PT MULTIPOLAR Tbk AND SUBSIDIARIES. Consolidated Financial Statements For the Years Ended December 31, 2011 and 2010

Transcription

1 PT MULTIPOLAR Tbk AND SUBSIDIARIES Consolidated Financial Statements For the Years Ended December 31, 2011 and 2010

2 PT MULTIPOLAR Tbk AND SUBSIDIARIES Table of Contents Page The Statement Letter of the Board of Directors Independent Auditor s Report Consolidated Financial Statements For the Consolidated Statements of Financial Position 1 Consolidated Statements of Income 4 Consolidated Statements of Comprehensive Income 5 Consolidated Statements of Changes in Equity 6 Consolidated Statements of Cash Flows 7 Notes to Consolidated Financial Statements 9

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5 . CONSOLIDATED STATEMENTS OF FINANCIAL POSITION December 31, 2011, 2010 and 2009 (Expressed in millions of Indonesian Rupiah, except for share data) Notes 2009 ASSETS CURRENT ASSETS Cash and cash equivalents 4,8,30 2,039,663 3,043,788 2,428,942 Short-term investments 5,14,20,30 - Third parties 347, , ,290 - Related parties 8 1,280,602 1,781,600 1,332,759 Account receivables 6,30 Trade - net 14,19 - Third parties 147, ,322 81,914 - Related parties 8 45,511 5,682 22,632 Others - net 38 - Third parties 258, , ,615 - Related parties 8 4,031 6,365 1,894 Inventories - net 7,14,19 1,413,534 1,057,447 1,233,082 Prepaid taxes and expenses 8,17,38 346, , ,942 Other current assets 8,30,38 116, ,262 74,657 Total Current Assets 5,999,664 7,006,683 5,924,727 NON-CURRENT ASSETS Due from related parties - net 8,30,38 53,212 12,513 9,447 Other long-term receivables 9,32,38 1,171,346 1,088,359 - Deferred tax assets - net , ,429 61,641 Investments in associates 8,10,14 642, , ,806 Other long-term investments 8,10 883,853 1,069, ,591 Property and equipment 8,11,14,19 Carrying value 4,385,221 3,880,513 4,456,817 Accumulated depreciation (2,044,206) (1,789,898) (2,174,518) Impairment of assets (78,283) (78,283) - Net 2,262,732 2,012,332 2,282,299 Rental advances and deposits - net 8,12,32,38 1,681,018 1,394,535 2,036,912 Prepaid long-term rent - net 13 - Third parties 366, , ,606 - Related parties 8 337, , ,248 Intangible assets - net 175, , ,285 Other non-current assets - net 30,38 401, , ,815 Total Non-current Assets 8,315,043 7,010,003 5,943,650 TOTAL ASSETS 14,314,707 14,016,686 11,868,377 The accompanying notes form an integral part of these consolidated financial statements 1 APPROVAL FOR PRINTING

6 . CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (continued) December 31, 2011, 2010 dan 2009 (Expressed in millions of Indonesian Rupiah, except for share data) Notes 2009 LIABILITIES AND EQUITY LIABILITIES CURRENT LIABILITIES 5,6,7,10,11 Short-term bank loans 14,30,32,36 225, , ,128 Account payables Trade 15,30 - Third Parties 1,569,213 1,182,944 1,330,841 - Related Parties Others 16,30 357, , ,163 Taxes payable 17 65, ,485 55,071 Accrued expenses 18,29,30 812, , ,378 Current maturities of long-term debt: Bank and other financial 6,7,11 institution loans 19,30,32 523, ,629 1,093,518 Bonds payable - net 5,20 339, Current portion of deferred gain on asset sale and lease transactions 11 2,098 44,745 41,431 Other current liabilities 8,30 146, ,098 33,786 Total Current Liabilities 4,042,864 3,705,603 3,625,814 NON-CURRENT LIABILITIES Due to related parties - net 8,30 3, ,897 5,731 Deferred tax liabilities - net 17 9,239 5,685 1,372 Notes payable - net - - 1,788,211 Long-term debts, net of current maturities: Bank and other financial 6,7,11 institution loans 19,30,32 1,421, ,601 1,744,074 Bonds payable - net , , ,807 Deferred gain on asset sale and lease transactions, net of current portion 11 10, , ,996 Other non-current liabilities - net 29,30 491, , ,781 Total Non-current Liabilities 2,123,104 1,810,532 4,799,972 Total Liabilities 6,165,968 5,516,135 8,425,786 The accompanying notes form an integral part of these consolidated financial statements 2 APPROVAL FOR PRINTING

7 . CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (continued) December 31, 2011, 2010 dan 2009 (Expressed in millions of Indonesian Rupiah, except for share data) EQUITY Notes 2009 Equity Attributable to Owners of The Parent Capital Stocks Authorized- 23,620,710,440 shares in 2011 and 2010 consist of: 467,942,000 class A shares with par value of Rp2,000 (full amount);1,228,347,890 class B shares with par value of Rp500 (full amount) and 21,924,420,550 class C shares with par value of Rp 100 (full amount); 24,324,696,000 shares in 2009 consist of: 1,871,768,000 class A shares with par value of Rp 500 (full amount) and 22,452,928,000 class B shares with par value of Rp125 (full amount) Issued and fully paid - 7,727,542,968 shares in 2011 consist of: 467,942,000 class A shares, 1,228,347,890 class B shares and 6,031,253,078 class C shares; 7,727,542,830 shares in 2010 consist of: 467,942,000 class A shares, 1,228,347,890 class B shares and 6,031,252,940 class C shares; 6,785,159,560 shares in 2009 consist of: 1,871,768,000 class A shares and 4,913,391,560 class B shares 21 2,153,183 2,153,183 1,550,058 Additional paid-in capital - net , ,391 14,397 Difference in changes on equity transactions of Subsidiaries/Associates 23 (50,029) (410,342) (49,827 ) Other components of equity 128,232 71,135 20,883 Retained earnings Appropriated Unappropriated 2,807,107 2,864,364 50,652 Total 5,201,784 4,841,331 1,586,463 Non-controlling interests 38 2,946,955 3,659,220 1,856,128 Total Equity - Net 8,148,739 8,500,551 3,442,591 TOTAL LIABILITIES AND EQUITY 14,314,707 14,016,686 11,868,377 The accompanying notes form an integral part of these consolidated financial statements 3 APPROVAL FOR PRINTING

8 . CONSOLIDATED STATEMENTS OF INCOME (Expressed in millions of Indonesian Rupiah, except for earnings per share) Notes * NET SALES 8,24 10,332,842 9,537,671 COST OF GOODS AND SERVICES SOLD 11,25,38 (8,534,649) (7,436,507) GROSS PROFIT 1,798,193 2,101,164 Selling expenses 8,11,26,38 (520,563) (733,296) General and administrative expenses 8,11,27,29,38 (1,376,800) (1,349,336) Interest income (charges) - net 8,28,38 122,735 (21,475) Gain on disposal of Subsidiary - net 38-5,518,619 Other income (charges) - net 77,468 (125,746) Share of net profit (loss) of associates - net 8,10 (11,801) 5,681 INCOME BEFORE INCOME TAX 89,232 5,395,611 INCOME TAX BENEFIT (EXPENSES) - Net 17,38 Current (18,713) (37,317) Deferred 25, ,817 Net 6, ,500 INCOME BEFORE PRO FORMA ADJUSTMENT 96,038 5,627,111 PRO FORMA ADJUSTMENT - 114,530 INCOME FOR THE YEAR 96,038 5,741,641 Income attributable to: Owners of the parent 20,318 2,830,626 Non-controlling interests 75,720 2,911,015 96,038 5,741,641 EARNINGS PER SHARE *) Included the figures of PT Matahari Department Store Tbk that was deconsolidated since April 1, 2010 (Note 1c) The accompanying notes form an integral part of these consolidated financial statements 4 APPROVAL FOR PRINTING

9 . CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Expressed in millions of Indonesian Rupiah) Income For The Year 96,038 5,741,641 Other comprehensive income: Exchange differences on translation of foreign operation 51, Unrealized gain on available for sale investments 5,796 41,688 Cash flow hedges - 8,544 Total Comprehensive Income For The Year 153,136 5,791,912 Comprehensive income attributable to: Owners of the parent 77,415 2,880,878 Non-controlling interests 75,721 2,911, ,136 5,791,912 The accompanying notes form an integral part of these consolidated financial statements 5 APPROVAL FOR PRINTING

10 CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Expressed in millions of Indonesian Rupiah) Equity attributable to owners of the parent Other components of equity Retained Earnings Difference in Exchange changes on equity differences on Additional transactions of Unrealized gain on translation of Paid in Capital - subsidiaries/ available for sale foreign Cash Flow Non-Controlling Total Notes Capital Stock Net associates investments operation Hedges Appropriated Unappropriated Total Interest Equity - net Balance, Januari 1, ,550,058 14,397 (49,827) 28, (8,544) ,652 1,586,463 1,856,128 3,442,591 Resolution of Annual General Stockholders Meeting on May 14, 2010: 31 Cash dividend declaration (16,614) (16,614) - (16,614) Appropriation for general reserve (300) Additional Paid in Capital through Pre-Emptive Rights in Fifth Limited Public Offering 21,22 603, , , ,906 Stock Issuance Costs 22 - (2,787) (2,787) - (2,787 ) Changes in non-controlling interest (1,107,942) (1,107,942 ) Difference in changes on equity transactions of subsidiaries/associates (360,515) (360,515) - (360,515 ) Total Comprehensive Income For The Year , ,544-2,830,626 2,880,878 2,911,034 5,791,912 Balance, December 31, ,153, ,391 (410,342) 70, ,864,364 4,841,331 3,659,220 8,500,551 Resolution of Annual General Stockholders Meeting on February 14, 2011: 31 Cash dividend declaration (77,275) (77,275) - (77,275) Appropriation for general reserve (300) Changes in non-controlling interest (787,986) (787,986 ) Difference in changes on equity transactions of subsidiaries/associates , , ,313 Total Comprehensive Income For The Year ,796 51, ,318 77,415 75, ,136 Balance, December 31, ,153, ,391 (50,029) 76,415 51, ,807,107 5,201,784 2,946,955 8,148,739 The accompanying notes form an integral part of these consolidated financial statements. 6 APPROVAL FOR PRINTING

11 CONSOLIDATED STATEMENTS OF CASH FLOWS (Expressed in millions of Indonesian Rupiah) Notes CASH FLOWS FROM OPERATING ACTIVITIES Cash receipts from sales 10,788,156 9,794,864 Cash paid for: Purchase of inventories (8,521,129) (6,904,278) Salaries and wages (643,608) (588,796) Other operating expenses (1,127,914) (1,047,159) Cash received from operations 495,505 1,254,631 Other income 568, ,410 Other expenses (740,245) (1,173,151) Net Cash Provided from Operating Activities 323, ,890 CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sale of short term investments 1,693, ,652 Proceeds from sale of long term investments - net 196,465 - Proceeds from disposal of property and equipment 11 68,217 14,342 Additional in short-term investments (1,284,923) (1,240,112) Increase in rental advances and deposits (546,975) (21,967) Acquisition of property and equipment 11 (541,524) (307,965) Increase in investment in Associates and Subsidiaries (235,731) (289,251) Increase in other non current assets - net (213,377) (107,392) Increase in other current assets - net (1,646) (28,902) Proceeds from sale of investment in Associates and Subsidiaries - 5,048,158 Net Cash (Used in) Provided from Investing Activities (866,464) 3,913,563 CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from loans 3,237,983 1,741,086 Interest income 277, ,756 Repayments of loans (2,358,446) (3,423,941) Cash dividend paid to non-controlling interest (1,295,139) (1,010,219) Interest charges (253,069) (385,487) Cash dividend paid by the Company (77,275) (16,614) Deduction to amount due to related parties - net (2,869) (1,237) Repayments of other payables (1,271) - Net proceeds from Limited Public Offering to stockholders - 751,120 Proceeds from execution of Subsidiaries warrants - 374,210 Buy-back of notes - (1,886,225) Net Cash Used in Financing Activities (472,879) (3,552,551) NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (1,016,021) 965,902 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 4 3,043,788 2,428,942 Effects in Foreign Exchange Changes in Cash and Cash Equivalent 11,896 (12,539) DECONSOLIDATED SUBSIDIARY - PT MATAHARI DEPARTMENT STORE TBK - (338,517) CASH AND CASH EQUIVALENTS AT END OF YEAR 4 2,039,663 3,043,788 The accompanying notes form an integral part of these consolidated financial statements. 7 APPROVAL FOR PRINTING

12 CONSOLIDATED STATEMENTS OF CASH FLOWS (continued) (Expressed in millions of Indonesian Rupiah) Supplemental of Cash Flows Information: Notes Transactions not affecting cash flows: Reclassification of rental advance payment to prepaid rent 275,921 3,067 Acquisition of property and equipment through account payables - others 63,465 - Reclassification of other non-current assets - net to property and equipment 45, ,610 Reclassification of other current assets to other long-term investments 1,000 - Proceeds from sale of investment in Subsidiary through other long-term receivables - 1,000,000 Proceeds from sale of investment in Subsidiary through other long-term investments - 882,848 The accompanying notes form an integral part of these consolidated financial statements. 8 APPROVAL FOR PRINTING

13 1. GENERAL a. The Company's Establishment PT Multipolar Tbk (the Company) was incorporated in the Republic of Indonesia on December 4, 1975 based on notarial deed No. 7 of Adlan Yulizar, S.H., which has been amended several times, the latest by notarial deed No. 119 of Misahardi Wilamarta, S.H., dated March 25, The deed of establishment and its amendments were approved by the Minister of Justice in his decree No. C HT Th.82 dated September 3, 1982 and was published in the State Gazette No. 84, Supplement No. 938 dated October 20, The Company s Articles of Association has been amended several times, the latest based on notarial deed No. 19 of Rini Yulianti, S.H. dated March 15, 2011 concerning changes in article 4 point 2 regarding the capital of the Company. The Changes in the Company s Articles of Association was approved by the Minister of Law and Human Rights of Republic of Indonesia in its letter No. AHU-AH dated March 17, The Company primarily engages in systems integration services, including import, trading, distribution and service of computers and related products, rental of computer equipments, management and information technology consulting services, and also acts as IBM business partner (system integration, system remarketer and PS 2 advance function). The Company is domiciled in South Jakarta. Its operational head office is located at Menara Matahari, Palem Raya Bulevar No. 7, Lippo Karawaci - Tangerang, Banten. The Company started commercial operations on December 4, b. The Company's Public Offerings By virtue of the approval letter of the Minister of Finance No. SI-052/SHM/MK.10/1989, the Company offered 3,428,000 shares to the public on September 18, All issued shares have been listed in the Jakarta Stock Exchange in 1989 and in the Surabaya Stock Exchange in In 1996 and 1997, the Company listed additional capital totaling 102,852,000 shares (at par value of Rp1,000) and 1,508,496,000 shares (at par value of Rp500) in the Jakarta and Surabaya Stock Exchanges in connection with First and Second Limited Public Offering of Pre-Emptive Rights Issuance, respectively. In 2000, there were 89,000,000 new shares other than the Limited Public Offering for the strategic investor. These were approved by the Jakarta Stock Exchange in its letter No. S- 2183/BEJ.EEM/07/2000 dated July 24, 2000 and by the Surabaya Stock Exchange in its letter No. 005/EMT/LIST/BES/IV/2000 dated April 18, On September 10, 2005, the Company's registration statement regarding the Third Limited Public Offering to the stockholders in connection with Pre-Emptive Rights Issuance of 2,339,710,000 class B shares (at par value of Rp125) with offering price of Rp125 per share took effect. All shares were listed in the Indonesian Stock Exchange (formerly Jakarta Stock Exchange and Surabaya Stock Exchange) on September 24, On November 24, 2006, the Company's registration statement regarding the Fourth Limited Public Offering to the stockholders in connection with Pre-Emptive Rights Issuance of 2,573,681,000 class B shares (New Share) at par value of Rp125 per share with offering price of Rp125 per share, and issuance of a maximum 1,429,822,778 Warrant Series I were declared effective. 9 APPROVAL FOR PRINTING

14 1. GENERAL (continued) b. The Company's Public Offerings (continued) In the Extraordinary General Meeting of Stockholders on February 25, 2010 concerning a reverse stock plan, the stockholders decided and approved, among others, to change the par value of shares in connection with the reverse stock by increasing the par value per shares 4 times. This decision increased class A shares from Rp500 per share to Rp2,000 per share and class B shares from Rp125 per share to Rp500 per share (Note 21). On March 30, 2010, the Company conducted a Fifth Limited Public Offering in connection with the Pre-Emptive Rights Issuance of 6,031,252,940 class C shares (New Share) at par value Rp100 per share with offering price of Rp125 per share and 2,345,487,255 Warrant Series II will be issued attached to the new shares. The warrants were offered free of charge as an incentive for stockholders of the Company and/or Pre-Emptive Rights holders to exercise their rights (Note 21). All the Company s shares were listed in the Indonesian Stock Exchange. c. Structure of the Company and Subsidiaries As of December 31, 2011 and 2010, the Company had consolidated all its subsidiaries in line with the policies described in Note 2b. For presentation purposes, only subsidiaries (owned either directly or indirectly) that have assets of more than Rp50,000 are presented in the table below: Start of Percentage of Ownership Total Assets Location of Nature of Commercial Subsidiaries Operations Business Operating PT Matahari Putra Prima ( PT MPP ) PT Matahari Pacific ( PT MP ) PT Nadya Putra Investama ( PT NPI )* PT Mentari Sinar Persada ( PT MSP )* PT Prima Gerbang Persada ( PT PGP ) PT Mulia Persada Pertiwi ( PT Mulia ) Tangerang, West Java Tangerang, West Java Retail business Trading and services ,308,169 11,420, ,083,724 1,984,022 Tangerang, West Java General trading ,185, ,614 Tangerang, West Java General trading , ,775 Tangerang, West Java General trading , ,105 Tangerang, West Java General trading ,273 17,500 Tristar Capital Limited ( Tristar ) Labuan, Malaysia Investment , ,836 Tangerang, West PT Nadya Prima Indonesia Java ( PT NPrI, formerly General trading , ,566 PT Matahari Mega Swalayan) PT Matahari Graha Fantasi ( PT MGF ) PT Mitra Prima Kreasi ( PT MPK )* PT Prima Cipta Lestari ( PT Prima ) PT Times Prima Indonesia ( PT TPI ) PT Kharisma Artha Sejati ( PT KAS )* Mainvest Limited ( ML ) Congrex Limited ( CL ) Robbinz Department Store (Tianjin) Ltd ( RDS TJ ) Robbinz Department Store (Chengdu) Ltd, ( RDS CD ) Robbinz Department Store (Yangzhou) Ltd, ( RDS YZ ) Robbinz Department Store (Suzhou) Ltd ( RDS SZ ) Jakarta Family entertainment , ,197 Tangerang, West Java General trading , ,040 Tangerang, West Java Tangerang, West Java Jakarta British Virgin Islands British Virgin Islands Restaurant ,984 63,107 General trading ,876 56,787 Services and general trading ,00 622, ,897 Investment , ,897 Investment , ,897 China Retail business , ,981 China Retail business ,497 93,973 China Retail business ,442 95,724 China Retail business , APPROVAL FOR PRINTING

15 1. GENERAL (continued) c. Structure of the Company and Subsidiaries (continued) Start of Percentage of Ownership Total Assets Location of Nature of Commercial Subsidiaries Operations Business Operating PT Reksa Puspita Karya ( PT RPK ) Jakarta Trading , ,891 PT Multipolar Technology ( PT MT ) Jakarta Trading , ,027 PT Visionet Internasional ( PT VI ) Jakarta Trading , ,517 PT Surya Cipta Investama ( PT SCI ) PT Multifiling Mitra Indonesia Tbk ( PT MMI ) PT Air Pasifik Utama ( PT APU ) PT General Artha Sejati ( PT GAS )* Jakarta Services and general trading , ,641 Cikarang, Bekasi Filling management , ,543 Tangerang, West Java Jakarta Air transportation ,344 17,140 Services and general trading ,855 - * Including Subsidiaries that have not started commercial operations yet. On January 23, 2010, PT MPP sold ownership of its subsidiary, PT Matahari Department Store Tbk ( PT MDS ), to PT Meadow Indonesia, the party appointed as the buyer by Meadow Asia Company Limited at a price of Rp2, (full amount) per share, amounted to a total of Rp7,164,309. The difference between book value and sales price has been recorded as part of Gain on disposal of Subsidiary - net in the consolidated financial statements of the Company. On April 1, 2010, the transaction was completed. Since then, the financial statements of PT MDS have been deconsolidated in the consolidated financial statements of the Company. In May 2010, the Company established PT KAS and PT GAS. In turn, PT KAS and PT GAS established new subsidiaries, each with 100% ownership. These new subsidiaries include entities that have not yet started commercial operations. In August 2010, ML invested in Congrex Limited previously owned by Queenz Limited, a company incorporated in the British Virgin Islands and owner of the department store brand, Robbinz. The purchase was considered a restructuring transaction under common control, recorded in accordance with PSAK 38 (revised 2004) (Note 2b). In August 2010, the Company established PT SCI to hold 50.20% ownership (with the capital stock paid by shares inbreng ) of PT MMI. In September 2010, PT MPP through PT NPI and PT MP established PT MPK and PT MSP, owning 99% and 1% respectively. d. Employees, the Board of Commissioners and Directors and Audit Committee As of December 31, 2011 and 2010, based on a resolution during the Company s Stockholders Annual General Meeting held February 14, 2011, notarized under notarial deed No. 19 of Rini Yulianti, S.H. dated February 22, 2011, and on May 14, 2010, notarized under notarial deed No. 4 of Rini Yulianti, S.H. dated May 14, 2010, the members of the Boards of Commissioners and Directors are as follows: 11 APPROVAL FOR PRINTING

16 1. GENERAL (continued) d. Employees, the Board of Commissioners and Directors and Audit Committee (continued) President Commissioner DR. Cheng Cheng Wen DR. Cheng Cheng Wen Independent Commissioner Jonathan Limbong Parapak Jonathan Limbong Parapak Isnandar Rachmat Ali Isnandar Rachmat Ali Commissioners Theo L. Sambuaga Bunjamin Jonatan Mailool *) Jeffrey Koes Wonsono President Director Eddy Harsono Handoko Jeffrey Koes Wonsono Directors Harijono Suwarno Harijono Suwarno Antonius Agus Susanto Antonius Agus Susanto Reynold Pena Ong Reynold Pena Ong *) Effectively resigned as of July 14, 2010 As of December 31, 2011 and 2010, the members of the Audit Committee are as follows: Chairman Members Jonathan Limbong Parapak Basilius Hadibuwono Siswanto Pramono As of December 31, 2011 and 2010, the Audit Committee was already established in compliance with BAPEPAM-LK Regulation No. IX.I.5. As of December 31, 2011 and 2010, the Company s corporate secretary is Chrysologus RN Sinulingga. The Company have employed approximately 13,797 and 11,047 employees (unaudited) as of December 31, 2011 and 2010 respectively. 2. SUMMARY OF ACCOUNTING POLICIES a. Basis of Presentation of Consolidated Financial Statements The consolidated financial statements are presented in accordance with the generally accepted accounting principles in Indonesia (Statements of Financial Accounting Standards or PSAK ) and BAPEPAM-LK regulations No. VIII.G.7, Guidelines on Financial Statements Presentation and SE- 02/PM/2002, Guidelines on Financial Statements Presentation and Disclosures of Listed or Public Companies in Industrial Trading, and as far as the BAPEPAM and LK Rules are not regulated and not contradictive with PSAK. The consolidated financial statements are prepared under the historical cost basis of accounting, except for inventories which are stated at the lower of cost or net realizable value and certain investments which are stated at fair value or at net assets value, or accounted for under the equity method for associated companies representing equity interest of at least 20% but not more than 50%. The consolidated statements of cash flows present cash receipts and payments classified into operating, investing and financing activities. The cash flows from operating activities are presented under the direct method. The reporting currency used in the consolidated financial statements is Indonesian rupiah. 12 APPROVAL FOR PRINTING

17 2. SUMMARY OF ACCOUNTING POLICIES (continued) a. Basis of Presentation of Consolidated Financial Statements (continued) New Accounting Standards The Company adopted the amended PSAK and standard interpretations ( ISAK ) that have taken effect on or after January 1, 2011 in the consolidated financial statements: PSAK 1 (revised 2009): Presentation of Financial Statements PSAK 1 (revised 2009) introduced terminology changes (including revised titles for the financial statements) and changes in the format and content of the financial statements that affected the presentation of the Company s consolidated financial statements as follows: o Balance sheet is changed to Statements of Financial Position o o Statements of Income is changed to Statements of Comprehensive Income The term for assets, liabilities, and minority interest are changed to follow the revised standards The revised PSAK also resulted in some additional disclosures in the consolidated financial statements. Recognition and measurement of assets, liabilities, revenues and expenses of the Company is unchanged. However, several accounts of income and expense that are recognized directly in the equity section of the Company are now recognized in the statements of comprehensive income as "Other comprehensive income". In addition, this PSAK also changes the presentation of non-controlling interests from presentation between liabilities and equity to be presented as part of equity and also does not allow the presentation of extraordinary items in the financial statements. Due to these changes, in compliance with the comparative period required by PSAK 1 (revised 2009), the Company has presented a statement of financial position at beginning of the earliest comparative period in the consolidated financial statements of the Company for the year ended December 31, PSAK 2 (revised 2009): Statement of Cash Flow PSAK 2 (revised 2009) provides additional guidelines on the cash flow for certain transactions and the recording of profits or losses from those certain transactions that are not explicitly regulated by the previous PSAK 2. The adoption of PSAK 2 (revised 2009) does not have a significant impact on the Company's consolidated financial statements. PSAK 3 (revised 2010): Interim Financial Statements PSAK 3 (revised 2010) introduces two types of interim financial statements, which are complete interim financial statements and condensed interim financial statements. Furthermore, PSAK 3 (revised 2010) provides guidelines on minimal components, the format and content of the report, as well as the comparative reporting period in the interim financial statements. The Company has chosen to present the complete financial statements in preparing the Company's interim consolidated financial statements during PSAK 4 (revised 2009): Consolidated and Separate Financial Statements PSAK 4 (revised 2009) abolished the settings not to consolidate a subsidiary if the control is intended for temporary or limited by a long-term restriction. Under PSAK 4 (revised 2009), all subsidiaries are consolidated if a company has control over the subsidiaries and the existence of potential voting rights should be taken into account in assessing the existence of control. The adoption of PSAK 4 (revised 2009) does not affect the Company's consolidated financial statements. 13 APPROVAL FOR PRINTING

18 2. SUMMARY OF ACCOUNTING POLICIES (continued) a. Basis of Presentation of Consolidated Financial Statements (continued) New Accounting Standards (continued) PSAK 5 (revised 2009): Operating Segments PSAK 5 (revised 2009) identifies operating segments based on internal management reports which are reviewed regularly by the Company s operating decision maker. PSAK 5 (revised 2009) also made several changes in the methodology and format of segment reporting. The impact of PSAK 5 (revised 2009) on the consolidated financial statements is relatively minor because the Company has determined that reporting of operating segments in accordance with PSAK 5 (revised 2009) are the same as the primary form of segment reporting previously identified under PSAK 5. The adoption of PSAK 5 (revised 2009) resulted in some additional disclosures in the Company s consolidated financial statements. PSAK 7 (revised 2010): Related Party Disclosures PSAK 7 (revised 2010) changes the term in Bahasa Indonesia for related party to follow the revised standards, other than that, this revised PSAK clarifies the definition of related party and require some additional disclosures of the related party. PSAK 7 (revised 2010) resulted to additional disclosures in the Company s consolidated financial statements. PSAK 8 (revised 2010): Events after the Reporting period PSAK 8 (revised 2010) set on when the Company has to adjust its financial statements for events after the reporting period and the disclosures on the Company's financial statements authorized for publication and events after the reporting period. This revised PSAK does not affect the Company's consolidated financial statements. PSAK 15 (revised 2009): Investment in Associate PSAK 15 (revised 2009) determined that a significant influence should not only be based on existing ownership percentage, but should also consider the potential voting rights. In addition, the adoption of equity method under revised PSAK eliminates the amortization of goodwill. PSAK 15 (revised 2009) does not affect the Company's consolidated financial statements. PSAK 19 (revised 2010): Intangible Assets PSAK 19 (revised 2010) added guidelines on the acquisition of intangible assets that are part of a business combination, as well as on the determination of useful lives for intangible assets that can be finite or infinite. Intangible assets with infinite useful lives are not amortized and should be tested for impairment of assets each year. This revised PSAK does not affect the Company's consolidated financial statements. PSAK 23 (revised 2010): Revenue PSAK 23 (revised 2010) does not differ much compare to the previous PSAK 23. However the revised PSAK is equipped with an attachment that was adopted from the appendix IAS 18. The adoption of revised PSAK does not affect the Company's consolidated financial statements. ISAK 10: Customer Loyalty Programs ISAK 10 addresses accounting by entities that grant loyalty award credits (such as customer points) to customers who buy other goods or services. Specifically, it explains how such entities should account for their obligations to provide free or discounted goods or services to customers who redeem award credits. The Company has adopted ISAK 10 in the consolidated financial statements. The Customer Loyalty Programs undertaken by the Company is a shortterm program therefore the adoption of ISAK 10 does not give a significant impact on the Company's financial statements, thus, the Company does not restate the effect on adopting ISAK 10 for the period prior to January 1, APPROVAL FOR PRINTING

19 2. SUMMARY OF ACCOUNTING POLICIES (continued) a. Basis of Presentation of Consolidated Financial Statements (continued) New Accounting Standards (continued) PSAK 25 (revised 2009): Accounting Policies, Changes in Accounting Estimate and Error PSAK 25 (revised 2009) provides guidelines on accounting policy choices in the absence of specifically applicable PSAK to transactions, events or other conditions. This revised PSAK also requires retrospective adoption of an accounting policy unless required otherwise by the adoption of initial PSAK or impractical to determine the period specific effects or the cumulative impact of those changes. This revised PSAK does not affect the Company's consolidated financial statements. PSAK 48 (revised 2009): Impairment of Assets PSAK 48 (revised 2009) provides a number of regulations that have not been regulated in the previous PSAK 48 such as, certain assets that should be tested for annual assessments of impairment although there are no indications of impairment, regulation regarding future cash flows in foreign currencies, and method to perform impairment tests on goodwill. This revised PSAK does not affect the Company s consolidated financial statements. ISAK 17: Interim Financial Statements and Impairment ISAK 17 requires the Company not to reverse an impairment loss recognized in prior interim periods related to goodwill or investments in equity instruments or financial assets carried at cost. This ISAK does not affect the Company's consolidated financial statements. PSAK 57 (revised 2009): Provisions, Contingent Liabilities and Contingent Assets PSAK 57 (revised 2009) provides a clearer arrangement regarding provisions that must be recognized by the Company if certain conditions met, other than that, this revised PSAK is also set more guidelines regarding the provisions related to company restructuring. The adoption of PSAK 57 (revised 2009) does not affect the Company's consolidated financial statements. The list below indicates the revised standards and interpretations of standards that must be applied for the first time on or after January 1, 2011, but are not relevant to the Company's consolidated financial statements: PSAK 12 (revised 2009): Interest in Joint Venture PSAK 22 (revised 2010): Business Combinations PSAK 58 (revised 2009): Non-current Assets Held for Sale and Discontinued Operations ISAK 7: Consolidation of Special Purposes Entities ISAK 9: Changes in Existing Decommissioning, Restoration and Similar Liabilities ISAK 11: Distributions of Non-cash to Owners ISAK 12: Joint Controlled Entity - Non-monetary Contributions ISAK 14: Intangible Assets - Web Site Costs b. Principles of Consolidation The consolidated financial statements included the accounts of the Company and its Subsidiaries. All significant intercompany accounts and transactions were eliminated. The carrying value of the Company s investment in a Subsidiary is adjusted accordingly for the net change in its investment in the Subsidiary s equity by crediting or debiting Difference in Changes in Equity Transactions of Subsidiaries presented as a separate component in the Company equity. 15 APPROVAL FOR PRINTING

20 2. SUMMARY OF ACCOUNTING POLICIES (continued) b. Principles of Consolidation (continued) The accounts of foreign subsidiaries that are not an integral part of the Company are translated into the Rupiah currency at the median rate of prevailing exchange rates at the date of financial position for financial position accounts and at the average rate during the year for statements of income. The differences which arose from the translations were debited/credited to and presented as Exchange Differences on the translation of foreign operation, presented under equity as part of Other components of equity. The accounts of foreign subsidiaries that are an integral part of the Company are translated into the Rupiah currency on the reporting date is described in Note 2s. The resulting differences were debited/credited as part of other income (charges) - net in the consolidated statements of income for the year. Acquisitions of subsidiaries that qualify as a restructuring transaction of entities under common control are accounted for in accordance with PSAK 38 (Revised 2004), Accounting for Restructuring Transactions of Business under Common Control. Based on this standard, acquisition of a subsidiary is accounted based on the pooling of interest, wherein assets and liabilities of a subsidiary are recorded at their book values. The difference between the transfer price and the Company s interest in the subsidiary s book values, if any, is recorded as Difference in Value from Restructuring Transactions of Entities under Common Control and presented as a separate component in the Company s Equity. The balance of Difference in Value from Restructuring Transactions of Entities under Common Control can be realized as a gain or loss from the time that common control no longer exists between the entities that entered into the transaction. c.. Cash Equivalents Cash equivalents include all highly liquid investments purchased with original maturities of three months or less and which are not pledged as collateral to loans. Restricted cash is recorded as part of short-term investment and other non-current assets. d. Financial Assets and Financial Liabilities The Company classified the financial instrument in the form of financial assets and financial liabilities. Financial assets are classified as follows: 1. Financial assets at fair value through profit or loss Financial assets are classified as held for trading if they are acquired for the purpose of selling in the near term or where there is evidence of a recent actual pattern of short-term profit-taking. Derivative assets are also classified as held for trading unless they are designated as effective hedging instruments. Financial assets at fair value through profit and loss are carried in the consolidated statements of financial position at fair value. Unrealized gains or losses on reporting date are credited / debited into consolidated statements of income. Financial assets at fair value through profit or loss comprise of part of the Company s shortterm investments that are held for trading. 2. Held to maturities investments Held to maturities investments are non-derivative financial assets with fixed or determinable payments and fixed maturities, and the management has the positive intention and ability to hold them to maturity, except: a. those that the Company upon initial recognition designates as at fair value through profit or loss; b. those that the Company designates as available for sale; and c. those that have a definition of loans and receivables. 16 APPROVAL FOR PRINTING

21 2. SUMMARY OF ACCOUNTING POLICIES (continued) d. Financial Assets and Financial Liabilities (continued) Financial assets are classified as follows (continued): 2. Held to maturities investments (continued) After initial measurement, held to maturities investments are measured at fair value and their transaction costs subsequently measured at amortized cost using the effective interest rate method. Held to maturities investments comprise part of the Company s long-term investments that are held to maturities. 3. Loans and Receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. At initial measurement, loans and receivables are measured at fair value and their transaction costs subsequently measured at amortized cost using the effective interest rate method, except for short-term loans and receivables where the effect of discounting is immaterial. Loans and receivables comprise of cash and cash equivalents (Note 2c), account receivables due from related parties, and other long-term receivables (Note 2f) in the consolidated statements of financial position. 4. Available-for-sale financial assets Available-for-sale financial assets are non-derivative financial assets that are designated as available-for-sale or are not classified in any of the three preceeding categories. At initial measurement, these assets are recorded at fair value. The difference between the acquisition costs with fair value at the reporting date is recorded as unrealized gain or loss and presented as part of the equity. As of December 31, 2011, financial assets classified as available for sale category form part of the Company s short-term investments. As of December 31, 2010, financial assets classified under this category comprise the Company s short-term investments and other long-term investments. The Company uses the accounting for settlement date for regular contract when recording the financial instrument transactions. Financial liabilities are classified as follows: 1. Financial liabilities at fair value through profit or loss Financial liabilities at fair value through profit or loss are financial liabilities that are transferable within a short-term period. Derivative instruments are classified as financial liabilities at fair value though profit or loss, unless they are designated as effective hedging instruments. There are no financial liabilities classified as financial liabilities at fair value through profit or loss. 2. Financial liabilities measured at amortized cost Financial liabilities not classified as financial liabilities at fair value through profit or loss are categorized as financial liabilities measured at amortized cost. Financial liabilities measured at amortized cost are comprised of, among others, account payables - trade, account payables - others, accrued expenses, due to related parties, loans and bonds payables. 17 APPROVAL FOR PRINTING

22 2. SUMMARY OF ACCOUNTING POLICIES (continued) e. Investments Investments consist of: 1. Investment in associated company The Company's investment in associated companies is accounted for under the equity method. A company is considered an associate if the Company has significant influence in that company. Significant influence is presumed to exist through the inclusion of at least 20%, but not more than 50%, of ownership unless it can be clearly demonstrated that the Company has no significant influence. Under the equity method, investments are carried at cost and subsequently adjusted by the interest in the profits or losses of associated companies, proportional to the percentage of ownership in that company, less any dividends income. Goodwill related to an associated company at the time of acquisition is included in the carrying value of investments. Amortization of goodwill is not permitted. If the interest in the loss of an associate equals or exceeds the Company's ownership in associated companies, the Company can stop the recognition of its share to avoid further losses. The obligation to recognize additional losses exceeding the Company's ownership is only recognized to the extent that the Company has incurred legal or constructive obligations to make payments on behalf of the associate. 2. Long-term investments in shares of stock without available fair values Investment in shares of stock without available fair value, wherein the Company have an ownership interest of less than 20%, and other long-term investments are stated at cost. f. Allowance for impairment of receivables On each reporting date, the Company evaluates whether there is objective evidence that impairment of receivables exist. The outstanding balance of receivables is written off against the respective allowance for impairment of receivables or directly written off when the management believes that these assets are determined to be definitely uncollectible. g. Inventories Inventories are stated at the lower of cost or net realizable value. Information technology inventories are determined by the moving average method, except for the cost of certain inventories which are determined by the specific identification method. Goods in transit are carried at cost. Retail and distribution merchandise inventories are determined by the conventional retail method. The merchandise inventories do not include goods on consignment. Allowance for inventory obsolescence is provided based on the review of the condition of individual inventory at the end of the year, while the allowance for decline in value is provided to reduce the carrying values of the inventories to their net realizeable value. h. Prepaid Expenses Prepaid expenses are amortized over their beneficial periods using the straight-line method. 18 APPROVAL FOR PRINTING

23 2. SUMMARY OF ACCOUNTING POLICIES (continued) i. Lease The classification of a lease is determined by whether the lessor or lessee controls substantially all risks and rewards incidental to ownership. Leases that do not transfer substantially all risks and rewards incidental to ownership are classified as operating leases. Operating lease payments are recognized as an expense on a straight-line basis over the lease term. Lease income from operating leases is amortized on a straight-line basis over the lease term. Long-term lease with contract value payable in installments over a period shorter than the lease period is recorded when the lease agreement is effective by debiting Prepaid long-term rent at the contract value and crediting the unpaid portion to Other non-current liabilities - net. Prepaid long-term rent, generally on store space, is amortized on the straight-line method starting from the opening of the leased store/renewal of the lease over the lease period. The portion of the rent chargable to operations within one year is reclassified and presented under current assets as part of prepaid expenses. When the Company controls substantially all the risks and rewards incidental to ownership, leases are clasified as finance lease. Finance leases are initially capitalized at amount equal to the fair value of leased asset or present value of minimum lease payments, if the present value is lower than fair value. The gain or loss on sale-and-lease back transaction that results to an operating lease, where it is clear that the transaction is established at fair value, shall be recognized immediately. If the sale price is below fair value, any profit or loss shall be recognized immediately. If the loss, however, is compensated by future lease payments at below market price, it shall be deferred and amortized in proportion to the lease payments over the period in which the asset will be used. If the sale price is above fair value, the excess fair value shall be deferred and amortized over the period in which the asset will be used. The gain or loss on a sale-and-lease back transaction that results to a finance lease is deferred and amortized over the lease term. j. Property and Equipment Property and equipment are stated at cost less accumulated depreciation and impairment losses. The cost of maintenance and repairs is charged to profit and loss as incurred; significant renewals and betterments are capitalized. When assets are retired or otherwise disposed, their carrying values and the related accumulated depreciation are removed from the accounts and any resulting gain or loss is reflected in the profit and loss for the year. Depreciation is computed as follows: Method Years Rates Buildings Straight-line 20 - Building improvements and renovations Straight-line Office furnitures, fixtures and equipments Straight-line Equipment and Doubleinstallation declining balance - 15% dan 25% Machineries Straight-line Transportation equipments Straight-line Equipments for rental Straight-line Finance leased assets - vehicle Straight-line 5-19 APPROVAL FOR PRINTING

24 2. SUMMARY OF ACCOUNTING POLICIES (continued) j. Property and Equipment (continued) The assets residual values, useful lives and methods of depreciation are reviewed at each financial year end. Landrights are stated at cost and are not amortized, unless there is a management prediction, or probability, that extension or renewal of the title is highly unlikely or will definitely not be obtained. In accordance with PSAK 47 Accounting for Land, the Company recognizes the acquisition cost of land as separate from the legal expenditures incurred to acquire the land rights, including the expenditures for the subsequent extension thereof. These expenditures are deferred and presented as part of Other Non-Current Assets in the consolidated statements of financial position and are amortized over the period of landrights. Construction in progress is carried at cost and presented as part of property and equipment. The accumulated costs will be reclassified to the appropriate property and equipment account when construction becomes substantially complete and the asset is ready for intended use. k. Investment Properties Investment properties (charged to Other Non-current Assets ) are stated at cost and depreciated using the straight-line method over 20 years, except land which is not depreciated. The Company s investment properties consist of land, buildings and improvements which are held by the Company to earn rentals or for capital appreciation, or both, rather than for use in the production, supply of goods or services, administrative purposes or sale in the ordinary conduct of business. Investment property is derecognized when the investment property is permanently withdrawn from use and no future benefit is expected from its disposal. Any gains or losses are recognized in the statements of income for the year. l. Deferred Gain on Asset Sale and Lease Transactions The gain or loss on the implementation of the restructuring program of certain assets of the Subsidiaries involving asset sale and lease transactions is deferred and amortized proportionally based on the rent expenses related to those assets. m. Impairment of Assets Value Impairment of non-financial assets Non-financial assets are reviewed by the Company for impairment whenever events or changes in circumstances indicate that the carrying amount is not recoverable. Losses due to impairment are recognized if the carrying amount exceeds the recoverable amount. Recoverable amount is the higher of the fair value less costs to sell and use value. In assessing impairment purposes, the assets are grouped at the smallest group of cashgenerating units. Non-financial assets due for impairment are reviewed for possible reversal of the impairment at each reporting date. Impairment of financial assets At each reporting date, the Company will assess if there is objective evidence that the Company s financial asset is impaired. For securities in equity that are classified as available for sale, a securiy that is prolonged below its cost is an indicator that it is significantly impaired. 20 APPROVAL FOR PRINTING