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ANNUAL REPORT 2017 1 PT ASIA PACIFIC FIBERS
Contents
3 Company Description
Financial Highlights 4
5 Message from the President Commissioner
Message to Shareholders 8
12 Management Report
Management Discussion
and Analysis 18
20 Corporate Governance
Audit Committee Report 26
28 Organisation Structure
Corporate Information 29
Independent Auditor Report iii
ANNUAL REPORT 2017 3 PT ASIA PACIFIC FIBERS
Company
Description
PT Asia Pacific Fibers Tbk, established in 1984, is a leading polyester manufacturer in Indonesia. Its manufacturing operations span the entire polyester production chain, from raw materials to end products, ensuring quality and consistency. PT Asia Pacific Fibers Tbk is the one of the leading integrated producers of polyester in Indonesia. The manufacturing facility for PTA, continuous polymer, and staple fiber is located in Karawang, West Jawa, and filament yarn is located in Kendal, Central Jawa.
Company’s current products include Purified Terephthalic Acid (PTA), Polyester Chips, Polyester Staple Fiber, Polyester Filament Yarn, and Performance Fabrics. The Company´s products are marketed and sold both in domestic and international markets. The following is the report on the business performance of PT Asia Pacific Fibers Tbk in 2017. The term “Company” used throughout the report refers to PT Asia Pacific Fibers Tbk and all its subsidiaries. The term “APF” refers to PT Asia Pacific Fibers Tbk as a stand-alone entity.
4 ANNUAL REPORT 2017 PT ASIA PACIFIC FIBERS
Financial
Highlights
The following table sets forth the financial highlights of the Company for the years ended 31st December 2015 to 2017. The Financial Report for the year ended 31st December 2017 and 2016 are audited
by Public Auditor Office Hendrawinata Eddy Hanny Erwin & Sumargo (A member of Kreston International) with Unqualified Opinion.
(in USD)
31st
December
2 0 1 7 2 0 1 6 2 0 1 5*)
Current Assets
Fixed Assets – Net of Depreciation
Total Assets
Total Liabilities
Equity (Capital Deficiency)
Total Revenues
Gross Profit (Loss)
Operating Profit (Loss)
Net Profit (Loss)
Comprehensive Profit (Loss)
Net Profit (Loss) Attributable to the Owners of the Company
Comprehensive Profit (Loss) Attributable to the Owners of the Company
Net Working Capital
Profit (Loss) per Share - Basic
Profit (Loss) per Share - Diluted
Ratio Analysis
Gross Profit Margin (%)
Net Profit Margin (%)
Return on Investment (%)
Return on Equity (%)
Current Ratio (X)
Debt to Total Assets (X)
Debt to Equity (X)
124,065,058
67,634,235
231,566,955
1,174,807,927
(943,240,972)
399,776,871
27,990,914
(983,840)
(4,408,564)
(5,674,811)
(4,408,564)
(6,574,811)
(987,659,306)
(0.002)
(0.002)
7.00
(1.10)
(1.90)
NA
0.11
4.71
(1.16)
118,020,699
69,647,040
231,149,516
1,168,715,677
(937,566,161)
360,480,752
17,900,549
(6,978,741)
(11,868,369)
(12,159,436)
(11,868,369)
(12,159,436)
(990,677,263)
(0.004)
(0.004)
4.97
(3.29)
(5.13)
NA
0.11
4.80
(1.15)
123,771,540
61,876,082
232,495,236
1,157,901,961
(925,406,725)
390,055,996
8,153,203
(11,647,347)
(17,786,672)
(16,382,755)
(17,786,672)
(16,382,755)
(978,049,518)
(0.006)
(0.006)
2.09
(4.56)
(7.65)
NA
0.11
4.74
(1.17)
Notes: (*)
As Reclassified
ANNUAL REPORT 2017 5 PT ASIA PACIFIC FIBERS
Message from The President Commissioner
Dear Shareholders, The global economy continues to experience a broad based cyclical recovery. Global growth remained strong through the year 2017 and was supported by firmer global trade, rebounding investment, improved business confidence, and relatively supportive global monetary conditions. A sustained strengthening in global commodity prices, specifically energy commodity prices, also spurred growth of commodity exporting emerging economies. This continued upswing in the global economy has been supportive to the Indonesian economy. Indonesian GDP growth in 2017 accelerated to 5.1 year-on-year (YoY) as compared to 5.0% in 2016, a four year high. All major regions delivered healthier GDP growth rates than expected in 2017. Year 2017 has delivered relative stability in crude oil prices after a rapid increase in prices through 2016. A more stable crude oil environment and better economic growth led to a better year for the polyester chain. The Industry witnessed firm recovery during the year supported by many factors including global economic recovery, strong textile demand pull, and stability in commodity prices. The long awaited recovery of PTA margins began in the second half of 2017, pushing the Asian PTA margins over the USD100/MT mark at one point with improved operating rates. Global Fiber and Filament yarn demand growth continued to be determined by the textile and apparel sales in Asia as well as performance fibers and fabrics that are increasingly developed for consumption by industrial and non- apparel sectors.
The TPT sector in Indonesia also staged a strong recovery supported by stiff measures taken against illegal imports, increased domestic demand and growth in exports.
Assessment of Performance of Board of Directors The Board of Commissioners continue to supervise and guide the Board of Directors with the necessary policy guidelines in implementing the business strategies and meeting the challenges to sustain its long term business performance. Improving market conditions and the changing economic environment had a positive impact on the performance of PT Asia Pacific Fibers Tbk (the “Company”) during 2017 in terms of its sales revenue and margins. The Company achieved a sales revenue of USD397 million for 2017 as compared to USD356 million for the previous year. The Company was also able to post an increased EBITDA of USD10.96 million in 2017 as compared to USD3.43 million in 2016.
The major factors contributing to the improved performance are increased demand, especially from the domestic market, stability in prices, product-mix and cost saving measures. The strategic decision of the management to suspend the operations of the PTA plant and outsource its PTA requirement from the market continued to contribute positively, despite the upward trend in PTA margins. The Board of Directors, however, is in the process of evaluating the economics of restarting the PTA Plant to take advantage in the anticipated upcycle in PTA margin.
6 ANNUAL REPORT 2017 PT ASIA PACIFIC FIBERS
A final decision on this would be taken after a detailed feasibility report and technical study.
The Board of Commissioners acknowledges and appreciates the strategic initiatives and actions taken by the Board of Directors and values their contribution in the following areas: a) Retain APF’s dominant position in
catering to the raw material needs of the downstream textile sector in Indonesia, despite stiff price competition, increasing imports and various other constraints.
b) Continuous engagement in diversifying into specialty/distinctive products and entry into growing segments of Automotive, Home Textiles and Performance applications, despite the financial constraints faced by the Company.
c) Cost saving measures in the areas of energy, efficiency improvement and waste reduction to improve overall operational efficiency.
Review of Business Prospects The Board of Commissioners have carefully reviewed the future market outlook and the business strategies as charted out by the management team for the year 2018 and beyond. These are based in part on the long awaited revitalisation of the domestic TPT sector initiated by the Government which is providing various economic and supportive measures for the sector. In the light of the policy framework pronounced by the Government of Indonesia under the “MAKING INDONESIA 4.0” initiative to revive the manufacturing sector, it is imperative for the Company to gear up to take on the challenge and drive the desired growth.
In the short term, stability in crude and polyester feedstock prices are likely to improve the polyester chain prices and
margins. Despite fluctuations, polyester continues to hold a dominant position relative to other fibers due to its affordability and ever widening application in new segments. Polyester is expected to remain the most preferred and competitive amongst cotton and other fibers, which would improve polyester’s share in blended textile products.
The key areas of action in the business strategy implemented by the Board of Directors are expected to further improve the performance of the Company in the coming years. Continuous optimization of plant
utilization through de-bottlenecking, upgrades and sustainability initiatives.
Company’s re-focussed marketing strategy to be become a “Product Company” with value added and specialty products and gradually move away from commodity segment.
Organizational and human resources development to reinforce its core competency
Continuous improvement in cost saving with focus on energy savings, efficiency and productivity.
The Board of Commissioners continued to provide strategic guidance to the Company to engage in constant negotiations with the Ministry of Finance to arrive at a solution for its longstanding issue of defaulted secured debt, which has been a major obstacle to the growth of your Company. Potential business opportunities were lost in the past and various growth oriented investments are on hold due to the protracted delay in resolving the issue of the secured debt restructuring. However, quite recently, the Company has submitted an updated Debt Restructuring Plan to the Ministry of Finance and other Secured Creditors for their speedy
ANNUAL REPORT 2017 7 PT ASIA PACIFIC FIBERS
consideration and approval. The Board of Commissioners is fully supportive of the initiatives taken by the Board of Directors in reaching a mutually acceptable solution through ongoing discussions with all constituencies. The Company is hopeful that this will be completed soon given the Government's commitment to support and revive the manufacturing sector, and especially the TPT sector in the country. On completion of this debt restructuring the Company will be in a strong position to significantly improve its financial standing and will be able to implement its long-term growth plans.
Corporate Governance The Board of Commissioners has mandated the Board of Directors to conduct the business functions and pursue their business strategies and trade practices in accordance with the principles of Good Corporate Governance. The Board of Commissioners has reviewed the reports of the Audit Committee, Remuneration Committee and Risk Management Committee and are of the
view that the internal control systems and procedures, financial reporting systems and the Risk management process are commensurate with the Company’s business needs and its complexities. The Company endeavors to constantly improve its corporate governance standards and to ensure compliance with the various regulations and requirements as applicable.
Appreciations The Board of Commissioners wishes to express their appreciation to the Board of Directors, Management team and all the employees of the Company for their continued commitment and dedication throughout 2017.This was another challenging year for the Company as it worked to sustain its strategic market position whilst facing the tough challenges of the business and economic environment. Finally, we wish to acknowledge our sincere gratitude to our customers, suppliers, and shareholders for their continued support and the confidence they have entrusted to the Company in this critical transition period.
Robert McCarthy President Commissioner
8 ANNUAL REPORT 2017 PT ASIA PACIFIC FIBERS
Message to
Shareholders
Dear Shareholders, Global economic activity continued to firm up throughout 2017, supported by strong global trade, industrial production and cyclical recovery in investment growth. The steady pick up in global growth has been broad-based, coming from both advanced economies and emerging markets and developing economies. Growth in major economies such as the Euro Area and the United States remained robust recording a growth rate of 2.5 percent and 2.3 percent respectively. Growth in Japan accelerated to 1.7 percent, almost doubling its 2016 growth. Major emerging market and developing economies, such as Brazil and China also posted stronger growth in 2017. Global trade also recorded a solid growth of 4.7 percent and the industrial production growth posted a highest growth in 6 years in 2017. Indonesian Economy consistently showing an improved performance supported by the upswing in the Global economic trend. The actual GDP growth in 2017 edged up to 5.10 percent as compared to 5.0 percent in 2016 that was highest in the last four years. The solid economic growth in 2017 was primarily supported by commodity tailwinds and stronger domestic and external demand, better business environment that attracted more foreign direct investment as well as more public capital investments. Investment growth rose to its highest level in more than four years and foreign direct investment recorded the largest net inflow in more than seven years. Export and import volumes registered double-digit growth for the first time since 2012.
The Crude prices recovered in Q1 2017 and continued to remain fairly stable and closed at USD58 per barrel by end of year. This upward trend during the year 2017 has helped the commodity segment to stage a gradual recovery and maintain stability. The inflation in 2017 was moderate at 3.61 percent well within the targeted rate of 4±1% (y-o-y), but higher as compared to 3.02 percent for the previous year. This was possible on account of lower inflation, supported by positive supply demand, low external pressure and strong policy coordination between BI and the Central and Regional Governments. Indonesian currency remained resilient and relatively stable through the year 2017 backed by solid economic growth and robust economic outlook. Bank Indonesia's benchmark rupiah rate (Jakarta Interbank Spot Dollar Rate, abbreviated JISDOR) depreciated by 0.47 percent closing at IDR13,548 per US dollar by end of December 2017. BI has maintained its key interest rate (BI Rate) at 6.50% through the year 2017 in line with the macroeconomic stability of the Country.
Polyester Industry: Global and Domestic Trends The global polyester chain continued to witness a firm recovery throughout the year 2017 strongly supported by a host of factors such as stability in petro chemical commodity prices, better global economic growth and redeeming demand outlook for textile and other products. Much anticipated PTA recovery cycle began in mid of 2017 and
ANNUAL REPORT 2017 9 PT ASIA PACIFIC FIBERS
expected to gain momentum to reach an upcycle in coming years. However, Cotton prices have trended upwards in the second half of the year and remained steady supported by stable demand during the season. Growth of polyester fiber in 2017 was quite impressive with 6.8 percent y-o-y, almost double of previous year’s growth rate. The operating rates remained healthy at 71.2 percent improved from 69.6 percent in 2016 with a capacity growth of 6.00 percent y-o-y. Average polymer utilization rates have also improved to 79.30 percent. PTA world capacity reached 78.0 mil tonnes, almost unchanged since 2015. Hence, the operating rates for 2017 increased to 79.0 percent as compared to 76% for the previous year. With the improved operating rates and growing PTA consumption, PTA margins started recovering from mid of 2017 and margins crossed USD100/MT mark by close of the year; average margin levels remained at USD80/MT as compared to USD68/MT (spot) in 2016. Domestic market also recovered from second semester of the year with the support of stiff measures against illegal imports and dumping initiated by the Government. With the growth in Domestic consumption, Textile and Apparel manufacturing sector registered a positive growth rate of 3.80% during 2017 as compared to negative growth in the past two years.
Company Performance The Company was able to post an improved performance during the year 2017 helped by solid recovery in the global economy, enhanced demand and better market conditions, stability in commodity prices and better margins in the polyester chain. The feedstock prices also remained fairly stable and helped to maintain the firm
prices for our products. As a result, the sales revenue for the year 2017 has increased to USD397 million as compared to USD356 million for the previous year. Domestic market has been under recovery phase throughout the year with downstream activities started improving with the help of domestic consumption growth and TPT Exports. Both Fiber and Filament yarn prices and margins edged up due to increased off take and stability in RM prices. However, the production of polymer and fiber during the first semester of the year fell due to shutdown of Polymer plant. Filament yarn production was maintained at optimum levels with focus on specialty and value-added products. Overall increase in the sales revenue of 11.50 percent over the previous year is primarily attributed to rise in selling price and marginally due to increase in volume of filament yarn. However, Sales of Performance Fabrics division of the Company has marginally dropped to USD7.79 million in 2017 as compared to USD8.56 million for the previous year. The overall financial performance of the Company in terms of earnings before interest and depreciation (EBITDA) improved significantly. Amidst the normalizing trading conditions and stable market outlook through the year, the Company posted a positive EBITDA of USD10.94 million in 2017 as compared USD3.43 million for the previous year. The improvement in performance was mainly attributed to better market conditions, better product-mix and overall recovery in product margins. The Company continues to operate its plant at optimum capacity supported by its strong customer base and the sustained demand from domestic market. The Company needs to access funding for its capex and upgrade budgets. The Company is committed to firmly move towards its strategic direction of product
10 ANNUAL REPORT 2017 PT ASIA PACIFIC FIBERS
and market diversification with concerted efforts on increasing the volume of specialty and value-added products into new market segments. The value-added products range from automotive fabrics, fleece, non-woven, and other technical application. The Company has also initiated various cost saving measures at both the locations, especially in the area of energy that are expected to yield significant cost savings going forward. The Company’s board is in the process of evaluating the PTA make or buy analysis in the light of the anticipated upcycle in the PTA margins. The management team has initiated various action to evaluate both options and the board will review these inputs. The Board of Directors are pleased to inform that all these strategic initiatives and actions should help the Company to strengthen its competitiveness and significantly enhance its product offerings in order to achieve an improved performance in the coming year.
Business Outlook Indonesian Economic growth is expected to continue in a solid pace based on and some positive developments during the fourth quarter of 2017 in investment, exports, and business confidence will serve as the basis for the continued economic recovery process in the years to come. The Government’s commitment to consistently strengthen business competitiveness and business climate also supports the economic recovery. Given stable and higher prices for key export commodities, particularly for CPO and Coal and thrust on exports, the Economic growth is expected to pick up pace in 2018 and 2019 and reach 5.3 percent and 5.5 percent respectively. Meanwhile, as the U.S. Federal Reserve proceeds on its monetary policy normalization, both in terms of increasing
the Federal Funds rate and reducing its balance sheets, any faster than expected tightening could spark volatility in the financial markets. Such volatility could result in sudden capital outflows from emerging market economies including Indonesia, triggering a sharp increase in borrowing costs and volatility, which would stifle investment. Domestic manufacturing sector is expected to rebound with the series of supporting measures by the government to boost the domestic manufacturing activities. The national mid-term Development Plan (RPJMN) sets a goal of 8.8 percent for the manufacturing sector by 2019. Governments concerted efforts to protect the domestic TPT sector by imposing restriction on illegal imports, anti-dumping duties on Fiber and yarn, rationalization of import duties etc. are expected to revive the growth prospects. The Ministry of Industry set an Export target of USD15 billion for 2019, which is expected to drive the performance and growth of domestic TPT sector. The Government’s major policy initiative “Making Indonesia 4.0” to revive the manufacturing sector in Indonesia, recognizes Textile and Apparel sector as one of the priority sector with high growth potential. Hence, as one of the leading upstream player, the Company will be ready to take on this challenge and seize the opportunities ahead. The Company developed an IT blueprint for upgrading its systems and application of technology in line with its future business strategy. The Company will initiate implementation of this IT blue print in 2018. The long delay in finding a solution to its secured debt restructuring continues to remain a major road block to the company in moving forward and implementing its growth plans. Consequent to the legal and financial due diligence by the high-level committee appointed by the Ministry of
ANNUAL REPORT 2017 11 PT ASIA PACIFIC FIBERS
Finance for the purpose of finding a restructuring solution, the Company continued to engage in active dialogue with the Ministry and recently submitted an updated debt restructuring plan. While the majority of the secured creditors are already in agreement with the restructuring plan, the Company is hopeful that a final solution and decision by the government will be in place soon. Post restructure, the Company’s financial position will improve significantly with healthy and sustainable debt/equity structure and the Company will be able to implement its growth plans.
Corporate Governance The Company consistently strive to comply with the high standards of Corporate Governance principles in conducting all its business activities. Various internal monitoring and advisory committees are in place to
functionally assist the Board of Directors and Commissioners in complying with the governance standards and with policies of the Company. It has also set up strong internal control systems and procedures to ensure that Company policies are in compliance. The Group has a team of professional managers to manage various risks of the business environment in which the Company operates. We would like to take this opportunity to express our sincere gratitude to all our Shareholders, Customers, Suppliers, Bankers, and all skate holders who continue to support the Company during these tough and challenging periods and to retain our strategic position in the polyester industry. Our appreciation and sincere gratitude to the team of 4000 people who stood by the Company during the turbulent times and made valuable contributions.
V. Ravi Shankar
President Director
12 ANNUAL REPORT 2017 PT ASIA PACIFIC FIBERS
Management
Report
Economic and Polyester Industry Overview Indonesia’s economy is consistently showing an improved performance. The GDP growth in 2017 was 5.07% which is the highest in the last four years and better than that of 2016 which was at 5.02%. The strong economic growth in 2017 was primarily driven by improved commodity prices and strong domestic and external demand. Investment growth rose to its highest level during this year as compared to past 4 years and foreign direct investment recorded the largest net inflow in more than seven years. The huge spending of Government in the infrastructure projects sustained the economic growth and will continue to be the driver of economic growth going forward. Indonesia’s exports grew significantly to USD168.73 billion in 2017 as compared to USD145.19 billion in the previous year registering a growth of 16.22% y-o-y and in volume terms it recorded an increase of 6.09% y-o-y. The higher exports during the year was primarily due to increased prices of key export commodities such as coal, metal minerals, rubber, crude palm oil and partly by increased volume. The imports during the year also increased to USD156.89 billion as compared to USD135.65 billion in 2016 registering a growth of 15.66%. The trade balance in 2017 recorded a surplus of USD11.83 billion as compared to USD9.54 billion in 2016. The current account deficit was maintained at USD17.3 billion or 1.7% of GDP ably supported by improvement in goods and services trade performances. The crude prices remained relatively stable and tended towards upward
direction during 2017. The Crude prices recovered in Q1 2017 and continued to remain fairly stable. The price of Crude closed at USD58 per barrel by end of the year as compared to USD50 per barrel in the previous year. The inflation in 2017 was quite moderate at 3.61% well below the BI targeted rate of 4% and as compared to 3.02% in 2016. The controlled inflation in 2017 was possible on account of lower inflation of food supported by improved supply management and strong fiscal policy coordination between BI and Central & Regional Governments. Indonesia’s economic growth is expected to be on solid footing, with Government’s commitment to continuously strengthen the business environment and competitiveness. Bank Indonesia estimates the GDP growth will be in the range of 5.2% to 5.5% going forward. The IDR remained relatively stable and closed at Rp13,548/USD by end of 2017 as compared to Rp13,436 in 2016. The Global Polyester chain continued its recovery towards stability in 2017 after the downtrend of its trade cycle in 2014/2015 caused by combination of excess capacity, weaker demand growth in key markets, especially in China. The overall growth of polyester fiber increased significantly by 6.73% during 2017 as compared to 1.9% in the previous year. The operating rate was at 71.22% in 2017 as compared to 70.7% in the previous year.
Indonesia’s textiles exports increased to USD12.4 billion as compared to USD11.88 billion in 2016. The textile imports in 2017 have also increased to USD8.62 billion as compared to USD8.16 billion in 2016.
ANNUAL REPORT 2017 13 PT ASIA PACIFIC FIBERS
PTA (Pure Terephthalic Acid) and Polymer The global production of PTA in 2017 grew by around 5.9% or over 3.54 million tons to reach around 63.18 million tons. The operating rate improved to 79% during 2017as compared to the previous year level of 76.3%. Due to stabilization of supply/demand of PTA, its margin improved to an average level of USD83 per ton as compared to USD74 per ton. The second semester of 2017 witnessed a surge in the PTA margin even to level of USD100 per ton. In view of the unsustainability of PTA operation under the current trading condition, the Company has taken a strategic decision to suspend the operation of its PTA plant towards the end of 2015, which needs to be revamped to improve its cost efficiency at par with the new plants. The Company continued to outsource its requirement of PTA in 2017.
Polyester Polymer World Polymer production in 2017 was 73.18 million tonnes with a growth of 3.8 million tonnes or 5.5% more over 2016 levels. The price of Polyester Chips surged in 2017 in line with increase in the price of PTA and other feed stock prices. The Company’s polymer production in 2017 was lower than the level of 2016.
Staple Fiber Global polyester staple fiber production in 2017 was estimated to be 16.59 million tons as compared to 16.3 million tons in 2016, registering a growth of 1.8% over 2016. The Company’s staple fiber production and sales in the year 2017 were marginally lower than the previous year due to lower operating rates
of domestic spinning sector which however, revived and grew stronger in the later part of the year.
Filament Yarn In 2017, global polyester filament yarn production was estimated at 35.8 million tons as compared to 32.8 million tons in 2016, thus registering a growth of around 9.1% as compared to the previous year’s growth of 2.7%. The Company’s filament yarn production increased by 2.3% over the previous year level. In 2017 a major thrust was given for the specialty and value added yarn production. In order to protect the domestic Filament Yarn industry, the Government of Indonesia has taken steps to impose anti-dumping duty on certain category of yarns.
Performance Fabric The performance fabric division continued to operate through a production tolling arrangement with its erstwhile subsidiary, Texmaco Jaya. The production and sales of performance fabrics optimized during the year 2017.
14 ANNUAL REPORT 2017 PT ASIA PACIFIC FIBERS
Product Range The Company’s product range includes:
Product Type Utilization
1. PTA (Purified
Terephthalic Acid)
Manufacture of Polyester
Chips
2. Polyester Chips Semi-Dull
Super Bright
Optical Bright
Polyester Filament
Yarn/Staple Fiber
Filament Yarn/ Staple Fiber
Polyester Staple Fiber
Filament Yarn
3. Polyester Staple Fiber Normal/Specialty Spun Yarn
Non-Woven
Fiber Fill
4. Polyester Filament Yarn Normal/Specialty
Micro Filament
Hi filament
Differential
Shrinkage
Tailored Clothing - Formal
and Casual
Super Fine Apparel Fabrics
with Cotton Tencel Free
Fine Apparel Fabrics
Fine Apparel Fabrics
5. Fabrics High
Performance
Fabrics
Outdoor wear, Winter
Clothing Active Wear,
Sportswear, Children’s Wear
_______________________________________________________________________________
Marketing Distribution APF is a trusted long-term partner for global textile consumers producing fabrics for apparel, home- textiles, Automotive, footwear, sportswear, hygiene and health care and various other applications. The Company has a very strong marketing network and supply chain management which differentiate it from its competitors. It maintains a very close collaboration with its customers through tailored and innovative branded products unique to APF and enjoys high level of customer loyalty. As a strategic move, the marketing team focuses on product and application
innovation to customize products for value creation. APF has recently developed and branded the premium tier of its portfolio of specialty products that provide performance Comfort, aesthetic and other advantages. APF continues to focus its efforts to maintain the leadership position in the domestic market and increase its market share for its products filament yarn and staple fiber. The Company has allocated higher volume of production to domestic market to meet the increased requirement of the downstream customers. Domestic sale proportion was around 84% in 2017.
ANNUAL REPORT 2017 15 PT ASIA PACIFIC FIBERS
Human Resources Asia Pacific Fibers recognizes that human resources are the core assets of the company and continuously strives to nurture and develop the talents and skills to keep pace with the advancement in technology and changing Customer needs. The core employees are put on specialized training to upgrade their skill levels with a view to provide career growth opportunities. A well-structured employee’s retention scheme based on performance appraisal is in place to boost the motivation of the employees. The Company has also implemented Health Insurance Scheme for its core employees. The employees are encouraged to participate in collective decision-making process through well-established communication channels across the organization and contribute to value creation. The Company endeavors to maintain harmonious industrial relations and implemented a number of welfare measures such as education, health, and social security to improve their social status.
Environment With its strong commitment to environmental safety and protection, the Company is strictly adhering to stringent emission norms of its effluents. The Company is fully compliant to all applicable environmental standards of Indonesia, with Badan Pengendali Lingkungan (Bapedal) as its regulating authority. The Company also installed and commissioned 100% waste recycling facility at Karawang (“Glycolysis”) to convert all its waste into ‘green label products’ and to ensure ZERO waste from its production facilities.
Location & Type of Assets Work more than 5% of Total Assets The assets of the Company, which essentially consist of land, building and machinery such as PTA facilities, Polymer facilities, fiber line and filament yarn equipment &other utilities, are located in two manufacturing facilities in Kaliwungu, in Central Java, and Karawang, in West Java.
Hypothecated Fixed Assets APF has production facilities at Karawang and Kaliwungu. Land totaling 26.40 hectares, with buildings, plant and equipment and located in Kaliwungu facilities and Land totaling 17.67 hectares located at Karawang are hypothecated to BPP/PPA. Land totaling 26.62 hectares, with buildings, and production facilities at Karawang are secured to the Company’s Secured Bonds. Some of the machines including a Turbine located in Karawang and Semarang are pledged to Damiano Investments BV for the Capex Loan provided to the Company. Some portion of POY Spinning Machines and few types of equipment in Karawang are pledged to the holders of ex banks bilateral loans.
Dividend Policy APF has historically paid an annual dividend after approval of the Company’s shareholders at the Annual General Meeting of the shareholders. However in view of the current financial situation, APF has not declared a dividend for 2017.
_______________________________________________________________________________
16 ANNUAL REPORT 2017 PT ASIA PACIFIC FIBERS
Stock Price Performance
1st Quarter 2
nd Quarter 3
rd Quarter 4
th Quarter
2017
Highest
Lowest
Volume
Shares on Market
Closing Price
Market Capitalization
2016
Highest
Lowest
Volume
Shares on Market
Closing Price
Market Capitalization
(Rp)
(Rp)
(shares)
(shares)
(Rp)
(Rp)
(Rp)
(Rp)
(shares)
(shares)
(Rp)
(Rp)
96
54
592,982,00
2,313,113,365
76
175,796,615,740
83
50
152,506,700
2,313,113,365
71
164,231,048,915
84
65
106,518,800
2,313,113,365
68
157,291,708,820
73
58
35,725,900
2,313,113,365
62
143,413,028,630
85
56
147,669,900
2,313,113,365
67
154,978,595,455
88
58
239,444,600
2,313,113,365
61
141,099,915,265
94
61
180,178,600
2,313,113,365
71
164,231,048,915
76
50
292,604,300
2,313,113,365
55
127,221,235,075
_______________________________________________________________________________
Restructuring Status and Financing Activities The Company has submitted an updated restructuring plan with alternate options taking into account the current condition of the business and various other economic factors to its secured creditors including Ministry of Finance in October 2016. The majority of its secured creditors are favorably considering the proposal and the Company is engaged in active negotiations with the MoF to find an amicable solution to this long pending issue. The MoF had appointed a high-level committee led by Mandiri Sekuritas to study and recommend a restructuring proposal. The Mandiri Sekuritas had completed its financial and legal due diligence of the Company and also done technical evaluation and valuation of the Company’s assets with a view to formulate a suitable restructuring proposal.
In March 6, 2017, the Company established a wholly owned subsidiary Asia Pacific Fibers Hongkong Limited, a private limited company established under the laws of the Hongkong Special Administrative Region. The new subsidiary company through the execution of Deed poll will voluntarily assume liability of the Issuer and/or Guarantor in respect of the secured bonds of USD682.5 million. This is mainly intended to facilitate the restructuring of the secured Notes through a scheme of arrangement pursuant to Companies Ordinance (Cap 622 of the law of the HKSAR). The Company is taking all efforts to implementing a restructuring which is fair to all holders of the Notes. In the meantime, Damiano Investments BV, the majority shareholders, continues to provide working capital through a Letter of Credit facility for the procurement of raw materials. This has primarily helped the Company’s to sustain
ANNUAL REPORT 2017 17 PT ASIA PACIFIC FIBERS
its operations and maintain optimum capacity utilization of its production facilities. In view of the current business condition, Damiano Investments BV have accepted the Company’s request to waive the interest on its LC facility for the year 2017 and interest on Capex Loan for 3 months in 2017. Damiano Investments BV have also extended Capex loan to fund its critical maintenance capital expenditure that are critical to improve the competitiveness of the Company. Due to tight cash flow situation, the Company sought and obtained the approval of its unsecured creditors for capitalizing the interest on New Notes due in 2017. Besides the above mentioned Asia Pacific Fibers Hongkong Limited, the Company has four other subsidiaries: PT Texmaco Jaya Tbk. (Bankrupt – under liquidation), Polysindo International Finance Company BV. (PIFC), Polysindo Mauritius Ltd., and PT EastindoPolymertama (Eastindo).
PT Texmaco Jaya Tbk (Bankrupt – under liquidation) PT Texmaco Jaya was declared bankrupt by the commercial court Jakarta on 19th August 2011 as per the Court order 10/PKPU/2010/PN.NIAGA.JKT.PST. Jo No: 71/PAILIT/2010/PN.NIAGA.JKT.PST. The Court also appointed Dr. MARSUDIN NAINGGOLAN SH., as the supervisory Judge and a team of Receivers (Curators) Peter Kurniawan, SH., M.Kn., Lili Badrawati, SH., and Permata N. Daulay, SH. MH. to monitor and enforce the liquidation process as per the law. Subsequent to completion of debt verification, the Court had declared PT Texmaco Jaya Tbk insolvent and ordered liquidation of the bankrupt estate – vide Court order no 71/PAILIT/2010/PN.NIAGA.JKT.PST dated 26th September 2011. The Company is currently under liquidation process.
In the meantime, the Court has approved continued operation of its Fleece division as a going concern with a view to maintain the value of the bankrupt assets. In accordance with the Court approval and pursuant to the tolling agreement between the team of curators and PT Asia pacific Fibers, the Fleece Division continued to be operated on tolling basis.
Polysindo International Finance Company BV. (PIFC) and Polysindo (Mauritius) Ltd. Polysindo International Finance Company BV (PIFC) and Polysindo (Mauritius) Ltd. are wholly owned subsidiaries of PT. Asia Pacific Fibers Tbk and act as financing vehicle for APF. The double taxation treaty between Indonesia and Mauritius has expired, hence APF intends to wind-up Polysindo (Mauritius) Ltd.
PT Eastindo Polymertama (Eastindo) Eastindo was originally formed to implement the expansion of PTA and polymer production in Karawang which was later implemented through APF. As Eastindo has not engaged in any manufacturing activity, the Company is planning to wind up PT Eastindo Polymertama.
18 ANNUAL REPORT 2017 PT ASIA PACIFIC FIBERS
Management
Discussion and Analysis
Overview The revenue of the company is derived from the sale of filament yarn, staple fiber, polyester chips, and performance fabrics, both in domestic and export markets. Total sales in 2017 have increased from the previous year due to increase in selling prices of filament yarn and staple fiber in line with the increase in the price of raw material. The price of crude oil increased during the year 2017 by around 19% from the previous year level and closed at USD58 per barrel as at the end of 2017. In line with the crude oil price the prices of raw materials have also increased pushing up the PTA prices as well. This led to the overall improvement in the prices of polyester products. The strong and sustained domestic demand for the polyester products triggered by the recovery in the downstream polyester chain and the market dynamics has improved the margins of polyester products in 2017. The rupiah depreciated marginally during the year and closed at Rp13,548 per USD as at 31st December 2017, compared to Rp13,436 per USD in 2016.
Results of Operations In 2017, net sales revenue was USD396.62 million as compared to USD355.75 million in 2016. The increase in net sales in 2017 was primarily on account of increase in the selling prices for polyester filament yarn and staple fiber during the year. The increase in selling prices was on account of increase in the raw material prices consequent to increase in the crude oil prices coupled with strong demand for the polyester products. Export sales were
USD63.36 million or 15.97% of the net sales, and domestic sales were USD333.26 million accounting for 84.02% of the net sales. Other operational revenue was USD3.16 million, realized through the sale of recycle products, indirect materials and waste/scrap.
Gross Profit / (Loss) The Company posted a Gross profit of USD27.99 million in 2017, as compared to USD17.90 million in 2016. The increase in gross profit was attributable to improvement in the margins of polyester products driven by the improved demand for the products. The Company has also produced and sold increased quantities of specialty polyester products with higher margins during the year. Besides an overall increase in the value addition for the polyester products, the improved operational efficiency and reduction in the waste/off grade levels have yielded benefits during the year. The discontinuation of PTA production due to adverse market condition effective November 2015 also had an impact in reducing the overall cost of manufacturing.
Profit / (Loss) Before Tax The Company incurred loss before tax of USD0.98 million in 2017, as compared to a loss of USD6.98 million in 2016. The general administrative, selling expenses in year 2017 were higher by 6.5% as compared to 2016 levels. In 2017 the finance charges reduced as compared to the previous year due to waiver of interest on capex loans for 3 months. The interest/fee on the LC
ANNUAL REPORT 2017 19 PT ASIA PACIFIC FIBERS
loans for the year 2017 was waived. The Company incurred foreign exchange loss of USD2.54 million as compared to loss of USD3.88 million in 2016. The reduction in the forex loss in 2017 was due to marginal depreciation of Rupiah against USD. The Insurance Claim included interim settlement of insurance claim arose on account of fire accident in a manufacturing unit in Kendal, Central Java.
Business Risks Despite the improvement in the downstream sector which triggered the demand for the polyester products during the year, the TPT sector remained vulnerable due to lack of new investments and modernization of machines to sustain the demand and growth going forward. The price of natural gas which is the major ingredient for power generation under clean environment remains high in Indonesia as compared to the other Asian countries. This makes the product not competitive in the international market. The increase in the imports of polyester products has also affected the margin levels. The TPT sector which remains the major contributor of forex besides the oil sector needs an attention from the Government. Indonesian currency remained resilient and relatively stable through the year. Meanwhile, as the US Federal Reserve proceeds on its monetary policy normalization with doses of increase in the Federal Funds rate could spark volatility in the financial markets. Such volatility could result in the sudden flight of capital outflow from the emerging market economies including Indonesia. During the first quarter of 2018 the rupiah remained very vulnerable and depreciated more than expected rate. Bank Indonesia estimates that economic expansion will continue in 2018. With an improvement in the commodity prices and domestic demand, the polyester industry is
expected to perform better in the year 2018. The Company is still depending on the working capital facility provided by the majority owner, for the procurement of raw materials and in the absence of a conventional source of working capital through normal banking channels. A formal working capital loan through a bank will be possible only when the secured debt is restructured. With regard to Bank Indonesia rule No 17/3/PBI/2015, the Company has received approval from Bank Indonesia with letter dated 25th January 2017 for procurement of raw material and sale of finished goods using USD Dollar as currency of transaction until June 2021. However the company has began the transaction in Rupiah wherever possible to comply with the regulation.
Debt Restructuring The Company continued its negotiation with Ministry of Finance to arrive at a solution for its longstanding issue of secured debt restructuring. The high-level committee led by Mandiri Sekuritas, appointed by the Ministry of Finance to study and recommend a proposal of secured debt restructuring of the company had completed it legal/financial due diligence and submitted its recommendations to the Ministry for its review. Damiano Investments BV, the majority secured creditors and the majority shareholders of the Company, are willing to support the suitable restructuring scheme in order to make the Company viable. Damiano Investments BV continued to provide working capital loans and a Letter of Credit facility for the procurement of raw materials. This has helped the Company to maintain optimum capacity utilization of the Company’s production facilities.
20 ANNUAL REPORT 2017 PT ASIA PACIFIC FIBERS
Corporate
Governance The Board of Commissioners, the Board of Directors and the professional employees are fully committed in meeting the high standards of Good Corporate Governance (GCG). GCG principles which cover transparency, fairness, accountability and reasonability are always the primary factors in all business aspects and at all management levels.
The Board of Commissioners The Board of Commissioners meet on a periodical basis to review the operations of Board of Directors and to provide policy guidance related to financing, loan, pledge
of collaterals, insurance, setting the annual budget and business plans and they have full access to Company’s information. The Commissioners are ably assisted by various Committees such as Audit Committee, Risk Management Committee and Remuneration Committee constituted under the able guidance of Independent Commissioner. The members of the Board of Commissioners are as follows based on the Meeting of the Shareholders held on 15th June 2017: The Current members of the Board of Commissioners of PT Asia Pacific Fibers Tbk (APF) are as follows:
_______________________________________________________________________________
Robert McCarthy (63) President Commissioner of APF since March 2017. Commissioner of APF since June 2008. He holds a Master in Business Administration from Yale School of Management, and a Master’s Degree in Medieval History from Columbia University. He manages distressed investments for the Spinnaker Funds. He was founding director of Morgan Grenfell and worked as director of Deutsche Bank
_______________________________________________________________________________
Christopher Robert Botsford (56) Commissioner of APF since 2007. He holds MA and MBA in Engineering from Cambridge University, England. Chief Executive Officer and Director of Asia Debt Management Hongkong Limited (ADM). Prior to establishing ADM, he ran the Asia-Pacific regional debt and derivatives operations for Republic National Bank of New York which provided hedging and other debt management structures to regional users
_______________________________________________________________________________
ANNUAL REPORT 2017 21 PT ASIA PACIFIC FIBERS
Christopher Ian Teague (66) Commissioner of APF since 2016. He holds Bachelor’s degree from Cambridge University and Master’s Degree in Law from Sydney University. He is an Investment officer with Spinnaker Capital specializing investments in emerging markets. Prior to joining Spinnaker, he worked as Executive Director in a Private Equity Company in Australia. He has spent over 20 years in New York and Brazil in various capacities in the field of structured financing arrangements to Corporates, Project Financing
_______________________________________________________________________________
Alexander Shaik (35) Commissioner of APF since March 2017. He holds Bachelor’s degree in Law and Arts from the University of Melbourne. In 1995 he was admitted to practice Law in England and Australia. He has been with ADM Capital since 2005 as General Counsel and Partner. Prior to joining ADM, he worked over 10 years with renowned Law firms such as Sidley Austin Brown & Wood, Allen & Overy, Tokyo
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Dono Iskandar Djojosubroto (73) Independent Commissioner of APF since February 2008. He holds a degree from University of Indonesia and MA & PhD in Economics from The University of Illinois, USA. Previously he worked as the Secretary General of the Minister of Finance, Deputy Governor of Bank Indonesia, and Executive Director representing twelve Asian Countries in the IMF. He was also a member of Board of Commissioners and Supervisory Board in various Government Institutions, such as PT Jasindo, PT Jasa Marga, Bank BRI and Bank BTN.
_______________________________________________________________________________
Agus Tjahajana Wirakusumah (63) Independent Commissioner of APF since June 2015. He holds a Bachelor Degree in Mechanical Engineering from Bandung Institute of Technology and Economics degree from University of Indonesia. He is also holding Master’s Degree in Industrial System Engineering from University of Florida, USA. He held Senior Management position in various private sector companies and also in the Board of Commissioners of BUMN companies. He had over 17 years of rich experience in the Ministry of Trade and Industry and retired as Director General in 2015.
During the year, the Board of Commissioners held six BOC Meetings.
22 ANNUAL REPORT 2017 PT ASIA PACIFIC FIBERS
The Board of Directors The Board of Directors as a Company organ shall function and be responsible collegially for the management of the Company. Each member of the Board of Directors can carry out its duty and take decisions in accordance with their respective assignments and authorities. The Board of Directors shall formulate the values of the Company as well as the short and long term program of the Company to be discussed and approved by the Board of
Commissioners or the GMS in accordance with the Articles of Association of the Company. The Company’s Board of Directors is represented by the professionals in the field of Production, Marketing, Human Resources, Finance and General Management expertise. The members of the Board of Directors are as follows based on the Meeting of the Shareholders held on 16th June 2017:
_______________________________________________________________________________
V. Ravi Shankar (54) President Director of APF since 2002. He is a graduate of Production Engineering. He has also completed Advanced Management Programme from Harvard University in 2004. Prior to joining APF, he managed the Textiles Division of the subsidiary Company of APF and also worked in a machinery manufacturing company in Indonesia and India.
_______________________________________________________________________________
Bonar Firman Hasiholan Sirait (70) Director of APF since 2013. He holds post-graduate degree in Economics from University of Indonesia and completed Ph.D. in Economics from the same University. He also attended various advanced management courses on HRD, Business re-engineering, Personal management, Strategic Management etc., in Singapore, Malaysia, France, Switzerland and Canada. He was heading the HRD of APF since 2004 as a Senior Vice President and was head of HRD since 1993. Prior to that he was Personnel Director in Bata Shoes Company.
_______________________________________________________________________________
S. Jegatheesan (68) Director of APF since 2002. He is a graduate in Electrical Engineering and has been with APF since 1989. Prior to joining APF, he was General Manager of a yarn producing company and worked as Project Manager for an engineering company in India.
_______________________________________________________________________________
ANNUAL REPORT 2017 23 PT ASIA PACIFIC FIBERS
Peter Vinzenz Merkle (60) Director of APF since 2007. He joined APF in 2000 as head of the Karawang unit producing PTA, Polymer, and Fiber. Prior to joining APF, he worked in various renowned chemical and fiber companies such as Trevira Group and Hoechst AG as the head of their R&D and Technology Development Divisions. He has an MS in Chemical Engineering from University of Stuttgart, Germany, specializing in polymer processing and environmental technologies.
_______________________________________________________________________________
Antonius W. Sumarlin (51) Director of APF since 2014. He holds Master’s degree in Economics Development from Vanderbit University, in Nashville, USA and also holds Phd in Marketing from Institut Pertanian, Bogor. He has over 18 years of experience in strategic and financial management in various organizations from manufacturing to investment companies.
_______________________________________________________________________________
In 2017, the Board of Directors held five BOD Meetings. _______________________________________________________________________________
Joint Meetings A Joint Meeting is a meeting attended by the Commissioners and Directors. The Joint Meetings are held to improve the coordination and smooth communication between the Boards. A total of four Joint Meetings were conducted in 2017.
Share Ownership of the Company By the Board of Directors and Commissioners Share ownership of the Company by the Board of Directors and Commissioners of the Company as of December 31, 2017 in accordance with the List of Shareholders of the Company issued by PT. Datindo Entrycom is:
Name Position Total Shares % Ownership
S. Jegatheesan Director 29,713,388 1.29%
Bonar Firman Hasiholan Sirait Director 1,359,500 0.06%
Peter Vinzenz Merkle Director 2,711,000 0.11%
_______________________________________________________________________________
24 ANNUAL REPORT 2017 PT ASIA PACIFIC FIBERS
Risk Management Committee The Risk Management Committee’s function is to assist the Board of Commissioners in carrying out the supervisory duty relating to the implementation of Risk Management in the Company. The Committee can liaise with the Senior Management to have access to the information to review the activities relating to the Risk Management. This Committee is headed by an Independent Commissioner Mr Ir. Agus Tjahajana Wirakusumah. During the year 2017, the Committee reviewed the activities pertaining to placement of Company’s Property and All Risk Insurance, Throughput Insurance, Long term Procurement Contracts.
Nomination and Remuneration Committee This committee is headed by an Independent Commissioner Mr Ir. Agus Tjahajana Wirakusumah and Mr Bonar FH Sirait is the member. The main tasks of this Committee during the year were to review the proposed wage increase, Minimum Wages of the different regions as per the Government regulation, Employees Retention Programme, Employees Training Programme.
Internal Audit The Company’s Internal Audit Department is headed by Mr Yohanes Baptis Galuh Adjar Pamungkas, ably assisted by experienced staff members. Internal audits on various functions are conducted concurrently and the audit reports are being reviewed by the Independent Commissioner and the Board of Directors periodically to ensure remedial actions.
Corporate Secretary The Corporate Secretary is in charge as a liaison between the Company and Capital Market authorities, shareholders, investors and other stakeholders. He holds the responsibility for the supervision and coordination of the GMS, Public expose events and all corporate actions. He is also responsible for the implementation of the agenda related to meetings of the Board of Directors and Board of Commissioners. The Company has a “Corporate Secretarial Department” headed by Mr Tunaryo, and is being ably assisted by experienced staff in the field of finance and legal affairs. The Company has complied with the various statutory requirements of Indonesian Corporate Law, Capital Market Law, and Stock Exchange Regulations In December 2017 the Company conducted the PUBLIC EXPOSE as per the regulation of IDX and made known to the media, general public, shareholders regarding the operations of the Company.
ANNUAL REPORT 2017 25 PT ASIA PACIFIC FIBERS
Corporate Social Responsibility (CSR) The Company has been continuosly and consistently participating in the community development programme through its Corporate Social Responsibility Programmes (CSR) over the past several years as a part of its commitment to create a value for society. APF has been actively involved, as a part of its social obligation to create a better community and environment in and around its operational facilities. APF’s major intiatives are in the field of education, health, environmental control, civic amenities, infrastructure and development of vocational skills. APF has been carrying out these CSR activities on a more channelised and focusssed manner through “Yayasan Asia Pacific Fibre”. Some of the major ongoing activities and initiatives are given below: Education Programmes:
a. Construction of elementary school building in the Blendung Village, Klari, Karawang district.
b. Distribution of scholarships to students in Karawang and Kaliwungu region.
c. Contruction of educational facilities for pre-schooling (PAUD) in Cibuaya, Karawang, Madrasah Ibtidaiyah in Cimahi and Tunggakjati, Karawang, and Primary School in Karanganyar, Karawang.
Health care programme:
a. Providing free medical treatment and medicines to the needy people in Sumberejo and Nolokerto, Kaliwungu, Kendal
b. Construction of building to house the primary health centre for in patients at Klari, Karawang
c. Free distribution of spectacles to the needy students of the primary school and junior high scool students in Kaliwungu in cooperation with Yayasan Mata Indonesia.
d. Assistance for people with Cataract Eyes surgery in Kendal.
Religious and Cultural activities:
a. Construction of boarding school for religious studies, prayer halls and facilities at Karawang and Kaliwungu.
b. Actively supporting religious and cultural activities in the region to improve social harmony.
Environmental aspects:
a. “Go Green” movement in coordination with the University of Jenderal Sudirman Purwokerto
b. Planting of teakwood trees in Kaliwungu region.
Humanitarian Relief:
a. Renovation.reconstruction of flood effected schools Mangkang Kulon, Kendal.
b. Relief assistance to disaster effected people in Megelang and Padang.
c. Remodelling House for disanvantaged familied in Sumberejo, kaliwungu, Kendal.
Social and Economic empowerment:
a. Financial assitance to small scale/cottage industries in the region
b. Promotion of fiber waste processing units in the region to provide self employment to local people.
26 ANNUAL REPORT 2017 PT ASIA PACIFIC FIBERS
Audit Committee
Report Report of the Audit Committee We are pleased to present our report for the financial year ended 31st December 2017.
Audit Committee Members In line with the regulation of Bapepam LK No IX.I.5, AUDIT COMMITTEE was established on 10th August 2015 to assist the Board of Commissioners. The members of the Committee are as follows: - Mr Dono Iskandar Djojosubroto:
Chairman of the Committee. He is an Independent Commissioner in the Board of Commissioners of the Company
- Mr Doedy Darwin: He is an Engineer
from the Institute of Technology Bandung. He has over 24 years of experience in banking sector as Head of Asset Management, Credit Division.
- Mr Deddy Sutrisno: He is a Chartered
Accountant from the Institute of Indonesian Accountants and Certified Management Accountant (CMA) from the Institute of Certified Management Accountants, Australia. He has 25 years of rich experience in the field of Accounting, Finance, and Taxation. He is currently working as Director in a Consulting Firm.
Functions, Duty and Authority We report that we have adopted appropriate formal terms of reference in our charter in line with the regulation of Bapepam. We further report that we have conducted our affairs in compliance with this charter.
Internal Audit We have met with the Internal Audit during the year to ensure that the function is executed effectively and objectively. We have reviewed and discussed several Internal Audit Report prepared by the Internal Auditors of the Company during the year under review. We are satisfied with the content and quality of the Internal Audit reports and satisfied with its effectiveness in addressing various pertinent issues and its recommendations for the improvements. We have also reviewed the responses of the concerned departments to the recommendations and its effective implementation of the recommendations.
Internal Control System We had full access to the information with regard to the operations of the Company and we found that the Management Control systems are in line with the operations of the Company.
ANNUAL REPORT 2017 27 PT ASIA PACIFIC FIBERS
Evaluation of Financial Statements We have: a. Reviewed and discussed the audited
financial statement to be included in the annual report with the Corporate Secretary, Internal auditor and Chief Financial Officer
b. Reviewed the changes in accounting practices
c. Reviewed the Company’s compliance
with legal and regulatory provisions and
d. Reviewed significant adjustments and noted none resulting from the audit
e. We also reviewed the quarterly Managements accounts
_______________________________________________________________________________
Number of Meetings Attended Members of the Committee Number of Meetings attended
1. Mr Dono Iskandar Djojosubroto 8 2. Mr Doedy Darwin 8 3. Mr Deddy Sutrisno 8
The other invitees such as Internal Auditor, Corporate Secretary and Chief Financial officer also attended the meeting whenever required by the Committee. _______________________________________________________________________________
Dono Iskandar Djojosubroto Chairperson of the Committee
28 ANNUAL REPORT 2017 PT ASIA PACIFIC FIBERS
Organisation Structure
Annual General Meeting of Shareholders
Board of Commissioner
President Director
DirectorDirector of
SBU Filament Yarn
H.R. & I.R.Corporate
I.T.Corporate
FinanceInternal
AuditCorporate
SecretaryPerformance
Fabric Division
Director of SBU Filament Yarn/Chemical & Fiber
Production Engineering AccountingPPC/Desp/
Material Control
R&D/CTS/
Product Dev.
Admin./Security/
Transport/P.R.
Information Technology
HRD & LD
Marketing
Director of SBU Chemical &
Fiber
Independent Director
- Audit Committee- Risk Management
Committee- Nomination &
Remuneration Committee
V. RAVI SHANKAR
• ROBERT McCARTHY• CHRISTOPHER ROBERT BOTSFORD• CHRISTOPHER IAN TEAGUE• ALEXANDER SHAIK• DONO ISKANDAR D.• AGUS TJAHAJANA WIRAKUSUMAH
BONAR F.H. SIRAITANTONIUS W.
SUMARLINPETER V. MERKLES. JEGATHEESAN
- METTONI- PALTI H.
-DEXTER K.-TUNARYO-S. GOPALAKRISHNAN-ISWANTO-GALUH A.P.
- A. BHARARA.- SANJAY GUPTA
- SURESH KABRA- SANJIV VERMA
- DAVIT H.- M. SIMBOLON
- SUBRAMONIA GOPALA K.
- ANDARE
- JOKO P.- PALTI H.
- G. BALASUBRAMANIAN- SURESH K.
- METTONI- PALTI H.
- SANJAY PATNI- PANKAJ GUPTA
-S. JEGATHEESAN- PETER V. MERKLE
- DONO ISKANDAR D.- DOEDY DARWIN- DEDDY SUTRISNO- AGUS TJAHAJANA W.
- VIPIN KAPOOR- BALASUBRAMANIAN
ANNUAL REPORT 2017 29 PT ASIA PACIFIC FIBERS
Corporate
Information
Date of Incorporation February 15th, 1984
Our Vision To be the most agile and innovative polyester producer through creating value for customer, its employee, stakeholders and society
Our Mission - To suit the ever changing global needs through producing
products bench marked to international standards - To stand committed to the business of customers before ours and
globally competitive through better quality, service and continuous innovation
- To be a responsible corporate citizen through high commitment to
pursue sustainability by simultaneously creating value along social, environment and economy of the region
- To become a partner in progress to “winning together” with high
standards of ethics and Corporate Governance
30 ANNUAL REPORT 2017 PT ASIA PACIFIC FIBERS
Listing on the Indonesia Stock Exchange 1. Public Offering in February 1991.
Partial Listing of 24,000,000,000
shares on 12 March 1991 on the
Jakarta and Surabaya Stock
Exchanges.
2. Company Listing in January 1992.
Company listed 68,000,000 shares on
3 January 1992 on the Jakarta and
Surabaya Stock Exchanges. The
Company’s total number of listed
shares was 92,000,000.
3. Rights Issue Offering in October 1993.
Between November 1, 1993 and
January 3, 1994, the Company
launched the first Rights Issue
Offering of 184,000,000 shares. After
the rights issued, the number of
issued shared shares of the company
totaled to 276,000,000.
4. Stock Splits in March 1995.
With the stock splits on 27 March
1995 respectively, a total of
552,000,000.
5. Bonus issue and dividend shares in
April 1995.
On 12 April 1995 and 17 April 1995,
respectively, a total of 552,000,000
bonus and dividend share were listed
on Jakarta and Surabaya Stock
Exchanges. The total number of listed
on both Jakarta and Surabaya Stock
Exchanges amounted to
1,104,000,000.
6. Rights Issue Offering II in June 1996.
With the second Right Issue Offering
on 10 June 1996, 1,104,000,000
shares were listed on Jakarta and
Surabaya Stock Exchanges, which
gives a total of 2,208,000,000 shares
listed on the Stock Exchange Houses.
7. Rights Issue Offering III in December
1997.
The third Rights Issue Offering on 24
December 1997 launched a sum of
2,185,920,000 shares on Jakarta and
Surabaya Stock Exchanges. Thus,
after the completion of rights Issue
III, the Company’s total number of
listed shares is 4,393,920,000.
8. Debt to Equity Swap in September
2006.
APF has received approval from
Department of Justice and Human
Right for the issue of 43,144,238,750
shares to its unsecured creditor as a
part of debt to equity swap as
approved by Jakarta Commercial
Court. Out of that as on 31st
December 2006, APF has allotted
36,093,831,290 shares to unsecured
creditors who have made their claim
with the Company. APF has also
received approval from Department
of Justice and Human Right for the
40,340,241,250 shares to be issued to
its secured creditors as per Secured
Debt Restructure Proposal (“SDRP”).
APF has not allotted any shares so far
as of 31st December 2007.
9. Reverse Stock in February 2008.
The Company has amended its
Articles of Association in connection
with the reverse stock split with ratio
20:1. And based on notarial deed of
Sutjipto S.H. No. 91 dates February
21, 2008 about the changes of
Articles of Association, the authorized
capital of the Company amounts to
Rp16,000,000,000,000 consisting of
12,357,255,040 shares. The deed was
approved by Minister of Justice and
Human Rights in its decision letter
No. AHU-10588.AH.01.02 Year 2008
dated March 3, 2008.
10. The Company obtained the approval
of the shareholders of the Company
in the Extra Ordinary General
Meeting of Shareholders held on 24th
ANNUAL REPORT 2017 31 PT ASIA PACIFIC FIBERS
March 2009, the issuance of 5%
(118,845,397 shares) of Issued and
Paid-up capital of series ‘C’ share
without preemptive right, for
providing stock option to the
Company management and
employees (Management Employee
Stock Option Programme). _______________________________________________________________________________
Based on the notaries deed of Aryanti
Artisari, S.H., M.Kn. No. 107 dated
February 23, 2012, the stockholders
agreed to used their option right regarding
the Management Employee Stock Option
Programme (MESOP). It was connected
with the notarial deed of Sutjipto, S.H.
No. 91 dated March 24, 2009 regarding
the issuance of 118,845,397 new
authorized shares series ‘C’ (5% of issued
and paid-up capital) without preemptive
rights at par value of Rp40 each. The
execution price at March 5, 2012 is Rp45
each, and the shares have been fully paid-
up on February 20, 2012 and February 21,
2012. The shares also registered in the
Indonesian Stock Exchange through
announcement, No. Peng-P-
00032/BEI.PPR/03-2012 dated March 5,
2012 and No. Peng-P-00033/BEI.PPR/03-
2012 dated March 7, 2012.
The Company obtained the approval for
the change of name to PT Asia Pacific
Fibers Tbk from Minister of Justice on 10th
November 2009 and Indonesian
Investment Coordinating Board/BKPM on
2nd December 2009.
_______________________________________________________________________________
32 ANNUAL REPORT 2017 PT ASIA PACIFIC FIBERS
Total Structure listed on Indonesia Stock Exchange as of 31 December 2017 2,495,753,347
Capital Structure as 31 December 2017 Serie A
Authorized Capital Rp 8,500,000,000,000
Nominal Value per share Rp 10,000
Paid-up Capital Rp 2,196,960,000,000
Serie C
Authorized Capital Rp 166,968,960,000
Nominal Value per share Rp 40
Paid-up Capital Rp 91,042,293,920
Shareholders Damiano Investments B.V. 57.85%
PT Multikarsa Investama* 5.26%
Public with ownership of shares under 5% 29.57%
Unsettled 7.32%
* Shares transferred by PT Multikarasa Investama to PT Bina Prima Perdana under IBRA restructuring. Registration with Indonesia Stock Exchange yet to be completed.
Board of Commissioners President Commissioner Robert McCarthy Commissioner Christopher Robert Botsford Commissioner Christopher Ian Teague Commissioner Alexander Shaik Independent Commissioner Dono Iskandar Djojosubroto Independent Commissioner Agus Tjahajana Wirakusumah
Board of Directors President Director Vasudevan Ravi Shankar Director Bonar Firman Hasiholan Sirait Director Seeniappa Jegatheesan Director Peter Vinzenz Merkle Director Antonius Widyatma Sumarlin
Company’s Activities Engaged in the production of PTA, Polymer, Polyester Fiber, Filament
Yarn, and Synthetic Fabrics.
ANNUAL REPORT 2017 33 PT ASIA PACIFIC FIBERS
Production Capacity as of 31 December 2017
Purified Therepthalic Acid (PTA) 340.000 tons/year Polyester Chips 330.400 tons/year Polyester Staple Fiber 198.000 tons/year Polyester Filament Yarn 140.000 tons/year
Representative Office The East 35th Floor, Unit 5-7 Jl. DR. Ide Anak Agung Gde Agung, Kav. E3.2 No. 1 Jakarta 12950, Indonesia Tel : (62-21) 579-38555 Fax : (62-21) 579-38565 Web : www.asiapacificfibers.com Email : [email protected]
Registered Office Jl. Raya Kaliwungu Km. 19 Kaliwungu, Kendal, Central Java - Indonesia Tel : (62-24) 8660272 Fax : (62-24) 8660275
Manufacturing Facilities Plant 1: Plant 2: Desa Kiara Payung, Jl. Raya Kaliwungu Km. 19 Klari, Karawang Kaliwungu, Kendal, West Java - Indonesia Central Java - Indonesia Tel : (62-267) 431971 Tel : (62-24) 8660272 Fax : (62-267) 431975 Fax : (62-24) 8660275
Share Registrar PT Datindo Entrycom Jl. Hayam Wuruk No.28, Lantai 2 Jakarta 10120 - Indonesia Telephone: (+62-21) 350 8077 (Hunting) Fax:(+62-21) 350 8078
Registered Public Accountant Hendrawinata Hanny Erwin & Sumargo (Indonesian Member Firm of Kreston International) Intiland Tower 18th Floor Jl. Jend. Sudirman 32 Jakarta 10220, Indonesia Tel : (62-21) 5707997 Fax : (62-21) 5707996
i
SURAT PERNYATAAN REPRESENTATION LETTER
ANGGOTA DEWAN KOMISARIS DAN DIREKSI
MEMBER OF BOARD OF COMMISSIONERS AND DIRECTORS
TENTANG REGARDING
TANGGUNG JAWAB ATAS LAPORAN TAHUNAN 2017
RESPONSIBILITY FOR ANNUAL REPORT 2017 _______
PT ASIA PACIFIC FIBERS Tbk
Kami yang bertanda tangan di bawah ini,
menyatakan bahwa semua informasi dalam Laporan Tahunan PT Asia Pacific Fibers Tbk
tahun 2017 telah dimuat secara lengkap dan bertanggung jawab penuh atas kebenaran isi
Laporan Tahunan Perusahaan.
Demikian pernyataan ini dibuat dengan sebenarnya.
We, undersigned, certify that all the information in the Annual Report of PT Asia Pacific Fibers Tbk for the year 2017, is complete and we are fully responsible for the accuracy of the contents. Such statement was made correctly.
Robert Mc Carthy JR. Vasudevan Ravi Shankar
Komisaris Utama / President Commissioner Direktur Utama / President Director
Christopher Ian Teague Bonar Firman Hasiholan Sirait
Komisaris / Commissioner Direktur / Director
Christopher Robert Botsford Seeniappa Jegatheesan
Komisaris / Commissioner Direktur / Director
Alexander Shaik Antonius Widyatma Sumarlin
Komisaris / Commissioner Direktur / Director
ii
Agus Tjahajana Wirakusumah Peter Vinzenz Merkle
Komisaris Independen / Independent Commissioner
Direktur / Director
Dono Iskandar Djojosubroto
Komisaris Independen / Independent Commissioner
Consolidated Financial Statements and
Independent Auditors’ Report
PT Asia Pacific Fibers Tbk
And Its Subsidiaries
December 31, 2017 and 2016
CONTENTS
Board of Directors’ Statement
Independent Auditors’ Report
Page
Consolidated Financial Statements
Consolidated Statements of Financial Position 1 − 3
Consolidated Statements of Profit or Loss and Other Comprehensive Income 4 − 5
Consolidated Statements of Changes in Capital Deficiency 6
Consolidated Statements of Cash Flows 7
Notes to the Consolidated Financial Statements 8 − 124
Additional Financial Information 1 – 6
Financial Statements – Parent Entity Only Appendix
Statements of Financial Position 1
Statements of Profit or Loss and Other Comprehensive Income 4
Statemenst of Changes in Capital Deficiency 5
Statements of Cash Flows 6
INDEPENDENT AUDITORS’ REPORT
No. : 044a/01/ISS/I/18
To the Shareholders, Boards of Commissioners and Directors
PT ASIA PACIFIC FIBERS Tbk.
We have audited the accompanying consolidated financial statements of PT Asia Pacific Fibers Tbk
(the “Company”) and its subsidiaries, which comprise the consolidated statement of financial position as at
December 31, 2017, and the consolidated statements of profit or loss and other comprehensive income, changes
in capital deficiency and cash flows for the year then ended, and a summary of significant accounting policies
and other explanatory information.
Management’s responsibility for the consolidated financial statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements
in accordance with Indonesian Financial Accounting Standards, and for such internal control as management
determines is necessary to enable the preparation of consolidated financial statements that are free from
material misstatement, whether due to fraud or error.
Auditors’ responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We
conducted our audit in accordance with Standards on Auditing established by the Indonesian Institute of
Certified Public Accountants. Those standards require that we comply with ethical requirements and plan and
perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free
from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
consolidated financial statements. The procedures selected depend on the auditors’ judgment, including the
assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud
or error. In making those risk assessments, the auditors consider internal control relevant to the entity’s
preparation and fair presentation of the consolidated financial statements in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness
of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies
used and the reasonableness of accounting estimates made by management, as well as evaluating the overall
presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.
Opinion
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the
consolidated financial position of PT Asia Pacific Fibers Tbk and its Subsidiaries as at
December 31, 2017, and their consolidated financial performance and cash flows for the year then ended, in
accordance with Indonesian Financial Accounting Standards.
Page 2
Emphasis of matter
The accompanying consolidated financial statements have been prepared assuming the Company and its
Subsidiaries will continue as a going concern. Without qualifying our opinion, we draw attention to Note 2 in
the consolidated financial statements which indicates that the Company and its Subsidiaries incurred a net loss
of US$ 5,674,811 during the year ended December 31, 2017 and, as of that date, the Company and its
Subsidiaries’ current liabilities exceeded its total assets by US$ 880,157,409, and experienced a capital deficiency
of US$ 943,240,972. Total current liabilities as at December 31, 2017 of US$ 1,111,724,364 or 85% of total
current liabilities represent the secured debts. In October 2016, the Company has submitted a revised Secured
Debt Restructuring Plan (SDRP) to Secured Creditors, but until the issuance of these consolidated financial
statements, the Company has not received the response from its Secured Creditors. In addition to that, as at the
date of this report, one of the Company’s secured creditors is PT Perusahaan Pengelola Assets (PPA) (26%)
has not yet given its approval on the restructuring plan proposed by the Company. However, Damiano
Investments B.V., Netherland, majority shareholder of the Company (57.85% ownership) and majority secured
debt holder (92.5%) have provided capital expenditure facility of US$ 22,695,000 and letter of credit facility
of US$ 92,023,680 for raw materials procurement. Damiano Investment B.V., Netherland has commited to
provide the necessary financial support to the Company to enable it to continue as a going concern. The
Company’s management also continues to exert effort and expects to obtain the resolution of the secured debt
restructuring in order for the Company to obtain working capital from banks. The consolidated financial
statements do not include any adjustments that might result from the outcome of this uncertainty.
Other matters
Our audit of the accompanying consolidated financial statements of the PT Asia Pacific Fibers Tbk and its
Subsidiaries as at December 31, 2017 and for the year then ended was performed for the purpose of forming
an opinion on these consolidated financial statements taken as a whole. The accompanying financial
information of PT Asia Pacific Fibers Tbk (parent entity only), which comprises the statement of financial
position as at December 31, 2017, and the statements of profit or loss and other comprehensive income,
changes in capital deficiency and cash flows for the year then ended (collectively referred to as the “Parent
Entity Financial Information”), which is presented as a supplementary information to the accompanying
consolidated financial statements, is presented for the purpose of additional analysis and is not a required part
of the accompanying consolidated financial statements under Indonesian Financial Accounting Standards. The
Parent Entity Financial Information is the responsibility of management and was derived from and relates
directly to the underlying accounting and other records used to prepare the accompanying consolidated
financial statements. The Parent Entity Financial Information has been subjected to the auditing procedures
applied in the audit of the accompanying consolidated financial statements in accordance with Standards on
Auditing established by the Indonesian Institute of Certified Public Accountants. In our opinion, the Parent
Entity Financial Information is fairly stated, in all material respects, in relation to the accompanying
consolidated financial statements taken as a whole.
The consolidated financial statements of PT Asia Pacific Fibers Tbk and its Subsidiaries as at
December 31, 2016 and for the year then ended, were audited by another independent auditors who expressed
an unmodified opinion on those consolidated statements on March 17, 2017.
HENDRAWINATA HANNY ERWIN & SUMARGO
Iskariman Supardjo, CPA
License No. AP. 0336
Jakarta, March 19, 2018
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
December 31, 2017 and 2016
1
Notes
2 0 1 7
2 0 1 6
US$ US$
ASSETS
CURRENT ASSETS
Cash and cash equivalents 5 6,240,585 3,468,469
Trade receivables, net of allowance for
impairment of US$ 15,657,945 in 2017 and 2016
Third parties 6 39,064,158 31,584,686
Other receivables, net of allowance for
impairment of US$ 67,637,756 in 2017 and 2016
Third parties 7 2,112,875 3,032,953
Other current financial assets 8 6,035,155 5,906,063
Inventories 9 54,418,341 59,691,450
Purchase advances
Third parties 10 3,732,757 2,330,122
Prepaid taxes 27a 10,734,489 10,178,297
Prepaid expenses 11 1,726,698 1,828,659
Total Current Assets 124,065,058 118,020,699
NON–CURRENT ASSETS
Non-trade receivables, net of allowance
for impairment of US$ 111,962,653 in 2017 and 2016
Third party 12 38,770,115 39,574,362
Other non-current financial assets 13 996,500 998,945
Property, plant and equipment, net of
accumulated depreciation of US$ 1,718,316,734 in 2017 and
US$ 1,713,765,001 in 2016 14 67,634,235 69,647,040
Intangible assets 15 101,047 107,316
Deferred tax assets 27d – 2,801,154
Total Non–Current Assets 107,501,897 113,128,817
TOTAL ASSETS 231,566,955 231,149,516
Jakarta, March 19, 2018
Vasudevan Ravi Shankar Bonar Firman Hasiholan Sirait
President Director Director
The accompanying notes to the consolidated financial statements
form an integral part of these consolidated financial statements taken as a whole.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Continued)
December 31, 2017 and 2016
2
Notes
2 0 1 7
2 0 1 6
US$ US$
LIABILITIES AND EQUITY
(CAPITAL DEFICIENCY)
CURRENT LIABILITIES
Trade payables
Third parties 16 9,264,538 11,986,713
Accrued expenses 17 53,599,630 56,917,886
Taxes payable 27b 185,678 145,695
Bank loans 18 92,023,680 85,729,859
Secured debts 19 950,016,398 947,993,134
Short – term employee benefits liabilities 25 183,813 532,715
Current portion of long-term liabilities:
Credit financing payables 22 54,549 41,718
Other current financial liabilities 23 6,396,078 5,350,242
Total Current Liabilities 1,111,724,364 1,108,697,962
NON–CURRENT LIABILITIES
Borrowing from Other Financial Institutions:
Unsecured notes payable 20 26,055,409 25,024,969
Capex loans 21 22,695,000 23,570,000
Credit financing payables 22 42,854 67,977
Deferred revenues 24 187,399 199,962
Deferred tax liabilities 27d 194,252 –
Long-term employee benefits liabilities 26 13,908,649 11,154,807
Total Non–Current Liabilities 63,083,563 60,017,715
Total Liabilities 1,174,807,927 1,168,715,677
Jakarta, March 19, 2018
Vasudevan Ravi Shankar Bonar Firman Hasiholan Sirait
President Director Director
The accompanying notes to the consolidated financial statements
form an integral part of these consolidated financial statements taken as a whole.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Continued)
December 31, 2017 and 2016
3
Notes
2 0 1 7
2 0 1 6
US$ US$
LIABILITIES AND EQUITY (CAPITAL DEFICIENCY)
EQUITY (CAPITAL DEFICIENCY)
Share Capital
Authorized 12,357,255,040 shares at Rp 10,000 par value per Series A, Rp 1,000 par value
per Series B and Rp 40 par value per Series C
in 2017 and 2016
Issued and paid up 219,696,000 Series A and
2,276,057,347 Series C in 2017 and 2016 28 635,689,316 635,689,316
Additional paid-in capital 29 624,323,168 624,323,168
Retained earnings (accumulated deficit)
Appropriated 30 2,345,301 2,345,301
Unappropriated (2,205,598,757 ) (2,199,923,946 )
Total capital deficiency (943,240,972 ) (937,566,161 )
TOTAL LIABILITIES AND EQUITY (CAPITAL DEFICIENCY) 231,566,955 231,149,516
Jakarta, March 19, 2018
Vasudevan Ravi Shankar Bonar Firman Hasiholan Sirait
President Director Director
The accompanying notes to the consolidated financial statements
form an integral part of these consolidated financial statements taken as a whole.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
For the years ended December 31, 2017 and 2016
4
Notes 2 0 1 7 2 0 1 6
US$ US$
REVENUES
Net sales 34 396,618,468 355,748,940
Other operating revenues 35 3,158,403 4,731,812
Total revenues 399,776,871 360,480,752
COST OF GOODS SOLD 36 (371,785,957 ) (342,580,203 )
GROSS PROFIT 27,990,914 17,900,549
General and administrative expenses 39 (16,498,407 ) (15,386,149 )
Finance costs 40 (3,483,290 ) (4,451,148 )
Selling expenses 38 (8,416,514 ) (7,999,603 )
Loss on foreign exchange transactions, net (2,540,416 ) (3,884,345 )
Insurance claim settlement, net 33 1,497,966 5,638,402
Gain on sale or disposal of property, plant and equipment – 28,669
Miscellaneous income, net 41 465,907 1,174,884
(28,974,754 ) (24,879,290 )
LOSS BEFORE INCOME TAX (983,840 ) (6,978,741 )
TAX EXPENSE
Current tax expense 27c (7,236 ) (883,641 )
Deferred tax expense – net 27d (3,417,488 ) (4,005,987 )
Total tax expense 27e (3,424,724 ) (4,889,628 )
TOTAL LOSS FOR THE YEAR (4,408,564 ) (11,868,369 )
OTHER COMPREHENSIVE LOSS, NET OF TAX
Items that will not be reclassified to profit or loss:
Remeasurement of post employment benefit obligations (1,688,330 ) (388,089 )
Related income tax benefit 422,083 97,022
Total Other Comprehensive Loss, net of tax (1,266,247 ) (291,067 )
TOTAL COMPREHENSIVE LOSS FOR THE YEAR (5,674,811 ) (12,159,436 )
Jakarta, March 19, 2018
Vasudevan Ravi Shankar Bonar Firman Hasiholan Sirait
President Director Director
The accompanying notes to the consolidated financial statements
form an integral part of these consolidated financial statements taken as a whole.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME (Continued)
For the years ended December 31, 2017 and 2016
5
Notes 2 0 1 7 2 0 1 6
US$ US$
Total Net Loss Attributable to the Owners
of the Company
(4,408,564 )
(11,868,369
)
Total Comprehensive Loss Attributable to the Owners
of the Company
(5,674,811 )
(12,159,436
)
LOSS PER SHARE:
Basic (0.002 ) (0.004 )
Diluted (0.002 ) (0.004 )
Jakarta, March 19, 2018
Vasudevan Ravi Shankar Bonar Firman Hasiholan Sirait
President Director Director
The accompanying notes to the consolidated financial statements
form an integral part of these consolidated financial statements taken as a whole.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN CAPITAL DEFICIENCY
For the years ended December 31, 2017 and 2016
6
Retained Earnings
(Accumulated deficit)
Notes
Share Capital
Additional
paid-in capital
Appropriated
Unappropriated
Total Equity
(Capital
Deficiency)
US$ US$ US$ US$ US$
Balance as at December 31, 2015 635,689,316 624,323,168 2,345,301 (2,187,764,510 ) (925,406,725 )
Total loss for the year – – – (11,868,369 ) (11,868,369 )
Other comprehensive loss, net of tax – – – (291,067 ) (291,067 )
Balance as at December 31, 2016 635,689,316 624,323,168 2,345,301 (2,199,923,946 ) (937,566,161 )
Total loss for the year – – – (4,408,564 ) (4,408,564 )
Other comprehensive loss, net of tax – – – (1,266,247 ) (1,266,247 )
Balance as at December 31, 2017 635,689,316 624,323,168 2,345,301 (2,205,598,757 ) (943,240,972 )
Jakarta, March 19, 2018
Vasudevan Ravi Shankar Bonar Firman Hasiholan Sirait
President Director Director
The accompanying notes to the consolidated financial statements
form an integral part of these consolidated financial statements taken as a whole.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31, 2017 and 2016
7
Notes 2 0 1 7 2 0 1 6
US$ US$
CASH FLOWS FROM OPERATING ACTIVITIES
Receipt from customers 452,275,268 359,942,630
Payment to suppliers (366,149,955 ) (253,401,986 )
Payment of salaries (10,335,562 ) (8,830,852 )
Other operating cash payments, net (55,333,452 ) (88,909,037 )
Cash provided by operations 20,456,299 8,800,755
Interest received 7,40 22,181 23,557
Interest expense and bank charges paid 17,40 (3,297,599 ) (3,824,705 )
Cash receipt from insurance claim settlement 7,33 1,497,966 5,688,253
Payment of income tax 27 (2,903,110 ) (2,175,977 )
Refund of income tax 27 2,901,194 5,426,618
Net Cash Provided By Operating Activities 18,676,931 13,938,501
CASH FLOWS FROM INVESTING ACTIVITIES
Payment to acquire property, plant and equipment 14,22 (2,538,928 ) (12,431,261 )
Proceed from sale of property, plant and equipment 14,41 − 28,669
Net Cash Used In Investing Activities (2,538,928 ) (12,402,592 )
CASH FLOWS FROM FINANCING ACTIVITIES
Receipt of capex loans 21 − 1,500,000
Payment of capex loans 21 (875,000 ) −
Receipt/(Payment) of bank loans 18 6,293,821 (2,405,857 )
Payment of credit financing payables 22 (12,292 ) (69,829 )
Net Cash Provided By (Used In) Financing Activities 5,406,529 (975,686 )
NET INCREASE IN CASH AND
CASH EQUIVALENTS
21,544,532
560,223
EFFECT OF FOREIGN CURRENCY EXCHANGE
RATE CHANGES
(18,772,416
)
251,098
CASH AND CASH EQUIVALENTS
AT THE BEGINNING OF YEAR
5
3,468,469
2,657,148
CASH AND CASH EQUIVALENTS
AT THE END OF YEAR
5
6,240,585
3,468,469
Jakarta, March 19, 2018
Vasudevan Ravi Shankar Bonar Firman Hasiholan Sirait
President Director Director
The accompanying notes to the consolidated financial statements
form an integral part of these consolidated financial statements taken as a whole.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2017 and 2016
8
1. GENERAL
a. Establishment and General Information
PT Asia Pacific Fibers Tbk (“the Company”) is engaged in manufacturing of chemical and synthetic
fiber, weaving and knitting, and other activities related to the textile industry. The Company has
2 (two) manufacturing plants, and marketed its product both locally and internationally, such as in
Europe, United States of America, Asia, Australia and the Middle East.
PT Asia Pacific Fibers Tbk was established within the framework of Domestic Capital Investment
Law No. 6 of year 1968 as amended by Law No. 12 of year 1970 based on notarial deed No. 22 dated
February 15, 1984 of Januar Tirtaamidjaja, S.H., public notary in Jakarta. The above laws were
subsequently amended by the Limited Liability Company Law of Republic of Indonesia No. 40 in year
2007 dated August 16, 2007. The deed of establishment was approved by the Ministry of Justice of
Republic of Indonesia based on decision letter No. C2–6107.HT.01.01.TH.84 dated October 26, 1984
and was published in Supplement No. 3247 of State Gazette No. 72 dated September 7, 1990.
The Article of Association has been amended based on notarial deed No. 92 dated March 24, 2009 of
Sutjipto, S.H., notary in Jakarta to adjust the Company’s Article of Association with Bapepam-LK No.
IX.J.1 dated May 14, 2008 concerning the Principles of Association of Public Offering of Conduct
Equity Securities and Public Companies. The deed of establishment was approved by the Ministry of
Justice of Republic of Indonesia based on decision letter No. AHU-0052618.AH.01.09.Tahun 2009
dated August 14, 2009.
The Articles of Association have been amended based on notarial deed No. 50 dated
September 10, 2009 of Sutjipto, S.H., public notary in Jakarta, concerning the change in the
Company’s name from PT Polysindo Eka Perkasa Tbk to PT Asia Pacific Fibers Tbk. The deed was
approved by the Ministry of Law and Human Rights of the Republic Indonesia based on decision letter
No. AHU-54294.AH.01.02.Tahun 2009 dated November 10, 2009 and was published in Supplement
No. 21449 of State Gazette No. 77 dated September 24, 2010.
The Company’s Articles of Association have been amended based on the notarial deed No. 107 dated
February 23, 2012 of Aryanti Artisari, S.H., M.Kn., public notary in Jakarta, concerning the
implemented Management Employee Stock Option Programme (MESOP) based on the Capital
Market and Financial Institution Supervisory Agency (BAPEPAM-LK)’s Regulation No. IX.D.4. The
deed was approved by the Ministry of Law and Human Rights of Republic Indonesia based on decision
letter No. AHU-0018443.AH.01.09.Tahun 2012 dated February 29, 2012.
The Articles of Association have been amended several times. The latest amendment of the Company’s
Articles of Association was based on the notarial deed No. 30 dated July 7, 2015 of Aryanti Artisari,
S.H., M.Kn., notary in Jakarta to adjust the Company’s Article of Association with the regulation from
Otoritas Jasa Keuangan. The deed of establishment was approved by the Ministry of Justice of
Republic of Indonesia based on decision letter No. AHU AH.01.03 0954603.Tahun 2015 dated
July 31, 2015.
On February 4, 2011, the Company obtained the approval from Chairman of the Capital Investment
Coordinating Board (BKPM) in his letter No. 2/B/II/PMDN/2011 with regard to the cancellation of
approval from Chairman of the Capital Investment Coordinating Board (BKPM) in his letter
No. 249/II/PMDN.1997 dated December 2, 1997.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
9
1. GENERAL (Continued)
a. Establishment and General Information (Continued)
Further, the Company has received the approval of Chairman of the Capital Investment Coordinating
Board (BKPM) for the expansion of the Fiber capacity in Karawang site through the approval letter
No. 2/B/II/PMDN/2011 dated February 24, 2011. This project has started in the second quarter
of 2012.
In accordance with Article 3 of Company’s Article of Association, the Company’s objectives and
scope of activities is mainly to engage in the manufacturing of chemical and synthetic fiber, weaving
and knitting, and other activities related to the textile industry. The Company is domiciled in Kendal,
Central Java with its plants located in Kendal, Central Java and Karawang, West Java. The Company’s
representative office is located at The East Building, 35th Floor, Jl. DR. Ide Anak Agung Gde Agung
(formerly Jalan Lingkar Mega Kuningan) Kav. E-3.2 No. 1, Jakarta. The Company started its
commercial operations in 1986.
The Company has many ongoing social activities in the local environs of its two plant location in
Semarang and Karawang which the purpose of this activity is to improve the livelihood of the
surrounding communities. In order to carry out these programmes more effectively, the Company has
established a foundation “Yayasan Asia Pacific Fiber” on January 15, 2010. The deed was approved
by the Ministry of Justice and Human Rights of Republic of Indonesia based on decision letter
No. AHU-960.AH.01.04.Tahun 2010 dated March 15, 2010.
The Company’s immediate parent company is Damiano Investments B.V., incorporated in Netherland,
and its ultimate parent company is ADM Capital and Spinnaker Capital Group, incorporated and
domiciled in Hong Kong and United Kingdom, respectively.
b. Public Offering of Shares, Notes Payable of the Company and its Subsidiaries
On December 14, 1990, the Company offered 12,000,000 shares to the public through Jakarta and
Surabaya Stock Exchanges, now known as Indonesian Stock Exchange.
On October 8, 1993, the Company obtained the notice of effectively from the Chairman of Capital
Market Supervisory Agency (BAPEPAM), in his letter No. S-1738/PM/1993, for its limited
offering of 184,000,000 shares through rights issue with preemptive rights to shareholders. These
shares were listed in Jakarta and Surabaya Stock Exchanges on November 1, 1993.
On December 15, 1994, the Company obtained the notice of effectively from the Chairman of
BAPEPAM, in his decision letter No. S-2027/PM/1994, for the change of par value from Rp 1,000
to Rp 500 per share.
On May 20, 1996, the Company obtained the notice of effectively from the Chairman of
BAPEPAM, in his decision letter No. S-778/PM/1996, for its offering of 1,104,000,000 shares
through rights issue II with preemptive rights to shareholders. These shares were listed in Jakarta
and Surabaya Stock Exchanges on June 10, 1996.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
10
1. GENERAL (Continued)
b. Public Offering of Shares, Notes Payable of the Company and its Subsidiaries (Continued)
On December 11, 1997, the Company obtained the notice effectively from the Chairman of
BAPEPAM, in his decision letter No. S-2844/PM/1997, for its offering of 2,185,920,000 shares
through rights issue III with preemptive rights to shareholders. These shares were listed in Jakarta
and Surabaya Stock Exchanges on January 5, 1998.
In 1994, the Company issued US$ 125,000,000 Unsecured Senior Notes which are listed in
Luxembourg. In 1996, the Company offered to the holders of said unsecured notes to exchange
their notes with US$ 125,000,000 Guaranteed Senior Notes issued by PIFC with the Company as
the guarantor. These notes were listed in Luxembourg Stock Exchange.
In 1996, PIFC, with the Company as a guarantor, also issued US$ 50,000,000 Secured Floating
Rate Notes and US$ 260,000,000 Guaranteed Secured Notes which were listed in Luxembourg
Stock Exchange.
In 1997, PIFC, with the Company as a guarantor, issued US$ 250,000,000 Guaranteed Secured
Notes which were listed in Luxembourg Stock Exchange.
Since January 2000, the above notes issued by PIFC were delisted from Luxembourg Stock
Exchange.
Beginning of December 2004, all of the Company’s outstanding shares totaling 4,393,920,000
shares were suspended regarding the bankruptcy proceeding against the Company and delay in
submitting the required consolidated financial statements. The Company’s shares were still
suspended after the Company removes their bankruptcy. However, the Company took efforts to
remove its suspension which includes submitting Company’s future plan of actions. Further in
July 2006, all of the Company’s shares resumed trading.
In 2006, the Company converted the unsecured debt amounted to 43,144,238,750 shares as part
of the implementation of Composition Plan which have been approved and ratified by the
Commercial Court. Based on the condition issued by Indonesian Stock Exchange, the new shares
cannot be traded for 1 (one) year. Further in October 2007, the new Company’s shares were traded.
Based on the Extraordinary General Stockholders Meeting (RUPSLB) held on February 21, 2008,
the shareholders approved the reverse stock split (split down) with a ratio of 20:1 wherein 20 old
shares will become 1 new share. Reverse stock splits are conducted for the Company’s shares to
be more liquid and in line with the Company’s performance. Due to the changes in the Company’s
number of shares and par value, the Company amended its Articles of Association and the notarial
deed regarding the changes of the Company’s Article of Association had been approved by the
Ministry of Justice and Human Rights on March 3, 2008. Further, based on the notarial deed of
Sutjipto, S.H., No. 122 dated February 27, 2008 regarding shares purchase as the result of reverse
stock split named PT Trimegah Securities Tbk as “Stand by Buyer”. In addition, all shares from
reverse stock were traded on March 14, 2008.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
11
1. GENERAL (Continued)
b. Public Offering of Shares, Notes Payable of the Company and its Subsidiaries (Continued)
On October 10, 2008, the Subsidiary’s shares (PT Texmaco Jaya Tbk) have been delisted from the
Indonesian Stock Exchange based on its letter No. S-04741/BEI.PSR/09/2008 and
Peng-004/BEI.PSR/DEL/09-2008 due to the suspension of trading shares and going concern
problem of the Subsidiary.
Since December 2, 2009, the Company’s shares in Indonesian Stock Exchange have been changed
with the new Company’s name.
Based on the Extraordinary General Stockholders Meeting (RUPSLB) held on March 24, 2009
and based on notarial deed No. 91 dated March 24, 2009 of Sutjipto, S.H., public notary in Jakarta,
the shareholders approved the issuance of 118,845,397 new authorized shares series C (5% of
issued and paid-up capital) without preemptive rights, for providing stock options to the
Company’s management and employees (Management Employee Stock Option Programme /
MESOP). The notarial deed was approved by the Ministry of Justice and Human Rights of
Republic of Indonesia based on decision letter No. AHU-0052619.AH.01.09.Tahun 2009 dated
August 14, 2009. As per the Company’s schedule that was reported to Indonesian Stock Exchange
dated March 17, 2009, its programme has been implemented at the latest period (February 1,
2012).
Further, based on the notarial deed No. 107 dated February 23, 2012 of
Aryanti Artisari, S.H., M.Kn., public notary in Jakarta, the Management Employee Stock Option
Programme / MESOP has been implemented with the execution price of Rp 45 each. All shares
under MESOP have been fully paid up through the Company’s bank accounts dated
February 20 and February 21, 2012. It has been registered in the Indonesian Stock Exchange
through announcement No. Peng-P-00032/BEI.PPR/03-2012 dated March 5, 2012 and No. Peng-
P-00033/BEI.PPR/03-2012 dated March 7, 2012.
Based on the Extraordinary General Stockholders Meeting (RUPSLB) held on June 18, 2012 and
based on the notarial deed No. 88 dated June 18, 2012 of Aryanti Artisari, S.H., M.Kn., notary
public in Jakarta, the shareholders approved the issuance of 74,872,600 new authorized shares
series C (3% of issued and paid-up capital) without preemptive rights, for providing stock options
to the Company’s management and employees (Management Employee Stock Option Programme
/ MESOP). The Company has sent a letter No. 068/APF-CS/VI/2014 dated June 25, 2014 and
No. 071/APF-CS/VII/2014 dated July 7, 2014 to Otoritas Jasa Keuangan (OJK) regarding the
cancelation of MESOP implementation due to the debt restructuring is not completed so the
Company’s market price is decreasing. Based on the Extraordinary General Stockholders Meeting
(RUPSLB) held on June 16, 2015 notarial deed No. 49 dated June 16, 2015 of Aryanti Artisari
S.H., M.Kn, the shareholders approved the cancelation of MESOP implementation.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
12
1. GENERAL (Continued)
c. Subsidiaries
The Parent Company has the following non-active subsidiaries as follows:
Commercial Percentage of Total Assets
Subsidiaries Domicile Nature of Business Operations Ownership 2 0 1 7 2 0 1 6
% US$ US$
(in million) (in million)
PT Texmaco
Jaya Tbk (TJ)
Karawang Trading, weaving,
knitting and processing
1972 92.00 *) *)
PT Texmaco Graha Jakarta Trading of textile and 1994 91.08 *) *)
Busana (TGB) producing ready to
(99% owned by TJ) wear garments and
accessories
Polysindo International
Finance Company
BV (PIFC)
Netherlands Financial services 1994 100.00 759 759
Polysindo (Mauritius)
Ltd. (PML)
Republic of
Mauritius
Financial services Pre-
operating
100.00 – –
*) Not applicable due to PT Texmaco Jaya Tbk (TJ)(under bankruptcy) and PT Texmaco Graha Busana (TGB) have been
deconsolidated.
In 2001, the Company acquired 10,000 shares which represent 100% ownership in Polysindo
(Mauritius) Ltd. The shares were acquired for the amount of US$ 10,000. The difference between
the acquisition cost and the net assets of PML amounted to Rp 221,924,188 (equivalent to
US$ 21,339) was recorded as “difference on restructuring among companies under common
control” account as part of the additional paid-in capital in the consolidated statements of financial
position (Note 29).
There were no transactions between the Company and Polysindo (Maurutius) Ltd and Polysindo
International Finance Company BV during 2017 and 2016. The Company intends to close the
operation of its subsidiaries along with the restructuring of the Company.
Since April 2008, PT Texmaco Jaya Tbk (TJ) operations (Fleece division) are conducted by the
Company with tolling basis.
Since the second semester of 2004, PT Texmaco Graha Busana has halted its business operations.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
13
1. GENERAL (Continued)
d. Boards of Commissioners and Directors, Audit Committee and Employees
The composition of board of commissioners, directors and audit committee (key management) of
the Company as at December 31, 2017 is based on the notarial deed No. 30 dated March 9, 2017
of Aryanti Artisari, S.H., M.Kn., notary in Jakarta.
The composition of the Company’s boards of commissioners and directors as at
December 31, 2017 and 2016 are as follows:
2 0 1 7 2 0 1 6
Board of Commissioners:
President Commissioner : Mr. Robert Mc Carthy Mr Robert Clive Appleby
Independent Commissioners : Mr. Ir. Agus Tjahajana
Wirakusumah
Mr. Ir. Agus Tjahajana
Wirakusumah
Mr. Dono Iskandar Djojosubroto Mr. Dono Iskandar Djojosubroto
Commissioners : Mr. Christoper Ian Teague Mr. Christoper Ian Teague
Mr. Christopher Robert Botsford Mr. Christopher Robert Botsford
Mr. Alexander Shaik Mr. Robert Mc Carthy
Board of Directors:
President Director : Mr. Vasudevan Ravi Shankar Mr. Vasudevan Ravi Shankar
Independent Directors : Mr. Bonar Firman Hasiholan
Sirait
Mr. Bonar Firman Hasiholan
Sirait
Mr. Antonius Widyatma Sumarlin Mr. Antonius Widyatma Sumarlin
Directors : Mr. Seeniappa Jegatheesan Mr. Seeniappa Jegatheesan
Mr. Peter Vinzenz Merkle Mr. Peter Vinzenz Merkle
To comply with BAPEPAM regulation No. IX.1.5 regarding the forming and work guidance of
Audit Committee, the Board of Commissioners has formed Audit Committee.
The members of the Company’s Audit Committee as at December 31, 2017 and 2016 are as
follows:
Chairman : Mr. Dono Iskandar Djojosubroto
Member : Mr. Doedy Darwin
Mr. Deddy Sutrisno
The Company’s corporate secretary as at December 31, 2017 and 2016 is Mr Tunaryo.
In February 2009, the Company formed an internal audit department to comply with
BAPEPAM-LK regulation. The head of internal audit is Mr. Yohanes Baptis Galuh Adjar
Pamungkas.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
14
1. GENERAL (Continued)
d. Boards of Commissioners and Directors, Audit Committee and Employees (Continued)
As at December 31, 2017 and 2016, the Company had 3,164 and 3,338 permanent employees,
respectively. Also as at December 31, 2017 and 2016, the Subsidiaries does not have permanent
employees.
e. Approval and Authorization for Issuance of Consolidated Financial Statements
The consolidated financial statements of the Company and its Subsidiaries as at December 31, 2017
and for the year then ended was approved and authorized for issuance by the Board of Directors on
March 19, 2018.
2. GOING CONCERN, DEBT RESTRUCTURING AND ECONOMIC CONDITIONS
a. Going Concern
The global polyester chain continued its recovery towards stability in 2017 after a downside of its trade
cycle in 2014/2015 caused by a combination of excess capacity, weaker demand growth in the key
markets, especially in China. PTA margins witnessed signs of improvements during 2017, despite
volatility in prices. Cotton prices have remained firm and trended upwards in most part of the year
caused by declining stock levels and stock/use ratios. Viscose prices also remained high during the
year, helping polyester prices to remain relatively stable.
Overall growth of polyester fiber increased significantly by 6.70% during 2017 with the improved
operating rates at 71.22% during the year. Average polymer utilization rates have also increased to
79.30% with the growth in production at 5.50% during 2017. PTA world capacity reached 79.99 mil
tonnes, only a very marginal increase from 2016. Hence, the operating rates for 2017 increased to
79.00% as compared to 76.3% for the previous year. The improved PTA operating rates with the
consumption growth at 5.70% during the year helped to stabilize of the PTA prices and recoup the
margins. PTA margins which were under continuous downward trend during the past 3 years have
recovered during 2017 and the average margin levels remained at US$80/MT (spot) as compared to
US$67/MT (previous year average).
Globally, Polyester chain witnessed a smart recovery during the year supported by the global economic
recovery, improved consumption and relative stability in crude prices. Domestic market also turned
towards stability from second semester of the year with the support of stiff measures against illegal
imports and restriction on imported textile goods into Indonesia. With the growth in Domestic
consumption, Textile and Apparel manufacturing sector registered a positive growth rate of 3.80%
during 2017 as compared to negative growth in 2015 and 2016.
With the improved market conditions, the Company continue to operate its plant at normal levels
supported by its strong customer base and the sustained demand from domestic market. Damiano
Investments B.V., Netherland, our majority shareholders continue to provide the working capital
facility of US$ 97.2 million of Letter of Credit limit through Deutsche Bank, Hong Kong.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
15
2. GOING CONCERN, DEBT RESTRUCTURING AND ECONOMIC CONDITIONS (Continued)
a. Going Concern (Continued)
Year 2017 has delivered relative stability in crude oil prices after rapid increase in prices through 2016
followed by the sharp fall towards end of 2015. This turn led to some stability in the prices of feed
stocks PX and PTA to a larger extent. The crude price has been on the uptrend and ranged between
US$ 46 and US$ 58 per barrel and closed at US$ 58 by end of 2017. Average price of crude increased
by 19% during 2017 as compared to previous year. In line with the gradual surge in Crude prices.
Prices of PX, MEG also increased pushing up the PTA prices as well. This has led to overall
improvement in Polyester chain prices. The Polyester margins also improved in tandem, supported by
recovery in the downstream activities, domestic consumptions and market dynamics. As a result, the
sales revenue for the year 2017 has increased to US$ 394 million as compared to US$ 356 million for
the previous year. Both Filament yarn and Fiber prices increased with improved margins during the
second semester of 2017.
On the production front, while yarn production was maintained above the previous year, Fiber
production was curtailed in view of lower operating rates of domestic spinning sector that revived in
the later part of the year. Overall increase in yarn production was 2.32% over 2016, while Polymer
and Fiber production were lower by 8.57% and 2.68% respectively. Sales of Performance Fabrics
division of the Company has marginally dropped to US$ 7.79 million in 2017 as compared to US$ 8.86
million for the previous year.
The overall financial performance of the Company in terms of earnings before interest and
depreciation (EBITDA) improved significantly. The Company posted an EBITDA of US$ 10.96
million in 2017 as compared US$ 3.43 million for the previous year. The improvement in the
performance was mainly on account better market conditions, improved product-mix, overall recovery
in product margins and outsourcing of PTA from market.
However, lower earnings (EBITDA) continued to cause severe strain on the cash flow position of the
Company in the background of increased working capital needs and critical Capex requirements. This
turn led to postponement of certain critical and sustainability maintenance projects and financial
commitments.
In the absence of sufficient free cash, the Company could not service the interest to its unsecured
creditors (New Notes) fully during the year. Interest amounts due for all the four quarters to unsecured
creditors were capitalized per approval from the majority of the creditors. Damiano Investments B.V.,
the majority shareholders and creditors of the Company, waived the interest on LC limit of US$ 97.20
million for the full year and interest on other capex loans for 3 months. They also agreed for re-
scheduling of principal payment for the capex loan.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
16
2. GOING CONCERN, DEBT RESTRUCTURING AND ECONOMIC CONDITIONS (Continued)
a. Going Concern (Continued)
Global fiber industry will be determined increasingly by growth in demand in Textiles and Apparel in
Asia. Although economic growth in developed regions such as in North America, EU 28 and Japan
remains modest, they continue to be major consumers of downstream textiles and apparel products
sourced from Asia. As economies develop, many more polyester consumers are entering the market
for first time. Most importantly, polyester is widely accepted within China and elsewhere in Asia by
major retailers and apparel brand owners as the key performance fiber for the higher added value
technical textile sectors.
Therefore, significant growth is forecast in the many performance fabrics that are increasingly
developed in Asia for consumption in home textiles, building construction, advanced sportswear
apparel, and the fast emerging medical and hygiene textile sectors via the non-woven route.
Year 2018 looks promising with robust demand for polyester products, the Company with its newly
built capabilities to increase the volume of specialty products (Colored yarns/PBT) for automotive /
home textiles applications and its strategy to enter new markets for performance oriented textile and
non-textile segments, will be able to face the competition and improve its performance in the years to
come.
Earlier, the Company’s 100% of energy requirements (both power and steam) had been met by PT
Wismakarya Prasetya (WKP). However, subsequent to bankruptcy of WKP, the Company took the
following action to ensure uninterrupted supply of power steam and Gas:
1) Acquired the ABB Gas turbine – 20 MW from WKP through Court auction with effect from
5th November 2014.
2) Entered into a rental agreement for the rest of the facilities of WKP with the curator of
PT WKP to maintain and operate the turbines to generate power and stream for its captive use
– vide agreement dated 16th April 2014 and the subsequent amendments i) dated 24th
November 2014 and ii) 18th December 2015, which are valid up to 31st December 2018.
3) Consequent to expiry of the contract for supply of Gas between PT WKP and PGN, the
Company has renewed the Gas supply contract directly with PT PGN to ensure uninterrupted
supply of Gas for operating the power plant – vide contract no 011700.PK/HK.02/USH/2014
dated 30th June 2014, which is valid through March 2018.
In 2017, while the production volumes and the capacity utilization of the Company’s facilities in
Karawang dropped marginally due to curtailment of production owing to market conditions,
production at Semarang facilities increased.
PTA plant at Karawang continued to remain mothballed in view of the PTA economy and trading
conditions and its PTA requirement is outsourced externally. The overall capacity utilization was,
however, maintained around 90% in both the facilities.
In addition, the Company’s financial condition in 2017 showed the following:
Total comprehensive loss for the year amounting to US$ 5,674,811;
Negative working capital amounting to US$ 987,659,306;
Capital deficiency amounting to US$ 943,240,972.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
17
2. GOING CONCERN, DEBT RESTRUCTURING AND ECONOMIC CONDITIONS (Continued)
a. Going Concern (Continued)
Subsidiary’s Operations (PT Texmaco Jaya Tbk):
Consequent to declaration of bankruptcy of PT Texmaco Jaya by the commercial court of Jakarta on August 19,
2011 per court order 10/PKPU/2010/PN.NIAGA.JKT.PST Jo No: 71/PAILIT/2010/PN.NIAGA.JKT.PST, the
management of the Company and enforcement of the liquidation process was under the team of curators appointed
by the Court and monitored by the supervisory judge. The Curator and the Commercial Court of Jakarta had
acknowledged and registered the receivable amount of Rp 1,106,832,761,717 as unsecured debt. The liquidation
process of the Company’s subsidiary is still under progress.
In the meantime, the Court has approved continued operation of its Fleece division as a going concern
with a view to maintain the value of the bankrupt assets. In accordance with the Court approval and
pursuant to the tolling agreement between the team of curators and PT Asia Pacific Fibers Tbk, the
Fleece division continued to be operated on tolling basis.
Pursuant to PSAK 10 (Revised 2014), the Company and its Subsidiaries has determined US dollar as
its functional currency as predominant financial transaction such as Sales, Purchases, Pricing etc., are
transacted in dollar currency. Hence the Company and its Subsidiaries has chosen to prepare and
present its financial statements in US Dollar currency effective January 2012. The financial statements
for the year 2017 and 2016 was prepared in accordance with the guidelines provided under PSAK 10
paragraph 27-34 and paragraph 61-62.
The accompanying consolidated financial statements have been prepared on a going concern basis,
and do not include any adjustment that might result from the outcome of these uncertainties. Related
effects will be reported in the consolidated financial statements as they become known and can be
estimated. To date, the Company, in running its operations is supported through the letter of credit
facility and other capex loans from Damiano Investments B.V., Netherland and through the confidence
and support of its suppliers and customers. In addition, Damiano Investments B.V., Netherlands
confirmed that it will provide the assistance to the Company in obtaining letter of credit facilities until
such time that the Company can secure a credit facility from banks on its own. Damiano Investments
B.V., Netherland has also provided the requisite funds for the Company’s maintenance capital
expenses programs in 2017 through its Third Loan Agreement.
b. Debt Restructuring
Secured Debt
In response to our continuous appeal and discussions with Ministry of Finance (MoF)/PT Perusahaan
Pengelola Asset (PPA) for a restructuring solution of Secured Debt, Ministry of Finance had appointed
a high-level committee lead by Mandiri Sekuritas (Investment and Security division of the state-owned
Bank – Bank Mandiri) to study and recommend a restructuring proposal for the Texmaco group debts
including PT Asia Pacific Fibers secured debt to the Ministry for its review and approval.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
18
2. GOING CONCERN, DEBT RESTRUCTURING AND ECONOMIC CONDITIONS (Continued)
b. Debt Restructuring (Continued)
Secured Debt (Continued)
Accordingly, the Committee had several rounds of discussion with the Management and Majority
shareholders of the Company on various restructuring under the given conditions. The committee had
undertaken financial and legal due diligence of the Company and also done technical evaluation and
valuation of the Company’s assets with a view to formulate a suitable restructuring proposal. During
the bilateral discussions with the committee, APF had emphasized the need for an immediate solution
to the issue and requested that APF to be de-linked from Texmaco group in as much as it is no more
an affiliate company and the Majority shares are held by Damiano Investments B.V., Netherland, who
are the majority creditors of the Company as well.
After a several rounds of discussions and considering the current conditions and various other
economic factors, the Company had submitted an updated Secured Debt Restructuring proposal to the
Committee and the MoF during October 2016. The final restructuring plan proposed by the Company
envisages conversion of the entire secured debt into equity through debt equity swap. The broad terms
of the Secured Debt Restructuring Proposal (SDRP) are as follows:
a) 100% of the Secured Debt of MoF/BPP will be either converted into 15 - Year, 0% Coupon
Mandatory Convertible Bonds (MCB) for a value equivalent to 100% of the Principal value of the
debt (as per the terms set out below), or
b) Directly convert the entire debt in to 24.49% of the expanded equity of the Company (Post
Restructure)
c) 100% of all other Secured Debts comprising of Secured Bonds, Ex – Banks bilateral loans will be
converted into equity as below:
i. All Secured Bonds to be converted into 69.26% of the equity
ii. Other Secured Debts to be converted into 3.08% of the equity
d) All accrued interest/ penalties on the Secured Debt up to the date of restructure will be fully
waived.
Terms of the MCB
a) Face value of the MCB will be equal to the 100% value of the MoF/BPP debt.
b) The tenor of the MCB is 15 years with 0% Coupon rate.
c) The restructured MCB of BPP and MoF will be denominated in Rupiah (IDR). The debts
denominated in currencies other than IDR will be converted into Rupiah (IDR) using the exchange
rate (BI Middle rate) prevailing at the date of restructure.
d) At holder’s option, MCBs can be converted in to Equity any time after expiry of 36/60 months
from the date of issue of the MCB;
e) MCB is classified as a quasi-equity instrument.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
19
2. GOING CONCERN, DEBT RESTRUCTURING AND ECONOMIC CONDITIONS (Continued)
b. Debt Restructuring (Continued)
Secured Debt (Continued)
In March 6, 2017, PT Asia Pacific Fibers Tbk established a wholly owned subsidiary Asia Pacific
Fibers Hong Kong Limited, a private limited company established under the laws of the Hong Kong
Special Administrative Region (“HKSAR”) with corporate registration number 2493881 and its
registered office in Hong Kong.
The new subsidiary Company, Asia Pacific Fibers Hong Kong Limited through the execution of Deed
Poll will voluntarily assume liability of the Issuer and/or Guarantor in respect of the secured bonds of
US$ 682.5 million. This is intended to facilitate the restructuring of (inter alia) the Notes through a
scheme of arrangement pursuant to sections 673 and 674 of the Companies Ordinance (Cap 622 of the
law of the HKSAR) (“Scheme”) and otherwise in a manner that is beneficial to the Company, the
Company and each of their respective stakeholders, including (but not limited to) the holders of the
Notes.
The Company has recently made considerable progress towards resolving these issues with the
Government of Indonesia and now seeks to push ahead with a restructuring of the Notes, which will
help facilitate acceptance and implementation of any restructuring plan agreed with the Government
of Indonesia. The last 15 years of protracted inability to achieve a restructuring of its secured debt,
have eroded the Company’s ability to service the original level of its secured debt. However, there
remains significant value in the Company’s business which can be made available to creditors under
any restructuring. Such a restructuring will also pave the way for the Company to achieve a sustainable
capital structure which will allow it to continue and grow its business with new capital expenditure
and other initiatives which will benefit all of its stakeholders (which include public shareholders
currently holding over 40% of the Company’s equity).
The Company’s ability to restructure the Notes is constrained by the fact that the restructuring would
require unanimous consent from holders of the Secured Bond Holders. However the Company has
been unable to identify a small percentage (of around 1-2%) of such holders which it believes may be
inactive, either being liquidated or no longer exist or in the case of individuals being deceased.
As is clear from the above, the Company is committed to implementing a restructuring which is fair
to all holders of the Notes, but has been frustrated by the inability to identify or contact a very small
minority of holders of the Notes to obtain the required approvals for such a restructuring. Accordingly,
the Company has obtained professional advice as to the various options available to it to effect a
restructuring in a manner that is fair to all stakeholders, but also allows it to bind unidentified holders
of the Notes who do not provide affirmative consent. The Company has considered that a Scheme in
HKSAR would be the most appropriate options for implementing a restructuring the secured bonds.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
20
2. GOING CONCERN, DEBT RESTRUCTURING AND ECONOMIC CONDITIONS (Continued)
b. Debt Restructuring (Continued)
Secured Debt (Continued)
The advantages of this scheme of restructuring are:
(a) Management of the Company will remain free to run the business and operations of the Company
while any scheme is being proposed and implemented;
(b) The Company has been advised that a scheme may be used to bind unidentified holders of the
Notes who do not provide affirmative consent so long as the Scheme is supported by the requisite
majority of holders of the Notes and sanctioned by the relevant court after a hearing on fairness;
(c) The key creditors of the Company are managed by fund managers who have offices in Hong Kong
and are subject to supervision of, or registration with, the Hong Kong Security and Futures
Commission; and bind dissenting secured creditors of the Company (including minority holders of
the Notes).
The committee has subsequently submitted its interim report and recommendations to the Ministry of
Finance for its decision and final direction. While the majority creditors are in agreement with the
above proposal. It is expected that a final decision by MoF/PPA on restructuring will be taken very
soon.
Unsecured Notes Payable
The Company has executed the restructuring agreement with the unsecured creditors as approved by
the creditors and ratified by the Court. On September 29, 2006, the unsecured creditors comprising of
Banks, PT Bina Prima Perdana, Leasing, and Notes was restructured into Fixed Rate Notes under
custodian of The Hongkong and Shanghai Banking Corporation Limited, Hong Kong. Accordingly,
total unsecured loan after the restructuring stands at US$ 18,670,630. As at December 2017, the
outstanding amount of unsecured new notes is USD 26,055,409 including the capitalized interest of
USD 7,384,779.
The Company has taken all the required corporate actions towards the implementation of the
Composition Plan (“Peace Plan”) as approved by the unsecured creditors of the Company and ratified
by the Commercial Court. The steps involve the issuance of the new debts secured or unsecured in
exchange of the old unsecured debts and issuance of shares for the reduction of the principal amount
of debts as per the terms of the Composition Plan. The Company has reduced its unsecured debts as
per the Composition Plan and increased its share capital as additional capital pending allotment to the
creditors. The Company has appointed The Hongkong and Shanghai Banking Corporation Limited,
Hong Kong to act as its Fiscal Agent, Paying Agent and Trustees for its new unsecured notes which
are euro-cleared. Currently, Madison Pacific Trust Limited has taken over on the Fiscal Agent for the
Unsecured Notes from The Hongkong and Shanghai Banking Corporation Limited, Hong Kong.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
21
2. GOING CONCERN, DEBT RESTRUCTURING AND ECONOMIC CONDITIONS (Continued)
b. Debt Restructuring (Continued)
Unsecured Notes Payable (Continued)
In January 2018, the Company sought and got the approval of its Unsecured New Note Holders for
the extension of its maturity from February 2018 to February 2020 including the capitalization of
interest until February 2018. The details are as follows:
Redemption Date
Redemption Table (Revised for PIK)
Subject to PIK Outstanding Redemption Redemption
% Request Amount Amount
February 15, 2005 US$18,670,630.00 US$18,670,630.00 0.00%
to February 15, 2018 US$ 7,651,122.73 US$25,024,968.56 0.00%
February 15, 2020 US$23,773,720.13 US$(1,316,087.63) 5.00%
February 15, 2021 US$19,394,350.63 US$(4,606,306.73) 17.50%
February 15, 2022 US$15,014,981.13 US$(4,606,306.73) 17.50%
February 15, 2023 US$10,635,611.64 US$(4,606,306.73) 17.50%
February 15, 2024 US$5,630,617.93 US$(5,264,350.55) 20.00%
February 15, 2025 US$0.00 US$(5,922,394.38) 22.50%
US$26,321,752.73 US$(26,321,752.75) 100.00%
c. Economic Condition
Indonesia’s economy consistently showing an improved performance. The actual GDP growth in 2017
recorded 5.07% which is the highest in the last four years and better than that in 2016 at 5.02%.
The solid Economic growth in 2017 was primarily helped by commodity tailwinds and stronger
domestic and external demand, better business environment that attracted more foreign direct
investment as well as more public capital investments. Investment growth rose to its highest level in
more than four years and foreign direct investment recorded the largest net inflow in more than seven
years. Export and import volumes registered double-digit growth for the first time since 2012.
Exports increased significantly to US$168.73 billion in 2017, as compared to the previous year
realization of US$145.19 billion in 2016 recording a growth rate of 16.22% y-o-y and in volume terms
it recorded an increase of 6.09% y-o-y. Hence, the growth in exports were primarily triggered by
increased prices for key export commodities such as coal, metal minerals, rubber and crude palm oil
and partly by increased volume. Import trade value also increased by an almost similar rate at 15.66%
to US$ 156.89 billion as compared US$ 135.65 billion.
The crude prices remained relatively stable and trended towards upward direction during 2017. The
Crude prices recovered in Q1 2017 and continued to remain fairly stable and closed at US$ 58 per
barrel by end of year. This upward trend during the year 2017 has helped the commodity segment to
stage a gradual recovery and maintain stability.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
22
2. GOING CONCERN, DEBT RESTRUCTURING AND ECONOMIC CONDITIONS (Continued)
c. Economic Condition (Continued)
The inflation of consumer price index (CPI) in 2017 was quite moderate at 3.61% (y-o-y) within the
targeted inflation range of 4±1% (yoy), but slightly higher than 3.02 for the previous year. Controlled
inflation in 2017 was possible on account of lower inflation of Food, supported by positive supply
demand, low external pressure and strong policy coordination between BI and the Central and
Regional Governments.
Indonesia’s trade balance in 2017 recorded a surplus of US$11.83 billion as compared to US$ 9.54
billion for the previous year. However, Current account deficit was recorded at US$17.3 billion or
1.7% of the GDP in 2017, supported by improvement in goods and services trade performances.
Indonesian currency remained resilient and relatively stable through the year backed by solid economic
growth and better economic outlook going forward. Bank Indonesia's benchmark rupiah rate (Jakarta
Interbank Spot Dollar Rate, abbreviated JISDOR) depreciated by 0.47 percent at IDR 13,548 per US
dollar by end of December 2017. BI has maintained its key interest rate (BI Rate) at 6.50% through
the year 2017 in consistent with the macroeconomic stability of the Country.
Going forward, Indonesian Economic growth is expected to continue in a solid pace. Some positive
developments during the fourth quarter of 2017 in investment, export, and business field structure are
forecast to serve as the basis for the continued economic recovery process in the future.
The Government’s commitment to consistently strengthen business competitiveness and business
climate also supports the economic recovery. Going forward, Bank Indonesia estimates that economic
growth in 2018 will be within the range of 5.1~5.5%.
Meanwhile, as the U.S. Federal Reserve proceeds on its monetary policy normalization, both in terms
of increasing the Federal Funds rate and reducing its balance sheets, any faster than expected
tightening could spark volatility in the financial markets. Such volatility could result in sudden capital
outflows from emerging market economies including Indonesia, triggering a sharp increase in
borrowing costs and volatility, which would stifle investment.
However, there are also some upside external risks including the possibility of stronger-than-expected
growth in the largest advanced economies and EMDEs – reflecting, for instance, a more pronounced
investment-led recovery in the United States and the Euro Area, or a stronger rebound in large
commodity exporters.
Domestic manufacturing sector is expected to rebound with the series of supporting measures by the
government to boost the domestic manufacturing activities. The national mid-term Development Plan
(RPJMN) sets a goal of 8.8 percent in manufacturing sector by 2019. Governments concerted efforts
to protect the domestic TPT sector by imposing restriction on illegal imports, anti-dumping duties on
Fiber and yarn, rationalization of import duties etc. are expected to revive the growth prospects.
The Ministry of Industry set an Export target of US$15 billion for 2019, which is expected to drive
the performance and growth of domestic TPT sector. The Government’s initiative to recognize Textile
and Food and beverages industry as priority sector and provide a package of incentive and fiscal
support are expected to yield results in the coming years.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
23
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies of the Company and its Subsidiaries adopted in preparation of the
consolidated financial statements are set below:
a. Basis of Preparation of the Consolidated Financial Statements
The consolidated financial statements of PT Asia Pacific Fibers Tbk have been prepared in accordance
with the Indonesian Financial Accounting Standards (“SAK”) comprising of the Statements of
Financial Accounting Standards (“PSAK”) and its Interpretation Financial Accounting Standards
(“ISAK”), issued by the Board of Financial Accounting Standard of the Indonesia Institute of
Accountant (“DSAK – IAI”), and the regulations and guidelines for financial statements presentation
established by Financial Service Authority (“OJK” for merly BAPEPAM – LK) No. VIII.G7 regarding
“Emiten or Public Company’s Financial Statements Presentation and Disclosure Guidelines as included in
the appendix of the Decision Degree of the chairman of BAPEPAM – LK No. KEP-347/BL/2012 dated
June 25, 2012.
The consolidated financial statements of the Company and its Subsidiaries have been prepared in
accordance with Indonesian Financial Accounting Standards. The Company and its Subsidiaries have
been elected to present all items of income and expense in the single statement. In relation to the
amendment to PSAK No. 4, “Separate Financial Statements”, the Company has measured investment
in subsidiaries using cost method.
On August 19, 2011, the Commercial Court had declared that the Subsidiary (PT Texmaco Jaya Tbk)
is bankrupt and insolvent effective on September 26, 2011. Effective this period, the Subsidiary
becomes subject to the control of the Court, and causing the Company to loss its controls.
The consolidated financial statements have been prepared on the historical cost basis of accounting,
except for the certain accounts which are prepared based on the other measurement that are more fully
described in the accounting policies below. The consolidated financial statements are prepared under
the accrual basis of accounting, except for the consolidated statement of cash flows.
The consolidated statements of cash flows are prepared using the direct method and present the sources
and uses of cash and cash equivalents according to operating, investing and financing activities. Cash
and cash equivalents consist of cash on hand, cash in banks and deposits with original maturities of
3 (three) months or less.
The reporting currency used in preparation of the consolidated financial statements is
US Dollar (“US$”), which is also the Company’s functional and presentation currency. All figures
presented in the consolidated financial statements are stated at absolute amounts of US$, unless
otherwise specified. Refer to Note 3c for the information on the functional currency.
The Company has received approval from Bank Indonesia with letter No. 17/1192/DKSP dated
August 11, 2015 for using US$ as its presentation currency of transaction until July 2016 in relation
to Bank Indonesia rule No. 17/3/PBI/2015. Further, based on letter from Bank Indonesia
No. 19/90/DKSP/Srt/B dated January 25, 2017, the Company has received permission to use US$ as
its presentation currency of transaction until June 30, 2021. However, the Company has converted
some of its domestic transactions into Rupiah wherever possible to comply with the requirement of
BI rate.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
24
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
b. Principles of Consolidation
(a) Subsidiaries
Subsidiaries are all entities (including structured entities) over which the Company has control.
The Company controls an entity when the Company is exposed to, or has rights to, variable returns
from its involvement with the entity and has the ability to affect those returns through its power
over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to
the Company. They are de-consolidated from the date on which the control ceases.
The Company applies the acquisition method to account for business combinations.
The consideration transferred for the acquisition of a subsidiary is the fair value of the assets
transferred, the liabilities incurred to the former owners of the acquireee and the equity interests
issued by the Company. The consideration transferred includes the fair value of any asset or
liability resulting from a contingent consideration arrangement. Identifiable assets acquired and
liabilities and contingent liabilities assumed in a business combination are measured initially at
their fair values at the acquisition date.
The Company recognises any non – controlling interest in the acquiree on an acquisition-by-
acquisition basis, either at fair value or at the non – controlling interest’s proportionate share of
the acquiree’s net assets. Non – controlling interest is reported as equity in the consolidated
statement of financial position, separate from the owner of the parent’s equity.
Acquisition-related costs are expensed as incurred.
If the business combination is achieved in stages, at the acquisition date fair value of the acquirer’s
previously held equity interest in the acquiree is re-measured to fair value at the acquisition date
through profit or loss.
Any contingent consideration to be transferred by the Company is recognized at fair value at the
acquisition date. Subsequent changes to the fair value of the contingent consideration that is
deemed to be an asset or liability is recognized in accordance with PSAK 55 (Revised 2014)
“Financial Instrument: Recognition and Measurement” in the consolidated statements of profit or
loss and other comprehensive income. Contingent consideration that is classified as equity is not
re-measured, and its subsequent settlement is accounted for within equity.
The excess of the consideration transferred the amount of any non – controlling interest in the
acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the
fair value of the identifiable net assets acquired is recorded as goodwill. If the total of consideration
transferred, non-controlling interest recognised and previously held interest measured is less than
the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the
difference is recognised directly in the statement of profit or loss and other comprehensive income.
Inter – company transactions, balances and unrealised gains on transactions between group
companies are eliminated. Unrealised losses are also eliminated. When necessary amounts
reported by subsidiaries have been adjusted to conform to the Company’s accounting policies.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
25
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
b. Principles of Consolidation (Continued)
(b) Changes in ownership interests in subsidiaries without change of control
Transactions with non-controlling interests that do not result in loss of control are accounted for
as equity transactions. The difference between the fair value of any consideration paid and the
relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity
and attributable to owners of the Company. Gains or losses on disposals to non-controlling
interests are also recorded in equity.
(c) Disposal of subsidiaries
When the Company ceases to have control, any retained interest in the entity is re-measured to its
fair value at the date when the control is lost, with the change in carrying amount recognized in
the consolidated statements of profit or loss and other comprehensive income. The fair value is
the initial carrying amount for the purposes of subsequently accounting for the retained interest as
an associate, joint venture or financial asset.
In addition, any amounts previously recognized in other comprehensive income in respect of that
entity are accounted for as if the Company had directly disposed of the related assets or liabilities.
This may mean that amounts previously recognized in other comprehensive income are
reclassified to consolidated profit or loss.
c. Foreign Currency Transaction and Balances
Functional and presentation currency
Items included in the consolidated financial statements of each of the Company and its
Subsidiaries are measured using the currency of the primary economic environment in which the
entity operates (“functional currency”).
The consolidated financial statements are presented in US Dollar, which is the functional and
presentation currency of the Company and its Subsidiaries.
Transactions and balances
Foreign currency transactions are translated into US Dollar using the exchange rates prevailing at
the dates of the transactions. At each reporting date, monetary assets and liabilities denominated
in foreign currencies are translated into US Dollar using the closing exchange rate. Exchange rate
used as benchmark is the rate which is issued by Bank Indonesia.
Foreign exchange gains and losses resulting from the settlement of such transactions and from the
translation at period-end exchange rates of monetary assets and liabilities denominated in foreign
currencies are recognized in the consolidated statements of profit or loss and other comprehensive
income.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
26
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
c. Foreign Currency Transaction and Balances (Continued)
Transactions and balances (Continued)
Foreign currency 2 0 1 7 2 0 1 6
Rp Rp
US$ 1 13,548 13,436
JPY 1 120 115
CHF 1 13,842 13,178
SGD 1 10,134 9,299
GBP 1 18,218 16,507
EUR 1 16,174 14,162
NOK 1 1,642 1,559
d. Transactions with Related Parties
This PSAK requires disclosure of relationships, transactions and balances with related parties,
including commitments in the consolidated financial statements.
This PSAK also introduces an exemption from the general related party disclosure requirements for
transactions with government and entities that are controlled, jointly controlled or significantly
influenced by the same Government as the reporting entity (Government related entities).
Related party is a person or an entity related to the entity.
Related party is principally define as follows:
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 defined benefit plan for the benefit of employees of either the
reporting entity or an entity related to the reporting entity. If the reporting entity in itself such
a plan, the sponsoring employers are also related to the reporting entity;
(vi) the entity is controlled or jointly controlled by a person identified in (a); and
(vii) a person identified in a (i) has significant influence over the entity or is a member of the key
management personnel of the entity (or of a parent of the entity).
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
27
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
d. Transactions with Related Parties (Continued)
The transaction was conducted on terms agreed by both parties, which terms may not be the same as
other transactions conducted by parties who are not related.
All transactions and balances with significant related parties, whether or not conducted with the terms
and conditions, as was done with the parties that have no relation to related parties, have been disclosed
in the relevant notes to the consolidated financial statements (Note 42).
e. Adoption of New, Revised and Amendment Statements of Financial Accounting Standards (“PSAK”)
and Interpretation Financial Accounting Standards (“ISAK”)
The Board of Financial Accounting Standards of the Indonesian Institute of Accountant has issued
improvement and amendment to Statements of Financial Accounting Standards (PSAK) and
lnterpretations (ISAK). These accounting standards will be effective or applied to the Company and
its Subsidiaries’ consolidated financial statements beginning on or after January 1, 2017:
The adoption of these new and amended standards and interpretation did not result in substantial
changes to the Company's accounting policies and had no material effect on the amounts reported for
the current or prior financial years.
– Amendment to PSAK No. 1, “Presentation of financial statements” which is effective for the
period beginning on or after January 1, 2017.
The amendment clarifies the guidance on materiality and aggregation, the presentation of
subtotals, the structure of financial statements and the disclosure of accounting policies.
An entitiy should not aggregate or disaggregate information in a manner that obscures useful
information. Immaterial items are required to be assessed of which specific disclosures set out in
the relevant standard should be presented and whether additional information is necessary to
understand the impact on the financial position or performance.
The amendment clarifies that it may be necessary to disaggregate some of the line items in
statements of financial position and profit or loss. The disaggregation is required when it is
relevant to an understanding of the entity’s financial position or performance. The amendment
addresses additional subtotals in the statement of financial position or the statement of profit or
loss and other comprehensive income. The amendments give guidance on what additonal
subtotals are acceptable and how they are presented. Additional subtotals in the statement of profit
or loss and other comprehensive income should be reconciled to the subtotals and totals required
by the existing standard.
The amendments also allows entity to tailor their presentation to their circumstances. An entity is
not required to present the notes to the financial statements in a particular order. However, entity
should consider the understandability and comparability of the financial statements when it
determines the order of the notes.
The amendments require that the share of other comprehensive income arising from investments
accounted for under the equity method is grouped based on whether the items will or will not
subsequently be reclassified to profit or loss. Each group should then be presented as a single line
item in the statement of other comprehensive income.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
28
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
e. Adoption of New, Revised and Amendment Statements of Financial Accounting Standards (“PSAK”)
and Interpretation Financial Accounting Standards (“ISAK”) (Continued)
– PSAK No. 24, “Employee Benefit” which is effective for the period beginning or after
January 1, 2017.
The amendment clarifies that, when determining the discount rate for post-employment benefit
obligations, it is the currency that the laibilities are denominated in that is important, and not the
country where they arise. The assessment of whether there is a deep market in high-quality
corporate bonds is based on corporate bonds in that currency, not coroporate bonds in a particular
country.
– PSAK No. 60, “Financial instrument: Disclosure” which is effective for the period beginning or
after January 1, 2017.
The amendment provides guidance on what is meant by continuing involvement in this context.
The amendment adds specific guidance to help management determine whether the terms of an
arrangement to service a financial asset which has been transferred constitute continuing
involvement.
– ISAK No. 32, “Interpretation on definition and hierarchy of financial accounting standards”
which is effective for the period beginning or after January 1, 2017.
This interpretation is issued in order to provide clarity on the definition and hierarchy between
PSAK, ISAK and capital market regulations especially in situtations where there are
inconsistencies between PSAK/ISAK and pronouncements issued by the capital market
regulators. In such situations, the interpretation requires the entity to apply the requirements of
the specific PSAK/ISAK in order to state an explicit compliance with ISAK, as the applicable
financial reporting framework. Otherwise, the entity shall not be able to make an explicit and
unreserved statement of compliance with PSAK as required by PSAK 1.
The following amendment, interpretation, and new accounting have been issued by the Indonesian
Financial Accounting Standards of the Indonesian Institute of Accountant effective for periods
beginning on or after January 1, 2017. These accounting standards are not relevant to the Company
and its Subsidiaries’ consolidated financial statements.
PSAK No. 3 (Revised 2016) : Interim financial statements.
PSAK No. 58 (Revised 2016) : Non current asset held for sale and discontinued operations.
ISAK No. 31 : Interpretation on scope under PSAK No. 31 : “Investment
Property”.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
29
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
f. Financial assets
Classification
The Company and its Subsidiaries classifies its financial assets in the following categories: at fair
value through profit or loss, loans or receivables, available-for-sale, and held to maturity. The
classification depends on the purpose for which the financial assets were acquired. Management
determines the classification of its financial assets at initial recognition.
(a) Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are financial assets held for trading. A financial
asset is classified in this category if acquired principally for the purpose of selling in the short-
term. Derivatives are also categorized as held for trading unless they are designated as hedges.
Assets in this category are classified as current assets if they are expected to be settled within 12
months; otherwise, they are classified as non-current. As at December 31, 2017 and 2016, the
Company and its Subsidiaries have no financial assets at fair value through profit or loss.
(b) Loans and receivables
Loans and receivables are non-derivate financial assets with fixed or determinable payments that
are not quoted in an active market. They are included in current assets, except for maturities greater
than 12 months after the end of reporting period. These are classified as non-current assets.
The Company and its Subsidiaries’ loans and receivables comprise “Trade Receivables, Other
Receivables, Other Current Financial Assets, Non-trade Receivables From Related Parties and
Other Non-Current Financial Assets” in the consolidated statements of financial position.
(c) Available-for-sale financial assets
Available-for-sale financial assets are non-derivatives that are either designated in this category
or not classified in any of the other categories. They are included in non-current assets unless the
investment matures or management intends to dispose of it within 12 months of the end of the
reporting period. As at December 31, 2017 and 2016, the Company and its Subsidiaries have no
available-for-sale financial assets.
(d) Held to maturity financial assets
Held-to-maturity financial assets are non-derivative financial assets with fixed or determinable
payments and fixed maturity that the group has the positive intent and ability to hold maturity,
and which are not designated at fair value through profit or loss or available-for-sale. As at
December 31, 2017 and 2016, the Company and its Subsidiaries have no held to maturity financial
assets.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
30
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
f. Financial assets (Continued)
Recognition and Measurement
Regular purchases and sale of financial assets are recognized on the trade date – the date on which the
Company and its Subsidiaries commits to purchase or sell the asset. Investments are initially
recognized at fair value plus the transaction costs for all financial assets nor carried at fair value
through profit or loss. Financial assets carried at fair value through profit or loss is initially recognized
at fair value, and transaction costs are expensed in the profit or loss. Financial assets are derecognized
when the rights to receive cash flows from the investments have expired or have been transferred and
the Company and its Subsidiaries have transferred substantially all risks and rewards of ownership.
Available-for-sale financial assets and financial assets at fair value through profit or loss are
subsequently carried at fair value. Loans and receivables and financial asset held to maturity are carried
at amortized cost using the effective interest method.
Net differences arising from changes in the fair value of the “financial assets at fair value through
profit or loss” category are presented in profit or loss within “finance income” in the period in which
they arise. Dividend income from financial assets at fair value through profit or loss is recognized in
the profit or loss as part of “other income” when the Company and its Subsidiaries’ right to receive
payments is established. Interest income from these financial assets is included in the “finance
income”.
Changes in the fair value of monetary and non-monetary securities classified as available for sale are
recognized in other comprehensive income.
When securities classified as available-for-sale are sold, the accumulated fair value adjustments
recognized in equity are included in the consolidated statements of profit or loss and other
comprehensive income as “finance income” or “finance costs”.
Interest on available-for-sale securities calculated using the effective interest method is recognized in
the consolidated statement of profit or loss and other of comprehensive income as part of “finance
income”. Dividends on available-for-sale equity instruments are recognized in the profit or loss as part
of “other income” when the Company and its Subsidiaries’ right to receive payments is established.
Interest income on held-to-maturity financial assets is included in the consolidated statements of profit
or loss and other comprehensive income and reported as “interest income”.
g. Cash and Cash Equivalents
Cash and cash equivalents include cash in hand, deposits held at call with banks, other short – term
highly liquid investments with original maturities of three months or less.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
31
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
h. Trade and Other Receivables
Trade receivables are amounts due from customers for product sold performed in the ordinary course of
business. If collection is expected in one year or less (or in the normal operating cycle of the business if
longer), they are classified as current assets. If not, they are presented as non-current assets.
Non-trade receivables from related parties are receivables balance reflecting loan given to related
parties of the Company and its Subsidiaries.
Trade and non-trade receivables are recognized initially at fair value and subsequently measured at
amortized cost using the effective interest method, if the impact of discounting is significant, less any
provision for impairment.
Collectability of trade and non-trade receivables is reviewed on an ongoing basis. Debts which are
known to be uncollectible are written off by reducing the carrying amount directly. An allowance
account is used when there is objective evidence that the Company and its Subsidiaries will not be
able to collect all amounts due according to the original terms of the receivables.
Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or
financial reorganization and default or delinquency in payments are considered indicators that the trade
receivable is impaired.
The amount of the impairment allowance is the difference between the asset’s carrying amount and the
present value of estimated future cash flows, discounted at the original effective interest rate. Cash flows
relating to short-term receivables are not discounted if the effect of discounting is immaterial.
The amount of the impairment loss is recognized in the consolidated statement of profit or loss and
other comprehensive income within “Impairment charges”. When a trade and non-trade receivables
for which an impairment allowance had been recognized becomes uncollectible in a subsequent period,
it is written off against the allowance account. Subsequent recoveries of amounts previously written
off are credited against “miscellaneous income (expense), net” in the consolidated statements of profit
or loss and other comprehensive income.
i. Offsetting financial instruments
Financial assets and liabilities are offset and the net amount is reported in the consolidated statements
of financial position when there is a legally enforceable right to offset the recognized amounts and
there is an intention to settle on a net basis, or realize the asset and settle the liability simultaneously.
j. Impairment of Financial Assets
A financial asset not classified as at fair value through profit or loss is assessed at each reporting date
to determine whether there is objective evidence that it is impaired. A financial asset is impaired if
there is objective evidence of impairment as a result of one or more events that occurred after the initial
recognition of the asset, and that loss event had an impact on the estimated future cash flows of that
asset that can be estimated reliably.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
32
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
j. Impairment of Financial Assets (Continued)
Objective evidence that financial assets are impaired includes default or delinquency by a debtor,
restructuring of an amount due to the Company and its Subsidiaries on terms that the debtor would not
consider otherwise, indications that a debtor or issuer will enter bankruptcy, adverse changes in the
payment status of borrowers or issuers, economic conditions that correlate with defaults or the
disappearance of an active market for a security.
The Company and its Subsidiaries considers evidence of impairment for financial assets (loans and
receivables) measured at amortized cost both at specific asset level and collective level. All
individually significant assets are assessed for specific impairment. Those found not to be specifically
impaired are then collectively assessed for any impairment that has been incurred but not yet identified.
Assets that are not individually significant are collectively assessed for impairment by grouping
together assets with similar risk characteristics.
In assessing collective impairment, the Company and its Subsidiaries uses historical trends of the
probability of default, the timing of recoveries and the amount of loss incurred, adjusted for
management’s judgment as to whether current economic and credit conditions are such that the actual
losses are likely to be greater or lesser than suggested by historical trends.
An impairment loss in respect of a financial asset measured at amortized cost is calculated as the
difference between its carrying amount and the present value of the estimated future cash flows
discounted at the asset’s original effective interest rate. Losses are recognized in the consolidated
statements of profit or loss and other comprehensive income and reflected in an impairment account
against loans and receivables. Interest on the impaired asset continues to be recognized. When an event
occurring after the impairment was recognized causes the amount of impairment loss to decrease, the
decrease in impairment loss is reversed through consolidated statements of profit or loss and other
comprehensive income.
k. Inventories
Inventories are carried at the lower of cost and net realizable value. Cost of inventories is determined
using on the weighted average method, and includes expenditure incurred in acquiring the inventories,
production or conversion costs, and other costs incurred in bringing them to their existing location and
condition. In the case of manufactured inventories and work in progress, cost includes an appropriate
share of production overheads based on normal operating capacity. Net realizable value is the
estimated selling price in the ordinary course of business less the estimated costs of completion and
the estimated costs necessary to make the sale.
A provision for impairment regarding the obsolete and slow moving inventory is determined on the
basis of estimated future usage or sale of individual inventory items. The amount of any write-down
of inventories to net realizable value and all losses of inventories are recognized as an expense in the
period the write-down or loss occurs. The amount of any reversal of any write-down of inventories,
arising from an increase in net realizable value, is recognized as a reduction in the amount of
inventories recognized as an expense in the period in which the reversal occurs.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
33
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
l. Prepaid Expenses
Prepaid expenses are charged to operations over the periods benefit using the straight-line method.
m. Property, Plant and Equipment
Items of property, plant and equipment are measured at cost, less accumulated depreciation and any
accumulated impairment losses, if any, since the Company and its Subsidiaries adopt the cost model.
Cost includes expenditure that is directly attributable to the acquisition of the asset.
When parts of an item of property, plant and equipment have different useful lives, they are accounted
for as separate items (major components) of property, plant and equipment.
Any gain or loss on disposal of an item of property, plant and equipment (calculated as the difference
between the net proceeds from disposal and the carrying amount of the item) is recognized in the
consolidated statements of profit or loss and other comprehensive income.
Subsequent expenditure is capitalized only when it is probable that the future economic benefits
associated with the expenditure will flow to the Company and its Subsidiaries. Ongoing repairs and
maintenance are expensed as incurred.
Items of property, plant and equipment are depreciated from the date they are available for use or, in
respect of self-constructed assets, from the date that the asset is completed and ready for use.
Depreciation is calculated to write off the cost of items of property, plant and equipment less their
estimated residual values using the straight-line basis over their estimated useful lives. Depreciation
is generally recognized in the consolidated statements of profit or loss and other comprehensive
income, unless the amount is included in the carrying amount of another asset.
Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted
if appropriate.
Land is not depreciated.
Depreciation is recognized on straight-line basis to write down the depreciable amount of property,
plant and equipment. The estimated useful lives are as follows:
Years
Buildings and improvement 20
Machinery and equipment 3 − 20
Transportation equipment 5
Office equipment 5
Initial legal costs incurred to obtain legal rights are recognized as part of the acquisition cost of the
land, and these costs are not depreciated. Cost related to renewal of land rights are recognized as
intangible assets and amortized during the period of the land rights.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
34
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
n. Construction in Progress
Construction in progress is stated at cost and presented as part of property, plant and equipment. The
accumulated cost will be reclassified to the appropriated property, plant and equipment account when
the construction is substantially completed and the asset is ready for its intended use.
o. Intangible Asset
The certain cost associated with the renewal of legal titles on the landrights are deferred and amortized
during twenty (20) years.
p. Impairment of Non-Financial Assets
At the end of each reporting period, the Company and its Subsidiaries assesses whether there is an
indication that an asset may be impaired. If any such indication exists, the recoverable amount is
estimated for the individual asset.
The recoverable amount of an asset is the higher of the asset’s fair value less costs to sell and its value
in use. Where the carrying amount of the asset exceeds its recoverable amount, the assets is considered
impaired and is written down to its recoverable amount. Impairment loss of continuing operations are
recognized in the consolidated statement of profit or loss and other comprehensive income as
“Impairment Loss”.
Reversal of an impairment loss is recognized in consolidated statement of profit or loss and other
comprehensive income. After such a reversal, the depreciation charge on that asset is adjusted in future
period to allocate the asset’s revised carrying amount, less any residual value, on a systematic basis
over its remaining useful life.
q. Leases
Determination whether an arrangement is, or contains, a lease is made based on the substance of the
arrangement and assessment of whether fulfillment of the arrangement is dependent on the use of a
specific asset or assets, and the arrangement convey a right to use the asset. Leases in which a
significant portion of the risks and rewards of ownership are retained by the lessor are classified as
operating leases. Payments made under operating lease (net of any incentives received from the lessor)
are charged to consolidated statement of profit or loss and other comprehensive income on a straight-
line basis over the term of the lease.
r. Financial Liabilities
The Company and its Subsidiaries initially recognizes liabilities on the date that they are originated.
All other financial liabilities are recognized initially on the trade date, which is the date that the
Company and its Subsidiaries becomes a party to the contractual provisions of the instrument.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
35
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
r. Financial Liabilities (Continued)
The Company and its Subsidiaries classify non-derivative financial liabilities into the other financial
liabilities category which comprise Trade Payables, Accrued Expenses, Bank Loans, Secured Debts,
Other Current Financial Liabilities, and Borrowing from Other Financial Institution (such as: Credit
Financing Payables, Unsecured Notes Payable and Capex Loans). Such financial liabilities are
recognized initially at fair value less any directly attributable transaction costs. Subsequent to initial
recognition, these financial liabilities are measured at amortized cost; any difference between the
proceeds (net of transaction costs) and the redemption value is recognized in the consolidated
statement of profit or loss and other comprehensive income over the period of the borrowings using
the effective interest method.
Bank Loans, Secured Debts, Borrowing from Other Financial Institution are raised for support of
short-term funding of operations.
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary
course of business from suppliers. Accounts payable are classified as current liabilities if payment is
due within one year or less (or in the normal operating cycle of the business if longer). If not, they are
presented as non-current liabilities.
Each payment is allocated between the liability and finance charges so as to achieve a effective rate
on the finance balance outstanding. The corresponding financing obligations, net of finance charges,
are included in “Credit Financing Payables”. The interest element of the finance cost is charged to the
consolidated statement of profit or loss and other comprehensive income over the term of financing so
as to produce an effective interest rate on the remaining balance of the liability for each period.
The Company and its Subsidiaries derecognizes a financial liability when its contractual obligations
are discharged, cancelled or expired.
s. Determination of Fair Value
Fair value is defined as the amount at which the financial instruments could be exchanged in a current
transaction between knowledgeable, willing parties in an arm’s length transaction, other than in a
forced sale or liquidation. Fair values are obtained from quoted prices, discounted cash flow models,
as appropriate.
The fair values less any estimated credit adjustments for financial assets and liabilities with a maturity
of less than one year are assumed to approximate to their fair values. The fair value of financial
liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the
current market interest rate available to the entity for similar financial instruments.
t. Government Grant
Government grants are assistance by Government in the form of transfers of resources to an entity in
return for past or future compliance with certain conditions relating to the operating activities of the
entity. The grants related to assets are government grants whose primary condition is that an entity
qualifying for them should purchase, construct or otherwise acquire long-term assets.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
36
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
t. Government Grant (Continued)
A Government grant is recognized only when there is reasonable assurance that the entity will comply
with any conditions attached to the grant and the grant will be received.
There are two broad approaches to the accounting for government grants: the capital approach, under
which a grant is recognized outside the consolidated statements of profit or loss and other
comprehensive income, and the income approach, under which a grant is recognized in the
consolidated statements of profit or loss and other comprehensive income over one or more period.
The Company adopts the income approach model and they recognized a government grants through
deferred income. It will be amortized as income over the period necessary to match them with related
cost of property, plant and equipments, for which they are intended to compensate, on a systematic
basis (20 years).
u. Employment Benefit
(i) Short-term employee benefits liabilities
The short-term employee benefits consist of salary and related remuneration, bonuses, incentives,
and other short-term employee benefits are recognized as expense and are not discounted when
the employee has provided services to the Company.
(ii) Post-employment obligation
Post-employment benefits such as retirement, severance and service payments are calculated based
on Labor Law No. 13/2003 (“Law 13/2003”). In accordance with Law 13/2003, the Company and
its Subsidiaries have further payment obligations if the benefits provided by the existing plan do
not adequately cover the obligations under Law 13/2003.
The liability recognized in the consolidated statement of financial position in respect of defined
benefit pension plans is the present value of the defined benefit obligation at the end of the
reporting period less the fair value of plan assets. The defined benefit obligation is calculated
annually by independent actuaries using the projected unit credit method. The present value of the
defined benefit obligation is determined by discounting the estimated future cash outflows using
interest rates of Government Bonds (considering currently there is no deep market for high-quality
corporate bonds) that are denominated in the currency in which the benefits will be paid, and that
have terms to maturity approximating to the terms of the related pension obligation.
Typically, defined benefit plans define an amount of pension benefit that an employee will receive
on retirement, usually dependent on one or more factors such as age, years of service and
compensation.
The present value of the defined benefit obligation is determined by discounting the estimated
future cash outflows using interest rates of Government Bonds (considering currently there is no
deep market for high-quality corporate bonds) that are denominated in the currency in which the
benefits will be paid, and that have terms to maturity approximating to the terms of the related
pension obligation.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
37
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
u. Employment Benefit (Continued)
(ii) Post-employment obligation (Continued)
Actuarial gains and losses arising from experience adjustments and changes in actuarial
assumptions charged or credited to equity in other comprehensive income in the period in which
they arise.
Past-service costs are recognised immediately in profit or loss. Gains or losses on the curtailment
or settlement of a defined benefit plan are recognised in profit or loss when the curtailment or
settlement occurs.
(iii) Termination benefits
The Company and its Subsidiaries shall recognize termination benefits as a liability and an expense
when, and only when, the Company and its Subsidiaries are demontrably committed to either,
terminate the employment of employee before the normal retirement date, or provide termination
benefits as a result of an offer made in order to encourage voluntary redundancy based on a detailed
formal plan and without realistic possibility of withdrawal. Where termination benefits fall due
more than 12 months after the reporting period, they should be discounted using the discount rate.
(iv) Bonus
The Company and its Subsidiaries recognized a liability and an expense for bonuses based on a
formula that takes into consideration the profit attributable to the Company and its Subsidiaries’
shareholder after certain adjustments. The Company and its Subsidiaries recognized a provision
where contractually obliged or where there is a past practice that has created a constructive
obligation.
v. Income Tax
The income tax expense comprises current and deferred income tax. Tax is recognized in the
consolidated statements of profit or loss and other comprehensive income account, except to the extent
that it relates to items recognized directly to equity and other comprehensive income.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively
enacted at the reporting date. Management periodically evaluates positions taken in tax returns with
respect to situations in which applicable tax regulation is subject to interpretation. It establishes
provision where appropriate on the basis of amounts expected to be paid to the tax authorities.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
38
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
v. Income Tax (Continued)
Deferred income tax is recognized, using balance sheet method, on temporary differences arising
between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial
statements. Deferred income tax is determined using tax rates that have been enacted or substantially
enacted as at reporting period and is expected to apply when the related deferred income tax asset is
realized or the deferred income tax liability is settled. Deferred income tax assets are recognized only
to the extent that it is probable that future taxable profit will be available against which the temporary
differences can be utilized.
Amendments to tax obligations are recorded when an assessment is received or, for assessment
amounts appealed against by the Company and its Subsidiaries, when: (1) the result of the appeal is
determined, unless there is significant uncertainty as to the outcome of such appeal, in which case the
impact of the amendment of tax obligations based on an assessment is recognized at the time making
such appeal, or (2) at the time based on knowledge of developments in similar cases involving matters
appealed by the Company and its Subsidiaries, based on rulings by the Tax Court or the Supreme
Court, that a positive outcome of the Company and its Subsidiaries’ appeals is adjudged to be
significantly uncertain, in which event the impact of an amendment of tax obligations based on the
assessment amounts appealed is recognized.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset
current tax assets against current tax liabilities and when the deferred income taxes assets and liabilities
relate to income taxes levied by the same taxation authority on either the same taxable entity or
different taxable entities where there is an intention to settle the balances on a net basis.
w. Additional Paid-in Capital
Expenses related to the issuance of the Company’s shares to the public were deferred and amortized
over a ten-year period using the straight-line method. In 1997, the Company opted to amortize the
remaining balance of this account over five years. Based on BAPEPAM’s decision letter
KEP-No.06/PM/2000 dated March 13, 2000, the share issuance costs were retroactively recorded into
“Additional Paid-in Capital”.
x. Revenue and Expense Recognition
Revenue comprises the fair value of the consideration received or receivable for the sale of goods in
the ordinary course of the Company and its Subsidiaries’ activities. Revenue is shown net of value-
added tax, returns, rebates and discounts.
The Company and its Subsidiaries recognizes revenue when the amount of revenue can be reliably
measured; it is probable that future economic benefits will flow to the entity; and when specific criteria
have been met for each of the Company and its Subsidiaries’ activities as described below. The
Company and its Subsidiaries bases its estimates on historical results, taking into consideration the
type of customer, the type of transaction and the specifics of each arrangement.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
39
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
x. Revenue and Expense Recognition (Continued)
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the entity
and the revenue can be reliably measured. The following specific recognition criteria must also be met
before revenue is recognized:
(i) Sale of goods – Revenue is recognized when the risks and rewards of ownership of the goods have
passed to the buyer, i.e. generally when the goods are delivered to the customers.
(ii) Interest income – Revenue is recognized as the interest accrues taking into account the effective
yield of the asset.
Expenses are recognized upon utilization of the service or at the date they are incurred.
y. Earnings per Share
Basic earnings per share are calculated by dividing the profit (loss) attributable to the equity holders
of the Company by the weighted average number of ordinary shares outstanding during the period.
For purposes of calculating diluted earnings per share, the profit or loss attributable to the Company’s
ordinary equity holders will be adjusted for the after-tax effects of interest recognized during the period
on convertible bonds.
z. Segment Information
Operating segments are reported in a manner consistent with the internal reporting provided to the
chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating
resources and assessing performance of the operating segments, has been identified as Board of
Directors that makes strategic decisions.
An operating segment is a component of an entity:
1. that engages in business activities from which it may earn revenue and incur expenses (including
revenue and expenses relating to the transaction with other components of the same entity);
2. whose operating results are reviewed regularly by the entity’s chief operating decision maker to
make decision about resources to be allocated to the segments and assess its performance; and;
3. for which discrete financial information is available.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
40
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
aa. Provisions
A provision is recognized if, as a result of a past event, the Company and its Subsidiaries have a present
legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of
economic benefits will be required to settle the obligation. Provisions are determined by discounting
the expected future cash flows at a pre-tax rate that reflects current market assessments of the time
value of money and the risks specific to the liability. The unwinding of the discount is recognized as
finance cost.
ab. Contingencies
Contingent liabilities are not recognized in the consolidated financial statements but are disclosed in
the notes to the consolidated financial statements unless the possibility of an outflow of resources
embodying economic benefits is remote. Contingent assets are not recognized in the consolidated
financial statements but are disclosed in the notes to the consolidated financial statements when an
inflow of economic benefits is probable.
ac. Events after the reporting period
Post year-end events that provide additional information about the Company and its Subsidiaries’
positions at the reporting date (adjusting events) are reflected in the consolidated financial statements
when material. Post year-end events that are not adjusting events are disclosed in the notes to the
consolidated financial statements when material.
4. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS
The preparation of the consolidated financial statements in conformity with PSAK requires management
to make judgments, estimates and assumptions that affect the application of accounting policies and the
reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognized in the period in which the estimates are revised and in any future periods affected.
The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next 12 months are addressed below.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
41
4. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS (Continued)
a. Judgments
In the process of applying the accounting policies, management has made the following judgments,
apart from those including estimations and assumptions, which have the most significant effect on the
amounts recognized in the consolidated financial statements.
Functional currency
The functional currency of the Company and its Subsidiaries are the currency of the primary economic
environment in which each entity operates. The Company and its Subsidiaries considers some factors
in determining its functional currency, among others, the currency that mainly influences the revenue,
cost and financing activities, and the currency in which receipts from operating activities are usually
retained.
Based on the economic substance of the underlying circumstances relevant to the Company and its
Subsidiaries, the functional currency has been determined to be United States Dollar (US$), as this
reflected the fact that majority of the Company and its Subsidiaries’ operational businesses are
influenced by pricing in foreign commodity markets with United States’ Dollar (US$) economic
environment.
Estimating Allowance for Impairment Losses on Receivables
The Company and its Subsidiaries performs regular review of the age and status of its receivables,
designed to identify accounts with objective evidence of impairment and provides these with the
appropriate allowance for impairment losses.
The review is accomplished using a combination of specific and collective assessment approaches,
with the impairment losses being determined for each risk grouping identified by the Company and its
Subsidiaries. The amount and timing of recorded expenses for any period would differ if the Company
and its Subsidiaries made different judgments or utilized different methodologies.
As at December 31, 2017 and 2016, total allowance for impairment losses recognized on the Company
and its Subsidiaries’ receivables is amounted to US$ 195,258,354, in both years (see Notes 6, 7
and 12).
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
42
4. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS (Continued)
a. Judgments (Continued)
Estimating Net Realizable Value of Inventories
In determining the net realizable value (NRV) of inventories, the Company and its Subsidiaries
considers inventory obsolescence, damages, physical deterioration, changes in price levels, changes in
consumer demands, or other causes to identify inventories which are to be written down to NRV. The
Company and its Subsidiaries adjusts the cost of inventories to recoverable amount at a level
considered adequate to reflect market decline in the value of the inventories.
As at December 31, 2017 and 2016, total allowance for impairment losses recognized on the Company
and its Subsidiaries’ inventories amounted to US$ 138,220 and US$ 164,050, respectively (Note 9).
Impairment of Property, Plant and Equipment and Intangible Assets
PSAK requires that an impairment review be performed on property, plant and equipment and
intangible assets when events or changes in circumstances indicate that the carrying amount may not
be recoverable. Determining the net recoverable amount of assets requires the estimation of cash flows
expected to be generated from the continued use and ultimate disposition of such assets. While it is
believed that the assumptions used in the estimation of fair values reflected in the financial statements
are appropriate and reasonable, significant changes in these assumptions may materially affect the
assessment of recoverable amounts and any resulting impairment loss could have a material adverse
impact on the results of operations.
As at December 31, 2017 and 2016, there was no allowance for impairment losses recognized on the
Company’s property, plant and equipment and intangible assets (Notes 14 and 15).
b. Estimates and Assumptions
The key assumptions concerning the future and other key sources of estimation uncertainty at the end
of the reporting period that have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial period are discussed below.
Determination Fair Value of Financial Instruments
Management uses valuation techniques, including the discounted cash flow model in measuring the
fair value of financial instruments where active market quotes are not available.
In applying the valuation techniques, management makes maximum use of market inputs, and uses
estimates and assumptions that are, as far as possible, consistent with observable data that market
participants would use in pricing the instrument.Where applicable data is not observable, management
uses its best estimate about the assumptions that market participants would make. These estimates may
vary from the actual prices that would be achieved in an arm’s length transaction at the reporting date.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
43
4. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS (Continued)
b. Estimates and Assumptions (Continued)
Estimating Allowance for Impairment Loss on Receivables
The level of a specific allowance is evaluated by management on the basis of factors that affect the
collectability of the accounts. Any collective allowance recognized is based on historical loss
experience using various factors such as historical performance of the debtors within the collective
group and judgments on the effect of deterioration in the markets in which the debtors operate and
identified structural weaknesses or deterioration in the cash flows of debtors.
Estimating Useful Lives of Property, Plant and Equipment and Intangible Assets
The Company and its Subsidiaries estimates the useful lives of its property, plant and equipment and
intangible assets based on expected asset utilization as anchored on business plans and strategies that
also consider expected future technological developments and market behavior. The estimation of the
useful lives of property, plant and equipment and intangible assets is based on the Company and its
Subsidiaries’ collective assessment of industry practice, internal technical evaluation and experience
with similar assets. The estimated useful lives are reviewed at least each financial year and are updated
if expectations differ from previous estimates due to physical wear and tear, technical or commercial
obsolescence and legal or other limitations on the use of the assets. It is possible, however, that future
results of operations could be materially affected by changes in the estimates brought about by changes
in the factors mentioned above. The amounts and timing of recorded expenses for any period are
affected by changes in these factors and circumstances. A reduction in the estimated useful lives of
the Company and its Subsidiaries’ property, plant and equipment and intangible assets increases the
recorded operating expenses and decreases non-current assets. An extension in the estimated useful
lives of the Company and its Subsidiaries’ property, plant and equipment and intangible assets
decreases the recorded operation expenses and increases non-current assets.
Estimation of Pension and Employees’ Benefit
The present value of the pension obligations depends on a number of factors that are determined on an
actuarial basis using a number of assumptions. The assumptions used in determining the net cost
(income) for pensions include the discount rate and future salary increase. Any changes in these
assumptions will have an impact on the carrying amount of pension obligations. The discount rate is
interest rate that should be used to determine the present value of estimated future cash outflows
expected to be required to settle the pension obligations. In determining the appropriate discount rate,
the Company and its Subsidiaries considers the interest rates of government bonds that are
denominated in the currency in which the benefits will be paid and that have terms to maturity
approximating the terms of the related pension obligation. For the rate of future salary increases, the
Company and its Subsidiaries collects all historical data relating to changes in base salaries and adjusts
it for future business plans.
Other key assumptions for pension obligations are based in part on current market conditions.
Additional information is disclosed in Note 26.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
44
4. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS (Continued)
b. Estimates and Assumptions (Continued)
Realization of Deferred Tax Assets
Determining provision for corporate income tax requires significant judgment by management. There
are certain transactions and computation for which the ultimate tax determination is uncertain during
the ordinary course of business. The Company and its Subsidiaries recognizes liabilities for expected
corporate income tax issues based on estimates of whether additional corporate income tax will be
due. Where the final tax outcome of these matters is different from the amount that are initially
recorded, such differences will have an impact on the current and deferred tax assets and liabilities in
the period in which such determination is made.
The Company and its Subsidiaries conducted a review of the carrying amount of deferred tax assets at
every reporting period and reduce the value of such assets by as much as possible cannot be realized,
where the availability of taxable income allow to use all or part of the deferred tax assets. The
Company and its Subsidiaries’ review on the recognition of deferred tax assets for deductible
temporary difference can be deductible based on the level and timing from the estimated taxable
income for the next reporting period.
The estimation is based on the achievement of the Company and its Subsidiaries in the past and future
expectation toward income and expenses, as well as with the tax planning strategies in the future. But
there is no certainty that the Company and its Subsidiaries can generate sufficient taxable income to
allow use of part or all of these deferred tax assets.
5. CASH AND CASH EQUIVALENTS
2 0 1 7 2 0 1 6
US$ US$
Cash on hand:
Rupiah 74,403 60,741
US Dollar 27,070 30,317
Singapore Dollar 5,177 5,240
European Euro 1,208 12
Norwegian Krone 134 129
107,992 96,439
Cash in banks:
Third Parties:
Deutsche Bank, Jakarta
US Dollar account 1,157,976 1,289,847
Rupiah account 3,969,527 1,211,430
Carried forward 5,127,503 2,501,277
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
45
5. CASH AND CASH EQUIVALENTS (Continued)
2 0 1 7 2 0 1 6
US$ US$
Cash in banks: (Continued)
Third Parties: (Continued)
Brought forward 5,127,503 2,501,277
PT Bank CIMB Niaga Tbk
US Dollar account 258,338 23,270
Rupiah account 280,092 265,382
PT Bank Central Asia Tbk
US Dollar account 72,785 208,829
Rupiah account 242,032 300,869
PT Bank Negara Indonesia (Persero) Tbk
Rupiah account 111,754 72,403
PT Bank Mandiri Tbk
US Dollar account 38,261 –
Rupiah account 1,828 –
6,132,593 3,372,030
Total 6,240,585 3,468,469
Cash at bank can be withdrawn at any time.
All accounts in banks earn interest at floating rates based on the offered rate from each bank.
The Company and its Subsidiaries do not have related party relationship with the banks where cash
and cash equivalents are placed.
The maximum exposure to credit risk at the end of the reporting period is the carrying amount of each
class of cash and cash equivalents is disclosed in Note 48.
6. TRADE RECEIVABLES
2 0 1 7 2 0 1 6
US$ US$
This account consists of:
Third parties 39,064,158 31,584,686
Total 39,064,158 31,584,686
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
46
6. TRADE RECEIVABLES (Continued)
Third parties:
2 0 1 7 2 0 165
US$ US$
Local debtors 34,550,875 28,711,665
Foreign debtors 4,513,283 2,873,021
Total 39,064,158 31,584,686
Less: Allowance for impairment − −
Total 39,064,158 31,584,686
Due to the short-term nature of trade receivables from third parties, their carrying amount approximates
their fair values.
The aging of trade receivables from third parties is as follows:
2 0 1 7 2 0 1 6
US$ US$
Up to 1 month 37,176,211 28,964,976
> 1 month – 3 months 477,502 1,474,918
> 3 months – 6 months 210,289 937,172
> 6 months – 1 year 1,200,156 207,620
Total 39,064,158 31,584,686
There is no recent history of default of trade receivables from third parties.
The details of trade receivables from third parties based on its original currencies are as follows:
2 0 1 7 2 0 1 6
US$ US$
United States Dollar 27,430,431 21,158,049
Rupiah
(Rp 157,613,717,100 in 2017 and Rp 140,092,294,366 in 2016) 11,633,727 10,426,637
Total 39,064,158 31,584,686
All amounts of trade receivables from third parties does not bear any interest and have been reviewed for
indication of impairment. Based on the review of the status of individual trade receivables from third
parties, the Company and its Subsidiaries’ management determined that the trade receivables from third
parties are not impaired.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
47
6. TRADE RECEIVABLES (Continued)
The maximum exposure to credit risk at the reporting date is the carrying value of each class of trade
receivable is disclosed in Note 48.
Related party:
2 0 1 7 2 0 1 6
US$ US$
PT Texmaco Jaya Tbk (under bankruptcy) 15,657,945 15,657,945
Less: Allowance for impairment (15,657,945 ) (15,657,945 )
Net – –
Due to the short-term nature of trade receivables from related party, their carrying amount approximates
their fair values.
The aging of trade receivables from related party is as follows:
2 0 1 7 2 0 1 6
US$ US$
Up to 1 month – –
> 1 month – 3 months – –
> 3 months – 6 months – –
> 6 months – 1 year – –
> 1 year 15,657,945 15,657,945
Total 15,657,945 15,657,945
Changes in the allowance for impairment from related party are as follows:
2 0 1 7 2 0 1 6
US$ US$
Beginning balance 15,657,945 15,657,945
Movement during the year:
Addition – –
Deduction – –
Ending balance 15,657,945 15,657,945
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
48
6. TRADE RECEIVABLES (Continued)
All amounts of trade receivables from related party does not bear any interest and have been reviewed for
indication of impairment. Based on the review of the status of the trade receivables from related party,
management believes that the carrying value is a reasonable approximation of fair value.
Based on the notarial deed of DR. H. Teddy Anwar, S.H. No. 111 dated August 16, 2002, the shares of
PT Multikarsa Investama (“MKI”) were sold to PT Bina Prima Perdana (Note 28), thus MKI is no longer
included as Company’s shareholder.
The maximum exposure to credit risk at the reporting date is the carrying value of each class of trade
receivable is disclosed in Note 48.
Trade receivables amounted to US$ 45,000,000 in 2017 and 2016, respectively are used as collateral for
the Company’s bank loans that were received from Damiano Investments B.V., Netherland (Note 18).
7. OTHER RECEIVABLES
2 0 1 7 2 0 1 6
US$ US$
Third parties:
Receivables from purchase discounts 757,448 123,134
Receivables from employees 138,102 207,247
Receivables from import clearance 18,308 179
Insurance claims 15,729 738,460
Others 79,239 850,685
1,008,826 1,919,705
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
49
7. OTHER RECEIVABLES (Continued)
2 0 1 7 2 0 1 6
US$ US$
Other third parties:
Operational Advances to:
PT Wismakarya Prasetya (under bankruptcy) 34,267,327 34,267,327
PT Wastra Indah 15,761,121 15,762,180
PT Texmaco Perkasa Engineering Tbk 5,648,030 5,648,027
PT Wahana Perkasa Auto Jaya 5,579,991 5,579,991
PT Sumatex Subur 3,192,784 3,192,784
PT Texmaco Taman Synthetics 3,011,273 3,013,010
PT Bina Prima Perdana 416,701 420,174
PT Jaya Perkasa Engineering 316,135 318,770
PT Perkasa Heavindo Engineering 194,587 194,587
PT Raja Busana Mahameru 136,945 136,945
PT Supermitory Utama Tbk 93,407 93,407
PT Saritex Jaya Swasti 54,504 54,802
PT Devrindo Widya 25,434 25,434
PT Perkasa Indobaja 15,816 15,816
PT Perkasa Indosteel 13,327 13,327
PT Wahana Jaya Perkasa 11,102 11,102
PT Bina Peranan Busana 2,336 2,336
PT Citra Indah Textile 985 985
Total 68,741,805 68,751,004
Less: Allowance for impairment (67,637,756 ) (67,637,756 )
Net 1,104,049 1,113,248
Total 2,112,875 3,032,953
Other receivables from employees represent advances to employees. These advances are not subject to
interest and the payments are made based on the terms of the repayment schedule.
Other receivables from these above companies represent the loans and advances for working capital
purposes. The loans and advances are not subject to interest and have no terms of repayment. Until now,
these companies are unable to pay their payables to the Company and its Subsidiaries due to their financial
difficulties. Most of the companies have already stopped operations and are still under the restructuring
program with PT Perusahaan Pengelola Asset (PPA). As at March 2018, the debt restructuring program
has not yet been completed.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
50
7. OTHER RECEIVABLES (Continued)
The payment made by the Company to PT Wismakarya Prasetya (under bankruptcy) in excess of the
invoice amount is treated as other receivables to PT Wismakarya Prasetya (under bankruptcy) in line with
the agreement between PT Wismakarya Prasetya (under bankruptcy) and the Company on November 16,
2006, and the working capital provided to PT Wismakarya Prasetya was towards payment of old dues to
PT Perusahaan Gas Negara (PGN), PT Perusahaan Listrik Negara (PLN) and taxation. The Company has
lodged its claims with the curator for the dues amounting to Rp 279,593,977,457 of principal value and
Rp 206,051,448,529 towards interest amount. As at the authorization date of these consolidated financial
statements, it is still being discussed with the curator.
In compliance of PSAK requirement with regard to “Impairment of Receivables” in view of the fact that
PT Wismakarya Prasetya being declared as bankrupt and the liquidation process has commenced, the
Company have already provided allowance for impairment of receivables included in the allowance for
impairment as at December 31, 2017. However, it will continue to pursue with the curator for the
settlement of its dues from PT Wismakarya Prasetya.
Due to the short-term nature of other receivables, their carrying amount approximates their fair values.
Changes in the allowance for impairment are as follows:
2 0 1 7 2 0 1 6
US$ US$
Beginning balance 67,637,756 67,637,756
Movement during the year:
Addition – –
Deduction – –
Ending balance 67,637,756 67,637,756
The details of other receivables based on its original currencies are as follows:
2 0 1 7 2 0 1 6
US$ US$
United States Dollars 35,233,151 36,771,433
Rupiah
(Rp 467,642,819,040 in 2017 and
Rp 455,470,672,336 in 2016) 34,517,480 33,899,276
Total 69,750,631 70,670,709
All amounts of other receivables have been reviewed for indication of impairment. Based on the review
of the status of individual other receivables, the Company and its Subsidiaries’ management believe that
the impairment of other receivables are adequate to cover possible losses on uncollectible other
receivables.
The maximum exposure to credit risk at the reporting date is the carrying value of each class of other
receivables is disclosed in Note 48.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
51
8. OTHER CURRENT FINANCIAL ASSETS
2 0 1 7 2 0 1 6
US$ US$
This account consists of:
Time deposits:
Third party:
Deutsche Bank, Jakarta 147,623 148,854
Bank guarantees / SBLC 5,381,655 5,381,655
Security deposits:
Third parties:
Security deposit for electricity 432,352 301,987
Security deposit for rental 53,647 53,615
Others 19,878 19,952
505,877 375,554
Total 6,035,155 5,906,063
a. Time Deposits
In 2017, time deposit with Deutsche Bank, Jakarta of Rp 2,000,000,000 (equivalent US$ 147,623)
represents 1 (one) year time deposit with interest rate of 3.42% per annum, due on October 5, 2018.
In 2016, time deposit with Deutsche Bank, Jakarta of Rp 2,000,000,000 (equivalent to
US$ 148,854) represents 1 (one) year time deposit with interest rate of 4.1% per annum, due on
October 5, 2017.
b. Bank Guarantees / SBLC
The Company and PT Perusahaan Gas Negara (Persero) Tbk have signed an agreement
No. 011700.PK/HK.02/USH/2014 for the supply of gas to the Company. Additionally per agreement,
the Company should pay the past penalty of Rp 22,500,000,000 over a period of 45 months. Based on
the amendment of the agreement dated October 20, 2015, both parties agreed to amend the maximum
limit for the gas consumption for the period November 1, 2015 until December 31, 2018.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
52
8. OTHER CURRENT FINANCIAL ASSETS (Continued)
b. Bank Guarantees / SBLC (Continued)
The Company should provide the bank guarantee (SBLC) for gas supplies equivalent to approximately
two month’s consumption value. Accordingly the Company issued SBLC through Deutsche Bank,
Jakarta for an amount equal to US$ 3,550,976 plus Rp 9,900,000,000 (equivalent to US$ 4,281,711)
in 2017 and US$ 3,550,976 plus Rp 9,900,000,000 (equivalent to US$ 4,287,802) in 2016 representing
two (2) month’s consumption. These SBLC have since expired and the Company is negotiating with
PT Perusahaan Gas Negara for the issuance of SBLC values. The Company has entered into contract
with PT Pertagas (Persero) for the supply of gas. As per the contract terms, the Company has issued
the SBLC valuing US$ 1,534,000 through Deutsche Bank, Jakarta representating 63 days value of
consumption of gas.
Due to the short-term nature of other current financial assets, their carrying amount approximates their fair
values.
The details of other current financial assets based on its original currencies are as follows:
2 0 1 7 2 0 1 6
US$ US$
United States Dollar 5,450,493 5,450,493
Rupiah
(Rp 7,920,998,946 in 2017 and Rp 6,120,998,946 in 2016) 584,662 455,567
Total 6,035,155 5,906,060
No other current financial assets are placed with related parties.
The maximum exposure to credit risk at the reporting date is the carrying value of each class of other
current financial assets is disclosed in Note 48.
9. INVENTORIES
2 0 1 7 2 0 1 6
US$ US$
Finished goods 20,073,127 25,972,215
Work in process 4,150,302 3,707,551
Raw materials 10,304,519 9,859,792
Indirect materials 20,028,613 20,315,942
Total 54,556,561 59,855,500
Less : Allowance for impairment – net (138,220 ) (164,050 )
Net 54,418,341 59,691,450
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
53
9. INVENTORIES (Continued)
Movement in the allowance for inventory write-down are as follow:
2 0 1 7 2 0 1 6
US$ US$
Beginning balance 164,050 122,685
Movement during the period:
Addition – 41,365
Deduction (25,830 ) –
Ending balance 138,220 164,050
Based on the review of the physical condition of the inventories at the end of each year, the management
believes that allowance for inventory write-down provided is adequate. Total amount reversal of inventory
write-down for the year ended December 31, 2017 is amounting to US$ 25,830, and were recorded as part
of Cost of Goods Sold accounts in the consolidated statements of profit or loss and other comprehensive
income (Note 36). Total amount impairment of inventory write-down for the year ended
December 31, 2016 is amounting to US$ 41,365.
As at December 31, 2017, the inventories are covered by a throughput policy issued by PT FPG Indonesia
covering fire loss and other risks of inventories totaling US$ 76,500,000 and as at December 31, 2016, the
inventories are covered by a throughput policy issued by PT Asuransi Indrapura covering fire loss and
other risks of inventories totaling US$ 76,500,000. The management believes that the insurance coverage
is adequate to cover losses arising from such risks.
The inventories amounted to US$ 60,200,000 in 2017 and 2016, respectively, are used as collateral for the
Company’s bank loans that were received from Damiano Investments B.V., Netherland (Note 18).
10. PURCHASE ADVANCES
2 0 1 7 2 0 1 6
US$ US$
Third parties:
Purchase of material and operational 2,252,957 1,332,483
Purchase of property, plant and equipments 1,479,800 997,639
Total 3,732,757 2,330,122
In 2017, total purchases advance of property, plant and equipments of US$ 1,479,800 (equivalent to
Rp 19,749,351,841) represents the balance in connection with the purchases of machineries and
equipments with total amounts of US$ 437,758 (equivalent to Rp 5,829,098,777) in filament yarn division
and the purchases of fiber machineries and equipments for expansion with total amounts of US$ 1,042,042
(equivalent to Rp 13,920,253,064). The machineries and equipments will be received in 2018.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
54
10. PURCHASE ADVANCES (Continued)
In 2016, total purchases advance of property, plant and equipments of US$ 997,639 (equivalent to
Rp 13,336,203,318) represents the balance in connection with the purchases of machineries and
equipments with total amounts of US$ 873,258 (equivalent to Rp 11,657,746,038) in filament yarn division
and the purchases of fiber machineries and equipments for expansion with total amounts of
US$ 124,381 (equivalent to Rp 1,678,457,280). The machineries and equipments will be received in 2017.
The payment made by the Company to PT Texmaco Jaya Tbk (under bankruptcy) in excess of the payment for
tolling expenses and was treated as advance payment for tolling expense in the next month.
11. PREPAID EXPENSES
2 0 1 7 2 0 1 6
US$ US$
Prepaid insurance premium 1,528,366 1,697,638
Prepaid rent 198,332 131,021
Total 1,726,698 1,828,659
12. NON-TRADE RECEIVABLES
2 0 1 7 2 0 1 6
US$ US$
This account consists of:
Third party:
PT Multikarsa Investama 44,322,056 45,128,440
Related party:
PT Texmaco Jaya Tbk (under bankruptcy) 106,410,712 106,408,575
150,732,768 151,537,015
Less: Allowance for impairment (111,962,653 ) (111,962,653 )
Total 38,770,115 39,574,362
Non-trade receivables from PT Multikarsa Investama represent the cash receipts from AR International
Limited, Hong Kong of Rp 51,421,394,625 (equivalent to US$ 3,795,497 in 2017 and US$ 3,827,136 in
2016) for the refund on the Company’s advances for the purchase of property, plant and equipment
(machinery and equipment). The remaining balance of US$ 40,526,559 and US$ 41,301,304, respectively
as at December 31, 2017 and 2016 represents advance payments for salary and other expenses.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
55
12. NON-TRADE RECEIVABLES (Continued)
Changes in the allowance for impairment are as follows:
2 0 1 7 2 0 1 6
US$ US$
Beginning balance 111,962,653 111,962,653
Movement during the period:
Addition – –
Deduction – –
Ending balance 111,962,653 111,962,653
Based on the review of the status of the non-trade receivables, management believes that the carrying value
is a reasonable approximation of fair value. As at December 31, 2017, the allowance for impairment of
remaining balance of PT Multikarsa Investama amounting to US$ 38,770,115 was not provided and this
will be addressed when APF debt restructuring is done and the settlement of the non-trade receivables will
be done when the debt restructuring is completed. Further, management believes that the remaining
balance of non-trade receivables are collectible in the future.
The details of non-trade receivables based on its original currencies are as follows:
2 0 1 7 2 0 1 6
US$ US$
United States Dollar 106,410,712 106,408,575
Rupiah
(Rp 600,475,211,603 in 2017 and
Rp 606,345,726,749 in 2016) 44,322,056 45,128,440
Total 150,732,768 151,537,015
The maximum exposure to credit risk at the reporting date is the carrying value of each class of non-trade
receivables is disclosed in Note 48.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
56
13. OTHER NON-CURRENT FINANCIAL ASSETS
2 0 1 7 2 0 1 6
US$ US$
Restricted Cash In Banks:
IBRA (PPA):
PT Bank Dharmala
Rupiah account 1,998 2,015
PT Bank Putera Multikarsa
Rupiah account 287,363 289,852
US Dollar account 702,410 702,330
PT Bank Papan Sejahtera
Rupiah account 2,757 2,780
PT Bank Umum Nasional
US Dollar account 1,931 1,927
PT Bank Asia Pacific
Rupiah account 41 41
Total 996,500 998,945
As the Company and its Subsidiaries are under restructuring process with the Indonesian Bank
Restructuring Agency (IBRA), the aggregate balances of cash in banks were restricted by IBRA.
The Indonesian government through the Indonesian Bank Restructuring Agency (IBRA) suspended the
bank operating licences of PT Bank Putera Multikarsa, a related party, on January 28, 2000;
PT Bank Dharmala, PT Bank Asia Pacific and PT Bank Papan Sejahtera on March 13, 1999; and PT Bank
Umum Nasional on August 21, 1998. As a result, the balance of banks as at December 31, 2017 and 2016
amounting to US$ 996,500 and US$ 998,945, respectively, is shown as other non-current financial assets
in the consolidated statements of financial position.
The Company and its Subsidiaries’ management determined that the restricted cash in banks does not need
to be impaired, and the same with be dealt with accordingly repayment or upon completion of the
restructuring program with the creditors and PPA. The net carrying value of restricted cash in banks is
representing the value of funds at the bank.
The maximum exposure to credit risk at the reporting date is the carrying value of each class of other non-
current financial assets is disclosed in Note 48.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
57
14. PROPERTY, PLANT AND EQUIPMENT
The details of property, plant and equipment are as follows:
2 0 1 7 2 0 1 6
US$ US$
Direct acquisition:
Carrying cost 1,773,819,425 1,772,845,331
Accumulated depreciation (1,718,316,734 ) (1,713,765,001 )
Book value 55,502,691 59,080,330
Construction in progress 12,131,544 10,566,710
Total 67,634,235 69,647,040
Direct acquisition:
2 0 1 7 Changes during the current period
Beginning Addition Deduction Reclassification Ending
US$ US$ US$ US$ US$
Carrying cost:
Land 15,529,702 135,377 – – 15,665,079
Building and improvement 48,392,226 – – 116,623 48,508,849
Machinery and equipment 1,700,313,851 176,168 – 392,984 1,700,883,003
Transportation equipment 5,686,615 52,840 – – 5,739,455
Office equipment 2,922,937 5,470 – 94,632 3,023,039
1,772,845,331 369,855 – 604,239 1,773,819,425
Accumulated depreciation:
Building and improvement 45,965,452 330,029 – – 46,295,481
Machinery and equipment 1,659,740,793 4,046,688 – – 1,663,787,481
Transportation equipment 5,172,151 156,024 – – 5,328,175
Office equipment 2,886,605 18,992 – – 2,905,597 – –
1,713,765,001 4,551,733 – – 1,718,316,734
Book value 59,080,330 55,502,691
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
58
14. PROPERTY, PLANT AND EQUIPMENT (Continued)
Direct acquisition: (Continued)
2 0 1 6 Changes during the current period
Beginning Addition Deduction Reclassification Ending
US$ US$ US$ US$ US$
Carrying cost:
Land 15,529,702 – – – 15,529,702
Building and improvement 46,478,745 – – 1,913,481 48,392,226
Machinery and equipment 1,693,117,182 5,797,603 (318,891 ) 1,717,957 1,700,313,851
Transportation equipment 5,352,293 487,352 (153,030 ) – 5,686,615
Office equipment 2,908,133 14,804 – – 2,922,937
1,763,386,055 6,299,759 (471,921 ) 3,631,438 1,772,845,331
Accumulated depreciation:
Building and improvement 45,499,526 465,926 – – 45,965,452
Machinery and equipment 1,655,553,738 4,187,055 – – 1,659,740,793
Transportation equipment 5,179,103 126,973 (133,925 ) – 5,172,151
Office equipment 2,874,051 12,554 – – 2,886,605
1,709,106,418 4,792,508 (133,925 ) – 1,713,765,001
Book value 54,279,637 59,080,330
Construction in progress:
2 0 1 7 Changes during the current period
Beginning Addition Deduction Reclassification Ending
US$ US$ US$ US$ US$
Carrying cost:
Machinery and equipment 10,566,710 2,183,386 (14,313 ) (604,239 ) 12,131,544
2 0 1 6 Changes during the current period
Beginning Addition Deduction Reclassification Ending
US$ US$ US$ US$ US$
Carrying cost:
Machinery and equipment 7,596,445 6,710,297 (108,594 ) (3,631,438 ) 10,566,710
2 0 1 7 2 0 1 6
US$ US$
Depreciation expenses is allocated to:
Direct acquisition:
Manufacturing expense (Note 37) 4,376,710 4,652,987
General and administrative expenses (Note 39) 175,023 139,521
Total 4,551,733 4,792,508
The Company own several pieces of land located in Karawang and Kendal amounted to 755,071 square
meters with certificate Building Use Right (Hak Guna Bangunan or HGB) for a period of 20 – 30 years
which will be expired between 2006 and 2044. In 2007, the Company has extended the ownership
certificate of the land which were located in Semarang of 78,111 square meters up to November 29, 2027.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
59
14. PROPERTY, PLANT AND EQUIPMENT (Continued)
Also in 2014, the Company has also extended the ownership certificate of the land which were located in
Karawang of 319,755 square meters up to May 3, 2034. Management believes that there will be no
difficulty in the extension of the certificate of landrights since all the landrights were acquired legally and
supported by sufficient evidence of ownership.
The part of the Company’s land in Karawang, with the certificate Building Use Right (HGB) No. 13
of 33,630 square meters and with the certificate Building Use Right (HGB) No. 14 of 35,380 square
meters, are pledged to PT Bank Negara Indonesia (BNI) and PT Bina Prima Perdana (BPP) towards
secured debts’ PT Texmaco Jaya Tbk (in bankruptcy) (Note 44).
In March 31, 2014, portion of Company’s building and machinery with total acquisition cost of
US$ 43,287,851 and total accumulated depreciation of US$ 43,065,198 were affected fully by fire
accident. The book value of the assets of US$ 222,653 was adjusted against the insurance claim settlement,
net (Note 33). As at December 31, 2017, the Company has received a total claim of
US$ 11,336,350 from the insurance company.
As at December 31, 2017, the construction in progress for machinery and equipment of US$ 11,086,622
consist of the remaining balance in the construction in progress for machinery and equipment in 2016 of
US$ 9,646,639, the addition during the year 2017 of US$ 2,179,492, and deduction during the year 2017
of US$ 392,984. Up to December 31, 2017, the total percentage of completion for the construction in
progress for machinery and equipment is approximately 5% and will be completed in 2018. Management
believes that there is no impediment to the completion of the construction in progress.
As at December 31, 2016, the construction in progress for machinery and equipment of US$ 10,566,710
consist of the remaining balance in the construction in progress for machinery and equipment in 2015 of
US$ 4,462,642, the addition during the year 2016 of US$ 4,462,642, and deduction during the year 2016
of US$ 1,385,784 are connected with the capitalization of PTA’s machineries. Up to December 31, 2016,
the total percentage of completion for this project is approximately 80% and will be completed in 2017.
In November 2014, the Company has purchased a Gas Turbine for US$ 4,217,940 from the curator of
PT Wismakarya Prasetya on a public auction.
Management believes that the estimated recoverable amounts of property, plant and equipment exceed
their carrying values and, hence, no impairment of property, plant and equipment should be recorded as at
the reporting date.
In 2017, the fair value of land (803,712 sqm) based on NJOP (Tax Object Market Value) is
Rp 397,700,939,000 (equivalent to US$ 29,354,956) and the fair value of building (214,714 sqm) based
on NJOP is Rp 138,144,876,000 (US$ 10,196,699).
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
60
14. PROPERTY, PLANT AND EQUIPMENT (Continued)
Based in the appraisal’s report of KJPP Nirboyo A., Dewi A. & Rekan dated November 18, 2016, total
market value of the Company’s property, plant and equipment were US$ 434,245,310 with the liquidation
value of US$ 281,855,681.
The valuation, which conforms to International Valuation Standards, was determined by reference to
recent market transactions on arm’s length terms. Appraisal method used is Market Data Approach
Methods. Elements used in data comparison process to determine assets’ fair value are as follows:
a. Type of right on property.
b. Market condition
c. Location
d. Land and Physical characteristics
e. Income producing characteristics
As at December 31, 2017 and 2016, total acquisition cost of fully depreciated property, plant and
equipment is amounted to US$ 1,016,675 and US$ 7,345,358, respectively. But the Company is still using
these assets in their operations.
All of the Company’s property, plant and equipment, except land were insured with PT MAG lead
Insurance Company from fire loss and other risks including earthquake valuing in total of
US$ 456,100,000 as at December 31, 2017 and US$ 459,500,000 as at December 31, 2016, respectively.
The Company’s management, believes that the sum insured as stated above is adequate to cover possible
losses arising from risks covered.
Most of Company’s land, building, machinery and equipments are used as collateral for secured bond
holders from PT Bina Prima Perdana (BPP)/PT Perusahaan Pengelola Asset (PPA) (Note 19). The
machinery and equipment under Batch Poly Project (excluding civil work), Fiber Line, and Automotive
Project with EFK machine of US$ 17,700,000 in 2017 and 2016, respectively, are used as collateral for
the Third Loans from Damiano Investments B.V., Netherland (Note 21).
15. INTANGIBLE ASSETS
2 0 1 7 2 0 1 6
US$ US$
Legal processing of landrights 125,428 125,428
Less: accumulated amortization (24,381 ) (18,112 )
Net 101,047 107,316
Amortization expense are allocated to:
General and administrative expenses (Note 39) 6,269 6,272
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
61
15. INTANGIBLE ASSETS (Continued)
Intangible assets represent legal cost associated with the acquisition of landrights for land located at
Bandung (166 square meters) and the acquisition of landrights for land located in Karawang
(319,755 square meters). These are amortized over the useful life (Hak Guna Bangunan) of 20 years.
As at December 31, 2017 and 2016, the management believes that there was no indication of impairment
for intangible assets.
16. TRADE PAYABLES
This account consist of: 2 0 1 7 2 0 1 6
US$ US$
Third parties:
Local suppliers 5,401,791 5,875,231
Foreign suppliers 3,862,747 6,111,482
Total 9,264,538 11,986,713
A summary of the aging of trade payables to third parties based on the date of invoice is as follows:
2 0 1 7 2 0 1 6
US$ US$
Up to 1 month 6,902,112 8,239,683
> 1 month – 3 months 1,260,863 2,592,292
> 3 months – 6 months 353,768 774,345
> more than 6 months 747,795 380,393
Total 9,264,538 11,986,713
The details of trade payables to third parties based on its original currencies are as follows:
2 0 1 7 2 0 1 6
US$ US$
United States Dollar 3,519,297 6,085,694
Rupiah
(Rp 75,380,244,701 in 2017 and
Rp 74,463,024,065 in 2016) 5,563,939 5,542,047
European Euro
(EUR 139,530 in 2017 and
EUR 291,553 in 2016) 166,571 307,286
Carried forward 9,249,807 11,935,027
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
62
16. TRADE PAYABLES (Continued)
The details of trade payables to third parties based on currencies are as follow: (Continued)
2 0 1 7 2 0 1 6
US$ US$
Brought forward 9,249,807 11,935,027
Japan Yen
(Yen 485,000 in 2017 and
Yen 4,419,000 in 2016) 4,034 37,955
Poundsterling
(£ 6,075 in 2017) 8,169 −
Swiss Franc
(CHF 2,474 in 2017 and
CHF 14,000 in 2016) 2,528 13,731
Total 9,264,538 11,986,713
Trade payables to local and foreign suppliers represent payables for purchase of raw materials and indirect
materials. These are non-interest bearing with clear terms of repayment.
Due to their short-term nature, their carrying amount of trade payables approximates their fair value.
There is no guarantee given on the trade payables.
The maximum exposure to liquidity risk at the end of the reporting date is the carrying value of each class
of trade payables disclosed in Note 48.
17. ACCRUED EXPENSES
2 0 1 7 2 0 1 6
US$ US$
Interest 43,118,443 42,996,909
Electricity and gas 7,894,051 12,239,781
Insurance 1,414,132 561,736
Transportation 455,695 560,857
Professional fee 86,575 95,322
Rent 30,091 81,672
Salaries and bonus 14,676 −
Others 585,967 381,609
Total 53,599,630 56,917,886
The maximum exposure to credit risk at the reporting date is the carrying value of each class of accrued
expenses is disclosed in Note 48.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
63
17. ACCRUED EXPENSES (Continued)
Portion of accrued interest amounted to Rp 380,648,007,290 (equivalent to US$ 28,096,250 in 2017) and
Rp 380,648,007,290 (equivalent to US$ 28,330,456 in 2016) represent the interest expenses accrued from
secured debt since year 2001 to 2002, while all the unpaid and accrued interest up to year 2000 according
to the DMOA had been waived. The interest expense after the year 2002 has not been recorded by the
Company due to the restructuring process that has not yet been completed (Note 19).
The details of accrued expenses based on its original currencies are as follows:
2 0 1 7 2 0 1 6
US$ US$
Rupiah
(Rp 501,123,845,743 in 2017 and
Rp 548,908,523,763 in 2016) 36,988,770 40,853,567
United States Dollar 16,610,860 16,064,319
Total 53,599,630 56,917,886
Due to their short-term nature, their carrying amount of accrued expenses approximates their fair value.
18. BANK LOANS
2 0 1 7 2 0 1 6
US$ US$
Related Party:
Damiano Investment B.V., Netherland 92,023,680 85,729,859
According to the loan agreement dated March 3, 2006 and its amendment dated August 31, 2006 between
the Company (Borrower), and Damiano Investments B.V., Netherland (Lender), and PT Ferrier Hodgson
(Monitoring Agent), the lender agreed to provide the Letter of Credit facility in the aggregate principal
amount of US$ 50,000,000. Accordingly, the Company can also use the lender name as guarantor for
opening Letter of Credit in Barclays Bank Plc, Hong Kong (Barclays). In addition, the Company should
pay a financing fee of 2.25% per month on the aggregate amounts of the facility in Barclays to Damiano
Investments B.V., Netherland.
Based on the amendment loan agreement dated January 1, 2009 between the Company (Borrower), and
Damiano Investments B.V., Netherland (Lender), and PT Ferrier Hodgson (Monitoring Agent), from
April 3, 2009 onwards, any and all references to “Barclays Letter of Credit Facility” shall be moved to
“Deutsche Bank AG: Letter of Credit Facility”. The fee charges by Damiano Investments B.V., Netherland
on this facility was 1.25% per month.
The Letter of Credit facility always changed based on the Company’s requirements for purchasing of raw
materials. Based on the recent amendment loan agreement dated April 8, 2011 between the Company
(Borrower) and Damiano Investments B.V., Netherland (Lender), and PT Ferrier Hodgson (Monitoring
Agent), the lender agreed to increase the Letter of Credit facility in the aggregate principal amount from
US$ 50,000,000 to US$ 80,000,000.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
64
18. BANK LOANS (Continued)
Based on the amendment loan agreement on July 2012 between the Company (Borrower) and Damiano
Investments B.V., Netherland (Lender), and PT Ferrier Hodgson (Monitoring Agent), the lender agreed to
increase the Letter of Credit facility in the aggregate principal amount from US$ 80,000,000 to
US$ 100,000,000.
The available facility as at December 31, 2017 and 2016 was US$ 97,270,529 and US$ 94,630,740,
respectively. The letter of credit used by the Company to purchase of raw materials is US$ 92,023,680
in 2017 and US$ 85,729,859 in 2016, respectively. All of the bank loans is represents in US Dollar. This
is a revolving facility.
For the year ended December 31, 2017, the interest fee on Bank Loan has been waived by Damiano
Investments BV., Netherland as per amendment agreement dated January 2, 2017.
In 2017, the letter of credit facility is secured by fiduciary transfers of inventories and receivables valuing
US$ 60,200,000 and US$ 45,000,000, respectively (Notes 6 and 9).
Due to their short-term nature, their carrying amount of bank loans approximates their fair value.
The maximum exposure to credit risk at the reporting date is the carrying value of each class of bank loans
is disclosed in Note 48.
19. SECURED DEBTS
2 0 1 7 2 0 1 6
US$ US$
Bonds:
13% Guaranteed Secured Notes 122,526,000 122,526,000
Secured Floating Rate Notes 50,000,000 50,000,000
9.375% Guaranteed Secured Notes 250,000,000 250,000,000
11.375% Guaranteed Secured Notes 260,000,000 260,000,000
682,526,000 682,526,000
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
65
19. SECURED DEBTS (Continued)
2 0 1 7 2 0 1 6
US$ US$
PT Bina Prima Perdana
PT Bank Negara Indonesia (Persero) Tbk
IDR 1,302,583,907,331 96,145,845 96,947,299
USD 29,055,834 29,055,834
EUR 849,872 1,014,578 895,765
YEN 3,001,711,400 26,635,735 25,781,296
152,851,992 152,680,194
Ex – Banks – Billateral Loans:
Damiano Investments B.V., Netherland
(Ex. Credit Agricole Indosuez, Singapore) 12,117,088 12,117,088
Damiano Investments B.V., Netherland
(Ex. PT Bank Finconesia)
EUR 7,471,539 8,919,530 7,875,005
Damiano Investments B.V., Netherland
(Ex. Union Europeene de CIC, Singapore)
EUR 5,941,395 7,092,844 6,262,233
Damiano Investments B.V., Netherland
(Ex. Bangkok Bank, Singapore) 1,303,097 1,303,097
Kyoa Investment Limited, British Virgin Island
(Ex. Bangkok Bank, Singapore) 500,000 500,000
Sverige Financing Limited, British Virgin Island
(Ex. Bangkok Bank, Singapore) 500,000 500,000
Sasando Pte. Ltd., Singapore
(Ex. Bangkok Bank, Singapore) 500,000 500,000
Sverige Netherlands B.V., Netherland
(Ex. Bangkok Bank, Singapore) 9,600 9,600
Others 490,400 490,400
31,432,559 29,557,423
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
66
19. SECURED DEBTS (Continued)
2 0 1 7 2 0 1 6
US$ US$
Ministry of Finance (Ex. BNI LC):
PT Bank Negara Indonesia (Persero) Tbk
United States Dollar 80,366,458 80,366,458
Rupiah
(Rp 38,468,048,072 in 2017 and 2016) 2,839,389 2,863,059
83,205,847 83,229,517
Total 950,016,398 947,993,134
On November 30, 2001, the Company entered into Definitive Memorandum of Agreement (DMOA) with
the noteholders regarding the restructuring plan of the Company. However, it has not yet been executed
by the Company and the DMOA and automatically terminated. On March 14, 2007 and July 2007, the
Company has issued a new Secured Debt Restructure Proposal (SDRP) to its secured creditors for the
restructure of its Secured debts including the bonds, but the approval from the secured creditors,
particularly from PPA (approximately of 26% of total secured debt) has not given. Since no restructure
agreement has been reached between the Company and the secured creditors, the secured debts continue
to remain overdue.
In November 2010 and December 2010, PPA announced a “Sale of Texmaco Assets and Shares”
programme which includes the fixed assets held as security by PPA in the Company-Semarang’s site.
However for some reasons, the programme was later called off and cancelled.
Damiano Investments B.V., Netherland currently hold approximately 93% of the secured bonds and ex.
banks are willing to approve the new Secured Debt Restructure Proposal. In February 2014, the Company
has submitted a revised Secured Debt Restructuring Plan (SDRP) to PPA (Note 2a) in line with the current
business trend and the sustainability of debts. According to the Revised Proposal, the secured debt will be
converted into a retained debt of US$ 80 million and the balance converted into equity. The new debt is
repayable over 8 years. The existing equity will be diluted by 45.10% by issuance of 54.90% of new equity
which will be issued to the secured creditors for swapping the debt.
The Company has also submitted an updated Secured Debt Restructuring proposal to the Committee and
the MoF during October 2016. Until March 2018, no response has been received. However, the SDRP is
under active consideration of all the secured creditors.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
67
19. SECURED DEBTS (Continued)
A. 13% Guaranteed Secured Notes, US$ 122,526,000.
The Company issued US$ 125,000,000 Unsecured Senior Notes in June 1994 carrying an interest rate
of 13% per annum. The notes are due for repayment in 2001. In May 1996, the Company offered to
the holders of the said unsecured notes to exchange their notes with 13% Guaranteed Senior Notes due
in 2001 which were listed in Luxembourg Stock Exchanges and issued by PIFC with the Company as
the guarantor. All holders of the unsecured notes exchanged their notes with the new secured notes
except for the holders of unsecured notes amounting to US$ 2,474,000. In August 1997, the Company
paid part of the 13% Unsecured Senior Notes amounting to US$ 1,250,000.
B. Secured Floating Rates Notes, US$ 50,000,000.
In February 1996, PIFC, with the Company as a guarantor, issued the US$ 50,000,000 Secured
Floating Rate Notes which were listed in Luxembourg Stock Exchanges with carrying an interest rate
of 3% above LIBOR and were due in 1999.
C. 9.375% Guaranteed Secured Notes, US$ 250,000,000.
In July 1997, PIFC, with the Company as a guarantor, issued the US$ 250,000,000 Guaranteed
Secured Notes due in 2007 which were listed in Luxembourg Stock Exchange with carrying an interest
rate of 9.375% per annum. The proceeds from issuance of these notes were used to finance a portion
of phase I of the Company’s expansion program.
D. 11.375% Guaranteed Secured Notes, US$ 260,000,000.
In June 1996, PIFC, with the Company as a guarantor, issued the US$ 260,000,000 Guaranteed
Secured Notes due in 2006 which were listed in Luxembourg Stock Exchange. The notes carry an
interest rate of 11.375% per annum. The proceeds from issuance of these notes were used to pay off
other debts and loans.
Currently all these notes have been delisted from Luxembourg Stock Exchanges and are secured by liens
of the collateral, which consist of real property, moveable assets (other than inventories) and proceeds of
collateral on a pari-passu basis with the other notes payable and obligations of the Company (Note 14).
Of the total Secured Bonds of US$ 682,526,000, Damiano Investments B.V., Netherland is holding around
US$ 631,000,000 (92.5%).
Loans to PT Bina Prima Perdana (BPP) represent loans from PT Bank Negara Indonesia (Persero) Tbk
which had been defaulted and transferred to IBRA. Further, pursuant to debt restructuring scheme in
Master Restructuring Agreement (MRA) dated May 23, 2001, in 2002 the Company’s debts to IBRA have
been transferred to BPP. For this transfer, BPP issued Exchangeable Bond (EB) to IBRA. But,
on February 26, 2004, IBRA issued a letter of default notice to PT Bina Prima Perdana. The letter stated
that PT Bina Prima Perdana as the textile holding company had failed to pay the Exchangeable Bond (EB)
coupons due on August 18, 2003.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
68
19. SECURED DEBTS (Continued)
The Company did not recognize the interest expenses on secured debts since 2002 since the Company is
under restructuring process, and the interest payable will not be counted. As at December 31, 2017
and 2016, the Company had interest payable of Rp 380,648,007,290 (equivalent to US$ 28,096,251
in 2017) and Rp 380,648,007,290 (equivalent to US$ 28,330,456 in 2016) and was presented as part of
accrued expenses in the consolidated statements of financial position (Note 17).
Based on the Deed of Debt Assignment dated June 11, 2014, Damiano Investments B.V., Netherland agree
to assigns rights, title and interest of Company’s secured debts to Kyoa Investment Limited, Sverige
Financing Limited, Sverige Netherland B.V. and Sasando Pte. Ltd. in the proportion set out below:
Creditors
Principal Amount
Outstanding of Debts
Purchased
Purchase Consideration
Damiano Investments B.V. US$ 1,303,097.37 Seller is retained a portion
of the outstanding Debts
Kyoa Investment Limited US$ 500,000.00 US$ 50,000.00
Sverige Financing Limited US$ 500,000.00 US$ 50,000.00
Sverige Netherland B.V. US$ 500,000.00 US$ 50,000.00
Sasando Pte. Ltd. US$ 500,000.00 US$ 50,000.00
Total US$ 3,303,097.37 US$ 200,000.00
Futher, based on the Transfer Certificate dated April 30, 2015, Sverige Financing Limited agree to transfer
the principal on secured debt amounted US$ 490,400 to some people, and hold for itself amounted US$
9,600. Then, the proportion of Company’s secured debts are shown as below:
Creditors
Principal Amount
Outstanding of Debts
purchased
Purchase Consideration
Damiano Investments B.V. US$ 1,303,097.37 Seller is retained a portion
of the outstanding Debts
Kyoa Investment Limited US$ 500,000.00 US$ 50,000.00
Sverige Netherland B.V. US$ 500,000.00 US$ 50,000.00
Sasando Pte. Ltd. US$ 500,000.00 US$ 50,000.00
Sverige Financing Limited US$ 9,600.00 US$ 50,000.00
Others US$ 490,400.00
Total US$ 3,303,097.37 US$ 200,000.00
Consequently, the Company should be paid in respect of the Purchase Debt to each of the creditors above
in accordance with the proportion of the Purchase Debt owned by each creditor as stated at the above table.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
69
19. SECURED DEBTS (Continued)
The breakdown of secured debts on its original currencies are as follows:
2 0 1 7 2 0 1 6
US$ US$
United States Dollar 807,368,478 807,368,477
European Euro
(EUR 14,262,806 in 2017 and 2016) 17,026,950 15,033,003
Japan Yen
(Yen 3,001,711,460 in 2017 and 2016) 26,635,736 25,781,296
Rupiah
(Rp 1,341,051,955,403 in 2017 and 2016) 98,985,234 99,810,358
Total 950,016,398 947,993,134
Due to their short-term nature, their carrying amount of secured debts approximates their fair value.
The maximum exposure to credit risk at the reporting date is the carrying value of each class of secured
debts is disclosed in Note 48.
20. UNSECURED NOTES PAYABLE
2 0 1 7 2 0 1 6
US$ US$
Madison Pacific Trust Limited 26,055,409 25,024,969
Total 26,055,409 25,024,969
The Company has taking steps to implement the Composition Plan (Peace Plan) as approved by the
unsecured creditors of the Company and ratified by the Commercial Court. On September 29, 2006, the
unsecured creditors comprising of Banks, PT Bina Prima Perdana, Leasing, and Notes stand at
US$ 18,670,630 was restructured into Fixed Rate Notes under custodian of The Hongkong and Shanghai
Banking Corporation Limited, Hong Kong.
As at December 31, 2017 and 2016, the total restructured unsecured debt were US$ 26,055,409 and
US$ 25,024,969, respectively, which comprising of principal notes at US$ 18,670,630 plus unpaid
capitalized interest of US$ 7,384,779 in 2017 and US$ 6,354,339 in 2016.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
70
20. UNSECURED NOTES PAYABLE (Continued)
Based on the Minutes of Noteholders’ Meeting between the Company (Borrower) and the majority
unsecured creditors dated January 21, 2015, the Noteholder shall defer the redemption dated of the
unsecured notes payable for 3 (three) years by revoking and replacing the table of redemption dates below:
Years Amortizations
2018 5.00%
2019 17.50%
2020 17.50%
2021 17.50%
2022 20.00%
2023 22.50%
Further, based on the Minutes of Noteholders’ Meeting between the Company (Borrower) and the majority
unsecured creditors dated January 23, 2018, the Noteholder shall defer the redemption dated of the
unsecured notes payable by revoking and replacing the table of redemption dates below:
Years Amortizations
2020 5.00%
2021 17.50%
2022 17.50%
2023 17.50%
2024 20.00%
2025 22.50%
All unsecured notes payable are denominated in US Dollar.
Based on the Deed of Novation and Accession dated April 28, 2016 between the Company, Damiano
Investments, B.V., Netherlands, Deutsche Bank AG, PT Pilot Asia Capital, The Hongkong and Shanghai
Banking Corporation Limited, and Madison Pacific Trust Limited, the parties agreed to changed the Fiscal
Agency services of Unsecured New Notes from The Hongkong and Shanghai Banking Corporation
Limited to Madison Pacific Trust Limited.
For the years ended December 31, 2017 and 2016, the interest charges on the unsecured notes payable
were US$ 744,383 and US$ 982,016, respectively, and are presented as part of finance costs accounts in
the consolidated statements of profit or loss and other comprehensive income (Note 40).
The fair value of long-term financial liabilities have been determined by calculating their present value at
the consolidated statements of financial position date, using fixed effective market interest rates available
to the Company. No fair value changes have been included in consolidated statements of profit or loss and
other comprehensive income for the period as financial liabilities are carried at amortized cost in the
consolidated statements of financial position.
The maximum exposure to credit risk at the reporting date is the carrying value of each class of unsecured
notes payable is disclosed in Note 48.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
71
21. CAPEX LOANS
2 0 1 7 2 0 1 6
US$ US$
Related Party:
Damiano Investments B.V., Netherland 22,695,000 23,570,000
Based on the Working Capital Loan Agreement between the Company and Damiano Investments B.V.,
Netherland dated June 1, 2006, Damiano Investments B.V., Netherland has provided the working capital
loans facility for the Company. The interest chargeable on this loan is 9% per annum until the
implementation of the Composition Plan. Upon implementation of the Composition Plan, the rate of
interest is as per the terms of the “New Notes / Loan restructure”. The working capital loan shall be
repayable on the earlier of 5 (five) years from the date of this agreement.
Based on the second amendment of working capital loan agreement dated June 1, 2011, the repayment
date has been extended from 5 (five) years to be 7 (seven) years.
Based on the third amendment of third working capital loan agreement dated August 1, 2013, the
repayment date has been re-extended from 7 (seven) years to be 9 (nine) years.
Based on the fourth amendment of third working capital loan agreement dated June 1, 2015, the repayment
date has been re-extended from 9 (nine) years to be 11 (eleven) years. The management informed that the
loan will be extended by 2 (two) more years when it expires by June 2017.
Third Loan:
During the year 2011, Damiano Investments B.V., Netherland has provided US$ 8,500,000 as part of the
Company’s capital expenditure. The part of these working capital loans of US$ 4,100,000 have been repaid
by the Company in 2012, while the remaining balance of US$ 4,400,000 is still outstanding as at
December 31, 2016 and 2015.
During the year 2012, Damiano Investments B.V., Netherland has also provided US$ 12,940,000 as part
of the Company’s capital expenditure. It was still outstanding as at December 31, 2016 and 2015,
respectively.
This loan is denominated in US Dollar. The loan is secured by fiduciary transfer of certain assets in
Karawang and Semarang for a value of US$ 17,700,000 (Note 14).
During the year 2016, Damiano Investments B.V., Netherland has also provided US$ 1,000,000 in
September 2016 and US$ 500,000 in November 2016 as part of the Company’s capital expenditure. The
Company has repaid US$ 875,000 during the year and the amount outstanding as of December 31, 2017
was US$ 625,000.
Based on th agreement dated July 3, 2017 between the Company and Damiano Investments B.V.,
Netherland, the interest for the period June 2017 to August 2017 was waived.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
72
21. CAPEX LOANS (Continued)
Fourth Loan:
Based on the Fourth Loan Agreement between the Company and Damiano Investments B.V., Netherland dated
November 5, 2014, Damiano Investments B.V., Netherland agree to provide a loan facility for the Company
with totaling of US$ 4,750,000. The interest chargeable on this loan is 6% per annum since the first anniversary
of the first drawdown date, and shall be repayable on the earlier of 5 (five) years from the date of this agreement.
This loan is used for the purpose of purchase of Gas Turbine (ABB) on a public auction from the curator of
PT Wismakarya Prasetya.
Further based on the drawdown notice dated November 5, 2014 and November 14, 2014, the Company has
receive part of fourth loan facility of US$ 4,730,000. These drawdown are used for purchasing of 1 (one) of gas
turbine from PT Wismakarya Prasetya.
Based on the agreement dated July 3, 2017 between the Company and Damiano Investments B.V., Netherland,
the interest in Fourth Loan for a period from June 2017 to August 2017 has waived. The amount outstanding
under this agreement was US$ 4,730,000 as at December 31, 2017.
For the years ended December 31, 2017 and 2016, the interest charge on the capex loans from Damiano
Investments B.V., Netherland were US$ 2,494,229 and US$ 3,244,042, respectively, and are presented as part
of finance costs accounts in the consolidated statements of profit or loss and other comprehensive income (Note
40).
The fair value of long-term financial liabilities have been determined by calculating their present value at the
consolidated statements of financial position date, using fixed effective market interest rates available to the
Company. No fair value changes have been included in consolidated statements of profit or loss and other
comprehensive income for the period as financial liabilities are carried at amortized cost in the consolidated
statements of financial position.
The maximum exposure to credit risk at the reporting date is the carrying value of each class of capex loans is
disclosed in Note 48.
22. CREDIT FINANCING PAYABLES
2 0 1 7 2 0 1 6
US$ US$
Credit financing payable:
PT Astra Sedaya Finance 20,719 37,575
PT Toyota Astra Financial Service 16,377 28,166
PT Mandiri Tunas Finance 60,307 40,460
PT Andalan Finance Indonesia − 3,494
Total credit financing payables 97,403 109,695
Less: current maturity of credit financing payable:
PT Astra Sedaya Finance (16,447 ) (11,652 )
PT Toyota Astra Financial Service (12,341 ) (16,857 )
PT Mandiri Tunas Finance (25,761 ) (9,715 )
PT Andalan Finance Indonesia − (3,494 )
Total current maturity of credit financing payables (54,549 ) (41,718 )
Credit financing payables – net of current maturity 42,854 67,977
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
73
22. CREDIT FINANCING PAYABLES (Continued)
Based on agreement dated September 14, 2013, the Company obtained a credit financing from
PT Astra Sedaya Finance for purchasing of a car (Toyota Innova) amounting to Rp 180,078,500 with
effective interest rate of 10.18% per annum, repayable in monthly installments from September 14, 2013
up to August 14, 2017. As at December 31, 2017 and 2016, the outstanding credit financing payable
balances was Rp Nil (equivalent to US$ Nil) and Rp 35,017,838 (equivalent to US$ 2,606), respectively.
Based on agreement dated February 7, 2014, the Company obtained a credit financing from
PT Andalan Finance Indonesia for purchasing of a car (Honda Brio) amounting to Rp 87,500,000 with
effective interest rate of 9.08% per annum, repayable in monthly installments from February 15, 2014 up
to January 15, 2017. As at December 31, 2017 and 2016, the outstanding credit financing payable balance
were Rp Nil (equivalent to US$ Nil) and Rp 2,745,226 (equivalent to US$ 204), respectively.
Based on agreement dated February 7, 2014, the Company obtained a credit financing from
PT Andalan Finance Indonesia for purchasing of a car (Toyota Rush) amounting to Rp 146,580,000 with
effective interest rate of 8.90% per annum, repayable in monthly installments from February 15, 2014 up
to January 15, 2017. As at December 31, 2017 and 2016, the outstanding credit financing payable balance
were Rp Nil (equivalent to US$ Nil) and Rp 4,587,973 (equivalent to US$ 342), respectively.
Based on agreement dated February 7, 2014, the Company obtained a credit financing from
PT Andalan Finance Indonesia for purchasing of a car (Honda Brio) amounting to Rp 87,500,000 with
effective interest rate of 9.08% per annum, repayable in monthly installments from February 15, 2014 up
to January 15, 2017. As at December 31, 2017 and 2016, the outstanding credit financing payable balance
were Rp Nil (equivalent to US$ Nil) and Rp 2,745,226 (equivalent to US$ 204), respectively.
Based on agreement dated February 7, 2014, the Company obtained a credit financing from PT Andalan
Finance Indonesia for purchasing of a car (Toyota Etios) amounting to Rp 113,400,000 with effective
interest rate of 8.90% per annum, repayable in monthly installments from February 15, 2014 up to
January 15, 2017. As at December 31, 2017 and 2016, the outstanding credit financing payable balance
were Rp Nil (equivalent to US$ Nil) and Rp 3,549,659 (equivalent to US$ 264), respectively.
Based on agreement dated November 25, 2014, the Company obtained a credit financing from
PT Andalan Finance Indonesia for purchasing of a car (Honda Mobilio) amounting to Rp 96,675,000 with
effective interest rate of 14.72% per annum, repayable in monthly installments from
January 2, 2015 up to December 2, 2017. As at December 31, 2017 and 2016, the outstanding credit
financing payable balance was Rp Nil (equivalent to US$ Nil) and Rp 33,314,469 (equivalent to
US$ 2,480), respectively.
Based on agreement dated April 6, 2016, the Company obtained a credit financing from
PT Toyota Astra Finance Services for purchasing of a car (Toyota Innova) amounting to Rp 305,458,400
with effective interest rate of 10.35% per annum, repayable in monthly installments from April 6, 2016
up to March 6, 2019. As at December 31, 2017 and 2016, the outstanding credit financing payable balance
were Rp 138,978,391 (equivalent to US$ 10,258) and Rp 237,011,716 (equivalent to US$ 17,640),
respectively.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
74
22. CREDIT FINANCING PAYABLES (Continued)
Based on agreement dated July 20, 2016, the Company obtained a credit financing from
PT Astra Sedaya Finance for purchasing of a car (Toyota Nav) amounting to Rp 277,683,400 with
effective interest rate of 9.95% per annum, repayable in monthly installments from July 20, 2016 up to
June 20, 2019. As at December 31, 2017 and 2016, the outstanding credit financing payable balance were
Rp 149,081,810 (equivalent to US$ 11,004) and Rp 236,158,772 (equivalent to US$ 17,577), respectively.
Based on agreement dated February 19, 2016, the Company obtained a credit financing from
PT Astra Sedaya Finance for purchasing of a car (Toyota Camry) amounting to Rp 327,502,000 with
effective interest rate of 18.79% per annum, repayable in monthly installments from February 16, 2016 up
to January 16, 2019. As at December 31, 2017 and 2016, the outstanding credit financing payable balance
were Rp 131,618,659 (equivalent to US$ 9,715) and Rp 233,684,178 (equivalent to US$ 17,392),
respectively.
Based on agreement dated June 14, 2016, the Company obtained a credit financing from
PT Toyota Astra Finance Services for purchasing of a car (Toyota Innova) amounting to Rp 175,559,640
with effective interest rate of 5.35% per annum, repayable in monthly installments from June 14, 2016 up
to May 14, 2019. As at December 31, 2017 and 2016, the outstanding credit financing payable balance
were Rp 82,903,163 (equivalent to US$ 6,119) and Rp 141,423,043 (equivalent to US$ 10,526),
respectively.
Based on agreement dated November 8, 2016, the Company obtained a credit financing from
PT Mandiri Tunas Finance for purchasing of two (2) Toyota forklift amounting to Rp 702,000,000 with
effective interest rate of 13% per annum, repayable in monthly installments from March 10, 2017 up to
January 10, 2020. As at December 31, 2017 and 2016, the outstanding credit financing payable balance
were Rp 394,824,157 (equivalent to US$ 29,143) and Rp 543,620,000 (equivalent to US$ 40,460),
respectively.
Based on agreement dated May 3, 2017, the Company obtained a credit financing from PT Mandiri Tunas
Finance for purchasing of two (2) Toyota forklift amounting to Rp 702,000,000 with effective interest rate
of 13% per annum, repayable in monthly installments from March 10, 2017 up to January 10, 2020. As of
December 31, 2017 and 2016, the outstanding credit financing payable balance was Rp 422,212,195
(equivalent to US$ 31,164) and Rp 543,620,000 (equivalent to US$ 40,460), respectively.
The interest expenses incurred on this credit financing for the years ended December 31, 2017 and 2016
were Rp 95,225,287 (equivalent to US$ 7,425) and Rp 138,574,412 (equivalent to US$ 10,561),
respectively, and is shown as part of the finance costs accounts in the consolidated statements of profit or
loss and other comprehensive income (Note 40).
The fair value of long-term financial liabilities have been determined by calculating their present value at
the consolidated statements of financial position date, using fixed effective market interest rates available
to the Company. No fair value changes have been included in consolidated statements of profit or loss and
other comprehensive income for the period as financial liabilities are carried at amortized cost in the
consolidated statements of financial position.
The maximum exposure to credit risk at the reporting date is the carrying value of each class of credit
financing payables is disclosed in Note 48.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
75
23. OTHER CURRENT FINANCIAL LIABILITIES
2 0 1 7 2 0 1 6
US$ US$
Advance receipts from customers 1,101,746 824,082
Freight and transportation 297,403 329,376
Others 4,996,929 4,196,784
Total 6,396,078 5,350,242
The details of other current financial liabilities based on currencies are as follows:
2 0 1 7 2 0 1 6
US$ US$
Rupiah
(Rp 39,373,800,625 in 2017 and
Rp 29,649,792 in 2016) 2,906,245 2,206,723
United States Dollar 3,489,833 3,143,519
Total 6,396,078 5,350,242
Due to their short-term nature, their carrying amount of other current financial liabilities approximates
their fair value.
The maximum exposure to credit risk at the reporting date is the carrying value of each class of other
current financial liabilities is disclosed in Note 48.
24. DEFERRED REVENUE
2 0 1 7 2 0 1 6
US$ US$
Government grant 246,027 246,027
Less: accumulated amortization (58,628 ) (46,065 )
Net 187,399 199,962
Amortization income are allocated to:
Miscellaneous income, net (Note 41) 12,563 12,563
Deferred revenue represents the government grant related to purchase of machinery EFK Multi Spindel
Texturing and EFK Coolflex of Rp 37,629,356,188 (equivalent to US$ 3,972,862). The machinery was
located at Semarang, Central Java.
The government grant is based on the Letter of Agreement to give the grant for Revitalization Programme
and Industrial Growth through Restructuring of machinery / industry equipment TPT, and also IAK from
the Ministry of Industry No. 0043/BIM.5/SPPB-TL/A/5/2013 dated May 10, 2013, which stated that the
Company obtain the grant for purchasing of machinery amounting to Rp 2,388,181,818 (equivalent to
US$ 246,027). The government grant will be amortized over the useful life of machinery (20 years).
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
76
25. SHORT-TERM EMPLOYEE BENEFIT LIABILITIES
Short-term employee benefit liabilities on December 31, 2017 and 2016 amounting to US$ 183,813 and
US$ 532,715, respectively, are liabilities on bonus for employee, pension, salary, medical, and other
benefits.
26. LONG-TERM EMPLOYEE BENEFITS LIABILITIES
On June 20, 2000, the Ministry of Manpower issued Decree No. KEP-150/Men/2000 regarding the
settlement of work dismissal and determination of separation, appreciation and compensation payment to
employees, which requires companies to pay their employees gratuity and compensation benefits in case
of employees resignation based on the employee’s number of years of service and salaries provided the
conditions set forth in the decree are met.
In April 2003, the Government of the Republic Indonesia issued Labour Law No. 13/2003 replacing the
Decree No. KEP-150/Men/2000.
The Company has defined benefit pension plans covering substantially all of their eligible permanent
employees. The balances of long-term employee benefit liabilities as at December 31, 2017 and 2016
amounted of US$ 13,908,649 and US$ 11,154,807, respectively, are calculated by independent actuary
on a yearly basis, as set out in their reports dated February 26, 2018 and March 1, 2017.
The amounts recognized in the consolidated statements of financial position are determined as follows:
2 0 1 7 2 0 1 6
US$ US$
Present value of unfunded benefit obligations 13,908,649 11,154,807
Fair value of plan assets − −
Net liability 13,908,649 11,154,807
The movements in the present value of defined obligation over the year are as follows:
2 0 1 7 2 0 1 6
US$ US$
Present value of defined benefit obligations
at beginning of the period 11,154,807 9,759,801
Current service costs 1,037,346 718,973
Past service costs – 2,311
Interest costs 886,405 873,270
Actuarial loss (gain) from experience adjustment 546,137 (209,991 )
Actuarial loss from change in financial assumptions 1,142,193 598,080
Benefits paid (766,025 ) (848,411 )
Foreign exchange (gain) loss – net (92,214 ) 260,774
Present value of defined benefit obligations
at end of the period
13,908,649
11,154,807
As at December 31, 2017 and 2016, all of defined benefit obligation is unfunded obligation so there is no
fair value of plan assets.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
77
26. LONG-TERM EMPLOYEE BENEFITS LIABILITIES (Continued)
The amounts recognized in the consolidated statements of profit or loss and other comprehensive income
are as follows:
2 0 1 7 2 0 1 6
US$ US$
Current service cost 1,037,346 718,973
Interest costs 886,405 873,270
Past service cost – 2,311
Total (Note 39) 1,923,751 1,594,554
The movements in the net liability recognized in the consolidated statements of financial position are as
follows:
2 0 1 7 2 0 1 6
US$ US$
Beginning of the year 11,154,807 9,759,801
Actuarial loss (gain) from experience adjustment 546,137 (209,991 )
Actuarial loss from change in financial assumptions 1,142,193 598,080
Benefits paid (not plan asset) (766,025 ) (848,411 )
Employee benefit expense 1,923,751 1,594,554
Foreign exchange (gain) loss (92,214 ) 260,774
Total 13,908,649 11,154,807
The cost of providing post-employment benefits is calculated by independent actuary, PT Sienco
Aktuarindo Utama using the following key assumptions:
Discount rate : 7% p.a. in 2017 and 8.30% p.a. in 2016
Salary growth rate : 8% p.a. in 2017 and 2016
Mortality rate : Table Mortality in Indonesia 2011
Normal retirement age : 10% in 20 years old and decline until 55 years old
Disability rate : 1% of mortality rate
Fund method : Projected Unit Credit
Assumptions regarding future mortality experience are set based on actuarial advice in accordance with
published statistics and experience in each territory. In Indonesia, the mortality assumptions used are based
on Mortality Table in Indonesia 2011 (“TMI 2011”).
Management reviewed the assumptions used and is of the opinion that the assumptions are reasonable.
Management believes that the provision for severance provided is adequate to cover the potential liability
required by Labour Law No. 13/2003.
The weighted average duration of the Company’s benefits liabilities as at December 31, 2017 is 15 years.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
78
26. LONG-TERM EMPLOYEE BENEFITS LIABILITIES (Continued)
Expected maturity analysis of undiscounted pension benefits are as follows:
2 0 1 7
Less than a year 506,721
Between one and two years 850,924
Between two and five years 2,882,050
Between five and ten years 4,544,049
More than ten years 5,124,905
Net profit 13,908,649
The sensitivity of the present value of defined benefit obligation and current service cost to changes in the
weighted principal assumptions of 1% is as follows:
Descriptions
Discount Rate Discount Rate
8% 9%
US$ % US$ %
December 31, 2017: 15,155,065 8.96% 12,823,893 -7.80%
Present value of defined obligation 1,163,899 12.20% 932,429 -10.11%
Current service cost
Descriptions
Discount Rate Discount Rate
7.30% 9.30%
US$ % US$ %
December 31, 2016:
Present value of defined obligation 12,128,777 8.73% 10,301,810 -7.65%
Current service cost 804,407 11.88% 647,510 -9.94%
Historical information of present value of experience adjustment on plan liabilities was as follows:
2 0 1 7 2 0 1 6 2 0 1 5 2 0 1 4 2 0 1 3
US$ US$ US$ US$ US$
Present value of defined benefit obligation 13,908,649 11,154,807 9,759,801 12,125,149 9,975,563
Fair value of plan assets ─ ─ ─ ─ ─
Deficit in the plan 13,908,649 11,154,807 9,759,801 12,125,149 9,975,563
Experience adjustments on plan liabilities 546,137 (209,991 ) (1,256,157 ) 615,393 2,301,812
Experience adjustments on plan assets ─ ─ ─ ─ ─
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
79
27. TAXATION
a. Prepaid Taxes
2 0 1 7 2 0 1 6
US$ US$
Overpayment of corporate income tax
2015 2,908,430
2016 1,292,336 1,292,336
2017 2,903,110
Value added Tax 6,539,043 5,977,531
Total 10,734,489 10,178,297
b. Taxes Payable
2 0 1 7 2 0 1 6
US$ US$
Income tax article 21 110,847 86,018
Income tax article 23 38,288 30,333
Income tax article 26 36,308 27,579
Income tax article 4 (2) 235 1,765
Total 185,678 145,695
c. Corporate Income Tax
A reconciliation between loss before income tax as shown in the consolidated statements of profit or
loss and other comprehensive income and estimated taxable loss which was calculated by the
Company for the years ended December 31, 2017 and 2016 are as follows:
2 0 1 7 2 0 1 6
US$ US$
Loss before income tax per consolidated statements of profit or loss
and other comprehensive income (983,840) (6,978,741 )
Profit before income tax of the Subsidiaries
Loss before income tax per statements of profit or loss
and other comprehensive income of the Company (983,840) (6,978,741 )
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
80
27. TAXATION (Continued)
c. Corporate Income Tax (Continued)
A reconciliation between loss before income tax as shown in the consolidated statements of profit or
loss and other comprehensive income and estimated taxable loss which was calculated by the Parent
Company for the years ended December 31, 2017 and 2016 are as follows: (Continued)
2 0 1 7 2 0 1 6
US$ US$
Fiscal adjustments consisted of:
Permanent difference:
Non deductible expenses (non taxable income):
Income tax article 21 1,304,246 1,090,680
Tax expense 157,908 196,116
Entertainment and representation 125,341 118,980
Donation 189,934 119,321
Interest income (8,557 ) (22,498 )
Gain on foreign exchange rate, net 464,489 36,818,499
2,233,361 38,321,098
Timing differences:
Depreciation expense of property, plant and
Equipment (14,652,505 ) (16,829,481 )
Long-term employee benefits liabilities 1,065,511 1,006,917
Intangible assets 6,271 (106,802 )
Amortization of deferred revenues 12,563 12,564
Amortization of deferred charges (101,794 ) (107,152 )
(13,669,954 ) (16,023,954 )
Estimated taxable profit (loss) for the year before
fiscal loss carry forward (12,420,433 ) 15,318,403
Fiscal loss carry forward (401,025,267 ) (113,021,952 )
Total estimated accumulated taxable loss (413,445,700 ) (97,703,549 )
Estimated corporate income tax
Prepaid taxes:
Income tax article 22 (2,903,110 ) (1,292,336 )
Estimated overpayment of corporate income tax (2,903,110 ) (1,292,336 )
Adjustment on corporate income tax (7,236 ) (883,641 )
The Company has reported the overpayment of corporate income tax for year 2016 amounting to
Rp 28,688,919,000, and the yearly 2016 corporate income tax return was submitted to the tax office
in June 2017, after the issuance of audit report. The tax examination by the Tax Authorities relating to
this overpayment of corporate income tax is still ongoing.
The Company received and recorded its 2015 yearly corporate income tax return was US$ 2,901,194
in June 2017. Consequently, the differences between the amount receive against the estimated
overpayment of corporate income tax in the year 2015 is amounted to US$ 7,236 are recorded as part
of current income tax expenses in the statements of profit or loss and other comprehensive income.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
81
27. TAXATION (Continued)
c. Corporate Income Tax (Continued)
• Reconciliation the estimated taxable loss between the amounts computed by
functional/presentation currency and for axation purposes for the years ended December 31, 2017
and 2016 are as follows: December 31, 2017
Tax Reporting
Currency
Exchange
Rate
Tax Reporting
Currency
Functional
Currency
Rp Rp US$ US$
Loss before income tax as
consolidated statements of profit
or loss and other comprehensive
income
(106,188,500,378
)
(983,840
)
(983,840
)
Profit before income tax of
the Subsidiaries
Loss before income tax per
statements of profit or loss and
other comprehensive income
of the Company (106,188,500,378 ) (983,840 ) (983,840 )
Fiscal adjustments consisted of:
Permanent difference:
Non deductible expenses
(non taxable income):
Income tax article 21 17,452,858,243 13,382 1,304,246 1,304,246 Tax expenses 2,103,369,429 13,320 157,908 157,908 Entertainment 1,678,722,391 13,393 125,341 125,341 Donation 2,538,185,900 13,364 189,934 189,934 Interest income (114,596,600 ) 13,392 (8,557 ) (8,557 ) Gain on foreign exchange rate 464,489 464,489
23,658,539,363 2,233,361 2,233,361
Timing differences:
Depreciation expense of
property, plant and
equipment (101,653,837,598 ) 6,938 (14,652,505 ) (14,652,505 )
Long-term employee benefits
liabilities 15,684,876,610 14,721 1,065,511 1,065,511
Amortization of deferred
revenue 121,949,710 9,707 12,563 12,563
Intangible assets 72,444,868 11,552 6,271 6,271
Amortization of deferred
Charges (228,306,571 ) 2,243 (101,794 ) (101,794 )
(86,002,872,981 ) (13,669,954 ) (13,669,954 )
Estimated taxable loss for the year
before fiscal loss carry forward (168,532,833,996 ) 13,569 (12,420,434 ) (12,420,434 )
Fiscal loss carry forward (4,955,089,294,203 ) 12,356 (401,025,267 ) (401,025,267 )
Total estimated accumulated
taxable loss
(5,123,622,128,199
)
(413,445,701
)
(413,445,701
)
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
82
27. TAXATION (Continued)
c. Corporate Income Tax (Continued)
December 31, 2017
Tax Reporting
Currency
Exchange
Rate
Tax Reporting
Currency
Functional
Currency
Rp Rp US$ US$
Estimated corporate income tax
Prepaid taxes:
Income tax article 22 (38,831,696,422 ) 13,376 (2,903,110 ) (2,903,110 )
Estimated overpayment of
corporate income tax
(38,831,696,422
)
(2,903,110
)
(2,903,110
)
Adjustment on corporate income tax (15,248,459 ) (7,236 ) (7,236 )
December 31, 2016
Tax Reporting
Currency
Exchange
Rate
Tax Reporting
Currency
Functional
Currency
Rp Rp US$ US$
Loss before income tax per
consolidated statements of profit
or loss and other comprehensive
income
291,250,377,730
−
(6,978,741
)
(6,978,741
)
Profit before income tax of
the Subsidiaries
Loss before income tax per
statements of profit or loss and
other comprehensive income
of the Company 291,250,377,730 − (6,978,741 ) (6,978,741 )
Fiscal adjustments consisted of:
Permanent difference:
Non deductible expenses
(non taxable income):
Income tax article 21 14,542,968,575 13,334 1,090,680 1,090,680
Tax expenses 2,627,925,403 13,400 196,116 196,116
Entertainment 1,580,392,170 13,283 118,980 118,980
Donation 1,590,388,175 13,329 119,321 119,321
Interest income (279,863,116 ) 12,439 (22,498 ) (22,498 )
Loss on foreign exchange rate 36,818,493 36,818,493
20,061,811,207 38,321,092 38,321,092
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
83
27. TAXATION (Continued)
c. Corporate Income Tax (Continued)
December 31, 2016
Tax Reporting
Currency
Exchange
Rate
Tax Reporting
Currency
Functional
Currency
Rp Rp US$ US$
Timing differences:
Depreciation expense of
property, plant and equipment (117,766,711,777 ) 6,998 (16,829,481 ) (16,829,481 )
Long-term employee benefits
liabilities 13,935,945,517 13,840 1,006,917 1,006,917
Amortization of deferred revenue 121,949,710 9,707 12,564 12,564
Intangible assets (1,268,989,738 ) 11882 (106,802 ) (106,802 )
Amortization of deferred charges (240,322,712 ) 2,243 (107,152 ) (107,152 )
(105,218,129,000 ) (16,023,954 ) (16,023,954 )
Estimated taxable profit for the year
before fiscal loss carry forward 206,094,059,937 13,454 15,318,403 15,335,033
Fiscal loss carry forward (1,541,619,431,131 ) 13,640 (113,021,952 ) (113,021,952 )
Total estimated accumulated
taxable loss
(1,335,525,371,194
)
(97,703,549
)
(97,686,919
)
Estimated corporate income tax
Prepaid taxes:
Income tax article 22 (30,798,528,472 ) 23,831 (1,292,336 ) (1,292,336 )
Estimated overpayment of
corporate income tax
(30,798,528,472
)
(1,292,336
)
(1,292,336
)
Adjustment on corporate income tax (1,790,481,492 ) (883,641 ) (883,641 )
The estimated taxable profit for the year ended December 31, 2016 as reported in the 2016 corporate
income tax return amounted to Rp 319,671,944,640 and the tax return was submitted to the tax office
in June 2017.
In these consolidated financial statements, the amount of taxable loss as at December 31, 2017
amounted to US$ 413,445,701 is based on preliminary calculations, as the Company has not yet
submitted its yearly 2017 corporate income tax returns.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
84
27. TAXATION (Continued)
d. Deferred Tax Assets (Liabilities)
The calculation of deferred tax assets and deferred tax liabilities with the maximum tax tariff of 25%
in 2017 and 2016 are as follows:
2 0 1 7
As at
December 31,
2016
Credited (charged) to
the statement of
profit or loss and
other comprehensive
income for the year
Credited
(charged) to
equity
As at
December 31,
2017
US$ US$ US$ US$
Deferred tax assets (liabilities):
Accumulated taxable loss 24,421,729 78,939,696 – 103,361,425
Valuation allowance (24,421,729 ) (78,939,696 ) – (103,361,425 )
Depreciation expense of
property, plant and equipment
(599,046
)
(3,663,126
)
–
(4,262,172
)
Long-term employee benefit liabilities 2,788,701 266,378 422,083 3,477,162
Intangible assets (26,830 ) 1,568 – (25,262 )
Amortization of deferred revenues (49,991 ) 3,141 – (46,850 )
Amortization of deferred charges 688,319 (25,449 ) – 662,870
Total deferred tax assets (liabilities) 2,801,154 (3,417,488 ) 422,083 (194,252 )
2 0 1 6
As at
December 31,
2015
Credited (charged) to
the statement of
profit or loss and
other comprehensive
income for the year
Credited
(charged) to
equity
As at
December 31,
2016
US$ US$ US$ US$
Deferred tax assets (liabilities):
Accumulated taxable loss 39,519,978 (15,098,249 ) – 24,421,729
Valuation allowance (39,519,978 ) 15,098,249 – (24,421,729 )
Depreciation expense of
property, plant and equipment
3,608,324
(4,207,370
)
–
(599,046
)
Long-term employee benefit liabilities 2,439,950 251,729 97,022 2,788,701
Intangible assets (130 ) (26,701 ) – (26,831 )
Amortization of deferred revenues (53,131 ) 3,141 – (49,990 )
Amortization of deferred charges 715,106 (26,786 ) – 688,320
Total deferred tax assets 6,710,119 (4,005,987 ) 97,022 2,801,154
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
85
27. TAXATION (Continued)
d. Deferred Tax Assets (Liabilities) (Continued)
The recognition of the Company and its Subsidiaries’ deferred tax assets is based on management’s
estimates of the results of future operations including an estimate of output levels and commodity prices
for the Company and its Subsidiaries’ products, the timing and extent of the reversal of certain deferred tax
liabilities, and certain tax planning strategies. Based on these estimates, management believes that the
Company and its Subsidiaries will not realize its deferred tax asset from fiscal loss carry forward.
Accordingly, the management had made a valuation allowance of US$ 103,361,425 and US$ 24,421,729
as at December 31, 2017 and 2016, respectively.
The basis supporting recognition of the deferred tax assets is reviewed regularly by management.
A reconciliation between the total tax expense and the amounts computed by applying the effective tax
rate to loss before income tax is as follows:
2 0 1 7 2 0 1 6
US$ US$
Loss before income tax as consolidated
statements of profit or loss and other comprehensive
income
(1,288,120
)
(6,962,105
)
Profit before income tax of the Subsidiaries
Loss before income tax as statement of profit or loss and
other comprehensive income of the Company
(1,288,120
)
(6,962,105
)
Tax benefit at tax rate 25% (322,030 ) (1,740,526 )
Taxable loss (profit) at tax rate 25% 3,105,108 (3,833,760 )
Adjustment on 2014 corporate income tax 883,641
Adjustment on 2015 corporate income tax 7,236
Tax effect of non-deductible expense
(non-taxable income) 634,410 9,580,273
Total tax expense 3,424,724 4,889,628
e. Tax Expense 2 0 1 7 2 0 1 6
US$ US$
Current tax expense:
The Company (7,236 ) (883,641 )
Subsidiaries – –
(7,236 ) (883,641 )
Deferred tax expense - net:
The Company (3,417,488 ) (4,005,987 )
Subsidiaries – –
(3,417,488 ) (4,005,987 )
Total tax expense (3,424,724 ) (4,889,628 )
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
86
27. TAXATION (Continued)
f. Tax Assessment Letter
a. Parent Company
On February 27, 2017, the Company received a letter from the Indonesian Tax Authorities
No. S-161 / PJ.05 / 2017 as a continuance of the Evidence Preliminary Examination of one of
the Company’s customer. Due to the Evidence of Preliminary Examination, all of the tax
examination related to Value Tax Added refunds for the period from July 2015 until April
2016 is postponed for a while. Further, until the date of the audit report, the result has not yet
been determined.
On December 14, 2016, the Indonesian Tax Authorities (Direktorat Jenderal Pajak Kantor
Pelayanan Pajak Wajib Pajak Besar Dua) issued a Value Added Tax assessment letter for
fiscal period December 2014. Based on the Indonesian Tax Authorities letter
No. 00124/207/14/092/16, the Company had additional tax liability of Rp 28,299,736.
On December 14, 2016, the Indonesian Tax Authorities (Direktorat Jenderal Pajak Kantor
Pelayanan Pajak Wajib Pajak Besar Dua) issued a Value Added Tax assessment letter for
fiscal period January 2015. Based on the Indonesian Tax Authorities letter
No. 00038/207/15/092/16, the Company had no additional tax liability or overpayment.
On December 14, 2016, the Indonesian Tax Authorities (Direktorat Jenderal Pajak Kantor
Pelayanan Pajak Wajib Pajak Besar Dua) issued a Value Added Tax assessment letter for
fiscal period February 2015. Based on the Indonesian Tax Authorities letter
No. 00039/207/15/092/16, the Company had no additional tax liability or overpayment.
On December 14, 2016, the Indonesian Tax Authorities (Direktorat Jenderal Pajak Kantor
Pelayanan Pajak Wajib Pajak Besar Dua) issued a Value Added Tax assessment letter for
fiscal period March 2015. Based on the Indonesian Tax Authorities letter
No. 00040/207/15/092/16, the Company had no additional tax liability or overpayment.
On December 14, 2016, the Indonesian Tax Authorities (Direktorat Jenderal Pajak Kantor
Pelayanan Pajak Wajib Pajak Besar Dua) issued a Value Added Tax assessment letter for
fiscal period April 2015. Based on the Indonesian Tax Authorities letter
No. 00041/207/15/092/16, the Company had no additional tax liability or overpayment.
On October 3, 2016, the Indonesian Tax Authorities (Direktorat Jenderal Pajak Kantor
Pelayanan Pajak Wajib Pajak Besar Dua) issued a Value Added Tax assessment letter for
fiscal period May 2015. Based on the Indonesian Tax Authorities letter
No. 00129/407/15/092/16, the Company had an overpayment of Rp 10,058,236,238. The
overpayment of Value Added Tax has been received in October 2016.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
87
27. TAXATION (Continued)
f. Tax Assessment Letter (Continued)
a. Parent Company (Continued)
On December 14, 2016, the Indonesian Tax Authorities (Direktorat Jenderal Pajak Kantor
Pelayanan Pajak Wajib Pajak Besar Dua) issued a Value Added Tax assessment letter for
fiscal period June 2015. Based on the Indonesian Tax Authorities letter
No. 00143/207/15/092/16, the Company had an overpayment of Rp 15,044,633,904. The
overpayment of Value Added Tax has been received in January 2017.
On May 31, 2016, the Indonesian Tax Authorities (Direktorat Jenderal Pajak Kantor
Pelayanan Pajak Wajib Pajak Besar Dua) issued a Corporate Income Tax assessment letter for
fiscal year 2014. Based on the Indonesian Tax Authorities letter No. 00067/406/14/092/16,
the Company had an overpayment of Rp 64,420,363,000. The overpayment of Corporate
Income Tax were received in June 2016.
On May 14, 2009, the Indonesian Tax Authorities (Direktorat Jenderal Pajak Kantor
Pelayanan Pajak Wajib Pajak Besar Dua) issued an Income Tax Article 26 assessment letter
for fiscal year 2007. Based on the Indonesian Tax Authorities letter No. 012/204/07/092/09,
the Company had additional tax liability of Rp 20,622,616,789. The tax liability had been
compensated in May 28, 2009 with the overpayment of 2007 corporate income tax of
Rp 19,748,829,575, and the remaining balance of Rp 873,787,214 was paid by cash on June
11, 2009. Further, based on the decision letter from Indonesian Tax Court vide
No. PUT.39097/PP/M.11/13/2012 dated July 26, 2012, the tax liability for 2007 was assessed
at Rp 78,391,606. Accordingly, the Company received the refund of Rp 20,544,225,183 in
August 2012. Based on the Tax Court’s decision No. 978/PK/PJK/2014 dated March 12, 2015,
the petition is denied by the Supreme Court.
Further, on November 14, 2016, the Indonesian Tax Authorities (Direktorat Jenderal Pajak
Kantor Pelayanan Pajak Wajib Pajak Besar Dua) issued SKPPIB (Surat Keputusan Pajak
Pemberian Imbalan Bunga) for Income Tax Article 26 for fiscal year January to December
2017. Based on the tax assessment letter, the Company received interest income for Income
Tax Article 26 amounting to Rp 9,861,228,088. This amount had been received
on January 2017.
On September 30, 2010, the Indonesian Tax Authorities (Direktorat Jenderal Pajak Kantor
Pelayanan Pajak Wajib Pajak Besar Dua) issued an Income Tax Article 26 assessment letter
for fiscal year 2006. Based on the Indonesian Tax Authorities letter No. 00015/204/06/092/10,
the Company had an overpayment of Income Tax Article 26 of Rp 8,844,864,229. In addition
to that, the Company also received the interest of Rp 4,245,534,829. Total amount of
Rp 13,090,399,058 had been received on November 24, 2010. Direktorat Jenderal Pajak has
filed a Review Petition (PK) against the verdict of refund. If Review Petition is accepted and
approved, the Company has to refund the above amount along with accrued interest. As at the
authorization date of these consolidated financial statements, the result has not been
determined yet.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
88
27. TAXATION (Continued)
f. Tax Assessment Letter (Continued)
a. Parent Company (Continued)
On April 21, 2010, the Indonesian Tax Authorities (Direktorat Jenderal Pajak Kantor
Pelayanan Pajak Wajib Pajak Besar Dua) issued an Income Tax Article 26 assessment letter
for January to December 2008. Based on the Directorate General of Tax No.
00014/204/08/092/10, the Company had additional tax liability of Rp 5,280,764,328 and
administrative penalties amounting to Rp 1,689,844,585. The Direktorat Jenderal Pajak has
filed a Review Petition (PK) against the verdict of refund on January 8, 2015 for the decision
letter No. Put.55433 / PP / M.XIA / 13/2014. As at the authorization date of these consolidated
financial statements, the result has not been determined yet.
g. Administration
The Corporate Income Tax for year 2016 are being under examined by the Tax Authorities. As at
the authorization date of these consolidated financial statements, the result has not been
determined yet.
Under the taxation laws of Indonesia, the Company and its Subsidiaries submits tax returns on the
basis of self assessment. Under prevailing regulations the Director General of Tax (“DGT”) may
assess or amend taxes within a certain period. For the fiscal years of 2007 and before, this period
is within 10 (ten) years of the time the tax become due, but not later than 2013, while for the fiscal
years of 2008 and onwards, the period is within 5 (five) years of the time the tax becomes due.
The Company and its Subsidiaries’ management believe that the Company and its Subsidiaries
have complied with the prevailing tax regulations.
28. SHARE CAPITAL
Pursuant to the notarial deed of Januar Tirtaamidjaja, S.H., No. 22 dated February 15, 1984, the authorized
capital amounts to Rp 15,000,000,000 consisting of 600 shares with a par value of Rp 25,000,000 each.
Issued and fully paid-up capital amounts to Rp 7,500,000,000 (equivalent to US$ 6,710,179) or consist of
300 shares.
Pursuant to the General Shareholders Meeting with notarial deed of Aulia Taufani, S.H., No. 100 dated
December 27, 2002, the shareholders agreed to approve the changes in the Company’s Articles of
Association to increase the authorized capital from Rp 8,500,000,000,000 to become
Rp 16,000,000,000,000 and issued and paid-in capital from Rp 2,196,960,000,000 to become
Rp 4,174,224,000,000.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
89
28. SHARE CAPITAL (Continued)
Pursuant to the notarial deed of Aulia Taufan, S.H., No. 12 dated July 4, 2006 regarding the amendment
of the Company’s Article of Association and the Extraordinary Shareholders’ Meeting with notarial deed
of the same notary No. 111 dated June 21, 2006, the shareholders approved the following:
• The authorized capital of the Company amounts to Rp 16,000,000,000,000, issued and fully paid up
capital amounts to Rp 4,174,224,000,000.
• The allocation of 83,484,480,000 new shares (series C) par value Rp 2 each with to regard to the debt
to equity conversion. The new shares of 43,144,238,750 shares for the unsecured creditors and new
working capital lender and 40,340,241,250 shares for secured creditors.
• To record the paid in capital in excess of par value from debt to equity conversion of
Rp 5,574,513,535,500 (equivalent to US$ 618,017,022).
The deed was approved by the Ministry of Justice and Human Right in decision letter No. C-25038
HT.01.04.TH.2006 dated August 28, 2006 and registered in the Department of Industry and Trade under
No. 233/BH-1/IX/2006 dated September 1, 2006.
As at December 31, 2006, the authorized capital of the Company amounted to Rp 16,000,000,000,000
consisting of 247,145,100,800 shares with the following classifications.
• Series A of 17,000,000,000 shares with par value of Rp 500 each.
• Series B of 146,660,620,800 shares with par value of Rp 50 each.
• Series C of 83,484,480,000 shares with par value of Rp 2 each.
Issued and fully paid up capital was Rp 2,283,248,477,500 consisting of Series A of 4,393,920,000 shares,
and Series C of 43,144,238,750 shares.
In February 2008, the Company amended its Articles of Association in connection with the reverse stock
split with ratio 20: 1. Based on the notarial deed of Sutjipto S.H., No. 91 dated February 21, 2008 regarding
the changes of the Articles of Association, the authorized capital of the Company amounts to
Rp 16,000,000,000,000 consisting of 12,357,255,040 shares with following classifications:
Series A of 850,000,000 shares with par value of Rp 10,000 each.
Series B of 7,333,031,040 shares with par value of Rp 1,000 each.
Series C of 4,174,224,000 shares with par value of Rp 40 each.
Issued and fully paid in capital amounted to Rp 4,174,224,000,000 (26%) consist of:
219,696,000 shares with par value of Rp 10,000 each or totaling Rp 2,196,960,000,000.
1,890,975,522 shares with par value of Rp 1,000 each or totaling Rp 1,890,975,522,000.
2,157,211,950 shares with par value of Rp 40 each or totaling Rp 86,288,478,000.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
90
28. SHARE CAPITAL (Continued)
The composition of shareholders as at February 21, 2008 based on notarial deed is as follows:
Numbers of Percentage of Total
Stockholders Shares ownership Rp US$
%
Shares Series A 219,696,000 5.15 2,196,960,000,000 625,598,841
Shares Series B 1,890,975,522 44.30 1,890,975,522,000 209,642,519
Shares Series C 2,157,211,950 50.55 86,288,478,000 9,566,350
Total 4,267,883,472 100.00 4,174,224,000,000 844,807,710
The deed was approved by the Ministry of Justice and Human Rights in decision letter
No. AHU-10588.AH.01.02 Tahun 2008 dated March 3, 2008.
Based on the Extraordinary General Stockholders Meeting (RUPSLB) held on March 24, 2009 and based
on notarial deed No. 91 dated March 24, 2009 of Sutjipto, S.H., notary in Jakarta, the shareholders
approved the issuance of 118,845,397 new authorized shares series C (5% of issued and paid-up capital)
without preemptive rights in the framework of Grant Date I of stock options programme to the Company’s
management and employees (Management Employee Stock Option Programme / MESOP). The notarial
deed was approved by the Ministry of Law and Human Rights of the Republic of Indonesia based on
decision letter No. AHU-0052619.AH.01.09.Tahun 2009 dated August 14, 2009. Based on the Company’s
schedule that was reported to PT Bursa Efek Indonesia dated March 17, 2009, this program will be
implemented on the period below:
Period Implementation Period
I 5 (five) trading days starting from April 1, 2009
II 5 (five) trading days starting from October 1, 2009
III 5 (five) trading days starting from April 1, 2010
IV 5 (five) trading days starting from October 1, 2010
V 5 (five) trading days starting from April 1, 2011
VI 5 (five) trading days starting from October 3, 2011
VII 5 (five) trading days starting from February 1, 2012
Based on the notarial deed of Aryanti Artisari, S.H., M.Kn. No. 107 dated February 23, 2012, the
shareholders approved the exercise price for the first stock option programme of Rp 45 per share. On
March 5, 2012, the Company issued 118,845,397 new authorized shares series C with par value of Rp 40
each or Rp 4,753,815,880 (equivalent to US$ 524,125). The deed was approved by the Ministry of Law and
Human Rights in decision letter No. AHU-0018443.AH.01.09.Tahun 2012 dated February 29, 2012.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
91
28. SHARE CAPITAL (Continued)
The composition of shareholders as at December 31, 2017 and 2016 based on the stockholder’s list issued by
the Stock Administrative Office, PT Datindo Entrycom, of listed shares of the Company is as follows:
2 0 1 7
Numbers of Percentage of Total
Shareholders Shares Ownership Rp US$
%
Shares Series A:
PT Multikarsa Investama
(shares under sale to PT Bina Prima
Perdana)
131,394,719
5.26
1,313,947,195,000 374,155,125
Public (below 5% each) 88,301,281 3.54 883,012,805,000 251,443,716
219,696,000 8.80 2,196,960,000,000 625,598,841
Shares Series B: – – – –
Shares Series C:
Damiano Investments B.V.,
Netherland
1,443,805,382
57.85
57,752,215,280
6,402,685
Others 649,611,983 26.03 25,984,479,320 2,880,763
Unsettled 182,639,982 7.32 7,305,599,320 807,027
2,276,057,347 91.20 91,042,293,920 10,090,475
Total 2,495,753,347 100.00 2,288,002,293,920 635,689,316
2 0 1 6
Numbers of Percentage of Total
Shareholders Shares Ownership Rp US$
%
Shares Series A:
PT Multikarsa Investama
(shares under sale to PT Bina Prima
Perdana)
131,394,719
5.26
1,313,947,195,000 374,155,125
Public (below 5% each) 88,301,281 3.54 883,012,805,000 251,443,716
219,696,000 8.80 2,196,960,000,000 625,598,841
Shares Series B: – – – –
Shares Series C:
Damiano Investments B.V.,
Netherland
1,443,805,382
57.85
57,752,215,280
6,402,685
Others 649,611,983 26.03 25,984,479,320 2,880,763
Unsettled 182,639,982 7.32 7,305,599,320 807,027
2,276,057,347 91.20 91,042,293,920 10,090,475
Total 2,495,753,347 100.00 2,288,002,293,920 635,689,316
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
92
28. SHARE CAPITAL (Continued)
Unsettled shares series C represent the creditors that have not exchanged with the new shares (through The
Hong kong and Shanghai Banking Corporation Limited, Hong Kong – the custodian). These shareholders’
name is not yet registered in PT Datindo Entrycom (share administrator).
Further, based on the Extraordinary General Stockholders Meeting (RUPSLB) held on June 18, 2012 and
based on notarial deed No. 88 dated June 18, 2012 of Aryanti Artisari, S.H., M.Kn., notary in Jakarta, the
shareholders approved the issuance of 74,872,600 new authorized shares series C (3% of issued and paid-
up capital) without preemptive rights in the framework of Grant Date II of stock options programme to the
Company’s management and employees (Management Employee Stock Option Programme / MESOP).
The Company’s schedule that was reported to PT Bursa Efek Indonesia dated March 17, 2012 is as follows:
Period Implementation Period
I Starting from December 15, 2012 up to December 22, 2012
II Starting from June 18, 2013 up to June 24, 2013
III Starting from December 18, 2013 up to December 24, 2013
IV Starting from June 2, 2014 up to June 24, 2014
The Company has sent a letter No. 068/APF-CS/VI/2014 dated June 25, 2014 and No. 071/APF-
CS/VII/2014 dated July 7, 2014 to Financial Service Authority (OJK) regarding the cancellation of
MESOP implementation due to the non-completion of secured debts restructuring. Further, based on the
Extraordinary General Stockholders Meeting (RUPSLB) held on June 16, 2015 notarial deed No. 49 dated
June 16, 2015 of Aryanti Artisari, S.H., M.Kn, the shareholders approved the cancelation of MESOP
implementation.
According to notarial deed of DR. H. Teddy Anwar, S.H., Spn. No. 111 dated August 16, 2002, part of PT
Multikarsa Investama’s shares of 2,454,081,290 (or after reverse stock 122,704,064 shares) were sold to
PT Bina Prima Perdana. However, based on the data issued by PT Datindo Entrycom, the shares are still
registered under the name of PT Multikarsa Investama.
As at December 31, 2017 and 2016, the shares owned by the public included those owned by the directors
of the Company are as follows:
2 0 1 7 2 0 1 6
Mr. Seeniappa Jegatheesan 29,713,388 29,713,388
Mr. Peter Vinzenz Merkle 2,711,000 2,711,000
Mr. Bonar Firman Hasiholan Sirait 1,359,500 1,359,500
Total 33,783,888 33,783,888
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
93
29. ADDITIONAL PAID-IN CAPITAL
2 0 1 7 2 0 1 6
US$ US$
Paid-in capital in excess of par value from
public offering in 1990 13,571,804 13,571,804
Shares issuance cost (7,263,223 ) (7,263,223 )
Subtotal 6,308,581 6,308,581
Difference on restructuring among companies
under common control in 2001 (Note 1c)
(21,339
)
(21,339
)
Paid-in capital in excess of par value from
conversion of debt to equity in 2006 618,017,022 618,017,022
Paid-in capital in excess of par value from
1st MESOP in 2012 65,516 65,516
Shares issuance cost (46,612 ) (46,612 )
Subtotal 18,904 18,904
Total 624,323,168 624,323,168
As per the Composition Proposal (Peace Plan) the Company is issuing 16,780,718,747 shares series C to
unsecured creditors and 26,363,520,000 shares series C for Damiano Investments B.V., Netherland in
regard to debt to equity conversion of Rp 5,660,802,013,000.
Further, based on the amendment of the Company’s Articles of Association dated July 4, 2006 by notarial
deed No. 12 of Aulia Taufani, S.H., the Company has recognized the advances for future stock subscription
of Rp 5,660,802,013,000 as issued and paid-in capital amounting to Rp 86,288,477,500 and as additional
paid-in capital amounting to Rp 5,574,513,535,500 (equivalent to US$ 618,017,022).
Further, through the framework of Grant Date I of stock options programme in February 23, 2012, the
Company received Rp 5,348,042,865 for the issuance of 118,845,397 new authorized shares series C, with
a nominal value amounting to Rp 40 per share. The conversion rate of US$ 1 is Rp 9,070.
30. APPROPRIATE RETAINED EARNINGS
Under Indonesian Limited Company Law, the Company is required to set up a statutory reserve amounting
to at least 20% of the Company’s issued and paid up capital.
And, based on the annual general stockholders’ meeting as stated in notarial deed No.351 dated
June 23, 1997 and No.402 dated June 24, 1996 of Adam Kasdarmadji SH, notary public in Jakarta, the
shareholders agreed to appropriate a general reserve aggregating Rp 8,280,000,000 (equivalent to
US$ 2,345,301) from retained earnings in accordance with article 61 of the Corporate Law No. 1 year
1995 for Limited Liability Companies. In 2017 and 2016, the Company was exempted from reserving
additional amounts due to its accumulated deficit.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
94
31. LOSS PER SHARE
2 0 1 7 2 0 1 6
US$ US$
Weighted average number of shares outstanding 2,495,753,347 2,495,753,347
Total loss for the year (4,408,564 ) (11,868,369 )
Basic loss per share attributable to the
owners of the Company
(0.002
)
(0.004
)
32. NON-CASH TRANSACTIONS
In 2017 and 2016, the principal non-cash transaction consist of:
a. An acquisition vehicles by means of credit financing payable as discussed in Notes 14 and 22.
b. A reclassification of interest payables from accrued expenses to unsecured notes payables as discussed
in notes 17 and 20.
33. INSURANCE CLAIM SETTLEMENT, NET
2 0 1 7 2 0 1 6
US$ US$
Gain (loss) on fire:
Receipt from insurance claim 1,463,940 4,932,918
Net gain on fire 1,463,940 4,932,918
Receipt insurance claim on transit inventory loss
from damage 34,026 705,484
Total 1,497,966 5,638,402
In March 2014, a manufacturing unit comprising of building and machinery at Semarang plant were
affected by fire. The Company has received a portion of insurance settlement from the Insurance Company.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
95
34. NET SALES
2 0 1 7 2 0 1 6
US$ US$
Local
Fiber 136,801,577 136,675,846
Yarn 159,314,361 135,164,885
Chips 30,645,195 21,438,715
Fleece (Knitting) 6,500,367 7,904,676
333,261,500 301,184,122
Export
Yarn 47,776,303 38,129,749
Fiber 12,111,423 13,131,574
Chips 1,415,470 1,399,600
Fleece (Knitting) 1,289,382 683,263
Others 764,390 1,220,632
63,356,968 54,564,818
Total 396,618,468 355,748,940
In 2017 and 2016, net sales of fleece (knitting) were US$ 7,789,749 and US$ 8,587,959, respectively
consists of sales to third parties. The product is manufactured by PT Texmaco Jaya Tbk (under bankruptcy)
based on tolling basis.
In 2017 and 2016, there were no sales earned from related parties.
In 2017 and 2016, no sales to third parties exceeded 100% of the operating revenues.
35. OTHER OPERATING REVENUES
2 0 1 7 2 0 1 6
US$ US$
Indirect materials damage 15,656 701,581
Product non-standard and others 3,142,747 4,030,231
Total 3,158,403 4,731,812
In 2017 and 2016, other operating revenues of fleece were US$ 69,304 and US$ 86,795, respectively
represents the other operating revenues to third parties. The product is manufactured by PT Texmaco Jaya
Tbk (under bankruptcy) based on tolling basis.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
96
35. OTHER OPERATING REVENUES (Continued)
In 2017 and 2016, there were no other operating revenues earned from related parties.
In 2017 and 2016, no sales to third parties exceeded 10% of the operating revenues.
36. COST OF GOODS SOLD
2 0 1 7 2 0 1 6
US$ US$
Raw materials
At beginning of year 9,859,792 8,335,248
Purchases 253,156,917 225,178,798
Available for use 263,016,709 233,514,046
At end of year (10,304,519 ) (9,859,792 )
Raw materials used 252,712,190 223,654,254
Indirect materials
At beginning of year 20,315,942 20,204,877
Purchases 37,122,831 37,365,367
Available for use 57,438,773 57,570,244
At end of year (20,028,613 ) (20,315,942 )
Indirect materials used 37,410,160 37,254,302
Direct labor 9,882,985 9,761,244
Manufacturing expense (Note 37) 66,350,115 68,801,649
Total manufacturing cost 366,355,450 339,471,449
Work in process
At beginning of year 3,707,551 5,479,938
At end of year (4,150,302 ) (3,707,551 )
Cost of goods manufactured 365,912,699 341,243,836
Finished goods
At beginning of year 25,972,215 27,267,217
At end of year (20,073,127 ) (25,972,215 )
Loss on inventory write-down − 41,365
Reversal of inventory write-down (Note 9) (25,830 ) −
Total 371,785,957 342,580,203
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
97
36. COST OF GOODS SOLD (Continued)
In 2017 and 2016, total raw material and indirect material used included the raw material used for fleece
(knitting) product after eliminating intercompany account were US$ 1,704,822 and US$ 1,698,125,
respectively.
In 2017 and 2016, there are no purchases to related parties.
In 2017 and 2016, purchases to third parties exceeded 10% of total purchases are as follows:
2 0 1 7
US$ Percentage
PT Polychem Indonesia 48,713,635 18.06%
2 0 1 6
US$ Percentage
PT Polychem Indonesia 50,504,721 13.26%
37. MANUFACTURING EXPENSES
2 0 1 7 2 0 1 6
US$ US$
Electricity and gas 50,092,662 50,845,347
Depreciation expense of property, plant and equipment (Note 14) 4,376,710 4,652,987
Processing fee (tolling) 2,574,743 2,654,067
Freight 2,538,041 3,012,082
Insurance 2,069,196 2,213,980
Repair and maintenance 1,484,616 1,486,475
Salary and allowances 1,285,809 1,289,468
Rental 1,099,941 1,951,757
Others 828,397 695,486
Total 66,350,115 68,801,649
In 2017, the processing fee (tolling) of US$ 2,574,743 represent the processing fee to PT Texmaco Jaya
Tbk (under bankruptcy) amounting to US$ 468,456 and PT Multikarsa Investama amounting to
US$ 2,106,287. And in 2016, the processing fee (tolling) of US$ 2,654,067 represent the processing fee
to PT Texmaco Jaya Tbk (under bankruptcy) amounting to US$ 551,124 and PT Multikarsa Investama
amounting to US$ 2,102,943 (Note 42).
In 2017 and 2016, rental expenses to PT Texmaco Jaya Tbk (under bankruptcy) were US$ 139,376 and
US$ 137,998, respectively (Note 42).
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
98
38. SELLING EXPENSES
2 0 1 7 2 0 1 6
US$ US$
Freight 3,785,298 3,686,882
Export charges 2,981,109 2,228,454
Marketing expenses 853,201 1,752,536
Customer Claim 480,788 78,355
Advertising and promotion 30,730 11,989
Others 285,388 319,742
Total 8,416,514 7,999,603
39. GENERAL AND ADMINISTRATIVE EXPENSES
2 0 1 7 2 0 1 6
US$ US$
Salaries, wages and benefits 8,701,111 7,848,500
Employees’ entitlement (Note 26) 1,923,751 1,594,554
Rent 1,057,232 844,698
Business travelling 965,055 952,222
Professional fees 940,170 1,290,961
Communication 362,280 378,380
Stationery 296,737 365,429
Tax expense 217,134 259,073
Donation and Corporate Social Responsibility 189,934 119,321
Depreciation expense of property, plant and equipment (Note 14) 175,023 139,521
Insurance 160,965 20,684
Entertainment and representation 137,516 126,373
Repairs and maintenance 63,347 194,502
Electricity and water 40,529 40,194
Amortization expenses (Note 15) 6,269 6,272
Others 1,261,354 1,205,465
Total 16,498,407 15,386,149
40. FINANCE COSTS
2 0 1 7 2 0 1 6
US$ US$
Finance costs:
Interest expense from working capital loan (Note 21) (2,494,229 ) (3,244,042 )
Interest expense from unsecured notes payable (Note 20) (744,383 ) (982,016 )
Interest expense from credit financing payables (Note 22) (7,425 ) (10,561 )
Total interest expense (3,246,037 ) (4,236,619 )
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
99
40. FINANCE COSTS (Continued)
2 0 1 7 2 0 1 6
US$ US$
Bank charges (245,810 ) (237,027 )
Total finance costs (3,491,847 ) (4,473,646 )
Finance Income:
Interest income from current accounts and
time deposits
8,557
22,498
Total (3,483,290 ) (4,451,148 )
41. MISCELLANEOUS INCOME, NET
2 0 1 7 2 0 1 6
US$ US$
Amortization of deferred revenues (Note 24) 12,563 12,563
Payables’ written-off (844 ) (1,516 )
Others 454,188 1,163,837
Total 465,907 1,174,884
42. RELATED PARTIES TRANSACTIONS
The Company is controlled by Damiano Investments B.V. (domiciled in Netherland) which owns
1,443,805,382 of the Company’s shares (57.85%). The ultimate parent of the Company is ADM Capital
and Spinnaker Capital Group, which are incorporated and domiciled in Hong Kong and United Kingdom,
respectively.
Nature of Relationships and transactions
Nature of Nature of
Name of related parties relationship Transactions
Damiano Investments B.V., Netherland Shareholder Loans, shareholder
PT Texmaco Jaya Tbk (under bankruptcy) Affiliated company Tolling arrangement
Kyoa Investment Limited Shareholder Loans, shareholder
PT Pacific Poly Affiliated company Rental agreement
Mr. Agus Tjahajana Wirakusumah Independent Commissioner Compensation and renumeration
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
100
42. RELATED PARTIES TRANSACTIONS (Continued)
Nature of Relationships and transactions (Continued)
Nature of Nature of
Name of related parties relationship Transactions
Mr. Dono Iskandar Djojosubroto Independent Commissioner Compensation and renumeration
Mr. Bonar Firman Hasiholan Sirait Independent Director Compensation and renumeration
Mr. Antonius Widyatma Sumarlin Independent Director Compensation and renumeration
Mr. Vasudevan Ravi Shankar President Director Compensation and renumeration
Mr. Seeniappa Jegatheesan Director Compensation and renumeration
Mr. Peter Vinzenz Merkle Director Compensation and renumeration
Related Parties Transactions
In the normal course of business, the Company and its Subsidiaries entered into certain business and
financial transactions with its related parties. These transactions are normally made at normal price and
conditions as if they were done with non-related parties. These transactions are as follows:
Percentage to total
Assets / Liabilities
/ Expenses
2 0 1 7 2 0 1 6 2 0 1 7 2 0 1 6
US$ US$ % %
Other current financial liabilities 232,659 214,443 0.02 0.01
Accrued expenses 15,022,192 14,283,483 1.28 1.22
Bank loans 92,023,680 85,729,859 7.83 7.33
Secured debts 663,197,477 679,341,624 56.45 58.12
Capex loans 22,695,000 23,570,000 1.93 2.01
Manufacturing expenses to related parties accounted for 0.21% and 4.05% for the years ended
December 31, 2017 and 2016, respectively (Note 37).
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
101
42. RELATED PARTIES TRANSACTIONS (Continued)
The details of processing fee (tolling) and rental expenses to related parties are as follows:
2 0 1 7 2 0 1 6
US$ US$
PT Texmaco Jaya Tbk (under bankruptcy) 9 607.832 689,123
Key management compensation
Key management personnel of the Company are the Boards of Commissioners and Directors as
detailed in Note 1d.
Compensation representing salary was given to the Company’s Commissioners and Directors for the
years ended December 31, 2017 and 2016 is amounting to Rp 12,801,214,840 and Rp 11,684,960,602,
respectively. No contribution to retirement benefits, entitlement benefits and any other special benefits
were given during the year 2017 and 2016.
43. SIGNIFICANT AGREEMENTS
Tolling Agreement with PT Texmaco Jaya Tbk (under bankruptcy)
On April 1, 2008, the Company arranged the tolling / rental agreement with PT Texmaco Jaya Tbk for a
period of twelve (12) months and can be renewed. This agreement is prepared because the Subsidiary
does not have the necessary working capital to service the orders from its customers. Based on this
agreement, the Company should pay the conversion charges that consisting of tolling fee, building and
machinery rental to PT Texmaco Jaya Tbk each month. The tolling fees are calculated based on the
production results.
On August 3, 2009, the Company arranged the amendment of tolling agreement with PT Texmaco Jaya
Tbk for a period of three (3) months and can be renewed. Based on this agreement, the Company should
pay the tolling fee of US$ 1.20 per yard with the minimum production results of 100,000 yards to
PT Texmaco Jaya Tbk each month. On October 23, 2009, the Company renewed the tolling / rental
agreement for seven (7) months from November 1, 2009 up to June 30, 2010.
On July 15, 2010, the Company arranged the amendment of tolling agreement with PT Texmaco Jaya
Tbk for fifthteen (15) months from July 1, 2010 up to September 30, 2011 and can be renewed. Based on
this agreement, the Company should pay the tolling fee of US$ 1.20 per yard for the contract period from
July 1, 2010 up to September 30, 2010, and US$ 0.75 per yard for the contract period from
October 1, 2010 up to September 30, 2011.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
102
43. SIGNIFICANT AGREEMENTS (Continued)
Tolling Agreement with PT Texmaco Jaya Tbk (under bankruptcy) (Continued)
On January 10, 2011, the Company arranged the amendment of tolling agreement with PT Texmaco Jaya
Tbk for five (5) years from January 1, 2011 up to December 30, 2016 and can be renewed for three (3)
years later. Based on this agreement, the Company should pay the tolling fee of US$ 0.30 per kgs and at
least US$ 50,000 per month.
Further, based on the amendment of tolling agreement with PT Texmaco Jaya Tbk (under bankruptcy)
dated March 23, 2012, the Company agreed to pay the tolling fee of US$ 0.30 per kgs and
subject to minimum fee of US$ 64,000 per month. Effective September, 2017, the tolling fees will be
least Rp 350,000,000 per month as per amendment agreement No. 007/APF/IX/2017 dated
September 11, 2017.
Warehouse Agreement with PT Texmaco Jaya Tbk (under bankruptcy)
Based on the land rental agreement dated June 15, 2009 between the Company and PT Texmaco Jaya
Tbk (under bankruptcy), the Company agreed to rent the land for 950 meters of gas pipe, 1,500 meters of
water pipe, 800 meters of water pump facility and 1,000 meters of electricity cable. This agreement is
valid for thirty (30) years from January 1, 2010 up to December 31, 2040. Consequently, the Company
should pay the rental expenses amounted to Rp 100,000,000 per month.
Based on the warehouse rental agreement dated March 30, 2011 between the Company and PT Texmaco
Jaya Tbk (under bankruptcy), the Company agreed to rent the warehouse for ten (10) months from
March 1, 2011 up to December 31, 2011. The agreement has been extended several times. Based on the
amendment agreement dated July 1, 2016, this agreement has been extended until December 31, 2016.
Further, based on the latest amendment agreement dated January 1, 2017, the Company agreed to extend
the warehouse rental up to June 30, 2017. Consequently, the Company should pay the rental expenses
amounted to Rp 43,200,000 per month.
Based on the warehouse rental agreement dated January 2, 2012 between the Company and PT Texmaco
Jaya Tbk (under bankruptcy), the Company agreed to rent the Coating’s warehouse for one (1) years from
January 2, 2012 up to December 31, 2012. The agreement has been extended several times. Based on the
amendment agreement dated November 28, 2012, June 1, 2013, November 29, 2013 and May 30, 2014,
the Company agreed to extend the warehouse rental up to December 31, 2014. Based on the latest
amendment agreement dated December 31, 2014, the Company agreed to extend the warehouse rental up
to May 31, 2015. Further, based on the amendment agreement dated 30 May 2015, the Company agreed
to extend the warehouse rental up to December 31, 2015. On the latest amendment agreement dated
December 31, 2015, wherein the Company agreed to extend the warehouse rental up to May 31, 2016.
Consequently, the Company should pay the rental expenses amounted to Rp 5,000,000 per month.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
103
43. SIGNIFICANT AGREEMENTS (Continued)
Warehouse Agreement with PT Texmaco Jaya Tbk (under bankruptcy) (Continued)
Based on the warehouse rental agreement dated November 28, 2012 between the Company and
PT Texmaco Jaya Tbk (under bankruptcy), the Company agreed to rent the chiller machinery for one (1)
years from January 1, 2013 up to December 31, 2013. The agreement has been extended several times.
Based on the amendment agreement dated December 31, 2016, the Company agreed to extend the rental
of the chiller machinery up to December 31, 2017. Further, based on the latest amendment agreement
dated December 31, 2017, the Company agreed to extend the rental of the chiller machinery up to
December 31, 2018. Consequently, the Company should pay the rental expenses amounted to
Rp 5,000,000 per month.
Warehouse Agreement with PT Texmaco Taman Synthetics
Based on the rental agreement dated August 1, 2011 between the Company and PT Texmaco Taman
Synthetics, the Company agreed to rent the warehouse to put the laboratory equipments for five (5) years
from August 1, 2011 up to July 31, 2015. Consequently, the Company should pay the rental expenses
amounted to Rp 99,000,000 per month. Further, based on the latest agreement dated January 27, 2016,
the rent period is extended from November 1, 2015 up to January 31, 2018. Consquently, the Company
should pay the rental expenses amounted to Rp 130,000,000 per month for November 1, 2015 up to
January 31, 2016 and Rp 160,000,000 per month for February 1, 2016 up to January 31, 2018.
Gas Turbine with PT Wismakarya Prasetya
Based on the correspondence letter dated March 27, 2013, the Company agreed to pay the extra charges
amounted to US$ 250,000 per month for 6 (six) months. Accordingly, the Company has paid
US$ 250,000 per month beginning April 2013 until June 2013 for 3 (three) months. PT Wismakarya
Prasetya (WKP), which is supplying 100% energy requirement of the Company’s facility at Karawang,
has been declared bankrupt effective on October 22, 2013 by the Supreme Court, Jakarta as per its verdict
No:440k/Pdt.sus.PAILIT/2013 dated October 22, 2013, based on the debt claim filed by its creditors.
However, the Court has decided to keep WKP as a going concern as it is supplying the energy requirement
of Karawang facility vide its decision vide No.: 440K/PDT.SUS/PAILIT/2013 j.o.
No: 05/Pdt.sus/PKPU/2013/PN.Niaga.Jkt.Pst. dated on February 13, 2014.
Based on the equipment rental agreement dated April 16, 2014 between the Company and
PT Wismakarya Prasetya (under bankruptcy), the Company agreed to rent the power and supply
equipment for five (5) years from January 1, 2014 up to December 31, 2018. This equipments consist of
4 (four) power supply “Cogen Mitsubishi with capacity 12.50 MW + HRSG” and 1 (one) power supply
“ABB/Siemens with capacity 20 MW + HRSG”. Consequently, the Company should pay the rental
expenses amounted to US$ 40,800 per month. On November 5, 2014, the “ABB/Siemens Turbine with
capacity 20 MW + HRSG” has been bought by the Company on a public auction from the curator through
4th Loan facility from Damiano Investments B.V., Netherland.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
104
43. SIGNIFICANT AGREEMENTS (Continued)
Gas Turbine with PT Wismakarya Prasetya (Continued)
Further based on the amendment agreement dated November 24, 2014 between the Company and PT
Wismakarya Prasetya (under bankruptcy), the rental expenses has been changed from US$ 40,800 to US$
30,600 each month towards the rental for the balance of 4 (four) turbines. This agreement is valid for 4
(four) years from January 1, 2015 up to December 31, 2018.
Based on the amendment agreement dated December 18, 2015 between the Company and PT Wismakarya
Prasetya (under bankruptcy), the rental expenses has been changed from US$ 30,600 to Rp 210,375,000
each month towards the rental for the balance of 3 (three) turbines. This agreement is valid for 3 (three)
years from January 1, 2016 up to December 31, 2018.
Rental House Agreement with PT Wismakarya Prasetya
The Company has entered into an agreement with PT Wismakarya Prasetya for house rental for 53 houses.
As per amendment of the agreement dated December 29, 2017, this agreement will valid for 1 (one) year
from January 1, 2018 up to December 31, 2018. Consequently, the Company should pay the rental
expenses amounted to Rp 159,000,000 per month.
Power Supply Agreement with PT Perusahaan Listrik Negara (Persero) (PLN)
Based on the agreement dated October 17, 2016 between the Company and PT Perusahaan Listrik Negara
(Persero) ("PLN"), PLN agreed to provide the Premium Bronze electricity supply to the Company. Under
this agreement, PLN will provide 150 kV high voltage electrical to the Company’s installation which
located in Kendal, Central Java. This service will be effective starting in November 2016, and
consequently the Company will be subject to subscription price adjustment amounting to
Rp 18,917,000,000 and will be paid in installments for 60 months.
Rental Agreement with PT Pacific Poly
The Company has entered into an agreement with PT Pacific Poly for the usage of machinery, land, and
building (facility) on rental basis. As per amendment of the agreement dated January 1, 2016, the rental
amount has been revised to US$ 50,000 per quarter. This rental agreement is valid until
December 31, 2018.
The establishment of Asia Pacific Fibers Hong Kong Limited
On March 6, 2017, PT Asia Pacific Fibers Tbk established a wholly owned subsidiary Asia Pacific Fibers
Hong Kong Limited, a private limited company established under the laws of the Hong Kong Special
Administrative Region (“HKSAR”) with corporate registration number 2493881 and its registered office
in Hongkong.
This is intended to facilitate the restructuring of the Secured Bonds through the scheme of arrangement.
The Company will report suitably in future any action in takes through the Subsidiary in the process
restructuring to the regulator.
44. COMMITMENTS
(a) Capital Commitments
The capital expenditure committed but not yet incurred as at December 31, 2017 is approximately
US$ 2,943,282. This is for the maintenance of turbine in Karawang and additional equipment in
Semarang.
Amount outstanding above is relating to commitment made by the Company in development and
increase in the Company’s filament yarn and fiber capacity. The commitment has to be exercised at
the year 2018.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
105
44. COMMITMENTS (Continued)
(b) Operating Lease Commitments
The Company leases various warehouse under non-cancellable operating lease agreements. The lease
terms are between 1 (one) year up to thirty (30) years, and the majority of lease agreements are
renewable at the end of the lease period.
The following are counterparties of the Company’s lease commitments:
Counterparties Leased items Period of agreement Amount (Rp)
PT Texmaco Jaya Tbk
(under bankruptcy)
Warehouse at
Karawang
January 1, 2016 –
June 30, 2016
Rp 43,200,000
each month
July 1, 2016 –
December 31, 2016
Rp 43,200,000
each month
January 1, 2017 –
June 30, 2017
Rp 43,200,000
each month
Coating Warehouse
at Karawang
January 1, 2016 –
May 31, 2016
Rp 5,000,000
each month
Chiller’s Machine at
Karawang
December 31, 2015–
December 31, 2016
Rp 5,000,000
each month
January 1, 2017–
December 31, 2017
Rp 5,000,000
each month
January 1, 2018–
December 31, 2018
Rp 5,000,000
each month
Land at Karawang
January 1, 2010 –
December 31, 2040
Rp 100,000,000
each month
PT Wismakarya Prasetya
(under bankruptcy)
Turbine Machine
at Karawang
January 1, 2015 –
December 31, 2018
US$ 30,600
each month
PT Texmaco Taman
Synthetics
Warehouse at
Semarang
August 1, 2011 –
October 31, 2015
Rp 99,000,000
each month
November 1, 2015 –
January 31, 2016
Rp 130,000,000
each month
Februari 1, 2016 –
January 31, 2018
Rp 160,000,000
each month
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
106
44. COMMITMENTS (Continued)
(b) Operating Lease Commitments (Continued)
The future aggregate minimum lease payment under non-cancellable operating leases are as follows:
2 0 1 7 2 0 1 6
US$ US$
No later than 1 year 9 467,584 623,169
Later than 1 year and no later than 5 years 36,906 825,670
Later than 5 years 125,480 1,518,309
Total 9 629,970 2,967,148
45. CONTINGENCIES
Effective August 19, 2011, one of Subsidiary (PT Texmaco Jaya Tbk) becomes subject to the control of
Court, causing the Company to loss its control. The Count has already set a Supervisory Judge and curator
team to maintain and monitor the operation of bankruptcy assets and cash flows of the Subsidiary. Net
liabilities at the date of lost its control is Rp 656,593,951,279. PT Asia Pacific Fibers Tbk as parent
Company does not have obligation regarding the creditors’ payables of Subsidiary.
Based on the correspondence letter from PT Bina Prima Perdana dated August 8, 2011, PT Bina Prima
Perdana claims from the Company being the guarantor of the Subsidiary’s loans from Bank Dharmala and
Bank Arya. However, the management of the Company mentioned that the above guarantees (promissory
note) were not registered by PT Bina Prima Perdana during the debt verification by the curator of PT Asia
Pacific Fibers Tbk (formerly PT Polysindo Eka Perkasa Tbk) during its bankruptcy process in 2005.
Cnsequently, the above claims of PT Bina Prima Perdana were not valid. In addition, the restructuring
process of unsecured debt in PT Asia Pacific Fibers Tbk has been completed.
The Company’s land certificates with HGB No. 13 and HGB No. 14 located in Kiara Payung, Kec. Klari,
Karawang have been pledged to PT Bank Negara Indonesia/ PT Bina Prima Perdana in respect of secured
debts of PT Texmaco Jaya Tbk (under bankruptcy). PT Bina Prima Perdana has claimed with its letter dated
February 21, 2013 amounted to Rp 19 billion from the Company for the release of the pledge. This is under
discussion with PT Bina Prima Perdana (Note 15).
In 2015, Tomoe Engineering Co. Ltd. (Tomoe) filed a lawsuit against the Company in Pengadilan Negeri
Jakarta Selatan for breach of contract and claimed an amount of JPY 470,000,000 towards compensation
for the cancellation of order. The Company had earlier during 2010/2011 requested for quotation for supply
of spares for its PTA plant and held preliminary negotiations with the suppliers. The Company has informed
the suppliers of its intention to procure the spares subject to finalization of negotiation. Tomoe claimed to
have procured the materials for the above and asked for the compensation from the Company. The
Company defended this case and got a court verdict in its favour in January 2016. The District
Court’s decision has been received by the Company on February 25, 2016 through decision
No. 388/Pdt.G/2015/PN.JKT.Sel dated February 25, 2016.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
107
46. SEGMENT INFORMATION
The Board of Directors is the Company’s chief operating decision-maker. Management has determined the
operating segments based on the information reviewed by the Board of Directors for the purposes of allocating
resources and accessing performance of the Company and its Subsidiaries.
The Company is managed and classified into business segments consist of plants which located as follows :
Year ended December 31, Year ended December 31,
2017 2016
Semarang Karawang Semarang Karawang
Revenues 212,869,967 319,783,237 178,745,621 299,382,534
Cost of goods sold (195,787,278 ) (308,875,012 ) (168,714,723 ) (291,438,975 )
Gross profit 17,082,689 10,908,225 10,030,898 7,943,559
Expenses (13,022,466 ) (19,377,011 ) (19,392,894 ) (10,449,934 )
Net profit (loss) 4,060,223 (8,468,785 ) (9,361,996 ) (2,506,375 )
Segment assets 528,483,842 96,612,645 507,255,446 93,423,735
Segment liabilities 1,127,389,570 438,196,820 1,108,955,148 426,539,126
The Board of Directors considers the business from both a geographic and product perspective.
Geographically, management considers the performance in Indonesia, Asia, America, Europe, Australia
and Africa. From a product perspective, management separately considers the business segment as follows:
1. Chemical industry and synthetic fibre
2. Weaving and knitting
Although the weaving and knitting segment does not meet the quantitative thresholds required by
PSAK 5 for reportable segments, management has conclude that this segment should be reported, as it is
closely monitored by the strategic steering committee as a potential growth and is expected to materially
contribute to the Company’s revenue in the future.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
108
46. SEGMENT INFORMATION (Continued)
Chemical Weaving
Industry and and
Synthetic fibre Knitting Others Elimination Total
2 0 1 7 US$ US$ US$ US$ US$
SEGMENT SALES:
External sales
Local 329,850,231 6,569,671 – – 336,419,902
Export
Europe 31,823,366 250,196 – – 32,073,562
America 11,465,014 1,552 – – 11,466,566
Asia 15,439,749 1,028,572 – – 16,468,321
Africa 2,545,876 9,062 – – 2,554,938
Australia 793,314 – – – 793,314
Total Export 62,067,319 1,289,382 – – 63,356,701
Inter segment sales 132,876,602 – – (132,876,334 ) 268
Total segment sales 524,794,152 7,859,053 – (132,876,334 ) 399,776,871
Segment result 26,214,660 1,776,253 – – 27,990,913
Unallocated expenses (27,292,893 ) (1,681,860 ) – – (28,974,753 )
Profit (loss) before income tax (1,078,233 ) 94,393 – – (983,840 )
Tax expense (3,424,724 )
Total loss for the year (4,408,564 )
Other comprehensive loss, net of tax (1,266,247 )
Total comprehensive loss for the year (5,674,811 )
STATEMENT OF FINANCIAL
POSITION:
Segment assets 621,411,794 3,684,693 759,218,126 (1,152,747,658 ) 231,566,955
Segment liabilities 1,561,261,472 4,324,917 761,938,304 (1,152,716,766 ) 1,174,807,927
OTHER INFORMATION:
Capital expenditures 12,035,544 96,000 12,131,544
Depreciation expense 4,459,217 36,886 – – 4,496,103
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
109
46. SEGMENT INFORMATION (Continued)
Chemical Weaving
Industry and and
2 0 1 6 Synthetic fibre Knitting Others Elimination Total
US$ US$ US$ US$ US$
SEGMENT SALES:
External sales
Local 297,924,461 7,991,471 – – 305,915,932
Export
Europe 24,599,273 20,508 – – 24,619,781
America 12,115,090 1,200 – – 12,116,290
Asia 13,509,628 661,555 14,171,183
Africa 2,435,814 – 2,435,814
Australia 1,221,752 – – – 1,221,752
Total Export 53,881,557 683,263 – – 54,564,820
Inter segment sales 117,647,403 – – (117,647,403 ) –
Total segment sales 469,453,421 8,674,734 – (117,647,403 ) 360,480,752
Segment result 17,694,702 353,664 – – 18,048,366
Unallocated expenses (24,310,748 ) (716,359 ) – – (25,027,107 )
Loss before income tax (6,616,046 ) (362,695 ) – – (6,978,741 )
Tax expense (4,889,628 )
Total loss for the year (11,868,369 )
Other comprehensive loss,
net after tax
(291,067
)
Total comprehensive loss for the year (12,159,436 )
STATEMENT OF FINANCIAL
POSITION:
Segment assets 597,041,183 3,637,999 759,218,126 (1,128,747,792 ) 231,149,516
Segment liabilities 1,531,121,656 4,372,618 761,938,304 (1,128,716,901 ) 1,168,715,677
OTHER INFORMATION:
Capital expenditures 10,566,710 – – – 10,566,710
Depreciation expense 4,713,068 79,440 – – 4,792,508
The following table shows the carrying amount of segment non-current assets and additions to property,
plant and equipment by geographical area in which the assets are located:
Carrying amount non-current assets Additions to property, plant and equipment
December 31, December 31, December 31, December 31,
2 0 1 7 2 0 1 6 2 0 1 7 2 0 1 6
US$ US$ US$ US$
Indonesia 67,735,282 69,754,359 2,553,241 10,764,401
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
110
47. NET MONETARY ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES
The Company and its Subsidiaries have assets and liabilities denominated in foreign currencies as follows:
2 0 1 7 2 0 1 6
Foreign Equivalent in Foreign Equivalent in
Currency US$ Currency US$
Assets:
Cash and cash equivalents IDR 1,008,014,776 74,403 407,339,212 30,317
EUR 1,012 1,208 12 12
SGD 6,921 5,177 7,571 5,240
NOK 1,108 134 1,108 129
Trade receivables:
Third parties IDR 157,613,717,100 11,633,727 140,092,294,366 10,426,637
Other receivables IDR 467,642,819,040 34,517,480 455,470,672,336 33,899,276
Other current financial assets IDR 7,920,998,946 584,662 6,120,998,946 455,567
Non-trade receivables IDR 600,475,211,603 44,322,056 606,345,726,749 45,128,440
Other non-current financial
Assets
IDR 3,958,169,592
292,159
3,959,414,637
294,687
Total assets 91,431,006 90,240,305
Liabilities:
Trade payables:
Third parties IDR 75,380,244,701 5,563,939 74,463,024,065 5,542,047
EUR 139,530 166,571 291,553 307,286
YEN 485,000 4,034 4,419,000 37,955
CHF 2,474 2,528 14,000 13,731
GBP 6,075 8,169 − −
Accrued expenses IDR 489,623,952,241 36,139,944 548,908,523,763 40,853,567
Secured Debts IDR 1,341,051,955,403 98,985,234 1,341,051,955,403 99,810,357
EUR 14,262,806 17,026,950 14,262,806 15,033,003
YEN 3,001,711,460 26,635,736 3,001,711,400 25,781,296
Other current financial liabilities IDR 39,373,800,625 2,906,245 29,649,525,792 2,206,723
Credit financing payables IDR 1,319,618,369 97,403 1,473,858,100 109,695
Long-term employee benefit IDR 188,434,365,773 13,908,649 149,875,990,828 11,154,807
Total liabilities 201,445,402 200,850,467
Net liabilities (110,014,396 ) (110,610,162 )
Monetary assets and liabilities mentioned above are translated using Bank Indonesia closing rate as at
December 31, 2017 and 2016.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
111
48. FINANCIAL RISKS MANAGEMENT
The Company and its Subsidiaries have exposure to the following risks from its use of financial
instruments:
Credit Risk
Liquidity Risk
Market Risk
This note presents information about the Company and its Subsidiaries’ exposure to each of the above
risks, the Company and its Subsidiaries’ objectives, policies and processes for measuring and managing
risks, and the Company and its Subsidiaries’ management of capital. The main purpose of the Company
and its Subsidiaries’ dealings in financial instruments is to fund their respective operations and capital
expenditures. The Company and its Subsidiaries do not actively engage in the trading of financial assets
for speculative purposes nor does it write options. The BOD has overall responsibility for the establishment
and oversight of the Company and its Subsidiaries’ risk management framework. The BOD is also
responsible for developing and monitoring the Company and its Subsidiaries’ risk management policies.
The Company and its Subsidiaries’ risk management policies are established to identify and analyze the
risks faced by the Company and its Subsidiaries, to set appropriate risk limits and controls, and to monitor
risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect
changes in market conditions of the Company and its Subsidiaries’ activities. All risks faced by the
Company and its Subsidiaries are incorporated in the annual operating budget. Mitigating strategies and
procedures are also devised to address the risks that inevitably occur so as not to affect the Company and
its Subsidiaries’ operations and forecasted results. The Company and its Subsidiaries, through its training
and management standards and procedures, aims to develop a disciplined and constructive control
environment in which all employees understand their roles and obligations.
The BOD performs oversight role over financial reporting functions, specifically in the areas at managing
credit, liquidity, market and other risks of the Company and its Subsidiaries. The BOD undertakes reviews
of risk management controls and procedures and ensures the integrity of internal control activities which
affect the financial reporting system of the Company and its Subsidiaries.
a. Credit Risks
Credit risk represents the risk of loss the Company and its Subsidiaries would incur if customers and
counterparties fail to perform their contractual obligations.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
112
48. FINANCIAL RISKS MANAGEMENT (Continued)
a. Credit Risks (Continued)
Financial information of the Company and its Subsidiaries’ maximum exposure to credit risk as at
December 31, 2017 and 2016, without considering the effects of collaterals and other risk mitigation
techniques, is presented below:
2 0 1 7 2 0 1 6
US$ US$
Cash and cash equivalents 6,240,585 3,468,469
Trade receivables, net 39,064,158 31,584,686
Other receivables, net 2,112,875 3,032,953
Other current financial assets 6,035,155 5,906,063
Non-trade receivables 38,770,115 39,574,362
Other non-current financial assets 996,500 998,945
Total financial assets 93,219,388 84,565,478
(a) Cash and Cash Equivalents
The management evaluates the financial condition of the banking industry and bank
deposits/investments are maintained with reputable banks only. For banks, only independently
rated parties with a minimum rating of “A” are accepted. The credit quality can be assessed by
reference to external credit ratings as follows:
2 0 1 7 2 0 1 6
US$ US$
Counterparties with external credit rating:
- Fitch:
F1+ 5,127,502 2,501,277
F3 354,906 509,698
- Pefindo:
idAAA 538,430 288,652
idAA+ 111,755 72,403
6,132,593 3,372,030
Counterparties without external credit rating 107,992 96,439
Total cash and cash equivalents 6,240,585 3,468,469
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
113
48. FINANCIAL RISKS MANAGEMENT (Continued)
a. Credit Risks (Continued)
(b) Trade Receivables
Majority of the Company and its Subsidiaries’ credit risk on receivables is attributed to its
activities influenced mainly by the individual characteristics of each customer and non-interest
bearing advances made to the Company and its Subsidiaries with similar operations. The
demographics of the Company and its Subsidiaries’ customer base, including the default risk of
the industry and regions in which customers operate, has an influence on credit risk.
In respect of trade receivables, the Company and its Subsidiaries are not exposed to any significant
credit risk exposure to any single counterparty or any group of counterparties having similar
characteristics. Trade receivables consist of a large number of customers. Based on historical
information, the customer default rates in the settlement of receivables is low due to the settlement
from customers are normally received by the Company and its Subsidiaries with the credit term.
Moreover, some of export sales are on cash before delivery or a portion of the sales are collected
a front (prefinance). Thus, the management noted that the outstanding of trade receivables have
not impaired.
The Board of Directors has established a credit policy under which each advanced amount
requested by new customer/counterparties is analyzed individually for creditworthiness before
standard credit terms and conditions are granted.
The Company and its Subsidiaries’ review includes the requirements of updated credit application
documents, credit verifications through the use of no negative record requests and list of
blacklisted accounts, and analyses of financial performance to ensure credit capacity. The status
of each account is first checked before advances are approved.
The credit quality of financial assets that are neither past due or impaired, and past due but not
impaired can be assessed by reference to historical information about counterparty default rates.
2 0 1 7 2 0 1 6
Gross Amount Impairment Gross Amount Impairment
Counterparties without
external credit rating:
Group 1 37,758,328 − 31,377,066 −
Group 2 1,305,830 − 207,620 −
Group 3 15,657,945 15,657,945 15,657,945 15,657,945
Total 54,722,103 15,657,945 47,242,631 15,657,945
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
114
48. FINANCIAL RISKS MANAGEMENT (Continued)
a. Credit Risks (Continued)
(b) Trade Receivables (Continued)
Group 1 –customers / related parties (less than six months).
Group 2 –customers / related parties (more than six months) with no defaults in the past.
Group 3 –customers / related parties (more than six months) with some defaults in the past.
As at reporting date, there were no significant concentrations of credit risk.
Based on historical default rates, the Company and its Subsidiaries believe that no impairment
allowance is necessary in respect of receivables in Group 1 and Group 2 not past due or past due
can be collected.
(c) Other receivables
In respect of other receivables, the Company and its Subsidiaries are not exposed to any significant
credit risk exposure to any single counterparty or any group of counterparties having similar
characteristics. Based on historical information about customer default rates, management
consider the credit quality of other receivables in Group 1 and Group 2 have not impaired.
The credit quality of financial assets that are neither past due or impaired, and past due but not
impaired can be assessed by reference to historical information about counterparty default rates.
2 0 1 7 2 0 1 6
Gross Amount Impairment Gross Amount Impairment
Counterparties without
external credit rating:
Group 1 251,378 − 1,693,519 − Group 2 757,448 − 226,186 − Group 3 68,741,805 67,637,756 68,751,004 67,637,756
Total 69,750,631 67,637,756 70,670,709 67,637,756
Group 1 – customers / related parties (less than six months).
Group 2 – customers / related parties (more than six months) with no defaults in the past.
Group 3 – customers / related parties (more than six months) with some defaults in the past.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
115
48. FINANCIAL RISKS MANAGEMENT (Continued)
a. Credit Risks (Continued)
(d) Non-trade receivables
Non-trade receivables represent the receivables from PT Multikarsa Investama. The Company and
its Subsidiaries’ management stated that there is no impairment indication that could be counted
from the estimated cash flow in the future, due to PT Multikarsa Investama is still in the debt
restructuring process with PT Perusahaan Pengelola Aset (PPA). In addition, the said value will
be suitably adjusted at the time of restructuring.
(e) Other non-current financial assets
The Company and its Subsidiaries’ management noted that there is no impairment indication in
the restricted cash in banks that could be counted from the estimated cash flow in the future, due
to the Company and its Subsidiaries are still in the debt restructuring process with PT Perusahaan
Pengelola Aset (PPA). In addition, the said amount will be suitably adjusted at the time of
restructuring.
b. Liquidity Risk
Liquidity risk pertains to the risk that the Company and its Subsidiaries will encounter difficulty in
meeting obligations associated with financial liabilities that are settled by delivering cash or another
financial asset.
The Company and its Subsidiaries manage liquidity risk by forecasting projected cash flows and
maintaining a balance between continuity of funding and flexibility. Treasury controls and procedures
are in place to ensure that sufficient cash is maintained to cover daily operational and working capital
requirements.
Management closely monitors the Company and its Subsidiaries’ future and contingent obligations
and sets up required cash reserves as necessary in accordance with internal requirements.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
116
48. FINANCIAL RISKS MANAGEMENT (Continued)
b. Liquidity Risk (Continued)
The following are the contractual maturities of financial liabilities, including estimated interest
payments and excluding the impact of netting agreements of the Company and its Subsidiaries:
Current Non Current
Within 6 to 12 1 to 5 More than
6 months months Years 5 years
US$ US$ US$ US$
December 31, 2017:
Trade payables 8,516,743 747,795 Accrued expenses 53,599,670 Bank loans 92,023,680 Secured debts 950,016,398 Unsecured notes payable 7,384,779 18,670,630
Capex loans 22,695,000 Credit financing payables 26,441 28,108 42,854 Other current financial
liabilities
5,294,332
Total 1,109,477,264 775,903 30,122,633 18,670,630
December 31, 2016:
Trade payables 11,986,713 − − −
Accrued expenses 56,917,886 − − −
Bank loaans 85,729,859 − − −
Secured debts 947,993,134 − − −
Unsecured notes payable − − 6,354,339 18,670,630
Capex loans − − 23,570,000 −
Credit financing payables 20,859 20,859 67,977 −
Other current financial
liabilities
4,526,160
−
−
−
Total 1,107,174,611 20,859 29,992,316 18,670,630
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
117
48. FINANCIAL RISKS MANAGEMENT (Continued)
c. Market Risks
Market risk is the risk that changes in market prices, such as interest rates, foreign exchange rates, and
other market prices will affect the Company and its Subsidiaries’ income or the value of its holdings
of financial instruments. The objective of market risk management is to manage and control market
risk exposures within acceptable parameters, while optimizing the return.
The Company and its Subsidiaries are subject to various market risks, including risks from interest
rates, and foreign currency exchange rates.
(1) Interest Rate Risk
Interest rate risk is the impact of rate changes on interest bearing assets and liabilities. The interests
risk exposure is mainly from changes in fixed rate and floating interest rates. When considered
appropriate, in order to manage the interest rate risk, interest rate swaps are entered into to mitigate
the fair value risk relating to fixed-interest assets or liabilities and the cash flow risk related to
variable interest rate assets and liabilities.
The Company and its Subsidiaries’ policy are to minimize interest rate risk exposure on long-term
financing. Long-term borrowings are therefore usually at fixed rates. At December 31, 2017 and
2016, the Company and its Subsidiaries have applied the fixed interest rates for their loans to
banks, third parties and related parties, so there is no interest rate risk exposure in the Company
and its Subsidiaries.
(2) Foreign Currency Risks
Most of the Company and its Subsidiaries’ transactions are carried out in other currencies.
Exposure to currency exchange rates arise from the Company and its Subsidiaries’ operational
activities, which are denominated in Indonesian Rupiah and currencies other than United States
Dollar.
The Company and its Subsidiaries are aware of the market risk due to foreign exchange
fluctuation. Management has set up a policy to require Company and its Subsidiaries to manage
their foreign exchange risk against their functional currency. There are no specific arrangements
to reduce such risk exposures through derivatives and other hedging instruments. Foreign
exchange risk arises when future commercial transactions or recognized assets or liabilities are
denominated in a currency that is not the Company and its Subsidiaries’ functional currency.
To mitigate the Company and its Subsidiaries’ exposure to foreign currency risk, the Company
and its Subsidiaries actively monitors the foreign currency movements and together with principal
to manage the impact of the foreign exchange fluctuations. Foreign currency denominated
financial assets and liabilities, translated into United States Dollar at the middle rate, are stated in
Assets and Liabilities in Foreign Currency (Note 47).
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
118
48. FINANCIAL RISKS MANAGEMENT (Continued)
c. Market Risks (Continued)
(2) Foreign Currency Risks (Continued)
The management believes that the Company and its Subsidiaries are naturally hedged against
foreign exchange risk. The risk is measured using cash flow forecasts with sensitivity analysis.
The table below summarizes the sensitivity analysis to the possibility changes of foreign exchange
rates, with considering all other factors are held constant, to the consolidated statements of profit
or loss and other comprehensive income for the year ended December 31, 2017:
2 0 1 7
US$
IDR increased by 1.82% (1,216,634 )
EUR increased by 4.94% (849,502 )
YEN increased by 7.49% (204,164 )
NOK increased by 7.09% 10
SGD increased by 3.25% 168
CHF increased by 9.93% (117 )
Net loss (2,270,239 )
Management conducted a survey among banks to get an estimate on exchange rate of foreign
currencies until the reporting date. The estimate changes of foreign exchange rate are increased by
1.82% for Indonesia Rupiah, 7.49% for Japanese Yen, 4.94% for European Euro, 7.09% for Krona
Norwegia, 3.25% for Singapore Dollar, and 9.93% for Swiss Franc if compared with the exchange
rate on December 31, 2017.
The Company and its Subsidiaries’ policy is to manage the financial assets denominated in foreign
currencies are available to settle the financial liabilities denominated in foreign currencies. At
December 31, 2017, the financial liabilities denominated in foreign currencies are in excess of
financial assets denominated in foreign currencies at amount of US$ 110,855,053 due to un-
restructured long-term secured debts are shown in their full value. If the above mentioned secured
debts denominated in Indonesian Rupiah and currencies other than US Dollar are not considered,
there are no excess of financial liabilities over the assets. This is a manageable level as the loans
are repayable over a period of time.
Financing Arrangements
The Company has letter of credit facility from Deutsche Bank totaling of US$ 100,000,000. The facility
is available on various periods up to December 31, 2017. As at December 31, 2017, the unused portion
was US$ 97,270,529.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
119
48. FINANCIAL RISKS MANAGEMENT (Continued)
Fair value estimation
The fair value of financial assets and financial liabilities must be estimated for recognition and
measurement or for disclosure purposes.
PSAK 60, “Financial Instruments: Disclosures” requires disclosure of fair value measurements by level
of the following fair value measurement hierarchy:
1. Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1).
The fair value of financial instrument traded in active markets is based on quoted market prices at the
reporting date. The quoted market price used is the current bid price, while financial liabilities use ask
price.
2. Inputs other than quoted prices included within level 1 that are observable for the assets or liability,
either directly (as prices) or indirectly (derived from prices) (level 2), and
The fair value of financial instruments that are not traded in active market (such as derivative over-
the-counter) is determined using valuation techniques. These valuation techniques maximize the use
of observable market data where it is available and rely as little as possible on estimates. If all
significant inputs required to fair value an instrument are observable, the instrument is included in
level 2.
3. Inputs for the asset and liability that are not based on observable market data (unobservable inputs)
(level 3).
If one or more of the significant inputs is not based on observable market data, the instrument is
included in level 3.
Specific valuation techniques used to value financial instruments include:
(a) The use of quoted market prices or dealer quotes for similar instruments, and
(b) Other techniques, such as discounted cash flow analysis, are used to determine fair value for the
remaining financial instruments.
The Company and its Subsidiaries’ financial assets and liabilities are measured and recognized using the
fair value measurement of level 2 and 3.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
120
48. FINANCIAL RISKS MANAGEMENT (Continued)
Fair value estimation (Continued)
The fair values of financial assets and liabilities together with the carrying amounts are as follows:
December 31, 2017 December 31, 2016
Carrying amount Fair value Carrying amount Fair value
US$ US$ US$ US$
Financial assets:
Current Assets:
Cash and cash equivalents 6,240,585 6,240,585 3,468,469 3,468,469
Trade receivables, net 39,064,158 39,064,158 31,584,686 31,584,686
Other receivables, net 2,112,875 2,112,875 3,032,953 3,032,953
Other current financial assets 6,035,155 6,035,155 5,906,063 5,906,063
Non-current assets:
Non-trade receivables 38,770,115 38,770,115 39,574,362 39,574,362
Other non-current financial
Assets 996,500 996,500 998,945 998,945
Total financial assets 93,219,388 93,219,388 84,565,478 84,565,478
Financial liabilities:
Current Liabilities:
Trade payables 9,264,538 9,264,538 11,986,713 11,986,713
Accrued expenses 53,599,630 53,599,630 56,917,886 56,917,886
Bank loans 92,023,680 92,023,680 85,729,859 85,729,859
Secured debts 950,016,398 950,016,398 947,993,134 947,993,134
Current portion of long-
term liabilities:
Credit financing payables 54,549 − 41,718 −
Other current financial
liabilities
5,294,332
5,294,332
4,526,160
4,526,160
Non-current:
Unsecured notes payable 26,055,409 26,055,409 25,024,969 25,024,969
Capex loans 22,695,000 22,695,000 23,570,000 23,570,000
Credit financing payables 42,854 42,854 67,977 67,977
Total financial liabilities 1,159,046,390 1,158,991,841 1,155,858,416 1,155,816,698
Short-term financial assets and liabilities with remaining maturities of one (1) year or less (cash and cash
equivalents, trade receivables, other receivables, other current financial assets, trade payables, accrued
expenses, and other current financial liabilities). The net carrying value of these financial assets and
liabilities is considered a reasonable approximation of their fair value due to their short-term maturities.
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
121
48. FINANCIAL RISKS MANAGEMENT (Continued)
Fair value estimation (Continued)
Long-term fixed-rate financial instruments with remaining maturities are over one (1) year. The fair value
of these financial assets and liabilities is determined by discounting future cash flows using applicable
interest rates from observable current market transactions for instruments with similar terms, credit risk
and remaining maturities.
Based on the above different level from fair value hierarchy, the following table represents the Company’s
assets and liabilities that are measured at fair value as at December 31, 2017 and 2016:
December 31, 2017
Level 1 Level 2 Level 3 Total
US$ US$ US$ US$
Financial assets:
Current Assets:
Cash and cash equivalents − 6,240,585 − 6,240,585
Trade receivables, net − 39,064,158 − 39,064,158
Other receivables, net − 2,112,875 − 2,112,875
Other current financial assets − 6,035,155 − 6,035,155
Non-current assets:
Non-trade receivables from − − 38,770,115 38,770,115
related parties
Other non-current financial
assets − − 996,500 996,500
Total financial assets − 53,452,773 39,766,615 93,219,388
Financial liabilities:
Current Liabilities:
Trade payables − 9,264,538 − 9,264,538
Accrued expenses − 53,599,630 − 53,599,630
Bank Loans − 92,023,680 − 92,023,680
Secured Debts − 950,016,398 − 950,016,398
Current portion of long-
term liabilities:
Credit financing payables − − − −
Other current financial liabilities − 5,294,332 − 5,294,332
Non-current:
Debts
Unsecured notes Payable − 26,055,409 − 26,055,409
Capex loans − 22,695,000 − 22,695,000
Credit financing payables − 42,854 − 42,854
Total financial liabilities − 1,158,991,841 − 1,158,991,841
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
122
48. FINANCIAL RISKS MANAGEMENT (Continued)
Fair value estimation (Continued)
December 31, 2016
Level 1 Level 2 Level 3 Total
US$ US$ US$ US$
Financial assets:
Current Assets:
Cash and cash equivalents − 3,468,469 − 3,468,469
Trade receivables, net − 31,584,686 − 31,584,686
Other receivables, net − 3,032,953 − 3,032,953
Other current financial assets − 5,906,063 − 5,906,063
Non-current assets:
Non-trade receivables from
related parties − − 39,574,362 39,574,362
Other non-current financial
assets − − 998,945 998,945
Total financial assets − 43,992,171 40,573,307 84,565,478
Financial liabilities:
Current Liabilities:
Trade payables − 11,986,713 − 11,986,713
Accrued expenses − 56,917,886 − 56,917,886
Bank Loans − 85,729,859 − 85,729,859
Secured Debts − 947,993,134 − 947,993,134
Current portion of long-
term liabilities:
Other current financial liabilities − 4,526,160 − 4,526,160
Non-current:
Debts
Unsecured notes Payable − 25,029,969 − 25,029,969
Capex loans − 23,570,000 − 23,570,000
Credit financing payables − 67,977 − 67,977
Total financial liabilities − 1,155,821,698 − 1,155,821,698
The following table presents the changes in Level 3 instruments are as follows:
Non-trade Other
receivables non-current
from related financial Secured
parties assets debts Total
US$ US$ US$ US$
Beginning balance 39,574,362 998,945 (947,993,134 ) (907,419,827 )
Gain (loss) on foreign
exchange, net 1,302,040
(2,445
)
(2,023,264
) (723,669
)
Settlement of tolling expenses (2,106,287 ) − − (2,106,287 )
Ending balance 38,770,115 996,500 (950,016,398 ) (910,249,783 )
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
123
48. FINANCIAL RISKS MANAGEMENT (Continued)
Capital risk management
The Company and its Subsidiaries’ objective when managing capital is to safeguard the Company and its
Subsidiaries’ ability to continue as a going concern in order to provide returns for shareholders and benefits
for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. The
Company and its Subsidiaries actively and regularly reviews and manages its capital structure to ensure
optimal capital structure and shareholder returns, taking into consideration the future capital requirements
and capital deficiency of the Company and its Subsidiaries, prevailing and projected profitability, projected
operating cash flows, projected capital expenditures and projected strategic investment opportunities. In
order to maintain or adjust the capital structure, the Company and its Subsidiaries may from time to time
adjust the amount of issue new shares or increase/reduce debt levels.
Consistent with others in the industry, the Company and its Subsidiaries monitor capital on the basis of
the gearing ratio. The gearing ratio as at December 31, 2017 and 2016 are as follows:
2 0 1 7 2 0 1 6
US$ US$
Total borrowings 1,090,790,487 1,082,317,962
Less:
Cash and cash equivalents (6,240,585) (3,468,469 )
Other current financial assets (6,035,155) (5,906,063 )
Other non-current financial assets (996,500) (998,945 )
Net debt 1,077,518,247 1,071,944,485
Total deficiency (943,240,972 ) (937,566,161 )
Gearing ratio (0.88) (0.87 )
The total borrowings include the unrestructured secured debts of US$ 943,545,252. The Company
endevours to restructure this debt to a sustainable level and for which the negotiations are underway with
its secured creditors including PPA/BPP. If the proposal of the Company which includes debt to equity
swap and waiver of the past interest amounts is accepted by its creditors, it will considerably improve the
capital gearing structure of the Company and its Subsidiaries.
49. EVENTS AFTER THE REPORTING PERIOD
On January 23, 2018, the Company sought and got the approval of its Unsecured New Note Holders for
the extension of its maturity from February 2018 to February 2020 including the capitalization of interest
until February 2018. The details are as follows:
PT ASIA PACIFIC FIBERS Tbk
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2017 and 2016
124
49. EVENTS AFTER THE REPORTING PERIOD (Continued)
Redemption Date
Redemption Table (Revised for PIK)
Subject to PIK Outstanding Redemption Redemption
% Request Amount Amount
February 15, 2005 US$18,670,630.00 US$18,670,630.00 0.00%
to February 15, 2018 US$ 7,651,122.73 US$25,024,968.56 0.00%
February 15, 2020 US$23,773,720.13 US$(1,316,087.63) 5.00%
February 15, 2021 US$19,394,350.63 US$(4,606,306.73) 17.50%
February 15, 2022 US$15,014,981.13 US$(4,606,306.73) 17.50%
February 15, 2023 US$10,635,611.64 US$(4,606,306.73) 17.50%
February 15, 2024 US$5,630,617.93 US$(5,264,350.55) 20.00%
February 15, 2025 US$0.00 US$(5,922,394.38) 22.50%
US$26,321,752.73 US$(26,321,752.75) 100.00%
50. NEW ACCOUNTING STANDARDS AND INTERPRETATION
The Indonesian Financial Accounting Standards Board (DSAK-IAI) has issued new or amendment to
the following Indonesian Financial Accounting Standards (“PSAK”) and Its Interpretation (“ISAK”),
the accounting standards will be effective or applicable on the Company’s consolidated financial
statements for the period beginning on or after January 1, 2018:
PSAK No 2 (Amendment 2016) : Statements of Cash Flows
PSAK No 13 (Amendment 2017) : Investment Property
PSAK No 15 (Amendment 2017) : Investment in Associates and Join Venture
PSAK No 16 (Amendment 2015) : Fixed Assets
PSAK No 46 (Amendment 2016) : Income Taxes
PSAK No 53 (Amendment 2017) : Share-based Payment
PSAK No 62 (Amendment 2017) : Insurance Contract
PSAK No 67 (Amendment 2017) : Disclosure of Interests in Other Entities
PSAK No 69 : Agriculture
PSAK No 71 : Financial Instruments
PSAK No 72 : Revenue from Contracts with Customers
PSAK No 73 : Leases
PSAK No 33 : Foreign Currency Transactions and Advance Consideration
As at authorization date of these consolidated financial statements, the Company’s management is still
evaluating the potential impact on these new and amendment accounting standards and interpretations
on its consolidated financial statements.
51. SUPPLEMENTARY FINANCIAL INFORMATION
The Company published consolidated financial statements. The supplementary financial information of
PT Asia Pacific Fibers Tbk (Parent Entity only) in appendix 1 until appendix 6 that has been prepared in
order to analyze Parent Entity only’s result of operations. The following supplementary financial
information of PT Asia Pacific Fibers Tbk (Parent Entity only) should be read in conjuction with the
consolidated financial statements of PT Asia Pacific Fibers Tbk and its Subsidiaries.
Appendix -1
ADDITIONAL FINANCIAL INFORMATION
PT ASIA PACIFIC FIBERS Tbk
(PARENT ENTITY ONLY)
STATEMENTS OF FINANCIAL POSITION
December 31, 2017 and 2016
2 0 1 7
2 0 1 6
US$ US$
ASSETS
CURRENT ASSETS
Cash and cash equivalents 6,220,009 3,447,893 Trade receivables, net after allowance for
impairment of US$ 15,657,945 in 2017 and 2016
Third parties 39,064,158 31,584,686
Other receivables, net after allowance for
impairment of US$ 67,637,756 in 2017 and 2016
Third parties 2,112,875 3,032,953
Other current financial assets 6,035,155 5,906,060
Inventories 54,418,341 59,691,450
Purchase advances
Third parties 3,732,757 2,330,122
Prepaid taxes 10,734,489 10,178,297
Prepaid expenses 1,726,698 1,828,659
Total Current Assets 124,044,482 118,000,120
NON–CURRENT ASSETS
Non-trade receivables, net of allowance
for impairment of US$ 111,997,893 in 2017
and 2016
Third parties 41,435,660 42,239,907
Other non-current financial assets 996,500 998,945
Property, plant and equipment, net after
accumulated depreciation of US$ 1,718,316,734
in 2017 and US$ 1,713,765,001 in 2016 67,634,235 69,647,040
Intangible assets 101,047 107,319
Investment in subsidiaries 31,170 31,170
Deferred tax assets − 2,801,154
Total Non–Current Assets 110,198,612 115,825,535
TOTAL ASSETS 234,243,094 233,825,655
Appendix -2
ADDITIONAL FINANCIAL INFORMATION
PT ASIA PACIFIC FIBERS Tbk
(PARENT ENTITY ONLY) STATEMENTS OF FINANCIAL POSITION (Continued)
December 31, 2017 and 2016
2 0 1 7
2 0 1 6
US$ US$
LIABILITIES AND EQUITY (DEFICIENCY)
CURRENT LIABILITIES
Trade payables
Third parties 9,264,538 11,986,713
Accrued expenses 53,599,630 56,917,886
Taxes payable 185,678 145,695
Bank loans 92,023,680 85,729,859
Short – term employee benefit liabilities 183,813 532,715
Secured debts 950,016,398 947,993,134
Current portion of long-term liabilities:
Credit financing payables 54,549 32,003
Other current financial liabilities 6,321,147 5,275,311
Total Current Liabilities 1,111,649,433 1,108,613,316
NON–CURRENT LIABILITIES
Borrowing from Other Financial
Institutions:
Unsecured notes payable 26,055,409 25,024,969
Capex loans 22,695,000 23,570,000
Credit financing payables 42,854 77,692
Deferred revenues 187,399 199,962
Deferred tax liabilities 194,252 −
Long-term employee benefit liabilities 13,908,649 11,154,807
Total Non–Current Liabilities 63,083,563 60,027,430
Total Liabilities 1,174,732,996 1,168,640,746
Appendix -3
ADDITIONAL FINANCIAL INFORMATION
PT ASIA PACIFIC FIBERS Tbk
(PARENT ENTITY ONLY)
STATEMENTS OF FINANCIAL POSITION (Continued)
December 31, 2017 and 2016
2 0 1 7
2 0 1 6
US$ US$
LIABILITIES AND EQUITY (CAPITAL DEFICIENCY)
EQUITY (CAPITAL DEFICIENCY)
Share Capital
Authorized 12,357,255,000 shares at Rp 1000
par value per Series A, Rp 10.000 par value
per Series B and Rp 40 par value per Series C
in 2016, 2015, and 2014
Issued and paid up 219,696,000 Series A and
2,276,057,347 Series C in 2017, 2016, and 2015 635,689,316 635,689,316
Additional paid-in capital 624,344,507 624,344,507
Retained earnings (accumulated deficit)
Appropriated 2,345,301 2,345,301
Unappropriated (2,202,869,026 ) (2,197,194,215 )
Total capital deficiency (940,489,902 ) (934,815,091 )
TOTAL LIABILITIES AND
EQUITY (CAPITAL DEFICIENCY) 234,243,094 233,825,655
Appendix -4
ADDITIONAL FINANCIAL INFORMATION
PT ASIA PACIFIC FIBERS Tbk
(PARENT ENTITY ONLY)
STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
For the years ended December 31, 2017 and 2016
2 0 1 7 2 0 1 6
US$ US$
REVENUES
Net sales 396,618,468 355,748,940
Other operating revenues 3,158,403 4,731,812
Total revenues 399,776,871 360,480,752
COST OF GOODS SOLD (371,785,957 ) (342,580,203 )
GROSS LOSS 27,990,914 17,900,549
General and administrative expenses (16,498,407 ) (15,386,149 )
Finance costs (3,483,290 ) (4,451,148 )
Selling expenses (8,416,514 ) (7,999,603 )
Loss on foreign exchange transactions, net (2,540,416 ) (3,884,345 )
Insurance claim settlement, net 1,497,966 5,688,253
Gain on sale or disposal of property, plant and equipment − 28,669
Miscellaneous income, net 465,907 1,125,033
(28,974,754 ) (24,879,290 )
LOSS BEFORE INCOME TAX (983,840 ) (6,978,741 )
TAX EXPENSE
Current tax expense (7,236 ) (883,641 )
Deferred tax expense - net (3,417,488 ) (4,005,987 )
Total tax expense (3,424,724 ) (4,889,628 )
TOTAL LOSS FOR THE YEAR (4,408,564 ) (11,868,369 )
OTHER COMPREHENSIVE LOSS, NET OF TAX
Items that will not be reclassified to profit or loss:
Remeasurement of post employment benefit
Obligations (1,688,330 ) (388,089 )
Related income tax benefit 422,083 97,022
Total Other Comprehensive Loss, net of tax (1,266,247 ) (291,067 ) )
TOTAL COMPREHENSIVE LOSS FOR THE YEAR (5,674,811 ) (12,159,436 )
Total Net Loss Attributable to the Owners of the Company (4,408,564 ) (11,868,369 )
Total Comprehensive Loss Attributable to the Owners
of the Company
(5,674,811
)
(12,159,436
)
LOSS PER SHARE:
Basic (0,002 ) (0,004 )
Diluted (0,002 ) (0,004 )
Appendix -5
ADDITIONAL FINANCIAL INFORMATION
PT ASIA PACIFIC FIBERS Tbk
(PARENT ENTITY ONLY)
STATEMENTS OF CHANGES IN CAPITAL DEFICIENCY
For the years ended December 31, 2017 and 2016
Retained Earnings
(Accumulated deficit)
Share Capital
Additional
paid-in capital
Appropriated
Unappropriated
Total equity
(capital deficiency)
US$ US$ US$ US$ US$
Balance as at December 31, 2015 635,689,316 624,344,507 2,345,301 (2,185,034,779 ) (922,655,655 )
Total loss for the year – – – (11,868,369 ) (11,868,369 )
Other comprehensive loss, net of tax – – – (291,067 ) (291,067 )
Balance as at December 31, 2016 635,689,316 624,344,507 2,345,301 (2,197,194,215 ) (934,815,091 )
Total loss for the year – – – (4,408,564 ) (4,408,564 )
Other comprehensive loss, net of tax – – – (1,266,247 ) (1,266,247 )
Balance as at December 31, 2017 635,689,316 624,344,507 2,345,301 (2,202,869,026 ) (940,489,902 )
Appendix -6
ADDITIONAL FINANCIAL INFORMATION
PT ASIA PACIFIC FIBERS Tbk
(PARENT ENTITY ONLY)
STATEMENTS OF CASH FLOWS
For the years ended December 31, 2017 and 2016
DRAFT
2 0 1 7 2 0 1 6
US$ US$
CASH FLOWS FROM OPERATING ACTIVITIES
Receipt from customers 452,275,268 359,942,630
Payment to suppliers (366,149,955 ) (253,401,986 )
Payment of salaries (10,335,562 ) (8,830,852 )
Other operating cash payments, net (55,333,452 ) (88,909,037 )
Cash provided by operations 20,456,299 8,800,755
Interest received 22,181 23,557
Interest expense and bank charges paid (3,297,599 ) (3,824,705 )
Cash receipt from insurance claim settlement 1,497,966 5,688,253
Payment of income tax (2,903,110 ) (2,175,977 )
Refund of income tax 2,901,194 5,426,618
Net Cash Provided By Operating Activities 18,676,931 13,938,501
CASH FLOWS FROM INVESTING ACTIVITIES
Payment to acquire property, plant and equipment (2,538,928 ) (12,431,261 )
Proceed from sale of property, plant and equipment − 28,669
Net Cash Used In Investing Activities (2,538,928 ) (12,402,592 )
CASH FLOWS FROM FINANCING ACTIVITIES
Receipt of capex loans − 1,500,000
Payment of capex loans (875,000 ) −
Receipt/(Payment) of bank loans 6,293,821 (2,405,857 )
Payment of credit financing payables (12,292 ) (69,829 )
Net Cash Provided By (Used In) Financing Activities 5,406,529 (975,686 )
NET INCREASE IN CASH AND CASH EQUIVALENTS 21,544,532 560,223
EFFECT OF FOREIGN CURRENCY EXCHANGE RATE CHANGES (18,772,416 ) 251,098
CASH AND CASH EQUIVALENTS
AT THE BEGINNING OF YEAR
3,447,893
2,636,572
CASH AND CASH EQUIVALENTS
AT THE END OF YEAR
6,220,009
3,447,893