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Table of Contents Page
Director’s Statement
Interim Consolidated Financial Statements
As of September 30, 2014 (Unaudited) and December 31, 2013 (Audited) and
For the 9 (Nine) Months Period Ended September 30, 2014 (Unaudited) and 2013 (Audited)
Interim Consolidated Statements of Financial Position 1
Interim Consolidated Statements of Comprehensive Income 2
Interim Consolidated Statements of Changes in Equity 3
Interim Consolidated Statements of Cash Flows 4
Notes to the Interim Consolidated Financial Statements 5
The accompanying notes form an integral part of these
TOTAL ASSETS 2,855,063,989,175 2,600,774,537,159
LIABILITIES AND EQUITY Notes Current Portion of Deferred Gain on
Sale and Leaseback Transactions 2.j, 18, 33.a 11,897,445,548 11,897,445,548
Equity Attributable to Owners of the Parent Entity
Capital Stock, par Value - Rp100 per Share Authorized Capital - 4,000,000,000 shares
Total Equity Attributable to Owners of the Parent Entity 1,665,693,117,644 1,611,383,050,152 Non-Controlling Interest 2.c, 22 23,169,014,069 27,608,728,827
TOTAL EQUITY 1,688,862,131,713 1,638,991,778,979
The accompanying notes form an integral part of these interim consolidated financial statements
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Notes 2014 2013
(9 Months) (9 Months)
Rp Rp
REVENUE 2.p, 23 2,415,291,830,694 1,829,813,739,498
COST OF SALES 2.p, 24 (1,748,120,010,193) (1,370,188,040,434)
GROSS PROFIT 667,171,820,501 459,625,699,064
Operating Expenses 2.f, 2.p, 10, 25 (553,621,340,469) (420,880,880,854) Others - Net (12,920,157,835) (247,477,936)
PROFIT FROM OPERATION 100,630,322,197 38,497,340,274
Interest Income 26 12,041,784,471 4,946,205,484 Financial Charges 26 (48,346,899,604) (14,145,947,758)
PROFIT BEFORE TAX 64,325,207,064 29,297,598,000
Tax Expenses 2.q, 7.b (13,015,516,256) (9,642,519,175)
PROFIT FOR THE PERIOD 51,309,690,808 19,655,078,825
OTHER COMPREHENSIVE INCOME -
-TOTAL COMPREHENSIVE INCOME
FOR THE PERIOD 51,309,690,808 19,655,078,825
PROFIT FOR THE PERIOD ATTRIBUTABLE TO:
Owners of the Parent Entity 54,310,067,492 20,140,073,304 Non-Controlling Interest 2.c (3,000,376,684) (484,994,479)
51,309,690,808 19,655,078,825
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD ATTRIBUTABLE TO:
Owners of the Parent Entity 54,310,067,492 20,140,073,304 Non-Controlling Interest 2.c (3,000,376,684) (484,994,479)
51,309,690,808 19,655,078,825
EARNINGS PER SHARE
Basic, Profit for the Period Attributable to
The accompanying notes form an integral part of these interim consolidated financial statements
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Notes Capital Stock Total Equity Non-Controlling Total
Difference in Value Appropriated Unappropriated Attributable to Interest Equity
from Restructuring Owners of the
Paid-in Transactions between Parent Entity
Capital Entities Under Change in Equity Excess of Common Control- Transactions of
Par Net Subsidiaries Total
Rp Rp Rp Rp Rp Rp Rp Rp Rp Rp
BALANCE AS OF DECEMBER 31, 2012 100,000,000,000 -- (11,329,652,726) (11,728,781,953) (23,058,434,679) -- 156,238,115,976 233,179,681,297 11,461,117,212 244,640,798,509
Changes in Equity for the Year 2013
Proceeds from Initial
Public Offering - Net of Share Issuance Costs 20,21 15,610,000,000 1,312,722,950,000 -- -- 1,312,722,950,000 - -- 1,328,332,950,000 -- 1,328,332,950,000
Non-Controlling Interest 2.c -- -- -- -- -- -- -- -- 15,825,543,566 15,825,543,566
Total Comprehensive Income for the Year -- -- -- -- -- -- 49,870,418,855 49,870,418,855 322,068,049 50,192,486,904
BALANCE AS OF DECEMBER 31, 2013 115,610,000,000 1,312,722,950,000 (11,329,652,726) (11,728,781,953) 1,289,664,515,321 -- 206,108,534,831 1,611,383,050,152 27,608,728,827 1,638,991,778,979
Changes in Equity for the period ended September 30, 2014
Non-Controlling Interest 2.c -- -- -- -- -- -- -- -- (1,439,338,074) (1,439,338,074)
Reserved Fund -- -- -- -- -- 23,100,000,000 (23,100,000,000) -- --
--Total Comprehensive Income for the Period -- -- -- -- -- -- 54,310,067,492 54,310,067,492 (3,000,376,684) 51,309,690,808
BALANCE AS OF SEPTEMBER 30, 2014 115,610,000,000 1,312,722,950,000 (11,329,652,726) (11,728,781,953) 1,289,664,515,321 23,100,000,000 237,318,602,323 1,665,693,117,644 23,169,014,069 1,688,862,131,713 Total Equity Attributable to Owner of Parent Entity
The accompanying notes form an integral part of these interim consolidated financial statements
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Notes 2014 2013
(9 Months) (9 Months)
Rp Rp
CASH FLOWS FROM OPERATING ACTIVITIES
Collections from Customers 2,334,230,813,473 1,771,633,699,568 Payments to Suppliers and Third Parties (1,648,878,065,240) (1,329,081,900,093) Payments to Management and Employees (394,758,350,842) (303,510,169,085) Cash Flows from Operations 290,594,397,391 139,041,630,390 Financial Charges Payment - Net (4,927,616,836) (9,199,742,274)
Payments of Taxes (16,712,885,295) (19,276,077,498)
Net Cash Provided by Operating Activities 268,953,895,260 110,565,810,618
CASH FLOWS FROM INVESTING ACTIVITIES
Advances for Purchase of Property and Equipment and Other Advances (40,982,714,490) (15,418,327,066) Property and Equipment, and Software
Disposal 12 347,579,515 701,907,127
Acquisition 12, 13.b (267,631,837,645) (296,600,868,975)
Acquisition of Subsidiaries (11,731,480,787)
--Payment of Software (4,072,624,522)
--Net Cash Used in Investing Activities (324,071,077,929) (311,317,288,914)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Initial Public Offering -- 1,374,282,340,225
Payment to Related Parties (47,078,183,567) (368,649,974,074)
Bank Loans 17 (9,956,667,197) (8,286,394,412)
Net Cash Provided by (Used in) Financing Activities (57,034,850,764) 997,345,971,739
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENT (112,152,033,433) 796,594,493,443 Effect of Foreign Exchange on Cash and Cash Equivalent
at the End of the Period (4,332,226,795) 12,845,747,433
CASH AND CASH EQUIVALENT AT BEGINNING PERIOD 3 515,437,837,445 168,707,958,679
CASH AND CASH EQUIVALENT AT ENDING PERIOD 3 398,953,577,217 978,148,199,555
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1. General
1.a. The Company’s Establishment
PT Siloam International Hospitals Tbk (“the Company”) was established under the name of PT Sentralindo Wirasta on August 3, 1996 based on the Deed of Establishment No. 3, which was made in the presence of Myra Yuwono, S.H., a notary in Sukabumi. The deed of establishment was approved by the Minister of Justice of the Republic of Indonesia in his decree No. C2-8639.HT.01.01.TH.96 dated August 27, 1996 and was published in the State Gazette No. 97, Supplement No. 9518 on December 3, 1996.
The Company’s articles of association have been amended several times, and the latest was by Notarial Deed No. 2 dated May 2, 2014, made in the presence of Nurlani Yusup, S.H, M.Kn., notary in Tangerang, with regard to change among others the Company’s purpose and objectives. The change in articles of association was approved by the Minister of Law and Human Rights of the Republic of Indonesia in his decree No.AHU-02247.40.20.2014 dated May 5, 2014 and notification of the change in articles of association was received by the Minister of Law and Human Rights of the Republic of Indonesia in his decree No.AHU-01691.40.21.2014 dated May 5, 2014.
In accordance with Article 3 of the Company's articles of association, the Company's principal activity is engage in public health services, including setting up and/or acquire and managing hospitals, polyclinics,maternity hospitals, health facilities and supporting infrastructure, and engaging in government healthcare programs.
The Company commenced commercial operations in 2010 after the restructuring of PT Lippo Karawaci Tbk’s hospital units. The Company's principal activity is engage in public health services, including setting up and managing hospitals. The operation of hospital units of the Company and the subsidiaries (the Group) are in several cities on the island of Sumatra, Java, Bali, Kalimantan and Sulawesi.
The Company’s head office is located at Siloam Hospital Lippo Village 5th Floor, Jl. Siloam No. 6, Lippo Village, Tangerang 15811, Banten - Indonesia. The parent entity of the Company is PT Megapratama Karya Persada and the ultimate parent entity is PT Lippo Karawaci Tbk.
1.b. The Company’s Initial Public Offering
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1.c. The Group’s Structure
The Company has ownership of more than 50%, either direct or indirectly, in the following subsidiaries:
Domic ile Main Direc t Indirec t Year of
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Domic ile Main Direc t Indirec t Year of
Business Ownership Ownership Starting September 30, 2014 Dec ember 31, 2013 Perc entage Perc entage Operation Rp Rp PT RS Siloam Hospital Sumsel Palembang Healtc are inc lude - - 70.00% 2012 101,739,614,281 102,356,656,020
(d/h PT Karyatama Indah Sentosa) Hospital
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Domicile Main Direct Indirect Year of
Business Ownership Ownership Starting September 30, 2014 December 31, 2013
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On September 10, 2013, the Company acquired 99.99% ownership in PT Tunggal Pilar Sejahtera (TPP) from PT Primakreasi Propertindo and PT Grand Villa Persada at the acquisition cost of Rp599,999,000. The acquisition transactions were recorded in accordance with PSAKNo.38 (Revised2012) “BusinesCombination for Entities Under Common Control”. There was no net difference between the purchase price and the proportionate of stocks on net book value of assets of the subsidiary acquired.
On September 11, 2013, the Company acquired ownership in PT Mahkota Buana Selaras (MBS) (through direct ownership of 99.99% and 0.01% indirect ownership in TPP) at the acquisition cost of Rp600,000,000. The acquisition transactions were recorded in accordance with PSAK No. 38 (Revised 2012) “Business Combination for Entities Under Common Control”. There was no net difference between the purchase price and the proportionate of stocks on net book value of assets of the subsidiary acquired.
On November 26, 2013, TPP and MBS, acquired 99.99% and 0.01%, respectively, ownership in PT Koridor Usaha Maju (KUM) from PT Primakreasi Propertindo and PT Grand Villa Persada, at the acquisition cost of Rp599,999,000 and Rp 1,000, respectively. The acquisition transactions were recorded in accordance with PSAK No. 38 (Revised 2012) “Business Combination for Entities Under Common Control”. There was no net difference between the purchase price and the proportionate of stocks on net book value of assets of the subsidiary acquired.
On December 6, 2013, TPP and MBS, acquired 75% and 25%, respectively, ownership in PT Gramari Prima Nusa (GPN), at the acquisition cost of Rp750,000,000 and Rp250,000,000, respectively. At the acquisition date, GPN had not yet started operations and therefore, it was recorded as an asset acquisition.
Based on the deed Nos. 65, 66 and 67 on December 13, 2013 made in presence of Sriwi Bawana Nawaksari, S.H., M.Kn., notary in Tangerang, KUM acquired 80% ownership in PT Medika Sarana Traliansia (MST), at the acquisition cost of Rp189,600,000,000. This transaction represent business combination (see Note 27). MST commenced commercial operations in 2008. MST had ownership 99.99% of PT Trisaka Reksa Waluya. TRW commenced commercial operations in 2008.
Based on the deed No. 29 on July 23, 2014 made in presence of Unita Christina Winata, S.H., Notary in Jakarta, TPP and MBS acquired 75% and 25%, respectively ownership in PT Rashal Siar Cakra Medika (RSCM), at the acquisition cost of Rp117,314,807,872. This transaction represent business combination (see Note 27). RSCM commenced commercial operations in 2009.
1.d. Board of Commissioners, Directors, Employees and Audit Committee
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The audit committee composition as of 30 September 2014 and December 31, 2013 are as follows:
As of September 30, 2014, the Company’s Corporate Secretary is Sugianganto Budisuharto and head of internal audit is Gunawan HP.
As of September 30, 2014 and December 31, 2013, the Group have 6,393 and 4,905 permanent employees, respectively.
2. Summary of Significant Accounting Policies
2.a. Compliance with the Financial Accounting Standards
The Group’s consolidated financial statements have been prepared and presented in accordance with the Indonesian Financial Accounting Standards which include the Statements and the Interpretations as issued by the Financial Accounting Standards Board of the Indonesian Institute of Accountants (DSAK-IAI) and Regulation of Bapepam-LK No. VIII.G.7 regarding the “Guidance of Financial Statements Presentation” as set forth in decree No. KEP-347/BL/2012 regarding the amendment to Regulation No. VIII.G.7 and other accounting policies which prevailing in the Capital Market.
2.b. Basis of Measurement and Preparation of Consolidated Financial Statements
The consolidated financial statements have been prepared on a going concern assumption and on the accrual basis, except for the consolidated statements of cash flows which used the cash basis. The basis of measurement in the preparation of these consolidated financial statements is the historical cost principle, except for certain accounts that were measured using other basis, as described in the respective accounting policy.
The consolidated statements of cash flows have been presented by classifying the activities into operating, investing and financing. The cash flows from operating activities were prepared using the direct method.
September 30, 2014 December 31, 2013
Board of Commissioners
President Commissioner Ketut Budi Wijaya Ketut Budi Wijaya
Commissioner Theo Leo Sambuaga Theo Leo Sambuaga
Rahmawaty Agus Benjamin
Lambock V. Nahattands
--Independent Commissioner Farid Harianto Farid Harianto
Muladi Muladi
Jonathan Limbong Parapak Jonathan Limbong Parapak
Directors
President Director Romeo Fernandez Lledo *) Gershu Chandy Paul
Director Grace Frelita Indradjaja Grace Frelita Indradjaja
Andry Sugianganto Budisuharto
Kailas N. Raina Romeo Fernandez Lledo George Mathew George Mathew Anang Prayudi Anang Prayudi *)
*) Unaffiliated Director
Audit Committee
Chairman Farid Harianto
Members Lie Kwang T ak
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The functional currency of the Group is Indonesian Rupiah. Transactions are recorded using the functional currency. The reporting currency used in the preparation of these consolidated financial statements is the Indonesian Rupiah.
New accounting standard or improvement on accounting standard which is relevant to the Group and mandatory for the first time for the financial period beginning 1 January 2013 is PSAK No. 60 (Revised 2010) “Financial Instrument: Disclosures”. The Group’s management has evaluated the impact of the improvement on PSAK No. 60 to be immaterial to the consolidated financial statements. Application of PSAK No. 38, “Business Combinations on Entities under Common Control” resulted changes in accounting policies as described in Note 2.o.
Meanwhile, revocation of PSAK No. 51, “Quasi Reorganizations” with an effective date of 1 January 2013 is not relevant, and did not result in changes to the Company's accounting policies and had no effect on the amounts reported for the current period or prior financial years.
2.c. Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its subsidiaries (including special purpose entities) either directly or indirectly controlled, as presented in Note 1.c.
Control also exists when the parent entity owns half or less of the voting power of an entity when there is:
a. power over more than half of the voting rights by virtue of an agreement with other investors;
b. power to govern the financial and operating policies of the entity under a statute or an agreement;
c. power to appoint or remove the majority of the members of the board of directors or equivalent
governing body and control of the entity is by that board or body; or
d. power to cast the majority of votes in the meetings of the board of directors or equivalent governing
body and control of the entity is by that board or body.
The existence and effect of potential voting rights that can be implemented or converted on the date of the reporting period should be considered when assessing whether an entity has the power to govern financial and operating policies of another entity.
The entities are consolidated from the date on which control was transferred to the Company and are no longer consolidated when the Company ceases to have control. Control is obtained when the entity has the power to govern the financial and operating policies of another entity to obtain the benefits of the entity activity.
The consolidated financial statements have been prepared on the basis of entity concept. All significant related intercompany accounts, transactions and profits among the consolidated companies have been eliminated to reflect the financial position and result of operations as a whole entity.
The changes in the Company’s ownership interest in a subsidiary that do not result to a loss of control are accounted for as equity transactions and attributed to the owners of the parent.
All major transactions and inter-company account balances (including significant unrealized gain or loss) have been eliminated.
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2.d. Foreign Currency Transactions
A foreign currency is a currency other than the functional currency. Transactions during the current year using foreign currencies were recorded at the spot rate prevailing on the transaction date.
At the reporting date, transactions in foreign currencies were translated using the following closing rates:
Gains and losses from foreign exchange differences arising from foreign currency transactions into Rupiah were charged to profit or loss.
Non-monetary items that are measured in terms of historical cost in a foreign currency shall be translated using the exchange rate at the date of transaction. Non-monetary items that are measured at fair value in a foreign currency shall be translated using the exchange rate when the fair value was determined.
2.e. Cash and Cash Equivalent
Cash consist of cash on hand and in banks, are not used as collateral and are not restricted.
Cash equivalent consists of time deposits certificates with maturities of not more than or equal to three (3) months from the date of placement and are not restricted.
2.f. Transactions with Related Parties
In its normal business, the Company enters into transactions with related parties. A related party is a person or entity that is related to the Company (referred to as the “reporting entity”), which includes:
a) A person or a close member of that person’s family is related to a reporting entity if that person:
(i) has control or joint control over the reporting entity;
(ii) has significant influence over the reporting entity;
(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 following conditions applies:
(i) The entity and the reporting entity are members of the same group (which means that each
parent, subsidiary and fellow subsidiary is related to the others);
(ii) One entity is an associate or joint venture of the other entity (or an associate or joint venture of a
member of a group of which the other entity is a member);
(iii)Both entities are joint ventures of the same third party;
(iv)One entity is a joint venture of a third entity and the other entity is an associate of the third entity.
(v)The entity is a post-employment benefit plan for the benefit of employees of either the reporting
entity or an entity related to the reporting entity. If the reporting entity is managing the plan, the sponsoring entity is also related to the reporting entity;
(vi)The entity is controlled or jointly controlled by a person identified in (a); or
(vii)A person identified in (a) (i) has significant influence over the entity or is a member of the key
management personnel of the entity (or a parent of the entity).
2.g. Inventories
Inventories are stated at the lower of cost and net realizable value. Cost is determined by the average method. Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and selling cost. The Company determines the allowance for inventory obsolescence based on a review of the status of its inventory at the end of period.
September 30, 2014 December 31, 2013
Rp Rp
1 United State Dollar (USD) 12,212 12,189
1 Euro (EUR) 15,495 16,821
1 Singapore Dollar (SGD) 9,585 9,628
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2.h. Prepaid Expenses
Prepaid expenses are amortized over the period benefitted using straight line method.
2.i. Property and Equipment
At initial recognition, property and equipment are measured at acquisition cost.
After initial recognition, property and equipment except land are accounted for using the cost model which is carried at cost less accumulated depreciation and accumulated impairment losses. Land is not depreciated and carried at cost less accumulated impairment losses.
Depreciation is computed by using the straight line method based on the estimated useful lives of the assets as follows:
Building, Infrastructure and Renovations 4 - 20
Years
Equipment and Medical Supplies 4 - 8
Furniture, Fixtures and Office Equipment 4 - 10
Vehicles 5
The cost of repairs and maintenance is charged to profit or loss as incurred while significant renovations and addition which add estimated useful life or future economic benefits are capitalized. When assets are retired or otherwise disposed of, the cost and the related accumulated depreciation and accumulated impairment loss, if any, are removed from the accounts and any resulting gains or losses are charged to operations for the relevant period.
Accumulated construction costs of property and equipment are capitalized as "Construction in Progress " and recorded in "property and equipment" account until the construction process is completed. These costs are reclassified to property and equipment when the construction are completed.
The carrying amount of property and equipment is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is credited or charged to operations in the year the asset is derecognized.
Management has reviewed the estimated useful lives, depreciation methods and residual values of the propery and equipment, at each reporting period. Necessary adjustments made prospectively.
2.j. Leases
The determination of whether an arrangement is a lease agreement or lease agreement containing the substance of the agreement based on the inception date and whether the fulfillment of the agreement depends on the use of an asset and the agreement provides a right to use the asset.
Leases are classified as finance leases if the lease substantially transferred all the risks and benefits related to ownership of the asset. Leases are classified as operating leases if the lease did not substantially transfer all the risks and benefits related to ownership of the asset.
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and recognized as an asset. Leased asset depreciation policy is consistent with the policy for the Group’s own property and equipment.
Under an operating lease, the Group recognizes lease payments as an expense on a straight-line basis over the lease term.
The Group recognizes lease receivables in the consolidated statements of financial position as a net lease investment. Collection of leases are considered as payments of lease principal and finance lease income. Recognition of finance lease income is based on a pattern reflecting a constant periodic rate of return on the Group's net investment as lessor in a finance lease.
Group as lessor
The Group is required to present assets subject to operating leases in its consolidated statements of financial position according to the nature of the asset. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognized as an expense over the lease term on the same basis as operating rental income. Contingent rents, if any, are recognized as revenue in the periods in which they are earned. Lease income from operating leases is recognized as income on a straight-line basis over the lease term.
A sale and leaseback transaction involves the sale of an asset and leasing back the same asset. If a sale and leaseback transaction is a finance lease, any excess of sales proceeds over the carrying value is not immediately recognized as income in the consolidated financial statements of a seller (lessee) but is deferred and amortized over the lease period.
Sale and Leaseback
If a sale and leaseback transaction is an operating lease, and it is clear that the transaction is established at fair value, any profit or loss is recognized immediately. If the sales price is below fair value, any profit or loss is recognized immediately except if the loss is compensated by future lease payments below market price where it is deferred and amortized in proportion to the lease payments over the period for which the asset is expected to be used.
2.k. Impairment of Non-Financial Assets
The recover amount of non-financial assets shall be estimated at the time of the events or changes in circumstances indicate that the carrying value may not be recoverable. An impairment loss is recognized in the current period.
Impairment loss been recognized in prior periods is reversed, if and only if, there is a change in the estimates used to determine the asset's recoverable amount since the last impairment loss was recognized. If so, the carrying amount of the asset is increased to its recoverable amount. This increase is a reversal of an impairment loss. Total assets increased due to the reversal of an impairment loss, should not exceed the carrying amount if the asset does not bear an impairment loss in the previous period.
2.l. Business Combination
The Group accounts for each business combination by applying the acquisition method.
The consideration transferred for an acquisition is measured at the aggregate of the fair values of assets given-up, liabilities assumed and equity instruments issued by the Company. Acquisition-related costs are recognized in the profit or loss as incurred.
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• Deferred tax assets or liabilities that are related to assets acquired and liabilities taken over in
business combination are recognized and measured in accordance with PSAK No. 46 (Revised 2010), “Income Taxes”.
• Liabilities (or assets, if any) related to employee benefit arrangements from the acquiree are
recognized and measured in accordance with PSAK No. 24 (Revised 2010), “Employee Benefits”.
• Liabilities or equity instruments related to the replacement of an acquiree’s share-based payment
awards are measured in accordance with PSAK No. 53 (Revised 2010), “Share-based Payment”.
• Non-current assets (or disposal groups) acquired which are classified as held for sale are measured in
accordance with PSAK No. 58 (Revised 2009), “Non-current Assets Held for Sale and Discontinued Operations”.
2.m.Intangible Assets
Goodwill arising in a business combination is recognized as an asset on the date that control is acquired. Goodwill
Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any noncontrolling interests in the acquiree, and the fair value of the acquirer’s previously held equity interest in the acquiree over the net of the acquisition date amounts of the identifiable assets acquired and the liabilities taken over.
Goodwill is not amortized but is reviewed for impairment at least annually or more frequently when there is an indication that the goodwill may be impaired. For the purpose of impairment testing, goodwill is allocated to each of the cash-generating units expected to benefit from the synergies of the combination. If the recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit prorated on the basis of the carrying amount of each asset in the unit. An impairment loss is charged to the consolidated statements of comprehensive income for the current period. An impairment loss recognized for goodwill is not reversed in the subsequent period.
The negative goodwill that resulted from bargain purchases is recognized as gain in profit or loss. The gain is attributed to the acquirer.
If goodwill has been allocated to a cash-generating unit and certain operations on the cash-generating unit is stopped, the goodwill associated with discontinued operations are included in the carrying amount of the operation when determining the gain or loss on disposal. Goodwill removed is measured based on the relative value of discontinued operations and share of the cash-generating unit retained.
Software costs are initially recognized at cost or amounts attributable to the assets at the time of acquisition.
Cost of Software
Acquisition cost of accounting software is deferred and amortized using the straight line method based on the estimated economic useful life of five (5) years.
2.n. Employee Benefits
Short-term employee benefits are recognized as wages and salaries for rendered services to the Company during the accounting period.
Short-term employee benefits
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computed and recorded a provision for employee post-employment benefits in accordance with the Labour Law No. 13/2003 and PSAK No. 24 (Revised 2010), "Employee Benefits".
Post-employment benefits are recognized at a discounted amount when the employees have rendered services to the company during the accounting period. Liabilities and expenses are measured using actuarial techniques which include constructive obligation that arises from the Group’s common practices. In calculating such liabilities, the benefit must be discounted using the projected unit credit method. Past service cost is recognized in profit or loss when the benefit becomes vested and recognized as an expense using the straight-line method for the average period of vested benefit. Accumulated unrecognized actuarial gain (loss) that is more than 10% of the present value of defined benefit liabilities are amortized using the straight line method over the remaining projected average service period of employees in the programme.
2.o. Difference in Value from Restructuring Transactions between Entities Under Common Control
The restructuring transactions between entities under common control, such as transfers of assets, liabilities, shares or other ownership instruments by re-organizing entities within the same group, do not represent changes of ownership in terms of economic substance, and thus, should not result in a gain or loss for the group of companies as a whole or for the individual entity in the groups.
Since restructuring transactions with entities under common control do not result in changes in term of economic substance of ownership in transferred assets, liabilities or other ownership instruments, the transferred assets or liabilities (in legal form) should be recorded at book value in a manner similar to business combination transactions using the pooling of interest method.
The difference between transfer price and book value does not represent goodwill. Such difference is recorded in the account “Difference in Value from Restructuring Transactions between Entities under Common Control” and is presented in additional paid in capital as part of equity.
Since the implementation of PSAK No. 38 (Revised 2012) “Business Combinations on Entities under Common Control” starting in January 1, 2013, this account can not recognized as realized profit and loss nor reclassified as retained earning.
2.p. Revenue and Expense Recognition
Revenue is recognized when medical services are rendered or when medical supplies are delivered to patients.
Expenses are recognized when incurred.
2.q. Income Tax
Current income tax is calculated from taxable income, the earnings that have been adjusted to the appropriate tax rules.
Amendments to taxation liabilities are recorded when an assessment is received or, if appealed against, when the results of the appeal are determined.
Current tax assets and current tax liabilites are offset if, and only if, the entity:
1) has a legally enforceable right to set off the recognised amount; and
2) ntends to settle in net basis, or realises and settles the asset and liability simultaneously.
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Deferred tax assets and deferred tax liabilites are offset if, and only if, the entity:
1) has a legally enforceable right to set off current tax asset against current tax liability; and
2) the deferred tax asset and the deferred tax liability relate to income taxes levied by the same tax
authority on the same taxable entity.
2.r. Financial Instruments
The Group classified its financial assets into four (4) categories, as follows (i) financial assets measured at fair value through profit or loss (FVTPL), (ii) loans and receivables, (iii) held-to-maturity financial assets (HTM financial assets) and (iv) available-for-sale financial assets (AFS financial assets). The classification depends on the purpose for which the financial assets were acquired. The management determines the classification of its financial assets at initial recognition.
Financial Assets
(i) Financial Assets at FVTPL
Financial assets which are recognized as FVTPL are financial assets for trading. Assets are classified in this category when they are held principally for the purpose of selling or repurchasing in the near term and there is evidence of a recent actual pattern of short-term profit taking. Derivatives are classified as trading assets, except when designated and effective as hedging instruments.
At initial recognition, financial assets measured at FVTPL are measured at fair value. Transaction costs related to the acquistion are recognized in the current year profit or loss. Subsequent increase or decrease in fair value is recognized in profit or loss.
(ii) Loans and Receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables are initially recognized at fair value plus transaction costs and are subsequently measured at amortized cost using the effective interest rate method.
(iii)HTM Financial Assets
HTM investments are non-derivative financial assets with fixed or determinable payments and fixed maturity that management has the positive intention and ability to hold to maturity, other than:
a. Investments which from initial recognition, were designated as financial assets measured at
FVTPL;
b. Investments which are designated as available-for-sale; and
c. Investments that meet the definition of loans and receivables.
At initial recognition, HTM investments are recognized at fair value plus transaction costs and are subsequently measured at amortized cost using the effective interest rate method.
(iv)AFS Financial Assets
AFS financial asset are non-derivative financial assets that are held during a certain period with the intention for sale in order to fulfill liquidity needs, changes in interest rates or foreign exchange, or those that are not classified as loans and receivables, investments that are classified as held-to-maturity or financial assets at fair value through profit or loss.
18
Financial Liabilities and Equity Instruments
Financial liabilities and equity instruments issued by the Group are classified according to the substance of the contractual arrangements entered into and the definitions of financial liabilities and equity instruments.
Classification as debt or equity
An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. Equity instruments are recorded as the proceeds received, net of direct issue costs. Share issuance costs are presented as part of equity under "Additional Paid-in Capital – Net”.
Equity instruments
Financial liabilities are classified into the categories of (i) financial liabilities measured at fair value through profit or loss (FVTPL) and (ii) financial liabilities measured at amortized cost.
Financial Liabilities
(i) Financial liabilities measured at FVTPL
Financial liabilities at fair value through profit or loss are the financial liabilities that are designated for trading. Financial liabilities are classified for trading if acquired primarily for the purpose of selling or repurchasing in the near term and there is evidence of a pattern of short-term profit taking. Derivatives are classified as trading liabilities except those effectively designated as hedging instruments.
At initial recognition, financial liabilities at FVTPL are recognized at fair value. Transaction costs in connection with to the acquisition are recognized in profit or loss for the period; subsequent increase or decrease in fair value are recognized in the profit or loss.
(ii) Financial Liabilities Measured at Amortized Cost
Financial liabilities not classified as financial liabilities at fair value through profit or loss are categorized and measured using amortized cost.
At initial recognition, financial liabilities measured at amortized cost are recognized at fair value net of transaction costs and subsequently measured at amortized cost using the effective interest rate method.
Impairment of Financial Assets
Financial assets, other than those at FVTPL, are assessed for indicators of impairment at the reporting date. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been impacted. For listed and unlisted equity investments classified as AFS, a significant or prolonged decline in the fair value of the equity investment below its cost is considered to be an objective evidence of impairment.
Some objective evidence for impairment value are as follows:
• significant financial difficulty of the issuer or counterparty; or
• default or delinquency in interest or principal payments; or
• it becoming probable that the borrower will enter bankruptcy or financial reorganization.
19
For financial assets carried at amortized cost, the amount of impairment is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate.
The carrying amount of the financial asset is directly reduced by the amount of impairment loss for all financial assets with the exception of receivables, where the carrying amount is reduced through the use of an allowance account. When a receivable is considered uncollectible, it is written-off against the allowance account. Subsequent recoveries of amounts previously written-off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognized in the profit or loss.
When an AFS financial asset is considered to be impaired, cumulative gains or losses previously recognized in equity are reclassified to the profit or loss.
With the exception of AFS equity instruments, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment on the date of the impairment is reversed does not exceed the amortized cost had there been no impairment recognized.
In respect of AFS equity securities, impairment losses previously recognized in the consolidated statement of comprehensive income are not reversed through profit or loss. Any increase in fair value subsequent to an impairment loss is recognized directly in equity.
Reclassification of Financial Assets
Reclassification is only permitted in rare circumstances and where the asset is no longer held for the purpose of selling in the short-term. In all cases, reclassification of financial assets is limited to debt instruments. Reclassifications are accounted for at the fair value of the financial asset on the date of reclassification.
Offsetting of 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.
Derecognition of Financial Assets and Liabilities
The Group derecognizes a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognizes their retained interest in the asset and an associated liability for the amounts they may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognize the financial asset and also recognizes a collateralized borrowing for the proceeds received.
The Group derecognizes financial liabilities when, and only when, the Group’s obligations are discharged, cancelled or expired.
Effective Interest Method
20
expected life of the financial instrument, or, where appropriate, a shorter period to the net carrying amount on initial recognition.
Income is recognized on an effective interest basis for financial instruments other than those financial
instruments at FVTPL.
Fair Value Determination
The fair value of financial assets and liabilities must be estimated for recognition and measurement or for disclosure purposes.
PSAK No. 60, “Financial Instruments: Disclosures” requires disclosure of fair value measurements by level of the following fair value measurement hierarchy:
(i) quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1)
(ii) inputs other than quoted prices included within Level 1 that are observable for the asset or liability,
either directly (as prices) or indirectly (derived from prices) (Level 2), and
(iii)inputs for the asset or liability that are not based on observable market data (unobservable inputs)
(Level 3).
The fair value of financial instruments traded in active markets is based on quoted market prices at the reporting date. The quoted market price used for financial assets held by the Group is the current bid price, while ask price is used for financial liabilities. These instruments are included in Level 1.
The fair value of financial instruments that are not traded in an active market is determined using valuation techniques. These valuation techniques maximize the use of observable market data where it is available and rely as minimum as possible on estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in Level 2.
If one or more of the significant inputs is not based on observable market data, the instrument is included in Level 3. This is the case for unlisted equity securities.
2.s. Earnings Per Share
Earnings per share is computed by dividing income attributable to the parent by the weighted average number of common shares outstanding during the period.
Diluted earnings per share is computed considering other securities that potentially have a dilutive effect to ordinary shares outstanding during the reporting period.
2.t. Operating Segments
Operating segments are identified based on internal reports on components of the Group that are regularly reviewed by the "operational decision maker" in allocating resources and assessing performance of the operating segments.
An operating segment is a component of an entity that engages in business activity in which operating results are evaluated regularly by management, and its financial information can be presented separately.
21
2.u. Significant Accounting Estimation and Justification
The preparation of the consolidated financial statements in accordance with the Indonesian Financial Accounting Standards requires the management to make assumptions and estimates that could affect the carrying amounts of certain assets and liabilities at end of reporting period.
In the preparation of these consolidated financial statements, accounting assumptions have been made in the process of applying accounting policies that may affect the carrying amounts of assets and liabilties in the consolidated financial statements. In addition, there are accounting assumptions about the sources of estimation uncertainty at end of reporting period that could materially affect the carrying amounts of assets and liabilities in the subsequent reporting period.
The management periodically reviews them to ensure that the assumptions and estimates have been made based on all relevant information available on the date in which the consolidated financial statements have been prepared. Because there is inherent uncertainty in making estimates, the value of assets and liabilities to be reported in the future might differ from those estimates.
i. Significant Accounting Estimations and Justification
At the reporting date, the management has made significant assumptions and estimates which have the most significant impact to the carrying amount recognized in the consolidated financial statements are as follows:
Allowance for Impairment of Accounts Receivable
In general, the management analyzes the adequacy of the allowance for impairment based on several data, which include analyzing historical bad debts, the concentration of each customer's trade receivables, credit worthiness and changes in a given period of repayment. The analysis is carried out individually on a significant amount of accounts receivable, while the insignificant group of trade receivables is carried on the collective basis. At the reporting date, the carrying amount of trade receivables has been reflected at fair value and the carrying value may change materially in the subsequent reporting period. The change, however, will not be attributable to the assumptions and estimates made as of this reporting date (see Note 4).
Deferred Tax Assets Estimation
Management considerations are needed to determine the amount of deferred tax recognized in the profit or loss and the amount recorded as deferred tax assets. Recognition is performed only if it is probable that the asset will be recovered in the form of economic benefits to be received in future periods, in which the temporary differences and tax losses can still be used. Management also considers the future estimated taxable income and strategic tax planning in order to evaluate its deferred tax assets in accordance with applicable tax laws and its updates. As a result, related to its inherent nature, it is likely that the calculation of deferred taxes is related to a complex pattern where assessment requires a judgment and is not expected to provide an accurate calculation. Estimated Deferred tax disclose to the Note 7.c.
Estimated Useful Lifes of Property and Equipment
22
Post-employment Benefits
The present value of post-employment benefits obligation depends on several factors that are determined on an actuarial basis based on several assumptions. Assumptions used to determine the cost (income) include the discount rate. Changes in these assumptions will affect the carrying amount of post-employment benefits.
The Group determines the appropriate discount rate at the end of the reporting period by the interest rate used to determine the present value of future cash outflows expected to settle an estimated obligation. In determining the appropriate level of interest rates, the Group considers the interest rate of government bonds denominated in Rupiah that have a similar period to the corresponding period of the obligation.
Another key assumption is partly determined by current market conditions during the period in which the post-employment benefits is resolved. Changes in the employee benefits assumption will impact recognition of actuarial gains or losses at the end of the reporting period. Information about assumtion and balance of liability and post employment benefits expense disclose to the Note 19.
Fair Value of Financial Instruments
When the fair value of financial assets and liabilities recorded in the consolidated statements of financial position is not available in an active market, it is determined using valuation techniques including the use of mathematical models. Input for this model is derived from observable market data through the data available. When observable market data is not available, management judgment is required to determine the fair value. Such considerations include liquidity and volatility feedback model for derivative transactions and long-term discount rates, prepayments, and default rate assumptions. Fair value of financial instruments disclose to the Note 30.
ii. Significant Consideration in the Determination of Accounting Policies
The following considerations made by management in the application of accounting policies that have significant effect on the amount presented in the financial statements:
Revenue Recognition – Doctors Fee
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3. Cash and Cash Equivalent
Interest rates and maturity period of the time deposits are as follows:
There are no cash and cash equivalent pledged as collateral and restricted.
September 30, 2014 December 31, 2013
Rp Rp
Cash on Hand 4,926,516,517 4,613,913,629
Cash in Banks Related Party
Rupiah
PT Bank Nationalnobu Tbk 106,470,286,552 223,200,570,371
Third Parties
Rupiah
PT Bank Negara Indonesia (Persero) Tbk 47,087,609,110 55,026,324,173 PT Bank CIMB Niaga Tbk 29,016,859,201 16,380,733,527 PT Bank Central Asia Tbk 17,510,290,022 10,974,569,197 PT Bank Mandiri (Persero) Tbk 13,468,740,329 14,113,438,678 PT Bank Rakyat Indonesia (Persero) Tbk 8,211,715,279 18,627,512,852 Others (below Rp1 billion each) 829,106,727 1,832,686,779
Foreign Currencies SGD
PT Bank CIMB Niaga Tbk 46,933,010,405 75,301,799,681
PT Bank International Indonesia Tbk 3,140,500,165 3,164,074,460 USD
PT Bank ANZ Indonesia 14,337,439,250 2,086,378,332
PT Bank Negara Indonesia (Persero) Tbk 1,096,296,029 2,069,938,234
Others (below Rp1 billion each) 350,581,730 773,397,265
EURO
PT Bank ANZ Indonesia 8,223,202,915 1,433,499,312
Others (below Rp1 billion each) 189,800,663 529,601,289 AUD
PT Bank ANZ Indonesia 10,611,622,323 1,759,399,666
Subtotal 307,477,060,700 427,273,923,816
Time Deposits - Third Parties
Rupiah
PT Bank CIMB Niaga Tbk 80,900,000,000 19,900,000,000 PT Bank Mandiri (Persero) Tbk 5,600,000,000 2,600,000,000 PT Bank Negara Indonesia (Persero) Tbk 50,000,000 61,050,000,000
Subtotal 86,550,000,000 83,550,000,000
Total 398,953,577,217 515,437,837,445
September 30, 2014 December 31, 2013
Rupiah
Annual Contractual Interest Rates 4.00% - 10.50% 4.25% - 7.75%
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4. Trade Receivables
The movements in allowance for impairment losses are as follows:
All trade receivables are denominated in Rupiah.
Trade receivables of PT Golden First Atlanta, a subsidiary, are pledged as collateral for loans obtained from PT Bank Central Asia Tbk (see Note 17).
Based on management’s review of the individual account of the trade receivables at the end of the reporting date, there were impairment on certain trade receivables. Management has provided adequate allowance for impairment losses based on the Group's accounting policies.
Management believes that the allowance was made because the receivables cannot be collected and is adequate to cover possible losses from uncollectible accounts.
5. Other Current Financial Assets
Rental receivables represent receivables from retail tenants of the leased area in the hospital building.
September 30, 2014 December 31, 2013
Rp Rp
Related Parties (see Note 10) 2,517,710,058 2,432,208,891
Third Parties
Enterprise 325,549,505,299 251,060,097,452
Individual 19,933,266,132 17,405,834,003
Credit Card 6,757,771,892 4,563,215,001
Others (below Rp500 million each) 8,578,811,910 4,075,353,271
Subtotal 360,819,355,233 277,104,499,727
Less: Allowance for Impairment losses (8,678,533,381) (8,734,468,948) Trade Receivables - Third Parties - Net 352,140,821,852 268,370,030,779
Trade Receivables - Net 354,658,531,910 270,802,239,670
September 30, 2014 December 31, 2013
Rp Rp
Third Parties
Beginning Balance 8,734,468,948 6,167,375,415
Addition -- 2,675,109,173
Reversal (55,935,567) (108,015,640)
Ending Balance 8,678,533,381 8,734,468,948
September 30, 2014 December 31, 2013
Rp Rp
Other Current Financial Assets - Third Parties
Rental Receivables 4,008,019,937 2,978,977,233
Others 2,057,201,661 164,302,523
25
As of September 30, 2014 and December 31, 2013, the Group did not provide allowance for impairment losses on the receivables because management believes that all receivables are collectible.
6. Inventories
The Group’s inventory have been insured againts all forms of risk by PT Lippo General Insurance Tbk, a related party, amounting to Rp89,861,151,450 as of September 30, 2014 and December 31, 2013. The management believes that insurance coverage is adequate to cover possible losses of the insured assets.
The medicine and consumable goods of PT Golden First Atlanta, a subsidiary, are pledged as collateral for loans obtained from PT Bank Central Asia Tbk (see Note 17).
The amount of inventories charged to cost of sales for the 9 (Nine) months ended September 30, 2014 and 2013 amounted to Rp641,350,189,805 and Rp511,272,776,515, respectively (see Note 24).
The management believes that there is no indication of impairment of inventory as of September 30, 2014.
7. Taxes
a. Taxes Payable
On November 22, 2013 and November 25, 2013, PT East Jakarta Medika (EJM), a subsidiary, received the result of tax inspection for income tax article 23 for the year 2007 and 2008, respectively, and Value added tax for the year 2008 through Underpayment of Tax Assessment Letters (SKPKB) Nos. 00005/203/07/431/13, 00009/203/08/431/13 and 00068/207/08/431/13 amounting to Rp2,209,747,062. SKPKB has been fully paid on December 17, 2013.
September 30, 2014 December 31, 2013
Rp Rp
Medicine 56,408,933,891 54,556,306,252
Medical Supplies 34,876,095,886 36,109,123,363
Others 5,895,565,078 4,165,652,167
Total 97,180,594,855 94,831,081,782
September 30, 2014 December 31, 2013
Rp Rp
Income Tax
Article 4 (2) 3,059,725,331 1,178,537,667 Article 21 11,430,205,353 8,544,162,861 Article 23 345,896,902 481,518,681 Article 26 1,179,920 5,023,491 Article 25/29
The Company - 2,592,436,340 Subsidiaries - 3,894,560,892 Value Added Tax 435,471,665 287,642,701
26
b. Taxes Expense (Benefit)
The calculation of estimated current tax expense and corporate income tax payable of the Company are as follows:
Current Tax
A reconciliation between profit before tax expense as presented in the consolidated statements of comprehensive income with the total consolidated tax expense is as follows:
2014 2013
(9 Months) (9 Months)
Rp Rp
Current Tax (14,996,034,000) (9,946,656,000)
Deferred 1,980,517,744 304,136,825
Consolidated Tax Expenses-Net (13,015,516,256) (9,642,519,175)
2014 2013
(9 Months) (9 Months)
Rp Rp
Profit Before Tax as
Consolidated Statements of Comprehensive Income 64,325,207,064 29,297,598,000
Less: Loss Before Tax of Subsidiaries 7,105,453,767 (20,087,066,966)
Profit Before Tax of the Company 57,219,753,297 49,384,664,966
Timing Differences:
Depreciation and Amortization Charges (8,487,804,602) (18,478,831,933)
Employee Benefits 14,558,583,273 11,815,883,316
Allowance for Impairment Losses - 400,890,954 6,070,778,671 (6,262,057,663)
Permanent Differences:
Entertainment and Donation 844,369,114 685,165,630 Income Already Subjected to Final Tax (9,807,222,923) (3,288,141,745)
Salary and Allowances Employees 227,923,651 1,813,762,973
Interest Income already Subjected to Final Tax (2,412,524,648) (2,546,769,822) Deferred Charge 7,841,058,928
(3,306,395,878) (3,335,982,964)
Estimated Taxable Income 59,984,136,091 39,786,624,339
Estimated Taxable Income - Rounded 59,984,136,000 39,786,624,000
Consolidated Current Tax Expenses 14,996,034,000 9,946,656,000
Less :
Prepayments of Income Tax :
Article 23 -- (1,333,044) Article 25 (16,130,261,975) (9,945,322,956)
Estimated Corporate Tax Payable (1,134,227,975)
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c. Deferred Tax
2014 2013
(9 Months) (9 Months)
Rp Rp
Profit before Tax as Presented in the Consolidated
Statements of Comprehensive Income 64,325,207,064 29,297,598,000
Less: Loss before Tax of Subsidiaries 7,105,453,767 (20,087,066,966)
Profit before Tax of the Company 57,219,753,297 49,384,664,966
Current Prevailing Tax Rate 25% 14,304,938,324 12,346,166,242
Entertainment and Donation 211,092,279 171,291,408 Income Already Subjected to Final Tax (2,451,805,731) (822,035,436)
Salary and Allowances Employees 56,980,913 453,440,743 Interest Income already Subjected to Final Tax (603,131,162) (636,692,456) Correction and Recovery of Deferred Tax (6,940,320,364) (168,553,284) Deferred Charge 7,841,058,928
-Total Tax Expenses of the Company 12,418,813,187 11,343,617,217
Deferred Tax Expenses (Benefit) - Subsidiaries 596,703,069 (1,701,098,042)
Total Consolidated Tax Expenses 13,015,516,256 9,642,519,175
December 31, 2013 Charged Deferred Tax September 30, 2014 (Credited) to Liabilities
Consolidated from the Acquired Statement of Company Comprehensive
Income
Deferred Tax Assets Rp Rp Rp
The Company
Employee Benefits 19,317,307,583 (1,250,212,695) -- 18,067,094,888
Depreciation of Property and Equipment (5,949,384,660) 3,827,433,509 -- (2,121,951,151)
Allowance for Impairment Losses 1,056,097,166 -- -- 1,056,097,166
14,424,020,089
2,577,220,814 -- 17,001,240,903
Subsidiaries 4,557,581,123 (596,703,069) -- 3,960,878,054
Total Deferred Tax Assets 18,981,601,212 1,980,517,745 -- 20,962,118,957
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Management believes that the deferred tax asset can be recovered through taxable income in the future.
8. Prepaid Expenses
Prepaid rent mainly relates to the lease of the land and building of Siloam Hospitals Lippo Cikarang from PT Graha Pilar Sejahtera and lease of Siloam Cinere Hospital to PT Anadi Sarana Tatahusada (see Note
33.a).
9. Advances
Advances for purchase of property and equipment mainly represent the purchase of medical equipment for Siloam Hospitals Lippo Village and Siloam Simatupang.
Advances for construction represent downpayment to suppliers related to the hospitals renovation.
December 31, 2012 Charged Deferred Tax December 31, 2013 (Credited) to Liabilities
Consolidated from the Acquired Statement of Company Comprehensive
Income
Deferred Tax Assets Rp Rp Rp
The Company
Employee Benefits 15,357,528,163 3,959,779,420 -- 19,317,307,583
Depreciation of Property and Equipment (2,651,594,162) (3,297,790,498) -- (5,949,384,660) Allowance for Impairment Losses 955,874,428 100,222,739 -- 1,056,097,167
13,661,808,429
762,211,661 -- 14,424,020,090
Subsidiaries 2,646,479,051 1,911,102,072 -- 4,557,581,123
Total Deferred Tax Assets 16,308,287,480 2,673,313,733 -- 18,981,601,213
Deferred Tax Liability (6,653,250,000) -- (5,329,854,371) (11,983,104,371)
September 30, 2014 December 31, 2013
Rp Rp
Rental 18,049,608,684 17,127,815,179
Insurance 4,413,905,669 2,365,595,628
Information and Technology Infrastructure 2,023,696,849
-Advertising 1,398,685,179 1,283,265,903
Others (below Rp500 million each) 10,016,424,818 2,473,556,926
Total 35,902,321,199 23,250,233,636
September 30, 2014 December 31, 2013
Rp Rp
Advances for Purchase of Property and Equipment 38,890,743,284 29,319,002,322
Construction 27,228,667,824 18,852,487,557
Others (below Rp500 million each) 11,563,033,249 12,410,384,073
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10. Transactions and Balances with Related Parties
In its normal business transactions, the Company conducts business transactions with related parties as follows:
The loan obtained from PT Lippo Karawaci Tbk (LK) is related to funding for expansion and acquisition of subsidiaries.
On April 30, 2013, the Company entered into a loan agreement with LK. This agreement was effective from the signing of the agreement and will expire immediately when the Company repays the loan. It does not bear interest if it fully paid by December 31, 2013. As of September 30, 2014, the loan bore interest rate of 12% per annum based on the prevailing lending rate as agreed by both parties.
The entire balance of the related party transactions are transactions denominated in Rupiah.
The relationship and nature of accounts/ transactions with related parties are as follows:
September 30, 2014 December 31, 2013 September 30, 2014 December 31, 2013
Rp Rp % %
Cash and Cash Equivalent
PT Bank Nationalnobu Tbk 106,470,286,552 223,200,570,371 3.73 8.58
Trade Receivables
Non-employee 2,517,710,058 2,432,208,891 0.09 0.09
Due from Related Parties Non-Trade
Other (below Rp 1 billion each) 914,471,479 515,189,971 0.03 0.02
Total 914,471,479 515,189,971 0.03 0.02
Accrued Expense
PT Lippo Karawaci Tbk 63,996,450,666 10,888,996,419 5.49 1.13
Due to Related Parties Non-Trade
PT Lippo Karawaci Tbk 340,395,590,691 387,074,492,750 29.19 40.25
Percentage to Total Assets/Liabilities
September 30, 2014 September 30, 2013 September 30, 2014 September 30, 2013
Rp Rp % Rp
Employee Benefit for Key Management Short-Term Post-Employment Benefits
Directors 17,863,893,833 10,363,412,514 3.23 2.46
Board of Commissioners -- -- --
17,863,893,833 10,363,412,514 3.23 2.46
Rental Expense
PT Lippo Karawaci Tbk 23,857,324,869 6,805,622,762 4.31 1.62
Interest Expense
PT Lippo Karawaci Tbk 31,377,498,297 -- 5.67
--Percentage to Total Operating Expenses
Related Parties Relationship Nature of Accounts/Transaction
PT Bank Nationalnobu T bk Under common control Placement of current account
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All related parties transactions are disclosed in the consolidated financial statements.
11. Other Non Current Financial Assets
Deferred charges represents expenses related to development of professional staff for operational planning of future hospitals.
12. Property and Equipment
Related Parties Relationship Nature of Accounts/Transaction
Non-employees Member of the same group T rade receivables
September 30, 2014 December 31, 2013
Rp Rp
Deferred Charges 13,058,337,779 20,893,340,447 Others (below Rp500 millions each) 2,933,739,165 1,943,326,201
Total 15,992,076,944 22,836,666,648
Beginning Balance Addition Disposal Reclassification Ending Balance
Rp Rp Rp Rp Rp
Acquisition Cost Direct Ownership
Land 43,195,729,300 58,338,000,000 -- -- 101,533,729,300
Building and Infrastructure 291,719,048,205 50,354,531,530 -- 12,521,623,480 354,595,203,215
Medical Equipment 1,358,780,589,835 133,804,194,820 871,259,587 1,874,010,770 1,493,587,535,838
Furniture, Fixtures and Office Equipment 311,337,811,186 55,802,809,033 893,808,124 4,923,974,310 371,170,786,405
Transportation Equipment and Vehicles 19,094,402,824 2,108,827,500 158,063,626 -- 21,045,166,698
Total Direct Ownership 2,024,127,581,350 300,408,362,883 1,923,131,337 19,319,608,560 2,341,932,421,456
Construction In Progress 90,456,063,910 87,286,262,925 -- (19,319,608,560) 158,422,718,275
Total Acquisition Cost 2,114,583,645,260 387,694,625,808 1,923,131,337 -- 2,500,355,139,731
Accumulated Depreciation Direct Ownership
Building and Infrastructure 52,915,955,840 22,514,291,620 -- -- 75,430,247,460
Medical Equipment 516,513,232,971 136,322,677,626 706,259,583 -- 652,129,651,014
Furniture, Fixtures and Office Equipment 133,735,387,829 88,248,812,525 872,388,321 -- 221,111,812,033
Transportation Equipment and Vehicles 9,148,828,113 2,200,913,200 158,063,626 -- 11,191,677,687
Total Accumulated Depreciation
Direct Ownership 712,313,404,753 249,286,694,971 1,736,711,530 -- 959,863,388,194
Carrying Amount 1,402,270,240,507 1,540,491,751,537
