Unaudited Financial Statements for the Period Ended 31 March 2018
Unaudited Financial Statements for the Period Ended 31 March 2018
Profit & Loss Statement
Statement of Comprehensive Income for the 3 months ended 31 March 2018 and 31 March 2017
Review of Performance
The Group's revenue comprises revenue generated from Coal Mining and Coal Trading Divisions as well as Non-coal Businesses. Revenue from the Group increased by
US$129.813 million or 90.66% from US$143.186 million in 1Q17 to US$272.999 million in 1Q18. The increase was mainly due to increases in revenue from the Group's Coal
Mining and Coal Trading Divisions, partially offset by a decrease in revenue from our Non-coal Businesses.
Coal Mining Division
The Group's Coal Mining Division reported an increase in revenue by US$107.920 million or 83.42% from US$129.368 million in 1Q17 to US$237.288 million in 1Q18. The
increase was mainly due to higher sales volume and higher average selling price achieved as compared to the corresponding reporting period. Average selling price increased
from US$40.86 per metric ton in 1Q17 to US$47.35 per metric ton in 1Q18. The average Indonesia Coal Index 4 ("ICI4") in 1Q18, a better proxy for the majority of the Group's coal
quality, was US$48.01 per metric ton.
Coal Trading Division
Revenue generated by the Group's Coal Trading Division increased by US$22.710 million or 180.08% from US$12.611 million in 1Q17 to US$35.321 million in 1Q18. The
increase was mainly due to higher sales volume and higher average selling price as compared to the corresponding reporting period.
Revenue in 1Q18 comprises plywood sales as well as management fee income. Revenue decreased by US$0.817 million or 67.69% from US$1.207million in 1Q17 to US$0.390
million in 1Q18 due to the absence of log sales and the decrease in management fee income received offset by an increase in plywood sales.
Cost of Sales
The Group reported an increase in cost of sales by US$86.019 million or 121.06% from US$71.052 million in 1Q17 to US$157.071 million in 1Q18. This was mainly due to
increase in (i) mining services, coal freight, mining overhead and royalty as a result of an higher coal production and sales activities from Coal Mining Division; and (ii) coal
purchases from Coal Trading Division in line with the higher sales volume. The increase is offset by a lower amortisation expenses from lower depletion of mine properties for
stripping activity asset in the Group's Coal Mining Division.
The Group's gross profit increased by US$43.794 million or 60.71% from US$72.134 million in 1Q17 to US$115.928 million in 1Q18. The increase in gross profit was mainly due to
the above factors.
The Group's other income decreased by US$0.325 million or 9.55% from US$3.404 million in 1Q17 to US$3.079 million in 1Q18, mainly due to a decrease in miscellaneous
income of US$1.677 million offset by increases in interest income and compensation income of US$0.451 and US$0.901 million, respectively.
Selling and distribution expenses
The Group's selling and distribution expenses increased by US$13.773 million or 67.31% from US$20.461 million in 1Q17 to US$34.234 million in 1Q18 mainly due to increase in
freight and stockpile expenses in line with the increase in coal sales volume from Coal Mining and Coal Trading Divisions.
The Group's administrative expenses increased by US$6.972 million or 71.38% from US$9.767 million in 1Q17 to US$16.739 million in 1Q18 mainly due to increases in (i) repair
and maintenance expenses for road development in our Group's coal concessions, (ii) license, permits & property tax, (iii) salaries, benefits and employee welfare expenses, and
(iv) legal and professional fees incurred relating to mining consultancy and corporate exercises.
Other operating expenses
The Group's other operating expenses increased by US$0.709 million or 28.33% from US$2.503 million in 1Q17 to US$3.212 million in 1Q18 mainly due to increase in foreign
The Group's finance costs increased by US$2.737 million or 123.23% from US$2.221 million in 1Q17 to US$4.958 million in 1Q18 mainly due to the increases in (i) trade financing
charges in line with higher sales activities, and (ii) interest expenses as a result of the issuance of the Company's maiden bond.
Income tax expenses
Income tax expenses increased by US$5.336 million or 48.51% from US$10.999 million in 1Q17 to US$16.335 million in 1Q18 as a result of higher taxable profits in 1Q18.
Profit after tax
Due to the factors above, the Group's net profit increased by US$13.942 million or 47.12% to US$43.529 million in 1Q18 as compared to US$29.587 million in 1Q17, and profit
attributable to owners of the Company increased by US$7.744 million or 40.67% to US$26.784 million in 1Q18 as compared to US$19.040 million in 1Q17.
Review of Statement of Financial Position
Assets and liabilities
Total assets and total liabilities remained relatively stable as compared to the corresponding reporting period.
- Property, plant and equipment increased by US$0.743 million to US$65.178 million at 31 March 2018 as a result of additions to property, plant and equipment, offset by
- The increase in investment securities of US$17.695 million to US$41.035million at 31 March 2018 was due to the second and third tranche payments for our investment in
Westgold Resources Limited ("Westgold") offset by a marked to market loss on our Westgold shares
- The increase in restricted fund of US$7.320 million to US$11.984 million at 31 March 2018 was due to an increase of reclamation guarantee money placed with banks and funds
deposited in the interest reserve account relating to the Company's maiden bond.
- The increase in other non-current assets of US$6.420 million to US$29.559 million at 31 March 2018 was mainly due to the deferred expenses from our maiden bonds issued
during the period under review.
- The decrease in inventories of US$5.642 million to US$10.493 million at 31 March 2018 was due to inventories sold during the period under review.
- The decrease in trade and other receivables of US$9.660 million to US$124.076 million at 31 March 2018 was mainly due to higher sales offset by collections.
- The increase in other current assets of US$20.156 million to US$21.846 million at 31 March 2018 was mainly due to a refundable advance down payment of US$20.000 million to
a coal supplier under a coal offtake agreement.
- The increase in cash and cash equivalents of US$116.050 million to US$304.751 million at 31 March 2018 was mainly due to the proceeds from the Company's maiden bond;
collections from trade and other receivables, offset by the settlement of a loan facility, payments of trade and other payments and dividend by a subsidiary.
- Trade and other payables decreased by US$19.986 million to US$142.017 million at 31 March 2018 mainly due to dividend, declared in December 2017, paid to non-controlling
interests in 1Q18 by a subsidiary.
- Provision for taxation increased by US$14.037 million to US$49.385 million at 31 March 2018 as a result of the increase in taxable income during the period under review.
- Loans and borrowings increased by US$13.916 million to US$39.125 million at 31 March 2018 mainly due to the drawdown of working credit facility during the period under
- Loans and borrowings increased by US$118.07 million to US$187.844 million at 31 March 2018 as a result of the issuance of the Company's maiden bond partially offset by the
settlement of a loan facility.
As at 31 March 2018, the Group has net current assets of US$326.575 million and the Company has net current assets of US$120.715 million. The Group has loans and
borrowings totalling US$226.969 million out of which US$39.125 million are due within the next 12 months.
Review of Statement of Cash Flows
For 1Q18, the Group had net cash inflows of US$117.680 million mainly due to the following:
Net cash generated from operating activities of US$50.512 million which comprised operating cash inflow before working capital changes of US$70.036 million, net working capital
outflow of US$16.281 million, income taxes paid as well as interest and other financial charges paid amounting to US$2.922 million and US$2.193 million respectively. The Group
also recorded interest income received of US$1.872 million.
The net working capital outflow of US$16.281 million was mainly due to a decrease in trade and other payables of US$15.049 million and increases in trade and other receivables,
advances and other current assets of US$6.887 million partially offset by a decrease in inventories of US$5.655 million.
Net cash flows used in investing activities of US$46.429 million was mainly due to (i) the second and third tranche payments for our investment in Westgold of US$28.624 million;
(ii) increase in restricted fund of US$7.322 million; (iii) purchase of property, plant and equipment of US$2.342 million; (iv) increase in other non-current assets of US$5.869
million; and (v) additions to mining properties of US$2.306 million.
Net cash flows generated from financing activities of US$113.597 million was mainly due to proceeds from issuance of bond of US$149.294 million and loans and borrowings of
US$28.796 million respectively partially offset by repayment of loans and borrowings of US$46.781 million and payment of dividend of US$17.712 million by a subsidiary to noncontrolling
interests of the Group.
Strong Chinese demand and weather-related supply disruptions continued to lend support to thermal coal prices in the first quarter of this year . Price of FOB Kalimantan 4,200
kcal/kg GAR coal surged to a high of US$51.50/mt in February this year before correcting to US$43.50/mt in April.
We expect demand to be firm at current levels for the rest of the year, driven by robust coal use in Asia, which accounts for over 70% of global thermal coal consumption.
GEAR continues to see strong demand for our BIB coal from key Asian markets, such as China, India and South Korea, where coal consumption has held up despite national
programmes to boost the use of gas and renewable energy.
On 9 and 12 March 2018, Indonesia's Ministry of Energy and Mineral Resources issued a new decree relating to the pricing for coal sold under the Domestic Market Obligations
("DMO"). The DMO stipulates that coal mining companies are required to sell at least 25% of their total production within the domestic market. Under the new decree which would
be in effect from 12 March 2018 to 31 December 2019, coal mining companies which sell coal to domestic power plants have a maximum price cap of US$70.00/mt for calorific
value coal of 6,322 kcal/kg GAR or equivalent. In the event that the government's benchmark coal price ("HBA") falls below this level, then the selling price will conform to the HBA.
Domestically, Indonesia’s coal consumption is expected to exceed 100MT this year in support of the Indonesian government’s ongoing electrification programme to add 35,000
megawatts in power generation capacity across the country by 2019.
We look forward to expanding the processing capacity at our BIB mine to support our continued production ramp up to take advantage of the current coal price environment.