50.0 50.0 Perusahaan The Company Annual Report 2013

68 2013 Annual Report Financial Performance Highlights Discussion on the Company’s inancial review for the year ending 31 December 2013 compared to 31 December 2012 should be read in conjunction with the Company’s consolidated inancial statements for said periods that have been audited by the Public Accounting Firm of Purwantono, Suherman Surja a member of Ernst Young Global, as an integral part of this Annual Report. All of the igures quoted in this Financial Review are the igures stated in consolidated inancial statements of the Company and Subsidiary Entities. The continuing weak global economy in 2013 had caused a correction of the global coal index price. The average selling benchmark coal price of the Newcastle Index declined by 12 from US96.9ton in 2012 to US85.3ton in 2013. Amidst the not so conducive coal market conditions, PT Toba Bara Sejahtra Tbk continued to grow its production by 16.1 from 5.6 million tons in 2012 to 6.5 million tons in 2013. At the same time, the Company implemented a series of cost reduction initiatives throughout 2013 by lowering Stripping Ratio SR and shortening overburden OB dump distance. As a result of the above, the Company was able to post increased revenue, decreased cost of goods sold, improved EBITDA, and increased consolidated comprehensive net income for the year ending 31 December 2013, as presented below. Financial Review “ “ The Company was able to post increased revenues, decreased cost of goods sold, increased EBITDA, and increased consolidated comprehensive net income. Sales in million US 6.3 396.7 421.8 2012 2013 Operating Proit in million US 137.0

21.1 50.0

2012 2013 EBITDA in million US 160.7

22.5 58.6

2012 2013 Total Comprehensive Income in million US 200.8

12.0 36.1

2012 2013 Equity in million US 17.7 110.9 130.5 2012 2013 69 2013 Annual Report Comprehensive Proit and Loss Statements Sales Volume and Revenue Although the weak global coal price had impacted on the decline of the Company’s average selling price ASP by 7.8 from US72.2ton in 2012 to US66.6ton in 2013, the Company showed resilience by posting an increase in revenues by 6.3 from US396.7 million in 2012 to US421.8 million in 2013 on the back of an increase in the volume of sales by 14.5 over the same period. Cost of Goods Sold Cost of Goods Sold COGS decreased by 1.8 from US348.5 million in 2012 to US342.3 million in 2013. The decrease was mainly due to the lower stripping ratio and the shortened distance for overburden disposal as well as several other cost efficiencies that were derived from the newly operated coal-hauling road between TMU and IM. This was relected in the decline of the FOB Vessel Cash Cost from US62.5ton in 2012 to US52.8ton in 2013. A major portion of the COGS was derived from costs related to the mining contractor services, fuel and other coal production services. Gross Proit The Company posted a Gross Proit of US79.6 million in 2013, an increase of 65.1 from US48.2 million in 2012. The increase was primarily driven by higher sales volume accompanied by cost efficiencies undertaken by the Company. Despite a decline of 12 in the Newcastle Index price, the Company showed resilient strength by posting an increase in production volume as well as sales volume that contributed to an increase in gross proit. Sales in million US 6.3 396.7 421.8 2012 2013 Tries Nainggolan GM Finance Tries Nainggolan joined the Company on November 2012 as GM-Finance. Previously he served as Business Analyst and Financial Planning in health sector Siloam Hospitals Group and retail sector Limited Brands, Inc. and Foot Locker, Inc.. Tries earned his Bachelor’s degree in Finance from Pennsylvania State University and Master’s degree in Public Policy and Management from Ohio State University, United States of America. FOB Vessel cash cost = Cost of goods sold that includes royalty and marketing expenses less depreciation and amortisation expenses. 70 2013 Annual Report EBITDA Despite the weak condition of the global market and relatively low coal price, the Company posted EBITDA of US58.6 million, an increase of 160.7 from US22.5 million in 2012. A combination of increased sales volume and a series of cost-efficiency drive by the Company in addition to greater marketing efforts contributed positively to improving EBITDA margin from 5.7 in 2012 to 13.9 in 2013. Other IncomeExpense Other IncomeExpense comprised of lossgain from foreign currency translation, gain from the settlement of pre-existing accounts between entities, cost of transfer of liabilities on domestic purchases, net gain on derivatives instrument, and net other income. Total lossgain on foreign currency translation increased by 1,467 from a gain of US0.6 million in 2012 to a loss of US8.2 million in 2013. This was due to the depreciation of the Rupiah against the US Dollar by 26.0 throughout 2013, from Rp9,685 in early 2013 to Rp12,189 as of December 2013, which primarily resulted from unrealised exchange rate loss on the amounts of cash and cash-equivalent that were denominated in Rupiah and other Rupiah receivables. Gains made on the settlement of pre-existing accounts between entities amounted to US7.5 million in 2013 related to the effective settlement of the transaction between PKU and the Company prior to acquisition. Selling, General and Administrative Expenses Selling, General and Administrative Expenses in 2013 amounted to US528.1 thousand, an increase of 47.1 from US358.9 thousand in 2012. The increase was in line with the increase in sales volume that primarily resulted in the increase of commission expense by 1,195.4 to US365.3 thousand. General and Administrative Expenses in 2013 amounted to US28.7 million, a decrease of 8.9 from US31.5 million in 2012, mainly due to cost efficiencies that were applied to official transportation expense, representation and entertainment expense, corporate social responsibility expense, and a reduction of tax on land and building as well as other tax expenses. Operating Proit As a result of the above, the Company posted an Operating Proit of US50.0 million in 2013, an increase of 137.0 from US21.1 million in 2012. The increase was due to the increase in gross proit by 65.1. Operating Proit in million US 137.0

21.1 50.0

2012 2013 EBITDA = Gross proit less cost of goods sold and marketing expenses, less general and administrative expenses, plus depreciation and amortisation expenses. 71 2013 Annual Report Proit for the Year in million US 190.8

11.9 34.6

2012 2013 Comprehensive Income for the Year in million US 200.8

12.0 36.1

2012 2013 Proit for the Year After accounting for net tax expense of US15.8 million for the current year, the Company posted a Net Comprehensive Income in 2012 of US34.6 million in 2013, an increase of 190.8 from US11.9 million in 2012. The increase was due to factors referred to above. Other Comprehensive Income In 2013 the Company posted Other Comprehensive Income of US1.5 million, which was primarily derived from foreign currency translation on the inancial statements of the subsidiary entity, PKU. Other Comprehensive Income in 2012 was US70.4 thousand. Comprehensive Income for the Year The total Net Income for the Year amounted to US36.1 million in 2013, an increase of 200.8 from US12.0 million in 2012. Consolidated Cash Flows Report Cash received from operating activities increased by 100 from US31.9 million in 2012 to US63.9 million in 2013. This was mainly due to increased cash receipts from customers by 14 from US379.8 million in 2012 to US434.5 million in 2013 as well as the decline in corporate income tax payment from US52.2 million in 2012 to US8.9 million in 2013. Meanwhile, cash used in investment activities declined from US127.3 million in 2012 to US2.9 million in 2013. Cash derivedused in inancing activities declined from a positive US138.0 million in 2012 to a negative US28.0 million in 2013. This was mainly due to the initial public offering of shares that the Company undertook in 2012. All told, the Company was able to increase the amount of Cash and Cash Equivalent by US32.9 million in 2013. After accounting for loss of foreign currency translation of US5.9 million on the portion of Rupiah denominated Cash and Cash Equivalent, the Company’s Cash and Cash Equivalent balance as of year-end 2013 increased from US36.3 million on 31 December 2012 to US63.3 million on 31 December 2013. 72 2013 Annual Report Financial Condition and Capital Resources Total Assets The total Assets of the Company increased by 19.2 to US311.6 million as of year-end 2013. The increase resulted primarily from an increase in Current Assets by 22.3 from US106.5 million to US130.2 million, and an increase in Fixed Assets by 17.0 from US155.0 million to US181.4 million. Cash and Cash Equivalent The increase of Current Assets was mainly attributed to the increase in Cash and Cash Equivalent by 74.4 from US36.3 million in 2012 to US63.3 million in 2013. This was driven primarily by Net Cash receipt from operations amounting to US63.9 million in 2013. Account Receivables In 2013 the Company posted Trade Receivables of US16.6 million, an increase of 21.2 from US13.7 million in 2012. This amount pertains to Trade Receivables from third parties. Inventories The Company’s Inventories increased to US32.4 million as of year-end 2013, primarily stemming from the increase in coal inventories from rising production. Prepaid Taxes The Company posted Prepaid Taxes amounting to US6.8 million in 2013, being the accumulated installments of the Company’s 2012 Corporate Income Tax. Total Fixed Assets Total Fixed Assets as of year-end 2013 reached a total of US181.4 million, an increase of 17.0 from US155.0 million in 2012. The increase was primarily due to the rise in Fixed Assets, less accumulated depreciation, by 43.7 from US 34.1 million in 2012 to US49.0 million as of year-end 2013. These ixed assets are mainly comprised of heavy equipment, conveyor, workshop and related equipment, buildings as well as roads and bridges in the Company’s concession areas. The increase in total Fixed Assets was also due to the addition of plantation assets amounting to US16.8 million from the acquisition of PKU by the Company. Mine Properties Mine Properties, less accumulated amortisation, reached a total of US71.9 million as of year-end 2013, an increase of 24.8 from US57.6 million in 2012. Liabilities The Company’s total liabilities as at year-end 2013 amounted to US181.2 million, an increase of 20.3 from US150.6 million in 2012. The increase was primarily due to the increase in short-term liabilities by 3.6 to US145.5 million, and that of long-term liabilities by 257.0 to US35.7 million. Account Payables As year-end 2013, the Company had total Accounts Payable to third parties of US69.3 million, an increase of 19.9 from US57.8 million in 2012. The increase was mainly due to the rise in the production volume of coal in 2013. Bank Borrowing The Company posted total short-term Bank Borrowing of US33.6 million and long-term Bank Borrowing of US20.2 million as of 31 December 2013. Altogether, total Bank Borrowing increased by 11.4, mainly due to borrowings by IM from Standard Chartered Bank and that of PKU from PT Bank Rakyat Indonesia Persero Tbk. Sales Advances In selling its products, the Company received Sales Advances from customers as either intent of purchase or as part of the agreed clauses in the Sale and Purchase Agreement. This amount constitutes a liability of the Company before actual delivery of the sales is realised, and recognized as sales revenue only upon the delivery of coal. As of year-end 2013, the Company posted total Sales Advances for short-term and a portion of long-term deliveries of US27.9 million, an increase of 140.5 from US11.6 million in 2012. The increase was part of the Company’s strategy to secure sales commitments in 2014 at a certain volume and price. 73 2013 Annual Report Equity As a result of the above, the Company’s equity reached a total of US130.5 million as of year-end 2013, an increase of 17.7 from US110.9 million in 2012. The increase was derived mainly from the increase of retained earnings from the Company’s Net Income for the year under review. Ability to Pay Debts Ability to Pay Debts The Company’s solvency ratio did not change much, from 1.74 times in 2012 to 1.72 times in 2013, due to the increase in total Assets by 19.2, while total Liabilities rose by 20.3. This indicates a similar capability of the Company to meet its inancial obligations in 2013 as in 2012. Liquidity The Company’s liquidity strength increased in 2013 compared to that of 2012, as indicated by the improvement of its current ratio from 0.76 times in 2012 to 0.89 times in 2013. Capital Structure The Company strives to maintain a strong capital structure at all times, by maintaining inancial ratios that are sound and healthy to support the sustainable growth of the Company, as well as to meet the Company’s inancial obligations as they become due from time to time. Equity in million US 17.7 110.9 130.5 2012 2013 Material Increase or Decrease in Sales or Net Income The Company did not post a signiicant increase or decrease in the amount of coal sales in 2013 that would have a material effect on the business continuity of the Company. Although there was a decline in the Newcastle coal price index by 12 in 2013, this did not have a material impact on the Company’s revenues due to increased sales volume in 2013, to the effect that the Company was able to increase its sales revenue in 2013. Impact of Price Changes to Revenues and Net Income As described above, although changes in the Newcastle coal price index have a direct impact on the Company’s coal sales revenue, this impact was mitigated by the increase in coal sales volume throughout 2013. Realization of Use of IPO Proceeds This information is presented on page 49 of this Annual Report. Information Disclosure on Material Transactions The Company did not undertake any material transactions in 2013. Changes in Laws and Regulations that May Affect the Company’s Performance In 2013 there were no changes to prevailing laws and regulations that could signiicantly affect the operations of the Company or the consolidated inancial statements of the Company. 74 2013 Annual Report Factors that May Affect the Company’s Performance The performance of the Company is measured by the achievement of coal production volume and sales revenue that are obtainable on the basis of business targets set under the Company’s annual budget. Meanwhile, the level of coal production volume is dependent upon the management of mine planning and logistics management to increase coal production and transport coal to the barge–loading jetties and onward to transhipment points in open seas. Activities of coal mining can be affected by bad weathers throughout the rainy seasons that can occur from time to time. Production and sales volume can also be affected by market demand, availability of shipment, and the capacity and performance of the coal-mining contractors. In addition, luctuation of global coal price has a major impact on the Company’s sales revenue. The global price of coal is affected by the dynamics of supply and demand of the export markets for global coal as well as by demand from domestic market especially in the power generating sectors. Development Plan in 2014 The Company plans to undertake capital expenditures of approximately US25 million to support the Company’s business growth in coal mining and other business developments in 2014. A portion of the capital expenditures will be used to pay for land compensation in the PKU oil palm plantation, in addition to constructing a palm-oil mill in the Company’s newest subsidiary entity, PKU. The remaining capital expenditure will go to the construction of a coal conveyor belt in ABN, and for the purchase of additional heavy equipment in ABN and IM. The Company has also drawn up plans to carry out exploration in its three coal mine concessions, continuing with the exploration works that had been undertaken in 2014 to increase the coal reserves of the Company. In general, the Company plans to increase coal production somewhere in the range between 7.2 million tons and 7.8 million tons of coal in 2014, supported by the Company’s increasingly integrated mining infrastructures. 75 2013 Annual Report Risk Management The business of coal mining is fraught with business risks that are related to several factors including laws and regulations factor that can change from time to time, the coal price factor in both international and domestic markets that are beyond the control of the Company, production factor with respect to the availability of production facilities and mining infrastructures of the Company, natural factor related to weather and natural disasters, distribution factor in connection with the availability of mother vessels and transportation facilities from the mines to transhipment points, and social factor in regards to the Company’s relations with its surrounding communities. The initiatives on risk management by the Company essentially rest upon the dissemination of information as early and as comprehensive as possible to the Board of Directors and its management team to anticipate the possibility of risks in their earliest stage and carry out appropriate mitigation efforts. In that regards, the function of risk management at the Company and operating subsidiaries levels are carried out within each division and covers both operational and non operational activities. On the operational side, for instance those that involve work procedures with strict operational standard on safety and health at work both in the ields and offices, working relations with mining contractors and other suppliers, as well as the development and maintenance of mining infrastructures to ensure continuity of production. From the non-operational side, the Company faces risks that may result from fraudulent activities, non-compliance behaviors and inancial risks. From the inancial perspective alone, the Company is constantly exposed to luctuations of coal price, currency exchange rates, risks associated with credits provided to customers, and inancial liquidity risk. The Company mitigates these inancial risks among other things through i obtaining long term sales contract with locked price, ii carrying out its inancial statements denominated in US Dollars to minimize currency exchange risk, iii maintaining close ties with major coal buyers who are credible, and iv ensuring adequate working capital and inancial liquidity through equity inancing and bank borrowing. In terms of environmental conservation and community welfare, the Company reduces its risk impact on natural environment and maintains good relations with local communities by undertaking corporate social responsibility programs as a company that cares for the environment and community development in the area where the Company operates. Essentially, the Company continues to map out all of the risk potential that it faces, and formulates risk mitigation techniques that it considers appropriate. In 2013, one of the risk factors that was successfully mitigated was the settlement of the overlapping land issues with PT Perkebunan Kaltim Utama I comprehensively, providing the Company the opportunity to develop its business in its concession areas that previously had been hindered by the land overlapping issues. 76 2013 Annual Report 77 2013 Annual Report Corporate Governance General Meeting of Shareholders Legal Unit Safety, Health and the Environment Board of Commissioners Audit Committee Board of Directors Internal Audit Corporate Secretary Investor Relations 80 96 98 82 84 86 88 90 94 78 2013 Annual Report • The Principle of Fairness is implemented by carrying out business practices that are fair and honest, mindful of the rights of stakeholders that arise from contractual agreements andor prevailing laws. Accordingly, the Company has in place standard operating procedures SOPs for accounting, production and civil construction processes as well as for the procurement of goods and services. The Company adheres to the principles of GCG as follow: PT Toba Bara Sejahtra Tbk the Company is committed to implementing Good Corporate Governance GCG pursuant to best international practices. The GCG implementation by the Company is based on prevailing laws and regulations in Indonesia, the guidelines of National Committee on Corporate Governance, the recommendations of OECD and various references on GCG practices such as the ASEAN Balanced Scorecard and others. Transparency Fairness Accountability • The Principle of Accountability is implemented by clearly designating the rights and obligations of the Commissioners and Directors of the Company, and providing clear job descriptions to every rank-and-ile and positions of responsibility in the Company. All members of the Board of Commissioners and Board of Directors understand clearly their respective roles and responsibilities. The Company appoints Public Accountant Firm Purwantono, Suherman Surja Ernst Young of international repute big four accounting irms to ensure the quality and integrity of its audited inancial statements. • The Principle of Transparency is implemented by ensuring that the steps and processes leading to the formulation of policies and decisions by the Commissioners, Directors and Senior Managers of the Company are transparent and open to reviews by interested parties at all times. Throughout 2013, information disclosures by the Company routine as well as incidental disclosures have been performed in time in accordance with the prevailing regulations. While not mandatory to do so, the Company regularly issued Reports on Operational Progress as a means to improve transparency. 79 2013 Annual Report CORPORATE GOVERNANCE STRUCTURE The Corporate Governance Structure of the Company is made up of organs that comprise the General Meeting of Shareholders GMS, the Board of Commissioners BOC, the Board of Directors BOD, the Internal Audit Unit IAU and the Corporate Secretary. The following describes the authorities, duties and responsibilities of the respective organs. • The Principle of Responsibility is implemented by aligning the Company’s goals and objectives as well as managing its operations in accordance with prevailing laws and regulations and the expectations of stakeholders. Each year, the Company and its operating subsidiaries hold an Annual Budget Meeting to determine the business objectives and strategies, which are then deined into the Company’s Work Plan Budget RKAP. Responsibility Independence Good Corporate Governance • The Principle of Independence is implemented by ensuring that the Company and its Management operate independently without conlicting interests or at the behest of special interest groups. All members of the Company’s Board of Commissioners are Independent Commissioners. 2013 Annual Report 80 General Meeting of Shareholders GMS The General Meeting of Shareholders constitutes the highest and most authoritative body of the Company. All major transactions that require the approval of shareholders are carried out pursuant to prevailing terms and conditions set forth by the General Meeting of Shareholders. The GMS appoints and dismisses members of the BOC and BOD, determines the amount of remuneration for the Commissioners and Directors, approves the Annual Report and Performance of the Company as presented by the BOD, decides on the appropriation of net proits including the distribution of dividends to shareholders, and approves major corporate actions in conjunction with the management of the Company. The Company convenes the Annual GMS once a year, and the Extraordinary GMS at any time as needed without any limitation to the number of EGMS that can be convened within a year. In 2013, the Company carried out its Annual GMS on 28 June 2013 and did not convene an Extraordinary GMS. The followings are the resolutions of the Company’s irst Annual GMS as a publicly listed company that was held in Jakarta on 28 June 2013. First Agenda of the Meeting Accepted in good faith the Annual Report that among other things included the Consolidated Financial Statements of the Company for the year ending 31 December 2012 and ratiied the Company’s Balance Sheet and Income Statements for the year ending 31 December 2012 that had been audited by the Public Accounting Firm of “Purwantono, Suherman dan Surja” a member irm of Ernst Young Global with an Unqualiied Opinion as stated in the Independent Auditors Report Number : RCP-3525PSS2013, dated 26 March 2013. With the ratiication of both the Company’s Annual Report and the Balance Sheet and Income Statements of the Company for the year ending 31 December 2012, the Company grants full release and discharge Acquit et de Charge to the members of the BOC and BOD for their actions in supervising and managing the Company throughout 2012 in so far as those actions are relected in the Balance Sheet and Income Statements of the Company. Second Agenda of the Meeting 1. Appropriation of the net proit that is attributed to the parent entity for the year 2012 in the amount of US3,198,832 to be used as follows: a. A total of US31,988 to be used as statutory reserves pursuant to Article 70 of the Limited Liability Law No. 40 of 2007; b. A total of US3,166,844 or 99 of the Company’s proit to be distributed as inal cash dividends on net proit of 2012, wherein the dividends to be paid out to the single majority shareholder PT Toba Sejahtra already include interim dividends of US1,000,000 that had been paid on 10 April 2012 before the Company became a public company. The decision to distribute the interim dividends was stated in the Company’s prospectus for the Initial Public Offering of shares. 2. Appropriation of dividends from a portion of the Company’s retained earnings in early 2012 amounting to US2,499,135 or 99 of the retained earnings balance at the beginning of 2012 to be used for the payment of the inal cash dividends. 3. The full amount of the inal cash dividends pertaining to items 1.b and 2 above was US5,665,979 or US0.0028 per share. 4. Extend power of attorney to the Company’s BOD to determine the date for payment of the cash dividends, to be advertised in two national dailies by taking into account all prevailing regulations on the matter. Third Agenda of the Meeting Extend power of attorney to the Company’s BOC to appoint a Public Accounting Firm that is registered with the Financial Services Authority that will audit the Company’s inancial statements for the current year ending 31 December 2013, and subsequently approve and extend power of attorney to the Company’s BOC to determine the fee for the Public Accounting Firm and other terms. 2013 Annual Report 81 Fourth Agenda of the Meeting Accept the resignation of Catherine Warouw as Director of the company effective since October 2012 and grant her full release and discharge from her actions taken on behalf of the Company throughout her tenure until the effective date of her resignation from the Company. As such, the composition of the Company’s BOD is as follows: • President Director : Justarina S.M. Naiborhu • Director : Pandu P. Syahrir • Director : Arthur M.E. Simatupang • Director : Sudharmono Saragih Extend power of attorney to the Company’s BOD with substitution rights to reannounce the change in the composition of the Company’s BOD in the Notarial Deed and to inform the Minister of Justice and Human Rights of the Republic of Indonesia, and to register the change in the Company Registry and to undertake all necessary steps pursuant to prevailing laws and regulations. Fifth Agenda of the Meeting Extend power of attorney to the Board of Commissioners to determine the honorarium andor other beneits to members of the BOC for the year 2013, including details of the breakdowns among individual Commissioners with due consideration for the recommendations of the Remuneration Committee once the Committee is formed. Sixth Agenda of the Meeting Extend power of attorney to the Board of Commissioners to dertermine the salary andor other beneits to members of the BOD for the year 2013, including details of the breakdowns among individual Directors with due consideration for the recommendations of the Remuneration Committee once the Committee is formed. Seventh Agenda of the Meeting a. Accept the accountability of the use of the proceeds of the Initial Public Offering IPO of Shares as of 31 December 2012 amounting to Rp144,071 million and the remaining IPO proceeds of Rp217,352 million in accordance with the report on the realisation of the use of the IPO proceeds from July to 31 December 2012 that had been iled by the Company with the Financial Services Authority and the Indonesia Stock Exchange through the Letter No. 008TBSI13 dated 15 January 2013. b. The Meeting accepts the report on: The composition of the Company’s Audit Committee is as follows: • Chairman : Bacelius Ruru • Member : Prof. Dr. Ir. Irwandy Arif, MSc • Member : Aria Kanaka Pursuant to Article 68 Items 4 and 5 of the Laws of the Republic of Indonesia No. 40 of 2007 on the Limited Liability Company, the Meeting hereby states that the Company’s consolidated balance sheet and comprehensive income statements for the year ending 31 December 2012 as presented in the Company’s inancial statements that have been ratiied in the First Agenda of the Meeting above are in all material respect the same as those that have been published in the Suara Pembaruan Daily on 28 March 2013. The Company convened the Annual General Meeting of Shareholders for the irst time as a publicly listed company. 2013 Annual Report 82 Board of Commissioners The members of the Board of Commissioners BOC are appointed and dismissed by the resolution of the GMS. As of year-end 2013, the Board of Commissioners BOC of the Company comprises of three members, including the President Commissioner who is concurrently an Independent Commissioner and two other Independent Commissioners. The appointment of members of the BOC, and its composition, comply with Capital Market laws and regulations, namely Bapepam Regulation No.IX.I.6 juncto Bapepam Chairman Decision Letter No. KEP-45PM2004 of 29 November 2004 on the Board of Commissioners and Board of Directors of a Security Issuer and Publicly Listed Company. The composition of the Board of Commissioners is as follows: • IndependentPresident Commissioner : Jusman Syaii Djamal • Independent Commissioner : Bacelius Ruru • Independent Commissioner : Farid Harianto Based on the size and scope of the Company’s business, the number and qualiication of the members of the Board of Commissioners are deemed sufficient to perform the duties and responsibilities of supervising the management of the Company. Independency of the BOC The composition of the Board of Commissioners of the Company has exceeded the requirement of Capital Market laws and regulations that require at least a third of the membership of the BOC are Independent Commissioners. Presently set at three members, all members of the Company’s BOC are independent members who are not affiliated to the Shareholders of the Company. This ensures the Board’s independency in supervising the management of the Company. Implementation of the Duties and Responsibilities of the BOC Pursuant to the Company’s Articles of Association, the Board of Commissioners is charged with the supervision and advice given to the Board of Directors BOD on the management of the Company by the BOD. In addition to undertaking its routine supervisory and advisory capacity, in 2013 the Board of Commissioners gave its approval on the following items: • Formulation and Adoption of the Company’s Long-Term Business Plan. • Determining Key Performance Indicators for subsidiary entities. • Approval of the Semi Annual Financial Statements. • Approval of the Audited 2013 Financial Statements and 2013 Annual Report. The Board of Commissioners has the opportunity to broaden the perspectives of the Company on the implementation of GCG. For instance, the BOC gave its advice and recommendations in the formulation of the Company’s business plan including the formulation of the annual budget. In 2013, the Commissioners were active in supervising the implementation of GCG within the Company, which included the following activities: • Establishment of the Audit Committee in January 2013. • The Commissioners have given direction and input as well as discussed a variety of issues with the Directors in order to act on all pertinent matters that need the attention of the Commissioners in a timely, relevant and accurate manner. • The Commissioners have made a more effective communication with the Directors and management in the implementation of its duties through the use of letters, telephone, sms and e-mail. • The Commissioners have authorised certain transactions and corporate actions that require the approval of the Commissioners pursuant to the Articles of Association and prevailing regulations. In discharging its supervisory duties, the Board of Commissioners does not merely rely on official forum such as board meetings or report reviews, but also undertakes active on-the-spot engagements if necessary, including activities at the mining sites. 2013 Annual Report 83 Meetings of the BOC The Board of Commissioners convened 10 meetings in 2013. These meetings have been properly documented in the Minutes of Meeting. The attendance level of each Commissioner is presented in the following table: These meetings were held to undertake internal consolidation especially with regards to discussing reports submitted by the Directors. The agenda discussed among other things include discussion on monthly performances, annual performance, budget formulation, funding, discussion on the progress of projects, and discussion on the business of subsidiaries. Meetings of the Board of Commissioners were held to evaluate Company performance against business plans and targets, as well as other pertinent issues. Remuneration of Board of Commissioners As of year-end 2013, the Company’s BOC has begun to discuss the formation of the Nomination and Remuneration Committee. In the absence of this Committee in 2013, the remuneration for members of the BOC was proposed by the President Commissioner and approved by the General Meeting of Shareholders. The amount of remuneration and tantiem afforded to the Commissioners were based on the consideration of business target achievements, the Company’s inancial condition, and other relevant factors. Name Position Meeting Attendance Jusman Syaii Djamal IndependentPresident Commissioner 9 Bacelius Ruru Independent Commissioner 7 Farid Harianto Independent Commissioner 8 2013 Annual Report 84 Audit Committee To assist in its supervisory duties, the Board of Commissioners has formed the Audit Committee, with the duties and responsibilities as set forth in the Audit Committee Charter, as follows: • Oversees both the internal and external audit undertakings of the Company from planning to execution, audit indings and follow-up actions. • Advises the Board of Commissioners on the integrity of the Company’s inancial statements. • Provides professional and independent opinions to the Board of Commissioners on reports and other information presented by the BOD to the BOC as well as other assignments that are related to the duties of the BOC. Those duties were discharged through routine meetings as well as visits to sites in the mine ields. As of year-end 2013, the Company’s Audit Committee comprised of three members including the Chairman, as follows: Bacelius Ruru, SH, LLM Chairman of the Audit Committe and Independent Commissioner Bacelius Ruru’s proile is presented on page 39 of this Annual Report. Prof. Dr. Ir. Irwandy Arif, M.Sc. Member of the Audit Committee Holder of a PhD degree from Ecole des Mines de Nancy, France, as well as a Master degree in Industrial Technology and a Bachelor degree in Mining Technology, both from Institut Teknologi Bandung, he is a recognized expert in mining in Indonesia. He was appointed as member of the Audit Committee in January 2013. His concurrent and prior positions include as member of the Audit Committee of PT Adaro Energy Tbk since 2008, Chairman of the Audit Committee of PT Aneka Tambang Persero Tbk 2004-2009, as well as Independent Commissioner, Advisor and Expert Staff in various companies. In addition to positions in various scientiic organisations, he is also active in research and publication of journals in mining and geo-engineering. Aria Kanaka, CPA Member of the Audit Committee A graduate of Universitas Indonesia with Master and Bachelor degrees in Accountancy. He obtained the State Register of Accountant in 2000. He was appointed as member of the Audit Committee in January 2013. He also concurrently serves as member of the Audit Committee of PT Tower Bersama Infrastructure Tbk since 2010 and member of the Audit Committee of PT Metrodata Electronics Tbk since 2010. 2013 Annual Report 85 Appointment of the Public Accounting Firm Based on the power of attorney extended to the Board of Commissioners through the Company’s Annual GMS on 28 June 2013, the Board of Commissioners has appointed the Public Accounting Firm of Purwantoro, Suherman Surja, member irm of Ernst Young Global Limited, to perform the audit of the consolidated inancial statements of the Company and its three subsidiary entities for the inancial year ending 31 December 2013. This appointment was also based on the recommendations of the Audit Committee that had reviewed the qualiication of the PAF, and had ascertained that said PAF does not provide any other consultancy services to the Company. This represented the second such audit assignment for PAF Purwantoro, Suherman Surja by the Company in the past two years, at audit fees of US160 thousand in 2012 and US135 thousand in 2013. Audit Committee Meetings In 2013, the Audit Committee convened a total of 12 meetings with member’s attendance records as follows: The work program of the Audit Committee in 2013 covered the following activities: • Formulate the Audit Committee Work Plan for 2013 • Review and assess the Company’s business plan and budget for 2013 and update the Company on new accounting standards and treatments for the presentation of inancial statements, and identify risks related inance and internal control • Review of the Internal Audit Report • Discuss the draft for the audited inancial statements of 2012 and issues related to the audit indings of the PAF • Discuss the performances of PT Adimitra Baratama Nusantara, PT Indomining, PT Trisensa Mineral Utama and PT Perkebunan Kaltim Utama I • Discuss the drafts on the quarterly inancial statements in 2013 and discuss special strategyprogram by the Company in 2013 to maintain inancial performance • Evaluate selected audit indings by Internal Audit • Present the implementation of adherence to law within the Company • Discuss the quarterly report of the Audit Committee • Discuss the Audit Committee Report for 2013 and the Audit Committee Work Plan for 2014 • Discuss the appointment of the External Auditors • Discuss important AdHoc issues. In carrying out the work plan throughout 2013, the focus of the Audit Committee was to increase the added value of the Company in order to mitigate risks through operational productivity. Several programs that had been carried out were as follow: • Completed the Audit Committee Program of 2013 • Discussed the Company’s work plan and budget for 2013 and the work plan for the construction of CPP • Formulated the Audit Committee Charter and discussed the Audit Committee work program for 2013 • Discussed the challenges of preparing monthly inancial statements • Discussed signiicant audit indings • Visited the sites of subsidiary entities including PKU • Discussed audit indings report of Q1, 2, 3 and 4 in 2013 selected by Internal Audit • Discussed report on coal reserves, production target for 2013, organisational structure and human resources, proforma inancial statementsinancial projections in 2013 and other pertinent issues with the Board of Directors and subsidiary entities • Reviewed the Company’s legal compliance • Reviewed the appointment of auditors for 2013 • Discussed the quarterly Audit Committee Report • Discussed the Audit Committee Report for 2013 and the Audit Committee Work Plan for 2014. Name Position Meeting Attendance Bacelius Ruru Chairman of the Audit Committee 11 Irwandy Arif Member of the Audit Committee 12 Aria Kanaka Member of the Audit Committee 12 2013 Annual Report 86 Board of Directors Members of the Board of Directors BOD are appointed and dismissed by the resolution of the GMS. As of year-end 2013, the BOD comprised of four members, including the President Director and three Directors. The appointment of said Directors complies with the Bapepam-LK Regulation No.IX.I.6 juncto the Decision of Bapepam-LK Chairman N0. Kep-45PM2004 on the Directors and Commissioners of Securities Issuers and Public Companies. Pursuant to the mandate given by the Company’s shareholders, the BOD has formulated the Company’s business strategy and continued to strive to achieve the goals set in the strategy. The strategy covers key measures that were taken by the Company throughout 2013, especially with regards to facing up to the challenging conditions of the coal industry in general. Board Members As of year-end 2013, the Board of Directors comprises of four members, including the President Director who is also an Unaffiliated Director, as follows: • Justarina S.M. Naiborhu • Pandu P. Syahrir • Arthur M.E. Simatupang • Sudharmono Saragih All members of the Board of Directors are granted with power- of-attorney and authority to carry out their duties as Directors of the Company whose term will end at the closing of the Company’s GMS in 2017, while taking into account the rights of the General Meeting of Shareholders to terminate their appointments prior to the said. Based on the size and scope of the Company’s business, the number and qualiication of the members of the Board of Directors are deemed sufficient to perform the duties and responsibilities of managing the Company. Independency of the BOD The composition of the Board of Directors of the Company has met the requirements of the laws and regulations of the Capital Markets, with the number of Directors presently set at four members, one of which is an independent member who is not affiliated to the Shareholders of the Company. Implementation of the Duties and Responsibilities of the BOD Pursuant to the Company’s Articles of Association, the Board of Directors shall undertake all activities that relate to the management of the Company for the beneit of the Company and in line with the goals and objectives of the Company; while also representing the Company in or out of the court of law in all matters and events with certain exceptions as stipulated in the prevailing laws and regulations, the Company’s Articles of Association andor the resolutions of the Company’s GMS. The duties of the Board of Directors are, among other things: • To ensure that Company activities are conducted in line with its business objectives. • To formulate the Company’s Long Term Business Plan and prepare Annual Budget Plans for presentation to the BOC. • To execute the Company’s business plans with best efforts in order to achieve stated goals and objectives. • To produce the Company’s annual report as a form of accountability of the BOD’s performance, and the inancial statements of the Company as stipulated in the Company Act. • To prepare the Company’s inancial statements in accordance with generally accepted accounting standards and subject these statements to the Public Accountants for a inancial audit. • To establish the organisational structure of the Company, and ill the respective positions with qualiied personnel for the corresponding job descriptions. • To provide reports and brieings upon requests of the BOC. • To undertake other responsibilities in line with rules stated in the Company’s Articles of Association and GMS resolutions based on prevailing laws and regulations. In performing its duties and responsibilities, the Board of Directors must uphold the principles of GCG, including CSR engagements. 2013 Annual Report 87 Remuneration In the absence of the Nomination and Remuneration Committee in 2013, the remuneration for members of the BOD was proposed by the BOC and approved by the General Meeting of Shareholders. The amount of remuneration, tandem and other beneits afforded to the Directors were based on the consideration of business target achievements, the Company’s inancial condition, and other relevant factors. Name Position Meeting Attendance Justarina S.M. Naiborhu President Director 9 Pandu P. Syahrir Director 10 Arthur M.E. Simatupang Director 9 Sudharmono Saragih Director 8 BOD Meetings The BOD holds meetings among the Directors to discuss business matters and to ensure that the Company is on track in the execution of its business strategy. In 2013, the BOD held a total of 10 meetings with the following attendance records: Event Date Location Organiser 10th Annual Citi Asia Paciic Investor Conference 2013 30 Jan - 1 Feb Ritz-Carlton Millenia Singapore Citi Group Nomura’s ASEAN All Access 28 Feb - 1 Mar Singapore Nomura NDR Non Deal Roadshow Maybank 17 -18 Mar Singapore Maybank NDR Non Deal Roadshow Maybank 19 - 20 Mar Kuala Lumpur Maybank Deutsche Bank Indonesia Conference One on One 26 April Singapore Deutsche Bank Coal Trans Asia 2013 2 - 5 Jun Nusa Dua, Bali Euromoney Plc ASEAN Investor Conference 2013 4 - 5 Jun Mandarin Oriental Jakarta Citi Group Macquarie Emerging Leaders Corporate Date 18 - 19 Jun Singapore - Macquarie Office Macquarie CIMB 7th Annual Indonesia Conference 4 - 5 Jul Bali CIMB Securities Indonesia Power Energy Summit 2013 4 -5 Sep Grand Hyatt Jakarta Euromoney Annual Global Commodities Conference - Asia Paciic 2013 12 - 13 Sep Ritz-Carlton Millenia Singapore Goldman Sachs CLSA Investor Forum 26 - 27 Sep Hong Kong CLSA Deutsche Bank VIP Client Conference 15 - 16 Nov Bali Deutsche Bank Nomura Annual Asian High Yield Corporate Day 27 - 28 Nov Hong Kong Nomura Training for Commissioners, Directors and Senior Managers Members of the BOC and BOD of the Company as well as its Senior Managers kept abreast of developments in the industry, and general developments in various areas such as management, technology, human resources, inance and HSE. As such, they attended a variety of workshops and seminars in 2013, as follows: 2013 Annual Report 88 Internal Audit Unit The Company formed the Internal Audit Committee and appointed Pria Fardio Syaiful Dinar as Head of the Internal Audit Unit in May 2012, which has carried out its function well. The IAU works under the guidance and supervision of the Audit Committee. The IAU reports directly to the President Director of the Company, but also submits its report on the audit indings to the Board of Commissioners with the professional opinion of the Audit Committee. Execution of the audit is based on the Annual Audit Plan that is comprehensively structured by considering the risks of the respective aspects for audits. The Audit Plan is discussed with Management and presented to the BOD to be approved by the Audit Committee. The implementation of the Company’s internal audit works is risk-based in order to provide independent assurances to the Management on the compliance to prevailing rules and operating standards, and that internal control systems have functioned properly in line with expected references. In addition, the Internal Audit has also provided consultative services to other internal audit units within the Toba Bara Group with the intent of improving the standards of internal control at each subsidiary entity. The IAU works with the internal audit units of the subsidiary entities. IAU periodically reviews the activities of the Company and subsidiary entities as contained in the Annual Audit Work Plan. Those activities relate to inance and operation as well as compliance to prevailing laws and regulations by the Company and subsidiary entities. Periodically, summaries of audit indings and follow up actions are reported directly to the Board of Directors and the Audit Committee to be forwarded to the Board of Commissioners. Internal Audit also performs periodic internal assessments to review all aspects of internal audit activities and continuously monitors their effectiveness. In 2013, IAU together with audit partners in the subsidiary entities succeeded in enhancing the scope of audit works as well as the quality of audit indings. The following is a list of several audit works that were performed during the year under review: In Finance and Accountancy • Reviewed the rates and performances of the contractors of the TBS Group • Reviewed and identiied inventory loss. In Procurement and Logistics • Audited the procurement process, from the request for quotation, price comparison, issuance of the purchase order to payment • Discussed the implementation of SOP on the procurement of goods and services • Reviewed the payment document authorisation process at subsidiary entities • Carried stock audit on spare parts and fuel, including stock audits on actual balance of spare parts and fuel against actual use and consumption • Reviewed the cost for heavy equipment maintenance. Audit was done periodically on the maintenance of heavy equipment and the availability of related spare parts • Reviewed and analysed cost related to the procurement of ixed assets. 2013 Annual Report 89 In Human Resources • Reviewed the HR master data • Reviewed Key Performance Indicator KPI. In Sales and Marketing • Reviewed sales cut-off • Reviewed sales return, namely identifying the amount of coal that is either lost or decreased at FOB Vessel sale • Reviewed on sales contract and price. In Operations • Reviewed several civil engineering project • Reviewed mud swelling • Reviewed selection process of contractor • Reviewed the efficiency on the use of fuel for electricity generator and heavy equipment. Pria Fardio Syaiful Dinar Head of Internal Audit Unit Pria was appointed Head of Internal Audit Unit in May 2012. He obtained a Bachelor’s Degree in Economics from Universitas Indonesia 2008 and a Bachelor’s Degree in Law from Universitas Krisnadwipayana 2006. Currently he is pursuing a Master’s Degree in Business and Administration at Universitas Gadjah Mada. Prior to being appointed Head of Internal Audit Unit, Pria served as an internal auditor at PT Adimitra Baratama Nusantara, the largest coal mining subsidiary of PT Toba Bara Sejahtra Tbk, and an auditor with Public Accountant Firm of Tanudiredja Wibisana Partners PricewaterhouseCoopers in which he was last a Senior Associate specializing in Energy Mining audit. From 2007 to 2008, Pria was also a lecturer in the Faculty of Law, Universitas Islam Assyaiiyah. 2013 Annual Report 90 Corporate Secretary Pursuant to Bapepam-LK regulation No.IX.1.4 on appointment of Corporate Secretary in order to enhance communications between Public Company and its investors and stakeholders, the Company has established Corporate Secretary function, and appointed Perry B. Slangor as the Corporate Secretary in 2011. However, with his resignation from the Company effective 27 September 2013, the Company appointed Pandu P. Syahrir as his replacement. The Corporate Secretary is responsible to facilitate communications between the Company and its stakeholders, among other things by ensuring the availability of equitable, accurate and timely information on the performance of the Company. The Corporate Secretary also serves as the liaison officer between the Company and the capital market authorities, shareholders, investors and the general public, as well as the mass media. The Corporate Secretary also helps to ensure compliance with applicable capital market regulations. As an implementation of public information disclosure, Toba Bara routinely discloses information to the Financial Services Authority formerly Bapepam-LK and the Indonesia Stock Exchange, as well as disseminates corporate information to the general public through its website and the print media. In 2013, the Corporate Secretary, among other things, coordinated the following activities: organising business gatherings; production of Company Proile and Annual Report in print and video format; preparing press releases; organising analysts and investor meetings; organising and conducting interviews with the media; preparing the Company’s information disclosures; preparing the Company’s publication materials; preparing the Company’s corporate advertisements; preparing the contents and managing the Company’s website; and preparing the Company’s operational performance reports. Pandu P. Syahrir Corporate Secretary Pandu P. Syahrir’s proile is presented on page 41 of this Annual Report. 2013 Annual Report 91 Date Subject Regulation No. 10 January Monthly Report on Exploration Activities Period December 2013 Regulation No. I.E on the Requirement for Information Filing and Attachment Rule of Board of Directors of PT Bursa Efek Jakarta No. Kep-306BEJ07-2004 8 January Information related to Volatility in Shares Transaction Regulation No. I-E: Requirement for Information Filing 15 January Report on the Use of Funds Received from IPO as of 31 Desember 2012 Regulation No. X.K.4, Attachment Rule Chairman of Bapepam No. KEP-27PM2003 28 January Disclosure of Information Regulation No. X.K.1 on Information Disclosure to the General Public, Attachment the Decision of Chairman of Bapepam No. KEP-86PM1996 29 January Information of Establishment and Appointment of Audit Committee Decision of the Chairman of Bapepam-LK No. KEP-643 BL2012 dated 7 December 2012 and BEI Regulation No.I-A 11 February Report on the Use of Funds Received from IPO as of January 2013 Regulation No. X.K.4, Attachment Rule Chairman of Bapepam No. KEP-27PM2003 13 February Monthly Report on Exploration Activities Period January 2013 Regulation No. I.E on the Requirement for Information Filing and Attachment Rule of Board of Directors of PT Bursa Efek Jakarta No. Kep-306BEJ07-2004 13 February Recent Operational Report Non Regulated 11 March Monthly Report on Exploration Activities Period February 2013 Regulation No. I.E on the Requirement for Information Filing and Attachment Rule of Board of Directors of PT Bursa Efek Jakarta No. Kep-306BEJ07-2004 28 March Audited Financial Statements 31 December 2012 Regulation No. X.K.2 Rule of Chairman of Bapepam-LK No. Kep-346BL2011 dated Juli 5, 2011 on the Filing of the Pe- riodical Financial Statements of Emitent or Public Company and Rule III.1.6.1.4. Regulation Number I-E Attachment Rule of Board of Directors of PT Bursa Efek Jakarta No. Kep-306 BEJ07-2004 1 April Summary of Management’s Discussion and Analysis of Financial Condition Non Regulated 11 April Monthly Report on Exploration Activities Period March 2013 Regulation No. I.E on the Requirement for Information Filing and Attachment Rule of Board of Directors of PT Bursa Efek Jakarta No. Kep-306BEJ07-2004 15 April Report on the Use of Funds Received from IPO as of 31 March 2013 Regulation No. X.K.4, Attachment Rule Chairman of Bapepam No. KEP-27PM2003 25 April Consolidated Interim Financial Statements Regulation No. I.E on the Requirement for Information Filing and Attachment Rule of Board of Directors of PT Bursa Efek Jakarta No. Kep-306BEJ07-2004 The following is a list of the information that was issued by the Company through the Corporate Secretary as part of transparency on information disclosure: 2013 Annual Report 92 Date Subject Regulation No. 30 April Annual Report 2012 Regulation No. X.K.VI on the requirement for Annual Report iling by an Issuer or Public Company, Attachment the Deci- sion of the Chairman of the Capital Market and Financial Institution Supervisory Agency No. KEP-134BL2006 6 May Summary of Financial Analysis and Management’s Discussion Non Regulated 14 May Monthly Report on Exploration Activities Regulation No. I.E on the Requirement for Information Filing and Attachment the Decision of the Board of Directors of PT Bursa Efek Jakarta No. Kep-306BEJ07-2004 22 May Notice of Annual GMS Regulation No. IX.X.I Decision of the Chairman of Bapepam No. Kep-60PM1996 30 May Proof of Advertisment for Notice of Annual GMS Regulation No. IX.J.I on the Main Clauses of the Articles of Associations of the Company that Undertakes a Public Offering of Shares and other Public Companies. Attachment the Decision of the Chairman of the Capital Market and Financial Institution Supervisory Agency No. Kep-179 BL2008 12 June Monthly Report on Exploration Activities Regulation No. I.E on the Requirement for Information Filing and Attachment Rule of Board of Directors of PT Bursa Efek Jakarta No. Kep-306BEJ07-2004 14 June Proof of Advertisment for Notice of Annual GMS Regulation No. IX.J.I on the Main Clauses of the Articles of Associations of the Company that Undertakes a Public Offering of Shares and other Public Companies. Attachment the Decision of the Chairman of the Capital Market and Financial Institution Supervisory Agency No. Kep-179 BL2008 20 June Disclosure of Information Regulation No. X.K.1 on Information Disclosure to the General Public, Attachment the Decision of the Chairman of Bapepam No. KEP-86PM1996 21 June Disclosure of Information Regulation No. X.K.1 on Information Disclosure to the General Public, Attachment the Decision of the Chairman of Bapepam No. KEP-86PM1996 2 July Notice of the Results of the AGMS Regulation No. IX.X.I on Information Disclosure to the General Public, Attachment the Decision of the Chairman of Bapepam No. KEP-60PM1996 12 July Monthly Report on Exploration Activities Regulation No. I.E on the Requirement for Information Filing and Attachment Rule of Board of Directors of PT Bursa Efek Jakarta No. Kep-306BEJ07-2004 15 July Report on the Use of Funds Received from IPO as of 30 June 2013 Regulation No. X.K.4, Attachment Rule Chairman of Bapepam No. KEP-27PM2003 18 July Notice of Schedule and Adminstering of Cash Dividends Payment Decision of the Board of Directors of PT Bursa Efek Jakarta Nomor: Kep-565BEJ11-2003 31 July Consolidated Interim Financial Statements Regulation No. I.E on the Requirement for Information Filing and Attachment Decision of the Board of Directors of PT Bursa Efek Jakarta No. Kep-306BEJ07-2004 2 August Summary of Management’s Discussion and Analysis of the Company’s Financial Condition as of 30 June 2013 Non Regulated 2013 Annual Report 93 Date Subject Regulation No. 12 August Monthly Report on Exploration Activities Regulation No. I.E on the Requirement for Information Filing and Attachment Rule of Board of Directors of PT Bursa Efek Jakarta No. Kep-306BEJ07-2004 16 August Exchange Rate for Final Cash Dividends Decision of the Board of Directors of PT Bursa Efek Jakarta Nomor: Kep-565BEJ11-2003 12 September Monthly Report on Exploration Activities Regulation No. I.E on the Requirement for Information Filing and Attachment Rule of Board of Directors of PT Bursa Efek Jakarta No. Kep-306BEJ07-2004 30 September Information on a Change of the Corporate Secretary of PT Toba Bara Sejahtra Tbk Bapepam Regulation No. IX.I.4 Attachment Decision Letter of the Chairman of Bapepam No. Kp-63PM1996 on 17 January 1996 11 October Report on the Use of Funds Received from IPO as of 30 September 2013 Regulation No. X.K.4, Attachment Rule Chairman of Bapepam No. KEP-27PM2003 11 October Monthly Report on Exploration Activities Regulation No. I.E on the Requirement for Information Filing and Attachment Rule of Board of Directors of PT Bursa Efek Jakarta No. Kep-306BEJ07-2004 28 October Consolidated Interim Financial Statements Regulation No. I.E on the Requirement for Information Filing and Attachment Rule of Board of Directors of PT Bursa Efek Jakarta No. Kep-306BEJ07-2004 1 November Summary of Financial Analysis and Management’s Discussion Non Regulated 12 November Monthly Report on Exploration Activities Regulation No. I.E on the Requirement for Information Filing and Attachment Rule of Board of Directors of PT Bursa Efek Jakarta No. Kep-306BEJ07-2004 27 November Notice of the Annual Public Expose of PT Toba Bara Sejahtra Tbk Regulation No. I.E on the Requirement for Information Disclosure and Attachment Decision of the Board of Directors of PT Bursa Efek Jakarta No. Kep-306BEJ07- 2004 12 December Monthly Report on Exploration Activities Regulation No. I.E on the Requirement for Information Disclosure and Attachment Decision of the Board of Directors of PT Bursa Efek Jakarta No. Kep-306BEJ07- 2004 13 December Presentation Materials for the Annual Public Expose of PT Toba Bara Sejahtra Tbk Regulation No. I.E on the Requirement for Information Disclosure and Attachment Decision of the Board of Directors of PT Bursa Efek Jakarta No. Kep-306BEJ07- 2004 2013 Annual Report 94 Investor Relations The Company formed an Investor Relations Unit and appointed Iwan Sanyoto as Head of Investor Relations in February 2013. The Company develops investor relations activities as part of its obligations to shareholders and the investing community. Throughout 2013, the Company was active in organising business gatherings and road shows for the investing community, including institutional investors such as fund managers, insurance companies, pension funds, and others. From time to time, the Company also met with capital market analysts, and especially those analysts that have begun to include the Company in their coverage. Still in the context of building the Company’s corporate image, the Investors Relations Unit actively sought and coordinated speaking engagements for the Directors of the Company in various economic, industrial and investment forums that are relevant to the Company’s line of business. In 2013, the Directors of Toba Bara gave keynote addresses in the following national and international forums: Event Date Location Organiser 10th Annual Citi Asia Paciic Investor Conference 2013 30 Jan - 1 Feb Ritz-Carlton Millenia Singapore Citi Group Nomura’s ASEAN All Access 28 Feb - 1 Mar Singapore Nomura NDR Non Deal Roadshow Maybank 17 - 18 Mar Singapore Maybank NDR Non Deal Roadshow Maybank 19 - 20 Mar Kuala Lumpur Maybank Deutsche Bank Indonesia Conference One on One 26 April Singapore Deutsche Bank Mandiri Sekuritas Investor Forum 2013 15 May Ritz-Carlton PP Jakarta Bank Mandiri Coal Trans Asia 2013 2 - 5 Jun Nusa Dua, Bali Euromoney Plc ASEAN Investor Conference 2013 4 - 5 Jun Mandarin Oriental Jakarta Citi Group Macquarie Emerging Leaders Corporate Date 18 - 19 Jun Singapore - Macquarie Office Macquarie Iwan Sanyoto Head of Investor Relations Since February 2013, the position of Head of Investor Relations is held by Iwan Sanyoto. Since 1993, he has had experiences in international trade, capital market and investment, working with J.M Didier Asia s.c. Belgium, PT Vickers Ballas Tamara Indonesia, Cargill Financial Services Asia Pte Ltd Singapore, PT DBS Vickers Indonesia, PT Kuo Capital Raharja and PT CIMB-Principal Asset Management. Iwan holds a Bachelor degree in Management from University of Maryland European Division, Belgium, and an MBA degree from Vrije Universiteit Brussel VUB, Belgium. 2013 Annual Report 95 Event Date Location Organiser CIMB 7th Annual Indonesia Conference 4 - 5 Jul Bali CIMB Securities 2nd Kalimantan Coal Conference 3 - 4 Sep Novotel Balikpapan IBC Asia Indonesia Power Energy Summit 2013 4 - 5 Sep Grand Hyatt Jakarta Euromoney Asia Annual Global Commodities Conference - Asia Paciic 2013 12 - 13 Sep Ritz-Carlton Millenia Singapore Goldman Sachs CLSA Investor Forum 26 - 27 Sep Hong Kong CLSA KNPI Economy Dialogue 15 Nov Jakarta KNPI Deutsche Bank VIP Client Conference 15 - 16 Nov Bali Deutsche Bank Nomura Annual Asian High Yield Corporate Day 27 - 28 Nov Hong Kong Nomura Indonesia’s Directorate General of Taxation Seminar 7 - Nov - 2014 Jakarta Ditjen Pajak 2013 Annual Report 96 Legal Unit To ensure the Company’s compliance to all prevailing laws and regulations, the Company also formed the Corporate Legal Unit and appointed Bima Sinung Widagdo as Head of the Corporate Legal Unit in 2011. The Corporate Legal Unit undertakes the duties and responsibilities as follows: • Protecting the Company from legal risks that may arise from transactions conducted by the Company; • Ensuring that in the due course of transactions and operational activities, the Company is always in observance of any applicable laws and regulations in the capital markets, the mining industry and other relevant laws and regulations; • Resolving disputes or potential disputes between the Company and third party. Throughout 2013, the corporate legal team assisted and was involved in various transactions conducted by the Company and its subsidiary entities, such as signiicant contracts with third parties including contractors, suppliers and customers, the loan agreements with a number of inancial institutions, and the follow-up process of the settlement related to the land overlapping issue with PKU that was carried out in 2012. Through the involvement of the corporate legal team in various transactions conducted by the Company, the Company expects to minimize the risk of legal disputes in the future. Bima Sinung Widagdo Head of Corporate Legal Bima Sinung Widagdo has been appointed as Head of Corporate Legal since March 2011. Previously, Bima has had a career in the energy sector with PT Adaro Energy Tbk and the banking sector with PT CIMB Niaga Tbk. Bima holds a degree in Law from the Faculty of Law, Universitas Indonesia. 2013 Annual Report 97 IMPLEMENTATION OF THE PRINCIPLES OF CORPORATE GOVERNANCE The Board of Commissioners works closely with the Board of Directors to map out the policies of corporate governance, and to ensure that implementation of Good Corporate Governance within the Company’s working environment is carried out in accordance with best practices as expected by the stakeholders of the Company. In implementing the GCG principles, the Company has deined a work culture based on the following values: • The Company and its personnel uphold integrity in all of their conduct and business dealings • The Company complies with all prevailing laws and regulations • The Company is committed to promoting employee’s growth and welfare • The Company avoids and resolves conlicts of interests • The Company is committed to Safety, Health and the Environment • The Company is accountable for all of its actions • The Company espouses fair and transparent business competition • The Company respects individual rights and dignity • The Company maintains reciprocal good relations with all stakeholders • The Company carries out Corporate Social Responsibility • The Company disseminates information and communicates with stakeholders accurately, responsibly and in a timely manner. Enforcement of the Code of Ethics The Company is still reviewing the establishment of a whistle blowing system suited to internal conditions. In practice, however, the Company has always implemented an open door policy to receive complaints and discuss reported issues. In essence, the Company cultivates a pleasant working atmosphere that among other things upholds good work ethics in line with the working culture enumerated above. 2013 Annual Report 98 Safety, Health and the Environment The Directors also devote a substantial portion of their time and attention to the issue of HSE Health, Safety and Environment at the workplace. The Company believes that it has implemented industry standards in occupational health and safety in accordance with prevailing regulations. Nevertheless, mining activities are fraught with the risk of accidents that can occur at any time, despite of anticipatory measures taken for the maximum prevention of work accidents. The Company has implemented work health and safety procedures and systems that have been proven capable of reducing the frequency of accidents. This is evident from the performance of one of the Company’s subsidiaries IM and its contractors in successfully recording some six million work-hours without time lost in accidents Loss Time Injury-LTI. TMU, which started operations in October 2011, and its contractors, so far have managed around one million hours of No LTI. The Company continued to strive to enhance its safety and health standards at the work place by reviewing all of health and safety standards across the Company and subsidiary entities. Following up on the Company’s success in environmental management in the past several years, two of the Company’s subsidiary entities, ABN and IM, succeeded in achieving a Green and Blue rating, respectively, in the environmental management program of PROPER under the auspices of the Ministry of Environment of the Republic of Indonesia. In 2013, TMU began to participate in the PROPER program. Since 2012, the Company and its subsidiary entities have implemented a 12-step Work Health and Safety Control program, involving i Leadership and Commitment, ii Policies and Strategic Intent, iii Organisation, Responsibility, Resources and Documentation, iv Management of Hazardous Process and its Impact, v Planning and Procedures, vi Implementation and Monitoring, vii Inspection and Audit, viii Reviews, ix Safety Signage, x Hazard Reports, xi Safety and Environment Audit, and xii Environmental Activities. Through these SHE initiatives, the Company continues to strive to improve and enhance the awareness for work health and safety at the workplace and among surrounding communities. Since 2013, the Company has also intensiied its commitments to safety at work by including No LTI as a key Performance Indicator for work evaluation. 2013 Annual Report 99 2013 Annual Report 100 2013 Annual Report 101 104 106 106 Community Development Environment Product Responsibility Corporate Social Responsibility 2013 Annual Report 102 Toba Bara undertakes its Corporate Social Responsibility through the three subsidiary entities that are directly in touch with the communities in and around the Company’s mining concessions. The policies and goals of the CSR activities are aimed at meeting the most urgent needs of the communities and in line with the capabilities of the Company’s subsidiary entities. One of the earliest policies adopted by Toba Bara has been the effort to provide job opportunities for the local population. To that end, the Company sets forth a policy to prioritise local workforce when recruiting human resources for the subsidiary entities. In this way the Company ensures that the presence of its mining concessions in Kutai Kartanegara, East Kalimantan, can provide direct beneits to the people of Kutai Kartanegara. It is not coincidental that more than 60 of the workforce in the four subsidiary entities are people from the local communities, and not migrant workers coming from outside of Kalimantan. Toba Bara is aware of the importance of corporate social responsibility as a pillar and prerequisite for sustainable development. The mining industry plays a key role in empowering local economies. Due to the huge areas of mining concession areas in general, there will always be interaction between the Company and members of the communities within and around the mining concessions in considerable numbers. Thus, mining companies have the social responsibility to take notice of the social welfare of surrounding communities. No less important is the responsibility of the mining industry to protect and preserve the environment and as much as possible restore and re- vegetate mined over areas into productive cultivation land for the welfare of the communities. 2013 Annual Report 103 In its CSR activities, Toba Bara also places a strong emphasis on education and health-care services and social welfare for the local population. A number of community development programs are designed according to community needs and developed by evaluating the results from time to time. The community development programs undertaken by the subsidiary entities also cover the empowerment of local economies such as the establishment of a Training Centre that provides training in job-proiciency skills for free to community members. Since 2012, these training programs have included vocational skills in digital printing, automotive workshop and welding. Meanwhile, the environmental protection program has remained focused on the rehabilitation of mined over areas by replanting trees and vegetation in a re-greening process of the Company’s mine sites. In 2013, the Company and its subsidiaries allocated a total of US5.50 million in CSR funds, compared to US6.68 million in 2012. 2013 Annual Report 104 Community Development The community development programs of Toba Bara, carried out through the CSR activities of subsidiary entities, comprise of support for education, community health-care services; empowerment of small-scale businesses, local agriculture and ishery initiatives; and the construction or renovation of public infrastructures and facilities. Since 2012, the Company and subsidiary entities have provided scholarships to more than 280 school children from surrounding communities. In 2013, the CSR programs in education were developed further by providing scholarships to four university students, honorarium for teachers to improve teacher’s welfare, and inancial aids for two kindergartens and two elementary schools, one each in the Sangasanga District and Pendingin District of the Kutai Kartanegara Regency. In addition, Toba Bara also donated a school bus for the elementary school children in the Pendingin District. In community health-care services, the Company’s subsidiary entities regularly provide health-care services that are free-of-charge for local communities, in which most of the beneiciaries of this health-care service are folks in their productive ages between 18 and 55 years old. 2013 Annual Report 105 In 2013, Toba Bara donated an ambulance car to the Health Service Office of the Pendingin District. In addition to that, the Company continued to support good nutrition for children in 2013, by providing food supplements to more than 436 school children in the districts of Pendingin and Sangasanga. In the empowerment of village economies the Company also continued with the development programs for agriculture and isheries that have begun since 2012. Through the subsidiary entities, the Company undertook several model projects in cultivating the sereh wangi bamboo plant and other vegetables such as cassava, watercress and eggplant. Several other model projects include the construction of cow barns and the development of grass ields for grazing. Help and support were also provided to the youth group of Sanga-Sanga District for the breeding of fresh water ish, and the women farmers group in Pendingin who applies fertilisers and cultivates vegetable and fruit plots papaya. Training was also given to a local cooperatives group that designs packaging for home-made snack foods. Meanwhile, in the program of construction and renovation of public infrastructures and facilities, in 2013, the Company’s subsidiary entities constructed several village roads, provided water pumps to provide and distribute clean water to the communities, and donated funds for the celebration of national holidays. 2013 Annual Report 106 Environment The Company carries out an environmental management program that essentially aims to safeguard the natural environment in which the Company operates. The main activities still centered upon the replanting of mine sites and out-of-mine sites. In the mine sites, the areas to restore include mine-out areas, out-pit-dump areas, in-pit dump areas and top-soil-stock areas. Replanting comprises of planting trees as well as cover crops depending on the respective areas that are being restored. In 2013, the Company and its subsidiary entities planted trees in several concession areas, continuing with the program of planting a total of 118,000 trees in 2012. In addition to re-vegetation, the operational activities of the Company and subsidiary entities also include managing wastes carefully, ensuring that no contaminants will pollute the water systems and reservoirs in its operating areas. Monitoring of the environment is carried out routinely to assure the effectiveness of waste management systems at all times. Product Responsibility The Company is not engaged in the production of consumer goods that are widely consumed by the public. Hence, the Company is not liable for product safety features that are commonly applied to consumer goods with respect to the safety and well being of consumers. However, the Company is committed to providing its customers with high quality thermal coal under the speciications contracted with buyers. 2013 Annual Report 107 Jusman S. Djamal President Commissioner Independent Bacelius Ruru Commissioner Independent Farid Harianto Commissioner Independent Board of Commissioners Board of Directors Justarina S.M. Naiborhu President Director Unafiliated Director Sudharmono Saragih Director Arthur M.E. Simatupang Director Pandu P. Syahrir Director Responsibility for Annual Report We, the undersigned, hereby declare that all information in this Annual Report of PT TOBA BARA SEJAHTRA Tbk. for the year 2013 is presented in full and we attest to the integrity of the contents of the Annual Report of the Company. In witness thereof, this statement is made truthfully. Jakarta, April 21, 2014 STATEMENT LETTER OF THE BOARD OF COMMISSIONERS’ AND THE BOARD OF DIRECTORS’ RESPONSIBILITIES ON THE ANNUAL REPORT 2013 OF PT TOBA BARA SEJAHTRA Tbk. 2013 Annual Report 108 This page is left intentionally blank 2013 Annual Report 109 Financial Report 2013 Annual Report 110 This page is left intentionally blank PT Toba Bara Sejaht ra Tbk dan ent it as anaknya and it s subsidiaries Laporan keuangan konsolidasian tanggal 31 Desember 2013 dan untuk tahun yang berakhir pada tanggal tersebut beserta laporan auditor independen Consolidated financial statements as of December 31, 2013 and for the year then ended with independent auditors’ report Laporan Tahunan 2013 111 2013 Annual Report 112 113 Laporan Tahunan 2013 110 Halaman ini sengaja dikosongkan Laporan Tahunan 2013 114 2013 Annual Report The original consolidated financial statements included herein are in the Indonesian language. PT TOBA BARA SEJAHTRA TBK DAN ENTITAS ANAKNYA LAPORAN KEUANGAN KONSOLIDASIAN TANGGAL 31 DESEMBER 2013 DAN UNTUK TAHUN YANG BERAKHIR PADA TANGGAL TERSEBUT BESERTA LAPORAN AUDITOR INDEPENDEN PT TOBA BARA SEJAHTRA TBK AND ITS SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2013 AND FOR THE YEAR THEN ENDED WITH INDEPENDENT AUDITORS Laporan Tahunan 2013 116 2013 Annual Report Laporan Tahunan 2013 117 2013 Annual Report Indonesian language. Catatan atas laporan keuangan konsolidasian terlampir merupakan bagian yang tidak terpisahkan dari laporan keuangan konsolidasian secara keseluruhan. The accompanying notes to the consolidated financial statements form an integral part of these consolidated financial statements taken as a whole. 1 PT TOBA BARA SEJAHTRA TBK DAN ENTITAS ANAKNYA LAPORAN POSISI KEUANGAN KONSOLIDASIAN Tanggal 31 Desember 2013 Disajikan dalam Dolar Amerika Serikat, kecuali dinyatakan lain PT TOBA BARA SEJAHTRA TBK AND ITS SUBSIDIARIES CONSOLIDATED STATEMENT OF FINANCIAL POSITION As of December 31, 2013 Expressed in United States Dollar, unless otherwise stated Catatan 2013 Notes 2012 ASET ASSETS ASET LANCAR CURRENT ASSETS Kas dan setara kas 63.301.639 2d,2f,5 36.307.011 Cash and cash equivalents Piutang usaha Trade receivables Pihak ketiga 16.598.657 6 13.684.470 Third parties Pihak berelasi, setelah dikurangi Related parties, net of penyisihan kerugian penurunan allowance for impairment nilai sebesar AS1.157.419 losses of US1,157,419 pada tanggal 31 Desember 2013 as of December 31, 2013 2012: ASNihil 1.157.419 2e,6,34c 2.521.124 2012: USNil Piutang lain-lain Other receivables Pihak ketiga 6.398.865 7 6.729.446 Third parties Persediaan 32.389.968 2h,8 28.424.654 Inventories Pajak dibayar dimuka 6.791.548 2t,17a 14.608.360 Prepaid taxes Biaya dibayar dimuka dan Prepayments and uang muka - jangka pendek 3.560.688 2g,9 4.159.129 advances - current portion Aset lancar lain-lain - 78.279 Other current assets Total Aset Lancar 130.198.784 106.512.473 Total Current Assets ASET TIDAK LANCAR NON-CURRENT ASSETS Piutang lain-lain Other receivables Pihak ketiga - 7 14.491.130 Third parties Pihak berelasi, setelah dikurangi Related parties, net of penyisihan kerugian penurunan allowance for impairment nilai sebesar AS596.027 pada losses of US596,027 as of tanggal 31 Desember 2013 December 31, 2013 2012: ASNihil 30.789.323 2e,7,34c 32.710.686 2012: USNil Uang muka - bagian jangka panjang 807.083 9 2.861.955 Advances - long-term portion Taksiran tagihan pajak 748.305 2t,17a - Estimated claims for tax refund Tanaman perkebunan Plantations Tanaman menghasilkan, setelah Mature plantations, net of dikurangi akumulasi amortisasi accumulated amortization sebesar AS690.661 pada of US690,661 tanggal 31 Desember 2013 13.105.673 2m,10 - as of December 31, 2013 Tanaman belum menghasilkan 3.710.240 2m,10 - Immature plantations Aset tetap, setelah dikurangi Fixed assets, net of akumulasi penyusutan sebesar accumulated depreciation of AS14.883.534 pada US14,883,534 tanggal 31 Desember 2013 as of December 31, 2013 2012: AS9.140.475 49.032.780 2i,11 34.053.483 2012: US9,140,475 Aset eksplorasi dan Exploration and evaluasi 4.842.009 2l,12 8.897.455 evaluation assets Properti pertambangan, setelah Mining properties, net of dikurangi akumulasi amortisasi accumulated amortization sebesar AS9.155.967 pada of US9,155,967 tanggal 31 Desember 2013 as of December 31, 2013 2012: AS5.579.733 71.904.619 2l,13 57.564.050 2012: US5,579,733 Goodwill 3.523.795 2b,2k,4 25.017 Goodwill Aset pajak tangguhan - neto 1.495.963 2t,17d 3.267.022 Deferred tax assets - net Aset tidak lancar lainnya 1.489.365 1.143.229 Other non-current assets Total Aset Tidak Lancar 181.449.155 155.014.027 Total Non-Current Assets TOTAL ASET 311.647.939 261.526.500 TOTAL ASSETS Laporan Tahunan 2013 118 2013 Annual Report Indonesian language. Catatan atas laporan keuangan konsolidasian terlampir merupakan bagian yang tidak terpisahkan dari laporan keuangan konsolidasian secara keseluruhan. The accompanying notes to the consolidated financial statements form an integral part of these consolidated financial statements taken as a whole. 2 PT TOBA BARA SEJAHTRA TBK DAN ENTITAS ANAKNYA LAPORAN POSISI KEUANGAN KONSOLIDASIAN lanjutan Tanggal 31 Desember 2013 Disajikan dalam Dolar Amerika Serikat, kecuali dinyatakan lain PT TOBA BARA SEJAHTRA TBK AND ITS SUBSIDIARIES CONSOLIDATED STATEMENT OF FINANCIAL POSITION continued As of December 31, 2013 Expressed in United States Dollar, unless otherwise stated Catatan 2013 Notes 2012 LIABILITAS DAN EKUITAS LIABILITIES AND EQUITY LIABILITAS LIABILITIES LIABILITAS JANGKA PENDEK CURRENT LIABILITIES Utang usaha Trade payables Pihak ketiga 69.265.229 14 57.809.869 Third parties Pihak berelasi - 2e,14,34c 551.961 Related parties Utang lain-lain - pihak ketiga 1.907 15 365.493 Other payables - third parties Utang dividen 290.856 2e,34c 3.651.964 Dividends payable Beban akrual 6.057.579 16 8.034.468 Accrued expenses Liabilitas imbalan Short-term employee kerja jangka pendek 3.340.583 2r,22a 6.323.602 benefits liabilities Utang pajak 7.227.871 2t,17b 3.384.226 Taxes payable Bagian liabilitas jangka Current maturities panjang yang jatuh tempo of long-term dalam waktu satu tahun: liabilities: Utang bank 33.553.129 19 48.291.684 Bank loans Uang muka pelanggan 24.941.839 18 11.625.625 Advances from customers Sewa pembiayaan 772.679 2j,20 498.388 Finance leases Total Liabilitas Jangka Pendek 145.451.672 140.537.280 Total Current Liabilities LIABILITAS JANGKA PANJANG NON-CURRENT LIABILITIES Liabilitas jangka panjang - setelah dikurangi bagian yang jatuh tempo Long-term liabilities - dalam satu tahun: net of current maturities: Utang bank 20.183.289 19 - Bank loans Uang muka pelanggan 2.964.000 18 - Advances from customers Sewa pembiayaan 1.348.417 2j,20 244.902 Finance leases Utang lain-lain Other payables Pihak berelasi 2.288.701 2e,15,34c 2.880.575 Related parties Liabilitas untuk pengelolaan Provision for dan reklamasi lingkungan 2o, 2p environmental hidup dan penutupan 3 and reclamation tambang 3.951.817 21 4.410.627 costs and mines closure Liabilitas imbalan kerja Long-term employee jangka panjang 1.943.059 2r,3,22b 1.729.660 benefits liabilities Liabilitas pajak tangguhan - neto 3.035.740 2t,3,17d 779.149 Deferred tax liabilities - net Total Liabilitas Jangka Panjang 35.715.023 10.044.913 Total Non-Current Liabilities TOTAL LIABILITAS 181.166.695 150.582.193 TOTAL LIABILITIES Laporan Tahunan 2013 119 2013 Annual Report Indonesian language. Catatan atas laporan keuangan konsolidasian terlampir merupakan bagian yang tidak terpisahkan dari laporan keuangan konsolidasian secara keseluruhan. The accompanying notes to the consolidated financial statements form an integral part of these consolidated financial statements taken as a whole. 3 PT TOBA BARA SEJAHTRA TBK DAN ENTITAS ANAKNYA LAPORAN POSISI KEUANGAN KONSOLIDASIAN lanjutan Tanggal 31 Desember 2013 Disajikan dalam Dolar Amerika Serikat, kecuali dinyatakan lain PT TOBA BARA SEJAHTRA TBK AND ITS SUBSIDIARIES CONSOLIDATED STATEMENT OF FINANCIAL POSITION continued As of December 31, 2013 Expressed in United States Dollar, unless otherwise stated Catatan 2013 Notes 2012 EKUITAS EQUITY Ekuitas yang dapat diatribusikan Equity attributable to owners of kepada pemilik entitas induk the parent entity Modal saham - nilai nominal Share capital - par value of Rp200 Rp200 per saham per share Modal dasar - 6.000.000.000 saham Authorized - 6,000,000,000 shares Modal ditempatkan dan disetor penuh Issued and fully paid - - 2.012.491.000 saham 44.077.885 23 44.077.885 2,012,491,000 shares Tambahan modal disetor - neto 129.869.269 24 129.869.269 Additional paid-in capital - net Selisih kurs akibat translasi Exchange difference due to laporan translation keuangan 1.376.036 2b - of financial statements Selisih nilai pembelian Difference from saham tambahan di entitas the acquisition of additional anak dari pemegang saham shares in subsidiaries from non-pengendali 89.625.730 26 89.625.730 non-controlling shareholders Saldo laba Retained earnings Dicadangkan 31.988 - Appropriated Belum dicadangkan 18.639.199 1.271.946 Unappropriated 104.368.647 85.593.370 Kepentingan non-pengendali 26.112.597 2b,27 25.350.937 Non-controlling interest TOTAL EKUITAS 130.481.244 110.944.307 TOTAL EQUITY TOTAL LIABILITAS TOTAL LIABILITIES DAN EKUITAS 311.647.939 261.526.500 AND EQUITY Laporan Tahunan 2013 120 2013 Annual Report Indonesian language. Catatan atas laporan keuangan konsolidasian terlampir merupakan bagian yang tidak terpisahkan dari laporan keuangan konsolidasian secara keseluruhan. The accompanying notes to the consolidated financial statements form an integral part of these consolidated financial statements taken as a whole. 4 PT TOBA BARA SEJAHTRA TBK DAN ENTITAS ANAKNYA LAPORAN LABA RUGI KOMPREHENSIF KONSOLIDASIAN Tahun yang Berakhir pada Tanggal 31 Desember 2013 Disajikan dalam Dolar Amerika Serikat, kecuali dinyatakan lain PT TOBA BARA SEJAHTRA TBK AND ITS SUBSIDIARIES CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Year Ended December 31, 2013 Expressed in United States Dollar, unless otherwise stated Catatan 2013 Notes 2012 PENJUALAN 421.849.737 2s,28,34b 396.685.875 SALES BEBAN POKOK PENJUALAN 342.297.332 2l,2n,2s,29 348.535.503 COST OF GOODS SOLD LABA BRUTO 79.552.405 48.150.372 GROSS PROFIT Beban umum dan administrasi 28.679.546 2s,30 31.529.493 General and administrative expenses Beban penjualan dan pemasaran 528.132 2s,31 358.920 Selling and marketing expenses Beban pengalihan kewajiban Domestic market pemenuhan kebutuhan obligation dalam negeri 745.907 41b 777.918 transfer expenses Rugi laba selisih kurs - neto 8.205.950 612.323 Foreign exchange loss gain - net Laba instrumen Gain on derivatif - neto 693.712 2v,33 4.518.448 derivative instruments - net Keuntungan atas penyelesaian Gain on settlement of pre-existing akun pre-existing antar entitas 7.535.475 2b, 7 - intercompany account Pendapatan Other income lain-lain - neto 393.257 32 468.519 - net LABA OPERASI 50.015.314 21.083.331 OPERATING PROFIT Pendapatan keuangan 4.067.768 2.851.249 Finance income Beban keuangan 3.680.063 3.657.997 Finance charges LABA SEBELUM BEBAN PROFIT BEFORE MANFAAT PAJAK 50.403.019 20.276.583 TAX EXPENSE BENEFIT BEBAN MANFAAT PAJAK 2t,17c TAX EXPENSE BENEFIT Kini 13.424.716 8.722.756 Current Tangguhan 2.374.510 378.855 Deferred Beban pajak - neto 15.799.226 8.343.901 Tax expense - net LABA TAHUN BERJALAN 34.603.793 11.932.682 PROFIT FOR THE YEAR PENDAPATAN OTHER COMPREHENSIVE KOMPREHENSIF LAIN 1.528.929 2b 70.418 INCOME TOTAL LABA KOMPREHENSIF TOTAL COMPREHENSIVE TAHUN BERJALAN 36.132.722 12.003.100 INCOME FOR THE YEAR Laba tahun berjalan yang dapat Profit for the year diatribusikan kepada: attributable to: Pemilik entitas induk 18.543.538 3.198.832 Equity holders of the parent entity Kepentingan non-pengendali 16.060.255 2b,27 8.733.850 Non-controlling interest 34.603.793 11.932.682 Total laba komprehensif yang dapat Total comprehensive income diatribusikan kepada: attributable to: Pemilik entitas induk 19.919.574 3.269.250 Equity holders of the parent entity Kepentingan non-pengendali 16.213.148 2b,27 8.733.850 Non-controlling interest 36.132.722 12.003.100 Laba per saham dasar Basic earnings yang dapat diatribusikan per share kepada: attributable to: Pemilik entitas induk 0,0092 2w,35 0,0032 Equity holders of the parent entity Laporan Tahunan 2013 121 2013 Annual Report The original consolidated financial statements included herein are in the Indonesian language. Catatan atas laporan keuangan konsolidasian terlampir merupakan bagian yang tidak terpisahkan dari laporan keuangan konsolidasian secara keseluruhan. The accompanying notes to the consolidated financial statements form an integral part of these consolidated financial statements taken as a whole. 5 PT TOBA BARA SEJAHTRA TBK DAN ENTITAS ANAKNYA LAPORAN PERUBAHAN EKUITAS KONSOLIDASIAN Tahun yang Berakhir pada Tanggal 31 Desember 2013 Disajikan dalam Dolar Amerika Serikat, kecuali dinyatakan lain PT TOBA BARA SEJAHTRA TBK AND ITS SUBSIDIARIES CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Year Ended December 31, 2013 Expressed in United States Dollar, unless otherwise stated Ekuitas yang dapat diatribusikan kepada pemilik entitas induk Equity attributable to owners of the parent entity Selisih nilai Selisih pembelian saham kurs tambahan di akibat entitas anak dari translasi pemegang saham laporan non-pengendali keuangan Difference from Modal Tambahan Exchange the acquisition of Saldo laba Kepentingan ditempatkan modal difference additional shares Saldo laba belum non- dan disetor penuh disetor due to in subsidiaries dicadangkan dicadangkan pengendali Total Issued Additional translation of from Retained Retained Non- ekuitas Catatan and fully paid-in financial non-controlling earnings- earnings- Total controlling Total Notes paid capital capital statements shareholders Appropriated Unappropriated Total interest equity Saldo Balance as of 31 Desember 2012 44.077.885 129.869.269 - 89.625.730 - 1.271.946 85.593.370 25.350.937 110.944.307 December 31, 2012 Bagian kepentingan Non-controlling interest non-pengendali atas shares in dividend pembagian dividen oleh distributed entitas anak 27 - - - - - - - 15.190.145 15.190.145 by the subsidiaries Laba tahun berjalan 2013 - - - - - 18.543.538 18.543.538 16.060.255 34.603.793 Profit for the year 2013 Pendapatan Other comprehensive komprehensif lain 2b - - 1.376.036 - - - 1.376.036 152.893 1.528.929 income Bagian kepentingan Non-controlling interest non-pengendali shares in atas aset neto net assets of entitas anak yang diakusisi 4 - - - - - - - 261.343 261.343 acquired subsidiary Dividen 25b.ii - - - - - 1.144.297 1.144.297 - 1.144.297 Dividends Pencadangan Appropriation of saldo laba 25b.i - - - - 31.988 31.988 - - - retained earnings Saldo Balance as of 31 Desember 2013 44.077.885 129.869.269 1.376.036 89.625.730 31.988 18.639.199 104.368.647 26.112.597 130.481.244 December 31, 2013 Lapor an T ahunan 20 1 3 20 1 3 Ann ual R epor t The original consolidated financial statements included herein are in the Indonesian language. Catatan atas laporan keuangan konsolidasian terlampir merupakan bagian yang tidak terpisahkan dari laporan keuangan konsolidasian secara keseluruhan. The accompanying notes to the consolidated financial statements form an integral part of these consolidated financial statements taken as a whole. 6 PT TOBA BARA SEJAHTRA TBK DAN ENTITAS ANAKNYA LAPORAN PERUBAHAN EKUITAS KONSOLIDASIAN lanjutan Tahun yang Berakhir pada Tanggal 31 Desember 2013 Disajikan dalam Dolar Amerika Serikat, kecuali dinyatakan lain PT TOBA BARA SEJAHTRA TBK AND ITS SUBSIDIARIES CONSOLIDATED STATEMENT OF CHANGES IN EQUITY continued Year Ended December 31, 2013 Expressed in United States Dollar, unless otherwise stated Ekuitas yang dapat diatribusikan kepada pemilik entitas induk Equity attributable to owners of the parent entity Selisih nilai Selisih pembelian saham kurs tambahan di akibat entitas anak dari translasi pemegang saham laporan non-pengendali keuangan Difference from Modal Tambahan Exchange the acquisition of Kepentingan ditempatkan modal difference additional shares non- dan disetor penuh disetor due to in subsidiaries pengendali Total Issued Additional translation of from Saldo laba Non- ekuitas Catatan and fully paid-in financial non-controlling Retained Total controlling Total Notes paid capital capital statements shareholders earnings Total interest equity Saldo Balance as of 31 Desember 2011 33.011.808 2.307.521 70.418 - 2.524.379 33.299.084 25.823.835 59.122.919 December 31, 2011 Bagian kepentingan Non-controlling interest non-pengendali atas shares in dividend pembagian dividen oleh distributed entitas anak 27 - - - - - - 2.378.913 2.378.913 by the subsidiaries Penambahan kepentingan Additional pengendalian pada controlling interests entitas anak 2b, 26 - - - 89.625.730 - 89.625.730 6.827.835 96.453.565 in subsidiaries Setoran modal 24a 11.066.077 132.176.790 - - - 143.242.867 - 143.242.867 Capital contribution Laba tahun berjalan 2012 - - - - 3.198.832 3.198.832 8.733.850 11.932.682 Profit for the year 2012 Pendapatan Other comprehensive komprehensif lain 2b - - 70.418 - 70.418 - - - income Dividen 25a - - - - 4.521.683 4.521.683 - 4.521.683 Dividends Saldo Balance as of 31 Desember 2012 44.077.885 129.869.269 - 89.625.730 1.271.946 85.593.370 25.350.937 110.944.307 December 31, 2012 Lapor an T ahunan 20 1 3 123 20 1 3 Ann ual R epor t The original consolidated financial statements included herein are in the Indonesian language. Catatan atas laporan keuangan konsolidasian terlampir merupakan bagian yang tidak terpisahkan dari laporan keuangan konsolidasian secara keseluruhan. The accompanying notes to the consolidated financial statements form an integral part of these consolidated financial statements taken as a whole. 7 PT TOBA BARA SEJAHTRA TBK DAN ENTITAS ANAKNYA LAPORAN ARUS KAS KONSOLIDASIAN Tahun yang Berakhir pada Tanggal 31 Desember 2013 Disajikan dalam Dolar Amerika Serikat, kecuali dinyatakan lain PT TOBA BARA SEJAHTRA TBK AND ITS SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS Year Ended December 31, 2013 Expressed in United States Dollar, unless otherwise stated Catatan 2013 Notes 2012 ARUS KAS DARI AKTIVITAS CASH FLOWS FROM OPERASI OPERATING ACTIVITIES Penerimaan kas dari pelanggan 434.545.061 379.835.592 Cash received from customers Pembayaran kepada pemasok 324.210.355 319.394.450 Payments to suppliers Pembayaran kepada karyawan 21.685.644 16.321.631 Payments to employees Pembayaran royalti 22.492.790 21.783.016 Payments of royalty Pembayaran pajak penghasilan badan 8.877.623 52.239.078 Payment for corporate income taxes Penerimaan kelebihan pembayaran Receipt on corporate income tax pajak penghasilan badan 7.170.260 17e - overpayment Penerimaan pengembalian Receipt of repayment of piutang pihak ketiga 560.575 - receivable third parties Pembayaran bunga 2.572.076 2.745.812 PaymentS of interest Penerimaan bunga 1.430.593 730.226 Receipt of interest income Kas Neto yang Diperoleh dari Net Cash Provided by Digunakan untuk Aktivitas Used in Operating Operasi 63.868.001 31.918.169 Activities ARUS KAS DARI AKTIVITAS CASH FLOWS FROM INVESTASI INVESTING ACTIVITIES Pengeluaran biaya eksplorasi Disbursements for exploration dan pengembangan 6.124.874 12,13 7.957.861 and development expenditures Perolehan aset tetap 12.168.145 11 7.456.569 Acquisitions of fixed assets Hasil penjualan aset tetap 177.837 16.278 Proceed from sale of fixed assets Uang muka investasi - 4 1.146.670 Advance for investment Pinjaman kepada pihak ketiga - 14.209.210 Loan to third party Penambahan tanaman Addition to immature belum menghasilkan 434 - plantation Pembelian saham tambahan Acquisition of additional shares di entitas anak - 96.503.706 in subsidiaries Penerimaan pembayaran pinjaman Receipts of payments dari pihak berelasi 1.725.384 - on intercompany receivables Arus kas masuk neto Net cash inflow dari akuisisi entitas anak 13.485.456 4 - from acquisition of a subsidiary Kas Neto yang Digunakan Net Cash Used in untuk Aktivitas Investasi 2.904.776 127.257.738 Investing Activities ARUS KAS DARI AKTIVITAS CASH FLOWS FROM PENDANAAN FINANCING ACTIVITIES Pembayaran utang dividen 4.665.979 25 9.500.000 Payment of dividends payables Penerimaan pinjaman bank, neto 14.654.612 24.616.339 Proceeds from bank loans, net Pembayaran pokok sewa Payments pembiayaan 1.608.435 965.849 of finance leases Pembayaran pinjaman bank 21.269.536 10.346.783 Repayment of banks loan Pembayaran kepada Payment to pemegang saham non-controlling non-pengendali entitas anak 15.190.145 8.735.698 shareholders of subsidiaries Setoran modal - 24 104.690.000 Paid-in capital Penerimaan dari Penawaran Umum Proceeds from Saham Perdana, neto - 38.197.764 Initial Public Offering, net Kas Neto yang Digunakan untuk Net Cash Used in Diperoleh dari Aktivitas Provided by Financing Pendanaan 28.079.483 137.955.773 Activities Laporan Tahunan 2013 124 2013 Annual Report The original consolidated financial statements included herein are in the Indonesian language. Catatan atas laporan keuangan konsolidasian terlampir merupakan bagian yang tidak terpisahkan dari laporan keuangan konsolidasian secara keseluruhan. The accompanying notes to the consolidated financial statements form an integral part of these consolidated financial statements taken as a whole. 8 PT TOBA BARA SEJAHTRA TBK DAN ENTITAS ANAKNYA LAPORAN ARUS KAS KONSOLIDASIAN lanjutan Tahun yang Berakhir pada Tanggal 31 Desember 2013 Disajikan dalam Dolar Amerika Serikat, kecuali dinyatakan lain PT TOBA BARA SEJAHTRA TBK AND ITS SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS continued Year Ended December 31, 2013 Expressed in United States Dollar, unless otherwise stated Catatan 2013 Notes 2012 KENAIKANPENURUNAN NET INCREASEDECREASE IN NETO KAS DAN SETARA KAS 32.883.742 21.220.134 CASH AND CASH EQUIVALENTS KAS DAN SETARA KAS CASH AND CASH EQUIVALENTS AWAL TAHUN 36.307.011 58.573.270 AT BEGINNING OF YEAR Dampak Effect of foreign exchange perubahan selisih kurs 5.889.114 1.046.125 rate changes KAS DAN SETARA KAS CASH AND CASH EQUIVALENTS AKHIR TAHUN 63.301.639 5 36.307.011 AT END OF YEAR Laporan Tahunan 2013 125 2013 Annual Report PT TOBA BARA SEJAHTRA TBK DAN ENTITAS ANAK CATATAN ATAS LAPORAN KEUANGAN KONSOLIDASIAN Tanggal 31 Desember 2013 dan Tahun yang berakhir pada tanggal tersebut Disajikan dalam Dolar Amerika Serikat, kecuali dinyatakan lain PT TOBA BARA SEJAHTRA TBK AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As of December 31, 2013 and year then ended Expressed in United States Dollar, unless otherwise stated 9

1. UMUM

1. GENERAL

a. Perusahaan

a. The Company

PT Toba Bara Sejahtra Tbk “Perusahaan” didirikan di Indonesia dengan nama PT Buana Persada Gemilang berdasarkan Akta No. 1 tanggal 3 Agustus 2007 yang dibuat dihadapan Tintin Surtini, S.H., M.Kn, sebagai pengganti dari Surjadi S.H., Notaris di Jakarta, sebagaimana yang telah diubah dengan Akta No.11 tanggal 14 Januari 2008 yang dibuat dihadapan Surjadi, S.H., Notaris di Jakarta. Akta Pendirian ini telah disahkan oleh Menteri Hukum dan Hak Asasi Manusia Republik Indonesia melalui Surat Keputusan No. AHU-04084.AH.01.01.Tahun 2008 tanggal 28 Januari 2008. PT Toba Bara Sejahtra Tbk the “Company” was established in Indonesia as PT Buana Persada Gemilang based on the Deed No. 1 dated August 3, 2007 made before Tintin Surtini, S.H., M.Kn, as a substitute notary of Surjadi, S.H., Jakarta, which was amended based on notarial deed No. 11 dated January 14, 2008 prepared by notary Surjadi, S.H., Jakarta. The Deed of Establishment was approved by the Minister of Laws and Human Rights of the Republic of Indonesia through letter No. AHU-04084.AH.01.01.Tahun 2008 dated January 28, 2008. Berdasarkan Akta No.173 tanggal 22 Juli 2010 yang dibuat dihadapan Notaris Jimmy Tanal, S.H., sebagai pengganti dari Hasbullah Abdul Rasyid S.H., M.Kn, Notaris di Jakarta, para pemegang saham menyetujui perubahan nama Perusahaan dari sebelumnya PT Buana Persada Gemilang menjadi PT Toba Bara Sejahtra dan peningkatan modal dasar dari sebelumnya Rp20.000.000.000 menjadi Rp135.000.000.000 yang seluruhnya telah ditempatkan dan disetorkan. Perubahan ini telah disetujui oleh Menteri Hukum dan Hak Asasi Manusia Republik Indonesia melalui Surat Keputusan No. AHU-40246.AH.01.02.Tahun 2010 tanggal 13 Agustus 2010. Based on Deed No. 173 dated July 22, 2010 made before Jimmy Tanal, S.H., as a substitute notary of Hasbullah Abdul Rasyid, S.H., M.Kn, Jakarta, the Company’s shareholders agreed to change the Company’s name from PT Buana Persada Gemilang to PT Toba Bara Sejahtra and increase the Company’s authorized capital from Rp20,000,000,000 to Rp135,000,000,000 which has been fully subscribed and paid. These changes have been approved by the Minister of Laws and Human Rights of the Republic of Indonesia through letter No. AHU-40246.AH.01.02.Tahun 2010 dated August 13, 2010. Berdasarkan Akta No. 154 tanggal 23 Desember 2011 yang dibuat dihadapan Notaris Jimmy Tanal, S.H., sebagai pengganti dari Hasbullah Abdul Rasyid S.H., M.Kn, Notaris di Jakarta, para pemegang saham menyetujui peningkatan modal dasar Perusahaan dari sebelumnya Rp135.000.000.000 menjadi Rp1.200.000.000.000 serta peningkatan modal disetor dari sebelumnya Rp135.000.000.000 menjadi Rp300.000.000.000. Peningkatan tersebut telah mendapat persetujuan dari Menteri Hukum dan Hak Asasi Manusia Republik Indonesia, melalui surat keputusannya No. AHU-64523.AH.01.02.Tahun 2011 tertanggal 29 Desember 2011. Based on the Deed No. 154 dated December 23, 2011 made before Jimmy Tanal, S.H., a notary, as a substitute notary of Hasbullah Abdul Rasyid, S.H., M.Kn, Jakarta, the Company’s shareholders agreed to increase the Company’s authorized capital from Rp135,000,000,000 to Rp1,200,000,000,000 and increase the paid in capital from Rp135,000,000,000 to Rp300,000,000,000. The increase has been approved by the Minister of Laws and Human Rights of the Republic of Indonesia through letter No. AHU-64523.AH.01.02.Tahun 2011 dated December 29, 2011. Berdasarkan Akta No. 65 tanggal 30 Maret 2012 tentang Pernyataan Persetujuan Bersama Seluruh Pemegang Saham PT Toba Bara Sejahtra, yang dibuat di hadapan Dina Chozie, S.H., kandidat Notaris, pengganti dari Fathiah Helmi, S.H., Notaris di Jakarta, seluruh pemegang saham Perusahaan menyetujui antara lain, perubahan status Perusahaan menjadi Perusahaan Terbuka, dan perubahan nilai nominal saham Perusahaan dari Rp1.000.000 per lembar menjadi Rp200 per lembar. Based on the Deed No. 65 dated March 30, 2012 on the Statements of PT Toba Bara Sejahtra’s Shareholders’ Approval which were made before Dina Chozie, S.H., candidate Notary, a replacement of Fathiah Helmi, S.H., a Notary in Jakarta, all of the Company’s shareholders approved, among others, the change in the status of the Company to a Public Company, and change in the nominal value of the Company’s shares from Rp1,000,000 per share to Rp200 per share. Laporan Tahunan 2013 126 2013 Annual Report PT TOBA BARA SEJAHTRA TBK DAN ENTITAS ANAK CATATAN ATAS LAPORAN KEUANGAN KONSOLIDASIAN Tanggal 31 Desember 2013 dan Tahun yang berakhir pada tanggal tersebut Disajikan dalam Dolar Amerika Serikat, kecuali dinyatakan lain PT TOBA BARA SEJAHTRA TBK AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As of December 31, 2013 and year then ended Expressed in United States Dollar, unless otherwise stated 10

1. UMUM lanjutan

1. GENERAL continued

a. Perusahaan lanjutan