Justarina S. M. Naiborhu Pandu P. Syahrir Arthur M. E. Simatupang Price Fluctuation Risk Fuel Price Risk Interest Rate Risks

32 PT TOBA BARA SEJAHTRA Tbk - 2014 Annual Report

1. Justarina S. M. Naiborhu

President DirectorUnafiliated Director

2. Pandu P. Syahrir

Director

3. Arthur M. E. Simatupang

Director

4. Sudharmono Saragih

Director PROFILE OF THE BOARD OF DIRECTORS PT TOBA BARA SEJAHTRA Tbk - 2014 Annual Report 33 34 PT TOBA BARA SEJAHTRA Tbk - 2014 Annual Report 01 03 02 04 PROFILE OF THE BOARD OF DIRECTORS PT TOBA BARA SEJAHTRA Tbk - 2014 Annual Report 35 Justarina S. M. Naiborhu President DirectorUnafiliated Director 01 Born in Jakarta, October 27, 1963, Justarina Sinta Marisi Naiborhu earned her undergraduate degree from Institut Pertanian Bogor, Master in International Securities, Investment and Banking from Reading University, UK, and Master of Management from Universitas Indonesia. Previously she was President Director of PT CIMB-Principal Asset Management 2008 – 2011, Director of PT CIMB-GK Securities Indonesia 2003 – 2008, Vice President of Institutional Business Advisory PT Kuo Capital Raharja 2001 – 2003, Portfolio Manager of Institutional Asset Management of PT Danareksa Investment Management 1999 – 2001, and Research Development Analyst then Assistant to President Director of PT Bursa Efek Jakarta 1992 – 1997. She was 51 years old by December 31, 2014 and irst appointed as President Director of PT Toba Bara Sejahtra Tbk on May 5, 2011. She has no afiliation with other members of Board of Directors, Board of Commissioners or shareholders. Pandu P. Syahrir Director 02 Born in Boston - United States, May 17, 1979, Pandu Patria Syahrir graduated with a Bachelor Degree from the University of Chicago, United States and holds a Master of Business Administration Degree from Stanford Graduate School of Business, United States. Prior to joining the Company, he was Senior Analyst focusing on energy and mining sectors at Matlin Patterson from 2007, Principal at Byun Co., an Asian alternative energy fund 2002 – 2005 and Analyst at Lehman Brothers 2001 – 2002.. In 2014 he received “Asian Society Young Leaders Awards”, which is an award for young leaders under the age of 40 years from Asia Society. He was 35 years old by December 31, 2014 and irst appointed as Director of PT Toba Bara Sejahtra Tbk on October 1, 2010. He has no afiliation with other members of Board of Directors, Board of Commissioners or shareholders. Arthur M. E. Simatupang Director 03 Born in Bandung - West Java, February 12, 1973, Arthur Mangaratua Ebenhaezer Simatupang graduated with a Bachelor degree in International Business from University of Seattle, United States, and earned a Master of Commerce in Finance and Accounting from The University of Sydney, Australia. He served as Advertising and Promotion Supervisor at PT Indofood Sukses Makmur Tbk 1998 -2004 and Director and Chief Financial Oficer at ABN since 2007. He was 41 years old by December 31, 2014 and irst appointed as Director of PT Toba Bara Sejahtra Tbk on May 5, 2011. He has no afiliation with other members of Board of Directors, Board of Commissioners or shareholders. Sudharmono Saragih Director 04 Born in Pematang Siantar – North Sumatra, August 2, 1978, Sudharmono Saragih graduated with a Bachelor Degree in Mining Engineerig with concentration in General Mining from Institut Teknologi Bandung. He served as Project Manager at PT Toba Sejahtera 2011-2012, Site Manager of PT Raja Kutai Baru Makmur, Ancora Group 2010 - 2011, Operations Manager of PT Wijaya Karya Aneka Mineral, Harita Group 2009 - 2010, Site General Manager of PT Agrabudi Jasa Bersama, Titan Mining Indonesia Group 2009, Operations General Manager of PT Riau Bara Harum, Andaru Resources Group 2008 - 2009 and Production Inspector at PT Kaltim Prima Coal 2004-2005. He was 36 years old by December 31, 2014 and irst appointed as Director of PT Toba Bara Sejahtra Tbk on June 20, 2012. He has no afiliation with other members of Board of Directors, Board of Commissioners or shareholders. 36 PT TOBA BARA SEJAHTRA Tbk - 2014 Annual Report SHAREHOLDERS INFORMATION Name of Shareholders Numbers of Shares Share Ownership PT Bara Makmur Abadi 125,755,000 6.25 Bintang Bara B.V 201,250,000 10.00 PT Sinergi Sukses Utama 102,700,000 5.10 PT Toba Sejahtra 1,444,750,000 71.79 Shareholders Owning More Than 5 Report of Share Ownership - Directors Commissioners per 31 December 2014 Name Position Number of Shares Percentage Jusman Syaii Djamal President Commissioner 0.00 Bacelius Ruru Independent Commissioner 0.00 Farid Harianto Independent Commissioner 0.00 Justarina S. M. Naiborhu President Director 0.00 Pandu P. Syahrir Director 0.00 Arthur M. E. Simatupang Director 0.00 Sudharmono Saragih Director 54,800 0.003 Total 54,800 0.003 PT Sinergi Sukses Utama 5.1 Roby Budi Prakoso 3.6 PT Toba Sejahtra 71.8 Davit T. Pandjaitan 0.8 PT Bara Makmur Abadi 6.2 Publik 12.5 Luhut Pandjaitan 99.98 PT Adimitra Baratama Nusantara 51 PT Toba Bumi Energi 99.99 PT Trisensa Mineral Utama 99.99 PT Perkebunan Kaltim Utama I 90.00 PT Indomining 99.99 PT TOBA BARA SEJAHTRA Tbk - 2014 Annual Report 37 Information on the Majority Controlling Shareholder The Company is majority held by PT Toba Sejahtra TS, which holds 71.8 shares of the Company, and indirectly owned by Mr. Luhut Pandjaitan, which holds 99.98 shares of Toba Sejahtra. PT Toba Sejahtra is a limited liability company incorporated under Indonesian law on 6 August 2004, and is currently engaged in the mining, energy and plantation sector. The businesses of TS comprise of, among others, natural resources thermal coal and oil and gas, power plants as Independent Power Producer of coal-ired, gas-ired and geothermal power plants, as well as agricultural and plantation resources oil palm, rubber, sugar cane, and forestry. The TS Group currently comprises of 16 afiliated companies that are engaged in broad ranging industry sectors. Toba Sejahtra collaborates with leading companies from Indonesia and overseas in developing various assets and natural resources in Indonesia, with the aim of harnessing the Indonesian natural resources in the best possible way to improve the welfare of the Indonesian people. Chronology of Share Listing The Company listed its shares on the Indonesia Stock Exchange on July 6, 2012, under challenging conditions for the coal market in general. A total of 210,681,000 common shares at a nominal value of Rp 200 per share were listed on the Exchange, representing 10.47 of the Company’s fully paid and invested capital. The shares offered to the public at the IPO at a price of Rp 1,900 per share generated proceeds of Rp 400,293,900,000 for the Company. It is listed on IDX with the ticker code of TOBA. Report of Use of Proceeds Per December 2014 in million Rp No Type of Public Offering Effective Date Realization of Public Offering Plan of Use of Proceeds as Disclosed in Prospectus R Realization of Use of Proceeds as Disclosed in Prospectus Remaining Proceeds of IPO Total Proceeds from Public Offering Expenses of Public Offering Net Proceeds Payment of Loan to BNP Paribas Capital Expenditures Acquisition of Coal Mining Concession, Working Capital and Operational, and Exploration Activities Total Bayar Pinjaman ke BNP Paribas Capital Expenditures Acquisition of Coal Mining Concession, Working Capital and Operational, and Exploration Activitie Total 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 1 IPO 6-Jul-12 400,294 38,871 361,423 94,476 189,711 77,236 361,423 94,116 179,396 77,236 350,748 10,675 Total 400,294 38,871 361,423 94,476 189,711 77,236 361,423 94,116 179,396 77,236 350,748 10,675 Notes a. i Plan of use of proceeds as disclosed in Prospectus. 7 More or less 26.14 from the net proceeds to be used to repay loan facilities from BNP Paribas. 8 More or less 52.49 from the net proceeds to be used for capital expenditure to support mining activities, infrastructure and facilities development in the concession areas of the subsidiary entities. 9 More or less 21.37 from the net proceeds to be used as working capital for the Company and subsidiary entities and to inance exploration activities in the subsidiary entities’ concession areas and to acquire coal mining concessions. ii Realisation of use of proceeds as disclosed in Prospectus. 11 Repayment of the loan principal to BNP Paribas amounting to US9,946,782.69 equivalent to Rp94,116 million. 12 Capital expenditures related to the procurement of ixed assets for the Company and the development of supporting facilities in the concession areas of subsidiary entities. 13 Financing of working capital and exploration activities in the three subsidiary entities’ concession through loans extended to the subsidiary entities amounting to Rp18,485 million. Financing of operations and working capital of the Company b. Fund from the proceeds of the IPO as of 31 December 2014 was deposited in Standard Chartered Bank non afiliated with a tenor of one month, earning a Rupiah interest rate of 7.50. 38 PT TOBA BARA SEJAHTRA Tbk - 2014 Annual Report BRIEF DESCRIPTION OF OPERATING SUBSIDIARIES PT INDOMINING 99.99 PT Indomining is a subsidiary company of PT Toba Bumi Energi, which is wholly controlled by the Company. The Indomining coal concession is located in Sanga-Sanga, Kutai Kartanegara, East Kalimantan, and covers 683 hectares, adjacent to the concession of ABN. IM has a total estimated coal resources amounting to 37 million tons, and has its own coal mining infrastructures that include a crusher, land conveyor and jetty. IM can transport crushed coal from the ROM stockpile through the overland conveyor directly onto docked barges in the jetty. IM began production in 2007 and in 2013 produced a total of 1.4 million tons of coal. Board of Commissioners Paulina Maria Dame Uli Pandjaitan President Commissioner Imelda The Commissioner Aurelia Marsaulina Simatupang Commissioner Soenggoel Pardamean Sitorus Commissioner Sintong Pandjaitan Commissioner Board of Commissioners Godlief Manangkak Timbul Silaen President Commissioner Roby Budi Prakoso Commissioner Saswinadi Sasmojo Commissioner Luti Ismail Commissioner PT ADIMITRA BARATAMA NUSANTARA 51 Percentage Ownership of the Company PT Adimitra Baratama Nusantara ABN is a fast-growing thermal coal producer located in Sanga- Sanga, Kutai Kartanegara, East Kalimantan, Indonesia and covers 2,990 hectares. First set up in 2004, ABN has been a majority-owned subsidiary entity of the Company since 2010. ABN has a total estimated resources of 156 million tons of coal. Currently, ABN produces two varieties of blended thermal coal, ABN 52 and ABN 58. In 2013 it produced 4.2 million tons of coal, with main infrastructures that comprise of coal stockpile, crusher, overland conveyor and jetty. In 2013, more than 80 of ABN production is estimated to be higher than 5,600 GAR. ABN transports its coal from the ROM stockpile through the overland conveyor of less than ive kilometers, which directly loads the coal to 300-feet barges at the jetty. Board of Directors Arthur M. E. Simatupang President Director Alvin Sunanda Director Board of Directors Hamid Awaluddin President Director Sudirdjo Widjaja Director Michael Soerijadji Director Pandu P. Syahrir Director Sudharmono Saragih Director Percentage Ownership of the Company PT TOBA BARA SEJAHTRA Tbk - 2014 Annual Report 39 PT TRISENSA MINERAL UTAMA PT PERKEBUNAN KALTIM UTAMA I

99.99 90

Percentage Ownership of the Company PT Trisensa Mineral Utama TMU is a wholly owned 99.99 subsidiary of the Company. The TMU concession is located in Kutai Kartanegara, East Kalimantan, and covers 3,414 hectares. Trisensa has completed the construction of a coal-hauling road to IM through ABN in order to use IM’s infrastructures. TMU has an estimated total resources of 43 million tons. TMU commenced production in October 2011, and in 2013 produced approximately 925 thousands tons of coal. PT Perkebunan Kaltim Utama I PKU is a subsidiary entity of the Company with a majority share 90 of PKU, which is engaged in the oil palm plantation business. PKU holds the Rights to Cultivate Oil Palm Plantation HGU of a site totalling 8,633 hectares in the Teluk Dalam Bario, Pula Seribu Village, Muara Jasa District, Jawa County, Sanga-Sanga Regency, and in Tani Bhakti Village, Batuah, Loa Janan District, Kutai Kartanegara Regency, East Kalimantan for a period of 30 years. Board of Commissioners Tjokro Saputrajaya President Commissioner Bok Maria Laurensia Commissioner Salikin Moenits Commissioner Eddy Kustiwa Koesma Commissioner Board of Commissioners Luti Ibrahim Nasution President Commissioner Luti Ismail Commissioner Board of Directors Suaidi Marasabessy President Director Elim Khiat Director of Finance Hartanto Saputrajaya Nyoto Director of Operations Board of Directors Suaidi Marasabessy President Director Elim Khiat Director Percentage Ownership of the Company 40 PT TOBA BARA SEJAHTRA Tbk - 2014 Annual Report CAPITAL MARKET SUPPORTING PROFESSIONALS No Supporting Institutions Name of Institutions Address Period 1 Public Accountant KAP Purwantono, Suherman Surja Gedung Bursa Efek Indonesia Tower 2, 7th loor Jl. Jend. Sudiman Kav. 52-53 Jakarta 12190 T: 021 5289 5000 F: 021 5289 4100 2013 - 2014 2 Notary Aryanti Artisari, SH. M. Kn Menara Sudirman, 18th loor Jl. Jend. Sudirman Kav. 60 Jakarta 12190 T: 021 520 4778 F: 021 520 4780 - 3 Share Registrar PT Datindo Entrycom Wisma Diners Club Amex Jl. Jend. Sudirman Kav. 34-35 Jakarta 10220 T: 021 570 8870 F: 021 570 9026 Since 2012 4 Public Appraisal Firm Jennywati, Kusnanto Rekan Plaza Bapindo Citibank Tower, 27 th loor Jl. Jend. Sudirman Kav. 54-55 Jakarta 12190 T: 021 526 0808 F: 021 526 6006 - PT TOBA BARA SEJAHTRA Tbk - 2014 Annual Report 41 ADDRESS OF COMPANY AND SUBSIDIARIES PT TOBA BARA SEJAHTRA TBK Wisma Bakrie 2,16th loor Jl. H.R. Rasuna Said Kav. B-2 Jakarta 12920, Indonesia T: 021 5794 5779 F: 021 5794 5778 corsectobabara.com Operating Subsidiaries Ofice Site PT ADIMITRA BARATAMA NUSANTARA Jakarta Ofice Wisma Bakrie 2, 11th loor Jl. H.R. Rasuna Said Kav. B-2 Jakarta 12920, Indonesia T: 021 579 42103 F: 021 579 42130 Jl. Habiba RT 04 Kelurahan Jawa, Sangasanga 75254 Kab. Kutai Kartanegara - Samarinda East Kalimantan Indonesia TF: 0541 671 259 PT INDOMINING Jakarta Ofice Wisma Bakrie 2, 11th loor Jl. H.R. Rasuna Said Kav. B-2 Jakarta 12920, Indonesia T: 021 579 30579 F: 021 579 30580 District 5, Jl. Gajah Mada Kel. Sangasanga Dalam, Kec. Sangasanga, Kab. Kutai Kartanegara - Samarinda, East Kalimantan Indonesia T: 0541 671 387 F: 0541 671 310 PT TRISENSA MINERAL UTAMA Jakarta Ofice Wisma Bakrie 2, 11th loor Jl. H.R. Rasuna Said Kav B-2 Jakarta 12920, Indonesia T: 021 5793 05689 F: 021 5793 0570 KM 23 Desa Tani Harapan Kecamatan Loa Janan Kab. Kutai Kartanegara - Samarinda East Kalimantan Indonesia TF: 0541 726 8231 PT PERKEBUNAN KALTIM UTAMA I Jakarta Ofice Wisma Bakrie 2, 11th loor Jl. H.R. Rasuna Said Kav B-2 Jakarta 12920, Indonesia T: 021 5794 5779 Desa Tani Harapan Kecamatan Loa Janan Kab. Kutai Kartanegara - Samarinda East Kalimantan Indonesia TF: 0541 796 4704 42 PT TOBA BARA SEJAHTRA Tbk - 2014 Annual Report MANAGEMENT DISCUSSION AND ANALYSIS Although the coal market has not moved from its position of oversupply and declining demand, in the long-term, coal demand will continue to increase along with the world energy demand as driven by population growth and increase in Gross Domestic Product GDP. PT TOBA BARA SEJAHTRA Tbk - 2014 Annual Report 43 44 PT TOBA BARA SEJAHTRA Tbk - 2014 Annual Report Indonesia is one of the largest coal producers and exporters in the world. Since the early 1990s, when the coal mining sector was reopened for foreign investment, the Indonesian coal industry has increased rapidly both in terms of production and sales volumes. The domestic use of coal to this day is relatively low compared to the Indonesian coal exports which range between 70 - 80 of the total coal production. Production, exports and domestic sales are expected to grow at least by 10 every year. Based on the report of BP Statistical Review of World Energy published in 2014, in 2013 Indonesia was in the ifth place of coal producer in the world after China, the USA and Australia. Country Production million Mt Consumption million Mt 2012 2013 2012 2013 China 3,645.0 3,680.0 1,856.4 1,925.3 United States 922.1 892.6 436.7 455.7 India 606.5 605.1 302.3 324.3 Australia 452.8 478.0 47.3 45.0 Indonesia 386.0 421.0 50.4 54.4 Table: Big ive of world coal producers Source: BP Statistical Review of Wold Energy June 2014 INDUSTRY OVERVIEW PT TOBA BARA SEJAHTRA Tbk - 2014 Annual Report 45 From the table above, it shows that although Indonesia was the fourth as a producer, but its domestic consumption was still very low. In contrast, more than 80 of Indonesian coal production entered into the global market that puts Indonesia the world’s largest coal exporter. Based on data from Indonesian-Investments, most of exported thermal coal consisted of the medium quality type between 5,100 and 6,100 kcalkg and the low quality type below 5,100 kcalkg which were largely absorbed by China and India markets. Moreover, approximately 60 of Indonesia’s total coal reserves consisted of low quality coals that were cheaper sub-bituminous containing less than 6,100 kcalkg. Pertaining to the global coal reserves, Indonesia is currently ranked 10th having approximately 3.1 of total proven global coal reserves according to BP Statistical Review of World Energy 2014. COAL MARKET CONDITIONS 2014 Entering 2014, the coal industry showed no indication of improvement. The coal market has not moved from its position of oversupply and declining demand since 2011. China which has been the world’s largest coal importer began to reduce the use of low rank coal for developing environmentally friendly power plants. China’s policy shocked the other exporting countries because in 2013 alone China absorbed coal supply of 1.9 billion tons or 50.3 of total world coal consumption. In addition, excess supply in global market was also triggered by looding products from South Africa and the United States. Coal supply increased faster than demand was also due to some new mines commencing production phase. One of the world’s largest thermal coal exporters mentioned that thermal coal shipments By the end of 2014, global coal prices have declined by 27.8 compared to prices at the end of 2013, as the combined result of weakening demand growth in China and relatively high supply. 2014 Total Coal Production in Indonesia 435 million tons 2014 Exported coal from Total Pro- duction Indonesia 82.5 46 PT TOBA BARA SEJAHTRA Tbk - 2014 Annual Report INDUSTRY OVERVIEW by sea rose by 22.0 between 2011 and 2013. As a result, the price of thermal coal used in power plants was traded at its lowest level in ive years. Meanwhile, metallurgical coal, steel raw materials, was traded almost at the lowest level in seven years. Newcastle Price Index NEWC decreased by 16.2 from US 93.2ton in the irst quarter of 2013 to US 78.1ton in the irst quarter of 2014. Entering mid-year, the price weakening continued. NEWC Price Index fell to US 73.1ton in the second quarter and the third quarter dropped to US 68.4ton. By the end of the year, coal prices continued to weaken to US 63.5ton on December 31, 2014. Thus, in just a single year, coal prices declined by 26.0 compared to US 85.9ton by the end of 2013. The main cause of declining coal prices was a combination of weakening demand growth in China and relatively high inventories due to declining domestic coal prices. In addition, uncontrolled production of the major supplying countries like Indonesia and Australia added up the pressure on world coal prices. Hence, the estimated coal price in short to medium term would be in the same range. The Indonesian government made an effort to help drive up coal price. Ministry of Energy and Mineral Resources ESDM set a coal production quota of 397 million tons in 2014. This enforcement of production quotas was expected to help lift the domestic and international coal prices. However this production quota is predicted not to run effectively. Large-scale manufacturers continue their coal productions according to the agreements. Many coal producers focus on eficiency by cutting operating costs, reducing labors, delaying capital expenditures for large-scale development and renegotiating contracts. Uncertain market conditions force every coal industry player to operate eficiently, effectively and responsively to market demand. PT TOBA BARA SEJAHTRA Tbk - 2014 Annual Report 47 FUTURE PROSPECTS Given the growing energy needs, the coal industry players remain optimistic about the coal future. Quoted from the report of BP Statistical Review of World Energy released in June 2014, coal consumption continued to grow by 3 in 2013. Although the igure was still below the average growth in 10 years of 3.9, nevertheless coal was the most rapidly-growing fossil fuel. World energy demand will continue to increase as driven by population growth and increase in Gross Domestic Product GDP. Economic growth in Asia, which contributes to the world economic growth, strongly affects the world energy demand. According to projections of International Energy Agency IEA, by 2030 the world energy demand would increase by 45.0, or an average increase of 1.6 per year. Approximately 80 of the world’s energy needs are met by fossil fuels. Only around 20 comes from renewable energy. According to IEA projections for the period 2006-2030, about 87.0 of the world’s energy demand comes from non-OECD countries. Energy demand growth in China was projected to be the greatest among other areas. India in recent years also showed quite large growth in energy demand, one level below China. Of the energy growth, coal ranks second after oil as energy supply source. Coal consumption is expected to increase three times by 2030. Approximately 97.0 of coal users are non-OECD countries and China becomes the largest user, which is about 23 of the total world consumption. Coal is still needed to meet the demand for power plants construction in a number of areas in line with economic and revenue growth. The coal demand is expected to grow by about 2.0 per year. Based on the report of World Energy Outlook 2013, in the regional area, coal demand in ASEAN countries is projected to increase three times during the period from 2011 to 2035 with an average growth of 4.7 per year. Strong demand in the entire South Asia is driven by increasing electricity demands. 48 PT TOBA BARA SEJAHTRA Tbk - 2014 Annual Report OPERATIONAL OVERVIEW Toba Bara is the majority controlling shareholder in three coal mining Subsidiaries, namely ABN, IM and TMU. The Company’s business revenue depends entirely on the volume and quality of the coal produced. Through the Subsidiaries, the Company manufactures a wide range of coal products with different caloriic values. These products are the result of each concession area of different seams with various caloriic values to generate products with speciic characteristics according to customer speciications. The Company’s products are sub-bituminous coal with following speciications: Concession Area TM Total Moisture IM Inherent Moisture Ash VM Volatile Matter HGI Hardgrove Indexs TS Total Sulphur CV Caloriic Value GAR adb adb adb adb kcalkg GAD kcalkg GAR ABN ABN 52 23 15 6 40 45 0.8 5,800 5,200 ABN 56-HS 20 13 6 40 45 1.8 6,100 5,600 ABN 56-RS 20 13 6 40 45 0.8 6,100 5,600 ABN 58 19 11 6 40 45 0.8 6,250 5,800 PT TOBA BARA SEJAHTRA Tbk - 2014 Annual Report 49 Concession Area TM Total Moisture IM Inherent Moisture Ash VM Volatile Matter HGI Hardgrove Indexs TS Total Sulphur CV Caloriic Value GAR adb adb adb adb kcalkg GAD kcalkg GAR Indomining Indomining-56 19 13 8 40 45 0.9 6,200 5,700 TMU Trisensa-47 28 15 4 42 42 0.3 5,600 4,700 OPERATIONAL AND PRODUCTION PERFORMANCE In the midst of tough coal industry conditions, the Company continues to manage costs carefully in every operational aspect of its three Subsidiaries to maintain production growth to remain stable and proitable. One of the Company’s advantages is that the three concession areas are located next to each other. Accordingly, the Company can optimize cost eficiency program with a joint mine plan and infrastructure sharing. Undertaken cost eficiency efforts include: • Decrease stripping ratio SR and overburden management. • Build hauling road from TMU to IM and maximize the use of shared infrastructure such as CPP coal processing unit and jetty. One of the Company’s competitive advantages is that the three concession areas are located next to each other, thereby facilitating an optimum cost eficiency program through a joint mine plan and infrastructure sharing. 50 PT TOBA BARA SEJAHTRA Tbk - 2014 Annual Report OPERATIONAL OVERVIEW With the completion of the Coal Processing Plant CPP facility, coal production capacity in IM increased from 3 million tons per year to 6 million tons per year, in support of the Company’s long-term target of achieving production volume of 16 million ton per year. Toba Bara’s Production Volume in 2014 8.1 million tons Toba Bara’s Coal Production Growth in 2014 24.6 PT TOBA BARA SEJAHTRA Tbk - 2014 Annual Report 51 • Fuel eficiency. • Maximize sales through targeted marketing strategies. • Decrease in contractor cost. In 2014, the Company built new Coal Processing Plant CPP facility to increase coal production capacity in IM from 3 million tons per year to 6 million tons per year. The new CPP is also used to process TMU coal thereby creating cost eficiencies and increasing capacity of coal stockpile. Therefore, the total production capacity increased from 13 million tons per year to 16 million tons per year. The Company’s production volume increased by 24.6 from 6.5 million tons in 2013 to 8.1 million tons. Production volume achievement in 2014 was the highest in the Company’s history, whereby this production exceeded the planned target of 7.2 to 7.8 million tons. The increase in production volume was supported by the increased productions of TMU and IM. The contributions of each Subsidiary were approximately 1.4 million tons from TMU, approximately 2.3 tons from IM and approximately 4.4 million tons from ABN. The signiicant production increase of TMU was triggered by the completion of hauling road in the second quarter of 2013 which connects TMU and IM via ABN. ABN remains the major contributor of the three Subsidiaries which was 54.3 of the Company’s total production, although its percentage contribution has decreased from the previous year which reached 64.6 due to the increased contributions of IM and TMU. TMU’s contribution increased from 13.8 in 2013 to 17.3 in 2014. The production volumes of IM and TMU grew by around 64.3 and 55.6 respectively in 2014. ABN 2014 4.4 2013 4.2 13.9x 14.0x IM 2014 2.3 2013 1.4 13.2x 12.8x TMU 2014 1.4 2013 0.9 11.8x 11.1x Production Volume million tons SR x Chart: Production and SR stripping ratio growth of ABN, IM and TMU Compared to 2013, SR decreased by 0.7 from 13,4x to 13.3x relecting the Company’s efforts to improve eficiency in the midst of the weakened condition of the coal price. In line with its strategy to reduce overall costs continually in order to maintain proit margin, the Company maintains SR and Overburden OB at a stable position, considering both of these components, including fuel, account for 65-70 of the total cash cost. 52 PT TOBA BARA SEJAHTRA Tbk - 2014 Annual Report

9.0 8.0

7.0 6.0

5.0 4.0

3.0 2.0

1.0 0.0

16.0x 15.0x 14.0x 13.0x 12.0x 11.0x 10.0x 2012 2013 2014 TMU IM ABN SR x Production Volume SR Graph: Production and SR

5.6 14.9

6.5 13.4

8.1 13.3

SR million ton PROFITABILITY With Newcastle Index price down 17 year-on-year, the Company managed to keep its Average Selling Price ASP that only decreased by 4.4 from US 66.6 in 2013 to US 63.7 in 2014. This could be achieved because the Company obtained sales contracts with ixed prices from qualiied buyers at the end of 2013 for most of the production plan in 2014. The Company could maximize its price structure to anticipate the less favorable coal market condition. Payment mechanism was very beneicial to the Company as most of the buyers prepaid their transactions based on certain percentage of the contract values. The Company booked revenue of US 500.0 million, increasing by 18.5 from US 421.8 million in 2013. Chart: Price luctuation of NEWC Index and Average Selling Price 200 180 160 140 120 100 80 60 40 20 2014 2013 2012 2011 2010 2009 2008 2007 US 63.7ton US 66.6ton US 72.5ton US 91.3ton US 65.5ton US 50.1ton US 62.5ton US 41.5ton NEWC Index ASP USton OPERATIONAL OVERVIEW PT TOBA BARA SEJAHTRA Tbk - 2014 Annual Report 53 On the cost side, in 2014 the Company was able to reduce FOB cash cost by 3.0 due to cost eficiency efforts supported by better mine plan and lower fuel cost. Overall, the Company managed to increase EBIDTA by 14.8 to US 67.3 million compared to US 58.6 million in 2013. Proit in 2014 reached US 35.8 million, an increase of 3.5 from the proit achievement in 2013. With an average quarterly run-rate production reaching 2.0 million tons, hence EBITDA per ton in 2014 stabilized at US 8 - US 10 per ton. Operational 2013 2014 Change Newc. Index USton 85.3 70.8 17.0 Average Selling Price ASP USton 66.6 63.7 4.4 Production Volume Million ton 6.5 8.1 24.6 Sales Volume Million ton 6.3 7.9 25.4 Stripping Ratio x 13.4 13.3 0.7 Financial Sales US Million 421.8 500.0 18.5 EBITDA US Million 58.6 67.3 14.8 Proit for the Year US Million 34.6 35.8 3.5 EBITDA = Gross Proit - selling marketing expenses - GA expenses + Depreciation and amortization Table: Key operational indicators MARKETING The Company produces coal with diverse characteristics and required by power plants and other users in major export markets, particularly in the Asia Paciic region. Therefore, the Company does not have signiicant dificulties in marketing their products, as the Company has a strong diversiied customer base. Throughout 2014, the Company sold its products to Asian countries, such as China, Korea, Taiwan, India, and the Philippines. Several internationally well-known traders and end-users such as power plant companies are some of the major customers. The Company maximizes capability of its internal marketing team to acquire new well-known end- users in Japan without spending signiicant marketing cost. Integrated marketing strategies applied by the Company are: • Empower central marketing for the three Subsidiaries to build a customer base internally so as to reduce marketing cost. • Improve buyer quality through reinement of contracts and payment terms supported by prepayment. • Maximize pricing determination through mid and long-term sales contract strategy and ideal spot. • Participate actively in prominent seminars, conferences, and trade shows to enhance the Company’s brand awareness. 54 PT TOBA BARA SEJAHTRA Tbk - 2014 Annual Report South Korea 19.0 China 32.9 Hong Kong Taiwan

15.2 Thailand

Vietnam India

16.5 Japan

Philippines 4700 GAR 16 5200 GAR 9 5600 GAR 64 5800 GAR 1 5900 GAR 9 Others 1 Sales Based on Product in Sales Based on Countries of Destination Sales to other countries respectively below 3 Total Sales 2014 7.9 million tons OPERATIONAL OVERVIEW PT TOBA BARA SEJAHTRA Tbk - 2014 Annual Report 55 Sales Based on Countries of Destination in million tons Country of Destination Total Percentage China 2.6 33 South Korea 1.5 19 India 1.3 16 Taiwan 1.2 15 Philippines 0.3 4 Vietnam 0.3 4 Thailand 0.2 3 Others 0.5 6 Total 7.9 100 INITIATIVES AND DEVELOPMENT The Company has set a strategy to maintain business sustainability. Therefore, in 2014 the Company focuses on eficiency efforts to obtain positive operating margin in the middle of challenging coal market condition. In accordance with its revised mining plan, the Company sought to reduce stripping ratio in coal mining to reduce stripping cost. This was successfully done, whereby the overall stripping ratio decreased from 13.4x to 13.2x. In addition to decreasing stripping ratio, the Company sought to optimize its competitive advantages which is having the three adjacent mine locations. The Company designed joint mine plan and infrastructure sharing among ABN, IM and TMU such as the use of overland conveyor, coal crusher, coal transportation and jetty. The Company mines in the borderland between ABN and IM to maximize the reserves and increase overburden disposal capacity. The adjacent location of ABN and IM is optimized so as to shorten overburden disposal distance, thereby reducing overburden transport cost. With coal haul road from TMU to IM via ABN, the Company can maximize the use of shared infrastructure such as CPP Coal Processing Plant and jetty owned by ABN or IM. The Company has built a new CPP in IM, which can increase processing capacity of IM’s coals, accommodate TMU’s coals, increase overburden disposal capacity, reduce transportation cost, and increase stockpile capacity for raw coal and coal products. To shorten overburden disposal distance, the Company has built underpass at ABN’s location. In 2014, the Company invested in capital expenditure of US 11.8 million from the budget of US 15.5 million. The capital expenditure was used, among others, for land acquisition inancing in TMU and purchase of equipment and operational facilities to support operations at the mine site. 2014 56 PT TOBA BARA SEJAHTRA Tbk - 2014 Annual Report PROJECTS IN PROGRESS 1. In the third quarter of 2014, Perkebunan Kalimantan Utama I PKU, a subsidiary engaged in palm oil plantation, commenced the factory construction process starting with preparation of a mill. The palm oil mill capacity is planned to be 30 tonshour. The construction is expected to be completed by the end of 2015. 2. IM has completed the construction of conveyor belt transfer that connects the new CPP directly with the existing conveyor belt. OPERATIONAL OVERVIEW PT TOBA BARA SEJAHTRA Tbk - 2014 Annual Report 57 PROFILE OF SUBSIDIARIES PT Toba Bara Sejahtera Tbk is a coal mining company conducting mining activities in Sangasanga, Kutai Kartanegara Regency, East Kalimantan Province. The Company has mining operational supporting infrastructure such as coal haul road, ofice, workshop, special coal port and other infrastructure. The Company has three Subsidiaries engaged in coal mining with adjacent concession areas in Sangasanga, Kutai Kartanegara Regency, East Kalimantan Province. A subsidiary engaged in palm oil plantation is PT Perkebunan Kalimantan Utama I PKU, which recently started construction of palm oil mills. The three Subsidiaries in coal mining are: 1. PT Adimitra Baratama Nusantara ABN located in Sangasanga, Kutai Kartanegara, East Kalimantan. ABN operates with IUPOP license and began operating in September 2008. ABN has a land area of 2,990 hectares, with an estimated coal resource of 156 million tons. 2. PT Indomining IM located in Sangasanga, Kutai Kartanegara, East Kalimantan. IM operates with IUPOP license and began operating in August 2007. IM has a land area of 683 hectares, with an estimated coal resource of 37 million tons. 3. PT Trisensa Mineral Utama TMU located in Loa Janan, Muara Jawa and Sangasanga, Kutai Kartanegara, East Kalimantan. TMU operates with IUPOP license and began operating in October 2011. TMU has a land area of 3,414 hectares, with an estimated coal resource of 43 million tons. Overall, the Company’s total estimated coal resource is currently 236 million tons. Balikpapan East Kalimantan Central Kalimantan Malaysia Major city is less than 50 km Furthest pit to jetty ~25 km with closest ~5 km Close proximity transhipment point jetty Adjacent locations for three mines SAMARINDA MAKASSAR STRAIT ~55 Km total ~120 Km ~65 Km ~120 Km MUARA JAWA Kutai Energy MUARA BERAU Major city Jetty Transhipment Point TMU-IM Hauling Road T M U I M A B N ~25 km ~5 km IM Jetty BALIKPAPAN ABN Jetty M AHA KAM R IVER Based on Runge report for ABN per December 31, 2011, SMGC report for IM per January 1, 2012, Marston Report for TMU per October 30, 2011 58 PT TOBA BARA SEJAHTRA Tbk - 2014 Annual Report PT ADIMITRA BARATAMA NUSANTARA PT Adimitra Baratama Nusantara ABN which was established in 2006, has a mining area of approximately 2,990 hectares located in Kampung Jawa Village, Sangasanga District and Muara Kembang Village, Muara Jawa District, Kutai Kartanegara Regency, about 30 kilometers to the southeast of Samarinda, the capital of East Kalimantan. ABN’s concession area consists of two distinct regions, East ABN and West ABN. ABN operates under Mining Authority License No. 54074 KP-ErDPEIVVI2006. Based on the latest JORC report, ABN has a coal resource of about 156 million tons and coal reserve of about 117 million tons. ABN commenced exploration and infrastructure development in 2007, and commercial production in 2008. Coal production in 2014 reached 4.4 million tons, increased by 4.8 from 4.2 million tons in 2013. ABN’s stripping ratio reached 13.9x, lower than 14.0x in 2013. This is in line with consolidation and cost-eficiency programs launched by the Company since 2013. ABN’s operational activities provide employment for 2,006 people, consisting of 389 employees of ABN and 1,617 employees of contractors and sub-contractors. Most of employees of ABN and contractorssub- contractors are local people of Sangasanga and Muara Jawa District, Kutai Kartanegara Regency representing approximately 61 of the total employees. While the remaining 39 come from outside of these two districts. ABN’s infrastructure capabilities include crusher, overland conveyor and jetty, with a current capacity of approximately 10 million tons per year. Mining is conducted with surface open pit mining system. ABN’s coals have low dust content so that washing process is not required, only crushing process is required. ABN’s mining activities are carried out by two main contractors, namely PT Petrosea Tbk and PT Arkana Apta Pratista. ABN’s coal products are included in thermal coal group with sub-bituminous and bituminous ranks and quality between 5,200 GAR – 5,800 GAR. ABN’s products are also marketed to several countries in the world, including India, China, Japan, Thailand, and Korea. ABN also supplies domestic needs such as cement and some other industries. In a relatively short time since it began operating in 2008, ABN for three years in a row in 2011, 2012 and 2013 achieved Green rating and in 2014 earned Blue rating for PROPER, a Government environmental compliance rating program for major industries whose operations could impact on the environment. Exploration Activities A. Exploration Areas In January to March exploration activities and update geology model were conducted. Starting in April exploration activities were prioritized in new pit plan area which still required additional drilling data, especially in sub crop and down dip area. Undertaken exploration activities were: 1. Inill drilling in new pit plan in Eastern block, which is part of pit 1 mining development plan to obtain additional drilling data by pressing drilling space from the previous drilling data. 2. Inill drilling in anticline axis area to determine continuity and potential seam shapes in anticline axis area that could still be optimized. 3. Inill drilling in pit 1 North active pit to obtain additional drilling data by pressing drilling space from the previous drilling data to increase continuity conidence of the main seam toward down dip to the lower limit of pit plan. 4. Depressurization drilling to reduce water pressure and stabilize the low wall in pit 1. 5. Inill drilling phase I in anticline axis area to determine continuity and shape of potential seam in anticline axis area which could still be optimized. 6. Inill drilling phase II in anticline axis area to determine continuity and shape of potential seam in anticline axis area which could still be optimized. 7. In October there was no exploration activity, however there were geological model update and preparation of exploration activities in 2015. PT TOBA BARA SEJAHTRA Tbk - 2014 Annual Report 59

B. Measurement Methods

1. Drilling is carried out using open hole drilling method and touch coring with HQ and NQ hole diameters at an angle of 90˚ or vertical. Sample core and geophysical logging data are taken at touch coring drilling, while sample cutting and geophysical logging data are taken in at open drilling. 2. The dip in the West area ranged 70˚ - 85˚, therefore exploration drilling activities in the Western block are conducted using slanting drilling method with a slope of 45˚. The drilling system uses open hole method and touch coring. Open hole aims to determine the stratigraphy and continuity of rocks particularly coal seam. Meanwhile touch coring hole aims to take coal samples for coal quality analysis. 3. Geological structure condition in the Eastern block area has a quite lat dip of around 5 ° - 10 ° with this condition, drilling is carried out with vertical drilling method. 4. Drilling hole with size N 76.00 mm and H 99.70 mm is carried out with slanting drill system 45˚. For penetration depth of the existing drill types, Koken E-8 unit for 45˚ slanting condition reaches 100 meters, if vertical reaches 150 meters. 5. Crop line drilling uses vertical drilling system and drilling penetration to a depth of 30 meters using rods AW rods with a hole diameter of size N 76.00 mm. 6. Drilling is carried out using open hole drilling method and touch coring with hole diameters HQ and NQ at an angle of 90˚ or vertical. Sample core and geophysical logging data are taken at touch coring drilling, while sample cutting and geophysical logging data are taken in at open drilling.

C. Drilling Monitoring

Drilling activities are carried out by drilling contractor PT Duta Jaya Putrapersada Mining, which operates 3 drilling machines consisting of 2 Jacro 300 units and 1 Jacro 200 units used for inill drilling both open hole and touch coring. These drilling activities are supervised directly by ABN under Geology Section, Engineering Department.

D. Exploration Progress

ABN’s area consists of 2 main blocks, namely the Eastern block and the Western blocks, which are distinguished by oilgas exclusion zone of PT Pertamina Asset V site Sangasanga in the concession area. During the period from April to July, drilling was carried out in the Eastern block and the Western block. Inill drilling Phase I completed 59 holes of the total planned 56 drilling holes, with a total depth of 5,897.40 meters from 6,167 meters planned. In August inill drilling phase II activities were carried out in the Eastern block and Western block with a total of 1,295.10 meters 15 drill holes so that overall, drilling progress has been completed with a total of 72 drill holes, with a total depth of 7,153.45 meters from 7,167 meters planned. In September there was no exploration activity, but focused on veriication and validation of exploration data that has been done. 60 PT TOBA BARA SEJAHTRA Tbk - 2014 Annual Report PT INDOMINING PT Indomining IM has a concession area covering approximately 683 hectares in Sangasanga District, Kutai Kartanegara Regency, about 38 kilometers to southeast of Samarinda, the capital of East Kalimantan Province. According to the latest JORC report, Indomining has a total coal resource of about 37 million tons and coal reserve of around 22 million tons. IM operates under Production Business License No. 540004IUP-OPMB- PBATIII2013 dated March 15, 2013. IM’s production phase began in August 2007, while its commercial production commenced in September 2007. Coal production in 2014 reached 2.3 million tons, increased by 64.3 from 1.4 million tons in 2013. Stripping ratio SR increased to 13.2x compared to 12.8x in 2013. IM’s coal production volume increased signiicantly with the operation of the new CPP which added IM’s coal production capacity by six million tons per year, in addition to process coals from TMU’s mine. IM’s operational activities provide employment for 695 people, including contractors and sub-contractors. Approximately 80 of employees come from local people to implement community development program to improve welfare of communities surrounding the mining area. IM’s mining contractor is PT RPP Contractor Indonesia. The mining activity is surface open pit mining with truck and shovel method. The quality of IM’s coal products are between 5,600 GAR with total sulfur of around 1.0. This product is quite competitive in international and domestic markets. In terms of environmental compliance, Indomining earned Blue rating for PROPER Program for Environmental Compliance Performance Rating from Governor of East Kalimantan in 2012 and 2013 as a reward for compliance with requirements of sound environmental management according to laws and regulations. In 2014, IM again earned Blue rating for PROPER from Ministry of Environment as a reward for environmental preservation compliance by major industry players that have an impact on the natural environment. Exploration Activities A. Exploration Areas Exploration activities during 2014 were prioritized in areas that require detailed drilling to obtain geological and hydrological and geotechnical testing data. Undertaken exploration activities were: 1. Measure pit A North and South lats based on comparison data of pick-up survey and ield measurement. 2. Measure coal actual thickness in pit A North and D South for purposes of updating geological models and mining control. 3. Conduct inill drilling activity at some points which less dense spaces. 4. Check sludge material condition in acquired land area to determine sludge material thickness in order to perform geological model up-date. 5. Support the supervision of geotechnical drilling for OLC Over Line Conveyor construction plan in sludge area of CPP Coal Processing Plant. 6. Evaluate geotechnical drilling proposal for high LoM pit A seam A1 coordinating with ABN’s Geological Team. 7. Review geotechnical drilling plan for high LoM pit B 3 three points to evaluate the design LoM pit and disposal related to failure issues.

B. Measurement Methods

Drilling was conducted using open hole method NQ type with a maximum depth of 100 meters. For rock description geophysical logging was carried out with descriptions using drilling cutting.

C. Drilling Monitoring

Supervision is done directly by Indomining’s geologists. Drilling tools use 4 drill units owned by CV Moedjiarto Mandiri Utama.

D. Exploration Progress

Exploration drilling work reached a total depth of 2,047.50 meters for open hole drilling and 2,007.50 meters for geophysical logging. PT TOBA BARA SEJAHTRA Tbk - 2014 Annual Report 61 PT TRISENSA MINERAL UTAMA PT Trisensa Mineral Utama TMU has a mining area that is administratively included in the territory of three districts, namely Loa Janan, Sangasanga and Muara Jawa, Kutai Kertanegara Regency. The location is about 40 kilometers to the southeast of Samarinda, the capital of East Kalimantan Province. The total concession area covers 3,414 hectares with area code KTN 2010 3133 OP. TMU obtained approval to conduct mining activities and sell the mined materials as stipulated in Decision of Kutai Kartanegara Regent No. 5403133IUP-OPMB- PBATXII2010 concerning provision of Mining Permit KTN 2010 3133 OP dated December 14, 2010. Based on the latest JORC report which only covered an area of 680 hectares of the concession, TMU has coal resource of about 43 million tons and coal reserve of about 8 million tons. Coal production in 2014 reached a total of 1.4 million tons, increased by 55.6 from 925 thousand tons in 2013. Stripping ratio SR rose from 11.1x in 2013 to 11.8x in 2014. TMU’s operational activities provide employment for 119 people while for contractors and sub-contractors there are 929 people divided in 2 shifts. The mining contractor is PT Surya Teknik Anugrah STA and PT Bina Sarana Success BSS. Mining activities are conducted using surface open pit mining system with truck and shovel method. TMU’s coal products have an average calorie of 4,700 GAR with Total Sulphur TS below 1. This coal quality is suficient to meet market demand that requires coals with low sulphur. Exploration Activities A. Exploration Areas TMU’s exploration activities in 2014 were crop line drilling in pit B4D area block 3 and West 5A concentrated on seam D and pit KL area block 4 beginning in January 2014. In July, crop line drilling followed pit movement for Block 3 and 2 areas, which was extend pit B4D to the North and in December crop line drilling in anticline area of east wing in block 3.

B. Measurement Methods

Because the dip in the western area ranged 70˚- 85˚ then exploration drilling in west anticline was conducted using 45˚ slanting drilling. There are 2 drilling systems namely open hole and touch coring. Open hole aims to determine Stratigraphy and Continuity of the rocks especially coal seam. Meanwhile touch coring hole aims to conduct coal sampling for coal quality analysis. Drilling holes are of size N 76.00 mm and H 99.70 mm with slant drilling system 45˚. To penetrate the depth with the existing drill types, Koken E-8 Unit is for 45˚ slant condition reaching 100 meters, or if vertical reaching 150 meters. Meanwhile geological structure condition in the eastern block, the dip is relatively lat nearly 5º -10º so that drilling activities in the eastern block area use vertical drilling system and drilling penetration to a depth of 30 meters. The rods used are Aw rods type with a hole diameter of size N 76.00 mm.

C. Drilling Supervision

Drill tools which are used are owned by TMU including 1 power rig unit. Drilling supervision is carried out by TMU’s well site geologist.

D. Exploration Progress

Exploration drilling undertaken by TMU throughout 2014 reached 157 holes with a total depth of 3,041.5 meters. 62 PT TOBA BARA SEJAHTRA Tbk - 2014 Annual Report FINANCIAL REVIEW The following discussion should be read together with inancial and operational data as well as the consolidated inancial statements and notes to the inancial statements contained in this annual report. This discussion is based on the consolidated inancial statements of PT Toba Bara Sejahtra Tbk and Subsidiaries for the years ended December 31, 2014 and 2013, which have been audited by Public Accounting Firm Purwantono, Suherman Surja a member of Ernst Young Global network. All numbers presented in this Financial Review is consolidated inancial igures of the Company and its subsidiaries. INCOME STATEMENTS in US 2014 2013 Δ Statement of Comprehensive Income Statement Sales 499,965,642 421,849,737 18.5 Cost of Good Sold 413,764,435 342,297,332 20.9 Gross Proit 86,201,207 79,552,405 8.4 General and administrative expenses 31,205,900 28,679,546 8.8 Selling and marketing expenses 364,698 528,132 30.9 Foreign Exchange gain loss 82,262 8,205,950 101.0 Loss gain on derivative instruments 59,647 693,712 108.6 Gain on settlement of pre-existing intercompany account - 7,535,475 100.0 PT TOBA BARA SEJAHTRA Tbk - 2014 Annual Report 63 in US 2014 2013 Δ Other income expenses 1,376,024 352,650 490.2 Operating Proit 56,029,248 50,015,314 12.0 Finance income 2,511,526 4,067,768 38.3 Finance charge 4,643,549 3,680,063 26.2 Proit Before Tax Expense 53,897,225 50,403,019 6.9 Tax expense 18,096,721 15,799,226 14.5 Proit For The Year 35,800,504 34,603,793 3.5 Other comprehensive income Difference in foreign currency translation of the inancial statements of subsidiary - net 260,662 1,528,929 83.0 Effective portion of the fair value change of derivative instruments - cash lows hedge - net 3,919,319 - 100.0 Other Comprehensive Income 3,658,657 1,528,929 339.3 Total Comprehensive Income for The Year 32,141,847 36,132,722 11.0 Proit for The Year Attributable to: Equity holders of the parent entity 18,327,272 18,543,538 1.2 Non-controlling interest 17,473,232 16,060,255 8.8 Total 35,800,504 34,603,793 3.5 Basic Earnings per Share Attributable to Equity Holders of The Parent Entity 0.0091 0.0092 Toba Bara recorded an increase of 18.5 in sales, where 67.0 of total sales were derived from four major customers who have increased their purchase volume signiicantly compared to the previous year as a relection of customers’ trust to the quality of the Company’s products. 2014 Sales Value US million 500.0 2014 Proit US million 35.8 64 PT TOBA BARA SEJAHTRA Tbk - 2014 Annual Report

A. Sales

Amidst pressure of coal prices with the Newcastle Index declining by 17.0, the Company was able to limit the decline in its Average Selling Price ASP by only 4.4, from US 66.6 per ton to US 63.7 per ton. This was attributable to successful efforts by the Company to secure ixed price sales contracts with qualiied buyers at the end of 2013 for most of the production plan in 2014. With this type of sales contract, the Company was able to maximize the price structure in anticipation of the less favorable coal market condition. Sales volume in 2014 reached 7.9 million tons, an increase of 25.4 from 6.3 million tons in 2013. The Company recorded sales revenue of US 500.0 million, up by 18.5 from US 421.8 million in 2013. Approximately 67.0 of total sales were derived from the Company’s four major customers whose purchase volume signiicantly increased compared to 2013. This relected the customers’ trust in the Company’s commitment of product quality and delivery.

B. Cost of Goods Sold

Cost of goods sold increased by 20.9 from US 342.3 million in 2013 to US 413.8 million in 2014 due to the Company’s increased production volume by 24.6 from 6.5 million tons in 2013 to 8.1 million tons. The percentage increase in COGS was lower than the percentage increase in production volume as a result of the Company’s cost eficiency efforts including stripping ratio and fuel prices reduction. This was relected in a decrease in cash cost FOB of 3.0 from US 52.8ton in 2013 to US 51.3ton in 2014. FOB cash cost components consisted of cost of goods sold plus royalty and selling and marketing expenses minus depreciation and amortization. Cost of production increased by 25.5 from US 296.7 million in 2013 to US 372.3 million as a consequence of the increase in production volume.

C. Gross Proit

The Company recorded a gross proit of US 86.2 million in 2014, an increase of 8.4 from US 79.6 million in 2013 due to increased sales volume accompanied with ongoing cost eficiency strategy. Although the Newcastle Index continued to decline, the Company was able to achieve growth by increasing production volume optimally to meet sales commitments resulting in an increase in gross proit. Tries Nainggolan Tries Nainggolan joined the Company in November 2012 as GM-Finance. Previously he worked as a Business Analyst and Financial Planning in the health services sector Siloam Hospitals Group and retail sector Limited Brands, Inc. and Foot Locker, Inc.. Tries holds a Bachelor degree in Finance from Pennsylvania State University and a Masters degree in Public Policy and Management from Ohio State University, the United States.

D. EBITDA and EBITDA Margin

Although the global coal market conditions were still not conducive and coal prices were still weak, the Company recorded an EBITDA of US 67.3 million, an increase of 14.8 from US 58.6 million in 2013. The combination of increased sales volume, eficiency initiatives and increased sales and marketing activities managed to maintain EBITDA margin at 13.5 compared to 13.9 in 2013. FINANCIAL REVIEW PT TOBA BARA SEJAHTRA Tbk - 2014 Annual Report 65

E. Selling and Marketing, General and Administrative Expenses

Selling and marketing expenses decreased by 30.9 to US 364.7 thousand compared to US 528.1 thousand in 2013. Eficiency of selling and marketing expenses was achieved because the Company managed to maximize the capability of its internal marketing team to perform direct approach to new end-user customers, especially from Japan, and thus signiicantly reduce third party marketing expenses. General and administrative expenses in 2014 were recorded at US 31.2 million, an increase of 8.8 from US 28.7 million in 2013, primarily due to tax expense in 2014.

F. Other IncomeExpenses

Other incomeexpenses consisted of domestic market obligation transfer expenses, incomeexpense from dispatch and demurrage and other income expenses. Other income - net of US 1.4 million mainly consisted of income from dispatch and demurrage.

G. Operating Proit

The Company recorded an operating proit of US 56.0 million in 2014, an increase of 12.0 from US 50.0 million in 2013.

H. Proit for the Year

After the net tax expense for 2014 which amounted to US 18.1 million, the Company recorded a proit for the year of US 35.8 million, an increase of 3.5 from US 34.6 in 2013.

I. Other Comprehensive Income

In 2014 the Company recorded other comprehensive income of US 3.7 million, mostly representing the effective portion of exchange differences of fair value of derivative instrument – cash low hedging. In 2013, the Company recorded other comprehensive income from exchange differences arising from translation of inancial statements of PKU, a subsidiary, amounted to US 1.5 million.

J. Total Comprehensive Income for the Year

The Company’s total comprehensive income for the year in 2014 reached US 32.1 million, declining by 11.0 from US 36.1 million in 2013. STATEMENT OF CASH FLOWS in US 2014 2013 Δ Net cash provided by operating activities 18,897,029 63,868,001 70.4 Net cash used in investing activities 13,122,972 2,904,776 351.8 Net cash used in inancing activities 21,077,976 28,079,483 24.9 Decrease Increase in Cash and Cash Equivalents 15,303,919 32,883,742 146.5 Cash and Cash Equivalents at Beginning of The Year 63,301,639 36,307,011 74.4 Effect of foreign exchange rate changes 158,933 5,889,114 97.3 Cash and Cash Equivalents at End of Year 47,838,787 63,301,639 24.4 Net cash lows provided by operating activities Net cash provided by operating activities decreased by 70.4 from US 63.9 million in 2013 to US 18.9 million. This was mainly due to an increase in payments to suppliers by 27.4 from US 324.2 million in 2013 to US 413 million, an increase in payments of royalty by 25.8 of from US 22.5 million in 2013 to US 28.3 million, and payment for corporate income taxes which increased by 110.2 from US 8.9 million in 2013 to US 18.7 million. 66 PT TOBA BARA SEJAHTRA Tbk - 2014 Annual Report Net cash lows used in investing activities Net cash used in investing activities increased by 351.8 from US 2.9 million in 2013 to US 13.1 million in 2014. In 2014, cash used in investing activities were used primarily for acquisition of ixed assets, disbursement for exploration and development expenditures, acquisition of mining assets and advances for ixed assets purchase. Net cash used in funding activities Net cash used in funding activities decreased from US 28.1 million in 2013 to US 21.1 million in 2014. In 2014, cash used in funding activities were primarily used for payment of dividends. Overall, at the end of 2014, cash and cash equivalents decreased by US 15.3 million. After taking into account the impact of exchange loss of US 158.9 thousand in cash and cash equivalents denominated in rupiah, cash and cash equivalents at December 31, 2014 were US 47.8 million, or decreased by 24.4 compared to US 63.3 million at December 31, 2013. STATEMENT OF FINANCIAL POSITION

A. Assets

Total assets of the Company decreased by 3.5 from US 311.6 million at the end of 2013 to US 300.6 million as current assets decreased by 13.6 from US 130.2 million in 2013 to US 112.5 million while non-current assets increased by 3.7 from US 181.4 million in 2013 to US 188.1 million. in US 2014 2013 Δ Current Assets Cash and cash equivalents 47,838,787 63,301,639 24.4 Trade receivables • Third parties 10,721,711 16,598,657 35.4 • Related parties 578,709 1,157,419 50.0 Other receivables • Third parties 5,968,015 6,398,865 6.7 Inventories 41,963,307 32,389,968 29.6 Prepaid taxes 12,422 6,791,548 99.8 Prepayments 2,291,105 2,165,661 5.8 Advances 2,569,730 1,395,027 84.2 Derivative receivables 552,308 - 100.0 Total Current Assets 112,496,094 130,198,784 13.6 FINANCIAL REVIEW PT TOBA BARA SEJAHTRA Tbk - 2014 Annual Report 67 in US 2014 2013 Δ Non-Current Assets Other receivables – related parties 29,627,761 30,789,323 3.8 Advances 4,435,318 807,083 449.5 Estimated claims for tax refund - 748,305 100.0 Plantations • Mature plantations 15,889,338 13,105,673 21.2 • Immature plantations 67,150 3,710,240 98.2 Fixed assets 47,921,110 49,032,780 2.3 Exploration and evaluation assets 4,846,532 4,842,009 0.1 Mining properties 74,830,632 71,904,619 4.1 Goodwill 3,523,795 3,523,795 0.0 Deferred tax assets 3,257,957 1,495,963 117.8 Other non-current assets 3,714,555 1,489,365 149.4 Total Non-Current Assets 188,144,148 181,449,155 3.7 Total Assets 300,610,242 311,647,939 3.5 • Current Assets Cash and cash equivalents decreased by 24.4 from US 63.3 million in 2013 to US 47.8 million primarily due to increased payments to suppliers along with the increase in the Company’s operations during the year 2014, payment of dividends and capital expenditures. At the end of 2014 the Company recorded trade receivables of US 11.3 million, a decrease of 36.4 from US 17.8 million in 2013. Trade receivables consisted of trade receivables from third parties and related parties. Trade receivables from third parties were mainly derived from sales contracts that were yet not due amounted to US 10.7 million. The Company inventories increased by 29.6 from US 32.4 million in 2013 to US 42.0 million at the end of 2014, mainly triggered by a 32.5 increase in coal inventory from US 30.9 million in 2013 to US 41.0 million due to production volume increase in 2014. Prepaid taxes decreased by 99.8 from US 6.8 million in 2013 due to claim realization of 2014 corporate income tax overpayment. • Non-current Assets The increase in non-current assets amounted to 3.7, primarily driven by advances – long-term portion of US 4.4 million which largely consisted of ofice purchase advance to PT Toba Pengembang Sejahtera amounted to US 3.6 million. The increase in non-current assets was also caused by an increase in mining assets by 4.1 from US 71.9 million in 2013 to US 74.8 million, and increase in other non-current assets by 149.4 to US 3.7 million from US 1.1 million in 2013. 68 PT TOBA BARA SEJAHTRA Tbk - 2014 Annual Report

B. Liabilities and Equity

Total liabilities of the Company at the end of 2014 decreased by 12.6 to US 158.3 million, compared to US 181.2 million in 2013. The decrease was primarily due to declining current liabilities by 37.7 from US 145.45 million in 2013 to US 90.6 million, while non-current liabilities increased by 89.3 from US 35.7 million in 2013 to US 67.6 million. Liabilities in US 2014 2013 Δ Current Liabilities Trade payables – third parties 64,087,323 69,265,229 7.5 Other payables – third parties 3,709 1,907 94.5 Dividends payables 288,289 290,856 0.9 Accrued expenses 4,935,975 6,057,579 18.5 Derivative payables 5,532,509 - 100.0 Short-term employee beneits liabilities 3,109,951 3,340,583 6.9 Taxes payable 5,326,115 7,227,871 26.3 Advances from customers 6,387,209 24,941,839 74.4 Current maturities of long-term liabilities: • Bank loans - 33,553,129 100.0 • Finance leases 962,450 772,679 24.6 Total Current Liabilities 90,633,530 145,451,672 37.7 Non-Current Liabilities Long-term liabilities – net of current maturities: • Bank loans 56,114,739 20,183,289 178.0 • Finance leases 1,062,270 1,348,417 21.2 Advances from customers - 2,964,000 100.0 Other payables to related parties 2,242,526 2,288,701 2.0 Provision for reclamation and mines closure 4,496,413 3,951,817 13.8 Post employment beneit liabilities 2,840,670 1,943,059 46.2 Deferred tax liabilities 867,508 3,035,740 71.4 Total Non-Current Liabilities 67,624,126 35,715,023 89.3 Total Liabilities 158,257,656 181,166,695 12.6 Total Equity 142,352,586 130,481,244 9.1 Total Liabilities and Equity 300,610,242 311,647,939 3.5 • Current Liabilities The Company’s trade payables decreased by 7.5 from US 69.3 million in 2013 to US 64.1 million at the end of 2014. The decrease was mainly due to settlement of Subsidiaries’ overdue trade payables to third parties and shorter payment terms of trade payables. FINANCIAL REVIEW PT TOBA BARA SEJAHTRA Tbk - 2014 Annual Report 69 Accrued expenses decreased by 18.5 from US 6.1 million in 2013 to US 4.9 million, primarily due to a decrease of 69.3 in royalty from US 4.5 million in 2013 to US 1.1 million as the Company made an advance payment for royalty payment obligation. In 2014 the Company had no current bank loan maturing within one year since 2014, while in 2013 current bank loan reached US 33.6 million. This was mainly due to the reinancing of the Company’s syndicated loan and Subsidiaries’ bank loans. Advances from customers were obtained as down payment on purchases or as part sales contract payment agreement. This amount was classiied as the Company’s liabilities before the delivery of the sold coal was completed, and was recognized as revenue after coal delivery. At the end of 2013, the Company recorded sales advances current and non-current portions of US 27.9 million for the majority of sales contracts to be fulilled in 2014. In 2014, the Company recorded advances from customers for short-term contracts of US 6.4 million. • Non-Current Liabilities Non-current bank loans increased by 178.0 from US 20.2 million in 2013 to US 56.1 million primarily due to the Company obtaining a syndicated loan that would be used, among others, for the purposes of TMU’s capital expenditures, working capital, and investment. The syndicated loan will mature on March 31, 2018. Provision for environmental and reclamation costs and mines closure refers to the accrued amount for estimated costs of environmental management during the mining period and mines closure that will occur at the end of mining period. Estimates of these costs were calculated internally by management by taking into account the provisions of Law of the Republic of Indonesia No. 4, 2009, dated January 12, 2009 concerning Mineral and Coal Mining and other relevant regulations. In 2014 this liability increased by 13.8 from US 4.0 million in 2013 to US 4.5 million. Long-term employee beneits obligation increased by 46.2 from US 1.9 million in 2013 to US 2.8 million. The increase in the balance of long-term employee beneits obligation was determined based on calculation performed by an independent actuary using projected unit credit method with assumptions including, among others, discount rates, annual salary increase, annual employee turn-over, disability, retirement age and mortality. • Equity The Company’s total equity at December 31, 2014, increased by 9.1 from US 130.5 million in 2013 to US 142.4 million. The increase in equity was mainly due to an increase in the Company’s inappropriated retained earnings in 2014. DEBTS REPAYMENT CAPABILITY The Company’s capability to pay debts can be analyzed using three indicators: interest bearing debt to total assets ratio, net debt to EBITDA ratio and EBITDA to interest expense ratio. 2014 2013 Interest bearing debts to total assets Ratio 0.2x 0.2x Net payables to EBITDA Ratio 0.2x Net cash EBITDA to interest expenses Ratio 14.5x 15.9x Interest Bearing Debt to Total Assets Ratio Interest bearing debt to total assets ratio in 2014 was 0.2x which showed that 20 of total assets were inanced by debt. The Company had a stable interest bearing debt to total assets ratio compared to the previous year. Hence there was no problem for the Company to repay its debt. 70 PT TOBA BARA SEJAHTRA Tbk - 2014 Annual Report Net Debt to EBITDA Ratio At December 31, 2014, the Company’s net debt to EBITDA ratio was 0.2x or just 20 of total EBITDA in 2014. This relected the Company’s ability to repay its debt. EBITDA to interest expense ratio EBITDA to interest expense ratio in 2014 was 14.5x or slightly decreased from the year 2013 of 15.9x. The Company was able to maintain its ability to repay debt, despite the reinancing of syndicated loan in 2014. TRADE RECEIVABLES COLLECTABILITY RATE Trade receivables collectability was inluenced by the Company’s ability to collect its trade receivables. At the end of 2014, trade receivables collectability showed a decrease in collection period to 8 days compared to 15 days in 2013. CAPITAL STRUCTURE The Company strives to maintain its capital structure and sound capital ratio to support sustainable business growth, as well as to meet its matured inancial obligations from time to time. The Company manages its capital structure and makes adjustments based on changes in economic conditions. To maintain or adjust the capital structure, management can adjust the payment of dividends to shareholders, issue new shares or seek funding through loans. Liabilities to equity ratio in 2014 was 1.1x and 1.4x for 2013. The Company strives to maintain liabilities to equity ratio at around 1-1.5x. Description 2014 2013 Total Liabilities 158,257,656 181,166,695 Total Equity 142,352,586 130,481,244 Liability to Equity Ratio 1.1x 1.4x The Company’s capital structure and shareholders at December 31, 2014 are as follows: Description Number of Shares Amount Rp ‘000 Amount US of Ownership Authorized Capital Rp 200 per share 6,000,000,000 1,200,000,000,000 Issued and Fully Paid Capital PT Toba Sejahtra 1,444,750,000 288,950,000 31,795,873 71.8 Bintang Bara B.V. 201,250,000 40,250,000 4,317,555 10.0 PT Bara Makmur Abadi 125,755,000 25,151,000 2,739,760 6.2 PT Sinergi Sukses Utama 102,700,000 20,540,000 2,237,473 5.1 Roby Budi Prakoso 73,355,000 14,671,000 1,598,148 3.6 Davit Togar Pandjaitan 15,000,000 3,000,000 330,118 0.8 Public 49,681,000 9,936,200 1,058,958 2.5 Total 2,012,491,000 402,498,200 44,077,885 100.0 FINANCIAL REVIEW PT TOBA BARA SEJAHTRA Tbk - 2014 Annual Report 71 net income attributable to equity holders of the Parent Entity for the inancial year ended December 31, 2013 amounted to US 18,543,538 with the following details: a. US 1,500,000 to be used for appropriation of retained earnings. b. US 6,490,238 or 35 of the Company’s income to be distributed as cash dividends of US 0.0032 per share. c. The remaining amount of US 10,553,299 to be used for retained earnings. Based on decision of the Company’s AGMS dated June 28, 2013, the shareholders approved the use of Company’s net income attributable to equity holders of the Parent Entity for the year ended December 31, 2012 amounted to US 3,198,832 with following details: a. US 31,988 to be used as appropriated retained earnings. b. US 3,166,844 or 99 of the Company’s income to be distributed as cash dividends. In AGMS held on June 28, 2013, the shareholders also approved distribution of cash dividends amounted to US2,499,135 which was taken from retained earnings balance at the beginning of 2012. So that the total amount of inal cash dividends was US 5,665,979 or US 0.0028 per share. REALIZATION OF USE OF PROCEEDS FROM INITIAL PUBLIC OFFERING Realization report of the use of proceeds from the Company’s Initial Public Offering IPO dated July 6, 2012 is presented in “Shareholder Information” segment on page 36 of this Annual Report. INVESTMENT, EXPANSION, DIVESTMENT, ACQUISITION, DEBT RESTRUCTURING In 2014 there was no activity related to Investment, Expansion, Divestment, Acquisition and Debt Restructuring. MATERIAL CONTRACT FOR CAPITAL GOODS INVESTMENT Throughout 2014, the Company did not have material contract for capital goods investment. DISCLOSURE OF MATERIAL INCREASE DECREASE IN NET SALESINCOME Although the decrease in coal reference price Newcastle Index continued in 2014, the Company did not record any signiicant increase or decrease in coal sales value which could materially affect the Company’s business continuity. SUBSEQUENT EVENTS There was no material information and facts to the Company subsequent to the date of the Company’s Consolidated Financial Statements which were issued on March 9, 2015. DIVIDEND POLICY - IN THE LAST 2 YEARS Since 2012, the Company intends to pay dividends at the minimum 30 of its consolidated income for the current year considering the provisions of mandatory reserves as required under Limited Liability Company Law Company Law. The amount of distributable dividends will depend on cash low, investment plan, liquidity, future business prospect and other factors considered relevant by Board of Directors as well as the provisions of restricted payment of dividends based on relevant agreements. Once a decision has been made to pay dividends, the dividends will be paid in Rupiah. The Company’s dividend policy is a statement of current intent and is not legally binding because the policy depends on the changes in Board of Directors’ policy. Based on decision of Annual General Meeting of Shareholders AGMS of the Company dated May 21, 2014, the shareholders approved the use of Company’s 72 PT TOBA BARA SEJAHTRA Tbk - 2014 Annual Report MATERIAL TRANSACTIONS INVOLVING CONFLICT OF INTEREST Date, Value and Object of Transaction On June 30, 2014, the Company and ABN with PT Toba Pengembang Sejahtera TPS signed a Final Conirmation Letter of Order for SOPO DEL OFFICE TOWER A Unit related to purchase of ofice units in SOPO DEL OFFICE TOWER A ofice building, located at Jalan Mega Kuningan Barat III Lot 10.1-6, Kuningan Timur Village, Setiabudi District, South Jakarta 12950, Indonesia. Overall value of the purchase transaction of ofice units was Rp 121,704,700,000. Name of Parties in Transaction and Nature of Afiliation PT Toba Sejahtera is the Company’s major shareholder with ownership of 71.8 of the Company’s issued and fully paid shares. PT Toba Sejahtera is also the major shareholder of TPS with ownership of 99.0 of the Company’s issued and fully paid shares. Because the Company and TPS have the same major shareholder and controlling entity, which is PT Toba Sejahtera, then the transaction was an afiliated transaction as stipulated in Regulation No. IX.E.1 Attachment of Decision of Chairman of Bapepam-LK No. Kep-412BL2009 dated November 25, 2009 concerning Afiliated Transactions and Conlict of Interest in Certain Transactions. Clariication of the Fairness of the Transaction The Company appointed Independent Appraisal Firm Jennywati, Kusnanto Partners as independent consultant to provide an opinion on the fairness of the purchase transaction of ofice units. According to review of inancial impact of the transaction, the Consultant believed that the transaction was fair. Rationale of the Transaction The rationale of the purchase transaction of ofice units was the Company and ABN needed ofice units with greater capacity, to support their business activities. The existing capacity of current ofice units rented by the Company and ABN does not allow for space expansion of the ofice units. Realization of the Transaction in Current Period On December 31, 2014, the Company recorded an advance of US 3.6 million for purchase by order of the ofice units payable to TPS. This balance was recorded in the Company’s Consolidated Financial Statements per December 31, 2014 as a long-term advance for purchase of assets. Compliance with Related Provisions In accordance with provision in number 2.a Regulation No. IX.E.1, the Company announced information disclosure on this afiliated transaction to the public and submitted the announcement proof and supporting documents to Financial Services Authority OJK. This afiliated transaction has no Conlict of Interest as deined in Regulation No. IX.E.1 and its value was less than 20 of the Company’s equity therefore it was not classiied as a material transaction as deined in Bapepam Regulation No. IX.E.2 concerning Material Transactions and Change of Main Business Activities. IMPACT OF CHANGES IN THE LAWS AND REGULATIONS In 2014 there were no changes in the laws and regulations that signiicantly affected the Company’s operations and consolidated inancial statements. FINANCIAL REVIEW PT TOBA BARA SEJAHTRA Tbk - 2014 Annual Report 73 IMPACT OF CHANGES IN ACCOUNTING POLICIES The Company prepares its consolidated inancial statements based on Generally Accepted Accounting Principles in Indonesia and Regulation of Bapepam-LK No. VIII.G.7 concerning Presentation and Disclosure of Financial Statements and Public Companies as an attachment of Decree No. KEP-347BL2012. The Company disclosed its signiicant accounting policies as described in the notes to the consolidated inancial statements for the years ended December 31, 2014 and 2013 which are part of this Annual Report. BUSINESS PROSPECTS The world’s energy demand will continue to increase driven by population and Gross Domestic Product GDP growth. Economic growth in Asia, which provides important contribution to the world’s economic growth, signiicantly affects the world energy demand. According to projection of International Energy Agency IEA, by 2030 the world’s energy demand will increase by 45, or an average increase of 1.6 per year. Approximately 80 of the world’s energy needs will be met by fossil fuels. Only about 20 of it will come from renewable energy. Concerning the energy growth, coal is the second most important energy source after oil. Coal consumption is expected to increase threefold by 2030. Coal is still needed to meet the demand for power plant construction in a number of areas in line with the economic and revenue growths. Coal demand is expected to grow by about 2 per year. Entering 2015, the coal market conditions were predicted to be not much different from the year 2014. Nevertheless, the Company is still highly optimistic in facing the challenging times and taking the momentum for business development. The Company has both vertical and horizontal long-term business development plans. Horizontally, the Company plans to add coal reserves through exploration activities in the Company’s widespread concession areas and search for opportunities to acquire mines to increase production. Vertically, the Company plans to develop its business towards power generation sector. We believe that business development towards power plant is in line with the policy of the Government of Indonesia to develop new power plants to generate 35,000 MW in the next ive years, where the majority of the fuel derived from coal. This will also have positive impact on the coal industry particularly the Company, because this policy will increase domestic coal demand, while currently most of Indonesian coal production is aimed for export. Both development plans are parts of efforts for eficiency and business sustainability. By building power plants, the Company can ensure a more stable income while increasing proit margin from the synergy of the two businesses. In addition to coal-related business development, the Company diversiies its business through palm oil business through one of its Subsidiaries, namely PT Perkebunan Kaltim Utama I PKU, which is in the process of plantation development and construction of palm oil mill with a capacity of 30 tons per hour. The palm oil mill which is expected to commence its operations at the end of 2015 will add to the Company’s revenue base. 74 PT TOBA BARA SEJAHTRA Tbk - 2014 Annual Report HUMAN RESOURCES Systematic and continuous development of human resources’ quality is done as Toba Bara’s effort to keep growing and achieving its vision to be one of Indonesia’s best world class coal mining companies. Number of Toba Bara’s employee in 2014 Number of training days throughout 2014 979 205 PT TOBA BARA SEJAHTRA Tbk - 2014 Annual Report 75 76 PT TOBA BARA SEJAHTRA Tbk - 2014 Annual Report Human resources are the most important and deciding factor for Toba Bara’s success and continuity. In accordance with its vision to become one of the best world class coal mining companies, one initiative to keep growing is through the continuous development of human resources’ quality. Expertise in human resources, both in mining and plantations, is the key success factor that will support the Company’s growth. With the support of world class human resources, the Company is ready to face challenges presented by commodities markets and become one of the best players in the coal and energy industry in Indonesia in the coming decades. EMPLOYEES PROFILE As at the end of 2014, the Company and its Subsidiaries employed 979 employees decreasing slightly from the 1,036 employees employed in 2013,. A total of 28 employees worked in the Holding Company in Jakarta, and the rest worked for the Subsidiaries’ Jakarta ofice in Jakarta, on-site ofice, and mine. Various areas of expertise include administrative services, technical services, coal processing and transportation supervision, logistics, health and safety, environmental protection and community development. More than half of Toba Bara Group employees are within the age range of 18 to 35 years, a group of youth that full of energy, high work ethics, productivity, and challenge-loving. The attitude of “can do” is the basis of Toba Bara employees work ethos which was planted by the founder of the Company. HUMAN RESOURCES PT TOBA BARA SEJAHTRA Tbk - 2014 Annual Report 77 Employee composition based on employment status Employment Status 2014 2013 Full Time 784 802 Contract 195 234 Total 979 1,036 2014 2013 80.1 Full Time 77.4 19.9 Contract 22.6 More than half of Toba Bara Group employees are within the age range of 18 to 35 years, a group of youth that full of energy, high work ethics, productivity, and challenge-loving. Percentage of Total Employee Age 35 and Below by 2014 54 Percentage of Total Employee with Diplomas, Undergraduate Degree, and Graduate Degrees by 2014 24 78 PT TOBA BARA SEJAHTRA Tbk - 2014 Annual Report Employee composition based on gender Gender 2014 2013 Male 836 889 Female 143 147 Total 979 1,036 Employee composition based on position Position 2014 2013 Non-Staff 385 465 Staff 258 249 Supervisor 233 224 Assistant Manager Superintendent 52 49 Manager 34 32 Senior Manager 1 General Manager 7 6 Director 10 10 Total 979 1,036 HUMAN RESOURCES 85.4 Male 85.8 14.6 Female 14.2 2014 2013 39.3 Non-Staff 44.9 26.4 Staff 24.0 23.8 Supervisor 21.6 5.3 Assistant ManagerSuperintendent 4.7 3.5 Manager 3.1 0.0 Senior Manager 0.1 0.7 General Manager 0.6 1.0 Director 1.0 2014 2013 PT TOBA BARA SEJAHTRA Tbk - 2014 Annual Report 79 Employee composition based on age group Age Year 2014 2013 18 - 25 99 116 26 - 35 427 445 36 - 45 313 337 46 - 54 116 114 55 24 24 Total 979 1,036 Employee composition based on education level Education level 2014 2013 Up to High School 748 812 Diploma 52 54 Undergraduate and Graduate Degree 179 170 Total 979 1,036 10.1 18 - 25 11.2 43.6 26 - 35 43.0 32.0 36 - 45 32.5 11.9 46 - 54 11.0 2.5 55 2.3 2014 2013 76.4 Up to High School 78.4 5.3 Diploma 5.2 18.3 Undergraduate and Graduate Degree 16.4 2014 2013 Restated Human Resources Development Concept HR Development at the Company starts from the recruitment process to select among prospective employee. Then, every employee is given the chance to follow various development programs through consistent and continuous training. Every employee is encouraged to give hisher best performance and to face existing business challenges. This encouragement allows the Company to give outstanding employees fair and transparent promotion opportunities. 80 PT TOBA BARA SEJAHTRA Tbk - 2014 Annual Report As a company that is still growing, Toba Bara needs many enthusiastic, dynamic, and visionary young people. Every employee is given responsibility and adequate independence to develop hisher creativity and show hisher best performance. Interactions between employees and management happen intensively. Directors and key management are open to dialogue and input from all employee levels. The Company realizes, in facing the dificult market conditions, that solid teamwork will bring Toba Bara consistent growth and help the Company achieve sustainable business. In 2014, the process of recruiting the best people in the industry was still being conducted, in line with the Company’s plan to expand in the years to come. Recruitment The Company is doing recruitment based on the Company needs, along with the business development and organization growth. The Company maps out HR needs, including the need of fresh graduates as well as accomplished professionals in the mining sector to ill different positions in the ever-growing organization. The recruitment process is done openly and upholds the principle of equality. The Company opens up equal opportunities for the candidates without any regard for ethnicity, religion, race, groups, as well as gender as long as they fulill the deined prerequisites. The Company openly announces the available job vacancies through its website www.tobabara.com, as well as other online recruitment websites. Furthermore, the Company prioritizes candidates who come from where the mine is located. Training and Competency Development The Company systematically arranges training and competency development training programs that are tailored to the needs in the ield. Employees whose work nature requires them to have competency certiicates are sent to government-approved certiication agencies. Health, Safety, and Environment HSE is a top priority in conducting mining activities so that HSE training is done continuously to increase employee HSE awareness and alertness. The Company does routine training internally as well as externally, and works together with a quality training providers. In 2014, the Company held training as listed below: No Type of Training Organizer Dates Location 1 Effective Communication Interpersonal Skill Dale Carnegie Training January 20-23 Balikpapan 2 HSE Certiication Electrical Technician INDOTRAIN CONSULTANT January 21-24 Balikpapan 3 Annual Report Award ARA Workshop PT Bursa Efek Indonesia January 29 Jakarta 4 Proceedings Technique in PHI FK HR ER Kutai Kartanegara February 12-13 Samarinda 5 Social Security System National Workshop Indonesian Management Centre IMAC February 21-22 Balikpapan 6 Cisco Certiied Network Association CCNA Fast Track RootBrain March 3-8 Yogyakarta 7 Certiied Human Resources Practitioner Bina Insan Mandiri Consulting March 8-9 Balikpapan 8 Certiied Training of Trainer Bexpert Indocunsult March 18-20 Yogyakarta 9 Training Main Operations Supervisor Pusdiklat Minerba March 24-29 Bandung 10 Genset Operation Maintenance Workshop Indonesian Management Centre IMAC March 26-27 Balikpapan HUMAN RESOURCES PT TOBA BARA SEJAHTRA Tbk - 2014 Annual Report 81 No Type of Training Organizer Dates Location 11 Training SIO Opt. Heavy Equipment PT Megatrain Indonesia Bpn-Riau April 7-11 Sangasanga 12 Hazard Identiication Risk valuation IBPR HIRAC Gel. I HR HSE Dept. PT Indomining April 19 Sangasanga 13 Sanitation hygiene Dinas Kesehatan Tenggarong April 19 Sangasanga 14 Effective Technical Report Writing PT Cipta Energi Utama Mandiri April 20-25 Yogyakarta 15 Hazard Identiication Risk valuation IBPR HIRAC Gel. II HR HSE Dept. PT Indomining April 26 Sangasanga 16 LOTO ABNHSE May 6-7 Sangasanga 17 B3 Management and B3 Waste PT Beneita May 8-9 Sangasanga 18 Security Training External HR Dept. PT Indomining May 10 May 27 Sangasanga 19 Basic Scaffolding Certiication PT Alkon Tainindo Utama May13-17 Sangasanga 20 Certiied Information Systems Security Professional Inixindo May 19-23 Jakarta 21 Training “Purchasing and Procurement Management” SPIN Training Consulting May 22-23 Bandung 22 Land National Workshop Indonesia Management Centre May 23-24 Balikpapan 23 Workshop “Kajian Aspek Hukum Tanah Penyelesaian Konlik Sengketa Tanah” IMAC May 23-24 Balikpapan 24 Employment Development Staff HR Dept. PT Indomining May 17, 19, 24, 31 Sangasanga 25 Security Training Eksternal HR Dept. PT Indomining June 7, 14 21 Sangasanga 26 Effective Communication Interpersonal Skills Dale Carnegie Training June 9-12 Balikpapan 27 Emergency Response Team ERT BASARNAS June 10-14 Balikpapan 28 Technical Guidance Development Community Empowerment DISTAMBEN Provinsi Kaltim June 18-20 Balikpapan 29 K3 Experts General Training PT Laden Safety MandiriBPJS Ketenagakerjaan June 20-26 Balikpapan 30 Employment Development GL-Foreman HR Dept. PT Indomining June 21 28 Sangasanga 31 Training of Trainer PT Megatrain Balikpapan June 23-25 Balikpapan 32 Lifting For Supervisor PT Alkon Tainindo Utama June 24-26 Sangasanga 33 Tax Planning Lembaga Manajemen Formasi June 25-26 Jakarta 34 K3 Basic Accident investigation ABNHSE August 5 Sangasanga 35 JSEA HIRADC ABNHSE August 6 Sangasanga 36 First Aid Training ABNHSE August 7 Sangasanga 37 APAR ABNHSE August 8 Sangasanga 38 Weld Electricity Certiication from BNSP Bina Insan Mandiri Consulting August 11-15 Samarinda 82 PT TOBA BARA SEJAHTRA Tbk - 2014 Annual Report No Type of Training Organizer Dates Location 39 Basic Safety Investigation ABNHSE August 12 Sangasanga 40 JSEA HIRADC ABNHSE August 13 Sangasanga 41 Asia Coal Market Outlook: The Future of Indonesia’s Coal Sector HIS Energy August 13 Jakarta 42 Workshop “Economic Outlook Post Election in 2014” PT Bursa Efek Indonesia August 18 Jakarta 43 Social Mapping Program Formation Company’s CSR PT Beneita August 21-22 Bandung 44 APAR ABNHSE August 21 Sangasanga 45 APAR ABNHSE August 23 Sangasanga 46 Basic Safety Fire ABNHSE August 25 Sangasanga 47 APAR ABNHSE August 27 Sangasanga 48 ERT Training ABNHSE August 31 Sangasanga 49 Corporate Social Responsibility POWERINDO NS September 1-4 Yogyakarta 50 HSE Basics HR HSE Dept. PT Indomining September 6, 13, 20 27 Sangasanga 51 Effective Communication Interpersonal Skills Dale Carnegie Training September 8-11 Balikpapan 52 Xpac Training PT Runge Indonesia September 15-20 Jakarta 53 Certiied Professional Human Resources Bina Insan Mandiri Consulting September 20-21 Surabaya 54 HSE Expert Certiication on Young Construction INDOTRAIN CONSULTANT September 22-25 Balikpapan 55 Basic Safety, Fire, First Aid Kit ABNHSE September 23 Sangasanga 56 Preparation Techniques Wage Profession Certiication Seminarku September 25-26 Jakarta 57 Bimtek Certiication Welding BNSP – BLKI Samarinda October 2, 3, 7 8 Samarinda 58 Organic and inorganic waste management Mega Train Indonesia October 3-4 Sangasanga 59 Basic Human Resources Management HRM for Beginner PT Menara Kadin Indonesia October 7-8 Jakarta 60 HSE Electric Certiication Experts INDOTRAIN CONSULTANT October 6-18 Balikpapan 61 Implementation AMDAL UKL-UPL PT BMD Street October 9-10 Jakarta 62 HSE Experts General Mega Train Indonesia October 13-14 Jakarta 63 Bimtek HSE Dinas Pertambangan dan Energi October 14-15 Tenggarong 64 National Workshop on Employment Indonesian Management Centre IMAC October 17-18 Balikpapan 65 Service Excellence Skill Management For Security Bina Insan Mandiri Consulting October 17-19 Samarinda 66 In-house Training – Supervisory Skills HR PT Indomining October 23-24 Sangasanga 67 Legal Due Diligence Emi Training October 29 Jakarta 68 How to be a professional secretary + table manners PT Solution Centre Indonesia October 29-31 Denpasar 69 Asia Paciic Coal Outlook Conference HIS Energy 4-6 November Denpasar HUMAN RESOURCES PT TOBA BARA SEJAHTRA Tbk - 2014 Annual Report 83 No Type of Training Organizer Dates Location 70 Implementation of the Transparency and Governance Improvement Efforts Extractive Industries in Indonesia EITI Indonesia November 11-14 Bandung 71 Hiradc, Basic Safety JSA ABNHSE November 16 Sangasanga 72 Incident Investigation ABNHSE November 21 Sangasanga 73 Technical Inspection ABNHSE November 21 Sangasanga 74 In-house Training – Draught Survey Introduction HR PT Indomining dan PT Sucoindo December 9-10 Sangasanga 75 Environmental sampling techniques Water, Air and Land ABNHSE December 10-12 Sangasanga 76 Corsec Corcomm Gathering “Consumer Behavior, Advertising Strategy National Economic Projection 2015” Idea Group Indonesia December 16 Jakarta The Company’s total investment on training and employee development programs in 2014 was US 152 thousand, up 16.4 from the US 130 thousand the year before. Performance Management The Company values high performing employees very much. Performance evaluation results are used as input for career development and employee development programs. On the other hand, management also pays attention on employees whose performance is not optimal to be increased through various training programs. In 2013, the Company had developed a performance evaluation system using a Key Performance Indicators KPI throughout all Subsidiaries. The KPI that had been agreed upon became the reference for measured performance targets and work plan that had been harmonized with the Company’s business plan, for both Subsidiaries and employees. The supervisors will always supervise hisher direct subordinate. Performance evaluation is not based on KPI alone, but also on non-KPI factors such as a work ethos, attitude and discipline that is in line with the Company’s values and on weighing individual contributions to the Company outside of the KPI. Company Remuneration Toba Bara implements a competitive remuneration system that weighs salary levels of similar companies, labor laws, regulations on minimum regional wage and minimum provincial wage, and the Company’s capability. The Company ensures that it complies with the federal wage standard. Moreover, there is no remuneration policy that treats male and female employees differently at every level of the Company. The remuneration amount is decided based on position, work function and achievement. The Company has developed a competency-and-performance-based remuneration system in order that KPI achievements are also used in deciding the amount of remuneration. The Company gives compensation and beneits for full time as well as contract workers. Other than basic salary, the Company also gives various beneits such as Jamsostek Social Security and Holiday Allowance THR. 84 PT TOBA BARA SEJAHTRA Tbk - 2014 Annual Report CORPORATE GOVERNANCE GCG implementation at Toba Bara is aimed at reaching the Company’s vision and mission through responsible, independent, and fair management, as well as ensuring transparency through information disclosure to all stakeholders. PT TOBA BARA SEJAHTRA Tbk - 2014 Annual Report 85 86 PT TOBA BARA SEJAHTRA Tbk - 2014 Annual Report As a public company, Toba Bara is committed to managing and maintaining the Company’s reputation by applying the best Good Corporate Governance GCG practices in all its business activities. GCG implementation at Toba Bara is aimed at reaching the Company’s vision and mission through responsible, independent, and fair management, as well as ensuring transparency through information disclosure to all shareholders and stakeholders. One of the Company’s mission is “to become a responsible company in helping community development and implementing good corporate governance practices”. Therefore, it is the responsibility and obligation of all parts of the Company to fulill the mission with high ethical and professional standards, and following all applicable laws. The principles, policies, and implementation of Toba Bara’s corporate governance refers to the Law Number 40 Year 2007 regarding Limited Liability Companies, Indonesian Good Corporate Governance General Guidelines produced by the National Committee on Governance Policy, Financial Services Authority regulations, as well as common best practices in the industry. For GCG execution in the work ields, the Company had compiled guidelines and policies, which are periodically renewed to meet current conditions, to conform to changes in the laws and the Company’s Articles of Association and to address dynamics of the business world. Some of those guidelines and policies are: • Audit Committee Charter • Internal Audit Charter • Company Regulations • Standard Operating Procedures in Accounting, Production, and Civil Construction. CORPORATE GOVERNANCE PT TOBA BARA SEJAHTRA Tbk - 2014 Annual Report 87 Gradually, the Company will compile corporate governance guidelines and other policies to complete the GCG codiication and increase GCG observance at all organizational levels. GCG ACTIVITIES IN 2014 Mining activities possess a signiicant risk of occupational hazard as well as sickness due to work, especially in the production process. High work- related accident rates and health issues cause material and inancial loss to a company, but also cultivate an image that a company as not following the best and responsible corporate governance. Thus, to achieve operational excellence, the Company has conducted internalization and socialization of Company regulations as an effort to continually increase work discipline consistency in order to achieve high safety and occupational health results. CORPORATE GOVERNANCE STRUCTURE According to the Law on Limited Liability Companies, Toba Bara’s corporate governance structure consists of 3 three company bodies which are: General Meeting of Shareholders GMS, Board of Commissioners, and Board of Directors. The GMS is the highest decision making forum for shareholders. The Board of Commissioners is responsible for the supervision of the Company management, and the Board of Directors is responsible for managing the Company. The Boards of Commissioner and Directors have separate responsibilities and rights based on their functions as regulated in the laws, regulations, and the Articles of Association. The Audit Committee is tasked to help the Board of Commissioners with its supervisory functions, in fulilling its obligations and responsibilities, and in joining to formulate policies within the Board of Commissioners’ work scope. To reach optimal operational performance, Toba Bara has conducted internalization and socialization of Company regulations to increase work discipline consistency in order to achieve high safety and occupational health results. 88 PT TOBA BARA SEJAHTRA Tbk - 2014 Annual Report Meanwhile, the Board of Directors has supporting bodies that are in charge of controlling, supervising, and being responsible for GCG implementation, namely Internal Audit and the Corporate Secretary.

A. GENERAL MEETING OF SHAREHOLDERS

The General Meeting of Shareholders GMS is a forum for shareholders to make decisions related to the capital invested in the Company. The GMS has authority that is not given to the Boards of Commissioners and Directors within the boundaries deined in law and the Articles of Association. Some of the shareholders’ rights and authorities in the GMS as governed by the Articles of Association and law are: • Accept and authorize the Company’s Annual Report • Decide the use of Company proits including dividend payment to shareholders • Decide the remuneration for members of the Boards of Commissioners and Directors • Appoint and dismiss members of the Boards of Commissioners and Directors • Approve the Company’s corporate actions related to the management of the Company. Decisions taken at the GMS are based on the Company’s business interest in the long term. Without reducing the authority and power of the GMS, shareholders cannot interfere with the execution of tasks, functions, and authority of the Boards of Commissioners and Directors in exercising their rights and responsibilities as stated in the Articles of Association and related laws. The GMS consists of the Annual GMS and Extraordinary GMS. The Annual GMS has to be held at the latest six months after the inancial year ends. Meanwhile, an Extraordinary GMS can be held any time necessary as governed in the Articles of Association, and related laws and regulations. In 2014, Toba Bara held one AGMS and did not hold any EGMS. Below is the description of the AGMS that was held in 2014. 2014 Annual General Meeting of Shareholders The Annual General Meeting of Shareholders was held on Wednesday, May 21st, 2014, at the Conference Room - Indonesian Stock Exchange Building, Jl. Jendral Sudirman Kav. 52-53, Jakarta. Before the AGMS took place, the Company fulilled its obligations related to the procedure of organizing a GMS based on Financial Service Authority regulation, such as: a AGMS announcement through Investor Daily dated April 21, 2014 b Submitted proof of advertisement regarding announcement of AGMS to Financial Services Authority on April 21, 2014 c A convener regarding AGMS which was announced through Investor Daily on May 6, 2014 d Submission of proof of advertisement regarding AGMS’ convener to Financial Services Authority on May 6, 2014. The summary of decisions taken at AGMS dated May 21, 2014 is as follows: First Agenda Item Accepted Annual Report which contained Company’s Consolidated Financial Statement for inancial year which ended on December 31, 2013 and ratiied Company’s Balance Sheet and Proit and Loss Statement for inancial year that ended on December 31, 2013, the statement of which had been audited by Puwantono, Suherman, and Surja Public Accountant Firm member of Ernst Young global network, with an opinion of without exception as stated in the Independent Auditor Report dated March 21, 2014 Number: RPC-4902 PSS2014. With the acceptance of Company’s Annual Report and the ratiication of Balance Sheet and Proit and Loss Calculation for inancial year ended December 31, 2013, the shareholders granted the Boards of Commissioners and Directors release and discharge in full Acquit et de Charge related to all the management and supervision measures throughout 2013 as long as those management and supervision measures are relected in the Balance Sheet and Proit and Loss Calculations. CORPORATE GOVERNANCE PT TOBA BARA SEJAHTRA Tbk - 2014 Annual Report 89 Second Agenda Item 1. Deciding the use of 2013’s net proit that can be attributed to the owner of Holding Company in the amount of US 18,543,538.00 with the details as follows: a US 1,500,000.00 to be used for cash reserves, in accordance with the provision of Article 70 Constitution No. 40 Year 2007 regarding Limited Liability Companies. b US 6,490,238.30 or more than 35 of 2013’s net proit to be used to pay inal cash dividend. The payment schedule will be announced in 2 two national daily newspapers with regard to the applicable law. c US 10,553,299.70 as retained earnings. 2. Gave authority to the Board of Directors of the Company to set the schedule and procedure of paying the cash dividend with regard to the applicable law. Third Agenda Item Gave power and authority to the Company’s Board of Directors to appoint Public Accountant Firm which is registered at the Financial Services Authority to audit the Company’s inancial statement for the ongoing inancial year that will end on December 31, 2014, and approved the giving of power and authority to the Board of Commissioner to decide the amount of fee for said Public Accountant Firm and other requirements. Fourth Agenda Item Gave authority to the Board of Commissioners to decide the honorarium andor other allowance for the Board of Commissioners for year 2014 as well as the breakdown of allocation of the distribution for each Commissioner. Fifth Agenda Item Gave the authority to the Board of Commissioner to set the honorarium and other allowances for the Directors for inancial year 2014 and the breakdown of allocation of the distribution for Director. Sixth Agenda Item Accepted the accounts on the use of the money gathered from the Initial Public Offering until December 31, 2013 that the Company had reported to the Financial Services Authority as well as Indonesian Stock Exchange, LLC, where it had been reported that the net result from the IPO was Rp. 361,423,000,000.00. The realization details are as follows: a. Payment of Loan to BNP Paribas Rp. 94,116,000,000.00 b. Capital Expenditure Rp. 112,532,000,000.00 c. Acquisition of coal mining concession, Working and Operational Capital, and Exploration activities Rp. 77,236,000,000.00 d. And the remainder, the amount of Rp. 77,539,000,000.00, was saved in the form of a Certiicate of Deposit, in accordance with law. In order to fulill the provision under the Law of Limited Liability Companies Chapter 68 article 4 and 5, the Company had announced together with the announcement of the result of AGMS that Consolidated Cash Flow Position and Comprehensive Consolidated Proit and Loss Statement for the inancial year ended on December 31, 2013 as stated in the Company’s Financial Statement, which was ratiied in First Meeting Agenda, was the same ash the Consolidated Cash Flow Position and Comprehensive Consolidated Proit and Loss Statement that had been announced through Investor Daily on March 29, 2014. The decisions taken at the above AGMS were announced in Business Indonesia daily and Investor Daily on May 23, 2014. Realization and Implementation of AGMS’ Results Until December 31, 2014, all the decisions taken in the AGMS dated May 21, 2014 had been realized well. Those decisions are: 1. As agreed in the AGMS, the Company paid inal cash dividend amounting to US 6,490,238.30 or US0.032 per share on July 16, 2014. 2. AGMS gave power and authority to the Board of Commissioners to appoint public accountant irm that would audit the 2014 Financial Statement. Based on that decision, the Board of Commissioners in Toba Bara Sejahtra, LLC Board of Commissioner Circular Decision, as a Replacement of Board of Commissioner Meeting dated October 1, 2014, had appointed Public Accountant Firm Purwantono, Suherman and Surja, a member of Ernst Young global network, to audit 2014 Financial Statements and gave power and authority to the Board of Directors to decide the fee of the Public Accountant Firm and other requirements as long as this amound did not exceed the limited established by the Board of Commissioners. 90 PT TOBA BARA SEJAHTRA Tbk - 2014 Annual Report

B. BOARD OF COMMISSIONERS

The Board of Commissioner is in charge and responsible collectively and collegially to supervise the execution of tasks and responsibilities of Board of Directors, gives advice to the Board of Directors, and ensures that the Company is implementing GCG principles. The position of each Commissioner, including that of the President Commissioner, is equal. The task of the President Commissioner is to coordinate Board of Commissioners activities. In accordance with the Company’s Article of Association, the Commissioners are appointed and dismissed by the shareholders through a GMS. The term of ofice a Commissioners is counted from the date of the GMS in which the Commissioner was appointed until the close of the fourth AGMS from the date of appointment, without discounting the rights of the GMS to dismiss the Commissioner before the stated end of term of ofice. The GMS has authority to dismiss a member of the Board of Commissioners before the member’s term ends if said member does not fulill requirements as a member of the Board of Commissioners, which includes actions that have an adverse effect on the Company or any other reason deemed it by the GMS. Board of Commissioners Composition The composition of the Board of Commissioners is as follows: Board of Commissioners Name President Commissioner Independent Jusman Syaii Djamal Independent Commissioner Bacelius Ruru Independent Commissioner Farid Harianto Information Regarding Independent Commissioner Regarding the Regulation No. IX.I.5 Attachment to the Decision by the Head of Bapepam-LK No: KEP- 643BL2012 dated December 7,2012 regarding the Creation and Guidelines of Audit Committee Execution of Work, an Independent Commissioner is a member of the Board of Commissioners who comes from outside the Company and fulills these requirements: 1. Not someone who has worked or had authority and responsibility to plan, lead, control, or supervise Company activity within the last 6 six months; 2. Does not own any shares of the Company, directly or indirectly; 3. Does not have any afiliation with the Company, other Board of Commissioners members, Board of Directors’ members, or the Company’s Major Shareholder; and 4. Does not have any work related relationship, whether directly or indirectly, that is related with the Company’s business activities. Each Independent Commissioner of the Company has fulilled the independency requirements stated above. An Independent Commissioner has an important role as an Independent Commissioner represents the community’s and minority shareholders’ interests in supervising Company’s performance. All members of the Board of Commissioners of the Company are Independent Commissioner who are not afiliated with any shareholders. Therefore, [ed. this statement appears to contradict the 4 requirements listed above. If true, the statement “All members of the Board of Commissioners are Independent Commissioners. Therefore, “ is suficient. The Company has fulilled the requirements of Financial Services Authority regarding the number of Independent Commissioner which is minimum 30 of the number of the member of the Board of Commissioners. One of the Independent Commissioners serves as the Head of the Company’s Audit Committee. Board of Commissioners Tasks The tasks of the Board of Commissioners are to supervise and advise the Directors with good intentions and responsibilities for the Company’s interests. In doing its tasks, the Board of Commissioners conducts: • Supervising the Board of Director’s policies in managing the Company, including preventive and reparative measures, as well as having leave to temporarily dismiss member of the Board of Directors; • Supervising the Company’s business risks and the suficiency of management actions in internal control; CORPORATE GOVERNANCE PT TOBA BARA SEJAHTRA Tbk - 2014 Annual Report 91 • Supervising GCG implementation in the Company’s business activities; • Advising the Directors related to their tasks and responsibilities; • Giving response and recommendation on Board of Director’s proposals and plans to develop the Company; • Ensuring that the Board of Directors take stakeholder interests into account. In contrast to the Board of Directors, Board of Commissioners’ members cannot act alone but only by decision of the Board of Commissioners. In doing its job, the Board of Commissioners cannot be involved in operational decision making. Decisions of the Board of Commissioners regarding the matters that are governed by the Articles of Association and applicable laws are done within its supervisory capacity, so that the operational activities remain Board of Directors responsibilities. Board of Commissioners Remuneration In accordance to applicable laws and regulations, salary, honorarium, and other allowances decided at a GMS take into account the recommendations from the Nomination and Remuneration Committee, if such committee has been formed. If the committee has not been formed, the amount of remuneration for the members of Board of Commissioners is decided by the GMS or the authority given by the GMS to the Board of Commissioners to decide the amount of honorarium andor other allowances for the members of the Board as well as the detailed allocations of distribution for each member of the Board. The amount of honorarium and bonus for members of the Board of Commissioners is decided with regard to the achievement of business targets, Company’s inancial capability, and other relevant factors. Board of Commissioners Meeting Board of Commissioners meetings are held at least once every three months and can be held at any other time deemed necessary based on the request of one or more of the members. Meetings are held to do internal consolidation primarily concerned with the discussion of reports submitted by the Board of Directors. The agenda of meetings includes discussion on monthly performance, annual performance, budget forming, inancing, discussion on project progress, and discussion regarding the business of Subsidiaries. Throughout 2014, the Board of Commissioners held six meetings. The Board’s level of attendance in such meetings in 2014 is as follows: Attendees Position Attendance Jusman Syaii Djamal President Commissioner Independent 100 Bacelius Ruru Independent Commissioner 100 Farid Harianto Independent Commissioner 83 Board of Commissioners Meeting Agenda in 2014 among others included: • Operational and inancial performance discussion of the Subsidiaries and Consolidation year 2013. • Company’s 2014 Work Plan and Budgeting. • Monthly operational and inancial performance discussion. • Quarterly operational and inancial performance discussion. • Quarterly reports from the Audit Committee • GMS and dividend payment plan. • Public Expose plan. • Company’s 2015 Work Plan and Budgeting. Board of Commissioners Task Execution Throughout 2014, Board of Commissioners had fulilled their supervisory and advisory functions on things related to: • Company management in regards to the global coal price drop • Implementation of best GCG principles in all Company activities • Division of proit attained by the Company to all shareholders. 92 PT TOBA BARA SEJAHTRA Tbk - 2014 Annual Report Board of Commissioners Accountability Board of Commissioners reports their action on Company management taken by the Board of Directors. That report is delivered to the GMS to be approved. The Board of Commissioners Report to the GMS is a materialization of their accountability on their supervision of Company management with regards to the GCG execution. Board of Commissioners Performance Evaluation The Board of Commissioners performance is evaluated every year by the shareholders in the GMS. The performance is decided upon based on the execution of tasks, authority, and responsibilities as included in the Company’s Article of Association and applicable laws.

C. BOARD OF DIRECTORS

The Board of Directors is in charge and responsible collectively and collegially in managing the Company. Based on the Company’s Articles of Association, the President Director and one other Director; or in the case of non-appearance or unavailability of the President Director because of any reason that does not need to be explained to a third party, 2 two other members of the Board of Directors; are authorized and have the right to represent the Company inside and outside of court regarding everything and in any circumstances tied the Company with any other party as well as run the management of the Company. In accordance with the Company’s Articles of Association, Directors are appointed and dismissed by the shareholders through a GMS. The Directors’ term of ofice is one year from the date that the GMS that appointed them until the close of the ifth AGMS after that, without diminishing the right of the GMS to dismiss any Director before the term of ofice ends. The GMS has the authority to dismiss any Director before the term of ofice ends if the said Director is no longer capable of fulilling the requirements to be a member of the Board of Directors. Board of Directors Composition The Company’s Board of Directors consists of four people including Independent Director as required in Attached I Indonesian Stock Exchange, LLC. Director Decision No: Kep-00001BEI01-2014 dated January 20, 2014. The Independent Director is not afiliated with the Company’s controlling shareholder. Based on the AGMS dated June 28, 2013, below is the composition of the Company’s Board of Directors: Directors Name IndependentPresident Director Justarina S. M. Naiborhu Director Pandu P. Syahrir Director Arthur M. E. Simatupang Director Sudharmono Saragih Board of Directors Duties In accordance with the Company’s Articles of Association, the Board of Directors is responsible to conduct every activity that is related to the management of the Company to the beneit of the Company and in line with the purpose and objectives of the Company. The Board of Directors also represents the Company inside and outside of court in every matter and every event with special exceptions as set in the Articles of Association and applicable laws. The duties of the Board of Directors among others are: • To ensure that the Company’s activities are done in line with its business objectives. • To formulate the Company’s Long Term Business Plan and prepare Annual Budget Plan to be approved by the Board of Commissioners. • To execute the Company’s business plans to the best of its ability to achieve the set purpose and target. • To compile as a form of Board of Directors performance accountability, the Company’s annual report and inancial statements as set by the Limited Liability Company Law. • To prepare the Company’s annual report in compliance with the common accounting standards and submit the Company’s books to a Public Accountant to be audited. CORPORATE GOVERNANCE PT TOBA BARA SEJAHTRA Tbk - 2014 Annual Report 93 • To put into place the Company’s organizational structure, and ill each position with competent people. • To give a report and explanation at the request of the Board of Commissioners. • To do other responsibilities as set by regulations stated in the Articles of Association and GMS decisions based on applicable laws and regulations. In doing its duty and responsibilities, the Board of Directors upholds GCG principles, including Corporate Social Responsibilities. Board of Directors Work Scope and Responsibilities So that the Board of Directors can do its tasks of managing the Company in a more eficient and effective way, the Board of Directors based on its internal agreement delegates the work in hand based on each Director’s expertise and competence. However, to give a balanced result in very decision making, the delegation of work does not limit their cross-directorate authority as Directors. Board of Directors Remuneration Based on applicable laws and regulations, the honorarium and other allowances given to Directors is decided in a GMS with regard to the recommendation to the Nomination and Remuneration Committee, if such body has been formed. If the Committee has not been formed, the amount of remuneration is decided in a GMS or GMS appointed authority, in the Company’s case the Board of Commissioners, to decide the amount of honorarium and other allowances, as well as the detailed allocation for each Director. The amount of remuneration for Directors including salary, bonus, and other allowances is decided by taking into account the achievement of business targets, the Company’s inancial condition, and other relevant factors. Board of Directors Meetings Board of Directors meetings are held on a regular basis with a minimum of once a month, and a meeting can be held any time if deemed necessary based on any one or more Director’s request. In general, a Board of Directors meeting discusses business problems and ensures that the Company is following the right path in executing the set business strategy. In 2014, the Board of Directors held 12 meetings. The level of attendance of the Directors is as follows: Meeting Attendees Position Attendance Justarina Naiborhu IndependentPresident Director 100 Pandu P. Syahrir Director 100 Arthur Sumatupang Director 42 Sudharmono Saragih Director 100 Attended Lemhanas during April - Oct 2014 Board of Directors Meeting Agenda in 2014 included: • Discussion of operational and inancial performance of Subsidiaries and Holding Company at the end of 2013. • Company’s 2014 work plan and budget. • Discussion of monthly operational and inancial performance of subsidiaries and holding company. • Discussion of quarterly operational and inancial performance of subsidiaries and holding company. • GMS and dividend payment plan. • Public expose plan. • Company’s 2015 work plan and budget. Board of Directors Accountability The Board of Directors compiles an account on the management of the Company in the form of annual report, which includes inancial statements, activity report, GCG activity report among others to be submitted to the GMS. The annual report has to be approved by the GMS, while the inancial statement has to be ratiied by the GMS. The Board of Directors account to the GMS is a manifestation of its accountability on Company management in the context of GCG implementation. 94 PT TOBA BARA SEJAHTRA Tbk - 2014 Annual Report Directors Performance Evaluation Directors’ performance, individually and collegially, is evaluated by the Board of Commissioners. The evaluation report on the Board of Directors and each Director’s performance is presented to a GMS, and will become inseparable from the consideration on compensation and incentive scheme for the Directors. Individually, a Director’s performance evaluation is one basis of consideration for the shareholders to dismiss or to reappoint the said Director for the next term. The performance evaluation result is a means to evaluate and increase Board of Directors eficiency. Boards of Commissioners Directors Competency Development Members of the Boards of Commissioners and Directors follow industry developments as well as general development in various ields such as management, technology, human resources, inance, and occupational safety and health OSH. Competency development for Commissioners and Directors are conducted continuously to increase knowledge and support work execution. In 2014, the members of the Board of Directors followed seminars, workshops, and conferences such as: No Activity Name Dates Location Organizer Role 1 Citi Asia Paciic Investor Conference January 15 - 17 Hongkong Citi Participants 2 5th Annual Asia Paciic Export Agency Finance 2014 February 20 Grand Hyatt Hotel, Jakarta Euro Money Asia Panelists 3 4th Annual Corporate Treasury CFO Summit February 20 Hotel Mulia, Jakarta Haymarket Asia Panelists 4 12th Annual Coal Markets February 26 Hilton Hotel, Singapore IBC Asia Panelists 5 Coal Trans Asia 2014 June 1-4 Westin Nusa Dua Bali Euro Money Plc Participants 6 IHS Asia Coal Market Outlook August 13 Pullman Hotel, Jakarta IHS Asia Panelists 7 Goldman Sachs South of Asia Conference September 11-12 Singapore Goldman Sachs Participants 8 CLSA Investor Forum September 16 Grand Hyatt Hotel, Hongkong CLSA Participants 9 Macquarie Indonesia Commodities Conference September 23-24 Ritz Carlton Mega Kuningan Macquarie Speaker 10 IHS Asia Paciic Coal Outlook Conference November 4-6 Bali McCloskey Speaker Company Introduction for New Boards Members Program In 2014, the Company did not conduct any introduction program as there were no new Board members. Boards of Commissioners and Directors Disclosure Guidelines At this moment, the Company is drawing up the Boards of Commissioners and Directors and Disclosure Guidelines. Boards of Commissioners and Directors Afiliation Disclosure Commissioner Independency and Afiliation Every Commissioner has to act independently, have no conlict of interest and be free from intervention from any Company or third party that can disturb and affect the decisions taken as a Commissioner. CORPORATE GOVERNANCE PT TOBA BARA SEJAHTRA Tbk - 2014 Annual Report 95 Every Commissioners does not have any inancial, management, shareholding, andor familial relationship up to the second degree, both vertical and horizontal, nor marital relationship with other Commissioners and or Shareholders andor Directors, so that in doing hisher task, the said Commissioner is able to act independently. Director Independency and Afiliation All Directors do not have any afiliation with the Board of Commissioners. The Board of Directors independency is required to execute management actions or engage in any relationship with third parties without intervention from other parties or in contrary to the laws and Articles of Association which could materially interfere with the objectivity and independence of the Board of Directors in conducting its duties for the beneit of the Company. There is no familial relationship up to second degree, both vertical and horizontal, nor marital relationship between other Directors andor Commissioners. Boards of Commissioners and Directors Shareholding Disclosure Referring to Regulation No.X.M.1 Attachment on Decision by the Head of Capital Market Regulatory Body No: Kep-82PM1997 dated January 17, 1996 about Certain Shareholders Information Transparency, until the end of 2014 there were no Commissioners that held shares in the Company. Meanwhile, one Director, Sudharmono Saragih, owns shares in the amount of which falls within regulation through the ESA program at a time when he had not been appointed as Director. AUDIT COMMITTEE The Board of Commissioners formed the Audit Committee in accordance to Regulation No. IX.I.5 Decision of the Chairman of Bapepam-LK No: Kep- 643BL2012 dated December 7, 2012 regarding the Establishment and Guidelines for Audit Committee’s Work Implementation. The company’s Audit Committee consists of one Independent commissioner and two independent external parties. Duty and Responsibility of Audit Committee The main function of the Audit Committee is to help the Board of Commissioners in fulilling their supervisory responsibility. The duty and responsibility of the Audit Committee is regulated in the Audit Committee Charter, detailing the Audit Committee: • To do its duty and responsibility based on Regulation No. IX.I.5 attachment to Bapepam-LK Decision No. KEP-643BL2012 dated December 7, 2012 regarding the Establishment and Guidelines of Audit Committee’s work implementation. • To supervise the Company’s internal and external audit activities, from planning to execution, indings, and follow ups. • To give advice to the Board of Commissioners in ensuring the Company’s inancial statement integrity. • To give professional and independent opinion to the Board of Commissioners regarding any report or matters presented by the Directors to the Board of Commissioners and other tasks related to the duty of a Commissioner. Audit Committee Composition As at December 31, 2014, the Audit Committee composition was as follows: Name Position Bacelius Ruru, SH, LLM Head of the Audit Committee Independent Commissioner Prof. Dr. Ir. Irwandy Arif, M.Sc. Member Aria Kanaka, CA, CPA Member Audit Committee Member Proile Bacelius Ruru, SH, LLM – Head of the Audit Committee and Independent Commissioner His proile is presented in the Board of Commissioners Proile Section in this Annual Report. 96 PT TOBA BARA SEJAHTRA Tbk - 2014 Annual Report Prof. Dr. Ir. Irwandy Arif, M.Sc –Audit Committee Member Doctor, graduated from Ecole des Mines de Nancy, France; Bachelor of Mine Engineering and Master of Industrial Engineering from ITB. He is an expert in the Indonesian mining industry. Appointed as Audit Committee member in January 2013. Current and past positions among others were audit committee member at PT Adaro Energy Tbk from 2008, Head of audit committee PT Aneka Tambang Tbk Persero 2004- 2009, independent commissioner in some companies, and expert researcher in various institution in mining and the mineral technology ield. He is still actively teaching in the Mine Engineering College at ITB and researching, as well as writing mining and geotechnical journals. Aria Kanaka, CA, CPA – Audit Committee Member Bachelor of Arts in Accounting, and Master of Arts in Accounting from University of Indonesia. He was accepted at the National Registry of Accountants from Republic of Indonesia Ministry of Finance in 2000, and passed the public accountant certiication test from the Indonesian Accountants Association in 2003. Appointed as a member of the Audit Committee in January 2013. Positions currently held, among others, are audit committee member at PT Tower Bersama Infrastructure Tbk since 2010, PT Total Bangun Persada Tbk since 2014. He is currently a partner at Aria Kanaka and Associates Public Accountant Firm member of Mazars SCRL and actively teaches at the College of Economy at the University of Indonesia. Audit Committee Member Independency The Audit Committee is headed by an Independent Commissioner and has independent members from outside the Company. This is in accordance to Bapepam Regulation No. IX.I.5 regarding Audit Committee Forming and Guidelines of Work Execution. The Audit Committee fulills its duties and responsibilities independently and professionally. Duties and Responsibilities The Audit Committee fulills its duties and responsibilities according to Regulation No. IX.1.5 Decision of the Chairman of Bapepam-LK No. KEP-643BL2012 dated December 7, 2012 regarding the Audit Committee Forming and Guidelines of Work Execution. Those duties and responsibilities, among others, are to: a. Review inancial information to be disclosed by the Company to the public andor the authorities such as inancial statements, inancial projections, and other reports related to the Company’s inancial information. b. Do reviews on compliance with the laws and regulations related to the Company’s activities. c. Give independent opinions in case of dissent between management and public accountant regarding the service given. d. Give recommendations to the Board of Commissioners regarding the appointment of public accountant based on independency, work scope, and fees. e. Do reviews on audit activities done by internal auditor and to supervise follow up actions done by Directors on the indings. f. Do reviews on risk management activities done by the Board of Directors. g. Review reports related to the accounting process and the Company’s inancial reports. h. Review and advise the Board of Commissioners regarding possibilities of conlict of interest. i. Maintain Company documents, data, and information conidentiality. CORPORATE GOVERNANCE PT TOBA BARA SEJAHTRA Tbk - 2014 Annual Report 97 Audit Committee Meetings In 2014, the Audit committee held 9 meetings. The level of attendance of the members is as follows: Meeting Attendees Position Attendance Bacelius Ruru, SH, LLM Head of the Audit Committee Independent Commissioner 88.9 Prof. Dr. Ir. Irwandy Arif, M.Sc. Member 100.0 Aria Kanaka, CA, CPA Anggota 100.0 Summary of Audit Committee Activities in 2014 According to its duty and responsibility, the Audit Committee gave professional and independent opinions to the Board of Commissioners regarding matters presented to the Board of Commissioners by the Board of Directors and other tasks related to the tasks of the Board of Commissioners. This was done through routine meetings and site visits. The focus of the Audit Committee’s work program was on the effort by the Company to increase added value in order to prevent risks associated with operational productivity. Audit Committee 2014 activities among others were: created Audit Committee work program, discussed 2014 work plan and budget, studied Internal Audit reports, discussed with the external auditor new regulations implementation related to the preparation of inancial statement, and Subsidiaries’ performance. The Audit Committee also reviewed the 2013 annual report and 2014 1st, 2nd, and 3rd quarter reports and gave notes when necessary to be submitted to the Board of Commissioners. As a form of work execution accountability, the Audit Committee created and submitted quarterly reports, an annual activity report, and the 2015 Audit Committee work plan to the Board of Commissioners. Other than those activities, throughout 2014, the Audit Committee helped with the execution of a timely audit schedule, kept operational and inancial performance as well as forward-looking strategy, identiied risks regarding the Company’s inancial condition, and evaluated the Company’s legal compliance. Related to the Company’s operational aspects, the Audit Committee evaluated the coal marketing system and strategy concerning the products of the three subsidiaries, evaluated the efforts to increase productivity, supply chain effectiveness, and logistics concerning exports, and supervised the Occupational Safety and Health OSH improvement effort. The Audit Committee was also involved in the discussion about the implementation of the new accounting system, especially ISAK 29 as the replacement of PSAK 33 concerning the process of creating inancial statements in accordance to the new accounting policy and new regulation regarding inancial statement creation. Other than that, together with Internal Audit, the Audit committee discussed the 2014 audit activity strategy which consisted of supervision of developments that may have an impact on the Company’s business, supervision of the internal audit standard operating procedures and Audit Committee 2015 work plan formation. CORPORATE SECRETARY The Corporate Secretary is appointed and accountable directly to the President Director. The duty of the Corporate Secretary is to ensure effective internal Company communication, between the Company and inancial services authority and capital market, between the Company and the shareholders and other stakeholders. The Corporate Secretary also has to ensure the Company’s compliance to the applicable laws and regulations including capital market regulations. The Corporate Secretary is responsible for the administration of documents and information related to the Company’s compliance to capital market laws and regulations, as well as supporting the accountability of operational reporting and Company responsibility to stakeholders. The Corporate Secretary helps the Company in fulilling the principles of public disclosure by ensuring the availability of relevant, accurate, and expeditious information to all stakeholders and the public, including the availability of quarterly reports, annual report, and other reportsnews regarding the Company. 98 PT TOBA BARA SEJAHTRA Tbk - 2014 Annual Report Corporate Secretary Proile Pandu P. Syahrir From September 27, 2013, the position of Corporate Secretary has been held by Pandu P. Syahrir, who is concurrently one of the Company’s Directors. His proile is available at the Board of Directors proile section in this Annual Report. In 2014, the activities of the Corporate secretary among others were: coordinated AGMS for inancial year 2013, coordinated inancial year 2013 dividend payment and inancial year 2014 interim dividend payment, hosted annual public expose, 2013 annual report formation, managed Company website, as well as coordinated routine reports to the OJK and Indonesian Stock Exchange such as exploration results, IPO fund usage realization, and quarterly inancial reports. In 2014, the Corporate Secretary hosted a media site visit, in which media were invited to a site visit to a mine in order to give an understanding and explanation of activities in the mining concession, from overburden removal, coal hauling from pit to jetty, as well as CST activities and reclamations. INVESTOR RELATIONS The Company believes that adding value for shareholders starts from implementation of GCG principles, including transparency. Because of that, the Company is committed to communicating the Company’s business strategies and activities as clearly as possible to stakeholders. To achieve that, the Company is doing active communication with investors through well-planned investor relations activities. The Company created an investor relations unit by appointing Iwan Sanyoto as the head of investor relations on February 2013. The Company develops investor relations activities as a part of the Company’s accountability to the shareholders. Throughout 2014, the Company was active in holding analyst meetings and Company presentations. The Company also held one-on-one meetings with capital market analysts, especially those who covered the Company as a monitored and analyzed public company. Below are some of the important activities done by Investor Relations throughout 2014: No Activity Name Dates Location Organizer Role 1 Analyst Meeting January 22 Jakarta Goldman Sachs One-on-One Meeting 2 Analyst Meeting February 14 Jakarta JP Morgan One-on-One Meeting 3 Analyst Meeting April 17 Jakarta Morgan Stanley One-on-One Meeting 4 Analyst Meeting April 21 Jakarta Macquarie One-on-One Meeting 5 Analyst Meeting May 28 Jakarta PT Sucorinvest One-on-One Meeting 6 Analyst Meeting July 3 Jakarta PT Trimegah Securities Tbk One-on-One Meeting 7 CIMB Annual Indonesia Conference Agustus 21-22 Bali CIMB One-on-One Meeting 8 Deutsche Bank Fixed Income Meeting September 17 Hong kong Deutsche Bank One-on-One Meeting CORPORATE GOVERNANCE PT TOBA BARA SEJAHTRA Tbk - 2014 Annual Report 99 The Company realizes that capital market communication does not go one way. Feed back from investment community is essential for improving engagement and relation. Because of that, the investor relations unit is open to input through interactions with investors and analysts. The Investor Relations team can be contacted through e-mail: iwan.sanyototobabara. com Head of Investor Relations Proile Iwan Sanyoto Iwan Sanyoto was appointed as the Head of Investor Relations in February 2013. Since 1993, he has gained experience in international trading, capital markets, and investment 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 dan PT CIMB-Principal Asset Management. Iwan holds a Management degree from University of Maryland European Division, and an MBA from VUB, Belgium LEGAL DIVISION The Company created the Legal division whose responsibility among others is ensuring the Company’s legal compliance. The Legal Division’s duties and responsibilities consist of: • Ensuring all Company activities mitigate risks that may come up as a by product of the transactions the Company is doing. • Ensuring that the Company, in its transactions as well as its operational activities, always takes into account applicable laws, related to capital markets, mining, and others. • Resolving disputes as well as anticipating disputes that may come up between the Company and a third party. Head of Legal Proile Bima Sinung Widagdo Currently, the head of the Legal Division is held by Bima Sinung Widagdo who has been in the position since March 2011. Before that, Bima had a career in the energy and banking sector with PT Adaro Energy Tbk and PT CIMB Niaga Tbk. After inishing his education with a Bachelor of Law from Universitas Indonesia Law School. COMPANY DATA AND INFORMATION ACCESS Information Transparency Policy In order to fulill the transparency principle and GCG implementation, the Company discloses non-secretive information to the public through adequate means and facilities. Therefore, the stakeholders can access the information easily without any fees. Information which is time-sensitive to shareholders as well as other stakeholders is delivered through various communication means to facilitate a fast decision making process. Referring to the Financial Services Authority Regulations and Stock Exchange Regulations, the Company is committed to announce as fast as possible information or facts that may affect share price or investors’ investment decision at the latest two days after the information or facts come to light. 100 PT TOBA BARA SEJAHTRA Tbk - 2014 Annual Report Information Access The Company routinely publishes an annual report that presents information regarding the Company’s operational and inancial performance. Through the Company website www.tobabara.com, shareholders, investors and the public can access various information regarding the Company including annual inancial statements, quarterly inancial statements, summary of inancial performance, stock performance, GCG and CSR activities report, as well as other activities. The Company is also open access to submission of opinion, complaints, as well as questions by contacting: PT TOBA BARA SEJAHTRA Tbk. Wisma Bakrie 2, 16th loor Jl. H. R. Rasuna Said Kav. B-2 Jakarta 12920 – Indonesia Corporate Secretary Tel: 62 21 5794 5779 Fax: 61 21 5794 5778 E-mail: corsectobabara.com Below is a list of information published by the Company related to the principle of transparency to the public throughout 2014: No No. Letter Date Subject Regulation No. 1 002TBSI14 January 10 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 2 004TBSI14 January 10 Monthly Report on Registration of Securities Holders IDXnet 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 3 005TBSI14 January 15 Report on the Use of Funds Received from IPO as of 31 December 2013 Regulation No. X.K.4, Attachment Rule Chairman of Bapepam No. KEP-27PM2003 4 009TBSII14 February 5 Performance Guidance 2013 and 2014 Non Regulated 5 011TBSII14 February 10 Monthly Report on Registration of Securities Holders IDXnet 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 6 012TBSII14 February 12 Monthly Report on Exploration Activities Period January 2014 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 7 019TBSIII14 March 6 Monthly Report on Registration of Securities Holders IDXnet 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 021TBSIII14 March 12 Monthly Report on Exploration Activities Period February 2014 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 9 023TBSIII14 March 21 Disclosure Information of Revolving Loan Facility Regulation No. X.K.1 Rule of Chairman of Bapepam No. Kep-86PM1996 on Disclosure of Information that must be made Public and Rule Number IE, Appendix Decision of Board of Directors of the Jakarta Stock Exchange No. Kep- 306 BEJ 07-2004 regarding Obligation of Information Submission CORPORATE GOVERNANCE PT TOBA BARA SEJAHTRA Tbk - 2014 Annual Report 101 No No. Letter Date Subject Regulation No. 10 025TBSIII14 March 28 Audited Financial Statements 31 December 2013 Regulation No. X.K.2 Rule of Chairman of Bapepam-LK No. Kep-346BL2011 dated Juli 5, 2011 on the Filing of the Periodical 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-306BEJ07-2004 11 026TBSIV14 April 1 Proof of Advertisment for Notice of 2013 Audited Financial Statements Regulation No. X.K.2 Rule of Chairman of Bapepam-LK No. Kep-346BL2011 dated Juli 5, 2011 on the Filing of the Periodical 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-306BEJ07-2004 12 029TBSIV14 April 1 Summary of Financial Analysis and Management’s Discussion MDNA Non Regulated 13 031TBSIV14 April 7 Monthly Report on Registration of Securities Holders IDXnet 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 032TBSIV14 April 8 Monthly Report on Exploration Activities Period March 2014 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 037TBSIV14 April 15 Report on the Use of Funds Received from IPO as of 31 March 2014 Regulation No. X.K.4, Attachment Rule Chairman of Bapepam No. KEP-27PM2003 16 044TBSIV14 April 21 Proof of Advertisment for Notice of Annual GMS Bapepam Regulation No. I.1 IX of the Plan and Implementation of GMS and Securities Listing Regulation No. IE dated July 9, 2014 on the Obligation to Submit Information 17 051TBSIV14 April 24 Consolidated Interim Financial Statements Quarter I 2014 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 18 054TBSIV14 April 30 2013 Annual Report Regulation No. X.K.VI on the requirement for Annual Report iling by an Issuer or Public Company, Attachment the Decision of the Chairman of the Capital Market and Financial Institution Supervisory Agency No. KEP-134 BL2006 19 057TBSV14 May 6 Proof of Advertisment for Notice of Annual GMS Regulation No. IX.XI Decision of the Capital Market Supervisory Board No. Kep-60PM1996 20 065TBSV14 May 8 Monthly Report on Registration of Securities Holders IDXnet 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 21 068TBSV14 May 12 Monthly Report on Exploration Activities Period April 2014 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 22 074 TBSV2014 May 23 Submission Results of AGM 2014 Regulation No. IX.XI Decision of the Capital Market Supervisory Board No. Kep-60PM1996 23 077TBSVI14 June 9 Monthly Report on Registration of Securities Holders IDXnet 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 24 078TBSVI14 June 9 Notice of Schedule and Adminstering of Cash Dividends Payment Decision of the Board of Directors of PT Bursa Efek Jakarta No. Kep-565BEJ11-2003 25 082TBSVI14 June 12 Monthly Report on Exploration Activities Period Mei 2014 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 26 085TBSVII14 July 2 Exchange Rate for Final Cash Dividends Decision of the Board of Directors of PT Bursa Efek Jakarta No. Kep-565BEJ11-2003 102 PT TOBA BARA SEJAHTRA Tbk - 2014 Annual Report No No. Letter Date Subject Regulation No. 27 087TBSVII14 July 7 Monthly Report on Registration of Securities Holders IDXnet 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 088TBSVII14 July 10 Monthly Report on Exploration Activities Period June 2014 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 29 094TBSVII14 July 15 Report on the Use of Funds Received from IPO as of 30 June 2014 Regulation No. X.K.4, Attachment Rule Chairman of Bapepam No. KEP-27PM2003 30 095TBSVII14 July 24 Consolidated Interim Financial Statements Semester I 2014 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 31 097TBSVII14 July 25 Summary of Financial Analysis and Management’s Discussion MDNA Non Regulated 32 098TBSVII14 July 25 Report on the Use of Funds Received from IPO as of 30 June 2014 Revision Regulation No. X.K.4, Attachment Rule Chairman of Bapepam No. KEP-27PM2003 33 100TBS VIII14 August 7 Monthly Report on Registration of Securities Holders IDXnet 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 34 102TBS VIII14 August 12 Monthly Report on Exploration Activities Period July 2014 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 35 106TBSIX14 September 2 Notice of Schedule and Adminstering of Interim Dividends Payment Decision of the Board of Directors of PT Bursa Efek Jakarta No. Kep-565BEJ11-2003 36 110TBSIX14 September 10 Monthly Report on Exploration Activities Period August 2014 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 37 112TBSIX14 September 10 Monthly Report on Registration of Securities Holders IDXnet 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 38 122TBSIX14 September 25 Exchange Rate for Final Interim Dividends Decision of the Board of Directors of PT Bursa Efek Jakarta No. Kep-565BEJ11-2003 39 126TBSX14 October 6 Monthly Report on Registration of Securities Holders IDXnet 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 40 131TBSX14 October 10 Monthly Report on Exploration Activities Period September 2014 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 41 132TBSX14 October 15 Report on the Use of Funds Received from IPO as of 30 September 2014 Regulation No. X.K.4, Attachment Rule Chairman of Bapepam No. KEP-27PM2003 42 134TBSX14 October 28 Consolidated Interim Financial Statements Quarter III 2014 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 43 135TBSX14 October 28 Summary of Financial Analysis and Management’s Discussion MDNA Non Regulated 44 136TBSX14 October 29 Notice of the Annual Public Expose 2014 IDXnet 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 CORPORATE GOVERNANCE PT TOBA BARA SEJAHTRA Tbk - 2014 Annual Report 103 No No. Letter Date Subject Regulation No. 45 138TBSX14 October 30 Disclosure of Information Regulation No. X.K.1 Rule of Chairman of Bapepam No. Kep-86PM1996 on Disclosure of Information that must be made Public and Rule Number IE, Appendix Decision of Board of Directors of the Jakarta Stock Exchange No. Kep- 306 BEJ 07-2004 regarding Obligation of Information Submission 46 141TBSXI14 November 7 Monthly Report on Registration of Securities Holders IDXnet 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 47 142TBSXI14 November 7 Public Expose Material 2014 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 48 145TBSXI14 November 11 Monthly Report on Exploration Activities Period October 2014 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 49 146TBSXI14 November 12 Siaran Pers Public Expose Non Regulated 50 148TBSXI14 November 17 Public Expose Implementation Report 2014 IDXnet 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 51 151TBSXII14 December 4 Monthly Report on Registration of Securities Holders IDXnet 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 52 156TBSXII14 December 12 Monthly Report on Exploration Activities Period November 2014 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 INTERNAL AUDIT UNIT Internal Audit is the management’s partner in achieving Company targets through its audit and consulting functions, independently and objectively. Internal Audit is directly under the President Director. The Head of Internal Audit is appointed by and accountable to the President Director, but hisher appointment has to be approved by the Board of Commissioners. Functionally, Internal Audit works with the guidance and under the supervision of the Audit Committee. Other than submitting Audit Reports to the President Director, these reports are also submitted to the Audit Committee to be presented to the Board of Commissioners together with the Audit Committee’s professional opinion. Internal Audit conducts audit activities in accordance with the Annual Audit Plan, which has been comprehensively compiled by considering the risks related to each audited aspect. The audit plan is discussed together with the head of the unit that will be audited and submitted to the Board of Directors and approved by the Audit Committee. Internal Audit implementation is done on the basis of risk to ensure compliance to standard operating procedure, internal control systems and regulation has complied with the prevailing regulation. Internal Audit works together, in a consultative way, with Subsidiaries internal audit units to increase internal control in all subsidiaries. Periodically, Internal Audit will do a study on all the Company’s and its subsidiaries’ activities related to inancial and operational activities as well as compliance to the applicable laws and regulation. Internal Audit also does internal assessment periodically to study the effectiveness of all aspects of internal audit activities. Internal Audit Charter Internal Audit unit has an Internal Audit Charter as a guideline. The Internal Audit Charter sets the organizational structure and positions, duties and responsibilities, authority and ethics code for internal auditors, internal audit standards and auditor requirements. 104 PT TOBA BARA SEJAHTRA Tbk - 2014 Annual Report The internal audit charter is deined by the Board of Directors’ Decision dated May 14, 2012 and was approved by the Board of Commissioners based on the Circular Decision of the Board of Commissioners Meeting As Substitute Board of Commissioners dated May 14, 2012. Head of Internal Audit Proile Pria Fardio Syaiful Dinar The Head of Internal Audit is held by Pria Fardio Syaiful Dinar, who was appointed based on Surat Penunjukan Kepala Unit Audit Internal Perseroan Nomor: 043 TBSV2012 dated May 14, 2012. Pria Fardio Syaiful Dinar obtained his Bachelor in Economy from Universitas Indonesia 2008 and Bachelor of Law from Krisnadwipayana University 2006. Currently, Pria is doing his MBA at Gadjah Mada University. Before serving as Head of Internal Audit, Pria served as internal audit and controller at PT ABN, one of the subsidiaries owned by PT Toba Bara SejahtraTbk. Prior to that, he was an external auditor at Tanudiredja Wibisana and Partners Public Accountant Firm PricewaterhouseCoopers with his last position as a Senior Association with specialization in energy and mining audits. He also had been a faculty at Islam University Assyaiiyah School of Law from 2007 to 2008. Internal Audit Activity Report The activities done by Internal Audit in 2014 covered the three coal mining subsidiaries, ABN, IM, and TMU. The activities that were done in 2014 are: a. audits on activities related to procurement and logistic b. audits on activities related to sales and marketing c. audits on reserves d. audits of mining activities e. investigative audits related to HSE activities f. other audits related to Company operational activities. 2015 Audit Plan Activities that will be done in 2015 cover the three mining subsidiaries ABN, IM, and TMU, as well as PT Perkebunan Kaltim Utama I that is engaged in the palm plantation business. Below is the audit plan for 2015, including some additions on areas of activities compared to 2014: a. audits on activities related to procurement and logistic b. audits on activities related to sales and marketing c. audits on reserves d. audits of mining activities e. investigative audits related to HSE activities f. other audits related to Company operational activities g. audits on construction progress of Palm Oil Factory at PKU. CORPORATE GOVERNANCE PT TOBA BARA SEJAHTRA Tbk - 2014 Annual Report 105 PUBLIC ACCOUNTANT Based on AGMS decision dated May 21,2014 that gave the authority to the Board of Commissioners to appoint a Public Accountant Firm which is registered at the Financial Services Authority to audit the Company’s inancial statement for inancial year 2014, the Board of Commissioners had appointed Purwantoro, Suherman, and Surja Public Accountant Firm, member of Ernst Young Global Limited, to audit Company’s consolidated inancial statement for inancial year 2014. The data on Public Accountant Firm and Accountant who audited the Company’s inancial statement as well as the fees for the last three years are: Audit Period Public Accountant Firm Accountant Audit Fee Audit Service 2014 KAP Purwantoro, Suherman Surja E. Batara Manurung US 128 thousand Annual Financial Statement Audit 2013 KAP Purwantoro, Suherman Surja Agung Purwanto US 135 thousand 2012 KAP Purwantoro, Suherman Surja Agung Purwanto US 160 thousand RISK MANAGEMENT The Company’s business activities are always changing in line with the development of the coal market, resulting in a bigger challenge and risk exposure. Therefore, various methods for risk management are needed. The initiative for Company’s risk management is basically to provide the most current and comprehensive information for Directors and managements to anticipate risk as soon as possible, and to mitigate the risk. Related to that, the function of risk management in the Company and its subsidiaries is done by each division including operational and non-operational activities. Risk management in the subsidiaries includes identiication, evaluation, management, and supervision of risks in a coordinated and integrated way. As a group of companies, there is also a Risk Management Team that studies and approves investment plans. The Company has identiied main risks that have to be managed well so that they will not have a negative and material impact to the Company’s business activities, inancial conditions, operational performance, and business prospects. Those risks are:

1. Price Fluctuation Risk

The Company’s income is very dependent on the price accepted when doing sales. The price of coal refers to a world price index that tends to be cyclical and can luctuate signiicantly. Facing the price luctuation risk, the Company has taken mitigating actions as follows: • the Company sells most of its planned production to high quality buyers on a ixed price. This pricing mechanism is very proitable for the Company because buyers will pay some amount up-front. Therefore, the Company can maximize the price structure to anticipate unfavorable market conditions. • the Company always try to keep a stable operational costs structure through various eficiency initiatives as well as optimizing operational performance to maintain production levels. The adjacent locations of the three subsidiaries support the effort to maximize eficiency through joint mine plans and infrastructure sharing.

2. Fuel Price Risk

The Company faces fuel price risk caused by the luctuation of fuel prices and the luctuation of price of fuel provided by the Company to contractors. Increases in price will have a negative impact to the Company’s proits and margin. To limit the impact of fuel price luctuations, the Company manages risk by hedging against projected fuel requirements. 106 PT TOBA BARA SEJAHTRA Tbk - 2014 Annual Report

3. Interest Rate Risks

Interest rate risk on cash low is one risk where future cash low will luctuate because of interest rate changes. Currently, the exposure comes mainly from a long term syndicated loan with loating interest. Loans with loating interest will create risks for the Company’s cash low. The Company manages interest rate risks by using a capped interest rate throughout the loan period. Through this mechanism, the Company limits its exposure to the loating interest rate by using a swap interest rate. On December 31, 2014, the Company had signed a swap interest rate agreement with BNP Paribas, and the Company believes that this risk management strategy will have a long term positive impact.

4. Weather Risks