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6
PT NAGAI PLASTIC INDONESIA
STATEMENTS OF FINANCIAL POSITION
February 28, 2015 and 2014
With Independent Auditor’s Report
LIST OF CONTENTS
Page
Directors’ Statements
Financial Statements
We have audited the accompanying statements of financial position of PT Nagai Plastic Indonesia
(the “Company”) as at February 28, 2015 and 2014, and the related statements of comprehensive income,
changes in equity and cash flows for the years then ended. These financial statements are the responsibility
of the Company’s management. Our responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with auditing standards established by the Indonesian Institute of
Certified Public Accountants. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial
position of PT Nagai Plastic Indonesia as at February 28, 2015 and 2014, and the results of its operations and
cash flows for the years then ended, in conformity with Indonesian Financial Accounting Standards.
The accompanying financial statements are not intended to present the financial position, results of operations and cash
flows in accordance with accounting principles and practices generally accepted in countries and jurisdiction other than
Indonesia. The standards, procedures and practices to audit such financial statements are those generally accepted and
applied in Indonesia.
PT NAGAI PLASTIC INDONESIA
STATEMENTS OF FINANCIAL POSITION
February 28, 2015 and 2014
NON-CURRENT ASSETS
Property, plant and equipment, net 2h, 11 4,983,633 5,650,574
Refundable deposits 2e 80,074 77,808
1
PT NAGAI PLASTIC INDONESIA
STATEMENTS OF FINANCIAL POSITION
February 28, 2015 and 2014
CURRENT LIABILITIES
Trade payables 2e, 12 1,586,303 2,212,065
Other payables 2e 90,032 78,396
Taxes payable 2k, 23b 38,681 50,045
Short-term bank loans 2e, 15a 1,695,000 1,700,000
Accrued expenses 2e, 2j, 14 686,046 171,509
Current portion of long-term:
Bank loans 2e, 15b – 250,000
Obligations under finance lease 2e, 2n, 13 87,877 130,115
NON-CURRENT LIABILITIES
Long term liabilities, net of current portion:
Obligations under finance leases 2e, 2n, 13 – 87,782
Post-employment benefits obligation 2m, 16 474,381 401,783
Deferred tax liability, net 2k, 23d 103,556 131,510
EQUITY
Capital stock
Authorized capital – 56,000 shares with par value
US$100 (Rp242.500) per share; Issued and
paid-up capital – 28,000 shares 17 2,800,000 2,800,000
Retained earnings 2,193,827 1,960,188
Total equity 4,993,827 4,760,188
2
PT NAGAI PLASTIC INDONESIA
STATEMENTS OF COMPREHENSIVE INCOME
For the years ended February 28, 2015 and 2014
3
PT NAGAI PLASTIC INDONESIA
STATEMENTS OF CHANGES IN EQUITY
For the years ended February 28, 2015 and 2014
4
PT NAGAI PLASTIC INDONESIA
STATEMENTS OF CASH FLOWS
For the years ended February 28, 2015 and 2014
2015 2014
US$ US$
5
PT NAGAI PLASTIC INDONESIA
STATEMENTS OF CASH FLOWS (Continued)
For the years ended February 28, 2015 and 2014
2015 2014
US$ US$
6
PT NAGAI PLASTIC INDONESIA
NOTES TO FINANCIAL STATEMENTS
February 28, 2015 and 2014
1. GENERAL
PT Nagai Plastic Indonesia (the “Company”), was established within the framework of the Foreign
Capital Investment Law No. 1 Year 1967 as amended by Law No. 11/1970 (most recently amended
by Capital Investment No. 25/2007), based on notarial deed No. 9 dated May 7, 1997 of Isyana
Wisnuwardhani Sadjarwo S.H., substitute for notary public Mudofir Hadi S.H., amended by deed
of notary public Mudofir Hadi S.H., dated August 7, 1997 No. 26. The deed of establishment was
approved by the Minister of Justice of the Republic of Indonesia in Decision Letter
No. C2-10.605.HT.01.01.TH.97 dated October 10, 1997, registered in the Companies Register
under No. TDP 10071301886 on February 12, 1998 at the Bekasi Companies Registration Office
No. 028/10.07/II/1998, published in Supplement No. 2962 to State Gazette No. 44 of June 2, 1998.
The Company’s Articles of Association have been amended several times, most recently by
notarial deed of Sri Herawati Anwar Effendi, S.H., No. 01 dated February 5, 2015, which
concerning changes in member of the Company’s commissioners and directors.
The Company is mainly engaged in manufacturing of plastic goods and plastic components for
electronic goods. The Company is domiciled at East Jakarta Industrial Park Plot 3F-5 and Delta
Silicon Industrial Park, Lemahabang, Bekasi, West Java.
Total employees employed by the Company as at February 28, 2015 and 2014 were 456 and 467
permanent and non-permanent employees, respectively.
The Company’s management is responsible for the preparation of financial statements which were
completed and authorized for issue on June 30, 2014.
7
PT NAGAI PLASTIC INDONESIA
NOTES TO FINANCIAL STATEMENTS (Continued)
February 28, 2015 and 2014
A summary of significant accounting policies adopted by the Company, which affect the determination
of its financial position and results of its operations, is presented below.
The Company’s financial statements have been prepared and presented in accordance with
Indonesian Financial Accounting Standards (“SAK”), which comprise the Statements of Financial
Accounting Standards (“PSAK”) and its Interpretations (“ISAK”) issued by the Board of Financial
Accounting Standards of the Indonesian Institute of Accountants (“DSAK”).
The financial statements have been prepared on the accrual basis, except for the statements of cash
flows and are measured based on the historical cost concept of accounting, except as described in
relevant Notes herein.
The statements of cash flows are prepared using the indirect method classified into operating,
investing and financing activities.
In accordance with the approval letter of the Minister of Finance of the Republic of Indonesia
No. KEP-291/PJ.42/1997, dated August 20, 1997, the Company maintains its accounting records
and, accordingly, presents its financial statements in US Dollar, which is the Company’s functional
currency.
Transactions in Rupiah and other than US Dollar currencies are translated into US Dollar at the
rates of exchange prevailing at the transaction date.
At the reporting date, the monetary assets and liabilities in Rupiah and other than US Dollar
currencies are translated into US Dollar using the exchange rate prevailing at those
financial statements position dates (February 28, 2015 : Rp12,863/US$1 and JPY119.62/US$;
February 28, 2014 : Rp11,634/US$1 and JPY101.88/US$1).
The resulting exchange gains or losses are credited or charged to the statements of comprehensive
income in the current year.
In their operating activities, the Company has transactions with certain parties which are related to
them.
8
PT NAGAI PLASTIC INDONESIA
NOTES TO FINANCIAL STATEMENTS (Continued)
February 28, 2015 and 2014
Based on the PSAK No. 7 (Revised 2010) “Disclosure of related parties transaction”, related
parties are defined as follows:
a. A person or a close member of that person’s family is related to the reporting entity if that
person:
(i). has control or joint control over the reporting entity;
(ii). has significant influence over the reporting entity; or
(iii). is a member of the key management personnel of the reporting entity or of a parent of
the reporting entity.
b. An entity is related to the reporting entity if any of the following conditions applies:
(i). the entity, and the reporting entity are members of the same group (which means that
each parent, subsidiary and fellow subsidiary is related to the others);
(ii). one entity is an associate or joint venture of the other entity (or an associate or joint
venture of a member of a group of which the other entity is a member);
(iii). both entities are joint ventures of the same third party;
(iv). one entity is joint venture of a third entity and the other entity is an associate of the third
entity;
(v). the entity is a post-employment benefit plan for the benefit of employees of either the
reporting entity, or an entity related to the reporting entity. If the reporting entity in itself
such a plan, the sponsoring employers are also related to the reporting entity;
(vi). the entity is controlled or jointly controlled by a person identified in (a); and
(vii). a person identified in (a) (i) has significant influence over the entity or is a member of
the key management personnel of the entity (or a parent of the entity).
All transactions and balances with related parties, whether or not made at similar terms and
conditions as those done with third parties, are disclosed in the financial statements.
Cash and cash equivalents consist of cash on hand and in banks and all unrestricted time deposits
with maturities of three months or less from the date of placement.
e. Financial instruments
Initial recognition
Financial assets are classified as financial assets at fair value through profit or loss, loans and
receivables, held-to-maturity investments, or available-for-sale financial assets, as
appropriate. The Company determines the classification of its financial assets at initial
recognition.
9
PT NAGAI PLASTIC INDONESIA
NOTES TO FINANCIAL STATEMENTS (Continued)
February 28, 2015 and 2014
All financial assets are recognized initially at fair value plus transaction costs, except in the
case of financial assets which are recorded at fair value through profit or loss.
Purchases or sales of financial assets that require delivery of assets within a time frame
established by regulation or convention in the marketplace (regular way trades) are
recognized on the trade date, i.e., the date that the Company commits to purchase or sell the
assets.
The Company’s financial assets include cash and cash equivalent, trade and other receivable,
shareholder’s loan and security deposits.
Subsequent measurement
Financial assets at fair value through profit or loss include financial assets held for trading and
financial assets designated upon initial recognition at fair value through profit or loss.
Financial assets are classified as held for trading if they are acquired for the purpose of selling
or repurchasing in the near term. This category includes derivative financial instruments
entered into by the Company that are not designated as hedging instruments in hedge
relationships as defined by PSAK No. 55 (Revised 2011). Derivatives, including separated
embedded derivatives, are also classified as held for trading unless they are designated as
effective hedging instruments. Financial assets at fair value through profit or loss are carried
in the statements of financial position at fair value with changes in fair value recognized in
the statements of comprehensive income.
Derivatives embedded in host contracts are accounted for as separate derivatives and recorded
at fair value if their economic characteristics and risks are not closely related to those of the
host contracts and the host contracts are not held for trading or designated at fair value
through profit or loss. These embedded derivatives are measured at fair value with changes in
fair value recognized in the statements of comprehensive income. Reassessment only occurs
if there is a change in the terms of the contract that significantly modifies the cash flows that
would otherwise be required.
10
PT NAGAI PLASTIC INDONESIA
NOTES TO FINANCIAL STATEMENTS (Continued)
February 28, 2015 and 2014
Loans and receivables are non-derivative financial assets with fixed or determinable payments
that are not quoted in an active market. After initial measurement, such financial assets are
subsequently measured at amortized cost using the Effective Interest Rate (“EIR”), less
impairment. Amortized cost is calculated by taking into account any discount or premium on
acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is
included in the statements of comprehensive income. The losses arising from impairment are
also recognized in the statements of comprehensive income.
As at February 28, 2015 and 2014, the Company’s cash and cash equivalents, trade and other
receivables, shareholder’s loan and refundable deposits are included in this category.
Non-derivative financial assets with fixed or determinable payments and fixed maturities are
classified as HTM when the Company has the positive intention and ability to hold them to
maturity. After initial measurement, HTM investments are measured at amortized cost using
the EIR method, less impairment. Amortized cost is calculated by taking into account any
discount or premium on acquisition and fees or costs that are an integral part of the EIR. The
EIR amortization is included in the statements of comprehensive income. The losses arising
from impairment are recognized in the statements of comprehensive income.
As at February 28, 2015 and 2014, the Company has not had any financial asset classified as
HTM investments.
AFS financial assets are non-derivative financial assets that are designated as available-for-
sale or not classified in any of the three preceding categories. After initial measurement, AFS
financial assets are measured at fair value with unrealized gains or losses recognized in equity
until the investment is derecognized at which time the cumulative gain or loss is recognized
or determined to be impaired, at which time the cumulative loss is reclassified from equity to
comprehensive income. Interest earned on available-for-sale financial investments is reported
as interest income using the EIR method.
As at February 28, 2015 and 2014, the Company has not had any financial asset classified as
available-for-sale.
11
PT NAGAI PLASTIC INDONESIA
NOTES TO FINANCIAL STATEMENTS (Continued)
February 28, 2015 and 2014
Initial recognition
Financial liabilities within the scope of PSAK No. 55 (Revised 2011) are classified as
financial liabilities at fair value through profit or loss, loans and borrowings, or as derivatives
designated as hedging instruments in an effective hedge, as appropriate. The Company
determines the classification of its financial liabilities at initial recognition.
All financial liabilities are recognized initially at fair value and, in the case of loans and
borrowings, inclusive of directly attributable transaction costs.
The Company’s financial liabilities include short-term bank loans, trade payables, other
payables, accrued expenses, long-term bank loans and obligations under finance lease.
Subsequent measurements
Financial liabilities at fair value through profit or loss include financial liabilities held for
trading and financial liabilities designated upon initial recognition at fair value through profit
or loss. Financial liabilities are classified as held for trading if they are acquired for the
purpose of selling or repurchasing in the near term. This category includes derivative financial
instruments entered into by the Company that are not designated as hedging instruments in
hedge relationships as defined by PSAK No. 55 (Revised 2011).
Separated embedded derivatives are also classified as held for trading unless they are
designated as effective hedging instruments. Gains or losses on liabilities held for trading are
recognized in the statement of comprehensive income.
The Company has not had any financial liabilities classified at fair value through profit or loss
as at February 28, 2015 and 2014.
Interest-bearing loans and borrowings are subsequently measured at amortized cost using the
EIR method.
Gains or losses are recognized in the statement of comprehensive income when the liabilities
are derecognized as well as through the EIR amortization process.
The Company’s short-term bank loans, account payables, other payables, accrued expenses
long-term bank loans and obligations under finance lease are included in this category.
12
PT NAGAI PLASTIC INDONESIA
NOTES TO FINANCIAL STATEMENTS (Continued)
February 28, 2015 and 2014
Financial assets and financial liabilities are offset and the net amount reported in the statement
of financial position if, and only if, there is a currently enforceable legal right to offset the
recognized amounts and there is an intention to settle on a net basis, or to realize the assets
and settle the liabilities simultaneously.
The fair value of financial instruments that are traded in active market at each reporting date
is determined by reference to quoted market prices or dealer price quotations (bid price for
long position and ask price for short position), without any deduction for transaction costs.
For financial instruments where there is no active market, fair value is determined using
valuation techniques. Such techniques may include using recent arm’s length market
transactions, reference to the current fair value of another instrument that is substantially the
same, discounted cash flow analysis, or other valuation models.
The Company adjusts the price in the more advantageous market to reflect any differences in
counterparty credit risk between instruments traded in that market and the ones being valued
for financial asset positions. In determining the fair value of financial liability positions, the
Company's own credit risk associated with the instrument is taken into account.
Amortized cost is computed using the EIR method less any allowance for impairment and
principal repayment or reduction. The calculation takes into account any premium or discount
on acquisition and includes transaction costs and fees that are an integral part of the EIR.
The Company assesses at the end of each reporting period whether there is any objective
evidence that a financial asset or a group of financial assets is impaired.
For loans and receivables carried at amortized cost, the Company first assesses whether
objective evidence of impairment exists individually for financial assets that are individually
significant, or collectively for financial assets that are not individually significant.
13
PT NAGAI PLASTIC INDONESIA
NOTES TO FINANCIAL STATEMENTS (Continued)
February 28, 2015 and 2014
If there is objective evidence that an impairment loss has occurred, the amount of the loss is
measured as the difference between the asset’s carrying amount and the present value of
estimated future cash flows (excluding future expected credit losses that have not yet been
incurred). The present value of the estimated future cash flows is discounted at the financial
asset’s original EIR. If a loan or receivable has a variable interest rate, the discount rate for
measuring impairment loss is the current EIR.
The carrying amount of the asset is reduced through the use of an allowance account and the
amount of the loss is recognized in the statement of comprehensive income. Interest income
continues to be accrued on the reduced carrying amount based on the rate of interest used to
discount future cash flows for the purpose of measuring impairment loss. Loans and
receivables, together with the associated allowance, are written off when there is no realistic
prospect of future recovery and all collateral has been realized or has been transferred to the
Company.
If, in a subsequent period, the amount of the estimated impairment loss increases or decreases
because of an event occurring after the impairment was recognized, the previously recognized
impairment loss is increased or reduced by adjusting the allowance account. If a future write-
off is later recovered, the recovery is recognized in the statement of comprehensive income.
In the case of an equity investment classified as an AFS financial asset, objective evidence
would include a significant or prolonged decline in the fair value of the investment below its
cost.
Where there is objective evidence of impairment, the cumulative loss - measured as the
difference between the acquisition cost and the current fair value, less any impairment loss on
that investment previously recognized in the statement of comprehensive income is
reclassified from equity to comprehensive income. Impairment loss on equity investment is
not reversed through the statement of comprehensive income; increase in its fair value after
impairment is recognized in equity.
In the case of a debt instrument classified as an AFS financial asset, impairment is assessed
based on the same criteria as financial asset carried at amortized cost. Future interest income
is based on the reduced carrying amount and is accrued based on the rate of interest used to
discount future cash flows for the purpose of measuring impairment loss.
14
PT NAGAI PLASTIC INDONESIA
NOTES TO FINANCIAL STATEMENTS (Continued)
February 28, 2015 and 2014
Such accrual is recorded as part of the “Interest and Finance Income” account in the statement
of comprehensive income. If, in a subsequent period, the fair value of a debt instrument
increases and the increase can be objectively related to an event occurring after the
impairment loss was recognized in the statement of comprehensive income, the impairment
loss is reversed through the statement of comprehensive income.
A financial asset (or where applicable, a part of a financial asset or part of a group of similar
financial assets) is derecognized when: (1) the rights to receive cash flows from the asset have
expired; or (2) the Company has transferred its rights to receive cash flows from the asset or
has assumed an obligation to pay the received cash flows in full without material delay to a
third party under a “pass-through” arrangement; and either (a) the Company has transferred
substantially all the risks and rewards of the asset, or (b) the Company has neither transferred
nor retained substantially all the risks and rewards of the asset, but has transferred control of
the asset.
Trade and other receivables are classified and recorded as loans and receivables. An allowance for
impairment in the value of receivable is estimated based on the review of the collectibility of
outstanding amounts. Trade receivables are written-off as bad debts during the period in which they
are determined to be not collectible (Note 2e).
g. Inventories
Finished goods, raw materials, and work in progress are stated at the lower of cost or net
realiszable value. Cost is determined using the weighted average method. The cost of finished
goods and work in-progress comprises raw materials, direct labour, other direct costs and related
production overheads (based on normal operating capacity). Net realizable value is the estimated
selling price in the ordinary course of business, less the estimated costs of completion and the
estimated selling expenses.
Provision for obsolete and slow moving inventory is determined on the basis of estimated future
usage or sale of individual inventory items.
All property plant and equipment are initially recognized at cost. Such cost comprises of purchase
price and any cost includes the cost of replacing part of property, plant and equipment when that
cost is incurred, if the recognition criteria are met.
15
PT NAGAI PLASTIC INDONESIA
NOTES TO FINANCIAL STATEMENTS (Continued)
February 28, 2015 and 2014
Subsequent to initial recognition, property, plant and equipment are stated at cost less accumulated
depreciation and impairment losses. Such cost includes the cost of replacing part of property, plant
and equipment if the recognition criteria are met. Likewise, when a major inspection is performed,
its cost is recognized in the carrying amount of property, plant and equipment as a replacement if
the recognition criteria are satisfied. All other repairs and maintenance costs that do not meet the
recognition criteria are recognized in statements of comprehensive income as incurred.
Property, plant and equipment, except land, are classified and depreciated using a straight-line
basis, and based on the estimated useful lives of the asset, with details as follows:
Years
Buildings 5 – 20
Machinery and equipment 4 – 12
Factory and office equipment, furniture and fixtures 4–8
Leasehold improvements 5
Motor vehicles 4
An item of property, plant and equipment is derecognized upon disposal or when no future
economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition
of the asset (calculated as the difference between the net disposal proceeds and the carrying amount
of the asset) is included in profit or loss in the year the asset is derecognized.
The asset’s residual values, useful lives and methods of depreciation are reviewed, and adjusted
prospectively if appropriate, at each statement of financial position date.
i. Prepaid expenses
Prepaid expenses are amortized over their term using the straight-line method.
Revenue from sales is recognized when goods are delivered to the customers, and expenses are
recognized when these are incurred.
k. Income tax
Current tax expense is determined based on the taxable income for the year computed using the
prevailing tax rates.
16
PT NAGAI PLASTIC INDONESIA
NOTES TO FINANCIAL STATEMENTS (Continued)
February 28, 2015 and 2014
Deferred tax assets and liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax liabilities are recognized for all taxable temporary
differences and deferred tax assets are recognized for deductible temporary differences to the extent
that it is probable that taxable income will be available in future periods against which the
deductible temporary differences can be utilized.
Deferred tax assets and liabilities are measured at the applied tax rate or substantially applied as at
reporting date. Deferred tax is charged or credited in statements of comprehensive income, except
when it relates to items charged or credited directly to equity.
Deferred tax assets and liabilities are offset in the statement of financial position, except if these are
for different legal entities. In the same manner, as the current tax assets and liabilities are presented.
l. Treasury stock
Treasury stock is accounted for under the cost method and is presented as a reduction of equity.
The cost of providing post–employment benefits is determined using the Projected Unit Credit
Method. The accumulated unrecognized actuarial gains and losses that exceed 10% of the present
value of the Company’s defined benefit obligations is recognized on straight–line basis over the
expected average remaining working lives of the participating employees. Past service cost is
recognized immediately to the extent that the benefits are already vested, and otherwise is
amortized on a straight–line basis over the average period until the benefits become vested.
The benefits obligation recognized in the statement of financial position represents the present
value of the defined benefits obligation, as adjusted for unrecognized actuarial gains and losses and
unrecognized past service cost.
n. Lease
The Company classified leases based on the extent to which risks and rewards incidental to the
ownership of a leased asset are rested upon the lessor or the lease, and the transaction rather than
the form of the contract.
17
PT NAGAI PLASTIC INDONESIA
NOTES TO FINANCIAL STATEMENTS (Continued)
February 28, 2015 and 2014
n. Lease (Continued)
Finance lease
A lease is classified as a finance lease if it transfers substantially all the risks and rewards
incidental to ownership of the leased assets. Such leases are capitalized at the inception of the
lease at their fair value of the leased property or, if lower, at the present value minimum lease
payments. 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 liability.
Finance charges are charged directly to the profit or loss.
If the reasonable certainty available that lessee will obtained the ownership at the end of the
lease period, the lease assets are depreciated over the estimate useful life of the assets.
Capitalized leased assets are depreciated over the shorter of the estimated useful life of the asset
or the lease term, if there is no reasonable certainty that the Company will obtain ownership by
the end of the lease term.
Operating lease
A lease is classified as an operating lease if it does not transfer substantially all the risks and
rewards incidental to ownership of the leased asset. Accordingly, the related lease payments are
recognized in profit or loss on a straight-line basis over the lease term.
Sale and leaseback transaction should be treated as two (2) separate transactions. The excess of
sales proceeds over the carrying amount of the assets sold should be recognized as deferred gain
or in case of loss incurred, if there is no indication of impairment, the loss is recognized as
deferred charges, which should be amortized on a straight-line basis over the lease term if the
leaseback is finance lease, gain or loss should be recognized in the current period if the
leaseback is an operating lease.
The preparation of the financial statements in conformity with PSAK required management to make
judgments, estimates and assumption that effect the application of accounting policies and amounts
reported in the financial statements. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an on going basis. Revisions to accounting
estimates are recognized in the period in with the estimates are revised and in the future period effected.
Information about critical judgments and estimates in applying accounting policies that have the most
significant effect on the amounts recognized in the financial statements are as follows:
18
PT NAGAI PLASTIC INDONESIA
NOTES TO FINANCIAL STATEMENTS (Continued)
February 28, 2015 and 2014
Impairment
An impairment loss is recognized for the amount by which the assets’ or cash-generating unit’s carrying
amount exceeds its recoverable amount. To determine the recoverable amount, management estimates
expected future cash flows from each cash-generating unit and determines a suitable interest rate in
order to calculate the present value of those cash flows. In the process of measuring expected future
cash flows management makes assumptions about future operating results.
These assumptions relate to future events and circumstances. The actual results may vary, and may
cause significant adjustments to the Company’s assets within the next financial year.
In most cases, determining the applicable discount rate involves estimating the appropriate adjustment
to market risk and the appropriate adjustment to asset-specific risk factors.
The determination of the Company’s obligations and cost for pension and employee benefits liabilities
is dependent on its selection of certain assumptions used by the independent actuaries in calculating
such amounts. Those assumptions include among others, discount rates, annual salary increase rate,
annual employee turn-over rate, disability rate, retirement age and mortality rate.
Actual results that differ from the Company’s assumptions which effects are more than 10% of the
defined benefit obligations are deferred and being amortized on a straight-line basis over the expected
average remaining service years of the qualified employees. While the Company believes that its
assumptions are reasonable and appropriate, significant differences in the Company’s actual results or
significant changes in the Company’s assumptions may materially affect its estimated liabilities for
pension and employee benefits and net employee benefit expense.
The carrying amount of the Company’s estimated liabilities for employee benefits as at
February 28, 2015 and 2014 was US$474,381 and US$401,783, respectively (Note 16).
Management determined the estimated useful lives of these property, plant and equipment and
depreciation expense based on the expected utility of the assets. These are common life expectancies
applied in the industries where the Company conducts its business. Actual results may vary due to
technical obsolescence. Changes in the expected level of usage and technological development could
impact the economic useful lives and the residual values of these assets, and therefore future
depreciation charges could be revised.
The net carrying amount of the Company’s property, plant and equipment as at February 28, 2015
and 2014 was US$4,983,633 and US$5,650,574, respectively (Note 11).
19
PT NAGAI PLASTIC INDONESIA
NOTES TO FINANCIAL STATEMENTS (Continued)
February 28, 2015 and 2014
Management uses valuation techniques in measuring the fair value of financial instruments where active
market quotes are not available. In applying the valuation techniques, management makes maximum use
of market inputs, and uses estimates and assumptions that are, as far as possible, consistent with
observable data that market participants would use in pricing the instrument. Where applicable data is
not observable, management uses its best estimate about the assumptions that market participants would
make. These estimates may vary from the actual prices that would be achieved in an arm’s length
transaction at the reporting date.
2015 2014
US$ US$
Cash in banks
US Dollar accounts
PT Bank Resona Perdania 954,889 196,152
Bank of Tokyo-Mitsubishi UFJ, Ltd. 164,637 1,236
PT Bank Mizuho Indonesia 134,148 43,670
Rupiah accounts
PT Bank Permata Tbk 63,805 75,817
Bank of Tokyo-Mitsubishi UFJ, Ltd. 33,380 65,525
PT Bank Mizuho Indonesia 7,452 8,153
PT Bank Resona Perdania 5,228 9,534
PT Bank Internasional Indonesia Tbk 4,527 1,756
PT Bank Central Asia Tbk – 1,723
1,368,066 403,566
20
PT NAGAI PLASTIC INDONESIA
NOTES TO FINANCIAL STATEMENTS (Continued)
February 28, 2015 and 2014
5. TRADE RECEIVABLES
2015 2014
US$ US$
PT Muramoto Elektronika Indonesia 436,674 708,636
PT Indonesia Epson Industry 434,390 354,152
PT Kiyokuni Indonesia 237,083 418,197
PT Sugity Creatives 177,442 248,188
PT Indonesia Koito 175,735 200,980
PT Patco Electronic Technology 82,944 340,131
Others (below US$50,000 each) 52,600 109,914
Total 1,596,868 2,380,198
6. OTHER RECEIVABLES
2015 2014
US$ US$
Third parties
Advance for employees 15,101 14,873
Others 3,710 10,986
18,811 25,859
Related parties
Nagai Plastic Industry Co., Ltd. 389,240 391,672
389,240 391,672
Total 408,051 417,531
Receivable from Nagai Plastic Industry Co., Ltd., as at February 28, 2014 and 2013 comprise of:
Outstanding balance in relation to the reissuance of the treasury stock that acquired by Nagai
Plastic Industry Co., Ltd., amounting to US$389,240 (Note 17); and
7. INVENTORIES
2015 2014
US$ US$
Finished goods 397,344 309,729
Raw materials 168,464 196,785
Work in-progress 9,673 8,246
Total 575,481 514,760
Based on the review of the status of the individual inventory at the end of year, management of the
Company is of the opinion that the provision for decline in value of inventories is not required to be
provide, because there are no obsolete and slow moving inventories.
21
PT NAGAI PLASTIC INDONESIA
NOTES TO FINANCIAL STATEMENTS (Continued)
February 28, 2015 and 2014
8. ADVANCE PAYMENTS
2015 2014
US$ US$
Advance payments represent payments in advance to suppliers for the purchase of raw materials and
property, plant and equipment.
9. LOAN TO SHAREHOLDER
2015 2014
US$ US$
Related parties:
Nagai Plastic Industry Co., Ltd. 120,000 120,000
In 2013, the Company is willing to grant a loan facility to Nagai Plastic Industry Co., Ltd., a
shareholder of the Company, in the amount of US$120,000. Nagai Plastic Industry Co., Ltd., is charged
interest for the loan at 4.70% per annum.
2015 2014
US$ US$
22
PT NAGAI PLASTIC INDONESIA
NOTES TO FINANCIAL STATEMENTS (Continued)
February 28, 2015 and 2014
2015
Beginning Ending
balance Additions Deductions Reclassifications balance
US$ US$ US$ US$ US$
At cost:
Direct acquisition
Land 871,610 – – – 871,610
Buildings and improvements 4,781,925 – 122,567 – 4,659,358
Machinery and equipment 7,833,555 8,366 – – 7,841,921
Factory and office equipment,
furniture and fixtures 2,211,994 127,386 – – 2,339,380
Vehicles 68,580 753 – – 69,333
15,767,664 136,505 122,567 – 15,781,602
Construction in progress
Buildings − – – – –
− – – – –
Assets under finance lease
Machinery and equipment 684,956 – 49,583 – 635,373
Factory and office equipment,
furniture and fixtures 137,018 – – – 137,018
Vehicles 33,530 – – – 33,530
855,504 – 49,583 – 805,921
Total 16,623,168 136,505 172,150 – 16,587,523
Accumulated depreciation:
Direct acquisition
Buildings and improvements 1,527,094 210,660 91,927 – 1,645,827
Machinery and equipment 7,591,088 106,573 – – 7,697,661
Factory and office equipment,
furniture and fixtures 1,606,658 262,643 – – 1,869,301
Vehicles 29,239 13,802 – – 43,041
10,754,079 593,678 91,927 – 11,255,830
Assets under finance lease
Machinery and equipment 155,771 97,472 14,875 – 238,368
Factory and office equipment, –
furniture and fixtures 57,854 38,569 – 96,423
Vehicles 4,890 8,379 – – 13,269
218,515 144,420 14,875 – 348,060
Total 10,972,594 738,098 106,802 – 11,603,890
23
PT NAGAI PLASTIC INDONESIA
NOTES TO FINANCIAL STATEMENTS (Continued)
February 28, 2015 and 2014
2014
Beginning Ending
balance Additions Deductions Reclassifications balance
US$ US$ US$ US$ US$
At cost:
Direct acquisition
Land 871,610 − − − 871,610
Buildings and improvements 4,770,533 − − 11,392 4,781,925
Machinery and equipment 7,803,741 29,814 − − 7,833,555
Factory and office equipment,
furniture and fixtures 2,175,310 36,684 − − 2,211,994
Motor vehicles 26,986 41,594 − − 68,580
Accumulated depreciation:
Direct acquisition
Buildings and improvements 1,310,308 216,786 − − 1,527,094
Machinery and equipment 7,454,383 136,705 − − 7,591,088
Factory and office equipment,
furniture and fixtures 1,317,386 289,272 − − 1,606,658
Vehicles 15,552 13,687 − − 29,239
10,097,629 656,450 − − 10,754,079
Assets under finance lease
Machinery and equipment 51,924 103,847 − − 155,771
Factory and office equipment,
furniture and fixtures 19,284 38,570 − − 57,854
Vehicles − 4,890 − − 4,890
71,208 147,307 − − 218,515
Total 10,168,837 803,757 − − 10,972,594
24
PT NAGAI PLASTIC INDONESIA
NOTES TO FINANCIAL STATEMENTS (Continued)
February 28, 2015 and 2014
The Company has a land of 23,850 m 2 located in Delta Silicon, Cikarang. The land is a certificate of
land rights (HGB) No. 871 with a term of 23 years which will expire on September 24, 2025.
Management believes that there is no problem with the extension because the land was acquired legally
and is supported by sufficient evidence of ownership.
Portion of land, buildings, machineries and equipment of the Company were pledged as collateral for
bank loan (Note 15).
The assets under finance lease were pledged as collateral for the lease liabilities (Note 13).
The market value of land (23,850 m 2) based on the NJOP is Rp11,959,920,000 and the market value of
the building (3,303 m2) based on NJOP is Rp3,963,600,000.
Property, plant and equipment except land, were insured with insurance companies against fire, theft and
other risks with a sum insured of US$32,169.35 and US$12,838,630 for the year 2015 and 2014.
Management believes that the sum insurance is adequate to cover possible losses arising from fire, theft,
and other risks which may be experienced by the Company.
2015 2014
US$ US$
25
PT NAGAI PLASTIC INDONESIA
NOTES TO FINANCIAL STATEMENTS (Continued)
February 28, 2015 and 2014
2015 2014
US$ US$
In 2015, the Company entered into a direct lease agreement with PT Resona Indonesia Finance for the
vehicles. The leases agreement has a term of 36 months with effective interest rates per annum of
6.9898% in 2015. The obligation under finance leases were secured by the related leased assets
(Note 11).
In 2015, the Company entered into a sale and lease back agreement with PT Resona Indonesia Finance
for the plant and equipment. The leases agreement has a term of 36 months with effective interest rates
per annum of 6.9898 % in 2015. The obligation under finance leases were secured by the related leased
assets (Note 11).
2015 2014
US$ US$
Third parties :
Others 57,203 42,880
Related parties :
Royalty 527,478 34,190
Employees compensation 101,365 94,439
26
PT NAGAI PLASTIC INDONESIA
NOTES TO FINANCIAL STATEMENTS (Continued)
February 28, 2015 and 2014
2015 2014
US$ US$
a. Short-term loan
PT Bank Resona Perdania 1,695,000 1,700,000
b. Long-term loan
PT Bank Resona Perdania − 250,000
Less : Current portion of long term-bank loan − (250,000 )
On April 28, 2010, the Company obtained loans for working capital from PT Bank Resona Perdania
amounting US$1,400,000 and US$600,000, with the interest rate by COF + 1.75% per annum. This
loan will be due on June 30, 2014. This loan is secured by certain of machinery and equipment.
On September 16, 2012, the Company obtained loans for Working Capital from PT Bank Resona
Perdania amounted USD 700,000, with the interest rate by COLF + 3.50% per annum. This loan will be
due on September 2013 and was extended until March 16, 2014. This loan is secured by certain of
machinery and equipment.
On September 16, 2012, the Company obtained loans for Working Capital from PT Bank Resona
Perdania amounted USD 1,000,000, with the interest rate by COLF + 4% per annum. This loan will be
due on September 2013 and was extended until March 16, 2014. This loan is secured by certain
machinery and equipment.
On January 26, 2015, the Company obtained loans Working Capital from PT Bank Resona Perdania
amounted USD 700,000, with the interest rate by COLF + 3.50% per annum. This loan will be due on
January 2015 and was extended until May 29, 2015. This loan is secured by certain machinery and
equipment.
On January 26, 2015, the Company obtained loans for Working Capital from PT Bank Resona Perdania
amounted USD 1,000,000, with the interest rate by COLF + 4% per annum. This loan will be due on
January 2015 and was extended until May 29, 2015. This loan is secured by certain machinery and
equipment.
27
PT NAGAI PLASTIC INDONESIA
NOTES TO FINANCIAL STATEMENTS (Continued)
February 28, 2015 and 2014
In accordance with Law of the Republic of Indonesia No. 13/2003 relating to labor regulations, the
Company is required to provide post-employment benefits to its employees when their employment is
terminated or when they retire. These benefits are primarily based on years of service and the
employees’ compensation at termination or retirement.
The following table summarizes the obligation for post-employment benefits obligation recorded in the
financial statement positions, movement in the obligation, and expense recognized in the statements of
income during the years ended February 28, 2015 and 2014 :
2015 2014
US$ US$
b. The movement of net post employment benefits obligation in statements of financial position is as
follows :
2015 2014
US$ US$
2015 2014
US$ US$
28
PT NAGAI PLASTIC INDONESIA
NOTES TO FINANCIAL STATEMENTS (Continued)
February 28, 2015 and 2014
2015 2014
US$ US$
The principal assumptions used by the independent actuary to calculate the projected benefits obligation
were as follows :
2015 2014
Discount rate 7.5% per annum 8.5% per annum
Salary increment rate 9% per annum 9% per annum
Normal retirement age 55 years 55 years
Total employee 252 249
Actuary method Projected Unit Method Projected Unit Method
Pursuant to Notarial Deed No. 31 dated August 13, 2008 of Tahir Kamili S.H., M.H., MKn.,
the authorized capital of the Company amounting to US$5,600,000 (Rp13,580,000,000) consist of
56,000 shares with par value of US$100 (Rp242,500) per share. Issued and paid-up capital was 28,000
shares.
29
PT NAGAI PLASTIC INDONESIA
NOTES TO FINANCIAL STATEMENTS (Continued)
February 28, 2015 and 2014
On October 8, 2009, the Company has received approval from the Investment Coordinating Board
(BKPM) regarding plan to buy back all shares owned by Marubeni, with 2,630 shares.
The Company recorded the acquisition of its shares as treasury stock which will be held by the
Company for a maximum period of three years.
On October 13, 2009 the Company has acquired all the 2,630 shares at a total cost of US$ 389,240.
On September 28, 2012 the Company reissues the treasury stock and the stocks were acquired by Nagai
Plastic Industry Co., Ltd. amounting to US$ 389,248.
2015 2014
US$ US$
2015 2014
US$ US$
30
PT NAGAI PLASTIC INDONESIA
NOTES TO FINANCIAL STATEMENTS (Continued)
February 28, 2015 and 2014
2015 2014
US$ US$
2015 2014
US$ US$
31
PT NAGAI PLASTIC INDONESIA
NOTES TO FINANCIAL STATEMENTS (Continued)
February 28, 2015 and 2014
23. TAXATION
a. Prepaid taxes :
2015 2014
US$ US$
b. Taxes payable
2015 2014
US$ US$
32
PT NAGAI PLASTIC INDONESIA
NOTES TO FINANCIAL STATEMENTS (Continued)
February 28, 2015 and 2014
A reconciliation between profit before tax, as shown in the statements of comprehensive income
and estimated taxable profit which were calculated by the Company for the years ended
February 28, 2015 and 2014 is as follows :
2015 2014
US$ US$
121,435 131,185
Temporary differences:
Depreciation of property, plant and equipment (153,803 ) (114,186 )
Gain on sale of property plant and equipment −
Post-employment benefit obligation (466 ) (67,977 )
Difference in accounting record on payment
of leased payable (117,925 )
Depreciation of property plant and equipment under
finance lease 129,489 142,416
(24,780 ) (157,672 )
33
PT NAGAI PLASTIC INDONESIA
NOTES TO FINANCIAL STATEMENTS (Continued)
February 28, 2015 and 2014
The calculation of deferred tax assets and deferred tax liabilities with the tax rate 25% in 2015 and
2014 is as follows :
2015
Credited
(Charged) to
statement of
comprehensive
Adjustment income
US$ US$ US$ US$
Property, plant and equipment (129,698) (38,408) 38,450 (129,656)
Post-employment benefit obligation 100,446 18,033 116 118,595
Leased assets and lease payables (102,259) 42,136 (32,372) (92,495)
2014
Credited
(Charged) to
statement of
comprehensive
Adjustment income
US$ US$ US$ US$
Property, plant and equipment 4,309 (105,460) (28,547) (129,698)
Post-employment benefit obligation 117,440 – (16,994) 100,446
Leased assets and lease payables 17,802 (126,184) 6,123 (102,259)
34
PT NAGAI PLASTIC INDONESIA
NOTES TO FINANCIAL STATEMENTS (Continued)
February 28, 2015 and 2014
On June 21, 2010, the Company received a tax assessment letter No. 00064/206/08/052/10 on
underpayment of corporate income tax for fiscal year 2008 from Directorate General of Taxes
(DGT). The letter stated that the corporate income tax is underpayment amounting to US$167,025,
instead of an overpayment of US$105,103 as reported in annual income tax return (SPT). The
Company did not agree with the tax assessment and filed an objection letter to DGT on June 21,
2010. The Company has only paid amounting to US$4,330 and recorded as expense in the 2010
statement of comprehensive income. On June 24, 2011, the Company’s objection has rejected by
the tax office. On September 22, 2011, the Company submitted an appeal letter to the tax court for
its objection and paid amounting to US$162,695 as required in submission of the appeal letter. The
Company recorded the payment as claim for tax refund in its statement of financial position. On
March 18, 2013, the tax court issued the letter No. Put.44007/PP/M.IX/15/2013 stating that the tax
court agreed with the Company’s objection. As at July 19, 2013, the Company has received the
refund of the overpayment of the 2008’s corporate income tax.
On July 2, 2012, the Company received tax assessment letter No. 00017/206/10/052/12 from DGT,
which mentioned that the Company has an underpayment of corporate income tax for fiscal year
2010 amounting to US$68,426, instead of an overpayment of tax of US$114,795 as reported in
annual income tax return. The Company did not agree with the tax assessment, which was
corrected the royalty expenses, as the Company believes that the royalty is deductible expenses for
the tax purposes. On September 28, 2012, the Company filed an objection letter to DGT on this
matter, and paid in advance amounting to US$68,426, as required in submission of the tax
objection. The Company recorded the payment as additional claim for the tax refund in its
statement of financial position. As at reporting data the Company has not received any result on its
objection from DGT.
On June 27, 2013, the Company received tax assessment letter No. 00110/406/11/052/13 from
DGT, which mentioned that the Company has an underpayment of corporate income tax for fiscal
year 2011 amounting to US$33,746.32, instead of an overpayment of tax of US$163,746.32 as
reported in annual income tax return. The Company did not agree with the tax assessment, which
was corrected the royalty expenses, as the Company believes that the royalty is deductible
expenses for the tax purposes. On September 2013, the Company filed an objection letter to DGT
on this matter, and paid in advance amounting to US$33,746.32, as required in submission of the
tax objection. The Company recorded the payment as additional claim for the tax refund in its
statement of financial position. As at reporting data, the Company has not received any result on its
objection from DGT.
f. Administration
Under the taxation laws of Indonesia, the Company submits tax return on the basis of self
assessment. The tax authorities may asses or amend taxes within 5 years from the date the tax
became due.
35
PT NAGAI PLASTIC INDONESIA
NOTES TO FINANCIAL STATEMENTS (Continued)
February 28, 2015 and 2014
The Company has entered into a marketing and technical cooperation agreement with Nagai Plastic
Industry Co., Ltd., Japan (stockholder), whereby the Company has to pay royalty amounting to 4% of
production sales, with maximum amount of US$40,000/month and minimum amount of
US$20,000/month.
This agreement has been amended several times, the latest was made on February 29, 2012, whereby the
Company shall pay royalty at 3% from 97.85% of total injection product sales of each month between
September 2012 and March 2012; and from 100% of total injection product sales of each month since
October 2012. This agreement is valid for one year and shall be extended for successive period of one
year.
a. Nature of relationships
In conducting its business, the Company entered into certain business and financial transactions
with its related parties. These transactions are normally made at normal prices and conditions as if
they were done with non - related parties. These transactions are as follows :
1. Royalty were charged by Nagai Plastic Industry Co., Ltd., for the years ended February 2015
and 2014 amounted to US$527,478 and US$478,137, respectively. At financial statement
dates, the outstanding payables of this transaction as at February 2015 and 2014, were
presented under the accrued expense, in the amount of US$527,478 and US$34,190,
respectively (Note 14).
2. In 2013, the Company is willing to grant a loan facility to Nagai Plastic Industry Co., Ltd., a
shareholder of the Company, in the amount of US$120,000. Nagai Plastic Industry Co., Ltd.,
is charged interest for the loan at 4.70% per annum. As at February 28, 2014, the outstanding
balance of shareholder’s loan amounting to US$120,000 and interest charged by the Company
amounted to US$2,432 (Note 9).
The Company is exposed to a variety of financial risks in relation to financial instruments. The main
types of risks are market risks, credit risks, liquidity risks and business risk.
36
PT NAGAI PLASTIC INDONESIA
NOTES TO FINANCIAL STATEMENTS (Continued)
February 28, 2015 and 2014
The Company does not actively engage in the trading of financial assets for speculative purposes nor
does it write options. The most significant financial risks to which the Company is exposed are
described below:
a. Market risk
The Company is exposed to markets risk through its use of financial instruments and specifically to
currency risk and interest risk which result from both of its operating and investing activities, and
financing activities.
b. Credit risks
The Company places their bank balances with credit worthy financial institutions.
Credit risk refers to the risk that a counterparty fails to discharge an obligation to the Company
resulting in a loss.
The Company’s credit risk is primarily attributable to trade accounts receivable. The Company’s
policies are to deal only with respected and credit worthy third parties. The Company’s exposure and
counterparties are continuously monitored. The balance and aging of the trade receivables are within
the credit limit and terms of credit. Provision is created for any impairment in the value of receivable
with proper action to collect the payment and reduce the risk.
The carrying amount of financial assets recorded in the financial statements, net of any allowance
for impairment represents the Company’s exposure to credit risk.
c. Liquidity risks
The Company manages its liquidity risk by maintaining adequate reserves, banking facility and
reserve borrowing facilities by continuously monitoring forecast and actual cash flows and matching
the maturity profiles of financial assets and liabilities.
The Company maintains sufficient funds to finance its ongoing working capital requirements
d. Business risk
During the years 2015 and 2014, total sales to PT Indonesia Epson Industry amounted to 43.62%
and 33.18%. The high dependence on sales to PT Indonesia Epson Industry pose a risk to the
Company’s business. However, to address business risks, the Company took steps in addition to
permanent business relationships with PT Indonesia Epson Industry are looking for new customers
in the area of part (plastic) automotive. Sales of these parts in 2015 and 2014 reached 18,02% and
18.62%, respectively.
37
PT NAGAI PLASTIC INDONESIA
NOTES TO FINANCIAL STATEMENTS (Continued)
February 28, 2015 and 2014
New standards, revised and interpretations issued but not yet effective for the financial year beginning
January 1, 2013 are as follows:
ISAK 27, 28, and 29 will become effective for the financial year beginning January 1, 2014 while the
other new and revised standards will become effective for the financial year beginning January 1, 2015.
The Company is still evaluating the possible impact on the issuance of this financial accounting
standard.
38