PT. YOKOGAWA INDONESIA

Transcription

1 FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2015 AND INDEPENDENT AUDITORS' REPORT

2 TABLE OF CONTENTS INDEPENDENT AUDITORS' REPORT 1 Page FINANCIAL STATEMENTS - For the year ended March 31, 2015 Statement of Financial Position 2 Statement of Comprehensive Income 4 Statement of Changes in Equity 5 Statement of Cash Flows 6 Notes to Financial Statements 7

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4 STATEMENT OF FINANCIAL POSITION MARCH 31, 2015 ASSETS March 31, March 31, Notes CURRENT ASSETS Cash on hand and in banks 5 3,276,964 1,650,634 Trade accounts receivable 6 Related parties , ,777 Third parties - net 7,526,730 7,487,458 Unbilled revenues 7 7,366,220 7,641,435 Other accounts receivable 5,277 15,597 Inventories 8 805, ,884 Prepaid value added tax 234, ,404 Prepaid expenses and advances 278, ,330 Total Current Assets 19,931,922 18,359,519 NONCURRENT ASSETS Claim for tax refund 9 20,845 24,062 Deferred tax assets , ,164 Property and equipment - net of accumulated depreciation of 560,477 in 2015, 843,620 in ,312, ,783 Refundable deposits 419, ,934 Total Noncurrent Assets 2,199,774 1,005,943 TOTAL ASSETS 22,131,696 19,365,462 See accompanying notes to financial statements which are an integral part of the financial statements

5 STATEMENT OF FINANCIAL POSITION MARCH 31, 2015 (Continued) March 31, March 31, Notes LIABILITIES AND EQUITY CURRENT LIABILITIES Loan from a related party 11,24 3,000,000 2,000,000 Trade accounts payable 12 Related parties 24 2,628,116 2,480,438 Third parties 2,068,327 1,981,473 Other accounts payable and accrued expenses 13 2,602,195 1,684,340 Taxes payable , ,400 Unearned revenues 15 2,075,848 1,295,043 Advances received 83, ,945 Total Current Liabilities 12,560,014 9,811,639 NONCURRENT LIABILITIES Employee benefit obligations 16 1,150,512 1,227,183 Other noncurrent liability 32,120 - Total Noncurrent Liabilities 1,182,632 1,227,183 EQUITY Capital stock - Rp 2,160,000 or 1,000 par value per share Authorized, issued and fully paid - 2,300 shares 17 2,300,000 2,300,000 Retained earnings Appropriated 18 4,600 4,600 Unappropriated 6,084,450 6,022,040 Total Equity 8,389,050 8,326,640 TOTAL LIABILITIES AND EQUITY 22,131,696 19,365,462 See accompanying notes to financial statements which are an integral part of the financial statements

6 STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED MARCH 31, 2015 Notes NET REVENUES 19,24 33,458,454 31,587,181 COST OF GOODS SOLD 20,24 25,526,592 23,344,637 GROSS PROFIT 7,931,862 8,242,544 Selling, general and administrative expenses 21 (4,383,018) (4,546,710) Foreign exchange loss - net (84,113) (468,928) Interest expense (35,410) (5,560) Interest income 6,886 5,643 Loss on sale of property and equipment (4,036) - Others - net 4,204 99,012 PROFIT BEFORE TAX 3,436,375 3,326,001 TAX EXPENSE 22 (1,010,741) (962,752) PROFIT FOR THE YEAR AND TOTAL COMPREHENSIVE INCOME 2,425,634 2,363,249 See accompanying notes to financial statements which are an integral part of the financial statements

7 STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED MARCH 31, 2015 Retained earnings Notes Capital stock Appropriated Unappropriated Total Balance as of April 1, ,18 2,300,000 4,600 6,177,278 8,481,878 Total comprehensive income - - 2,363,249 2,363,249 Cash dividends (2,518,487) (2,518,487) Balance as of March 31, ,300,000 4,600 6,022,040 8,326,640 Total comprehensive income - - 2,425,634 2,425,634 Cash dividends (2,363,223) (2,363,223) Balance as of March 31, ,300,000 4,600 6,084,451 8,389,051 See accompanying notes to financial statements which are an integral part of the financial statements

8 STATEMENT OF CASH FLOWS FOR THE YEAR ENDED MARCH 31, 2015 CASH FLOWS FROM OPERATING ACTIVITIES Profit before tax 3,436,375 3,326,001 Adjustments for: Depreciation 172, ,936 Interest expense 35,410 5,560 Interest income (6,886) (5,643) Unrealized foreign exchange gain (168,408) (196,938) Provision for (reversal of) impairment loss 22,296 (20,980) Provision for employee benefits 217, ,484 Loss on sale of property and equipment 4,036 - Operating cash flows before changes in working capital 3,713,202 3,523,420 Changes in working capital: Trade accounts receivable (139,613) (2,509,680) Unbilled revenues 299,715 (2,282,602) Other accounts receivable 10,320 32,317 Inventories (236,548) 146,215 Prepaid expenses and advances 26,806 (145,252) Prepaid value added tax 95,451 (109,216) Trade accounts payable 234,532 1,700,080 Other accounts payable and accrued expenses 667, ,690 Taxes payable (167,486) 24,099 Unearned revenues 756, ,399 Advances received (24,352) (59,024) Other noncurrent liability 32,120 - Cash generated from operations 5,268, ,446 Post-employment benefits paid (122,740) (29,093) Corporate income tax paid (1,001,663) (1,028,199) Net Cash Generated from (Used in) Operating Activities 4,143,875 (262,846) CASH FLOWS FROM INVESTING ACTIVITIES Interest received 6,886 5,643 Acquisitions of property and equipment (976,460) (187,346) Proceeds from sale of property and equipment 23,175 - Refundable deposits (172,513) (135,288) Net Cash Used in Investing Activities (1,118,912) (316,991) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from loan 4,000,000 2,000,000 Payment of loan (3,000,000) - Interest paid (35,410) (5,560) Payment of cash dividends (2,363,223) (2,518,487) Net Cash Used in Financing Activities (1,398,633) (524,047) NET INCREASE (DECREASE) IN CASH ON HAND AND CASH IN BANKS 1,626,330 (1,103,884) CASH ON HAND AND IN BANKS AT BEGINNING OF YEAR 1,650,634 2,754,518 CASH ON HAND AND IN BANKS AT END OF YEAR 3,276,964 1,650,634 See accompanying notes to financial statements which are an integral part of the financial statements

9 AS OF MARCH 31, 2015 AND FOR THE YEAR ENDED 1. GENERAL PT. Yokogawa Indonesia (the Company) was established within the framework of the Foreign Capital Investment Law No. 1 year 1967 and Law No. 11 year 1970 based on deed No. 1 dated August 1, 1994 of Sutjipto SH, notary in Jakarta. The deed of establishment was approved by the Minister of Justice of the Republic of Indonesia in his decision letter No. C HT Th.95 dated November 2, 1995 and was published in State Gazette No. 7 dated January 23, 1996, Supplement No The Articles of Association has been amended several times, including the changes to comply with Law No. 40 year 2007 on Limited Liability Company. The amended Articles of Association was notarized by deed No. 6 dated November 14, 2008 of Hasnah, SH, notary public in Jakarta, and was approved by the Minister of Law and Human Rights of the Republic of Indonesia in his decision letter No. AHU AH Tahun 2009 dated May 7, The Company s head office is located at Plaza Oleos, 3 rd floor, Suite A-H, Jl. T.B. Simatupang Kav. 53, South Jakarta, with representative offices at Pekanbaru, Balikpapan, Cilegon and Surabaya. In accordance with article 3 of the Company s Articles of Association, the scope of its activities is mainly to engage in general import, trading and services. Currently, the Company operates in export and import, trading and acts as main distributor and sole agent of Yokogawa s industrial control system equipment and the related engineering, repairs and maintenance services for such control system. The Company is one of the group of companies owned by Yokogawa Electric Corporation, Japan. As of March 31, 2015 and 2014, the Company had a total number of employees of 210 and 188, respectively. At March 31, 2015 and 2014, the Company s management consists of the following: Commissioner : Mr. Makoto Otake Mr. Makoto Otake President Director : Mr. Naoki Nakamura Mr. Toshinari Miyamoto Directors : Mr. Sudarto Ramli Mr. Sudarto Ramli Mr. Tee Chee Teng Mr. Tee Chee Teng Mr. Ichsan Gaffar Mr. Ichsan Gaffar 2. ADOPTION OF NEW AND REVISED STATEMENTS OF FINANCIAL ACCOUNTING STANDARDS ( PSAK ) AND INTERPRETATIONS OF PSAK ( ISAK ) a. Interpretations effective in the current year Effective for periods beginning on or after January 1, 2014 are ISAK 27 Transfer of Assets from Customers, ISAK 28 Termination of Financial Liabilities with Equity Instruments, and ISAK 29 Stripping Cost in the Production Phase of a Surface Mine. Their adoption has not had any significant impact on the amounts reported in these financial statements but may impact the accounting for future transaction or arrangements

10 b. Standards and interpretation in issue not yet adopted The following standards and interpretation are effective for periods beginning on or after January 1, 2015, with early application not permitted: PSAK 1 (revised 2013), Presentation of Financial Statements The amendments to PSAK 1 introduce new terminology for the statement of comprehensive income. Under the amendments to PSAK 1, the statement of comprehensive income is renamed as a statement of profit or loss and other comprehensive income. The amendments to PSAK 1 retain the option to present profit or loss and other comprehensive income in either a single statement or in two separate but consecutive statements. However, the amendments to PSAK 1, require additional disclosures to be made in the other comprehensive income section such that items of other comprehensive income are grouped into two categories: (1) items that will not be reclassified subsequently to profit or loss; and (2) items that may be reclassified subsequently to profit or loss when specific conditions are met. PSAK 24 (revised 2013), Employee Benefits The amendments to PSAK 24 change the accounting for defined benefit plans and termination benefits. The most significant change relates to the accounting for changes in defined benefit obligations and plan assets. The amendments require the recognition of changes in defined benefit obligations and in fair value of plan assets when they occur, and hence eliminate the 'corridor approach' permitted under the previous version of PSAK 24 and accelerate the recognition of past service costs. The amendments require all actuarial gains and losses to be recognised immediately through other comprehensive income in order for the net pension asset or liability recognised in the statement of financial position to reflect the full value of the plan deficit or surplus. The application of PSAK 1 will impact the presentation of the Other Comprehensive Income items of the Company financial statements. The application of the amendments to PSAK 24 will have impact on the amounts reported in respect of the Company s defined benefit plans. However, the management has not yet performed a detailed analysis of the impact of the application of these standards and hence has not yet quantified the extent of the impact. The following standards are also effective for period beginning on or after January 1, 2015: PSAK 4 (revised 2013), Separate Financial Statements PSAK 15 (revised 2013), Investments in Associates and Joint Ventures PSAK 46 (revised 2014), Income Taxes PSAK 48 (revised 2014), Impairment of Asset PSAK 50 (revised 2014), Financial Instrument: Presentation PSAK 55 (revised 2014), Financial Instrument: Recognition and Measurement PSAK 60 (revised 2014), Financial Instrument: Disclosure PSAK 65, Consolidated Financial Statements PSAK 66, Joint Arrangements PSAK 67, Disclosures of Interests in Other Entities PSAK 68, Fair Value Measurements ISAK 26, Reassessment of Embedded Derivatives As of the issuance date of the financial statements, the effect of adoption of these standards and interpretations on the financial statements is not yet known nor reasonably estimated by management

11 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES a. Statement of Compliance The financial statements have been prepared in accordance with Indonesian Financial Accounting Standards. These financial statements are not intended to present the financial position, results of operations and cash flows in accordance with accounting principles and reporting practices generally accepted in other countries and jurisdictions. b. Financial Statement Presentation The financial statements, except for the statements of cash flows, are prepared under the accrual basis of accounting. The reporting currency used in the preparation of the financial statements is the U.S. Dollar, while the measurement basis is the historical cost, except for certain accounts which are measured on the bases described in the related accounting policies. The statements of cash flows are prepared using the indirect method with classifications of cash flows into operating, investing and financing activities. c. Foreign Currency Transactions and Balances The books of accounts of the Company are maintained in U.S. Dollar, the currency of the primary economic environment in which the Company operates (its functional currency). Transactions during the year involving foreign currencies are recorded at the rates of exchange prevailing at the time the transactions are made. At reporting date, monetary assets and liabilities denominated in foreign currencies are adjusted to reflect the rates of exchange prevailing at that date. The resulting gains or losses are credited or charged to profit or loss. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. d. Transaction with Related Parties A related party is a person or entity that is related to the Company (the reporting entity): a. A person or a close member of that person's family is related to the reporting entity if that person: i. has control or joint control over the reporting entity; ii. has significant influence over the reporting entity; or iii. is a member of the key management personnel of the reporting entity or of a parent of the reporting entity. b. An entity is related to the reporting entity if any of the following conditions applies: i. The entity, and the reporting entity are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others). ii. One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member). iii. Both entities are joint ventures of the same third party. iv. One entity is a joint venture of a third entity and the other entity is an associate of the third entity. v. The entity is a post-employment benefit plan for the benefit of employees of either the reporting entity, or an entity related to the reporting entity. If the reporting entity is itself such a plan, the sponsoring employers are also related to the reporting entity. vi. The entity is controlled or jointly controlled by a person identified in (a). vii. A person identified in (a) (i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity)

12 All transactions with related parties, whether or not made at similar terms and conditions as those done with third parties, are disclosed in the financial statements. e. Financial Assets All financial assets are recognised and derecognised on trade date where the purchase or sale of a financial asset is under a contract whose terms require delivery of the financial asset within the timeframe established by the market concerned, and are initially measured at fair value plus transaction costs, except for those financial assets classified as at fair value through profit or loss, which are initially measured at fair value. The Company s financial assets are classified as loans and receivables. Loans and Receivables Cash in banks, receivable from customers, unbilled revenues, other receivables and refundable deposits that have fixed or determinable payments that are not quoted in an active market are classified as loans and receivables. Loans and receivables are measured at amortized cost using the effective interest method less impairment. Interest is recognized by applying the effective interest rate method, except for short-term receivables when the recognition of interest would be immaterial. Effective Interest Method The effective interest method is a method of calculating the amortised cost of a financial instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial instrument, or, where appropriate, a shorter period to the net carrying amount on initial recognition. Income is recognized on an effective interest basis. Impairment of Financial Assets Financial assets, are assessed for indicators of impairment at each reporting date. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been impacted. The evidence of impairment could include: significant financial difficulty of the issuer or counterparty; or default or delinquency in interest or principal payments; or it becoming probable that the borrower will enter bankruptcy or financial re-organization. For certain categories of financial asset, such as receivables, assets that are assessed not to be impaired individually are, in addition, assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of receivables could include the Company s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period, as well as observable changes in national or local economic conditions that correlate with default on receivables

13 For financial assets carried at amortised cost, the amount of the impairment is the difference between the asset s carrying amount and the present value of estimated future cash flows, discounted at the financial asset s original effective interest rate. The carrying amount of the financial asset is reduced through the use of an allowance account. When a receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognized in profit or loss. If in a subsequent period, the amount of the impairement loss decreases and the decrease can be related objectively to an event occuring after the impairment was recognized, the previously recognized impairment loss is reversed through profit or loss to extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortized cost would have been had the impairment not been recognized. Derecognition of Financial Assets The Company derecognizes a financial asset when, and only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognizes its retained interest in the asset and an associated liability for amounts it may have to pay. If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognize the financial asset and also recognizes a collateralised borrowing for the proceeds received. On derecognition of financial asset in its entirety, the difference between the asset s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognized in other comprehensive income and accumulated in equity is recognized in profit or loss. On derecognition of financial asset other than its entirety (e.g., when the Company retains an option to repurchase part of a transferred asset), the Company allocates the previous carrying amount of the financial asset between the part it continues to recognize under continuing involvement, and the part it no longer recognizes on the basis of the relative fair values of those parts on the date of the transfer. The difference between the carrying amount allocated to the part that is no longer recognized and the sum of the consideration received for the part no longer recognized and any cumulative gain or loss allocated to it that had been recognized in other comprehensive income is recognized in profit or loss. A cumulative gain or loss that had been recognized in other comprehensive income is allocated between the part that continues to be recognized and the part that is no longer recognized on the basis of the relative fair values of those parts. f. Financial Liabilities and Equity Instruments Classification as debt or equity Financial liabilities and equity instruments issued by the Company are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument

14 Equity instruments An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. Equity instruments are recorded at the proceeds received, net of direct issue costs. Financial liabilities The Company s financial liabilities are classified as at amortized cost. Trade and other payables, loan from a related party, accrued expenses and other non-current liability are initially measured at fair value, net of transaction costs, and are subsequently measured at amortised cost, using the effective interest rate method, with interest expense recognized on an effective yield basis. Derecognition of financial liabilities The Company derecognizes financial liabilities when, and only when, the Company s obligations are discharged, cancelled or they expire. The difference between the carrying amount of the financial liability derecognized and the consideration paid and payable is recognized in profit or loss. g. Netting of Financial Assets and Financial Liabilities The Company only offsets financial assets and liabilities and presents the net amount in the statement of financial position where it: currently has a legal enforceable right to set off the recognized amount; and intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously. h. Inventories Inventories are stated at cost or net realizable value, whichever is lower. Cost is determined using the average method. Net realizable value represents the estimated selling price for inventories less all estimated cost of completion and costs necessary to make the sale. i. Prepaid Expenses Prepaid expenses are amortized over their beneficial periods using the straight-line method. j. Property and Equipment Property and equipment held for use in the supply of goods or services, or for administrative purposes, are stated at cost less accumulated depreciation. Depreciation is recognized so as to write-off the cost of assets less residual value using the straight-line method based on the estimated useful lives of the assets as follows: Years Leasehold improvement 5 Demo/test equipment and tools 2-5 Office equipment, furniture and fixture 3-5 Motor vehicles

15 The estimated useful lives, residual values and depreciation method are reviewed at each year end, with the effect of any changes in estimate accounted for on a prospective basis. The cost of maintenance and repairs is charged to operations as incurred. Other costs incurred subsequently to add to, replace part of, or service an item of property and equipment, are recognized as asset if, and only if, it is probable that future economic benefits associated with the item will flow to the entity and the cost of the item can be measured reliably. When assets are retired or otherwise disposed of, their carrying values are removed from the accounts and any resulting gain or loss is reflected in the profit or loss. k. Impairment of Non-Financial Asset At reporting dates, the Company reviews the carrying amount of non-financial assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash generating unit to which the asset belongs. Estimated recoverable amount is the higher of fair value less cost to sell and value in use. In assessing value in use, the estimated 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 for which the estimates of future cash flows have not been adjusted. If the recoverable amount of the non-financial asset (cash generating unit) is less than its carrying amount, the carrying amount of the asset (cash generating unit) is reduced to its recoverable amount and an impairment loss is recognized immediately against earnings. Accounting policy for impairment of financial assets is discussed in Note 3e. l. Provision Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that the Company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows. When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognized as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably. m. Leases Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases

16 Operating lease payments are recognized as an expense on a straight-line basis over the lease term, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased assets are consumed. Contingent rentals arising under operating leases are recognized as an expense in the period in which they are incurred. In the event that lease incentives are received to enter into operating leases, such incentives are recognized as a liability. The aggregate benefit of incentives is recognized as a reduction of rental expense on a straight-line basis, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. n. Revenue and Expense Recognition Net revenue represents revenue earned from the sales of products and services and excludes value added tax. Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for estimated customer returns, rebates and other similar allowances. Sale of Goods Revenue from sale of goods is recognized when all of the following conditions are satisfied: The Company has transferred to the buyer the significant risks and rewards of ownership of the goods; The Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold; The amount of revenue can be measured reliably; It is probable that the economic benefits associated with the transaction will flow to the Company; and The cost incurred or to be incurred in respect of the transaction can be measured reliably. Rendering of Services Revenue from engineering projects is recognized on a percentage judgment of completion basis as soon as it can be estimated reliably. The stage of completion is measured by reference to cost incurred to date compared to estimated total costs for each contract. The full amount of any anticipated loss, including any loss related to future work on contract, is recognized in the period in which the loss is identified. In determining cost incurred, any costs relating to the future activity of a project are excluded from cost of revenue and recorded as work in progress. Unbilled revenues represent the net difference between the revenue recognized related to on going projects at reporting date and the total amount billed to the customers. Unearned revenues represent progress billings in excess of revenue recognized. Expenses Expenses are recognized when incurred

17 o. Employee Benefits Post-employment Benefits The Company provides defined post-employment benefits as required under Labor Law No. 13/2003 (the Labor Law ). The cost of providing post-employment benefits is determined using the Projected Unit Credit Method. The accumulated unrecognized actuarial gains or losses that exceed 10% of the present value of the Company s defined benefit obligations is recognized on a straight-line basis over the expected average remaining working lives of the participating employees. Past service cost is recognized immediately to the extent that the benefits are already vested, and otherwise is amortized on a straight-line basis over the average period until the benefits become vested. The benefit obligation recognized in the statements of financial position represents the present value of the defined benefit obligation, as adjusted for unrecognized actuarial gains or losses and unrecognized past service cost. Other Long-term Employee Benefits The Company also provides loyalty reward to all of its employees in accordance with the Company s regulation. The cost of providing other long-term employee benefits is determined using the Projected Unit Credit Method. All actuarial gains or losses and past service cost are recognized immediately. Other long-term employee benefits obligation recognized in the statements of financial position represents the present value of defined benefit obligation at the reporting date. p. Income Tax Current tax expense is determined based on the taxable income for the year computed using prevailing tax rates. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases except those differences that are subject to final tax. Deferred tax liabilities are recognized for all taxable temporary differences and deferred tax assets are recognized for deductible temporary differences to the extent that it is probable that taxable income will be available in future periods against which the deductible temporary differences can be utilized. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on the tax rates (and tax laws) that have been enacted, or substantively enacted, by the end of the reporting period. The measurement of deferred tax assets and liabilities reflects the consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities

18 The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax assets and liabilities are offset when there is legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and current tax liabilities on a net basis. Current and deferred tax are recognized as an expense or income in profit or loss. 4. CRITICAL ACCOUNTING JUDGMENT AND ESTIMATES In the application of the Company s accounting policies, which are described in Note 3, management are required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods, if the revision affects both current and future periods. Critical Judgments in Applying Accounting Policies Apart from those involving estimation, management has not made any critical judgment that has significant impact on the amounts recognized in the financial statements. Key Sources of Estimation Uncertainty The key assumptions concerning future and other key sources of estimation 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 year are discussed below. Impairment Loss on Receivables The Company assess its receivables for impairment at each reporting date. In determining whether an impairment loss should be recorded in profit or loss, management makes judgment as to whether there is an objective evidence that loss event has occurred. Management also makes judgment as to the methodology and assumptions for estimating the amount and timing of future cash flows which are reviewed regularly to reduce any difference between loss estimate and actual loss. The carrying amount of loans and receivables are disclosed in Notes 5, 6 and 7. Percentage of Completion Project The Company determined the percentage of completion project based on the actual cost incurred for each project compared with budget cost for such project

19 Estimated Useful Lives of Property and Equipment The useful life of each of the item of the Company s property and equipment are estimated based on the period over which the asset is expected to be available for use. Such estimation is based on internal technical evaluation and experience with similar assets. The estimated useful life of each asset is reviewed periodically and updated if expectations differ from previous estimates due to physical wear and tear, technical or commercial obsolescence and legal or other limits on the use of the asset. It is possible, however, that future results of operations could be materially affected by changes in the amounts and timing of recorded expenses brought about by changes in the factors mentioned above. There is no change in the estimated useful life of property and equipment during the year. The carrying amounts of property, plant and equipment are disclosed in Note 10. Employee Benefits The determination of employee benefits obligation is dependent on selection of certain assumptions used by actuaries in calculating such amounts. Those assumptions include among others, discount rate and rate of salary increase. Actual results that differ from the Company s assumptions are accumulated and amortized over future periods and therefore, generally affect the recognized expense and recorded obligation in future periods. While it is believed that the Company s assumptions are reasonable and appropriate, significant differences in actual results or significant changes in assumptions may materially affect the Company s post-employment benefit obligations. The carrying amount of provision for employee benefits are disclosed in Note 16. Realizability of Deferred Tax Assets The carrying amount of deferred tax assets is reviewed at end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax assets to be utilized. However, there is no assurance that sufficient taxable profit will be generated to allow all or part of the deferred tax assets to be utilized. Deferred tax assets are presented at net amount in Note CASH ON HAND AND IN BANKS March 31, March 31, Cash on hand 11,779 10,269 Cash in banks U.S. Dollar 2,466,371 1,352,371 Rupiah 798, ,994 Total 3,276,964 1,650,

20 6. TRADE ACCOUNTS RECEIVABLE March 31, March 31, Related parties (Note 24) Yokogawa Engineering Asia Pte. Ltd 256, ,765 Yokogawa Electric Korea Co., Ltd 87,363 14,861 Yokogawa Electric International Pte. Ltd 87, ,812 Others 6,678 32,339 Total 437, ,777 Third parties 8,041,521 7,979,953 Allowance for impairment loss (514,791) (492,495) Total 7,526,730 7,487,458 Trade accounts receivable disclosed above included amounts (see below for aging analysis) that are past due at the end of the reporting period for which the Company has not recognized an allowance for impairment losses because there has not been significant change in credit quality and the amounts are still considered recoverable. The Company does not hold any collateral or other credit enhancements over these balance nor does it have a legal right of offset against any amounts owned by the Company to the counterparty. Age of receivables that are past due but not impaired March 31, March 31, 1-30 days 1,141,175 1,705, days 740,931 1,435, days 650, ,207 above 90 days 2,067,973 2,777,089 Total 4,600,913 6,853,971 Changes in the allowance for impairment loss as follows: March 31, March 31, Beginning balance 492, ,475 Addition 314,549 48,653 Reversal (292,253) (69,633) Ending balance 514, ,495 In 2015, the Company direct write off trade receivable amounting to 11,433. The Company recorded these transaction as addition from provision for (reversal of) impairment loss. Included in the provision for impairment losses are individually impaired trade receivables amounting to 514,791 and 492,495 at March 31, 2015 and 2014, respectively. The Company does not hold any collateral over these balance

21 Management believes that the allowance for impairment loss on receivables from third parties is adequate. No allowance for impairment loss was provided on receivables from related parties as management believes that all such receivables are collectible. Trade accounts receivable generally has a credit term of 30 days. 7. UNBILLED REVENUES March 31, March 31, Related parties (Note 24) Yokogawa Electric Korea Co., Ltd 111,011 - Yokogawa Engineering Asia Pte., Ltd. 27,901 66,762 Total 138,912 66,762 Third parties 7,227,308 7,574,673 Total 7,366,220 7,641, INVENTORIES March 31, March 31, Component materials 424, ,264 Work in progress 176,625 79,434 Materials in transit 204, ,186 Total 805, ,884 Management believes that the allowance for decline in value of inventory is not necessary. 9. CLAIM FOR TAX REFUND The Directorate General of Taxation (DGT) in its decision letter No /207/07/058/11 dated July 4, 2011 issued an assessment letter for value added tax period March 2007 and determined that the Company s value added tax underpayment was Rp 272,133,419 (equivalent to 20,845 as of March 31, 2015 and 24,062 as of March 31, 2014). The Company had paid such amount and submitted objection letter to DGT on September 29, 2011 as the Company believes the value added tax under payment should be nil. The objection was rejected by DGT in its Decision Letter No. KEP-1698/WPJ.07/2012 dated September 19, On December 10, 2012, the Company filed an appeal to Tax Court. Until the issuance date of these financial statement, the Company is awaiting for decision from Tax Court

22 10. PROPERTY AND EQUIPMENT April 1, March 31, 2014 Additions Deductions 2015 Cost: Leasehold improvements 180, ,248 (169,960) 758,921 Demo/test equipment and tools 148,602 6,923 (9,250) 146,275 Office equipment, furniture and fixtures 572, ,769 (196,433) 788,806 Motor vehicles 227,698 58,548 (107,396) 178,850 Total 1,129,403 1,226,488 (483,039) 1,872,852 Accumulated depreciation: Leasehold improvement 124,302 51,667 (169,960) 6,009 Demo/test equipment and tools 117,933 16,132 (9,250) 124,815 Office equipment, furniture and fixtures 451,027 83,597 (193,741) 340,883 Motor vehicles 150,358 21,289 (82,877) 88,770 Total 843, ,685 (455,828) 560,477 Net Book Value 285,783 1,312,375 April 1, March 31, 2013 Additions Deductions 2014 Cost: Leasehold improvements 173,543 7, ,633 Demo/test equipment and tools 122,586 26, ,602 Office equipment, furniture and fixtures 493,211 79, ,470 Motor vehicles 152,717 74, ,698 Total 942, ,346-1,129,403 Accumulated depreciation: Leasehold improvement 84,720 39, ,302 Demo/test equipment and tools 90,567 27, ,933 Office equipment, furniture and fixtures 374,557 76, ,027 Motor vehicles 140,840 9, ,358 Total 690, , ,620 Net Book Value 251, ,783 Depreciation expense for the years ended March 31, 2015 and 2014 is charged to operating expenses (Note 21). 11. LOAN FROM A RELATED PARTY On May 30 and October 24, 2014, the Company obtained a loan from Yokogawa Engineering Asia Pte., Ltd. a related party, amounting to 2,000,000 and 2,000,000, respectively. This loan for working capital and general corporate purposes. These loans bear with interest rate of 0.76% per annum fixed for period until March 31, The Company has made payment amounting to 1,000,000 on March 31, The Company has amend the agreement to extend loan due date until June 30, Starting from April 1, 2015 until June 30, 2015, the loan is bear with interest of 0.820% per annum. As of March 31, 2015, the outstanding balance of loan amounted to 3,000,

23 On November 25, 2013, the Company obtained a loan from Yokogawa Engineering Asia Pte., Ltd. a related party, amounting to 2,000,000 for working capital and general corporate purposes. This loan bears with interest rate of 0.75% per annum and due on May 31, The Company has amend the agreement to extend loan due date several times with last amendment made on July 31, 2014 with interest rate of 0.86% per annum and due date on January 31, The Company has fully paid the loan on January 31, TRADE ACCOUNTS PAYABLE March 31, March 31, Related parties (Note 24) Yokogawa Engineering Asia Pte., Ltd. 1,761,577 1,921,714 Yokogawa Electric International Pte., Ltd. 816, ,483 Yokogawa Corporation of America 21, Yokogawa India Pte., Ltd. - 57,473 Others 28,152 13,281 Total 2,628,116 2,480,438 Third parties 2,068,327 1,981,473 Trade accounts payable are non-interest bearing and generally have credit term of 60 days. 13. OTHER ACCOUNTS PAYABLE AND ACCRUED EXPENSES March 31, March 31, Bonus and festive day (THR) allowances 627, ,461 Provision for project loss 601, ,723 Penalty 492,372 84,000 Professional fees 88,456 66,178 Freight charges 37,573 14,461 Others 755, ,517 Total 2,602,195 1,684, TAXES PAYABLE March 31, March 31, Current tax (Note 22) 279 4,390 Income taxes Article 21 21,491 25,840 Article 23 2,837 3,663 Article 4 (2) 6,387 2,004 Article 25 70,524 59,394 Article Value added tax - net - 166,965 Total 101, ,

24 15. UNEARNED REVENUE March 31, March 31, Related parties Yokogawa Engineering Asia Pte., Ltd 37,636 - Yokogawa Electric Korea Co., Ltd 20,359 60,318 Yokogawa France S.A.S - 7,860 Yokogawa Electric International Pte., Ltd - 2,800 57,995 70,978 Third parties 2,017,853 1,224,065 Total 2,075,848 1,295, EMPLOYEE BENEFITS March 31, March 31, Defined post-employment benefits 1,125,233 1,199,978 Other long-term employee benefits 25,279 27,205 Total 1,150,512 1,227,183 The Company provides benefits according to the Company s regulation or the required minimum amount under the Labor Law No. 13/2003 whichever is higher. The number of employees entitled to the benefits is 179 in 2015 and 177 in Amounts recognized in the statements of comprehensive income in respect of these postemployment benefits are as follows: Current service cost 105, ,496 Interest cost 91,320 88,211 Actuarial gains 5,895 23,162 Past service cost - vested 2,929 12,104 Total 205, ,973 Using rate 12,097 10,984 The amounts included in the statements of financial position arising from the Company s obligation in respect of these employee benefits are as follows: Present value of benefit obligation 1,600,517 1,206,360 Unrecognized actuarial gain (513,203) (3,343) Unrecognized past service cost - (3,226) Foreign exchange rate effect 37, Total 1,125,233 1,199,

25 Movement in the present value of defined benefit obligation are as follows: March 31, March 31, Beginning of the year 1,206,360 1,473,332 Current service costs 105, ,496 Interest costs 91,320 88,211 Actuarial (gain)/loss 510,165 (240,768) Termination cost 5,895 9,277 Benefits paid (112,820) (24,168) Foreign exchange rate effect (206,171) (233,020) End of the year 1,600,517 1,206,360 Movement in the post-employment benefits are as follows: March 31, March 31, Beginning of the year 1,199,978 1,160,503 Amount charged to expenses 205, ,973 Benefits paid (112,820) (24,168) Foreign exchange rate effects (167,837) (193,330) End of the year 1,125,233 1,199,978 The historical of experience adjustment is as follows: Present value of defined benefit obligation 1,600,517 1,206,360 1,473,332 1,424,192 1,076,686 Experience adjustment on plan liabilities (75,694) (32,692) (121,403) (66,225) (285,752) Other Long-term Employee Benefits The Company established other long-term employee benefits, such as gold and watch, for employees whom reach certain years of services based on Company regulations. The expenses from other employee benefits in 2015 and 2014 are 11,782 and 5,511, respectively. The benefits paid from other employee benefits in 2015 and 2014 are 9,920 and 4,925, respectively. The expense of employee benefits was recorded as part of cost of goods sold and general and administrative expenses amounting to 76,579 and 141,115, respectively (Notes 20 and 21)

26 The cost of providing employee benefits was calculated by PT. Mercer Indonesia, independent actuary. The actuarial valuation was carried out using the following key assumptions: Discount rate : 7.25% p.a. in 2015 and 8.5% p.a. in 2014 Salary increment rate : 10% p.a. in 2015 and 8% p.a. in 2014 Mortality rate : TMI II 2011 for male and female in 2014 and Commissioners Standard Ordinary Mortality Table (CSO) in 2013 Resignation rate : 10% p.a. for age and 0% p.a. for age Normal retirement age : 55 years 17. CAPITAL STOCK Name of Stockholders 2015 and 2014 Number Percentage of of shares ownership Amount % Yokogawa Engineering Asia Pte., Ltd. 2, ,299,080 Yokogawa Electric Asia Pte., Ltd Total 2, ,300,000 The shares issued and fully paid are ordinary shares which entitle the holder to carry one vote per share and to participate in dividends. 18. APPROPRIATION FOR STATUTORY RESERVE In accordance with the Indonesian Limited Company Law No. 1/1995, the Company has setup a general reserve amounting to Rp 9,963,600 equivalent with 4,600, representing 0.2% of the Company s issued and paid-up share capital. 19. NET REVENUES Related parties (Note 24) 1,636,912 1,792,373 Third parties 31,821,542 29,794,808 Total 33,458,454 31,587,181 Revenue from related parties represents 4.9% and 5.7% of total revenue in 2015 and 2014, respectively (Note 24)

27 20. COST OF GOODS SOLD Cost of material 20,540,784 19,060,487 Direct labour 1,153,059 1,176,194 Factory overhead 3,832,749 3,107,956 Total 25,526,592 23,344,637 The total purchases of goods and process services from Yokogawa Engineering Asia Pte., Ltd. Singapore in 2015 and 2014 are amounting to 14,066,912 and 13,866,046, respectively. 21. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES Selling Expenses Management fees (Note 24) 109, ,938 Other marketing and selling expenses 31,108 21,446 Sub total 140, ,384 General and Administrative Expenses Salaries and employees compensation 2,414,119 2,651,606 Transportation and travel 528, ,761 Professional fee 335, ,936 Depreciation (Note 10) 172, ,936 Employee benefits (Note 16) 141,115 23,861 Rental expenses 105, ,105 Utilities 98,403 96,477 Repairs and maintenance 84, ,239 Office supplies 76,866 63,914 Entertainment 74, ,186 Provision for (reversal of) impairment loss 33,729 (15,771) Bank charges 33,019 35,666 Seminar and convention 24,135 31,671 Others 120, ,739 Sub total 4,242,811 4,420,326 Total 4,383,018 4,546,

28 22. INCOME TAX The tax expense of the Company consists of the following: Current tax 1,008, ,750 Deferred tax 2,057 (29,998) Total 1,010, ,752 Current tax A reconciliation between income before tax per statements of comprehensive income and taxable income is as follows: Profit before tax per statements of comprehensive income 3,436,375 3,326,001 Temporary differences: Employee benefits - net 76,671 32,159 Provision for (reversal of) impairment loss 24,118 (20,980) Differences between commercial and fiscal depreciation 9,014 18,036 Gain on sales of property, plant and equipment (67,214) - Net 42,589 29,215 Permanent differences: Benefit in kind 251, ,926 Tax expenses 62,727 - Difference between commercial and fiscal depreciation 10,980 7,512 Provision for impairment loss 9,656 5,209 Donation 3, Interest income subjected to final tax (6,886) (5,643) Others 223, ,922 Net 555, ,280 Taxable income 4,034,737 3,971,496 Current tax expense and payable are computed as follows: Current tax expense 1,008, ,750 Less prepaid income tax Article , ,588 Article 23 32,861 75,198 Article , ,574 Current tax payable 279 4,