Business Context and Reporting Period
This Form 6-K filing by Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia Tbk ("TELKOM") is dated November 6, 2003. The filing serves as a press release update regarding the ongoing audit of the company's 2002 financial statements conducted by PricewaterhouseCoopers ("PwC"). The audit, originally expected to conclude by the end of October 2003, remains incomplete.
Key Financial Metrics and Adjustments
The filing does not provide finalized revenue, profit, or cash flow figures for the 2002 period. Instead, it outlines anticipated adjustments to previously issued financial statements for 2002, 2001, and 2000. TELKOM expects the cumulative effect of these adjustments to decrease consolidated net income after tax for 2002 by between 4% and 20%. Shareholders' equity for 2002 is expected to decrease by between 3% and 5%.
Specific items driving these adjustments include:
- Employee Benefits: New provisions for long service awards, housing, and transport allowances not previously recorded.
- Post-Retirement Benefits: Reevaluation of healthcare liabilities for pensioners, requiring actuarial analysis.
- Deferred Tax: Potential adjustments to prior deferred tax calculations.
- Consolidation: Full consolidation of Pramindo Ikat Nusantara ("Pramindo") despite owning less than 50%, due to control and economic interest.
- AriaWest Dispute: Reversal of a previously recorded provision of Rp 512 billion following the settlement of the dispute.
Material Changes and Audit Status
The primary material change is the delay in the audit completion and the necessity to restate prior financial periods. The delay is attributed to ongoing discussions between TELKOM, PwC, and Deloitte Touche Tohmatsu (the auditor for 2000 and 2001) regarding the extent of adjustments required for 2001 and 2000 statements. TELKOM cannot currently predict the cumulative effect of adjustments on the 2001 and 2000 financial statements.
Outlook, Risks, and Contingencies
TELKOM expects to provide additional information on the progress of discussions within 30 days. A significant risk identified is the potential inability to reach an agreement with Deloitte regarding the 2001 and 2000 statements. If no agreement is reached, a reaudit of those years would be required, estimated to take 3 to 4 months. This would substantially delay the filing of the 2002 annual report on Form 20-F. The filing includes standard forward-looking statement disclaimers regarding the uncertainty of audit completion and the final quantification of adjustments.
Investor Verification Checklist
- Verify the final quantified impact of the 4% to 20% net income reduction once the audit is complete.
- Monitor the outcome of discussions between TELKOM, PwC, and Deloitte regarding 2001 and 2000 restatements.
- Confirm whether a reaudit of 2001 and 2000 is required and the resulting timeline for the Form 20-F filing.
- Review the final actuarial assumptions used for post-retirement healthcare liabilities.
- Check for any additional adjustments beyond the four principal items listed in the press release.