 1 § Loan drawdowns are payable annually | September 27, 2012 | Rp2,000,000 | § Year 1: 9.75% p.a. § Year 2: 10.5% p.a. § Years 3-5: 3-month JIBOR + 1.5% p.a. § Payable quarterly | § Without penalty if the repayment is made after the 24th month after the agreement date subject to 7 days’ prior written notice. § With penalty of 2% of the prepaid amount for repayment prior to the 24th month after the agreement date. | |
g. Goldman Sachs International (“GSI”) | § Investment loan § Provides an “FX Conversion Option” for GSI to convert the loan payable into U.S. dollar loan of US$50,000 on May 30, 2012 (“FX Conversion Option”). § Fair value of FX Conversion Option as of March 31, 2012, December 31, 2011 and December 31, 2010 amounting to US$4,123.34 (equivalent to Rp37,852), US$5,460.78 (equivalent to Rp49,518) and US$6,072.20 (equivalent to Rp54,595), respectively (Note 20) | May 30, 2013 | Rp434,300 | § 8.75% p.a § Payable quarterly § If GSI takes FX Conversion Option, starting May 30, 2012, the loan will bear interest at the fixed annual rate of 6.45% applied on the US$50,000 principal. | § Certain changes affecting withholding taxes in the United Kingdom or Indonesia. § Default under Guaranteed Notes due 2012. § Default under the Company’s USD Notes and IDR Bonds. § Redemption, purchase or cancellation of the Guaranteed Notes Due 2012 and there are no USD Indosat Notes outstanding upon such redemption, purchase or cancellation. § Change of control in the Company. | |
18.
LOANS PAYABLE (continued)
Counterparties | Loan Type | Maturity | Amount | Interest Structure | Early Repayment |
h. HSBC Jakarta Branch, CIMB Niaga and Bank of China Limited Jakarta Branch | § 9-year unsecured commercial facility § Payable in fifteen semi-annual payments after 24 months from the date of loan agreement. For the 1st five installments: US$1,351.85 each; and US$2,027.78 each for the remaining installments thereafter | November 28, 2016 | US$27,037 | § USD LIBOR + 1.45% p.a. § Payable semi-annually | § Permitted only on each repayment date after the first repayment date subject to 30 days’ prior written notice. § In minimum amount of US$5,000 and in an amount divisible by US$1,000. § Any prepayment shall satisfy the obligations of loan repayment proportionately. |
i. CIMB Niaga | § Investment credit facility 6 obtained by Lintasarta § Payable quarterly | August 24, 2012 | Rp75,000 | § 14.5% p.a., subject to change by CIMB Niaga depending on the market condition § Payable quarterly | § Permitted only on interest payment date subject to 15 days’ prior written notice. Lintasarta may repay the whole or any part of the loan before the due date only by using the fund from Lintasarta’s operational activities. Repayment using the fund from loans obtained from other parties is allowed with penalty determined by CIMB Niaga. § The loan is collateralized by all equipment (Note 8) purchased from the proceeds of credit facility. |
j. Finnish Export Credit Ltd. | § 5-year credit facility § Paid semi-annually | May 12, 2011 | US$38,000 | § 4.15% p.a. § Paid semi-annually | § Permitted only after 60 days of the loan agreement subject to 15 days’ prior written notice (in the minimum amount of US$10,000 and in an amount divisible by US$1,000). § In May 2011, this loan was fully paid. |
18.
LOANS PAYABLE (continued)
Counterparties | Loan Type | Maturity | Amount | Interest Structure | Early Repayment |
k. CIMB Niaga | § Investment credit facility 5 obtained by Lintasarta § Paid quarterly | January 10, 2011 | Rp50,000 | § 1-month SBI + 2.25% p.a. § Paid quarterly | § Permitted only on interest payment date subject to 13 days’ prior written notice. Lintasarta may repay the whole or any part of the loan before the due date only by using the fund from Lintasarta’s operational activities. Repayment using the fund from loans obtained from other parties was allowed with 1% penalty of the early repaid amount. § The loan was collateralized by all equipment (Note 8) purchased from the proceeds of credit facility. § In January 2011, this loan was fully paid. |
18.
LOANS PAYABLE (continued)
The scheduled principal payments from 2013 of all the loans payable as of March 31, 2012 are as follows:
Twelve months ending March 31,
2017 and
2013
2014
2015
2016
thereafter Total
In rupiah
BCA - revolving
time loan
-
1,300,000
-
-
-1,300,000
Mandiri
1,000,000
-
-
-
-1,000,000
BCA- 5-year facility
1,000,000
-
-
-
-1,000,000
CIMB Niaga
14,983
-
-
-
-14,983
GSI
-
434,300
-
-
-434,300
Sub-total
2,014,983
1,734,300
-
-
- 3,749,283
In U.S. dollar
Syndicated U.S. Dollar
Loan Facility
(US$229,500)
660,960
1,445,850
-
-
-2,106,810
SEK, Sweden
(US$226,428.57)
413,100
413,100
413,100
413,100426,2142,078,614
HSBC France
(US$151,040.02)
184,873
184,873
184,873
184,873647,0551,386,547
9-Year Commercial
Facility
(US$20,277.75)
37,230
37,230
37,230
37,23037,230186,150
GSI (US$4,123.34)
-
37,852
-
-
-37,852
Sub-total
1,296,163
2,118,905
635,203
635,2031,110,4995,795,973
Total
3,311,146
3,853,205
635,203
635,203
1,110,4999,545,256
Less:
- unamortized debt issuance costs and consent solicitation fees
(134,447)
- unamortized debt discount
(9,921)
Net
9,400,888
The total amortization of debt issuance, discount and consent solicitation fees on the loans for the three-month periods ended March 31, 2012 and 2011 amounted to Rp15,191 and Rp16,332, respectively (Note 28).
As of March 31, 2012, December 31, 2011 and January 1, 2011 / December 31, 2010, the Group has complied with all financial ratios required to be maintained under the loan agreements.
19.
BONDS PAYABLE
This account consists of the following:
March 31, December 31,
January 1,
2011 /
March 31,
December 31,
December 31,
201220112010
a.
Guaranteed Notes Due 2020 - net of unamortized notes
issuance cost of Rp56,720 in 2012,
Rp58,420 in 2011
and Rp64,885 in 2010 and unamortized notes discount
of Rp25,444 in 2012, Rp26,208 in 2011 and
Rp29,666 in 2010
5,884,836
5,809,572
5,749,599
b.
Fifth Indosat Bonds in Year 2007 with Fixed Rates - net of
unamortized bonds issuance cost and consent
solicitation fees of Rp8,618 in 2012, Rp9,102 in 2011
and Rp11,041 in 2010
2,591,382
2,590,898
2,588,959
c.
Seventh Indosat Bonds in Year 2009 with Fixed Rates - net
of unamortized bonds issuance cost of Rp4,195 in 2012,
Rp4,442 in 2011 and Rp5,362 in 2010
1,295,805
1,295,558
1,294,638
d.
Sixth Indosat Bonds in Year 2008 with Fixed Rates - net of
unamortized bonds issuance cost and consent
solicitation fees of Rp3,121 in 2012, Rp3,603 in 2011
and Rp5,414 in 2010
1,076,879
1,076,397
1,074,586
e.
Indosat Sukuk Ijarah III in Year 2008 - net of unamortized
bonds issuance cost and consent solicitation fees of
Rp1,257 in 2012, Rp1,545 in 2011 and Rp2,625 in 2010
568,743
568,455
567,375
f.
Indosat Sukuk Ijarah II in Year 2007 - net of unamortized
bonds issuance cost and consent solicitation fees of
Rp1,020 in 2012, Rp1,124 in 2011 and Rp1,517 in 2010
398,980
398,876
398,483
g.
Second Indosat Bonds in Year 2002 with Fixed and Floating
Rates - net of unamortized consent solicitation fees
of Rp648 in 2012, Rp649 in 2011 and Rp652 in 2010
199,352
199,351
199,348
h.
Indosat Sukuk Ijarah IV in Year 2009 - net of unamortized
bonds issuance cost of Rp722 in 2012, Rp754 in 2011
and Rp873 in 2010
199,278
199,246
199,127
i.
Limited Bonds II issued by Lintasarta
-
25,000
25,000
j.
Limited Bonds I issued by Lintasarta
-
16,989
16,989
k.
Fourth Indosat Bonds in Year 2005 with Fixed Rate -
net of unamortized bonds issuance cost
and consent solicitation fees of Rp1,382
-
-
813,618
l. Indosat Syari’ah Ijarah Bonds in Year 2005 -
net of unamortized bonds issuance cost and
consent solicitation fees of Rp487
-
-
284,513
Total bonds payable
12,215,255
12,180,342
13,212,235
Less current maturities
-
41,989
1,098,131
Long-term portion
12,215,255
12,138,353
12,114,104
39
These consolidated financial statements are originally issued in the Indonesian language.
PT INDOSAT Tbk AND SUBSIDIARIES
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
As of March 31, 2012 and for the Three-Month Period then Ended (Unaudited)
With Comparative Figures as of December 31, 2011 and
January 1, 2011 / December 31, 2010 (as Restated) (Unaudited)
and for the Three-Month Period Ended March 31, 2011 (as Restated) (Unaudited)
(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)
19.
BONDS PAYABLE (continued)
Bond | Nominal Amount | Interest | Maturity | Remarks |
a. Guaranteed Notes Due 2020 | US$650,000 | § 7.375% p.a. § Payable semi-annually | July 29, 2020 | The notes are redeemable at the option of IPBV: § At any time on or after July 29, 2015. § Prior to July 29, 2013, IPBV may redeem up to a maximum of 35% of the original aggregate principal amount. § At any time, upon not less than 30 days’ nor more than 60 days’ prior notice, at a price equal to 100% of the principal amount thereof, plus any accrued and unpaid interest to (but not including) the redemption date and any additional amounts, in the event of certain changes affecting withholding taxes in Indonesia and the Netherlands. § Upon a change in control of IPBV, the holder of the notes has the right to require IPBV to repurchase all or any part of such holder’s notes. § Based on latest rating reports (released in February 2012), the notes have BB (watch positive outlook), Ba1 (stable outlook) and BBB- (positive outlook) ratings from Standard & Poor’s (“S&P”), Moody’s Investors Service (“Moody’s) and Fitch Ratings (“Fitch”), respectively. |
a. Fifth Indosat Bonds in Year 2007 | ||||
§ Series A | Rp1,230,000 | § 10.20% p.a. § Payable quarterly | May 29, 2014 | § The Company has option to buy back part or all of the bonds, after the 1st anniversary of the bonds, at market price temporarily or as an early settlement. § Based on the latest rating report released in March 2012, the bonds haveidAA+ (stable outlook) rating from PT Pemeringkat Efek Indonesia (“Pefindo”). |
§ Series B | Rp1,370,000 | § 10.65% p.a. § Payable quarterly | May 29, 2017 | |
a. Seventh Indosat Bonds in Year 2009 | ||||
§ Series A | Rp700,000 | § 11.25% p.a. § Payable quarterly | December 8, 2014 | § The Company has option to buy back part or all of the bonds, after the 1st anniversary of the bonds, at market price temporarily or as an early settlement. § Based on the latest rating report released in March 2012, the bonds haveidAA+ (stable outlook) rating from Pefindo. |
§ Series B | Rp600,000 | § 11.75% p.a. § Payable quarterly | December 8, 2016 | |
19.
BONDS PAYABLE (continued)
Bond | Nominal Amount | Interest | Maturity | Remarks |
d. Sixth Indosat Bonds in Year 2008 | ||||
§ Series A | Rp760,000 | § 10.25% p.a. § Payable quarterly | April 9, 2013 | § The Company has option to buy back part or all of the bonds, after the 1st anniversary of the bonds, at market price temporarily or as an early settlement. § Based on the latest rating report released in March 2012, the bonds haveidAA+ (stable outlook) rating from Pefindo. |
§ Series B | Rp320,000 | § 10.80% p.a. § Payable quarterly | April 9, 2015 | |
d. Indosat Sukuk Ijarah III in Year 2008 (“Sukuk Ijarah III”) | Rp570,000 | § Bondholders are entitled to annual fixed Ijarah return (“Cicilan Imbalan Ijarah”) totalling Rp58,425, payable on a quarterly basis starting July 9, 2008 up to April 9, 2013. | April 9, 2013 | § The Company has option to buy back part or all of the bonds, after the 1st anniversary of the bonds, at market price. § Based on the latest rating report released in March 2012, the bonds haveidAA+ (sy) (stable outlook) rating from Pefindo. |
d. Indosat Sukuk Ijarah II in Year 2007 (“Sukuk Ijarah II”) | Rp400,000 | § Bondholders are entitled to annual fixed Ijarah return (“Cicilan Imbalan Ijarah”) totalling Rp40,800, payable on a quarterly basis starting August 29, 2007 up to May 29, 2014. | May 29, 2014 | § The Company has option to buy back part or all of the bonds, after the 1st anniversary of the bonds, at market price. § Based on the latest rating report released in March 2012, the bonds haveidAA+ (sy) (stable outlook) rating from Pefindo. |
d. Second Indosat Bonds in Year 2002 - Series B | Rp200,000 | § 16% p.a. § Payable quarterly | November 6, 2032 | § The Company has buyback option on the 10th, 15th, 20th and 25th anniversaries of the bonds at 101% of the bonds’ nominal value and the bondholder has sell option if the rating of the bonds decreases toidAA- or lower or on the 15th, 20th and 25th anniversaries of the bonds. § Based on the latest rating report released in March 2012, the bonds haveidAA+ (stable outlook) rating from Pefindo. |
h. Indosat Sukuk Ijarah IV in Year 2009 (“Sukuk Ijarah IV”) | ||||
§ Series A | Rp28,000 | § Bondholders are entitled to annual fixed ijarah return (“Cicilan Imbalan Ijarah”) totalling Rp3,150, payable on a quarterly basis starting March 8, 2010 up to December 8, 2014. | December 8, 2014 | § The Company has option to buy back part or all of the bonds, after the 1st anniversary of the bonds, at market price. § Based on the latest rating report released in March 2012, the bonds haveidAA+(sy) (stable outlook) rating from Pefindo. |
§ Series B | Rp172,000 | § Bondholders are entitled to annual fixed ijarah return (“Cicilan Imbalan Ijarah”) totalling Rp20,210, payable on a quarterly basis starting March 8, 2010 up to December 8, 2016. | December 8, 2016 | |
40
These consolidated financial statements are originally issued in the Indonesian language.
PT INDOSAT Tbk AND SUBSIDIARIES
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
As of March 31, 2012 and for the Three-Month Period then Ended (Unaudited)
With Comparative Figures as of December 31, 2011 and
January 1, 2011 / December 31, 2010 (as Restated) (Unaudited)
and for the Three-Month Period Ended March 31, 2011 (as Restated) (Unaudited)
(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)
19.
BONDS PAYABLE (continued)
Bond | Nominal Amount | Interest | Maturity | Remarks |
i. Limited Bonds II issued by Lintasarta (amended on August 25, 2009) | Rp66,150, with the remaining amount of Rp60,000 since June 14, 2009 | § Average 3-month rupiah time deposit rates with Mandiri, BNI, BRI and BTN, plus a fixed premium of 3% (The maximum limit of floating rates was 19% and the minimum limit was 11% p.a. and starting June 14, 2009, the minimum limit increased to 12.75%.) § Paid quarterly. | June 14, 2009 extended to June 14, 2012 | § On February 29, 2012, Lintasarta paid these bonds in full. |
i. Limited Bonds I issued by Lintasarta (amended on August 25, 2009) | Rp34,856, with the remaining amount of Rp26,553 since June 2, 2009 | § Average 3-month rupiah time deposit rates with Mandiri, BNI, BRI and BTN, plus a fixed premium of 3% (The maximum limit of floating rates was 19% and the minimum limit was 11% p.a. and starting June 14, 2009, the minimum limit increased to 12.75%.) § Paid quarterly. | June 2, 2009 extended to June 2, 2012 | § On February 29, 2012, Lintasarta paid these bonds in full. |
k. Fourth Indosat Bonds in Year 2005 | Rp815,000 | § 12% p.a. § Paid quarterly | June 21, 2011 | § The Company had early settlement option on the 4th anniversary of the bonds at 100% of the bonds’ nominal value and buy-back option after the 1st anniversary of the bonds at market price temporarily or as an early settlement. § On June 21, 2011, the Company paid these bonds in full. |
k. Indosat Syari’ah Ijarah Bonds in Year 2005 (“Syari’ah Ijarah Bonds”) | Rp285,000 | § Bondholders were entitled to annual fixed Ijarah return (“Cicilan Imbalan Ijarah”) totalling Rp34,200, paid on a quarterly basis starting September 21, 2005 up to June 21, 2011. | June 21, 2011 | § The Company had early settlement option on the 4th anniversary of the bonds at 100% of the bonds’ nominal value and buy-back option after the 1st anniversary of the bonds at market price temporarily or as an early settlement. § On June 21, 2011, the Company paid these bonds in full. |
41
These consolidated financial statements are originally issued in the Indonesian language.
PT INDOSAT Tbk AND SUBSIDIARIES
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
As of March 31, 2012 and for the Three-Month Period then Ended (Unaudited)
With Comparative Figures as of December 31, 2011 and
January 1, 2011 / December 31, 2010 (as Restated) (Unaudited)
and for the Three-Month Period Ended March 31, 2011 (as Restated) (Unaudited)
(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)
19.
BONDS PAYABLE (continued)
The scheduled principal payments of all the bonds payable outstanding as of March 31, 2012 are as follows:
Twelve months ending March 31,
2017 and
2013
2014
2015
2016
thereafter*
Total
In U.S. dollar
Guaranteed Notes
Due 2020*
(US$650,000)
-
-
-
-
5,967,0005,967,000
In rupiah
Fifth Indosat Bonds *
-
-
1,230,000
-
1,370,0002,600,000
Seventh Indosat Bonds*
-
-
700,000
-
600,000
1,300,000
Sixth Indosat Bonds*
-
760,000
-
320,000
-
1,080,000
Sukuk Ijarah III *
-
570,000
-
-
-570,000
Sukuk Ijarah II *
-
-
400,000
-
-
400,000
Second Indosat Bonds*
-
-
-
-
200,000
200,000
Sukuk Ijarah IV *
-
-
28,000
-
172,000
200,000
Sub-total
-
1,330,000
2,358,000
320,000
2,342,0006,350,000
Total
-
1,330,000
2,358,000
320,000
8,309,00012,317,000
Less:
-
unamortized notes issuance costs
(56,720)
-
unamortized notes discount
(25,444)
-
unamortized bonds issuance costs and consent solicitation fees
(19,581)
Net
12,215,255
*
Refer to previous discussion on early repayment options for each bond/note.
All bonds are neither collateralized by any specific Company assets nor guaranteed by other parties. All of the Company’s assets, except for the assets that have been specifically used as security to its other creditors, are used as pari-passu security to all of the Company’s other liabilities including the bonds.
The total amortization of bonds issuance cost, consent solicitation fees, notes issuance cost and discount for the three months ended March 31, 2012 and 2011 amounted to Rp4,102 and Rp4,237 respectively (Note 28).
As of March 31, 2012, December 31, 2011 and January 1, 2011 / December 31, 2010, the Group has complied with all financial ratios required to be maintained under the Notes Indenture and Trustee Agreements.
20. DERIVATIVES
The Company entered into several swap and forward contracts. Listed below is information related to the contracts and their fair values (net of credit risk adjustment) as of March 31, 2012, December 31, 2011 and January 1, 2011 / December 31, 2010:
Fair Value (Rp)
January 1, 2011 /
Notional
March 31, 2012
December 31, 2011
December 31, 2010
Amount
(US$)
Receivable
Payable
Receivable
Payable
ReceivablePayable
Cross Currency Swap Contracts:
a.
Goldman Sachs International
(”GSI”) (1)
75,000
-
-
-
-50,866-
b.
Standard Chartered
(“StandChart”)
25,000
-
10,532
-
6,981
-12,055
c.
StandChart
25,000
-
1,697
1,620
-
-1,731
d.
StandChart
25,000
9,604
-
12,608
-
9,443-
e.
Merrill Lynch International
Bank Limited,
London Branch (“MLIB”)(2)
50,000
-
-
-
-
-2,234
f.
MLIB(6)
25,000 with
decreasing amount
2,534
-
3,639
-
2,154-
g.
MLIB(3)
25,000
-
-
-
-
3,778-
h.
DBS(6)
25,000 with
decreasing amount
2,784
-
4,271
-
3,093-
Sub-total
14,922
12,229
22,138
6,981
69,33416,020
Interest Rate Swap Contracts:
i.
HSBC, Jakarta Branch
27,037 with
decreasing amount
-
14,179
-
13,254
-13,100
j.
HSBC, Jakarta Branch
44,200 with
decreasing amount
-
31,533
-
35,370
-29,027
k.
GSI
100,000
-
64,706
-
60,869
-90,273
l.
DBS
25,000 with
decreasing amount
-
4,379
-
4,174
-9,238
m.
DBS
25,000 with
decreasing amount
-
3,873
-
3,678
-9,343
n.
Bank of Tokyo MUFJ
25,000 with
(“BTMUFJ”)
decreasing amount
-
2,925
-
2,649
-6,656
o.
BTMUFJ
25,000 with
decreasing amount
-
2,617
-
2,347
-5,885
p.
BTMUFJ
25,000 with
decreasing amount
-
2,383
-
2,118
-5,297
q.
StandChart
40,000 with
decreasing amount
-
2,977
-
2,692
-6,814
r.
DBS
26,000 with
decreasing amount
-
1,548
-
1,486
-4,966
s.
DBS
26,000 with
decreasing amount
-
1,342
-
1,282
-4,303
t.
BTMUFJ
36,500 with
decreasing amount
-
1,308
-
1,289
-7,347
u.
International Netherlands
Group (“ING”)
25,000 with
Bank N.V. (5)
decreasing amount
-
-
-
-
-4,014
v.
ING Bank N.V.(4)
33,500
-
-
-
-
-3,120
Sub-total
-
133,770
-
131,208
-199,383
(1)
contract entered into in August 2005 and terminated in June 2011
(2)
contract entered into in August 2008 and terminated in June 2011
(3)
contract entered into in September 2008 and terminated in June 2011
(4)
contract entered into in April 2009 and settled in June 2011
(5)
contract entered into in March 2009 and settled in December 2011
(6)
In December 2011, the Company used the option to exercise US$6,000 of the contract amount
42
These consolidated financial statements are originally issued in the Indonesian language.
PT INDOSAT Tbk AND SUBSIDIARIES
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
As of March 31, 2012 and for the Three-Month Period then Ended (Unaudited)
With Comparative Figures as of December 31, 2011 and
January 1, 2011 / December 31, 2010 (as Restated) (Unaudited)
and for the Three-Month Period Ended March 31, 2011 (as Restated) (Unaudited)
(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)
20. DERIVATIVES (continued)
Fair Value (Rp)
January 1, 2011 /
Notional
March 31, 2012
December 31, 2011
December 31, 2010
Amount
(US$)
Receivable
Payable
Receivable
Payable
ReceivablePayable
Currency Forward Contracts:
w.
JP Morgan(7)
10,000
-
-
-
-
--
x.
DBS(7)
20,000
-
-
-
---
y.
Deutsche Bank(7)
20,000
-
-
-
-
--
z.
Deutsche Bank(7)
10,000
-
-
-
-
--
aa.
JP Morgan(7)
10,000
-
-
-
-
--
ab.
StandChart(7)
5,000
-
-
-
-
--
ac.
JP Morgan(7)
10,000
-
-
-
-
--
ad.
PT Danareksa (Persero)
(“Danareksa”) (7)
5,000
-
-
-
-
--
ae.
JP Morgan(7)
5,000
-
-
-
-
--
af.
StandChart(7)
5,000
-
-
-
-
--
ag.
JP Morgan(7)
5,000
-
-
-
-
--
ah.
HSBC, Jakarta Branch(8)
5,000
-
-
-
-
--
ai.
HSBC, Jakarta Branch(9)
5,000
-
-
-
-
--
aj.
JP Morgan(8)
5,000
-
-
-
-
--
ak.
HSBC, Jakarta Branch(8)
1,000
-
-
-
-
--
al.
HSBC, Jakarta Branch(8)
3,000
-
-
-
-
--
am.
HSBC, Jakarta Branch(10)
10,000
-
-
5,231
-
--
an.
JP Morgan(10)
2,000
-
-
1,011
-
--
ao.
StandChart
7,000
3,068
-
3,902
-
--
ap.
JP Morgan(10)
9,500
-
-
4,832
-
--
aq.
HSBC, Jakarta Branch(11)
6,000
-
-
3,222
-
--
ar.
HSBC, Jakarta Branch(11)
7,500
-
-
4,021
-
--
as.
JP Morgan(12)
13,750
-
-
6,771
-
--
at.
StandChart
8,000
3,579
-
4,542
-
--
au.
StandChart
6,600
2,880
-
3,666
-
--
av.
StandChart(10)
3,000
-
-
1,486
-
--
aw.
DBS(10)
10,000
-
-
5,010
-
--
ax.
ING(10)
7,000
-
-
3,538
---
ay.
DBS(10)
7,000
-
-
3,528
-
--
az.
DBS
10,000
4,213
-
5,497
-
--
ba.
JP Morgan
10,000
4,093
-
5,523
-
--
bb.
HSBC, Jakarta branch
10,000
4,098
-
4,909
-
--
bc.
ING(10)
10,000
-
-
5,330
---
bd.
ING(10)
13,000
-
-
6,960
---
be.
DBS(11)
13,000
-
-
6,859
-
--
bf.
ING(12)
13,500
-
-
7,386
---
bg.
ING(10)
10,000
-
-
5,478
---
bh.
ING(10)
10,000
-
-
5,508
---
bi.
GSI(10)
8,000
-
-
4,558
---
bj.
GSI(10)
13,000
-
-
7,550
---
bk.
Royal Bank of Scotland (“RBS”)(11)
12,000
-
-
6,370
-
--
bl.
GSI(11)
12,000
-
-
7,185
---
bm.
GSI(11)
12,500
-
-
7,338
---
Sub-total
21,931
-
137,211
---
Total
36,853
145,999
159,349
138,189
69,334215,403
(7)
Contracts entered into in July 2011 and settled in December 2011
(8)
Contracts entered into in August 2011 and settled in November 2011
(9)
Contract entered into in August 2011 and settled in December 2011
(10)
Contracts entered into in August 2011 and settled in January 2012
(11)
Contracts entered into in August 2011 and settled in February2012
(12)
Contracts entered into in August 2011 and settled in March 2012
The net changes in fair value of the swap contracts, currency forward contracts and embedded derivative (Note 18g), swap income or cost, termination income or cost, and settlement of derivative instruments totalling (Rp42,140) and (Rp34,901) for the three-month periods ended March 31, 2012 and 2011, respectively, were credited or charged to “Loss on Change in Fair Value of Derivatives - Net”, which is presented under Other Income (Expenses) in the interim consolidated statements of comprehensive income.
43
These consolidated financial statements are originally issued in the Indonesian language.
PT INDOSAT Tbk AND SUBSIDIARIES
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
As of March 31, 2012 and for the Three-Month Period then Ended (Unaudited)
With Comparative Figures as of December 31, 2011 and
January 1, 2011 / December 31, 2010 (as Restated) (Unaudited)
and for the Three-Month Period Ended March 31, 2011 (as Restated) (Unaudited)
(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)
20.
DERIVATIVES (continued)
The following are the details of the contracts:
Cross Currency Swap Contracts
No. | Counter-parties | Contract Period and Swap Amount | Annual Swap Premium Rate | Swap Premium Payment Date | Amount of Swap Premium Paid / Amortized (Rp) | |
2012 | 2011 | |||||
a. | GSI(1) | August 22, 2005 - June 22, 2012 The Company will swap the following: · US$75,000 which is equal to US$75,000 multiplied by the lowest IDR/USD exchange rate within the period of August 22, 2005 - June 22, 2012 if the IDR/USD spot rate at termination date is less than or equal to the lowest of IDR/USD exchange rate mentioned above plus Rp4,300 (in full amount) · US$75,000 which is equal to US$75,000 multiplied by IDR/USD spot rate at termination date minus Rp4,300 (in full amount) if IDR/USD spot rate at termination date is greater than the lowest of IDR/USD exchange rate mentioned above plus Rp4,300 (in full amount) | 3.28% of US$75,000 | Every June 22 and December 22 | - | - |
b. | StandChart | January 11, 2006 - June 22, 2012 Swap Rp236,250 for US$25,000 | 4.78% of US$25,000 | Every June 22 and December 22 | - | - |
c. | StandChart | March 15, 2006 - June 22, 2012 Swap Rp228,550 for US$25,000 | 3.75% of US$25,000 | Every June 22 and December 22 | - | - |
d. | StandChart | May 12, 2006 - June 22, 2012 Swap Rp217,500 for US$25,000 | 3.45% of US$25,000 | Every June 22 and December 22 | - | - |
e. | MLIB(2) | August 8, 2008 - June 22, 2012 The Company will receive the following: · zero amount if the IDR/USD spot rate at termination date is less than or equal to Rp8,950 to US$1 (in full amounts) · certain U.S. dollar amount which is equal to US$50,000 multiplied by (1 - Rp8,950 [in full amounts] divided by IDR/USD spot rate) if the IDR/USD spot rate at termination date is greater than Rp8,950 but is less than or equal to Rp11,000 to US$1 (in full amounts) · certain U.S. dollar amount which is equal to US$50,000 multiplied by (Rp11,000 - Rp8,950) (in full amounts) divided by IDR/USD spot rate if the IDR/USD spot rate at termination date is greater than Rp11,000 to US$1 (in full amounts) | 4.22% of US$50,000 | Every June 22 and December 22 | - | - |
f. | MLIB(3) | September 2, 2008 - June 12, 2013 The Company will receive the following: · zero amount if the IDR/USD spot rate at termination date is less than or equal to Rp8,800 to US$1 (in full amounts) · certain U.S. dollar amount as arranged in the contract multiplied by (IDR/USD spot rate - Rp8,800) (in full amount) divided by IDR/USD spot rate if the IDR/USD spot rate at termination date is greater than Rp8,800 but is less than or equal to Rp12,000 to US$1 (in full amounts) · certain U.S. dollar amount as arranged in the contract multiplied by (Rp3,200 [in full amount] divided by IDR/USD spot rate) if the IDR/USD spot rate at termination date is greater than Rp12,000 to US$1 (in full amounts) | 4.10% of US$25,000 up to June 12, 2011, and 4.10% of decreasing U.S. dollar amount as arranged in the contract up to June 12, 2013 | Every June 12 and December 12 | - | |
(1)
On June 28, 2011, this contract was terminated and the Company received settlement gain on the cross currency swap amounting to US$3,650 or equivalent to Rp31,379 on July 1, 2011.
(2)
On June 28, 2011, this contract was terminated and the Company paid settlement loss on the cross currency swap amounting to (US$1,456) or equivalent to (Rp12,519) on July 1, 2011.
(3)
On December 12, 2011, the Company used the option to exercise US$6,000 of the contract amount, and received settlement gain from the exercise amounting to US$189 or equivalent to Rp1,716.
44
These consolidated financial statements are originally issued in the Indonesian language.
PT INDOSAT Tbk AND SUBSIDIARIES
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
As of March 31, 2012 and for the Three-Month Period then Ended (Unaudited)
With Comparative Figures as of December 31, 2011 and
January 1, 2011 / December 31, 2010 (as Restated) (Unaudited)
and for the Three-Month Period Ended March 31, 2011 (as Restated) (Unaudited)
(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)
20. DERIVATIVES (continued)
Cross Currency Swap Contracts (continued)
No. | Counter-parties | Contract Period and Swap Amount | Annual Swap Premium Rate | Swap Premium Payment Date | Amount of Swap Premium Paid / Amortized (Rp) | |
2012 | 2011 | |||||
g. | MLIB(4) | September 8, 2008 - June 22, 2012 The Company will receive the following: · zero amount if the IDR/USD spot rate at termination date is less than or equal to Rp9,000 to US$1 (in full amounts) · certain U.S. dollar amount which is equal to US$25,000 multiplied by (1 - Rp9,000 [in full amounts] divided by IDR/USD spot rate) if the IDR/USD spot rate at termination date is greater than Rp9,000 but is less than or equal to Rp11,000 to US$1 (in full amounts) · certain U.S. dollar amount which is equal to US$25,000 multiplied by (Rp11,000 - Rp9,000) (in full amounts) divided by IDR/USD spot rate if the IDR/USD spot rate at termination date is greater than Rp11,000 to US$1 (in full amounts) | 2.52% of US$25,000 | Every June 22 and December 22 | - | - |
h. | DBS(5) | September 10, 2008 - June 12, 2013 The Company will receive the following: · zero amount if the IDR/USD spot rate at the scheduled settlement date is at or less than Rp8,800 to US$1 (in full amounts) · certain U.S. dollar amount which is equal to U.S. dollar amount at scheduled settlement date multiplied by (IDR/USD spot rate - Rp8,800) (in full amount) divided by IDR/USD spot rate if the IDR/USD spot rate at settlement date is greater than Rp8,800 and is at or less than Rp12,000 to US$1 (in full amounts) · certain U.S. dollar amount which is equal to U.S. dollar amount at scheduled settlement date multiplied by (Rp12,000 - Rp8,800) (in full amounts) divided by IDR/USD spot rate if the IDR/USD spot rate at settlement date is greater than Rp12,000 to US$1 (in full amounts) | 3.945% of US$25,000 up to June 12, 2011, and 3.945% of decreasing U.S. dollar amount as arranged in the contract up to June 12, 2013 | Every June 12 and December 12 | - | - |
Total | - | - | ||||
(4)
On June 28, 2011, this contract was terminated and the Company paid settlement loss on the cross currency swap amounting to (US$194) or equivalent to (Rp1,666) on July 1, 2011.
(5)
On December 12, 2011, the Company used the option to exercise US$6,000 of the contract amount, and received settlement gain from the exercise amounting to US$189 or equivalent to Rp1,716.
Cross currency swap contract with GSI (contract No. a) is structured to include credit-linkage with the Company as the reference entity and with the Company’s (i) bankruptcy, (ii) failure to pay on certain debt obligations or (iii) restructuring of certain debt obligations as the relevant credit events. Upon the occurrence of any of these credit events, the Company’s obligations and those of GSI under these swap contracts will be terminated without any further payments or settlements being made by or owed to either party, including a payment by either party of any marked-to-market value of the swap contracts.
45
These consolidated financial statements are originally issued in the Indonesian language.
PT INDOSAT Tbk AND SUBSIDIARIES
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
As of March 31, 2012 and for the Three-Month Period then Ended (Unaudited)
With Comparative Figures as of December 31, 2011 and
January 1, 2011 / December 31, 2010 (as Restated) (Unaudited)
and for the Three-Month Period Ended March 31, 2011 (as Restated) (Unaudited)
(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)
20.
DERIVATIVES (continued)
Interest Rate Swap Contracts
No. | Counter-parties | Contract Period | Annual Interest Swap Rate | Swap Income (Expense) Receipt (Payment) Date | Amount of Swap Expense Paid (Rp) | |
2012 | 2011 | |||||
i. | HSBC | April 23, 2008 - November 27, 2016 | 5.42% of US$27,037, the notional amount of which will decrease based on predetermined schedule, in exchange for 6-month U.S. dollar LIBOR plus 1.45% per annum | Every April 1 and October 1 up to October 2009, and every May 27 and November 27 up to termination date | 6,407 | 7,045 |
j. | HSBC | April 23, 2008 -September 29, 2019 | 4.82% of US$44,200, the notional amount of which will decrease based on predetermined schedule, in exchange for U.S. dollar LIBOR plus 0.35% per annum | Every January 28 and July 28 up to July 2009, and every March 29 and September 29 up to termination date | - | - |
k. | GSI | September 2, 2008 - June 12, 2013 | (8.10% - underlyer return) of US$100,000 per annum, in exchange for 6-month U.S. dollar LIBOR plus 1.85% per annum | Every June 10 and December 10 up to June 2011, and every June 12 and December 12 up to termination date | - | - |
l. | DBS | September 5, 2008 - June 12, 2013 | 5.625% of US$25,000 per annum, in exchange for 6-month U.S. dollar LIBOR plus 1.85% per annum | Every June 10 and December 10 up to December 2010, and every June 12 and December 12 up to termination date | - | - |
m. | DBS | October 23, 2008 - June 12, 2013 | 5.28% of US$25,000, the notional amount of which will decrease based on predetermined schedule, in exchange for 6-month U.S. dollar LIBOR plus 1.85% per annum | Every March 25 and September 25 up to March 2011, and every June 12 and December 12 up to termination date | - | 3,242 |
n. | BTMUFJ | December 1, 2008 - June 12, 2013 | 4.46% of US$25,000, the notional amount of which will decrease based on predetermined schedule, in exchange for 6-month U.S. dollar LIBOR plus 1.85% per annum | Every March 25 and September 25 up to March 2011, and every June 12 and December 12 up to termination date | - | 2,116 |
o. | BTMUFJ | December 4, 2008 - June 12, 2013 | 4.25% of US$25,000, the notional amount of which will decrease based on predetermined schedule, in exchange for 6-month U.S. dollar LIBOR plus 1.85% per annum | Every March 25 and September 25 up to March 2011, and every June 12 and December 12 up to termination date | - | 2,345 |
p. | BTMUFJ | December 12, 2008 - June 12, 2013 | 4.09% of US$25,000, the notional amount of which will decrease based on predetermined schedule, in exchange for 6-month U.S. dollar LIBOR plus 1.85% per annum | Every March 25 and September 25 up to March 2011, and every June 12 and December 12 up to termination date | - | 1,942 |
q. | StandChart | December 19, 2008 - June 12, 2013 | 3.85% of US$40,000, the notional amount of which will decrease based on predetermined schedule, in exchange for 6-month U.S. dollar LIBOR plus 1.85% per annum | Every March 25 and September 25 up to March 2011, and every June 12 and December 12 up to termination date | - | 2,687 |
r. | DBS | December 22, 2008 - December 12, 2012 | 4.02% of US$26,000, the notional amount of which will decrease based on predetermined schedule, in exchange for 6-month U.S. dollar LIBOR plus 1.85% per annum | Every March 25 and September 25 up to March 2011, and every June 12 and December 12 up to termination date | - | 1,940 |
s. | DBS | January 21, 2009 - December 12, 2012 | 3.83% of US$26,000, the notional amount of which will decrease based on predetermined schedule, in exchange for 6-month U.S. dollar LIBOR plus 1.85% per annum | Every March 25 and September 25 up to March 2011, and every June 12 and December 12 up to termination date | - | 1,724 |
t. | BTMUFJ | March 2, 2009 - June 12, 2012 | 4.10% of US$36,500, the notional amount of which will decrease based on predetermined schedule, in exchange for 6-month U.S. dollar LIBOR plus 1.85% per annum | Every March 25 and September 25 up to March 2011, and every June 12 and December 12 up to termination date | - | 2,851 |
u. | ING Bank N.V. | March 3, 2009 - December 12, 2011 | 4.0094% of US$25,000, the notional amount of which will decrease based on predetermined schedule, in exchange for 6-month U.S. dollar LIBOR plus 1.85% per annum | Every March 25 and September 25 up to every June 12 and December 12 up to termination date | - | 1,853 |
v. | ING Bank N.V. | April 14, 2009 - June 12, 2011 | 3.75% of US$33,500, in exchange for 6-month U.S. dollar LIBOR plus 1.85% per annum | Every March 25 and September 25 up to June 12, 2011 | - | 2,103 |
Total | 6,407 | 29,848 | ||||
46
These consolidated financial statements are originally issued in the Indonesian language.
PT INDOSAT Tbk AND SUBSIDIARIES
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
As of March 31, 2012 and for the Three-Month Period then Ended (Unaudited)
With Comparative Figures as of December 31, 2011 and
January 1, 2011 / December 31, 2010 (as Restated) (Unaudited)
and for the Three-Month Period Ended March 31, 2011 (as Restated) (Unaudited)
(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)
20.
DERIVATIVES (continued)
Currency Forward Contracts
No. | Counter-parties | Contract Period | IDR/USD Fixing Rate (in full amounts) | Settlement Gain (Rp) | |
2012 | 2011 | ||||
w. | JP Morgan(10) | July 14, 2011 - December 12, 2011 | Rp8,699 to US$1 | - | - |
x. | DBS(11) | July 19, 2011 - December 12, 2011 | Rp8,699 to US$1 | - | - |
y. | Deutsche Bank(12) | July 19, 2011 - December 12, 2011 | Rp8,714 to US$1 | - | - |
z. | Deutsche Bank(13) | July 21, 2011 - December 12, 2011 | Rp8,665 to US$1 | - | - |
aa. | JP Morgan(14) | July 21, 2011 - December 12, 2011 | Rp8,665 to US$1 | - | - |
ab. | StandChart(15) | July 22, 2011 - December 12, 2011 | Rp8,623 to US$1 | - | - |
ac. | JP Morgan(16) | July 22, 2011 - December 12, 2011 | Rp8,637 to US$1 | - | - |
ad. | Danareksa(17) | July 26, 2011 - December 12, 2011 | Rp8,604 to US$1 | - | - |
ae. | JP Morgan(18) | July 26, 2011 - December 12, 2011 | Rp8,614 to US$1 | - | - |
af. | StandChart(19) | July 26, 2011 - December 12, 2011 | Rp8,614 to US$1 | - | - |
ag. | JP Morgan(20) | July 29, 2011 - December 12, 2011 | Rp8,568 to US$1 | - | - |
ah. | HSBC(7) | August 1, 2011 - November 30, 2011 | Rp8,533 to US$1 | - | - |
ai. | HSBC(21) | August 1, 2011 - December 12, 2011 | Rp8,541 to US$1 | - | - |
aj. | JP Morgan(8) | August 2, 2011 - November 30, 2011 | Rp8,538 to US$1 | - | - |
ak. | HSBC(6) | August 4, 2011 - November 28, 2011 | Rp8,547 to US$1 | - | - |
al. | HSBC(9) | August 4, 2011 - November 30, 2011 | Rp8,549 to US$1 | - | - |
am. | HSBC | August 10, 2011 - January 24, 2012 | Rp8,698 to US$1 | 3,200 | - |
an. | JP Morgan | August 10, 2011 - January 24, 2012 | Rp8,696 to US$1 | 578 | - |
ao. | StandChart | August 10, 2011 - January 24, 2012 | Rp8,696 to US$1 | 966 | - |
ap. | JP Morgan | August 11, 2011 - January 24, 2012 | Rp8,693 to US$1 | 2,774 | - |
aq. | HSBC | August 11, 2011 - February 28, 2012 | Rp8,714 to US$1 | 2,226 | - |
ar. | HSBC | August 11, 2011 - February 28, 2012 | Rp8,715 to US$1 | 2,775 | - |
as. | JP Morgan | August 12, 2011 - March 29, 2012 | Rp8,764 to US$1 | 5,830 | - |
at. | StandChart | August 15, 2011 - May 30, 2012 | Rp8,785 to US$1 | - | - |
au. | StandChart | August 15, 2011 - May 30, 2012 | Rp8,787 to US$1 | - | - |
av. | StandChart | August 16, 2011 - June 12, 2012 | Rp8,788 to US$1 | - | - |
aw. | DBS | August 19, 2011 - January 27, 2012 | Rp8,708 to US$1 | 3,173 | - |
ax. | ING | August 19, 2011 - January 27, 2012 | Rp8,706 to US$1 | 2,235 | - |
ay. | DBS | August 19, 2011 - January 27, 2012 | Rp8,705 to US$1 | 2,242 | - |
az. | DBS | August 19, 2011 - June 12, 2012 | Rp8,819 to US$1 | - | - |
ba. | JP Morgan | August 19, 2011 - June 12, 2012 | Rp8,826 to US$1 | - | - |
bb. | HSBC | August 19, 2011 - June 12, 2012 | Rp8,832 to US$1 | - | - |
bc. | ING | August 22, 2011 - January 12, 2012 | Rp8,662 to US$1 | 5,405 | - |
bd. | ING | August 22, 2011 - January 30, 2012 | Rp8,679 to US$1 | 4,054 | - |
be. | DBS | August 22, 2011 - February 28, 2012 | Rp8,715 to US$1 | 4,786 | - |
20.
DERIVATIVES (continued)
No. | Counter-parties | Contract Period | IDR/USD Fixing Rate (in full amounts) | Settlement Gain (Rp) | |
2012 | 2011 | ||||
bf. | ING | August 22, 2011 - March 28, 2012 | Rp8,737 to US$1 | 6,070 | - |
bg. | ING | August 23, 2011 - January 12, 2012 | Rp8,644 to US$1 | 5,585 | - |
bh. | ING | August 23, 2011 - January 12, 2012 | Rp8,647 to US$1 | 5,555 | - |
bi. | GSI | August 23, 2011 - January 12, 2012 | Rp8,640 to US$1 | 4,500 | - |
bj. | GSI | August 24, 2011 - January 27, 2012 | Rp8,645 to US$1 | 4,940 | - |
bk. | RBS | August 24, 2011 - February 10, 2012 | Rp8,666 to US$1 | 3,901 | - |
bl. | GSI | August 24, 2011 - February 29, 2012 | Rp8,663 to US$1 | 6,005 | - |
bm. | GSI | August 24, 2011 - February 29, 2012 | Rp8,675 to US$1 | 6,107 | - |
Total | 82,907 | - | |||
(6)
On November 28, 2011, this contract was settled and the Company received settlement gain on the currency forward contract amounting to Rp553.
(7)
On November 30, 2011, this contract was settled and the Company received settlement gain on the currency forward contract amounting to Rp3,185.
(8)
On November 30, 2011, this contract was settled and the Company received settlement gain on the currency forward contract amounting to Rp3,160.
(9)
On November 30, 2011, this contract was settled and the Company received settlement gain on the currency forward contract amounting to Rp1,863.
(10)
On December 12, 2011, this contract was settled and the Company received settlement gain on the currency forward contract amounting to Rp3,860.
(11)
On December 12, 2011, this contract was settled and the Company received settlement gain on the currency forward contract amounting to Rp7,720.
(12)
On December 12, 2011, this contract was settled and the Company received settlement gain on the currency forward contract amounting to Rp7,420.
(13)
On December 12, 2011, this contract was settled and the Company received settlement gain on the currency forward contract amounting to Rp4,200.
(14)
On December 12, 2011, this contract was settled and the Company received settlement gain on the currency forward contract amounting to Rp4,200.
(15)
On December 12, 2011, this contract was settled and the Company received settlement gain on the currency forward contract amounting to Rp2,310.
(16)
On December 12, 2011, this contract was settled and the Company received settlement gain on the currency forward contract amounting to Rp4,480.
(17)
On December 12, 2011, this contract was settled and the Company received settlement gain on the currency forward contract amounting to Rp2,405.
(18)
On December 12, 2011, this contract was settled and the Company received settlement gain on the currency forward contract amounting to Rp2,355.
(19)
On December 12, 2011, this contract was settled and the Company received settlement gain on the currency forward contract amounting to Rp2,355.
(20)
On December 12, 2011, this contract was settled and the Company received settlement gain on the currency forward contract amounting to Rp2,585.
(21)
On December 12, 2011, this contract was settled and the Company received settlement gain on the currency forward contract amounting to Rp2,720.
21.
FINANCIAL ASSETS AND LIABILITIES
The Group has various financial assets such as trade and other accounts receivable, cash and cash equivalents and short-term investments, which arise directly from the Group’s operations. The Group’s principal financial liabilities, other than derivatives, consist of loans and bonds payable, procurement payable, and trade and other accounts payable. The main purpose of these financial liabilities is to finance the Group’s operations. The Company also enters into derivative transactions, primarily cross currency swaps and interest rate swaps, for the purpose of managing its foreign exchange and interest rate exposures emanating from the Company’s loans and bonds payable in foreign currencies.
The following table sets forth the carrying values and estimated fair values of the Group financial instruments that are carried in the consolidated statements of financial position as of March 31, 2012, December 31,2011 and January 1, 2011 / December 31, 2010 :
Carrying Amount
Fair Value
January 1,
January 1,
2011 /
2011 /
March 31,
December 31,
December 31,
March 31,
December 31,
December 31,
2012
2011
2010
2012
2011
2010
Current Financial Assets
Cash and cash equivalents
1,860,054
2,224,206
2,075,270
1,860,054
2,224,2062,075,270
Accounts receivable trade
and others - net
1,586,850
*
1,446,729
1,558,457
1,586,850
1,446,7291,558,457
Derivative assets
36,853
159,349
69,334
36,853
159,34969,334
Other current financial
assets - net
30,139
29,833
56,279
30,139
29,83356,279
Total current financial
assets
3,513,896
3,860,117
3,759,340
3,513,896
3,860,1173,759,340
Non-current Financial Assets
Due from related parties
8,504
10,654
8,421
7,4478,9677,176
Finance lease receivable
s
95,537
81,966
63,498
95,537
81,96663,498
Other non-current
financial assets - net
91,589
90,416
80,405
89,969
88,79576,039
Total non-current
financial assets
195,630
183,036
152,324
192,953
179,728146,713
Total Financial Assets
3,709,526
4,043,153
3,911,664
3,706,849
4,039,8453,906,053
Current Financial Liabilities
Short-term loan
1,499,331
1,499,256
-
1,499,331
1,499,256-
Accounts payable - trade
242,092
319,058
645,505
242,092
319,058645,505
Procurement payable
3,049,936
3,429,921
3,644,467
3,049,9363,429,9213,644,467
Accrued expenses
1,543,199
1,891,477
1,710,885
1,543,199
1,891,4771,710,885
Deposits from customers
42,995
37,265
50,279
42,995
37,26550,279
Derivative liabilities
145,999
138,189
215,403
145,999
138,189215,403
Loans payable - current
portion
3,309,604
3,300,537
3,184,147
3,656,4003,927,0623,155,634
Bonds payable - current
portion
-
41,989
1,098,131
-
43,1371,110,737
Other current financial
liabilities
88,850
73,201
44,880
88,850
73,20144,880
Total current financial
liabilities
9,922,006
10,730,893
10,593,697
10,268,802
11,358,56610,577,790
Non-current Financial
Liabilities
Due to related parties
15,068
15,480
22,099
13,19513,03018,833
Obligations under finance
lease
717,617
692,907
286,279
717,617
692,907286,279
Loans payable -
non-current portion
6,091,284
6,425,779
7,666,804
4,624,172
5,864,3547,510,510
Bonds payable -
non-current portion
12,215,255
12,138,353
12,114,104
13,485,782
13,334,90313,228,171
Total non-current
financial liabilities
19,039,224
19,272,519
20,089,286
18,840,766
19,905,19421,043,793
Total Financial Liabilities
28,961,230
30,003,412
30,682,983
29,109,568
31,263,76031,621,583
*excluding unpaid interest compensation from the Tax Office of Rp60,674 (Note 16)
21.
FINANCIAL ASSETS AND LIABILITIES (continued)
The fair values of the financial assets and liabilities are presented at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced sale or liquidation.
The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate such value:
Short-term financial assets and liabilities:
·
Short-term financial instruments with remaining maturities of one year or less (cash and cash equivalents, trade and other accounts receivable, other current financial assets, short-term loan, trade accounts payable, procurement payable, accrued expenses, deposits from customers and other current financial liabilities).
These financial instruments approximate their carrying amounts largely due to their short-term maturities.
·
Derivative financial instruments
Cross currency swap contracts (including bifurcated embedded derivative)
These derivatives are measured at their fair values using internal valuation techniques as no quoted market prices exist for such instruments. The principal technique used to value these instruments is the use of discounted cash flows. The key inputs include interest rate yield curves, foreign exchange rates, Credit Default Spread (“CDS”), and the spot price of the underlying instruments.
Interest rate swap contracts
These derivatives are measured at their fair values, computed using discounted cash flows based on observable market inputs which include interest rate yield curves and payment dates.
Currency forward contracts
These derivatives are measured at their fair values, computed using discounted cash flows based on observable market inputs which include foreign exchange rates, payment dates and the spot price of the underlying instruments.
Long-term financial assets and liabilities:
·
Long-term fixed-rate and variable-rate financial liabilities (unquoted loans and bonds payable)
The fair value of these financial liabilities is determined by discounting future cash flows using applicable rates from observable current market transactions for instruments with similar terms, credit risk and remaining maturities.
·
Other long-term financial assets and liabilities (due from/to related parties, finance lease receivable, obligations under finance lease and other non-current financial assets)
Estimated fair value is based on discounted value of future cash flows adjusted to reflect counterparty risk (for financial assets) and the Group’s own credit risk (for financial liabilities) and using risk-free rates for similar instruments.
47
These consolidated financial statements are originally issued in the Indonesian language.
PT INDOSAT Tbk AND SUBSIDIARIES
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
As of March 31, 2012 and for the Three-Month Period then Ended (Unaudited)
With Comparative Figures as of December 31, 2011 and
January 1, 2011 / December 31, 2010 (as Restated) (Unaudited)
and for the Three-Month Period Ended March 31, 2011 (as Restated) (Unaudited)
(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)
21. FINANCIAL ASSETS AND LIABILITIES (continued)
·
Financial instruments quoted in an active market
The fair value of the bonds issued by the Company which are traded in an active market is determined with reference to their quoted market prices.
For equity investments classified as available-for-sale, the fair value is determined based on the latest market quotation as published by the Indonesia Stock Exchange as of March 31, 2012, December 31, 2011 and January 1, 2011 / December 31, 2010.
Fair Value Hierarchy
Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurements. The assessment of the significance of a particular input to the fair value measurements requires judgment, and may affect the valuation of the assets and liabilities being measured and their placement within the fair value hierarchy.
The best evidence of fair value is quoted prices in an active market. If the market for a financial instrument is not active, an entity establishes fair value by using a valuation technique. The objective of using a valuation technique is to establish what the transaction price would have been on the measurement date in an arm's length exchange motivated by normal business considerations. Valuation techniques include using recent arm's length market transactions between knowledgeable, willing parties, if available, reference to the current fair value of another instrument that is substantially the same, discounted cash flow analysis and option pricing models. If there is a valuation technique commonly used by market participants to price the instrument and that technique has been demonstrated to provide reliable estimates of prices obtained in actual market transactions, the entity uses that technique. The chosen valuation technique makes maximum use of market inputs and relies as little as possible on entity-specific inputs. It incorporates all factors that market participants would consider in setting a price and is consistent with accepted economic methodologies for pricing financial instruments. Periodically, the Company calibrates the valuation technique and tests it for validity using prices from any observable current market transactions in the same instrument (i.e., without modification or repackaging) or based on any available observable market data.
The Company’s fair value hierarchy as of March 31, 2012, December 31, 2011 and January 1, 2011 / December 31, 2010 is as follows:
March 31, 2012
Quoted prices
Significant
in active
and
markets for
observable
identical
inputs,
Significant
assets or
directly or
unobservable
liabilities
indirectly
inputs
TOTAL
(Level 1)
(Level 2)
(Level 3)
Current Financial Assets
Derivative assets
36,853
-
36,853
-
Total Financial Assets
36,853
-
36,853
-
Current Financial Liabilities
Derivative liabilities
145,999
-
145,999
-
Embedded derivatives
37,852
-
37,852
-
Total Financial Liabilities
183,851
-
183,851
-
48
These consolidated financial statements are originally issued in the Indonesian language.
PT INDOSAT Tbk AND SUBSIDIARIES
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
As of March 31, 2012 and for the Three-Month Period then Ended (Unaudited)
With Comparative Figures as of December 31, 2011 and
January 1, 2011 / December 31, 2010 (as Restated) (Unaudited)
and for the Three-Month Period Ended March 31, 2011 (as Restated) (Unaudited)
(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)
21. FINANCIAL ASSETS AND LIABILITIES (continued)
Fair Value Hierarchy (continued)
December 31, 2011
Quoted prices
Significant
in active
and
markets for
observable
identical
inputs,
Significant
assets or
directly or
unobservable
liabilities
indirectly
inputs
TOTAL
(Level 1)
(Level 2)
(Level 3)
Current Financial Assets
Derivative assets
159,349
-
159,349
-
Total Financial Assets
159,349
-
159,349
-
Current Financial Liabilities
Derivative liabilities
138,189
-
138,189
-
Embedded derivatives
49,518
-
49,518
-
Total Financial Liabilities
187,707
-
187,707
-
January 1, 2011 /
December 31, 2010
Quoted prices
Significant
in active
and
markets for
observable
identical
inputs,
Significant
assets or
directly or
unobservable
liabilities
indirectly
inputs
TOTAL
(Level 1)
(Level 2)
(Level 3)
Current Financial Assets
Derivative assets
69,334
-
69,334
-
Total Financial Assets
69,334
-
69,334
-
Current Financial Liabilities
Derivative liabilities
215,403
-
215,403
-
Embedded derivatives
54,595
-
54,595
-
Total Financial Liabilities
269,998
-
269,998
-
For the years ended December 31, 2010 and 2011, there were no transfers between Level 1 and Level 2 fair value measurements.
22.
EMPLOYEE BENEFIT OBLIGATIONS - NET OF CURRENT PORTION
This account consists of the non-current portions of employee benefit obligations as follows:
March 31, December 31,
January 1,
2011 /
March 31,
December 31,
December 31,
20122011
2010
Post-retirement healthcare (Note 29)
575,248
555,752
639,271
Labor Law 13 (Note 29)
208,428
194,329
187,944
Service award
35,722
35,071
43,058
Accumulated leave benefits
2,332
2,161
2,134
Total
821,730
787,313
872,407
23. CAPITAL STOCK
The Company’s capital stock ownership as of March 31, 2012, December 31, 2011 and January 1, 2011 / December 31, 2010 is as follows:
Number of
Percentage
Shares Issued
of Ownership
Stockholders
and Fully Paid
Amount
(%)
March 31, 2012
A Share
Government
1
-
-
B Shares
Qatar Telecom (Qtel Asia) Pte. Ltd.
3,532,056,600
353,206
65.00
Government
776,624,999
77,662
14.29
SKAGEN Funds (SKAGEN AS)
305,714,450
30,571
5.62
Director:
Fadzri Sentosa
10,000
1
0.00
Others (each holding below 5%)
819,527,450
81,953
15.09
Total
5,433,933,500
543,393
100.00
December 31, 2011
A Share
Government
1
-
-
B Shares
Qatar Telecom (Qtel Asia) Pte. Ltd.
3,532,056,600
353,206
65.00
Government
776,624,999
77,662
14.29
SKAGEN Funds (SKAGEN AS)
305,498,450
30,550
5.62
Director:
Fadzri Sentosa
10,000
1
0.00
Others (each holding below 5%)
819,743,450
81,974
15.09
Total
5,433,933,500
543,393
100.00
January 1, 2011 / December 31, 2010
A Share
Government
1
-
-
B Shares
Qatar Telecom (Qtel Asia) Pte. Ltd.
3,532,056,600
353,206
65.00
Government
776,624,999
77,662
14.29
SKAGEN Funds (SKAGEN AS)
277,824,400
27,782
5.11
Director:
Fadzri Sentosa
10,000
1
0.00
Others (each holding below 5%)
847,417,500
84,742
15.60
Total
5,433,933,500
543,393
100.00
The “A” share is a special share held by the Government and has special voting rights. The material rights and restrictions which are applicable to the “B” shares are also applicable to the “A” share, except that the Government may not transfer the “A” share, which has a veto right with respect to (i) amendment to the objective and purposes of the Company; (ii) increase of capital without pre-emptive rights; (iii) merger, consolidation, acquisition and demerger; (iv) amendment to the provisions regarding the rights of “A” share as stipulated in the Articles of Association; and (v) dissolution, bankruptcy and liquidation of the Company. The “A” share also has the right to appoint one director and one commissioner of the Company.
49
These consolidated financial statements are originally issued in the Indonesian language.
PT INDOSAT Tbk AND SUBSIDIARIES
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
As of March 31, 2012 and for the Three-Month Period then Ended (Unaudited)
With Comparative Figures as of December 31, 2011 and
January 1, 2011 / December 31, 2010 (as Restated) (Unaudited)
and for the Three-Month Period Ended March 31, 2011 (as Restated) (Unaudited)
(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)
24.
OPERATING REVENUES
The balance of this account for the three-month periods ended March 31, 2012 and 2011 consists of the following:
2012
2011
Cellular
Usage charges
1,961,110
1,971,936
Value-added services
1,843,106
1,747,135
Interconnection services (Note 34)
277,722
276,354
Tower leasing (Note 31g)
96,718
88,009
Monthly subscription charges
37,090
30,636
Connection fee
3,858
2,648
Sale of Blackberry handsets
17
1,550
Upfront discount and Customer Loyalty Program (Note 2k)
(198,364
)
(215,606
)
Others
58,554
57,921
Sub-total
4,079,811
3,960,583
MIDI
Internet Protocol Virtual Private Network (IP VPN)
171,298
157,830
World link and direct link
87,886
74,282
Internet
84,350
97,460
Leased line
82,001
44,241
Application services
50,360
41,860
Satellite lease
47,082
24,300
Value-added Service
44,571
33,358
Digital data network
26,335
19,414
Multiprotocol Label Switching (MPLS)
24,659
20,735
Frame net
24,500
45,077
TV link
2,239
2,289
Others
26,974
30,153
Sub-total
672,255
590,999
Fixed Telecommunications
International Calls
160,343
248,361
Fixed Wireless
36,487
42,419
Fixed Line
28,096
31,648
Sub-total
224,926
322,428
Total
4,976,992
4,874,010
Operating revenues from related parties amounted to Rp362,821 and Rp362,444 for the three-month periods ended March 31, 2012 and 2011, respectively. These amounts represent 7.29% and 7.44% of the total operating revenues for the three-month periods ended March 31, 2012 and 2011, respectively (Note 30).
The operating revenues from interconnection services are presented on a gross basis (Note 2k).
25.
OPERATING EXPENSES - COST OF SERVICES
The balance of this account for the three-month periods ended March 31, 2012 and 2011 consists of the following:
2012
2011
Radio frequency fee (Notes 31j and 33)
481,052
423,553
Interconnection (Note 34)
364,728
424,487
Utilities
203,091
180,522
Maintenance
197,504
240,301
Rent (Note 31i)
150,739
109,145
Blackberry access fee
119,968
72,898
Leased circuits
94,949
85,119
USO (Note 33)
78,621
52,788
Cost of SIM cards and pulse reload vouchers
54,353
63,733
Concession fee (Note 33)
37,779
27,221
Delivery and transportation
31,939
18,941
Installation
18,152
13,770
Billing and collection
17,528
6,297
License
11,316
5,155
Cost of handsets and modems
4,597
2,490
Others
8,072
15,423
Total
1,874,388
1,741,843
Interconnection relates to the expenses for the interconnection between the Company’s telecommunications networks and those owned by Telkom or other telecommunications carriers (Note 2k).
26. OPERATING EXPENSES - PERSONNEL
The balance of this account for the three-month periods ended March 31, 2012 and 2011 consists of the following:
2012
2011
Salaries
135,042
128,108
Incentives and other employee benefits
76,129
78,085
Employee income tax
45,558
63,539
Post-retirement healthcare benefits (Note 29)
22,894
7,734
Bonuses
20,374
63,476
Medical expense
14,526
22,166
Separation, appreciation and compensation expense
under Labor Law No. 13/2003 (Note 29)
14,246
6,494
Pension (Note 29)
3,938
2,671
Severance benefits under Voluntary Separation Scheme (“VSS”)*
1,583
116,375
Others
1,926
23,307
Total
336,216
511,955
*
On January 20, 2011 and January 2, 2012, the Company’s and Lintasarta’s Board of Directors issued Directors’ Decree No. 003/Direksi/2011 and Directors Decree No. 015/Direksi/40000/2012, regarding the Organizational Restructuring Program through an offering scheme on the basis of mutual agreement between the Companies and certain employees (VSS), that became effective on the same date. For the three-month period ended March 31, 2012 and 2011, there were 24 employees of Lintasarta and 85 employees of the Company who availed themselves of the scheme, and the benefits paid amounted to Rp1,583 and Rp116,375, respectively.
The personnel expenses capitalized to properties under construction and installation for the three-month periods ended March 31, 2012 and 2011 amounted to Rp15,654 and Rp9,265, respectively.
50
These consolidated financial statements are originally issued in the Indonesian language.
PT INDOSAT Tbk AND SUBSIDIARIES
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
As of March 31, 2012 and for the Three-Month Period then Ended (Unaudited)
With Comparative Figures as of December 31, 2011 and
January 1, 2011 / December 31, 2010 (as Restated) (Unaudited)
and for the Three-Month Period Ended March 31, 2011 (as Restated) (Unaudited)
(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)
27.
OPERATING EXPENSES - GENERAL AND ADMINISTRATION
The balance of this account for the three-month periods ended March 31, 2012 and 2011 consists of the following:
2012
2011
Provision for impairment of receivables - net
40,694
16,940
Professional fees
33,987
39,189
Rent
24,745
28,895
Utilities
22,165
25,671
Transportation
15,637
17,770
Insurance
9,830
10,605
Office
9,306
8,470
Catering
5,113
6,738
Others (each below Rp5,000)
22,028
22,259
Total
183,505
176,537
28.
OTHER EXPENSES - FINANCING COST
The balance of this account for the three-month periods ended March 31, 2012 and 2011 consists of the following:
2012
2011
Interest on loans
421,020
439,421
Finance charges under finance lease
27,343
23,879
Amortization of debt and bonds issuance
costs, consent solicitation fees and discount (Notes 14, 18 and 19)
19,368
20,569
Bank charges
1,298
2,093
Total
469,029
485,962
29.
PENSION PLAN
The Company, Satelindo and Lintasarta have defined benefit and defined contribution pension plans covering substantially all of their qualified permanent employees.
Defined Benefit Pension Plan
The Company, Satelindo and Lintasarta provide defined benefit pension plans to their respective employees under which pension benefits to be paid upon retirement are based on the employees’ most recent basic salary and number of years of service. PT Asuransi Jiwasraya (“Jiwasraya”), a state-owned life insurance company, manages the plans. Pension contributions are determined by periodic actuarial calculations performed by Jiwasraya.
Based on an amendment dated December 22, 2000 of the Company’s pension plan, which was further amended on March 29, 2001, the benefits and the premium payment pattern were changed.
Before the amendment, the premium was regularly paid annually until the plan would be fully funded and the benefits consisted of retirement benefit (regular monthly or lump-sum pension) and death insurance. In conjunction with the amendment, the plan would be fully funded after making installment payments up to January 2002 of the required amount to fully fund the plan determined as of September 1, 2000. The amendment also includes an additional benefit in the form of thirteenth-month retirement benefit, which is payable annually 14 days before Idul Fitri (“Moslem Holiday”).
29.
PENSION PLAN (continued)
Defined Benefit Pension Plan (continued)
The amendment covers employees registered as participants of the pension plan as of
September 1, 2000 and includes an increase in basic salary pension by 9% compounded annually starting from September 1, 2001. The amendment also stipulates that there will be no increase in the premium even in cases of mass employee terminations or changes in marital status.
The total premium installments based on the amendment amounted to Rp355,000 and were paid on due dates.
On March 1, 2007, the Company entered into an agreement with Jiwasraya to provide defined death insurance plan to 1,276 employees as of January 1, 2007, who are not covered by the defined benefit pension plan as stated above. Based on the agreement, a participating employee will receive:
·
Expiration benefit equivalent to the cash value at the normal retirement age, or
·
Death benefit not due to accident equivalent to 100% of insurance money plus cash value when the employee dies not due to accident, or
·
Death benefit due to accident equivalent to 200% of insurance money plus cash value when the employee dies due to accident.
The premium of Rp7,600 was fully paid on March 29, 2007. Subsequently, in August 2007, February to December 2008, January to December 2009, January to December 2010, January to December 2011 and January to March 2012, the Company made payments for additional premium of Rp275 for additional 55 employees, Rp805 for additional 161 employees, Rp415 for additional 81 employees, Rp120 for additional 14 employees, Rp378 for additional 41 employees and Rp110 for additional 14 employees, respectively.
On June 25, 2003, Satelindo entered into an agreement with Jiwasraya to amend the benefits and premium payment pattern of the former’s pension plan. The amendment covers employees registered as participants of the pension plan as of December 25, 2002 up to June 25, 2003. Other new conditions include the following:
·
An increase in pension basic salary at 6% compounded annually starting from December 25, 2002
·
Thirteenth-month retirement benefit, which is payable annually 14 days before Idul Fitri
·
An increase in periodic payment of retirement benefit at 6% compounded annually starting one year after receiving periodic retirement benefit for the first time
·
If the average annual interest rate of time deposits of government banks exceeds 15%, the participants’ retirement benefit will be increased by a certain percentage in accordance with the formula agreed by both parties.
On April 15, 2005, Lintasarta entered into an agreement with Jiwasraya to replace their existing agreement. Based on the new agreement, the benefits and the premium payment pattern were changed. This agreement is effective starting January 1, 2005. The total premium installments based on the agreement amounted to Rp61,623, which is payable in 10 annual installments starting 2005 until 2015.
51
These consolidated financial statements are originally issued in the Indonesian language.
PT INDOSAT Tbk AND SUBSIDIARIES
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
As of March 31, 2012 and for the Three-Month Period then Ended (Unaudited)
With Comparative Figures as of December 31, 2011 and
January 1, 2011 / December 31, 2010 (as Restated) (Unaudited)
and for the Three-Month Period Ended March 31, 2011 (as Restated) (Unaudited)
(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)
29.
PENSION PLAN (continued)
Defined Benefit Pension Plan (continued)
The new agreement covers employees registered as participants of the pension plan as of
April 1, 2003. The conditions under the new agreement include the following:
·
An increase in pension basic salary by 3% (previously was estimated at 8%) compounded annually starting April 1, 2003
·
An increase in periodic payment of retirement benefit at 5% compounded annually starting one year after receiving periodic retirement benefit for the first time
·
If the average annual interest rate of time deposits of government banks exceeds 15%, the participants’ retirement benefit will be increased by a certain percentage in accordance with the formula agreed by both parties.
On May 2, 2005, Lintasarta entered into an agreement with Jiwasraya to amend the above agreement. The amendment covers employees registered as participants of the pension plan as of April 1, 2003 up to November 30, 2004 with additional 10 annual premium installments totalling Rp1,653 which are payable starting 2005 until 2015.
No contribution was made by Lintasarta to Jiwasraya for the three-month periods ended March 31, 2012 and 2011.
The net periodic pension cost for the pension plans of the Company and Lintasarta for the three-month periods ended March 31, 2012 and 2011 was calculated based on actuarial valuations as of December 31, 2011 and 2010, respectively. The actuarial valuations were prepared by an independent actuary, using the projected-unit-credit method and applying the following assumptions:
2012
2011
Annual discount rate
7.0 - 7.5%
8.5 - 9.0%
Expected annual rate of return on plan assets
4.5 - 9.0%
4.5 - 9.0%
Annual rate of increase in compensation
3.0 - 9.0%
3.0 - 9.0%
Mortality rate (Indonesian Mortality Table - TMI)
TMI 1999
TMI 1999
a.
The composition of the net periodic pension cost for the three-month periods ended March 31, 2012 and 2011 is as follows:
2012
2011
Interest cost
8,016
9,692
Service cost
7,401
7,638
Amortization of unrecognized actuarial loss
296
299
Return on plan assets
(11,775
)
(8,113)
Curtailment gain
-
(5,393)
Settlement loss
-
(1,452)
Net periodic pension cost (Note 26)
3,938
2,671
52
These consolidated financial statements are originally issued in the Indonesian language.
PT INDOSAT Tbk AND SUBSIDIARIES
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
As of March 31, 2012 and for the Three-Month Period then Ended (Unaudited)
With Comparative Figures as of December 31, 2011 and
January 1, 2011 / December 31, 2010 (as Restated) (Unaudited)
and for the Three-Month Period Ended March 31, 2011 (as Restated) (Unaudited)
(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)
29.
PENSION PLAN (continued)
Defined Benefit Pension Plan (continued)
b.
The funded status of the plans as of March 31, 2012, December 31, 2011 and January 1, 2011 / December 31, 2010 is as follows:
January 1,
2011 /
March 31,
December 31,
December 31,
20122011
2010
Plan assets at fair value
567,619
538,902
852,958
Projected benefit obligation
(478,491
)
(463,074
)*
(750,625)
Excess of plan assets over projected benefit obligation
89,128
75,828
102,333
Unrecognized actuarial loss
12,336
29,464
10,928
Total prepaid pension cost
101,464
105,292
113,261
* net of curtailment effect during 2011 due to VSS (Note 26)
c.
Movements in the fair value of plan assets for the three-month period ended March 31, 2012 and years ended December 31, 2011 and 2010 are as follows:
March 31, 2012 (Three Months)
The Company
Lintasarta
Total
Fair value of plan assets
at beginning of period
476,890
62,012
538,902
Actuarial gain (loss) on plan assets
22,990
(6,158
)
16,832
Expected return on plan assets
10,457
1,318
11,775
Contributions
110
-
110
Fair value of plan assets at end of period
510,447
57,172
567,619
December 31, 2011 (One Year)
The Company
Lintasarta
Total
Fair value of plan assets
at beginning of year
793,664
59,294
852,958
Expected return on plan assets
47,175
5,038
52,213
Actuarial gain (loss) on plan assets
14,651
(610
)
14,041
Contributions
378
9,653
10,031
Actual benefits paid
(378,978
)
(11,363
)
(390,341)
Fair value of plan assets at end of year
476,890
62,012
538,902
December 31, 2010 (One Year)
The Company
Lintasarta
Total
Fair value of plan assets
at beginning of year
763,244
50,344
813,588
Expected return on plan assets
67,149
4,320
71,469
Contributions
120
9,653
9,773
Actuarial loss on plan assets
(12,283
)
(2,677
)
(14,960
)
Actual benefits paid
(24,566
)
(2,346
)
(26,912
)
Fair value of plan assets at end of year
793,664
59,294
852,958
29.
PENSION PLAN (continued)
Defined Benefit Pension Plan (continued)
d.
Movements in the present value of the defined benefit obligation for the three-month period ended March 31, 2012 and years ended December 31, 2011 and 2010 are as follows:
March 31, 2012 (Three Months)
The Company
Lintasarta
Total
Defined benefit obligation at beginning of period
409,808
53,266
463,074
Interest cost
7,035
981
8,016
Current service cost
6,500
901
7,401
Defined benefit obligation at end of period
423,343
55,148
478,491
December 31, 2011 (One Year)
The Company
Lintasarta
Total
Defined benefit obligation at beginning of year
700,410
50,215
750,625
Interest cost
43,786
4,189
47,975
Current service cost
27,167
3,839
31,006
Actuarial loss (gain) on obligation
(12,066
)
4,315
(7,751
)
Effect of settlement
(358,597
)
(9,080
)
(367,677
)
Actual benefits paid
(18,750
)
(1,857
)
(20,607)
Effect of curtailment
(18,886
)
1,645
(17,241
)
Effect of changes in actuarial assumptions
46,744
-
46,744
Defined benefit obligation at end of year
409,808
53,266
463,074
December 31, 2010 (One Year)
The Company
Lintasarta
Total
Defined benefit obligation at beginning of year
684,611
41,816
726,427
Interest cost
70,279
4,279
74,558
Current service cost
38,375
3,374
41,749
Actuarial loss (gain) on obligation
(156,345
)
2,912
(153,433
)
Actual benefits paid
(24,102
)
(2,166
)
(26,268)
Effect of changes in actuarial assumptions
87,592
-
87,592
Defined benefit obligation at end of year
700,410
50,215
750,625
53
These consolidated financial statements are originally issued in the Indonesian language.
PT INDOSAT Tbk AND SUBSIDIARIES
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
As of March 31, 2012 and for the Three-Month Period then Ended (Unaudited)
With Comparative Figures as of December 31, 2011 and
January 1, 2011 / December 31, 2010 (as Restated) (Unaudited)
and for the Three-Month Period Ended March 31, 2011 (as Restated) (Unaudited)
(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)
29.
PENSION PLAN (continued)
Defined Benefit Pension Plan (continued)
e.
Movements in the prepaid pension cost for the three-month period ended March 31, 2012 and years ended December 31, 2011 and 2010 are as follows:
March 31, 2012 (Three Months)
The Company
Lintasarta
Total
Prepaid pension cost at beginning of period
75,731
29,561
105,292
Contribution to Jiwasraya
110
-
110
Net periodic pension cost
(3,078
)
(860
)
(3,938
)
Prepaid pension cost at end of period
72,763
28,701
101,464
December 31, 2011 (One Year)
The Company
Lintasarta
Total
Prepaid pension cost at beginning of year
82,871
30,390
113,261
Contribution to Jiwasraya
378
9,653
10,031
Net periodic pension cost
(5,887
)
(10,056
)
(15,943)
Refund from Jiwasraya
(1,631
)
(426
)
(2,057)
Prepaid pension cost at end of year
75,731
29,561
105,292
December 31, 2010 (One Year)
The Company
Lintasarta
Total
Prepaid pension cost at beginning of year
124,720
25,100
149,820
Contribution to Jiwasraya
120
9,653
9,773
Net periodic pension cost
(41,505
)
(4,183
)
(45,688)
Refund from Jiwasraya
(464
)
(180
)
(644)
Prepaid pension cost at end of year
82,871
30,390
113,261
f. Prepaid pension cost consists of:
January 1,
2011 /
March 31,
December 31,
December 31,
201220112010
Current portion (presented as part of “Prepaid expenses”)
Company
1,730
1,730
1,401
Lintasarta
381
381
516
2,111
2,111
1,917
Long-term portion (presented as “Long-term prepaid
pension - net of current portion”)
Company
71,033
74,001
81,470
Lintasarta
28,320
29,180
29,874
99,353
103,181
111,344
Total prepaid pension cost
101,464
105,292
113,261
29.
PENSION PLAN (continued)
Defined Benefit Pension Plan (continued)
The major categories of plan assets as a percentage of the fair value of total plan assets as of March 31, 2012 and December 31, 2011 and 2010 are as follows:
January 1,
2011 /
March 31,
December 31,
December 31,
201220112010
Investment in mutual fund
78.56%
78.11%
78.90%
Investment in time deposits
6.60%
12.50%
12.16%
Investment in debt securities
5.58%
5.19%
5.06%
Investment in shares and properties
9.25%
4.19%
3.87%
Other investments
0.01%
0.01%
0.01%
The overall expected rate of return on assets is determined based on the market expectations prevailing on that date, applicable to the period over which the obligation is to be settled. There has been a significant change in the expected rate of return on assets due to the improved stock market scenario.
Defined Contribution Pension Plan
In May 2001 and January 2003, the Company and Satelindo assisted their employees in establishing their respective employees’ defined contribution pension plans, in addition to the defined benefit pension plan as mentioned above. Starting June 2004, the Company also assisted ex-IM3 employees in establishing their defined contribution pension plan. Under the defined contribution pension plan, the employees contribute 10% - 20% of their basic salaries, while the Company does not contribute to the plans. Total contributions of employees for the three-month periods ended March 31, 2012 and 2011 amounted to Rp4,114 and Rp3,809, respectively. The plan assets are being administered and managed by seven financial institutions appointed by the Company and Satelindo, based on the choice of the employees.
Labor Law No. 13/2003
The Company, Lintasarta and IMM also accrue benefits under Labor Law No. 13/2003 (“Labor Law”) dated March 25, 2003. Their employees will receive the benefits which are higher under either this law or the defined benefit pension plan.
The net periodic pension cost of the Company and the subsidiaries under the Labor Law for the three months ended March 31, 2012 and 2011 was calculated based on actuarial valuations as of December 31, 2011 and 2010, respectively. The actuarial valuations were prepared by an independent actuary, using the projected-unit-credit method and applying the following assumptions:
2012
2011
Annual discount rate
7.5%
8.5 - 9.0%
Annual rate of increase in compensation
8.0 - 9.0%
8.0 - 9.0%
54
These consolidated financial statements are originally issued in the Indonesian language.
PT INDOSAT Tbk AND SUBSIDIARIES
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
As of March 31, 2012 and for the Three-Month Period then Ended (Unaudited)
With Comparative Figures as of December 31, 2011 and
January 1, 2011 / December 31, 2010 (as Restated) (Unaudited)
and for the Three-Month Period Ended March 31, 2011 (as Restated) (Unaudited)
(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)
29.
PENSION PLAN (continued)
Labor Law No. 13/2003 (continued)
a.
The composition of the periodic pension cost under the Labor Law for the three-month periods ended March 31, 2012 and 2011 is as follows:
2012
2011
Service cost
7,510
5,589
Interest cost
5,412
4,279
Amortization of unrecognized actuarial loss
1,151
5
Amortization of unrecognized past service cost
173
179
Curtailment gain
-
(3,558)
Net periodic pension cost under the Labor Law (Note 26)
14,246
6,494
b.
The composition of the accrued pension cost under the Labor Law as of March 31, 2012, December 31, 2011 and January 1, 2011 / December 31, 2010 is as follows:
January 1,
2011 /
March 31,
December 31,
December 31,
201220112010
Projected benefit obligation
303,911
291,135
*
217,754
Unrecognized actuarial loss
(82,343
)
(83,494
)
(17,245
)
Unrecognized past service cost
(8,440
)
(8,612
)
(9,632)
Net accrued pension cost under the Labor Law
213,128
199,029
190,877
* net of curtailment effect during 2011 due to VSS (Note 26)
c.
Movements in the present value of pension cost obligation under the Labor Law for the three-month period ended March 31, 2012 and years ended December 31, 2011 and 2010 are as follows:
March 31, 2012 (Three Months)
The Company
Lintasarta
IMM
Total
Benefit obligation
at beginning of period
250,988
24,160
15,987
291,135
Current service cost
6,241
523
746
7,510
Interest cost
4,664
451
298
5,413
Actual benefits paid
(147
)
-
-
(147)
Present value of obligation
at end of period
261,746
25,134
17,031
303,911
29.
PENSION PLAN (continued)
Labor Law No. 13/2003 (continued)
December 31, 2011 (One Year)
The Company
Lintasarta
IMM
Total
Benefit obligation
at beginning of year
182,572
24,340
10,842
217,754
Current service cost
24,740
2,003
2,612
29,355
Interest cost
12,855
2,064
969
15,888
Actuarial loss (gain) on
obligation
75,163
(5,182
)
(1,442
)
68,539
Actual benefits paid
(1,826
)
(111
)
(255
)(2,192)
Effect of curtailment
(38,828
)
(890
)
-
(39,718)
Effect of changes in
actuarial assumption
(3,688
)
1,936
3,261
1,509
Benefit obligation
at end of year
250,988
24,160
15,987
291,135
December 31, 2010 (One Year)
The Company
Lintasarta
IMM
Total
Benefit obligation
at beginning of year
159,055
22,173
6,660
187,888
Current service cost
17,661
1,967
2,119
21,747
Interest cost
16,574
2,319
693
19,586
Actuarial loss (gain) on
obligation
1,166
(890
)
804
1,080
Actual benefits paid
(2,150
)
(97
)
(102
)(2,349
)
Effect of changes in
actuarial assumption
(9,734
)
(1,132
)
668
(10,198
)
Benefit obligation
at end of year
182,572
24,340
10,842
217,754
d.
Movements in the accrued pension cost under the Labor Law for the three-month period ended March 31, 2012 and years ended December 31, 2011 and 2010 are as follows:
March 31, 2012 (Three Months)
The Company
Lintasarta
IMM
Total
Accrued pension cost under
the Labor Law at beginning
of period
165,213
21,489
12,327
199,029
Periodic Labor Law cost
12,087
1,081
1,078
14,246
Benefit payment
(147
)
-
-
(147)
Accrued pension cost under
the Labor Law at end
of period
177,153
22,570
13,405
213,128
29.
PENSION PLAN (continued)
Labor Law No. 13/2003 (continued)
December 31, 2011 (One Year)
The Company
Lintasarta
IMM
Total
Accrued pension cost under
the Labor Law at beginning
of year
164,285
17,648
8,944
190,877
Periodic Labor Law cost
2,754
3,952
3,638
10,344
Benefit payment
(1,826
)
(111
)
(255
)
(2,192)
Accrued pension cost under
the Labor Law at end
of year
165,213
21,489
12,327
199,029
December 31, 2010 (One Year)
The Company
Lintasarta
IMM
Total
Accrued pension cost under
the Labor Law at beginning
of year
131,416
12,771
6,206
150,393
Periodic Labor Law cost
35,019
4,974
2,840
42,833
Benefit payment
(2,150
)
(97
)
(102
)
(2,349
)
Accrued pension cost under
the Labor Law at end
of year
164,285
17,648
8,944
190,877
The current portion of pension cost under the Labor Law included in accrued expenses (Note 17) amounted Rp4,700each as of March 31, 2012 and December 31, 2011 and Rp2,933 as of January 1, 2011 / December 31, 2010. The non-current portion included in employee benefit obligations amounted to Rp208,428, Rp194,329 and Rp187,944 (Note 22) as of March 31, 2012, December 31, 2011 and January 1, 2011 / December 31, 2010, respectively.
Post-retirement Healthcare
The Company provides post-retirement healthcare benefits to its employees who leave the Company after the employees fulfill the early retirement requirement. The spouse and children who have been officially registered in the administration records of the Company are also eligible to receive benefits. If the employees die, the spouse and children are still eligible for the post-retirement healthcare until the spouse dies or remarries and the children reach the age of 25 or get married.
The utilization of post-retirement healthcare is limited to an annual maximum ceiling that refers to monthly pension from Jiwasraya as follows:
·
16 times the Jiwasraya monthly pension for a pensioner who receives monthly pension from Jiwasraya
·
16 times the equality monthly pension for a pensioner who became permanent employee after September 1, 2000
·
16 times the last monthly pension for a pensioner who retires after July 1, 2003 and does not receive Jiwasraya monthly pension.
29.
PENSION PLAN (continued)
Post-retirement Healthcare (continued)
The net periodic post-retirement healthcare cost for the three-month periods ended March 31, 2012 and 2011 was calculated based on actuarial valuations as of December 31, 2011 and 2010, respectively. The actuarial valuations were prepared by an independent actuary, using the projected-unit-credit method and applying the following assumptions:
2012
2011
Annual discount rate
8.0%
9.5%
Ultimate cost trend rate
6.0%
6.0%
Next year trend rate
12.0%
14.0%
Period to reach ultimate cost trend rate
4 years
4 years
a.
The composition of the periodic post-retirement healthcare cost - net for the three-month periods ended March 31, 2012 and 2011 is as follows:
2012
2011
Interest cost
13,626
16,138
Service cost
6,653
6,691
Amortization of unrecognized past service cost
1,935
2,120
Amortization of unrecognized actuarial loss
680
1,301
Curtailment gain
-
(18,516)
Net periodic post-retirement healthcare cost - net (Note 26)
22,894
7,734
a.
The composition of the accrued post-retirement healthcare cost as of March 31, 2012, December 31, 2011 and January 1, 2011 / December 31, 2010 is as follows:
January 1,
2011 /
March 31,
December 31,
December 31,
201220112010
Projected benefit obligation
704,670
687,789
*
846,636
Unrecognized actuarial loss
(101,744
)
(103,679
)
(161,443)
Unrecognized past service cost
(14,721
)
(15,401
)
(31,253)
Net accrued post-retirement healthcare cost
588,205
568,709
653,940
* net of curtailment effect during 2011 due to VSS (Note 26)
55
These consolidated financial statements are originally issued in the Indonesian language.
PT INDOSAT Tbk AND SUBSIDIARIES
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
As of March 31, 2012 and for the Three-Month Period then Ended (Unaudited)
With Comparative Figures as of December 31, 2011 and
January 1, 2011 / December 31, 2010 (as Restated) (Unaudited)
and for the Three-Month Period Ended March 31, 2011 (as Restated) (Unaudited)
(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)
29.
PENSION PLAN (continued)
Post-retirement Healthcare (continued)
a.
Movements in the present value of defined benefit obligation during the three-month period ended March 31, 2012 and years ended December 31, 2011 and 2010 are as follows:
March 31,
December 31,
December 31,
201220112010
(Three Months)
(One Year)
(One Year)
Balance at beginning of period
687,789
846,636
605,660
Interest cost
13,626
68,955
65,919
Service cost
6,653
24,149
28,229
Actual benefits paid
(3,398
)
(10,978
)
(12,465)
Effect of changes in actuarial assumptions
-
150,330
197,867
Effect of curtailment
-
(230,600
)
-
Actuarial gain on obligation
-
(160,703
)
(38,574)
Balance at end of period
704,670
687,789
846,636
b.
Movements in the accrued post-retirement healthcare cost during the three-month period ended March 31, 2012 and years ended December 31, 2011 and 2010 are as follows:
March 31,
December 31,
December 31,
201220112010
(Three Months)
(One Year)
(One Year)
Balance at beginning of period
568,709
653,940
561,805
Net periodic post-retirement healthcare cost (income)
22,894
(74,253
)
104,600
Benefit payment
(3,398
)
(10,978
)
(12,465
)
Balance at end of period
588,205
568,709
653,940
The current portion of post-retirement healthcare cost included in accrued expenses (Note 17) amounted to Rp12,957,each as of March 31, 2012 and December 31, 2011 and amounted Rp14,669 as of January 1, 2011 / December 31, 2010. The non-current portion included in employee benefit obligations amounted to Rp575,248, Rp555,752 and Rp639,271, respectively, as of March 31, 2012, December 31, 2011 and January 1, 2011 / December 31, 2010 (Note 22).
56
These consolidated financial statements are originally issued in the Indonesian language.
PT INDOSAT Tbk AND SUBSIDIARIES
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
As of March 31, 2012 and for the Three-Month Period then Ended (Unaudited)
With Comparative Figures as of December 31, 2011 and
January 1, 2011 / December 31, 2010 (as Restated) (Unaudited)
and for the Three-Month Period Ended March 31, 2011 (as Restated) (Unaudited)
(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)
29.
PENSION PLAN (continued)
Post-retirement Healthcare (continued)
e.
The effect of a one percentage point change in assumed post-retirement healthcare cost trend rate would result in aggregate service and interest costs for the three-month period ended March 31, 2012 and years ended December 31, 2011 and 2010 and in accumulated post-retirement healthcare benefit obligation as of March 31, 2012, December 31, 2011 and January 1, 2011 / December 31, 2010 as follows:
January 1,
2011 /
March 31,
December 31,
December 31,
201220112010
Increase
Service and interest costs
25,415
118,454
116,581
Accumulated post-retirement healthcare benefit
obligation
869,245
844,612
1,030,938
Decrease
Service and interest costs
16,048
73,626
76,868
Accumulated post-retirement healthcare
benefit obligation
581,893
566,627
702,632
Amounts for the current three-month period and previous four annual periods of employee benefits:
Defined Benefit Pension Plan
March 31,
December 31,
December 31,
December 31,
December 31,
2012
2011
2010
2009
2008
The Company
Plan assets
510,447
476,890
793,664
763,244
763,700
Projected benefit obligation
(423,343
)
(409,808
)
(700,410
)
(684,611)(512,513)
Excess of plan assets over
projected benefit obligation
87,104
67,082
93,254
78,633
251,187
Unrecognized actuarial loss (gain)
(14,341
)
8,649
(10,383
)
46,087(96,746)
Net Prepaid Pension
72,763
75,731
82,871
124,720
154,441
Lintasarta
Plan assets
57,172
62,012
59,294
50,344
41,499
Projected benefit obligation
(55,148
)
(53,266
)
(50,215
)
(41,816)(28,726)
Excess of plan assets over projected
benefit obligation
2,024
8,746
9,079
8,528
12,773
Unrecognized actuarial loss
26,677
20,815
21,311
16,572
5,886
Net Prepaid Pension
28,701
29,561
30,390
25,100
18,659
Total
101,464
105,292
113,261
149,820
173,100
57
These consolidated financial statements are originally issued in the Indonesian language.
PT INDOSAT Tbk AND SUBSIDIARIES
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
As of March 31, 2012 and for the Three-Month Period then Ended (Unaudited)
With Comparative Figures as of December 31, 2011 and
January 1, 2011 / December 31, 2010 (as Restated) (Unaudited)
and for the Three-Month Period Ended March 31, 2011 (as Restated) (Unaudited)
(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)
29.
PENSION PLAN (continued)
Labor Law No.13/2003
March 31,
December 31,
December 31,
December 31,
December 31,
2012
2011
2010
2009
2008
The Company
Projected benefit obligation
(261,746)
(250,988)
(182,572
)
(159,055)(141,316)
Unrecognized actuarial loss
84,593
85,775
18,287
27,639
40,798
Net
(177,153
)
(165,213
)
(164,285
)
(131,416)(100,518)
Lintasarta
Projected benefit obligation
(25,134
)
(24,160
)
(24,340
)
(22,173)(11,464
)
Unrecognized actuarial loss (gain)
(5,539
)
(5,598
)
(2,569
)
(547
)2,855
Unrecognized past service cost
8,103
8,269
9,261
9,949
-
Net
(22,570
)
(21,489
)
(17,648
)
(12,771)(8,609)
IMM
Projected benefit obligation
(17,031
)
(15,987
)
(10,842
)
(6,660)(3,674)
Unrecognized actuarial loss (gain)
3,289
3,317
1,527
55(955)
Unrecognized past service cost
337
343
371
399
427
Net
(13,405
)
(12,327
)
(8,944
)
(6,206)(4,202)
Total
(213,128
)
(199,029
)
(190,877
)
(150,393)(113,329)
Post-retirement Healthcare
March 31,
December 31,
December 31,
December 31,
December 31,
2012
2011
2010
2009
2008
The Company
Projected benefit obligation
(704,670
)
(687,789
)
(846,636
)
(605,660)(492,615)
Unrecognized past service cost
101,744
103,679
161,443
2,150(43,315)
Unrecognized actuarial loss
14,721
15,401
31,253
41,705
52,158
Net
(588,205
)
(568,709
)
(653,940
)
(561,805)(483,772)
58
These consolidated financial statements are originally issued in the Indonesian language.
PT INDOSAT Tbk AND SUBSIDIARIES
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
As of March 31, 2012 and for the Three-Month Period then Ended (Unaudited)
With Comparative Figures as of December 31, 2011 and
January 1, 2011 / December 31, 2010 (as Restated) (Unaudited)
and for the Three-Month Period Ended March 31, 2011 (as Restated) (Unaudited)
(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)
30.
ACCOUNTS AND TRANSACTIONS WITH RELATED PARTIES
The details of the accounts and the significant transactions entered into with related parties are as follows:
Amount
Percentage to Total Assets/Liabilities (%)
January 1, 2011 /
January 1, 2011 /
December 31,
December 31,
December 31,
December 31,
March 31, 2012
2011
2010
March 31, 2012
2011
2010
Cash and cash equivalents
(Note 4)
Government-related entities:
State-owned banks
990,319
977,960
1,615,651
1.90
1.84
3.03
Accounts receivable - trade
(Note 5)
Government-related entities:
State-owned companies
343,231
297,717
267,319
0.66
0.56
0.50
Ultimate parent company:
Qatar Telecom
592
6,927
2,827
0.00
0.01
0.01
Total
343,823
304,644
270,146
0.66
0.57
0.51
Less allowance for
impairment of
receivables
40,373
47,107
47,640
0.08
0.09
0.09
Net
303,450
257,537
222,506
0.58
0.48
0.42
Prepaid expenses
Government-related entities:
State-owned companies
8,384
8,222
11,683
0.01
0.01
0.02
Governmental departments
-
205
-
-
0.00
-
Entity under common significant
influence:
Kopindosat
4,049
3,681
3,294
0.01
0.01
0.01
Total
12,433
12,108
14,977
0.02
0.02
0.03
Other current and non-current
assets - financial and non-financial
Government-related entities:
State-owned banks
69,996
71,825
91,231
0.13
0.14
0.17
Governmental departments
-
87
87
-
0.00
0.00
Total
69,996
71,912
91,318
0.13
0.14
0.17
Due from related parties
Entity under common significant
influence:
Kopindosat
6,032
6,012
5,958
0.01
0.01
0.01
Government-related entities:
State-owned companies
1,524
1,583
1,693
0.01
0.00
0.01
Key management personnel:
Senior management
908
3,020
1,362
0.00
0.01
0.00
Ultimate parent company:
Qatar Telecom
55
54
54
0.00
0.00
0.00
Total
8,519
10,669
9,067
0.02
0.02
0.02
Less allowance for
impairment of
receivables
15
15
646
0.00
0.00
0.00
Net
8,504
10,654
8,421
0.02
0.02
0.02
59
These consolidated financial statements are originally issued in the Indonesian language.
PT INDOSAT Tbk AND SUBSIDIARIES
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
As of March 31, 2012 and for the Three-Month Period then Ended (Unaudited)
With Comparative Figures as of December 31, 2011 and
January 1, 2011 / December 31, 2010 (as Restated) (Unaudited)
and for the Three-Month Period Ended March 31, 2011 (as Restated) (Unaudited)
(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)
30.
ACCOUNTS AND TRANSACTIONS WITH RELATED PARTIES (continued)
Amount
Percentage to Total Assets/Liabilities (%)
January 1, 2011 /
January 1, 2011 /
December 31,
December 31,
December 31,
December 31,
March 31, 2012
2011
2010
March 31, 2012
2011
2010
Long-term prepaid rentals
- net of current portion
Government-related
entities:
State-owned companies
20,864
21,587
24,672
0.04
0.04
0.05
Entity under common
significant influence:
Kopindosat
9,231
9,962
12,817
0.02
0.02
0.02
Total
30,095
31,549
37,489
0.06
0.06
0.07
Long-term advances
Government-related entities:
State-owned companies
8,605
44
3,705
0.02
0.00
0.01
Entities under common
significant influence:
PT Personel Alih Daya
-
9,111
-
-
0.02
-
Kopindosat
-
-
1,016
-
-
0.00
Total
8,605
9,155
4,721
0.02
0.02
0.01
Long-term prepaid pension - net
of current portion (Note 29)
Government-related entities:
State-owned companies
99,353
103,181
111,344
0.19
0.19
0.21
Short-term loan (Note 14)
Government-related entity:
State-owned bank
1,499,331
1,499,256
-
4.53
4.39
-
Accounts payable - trade
Government-related entities:
State-owned companies
7,960
23,233
22,260
0.02
0.07
0.06
Ultimate parent company
Qatar Telecom
3
348
-
0.00
0.00
-
Total
7,963
23,581
22,260
0.02
0.07
0.06
Procurement payable (Note 15)
Government-related entities:
State-owned companies
34,107
9,882
33,348
0.10
0.03
0.10
Entities under common significant
influence:
PT Personel Alih Daya
11,697
16,319
13,210
0.04
0.05
0.04
Kopindosat
6,890
9,872
22,123
0.02
0.03
0.06
Total
52,694
36,073
68,681
0.16
0.11
0.20
Accrued expenses
Key management personnel:
Senior management
45,095
37,851
33,553
0.14
0.11
0.10
Entities under common significant
influence:
PT Personel Alih Daya
36,803
18,222
16,906
0.11
0.05
0.05
Kopindosat
11,703
5,817
13,838
0.03
0.02
0.04
Government-related entities:
State-owned companies
15,248
66,399
82,641
0.05
0.20
0.23
Total
108,849
128,289
146,938
0.33
0.38
0.42
Due to related parties
Government-related entities:
State-owned companies
14,422
14,928
20,609
0.05
0.05
0.06
Ultimate parent company:
Qatar Telecom
646
552
-
0.00
0.00
-
Entity under common significant
influence:
Kopindosat
-
-
1,490
-
-
0.00
Total
15,068
15,480
22,099
0.05
0.05
0.06
Other current and non-current liabilities -
financial and non-financial
Government-related entities:
State-owned companies
6,039
6,455
8,118
0.02
0.02
0.02
Governmental departments
5,568
2,141
3,895
0.02
0.01
0.01
Total
11,607
8,596
12,013
0.04
0.03
0.03
30.
ACCOUNTS AND TRANSACTIONS WITH RELATED PARTIES (continued)
Amount
Percentage to Total Assets/Liabilities (%)
January 1, 2011 /
January 1, 2011 /
December 31,
December 31,
December 31,
December 31,
March 31, 2012
2011
2010
March 31, 2012
2011
2010
Loan payable (including current
maturities) (Note 18)
Government-related entity:
State-owned bank
999,223
998,843
1,297,045
3.02
2.92
3.71
Percentage to Total Operating Revenue (%)
Amount
or Expenses (%)
Three months ended March 31,
Three months ended March 31,
2012
2011
2012
2011
Operating revenues (Note 24)
Government-related entities:
State-owned companies
356,867
343,801
7.17
7.05
Governmental departments
4,046
7,525
0.08
0.16
Ultimate parent company:
Qatar Telecom
1,769
10,966
0.04
0.23
Entity under common significant
influence:
Kopindosat
139
152
0.00
0.00
Total
362,821
362,444
7.29
7.44
Operating expenses
Cost of services
Government-related entities:
State-owned companies
368,416
383,053
8.48
9.19
Entities under common significant
influence:
Kopindosat
43,711
25,697
1.01
0.61
PT Personel Alih Daya
13,301
22,382
0.31
0.54
Ultimate parent company:
Qatar Telecom
14,524
15,376
0.33
0.37
Total
439,952
446,508
10.13
10.71
Personnel
Key management personnel:
Senior management
Short-term employee benefits
30,512
39,039
0.70
0.93
Termination benefits
-
27,424
-
0.66
Other long-term benefits
1,768
283
0.04
0.01
Sub-total
32,280
66,746
0.74
1.60
Government-related entities:
State-owned companies
3,938
4,749
0.09
0.12
Entity under common significant
influence:
PT Personel Alih Daya
-
7,175
-
0.17
Total
36,218
78,670
0.83
1.89
Marketing
Entities under common significant
influence:
PT Personel Alih Daya
17,603
16,711
0.40
0.40
Kopindosat
4,598
2,420
0.11
0.06
Total
22,201
19,131
0.51
0.46
60
These consolidated financial statements are originally issued in the Indonesian language.
PT INDOSAT Tbk AND SUBSIDIARIES
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
As of March 31, 2012 and for the Three-Month Period then Ended (Unaudited)
With Comparative Figures as of December 31, 2011 and
January 1, 2011 / December 31, 2010 (as Restated) (Unaudited)
and for the Three-Month Period Ended March 31, 2011 (as Restated) (Unaudited)
(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)
30.
ACCOUNTS AND TRANSACTIONS WITH RELATED PARTIES (continued)
Percentage to Total Operating Revenue (%)
Amount
or Expenses (%)
Three months ended March 31,
Three months ended March 31,
2012
2011
2012
2011
General and administration
Government-related entities:
State-owned companies
21,674
20,758
0.50
0.50
Entities under common significant
influence:
Kopindosat
3,593
5,602
0.08
0.13
PT Personel Alih Daya
3,090
3,702
0.07
0.09
Total
28,357
30,062
0.65
0.72
Other income (expenses) - net
Government-related entities:
State-owned banks
(28,913)
(11,031
)
(4.68)
(83.06
)
The relationship and nature of account balances/transactions with related parties are as follows:
No | Related Parties | Relationship | Nature of Account Balances/Transactions | |||
1. | State-owned banks | Government- related entities | Cash and cash equivalents, other current and non-current financial and non-financial assets, short-term loan, loan payable and other income (expenses) - net | |||
2. | State-owned companies | Government- related entities | Accounts receivable - trade, prepaid expenses, due from related parties, long-term prepaid rentals, long-term advances, long-term prepaid pension, accounts payable - trade, procurement payable, accrued expenses, due to related parties, other current and non-current financial and non-financial liabilities, operating revenues, operating expenses - cost of services, operating expenses - personnel and operating expenses - general and administration | |||
61
These consolidated financial statements are originally issued in the Indonesian language.
PT INDOSAT Tbk AND SUBSIDIARIES
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
As of March 31, 2012 and for the Three-Month Period then Ended (Unaudited)
With Comparative Figures as of December 31, 2011 and
January 1, 2011 / December 31, 2010 (as Restated) (Unaudited)
and for the Three-Month Period Ended March 31, 2011 (as Restated) (Unaudited)
(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)
30.
ACCOUNTS AND TRANSACTIONS WITH RELATED PARTIES (continued)
No | Related Parties | Relationship | Nature of Account Balances/Transactions |
3. | Qatar Telecom | Ultimate parent company | Accounts receivable - trade, due from related parties, accounts payable - trade, due to related parties, operating revenues - fixed telecommunications and cellular and operating expenses - cost of services | |||
4. | Governmental departments | Government- related entities | Prepaid expenses, other current and non-current financial and non-financial assets, other current and non-current financial and non-financial liabilities, operating revenues - MIDI | |||
5. | Kopindosat | Entity under common significant influence | Prepaid expenses, due from related parties, long-term prepaid rentals, long-term advances, procurement payable, accrued expenses, due to related parties, operating revenues, operating expenses - cost of services, operating expenses - marketing and operating expenses - general and administration | |||
6. | Senior management | Key management personnel | Due from related parties, accrued expenses and operating expenses - personnel | |||
7. | PT Personel Alih Daya | Entity under common significant influence | Long-term advances, procurement payable, accrued expenses, operating expenses - cost of services, operating expenses - personnel, operating expenses - marketing and operating expenses - general and administration |
62
These consolidated financial statements are originally issued in the Indonesian language.
PT INDOSAT Tbk AND SUBSIDIARIES
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
As of March 31, 2012 and for the Three-Month Period then Ended (Unaudited)
With Comparative Figures as of December 31, 2011 and
January 1, 2011 / December 31, 2010 (as Restated) (Unaudited)
and for the Three-Month Period Ended March 31, 2011 (as Restated) (Unaudited)
(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)
31.
SIGNIFICANT AGREEMENTS AND COMMITMENTS
a.
As of March 31, 2012, commitments on capital expenditures which are contractual agreements not yet realized relate to the procurement and installation of property and equipment amounting to US$82,876 (Note 37f) and Rp555,428.
The significant commitments on capital expenditures are as follows:
Contract Date | Contract Description | Vendor | Amount of Contract/Purchase Orders (“POs”) Already Issued | Amount of Contract/POs Not Yet Served |
December 10, 2010 | Procurement of Technology Upgrade for 2G and 3G Telecommunications Network in Kalimantan (see “g” below) | PT Nokia Siemens Networks and Nokia Siemens Networks Oy | US$38,439 | US$17,959 |
October 1, 2010 | Procurement of Telecommunications Equipment and Related Services | PT Ericsson Indonesia and Ericsson AB | US$81,881 and Rp241,947 | US$1,567 and Rp6,470 |
June 16, 2010 | Procurement of Telecommunications Infrastructure | PT Nokia Siemens Networks and Nokia Siemens Networks Oy | US$109,274 and Rp495,269 | US$1,708 and Rp23,510 |
b.
On February 7, 2012, the Company entered into an Asset Purchase Agreement with PT Tower Bersama Infrastructure Tbk and its subsidiary, PT Solusi Menara Bersama (collectively referred to as “Tower Bersama”), whereby the Company agreed to sell 2,500 of its telecommunication towers to Tower Bersama for a total consideration of US$518,500, consisting of US$406,000 paid upfront and a maximum potential deferred payment of US$112,500. The upfront payment includes PT Tower Bersama Infrastructure Tbk's shares of not less than 5% of the increase in its capital stock (upon the Rights Issue of PT Tower Bersama Infrastructure Tbk). Based on the agreement, the Company also agreed to lease back the spaces in the 2,500 telecommunication towers.
c.
On December 30, 2011, Lintasarta, a subsidiary, entered into agreements with MOCIT-Balai Penyedia dan Pengelola Pembiayaan Telekomunikasi dan Informatika (MOCIT-BPPPTI), whereby Lintasarta agreed to provide Public Access Services for Wireless Fidelity (WiFi) Internet inKewajiban Pelayanan Umum/ Universal Service Obligation (KPU/USO) Regencies (Kabupaten) (Penyediaan Jasa Akses Publik Layanan Internet WiFi Kabupaten KPU/USO) for Work Packages (Paket Pekerjaan) 3 and 6 that cover the provinces of West Kalimantan, South Kalimantan, Central Kalimantan, East Kalimantan, Bali, West Nusa Tenggara and East Nusa Tenggara. The agreements have contract values of Rp71,992 and Rp44,422 for Work Packages 3 and 6, respectively.
Subsequently on January 10, 2012, Lintasarta, also entered into an agreement with MOCIT-BPPPTI for the provision of Public Access Services for Wireless Fidelity (WiFi) Internet in KPU/USO Regencies (Kabupaten KPU/USO) (Penyediaan Jasa Akses Publik Layanan Internet WiFi Kabupaten KPU/USO) for Work Package (Paket Pekerjaan) 4 that covers the provinces of Gorontalo, West Sulawesi, South Sulawesi, Central Sulawesi, South East Sulawesi and North Sulawesi with contract value of Rp83,174.
d.
During May 2011 to March 2012, the Company had issued several POs to PT Nokia Siemens Network and Nokia Siemens Network OY with total amount of US$34,829 and Rp208,948 for the procurement of cellular technical equipment in the Sumatra and Java Areas. Based on the POs, the Company agreed to exchange certain existing cellular equipment with new equipment units and pay US$11,462 and Rp171,844 to Nokia for the installation services and additional equipment. For the three months ended March 31, 2012, the carrying amount of the cellular technical equipment units given up amounted to Rp44,987 and the accumulated carrying amount of such equipment up to March 31, 2012 amounted to Rp160,721(Note 8).
31.
SIGNIFICANT AGREEMENTS AND COMMITMENTS (continued)
e.
On July 28, 2011, the Company entered into an agreement with PT Quadra Solution, whereby the Company agreed to provide data communication service to PT Quadra Solution related to Project e-KTP (electronicKartu Tanda Penduduk / electronic citizens identity card). The agreement covers the provision of services until December 2012 for a total contract value of Rp283,352.
Up to March 31, 2012, the Company has recognized the operating revenue related to this agreement amounting to Rp39,531 which is classified as part of MIDI revenue.
f.
On December 10, 2010, the Company agreed with PT Nokia Siemens Networks and Nokia Siemens Networks OY (“Nokia”) to restate and amend the agreement for “Procurement of Technology Upgrade for 2G and 3G Telecommunications Network in Kalimantan” that was originally entered into on June 30, 2010. Based on the new agreement, the Company agreed to exchange certain existingcellular technical equipment units in Kalimantan area with new equipment units from Nokia with total value of US$75,243 consisting of cellular technical equipment with net book value of U$66,963 (net of discount amounting to US$2,029) for 1,325 units of 2G Base Transceiver Station (BTS), 24 units of Base Station Controller (BSC), 11 units of Transcoders, 66 units of Node B equipment and 3 units of Radio Network Controller (RNC), and pay US$6,251 to Nokia for the installation services. As of December 31, 2011, the Company has paid for the installation services. The accumulated carrying amount of such equipment up to March 31, 2012 amounted to Rp559,241 (Note 8). The Company also committed to procure additional equipment units from Nokia with total value of US$11,708 until the end of 2012.
g.
On January 29, April 15, May 24 and June 3 in 2010, and February 4 and 10 in 2011, the Company agreed to lease part of its telecommunications towers and sites to PT Hutchison CP Telecommunications (“Hutchison”) for a period of 12 years, PT Natrindo Telepon Selular (“NTS”) for a period of 10 years, PT XL Axiata Tbk (“XL Axiata”) for a period of 10 years, PT Berca Global Access (“Berca”) for a period of 10 years, PT Dayamitra Telekomunikasi (“Mitratel”) for a period of 10 years and PT First Media Tbk (“FM”) for a period of 5 years, respectively. Hutchison, NTS, and XL Axiata (on annual basis), Berca and Mitratel (on quarterly basis) and FM (on semi-annual basis) are required to pay the lease and maintenance fees in advance which are recorded as part of unearned income.
On August 18, 2011, the Company and Hutchison amended their tower leasing agreement covering changes in certain arrangements with respect to, among others, amount of compensation paid to landlords or residents around the leased site shouldered by the Company, penalty charged for overdue payments and effective lease period.
Future minimum lease receivables under the operating lease agreements as of March 31, 2012 and December 31, 2011 and January 1, 2011 / December 31, 2010 are as follows:
January 1,
2011 /
March 31,
December 31,
December 31,
201220112010
Within one year
879,274
374,864
410,828
After one year but not more than five years
3,519,138
1,514,834
2,372,145
More than five years
3,865,387
1,822,169
2,044,071
Total
8,263,799
3,711,867
4,827,044
63
These consolidated financial statements are originally issued in the Indonesian language.
PT INDOSAT Tbk AND SUBSIDIARIES
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
As of March 31, 2012 and for the Three-Month Period then Ended (Unaudited)
With Comparative Figures as of December 31, 2011 and
January 1, 2011 / December 31, 2010 (as Restated) (Unaudited)
and for the Three-Month Period Ended March 31, 2011 (as Restated) (Unaudited)
(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)
31.
SIGNIFICANT AGREEMENTS AND COMMITMENTS (continued)
Future minimum lease receivables under finance lease agreements as at March 31, 2012 is as follows:
Minimum
Present value
payments
of payments
Wtihin one year
11,413
7,976
After one year but not more than five years
60,871
39,442
More than five years
66,804
56,095
Total
139,088
103,513
Less amount representing finance charge
35,575
-
Present value of minimum lease payments
103,513
103,513
Current portion (presented as part of Other Current Financial Assets - Net)
(Note 7)
7,976
Long-term portion (presented as Finance Lease Receivables)
95,537
Total
103,513
h.
On April 15, 2010, Lintasarta, a subsidiary, entered into agreements with MOCIT-Balai Telekomunikasi dan Informatika Pedesaan (MOCIT-BTIP), whereby Lintasarta agreed to providePusat Layanan Jasa Akses Internet Kecamatan (Center for Internet Access and Services in Rural Areas) (PLIK) for Work Packages (Paket Pekerjaan) 7, 8 and 9 that cover the provinces of Bali, West Nusa Tenggara, East Nusa Tenggara, West Kalimantan, South Kalimantan, East Kalimantan, Central Kalimantan, Maluku and Papua. On December 22, 2010, the agreements were amended to increase the contract value. The agreements cover four years starting from October 15, 2010 with contract value amounting to Rp91,895, Rp143,668 and Rp116,721 for Work Packages 7, 8 and 9, respectively. In accordance with the agreements, Lintasarta placed its time deposits totalling Rp18,200 as a performance bond for the four-year contract period, which deposits are classified as part of other non-current financial assets.
On December 12, 2010, Lintasarta entered into agreements with MOCIT-BTIP to providePusat Layanan Jasa Akses Internet Kecamatan Bergerak (Mobile Center for Internet Access and Services in Rural Areas) (PLIKB) for Work Packages 2, 3, 11, 15, 16 and 18 that cover the provinces of North Sumatra, West Sumatra, East Nusa Tenggara, West Kalimantan, South Kalimantan and East Kalimantan. The agreements cover four years starting on September 22, 2011 with contract values amounting to Rp79,533, Rp92,003, Rp60,149, Rp71,879, Rp84,583 and Rp69,830 for Work Packages 2, 3, 11, 15, 16 and 18, respectively. On October 19, 2011, the agreements were amended to change the work starting date from September 22, 2011 to December 22, 2011.
As of March 31, 2012, Lintasarta has outstanding advance payments from MOCIT-BTIP related with those agreements amounting to Rp46,112 and Rp5,836 which are classified as part of unearned income for the current portion and other non-current liabilities for the long-term portion, respectively.
On May 6, 2010, Lintasarta entered into an agreement with PT Wira Eka Bhakti (WEB), for the procurement of equipment and infrastructure required for the construction of PLIK, as agreed with the MOCIT-BTIP above, with total contract value amounting to Rp189,704. The agreement has been amended several times, with the latest amendment dated March 9, 2011 increasing the contract value to become Rp208,361.
31.
SIGNIFICANT AGREEMENTS AND COMMITMENTS (continued)
On March 23, 2011, Lintasarta entered into agreements with WEB and PT Personel Alih Daya (a related party), for the procurement of equipment and infrastructure required for the construction of PLIKB, as agreed with the MOCIT-BTIP above, with total contract value amounting to Rp276,274 and Rp60,739, respectively.
As of March 31, 2012, Lintasarta has outstanding advances to WEB and PT Personal Alih Daya totalling Rp18,192 and Rp44,189 which are classified as part of advances for the current portion and long-term advances for the long-term portion, respectively.
i.
During 2008-2010, the Company entered into several agreements with, among other tower operator companies, PT Professional Telekomunikasi Indonesia (“Protelindo”), XL Axiata, Mitratel, PT Solusindo Kreasi Pratama, and PT Gihon Telekomunikasi Indonesia to lease part of spaces in their telecommunication towers and sites for an initial period of 10 years. The Company may extend the lease period for another 10 years, with additional lease fees based on the inflation rates in Indonesia.
Future minimum rentals payable under the operating lease agreements as of March 31, 2012, December 31, 2011 and January 1, 2011 / December 31, 2010 are as follows:
January 1,
2011 /
March 31,
December 31,
December 31,
201220112010
Within one year
109,440
97,522
119,310
After one year but not more than five years
547,133
488,183
477,243
More than five years
197,955
193,659
452,738
Total
854,528
779,364
1,049,291
Future minimum rentals payable under finance lease agreements as at March 31, 2012 is as follows:
Minimum
Present value
payments
of payments
Wtihin one year
109,122
72,309
After one year but not more than five years
581,986
361,016
More than five years
432,960
356,601
Total
1,124,068
789,926
Less amount representing finance charge
334,142
-
Present value of minimum lease payments
789,926
789,926
Current portion (presented as part of Other Current Financial Liabilities)
72,309
Long-term portion (presented as Obligations under Financial Lease)
717,617
Total
789,926
j.
The Company and IMM have committed to pay annual radio frequency fee over the 3G and BWA licenses period, provided the Company and IMM hold the 3G and BWA licenses. The amount of annual payment is based on the payment scheme set out in Regulations
No. 7/PER/M.KOMINFO/2/2006, No. 268/KEP/M.KOMINFO/9/2009 and No. 237/KEP/ M.KOMINFO/7/2009 dated February 8, 2006, September 1, 2009 and July 27, 2009, respectively, of the MOCIT. The Company and IMM paid the annual frequency fee for the 3G and BWA licenses totaling Rp333,594, Rp442,511 and Rp381,123 for the three-month period ended March 31, 2012 and the years ended December 31, 2011 and 2010, respectively.
31.
SIGNIFICANT AGREEMENTS AND COMMITMENTS (continued)
k.
On July 20, 2005, the Company obtained facilities from HSBC to fund the Company’s short-term working capital needs. The facilities agreement has been amended several times. On September 20, 2011, these facilities were further amended to extend the expiration date up to April 30, 2012 and change the interest rate and certain provisions in the agreement as follows:
·
Overdraft facility amounting to US$2,000 (including overdraft facility denominated in rupiah amounting to Rp17,000). Interest is charged on daily balances at 3.75% per annum and 6% per annum below the HSBC Best Lending Rate for the loan portions denominated in rupiah and U.S. dollar, respectively.
·
Revolving loan facility amounting to US$30,000 (including revolving loan denominated in rupiah amounting to Rp255,000). The loan matures within a maximum period of 180 days and can be drawn in tranches with minimum amounts of US$500 and Rp500 for loans denominated in U.S. dollar and rupiah, respectively. Interest is charged on daily balances at 2.25% per annum above the HSBC Cost of Fund Rate for the loans denominated either in rupiah or U.S. dollar.
·
The facilities are considered uncommitted facility based on guidelines No.12/516/DPNP/DPnP dated September 21, 2010 issued by the Central Bank of Indonesia; consequently, these facilities can be automatically cancelled by HSBC in the event that the Company’s credit collectibility declines to either substandard, doubtful or loss based on HSBC’s assessment pursuant to the general criteria set out by the Central Bank of Indonesia.
On March 27, 2012, the Company received the letter from HSBC to extend these facilities up to April 30, 2013.
a.
In 1994, the Company was appointed as a Financial Administrator (“FA”) by a consortium which was established to build and sell/lease Asia Pacific Cable Network (“APCN”) submarine cable in countries in the Asia-Pacific Region. As an FA, the Company collected and distributed funds from the sale of APCN’s Indefeasible Right of Use (“IRU”), Defined Underwritten Capacity (“DUC”) and Occasional Commercial Use (“OCU”).
The funds received from the sale of IRU, DUC and OCU and for upgrading the APCN cable did not belong to the Company and, therefore, were not recorded in the Company’s books. However, the Company managed these funds in separate accounts.
As of March 31, 2012, the balance of the funds (including interest earned) which are under the Company’s custody amounted to US$4,278. Besides receiving their share of the funds from the sale of IRU, DUC and OCU, the members of the consortium also received their share of the interest earned by the above funds.
b.
Other agreements made with Telkom are as follows:
·
Under a cooperation agreement, the compensation to Telkom relating to leased circuit/channel services, such as world link and bit link, is calculated at 15% of the Company’s collected revenues from such services.
The Company and Satelindo also lease circuits from Telkom to link Jakarta, Medan and Surabaya.
31.
SIGNIFICANT AGREEMENTS AND COMMITMENTS (continued)
·
In 1994, Satelindo entered into a land transfer agreement for the transfer of Telkom’s rights to use a 134,925-square meter land property located at Daan Mogot, West Jakarta, where Satelindo’s earth control station is currently situated. The land transfer agreement enables Satelindo to use the land for a period of 30 years from the date of the agreement, for a price equivalent to US$40,000 less Rp43,220. The term of the agreement may be extended based on mutual agreement.
The agreement was subsequently superseded by a land rental agreement dated December 6, 2001, generally under the same terms as those of the land transfer agreement.
·
In 1999, Lintasarta entered into an agreement with Telkom, whereby Telkom agreed to lease transponder to Lintasarta. This agreement has been amended several times, the latest amendment of which is based on the ninth amendment agreement dated May 24, 2010. Transponder lease expense charged to operations amounting to Rp5,286 and Rp6,119 in 2012 and 2011, respectively, is presented as part of “Operating Expenses - Cost of Services” in the consolidated statements of comprehensive income.
32.
TARIFF SYSTEM
a.
International telecommunications services
The service rates (“tariffs”) for overseas exchange carriers are set based on the international telecommunications regulations established by the International Telecommunications Union (“ITU”).
These regulations require the international telecommunications administrations to establish and revise, under mutual agreement, accounting rates to be applied among them, taking into account the cost of providing specific telecommunications services and relevant recommendations from the Consultative Committee on International Telegraph and Telephone (“CCITT”). The rates are divided into terminal shares payable to the administrations of terminal countries and, where appropriate, into transit shares payable to the administrations of transit countries.
The ITU also regulates that the monetary unit to be used, in the absence of special arrangements, shall be the Special Drawing Right (“SDR”) or the Gold Franc, which is equivalent to 1/3.061SDR. Each administration shall, subject to applicable national law, establish the charges to be collected from its customers.
The tariffs billed to domestic subscribers for international calls originating in Indonesia, also known as collection rates, are established in a decision letter of the MOC, which rates are generally higher than the accounting rates. During the period 1996 to 1998, the MOC made tariff changes effective January 1, 1997, March 15, 1998 and November 15, 1998.
Based on Decision Letter No. 09/PER/M.KOMINFO/02/06 dated February 28, 2006 of the MOCIT, the collection rates are set by tariff formula known as price cap formula which already considers customer price index starting January 1, 2007.
b.
Cellular services
The basic telephony tariffs for cellular mobile network service are set on the basis of Regulation No. 12/PER/M.KOMINFO/02/2006 dated February 28, 2006 of the MOCIT. Under this regulation, the cellular tariffs consist of the following:
·
Connection fee
·
Monthly charges
·
Usage charges
·
Additional facilities fee
32. TARIFF SYSTEM (continued)
b.
Cellular services (continued)
Cellular providers should implement the new tariffs referred to as “floor price”. For usage charges, the floor price should be the originating fee plus termination fee (total interconnection fee), while for connection fee and monthly charges, the floor price depends on the cost structure of each cellular provider.
In April 2008, the MOCIT issued Ministerial Decree No. 09/PER/M.KOMINFO/04/2008 about guidelines on calculating basic telephony service tariffs through cellular mobile network. Under this new Decree, the cellular providers should implement the new tariffs referred to as “price cap”. The types of tariffs for telecommunications services through cellular network consist of the following:
·
Tariff for basic telephony services
·
Tariff for roaming
·
Tariff for multimedia services
The retail tariffs should be calculated based on Network Element Cost, Activation Cost of Retail Services and Profit Margin.
The implementation of the new tariffs for a dominant operator has to be approved by the Government. A dominant operator is an operator that has revenue of more than 25% of the total industry revenue for a certain segment.
Starting May 2008, the Company has fully adopted the new cellular tariff system.
c.
Fixed telecommunications services
In February 2006, the MOCIT released Regulation No. 09/PER/M.KOMINFO/02/2006 regarding basic telephony tariffs for fixed network service.
In April 2008, the MOCIT issued Ministerial Decree No. 15/PER/M.KOMINFO/04/2008 about the guidelines on calculating basic telephony service tariffs through fixed network. This Decree also applies to fixed wireless access (FWA) network.
Under this new decree, the tariffs for basic telephony services and SMS (short message service) must be calculated based on the formula stated in the Decree. The fixed network providers should implement the new tariffs referred to as “price cap”.
Starting May 2008, the Company has fully adopted the new fixed telecommunications tariff system.
33.
INTERCONNECTION TARIFFS, USO, SPECTRUM FREQUENCY FEES AND REVENUE SHARING
Interconnection tariffs among domestic telecommunications operators are regulated by the MOC through its Decree No. KM.108/PR.301/MPPT-94 dated December 28, 1994. The Decree was updated several times with the latest update being Decree No. KM.37 Year 1999 (“Decree No. 37”) dated June 11, 1999. This Decree, along with Decree No. KM.46/PR.301/MPPT-98 (“Decree No. 46”) dated February 27, 1998, prescribed interconnection tariff structures between mobile cellular telecommunications network and Public Switched Telephone Network (“PSTN”), mobile cellular telecommunications network and international telecommunications network, mobile cellular telecommunications network and other domestic mobile cellular telecommunications network, international telecommunications network and PSTN, and between two domestic PSTNs.
64
These consolidated financial statements are originally issued in the Indonesian language.
PT INDOSAT Tbk AND SUBSIDIARIES
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
As of March 31, 2012 and for the Three-Month Period then Ended (Unaudited)
With Comparative Figures as of December 31, 2011 and
January 1, 2011 / December 31, 2010 (as Restated) (Unaudited)
and for the Three-Month Period Ended March 31, 2011 (as Restated) (Unaudited)
(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)
33.
INTERCONNECTION TARIFFS, USO, SPECTRUM FREQUENCY FEES AND REVENUE SHARING (continued)
Based on the Decree of the MOC, the interconnection tariff arrangements are as follows:
1.
Structure of Interconnection Tariffs
a. Between international and domestic PSTN
Based on Decree No. 37 dated June 11, 1999, the interconnection tariffs are as follows:
Tariff
Basis
Access charge
Rp850 per call
Number of successful outgoing
and incoming calls
Usage charge
Rp550 per paid minute
Duration of successful outgoing
and incoming calls
b.
Between domestic PSTN and another domestic PSTN
Interconnection charges for domestic telecommunications traffic (local and SLJJ) between a domestic PSTN and another domestic PSTN are based on agreements made by those domestic PSTN telecommunications carriers.
c.
Between cellular telecommunications network and domestic PSTN
Based on Decree No. 46 dated February 27, 1998 which became effective starting April 1, 1998, the interconnection tariffs are as follows :
(1)
Local Calls
For local calls from a cellular telecommunications network to a PSTN subscriber,
the cellular operator pays the PSTN operator 50% of the prevailing tariffs for local calls.
For local calls from the PSTN to a cellular subscriber, the cellular operator receives
the airtime charged by the PSTN operator to its subscribers.
(2)
SLJJ
For SLJJ which originates from the PSTN to a cellular subscriber, the cellular operator receives a portion of the prevailing SLJJ tariffs, which portion ranges from 15% of
the prevailing SLJJ tariffs plus the airtime charges in cases where the entire long-distance portion is not carried by the cellular operator, to 60% of the tariffs plus the airtime charges in cases where the entire long-distance portion is carried by the cellular operator.
For SLJJ which originates from a cellular telecommunications network to a PSTN subscriber, the cellular operator is entitled to retain a portion of the prevailing SLJJ tariffs, which portion ranges from 15% of the tariffs in cases where the entire long-distance portion is not carried by the cellular operator, to 60% of the tariffs in cases where the entire long-distance portion is carried by the cellular operator.
65
These consolidated financial statements are originally issued in the Indonesian language.
PT INDOSAT Tbk AND SUBSIDIARIES
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
As of March 31, 2012 and for the Three-Month Period then Ended (Unaudited)
With Comparative Figures as of December 31, 2011 and
January 1, 2011 / December 31, 2010 (as Restated) (Unaudited)
and for the Three-Month Period Ended March 31, 2011 (as Restated) (Unaudited)
(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)
33.
INTERCONNECTION TARIFFS, USO, SPECTRUM FREQUENCY FEES AND REVENUE SHARING (continued)
1.
Structure of Interconnection Tariffs (continued)
d.
Between cellular telecommunications network and another cellular telecommunications network
Based on Decree No. 46, the interconnection tariffs are as follows:
(1)
Local Calls
For local calls from a cellular telecommunications network to another, the “origin” cellular operator pays the airtime to the “destination” cellular operator. If the call is carried by
a PSTN, the cellular operator pays the PSTN operator 50% of the prevailing tariffs for local calls.
(2)
SLJJ
For SLJJ which originates from a cellular telecommunications network, the cellular operator is entitled to retain a portion of the prevailing SLJJ tariffs, which portion ranges from 15% of the tariffs in cases where the entire long-distance portion is not carried by
the cellular operator, to 85% of the tariffs in cases where the entire long-distance portion is carried by the cellular operator and the call is delivered to another cellular operator, and to 100% if the call is delivered to the same cellular operator.
e.
Between international PSTN and cellular telecommunications network
Starting in 1998, the interconnection tariffs for international cellular call traffic to/from overseas from/to domestic cellular subscribers, regardless of whether the traffic is made through domestic PSTN or not, is based on the same tariffs applied to traffic made through domestic PSTN as discussed in “a” above. However, as agreed mutually with the cellular telecommunications operators, the Company (including Satelindo until it was merged - Note 1e) still applied the original contractual sharing agreements regarding the interconnection tariffs until December 31, 2006 (Note34).
f.
Between international gateway exchanges
Interconnection charges for international telecommunications traffic between international gateway exchanges are based on agreements between international telecommunications carriers and international telecommunications joint ventures.
Decree No. 37 and Decree No. 46 were subsequently superseded by Decree No. 32 Year 2004 of the MOC which provides cost-based interconnection to replace the current revenue-sharing arrangement. Under the new Decree, the operator of the network on which calls terminate determines the interconnection charge to be received by it based on a formula mandated by the Government, which is intended to have the effect of requiring that operators charge for calls based on the cost of carrying such calls.
The effective date of the new Decree, which was originally set to start on January 1, 2005, was subsequently postponed until January 1, 2007 based on Regulation No. 08/PER/M.KOMINFO/02/2006 dated February 8, 2006 of the MOCIT (Note 34).
66
These consolidated financial statements are originally issued in the Indonesian language.
PT INDOSAT Tbk AND SUBSIDIARIES
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
As of March 31, 2012 and for the Three-Month Period then Ended (Unaudited)
With Comparative Figures as of December 31, 2011 and
January 1, 2011 / December 31, 2010 (as Restated) (Unaudited)
and for the Three-Month Period Ended March 31, 2011 (as Restated) (Unaudited)
(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)
33.
INTERCONNECTION TARIFFS, USO, SPECTRUM FREQUENCY FEES AND REVENUE SHARING (continued)
1.
Structure of Interconnection Tariffs (continued)
The implementation of interconnection billing between operators starts from the time they sign their interconnection agreements. All interconnection agreements will be based on Reference Interconnection Offer (“RIO”). All operators have to publish their RIO and a dominant operator is required to obtain an approval of its RIO from the Government.
In August 2006, the DGPT issued Decree No. 278/DIRJEN/2006, which approved the RIO of the Company and two other dominant telecommunications operators (Telkom and Telkomsel). This decree was implemented since January 2007 as agreed by all operators and approved by the Government. On April 11, 2008, the DGPT approved the new RIO for dominant operators (Telkom, Telkomsel and the Company). The DGPT requires all domestic operators to amend their interconnection agreements in line with the approved new RIO starting April 1, 2008. On April 1, 2008, the Company implemented the new interconnection tariffs based on the approved RIO.
However, on December 31, 2010, theBadan Regulasi Telekomunikasi Indonesia (BRTI or Indonesian Telecommunications Regulatory Bureau) issued letter No. 227/BRTI/XII/2010 regarding the implementation of new interconnection tariffs based on the implementation of cost-based interconnection fees, which will be used by all telecommunications operators effective January 1, 2011. The Company has adopted the new tariffs starting January 1, 2011.
On June 27, 2011, the MOCIT issued Regulation No.16/PER/M.KOMINFO/06/2011 regarding the amendment of Ministry of Transportation Decree No. 35 Year 2004 on implementation of local fixed wireless network with limited mobility, which encouraged the implementation of cost-based tariffs by all telecommunications operators effective July 1, 2011.
2.
USO and Spectrum Frequency Fees
On January 16, 2009, the Government issued Regulation No. 7 Year 2009 increasing the USO development contribution from 0.75% to 1.25% and decreasing the concession fee from 1% to 0.50% of annual gross revenue (after deducting bad debts and interconnection charges) effective January 1, 2009.
On December 13, 2010, the President of the Republic of Indonesia issued PP No.76/2010 regarding the amendment of PP No.7/2009 on types and tariffs of non-tax state income imposed by the MOCIT. This regulation affects the computation method and payment of the spectrum fee allocated to the Company (800 Mhz, 900 Mhz and 1,800 Mhz frequency bands).
3.
RevenueSharing
Revenue from access and usage charges from international telecommunications traffic with telecommunications networks owned by more than one domestic telecommunications carrier which is not regulated by Decree No. 08/PER/M.KOMINFO/02.2006, is to be proportionally shared with each carrier, which proportion is to be bilaterally arranged between the carriers.
67
These consolidated financial statements are originally issued in the Indonesian language.
PT INDOSAT Tbk AND SUBSIDIARIES
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
As of March 31, 2012 and for the Three-Month Period then Ended (Unaudited)
With Comparative Figures as of December 31, 2011 and
January 1, 2011 / December 31, 2010 (as Restated) (Unaudited)
and for the Three-Month Period Ended March 31, 2011 (as Restated) (Unaudited)
(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)
34.
INTERCONNECTION AGREEMENTS
The Company (including Satelindo and IM3 until they were merged - Note 1e) has interconnection arrangements with domestic and overseas operators. Some significant interconnection agreements are as follows:
1.
Telkom
The following are significant interconnection agreements/transactions with Telkom:
a.
Fixed telecommunications services
On September 23, 2005, the Company and Telkom signed an agreement regarding the interconnection of local, long-distance and international fixed networks. The principal matters covered by the agreement are as follows:
·
Interconnection between the Company’s and Telkom’s local, long-distance and international fixed networks enables the Company’s fixed telecommunications service subscribers to make or receive calls to or from Telkom’s subscribers or international gateways.
·
The Company’s and Telkom’s international services are accessible and continuously open to each other’s fixed networks.
·
The Company and Telkom are responsible for their respective telecommunications facilities.
·
The compensation arrangement for the services provided is based on interconnection tariffs determined by both parties.
·
Each party handles subscriber billing and collection for the other party’s international calls service used by the other party’s subscribers. Each party has to pay the other party 1% of the collections made by the other party, plus the billing process expenses which are fixed at Rp82 per record of outgoing call as compensation for billing processing. However, the collection and billing process expense was changed to “service charge”, which was computed at Rp1,250 per minute of outgoing call starting April 1, 2008. Based on the latest agreement, the service charge rate has been reduced to Rp1,200 per minute of outgoing call starting January 1, 2009.
On December 28, 2006, the Company entered into a memorandum of understanding
with Telkom applying the new interconnection rates under cost-based regime that were
effective starting January 1, 2007. This memorandum of understanding was replaced by the agreement dated December 18, 2007. This agreement was amended several times. The
latest amendment was dated December 20, 2011 to meet the requirement in the BRTI letter
No. 227/BRTI/XII/2010 dated December 31, 2010 regarding the implementation of the new interconnection tariffs in 2011. The Company has adopted the new tariffs starting January 1, 2011.
b.
Cellular Services
On December 1, 2005, the Company and Telkom signed an agreement regarding the interconnection between the Company’s cellular telecommunications network and Telkom’s fixed telecommunications network. Under this agreement, the interconnection between the Company’s cellular telecommunications network and Telkom’s fixed telecommunications network enables the Company’s cellular subscribers to make or receive calls to or from Telkom’s fixed telecommunications subscribers.
68
These consolidated financial statements are originally issued in the Indonesian language.
PT INDOSAT Tbk AND SUBSIDIARIES
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
As of March 31, 2012 and for the Three-Month Period then Ended (Unaudited)
With Comparative Figures as of December 31, 2011 and
January 1, 2011 / December 31, 2010 (as Restated) (Unaudited)
and for the Three-Month Period Ended March 31, 2011 (as Restated) (Unaudited)
(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)
34.
INTERCONNECTION AGREEMENTS (continued)
1.
Telkom (continued)
b.
Cellular Services (continued)
On December 28, 2006, the Company entered into a memorandum of understanding
with Telkom applying the new interconnection rates under cost-based regime that are effective starting January 1, 2007. This memorandum of understanding was replaced by an agreement dated December 18, 2007. This agreement was amended several times. The latest amendment was dated December 20, 2011 to meet the requirement in the BRTI letter No. 227/BRTI/XII/2010 dated December 31, 2010 regarding the implementation of new interconnection tariffs in 2011. The Company has adopted the new tariffs starting January 1, 2011.
2.
XL Axiata, PT Smartfren Telecom Tbk (previously PT Mobile-8 Telecom Tbk) (“Smartfren”) and Telkomsel
The principal matters covered by the agreements with these operators are as follows:
·
The Company’s and Satelindo’s international gateway exchanges are interconnected with the mobile cellular telecommunications operators’ networks to make outgoing or receive incoming international calls through the Company’s and Satelindo’s international gateway exchanges.
·
The Company and Satelindo receive, as compensation for the interconnection, a portion of
the cellular telecommunications operators’ revenues from the related services that are made through the Company’s and Satelindo’s international gateway exchanges.
·
Satelindo and IM3 also have an agreement with the above operators for the interconnection of Satelindo’s and IM3’s GSM mobile cellular telecommunications network with the above operators’ network, enabling the above operators’ customers to make calls/send SMS to or receive calls/SMS from Satelindo’s and IM3’s customers.
·
The agreements are renewable annually.
The Company (including Satelindo and IM3 until they were merged) and the above operators still continue their business under the agreements by applying the original compensation formula, except for interconnection fee.
On December 8, 27 and 28, 2006, the Company entered into a memorandum of understanding with each of Telkomsel, Smartfren and XL Axiata, respectively, applying the new interconnection rates under cost-based scheme effective January 1, 2007 to comply with Regulation No. 08/PER/M.KOMINFO/02/2006 of the MOCIT. The memoranda of understanding with Smartfren, XL Axiata and Telkomsel were subsequently replaced by agreements dated September 14, and December 17 and 19, 2007, respectively. The agreements with Smartfren and XL Axiata were amended on March 31, 2008, while the agreement with Telkomsel was amended on February 18, 2008. Subsequently, the agreements with Smartfren and XL Axiata were further amended on March 15, 2011 and March 3, 2011, respectively, while the agreement with Telkomsel was further amended on July 19, 2011, to meet the requirement in the BRTI letter No. 227/BRTI/XII/2010 dated December 31, 2010 regarding the implementation of new interconnection tariffs in 2011. The Company has adopted the new tariffs starting January 1, 2011.
69
These consolidated financial statements are originally issued in the Indonesian language.
PT INDOSAT Tbk AND SUBSIDIARIES
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
As of March 31, 2012 and for the Three-Month Period then Ended (Unaudited)
With Comparative Figures as of December 31, 2011 and
January 1, 2011 / December 31, 2010 (as Restated) (Unaudited)
and for the Three-Month Period Ended March 31, 2011 (as Restated) (Unaudited)
(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)
34.
INTERCONNECTION AGREEMENTS (continued)
2.
PT Bakrie Telecom Tbk (“Bakrie Telecom”)
The principal matters covered by the latest amendment of the agreement dated June 10, 2009 are related to interconnection of the Company’s mobile cellular network and international gateway exchanges to Bakrie Telecom’s network, including SLI 009 network. Subsequently, the agreement with Bakrie Telecom was further amended on February 9, 2011 to meet the requirement in the BRTI letter No. 227/BRTI/XII/2010 dated December 31, 2010 regarding the implementation of new interconnection tariffs in 2011. The Company has adopted the new tariffs starting January 1, 2011.
Net interconnection revenues (charges) from (to) major operators for the three-month periods ended March 31, 2012 and 2011 are as follows:
2012
2011
Telkom
31,072
39,699
Smartfren
2,354
3,142
XL Axiata
(19,474)
(29,151)
Telkomsel
(10,029)
(37,703)
Bakrie Telecom
(477)
(3,453)
Net revenues (charges)
3,446
(27,466)
35.
SEGMENT INFORMATION
The Group manages and evaluates its operations in three major reportable segments: cellular, fixed telecommunications and MIDI. The operating segments are managed separately because each offers different services/products and serves different markets. The Group operates in one geographical area only, so no geographical information on segments is presented.
Segment results and assets include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Expenditures for segment assets represent the total costs incurred during the period to acquire segment assets that are expected to be used for more than one year.
Consolidated information by industry segment follows:
Major Segments
Fixed
Segment
Cellular
Telecommunications
MIDI
Total
Three-month period ended March 31, 2012
Operating revenues
Revenues from external customers
4,079,811
224,926
672,255
4,976,992
Inter-segment revenues
-
-
152,848
152,848
Total operating revenues
4,079,811
224,926
825,103
5,129,840
Inter-segment revenues elimination
(152,848)
Operating revenues - net
4,976,992
Income
Operating income (loss)
662,691
(120,224)
91,061
633,528
Income tax benefit
24,034
Interest income
21,867
Financing cost
(469,029)
Loss on foreign exchange - net
(144,733)
Loss on change in fair value of derivatives - net
(42,140)
Others - net
15,588
Profit for the period
39,115
35.
SEGMENT INFORMATION (continued)
Major Segments
Fixed
Segment
Cellular
Telecommunications
MIDI
Total
Three-month period ended March 31, 2012
(continued)
Depreciation and amortization
1,359,760
151,825
192,594
1,704,179
As of March 31, 2012
Other Information
Segment assets
46,547,756
1,747,395
8,638,289
56,933,440
Unallocated assets
3,126,796
Inter-segment assets elimination
(7,911,792)
Assets - net
52,148,444
Segment liabilities
25,918,410
591,313
2,906,009
29,415,732
Unallocated liabilities
9,919,174
Inter-segment liabilities elimination
(6,223,225)
Liabilities - net
33,111,681
Capital expenditures
1,030,375
36,849
181,036
1,248,260
Three-month period ended March 31, 2011
Operating revenues
Revenues from external customers
3,960,583
322,428
590,999
4,874,010
Inter-segment revenues
-
-
151,837
151,837
Total operating revenues
3,960,583
322,428
742,836
5,025,847
Inter-segment revenues elimination
(151,837)
Operating revenues - net
4,874,010
Income
Operating income (loss)
706,445
(87,492)
86,036
704,989
Gain on foreign exchange - net
459,257
Interest income
24,531
Financing cost
(485,962)
Income tax expense
(193,406
)
Loss on change in fair value of
derivatives - net
(34,901
)
Others - net
23,794
Profit for the period
498,302
Depreciation and amortization
1,280,050
73,005
198,257
1,551,312
As of December 31, 2011
Other Information
Segment assets
45,932,612
2,057,272
8,497,30256,487,186
Unallocated assets
4,605,669
Inter-segment assets elimination
(7,928,774)
Assets - net
53,164,081
Segment liabilities
26,766,907
737,859
2,981,84030,486,606
Unallocated liabilities
9,949,269
Inter-segment liabilities elimination
(6,269,068)
Liabilities - net
34,166,807
Capital expenditures
5,585,641
227,755
771,1496,584,545
35.
SEGMENT INFORMATION (continued)
Major Segments
Fixed
Segment
Cellular
Telecommunications
MIDI
Total
As of January 1, 2011 / December 31, 2010
Other Information
Segment assets
47,349,629
2,111,778
8,548,97058,010,377
Unallocated assets
3,069,422
Inter-segment assets elimination
(7,802,547)
Assets - net
53,277,252
Segment liabilities
27,506,806
629,891
3,248,08031,384,777
Unallocated liabilities
9,762,239
Inter-segment liabilities elimination
(6,219,525)
Liabilities - net
34,927,491
Capital expenditures
4,787,383
209,776
844,8095,841,968
36.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
a.
Risk Management
The main risks arising from the Group’s financial instruments are interest rate risk, foreign exchange rate risk, equity price risk, credit risk and liquidity risk. The importance of managing these risks has significantly increased in light of the considerable change and volatility in both Indonesian and international financial markets. The Company’s Board of Directors reviews and approves the policies for managing these risks which are summarized below.
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Group’s exposure to the risk of changes in market interest rates relates primarily to its loans and bonds payable with floating interest rates.
The Company’s policies relating to interest rate risk are as follows:
(1)
Manage interest cost through a mix of fixed and variable rate debts. The Company evaluates the fixed to floating rate ratio of its loans and bonds payable in line with movements of relevant interest rates in the financial markets. Based on management’s assessment, new financing will be priced either on a fixed or floating rate basis.
(2)
Manage interest rate exposure on its loans and bonds payable by entering into interest rate swap contracts.
As of March 31, 2012, more than 65% of the Group’sdebts are fixed-rated.
Several interest rate swap contracts are entered into to hedge floating rate U.S. dollar debts. These contracts are accounted for as transactions not designated as hedges, wherein the changes in the fair value are credited or charged directly to the consolidated statement of comprehensive income for the period.
36.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
a.
Risk Management (continued)
Interest rate risk (continued)
The following table demonstrates the sensitivity to a reasonably possible change in interest rates, with all other variables held constant, of the Group’s consolidated statement of comprehensive income for the three-month period ended March 31, 2012 (through the impact on floating rate borrowings which is based on LIBOR for U.S. dollar borrowings and on JIBOR for rupiah borrowings).
Increase/decrease in basis points: U.S. dollar Rupiah | 28 36 |
Effect on consolidated profit for the period: | |
U.S. dollar Rupiah | US$184 (equivalent to Rp1,690) Rp3,248 |
Management conducted a survey among the Group’s banks to determine the outlook of the LIBOR and JIBOR interest rates until the Group’s next reporting date of June 30, 2012. The outlook is that the LIBOR and JIBOR interest rates may move 28 and 36 basis points, respectively, higher or lower than the interest rates at the end of the three-month period ended March 31, 2012.
If LIBOR interest rates were 28 basis points higher or lower than the market levels for the three-month period ended March 31, 2012, with all other variables held constant, the Group’s net comprehensive income for the period and equity would be Rp15,323 or Rp18,703 and Rp18,559,055 or Rp18,562,435, respectively, which are lower or higher than the actual results for the three-month period ended March 31, 2012, mainly due to the higher or lower interest expense on floating rate borrowings.
70
These consolidated financial statements are originally issued in the Indonesian language.
PT INDOSAT Tbk AND SUBSIDIARIES
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
As of March 31, 2012 and for the Three-Month Period then Ended (Unaudited)
With Comparative Figures as of December 31, 2011 and
January 1, 2011 / December 31, 2010 (as Restated) (Unaudited)
and for the Three-Month Period Ended March 31, 2011 (as Restated) (Unaudited)
(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)
36.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
a.
Risk Management (continued)
Interest rate risk (continued)
If JIBOR interest rates were 36 basis points higher or lower than the market levels for the three-month period March 31, 2012, with all other variables held constant, the Group’s net comprehensive income for the period and equity would be Rp13,765 or Rp20,261 and Rp18,557,497 or Rp18,563,993, respectively, which are lower or higher than the actual results for the three-month period ended March 31, 2012, mainly due to the higher or lower interest expense on floating rate borrowings.
Foreign exchange rate risk
Foreign exchange rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Group’s exposure to exchange rate fluctuations results primarily from U.S. dollar-denominated loans and bonds payable, accounts receivable, accounts payable and procurement payable.
To manage foreign exchange rate risks, the Company entered into several cross currency swap and currency forward contracts and other permitted instruments, if considered necessary. These contracts are accounted for as transactions not designated as hedges, wherein the changes in the fair value are credited or charged directly to the consolidated statement of comprehensive income for the period.
The Group’s accounts payable are primarily foreign currency net settlement payables to foreign telecommunications operators, while most of the Group’s accounts receivable are Indonesian rupiah-denominated collectibles from domestic operators.
To the extent the Indonesian rupiah depreciates further from the exchange rates in effect at
March 31, 2012, the Group’s obligations under such loans and bonds payable, accounts payable and procurement payable will increase in Indonesian rupiah terms. However, the increases in these obligations will be offset in part by increases in the values of foreign currency-denominated time deposits and accounts receivable. As of March 31, 2012, 11.91% of the Group’s U.S. dollar-denominated debts were insured from exchange rate risk by entering into several cross currency swap and currency forward contracts.
The following table shows the Group’s consolidated U.S. dollar-denominated assets and liabilities as of March 31, 2012:
U.S. Dollar
Rupiah*
Assets:
Cash and cash equivalents
52,622
483,069
Accounts receivable - trade
88,190
809,581
Derivative assets
4,014
36,852
Other current financial assets - net
238
2,182
Other current assets
15
139
Due from related parties
95
872
Other non-current financial assets - net
1,274
11,694
Total assets
146,448
1,344,389
36.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
a.
Risk Management (continued)
Foreign exchange rate risk (continued)
U.S. Dollar
Rupiah*
Liabilities:
Accounts payable - trade
23,566
216,336
Procurement payable
173,300
1,590,898
Accrued expenses
24,383
223,837
Deposits from customers
2,247
20,631
Derivative liabilities
15,904
145,999
Other current financial liabilities
6
59
Other current liabilities
6,331
58,119
Due to related parties
306
2,808
Loans payable (including current maturities)
631,370
5,795,974
Bonds payable (including current maturities)
650,000
5,967,000
Other non-current liabilities
8,730
80,144
Total liabilities
1,536,143
14,101,805
Net liabilities position
1,389,695
12,757,416
*
The exchange rate used to translate the U.S. dollar amounts into rupiah was Rp9,180 to US$1 (in full amounts) as published by the Indonesian Central Bank as of March 31, 2012.
The following table demonstrates the sensitivity to a reasonably possible change in the U.S. dollar exchange rate, with all other variables held constant, of the Group’s consolidated statement of comprehensive income for the three-month period ended March 31, 2012:
Change in U.S. dollar exchange rate | 0.52% | |
Effect on consolidated profit for the period | (50,029) |
Management conducted a survey among the Group’s banks to determine the outlook of the U.S. dollar exchange rate until the Group’s next reporting date of June 30, 2012. The outlook is that the U.S. dollar exchange rate may strengthen by 0.52% as compared to the exchange rate at March 31, 2012.
If the U.S. dollar exchange rate strengthens by 0.52% as compared to the exchange rate as of March 31, 2012, with all other variables held constant, the Group’s net comprehensive income for the three-month period ended March 31, 2012 would be (Rp33,016) which is lower than the actual results mainly due to the consolidated net foreign exchange loss on the translation of U.S. dollar-denominated net liabilities.
71
These consolidated financial statements are originally issued in the Indonesian language.
PT INDOSAT Tbk AND SUBSIDIARIES
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
As of March 31, 2012 and for the Three-Month Period then Ended (Unaudited)
With Comparative Figures as of December 31, 2011 and
January 1, 2011 / December 31, 2010 (as Restated) (Unaudited)
and for the Three-Month Period Ended March 31, 2011 (as Restated) (Unaudited)
(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)
36.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
a.
Risk Management (continued)
Equity price risk
The Group’s long-term investments consist primarily of minority investment in the equity of private Indonesian companies and equity of foreign companies. With respect to the Indonesian companies in which the Group has investments, the financial performance of such companies may be adversely affected by the economic conditions in Indonesia.
Credit risk
Credit risk is the risk that the Group will incur a loss arising from its customers, clients or counterparties that fail to discharge their contractual obligations. There are no significant concentrations of credit risk. The Group manages and controls this credit risk by setting limits on the amount of risk it is willing to accept for individual customers and by monitoring exposures in relation to such limits.
The Group trades only with recognized and creditworthy third parties. It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis to reduce the exposure to bad debts.
The table below shows the maximum exposure to credit risk for the components of the consolidated statement of financial position as of March 31, 2012:
Maximum
Exposure (1)
Loans and receivables:
Cash and cash equivalents
1,860,054
Accounts receivable
Trade - net
1,575,849
Others - net
11,001
*
Other current financial assets - net
30,139
Financial lease receivables
95,537
Due from related parties - net
8,504
Other non-current financial assets - others
88,859
Held-for-trading:
Cross currency swaps
14,922
Currency forward
21,931
Available-for-sale investments:
Other non-current financial assets -
other long-term investments - net
2,730
Total
3,709,526
*
excluding unpaid interest compensation from the Tax Office of Rp60,674 (Note 16)
(1) There are no collaterals held or other credit enhancements or offsetting arrangements that affect this maximum exposure.
Liquidity risk
Liquidity risk is defined as the risk when the cash flow position of the Group indicates that the short-term revenue is not enough to cover the short-term expenditure.
The Group’s liquidity requirements have historically arisen from the need to finance investments and capital expenditures related to the expansion of its telecommunications business. The Group’s telecommunications business requires substantial capital to construct and expand mobile and data network infrastructure and to fund operations, particularly during the network development stage.
36.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
a.
Risk Management (continued)
Liquidity risk (continued)
Although the Group has substantial existing network infrastructure, the Group expects to incur additional capital expenditures primarily in order to focus cellular network development in areas it anticipates will be high-growth areas, as well as to enhance the quality and coverage of its existing network.
In the management of liquidity risk, the Group monitors and maintains a level of cash and cash equivalents deemed adequate to finance the Group’s operations and to mitigate the effects of fluctuation in cash flows. The Group also regularly evaluates the projected and actual cash flows, including its loan maturity profiles, and continuously assesses conditions in the financial markets for opportunities to pursue fund-raising initiatives. These activities may include bank loans, debt capital and equity market issues.
The table below summarizes the maturity profile of the Group’s financial liabilities based on contractual undiscounted payments.
Expected maturity as of March 31,
Discount/
debtCarrying
issuancevalue
costs andas of
2017
consent March
and
solicitation31,
2013
2014
2015
2016
thereafter
Total
fees2012
Short-term loan
1,500,000
-
-
-
-
1,500,000(669
)1,499,331
Accounts payable - trade
242,092
-
-
-
-
242,092
-242,092
Procurement payable
3,049,936
-
-
-
-
3,049,936-3,049,936
Accrued expenses
1,543,199
-
-
-
-
1,543,199
-1,543,199
Deposits from customers
42,995
-
-
-
-
42,995
-42,995
Derivative liabilities
145,999
-
-
-
-
145,999-145,999
Other current financial liabilities
88,850
-
-
-
-
88,850
-88,850
Due to related parties
-
15,068
-
-
-
15,068-15,068
Obligations under finance lease
-
107,193
94,297
82,955
433,172
717,617
-717,617
Loans payable
In rupiah
2,014,983
1,734,300
-
-
-
3,749,283(12,111
)3,737,172
In U.S. dollar
1,296,163
2,118,905
635,203
635,203
1,110,499
5,795,973(132,257
)5,663,716
Total loans payable
3,311,146
3,853,205
635,203
635,203
1,110,499
9,545,256(144,368
)9,400,888
Bonds payable
In rupiah
-
1,330,000
2,358,000
320,000
2,342,000
6,350,000(19,581
)6,330,419
In U.S. dollar
-
-
-
-
5,967,000
5,967,000(82,164
)5,884,836
Total bonds payable
-
1,330,000
2,358,000
320,000
8,309,000
12,317,000(101,745
)12,215,255
Total
9,924,217
5,305,466
3,087,500
1,038,158
9,852,671
29,208,012
(246,782
)28,961,230
72
These consolidated financial statements are originally issued in the Indonesian language.
PT INDOSAT Tbk AND SUBSIDIARIES
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
As of March 31, 2012 and for the Three-Month Period then Ended (Unaudited)
With Comparative Figures as of December 31, 2011 and
January 1, 2011 / December 31, 2010 (as Restated) (Unaudited)
and for the Three-Month Period Ended March 31, 2011 (as Restated) (Unaudited)
(Expressed in millions of rupiah and thousands of U.S. dollar, except share and tariff data)
36.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
b.
Capital Management
The Group aims to achieve an optimal capital structure in pursuit of its business objectives, which include maintaining healthy capital ratios and strong credit ratings, and maximizing stockholder value.
Some of the Group’s debt instruments contain covenants that impose maximum leverage ratios. In addition, the Company’s credit ratings from the international credit ratings agencies are based on its ability to remain within certain leverage ratios. The Group has complied with all externally imposed capital requirements.
Management monitors capital using several financial leverage measurements such as debt-to-equity ratio. The Group’s objective is to maintain its debt-to-equity ratio at a maximum of 2.50 as of March 31, 2012.
As of March 31, 2012, the Group’s debt-to-equity ratio accounts are as follows:
Loans and
Guaranteed
Bonds Payables
Notes Due 2020
Short-term loan - gross
1,500,000
1,500,000
Loans and bonds payable - including current
maturities - gross
21,862,256
21,862,256
Obligation under finance lease
-
789,926
Total debts
23,362,256
24,152,182
Total equity
19,036,763
19,036,763
Debt-to-equity ratio
1.23
1.27
c.
Collateral
The loans of Lintasarta, a subsidiary, which were obtained from CIMB Niaga, are collateralized by all equipment (Notes 8 and 18i) purchased by Lintasarta from the proceeds of the credit facilities. There are no other significant terms and conditions associated with the use of collateral.
The Company did not hold any collateral as of March 31, 2012.
37. EVENTS AFTER REPORTING PERIOD
a.
On April 3, 2012, the Company entered into an agreement of "Perjanjian Pendahuluan Pencatatan Efek" with the Indonesian Stock Exchange with regard to the Company’s plan to issue Rp2,000,000 conventional bonds and Rp500,000 sukuk ijarah bonds.
b.
On April 13, 2012, the Company entered into a trustee agreement with BRI, an agreement of“Perjanjian Penjaminan Emisi Obligasi dan Sukuk” with Appointed Underwriters, an agreement of“Perjanjian Agen Pembayaran” and“Perjanjian Pendaftaran Obligasi dan Sukuk” with the Indonesian Central Securities Depository (KSEI) in relation to the plan of the Company to issue Rp2,000,000 conventional bonds and Rp500,000 sukuk ijarah bonds.
c.
On April 16, 2012, the Company made the first registration to BAPEPAM-LK in connection with the Company’s plan to issue Rp2,000,000 conventional bonds and Rp500,000 sukuk ijarah bonds.
d.
On April 30, 2012, the Company made a press release informing the Company’s plan to make early repayment of Second Indosat Bonds amounting to Rp200,000 on November 6, 2012.
e.
On April 30, 2012, the Company received rating report from Fitch for Indosat Bonds to be released in 2012 at BBB (stable outlook).
f.
As of May 3, 2012, the prevailing exchange rate of the rupiah to U.S. dollar is Rp9,196 to US$1 (in full amounts), while as of March 31, 2012, the prevailing exchange rate was Rp9,180 to US$1 (in full amounts). Using the exchange rate as of May 3, 2012, the Group suffered from foreign exchange loss amounting to approximately Rp22,235 (excluding the effect of revaluing derivative contracts on May 3, 2012) on the foreign currency liabilities, net of foreign currency assets, as of March 31, 2012 (Note 36).
The translation of the foreign currency liabilities, net of foreign currency assets, should not be construed as a representation that these foreign currency liabilities and assets have been, could have been, or could in the future be, converted into rupiah at the prevailing exchange rate of the rupiah to U.S. dollar as of March 31, 2012 or at any other rate of exchange.
The commitments for the capital expenditures denominated in foreign currencies as of
March 31, 2012 as disclosed in Note 31a are approximately Rp762,124 if translated at the prevailing exchange rate as of May 3, 2012.
73
