OVERSEAS REGULATORY ANNOUNCEMENT - HKEXnews

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(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 8061)

OVERSEAS REGULATORY ANNOUNCEMENT

The following is a translation of an announcement of PT Multipolar Tbk (a subsidiary of AcrossAsia Limited (“AcrossAsia”) listed on the Indonesia Stock Exchange in which AcrossAsia has an approximately 51.15% interest) published on the Indonesia Stock Exchange. As at the date hereof, the Board of Directors of AcrossAsia comprises one executive Director, namely, Mr. Marshall Wallace COOPER and three independent non-executive Directors, namely, Mr. Albert Saychuan CHEOK, Dr. Boh Soon LIM and Mr. Kwong Yiu MAK. Hong Kong, 12th June 2009

ANNUAL REPORT 2008

THE NEXT LEVEL OFINNOVATION

PT Multipolar Tbk

01

02

04

05

06

08

10

12

14

20

22

24

26

28

29

30

31

Our Vision

Our Journey

Financial Highlights

Stock Highlights

Board of Commissioners

Message from the President Commissioner

Board of Directors

Message from the President Director

Business Pillars

Development of Human Capital

Good Corporate Governance

Audit Committee’s Report

Management Discussion & Analysis

Corporate Data

Achievements in 2008

Curriculum Vitae of Audit Committee

Responsibility for 2008 Annual Report

TABLE OF CONTENT

OUR VISION

To be an admired company in the region, which delivers high values to its stakeholders through the deployment of the best available information and management technology

THE NEXT LEVEL OF INNOVATION

Annual Report 2008 • PT Multipolar Tbk 1

OURJOurNEy

Strong Growth for Outsourcing BusinessAsia Pacific Outstanding Enterpreneurship AwardUpgrade to Oracle Certified Advance Partner

Strong Revenue & ProfitabilityExpanding growth for outsourcing business

Strong Leader for IT SolutionsThe largest holding co. for retailing businessRenewal ISO 9001:2000 Certification4th rights issue

Server, Solution and Service emphasisIT OursourcingStrengthen equity through 3rd rights issue

Total Enterprise Solutions ProviderEstablishing Consulting BusinessAwarded ISO 9001:2000 certification in 2004

2008

2007

2006

2005

2001 - 2004


Annual Report 2008 • PT Multipolar Tbk2

1st IT co. to be awarded ISO 9001:1994 certificationAcquiring MPPA, Indonesian largest retailer2nd rights issue

1st IT co. to be listed in JSX in 19891st rights issue in 1996

1st IBM Business Partner in Indonesia

Pioneer of banking & financial computerization

Electronic Retailer

Establishment of Multipolar

1997

1989 - 1996

1986

1982

1976

Dec 4, 1975

System IntegratorBusiness Solutions and Application Service Provider

1998 - 2000



FinAnciAL HIgHlIgHTS

2005 20042008 2007 2006

PT Multipolar Tbk.and SubsidiariesIn Millions Rupiah (except stated otherwise)

RESULT OF OPERATION

Net Sales, Services, and Other Operating Revenue

Gross Profit

Income from Operations

Other Charges

Income Before Tax Benefit (Expense)

Net Income

Number of Shares (Shares)

Earnings per Share (In Full Rupiah)

BALANCE SHEET

Cash dan Cash Equivalents

Short-term Investments

Accounts Receivable - Trade - Net

Inventories - Net

Total Current Assets

Investments in Associates and Other Long-Term Investments

Total Non-Current Assets

Total Assets

Total Current Liabilities

Total Non-Current Liabilities

Total Liabilities

Stockholder’s Equity

Working Capital - Net

RATIO

Gross Margin

Operating Margin

Return on Assets

Return on Equity

Current Ratio

Debt to Equity

Debt to Assets

WORKING CAPITAL TURN OVER (Days)

Accounts Receivable Turn-Over

Inventory Turn-Over

12,709,388

3,242,232

529,842

(739,411)

(259,968)

(196,509)

6,785,159,000

(28.96)

1,896,282

1,913,659

218,575

1,030,304

6,253,209

271,963

5,149,289

11,402,498

5,214,135

3,052,138

8,266,273

1,505,134

1,039,074

25.51%

4.17%

-1.72%

-13.06%

1.20x

2.64x

0.72x

6

40

10,370,107

2,689,060

441,501

(260,520)

188,521

61,317

6,785,159,000

9.25

2,813,019

958,300

201,987

944,886

5,262,257

415,818

4,576,483

9,838,740

2,433,991

3,954,561

6,388,552

1,750,532

2,828,266

25.93%

4.26%

0.62%

3.50%

2.16x

1.85x

0.65x

7

45

9,100,380

2,415,906

436,275

(273,821)

167,998

45,159

4,365,500,658

10.72

1,433,573

527,381

252,288

853,539

3,391,468

243,121

4,081,127

7,472,595

2,488,807

2,458,283

4,947,090

1,364,375

902,661

26.55%

4.79%

0.60%

3.31%

1.36x

1.96x

0.66x

10

47

7,490,735

2,103,496

321,491

(121,036)

205,662

60,718

4,211,478,000

20.37

542,066

232,745

128,776

735,531

1,919,853

236,709

3,562,030

5,480,658

1,542,306

1,538,129

3,080,435

1,287,991

377,547

28.08%

4.29%

1.11%

4.71%

1.24x

1.28x

0.56x

6

50

2,506,936

683,307

148,369

(83,900)

82,776

23,127

1,871,768.000

12,36

1,073,699

243,726

156,532

466,899

2,136,365

304,118

2,736,516

4,872,881

1,578,479

1,331,373

2,909,852

945,427

557,886

27.26%

5.92%

0.47%

2.45%

1.35x

1.21x

0.60x

23

93



STOck HIgHlIgHTS

SHARE PERFORMANCEEarnings per Share (Rp)

Outstanding Shares (Shares)

Weighted Average Shares (Shares)

Book Value per Share (Rp)

SHAREHOLDERS1. AcrossAsia Limited

2. Others/Public

SHARE PRICE PER QUARTER2008

Highest (Rp)

Lowest (Rp)

Closing (Rp)

Volume (Shares)

2007

Highest (Rp)

Lowest (Rp)

Closing (Rp)

Volume (Shares)

HISTORY OF REGISTRATION OF SHARES ON THE INDONESIA STOCK EXCHANGE

HISTORY OF DIVIDEND PAY-OUT

Origin of Share

Initial Public Offering

Company Listing

Bonus Share (1:2)

Rights Issue I

(1:3 @ Rp 1,000)

Stock Split

Rights Issue II

(10:55 @ Rp 500)

Limited Public Offering

Rights Issue III

(4:5 @ Rp 125)

Rights Issue IV

(18:11 @ Rp 125)

Payment Date

16-Nov-92

16-Nov-93

16-Nov-94

16-Nov-95

16-Nov-96

4-Jul-07

5-May-08

Period

July 1991 - July 1992

July 1992 - June 1993

July 1993 - June 1994

July 1994 - June 1995

July 1995 - June 1996

July 2006 - June 2007

July 2007 - June 2008

AGM Date

11 September 1992

11 September 1993

11 September 1994

11 September 1995

11 September 1996

23 May 2007

19 March 08

Dividend

240

35

45

55

16

1

1

Outstanding Shares

11,428,000

34,284,000

34,284,000

34,284,000

137,136,000

6,785,159,000

6,785,159,000

Total Dividend Pay-out

2,742,720,000

1,199,940,000

1,542,780,000

1,885,620,000

2,194,176,000

6,785,159,000

6,785,159,000

Listing Date

6 November 1989

16 July 1990

9 November 1992

12 July 96

1 April 1997

14 July 1997

27 July 2000

24 June 2005

8 December 2006

Additional Number of Shares (Sheet)

3,428,000

8,000,000

22,856,000

102,852,000

137,136,000

1,508,496,000

89,000,000

2,339,710,000

2,573,681,000

Total Outstanding Shares After Transaction

3,428,000

11,428,000

34,284,000

137,136,000

274,272,000

1,782,768,000

1,871,768,000

1,871,768,000 Class A Shares

2,339,710,000 Class B Shares

1,871,768,000 Class A Shares

4,913,391,000 Class B Shares

Nominal Value Per Share Saham (Rp)

1,000

1,000

1,000

1,000

500

500

500

Class A @ Rp 500

Class B @ Rp 125

Class A @ Rp 500

Class B @ Rp 125

2008(28.96)

6,785,159,000

6,785,159,000

221

20083,470,636,478

3,314,522,522

6,785,159,000

51.15%

48.85%

1st Quarter

104

71

77

618,940,500

145

103

108

3,565,858

2nd Quarter

96

65

76

484,499,500

148

106

126

4,353,126

3rd Quarter

81

50

50

447,810,500

152

89

125

5,158,381

4th Quarter

50

50

50

11,648,500

125

99

102

752,002

20079.25

6,785,159,000

6,626,058,178

264

20073,470,636,478

3,314,522,522

6,785,159,000

51.15%

48.85%



BOARd of COmmISSIONErS

Dr. Cheng Cheng WenPresident Commissioner

Was appointed as the Commissioner of the Company in 2000 and as the President Commissioner in 2002. His over 30 years of international experience, includes extensive career at AT&T, USA, Bell Telephone Manufacturing, Belgium, Philips Electronic China Group, China. Currently, Dr. Cheng is also President Commissioner of PT Matahari Putra Prima Tbk. Dr. Cheng holds a Bachelor of Science degree from National Chengkung University, Taiwan as well as Master of Science and PhD degrees in Electrical Engineering from Iowa State University, USA.



Jonathan L. ParapakIndependent Commissioner

Was appointed as the Commissioner of the Company in 2000 and as the Independent Commissioner since 2001. Mr. Parapak has an an extensive career for over 40 years. His professional career in Telecom Australia and PT Indosat Indonesia has led him to be one of the most recognized expert in the Telecommunication industry and respected member of international organization. He is also the President Commissioners of PT First Media Tbk. and an Independent Commissioner of PT Matahari Putra Prima Tbk. Mr. Parapak holds a Bachelor degree in Technology and a Master degree in Engineering Science from University of Tasmania, Australia.

Dr. Isnandar Rachmat Ali, SE, MMIndependent Commissioner

Dr. Isnandar Rachmat Ali, obtained his Doctoral Degree (PhD) in Education Management from the Jakarta State University. He began his career at various industrial companies. In 1980-1989 he was Vice President Director of Bank Bhumy Bahari and from 1989-2001 as Vice President Director at Tokai Lippo Bank. Since 1990 until now, active as a lecturer at Krisnadwipayana University.

Benyamin J. MailoolCommissioner

Appointed as Commissioner in 2006. Mr. Benyamin has been the CEO/President Director of PT Matahari Putra Prima Tbk. since 2002. He started his career at Citibank, Jakarta in 1989 until 1997 with the last position as Vice President, Risk Management Treasury Head. From 1997 to 2001 he was the CEO of PT Bukit Sentul Tbk. Mr. Benyamin graduated from the Oklahoma State University, USA with a Master Degree in Business Administration.

Marshall W. CooperCommissioner

Appointed as Commissioner in 2004. Mr. Cooper is an Executive Director of AcrossAsia Limited and Commissioner of PT First Media Tbk. He has over 20 years experience in Asia and was the Asia-Pacific controller for an oil and gas service company and regional controller for a mining company. He holds a Bachelor degree in Statistics (Operation Research Analysis) from Perth Institute of Technology, Australia and a Bachelor degree in Accounting and a Master degree in Business Administration from University of Texas, USA. He resigned from the Company on 29 October 2008.

L. Krisnan CahyaCommissioner

Joined the Company in March 2001 as Chief Financial Officer. Mr. Cahya graduated from Tarumanegara University majoring in Accounting. Started his career as Finance Manager in a trading company before joining PT Bank Panin. He held various positions in PT Bank Panin in 1984-1985. He moved to PT Bank Bali in 1995-2001 with last position as Head of Treasury. He resigned from the Company on 10 November 2008.



MESSAgE fromTHE PrESIdENT COmmISSIONEr

“PT Multipolar Tbk reaffirmed its position as

the leading provider of Information Technology

(“IT”) solutions in Indonesia in the banking and

financial sector for which we are widely recognized

as well as in a growing range of other IT business

applications.”



In 2008, PT Multipolar Tbk. (“Multipolar”) reaffirmed its position as the leading provider of Information Technology (“IT”) solutions in Indonesia in the banking and financial sector for which we are widely recognized as well as in a growing range of other IT business applications. These results are commendable as in the midst of a volatile economic environment, especially in the second semester of 2008 due to the world economic crisis.

The extraordinary fluctuations of the Rupiah against major world currencies has significantly impacted the Company’s overall performance. Multipolar booked a net loss amounting to Rp 196,5 billion on a consolidated basis, mainly from the unrealized mark to market loss from hedging contracts and unrealized foreign exchange loss of our subsidiaries and associates.Nevertheless, our total operating performance showed an improvement, with revenues for the year reaching Rp 12.7 trilion or a 22.56% increase from last year’s figure of Rp 10.4 trillion. Gross profits increased by 20.57% to Rp 3.2 trillion in 2008 as has operating profits up by 20.01% to Rp 529.8 billion in 2008. Retail and IT services continue to be major contributors to Multipolar’s revenue, thus reflecting the Company’s continuing efforts to enhance its business.

We also received positive contributions from Multipolar’s subsidiary companies, who continue to aggressively expand their products, services and customer base. The increase in revenues came from subsidiary PT Matahari Putra Prima Tbk. (“Matahari”), supported by a growth in Indonesian household consumption, and from the Company’s investment in PT. First Media Tbk. (“First Media”), as a Cable TV and Internet Broadband provider that continues to show significant growth and performance.

We are proud to say that management continued its pace to intensify corporate performance through revenue growth and increasing competitiveness. This is reflected in our President Director, Bapak Jeffrey Wonsono receiving the Outstanding Entrepreneur Award 2008 from the Asia Pacific Entrepreneurship Awards as well as PT Multipolar Tbk. becoming the First Winner of the 2008 Indonesian Financial Reporting Award for the Trade Industry category. The Board congratulates Bapak Jeffrey for these remarkable awards as recognition of Multipolar’s continued commitment to the industry and Indonesia.

Multipolar’s dedication to Good Corporate Governance is reflected in its policies that are enforced corporate-wide and with its partners. The Company’s audit committee, which holds routine meetings and provides oversight for financial reports and internal audits, actively provides recommendations to the Board of Commissioners regarding best practices.

This helps ensure every Multipolar stakeholder obtain all the necessary information through our ongoing transparency initiatives as well as routine public releases in the Company’s quest to constantly build value and benefit for our shareholders.

In July 2008, the Board of Commissioners appointed a new Audit Committee to replace the previous committee in line with Bapepam Regulations on the Formation and Guidelines of the Audit Committee. At the Annual General Meeting of Shareholders held in March 2008, shareholders bid a fond farewell to Commissioners H.M. Salim Radjiman and Ketut Budi Wijaya, as well as directors Eddy Handoko and Krisnan Cahya, thanking them for their years of service at Multipolar. Bapak Krisnan Cahya was then appointed as a member of the Board of Commissioners of the Company.

As one of the few companies in Indonesia to obtain a ISO 9001:2000 certification for management quality in hardware, software and professional services, Multipolar is in a strong position as a leader in the Information Technology industry. With contributions from our investments, 2008 has shown that despite global economic calamities, Multipolar’s diverse strategies and assets will help us to sustain our business growth in these difficult economic times. We are confident Multipolar will be able to weather the global downturn and turn challenges into opportunities.

Finally, the Board of Commissioners would like to thank everyone who continued to contribute towards our mutual success. From our employees to our partners, we truly appreciate their hard work, commitment, and dedication towards achieving the Company’s goals.




BOARd of dIrECTOrS



Jeffrey Koes WonsonoPresident Director

Appointed as President Director in 2002. Mr. Wonsono started his career with various multinational joint venture banks including PT Bank Multicor, PT Bank LTCB Central Asia before joining Lippo group in 1994. Currently, Mr. Wonsono is also Commissioner of PT Matahari Putra Prima Tbk. Mr. Wonsono received a Bachelor degree in Marketing from the Centre for Business Studies, England and a Master degree in Business Administration from Golden Gate University, USA.

Harijono SuwarnoManaging Director

Appointed as Director in 2004, Mr. Suwarno graduated from Trisakti University Jakarta, Telecommunication Department. He started his career as workshop engineer in PT Guna Electro. In 1977 – 1981 worked as Workshop Manager in PT Centronix. Later he joined PT Panorama Timur Jaya and held various positions with last position as Director. Currently is still the President Commissioner of PT TeleNet.

Antonius Agus SusantoDirector

Appointed as Director in 1990, Mr. Susanto has been with the Company since 1984. He began his professional career as a Sales Representative for PT Komputa Agung, before joining the Company with the same position. Previously, Mr. Agus was Sales Manager and Deputy Manager of the Company. Mr. Susanto received a Bachelor Degree in Electrical Engineering from Trisakti University and a Master degree in Marketing Management from Univerisity of Pelita Harapan.

Reynold Pena OngDirector

Appointed as Director in 2008, Mr. Reynold P. Ong, Philippines citizenship, obtained his Master of Business Administration from the University of the Philippines, Philippines and Bachelor of Science in Commerce, major in Accounting from De La Salle University, Philippines. He started his career in Consulting Division of SGV in the Philippines and from 1983 – 1987 worked at PepsiCo Inc, Philippines and Analog Devices, Philippines. He was Assistant Vice President, Financial Services Division in PT Rajawali Corporation in 1989 – 1993 and during 1993 – 1998 as Associate Director in PT Lippo Karawaci. In 1998 – 2000 he was Vice President Finance and Administration in Jardine Davies Inc., Philipines. Since 2001 until 2004 he was Chief Financial Officer of PT Natrindo Telepon Seluler and as Director/CFO of PT Bank Lippo Tbk. in 2005.



MESSAgE from THE PrESIdENT dIrECTOr

2008 was a year of contrasts. Its promising start was concluded with a world suddenly in economic turmoil.

Despite these challenges, PT. Multipolar Tbk. (“the company”) continued its pace to become the leading

provider of information technology (“IT”) in Indonesia. Multipolar continues to make a difference for a growing number of companies that have sought the Company’s total business solutions concept. And it is where Multipolar’s more than three decades of experience in the business will be an even greater impetus for growth and value creation for customers in the long term. Even so, the

global downturn is expected to prompt many companies to reduce budgets and costs, thus increasing competition for Multipolar to provide the best value through its quality IT products and services.

As both the IT division and the Company’s subsidiaries continue to bring sustained contribution to the Company, revenues for the year went up by 22.56% from Rp 10.4 trillion in 2007 to Rp 12.7 trillion in 2008 with an increase in gross profits of 20.57% from Rp 2.7 trillion in 2007 to Rp 3.2 trillion in 2008. Operating profits went up by 20.10% from Rp 441.5 billion in 2007 to

Rp 529.8 billion in 2008. Multipolar booked a net loss amounting to Rp 196.5 billion

on a consolidated basis, mainly from the unrealized mark to market loss from hedging

contracts and unrealized foreign exchange loss of our subsidiaries and associates, as

a result of extraordinary sharp fluctuations in

“With more than three decades of experience in the business, PT Multipolar Tbk continues its pace to become the leading provider of information technology in Indonesia.”



exchange rates in the last quarter of 2008. Nevertheless, the Company continues to restructure its loans and liabilities to provide better cash flow, ease interest expense burdens and simultaneously mitigate foreign exchange risk.

Management’s efforts to further reduce the company’s reliance on selling information technology applications to the banking and financial sectors are also proving fruitful, providing additional revenue and market exposure for the Company. The outsourcing division, PT Visionet Internasional (“VisioNet”), continues to trail blaze its service line with a significant increase of clients and service points throughout the country, now available in 28 cities throughout Indonesia. In addition to its success, VisioNet obtained ISO 9001:2000 certification that is valid until 2011. This attests to the quality management in the field of Electronic Data Capture (EDC) operation and maintenance services. The Company believes outsourcing services will play a significant role in 2009 onwards due to growing demand from clients that delegate their IT functions to VisioNet, allowing them to focus more on their core business competencies as well as reducing costs.

Multipolar’s investment in PT. Matahari Putra Prima Tbk. (”Matahari”) continue to excel as it remains the country’s largest retailer that offer consistent growth and a large customer base. Despite the world global recession, the company managed to increase its revenues from Rp 9.8 trillion in 2007 to Rp 12 trillion thanks to substantial growth in the Matahari Department Store (MDS) and Matahari Food Businesses (MFB) divisions. Matahari has strategically positioned itself for future growth opportunities that include outlet expansions and distribution capabilities. With a network of over 300 stores throughout the archipelago, Matahari remains the main contributor in the Company’s future earnings growth.

Multipolar’s other investment in PT. First Media Tbk. (”First Media”) also continues toimprove, as demand for real time information and access through cable TV and broadband Internet maintains it upward ascent. First Media expansion in fiber optic cable and fast internet accesss has had remarkable results as its customer base has grown by 169% during the year to 110,239 subscribers with an increase in revenues of 20.75% from Rp438.6 billion in 2007 to Rp 529.6 billion in 2008.

The company’s commitment to Good Corporate Governance of transparency, accountability, responsibility and fairness remains a cornerstone of Multipolar’s success. It is reflected in the award the Company received as the First Winner of 2008

Indonesian Financial Reporting Award for the Trade Industry category. As such, Multipolar continues to build up its Human Capital by providing training and keeping up to date with the latest technologies. In addition, the Company continues to contribute back to the community via a number of initiatives such as the Blood Donation program that Multipolar conducts regularly.

I believe our supportive corporate culture, long term vision and development of human capital at all levels shall remain as the backbone of the company. Our close relations with strategic partners, both within Indonesia and overseas, as well as Multipolar’s consistent efficiency drives, shall assist us in weathering the current economic storm.

On behalf of the Board of Directors, I would like to thank all our stakeholders that include our valued employees, trusted partners and loyal customers for their trust and commitment with us as without them we would not be able to achieve our goals for 2008. I also thank the Board of Commissioners who has provided oversight for our mutual advancement and advice as we navigate today’s difficult global economic climate. I am confident that with the support of all our stakeholders, Multipolar will be able to not only survive but find successful opportunities in the current financial crisis and be well positioned to substantially grow as a world class IT company once it is over. Exciting opportunities lay ahead!




BUSinESSPIllarSDespite the global economic crisis in the last quarter, 2008 was a relatively good year for Multipolar. The Company had managed to finalize a bulk of its contracts and agreements prior to the beginning of Q4 thus managed to come out of the year on a positive note. This occurred despite the country experiencing macroeconomic instability as a result of the world crisis, increasing inflation, and the devaluation of the Rupiah among other things.

Although Multipolar focuses in the information technology solutions area, the Company is also supported by a number of subsidiary companies and investments that include PT. Matahari Putra Prima Tbk. (”Matahari”) in the retail sector, PT. First Media Tbk. (”First Media”), a multi-channel Pay TV and high-speed broadband internet provider, PT VisioNet Internasional (”VisioNet”) which offers outsourcing services, and PT. Multifiling Mitra Indonesia (”MMI”), which provides corporate archival management.


Laporan Tahunan 2008 • PT Multipolar Tbk14

IT DivisionWith over three decades of experience, Multipolar is without doubt a leading figure within the Information Technology solutions industry, a sector that demands the best products and services that are offered from a diverse range of hardware and software vendors. From off-the-shelf solutions to unique software and hardware customizations, Multipolar has served a variety of industries that include finance, banking, educational institutions and government, to name a few.

In order to maintain its leadership position, the Company seeks and recruits the best and talented professionals in the industry, invest in the development of their skills, competencies and abilities as well as offer a supportive working environment that retains its key employees through competitive compensation packages. For every new technological breakthrough that enters the market, Multipolar makes sure that it is able to stay ahead of the curve by learning and implementing the latest technologies for the benefit of their customers.

The Company’s commitment to excellence has led to many awards and high levels of confidence from a number of leading organizations from around the world. Recently, Jeffrey Wonsono, the President Director of PT Multipolar Tbk., received the Outstanding Entrepreneur Award 2008 from the Asia Pacific Entrepreneurship Awards. Multipolar was also awarded First Winner of the 2008 Indonesian Financial Reporting Award for the Trade Industry category,

In addition, 2008 also saw the Company receiving recognition from its vendor partners such as Vision Solutions, IBM, Symantec, CTI and Oracle. Multipolar recently upgraded its partnership with Oracle by becoming a Certified Advance Partner to assist in the implementation of Oracle solutions for their client base. The Company was also recognized as a leading IBM Business Partner for 2008, thanks to its above target sales of the IBM iSeries and POS solutions.

Some of 2008 client wins include the Indonesian Constitutional Court, who entrusted Multipolar to develop an Internet Protocol-based video conferencing solution to connect the court with 34 law faculties throughout Indonesia. The objective of this project is to enhance communication and coordination between the Indonesian Constitutional Court and its regional offices to ensure timely collaboration, workplace efficiency and accurate gathering of information towards rapid decision making. This solution would allow the Constitutional Court to quickly adapt to the demands of the 21st century.

The Company’s System Integration business unit continues to focus on providing value-added services as opposed to merely supplying hardware and software products. The unit listens to its client base - both old and new – to exchange views on ways to improve business performance through greater system integration, better communication systems and broader information technology tools throughout the client’s organization. Clients are responding favorably to the division’s initiatives, reflected in Multipolar’s growing sales and services to the many sectors as well as the high levels of confidence from a number of leading organizations.

The Banking Solutions business unit received recognition for its Core Banking Solutions product VisionShari’a which was implemented in several regional government banks, replacing previous core banking solutions. By utilizing the same system for both its sharia and conventional banking branches, our clients are able to offer integrated online services for their customers to check and transfer funds between accounts. With an increasing interest in sharia banking, Multipolar hopes this solution will grow in line with the digital economy.



The Consulting Services business unit also had a commendable year, with the development of an IT Governance program at ICT (Information & Communication Technology) Pusintek, the Ministry of Finance, a project designed to execute their Teknologi Informasi & Komunikasi (ICT) Shared Services Provider role to all Echelon 1 members of the Ministry. The division was also called in to supervise the development and implementation of the Case Management and Court Administration System for the Tax Court. This follows the successful IT modernization program that was recently concluded by the Company.

In addition, Consulting Services consolidated its position in the market by expanding into the health care sector, where it was entrusted to implement the Hospital Information System for the Siloam Group, to help their hospitals take steps towards a “digital hospital”.

Beyond 2008, the IT division will take strategic steps to counteract the negative influences of the global economic crisis. As such, the IT division endeavors not only to win strategic projects, but also ensure that its internal processes are efficient to ensure future growth of the company.

BUSinESS ParTNErS

Symantec Platinum PartnerPARTNERNETWORK



Retail DivisionDespite the fall in global consumer confidence, food products would always be in demand. That said, retail outlets must listen to what consumers need in order to provide the correct inventory to their benefit. Despite weakening consumer spending power, a minor spike in inflation, and banks freezing new loans in the last quarter of 2008, Matahari had a banner year in terms of operating performance.

Matahari has for years understood the Indonesian market dynamics, allowing it to utilize appropriate business strategies to introduce new products and services ideal for consumers. With this competitive advantage, Matahari has been able to consolidate its market leadership position in 2008 with revenue of Rp 12 trillion, or a 22.62% increase of the 2007 revenue of Rp 9.8 trillion.

The improved performance of Matahari’s two main business units, Matahari Department Store (”MDS”) and Matahari Food Business (”MFB”), have established the retailer as one of Indonesia’s fastest growing and most recognized retail outlet. By the end of December 2008, Matahari had 86 department stores, 43 hypermarkets, 27 foodmarts, 54 pharmacies (under the name of Boston Drugs) and more than 90 family entertainment outlets (under the brand Timezone) throughout Indonesia.

In 2008, Matahari received the “Indonesia’s Most Admired Company Award and The Best Corporate Image” from the Fortune Consulting Group and Business Week Indonesia, respectively. Based on an independent survey by Business Week Indonesia and the Frontier Consulting Group, Matahari for the second time in two years received the highest scores. Matahari also received the “Service Quality Gold Award 2008 – The Company with Best Service” for the second consecutive year in the Department Store category.



Another Matahari licensed business unit, Times Bookstore, recently opened its flagship store in Lippo Village. Times Bookstores provide a whole new concept of internal modern design with impeccable color combination complementing the comprehensive selection of books with an enjoyable atmosphere for visitors. Using Information Technology from VisioNet to provide the store with state-of-the-art systems, Times Bookstores seeks to offer thousands of selected international books that can be ordered and delivered to the store. The business unit also seeks to expand through a series of 30 new store openings in the next three to five years throughout Indonesia Thanks to its strong internal network and plans to expand in the near future, Matahari is ready to anticipate and meet the dynamics of change to satisfy the needs of consumers.



Multimedia DivisionPT. First Media Tbk. continues to grow its market base with upgrading its cable services to digital through its network of Hybrid Fiber Coaxial (HFC) infrastructure that spans a number of major Indonesian cities. With its 4,816 kilometer long cable network, First Media provides a wide range of multimedia services for homes and businesses through its high-speed Internet service known as FastNet as well as its high-speed communications service Datacomm. To date First Media paying cable TV subscribers is 126,673 which is 10% higher compared to 2007 of 115,060 subscriber, while Internet broadband subscribers jumped 169% to 110,239 subscribers in the same time frame.

By the end of 2008, Broadband posted revenues of Rp 529 billion, a 20.75% increase from 2007’s Rp 438.6 billion. Home cable and FastNet provided the highest contribution to First Media’s revenues, accounting for 43% and 41%, respectively. While Datacomm and Media Sales each contributed 9% and 7%, respectively. This growth in revenues was achieved due to significant increase of FastNet revenue after launching on September 1, 2007.

Data Management & Archiving and Outsourcing ServicesPT Multifiling Mitra Indonesia (“MMI”), supported by four warehouses in Lippo Cikarang, Surabaya, Medan and Bandung, A leader in archival outsourcing business and an ISO 9001:2000 certified company, continues to expand its business in line with the increasing awareness of business to delegate their archival and data management processes to firms that specialize in this field. Outsourcing helps increase efficiencies and optimizes human resources for customers, allowing them to focus more on their core business. MMI has successfully increased and developed new innovative products and services for its customers including document conversion with 24- hour online access, record management services, computer data management, CD imaging and micro graphics.

PT Visionet Internasional (“VisioNet”), continues to grow with a significant increase in clients and service points throughout Indonesia. Now operating out of 28 cities nationwide, VisioNet’s ISO 9001:2000 certification ensures that clients will get the best information management in the field of Electronic Data Capture (EDC)

Multipolar believes outsourcing services will play a significant role in 2009 as demand will continue to grow for customers to delegate their non-critical IT functions to allow them to focus more on core business competencies as well as reducing costs.



dEvELOpMEnT of HumaN CaPITal

“Employees play a key role in making Multipolar an internationally recognized IT Solutions provider over the decades and continue to achieve important milestones through the years.”



Since its inception, Multipolar is committed to continuously enhancing its human resources, as the Company believes its future success lies in the current investments toward developing its intellectual capital. This is realized through the advancement and execution of an integrated human resources management system, which begins with the recruitment of quality personnel, providing internal and external training as well as periodically evaluating performance to further develop their employees’ skills and character.

In addition, the Company provides complete facilities and media in-house to support the development of its employees at all career levels. This investment in a strong organizational structure, professionalism, and corporate commitment would result in individual employees with a strong sense of leadership that is effective in facing future challenges with creative solutions.

Multipolar’s unique corporate culture blends the principles of mutual respect with professionalism and personal integrity. The company’s Code of Conduct, which manages the internal relationships between Multipolar employees as well as external relationships with parties outside the company, is provided to all new employees during their orientation. At every opportunity, this Code of Conduct is socialized to employees and customers for it to be consistently implemented. This continuous socialization is hoped to further develop our employees from merely knowing about the Code of Conduct but rather to actually

implementing it in their daily activities and thus making it a part of the company’s culture.

Employees play a key role in making Multipolar an internationally recognized IT Solutions provider over the decades and continue to achieve important milestones through the years. The company rewards accomplished employees who have contributed in raising Multipolar’s performance and always seek feedback to further develop its policies and procedures towards a mutually profitable objective.

Currently, the company has 230 employees, which consists 12 in senior management, 35 in middle management, and 183 at staff levels. From this pool of professionals, 51 are certified by Cisco, Microsoft, IBM and others, 63% are between the ages of 26-35 years old, while 37% are aged between 36-45 years old.

By continually nurturing and enhancing human capital competencies in line with the latest technologies and market developments, Multipolar will always be able to meet customer requirements as well as market the latest quality products with the best customer service. In these difficult economic times, investing in human capital would yield promising rewards down the line.



gOOd cORpORATE gOVErNaNCE

“Multipolar has long believed that its commitment to corporate governance by all stakeholders will provide long-term benefits for the company and all its partners.”

In an era where customers demand greater transparency to ensure they receive the best value for their money, Multipolar is well prepared to ensure that its business practices adhere to a number of national and international standards and treaties. Multipolar has long believed that its commitment to corporate governance by all stakeholders will provide long-term benefits for the company and all its partners. A majority of its principals and shareholders continue to support its investment in good corporate governance at all levels of the company. Multipolar’s corporate culture continually ensures that its stakeholders remain transparent, accountable, responsible, fair and independent when working towards their common goals.

For every business decision, human resources training and even marketing campaigns, good corporate governance considerations will always be a part of the process as it will ensure the presence of an adequate mechanism within the company where the strategies and business processes can be implemented consistently, at all levels, in line with the established Multipolar vision and mission. This in turn will reflect on the quality, responsibilities and long-term development of the company, making Multipolar an ideal trusted partner for future opportunities.

Like other world-class public companies, all corporate information and data are made available at Multipolar’s offices to anyone who requires it as long as that information and data has already been released to the public. The Corporate Secretary is the key contact person who provides corporate information such as the Financial and Annual Reports as well as press releases and others. This information can also be accessed via Multipolar’s website at www.multipolar.com

As good corporate citizens, Multipolar has consistently over the years taken part in a number of community initiatives to provide its social contribution for its immediate and national surroundings. In 2008, the Company organized Blood Donation drives once every

quarter, in conjunction with its subsidiaries First Media and Matahari, to address an issue that sometimes escape the public’s attention, blood bank shortages. Now recognized as a regular event, Multipolar hopes that its blood donation drives will help increase awareness and motivate people to take a little time away from their busy schedule to save a life. Scores of Multipolar employees participated in these drives and shared their experience with others in the hope they too will contribute. The Company also participated in sponsoring soccer competitions for local junior schools in the Karawaci and Tangerang areas organized by Sekolah Pelita Harapan.

Multipolar also proudly received the 2008 Indonesian Financial Reporting Award (IFRA) where the Company reached the 1st winner of the IFRA 2008 for Trade Industry category. The Award is given to companies that have a high level of compliance to Bapepam (Capital Market Supervisory Body) Rules & Regulations on Financial Reporting. The Steering Committee consists of the Department of Accounting, Faculty of Economics of the University of Indonesia (FE-UI); Bapepam-LK; Bisnis Indonesia Daily News; Indonesia Accounting Association (IAI); Indonesia Public Accounting Institute (IAPI); and Accounting Laboratory of FE-UI. The Steering Committee reviewed 229 companies and selected 11 winners from 11 different industries.

Multipolar’s Code of Conduct, established in 2006, provides an ethical basis for all internal and external relationships for its stakeholders, which include employees, suppliers, partners, shareholders, affiliated companies, principals, investors, customers, government, communities and the surrounding environment. Adherence to this Code of Conduct helps ensure the Company is consistent with its Good Corporate Governance practices and is continually evaluated by Multipolar’s Audit Committee.

Formed by the Board of Commissioners, the Audit Committee is responsible for reviewing the company’s



audited financial reports and assessing them with an external auditor. In June 2008, the Board appointed a new Audit Committee to replace the previous committee in line with Bapepam regulations. The new Audit Committee consists of Bapak Dr. Isnandar Rachmat Ali, SE, MM as the committee chairman along with Bapak Herman Latief and Bapak Purnomo Budi Satrijo as committee members. The Audit Committee continually communicates with the Company’s internal auditor to discuss oversight issues, as prescribed by the company’s Audit Committee charter.

The Company’s Board of Commissioners currently consists of six members, including the President Commissioner, who has the main function of supervising Multipolar management, including the implementation of the company’s business plan. The Board of Commissioners meets at least once every quarter and whenever there is a request from a member of the Board.

The main function of the Board of Directors, which currently consists of four people including the President Director, is to lead and manage the company as well as control and administer its assets. The Board of Directors meets once a month or at the request of one of its directors.

Relationships with principals are affected by the company’s fulfillment of their requirements. The Company anticipates this by conducting evaluations from time to time in order to ensure its responsibilities for principals are enacted consistently.

As an ISO 9001:2000 certified company in management quality for hardware, software and professional services, Multipolar is consistently focused on customer satisfaction by providing high quality products and services towards achieving long term growth and maximizing company value. The Company will continue to enact good corporate governance as an integral part of its daily activities since its carefully prepared implementation will help raise the company’s credibility in the eyes of customers, partners and the general public as a whole.



March 31st, 2008

No.CSS.043-2009

The Distinguished MembersBoard of CommissionersPT Multipolar Tbk.Jakarta

Gentlemen,

Re: Audit Committee Report

In accordance to the Bapepam Rule No. IX.I.5 on the Audit Committee and the Jakarta Stock Exchange Rule No. 1-A on the General Listing Rule of Equity Type of Shares in the Bourse, we as the Audit Committee of PT Multipolar Tbk. (‘the Company’) has executed its duties and responsibilities in accordance with the Audit Committee Charter outlined by the Board of Commissioners of the Company.

We hereby report on the activities and discussions held at the Audit Committee meeting during the period of July 2008 up to March 2009 where the Audit Committee has conducted 3 Meetings and attended by the Management of the Company. The Meetings covered:

1. Analysis on the Financial Report and other relevant financial information for the fiscal year ending December 31, 2008.

2. Analysis on the independency and objectivity of the Public Accountant.

3. Analysis on the effectiveness of the Company’s internal control.

4. Analysis on the Company’s level of compliance towards capital market regulations and other regulations pertaining to the Company’s businesses.

To fulfill the requirements to disclose the results of the Audit Committee’s analysis regarding the Company’s Annual Report, we hereby concluded the following:

1. The Company’s businesses have been effectively carried out the control of an internal function, which is also continuously improved inline with the directions outlined by the Directors, under the supervision of the Board of Commissioners.

2. The Directors have appointed Public Accountant Aryanto Amir Jusuf & Mawar to audit the consolidated financial report of PT. Multipolar Tbk. and its subsidiaries for the year ended December 31, 2008 based on the authorization granted by the shareholders in the Annual General Shareholders’ Meeting held on March 19, 2008.



AUdiTCOmmITTEE’’’’’’S rEPOrT

DR. Isnandar Rachmat Ali, SE, MMChairman

Purnomo Budi SatrijoMember

Herman LatiefMember

3. Based on the Report from the Public Accountant Aryanto Amir Jusuf & Mawar, the Financial Report for the year ending December 31, 2008 has been well compiled and presented in conformity with the accepted general accounting practices in Indonesia.

The Audit Committee hereby submits this Report.

Thank you for your kind attention and for the trust given to us.

Sincerely yours,



“Multipolar’s consolidated operating profit for the year ending on December 31, 2008 increased to Rp 529.8 billion or up 20.01% compared to 2007. This rise is the result of the Company’s cost efficiency.”



MAnAgEMEnTdISCuSSION & aNalySIS

2008 was a chaotic year for the financial markets, which also eventually affected other industries around the world. Indonesia witnessed massive capital flight from the Indonesia Stock Exchange. In addition, the Indonesian inflation rate peaked at 11.4% however it is expected to return to lower levels in 2009. Despite the slowdown in Q4, Multipolar still maintained its IT leadership position by continuing to expand its market base outside of its traditional financial and banking industry portfolio.

Subsidiary PT Matahari Putra Prima Tbk. (Matahari) had a banner year in 2008 with substantial increase in its revenues. Overall, Matahari managed to open seven new department stores, 15 hypermarkets, two foodmarts and several additional supporting retail outlets including its Timezone entertainment centers and Times Bookstores during the calendar year. It seeks to continue its growth momentum but will undertake strategic measures to control costs and capital expenditures during this distressed global economy.

Operational Results2008 saw the company booking net revenues of Rp 12.7 trillion or 22.56% higher compared to 2007. This increase is due to the significant contributions from Matahari, which saw a 22.61% increase in growth of consolidated sales. Matahari’s two main businesses, the Matahari Department Store (MDS) division posted a total sales growth of 17.6% with sales of Rp 5.9 trillion and the Matahari Food Business (MFB) division came with sales reaching Rp 5.7 trillion or a growth of 27.1% compared to the same period last year.

In 2007, intense competition and price hikes in commodity products forced the company to compete intensely through price, product quality and services. Nevertheless, the company successfully booked a gross profit of Rp 3.2 trillion, or an increase of 20.57% from 2007 with a margin of 25.51%.

Multipolar’s consolidated operating profit for the year ending on December 31, 2008 increased to Rp 529.8 billion or up 20.01% compared to 2007. This rise is the result of the Company’s cost efficiency.

The bottom line of the Company for 2008 was a loss of Rp 196.5 billion on a consolidated basis, mainly from the unrealized mark to market loss from hedging contracts and unrealized foreign exchange loss of our subsidiaries and associates as a result of extraordinary sharp fluctuations in exchange rates in the last quarter of 2008.

Financial ConditionIn 2008, the company booked total assets of Rp 11.4 trillion, or an increase of 15.89% from 2007 levels of Rp 9.8 trillion. This rise is mostly due to business expansion of the Company.

Total liabilities for 2008 also went up to Rp 8.3 trillion or up 29.39% compared to the previous year, which is mostly due to the increase in debt.

The amount of equity as of December 31 2008 decreased 14.02% from Rp 1.8 trillion in 2007 to Rp 1.5 trillion in 2008. The decrease mainly resulted from the significant unrealized foreign exchange losses.



16th Fl. Menara MatahariJl. Palem Raya Bulevar No.7Lippo Karawaci 1100Tangerang 15811IndonesiaTel : (62 21) 55-777-000, 546-0011Fax : (62 21) 546-0020, 546-3001Email : [email protected] : www.multipolar.com

Corporate Information

History

Date of Establishment

Initial Public Offering

Initial Listing

Company Listing

Right Issue I

Right Issue II

Limited Public Offering

Right Issue III

Right Issue IV

Listed in

Share Code

Share Registration

Public Accountant

Total Employees

AGM Schedule

PT Sharestar Indonesia3rd Fl. Citra Graha BuildingJl. Gatot Subroto Kav.35-36Jakarta 12950Tel : (62 21) 527-7966Fax : (62 21) 527-7967

Aryanto Amir Jusuf & MawarPlaza ABDA Building, 10th & 11th FloorJl. Jend. Sudirman Kav.59Jakarta 12190Tel : (62 21) 5140 1340Fax : (62 21) 5140 1350, 5140 1312

230

24-Apr-09

Date/tanggal

4-Dec-75

21-Sep-89

6-Nov-89

16-Jul-90

25-Jun-96

26-Jun-97

15-Feb-00

10-Jun-05

24-Nov-06

Indonesia Stock Exchange

MLPL



cORpORATEdaTa

1. IBM Business Partner – 2008 Recognition2. IBM Business Partner 3rd Q 2008 Recognition3. Outstanding Entrepreneur Award 2008 from the Asia Pacific

Entrepreneurship Awards4. 2008 Indonesian Financial Reporting Award for Trade Industry

category. 5. MIMIX Best Partner 20076. The Best Selling Partner 2006- Sistech Kharisma7. CTI Golden Achievement Award 2006 – IBM Product8. CTI Golden Achievement Award 2006 – Oracle Product9. The Best Public Listed Company in Electronic Sector in 2005

by Investor Magazine10. MIMIX STAR Marketing Achievement Award11. Partner of the year for MIMIX Marketing 12. Recognition of Achieving a Microsoft Competency in

Delivering Information Worker Solutions13. Recognition of Achieving Microsoft Competency in Delivering

Information Infrastructure Solutions14. NCR Circle of Distinction15. NCR Best Performance in Asia Region16. IBM Business Partner 3rd Q 2005 Award17. IBM Business Partner 4th Q 2005 Award18. IBM Business Partner 2005 Recognition BP of the Year19. IBM Business Partner 2005 Recognition Star of the Year20. IBM Top Contributor Software 2005 Business Partner21. IBM Business Partner 2005 Recognition 100% Achiever.



Achievements in 2008

DR. Isnandar Rachmat Ali, SE, MM Independent Commissioner

Dr. Isnandar Rachmat Ali, obtained his Doctoral Degree (PhD) in Education Management from the Jakarta State University. He began his career at various industrial companies. In 1980-1989 he was Vice President Director of Bank Bhumy Bahari and from 1989-2001 as Vice President Director at Tokai Lippo Bank. Since 1990 until now, active as a lecturer at Krisnadwipayana University.

Purnomo Budi SatrijoMember of Audit Committee

Appointed as member of Audit Committee in 2008. He started his career at Citibank, Jakarta in 1968 until 1976 with the last position as Pro Manager, Branch Head of Operation. He joined Bank Niaga in 1976 until 1984 with the last position as Vice President, System and Procedure. From 1984 to 1990 he worked at Bank Lippo with the last position as Senior Vice President, System and Procedure. From 1990 until March 1999 he held position as Director, Computerization and Administration at Bank Central Dagang and in November 1999 until June 2002, he was one of team member of ING Bank working as consultant at Bank Lippo. Mr. Purnomo had education from the Faculty of Economics, the University of Diponegoro.

Herman LatiefMember of Audit Committee

Appointed as member of Audit Committee in 2008. He has extensive experience in property area. Graduated from Diplom Ingenieru Architect (Dipl.Ing) of TFH – Hamburg, Germany in 1976, he worked as architect in PT Widya Pertiwi Engineering. From 1979-1988 he held position as Director in one of Kalbe Farma Group company. Fron 1989 until 1999 he was President Director of PT Lippo Cikarang Tbk. and in 1999 he was appointed as Vice President Commissioner of PT Lippo Cikarang Tbk. From 2001 to 2004, he was a Commissioner of PT Lippo Land Development and Commissioner of PT Bukit Sentul Tbk. form 2001 – 2005. Since 2004 until now he holds position as Director of PT East Jakarta Industrial Park. He is also active in several organizations including Vice President of Board of Advisory of Indonesia Industrial Estate Association since 2000, Vice President of Real Estate Indonesia since 1999 and Vice President of Infrastructure and people housing area of Indonesian Chamber of Commerce & Industry since 2009.

cURRicULUM viTAE of audIT COmmITTEE



The 2008 Annual Reportincluding the accompanyingfinancial statement and relatedinformation are prepared by the management of PT Multipolar Tbk.The Board of Directors and the Board of Commissioners are fully responsible for the contentof the Annual Report.

• MarshallWallaceCooperresignedasCommissioneroftheCompanyon29October2008• L.KrisnanCahyaresignedasCommissioneroftheCompanyon10November2008

Jakarta, April 2009


Benyamin J. MailoolCommissioner

Harijono SuwarnoDirector

Reynold Pena OngDirector

Jonathan L. ParapakIndependent Commissioner

Dr. Isnandar Rachmat Ali, SE, MMIndependent Commissioner


Antonius Agus SusantoDirector



RESpOnSiBiLiTy for 2008 aNNual rEPOrT



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2008 FINaNCIal rEPOrTpT Multipolar Tbk

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These consolidated financial statements are originally issued in Indonesian language

R/099.AGA/5.3/03/09

See the Accompanying Notes which are an integral partof these Consolidated Financial Statements

1

FINAL DRAFTFor Discussion Purpose Only

To be FinalizedFriday, April 17, 2009

Agreed by :Date :

PT MULTIPOLAR TbkAND SUBSIDIARIESCONSOLIDATED BALANCE SHEETSAs of December 31, 2008 and 2007(In Million Rupiah, Except Share Data)

ASSETS Note 2008 2007Rp Rp

CURRENT ASSETSCash and Cash Equivalents 2.c, 2.p, 3, 29 1,896,282 2,813,019Short-term Investments 2.d, 2.p, 4, 29, 32

Related Parties 30 1,156,498 365,060Third Parties 757,161 593,240

Accounts Receivable 2.e, 2.p, 5, 29Trade - Net

Related Parties 30 18,298 37,367Third Parties 200,277 164,620

Others 650,122 133,211Inventories - Net 2.f, 6 1,030,304 944,886Prepaid Taxes and Expenses 2.g, 2.s, 16.a, 30 207,490 161,835Option/Forward Contract Assets 2.q, 29, 31 286,550 --Other Current Assets 2.p, 29 50,227 49,019Total Current Assets 6,253,209 5,262,257

NON-CURRENT ASSETSDue from Related Parties 30 10,042 7,092Deferred Tax Assets - Net 2.s, 16.b 116,398 12,975Investments in Associates 2.d, 7, 30 147,994 192,793Other Long-term Investments 2.d, 8, 30, 32 123,969 223,025Property and Equipment

(Net of accumulated depreciation of Rp 1,945,448and Rp 1,649,333 as of December 31, 2008 and 2007and allowance for possible loss from disposal ofRp 24,897 as of December 31, 2008 and 2007, respectively) 2.h, 2.j, 9, 32 2,009,399 1,819,748

Rental Advances 10, 30, 32Related Parties 286,433 384,345Third Parties 847,212 601,469

Prepaid Long-term Rent - Net 2.k, 11, 30Related Parties 162,971 84,944Third Parties 615,973 303,725

Advance for Purchase of Property and Equipment 12, 30, 32Related Parties 118,000 118,000Third Parties 159,119 172,569

Option Contract Assets 2.q, 29, 31 20,289 98,724Intangible Assets - Net 2.l 214,050 219,288Other Non-Current Assets - Net 2.d, 2.h, 2.j, 30, 32 317,440 337,786Total Non-Current Assets 5,149,289 4,576,483

TOTAL ASSETS 11,402,498 9,838,740


R/099.AGA/5.3/03/09


2



Agreed by :Date :

PT MULTIPOLAR TbkAND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS (Continued)As of December 31, 2008 and 2007(In Million Rupiah, Except Share Data)

LIABILITIES, MINORITY INTEREST AND Note 2008 2007STOCKHOLDERS' EQUITY Rp Rp

CURRENT LIABILITIESShort-term Loans 2.p, 13, 29 466,879 336,430Promissory Notes 2.p, 29 3,285 2,826Accounts Payable 2.p, 14, 29, 30

TradeRelated Parties 28 552Third Parties 1,252,375 1,009,690

Others 15, 32 459,270 390,895Taxes Payable 2.s, 16.c 68,009 65,395Accrued Expenses 2.m, 2.p, 17, 29, 30 525,979 410,644Current Maturities of Long-term Debts

Notes Payable - Net 2.m, 2.p, 19, 29 1,292,079 --Loans 2.p, 20, 29 113,204 140,368Bonds - Net 2.m, 2.n, 18 441,640 --

Current Portion of Deferred Gain onAsset Sale and Lease Transactions 1.c, 2.j, 9, 32 38,362 42,715

Swap Contract Liability 2.q, 29, 31 495,230 --Other Current Liabilities 2.p, 15, 30 57,795 34,476Total Current Liabilities 5,214,135 2,433,991

NON-CURRENT LIABILITIESDue to Related Parties 30 3,643 5,427Deferred Tax Liabilities - Net 2.s, 16.b 9,457 13,030Long-term Debts - Net of Current Maturities

Notes Payable - Net 2.m, 2.p, 19, 29 -- 1,366,081Loans 2.p, 20, 29 2,360,397 1,447,276Bonds - Net 1.b, 2.m, 2.n, 2.p, 18 -- 445,144

Deferred Gain on Asset Sale and Lease Transactions -Net of Current Portion 1.c, 2.j, 9, 32 349,427 379,567

Swap Contract Liability 2.q, 29, 30 18,002 84,997Other Long-term Payables - Net 2.p, 2.t, 21, 29 311,212 213,039Total Non-Current Liabilities 3,052,138 3,954,561

MINORITY INTEREST 2.b 1,631,091 1,699,656


R/099.AGA/5.3/03/09


3



Agreed by :Date :

PT MULTIPOLAR TbkAND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS (Continued)As of December 31, 2008 and 2007(In Million Rupiah, Except Share Data)

LIABILITIES, MINORITY INTEREST AND Note 2008 2007STOCKHOLDERS' EQUITY Rp Rp

STOCKHOLDERS' EQUITYCapital Stock

Authorized Capital 1,871,768,000 shares of class A(par value Rp 500 per share) and 22,452,928,000 shares of class B(par value Rp 125 per share)

Issued and Fully Paid1,871,768,000 shares of class A and 4,913,391,000 shares of class B 1.b, 22 1,550,058 1,550,058

Additional Paid in Capital - Net 1.b, 2.m, 23 14,397 14,397Changes in Equity Transaction of Subsidiary/Associate 2.d, 24 (81,625) (30,548)Unrealized Gain on Available for Sale Securities 2.d 100,045 73,070Cash Flow Hedging Reserve 2.q, 31 (18,002) --Retained Earnings (Deficit)

Appropriated 33 300 --Unappropirated (60,039) 143,555

Total Stockholders' Equity 1,505,134 1,750,532TOTAL LIABILITIES, MINORITY INTEREST

AND STOCKHOLDERS' EQUITY 11,402,498 9,838,740


R/099.AGA/5.3/03/09


4



Agreed by :Date :

PT MULTIPOLAR TbkAND SUBSIDIAIRIESCONSOLIDATED STATEMENTS OF INCOMEFor the Years Ended December 31, 2008 and 2007(In Million Rupiah, Except Share Data)

Note 2008 2007Rp Rp

NET SALES, SERVICES AND OTHER OPERATING REVENUE 2.o, 25, 30 12,709,388 10,370,107

COST OF SALES AND SERVICES 2.o, 26, 30 9,467,156 7,681,047

GROSS PROFIT 3,242,232 2,689,060

OPERATING EXPENSES 2.o, 27, 30Selling 957,680 692,485General and Administrative 1,754,710 1,555,074Total Operating Expenses 2,712,390 2,247,559

INCOME FROM OPERATIONS 529,842 441,501

OTHER INCOME (CHARGES)Loss on Foreign Exchange - Net, including Gain (Loss) on Changes

in Fair Value of Currency Swap/Option/Forward Contracts 2.q (489,598) (8,376)Interest Expense and Other Financing Cost - Net 28, 30 (250,814) (300,745)Gain on Increase in Market Value of Marketable Securities - Net 2.d 32,062 56,258Others - Net (31,061) (7,657)Total Other Charges - Net (739,411) (260,520)

INCOME (LOSS) BEFORE EQUITY IN NET EARNINGS (LOSS)OF ASSOCIATES (209,569) 180,981

EQUITY IN NET EARNINGS (LOSS) OF ASSOCIATES - NET 2.d, 7, 30 (50,399) 7,540

INCOME (LOSS) BEFORE INCOME TAX BENEFIT (EXPENSE) (259,968) 188,521

INCOME TAX BENEFIT (EXPENSE) 2.sCurrent 16.a (38,218) (41,339)Deferred 16.b 106,995 3,881Total Income Tax Benefit (Expense) 68,777 (37,458)

NET INCOME (LOSS) BEFORE MINORITY INTEREST (191,191) 151,063

MINORITY INTEREST 2.b (5,318) (89,746)

NET INCOME (LOSS) (196,509) 61,317

BASIC EARNING (LOSS) PER SHARE (in Full Rupiah) 2.u (28.96) 9.25


R/099.AGA/5.3/03/09


5



Agreed by :Date :

PT MULTIPOLAR TbkAND SUBSIDIAIRIESCONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITYFor the Years Ended December 31, 2008 and 2007(In Million Rupiah, Except Share Data)

Note Capital Stock Additional Paid Changes in Equity Unrealized Gain Cash Flow Totalin Capital - Net Transaction of on Available for Hedging Stockholders'

Subsidiary/ Associate Sale Securities Reserve Appropriated Unappropriated EquityRp Rp Rp Rp Rp Rp Rp Rp

BALANCE AS OF DECEMBER 31, 2006 1,247,601 21,104 (2,176) 8,823 -- -- 89,023 1,364,375

Additional Paid in Capital ThroughPre-Emptive Rights Issuance on LimitedPublic Offering IV 1.b, 22 302,457 -- -- -- -- -- -- 302,457

Stock Issuance Cost 2.m, 23 -- (6,707) -- -- -- -- -- (6,707)Changes in Equity Transaction of

Subsidiary/Associates 2.d -- -- (28,372) -- -- -- -- (28,372)Unrealized Gain on Available for

Sale Securities 2.d -- -- -- 64,247 -- -- -- 64,247Cash Dividend 33 -- -- -- -- -- -- (6,785) (6,785)Net Income -- -- -- -- -- -- 61,317 61,317

BALANCE AS OF DECEMBER 31, 2007 1,550,058 14,397 (30,548) 73,070 -- -- 143,555 1,750,532

Appropriation of Retained Earnings 33 -- -- -- -- -- 300 (300) --Changes in Equity Transaction of

Subsidiary/Associates 2.d -- -- (51,077) -- -- -- -- (51,077)Unrealized Gain on Available for

Sale Securities 2.d -- -- -- 26,975 -- -- -- 26,975Unrealized Loss on Cash Flow

Hedging Reserve 2.q, 31 -- -- -- -- (18,002) -- -- (18,002)Cash Dividend 33 -- -- -- -- -- -- (6,785) (6,785)Net Loss -- -- -- -- -- -- (196,509) (196,509)

BALANCE AS OF DECEMBER 31, 2008 1,550,058 14,397 (81,625) 100,045 (18,002) 300 (60,039) 1,505,134

Retained Earnings (Deficit)


R/099.AGA/5.3/03/09


6



Agreed by :Date :

PT MULTIPOLAR TbkAND SUBSIDIAIRIESCONSOLIDATED STATEMENTS CASH FLOWSFor the Years Ended December 31, 2008 and 2007(In Million Rupiah, Except Share Data)

2008 2007Rp Rp

CASH FLOWS FROM OPERATING ACTIVITIESCollections from Sales 12,735,809 10,445,247Cash Paid During the Year for:

Operating Expenses (Excluding Salaries, Allowance and Employees Benefits) (775,619) (710,846)Salaries, Allowance and Employee Benefits (838,034) (658,893)Suppliers (9,254,962) (7,394,891)

Net Cash Received from Operations 1,867,194 1,680,617Payment for Taxes (30,742) (47,821)Other Expenses - Net (1,081,208) (268,134)Net Cash Flows Provided by Operating Activities 755,244 1,364,662

CASH FLOWS FROM INVESTING ACTIVITIESDisposal of Other Short-term Investments 96,827 212,584Proceeds from Disposal of Property and Equipments 10,128 11,833Cash Dividend Received 5,000 2,500Increase in Short-term Investments (906,377) (175,857)Increase in Rental Advances (669,256) (891,807)Increase in Advances for Purchase of Property and Equipment (339,684) (251,827)Acquisitions of Property and Equipment (221,491) (158,020)Increase in Other Non-Current Assets (19,383) (37,492)Increase in Investment in Associate Company (13,500) (95,521)Proceeds from Assets Restructurization Program -- 771,562Disposal of Other Long-term Investments -- 25,031Placement on Time Deposit Escrow Fund -- (262,175)Increase in Other Payables from the Receipt of Escrow Fund -- 262,175Net Cash Flows Used in Investing Activities (2,057,736) (587,014)


R/099.AGA/5.3/03/09


7



Agreed by :Date :

PT MULTIPOLAR TbkAND SUBSIDIAIRIESCONSOLIDATED STATEMENTS CASH FLOWSFor the Years Ended December 31, 2008 and 2007(In Million Rupiah, Except Share Data)

2008 2007Rp Rp

CASH FLOWS FROM FINANCING ACTIVITIESProceeds from Loans and Promissory Notes 1,802,768 2,501,390Proceeds from Hedging Option Contract 7,095 --Receipts (Payments) of Other Long-term Payables 2,006 (11,972)Payments of Bonds Payable -- (450,000)Receipt from Limited Public Offering -- 802,926Payment of Stock Issuance Cost -- (21,550)Receipts from (Payments to) Related Parties (1,784) 2,767Payment of Cash Dividend of the Company (6,759) (6,785)Buy-back of Bonds Payable (7,000) --Payment of Cash Dividend to MPP's Minority Interest

and Subsidiaries (25,899) (23,422)Interest Expense and Other Financing Cost (157,181) (239,600)Buy-back of Notes Payable (286,948) --Repayments of Loans and Promissory Notes (940,543) (1,951,956)Net Cash Flows Provided by Financing Activities 385,755 601,798

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (916,737) 1,379,446

TOTAL CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR 2,813,019 1,433,573

TOTAL CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 1,896,282 2,813,019

Supplemental Cash Flows Information

Transactions not Affecting Cash FlowsReclassification of advances for purchase of property and equipment

to property and equipment 366,549 462,099Reclassification of rental advances to prepaid rent 300,977 86,936Investment in LMIR Trust units through sale of assets -- 258,786Reclassification of other non-current assets to current assets -- 211,289Reclassification of other non-current assets to property and equipment -- 8,397


PT MULTIPOLAR TbkAND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the Years Ended December 31, 2008 and 2007(In Million Rupiah and Thousand for foreign Currencies, Except Share Data)

8



Agreed by :Date :

1. General

1.a. The Company's EstablishmentPT Multipolar Tbk (the Company) was incorporated in the Republic of Indonesia on December 4, 1975based on notarial deed No. 7 of Adlan Yulizar, SH, which has been amended several times, the latest bynotarial deed No. 119 by Misahardi Wilamarta, SH, No. 119 dated March 25, 1982. The deed ofestablishment and its amendments were approved by the Minister of Justice in his decree No. C2-1093.HT.01.01.Th.82 dated September 3, 1982 and were published in the State Gazette No. 84,Supplement No. 938 dated October 20, 1987. The articles of association has been amended severaltimes, the latest based on notarial deed No. 40 of Poerbaningsih Adi Warsito, SH, dated August 8, 2008,in order to comply with Law of Republic of Indonesia No. 40 year 2007 concerning limited corporation.The amendment was approved by the Minister of Justice and Human Rights of Republic of Indonesia inhis letter No: AHU-80589.AH.01.02.Year 2008 dated October 31, 2008.

The Company is primarily engaged in systems integration services, including importation, trading,distribution and service of computers and related products, rental of computer equipments, managementand information technology consulting services, and also acts as IBM business partner (systemintegration, system remarketer and PS 2 advance function).

The Company is domiciled in Jakarta. Its operational head office is located at Menara Matahari, PalemRaya Bulevar No. 7, Lippo Karawaci - Tangerang, Banten.

The Company started its commercial operation on December 4, 1975.

1.b. Company's Public OfferingsOn September 18, 1989, by virtue of the letter of the Minister of Finance No. SI-052/SHM/MK.10/1989,the Company offered 3,428,000 shares to the public. All of the issued shares have been listed on theJakarta Stock Exchange in 1989 and on the Surabaya Stock Exchange in 1990. In 1996 and 1997, theCompany listed additional 102,852,000 shares (at par value of Rp 1,000 per share) and 1,508,496,000new shares (at par value of Rp 500 per share) on the Jakarta and Surabaya Stock Exchanges inconnection with Limited Public Offering of Pre-Emptive Rights Issuance I and II, respectively.

In the Extraordinary Stockholders' General Meeting held on February 15, 2000, as covered by notarialdeed No. 44 dated February 15, 2000 of Poerbaningsih Adi Warsito, SH, the stockholders approved theissuance of 89,138,400 new shares other than Limited Public Offering to strategic investors. However,only 89,000,000 new shares were approved for listing, other than Limited Public Offering, by PT BursaEfek Jakarta in its letter No. S-2183/BEJ.EEM/07/2000 dated July 24, 2000 and by PT Bursa EfekSurabaya in its letter No. 005/EMT/LIST/BES/IV/2000 dated April 18, 2000.

In 2005, the Company conducted Limited Public Offering in connection with Pre-Emptive Rights IssuanceIII of 2,339,710,000 shares class B (at par value of Rp 125 per share) with the offering price at Rp 125per share. The offering has received an effective notification statement based on the Letter from theCapital Market Supervisory Agency (Bapepam) No. S-1456/PM/2005 dated September 7, 2005, andbecame effective after obtained an approval from the Company’s Stockholders General Meeting datedSeptember 10, 2005. All the shares were listed on the Indonesian Stock Exchange (formerly JakartaStock Exchange and Surabaya Stock Exchange) on September 24, 2005.


PT MULTIPOLAR TbkAND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)For the Years Ended December 31, 2008 and 2007(In Million Rupiah and Thousand for foreign Currencies, Except Share Data)

9



Agreed by :Date :

In 2006, the Company conducted Limited Public Offering in connection with Pre-Emptive Rights IssuanceIV of a maximum of 2,573,681,000 class B shares (New Share) at par value of Rp 125 per share withoffering price of Rp 125 per share and a maximum of 1,429,822,778. Warrant Series I will be issuedattached to the new shares which being offered free of cost as an incentive to the stockholders of theCompany and/or Pre-Emptive Rights Holders who exercise their rights. The offering has received aneffective notification statement based on the Letter from the Chairman of Capital Market SupervisoryAgency (Bapepam) No. S-2910/BL/2006 dated November 23, 2006, and became effective after obtainedan approval from the Company’s Stockholders General Meeting dated November 24, 2006. Pre-EmptiveRights Issuance trading period from December 8, 2006 until January 22, 2007 with share allotment dateon January 25, 2007.

All of the Company's issued shares were listed in the Indonesian Stock Exchange (formerly Jakarta andSurabaya Stock Exchanges).

1.c. Structure of the Subsidiaries(1) The Company has direct and indirect ownership over the following subsidiaries:

Subsidiaries Domicile Operations Percentage of Ownership* Start of Total Ass et2008

%2007

%CommercialOperations

2008Rp

2007Rp

PT Sharestar Indonesia (SI) Jakarta Share Administration andOther Services

100.00 100.00 1990 16,735 16,763

PT Multipolar Technology (MT) Jakarta Trading 100.00 100.00 2000 357 347PT Visionet Internasional (VI) Jakarta Trading 100.00 100.00 2002 89,619 90,930PT Reksa Puspita Karya (RPK) Jakarta Trading 100.00 100.00 Non Operating 116,261 141,615PT Tryane Saptajagat (TS) Jakarta Trading 100.00 100.00 Non Operating 49 53PT Multifiling Mitra Indonesia(MMI)

Cikarang, Bekasi Archive Management 50.20 50.20 1993 63,203 47,991

PT Matahari Putra Prima Tbk(MPP)

Tangerang, WestJava

Retail Business 50.10 50.10 1986 9,741,369 8,446,442

PT Matahari Super Ekonomi(MSE)

Tangerang, WestJava

Retail Business 100.00 100.00 1994 15,545 13,834

Matahari International FinanceCompany B.V. (MIFCO)

Rotterdam,Netherlands

Financing Business 100.00 100.00 1996 7,163 6,447

PT Nadya Putra Investama (NPI) Tangerang, WestJava

General Trading 100.00 100.00 1998 826,388 855,580

PT Taraprima Reksabuana(TPRB)

Jakarta Sale and Marketing ofMineral Water

100.00 100.00 1998 14,590 32,633

PT Matahari Kafe Nusantara(MKN)

Tangerang, WestJava

Restaurant 100.00 100.00 2001 226 314

PT Matahari Mega Swalayan(MMS)

Tangerang, WestJava

General Trading 100.00 100.00 Non Operating 5,010 4,847

PT Matahari Mega Toserba(MMT)

Tangerang, WestJava

Retail Business 100.00 100.00 Non Operating 2,255 2,294

PT Matahari Boston Drugstore(MBD)

Tangerang, WestJava

Drugstore 100.00 100.00 Non Operating 2,360 2,244

Prime Connection Limited (PCL) British VirginIslands

Investment Company 100.00 100.00 Non Operating 5 5

PT Matahari Graha Fantasi(MGF)

Jakarta Family Entertainment 50.01 50.01 1995 165,563 177,784

Brighter Limited (BL) British VirginIslands

Investment Company 100.00 100.00 Non Operating 8 ,238 24,264

Matahari Finance B.V. (MF) Armsterdam,Netherlands

Financing Business 100.00 100.00 2006 2,177,864 1,476,833

PT Times Prima Indonesia (TPI) Tangerang, WestJava

Services and GeneralTrading

100.00 - 2008 24,210 -

PT Prima Cipta Lestari (Prima) Tangerang, WestJava

Restaurant 100.00 - Non Operating 9,735 -

PT Matahari Pacific (MP) Tangerang, WestJava

Trading and services 100.00 - Non Operating 25,069 -

Bright Regent Corporation (BRC) Hongkong Investment Company 100.00 100.00 Non Operating 7,720 24,202Merrill Investment Limited (MI) Labuan, Malaysia Investment Company 100.00 100.00 Non Operating 4,931 4,232



10



Agreed by :Date :

(2) Based on Minutes of Meeting of PT Multipolar System, which notarialized under notarial deed ofNotary Surjadi SH, No.1 dated September 3, 2007, has been approved the change of the name ofPT Multipolar System become PT Multipolar Technology. The amendment of this article ofassociation has been approved by the Minister of Justice and Human Rights of Republic ofIndonesia No. W7-06162 HT.01.04-TH.2007.

(3) As of December 31, 2008, RPK and TS operate in investment activity, while MMS, MMT, MBD, PCL,BL, Prima, MP, BRC, MI, MTL, GCL, MDP and PGP have not started their commercial activities.

(4) On January 26, 2007, MPP, a subsidiary, invested through NPI at 100% to Tristar and Tristarinvested at 100% to Madiun Properties Pte. Ltd (Madiun), Java Properties Pte. Ltd (Java), SerpongProperties Pte. Ltd (Serpong), Matos Properties Pte. Ltd (Matos), Detos Properties Pte, Ltd (Detos),Palladium Properties Pte. Ltd. (Palladium) and Metropolis Properties Pte. Ltd. (Metropolis).

(5) On January 31, 2007, MPP, a subsidiary, invested through NPI and MMT at 99% and 1%,respectively to PT Madiun Ritelindo (MR), PT Java Mega Jaya (JMJ), PT Dinamika Serpong (DS),PT Matos Surya Perkasa (MSP), PT Megah Detos Utama (MDU), PT Palladium Megah Lestari(PML) and PT Gema Metropolis Modern (GMM).

(6) In accordance with the implementation of the restructurization program involving certain assets of theMPP, a subsidiary (see Note 9) as approved by the shareholders in the Extraordinary Stockholders’General Meeting held on April 27, 2007, NPI and MMT transferred on August 10, 2007 all of theirownership in MR, JMJ, DS, MSP, MDU, PML and GMM to Madiun, Java, Serpong, Matos, Detos,Palladium and Metropolis, respectively, where Madiun owns 95% interest in MR and 5% in JMJ,Java owns 95% interest in JMJ and 5% in DS, Serpong owns 95% interest in DS and 5% in GMM,Matos owns 95% interest in MSP and 5% in MDU, Detos owns 95% interest in MDU and 5% in PML,Palladium owns 95% interest in PML and 5% in MR, and Metropolis owns 95% interest in GMM and5% in MSP. Based on the Share Purchase Agreement dated October 18, 2007, between TristarCapital Ltd (Tristar) and HSBC Institutional Trust Service (Singapore) Limited (HSBC, a trustee ofLippo-Mapletree Indonesia Retail Trust), all of Tristar’s ownership interests in each of Madiun, Java,Serpong, Matos, Detos, Palladium and Metropolis would be transferred to HSBC on the scheduledlisting date of LMIR Trust units on the Singapore Stock Exchange (Notes 2.j, 9 and 32). OnNovember 19, 2007, the transfer of Tristar’s ownership interests was consummated at a total price ofSGD 161,246 (equivalent to Rp 1,028,750), resulting in a total gain of Rp 407,114 (net of transactioncost). The gain was recorded as part of “Deferred Gain on Asset Sale and Lease Transactions” (seeNotes 2.j and 9).

Subsidiaries Domicile Operations Percentage of Ownership* Start of Total Asset2008

%2007

%CommercialOperations

2008Rp

2007Rp

Matahari Department Store(Shenzhen) Limited (MDS)

China Retail Business 100.00 100.00 Non Operating 7,245 12,845

Matahari Trading (Shenzhen)Limited (MTL)

China General Trading 100.00 100.00 Non Operating - 604

Grandbright Corporation Limited(GCL)

Hongkong Investment Company 100.00 100.00 Non Operating 0,001 0,001

PT Matahari Dana Prima (MDP) Jakarta Consumer FinancingBusiness

99.99 99.99 Non Operating 1,927 1,927

Tristar Capital Limited (Tristar) Labuan, Malaysia Investment Company 100,00 100,00 Non Operating 615,879 668,668PT Prima Gerbang Persada(PGP)

Jakarta Services, GeneralTrading and Agribusiness

100,00 100,00 Non Operating 170,642 168,302

*not represents an effective percentage of ownership



11



Agreed by :Date :

(7) On October 9, 2007, MPP, a subsidiary, acquired 100% ownership interest in PGP, developer ofPlaza Central located in Lampung, through NPI and MSE.

(8) On February 1, 2008, MPP, a subsidiary, and NPI acquired 99% and 1% ownership interests,respectively, in TPI.

(9) On May 2, 2008, MPP, a subsidiary, and NPI acquired 99% and 1% ownership interests,respectively, in Prima.

(10) On August 22, 2008, MPP, a subsidiary, and NPI acquired 99% and 1% ownership interests,respectively, in MP.

1.d. Commissioners, Directors and EmployeesAs of December 31, 2008, the members of the Company's boards of commissioners and directors basedon the Stockholders' Annual General Meeting held on March 19, 2008, as covered by notarial deed No.39 of Poerbaningsih Adi Warsito, SH, dated March 19, 2008, are as follows:

Board of CommissionersPresident Commiss ioner : DR. Cheng Cheng WenIndependent Commissioner : Jonathan Limbong ParapakIndependent Commissioner : Isnandar Rachmat AliCommissioner : Lay Krisnan CahyaCommissioner : Marshall Wallace CooperCommissioner : Benyamin Jonathan Mailool

DirectorsPresident Director : Jeffrey Koes WonsonoDirector : Harijono SuwarnoDirector : Antonius Agus SusantoDirector : Reynold Pena Ong

As of December 31, 2007, the members of the Company's boards of commissioners and directors basedon the Stockholders' Annual General Meeting held on May 23, 2007, as covered by notarial deed No. 63of Poerbaningsih Adi Warsito, SH, dated May 23, 2007, are as follows:

Board of CommissionersPresident Commissioner : DR. Cheng Cheng WenIndependent Commissioner : Jonathan Limbong ParapakIndependent Commissioner : M. Salim RadjimanIndependent Commissioner : Ketut Budi WijayaCommissioner : Marshall Wallace CooperCommissioner : Benyamin Jonathan Mailool

DirectorsPresident Director : Jeffrey Koes WonsonoVice President Director : Eddy H. HandokoDirector : Harijono SuwarnoDirector : Antonius Agus SusantoDirector : Lay Krisnan Cahya

As of December 31, 2008 and 2007, the Company and subsidiaries have approximately 19,239 and19,129 permanent employees, respectively (unaudited).



12



Agreed by :Date :

2. Summary of Accounting Policies

2.a. Basis of Measurement and Preparation of Consolidated Financial StatementsThe consolidated financial statements have been prepared in accordance with generally acceptedaccounting principles and practices in Indonesia, i.e. Statements of Financial Accounting Standards(SFAS) and the Capital Market Supervisory Agency and Financial Institution (BAPEPAM-LK) rules andguidelines for financial statements presentations and disclosures for public listed trading companies.

The consolidated financial statements have been prepared based on the accrual basis, except forstatements of cash flows, and using the historical cost method of accounting, except for certaininvestments which are either stated at fair value or at net assets value or accounted for under the equitymethod, swap, option and forward contracts which stated at fair value and inventories which are valued atthe lower of cost or net realizable value.

The consolidated statements of cash flows present cash receipts and payments classified into operating,investing and financing activities. The cash flows from operating activities are prepared using the directmethod.

The reporting currency used in the consolidated financial statements is Indonesian Rupiah.

2.b. Consolidation PrinciplesThe consolidated financial statements included accounts of the Company and subsidiaries as describedin Note 1.c.

The presentation of consolidated financial statements are carried out based on entity concept. Allsignificant interrelated accounts, transactions and profit among consolidated companies have beeneliminated to reflect the financial position and result of operations as a whole.

The carrying value of the Company’s investment in a subsidiary is correspondingly adjusted for the netchange in its investment in the subsidiary’s equity by crediting of debiting “Difference in Changes inEquity Transactions of Subsidiary”.

The accounts of foreign subsidiaries were translated into rupiah amounts at the middle rate of exchangeprevailing at balance sheet date for balance sheet accounts and the average rate during the year forprofit and loss accounts. The resulting difference arising from the translations of the financial statementsof subsidiaries which are an integral part of the Company are debited/credited to Gain (Loss) on ForeignExchange which is presented in the consolidated financial statements, while for the subsidiaries whichare not an integral part of the Company, these are debited/credited to and presented as “Difference inForeign Currency Translation” and are presented as “Difference in Changes in Equity Transactions ofSubsidiaries”.

2.c. Cash EquivalentsCash equivalents consist of short-term time deposits with maturities of 3 (three) months or less since thetime of their placement, not pledged as collateral and unrestricted.



13



Agreed by :Date :

2.d. InvestmentsInvestments consist of:1. Marketable securities in the form of debt and equity securities

Investment in securities are classified into 3 categories:Trading

Included in this classification are investments which are purchased for immediate resale, normallycharacterized by the high frequency of purchase-and-sale transactions. These investments aremade to earn immediate gain from the increase in the short-term prices of the securities.Investments that meet this classification are recorded at fair value. The unrealized gain or loss onthe appreciation or decline in market value of the investments at balance sheet date is credited orcharged to current operations.

Held to MaturityInvestments in debt securities which are held to maturity date are recorded at cost, adjusted foramortization of premium or discount to maturity.

Available for SaleInvestments which do not meet the classification of trading and held to maturity categories arerecorded at fair value. Any unrealized gain or loss on the appreciation or decline in market value ofthe investment at balance sheet date is credited or charged to Unrealized Gain or Loss ofAvailable for Sale Securities, under the Stockholders' Equity section of the consolidated balancesheet.

The cost of marketable securities sold is determined using the average method and fair value isdetermined based on quoted market prices.

2. Mutual FundsMutual funds are stated at net asset value at balance sheet date. Unrealized gains or losses from thechanges in net asset value at balance sheet date are credited or charged to current operations.

3. Time DepositsTime deposits which are either used as collateral and/or with maturity greater than three months butnot more than one year from the time of placement are carried at face value.

4. Long-term Investments in Shares of StockInvestments in shares of stock wherein the Company and subsidiaries have an ownership interest ofat least 20% but not exceeding 50% are accounted for under the equity method. Under this method,the investments are initially stated at cost, adjusted for the Company's and subsidiaries' share in thenet earnings (losses) of the associated companies after acquisition, dividends received and straight-line amortization over a 20 (twenty) years period of the difference between the cost of suchinvestment and the investor's proportionate share in the underlying net assets of the investee at thedate of acquisition. Investment wherein the Company and subsidiaries have an ownership interest ofless than 20% are stated at cost. The Company reviews and evaluates periodically the carryingvalues of goodwill, taking into consideration current results and future prospects of the relatedassociate.

The changes in the equity transactions of associates are presented as additions to or reductionsfrom Stockholders' Equity under the account “Changes in the Equity Transactions ofa Subsidiary/Associates” in the consolidated balance sheets.



14



Agreed by :Date :

5. Investment PropertyPrior to January 1, 2008, investment property was stated at cost less accumulated depreciation,except land which is not depreciated.

Effective January 1, 2008, the Company and subsidiaries have applied PSAK No. 13 (Revised2007), “Investment Property”, which supersedes PSAK No. 13 (1994) “Accounting for Investment”,and chosen the cost model. Investment property is depreciated under straight-line method over 20years, except land which is not depreciated.

Investment property comprise of lands, buildings and infrastructures, held by the Company andsubsidiaries to earn rentals or for capital appreciation or both, and are not utilized for use in theproduction or supply of goods or services, for administrative purposes or sale in the ordinary courseof business.

Investment property shall be derecognized when the investment property is permanently withdrawnfrom use and no future economic benefits are expected from its disposal. Any gains or losses arerecognised in the consolidated statement of income.

The adoption of this revised PSAK did not have significant effect to the Company’s consolidatedfinancial statements.

2.e. Allowance for Doubtful AccountsAllowance for doubtful accounts is provided based on a review of the status of the individual receivableaccounts at the end of the year.

The outstanding balance of receivables is written off against the respective allowance for doubtfulaccounts or directly written off when management believes that these assets are determined to bedefinitely uncollectible.

2.f. InventoriesInformation technology and other inventories, except for goods in transit, are carried at the lower of costor net realizable value. Cost is determined by the moving average method, except for the cost of certaininventories which is determined by the specific identification method. Goods in transit are carried at cost.

Retail and distribution merchandise inventories are stated at lower of cost, determined by theconventional retail method, or net realizable value. The merchandise inventory does not include goods onconsignment.

Allowance for inventory obsolescence is provided based on the review of the condition of the individualinventory items at the end of the year, while the allowance for decline in value is provided to reduce thecarrying values of the inventories to their net realizable values.

2.g. Prepaid ExpensesPrepaid expenses are amortized over their beneficial periods by using the straight-line method. Theshort-term portion of prepaid expenses is shown as part of Current Assets, while the long-term portion isshown as part of Non-Current Assets.



15



Agreed by :Date :

2.h. Property and EquipmentPrior to January 1, 2008, property and equipment were stated at cost (except certain assets revalued in1986 in accordance with government regulation) less accumulated depreciation (except for land which isnot depreciated). Effective January 1, 2008, the Company and subsidiaries have applied PSAK No. 16(Revised 2007), “Fixed Assets”, which supersedes PSAK No. 16 (1994), “Fixed Assets and OtherAssets”, and PSAK No. 17 (1994), “Accounting for Depreciation” and chosen the cost model.

Property and equipment are carried at cost less their accumulated depreciation and value impairment.Depreciation is computed over the estimated useful live of the assets using the following methods:

Method Year RateBuildings(including apartment units which are presentedas part of “Other Non-current Assets”)

Straight-line 20 --

Building Improvement and Renovation Straight-line 2 - 20 --Equipment and Installations Double-declining balance -- 15% and 25%Machineries Straight-line 3 - 5 --Computers Straight-line 3 - 5 --Fixtures, Furnitures and Equipments Straight-line 3 - 5 --Equipments for Rental and Advertising Equipments Straight-line 2 - 5 --Transportation Equipments Straight-line 2 - 5Assets under Capital Lease – Motor Vehicles Straight-line 5 --

Land is stated at cost and is not depreciated. In accordance with PSAK No. 47 “Accounting for Land”, theCompany and subsidiaries recognized the acquisition cost of land separately from the legal expendituresincurred to acquire the land rights and the expenditures for the subsequent extension thereof. Theseexpenditures are deferred and presented as part of Other Non-Current Assets in the consolidatedbalance sheet and amortized over the period the landrights are valid or their economic lives, whicheverperiod is shorter.

Construction in progress is carried at cost and presented as part of property and equipment. Theaccumulated costs will be reclassified to the appropriate property and equipment account whenconstruction is substantially completed and the asset is ready for its intended use.

The cost of repairs and maintenance is charged to statement of income as incurred; significant renewalsand betterments are capitalized. When assets are retired or otherwise disposed of, the cost and therelated accumulated depreciation are removed from the respective accounts and any resulting gain orloss is credited or charged to current operations.

2.i. LeasesPrior to January 1, 2008, the Company and subsidiaries recognize a lease transaction as capital lease, ifall of the following criteria were met:1. The lessee had the option to purchase the leased asset at the end of the lease period at a price

mutually agreed upon at the commencement of the lease agreement.2. Total periodic payments made by a lessee plus residual value fully covered the acquisition cost of

leased capital goods plus interest thereon which was the lessor’s profit (full payout lease).3. The lease period was a minimum of 2 (two) years.



16



Agreed by :Date :

Lease transactions that did not meet any or all of the above criteria were reported using the operatinglease method, and lease payments were recognized as an expense in the consolidated statement ofincome on a straight-line basis over the lease term.

Gain or loss on sale-and-leaseback transactions results in a finance lease, shall be deferred andamortized over the lease term.

Long-term lease with contract value payable in installments over a period shorter than the lease period isrecorded when the lease agreement is effective by debiting “Prepaid Long-term Rent - Net” at thecontract value and crediting the unpaid portion to “Long-term Debts - Others”.

Prepaid long-term rent, generally on store space, is being amortized on the straight-line method startingfrom the opening of the leased store/renewal of the lease over the lease period. The portion of the rentchargeable to operations within one year is reclassified and presented under current assets as part of“Prepaid Expenses”.

Effective January 1, 2008, the Company and subsidiaries have applied PSAK 30 (Revised 2007),“Leases”, which supersedes PSAK 30 (1990) “Accounting for Leases”. Under this revised PSAK, theclassification of a lease is determined based on whether the lessor or lessee controls substantially all therisks and rewards incidental to ownership.

Leases which do not transfer substantially all the risks and rewards incidental to ownership are classifiedas operating leases. Operating lease payments are recognized as an expense on a straight-line basisover the lease term. Lease income from operating lease is amortized on a straight-line basis over thelease term.

In the adoption of this revised PSAK, the Company has chosen to apply it prospectively. The Companyhas determined that the outstanding balances related to the financing leases that had existed prior toJanuary 1, 2008 are appropriate. All arrangements containing a lease that existed at beginning of theearliest year presented, were evaluated by the Company to determine their classification in accordancewith this revised PSAK.

The gain or loss on sale-and-leaseback transactions results in a finance lease, shall be deferred andamortized over the lease term.

The gain or loss on sale-and-leaseback transactions results in an operating lease, and it is clear that thetransaction is established at fair value, any profit or loss shall be recognized immediately. If the sale priceis below fair value, any profit or loss shall be recognized immediately except that, if the loss iscompensated for by future lease payments at below market price, it shall be deferred and amortized inproportion to the lease payments over the period for which the asset is expected to be used. If the saleprice is above fair value, the excess over fair value shall be deferred and amortized over the period forwhich the asset is expected to be used.

The adoption of this revised PSAK did not have significant effect to the Company’s consolidated financialstatements.



17



Agreed by :Date :

2.j. Deferred Gain on Sale and Lease of Assets TransactionThe gain or loss on the implementation of the restructurization program of certain assets of MPP,a subsidiary, involving the sale and lease of assets transaction is deferred and amortized proportionallybased on the rent expenses related to those assets.

2.k. Impairment in Assets ValueThe Company and subsidiaries review the carrying values of their assets for any impairment and possiblewrite-down to fair values whenever events or changes in circumstances indicate that their carrying valuesmay not be fully recovered. The excess of the carrying value over the estimated recoverable amount ofthe asset is charged to current operations.

2.l. Intangible AssetsCosts in regard with the purchase of software for voice and data communications, accounting programand the updating are deferred and amortized using the straight-line method over the estimated useful life4 (four) to 5 (five) years.

Intangible assets also including the excess of acquisition cost over the fair value of net assets ofsubsidiary (goodwill) is amortized by using the straight-line method for 20 (twenty) years.

2.m. Stock and Bonds/Notes Issuance CostsExpenses incurred in connection with the issuance of bonds/notes are deducted from proceeds thereof.The difference between the net proceeds and the nominal value represents premium or discount thatshould be amortized over the term of the bonds/notes.

Based on Capital Market Regulation No. 06/PM/2000 dated March 13, 2000, stock issuance cost ispresented as deduction of additional paid-in capital.

2.n. Treasury Bonds/NotesRepurchased instrument of indebtedness that are not retired are treated in the consolidated financialstatements as if they were retired. The difference between the face value of the instruments ofindebtedness and the fair value is credited or charged to current operations.

2.o. Revenues and Expenses RecognitionRevenues from sales and services of information technology are recognized when the products orservices are delivered or rendered to the customers. Services income billed or received in advance aredeferred (presented under Other Current Liabilities) and amortized as services are rendered.

Revenue from sales of retail and distribution inventory (except those sold on “Cash-on-Delivery” basiswhich is recognized when the goods are delivered to customers) is recognized when the goods are paidfor at the sales counter. Revenue consignment sales is recorded at the amount the consignment goodsare sold to customers, while the related cost (included as part of Cost of Sales) is recorded at the amountdue to consignors.

Revenue from sales of prepaid cards (known as “Power Card”) by family entertainment centers is initiallyrecorded as unearned income and then proportionately recognized as earned revenue based on theactual use of the cards by customers. Revenue from sales of tokens, snacks and beverage arerecognized at the time the tokens snacks/packages are purchased by customers.

Expenses and other income (expense) are recognized when these are incurred/earned (accrual basis).



18



Agreed by :Date :

2.p. Foreign Currencies Transactions and BalancesTransactions involving foreign currencies are recorded in Rupiah amounts at the rates of exchangeprevailing at the time the transactions are made. At balance sheet date, monetary assets and liabilitiesdenominated in foreign currencies are adjusted to Rupiah to reflect the prevailing rates of exchange aspublished by Bank Indonesia at the last transaction date for the year/period. Any resulting gains or lossesare credited or charged to current operations.

The rates of exchange used (in full Rupiah) are as follows:

2008 2007Rp Rp

1 EUR 15,433 13,7591 USD 10,950 9,4191 SGD 7,607 6,5021 HKD 1,413 1,2081 RMB 1,610 1,291

2.q. Derivative Instruments and Hedging ActivitiesThe Company applies PSAK No. 55, “Accounting for Derivative Instruments and Hedging Activities”.PSAK No. 55 sets forth the accounting and reporting standards for derivative transactions and hedgingactivities, which requires that every derivative instrument (including embedded derivatives) be recognizedas either an asset or a liability based on the fair value of each contract. Fair value is a computation ofpresent value by using data and assumption which are commonly used.

The method of recognizing resulting gains or losses from derivatives transaction is dependent on thenature of the derivative transaction. If derivatives transactions are not qualified as hedging for accountingpurposes, the difference between fair value at balance sheet date and maturity date will be recorded inconsolidated statements of income. Changes in fair value of derivatives instrument that meets the criteriaas cash flow hedges will be recorded in the consolidated statement of changes in equity on the effectivehedged amount. When the instrument is mature, or no longer meets the criteria of hedges, the cumulativegain or losses will be recorded in the consolidated statements of income.

2.r. Segment InformationSegment information of the Company and subsidiaries are presented based on business segment.Business segment is a distinguishable component and provides a different product or service, especiallyfor customers outside the Company.

Geographical segment of the Company and subsidiaries represents a distinguishable component andprovides a different product or services in certain economic environment (location) and the componenthas distinct risk and return from other component which operates in other location.

2.s. Income Tax Benefit (Expense)All temporary differences arising between the tax bases of assets and liabilities and their carrying valueare recognized as deferred tax using liability method. Currently enacted tax rates are used to determinedeferred income tax.



19



Agreed by :Date :

Deferred tax assets relating to the carryforward of unused tax losses are recognized to the extent that it isprobable that the future taxable profit will be available against which the unused tax losses can beutilized. A valuation of allowance is provided for the portion of deferred tax assets which is not expectedto be realized in the future. Amendment to tax obligations are recorded when an assessment is receivedor, if appealed against, when the result of the appeal is determined.

Current tax is recognized based on taxable income for the year, in accordance with the current taxregulation.

2.t. Estimated Liabilities on Employees BenefitPost employment benefit is recognized at discounted amount when the employees have rendered theirservice to the Company during the accounting period. Liabilities and expenses are measured usingactuarial techniques which include constructive obligation that arises from the Company’s informalpractices. In calculating the liabilities, the benefit must be discounted by using the projected unit creditmethod.

The Company and certain subsidiaries have defined contribution retirement plans covering certainpermanent employees according to their preference. Contributions are funded and consist of employees’contribution computed at 3% and the Company and subsidiaries contributions at 5% of the employeesbasic salaries.

2.u. Basic Earning Per ShareBasic earning per share (EPS) is computed by dividing net income with the weighted average number ofshares outstanding during the year, while for diluted EPS is computed by dividing net income with theweighted average number of shares outstanding during the year plus dilutive potential common stocks.Number of weighted average number of shares outstanding as of December 31, 2008 and 2007 are6,785,159,000 and 6,626,058,178, respectively.

In 2007, 2,573,681,000 shares have been issued through the exercise of Right Issue IV, though theweighted average shares in 2007 have changed. Basic earnings per share was not adjusted since theoffering price from Right Issue IV at Rp 125 per share are higher than the fair price before the exercise ofrights, and accordingly there was no bonus element for the stockholders.

Due to the exercise price of warrant was higher than market price of share as of December 31, 2008 and2007, diluted earnings per share was not computed for December 31, 2008 and 2007.

2.v. Use of EstimatesThe preparation of the consolidated financial statements is conformity with generally accepted accountingprinciples requires the Company and subsidiaries’ management to make estimates and assumptions thataffect the reported amounts of assets and liabilities at the date of the financial statements and thereported amount of revenue and expenses during the reporting period. Actual results could be differentfrom these estimates.



20



Agreed by :Date :

2.w. Revised Statement of Financial Accounting Standard (PSAK)Following is the summary of new PSAK issued by Indonesian Institute of Public Accountants:

PSAK 50 (Revised 2006), “Financial Instruments: Presentation and Disclosures”, contains therequirements for the presentation of financial statements and identifies the information that should bedisclosed. The presentation requirements apply to the classification of financial instruments, from theperspective of the issuer, into financial assets, financial liabilities and equity instruments, theclassification of related interests, dividends, losses and gains; and the circumstances in whichfinancial assets and financial liabilities should be offset. This PSAK requires the disclosure of amongothers information about factors that effect the amount, timing and certainty of an equity future cashflows relating to financial statements and the accounting policies applied to these instuments. PSAK50 (Revised 2006) supersedes PSAK 50, “Accounting for Certain Investments in Securities”, and isapplied prospectively for financial statements covering the periods beginning on or after January 1,2010. Early application is encourage.

PSAK 55 (Revised 2006), “Financial Instruments: Recognition and Measurement”, establishes theprinciples for recognizing and measuring financial assets, financial liabilities and some contracts tobuy or sell non financial items. This PSAK provides the definitions and characteristics of derivatives,the categories of financial instruments, recognition and measurement, hedge accounting anddetermination of hedging relationships, among others. PSAK 55 (Revised 2006) supersedes PSAK55 (Revised 1999), “Accounting for Derivative Instruments and Hedging Activities”, and is appliedprospectively for financial statements covering the periods beginning on or after January 1, 2010.Early application is encouraged.

PSAK 14 (Revised 2008), "Inventories", which prescribes the accounting treatment for inventoriesand provides guidance on the determination of inventory cost and its subsequent recognition as anexpense, including any write-down to net realizable value, as well as guidance on the cost formulasused to assign costs to inventories. This revised PSAK is effective for financial statements beginningon or after January 1, 2009.

The Company and subsidiaries have not adopted early any of these PSAK’s. The Company andsubsidiaries are currently studying them and have not yet determined the related effects on theconsolidated financial statements.



21



Agreed by :Date :

3. Cash and Cash Equivalents

2008 2007Rp Rp

Cash on Hand ( including 2008: USD 1, SGD 3 and RMB 32;2007: SGD 1 and RMB 89) 36,797 31,326

BanksThird Parties

PT Bank CIMB Niaga Tbk (formerly PT Bank Niaga Tbk andPT Bank Lippo Tbk), (including 2008: USD 860; 2007: USD 259) 540,969 159,871

PT Bank Negara Indonesia (Persero) Tbk (including 2008: USD 45; 2007: USD 232) 332,283 505,183PT Bank Permata Tbk (including 2008: USD 1; 2007: USD 8) 300,128 73PT Bank Danamon Tbk (including 2008: USD 10; 2007: USD 43) 220,967 1,915Bank Julius Bear & Co. Ltd (2008: SGD 8,448; 2007: SGD 28,394) 64,264 184,630PT Bank OCBC NISP Tbk 50,416 10,001PT Bank Central Asia Tbk 45,926 13,561Raiffeisen Zentralbank Osterreich AG (SGD 5,007) 38,090 --PT Bank Mayapada Tbk 30,472 42PT Bank DBS Indonesia 21,758 --PT Bank Internasional Indonesia Tbk (including 2008: USD 141; 2007: USD 35) 12,915 2,732PT Bank Mega Tbk (including 2008: USD 2 and SGD 2;

2007: USD 3,307 and SGD 9) 3,539 1,831,440Others (below Rp 10,000 each)

(including 2008: USD 603, HKD 686, RMB 110, SGD 522,EURO 90 and JPY 11,371; 2007: USD 364, HKD 3,138,RMB 1, SGD 25, EURO 102 and JPY 9,479) 32,190 24,969

Sub Total 1,693,917 2,734,417

Time DepositsThird Parties

PT Bank CIMB Niaga Tbk (2008: USD 417; 2007: USD 2,355) 76,469 23,252PT Bank Permata Tbk 60,000 --PT Bank Mayapada Internasional Tbk 12,000 10,000PT Bank Panin Tbk 8,068 --PT Bank Mandiri (Persero) Tbk 6,000 --Others (2008: USD 97; 2007: HKD 3,930) 3,031 14,024

Sub Total 165,568 47,276Total 1,896,282 2,813,019

Interest Rate on Time Deposits per Annum:2008 2007

Rupiah 3% - 13% 6% - 10%US Dollar 1.75% - 3% 3.5%HK Dollar 2.95% 3.4% - 4.2%



22



Agreed by :Date :

4. Short-term Investments

2008 2007Rp Rp

Related PartiesManaged Funds 837,000 87,297Marketable Securities

TradingShares of PT Lippo Karawaci Tbk 115,202 99,362Bonds of PT Lippo Karawaci Tbk (2008: USD 735 ; 2007: USD 964) 8,048 9,085Others 70 114

Available for SaleShares of PT Lippo Karawaci Tbk 196,178 169,202

Sub Total 1,156,498 365,060

Third PartiesDeposit (2008: USD 10,085 and SGD 40,730 ; 2007: USD 1,813 and SGD 40,320) 420,283 279,258Note Receivable (USD 24,750) 271,013 233,120Marketable Securities

TradingBonds (2008: USD 3,290; 2007: USD 3,448) 42,234 38,831Shares of Stock 21 678

Mutual Funds 17,667 31,050Restricted Funds (including 2008: USD 416; 2007: USD 423) 5,943 10,303Sub Total 757,161 593,240

Total 1,913,659 958,300

The unrealized gain from the available for sale shares of PT Lippo Karawaci Tbk, a related party, as ofDecember 31, 2008 and 2007 is amounting to Rp 100,045 and Rp 73,070, respectively.

The bonds bore interest at annual rates ranging from 6.62% to 16.15% in 2008 and ranging from 6.62% to17.5% in 2007.

The Company and MPP, a subsidiary, entered into fund management agreements with PT Ciptadana Sekuritas(CS), a related party. Based on the agreements, which can be extended, the funds placed in CS will be used forthe purchase of investments, such as bonds and other debentures.

The deposit placed by the Company in Credit Suisse Bank, Singapore amounted to Rp 110,434 and Rp 17,083as of December 31, 2008 and 2007, respectively, represent pledged funds for loan obtained from Credit SuisseBank (see Note 20). The time deposit placed by MPP, a subsidiary, represents deposit placed in Bank CreditSuisse Bank, Singapore Branch amounted to Rp 309,849 in 2008 and placed in Bank Julius Bear & Co. Ltd.amounted to Rp 262,175 in 2007. The MPP’s time deposits represent guarantee (escrow) funds received fromDellmore Investment Limited (“DM”) relating to the LMIR Trust units owned by Tristar which are held by DM(Notes 1c, 2j, 8, 9, 29, 32, and 36). The time deposit placed earned interest at annual rates 1.52% in 2008 andranging from 0.2% to 1.14% in 2007.

The Company placed fund in note receivable on Supreme Capital Limited, Malaysia amounting to USD 24,750.The note receivable may be rolled over monthly, at annual interest rate ranging from 7.75% to 8% in 2008 andranging from 10.37% to 11.25% in 2007.



23



Agreed by :Date :

In 2007, the Company and MPP, a subsidiary, entered into a Managed Investment Assets Agreement (KontrakPengelolaan Aset Investasi) with PT Syailendra Capital (Syailendra) wherein, based on the agreement, theCompany and MPP appointed Syailendra as their investment manager and gave power and full authority toSyailendra to receive and manage its investment assets on behalf of the Company and MPP. The Company andMPP pay a certain fee as compensation to Syailendra. The Company’s investment portfolio consists ofinvestment in a mutual fund with net assets value of Rp 15,401, including the decline of net assets value byRp 12,111 in 2008 and of Rp 27,512, including increase of net assets value by Rp 7,512 in 2007.

Restricted fund represents current account (escrow) and deposits used as security for loan facility obtained bythe Company and subsidiaries (see Notes 13 and 20).

5. Accounts Receivable

Accounts receivable – trade consist of:2008 2007Rp Rp

Related Parties (including 2008: 1,367 ; 2007: USD 3,167) 21,019 37,667Allowance for Doubtful Accounts (2,721) (300)Net 18,298 37,367

Third Parties (including 2008: 8,648 ; 2007: USD 4,538) 200,820 165,163Allowance for Doubtful Accounts (543) (543)Net 200,277 164,620Total 218,575 201,987

Aging analysis of the trade receivables based on number of days outstanding are as follows:

2008 2007 2008 2007Rp Rp % %

Related PartiesLess than 31 days 2,252 13,625 1.02 6.7231 - 60 days 280 12 0.13 0.0161 - 90 days 3,237 9 1.46 0.00Over 90 days 15,250 24,021 6.87 11.84

21,019 37,667 9.48 18.57Third Parties

Less than 31 days 188,311 154,540 84.89 76.1931 - 60 days 6,125 5,861 2.76 2.8961 - 90 days 2,256 4,406 1.02 2.17Over 90 days 4,128 356 1.86 0.18

200,820 165,163 90.53 81.43Total 221,839 202,830 100.00 100.00

Total Percentage to TotalAccounts Receivable

The Company’s accounts receivable are used as collateral to the Company's short term and long term loansfacilities (see Notes 13 and 20).



24



Agreed by :Date :

The change in the allowance for doubtful accounts is as follows:2008 2007Rp Rp

Balance at Beginning of the Year 843 543Provision During the Year 2,421 300Total 3,264 843

Based on December 31, 2008, other receivables mainly consist of receivables to developers.

Based on the review of the status of the individual debtors at the end of the year, the Company and subsidiaries'management are of the opinion that the allowance for doubtful accounts amounting to Rp 3,264 and Rp 843 asof December 31, 2008 and 2007 is adequate to cover possible losses from the non collection of the accounts.

6. Inventories - Net

2008 2007Rp Rp

Retail and DistributionDaily Needs, Food and Beverages 690,319 646,688Men's Wear 60,974 53,174Ladies' Wear 60,811 60,865Children's Wear 55,478 48,681Shoes 51,089 47,616Household Appliance and Bathroom Accessories 39,640 35,041Toys and Sport Gadgets 9,844 10,449Books and Stationeries 8,276 --Bags, Cosmetics and Accessories 6,577 3,863Sub Total 983,008 906,377

Information Technology 50,492 41,429Others 123 399Total 1,033,623 948,205Allowance for Inventory Obsolescence (3,319) (3,319)Net 1,030,304 944,886

The Company and subsidiaries' management are of the opinion that the allowance for inventory obsolescence isadequate to cover possible losses from inventory obsolescence.

Merchandise inventory is covered by insurance against losses by fire and other risk under blanket policiesamounting to Rp 1,219,440 and Rp 1,069,723 as of December 31, 2008 and 2007, respectively, which in theCompany and subsidiaries' management opinion, is adequate to cover possible losses arising from such risks.

Certain inventories are used as collateral to the Company and subsidiaries’ loans (see Notes 13 and 20).



25



Agreed by :Date :

7. Investments in Associates

Percentage Acquisition Accumulated Others Netof Ownership Cost Equity in Net

Earnings(Losses) - Net

% Rp Rp Rp RpInvestments in:

PT First Media Tbk (FM) 33.77 175,643 (56,902) (2,900) 115,841PT Bintang Sidoraya (BSR) 24.00 2,380 -- -- 2,380PT Matahari Leisure (ML) 50.00 1,437 30,854 (5,000) 27,291PT Tason Mitra Prima (TMP) 50.00 3,000 (918) -- 2,082PT Karya Dinamika Investasi (KDI) 36.36 400 -- -- 400PT Natrindo Global Telekomunikasi (NGT) 20.00 5,500 (5,500) -- --PT Tirta Mandiri Sejahtera (TMS) 20.00 1 (1) -- --

Total 188,361 (32,467) (7,900) 147,994

2008

Percentage Acquisition Accumulated Others Netof Ownership Cost Equity in Net

Earnings(Losses) - Net

% Rp Rp Rp RpInvestments in:

PT First Media Tbk (FM) 32.67 162,143 (20,941) -- 141,202PT Bintang Sidoraya (BSR) 40.00 20,961 162 -- 21,123PT Matahari Leisure (ML) 50.00 1,437 27,736 (2,500) 26,673PT Tason Mitra Prima (TMP) 50.00 3,000 395 -- 3,395PT Karya Dinamika Investasi (KDI) 36.36 400 -- -- 400PT Natrindo Global Telekomunikasi (NGT) 20.00 5,500 (5,500) -- --PT Tirta Mandiri Sejahtera (TMS) 20.00 1 (1) -- --

Total 193,442 1,851 (2,500) 192,793

2007

The equity in net earnings (losses) of associates during the year consist of:2008 2007Rp Rp

PT Matahari Leisure 5,618 8,328PT First Media Tbk (35,961) (788)PT Bintang Sidoraya (18,743) --PT Tason Mitra Prima (1,313) --Total (50,399) 7,540



26



Agreed by :Date :

(a) In February 2007, the Company through PT Reksa Puspita Karya (RPK), a subsidiary, purchase additionalshares through Limited Public Offering of Pre-Emptive Rights Issuance of PT First Media Tbk (FM)amounting to 191,041,832 shares or equivalents to Rp 95,521, therefore the effective ownership of theshares by the Company increase from 20.18% to 32.67%. In 2008, the Company through RPK, asubsidiary, increase the ownerhip of FM’s shares by exercising the warrants for 13.5 million of shares orequivalent to Rp 13,500, therefore the effective ownership of the shares by the Company increase to be33.77%.

Part of investment in FM shares are used as collateral for short term and long term loan facility obtained bythe Company (see Notes 13).

(b) NGT is engaged in telecommunication services.

(c) TMS is engaged in trading, industry, mining, real estate, agribusiness and other services.

(d) The investment in BSR and TMP were acquired through PT Taraprima Reksabuana, MPP’s subsidiary.BSR is engaged in the sale and marketing of beer, while TMP has not started its commercial operations.

(e) The investment in ML were acquired through MPP, a subsidiary. ML is engaged in the manufacture ofamusement machines while PT Nadya Putra Investama, MPP’s subsidiary, owns the 36.36% shareownership in KDI which has not started its commercial operation.

8. Other Long-term Investments

2008 2007Rp Rp

Investment in LMIR Trust Unit (2008: SGD 15,621; 2007: 33,509) 118,831 217,887Investments in Shares of Stock which are Accounted for Under the Cost Method 5,138 5,138Total 123,969 223,025

a. Tristar, a subsidiary of MPP, hold an available-for-sale investment of 50,389,000 units of LMIR Trust, a trustwhich has investments in assets such as commercial mall and retail spaces. As of December 31, 2008 and2007, the market value of the units were Rp 118,831 and Rp 217,887, respectively. The difference betweenthe acquisition cost and fair value of the investment amounting to Rp 138,354 and Rp 40,899 are recordedas unrealized loss as of December 31, 2008 and 2007, respectively, which is presented under stockholders’equity (Notes 1c, 32 and 36).

On December 24, 2008, Tristar received 50,389,000 LMIR Trust units as a realization of agreement withDellmore Investment Ltd (Notes 1c and 32).



27



Agreed by :Date :

b. As of December 31, 2008 and 2007, the investments in shares of stock which accounted for under the costmethod consist of the following:

Ownership 2007 Additions 2008(Deductions)

% Rp Rp RpInvestments in:

PT Courts Indonesia Tbk (CI) 4.99 4,251 -- 4,251PT AsiaNet Multimedia 5.00 507 -- 507PT Multipolar Telemedia 10.00 250 -- 250PT Lippo On Line 1.00 125 -- 125BigboXX.com (CI) Limited (BCL) 3.50 5 -- 5PT Natrindo Kartu Panggil 1.00 -- -- --PT Aneka Tirta Nusa (ATN) 3.13 -- -- --

Total 5,138 -- 5,138

Ownership 2006 Additions 2007(Deductions)

% Rp Rp RpInvestments in:

PT Courts Indonesia Tbk (CI) 4.99 4,251 -- 4,251PT AsiaNet Multimedia 5.00 507 -- 507PT Multipolar Telemedia 10.00 250 -- 250PT Lippo On Line 1.00 125 -- 125BigboXX.com (CI) Limited (BCL) 3.50 5 -- 5PT Natrindo Kartu Panggil 1.00 -- -- --PT Aneka Tirta Nusa (ATN) 3.13 25,031 (25,031) --

Total 30,169 (25,031) 5,138

Investment in CI of 4.9889% owned by MPP, a subsidiary, is engaged in the electronic and furniture retailbusiness.

Prime Connection Limited, a MPP’s subsidiary, owns the investment in BCL, a company which is part of theHutchison Whampoa Ltd. – Hongkong, a business group which is engaged in the retail and distributionbusiness.

Based on ATN’s Extraordinary Stockholders Meeting dated May 9, 2007, the stockholders agreed tochange par value of shares and reduction of authorized capital, issued and fully paid. In 2007, RPK, asubsidiary, has received the amount reduction of such capital.



28



Agreed by :Date :

9. Property and Equipment

Beginning Additions Deductions Transfer in (Out) EndingBalance Balance

Rp Rp Rp Rp RpCarrying ValueDirect Ownership

Land 134,116 -- 2,130 -- 131,986Building 854,816 25 85 7,514 862,270Building Improvements and Renovations 270,589 65,645 25,733 87,653 398,154Computer 52,735 12,687 3,889 25 61,558Office Furniture, Fixtures and

Equipments 22,249 5,614 344 -- 27,519Transportation Equipment 26,075 1,913 1,471 3,572 30,089Equipment and Installment 1,612,368 116,397 54,551 266,013 1,940,227Machineries 279,568 10,492 8,315 5,286 287,031Equipment for Rental 224,152 10,068 21,443 21,340 234,117Advertising Apparatus 15 -- -- -- 15Sub Total 3,476,683 222,841 117,961 391,403 3,972,966

Assets Under Capital Lease -- 2,261 -- -- 2,2613,476,683 225,102 117,961 391,403 3,975,227

Construction in Progress 17,295 12,076 -- (24,854) 4,517Total 3,493,978 237,178 117,961 366,549 3,979,744

Accumulated DepreciationDirect Ownership

Building 201,952 41,193 12 -- 243,133Building Improvements and Renovations 125,433 61,064 22,785 -- 163,712Computer 43,979 3,920 1,534 -- 46,365Office Furniture, Fixtures and

Equipments 19,006 2,043 303 -- 20,746Transportation Equipment 19,742 4,315 1,427 -- 22,630Equipment and Installment 844,286 191,757 37,505 -- 998,538Machineries 222,389 34,952 7,901 -- 249,440Equipment for Rental 172,438 45,655 17,561 -- 200,532Advertising Apparatus 15 -- -- -- 15Sub Total 1,649,240 384,899 89,028 -- 1,945,111

Assets Under Capital Lease 93 244 -- -- 337Total 1,649,333 385,143 89,028 -- 1,945,448Book Value 1,844,645 2,034,296Allowance for Possible Loss from

Disposal (24,897) (24,897)Net 1,819,748 2,009,399

2008



29



Agreed by :Date :

Beginning Additions Deductions Transfer in (Out) EndingBalance Balance

Rp Rp Rp Rp RpCarrying ValueDirect Ownership

Land 142,288 -- 12,141 3,969 134,116Building 1,195,205 5,193 627,022 281,440 854,816Building Improvements and Renovations 238,643 20,038 15,645 27,553 270,589Computer 48,637 3,821 670 947 52,735Office Furniture, Fixtures and

Equipments 19,794 2,471 16 -- 22,249Transportation Equipment 24,094 3,140 1,838 679 26,075Equipment and Installment 1,474,521 73,223 93,572 158,196 1,612,368Machineries 263,191 20,114 9,177 5,440 279,568Equipment for Rental 199,840 6,271 5,425 23,466 224,152Advertising Apparatus 15 -- -- -- 15Sub Total 3,606,228 134,271 765,506 501,690 3,476,683

Assets Under Capital Lease 8,280 -- -- (8,280) --3,614,508 134,271 765,506 493,410 3,476,683

Construction in Progress 12,273 23,967 -- (18,945) 17,295Total 3,626,781 158,238 765,506 474,465 3,493,978

Accumulated DepreciationDirect Ownership

Building 248,006 62,374 108,428 -- 201,952Building Improvements and Renovations 92,851 46,858 14,276 -- 125,433Computer 39,597 4,090 655 947 43,979Office Furniture, Fixtures and

Equipments 17,647 1,374 15 -- 19,006Transportation Equipment 17,659 3,686 1,603 -- 19,742Equipment and Installment 724,636 171,522 51,872 -- 844,286Machineries 189,547 41,598 8,756 -- 222,389Equipment for Rental 119,855 55,505 5,425 2,503 172,438Advertising Apparatus 15 -- -- -- 15Sub Total 1,449,813 387,007 191,030 3,450 1,649,240

Assets Under Capital Lease 920 2,623 -- (3,450) 93Total 1,450,733 389,630 191,030 -- 1,649,333Book Value 2,176,048 1,844,645Allowance for Possible Loss from

Disposal (24,897) (24,897)Net 2,151,151 1,819,748

2007

The Company and subsidiaries’ land represent HGB on land located in several cities in Indonesia. These HGBexpire on various dates from year 2009 to 2038. The Company and subsidiaries' management believe that theabove HGB certificates can be extended upon their expiration.



30



Agreed by :Date :

Depreciation for the years ended December 31, 2008 and 2007 charged to the following:

2008 2007Rp Rp

General and Administrative Expenses 332,043 324,667Cost of Sales 47,658 59,323Selling Expenses 889 1,315Other Expenses -Others 4,552 4,325Total 385,142 389,630

In 2008 and 2007, the Company and subsidiaries recorded loss on sales of property and equipments as follows:

2008 2007Rp Rp

Proceeds 19,054 11,832Net Book Value (28,934) (14,954)Total (9,880) (3,122)

On November 19, 2007, MPP and Tristar, a subsidiary of MPP, entered into investment in shares and asset saleand lease transactions. The difference between the proceeds from the sale and net book value was recorded asdeferred gain on asset sale and lease transactions and amortized proportionally over the rental period based onthe rent expenses related to those assets as follows:

2008 2007Rp Rp

Balance at Beginning of Year 422,282 --Deferred Gain on Sale of Investment and Asset

Sale and Lease Transactions -- 427,146Amortization (34,493) (4,864)Balance at End of Year 387,789 422,282Less: Current Portion (38,362) (42,715)Long-term Portion 349,427 379,567

On June 22, 2007, MPP, a subsidiary, entered into Memorandum of Sale and Purchase Agreement (PerjanjianPengikatan Jual Beli) with each of PT Madiun Ritelindo (MR), PT Java Mega Jaya (JMJ) and PT DinamikaSerpong (DS) and Memorandum of Transfer of Right Agreement (Perjanjian Pengikatan Pengalihan Hak) witheach of PT Matos Surya Perkasa (MSP), PT Megah Detos Utama (MDU), PT Palladium Megah Lestari (PML)and PT Gema Metropolis Modern (GMM) relating to the sale of MPP’s properties and facilities located in Madiun(to MR), Semarang (to JMJ), Serpong (to DS), Malang (to MSP), Depok (to MDU), Medan (to PML) andTangerang (to GMM). The total proceeds amounted to Rp 578,582 and the resulting total gain of Rp 20,032 wasrecorded as part of Deferred Gain on Asset Sale and Lease Transactions” (Note 2.j).

On November 19, 2007, MPP, a subsidiary, entered into Sale and Purchase Agreements on properties locatedin Madiun, Serpong and Semarang, and Transfer of Right and Obligation on properties located in Malang,Depok, Medan and Tangerang to each of the respective buyers. As of December 31, 2008, Malang andTangerang have transferred to MSP and GMM, respectively.



31



Agreed by :Date :

MPP, a subsidiary, continuously review and maximize MPP’s operations to generate income, review theappropriateness of stores location and demographic condition, close down some non-value added stores, andreduce the spaces occupied by some stores to enhance operating efficiency. In connection with these activities,MPP made provisions, such as allowance for possible loss from disposal of property and equipment.

Property and equipment are covered by insurance against losses by fire and other risks under blanket policiesapproximately amounting to Rp 3,096,516 in 2008 and Rp 2,618,326 in 2007. The management of theCompany and subsidiaries believe that the insurance coverage is adequate to cover possible losses from fireand other risks.

Based on the review on property and equipment individually, the management of the Company and subsidiariesbelieves that there is no need to provide allowance for impairment of assets value as of December 31, 2008 and2007.

Certain property and equipment are pledged as collateral to short term and long term loans obtained by theCompany and MPP, a subsidiary, and bonds issued by MPP (see Notes 13, 18 and 20).

10. Rental Advances

This account represents rental advances made to building owners for new stores. The rental advances are usedfor rental payment at the start of the rent period (Note 32). Rental advance to related party amounting toRp 286,433 and Rp 384,385 as of December 31, 2008 and 2007, respectively (Note 30).

11. Prepaid Long Term Rent- Net

This account represents the long-term rent prepayment for MPP’s stores located at Pluit, Bellanova CountryMall, Puri, Cibubur Town Square, Bandung Indah Plaza, Kramat Jati, King Bandung and other locations in 2008,MPP’s stores located at Bellanova Country Mall, Cibubur Town Square, Bandung Indah Plaza, Kramat Jati, KingBandung and other locations in 2007. Prepaid long term rent-net to related party amounting to Rp 162,971 andRp 84,944 as of December 31, 2008 and 2007, respectively (Note 30).

12. Advances for Purchase of Property and Equipment

This account primarily represents advances for store spaces under construction to be used for the store of MPPin Lampung. In addition, this account also includes advances for purchase of equipment and installations in itsMPP’s existing stores. The advances account will be reclassified to property and equipment upon the transfer ofthe stores to MPP after completion of construction/installation or delivery of the equipment purchased. Advancesfor purchase of property and equipment to related party amounting to Rp 118,000 and Rp 131,427 as ofDecember 31, 2008 and 2007, respectively (Note 30).



32



Agreed by :Date :

13. Short-term Loan

2008 2007Rp Rp

Raiffeisen Zentralbank Oesterreich AG, Singapore (2008: USD 15,000;2007:USD 25,000) 164,250 235,475

PT Bank Negara Indonesia (Persero) Tbk 150,000 34,000PT Bank Mandiri (Persero) Tbk 52,000 15,900PT Bank CIMB Niaga Tbk (ex PT Bank Lippo Tbk) 45,029 39,500PT Bank Permata Tbk (2007:USD 89) 40,000 841Standard Chartered Bank, Jakarta (2008: USD 1,425 ; 2007:USD 1,138) 15,600 10,714Jumlah 466,879 336,430

On May 11, 2006, the Company obtained short-term loan facility from Raiffeisen Zentralbank Oesterreich AG,Singapore amounting to USD 25,000 for 1 (one) year period. This loan is used, including but not limited, forworking capital and refinancing. In 2008, the loan period has been extended with repayment schedule asfollows:- Tranche A amounting to USD 15,000 within period of 1 year- Tranche B amounting to USD 10,000 within period of 3 years, with repayment schedule of USD 3,000 on

each months of 12th and 24th , and amounting to USD 4,000 on month of 36th starting on May 31, 2008. As ofDecember 31, 2008, the loan amounting to USD 10,000 has been recorded as long-term loan (see Note 20).

The loan obtained by the Company from PT Bank Negara Indonesia Tbk represents working capital creditfacilities with total maximum amount of Rp 150,000 and will mature on November 12, 2009.

The loan obtained by the Company from PT Bank Mandiri Tbk represents working capital credit facility with totalmaximum of credit amounting to Rp 52,000 and will mature on November 16, 2009.

The loan obtained by the Company from PT Bank CIMB Niaga Tbk (ex PT Bank Lippo Tbk) represents fixedloan on demand with total maximum of credit amounting to Rp 55,000 and will due in March 2009 and in theprocess of extension.

The loans obtained by the Company from Standard Chartered Bank, Jakarta represents credit facility related toprocurement with total maximum amount of USD 3,000. This loan facility is available until November 30, 2009.

The loan obtained by the Company from PT Bank Permata Tbk represents revolving loan facility using for thepurchase of inventories for purchase value less than USD 250 with maximum amount of USD 1,500 for 1 yearperiod and may be extended.

For all the above loan facilities, the Company and subsidiaries were charged with interest at annual ratesranging from 10.5% to 16% for Rupiah and 5.32% to 9.5% for USD in 2008 and ranging from 11% to 15.75% forRupiah and 6% to 10% for USD in 2007. The above loan agreements require the Company and subsidiaries tocomply with certain conditions, such as maintaining specific financial ratios. As of December 31, 2008, all ofthese financial ratios have been met. These loan facilities are collateralized by trade receivables, inventories,property and equipments and ownerships in certain subsidiaries/associate companies.



33



Agreed by :Date :

14. Accounts Payable - Trade

2008 2007Rp Rp

Related Parties 28 552Third Parties 1,252,375 1,009,690Total 1,252,403 1,010,242

The amounts due to suppliers as of December 31, 2008 are all payable in the first quarter of 2009.

15. Other Payables and Other Current Liabilities

This account primarily represents liabilities to MPP, a subsidiary, to Dellmore Investment Limited (DM) related tothe receipt of escrow fund from DM (see Notes 2p, 4, 29 and 36), to contractors for building renovation work,including store decoration, and to other parties for marketing expenses. In addition, this account consists of theestimated liabilities relating to MPP’s customer loyalty program amounting to Rp 10,984 and Rp 13,093 as ofDecember 31, 2008 and 2007, respectively.

16. Taxation

a. Income Tax Benefit (Expense)A reconciliation between income before income tax expense, as shown in the consolidated statements ofincome, and estimated taxable income (tax loss) of the Company is as follows:

2008 2007Rp Rp

Income (Loss) before Income Tax Expense per Consolidated Statement of Income (259,968) 188,521Loss (Income) before Income Tax Expense of Consolidated Subsidiaries 63,459 (127,204)

Income (Loss) before Income Tax Expense Attributable to the Company (196,509) 61,317

Permanent Differences:Equity in Net Earnings of Subsidiaries/Associates 43,352 (74,234)Interest Income already Subjected to Final Tax (505) (1,289)Others (841) (436)Sub Total 42,006 (75,959)

Timing Differences:Depreciation and Amortization 5,627 15,947Employee's Benefits 1,936 2,032Equity in Net Earnings of Subsidiaries/Associates (3,336) (3,104)Inventory Obsolescence Write-off -- (2,503)Allowance for Doubtfull Account 2,421 --Others 3,306 (54,660)Sub Total 9,954 (42,288)

Estimated Tax Loss (144,549) (56,930)Tax Loss Carryforward (149,908) (94,331)Corrections from Tax Office 30,541 1,353Estimated Tax Loss Carryforward Can Be Compensated (263,916) (149,908)



34



Agreed by :Date :

As of the independent auditors’ report date, the Company and its subsidiaries have not yet submitted theirrespective 2008 Income Tax Returns (SPT) to the Tax Office.

The income tax expense and the computations of the estimated corporate income tax payable (claim forincome tax refund) are as follows:

Company Subsidiaries Company SubsidiariesRp Rp Rp Rp

Income Tax Expenses -- 38,218 -- 41,339Prepayment of Income Taxes

Article 22 4,114 -- 3,242 --Article 23 9,119 8,701 14,287 761

Others 34 26,661 55 2Total Prepayments of Income Taxes 13,267 35,362 17,584 763Estimated Corporate Income Tax Payable (Claim

for Income Tax Refund) (13,267) 2,856 (17,584) 40,576

20072008

In February 2008, the Company has received net tax refund amounting to Rp 17,851 after consideringUnder Payment Tax Assessment Notice for Income Tax article 23 and 4(2) amounting to Rp 22. In April2007, the Company has received net refund amounting to Rp 15,804 after considering Under Payment TaxAssessment Notice for Income Tax article 21 and 23 amounting to Rp 67.

b. Deferred Tax Assets (Liabilities) - NetA computation of deferred income tax benefit (expense) on temporary significant differences using themaximum tax rate of 28% and 30% in 2008 and 2007, respectively, is as follows:

2008 2007Rp Rp

The CompanyAccumulated Tax Loss - including Correction from Tax Office 34,203 16,673Correction on Deferred Tax Asset/Liability -Net 6,515 --Depreciation and Amortization 1,687 4,784Allowance for Doubtfull Accounts 726 --Employees' Benefits 581 610Obsolent Inventory Write-off -- (751)Adjustment in regard with Tax Tariff Decline (401) --Equity in Net Earnings of Subsidiaries/Associates (1,001) (932)Allowance for Estimated Unrecoverable Deferred Tax Assets (43,302) (3,987)Others 992 (16,397)Net -- --

SubsidiariesPT Visionet Internasional (2,602) 2,033PT Multifiling Mitra Indonesia (138) 94PT Matahari Putra Prima Tbk 109,709 1,848PT Sharestar Indonesia 26 (94)Sub Total 106,995 3,881

Deferred Tax Benefit - Net 106,995 3,881



35



Agreed by :Date :

Accumulated deferred income tax benefit (expense) presented as Deferred Tax Assets (Liabilities)-Net inthe consolidated balance sheets, with details as follows:

2008 2007Rp Rp

The CompanyTax Losses 73,897 44,972Accumulated Depreciation and Disposal of Fixed Asset 5,684 4,402Employees' Benefits 3,907 3,366Allowance for Inventories Obsolescence 929 996Allowance for Doubtful Accounts 830 163Accumulated Equity in Net Earning of Associates (7,106) (6,613)Allowance for Estimated Unrecovered Deferred Tax Assets (52,441) (12,884)Others (20,086) (28,788)Net 5,614 5,614

SubsidiariesPT Matahari Putra Prima Tbk 109,604 4,037PT Multifiling Mitra Indonesia 674 812PT Sharestar Indonesia 506 479PT Visionet Internasional -- 2,033Sub Total 110,784 7,361

Deferred Tax Assets - Net 116,398 12,975Deferred Tax Liabilities - Net

PT Matahari Putra Prima Tbk 8,888 13,030PT Visionet Internasional 569 --

Deferred Tax Liabilities - Net 9,457 13,030

Based on review of the status of the deferred tax assets at the end of each year, management believes thatthe allowance for estimated unrecoverable deferred tax assets is adequate to cover unrecoverable amount.

c. Taxes Payable2008 2007Rp Rp

Income Taxes Accrued and WithheldArticle 21 30,736 10,186Article 23 12,223 7,467Article 25 2,859 2,737Article 26 2,184 2,171Article 29 1,212 4,264Article 4 (2) 16 4Others 109 103

Value Added Tax - Net 18,670 38,463Total 68,009 65,395



36



Agreed by :Date :

17. Accrued Expenses

2008 2007Rp Rp

Maintenance and Services 85,247 58,577Interest 80,433 59,203Salaries, Allowance and Employee Benefits 69,112 98,047Marketing and Supplies 67,043 41,616Electricity and Energy 43,202 31,414Rent 36,475 27,808Others 144,467 93,979Total 525,979 410,644

18. Bonds Payable

2008 2007Rp Rp

Second Matahari Bonds in Year 2004 with Fixed Rates 300,000 300,000First Matahari Syariah Ijarah Bonds in Year 2004 150,000 150,000Nominal Value 450,000 450,000Treasury Bonds (7,000) --Balance 443,000 450,000Unamortized Bonds Issuance Cost (1,360) (4,856)Net 441,640 445,144Less: Bond Due within One YearSecond Matahari Bonds in Year 2004 with Fixed Rates 300,000 --First Matahari Syariah Ijarah Bonds in Year 2004 150,000 --Treasury Bonds (7,000) --Unamortized Bonds Issuance Cost (1,360) --Current Maturities - Net 441,640 --Long-term Portion - Net -- 445,144

On May 11, 2004, MPP, a subsidiary, issued “Obligasi II Matahari Putra Prima Tahun 2004 dengan TingkatBunga Tetap” (Second Matahari Bonds) and “Obligasi Syariah Ijarah I Matahari Putra Prima Tahun 2004” (FirstMatahari Syariah Ijarah Bonds), with PT Bank Negara Indonesia (Persero) Tbk as the trustee. The bonds havetotal face values of Rp 300,000 and Rp 150,000, respectively, in Rp 50 denomination andwill mature on May 11, 2009. Thus, as of December 31, 2008, the Second Matahari Bonds and the FirstMatahari Syariah Ijarah Bonds were reclassified to Current Maturities of Long-term Debts - Bonds Payable -Net. The ratings were idA+ (stable outlook) for the Second Matahari Bonds and idA+(sy) (stable outlook) for theFirst Matahari Syariah Ijarah Bonds.

MPP’s bonds listing on the Surabaya Stock Exchange (BES) was approved on the basis of the BES DecisionLetter No. JKT-007/LIST-EMITEN/BES/V/2004 dated May 10, 2004.

The Second Matahari Bonds bear interest at the fixed rate of 13.8% per annum for 5 years starting May 11,2004. PT Kustodian Sentral Efek Indonesia (KSEI), acting as the payment agent, pays quarterly interest on thebonds starting August 11, 2004 until May 11, 2009.



37



Agreed by :Date :

Each bondholder of First Matahari Syariah Ijarah is entitled to “Ijarah fee” at 13.8% per annum. The fee shall bepaid for 5 years starting May 11, 2004. KSEI, acting as the payment agent, pays quarterly Ijarah fee startingAugust 11, 2004 until May 11, 2009.

The bonds are collateralized by certain landrights and buildings with fair value representing 115% of the totalface value of the bonds.

The proceeds of the Second Matahari Bonds were used for the opening of new stores and the renovation of theexisting ones and for MPP’s working capital requirements, such as for the purchase of merchandise inventory.

The proceeds of the First Matahari Syariah Ijarah Bonds were used for the lease of store spaces which hadbeen determined in Akad Wakalah.

Based on the Bonds Indenture, MPP is required to comply with certain conditions, such as maintaining severalfinancial ratios. As of December 31, 2008, all of the financial ratios have been met.

The amortization of bonds issuance cost charged to 2008 and 2007 operations amounted to Rp 3,496 andRp 3,510, respectively.

If the bonds’ annual rating decreased below idA- for the Second Matahari Bonds and idA-(sy) for the FirstMatahari Syariah Ijarah Bonds, MPP should maintain a sinking fund in amounts as determined amounts basedon the Bonds Indenture.

On November 30, 2006, MPP held the General Bondholders’ Meeting of Second Matahari Bonds in Year 2004and First Matahari Syariah Ijarah Bonds in Year 2004 to approve the changes in the Bonds Indenture and toaccept the resignation of PT Bank Negara Indonesia (Persero) Tbk (BNI) as trustee and bond collateral agent,and approve the appointment of PT Bank Mega Tbk to replace BNI as trustee and bond collateral agent.

In 2008, MPP repurchased the Second Matahari Bonds with par value of Rp 7,000 from the market withpurchase price of Rp 7,058. The difference amounting to Rp 58 was charged to operations and is presentedunder Other charges (income) - net in the consolidated statements of income.

19. Notes Payable

2008 2007Rp Rp

Face Value (USD 150,000) 1,642,500 1,408,950Treasury Notes (USD 30,656) (335,680) --

1,306,820 1,408,950Unamortized Notes Discount and Issuance Cost (14,741) (42,869)Total 1,292,079 1,366,081

On October 6, 2006, Matahari Finance B.V., a MPP’s subsidiary, issued Notes with a total face value ofUSD 150,000 (“the Notes”) in USD 100 denomination at the price of 98.731%, with the DB Trustees (HongKong) Limited as the trustee and UBS AG and Credit Suisse Securities (Europe) Limited as Joint LeadManagers.



38



Agreed by :Date :

The Notes will mature on October 6, 2009 and bear interest at the rate of 9.5% per annum. The proceeds fromthe Notes were used for debt repayment, capital expenditures, working capital and other general corporatepurposes. The Notes are guaranteed by MPP and have no collateral. At any time on or after October 6, 2007,the issuer may redeem the Notes, in whole or in part, at pre-determined prices.

The Notes have been rated “B1” by Moody’s Investor Service, Inc. and “B+” by Standard and Poor’s RatingGroup, a division of Mc Graw-Hill Companies, Inc. and have been listed on the Singapore Stock Exchange(“SGX-ST”).

In 2008, the Company and MPP, a subsidiary, repurchased the Notes with par value of USD 30,650 from themarket with purchase price of USD 27,912. The difference amounting to Rp 31,095 was credited to operationsand is presented under “Other charges (income) - net” in the consolidated statements of income.

The amortization of notes discount and issuance cost charged to years ended December 31, 2008 and 2007operations amounted to Rp 28,128 and Rp 24,393, respectively.

20. Long-term Loans

2008 2007Rp Rp

LoansCredit Suisse, Singapore (USD 75,000) 821,250 706,425PT Bank Negara Indonesia (Persero) Tbk 500,000 100,000PT Bank CIMB Niaga Tbk (ex PT Bank Niaga Tbk and PT Bank Lippo Tbk)

(including 2008: USD 104; 2007: USD 892) 244,669 251,662PT Bank Danamon Tbk 235,000 --PT Bank Mizuho Indonesia 200,000 200,000PT Bank Internasional Indonesia Tbk 200,000 200,000The Hongkong and Shanghai Banking Corporation Ltd 150,000 107,900Raiffeisen Zentralbank Oesterreich AG, Singapore (USD 10,000) 109,500 --PT Bank Permata Tbk (2008: USD 603; 2007: including USD 2,175) 6,607 20,488PT Bank Mayapada Tbk 4,354 --PT Bank Akita 2,221 1,169Total 2,473,601 1,587,644

Less : Current MatuririesThe Hongkong and Shanghai Banking Corporation Ltd 70,000 107,900Raiffeisen Zentralbank Oesterreich AG, Singapore (USD 3,000) 32,850 --PT Bank Permata Tbk (2008: USD 430; 2007: including USD 1,546) 4,712 14,559PT Bank CIMB Niaga Tbk (ex PT Bank Niaga Tbk and PT Bank Lippo Tbk)

(2008: USD 104; 2007: termasuk USD 764) 2,967 8,087PT Bank Mayapada Tbk 1,985 --PT Bank Akita 690 731PT Bank Negara Indonesia (Persero) Tbk -- 9,091

Total 113,204 131,277Long-term Portion 2,360,397 1,456,367



39



Agreed by :Date :

In September 2007, the Company obtained US Dollar Secured Term Loan facility with total of USD 75,000where Credit Suisse Singapore acted as Mandated Arranger. This facility has period of 5 years with Put Option,where after 3 years, the creditor has right to request a full repayment or repayment by installment. This loancollateralized by the shares of PT Matahari Putra Prima Tbk, a subsidiary, at amounts that both parties agreedor the replacing shares, which owned by the Company. This facility was used for repayment for outstanding loanand for working capital of the Company.

The loan obtained by the Company from Raiffeisen Zentralbank Oesterreich AG, Singapore amounting to USD10,000 is reclassification of short-term loan in 2007 (see Note 13), in line with the installment schedule (TrancheB) amounting to USD 3,000 on each months of 12th and 24th and amounting to USD 4,000 on month of 36th

starting on May 31, 2008.

On December 13, 2007, MPP, a subsidiary, obtained from PT Bank CIMB Niaga Tbk (formerly PT Bank LippoTbk) a Fixed Loan on Demand 3 (“PTX-OD 3”) facility amounting to Rp 240,000. The loan facility is available upto December 13, 2010.

On September 8, 2006 and September 19, 2006, MPP, a subsidiary, obtained from PT Bank Danamon Tbk tworevolving working capital loan facilities amounting to Rp 125,000 and Rp 110,000, respectively. The facilitieshave been extended up to June 30, 2010.

On April 20, 2007, MPP, a subsidiary, obtained from PT Bank Mizuho Indonesia a revolving working capital loanfacility amounting to Rp 100,000. The credit facility has been extended up to September 28, 2010 and theamount was increased to Rp 200,000.

On December 13, 2007, MPP, a subsidiary, obtained from PT Bank Internasional Indonesia Tbk a revolvingpromissory loan facility amounting to Rp 200,000. The loan facility is available up to December 13, 2010.

The Company and subsidiaries also obtained loans from PT Bank CIMB Niaga Tbk (formerly PT Bank NiagaTbk and PT Bank Lippo Tbk), PT Bank Internasional Indonesia Tbk, PT Bank Permata Tbk and PT Bank Akitaand PT Bank Mayapada Tbk represent credit facilities that were used for financing the purchase of inventoriesagreed by the banks (contract of sales). Each borrowings used for this contract will have same maturity datewith the term of the financed sales. The loans used for sales for more than 1 (one) year consists of:- Loan obtained from PT Bank CIMB Niaga Tbk (formerly PT Bank Lippo Tbk) by PT Visionet Internasional, a

subsidiary, which is PTA facility (umbrella line credit facility) amounting to Rp 10,000, with the latestcontract will mature on August 11, 2011.

- Loan obtained from PT Bank Internasional Indonesia Tbk by the Company with maximum facility amount ofUSD 5,000. The facility will mature on October 21, 2009.

- Loan obtained from PT Bank CIMB Niaga Tbk (ex PT Bank Niaga Tbk) by the Company with the latestcontract will mature on July 9, 2009.

- Loan obtained from PT Bank Permata Tbk by the Company has maximum credit facility of USD 10,000 withthe latest contract will mature on June 20, 2011.

- Loan obtained from PT Bank Akita by the Company is installment investment credit facility of Rp 3,158. Thisloan will mature on May 31, 2010. The loan obtained from PT Bank Akita by PT Visionet Internasional, asubsidiary, is installment credit facility amounting to Rp 1,900 which will mature on July 23, 2013.

- Loan obtained from PT Bank Mayapada Tbk by PT Visionet Internasional, a subsidiary, is installment creditfacility amounting to Rp 6,000 with the latest contract will mature on August 5, 2011.



40



Agreed by :Date :

On September 21, 2006, MPP, a subsidiary, obtained from PT Bank Negara Indonesia Tbk (BNI) a term loanfacility with a maximum amount of Rp 500,000 which is available up to June 20, 2011. On December 24, 2008,MPP drew down the facility amounting to Rp 500,000 from BNI that is payable in 6 quarterly instalments eachamounting to Rp 70,000 per quarter starting on December 24, 2009 and amounting to Rp 80,000 for the lastinstallment on June 20, 2011. Therefore, the first installment that will be due on December 24, 2009 ispresented as “Current maturities of long-term debts - Bank loans” on December 31, 2008.

On March 15, 2005, PT Matahari Graha Fantasi (MGF), MPP’s subsidiary, obtained from Hongkong andShanghai Banking Corporation Ltd (HSBC) revolving working capital loan and overdraft facilities with amaximum aggregate amount of Rp 30,000. In 2006, the facilities were converted into a Reducing Balance LoanFacility and the loan is payable in 22 monthly installments in the amount of Rp 1,300 each starting August 2006and Rp1,400 for the last installment in June 2008. In June 2008, the final installment on loan was paid.

On September 19, 2006, MPP, a subsidiary, obtained a working capital loan facility from HSBC with a principalamount of Rp 150,000 (or its US Dollar equivalent up to a maximum of USD 15,000). The facility which willdue on December 18, 2008 has been rolled over up to December 19, 2010. In September 2006, MPP obtaineda trade facility amounting to USD 10,000 (Import Facility amounting to USD 10,000 and Guarantee Facilityamounting to USD 10,000, with combined limit of USD 10,000) and a cross currency swap facility amounting toUSD 29,000 from HSBC. The trade facility is to be used for payment of imported goods and has a maximumtenor of 90 days. The trade facility also includes a guarantee tranche with a maximum tenor of one year. Thefacilities were extended up to June 30, 2008. The cross currency swap facility reduced to USD 10,000. Thisfacility which will due on December 18, 2008 has been rolled over up to August 31, 2009.

For all the above loan facilities, those loans bear interest at annual rates ranging from 7.3% to 16.75% forRupiah denominated loan and 5.32% to 8.79% for USD denominated loan in 2008 and ranging from 9.75% to15% for Rupiah denominated loan and 7% to 12.75% for USD denominated loan in 2007.

The above loan agreements require the Company and subsidiaries to comply with certain conditions, such asmaintaining specific financial ratios. As of December 31, 2008, all of these financial ratios have been met.These loan facilities are collateralized by trade receivable, inventories, property and equipment, ownership incertain subsidiary/associate companies.

21. Other Long-term Payables

2008 2007Rp Rp

Estimated Liabilities on Employee Benefits 234,528 191,191Others 76,684 21,848Total 311,212 213,039

The estimated liabilities on employee benefits represent an actuary calculation of SFAS No. 24 (Revised 2004)regarding Employee Benefits. As of December 31, 2008 and 2007, the Company’s estimated liabilities onemployee benefits amounting to Rp 14,157 and Rp 13,279, respectively.



41



Agreed by :Date :

The key assumptions used by independent actuary of PT Dayamandiri Dharmakonsilindo for the calculation ofestimated liabilities on employee benefits as of December 31, 2008 and 2007, are as follows:

Normal Pension Age : 55 yearsInterest Rate : 2008: 12% per annum; 2007: 10% per annumSalary Increase Projection Rate : 10% per annumPermanent Disability Rate : 10% of mortality rateResignation Rate : 15% at age 25 years and reducing linearly 1% at age 45 and thereafterTable of Mortality : USA Table of Mortality 1980 - (CSO‘80)

Employee benefits expenses to be recognized during current year period, are as follows:

2008 2007Rp Rp

Current Service Cost 18,363 15,540Interest Cost 16,149 14,973Total Amortization of Past Service Cost - Non Vested and Actuarial Losses 2,685 4,116Compensation Cost 15,149 19,363Gain on Termination Cost -- (1,029)Total 52,346 52,963

Reconciliation of charges on liabilities recognizedin balance sheets, are as follows:2008 2007Rp Rp

Liabilities at Beginning of the Year 191,191 151,481Termination Cost (9,009) (13,253)Recognized Employee Benefit Expenses in Current Year 52,346 52,963Liabilities at End of the Year 234,528 191,191

22. Capital Stock

The Company's stockholders as of December 31, 2008 and 2007 are as follows:

Number of Percentage of TotalStockholders Shares Ownership

% RpClass A Shares (par value of Rp 500 per share)AccrossAsia Ltd 938,328,300 13.829 469,164Management

Jeffrey Koes Wonsono 112,000 0.001 56Antonius Agus Susanto 400 0.000 --

Others (each below 5% ownership) 933,327,300 13.756 466,664Sub Total 1,871,768,000 27.59 935,884

Class B Shares (par value Rp 125 per shares)AccrossAsia Ltd 2,532,308,178 37.321 316,539Others (each below 5% ownership) 2,380,904,111 35.091 297,613Management - Jeffrey Koes Wonsono 178,711 0.002 22Sub Total 4,913,391,000 72.41 614,174Total 6,785,159,000 100.00 1,550,058



42



Agreed by :Date :

23. Additional Paid-in Capital

2008 2007Rp Rp

Premium Arising from:- Issuance of Shares through Limited Public Offering II in Connection with

Pre-emptive Right Issuance II 32,613 32,613- Issuance of Shares Other than Limited Public Offering 33,375 33,375

Declaration of Stock Dividends (22,856) (22,856)Stock Issuance Cost (28,735) (28,735)Total 14,397 14,397

24. Changes in Equity Transactions of Subsidiary/Associate

2008 2007Rp Rp

PT Reksa Puspita KaryaDifference in Value arising from Restructuring Transaction Entities

Under Common Control (6,553) (6,553)Changes in Equity Transaction of NGT, an Associate Company (3,602) (701)Sub Total (10,155) (7,254)

PT Matahari Putra Prima TbkChanges in Equity Transaction of Subsidiaries (71,470) (23,294)

Total (81,625) (30,548)

25. Net Sales, Services and Other Operating Revenues

a. The net sales, services and other operating revenues were derived from the following customers:

2008 2007 2008 2007Rp Rp % %

Related Parties 38,186 55,264 0.3 0.53Third Parties 12,671,202 10,314,843 99.70 99.47Total 12,709,388 10,370,107 100.00 100.00

Total Percentage to TotalRevenue



43



Agreed by :Date :

b. The details of sales by product and services are as follows:2008 2007Rp Rp

Retail and Distribution 11,977,370 9,768,075Information Technology

Hardware and its Peripherals 443,525 320,912Software 62,006 63,713Other Services 191,190 187,476Sub Total 696,721 572,101

Share Administration and Other Services 35,297 29,931Total 12,709,388 10,370,107

Sales of retail and distribution represent sales from MPP, a subsidiary’s stores which include MatahariSuper Ekonomi and family entertainment centers known as Time Zone.

In 2008 and 2007, consignment sales from MPP, a subsidiary, amounting to Rp 4,238,885 andRp 3,436,588, respectively, and the related cost due to consignors amounting to Rp 2,949,752 andRp 2,399,806, respectively.

The sales of information technology of the Company in 2008 mainly resulted from PT TelekomunikasiSeluler, PT Bank CIMB Niaga Tbk, PT Telkom Tbk, PT Bank Negara Indonesia Tbk and PT Excelkomindoamounting to Rp 365,916. The sales of information technology of the Company in 2007 mainly resultedfrom PT Bank Lippo Tbk, PT Orix Indonesia Finance, PT Telekomunikasi Seluler and PT Bank PermataTbk amounting to Rp 207,200.

26. Cost of Sales and Services

a. This account consists of cost of goods sold and services provided by the following suppliers:

2008 2007 2008 2007Rp Rp % %

PT SUN Microsystem Indonesia 121,626 51,852 1.28 0.68PT IBM Indonesia 109,401 66,763 1.16 0.87Cisco System 85,685 102,363 0.91 1.33PT Computrade Technology International 33,030 39,954 0.35 0.52PT Metrodata E-Bisnis 13,178 11,028 0.14 0.14NCR Global Solutions 11,042 13,435 0.12 0.17NCR Indonesia 7,746 10,708 0.08 0.14Others 232,233 195,963 2.45 2.55Sub Total 613,941 492,066 6.48 6.41Cost of Sales of Retail and Distribution 8,853,215 7,188,981 93.52 93.59Total 9,467,156 7,681,047 100.00 100.00

Total Percentage to Total

Sales and ServicesCost of Cost of



44



Agreed by :Date :

b. Cost of sales and services by products and services consists of:

2008 2007Rp Rp

Retail and Distribution 8,853,215 7,188,981Information Technology

Hardware and its Peripherals 402,727 286,201Software 57,900 55,629Other Services 150,181 147,681Sub Total 610,808 489,511

Share Administration and Other Services 3,133 2,555Total 9,467,156 7,681,047

27. Operating Expenses

2008 2007Rp Rp

SellingRental 700,172 530,098Supplies 99,365 70,514Credit Card 55,739 43,005Marketing 83,039 30,276Salaries, Allowance and Employee Benefits 12,477 11,388Others 6,888 7,204Sub Total 957,680 692,485

General and AdministrativeSalaries, Allowance and Employee Benefits 836,875 754,328Depreciation (see Note 9) 332,043 324,667Water and Electricity 271,788 237,264Insurance 39,923 38,710Taxes and Licenses 46,090 36,774Amortization 35,532 34,869Professional Fees 74,248 33,950Traveling and Transportation 36,699 31,960Telephone, Facsimile and Postage 28,142 24,113Others 53,370 38,439Sub Total 1,754,710 1,555,074

Total Operating Expenses 2,712,390 2,247,559

28. Interest Expense and Other Financing Cost - Net

2008 2007Rp Rp

Interest Income 266,889 212,528Interest Expense and Other Financing Cost (517,703) (513,273)Net (250,814) (300,745)



45



Agreed by :Date :

29. Assets and Liabilities Denominated in Foreign Currencies

As of December 31, 2008 and 2007, the monetary assets and liabilities in foreign currencies are as follows:

Equivalent toRp

AssetsCash and Cash Equivalents USD 2,177 23,842

SGD 13,982 106,366JPY 11,371 1,379HKD 686 969EUR 90 1,389RMB 142 229

Short-term Investments USD 39,276 430,073SGD 40,730 309,849

Accounts ReceivableTrade

Related Parties USD 1,367 14,967Third Parties USD 8,648 94,697

Others USD 295 3,235Other Current Assets USD 513 5,613Option/Forward Contract Assets USD 21,731 237,953

JPY 568,205 68,883Other Non-Current Assets USD 10 113Total Assets 1,299,557

LiabilitiesShort-term Loans USD 16,425 179,850Promissory Notes USD 300 3,285Accounts Payable

Trade USD 4,023 44,056SGD 40,730 309,849

Others USD 24 258Accrued Expenses USD 400 4,378Other Current Liabilities USD 1,563 17,118Long-term Debts

Notes Payable USD 119,344 1,306,820Loans USD 85,707 938,498

Swap Contract Liabilities USD 46,870 513,226Others Long-term debt USD 2,423 26,528Total Liabilities 3,343,866Net Liabilities Denominated in Foreign Currencies (2,044,309)

2008Amount in Foreign

Currencies



46



Agreed by :Date :

Equivalent toRp

AssetsCash and Cash Equivalents USD 6,603 62,099

SGD 28,429 184,856JPY 9,479 795HKD 7,068 8,538EUR 102 1,410RMB 90 116

Short-term Investments USD 29,968 282,180SGD 40,320 262,175

Other Long-term Investments SGD 33,509 217,887Accounts Receivable

TradeRelated Parties USD 3,167 29,825Third Parties USD 4,538 42,747

Others USD 26 250Other Current Assets USD 966 9,103Option/Forward Contract Assets USD 10,502 98,724Other Non-Current Assets USD 30 285Total Assets 1,200,990

LiabilitiesShort-term Loans USD 26,227 247,030Promissory Notes USD 300 2,826Accounts Payable

Trade USD 4,286 40,370SGD 40,320 262,176

Others USD 6 52Accrued Expenses USD 217 2,047Other Current Liabilities USD 1,652 15,561Long-term Debts

Notes Payable USD 150,000 1,408,950Loans USD 78,067 735,312

Option/Swap Contract Liabilities USD 9,049 84,997Others Long-term Debt USD 2,412 22,657Total Liabilities 2,821,978Net Liabilities Denominated in Foreign Currencies (1,620,988)

Amount in ForeignCurrencies

2007



47



Agreed by :Date :

30. Account and Transactions with Related Parties

The Company and subsidiaries, in their normal course of business, have engaged in transactions with relatedparties principally consisting of sales, providing services and space rental which are made on an arm's lengthbasis, and intercompany advances.

The details of the accounts and transactions with related parties are as follows:

2008 2007 2008 2007Rp Rp % %

Short term InvestmentPT Ciptadana Sekuritas 837,000 87,297 7.34 0.89PT Lippo Karawaci Tbk 319,428 277,649 2.80 2.82Others (below Rp 1,000 each) 70 114 -- --

Total 1,156,498 365,060 10.14 3.71

Accounts ReceivablePT First Media Tbk 7,388 11,734 0.06 0.12PT Direct Vision 3,631 5,278 0.03 0.05PT Link Net 1,709 17,894 0.01 0.18PT Lippo Karawaci Tbk 1,902 537 0.02 0.01Others (below Rp 1,000 each) 3,668 1,924 0.03 0.02

Total 18,298 37,367 0.15 0.38

Other ReceivablesPT First Media Tbk 1,323 -- 0.01 --Others (below Rp 1,000 each) 2,261 1,982 0.02 0.02

Total 3,584 1,982 0.03 0.02

Due from Related PartiesEmployees 2,200 2,200 0.02 0.02PT Bintang Sidoraya 5,027 2,066 0.04 0.02PT Karya Dinamika Investama 1,600 1,600 0.01 0.02PT Inti Mitratama Abadi 1,035 1,035 0.01 0.01Others 180 191 -- --

Total 10,042 7,092 0.08 0.07

Prepaid ExpensesRentalPT Mandiri Cipta Gemilang 9,791 -- 0.09 --PT Direct Power 3,532 3,532 0.03 0.04Others (below Rp 1,000 each) 388 335 -- --Total 13,711 3,867 0.12 0.04

OthersPT Lippo Karawaci Tbk 452 1,129 -- 0.01Others (below Rp 1,000 each) 1,139 -- 0.01 --Total 1,591 1,129 0.01 0.01

Percentage to Total Assets/Liabilities/Respective

Amount Revenue and Expenses



48



Agreed by :Date :

2008 2007 2008 2007Rp Rp % %

Investments in AssociatesPT First Media Tbk 115,841 141,202 1.02 1.44PT Matahari Leisure 27,291 26,673 0.24 0.27PT Bintang Sidoraya 2,380 21,123 0.02 0.21PT Tason Mitra Prima 2,082 3,395 0.02 0.03Others 400 400 -- --

Total 147,994 192,793 1.30 1.95

Other Long Term InvestmentsInvestments in:

PT Courts Indonesia Tbk 4,251 4,251 0.04 0.04Others 887 887 0.01 0.01

Total 5,138 5,138 0.05 0.05

Long-term Rent - netPT Direct Power 83,010 84,776 0.73 0.86PT Mandiri Cipta Gemilang 79,961 -- 0.70 --Others -- 168 -- --

Total 162,971 84,944 1.43 0.86

Advance for Purchase of Propertyand EquipmentPT Lippo Karawaci Tbk 118,000 118,000 1.03 1.20

Rental AdvancesPT Menara Bhumimegah 286,433 286,433 2.51 2.91PT Mandiri Cipta Gemilang -- 97,912 -- 1.00

Total 286,433 384,345 2.51 3.91

Other Non-Current AssetsAdvance for Investments in:

PT Asianet Mutlimedia 27,943 27,943 0.25 0.28Others 124 124 -- --

Guarantee DepositsOthers 293 198 -- --

Total 28,360 28,265 0.25 0.28

Accounts Payable 28 552 -- 0.01

Other Current LiabiitiesCustomers' Deposits 2,295 2,357 0.03 0.04Unearned Services Income 1,699 783 0.02 0.01

Total 3,994 3,140 0.05 0.05





49



Agreed by :Date :

2008 2007 2008 2007Rp Rp % %

Due to Related PartiesPT Buana Trans Mandiri 1,437 558 0.02 0.01PT Bintang Taratrans Buana 1,350 1,509 0.02 0.02Avey Pty, Limited Australia 353 2,778 -- 0.04Others 503 582 0.01 0.01

Total 3,643 5,427 0.05 0.08

Net Sales, Servicesand Other Operating ExpensesPT First Media Tbk 24,002 35,876 0.19 0.35PT Lippo Karawaci Tbk 6,152 5,245 0.05 0.05PT AIG Life 2,709 867 0.02 0.01PT Link Net 6 1,005 -- 0.01Others (below Rp 1,000 each) 5,317 12,271 0.04 0.13

Total 38,186 55,264 0.30 0.55

Cost of Sales and Services 721 320 -- --

Rental ExpensesPT Mandiri Cipta Gemilang 8,159 -- 1.17 --PT Direct Power 1,766 -- 0.25 --Others (below Rp 1,000 each) 1,513 561 0.22 0.11

Total 11,438 561 1.64 0.11

Rental RevenuePT Lippo Karawaci Tbk 2,931 2,062 0.42 0.39PT First Media Tbk 1,652 -- 0.24 --

Total 4,583 2,062 0.66 0.39

Salaries and EmployeeBenefits 24,425 26,377 -- --

Marketing ExpensesAvel Pty. Limited, Australia 4,888 7,771 5.64 25.67PT First Media Tbk -- 1,381 -- 4.56Others 121 502 0.14 1.66

Total 5,009 9,654 5.78 31.89

Archive Management Fees 397 815 128.90 0.05

Telephone, Facsimile andPostage Expenses 265 200 0.72 0.01





50



Agreed by :Date :

2008 2007 2008 2007Rp Rp % %

Insurance Expenses 838 1,927 2.10 0.12

Consultants Fee 7 288 0.01 0.02

Interest and Other Financing ExpensesInterest Income

PT Ciptadana Sekuritas 50,180 15,095 27.65 5.79PT Lippo Securities Tbk -- 1,454 -- 0.56Others 1,073 124 0.59 0.05

Total 51,253 16,673 28.24 6.40

Other ExpensesOthers 1,214 268 1.26 0.01

Equity in Net Earnings (Losses)Perusahaan Asosiasiof Associatees

PT Matahari Leisure 5,618 8,328 (11.15) 110.45PT First Media Tbk (35,961) (788) 71.35 (10.45)PT Bintang Sidoraya (18,743) -- 37.19 --Others (1,313) -- 2.61 --

Total (50,399) 7,540 100.00 100.00



The relationship and nature of account balances/transactions with related parties are as follows:

Related Parties Relationship Nature of Account Balance/Transaction

Avel Pty, Limited, Australia Affiliate Payment for promotion expense and intercompany account

PT Bintang Sidoraya Associate Intercompany account and investment in associate

PT Buana Trans Mandiri Affiliate Intercompany account

PT Bintang Taratrans Buana Affiliate Intercompany account

PT Ciptadana Sekuritas Affiliate Investment in managed funds, other receivables, sales,archieve management fee, interest income, marketing expenseand other expenses

PT Direct Vision Associatee Accounts receivable and sales

PT Direct Power Affiliate Prepaid expenses, prepaid long term rent - net and rentalexpenses

PT First Media Tbk Associate Accounts receivable, other receivables, investment inassociate, customer’s deposits, prepaid expenses, sales,rental revenue, promotion expenses, communication and otherexpenses



51



Agreed by :Date :

Related Parties Relationship Nature of Account Balance/Transaction

PT Inti Miratama Abadi Affiliate Intercompany account

Employees Employees LoansPT Karya Dinamika Investama Affiliate Intercompany receivable and investment in associatePT Link Net Affiliate Accounts receivable, sales, cost of sales and telephone

expensesPT Lippo Karawaci Tbk Affiliate Marketable securities, accounts receivable, other receivable,

prepaid expenses, renovation of properties, acquisition ofinvestment in properties, deposit, sales, unearned serviceincome, sales, rental income and expense, and interestincome

PT Lippo Securities Tbk Affiliate Marketable securities, accounts receivable, intercompanyaccount, unearned service income, sales and interest income

PT Matahari Leisure Associate Investment in associate and intercompany accountPT Mandiri Cipta Gemilang Affiliate Prepaid expenses, rental advance, prepaid long term rent - net

and rental expensesPT Menara Bhumimegah Affiliate Rental advance

PT Menara Perkasa Megah Affiliate Advance for Purchase of Property and Equipment

PT Persada Mandiri Dunia Niaga Affiliate Advance for Purchase of Property and Equipment

PT Tason Mitra Prima Associate Investment in associate

31. Swap/Option/Forward Contracts

a. Cross Currency Swapi. On October 20, 2006, Matahari Finance B.V (MF), MPP’s subsidiary, entered into an agreement for

Cross Currency Rate Swap from USD to Japanese Yen with BNP Paribas, Paris. At the end ofthe contract period on October 6, 2009, MF will buy back the USD 75,000 at the same rate. MF willreceive 9.5% interest per annum in USD and pay 5.38% per annum interest in Japanese Yensemiannually, every April 6 and October 6 up to the end of the contract period. The contract isguaranteed by MPP.

ii. On May 2, 2007, MF also entered into an agreement for Cross Currency Rate Swap from USD toJapanese Yen with JP Morgan, London. At the end of the contract period on October 6, 2009, MF willbuy the USD 75,000 at the same rate. MF will receive 9.5% interest per annum in USD and pay 5.37%per annum interest in Japanese Yen semiannually, every April 6 and October 6 up to the end of thecontract period. The contract is guaranteed by MPP.

As of December 31, 2007, the loss on change in fair value of the cross currency swap amounted toRp 72,959 (equivalent to USD 7,767) while as of December 31, 2008, the loss on change in fair value of thecross currency swap amounted to Rp 485,913 (equivalent to USD 44,376), the net change in fair value,including the effect of interest income/expense, amounting to Rp 410,233 (equivalent to USD 36,177) wasdebited to profit and loss and is presented as part of “Other income (charges) - net” in the consolidatedstatements of income.



52



Agreed by :Date :

b. Interest Rate SwapOn October 22, 2008, the Company has entered into USD Interest Rate Swap contract with PT Bank BNPParibas Indonesia (BNP) for notional amount of USD 75,000, where BNP will pay floating rate three-months’ LIBOR and the Company will pay annual fixed rate USD of 2.75%. The interest will be paidquarterly and will mature on June 18, 2010.

The purpose of this USD Interest Rate Swap contract is to cover the risks of potential losses from theincrease of interest rate. The contract qualified as hedges of future cash flows accounting. Therefore, theeffective portion of the changes in fair value is recorded as part of equity. As of December 31, 2008, thecash flows hedging reserve recorded in the equity amounted to Rp 18,002.

c. Optionsi. On July 30, 2007, the Company has agreement of Buy USD Sell IDR Seagull facility with JP Morgan

(SEA) Limited, Singapore amounting to USD 35,000 for spread more or equal to Rp 10,400 (in fullamount). If on termination date the rate is below Rp 10,400 (in full amount), then the Company will buyon strike rate amounting to Rp 9,025 (in full amount). This facility will be due on September 18, 2010.

Based on the contract, the Company has to pay in advance the premium amounting to USD 1,640,which will be amortized during the period of contract.

ii. On October 1, 2007, the Company has agreement of Buy USD Sell IDR Seagull facility with JP Morgan(SEA) Limited, Singapore amounting to USD 20,000 for spread more or equal to Rp 9,500 (in fullamount). If on termination date the rate is below Rp 9,500 (in full amount), then the Company will buyon strike rate amounting to Rp 9,025 (in full amount). Based on the contract, the Company has to payin advance the premium amounting to USD 280, which will be amortized during the period of contract.This facility has due on December 31, 2008. The Company record net gain amounting to USD 743(equivalent to Rp 7,095).

iii. On October 20, 2006, MPP, a subsidiary, entered into an Options Foreign Currency Contract withJP Morgan, Singapore (JPM). Based on the contract, at termination date on October 6, 2009, MPP andJPM may execute the following: MPP has the right to buy JPY 5,915,000 at the strike price of Rp 77.5 per JPY 1 (in full amount)

from JPM. JPM has the right to buy JPY 5,915,000 at the strike price of Rp 98 per JPY 1 (in full amount) from

MPP. JPM has the right to sell JPY 5,915,000 at the strike price of Rp 76 per JPY 1 (in full amount) to

MPP.

Based on the contract, MPP has to pay a fixed premium of 4.54% per annum from the notional amountof JPY 5,915,000 payable semiannually, every April 6 and October 6 up to the end of the contractperiod.

iv. On October 20, 2006, MPP, a subsidiary, entered into an Options Foreign Currency Contract with JPMorgan, Singapore (JPM). Based on the contract, at termination date on October 6, 2009, MPP andJPM may execute the following: MPP has the right to buy JPY 2,957,500 at the strike price of Rp 77.4 per JPY 1 (in full amount)


MPP.



53



Agreed by :Date :

JPM has the right to sell JPY 2,957,500 at the strike price of Rp 76 per JPY 1 (in full amount) tothe MPP.

Based on the contract, MPP has to pay a fixed premium of 4.54% per annum from the notional amountof JPY 2,957,500 payable semiannually, every April 6 and October 6, up to the end of the contractperiod.

v. On November 9, 2006, MPP, a subsidiary, entered into other Option Foreign Currency Contract withJPM, Singapore. Based on the contract, at termination date on October 6, 2009, MPP and JPM mayexecute the following: MPP has the right to buy JPY 8,850,000 at the strike price of Rp 77.4 per JPY 1 (in full amount)


MPP. JPM has the right to sell JPY 8,850,000 at the strike price of Rp 76 per JPY 1 (in full amount) to

MPP.

Based on the contract, MPP has to pay a fixed premium of 4.23% per annum from the notional amountof JPY 8,850,000 payable semiannually, every April 6 and October 6 up to the end of the contractperiod.

As of December 31, 2007, the gain on fair value of the option contracts amounted to Rp 83,650 (equivalentto USD 8,925) while as of December 31, 2008, the gain on fair value amounted to Rp 214,885 (equivalentto USD 19,704), the net change in fair value, including the effect of interest expense, amounting toRp 139,232 (equivalent to USD 11,616) was credited to profit and loss and is presented as part of “Otherincome (charges)” in the consolidated statements of income.

d. ForwardOn October 20, 2008, MPP, a subsidiary, entered into a Foreign Exchange - Non Deliverable ForwardContract with Prime Venture Pte. Ltd., Singapore. Based on the contract, at termination date on April 22,2009 the Company has the right to buy JPY 4,000,000 at the strike price of Rp 109.5 per JPY1 (in fullamounts) or amounted Rp 438,000.

The net change in fair value amounting to Rp 68,883 (equivalent to JPY 568,205) was credited to profit andloss and is presented as part of “Other income (charges) - net” in consolidated statements of income.

32. Other Agreements and Contingency

Agreementsa. On May 18, 1994, the Company entered into a distribution licensing agreement with BankVision Software

Ltd. (BV), U.S.A., as amended by agreement dated November 28, 1997, whereby the Company wasgranted the right to sell and distribute the BV licensed products. As agreed by the parties, the Companypaid BV a one-time payment of USD 250 as compensation for the entire grant and license. The amendedagreement is valid for 99 years.



54



Agreed by :Date :

b. In March 2001, MPP, a subsidiary entered into a license agreement with IGA, Inc. (“IGA”), whereby IGAauthorized and licensed MPP to use the IGA trademarks (1) to identify MPP as an IGA member, (2) inconnection with the distribution and promotion of products with the quality standards established by IGA,solely in MPP’s stores, and rendering of services relating to IGA systems in those stores, and (3) inconnection with the procurement and labeling of products with the quality standards established by IGA.

On the same date, MPP entered into a service agreement with IGA to obtain service and support from IGA,including guidance and counsel, international public relations assistance, and attendance at major keyevents.

c. In December 2002, MPP, a subsidiary, entered into a management agreement with PT Matahari GrahaFantasi (MGF), a subsidiary of MPP, whereby MPP agreed to provide management consultation services toMGF. MPP earns an annual management fee as compensation, which is computed at a certain percentageof the gross revenue of MGF. The agreement is effective for a 12-year period starting January 1, 2003.

The related reciprocal management fee income and expense amounting to Rp 2,222 and Rp 3,532 for theyears ended December 31, 2008 and 2007, respectively, have been eliminated in the consolidated financialstatements.

d. In January 2003, MGF , a subsidiary of MPP, entered into a “Business System License Agreement” withAvel Pty. Limited, Australia (licensor) whereby the licensor granted MGF the exclusive right in Indonesia touse the “Timezone Business System”. The licensor earns an annual royalty as compensation, which iscomputed at a certain percentage of the gross revenue of MGF. The agreement is effective for a 12-yearperiod starting January 1, 2003.

The royalty fees charged to current operations as part of “Selling Expenses (Marketing)” amounted toRp 4,888 and Rp 7,771 in 2008 and 2007, respectively.

e. In August 2004, MPP , a subsidiary, entered into a lease agreement with PT Donindo Menara Utamacovering lease of store space with a floor area of 9,000 square meters in Banjarmasin. The lease periodcovers 11 years to start at the opening day of the store and is extendable. As required in the agreement,MPP made rental deposit amounting to Rp 1,500 which is presented as part of “Other Non-current Assets”as of December 31, 2008 and 2007. The store has not opened yet as of December 31, 2008.

f. In December 2004, MPP , a subsidiary, entered into a “Software License Agreement” with PT Accenturewhereby PT Accenture granted to MPP a non-transferable and non-exclusive license to utilize the licensedsoftware program for the entire duration of the agreement. The agreement commenced in December 2004and shall be perpetual unless terminated by PT Accenture. In addition, MPP entered into a “ConsultingService Agreement” whereby PT Accenture will assist MPP in implementing selected “Retek” applicationmodules. The service is for 18 months. MPP shall pay service fee as compensation for the services over acertain agreed period. As of December 31, 2008, MPP has paid USD 4,000 for the license fee andUSD 4,027 for the consultation, which are presented as part of “Other Non-current Assets”.

g. In February 2007, MPP , a subsidiary, entered into a lease agreement with PT Gerbang Perkasa coveringa store with floor area of 20,343 square meters in Boutique Mall, Yogyakarta. The lease period covers15 years to start on the opening day of the store with total rental charge of Rp 129,000. As required in theagreement, MPP has made the rental payment amounting to Rp 129,000 as of December 31, 2008, whichis presented as part of “Rental Advances”.



55



Agreed by :Date :

Based on the addendum on rental agreement that was signed on October 2008, the rental period become19 years to start on the opening day of store, MPP will also received compensation for participation feeamounting to Rp 3,800 that has been presented as part of “Other receivables - net”. The store has notopened yet as of December 31, 2008. The store has not opened yet as of December 31, 2008.

h. In March 2007, MPP , a subsidiary, entered into a lease agreement with PT Lingkar Indah Kencanacovering a store with floor area of 13,233 square meters in The Great Town Square, Sidoarjo. The leaseperiod covers 20 years to start on the opening day of the store with total rental charge of Rp 78,241. Asrequired in the agreement, MPP has made the rental payment amounting to Rp 78,241 as of December 31,2008, which is presented as part of “Rental Advances”.

Based on the addendum on rental agreement that was signed on November 2008, the rental periodbecome 26 years to start on the opening day of store, MPP will also received compensation for participationfee amounting to Rp 2,300 that has been presented as part of “Other receivables - net”. The store has notopened yet as of December 31, 2008. The store has not opened yet as of December 31, 2008.

i. In March 2007, MPP , a subsidiary, entered into a lease agreement with PT Perisai Emas covering a storewith floor area of 15,267 square meters in Kuta Beach, Bali. The lease period covers 20 years to start onthe opening day of the store with total rental charge of Rp 214,827. As required in the agreement, MPP hasmade the rental payment amounting to Rp 214,827 as of December 31, 2008, which is presented as part of“Rental Advances”.

Based on the addendum on rental agreement that was signed on October 2008, the rental period become24 years to start on the opening day of store, MPP will also received compensation for participation feeamounting to Rp 6,400 that has been presented as part of “Other receivables - net”. The store has notopened yet as of December 31, 2008.

j. In April 2007, MPP , a subsidiary, entered into a lease agreement with PT Rekapastika Asri covering astore with floor area of 7,000 square meters in Bekasi. The lease period covers 11 years to start on theopening day of the store. As required in the agreement, MPP made the rental payment amounting toRp 2,500 which is presented as part of “Rental Advances” as of December 31, 2008. The store has notopened yet as of December 31, 2008.

k. In April 2007, MPP , a subsidiary, entered into a lease agreement with PT Cakrawala Sakti Kencanacovering a store with floor area of 7,350 square meters in Paragon City, Semarang. The lease periodcovers 12 years to start on the opening day of the store. As required in the agreement, MPP made therental deposit amounting to Rp 1,103 which is presented as part of “Other Non-current Assets” as ofDecember 31, 2008. The store has not opened yet as of December 31, 2008.

In November 2007, MPP , a subsidiary, entered into a lease agreement with PT Cakrawala Sakti Kencanacovering a store with floor area of 8,672 square meters in Paragon City, Semarang. The lease periodcovers 11 years. As required in the agreement, MPP made the rental deposit amounting to Rp 1,561 as ofDecember 31, 2008, which is presented as part of “Other Non current-Assets”. The store has not openedyet as of December 31, 2008.



56



Agreed by :Date :

l. On June 18, 2007, PT Prima Gerbang Persada (PGP, a wholly-owned indirect subsidiary of MPP) enteredinto an agreement with PT Lippo Karawaci Tbk to renovate a building located in Bandar Lampung with totalcost amounting to Rp 118,000. As required in the agreement, PGP has made payment amounting toRp 118,000 as of December 31, 2008, which is presented as part of “Advances for Purchase of Propertyand Equipment”. The store has not opened yet as of December 31, 2008.

m. In July 2007, MPP, a subsidiary, entered into a lease agreement with PT Selyca Mulia covering a storewith floor area of 7,100 square meters in Plaza Mulia Samarinda. The lease period covers 10 years to starton the opening day of the store. As required in the agreement, MPP made the rental payment amounting toRp 11,758 as of December 31, 2008, which is presented as part of “Rental Advances”. The store has notopened yet as of December 31, 2008.

In January 2008, MPP, a subsidiary, entered into a lease agreement with PT Selyca Mulia covering a storewith floor area of 6,000 square meters in Plaza Mulia Samarinda. The lease period covers 11 years to starton the opening day of the store with rental payment amounting to Rp 2,970 and Rp 1,620 as of December31, 2008 which are presented as part of “Rental Advances” and “ Other Non current-Assets”. The store hasnot opened yet as of December 31, 2008.

n. In July and November 2007, MPP, a subsidiary, entered into a lease agreement with PT Gaya KreasindoPermai covering a store with floor area of 14,715 square meters in Jakarta. The lease period covers11 years. The store has not opened yet as of December 31, 2008.

o. In August 2007, MPP, a subsidiary, entered into a new lease agreement with PT Menara Bhumimegahcovering lease of a store with floor area of 19,795 square meters in Jakarta. The lease period covers20 years with total rental charge of Rp 286,433. As required in the agreement, MPP made the rentalpayment amounting to Rp 286,433 as of December 31, 2008, which is presented as part of “RentalAdvances”. The store has not opened yet as of December 31, 2008.

p. On October 10, 2007, Tristar, a subsidiary of MPP, entered into an agreement with Dellmore InvestmentLtd. (“DM”) to obtain an assurance that net proceeds from the restructurization program of MPP’s certainassets shall not be less than Rp 1,000,000 and 25% of the payment consideration will be in the form ofLMIR Trust units without lock-up provisions or without encumbrances. DM is required to deliver LMIR Trustunits which Tristar is entitled to receive on the listing date of the LMIR units on the Singapore StockExchange (SGX-ST). As long as Tristar does not receive the units, DM will provide a guarantee to Tristar inthe form of cash equivalent which is retained in an escrow account or other similar arrangement agreed byboth parties (Notes 1c, 4 and 36).

q. On October 18, 2007, MPP, together with HSBC Institutional Trust Services (Singapore) Limited (“HSBC”,as trustee of Lippo-Mapletree Indonesia Retail Trust, called Option Holder), Detos Properties e. Ltd(“Detos”) and Matos Properties e. Ltd (“Matos”), both stockholders of Megah Detos Utama (“ MDU”)entered into a put option agreement whereby, if in the following 2 (two) years from the listing date of theLMIR Trust units on the Singapore Stock Exchange (“SGX-ST”), MDU does not acquire the strata titles ofthe property purchased from MPP, Option Holder has an option to request MPP to repurchase shares ofDetos at the Average of Valuations conducted by Valuers or Valuation Amount at the initial offering of theLMIR Trust units, whichever is higher.



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Agreed by :Date :

r. On October 18, 2007, MPP, together with HSBC Institutional Trust Services (Singapore) Limited (“HSBC”,as trustee of Lippo-Mapletree Indonesia Retail Trust, called Option Holder), Palladium Properties e. Ltd(“Palladium”) and Detos Properties e. Ltd (“Detos”), both stockholders of Palladium Megah Lestari (“ PML”)entered into a put option agreement whereby, if in the following 2 (two) years from the listing date of theLMIR Trust units on the Singapore Stock Exchange (“SGX-ST”), PML does not acquire the strata titles ofthe property purchased from MPP, Option Holder has an option to request MPP to repurchase shares ofPalladium at the Average of Valuations conducted by Valuers or Valuation Amount at the initial offering ofthe LMIR Trust units, whichever is higher.

s. In February 2008, MPP, a subsidiary, entered into a lease agreement with PT Pakuwon Jati covering astore with floor area of 7,099 square meters in Pakuwon Town Square, Surabaya. The lease period covers11 years to start on the opening day of the store. As required in the agreement, MPP has made the rentalpayment amounting to Rp 3,067 as of December 31, 2008, which is presented as part of “RentalAdvances”. The store has not opened yet as of December 31, 2008.

t. In March 2008, MPP, a subsidiary, entered into a lease agreement with PT Trimitra Exelindo Utama Karyacovering a store with floor area of 20,000 square meters in Setiabudi Signature Semarang. The leaseperiod covers 15 years to start on the opening day of the store with total rental charge of Rp 113,353. Asrequired in the agreement, MPP has made the rental payment amounting to Rp 113,353 as of December31, 2008, which is presented as part of “Rental Advances”. The store has not opened yet as of December31, 2008.

u. In March 2008, MPP, a subsidiary, entered into a lease agreement with PT Bima Mitra Utama Energicovering a land and building with floor area of 9,968 square meters in Cempaka Putih, Jakarta. The leaseperiod covers 10 years to start on the opening day of the store with total rental charge of Rp 117,682. Asrequired in the agreement, MPP has made the rental payment amounting to Rp 117,682 as of December31, 2008, which is presented as part of “Rental Advances”. The store has not opened yet as of December31, 2008.

v. In March 2008, MPP, a subsidiary, entered into a lease agreement with PT Rangkai Ribu Paremascovering a store with floor area of 14,000 square meters in Arteri Simpruk, Jakarta. The lease period covers15 years to start on the opening day of the store with total rental charge of Rp 154,433. As required in theagreement, MPP has made the rental payment amounting to Rp 154,433 as of December 31, 2008, whichis presented as part of “Rental Advances”. The store has not opened yet as of December 31, 2008.

w. In March 2008, MPP, a subsidiary, entered into a lease term-sheet with PT Win Win Realty Centrecovering a store with floor area of 6,855 square meters in Ciputra World, Surabaya. The lease periodcovers 12 years to start on the opening day of the store. As required in the agreement, MPP has made therental payment amounting to Rp 2,056 as of December 31, 2008, which is presented as part of “RentalAdvances”. The store has not opened yet as of December 31, 2008.

x. In June 2008, MPP, a subsidiary, entered into a lease term-sheet with PT Karya Bersama Takarobcovering a store with floor area of 6,187 square meters in Cirebon Superblock Mall. The lease periodcovers 11 years to start on the opening day of the store. As required in the agreement, MPP has made therental payment amounting to Rp 2,784 as of December 31, 2008, which is presented as part of “RentalAdvances”. The store has not opened yet as of December 31, 2008.



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Agreed by :Date :

In September 2008, MPP, a subsidiary, entered into an additional lease term-sheet with PT KaryaBersama Takarob covering a store with floor area of 5,500 square meters in Cirebon Superblock Mall. Thelease period covers 11 years to start on the opening day of the store. As required in the agreement, MPPhas made the rental payment amounting to Rp 5,000 as of December 31, 2008, which is presented as partof “Rental Advances”. The store has not opened yet as of December 31, 2008.

y. In June 2008, MPP, a subsidiary, entered into a lease term-sheet with PT Wulandari Bangun Laksanacovering a store with floor area of 2,180 square meters in e-Walk@Balikpapan Superblock. The leaseperiod covers 10 years to start on the opening day of the store. The store has not opened yet as ofDecember 31, 2008.

z. In July 2008, MPP, a subsidiary, entered into a lease agreement with PT Bangun Cipta Karya Perkasacovering a store with floor area of 5,500 square meters in Mall Taman Palem, Jakarta. The lease periodcovers 11 years to start on the opening day of the store. As required in the agreement, MPP has made therental payment amounting to Rp 2,500 and Rp 866 as of December 31, 2008, which are presented as partof “Rental Advances” and “Other Non-current Assets”, respectively. The store has not opened yet as ofDecember 31, 2008.

aa. In September 2008, MPP, a subsidiary, entered into a lease agreement with PT Khatulistiwa Multipromocovering a store with floor area of 19,660 square meters in Salemba, Jakarta. The lease period covers15 years to start on the opening day of the store with total rental charge of Rp 196,600. As required in theagreement, MPP has made the rental payment amounting to Rp 196,600 as of December 31, 2008, whichis presented as part of “Rental Advances”. The store has not opened yet as of December 31, 2008.

On October 28, 2008, MPP, a subsidiary, entered into an addendum to the lease agreement No. 117 datedSeptember 19, 2008 with PT Khatulistiwa Multipromo in Salemba, Jakarta, as agreed in the addendum,MPP has an option to cancel the lease agreement anytime during November 1, 2008 up to December 31,2009 under the agreed term and condition (Note 36). The store has not opened yet as of December 31,2008.

bb. In September 2008, MPP, a subsidiary, entered into a lease agreement with PT Inovasi Ragam Abadicovering a store with floor area of 10,789 square meters in Kuta Central Park, Bali. The lease period covers15 years to start on the opening day of the store with total rental charge of Rp 140,956. As required in theagreement, MPP has made the rental payment amounting to Rp 140,956 as of December 31, 2008, whichis presented as part of “Others Current Assets”.

On October 27, 2008, MPP, a subsidiary, entered into an addendum to the lease agreement No. 124 datedSeptember 24, 2008 with PT Inovasi Ragam Abadi in Kuta Central Park, Bali, as agreed in the addendum,MPP has an option to cancel the lease agreement anytime during November 1, 2008 up to December 31,2009 under the agreed term and condition (Note 36). The store has not opened yet as of December 31,2008.

cc. In September 2008, MPP, a subsidiary, entered into a lease agreement with PT Sitryco Riwani Jayacovering a store with floor area of 22,739 square meters in Surabaya Junction, Surabaya. The lease periodcovers 20 years to start on the opening day of the store with total rental charge of Rp 197,716. As requiredin the agreement, MPP has made the rental payment amounting to Rp 197,716 as of December 31, 2008,which is presented as part of “Others Receivables - net”.



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Agreed by :Date :

On October 29, 2008, MPP, a subsidiary, entered into an addendum to lease agreement No. 138 datedSeptember 25, 2008 with PT Sitryco Riwani Jaya in Surabaya Junction, Surabaya, as agreed in theaddendum, MPP has an option to cancel the lease agreement anytime during November 1, 2008 up toDecember 31, 2009 under the agreed term and condition (Note 36). The store has not opened yet as ofDecember 31, 2008.

dd. On November 20, 2008, MPP, a subsidiary, entered lease agreement with PT Mandiri Cipta Gemilangcovering a store with floor area of 24,858.91 square meters in Jakarta. The lease period covers 20 years tostart on the opening day of the store with total rental charge of Rp 324,260. The store has not opened yetas of December 31, 2008 (Note 36).

ContingencyIn relation to MPP, a subsidiary’s rent right in the Bogor Internusa Plaza (now Pangrango Plaza) located inBogor which was not compensated by PT Bogor Internusa Plaza (BIP) as developer after the fire incident in1996, MPP has filed a legal suit against BIP in the Bogor State Court. The state court has approved a part of theMPP’s suit to recover the amounts of Rp 101,617 and USD 1,441. In January 2006, BIP filed its objection to thedecision of the state court in the High Court of Bandung. The high court decided that BIP should paycompensation for the remaining unused rent amounting to Rp 1,617 and USD 1,441 and MPP should paycompensation to BIP amounting to Rp 218,484. On March 14, 2007, MPP filed its objection to the decision ofthe High Court of Bandung in the Supreme Court. Up to the financial statements completion date, the appealprocess has not been completed.

33. Distribution of Income and Appropriation of Retained Earnings

In General Meeting of Stockholders on March 19, 2008 as covered by notarial deed No. 39 of Poerbaningsih AdiWarsito, SH, the shareholders resolved to, among others, declare cash dividend amounting to Rp 1 (in fullRupiah) per share to shareholders’ that registered in list of stockholders as of April 18, 2008 and to appropriateof Rp 300 from retained earnings as a general reserve.

In General Meeting of Stockholders on May 23, 2007 as covered by notarial deed No. 63 of Poerbaningsih AdiWarsito, SH, the shareholders resolved to, among others, declare cash dividend amounting to Rp 6,785 or Rp 1(in full Rupiah) per share to shareholders’ that registered in list of stockholders as of September 20, 2007.

34. Segment Information

Primary SegmentThe Company and subsidiaries classify their products and services into three core business segment namely: Retails and Distribution; Information Technology; Share Administration and Other Services; and Others



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Agreed by :Date :

Information concerning the Company and subsidiaries business segment are as follows:

Retail and Information Share Others Elimination ConsolidatedDistribution Technology Administration

and Other ServicesRp Rp Rp Rp Rp Rp

RevenuesExternal 11,977,370 696,721 35,297 -- -- 12,709,388Intersegment -- 42,064 2,772 -- (44,836) --Total Revenues 11,977,370 738,785 38,069 -- (44,836) 12,709,388

2008



ResultSegment Result 496,720 24,670 8,076 (6) 382 529,842Loss on Foreign Exchange - Net

of Gain (Loss) on change in Fair Valueof Currency Option/Swap Contracts (389,593) (100,465) 460 -- -- (489,598)

Interest Expenses and OtherFinancing Costs- Net (173,200) (78,000) 1,091 (1) (704) (250,814)

Gain on Increase in Market Value ofMarketable Securities - Net 24,388 7,658 16 -- -- 32,062

Others- Net (10,748) (4,547) 236 (12) (15,990) (31,061)Income (Loss) before Income

(Loss) in Associates (52,433) (150,684) 9,879 (19) (16,312) (209,569)Income (Loss) in Associates (14,438) -- -- (35,961) -- (50,399)Income (Loss) before Tax

Benefit (Expenses) (66,871) (150,684) 9,879 (35,980) (16,312) (259,968)Income Tax Benefit (Expenses) 74,138 (2,602) (2,759) -- -- 68,777Profit (Loss) before Minority Interest 7,267 (153,286) 7,120 (35,980) (16,312) (191,191)

Segment Assets 9,709,216 3,274,332 79,937 469 (1,809,450) 11,254,504Investment in Associates

with Equity Method 32,153 -- -- 115,841 -- 147,994Total Assets 9,741,369 3,274,332 79,937 116,310 (1,809,450) 11,402,498

Segment Liabilities 6,578,137 1,710,340 17,097 185,056 (224,357) 8,266,273

Capital Expenditures 491,092 28,556 15,600 -- -- 535,248Depreciation 358,781 50,196 3,921 -- -- 412,898

2008



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Agreed by :Date :



RevenuesExternal 9,768,075 572,101 29,931 -- -- 10,370,107Intersegment -- 30,566 3,477 -- (34,043) --Total Revenues 9,768,075 602,667 33,408 -- (34,043) 10,370,107

2007

ResultSegment Result 407,995 25,265 8,171 -- 70 441,501Loss on Foreign Exchange - Net

of Gain (Loss) on change in Fair Valueof Currency Option/Swap Contracts (3,454) (5,027) 105 -- -- (8,376)

Interest Expenses and OtherFinancing Costs- Net (211,685) (89,059) 960 (1) (960) (300,745)

Gain on Increase in Market Value ofMarketable Securities - Net 3,389 52,680 189 -- -- 56,258

Others- Net 9,134 2,255 325 (3,198) (16,173) (7,657)Income (Loss) before Income

(Loss) in Associates 205,379 (13,886) 9,750 (3,199) (17,063) 180,981Income (Loss) in Associates 8,328 -- -- (788) -- 7,540Income (Loss) before Tax

Benefit (Expenses) 213,707 (13,886) 9,750 (3,987) (17,063) 188,521Income Tax Benefit (Expenses) (36,763) 2,033 (2,728) -- -- (37,458)Profit (Loss) before Minority Interest 176,944 (11,853) 7,022 (3,987) (17,063) 151,063

Segment Assets 8,394,851 3,114,858 64,754 465 (1,928,981) 9,645,947Investment in Associates

with Equity Method 51,591 -- -- 141,202 -- 192,793Total Assets 8,446,442 3,114,858 64,754 141,667 (1,928,981) 9,838,740

Segment Liabilities 5,142,414 1,308,574 8,284 171,532 (242,252) 6,388,552

Capital Expenditures 372,058 28,313 10,076 -- -- 410,447Depreciation 380,002 62,451 2,764 -- -- 445,217



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Agreed by :Date :

Secondary SegmentInformation concerning the Company and subsidiaries geographical areas segment are as follows:

2008 2007Rp Rp

SalesJabotabek

Retail and Distribution 4,385,644 3,552,775Information Technology 738,785 602,667Shares Administration and Other Services 33,421 30,406Elimination Inter Segment (44,836) (34,043)

Sub Total 5,113,014 4,151,805

Outside JabotabekRetail and Distribution 7,591,726 6,215,300Shares Administration and Other Services 4,648 3,002

Sub Total 7,596,374 6,218,302Total 12,709,388 10,370,107

35. Recent Economic Conditions

The operations of the Company and subsidiaries may be affected by future economic conditions in Indonesiathat may contribute to volatility in currency values and negatively impact economic growth. Economicimprovements and sustained recovery are dependent upon several factors such as fiscal and monetary actionsbeing undertaken by the Government and others, actions that are beyond the control of the Company andsubsidiaries.

36. Subsequent Events

a. On January 6, 2009, MPP, a subsidiary fully repaid the loan obtained from PT Bank CIMB Niaga Tbkamounting to Rp 240,000 (Note 20), and on January 13, 2009, MPP drew down the loan amounting toRp 240,000.

b. On January 9, 2009, MPP, a subsidiary refunded the guarantee funds given by Dellmore InvestmentLimited to Tristar, MPP’s subsidiary, relating to the LMIR Trust units that have been received by Tristar(Note 4).

c. On January 16, 2009, the Company acquired 99.92% of share ownership of PT Air Pasifik Utama (APU),and had been approved by Extraordinary General Meeting of Stockholders of APU, which notarializedunder notarial deed of Notary Kurnia Ariyani SH, No. 5 dated January 16, 2009.

d. On January 23, 2009 and February 25, 2009, MPP, a subsidiary made rental payments amounting toRp 129,704 and Rp 97,278, respectively, as required in the lease agreement with PT Mandiri CiptaGemilang (Note 32).



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Agreed by :Date :

e. On January 27, 2009, MPP, a subsidiary entered into a lease agreement with PT Papetra Perkasa Utamacovering a store with floor area of 5,800 square meters in Blue Banter City, Manado. The lease periodcovers 11 years to start on the opening day of the store.

f. On February 24, 2009, MPP, a subsidiary entered into agreement with trustee and underwriters that willbe involved in the offering of Third Matahari Bonds Year 2009 and Second Matahari Syariah Ijarah SukukYear 2009 totalling Rp 500,000 with detail as follows: Conventional Bonds Year 2009, Series A and Series B totalling Rp 300,000. Syariah Ijarah II, Series A and Series B totalling Rp 200,000.

On March 23, 2009, MPP, a subsidiary entered into an amendment of the agreement with trustee andunderwriters designated in the offering of Third Matahari Bonds Year 2009 with Fixed Rates and SecondMatahari Syariah Ijarah Bonds Year 2009 with fixed maximum ijarah fee of Rp 600,000 with detailas follows: Bonds with a total maximum amount of Rp 350,000 and interest rate at 16% per annum for Series A

with 3 years period and 17% per annum for Series B with 5 years period. Syariah Ijarah with a total maximum of Rp 250,000 and fixed fee amounting to Rp 160 per annum for

each Rp 1,000 Syariah Ijarah Fund Series A with 3 years period and Rp 170 per annum for eachRp 1,000 Syariah Ijarah Fund Series B with 5 years period.

g. On March 2, 2009, MPP, a subsidiary fully repaid its outstanding long term bank loan from HSBCamounting to Rp 150,000 (Note 19).

h. On March 24, 2009, MPP, a subsidiary entered into a cancellation of the rental agreement No. 138 datedSeptember 25, 2008 and its amendment dated October 29, 2008 with PT Sitryco Riwani Jaya. Based onthe cancellation agreement, MPP will receive the refund of all payments which were made by MPPamounting to Rp 197,716 within 30 days from the cancellation (Note 32).

i. On March 25, 2009, MPP, a subsidiary entered into a cancellation of the rental agreement No. 124 datedSeptember 24, 2008 and its amendment dated October 27, 2008 with PT Inovasi Ragam Abadi. Based onthe cancellation agreement, the Company will receive the refund of all payments which were made by theCompany amounting to Rp 140,956 within 30 days from the cancellation (Note 32).

j. On March 27, 2009, MPP, a subsidiary entered into a cancellation of the rental agreement No. 117 datedSeptember 19, 2008 and its amendment dated October 28, 2008 with PT Khatulistiwa Multipromo. Basedon the cancellation agreement, MPP will receive the refund of all payments which were made by MPPamounting to Rp 196,600 within 30 days from the cancellation (Note 32).

k. During January 2009 up to March 27, 2009, MPP, a subsidiary, has made additional fund placement inPT Ciptadana Sekuritas amounting to Rp 200,000.

l. On March 27, 2009, the exchange rates (in full amounts) were Rp 11,495 to USD 1 and Rp 7,630 to SGD 1while on December 31, 2008, the rates were Rp 10,950 to USD 1 and Rp 7,607 to SGD 1. On the basis ofthe rates on March 27, 2009, the Company and subsidiaries recognized foreign exchange loss amountingto approximately Rp 96,836 (not include the effects from derivative contract valuation) on its net foreigncurrency liabilities as of December 31, 2008.



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Agreed by :Date :

37. Reclassification of Accounts

Certain accounts in the 2007 consolidated financial statements were reclassified to conform with thepresentation of accounts in 2008 consolidated financial statements.

38. Management Responsibility on the Consolidated Financial Statements

The management of the Company is responsible for the preparation of the consolidated financial statementsthat were completed on March 27, 2009.

Menara Matahari Lt. 16Jl. Palem Raya Bulevar No. 7Lippo Karawaci 1100Tangerang 15811Indonesia

Tel : (62 21) 546 0011, 55 777 000Fax : (62 21) 546 0020, 546 3001Email : [email protected] : www.multipolar.com

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