becoming more competitive -...

Becoming More COMPETITIVE

2010 Annual Report

Becoming More COMPETITIVE

2010 Annual Report

THEME HIGHLIGHT

In 2010, PT Indo Tambangraya Megah Tbk (ITM) focused on becoming more competitive by focusing on three areas: Growth, Cost Management, and Best Practices.

We successfully made concrete gains in all areas, further supported by tangible improvements in Quality, Safety and Environmental (QSE) Management, Good Corporate Governance (GCG) and Corporate Social Responsibility (CSR) aspects.

The result was that ITM has emerged as a stronger, more productive and more efficient organization, positioned to deliver long-term value to shareholders and stakeholders alike.

CONTENTS

ABOUT THE COMPANY IN 2010

GOOD CORPORATE GOVERNANCE AND CORPORATE SOCIAL RESPONSIBILITY

BUSINESS REVIEW

MANAGEMENT DISCUSSION AND ANALYSIS

CORPORATE DATA

2 VISION / MISSION

4 CORPORATE VALUES

5 FINANCIAL SUMMARY

7 SHARE PRICE AND OWNERSHIP

9 ITM IN BRIEF

12 RESOURCES AND RESERVES

13 AWARDS 2010

16 SIGNIFICANT EVENTS 2010

18 ORGANIZATIONAL STRUCTURE OF ITM

22 REPORT OF PRESIDENT COMMISSIONER

25 REPORT OF PRESIDENT DIRECTOR

28 CORPORATE STRATEGY

29 SALES AND MARKETING

31 OPERATIONAL REVIEW

32 Mining Operations

35 Contractor Management System

36 Coal Quality Management

37 Business Continuity Management

38 QUALITY, SAFETY AND ENVIRONMENT

42 ENERGY MANAGEMENT

43 HUMAN RESOURCES

47 INFORMATION TECHNOLOGY

48 COMMUNICATIONS

54 MANAGEMENT DISCUSSION AND ANALYSIS

62 GOOD CORPORATE GOVERNANCE

63 GCG Framework and Values

64 Our Corporate Values

65 Code of Conduct

66 Responsibility

66 Board of Commissioners

68 Board of Directors

70 Board Development

70 Responsible Risk Management

72 Independence

72 Independent Auditor

72 Conflicts of Interest

72 Non-Affiliated Director

72 Fairness

72 Equal and Transparent Access to Information

72 Rights and Equality of Shareholders

72 Equal Opportunity for Employees

73 Transparency

73 Whistleblower

73 Corporate Secretary

73 General Meeting of Shareholders

75 Accountability

75 Good Corporate Governance, Nomination and Compensation Committee

76 Remuneration

76 Internal Audit

77 Audit Committee

78 Report from the Audit Committee

80CORPORATE SOCIAL RESPONSIBILITY AND COMMUNITY DEVELOPMENT

88 RESPONSIBILITY FOR THE ANNUAL REPORT

92 CORPORATE DATA

92 Board of Commissioners Profile

94 Board of Directors Profile

96 Audit Committee Profile

97 ITM and Subsidiaries Directory

98 Glossary

102 CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED FINANCIAL STATEMENTS

RESPONSIBILITY FOR THE ANNUAL REPORT

ABOUT THE COMPANY IN 2010

2 VISION / MISSION

4 CORPORATE VALUES

5 FINANCIAL SUMMARY

7 SHARE PRICE AND OWNERSHIP

9 ITM IN BRIEF

12 RESOURCES AND RESERVES

13 AWARDS 2010

16 SIGNIFICANT EVENTS 2010

18 ORGANIZATIONAL STRUCTURE OF ITM

1PT Indo Tambangraya Megah Tbk 2010 Annual Report

VISION / MISSION

To become a leading coal-related energy company in Indonesia with sustainable growth through professionalism and care to our employees, community and environment.

To develop operational excellence to serve our customers with consistent quality and quantity of product and services.

To develop competent employee, efficient systems and infrastructure under the innovation, integrity, care and synergy culture within the organization.

To invest in coal-related energy businesses which will sustainably strengthen our position.

To promote and contribute to the development of society by acting as a good citizen and contribute to the economy and society.

VISION MISSION

2 PT Indo Tambangraya Megah Tbk 2010 Annual Report 3PT Indo Tambangraya Megah Tbk 2010 Annual Report

CORPORATE VALUES

Our core values are manifested in the Banpu Spirit, which we aim to foster in such a way that we feel:

Innovation

Think out of the box, act intelligently, dare to initiate, courageous and challenging, pro-active, flexible and versatile, adaptive and resilient, continual development.

Care

Open and sincere, accepting and accommodating, honoring others, respectful, warm and solicitous, kind and generous.

Integrity

Honest, ethical, reliable, disciplined, persisted, committed, transparent.

Synergy

Cooperative, fair-minded, teamwork, networking, supportive and sharing, strive for win-win.

FINANCIAL SUMMARY

STATEMENTS OF INCOME [in thousand US Dollars, unless otherwise stated]

2010 2009 % 2008 2007 [restated]***

2006 [restated]*

Net Sales 1,668,192 1,508,359 11 1,316,981 771,817 732,317

Gross Profit 541,595 570,404 (5) 477,811 206,068 186,632

Operating Income 362,908 435,815 (17) 340,012 120,774 82,524

Net Income 204,151 335,551 (39) 234,925 55,785 23,241

Weighted Average Number of Ordinary Shares Outstanding [in thousands of shares]

1,129,925 1,129,925 - 1,129,925 533,840 202,162**

Basic Earnings per Share [full amount] 0.18 0.30 (40) 0.21 0.10 0.11

Current Assets 608,153 673,004 (10) 498,228 380,692 175,472

Non-Current Assets 481,553 525,567 (8) 480,837 394,937 365,586

Total Assets 1,089,706 1,198,571 (9) 979,065 775,629 541,058

Current Liabilities 331,527 340,267 (3) 325,905 238,986 209,587

Non-Current Liabilities 37,155 70,818 (48) 42,790 80,328 202,101

Total Liabilities 368,682 411,085 (10) 368,695 319,314 411,688

Minority Interests - - - - - 2,037

Total Equity 721,024 787,486 (8) 610,370 456,315 127,333

Total Liabilities and Equity 1,089,706 1,198,571 (9) 979,065 775,629 541,058

Net Working Capital 276,626 332,737 (17) 172,323 141,706 (34,115)

Capital Expenditure 55,621 78,831 (29) 98,502 60,463 43,988

Ratio of Profit to Total Assets 18.73% 28.00% (33) 23.99% 7.19% 4.30%

Ratio of Profit to Equity 28.31% 42.61% (34) 38.49% 12.23% 18.25%

Current Ratio 183.44% 197.79% (7) 152.88% 159.29% 83.72%

Ratio of Liabilities to Equity 51.13% 52.20% (2) 60.41% 69.98% 323.32%

Ratio of Liabilities to Total Assets 33.83% 34.30% (1) 37.66% 41.17% 76.09%

Gross Profit Margin 32.47% 37.82% (14) 36.28% 26.70% 25.49%

Net Profit Margin 12.24% 22.25% (45) 17.84% 7.23% 3.17%

* Restated to include PT Jorong Barutama Greston.

** Restated to reflect the split in the Company’s shares on a 2,000 to 1 basis effective 27 July 2007.

*** Restated to reflect the changes of accounting policy in respect of Statement of Financial Accounting Standards (SFAS) No. 16 - Fixed Assets (2007 revision) to record estimated costs for decommissioning, demobilisation and restoration of certain long-lived assets. The previous year’s Financial Statement presented above have not been restated for this change.


0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

55,000

Jan-10 Feb-10 Mar-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-100

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

Price [Rp] Volume

SALES BY COMPANY 2010

PT Indominco Mandiri: 14.5 million tons [65 %].

PT Trubaindo Coal Mining: 5.3 million tons [24 %].

PT Kitadin: 1.3 million tons [6 %].

PT Jorong Barutama Greston: 1.0 million tons [5 %].

TOTAL: 22.1 million tons.

SHARE PRICE AND OWNERSHIP

PERIODSHARE PRICE

HIGHEST [Rp] LOWEST [Rp] CLOSING [Rp]

Q1 38,950 28,950 38,050

Q2 40,300 30,200 37,150

Q3 41,600 37,100 41,600

Q4 55,000 41,400 50,750

2010 SHARE PERFORMANCE

2010 QUARTERLY SHARE PERFORMANCE

The total number of ITM shares listed on the Indonesia Stock Exchange (IDX) as of December 31, 2010 was 1,129,925,000 shares. Since the Initial Public Offering on the IDX on December 18, 2007, the Company has not conducted any stock splits or any stock bonus distributions.

Volume [mil l ion tons]

FINANCIAL SUMMARY

14.5 5.3 1.01.3


DIVIDEND PAYMENT HISTORY

COMPANY SHAREHOLDERS AS OF DECEMBER 31, 2010

NAME NUMBER OF SHARES OWNED % OWNERSHIP

Banpu Minerals (Singapore) Pte. Ltd. 734,452,000 65.0000

Somyot Ruchirawat [President Director] 40,000 0.0035

Ir. Lukmanul Hakim, MM [Commissioner] 9,500 0.0008

Rudijanto Boentoro [Commissioner] 5,000 0.0004

Public < 5% 395,418,500 34.9951

TOTAL 1,129,925,000 100.0000

YEAR PAYMENT DATE DESCRIPTION BOOK YEAR DIVIDEND / SHARE [IDR]

2008 May 23 Final Dividend 2007 155

2008 October 22 Interim 1 st Half 2008 344

2008 December 19 Interim Q3 2008 295

2009 May 28 Balance of Final Dividend 2008 706

2009 November 3 Interim 1 st Half 2009 678

2010 May 12 Balance of Final Dividend 2009 1,286

2010 October 15 Interim 1 st Half 2010 795

DIVIDENDS

The Company pays dividends twice a year in Rupiah. The rate of dividends shall be subject to cash flow and the investment plans of the Company and its subsidiaries as well as to regulatory restrictions and other requirements.

SHARE OWNERSHIP HISTORY

ITM was founded in 1987 as a private company. In 2001, it was acquired by the Banpu Group of Thailand and in 2007, ITM went public. At that time, Banpu through PT Centralink Wisesa International held 77.60% of shares, PT Sigma Buana Cemerlang held 2.4%, and the remaining was held by the public.

In 2008, PT Centralink Wisesa International’s shares were transferred to Banpu Minerals (Singapore) Pte.Ltd for 73.72%, and the public portion increased from 20% to 26.28%. In 2010, Banpu Minerals (Singapore) Pte. Ltd disposed 8.72% of its shares to the public, retaining majority ownership of 65.00% with the remainder held by the public and other individuals at less than 5% each.

ITM IN BRIEF

ITM is a leading Indonesian supplier of coal to the world’s energy markets. We aim to set the highest standards in the areas of GCG, as well as Quality, Environmental and Safety compliance. All of our activities are conducted in close collaboration with local communities and other stakeholders.

Since our establishment in 1987, ITM has become known as a premium coal producer and has built a diversified base of customers. In 2001, we were acquired by the Banpu Group of Thailand and at the end of 2007, we went public.

Today, ITM comprises integrated coal mining, coal processing and operational logistics in Indonesia. The Company holds majority ownership in five subsidiary companies, operating six concessions on the island of Borneo, in the Indonesian provinces of East, Central, and South Kalimantan. We also own and operate a coal terminal in Bontang, three barge loading facilities, and a power plant.

Of these five companies, PT Indominco Mandiri, PT Trubaindo Coal Mining and PT Jorong Barutama Greston and PT Kitadin (Embalut) are in the production stage, while PT Bharinto Ekatama and PT Kitadin (Tandung Mayang) are targeted to begin production in 2011.

Banpu Coal Investment Co., Ltd.

100%

Banpu Minerals Co. Ltd.

50%

65%

50%

35%

Banpu Public Company Ltd.

99.99%

PublicBanpu Minerals (Singapore) Pte. Ltd.

PT Indo Tambangraya Megah Tbk

PT Jorong Barutama Greston

99.67%

PT Indominco Mandiri

99.99%

PT Bharinto Ekatama

99.00%

PT Kitadin

99.99%

PT Trubaindo Coal Mining

99.99%

SHARE PRICE AND OWNERSHIP


SOUTH KALIMANTAN

CENTRAL KALIMANTAN

EAST KALIMANTAN

Mine

City

Project

Port

Anchorage/Coal Loading Point

Capital CityBANJARMASIN

BALIKPAPAN

JORONG

BHARINTO

TRUBAINDO

BUNYUTBARGELOADER EMBALUT

BARGELOADER

JORONGBARGELOADER

MUARA JAWA(ANCHORAGE)

BONTANG COAL TERMINAL (BoCT)

BALIKPAPAN COAL TERMINAL (BCT)

MUARA BERAU(ANCHORAGE)

KITADIN (EMBALUT)

KITADIN (TANDUNG MAYANG)

INDOMINCO

PALANGKARAYA

SAMARINDA

MAHAKAM RIVER

PT Indominco Mandiri is a 99.99% owned subsidiary which was established on November 11, 1988 and holds a Coal Contract of Work (CCoW) signed with the Government of Indonesia for an initial area of 100,000 hectares which was gradually relinquished to leave 25,121 hectares, in the Bontang, Kutai Kertanegara and East Kutai regencies of the province of East Kalimantan. This area is divided between 18,100 hectares in the West Block and 7,021 hectares in the East Block. Both blocks have entered the production phase and the CCoW is valid until October 5, 2030. The coal in these blocks has a value of 6,000 - 6,300 kcal/kg coal and was formed along the Balikpapan Late Miocene and Balang Island formations. The sub-bituminous coal has calorific value ranging from 6,000 to 6,500 kcal/kg and sulfur content of 0.8-1.6%.

PT Trubaindo Coal Mining is a 99.99% owned subsidiary which was established on March 13, 1990 and holds a CCoW signed by the Government of Indonesia for an initial area of 100,000 hectares which was gradually relinquished to 23,650 hectares in the districts of Muara Lawa, Bentian Besar, Muara Pahu and Damai of the regency of West Kutai in the province of East Kalimantan. The coal exploitable by this 30-year contract, which was valid from the start of production on February 28, 2005 until February 27, 2035, was formed in the Pamaluan and Kutai Basin formations, and has calorific value ranging from 6,500 to 7,300 kcal/kg and sulfur content of 0.8-1.4%.

PT Jorong Barutama Greston is a 99.67% subsidiary which was established on May 10, 1991 and holds a CCoW from the Government of Indonesia for an initial area of 100,000 hectares which was gradually relinquished to 11,478 hectares, located 100 kilometers south of Banjarmasin, the provincial capital of South Kalimantan. The coal in this area, which began production on December 10, 1999 with a CCoW valid until December 9, 2029), has a calorific value of 5,300 – 5,800 kcal/kg and sulfur content of 0.3%, and lies in the Warakin formation.

PT Kitadin is a 99.99% owned subsidiary which was established on January 25, 1978 and holds two coal Mining Rights (KP) for Embalut valid from February 25, 2009 – February 25, 2013; and for Tandung Mayang valid from May 28, 2008 – May 28, 2018.

PT Kitadin (Embalut) covers 2,973 hectares in Embalut village, Kutai Kartanegara regency, East Kalimantan. The coal is sub-bituminous with a calorific value of 5,850 kcal/kg and sulfur content of 0.2%.

PT Kitadin (Tandung Mayang) has a concession area of 2,338 hectares and is located in Tandung Mayang, in the regency of East Kutai, East Kalimantan. The coal has a calorific value of 6,700 kcal/kg and sulfur content of 1.5%. It also operates as a mining contractor, specifically for the PT Indominco Mandiri concession.

PT Bharinto Ekatama is a 99.00% owned subsidiary which was established on January 9, 1996 and holds a CCoW signed with the Government of Indonesia on November 20, 1997 for 93,100 hectares initially, which was relinquished gradually to leave 22,000 hectares in the regencies of West Kutai and North Barito in the provinces of East and Central Kalimantan. Authorization to begin construction of the required mining infrastructure was given in mid-2007. It is presently still in the production stage. Its sub-bituminous coal has a calorific value of 6,400 – 6,800 kcal/kg and sulfur content of 0.8%. Production is planned for 2011.

MAP OF OPERATIONS

ITM IN BRIEF

PT Kitadin (Tandung Mayang)Preparation for Mining in 2011

PT Indominco Mandiri• MiningArea

(West and East Block)

• CrushingPlantI,II,III

• WashingPlant

Bontang Coal Terminal (BoCT)• BontangCoalLaboratory(BCL)

• PowerPlant

• ContinuousBargeUnloader(CBU)

• OnshoreandOffshoreConveyorinto Shiploader

PT Trubaindo Coal Mining• MiningArea

(North and South Block)

• CrushingPlantand Mobile Crushing Plant

• WashingPlant

PT Bharinto Ekatama• PreparationforMiningin2011

• CrushingPlant

PT Jorong Barutama Greston• MiningArea

(East and Central Block)

• CrushingPlant


RESOURCES AND RESERVES

As of December 31, 2010 As of December 31, 2009

MINE OPERATION / PROJECT TOTAL RESOURCES

TOTAL RESERVES

TOTAL RESOURCES

TOTAL RESERVES

PT Jorong Barutama Greston 145.4 7.2 146.6 8.2

PT Indominco Mandiri 697.2 149.6 743.1 135.5

West Block 251.2 35.2 248.0 25.5

East Block 446.0 114.4 445.7 98.2

Underground - - 49.4 11.8

PT Kitadin (Embalut) 151.7 15.2 153.2 16.5

PT Kitadin (Tandung Mayang) 12.9 9.7 12.9 9.7

PT Trubaindo Coal Mining 334.7 108.5 296.5 78.3

PT Bharinto Ekatama 298.0 45.4 298 46.3

TOTAL 1,639.9 335.6 1,650.3 294.3

AWARDS 2010

QUALITY, OCCUPATIONAL HEALTH AND SAFETY

ISO 9001:2008 from SGS[PT Indominco Mandiri]

ISO 9001:2008 from SGS[PT Kitadin (Tandung Mayang)]

TPM3 Certification Level 2 from CTPM Australasia[PT Indominco Mandiri]

ISO 14001:2004 from SGS[PT Indominco Mandiri]

Silver Medal at the Indonesia Quality Convention 2010-PPMI[PT Kitadin (Tandung Mayang)]

Gold and Silver at the Indonesia Quality Convention 2010-PPMI[PT Indominco Mandiri]

Marketable total proven and probable coal reserves (100% equity basis) has increased from 294.3mt as of December 31, 2009 to 335.6mt as of December 31, 2010, a rise of 41.3mt. This change in marketable total coal reserves was caused by:

1. A decrease in Reserves because of coal sales in 2010 (-22.1mt).

2. Additional exploration activity and revised coal price parameters at Indominco (+40.4mt) and Trubaindo (+35.6mt).

3. The termination of underground mining at Indominco (-11.8mt).

OHSAS 18001:2007 from SGS[PT Indominco Mandiri]

TPM3 Certification Level 3 from CTPM Australasia[PT Kitadin (Tandung Mayang)]

Gold Medal at the International Conference Quality Control Circle 2010 at Hyderabad, India[PT Indominco Mandiri]

ISO 9001:2008 from SGS[PT Jorong Barutama Greston]


Regional PROPERDA Blue Certificate from East Kalimantan Province for environmental compliance[PT Kitadin (Embalut)]

National PROPERNAS Blue Level for environmental compliance[PT Kitadin (Embalut)]

Pratama (Bronze) Award for Environmental Management from the Directorate General of Technical, Mineral and Coal[PT Kitadin (Embalut)]

AWARDS 2010

ENVIRONMENTAL

Regional PROPERDA Green Certificate from East Kalimantan Province for exceeding environmental compliance requirements[PT Indominco Mandiri]

National PROPERNAS Blue Level for environmental compliance[PT Indominco Mandiri]

Aditama (Golden) Award for Environmental Management from the Directorate General of Technical, Mineral and Coal[PT Indominco Mandiri]

Regional PROPERDA Green Certificate from East Kalimantan for exceeding environmental compliance requirements[PT Kitadin (Tandung Mayang)]

Pratama (Bronze) Award for Environmental Management from the Directorate General of Technical, Mineral and Coal[PT Jorong Barutama Greston]

Pratama (Bronze) Award for Environmental Management from the Directorate General of Mining and Coal[PT Kitadin (Tandung Mayang)]

National PROPERNAS Blue Level for environmental compliance[PT Jorong Barutama Greston]

Utama (Silver) Award for Environmental Management from the Directorate General of Technical, Mineral and Coal[PT Trubaindo Coal Mining]

Regional PROPERDA Blue Certificate from East Kalimantan Province for environmental compliance[PT Trubaindo Coal Mining]

National PROPERNAS Blue Level Certificate for environmental compliance[PT Trubaindo Coal Mining]


SIGNIFICANT EVENTS 2010

Payment of 2009 Balance of Final Dividend amounting to Rp1,286 per share.

MAY

ITM won Investor Awards as the “Top Performing Listed Companies 2010 for the Basic and Primary Industry sector”.

The Bontang Coal Terminal Expansion Project was completed in this month.

MARCH

Annual General Meeting of Shareholders held at Dharmawangsa Hotel, Jakarta.

JUNE

The Bontang Power Plant began operations.

PT Kitadin (Tandung Mayang) received TPM Level 3 Certification from CTPM Australia.

SEPTEMBER

ITM received National Solidarity Awards including a Platinum Trophy for PT Jorong Barutama Greston Mine Head Pongsak Dejmark for his contribution to developing the community.

PT Indominco Mandiri, PT Jorong Barutama Greston and PT Trubaindo Coal Mining, PT Kitadin (Embalut) and PT Kitadin (Tandung Mayang) all received Environmental Management Rewards from the Ministry of Energy and Mineral Resources.

OCTOBER

Payment of Interim Dividend for 1st half of 2010 amounting to Rp795 per share.

ITM received two GKPM awards from the Coordinating Ministry of Social Welfare in collaboration with Corporate Forum for Community Development, for our work empowering communities.

PT Indominco Mandiri won a Gold Award at the International Convention on Quality Control Circles in Hyderabad, India.


NOVEMBER

PT Indominco Mandiri achieved Total Productive Maintenance (TPM) Level 2 Certification from CTPM Australia.

The second ITM Innovation Convention was held in Balikpapan.

The 10 th Technical Meeting was held in Surabaya.

DECEMBER

PT Indominco Mandiri, PT Jorong Barutama Greston, PT Kitadin (Embalut) and PT Trubaindo Coal Mining achieved PROPERNAS Blue Level for environmental compliance from the Ministry of Environment.

Board of Commissioners

President DirectorAudit Committee

Internal Audit

Finance Corporate Services Corporate Secretary

Business DevelopmentInformation

TechnologyHuman

Resources

Accounting

Treasury

Tax

Financial System & Procedure

Corporate Finance & Investor Relations

QSE Promotion Center

Business Process Management

ITM Representative Office (Balikpapan)

General Services

Legal

Corporate Affairs OperationsSales & Logistics ITM Projects

Operations SupportNorth Asia, EuropeExternal Relations

Corporate Communications

& Community Development

Commercial Strategy

China, Hong Kong

Coal Quality Management

South Asia, Domestic and Compliance

Marine Operations

Coal Utilization

Coal Indonesia TDS

Contract Management

Government Relation

Infrastructure & Security

Human Resources Management

Financial Accounting

Financial Operations

Environment Management System

Procurement

Legal Counsel

General Affairs

Community Development

Land Compensation

Application & Services

Human Resources Development

Management Accounting

Financial Management

Safety Management System

Human Resources Compliance

Quality Management System

Project Procurement

Asset Management

Corporate Communications

Medium Term Support

Planning & Technical Management

Performance Management



PT Kitadin (Tandung Mayang)

PT Kitadin (Embalut)


PT Bharinto Ekatama

Secretary

SIGNIFICANT EVENTS 2010ORGANIZATIONAL STRUCTURE OF ITM


BUSINESS REVIEW

22 REPORT OF PRESIDENT COMMISSIONER

25 REPORT OF PRESIDENT DIRECTOR

28 CORPORATE STRATEGY

29 SALES AND MARKETING

31 OPERATIONAL REVIEW

32 Mining Operations

35 Contractor Management System

36 Coal Quality Management

37 Business Continuity Management

38 QUALITY, SAFETY AND ENVIRONMENTAL

42 ENERGY MANAGEMENT

43 HUMAN RESOURCES

47 INFORMATION TECHNOLOGY

48 COMMUNICATIONS


» “The initiatives taken in 2010 increased the Company’s competitiveness and delivered a solid platform for future growth,

while ensuring stakeholder value for our employees, surrounding communities, governments, suppliers and customers”

Ibrahim Yusuf President and Independent Commissioner

REPORT FROM THE PRESIDENT COMMISSIONER

In the past three years, ITM has worked to establish a strong platform for growth, via both organic expansion and acquisitions. ITM exited the past year stronger and more resilient after making significant investments and improvements in its infrastructure, operations and knowledge base. The expansion at the Bontang Coal Terminal has been completed, increasing our capacity as well as reducing dependence on third parties. Production at the PT Bharinto Ekatama and the PT Kitadin (Tandung Mayang) mines are starting in 2011. As securing coal resources becomes increasingly competitive, ITM is actively looking for the best opportunities to grow in a sustainable way.

Higher productivity, focused customer service and innovation were the key goals in 2010. ITM did better on all these measures through process improvements, yielding long-term value for the company. Only a year after establishing the KOMPAK program of small focus groups for idea sharing, one of our employee focus groups was recognized for its innovative ideas at the prestigious Gold Award at the International Convention on Quality Control Circles in Hyderabad, India.

As part of the development of our human resources, training workshops and a dialogue of corporate values and governance principles were carried out in 2010. Focusing on mutual benefit and achieving a common goal, constructive feedback aimed at improving the performance of employees and suppliers was provided. This past year, ITM also stressed the importance of cultivating and developing constructive relationships with labor unions and other important counter parties.

Dear Shareholders and Stakeholders,

Entering the fourth year as a public company, ITM continues to deliver both strength in performance and flexibility at a time of global economic uncertainty. In 2010, the global economic recovery, high growth in Asia and higher coal prices contributed to another successful year for ITM. But the results also came from within as ITM focused on strengthening the organization, continuously pushing for best practices and operational excellence, as well as emphasizing good corporate citizenship.

Lessons of mismanagement such as the Euro crisis and the BP oil spill in 2010 highlight the importance of transparency, independence, accountability and responsibility. By following and communicating these principles, ITM has been able to harness the support of shareholders, employees, suppliers, customers and the community as it moves to compete on the global market.

ITM is committed to good governance, risk management and compliance. Already in their third year, the Good Corporate Governance, Nomination and Compensation Committee (GCGNCC), the Audit Committee, and the Risk Management Committee continued to support the Board of Commissioners within these areas. ITM engaged independent third parties to assist with internal benchmarking and evaluation where appropriate. In our continuing efforts for regulatory compliance, a Compliance Committee was created in 2010 to assist the Operations Department in monitoring regulation changes and mitigating risks. It should be noted that ITM’s business conduct was already deemed to be compliant, and that the establishment of this Committee is a manifestation of our commitment.


A vision for the future is essential to how we conduct business that has an impact on the surrounding community and the environment. ITM puts great importance on extensive environmental protection and restoration planning, a process that begins long before production and extends for three years after mine closure. Striving beyond regulatory government compliance, ITM took its environmental best practices a step further in 2010. A biodiversity study was conducted at the PT Bharinto Ekatama mine area. Three of ITM’s five operating mines were ISO-certified, with the remaining working towards certification. Even as ITM’s productivity levels increased, all five operating mines won National PROPER awards, signifying compliance with environmental requirements. Two mines earned green-level certification at the Provincial PROPERDA awards for exceeding environmental compliance requirements. In addition, all operating ITM mines won Environmental Management Awards from the Directorate of Technical, Mineral and Coal.

In helping to build economic independence of the communities around our mine sites after our operations eventually leave the area, ITM’s Community Development programs provided training to small-scale local enterprises. Long-term programs were developed in a participatory process, where the community members consulted with ITM and the local government to ensure that the program truly suits community needs and the local terrain. These programs cover socio-economic, cultural and health aspects, ranging from the provision of clean water supply to building a school and giving scholarships, to training for agricultural practices, business management and micro-credit enterprise. Details on Community Development progress are set out in the ‘CSR and Community Development’ section of this report.

REPORT FROM THE PRESIDENT COMMISSIONER REPORT FROM THE PRESIDENT DIRECTOR

» “The global economic recovery, high growth in Asia and higher coal prices contributed to another successful year for ITM.”

Somyot Ruchirawat President Director

Already in its third year, the CSR program ‘ITM for Education’ focused on the promotion of reading among underprivileged children, training volunteers, and improving the quality of teaching. The program reached more beneficiaries than ever in 2010, and expanded its coverage area to Jakarta, Jorong, Samarinda and Bontang.

The initiatives taken in 2010 increased the Company’s competitiveness and delivered a solid platform for future growth, while ensuring stakeholder value for our employees, surrounding communities, governments, suppliers and customers. Ultimately, shareholders and stakeholders’ needs will be best served by the prompt delivery of quality product to our customers, the safe extraction and processing of coal, and the conscientious rehabilitation of the mining sites.

On behalf of the Board of Commissioners, I would like to commend the Board of Directors and all employees for their hard work over the year, and to thank shareholders and other stakeholders for their continued support.

Ibrahim Yusuf President and Independent Commissioner


In 2010 ITM was able to meet sales and revenue targets despite having to revise production growth targets downwards due to the effect of weather conditions on our production. Thanks to higher coal prices, revenues were up 11% over the previous year and ITM’s share price climbed 60% to Rp 50,750 by the end of 2010.

Our 2010 corporate strategy concentrated on three pillars: growth, cost management, and best practices. Together, these initiatives were designed to make ITM into a more efficient, innovative and responsible company. The ultimate objective is to position ITM for greater competitiveness down the road.

FINANCIAL PERFORMANCE IN 2010

ITM recorded total revenues of US$1,668 million in 2010, a 11% year-on-year growth from US$1,508 million in the preceding year. This increase was driven by a 2.8% rise in coal production from 21.4mt in 2009 to 22.0mt in 2010, and by higher coal sales prices, particularly in the second half of 2010.

However, Net Profit after Tax decreased by 39% to US$204 million from US$336 million in 2009. EBITDA and Earnings Per Share also decreased from US$493 million and US$0.30 cents to US$416 million and US$0.18 cents respectively over 2010. This was largely due to higher fuel and demurrage costs, as well as a write-off of deferred exploration and development expenditures at PT Indominco Mandiri.

Despite the capital expenditure on the Bontang Port Power Plant and elsewhere, ITM finished the year debt-free, and was able to maintain the high dividend payout of previous years thanks to prudent management and strong cashflow.

COAL SALES IN 2010

The Newcastle Export Index for spot thermal coal price for high grade coal from Australia to Japan (known as the ‘NEX’ or previously called the ‘BJI’) rose to its highest levels since October 2008, driven by low temperatures in Europe, the global recovery, and rising demand from China. The NEX climbed to over US$120 per ton by the end of December 31, 2010, up around 50% from US$83.25 at year end 2009.

ITM continues to benefit from a strong marketing team and the ability to custom-blend coals to customer specifications. The sales volume of coal to North-East Asia represented over half of all sales in 2010 (69%), comprising 5.1mt to China, 4.7mt to Japan, 2.5mt to Taiwan, 1.8mt to Korea and 1.2mt to Hong Kong. Coal sales to South-East Asia accounted for 14% of total sales including 1.5mt to Thailand, 1.1mt to the Philippines, and 0.5mt to Indonesia. The remainder was sold to customers in India (0.9mt), Italy (1.8mt), and small non-regular purchasers (1.1mt).

OPERATIONAL PERFORMANCE

Inspite of better mining planning procedures and increased output from PT Indominco Mandiri, total production fell short of the revised 23 Mt target for the year by about 0.5 Mt, due mainly to abnormally wet weather and the unexpected government permit delays for the new PT Bharinto Ekatama mine is planned to start in 2011.

The total output of PT Indominco Mandiri was 14.3mt, up from 12.4mt in 2009 and PT Trubaindo Coal Mining generated 5.5mt, up from 5.2mt in 2009. PT Jorong Barutama Greston produced 0.9 mt compared with 3.1mt the previous year due to a temporary forestry permit problem, and PT Kitadin (Embalut) produced 1.2mt compared with 0.7mt from the year before. Production at the PT Bharinto Ekatama and PT Kitadin (Tandung Mayang) sites will commence in 2011.

The Bontang Coal Terminal Expansion Project was completed in the first quarter of 2010, providing ITM with additional ship-loading and barge loading/unloading capacity. This project is expected to reduce logistic costs and enhance our blending capabilities, reducing our dependency on third-party ports. We further completed the Bontang Power Plant as scheduled, which will decrease our exposure to fuel price increase and improve our self-sufficiency as part of our drive to reduce cost and business risks.

Environmental and safety considerations continued to be top priorities. In 2010, we emphasized proper safety procedures on mine sites for small and medium contractors. We also established an Energy Committee with the goal of reducing our long term energy usage, which will decrease our impact on the environment and boost productivity.

GOVERNANCE, CORPORATE CITIZENSHIP AND STAKEHOLDERS

ITM recognizes the importance of regulatory compliance and stakeholder engagement as an integral part of risk management and business success. To further assist the Operations Department in monitoring changes in government regulations, a Compliance Committee was established with the help of outside consultants and the support of our majority shareholder. Company-wide, the Code of Conduct implemented in the previous year was incorporated in day-to-day messages.

In order to monitor our Community Development progress more effectively, we developed the Community Development Management Information System, an online database to monitor the progress of the Community Development programs at various sites. This, together with the Community Development Success Parameters, gives us a framework from which to monitor and assess our programs. All of our Community Development programs are conducted through a participative process that brings local communities, local government, and ITM together to improve the health and socio-economic welfare in a sustainable way.

We also expanded our ‘ITM for Education’ CSR program, which is now in its third year. We reached out to nine thousand children in Jakarta and Kalimantan, and trained hundreds of volunteers and teachers to improve their teaching capabilities for long term results. Our practices of empowering communities were recognized by a number of awards, such as the Platinum Awards from the Coordinating Ministry for People’s Welfare and the Corporate Forum for Community Development.

CONCLUDING REMARKS

Supported by a solid balance sheet and the improvements we made in 2010, we enter 2011 in a position of strength and readiness to seize new growth opportunities. Demand for coal is forecast to be strong in 2011, though it is likely to be offset by rising fuel prices, and thus higher production costs. Wet weather continues to be a potential hazard, but one that can be mitigated through appropriate water management policies and initiatives.

Just three years after going public, the measures taken in 2010 have given us a platform to move towards becoming a world class company in every way. This would not be possible without the hard work and unity of our employees and management. Finally, on behalf of the Board of Directors, I would like to thank the shareholders and stakeholders for their continued support and encouragement as we strive to advance in a sustainable and responsible manner.

Somyot Ruchirawat President Director

REPORT FROM THE PRESIDENT DIRECTOR


CORPORATE STRATEGY SALES AND MARKETING

Facing increasing competition, we moved to strengthen our market position in 2010 through advances in Growth, Cost Management, and Best Practices.

In terms of the first pillar, Growth, we looked into improving our production through organic growth and acquisitions. In terms of the organic expansion, we began production in the PT Indominco Mandiri East Block in 2009 and will ramp it up further. Our PT Kitadin (Tandung Mayang) and PT Bharinto Ekatama site also planned to start production in 2011. The completion of the BoCT expansion during the year also improved our ship-loading capacity to 18.5mt per annum, supporting future production growth and preventing shipping bottlenecks. The Business Development unit, which ramped up its capabilities this year, continued to proactively search for potential acquisitions and other opportunities. Thanks to our strong balance sheet and good internal teamwork, we are in a good position to capitalize on any such opportunities.

In terms of the second pillar, Cost Management, we improved the efficiency of our processes, reducing costs through logistics expansion and economics of scale. A review was conducted using outside consultants to study how to make our Information Technology, Human Resources (HR) and General Services functions more efficient.

We completed the expansion of the BoCT at a cost of $101 million. This major infrastructure upgrade and initiative will improve loading/unloading capacity to ships and barges, and thus, will improve efficiency and reduce costs, generating improved profit margins. The completion of a 2x7 MW captive coal power plant has decreased our exposure to rising fuel prices and third party supplier risk was also completed in 2010 at a cost of US$36 million.

With regards to the third pillar of our strategy, we strove to achieve Best Practices in all aspects of our business and operations, in keeping with our goal of becoming a world-class company.

Coal prices trended higher in 2010, after dropping in 2009. The gradual recovery of the world economy stoked demand while on the supply side, disruptions from bad weather including severe flooding in Australia reduced production globally. In total, we proactively sold 22.1mt to make net sales of US$1,668 million, an 11% improvement over the 21.0mt sold at US$1,508 million in 2009. All of our coal was sold under contract, part of it at index-linked prices which benefited us as prices rose in Q3 and Q4.

Our major achievements in 2010 were capitalizing on the fast-growing China market, and improving our already premium image in customer eyes. We also maintained our already strong customer base. As a large producer, we were in a favorable position to capitalize on demand for such coal. In addition, we correctly judged the market trend of rising prices and proactively structured contract sales prices to capitalize on this opportunity.

Chinese purchases nearly doubled to 22.9% of our total production, up from 14.7% in 2009. This put China at the top of our customer list, neck and neck with Japan, which has traditionally been our biggest customer. Solid teamwork from our marketing team, and our ability to produce and custom-blend the right product for this market were the key factors in our successful expansion into the China market.

We measure success not just by profit, but also by how sustainable we are and whether we are a good corporate citizen. It is our strong belief that companies that do well on all these aspects become stronger and more consistently profitable over time, thus delivering real value.

We are already compliant with environmental and other requirements but in 2010, we pushed to strengthen our compliance procedures yet further beyond what is required. We continued to engage in environmental mine reclamation efforts, participatory Community Development at our mine sites, and education efforts. Several international and national awards for innovation, environmental management (such as the PROPERNAS award for performance improvement programs by the Ministry of the Environment), and community development programs were given to us in recognition of our achievements. Finally, a new Business Process Management department was created to support our adoption of best business practices.

The successful progress we made on this three-part strategy was ultimately due to the dedication and skill of our dedicated employees, working under the guidance of management. We were also assisted by the encouragement of our parent company Banpu, goodwill from local governments and communities, customer feedback as well as our shareholder support—intangible but invaluable assets.

Ultimately, our high quality product, reliability and fair business ethics have translated into higher product prices and value for our stakeholders. We continue to push best practices implementation in parallel with our top and bottom line growth, as we strive to become more competitive in every way.

SALES [mt] PERCENTAGE OF SALES

COUNTRY 2010 2009 2008 2010 2009 2008

East Asia

China 5.1 3.1 1.6 22.9% 14.7% 9.1%

Japan 4.7 4.2 4.1 21.0% 19.8% 23.4%

Taiwan 2.5 2.6 1.7 11.2% 12.2% 9.8%

South Korea 1.8 0.6 2.4 8.2% 2.8% 13.3%

Hong Kong 1.2 0.9 0.0 5.5% 4.4% 0.0%

South-East Asia

Thailand 1.5 2.0 2.1 7.0% 9.6% 11.6%

Philippines 1.1 1.8 1.6 5.0% 8.6% 9.1%

Indonesia 0.5 1.4 1.4 2.2% 6.4% 7.8%

South Asia India 0.9 2.2 0.1 4.1% 10.3% 0.4%

EuropeItaly 1.8 1.4 1.4 7.9% 6.6% 7.6%

Others * 1.1 1.0 1.4 5.0% 4.6% 7.9%

TOTAL 22.1 21.0 17.7 100.0% 100.0% 100.0%

COAL SALES BY GEOGRAPHIC DISTRIBUTION

* Includes small, non-regular purchasers.


Measures were taken to maintain and improve our track record of customer satisfaction in 2010. We continued to execute our Customer Relationship Management (CRM) in more depth, exploring how we can increase our strategic value to each customer. This CRM program, which is executed under the Sales Department, keeps tabs on and integrates the results of in-depth research into the strategic value of each customer, shifts in their procurement policy/preferences, logistics requirements and other important indicators. This research is gathered through a series of activities including customer visits and an interview by a special team of non-sales marketing executives to prevent bias, plus an in-depth customer satisfaction questionnaire. The results of this research are fed back to the sales team and ITM management for further improvement and maintenance of the customer relationship. This closely measured and monitored system allows us to understand what is most important to customers, and what we can improve on, thus allowing us to manage customer expectations for higher satisfaction, and differentiates us from competitors. Thus far customer feedback has been very good.

As part of our drive to improve customer service, our customers were segmented and analyzed based on their needs, structure and requirements. This system of customer handling has enabled us to give better service to our customers, reinforcing their loyalty and keeping their business with us.

Communication channels were constantly reinforced between the marketing, operations and logistics departments to enable the sales and marketing team to react faster, match products to the customers, and plan ahead better.

Going forward, our strategy is to maintain market share in our existing customer base while increasing sales volume to fast-growing markets. We will continue to focus on supplying the Asian market, including meeting our obligations to the Indonesian market under the Domestic Market Obligation (DMO) requirement from the government. The modeling tools we have developed in previous years, together with our extensive global databases, support us to seek best prices while taking into consideration spot price fluctuations and our long term production capacity.

SALES AND MARKETING OPERATIONAL REVIEW

» “Compared with 2009, our total production in 2010 grew by 0.6mt or 2.8%, from 21.4mt to 22.0mt

despite the challenges we faced.”


Mining Operations

OPERATIONS

We presently own six concession areas: four in East Kalimantan province, one located in both East Kalimantan and Central Kalimantan province, and one in South Kalimantan province. Of these six sites, four are currently in production, namely PT Indominco Mandiri, PT Trubaindo Coal Mining, PTJorong Batubara Greston and PT Kitadin (Embalut), with PT Bharinto Ekatama commencing production and PT Kitadin (Tandung Mayang) restarting production in 2011.

Compared with 2009, our total production in 2010 grew by 0.6mt or 2.8% from 21.4mt to 22.0mt, slightly short of the 23.0mt target, primarily due to abnormally wet weather, the suspension of our PT Jorong Barutama Greston’s operations in Q1 and the delay in PT Bharinto Ekatama becoming operational. Increased output from PT Indominco Mandiri, as well as more efficient methods of working at all sites including water management systems to counter the wet weather, were able to make up for most of the shortfall. PT Indominco Mandiri contributed 14.3mt or 65.0%, PT Trubaindo Coal Mining 5.6mt or 25.5%, PT Kitadin (Embalut) 1.2mt or 5.5%, and PT Jorong Batubara Greston 0.9mt or 4.0% of ITM’s total 2010 production.

The El Nino phenomenon caused rainfall to extend beyond the normal six-month rainy season to ten months. These weather conditions are forecasted to continue in 2011. However in 2010, we learned to handle these conditions through building more inventory stock, better water drainage, reducing the water catchment area, as well as improving pumping performance. The result was to minimize the impact of the weather.

Most of our major capital expenditure for the Fiscal Year of 2010 was mainly used for the completion of BoCT expansion and the Bontang power plant, infrastructure development at the PT Indominco Mandiri East Block and the feasibility study of underground mining in PT Indominco Mandiri, the adding of heavy equipment for PT Kitadin (Tandung Mayang), and the infrastructure development of PT Trubaindo Coal Mining and PT Bharinto Ekatama.

As of December 31, 2010, it is estimated that our total coal resources (proven and probable) stand at 1,639.9mt, while our total reserves stand at 335.6mt based on internal surveys.

To ensure future business continuity, we are taking proactive measures to grow organically and inorganically through acquisitions. In 2010, our Business Development team solidified our database of valuation factors and analysis. Leveraging our industry network and our professional expertise to proceed cautiously but aggressively, we intend to look for opportunities that are a good fit for us.

COMPLIANCE COMMITTEE

A Compliance Committee was established during the year to assist operational business units with compliance. It draws from the functions of External Relations, Legal, Operation and QSE (Quality, Safety and Environment). The Compliance Committee acts as a consultant, facilitator and resource to the Mine Head. The function of the Compliance Committee is to enhance compliance through the following activities:

A checklist of all required operational permits was made.

An action plan based on the checklist.

Improving the awareness of operational staff.

These steps were implemented in 2010 and will be continued in 2011 as needed. It should be stressed that we are already in compliance, and that the establishment of this Committee is a manifestation of our commitment.

MINING REPORTS

1. PT INDOMINCO MANDIRI

PT Indominco Mandiri’s concession area of 25,121 hectares produced 65% percent of total company output in 2010. Total production for 2010 stood at 14.3mt, up from 12.4mt in 2009.

The concession area is divided into the West Block and the East Block, and has 15 pits in operation.

The BoCT expansion at PT Indominco Mandiri was successfully completed, increasing ship loader capacity from 12.5mt to 18.5mt per annum, as well as a barge loader with capacity of 2mt per annum. The barge loader was developed in order to utilize ship loader idle time to improve productivity. The CBU (Continuous Barge Unloading) system and a surge bin were also completed, which together enabled direct loading from barge to vessels instead of going through our stockpile, thus improving loading flexibility at our terminal.

This increase in our loading and unloading capacity means that we can blend the majority of our coal for added value, as well as reducing reliance on third party logistics providers.

The 2x7MW Bontang Coal-Fired Power Plant was also completed in 2010. This will help reduce our dependence on outside energy sources whose costs are considerable, promoting scheduled and profitable growth. The power plant will supply electricity needs for the BoCT operation, followed by the East Block. The power plant is currently under development to supply power to the West Block.

West Block

The West Block commenced operations in 1995. It produced 10.1mt in 2010 through open pit mining. A feasibility study on extracting deep reserves through underground mining methods was terminated in Q4 2010, as calculations showed that open pit mining is more economic given the current high price of coal and geologically safer.

East Block

The East Block commenced operations in 2009 and in 2010 produced 4.2mt, also through open pit mining methods. Infrastructure development in 2010 included a crushing plant, the development of a stockyard and loading bin, and of supporting facilities e.g. offices and workshops at the East Block. A feasibility study was also made of In-Pit Crushing and Conveying (IPCC) methods to optimize East Block reserves.


2. PT TRUBAINDO COAL MINING

PT Trubaindo Coal Mining’s concession area of 23,650 hectares comprises the North Block and newly opened South Block. The coal is trucked from our mine stockyard 38 kilometers to our port stockyard close to the Bunyut Barge Loader, and then barged to the BoCT, Balikpapan Coal Terminal (BCT), or directly to buyers. Production in 2010 was 5.6mt, up from 5.2mt in 2009.

Production was impacted due to heavy rainfall starting in the third quarter. In order to to increase coal recovery, a coal washing plant was constructed. In addition, a road and bridge was built to support coal transportation from PT Trubaindo Coal Mining which will also be used by PT Bharinto Ekatama.

Production was impacted due to heavy rainfall starting in the third quarter, In order to decrease waste, a coal washing plant was constructed. In addition, a road and bridge was built to support coal transportation from PT Trubaindo Coal Mining which will also be used by PT Bharinto Ekatama.

3. PT JORONG BARUTAMA GRESTON

PT Jorong Barutama Greston’s concession area covers 11,478 hectares. The coal it produces is trucked 20 kilometers to the ROM stockyard to be crushed, before it is brought to the port stockyard, and then to the Jorong barge loader.

Production was 0.9mt in 2010, lower than originally planned, due to permit issues and severe weather conditions. The permit issues were successfully resolved and we anticipate improved production in 2011, aided by measures to counteract wet weather.

4. PT KITADIN

PT Kitadin (Embalut)’s concession area spans 2,973 hectares. Production in 2010 reached 1.2mt, lower than planned production of 1.6mt but higher than 2009 production of 0.7mt. This was caused by high rainfall and the presence of mud in our working area that negatively impacted our production.

PT Kitadin (Tandung Mayang)’s concession area of 2,338 hectares will go into production in the 2011. PT Kitadin (Tandung Mayang) also serves as the mining contractor for roughly 25% of PT Indominco Mandiri’s total coal production.

5. PT BHARINTO EKATAMA

PT Bharinto Ekatama’s concession area of 22,000 hectares is located adjacent to the PT Trubaindo Coal Mining. The mine was planned to go operational at the end of 2010 but was delayed due an unexpected delay in acquiring government permits. It will now begin production in 2011. PT Bharinto Ekatama is presently in the construction phase, and a crushing plant construction. The plan is that the coal will first be trucked to the stockyard close to the Bunyut Barge Loader at PT Trubaindo Coal Mining, then transported by barge to the BoCT or other destinations.

Contractor Management System

Contractors play a major part in determining our success and productivity. At all five mining sites, over 80 percent of direct mining activity was done through contractors. As such, ITM views our Contractors as partners in our business. Contractors are mostly hired for three-year contract periods, giving them sufficient time to earn back their investment in ITM. This will also allow them to familiarize themselves with ITM’s procedures and systems, and encourage them to put in their best performance.

In the spirit of sustainability and local development, we make it a priority to hire small/medium Contractors where feasible despite the fact they usually require more technical assistance than large Contractors. We work with Contractors in a participative manner to improve their knowledge and abilities. This supports transfer of knowledge, local empowerment, and job creation. At the same time, we do our best to match the Contractor scale (small/medium vs. big) to match each site’s requirements, for maximum effectiveness.

The performance of the numerous Contractors working on our mine sites is tracked using CMS. CMS is a risk-based system, deployed throughout all ITM site operations, that seeks to manage mining Contractors in a consistent manner. It assists the realization of business goals, including commercial, technical, quality and environmental, health and safety goals.

The system was developed based on mining contractor management benchmarking studies from selected leading mining companies, both from overseas and from Indonesia. The system was then tailored to ITM’s needs by adopting and integrating the best management practices from the

benchmarking study with our own in-house mining contract management practices. This integration was carried out through a systems streamlining process that was attended by all of our in-house mining experts and all site management teams.

The principle objective of CMS is to enhance the company’s mining contract management practices with the goal of optimizing outcomes for the Company and Contractors. It begins with good budgeting and mine planning, risk assessment and mitigation, clear scope of work, and stringent Contractor selection. It is followed by continuous monitoring of, and support to, our Contractors throughout the Contractor’s contract period, up to the end/termination of the contract.

The CMS System scores Contractors on ten elements that are related to compliance with regulations and operational control. Uniform implementation of the CMS system creates a standard framework by which to measure Contractors’ performance. The CMS system also allowed us to select the Contractors with the best performance in 2010, based on their safety and quality record overall.

A yearly Executive Mine Contractor Meeting is held where the Contractor Owners, Project Managers and/or Directors are invited in to chat, share knowledge and best practices, and encourage communication. This year’s meeting was held in Surabaya, at which contractors’ 2010 performance was reviewed. Finally in 2010, the Contractor Environment, Health and Safety (EHS) Management system was folded into the CMS Corporate Program as an additional benchmark, reflecting our continued evolution towards best practices.

Mining Operations


Coal Quality Management

In the long-term, one of our major goals is to keep customers loyal and strengthen our relationships with them. Besides keeping revenue streams stable, an added benefit of making customer relationships less price sensitive is that we can demand a premium for our product.

Our customers have stringent requirements for their quality. In order to do so, we need to make sure that customers get what they have purchased. The quality of our product, its delivery in a timely fashion, and optimal utilization, are our top priorities, in order to fulfill our customers’ needs and wants.

The top four priorities from customers are, in order of importance: 1) coal quality, 2) competitive price, 3) reliable supply of product, and 4) prompt and flexible shipping schedule. These customer priorities were identified through in-depth customer research activities carried out under the Marketing Department’s CRM program.

Our activities focus on good quality control, keeping the coal clean, and also on custom-blending to suit customer requirements. On average, around three-fourths of our coal is blended to fulfill customer specifications and optimize pricing. We are able to blend coals from different pits, site operations, and coal terminals.

The coal supply chain is strictly controlled and monitored from extraction to delivery all the way to our proprietary stockpiling and processing facilities, for good quality control.

The Bontang Coal Labs, located right by the shipping port, hosts three major independent Indonesian surveyors. Customers may choose which surveyor they want to perform an evaluation of their coal shipment. All shipments are examined by lab tests prior to shipping.

Before the coal is loaded, a report is created for each vessel which can be accessed online by management. This independent verification helps us to improve and monitor our product, and improves customer confidence through quality assurance.

As part of our drive to improve customer service, we undertook in-depth analysis of customer needs and requirements, and adjusted our service accordingly. As a result, customer satisfaction improved, strengthening customers’ loyalty to us.

Customer also welcomed our new technical support services in coal utilization. Its role is to optimize utilization of our various products. We visit customers regularly, assist them with any coal utilization issues, and share knowledge regarding new coal utilization technologies and products. These services have strengthened demand for our product and improved customer satisfaction. The end result is to make us more competitive in the industry.

Business Continuity Management

To minimize the negative impacts from unforeseen disruptive events or natural disasters, we have developed an integrated process to identify potential threats and build frameworks for an effective emergency response. Business Continuity Management (BCM) is the framework for establishing processes and resources in order to ensure the continued achievement of critical business objectives at the time of emergencies or crises.

Following an analysis from the Business Continuity Institute (UK), we have developed a BCM strategy with the following key priorities in any outage, emergency or crisis situation:

Save life through a strong focus on the ability to account for people.

Minimize damage to the environment.

Protect assets and information from further damage.

Minimize business interruptions.

Minimize financial and legal liability.

Protect or enhance reputation.

Seize business opportunities.

These efforts were made to safeguard the interests of stakeholders, our reputation, and value creating activities.

Our approach to crisis management is to solve the problem at the lowest level as possible, while keeping channels of information flowing. To comply with regulation and to remain prepared, we have formed an Emergency Response Team (ERT) at each site location. The ERT is responsible to be the first and the informed party at the scene in order to facilitate awareness, communication and solution of any extraordinary event.

Once the situation is evaluated, information and decisions are channeled in accordance with the established BCM framework, i.e. from the ERT to the Emergency Management Team (EMT) in the field and the Incident Management Team, and then escalated to the Crisis Management Team (CMT) at the corporate level (Banpu). At each level, the appointed person-in-charge has been previously socialized and trained to be familiar with their responsibilities under such situation. Training and crisis scenario simulations are regularly taken to ensure that key personnel are ready to prevent escalation of any problems.

BCM infrastructure was further improved and readied in preparation for drills, and BCM Standard Operating Procedures or systems were socialized and implemented at mine sites. In September 2010, a BCM on-line drill was conducted between the Jakarta Office and Indominco Mandiri Site Office, in order to enhance the readiness of the crisis emergency management team at the site level.


QUALITY, SAFETY AND ENVIRONMENT

» “The QSE Department continued to advance ITM’s performance in terms of Quality, Safety and Environment throughout 2010.”

The Quality, Safety and Environment (QSE) Department is responsible for coordinating and overseeing QSE standards throughout ITM. We operate using guidelines called QSE Management Standards. The QSE department ensures that good performance is sustained and improvements needed are made. In concrete terms, the goal of the QSE Department is to set up the systems that will enable delivery of quality product to our customers, the safe production of coal, and rehabilitation of the mining sites.

The QSE Management Standards are practical guidelines for the achievement of sustainable development, and continuous improvement in QSE performance. By doing so, the Company can also minimize non-compliance risk factors and increase our competitiveness. Our QSE Management Standards identify, assess and manage the risks to our people, contractors, the environment and our host communities, that arise from all activities that we undertake.

Each business unit under ITM embeds their program activities with QSE Management tools, as a long-term strategic driver to corporate excellence. To facilitate and to help supervise the process, QSE officers are on every mine site.

The QSE Road Map starts with the fundamentals of good Standard Operating Procedures for QSE aspects. The next step is to meet International Standard such as ISO 9001:2008 for Quality, OHSAS 18001-2007 for Occupational Health and Safety Management, and ISO14001-2004 for the Environment. The third step is benchmarking, for example by measuring the Total Production Management (TPM) effect, and the fourth and final step of the Road Map is the achievement of excellence as recognized by national and international awards.

QUALITY

At present, we have obtained and secured ISO certification for three mines: PT Indominco Mandiri in 2003, PT Kitadin (Tandung Mayang) in 2005, and PT Jorong Barutama Greston in 2008. The new mine sites will obtain this certification in due course.

We intensified our efforts to obtain TPM certification as we focused on improving our production equipment maintenance system. In November 2010, PT Indominco Mandiri achieved The Centre for TPM (CTPM) Australasia Level 2 and PT Kitadin (Tandung Mayang) was upgraded to Level 3, showing that we are efficient and productive. TPM certification at other locations will start once their ISO certification process are completed. Our other mines have begun implementing systems management frameworks in preparation.

INNOVATION

We believe that innovation is the key to continuous improvement. In order to encourage new ideas and foster a culture of innovation, since 2009 we have established small working groups called ‘KOMPAK.’ The close-knit atmosphere and small size of these groups is an ideal environment for the testing and development of new ideas in manifestation of our Banpu Spirit corporate values, which are iterated in the GCG section of this report.

Our excellent performance has been recognized by various national and international awards. In 2010, KOMPAK groups participated in various domestic and international conventions. An internal convention is also held yearly since 2009. The second ITM Innovation Convention was held on October 26-27 in Balikpapan, which was attended by all subsidiaries. The winners were sent to the second


starting up production were joined by new contractors, including many small and medium contractors whose safety knowledge was below ITM standards.

To counter this, safety communications and training was intensified. The adoption of the 10-point CMS evaluation system outlined in the previous section on Operations was able to effectively lift the level of contractors’ awareness overall to equal or exceed ITM’s requirements.

The QSE Department is intimately involved with risk management. It is responsible for helping to set indicators for environmental, health, safety and social responsibility.

ENVIRONMENT

ITM is fully in compliance with current laws and regulations on the environment. In the spirit of good corporate citizenship, we strive to go above and beyond these requirements. An environmental compliance audit has been conducted regularly by both external and internal parties to identify any potential for nonconformance findings, and to suggest corrections accordingly. To ensure that systems to evaluate compliance are in place, they are reviewed regularly and the results are evaluated, documented and improved as required.

In 2010, ITM achieved 100% compliance with national PROPER requirements for the environment, indicating that we are in compliance with the Environmental Ministry’s standards for Air Quality, Water Quality, and Hazardous Substances and Poison (B3). ITM’s subsidiaries in East Kalimantan also achieved 100% compliance with regional PROPERDA standards in our East Kalimantan sites.

Indonesia Quality Convention 2010 where ITM took gold and silver medals. At the international level, a KOMPAK team from PT Indominco Mandiri won the Gold Award from among 278 participants at the annual International Convention on Quality Control Circles in Hyderabad, India, for their project “To Eliminate Complains in Mine Stock Yard Water Treatment Plant within Three Months.”

These achievements demonstrate ITM’s commitment to fostering innovation and ideas from the bottom up, a culture that will help ITM maintain its high quality and competitiveness in years to come.

HEALTH AND SAFETY

At ITM, health and safety in mining is the Company’s responsibility and a key success factor in achieving operational excellence. Given the inherent hazardous risks in mining operations, ITM management has proactively improved safety procedures.

Each business unit prepares Hazard Identification Risk Assessment and Risk Control documents, before operations commence. Armed with this information, all parties involved in mine operations – employees, contractors and suppliers – are fully aware of both general and specific behaviors which are required or prohibited. The appropriate preventive and corrective actions are then taken.

PT Indominco Mandiri as the leading unit has been implementing OHSAS 18001:1999 since 2004. Other business units are making progress towards this standard.

The health and safety awareness of contractors overall improved in 2010, supported by QSE training and better safety systems. However, indicators such as Lost Time Due to Injury (LTI), Injury Frequency Rate (IFR) and Injury Severity Rate (ISR) declined as the sites

QUALITY, SAFETY AND ENVIRONMENT

Leading the way, PT Indominco Mandiri achieved ISO 14001:2004 certification for environmental standards. Having seen the benefits of a comprehensive framework for both planning and operational components, ITM is seeking to implement the same approach for our other mines in the near term.

Recognizing that our mining activities are a major disruption to the environment, ITM has established a process for mine reclamation that begins well in advance of productions and extends to three years after mine closure. We were given an award from the Directorate Technical and Environmental Mining Department for our company environmental performance.

We have made efforts to prepare Mine Reclamation and Mine Closure documents comprising detailed plans and activities which must be taken in order to ensure that sustainable environmental rehabilitation can be achieved. All documents have been delivered to the Government, as a guarantee that we will carry out annual reclamation projects. The above plans are proof of our ongoing commitment to good corporate citizenship.

All subsidiaries prepare individual environmental impact and aspect identification studies. The main Environmental Impact Analysis (EIA) documents are the Environment Management Plans (RKL) and Environment Monitoring Plans (RPL). Upon approval

from the Government, these studies serve as the basis for evaluating environmental quality standards and for the reclamation of areas that have been impacted by mining activities. In the preparatory phase, ITM prepares Mine Reclamation and Mine Closure documents which detail the plans and activities that will be taken in order to ensure that sustainable environmental rehabilitation can be achieved, and posts guarantee bonds in compliance with the law. Each subsidiary has a reclamation department that handles seedlings and reforestation. At present, all subsidiaries are in full compliance with the existing standards.

We conducted a non-required biodiversity study in the PT Bharinto Ekatama mine area, prior to the start of operations in 2011. This study was done together with the Purwodadi Botanical Gardens. A survey was done of the area to create a baseline to which we can restore the area to when the mine is closed, and to map its species. We plan to extend such studies to other new sites in the future.

To share and promote our environmental practices, we were invited to join an Environmental and CSR Exhibition in July 2010, a program led by the Ministry of the Environment in cooperation with the Indonesia Mining Association. Previously in March 2010, we participated in a Mined Area Rehabilitation Exhibition held by the Mined Rehabilitation Forum together with the Indonesia Mining Association.

» PT Bharinto Ekatama 2010 Long Term Biodiversity Study Framework

Indonesia is the country with the second highest levels of biodiversity in the world. At the same time it is experiencing high rates of environmental degradation. As a result we designed a study to evaluate the characteristics and variety of the vegetation in the area of our mine site including orchid species, the characteristics of the ecology, the estimated carbon trapped by the vegetation, and how local communities can exploit the potential of their environment in a sustainable manner.


ENERGY MANAGEMENT

In line with our corporate strategy of Growth, Cost Management and Best Practices, as well as our goal of becoming an ethical corporate citizen, ITM has created an Energy Management and Climate Change program. The purpose of our Energy Management program is to reduce energy usage for current levels of productivity, keep energy usage the same while productivity goes up, or a combination of both.

By doing so, we hope to proportionally reduce CO2 emissions to the atmosphere, as energy from fossil fuel conversion is a major source of greenhouse gas, namely CO2. Thus, decreasing energy usage is not only good for the environment and future generations’ quality of life, but it will also improve our bottom line and raise our productivity.

To achieve this goal, we created an Energy Committee, led by the President Director as the Chairperson, which has broad-ranging participation. The Committee established a short term three-year target of reducing energy consumption and a long term ten year target of decreasing energy consumption, which will lead to optimum minimization of CO2 emissions. To realize this target, a comprehensive ten-step approach to Energy Management has been adopted that involves aspects of Leadership, Understanding,

ENVIRONMENTemission, safety

ENERGYefficiency

PRODUCTIONproductivity

HUMAN RESOURCES

» “Management and development of quality Human Resources are critical to our success.”

Planning, People, Financial Management, Supply Management, Operations and Maintenance, Technology and Innovation, and Measurement and Verification. Reward programs have also been established at the individual and department level for improvements in energy usage, to motivate and reinforce energy-saving behavior and actions.

Together with the business unit owners, the Committee sets energy targets for each unit, with a focus on operational units as the main generators of CO2. In 2010, each mine site signed onto our energy targets. The Mine Heads, as the project owners, report directly to the Energy Management Committee on a monthly basis. The actual initiatives are coordinated by the managers on the sites, who work with the contractors and other staff to achieve these goals. For example these contractors’ fuel consumption is now tracked and monitored.

Based on the energy usage patterns that are recorded at each site, decisions can be made to conserve energy and drive for better energy usage. For instance, we can decide to upgrade our technology to less fuel-hungry versions, work around peak usage times, buy energy from other sources, or decide to build our own sources if more convenient. The end result is to make our energy consumption more efficient relative to productivity.


Recognizing that our people are the driving force behind our success, Human Resources (HR) is an important function at ITM. Each subsidiary company has its own HR department, which coordinates with the Country HR at ITM headquarters. The overarching goal of HR is to ensure that all employees put into practice a culture of high performance in alignment with our corporate values.

As such, HR covers three areas: HR Management, HR Development and HR Compliance. HR Management is primarily concerned with organizational development, performance based compensation and benefit packages, while HR Development handles training, management and career development for employees. HR Compliance focuses on handling permits and all Industrial Relations aspects including those with our labor union partners, and administering best practices standards.

As of year end 2010, ITM and its subsidiary companies totaled 3,217 employees, 154 more than in 2009.

HUMAN RESOURCES

HR FRAMEWORK OF ITM

NUMBER OF EMPLOYEES AT ITM AND SUBSIDIARIES

Man Power Planning

Vision, Mission, Philosophy

Culture Strategy

Job Design

HRIS

Business Strategy

Organizational Development

Organizational Design

Competency

Communication - Alignment - Skill - Accountability - Measurement

HR CORPORATE HR COUNTRY HR MINE SITE

Recruitment, Selection, Placement

Learning and Development

Performance Management

Reward Management

Industrial Relations

Career Management

Separation Management

Total Employees

3,217 Employees


121 Employees

PT Bharinto Ekatama

49 Employees


815 Employees

PT Kitadin

1,248 Employees


296 Employees


688 Employees

NUMBER OF EMPLOYEES BY EDUCATION LEVEL

Primary 217 employees.

Junior Secondary 274 employees.

Senior Secondary / Technical

1,679 employees.

Diploma 1 50 employees.

52,04%

6.75%

8.52%

52.19%

22.82%

35.28%

11.94%

14.33%

4.88%

4.10%

2.64% 2.67%0.75% 0.31% 0.22% 0.03%

0.03%

6.84%

21.73%

1.80%

0.09%

1.55%0.53%




University 699 employees.

Post Graduate 58 employees.

TOTAL 3,217 employees.

NUMBER OF EMPLOYEES BY POSITION LEVEL

Helper 734 employees.

Operator 1,135 employees.

Foreman 384 employees.

Supervisor 461 employees.

Section Chief 157 employees.

Superintendent 132 employees.

Dept. Head 85 employees.

Manager 86 employees.

Asst. Vice President 24 employees.

Vice President 10 employees.

Sr. Vice President 7 employees.

President Director 1 employee.

Advisor 1 employee.

TOTAL 3,217 employees.Source: DDI (Daya Dimensi Indonesia)


INFORMATION TECHNOLOGY

Information Technology (IT) is an essential part of our drive to be a world-class company. The main focus of the IT department is to provide continuous access to world class applications including Enterprise Resource Planning (ERP) solutions and Intelligent Mining Solutions packages. These packages provide decision-makers at all levels with timely automated reports and individually tailored reports, all the while coordinating and collating information from multiple remote locations. The IT department covers five interrelated areas: IT Services, IT Infrastructure, System and Security Management, Database Management and Business Software Solutions.

Together with Banpu head office, the IT department has put together a set of standard parameters and standardized the system structure for a robust and strong system. ITM's network architecture is capable of handling satellite communications including live video conferencing, as well as high data transfer needs, at all operational sites, and to handle IT needs at different locations including mine sites, barges, sea ports, and offices.

We pushed to streamline the Company’s administrative capabilities as part of ITM’s objectives of cost control. Through IT-enabled online approval and virtual office capabilities, employees who need to travel frequently can conduct business in a seamless and hassle-free manner. We further

minimized travel needs and costs through video communications. Our network architecture is constructed to advanced satellite communications including live video conferencing, as well as high data transfer needs, at all operational sites. Our network handles IT needs at different locations including mine sites, barges, sea ports, and offices.

The IT department plays a critical role in disaster recovery. It is imperative that data is recoverable. As such, the IT department coordinates with the Disaster Recovery Center to plan for and minimize any negative effects due to any extraordinary events. Most critical are the continuing utilization of the ERP and Intelligent Mining Solution packaging and the ability to maintain communications. Regular simulation drills are conducted that simulate various scenarios. The IT department is currently satisfied that our response time to full recovery is within the global norm of 24 hours.

In the interests of developing our in house staff, the IT department holds at least one comprehensive training course per year, bolstered by many in-house technology updates throughout this year.

Reflecting our commitment to reducing our environmental impact, ITM has also pioneered a Green Data Center to reduce system energy demands and share other environmentally friendly technologies within the companies.

Organizationally, major efforts were taken over the year to improve efficiency within the structure and processes of the Company. HR was involved in centralizing recruitment, payroll and other transactional processes and functions.

Key Performance Indicators (KPI) are established top-down from the President Director in alignment with the Company’s business strategy and targets. The KPI are reviewed twice a year. KPI are available online to speed up the process of implementation.

In the course of nurturing our employees’ talents, we developed our Career Management System further. This system offers greater transparency and visibility as to the development of employees’ career path. It will apply to all employees, encouraging them to take responsibility and feel empowered for their career. In addition, employees are encouraged to broaden their skills and competencies. Every year, the Company provides various training for our employees, based upon Company needs, employees’ competence, and the ITM training roadmap. Over the course of the year, the Company spent US$403,879.84 on increasing employees’ competencies through various trainings.

Our Geologist and Engineer Training (GET) program has been held since 2008. The GET offers a challenging one year training program for promising university graduates majoring in geology or certain other technical subjects. Upon successful graduation from the GET program, graduates will become permanent employees at ITM or its subsidiaries. The GET program is meant to attract and maintain top industry talent, to create future leaders and professionals. We also grant scholarships in cooperation with Gadjah Mada University, the Bandung Institute of Technology, Mulawarman University and the University of National Development.

HR made sure that we were in compliance with applicable labor laws, in line with government regulations, including for expatriate permits. As we do every year, HR collected an Integrity Commitment from employees in which they agree to abide by the company’s Code of Conduct, as part of the drive to encourage the Banpu Spirit amongst employees. HR also reminded and socialized these corporate values to employees through workshops, seminar, formal and informal events, including a quarterly bulletin called Selaras.

HR reaches out through numerous communications channels to employees. The HR Information System (HRIS) was enhanced to deal with the growing demand for information amongst the Company’s 3,217 employees. Our communication channels include posters, notices, and communication forums among others. HR also maintains an interactive intranet portal that is dedicated to keeping communication transparent.

A top-down motivational communication forum is held quarterly in Jakarta, which is attended by all employees for the superintendent-level downwards. This encourages communication between management and subordinates. A Management Forum is also held regularly to strengthen synergies across the company. Finally, HR nurtures good relationships with the labor unions, holding quarterly bipartite discussions during which the issues that all face are discussed for a smooth and positive relationship.

HUMAN RESOURCES


COMMUNICATIONS

Including the office of the Corporate Secretary and Community Development, we maintain five separate but interconnected departments to help collect various opinions and help to keep people informed of ITM’s operations, and nurture external relations. The offices of the Corporate Secretary and Community Development are respectively described in detail in the GCG Section and CSR Section of this report as their functions overlap with these objectives.

CORPORATE COMMUNICATIONS (CC)

Corporate Communications (CC)’s objective is to strengthen the image and good reputation of ITM, through sustainable development and social responsibility outreaches, to build public trust and brand equity. CC carries out this objective through communications initiatives and by building relationships.

EXTERNAL COMMUNICATIONS

CC provides a number of external communication services. Foremost of these tasks is media relations. CC has been assigned to widely publicize timely corporate information and performance data via various media. CC plays a key role in broadening awareness of ITM’s many program contributions to communities and society beyond the immediate vicinities of mining sites. Details of these programs are available in the CSR section of this report.

Through press releases, exhibitions, public advertisements, the publication of brochures and event advertising, ITM has been able to increase brand awareness to reflect ITM’s position as one of the largest coal companies in Indonesia. CC helps increase public trust through maintenance of the company website: www.itmg.co.id and through oversight of the company Annual Report. CC also provides top management with workshops to prepare them for crisis media handling.

In 2010, CC built good relationships and coordinated with local governments’ PR officers (Humas Pemda), through workshops and seminars. These proactive activities created goodwill, strengthened our network, improved the PR officials’ capacity and supported local government activities towards self-sustainable local economic development.

INTERNAL COMMUNICATIONS

CC has a central role in expanding awareness of corporate values and keeping all employees informed of corporate actions. In 2010, it once again socialized the corporate identity and brand guidelines internally across all sites. In addition, in its Brand Management function, it is responsible for keeping internal branding consistent for the dissemination and socialization of brand guidelines across all sites, including for subsidiary companies.

Another duty that falls to CC is involved in maintaining the Corporate Intranet, which provides broad access to news throughout the group. News releases are overseen by CC although input is also generated by all departments. This clearing house of information provides interactivity through the website.

In dealing with crisis situations, CC plays a unique role, giving guidance and controlling the information flow from internal parties to external parties including media. We carry out exercises and crisis simulations every year to refresh our abilities. In the case of a crisis, a Crisis Communication Team will immediately be formed at the site.

Coinciding directly with quarterly analyst meetings, CC holds a Quarterly Communication Day for employees to get updates on recent performance news, highlight exceptional efforts and achievements and share best practices from mine sites.

INVESTOR RELATIONS

The function of Investor Relations is primarily to communicate information about ITM and its business to investors and analysts. As part of its efforts in accountability and transparency, the Investor Relations Department pro-actively communicates about the Company’s activities and ensures that required information is provided to investors in a timely manner. Analyst Meetings were conducted on a quarterly basis and the Annual Report was supplied to investors in relation to AGMS. Information is also posted on the company website in both Bahasa Indonesia and English.

The Investor Relations department also conducts regular and ad hoc updates to help investors keep abreast of any new developments.


ACTIVITY FREQUENCY

Analyst Visit 88 times

Conference Call 5 times

Site Visit 2 times

AGMS 1 time

Public Expose 1 time

Investor Summit 1 time

ANALYST OPINIONS CONTINUED TO BE LARGELY FAVORABLE

“We continue to like ITM given its price leverage as the company sells most of its output for export and solid medium-term growth profile.”

CLSA : Ahmad Solihin , January 13, 2010

“We have a Buy/Medium Risk rating on ITM. The company’s coal quality is among the highest in Indonesia and we expect it to buck the trend of declining coal quality in the next few years.”

Citigroup: Kim Kwie Sjamsudin, February 17, 2010

“We continue to like ITM, and believe that the Company will benefit a lot from recovery in international coal price as more than 90% of sales are exported.”

OSK: Isnaputra Iskandar, March 3, 2010

“ITMG has one of the most visible production profiles (2008-11 CAGR of 15%) over the next few years.”

BNP Paribas, April 1, 2010

“We initiate coverage on ITMG with a Buy rating due to superior cash returns profile (driven by higher quality coal), strong balance sheet and fair valuations.”

Goldman Sachs: Patrick Tiah, May 14, 2010

“Indo Tambangraya produces high-quality coal and benefits from the strong marketing network of its parent company. Its CCOW coal concession contracts protect the company from regulatory changes.”

RBS: Stephan Hasjim, June 1, 2010

“We like ITMG because its valuation is dependent on production growth of 9-10% p.a.”

Bahana: Surabhi Chopra, July 9, 2010

“ITM has outperformed the Indonesian coal sector this year, gaining 24% versus the sector’s 9%, and is now trading within 7% of our price target. Amidst investor concerns directed at other Indonesian coal miners, we believe ITM’s good corporate governance and high-quality operations have stood out among its peers.”

UBS: Andreas Bokkenheuser, August 23, 2010

“We see ITMG as the most leveraged play on rising spot coal prices. Its coal quality is relatively high than peers and thus is more sensitive to changes in benchmark coal prices. Its high dividend yield would also provide good cushion in case of weaker coal prices. We expect Banpu to continue to demand high dividend from ITMG to make ITMG’s capital structure more efficient.”

Credit Suisse: Paworamon (Poom) Suvarnatemee, September 1, 2010

“We were impressed by the infrastructure at the Indominco mine and believe that there is excess capacity to support 2–3mtpa production growth in the next three years. This is supportive of our view that the company is one of the top picks in the ASEAN coal sector.”

Macquarie: Albert Saputro, October 18, 2010

“We deem ITMG a solid option as an export-coal play given its exposure to overseas markets, compelling valuation, good corporate governance and attractive dividend. Having Banpu as its anchor shareholder should help secure demand and support ITMG’s robust growth, in our view.”

Bank of America Merrill Lynch: Daisy Suryo , November 15, 2010

“We expect ITMG to outperform again in 2011 as it continues to offer the best exposure to export prices and has a strong production growth track record.”

CIMB: Erisca Wiraatmadja, December 15, 2010

GOVERNMENT RELATIONS

In addition to maintaining strict compliance with all national, regional and local laws, it is vitally important to keep fluid and effective communication channels open with government representatives at all levels. In this regard, ITM and its subsidiaries maintain personnel dedicated to nurturing these relationships.

COMMUNICATIONS



54 MANAGEMENT DISCUSSION AND ANALYSIS



» “ITM continued to deliver strong performance in 2010, on the back of higher production, sales, and coal prices during the year.”

FINANCIAL REVIEW

NET SALES

ITM’s consolidated net sales increased by 11% to US$1,668.2 million in 2010 from US$1,508.4 million in 2009 due to increased coal shipments from 21.0 million tons in 2009 to 22.1 million tons in 2010 and higher average coal sales price from US$71.48 per ton in 2009 to US$74.87 per ton in 2010.

Higher coal shipments were in line with the increase in production output. Higher average coal sales price were driven by the tightening global coal supply.

COST OF GOODS SOLD (COGS)

COGS increased by 20%, from US$938.0 million in 2009 to US$1,126.6 million in 2010 primarily due to higher production and coal transportation costs as well as royalty and exploitation fees paid to the Government.

A significant component of production costs is mining costs, which include fees paid to ITM’s mining contractors in relation to overburden activities, including top soil removal, blasting, excavation and removal of overburden. It also includes coal mining, coal transportation to the coal processing area and mine reclamation activities.

Mining costs increased from US$484.8 million in 2009 to US$586.9 million in 2010 because of overall increase in continuing coal mining and overburden removal activities at ITM’s mining operations and increase in stripping costs. Other increases in production costs can be attributed from the increase in repairs and maintenance and fuel and oil costs.

Coal transportation costs represent costs of coal hauling from stockpiles in concession areas to port facilities. These costs increased from US$63.0 million in 2009 to US$72.6 million in 2010 due to the impact of surging fuel prices, as well as higher quantities of coal being transported.

Royalties paid to the Government are calculated based on the 13.5% tariff of sales after deduction of certain allowed selling expenses. The tariff is applicable for companies who hold “CCoW” license like PT Indominco Mandiri, PT Trubaindo Coal Mining and PT Jorong Barutama Greston. PT Kitadin, under its Mining Rights (“KP”), pays royalties to the Government in the form of exploitation fees. The exploitation fee for PT Kitadin ranges from 5% to 7%, depending on the calorific value of the coal, of sales after deduction of certain allowed selling expenses. Royalties and exploitation fees increased in 2010 primarily due to the increase in sales volume and selling price.

SIGNIFICANT SUPPLIERS

ITM considers significant suppliers to be those with transactions of more than 10% of the Company’s total purchases of goods and services for production activities. Currently, PT Pamapersada Nusantara (“PAMA”) is ITM’s most significant supplier. PAMA provides mining contractor services to PT Indominco Mandiri and PT Trubaindo Coal Mining. The services provided include overburden removal, coal mining, and coal hauling/transportation. Transaction amounts from PAMA increased from US$374.3 million in 2009 to US$452.4 million in 2010.

GROSS PROFIT AND MARGIN

Due to the abovementioned factors, ITM’s gross profit decreased by 5%, from US$570.4 million in 2009 to US$541.6 million in 2010. Gross profit margin decreased from 38% in 2009 to 32% in 2010 primarily due to higher cost of goods sold per ton, offset by higher average sales price.


OPERATING EXPENSES

Selling expenses increased from US$77.4 million in 2009 to US$99.4 million in 2010 primarily due to unseasonably wet weather conditions during the year caused by the El Nino phenomenon and the surge in the world’s crude oil prices also resulted in higher fuel and oil expenses that ITM used for transhipment. The El Nino phenomenon impacted our shipping schedule, resulting in delayed shipments which translated into higher demurrage expenses in 2010.

General and administration expenses increased from US$57.2 million in 2009 to US$79.3 million in 2010 primarily due to the increase in professional and management fees, higher salaries and allowance and US$7.7 million in standby fees paid to PT Jorong Barutama Greston’s mining contractors to reserve their equipment during PT Jorong Barutama Greston’s suspension period between February to July 2010.

OPERATING INCOME AND MARGIN

The resulting operating income decreased by 17% from US$435.8 million in 2009 to US$362.9 million in 2010, and the operating income margin decreased from 29% in 2009 to 22% in 2010.

OTHER INCOME / (EXPENSES)

ITM recorded other expenses of US$85.6 million in 2010 (2009: US$20.7 million other income). Significant change was primarily due to write-off of deferred exploration expenditures of US$20.7 million and net losses from derivative transactions (2010: US$54.0 million loss; 2009: US$19.0 million gain). ITM’s derivative transactions consist of coal swap contracts, fuel swap contracts, and minimal Rupiah forward buy contracts.

ITM faces constant commodity price risk because coal is bought and sold on the world coal markets, therefore ITM has adopted a coal swap program to hedge future revenue. Hedging reduces potential losses to ITM that may occur due to significant price fluctuations.

ITM also faces commodity price risk related to the usage of fuel necessary to run its operations. An increase in fuel price may cause profit to decrease as any increase in fuel price increases production costs, the COGS and selling costs. ITM therefore entered into derivative agreements with international financial institutions to hedge against future fuel price increases.

ITM wrote-off deferred exploration expenditures amounting to US$20.7 million, related to the underground mining project at West Block area of PT Indominco Mandiri, as ITM concluded that the project is not economic to be developed.

PROFIT BEFORE INCOME TAX

Profit before income tax decreased from US$456.5 million in 2009 to US$277.4 million in 2010, due to the abovementioned factors.

INCOME TAX EXPENSE

Income tax expense decreased from US$120.9 million in 2009 to US$73.2 million in 2010, reflecting the decline in profit as well as decline in the statutory tax rate from 28% in 2009 to 25% in 2010. As a percentage of sales, income tax expense decreased from 8% in 2009 to 4% in 2010.

NET INCOME

As a result of the foregoing factors, Net Income decreased from US$335.6 million in 2009 to US$204.2 million in 2010.

BALANCE SHEET

TOTAL ASSETS

ITM’s consolidated total assets decreased by 9% from US$1,198.6 million in 2009 to US$1,089.7 million in 2010 mainly due to the decrease in cash and cash equivalents, deferred stripping costs, and deferred exploration and development expenditures, offset with the increase in prepaid taxes.

CURRENT ASSETS

Current assets decreased from US$673.0 million in 2009 to US$608.2 million in 2010 as a result of a substantial decrease in cash and cash equivalents, trade receivables and other receivables, and partially offset with the increase in prepaid taxes.

Cash and Cash Equivalents

Cash and cash equivalents decreased from US$428.6 million in 2009 to US$294.6 million in 2010, to stand at 48% of current assets. The decrease was primarily due to the dividends payment to ITM’s shareholders amounting to US$256.0 million during 2010. Another factor contributing to the decrease is the repayment of outstanding bank loans of ITM’s subsidiaries, PT Indominco Mandiri and PT Trubaindo Coal Mining, amounting to US$50.0 million and US$5.1 million, respectively.

Aside from holdings in US Dollars, which accounted for 83% of the total cash and cash equivalents, ITM also holds Rupiah and Euro in cash at banks.

The interest earned for Rupiah denominated time deposits ranges from 5.85% - 7.15%, while for US Dollars deposit interest rates ranges from 0.30% - 2.00%.

Trade Receivables

Trade receivables slightly decreased from US$125.3 million in 2009 to US$121.1 million in 2010. Third party trade receivables decreased from US$123.1 million in 2009 to US$117.9 million in 2010, while related parties’ trade receivables increased from US$2.2 million to US$3.2 million.

Derivative Receivables

Derivative receivables reflect the fair value of the outstanding fuel swap contracts at the end of the year, and the Rupiah forward buy contracts that ITM had entered into to cover future operating expenses. The value of these contracts increased from US$7.3 million in 2009 to US$18.2 million in 2010.



Prepaid Taxes

ITM’s prepaid taxes increased from US$19.4 million in 2009 to US$70.0 million in 2010. The increase was primarily due to the calculation mechanism which uses previous year taxable income as a basis for the current year’s monthly tax instalments. ITM’s subsidiaries, primarily PT Indominco Mandiri and PT Trubaindo Coal Mining, have higher taxable income in 2009 compared to 2010. As a result, these subsidiaries are in overpayment of corporate income tax position at December 31, 2010.

NON-CURRENT ASSETS

Fixed Assets

ITM’s fixed assets increased from US$343.5 million in 2009 to US$348.3 million in 2010 with major additions resulting from construction-in-progress of on-going projects such as the PT Bharinto Ekatama crushing plant construction and PT Trubaindo Coal Mining coal hauling road construction.

Deferred Stripping Costs

Deferred stripping costs at PT Jorong Barutama Greston represent the excess stripping ratio over the estimated average mine life stripping ratio. The Deferred Stripping Costs (DSC) at PT Jorong Barutama Greston accounted for 58% of total DSC as of December 31, 2010, decreasing from US$30.5 million in 2009 to US$29.3 million in 2010. The DSC will be expensed over the remaining life of PT Jorong Barutama Greston’s mine as the actual stripping ratio decreases.

At PT Indominco Mandiri, PT Trubaindo Coal Mining and PT Kitadin (Embalut), the DSC represents costs incurred for removal of overburden without exposing the coal. The DSC for PT Indominco Mandiri decreased from US$36.3 million in 2009 to US$10.3 million, and PT Trubaindo Coal Mining decreased from US$11.9 million to US$9.7 million, while PT Kitadin (Embalut) slightly increased from US$1.2 million in 2009 to US$1.4 million in 2010.

Deferred Exploration and Development Expenditures

ITM’s deferred exploration and development expenditures decreased from US$61.0 million in 2009 to US$43.0 million mainly related to the write-off of deferred exploration expenditures relating to the underground mining project at the West Block area of PT Indominco Mandiri.

Mining Properties

The mining properties balance was determined by three acquired mining properties (PT Trubaindo Coal Mining, PT Bharinto Ekatama, and PT Jorong Barutama Greston), and represents the fair value of these properties at date of acquisition. ITM amortizes mining properties using the units of production method. As a result, the carrying value has decreased from US$24.6 million in 2009 to US$ 24.1 million in 2010.

TOTAL LIABILITIES

ITM’s consolidated total liabilities decreased by 10% from US$411.1 million in 2009 to US$368.7 million in 2010 mainly due to the decrease in taxes payables, accrued expenses, and repayment of bank loans, partially offset with the increase in derivative payables.

CURRENT LIABILITIES

Trade Payables

Third party trade payables increased from US$89.3 million in 2009 to US$94.8 million in 2010. These trade payables are due in 30 days and are comprised mostly of US Dollar transactions, with the majority of the outstanding amount is due to PAMA as a third party mining contractor of PT Indominco Mandiri and PT Trubaindo Coal Mining.

Taxes Payable

ITM’s taxes payable decreased from US$55.1 million in 2009 to US$13.8 million in 2010 due to ITM’s subsidiaries, PT Indominco Mandiri and PT Trubaindo Coal Mining, which were in overpayment of corporate income tax (prepaid) position at December 31, 2010.

Accrued Expenses

Accrued expenses decreased from US$165.7 million in 2009 to US$150.1 million in 2010 mainly due to the decrease in the accrual for royalty and exploitation fee as the timing of payment has changed from quarterly to monthly starting 2010.

Derivative Payables

PT Indominco Mandiri has entered into swap and derivative agreements with various financial institutions to hedge future coal prices. Derivative payables of US$63.6 million in 2010 reflected the fair value of the coal swap contracts at year end.

Current Maturities of Long-term Loans

The outstanding bank loans of PT Indominco Mandiri and PT Trubaindo Coal Mining have been fully repaid in September 2010 and April 2010, respectively.

NON-CURRENT LIABILITIES

Long-Term Loans, Net of Current Maturities

Outstanding bank loans of PT Indominco Mandiri and PT Trubaindo Coal Mining have been fully repaid in September 2010 and April 2010, respectively.

Provision for Mine Rehabilitation and Mine Closure

ITM recognizes a provision to meet its future environmental obligations, which consist of costs associated with mine reclamation during mine operation, mine closure, and decommissioning and demobilisation of facilities and other closure activities. The reclamation provision is recorded on an incremental basis based on the quantity produced, while the mine closure provision is based on the discounted value of the expected closure costs at the end of mine life based on mine closure plans. Provision for mine rehabilitation increased from US$8.2 million in 2009 to US$11.2 million in 2010, while the provision for decommissioning, demobilisation and restoration increased from US$4.2 million in 2009 to US$5.9 million in 2010.

Provision for Employee Benefits

ITM is required to provide a minimum amount of pension benefits in accordance with Labour Law No. 13/2003 or ITM’s Collective Labour Agreement, whichever is higher. In addition, ITM also provides long-term employee benefits which consist of long service rewards and long leave benefits. The provision for employee benefits increased from US$8.8 million in 2009 to US$11.2 million in 2010.

EQUITY

During 2010, ITM recorded net income of US$204.2 million and declared dividends of US$256.0 million. These were the main factors leading to ITM’s decrease in total equity from US$787.5 million in 2009 to US$721.0 million in 2010. Other factors are booking of cash flow hedging reserves of US$14.6 million.



GOOD CORPORATE GOVERNANCE AND CORPORATE SOCIAL RESPONSIBILITY

62 GOOD CORPORATE GOVERNANCE

63 GCG Framework and Values

64 Our Corporate Values

65 Code of Conduct

66 Responsibility

66 Board of Commissioners

68 Board of Directors

70 Board Development

70 Responsible Risk Management

72 Independence

72 Independent Auditor

72 Conflicts of Interest

72 Non-affiliated Director

72 Fairness

72 Equal and Transparent Access to Information

72 Rights and Equality of Shareholders

72 Equal Opportunity for Employees

73 Transparency

73 Whistleblower

73 Corporate Secretary

73 General Meeting of Shareholders

75 Accountability

75 Good Corporate Governance, Nomination and Compensation Committee

76 Remuneration

76 Internal Audit

77 Audit Committee

78 Report from the Audit Committee

80 CORPORATE SOCIAL RESPONSIBILITY (CSR) AND COMMUNITY DEVELOPMENT


GOOD CORPORATE GOVERNANCE

ITM is committed to being the best corporate citizen we can be. This means striving for the highest standards of corporate governance, and giving back to the community around us in a sustainable and empowering manner. ITM follows Indonesia's GCG code as published by the National Committee on Governance, and strives to exceed this code where

possible. The company aims to attain the highest international standards and best practices in the adoption and implementation of sound principles of corporate governance, as well as complying with the relevant rules, regulations and guidelines of the Indonesia Stock Exchange and Bapepam-LK.

GCG Framework and Values

Our approach to GCG and CSR addresses the welfare of all stakeholders, including the environment and community surrounding us. All major business decisions must take into account the welfare of these stakeholders and the environment. These considerations are embedded in our core company values, the Banpu Spirit.

ADDRESSES ALL STAKEHOLDERS’ INTERESTS

Community

Customers

Trade Partners (Suppliers) Government

Shareholders

Employees


In 2010, ITM established a five-year GCG Implementation Road Map, referencing our Banpu Spirit corporate values of Innovation, Integrity, Care and Synergy, as well as the GCG principles of transparency, accountability, responsibility, independence and fairness that are contained within the Banpu Spirit values. We entered Stage 1 of this Road Map during the year, in which we aimed to fulfill all regulatory rules (mandatory and voluntary). Stage 2 is effectively governing company business processes, and Stage 3 is becoming an ethical good corporate citizen.

For the first time, employees were required to sign a Statement of Commitment pledge to state their commitment to upholding company values and the Code of Contact. These pledges will be collected annually from now on by the HR department, as a reminder to all employees of the values they have sworn to uphold.

We continued to see an increase in employees’ knowledge and awareness over the year. This rise in awareness was supported by various initiatives, including items such as the distribution of pocket-sized reference books on GCG and Code of Conduct, quizzes on GCG to encourage employees to read the books, and the establishment of a Whistleblower System.

» ITM Code of Conduct

Responsibility to Shareholders To maintain sustainable growth and treat shareholders equitably, ITM conducts its business with integrity,

honesty and ethics.

Compliance with the Law and Relevant Rules and Regulations ITM always operates fully in compliance with all rules and regulations, while respecting local customs and

traditions. Employees shall not assist, support or conspire to avoid any legal or regulatory requirement and shall cooperate with regulators and report any information on violation or non-compliance.

Conflicts of Interest ITM employees are not allowed to trade on their position at ITM nor seek personal benefit from proprietary

Company information.

Giving / Receiving Bribes, Gratuities and Entertainment [1] ITM employees will not demand, receive or give any benefit which may be construed as a bribes from

business partners, contractors, suppliers, advisors, consultants, auditors and those with whom ITM is doing business with, including competitors.

[2] ITM employees are prohibited from offering any benefit to government officers, customers, labor unions or any other external parties in any attempt to persuade them to commit a fraudulent action.

[3] ITM employees conduct our business with integrity. We will not accept nor give gifts, gratuities or unusually lavish entertainment to any party.

Policies and Practices toward Employees Fair treatment is required in all relations with employees, including policies regarding employment

opportunity, remuneration, promotion and professional development.

Policies and Practices toward Customers Customer satisfaction is of great importance to the Company; thus, ITM fully intends to respond to customer

demands effectively and efficiently and to continuously improve satisfaction.

Policies and Practices toward Trading Partners and/or Creditors Founded upon the principle of mutual benefit, a fair and equal treatment of trading partners and creditors

will lead away from conflict of interest.

Safety, Occupational Health and the Environment ITM will disclose all information regarding its operations in relation to safety, occupational health and the

environment in an effort to clearly demonstrate: compliance with all legislation, the provision of a safe working environment, and the systems ITM uses to promote good practices in these areas.

Responsibility to the Community and Society With its corporate culture, ITM operates under and promotes goals and policies that provide sustainable

benefits to the economy and the society while safeguarding the customs and traditions of local communities. It is also ITM’s policy to create in each employee an individual social consciousness as a responsible corporate citizen who complies with all relevant laws, rules and regulations and contributes to uplifting the overall quality of life.

OUR CORPORATE VALUES

As part of the Banpu Group of companies, ITM has embedded the core values and attributes that characterizes Banpu’s corporate culture. These values and attributes, also known as the Banpu Spirit, have led the Company’s success in the past and will also do so for the future.

CODE OF CONDUCT

In 2009, ITM revalidated and adjusted our Corporate Governance Policy and Code of Conduct to better reflect ITM’s existing work culture, and encourage a proactive and positive attitude. Together with our Corporate Governance Policy, these documents have succeeded in connecting corporate GCG goals with business practices.

In dealing with stakeholders and concerned parties including employees, customers, trading partners, creditors, government agencies, communities where the company operates and the society at large, ITM Commissioners, Directors and employees must comply with the Code of Conduct to ensure fair and balanced dealings with stakeholders.

In 2010, efforts were made to socialize the GCG / Code of Conduct policies and ensure that all employees understood them. Activities included quizzes to engage employees, and surveys to measure understanding of GCG in the Jakarta office.

GCG Framework and Values


Responsibility

The Board of Commissioners (BoC) and Board of Directors (BoD) share primary responsibility for the development and implementation of GCG. In implementing this responsibility, various committees have been established. The Articles of Association provide the basis of GCG. Changes to the Articles must be approved at a General Meeting of Shareholders (GMS). The BoC and BoD are bound to ensure that, in pursuit of its vision, the Company operates in accordance with the principles of corporate governance.

BOARD OF COMMISSIONERS

DUTIES AND RESPONSIBILITIES

The BoC shoulders the responsibility of overseeing and advising the Directors on matters of corporate policy. The BoC monitors the effectiveness of policy implementation and the effectiveness of the decision making process by the Directors, including the implementation of strategies to meet stakeholder expectations. Pursuant to Article 22 of the Articles of Association, it must consists of two members at least, comprising a President Commissioner and one or more Commissioner(s).Currently, the BoC consists of six members, of which two are Independent Commissioners. Each term will be up to the closing of the Annual General Meeting of Shareholders (AGMS) in 2013 after their appointment on March 29, 2009.

The BoC is aided in the performance of their duties by the Audit Committee and the Good Corporate Governance, Nomination and Compensation Committee (GCGNCC). Both these committees are established and report to the BoC.

Article 23 of the Articles of Association respectively detail the requirements and authorities of the BoC, who on this basis acts in a supervisory fashion to ensure Company compliance with Company Articles of Association, with any resolutions of Annual or Extraordinary Meetings of Shareholders (AGMS or EGMS), and with internal and external regulations. Appointed by AGMS, the term of office of the BoC is three years, up until the closing of the third AGMS from the time of appointment. There is

no prejudice to the ability of a General Meeting of Shareholders on dismissal of a Commissioner mid-term, or on re-appointment after a term expires. In carrying out its responsibilities, the BoC relies on and coordinates information collection and analysis from internal and/or external parties as deemed necessary. In addition to its supervisory role as regards compliance with laws, objectives, the Articles of Association and resolutions of the shareholders’ meeting of the company, the BoC stipulates that the following matters shall be vested under the authority, duty and responsibility of the BoC:

1. The company’s policies, business strategies, business plans and annual budget.

2. The company’s monthly and quarterly performance and operation report compared to its plan, budget and outlook of the following period of the budget year.

3. The company’s investment in a project worth more than idr 150 billion.

4. Transactions or acts which materially affect the company’s financial status, liabilities, business strategy and reputation.

5. Entering into a contract not related to the normal course of business and a contract related to an important normal business.

6. Purchase and disposal of assets, acquisition of business and participation in a joint venture project which are not in conflict with the rules and regulations of the indonesia stock exchange and bapepam and lk.

7. Investment which exceeds ten percent of the total investment budget of an approved project and which exceeds ten percent of the total non project investment budget.

8. Parts of a connected transaction between the company, its parent company, subsidiaries, associated companies and related individuals in accordance with the capital market regulations.

9. Transaction which causes the ratio of company’s debt-to-equity ratio to exceed 2.5:1.

10. Distribution of interim dividend.

11. Net borrowing that exceeds a maximum amount of idr 30 billion subject to annual review.

12. Changes in policy and practices with material implications to accounting, risk management and financial reserves.

13. Significant changes relating to management and financial control system.

14. Determination and review of approval authority granted to the executives and subsidiaries.

15. Recruitment of the board members, committee members, approval of salary increment budget and bonus or bonus formula or annual remuneration package adjustment formula of the board and committee members, executives and employees.

16. Nomination, appointment and termination of directors and the secretary of the board of commissioners and its committees.

17. Appointment and determinations of authority of the sub committees.

18. Establishing and supervising the management in accordance with GCG policy and practices.

19. Appointment of directors or executives to be directors of subsidiaries and associated companies.

20. Registration of new companies and dissolution of companies.

21. Duty to keep corporate information strictly confidential especially internal information not be disclosed to the public or information that may affect its business or share price.

22. Amendments to the scope of approved authority of the BoC as stated in items 1-20 above.


BoC MEETINGS IN 2010

BoC shall convene monthly meetings or at any time that it is deemed necessary by the members. Meetings of the BoC shall be deemed valid and entitled to adopt binding resolutions if more than half of the number of members of the BoC are present or represented at the meeting.

The BoC met 14 times in 2010, all of which were joint meetings with the BoD, with attendance as follows:

Ibrahim Yusuf *President and Independent

Commissioner

14 Times

Somruedee ChaimongkolCommissioner

13 Times

Ir. Lukmanul Hakim, MMCommissioner

14 Times

Rawi CorsiriCommissioner

13 Times

Prof. Dr. Djisman S. Simandjuntak

Independent Commissioner

14 Times

Rudijanto BoentoroCommissioner

[since 29 March 2010]

11 Times

* Sutoyo Sutejo resigned as of March 29, 2010, and was replaced by Ibrahim Yusuf in the capacity of President Commissioner.** Rudijanto Boentoro was appointed as the BoC member as of March 29, 2010.

BOARD OF DIRECTORS

BoD has primary responsibility for the day to day operations of the Company. As per the Articles of Association, the membership of the BoD shall be at least 2 (two) members, one of which shall be the President Director and they are appointed and dismissed by a GMS. The term of office is for 3 (three) years and runs up until the closing of the

third AGMS after appointment, without prejudice to the right of a GMS to dismiss at any time or to reappoint.

DUTIES AND RESPONSIBILITIES

The BoD establishes the Company’s business strategies as well as the annual work plan and budget including risk management, and with the agreement of the BoC, carries out these plans. It is accountable to the BoC. Specifically, the BoD is responsible for ensuring that the management of Company business complies with all relevant laws and regulations.

Under the Articles of Association, the BoD must carry out meetings at least once every year or at any time deemed necessary by one or more members of the BoD or by shareholders representing 1/10 of the total number of shares with lawful voting rights. Meetings of the BoD shall be deemed valid and resolutions shall be binding if more than half of the total number of BoD members are present or are represented at the meeting.

The following matters are vested under the authority, duty and responsibility of the BoD:

4. The use of capital investment;

5. Approval of new/additional capital budget items up to Rp4 billion;

6. Asset write-offs;

7. Fixed asset transfer among companies in Indonesia.

BoD MEETINGS IN 2010

The BoD shall convene monthly meeting or at any time it is deemed necessary. Meetings of the BoD shall be legal and entitled to adopt binding resolutions if more than half of the number of members of the BoD are present or represented at the meeting.

The BoD met 16 times in 2010, with attendance as follows:

Somyot RuchirawatPresident Director

16 Times

Edward ManurungNon-affiliated Director

14 Times

Mahyudin LubisDirector

16 Times

Aphimuk TaifayongvichitDirector

13 Times

The complete profiles of the BoD may be viewed on page 94 of this report.

The complete profiles of the BoC may be viewed on page 92 of this report.

Pongsak ThongampaiDirector

16 Times

1. Adjustment of the annual operational plan, for which the total amount is less than five (5)% of the total approved administration;

2. The strategic plan of each business unit;

3. The calculation of the interim dividend payment to be submitted to the BoC for approval;

Responsibility


BOARD DEVELOPMENT

To enhance board member competency, the Commissioners and Directors were encouraged to attend relevant seminars and workshop whenever possible, such as the third Top Executive Forum on Governance, the Legal Implications of Management Decisions, and various members of the BoC were also selected as speakers in a number of national and international forums.

RESPONSIBLE RISK MANAGEMENT

ITM is engaged in the coal mining business and recognizes risks associated within this industry. Steps to identify, measure, and mitigate risk are integrated within planning and operations at all stages. The Risk Management Committee was formed in 2008 to provide the BoD with information directly relating to the Company’s risk profile. Although the Risk Management Committee was formed to directly assist the BoD in the management of risk, continuous and consistent diligence by each subsidiary to maintain and update systems is central to our risk management strategy. This Committee identifies, measures, and mitigates risk, then embeds it within all stages of planning and operations.

The Risk Management Committee convenes regularly to assess risk management efforts and coordinates with other compliance bodies to provide a comprehensive assessment. Part of the regular flow of information includes both monthly operational risk reports and quarterly non-operational risk reports. Should a particular risk indicator increase unexpectedly, immediate steps can be taken to address this.

In 2010, the Coal Price Risk parameter edged down in the first half of 2010 due to the global economic recovery, but then increased in the second half due to disruptions in the supply caused by extreme weather.

From a legal or compliance standpoint, ITM continuously remains in full compliance with environmental regulations, thus decreasing any environmental risks.

ITM assesses risk through an integrated method but, for the purposes of organization, ITM separates risk into six main sections: Financial Risk, Coal Business Risk, Regulatory Risk, Contractor Risk, Environmental Risk, and Social and Community Relations Risk.

FINANCIAL RISK

Coal and Fuel Price Risk

By using coal swaps and gas and oil swaps, the Company try to mitigate risk of price fluctuations. The completion of the captive coal fired power plant at BoCT will further reduce exposure to fluctuating global energy prices.

In addition, we have created a Commodity Risk Management Committee which meets biweekly to discuss the current coal market and oil-gas market, and determines hedging strategies as needed to take out the risk in price fluctuations vs. contract delivery price.

Exchange Risk

As it deals in foreign currencies, the Company adopts hedging to reduce exposure to shifts in currency valuations. Balance between foreign currency earnings and costs can also be maintained.

COAL BUSINESS RISK

Coal Market Volatility Risk

Significant changes to either coal prices or coal demand pose a threat to cash flow. A steady growth of customer base has also succeeded in reducing risk of large coal demand fluctuations.

Coal Quality and Delivery Risk

To guard against problems in coal quality and delivery, ISO standards have been put in place. Coal quality assurance risk has decreased in the last three years in part due to the new on-site Bontang Coal Laboratory, which has been able to accurately and speedily test all coals prior to delivery. Current expansion of the BoCT has increased delivery risk due to potential construction related events. However, a variety of alternate shipping facilities are available to ship coal in the event of

a BoCT shut-down. These include mechanisms for sea-loading, and re-directing ships to ports in PT Jorong Barutama Greston, PT Kitadin (Embalut), PT Trubaindo Coal Mining and others. The completion of TPM systems at PT Indominco Mandiri (including the BoCT) has also reduced risk associated with equipment and/or equipment systems failure, largely due to reduced equipment systems failure because of TPM (the TPM Effect).

Weather Risk

The island of Borneo is at times a very rainy place. The risks associated with unusually heavy rains include work slowdown or stoppage, equipment failure, and road wash-outs. To minimize these risks, production scheduling based on weather prediction balances demand and inventory costs to ensure targets are met regardless of extraordinary rains. In addition, ITM has invested in ditches, improved road construction and re-landscaping to prevent rain from interfering too significantly in the production process.

REGULATORY RISK

The Company at all times complies fully with all local, regional and national laws and regulations. However, changes to regulation or disagreements over interpretation may at times increase costs or necessitate changes in operating procedures. Both the Company’s legal team and outside legal counsel are on hand to evaluate all legalities and recommend appropriate action.

CONTRACTOR MANAGEMENT RISK

Over 80% of all ITM coal is mined by independent contractors. The recent institution of the CMS has helped increase productivity and safety. Also, a downsizing of the number of different contractors has allowed better oversight of performance quality.

ENVIRONMENTAL RISK

Required environmental studies and assessments are conducted on all operations and are divided

into three stages: Pre-Operation, Operation, and Post- Operation. The removal of overburden and extraction of coal necessarily disrupts the environment and the Company’s is committed to restore the environment to its pre-mining condition in keeping with regulations as well as the expectations of stakeholders. As well, industrial discharges are handled according to government regulations.

Pre-Operation Stage

An EIA is conducted on a projected site and reviewed with government bodies. Included within this assessment are an environmental damage mitigation plan and an environmental monitoring plan covering the duration of the operation.

Operation Stage

At this stage, monitoring is ongoing and changes to procedures can be recommended. Risk is involved at this stage as changes on the ground may require deviation from the plan. However, changes in production levels and processes are fully discussed with relevant government bodies and agreed upon before proceeding. Compliance with reforestation requirements is monitored on a yearly basis.

Post-Operation Stage

ITM has produced Mine Closure Documents, in compliance with Government Decree No. 78/2010 on reclamation and mine closure. Ongoing assessments of the progress of rehabilitation will help ensure that ITM has conformed to its plans. Communication with interested parties will also help to assess whether agreed upon environmental goals have been met.

SOCIAL AND COMMUNITY RISK

ITM, individually and through its subsidiaries has a great deal of experience and a multi-targeted Community Development program, as part of the CSR. Through intensive consultation with local communities, risk of social conflict is greatly reduced, the benefits of the coal mines are shared and good will is created.

Responsibility


Independence Fairness

INDEPENDENT AUDITOR

The March 29, 2010 AGMS authorized the BoD to choose and appoint a public accountant to audit the Company’s annual financial statements for the Fiscal Year ending December 31, 2010. Based upon this authority, Public Accountant Tanudiredja, Wibisana dan Rekan, a member firm of PricewaterhouseCoopers, was appointed to provide this service and provide an external check.

CONFLICTS OF INTEREST

Members of the BoC are assessed on their independence annually. Furthermore, Commissioners, Directors and employees having an interest in any transaction must not take part in its approval process. Any Director having a potential conflict of interest in relation to a matter that is under consideration by the board must excuse himself / herself from the deliberation by the board.

NON-AFFILIATED DIRECTOR

The Board of Director is required to have one non-affiliated Director as its member.

EQUAL AND TRANSPARENT ACCESS TO INFORMATION

The BoD is committed to disclosing accurate, complete, adequate, regular and timely financial information related to the company’s business and performance. Strict adherence to all relevant laws, rules and regulations relating to the disclosure of information and transparency apply.

In addition, relevant information will be reported to stakeholders and related parties through the Annual Report, company website and other relevant channels. Two-way communication channels have been established to ensure that stakeholders and other parties can give feedback and/or express grievances.

RIGHTS AND EQUALITY OF SHAREHOLDERS

The company’s shareholders are entitled to the same basic rights as follows:

Rights to receive share certificates and rights to transfer the shares.

Rights to receive adequate information in a timely manner and in a form appropriate for making decisions.

Rights to attend, express an opinion and vote in the shareholders meeting.

Rights to elect and remove Commissioners and Directors.

Rights to approve the appointment of auditor.

Rights to share in profits of the company.

All shareholders shall be facilitated to attend meetings, obtain access to information, pose questions, and exercise voting rights at the shareholders’ meetings, in an equitable manner. Shareholders shall receive full, adequate and timely information for decision making purposes. The BoD shall prepare minutes of shareholders’ meetings and distribute them to shareholders via the corporate website within 30 days from the meeting date.

EQUAL OPPORTUNITY FOR EMPLOYEES

ITM is committed to a fair and equal hiring and promotions policy, regardless of gender, race or religion.

Transparency

ITM strives to provide information in a transparent and fair manner to stakeholders. Investor Relations, Corporate Secretary, and Corporate Communications are the major departments involved in this.

WHISTLEBLOWER

In the interests of promoting transparency and to complement the execution of the Corporate Governance Policy, development of a Whistleblower System began in 2010, to be implemented in 2011. This involved planning for what will be an independent online reporting web-based portal to handle reports. All whistleblowers will be protected and their complaints handled confidentially.

CORPORATE SECRETARY

The Corporate Secretary’s main responsibility is to assist the BoD in ensuring implementation of the GCG practices of a listed company. Specifically, the Corporate Secretary’s function is to:

Ensure compliance with corporate law, the Company’s Articles of Association, and capital market rules and regulations;

Maintain effective communications with stakeholders, in particular with capital market regulatory bodies;

Coordinate and administer the activities/meetings of the BoC, BoD, and GCGNCC;

Administer share ownership records.

Execute the GCG programs to increase awareness of the importance of GCG.

As of December 28, 2007, Ms. Roslini Onwardi was appointed to the position of Corporate Secretary at ITM. Her appointment as Corporate Secretary was made based on her more than 20 years of experience within ITM and its subsidiaries and from her extensive knowledge of the mining industry, especially within the areas of Legal Affairs and Human Resources. Ms. Onwardi earned a Master of Business Administration from Newport University in 1993.

GENERAL MEETING OF SHAREHOLDERS

In 2010 there was one 1 (one) AGMS held on March 29, 2010. The AGMS was attended by representatives of 82.19% of the total shares issued by the Company.

1. The AGMS resolved and adopted the following:

1.1. Approved the Annual Report for the Financial Year of 2009.

1.2. Ratified:

a. The Audited Financial Statement for the Fiscal Year of 2009 by Public Accountant Haryanto Sahari and Rekan – PricewaterhouseCoopers pursuant to their Report dated February 24, 2010.

b. The Supervisory Report of the Board of Commissioners.

1.3. Gave full acquittal and discharge to the members of the Board of Directors and those of the Board of Commissioners from any responsibility and accountability (acquit et de charge) for management and supervision they performed during the Fiscal Year of 2009, provided that such acts appeared in the Company’s notes and books and were reflected in the Company’s Balance Sheet and Profit and Loss Account for the Fiscal Year of 2009.

2. Approved and determined the use of the Company’s Net Profit of the Financial Year of 2009 in the amount of US$ 335.55 million as follows:

2. 1. The amount of US$ 1,987,000,- determined as Legal Reserve in compliance with Article 70 of the Company Law No. 40/2007 and it shall be used in accordance with Article 27 of the Company’s Articles of Association.

2. 2 .The amount of US$ 235 million or 70% of the net profit of the Financial Year of 2009 determined as total final dividend with detail as follows:

a. The amount of US$79 million distributed on November 3, 2009 as interim dividend to the shareholders registered in the Company’s Shareholder List dated


October 23, 2009 based on the Board of Directors’ Resolutions in lieu of the Meeting of the Board of Directors dated September 29, 2009 which has been approved by the Board of Commissioners.

b. The amount of US$156 million at the middle exchange rate of Bank Indonesia dated February 23, 2010 or equivalent to IDR 1,286,- per share will be distributed as cash dividend in Rupiah to the shareholders registered in the Company’s Shareholder List (Recording Date) on May 4, 2010 and payment date will be on May 19, 2010.

2.3. The remaining US$100.55 million will increase the Retained Earnings to support Company development.

2.4. Furthermore, gave power and authority to the Board of Directors to arrange the procedure for the payment of the said cash dividend.

3. Approved and Authorized the Board of Directors to:

3.1. Appoint the Independent Public Account’s Office to audit the Company’s Financial Statement for the Fiscal Year ended on December 31, 2010 with provisions that the Public Accountants’ Office so appointed is an independent Public Accountant’s Office registered with the Capital Market and Financial Institutions Supervisory Board (Bapepam-LK).

3.2. Determine the fee and other requirements in relation to the appointment of the Public Accountant with due regard to the recommendation of the Board of Commissioners.

4. Approved:

4.1. To delegate to the Board of Commissioners determination of the Board of Directors’s compensation and benefit for the Financial Year of 2010.

4.2. Determine the fee and other requirements in relation to the appointment of the Public Accountant with due regard to the recommendation of the Board of Commissioners.

5. Decisions made:

5.1. Appointed Ibrahim Yusuf as President and Independent Commissioner and Rawi Corsiri, Somruedee Chaimongkol, Ir. Lukmanul Hakim, MM, Rudijanto Boentoro as Commissioners and Prof. Dr. Djisman S. Simandjuntak as Independent Commissioner and re-appointed the whole members of the Board of Directors. The term of office of the Board of Commissioners and the Board of Directors shall take effect as of the closing of the AGMS up to the closing of the third AGMS to be held in 2013.

5.2. Authorized the Meeting of the Board of Directors to determine distribution of duty and position among the members.

5.3. Gave full acquittal and discharge to Sutoyo Sutejo, SH, MH for his supervision that has been carried out since January 1, 2010 up to the closing of the AGMS with sincere gratitude for his valuable contribution during his tenure with the Company.

After closing of the AGMS, the structure of the BoC and the BoD shall be as follows:

Accountability

Accountability is of key importance in ensuring that GCG is implemented. Effective and adequate check and balance mechanisms must be in place to protect shareholders’ investments in the company and its assets.

THE GOOD CORPORATE GOVERNANCE, NOMINATION AND COMPENSATION COMMITTEE

The Good Corporate Governance, Nomination and Compensation Committee (GCGNCC) is responsible for assessing the BoD’s performance on an annual basis, assessing its compliance with best practices and policies within an ethical framework; recommending an appropriate remuneration structure along with an evaluation system; nominating Directors, evaluating the succession plan to appoint appropriate candidates for vacancies, and reporting to the BoC for approval or bring it before an AGMS.

The GCGNCC consists of three members with three-year terms of office in accordance with the member’s term of office as a Director or Commissioner. The GCGNC meets quarterly or as requested by any member(s) or as needed.

During 2010, there were five meetings held, with attendance as follows:

Ibrahim YusufChairman *

5 Times

Somruedee ChaimongkolMember

4 Times

Ir. Lukmanul Hakim, MMMember

5 Times

Rudijanto BoentoroMember **

3 Times

Biographies of the GCGNCC members, all of whom are Commissioners or Directors of the Company, may be found on page 92 - 95.

* Appointed as Chairman as of March 29, 2010. ** Appointed as a member as of June 27, 2010.

THE BOARD OF COMMISSIONERSPresident and Independent Commissioner : Ibrahim YusufCommissioner : Rawi CorsiriCommissioner : Somruedee ChaimongkolCommissioner : Ir. Lukmanul Hakim, MMCommissioner : Rudijanto BoentoroIndependent Commissioner : Prof. Dr. Djisman S. Simandjuntak

THE BOARD OF DIRECTORS

President Director : Somyot Ruchirawat

Director : Pongsak Thongampai

Director : Aphimuk Taifayongvichit

Director : Mahyudin Lubis

Director (non-affiliated) : Edward Manurung, SE, MBA

Transparency


The activities of the GCGNCC during 2010 were as follows:

Recommended the annual salary adjustment and bonus payment for employees.

Nominated and recommended the candidate for Commissioner to replace the retired Commissioner and recruited the candidate upon AGMS approval.

Acknowledged the revision of GCGNCC charter.

Developed the Committee work plan and budget for 2011.

Reviewed the existing practices and governance issues such as major commitment and compliance toward the gcg implementation roadmap.

Acknowledged remuneration policy and HR policy.

Reviewed and recommended the board members remuneration package.

REMUNERATION

The Company has been using a performance based remuneration system based upon KPI. With both yearly and long-term targets as criteria, measurements of success are in line with the Company’s vision, mission and strategy. Individual Director and Commissioner’s holdings of Company shares are listed on page 8 of this report.

The total remuneration paid to the Directors and Commissioners amounted to Rp18.6 billion or equivalent to US$2.1 million (2009: Rp15.4 billion, or equivalent to US$1.5 million).

INTERNAL AUDIT

The internal audit function, which was established since 2002, is to provide assurance to management that all key risks are being managed effectively. To do this, the internal auditor will evaluate the quality of risk management processes, systems of internal control and corporate governance processes, across all parts of an organization and report this directly and independently to the President Director.

As we might know, that techniques of internal auditing have changed from a reactive and control based form to a more proactive and risk based approach. This enables the ITM’s internal auditor to anticipate possible future concerns and opportunities as well as identifying current issues.

As well as providing assurance, an internal auditor’s knowledge of the management of risk enables them to act as consultant and catalyst for improvement in ITM organization’s practices.

In evaluating internal controls which is wide ranging as everyone is involved in internal control, the internal auditor’s work includes assessing the tone and risk management culture of the organization at one level through to evaluating and reporting on the effectiveness of the implementation of management policies at another.

Internal auditors identify key activities and relevant risk factors and assess their significance. Changing trends and business/economic conditions may impact the way internal auditor assesses risk.

As management will increasingly rely on internal audit to provide a conclusion on the effectiveness of the control environment and on the alignment of the control framework within the business.

Internal audit’s has become the strategic role in helping to establish the right GRC (Governance Risk and Compliance), which include, but not limited to:

Providing advice on a GRC framework.

Assessing business process and internal control.

Making recommendations on existing systems available and business processes.

Aligning Internal Audit plans with Enterprise Risk Management (ERM).

Ensuring appropriate implementation of audit recommendations.

Guidelines for Internal Audit activities are laid down in the Internal Audit Charter, which outlines the scope and methodology to be used in audit and consulting services, especially in the areas of organisation structure, risk management, process control and corporate governance.

Training is periodically undertaken to upgrade internal auditor skills and knowledge in an effort to meet international standard practice.

AUDIT COMMITTEE

The Audit Committee, comprising three qualified people according to the Audit Committee charter is to assist the BoC to oversee and provide recommendations. The scope of oversight concerns any matter and any report to be submitted to the BoC. Particular attention is paid to identify and clarify potential problems that require BoC or BoD action.

The Audit Committee report can be found on page 78 of this report.

Other regular areas of concern to the Audit Committee are a review of the Company’s financial reporting system, internal control, risk management and compliance. Advice and recommendations are also provided on any proposals which require approval at GMS.

Exceeding regulatory requirements, all three members of the Audit Committee are independent members. Brief biographies of Audit Committee members may be found on page 96 of this report. In accordance with the appointment letter from Board of Commissioners dated 27 May 2010, the term of office of the Audit Committee members is three years, from March 29, 2010 until the closing ot AGMS of 2013.

Meetings are conducted monthly or as necessary. In 2010, there were 12 meetings of which the record of attendance is laid out in the Audit Committee Report on page 79 of this report.

Accountability


REVIEW OF FINANCIAL REPORTING

The Audit Committee regularly reviews quarterly

and annual financial statements before submitted to Bapepam-LK and the Indonesia Stock Exchange. The review covers accounting policy, its implementation, and transparency. Assessment of the effectiveness of internal control over financial reporting is based on International framework standard issued by Committee of Sponsoring Organisations (COSO).

COMMUNICATION WITH INTERNAL AUDIT

To facilitate the duties, including to take care of technical administrative matters of Audit Committee, a secretary, who is working on day-to-day basis as the Company’s Legal Head, had been appointed. The Secretary’s responsibility includes arranging regular meeting with the Internal Audit Department. In those meetings, the Internal Audit head explains all phases of his department’s work, including annual audit plan, priority on high risk areas, audit reports and conclusions, and monitors the follow-up of suggestions and recommendations in audit reports.

Any discrepancies and findings, which are considered significant by the Audit Committee, are discussed with Internal Audit head, and reported to the BoC for further follow up and improvement.

During 2010, the Audit Committee concluded that the Internal Audit function had conducted its audits according to a risk-based audit approach.

REVIEW OF EXTERNAL AUDIT

During the 2010 fiscal year, the Audit Committee held four meetings with the External Auditor, discussing the risk -based audit plan, the limited review on the quarterly financial statements, and the result of the financial statements audit as well as evaluated the sufficiency and objectivity of the External Auditor in relation with the financial statements.

The Audit Committee concluded that the External Auditor has conducted the audit in accordance with the auditing standards established by the Indonesian Institute of Certified Public Accountants, both in planning and implementation. External Audit has been planned and implemented so that all key risks have been addressed.

REPORT FROM THE AUDIT COMMITTEE

The audit committee was established on April 10, 2008 in accordance with Decision of the Chairman of Capital Market Supervisory Agency No.29-PM/2004 rule no. IX.1.5 dated September 24, 2004 on Guidelines on Establishment and Working Implementation of Audit Committee for public listed companies, and also in accordance with GCG principles of transparency, accountability, responsibility, and fairness.

The Audit Committee, comprising at least three qualified members with an independent commissioner as chairman, reports directly to the BoC. It is tasked with assisting the BoC to oversee and provide recommendations. The scope of oversight concerns any matter and any report to be submitted to the BoC. Particular attention is paid to identify and clarify potential problems that require BoC or BoD action. Other regular areas of concern to the Audit Committee are a review of the Company’s financial reporting system, internal control, risk management and compliance. Advice and recommendations are also provided on any proposals which require approval at the General Shareholders Meeting.

Specifically, the Audit Committee is responsible for reviewing the company’s financial reports, assessing the adequacy of the internal control and risk management, ensuring that conflicts of interest are dealt with in accordance with the company’s policy and proposing the company’s external auditor and its fees. The Audit Committee also monitors and reviews compliance with risk management policy as reported by the Risk Management Committee.

Davy Indra KurniadiMember

10 Times

Myrnie Zachraini TaminMember

11 Times


Chairman and Independent Commissioner

11 Times

THE AUDIT COMMITTEE MET 12 TIMES IN 2010, WITH ATTENDANCE AS FOLLOWS

The Audit Committee is also responsible for expressing its opinion with regard to operation plan and budgets as well as the appointment and termination of staff of the Internal Audit Office.

Exceeding regulatory requirements, all three members of the Audit Committee are independent members. The three-year term of office of the Audit Committee shall extend to the closing of the third AGMS after appointment. Meetings are conducted monthly or as necessary.

Throughout 2010 we, the Audit Committee, covered a wide range of issues. Our works include among others reviews of financial statements of the company, IMM’s BoCT project, procurement policies and execution in the company, mine coal production at TCM, project planning and execution and budgeting process and investment approval process.

We regularly submit to the BoC report on our activities. To have a better understanding of the Company’s activities, we made one visit to the mine site. Upon the invitation of the BoC we attended one meeting of the BoC.

February 17, 2011

Prof. Dr. Djisman S. Simandjuntak Chairman of the Audit Committee

Accountability


(Volunteer@ction Programme)

(Smart Teaching Programme)

(Mining for Children Programme)

(On Mining Generation)

CORPORATE SOCIAL RESPONSIBILITY AND COMMUNITY DEVELOPMENT

» “The goal of our CSR and Community Development programs are to deliver sustainable benefits to the receiving communities,

thus benefiting all stakeholders including ITM itself.”

ITM is aware that our existence as a business entity is integrated with the community. The term “community” encompasses but is not limited to those who live in the mining operation areas that are the target of most of our Community Development programs. This is in line with the Company’s intention to bring more extensive benefits to stakeholders.

As part of our responsibility to the society and the nation, we carry out CSR programs on a national level, as well as Community Development programs around the mine sites that we work in. Coordinated under the umbrella of the CC department, these programs embody our commitment to give back and realize the society’s potential for a better life.

The task of carrying out our CSR activities is divided amongst several bodies and represents our objective of delivering sustainable benefits to the receiving communities, thus benefiting all stakeholders including ITM itself. In addition to communications functions by other corporate bodies, we have dedicated departments to oversee effective lines of communication with a variety of stakeholders. Comprising both external and internal lines of communication, these resources seek to engage a variety of parties, including the communities we work with, to communicate our goals and actions.

CORPORATE SOCIAL RESPONSIBILITY

In 2010, CC implemented the third year of our five-year commitment to education, as a means to engage the general public and fulfill our obligations to society. Launched in 2008 with the theme of “Spreading Knowledge, Achieving Dreams” (Menebar Ilmu, Menggapai Cita), our ITM for Education program aims to elevate the quality of education in Indonesia. The program has reached thousands of participants.

This aim has traditionally been carried out through three sub-programs: Mining for Children, Volunteer Action, and Smart Teaching. The first reaches out directly to early age and elementary school children, the second empowers volunteers, and

the third concentrates on teachers, in a holistic and empowering cycle. In 2010 we added a fourth sub-program called On-Mining Generation which targets high school children.

In 2010, our progress was as follows:

We increased our coverage in terms of quantity of the beneficiaries and geographic area.

We were able to raise the awareness of children regarding the mining industry.

We improved the capability of teachers and volunteers, based on qualitative surveys given out to the teachers and schools.

MINING FOR CHILDREN

Our Mining for Children program aims to widely spread understanding of all aspects of coal mining, for both rural and urban children. This innovative and pioneering program aims to introduce the world of mining to children, and broaden their science insights. Starting with the publication of children’s storybooks on coal, it was continued by elementary school visits to elaborate on the content of the books through storytelling, science experiments, games and other methods. As a result, the children become “Mining Buddies”.


In 2010, we reached 7,800 elementary school-age children in the Jabodetabek, Jorong, Samarinda and Bontang. We visited 24 schools in Greater Jakarta, 12 at PT Jorong Barutama Greston, 12 at PT Kitadin (Embalut), and 23 at PT Indominco Mandiri, as well as 3 schools within the Thousand Islands. Since the program started in 2008, we have reached over 17,000 children in Jabodetabek and Kalimantan, and a few other areas.

Along with teaching them about the mining industry, we introduced the concept of environmental conservation and eco-friendly energy resources, expanding their consciousness as to how they should be proud of their rich Indonesian country. Besides giving them early science education, this also helped opened their eyes to mining career paths and inspired them with a love of science.

Students and teachers benefited from new knowledge as part of their science studies, and teachers were inspired by our example to use storytelling methods in their other teaching methods.

One of the program activities was the free distribution of two children’s storybooks about coal mining during the school visits and ITM’s other Education programs. These two books were also commissioned and published by ITM. They can be obtained in Indonesian and English by contacting ITM’s CC department. In addition, a number of books were donated to the schools’ libraries.

VOLUNTEER ACTION

Volunteer Action is a capacity building program that has been specifically designed for teachers and volunteers in non-formal education who conduct

activities in the Jabodetabek area. The program aims to improve the teaching quality of teachers and volunteers in providing alternative education to their students through workshops and seminars.

Four main Volunteer Action sub-programs took place in 2010. First, ITM conducted eight workshops for over 1,300 teachers from non-formal early childhood centers (PAUD) throughout Jabodetabek and the Thousand Islands. Various lessons were provided during the workshops. Some of the materials had to do with motivating and inspiring the students, PAUD management, management of mini-libraries, storytelling for early age children, early childhood psychological development and so forth.

The second event was a storytelling performance for underprivileged children in Kampung Apung, North Jakarta. A theatrical adaptation of the book “Adventure in Coal Mining”, published by ITM, was staged. A total of 160 children joined the event.

The third event was a fast-breaking gathering for children from shelter houses which featured various performances. Held on August 19, 2010 at the Gelanggang Remaja Tanah Abang, it was attended by 443 children.

Finally, the annual Volunteer Action workshop was conducted for the third time at the Sekolah Alam Cikeas (Cikeas Nature School), Bogor, with the theme “Learn from Nature” which was attended by 102 volunteers for education from 56 shelter houses. The purpose of the workshop was to improve volunteers’ capacity and skills. They were taught to educate children creatively using the materials at hand, for example creating snakes-and-ladders games out of old calendars and cardboard.

SMART TEACHING

The Smart Teaching program provides capacity training resources and training for elementary school teachers in many districts across Indonesia. This program is aimed at elevating the ability of primary school teachers. The activities included teacher training with a modern perspective. In this activity, the teachers learned creative teaching, library management, teaching through read aloud methods, communicating with pupils, etiquette, and morality.

In 2010, we held workshops for teachers in Jakarta and Kalimantan where our sites are located. This capacity building outreach was recognized and supported by the Ministry of Education. Examples included:

A two-day Read Aloud (Membaca Lantang) workshop in Jakarta that encouraged teachers to prepare themselves better before teaching. A total of 108 teachers from 42 schools participated. Subsequently, a Read Aloud competition was held, with the winners receiving a free mine site trip from ITM to experience the reality of mining processes and understand the good mining practices taking place at ITM and its subsidiaries.

A workshop for elementary teachers in South Kalimantan around our PT Jorong Bharutama Greston mine site. The workshop, which had the theme “Creative and Innovative Teaching,” was conducted in two days and was joined by 148 teachers from 23 schools. This was the first time that such a workshop had been held for Jorong.

The impact is that teachers have an increased sense of responsibility for teaching better. They are encouraged to read more books and find more references before entering the classroom, and are inspired to read aloud in class. They value reading more, and are motivated to be more creative and innovative.

» “The program is very good for us as shelter houses’ teachers. It improves our knowledge…”

Leftysia, Rumah Singgah Kokeci.

» “The program is great. A workshop activity like this can increase teachers’ skills

and knowledge. Therefore the teachers can

provide more qualified lessons to their students,”

Ahmad Siroj (SD Global Islamic), participant.



ON-MINING GENERATION

The aim of this program is to raise awareness and understanding among high school students regarding mines and the mining industry. It teaches understanding of good mining practices, in compliance with government, environmental regulations, regional income requirements (pendapatan daerah), local labor laws, creating local employment opportunities, and in a participative manner involving community, the government, and mining companies.

Under this program, a debate competition was held in Samarinda hosted by PT Kitadin (Embalut) on mining-related topics such as the environmental impact, labor issues, etc. The competition was supported by the Provincial Mining Office, the faculty of mining at Mulawarman University, Samarinda, and newspapers Tribune Kaltim and Kaltim Pos. A writing competition was also held, as well as several workshops for the teachers at the same time on creative writing and storytelling, held by experts.

PROGRAM PLANNING PROCESS

Our Community Development programs are joint efforts between ITM and the local stakeholders. Programs are developed for each site in a bottom-up, participative manner that engages the local community and ITM, and involves the local government. The mechanism is the Community Consultative Committee (CCC), while the framework and parameters for our Community Development programs have been laid out in a major study carried out by an outside, independent consultant. We also refer to the Community Involvement aspect of the ISO 26000 guidelines, which Community Development achieved in 2010.

To determine particular activities within each of these categories, communities are first asked to conduct social and economic mapping of local conditions and resources, facilitated by Community Development Officers (CDO) from ITM, and selected outside resources. The results from these surveys become the basis for the selection of programs by the CCC established in the respective fostered villages or areas, representing local leaders and community members. The various CCCs, consisting of local government representatives, CDO and community leaders, meet in the second quarter to discuss program priority and selection in a participative manner. Program priorities and selections are revised as needed from time to time with consideration of budget, activity time frame, availability of skills, and potential local resources.

In the CCC meeting, members discuss the various program proposals to ensure that they represent the actual needs of the majority community in the villages and will therefore benefit the greatest number of villagers. Thus, program selection is not made based on wishes or unreasonable demands from certain individuals or small involved groups, but by agreement of community members through their representatives in the CCC. The programs that are selected are adopted into ITM’s and the governmental Department of Energy and Mineral Resources’ annual budget and work plan (RKAB).

From the perspective of ITM as well as local governments, the CCCs also serve as a means to maintain social harmony with regards to the Company and its activities, as well as to promote self reliance in communities around the operating areas of ITM. Over time, these self-reliant communities are expected to be able to plan, execute, and supervise development of the villages on their own initiative based on sustainable practices and utilization of local resources and potential, and thus reduce their dependency on the Company. Our eventual goal is for them to achieve sustainable development on their own.

As a result, the programs that are selected generally enjoy a high level of support and participation from the community. They are also appropriate to the characteristics of the community and the local surroundings.

EVALUATION, SUPERVISION AND OVERSIGHT

Community Development programs are monitored on a qualitative as well as a quantitative basis. Onsite CDO are responsible for uploading reports on program progress into our Management Information System, an online data base information system to monitor the progress of the Community Development programs at various sites.

One of the measures of success of a Community Development program is the level of active participation from the community, the local government, and the Company itself. Active participation is a good indicator that the community is engaged and supports the activity, suggesting some form of capacity building is underway. Another measure of success is the emergence of spontaneous new activity, especially economic activity.

The success of these Community Development programs are ultimately evaluated according to the CD framework and success parameters previously established as mentioned above. Different success parameters have been established for each type of program together with an outside consultant.

COMMUNITY DEVELOPMENT

ITM engages in Community Development activities in compliance with pertinent government rules and regulations, but more importantly as part of its commitment to give back to society.

TARGETS AND OBJECTIVE

Within our Community Development program, we specifically target the communities around our six mine sites. Recognizing that they are the ones to which our activities have the most impact, we do our best to mitigate these impact by providing positive inputs. We are also cognizant that after our departure, the community needs to be adequately prepared to handle the subsequent slowdown of the local economy through the development of their own social and economic capacity.

Consequently, our Community Development programs are primarily concerned with empowering the community. We go about this goal in a holistic and comprehensive manner, by addressing economic aspects, infrastructure needs, and social needs such as health, education, sports, and culture. Our economic initiatives aim to improve the economic welfare of communities by providing access to capital and skill development as well as support for economic activities using available local resources. Next is social development, which aims at improving the quality of life in communities through the provision of healthcare and educational facilities as well as programs to help preserve local arts and culture. The third category is environment preservation, in which we try to raise community awareness as to the importance of preserving the environment.



To evaluate our programs, our Community Development programs are periodically reviewed by an independent, outside consultant. The results of these evaluations will be used as a basis for further improvement and further steps. This reflects the company’s system of PDCA (Plan – Do – Check – Action).

Finally, to share the news, we publish a newsletter every two months called Bubuhan on our activities. Also, at the end of the year, we publish a Community Development Annual Report.

PROGRAMS

A number of major projects were carried out in 2010. Some were started in 2010, while many others have been ongoing for several years. Our Jorong site, which is closest to mine closure, has the most programs as we have stepped-up activity there in anticipation of ending production. All had the aim of improving beneficiaries’ quality of life, and nurturing good relations between ITM and its stakeholders so that ITM is accepted.

Economic Development

In order to provide access to funds, a Micro Financing Institution (MFI) called the Binaan Mandiri Cooperative has been established at Bontang, with the assistance of government-owned PT Permodalan Nasional Madani. Members use loans provided by the cooperative to engage in a variety of productive economic activities. Since its inception, it has returned an average of 2.5% profit per month.

Various programs have been carried out to improve the community’s economic capabilities, with reference to local resources and local potential. A number of activities involved empowering housewives to earn extra income through food products such as dodol snacks made from pineapple, papayas, snakefruit and pumpkin; drinks made from seaweed; and ocean produce such as shrimp crackers, fish flakes (abon ikan),

shrimp paste (terasi). Other products include sasirangan batik textiles, which is made by housewives in the vicinity of the mines. Other housewives were taught to earn income by sewing, towards economic self-sufficiency in the future.

A decorative wood-carving program was held for men, while youths were given entrepreneurship training in silk-screening and printing as well as making banners, T-shirts and pins. They have received many orders now, not just from us or from contractors, but from the general public around the mine areas.

Agriculture, fresh and ocean aquaculture programs were held for farmers and fishermen, for example in the areas of banana plantation, oyster mushroom farming cultivation, rubber and coconut farming practices and goat cultivation. Fishermen received support and guidance in freshwater and ocean fish cultivating as well as in seaweed farming.

At this point, efforts are ongoing to market these community products through a marketing outlet which, it is hoped, can become a center for local business transactions with an expanded business network.

We provided training and funds for all these activities, in accordance with the needs and readiness of the community. In addition, working through the CC department, we created opportunities for community products in the mine site area to be exposed to a wider audience in our annual Jakarta CSR exhibition, the PNPM (Program Nasional Pemberdayaan Masyarakat which is held by the Social Welfare Ministry) exhibition, and the KSN (Kesetiakawanan Nasional) exhibition held by the Social Ministry, as well as local and regional exhibitions.

Social Development

These programs aim to improve the quality of life in communities through the provision of healthcare and educational facilities as well as programs to help preserve local arts and culture. Activities include building facilities such as libraries and school buildings, and scholarships for elementary, high school and university students. Teacher training for nursery and elementary level teachers was also given under the CC “Education for ITM” program.

Some of the residents and part of the community around our mine sites are actively involved in other social activities which are held by the local government or by the community in various community activities, as well as religious and traditional events that are part of the local culture and which are supported by ITM.

Free healthcare for the community in general with an emphasis on the elderly is another program that has been developed to answer community needs. The provision of health facilities such as the development of Posyandu buildings and staff, and of sports and religious facilities, met important basic needs for the community, and will have an impact on their sustainability from a health and spiritual standpoint. The same is true of our conservation efforts towards traditional local culture such as dances, which are part of our planned and programmed community activities.

Finally, it is strategically very important to improve the supporting infrastructure for example roads, bridges, irrigation, developing clean water facilities and constructing various other buildings, as part of the Community Development program.

Environment Preservation

We carried out environmental preservation programs among others by setting examples to the community, for example by reminding them during meetings of the need to be aware of their environment and its cleanliness. We also supported environmental awareness programs through schools and the local government, especially with regard to cleanliness, for healthier and better living conditions.

Community Relations

The purpose of this program is make sure that our perceptions are aligned and to improve the quality of interaction/community with the community as well as with that of other stakeholders. Relationship-enhancing activities that have an impact on Community Development activities include training on Community Development for community figures and village heads. ITM views community relation activities as the front line in our interactions with the community towards mutual understanding and implementation of community empowerment activities, with the end of goal of improving the community’s quality of life towards self-sufficiency.

AWARDS

In recognition of our contributions to the community, in 2010, Pongsak Thongampai received a Platinum Director-level award from the government’s PNPM program, and Pongsak Dejmark as the Mine Head of PT Jorong Barutama Greston was awarded a Platinum Management-level award for HKSN (National Social Solidarity Day). Furthermore, the sasirangan batik created by housewives in villages around PT Jorong Barutama Greston area won a Silver Award for local culture from HKSN. At PT Kitadin, our freshwater aquaculture efforts were awarded a Gold Award by PNPM for improving the local economy, and at PT Indominco Mandiri, we won a Platinum Award from the Bontang, Kutai Kartanegara and East Kutai areas for infrastructure.



RESPONSIBILITY FOR THE 2010 ANNUAL REPORT

Somyot RuchirawatPresident Director

Pongsak ThongampaiDirector

Somruedee ChaimongkolCommissioner

Aphimuk TaifayongvichitDirector

Rawi Corsiri * Ir. Lukmanul Hakim, MMCommissioner

BOARD OF COMMISSIONERS BOARD OF DIRECTORS

Ibrahim YusufPresident and Independent Commissioner

Rudijanto BoentoroCommissioner

* As of January 1, 2011, Mr. Rawi Corsiri tendered his resignation as Commissioner.

Mahyudin LubisDirector

Prof. Dr. Djisman S. SimandjuntakIndependent Commissioner

Edward Manurung, SE, MBADirector


CORPORATE DATA

92 CORPORATE DATA

92 Board of Commissioners Profile

94 Board of Directors Profile

96 Audit Committee Profile

97 ITM and Subsidiaries Directory

98 Glossary


CORPORATE DATA • Board of Commissioners Profiles

Ibrahim Yusuf Indonesian Citizen, 65

Ibrahim Yusuf was appointed as Independent Commissioner on April 17, 2009 and further appointed as President Commissioner on March 29, 2010. Previously he was a diplomat for over 20 years, stationed largely in developed countries. He graduated from the Asian Institute of Journalism in Manila in 1993 and Lemhanas in 1996. He received the following medal and awards: Loyalty and Dedication (Satya Lencana Karya) presented by the President of Republic of Indonesia in January 2002; Knight Grand Cross (First Class) of the Most Exalted Order of The White Elephant conferred by His Majesty King Bhumibol Adulyadej in recognition of service to the state, Bangkok in April 2008; Award conferred by President of Mae Fah Luang University for the contribution for the enhancement of the bilateral cooperation in education, Chiang Rai in November 2008.

Ir. Lukmanul Hakim, MM Indonesian Citizen, 58

Ir. Lukmanul Hakim was appointed as Commissioner of the Company in 2007. Prior to being appointed as a Commissioner of the Company, he was Operation Director and HR Director. In addition he also a variety of other positions since 2001. He began his career with Indocement in 1978 where he worked until 1992 before being assigned to Indominco, where he remained after Banpu acquired the Company. He obtained his Bachelor of Engineering in Mining Technology from Bandung Institute of Technology in 1976 and earned his Magister of Management from Prasetya Mulia Business School in 2001.

Rawi Corsiri Thai Citizen, 61

Rawi Corisir was appointed as a Commissioner of the Company in 2007. He joined Banpu in 1989 and since 2001 has taken up the position as Chief Operating Officer of Banpu Public Company Limited. He began his career at Electricity Generating Authority of Thailand (EGAT) and has over 30 years experience in the mining and power industries. He previously held the position of President of Tri Energy Company Limited. He currently holds directorships at a number of Banpu affiliated companies involved in both the coal and power business. He is a graduate of Science Degree from Chulalongkorn University where he earned his Master Degree in Management in 1993.

Rudijanto Boentoro Indonesian Citizen, 58

Appointed as Commissioner of the Company on March 29, 2010. Prior to being appointed as Commissioner, Rudijanto Boentoro spent most of his career in the Marketing area of the group since 1986 until he was appointed as Director in 1994 up to 2009 and he also taken up the position of Senior Vice President Marketing for Japan, Europe, South and North America. Before joining the group, he worked for PT Astra Graphia in its computer division from 1981-1986 as a Marketing Support Specialist. He graduated from Faculty of Economics of the Catholic University of Parahyangan Bandung in 1981.

Somruedee Chaimongkol Thai Citizen, 50

Somruedee Chaimongkol was appointed as a Commissioner of the Company in 2007. She joined Banpu in 1983 where she has held various positions including the role as Chief Financial Officer since 1999. She began her career at Banpu and has had 24 years experience in the mining industry. She currently holds directorships at a number of Banpu companies and is currently chairwoman of the Banpu Provident Fund. She is currently is a member of the Banpu Risk Management Committee and the Commodity Risk Management Committee. She earned a degree in accounting from Bangkok University, Thailand in 1983 and graduated from the Global Leadership program at Harvard Business School, Boston, USA, in 2000.

Professor Dr. Djisman S. Simandjuntak Indonesian Citizen, 64

Appointed as an Independent Commissioner of the Company in 2007. He began his career as an auditor at SGV-Utomo in 1973. In 1984 he became Head of the Government Department of Economic Affairs in Jakarta. In 1999 he was appointed Chairman of the Board of Trustees, Centre for Strategic International Studies in Jakarta. He currently holds the role of Executive Director of Prasetya Mulya Business School in Jakarta. He obtained his Bachelor of Economic at the Catholic University of Parahyangan, Bandung, Indonesia in 1973 and a Diploma in Monetary Economic and Public Finance at the University of Cologne in 1979 and his PhD. in Economics at the same University of Cologne in 1983.


Board of Directors Profiles

Somyot Ruchirawat Thai Citizen, 56

Somyot Ruchirawat joined the Company in 2001 as President Director. He has 15 years of experience in the mining industry, having joined Banpu in 1995 where he held the role of Managing Director of MRD-ECC at a Banpu subsidiary until 2000. In 2000, he moved to Indonesia as Vice President of Coal International Trade and Senior Vice President of Coal Operations Indonesia before becoming the head of Banpu’s coal operations in Indonesia. He began his career as manager of Siam Kraft Paper Co.,Ltd in 1977. He has held various other positions, including the position of lead technologist at Thai Oil Co., operations manager of PPG-Siam Silica Co.,Ltd. and general manager of Siam Unisole Co., Ltd from 1987 to 1995. He obtained his B.Sc. in Chemical Engineering and Masters of Business Administration from Chulalangkorn University in 1982 and in 1997 respectively. In 1994 he obtained his Master in Industrial Engineering and Management from the Asian Institute of Technology.

Edward Manurung Indonesian Citizen, 45

Edward Manurung joined the Company in early 2007 and was further appointed as Non-affiliated Director responsible for Finance. He began his career at Deutsche Bank in Jakarta. Prior to joining the Company, He held various roles with large multinational corporations, including Finance Manager of Dow Indonesia, Finance and Administrative Director of L’Oreal Indonesia from 2002 to 2003 and Finance Director of Makro Indonesia from 2003 to 2006. He obtained his undergraduate degree in accounting from the University of Indonesia in 1990 and is a graduate of the University of Florida where he obtained his Master of Business Administration in Finance in 1995.

Pongsak Thongampai Thai Citizen, 50

Pongsak Thongampai joined the Company as Director of Business Development since 2002. He has over 25 years of substantial experience in the mining industry. Prior to joining the Company, he held the role of senior manager of government relations at Banpu Public Company Limited between 1992 and 2001. Since 2005 he has held the role of Deputy Head of coal operations in Indonesia. He began his career as a geologist at Chachue Sompong Mining Co.,Ltd in 1982. Over his career, he has also held positions as Mine Manager of S.T.C. Mining Co.,Ltd and assistant project manager of Visanu Cement Co., Ltd. He graduated from the Faculty of Geology, Chulalongkorn University in 1982 and obtained his Master of Business Administration from Kasetsart University in 2002.

Mahyudin Lubis Indonesian Citizen, 58

Mahyudin Lubis joined the Company as of June 7, 2006 as an advisor to the BoC, then on April 17, 2009 was appointed as a Director of ITM. Prior to his appointment as ITM Director, he was the Commissioner of PT Tambang Batubara Bukit Asam during 2003 – 2008 and his career was developed in the Department of Mines starting as Kepala Sub Direktorat Lingkungan Pertambangan, Direktorat Teknik Pertambangan during 1989 up to 1997. In 1997 he was Director of Coal and during 1998 – 2001 he was Head of the Department of Mines Office in Riau Province and then during 2001 – 2006 he was the Director for Coal and Mineral Development at the Ministry of Energy and Mineral Resources. He graduated from the Mining Engineering department of the Institute Technology Bandung in 1977.

Aphimuk Taifayongvichit Thai Citizen, 52

Aphimuk Taifayongvichit joined the Company in 2002 and became Marketing Director in 2003. He previously joined Banpu in 1994 as manager of a power project in Thailand and went on to hold various roles within the Banpu group of companies including assistant vice president of logistics from 1995 to 1998, managing director of a Banpu subsidiary from 1998 to 2000 and Chief Marketing and Logistic Planner from 2002. Since 2006, he has held the role of Senior Vice President of Marketing responsible for North America, North Asia and Thailand for the Company. He began his career as an Operations Engineer at Thai Shell Exploration and Production Co., Ltd in 1984 and has 23 years experience in the mining industry. He is a graduate of the Ohio State University where he obtained his Bachelor of Science and Master of Science in Mechanical Engineering in 1981 and 1983, respectively.


Audit Committee Profile


Joined the Company as Independent Commissioner as of July 27, 2007 and became Chairman of the Audit Committee as of April 10, 2008. He obtained his Ph.D. in economics from the Faculty of Economics and Social Sciences, University of Cologne majoring in International Economics.

Davy Indra Kurniadi

Joined the Company as a member of the Audit Committee as of April 1, 2008. He holds a Bachelor of Science in Industrial Engineering from Northeastern University, Boston, Massachusetts and has extensive experience in the banking industry.

Myrnie Zachraini Tamin

Joined the Company as a member of the Audit Committee as of April 7, 2008. She obtained her Bachelor degree in accountancy from the University of Indonesia and a Magister degree in Commercial Law from Padjadjaran University. She holds a BAP and Public Accountant License and has more than 15 years experience as an auditor.

ITM and Subsidiaries Directory


Ventura Building 8 th Floor Jl. R. A. Kartini No. 26 Jakarta 12430 Indonesia

[T] +62 21 750 4390 [F] +62 21 750 4696

[e-mail] [email protected] www.itmg.co.id


[Site Office] PO Box 178 Bontang 75311 Km. 30, Bontang Office Site Kalimantan Timur Indonesia 75311

[T] +62 548 26235 [F] +62 548 26241


[Site Office] Adong Camp Adong Kecamatan Muara Lawa Kabupaten Kutai Barat Kalimantan Timur 75775

[Site Office] Bunyut Camp Bunyut Kecamatan Melak Kabupaten Kutai Barat Kalimantan Timur 75765

[T] +62 21 750 4390 ext. 412413 [T] +62 21 750 4390 ext. 417-418 [F] +62 21 750 4390 ext. 416 [F] +62 21 750 4390 ext. 419


[Site Office] Jl. A. Yani Km. 104 Desa Swarangan RT. 07 No. 286 Kecamatan Jorong Kabupaten Tanah Laut P.O. Box 141 Pelaihari Kalimantan Selatan Indonesia 70882

[T] +62 21 750 4390 ext. 400 - 402 [F] +62 21 750 4390 ext. 403

PT Kitadin

[Site Office] Embalut Desa Embalut Kecamatan Tenggarong Seberang Kabupaten Kutai Kertanegara Kalimantan Timur Indonesia 75572

[T] +62 811 5824887 [T] +62 811 5824889 [F] +62 21 750 4390 ext. 410

[Site Office] Tandung Mayang Jl. Poros Bontang Samarinda Km. 10 Bontang, Kalimantan Timur Indonesia 75300

[T] +62 548 20698/99 [F] +62 548 20696

PT Bharinto Ekatama

[Site office] Jl. Pendreh No. 173 Muara Teweh Kalimantan Tengah Indonesia 73811

[T] +62 21 750 4390 ext. 421 - 422 [F] +62 21 750 4390 ext. 420

Public Accountant

KAP Tanudiredja, Wibisana and Rekan (A member firm of PricewaterhouseCoopers)

Jl. H. R. Rasuna Said Kav X-7 No. 6 Lantai 12, Jakarta 12940

[T] +62 21 521 2901

[STTD Number] 383/PM/STTD-AP/2004 [STTD Date] July 27, 2004 [Member of IAPI] Number 1171 valid until December 2011

Lawyer

DNC Advocates at Work The Landmark Center Tower B, 8 th Floor Jl. Jend. Sudirman No. 1 Jakarta 12910, Indonesia

[T] +62 21 520 2800 [F] +62 21 520 2801

www.dnc-advocates-at-work.com

Notary

Popie Savitri Martosuhardjo Pharmanto, S.H. Notaris and PPAT Jl. Hadiah IX Blok D XII / 1121 Kav. Polri, Jakarta 11460

[T] +62 21 5657851; 5683746

Share Administration Bureau

PT Datindo Entrycom Puri Datindo – Wisma Sudirman Jl. Jendral Sudirman Kav. 34 Jakarta 10220

[T] +62 21 570 9009

[STTD Number] 1548/KMK.013/1990 [STTD Date] April 19, 1991


Glossary

AGMS Annual General Meeting of Shareholders

Bapepam-LK Capital Market and Financial Institution Supervisory Board

BCL Bontang Coal Laboratory

BCM Business Continuity Management

BoC Board of Commissioners

BoCT Bontang Coal Terminal

BoD Board of Directors

CC Corporate Communications

CBU Continuous Barge Unloader

CCC Community Consultative Committee

CCoW Coal Contract of Work

CDO Community Development Officer

CMS Contractor Management System

CMT Crisis Management Team

COGS Cost of Goods Sold

COSO Committee of Sponsoring Organisations

CPA Certified Public Accountant

CRM Customer Relationship Management

CSR Corporate Social Responsibility

DSC Deferred Stripping Costs

EBITDA Earnings before interest, tax, depreciation and amortization

EIA Environmental Impact Analysis

ERM Enterprise Risk Management

ERP Enterprise Resource Planning

ERT Emergency Response Team

GCG Good Corporate Governance

GCGNCC Good Corporate Governance, Nomination and Compensation Committee

GET Geologist and Engineer Training

GSM General Shareholder Meeting

HKSN National Solidarity Day

HR Human Resources

IFR Injury Frequency Rate

IMT Incident Management Team

ISO International Organization for Standarization

ISR Injury Severity Rate

IT Information Technology

ITM PT Indo Tambangraya Megah Tbk

HR Human Resources

HRIS HR Information System

KP Mining Rights

KPI Key Performance Indicators

LTI Lost Time Due to Injury

OHSAS Occupational Health and Safety Advisory Services

mt Million tons

NEX Newcastle Export Index

PAMA PT Pamapersada Nusantara

PAUD non-formal early childhood centers

PDCA Plan Do Check Action

PNPM Program Nasional Pemberdayaan Masyarakat

QSE Quality, Safety and Environment

RKAB Annual Budget and Work Plan

RKL Environment Management Plans

RPL Environment Monitoring Plans

SFAS Statement of Financial Accounting Standard

TPM Total Productive Maintenance

Gross Profit Margin = Gross Profit / Net Sales

Net Profit Margin = Net Income / Net Sales

EBITDA = Operating Profit + Depreciation + Amortization

Networking Capital = Current Assets - Current Liabilities

Current Ratio = Current Assets / Current Liabilities


CONSOLIDATED FINANCIAL STATEMENTS

102 CONSOLIDATED FINANCIAL STATEMENTS


PPTT IINNDDOO TTAAMMBBAANNGGRRAAYYAA MMEEGGAAHH TTBBKK..DDAANN AANNAAKK PPEERRUUSSAAHHAAAANN//AANNDD SSUUBBSSIIDDIIAARRIIEESS

LAPORAN KEUANGAN KONSOLIDASIAN/CONSOLIDATED FINANCIAL STATEMENTS

31 DESEMBER 2010 DAN 2009/31 DECEMBER 2010 AND 2009

PT INDO TAMBANGRAYA MEGAH TBK.DAN ANAK PERUSAHAAN/AND SUBSIDIARIES

Lampiran 1/1 Schedule

Catatan atas laporan keuangan merupakan bagian yang takterpisahkan dari laporan keuangan konsolidasian ini

The accompanying notes form an integralpart of these consolidated financial statements

NERACA KONSOLIDASIAN31 DESEMBER 2010 DAN 2009(Dinyatakan dalam ribuan Dolar AS, kecuali nilai nominaldan data saham)

CONSOLIDATED BALANCE SHEETSAS AT 31 DECEMBER 2010 AND 2009

(Expressed in thousand US Dollars, except for par value andshare data)

Catatan/Notes 2010 2009

ASET LANCAR CURRENT ASSETSKas dan setara kas 2a,3 294,569 428,580 Cash and cash equivalentsPiutang usaha, setelah dikurangi Trade receivables, net of

penyisihan piutang ragu-ragu allowance for doubtful accountssejumlah US$ nihil (2009: of US$ nil (2009:US$ nihil) US$ nil)- Pihak ketiga 2d,4 117,919 123,080 Third parties -- Pihak yang mempunyai

hubungan istimewa 2d,4,23 3,143 2,174 Related parties -Piutang lain-lain - pihak ketiga 2d 12,151 18,285 Other receivables - third partiesPiutang derivatif 2o, 22 18,225 7,327 Derivative receivablesPersediaan, Inventories,

setelah dikurangi penyisihan net of provision for obsoleteuntuk persediaan usang sejumlah inventories of US$1,672 (2009:US$1.672 (2009: US$1.476) 2e,5 70,533 64,928 US$1,476)

Pajak dibayar dimuka 2l,6a 70,007 19,358 Prepaid taxesAset lancar lain-lain 21,606 9,272 Other current assets

Jumlah aset lancar 608,153 673,004 Total current assets

ASET TIDAK LANCAR NON-CURRENT ASSETSPiutang lain-lain - pihak yang Other receivables - related

mempunyai hubungan istimewa 2d,23 728 605 partiesAset tetap, setelah dikurangi Fixed assets, net of

akumulasi penyusutan sejumlah accumulated depreciation ofUS$282.628 (2009: US$242.330) US$282,628 (2009: US$242,330)dan penyisihan penurunan nilai and net of a provision forsebesar US$176 (2009: impairment of US$176 (2009:US$176) 2f,2g,2i,7 348,290 343,515 US$176)

Biaya pengupasan tanah yangditangguhkan 2m,8 50,737 79,908 Deferred stripping costs

Biaya eksplorasi danpengembangan yang Deferred exploration andditangguhkan, setelah dikurangi development expenditures, netakumulasi amortisasi sejumlah of accumulated amortisation ofUS$52.007 (2009: US$45.218) 2h,2i,9 42,975 60,992 US$52,007 (2009: US$45,218)

Properti pertambangan, setelah Mining properties, netdikurangi akumulasi amortisasi of accumulated amortisation ofsejumlah US$6.266 (2009: US$6,266 (2009:US$5.744) 2i,2j,10 24,083 24,605 US$5,744)

Aset pajak tangguhan, bersih 2l,6d 12,493 12,939 Deferred tax assets, netAset tidak lancar lain-lain 2,247 3,003 Other non-current assets

Jumlah aset tidak lancar 481,553 525,567 Total non-current assets

JUMLAH ASET 1,089,706 1,198,571 TOTAL ASSETS









KEWAJIBAN LANCAR CURRENT LIABILITIESHutang usaha - pihak ketiga 11 94,783 89,255 Trade payables - third partiesHutang pajak 2l,6b 13,763 55,065 Taxes payableBeban yang masih harus dibayar 2k,12 150,130 165,736 Accrued expensesKewajiban lancar lain-lain - pihak Other current liabilities - third

ketiga 9,291 1,381 partiesKewajiban derivatif 2o,22 63,560 13,780 Derivative payablesKewajiban jangka panjang yang

akan jatuh tempo dalam Current maturities ofwaktu satu tahun 13 - 15,050 long-term loans

Jumlah kewajiban lancar 331,527 340,267 Total current liabilities

KEWAJIBAN TIDAK LANCAR NON-CURRENT LIABILITIESKewajiban lain-lain - pihak

yang mempunyai hubungan Other liabilities - relatedistimewa 23 2,837 3,521 parties

Kewajiban pajak tangguhan,bersih 2l,6e 6,021 6,151 Deferred tax liabilities, net

Kewajiban jangka panjang, setelahdikurangi bagian yang akan jatuh Long-term loans, net oftempo dalam waktu satu tahun 13 - 40,000 current maturities

Penyisihan untuk rehabilitasitambang 2n 11,210 8,158 Provision for mine rehabilitation

Penyisihan untuk pembongkaran, Provision for decommissioning,pemindahan, dan restorasi 2n 5,872 4,175 demobilisation and restoration

Penyisihan imbalan karyawan 2p 11,215 8,813 Provision for employee benefits

Jumlah kewajiban tidak lancar 37,155 70,818 Total non-current liabilities

JUMLAH KEWAJIBAN 368,682 411,085 TOTAL LIABILITIES









EKUITAS EQUITYModal saham biasa: Share capital:Modal dasar 3.000.000.000 lembar; Authorised 3,000,000,000 shares;

ditempatkan dan disetor penuh issued and full paid1.129.925.000 lembar (2009: 1,129,925,000 shares1.129.925.000 lembar) (2009: 1,129,925,000 shares)dengan nilai nominal Rp 500 14 63,892 63,892 at par value of Rp 500

Agio saham 15 344,198 344,198 Additional paid in capitalCadangan nilai wajar lindung

nilai arus kas 2o,22a (14,614) - Cash flow hedging reserveDifference in value from restructuring

Selisih nilai transaksi restrukturisasi transactions of entities underentitas sepengendali (15,170) (15,170) common control

Laba ditahan: Retained earnings:- Dicadangkan 16 3,000 1,013 Appropriated -- Tidak dicadangkan 339,718 393,553 Unappropriated -

Jumlah ekuitas 721,024 787,486 Total equity

JUMLAH KEWAJIBAN TOTAL LIABILITIESDAN EKUITAS 1,089,706 1,198,571 AND EQUITY


Lampiran 2 Schedule



LAPORAN LABA RUGI KONSOLIDASIANUNTUK TAHUN-TAHUN BERAKHIR31 DESEMBER 2010 DAN 2009(Dinyatakan dalam ribuan Dolar AS, kecuali laba bersih persaham)

CONSOLIDATED STATEMENTS OF INCOMEFOR THE YEARS ENDED

31 DECEMBER 2010 AND 2009(Expressed in thousand US Dollars, except earnings per

share)


Penjualan bersih 2k,18 1,668,192 1,508,359 Net sales

Harga pokok penjualan 2k,19 (1,126,597) (937,955) Cost of goods sold

Laba kotor 541,595 570,404 Gross profit

Beban operasi Operating expenses

Beban penjualan 2k,20 (99,386) (77,413) Selling expensesGeneral and administration

Beban umum dan administrasi 2k,21 (79,301) (57,176) expenses

Jumlah beban operasi (178,687) (134,589) Total operating expenses

Laba usaha 362,908 435,815 Operating income

Pendapatan/(biaya) lain-lain Other income/(expenses)Pendapatan keuangan 5,421 4,046 Finance incomeBeban keuangan (3,242) (1,927) Finance costsKeuntungan selisih Foreign exchange

kurs, bersih 2c 5,131 4,006 gain, net(Kerugian)/keuntungan transaksi (Loss)/gain on derivative

bersih derivatif 2o,22 (54,091) 19,031 transactions, net(Kerugian)/keuntungan atas (Loss)/gain on disposal

pelepasan aset tetap 2f,7 (4,488) 69 of fixed assetsPenghapusan piutang Write-off of uncollectible

tak tertagih 2d (2,389) - trade receivablesPenghapusan pajak dibayar dimuka Write-off of uncollectible

tak tertagih - (2,418) prepaid taxes(Penghapusan)/pembalikan

penyisihan biaya eksplorasi dan (Write-off)/reversal of provisionpengembangan yang for deferred exploration andditangguhkan 2h, 2i, 9 (20,702) 3,301 development expenditures

Denda pajak (3,509) (1,244) Tax penaltiesBiaya lain-lain (7,685) (4,204) Other expenses

(85,554) 20,660

Laba sebelum pajak penghasilan 277,354 456,475 Profit before income tax

Beban pajak penghasilan 2l,6c (73,203) (120,924) Income tax expense

Laba bersih 204,151 335,551 Net income

Laba bersih per saham Earnings per share(nilai penuh) 2r,24 0.18 0.30 (full amount)


Lampiran 3 Schedule



LAPORAN PERUBAHAN EKUITASKONSOLIDASIANUNTUK TAHUN-TAHUN BERAKHIR31 DESEMBER 2010 DAN 2009(Dinyatakan dalam ribuan Dolar AS)

CONSOLIDATED STATEMENTS OFCHANGES IN EQUITY

FOR THE YEARS ENDED31 DECEMBER 2010 AND 2009

(Expressed in thousand US Dollars)

Selisih nilaitransaksi

restrukturisasientitas

sepengendali/Difference

Cadangan in value fromnilai wajar restructuring

Modal Agio lindung nilai transactions Laba ditahan/saham saham/ arus kas/ of entities Retained earningsbiasa/ Additional Cash flow under Tidak

Catatan/ Share paid hedging common Dicadangkan/ dicadangkan/ Jumlah/Notes capital in capital reserve control Appropriated Unappropriated Total

Balance as atSaldo 1 Januari 2009 63,892 344,198 9,273 (15,170) 13 208,164 610,370 1 January 2009

Laba bersih tahun Net income forberjalan - - - - - 335,551 335,551 the year

Pencadangan Appropriation oflaba ditahan 16 - - - - 1,000 (1,000) - retained earnings

Dividen dideklarasikan 17 - - - - - (149,162) (149,162) Dividends declared

Cadangan nilai wajar Cash flow hedginglindung nilai arus kas 22a - - (9,273) - - - (9,273) reserve

Saldo Balance as at31 Desember 2009 63,892 344,198 - (15,170) 1,013 393,553 787,486 31 December 2009

Laba bersih tahun Net income forberjalan - - - - - 204,151 204,151 the year

Pencadangan laba Appropriation ofditahan 16 - - - - 1,987 (1,987) - retained earnings

Dividen dideklarasikan 17 - - - - - (255,999) (255,999) Dividends declared

Cadangan nilai wajar Cash flow hedginglindung nilai arus kas 22a - - (14,614) - - - (14,614) reserve

Saldo Balance as at31 Desember 2010 63,892 344,198 (14,614) (15,170) 3,000 339,718 721,024 31 December 2010


Lampiran 4 Schedule



LAPORAN ARUS KAS KONSOLIDASIANUNTUK UNTUK TAHUN-TAHUN BERAKHIR31 DESEMBER 2010 DAN 2009(Dinyatakan dalam ribuan Dolar AS)

CONSOLIDATED STATEMENTS OF CASH FLOWSFOR THE YEARS ENDED

31 DECEMBER 2010 AND 2009(Expressed in thousand US Dollars)

2010 2009

Arus kas dari aktivitas operasi Cash flows from operating activitiesPenerimaan dari pelanggan 1,672,384 1,514,780 Receipts from customersPembayaran kepada pemasok (954,545) (770,603) Payments to suppliersPembayaran kepada direktur dan Payments to directors and

karyawan (44,989) (39,472) employeesPendapatan keuangan 5,421 4,046 Receipts of finance incomePembayaran beban keuangan (4,090) (2,059) Payments of finance costsPembayaran pajak penghasilan (162,126) (175,508) Payments of taxPembayaran royalti (244,857) (185,868) Payments of royalties(Pembayaran)/penerimaan lain-lain (27,707) 59,450 Other (payments)/receiptsKas bersih yang diperoleh dari Net cash provided by

aktivitas operasi 239,491 404,766 operating activities

Arus kas dari aktivitas investasi Cash flows from investing activitiesAkuisisi tambahan kepemilikan Acquisition of additional shares

anak perusahaan - (450) of subsidiaryPembelian aset tetap (53,076) (78,235) Acquisition of fixed assetsHasil penjualan aset tetap 332 1,695 Proceeds from sale of fixed assetsBiaya eksplorasi dan pengembangan Deferred exploration and development

yang ditangguhkan, setelah dikurangi expenditures, net ofkapitalisasi beban penyusutan dan capitalisation of depreciationbeban keuangan (9,677) (13,378) and finance costs

Kas bersih yang digunakan untuk Net cash used inaktivitas investasi (62,421) (90,368) investing activities

Arus kas dari aktivitas pendanaan Cash flows from financing activitiesPembayaran pinjaman bank (55,050) (6,060) Repayment of bank loansPenerimaan dari pinjaman bank - 50,000 Proceeds from bank loansPembayaran dividen (255,999) (151,376) Payment of dividendsPembayaran pokok sewa Principal repayments under

pembiayaan (32) (119) finance leasesKas bersih yang digunakan untuk Net cash used in

aktivitas pendanaan (311,081) (107,555) financing activities`(Penurunan)/kenaikan bersih kas dan Net (decrease)/increase in cash and

setara kas (134,011) 206,843 cash equivalents

Kas dan setara kas pada Cash and cash equivalents atawal tahun 428,580 221,737 the beginning of the year

Kas dan setara kas pada Cash and cash equivalents atakhir tahun 294,569 428,580 the end of the year

Aktivitas non-kas Non-cash activitiesKapitalisasi beban keuangan 1,030 132 Capitalisation of finance costsKapitalisasi biaya penyusutan 46 44 Capitalisation of depreciation expense

Capitalisation of provision forKapitalisasi penyisihan untuk pembongkaran, decommissioning, demobilisation

pemindahan, dan restorasi 1,515 464 and restoration



CATATAN ATAS LAPORAN KEUANGANKONSOLIDASIAN31 DESEMBER 2010 DAN 2009(Dinyatakan dalam ribuan Dolar AS, kecuali dinyatakanlain)

NOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTS

31 DECEMBER 2010 AND 2009(Expressed in thousand US Dollars, unless otherwise

stated)

1. UMUM 1. GENERAL

PT Indo Tambangraya Megah Tbk. (“Perusahaan”)didirikan dengan Akta Notaris Benny Kristianto, S.H., No.13 tertanggal 2 September 1987 yang telah disetujui olehMenteri Kehakiman Republik Indonesia dalam SuratKeputusan No. C2-640.HT.01.01.TH’89 tertanggal 20Januari 1989. Anggaran Dasar Perusahaan telahmengalami beberapa kali perubahan. PerubahanAnggaran Dasar Perusahaan terakhir dilakukanberdasarkan Akta Notaris Popie Savitri MartosuhardjoPharmanto, S.H., notaris di Jakarta, No. 30 tertanggal 11Mei 2009 dan No. 24 tertanggal 14 Agustus 2009 terkaitdengan penyesuaian Anggaran Dasar Perusahaandengan Peraturan IX.J.1 lampiran Keputusan KetuaBAPEPAM-LK No. 179/BL/2008 tanggal 14 Mei 2008.Perubahan tersebut telah mendapatkan persetujuan dariMenteri Hukum dan Hak Asasi Manusia RepublikIndonesia dalam Surat Keputusan No. AHU-41810.AH.01.02.Tahun 2009 tertanggal 27 Agustus 2009.

PT Indo Tambangraya Megah Tbk. (the “Company”)was established based on Notarial Deed of BennyKristianto, S.H., No. 13 dated 2 September 1987which was approved by the Minister of Justice of theRepublic of Indonesia in Decree No. C2-640.HT.01.01.TH’89 dated 20 January 1989. TheCompany’s Articles of Association have beenamended several times. The latest amendment madeto the Company’s Articles of Association was basedon Notarial Deed No. 30, dated 11 May 2009 andNotarial Deed No. 24 dated 14 August 2009, of PopieSavitri Martosuhardjo Pharmanto, S.H., notary inJakarta, relating to amendment of the Company’sArticles of Association to conform with therequirements of Regulation IX.J.1, Supplement toDecree of Capital Market and Financial InstitutionsSupervision Agency No.179/BL/2008 dated 14 May2008. That amendment has been approved by theMinister of Law and Human Rights of the Republic ofIndonesia in Decree No. AHU-41810.AH.01.02.Tahun 2009 dated 27 August 2009.

Pada tanggal 18 Desember 2007, Perusahaan melakukanPenawaran Umum Perdana sebanyak 225.985.000lembar saham yang merupakan 20% dari 1.129.925.000lembar saham yang ditempatkan dan disetor penuh.Penawaran kepada masyarakat tersebut dicatat di BursaEfek Indonesia pada tanggal 18 Desember 2007.

On 18 December 2007, the Company conducted anInitial Public Offering (“IPO”) of 225,985,000 sharesor 20% of 1,129,925,000 shares issued and fullypaid. The shares offered to the public in the IPO werelisted on the Indonesia Stock Exchange on 18December 2007.

Perusahaan memiliki kepemilikan langsung dan tidaklangsung pada anak perusahaan berikut ini:

The Company has direct and indirect ownership inthe following subsidiaries:

Anakperusahaan/Subsidiaries

Aktivitas bisnis/Business activity Lokasi/

Location

Persentase kepemilikan/Percentage of

ownership

Jumlah asetsebelum eliminasi/

Total assets beforeelimination

2010 2009 2010 2009

PT IndomincoMandiri(“IMM”)

Penambanganbatubara/Coal mining

KalimantanTimur/EastKalimantan

100.00 100.00 435,378 573,857

PT TrubaindoCoal Mining(“TCM”)



100.00 100.00 212,508 207,006

PT JorongBarutamaGreston(“JBG”)


KalimantanSelatan/SouthKalimantan

100.00 100.00 65,259 91,589

PT Kitadin(“KTD”)

Penambanganbatubara, jasakontraktor yangberkaitandenganpenambanganbatubara danperdaganganbatubara/Coal mining,contractorservices relatingto coal miningand coal trading


99.99 99.99 136,080 118,841






stated)

1. UMUM (lanjutan) 1. GENERAL (continued)

Anakperusahaan/Subsidiaries

Aktivitas bisnis/Business activity Lokasi/

Location

Persentase kepemilikan/Percentage of

ownership

Jumlah asetsebelum eliminasi/

Total assets beforeelimination

2010 2009 2010 2009

PT BharintoEkatama(“Bharinto”)

Eksplorasitambangbatubara/CoalExploration

KalimantanTimur danTengah/Eastand CentralKalimantan

100.00 99.00 24,011 12,880

Bidang usaha utama Perusahaan adalah bidangpertambangan dengan melakukan investasi pada anak-anak perusahaan dan jasa pemasaran untuk pihakyang memiliki hubungan istimewa. Anak-anakperusahaan yang dimilikinya bergerak dalam industripertambangan batubara. Kantor pusat Perusahaanberlokasi di Jakarta. Dalam laporan keuangankonsolidasian ini, Perusahaan dan anak-anakperusahaan secara bersama-sama disebut sebagai“Grup”.

The main activities of the Company are mining, byinvesting in subsidiaries, and marketing services torelated companies. Its subsidiaries are involved in thecoal mining industry. The Company’s head office islocated in Jakarta. In these consolidated financialstatements, the Company and its subsidiaries arecollectively referred to as the “Group”.

Entitas pengendali utama Perusahaan adalah BanpuPublic Company Limited, sebuah perusahaan yangdidirikan di Kerajaan Thailand.

The ultimate parent entity is Banpu Public CompanyLimited, a company incorporated in the Kingdom ofThailand.

Susunan Dewan Direksi dan Dewan KomisarisPerusahaan pada tanggal 31 Desember 2010 dan2009 adalah sebagai berikut:

The composition of the Company’s Board of Directorsand Board of Commissionersas at 31 December 2010and 2009 were as follows:

2010 2009

Direktur Utama: Mr. Somyot Ruchirawat Mr. Somyot Ruchirawat President Director:Direktur: Mr. Pongsak Thongampai Mr. Pongsak Thongampai Directors:

Mr. Aphimuk Taifayongvichit Mr. Aphimuk TaifayongvichitMr. Mahyudin Lubis Mr. Mahyudin Lubis

Non-affiliatedDirektur tidak terafiliasi:Mr. Edward Manurung, S.E., MBA Mr. Edward Manurung, S.E., MBA Director:

PresidentKomisaris Utama: Mr. Ibrahim Yusuf^ # Mr. Sutoyo Sutedjo, S.H., MH^ Commissioner:Komisaris: Ms. Somruedee Chaimongkol Ms. Somruedee Chaimongkol Commissioners:

Mr. Rawi Corsiri Mr. Rawi CorsiriMr. Ir. Lukmanul Hakim, MM Mr. Ir. Lukmanul Hakim, MM

Mr. Rudijanto Boentoro^ Mr. Ibrahim Yusuf#

Prof. Dr. Djisman S. Simanjuntak # Prof. Dr. Djisman S. Simandjuntak#

^ Diangkat atau digantikan berdasarkan Keputusan RapatUmum Pemegang Saham Tahunan pada tanggal 29 Maret2010.

^ Appointed or replaced based on decision of the AnnualGeneral Meeting of Shareholders held on 29 March 2010.

# Komisaris Independen # Independent Commissioner






stated)

1. UMUM (lanjutan) 1. GENERAL (continued)

Susunan Komite Audit Perusahaan pada tanggallaporan keuangan konsolidasian ini adalah sebagaiberikut:

The composition of the Company’s Audit Committee asat the date of these consolidated financial statementswas as follows:

Ketua: Prof. Dr. Djisman S. Simandjuntak Chairman:Anggota: Mr. Davy Indra Kurniadi Members:

Ms. Myrnie Zachraini TaminSekretaris: Mr. Erwin Sundoro Secretary:

Pada tanggal31 Desember 2010, Grup memiliki 3.217karyawan (2009: 3.063 karyawan) - tidak diaudit.

The Group has 3,217 employees as at 31 December2010 (2009: 3,063 employees) - unaudited.

Cadangan Batubara – tidak diaudit Coal Reserves – unaudited

Berdasarkansurvei internal, setelah memperhitungkanpenjualan batubara yang diproduksi dari cadanganbatubara Grup selama tahun 2010, jumlah cadanganterbukti tanggal 31 Desember 2010 adalah sebagaiberikut:

Based on internal surveys, and after accounting forsales of coal produced from the Group’s reservesduring 2010, the proven reserves as at 31 December2010 were as follows:

Lokasi/Location

Tanggal izinpenambangan/

Date of mining permit

Tanggalberakhir/Expiry

date2)

Jumlah CadanganTerbukti per/TotalProven Reserves

as of31 Desember/

December 2009 1) 3)

(tidak diaudit/unaudited)

Jumlahpenjualan

tahun 2010/Sales in20101)


Revisisepanjang

2010/Revision

during 2010(tidak

diaudit/unaudited)

JumlahCadangan

Terbukti per/TotalProven Reserves

as of31 Desember/

December 20101)


KTD – TandungMayang

Izin UsahaPertambanganEksploitasi/ExploitationMining BusinessLicence – 28 Mei/May2008

28 Mei/May2018

- - - -

KTD – Embalut

Kuasa PertambanganEksploitasi/ExploitationMining Rights – 25Februari/February 2009

25 Februari/February

20138.2 (1.3) - 6.9

IMM

Perjanjian KaryaPengusahaanPertambanganBatubara(“PKP2B”)/CoalAgreement– 5Oktober/October 1990

5 Oktober/October 2030 98.2 (14.5) 51.9 135.6

TCMPKP2B/CoalAgreement– 15Agustus/August 1994

27 Februari/February

203555.4 (5.4) 17.1 67.1

JBGPKP2B/CoalAgreement– 15Agustus/August 1994

3 Mei/May2035 8.2 (1) - 7.2

Bharinto

PKP2B/CoalAgreement– 20November/November1997

29 Juni/June 2011

(tahapkonstruksi/

constructionphase)

9.8 - 31.5 41.3

1) Dalam jutaan MT 1) In million MT2) Tanggal izin terakhir jika terdapat lebih dari satu

izin

2) Expiry date of latest permit if more than one permit

3) Diperbaharui berdasarkan hasil survei internal 3) Revised to reflect internal survey results






stated)

2. IKHTISAR KEBIJAKAN AKUNTANSI 2. SUMMARY OF SIGNIFICANT ACCOUNTINGPOLICIES

Laporan keuangan konsolidasian Grup telah disusundan diselesaikan oleh Dewan Direksi pada tanggal 23Februari 2011.

The Group’s consolidated financial statements wereprepared and finalised by the Board of Directors on 23February 2011.

Berikut ini adalah kebijakan akuntansi yang diterapkanoleh Grup dalam penyusunan laporan keuangankonsolidasiannya, yang sesuai dengan prinsipakuntansi yang berlaku umum di Indonesia. Laporankeuangan konsolidasian ini juga disusun berdasarkanperaturan yang ditetapkan oleh Badan Pengawas PasarModal dan Lembaga Keuangan (BAPEPAM & LK) No.VIII.G.7 mengenai Pedoman Penyajian LaporanKeuangan dan Surat Edaran BAPEPAM & LK No. SE-02/BL/2008 tertanggal 31 Januari 2008 mengenaiPedoman Penyajian dan Pengungkapan LaporanKeuangan Emiten atau Perusahaan Publik IndustriPertambangan Umum.

Presented below are the significant accounting policiesadopted in preparing the consolidated financialstatements of the Group, which are in conformity withaccounting principles generally accepted in Indonesia.The consolidated financial statements have also beenprepared in conformity with Regulation of the CapitalMarket and Financial Institutions Supervisory Board(BAPEPAM & LK) No. VIII.G.7 for the Guidance onFinancial Statements Presentation and Circular Letter ofBAPEPAM & LK No. SE-02/BL/2008 dated 31 January2008 for Preparation and Disclosure Guidance forFinancial Statements of an Issuer or Public Company inthe General Mining Industry.

a. Dasar penyusunan laporan keuangankonsolidasian

a. Basis of preparation of the consolidatedfinancial statements

Laporan keuangan konsolidasian telah disusundengan dasar harga perolehan, kecuali instrumenkeuangan, yang dicatat sebesar nilai wajarnya.Perusahaan mencatat pembukuannya dalam DolarAmerika Serikat (“Dolar AS” atau “US$”) yang telahdisetujui oleh Menteri Keuangan melalui SuratKeputusan No. 548/PJ.42/2002. Mata uangfungsional Grup adalah Dolar AS.

The consolidated financial statements have beenprepared on the basis of historical costs, except forfinancial instruments, which are carried at fairvalue. The Company maintains its books in UnitedStates Dollars (“US Dollars” or “US$”) which hasbeen approved by the Ministry of Finance throughDecree No. 548/PJ.42/2002. The US Dollar is thefunctional currency of the Group.

Laporan arus kas konsolidasian disusunmenggunakan metode langsung denganmengklasifikasikan arus kas berdasarkan aktivitasoperasi, investasi, dan pendanaan. Untuk tujuanpenyusunan laporan arus kas konsolidasian, kasdan setara kas mencakup kas, kas di bank, dandeposito dengan jangka waktu tiga bulan ataukurang, setelah dikurangi cerukan.

The consolidated statements of cash flows areprepared based on the direct method by classifyingcash flows on the basis of operating, investing andfinancing activities. For the purpose of theconsolidated statements of cash flows, cash andcash equivalents includes cash on hand, cash inbanks and deposits with a maturity of three monthsor less, net of overdrafts.

Angka dalam laporan keuangan konsolidasiandisajikan dalam ribuan Dolar AS kecuali dinyatakanlain.

Figures in the consolidated financial statementsare rounded to and stated in thousand US Dollars,unless otherwise stated.

Transaksi restrukturisasi entitas sepengendalidicatat dengan menggunakan metode penyatuankepemilikan (“pooling of interest”). Selisih antaraharga pengalihan dengan nilai buku dicatat dalamakun “Selisih Nilai Transaksi RestrukturisasiEntitas Sepengendali” dan disajikan pada bagianekuitas dalam neraca konsolidasian.

Restructuring transactions for entities undercommon control are accounted for using thepooling of interests method. The differencebetween the transfer price and the book value isrecorded under the account “Difference in Valuefrom Restructuring Transactions of Entities underCommon Control” and presented under the equitysection of the consolidated balance sheet.






stated)

2. IKHTISAR KEBIJAKAN AKUNTANSI (lanjutan) 2. SUMMARY OF SIGNIFICANT ACCOUNTINGPOLICIES (continued)

b. Prinsip-prinsip konsolidasi b. Principles of consolidation

Laporan keuangan konsolidasian meliputi laporankeuangan Perusahaan dan anak perusahaandimana Perusahaan mempunyai kepemilikansaham dengan hak suara lebih dari 50%, baiklangsung atau tidak langsung, apabila Perusahaanmemiliki 50% atau kurang saham dengan haksuara, Perusahaan memiliki kemampuan untukmengendalikan anak perusahaan. Anakperusahaan dikonsolidasi sejak tanggal dimanapengendalian telah beralih kepada Perusahaansecara efektif dan tidak lagi dikonsolidasi sejaktanggal pelepasan.

The consolidated financial statements include theaccounts of the Company and its subsidiaries inwhich the Company directly or indirectly hasownership of more than 50% of voting rights, or ifequal to or less than 50%, the Company has theability to control the entity. Subsidiaries areconsolidated from the date on which effectivecontrol is transferred to the Company and are nolonger consolidated from the date of disposal.

Pengaruh dari seluruh transaksi dan saldo antaraperusahaan-perusahaan di dalam Grup telahdieliminasi dalam penyusunan laporan keuangankonsolidasian.

The effect of all transactions and balancesbetween companies in the Group has beeneliminated in preparing the consolidated financialstatements.

Bagian pemegang saham minoritas atas asetbersih anak perusahaan disajikan sebagai “hakminoritas” dalam neraca konsolidasian.

The proportionate share of minorityshareholders inthe net assets of subsidiaries is presented as“minority interests” in the consolidated balancesheet.

Hak minoritas dalam suatu anak perusahaandengan defisit ekuitas tidak akan diakui, kecualipemegang saham minoritas tersebut memilikikewajiban kontraktual untuk ikut membiayai defisittersebut.

A minority interest is not recognised in respect ofsubsidiaries with a deficit in equity unless theminority shareholder has a contractual obligation tocontribute to fund the deficit.

Kebijakan akuntansi yang dipakai dalam penyajianlaporan keuangan konsolidasian telah diterapkansecara konsisten oleh anak perusahaan, kecualidinyatakan lain.

The accounting policies adopted in preparing theconsolidated financial statements have beenconsistently applied by the subsidiaries unlessotherwise stated.

c. Penjabaran mata uang asing c. Foreign currency translation

Transaksi dalam mata uang selain Dolar ASdikonversi menjadi mata uang Dolar ASmenggunakan kurs yang berlaku pada tanggaltransaksi. Pada tanggal neraca, aset dankewajiban moneter dalam mata uang selain DolarAS dikonversi menjadi Dolar AS dengan kurs yangberlaku pada tanggal neraca. Keuntungan dankerugian yang timbul dari penjabaran aset dankewajiban moneter dalam mata uang selain DolarAS diakui dalam laporan laba rugi konsolidasian.

Transactions denominated in currencies other thanUS Dollars are converted into US Dollars at theexchange rate prevailing at the date of thetransaction. At the balance sheet date, monetaryassets and liabilities in currencies other than USDollars are translated into US Dollars at theexchange rate prevailing at that date. Exchangegains and losses arising on the translation ofmonetary assets and liabilities in currencies otherthan US Dollars are recognised in the consolidatedstatements of income.






stated)


c. Penjabaran mata uang asing (lanjutan) c. Foreign currency translation (continued)

Kurs, berdasarkan kurs tengah Bank Indonesia,yang digunakan pada tanggal neraca adalahsebagai berikut (jumlah penuh):

The rates of exchange, based on the BankIndonesia middle rate, used at the balance sheetdates were as follows (full amount):

2010 2009Indonesian Rupiah (“Rupiah”)

Rupiah per Dolar AS 8,991 9,400 equivalent to US$1Euro per Dolar AS 0.752 0.696 Euro equivalent to US$1

Great Britain Pound SterlingPound Sterling Inggris per Dolar AS 0.647 0.622 equivalent to US$1

Australian DollarDolar Australia per Dolar AS 0.983 1.115 equivalent to US$1

Japanese YenYen Jepang per Dolar AS 81.521 92.425 equivalent to US$1

Singapore DollarDolar Singapura per Dolar AS 1.288 1.403 equivalent to US$1

Thailand BahtBaht Thailand per Dolar AS 30.104 33.330 equivalent to US$1

Malaysian RinggitRinggit Malaysia per Dolar AS 3.083 3.241 equivalent to US$1

d. Piutang d. Receivables

Piutang disajikan pada nilai estimasi kolektibilitassaldo piutang berdasarkan telaah darimanajemen terhadap status masing-masingsaldo piutang pada akhir periode. Piutangdihapuskan pada periode dimana piutangtersebut ditentukan tidak akan tertagih.

Receivables are presented at their estimatedrecoverable value based on management’sreview of the status of each account at the end ofthe period. Receivables are written-off during theperiod in which they are determined to be notcollectible.

e. Persediaan e. Inventories

Persediaan batubara merupakan batubara yangmenjadi hak Grup dan dinilai berdasarkan nilaiterendah antara harga perolehan atau nilairealisasi bersih. Harga perolehan ditentukandengan metode rata-rata bergerak dan mencakupalokasi komponen biaya bahan baku, tenaga kerja,penyusutan, dan biaya tidak langsung yangberkaitan dengan aktivitas penambangan. Nilairealisasi bersih adalah estimasi nilai penjualandalam kondisi bisnis normal setelah dikurangidengan estimasi biaya penyelesaian dan bebanpenjualan.

Coal inventories represent the Group’s entitlementto coal on hand and are valued at the lower of costor net realisable value. Cost is determined on amoving average basis and includes an appropriateallocation of materials, labour, depreciation andoverheads related to mining activities. Netrealisable value is the estimated sales amount inthe ordinary course of business, less the estimatedcosts of completion and selling expenses.

Suku cadang dan bahan-bahan pendukung lainnyadinilai berdasarkan harga perolehan yangditentukan dengan metode rata-rata bergeraksetelah dikurangi dengan penyisihan ataspersediaan yang sudah usang. Suku cadang danbahan-bahan pendukung lainnya dicatat sebagaibiaya produksi pada saat digunakan.

Stores and consumable supplies are valued atcost, determined on a moving average basis, lessprovision for obsolete items. Stores andconsumable supplies are charged to productioncosts in the period they are used.






stated)


e. Persediaan (lanjutan) e. Inventories (continued)

Penyisihan atas persediaan suku cadang danbahan-bahan pendukung yang sudah usang danbergerak lambat ditentukan berdasarkan estimasipenggunaan atau penjualan masing-masing jenispersediaan pada masa mendatang.

A provision for obsolete and slow moving storesand consumable supplies is determined on thebasis of estimated future usage or sale ofindividual inventory items.

f. Aset tetap f. Fixed assets

Aset tetap diakui sebesar harga perolehandikurangi akumulasi penyusutan. Aset tetapdisusutkan menggunakan metode garis lurushingga mencapai nilai sisa, selama periode yanglebih rendah antara estimasi masa manfaat aset,umur tambang, atau masa PKP2B, KuasaPertambangan atau Izin Usaha Pertambangan,sebagai berikut:

Fixed assets are stated at cost of acquisition,less accumulated depreciation. Fixed assets aredepreciated using the straight-line method to theirestimated residual value over the lesser of theestimated useful lives of the assets, the life ofmine or the Coal Agreement, Mining Rights orMining Business Licence term as follows:

Tahun/Years

Hak atas tanah dan pematangan tanah 10 Land rights and land improvementsBangunan 5 - 20 BuildingsInfrastruktur 5 - 20 InfrastructurePabrik, mesin, dan peralatan 3 - 20 Plant, machinery and equipmentPerabotan dan perlengkapan kantor 4 - 5 Office furniture and fixturesKendaraan 4 - 5 Vehicles

Hak atas tanah disusutkan selama perkiraanperiode penggunaan, yang lebih dahulu antarapenyelesaian penambangan batubara ataupemutusan PKP2B, Kuasa Pertambangan atauIzin Usaha Pertambangan.

Land rights are depreciated over the expectedperiod of use, being the earlier of the completionof coal mining in the relevant area or thetermination of the Coal Agreement, Mining Rightsor Mining Business Licence.

Biaya hukum yang terkait dengan perolehan hakatas tanah dikapitalisasi dan diamortisasi selamamasa manfaat hak atas tanah tersebut.

Legal costs associated with the acquisition ofland rights are capitalised and amortised overtheir useful lives.

Biaya-biaya setelah pengakuan awal aset diakuisebagai bagian dari nilai tercatat aset atausebagai aset yang terpisah, sebagaimanamestinya, hanya apabila kemungkinan besarGrup akan mendapatkan manfaat ekonomismasa depan berkenaan dengan aset tersebut danbiaya perolehan aset dapat diukur denganhandal. Nilai tercatat komponen yang diganti tidaklagi diakui. Biaya perbaikan dan pemeliharaandibebankan ke dalam laporan laba rugikonsolidasian dalam periode dimana biaya-biayatersebut terjadi.

Subsequent costs are included in the asset’scarrying amount or recognised as a separateasset, as appropriate, only when it is probablethat future economic benefits associated with theitem will flow to the Group and the cost of the itemcan be measured reliably. The carrying amount ofthe replaced part is derecognised. All otherrepairs and maintenance are charged to theconsolidated statement of income during thefinancial period in which they are incurred.






stated)


f. Aset tetap (lanjutan) f. Fixed assets (continued)

Apabila suatu aset tetap sudah tidak digunakanatau dijual, nilai tercatatnya dikeluarkan darilaporan keuangan konsolidasian, dan keuntungandan kerugian yang timbul diakui dalam laporanlaba rugi konsolidasian.

When assets are retired or otherwise disposed of,their carrying values are eliminated from theconsolidated financial statements, and theresulting gains and losses on the disposal of fixedassets are recognised in the consolidatedstatement of income.

Akumulasi biaya konstruksi bangunan dan pabrikserta pemasangan mesin dikapitalisasi sebagaiaset dalam penyelesaian. Biaya-biaya tersebutdireklasifikasi ke akun aset tetap pada saat proseskonstruksi atau pemasangan selesai.Penyusutanmulai dibebankan pada tanggal yang sama.

The accumulated costs of the construction ofbuildings and plant and the installation ofmachinery are capitalised as construction inprogress. These costs are reclassified to fixedasset accounts when the construction orinstallation is complete. Depreciation is chargedfrom such date.

Biaya bunga dan biaya pinjaman lain, seperti biayadiskonto atas pinjaman baik yang secara langsungataupun tidak langsung digunakan untuk mendanaiproses pembangunan aset tertentu yangmemenuhi syarat, dikapitalisasi sampai prosespembangunan tersebut selesai. Untuk pinjamanyang dapat diatribusi secara langsung pada suatuaset tertentu yang memenuhi syarat, jumlah yangdikapitalisasi adalah sebesar biaya pinjaman yangterjadi selama tahun berjalan, dikurangipendapatan investasi jangka pendek dari pinjamantersebut. Untuk pinjaman yang tidak dapatdiatribusi secara langsung pada suatu aset tertentuyang memenuhi syarat, jumlah biaya pinjamanyang dikapitalisasi ditentukan dengan mengalikantingkat kapitalisasi dengan pengeluaran untuk asettertentu yang memenuhi syarat. Tingkat kapitalisasiadalah rata-rata tertimbang biaya pinjaman dibagidengan jumlah pinjaman dari suatu periodetertentu, tidak termasuk pinjaman yang secarakhusus digunakan untuk perolehan aset tertentuyang memenuhi syarat.

Interest and other borrowing costs, such asdiscount fees on loans either directly or indirectlyused in financing construction of a qualifying asset,are capitalised up to the date when construction iscomplete. For borrowings directly attributable to aqualifying asset, the amount to be capitalised isdetermined as the actual borrowing costs incurredduring the year, less any income earned on thetemporary investment of such borrowings. Forborrowings that are not directly attributable to aqualifying asset, the amount to be capitalised isdetermined by applying a capitalisation rate to theamount expended on the qualifying asset. Thecapitalisation rate is the weighted-average of theborrowing costs applicable to the total borrowingsoutstanding during the period, excludingborrowings directly attributable to financing thequalifying asset under construction.

g. Sewa pembiayaan g. Finance leases

Apabila dalam suatu kontrak sewa porsi yangsignifikan atas risiko dan manfaat kepemilikanaset tetap berada ditangan lessor, maka sewatersebut diklasifikasikan sebagai sewa operasi.Pembayaran sewa operasi dibebankan kelaporan laba rugi konsolidasian atas dasar garislurus selama masa sewa.

Leases in which a significant portion of the risks andrewards of ownership are retained by the lessor areclassified as operating leases. Payments made underoperating leases are charged to the consolidatedstatements of income on a straight-line basis over theperiod of the lease.

Sewa aset tetap dimana Grup memiliki secarasubstansi seluruh risiko dan manfaatkepemilikan aset diklasifikasikan sebagai sewapembiayaan. Sewa pembiayaan dikapitalisasipada awal masa sewa sebesar nilai wajar asetsewaan atau sebesar nilai kini pembayaransewa minimum, jika nilai kini lebih rendah darinilai wajar.

Leases of fixed assets where the Group hassubstantially all the risks and rewards of ownershipare classified as finance leases. Finance leases arecapitalised at the lease’s commencement at the lowerof the fair value of the leased property and thepresent value of the minimum lease payments.






stated)


g. Sewa pembiayaan (lanjutan) g. Finance leases (continued)

Setiap pembayaran sewa dialokasikan antarabagian yang merupakan pelunasan kewajiban danbagian yang merupakan beban keuangansedemikian rupa sehingga menghasilkan tingkatsuku bunga yang konstan atas saldo pembiayaan.Unsur bunga dalam beban keuangan dibebankandi laporan laba rugi konsolidasian selama masasewa sedemikian rupa sehingga menghasilkansuatu tingkat suku bunga periodik yang konstanatas saldo kewajiban setiap periode. Aset tetapyang diperoleh melalui sewa pembiayaandisusutkan dengan metode yang sama denganmetode penyusutan aset tetap yang dimiliki sendiri.Jika tidak terdapat kepastian yang memadaibahwa Grup akan mendapatkan kepemilikan atasaset pada akhir masa sewa, aset tersebutdisusutkan selama jangka waktu yang lebihpendek antara umur manfaat aset dan masa sewa.

Each lease payment is allocated between theliability and finance charges so as to achieve aconstant rate of interest on the finance balanceoutstanding. The interest element of the financecost is charged to the consolidated statement ofincome over the lease period so as to produce aconstant periodic rate of interest on the remainingbalance of the liability for each period. Fixed assetsacquired under finance leases are depreciatedsimilarly to owned assets. If there is no reasonablecertainty that the Group will hold the ownership bythe end of the lease term, the asset is depreciatedover the shorter of the useful life of the asset andthe lease term.

h. Biaya eksplorasi dan pengembangan yangditangguhkan

h. Deferred exploration and developmentexpenditure

Biaya eksplorasi dikapitalisasi dan ditangguhkan,untuk setiap area of interest, apabila memenuhisalah satu dari ketentuan berikut ini:

Exploration expenditure is capitalised and carriedforward, on an area of interest basis, provided oneof the following conditions is met:

(i) Biaya tersebut diharapkan dapat diperolehkembali melalui keberhasilan pengembangandan eksploitasi area of interest tersebut ataumelalui penjualan area of interest tersebut;atau

(i) Such costs are expected to be recoupedthrough successful development andexploitation of the area of interest or,alternatively, by its sale; or

(ii) Kegiatan eksplorasi dalam area of interestbelum mencapai tahap yang memungkinkanpenentuan adanya cadangan terbukti yangsecara ekonomis dapat diperoleh, dankegiatan yang aktif dan signifikan dalam atauberhubungan dengan area of interest tersebutmasih berlanjut.

(ii) Exploration activities in the area of interesthave not yet reached the stage which permitsa reasonable assessment of the existence orotherwise of economically recoverablereserves, and active and significant operationsin or in relation to the area are continuing.

Pemulihan biaya eksplorasi yang ditangguhkantergantung suksesnya pengembangan daneksploitasi secara komersial, atau penjualan dariarea of interest yang terkait. Setiap area of interestditelaah pada setiap akhir periode akuntansi. Biayaeksplorasi yang terkait pada suatu area of interestyang telah ditinggalkan atau yang telah diputuskanDireksi Grup bahwa area of interest tersebut tidaklayak secara ekonomis, dihapuskan pada periodekeputusan tersebut dibuat.

Ultimate recoupment of exploration expenditurecarried forward is dependent upon successfuldevelopment and commercial exploitation, oralternatively, sale of the respective area of interest.Each area of interest is reviewed at the end ofeach accounting period. Exploration expenditure inrespect of an area of interest, which has beenabandoned, or for which a decision hasbeen madeby the Group’s Directors against the commercialviability of the area are written-off in the period thedecision is made.






stated)


h. Biaya eksplorasi dan pengembangan yangditangguhkan (lanjutan)

h. Deferred exploration and developmentexpenditure (continued)

Biaya pengembangan tambang dan biaya-biayalain yang terkait dengan pengembangan suatuarea of interest yang terjadi sebelum dimulainyaoperasi di area tersebut, sepanjang telahmemenuhi kriteria untuk penangguhan, akandikapitalisasi.

Mine development expenditure and incorporatedcosts in developing an area of interest prior tocommencement of operations in the respectivearea, as long as they meet the criteria for deferral,are capitalised.

Biaya eksplorasi dan pengembangan yangditangguhkan mencakup akumulasi biaya yangterkait dengan penyelidikan umum, administrasidan perizinan, geologi dan geofisika, dan biaya-biaya yang terjadi untuk mengembangkan areatambang sebelum dimulainya operasi secarakomersial.

Deferred exploration and developmentexpenditure represents the accumulated costsrelating to general investigation, administrationand licence, geology and geophysicsexpenditures and costs incurred to develop amine before the commencement of thecommercial operations.

Biaya eksplorasi dan pengembangan diamortisasiberdasarkan unit produksi sejak dimulainyaproduksi secara komersialdengan memperhatikanmasa PKP2B, Kuasa Pertambangan atau IzinUsaha Pertambangan.

Deferred exploration and development expenditureis amortised based on the units of productionmethod, from the commencement of commercialproduction and giving regard to the term of theCoal Agreement, Mining Rightsor Mining BusinessLicence.

Biaya bunga dan biaya pinjaman lain, seperti biayadiskonto atas pinjaman baik yang secara langsungataupun tidak langsung digunakan untuk mendanaiaktivitas eksplorasi dan pengembangan,sepanjang telah memenuhi kriteria untukpenangguhan, dikapitalisasi sampai aktivitaseksplorasi dan penambangan tersebut selesai.Untuk pinjaman yang dapat diatribusi secaralangsung pada suatu aktivitas tertentu, jumlahyang dikapitalisasi adalah sebesar biaya pinjamanyang terjadi selama periode berjalan, dikurangipendapatan investasi jangka pendek dari pinjamantersebut. Untuk pinjaman yang tidak dapatdiatribusi secara langsung pada suatu aktivitastertentu, jumlah biaya pinjaman yang dikapitalisasiditentukan dengan mengalikan tingkat kapitalisasidengan pengeluaran untuk aktivitas eksplorasi danpengembangan. Tingkat kapitalisasi adalah rata-rata tertimbang biaya pinjaman dibagi denganjumlah pinjaman dari suatu periode tertentu, tidaktermasuk pinjaman yang secara khusus digunakanuntuk aktivitas eksplorasi dan pengembangantertentu.

Interest and other borrowing costs, such asdiscount fees on loans either directly or indirectlyused in financing exploration and developmentactivities, as long as they meet the criteria fordeferral, are capitalised up to the date when theexploration and development activities arecomplete. For borrowings directly attributable to aspecific activity, the amount to be capitalised isdetermined as the actual borrowing costs incurredduring the period, less any income earned on thetemporary investment of such borrowings. Forborrowings that are not directly attributable to aspecific activity, the amount to be capitalised isdetermined by applying a capitalisation rate to theamount expended on the exploration anddevelopment activities. The capitalisation rate isthe weighted-average of the borrowing costsapplicable to the total borrowings outstandingduring the period, excluding borrowings directlyattributable to financing the relevant explorationand development activities.

i. Penurunan nilai aset jangka panjang i. Impairment of long-lived assets

Pada tanggal neraca, Grup melakukan telaahuntuk menentukan ada tidaknya indikasipenurunan nilai aset.

At balance sheet date, the Group undertakes areview to determine whether there is any indicationof asset impairment.






stated)


i. Penurunan nilai aset jangka panjang (lanjutan) i. Impairment of long-lived assets (continued)

Aset tetap dan aset tidak lancar lainnya ditelaahuntuk mengetahui apakah telah terjadi kerugianakibat penurunan nilai apabila terjadi kondisi atauperubahan yang mengindikasikan bahwa nilaitercatat aset tidak dapat diperoleh kembali secarapenuh. Kerugian akibat penurunan nilai diakuisebesar selisih antara nilai tercatat aset dengannilai yang dapat diperoleh kembali dari asettersebut. Nilai yang dapat diperoleh kembali adalahyang lebih tinggi antara harga jual neto atau nilaipakai aset. Dalam rangka menguji penurunan nilai,aset-aset dikelompokkan hingga unit terkecil yangmenghasilkan arus kas terpisah. Pemulihanpenyisihan penurunan nilai diakui sebagaipendapatan dalam periode dimana pemulihantersebut terjadi.

Fixed assets and other non-current assets arereviewed for impairment losses whenever eventsor changes in circumstances indicate that thecarrying amount may not be recoverable. Animpairment loss is recognised for the amount bywhich an asset’s carrying amount exceeds itsrecoverable amount, which is the higher of anasset’s net selling price or value in use. For thepurpose of assessing impairment, assets aregrouped at the lowest levels for which there areseparately identifiable cash flows. Reversal of animpairment provision is recorded as income in theperiod when the reversal occurs.

j. Properti pertambangan j. Mining properties

Properti pertambangan dinyatakan sebesar biayaperolehan dan merupakan penyesuaian nilai wajarproperti pertambangan pada tanggal akuisisi untukTCM, Bharinto, dan JBG.

Mining properties are stated at cost and representthe fair value adjustment of properties acquired atthe date of acquisition of TCM, Bharinto and JBG.

Saldo properti pertambangan terkait dengan TCMdan JBG diamortisasi selama umur propertimenggunakan metode unit produksi sejak tanggaldimulainya operasi komersial. Saldo propertipertambangan Bharinto akan diamortisasi sejakdimulainya operasi komersial. Amortisasi tersebutmenggunakan basis estimasi cadangan.Perubahan dalam estimasi cadangan dilakukansecara prospektif, dimulai sejak awal periodeterjadinya perubahan.

The mining properties balance related to TCM andJBG are amortised over the life of the propertyusing the units of production method from the dateof the commencement of commercial operations.The mining properties balance related to Bharintowill be amortised from the date of thecommencement of commercial operations. Theamortisation is based on estimated reserves.Changes in estimated reserves are accounted foron a prospective basis, from the beginning of theperiod in which the change occurs.

k. Pengakuan pendapatan dan beban k. Revenue and expense recognition

Penjualan bersih merupakan penghasilan yangdiperoleh dari penjualan produk-produk Grup danpemberian jasa pelabuhan dan jasa lain setelahdikurangi retur, potongan penjualan, bea, danPajak Pertambahan Nilai.

Net sales represent revenue earned from the saleof the Group’s products, and delivery of port andother services, net of returns, sales discounts,duties and Value Added Tax.

Penjualan diakui sebagai penghasilan pada saatterjadi pemindahan risiko kepada pelanggan, dan:

Sales are recognised as revenue when there hasbeen a passing of risk to the customers, and:

Produk sudah dalam bentuk yang siap dikirimdan tidak memerlukan proses lebih lanjut oleh,atau atas nama Grup;

The product is in a form suitable for deliveryand no further processing is required by, or onbehalf of the Group;

Kuantitas dan kualitas dari produk dapatditentukan secara wajar dan akurat;

The quantity and quality of the product can bedetermined with reasonable accuracy;






stated)


k. Pengakuan pendapatan dan beban (lanjutan) k. Revenue and expense recognition (continued)

Barang sudah dikirim kepada pelanggan dantidak lagi berada dalam pengendalian fisikGrup (atau kepemilikan atas produkdiserahkan kepada pelanggan); dan

The product has been dispatched to thecustomer and is no longer under the physicalcontrol of the Group (or ownership of theproduct has passed to the customer); and

Harga jual dapat ditentukan secara wajar danakurat.

The selling price can be determined withreasonable accuracy.

Penghasilan dari penjualan ekspor diakui padasaat pengiriman barang kepada pelanggan sesuaidengan persyaratan penjualan yang telahdisepakati. Penghasilan dari penjualan domestikdiakui ketika barang telah dikirim kepadapelanggan sesuai dengan persyaratan penjualanyang telah disepakati atau ketika jasa telahdiberikan kepada pelanggan.

Revenue from export sales is recognised uponshipment of the goods to the customer inaccordance with the terms of sale. Revenue fromdomestic sales is recognised when goods aredelivered to customers in accordance with theterms of sale or when services are rendered tocustomers.

Beban diakui pada saat terjadinya dengan basisakrual.

Expenses are recognised as incurred on theaccrual basis.

l. Perpajakan l. Taxation

Semua perbedaan temporer antara jumlah tercatataset dan kewajiban untuk tujuan pelaporankeuangan dengan dasar pengenaan pajaknyadiakui sebagai pajak penghasilan tangguhandengan metode liabilitas neraca. Tarif pajak yangberlaku saat ini atau secara substansial telahberlaku digunakan untuk menentukan pajaktangguhan.

Deferred income tax is provided using the balancesheet liability method, for all temporary differencesarising between the tax bases of assets andliabilities and their carrying values for financialreporting purposes. Current enacted orsubstantially enacted tax rates are used todetermine deferred income tax.

Aset pajak tangguhan yang berasal dari manfaatpajak masa mendatang dan saldo rugi fiskal yangdapat dikompensasi akan diakui apabila besarkemungkinan jumlah laba fiskal pada masamendatang akan memadai untuk dikompensasidengan manfaat pajak masa mendatang dan saldorugi fiskal dapat dipakai.

Deferred tax assets related to future tax benefitsand the carry forward of unused tax losses arerecognised to the extent that it is probable thatfuture taxable profit will be available against whichthe future tax benefits and unused tax losses canbe utilised.

Koreksi terhadap kewajiban perpajakan diakuisaat surat ketetapan pajak diterima atau jikamengajukan keberatan/banding, pada saatkeputusan atas keberatan/banding tersebut telahditetapkan.

Amendments to taxation obligations are recordedwhen an assessment is received or, if appealedagainst, when the results of the appeal aredetermined.






stated)


m. Biaya pengupasan m. Stripping costs

Untuk area pertambangan dimana pengupasantanah dilakukan berdasarkan rasio rata-ratapengupasan selama umur tambang, biayapengupasan tanah dibebankan sebagai biayaproduksi berdasarkan rasio rata-rata pengupasantanah umur tambang. Jika rasio pengupasanaktual melebihi rasio rata-rata pengupasan selamaumur tambang, kelebihan biaya pengupasan tanahditangguhkan dan dicatat di neraca konsolidasiansebagai biaya pengupasan tanah yangditangguhkan. Jika rasio pengupasan aktual lebihkecil daripada rasio rata-rata selama pengupasanumur tambang, selisihnya dibebankan pada saldobiaya pengupasan tanah yang ditangguhkan dariperiode sebelumnya atau dicatat di neracakonsolidasian sebagai biaya pengupasan tanahyang masih harus dibayar. Perubahan atasestimasi rasio rata-rata pengupasan umur tambangdiperhitungkan secara prospektif sepanjang sisaumur tambang.

For mining areas where stripping is performedbased on a life of mine average stripping ratio,stripping costs are recognised as production costsbased on the average life of mine stripping ratio.When the actual stripping ratio exceeds the life ofmine average, the excess stripping costs aredeferred and recorded in the consolidated balancesheet as deferred stripping costs. When the actualstripping ratio is lower than the life of mineaverage, the difference is adjusted against theamount of deferred stripping costs carried forwardfrom prior periods or is recognised in theconsolidated balance sheet as accrued strippingcosts. Changes in the estimated average life ofmine stripping ratio are accounted for on aprospective basis over the remaining mine life.

Untuk area pertambangan lainnya, biayapengupasan tanah dibebankan sebagai biayaproduksi berdasarkan rasio aktual pengupasantanah selama periode tersebut. Biaya pengupasantanah yang terjadi untuk memindahkan tanah yangbelum menghasilkan batubara akan ditangguhkandan akan diakui sebagai biaya produksi ketikabatubara tersebut ditambang. Biaya pengupasantanah yang ditangguhkan akan dihapus dalamperiode dimana dinyatakan tidak terdapat batubaradan/atau batubara yang ada tidak ekonomis untukditambang.

For other mining areas, stripping costs arerecognised as production costs based on theactual stripping ratio for the period. Stripping costsincurred for removal of overburden withoutexposing the coal are deferred and will berecognised as production costs when the coal hasbeen exposed. Deferred stripping costs are written-off during the period in which the coal isdetermined to be not available and/or noteconomic to be mined.

n. Kewajiban lingkungan n. Environmental obligations

Kewajiban lingkungan terdiri dari biaya-biaya yangberkaitan dengan reklamasi tambang selamamasa operasi, penutupan tambang, danpembongkaran dan pemindahan fasilitas danaktivitas penutupan lainnya.

The environmental obligations consist of costsassociated with mine reclamation during mineoperation, mine closure, and decommissioning anddemobilisation of facilities and other closureactivities.

Tambahan penyisihan untuk biaya reklamasitambang dan penutupan tambang dihitungberdasarkan kuantitas produksi.

Provision for estimated costs of mine reclamationand mine closure is recorded on an incrementalbasis based on quantity produced.

Satuan yang digunakan sebagai dasar untukpencatatan ditelaah secara berkala berdasarkanrencana reklamasi dan rencana penutupantambang.

The rate used is subject to regular review based onmine reclamation and mine closure plans.






stated)


n. Kewajiban lingkungan (lanjutan) n. Environmental obligations (continued)

Cadangan untuk pembongkaran, pemindahan, danrestorasi dicatat untuk mengakui kewajiban hukumyang berkaitan dengan penarikan aset tetap yangberasal dari akuisisi, pembangunan ataupengembangan dan/atau operasi normal asettetap. Penarikan aset tetap ini termasuk penjualan,peninggalan, pendaurulangan atau penghapusandengan cara lain, dan bukan dikarenakanpenghentian sementara pemakaian.

Provision for decommissioning, demobilisation andrestoration provides for legal obligations associatedwith the retirement of a tangible long-lived assetthat results from the acquisition, construction ordevelopment and/or the normal operation of a long-lived asset. The retirement of a long-lived assetincludes its sale, abandonment, recycling ordisposal in some other manner, other thantemporary removal from service.

Kewajiban diakui sebagai kewajiban pada saattimbulnya kewajiban hukum yang berkaitandengan penarikan sebuah aset, dan pada awalnyadiakui sebesar nilai wajarnya. Kewajiban inibertambah dari waktu ke waktu sampai mencapaijumlah penuh dengan melakukan pembebanan kelaporan laba rugi konsolidasian. Disamping itu,biaya penarikan aset dalam jumlah yang setaradengan jumlah kewajiban dikapitalisasi sebagaibagian dari suatu aset tertentu dan kemudiandisusutkan nilainya sepanjang masa manfaat asettersebut. Kewajiban penarikan aset dibebankanpada lebih dari satu periode pelaporan, jikakejadian yang menimbulkan kewajiban itu timbullebih dari satu periode pelaporan. Misalnya, bilaada sebuah fasilitas yang ditutup untuk selamanyatetapi rencana penutupan ditetapkan selama lebihdari satu periode pelaporan, biaya penutupantersebut akan diakui selama periode pelaporansampai rencana penutupan tersebut selesai.Setiap penambahan lapisan kewajiban yang terjadisetelah periode pelaporan akan dianggap sebagaitambahan lapisan kewajiban awal. Setiaptambahan lapisan kewajiban akan diakui sebesarnilai wajar. Tambahan kewajiban akan dinilaiterpisah, diakui dan dicatat tanpa mempengaruhikewajiban masa lalu.

The obligations are recognised as liabilities when alegal obligation with respect to the retirement of anasset is incurred, with the initial measurement ofthe obligation at fair value. These obligations areaccreted to full value over time through charges tothe consolidated statements of income. In addition,an asset retirement cost equivalent to the liabilitiesis capitalised as part of the related asset’s carryingvalue and is subsequentlydepreciated or depletedover the asset’s useful life. A liability for an assetretirement obligation is incurred over more thanone reporting period when the events that createthe obligation occur over more than one reportingperiod. For example, if a facility is permanentlyclosed but the closure plan is developed over morethan one reporting period, the cost of the closure ofthe facility is incurred over the reporting periodswhen the closure plan is finalised. Any incrementalliability incurred in a subsequent reporting period isconsidered to be an additional layer of the originalliability. Each layer is initially measured at fairvalue. A separate layer shall be measured,recognised and accounted for prospectively.

Untuk hal-hal yang berkaitan dengan lingkunganyang mungkin tidak berkaitan dengan penarikanaset, dimana Grup merupakan pihak yangbertanggung jawab atas kewajiban tersebut dankewajiban tersebut ada dan jumlahnya bisa diukur,Grup mencatat estimasi kewajiban tersebut.Dalam menentukan keberadaan kewajiban yangberkaitan dengan lingkungan tersebut, Grupmengacu pada kriteria pengakuan kewajibansesuai dengan standar akuntansi yang berlaku.

For environmental issues that may not involve theretirement of an asset, where the Group is aresponsible party and it is determined that a liabilityexists, and amounts can be quantified, the Groupaccrues for the estimated liability. In determiningwhether a liability exists in respect of suchenvironmental issues, the Group applies the criteriafor liability recognition under applicable accountingstandards.






stated)


o. Aset keuangan dan kewajiban keuangan o. Financial assets and liabilities

Pernyataan Standar Akuntansi Keuangan(“PSAK”) No. 50 (Revisi 2006) “InstrumenKeuangan: Penyajian dan Pengungkapan” danPSAK No. 55 (Revisi 2006) “Instrumen Keuangan:Pengakuan dan Pengukuran” berlaku untuklaporan keuangan yang periodenya dimulai padaatau setelah tanggal 1 Januari 2010.

Statement of Financial Accounting Standards(“SFAS”) No. 50 (Revised 2006) "FinancialInstruments: Presentation and Disclosures" andSFAS No. 55 (Revised 2006) "FinancialInstruments: Recognition and Measurement” areapplicable for financial statements covering periodsbeginning on or after 1 January 2010.

I. Aset keuangan I. Financial assets

Grup mengklasifikasikan aset keuangandalam kategori sebagai berikut (i) asetkeuangan yang nilai wajarnya diakui melaluilaporan laba rugi, (ii) pinjaman dan piutang,(iii) aset keuangan yang dimiliki hingga jatuhtempo, dan (iv) aset keuangan yang tersediauntuk dijual. Klasifikasi ini tergantung padatujuan saat aset keuangan tersebut diperoleh.Manajemen menentukan klasifikasi asetkeuangan tersebut pada saat pengakuanawal.

The Group classifies its financial assets intothe categories of (i) financial assets at fairvalue through profit or loss, (ii) loans andreceivables, (iii) held-to-maturity financialassets and (iv) available-for-sale financialassets. The classification depends on thepurpose for which the financial assets wereacquired. Management determines theclassification of its financial assets at initialrecognition.

(i) Aset keuangan yang nilai wajarnya diakuimelalui laporan laba rugi

(i) Financial assets at fair value throughprofit or loss

Aset keuangan yang nilai wajarnya diakuidi laporan laba atau rugi adalah asetkeuangan yang diklasifikasikan sebagaiaset untukdiperdagangkan. Sebuah asetkeuangan diklasifikasikan sebagai asetuntuk diperdagangkan jika diperolehterutama untuk tujuan penjualan ataupembelian kembali dalam waktu dekatdan terdapat bukti yang menunjukkanlatar belakang untuk mengambilkeuntungan jangka pendek.

Financial assets at fair value throughprofit or loss are financial assetsclassified as held for trading. A financialasset is classified as held for trading if it isacquired principally for the purpose ofselling or repurchasing it in the near termand for which there is evidence of arecent actual pattern of short-term profittaking.

(ii) Pinjaman dan piutang (ii) Loans and receivables

Pinjaman dan piutang adalah asetkeuangan non-derivatif denganpembayaran tetap atau telah ditentukanyang tidak terpengaruh oleh pasar aktif.Pinjaman dan piutang awalnya diakuisebesar nilai wajar ditambah biayatransaksi dan selanjutnya diukur sebesarbiaya perolehan yang diamortisasidengan menggunakan metode sukubunga efektif. Pinjaman dan piutangterdiri dari investasi bersih dalam sewaguna usaha pembiayaan, piutanglainnya, dan aset lainnya.

Loans and receivables are non-derivativefinancial assets with fixed or determinablepayments that are not quoted in an activemarket. Loans and receivables areinitially recognised at fair value plustransaction costs and subsequentlymeasured at amortised cost using theeffective interest rate method. Loans andreceivables consist of net investment infinance leases, other receivables andother assets.






stated)


I. Aset keuangan I. Financial assets

(iii) Aset keuangan yang dimiliki hingga jatuhtempo

(iii) Held-to-maturity financial assets

Aset keuangan yang dimiliki hingga jatuhtempo adalah aset keuangan non-derivatif dengan pembayaran dan jatuhtempo yang tetap serta telah ditentukandimana manajemen Grup memilikimaksud positif dan kemampuan untukmemiliki hingga jatuh tempo, selain:

Held-to-maturity financial assets are non-derivative financial assets with fixed ordeterminable payments and fixedmaturities that the Group’s managementhas the positive intention and ability tohold to maturity, other than:

a) aset keuangan Grup yang nilaiwajarnya diakui melalui laporan labarugi;

a) those that the Group upon initialrecognition designates as at fairvalue through profit or loss;

b) aset keuangan Grup yang tersediauntuk dijual; dan

b) those that the Group designates asavailable for sale; and

c) aset keuangan yang memenuhidefinisi sebagai pinjaman danpiutang.

c) those that meet the definition ofloans and receivables.

Aset keuangan ini pada awalnya diakuisebesar nilai wajar termasuk biayatransaksi dan kemudian diukur padabiaya perolehan diamortisasi denganmenerapkan metode suku bunga efektif.

These financial assets are initiallyrecognised at fair value includingtransaction costs and subsequentlymeasured at amortised cost, using theeffective interest rate method.

(iv) Aset keuangan yang tersedia untuk dijual (iv) Available-for-sale financial assets

Aset keuangan yang tersedia untuk dijualadalah aset keuangan yangdimaksudkan untuk dimiliki hinggajangka waktu yang tak terbatas, yangdapat dijual untuk memenuhi kebutuhanlikuiditas atau perubahan suku bunga,nilai tukar, atau yang tidakdiklasifikasikan sebagai pinjaman danpiutang, aset keuangan yang dimilikihingga jatuh tempo atau aset keuanganyang nilai wajarnya diakui melaluilaporan laba rugi.

Available-for-sale financial assets arefinancial assets that are intended to beheld foran indefinite period of time, whichmay be sold in response to needs forliquidity or changes in interest rates,exchange rates or that are not classifiedas loans and receivables, held-to-maturityinvestments or financial assets at fairvalue through profit or loss.






stated)


o. Aset keuangan dan kewajiban keuangan(lanjutan)

o. Financial assets and liabilities (continued)

I. Aset keuangan (lanjutan) I. Financial assets (continued)

(iv) Aset keuangan yang tersedia untukdijual (lanjutan)

(iv) Available-for-sale financial assets(continued)

Aset keuangan yang tersedia untuk dijualpada awalnya diakui sebesar nilai wajar,ditambah biaya transaksi, dan kemudiandiukur dengan nilai wajar keuntungandan kerugian yang diakui pada laporanperubahan ekuitas, kecuali untukkerugian akibat penurunan nilai dankeuntungan dan kerugian selisih kurs,sampai aset keuangan tersebut tidak lagidiakui. Jika suatu aset keuangan yangtersedia untuk dijual mengalamipenurunan nilai, maka akumulasikeuntungan atau kerugian yangsebelumnya telah diakui dalam laporanperubahan ekuitas, akan diakui dalamlaporan laba rugi konsolidasian. Namun,bunga dihitung dengan menggunakanmetode suku bunga efektif, dankeuntungan atau kerugian mata uangasing atas aset moneter yangdiklasifikasikan sebagai aset tersediauntuk dijual diakui dalam laporan labarugi konsolidasian.

Available-for-sale financial assets areinitially recognised at fair value, plustransaction costs, and measuredsubsequently at fair value with gains andlosses being recognised in the statementof changes in equity, except forimpairment losses and foreign exchangegains and losses, until the financialassets are derecognised. If an available-for-sale financial asset is determined tobe impaired, the cumulative gain or losspreviously recognised in the statement ofchanges in equity is recognised in theconsolidated statement of income.However, interest is calculated using theeffective interest ratemethod, and foreigncurrency gains or losses on monetaryassets classified as available-for-sale arerecognised in the consolidatedstatement of income.

II. Kewajiban keuangan II. Financial liabilities

Grup mengklasifikasikan kewajiban keuangandalam kategori (i) kewajiban keuangan yangnilai wajarnya diakuimelalui laporan laba rugidan (ii) kewajiban keuanganyang diukur padabiaya perolehan diamortisasi.

The Group classifiesits financial liabilities intothe categories of (i) financial liabilities at fairvalue through profit or loss and (ii) financialliabilities measured at amortised cost.

(i) Kewajiban keuangan yang nilai wajarnyadiakui melalui laporan laba rugi

(i) Financial liabilities at fair value throughprofit or loss

Kewajiban keuangan yang nilai wajarnyadiakui melalui laporan laba rugi adalahkewajiban keuangan yangdiklasifikasikan sebagai kewajiban yangdiperdagangkan. Sebuah kewajibankeuangan diklasifikasikan sebagaikewajiban yang diperdagangkan jikadiperoleh terutama untuk tujuanpenjualan atau pembelian kembali dalamwaktu dekat dan terdapat bukti yangmenunjukkan latar belakang untukmengambil keuntungan jangka pendek.

Financial liabilities at fair value throughprofit or loss are financial liabilitiesclassified as held for trading. A financialliability is classified as held for trading if itis acquired principally for the purpose ofselling or repurchasing it in the near termand for which there is evidence of arecent actual pattern of short term profittaking.






stated)


o. Aset keuangan dan kewajiban keuangan(lanjutan)


II. Kewajiban keuangan (lanjutan) II. Financial liabilities (continued)

(ii) Kewajiban keuangan yang diukur padabiaya perolehan diamortisasi

(ii) Financial liabilities measured atamortised cost

Kewajiban keuangan yang tidakdiklasifikasikan sebagai kewajibankeuangan yang nilai wajarnya diakuimelalui laporan laba rugi diukur padabiaya perolehan diamortisasi. Kewajibankeuangan yang diukur pada biayaperolehan diamortisasi adalah hutanglain-lain, beban yang masih harusdibayar, pinjaman, dan obligasi.

Financial liabilities that are not classifiedas at fair value through profit and loss fallinto this category and are measured atamortised cost. Financial liabilitiesmeasured at amortised cost are otherpayables, accrued expenses, loans andbonds.

III. Akuntansi untuk instrumen keuanganderivatif dan aktivitas lindung nilai

III. Accounting for derivative financialinstruments and hedging activities

Instrumen keuangan derivatif pada awalnyadiakui di neraca sebesar harga perolehannyadan selanjutnya dinilai kembali sebesar nilaiwajarnya. Metode untuk mengakui adanyakeuntungan atau kerugian yang terjaditergantung pada sifat dari objek yangdilindungi nilainya. Grup mengelompokkanderivatif sebagai (1) instrumen lindung nilaiterhadap nilai wajar suatu aset atau kewajibanyang diakui atau komitmen sah yang belumdiakui (lindung nilai atas nilai wajar) atau (2)instrumen lindung nilai transaksi yangdiperkirakan akan terjadi (lindung nilai aruskas).

Derivative financial instruments are initiallyrecognised in the balance sheet at cost andsubsequently are remeasured at their fairvalue. The method of recognising the resultinggain or loss is dependent on the nature of theitem being hedged. The Group designatescertain derivatives as either (1) a hedge of thefair value of a recognised asset or liability or ofan unrecognised firm commitment (fair valuehedge); or (2) a hedge of a forecastedtransaction (cash flow hedge).

Perubahan nilai wajar derivatif yang ditujukandan memenuhi kualifikasi sebagai lindung nilaiatas nilai wajar yang efektif dicatat di dalamlaporan laba rugi konsolidasian, bersamadengan perubahan yang terjadi pada nilaiwajar aset dan kewajiban yang dilindunginilainya.

Changes in the fair value of derivatives thatare designated and qualify as fair valuehedges and that are highly effective, arerecorded in the consolidated statement ofincome, along with any changes in the fairvalue of the hedged asset or liability that isattributable to the hedged risk.

Perubahan nilai wajar derivatif yang ditujukandan memenuhi kualifikasi sebagai lindung nilaiarus kas dan lindung nilai tersebut efektif,diakui sebagai bagian dari ekuitas, khususnyapada akun cadangan nilai wajar lindung nilaiarus kas. Jumlah yang ditangguhkan diekuitas kemudian dialihkan ke laporan labarugi konsolidasian dan diklasifikasikansebagai pendapatan atau beban pada periodeyang sama dengan periode ketika prakiraantransaksi yang dilindungi nilainyamempengaruhi laporan laba rugikonsolidasian.

Changes in the fair value of derivatives thatare designated and qualify as cash flowhedges and that are highly effective, arerecognised in equity, in the cash flow hedgingreserve account. Amounts deferred in equityare subsequently released to the consolidatedstatement of income and classified as

revenue or expense in the same periodsduring which the hedged forecastedtransaction affects the consolidatedstatement of income.






stated)


o. Asset keuangan dan kewajiban keuangan(lanjutan)


III. Akuntansi untuk instrumen keuanganderivatif dan aktivitas lindung nilai(lanjutan)

III. Accounting for derivative financialinstruments and hedging activities(continued)

Perubahan nilai wajar atas instrumen derivatifyang tidak memenuhi persyaratan akuntansilindung nilai diakui dalam laporan laba rugikonsolidasian.

Changes in the fair value of any derivativeinstruments that do not qualify for hedgeaccounting are recognised immediately in theconsolidated statement of income.

Ketika instrumen lindung nilai berakhir ataudijual, atau tidak lagi memenuhi persyaratanakuntansi lindungnilai, akumulasi keuntunganatau kerugian yang ada di ekuitas saat itutetap berada di bagian ekuitas dan akandiakui pada saat prakiraan transaksi diakuidalam laporan laba rugi konsolidasian.Apabila suatu prakiraan transaksi tidak lagidiharapkan akan terjadi, akumulasikeuntungan atau kerugian yang telah dicatatdi bagian ekuitas dialihkan ke dalam laporanlaba rugi konsolidasian.

When a hedging instrument expires or is sold,or when a hedge no longer meets the criteriafor hedge accounting, any cumulative gain orloss existing in equity at that time remains inequity and is recognised when the forecastedtransaction is ultimately recognised in theconsolidated statement of income. When aforecasted transaction is no longer expectedto occur, the cumulative gain or loss that wasreported in equity is immediately transferred tothe consolidated statement of income.

Pada saat awal terjadinya transaksi, Grupmembuat dokumentasi mengenai hubunganantara instrumen lindung nilai dan unsur yangdilindungi nilainya, juga tujuan manajemenrisiko dan strategi yang diterapkan dalammelakukan berbagai macam transaksi lindungnilai. Proses dokumentasi ini menghubungkanderivatif yang ditujukan sebagai lindung nilaidengan aset dan kewajiban tertentu ataudengan komitmen tertentu atau transaksiyang diperkirakan akan terjadi. Grup jugamelakukan dokumentasi atas penilaian,apakah pada saat dilakukan transaksi lindungnilai dan saat berlakunya lindung nilaitersebut, derivatif yang digunakan padatransaksi lindung nilai memiliki efektivitasyang tinggi dalam menandingi (offsetting)perubahan nilai wajar atau arus kas suatuunsur yang dilindungi nilainya.

At the inception of the transaction, the Groupdocuments the relationship between hedginginstruments and hedged items, as well as itsrisk management objective and strategy forundertaking various hedge transactions. Thisprocess includes linking all derivativesdesignated as hedges to specific assets andliabilities or to specific firm commitments orforecast transactions. The Group alsodocuments its assessment, both at the hedgeinception and on an ongoing basis, of whetherthe derivatives that are used in hedgingtransactions are highly effective in offsettingchanges in fair values or cash flows of hedgeditems.

IV. Estimasi nilai wajar IV. Fair value estimation

Grup menggunakan beberapa teknikpenilaian yang digunakan secara umumuntuk menentukan nilai wajar dari instrumenkeuangan dengan tingkat kompleksitas yangrendah, seperti swap batubara, swap bahanbakar minyak dan kontrak forward. Inputyang digunakan dalam teknik penilaianuntuk instrumen keuangan di atas adalahdata pasar yang dapat diobservasi.

The Group uses widely recognised valuationmodels for determining fair values of non-standardised financial instruments of lowercomplexity, such as coal swaps, fuel swapsand forward contracts. For these financialinstruments, inputs into models are generallymarket-observable.






stated)


o. Asset keuangan dan kewajiban keuangan(lanjutan)


IV. Estimasi nilai wajar (lanjutan) IV. Fair value estimation (continued)

Nilai wajar instrumen keuangan yang tidakdiperdagangkan di pasar aktif ditentukandengan menggunakan teknik penilaian. Grupmenggunakan metode diskonto arus kasdengan menggunakan asumsi-asumsi yangdidasarkan pada kondisi pasar pada tanggalneraca yang kemudian digunakan untukmenentukan nilai wajar dari instrumenkeuangan.

The fair value of financial instruments that arenot traded in active markets are determined byusing valuation techniques. The Group usesdiscounted cashflow methods and makesassumptions that are based on marketconditions existing at each balance sheet datewhich are used to determine fair value for thefinancial instruments.

p. Imbalan karyawan p. Employee benefits

(i) Kewajiban imbalan pasca masa kerja (i) Post–retirement benefit obligations

Program pensiun imbalan pasti adalahprogram pensiun yang menentukan jumlahimbalan pensiun yang akan diberikan,biasanya berdasarkan satu faktor atau lebihseperti usia, masa kerja, atau kompensasi.

A defined benefit plan is a pension plan thatdefines an amount of pension benefit to beprovided, usually as a function of one or morefactors such as age, years of service orcompensation.

Grup harus menyediakan imbalan pensiundengan jumlah minimal sesuai dengan UUKetenagakerjaan No. 13/2003 atau KontrakKerja Bersama (“KKB”), mana yang lebihtinggi. Karena UU Ketenagakerjaan atau KKBmenentukan rumus tertentu untuk menghitungjumlah minimal imbalan pensiun, padadasarnya program pensiun berdasarkan UUKetenagakerjaan atau KKB adalah programpensiun imbalan pasti.

The Group is required to provide a minimumamount of pension benefits in accordancewith Labour Law No. 13/2003 or the Group’sCollective Labour Agreement (the “CLA”),whichever is higher. Since the Labour Lawand the CLA set the formula for determiningthe minimum amount of benefits, in substancepension plans under the Labour Law or theCLA represent defined benefit plans.

Kewajiban program pensiun imbalan pastiyang diakui di necara konsolidasian adalahnilai kini kewajiban imbalan pasti pada tanggalneraca dikurangi nilai wajar aset program,serta disesuaikan dengan keuntungan/kerugian aktuarial dan biaya jasa lalu yangbelum diakui. Kewajiban imbalan pastidihitung setiap tahun oleh aktuarisindependen menggunakan metode projectedunit credit. Nilai kini kewajiban imbalan pastiditentukan dengan mendiskonto estimasi aruskas keluar masa depan menggunakan tingkatbunga obligasi pemerintah (denganpertimbangan saat ini tidak ada pasar aktifuntuk obligasi korporat berkualitas tinggi)dalam mata uang yang sama dengan matauang imbalan yang akan dibayarkan danwaktu jatuh tempo yang kurang lebih samadengan waktu jatuh tempo imbalan yangbersangkutan.

The liability recognised in the consolidatedbalance sheet in respect of the defined benefitpension plan is the present value of thedefined benefit obligation at the balance sheetdate less the fair value of plan assets,together with adjustments for unrecognisedactuarial gains or losses and past servicecosts. The defined benefit obligation iscalculated annually by independent actuariesusing the projected unit credit method. Thepresent value of the defined benefit obligationis determined by discounting the estimatedfuture cash outflows using interest rates ofgovernment bonds (considering currentlythere is no deep market for high-qualitycorporate bonds) that are denominated in thecurrency in which the benefit will be paid, andthat have terms to maturity approximating theterms of the related pension liability.






stated)


p. Imbalan karyawan (lanjutan) p. Employee benefits (continued)

(i) Kewajiban imbalan pasca masa kerja(lanjutan)

(i) Post–retirement benefit obligations(continued)

Keuntungan dan kerugian aktuarial dapattimbul dari penyesuaian yang dibuatberdasarkan pengalaman, perubahan asumsi-asumsi aktuarial, dan perubahan padaprogram pensiun, apabila jumlah keuntunganatau kerugian aktuarial ini melebihi 10% dariimbalan pasti atau 10% dari nilai wajar asetprogram, maka kelebihannya dibebankan ataudikreditkan ke laporan laba rugi konsolidasianselama sisa masa kerja rata-rata parakaryawan yang bersangkutan.

Actuarial gains and losses arising fromexperience adjustments, changes in actuarialassumptions and amendments to the pensionplan, when exceeding 10% of the presentvalue of the defined benefit or 10% of the fairvalue of the program’s assets at balancesheet date, are charged or credited to theconsolidated statement of income over theaverage remaining service lives of the relatedemployees.

(ii) Imbalan kerja jangka panjang lainnya (ii) Other long-term employee benefits

Imbalan kerja jangka panjang lainnya, yangterdiri dari penghargaan masa kerja dan cutiberimbalan jangka panjang, diakui di neracakonsolidasian berdasarkan nilai kini darikewajiban imbalan pasti. Keuntungan dankerugian aktuarial dan biaya jasa lalu diakuisecara langsung di laporan laba rugikonsolidasian.

Other long-term employee benefits, whichconsist of long service rewards and long leavebenefits, are recognised in the consolidatedbalance sheet at the present value of thedefined benefit obligation. The relatedactuarial gains and losses and past servicecosts are recognised immediately in theconsolidated statement of income.

Pesangon pemutusan kontrak terhutangketika karyawan dihentikan kontrak kerjanyasebelum usia pensiun normal. Grup mengakuipesangon pemutusan kontrak kerja ketikaGrup menunjukkan komitmennya untukmemberhentikan kontrak kerja dengankaryawan berdasarkan suatu rencana formalterperinci yang kecil kemungkinan untukdibatalkan.

Termination benefits are payable wheneveran employee’s employment is terminatedbefore the normal retirement date. The Grouprecognises termination benefits when it isdemonstrably committed to terminate theemployment of current employees accordingto a detailed formal plan with a low possibilityof withdrawal.

q. Dividen q. Dividends

Pembayaran dividen kepada pemegang sahamGrup diakui sebagai kewajiban dalam laporankeuangan konsolidasian Grup dalam periodedimana pembagian dividen diumumkan.

Dividend distributions to the Group’s shareholdersare recognised as a liability in the Group’sconsolidated financial statements in the period inwhich the dividends are declared.

r. Laba per saham r. Earnings per share

Laba bersih per saham dasar dihitung denganmembagi laba bersih dengan rata-rata tertimbangjumlah saham biasa yang beredar selama periodeyang bersangkutan.

Basic earnings per share is computed by dividingnet income by the weighted-average number ofordinary shares outstanding during the period.






stated)


s. Pelaporan segmen s. Segment reporting

Sebuah segmen usaha adalah sekelompok asetdan operasi yang menyediakan barang atau jasayang memiliki risiko serta tingkat pengembalianyang berbeda dengan segmen usaha lainnya.Sebuah segmen geografis menyediakan barangmaupun jasa di dalam lingkungan ekonomitertentu yang memiliki risiko serta tingkatpengembalian yang berbeda dengan segmenoperasi lainnya yang berada dalam lingkunganekonomi lain.

A business segment is a group of assets andoperations engaged in providing products orservices that are subject to risks and returns thatare different from those of other businesssegments. A geographical segment is engaged inproviding products or services within a particulareconomic environment that are subject to risks andreturns that are different from those of segmentsoperating in other economic conditions.

Grup melakukan segmentasi pelaporankeuangannya sebagai berikut:

The Group segments its financial reporting asfollows:

(i) segmen usaha (primer), yangmengelompokkan aktivitas bisnis Grupmenjadi batubara dan jasa; dan

(i) business segments (primary), where theGroup’s business activities are classified intocoal and services; and

(ii) segmen geografis (sekunder), yangmengelompokkan penjualan berdasarkanarea tujuan pemasaran.

(ii) geographical segments (secondary), whichclassifies sales based on target market areas.

t. Biaya emisi saham t. Share issuance costs

Biaya-biaya yang secara langsung terkait denganpenerbitan saham baru disajikan pada bagianekuitas sebagai pengurang, neto setelah pajak,dari jumlah yang diterima.

Incremental costs directly attributable to the issueof new shares are shown in equity as a deduction,net of tax, from the proceeds.

u. Pembagian hasil produksi u. Sharing of production

Berdasarkan PKP2B, Pemerintah berhakmemperoleh 13,5% atas jumlah batubara yangdihasilkan oleh IMM, TCM, dan JBG dari prosesproduksi akhir perusahaan. Sesuai dengankeputusan Presiden No. 75/1996 tertanggal 25September 1996, perusahaan-perusahaantersebut membayar bagian produksi Pemerintahsecara tunai, yaitu sebesar 13,5% dari penjualansetelah dikurangi beban penjualan. Perusahaan-perusahaan tersebut mengakui penjualan atasbagian Pemerintah sebagai bagian daripendapatan dari penjualan dan kewajibanpembayaran ke Pemerintahnya diakui denganbasis akrual sebagai beban royalti di bagian hargapokok penjualan.

As stipulated in the Coal Agreements, theGovernment is entitled to take 13.5% of total coalproduced from the final production processesestablished by IMM, TCM and JBG. In accordancewith Presidential Decree No. 75/1996 dated 25September 1996, these companies pay theGovernment’s share of production in cash, whichrepresents 13.5% of sales after deduction of sellingexpenses. These companies recognise theGovernment’s share as part of sales revenue, andthe obligation to make payment to the Governmenton an accrual basis as royalty expense as part ofcost of goods sold.






stated)


v. Penggunaan estimasi v. Use of estimates

Penyusunan laporan keuangan konsolidasiansesuai dengan prinsip akuntansi yang berlakuumum di Indonesia mengharuskan manajemenuntuk membuat estimasi dan asumsi yangmempengaruhi jumlah aset dan kewajiban yangdilaporkan dan pengungkapan atas aset dankewajiban kontinjen pada tanggal laporankeuangan konsolidasian, serta jumlahpendapatan dan beban selama periode pelaporan.Walaupun estimasi ini dibuat berdasarkanpengetahuan terbaik manajemen atas kejadiandan aktivitas saat ini, hasil yang sebenarnyamungkin berbeda dari jumlah yang diestimasi.

The preparation of consolidated financialstatements in conformity with accounting principlesgenerally accepted in Indonesia requiresmanagement to make estimates and assumptionsthat affect the reported amounts of assets andliabilities and disclosure of contingent assets andliabilities at the date of the consolidated financialstatements and the reported amounts of revenuesand expenses during the reporting period. Althoughthese estimates are based on management’s bestknowledge of current events and activities, actualresults could differ from those estimates.

3. KAS DAN SETARA KAS 3. CASH AND CASH EQUIVALENTS

2010 2009Kas Cash on hand

- Rupiah 788 242 Rupiah -- Dolar AS 76 19 US Dollars -

Jumlah kas 864 261 Total cash on hand

Bank: Cash in banks:Rupiah Rupiah

- Citibank N.A. 1,790 585 Citibank N.A. -- PT Bank Central Asia Tbk. 1,245 1,792 PT Bank Central Asia Tbk. -- Standard Chartered Bank Standard Chartered Bank –

(cabang Jakarta) 667 439 (Jakarta branch)- Bank-bank lain 1,202 742 Other banks -

Jumlah rekening Rupiah 4,904 3,558 Total Rupiah accounts

Dolar AS US Dollars- Standard Chartered Bank Standard Chartered Bank -

(cabang Jakarta) 25,873 43,511 (Jakarta branch)- PT Bank Central Asia Tbk. 9,492 25,558 PT Bank Central Asia Tbk. -- Bangkok Bank Public Company Bangkok Bank Public -

Limited 6,348 4,855 Company Limited- Citibank N.A. 2,277 6,275 Citibank N.A. -- Bank-bank lain 996 739 Other banks -

Jumlah rekening Dolar AS 44,986 80,938 Total US Dollar accounts

Euro Euro- Standard Chartered Bank 2,500 50 Standard Chartered Bank -

Jumlah rekening Euro 2,500 50 Total Euro accounts

Jumlah kas di bank 52,390 84,546 Total cash in banks

Deposito berjangka: Time deposits:Rupiah Rupiah

PT Bank Mandiri -- PT Bank Mandiri (Persero) Tbk. 26,570 2,660 (Persero) Tbk.- PT Bank DBS Indonesia 9,540 - PT Bank DBS Indonesia -- PT Bank Permata Tbk. 2,514 - PT Bank Permata Tbk.-- Citibank N.A. 1,891 14,255 Citibank N.A -- Standard Chartered Bank 1,121 13,247 Standard Chartered Bank -- PT Bank Central Asia Tbk. - 5,000 PT Bank Central Asia Tbk. -- PT ANZ Panin Bank - 4,255 PT ANZ Panin Bank -

Jumlah rekening Rupiah 41,636 39,417 Total Rupiah accounts






stated)

3. KAS DAN SETARA KAS (lanjutan) 3. CASH AND CASH EQUIVALENTS (continued)

2010 2009

Dolar AS US Dollars- PT Bank CIMB Niaga Tbk. 45,422 - PT Bank CIMB Niaga Tbk. -- PT ANZ Panin Bank 34,863 25,520 PT ANZ Panin Bank -- PT Bank Permata Tbk. 34,128 - PT Bank Permata Tbk.-- DBS Bank Ltd 30,062 - DBS Bank Ltd -- PT Bank Central Asia Tbk. 20,060 68,060 PT Bank Central Asia Tbk. -- Standard Chartered Bank Standard Chartered Bank -

(cabang Jakarta) 15,070 5,025 (Jakarta branch)Bangkok Bank -

- Bangkok Bank Public Company Public CompanyLimited (cabang Jakarta) 15,064 26,004 Limited (Jakarta branch)

PT Bank Mandiri -- PT Bank Mandiri (Persero) Tbk. 5,010 50,000 (Persero) Tbk.- Standard Chartered Bank Standard Chartered Bank -

(cabang Jakarta) - 71,000 (Jakarta branch)Bangkok Bank -

- Bangkok Bank Public Company Public CompanyLimited (cabang Jakarta) - 30,000 Limited (Jakarta branch)

- ANZ Singapore - 5,006 ANZ Singapore -

Jumlah rekening Dolar AS 199,679 280,615 Total US Dollar accounts

Euro Euro- Standard Chartered Bank - 3,664 Standard Chartered Bank -

Jumlah rekening Euro - 3,664 Total Euro accounts

Jumlah deposito berjangka 241,315 323,696 Total time deposits

Sertifikat Bank Indonesia - 20,077 Bank Indonesia Certificates

Jumlah kas dan setara kas 294,569 428,580 Total cash and cash equivalents

Tingkat bunga rata-rata deposito berjangka diatasadalah sebagai berikut:

The above time deposits earned interest at averageannual rates as follows:

2010 2009

Rupiah 5.85% - 7.15% 5.40% - 7.00% RupiahDolar AS 0.30% - 2.00% 0.04% - 1.25% US DollarsEuro - 0.12% Euro

4. PIUTANG USAHA 4. TRADE RECEIVABLES

2010 2009

Pihak ketiga: Third parties:Dolar AS US Dollars

- Enel Trade SpA 18,179 9,538 Enel Trade SpA -- Taiwan Power Company 13,296 - Taiwan Power Company -- Korea East West Power 10,707 - Korea East West Power -- Formosa Plastic Group 7,162 10,825 Formosa Plastic Group -- Sumiseki Material Co., Ltd 6,989 - Sumiseki Material Co., Ltd -- TNB Fuel Services Sdn. Bhd. 6,175 4,377 TNB Fuel Services Sdn. Bhd. -- CLP Fangghen 6,132 - CLP Fangghen -- Korea South East Power 6,131 - Korea South East Power -- Shinsho Corporation 5,896 - Shinsho Corporation -- Chubu Energy Trading 5,573 - Chubu Energy Trading -






stated)

4. PIUTANG USAHA (lanjutan) 4. TRADE RECEIVABLES (continued)

2010 2009

Pihak ketiga: Third parties:Dolar AS US Dollars- The Hongkong Electric Co., Ltd. 4,997 8,856 The Hongkong Electric Co., Ltd.-- China National Minerals Co., Ltd. 3,683 14,185China National Minerals Co., Ltd.-- Liji Material Trading Co., Ltd. - 10,265 Liji Material Trading Co., Ltd. -- Ghommaz General Trading LLC - 7,423Ghommaz General Trading LLC -- Hong Kong Qinfa Trading - 6,999 Hong Kong Qinfa Trading -- Tirreno Power SpA - 5,227 Tirreno Power SpA -

Hokkaido Electric -- Hokkaido Electric Power Co., Ltd - 5,006 Power Co., Ltd -- Lain-lain (masing-masing

di bawah US$5.000) 16,577 33,096 Others (each below US$5,000) -

111,497 115,797

Rupiah Rupiah- PT Sumber Segara Primadaya 6,422 5,851 PT Sumber Segara Primadaya-- PT PLN (Persero) - 1,432 PT PLN (Persero) -

6,422 7,283

117,919 123,080

Pihak yang mempunyai hubunganistimewa: Related parties:

Dolar AS US Dollars-Banpu International Limited 3,143 2,174 Banpu International Limited-

Dikurangi: Less:Penyisihan piutang ragu-ragu - - Allowance for doubtful accounts

Piutang usaha - bersih 121,062 125,254 Trade receivables - net

Umur piutang usaha adalah sebagai The aging of trade receivables isberikut: as follows:

Lancar 86,539 85,506 CurrentLewat jatuh tempo: Overdue:-antara 1 sampai 30 hari 34,523 31,404 1 to 30 days --antara 31 sampai 60 hari - 2,642 31 to 60 days --antara 61 sampai 90 hari - 4,235 61 to 90 days -- lebih dari 90 hari - 1,467 over 90 days -

121,062 125,254

Berdasarkan telaah atas status dari masing-masingakun piutang usaha pada akhir periode, manajemenGrup berpendapat bahwa seluruh piutang usaha dapatditagih secara penuh sehingga tidak diperlukanpenyisihan piutang tidak tertagih.

Based on a review of the status of the individualreceivable accounts at the end of the period, theGroup’s management is of the opinion that thesereceivables will be collected in full and therefore anallowance for doubtful accounts is not considerednecessary.

Lihat Catatan 23 untuk rincian transaksi dengan pihakyang memiliki hubungan istimewa.

Refer to Note 23for details of related party transactions.






stated)

5. PERSEDIAAN 5. INVENTORIES

2010 2009

Batubara 57,478 49,114 CoalSuku cadang dan bahan-bahan

pendukung 14,727 17,290 Stores and consumable supplies

72,205 66,404Dikurangi: Less:Penyisihan untuk suku cadang dan Provision for obsolete stores and

bahan-bahan pendukung usang (1,672) (1,476) consumable supplies

70,533 64,928

Mutasi penyisihan untuk suku cadang dan bahan-bahan pendukung usang adalah sebagai berikut:

Movement in provision for obsolete stores andconsumable supplies is as follows:

2010 2009

Saldo awal 1,476 1,388 Beginning balancePenambahan 196 88 Addition

Saldo akhir 1,672 1,476 Ending balance

Manajemen berpendapat bahwa penyisihan untuk sukucadang dan bahan-bahan pendukung usang cukupuntuk menutup kemungkinan kerugian dari persediaanusang tersebut.

Management believes that the provision for obsoletestores and consumable supplies is adequate to coverpossible losses from obsolete stock.

Pada tanggal 31 Desember 2010, persediaan sukucadang dan bahan-bahan pendukung diasuransikanterhadapcombined property all risks, kerusakan mesin-mesin, dan gangguan usaha sebesar US$11.642(2009: US$11.642). Manajemen Grup berpendapatbahwa persediaan pada tanggal 31 Desember 2010telah diasuransikan secara memadai.

As at 31 December 2010, the stores and consumablesupplies were insured under a combined property allrisks, machinery breakdown and business interruptioninsurance policy amounting to US$11,642 (2009:US$11,642). The Group’s management believes thatthe inventories as at 31 December 2010are adequatelyinsured.

6. PERPAJAKAN 6. TAXATION

a. Pajak dibayar dimuka a. Prepaid taxes

2010 2009

Perusahaan The CompanyPajak Pertambahan Nilai (“PPN”) 152 325 Value Added Tax (“VAT”)Kelebihan pembayaran pajak Overpayment of

penghasilan corporate income tax- 2010 703 - 2010 -- 2009 2,455 2,455 2009 -- 2008 2,620 2,620 2008 -- 2007 259 259 2007 -

6,189 5,659






stated)

6. PERPAJAKAN (lanjutan) 6. TAXATION (continued)

a. Pajak dibayar dimuka (lanjutan) a. Prepaid taxes (continued)

2010 2009

Anak Perusahaan SubsidiariesPPN 5,386 3,179 VATKelebihan pembayaran pajak Overpayment of

penghasilan corporate income tax- 2010 49,124 - 2010 -- 2009 9,308 9,238 2009 -- 2008 - 1,282 2008 -

63,818 13,699

70,007 19,358

b. Hutang pajak b. Taxes payable

2010 2009

Perusahaan The CompanyPajak Penghasilan – pasal 21 1,034 639 Income tax – article 21Pajak Penghasilan – pasal 23/26 10 22 Income tax – articles 23/26PPN - 693 VAT

1,044 1,354

Anak Perusahaan SubsidiariesPajak Penghasilan Badan 5,556 46,846 Corporate income taxPajak Penghasilan – pasal 23/26 2,143 1,981 Income tax – articles 23/26PPN 1,924 1,909 VATPajak Penghasilan – pasal 21 2,845 1,844 Income tax – article 21Pajak Penghasilan – pasal 4(2) 75 1,008 Income tax – article 4(2)Pajak Penghasilan – pasal 15 176 123 Income tax – article 15

12,719 53,711

13,763 55,065

c. Beban pajak penghasilan c. Income tax expense

2010 2009Perusahaan The Company- Kini 1,107 - Current -- Tangguhan (130) (193) Deferred -

977 (193)

Anak Perusahaan Subsidiaries- Kini 71,780 128,217 Current -- Tangguhan 446 (7,100) Deferred -

72,226 121,117

Konsolidasian Consolidated- Kini 72,887 128,217 Current -- Tangguhan 316 (7,293) Deferred -

73,203 120,924






stated)


c. Beban pajak penghasilan (lanjutan) c. Income tax expense (continued)

Perhitungan beban pajak penghasilan kini adalahsebagai berikut:

The calculation of current corporate income taxexpense is as follows:

2010 2009

Laba konsolidasian sebelum pajak 277,354 456,475Consolidatedprofit before income taxDitambah/(dikurangi): Add/(deduct):Eliminasi konsolidasian 283,101 157,785 Consolidation eliminationsLaba sebelum pajak- Profit before income tax-

anak perusahaan (277,988) (451,818) subsidiaries

Laba sebelum pajak Profit before incomepenghasilan – Perusahaan 282,467 162,442 tax – the Company

Pajak penghasilan dihitung dengantarif pajak 25% (2009: 28%) 70,617 45,484 Income tax at 25% (2009: 28%)

Pendapatan yang tidakdiperhitungkan untuk keperluanpajak (69,995) (42,842) Non-assessable income

Pendapatan bunga yang dikenakanpajak final (791) (653)Interest income subject to final tax

Beban yang tidak dapat dikurangkanuntuk keperluan pajak 1,147 639 Non-deductible expenses

Perbedaan temporer: Temporary differences:Sewa pembiayaan - 4 Finance leasesPenyisihan imbalan Provision for employee

karyawan 129 46 benefitsPemakaian rugi fiskal

tahun-tahun sebelumnya - (2,678) Utilisation of prior year tax losses

Beban pajak penghasilan kini – Current corporate income taxPerusahaan 1,107 - expense – the Company

Beban pajak penghasilan kini – Current corporate income taxanak perusahaan 71,780 128,217 expense – subsidiaries

Beban pajak penghasilan kini Consolidated current corporatekonsolidasian 72,887 128,217 income tax expense

Dikurangi: pajak dibayar di muka Less: prepaid taxes- Perusahaan 1,810 - The Company -- Anak perusahaan 114,645 81,371 Subsidiaries -

(Kelebihan pembayaran pajak (Over payment of corporatepenghasilan)/hutang Pajak income tax)/corporatepenghasilan badan (43,568) 46,846 income tax payable

Perhitungan pajak penghasilan kini dilakukanberdasarkan estimasi penghasilan kena pajak.Nilai tersebut mungkin disesuaikan ketika SPTTahunan disampaikan ke Direktorat JenderalPajak (“DJP”).

Current income tax computations are based onestimated taxable income. The amounts may beadjusted when annual tax returns are filed to theDirectorate General of Tax (“DGT”).






stated)



Rekonsiliasi antara beban pajak penghasilandengan jumlah teoritis beban pajak penghasilanyang dihitung berdasarkan laba sebelum pajakpenghasilan Perusahaan dengan menggunakantarif pajak yang berlaku adalah sebagai berikut:

The reconciliation between income tax expenseand the theoretical tax amount on the Company’sprofit before income tax is as follows:

2010 2009

ConsolidatedLaba konsolidasian sebelum pajak 277,354 456,475 profit before income taxDitambah/(dikurangi): Add/(deduct):Eliminasi konsolidasian 283,101 157,785 Consolidation eliminationsLaba sebelum pajak- Profit before income tax-

anak perusahaan (277,988) (451,818) subsidiaries

Laba sebelum pajak Profit before incomepenghasilan – Perusahaan 282,467 162,442 tax – the Company

Pajak penghasilan dihitung dengantarif pajak 25% (2009: 28%) 70,617 45,484 Income tax at 25% (2009: 28%)

Pendapatan yang tidakdiperhitungkan untuk keperluanpajak (69,995) (42,842) Non-assessable income

Pendapatan bunga yang dikenakan Interest incomepajak final (791) (653) subject to final tax

Beban yang tidak dapat dikurangkanuntuk keperluan pajak 1,147 639 Non-deductible expenses

Penambahan propertipertambangan - 126 Addition of mining properties

Amortisasi properti pertambangan (130) (342) Amortisation of mining propertiesPenyesuaian terkait perubahan Adjustment related to change

tarif pajak - 23 in tax ratePemakaian rugi fiskal tahun - tahun Utilisation of prior year

sebelumnya - (2,678) tax lossesRecognition of previously

Pengakuan aset pajak tangguhan unrecognised deferredyang sebelumnya tidak diakui 129 50 tax assets

Beban/(kredit) pajak penghasilan – Corporate income tax expense/Perusahaan 977 (193) (benefit) – the Company

Beban pajak penghasilan – Corporate income taxanak perusahaan 72,226 121,117 expense – subsidiaries

Beban pajak penghasilan Consolidated corporate incomekonsolidasian 73,203 120,924 tax expense

Grup telah mengakumulasi kerugian fiskal yangdapat dipakai sebagai pengurang penghasilankena pajak di masa mendatang selama limasampai delapan tahun sebagaimana ditetapkandalam PKP2B dan peraturan pajak yang berlaku.

The Group has accumulated corporate income taxlosses which are available to be carried forwardand offset against future taxable income forperiods of five to eight years as specified in eachcompany’s Coal Agreement and applicable taxregulations.






stated)



Rugi fiskal yang dapat dikompensasikan denganpenghasilan kena pajak di masa mendatang terjadidi tahun pajak berikut:

Tax losses carried-forward which can be offsetagainst future taxable income were incurred in thefollowing fiscal years:

Perusahaan/Company31 Desember/December 2008 5,770

5,770

Anak Perusahaan/Subsidiaries31 Desember/December 2004 23531 Desember/December 2005 8331 Desember/December 2006 10131 Desember/December 2007 8731 Desember/December 2008 25431 Desember/December 2009 5331 Desember/December 2010 10,871

11,684

d. Aset pajak tangguhan d. Deferred tax assets

2010 2009

Perusahaan The CompanyPenyisihan imbalan karyawan 643 514 Provision for employee benefitsSewa pembiayaan 2 (4) Finance leaseRugi fiskal yang dibawa ke masa

depan 1,443 1,443 Tax losses carried forwardAset pajak tangguhan

yang tidak diakui (2,088) (1,953)Unrecognised deferred tax assets

Aset pajak tangguhan, bersih - - Deferred tax assets, net

Aset pajak tangguhan Deferred tax assets at thepada awal periode - - beginning of the period

Dibebankan pada laporan laba rugi Charged to consolidatedkonsolidasian - - statement of income

Aset pajak tangguhan Deferred tax assets at thepada akhir periode - - end of the period






stated)


d. Aset pajak tangguhan (lanjutan) d. Deferred tax assets (continued)

2010 2009

Anak Perusahaan SubsidiariesDifference between commercial

Perbedaan nilai buku aset tetap and tax net book valuekomersial dan fiskal 6,226 7,574 of fixed assets

Penyisihan imbalan karyawan 2,161 1,689 Provision for employee benefitsPenyisihan untuk royalti/biaya eksploitasi 809 1,095Provision for royalty/exploitation feePenyisihan untuk rehabilitasi

tambang 2,803 2,039 Provision for mine rehabilitationPenyisihan untuk persediaan usang 418 369 Provision for obsolete stockAmortisasi biaya eksplorasi Amortisation of deferred

yang ditangguhkan 238 307 exploration expendituresPenyisihan untuk pembongkaran, Provision for decommissioning,

pemindahan dan restorasi lokasi demobilisation and restorationaset tetap 1,468 1,044 of fixed assets

Penyisihan penurunan nilaibiaya ekplorasi dan Provision for diminution in valuepengembangan yang of deferred exploration andditangguhkan - - development expenditures

Penyisihan penurunan nilai Provision for impairment ofaset tetap 44 44 fixed assets

Sewa pembiayaan (3) (18) Finance leasesRugi fiskal yang dibawa ke masa

depan 2,921 203 Tax losses carried forwardAset pajak tangguhan yang

tidak diakui (4,592) (1,407)Unrecognised deferred tax assets

Aset pajak tangguhan, bersih 12,493 12,939 Deferred tax assets, net

Aset pajak tangguhan Deferred tax assets at thepada awal tahun 12,939 6,849 beginning of the year

Penyesuaian terkait perubahan Adjustment related to changetarif pajak (Catatan 6h) - (368) in tax rate (Note 6h)

(Dibebankan)/dikreditkan padalaporan laba rugi (Charged)/credited to consolidatedkonsolidasian (446) 6,458 statement of income

Aset pajak tangguhan Deferred tax assets at thepada akhir tahun 12,493 12,939 end of the year






stated)


d. Aset pajak tangguhan (lanjutan) d. Deferred tax assets (continued)

2010 2009

Konsolidasian ConsolidatedDifference between commercial

Perbedaan nilai buku aset tetap and tax net bookkomersial dan fiskal 6,226 7,574 value of fixed assets

Penyisihan imbalan karyawan 2,804 2,203 Provision for employee benefitsPenyisihan untuk royalti/biaya eksploitasi 809 1,095Provision for royalty/exploitation feePenyisihan untuk rehabilitasi tambang 2,803 2,039 Provision for mine rehabilitationPenyisihan untuk persediaan usang 418 369 Provision for obsolete stockAmortisasi biaya eksplorasi Amortisation of deferred

yang ditangguhkan 238 307 exploration expendituresPenyisihan untuk pembongkaran, Provision for decommissioning,

pemindahan dan restorasi demobilisation and restorationaset tetap 1,468 1,044 of fixed assets

Penyisihan penurunan Provision for impairmentnilai aset tetap 44 44 of fixed assets

Sewa pembiayaan (1) (22) Finance leasesRugi fiskal yang dibawa

ke masa depan 4,364 1,646 Tax losses carried forwardAset pajak tangguhan

yang tidak diakui (6,680) (3,360)Unrecognised deferred tax assets

Aset pajak tangguhan, bersih 12,493 12,939 Deferred tax assets, net

Aset pajak tangguhan Deferred tax assets at thepada awal tahun 12,939 6,849 beginning of the year

Penyesuaian terkait perubahan Adjustment related to changetarif pajak (Catatan 6h) - (368) in tax rate (Note 6h)

Dikreditkan/(dibebankan) padalaporan laba rugi Credited/(charged) to consolidatedkonsolidasian (446) 6,458 statement of income

Aset pajak tangguhan Deferred tax assets at thepada akhir tahun 12,493 12,939 end of the year






stated)


e. Kewajiban pajak tangguhan e. Deferred tax liabilities

2010 2009

Perusahaan The CompanyProperti pertambangan 6,021 6,151 Mining properties

Kewajiban pajak tangguhan, bersih 6,021 6,151 Deferred tax liabilities, net

Kewajiban pajak tangguhan Deferred tax liabilities at thepada awal tahun 6,151 6,344 beginning of the year

Penyesuaian terkait dengan Adjustment related to change inperubahan tarif pajak (Catatan 6h) - 23 tax rate (Note 6h)

Dikreditkan pada laporan laba Credited to consolidatedrugi konsolidasian (130) (216) statement of income

Kewajiban pajak tangguhan Deferred tax liabilities at thepada akhir tahun 6,021 6,151 end of the year

Anak Perusahaan SubsidiariesKewajiban pajak

tangguhan, bersih - - Deferred tax liabilities, net

Kewajiban pajak tangguhan Deferred tax liabilities at thepada awal tahun - 1,010 beginning of the year

Dikreditkan pada laporan laba Credited to consolidatedrugi konsolidasian - (1,010) statement of income

Kewajiban pajak tangguhan Deferred tax liabilities at thepada akhir tahun - - end of the year

Konsolidasian ConsolidatedProperti pertambangan 6,021 6,151 Mining properties

Kewajiban pajak tangguhan, bersih 6,021 6,151 Deferred tax liabilities, net

Kewajiban pajak tangguhan Deferred tax liabilities at thepada awal tahun 6,151 7,354 beginning of the year

Penyesuaian terkait dengan Adjustment related to changeperubahan tarif pajak (catatan 6h) - 23 in tax rate (note 6h)

Dikreditkan pada laporan laba Credited to consolidatedrugi konsolidasian (130) (1,226) statement of income

Kewajiban pajak tangguhan Deferred tax liabilities at thepada akhir tahun 6,021 6,151 end of the year






stated)


f. Audit pajak f. Tax audits

Perusahaan The Company

Pada bulan April 2010, DJP menyelesaikan auditpajak untuk tahun fiskal 2008. Perusahaan setujudengan tuntutan sejumlah US$3.509 yangdiperhitungkan oleh DJP yang telah dibebankandalam laporan keuangan konsolidasian ini.Perusahaan tidak setuju dengan tuntutan sejumlahUS$16.999 yang diperhitungkan oleh DJP dantelah memasukkan surat keberatan. Sementarahasil keberatan belum diterima, Perusahaanberkeyakinan bahwa hasil final dari audit pajak initidak akan memiliki dampak yang merugikanterhadap posisi laporan keuangan dan arus kasPerusahaan secara material.

In April 2010, the DGT completed a tax audit forfiscal year 2008. The Company agreed withUS$3,509 of the amounts assessed by the DGT,which have been expensed in these consolidatedfinancial statements. The Company disagreed withUS$16,999 of the amounts assessed by the DGTand has filed objection letters. While the results ofthe objections have not yet been received, theCompany believes that the final result of this taxaudit will not have a material adverse impact on theCompany’s financial position and cash flows.

KTD KTD

Pada tanggal 31 Desember 2010, KTD sedangdalam proses audit PPN untuk tahun 2006 sampaidengan 2007 oleh DJP. Sampai tanggal laporanini, KTD belum menerima hasil audit tersebut.Perusahaan berpendapat bahwa hasil audittersebut tidak akan memiliki dampak yangmerugikan terhadapposisi keuangan dan arus kasKTD secara material.

As at 31 December 2010, KTD is being audited bythe DGT for the fiscal years 2006 to 2007 for VAT.At the date of this report, KTD has not yet receivedthe audit results. The Company believes that theresults will not have a material adverse impact onKTD’s financial position and cash flows.

TCM TCM

Pada tanggal 31 Desember 2010, TCM sedangdalam proses audit berbagai jenis pajak oleh DJPuntuk tahun pajak 2008 dan 2009. Sampaitanggal laporan ini diterbitkan, TCM belummenerima hasil audit tersebut. Manajemenberpendapat bahwa hasil audit tersebut tidakakan memiliki dampak yang merugikan terhadapposisi keuangan dan arus kas TCM secaramaterial.

As at 31 December 2010, TCM is being auditedby the DGT for the fiscal years 2008 and 2009 forvarious taxes. At the date of this report, TCM hasnot yet received the audit results. Managementbelieves that the results will not have a materialadverse impact on TCM’s financial position andcash flows.

IMM IMM

Pada tanggal 31 Desember 2010, IMM sedangdalam proses audit berbagai jenis pajak oleh DJPuntuk tahun pajak 2006. Sampai tanggal laporanini diterbitkan, IMM belum menerima hasil audittersebut. Manajemen berpendapat bahwa hasilaudit tersebut tidak akan memiliki dampak yangmerugikan terhadap posisi keuangan dan aruskas IMM secara material.

As at 31 December 2010, IMM is being auditedby the DGT for the fiscal year 2006 for varioustaxes. At the date of this report, IMM has not yetreceived the audit results. Management believesthat the results will not have a material adverseimpact on IMM’s financial position and cashflows.






stated)


f. Audit pajak (lanjutan) f. Tax audits (continued)

JBG JBG

Pada tanggal 31 Desember 2010, JBG sedangdalam proses audit berbagai jenis pajak oleh DJPuntuk tahun pajak 2008 dan 2009. Sampaitanggal laporan ini diterbitkan, JBG belummenerima hasil audit tersebut. Manajemenberpendapat bahwa hasil audit tersebut tidakakan memiliki dampak yang merugikan terhadapposisi keuangan dan arus kas JBG secaramaterial.

As at 31 December 2010, JBG is being auditedby the DGT for the fiscal years 2008 and 2009 forvarious taxes. At the date of this report, JBG hasnot yet received the audit results. Managementbelieves that the results will not have a materialadverse impact on JBG’s financial position andcash flows.

g. Administrasi g. Administration

Berdasarkan Undang-Undang Perpajakan yangberlaku di Indonesia, perusahaan-perusahaanyang berada di dalam Grup menghitung,menetapkan dan membayar sendiri besarnyajumlah pajak yang terhutang. DJP dapatmenetapkan atau mengubah kewajiban pajakdalam batas waktu sepuluh tahun sejak saatterhutangnya pajak, atau sampai akhir tahun2013, mana yang lebih dahulu. Ketentuan baruyang diberlakukan terhadap tahun pajak 2008dan tahun-tahun selanjutnya yang menetapkanbahwa DJP dapat menentukan atau mengubahkewajiban pajak dalam batas waktu lima tahunsejak saat terhutangnya pajak.

Under the taxation laws of Indonesia, thecompanies within the Group submit tax returns onthe basis of self assessment. The DGT mayassess or amend taxes within ten years of thetime the tax becomes due, or until the end of2013, whichever is earlier. There are new rulesapplicable to fiscal year 2008 and subsequentyears stipulating that the DGT may assess oramend taxes within five years of the time the taxbecomes due.

h. Perubahan Undang-Undang Perpajakan h. Changes to taxation law

Pada tanggal 3 September 2008, DewanPerwakilan Rakyat menyetujui perubahanUndang-Undang Pajak Penghasilan. Undang-Undang ini kemudian ditandatangani Presidenpada tanggal 23 September 2008. Salah satu dariperubahan tersebut mengatur tentang tarif pajakpenghasilan badan yang ditetapkan pada tariftetap sebesar 28% dimulai sejak 1 Januari 2009dan kemudian turun menjadi 25% sejak 1 Januari2010.

On 3 September 2008 the House ofRepresentatives approved the amendments tothe income tax law. This was signed into law bythe President on 23 September 2008. One ofthese amendments stipulates that the income taxfor corporations will be set at a flat rate of 28%commencing 1 January 2009 and further reducedto 25% from 1 January 2010.






stated)

7. ASET TETAP 7. FIXED ASSETS

2010Saldo Pemindahan dan Saldoawal/ reklasifikasi/ akhir/

Opening Penambahan/ Pengurangan/ Transfers and Endingbalance Additions Disposals reclassifications balance

Harga perolehan Acquisition costHak atas tanah dan Land rights and land

pematangan tanah 5,883 - (3) - 5,880 improvementsBangunan 33,556 132 (328) 10,188 43,548 BuildingsInfrastruktur 135,827 608 (272) 37,893 174,056 InfrastructurePabrik, mesin, dan Plant, machinery and

peralatan 260,042 13,421 (4,857) 88,404 357,010 equipmentPerabotan dan perlengkapan Office furniture and

kantor 10,250 3,148 (842) 110 12,666 fixturesKendaraan 1,904 633 (139) - 2,398 Vehicles

447,462 17,942 (6,441) 136,595 595,558

Aset dalam penyelesaian 137,980 37,679 (4,107) (136,595) 34,957Construction in progress

Sewa pembiayaan: Under finance leases:Kendaraan 579 - - - 579 Vehicles

586,021 55,621 (10,548) - 631,094

2010Saldo Pemindahan dan Saldoawal/ reklasifikasi/ akhir/


Akumulasi penyusutan Accumulateddepreciation

Hak atas tanah dan Land rights and landpematangan tanah 5,513 370 (3) - 5,880 improvements

Bangunan 17,905 5,005 (220) - 22,690 BuildingsInfrastruktur 58,361 13,071 (114) - 71,318 InfrastructurePabrik, mesin, dan Plant, machinery and

peralatan 151,467 25,955 (4,429) - 172,993 equipmentPerabotan dan perlengkapan Office furniture and

kantor 7,247 1,337 (822) - 7,762 fixturesKendaraan 1,269 277 (140) - 1,406 Vehicles

241,762 46,015 (5,728) - 282,049Sewa pembiayaan: Under finance leases:Kendaraan 568 11 - - 579 Vehicles

242,330 46,026 (5,728) - 282,628Penyisihan penurunan nilai Provisionforimpairment

Plant, machinery andPabrik, mesin, dan peralatan 176 - - - 176 equipment

Nilai buku bersih 343,515 348,290 Net book value






stated)

7. ASET TETAP (lanjutan) 7. FIXED ASSETS (continued)

2009Saldo Pemindahan Saldoawal/ dan reklasifikasi/ akhir/


Harga perolehan Acquisition costHak atas tanah dan Land rights and land

pematangan tanah 5,883 - - - 5,883 improvementsBangunan 30,319 151 (90) 3,176 33,556 BuildingsInfrastruktur 123,019 - (4) 12,812 135,827 InfrastructurePabrik, mesin, dan Plant, machinery and

peralatan 239,524 7,764 (6,797) 19,551 260,042 equipmentPerabotan dan perlengkapan 9,510 998 (527) 269 10,250 Office furniture

kantor and fixturesKendaraan 2,234 95 (423) (2) 1,904 Vehicles

410,489 9,008 (7,841) 35,806 447,462

Aset dalam penyelesaian 104,980 69,823 (246) (36,577) 137,980Construction in progress

Sewa pembiayaan: Under finance leases:Kendaraan 612 - (33) - 579 Vehicles

516,081 78,831 (8,120) (771) 586,021

Akumulasi penyusutan Accumulateddepreciation

Hak atas tanah dan Land rights and landpematangan tanah 4,369 1,144 - - 5,513 improvements

Bangunan 14,859 3,092 (46) - 17,905 BuildingsInfrastruktur 47,914 10,449 (2) - 58,361 InfrastructurePabrik, mesin, dan Plant, machinery and

peralatan 124,371 32,639 (5,509) (34) 151,467 equipmentPerabotan dan perlengkapan Office furniture

kantor 6,030 1,625 (408) - 7,247 and fixturesKendaraan 1,423 331 (519) 34 1,269 Vehicles

198,966 49,280 (6,484) - 241,762Sewa pembiayaan: Under finance leases:Kendaraan 509 69 (10) - 568 Vehicles

199,475 49,349 (6,494) - 242,330Penyisihan penurunan nilai Provisionforimpairment

Plant, machinery andPabrik, mesin, dan peralatan 1,382 154 (1,360) - 176 equipment


Hak atas tanah Grup memiliki masa manfaat tersisaselama 6 tahun.

The Group’s land rights have remaining useful lives of 6years.

Grup sedang memperpanjang hak atas tanah KTD.Manajemen yakin tidak akan mengalami kesulitandalam memperpanjang hak atas tanah karena tanahtelah dibeli secara sah dan didukung oleh buktikepemilikan yang sah.

The Group is in the process of extending land rights ofKTD. Management believes that there will be nodifficulties in the extension of the land rights as therights were acquired legally and are supported bysufficient evidence of ownership.

Penambahan biaya penarikan aset untuk tahun 2010adalah US$1.515 (2009: US$464).

Additional asset retirement costs recognised during2010 are US$1,515 (2009: US$464).






stated)


Pada tanggal 31 Desember 2010, seluruh aset tetapmilik IMM, KTD, JBG, dan TCM telah diasuransikanatas property all risks, kerusakan mesin, gangguanusaha, kerusakan yang material, kewajiban umumkomprehensif, kewajiban operasi dermaga danterminal, dan kerusakan atas peralatan dan kendaraansampai dengan US$630.903 (2009: US$631.485).Manajemen berpendapat bahwa seluruh aset tetappada tanggal 31 Desember 2010 telah diasuransikansecara memadai.

As at 31 December 2010, the fixed assets of IMM, KTD,JBG and TCM were insured for property all risk,machinery breakdown, business interruption, materialdamage, comprehensive general liability, port andterminal operations liability, mobile and equipmentdamage amounting to US$630,903 (2009:US$631,485). Management believes that fixed assets at31 December 2010 are adequately insured.

Pelepasan aset tetap untuk periode yang berakhir pada31 Desember 2010 dan 2009 adalah sebagai berikut:

Disposals of fixed assets for the periods ended 31December 2010 and 2009 were as follows:

2010 2009

Kas yang diterima dari pelepasan Proceeds from disposals ofaset tetap 332 1,695 fixed assets

Nilai buku aset tetap yang dilepas (4,820) (1,626)Book value of disposed fixedassets

(Kerugian)/keuntungan atas pelepasan (Loss)/gain on disposalsaset tetap (4,488) 69 of fixed assets

Biaya penyusutan dibebankan sebagai berikut: Depreciation expense was charged as follows:

2010 2009

Harga pokok penjualan 43,243 46,871 Cost of goods soldBeban umum dan administrasi 2,719 2,418GeneralandadministrationexpensesBiaya eksplorasi dan pengembangan Deferred exploration and

yang ditangguhkan 46 44 development expendituresBeban penjualan 18 16 Selling expenses

46,026 49,349

Perubahan penyisihan penurunan nilai aktiva tetappada periode yang berakhir 31 Desember 2010 dan2009 adalah sebagai berikut:

The movement in the provision for impairment of fixedassets for the periods ended 31 December 2010 and2009 were as follows:

2010 2009

Saldo awal 176 1,382 Beginning balancePerubahan selama periode berjalan: Movement during the period:

Penambahan - 154 AdditionPemulihan - (1,360) Reversal

Saldo akhir 176 176 Ending balance






stated)


Pada tahun 2009, beberapa aset tetap IMM telahditurunkan nilainya sebesarUS$154 dikarenakan aset-aset tersebut sudah tidak mempunyai manfaat lagi.Penurunan nilai tersebut dibebankan pada biaya lain-lain (biaya non-operasi). Selama tahun 2009, Grup jugamemulihkan penurunan nilai atas aktiva tetap yangberkaitan dengan blok Embalut di KTD sebesarUS$1.360 karena telah dimulainya operasi komersial diblok tersebut di akhir kuartal 2009 dan Grupberpendapat bahwa nilai buku dari aktiva tetap tersebutdapat dipulihkan selama umur tambang.

In 2009, a provision for impairment was raised againstcertain items of fixed assets held by IMM amounting toUS$154 as these items are no longer in use. Theimpairment was charged to other expenses (non-operating expense). Also during 2009, the Groupreleased a provision for fixed assets of US$1,360related to KTD’s Embalut block, as the block hascommenced commercial operations in the last quarterof 2009, and the Group believes that the book value ofthe fixed assets is recoverable over the life of mine.

Pada tahun 2010, aset dalam penyelesaian sebesarUS$4.107 yang berkaitan dengan proyekpenambangan bawah tanah di blok Barat di IMMdihapuskan karena Grup telah memutuskan bahwaproyek tersebut tidak ekonomis untuk dikembangkan.

In 2010, construction in progress of US$4,107 relatingto the underground mining project at IMM’s Westblock was written-off as the Group concluded that theproject is not economic to be developed.

Aset dalam penyelesaian Construction in progress

Aset dalam penyelesaian merupakan proyek yangmasih belum selesai pada tanggal neraca, sebagaiberikut:

Construction in progress represents projects that havenot been completed at the balance sheet date asfollows:

2010

Aset dalampenyelesaian yangbelum selesai pada

tanggal neraca

Persentasepenyelesaian/Percentage

of completion

Akumulasibiaya/

Accumulatedcosts

Estimasi tanggalpenyelesaian/

Estimated completiondate

Construction in progressthat has not been

completed at the balancesheet date

Jalan angkut batubara- TCM 78% 10,597

Februari/February2012 Coal haul road - TCM

Pabrik penghancurBatubara - BEK 99% 3,614 Juni/June 2011 Crusher - BEK

Lain-lain (masing-masing di bawah10% dari nilai asetdalampenyelesaian) 7%-95% 20,746

Januari/January2011 –Juni/ June 2011

Others (each below 10%of construction in

progress)34,957






stated)


Aset dalam penyelesaian (lanjutan) Construction in progress (continued)

2009

Aset dalampenyelesaian yangbelum selesai pada

tanggal neraca

Persentasepenyelesaian/Percentage

of completion

Akumulasibiaya/

Accumulatedcosts

Estimasi tanggalpenyelesaian/

Estimated completiondate

Construction inprogress that has not beencompleted at the balance

sheet date

Terminal batubaraBontang- IMM tahap II 98% 77,118 Februari/February 2010

Bontang coal terminal -IMM stage II

Pembangkit listrik -IMM 95% 32,905 Agustus/August 2010 Power plant – IMM

Lain-lain (masing-masing di bawah5% dari nilai asetdalam penyelesaian) 5% - 95% 27,957

Januari – Maret 2010/January – March 2010

Others (each below5%of construction in

progress)

137,980

Kapitalisasi biaya pinjaman oleh Grup selama tahunyang berakhir pada 31 Desember 2010 dan 2009adalah US$1.030 dan US$132. Tingkat kapitalisasirata-rata selama tahun yang berakhir pada 31Desember 2010 dan 2009 adalah 0,45% dan 1,48%.

Borrowing costs capitalised by the Group during theyears ended 31 December 2010 and 2009 amountedto US$1,030 and US$132, respectively. The averagecapitalisation rates for the years ended 31 December2010 and 2009 were 0.45% and 1.48%.

8. BIAYA PENGUPASAN TANAH YANGDITANGGUHKAN

8. DEFERRED STRIPPING COSTS

2010 2009

IMM IMM- Blok Barat 6,488 27,237 West Block -- Blok Timur 3,829 9,097 East Block -

JBG JBG- Blok Tengah 29,280 30,471 Central Block -

TCM TCM- Blok Selatan 5,356 209 South Block -- Blok Utara 4,356 11,670 North Block -

KTD KTD- Embalut 1,428 1,224 Embalut -

50,737 79,908

Di IMM, TCM, dan KTD, biaya pengupasan tanah yangditangguhkan merupakan biaya yang terjadi untukmemindahkan tanah yang belum menghasilkanbatubara.

For IMM, TCM and KTD, the deferred stripping costsrepresent costs incurred for removal of overburdenwithout exposing the coal.






stated)

8. BIAYA PENGUPASAN TANAH YANGDITANGGUHKAN

8. DEFERRED STRIPPING COSTS

Di JBG, biaya pengupasan tanah yang ditangguhkanmerupakan kelebihan rasio pengupasan tanah atasestimasi rasio pengupasan rata-rata selama umurtambang.

For JBG, the deferred stripping costs represent theexcess stripping ratio over the estimated average life ofmine stripping ratio.

Rasio pengupasan rata-rata aktual untuk pit J1 di BlokTengah JBG selama tahun 2010 adalah 5,72:1 (2009:6,68:1). Estimasi rasio pengupasan rata-rata selamaumur tambang untuk pit J1 JBG adalah 6,88:1 (2009:6,88:1) berdasarkan rencana pengelolaan tambangsaat ini.

The actual average stripping ratio for JBG’s J1 pit inCentral Block in respect of the year ended 31December 2010 was 5.72:1 (2009: 6.68:1). Theestimated life of mine average stripping ratio for JBG’sJ1 pit is 6.88:1 (2009: 6.88:1) based on management’scurrent mine plan.

9. BIAYA EKSPLORASI DAN PENGEMBANGAN YANGDITANGGUHKAN

9. DEFERRED EXPLORATION AND DEVELOPMENTEXPENDITURES

2010Pelepasan dan

Saldo awal/ pemindahan/Beginning Penambahan/ Disposals and Saldo akhir/balance Additions transfers Ending balance

Biaya CostArea yang telah ditemukan Areas with proven

cadangan terbukti reservesIMM IMM- Blok Timur 2,013 145 - 2,158 East Block -- Blok Barat 23,414 4,045 (20,702) 6,757 West Block -

25,427 4,190 (20,702) 8,915

TCM TCM- Blok Selatan 11,986 2,356 - 14,342 South Block -- Blok Utara 14,662 923 - 15,585 North Block -

26,648 3,279 - 29,927

KTD KTD- Embalut 20,187 9 - 20,196 Embalut -- Tandung Mayang 190 - - 190 Tandung Mayang -

20,377 9 - 20,386

JBG JBG- Blok Tengah 6,565 249 - 6,814 Central Block -

6,565 249 - 6,814

Bharinto 10,381 1,996 - 12,377 Bharinto

89,398 9,723 (20,702) 78,419

Biaya eksplorasi dan Deferred exploration andpengembangan yang development expenditureditangguhkan yang tidak which cannot be identifieddapat dihubungkan to be related to a specificdengan area tertentu: area of interest:

TCM TCM- Blok Utara 16,512 - - 16,512 North Block -

16,512 - - 16,512Area yang belum ditemukan Areas which have not yet

cadangan terbukti found proven reservesLain-lain 300 - (249) 51 Others

106,210 9,723 (20,951) 94,982






stated)

9. BIAYA EKSPLORASI DAN PENGEMBANGAN YANGDITANGGUHKAN (lanjutan)

9. DEFERRED EXPLORATION AND DEVELOPMENTEXPENDITURES (continued)

2010Pelepasan dan

Saldo awal/ pemindahan/Beginning Penambahan/ Disposals and Saldo akhir/balance Additions transfers Ending balance

Akumulasi amortisasi Accumulated amortisationIMM IMM- Blok Timur 54 128 - 182 East Block-- Blok Barat 6,702 - - 6,702 West Block -

6,756 128 - 6,884TCM TCM- Blok Selatan 365 1,093 1,458 South Block -- Blok Utara 14,662 182 - 14,844 North Block -

15,027 1,275 16,302KTD KTD- Embalut 1,666 5,055 - 6,721 Embalut-

1,666 5,055 6,721JBG JBG- Blok Tengah 5,257 331 - 5,588 Central Block -

5,257 331 5,588Biaya eksplorasi dan Deferred exploration and

pengembangan yang development expenditureditangguhkan yang tidak which cannot be identifieddapat dihubungkan to be related to a specificdengan area tertentu: area of interest:

TCM TCM- Blok Utara 16,512 - - 16,512 North Block -

45,218 6,789 - 52,007


2009Saldo awal/ Saldo akhir/Beginning Penambahan/ Pelepasan/ Endingbalance Additions Disposals balance

Nilai perolehan Acquisition costArea yang telah menemukan Areas with proven

cadangan terbukti reservesIMM IMM- Blok Timur 1,894 119 - 2,013 East Block -- Blok Barat 17,611 5,803 - 23,414 West Block -

19,505 5,922 - 25,427TCM TCM- Blok Selatan 10,794 1,192 - 11,986 South Block -- Blok Utara 14,662 - - 14,662 North Block -

25,456 1,192 - 26,648KTD KTD- Embalut 15,976 4,211 - 20,187 Embalut -- Tandung Mayang 190 - - 190 Tandung Mayang -

16,166 4,211 - 20,377JBG JBG- Blok Tengah 5,921 644 - 6,565 Central Block -

5,921 644 - 6,565

Bharinto 8,284 2,097 - 10,381 Bharinto

75,332 14,066 - 89,398






stated)



2009Saldo awal/ Saldo akhir/Beginning Penambahan/ Pelepasan/ Endingbalance Additions Disposals balance


TCM 16,512 - - 16,512 TCM

Area yang belum ditemukan Areas which have not yetcadangan terbukti found proven reserves

Lain-lain 300 - - 300 Others

92,144 14,066 - 106,210

Akumulasi amortisasi Accumulated amortisationIMM IMM- Blok Timur - 54 - 54 East Block -- Blok Barat 6,702 - - 6,702 West Block -

6,702 54 - 6,756TCM TCM- Blok Selatan - 365 - 365 South Block -- Blok Utara 13,144 1,518 - 14,662 North Block -

13,144 1,883 - 15,027KTD KTD- Embalut - 1,666 - 1,666 Embalut -

JBG JBG- Blok Tengah 3,796 1,461 - 5,257 Central Block -


TCM 14,791 1,721 - 16,512 TCM

38,433 6,785 - 45,218

Penyisihan penurunan nilai Impairment provisionKTD KTD- Embalut 3,301 - (3,301) - Embalut -







stated)



Pada tahun 2009, Grup memulihkan penurunan nilaiatas biaya eksplorasi dan pengembangan yangditangguhkan berkaitan dengan blok Embalut di KTDsebesar US$3.301 karena telah dimulainya operasikomersial di blok tersebut diakhir tahun 2009 dan Grupberpendapat bahwa biaya yang ditangguhkan tersebutdapat dipulihkan selama umur tambang.

In 2009, the Group released a provision for diminutionagainst deferred exploration and developmentexpenditures of US$3,301 related to KTD’s Embalutblock, as the block has commenced commercialoperations at the end of 2009, and the Group believesthat the deferred costs are recoverable over the life ofthe mine.

Pada tahun 2010, biaya eksplorasi dan pengembanganyang ditangguhkansebesar US$20.702 yangberkaitandengan proyek penambangan bawah tanah di blokBarat di IMM dihapuskan karena Grup telahmemutuskan bahwa proyek tersebut tidak ekonomisuntuk dikembangkan.

In 2010, deferred exploration and developmentexpenditures of US$20,702 relating to theunderground mining project at IMM’s West block werewritten-off as the Group concluded that the project isnot economic to be developed.

Pemulihan biaya eksplorasi yang ditangguhkanbergantung pada keberhasilan pengembangan daneksploitasi komersial atau penjualan area of interesttersebut.

Ultimate recoupment of exploration expenditure carriedforward is dependent upon successful development andcommercial exploitation, or alternatively, sale of therespective area of interest.

10. PROPERTI PERTAMBANGAN 10. MINING PROPERTIES

2010 2009

Properti pertambangan 30,349 29,899 Mining propertiesPenambahan - 450 Additions

30,349 30,349

Akumulasi amortisasi (6,266) (5,744) Accumulated amortisation


Saldo di atas merupakan biaya untuk propertipertambanganyang timbul karena akuisisi kepemilikanatas TCM, Bharinto, dan JBG. Saldo tersebut timbulakibat penilaian wajar atas aset-aset yang diperolehpada tanggal akuisisi.

The balance represents the cost of mining propertiesarising from the acquisition of ownership in TCM,Bharinto and JBG. The balance arose from the fairvaluation of the assets acquired at the date ofacquisition.

11. HUTANG USAHA 11. TRADE PAYABLES

2010 2009

Pihak ketiga: Third parties:- PT Pamapersada Nusantara 77,664 75,384 PT Pamapersada Nusantara -- PT Mitra Alam Persada 3,601 - PT Mitra Alam Persada -- Lain-lain (masing-masing Others (each below -

dibawah US$3.000) 13,518 13,871 US$3,000)

94,783 89,255

Komposisi hutang usaha berdasarkan Trade payables compositionmata uang adalah sebagai berikut: based on currency is as follows:

- Dolar AS 94,466 88,454 US Dollars -- Rupiah 317 801 Rupiah -

94,783 89,255






stated)

11. HUTANG USAHA 11. TRADE PAYABLES

Saldo tersebut diatas timbul dari pembelian sukucadang, jasa penambangan, dan jasa lain-lain.

These balances arose from purchase of spare parts,mining services and other services.

2010 2009

Rincian umur hutang usaha dari tanggal Details of aging of trade payablesinvoice adalah sebagai berikut: from invoice date is as follows:

- < 30 hari 94,783 88,488 < 30 days -- 30 sampai 90 hari - 767 30 to 90 days -- > 90 hari - - > 90 days -

94,783 89,255

12. BEBAN YANG MASIH HARUS DIBAYAR 12. ACCRUED EXPENSES

2010 2009

Iuran kehutanan 36,130 24,021 Forestry feeRoyalti/iuran eksploitasi 19,795 60,711 Royalty/exploitation feeBiaya kelebihan waktu berlabuh/

denda keterlambatan kapal 16,405 6,473 Despatch/demurrageBiaya bahan bakar 9,301 8,161 Fuel purchasingBahan peledak 7,305 10,732 ExplosivesSewa peralatan, kapal, ponton Equipment, vessel, pontoon and

dan kendaraan 8,375 6,455 vehicle rentalKontraktor 9,131 11,546 ContractorsBiaya angkut 2,658 5,241 Freight expenseBonus kinerja karyawan 13,922 6,362 Employee performance bonusesLain-lain (masing-masing di bawah

US$3.000) 27,108 26,034 Others (each below US$3,000)

150,130 165,736

13. PINJAMAN JANGKA PANJANG 13. LONG-TERM LOANS

2010 2009

IMM IMMPinjaman Bank Bank loans- The Siam Commercial Bank The Siam Commercial Bank -

Public Company Limited Public Company Limited(Cabang Bangkok) - 50,000 (Bangkok Branch)

Porsi jangka pendek Current portion- The Siam Commercial Bank The Siam Commercial Bank -


Porsi jangka panjang - 40,000 Long-term portion






stated)


2010 2009

TCM TCMPinjaman bank Bank loans- Export-Import Bank of Thailand - 1,900 Export-Import Bank of Thailand -- The Siam Commercial Bank The Siam Commercial Bank -

Public Company Limited Public Company Limited(Cabang Singapura) - 1,900 (Singapore Branch)

- Bangkok Bank Public Bangkok Bank Public -Company Limited - 1,250 Company Limited

- 5,050

Porsi jangka pendek Current portion- Export-Import Bank of Thailand - 1,900 Export-Import Bank of Thailand -- The Siam Commercial Bank The Siam Commercial Bank -



- 5,050

Porsi jangka panjang - - Long-term portion

Grup The GroupPinjaman bank Bank loans- The Siam Commercial Bank The Siam Commercial Bank -


- Export-Import Bank of Thailand - 1,900 Export-Import Bank of Thailand -- The Siam Commercial Bank The Siam Commercial Bank -



- 55,050

Porsi jangka pendek Current portion- The Siam Commercial Bank The Siam Commercial Bank -


- Export-Import Bank of Thailand - 1,900 Export-Import Bank of Thailand -- The Siam Commercial Bank The Siam Commercial Bank -



- 15,050

Porsi jangka panjang - 40,000 Long-term portion






stated)


a. IMM a. IMM

The Siam Commercial Bank Public CompanyLimited (Cabang Bangkok)

The Siam Commercial Bank Public CompanyLimited (Bangkok Branch)

Berdasarkan perjanjian pinjaman antara The SiamCommercial Bank Public Company Limited("Pemberi Pinjaman") dan IMM tertanggal 24Desember 2009, Pemberi Pinjaman setuju untukmemberikan fasilitas pinjaman sebesar US$50.000yang digunakan untuk pembayaran pinjamanpemegang saham dan pendanaan pengeluaranmodal saat ini dan di masa mendatang.

Based on the loan agreement between The SiamCommercial Bank Public Company Limited (the“Lender”) and IMM dated 24 December 2009, theLender agreed to provide a loan facility ofUS$50,000 for purposes of repayment ofshareholder loans and funding of existing andfuture capital expenditures.

Tingkat bunga yang dikenakan adalah LIBORditambah 2,9% per tahun, yang akan dibayarkansetiap kuartal atau setengah tahunan. Perjanjianpinjaman mensyaratkan IMM untukmempertahankan rasio hutang terhadap ekuitasmaksimum sebesar 1,75:1.

The interest rate is LIBOR plus 2.9% per annum,which is payable on a quarterly or semi annualbasis. The loan agreement includes a financialcovenant requiring IMM to maintain a debt to equityratio of a maximum of 1.75:1.

Pinjaman ini telah dilunasi pada bulan September2010.

The loan has been repaid in full in September2010.

Export-Import Bank of Thailand Export-Import Bank of Thailand

Berdasarkan perjanjian pinjaman antara Export-Import Bank of Thailand ("Pemberi Pinjaman") danIMM tertanggal 12 Februari 2010, PemberiPinjaman setuju untuk memberikan fasilitaspinjaman sebesar US$50.000 yang digunakanuntuk pembayaran pinjaman pemegang sahamdan pendanaan pengeluaran modal saat ini dan dimasa mendatang.

Based on the loan agreement between Export-Import Bank of Thailand (the “Lender”) and IMMdated 12 February 2010, the Lender agreed toprovide a loan facility of US$50,000 for purposes ofrepayment of shareholder loans and funding ofexisting and future capital expenditures.

Tingkat bunga yang dikenakan adalah LIBORditambah 2,9% per tahun, yang akan dibayarkansetiap setengah tahunan. Perjanjian pinjamanmensyaratkan IMM untuk mempertahankan rasiohutang terhadap ekuitas maksimum sebesar1,75:1.

The interest rate is LIBOR plus 2.9% per annum,which is payable on a semi annual basis. The loanagreement includes a financial covenant requiringIMM to maintain a debt to equity ratio of amaximum of 1.75:1.

Pinjaman ini telah dilunasi pada bulan Agustus2010.

The loan has been repaid in full in August 2010.

b. TCM b. TCM

Pinjaman bank Bank loans

Berdasarkan perjanjian fasilitas pinjaman antaraBangkok Bank Public Company Limited, Export-Import Bank of Thailand, The Siam CommercialBank Public Company Limited (Cabang Singapura)(bersama-sama disebut sebagai “PemberiPinjaman”) dan TCM tertanggal 13 Juli 2004,Pemberi Pinjaman setuju untuk memberikanfasilitas pinjaman untuk pengembangan tambang(Fasilitas A) sebesar US$50.500 dan fasilitasmodal kerja (Fasilitas B) sebesar US$6.500.Fasilitas B tersebut diberikan hanya oleh BangkokBank Public Company Limited. Sesuai denganperubahan perjanjian, fasilitas tersebut akanberlaku sampai dengan 31 Desember 2010.

Based on the facility agreement between BangkokBank Public Company Limited, Export-Import Bankof Thailand, The Siam Commercial Bank PublicCompany Limited (Singapore Branch) (together the“Arranger”) and TCM dated 13 July 2004, theArranger agreed to provide financing for minedevelopment (Facility A) amounting to US$50,500and a working capital facility (Facility B) amountingto US$6,500. Facility B is provided only byBangkok Bank Public Company Limited. Asamended, these facilities will be available for theperiod up to 31 December 2010.






stated)

13. PINJAMAN JANGKA PANJANG (lanjutan) 13. LONG-TERM LOANS (continued)

b. TCM (lanjutan) b. TCM (continued)

Pinjaman bank (lanjutan) Bank loans (continued)

Tingkat bunga pinjaman yang dikenakan adalahLIBOR ditambah 2,25% per tahun, yang akandibayarkan setiap kuartal.

The interest rate is LIBOR plus 2.25% per annum,which is payable on a quarterly basis.

Pinjaman ini telah dilunasi pada bulan April 2010. The loan has been repaid in full in April 2010.

14. MODAL SAHAM 14. SHARE CAPITAL

Struktur pemegang saham Perusahaan pada tanggal31 Desember adalah sebagai berikut:

The Company’s shareholders as at 31December are asfollows:

2010Saham diterbitkan dan disetor penuh/

Issued and paid up capitalJumlah Nilaisaham/ (Rp juta)/

Number of Value Setara US$/shares (Rp million) US$ equivalent %

Banpu Minerals (Singapore) Pte. Ltd. 734,452,000 367,226 41,530 65.00Somyot Ruchirawat (Direktur Utama/

President Director) 40,000 20 2 0.01Ir. Lukmanul Hakim, MM (Komisaris/

Commissioner) 9,500 5 1 -Rudijanto Boentoro (Komisaris/Commissioner) 5,000 2 - -Masyarakat/Public 395,418,500 197,709 22,359 34.99

1,129,925,000 564,962 63,892 100.00

2009Saham diterbitkan dan disetor penuh/

Issued and paid up capitalJumlah Nilaisaham/ (Rp juta)/

Number of Value Setara US$/shares (Rp million) US$ equivalent %

Banpu Minerals (Singapore) Pte. Ltd. 832,984,000 416,492 47,742 73.72Somyot Ruchirawat (Direktur Utama/

President Director) 83,000 65 7 0.01Pongsak Thongampai (Direktur/Director) 38,000 39 4 0.01Aphimuk Taifayongvichit (Direktur/Director) 11,500 6 1 -Mahyudin Lubis (Direktur/Director) 30,000 15 2 -Edward Manurung, S.E., MBA (Direktur Tidak

Terafiliasi/Non-affiliated Director) 30,000 15 2 -Sutoyo (Sutedjo), S.H., MH (Komisaris Utama/

President Commissioner) 4,500 2 - -Ir. Lukmanul Hakim, MM (Komisaris/

Commissioner) 9,500 5 1 -Masyarakat/Public 296,734,500 148,324 16,133 26.26

1,129,925,000 564,962 63,892 100,00






stated)

15. AGIO SAHAM 15. ADDITIONAL PAID IN CAPITAL

2010 2009

Agio saham 354,935 354,935Excess of proceeds over par valueBiaya emisi saham (10,737) (10,737) Share issuance costs

344,198 344,198

Biaya emisi saham merupakan biaya-biaya yangberkaitan langsung dengan penerbitan saham baruPerusahaan yang dilakukan saat Penawaran UmumPerdana pada 18 Desember 2007.

Share issuance costs represent costs directlyattributable to the issuance of new shares of theCompany during the Initial Public Offering on 18December 2007.

16. SALDO LABA YANG TELAH DICADANGKAN 16. APPROPRIATED RETAINED EARNINGS

Berdasarkan Rapat Umum Pemegang Saham Tahunanpada tanggal 29 Maret 2010 dan 17 April 2009,Perusahaan membentuk tambahan cadangan wajibmasing-masing sebesar US$1.987 dan US$1.000sehingga total cadangan wajib Perusahaan menjadisebesar US$3.000 (2009: US$1.013). Hal ini sesuaidengan Undang-Undang Perseroan Terbatas No.40/2007 yang diterbitkan pada bulan Agustus 2007,yang mengharuskan setiap perusahaan untukmembentuk cadangan minimum 20% dari modal yangtelah ditempatkan dan disetor penuh. Tidak adabatasan waktu tertentu untuk membentuk cadangantersebut.

Based on the Annual General Meetings of Shareholderson 29 March 2010 and 17 April 2009, the Companyappropriated a further US$1,987 and US$1,000,respectively, to its statutory reserve to total US$3,000(2009: US$1,013). This is in accordance withIndonesian Limited Company Law No.40/2007 enactedon 16 August 2007 which requires companies to set upa reserve amounting to a minimum 20% of a company’sissued and paid up capital. There is no set period oftime over which this amount should be accumulated.

17. DIVIDEN 17. DIVIDENDS

Berdasarkan Rapat Umum Pemegang Saham Tahunanpada tanggal 17 April 2009 dan 29 Maret 2010, sertahasil dari resolusi pola bergilir sebagai pengganti rapatDewan Direksi di bulan September 2009 dan Agustus2010, Perusahaan mengumumkan pembagian dividensebagai berikut:

Based on the Annual General Meetings of Shareholderson 17 April 2009 and 29 March 2010, and circularresolutions in lieu of Board of Directors meetings inSeptember 2009 and August 2010, the Companydeclared dividends as follows:

Periode/Period Nilai/AmountPer saham (nilai

penuh)/Per share (full amount)

Pengumuman dividen pada tahun 2009 yang berhubungandengan laba bersih tahun 2008/Dividend declaration in2009 relating to 2008 net income

US$69,760 US$0.06

Pengumuman dividen pada tahun 2009 yangberhubungan dengan laba bersih tahun 2009/Dividenddeclaration in 2009 relating to 2009 net income US$79,402 US$0.07

Pengumuman dividen pada tahun 2010 yang berhubungandengan laba bersih tahun 2009/Dividend declaration in2010 relating to 2009 net income US$155,944 US$0.14

Pengumuman dividen pada tahun 2010 yangberhubungan dengan laba bersih tahun 2010/Dividenddeclaration in 2010 relating to 2010 net income US$100,055 US$0.09






stated)

18. PENJUALAN 18. SALES

2010 2009

Batubara Coal- Pihak ketiga 1,629,318 1,432,941 Third parties -- Pihak yang mempunyai

hubungan istimewa 28,887 68,166 Related parties -

Jasa Services- Pihak ketiga 9,987 6,977 Third parties -- Pihak yang mempunyai

hubungan istimewa - 275 Related parties -

Jumlah penjualan 1,668,192 1,508,359 Total sales

Selama tahun yang berakhir 31 Desember 2010 tidakada pelanggan yang mempunyai tranksaksi lebih dari10% atas penjualan bersih. Selama tahun yangberakhir 31 Desember 2009 Adani Global Pte. Ltd danFormosa Plastic Group membeli batubara senilaiUS$162.897 dan US$156.830 (10,8% dan 10,4% daripenjualan Grup).

For the year ended 31 December 2010 there was nocustomer with transactions representing more than 10%of net sales. For the year ended 31 December 2009Adani Global Pte. Ltd and Formosa Plastic Grouppurchased US$162,897 and US$156,830 of coal(10.8% and 10.4% of Group’s net sales).

19. HARGA POKOK PENJUALAN 19. COST OF GOODS SOLD

2010 2009

Biaya produksi: Production costs:Biaya penambangan 586,863 484,813 Mining costsPerawatan dan pemeliharaan 71,339 50,618 Repairs and maintenancePenyusutan 43,243 46,871 DepreciationBahan bakar dan minyak 40,566 30,908 Fuel and oilGaji dan tunjangan 39,255 32,049 Salaries and allowancesSewa peralatan 23,863 20,649 Equipment rentalIuran kehutanan dan lisense 15,012 16,995 Forestry fee and licensesAmortisasi biaya eksplorasi dan Amortisation of deferredexploration

pengembangan yang ditangguhkan 6,789 6,785 and development expenditureBiaya konsultan 5,049 2,654 Consultants feesTunjangan makan dan minum 3,742 3,134 Meal and drinks allowanceTunjangan kesehatan 2,599 1,982 Medical allowancesBiaya transportasi 2,584 1,992 Transportation expensePenyisihan untuk rehabilitasi tambang 4,431 2,952 Provision for mine rehabilitationLain-lain (masing-masing

kurang dari US$2.000) 13,087 7,469Others (each less than US$2,000)

Total biaya produksi 858,422 709,871 Total production costs

Royalti/iuran eksploitasi 203,941 189,037 Royalty/exploitation feeTransportasi batubara 72,598 62,981 Coal transportationPenurunan/(kenaikan) persediaan Decrease/(increase) in coal

batubara (8,364) (23,934) inventories

268,175 228,084

Harga pokok penjualan 1,126,597 937,955 Cost of goods sold






stated)

19. HARGA POKOK PENJUALAN (lanjutan) 19. COST OF GOODS SOLD (continued)

Rincian pemasok yang memiliki transaksi lebih dari10% dari jumlah pembelian barang dan jasa untukproduksi:

Details of suppliers having transactions more than 10%of total purchases of goods and services for productionactivities:

2010 2009Pihak ketiga: Third party:PT Pamapersada Nusantara 452,436 374,290 PT Pamapersada Nusantara

20. BEBAN PENJUALAN 20. SELLING EXPENSES

2010 2009Biaya kelebihan waktu berlabuh/

denda keterlambatan kapal 23,542 7,534 Despatch and demurrageBahan bakar dan minyak 16,190 11,408 Fuel and oilPenanganan batubara 15,899 16,056 Coal handlingBiaya angkut 13,655 14,520 Freight costKomisi 10,740 9,276 CommissionsBeban pemuatan batubara 6,689 9,370 Vessel wrappingSewa kapal 5,176 3,215 Ship rentalSurvey dan analisis sampel 2,759 2,510Draft survey and sampling analysisGaji dan tunjangan 2,255 821 Salary and allowancesLain-lain (kurang dari US$1.500) 2,481 2,703 Others (less than US$1,500)

99,386 77,413

21. BEBAN UMUM DAN ADMINISTRASI 21. GENERAL AND ADMINISTRATION EXPENSES

2010 2009

Jasa profesional dan manajemen 42,769 37,813Professional and management feesGaji dan tunjangan 13,776 10,063 Salaries and allowancesStandby fees yang dibayarkan ke Standby fees paid to JBG

kontraktor JBG 7,715 - contractorsPenyusutan 2,719 2,418 DepreciationTransportasi dan perjalanan 1,905 1,279 Transportation and travelingPos dan telekomunikasi 1,809 896 Postage and telecommunicationsSewa kantor 1,105 854 Office rentalPerbaikan dan pemeliharaan 840 973 Repairs and maintenanceLain-lain (kurang dari US$500) 6,663 2,880 Others (less than US$500)

79,301 57,176

Lihat Catatan 23 untuk rincian transaksi dengan pihakyang memiliki hubungan istimewa.

Refer to Note 23for details of related party transactions.






stated)

22. INSTRUMEN DERIVATIF 22. DERIVATIVE INSTRUMENTS

2010 2009Piutang derivatif Derivative receivables- Kontrak swap bahan bakar Fuel swap contracts -

minyak – bukan lindung nilai 18,174 7,088 non-hedge- Kontrak forward pembelian Rupiah forward buy -

Rupiah – bukan lindung nilai 51 239 contracts – non-hedge

18,225 7,327

Hutang derivatif Derivative payables- Kontrak swap batubara – Coal swap contracts -

lindung nilai arus kas 14,614 - cash flow hedge- Kontrak swap batubara – Coal swap contracts -

bukan lindung nilai 48,849 13,780 non-hedge- Kontrak forward pembelian Rupiah forward buy -

Rupiah – bukan lindung nilai 97 - contracts – non-hedge

63,560 13,780

a. Transaksi Swap Batubara a. Coal Swap Transactions

IMM melakukan perikatan kontrak harga swapbatubara dengan berbagai institusi keuanganuntuk melakukan lindung nilai atas harga jualbatubara di masa mendatang. Kontrak tersebutakan jatuh tempo dalam waktu dua tahun. Hargayang digunakan adalah harga pasar indeksbatubara API 4 dan Newcastle.

IMM entered into coal price swap contracts withvarious financial institutions to hedge future salesprices. Such contracts are due within two years.The underlying pricing is the market price specifiedby the API 4 and Newcastle coal indices.

Transaksi swap batubara yang masih berlaku padatanggal 31 Desember 2010 adalah sebagaiberikut:

The following coal swap transactions wereoutstanding as at 31 December 2010:

Mitratransaksi/Counterparties

Harga yangdisepakati (jual)

nilai penuh/Deal price (sell)

full amount

Jumlahnosional

(jual)/Totalnotionalamounts(sell) (MT)

Harga yangdisepakati (beli)

nilai penuh/Deal price (buy)

full amount

Jumlahnosional

(beli)/Totalnotionalamounts(buy) (MT)

Tanggal jatuh tempo/Maturity date

SocieteGenerale

US$91.90-US$98.50/MT

603,000 US$106.75-US$117.25/MT

519,600Maret/March 2011 -

Desember/December 2011StandardCharteredBank

US$90.50-US$99.50/MT 1,343,400

US$109.25-118.60/MT 234,600

Maret/March 2011 -Desember/December 2011

BarclaysBank PLC

US$95.00-US$98.30/MT

381,000 US$108.50-US$116.00/MT

72,000Maret/March 2011 -

Desember/December 2011BNPParibas

US$94.50-US$96.00/MT

135,000 US$109.00-US$109.75 /MT

30,000 Maret/March 2011 -Desember/December 2011

ANZInvestmentBank

US$94.50-US$96.00/MT

109,200 - -Maret/March 2011 -

Desember/December 2011

MizuhoCorporateBank

US$97.10/MT 60,000 - -Maret/March 2011 -

Desember/December 2011






stated)

22. INSTRUMEN DERIVATIF (lanjutan) 22. DERIVATIVE INSTRUMENTS (continued)

a. Transaksi Swap Batubara (lanjutan) a. Coal Swap Transactions (continued)

Keuntungan atau kerugian yang sudah terealisasidari transaksi swap batubara yang memenuhikualifikasi untuk akuntansi lindung nilai dankeuntungan atau kerugian baik yang telahterealisasi dan yang belum terealisasi daritransaksi swap batubara yang tidak memenuhikualifikasi untuk akuntansi lindung nilai dicatatsebagai pendapatan/beban lain-lain dalam laporanlaba rugi konsolidasi.

The gains or losses from realised coal swaptransactions which qualify for hedge accountingand realised and unrealised gains or losses fromcoal swap transactions which do not qualify forhedge accounting were recorded as otherincome/expenses in the consolidated statement ofincome.

Mutasi cadangan nilai wajar lindung nilai arus kasadalah sebagai berikut:

Movement in cash flow hedging reserve is asfollows:

2010 2009

Saldo awal - 9,273 Beginning balanceRealisasi 416 (9,273) RealisedPerubahan nilai wajar (15,030) - Change in fair value

Saldo akhir (14,614) - Ending balance

b. Transaksi Swap Bahan Bakar Minyak b. Fuel Swap Transactions

IMM melakukan perikatan kontrak swap denganberbagai institusi keuangan untuk melakukanlindung nilai atas harga bahan bakar minyak dimasa mendatang. Transaksi swap yang masihberlaku pada tanggal 31 Desember 2010 adalahsebagai berikut:

IMM entered into swap agreements with variousfinancial institutions, to hedge future fuel prices.The following fuel swaps were outstanding as at31December 2010:

Mitra transaksi/Counter parties

Harga yang disepakati(beli) nilai penuh/Deal price (buy)

full amount

Jumlah nosional(beli)/Total notional

amounts (buy)(barel/barrel)

Tanggal jatuh tempo/Maturity date

ANZ Investment Bank US$90 60,000 Maret/March 2011 –Desember/December 2011

Barclays Bank PLC. US$88.25- US$96.00 504,000 Maret/March 2011 –Desember/December 2011

Societe Generale US$87.80- US$93.05 585,000 Maret/March 2011 –Desember/December 2011

BNP Paribas US$89.50- US$90.80 120,000 Maret/March 2011 –Desember/December 2011

Keuntungan atau kerugian baik yang telahterealisasi dan yang belum terealisasi dari kontrak-kontrak ini dicatat sebagai pendapatan/beban lain-lain dalam laporan laba rugi konsolidasian.Kontrak-kontrak ini tidak memenuhi kualifikasiuntuk akuntansi lindung nilai.

The realised and unrealised gains or losses fromthese contracts were recorded as otherincome/expenses in the consolidated statement ofincome. These contracts do not quality for hedgeaccounting.

c. Kontrak Forward c. Forward Contracts

ITM, TCM, IMM dan KTD melakukan perikatankontrak forward pembelian Rupiah untukmenutupi pembayaran beban operasi di masamendatang yang menggunakan mata uangRupiah.

ITM, TCM, IMM and KTD entered into Rupiahforward buy contracts to cover future operatingexpenses denominated in Rupiah.






stated)

22. INSTRUMEN DERIVATIF (lanjutan) 22. DERIVATIVE INSTRUMENTS (continued)

c. Kontrak Forward (lanjutan) c. Forward Contracts (continued)

Kontrak yang masih berlaku pada tanggal 31Desember 2010 adalah sebagai berikut:

The following contracts were outstanding as at 31December 2010:

Mitra transaksi/Counter parties

Kurs forward/Forward rate

Jumlahnosional

(jual)/Totalnotional

amounts (sell)

Nilai setaraRupiah

(beli)/Rupiahequivalent

amounts (buy)

Tanggal jatuhtempo/

Maturity date

Citibank Rp 8,973 –Rp 9,176 US$17,300 Rp 117.15

milyar/billionJanuari/January -

Mei/May 2011

Standard Chartered Rp 9,013 –Rp 9,178 US$9,200 Rp 173.04

milyar/billionJanuari/January -Maret/March 2011

Bangkok Bank Rp 8,975 –Rp 9,220 US$12,500 Rp 45.23


Mei/May 2011

Bank Central Asia Rp 8,975 –Rp 9,206 US$15,000 Rp 45.81


Mei/May 2011

Keuntungan atau kerugian baik yang telahterealisasi dan yang belum terealisasi dari kontrak-kontrak ini dicatat sebagai pendapatan/beban lain-lain dalam laporan laba rugi konsolidasian.Kontrak-kontrak ini tidak memenuhi kualifikasiuntuk akuntansi lindung nilai.

The realised and unrealised gains or losses fromthese contracts were recorded as otherincome/expenses in the consolidated statement ofincome. These contracts do not quality for hedgeaccounting.

23. TRANSAKSI PIHAK YANG MEMILIKI HUBUNGANISTIMEWA

23. RELATED PARTY TRANSACTIONS

Transaksi dengan pihak yang memiliki hubunganistimewa adalah sebagai berikut:

Related party transactions are as follows:

2010 2009

Transaksi: Transactions:Penjualan batubara: Sale of coal:- Banpu International Limited 18,893 23,285 Banpu International Limited -- Banpu Public Company Limited 9,994 41,359 Banpu Public Company Limited -- Banpu Singapore Pte. Ltd. - 3,522 Banpu Singapore Pte. Ltd. -

28,887 68,166

Jasa Services:- Banpu Public Company Limited - 275 Banpu Public Company Limited -

Jumlah 28,887 68,441 Total

Persentase dari jumlah penjualan 1.73% 4.54% As a percentage of total sales

Management andJasa manajemen dan konsultasi: advisory services:- Banpu Public Company Limited Banpu Public Company Limited -

(lihat Catatan 25j) 33,413 31,446 (refer to Note 25j)

Persentase dari jumlah As a percentageof total professionaljasa profesional dan manajemen 78.12% 83.16% and management fees

Aset: Assets:Piutang usaha: Trade receivables:- Banpu International Limited 3,143 2,174 Banpu International Limited -

3,143 2,174






stated)

23. TRANSAKSI PIHAK YANG MEMILIKI HUBUNGANISTIMEWA (lanjutan)

23. RELATED PARTY TRANSACTIONS (continued)

2010 2009

Piutang lain-lain: Other receivables:- Pinjaman karyawan 561 471 Loans to employees -- Banpu Mineral Company Limited - 48 Banpu Mineral Company Limited -- Banpu Public Company Limited 137 28 Banpu Public Company Limited -

Banpu Minerals (Singapore) -- Banpu Minerals (Singapore) Pte. Ltd. 30 22 Pte. Ltd.- Banpu International Limited - 36 Banpu International Limited -

728 605


Persentase dari jumlah aset 0.36% 0.23% As a percentage of total assets

Kewajiban lain – lain: Other liabilities:Jasa manajemen dan konsultasi: Management and advisory services:- Banpu Public Company Limited 2,713 3,221 Banpu Public Company Limited -

Penggantian biaya: Expense reimbursement:- Silamani Company Limited 77 - Silamani Company Limited -- Banpu Singapore Pte. Ltd. - 65 Banpu Singapore Pte. Ltd. -- Banpu Public Company Limited 47 235 Banpu Public Company Limited -

2,837 3,521


Persentase dari total kewajiban 0.78% 0.86% As a percentage of total liabilities

Sifat dari hubungan istimewa dengan pihak-pihak yangmengadakan transaksi dengan Perusahaan adalahsebagai berikut:

The nature of the relationships with the related parties isas follows:

Entitas/Party Hubungan/Relationships Transaksi/Transactions

Banpu Public Company Limited Pemegang saham pengendaliutama Perusahaan/the ultimatecontrolling entity of the Company

Penjualan batubara/coal sales,penggantian biaya/expensereimbursement, jasamanajemen dan konsultasi/management and advisoryservices

Banpu International Limited Entitas sepengendali denganPerusahaan/under commoncontrol with the Company

Penjualan batubara/coal sales,penggantian biaya/expensereimbursement

Banpu Singapore Pte. Ltd. Entitas sepengendali denganPerusahaan/under commoncontrol with the Company

Penjualan batubara/coal sales

Banpu Minerals (Singapore) Pte.Ltd.

Entitas induk Perusahaan/thecontrolling shareholder of theCompany

Penggantian biaya/expensereimbursement ,dividen/dividends

Silamani Company Limited Entitas sepengendali denganPerusahaan/under commoncontrol with the Company

Penggantian biaya/expensereimbursement






stated)

23. TRANSAKSI PIHAK YANG MEMILIKI HUBUNGANISTIMEWA (lanjutan)

23. RELATED PARTY TRANSACTIONS (continued)

Kebijakan Grup terkait penetapan harga untuk transaksidengan pihak-pihak yang memiliki hubungan istimewaadalah sebagai berikut:

The Group’s pricing policy related to the transactionswith related parties is as follows:

Penjualan batubara ke pihak yang memilikihubungan istimewa ditetapkan berdasarkankontrak-kontrak penjualan, yang pada umumnyamenggunakan indeks internasional yang setarasebagai perbandingan dan disesuaikan denganspesifikasi dari batubara dan lokasi pengiriman.Grup mendapatkan persetujuan dari pejabatpemerintah yang terkait sebelum memasukitransaksi-transaksi tersebut.

Sales of coal to related parties are set based onsales contracts, which generally use internationalindices as benchmarks adjusted for coalspecifications and location of deliveries. The Groupobtained approvals from the appropriategovernment authority for these sales transactions.

Pihak yang memiliki hubungan istimewa menagihsegala biaya yang dikeluarkan atas nama Grupsebesar biaya yang telah dibayarkan, dansebaliknya.

Related parties re-charged expenses paid onbehalf of the Group at cost, and vice versa.

24. LABA BERSIH PER SAHAM DASAR 24. BASIC EARNINGS PER SHARE

Laba bersih per saham dasar dihitung denganmembagi laba bersih untuk para pemegang sahamdengan rata-rata tertimbang jumlah saham biasa yangberedar pada periode yang bersangkutan.

Basic net earnings per share is calculated by dividingnet income attributable to shareholders by theweighted-average number of ordinary sharesoutstanding during the period.

2010 2009

Net income attributable toLaba bersih untuk pemegang saham 204,151 335,551 shareholdersRata-rata tertimbang jumlah saham Weighted average number of

biasa yang beredar (dalam ordinary shares outstandingribuan lembar saham) 1,129,925 1,129,925 (in thousands of shares)

Laba bersih per saham dasar Basic earnings per share(nilai penuh) 0.18 0.30 (full amount)

Grup tidak memiliki efek yang bersifat dilutif pada 31Desember 2010 dan 2009.

The Group does not have any dilutive ordinary sharesat 31 December 2010 and 2009.

25. KOMITMEN DAN KEWAJIBAN KONTINJENSI 25. COMMITMENTS AND CONTINGENT LIABILITIES

a. Komitmen pembelian a. Purchase commitments

Pada tanggal 31 Desember 2010, Grup memilikipesanan pembelian peralatan dan perlengkapantambang, dan bahan-bahan pendukung lainnyayang belum diterima sebesar US$24.840.

As at 31 December 2010, the Group hasoutstanding purchase orders for mining equipmentand supplies amounting to US$24,840.

b. Komitmen penjualan b. Sales commitments

Pada tanggal 31 Desember 2010, Grup memilikibeberapa komitmen penjualan untuk menjual 59,2juta metrik ton batubara ke beberapa pembeli.Batubara tersebut akan dikirimkan secara periodiksejak tahun 2011 hingga 2021.

As at 31 December 2010, the Group has variouscommitments to sell 59.2 million metric tonnes ofcoal to various buyers. The products will beperiodically delivered from 2011 until 2021.






stated)

25. KOMITMEN DAN KEWAJIBAN KONTINJENSI(lanjutan)

25. COMMITMENTS AND CONTINGENT LIABILITIES(continued)

c. Jaminan reklamasi c. Reclamation guarantees

Bank garansi berikut dapat diklaim olehPemerintah jika Grup tidak melaksanakan rencanareklamasi seperti yang telah disetujui denganPemerintah pada periode tersebut:

The following bank guarantees may be claimed bythe Government if the Group does not carry out itsreclamation plans as agreed with the Governmentfor those periods:

IMM IMM

IMM telah menyediakan jaminan reklamasi kePemerintah dalam bentuk bank garansi senilaiRp 14,7 milyar (US$1.636) yang berlaku sampaidengan 1 Maret 2011 untuk memenuhi jaminanreklamasi tahun 2008-2012.

IMM provided reclamation guarantees to theGovernment in the form of bank guaranteestotalling Rp 14.7 billion (US$1,636) which are validuntil 1 March 2011to cover 2008-2012 reclamationrequirements.

TCM TCM

TCM telah menyediakan jaminan reklamasi kePemerintah dalam bentuk bank garansi senilaiRp 28.5 milyar (US$3.173) yang berlaku sampaidengan 31 Januari 2012 untuk memenuhijaminan reklamasi tahun 2007-2011.

TCM provided reclamation guarantees to theGovernment in the form of bank guaranteestotalling Rp 28.5 billion (US$3,173) which arevalid until 31 January 2012 to cover 2007-2011reclamation requirements.

KTD KTD

KTD telah menyediakan jaminan reklamasi kePemerintah dalam bentuk bank garansi senilaiRp 6,4 milyar (US$712) yang berlaku sampaidengan 31 Januari 2012 untuk memenuhijaminan reklamasi tahun 2010-2014.

KTD provided reclamation guarantees to theGovernment in the form of bank guaranteestotaling Rp 6.4 billion (US$712) which are validuntil 31 January 2012 to cover 2010-2014reclamation requirements.

JBG JBG

JBG telah menyediakan jaminan reklamasi kePemerintah dalam bentuk bank garansi senilai Rp6.7 milyar (US$746) yang berlaku sampai dengan31 Januari 2011 untuk memenuhi jaminanreklamasi tahun 2006-2010.

Sampai dengan tanggal laporan ini, JBG sedangdalam proses mendapatkan persetujuan dariPemerintah untuk rencana reklamasi 5 tahunanberikutnya.

JBG provided reclamation guarantees to theGovernment in the form of bank guaranteestotaling Rp 6.7 billion (US$746) which are validuntil 31 January 2011 to cover 2006-2010reclamation requirements.

As of the date of this report, JBG is still in theprocess to obtain approval on the next 5-yearreclamation plan from the Government.

d. Litigasi/investigasi d. Litigation/investigation

IMM IMM

Pada tanggal 20 Januari 2009, IMM mengajukangugatan perdata terhadap PT Asuransi AndikaRaharja Putera melalui Pengadilan Negeri JakartaSelatan (Perkara No. 29/Pdt.G/2009/PN.JKT.Sel)sehubungan dengan klaim performance bondyangtelah diklaim sebelumnya oleh IMM namun tidakdibayar. Klaim performance bond tersebutberjumlah US$1.400 (belum termasuk bunga danganti rugi imaterial), ditujukan kepada sebuahperusahaan penerbit performance bondsehubungan dengan wanprestasi yang dilakukanoleh kontraktor proyek pembangunan pembangkitlistrik IMM di Bontang.

On 20 January 2009, IMM filed a civil claim againstPT Asuransi Andika Raharja Putera through theCivil Court of South Jakarta (Case No.29/Pdt.G/2009/PN.JKT.Sel) in relation to adefaulting payment of performance bond previouslyclaimed by IMM. The claim of the performancebond, amounting to US$1,400 (not includinginterest and opportunity loss claims), was claimedto a performance bond issuer in responding to acontractual default by a contractor in the IMMBontang power plant project.






stated)



d. Litigasi (lanjutan) d. Litigation (continued)

IMM (lanjutan) IMM (continued)

Pada tanggal 18 Agustus 2009, PengadilanNegeri Jakarta Selatan mengeluarkan PutusanNo. 29/Pdt.G/2009/PN.Jkt.Sel yang mengabulkangugatan IMM dan memerintahkan pihak Tergugat(PT Asuransi Andika Raharja Putera) untukmembayar ganti rugi kepada pihak penggugat(IMM) sebesar US$1.400. Tergugat kemudianmengajukan banding ke Pengadilan TinggiJakarta melalui Pengadilan Negeri JakartaSelatan. Dalam tahap banding di PengadilanTinggi Jakarta tersebut, pada tanggal 1 April2010, IMM dan pihak tergugat setuju untukmenyelesaikan perselisihan secara damai. IMMsetuju untuk menerima pembayaran sebesarUS$840 dari pihak tergugat, yang merupakan60% dari nilai performance bond. Namundemikian, meskipun Penggugat dan Tergugattelah menyelesaikan perkara secara damai danmenyampaikan perjanjian perdamaian kepadaPengadilan Tinggi Jakarta, Pengadilan TinggiJakarta belum mengeluarkan putusan dalamperkara tersebut.

On 18 August 2009, the South Jakarta DistrictCourt issued Decision No.29/Pdt.G/2009/PN.Jkt.Sel which granted IMM'sclaim and ordered the Defendant (PT AsuransiAndika Raharja Putera) to pay compensation tothe plaintiff (IMM) in the amount of US$1,400.Subsequently, the Defendant submitted anappeal to the Jakarta High Court through theSouth Jakarta District Court. During the appealstage at the Jakarta High Court, on 1 April 2010,IMM and the defendant agreed to settle thedispute amicably. IMM agreed to receive US$840from the defendant, which represents 60% of theperformance bond. However, even though thePlaintiff and the Defendant have settled the caseamicably and submitted the settlementagreement to the Jakarta High Court, the JakartaHigh Court has not yet issued any decision in thecase.

TCM TCM

Melalui Pemberitahuan Arbitrase tertanggal 2Desember 2008, salah satu kontraktor TCMmemulai upaya penyelesaian sengketa denganTCM melalui arbitrase di Singapura dengan klaimsenilai US$1.415. Pemberitahuan tersebutdisampaikan kepada Singapore InternationalArbitration Centre (SIAC).

By Notice of Arbitration dated 2 December 2008,one of TCM's contractors commenced arbitration inSingapore against TCM for a claim totallingUS$1,415. The Notice was filed with the SingaporeInternational Arbitration Centre (SIAC).

Pada tanggal laporan keuangan ini, upayaarbitrase belum menunjukkan kemajuan sejakdiajukannya pemberitahuan sebagaimana tersebutdi atas dan kontraktor tersebut belum memulaitahapan-tahapan dalam arbitrase sejak tanggal 2Desember 2008.

As of the date of these financial statements, thearbitration has not progressed beyond the abovementioned notice and the contractor has not takenany steps in the arbitration since 2 December2008.

Manajemen berpendapat bahwa penyelesaianmasalah-masalah tersebut di atas tidak akanmemberikan dampak yang material terhadap posisikeuangan atau arus kas Grup.

Management believes that resolution of this matterwill not have a material adverse impact on theGroup’s financial position and cash flows.






stated)



e. Kontrak jasa penambangan, komitmenpembelian bahan bakar dan perjanjian sewakendaraan

e. Mining services contracts, fuel purchaseagreements and vehicle rental agreements

Anak-anak perusahaan mengadakan berbagaimacam perjanjian dengan jasa kontraktorpertambangan, pembelian bahan bakar dan sewakendaraan untuk mendukung operasi tambang.

The Company’s subsidiaries entered into variousmining services contracts, fuel purchaseagreements and vehicle rental agreements tosupport its mine operations.

Kontraktor-kontraktor yang saat inidigunakan untuk pertambangan, antara lain,adalah PT Pamapersada Nusantara, PTMitra Alam Persada, PT GaswaraInternational, PT Borneo Alam Semesta, PTSurya Triwira Sakti, PT Arkananta AptaPratista, PT Riung Mitra Lestari, PT PrimaAlam Makmur, dan PT Kopex MiningContractors. Setiap perjanjian dengankontraktor pertambangan mengatur, antaralain, tingkat harga, penyesuaian harga bahanbakar, konsumsi bahan bakar, manajemenbahan peledak, insentif untuk kontraktor,tolok ukur rasio pengupasan tanah dan hallainnya. Nilai kontrak tergantung padavolume tanah overburden yang dipindahkandan batubara yang ditambang. Kontrak-kontrak tersebut akan berakhir antaraAgustus 2011 sampai dengan Desember2013.

The mining services contractors are, amongothers, PT Pamapersada Nusantara, PT MitraAlam Persada, PT Gaswara International, PTBorneo Alam Semesta, PT Surya TriwiraSakti, PT Arkananta Apta Pratista, PT RiungMitra Lestari, PT Prima Alam Makmur, and PTKopex Mining Contractors. Each agreementgoverns, among others, the price rate, fuelprice adjustment, fuel consumption,explosives management, incentives for thecontractor, stripping ratio benchmarks andother terms. Contract values are dependenton volumes of overburden moved and coalmined. These contracts will expire betweenAugust 2011 and December 2013.

Perjanjian pembelian bahan bakar dilakukandengan Pertamina. Pada tanggal 31Desember 2010, jumlah sisa nilai kontrakadalah 63.000 kiloliter. Anak-anakperusahaan memberikan jaminan bankgaransi untuk Pertamina dengan nilai totalUS$3.132.

The fuel purchase agreements were enteredinto with Pertamina. As at 31 December 2010,the total remaining contract quantity is 63,000kilolitres. The Company’s subsidiaries haveprovided bank guarantees to Pertamina for atotal amount of US$3,132.

Perjanjian sewa kendaraan dilakukandengan berbagai penyedia jasa. Jumlah sisanilai kontrak adalah Rp90,32 milyar atausetara dengan US$10.046.

The vehicle rental agreements were enteredinto with various providers. The totalremaining contract value is Rp90.32 billion orequivalent to US$10,046.

f. Komisi keagenan f. Agency fees

IMM, JBG, dan TCM IMM, JBG and TCM

IMM, JBG, dan TCM memiliki beberapa perjanjiankeagenan dengan agen pihak ketiga untukmemasarkan batubara mereka kepadapelanggan-pelanggan tertentu. Agen tersebutakan mendapatkan komisi berdasarkanpersentase penjualan kepada pelanggan-pelanggan tersebut.

IMM, JBG and TCM have various agencyagreements with third party agents to market theircoal for certain customers. The agents willreceive commissions based on a percentage ofsales to those customers.






stated)



g. Fasilitas kredit g. Credit facilities

Perusahaan The Company

Standard Chartered Bank (“SCB”) Standard Chartered Bank (“SCB”)

Pada 18 September 2008, Perusahaanmengadakan perjanjian fasilitas kredit denganSCB. Fasilitas kredit perbankan tersedia bagiPerusahaan (“Peminjam”), IMM, KTD, JBG danBharinto (bersama-sama disebut “sub-Peminjam”) dengan Fasilitas Perbankan Umumsejumlah US$40.000 dimana setiap fasilitasdianggap sebagai sub-limit dengan jumlahgabungan fasilitas yang dipakai tidak bolehmelebihi Fasilitas Perbankan Umum.

On 18 September 2008, the Company enteredinto a banking credit facility agreement with SCB.The banking credit facilities are made available tothe Company (the “Borrower”), IMM, KTD, JBGand Bharinto (collectively the “co-Borrowers”) withGeneral Banking Facilities of US$40,000 witheach facility treated as a sub-limit with thecombined outstanding amount not to exceed theamount of the General Banking Facility.

Fasilitas-fasilitas ini mengharuskan Peminjam dansub-Peminjam untuk memenuhi persyaratan-persyaratan yang bersifat keuangan dan non-keuangan.

These facilities require various financial and non-financial undertakings to be complied with.

Perjanjian ini berlaku sampai dengan 30 Juni 2009(“Periode Ketersediaan”). Pada saat berakhirnyaPeriode Ketersediaan tersebut kecuali diubah olehSCB, Perubahan Perjanjian Fasilitas Perbankan iniakan secara otomatis diperpanjang selama periodetiga bulan.

The agreement is valid until 30 June 2009 (the“Availability Period”). Upon the expiration of theAvailability Period, unless otherwise amended bythe Bank, this Banking Facility AmendmentAgreement will be automatically extended foranother three month period.

Berdasarkan amendemen perjanjian terakhirtertanggal 15 Juli 2010, fasilitas ini diperpanjangsampai dengan tanggal 30 Juni 2011 dan tersediajuga bagi TCM. SCB menyediakan beberapafasilitas, seperti Bond and Guarantees facility,Short Term Loans facility, Overdraft facility, ImportLetter of Credit facility, Loans Against TrustReceipts facility, Other Import Loans Facility,Shipping Guarantees Facility, Pre-shipmentFinancing under Export Letter of Credit Facility,Credit Bills Negotiated Discrepant facility,Commercial Standby Letter of Credit facility danforeign currency exchange facility dengan jumlahnilai sebesar US$100.000.

Based on the latest amendment dated 15 July2010, the agreement was extended until 30 June2011 and it was also made available to TCM. SCBprovides facilities, including Bond and Guaranteesfacility, Short Term Loans facility, Overdraft facility,Import Letter of Credit facility, Loans Against TrustReceipts facility, Other Import Loans Facility,Shipping Guarantees Facility, Pre-shipmentFinancing under Export Letter of Credit Facility,Credit Bills Negotiated Discrepant facility,Commercial Standby Letter of Credit facility andforeign currency exchange facility with a totalamount of US$100,000.

Pada tanggal 31 Desember 2010, Grup telahmenggunakan fasilitas berikut ini:

As at 31 December2010, the Group has used thefollowing facilities:

Jenis fasilitas/Type of facility Jumlah yang telah dipakai/ Outstanding

- Fasilitas Impor/Import Facilities

- Bank garansi dan Fasilitas Standby Letter ofCredit/Bank guaranteesand Standby Letter ofCredit Facility

- Fasilitas Nilai Tukar Mata Uang Asing/ForeignCurrency Exchange Facility

US$717,585

Rp599.3 milyar/billion (setara dengan/equivalentto US$66,66) dan/and US$9,483

US$9,200






stated)



g. Fasilitas kredit (lanjutan) g. Credit facilities (continued)

Perusahaan (lanjutan) The Company (continued)

PT Bank Central Asia Tbk. (“BCA”) PT Bank Central Asia Tbk. (“BCA”)

Pada tanggal 10 Agustus 2010, Perusahaan, IMM,KTD, JBG dan Bharinto (bersama-sama disebut”Peminjam”) mengadakan perikatan perjanjianfasilitas kredit dengan BCA. Perjanjian ini berlakusampai dengan 10 Agustus 2011. BCAmenyediakan fasilitas berikut ini:

On 10 August 2010, the Company, IMM, KTD, JBGand Bharinto (collectively the “Borrower”) enteredinto a credit facility agreement with BCA. Theagreement is valid until 10 August 2011. BCAprovides the following facilities:

Jenis fasilitas gabungan/Type of joint facility Batas/LimitJumlah yang telah

dipakai/OutstandingGabungan L/G line, Standby L/C, Jaminan Bank, Letter of

Credit dan Surat Kredit Berdokumen Dalam Negeri/Omnibus L/G line, Standby L/C, Bank Guarantee, Letterof Credit and Letter of Credit for Local Documents US$30,000 -

Fasilitas nilai tukar/Foreign exchange line US$25,000 US$15,000Kredit lokal/Local credit Rp50 milyar/billion

(setara dengan/equivalent to US$

5,561)

-

Fasilitas ini mengharuskan Peminjam untukmemenuhi persyaratan-persyaratan yang bersifatkeuangan dan non-keuangan.

This facility requires various financial and non-financial undertakings to be complied with by theBorrower.

Jaminan atas fasilitas ini adalah laba operasiPeminjam dengan agunan negatif tanpapreferensi.

Collateral is the Borrower’s operating income withnegative pledge without preference.

IMM IMM

Citibank Citibank

Pada tanggal 17 Januari 2006, IMM dan Citibankmengadakan perikatan Perjanjian Derivatif danSwap dengan batasan yang didasarkan padakondisi pasar yang ditentukan Citibank. Perjanjianbersifat tidak mengikat dan dapat ditinjau ulang,dikurangi atau dibatalkan sewaktu-waktu olehCitibank. Batas maksimum fasilitas nilai tukaradalah sebesar US$100.000. Jumlah fasilitasyang dipakai pada tanggal 31 Desember 2010sebesar US$ 4.100.

On 17 January 2006, IMM and Citibank enteredinto Swaps and Derivative Agreements with thelimit based on current market conditions asdetermined by Citibank. The agreement isuncommitted and subject to review, reduction orcancellation from time to time by Citibank. The limitof the foreign exchangefacility is US$100,000. Thetotal outstanding facility as at 31 December 2010amounted to US$4,100.

Pada tanggal 17 Januari 2006, IMM mengadakanperikatan Perjanjian Kredit Revolving denganCitibank yang berlaku hingga 17 Januari 2007.Fasilitas ini telah diperpanjang hingga 17 Januari2011. Fasilitas kredit yang diberikan adalahsebagai berikut:

On 17 January 2006, IMM entered into a RevolvingCredit Agreement with Citibank valid until 17January 2007. This facility agreement has beenextended until 17 January 2011. The creditfacilities are as follows:






stated)




IMM (lanjutan) IMM (continued)

Citibank (lanjutan) Citibank (continued)

Jumlah yangtelah dipakai/

Jenis fasilitas/Type of facility Batas/Limit OutstandingFasilitas Modal Kerja/Working Capital Facility US$25,000 -Fasilitas Letters of Credit/Letters of Credit Faciity US$25,000 -Jaminan Bank/Bank Guarantee US$25,000 -

Jumlah fasilitas tidak boleh melebihi US$25.000. The total facility shall not exceed the amount ofUS$25,000.

IMM harus memenuhi persyaratan-persyaratanyang bersifat keuangan dan non-keuangansehubungan dengan fasilitas-fasilitas tersebut.

IMM must comply with various financial and non-financial covenants with respect to the facilities.

KTD KTD

Citibank Citibank

Pada tanggal 17 Januari 2006, KTD dan Citibankmelakukan Perjanjian Derivatif dan Swap denganbatas berdasarkan kondisi pasar yang ditentukanoleh Citibank. Perjanjian ini tidak mengikat dandapat ditelaah, dikurangi, atau dibatalkan dariwaktu ke waktu oleh Citibank. Surat dukungan dariIMM diperlukan sebelum menggunakan fasilitas ini.

On 17 January 2006, KTD and Citibank enteredinto Swaps and Derivative Agreements with thelimit based on current market conditions asdetermined by Citibank. The agreement isuncommitted and subject to review, reduction orcancellation from time to time by Citibank. Letter ofsupport from IMM is needed prior to using thisfacility.

Pada tanggal 31 Desember 2010, batasmaksimum fasilitas adalah sebesar US$12.500.Jumlah fasilitas yang dipakai pada tanggal 31Desember 2010 sebesar US$6.700.

As at 31 December 2010, the limit of this facility isUS$12,500. The total outstanding facility as at 31December 2010 amounted to US$6,700.

Pada 18 Desember 2008, Perjanjian KreditRevolving telah disepakati antara KTD, Citibankdan IMM dengan fasilitas omnibus US$25.000berlaku sampai dengan 18 Desember 2010.Fasilitas tersebut masih dalam proses untukdiperpanjang sampai 18 Desember 2011. Fasilitastersebut adalah:

On 18 December 2008, KTD, Citibank and IMMentered into a Revolving Credit Agreement with anomnibus facility of US$25,000 valid until 18December 2010. The facility is in the process ofbeing extended until 18 December 2011. Thefacilities are:

Jenis fasilitas/Type of facility Batas/LimitJumlah yang telah

dipakai/Outstanding

Fasilitas Modal Kerja/Working Capital Facility US$2,000 -Fasilitas Kredit Ekspor/Export Credit Facility US$2,000 -

Jumlah total fasilitas tidak boleh melebihi batasfasilitas omnibus.

The total amount of the facility should not exceedthe limit of the omnibus facility.






stated)




KTD (lanjutan) KTD (continued)

Citibank (lanjutan) Citibank (continued)

KTD harus memenuhi persyaratan-persyaratanyang bersifat keuangan dan non-keuangansehubungan dengan fasilitas ini.

KTD is required to comply with various financialand non-financial undertakings with respect to thisfacility.

TCM TCM

Bangkok Bank Public Company Limited(“Bangkok Bank”)

Bangkok Bank Public Company Limited(“Bangkok Bank”)

Pada tanggal 22 September 2006, PerjanjianKreditRevolving telah disepakati dengan BangkokBank dengan fasilitas berikut ini yang ditujukanuntuk modal kerja. Berdasarkan amandemenperjanjian jumlah pinjaman maksimum US$11.500yang terdiri dari Fasilitas Letter of Credit (“L/Csight”), Fasilitas Letter of Credit untuk jangka waktu90 hari (“Usance L/C”), Fasilitas Tagihan Piutangdibawah Fasilitas Letter of Credit (“BRL”), danFasilitas Standby Letter of Credit (“SBLC”), UangMuka terhadap Wesel Bayar (Advance againstPromissory Notes) untuk tagihan impor denganfasilitas Letter of Credit dengan jangka waktu 180hari (“T/R”), fasilitas Uang Muka terhadap WeselBayar (Advance against Promissory Notes) untukmodal kerja dengan jangka waktu 180 hari (“P/N”),dan fasilitas Letter of Guarantee . Berdasarkanamandemen perjanjian terakhir tertanggal 23Maret 2010, fasilitas ini diperpanjang sampaidengan tanggal 31 Desember 2010.

On 22 September 2006, a Revolving CreditAgreement has been drawn up with Bangkok Bankwith the following facilities for working capitalpurposes: an aggregate principal amount up toUS$11,500 consisting of Letters of Credit Facility(“L/C sight”), Letters of Credit Facility for the term of90 days (“Usance L/C”), Letter of Bills Receivableunder Letter of Credit Facility (“BRL”) and StandbyLetter of Credit Facility (“SBLC”) Advance againstPromissory Notes for Import bills under sight Letterof Credit facility for the term of 180 days (“T/R”),Advance against Promissory Notes for workingcapital facility for the term of 180 days (“P/N”), andLetter of Guarantee facility. Based on the latestamendment dated 23 March 2010 the facility wasextended until 31 December 2010.

TCM harus memenuhi persyaratan-persyaratanyang bersifat keuangan dan non-keuangansehubungan dengan fasilitas ini.

TCM is required to comply with various financialand non-financial undertakings with respect to thisfacility.

Pada tanggal 27 Desember 2006, TCMmenandatangani Perjanjian Perdagangan MataUang Asing dengan Bangkok Bank, yang menjadibagian integral dan tidak terpisahkan dariPerjanjian Kredit Revolving. Berdasarkanamandemen perjanjian tanggal 23 Maret 2010,limit fasilitas diubah menjadi US$75.000 danberlaku sampai dengan tanggal 31 Desember2010. Fasilitas tersebut kemudian diperpanjangsampai dengan tanggal 31 Desember 2011.

On 27 December 2006, TCM entered into aForeign Exchange Trade Agreement with BangkokBank, which constitutes an integral andinseparable part of the Revolving CreditAgreement. Based on an amendment to theagreement dated 23 March 2010, the limit of thefacility was changed to US$75,000 and is validuntil 31 December 2010. The facility was furtherextended to 31 December 2011.






stated)




TCM (lanjutan) TCM (continued)

Bangkok Bank Public Company Limited(“Bangkok Bank”) (lanjutan)

Bangkok Bank Public Company Limited(“Bangkok Bank”) (continued)

Pada tanggal 31 Desember 2010, fasilitas yangtelah digunakan adalah sebagai berikut:

As at 31 December 2010, the facilities that havebeen used are as follows:

Jenis fasilitas/Type of facilityJumlah yang telah dipakai/

Outstanding

- Jaminan bank/Bank Guarantee

- Pertukaran Mata Uang Asing/Foreign Exchange

Rp 28.53 milyar/billion (setara dengan/equivalentwith US$3,173) dan/and US$816

US$12,500

h. Sewa dan pajak tanah h. Deadrent and land tax

Bharinto Bharinto

Sesuai dengan PKP2B, Bharinto harus membayarsewa tanah dengan angsuran enam bulananselama masa PKP2B.Sewa dihitung berdasarkanjumlah hektar yang termasuk dalam area PKP2B,sesuai dengan tarif yang ditetapkan dalam PKP2B.Hutang pajak bumi dan bangunan selama masapra-produksi adalah sebesar sewa tanah. Selamamasa produksi, Bharinto diwajibkan membayarpajak bumi dan bangunan sebesar sewa tanahditambah 0,15% dari pendapatan kotor darioperasi tambang.

Pursuant to its Coal Agreement, Bharinto shall paythe Government deadrent in semi-annualinstallments during the term of the CoalAgreement. Deadrent is calculated by reference tothe number of hectares included in the CoalAgreement area, in accordance with the ratesstipulated in the Coal Agreement. Land andbuilding tax payable for the pre-production period isequal to the amount of deadrent. During theproduction period, Bharinto is required to pay landand building tax equal to the deadrent plus 0.15%of gross revenue from the mining operations.

i. Iuran kehutanan i. Forestry fee

IMM, TCM, KTD, dan JBG IMM, TCM, KTD and JBG

Berdasarkan Peraturan Pemerintah No. 2 tanggal4 Februari 2008, seluruh perusahaan yangmemiliki aktivitas di dalam area hutan produksi danhutan lindung namun kegiatannya tidakberhubungan dengan kegiatan kehutanan memilikikewajiban untuk membayar iuran kehutananberkisar dari Rp 1.200.000 sampai Rp 3.000.000per hektar. Iuran ini berlaku sejak tahun 2008.Grup mengakui iuran ini dengan dasar akrual.

Based on Government Regulation No. 2 dated 4February 2008, all companies which have activitiesin production and protected forest areas but notrelated to forestry activity will have an obligation topay a forestry fee ranging from Rp 1,200,000 to Rp3,000,000 per hectare. This fee is effective from2008. The Group has recognised this fee on anaccrual basis.






stated)



j. Jasa manajemen dan konsultasi j. Management and advisory services

Pada tanggal 22 Oktober 2007, Perusahaanmengadakan perjanjian Jasa Manajemen danKonsultasi dengan Banpu Public Company Limited(“BPL”). BPL setuju memberikan jasa kepada Grupsecara eksklusif, yang meliputi jasa umum danjasa konsultasi pemasaran dan logistik. Imbalanyang dikenakan atas jasa tersebut adalahUS$2.000 setiap kuartal (imbalan tetap) dan 1,5%penjualan kotor batubara (imbalan variabel).Perjanjian tersebut berlaku dari 1 Januari 2008sampai dengan 31 Desember 2008 dan akandiperpanjang secara otomatis setiap tahunnya.

On 22 October 2007, the Company entered into aManagement and Advisory Service Agreement withBanpu Public Company Limited (“BPL”). BPLagreed to be exclusively engaged in rendering theservices to the Group which includes generalservices and marketing and logistics advisoryservices. The fee related to the services isUS$2,000 per quarter (fixed fee) and 1.5% of grossrevenues from coal sales (variable fee). Theagreement is valid from 1 January 2008 until 31December 2008 and shall be automaticallyrenewed on an annual basis.

k. Iuran eksploitasi k. Exploitation fee

Berdasarkan Peraturan Pemerintah No. 45/2003seluruh perusahaan yang memiliki kuasapertambangan diwajibkan untuk membayar iuraneksploitasi sebesar 5% sampai 7% dari nilaipenjualan, setelah dikurangi beban penjualan.KTD mengakui iuran ini dengan dasar akural.

Based on Government Regulation No. 45/2003 allcompanies holding mining rights will have anobligation to pay an exploitation fee ranging from5% to 7% of sales, net of selling expenses. KTDrecognises this fee on an accrual basis.

l. Undang-Undang Pertambangan No. 4/2009 l. Mining Law No. 4/2009

Pada tanggal 16 Desember 2008, DewanPerwakilan Rakyat Indonesia meloloskan Undang-Undang Pertambangan Mineral dan Batubara yangbaru (“Undang-Undang”), yang telah disetujui olehPresiden pada 12 Januari 2009, menjadi UU No.4/2009. Sistem PKP2B dimana beberapa anakperusahaan Grup beroperasi sudah tidak tersediabagi para investor. Meskipun, Undang-Undangmengindikasikan PKP2B yang ada, seperti yangdimiliki Grup akan tetap diberlakukan sampaijangka waktu berakhirnya kontrak, ketentuanperalihan tidaklah jelas dan memerlukan klarifikasilebih lanjut melalui peraturan pemerintah. Terdapatsejumlah permasalahan yang sedang dianalisispemegang PKP2B, termasuk Grup. Beberapadiantaranya termasuk:

On 16 December 2008, the Indonesian Parliamentpassed a new Law on Mineral and Coal Mining(the “Law”), which received the assent of thePresident on 12 January 2009, becoming Law No.4/2009. The Coal Co-operation Agreement (“CCA”)system under which several of the Group’ssubsidiaries operate will no longer be available toinvestors. While the Law indicates that existingCCAs, such as those held by the Group, will behonoured, the transition provisions are unclear,and will require clarification through governmentregulations. There are a number of issues whichexisting CCA holders, including the Group, arecurrently analysing. Among others these include:

- ketentuan peralihan atas PKP2B. Undang-Undang menjelaskan bahwa PKP2B akantetap diberlakukan sampai jangka waktuberakhirnya kontrak. Namun, Undang-Undangjuga menetapkan bahwa PKP2B yang adaharus disesuaikan dalam jangka waktu satutahun terhadap ketentuan Undang-Undang(kecuali untuk penerimaan negara – yangtidak didefinisikan, tetapi diasumsikantermasuk royalti dan pajak); dan

- the CCA transition provisions. The Lawnotes that existing CCAs will be honoureduntil their expiration. However, it also statesthat existing CCAs must be amended withinone year to conform with the provisions ofthe Law (other than terms related to Staterevenue – which is not defined, butpresumably includes royalties and taxes);and






stated)



l. Undang-Undang Pertambangan No. 4/2009(lanjutan)

l. Mining Law No. 4/2009 (continued)

- keharusan bagi pemegang PKP2B yang telahmemulai aktivitasnya untuk, dalam waktu satutahun sejak diberlakukannya Undang-Undangyang baru, menyerahkan rencana kegiatanpenambangan untuk keseluruhan areakontrak. Jika ketentuan ini tidak dilaksanakan,area kontrak dapat dikurangi menjadi hanyaseluas area yang diperbolehkan untuk IzinUsaha Pertambangan berdasarkan Undang-Undang.

- the requirement for CCA holders which havealready commenced some form of activity to,within one year of enactment of the newLaw, submit a mining activity plan for theentire contract area. If this requirement is notfulfilled, the contract area may be reduced tothat allowed for licences under the Law.

Diperkirakan para pemegang PKP2B, dengandukungan dari asosiasi industri pertambangan,akan mempertahankan hak mereka berdasarkankontrak yang sekarang berlaku. Terdapatkemungkinan bahwa ketentuan arbitrase akandipakai jika pemerintah mencoba untuk memaksaperubahan ketentuan PKP2B tanpa persetujuanpemegang PKP2B. Grup sedang menganalisadampak situasi ini terhadap operasinya, dan yakinbahwa tidak terdapat dampak yang signifikandalam waktu dekat, karena industri pertambangandan pemerintah bekerjasama untuk menyelesaikanpermasalahan-permasalahan yang ada.

It is expected that CCA holders, with the supportof mining industry associations, will vigorouslydefend their rights under their existing contracts.It is possible that the arbitration provisions of theCCAs will be invoked if the government attemptsto force changes in CCA terms without theagreement of the contractors. The Group isanalysing the impact of this situation on itsoperations, and believes that there will be nosignificant impact in the near term, as theindustry and the government work towards aconsensus on these issues.

Setelah keluarnya Undang-Undang tersebut,Direktur Jenderal Mineral, Batubara dan PanasBumi (“DJMBP”) menerbitkan Surat Keputusan(“SK”) No. 03.E/31/DJB/2009 sehubungandengan Kuasa Pertambangan (“KP”) yangmenjadi dasar operasi KTD. Beberapa diantaranya adalah:

Following the issuance of the Law, the DirectorGeneral of Minerals, Coal and Geothermal(“DGMCG”) issued Circular No.03.E/31/DJB/2009 with respect to Mining Rights(“KP”) under which KTD operates. The Circularstates that, among others:

• KP yang ada pada saat diberlakukannyaUndang-Undang masih berlaku hinggajangka waktu berakhirnya KP tetapi wajibdikonversi menjadi Izin UsahaPertambangan (“IUP”) sesuai denganUndang-Undang, paling lambat 11 Januari2010.

• KPs in force at the time the new Mining Lawwas enacted will remain valid until theexpiration of the KP but must be converted toa Mining Business Licence (Izin UsahaPertambangan or “IUP” – the mining licenceunder the Law) by 11 January 2010 at thelatest.

• Tata cara penerbitan IUP akan diterbitkanoleh DJMBP (diasumsikan melalui peraturanpelaksana Undang-Undang No. 4/2009).

• The procedures for IUP issuance will beissued by the DGMCG (presumably throughthe upcoming implementing regulations forLaw No. 4/2009).

• Semua pemilik KP eksplorasi dan eksploitasidiwajibkan untuk menyerahkan rencanaaktivitas seluruh KP hingga berakhirnyajangka waktu KP, paling lambat enam bulansetelah disahkannya Undang-Undang, yaitu11 Juli 2009.

• All existing exploration and exploitation KPholders are required to deliver an activitiesplan for the whole KP area covering the perioduntil expiration of the KP term, at the latestwithin six months of the enactment of the newMining Law, i.e. by 11 July 2009.






stated)



l. Undang-Undang Pertambangan No. 4/2009(lanjutan)

l. Mining Law No. 4/2009 (continued)

Pada bulan Februari 2010, Pemerintah Indonesiamengeluarkan dua peraturan implementasi atasUndang-Undang Mineral No. 4/2009, yaituPeraturan Pemerintah No. 22/2010 dan 23/2010(“PP No. 22” dan “PP No. 23”), sehubungandengan penerapan Undang-UndangPertambangan No. 4/2009. PP No. 22 mengaturtentang pembentukan area pertambangan melaluisistem IUP yang baru. PP No. 23 memperjelasprosedur untuk memperoleh IUP. PP No. 23menyatakan bahwa PKP2B yang ada akan tetapdiakui oleh Pemerintah, namun demikianperpanjangan atas PKP2B tersebut akan dilakukanmelalui penerbitan IUP. PP No. 23 jugamewajibkan agar KP diubah menjadi IUP dalamjangka waktu tiga bulan sejak diterbitkannya PPNo. 23.

In February 2010, the Government of Indonesiareleased two implementing regulations for MiningLaw No. 4/2009, i.e. Government Regulations Nos.22/2010 and 23/2010 (“GR No. 22” and “GR No.23”). GR No. 22 deals with the establishment ofmining areas under the new IUP system. GR No.23 provides clarifications surrounding theprocedures to obtain new IUPs. GR No. 23indicates that existing CCAs will be honoured bythe Government although any extension of existingCCAs will be through the issuance of an IUP. GRNo. 23 also requires a KP to be converted into anIUP within three months of the issuance of GR No.23.

Grup terus memonitor perkembangan peraturanpelaksana Undang-Undang tersebut secara ketatdan akan mempertimbangkan dampak terhadapoperasi Grup, jika ada, pada saat peraturan-peraturan pelaksana ini diterbitkan. Pada tanggallaporan keuangan ini, KTD-Tandung Mayang telahmemperoleh IUP Eksploitasi. Saat ini, Grupsedang menunggu persetujuan dari pemerintahkabupaten terkait sehubungan dengan konversidari KP ke IUP untuk KTD-Embalut.

The Group is closely monitoring the progress ofthe implementing regulations for the Law, and willconsider the impact on its operations, if any, asthese regulations are issued. As of the date ofthese financial statements, KTD-TandungMayang has obtained an Exploitation IUP. TheGroup is waiting for approvals from the regencyauthorities in connection with the KP to IUPconversion for KTD-Embalut.

m. Peraturan Menteri No. 34/2009 m. Ministerial Regulation No. 34/2009

Pada bulan Desember 2009, Menteri Energi danSumber Daya Mineral mengeluarkan PeraturanMenteri No. 34/2009 yang mewajibkan perusahaanpertambangan untuk menjual sebagian hasilproduksinya kepada pelanggan domestik(“Domestic Market Obligation” atau “DMO”).Sesuaidengan Keputusan Menteri Energi dan SumberDaya Mineral No. 1604/K/30/ MEM/2010,persentase batas minimal DMO untuk tahun 2010adalah 24,75%.

In December 2009, the Minister of Energy andMineral Resources issued Ministerial RegulationNo. 34/2009, which provides a legal framework torequire mining companies to sell a portion of theiroutput to domestic customers (“Domestic MarketObligation” or “DMO”). According to MinisterialDecree No. 1604/K/30/ MEM/2010, the minimumDMO percentage for 2010 is 24.75%.

Pelanggan domestik dan harga yang akandigunakan untuk porsi penjualan DMO akanmengikuti harga indeks internasional sebagai tolakukur, yang juga ditentukan oleh Menteri Energi danSumber Daya Mineral. Pada tanggal laporankeuangan ini, industri pertambangan masihmenunggu pedoman kebijakan dan instruksi dariMenteri Energi dan Sumber Daya Mineral.

The domestic customers and the price to be usedfor the DMO sales, which will follow internationalindices as the benchmark, will be determined bythe Minister of Energy and Mineral Resources. Asof the date of these financial statements, themining industry is waiting for further implementationguidelines and instructions from the Minister ofEnergy and Mineral Resources.






stated)



n. Peraturan Menteri No. 28/2009 n. Ministerial Regulation No. 28/2009

Pada bulan September 2009, Menteri Energi danSumber Daya Mineral mengeluarkan PeraturanMenteri No. 28/2009, yang salah satu isinyamemperketat penggunaan perusahaan afiliasi atauanak perusahaan sebagai penyedia jasa kontraktorpertambangan dan mengharuskan persetujuanpemerintah untuk penggunaan perusahan afiliasisebagai jasa kontraktor pertambangan. Peraturantersebut memberikan pengecualian hanya apabilatidak terdapat perusahaan kontraktorpertambangan yang mampu di lokasi tersebut.Peraturan tersebut menyediakan masa transisiselama tiga tahun untuk perubahan terhadapperjanjian yang berlaku saat ini. Grup sedangmempertimbangkan dampak dari peraturantersebut oleh karena KTD menyediakan jasakontraktor pertambangan kepada perusahaan laindalam Grup.

In September 2009, the Minister of Energy andMineral Resources issued Ministerial RegulationNo. 28/2009 which, among others, sets strictcriteria for mining companies use of 'Affiliates' or'Subsidiaries' as their mining contractors andrequires government approval to use an affiliateas a mining contractor. The regulation providesexceptions only when no other capable miningservice companies operate in the area. Theregulation provides a three year transition periodfor changes to existing arrangements. The Groupis currently considering the implications of thisregulation, given that KTD provides miningservices to other members of the Group.

o. Peraturan Pemerintah No. 78/2010 o. Goverment Regulation No. 78/2010

Pada tanggal 20 Desember 2010, PemerintahIndonesia mengeluarkan peraturan implementasiatas Undang-Undang Mineral No. 4/2009, yaituPeraturan Pemerintah No. 78/2010 (“PPNo. 78”)yang mengatur aktivitas reklamasi dan pascatambang untuk pemegang IUP-Eksplorasi danIUP-Operasi Produksi. Peraturan ini memperbaruiPeraturan Menteri No. 18/2008 yang dikeluarkanoleh Menteri Energi Sumber Daya Mineral padatanggal 29 Mei 2008.

On 20 December 2010, the Government ofIndonesia released an implementing regulationfor Mining Law No. 4/2009, i.e. GovernmentRegulation No. 78/2010 (“GR No. 78”) that dealswith reclamations and post-mining activities forboth IUP-Exploration and IUP-ProductionOperation holders. This regulation updatesMinisterial Regulation No. 18/2008 issued by theMinister of Energy and Mineral Resources on 29May 2008.

Pemegang IUP-Eksplorasi, ketentuannya antaralain, harus memuat rencana eksplorasi didalamrencana kerja dan anggaran biaya ekplorasinyadan menyediakan jaminan reklamasi berupadeposito berjangka yang ditempatkan pada bankpemerintah.

An IUP-Exploration holder, among otherrequirements, must include a reclamation plan inits exploration work plan and budget and providea reclamation guarantee in the form of a timedeposit placed at a state-owned bank.

Pemegang IUP-Operasi Produksi, ketentuannyaantara lain, harus menyiapkan (1) rencanareklamasi lima tahunan; (2) rencana pascatambang; (3) menyediakan jaminan reklamasiyang dapat berupa rekening bersama ataudeposito berjangka yang ditempatkan pada bankpemerintah, bank garansi, atau cadanganakuntansi (bila diijinkan), dan (4) menyediakanjaminan pasca tambang berupa depositoberjangka yang ditempatkan di bank pemerintah.

An IUP-Production Operation holder, amongother requirements, must prepare (1) a 5-yearreclamation plan; (2) a post-mining plan; (3)provide a reclamation guarantee which may be inthe form of a joint account or time deposit placedat a state-owned bank, a bank guarantee, or anaccounting provision (if eligible); and (4) providea post-mine guarantee in the form of a timedeposit at a state-owned bank.






stated)



o. Peraturan Pemerintah No. 78/2010 (lanjutan) o. Goverment Regulation No. 78/2010 (continued)

Penempatan jaminan reklamasi dan jaminanpasca tambang tidak menghilangkan kewajibanpemegang IUP dari ketentuan untukmelaksanakan aktivitas reklamasi dan pascatambang.

The requirement to provide reclamation and post-mine guarantees does not release the IUP holderfrom the requirement to perform reclamation andpost-mine activities.

Ketentuan peralihan didalam PP No. 78menegaskan bahwa para pemegang PKP2B jugawajib mematuhi peraturan ini.

The transitional provisions in GR No. 78 make itclear that CCA holders are also required tocomply with this regulation.

Pada tanggal laporan keuangan ini, IMM, TCM,KTD dan JBG telah membuat jaminan reklamasidalam bentuk bank garansi. Grup sedang dalamproses untuk mendapatkan persetujuan rencanatutup tambang dari Pemerintah untuk IMM, TCM,KTD dan JBG.

As at the date of these financial statements, IMM,TCM, KTD and JBG have placed reclamationguarantees in the form of bank guarantees. TheGroup is in the process of obtaining Governmentapproval for the mine closure plans prepared byIMM, TCM, KTD and JBG.

p. Peraturan Menteri No. 17/2010 p. Ministerial Regulation No. 17/2010

Pada tanggal 23 September 2010, Menteri Energidan Sumber Daya Mineral mengeluarkanPeraturan Menteri No. 17/2010 yang menjelaskanmekanisme untuk menentukan IndonesianMinerals and Coal Benchmark Price ("IMCBP"),sebagai salah satu peraturan pelaksana UU No.4/2009. Peraturan ini berlaku efektif pada tanggal23 September 2010.

On 23 September 2010, the Minister of Energyand Mineral Resources issued MinisterialRegulation No. 17/2010 outlining the mechanismfor determining the Indonesian Minerals and CoalBenchmark Price (“IMCBP”), as one of theimplementing regulations to the Mining Law No.4/2009. It is effective on 23 September 2010.

Peraturan Menteri No. 17/2010 mengaturantara lain:

Ministerial Regulation No. 17/2010 governsamong others:

• penggunaan harga rata-ratamineral/batubara dari indeks pasarinternasional dan penggunaan free-on-board("FOB"), kapal induk sebagai titik penjualanuntuk menentukan IMCBP;

• the use of the average mineral/coal pricefrom international market indices and the useof free-on-board (“FOB”) mother vessel asthe sale point to determine the IMCBP;

• penerimaan beban tertentu sebagaipenyesuaian untuk IMCBP (jika titikpenjualan FOB yang sebenarnya bukankapal induk); dan

• the acceptance of certain costs asadjustments to the IMCBP (if the actual salepoint is not FOB mother vessel); and

• penggunaan pendekatan harga dasar (yaituharga jual IMCBP vs harga jual aktual, manayang lebih tinggi, untuk perhitunganPenerimaan Negara (contoh: royalti ataubiaya eksploitasi).

• the use of a “floor" price approach (i.e.IMCBP vs. actual sales price, whicheverhigher, for the Non-Tax State Revenuecalculation (e.g. royalty or exploitation fee).

Peraturan ini juga mengharuskan perusahaanpertambangan untuk:

This regulation also requires mining companiesto:

• menggunakan kapal/perahu berbenderaIndonesia untuk mengangkutmineral/batubara;

• use Indonesian flagged ships/vessels totransport minerals/coal;






stated)



p. Peraturan Menteri No. 17/2010 (lanjutan) p. Ministerial Regulation No. 17/2010 (continued)

• mengutamakan penggunaan perusahaanasuransi nasional dimana syarat adopsi CIFdigunakan; dan

• prioritise the use of a national insurancecompany where CIF sale terms are adopted;and

• menggunakan surveyor yang ditunjuk olehDirektorat Jenderal Mineral, Batubara danPanas Bumi.

• use surveyors appointed by the DirectorateGeneral of Minerals, Coal and Geothermal.

Peraturan Menteri No. 17/2010 memberikanmasa transisi untuk merubah kontrak spotpenjualan sampai dengan 22 Maret 2011 dankontrak penjualan jangka panjang sampai dengan22 September 2011.

Ministerial Regulation No. 17/2010 provides atransitional period until 22 March 2011 for spotsales contracts and 22 September 2011 for termsales contracts.

Grup sedang mempertimbangkan dampak dariperkembangan di atas terhadap operasi Grup.

The Group is considering the impact of the abovedevelopment on its operations.

q. Lain-lain q. Others

Berdasarkan ketentuan PKP2B, Bharintodiharuskan mengeluarkan dana sebesar US$10(nilai penuh) per hektar untuk aktivitas eksplorasisesuai area kontrak (22.000 hektar) selamaperiode eksplorasi. Jika, setelah 36 bulan daritanggal dimulainya periode eksplorasi, Bharintobelum memenuhi kewajibannya atas pengeluaranminimum, Menteri Energi dan Sumber DayaMineral dapat mewajibkan Bharinto untukmemberikan jaminan sebesar jumlah yang tidakmelebihi kewajiban pengeluaran yang masih harusdilakukan. Jaminan tersebut, pada akhir periodeeksplorasi, dapat digunakan sebagai pembayarandenda kepada Pemerintah apabila Bharinto gagalmemenuhi kewajiban pengeluaran. Manajemenberpendapat bahwa Bharinto telah memenuhikewajiban ini karena saat ini jumlah pengeluarantelah melebihi jumlah minimum yang diharuskan.

Bharinto is required under its Coal Agreement tospend a minimum of US$10 (full amount) perhectare on exploration activities with respect to theContract Area (22,000 hectares) during theexploration period. If, after 36 months from the dateof commencement of the exploration period,Bharinto has not met its obligations with respect tominimum expenditures, the Ministry of Energy andMineral Resources may require Bharinto to delivera guarantee of an amount not exceeding the totaloutstanding expenditure obligations. Theguarantee may, at the end of the explorationperiod, be forfeited to the Government to the extentthat Bharinto has failed to fulfill such expenditureobligations. Management believes that it has metthe obligations since the expenditures to date haveexceeded the minimum amounts.

Pada tanggal31 Desember 2010, Bharinto belummembuat penyisihan untuk penutupan tambangkarena belum memasuki tahap produksi.

As at 31 December 2010, Bharinto has not madeany provision for mine closure as it has not yetentered the production stage.

26. INFORMASI SEGMEN USAHA 26. SEGMENT REPORTING

Berdasarkan informasi keuangan yang digunakan olehmanajemen dalam mengevaluasi kinerja segmen danmenentukan alokasi sumber daya yang dimilikinya,manajemen menetapkan segmen usaha Grup menjadidua kegiatan usaha utama, yaitu batubara dan jasalainnya. Seluruh transaksi antar segmen telahdieliminasi.

Based on the financial information used bymanagement in evaluating the performance ofsegments and in the allocation of resources,management considers the Group’s primary segmentsto be the two major business operations consisting ofcoal and other services. All transactions betweensegments have been eliminated.

Informasi menurut segmen usaha yang merupakansegmen primer adalah sebagai berikut:

Information concerning the business segments whichare considered the primary segments is as follows:






stated)

26. INFORMASI SEGMEN USAHA (lanjutan) 26. SEGMENT REPORTING (continued)

2010Batubara/ Jasa/ Eliminasi/ Konsolidasian/

Coal Services Eliminations Consolidated

Penjualan: Sales:Penjualan di luar segmen 1,629,318 9,987 - 1,639,305 External salesPenjualan antar segmen 345,499 121,580 (438,192) 28,887 Inter-segment salesPenjualan bersih 1,974,817 131,567 (438,192) 1,668,192 Net sales

Laba kotor 532,385 9,210 - 541,595 Gross profitBeban penjualan (99,386) - - (99,386) Selling expenses

General andBeban umum dan administration

administrasi - - - (79,301) expensesLaba usaha - - - 362,908 Operating income

Beban keuangan - - - (3,242) Finance costsPendapatan keuangan - - - 5,421 Finance incomeBeban lain-lain,

bersih - - - (87,733) Other expenses, net

Laba sebelum pajak Profit beforepenghasilan - - - 277,354 income tax

Beban pajak penghasilan - - - (73,203) Income tax expense

Laba bersih - - - 204,151 Net income

Aset segmen 1,083,832 5,874 - 1,089,706 Segment assetsKewajiban segmen 368,682 - - 368,682 Segment liabilitiesPerolehan aset tetap 55,621 - - 55,621 Capital expenditurePenyusutan 45,251 775 - 46,026 DepreciationAmortisasi 7,311 - - 7,311 Amortisation



Penjualan: Sales:Penjualan di luar segmen 1,501,107 7,252 - 1,508,359 External salesPenjualan antar segmen 167,365 108,154 (275,519) - Inter-segment salesPenjualan bersih 1,668,472 115,406 (275,519) 1,508,359 Net sales

Laba kotor 563,961 6,443 - 570,404 Gross profitBeban penjualan (77,413) - - (77,413) Selling expenses

General andBeban umum dan administration

administrasi - - - (57,176) expensesLaba usaha - - - 435,815 Operating income

Beban keuangan - - - (1,927) Finance costsPendapatan keuangan - - - 4,046 Finance incomePendapatan lain-lain,

bersih - - - 18,541 Other income, net






stated)

26. INFORMASI SEGMEN USAHA (lanjutan) 26. SEGMENT REPORTING (continued)



Laba sebelum pajak Profit beforepenghasilan - - - 456,475 income tax

Beban pajak penghasilan - - - (120,924) Income tax expense

Laba bersih - - - 335,551 Net income

Aset segmen 1,191,921 6,650 - 1,198,571 Segment assetsKewajiban segmen 411,085 - - 411,085 Segment liabilitiesPerolehan aset tetap 78,831 - - 78,831 Capital expenditurePenyusutan 48,541 808 - 49,349 DepreciationAmortisasi 8,005 - - 8,005 Amortisation

Informasi menurut segmen geografis yang merupakansegmen sekunder adalah sebagai berikut:

Geographical segment information as a secondarysegment is as follows:

2010 2009

Area penjualan Sales area- Domestik 41,730 83,239 Domestic -- Jepang 380,187 351,877 Japan -

South East Asia -- Asia Tenggara (kecuali Indonesia), (excluding Indonesia),

India, dan Pakistan 348,112 593,741 India and PakistanEurope, Taiwan, -

- Eropa, Taiwan, Cina, dan Korea 898,163 479,502 China and Korea

1,668,192 1,508,359

27. ASET DAN KEWAJIBAN MONETER DALAM MATAUANG SELAIN DOLAR AS

27. MONETARY ASSETS AND LIABILITIESDENOMINATED IN CURRENCIES OTHER THAN USDOLLARS

Aset dan kewajiban moneter dalam mata uang selainDolar AS pada31 Desember 2010 telah dikonversikanke dalam mata uang Dolar AS dengan menggunakankurs tengah Bank Indonesia.

At 31 December 2010, monetary assets and liabilitiesdenominated in currencies other than US Dollars havebeen translated into US Dollars using an exchange ratebased on the Bank Indonesia middle rate.

Apabila aset dan kewajiban dalam mata uang selainDolar AS pada tanggal 31 Desember 2010 dijabarkandengan menggunakan kurs yang berlaku pada tanggallaporan ini, maka aset bersih dalam mata uang selainDolar AS Grup akan turun sebesar US$141.

If assets and liabilities denominated in currencies otherthan US Dollars as at 31December 2010are translatedusing the exchange rate as at the date of this report, thetotal net assets denominated in currencies other thanUS Dollars of the Group will decrease by approximatelyUS$141.






stated)

27. ASET DAN KEWAJIBAN MONETER DALAM MATAUANG SELAIN DOLAR AS (lanjutan)

27. MONETARY ASSETS AND LIABILITIESDENOMINATED IN CURRENCIES OTHER THAN USDOLLARS (continued)

2010Mata uang selainDolar AS (nilai

penuh)/Currencies otherthan US Dollars

(full amount)

Setara US$(dalam ribuan)/US$ equivalent(in thousands)

Aset dalam mata uang selainDolar AS/Assets denominated incurrencies other than US Dollars

Kas/Cash on hand RupiahIndonesia/IndonesianRupiah 7.08 milyar/billion 788

Bank/Banks Euro/Euro 1.88 juta/million 2,500RupiahIndonesia/IndonesianRupiah 44.09 milyar/billion 4,904

Deposito berjangka/Time deposits RupiahIndonesia/IndonesianRupiah 374.35 milyar/billion 41,636

PPN dibayar dimuka/Prepaid VAT RupiahIndonesia/IndonesianRupiah 49.79 milyar/billion 5,538

Piutang usaha/Trade receivables RupiahIndonesia/IndonesianRupiah 57.74 milyar/billion 6,422

Uang muka/Advances RupiahIndonesia/IndonesianRupiah 93.34 milyar/billion 10,381Dolar Australia/AustralianDollar 906.33 ribu/thousand 922Euro/Euro 54.14 ribu/thousand 72PoundsterlingInggris/Great BritainPoundsterling 107.40 ribu/thousand 166Baht Thailand/ThailandBaht 60.20 ribu/thousand 2DolarSingapura/SingaporeDollar 6.44 ribu/thousand 5

Jumlah aset dalam mata uangselain Dolar AS/Total assetsdenominated in currencies otherthan US Dollars 73,336






stated)

27. ASET DAN KEWAJIBAN MONETER DALAM MATAUANG SELAIN DOLAR AS (lanjutan)

27. MONETARY ASSETS AND LIABILITIESDENOMINATED IN CURRENCIES OTHER THAN USDOLLARS (continued)

2010Mata uang selain Dolar

AS (nilai penuh)/Currencies other than

US Dollars(full amount)

Setara US$(dalam ribuan)/US$ equivalent(in thousands)

Kewajiban dalam mata uangasing/ Foreign currencyliabilities

Hutang usaha/Trade payables RupiahIndonesia/IndonesianRupiahDolarSingapura/SingaporeDollar

2.85 milyar/billion

5,15 ribu/ thousand

317

4

Beban yang masih harusdibayar/Accrued expenses

RupiahIndonesia/IndonesianRupiah 217.35milyar/billion 24,174

Jumlah kewajiban dalammata uang asing/Totalforeign currency liabilities 24,495

Aset bersih dalam matauang asing/ Net foreigncurrency assets 48,841

28. BIAYA KARYAWAN 28. EMPLOYEE COSTS

2010 2009

Biaya karyawan 55,286 42,933 Employee costs

Pada tanggal 31 Desember 2010, Grup memiliki 3.217karyawan (2009: 3.063) - tidak diaudit.

The Group has 3,217 employees as at 31 December2010 (2009: 3,063) - unaudited.

Jumlah remunerasi yang dibayarkan kepada DewanDireksi dan Dewan Komisaris dari Grup adalah sebesarRp 18.630 juta atau setara dengan US$2.072 (2009:Rp 15.427 juta atau setara dengan US$1.484).

Total remuneration paid to the Directors andCommissioners of the Group amounted to Rp 18,630million or equivalent to US$2,072 (2009: Rp 15,427million or equivalent to US$1,484).






stated)

29. ASET KEUANGAN DAN KEWAJIBAN KEUANGAN 29. FINANCIAL ASSETS AND FINANCIAL LIABILITES

Berikut ini adalah kategori aset dan kewajibankeuangan dari Grup:

The information given below relates to the Group’sfinancial assets and liabilities by category:

Nilai wajar Aset dandiakui melalui Derivatif yang kewajiban

laporan digunakan keuanganPinjaman laba rugi/ untuk lainnya/

dan Fair value lindung nilai/ Otherpiutang/ through Derivatives financial

Jumlah/ Loans and profit and used assets ndTotal receivables loss for hedging liabilities

31 Desember/December 2010

Aset keuangan/Financial assetsKas dan setara kas/Cash and cash equivalents 294,569 294,569 - - -Piutang usaha/Trade receivables 121,062 121,062 - - -Piutang lain-lain/Other receivables 12,879 12,879 - - -Piutang derivatif /Derivative receivables 18,225 - 18,225 - -

Jumlah aset keuangan/Total financial assets 446,735 428,510 18,225 - -

Kewajiban keuangan/Financial liabilitiesHutang usaha/Trade payables (94,783) - - - (94,783)Beban yang masih harus dibayar/Accruedexpenses (150,130) - - - (150,130)

Hutang derivatif/Derivative payables (63,560) - (48,946) (14,614) -Kewajiban lain-lain/Other liabilities (12,128) - - - (12,128)

Jumlah kewajiban keuangan/Total financialliabilities (320,601) - (48,946) (14,614) (257,041)

31 Desember/December 2009

Aset keuangan/Financial assetsKas dan setara kas/Cash and cash equivalents 428,580 428,580 - - -Piutang usaha/Trade receivables 125,254 125,254 - - -Piutang lain-lain/Other receivables 18,890 18,890Piutang derivatif /Derivative receivables 7,327 - 7,327 - -

Jumlah aset keuangan/Total financial assets 580,051 572,724 7,327 - -

Kewajiban keuangan/Financial liabilitiesHutang usaha/Trade payables (89,255) - - - (89,255)Beban yang masih harus dibayar/AccruedExpenses (165,736) - - - (165,736)

Hutang derivatif/Derivative payables (13,780) - (13,780) - -Kewajiban lain-lain/Other liabilities (4,902) - - - (4,902)Kewajiban jangka panjang/Long-term loans (55,050) - - - (55,050)

Jumlah kewajiban keuangan/Total financialliabilities (328,723) - (13,780) - (314,943)






stated)

30. KEBIJAKAN MANAJEMEN RISIKO 30. RISK MANAGEMENT POLICY

Berbagai aktivitas yang dilakukan membuat Grupterekspos terhadap berbagai risiko keuangan, termasukdampak nilai tukar mata uang asing, tingkat hargakomoditas dan tingkat suku bunga. Programmanajemen risiko keseluruhan yang dimiliki Grupditujukan untuk menghadapi ketidakpastian hargakomoditas dan untuk meminimalkan dampak yang tidakdiharapkan pada kinerja keuangan Grup.

The Group’s activities expose it to a variety of financialrisks, including the effects of foreign currency exchangerates, commodity prices and interest rates. The Group’soverall risk management programme focuses on theunpredictability of commodity prices and seeks tominimise potential adverse effects on the financialperformance of the Group.

Manajemen risiko dijalankan oleh DewanDireksi Grup,khususnya Komite Manajemen Risiko (“Komite”).Komite melakukan identifikasi, evaluasi dan lindungnilai terhadap risiko-risiko keuangan, apabila dianggapperlu. Komite menentukan prinsip manajemen risikosecara keseluruhan, termasuk risiko pasar, kredit danlikuiditas.

Risk management is carried out by the Group’s Boardof Directors, and specifically the Risk ManagementCommittee (the “Committee”). The Committee identifies,evaluates and hedges financial risks, where consideredappropriate. The Committee provides principles foroverall risk management, including market, credit andliquidity risks.

a. Risiko pasar a. Market risk

(i) Risiko mata uang asing (i) Foreign exchange risk

Pendapatan, pendanaan dan sebagian besarbiaya operasi dari Grup dilakukan dalam matauang Dolar AS, oleh karena itu Grup tidakmemiliki eksposur yang signifikan terhadapfluktuasi nilai tukar mata uang asing.

The Group’s revenue, financing and themajority of its operating expenditures aredenominated in US Dollars, and as such theGroup does not have a significant exposure tofluctuations in foreign exchange rates.

Grup melakukan perikatan kontrak forwardpembelian Rupiah untuk melindungi bebanoperasidi masa mendatang dalam mata uangRupiah (lihat Catatan 22c).

The Group enters into Rupiah forward buycontracts to cover future operating expensesdenominated in Rupiah (refer to Note 22c).

(ii) Risiko harga (ii) Price risk

Grup terekspos terhadap perubahan hargabatubara dan harga bahan bakar, namundemikian hal ini diatasi dengan melakukanlindung nilai terhadap sebagian penjualanbatubara serta biaya bahan bakar minyakGrup. Operasi dan kinerja keuangan Grupdapat dipengaruhi oleh harga batubara, yangpada dasarnya juga tergantung padapermintaan dan penawaran batubara di dunia,harga minyak dan faktor-faktor lain. Grupsecara aktif mengatur risiko-risiko ini danmenyesuaikan jadwal produksi dan aktivitaspenambangan yang diperlukan untukmengatasi dampak volatilitas tersebut.

The Group is exposed to fluctuations in coaland fuel prices, however this is mitigated bythe hedging contracts entered into for part ofthe Group’s coal sales and fuel costs. TheGroup’s operations and financial performancemay be adversely affected by the price of coal,which in turn will be determined by worldwidecoal supply and demand, oil price and otherfactors. The Group actively manages theserisks and adjusts production schedules andmining operations as necessary to reduce theimpact of volatility.

Grup melakukan kontrak swap batubara untukmelakukan lindung nilai terhadap fluktuasiharga batubara dengan lindung nilaimaksimum sebesar 8.000.000 ton denganjangka waktu maksimum 3 tahun. Jumlahpengadaan maksimum dalam ton adalahsebagai berikut:

The Group enters into coal swap contracts tohedge against the fluctuation in coal prices formaximum hedging amounts of 8,000,000tonnes with a maximum tenor of 3 years. Themaximum holding in tonnes is as follows:






stated)

30. KEBIJAKAN MANAJEMEN RISIKO (lanjutan) 30. RISK MANAGEMENT POLICY (continued)

a. Risiko pasar (lanjutan) a. Market risk (continued)

(ii) Risiko harga (lanjutan) (ii) Price risk (continued)

Jangka waktu/Tenor≤1 tahun/year 4,400,000 ton/tonnes 1 tahun/year < jangka waktu/tenor

≤2 tahun/years 4,000,000 ton/tonnes 2 tahun/years < jangka waktu/tenor

≤3 tahun/years 1,700,000 ton/tonnes

Grup membatasi besaran dari setiap kontrakswap batubara sebesar maksimum 120.000ton untuk setiap tahun kalender per transaksiatau maksimum 60.000 ton untuk setiapkuartal per transaksi.

The Group limits the size of each coal swapcontract to a maximum of 120,000 tonnes foreach calendar year per transaction or 60,000tonnes for each quarter per transaction.

Grup melakukan kontrak lindung nilai minyakuntuk mengantisipasi fluktuasi harga bahanbakar untuk 50%-80% dari estimasipenggunaan bahan bakar tahunan denganjangka waktu maksimum 2 tahun.Kesepakatan harga maksimum adalah120.000 barel per setiap tahun kalender pertransaksi atau 60.000 barel per setiap tahunkuartal per transaksi.

The Group enters into oil hedge contracts tohedge against the fluctuation in fuel prices for50%-80% of the estimated annual fuel usagewith a maximum tenor of 2 years. Maximumdeal price is 120,000 barrels foreach calendaryear per transaction or 60,000 barrelsfor eachquarter per transaction.

(iii) Risiko suku bunga (iii) Interest rate risk

Eksposur terhadap suku bunga Grup dinilairendah apabila ditinjau dari posisi neraca,namun Grup terus memonitor hal ini untukmeminimalkan dampak negatif terhadapGrup. Pinjaman yang dikeluarkan pada tingkatsuku bunga variabel mengekspos Grupterhadap arus kas dari risiko tingkat sukubunga.

The Group’s interest rate exposure is minimaldue to the balance sheet position, however,the Group monitors interest rates to minimiseany negative impact to the Group. Borrowingsissued at variable rates expose the Group tocash flow interest rate risk.

Tabel berikut ini merupakan rincian dari asetkeuangan dan kewajiban keuangan Grupyang dipengaruhi oleh suku bunga:

The following table represents a breakdown ofthe Group’s financial assets and financialliabilities which are impacted by interest rates:

31 Desember/December 2010Suku bunga mengambang/ Suku bunga tetap/

Floating rate Fixed rate

Kurang dari Lebih dari Kurang dari Lebih dari Non bunga/satu tahun/ satu tahun/ satu tahun/ satu tahun/ NonLess than More than Less than More than interest Jumlah/one year one year one year one year bearing Total

Aset/AssetsKas dan setara kas/

Cash and cash equivalents - - 294,569 - - 294,569Piutang usaha/

Trade receivables - - - - 121,062 121,062Piutang lain-lain/

Other receivables - - - - 12,879 12,879Piutang derivatif/

Derivative receivables - - - - 18,225 18,225

Jumlah aset keuangan/Total financial assets - - 294,569 - 152,166 446,735






stated)


a. Risiko pasar (lanjutan) a. Market risk (continued)

(iii) Risiko suku bunga (lanjutan) (iii) Interest rate risk (continued)

31 Desember/December 2010Suku bunga mengambang/ Suku bunga tetap/

Floating rate Fixed rate

Kurang dari Lebih dari Kurang dari Lebih dari Non bunga/satu tahun/ satu tahun/ satu tahun/ satu tahun/ NonLess than More than Less than More than interest Jumlah/one year one year one year one year bearing Total

Kewajiban/LiabilitiesHutang usaha/

Trade payables - - - - 94,783 94,783Beban yang masih harus

dibayar/Accrued expenses - - - - 150,130 150,130

Kewajiban derivatif/Derivative payables - - - - 63,560 63,560

Kewajiban lain-lain/Other liabilities - - - - 12,128 12,128

Jumlah kewajiban keuangan/Total financial liabilities - - - - 320,601 320,601

b. Risiko kredit b. Credit risk

Pada tanggal 31 Desember 2010, jumlahmaksimum eksposur dari risiko kredit adalahUS$394.345. Risiko kredit terutama berasal daripenjualan batubara dengan memberikan kredit,deposito berjangka, dan kontrak forward dengannilai pasar positif.

At 31 December 2010, total maximum exposurefrom credit risk is US$394,345. Credit risk arisesfrom sales of coal under credit terms, time depositsand favourable forward contracts.

Kebijakan umum Grup untuk penjualan batubarake pelanggan baru dan yang sudah ada adalahsebagai berikut:

The Group’s general policies for coal sales to newand existing customers are as follows:

- Menyeleksi pelanggan-pelanggan yangmemiliki kondisi keuangan yang kuat sertareputasi yang baik.

- Selecting customers with strong financialcondition and good reputation.

- Penerimaan pelanggan baru dan penjualanbatubara disetujui oleh karyawan yangberwenang sesuai dengan pedelegasianwewenang yang ditetapkan oleh Grup.

- Acceptance of new customers and sales ofcoal are approved by the authorisedpersonnel according to the Group’s delegationof authority policy.

Pada tanggal 31 Desember 2010, Grupmempunyai 3 pelanggan (2009: 3 pelanggan)dengan masing-masing nilai piutang lebih dariUS$10 juta, piutang-piutang tersebut merupakan35% (2009: 28%) dari jumlah semua saldo piutang.Terdapat 9pelanggan (2009: 7 pelanggan) dengansaldo masing-masing diantara US$5 juta danUS$10 juta yang merupakan49% (2009:39%) darijumlah piutang pada tanggal 31 Desember 2010.Grup tidak mengambil agunan sebagai jaminanatas piutang usaha.

At 31 December 2010, the Group had3 customers(2009: 3 customers) that owed the Group morethan US$10 million and these balances accountedfor 35% (2009: 28%) of all receivables owing.There were 9 customers (2009: 7 customers) withbalances between US$5 million and US$10 millionaccounting for approximately 49% (2009: 39%) ofthe total trade receivables at 31 December 2010.The Group does not hold collateral as security forany trade receivables.






stated)


b. Risiko kredit (lanjutan) b. Credit risk (continued)

Manajemen menggunakan lembaga-lembagakeuangan ternama untuk transaksiswap batubaradan bahan bakar minyak. Penggunaan lembaga-lembaga keuangan ini harus disetujui terlebihdahulu oleh Dewan Direksi.

For coal and fuel swaps and oil hedgingtransactions, management uses reputable financialinstitutions as the counterparty. These financialinstitutions are pre-approved by the Board ofDirectors.

Manajemen yakin akan kemampuannya untukterus mengontrol dan mempertahankan eksposuryang minimal terhadap risiko kredit mengingatGrup memiliki kebijakan yang jelas dalampemilihan pelanggan, menggunakan perjanjianyang berkekuatan hukum pada saat melakukantransaksi penjualan batubara, dan sejarah tingkatkredit macet yang rendah.

Management is confident in its ability to continue tocontrol and sustain minimal exposureto credit riskgiven that the Group has clear policies on selectionof customers, legally binding agreements in placefor coal sales transactions and historically lowlevels of bad debts.

c. Risiko likuiditas c. Liquidity risk

Risiko likuiditas muncul dalam situasi Grupkesulitan memperoleh pendanaan. Kebijakanmanajemen risiko likuiditas yang berhati-hatidilakukan dengan menjaga kecukupan kas dansetara kas. Grup mengelola risiko likuiditas denganmemonitor perkiraan arus kas dan arus kas aktualserta menyesuaikan profil jatuh tempo dari asetdan kewajiban keuangan.

Liquidity risk arises in situations where the Grouphas difficulties in obtaining funding. Prudentliquidity risk management implies maintainingsufficient cash and cash equivalents. The Groupmanages liquidity risk by continuously monitoringforecast and actual cash flows and matching thematurity profiles of financial assets and liabilities.

d. Nilai wajar d. Fair value

Manajemen berpendapat bahwa nilai buku dariaset dan kewajiban keuangannya mendekati nilaiwajar dari aset dan kewajiban keuangan tersebutpada tanggal 31 Desember 2010.

Management is of the opinion that the carryingvalue of its financial assets and liabilitiesapproximates the fair value of the financial assetsand liabilities as at 31 December 2010.

31. PERKEMBANGAN TERAKHIR PERNYATAANSTANDAR AKUNTANSI KEUANGAN (“PSAK”)

31. PROSPECTIVE ACCOUNTING PRONOUNCEMENTS(“SFAS”)

Ikatan Akuntan Indonesia telah menerbitkan beberapastandar akuntansi revisi sebagai berikut yang mungkinmempunyai dampak terhadap laporan keuangankonsolidasian Grup yang periodenya dimulai pada atausetelah tanggal 1 Januari 2011:

The Indonesian Institute of Accountants has issued thefollowing revised accounting standards that may beapplicable to the Group’s consolidated financialstatements covering periods beginning on or after 1January 2011:

PSAK 1 (Revisi 2009) – Penyajian LaporanKeuangan.

SFAS 1 (Revised 2009) – Presentation of FinancialStatements.

PSAK 2 (Revisi 2009) – Laporan Arus Kas. SFAS 2 (Revised 2009) – Statement of CashFlows.

PSAK 3 (Revisi 2010) – Laporan KeuanganInterim.

SFAS 3 (Revised 2010) – Interim FinancialReporting.

PSAK 4 (Revisi 2009) – Laporan KeuanganKonsolidasi dan Terpisah.

SFAS 4 (Revised 2009) – Consolidated andSeparate Financial Statements.






stated)

31. PERKEMBANGAN TERAKHIR PERNYATAANSTANDAR AKUNTANSI KEUANGAN (“PSAK”)(lanjutan)

31. PROSPECTIVE ACCOUNTING PRONOUNCEMENTS(“SFAS”) (continued)

PSAK 5 (Revisi 2009) – Segmen Operasi. SFAS 5 (Revised 2009) – Operating Segments.

PSAK 7 (Revisi 2009) – Pengungkapan Pihak-Pihak yang mempunyai Hubungan Istimewa.

SFAS 7 (Revised 2009) – Related PartyDisclosures.

PSAK 8 (Revisi 2010) – Peristiwa setelah PeriodePelaporan.

SFAS 8 (Revised 2010) – Events after theReporting Period.

PSAK 12 (Revisi 2009)– Bagian Partisipasi dalamVentura Bersama

SFAS 12 (Revised 2009) – Interests in JointVentures.

PSAK 15 (Revisi 2009) – Investasi DalamPerusahaan Asosiasi.

SFAS 15 (Revised 2009) – Investments inAssociates.

PSAK 19 (Revisi 2010) – Aset Tidak Berwujud. SFAS 19 (Revised 2010) – Intangible Assets.

PSAK 22 (Revisi 2010) – Penggabungan Usaha. SFAS 22 (Revised 2010) – BusinessCombinations.

PSAK 23 (Revisi 2010) – Pendapatan. SFAS 23 (Revised 2010) – Revenue.

PSAK 25 (Revisi 2009) – Kebijakan Akuntansi,Perubahan Estimasi Akuntansi dan Kesalahan.

SFAS 25 (Revised 2009) – Accounting Policies,Changes in Accounting Estimates and Errors.

PSAK 48 (Revisi 2009) – Penurunan Nilai Aset. SFAS 48 (Revised 2009) – Impairment of Assets.

PSAK 57 (Revisi 2009) – Kewajiban Diestimasi,Kewajiban Kontinjensi dan Aset Kontinjensi.

SFAS 57 (Revised 2009) – Provisions, ContingentLiabilities and Contingent Assets.

PSAK 58 (Revisi 2009) – Aset Tidak LancarTersedia Untuk Dijual dan Operasi DalamPenghentian.

SFAS 58 (Revised 2009) – Non-current AssetsHeld for Sale and Discontinued Operations.

Ikatan Akuntan Indonesia juga telah menerbitkanstandar akuntansi revisi sebagai berikut yang mungkinmempunyai dampak terhadap laporan keuangankonsolidasian Grup yang periodenya dimulai pada atausetelah tanggal 1 Januari 2012:

The Indonesian Institute of Accountants has also issuedthe following revised accounting standard that may beapplicable to the Group’s consolidated financialstatements covering periods beginning on or after 1January 2012:

PSAK 10 (Revisi 2009) – Efek dari PerubahanKurs Mata Uang Asing.

SFAS 10 (Revised 2009) –The Effects of Changesin Foreign Exchange Rates.

Grup masih mempelajari dampak yang mungkin timbuldari penerapan standar-standar ini terhadap laporankeuangan konsolidasian.

The Group is still considering the impact of theserevised standards to the consolidated financialstatements.






stated)

32. REKLASIFIKASI AKUN 32. RECLASSIFICATION OF ACCOUNTS

Angka komparatif pada laporan keuangankonsolidasian untuk tahun yang berakhir pada tanggal31 Desember 2009 telah diubah untuk menyesuaikandengan penyajian laporan keuangan konsolidasianuntuk tahun yang berakhir pada tanggal 31 Desember2010.

Certain comparative figures in the consolidatedfinancial statements for the year ended 31 December2009 have been amended to conform with the basis onwhich the consolidated financial statements for theyearended 31 December 2010 have been presented.