Guidelines for Business Valuation and Presentation of Business Valuation Reports in the Capital Market

To:
Business Valuers
At your location.

COPY
CIRCULAR LETTER OF THE FINANCIAL SERVICES AUTHORITY REPUBLIC OF INDONESIA NUMBER 17 /SEOJK.04/2020

CONCERNING
GUIDELINES FOR BUSINESS VALUATION AND PRESENTATION OF BUSINESS VALUATION REPORTS IN THE CAPITAL MARKET

In carrying out the mandate of the provisions of Article 92 paragraph (1), Article 96 paragraph (1), Article 98 paragraph (1), and Article 100 paragraph (2) of Financial Services Authority Regulation Number 35/POJK.04/2020 concerning Business Valuation and Presentation of Business Valuation Reports in the Capital Market (State Gazette of the Republic of Indonesia Year 2020 Number 161, Additional State Gazette of the Republic of Indonesia Number 6534), it is necessary to regulate provisions regarding guidelines for business valuation and presentation of business valuation reports in the Capital Market, in this Financial Services Authority Circular Letter as follows:

I. GENERAL PROVISIONS

In this Financial Services Authority Circular Letter, the following terms are meant:

Valuation is the work process to provide a written opinion on the economic value of a valuation object.
Valuer is an individual who, with their expertise, carries out Valuation activities in the capital market.
Business Valuer is a Valuer who carries out business valuation activities as referred to in the Financial Services Authority Regulation concerning Valuers who carry out activities in the capital market.
Property Valuer is a Valuer who carries out property Valuation activities as referred to in the Financial Services Authority Regulation concerning Valuers who carry out activities in the capital market.
Business Valuation is the work process to provide a written opinion on the Business Valuation object as referred to in the Financial Services Authority Regulation concerning Valuers who carry out activities in the capital market.
Professional Valuation Assignment is an assignment received by the Valuer from the assignor to carry out Valuation on an object, Valuation purpose, and a specific date on which the Valuer bases their opinion, which is presented in the valuation report.
Value is the estimated price desired by the seller and/or buyer for a good or service and is the amount of economic benefit based on market value that will be obtained from the Valuation object on the Valuation Date.
Valuation Date is the date on which the Value, Valuation result, or calculation of economic benefit is stated.
Valuation Basis is an explanation and/or definition regarding the type of Value being studied based on certain criteria.
Value Premise is the Value assumption related to a transaction condition that can be used on the Valuation object.
Book Value is:
a. the result of capitalization of the acquisition cost of assets, minus accumulated depreciation, depletion, amortization, or impairment as recorded in the financial statements; or b. the difference between total assets minus total liabilities of the company as recorded in the financial statements.
Adjusted Book Value is the Book Value resulting after adjustments to the Value of one or more assets or liabilities.
Net Asset Value is the total market value of assets minus the total market value of liabilities.
Market Value is the estimated amount of money that can be obtained from the result of exchanging an asset or liability on the Valuation Date, between a buyer interested in buying and a seller interested in selling, in an arm's length transaction, which is marketed properly, where both parties act based on their understanding, caution, and without coercion.
Assumption is something considered to happen, including facts, conditions, or circumstances that may affect the Valuation object or valuation approach and its reasonableness, which have been analyzed by the Business Valuer as part of the Valuation process.
Valuation Approach is a way to estimate Value using one or more valuation methods.
Asset Approach is a Valuation Approach based on the audited historical financial statements of the Valuation object, by adjusting all assets and liabilities to Market Value in accordance with the Value Premise used in the Business Valuation.
Market Approach is a Valuation Approach by comparing the Valuation object with other comparable and similar objects that have a selling price.
Valuation Method is a specific way or series of ways to carry out Valuation.
Discounted Future Income Method (Multi Period of Income Discounting) is a Valuation Method used to determine the present Value of income to be received in the future for the Valuation object, with a discount rate.
Capitalization of Income Method is a Valuation Method based on an income considered to represent the future capability of a company or business interest being valued, divided by a capitalization rate or multiplied by a capitalization factor, thus becoming an indication of the Value of the company or business interest.
Business Valuation Report is a written report made by the Business Valuer containing the Business Valuer's opinion on the Valuation object and presenting information about the Valuation process.
Business Valuation Report Date is the date the Business Valuation Report is signed by the Business Valuer.
Expert is a person who has expertise and qualifications in a specific field outside the scope of Valuation activities and does not work at a public valuation firm.
Discount for Lack of Control is a specific amount or percentage that is a reduction from the Value of an equity as a reflection of the lack of control level over the Valuation object.
Discount for Lack of Marketabilities is a specific amount or percentage that is a reduction

from the Value of an equity as a reflection of the lack of liquidity of the Valuation object.
27. Business Interest is ownership in a company including participation in a company, securities, other financial assets, and intangible assets.
28. Capitalization Factor is all types of ratios used to convert income into a Value.
29. Going Concern is:
a. a condition reflecting a business that is operating or under construction; or b. a premise in Valuation, where the Business Valuer assumes that a company will continue its operations continuously.
30. Capitalization is:
a. the conversion of net cash flow or other net income, whether actual or estimated, over a certain period equivalent to the Value of assets on a specific date; or b. the recognition of a capital expenditure.
31. Premium for Control is a specific amount or percentage that is an addition to the Value of an equity as a reflection of the control level over the Valuation object.
32. Investment Capital is the amount of long-term debt and equity in a company.
33. Capitalization Rate is the divisor amount used to convert income into Value.
34. Rate of Return is the amount of profit or loss and/or change in Value realized or expected from an investment expressed as a percentage.
35. Discount Rate is a Rate of Return to convert Future Value to Present Value reflecting the time value of money and uncertainty regarding the realization of economic income.
36. Net Cash Flow is the amount of cash that:
a. is available after meeting cash needs for operational activities; b. is cash flow available to capital providers consisting of debt and equity; and
c. is free from obligations to maintain current operations and to anticipate company growth.
37. Gross Cash Flow is net profit after tax, plus non-cash transactions such as depreciation and/or impairment.
38. Terminal Value is the Value of the sum of cash flows for the period after the fixed time period, where the applied cash flows can use an equity or Investment Capital model.
39. Fairness Opinion is a statement given by the Business Valuer to state that a transaction to be carried out is fair or unfair.
40. Fairness Opinion on Loan Transactions and/or Guarantees is a statement given by the Business Valuer to state that loan transactions and/or guarantees are fair or unfair.
41. Business Feasibility Study is a Professional Valuation Assignment given by the Business Valuer in the form of an opinion to state the feasibility of a business or project.

II. TERMINAL VALUE

To carry out the Valuation of a business with a Going Concern premise where there is a projection for a fixed time period and an eternal time period, the Business Valuer needs to calculate the Terminal Value.

Terminal Value estimation is done in applying the discounted cash flow method with 2 (two) periods of financial statement projections, namely the fixed time period and the eternal time period.
The methods used to estimate Terminal Value are:
a. Residual Value
Residual value is used when the Valuation object has a specific duration.
1. In calculating the residual value of a Valuation object with a specific duration using the Investment Capital model, the Terminal Value is obtained by estimating the residual value of the Investment Capital, which is fixed assets plus the estimated amount that can be realized from net working capital minus the costs to be incurred at the end of the specific period.
2. In calculating the residual value of a Valuation object with a specific duration using the equity model, the Terminal Value is obtained by subtracting the amount of liabilities at the end of a specific period from the estimated residual value of the Investment Capital.
3. In calculating the residual value of a Valuation object with a specific duration consisting of fixed assets, the Business Valuer must refer to the results of property valuation.
4. The Business Valuer must explain and disclose the Assumptions used to estimate the residual value of the Valuation object in the valuation report.
  b. Capitalization of Income
5. The Capitalization of Income Method is used when the entity that is the Valuation object has an eternal or undeterminable duration (such as for certain intangible assets), then the Terminal Value is estimated by capitalizing the eternal period cash flow, i.e., the cash flow of one period after the fixed period, with the terminal capitalization rate.
6. The Capitalization of Income Method can be used for an entity or intangible asset that is the Valuation object considered to be in a constant growth stage.
7. Cash flow for the eternal period is the periodic cash flow representing the entity or intangible asset that is the Valuation object in one business cycle.
8. The terminal capitalization rate is obtained by subtracting the discount rate used in the Valuation from a certain growth rate assumed to be constant, where the growth rate can be positive, negative, or zero.
9. The growth rate for the eternal period cannot exceed the long-term economic or industry growth rate where the company operates, and the Business Valuer must choose a lower long-term growth rate.
10. The Business Valuer must explain and disclose the Assumptions used for eternal period growth in the valuation report of intangible assets, considering among others:
  a) limitations of the company's operations; b) use of currency in projections; and c) preparation of financial projections with real value Assumptions without considering inflation or nominal value.

III. ISSUANCE OF FAIRNESS OPINION

In the event that the Business Valuer carries out a Professional Valuation Assignment in the form of issuing a Fairness Opinion, the Business Valuer must meet the following provisions:

Fairness Opinion is given after the Business Valuer carries out an analysis on:
a. the Value of the transacted object; b. the financial impact of the transaction to be carried out on shareholders' interests; and
c. business considerations used by company management regarding the transaction plan to be carried out on shareholders' interests;
Fairness Opinion must be given for the entire transaction plan and analysis elements of the transaction plan;
in carrying out the analysis as referred to in item 1, the Business Valuer must carry out at least the following:
a. transaction analysis; b. qualitative and quantitative analysis of the transaction plan;
c. analysis of the fairness of the transaction value; and
d. analysis of other relevant factors;
transaction analysis as referred to in item 3 letter a must at least include the following:
a. identification and relationship between transacting parties; b. agreements and terms agreed upon in the transaction; and
c. assessment of the risks and benefits of the transaction to be carried out;
qualitative analysis as referred to in item 3 letter b must at least include the following:
a. company history and nature of business activities; b. industry and environment analysis;
c. operational and company prospect analysis;
d. reasons for carrying out the transaction; and e. qualitative benefits and losses of the transaction to be carried out;
quantitative analysis as referred to in item 3 letter b must at least include the following:
a. assessment of revenue potential, assets, liabilities, and company financial conditions, including:
1) assessment of historical performance;
2) cash flow assessment;
3) assessment of financial projections obtained from the assignor's management;
4) financial ratio analysis; and
5) analysis of financial statements before the transaction and proforma financial statements after the transaction is carried out;
b. carrying out incremental analysis to measure the added value of the transaction by considering at least the following:
1) contribution of added value to the company as a result of the transaction to be carried out, including its impact on the company's financial projections;
2) relevant costs or income;
3) relevant non-financial information;
4) company decision-making procedures in determining the transaction plan and value by considering other alternatives; and
5) other material matters that can provide assurance to the Business Valuer in giving an opinion on the fairness of the transaction;
c. carrying out sensitivity analysis to measure the benefits and losses of the transaction to be carried out, if necessary;
analysis of the fairness of the transaction value as referred to in item 3 letter c must at least include the following:
a. comparison between the planned transaction value and the result of the Valuation of the transaction to be carried out; b. analysis to ensure that the planned transaction value provides added value from the transaction to be carried out; and
c. Analysis of the fairness of the transaction value is done to ensure that the planned transaction value is within the range of Values obtained from the Valuation results.

IV. FAIRNESS OPINION ON LOAN TRANSACTIONS AND/OR GUARANTEES

Fairness Opinion on Loan Transactions and/or Guarantees including mortgaging assets and/or providing company guarantees applies the following provisions:

Fairness Opinion on Loan Transactions and/or Guarantees must be based on the results of evaluation of the transaction object;
Fairness Opinion on Loan Transactions and/or Guarantees must be given for the entire loan transaction and/or guarantee plan and analysis elements of the transaction plan;
the issuance of Fairness Opinion on Loan Transactions and/or Guarantees must consider the following:
a. the issuance of Fairness Opinion on Loan Transactions and/or Guarantees is given after the Business Valuer carries out an analysis on:
1) the amount of funds from the transaction object;
2) the financial impact of the loan transaction and/or guarantee on the company's interests; and
3) business considerations used by company management regarding the loan transaction and/or guarantee on shareholders' interests;
b. in carrying out the analysis as referred to in letter a, the Business Valuer must consider the following:
1) analysis of the impact of the loan transaction and/or guarantee on the company's finances;
2) identification and relationship between parties in the event of a loan transaction and/or guarantee;
3) analysis of agreements and terms agreed upon by parties in the loan transaction and/or guarantee;
4) analysis of the liquidity of the loan transaction and/or guarantee;
5) analysis of the benefits and risks of the loan transaction and/or guarantee;
6) qualitative analysis of the loan transaction and/or guarantee;
7) quantitative analysis of the loan transaction and/or guarantee; and
8) analysis of the feasibility of the fund usage plan for the loan transaction and/or guarantee, including:
a) investment feasibility analysis; b) debt repayment feasibility analysis; and c) analysis of other relevant factors;
c. qualitative analysis as referred to in item b number 6) must consider at least the following:
1) company history, i.e., history of loan transactions and/or guarantees and nature of business activities;
2) industry and business analysis;
3) operational and company prospect analysis;
4) analysis of management's reasons and background for carrying out the loan transaction and/or guarantee;
5) qualitative benefits and losses of the loan transaction and/or guarantee;
6) analysis of the impact of leverage on the company's finances in the future, compared to similar and comparable industries;
7) analysis of the impact of liquidity on the company's finances in the future to ensure that loans can be repaid at maturity; and
8) analysis of the financial impact on the company if the project financed by the funds from the loan transaction and/or guarantee fails;
d. quantitative analysis as referred to in item b number 7) must consider at least the following:
1) assessment of revenue potential, assets, liabilities, and company financial conditions, including:
a) assessment of historical performance; b) assessment of financial projections; c) financial ratio analysis; d) financial analysis both before and after the loan transaction and/or guarantee; e) analysis of the ability of the company or guarantee recipient to repay the loan transaction and/or guarantee until maturity; and f) analysis of cash management and financial covenants of the loan transaction;
2) analysis of the yield of the loan transaction against similar and comparable debt-like securities with the same rating or 1 (one) notch above or below, if the loan transaction is in the form of securities;
3) carrying out incremental analysis to measure the added value of the loan transaction by considering at least the following:
a) contribution of added value to the company as a result of the loan transaction, including its impact on the company's financial projections; b) relevant costs or income; and c) relevant non-financial information; and
4) carrying out sensitivity analysis to measure the benefits and losses of the loan transaction and/or guarantee, if necessary; and
e. analysis of guarantees related to the loan transaction and/or guarantee, with the provision that in the event the guarantee provided is shares in a subsidiary, the shares of that subsidiary must be Valued with the following provisions:
1) The Valuation Date on the Valuation of subsidiary shares must be the same as the Valuation Date of the Fairness Opinion;
2) in the event the Valuation of subsidiary shares refers to interim financial statements, financial statements that have been reviewed by a public accountant registered with the Financial Services Authority can be used;
3) in the event the Valuation of subsidiary shares refers to the results of property valuation, the property valuation results used as a reference are the property valuation results issued by the Property Valuer; and
4) the property valuation results used as a reference must be attached to the valuation report of the subsidiary shares.

V. BUSINESS FEASIBILITY STUDY

In the event that the Business Valuer carries out a Professional Valuation Assignment in the form of a Business Feasibility Study, the Business Valuer must meet the following provisions:

the opinion given by the Business Valuer in carrying out a Professional Valuation Assignment in the form of a Business Feasibility Study is to state the feasibility of a business or project;
in the event the Business Valuer does not have expertise in the property field, then a Business Feasibility Study requiring property Valuation must refer to the opinion results of the Property Valuer;
the opinion as referred to in item 1 is given after the Business Valuer carries out an analysis on:
a. market feasibility; b. technical feasibility;
c. business model feasibility;
d. management model feasibility; and e. financial feasibility;
in carrying out an analysis of market feasibility as referred to in item 3 letter a, the Business Valuer must consider:
a. market conditions, such as market share, sustainability, market potential, targets, and potential market value; b. business competitors; and
c. marketing strategy;
in carrying out an analysis of technical feasibility as referred to in item 3 letter b, the Business Valuer must consider:
a. capacity; b. availability and quality of resources, including raw materials, workers, and professional experts; and
c. production process;
in carrying out an analysis of business model feasibility as referred to in item 3 letter c, the Business Valuer must consider:
a. competitive advantage due to the uniqueness of the business model; b. competitors' ability to imitate products; and
c. ability to create value;
in carrying out an analysis of management model feasibility as referred to in item 3 letter d, the Business Valuer must consider:
a. labor availability; b. intellectual property management;
c. risk management;

d. management capacity and capability; and e. alignment of organizational structure and management; and
8. in conducting an analysis of management's financial feasibility as referred to in item 3 letter e, the Business Valuer must pay attention to:
a. start-up costs; b. working capital;
c. financing sources;
d. operational costs; e. raw material costs; f. financial statement projections; g. break-even analysis; h. overall profitability analysis; and
i. overall return on investment rate.

VI. BUSINESS VALUATION REPORT

General Provisions
a. A Business Valuer conducting a Professional Valuation Assignment must prepare a Business Valuation Report. b. The Business Valuation Report as referred to in letter a consists of:

a report presenting the Valuation Conclusion regarding the Valuation Object;
a Fairness Opinion Report presenting a conclusion on the fairness of a transaction;
a Fairness Opinion Report presenting a conclusion on the fairness of a loan and/or guarantee transaction;
a Business Feasibility Study Report presenting a conclusion on the feasibility of a business or project; or
other Business Valuation Reports.
c. The Business Valuation Report as referred to in letter b must be in the form of a complete report (narrative report or long form report) and a summary report (short form report).
d. The Business Valuer must use the definitions and terms as referred to in Item I. e. The summary report (short form report) may be presented separately but constitutes a single unit with the Business Valuation Report.

Content of the Report Presenting the Valuation Conclusion
The report presenting the Valuation Conclusion regarding the Valuation Object as referred to in item 1 letter b item 1) in the form of a complete report (narrative report or long form report) must contain at least the following:
a. cover letter; b. table of contents;
c. identity of the client, including name, business field, address, telephone number, facsimile, and email;
d. purpose and objective of the valuation; e. definitions and terms used in the valuation; f. Valuation Date; g. Business Valuation Report Date; h. Value Premise and Value Basis used;
i. Assumptions and limiting conditions as well as hypothetical scenarios that directly affect the valuation;
j. data and information, with the provision that the Business Valuer must identify and disclose data and information, whether known or reasonably knowable, obtained from within or from outside the client's party, which must include at least:

results of inspection;
results of examination of legal documents relevant to the Valuation Object;
explanation regarding the level of ownership and nature of control of the Valuation Object;
explanation regarding the liquidity level of the market of the Valuation Object;
description of Experts and the results of the Experts' work in the event the Business Valuer bases the Valuation on the Experts' work results;
description of the Property Valuer and the Property Valuation results in the event the Business Valuer bases the valuation on the Property Valuation results;
explanation regarding material events occurring after the Valuation Date;
description of relevant regulatory provisions, if there are relevant regulatory provisions concerning the Valuation;
results of identification of non-operating assets, non-operating liabilities, and excess or deficient operating assets (excess or deficient) related to and their impact on the valuation;
information regarding the identity and position of interviewed parties and their relationship with the Valuation Object;
financial information;
tax information;
industry data, market data, economic data, and other empirical information supporting the valuation;
documents and information sources provided by or related to the entity;
relevant non-financial information regarding the Valuation Object, at least including:
a) nature, background, and history of the company; b) production facilities, if there are production facilities; c) organizational structure; d) management, including directors, commissioners, and key employees; e) type of equity and attached rights; f) products and/or services produced; g) economic background; h) geographic market; i) industry market, if there is an industry market; j) key suppliers and customers, if there are key suppliers and customers; k) business competition; l) business risks; and m) company strategy and future plans (business plan); and
other additional information required by users of the Business Valuation Report beyond what has been described;
k. Adjustments to financial statement data, with the provision that the Business Valuer must describe the adjustments to financial statement data and the considerations underlying each adjustment to the financial statement data;
l. analysis of financial statements and other financial information, with the provision that the Business Valuer must disclose descriptions of the results of analysis regarding:
historical annual or interim financial statements including key ratios, and statistical data;
prospective financial information which may be in the form of budgets, estimates, and/or projections;
comparable financial statement comparisons (common size) for the appropriate period;
comparable industry financial information comparisons (common size) for the appropriate period;
tax information;
information regarding compensation for shareholders;
information regarding insurance covered by the company for key employees, if there is insurance covered by the company for key employees; and
management's analysis and discussion regarding:
a) profits and losses from business contracts; b) assets and liabilities outside the statement of financial position (contingencies); c) results of product or service sales by the company in previous periods, if there are results of product or service sales by the company in previous periods; d) comparison of current performance with historical performance of the Valuation Object; and e) comparison of the Valuation Object's performance with the relevant industry trend; m. consideration of Valuation Approaches and Valuation Methods, with the provision that the Business Valuer must state that the Business Valuer has considered the Valuation Approaches and Valuation Methods as referred to in the Financial Services Authority Regulation regarding valuation and presentation of business valuation reports in the capital market; n. use of Valuation Approaches and Valuation Methods, with the provision that the Business Valuer must explain and disclose the considerations for using the Valuation Approaches and Valuation Methods and the description of their application; o. calculation of the Indicated Value, with the provision that the Business Valuer must disclose the calculation process to generate the Indicated Value; p. use of discounts and premiums, with the provision that the Business Valuer must:
disclose the discounts and premiums used, such as Discount for Lack of Control and/or Discount for Lack of Marketabilities;
describe the factors considered in determining the amount or percentage of discounts and premiums used; and
describe the Value after discounts and premiums are applied.
q. reconciliation of Value estimates and Valuation Conclusion
The Business Valuer must present a reconciliation of various Value estimates obtained from the Valuation Approaches and Valuation Methods used and disclose the reconciliation considerations underlying the Valuation Conclusion;
description of the Valuation Conclusion, whether in the form of a single amount or a range;
r. Business Valuer's statement including:
statement regarding the independence of the Business Valuer;
statement that the Business Valuer is responsible for the Business Valuation Report;
statement that the Professional Valuation Assignment has been conducted on the Valuation Object on the Valuation Date;
statement that the analysis has been conducted for the purpose as disclosed in the Business Valuation Report;
statement that the Professional Valuation Assignment has been carried out in accordance with regulatory provisions;
statement that the estimated Value generated in the Professional Valuation Assignment has been presented as the Valuation Conclusion;
statement that the scope of work and data analyzed have been disclosed;
statement that the Valuation Conclusion is consistent with the Assumptions and limiting conditions; and
statement that the economic and industry data in the Business Valuation Report are obtained from various sources that the Business Valuer believes are accountable.
s. information regarding the qualifications and expertise of the Business Valuer; t. signature of the Business Valuer stating the name, place, registered certificate number, and reporting date; and u. Appendices required in conducting the analysis and supporting the Valuation results in the Business Valuation Report;

Fairness Opinion Report
The Fairness Opinion Report as referred to in item 1 letter b item 2) in the form of a complete report must contain at least:
a. number and Business Valuation Report Date; b. Valuation Date;
c. identity of the client;
d. purpose and objective of providing the Fairness Opinion; e. description regarding the existence or non-existence of conflicts of interest regarding the transaction to be conducted; f. Business Valuer's statement including:

statement regarding the independence of the Business Valuer;
statement that the calculations and analysis in providing the Fairness Opinion have been conducted correctly; and
statement that the Business Valuer is responsible for the Fairness Opinion Report;
g. explanation regarding the data, information, and procedures used; h. explanation of the scope of the Valuation;
i. description of Assumptions and limiting conditions;
j. information regarding the relationship of parties conducting the transaction; k. description of the Business Valuer and/or Property Valuer and the Valuation results by the Business Valuer and/or Property Valuer that form the basis for providing the Fairness Opinion;
l. description of agreements and analysis of risks and opportunities regarding the transaction;
m. description of the results of qualitative analysis and quantitative analysis as referred to in Item III item 5 and item 6; n. description of the results of analysis regarding the fairness of the transaction value as referred to in Item III item 7; o. opinion on the fairness of the transaction; p. information regarding the qualifications and expertise of the Business Valuer; q. signature of the Business Valuer stating the name, place, registered certificate number, and reporting date; and r. appendices required in conducting the analysis and supporting the Valuation results in the Business Valuation Report.

Fairness Opinion Report on Loan and/or Guarantee Transactions
The Fairness Opinion Report on Loan and/or Guarantee Transactions presenting a conclusion on the fairness of loan and/or guarantee transactions as referred to in item 1 letter b item 3) in the form of a complete report must contain at least:
a. number and Business Valuation Report Date; b. Valuation Date;
c. identity of the client;
d. purpose and objective of providing the fairness opinion; e. description regarding the existence or non-existence of conflicts of interest regarding the transaction to be conducted; f. Business Valuer's statement including:

statement regarding the independence of the Business Valuer;
statement that the calculations and analysis in providing the Fairness Opinion on Loan and/or Guarantee Transactions have been conducted correctly; and
statement that the Business Valuer is responsible for the Fairness Opinion Report on Loan and/or Guarantee Transactions;
g. explanation regarding the data, information, and procedures used; h. explanation of the scope of the Valuation;
i. description of Assumptions and limiting conditions;
j. description of the impact of the loan and/or guarantee transaction on the company's finances; k. information regarding the relationship of parties conducting the transaction;
l. description of the Business Valuer and/or Property Valuer and the Valuation results by the Business Valuer and/or Property Valuer that form the basis for providing the Fairness Opinion on Loan and/or Guarantee Transactions;
m. description of agreements regarding the loan and/or guarantee transaction; n. description of agreements and analysis of liquidity regarding the loan and/or guarantee transaction; o. description of risks and benefits regarding the loan and/or guarantee transaction; p. description of the results of analysis regarding the feasibility of the fund usage plan for the loan and/or guarantee transaction as referred to in Item IV item 3 letter b item 8; q. description of the results of qualitative analysis as referred to in Item IV item 3 letter c; r. description of the results of quantitative analysis as referred to in Item IV item 3 letter d; s. description of the results of analysis regarding guarantees related to the loan and/or guarantee transaction as referred to in Item IV item 3 letter e; t. opinion on the fairness of the transaction regarding the loan and/or guarantee transaction; u. information regarding the qualifications and expertise of the Business Valuer;
v. signature of the Business Valuer stating the name, place, registered certificate number, and reporting date; and
w. appendices required in conducting the analysis and supporting the Valuation results.

Business Feasibility Study Report
The opinion report on the Business Feasibility Study as referred to in item 1 letter b item 4) in the form of a complete report must contain at least:
a. number and Business Valuation Report Date; b. Valuation Date;
c. identity of the client;
d. purpose and objective of providing an opinion on the feasibility of the business or project; e. explanation regarding the data, information, and procedures used; f. explanation of the scope of the Professional Valuation Assignment; g. description of Assumptions and limiting conditions; h. description and information regarding the business or project being valued, at least including:

business or project profile;
financial performance, if there is financial performance description or information;
products and services;
technology used;
intended market environment;
competitors and competition;
industry information;
business model;
marketing and sales strategy;
production or operational requirements;
management and human resource requirements;
intellectual property rights;
relevant regulatory provisions;
environmental aspects;
main risk factors; and
capital requirements and financial strategy;
i. description of the results of analysis regarding matters regulated in Item V item 3;
j. description of the opinion on the feasibility of a business or project; k. Business Valuer's statement including:
statement regarding the independence of the Business Valuer;
statement that the calculations and analysis in the Business Feasibility Study have been conducted correctly; and
statement that the Business Valuer is responsible for the results of the Business Feasibility Study;
l. information regarding the qualifications and expertise of the Business Valuer;
m. signature of the Business Valuer stating the name, place, registered certificate number, and reporting date; and n. appendices containing appendices required in conducting the analysis and supporting the Valuation results.

This copy is consistent with the original
Legal Director 1
Legal Department signed
Mufli Asmawidjaja

VIII. CLOSING PROVISIONS
This Financial Services Authority Circular shall take effect on the date of issuance.

Issued in Jakarta on 9 August 2020
EXECUTIVE HEAD
CAPITAL MARKET SUPERVISOR
FINANCIAL SERVICES AUTHORITY
REPUBLIC OF INDONESIA, signed
HOSEN

Guidelines for Business Valuation and Presentation of Business Valuation Reports in the Capital Market

Lineage: In force