Consolidation and Integration · 2018. 11. 8. · coal producing facilities – coal crusher,...

PT TOBA BARA SEJAHTRA Tbk

Consolidation and Integration

2013

AnnualReport


Contents

Industry Overview56Operational Review58Financial Review68

Management Discussion and Analysis

Community Development104Environment106Product Responsibility106

12

14

16

Corporate Governance

Corporate Social Responsibility

Financial Report109

Annual Report Contents Reference to the Bapepam-LK Regulation

221

Company Profile

30 Brief History of the Company

32 Business Line

34 Business Strategy

35 Vision and Mission

36 Organisation Structure

38 Profiles of the Board of Commissioners

40 Profiles of the Board of Directors

42 Human Resources

48 Shareholders Information

50 Brief Description of Subsidiaries

52 Capital Market Supporting Professionals

53 Address of Company and Operating Subsidiaries

Financial Highlights

Stock Highlights

2013 Event Highlights

17 Awards and Certifications

18 Report of the Chairman

22 Report of the President Directors

27 Perspectives of the Founding Shareholder

80 General Meeting of Shareholders

82 Board of Commissioners

84 Audit Committee

86 Board of Directors

88 Internal Audit

90 Corporate Secretary

94 Investor Relations

96 Legal Unit

98 Safety, Health and the Environment

2013 Annual Report 1

Consolidation and Integration

“ “Coal continues to feel the pressure of a weak market price. Far from experiencing a recovery from a prolonged price depression, the monthly average benchmark price of Newcastle Index declined from US$96.9 per ton in 2012 to US$85.3 per ton in 2013.

Without doubt, coal producers are forced to work in the most effective and efficient manner to cope with the challenging conditions that still prevailed throughout 2013. Only those who are strong – strong in the sense of being efficient and cost-effective in terms of operations – and can still enjoy a healthy operating margin. Not exceptional, but healthy.

Keenly aware of this, Toba Bara exerted all efforts to make its coal mining operations one of the most cost-effective in the sector. To that end, the Company consolidated its strengths – human resources, work process, marketing strategy and social responsibility – and integrated the infrastructures of its three subsidiary coalmine entities.

With its consolidation and integration steps, Toba Bara came through the year 2013 with flying colours.

2013 Annual Report2

Full-scale Integration

1Toba Bara benefits from the locations of its three

subsidiary coalmine entities that are adjacent to one

another. This enables the Company to plan, build and

operate mining infrastructures in an integrated and

synergistic manner. Imagine the immense benefits that

can be derived from a coal-hauling road, which is not

only shared but can be used to transport coal; shorten

the distance to store away overburden; and enabling

the three mining entities to also share the use of other

coal producing facilities – coal crusher, stockpile yard,

conveyor belt – simply because they are connected to

one another through the haul road.

2013 Annual Report4

Cost Efficiency

2With the integrated mining infrastructures, Toba Bara

benefits from the economies of scale of its mining

operations that are reflected in the decreasing operating

costs of the three mining companies.

The outcome of this has been a significant amount of

savings in both production and operating costs, which is

even more significant in light of the depressed coal market

in recent years.

In the eyes of Toba Bara, nothing is more important than

cost efficiency in the current state of the coal industry.

Toba Bara was able to achieve this through the strategy

of consolidation and integration that it has pursued since

2013.

2013 Annual Report6

Increasing Productivity

3With increasing integration of the mining infrastructures

and facilities among its three mining entities, Toba Bara

has been able to increase coal production volume, achieve

better and more efficient working processes in the fields,

and meet higher productivity.

In 2011, the Toba Bara Group produced a total of 5.2 million

tons of coal. In 2012, this was increased to 5.6 million tons.

And in 2013, production volume increased even further to

6.5 million tons.

The Company has not harnessed all of its resources

to date, and therefore still has room for improvement,

enhancement and perfection to increase its productivity

even more in the years to come.

2013 Annual Report8

Quality Human Resources

4Despite the Company’s efficiency drive, the number of

employees increased. This shows the importance that

Toba Bara has always placed in the roles that human

resources play behind the business efforts of the

Company, which has to sustained its growth, amid the

challenges and uncertainties of the commodities market

in recent years.

An in-depth expertise on the natural resources industry

itself – whether it be in the mining or plantation

industries – is key to the successful pursuit of achieving

that sustainable development.

With a growing number of employees totalling 795

people as of year-end 2013, the personnel of the Toba

Bara Group have a median age of below 35 years.

Whereas the largest group of employees are within the

age range of 26 to 45 years old, generally the most

productive years of any working person.

As a result of which, the Company is set to face up to

the challenges of the commodities markets in the future,

forging ahead to become one of the leading players in

the natural resources industry in Indonesia for decades

to come.

2013 Annual Report10

Sustainable Social Responsibility

5Corporate Social Responsibility constitutes one of the

success factors of any mining or plantation operations,

in view of the fact that these two business activities are

intensely intertwined with the people or communities in

the surrounding areas where the business operates.

In recognition of this, Toba Bara through its three

subsidiary entities places a strong emphasis on

corporate social responsibility as a key initiative to foster

harmonious relations with the surrounding communities.

A number of corporate social responsibility programs

have been undertaken by taking into consideration

the primary needs of the surrounding communities,

in addition to emphasizing activities that enhance

community welfare such as through social and economic

empowerment programs in education, health and decent

livelihoods.


Financial Highlights

2011 2012 2013

Sales 498,190,177 396,685,875 421,849,737

Gross Profit 190,202,268 48,150,372 79,552,405

Operating Profit 156,532,532 21,083,331 50,015,314

Profit for the Year Attributable to:

Equity Holders of the Parent Entity 57,716,891 3,198,832 18,543,538

Non-Controlling Interest 57,572,552 8,733,850 16,060,255

Total Profit for the Year 115,289,443 11,932,682 34,603,793

Total Comprehensive Income Attributable to:

Equity Holders of the Parent Entity 57,639,973 3,269,250 19,919,574

Non-Controlling Interest 57,504,921 8,733,850 16,213,148

Total Comprehensive Income 115,144,894 12,003,100 36,132,722

Basic Earnings per Share 427.5325 0.0032 0.0092

Current Assets 110,747,014 106,512,473 130,198,784

Non-Current Assets 114,499,071 155,014,027 181,449,155

Total Assets 225,246,085 261,526,500 311,647,939

Current Liabilities 122,782,483 140,537,280 145,451,672

Non-Current Liabilities 43,340,683 10,044,913 35,715,023

Total Liabilities 166,123,166 150,582,193 181,166,695

Total Equity 59,122,919 110,944,307 130,481,244

Total Liabilities and Equity 225,246,085 261,526,500 311,647,939

Gross Profit Margin 38% 12% 19%

Operating Profit Margin 31% 5% 12%

Comprehensive Income for the Year Margin 23% 3% 9%

Return on Assets 0.5 0.0 0.1

Return on Equity 1.9 0.1 0.3

Current Ratio 0.9 0.8 0.9

Total Liabilities to Total Equity 2.8 1.4 1.4

Total Liabilities to Total Assets 0.7 0.6 0.6

Production Volume (in millions of tons) 5.2 5.6 6.5

Overburden (x) 12.7 14.9 13.4

Sales Volume (in millions of tons) 5.5 5.5 6.3

5.2

2011 2012

5.6

2013

6.5

Production Volume (in million tons)

(in US$)


Total Assets (in million US$)

19.2%

225.2 261.5 311.6

2011 2012 2013

Total Liabilities (in million US$)

166.1 150.6 181.2

2011 2012 2013

Total Equity (in million US$)

59.1 110.9 130.5

2011 2012 2013

Sales (in million US$)

498.2 396.7 421.8

2011 2012 2013

Operating Profit (in million US$)

156.5 21.1 50.0

2011 2012 2013

Total Comprehensive Income (in million US$)

115.1 12.0 36.1

2011 2012 2013

20.3% 137.0%

200.8%17.7%

6.3%

2012-2013

2012-2013

2012-2013

2012-2013

2012-2013

2012-2013


Stock Highlights

Share Performance 2013

5,000,000 200

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

0 0

10,000,000 400

15,000,000 600

20,000,000 800

25,000,000 1,000

Share PriceVolume


Quarter 3 Quarter 4

Highest Price (in Rp) 2,200 1,480

Lowest Price (in Rp) 1,350 1,060

Closing Price (in Rp) 1,460 1,270

Transaction Volume* (Unit) 59,628,000 2,382,000

Transaction Value* (in Rp) 118,443,462,320 3,123,300,000


Quarter 1 Quarter 2 Quarter 3 Quarter 4

Highest Price (in Rp) 1,330 920 860 810

Lowest Price (in Rp) 770 720 680 630

Closing Price (in Rp) 880 860 710 740

Transaction Volume* (Unit) 148,771,500 17,548,000 7,246,000 9,487,500

Transaction Value* (in Rp) 149,293,019,320 20,770,194,968 5,073,634,976 6,436,890,000


Dividend Policy

Based on Indonesian law, decision on dividend is made by

shareholders through the General Meeting of Shareholders

on the recommendation of the Board of Directors. The

Company can announce the distribution of dividend annually

if it has positive results. Prior to the closing of a financial year,

interim dividend can be distributed, provided it is based on

the Company’s Articles of Association, and if the distribution

of such interim dividend does not result in the Company’s

net assets to fall below the amount of fully subscribed and

paid-in capital, and furthermore, the Company still meets the

requirement for statutory reserves pursuant to the Limited

Liability Company Law on compulsory reserve. The distribution

of interim dividend is determined by the Board of Directors post

securing approval from the Board of Commissioners.

The Company plans to pay cash dividend at least once a year.

The amount of dividend is related to the profit of the Company

for the financial year, mindful of the financial condition of the

Company, and without exempting the rights of the General

Meeting of Shareholders of the Company to decide otherwise

in accordance with the Company’s Articles of Association and

prevailing laws and regulations.

The Company aims to pay dividends in the amount of at

least 30% of its consolidated profit for the year (less minority

interests and other comprehensive income) since financial year

2012, while observing the compulsory reserve requirements

pursuant to the Limited Liability Company Law. The amount

of dividends to be distributed by the Company will depend on

available cash flow, investment plans, liquidity condition, future

business prospects and other factors that are deemed relevant

by the Board of Directors and restrictions on the payment of

dividends based on certain agreements.

The shareholders on the prevailing listing date have rights

to certain full dividend that has been approved, subject to

prevailing income tax law in Indonesia. Dividend payable to

a shareholder of foreign national is subject to income tax of

maximum 20% in Indonesia.

Dividends Payment

Information on dividends payment is presented in the

Corporate Governance section on page 80 of this Annual

Report.

* Cummulative Value

Market capitalisation as of 28 December 2012 amounted to Rp2,556 billion.

Market capitalisation as of 31 December 2013 amounted to Rp1,489 billion.

* Cummulative Value


2013 Event Highlights

The Company presented its results of operations as of September 2013 in the Public Expose event at the Indonesia Stock Exchange Building, covering both financial and operating results. Pandu Syahrir (Director of Finance) and Sudharmono Saragih (Director of Operations) gave the presentation, accompanied by Iwan Sanyoto (Head of Investor Relations) and Bima Sinung Widagdo (Head of Legal Division).

Public Expose / 18 December 201310 millions No Loss Time Injury Award -

Petrosea / 11 November 2013

Presentation of the certificate and award from the Company to PT Petrosea Tbk as the mining contractor in ABN on the achievement of safety at work of 10 million man-hours without an accident.

The Company (represented by Pandu Syahrir) was a speaker at the Indonesia Commodities Conference organised by Macquarie Securities, in Jakarta. Pandu Syahrir had the opportunity to speak in the session of “Outlook and Challenges for Indonesia’s Coal Industry.”

Indonesia Commodities Conference /

25 September 2013

The Company convened the Annual General Meeting of Shareholders for the first time as a publicly listed company.

General Meeting of Shareholders /

28 June 2013

To increase awareness for the Company, Toba Bara participated in Coal Trans 2013 by opening a booth and becoming a sponsor of the event that was held in Nusa Dua, Bali.

Coal Trans Asia /

2 – 5 June 2013

Forbes Indonesia magazine designates PT Toba Bara Sejahtra Tbk as one of “Indonesia’s Top 50 Companies.”

Award from Forbes Magazine /

25 November 2013


Awards and Certifications

PT Adimitra Baratama Nusantara received an award for achieving Zero Accident between the period of 1 January 2009 and 20 October 2013 from the Governor of East Kalimantan on 17 February 2014.

PT Adimitra Baratama Nusantara received a Gold Award Certificate as a token of Partnership and Appreciation from the Regency Government of Kutai Kartanegara in 2013.

PT Adimitra Baratama Nusantara received a Green Rating Certificate in the rating evaluation program on the performances of companies in environmental management, from the Governor of East Kalimantan in June 2011.

PT Adimitra Baratama Nusantara received a Green Rating Certificate in the rating evaluation program on the performances of companies in environmental management, from the Governor of East Kalimantan in June 2012.

PT Indomining received a Blue Rating Certificate in the rating evaluation program on the performances of companies in environmental management, from the Government of the East Kalimantan Province in 2012-2013.

PT Adimitra Baratama Nusantara received a Green Rating Certificate in the rating evaluation program on the performances of companies in environmental management, from the Governor of East Kalimantan on 5 June 2013.

PT Toba Bara Sejahtra Tbk received the Certificate of Participation in the Indonesia Environmental Week 2013, presented by the Ministry of Environment of the Republic of Indonesia on 2 June 2013.

PT Adimitra Baratama Nusantara received an award for achieving Zero Accident from the period of 1 January 2009 through to 20 November 2012 from the Governor of East Kalimantan on 12 February 2013.


Report of the Chairman

Jusman S. DjamalPresident Commissioner

It gives me great pleasure to present

the highlights of the achievements of

PT Toba Bara Sejahtra Tbk for fiscal

year 2013. This report also presents

the assessment of the Board of

Commissioners on the performance of

the Company under the management

of the Board of Directors, along with the

supervisory measures of the Board of

Commissioners on the management of

the Company.

In 2013, conditions affecting the coal

industry sector in Indonesia were not

encouraging. In fact, we can say that the

mining industry in general – including

that of coal – faced even greater

challenges in 2013 than they did in the

previous year.

A number of factors such as the global

price of coal that had not fully recovered,

operating expenses that tended to rise,

a global economy that is still weak, and

the prolonged monetary crisis in some

of the Eurozone countries, all of these

factors influenced one way or another the

coal industry in general, as well as the

Company’s performance in particular.

Dear Distinguished Shareholders,

““As a result of these efficiency measures, the Company was able to increase its profitability returns

encouragingly.


Under those rather unfavourable

conditions, the development of the

Indonesian economy was also not very

encouraging. Indonesia’s GDP growth

declined from 6.2% in 2012 to 5.8%

in 2013. Several other key indicators

also reflected similar discouraging

developments, among which were

the weakening of the Rupiah that

depreciated by 26% throughout the year,

the benchmark interest rate of Bank

Indonesia that rose from 5.75% to 7.5%

by year-end 2013, and inflation rate that

increased from 4.3% in 2012 to 8.4% in

2013.

Although still within the safe corridor,

Indonesia has begun to feel the external

effects that are potentially harmful

to the delicate balance of its macro-

economy. For example, the suspension

of the quantitative easing policy of the

US Federal Reserve Bank resulted in

capital flight from Indonesia that instantly

brought down the exchange rate value of

the Rupiah. Indonesia’s external balance

of payment suffered due to a weakening

of exports relative to imports that had

prevailed throughout 2013. At the same

time, Indonesia also experienced current

account deficits that continued to rise

over the years, among other things due

to the cost of subsidies on fuel, electricity

and other utilities that are still borne by

the government.

Obviously we hope that those

unfavourable conditions will soon change

for the better in 2014 and beyond.

Assessing the Performance of the

BOD

Against the backdrop of numerous

challenges in 2013, PT Toba Bara

Sejahtra Tbk posted quite an

encouraging performance.

In our opinion, the Board of Directors

was able to execute the budget and

work plan of the Company for the

financial year 2013, as mandated by the

shareholders and guided by the Board of

Commissioners.

By implementing the right production

strategy, the Company was able to

increase its production volume by 16.1%

to 6.5 million tons of coal in 2013. At

the same time, the Company was also

able to undertake tight cost efficiency

measures without compromising the

safety and security of its operations. As

a result of these efficiency measures,

the Company was able to increase its

profitability returns encouragingly.

The Company posted a total

comprehensive income for the year of

US$36.1 million on total net revenues of

US$421.8 million in 2013, an increase of

200.8% and 6.3%, respectively, of those

of 2012.

Integration of Infrastructure Enhances

Competitiveness

There is no denying that the nature of the

coal commodity market, that has suffered

from the depressed coal prices in recent

years, has somewhat shifted the focus on

what constitute a successful coal mining

operations. It used to be that production

volume was the primary measure of

success for any coal mine operations.

This is no longer true. Today, to be a coal

mining company that is able to produce

coal at a lower or more efficient operating

cost compared to that of any other coal

mining company is a must, especially

when seen in the context of achieving

sustainable growth and profitability.

Coal Production Volume(in million tons)

16.1%

5.6 6.5

2012 2013




To that end, Toba Bara enjoys a unique advantage compared

to its peers. Through its three operating subsidiaries, the

Company owns three coal mine concession areas that

are adjacent to one another. This allows for the sharing of

mining infrastructure in an integrated manner. In 2013, the

Company’s Management focused their attention and exerted

all efforts to enhance that integration even further. This

enables the Company to suppress the operating costs of its

mines efficiently and effectively. In turn, the cost efficiency has

increased Toba Bara’s competitiveness, while also maintaining

sound profitability.

That is why the theme of our 2013 Annual Report,

“Consolidation and Integration,” aptly describes the efforts of

the Company not only to prevail over the competition in the

market, but also to ensure the Company’s sustainable long-

term growth.

Implementing Corporate Governance that Continues to be

Enhanced

The Board of Commissioners continues to carry out its

supervisory roles with the help of the committee under its

control, namely the Audit Committee. The establishment

of this committee is part of implementing Good Corporate

Governance (GCG) that continues to be enhanced by the

Company.

The Board of Commissioners welcomes the initiatives that

have been and will continue to be taken by the Company with

respect to developing or implementing the policies of GCG

within the Company in line with international best practices

such as the Recommendation of the OECD (Organisation

for Economic Co-operation and Development), the ASEAN

Scorecard, the Guidelines of the National Committee on GCG,

prevailing laws and regulations, and the Articles of Association

of the Company.

One of the Company’s strengths in corporate governance is

that all of the members of the Board of Commissioners of PT

Toba Bara Sejahtra Tbk are not affiliated with the majority

shareholder of the Company.

This means that the level of independence of the Board of

Commissioners of the Company is 100%, well above the

mandatory requirement of the Capital Market Authority of more

than 30% of the board membership.

In 2013, with the help of the Audit Committee, the Board of

Commissioners continued to monitor the execution of risk

management policies, implementation of internal audit, and

compliance to prevailing laws and regulations, including the

Company’s standard operating procedures. I am pleased that,

based on audit findings and other internal controls, there were

no indications of frauds or other activities that fall outside of

prevailing rules and regulations.

The Board of Commissioners has reviewed the audited

consolidated financial statements of the Company for the

year ending 31 December 2013 and is of the opinion that

the Company has achieved most of its targets for the year.

The Board of Commissioners duly submits said financial

statements for the approval of shareholders at the Annual

General Meeting of Shareholders of the Company in 2014.

Human Resources and Social Responsibility

The Board of Commissioners also monitors as a matter

of course the company’s activities in the areas of Human

Resources (HR) and Corporate Social Responsibility (CSR).

In 2013, Toba Bara continued to place an emphasis on

employee welfare, training and HR development, as well as

meeting the collective aspiration of the communities in which

the Company and its subsidiary entities operate. As in previous

years, Toba Bara directed its CSR activities in a planned

and systematic manner towards long-term objectives that

comprised of among other things empowering the economies

of local villages, improving the quality of education, providing

community health care services, including supporting healthy

nutrition for babies, and alleviating poverty in general.



Following up on past successes in environmental management prior to 2013, two of the Company’s subsidiary entities, namely

ABN and IM, received a Green rating and Blue rating, respectively, in managing environmental conservation through PROPER, a

government sanctioned environmental management program. In 2013, TMU also entered the PROPER program for the first time.

In the discussion on CSR in its own section of this Annual Report, the Company has also begun to report activities related to

three aspects of corporate sustainability – namely (i) environmental management, (ii) community development and (iii) product

responsibility.

Board of Commissioners Composition

I am pleased to report that there has not been any change to the composition of the Board of Commissioners of PT Toba Bara

Sejahtra Tbk since the last Annual GMS of the Company.

As such, I continue to share my duties and responsibilities with my distinguished colleagues, Messrs. Bacelius Ruru and Farid

Harianto, two highly accomplished professionals in government, business, the capital market and academia.

Future Expectations

The Board of Commissioners views that the steps taken by Toba Bara to consolidate and integrate its resources in these

extremely challenging times for the coal industry, constitute the right approach with strategic implications for the continuity and

sustainable growth of the Company going forward.

With their numerous infrastructures and resources, the three subsidiary entities of Toba Bara were able to harness the synergy

needed to enhance their competitiveness as well as the growing value that their businesses create.

In the long run, the synergy will have a significant impact on the Company’s resilience and growth capacities. This was already

evident in 2013, when amid the challenging conditions that had driven most coal mining companies in Indonesia to post lower

results of operations than they did a year ago, the Company had in fact posted higher operating results.

We are therefore highly confident of the Company’s ability to sustain its growth in 2014 and beyond.

Closing Remarks

It goes without saying that the success of Toba Bara could not have been achieved without the support and trust of a great many

stakeholders.

We are eternally grateful and appreciative of the Company’s shareholders, customers, employees, business partners, the central

and regional governments, the people’s representatives and the communities in which the Company operates.

May God bless all of our endeavours in the future.

Jusman S. DjamallPresident Commissioner


Report of the President Director

Justarina S. M. NaiborhuPresident Director

““

The year 2013 went by so quickly. The

price of coal that had been depressed

throughout 2012, had not fully recovered

in 2013.

This condition forced Toba Bara, through

its three subsidiary entities that are

engaged in the business of coal mining,

namely Adimitra Baratama Nusantara

(ABN), Indomining (IM) and Trisensa

Mineral Utama (TMU), to work hard in

response to the difficult and challenging

market conditions.

The Company undertook a number of

initiatives to counter the challenging

conditions, among the key initiatives

of which were efforts to Consolidate

and Integrate. Our consolidation efforts

centred on human resources as well as

on work processes and cost efficiencies;

whereas our integration efforts were

aimed at the mining infrastructures and

other mining resources among the three

subsidiary entities of the Company.

Our consolidation and integration

initiatives will be elaborated further

herein, and constitute the theme of this

Annual Report.

Our consolidation efforts centered on human resources as well as on work processes and cost efficiencies; whereas

our integration efforts were aimed at the mining infrastructures and other

mining resources among the three subsidiary entities of the

Company.

Dear Distinguished Shareholders,


However, allow me to present some

of the results of our Consolidation and

Integration initiatives that are quite

encouraging.

Amid a coal market background that

has not been conducive, I am pleased

to report the Company’s results of

operations that are promising. Toba Bara

posted total sales revenue that increased

by 6.3% to US$421.8 million in 2013. The

increase was derived primarily from the

increase in sales volume by 14.5% to

6.3 million tons of coal compared to that

of the previous year. The Company also

posted an encouraging growth in terms

of comprehensive net income, amounting

to US$36.1 million in 2013 compared

to US$12.0 million a year before. The

Company successfully achieved all of

its key business targets as set forth in

the Company’s budget and work plan of

2013.

The encouraging growth delta between

the operating results of 2013 and those

of 2012, however, was not as high as

the growth delta between the years 2012

and 2011. This prompted the Company

to continue to consolidate and manage

cost more efficiently, in addition to the

aforementioned integration efforts.

Cost efficiencies were achieved in almost

every aspect of production, starting from

mining operating cost, barging and fuel

consumption to employing infrastructures

on integrated basis.

In the meantime, a reduction of the

stripping ratio, shortening the distance

to stow away overburden, and border

mining activities – all contributed to

further cost savings.

These cost-efficiency initiatives

succeeded in maintaining the Company’s

operating margin at a healthy level, thus

contributing positively to the Company’s

operating income as well as net income

for the year under review.

Work Transformation Process

One of the key factors behind the

Company’s achievements in 2013

was the efforts to transform the way

the Company works that include

reorganising, appointing the right

people in key operating positions, and

instilling the same understanding among

all personnel of the three subsidiary

entities towards the business goals

and objectives of the Company. These

transformation efforts had a significant

impact on better operating efficiencies,

cost and time efficiencies, and more

importantly, on the formation of a

stronger camaraderie and teamwork

spirit between the personnel of Toba

Bara and the three subsidiary entities.

Several concrete results that have been

gained from this work transformation

process, among which are the 2013

record-breaking fourth-quarter production

volume that reached a total of 1.9

million tons of coal, the highest ever

quarterly production by the Company, the

construction of the new hauling road from

TMU to IM via ABN that was completed

ahead of schedule, in addition to the

aforementioned cost efficiencies.

Sales(in million US$)

6.3%

396.7 421.8

2012 2013




Initiatives Carried Out by the Company

The Company made a total of US$23.3 million in capital

expenditure in 2013 to support its operating activities

and improve work efficiencies. One of the realised capital

expenditure was for the construction of a Coal Processing

Plant (CPP) at IM that can increase the coal crushing capacity

of Toba Bara from 13 Mmt to 16 Mmt.

The increase in infrastructure capacities in 2013, as referred

to above, is complemented by a number of initiatives

undertaken in the area of marketing with the aim of securing

the Company’s market share. Those initiatives include closing

the deal on long-term coal sales contract at a locked price,

expanding the marketing coverage area in response to the

uncertain coal market conditions, and efforts to increase the

number of end-user customers to balance the number of

trading companies that the Company could rely upon.

At the same time, the Company also enhanced its corporate

communications and investor relations as a way to build a

positive image around the brand Toba Bara. A number of

initiatives taken by the Company’s Investor Relations Division

have yielded positive results, including greater recognitions in

the market from the various exposures of Toba Bara in leading

media such as Forbes magazine, or the coverage of Toba Bara

by market analysts from leading firms such as Macquarie, and

the participation of Toba Bara in the Coal Trans Asia 2013 as

one of the main sponsors as well as exhibitor in the trade fair.

In addition, Toba Bara was also invited to speak in various

prominent industry events such as Kalimantan Coal, Indonesia

Power & Energy Summit, Macquarie Indonesia Commodities

Conference, Seminar organised by the Directorate General of

Taxation and others.

In this context, Toba Bara also participated actively as the

Team Chair and Speaker in the dialogue forum between the

Government and the Indonesian Coal Mine Association to find

the middle ground in the Indonesian Government’s plan to

raise the royalty rate of coal production.

Corporate Governance

The Board of Directors continued to implement good corporate

governance (GCG) policies as mandated by the General

Meeting of Shareholders and capital market regulations with

respect to publicly listed companies.

In 2013, the Audit Committee of the Company had fully served

its functions pursuant to the duties and responsibilities as set

forth in the Audit Committee Charter. The Report of the Audit

Committee for the year ending 31 December 2013 is presented

in this Annual Report starting from page 84.

Meanwhile, the Board of Commissioners has begun to discuss

the establishment of the Nomination and Remuneration

Committee and the Risk Management Oversight Committee to

assist the oversight duties of the Board of Commissioners in

overseeing the management of the Company by the Board of

Directors.

The Board of Directors continue to ensure that the principles

of GCG comprising transparency, accountability, responsibility,

independence, and fairness are constantly upheld by each and

every person in the Company and the three subsidiary entities.



In addition, the Corporate Secretary Division and Legal

Division are seeing to it that the Company with all of its rank-

and-file comply fully with all prevailing laws and regulations

that are relevant to the Company’s business.

The Company also continues to enhance corporate social

responsibility activities, especially those that relate to the

Company’s sustainable business development and growth.

Slowly but surely, Toba Bara has begun to implement the

principles of sustainable development that are grounded upon

the 3Ps of Profit, People and Planet. Discussions on these

three “P” that are presented in the context of (i) environmental

management, (ii) community development, and (iii) product

responsibility are presented in the Sustainability Program

section in the discussion on Corporate Governance in this

Annual Report starting from page 78.

Human Resources

The management of human resources (HR) has become an

increasingly important part of the Company’s activities due

to the business process transformation undertaken since

2013 in response to the currently bearish coal market. We

then made a workforce mapping exercise, along with the

gap analysis between the job requirement at hand and the

Company’s available HR capabilities. The outcome of this

mapping and analysis is then used as the basis to develop the

HR development policies and the recruitment of employees to

strengthen the rank-and-file of the Company and its subsidiary

entities.

The Principles of Sustainable Development that are Grounded Upon the 3Ps

Profit People Planet



Justarina S. M. NaiborhuPresident Director

Prospects in 2014

The Company believes that conditions in the coal market will

generally not change much in 2014 compared to those of the

previous year, although there has been an upward trend in the

price of coal since the fourth quarter of 2013. We will still have

to see whether this upward trend reflects market fundamentals

over the long term or simply a temporary spike in demand

related to the winter season in the northern hemisphere of

the globe. But whatever the trending price will be in 2014, the

Company is ready to face up to any challenge that the market

may pose.

Toba Bara has a long-term business plan that centres around

(i) efforts to increase the exploitation of coal from current coal

reserves of 147 million tons, (ii) efforts to increase production

and operating cost efficiencies through various initiatives that

have proven to work, (iii) efforts to expand markets and the

number of end-user customers in order to increase market

share, and (iv) efforts to explore for more coal reserves

throughout the Company’s vast concession areas that are

still not prospected, as well as through acquisitions when the

opportunity arises.

Based on those efforts, the Company believes that it can

maintain sustainable growth in 2014 and in the years to come.

Board of Directors Composition

In 2013, there was no change in the composition of the Board

of Directors.

Closing Statements

In closing, allow me on behalf of the Board of Directors to

convey our heartfelt appreciation to shareholders, members

of the Board of Commissioners and its committee, customers,

employees, business partners, the central and regional

governments as well as the people’s representatives, and the

communities surrounding the Company’s operations. We value

their support and trust towards Toba Bara. May God bless our

efforts in the future.


Gen. (Ret.) Luhut B. PandjaitanFounding Shareholder

Gen. (Ret.) Luhut B. Pandjaitan is the founder of PT Toba

Sejahtra that holds 71.8% shares of PT Toba Bara Sejahtra

Tbk.

A retired general of the Indonesian National Army (TNI),

statesman, former ambassador extraordinary and

plenipotentiary of the Republic of Indonesia, businessman and

philanthropist, Luhut B. Pandjaitan devotes all his thoughts and

efforts to the progress and prosperity of the Indonesian nation

that he loves.

As a businessman, his vision is to increase the

competitiveness of Indonesian businesses in order to compete

regionally and globally.

Regionally, the demand for increased competitiveness by

Indonesia is already upon us with the inauguration of the

ASEAN Free Trade Market in 2015. Whereas globally,

Indonesia must improve its industrial strength among the

leading industrialised countries in the world – the G-20 Group,

in which as of year-end 2013, Indonesia ranked 13th among

the world’s largest economies (the World Bank).

Luhut B. Pandjaitan believes that education is key to increasing

the competitiveness of a nation. Therefore, he founded the DEL

Foundation, a non-profit foundation that is actively engaged

in community development in North Sumatra with a focus on

education through PI DEL. A leading national university in the

field of information technology that is accredited by the Ministry

of Education of the Republic of Indonesia.

He believes that Indonesia needs to add the value that can be

derived from the nation’s natural resource riches. Therefore, he

founded Toba Bara to create added value from the coal-mining

sector – a leading sector of Indonesia’s.

“The Social Entrepreneur of the Year” of Ernst & Young Global

Entrepreneurship Award 2012, Luhut B. Pandjaitan, is keenly

aware of the significance of the sustainable development

that is built upon the three pillars of economic performance

(profit), environmental conservation (planet) and social welfare

(people). Therefore, he expects Toba Bara to begin harnessing

the principles of sustainable development in every aspect of its

business activities.

Perspectives of the Founding Shareholder

““I am pleased that the Toba Bara Group has begun to show the strength and features of a sustainable

business.


Company Profile

Brief History of the Company30 Shareholders Information48

Capital Market Supporting Professionals 52

Address of Company and Operating Subsidiaries53

Brief Description of Operating Subsidiaries50Business Line32

Business Strategy34

Vision and Mission35

Organisation Structure36

Profiles of the Board of Commissioners38

Profiles of the Board of Directors40

Human Resources42


Brief History of the Company

PT Toba Bara Sejahtra Tbk (Toba Bara) was incorporated in 2007 and acquired its legal entity status based on the approval of

the Minister of Justice and Human Rights of the Republic of Indonesia number AHU-04084.AH.01.01 dated 28 January 2008.

Toba Bara is structured as a holding company and, through its subsidiary entities, operates three coal mines.

The Company is the holding company of PT Adimitra Baratama Nusantara (ABN), PT Indomining (IM) through PT Toba Bumi

Energi (TBE) and PT Trisensa Mineral Utama (TMU), as well as PT Perkebunan Kaltim Utama I (PKU) that was acquired in

June 2013. The following timeline describes the major events that have transpired in the Company’s corporate history:

ABN and TMU were incorporated in

2004.

2004

IM was incorporated in 2005.

2005

ABN and IM were granted mining

authorization for exploration.

2006

ABN and IM were granted KP for

exploitation.

2007

IM began production.

ABN began production.

2008

TMU was granted KP for exploration.


ABN converted its KP to IUPOP.

2009

TMU began production. Consolidated

production of Toba Bara surpassed 5

million tons.

2011

The haul road TMU – IM is operated ahead of

schedule. Construction of the second underpass in ABN was completed.

2013

IM and TMU converted their KP

to IUPOP.

2010

TBS acquired 51.0% of ABN, 52.5% of TBE

(that controlled IM) and 51.0% of TMU.

Toba Bara acquired additional shares

of TBE and TMU to 99.99% each.

2012

TBS listed its shares on the Indonesia Stock Exchange

(July).

TBS settled the land overlapping issue

with PKU.

TMU is poised to increase coal

production to 80,000 tons – 100,000 tons/

month. A new CPP has been constructed in IM.

Company Profile • Brief History of the Company

Consolidated production of Toba Bara reached more

than 3.9 million tons.


Business Line

TMU

ABN

ABN Jetty

IM Jetty

~5 km

~65 km

IM

Samarinda

Mahakam River

Major city is less than 50 km

Adjacent locations for three mines

Close proximity transhipment point & jetty

Major City Jetty Transhipment Point

Furthest pit to jetty 25 km with closest 1 - 5 km

Kutai Energy

The Company is currently engaged in coal production and sales through three subsidiary entities. These three subsidiary entities have

adjacent concession areas located in Sanga-Sanga, Loa Janan and Muara Jawa, Kutai Kartanegara Regency, in the province of East

Kalimantan. The ABN and Indomining concession areas are situated within 5 kilometers of their respective self-owned jetties on the

Mahakam River delta, which provide access to transhipment points in Muara Jawa and Muara Berau. The Company’s concession areas

total approximately 7,087 hectares.

Hauling Road TMU - IM


~55 km(Total ~120 km)

Makasar Strait

Muara Berau

Muara Jawa

Coal Production (in million ton)

0.8

2.0

3.9

5.25.6

6.5

2008 2009 2010 2011 2012 2013

ABN TMUIM

Concession Area

TM Ash TS Calorific Value (kcl/kg)

(% GAR) (% GAD) (% GAD) GAR GAD

PT ADIMITRA BARATAMA NUSANTARA

ABN 52 25 7 0.8 5,200 5,800

ABN 55 - HS 20 6 1.8 5,500 6,000

ABN 55 - RS 20 6 0.8 5,500 6,000

ABN 58 19 6 0.9 5,800 6,250

PT INDOMINING

Indomining 19 8 0.9 5,700 6,200

PT TRISENSA MINERAL UTAMA

Trisensa - 47 28 5 0.4 4,700 5,400

Coal Products

Coal Resevers

147 million tonCoal Resources

236 million ton

Based on the JORC Reports, the Company’s coal reserves are estimated to be 147 million tons and the Company’s coal resources are

estimated to be 236 million tons. The reserves and resources in the Company’s concession areas include various grades of thermal coal.

The calorific values of the coal produced by the operating subsidiaries range from 4,700 GAR to 5,800 GAR. Currently, the majority of the

Company’s coal is sold to coal trading companies, which primarily supply the coal to power generating companies in South Korea, Taiwan,

China and India.

Company Profile • Business Line


Business Strategy

SustainableLong Term

Growth

The Company’s business strategy in maintaining sustainable growth rests upon the coal mining concession locations of the three

operating subsidiaries that are adjacent to one another. This allows the Company to undertake a collective mine planning on a group-

wide basis that integrates the mining operations of ABN, IM and TMU. Through this integration strategy, there are many benefits that

accrue to the Company and the Group, such as joint infrastructure development, the construction of hauling road that cuts through one

of the subsidiary entity concessions, in addition to cost efficiency that can be derived from an integrated operation.

To that end, the Company has formulated five strategic steps to support sustainable long term growth, as follows:

Integration of three

mines.

Continue to focus on

health and safety,

environmental track

record and commitment

to Corporate Social

Responsibility.

Organically increase

coal production levels.

Increase coal reserve

and resource.

Stregthen existing and

develop new customer

relationships.


Vision

• Creating sustainable shareholder value from

Indonesian mining

• Developing a best-in-class pool of talent

• Investing in our subsidiaries and other related

businesses that will enhance value to shareholders

• Managing competitiveness of mining operations

effectively

• Enhancing integration of coal supply chain to

ensure reliability and efficiency

• Building strong relationship with our business

partners and the financial community

• Being a responsible corporate citizen in promoting

community development and implementing good

corporate governance practices.

Mission

Vision and Mission

To be one of the best-managed

world class mining companies in

Indonesia with a focus on high

growth by building competence

through development of our

employees, robust financial

performance, and solid returns

for our shareholders.


Organisation Structure

Board of Commissioners

Board of Directors

Bima Sinung Widagdo

Legal UnitCorporate Secretary

Pandu P. Syahrir

Investor Relations

Iwan Sanyoto


ABN BOD IM BOD TMU BOD

Audit Committee

Internal Audit

Finance & Accounting

Tries Nainggolan

Government Relations

Vacant

Company Profile • Organisation Structure


Profiles of the Board of Commissioners

1

2

3


Company Profile • Profiles of the Board of Commissioners

Mr. Jusman Syafii Djamal has been

President Commissioner of the company

since October 1, 2010. Currently he also

serves as the President Commissioner of

PT Cardig Aero Services Tbk (July 2011 –

present), President Commissioner of PT

Telkom Indonesia Tbk (January 2011 –

present), Member of National Innovation

Committee (May 2010 – present),

Chairman of the Advisory Council of

Entrepreneur of Land Transportation

Organization (January 2010 – present),

and Chairman of Matsushita Gobel

Foundation January 2005 – present).

Previously, he served, among others, as

the Minister of Transportation of the First

United Indonesia Cabinet (May 2007 –

October 2009), Member of the National

Evaluation Team of Transportation Safety

and Security (January - May 2007),

Member of Incubator Technology of

BPPT (2003), and Chief Project Engineer

of 50 seaters Advanced Turboprop N250

Fly by Wire Airplane, IPTN Indonesia

(1990 – 1995). He graduated with a

Bachelors Degree in Technical Aviation

from Institut Teknologi Bandung.

Jusman S. DjamalPresident Commissioner1

Mr. Bacelius Ruru has been a

Commissioner of the Company since

March 30, 2012. Currently he also

serves as Independent Commissioner

of PT Manulife Aset Manajemen

Indonesia (2011 – present), Independent

Commissioner of PT Agung Podomoro

Land Tbk (2010 – present), President

Commissioner of PT Axle Asia (insurance

broker) (2008 – present), President

Commissioner of PT Jababeka Tbk (2007

– present), President Commissioner of

PT Tuban Petrochemical Industries (2003

– present) and President Commissioner

of PT Polychem Indonesia (2003 –

present). Previously, he served, among

others, as President Commissioner of PT

Perusahaan Pengelola Aset (Persero)

(2004 – 2008), President Commissioner

of PT Telekomunikasi Indonesia Tbk

(2001 – 2004), President Commissioner

of PT Bursa Efek Indonesia (2001 –

2008), Secretary of the Ministry of

State-Owned Enterprises (2001 – 2004),

Deputy of State Minister/Deputy of

Head of Investment and State-Owned

Enterprises Development, Division of

Supervision and Control, Ministry of

State-Owned Enterprise (2000 – 2001),

Assistant of Minister/Deputy of Mining

Business and Agro Industry, State

Ministry of Utilization (1999 – 2000),

Deputy of Competitive Business Sector,

Management Board of State-Owned

Enterprises (1998 – 1999), Director

General of State-Owned Enterprises

Development, Ministry of Finance (1995

– 1998), and Head of the Indonesian

Capital Markets Supervisory Agency,

Ministry of Finance (1993 – 1995).

He holds a law degree from the

University of Indonesia, Indonesia and

a Masters of Law Degree from Harvard

Law School, United States.

Mr. Farid Harianto has been a

Commissioner of the Company since

2011. Currently he also serves as a

Member of the President’s Advancement

Advisory Council in the National

University of Singapore (2011 – present),

Independent Commissioner of PT BATA

Indonesia Tbk (2011 – present),

He is Special Staff of the Vice President

of the Republic of Indonesia (2009 –

present), Risk Oversight Committee of PT

Bank International Indonesia Tbk (2007

– present), Independent Commissioner

of PT Unggul Indah Cahaya Tbk (2005 –

present), Independent Commissioner of

PT Lippo Karawaci Tbk (2004 – present),

and Member of Asian Executive Advisory

Board, the Wharton School, University of

Pennsylvania (2000 – present).

Previously, he served, among others, as

Deputy Chairman of the Indonesian Bank

Restructuring Agency (1998 – 2000),

President Director of PT Pemeringkat

Efek Indonesia (1995 – 1998), Visiting

Professor and Chairman, ASEAN

Studies, University of Toronto, Canada

(1993 – 1995), and Director, Graduate

Programs, Institute PPM (1990 – 1993).

He graduated with a Bachelors Degree

in Electrical Engineering from Institut

Teknologi Bandung, Indonesia.

He also holds a Masters in Applied

Economics and Managerial Science

and a Ph.D in Applied Economics and

Managerial Science from The Wharton

School at the University of Pennsylvania,

United States.

Bacelius RuruIndependent Commissioner2 Farid HariantoIndependent Commissioner3

40

Profiles of the Board of Directors

1 2

34

2013 Annual Report

41

Ms. Justarina Sinta Marisi Naiborhu has been the President

Director of the Company since May 5, 2011. Prior to this

she was the President Director of PT CIMB-Principal

Asset Management (2008 – 2011), Director of PT CIMB-

GK Securities Indonesia (2003 – 2008), Vice President of

Institutional Business & Advisory PT Kuo Capital Raharja

(2001 – 2003), Portfolio Manager of Institutional Asset

Management of PT Danareksa Investment Management (1999

– 2001), and Research & Development Analyst and Assistant

to the President Director of PT Bursa Efek Jakarta (1992 –

1997).

She graduated with a Bachelors Degree from the Bogor

Institute of Agriculture, Indonesia. She also holds a Masters

Degree in International Securities, Investment and Banking

from Reading University, United Kingdom and a Masters

Degree in Management from the University of Indonesia,

Indonesia.

Mr. Arthur Mangaratua Ebenhaezer Simatupang has been a

Director of the Company since May 5, 2011. Prior to this, he

was a Director and Chief Financial Officer of ABN since 2007.

Additionally, he previously served as Advertising and Promotion

Supervisor at PT Indofood Sukses Makmur Tbk (1998 -2004).

He graduated with a Bachelors Degree in International

Business from Seattle University, United States and a Masters

of Commerce Degree in Finance and Accounting from The

University of Sydney, Australia.

Mr. Pandu Patria Syahrir has been a Director of the Company

since October 1, 2010. Prior to this, he was a Senior Analyst

focusing on the energy and mining sectors at Matlin Patterson

from 2007. Additionally, he previously served as Principal at

Byun & Co., an Asian alternative energy fund (2002 – 2005)

and as an Analyst at Lehman Brothers (2001 – 2002). He

graduated with a Bachelors Degree from the University of

Chicago, United States and holds a Masters of Business

Administration Degree from the Stanford Graduate School of

Business, United States.

Justarina S. M. NaiborhuPresident Director/ Unaffiliated Director1 Arthur M. E. SimatupangDirector3

Mr. Sudharmono Saragih has been a Director of the Company

since June 20, 2012. Prior to this, he was the Company’s

General Manager of Operations since April 2012.

He previously served as a Project Manager at PT Toba

Sejahtra (2011 – 2012). Prior to that, he was the Site Manager

of PT Raja Kutai Baru Makmur, Ancora Group (2010 – 2011),

Operations Manager of PT Karya Wijaya Aneka Mineral,

Harita Group (2009 – 2010), Site General Manager of PT

Agrabudi Jasa Bersama, Titan Mining Indonesia Group

(2009), Operations General Manager of PT Riau Bara Harum,

Andaru Resources Group (2008 – 2009), and Production

Superintendent at PT Kaltim Prima Coal (2004 – 2005).

He graduated with a Bachelors Degree from Bandung Institute

of Technology in Mining Engineering – General Mining,

Indonesia.

Sudharmono SaragihDirector4Pandu P. SyahrirDirector2

Company Profile • Profiles of the Board of Directors

2013 Annual Report


In 2013, the Company added a total of 27 personnel, an

increase of 1.1%, bringing the total number of employees in the

Company and the three subsidiary entities to 795 people.

As a growing organisation the Company sees human capital

as a critical factor to achieving sustainable long-term growth.

As such, the Company places a great emphasis on recruiting,

training and retaining professionals and top talents in the coal

mining industry.

In 2013 the Company sharpenned the Key Performance

Indicator (KPI) in the three subsidiary entities. This is aimed at

enhancing the performance of each subsidiary entity in a more

measured and sustained manner.

In addition, the Company continues to develop its strategic

human capital policy, including identifying skills and

capabilities, setting remuneration standards, establishing

career path programs, and devising new method of

performance evaluation for the Company and its three

subsidiary entities.

Human Resources

As of 31 December 2013 the Company and its subsidiary entities employ a total of 795 people, 702 of which are

permanent employees. A total of 28 employees worked at Head Office in Jakarta with the remaining employees assigned

in field offices and sites working in various capacities that include administration, technical services, supervision of coal

processing and barging, logistics, safety and health, the environment and community development.

Total Employees

2011

731

2013

795

7862012

43 2013 Annual Report

The Company has a relatively young human resources composition, in which the largest group of employees are between the

ages 26 years to 35 years. This youthful composition provides dynamism to the Company and its three operating subsidiaries.

One of the enduring features of the Group’s human capital is their ‘can do’ spirit that underlines the work ethics of the Toba Bara

business group. This fact plays a key role in the ability of the Company to increase its coal production consistently over the past

four years.

The Company also places a strong emphasis on the value of training and education in human resources development.

As a relatively young coal mining company, in 2012 the Company carried out intensive training program, attended by employees

of various seniority levels. The list of training program is presented below:

No Training Organiser Date Location

1 First Aid Injury HSE ABN 18 January Sangasanga

2 Environmental Awareness HSE ABN 26 January Sangasanga

3 In-house Training Fatigue Management Indomining (Team HSE) 6 February Sangasanga

4 First Operational Supervisor Distamben Propinsi Kalimantan Timur 6-10 February Balikpapan

5 First Operational Supervisor Distamben Provinsi Kalimantan Timur 13 - 17 February Sangasanga


7 Leadership Course for New Managers QB Leadership Center 15 - 16 February Jakarta



10 Environmental Protection Expert on Safety, Health at Work Indotrain18 February -

2 MarchBalikpapan

Training Programs in 2013

As a growing organisation the Company sees human capital as a critical factor to achieving sustainable long term growth.

“ “

Company Profile • Human Resources





12 Root Cause Analysis Indotrain 9 - 10 March Sangasanga

13 Workshop National Security Indonesian Management Centre (IMAC) 15 - 16 March Balikpapan

14Seminar Geotechnical Engineering in The Mining Industry Workshop

Balinga Utama 19 - 21 March Yogyakarta

15 Incident Investigation & Reporting Indomining (Team HSE) 20 March Sangasanga

16Designing Salary Structure & Remuneration to Enhance Company’s Productivity with Ergonomy and Psychology Approach

Expertindo 25 - 27 March Yogyakarta

17 Environment Management Mairodi Mandiri Sejahtera 8 - 11 April Bandung

18 Awareness Oil Spillage HSE ABN 14 April Sangasanga

19 Coal Washing Plant & Stockpile Management Course PT Geoservices 15 - 16 April Bandung

20 Oil Spillage dan Penggunaan APAR HSE ABN 20 April Sangasanga

21 Certifate Industrial Relations Profesional Unika Atmajaya 24 - 27 April Balikpapan

22 Safety Leadership Team Safety Indomining 1 May Sangasanga

23 Safety Officer Technos Prima 6 - 8 May Sangasanga

24 Middle Operational Supervisor Pusdiklat Mineral & Batubara 13 - 19 May Bandung

25 Environmental Protection Expert on Safety, Health at Work PT Phitagoras Global Duta 13 - 25 May Jakarta

26 How to Develop and Implement ISO 14001 Cipta Energi Utama Mandiri 15 - 19 May Sangasanga

27 How to Develop and Implement ISO 14001 PT Cipta Energi Utama Mandiri 16 - 19 May Bandung

28 P3K/First Aid Indonesian Red Cross 17 - 18 May Sangasanga

29Education and Training on Mining Environmental Management

Pusdiklat Minerba 20 - 25 May Bandung

30 Professional Filing & Record Management Cipta Energi Utama Mandiri 27 - 31 May Sangasanga

31Mine Indonesia 2013 11th Annual Review of trend in the Indonesia Mining Industry

Pricewaterhouse Coopers Indonesia (PwC Indonesia)

29 - 30 May Jakarta

32 Welder Indotrain 29 May - 30 June Sangasanga

33 Train of Trainer Indotrain 30 May - 1 June Sangasanga

34 Safety Officer Technos Prima 9 - 11 June Sangasanga

35 Intergrating QHSE Management System PT PGD 10 - 14 June Sangasanga

Training Programs in 2013



36 Training for Main Supervisor in Mining Pusdiklat Minerba 17 - 20 June Jakarta

37Training and Competence Testing for Building/Construction

Asosiasi Tenaga Ahli Kontruksi Indonesia (ATAKI) 17 - 18 June Samarinda

38Training and Competence Testing for Main Supervisor in Mining

Pusdiklat-Minerba Bandung 17 - 21 June Jakarta

39 In-house Training for Training XPAC PT Admitra Baratama Nusantara 24 - 28 June Sangasanga

40 LOTO HSE ABN 27 June Sangasanga

41 Domestic Waste Management HSE ABN 29 June Sangasanga

42 Candidate for Health and Safety at Work Expert in 2013 Distamben Provinsi Kalimantan Timur 1 - 4 July Sangasanga

43 Training for Candidate for Health and Safety at Work Expert in 2013 Disnaker Provinsi Kalimantan Timur 2 - 5 July Samarinda

44 In-house Training Clean and Healthy Lifestyle Bio Medika 27 July Sangasanga

45 Health & Safety Management System Gilbert Markus Nisah Pih 14 September Sangasanga

46 Lead Auditor OHSAS 18001 & ISO 14001 Indotrain 21 - 20 September Sangasanga

47 Electricity Use at the Office and Mess HSE ABN 9 October Sangasanga

48 Awareness ASMK3L HSE ABN 11 - 12 October Sangasanga

49 Lead Auditor OHSAS 18001 & ISO 14001 Indotrain 17 - 18 October Sangasanga

50 Minescape Advance Stratmodel Mitrais 16 - 19 October Jakarta

51 Awareness ASMK3L HSE ABN 19 - 20 October Sangasanga

52 Evaluation & Certification of General Safety and Health Expert Start Safety 25 - 26 October Sangasanga

53 Mining Acid PT BENEFITA 26 - 30 October Sangasanga

54Environmental Brainstorming “Basic Knowledge on Post-Mining Revegetation and Safety Management System"

Sri Soegiharto 31 October Sangasanga

55 Awareness Training ASMK3L HSE ABN 3 November Sangasanga

56 HIRADC & Identifikasi Aspek HSE ABN 9 November Sangasanga

57 Minescape Open Cut Public Mitrais 10 - 14 November Jakarta

58 Intensive Course on Mining Law EMLI Training 12 - 14 November Jakarta

59 Lead Auditor ISO 14001 Cerification Indotrain 12 - 16 November Sangasanga

60Workshop on Implementation of Inventory Data Application

Pusat Pengelolaan Ecoregion (PPE Kalimantan) 20 November Balikpapan

61 Training on Analysis Need and Impact Evaluation PT ISDM 5 - 6 Desember Jakarta

62 Accident Investigation Expertindo 25 - 28 December Sangasanga




Employees Composition 2012-2013

2012 2013

Employeesby Status

STATUS Permanent613 (77.9%)Temporary173 (22.1%)

Permanent702 (88.3%)Temporary93 (11.7%)

Employeesby Education

Senior High School555 (70.6%)

Junior High School12 (1.5%)

Elementary School12 (1.5%)

Diploma46 (5.8%)Bachelor’s and Master’s Degree161 (20.6%)

Senior High School553 (69.5%)

Junior High School14 (1.8%)

Elementary School13 (1.6%)

Diploma51 (6.4%)Bachelor’s and Master’s Degree164 (20.7%)

Male712 (90.6%)Female74 (9.4%)

Male703 (88.4%)Female92 (11.6%)

Employeesby Gender

Age 18-2586 (10.9%)Age 26-35342 (43.5%)Age 36-45241 (30.7%)Age 46-5492 (11.7%)Age >5525 (3.2%)

Age 18-25 76 (9.5%)Age 26-35355 (44.7%)Age 36-45261 (32.8%)Age 46-5487 (10.9%)Age >5516 (2.1%)

Employeesby Age


Employeesby TItle

2012 2013

Non-Staff427 (54.3%)Staff165 (20.9%)Supervisor114 (14.5%)Super Intendent33 (4.2%)Manager25 (3.3%)Senior Manager4 (0.5%)General Manager6 (0.8%)Director12 (1.5%)

Non-Staff465 (58.5%)Staff108 (13.7%)Supervisor132 (16.6%)Super Intendent44 (5.5%)Manager29 (3.6%)Senior Manager1 (0.1%)General Manager6 (0.7%)Director10 (1.3%)

“ “One of the enduring features of the Group’s human capital is their ‘can do’ spirit that underlines the work ethics of the Toba Bara business group.



Shareholders Information

Name Position Number of Shares Percentage

Jusman D. Djamal President Commissioner 0 0.0000000

Bacelius Ruru Independent Commissioner 0 0.0000000

Farid Harianto Independent Commissioner 0 0.0000000

Justarina S. M. Naiborhu President Director 0 0.0000000

Pandu P. Syahrir Director 0 0.0000000

Arthur M. E. Simatupang Director 0 0.0000000

Sudharmono Saragih Director 45,000 0.0022360

Total 45,000 0.0022360

Composition of Shareholders

Shareholders Owning More Than 5%

Report of Share Ownership - Directors & Commissioners per 31 December 2013

Luhut Pandjaitan

99.98%

PT Bara Makmur Abadi (6.2%)

PT Sinergi Sukses Utama (5.1%)

Public (12.5%)

Davit T. Pandjaitan (0.8%)

PT Toba Sejahtra (71.8%)

Roby Budi Prakoso (3.6%)

Name of Shareholders Numbers of Shares Share Ownership

PT Bara Makmur Abadi 125,755,000 6.25%

Bintang Bara B.V 201,250,000 10.00%

PT Sinergi Sukses Utama 102,700,000 5.10%

PT Toba Sejahtra 1,444,750,000 71.79%

PT Adimitra Baratama Nusantara

51.00%

PT TobaBumi Energi

99.99%

PT Indomining99.99%

PT Trisensa Mineral Utama

99.99%

PT Perkebunan Kaltim Utama I

90.00%


Company Profile • Shareholders Information

Information on the Majority Controlling ShareholderThe Company is majority held by PT Toba Sejahtra (TS), which holds 71.8% shares of the Company. Mr. Luhut Pandjaitan holds 99.98% shares of Toba Sejahtra.

PT Toba Sejahtra is a limited liability company incorporated under Indonesian law on 6 August 2004, and is currently engaged in the business of mining, energy and plantation. The businesses of Toba Sejahtra comprise of among other things natural resources (thermal coal and oil and gas), power generating plants (as Independent Power Producer of coal- fired, gas-fired and geothermal power plants), as well as agricultural and plantation resources (oil palm, rubber, sugar cane, and forestry). In addition to Toba Sejahtra itself, the TS Group currently comprises of 16 other affiliated companies that are engaged in broad ranging industry sectors.

Toba Sejahtra works with several leading companies from Indonesia and overseas in developing various assets and natural resources in Indonesia, with the aim of harnessing the natural resources of Indonesia to their full capacity for the benefit of the Indonesian people.

Chronology of Share ListingThe Company successfully listed its shares on the Indonesia Stock Exchange on 6 July 2012, under challenging conditions for the coal market in general. A total of 210,681,000 common shares at a nominal value of Rp200 per share, was listed on the Exchange, representing 10.47% of the Company’s fully paid and subscribed capital. The number of shares that was offered to the public at a price of Rp1,900 per share generated an IPO proceed of Rp400,293,900,000 for the Company. It is listed on IDX with the ticker code of TOBA.

No.Type of Public

Offering

Effective Date

Realization of Public Offering Plan of Use of Proceeds as Disclosed in Prospectus Realization of Use of Proceeds as Disclosed in Prospectus

Total Proceeds

from Public

Offering

Expenses of Public Offering

Net Proceeds

Payment of Loan to BNP Paribas

CapitalExpenditures

Acquisition of Coal Mining Concession,

Working Capital and Operational,

and Exploration Activities

Total

Payment of Loan to BNP Paribas

CapitalExpenditures

Acquisition of Coal Mining Concession,

Working Capital and Operational, and Exploration

Activities

TotalRemaining Proceeds of

IPO

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

1Penawaran

Umum ( IPO )

6-Jul-12 400,294 38,871 361,423 94,476 189,711 77,236 361,423 94,116 112,532 77,236 283,884 77,539

Total 400,294 38,871 361,423 94,476 189,711 77,236 361,423 94,116 112,532 77,236 283,884 77,539

Report of Use of Proceeds Per December 2013

Notesa. (i) Plan of use of proceeds as disclosed in Prospectus. 7 More or less 26.14% from the net proceeds to be used to repay loan facilities from BNP Paribas. 8 More or less 52.49% from the net proceeds to be used for capital expenditure to support mining activities, infrastructure and

facilities development in the concession areas of the subsidiary entities. 9 More or less 21.37% from the net proceeds to be used as working capital for the Company and subsidiary entities and to

finance exploration activities in the subsidiary entitities’ concession areas and to acquire coal mining concessions. (ii) Realisation of use of proceeds as disclosed in Prospectus. 11 Repayment of the loan principal to BNP Paribas amounting to US$9,946,782.69 equivalent to Rp94,116 million. 12 Capital expenditures related to the procurement of fixed assets for the Company and the development of supporting facilities in

the concession areas of subsidiary entities. 13 Financing of working capital and exploration activities in the three subsidiary entities’ concession through loans extended to the

subsidiary entities amounting to Rp18,485 million. Financing of operations and working capital of the Company

b. Fund from the proceeds of the IPO as of 31 December 2013 was deposited in PT Bank CIMB Niaga Tbk (non afiliated) with a tenor of one month, earning a Rupiah interest rate of 9.75%.



Percentage Ownership of the Company

51.00%

PT INDOMINING

99.99%PT Adimitra Baratama Nusantara (ABN) is a fast-growing thermal coal producer located in Sanga- Sanga, Kutai Kartanegara, East Kalimantan, Indonesia and covers 2,990 hectares. First set up in 2004, ABN has been a majority-owned subsidiary entity of the Company since 2010.

ABN has a total estimated resources of 156 million tons of coal. Currently, ABN produces two varieties of blended thermal coal, ABN 52 and ABN 58. In 2013 it produced 4.2 million tons of coal, with main infrastructures that comprise of coal stockpile, crusher, overland conveyor and jetty. In 2013, more than 80% of ABN production is estimated to be higher than 5,600 GAR. ABN transports its coal from the ROM stockpile through the overland conveyor of less than five kilometers, which directly loads the coal to 300-feet barges at the jetty.

PT Indomining is a subsidiary company of PT Toba Bumi Energi, which is wholly controlled by the Company. The Indomining coal concession is located in Sanga-Sanga, Kutai Kartanegara, East Kalimantan, and covers 683 hectares, adjacent to the concession of ABN.

IM has a total estimated coal resources amounting to 37 million tons, and has its own coal mining infrastructures that include a crusher, land conveyor and jetty. IM can transport crushed coal from the ROM stockpile through the overland conveyor directly onto docked barges in the jetty. IM began production in 2007 and in 2013 produced a total of 1.4 million tons of coal.

Brief Description of Operating Subsidiaries



Directors Directors

Paulina Maria Dame Uli Pandjaitan President Commissioner

Imelda The Commissioner

Aurelia Marsaulina Simatupang Commissioner

Soenggoel Pardamean Sitorus Commissioner

Sintong Pandjaitan Commissioner

Johny Lumintang* President Director

Sudirdjo Widjaja Director

Michael Soerijadji Director

Pandu P. Syahrir Director

Sudharmono Saragih Director


Godlief Manangkak Timbul Silaen President Commissioner

Hamid Awaluddin Commissioner

Roby Budi Prakoso Commissioner

Saswinadi Sasmojo Commissioner

HM Yunus Yosfiah Commissioner

Arthur Simatupang President Director

Alvin Sunanda Director

* As of the date of this Annual Report, Mr. Johny Lumintang no longer serves as the President Director of ABN.



PT PERKEBUNAN KALTIM UTAMA I

99.99% 90%PT Trisensa Mineral Utama (TMU) is a wholly owned (99.99%) subsidiary of the Company. The TMU concession is located in Kutai Kartanegara, East Kalimantan, and covers 3,414 hectares. Trisensa has completed the construction of a coal-hauling road to IM through ABN in order to use IM’s infrastructures.

TMU has an estimated total resources of 43 million tons. TMU commenced production in October 2011, and in 2013 produced approximately 925 thousands tons of coal.

PT Perkebunan Kaltim Utama I (PKU) is a subsidiary entity of the Company with a majority share (90%) of PKU, which is engaged in the oil palm plantation business. PKU holds the Rights to Cultivate Oil Palm Plantation (HGU) of a site totalling 8,633 hectares in the Teluk Dalam Bario, Pula Seribu Village, Muara Jasa District, Jawa County, Sanga-Sanga Regency, and in Tani Bhakti Village, Batuah, Loa Janan District, Kutai Kartanegara Regency, East Kalimantan for a period of 30 years.



Company Profile • Brief Description of Operating Subsidiaries

Directors Directors


Tjokro Saputrajaya President Commissioner

Bok Maria Laurensia Commissioner

Utomo Santoso Commissioner

Suadi Atma Commissioner

Salikin Moenits Commissioner

Eddy Kustiwa Koesma Commissioner

Suaidi Marasabessy President Director

Elim Khiat Director

Hartanto Saputrajaya Nyoto Director


Lutfi Ibrahim Nasution President Commissioner

Lutfi Ismail Commissioner

Suaidi Marasabessy President Director


No.Supporting Institutions

Name of Institutions Address Period

1 Public AccountantKAP Purwantono, Suherman & Surja

Gedung Bursa Efek Indonesia, Tower 2, 7th floorJl. Jend. Sudiman Kav. 52-53, Jakarta 12190

T: (021) 5289 5000F: (021) 5289 4100

2012 - 2013

2 Notary Aryanti Artisari, SH. M. Kn

Menara Sudirman, 18th floorJl. Jend. Sudirman Kav. 60

Jakarta 12190T: (021) 520 4778F: (021) 520 4780

-

2 Share Registrar PT Datindo Entrycom

Wisma Diners Club AmexJl. Jend. Sudirman Kav. 34-35

Jakarta 10220T: (021) 570 8870F: (021) 570 9026

-

3 Public Appraisal Firm Jennywati, Kusnanto & Rekan

Plaza Bapindo Citibank Tower, 27th floorJl. Jend. Sudirman Kav. 54-55,

Jakarta 12190T: (021) 526 0808F: (021) 526 6006

-

Capital Market Supporting Professionals


OPERATING SUBSIDIARIES


Jakarta OfficeWisma Bakrie 2, 11th floorJl. H.R. Rasuna Said Kav. B-2Jakarta 12920, IndonesiaT: (021) 579 42103F: (021) 579 [email protected]

SiteJl. Habiba RT 04Kelurahan Jawa, Sanga-Sanga 75254Kab. Kutai Kartanegara - SamarindaKalimantan TimurIndonesiaT/F: (0541) 671 259

PT INDOMINING

Jakarta OfficeWisma Bakrie 2, 11th floorJl. H.R. Rasuna Said Kav. B-2Jakarta 12920, IndonesiaT: (021) 579 30579F: (021) 579 30580

SiteDistrict 5, Jl. Gajah MadaKel. Sanga-Sanga Dalam, Kec. Sanga-SangaKab. Kutai Kartanegara - SamarindaKalimantan TimurIndonesiaT: (0541) 671 387F: (0541) 671 310


Jakarta OfficeWisma Bakrie 2, 16th floorJl. H.R. Rasuna Said Kav B-2Jakarta 12920, IndonesiaT: (021) 5793 0568/9F: (021) 5793 0570

SiteKM 23 Desa Tani HarapanKecamatan Loa JananKab. Kutai Kartanegara - SamarindaKalimantan TimurIndonesiaT/F: (0541) 726 8231

PT PERKEBUNAN KALTIM UTAMA 1

Jakarta OfficeWisma Bakrie 2, 16th floorJl. H.R. Rasuna Said Kav B-2Jakarta 12920, IndonesiaT: (021) 5794 5779

SiteDesa Tani HarapanKecamatan Loa JananKab. Kutai Kartanegara - SamarindaKalimantan TimurIndonesiaT/F: (0541) 796 4704

Address of Company and Operating Subsidiaries


Wisma Bakrie 2, 16th floorJl. H.R. Rasuna Said Kav. B-2Jakarta 12920, IndonesiaT: (021) 5794 5779 F: (021) 5794 [email protected]


Management Discussion and Analysis

Industry Overview

Operational Review

Financial Review

56

58

68


The Coal Industry Sector Facing Declining Pace of Growth

The pace of growth in the demand for thermal coal continues

to indicate a slowing trend. A number of energy policies that

are directed towards lessening the dependency on coal energy

resources - especially in the largest consuming country, China -

have contributed to the changing landscape of the coal market

over the past several years. Ten or even five years ago, it would

seem that the demand for cheap and readily available coal

energy resources would never subside. New technology in power

plants was developed specifically to be able to use thermal

coal of low-range to medium-range calorific value, enabling the

consumption of much more coal. The process by which coal is

produced and made available – from pit to port – was designed

in the most effective and efficient manner for coal to be shipped

to its destination quickly and reliably. Environmentally friendly

technology was invented to reduce the amount of carbon

emission from the burning of thermal coal.

But none of these initiatives were enough, it seems, to alleviate

the pressure that continues to bear down on the coal industry.

In the past several years, a number of initatives was pursued to

reduce dependency on coal as an energy source – especially

from the point of view of health and environmental considerations

– and to rely more on other energy resources that are deemed

more environmentally friendly or renewable.

China has a big opportunity to capitalise more on the technology

to convert coal into synthetic gas or liquefied fuel. It is estimated

that the gasification of coal will be the basis for new energy

sources for China in the next five years.

Whereas for other markets in Asia aside from China, India

is expected to still rely on low-calorific to medium-calorific

grade coal in growing volumes for the foreseeable future – but

the problem for India is the steep devaluation of the Rupee

against the US Dollar that has made the cost of coal imports

prohibitively expensive for India.

These two developments in China and India have led to

a decline in the market demand for coal that ultimately

contributed to the market oversupply and depressed coal

price. Throughout 2013, the average selling price of coal in

accordance with the Newcastle Index Price was US$85.3 per

ton, compared to US$96.9 per ton in 2012 and US$121.2 per

ton in 2011.

The year 2013 was full of challenges for the coal-mining sector in Indonesia, as well as for the global coal industry in

general. The lingering low global coal price index and an oversupply of the coal market in 2013 had forced most of the coal

players in the world including Indonesia to cut operating costs, reduce workforce, and postpone major capital expenditures

for large-scale developments. According to the International Energy Agency (IEA) in its Medium-Term Coal Market Report

towards the end of 2013, “the global demand for coal will grow at an average rate of 2.3% per annum until 2018.” This

estimate is lower than that of the previous year that predicted the average annual growth rate to be 2.6%, and far below the

actual average annual growth rate between 2007 and 2012, which was 3.4%.

However, the IEA report also stated that despite the declining trend in the growth of global coal demand, coal will remain to

be the primary source for the world’s growing energy consumption, more than the use of any other fossil fuel.

Industry Overview

Indonesia’s Coal Export

Volume (in million tons)

353 384 421

2011 2012 2013

* Source, Indonesian Central Bureau of Statististics


The downward price trend above exerts pressure on coal

companies to reduce their operating costs in order to maintain

profitability. Declining coal price also put under pressure on

coal companies that have invested heavily on the basis of coal

prices of several years back – when the price of coal was still

in the range of US$100 per ton.

Needless to say, the current global coal markets tend to be

oversupplied, highly competitive, and are also faced with the

challenges of environmental conservation, forcing every coal

producer to operate efficiently, effectively and be responsive to

market expectations.

Challenges for the Indonesian Coal Industry

Indonesia has been the largest exporter of thermal coal in

the world since 2007 when it took over that distinction from

Australia. In the past five years, Indonesia’s coal production

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