PT CITATAH Tbk. Balance Sheets (Expressed in Rupiah, unless … · 2018. 1. 3. · Cash and cash equivalents at the end of period 4 258,714,834 4,322,558,035 The accompanying notes

1

PT CITATAH Tbk. Balance Sheets

30 June 2007 with comparative figures for 2006 (Expressed in Rupiah, unless otherwise stated)

Notes 2007 2006 Assets Current assets Cash and cash equivalents 3d,4 258,714,834 4,322,558,035Trade accounts receivable, net of allowance for doubtful account

3e,5

22,699,569,878

6,764,546,164

Other receivables 6 2,144,355,353 2,151,717,691Inventories 3f,7 74,693,878,555 109,736,766,638Prepaid taxes 8 2,269,438,154 1,045,978,665Other current assets 139,282,552 123,512,883 Total current assets 102,205,239,326 124,145,080,076 Non-current assets Unused fixed assets 10 1,998,339,369 2,026,111,881Fixed assets, net of accumulated

depreciation of Rp 134,420,121,940 (2006: Rp. 122,985,108,744)

3g,3h

11

74,237,685,625

83,841,879,959Deferred charges, net of accumulated amortization

3i,12

14,632,991,217

15,177,825,213

Restricted fund 13 758,821,478 711,269,040Other non current assets 14 790,776,376 790,776,376 Total non-current assets 92,418,614,065 102,547,862,469 Total assets 194,623,853,391 226,692,942,545

The accompanying notes form an integral part of the financial statements

2

PT CITATAH Tbk. Balance Sheets (continued)


Notes 2007 2006 Liabilities and Shareholders’ Equity Current liabilities Bank loans 15 5,817,954,494 4,066,927,094Trade accounts payable 16 29,494,516,421 27,545,973,874Other payables 3,437,862,694 4,167,577,145Advances received 5 7,211,961,942 11,644,205,185Tax payables 17 2,606,841,085 1,898,845,598Accrued expenses 18 12,989,182,445 12,609,224,656Current portion of long term bank loans 20 55,566,115,820 53,651,525,659Current portion of lease obligations 21 1,459,847,555 1,931,801,677Current portion of convertible loans 22 59,254,533,702 57,863,751,697Total current liabilities 177,838,816,158 175,379,832,585 Long-term liabilities

Due to related parties 3j,9 1,549,694,545 1,549,694,545Provision for employee entitlements 19 10,417,207,173 7,824,086,707Lease obligations 21 791,984,613 1,446,656,715Deferred tax liabilities 28d 4,629,773,245 10,087,262,262Effect of trouble in debt restructuring 3n 6,345,747,232 13,571,873,254Total long-term liabilities 23,734,406,808 34,479,573,483 Total liabilities 201,573,222,966 209,859,406,068 Shareholders’ equity Authorized – Rp 1,260,000,000,000

consist of 840,000,000 shares of A Series with nominal value of Rp 500 per share and 8,400,000,000 shares of B Series with nominal value of Rp 100 per shares

Issued and fully paid – 840,000,000 shares of A Series

23

420,000,000,000

420,000,000,000Additional paid in capital-net 24 53,153,976,716 53,153,976,716Accumulated losses (480,103,346,291) (456,320,440,239)Total shareholders’ equity (6,949,369,575) 16,833,536,477

Total liabilities and shareholders’ equity

194,623,853,391

226,692,942,545


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PT CITATAH Tbk. Statements of Profit and Loss

For the year ended 30 June 2007 with comparative figures for 2006 (Expressed in Rupiah, unless otherwise stated)

Notes 2007 2006 Net sales 3c,25 47,791,086,848 33,748,528,171Cost of goods sold 26 42,424,834,240 31,843,128,264Gross profit 5,366,252,608 1,905,399,907 Operating expenses: 27

Marketing and selling 4,406,428,980 3,707,714,090General and administrative 3,682,783,554 3,467,843,883

Total operating expenses 8,089,212,534 7,175,557,973 Operating (loss) (2,722,959,926) (5,270,158,066) Other income/(expenses):

Interest income 40,160,805 34,633,852Interest expense 20,22 (518,053,654) (826,303,416)Foreign exchange gain/(loss)-net (850,822,827) 7,972,613,688Others (61,202,269) (201,124,873)

Total other income/(expenses)-net (1,389,917,945) 6,979,819,251 Profit/(Loss) before corporate income

tax

(4,112,877,871)

1,709,661,185 Corporate income tax (expense)/benefits 3l,28a

Current year 0 0Deferred tax 972,335,076 (1,648,466,921)

972,335,076 (1,648,466,921) Net profit/(loss) (3,140,542,795) 61,194,264 Operating (loss) per share 3k (3.24) (6.27) Net profit/(loss) per share 3k (3.74) 0.07


4

PT CITATAH Tbk. Statement of Changes in Equity


Share capital Additional Paid in

Capital-net Accumulated loss Total shareholders’

equity Balance as of 1 January 2006 420,000,000,000 53,153,976,716 (456,381,634,503) 16,772,342,213 Net profit for 2006 61,194,264 61,194,264 Balance as of 30 June 2006

420,000,000,000 53,153,976,716 (456,320,440,239) 16,833,536,477

Balance as of 1 January 2007

420,000,000,000 53,153,976,716 (476,962,803,496) (3,808,826,780)

Net loss for 2007 (3,140,542,795) (3,140,542,795)

Balance as of 30 June 2007 420,000,000,000 53,153,976,716 (480,103,346,291) (6,949,369,575)


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PT CITATAH Tbk. Statements of Cash Flows


2007 2006 Cash flows from operating activities Cash received from customers 44,610,314,252 35,198,064,625Cash paid to suppliers and employees (38,855,072,168) (28,904,077,987)Cash paid for income tax

(3,191,338,131) (2,687,535,804)

2,563,903,953 3,606,450,834 Interest paid (518,053,654) (816,400,073)Interest received 40,160,805 34,605,163 Total net cash provided by operating activities

2,086,011,104

2,824,655,924

Cash flows from investing activities Purchases of fixed assets (255,658,423) (26,919,203)Proceeds from sales of fixed assets 18,000,000 21,500,000 Total net cash (used in) investing activities

(237,658,423) (5,419,203)

Cash flows from financing activities Increase in restricted fund 22,782,505 3,500,252Proceeds from short-term bank loans (856,868,525) 612,539,164Payment of lease obligations (1,896,354,490) (909,746,109) Total net cash (used in) financing activities

(2,730,440,510) (293,706,693)

Net (decrease)/increase in cash and cash equivalents

(882,087,829) 2,525,530,028

Cash and cash equivalents at beginning of period

1,140,802,663

1,797,028,007

Cash and cash equivalents at the end of period

4

258,714,834

4,322,558,035


6

PT CITATAH Tbk. NOTES TO THE FINANCIAL STATEMENTS


1. General

PT Citatah Tbk (the “Company”) is a limited liability company established in Indonesia within the framework of the Domestic Capital Investment Companies (PMDN) Law No. 6/1968 based on notarial deed No. 77 dated September 26, 1974 of Komar Andasasmita, S.H., notary public in Jakarta. The deed of establishment was approved by the Minister of Justice of the Republic of Indonesia (currently known as the Minister of Law and Human Rights of the Republic of Indonesia) in its decision letter No. Y.A.5/362/17 dated December 8, 1975, and was published in the State Gazette of the Republic of Indonesia No. 38 dated May 11, 1976, Supplement No. 348. The Articles of Association have been amended most recently by notarial deed No. 72 dated May 12, 2005 of Irawan Soerodjo, S.H., notary public in Jakarta concerning the changes of all issued capital from 840,000,000 shares with a par value of Rp500 to 840,000,000 shares of A Series with a par value of Rp500 and changes of all portepel capital from 1,680,000,000 shares with a par value of Rp500 to 8,400,000,000 shares of B Series with a par value of Rp100. The said amendments were approved by the Minister of Law and Human Rights of the Republic of published in the State Gazette of the Republic of Indonesia No. 91 dated November 15, 2005, Supplement No. 1080. In accordance with article 3 of the Company’s Article of Association, the scope of the Company’s activities comprises manufacturing and sale of marble, marble handicrafts and other related activities The Company commenced its commercial operations in 1976. The Company’s office is located in Pinangsia III No. 31, Jakarta, Indonesia and it has factories located in Pangkep (South Sulawesi), Bandung and Karawang. As of 30 June 2007, the Company had a production capacity of 68,000 m2 slabs and 115,000 m2 tiles per month and it had 994 employees. The end of year 2005, Company have closed all factory’s activity in Bandung. Effective from 10 June 1996 the Capital Market Supervisory Agency (“Bapepam”) approved the Company’s initial public offering of 44,000,000 shares at a total nominal value of Rp22,000,000,000. Since 3 July 1996, the Company’s said shares have been traded on the Jakarta Stock Exchange. The Company’s Board of Commissioners and Directors as of 30 June 2007 are as follows: Board of Commissioners Board of Directors ---------------------------------------------------------------------------------------------------------- Arif Sianto - President Commissioner Taufik Johannes - President Director Gregory Nanan Aswin - Independent Denise Johanes commissioner Tiffany Johanes Ismail Husin Sergio Magliocco

2. Economic conditions and going concern

Indonesia is still experiencing continuous period of severe economic difficulties as a result of the instability in global economy and social and political uncertainties in Indonesia. The delay in the economic recovery in Indonesia has resulted to decline in availability of credit as well as decrease in available employment opportunities and foreign investments.

7



2. Economic conditions and going concern (continued)

The economic improvement and sustained recovery are dependent upon several factors such as fiscal and monetary action being undertaken by the Government, actions that are beyond the control of the Company. The company’s future operations may continue to be significantly affected by the continuation of these economic conditions. The economic conditions have adversely affected the financial conditions and results of operations of the Company. Furthermore, these conditions caused the Company to incur liquidity deficiency, which affects the ability of the Company to meet its financial obligations as they fall due and perform normal operation. These circumstances raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s management has implemented and plans to implement the following measures to address the company’s financial and operational conditions: Continue the negotiation with the creditors during the second phase of the

restructuring for its long-term loan and convertible loan. Ten out of twelve creditors have signed on the second phase restructuring agreement. Up to the auditor’s report date, the remaining creditors who have not yet signed on the second phase restructuring agreements are PT Bank Lippo Tbk and PT Perusahaan Pengelolaan Asset (Persero);

Continue the negotiation process with strategic customers to obtain several domestic project and also bid for projects in overseas markets. Currently the Company has secured several commercial and apartment projects;

Continue to markets the new value added products in domestic and overseas market;

Continue to search for new quarry for its future expansion and increase mining reserve and

Continue to improve cost efficiency in all key areas. The Company’s ability to continue as a going concern entity is dependent, among others, upon the success of the management’s plans, the success of its negotiation with the creditors during the second phase of the restructuring, the success of its future operation and the continuing financial support of its creditors. The accompanying financial statement do not include any adjustments that might result the economic conditions on the Company’s liquidity and earnings, including the effects flowing through from its customers, suppliers, creditors and shareholders.

3. Summary of significant accounting policies The significant accounting principles which are applied consistently in the presentation of the financial statements for the years ended 30 June 2007 and 2006 as follows: a. Basis of Measurement and Presentation of Financial statements

The financial statements are presented in accordance with generally accepted accounting principles in Indonesia (“Indonesian GAAP”), i.e., Statements of Financial Accounting Standard (“PSAK”), and regulations and Financial Statements Presentation and Disclosure Guidelines established by the Indonesia Capital Market Supervisory Agency (“BAPEPAM”) for public listed manufacturing companies. The financial statements are prepared on the basis of historical costs. The financial statements are prepared on the basis of accrual method, except for statements of cash flows. The statements of cash flows are prepared using direct method by classifying cash flow into operating activities, investing activities and financing activities. The Company using Rupiah for the presentation of the financial statements, unless otherwise stated.

8



3. Summary of significant accounting policies (continued)

b. Foreign Currency Transactions and Balances

The Company maintains its accounting records in Rupiah. Transactions in currencies other than Rupiah are recorded at the prevailing rates of exchange in effect on the date of the transactions.

As of the balance sheet dates, all foreign currency monetary assets and liabilities have been translated at the middle exchange rates quoted by Bank Indonesia on those dates. The net unrealized foreign exchange gains or losses arising are recognized in the current year’s statement of profit and loss.

c. Revenue Recognition

Revenue from the sales of goods is recognized when all the significant risks and rewards of ownership of the goods have been passed to the buyer. Revenue from local sales is recognized when goods are delivered to the buyer and revenue from export sales is recognized when goods are shipped (FOB shipping point).

d. Cash and Cash Equivalents

Cash on hand and in banks and short-term deposits which are held to maturity are carried at cost.

Cash and cash equivalents are defined as cash on hand, bank and time deposits which are not pledged, highly liquid investments readily convertible to known amounts of cash and subject to insignificant risk of changes in value.

For the purposes of the statements of cash flow, cash and cash equivalents consists of cash on hand and at banks and short term deposits with maturity of not more than three months.

e. Allowance for Doubtful Accounts

Allowance for doubtful accounts is made based on management’s evaluation of the collectibility of the individual receivable accounts at the end of the period.

f. Inventories

Inventories are stated at the lower of cost or net realizable value.

Cost is determined using the average method (except for the indirect materials like spare part, factory supplies and explosive material which is determined using FIFO - first in first out method) and comprises of all purchase, conversion and other costs incurred in bringing the inventory to its present location and condition. Finished goods include an appropriate allocation of fixed and variable factory overhead in addition to direct materials and labor. Net realizable value is the estimated selling price in the ordinary course of business, less estimated cost of completion and the estimated cost necessary to make the sale. Provision for obsolete and slow moving inventory is determined on the basis of estimated future usage or sale of individual inventory items.

g. Fixed Assets Fixed assets are stated at cost less accumulated depreciation. Fixed assets, except land, are depreciated using the straight line method based on the estimated useful lives of the assets as follows:

9




g. Fixed Assets (continued)

Years Buildings 20 Machinery and equipment 12.5 Vehicles 5 Office equipment 5-8 The cost of repairs and maintenance is charged to income as incurred, significant renewals and betterment are capitalized. When assets are retired or otherwise disposed of, their carrying value and the related accumulated depreciation are removed from the accounts and any resulting gain or loss is reflected in the statement of profit and loss for the period. The Company has rights to land through years 2024 to 2028 on which its quarries and factories are located in Bandung, Pangkep and Karawang. These rights can be extended for an additional 40 years at the Company’s option and following payment of a nominal fee before the expiry of the initial term. Deferred costs incurred during the legal process of establishing the land rights paid to the government is expensed when incurred as they are small amounts relative to the cost of the land rights.

h. Leases Lease transactions are accounted for under the capital lease method if all of the following criteria are met: • The lessee has an option to purchase the leased assets at the end of the

lease period at a price mutually agreed upon at the commencement of the lease agreement;

• Total periodic payments plus residual value fully covers the acquisition cost of the leased capital goods plus interest thereon which is the lessor’s profit; and

• The lease period covers a minimum of two years.

Finance leases, which effectively transfer to the company substantially all the risks and rewards incidental to ownership of the leased item, are capitalized at the present value of the minimum lease payments at the inception of the lease term and disclosed as leased property, plant and equipment. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly against income. Capitalized leased assets are depreciated over the estimated useful life of the asset. Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item are classified as operating leases. Operating lease payments are recognized as an expense in the statement of profit and loss on a straight-line basis over the lease term.

i. Deferred Charges Deferred charges represent costs incurred obtaining quarry areas and quarry permits (“SIPD”). The costs of obtaining quarry areas are amortized over their estimated useful lives (20-40 years) on the straight-line basis. SIPDs are amortized over five years.

10




j. Related Party Transactions

The nature and value of transactions with parties that the Company has the ability to influence, or with parties with which the Company has specific arrangements or significant transactions, and whether or not the transactions have been performed with the conditions as if the transactions are performed with non-related parties, have been disclosed in the financial statements. Such transactions are conducted on terms agreed between the parties.

k. Profit (loss) per Share

Profit (loss) per share is computed based on the weighted average number of shares issued and paid up during the year. Diluted earning per share is computed based on the weighted average number of shares issued and paid up during the year with the assumption that the potential ordinary shares have been converted into ordinary shares outstanding. For this computation, the net profit is adjusted by eliminating the interest expenses and foreign exchange on the convertible loan and the related tax effect.

l. Corporate Income Tax

Income tax is accounted for under the liability method. Deferred tax assets and liabilities are recognized on all temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax liabilities are recognized for all taxable temporary differences. Deferred tax assets are recognized for all deductible temporary differences and carry-forward of unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and unused tax losses can be utilized. The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date.

m. Employee Entitlements The Company recognizes employee benefits obligation in accordance with its policy. The unfunded defined employee benefits are based on the employees’ years of service and salary at retirement. Current service cost is charged to current operations. Past service cost, actuarial adjustments and the effect of changes in actuarial assumptions for active participants are amortized over the estimated residual employment period.

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n. Restructuring of Troubled Debt

The Company records the restructuring of troubled debt in accordance with PSAK No. 54 “Accounting for the Restructuring of Troubled Debt”. PSAK No. 54 requires the Company to calculate estimated repayment including interest charged in the loan period. If the future repayment exceeds the carrying amount of loans recorded by the Company, no gain on restructuring is recognized. If the future repayment is less than the carrying amount of loans recorded by the Company, the difference is recognized as a gain on the restructuring of troubled debt.

o. Segment Information

Segment information is presented by product category and marketing region.

p. Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimations and assumptions that affect amounts reported in therein. Due to inherent uncertainty in making estimates, actual results reported in future periods may be based on amounts which differ from those estimates.

4. Cash and cash equivalents

2007 2006 Cash on hand 117,137,937 197,546,750Cash in bank 141,576,897 3,996,541,292Total cash on hand and bank 258,714,834 4,194,088,042 Time deposits 0 128,469,993 Total cash and cash equivalents 258,714,834 4,322,558,035 During the year ended 30 June 2007, time deposits earned interest at annual rates of 5,75%-8,75% (2006: 8,75%-13%) for Rupiah 2,75%-4,80% p.a. (2006: 2,5%- 3,5%) for US$. The time deposit period is 7-30 days.

5. Trade accounts receivable

2007 2006 PT. Abadi Agung Utama 6,892,388,317 0 PT. Pacific Place Jakarta 4,320,565,996 0 Shanghai Stone 737,776,510 832,467,923Citatah Korea Co. Ltd 1,775,542,286 1,870,283,014Others (less than Rp1 billion individually ) 11,711,254,263 7,090,529,564Total trade account receivables 25,437,527,372 9,793,280,501 Less: Allowance for doubtful accounts (2,737,957,494) (3,028,734,337) Total trade account receivables, net 22,699,569,878 6,764,546,164

12



5. Trade accounts receivable (continued)

The aging analysis of trade accounts receivable is as follows: 2007 2006 0 - 30 days 6,499,710,864 2,637,186,80131 - 60 days 3,580,056,282 531,277,63061 - 90 days 3,937,371,859 733,629,669Over 90 days 8,682,430,873 2,862,452,064 Total 22,699,569,878 6,764,546,164 Trade accounts receivable are used as collateral for the Company’s bank loan. Management believe that the allowance for doubtful accounts is adequate to cover possible losses from uncollectible accounts. Advance received from customers for sales orders made that will be applied against the accounts receivable upon recognition of the sale.

6. Other receivables

2007 2006 Employee receivables 42,391,000 31,306,000Others 2,101,964,353 2,120,411,691 Total other receivables 2,144,355,353 2,151,717,691 Management believes that the other receivable amount is collectible.

7. Inventories

2007 2006 Finished goods 64,481,549,903 80,753,505,274Raw materials 9,265,630,076 19,178,753,846Factory supplies 3,533,995,174 3,531,449,224Spare parts 5,729,229,402 6,273,058,294Total inventories 83,010,404,555 109,736,766,638 Less: Allowance for stock obsolescence 8,316,526,000 0Total inventories-net 74,693,878,555 109,736,766,638

All inventories are pledged as collateral for the Company's bank loans. The Company’s inventories are covered by insurance against any possible loss from fire and other risks with coverage of Rp46 billion. Management believes that the insurance coverage is sufficient to cover such losses.

13



8. Prepaid Tax 2007 2006 Fiscal

34,000,000

25,000,000

2006 corporate income tax 255,133,630 02005 corporate income tax 0 263,942,923Value added tax 1,695,897,490 683,491,158Income tax article 22 264,954,832 68,829,252Income tax article 23 19,452,202 4,715,332 Total prepaid tax 2,269,438,154 1,045,978,665

9. Related party transactions 2007 2006 Due to PT Megapasific Nusapersada 1,549,694,545 1,549,694,545

The Company, in the ordinary course of business, has various trade and finance transactions with related parties that are at prices consistent with third parties. The nature of the relationship with the related parties is generally that of directors and management, companies under common control and associates entities.

10. Unused fixed asset

2007 2006 Unused fixed asset Acquisition cost Land 1,890,068,050 1,890,068,050 Building 912,504,447 912,504,447 Machineries and equipment 1,741,368,912 1,741,368,909 4,543,941,409 4,543,941,406 Accumulated depreciation Building (804,233,130) (776,460,616) Machineries and equipment (1,741,368,910) (1,741,368,909) (2,545,602,040) (2,517,829,525) Total Unused fixed asset 1,998,339,369 2,026,111,881

Represent unused fixed asset in relation to closing down of factory in Bandung (see

note 1)

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11. Fixed assets

2007 Movements

Opening balance

1 Jan. 2007

Additions

Deductions/ disposals

Closing balance

30 June. 2007

Cost: Direct ownership: Land 21,484,238,792 0 0 21,484,238,792Building 45,284,891,338 0 0 45,284,891,338Machinery & equipment 119,552,343,195 74,701,600 0 119,627,044,795Vehicles 7,429,872,617 97,577,273 32,175,000 7,495,274,890Office equipment 4,982,497,082 83,379,550 0 5,065,876,632 198,733,843,024 255,658,423 32,175,000 198,957,326,447Leased assets: - Machinery &

equipment 7,918,861,118 1,781,620,000 0 9,700,481,118

- Vehicles 97,577,273 0 97,577,273 0 8,016,438,391 1,781,620,000 97.577,273 9,700,481,118 Total cost 206,750,281,415 2,037,278,423 129,752,273 208,657,807,565

Accumulated depreciation:

Direct ownership: Building 20,554,743,126 1,027,079,601 0 21,581,822,727Machinery & equipment 94,345,138,349 4,189,970,401 0 98,535,108,750Vehicles 7,138,481,005 124,470,918 32,175,000 7,230,776,923Office equipment 4,501,611,378 48,150,906 0 4,549,762,284 126,539,973,858 5,389,671,826 32,175,000 131,897,470,684Leased assets: - Machinery &

equipment 2,170,264,413 352,386,843 0 2,522,651,256

- Vehicles 29,273,184 6,505,152 35,778,336 0 2,199,537,597 358,891,995 35,778,336 2,522,651,256Total accumulated Depreciation

128,739,511,455

5,748,563,821

67,953,336 134,420,121,940

Total book value 78,010,769,960 74,237,685,625

2006 Movements

Opening balance

1 Jan. 2006

Additions

Deductions/

disposals

Closing balance

30 June 2006

Cost: Direct ownership:Land 21,484,238,792 0 0 21,484,238,792Building 45,284,891,338 0 0 45,284,891,338Machinery & equipment 119,606,185,898 0 0 119,606,185,898Vehicles 7,437,177,104 127,000,000 91,806,650 7,472,370,454Office equipment 4,956,787,627 26,919,203 20,843,000 4,962,863,830 198,769,280,759 153,919,203 112,649,650 198,810,550,312Leased assets: - Machinery &

equipment 7,918,861,118 0 0 7,918,861,118

- Vehicles 224,577,273 0 127,000,000 97,577,273 8,143,438,391 0 127,000,000 8,016,438,391 Total cost 206,912,719,150 153,919,203 239,649,650 206,826,988,703

15



11. Fixed assets (continued) Accumulated depreciation:

Direct ownership: Building 18,500,583,911 1,027,079,598

0

19,527,663,509

Machinery & equipment 85,848,905,449 4,302,356,244 0 90,151,261,693Vehicles 7,008,568,825 178,633,308 91,806,650 7,095,395,483Office equipment 4,148,845,715 209,759,917 20,843,000 4,337,762,632

115,506,903,900 5,717,829,067 112,649,650 121,112,083,317 Leased assets: - Machinery &

equipment 1,536,755,529 316,754,442 0 1,853,509,971

- Vehicles 49,974,401 20,341,063 50,800,008 19,515,456 1,586,729,930 337,095,505 50,800,008 1,873,025,427 Total accumulated Depreciation 117,093,633,830 6,054,924,572 163,449,658

122,985,108,744 Total book value 89,819,085,320 83,841,879,959

Fixed assets are pledged as collateral for the bank loans and leased assets are pledged as collateral for lease obligations. The Company’s fixed assets are covered by insurance from any possible losses from fire or other risks with coverage of Rp156 billion. The Management believes that the insurance coverage is sufficient to cover such losses. As of June 31, 2007 and 2006, based on company’s management, there are no impairment in value of the aforementioned property, plant and equipment as its carrying value does not exceed the replacement cost or recoverable amount from the sale or use of the asset.

12. Deferred charges

2007 2006 Cost: Quarry areas 21,783,360,000 21,783,360,000 Quarry permits 338,766,247 338,766,247 22,122,126,247 22,122,126,247Less: Accumulated amortization Quarry areas (7,150,368,783) (6,605,534,787) Quarry permits (338,766,247) (338,766,247) (7,489,135,030) (6,944,301,034)

Deferred charges-net 14,632,991,217 15,177,825,213 The quarry area is located in Citatah, Bandung, West Java with total area of 7.8

hectares. 13. Restricted fund

2007 2006 Bank 23,114,936 24,446,767Time Deposit 735,706,542 686,822,273Total restricted fund 758,821,478 711,269,040

16



13. Restricted fund (continued) The Company has committed to an escrow account agreement with Bank DBS Indonesia as the Facility Agent that represents the Company’s creditors in troubled debt restructuring agreement. Cash in Bank DBS Indonesia is pledged as fiduciary collateral for the restructured debt . Time deposits in Bank UOB Indonesia are pledged for a Letter of Credit related to import purchasing.

14. Other non current assets

2007 2006 Unused property 578,377,631 578,377,631Refundable deposit 212,398,745 212,398,745 Total other non current assets 790,776,376 790,776,376

15. Bank loans

Bank loans represent short-term credit facilities from third party banks.

2007 2006 PT United Overseas Bank Bali 5,090,409,864 3,319,132,887PT. Bank Panin Tbk 727,544,630 747,794,207 Total bank loans 5,817,954,494 4,066,927,094

PT United Overseas Bank Bali Represents a Short Term Advance, Letters of Credit, Term Bill, Post Import Loan and Bank Guarantee facilities with a combined maximum credit limit amounting to US$1,350,000 that bear interest at 19.75% per annum and 7.25% per annum for loans in Rupiah and US$, respectively. These loans are secured by personal guarantees of Mr. Taufik Johannes and Mr. Arif Sianto, related parties, first registered Hak Tanggung on land and factory buildings in Karawang and a letter of undertaking to deliver the Company’s land and buildings. This facility will be due on 6 September 2007. PT. Bank Panin Tbk Represents an overdraft facility with maximum credit amounting to Rp 750,000,000 (excluding interest). This facility will be due on 25 April 2008 are secured by land and building in Makasar, South Sulawesi.

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16. Trade accounts payable

2007 2006

Ceam, Srl 2,504,553,267 2,434,170,873Vivacity Engineering PTY. Ltd 3,706,074,054 3,420,470,300Socomac 1,650,341,827 1,363,714,800PT. Jaya Abadi Granitama 1,690,975,258 3,837,622,412Others (less than Rp1 billion individually) 19,942,572,015 16,489,995,489

Total trade accounts payable 29,494,516,421 27,545,973,874

Trade accounts payable to third parties represent amounts due to third parties for the purchase of marble and supplies from local and overseas suppliers.

17. Tax payable

2007 2006 Employee income tax 304,210,536 359,927,247Withholding tax art 23 & 26 29,228,100 13,706,461Value added tax 2,273,402,449 1,525,211,890 Total taxes payable 2,606,841,085 1,898,845,598

18. Accrued expenses

2007 2006 Consultant expenses 5,069,031,199 5,857,244,532Others (less than Rp1 billion individually) 7,920,151,246 6,751,980,124 Total accrued expenses 12,989,182,445 12,609,224,656

19. Provision for employee entitlements

2007 2006 Balance at beginning of the year 10,471,326,836 9,823,050,139 Additional provision 0 0Utilized during the year (54,119,663) (1,998,963,432) Balance at end of the year 10,417,207,173 7,824,086,707

The Company provides for benefits due to employees under Labor Law No. 13 year 2003 dated March 25, 2003. (Note 3m).

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20. Current portion of long-term bank loans

Current portion of long-term bank loans represent credit facilities obtained from third party banks, which have been restructured effective from December 20, 2002. 2007 2006 Current portion of long term

bank loan 55,566,115,820

53,651,525,659

Represents a facility from Company’s restructuring of troubled debt amounting to US$5,000,000 and bears interest at 2.00%-2.50% above SIBOR per annum. A minimum payment of 0.50% from interest has to be paid to the creditors, and the remains are capitalized. This facility will be repaid on an installment basis of 10 half-year periods starting from 30 June 2006. Currently the current portion of long term bank loans is in process of re-negotiation based on the second phase of the loan restructuring (notes 31).

21. Lease obligations Lease obligations comprise non-cancelable leasing contracts with BNP Lippo Leasing, PT. Tifa Finance, PT. Saseka Gelora Finance and Bumiputera BOT Finance for machinery, equipment and vehicles with lease periods from two to four years at interest of 8.3% per annum to 23.0% per annum . This loan is secured by its leased assets. The capital lease payments, both principal and interest, are payable as follows: 2007 2006 Net present value of minimum future lease payment

2,251,832,168

3,378,458,392

Current lease obligations 1,459,847,555 1,931,801,677Non current lease obligations 791,984,613 1,446,656,715

22. Current portion of convertible loans 2007 2006 Current portion of convertible loans 59,254,533,702 57,863,751,697 Represents a facility from the Company’s restructuring of troubled debt amounting to US$5,000,000 and bears interest at 6% per annum. A minimum payment of 0.50%-0.75% from interest has to be paid to the creditors, and the remains are capitalized. This loan will be converted not later than 30 June 2010. Currently the current portion of convertible loan is in process of re-negotiation based on the second phase of the loan restructuring (notes 31).

23. Share capital

The Company’s authorized capital amounting to Rp1,260,000,000,000 consists of 840,000,000 shares of A Series with nominal value of Rp500 per share and 8,400,000,000 shares of B Series with nominal value of Rp100. Issued and fully paid 840,000,000 shares of A Series.

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23. Share capital (continued) The list of the Company’s shareholders as of 30 June 2007 and 2006 were follows:

2007

Name of Stockholders Number of

Shares Percentage of

Ownership Total Paid-up Capital Stock

BNP Paribas Limited Singapore 115.735.348 13.78 % 57.867.674.000 The Company’s Directors & Commissioners 80.952.700 9.64 % 40.476.350.000 Goldmany Assets 79.329.500 9.44 % 39.664.750.000 Meridian Pacific International Pte. Ltd. 71.614.000 8.53 % 35.807.000.000 Commerzbank Akleingensellschaft 60.842.830 7.24 % 30.421.415.000 Others (below 5% each) 431.525.622 51.37 % 215.762.811.000 Total 840.000.000 100,00% 420.000.000.000

2006

Name of Stockholders Number of

Shares Percentage of

Ownership Total Paid-up Capital Stock

BNP Paribas Limited Singapore 115.735.348 13.78 % 57.867.674.000 The Company’s Directors & Commissioners 80.952.700 9.64 % 40.476.350.000 Meridian Pacific International Pte. Ltd. 71.614.000 8.53 % 35.807.000.000 Commerzbank Akleingensellschaft 60.842.830 7.24 % 30.421.415.000 Others (below 5% each) 510.855.122 60.81 % 255.427.561.000 Total 840.000.000 100,00% 420.000.000.000

24. Additional paid in capital – net Share premium/(discount) Share premium represents the difference between the nominal value of the Company’s shares and the price paid by the new shareholders during the Company’s initial public offering in June 1996. The number of shares offered was 44,000,000 with a par value of Rp500 per share, which were sold for Rp2,375 per share. To comply with Capital Market Supervisory Agency (Bapepam) regulation under its decision letter No. Kep-06/PM/2000 on the Amendment of Rule No. VIII.G.7 dated 13 March 2000, costs incurred in relation to the Company’s initial public offering should be recognized as a deduction in share premium. As of 31 December 2000, the net book value of the cost of the public offering of shares amounted to Rp837,324,731 and was recognized as a deduction in share premium.

Share discount represents the differences between the nominal value of the

Company’s shares and the fair value of the shares at conversion date between the Company’s shares and the carrying amount of the loan on 20 December 2002. The converted shares amounted to 714,000,000 with a par value of Rp500 each and total nominal value of shares amounted to Rp357,000,000,000 with a fair value of Rp326,296,638,195 .

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24. Additional paid in capital – net (continued) Donated Capital Represents donated capital from Mr. Taufik Johannes and Mr. Arif Sianto, related

parties, being donated shares of QEM to the Company, based on notarial deed no. 49 and 50 dated 26 October 1999 of Ny. Esther Mercia Sulaiman, S.H. Notary in Jakarta. The donated capital was valued at its book value at the transaction date.

25. Net sales

2007 2006 Local sales 35,017,881,039 23,348,604,121Export sales 12,773,205,809 10,399,924,050 Total sales 47,791,086,848 33,748,528,171 There were no sales to individual customers that represent more than 10% of total sales for the years ended 30 June 2007and 2006.

26. Cost of goods sold

2007 2006 Finished goods at beginning of the year 65,255,719,175 80,219,110,846 Raw materials used 19,760,666,562 10,589,910,892Direct labor 4,874,351,970 4,644,836,910Manufacturing overheads 17,015,646,436 16,702,334,804Total production costs 41,650,664,968 31,937,082,606 Finished goods purchased 0 440,440,086Finished goods available for sale 106,906,384,143 112,596,633,538 Finished goods at the end of the year (64,481,549,903) (80,753,505,274)Cost of goods sold 42,424,834,240 31,843,128,264

There were no purchases from individual suppliers that represented more than 10% of total sales for the years ended 30 June 2007 and 2006.

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27. Operating expenses

2007 2006 Selling expenses Salaries and allowances 1,378,244,409 1,484,658,136Sales commission 488,095,180 298,947,959Installation and polishing 700,136,513 409,085,382Export selling expense 611,448,579 624,519,989Administration Bank 70,720,782 93,982,386Other (less than Rp100 million individually) 1,157,783,517 796,520,238Total selling expenses 4,406,428,980 3,707,714,090

General and administrative expenses Salaries and allowances 1,696,168,750 1,646,444,743Taxes and retributions 155,670,847 149,250,696Postage and telecommunications 254,317,614 241,671,992Vehicle expenses 418,032,623 407,081,470Stationary 188,106,689 187,900,109Consultant fee 339,428,061 103,520,000Other (less than Rp100 million individually) 631,058,970 731,974,873Total general and administrative expenses 3,682,783,554 3,467,843,883 Total operating expenses 8,089,212,534 7,175,557,973

28. Taxation

2007 2006

a. Corporate income tax (Expense)/benefit of corporate

income tax:

Current year 0 0Deferred tax 972,335,076 (1,648,466,921)Total corporate income tax 972,335,076 (1,648,466,921)

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30 June 2007with comparative figures for 2006 (Expressed in Rupiah, unless otherwise stated)

28. Taxation (continued) b. Reconciliation of corporate income tax

2007 2006

Profit/(Loss) before corporate income tax (4,112,877,871) 1,709,598,692 Expenses/(income) that are not deductible /(assessable) in determining taxable profit:

Salaries and allowances 319,715,248 218,364,436Entertainment / donations 101,059,289 113,784,663Tax expenses 887,362,916 813,037,380Interest income (40,160,805) (34,633,852)

1,267,976,648 1,110,552,627 Temporary differences:

Fixed assets Lease asset

4,128,985,779 (1,536,145,557)

(4,736,823,317) (637,083,315)

Provision for employee entitlements 648,276,697 (233,632,753) 3,241,116,919 (5,607,539,385)

Total fiscal correction 4,509,093,567 (4,496,986,758)

Profit/(loss) after fiscal correction 396,215,696 (2,787,388,066)Compensated loss (57,800,097,680) (270,388,016,310) Tax loss carried forward (57,403,881,984) (273,175,404,376)

c. Calculation of corporate income tax

2007 2006 Current year income tax expense 0 0 Deferred tax

Effect from temporary difference at maximum tax rate (30%)

Fixed assets 1,238,695,734 (1,421,046,995)Lease assets (460,843,667) (157,330,100)Provision for employee entitlements 194,483,009 (70,089,826)

Total deferred income tax expense 972,335,076 (1,648,466,921)

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28. Taxation (continued)

d. Deferred tax assets/(liabilities)

Deferred tax assets and liabilities consist of:

2007 2006

Deferred tax assets: Fixed assets Lease assets

(8,856,037,744)

(918,295,554)

(12,765,811,723)

(268,365,581)Provision for employee entitlements 5,144,560,053 2,946,915,042Tax loss carried forward 17,221,164,595 81,952,621,313Provision Tax loss carried forward (17,221,164,595) (81,952,621,313)

Deferred tax liabilities-net (4,629,773,245) (10,087,262,262)

e. According to the tax regulations, lodgment of tax returns is based on taxpayers'

own calculation of tax liabilities (self assessment system). The tax authorities may conduct a tax audit on the Company for up to ten years thereafter. However, when an audit is not conducted within such period, generally the tax return is then considered to be final.

On February 22, 2006, the Company received an overpayment of corporate income tax

assessment letter, which stated that the Company’s tax loss and overpayment of corporate income tax for the year 2004 of Rp28,759,600,034 and Rp403,220,059, respectively. The Company received the refund for the overpayment from the tax office in 2006 amounting to Rp345,595,886, after reduction of other tax underpayments. The difference between the recorded amount over the tax assessment balance amounting to Rp7,389,876 was recognized as “Taxes and fees” in the statement of operation

29. Monetary assets and liabilities in foreign currencies

2007

Foreign Currency Equivalent

Rupiah Assets

Cash and cash equivalents US$ 13,847.48 125,375,083 Accounts receivable US$ 437,722.29 3,963,137,614 SGD 24,000.32 141,793,891 Restricted fund US$ 66,727.86 604,154,044

Total assets 4,834,460,632

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29. Monetary assets and liabilities in foreign currencies

2007 Foreign Currency Equivalent

Rupiah Liabilities Bank UOB loans US$ 191,537.06 1,734,176,541 EUR 57,271.76 696,596,416 Accounts payable US$ 769,935.20 6,970,993,301 EUR 542,472.72 6,598,638,166 AUD 390,000.00 2,993,793,520 SGD 1,013.52 5,987,876 JPY 220,000.00 16,060,000 Other payable US$ 226,659.35 2,052,173,755 Advanced received

Accrued expenses 753,001.01 6,817,671,144

Current portion of lease obligations US$ 101,602.60 919,909,940 Current portion of long term bank loans US$ 6,137,189.73 55,566,115,820

US$ 59,254,533,702 Effect of trouble in debt restructuring US$

US$ 424,617.89 3,844,490,376

US$

Current portion of convertible loans 6,544,569.66

700,877.76 6,345,747,232

Total liabilities 153,816,887,789 Total liabilities - net (148,982,427,157) Due to the Company’s liquidity position, it has not entered into hedging contracts to cover its foreign currency risk.

30. Business segment information

2007

Information regarding the Company’s business segment is as follows:

Based on Geographic area:

35,017,881,039Local 12,773,205,809 Total 47,791,086,848

Sales: Export

Based on Product: Sales:

Local Marble 8,428,000,624

Granite

36,075,620,638Import Marble

3,287,465,586 Total 47,791,086,848

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PT CITATAH Tbk.

(Expressed in Rupiah, unless otherwise stated)

2007

NOTES TO THE FINANCIAL STATEMENTS 30 June 2007 with comparative figures for 2006

30. Business segment information

Cost of goods sold: 31,121,524,470

Import Marble 8,156,621,920Granite

42,424,834,240

Local Marble

3,146,687,850 Total

Gross profit:

Local Marble Import Marble 271,378,704Granite 140,777,736 Total

4,954,096,168

5,366,252,608 Assets:

Local Marble Import Marble 34,322,089,453

13,387,853,730 Total

146,913,928,208

Granite 194,623,871,391

The identified assets are assets that were used exclusively in each segment operation or geographic area. Those assets may also include the allocation of assets used together with other segments. The Company’s assets are cash and cash equivalent, account receivable, other receivables, prepaid tax, investment in association, fixed assets, deferred charges and other non-current assets.

31. Restructuring of Troubled Debt

The Company, Parallax Venture Partners XIII Ltd. (the Investor) and most of the Creditors have signed the Master Restructuring Agreement dated March 10, 2005 where it was agreed that the outstanding long-term loan and conversion payable amounting to US$5,000,000 and US$5,000,000, respectively, plus accrued interest and other costs will be further restructured.

The significant terms and condition from the Master Restructuring Agreement are as follows:

On the effective date, total restructured debt purchased by the investor shall be

converted into 843,366,733 Class B Shares in the Company. The Company shall issue an aggregate of 843,366,733 Class B Shares with at least 50.1% of the voting rights in the Investor post the issuance of the Class B.

On the effective date, total restructured debt amounting to US$10,000,000 shall be purchased by the investor, including all of the rights, title, interest and benefits of such Creditors upon the terms and conditions of the existing restructuring agreement, and all unpaid interest and others cost shall be written off by the investor and shall be deemed extinguished.

26



31. Restructuring of Troubled Debt (continued)

The Company agrees to issue Secured Convertible Bonds to the Investor amounting to US$4,000,000 which will mature on 2010 with the payment of the related interest to be deferred during the term of the Secured Convertible Bonds. The rate of annual interest shall be 11% compounded quarterly from the effective date payable by the Company on the maturity date of the Secure Convertible Bonds. The Secured Convertible Bonds will be secured by a debenture or other form of security document creating fixed and floating charges over the assets of the Company including, without limitation, land, plant, equipment, receivables and inventory.

PT Perusahaan Pengelola Aset (Persero), which owned 18.32% of total

restructured debt, is waiting for the valuation process of the assets’ transfer from the Indonesian Bank Restructuring Agency (“IBRA”) to PT Perusahaan Pengelola Aset (Persero).

• The second phase of the debt restructuring has not been deemed effective as of June 30, 2007 because of two out of twelve Creditors, namely PT Bank Lippo Tbk and PT Perusahaan Pengelola Aset (Persero), have not yet signed Master Restructuring Agreement because of the following reasons:

On July 21, 2006, PT Bank Lippo Tbk, which owned 2.96% of total restructured debt, filled a legal suit against the Company in the Central Court of Jakarta in relation with the Company’s loan. After conducting legal proceedings, all of the plaintiff’s demands were rejected by the Court based on its final decision made on January 16,2007. Since the plaintiff did not submit an appeal to the high Court, January 30, 2007, the Council of Central Court of Jakarta released its final verdict on January 30, 2007 that the legal suit of PT Bank Lippo Tbk to the Company was rejected (Niet Ontuankelijk Verklaard) and asked PT Bank Lippo Tbk to pay the Company’s legal costs.

Page Financial statements Balance Sheets 1 - 2 Statements of Profit and Loss 3

*******************

Contents

Statement of Changes in Equity 4

Statements of Cash Flows 5

Notes to the Financial Statements 6 - 26

FINANCIAL STATEMENT

For the year ended 30 June 2007 and 2006

(This Financial Statement were not audited by public accounting firm)

PT. CITATAH TBK.

Documents

PT CITATAH Tbk. Balance Sheets (Expressed in Rupiah, unless … · 2018. 1. 3. · Cash and cash equivalents at the end of period 4 258,714,834 4,322,558,035 The accompanying notes