PT Indo perkasa - Mercatormercator.in/investors/FinSub2016-17/PT Indo Perkasa.pdf · PT Indo...

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

Transcript of PT Indo perkasa - Mercatormercator.in/investors/FinSub2016-17/PT Indo Perkasa.pdf · PT Indo...

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

March 31, March 31,

Notes 2017 2016

US$ US$

ASSETS

CURRENT ASSETSCash and cash equivalent 5 1,508,712 139,590 Trade accounts receivable 6

Related party 23 520,321 - Third parties 1,167,037 390,940

Inventories 7 122,910 155,611 Prepaid taxes 8 - 39,167 Prepayments and advances 101,336 69,024

Total Current Assets 3,420,316 794,332

NONCURRENT ASSETSDeferred tax assets 21 62,069 34,509 Advance for purchase of property, plant and equipment 188,498 188,498 Property, plant and equipment - net of accumulated

depreciation and impairment loss of US$ 5,002,161at March 31, 2017 and US$ 3,014,636 at March 31, 2016 9 20,895,033 23,406,341

Other noncurrent assets 180,656 177,256

Total Noncurrent Assets 21,326,256 23,806,604

TOTAL ASSETS 24,746,572 24,600,936

LIABILITIES AND EQUITY

CURRENT LIABILITIESTrade accounts payable 10

Related parties 23 - 546,226 Third parties 546,187 697,032

Taxes payable 11 1,011,899 52,961 Accrued expenses 12 1,019,026 446,666 Advance from customers 123,768 14,184 Due to related parties 13,23 12,306,080 16,467,352

Total Current Liabilities 15,006,960 18,224,421

NONCURRENT LIABILITY

Employee benefits obligations 22 198,921 99,113

EQUITYCapital stock - Rp 1,000,000 par value per share

Authorized - 20,000 sharesSubscribed and paid-up - 5,000 shares 14 551,390 551,390

Contributed capital 15 5,000,000 5,000,000 Additional paid-in capital 16 6,130 - Retained earnings 3,983,171 726,012

Total Equity 9,540,691 6,277,402

TOTAL LIABILITIES AND EQUITY 24,746,572 24,600,936

See accompanying notes to financial statements

which are an integral part of the financial statements.

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PT INDO PERKASA

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE YEAR ENDED MARCH 31, 2017

Notes 2017 2016

US$ US$

REVENUES 17,23 16,908,562 9,724,692

COSTS OF REVENUES 18 10,584,479 6,731,180

\

GROSS PROFIT 6,324,083 2,993,512

General and administrative expenses 19 (540,597) (113,228)

Financial charges 20 (961,817) (1,859,597)

Loss on disposal of property, plant and equipment 9 (614,736) -

Others - net 164,171 (421,656)

PROFIT BEFORE TAX 4,371,104 599,031

TAX EXPENSE - NET 21 (1,105,046) (163,121)

PROFIT FOR THE YEAR 3,266,058 435,910

OTHER COMPREHENSIVE INCOME

Item that will not be reclassified subsequently to profit or loss:

Remeasurement of defined benefit obligation, net of tax (8,899) (9,800)

TOTAL COMPREHENSIVE INCOME FOR THE YEAR 3,257,159 426,110

See accompanying notes to financial statements

which are an integral part of the financial statements.

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PT INDO PERKASA

STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED MARCH 31, 2017

Capital Contributed Additional Retained Total

Note stock capital paid-in capital earnings equity

US$ US$ US$ US$ US$

Balance as of April 1, 2015 551,390 5,000,000 - 299,902 5,851,292

Profit for the year - - - 435,910 435,910

Other comprehensive income - - - (9,800) (9,800)

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 - - - (8,899) (8,899)

Additional paid-in capital 16 - - 6,130 - 6,130

Balance as of March 31, 2017 551,390 5,000,000 6,130 3,983,171 9,540,691

See accompanying notes to financial statements

which are an integral part of the financial statements.

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PT INDO PERKASA

STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED MARCH 31, 2017

2017 2016

US$ US$

CASH FLOWS FROM OPERATING ACTIVITIES

Profit before tax 4,371,104 599,031

Adjustments:

Financial charges 961,817 1,859,597

Depreciation expense 2,154,243 918,462

Employee benefits obligations 87,941 38,284

Loss on disposal of property,plant and equipment 614,736 -

Operating cash flows before changes in working capital 8,189,841 3,415,374

Changes in working capital:

Trade accounts receivable (1,296,418) (208,756)

Inventories 32,701 (29,319)

Prepaid taxes 39,167 228,184

Prepayments and advances (32,312) (47,480)

Other noncurrent assets (3,399) (2,069)

Trade accounts payable (697,071) 549,746

Taxes payable 156,156 23,148

Advance from customers 109,583 (129,824)

Accrued expenses 572,360 322,535

Cash Generated from Operations 7,070,608 4,121,539

Payment of employee benefits - (13,368)

Payment of income tax (326,856) (163,925)

Net Cash Provided by Operating Activities 6,743,752 3,944,246

CASH FLOWS FROM INVESTING ACTIVITIES

Acquisition of property, plant and equipment (261,143) (886,514)

Proceeds from sale of property, plant and equipment 9,602 -

Payment of due from a related party - 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 17,165,482 1,824,329

Payment of due to related parties (22,273,954) (6,093,286)

Payment of financial charges (14,617) (1,978)

Net Cash Used in Financing Activities (5,123,089) (4,270,935)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENT 1,369,122 (243,966)

CASH AND CASH EQUIVALENT AT BEGINNING OF YEAR 139,590 383,556

CASH AND CASH EQUIVALENT AT END OF YEAR 1,508,712 139,590

See accompanying notes to financial statements

which are an integral part of the financial statements.

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

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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 : Atul Agarwal Board of Directors President Director : Kirtipal Singh Raheja Directors : Suhadi Zaini

: Handoko Soeseno

b. 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.

2. 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.

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

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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. use the existing PSAK, or 2. 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:

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

b. 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.

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

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

of the reporting entity.

b. An entity is related to the reporting entity if any of the following conditions applies:

i. The entity and the reporting entity are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others).

ii. One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member).

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

the third entity. v. The entity is a post-employment benefit plan for the benefit of employees of either

the reporting entity, or an entity related to the reporting entity. If the reporting entity is itself such a plan, the sponsoring employers are also related to the reporting entity.

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

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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 re-organisation.

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.

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

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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.

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

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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:

currently has a legal enforceable right to set off the recognized amount; and

intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.

h. 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:

Depreciation Prior to

method Year 2017 April 1, 2016

Coal Crusher Plant Unit of production 30,000,000 MT 60,000,000 MT

Land improvements Straight-line 10 - 20 years 20 years

Building Straight-line 20 years 20 years

Heavy equipment Straight-line 4 years 4 years

Vehicle Straight-line 4 years 4 years

Furniture, fixture and office equipment Double declining 4 years 4 years

Unit of measure

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.

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

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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.

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

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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.

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

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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:

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

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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 non-financial 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.

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

- 15 -

5. CASH AND CASH EQUIVALENT

March 31, March 31,

2017 2016

US$ US$

Cash on hand 10,597 8,429

Cash in banks

U.S. Dollar

PT Bank Danamon Indonesia Tbk 396,236 120,822

PT Bank Mandiri (Persero) Tbk 1,017 572

Rupiah

PT Bank Danamon Indonesia Tbk 100,814 9,630

PT Bank Mandiri (Persero) Tbk 48 137

Time Deposit in U.S. Dollar

PT Bank Danamon Indonesia Tbk,

interest rates per annum 1.3% in 2017 1,000,000 -

Total 1,508,712 139,590

6. TRADE ACCOUNTS RECEIVABLE

March 31, March 31,

2017 2016

US$ US$

a. By debtor

Related party (Note 23)

PT Karya Putra Borneo 520,321 -

Third parties

PT Baramulti Suksessarana Tbk 1,099,220 195,325

PT Rinjani Kertanegara 67,817 183,521

CV Kutai Kumala Energy - 8,448

Others - 3,646

Total 1,167,037 390,940

b. Aging

Not yet due 1,619,541 203,177

Past due:

Under 30 days 48,735 114,840

31 - 60 days 19,082 44,623

61 - 90 days - -

More than 91 days - 28,300

Total 1,687,358 390,940

c. By currency

U.S. Dollar 1,663,323 195,622

Rupiah 24,035 195,318

Total 1,687,358 390,940

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

7. INVENTORIES

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

- 16 -

March 31, March 31,

2017 2016

US$ US$

Spareparts 118,514 153,035

Fuel 4,396 2,576

Total 122,910 155,611

8. PREPAID TAXES

March 31, March 31,

2017 2016

US$ US$

Corporate income tax

2015 - 11,218

2013 - 1,785

Value-added Tax - 23,501

Other tax receivable - 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

March 31,

April 1, 2016 Additions Deduction 2017

US$ US$ US$ US$

At cost:

Land 7,446,634 68,240 - 7,514,874

Land improvements 9,915,720 - 750,033 9,165,687

Coal crusher plant 7,744,817 - - 7,744,817

Building 403,293 57,523 - 460,816

Furniture, fixture and

office equipment 196,349 11,092 - 207,441

Heavy equipment 569,987 130,418 41,023 659,382

Vehicle 144,177 - - 144,177

Total 26,420,977 267,273 791,056 25,897,194

Accumulated depreciation

and impairment loss:

Land improvements 1,172,440 954,140 159,382 1,967,198

Coal crusher plant 1,551,766 961,969 - 2,513,735

Building 110,998 27,692 - 138,690

Furniture, fixture and

office equipment 107,613 46,703 - 154,316

Heavy equipment 60,447 130,425 7,336 183,536

Vehicle 11,372 33,314 - 44,686

Total 3,014,636 2,154,243 166,718 5,002,161

Net Carrying Value 23,406,341 20,895,033

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

- 17 -

April 1, 2015 Additions Deduction March 31, 2016

US$ US$ US$ US$

At cost:

Land 7,331,821 114,813 - 7,446,634

Land improvements 9,915,720 - - 9,915,720

Coal crusher plant 7,744,817 - - 7,744,817

Building 385,160 18,133 - 403,293

Furniture, fixture and

office equipment 156,945 39,404 - 196,349

Heavy equipment - 569,987 - 569,987

Vehicle - 144,177 - 144,177

Total 25,534,463 886,514 - 26,420,977

Accumulated depreciation

and impairment loss:

Land improvements 676,654 495,786 - 1,172,440

Coal crusher plant 1,287,976 263,790 - 1,551,766

Building 76,548 34,450 - 110,998

Furniture, fixture and

office equipment 54,996 52,617 - 107,613

Heavy equipment - 60,447 - 60,447

Vehicle - 11,372 - 11,372

Total 2,096,174 918,462 - 3,014,636

Net Carrying Value 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 2016

US$ US$

Net carrying amount (624,338) -

Proceeds from sale of property, plant and equipment 9,602 -

Loss on disposal of property, plant and equipment (614,736) -

10. TRADE ACCOUNTS PAYABLE

March 31, March 31,

2017 2016

US$ US$

Related parties (Note 23)

PT Mincon Indo Resources - 338,840

PT Oorja Indo KGS - 190,681

PT Nuansa Sakti Kencana - 16,705

Total - 546,226

Third parties 546,187 697,032

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

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11. TAXES PAYABLE

March 31, March 31,

2017 2016

US$ US$

Corporate income tax (Note 21) 813,399 10,616

Income taxes:

Article 4(2) 58 -

Article 21 16,654 9,043

Article 23 6,416 33,302

Article 25 1,306 -

Value-added Tax 174,066 -

Total 1,011,899 52,961

12. ACCRUED EXPENSES

March 31, March 31,

2017 2016

US$ US$

Bonus 350,000 -

Professional fees 317,106 21,682

Heavy equipment rental 257,123 391,802

Fuel 24,461 26,660

Others 70,336 6,522

Total 1,019,026 446,666

13. DUE TO RELATED PARTIES

March 31, March 31,

2017 2016

US$ US$

Oorja Batua Pte. Ltd. 11,406,110 2,026,000

PT Karya Putra Borneo (KPB) - 11,558,598

Subtotal 11,406,110 13,584,598

Accrued interest 899,970 1,882,754

Processing fee - 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.

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

- 19 -

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:

Number of Percentage of Total Paid-up

Name of Stockholders Shares Ownership Capital Stock

% US$

PT Karya Putra Borneo 2,550 51 281,209

PT Indo Karya Perdana 2,450 49 270,181

Total 5,000 100 551,390

March 31, 2017 and 2016

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

2017 2016

US$ US$

Loading and crushing 8,374,082 5,141,007

Hauling 8,534,480 4,583,685

Total 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).

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

- 20 -

18. COSTS OF REVENUES

2017 2016

US$ US$

Stockpile operation 2,191,050 1,560,457

Depreciation (Note 9) 2,154,243 918,462

Salaries and allowance 2,011,272 624,455

Crushing and loading 1,786,673 1,316,021

Technical fees 645,292 1,467,325

Security 427,094 -

Freight and shipment expenses 280,537 -

Hauling road maintenance 205,878 218,209

Compensation for disturbance 156,525 139,694

Staff welfare 141,502 113,172

Others (below US$ 30,000 each) 584,413 373,385

Total 10,584,479 6,731,180

19. GENERAL AND ADMINISTRATIVE EXPENSES

2017 2016

US$ US$

Professional fees 456,808 80,811

Permit and license 23,500 23,500

Others 60,289 8,917

Total 540,597 113,228

20. FINANCIAL CHARGES

2017 2016

US$ US$

Loan interest 947,200 857,619

Loan processing fees - 1,000,000

Others 14,617 1,978

Total 961,817 1,859,597

21. INCOME TAXES

Tax expense of the Company consists of the following:

2017 2016

US$ US$

Current (1,129,639) (174,541)

Deferred 24,593 11,420

Tax expense - net (1,105,046) (163,121)

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

- 21 -

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 4,371,104 599,031

Temporary differences:

Difference between commercial and fiscal depreciation 10,432 20,765

Provision for employee benefits obligations 87,941 24,918

98,373 45,683

Nondeductible expenses (nontaxable income):

Donation 26,528 -

Interest income already subject to final tax (1,468) (211)

Community development - 12,135

Benefits in kind - 7,600

Others 24,018 33,926

Total 49,078 53,450

Taxable income 4,518,555 698,164

Current tax expense and payable are as follows:

2017 2016

US$ US$

Current tax expense 1,129,639 174,541

Less prepaid taxes

Income tax

Article 22 3,446 2,709

Article 23 300,995 161,216

Article 25 11,799 -

Total 316,240 163,925

Current tax payable (Note 11) 813,399 10,616

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

- 22 -

Deferred Tax The details of the Company's deferred tax assets are as follows:

April 1, Credited Credited to other March 31,

2016 to profit or loss comprehensive income 2017

US$ US$ US$ US$

Employee benefits 24,779 21,985 2,967 49,731

Difference between commercial

and fiscal depreciation 9,730 2,608 - 12,338

Deferred tax asset 34,509 24,593 2,967 62,069

April 1, Credited Credited to other March 31,

2015 to profit or loss comprehensive income 2016

US$ US$ US$ US$

Employee benefits 15,283 6,229 3,267 24,779

Difference between commercial

and fiscal depreciation 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 2016

US$ 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 6,632 -

Interest income already subject to final tax (367) (53)

Community development - 3,034

Benefit in kind - 1,900

Others 6,005 8,482

Total 12,270 13,363

Tax expense 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.

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

- 23 -

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 2016

US$ US$

Current service cost 56,957 34,980

Interest costs 7,902 4,189

Past service cost 23,416 -

Foreign exchange difference (334) (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, March 31,

2017 2016

US$ US$

Opening balance of present value

of unfunded obligation 99,113 61,130

Current service cost 56,957 34,980

Interest cost 7,902 4,189

Past service cost 23,416 -

Benefit paid - (13,368)

Actuarial loss 11,866 13,067

Effect of foreign exchange (333) (885)

Ending balance of present value

of unfunded obligation 198,921 99,113

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

- 24 -

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:

March 31, March 31,

2017 2016

Discount rate 7.5% per annum 8.0% per annum

Future salary increment rate 9.0% per annum 9.0% per annum

Mortality rate TMI - 2011 TMI - 2011

Disability rate 1% of TMI 2011 1% of TMI 2011

Resignation rate 5% per annum until age 5% per annum until age

29 then decrease 29 then decrease

linearly into 0% at linearly into 0% at

age 59 age 59

Normal retirement age 60 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.

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

- 25 -

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.

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

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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:

Equivalent in Equivalent in

Rp '000 US$ Rp '000 US$

Assets

Cash and cash equivalent 1,484,745 111,459 241,570 18,196

Trade accounts receivable 320,170 24,035 2,593,042 195,318

Other noncurrent assets 736,904 55,319 377,304 28,420

Total Assets 190,813 241,934

Liabilities

Trade accounts payable 7,270,628 545,802 12,338,157 929,358

Accrued expenses 2,156,710 161,903 2,571,336 193,683

Taxes payable 13,479,507 1,011,899 703,110 52,961

Employee benefits obligations 2,649,823 198,921 1,315,824 99,113

Total Liabilities 1,918,525 1,275,115

Net Monetary Liabilities (1,727,712) (1,033,181)

March 31, 2017 March 31, 2016

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, March 31,

2017 2016

US$ US$

Loans and receivables

Current Financial Assets

Cash and cash equivalent 1,498,115 131,161

Trade accounts receivable

Related party 520,321 -

Third parties 1,167,037 390,940

Noncurrent Financial Assets

Other noncurrent assets 55,319 28,420

Total 3,240,792 550,521

Liabilities at amortised cost

Current Financial Liabilities

Trade accounts payable

Related parties - 546,226

Third parties 546,187 697,032

Accrued expenses 1,019,026 446,666

Due to related parties 12,306,080 16,467,352

Total 13,871,293 18,157,276

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.

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

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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, March 31,

2017 2016

US$ US$

Debt:

Due to related parties 12,306,080 16,467,352

Cash and cash equivalent (1,508,712) (139,590)

Net debt 10,797,368 16,327,762

Equity 9,540,691 6,277,402

Net debt to equity ratio 113% 260%

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.

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

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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.

March 31, March 31,

2017 2016

US$ US$

Gain (loss) 38,674 67,069

IDR Impact

ii. 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.

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

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Liquidity and interest risk tables The following tables detail the Company's remaining contractual maturity for its non-derivative 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 Less than 3 months

interest rate 1 month 1-3 months to 1 year 1-5 years Total

% US$ US$ US$ US$ US$

March 31, 2017

Non-interest bearing

Trade accounts payable - - 546,187 - - 546,187

Accrued expenses - - 1,019,026 - - 1,019,026

Variable interest rate

Due to related parties 6.67 13,126,310 - - - 13,126,310

Total 13,126,310 1,565,213 - - 14,691,523

March 31, 2016

Non-interest bearing

Trade accounts payable - - 1,243,258 - - 1,243,258

Accrued expenses - - 446,666 - - 446,666

Variable interest rate

Due to related parties 5.47 - - 16,520,549 - 16,520,549

Total - 1,689,924 16,520,549 - 18,210,473

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 Less than 3 months

interest rate 1 month 1-3 months to 1 year 1-5 years Total

% US$ US$ US$ US$ US$

March 31, 2017

Non-Interest bearing

Cash on hand - 10,597 - - - 10,597

Trade accounts receivable

Related party - - 520,321 - - 520,321

Third parties - - 1,167,037 - - 1,167,037

Other noncurrent asset - - - - 55,319 55,319

Variable interest rate

Cash in banks 0.10 502,266 - - - 502,266

Fixed interest rate

Time Deposit 1.3 - 1,013,000 - 1,013,000

Total 512,863 2,700,358 - 55,319 3,268,540

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

- 30 -

Weighted

average

effective Less than 3 months

interest rate 1 month 1-3 months to 1 year 1-5 years Total

% US$ US$ US$ US$ US$

March 31, 2016

Non-Interest bearing

Cash on hand - 8,429 - - - 8,429

Trade accounts receivable

from third parties - - 390,940 - - 390,940

Other noncurrent asset - - - - 28,420 28,420

Variable interest rate

Cash in banks 0.11 131,173 - - - 131,173

Total 139,602 390,940 - 28,420 558,962

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 2016

US$ US$

Increase in property, plant and equipment

from additional paid in capital 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.

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