SMRA Interim Acc - Q2 2013 Eng

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PT Summarecon Agung Tbk

and Subsidiaries

Consolidat ed financial st at ement s

wit h independent audit ors’ report

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These consolidated financial statements are originally issued in the Indonesian language.

PT SUMMARECON AGUNG Tbk AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS WITH INDEPENDENT AUDITORS’ REPORTS

AS OF JUNE 30, 2013 AND DECEMBER 31, 2012, 2011 AND 2010

AND FOR THE SIX-MONTH PERIODS ENDED JUNE 30, 2013 AND 2012 (UNAUDITED) AND YEARS ENDED DECEMBER 31, 2012, 2011 AND 2010

Table of Contents

Page

Board of Directors’ Statement

Independent Auditors’ Report

Consolidated Statements of Financial Position……… 1-3

Consolidated Statements of Comprehensive Income……… 4

Consolidated Statements of Changes in Equity………..………… 5-7

Consolidated Statements of Cash Flows ………. 8-9

Notes to the Consolidated Financial Statements……… 10-121

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The accompanying notes form an integral part of these consolidated financial statements.

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PT SUMMARECON AGUNG Tbk AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

June 30, 2013 and December 31, 2012, 2011 and 2010 (Expressed in thousands of rupiah, unless otherwise stated)

December 31,

Third parties 470,650,500 357,819,168 373,999,375 468,937,425

Other current financial assets 2w,14,

35,36,37,40 1,350,954 1,215,414 - 8,991,000

Total current assets 7,241,090,290 6,079,041,437 4,897,816,510 3,230,106,316

Investment properties - net 2m,2n,2o,2p,

13,15,17 2,845,400,360 2,549,918,696 1,925,426,080 1,278,389,197

Deferred tax assets - net 2p,2v,21f 9,853,734 9,260,769 4,726,822 794,873

Other non-current financial assets 2e,2w,14,

15,35,36,37 61,339,548 89,062,099 95,917,488 102,737,828

Other non-current assets 2l 4,099,414 3,835,767 4,122,870 4,720,828

Total non-current assets 5,511,458,371 4,797,345,248 3,201,358,171 2,909,534,122

TOTAL ASSETS 12,752,548,661 10,876,386,685 8,099,174,681 6,139,640,438

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PT SUMMARECON AGUNG Tbk AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION(continued)

December 31,

Short-term loans from banks and 2t,2w,15,

financing institution 35,36,37 74,361,926 13,248,512 52,942,822 3,596,787

Trade payables to third parties 2t,2w,18,

35,36,37 45,293,711 184,224,757 246,765,162 181,664,820

Third parties 2,996,470,931 3,569,989,568 2,325,742,472 1,493,421,418

Unearned revenues 2n,2r,24 221,522,635 192,195,100 194,934,791 123,791,788

Total current liabilities 4,971,943,289 5,197,489,997 3,572,428,037 2,407,673,725

NON-CURRENT LIABILITIES

Long-term debts - net of current maturities:

Third parties 2,296,273,760 1,059,043,500 1,071,264,254 896,500,580

Unearned revenues 2n,2r,24 58,705,624 20,365,910 10,616,181 35,996,632

Deferred tax liabilities - net 2v,21f 1,831,739 1,364,521 1,460,610 1,539,907

Derivative liability 2w,40 - - - 201,204

Other non-current financial liabilities 2w,36,37,39b 7,946,970 10,734,092 - -

Total non-current liabilities 3,664,394,958 1,863,496,830 2,049,646,694 1,574,433,285

TOTAL LIABILITIES 8,636,338,247 7,060,986,827 5,622,074,731 3,982,107,010

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CONSOLIDATED STATEMENTS OF FINANCIAL POSITION(continued)

December 31,

Notes June 30, 2013 2012 2011 2010

EQUITY

EQUITY ATTRIBUTABLE TO OWNERS OF THE PARENT ENTITY Capital stock

Authorized - 25,000,000,000 shares as of June 30, 2013 and December 31, 2012 and 10,000,000,000 shares as of December 31, 2011 and 2010 at par value

of Rp100 (full amount) per share

Issued and fully paid - 7,213,390,840 shares as of June 30, 2013 and December 31, 2012 and 6,873,140,840 shares

as of December 31, 2011 and 2010 1b,26,27 721,339,084 721,339,084 687,314,084 687,314,084

Additional paid-in capital 1b,1i,2q,

26,27 744,335,399 744,335,399 245,412,060 245,412,060

Differences from transactions

with non-controlling interests 1j 1,984,397 1,984,397 - -

Retained earnings

Appropriated - general reserve 28 57,700,058 49,779,199 45,892,133 43,557,354

Unappropriated 2,414,911,783 2,121,422,718 1,485,577,897 1,163,603,329

Equity Attributable to

Owners of the Parent Entity 3,940,270,721 3,638,860,797 2,464,196,174 2,139,886,827

Non-controlling Interests 2b,25 175,939,693 176,539,061 12,903,776 17,646,601

TOTAL EQUITY 4,116,210,414 3,815,399,858 2,477,099,950 2,157,533,428

TOTAL LIABILITIES AND EQUITY 12,752,548,661 10,876,386,685 8,099,174,681 6,139,640,438

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PT SUMMARECON AGUNG Tbk AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Six-Month Periods Ended June 30, 2013 and 2012 (unaudited) and

Years Ended December 31, 2012, 2011 and 2010 (Expressed in thousands of rupiah, unless otherwise stated)

Six-Month Periods Years Ended

GROSS PROFIT 1,106,381,805 747,340,080 1,591,986,905 1,047,145,273 753,054,124

Selling expenses 2r,32 (107,725,600) (95,064,161) (148,319,541) (125,728,711) (92,694,015)

OPERATIONS 710,980,221 458,270,300 1,010,901,426 564,474,568 398,985,762

Finance income 2r,2t,2w 61,430,208 28,247,176 83,777,232 62,645,588 44,810,897

PROFIT FOR THE YEAR 608,986,362 342,412,541 792,085,965 388,706,644 234,336,639

OTHER COMPREHENSIVE

INCOME - - - - -

TOTAL COMPREHENSIVE

INCOME FOR THE YEAR 608,986,362 342,412,541 792,085,965 388,706,644 234,336,639

PROFIT FOR THE YEAR ATTRIBUTABLE TO:

Owners of the Parent Entity 611,585,730 345,994,718 797,814,126 392,019,495 233,477,896

Non-controlling interests 2b,25 (2,599,368) (3,582,177) (5,728,161) (3,312,851) 858,743

Owners of the Parent Entity 611,585,730 345,994,718 797,814,126 392,019,495 233,477,896

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PT SUMMARECON AGUNG Tbk AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY Six-Month Periods Ended June 30, 2013 and 2012 (unaudited)

and Years Ended December 31, 2012, 2011 and 2010 (Expressed in thousands of rupiah)

Equity Attributable to Owners of the Parent Entity

Differences from _{Retained earnings}

Issued and Additional transactions with

fully paid paid-in non-controlling Appropriated - Non-controlling Total

Notes capital stock capital interests reserve fund Unappropriated Total Interests Equity

Balance as of December 31, 2012 721,339,084 744,335,399 1,984,397 49,779,199 2,121,422,718 3,638,860,797 176,539,061 3,815,399,858

Appropriation for general reserve 28 - - - 7,920,859 (7,920,859) - - -

Cash dividend 29 - - - - (310,175,806) (310,175,806) - (310,175,806 )

Total comprehensive income for the six-month period

ended June 30, 2013 - - - - 611,585,730 611,585,730 (2,599,368 ) 608,986,362

Changes in non-controlling interest 25 - - - - - - 2,000,000 2,000,000

Balance as of June 30, 2013 721,339,084 744,335,399 1,984,397 57,700,058 2,414,911,783 3,940,270,721 175,939,693 4,116,210,414

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CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (continued) Six-Month Periods Ended June 30, 2013 and 2012 (unaudited)

Balance as of December 31, 2011 687,314,084 245,412,060 - 45,892,133 1,485,577,897 2,464,196,174 12,903,776 2,477,099,950

Cash dividend 29 - - - - (158,082,239) (158,082,239) - (158,082,239 )

Total comprehensive income for the six-month period

ended June 30, 2012 - - - - 345,994,718 345,994,718 (3,582,177 ) 342,412,541

Balance as of June 30, 2012 687,314,084 245,412,060 - 49,779,199 1,669,603,310 2,652,108,653 100,079,660 2,752,188,313

Issuance of capital stock without pre-emptive rights phase I 1b,26,27 34,025,000 493,362,500 - - - 527,387,500 - 527,387,500

Difference in value from transactions of entities

under common control 1j,27 - 5,560,839 - - - 5,560,839 - 5,560,839

Difference from transactions with

non-controlling interests 1j - - 1,984,397 - - 1,984,397 - 1,984,397

Total comprehensive income for the period July 1, 2012 to

December 31, 2012 - - - - 451,819,408 451,819,408 (2,145,984 ) 449,673,424

Balance as of December 31, 2012 721,339,084 744,335,399 1,984,397 49,779,199 2,121,422,718 3,638,860,797 176,539,061 3,815,399,858

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CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (continued) Six-Month Periods Ended June 30, 2013 and 2012 (unaudited)

Balance as of December 31, 2009 643,680,064 49,058,969 - 41,883,927 983,153,942 1,717,776,902 7,021,126 1,724,798,028

Exercise of warrants 1b,25,26 43,634,020 196,353,091 - - - 239,987,111 - 239,987,111

Cash dividend 29 - - - - (54,647,222) (54,647,222 ) - (54,647,222 )

Total comprehensive income for the year - - - - 233,477,896 233,477,896 858,743 234,336,639

Transition adjustment on applying Statement of Financial

Accounting Standards (PSAK) No.55 (Revised 2006), “Financial Instruments: Recognition

and Measurement” 2w - - - - 3,292,140 3,292,140 - 3,292,140

Cash dividend 29 - - - - (68,731,408) (68,731,408 ) - (68,731,408 )

Total comprehensive income for the year - - - - 392,019,495 392,019,495 (3,312,851 ) 388,706,644

Changes in non-controlling interest 25 - - - - - - (1,429,974 ) (1,429,974 )

Transition adjustment on applying PSAK No.22 (Revised 2010),

“Business Combination” 2c,19 - - - - 1,021,260 1,021,260 - 1,021,260

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PT SUMMARECON AGUNG Tbk AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Six-Month Periods Ended June 30, 2013 and 2012 (unaudited)

Cash receipts from customers 2,599,537,878 2,160,797,023 4,635,916,582 3,485,801,616 2,791,696,602

Cash payments to:

Suppliers (1,635,582,239) (1,372,285,168) (2,800,209,600) (2,032,010,863) (1,632,801,582)

Employees (228,397,290) (176,418,315) (309,559,287) (238,636,666) (192,508,947)

Cash payments

for other operating expenses (146,601,280) (103,229,187) (61,316,169) (217,559,938) (94,371,487 )

Receipts of interest income 61,022,831 28,247,176 83,072,874 61,442,689 44,631,894

Payments of:

Income taxes (138,790,276) (93,038,107) (308,274,118) (222,214,587) (161,978,942)

Interest expense (61,681,716) (54,028,284) (107,030,548) (87,120,138) (100,278,699)

Net cash provided by

operating activities 449,507,908 390,045,138 1,132,599,734 749,702,113 654,388,839

and investment properties 12,13,44 (392,589,683) (181,310,484) (657,694,825) (599,030,376) (213,107,789)

Payment of advances for

Proceeds of loans from banks 624,999,750 138,348,717 214,869,716 503,558,797 41,500,000

Receipt of advances from

related parties 33 33,006,912 100,802,688 32,125,136 87,505,870 86,614,615

Release of restricted

financing activities 291,553,716 222,629,155 574,689,069 366,108,543 38,967,686

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PT SUMMARECON AGUNG Tbk AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

Six-Month Periods Ended June 30, 2013 and 2012 (unaudited) and Years Ended December 31, 2012, 2011 and 2010

(Expressed in thousands of rupiah)

Six-Month Periods Years Ended

Ended June 30, December 31,

2012

Notes 2013 (unaudited) 2012 2011 2010

NET INCREASE IN CASH

AND CASH EQUIVALENTS 295,250,404 433,646,577 946,446,505 366,267,846 485,871,705

CASH AND CASH EQUIVALENTS AT BEGINNING OF

PERIOD/YEAR 4 2,427,999,474 1,482,154,969 1,482,154,969 1,116,886,523 633,169,242

EFFECT OF FOREIGN

EXCHANGE 15 259,000 412,000 (602,000) (999,400) (2,154,424 )

CASH AND CASH EQUIVALENTS AT END

OF PERIOD/YEAR 4 2,723,508,878 1,916,213,546 2,427,999,474 1,482,154,969 1,116,886,523

Cash and cash equivalents consist of:

- Cash on hand 4 2,625,747 1,805,897 2,801,828 1,885,239 1,610,338

- Cash in banks 4 830,569,453 685,607,480 628,346,639 504,018,439 185,071,677

- Time deposits 4 1,890,313,678 1,228,800,169 1,796,851,007 989,997,138 933,801,295

- Overdraft 15 - - - (13,745,847) (3,596,787 )

2,723,508,878 1,916,213,546 2,427,999,474 1,482,154,969 1,116,886,523

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PT SUMMARECON AGUNG Tbk AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2013 AND DECEMBER 31, 2012, 2011 AND 2010

(Expressed in thousands of rupiah, unless otherwise stated)

10 1. GENERAL

a. The Company’s Establishment

PT Summarecon Agung Tbk (the “Company”) was established within the framework of the Domestic Capital Investment Law based on notarial deed No. 308 dated November 26, 1975 of Ridwan Suselo, S.H. The Company’s articles of association was approved by the Ministry of Justice in its Decision Letter No. YA 5/344/6 dated July 12, 1977 and was published in Supplement No. 597 of State Gazette No. 79 dated October 4, 1977. The articles of association has been amended from time to time, the latest amendment of which was made by notarial deed No. 51 dated July 24, 2013 of Fathiah Helmi, S.H., concerning the increase in the Company’s issued and fully paid capital stock through the distribution of bonus shares from the capitalization of additional paid-in capital (Note 26). The amendment was submitted to and acknowledged by the Ministry of Law and Human Right (MLHR) in its Decision Letter No. AHU-AH.01.10-32548 dated August 2, 2013.

According to Article 3 of the Company’s articles of association, its scope of activities comprises development of real estate including the related supporting facilities, provision of services and trading. The Company is domiciled in East Jakarta, and its head office is located in Plaza Summarecon, Jl. Perintis Kemerdekaan No. 42, Jakarta.

The Company started commercial operations in 1976.

PT Semarop Agung is the ultimate parent entity of the Company and Subsidiaries.

b. The Company’s Public Offerings

The Chairman of the Capital Market and Financial Institutions Supervisory Agency (BAPEPAM-LK), through his letter No. SI-085/SHM/MK.10/1990 dated March 1, 1990, declared effective at that date, the offering of 6,667,000 Company shares with a par value of Rp1,000 (full amount) per share to the public at an offering price of Rp6,800 (full amount) per share. The Company listed all its issued shares on the Jakarta Stock Exchange on August 14, 1996.

Based on the minutes of the stockholders’ extraordinary meeting which were notarized under deed No. 191 dated June 21, 1996 of Sutjipto, S.H., the stockholders approved the reduction in the par value of the Company’s shares from Rp1,000 (full amount) to Rp500 (full amount) per share. The amendment was acknowledged and recorded by the Ministry of Justice in its Decision Letter No. C2.9225.HT.01.04.TH.96 dated September 27, 1996.

Based on the minutes of the stockholders’ extraordinary meeting which were notarized under deed No. 99 dated June 21, 2002 of Sutjipto, S.H., the stockholders approved the reduction in the par value of the Company’s shares from Rp500 (full amount) to Rp100 (full amount) per share. The amendment was submitted to and acknowledged by the MLHR in its Decision Letter No. C-12844 HT.01.04.TH.2002 dated July 12, 2002.

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11 1. GENERAL (continued)

b. The Company’s Public Offerings (continued)

In 2006, the Company distributed 786,881,920 bonus shares with a par value of Rp100 (full amount) per share.

On July 7, 2007, the Company’s Registration Statement to offer its First Limited Public Offering of Rights to the Stockholders with the Issuance of Pre-emptive Rights, totaling 459,014,453 new shares and a maximum of 229,507,226 Series I Warrants was declared effective. The Company listed all such new shares on the Indonesia Stock Exchange.

In June 2008, the Company distributed 3,217,893,796 bonus shares with a par value of Rp100 (full amount) per share.

In June 2010 and December 2009, 436,340,202 and 1,013,046 Series I Warrants were exercised, respectively.

In 2012, the Company issued 340,250,000 new shares with a nominal value of Rp100 (full amount) per share through the issuance of capital stock without pre-emptive rights phase I with minimum exercise price of Rp1,550 (full amount) per share, increasing the Company's issued and fully paid capital stock from 6,873,140,840 shares to 7,213,390,840 shares.

c. Commissioners, Directors, Audit Committee and Employees

The composition of the Company's Boards of Commissioners and Directors as of June 30, 2013 is as follows:

Board of Commissioners Board of Directors

President Commissioner : Soetjipto Nagaria President Director : Johanes Mardjuki

Commissioner : Harto Djojo Nagaria Director : Lexy Arie Tumiwa

Independent Commissioner : H. Edi Darnadi Director : Liliawati Rahardjo Independent Commissioner : Esther Melyani Homan Unaffiliated Director : G. E. Lilies Yamin

Director : Soegianto Nagaria Director : Herman Nagaria Director : Yong King Ching Director : Adrianto Pitoyo Adhi Director : Sharif Benyamin

The composition of the Company's Boards of Commissioners and Directors as of December 31, 2012 and 2011 is as follows:

Independent Commissioner : H. Edi Darnadi Director : Liliawati Rahardjo Independent Commissioner : Esther Melyani Homan Unaffiliated Director : G. E. Lilies Yamin

Director : Soegianto Nagaria Director : Herman Nagaria Director : Yong King Ching

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c. Commissioners, Directors, Audit Committee and Employees (continued)

The composition of the Company's Boards of Commissioners and Directors as of December 31, 2010 is as follows:

Commissioner : Sumantri Gangga Director : Liliawati Rahardjo

Independent Commissioner : H. Edi Darnadi Unaffiliated Director : G. E. Lilies Yamin Independent Commissioner : Esther Melyani Homan Director : Soegianto Nagaria

Director : Herman Nagaria Director : Yong King Ching

The composition of the Company’s Audit Committee as of June 30, 2013 is as follows:

Chairman : H. Edi Darnadi

Member : Neneng Martini

Member : Poespita Pelangiwati

The composition of the Company’s Audit Committee as of December 31, 2012, 2011 and 2010 is as follows:

Chairman : H. Edi Darnadi

Member : Poespita Pelangiwati

Member : Esther Melyani Homan

For the six-month periods ended June 30, 2013 and 2012 and years ended December 31, 2012, 2011 and 2010, the amounts of gross compensation for the key management (including boards of commissioners and directors) of the Company and Subsidiaries are as follows:

Six-Month Periods Ended Years Ended

June 30, December 31,

2012

2013 (unaudited) 2012 2011 2010

Short-term employee benefits 32,943,051 25,097,696 37,421,266 31,342,189 26,051,069

Post-employment benefits 3,137,297 1,669,854 1,986,409 1,472,512 708,534

Total gross compensation paid

to the key management 36,080,348 26,767,550 39,407,675 32,814,701 26,759,603

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1. GENERAL (continued)

d. Structure of the Company’s Subsidiaries (continued)

Start of Total Assets Before Elimination

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d. Structure of the Company’s Subsidiaries (continued)

Start of Total Assets Before Elimination

** In 2010 and 2011, LMD, SPM, SHO, MOJ and SBI were direct subsidiaries of the Company. Since 2012, they became direct subsidiaries of SIP (Note 1i).

In 2010, the Company established new direct Subsidiaries, MPP, MIC, SBI, IJP, SPD and SIP, and new indirect Subsidiaries, STK, BIP and BID, through other existing Subsidiaries.

In 2011, the Company established a new direct Subsidiary, PT Bekasi Tatanan Kota (BTK), and new indirect Subsidiaries, BPA, BJI, PCC and MPI, through other Subsidiaries.

In 2012, the Company established new direct Subsidiaries, MAP, BKS and new indirect Subsidiaries, SMI, SSI, BEM, WKS, KJM, GSA, BPP and KIP, through other Subsidiaries.

In 2013, the Company established new indirect Subsidiaries, TMB, ACA, GSP and DMP through other Subsidiaries.

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e. Changes in Capital Structure of the Subsidiaries

PT Multi Abadi Prima (MAP)

In 2012, MAP was established with capital stock of Rp50,000,000, of which Rp15,000,000 was subscribed and fully paid by the stockholders. The Company acquired 14,999,999 shares for Rp14,999,999, with nominal amount of Rp1,000 (full amount) per share, representing 99.99999% ownership. The establishment of MAP was notarized under notarial deed No. 23 dated February 8, 2012 of Dewi Himijati Tandika, S.H., and was submitted to and acknowledged by the MLHR in its Decision Letter No. AHU-10102.AH.01.01.Year 2012 dated February 24, 2012.

PT Summarecon Property Development (SPD)

In 2010, SPD was established with capital stock of Rp100,000, of which Rp25,000 was subscribed and fully paid by the stockholders. The Company acquired 24,999 shares for Rp24,999, with nominal amount of Rp1,000 (full amount) per share, representing 99.99600% ownership. The establishment of SPD was notarized under notarial deed No. 50 dated December 14, 2010 of Dewi Himijati Tandika, S.H., and was submitted to and acknowledged by the MLHR in its Decision Letter No. AHU-07695.AH.01.01.Year 2011 dated February 16, 2011.

In May 2012, SPD increased its authorized capital stock from Rp100,000 to become Rp500,000,000 and increased its issued and fully paid capital stock from Rp25,000 to become Rp125,000,000 with nominal amount of Rp1,000 (full amount) per share. The increase in capital stock was notarized under notarial deed No. 8 dated May 2, 2012 of Dewi Himijati Tandika, S.H., which was submitted to and acknowledged by the MLHR in its Decision Letter No. AHU-28955.AH.01.02.Year 2012 dated May 30, 2012.

In December 2012, SPD increased its authorized capital stock from Rp500,000,000 to become Rp3,500,000,000 and increased its issued and fully paid capital stock from Rp125,000,000 to become Rp855,180,000 with nominal amount of Rp1,000 (full amount) per share. The increase in capital stock was notarized under notarial deed No. 99 dated December 21, 2012 of Dewi Himijati Tandika, S.H. No.99 dated December 21, 2012, which was submitted to and acknowledged by the MLHR in its Decision Letter No. AHU-13468.AH.01.02.Year 2013 dated March 18, 2013.

PT Summarecon Investment Property (SIP)

In 2010, SIP was established with capital stock of Rp100,000, of which Rp25,000 was subscribed and fully paid by the stockholders. The Company acquired 24,999 shares for Rp24,999, with nominal amount of Rp1,000 (full amount) per share, representing 99.99600% ownership. The establishment of SIP was notarized under notarial deed No. 49 dated December 14, 2010 of Dewi Himijati Tandika, S.H., and was submitted to and acknowledged by the MLHR in its Decision Letter No. AHU-07796.AH.01.01.Year 2011 dated February 16, 2011.

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e. Changes in Capital Structure of the Subsidiaries (continued)

PT Summarecon Investment Property (SIP) (continued)

In December 2012, SIP increased its authorized capital stock from Rp100,000,000 to become Rp2,000,000,000 and increased its issued and fully paid capital stock from Rp25,000,000 to become Rp673,730,000 with nominal amount of Rp1,000 (full amount) per share. The increase in capital stock was notarized under notarial deed No. 101 dated December 21, 2012 of Dewi Himijati Tandika, S.H., and was submitted to and acknowledged by the MLHR in its Decision Letter No. AHU-11545.AH.01.02.Year 2013 dated March 7, 2013.

PT Bhakti Karya Sejahtera (BKS)

In 2012, BKS was established with capital stock of Rp10,000,000, of which Rp3,000,000 was subscribed and fully paid by the stockholders. The Company acquired 2,999,999 shares for Rp2,999,999, with nominal amount of Rp1,000 (full amount) per share, representing 99.99997% ownership. The establishment of BKS was notarized under notarial deed No. 3 dated March 1, 2012 of Dewi Himijati Tandika, S.H., and was submitted to and acknowledged by the MLHR in its Decision Letter No. AHU-14910.AH.01.01.Year 2012 dated March 21, 2012.

PT Eskage Tatanan Kota (ETK)

In December 2010, ETK increased its capital stock from Rp2,000,000 to become Rp30,000,000 and increased its issued and fully paid capital stock from Rp500,000 to become Rp9,356,000 with nominal amount of Rp1,000,000 (full amount) per share. The increase in capital stock was notarized under notarial deed No. 65 dated December 16, 2010 of Dewi Himijati Tandika, S.H. The Company acquired additional 8,856 shares of Eskage for Rp8,856,000, increasing the Company’s ownership from 99.00000% to 99.94656%.

In October 2011, ETK executed a stock split, changing the par value of its shares from Rp1,000,000 (full amount) to become Rp1,000 (full amount) per share. In 2011, the Company acquired additional 4,999 shares of ETK for Rp4,999, increasing the Company’s ownership to 99.99999%.

PT Bekasi Tatanan Kota (BTK)

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PT Lestari Mahadibya (LMD)

In December 2012, LMD increased its authorized capital stock from Rp500,000,000 to become Rp2,000,000,000 and increased its issued and fully paid capital stock from Rp363,920,000 to become Rp501,920,000 with nominal amount of Rp1,000 (full amount) per share. The increase in capital stock was notarized under deed No. 110 dated December 21, 2012 of Dewi Himijati Tandika, S.H., reaffirmed with deed BAR No. 59 dated January 28, 2013 of Dewi Himijati Tandika, S.H., and was submitted to and acknowledged by the MLHR in its Decision Letter No. AHU-18481.AH.01.02.Year 2013 dated April 10, 2013.

PT Summerville Property Management (SPM)

In December 2010, SPM increased its capital stock from Rp1,000,000 to become Rp17,000,000 and increased its issued and fully paid capital stock from Rp250,000 to become Rp4,287,000 with nominal amount of Rp1,000,000 (full amount) per share. The increase in capital stock was notarized under deed No. 66 dated December 16, 2010 of Dewi Himijati Tandika, S.H., and was submitted to and acknowledged by the MLHR in its Decision Letter No. AHU-07116.AH.01.02 dated February 10, 2011. The Company acquired additional 4,037 shares of SPM for Rp4,037,000, increasing the Company’s ownership from 99.20000% to 99.95335%. In October 2011, SPM executed a stock split, changing the par value of its shares from Rp1,000,000 (full amount) to become Rp1,000 (full amount) per share. In 2011, the Company acquired additional 1,999 shares of SPM for Rp1,999, increasing the Company’s ownership to 99.99998%.

In December 2012, SPM increased its issued and fully paid capital stock from Rp4,287,000 to become Rp5,685,000 with nominal amount of Rp1,000 (full amount) per share. The increase in capital stock was notarized under deed No. 104 dated December 21, 2012 of Dewi Himijati Tandika, S.H., which was submitted to and acknowledged by the MLHR in its Decision Letter No. AHU-AH.01.10-07153.Year 2013 dated February 28, 2013.

PT Summarecon Hotelindo (SHO)

In December 2010, SHO increased its capital stock from Rp10,000,000 to become Rp200,000,000 and increased its issued and fully paid capital stock from Rp2,500,000 to become Rp56,523,000 with nominal amount of Rp1,000,000 (full amount) per share. The increase in the capital stock was notarized under deed No. 63 dated December 16, 2010 of Dewi Himijati Tandika, S.H., and was submitted to and acknowledged by the MLHR in its Decision Letter No. AHU-06582.AH.01.02 dated February 9, 2011. The Company acquired additional 54,023 shares of SHO for Rp54,023,000, increasing the Company’s ownership from 99.96000% to 99.99823%. In October 2011, SHO executed a stock split, changing the par value of its shares from Rp1,000,000 (full amount) to become Rp1,000 (full amount) per share. In 2011, the Company acquired additional 999 shares of SHO for Rp999, increasing the Company’s ownership from 99.99800% to 99.99999%.

PT Makmur Orient Jaya (MOJ)

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PT Summarecon Bali Indah (SBI)

In 2010, SBI was established with capital stock of Rp100,000, of which Rp25,000 was subscribed and fully paid by the stockholders. The Company acquired 24,999 shares for Rp24,999, with nominal amount of Rp1,000 (full amount) per share, representing 99.99600% ownership. The establishment of SBI was notarized under notarial deed No. 12 dated March 2, 2010 of Dewi Himijati Tandika, S.H., and was submitted to and acknowledged by the MLHR in its Decision Letter No. AHU-20432.AH.01.01.Year 2010 dated April 22, 2010.

In December 2010, SBI increased its authorized capital stock from Rp100,000 to become Rp900,000 and increased its issued and fully paid capital stock from Rp25,000 to become Rp231,000 with nominal amount of Rp1,000 (full amount) per share. The increase in capital stock was notarized under deed No. 67 dated December 16, 2010 of Dewi Himijati Tandika, S.H., which was submitted to and acknowledged by the MLHR in its Decision Letter No. AHU-06583.AH.01.02.Year 2011 dated February 9, 2011.

In March 2011, SBI increased its authorized capital stock from Rp900,000 to become Rp15,300,000 and increased its issued and fully paid capital stock from Rp231,000 to become Rp3,831,000 with nominal amount of Rp1,000 (full amount) per share. The increase in capital stock was notarized under deed No. 3 dated March 1, 2011 of Dewi Himijati Tandika, S.H., which was submitted to and acknowledged by the MLHR in its Decision Letter No. AHU-20344.AH.01.02.Year 2011 dated April 21, 2011.

In November 2012, SBI increased its authorized capital stock from Rp15,300,000 to become Rp250,000,000 and increased its issued and fully paid capital stock from Rp3,831,000 to become Rp73,831,000 with nominal amount of Rp1,000 (full amount) per share. The increase in capital stock was notarized under deed No. 87 dated November 19, 2012 of Dewi Himijati Tandika, S.H., which was submitted to and acknowledged by the MLHR in its Decision Letter No. AHU-02804.AH.01.02.Year 2013 dated January 28, 2013.

PT Bali Indah Property (BIP)

In 2010, BIP was established with capital stock of Rp100,000, of which Rp25,000 was subscribed and fully paid by the stockholders. SBI acquired 24,999 shares for Rp24,999, with nominal amount of Rp1,000 (full amount) per share, representing 99.99600% ownership. The establishment of BIP was notarized under notarial deed No. 7 dated May 4, 2010 of Dewi Himijati Tandika, S.H., and was submitted to and acknowledged by the MLHR in its Decision Letter No. AHU-47724.AH.01.01.Year 2010 dated October 11, 2010.

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PT Bali Indah Development (BID)

In 2010, BID was established with capital stock of Rp100,000, of which Rp25,000 was subscribed and fully paid by the stockholders. SBI acquired 23,125 shares for Rp23,125, with nominal amount of Rp1,000 (full amount) per share, representing 92.50000% ownership. The establishment of BID was notarized under notarial deed No. 6 dated May 4, 2010 of Dewi Himijati Tandika, S.H.,

and was submitted to and acknowledged by the MLHR in its Decision Letter No. AHU-48219.AH.01.01.Year 2010 dated October 13, 2010.

In November 2012, BID increased its authorized capital stock from Rp100,000 to become Rp100,000,000 and increased its issued and fully paid capital stock from Rp25,000 to become Rp32,025,000 with nominal amount of Rp1,000 (full amount) per share. The increase in capital stock was notarized under notarial deed No. 88 dated November 19, 2012 of Dewi Himijati Tandika, S.H.

PT Bukit Jimbaran Indah (BJI)

In 2011, BJI was established with capital stock of Rp200,000,000, of which Rp50,000,000 was subscribed and fully paid by the stockholders. SBI acquired 35,000,000 shares for Rp35,000,000 with nominal amount of Rp1,000 (full amount) per share, representing 70% ownership. The establishment of BJI was notarized under notarial deed No. 10 dated September 7, 2011 of Dewi Himijati Tandika, S.H., and was submitted to and acknowledged by the MLHR in its Decision Letter No. AHU-52092.AH.01.01.Year 2011 dated October 26, 2011.

In September 2011, BJI decreased its authorized capital stock from Rp200,000,000 to become Rp2,000,000 and increased its issued and fully paid capital stock from Rp50,000,000 to become Rp60,000,000 with nominal amount of Rp1,000 (full amount) per share. The increase in capital stock was notarized under notarial deed No. 52 dated September 16, 2011 of Dewi Himijati Tandika, S.H.

PT Bukit Permai Properti (BPP)

In 2012, BPP was established with capital stock of Rp100,000,000, of which Rp25,000,000 was subscribed and fully paid by the stockholders. SBI acquired 17,500,000 shares for Rp17,500,000, with nominal amount of Rp1,000 (full amount) per share, representing 70.00000% ownership. The establishment of BPP was notarized under notarial deed No. 114 dated March 30, 2012 of Dewi Himijati Tandika, S.H., and was submitted to and acknowledged by the MLHR in its Decision Letter No. AHU-36902.AH.01.01.Year 2012 dated July 6, 2012.

In September 2012, BPP decreased its authorized capital stock from Rp100,000,000 to become Rp4,000,000 and decreased its issued and fully paid capital stock from Rp25,000,000 to become Rp1,000,000 with nominal amount of Rp1,000 (full amount) per share. The decrease in capital stock was notarized under notarial deed No. 15 dated September 5, 2012 of Dewi Himijati Tandika,

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PT Permata Jimbaran Agung (PJA)

In 2010, PJA was established with capital stock of Rp2,500,000, of which Rp625,000 was subscribed and fully paid by the stockholders with nominal amount of Rp1,000 (full amount) per share. The establishment of PJA was notarized under notarial deed No. 83 dated June 22, 2010 of Dewi Himijati Tandika, S.H., and was submitted to and acknowledged by the MLHR in its Decision Letter No. AHU-46059.AH.01.01 Year 2010 dated September 29, 2010.

In July 2012, PJA increased its authorized capital stock from Rp2,500,000 to become Rp500,000,000 and increased its issued and fully paid capital stock from Rp625,000 to become Rp161,994,057 with nominal amount of Rp1,000 (full amount) per share. The increase in capital stock was notarized under notarial deed No. 17 dated July 4, 2012 of Dewi Himijati Tandika, S.H.,

which was submitted to and acknowledged by the MLHR in its Decision Letter No. AHU-41549.AH.01.02.Year 2012 dated July 31, 2012.

In September 2012, PJA increased its issued and fully paid capital stock from Rp161,994,057 to become Rp167,118,529 with nominal amount of Rp1,000 (full amount) per share. The increase in capital stock was notarized under notarial deed No. 45 dated September 18, 2012 of Dewi Himijati Tandika, S.H., which was submitted to and acknowledged by the MLHR in its Decision Letter No. AHU-AH.01.10.35937.Year 2012 dated October 3, 2012.

PT Kharisma Intan Properti (KIP)

In 2012, KIP was established with capital stock of Rp10,000,000, of which Rp2,500,000 was subscribed and fully paid by the stockholders. SIP acquired 2,499,999 shares for Rp2,499,999, with nominal amount of Rp1,000 (full amount) per share, representing 99.99996% ownership. The establishment of KIP was notarized under notarial deed No. 25 dated March 8, 2012 of Dewi Himijati Tandika, S.H., and was submitted to and acknowledged by the MLHR in its Decision Letter No. AHU-22380.AH.01.01.Year 2012 dated April 27, 2012.

In December 2012, KIP increased its authorized capital stock from Rp10,000,000 to become Rp25,000,000 and increased its issued and fully paid capital stock from Rp2,500,000 to become Rp6,888,000 with nominal amount of Rp1,000 (full amount) per share. The increase in capital stock was notarized under notarial deed No. 106 dated December 21, 2012 of Dewi Himijati

Tandika, S.H., and was submitted to and acknowledged by the MLHR in his Decision Letter No. AHU-11937.AH.01.02.Year 2013 dated March 11, 2013.

PT Dunia Makmur Properti (DMP)

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j. Acquisition of PT Permata Jimbaran Agung (PJA) (lanjutan)

On November 19, 2012, PT Bali Indah Development (BID) acquired 30,081,335 shares (representing 18% ownership) in PJA, including its subsidiary PT Hotelindo Permata Jimbaran (HPJ), from Soetjipto Nagaria (President Commissioner of the Company), Thomas Lundi Halim and I Made Sudarta, third parties, at a transfer price of Rp27,765,000 which was paid in cash. The difference amounting to Rp2,263,571 between the transfer price and book value of PJA was partly credited to "Difference in Value from Transactions of Entities under Common Control" amounting to Rp1,668,252 as part of “Additional Paid-in Capital”, and the remaining difference of Rp595,319 was credited to “Difference from Transactions with Non-controlling Interests”, both of which are presented under the equity section of the consolidated statements of financial position.

Soetjipto Nagaria is the president commissioner of the Company, and SBI and BID are under common control. This relationship is non-temporary.

For the years ended December 31, 2011 and 2010, the consolidated financial statements were not restated as if the transactions had occurred since January 1, 2010, since the effect of the proforma adjustment was not material.

k. Approval and authorization for the issuance of financial statements

The issuance of the consolidated financial statements of the Company and Subsidiaries as of June 30, 2013 and December 31, 2012, 2011, 2010 and for the six-month periods ended June 30, 2013 and 2012 and years ended December 31, 2012, 2011 and 2010 was approved and authorized by the Board of Directors on August 19, 2013, as reviewed and recommended for approval by the Audit Committee.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accounting and reporting policies adopted by the Company and Subsidiaries conform to generally accepted accounting principles in Indonesia. The significant accounting principles applied consistently in the preparation of the consolidated financial statements for the six-month periods ended June 30, 2013 and 2012 and years ended December 31, 2012, 2011 and 2010 are as follows:

a. Basis of preparation of the consolidated financial statements

The consolidated financial statements have been prepared and presented in accordance with Indonesian Financial Accounting Standards (“SAK”), which comprise the Statements and Interpretations issued by the Financial Accounting Standards Board (“DSAK”) of the Indonesian Institute of Accountants and the Regulations and the Guidelines on Financial Statement Presentation and Disclosures issued by the Capital Market and Financial Institutions Supervisory Agency (BAPEPAM-LK).

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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

a. Basis of preparation of the consolidated financial statements (continued)

The consolidated financial statements have been prepared on the accrual basis using the historical cost concept of accounting, except for certain accounts which are measured on the basis described in the related accounting policies for those accounts.

The consolidated statements of cash flows present cash flows classified into operating, investing and financing activities. The cash flows from operating activities are presented using the direct method.

The reporting currency used in the preparation of consolidated financial statements is the Indonesian rupiah (Rp), which is also the functional currency of the Company and Subsidaries.

These financial statements were prepared solely for inclusion in the prospectus in connection with the proposed bonds offering of PT Summarecon Agung Tbk on the Indonesia Stock Exchange.

b. Principles of consolidation

The consolidated financial statements include the accounts of the Company and Subsidiaries mentioned in Note 1d, in which the Company maintains more than 50% share ownership, either directly or indirectly.

All material intercompany accounts and transactions (including unrealized gains or losses) are eliminated.

A subsidiary is fully consolidated from the date of acquisition, being the date on which the Company obtains control, and continues to be consolidated until the date such control ceases. Control is presumed to exist if the Company owns, directly or indirectly through another Subsidiary, more than half of the voting power of an entity. Control also exists when the Company 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 at meetings of the board of directors or equivalent governing body and control of the entity is by that board or body.

Losses of a non-wholly owned subsidiary are attributed to the non-controlling interests (NCI) even if such losses result in a deficit balance.

In case of loss of control over a subsidiary, the Company:

- derecognizes the assets (including goodwill) and liabilities of the subsidiary; - derecognizes the carrying amount of any NCI;

- derecognizes the cumulative translation differences, recorded in equity, if any; - recognizes the fair value of the consideration received;

- recognizes the fair value of any investment retained; - recognizes any surplus or deficit in profit or loss; and

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b. Principles of consolidation (continued)

NCI represent the portion of the profit or loss and net assets of the Subsidiaries not attributable, directly or indirectly, to the Company, which are presented in the consolidated statements of comprehensive income and under the equity section of the consolidated statements of financial position, respectively, separately from the corresponding portion attributable to the owners of the Parent Entity.

The transactions with non-controlling interests that do not result in a loss of control are accounted for as an equity transaction (i.e., a transaction with owners in their capacity as owners). The difference between the fair value of any consideration paid and the relevant acquired share of the carrying value of the net assets of the Subsidiary is recorded in equity.

c. Business combination

The Company and Subsidiaries adopted PSAK No. 22 (Revised 2010), “Business Combinations”.

In accordance with the transitional provisions of PSAK No. 22 (Revised 2010), the Company and Subsidiaries:

• ceased the goodwill amortization;

• eliminated the carrying amount of the related accumulated amortization of goodwill; and • performed an impairment test of goodwill in accordance with PSAK No. 48 (Revised

2009), “Impairment of Assets”.

Theexcess amounting to Rp1,021,260 of interest in net assets of a Subsidiary over the net cost of acquisition as of December 31, 2010 was credited to retained earnings as of January 1, 2011 due to the implementation of this PSAK (Note 19).

Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, measured at acquisition-date fair value and the amount of any NCI in the acquiree. For each business combination, the acquirer measures the NCI in the acquiree either at fair value or at the proportionate share of the acquiree’s identifiable net assets. Acquisition costs incurred are directly expensed and included in administrative expenses.

When the Company or a subsidiary acquires a business, it assesses the financial assets acquired and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree.

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c. Business combination (continued)

For bargain purchases, before recognizing a gain on a bargain purchase, the acquirer shall reassess whether it has correctly identified all of the assets acquired and all of the liabilities assumed and shall recognize any additional assets or liabilities that are identified in that review. If that excess remains after applying the identification, the acquirer shall recognize the resulting gain in profit or loss on the acquisition date. The gain shall be attributed to the acquirer.

Any contingent consideration to be transferred by the acquirer will be recognized at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration which is deemed to be an asset or liability, will be recognized in accordance with PSAK No. 55 (Revised 2011) either in profit or loss or as other comprehensive income. If the contingent consideration is classified as equity, it should not be remeasured until it is finally settled within equity.

At acquisition date, goodwill is initially measured at cost being the excess of the aggregate of the consideration transferred and the amount recognized for NCI over the net identifiable assets acquired and liabilities assumed. If this consideration is lower than the fair value of the identifiable net assets of the subsidiary acquired, the difference is recognized in profit or loss.

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Company and Subsidiaries’ cash-generating units (“CGUs”) that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those CGUs.

Where goodwill forms part of a CGU and part of the operations within that CGU is disposed of, the goodwill associated with the operations disposed of is included in the carrying amount of the operations when determining the gain or loss on disposal of the operations. Goodwill disposed of in this circumstance is measured based on the relative values of the operations disposed of and the portion of the CGU retained.

d. Interest in joint ventures

SCK has interests in joint ventures, which are jointly controlled entities, known as KSO Summarecon Serpong (KSO SS), between SCK and PT Jakartabaru Cosmopolitan (JBC), and KSO Summarecon Lakeview (KSO LV), among SCK, PT Telaga Gading Serpong (TGS) and PT Lestari Kreasi (LK), whereby the venturers have contractual arrangements that establish joint control over the economic activities of the entities. The agreements require unanimous agreements for financial and operating decisions among the venturers.

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e. Cash equivalents

Time deposits with maturities of three months or less at the time of placement, which are not restricted as to withdrawal or are not pledged as collateral for loans, are classified as “Cash Equivalents”. Cash in banks and time deposits which are restricted or pledged are presented as part of “Other Non-current Financial Assets”.

f. Investments in associates

The Company’s investments in its associates are accounted for using the equity method. An associated entity is an entity in which the Company has significant influence. Under the equity method, the cost of investment is increased or decreased by the Company’s share in net earnings or losses of, and dividends received from, the associate since the date of acquisition.

The consolidated statements of comprehensive income reflect the share of the results of operations of the associate. Where there has been a change recognized directly in other comprehensive income of the associate, the Company recognizes its share of any such change and discloses this, when applicable, in other comprehensive income. Unrealized gains and losses resulting from transactions between the Company and the associate are eliminated to the extent of the Company’s interest in the associate.

The Company determines whether it is necessary to recognize an additional impairment loss on the Company’s investment in the associate. The Company determines at each reporting date whether there is any objective evidence that the investment in the associate is impaired. If this is the case, the Company calculates the amount of impairment as the difference between the recoverable amount of the investment in associate and its carrying value, and recognizes the amount in the consolidated statements of comprehensive income.

The financial statements of the associate are prepared on the same reporting period with that of the Company.

g. Allowance for impairment of receivables

Allowance for impairment of receivables is determined based on the policies outlined in Note 2w.

h. Transactions with related parties

The Company and Subsidiaries have transactions with certain parties which have related party relationships as defined under PSAK No. 7 (Revised 2010), “Related Party Disclosures”.

The transactions are made based on terms agreed by the parties. Such terms may not be the same as those for transactions with unrelated parties.