PT Indo Perkasa [PDF]

Citation preview

PT INDO PERKASA FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2017 AND INDEPENDENT AUDITORS’ REPORT



PT INDO PERKASA TABLE OF CONTENTS Page DIRECTORS’ STATEMENT LETTER INDEPENDENT AUDITORS’ REPORT FINANCIAL STATEMENTS - For the year ended March 31, 2017 Statement of Financial Position



1



Statement of Profit or Loss and Other Comprehensive Income



2



Statement of Changes in Equity



3



Statement of Cash Flows



4



Notes to Financial Statements



5



PT INDO PERKASA STATEMENT OF FINANCIAL POSITION MARCH 31, 2017 Notes



March 31, 2017 US$



March 31, 2016 US$



ASSETS CURRENT ASSETS Cash and cash equivalent Trade accounts receivable Related party Third parties Inventories Prepaid taxes Prepayments and advances



5 6 23



1,508,712



139,590



520,321 1,167,037 122,910 101,336



390,940 155,611 39,167 69,024



3,420,316



794,332



21



62,069 188,498



34,509 188,498



9



20,895,033 180,656



23,406,341 177,256



Total Noncurrent Assets



21,326,256



23,806,604



TOTAL ASSETS



24,746,572



24,600,936



546,187 1,011,899 1,019,026 123,768 12,306,080



546,226 697,032 52,961 446,666 14,184 16,467,352



15,006,960



18,224,421



22



198,921



99,113



14 15 16



551,390 5,000,000 6,130 3,983,171



551,390 5,000,000 726,012



9,540,691



6,277,402



24,746,572



24,600,936



7 8



Total Current Assets NONCURRENT ASSETS Deferred tax assets Advance for purchase of property, plant and equipment Property, plant and equipment - net of accumulated depreciation and impairment loss of US$ 5,002,161 at March 31, 2017 and US$ 3,014,636 at March 31, 2016 Other noncurrent assets



LIABILITIES AND EQUITY CURRENT LIABILITIES Trade accounts payable Related parties Third parties Taxes payable Accrued expenses Advance from customers Due to related parties



10 23 11 12 13,23



Total Current Liabilities NONCURRENT LIABILITY Employee benefits obligations EQUITY Capital stock - Rp 1,000,000 par value per share Authorized - 20,000 shares Subscribed and paid-up - 5,000 shares Contributed capital Additional paid-in capital Retained earnings Total Equity TOTAL LIABILITIES AND EQUITY See accompanying notes to financial statements which are an integral part of the financial statements.



-1-



PT INDO PERKASA STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED MARCH 31, 2017



REVENUES COSTS OF REVENUES



Notes



2017 US$



17,23



16,908,562



9,724,692



18 \



10,584,479



6,731,180



6,324,083



2,993,512



GROSS PROFIT General and administrative expenses Financial charges Loss on disposal of property, plant and equipment Others - net



19 20 9



PROFIT BEFORE TAX TAX EXPENSE - NET



21



PROFIT FOR THE YEAR OTHER COMPREHENSIVE INCOME Item that will not be reclassified subsequently to profit or loss: Remeasurement of defined benefit obligation, net of tax TOTAL COMPREHENSIVE INCOME FOR THE YEAR



See accompanying notes to financial statements which are an integral part of the financial statements.



-2-



(540,597) (961,817) (614,736) 164,171



2016 US$



(113,228) (1,859,597) (421,656)



4,371,104



599,031



(1,105,046)



(163,121)



3,266,058



435,910



(8,899) 3,257,159



(9,800) 426,110



PT INDO PERKASA STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED MARCH 31, 2017



Contributed capital US$



Additional paid-in capital US$



551,390



5,000,000



-



299,902



5,851,292



Profit for the year



-



-



-



435,910



435,910



Other comprehensive income



-



-



-



Balance as of March 31, 2016



551,390



5,000,000



-



726,012



6,277,402



Profit for the year



-



-



-



3,266,058



3,266,058



Other comprehensive income



-



-



-



-



-



6,130



-



6,130



551,390



5,000,000



6,130



3,983,171



9,540,691



Note



Balance as of April 1, 2015



Additional paid-in capital Balance as of March 31, 2017



Capital stock US$



16



See accompanying notes to financial statements which are an integral part of the financial statements.



-3-



Retained earnings US$



Total equity US$



(9,800)



(8,899)



(9,800)



(8,899)



PT INDO PERKASA STATEMENT OF CASH FLOWS FOR THE YEAR ENDED MARCH 31, 2017 2017 US$ CASH FLOWS FROM OPERATING ACTIVITIES Profit before tax Adjustments: Financial charges Depreciation expense Employee benefits obligations Loss on disposal of property,plant and equipment Operating cash flows before changes in working capital Changes in working capital: Trade accounts receivable Inventories Prepaid taxes Prepayments and advances Other noncurrent assets Trade accounts payable Taxes payable Advance from customers Accrued expenses Cash Generated from Operations



4,371,104



599,031



961,817 2,154,243 87,941 614,736



1,859,597 918,462 38,284 -



8,189,841



3,415,374



(1,296,418) 32,701 39,167 (32,312) (3,399) (697,071) 156,156 109,583 572,360 7,070,608



Payment of employee benefits Payment of income tax



(326,856)



Net Cash Provided by Operating Activities



2016 US$



6,743,752



(208,756) (29,319) 228,184 (47,480) (2,069) 549,746 23,148 (129,824) 322,535 4,121,539 (13,368) (163,925) 3,944,246



CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of property, plant and equipment Proceeds from sale of property, plant and equipment Payment of due from a related party



(261,143) 9,602 -



(886,514) 969,237



Net Cash Used in Provided by (Used in) Investing Activities



(251,541)



82,723



CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from due to a related party Payment of due to related parties Payment of financial charges Net Cash Used in Financing Activities NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENT CASH AND CASH EQUIVALENT AT BEGINNING OF YEAR CASH AND CASH EQUIVALENT AT END OF YEAR



See accompanying notes to financial statements which are an integral part of the financial statements.



-4-



17,165,482 (22,273,954) (14,617)



1,824,329 (6,093,286) (1,978)



(5,123,089)



(4,270,935)



1,369,122



(243,966)



139,590



383,556



1,508,712



139,590



PT INDO PERKASA NOTES TO FINANCIAL STATEMENTS MARCH 31, 2017 AND FOR THE YEAR THEN ENDED 1.



GENERAL a.



Establishment and General Information PT Indo Perkasa (“the Company”) was established in Samarinda based on deed No. 03 dated November 1, 2002 of Hernawan Hadi, S.H., notary in Samarinda. The deed of establishment was approved by the Ministry of Justice and Human Rights of the Republic of Indonesia in its Decision Letter No. C-00836 HT.01.01.TH.2003 dated January 16, 2003. The Company’s articles of association have been amended several times, most recently by deed No. 3 dated May 20, 2015 of Saint Anderonikus, A.Md, SH, M.Kn., notary in Subang, regarding the change in the management composition. The Company is domiciled in Samarinda, East Kalimantan. The Company’s head office is located at Menara Prima Tower 1 Jl. DR. Ide Anak Agung Gde Agung Blok 6.2, Kawasan Mega Kuningan, Jakarta. In accordance with Article 3 of the Company’s Articles of Association, the scope of its activities is mainly to engage in the coal mining services. The Company started its commercial operations in 2012. The Company had average total number of employees of 93 and 87 at March 31, 2017 and 2016, respectively. The Company belongs to a group of companies owned by Mercator Limited, a group listed on the National Stock Exchange and Bombay Stock Exchange in India. The Company’s management at March 31, 2017 is as follows: Commissioner President Commissioner Board of Directors President Director Directors



b.



2.



:



Atul Agarwal



: : :



Kirtipal Singh Raheja Suhadi Zaini Handoko Soeseno



License 1.



Based on letter no. 503/194/IUJP/BPPMD-PTSP/II/2015 dated February 15, 2015, the Company is granted mining service permit (Izin Usaha Jasa Pertambangan) by the Local Government of East Borneo for 5 years and can be extended.



2.



Based on Dock Permit Letter No. 552.3/952/Dishub/VII/2011 dated July 1, 2011, the Government granted permit to the Company to operate a special dock located at the shipping line of Mahakam River as a mooring facility/dock ship/barge to its own interest to support the loading/unloading of coal.



ADOPTION OF NEW AND REVISED STATEMENTS OF FINANCIAL ACCOUNTING STANDARDS (“PSAK”) AND INTERPRETATIONS OF PSAK (“ISAK”) a.



Standard and amendments effective in the current year In the current year, the Company has applied a new standard, a number of amendments, and an interpretation to PSAK issued by the Financial Accounting Standard Board of the Indonesian Institute of Accountants that are relevant to its operations and effective for accounting period beginning on January 1, 2016.



-5-



PT INDO PERKASA NOTES TO FINANCIAL STATEMENTS MARCH 31, 2017 AND FOR THE YEAR THEN ENDED - Continued 



PSAK 70, Accounting for Tax Amnesty Asset and Liability The new standard specifically prescribes the accounting for tax amnesty asset and liability in relation to the application of Tax Amnesty Law. PSAK 70 provides two (2) accounting policy choices for an entity who recognizes assets and liabilities in relation to the provision of the Tax Amnesty Law based on Declaration Letter for Tax Amnesty as whether: 1. 2.



use the existing PSAK, or use the specific provisions in paragraph 10- 23 of PSAK 70.



The major differences between the two choices are related to the measurement, presentation, and disclosures of the assets and liabilities and whichever is chosen by an entity, it has to be consistently applied to all Tax Amnesty assets and liabilities. The standard is effective on July 1, 2016 consistent with the enactment of the Tax Amnesty Law. The application of the following amendments, and interpretation to standards have not resulted to material impact to disclosures or on the amounts recognized in the current and prior period financial statements:      b.



Amendments to PSAK 7, Related Party Disclosures Amendments to PSAK 16, Property, Plant and Equipment Amendments to PSAK 24, Employee Benefits Amendments PSAK 25, Accounting Policies, Changes in Accounting Estimates and Errors Amendments to PSAK 68, Fair Value Measurement



Standards and interpretations issued not yet adopted New standards, amendments and interpretation effective for periods beginning on or after January 1, 2017, with early application is permitted are the following: 



PSAK 1: Presentation of Financial Statements about Disclosure Initiative



Standard and amendment to standard effective for periods beginning on or after January 1, 2018, with early application permitted are: 



Amendments to PSAK 16: Property, Plant and Equipment



As of the issuance date of the financial statements, the effect of adoption of these standards, amendments and interpretations on the financial statements is not known nor reasonably estimable by management.



3.



SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES a.



Statement of Compliance The financial statements have been prepared in accordance with Indonesian Financial Accounting Standards.



-6-



PT INDO PERKASA NOTES TO FINANCIAL STATEMENTS MARCH 31, 2017 AND FOR THE YEAR THEN ENDED - Continued b.



Basis of Preparation The financial statements have been prepared on the historical cost basis except for certain properties and financial instruments that are measured at revalued amounts or fair values at the end of each reporting period, as explained in the accounting policies below. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The statement of cash flows is prepared using the indirect method with classifications of cash flows into operating, investing and financing activities.



c.



Foreign Currency Transactions and Translation The financial statements are measured and presented in U.S. Dollar (US$), which is the functional currency for the financial statements. In preparing the financial statements, transactions in currencies other than the Company’s functional currency (foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Nonmonetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Nonmonetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Exchange differences on monetary items are recognized in profit or loss in the period in which they arise.



d.



Transaction with Related Parties A related party is 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. ii. iii.



b.



has control or joint control over the reporting entity; has significant influence over the reporting entity; or is a member of the key management personnel of the reporting entity or of a parent of the reporting entity.



An entity is related to the reporting entity if any of the following conditions applies: i. ii. iii. iv. v.



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). 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). Both entities are joint ventures of the same third party. One entity is a joint venture of a third entity and the other entity is an associate of the third entity. 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.



-7-



PT INDO PERKASA NOTES TO FINANCIAL STATEMENTS MARCH 31, 2017 AND FOR THE YEAR THEN ENDED - Continued 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 a parent of the entity). viii. The entity, or any member of a group of which it is a part, provides key management personnel services to the reporting entity or to the parent of the reporting entity. e.



Financial Assets All financial assets are recognized and derecognized on trade date where the purchase or sale of a financial asset is under a contract which terms require delivery of the financial assets within the time frame established by the market concerned, and are initially measured at fair value plus transaction costs. The Company’s financial assets are classified as loans and receivables. Loans and receivables Cash and cash equivalent, except cash on hand and trade accounts receivable 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 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 amortized 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. Impairment of financial assets Loans and receivables are assessed for indicators of impairment at each reporting date. Loans and receivables are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the loans and receivables, the estimated future cash flows of the loans and receivables have been affected. Objective evidence of impairment could include:   



significant financial difficulty of the issuer or counterparty; or default or delinquency in interest or principal payments; or it is becoming probable that the borrower will enter bankruptcy or financial reorganisation.



Loans and receivables 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 experiences 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.



-8-



PT INDO PERKASA NOTES TO FINANCIAL STATEMENTS MARCH 31, 2017 AND FOR THE YEAR THEN ENDED - Continued The amount of the impairment on loans and receivables 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 receivables is reduced by the impairment loss 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. Derecognition of financial assets The Company derecognizes a financial asset 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 collateralized 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. 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 at Amortized Cost Trade and other payables and other borrowings are initially measured at fair value, net of transaction costs, and are subsequently measured at amortized cost, using the effective interest method.



-9-



PT INDO PERKASA NOTES TO FINANCIAL STATEMENTS MARCH 31, 2017 AND FOR THE YEAR THEN ENDED - Continued 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 Asset and Financial Liabilities The Company only offsets financial assets and liabilities and presents the net amount in the statement of financial position where it:  



h.



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.



Cash and cash Equivalent For cash flow presentation purposes, cash and cash equivalent consist of cash on hand and in bank and all unrestricted investments with maturities of three months or less from the date of placement.



i.



Inventories Inventories are stated at cost or net realizable value, whichever is lower. Cost is determined using the weighted average method. Net realizable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale.



j.



Prepaid Expenses Prepaid expenses are amortized over their beneficial periods using the straight-line method.



k.



Property, Plant and Equipment Property, plant and equipment are stated at cost, less accumulated depreciation and any accumulated impairment losses. Depreciation is recognized so as to write-off the cost of assets less residual value using the following method: Unit of measure Depreciation Prior to method Year 2017 April 1, 2016 Coal Crusher Plant Land improvements Building Heavy equipment Vehicle Furniture, fixture and office equipment



Unit of production 30,000,000 MT 60,000,000 MT Straight-line 10 - 20 years 20 years Straight-line 20 years 20 years Straight-line 4 years 4 years Straight-line 4 years 4 years Double declining 4 years 4 years



Starting April 1, 2016, the Company changed the estimated useful lives of Coal Crusher Plant and Land improvements, based on the Company’s assessment on the remaining estimated useful life of the assets. This change was applied prospectively.



- 10 -



PT INDO PERKASA NOTES TO FINANCIAL STATEMENTS MARCH 31, 2017 AND FOR THE YEAR THEN ENDED - Continued The estimated useful lives, residual values and depreciation methods are reviewed at each year end, with the effect of any changes in estimate accounted for on a prospective basis. Land is stated at cost and is not depreciated. 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. Construction in progress is stated at cost. Construction in progress is transferred to the respective property, plant and equipment account when completed and ready for use. l.



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. 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 asset 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.



m. Impairment of Non-Financial Assets 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. If the recoverable amount of a 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. n.



Revenue and Expense Recognition Rendering of services Revenue from contracts to provide services is recognized when the services are rendered. Interest income Interest income is accrued on time basis, by reference to the principal outstanding and at the applicable interest rate.



- 11 -



PT INDO PERKASA NOTES TO FINANCIAL STATEMENTS MARCH 31, 2017 AND FOR THE YEAR THEN ENDED - Continued Expenses Expenses are recognized when incurred. o.



Employee Benefits Obligations The Company provides defined employee benefits to its employees in accordance with Labor Law No. 13/2003. No funding has been made to the defined benefit plans. The cost of providing benefits is determined using the projected unit credit method, with actuarial valuations being carried out at the end of each annual reporting period. Remeasurement, comprising actuarial gains and losses, the effect of the changes to the asset ceiling (if applicable) and the return on plan assets (excluding interest), is reflected immediately in the statement of financial position with a charge or credit recognised in other comprehensive income in the period in which they occur. Remeasurement recognised in other comprehensive income is reflected immediately in retained earning and will not be reclassified to profit or loss. Past service cost is recognised in profit or loss in the period of a plan amendment. Net interest is calculated by applying the discount rate at the beginning of the period to the net defined benefit liability or asset. Defined benefit costs are categorised as follows:   



Service cost (including current service cost, past service cost, as well as gains and losses on curtailments and settlements). Net interest expense or income Remeasurement



The Company presents the first two components of defined benefit costs in profit or loss. Curtailment gains and losses are accounted for as past service costs. The retirement benefit obligation recognised in the statement of financial position represents the actual deficit or surplus in the Company’s defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any economic benefits available in the form of refunds from the plans or reductions in future contributions to the plans. A liability for a termination benefit is recognised at the earlier of when the entity can no longer withdraw the offer of the termination benefit and when the entity recognises any related restructuring costs. p.



Income Tax The tax currently payable is based on taxable profit to the year. Taxable profit differs from profit before tax as reported in the statement of profit or loss and other comprehensive income because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. Current tax expense is determined based on the taxable income for the year computed using prevailing tax rates. Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences to the extent that is probable that taxable profits will be available against which those deductible temporary differences can be utilized. Such deferred tax assets and liabilities are not recognized if the temporary differences arises from the initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.



- 12 -



PT INDO PERKASA NOTES TO FINANCIAL STATEMENTS MARCH 31, 2017 AND FOR THE YEAR THEN ENDED - Continued 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. The carrying amount of deferred tax asset 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. Current and deferred tax are recognized as an expense or income in profit or loss, except when they relate to items that are recognized outside of profit or loss (whether in other comprehensive income or directly in equity), in which case the tax is also recognized outside of profit or loss. 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 on either the same taxable entity or different taxable entities when there is an intention to settle its current tax assets and current tax liabilities on a net basis, or to realize the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.



4.



CRITICAL ACCOUNTING JUDGMENTS AND ESTIMATES In the application of the Company’s accounting policies, which are described in Note 3, the directors 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 recognised 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 Below are the critical judgments, apart from those involving estimations, that the directors have made in the process of applying the Company accounting policies and that have the most significant effect 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:



- 13 -



PT INDO PERKASA NOTES TO FINANCIAL STATEMENTS MARCH 31, 2017 AND FOR THE YEAR THEN ENDED - Continued 



Impairment Loss on Loans and Receivables The Company assesses its loans and 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 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 amounts of loans and receivables are disclosed in Notes 5 and 6.







Estimated Useful Lives of Property, Plant and Equipment The useful life of each item of the Company’s property, plant 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. A change in the estimated useful life of any item of property, plant and equipment would affect the recorded depreciation expense and decrease in the carrying values of these assets. The carrying amounts of property, plant and equipment are disclosed in Note 9.







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 such future periods. While it is believed that the Company’s assumptions are reasonable and appropriate, significant differences in actual experience or significant changes in assumptions may materially affect the Company’s employee benefits obligations.







Impairment of Non-Financial Assets The Company reviews its non-financial assets for any indication of impairment at each reporting date. If any such indication exist, management estimates the recoverable amount of the non-financial assets. Determining the value in use requires the estimation of cash flows expected to be generated from the continued use and ultimate disposition of such nonfinancial assets (cash generating unit) and a suitable discount rate in order to calculate the present value. While it is believed that the assumptions used in the estimation of the value in use of non-financial assets reflected in the financial statements are appropriate and reasonable, significant changes in these assumptions may materially affect the assessment of recoverable values and any resulting impairment loss could have a material adverse impact on the results of operations.



- 14 -



PT INDO PERKASA NOTES TO FINANCIAL STATEMENTS MARCH 31, 2017 AND FOR THE YEAR THEN ENDED - Continued 5.



CASH AND CASH EQUIVALENT March 31, 2017 US$



6.



Cash on hand Cash in banks U.S. Dollar PT Bank Danamon Indonesia Tbk PT Bank Mandiri (Persero) Tbk Rupiah PT Bank Danamon Indonesia Tbk PT Bank Mandiri (Persero) Tbk Time Deposit in U.S. Dollar PT Bank Danamon Indonesia Tbk, interest rates per annum 1.3% in 2017



1,000,000



Total



1,508,712



March 31, 2016 US$



10,597



8,429



396,236 1,017



120,822 572



100,814 48



9,630 137



139,590



TRADE ACCOUNTS RECEIVABLE March 31, 2017 US$ a. By debtor Related party (Note 23) PT Karya Putra Borneo



March 31, 2016 US$



520,321



-



Third parties PT Baramulti Suksessarana Tbk PT Rinjani Kertanegara CV Kutai Kumala Energy Others



1,099,220 67,817 -



195,325 183,521 8,448 3,646



Total



1,167,037



390,940



1,619,541



203,177



48,735 19,082 -



114,840 44,623 28,300



1,687,358



390,940



1,663,323 24,035



195,622 195,318



1,687,358



390,940



b. Aging Not yet due Past due: Under 30 days 31 - 60 days 61 - 90 days More than 91 days Total c. By currency U.S. Dollar Rupiah Total



No allowance for impairment loss was provided on receivables from third parties as management believes that all such receivables are collectible. 7.



INVENTORIES



- 15 -



PT INDO PERKASA NOTES TO FINANCIAL STATEMENTS MARCH 31, 2017 AND FOR THE YEAR THEN ENDED - Continued March 31, 2017 US$



8.



March 31, 2016 US$



Spareparts Fuel



118,514 4,396



153,035 2,576



Total



122,910



155,611



PREPAID TAXES March 31, 2017 US$



March 31, 2016 US$



Corporate income tax 2015 2013 Value-added Tax Other tax receivable



-



11,218 1,785 23,501 2,663



Total



-



39,167



On April 2016, the Company received income tax overpayment assessment letter (SKPLB) dated April 15, 2016 for corporate income tax fiscal year 2014 amounting to US$ 48,726. The difference was recognized in profit or loss of the period. The tax refund has been received in June 2016. 9.



PROPERTY, PLANT AND EQUIPMENT April 1, 2016 US$ At cost: Land Land improvements Coal crusher plant Building Furniture, fixture and office equipment Heavy equipment Vehicle Total Accumulated depreciation and impairment loss: Land improvements Coal crusher plant Building Furniture, fixture and office equipment Heavy equipment Vehicle Total Net Carrying Value



Additions US$



Deduction US$



March 31, 2017 US$



7,446,634 9,915,720 7,744,817 403,293



68,240 57,523



750,033 -



7,514,874 9,165,687 7,744,817 460,816



196,349 569,987 144,177



11,092 130,418 -



41,023 -



207,441 659,382 144,177



26,420,977



267,273



791,056



25,897,194



1,172,440 1,551,766 110,998



954,140 961,969 27,692



159,382 -



1,967,198 2,513,735 138,690



107,613 60,447 11,372



46,703 130,425 33,314



7,336 -



154,316 183,536 44,686



3,014,636



2,154,243



166,718



5,002,161



23,406,341



- 16 -



20,895,033



PT INDO PERKASA NOTES TO FINANCIAL STATEMENTS MARCH 31, 2017 AND FOR THE YEAR THEN ENDED - Continued April 1, 2015 US$ At cost: Land Land improvements Coal crusher plant Building Furniture, fixture and office equipment Heavy equipment Vehicle Total Accumulated depreciation and impairment loss: Land improvements Coal crusher plant Building Furniture, fixture and office equipment Heavy equipment Vehicle Total Net Carrying Value



Additions US$



Deduction US$



March 31, 2016 US$



7,331,821 9,915,720 7,744,817 385,160



114,813 18,133



-



7,446,634 9,915,720 7,744,817 403,293



156,945 -



39,404 569,987 144,177



-



196,349 569,987 144,177



25,534,463



886,514



-



26,420,977



676,654 1,287,976 76,548



495,786 263,790 34,450



-



1,172,440 1,551,766 110,998



54,996 -



52,617 60,447 11,372



-



107,613 60,447 11,372



2,096,174



918,462



-



3,014,636



23,438,289



23,406,341



All depreciation expense was allocated to the cost of revenues (Note 18). Disposal of property, plant and equipment is as follows: 2017 US$



2016 US$



Net carrying amount Proceeds from sale of property, plant and equipment



(624,338) 9,602



-



Loss on disposal of property, plant and equipment



(614,736)



-



10. TRADE ACCOUNTS PAYABLE March 31, 2017 US$



March 31, 2016 US$



Related parties (Note 23) PT Mincon Indo Resources PT Oorja Indo KGS PT Nuansa Sakti Kencana



-



338,840 190,681 16,705



Total



-



546,226



546,187



697,032



Third parties



- 17 -



PT INDO PERKASA NOTES TO FINANCIAL STATEMENTS MARCH 31, 2017 AND FOR THE YEAR THEN ENDED - Continued 11. TAXES PAYABLE March 31, 2017 US$ Corporate income tax (Note 21) Income taxes: Article 4(2) Article 21 Article 23 Article 25 Value-added Tax Total



March 31, 2016 US$



813,399



10,616



58 16,654 6,416 1,306 174,066



9,043 33,302 -



1,011,899



52,961



12. ACCRUED EXPENSES March 31, 2017 US$ Bonus Professional fees Heavy equipment rental Fuel Others Total



March 31, 2016 US$



350,000 317,106 257,123 24,461 70,336



21,682 391,802 26,660 6,522



1,019,026



446,666



13. DUE TO RELATED PARTIES March 31, 2017 US$



March 31, 2016 US$



Oorja Batua Pte. Ltd. PT Karya Putra Borneo (KPB)



11,406,110 -



2,026,000 11,558,598



Subtotal Accrued interest Processing fee



11,406,110 899,970 -



13,584,598 1,882,754 1,000,000



Total



12,306,080



16,467,352



On December 19, 2011, the Company obtained a loan from KPB. The loan is unsecured and repayable on demand. Based on the amendment to the loan agreement on April 1, 2013, the loan bears interest of 3 months LIBOR plus a fixed rate starting 3 months after the completion of the Company’s facility construction. The Company completed its construction facility in December 2013. This loan has been repaid in May 2016. On April 11, 2014, the Company obtained a loan facility from Oorja Batua Pte. Ltd. with maximum credit limit of US$ 4,000,000. Based on the agreement, the loan bears interest of 3 months LIBOR plus a fixed rate, is unsecured and is repayable on demand. This loan has been repaid in May 2016.



- 18 -



PT INDO PERKASA NOTES TO FINANCIAL STATEMENTS MARCH 31, 2017 AND FOR THE YEAR THEN ENDED - Continued On March 21, 2016, the Company and Oorja Batua Pte. Ltd. entered into a loan agreement whereas Oorja Batua Pte. Ltd. will provide loan to the Company with maximum amount of US$ 20,000,000. The loan is secured by the Company’s share owned by KPB. The loan bears a 3 months LIBOR plus a fixed interest rate and payable on demand. This loan agreement also requires the Company to pay loan processing fee amounting to US$ 1,000,000.



14. CAPITAL STOCK The details of the Company’s stockholders are as follows:



Name of Stockholders



Number of Shares



March 31, 2017 and 2016 Percentage of Total Paid-up Ownership Capital Stock % US$



PT Karya Putra Borneo PT Indo Karya Perdana



2,550 2,450



51 49



281,209 270,181



Total



5,000



100



551,390



15. CONTRIBUTED CAPITAL Contributed capital represents land waterfront, hauling road and stockpile amounting to US$ 5,000,000.



16. ADDITIONAL PAID IN CAPITAL On October 5, 2016, the Company filed an Asset Declaration Letter for Tax Amnesty (SPHPP) amounted to Rp 80,000,000 (equivalent to US$ 6,130) to the Directorate General of Taxes (“DGT”) and has paid the tax due. On October 14, 2016, the Company received Tax Amnesty Letter No.KET-6895/PP/WPJ.14/2016 from the DGT.



17. REVENUES



Loading and crushing Hauling Total



2017 US$



2016 US$



8,374,082 8,534,480



5,141,007 4,583,685



16,908,562



9,724,692



31% and 28% for the year ended March 31, 2017 and 2016, respectively, of the above revenues were made to a related party (Note 23).



- 19 -



PT INDO PERKASA NOTES TO FINANCIAL STATEMENTS MARCH 31, 2017 AND FOR THE YEAR THEN ENDED - Continued 18. COSTS OF REVENUES



Stockpile operation Depreciation (Note 9) Salaries and allowance Crushing and loading Technical fees Security Freight and shipment expenses Hauling road maintenance Compensation for disturbance Staff welfare Others (below US$ 30,000 each) Total



2017 US$



2016 US$



2,191,050 2,154,243 2,011,272 1,786,673 645,292 427,094 280,537 205,878 156,525 141,502 584,413



1,560,457 918,462 624,455 1,316,021 1,467,325 218,209 139,694 113,172 373,385



10,584,479



6,731,180



19. GENERAL AND ADMINISTRATIVE EXPENSES 2017 US$



2016 US$



Professional fees Permit and license Others



456,808 23,500 60,289



80,811 23,500 8,917



Total



540,597



113,228



20. FINANCIAL CHARGES 2017 US$



2016 US$



Loan interest Loan processing fees Others



947,200 14,617



857,619 1,000,000 1,978



Total



961,817



1,859,597



21. INCOME TAXES Tax expense of the Company consists of the following: 2017 US$



2016 US$



Current Deferred



(1,129,639) 24,593



(174,541) 11,420



Tax expense - net



(1,105,046)



(163,121)



- 20 -



PT INDO PERKASA NOTES TO FINANCIAL STATEMENTS MARCH 31, 2017 AND FOR THE YEAR THEN ENDED - Continued Current Tax Reconciliation between profit before tax per statement of profit or loss and other comprehensive income and taxable income is as follows: 2017 2016 US$ US$ Profit before tax per statement of profit or loss and comprehensive income Temporary differences: Difference between commercial and fiscal depreciation Provision for employee benefits obligations



Nondeductible expenses (nontaxable income): Donation Interest income already subject to final tax Community development Benefits in kind Others Total Taxable income



4,371,104



599,031



10,432 87,941



20,765 24,918



98,373



45,683



26,528 (1,468) 24,018



(211) 12,135 7,600 33,926



49,078



53,450



4,518,555



698,164



Current tax expense and payable are as follows: 2017 US$ Current tax expense



2016 US$



1,129,639



174,541



Less prepaid taxes Income tax Article 22 Article 23 Article 25



3,446 300,995 11,799



2,709 161,216 -



Total



316,240



163,925



Current tax payable (Note 11)



813,399



10,616



- 21 -



PT INDO PERKASA NOTES TO FINANCIAL STATEMENTS MARCH 31, 2017 AND FOR THE YEAR THEN ENDED - Continued Deferred Tax The details of the Company's deferred tax assets are as follows: April 1, 2016 US$



Credited to profit or loss US$



Credited to other comprehensive income US$



March 31, 2017 US$



Employee benefits Difference between commercial and fiscal depreciation



24,779



21,985



2,967



49,731



9,730



2,608



-



12,338



Deferred tax asset



34,509



24,593



2,967



62,069



April 1, 2015 US$



Credited to profit or loss US$



Credited to other comprehensive income US$



March 31, 2016 US$



Employee benefits Difference between commercial and fiscal depreciation



15,283



6,229



3,267



24,779



4,539



5,191



-



9,730



Deferred tax asset



19,822



11,420



3,267



34,509



A reconciliation between the tax expense and the amounts computed by applying the effective tax rate to profit before tax per statement of profit or loss and other comprehensive income is as follows: 2017 US$



2016 US$



Profit before tax per statement of profit or loss and other comprehensive income



4,371,104



599,031



Tax expense at effective tax rates:



1,092,776



149,758



Tax effect of nondeductible expenses (nontaxable income): Donation Interest income already subject to final tax Community development Benefit in kind Others Total Tax expense



6,632 (367) 6,005



(53) 3,034 1,900 8,482



12,270



13,363



1,105,046



163,121



22. EMPLOYEE BENEFITS OBLIGATIONS The Company provides employee benefits for covering all the local permanent employees in accordance with Labor Law No. 13/2003. The number of employees entitled to the benefits were 93 and 87 as of March 31, 2017 and 2016, respectively. The defined benefit plan typically expose the Company to actuarial risks such as: interest rate risk, longevity risk and salary risk. Interest risk A decrease in the bond interest rate will increase the plan liability.



- 22 -



PT INDO PERKASA NOTES TO FINANCIAL STATEMENTS MARCH 31, 2017 AND FOR THE YEAR THEN ENDED - Continued Longevity risk The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants during their employment. An increase in the life expectancy of the plan participants will increase the plan’s liability. Salary risk The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the plan’s liability. Amounts recognized in the statement of profit or loss and other comprehensive income with respect to these employee benefits are as follows: 2017 US$



2016 US$



Current service cost Interest costs Past service cost Foreign exchange difference



56,957 7,902 23,416 (334)



34,980 4,189 (885)



Components of defined benefit costs recognised in profit or loss



87,941



38,284



Component of defined benefit costs recognised in other comprehensive income



11,866



13,067



Total



99,807



51,351



Movements in the present value of employee benefits obligations are as follow: March 31, 2017 US$ Opening balance of present value of unfunded obligation Current service cost Interest cost Past service cost Benefit paid Actuarial loss Effect of foreign exchange



99,113 56,957 7,902 23,416 11,866 (333)



Ending balance of present value of unfunded obligation



198,921



- 23 -



March 31, 2016 US$ 61,130 34,980 4,189 (13,368) 13,067 (885) 99,113



PT INDO PERKASA NOTES TO FINANCIAL STATEMENTS MARCH 31, 2017 AND FOR THE YEAR THEN ENDED - Continued The cost of providing post-employment benefits is calculated by PT Jasa Aktuaria Praptasentosa Gunajasa an independent actuary. The actuarial calculation was carried out using the following key assumptions:



Discount rate Future salary increment rate Mortality rate Disability rate Resignation rate



Normal retirement age



March 31, 2017



March 31, 2016



7.5% per annum 9.0% per annum TMI - 2011 1% of TMI 2011 5% per annum until age 29 then decrease linearly into 0% at age 59 60



8.0% per annum 9.0% per annum TMI - 2011 1% of TMI 2011 5% per annum until age 29 then decrease linearly into 0% at age 59 60



23. NATURE OF RELATIONSHIP AND TRANSACTIONS WITH RELATED PARTIES Nature of Relationship a. Mercator Limited is the ultimate parent of the Company. b. PT Karya Putra Borneo (KPB) and PT Indo Karya Perdana (IKP) are the stockholders of the Company. c.



Related parties with the same ultimate parent with the Company: - PT Mincon Indo Resources (MIR) - PT Oorja Indo KGS (OIKGS) - PT Oorja Indo Petangis Four (OIP4) - PT Nuansa Sakti Kencana (NSK) - Oorja Batua Pte. Ltd. - Mercator International Pte. Ltd. - Oorja Holding Pte. Ltd. - MCS Holdings Pte. Ltd.



Transactions with Related Parties The Company entered into certain transactions with related parties, including the following: a.



Revenue from KPB related to charges for coal hauling, loading and crushing amounted to US$ 5,215,664 and US$ 2,728,889 for the year ended March 31, 2017 and 2016, respectively (Note 17).



b.



The Company purchased property, plant and equipment from MIR, OIKGS, OIP4 and NSK with total amount of US$ 228,782 in 2016. At the reporting date, the liabilities from these purchases were presented as trade accounts payable (Note 10).



c.



The Company obtained loans from KPB and Oorja Batua Pte. Ltd as described in Note 13.



- 24 -



PT INDO PERKASA NOTES TO FINANCIAL STATEMENTS MARCH 31, 2017 AND FOR THE YEAR THEN ENDED - Continued d.



Based on Notarial Deed No. 98 dated September 20, 2011 of Humberg Lie, S.H., S.E., Mkn., notary in Jakarta, the Company agreed to grant corporate guarantee to ICICI Bank Limited, Singapore Branch for the full payment by Oorja Holding Pte. Ltd. and Mercator International Pte. Ltd. of the loan facility given by ICICI Bank Limited to Oorja Holding Pte. Ltd., Mercator International Pte. Ltd. and MCS Holdings Pte. Ltd. dated September 14, 2011.



24. SIGNIFICANT COMMITMENTS AND AGREEMENTS a.



Based on road usage agreement between the Company and Bakungan Village dated March 10, 2008, which has been amended on June 2, 2008, the Company agreed to take responsibility for the repair and maintenance of 2 kilometers road at Bakungan Village and pay a hauling charge for each Metric Tonne of coal that is hauled by the Company and its affiliate through the road. In exchange, the Company has rights to use the 30 kilometers road ex. PT Cita for hauling. The agreement is valid for 30 years up to March 10, 2038. As of March 31, 2017, only one kilometer of the road is being used by the Company.



b.



On March 26, 2014, the Company and PT Baramulti Suksessarana Tbk (BSSR) entered into a port loading agreement where the Company agreed to provide coal hauling and loading services for BSSR on an agreed price based on coal quantity loaded into barge. BSSR coal in the Company’s stockpile shall not exceed 50,000 MT. The agreement is valid for three years and can be extended. On June 8, 2015, this agreement has been amended to extend to 4 years with minimum quantity of 1 million MT per year and to adjust the coal hauling and loading rate based on coal market price every three months.



c.



On May 8, 2013, the Company and CV Kutai Kumala Energy (KKE) entered into an agreement where the Company will provide coal hauling service to KKE on an agreed price based on coal quantity loaded into barge. The agreement is valid until KKE’s mining rights expired.



d.



On May 12, 2015, the Company and PT Bukit Teluk Mas (BTM) entered into an agreement, where the Company will provide coal hauling and loading service for CV Alam Jaya Indah (AJI) on an agreed price based on coal loaded into barge. AJI has appointed BTM to manage its mine. The agreement is valid as long as AJI is still operating.



e.



On July 29, 2015, the Company and PT Rinjani Kartanegara entered into an agreement, where the Company shall give permission to Rinjani to utilize its land for Rinjani’s hauling road access, utilizing the partial area of Rinjani‘s IPPKH to operate the mining support services facilities which are stockpile, conveyor and coal loading jetty and the Company will provide hauling service to Rinjani on an agreed price based on coal quantity loaded into barge. The agreement is valid until April 1, 2021.



- 25 -



PT INDO PERKASA NOTES TO FINANCIAL STATEMENTS MARCH 31, 2017 AND FOR THE YEAR THEN ENDED - Continued 25. MONETARY ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCY At March 31, 2017 and 2016, the Company had monetary assets and liabilities in currency other than U.S. Dollar as follows:



Assets Cash and cash equivalent Trade accounts receivable Other noncurrent assets



March 31, 2017 Equivalent in Rp '000 US$



March 31, 2016 Equivalent in Rp '000 US$



1,484,745 320,170 736,904



241,570 2,593,042 377,304



Total Assets Liabilities Trade accounts payable Accrued expenses Taxes payable Employee benefits obligations



111,459 24,035 55,319 190,813



7,270,628 2,156,710 13,479,507 2,649,823



Total Liabilities Net Monetary Liabilities



545,802 161,903 1,011,899 198,921



18,196 195,318 28,420 241,934



12,338,157 2,571,336 703,110 1,315,824



929,358 193,683 52,961 99,113



1,918,525



1,275,115



(1,727,712)



(1,033,181)



The conversion rates used by the Company as of June 15, 2017, March 31, 2017 and 2016 are US$ 0.075, US$ 0.075 and US$ 0.075 per IDR 1,000, respectively.



26. CATEGORIES AND CLASSES OF FINANCIAL INSTRUMENTS March 31, 2017 US$ Loans and receivables Current Financial Assets Cash and cash equivalent Trade accounts receivable Related party Third parties Noncurrent Financial Assets Other noncurrent assets



March 31, 2016 US$



1,498,115



131,161



520,321 1,167,037



390,940



55,319



28,420



3,240,792



550,521



Liabilities at amortised cost Current Financial Liabilities Trade accounts payable Related parties Third parties Accrued expenses Due to related parties



546,187 1,019,026 12,306,080



546,226 697,032 446,666 16,467,352



Total



13,871,293



18,157,276



Total



The Company has no financial asset categorized as at Fair Value Through Profit or Loss (FVTPL), held to maturity or available-for-sale nor a financial liability categorized as at FVTPL.



- 26 -



PT INDO PERKASA NOTES TO FINANCIAL STATEMENTS MARCH 31, 2017 AND FOR THE YEAR THEN ENDED - Continued 27. FINANCIAL INSTRUMENTS, FINANCIAL RISK AND CAPITAL RISK MANAGEMENT a. Capital Risk Management The Company manages its capital to ensure that it will be able to continue as a going concern while maximizing the return to stakeholders through the optimization of debt and equity balance. The capital structure of the Company consists of due to related parties (Note 13) offset by cash and cash equivalent (Note 5) and equity shareholder consisting of capital stock (Note 14), contributed capital (Note 15), additional paid-in capital (Note 16) and retained earnings. The Board of Directors of the Company periodically reviews the Company's capital structure. As part of this review, the Board of Directors considers the cost of capital and related risk. The gearing ratio as of March 31, 2017 and 2016 are as follows: March 31, 2017 US$



March 31, 2016 US$



Debt: Due to related parties Cash and cash equivalent



12,306,080 (1,508,712)



16,467,352 (139,590)



Net debt Equity



10,797,368 9,540,691



16,327,762 6,277,402



113%



260%



Net debt to equity ratio



b. Financial Risk Management Objectives and Policies The Company’s overall financial risk management and policies seek to ensure that adequate financial resources are available for operation and development of its business, while managing its exposure to foreign exchange risk, credit risk and liquidity risk. The Company operates within defined guidelines that are approved by the Board. i.



Foreign currency risk management Foreign exchange risks are exposures of the Company to economic and accounting losses as a result of volatility in foreign exchange rates. It is the Company’s policy to contain foreign exchange risks within prudent levels so as to maximize its profits. The Company has practices that include the periodic review of the impact of movements in foreign exchange rates on profitability so that appropriate action is taken to mitigate these risks. Foreign currency sensitivity analysis The Company is mainly exposed to Indonesian Rupiah for the operation expenses.



- 27 -



PT INDO PERKASA NOTES TO FINANCIAL STATEMENTS MARCH 31, 2017 AND FOR THE YEAR THEN ENDED - Continued The following table details the Company’s sensitivity to a 2.47% and 6.70%, increase and decrease in the US$ against Rupiah for the year ended March 31, 2017 and 2016, respectively. 2.47% and 6.70%, is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management's assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 2.47% and 6.70% change in foreign currency rates as of March 31, 2017 and 2016, respectively. A positive number below indicates an increase in profit or equity where the US$ strengthens 2.47% and 6.70% for the year ended March 31, 2017 and 2016, respectively, against the relevant currency. For a 2.47% and 6.70% weakening of the US$ against the relevant currency in March 31, 2017 and 2016, there would be a comparable impact on the profit or equity, and the balances below would be negative. IDR Impact March 31, March 31, 2017 2016 US$ US$ Gain (loss)



ii.



38,674



67,069



Interest rate risk management The Company is exposed to interest rate risk because the Company borrows funds at floating interest rates. There is no interest rate hedging activities in place as at March 31, 2017 and 2016. The sensitivity analysis below have been determined based on the exposure to interest rates for non-derivative instruments at the end of the reporting period. For floating rate liabilities, the analysis is prepared assuming the amount of the liability outstanding at the end of the reporting period was outstanding for the whole period. A 50 basis point increase or decrease at March 31, 2017 and 2016 is used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the reasonably possible change in interest rates. If interest rates had been 50 basis points higher/lower and all other variables were held constant, the Company profit for the year ended March 31, 2017 and 2016 would decrease/increase by US$ 57,031 and 67,923, respectively. This is mainly attributable to the Company exposure to interest rates on its variable rate borrowings.



iii.



Credit risk management Credit risk refers to the risk that a counterparty will default on its contractual obligation resulting in a loss to the Company. The Company’s credit risk is primarily attributed to its cash in banks and trade accounts receivable. The Company places its bank balances with credit worthy financial institutions. Trade accounts receivable are entered with respected and credit worthy third parties. The carrying amount of financial assets recorded in the financial statements, net of any allowance for impairment losses represents the Company’s exposure to credit risk.



iv.



Liquidity risk management The liquidity risk of the Company arises mainly from funding requirements to pay its liabilities and support its business activities. The Company maintains sufficient funds to finance its ongoing working capital requirements using loan obtained from a related party.



- 28 -



PT INDO PERKASA NOTES TO FINANCIAL STATEMENTS MARCH 31, 2017 AND FOR THE YEAR THEN ENDED - Continued Liquidity and interest risk tables The following tables detail the Company's remaining contractual maturity for its nonderivative financial liabilities with agreed repayment periods. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay. The tables include both interest and principal cash flows. To the extent that interest flows are floating rate, the undiscounted amount is derived from interest rate curves at the end of the reporting period. The contractual maturity is based on the earliest date on which the Company may be required to pay. Weighted average effective interest rate % March 31, 2017 Non-interest bearing Trade accounts payable Accrued expenses Variable interest rate Due to related parties



-



3 months to 1 year US$



1-3 months US$



1-5 years US$



Total US$



-



546,187 1,019,026



-



-



546,187 1,019,026



13,126,310



-



-



-



13,126,310



13,126,310



1,565,213



-



-



14,691,523



-



-



1,243,258 446,666



-



-



1,243,258 446,666



5.47



-



-



16,520,549



-



16,520,549



-



1,689,924



16,520,549



-



18,210,473



6.67



Total March 31, 2016 Non-interest bearing Trade accounts payable Accrued expenses Variable interest rate Due to related parties



Less than 1 month US$



Total



The following table details the Company's expected maturity for its non-derivative financial assets. The table has been drawn up based on the undiscounted contractual maturities of the financial assets including interest that will be earned on those assets. The inclusion of information on non-derivative financial assets is necessary in order to understand the Company's liquidity risk management as the liquidity is managed on a net asset and liability basis. Weighted average effective interest rate % March 31, 2017 Non-Interest bearing Cash on hand Trade accounts receivable Related party Third parties Other noncurrent asset Variable interest rate Cash in banks Fixed interest rate Time Deposit Total



Less than 1 month US$



1-3 months US$



-



10,597



-



-



-



10,597



-



-



520,321 1,167,037 -



-



55,319



520,321 1,167,037 55,319



0.10



502,266



-



-



-



502,266



1.3



-



1,013,000



-



1,013,000



512,863



2,700,358



55,319



3,268,540



- 29 -



3 months to 1 year US$



1-5 years US$



-



Total US$



PT INDO PERKASA NOTES TO FINANCIAL STATEMENTS MARCH 31, 2017 AND FOR THE YEAR THEN ENDED - Continued Weighted average effective interest rate % March 31, 2016 Non-Interest bearing Cash on hand Trade accounts receivable from third parties Other noncurrent asset Variable interest rate Cash in banks



Less than 1 month US$



3 months to 1 year US$



1-3 months US$



1-5 years US$



Total US$



-



8,429



-



-



-



8,429



-



-



390,940 -



-



28,420



390,940 28,420



131,173



-



-



-



131,173



139,602



390,940



-



28,420



558,962



0.11



Total



c. Fair Value of Financial Instruments Management believes that the carrying amount of financial assets and liabilities recorded in the financial statements approximate their fair values because of their short-term maturities or they carry market interest rates.



28. SUPPLEMENTAL DISCLOSURES ON NON-CASH INVESTING ACTIVITIES The Company has investment transaction that did not affect cash and cash equivalent and hence not included in the statement of cash flows with the detail as follows: 2017 US$ Increase in property, plant and equipment from additional paid in capital



2016 US$ 6,130



-



29. MANAGEMENT RESPONSIBILITY AND APPROVAL OF FINANCIAL STATEMENTS The preparation and fair presentation of the financial statements on pages 1 to 30 were the responsibilities of the management, and were approved by the Directors and authorized for issue on June 15, 2017.



********



- 30 -