Telkom finishes 2002 reaudit report
Rendi A. Witular, The Jakarta Post, Jakarta
State-controlled telecommunications company PT Telekomunikasi Indonesia (Telkom) said the reaudit of its 2002 financial report has been finally completed with a consolidated net profit for the year was revised downward by 3.7 percent.
Telkom said in a press statement on Monday that consolidated net profit after tax for 2002 declined to Rp 8.03 trillion (US$968 million) from Rp 8.34 trillion under the earlier version report.
The company, which was in limbo for more than seven months due to the reaudit process, also said that there was an adjustment to its net profit figures for 2001 and 2000 by 4.3 percent and 7.8 percent, respectively.
Telkom's 2001 net profit was revised downward to Rp 4.06 trillion from Rp 4.25 trillion, while its 2000 net profit was lowered to Rp 2.77 trillion from Rp 3.01 trillion.
It also reported that its stockholder's equity decreased by 8.1 percent to Rp 14.6 trillion in 2002; 2.6 percent to Rp 9.08 trillion in 2001; and 2.9 percent to Rp 14.4 trillion in 2000.
Other than negative adjustments, there was also a positive adjustment in which Telkom managed to book a reverse provision worth Rp 332 billion gained from the settlement of its arbitration with Aria West in 2003.
Telkom president Kristiono said the company was pleased to be able to finalize its audits and file its reports to the United States Securities and Exchanges Commission (SEC).
"... We are, and have throughout this process been, committed to fulfilling our obligations to our shareholders, including through full compliance with the rules of the U.S. SEC and the New York Stock Exchange (NYSE)," he said in the press statement.
In connection with the completion of its 2002 reaudit report, Telkom plans to hold an extraordinary general meeting of shareholders soon to approve and ratify the restated financial reports for 2002, 2001 and 2000.
Telkom shares surged higher by Rp 200 to Rp 7,550 on the Jakarta Stock Exchange (JSX) due to the announcement.
Problems with Telkom's 2002 financial report emerged after the SEC rejected an earlier filing because the report was audited by an Indonesian accounting firm which was not approved by the SEC.
The SEC has demanded that Telkom, whose shares are listed both on the JSX and NYSE, resubmit the 2002 accounts as soon as possible or risk being delisted from the NYSE. Telkom then called in PricewaterhouseCoopers (PwC) in June to reaudit the report.
However, the reaudit has taken longer than expected because PwC wants to reaudit Telkom's 2001 and 2000 financial reports as well.
Some adjustments in Telkom's financial report
1. Provision for long service, housing and transport allowance. Telkom had not previously made provision for these liabilities, thus decreasing the company's net profit by Rp 151 billion in 2002, Rp 65.6 billion in 2001 and 19.1 billion in 2000.
2. Provision for post-retirement healthcare benefits. By including such provisions in the report, Telkom's net profit decreased by Rp 414 billion in 2002, Rp 186 billion in 2001 and 141 billion in 2000.
3. Deferred income tax. Telkom had identified the need to make certain adjustment in its prior calculation of deferred taxes with an effect of decrease in net profit by Rp 286 billion in 2002 and Rp 54 billion in 2000, and an increase by Rp 66.7 billion in 2001.
4. Acquisition accounting and consolidation of PT Dayamitra Telekomunikasi and PT Pramindo Ikat Nusantara. Telkom was making adjustments to correct certain errors in the application of accounting principles to various acquisition. The adjustment decreased Telkom's profit by Rp 55.7 billion in 2002, Rp 2 billion in 2001 and had no effect in 2000.
5. Operating revenues. As a result of review of certain terms of revenue sharing and other service agreements, Telkom was making adjustment to correct certain errors in previous calculation with the result of an increased profit by Rp 18.9 billion in 2002, and decreased by Rp 27.3 billion in 2001 and Rp 20.6 billion in 2000.
6. Trade accounts payable. As a result of the reconciliation of balances with other telephone operators in 2002, an adjustment was needed with an effect of an increased profit by Rp 22.1 billion in 2002 and Rp 36.3 billion in 2001.
7. Telkomsel equity transaction. The adjustment increased Telkom's profit by Rp 65.1 billion in 2002.
8. Corporate tax. The adjustment increased Telkom's profit by Rp 36.1 billion in 2002, and decreased its profit by Rp 2.96 billion in 2001.
9. Other items. Telkom is making other adjustments representing individually insignificant adjustments to correct errors as a result of understatement of depreciation expenses, understatement of allowance for doubtful accounts and amortization of deferred interest and other issues. Such adjustments had decreased Telkom's profit and equity by Rp 65.5 billion in 2002.