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Risk Management

Business risk exposure

The business of PT Duta Intidaya Tbk (the “Company”) has certain operational risks, which are beyond the Company’s control. The Company strives to continuously keep these risks under control by, among others:

  1. operating under the guidance of standard operating procedures throughout the Company’s operations;
  2. ensuring that robust internal controls are operating effectively to safeguard the Company’s operations and assets; and
  3. requiring all employees to sign and adhere to an integrity pact.

Financial risk exposure

The Company’s activities expose it to a variety of financial risks such as foreign exchange risk, interest rate risk, credit risk and liquidity risk. The Company’s overall risk management program is designed to minimise the impact of the unpredictability of financial markets and potential adverse effects on the Company’s financial performance.

  1. Foreign exchange risk

    The Company is exposed to foreign exchange risk arising mainly from the purchase of merchandise and operating expenses. The Company monitors foreign exchanges fluctuations and may hedge the exposure on the foreign currency fluctuation for known and committed transactions.

  2. Interest rate risk

    The Company is exposed to interest rate risk through the impact of rate changes on interest-bearing liabilities. Interest rates for borrowings can fluctuate over the borrowing period. The treasury policy sets the guideline that the interest rate exposure shall be identified and minimised/neutralised promptly.

    Management is of the view that the exposure to the cash flow interest rate risk is minimal and therefore, no measures have been taken as yet.

  3. Credit risk

    The Company is exposed to credit risk primarily from cash in bank and credit exposures given to vendors in connection with claimable sales discount and incentives and revenue from promotional activities. The Company manages the credit risk by placing its deposit in highly reputable banks and by monitoring the receivable aging and entering into transactions with reputable vendors.

    The Company is exposed to credit risk primarily from cash in bank and credit exposures given to vendors in connection with claimable sales discount and incentives and revenue from promotional activities. The Company manages the credit risk by placing its deposit in highly reputable banks and by monitoring the receivable aging and entering into transactions with reputable vendors.

    The Company believes the credit risk from credit cards receivables is not significant as they represent receivables from reputable bank and are generally settled within 2 (two) or 3 (three) days from the transaction date.

    Other receivables represent receivables from third parties that do not have history of default and related party.

    The maximum exposure to credit risk at the reporting date is the carrying value of each financial asset.

  4. Liquidity risk

    The Company manages its liquidity risk by monitoring the projected and actual cash flows regularly. The Company believes that the cash collection cycle enables it to meet its obligations when they fall due.

Capital risk exposure

The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders.

In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders or issue new shares.

The Company periodically reviews and manages its capital structure to ensure optimal capital structure and shareholder returns, taking into consideration the future capital requirements and capital efficiency of the Company, prevailing and projected profitability, projected operating cash flows, projected capital expenditures and projected strategic investment opportunities.