NEWS & EVENTS

 

Changes in accounting policies for SMN

Jakarta, April 18, 2018 | Source: Company

Several changes in accounting and tax policies have occurred in late 2017 and 2018. The accounting policy changes have an impact on the financial statements but do not impact cash flow.

DEPRECIATION

In 2017 the Financial Services Industry regulator ("OJK") in Indonesia revised policy on the accounting treatment for tower companies. Previously tower companies in Indonesia accounted for tower portfolios as investment property with no depreciation in accordance with PSAK 13. The revised policy requires tower companies to account for tower portfolios using PSAK 16 as the accounting standard. PSAK 16 requires that towers be accounted for as fixed assets and depreciated accordingly. SMN adapted the revised standards effective as 1 January 2017.

As part of the change in accounting policies, for the year 2017 SMN revised the Company's depreciation standards to allow for towers to be depreciated over a 30 year period with a 10% residual value of the towers. The towers are valued at cost with the residual value based on the SMN's experience with the value of scrap metal. The standards adopted by SMN are in line with Indonesian GAAP and SMN believes reflect a fairly conservative accounting policy.

The depreciation policy revision does not apply to 2016 results which are based on a 20 year depreciation schedule with no residual value. The 2017 revisions in depreciable life and the 2016 treatment under a different depreciable life are in line with Indonesian GAAP standards.

The change from PSAK 13 to PSAK 16 impacted SMN's depreciation, net income and retained earnings results for 2017. There was no impact on cash flow.

TAXATION

In September 2017, the Indonesian Tax authorities revised policy on taxation for tower companies. SMN has adopted the revised policy so that revenue generated from new and renewed tower leases will be taxed at a final 10% rate on actual revenue for leases that were signed after January 2, 2018. Leases that were signed prior to that date will continue to be taxed on a non-final basis in line with historical corporate income tax policy.

Contact:
investor.relations@ptsmn.co.id