grant thornton hendrawinata gani hidayat - investor...

Grant Thornton Hendrawinata Gani ampHidayat

(J3IJJlnQ

Hoani of Directors and Stockholders PT lllr15entnSalc$iari

We JfCe alhli~d the accompanying ballIlte thetLi of PT Bara5en1o$lI Lestari as (If -middotiarch 3[ 20 ID and 2009 he rell1o [3iCmCI1S (gt- income ciJ3ngt ill cqnily nlu ens1 flows for Ihe yCit ended larch 3 L W IJ ilnd three mfltth period ended larch] 2u)lt rbee fimmcia lat~llenlS lire the tep0flgtihiii- uf 1he C1npiHl)$ IMnllgcruCllL Our rcsplnsibiliy i ( expreSs nl opinion ()11 Ihc$gt fimcbl SahmlnltS bOliCU (HI )tr anlits bullbull

Ve Cl(~lHed (Ilr audits il accoroance with gengtrnlly accepl~d auditing -laquoIJldurns eSahflshed by lhe lnd01llsian Jnsrillle ofC~rt(ied Puhlic cc)unmn~s Th~)5e sralt1danl5 reqllire thai we plan 1U perlOml th~ mdis to obmin -rlta101lltlhe llMllttlllCe about Whether Ihe fimmcial ~tJte1llents afC frce of ma~rlal mi$SlaltanenL An mrlir indudos examining (In 2 test basis evidence lIpp~)1illg 1Ie mn)unt and disbsures III he- inallcial Sl1lemenls An md also induJc~ rlSSlflg the accounting princip~ei lIsed am ilglliricllt csd1lla~~ Inant 1Iy Oliillllgemenl wel as elau2ting the ()ttal unancIltl1 $1aelllnlS presemalion WI believe thH our audits provide ltl reasMable oosis l~W our Ol)inigtn

In Ollr opini)ll ihe fillMcla Siatemens present fliry in ali milleri respects the financiill pt)~hlmi M PT BamSclLSltl LestMi il~ fgti2rch 3 12(110 ann 2009 and Ihc relllS 01 lIS operatiollgt and its cash Jbws r lile y~r ended I-1nnh 120 I (j U)(J lhrec 1Jl()nlh erlltlj ended vIltrch 31 2009 in ~Utlr(wny wih the genernlJy accepled lccunling principles in Inbne~ia

NNe 19 h) the firancial statements illclude~ a summary t~f 111e effcclS r Ih~ gl)bd tCollornic c)lIdililn in Ir(Jon~i~ Ias had on Ihe (omp2n- It alsl) nClllce$ the aCti1T1 tn dlc Cnmp2ny 2S im~lcmen(~i N plan 1) implement in respollse 0 the ecollOmic ctlndilintl The aCtgtmpanying financial $ll1tmclts include cle effects of the economic conditions 10 the e-tel1t they m(ly be liclenl1Jned ann estil11a~e~l

Ciwi [al(lO CPA License No 031 oS60

- Anti 28 20 I0

h iConljMllynt- fimlrtinl ~lal~m(n~ arc interh~ ugt prC$Il the rmiludul rraquo~li(l lt1iq of lt)pcrl~agt rn-1 tlgtl iu1 in gtlturualc 11 ~ooouujyen prlcldpks md Jlr~dlm fofItrtUy ~-(pteJ in JHJltm~~rl Ulld nd Jltl (J -y ulicl I$iclm~ TI ~1tdlrltls jllutuurell altl rrJClicc t lIudil 111(11 filUl~lil MiWm1S nrc lMC 1lr~ Iy loX(pl~l nl pjlJ~rd l rkni

- -- -

i

PT BARASENTOSA LESTARI BALANCE SHEETS (Continued)

March 31 2010 and 2009 (In US Dollar Currency)

1

A S S E T S Notes 2 0 1 0 2 0 0 9

US$ US$

CURRENT ASSETS Cash and cash equivalent 2c3 602611 ndash Advance payments 4 32254 ndash Prepaid rent 5 119065 ndash Other receivable 6 57901

Total current assets 811831 ndash

NON CURRENT ASSETS Plant and equipment net 2e7 816274 ndash Other receivable 6 72376 ndash Refundable deposit 2368 ndash Deferred exploration expenditures 2b8 14407304 4297168

Total non current assets 15298322 4297168

TOTAL ASSETS 16110153 4297168

LIABILITIES AND EQUITY

CURRENT LIABILITIES Accrued expense 2d1116b 2607347 ndash Taxes payable 2h9b 269499 ndash

Total current liabilities 2876846 ndash

NON CURRENT LIABILITIES Other payables 2d1016a 13218108 4185432 Deferred tax liabilities 2h9c 517 ndash

Total non current liabilities 13218625 4185432

EQUITY Capital stock Authorized issued and fully paidndashup capital 3500 shares at Rp 1000000 par

value each

12

898734

898734

Additional paid-in capital 78555 78555 Accumulated deficit 19 (962607 ) (865553 )

Total equity 14682 111736

TOTAL LIABILITIES AND EQUITY 16110153 4297168

PT BARASENTOSA LESTARI STATEMENTS OF INCOME

For the year ended March 31 2010 and for three months period ended March 31 2009

(In US Dollar Currency)

The accompanying notes form an integral part of these financial statements

2

Notes 2 0 1 0 2 0 0 9

US$ US$ Operating expenses General and administrative expenses 2f14 94204 ndash

Operating loss (94204 ) ndash Other expenses ndash net 2f2g15 (2333 ) (213 )

Loss before income tax (96537 ) (213 ) Income tax expense - nil 2h9a (517 ) ndash

Net loss (97054 ) (213 )

PT BARASENTOSA LESTARI STATEMENTS OF CHANGES IN EQUITY




3

Capital Additional Accumulated stock paid in capital deficit Total

US$ US$ US$ US$ Balance as of December 31 2008 898734 78555 (865340 ) 111949

Net loss for the period ndash ndash (213) (213 ) Balance as of March 31 2009 898734 78555 (865553 ) 111736 Net loss for the year ndash ndash (97054) (97054)

Balance as of March 31 2010 898734 78555 (962607 ) 14682

PT BARASENTOSA LESTARI STATEMENTS OF CASH FLOWS

For the year ended March 31 2010 and for three months period up to March 31 2009



4

2 0 1 0 2 0 0 9

US$ US$ Cash flows from operating activities

Loss before income tax (96537) (213) Adjustments to reconcile net loss to net cash

used in operating activities Depreciation of plant and equipment 3850 minus

Operating loss before working capital changes (92687) (213) Advance payment (32254) minus Prepaid rent (119065 ) minus Other receivables (130277 ) Refundable deposit (2368 ) minus Other payables 9032676 17167 Accrued expense 2607346 minus Tax payable 269499 minus

Net cash provided by operating activities 11532870 16954

Cash flows from investing activities

Exploration expenditures net of depreciation expense (10110136 ) (16954) Payments to acquire plant and equipment (820124 ) minus Net cash used in investing activities (10930260 ) (16954)

Net increase in cash and cash equivalents 602611 minus Cash and cash equivalents at beginning of year period minus minus

Cash and cash equivalents at end of year period 602611 minus

PT BARASENTOSA LESTARI NOTES TO FINANCIAL STATEMENTS


5

1 G E N E R A L

a Articles of Association PT Barasentosa Lestari (the Company) domiciled in Jakarta was established based on notarial deed of No 219 dated February 14 1990 of Endrawila Parmata SH notary in Jakarta which has been approved by the Minister of Justice of the Republic of Indonesia under Decision Letter No C2-1064HT0101-Th92 dated February 4 1992 Based on notarial deed No 215 dated August 25 1993 of Benny Kristianto SH notary in Jakarta the Company received approval to change its status from a non-facility limited liability company into a limited liability company with Domestic Capital Investment facility according to Law of Investment No 61968 The Companyrsquos articles of incorporation have been amended several times and the latest amendment was made based upon notarial deed No 125 dated January 31 2008 of Sugito Tedjamulja SH notary in Jakarta concerning the changes of the Companyrsquos articles of association to conform with Law No 40 Year 2007 of Limited Liability Company which has been approved by the Minister of Justice of the Republic of Indonesia under Decision Letter No AHU-24328AH0102 dated May 12 2008 Until the date of this report this amendment has not been published in the State Gazette The Companyrsquos parent entity is PT Duta Sarana Internusa a company incorporated in the Republic of Indonesia The Company is required to prepare financial statements for the year ended March 31 2010 and for three months period ended March 31 2009 for the consolidation purpose The principal activity of the Company is coal mining and developing a mine-mouth power plant The Companyrsquos head office is located in Jakarta and the mine operating site is in Muara Lakitan South Sumatra

b Coal Mining Operation Agreement Based on the Coal Mining Operation Agreement (the ldquoCoal Agreementrdquo) No 015PKPTBA-BL1994 which was entered into by the Company and PT Tambang Batubara Bukit Asam (Persero) (ldquoPTBArdquo) on August 15 1994 the Company has been granted a coal exploration and exploitation license on 100000 hectares in Musi Banyu Asin and Musi Rawas Regency South Sumatra Province The Minister of Mines and Energyrsquos Decree No 062K29MPE1998 dated January 23 1998 reduced the area from 100000 hectares to 55820 hectares and stated that exploration activity should occur in the period from August 15 1996 up to August 14 1999 In March 1998 the Company ceased its exploration activity Based on Decree No 20832001DJG2001 dated 10 September 2001 from Director General of Geology and Mineral Resources (ldquoDGGMRrdquo) the Company was granted a license to continue its exploration activity from July 1 2001 to June 30 2002

PT BARASENTOSA LESTARI NOTES TO FINANCIAL STATEMENTS (Continued)


6

1 G E N E R A L (Continued) b Coal Mining Operation Agreement (Continued)

Based on Decree No 23434000DPM2002 dated September 20 2002 the DGGMR refused the Companyrsquos proposal to further extend the exploration activity period and confirmed that the exploration activity period expired on July 29 2003 The Company lodged its exploration activity report to the DGGMR and expressed its intention to enter into the feasibility stage Based on Decree No 242K4000DJG2004 dated October 25 2004 the DGGMR has approved the extension of the feasibility study period of the Company from July 30 2004 to July 29 2005 Based on the Decree the Coal Agreement area was reduced to 24385 hectares Based on Decree No 15704000DJG2005 dated August 5 2005 the DGGMR has approved the extension of the feasibility study period of the Company from July 19 2005 to July 18 2006 As of March 31 2010 and 2009 the Companyrsquos request for construction stage approval from DGGMR is still under process On April 7 2009 the Company has obtained the approval of final feasibility study from the Directorate General of Mineral Coal and Geothermal of Department of Energy and Mineral Resources Republic of Indonesia for area of 24385 hectares in Musi Banyuasin and Musi Rawas Regency South Sumatra Province

c Board of Directors and Commissioner As of March 31 2010 and 2009 the composition of the Companyrsquos Board of Directors and Commissioners are as follow 2 0 1 0 2 0 0 9 Commissioners Mr Raaj Kumar Mr Raaj Kumar

Directors Mr Ashis Basu Mr Ashis Basu 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A summary of significant accounting policies adopted by the Company which affects the determination of its financial position and results of its operations is presented below a Basis of Preparation of the Financial Statements

The Companyrsquos financial statements have been prepared in accordance with accounting principles generally accepted in Indonesia The financial statements have been prepared under historical cost concept and on the accrual basis unless otherwise stated



7

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) a Basis of Preparation of the Financial Statements (Continued)

The statement of cash flows is prepared based on the indirect method by classifying cash flows on the basis of operating investigating and financing activities For the purpose of the cash flow statement cash and cash equivalent include cash in hand cash in banks and time deposits with a maturity period of 3 months or less as long as these time deposits are not pledged as collateral for borrowings nor restricted The preparation of financial statements in conformity with generally accepted accounting principles requires the use of estimates and assumptions that affect

minus the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and

minus the reported amounts of revenues and expenses during the reporting period Although these estimates are based on managementrsquos best knowledge of current events and activities actual results may differ from those estimates Figures in the financial statements are expressed in United States Dollar unless otherwise stated

b Deferred exploration expenditures Exploration expenditures incurred is capitalized and carried forward on an area of interest basis provided one of the following conditions is met

i Such cost are expected to be recouped through successful development and exploitation of the area of interest or alternatively by its sale or

ii Exploration activities in the area of interest have not yet reached the stage which permits

a reasonable assessment of the existence or otherwise of economically recoverable reserves and active and significant operations in or in relation to the area are continuing

Ultimate recoupment of exploration expenditure carried forward is dependent upon successful development and commercial exploitation or alternatively sale of the respective area Exploration expenditures in respect of an area of interest which has been abandoned or for which a decision has been made by the Companyrsquos Directors against the commercial viability of the area of interest are written-off in the period the decision is made

Deferred exploration expenditures represents the accumulated cost relating to general investigation administration and license geology and geophysics expenditures before the commencement of the Companyrsquos commercial operations Deferred exploration expenditure is amortized from the commencement of commercial production



8

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

c Cash and Cash Equivalents

Cash and cash equivalents include cash in hand deposit held on call with banks and other short term highly liquid investments with original maturities of three months or less

d Transactions with Related Parties In conducting its business the Company has transactions with its related parties in accordance with the definition in SFAS 7 regarding Related Party Disclosures All significant transactions with related parties are disclosed in the financial statements

e Plant and Equipment The cost of a plant and equipment comprises its purchase price and any costs directly attributable to bringing it into working condition for its intended use Once a mining project has been commercially viable expenditure other than that of land buildings plant and equipment is capitalised together with any amounts transferred from exploration and evaluation This includes costs incurred in preparing the site for mining operations including stripping costs Depreciation is charged from such date Costs associated with a start up period are capitalised where the asset is available for use but incapable of operating at normal levels without a commissioning period Development costs incurred after the commencement of production are capitalised to the extent they give rise to a future economic benefit Net interest on borrowings related to construction or development projects is capitalised until the point when substantially all the activities that are necessary to make the asset ready for use are complete Other borrowing costs are expensed Plant and equipment are stated at cost less accumulated depreciation Historical cost covers expenditure that is directly attributable to the acquisition of the items Land is not depreciated The estimated useful lives are as follows Years per annum Building 10 10 Office equipment 5 20 Furniture and fixtures 5 20

The cost of maintenance and repairs is charged as an expense as incurred Expenditures which extend the future life of assets or provide further economic benefits by increasing capacity or quality of production is capitalized and depreciated over the remaining useful life of the related assets



9


e Plant and Equipment (Continued)

When assets are retired or otherwise disposed of their carrying values and the related accumulated depreciation are eliminated from the financial statements and the resulting gains and losses on the disposal of plant and equipment are recognized in the statements of income

Plant and equipment are reviewed for impairment if events or changes in circumstances indicate that the carrying amount may not be recoverable An impairment loss is recognized for the amount by which the carrying amount of the assets exceeds its recoverable amounts which is the higher of an assetrsquos net selling price and value in use For the purpose of assessing impairment assets are grouped at lowest level for which they are separately identifiable cash flow

f Expense Recognition

Expenses that do not meet the conditions for deferred exploration expenditure recognition are treated as expenses in the current period and recognized when these are incurred (accrual basis)

g Foreign Currency Translation

(1) Reporting Currency

The financial statements are presented in US Dollar

(2) Transactions and Balances

Transactions denominated in Rupiah and other currencies are converted into US Dollar at the exchange rate prevailing at the date of the transaction At the balance sheet date monetary assets and liabilities in Rupiah and other foreign currencies are translated at the exchange rates prevailing at that date

Exchange gains and losses arising on transactions in Rupiah and other foreign currencies and on the translation of Rupiah and other foreign currencies monetary assets and liabilities are recognized in the statement of income

h Income Tax Current tax expense is provided based on the estimated taxable income for the year Deferred tax assets and liabilities are recognized for temporary differences between commercial and tax bases of assets and liabilities at each reporting date Future tax benefit such as the carry forward of unused tax losses if any is also recognized to the extent that realization of such tax benefit is probable



10


h Income Tax (Continued)

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the assets are realized or the liabilities are settled based on the applicable tax rates (and tax law) that have been enacted or substantively enacted at the balance sheet date Changes in the carrying amount of the deferred tax assets and liabilities due to change in tax rates is charged to current year operations except to the extent that it relates to items previously charged or credited to equity

Amendments to tax obligations are recorded when an assessment is received or if appealed against by the Company when the result of the appeal is determined

i Impairment of Non-Current Asset

At balance sheet date the Company reviews whether there is any indication of asset impairment or not

Plant and equipment and other non-current assets including intangible assets are reviewed for impairment losses whenever events or changes in circumstances indicate that the carrying amount may not be recoverable An impairment loss is recognized for the amount by which the carrying amount of the asset exceeds its recoverable amount which is the higher of an assetrsquos net selling price and value in use For the purposes of assessing impairment assets are grouped at the lowest levels for which there are separately identifiable cash flows

3 CASH AND CASH EQUIVALENTS 2 0 1 0 2 0 0 9 US$ US$

Cash on hand 3556 ndash

Cash in banks PT Bank Central Asia Tbk

US Dollars 420139 ndash

Rupiah 178916 ndash

599055 ndash

Total 602611 ndash

4 ADVANCE PAYMENT

This account represents advance payment paid to the employee for the Companyrsquos operational activities of the Company



11

5 PREPAID RENT 2 0 1 0 2 0 0 9 US$ US$

House 74207 ndash Office 29695 ndash Guest house 15163 ndash

Total 119065 ndash

6 OTHER RECEIVABLE 2 0 1 0 2 0 0 9 US$ US$ Related parties

Mr Bing Tobing 130277 ndash Less current portion of other receivable 57901 ndash

Long term portion of other receivable 72376 ndash

Based on the agreement made dated December 15 2009 the Company has granted a personal loan amounted Rp 1584000000 to Mr Bing Tobing the Companyrsquos key management This loan amount will be repaid by in 36 equated monthly installment of Rp 44000000 per month The first installment commenced from the month of July 2009 This loan bears no interest

7 PLANT AND EQUIPMENT

The details of plant and equipment are as follows 2 0 1 0 Beginning Ending Balances Additions Disposals Balances US$ US$ US$ US$ Acquisition cost

Buildings 25135 minus minus 25135 Office equipment 6883 52917 minus 59800 Furniture and fixtures minus 35819 minus 35819 Construction in progress minus 731388 minus 731388

32018 820124 minus 852142Accumulated depreciation

Buildings 25135 minus minus 25135 Office equipment 6883 2801 minus 9684 Furniture and fixtures minus 1049 minus 1049

32018 3850 minus 35868

Book value ndash 816274



12

7 PLANT AND EQUIPMENT 2 0 0 9 Beginning Ending Balances Additions Disposals Balances US$ US$ US$ US$ Acquisition cost

Buildings 25135 ndash ndash 25135 Office equipment 6883 ndash ndash 6883

32018 ndash ndash 32018

Accumulated depreciation Buildings 25135 ndash ndash 25135 Office equipment 6883 ndash ndash 6883

32018 ndash ndash 32018 Book value ndash ndash

In 2010 and 2009 plant and equipment assets were not covered with insurance against fire and other

possible losses

In 2010 depreciation expenses amounted to US$ 3850 are allocated to general and administrative expenses (Note 14)

8 DEFERRED EXPLORATION EXPENDITURES 2 0 1 0 2 0 0 9 US$ US$ General investigation expenses Feasibility study expenses 2517448 890951

Exploration extension 949438 946558Drilling expenses 677984 55846Airborne and digital expenses 515031 515031Detailed mine study 385718 181717Survey expenses 218993 217086Analysis expenses 206591 111843Rental 202234 39783Geophysical services 145865 143420Geological mapping expenses 107007 107007Sub contractor expenses 80569 80569Desk study 4091 1207

6010969 3291018



13

8 DEFERRED EXPLORATION EXPENDITURES (Continued) 2 0 1 0 2 0 0 9 US$ US$ Other exploration expenses

Consultation 5090228 minus Salaries and allowances 1334386 196898 Licenses and regional tax 393112 321403 Recruitment charges 264430 minus Traveling expenses 190787 115728 Capital expenditure 189197 minus Office expenses 166004 33287 Equipment rental and vehicle expenses 139621 75832 Interest expenses 115922 minus Transportation expenses 96634 41336 Professional fee 68665 51248 Depreciation expense 64018 64018 Manpower outsourcing 44506 minus Repairs and maintenance 38551 16870 Representation and entertainment 31219 16319 Communications 30108 minus Socialisation cost 25696 minus Fuel expenses 21586 17296 Medical allowances 21146 11979 Other expenses (less than US$ 10000) 70519 43936

8396335 1006150

Total 14407304 4297168

9 TAXATION

a Income tax expense

Income tax expenses for the year ended March 31 2010 and for the three months period up to March 31 2009 are nil

Reconciliation between loss before provision for income tax as per statements of income and estimated taxable losses are as follow 2 0 1 0 2 0 0 9 US$ US$

Loss before income tax per statements of income (96537) ndash

Permanent differences Interest subject to final tax 712 ndash Non-deductible expenses 2703 ndash

Temporary differences

Depreciation of plant and equipment (2067) ndash

Tax losses to be carried forward (95189) ndash



14

9 TAXATION (Continued)

a Income tax expense (Continued)

The Company has accumulated corporate income tax losses which are available to be carried forward and offset against future taxable income for five years following fiscal years

2 0 1 0 2 0 0 9 US$ US$

December 31 2005 209493 209493December 31 2006 203245 203245December 31 2007 61212 61212December 31 2008 62202 62202December 31 2009 95189 ndash

631341 536152

b Taxes payable 2 0 1 0 2 0 0 9 US$ US$ Income tax

Article 21 30599 ndash Article 4(2) and 23 8350 ndash

Value added tax 230550 ndash

Total 269499 ndash

c Deferred tax assets 2 0 1 0 2 0 0 9 US$ US$ Tax losses carried forward 157835 150123 Unrecognized deferred tax assets (157835) (150123) Depreciation of plant and equipment (517) ndash

Net deferred tax assets (517) ndash

As of March 31 2010 and 2009 the Company has an unrecognized deferred tax asset in respect of the 2010 and 2009 tax losses of US$ 157835 and US$ 150123 respectively Tax assets have not been recognized on the basis that there is significant uncertainty as to whether the tax losses will be offset by sufficient taxable profits in the future



15


d Administration On September 2 2008 the Government enacted an amendment to the income tax law with effect from January 1 2009 stipulating that the income tax for corporationrsquos will be set to a flat rate of 28 starting in 2009 and further reduced to 25 starting 2010 In addition to the impact in the current income tax for 2009 the revision will also impact the deferred income tax previously set up to reflect the reduction in effective tax rate

10 OTHER PAYABLES 2 0 1 0 2 0 0 9 US$ US$ Related parties

PT Duta Sarana Internusa (DSI) Revolving loan 7352805 ndash Others

Loan transferred from PT Indo Tambangraya Megah 748622 748622 Loan transferred from Banpu Public Company Limited 1751097 1751097 Project cost 3365584 1685713

13218108 4185432

This account represents payable to DSI the Company stockholder to fund the Companyrsquos exploration expenditure This payable has no repayment schedule and non bearing interest In 12 (twelve) month from March 31 2010 DSI will decide whether this payable will be converted as paid-in capital or will be stated in the loan agreement and treated as long term loan Based on the agreement made dated March 12 2007 between PT Indo Tambangraya Megah and PT Centralink Wisesa International as sellers and DSI and Mr Buntardjo Hartadi Sutanto as purchasers the sellers are willing to sell and the purchasers are willing to purchase the shares including receivables owed by the Company to PT Indo Tambangraya Megah and Banpu Public Company Limited for the amount including interests as of the date of the agreement of US$ 748622 and US$ 1751097 respectively In addition to the above payable the total project cost funded by DSI is amounted to US$ 3365584 and US$ 1685713 respectively as of March 31 2010 and 2009 In 2010 and 2009 the other payable to DSI amounted US$ 5865303 and US$ 4185432 respectively has no repayment schedule and non bearing interest In 12 (twelve) month from March 31 2009 DSI will decide whether this payable will be converted as paid-in capital or will be stated in the loan agreement and treated as long term loan This conversion period has been extended up to 12 (twelve) month from March 31 2010



16

10 OTHER PAYABLES (Continued) On November 1 2009 the Company has entered into loan agreement with DSI the Companyrsquos stockholder Based on the loan agreement DSI should provide an unsecured loan with a revolving line of credit in which DSI may make advance provided that the aggregate amount of all loan outstanding under the line of credit at any one time shall not exceed US$ 10000000 The details of the loan are as follow Interest rate 635 Settlement date March 31 2011 Amount of installment repayment USD 10 millionoutstanding amount as on that date plus

any interest as due on this date

11 ACCRUED EXPENSE 2 0 1 0 2 0 0 9 US$ US$ Related parties

Consultancy 2137500 ndash Interest 115921 ndash

2253421 ndash Third parties

Construction work in progress 185115 ndash Logistic consultant 73294 ndash Transportation 34812 ndash Geological mapping 13977 ndash Tax consultant 9380 ndash Social security 8868 ndash Audit fees 8590 ndash Office maintenances 7862 ndash Office supplies 3727 ndash Survey 2459 ndash Communication 2035 ndash Capital expenditure 1762 ndash Travel 855 ndash Miscellaneous 1190 ndash

353926 ndash Total 2607347 ndash



17

12 CAPITAL STOCK Based on deed of share ownership transferred No 36 dated February 24 2009 of Mala Mukti SH LLM notary in Jakarta Mr Buntardjo Hartadi Sutanto the Company stockholders has transferred his ownership of 1 share with total nominal value of Rp 1000000 to PT Unsoco Therefore the composition of stockholder as of March 31 2010 and 2009 is as follows Number of Percentage of

Stockholders shares Par value Par value ownership

(Rp thousand) US$

PT Duta Sarana Internusa 3499 3499000 898477 9997 PT Unsoco 1 1000 257 003

3500 3500000 898734 10000

13 GENERAL RESERVE

The Limited Liability Company Law of the Republic of Indonesia No 11995 introduced in March 1995 requires the establishment of a general reserve from net profits amounting to at least 20 of a companyrsquos issued and paid up capital This regulation has been amended by Indonesian Limited Company Law No 40 year 2007 which also requires companies to set up a general reserve amounting to at least 20 of the issued and paid-up share capital As of March 31 2010 and 2009 the Company has not yet established a general reserve as it is in accumulated loss position

14 GENERAL AND ADMINISTRATIVE EXPENSES 2 0 1 0 2 0 0 9 US$ US$ Deadrent 37939 minus Audit and tax consultancy fee 32189 minus Tax and licenses 19535 minus Depreciation (Note 7) 3850 minus Others 691 minus 94204 ndash



18

15 OTHER INCOME (EXPENSES) 2 0 0 9 2 0 0 8 US$ US$

Interest income 712 ndash Bank administration charges (342) ndash Donations (2703) ndash

(2333) ndash

16 RELATED PARTY TRANSACTIONS

In conducting its business the Company entered into certain business and financial transactions with its related parties

Related parties Nature of related parties Transactions

PT Duta Sarana Internusa Stockholder Other payables accrued expenses

GMR Consulting Services Pvt Ltd Affiliated company Accrued expenses

a Others payables (Note 10) 2 0 1 0 2 0 0 9 US$ US$

PT Duta Sarana Internusa 13218108 4185432

b Accrued expenses (Note 11) 2 0 1 0 2 0 0 9 US$ US$

GMR Consulting Services Pvt Ltd 2137500 ndash PT Duta Sarana Internusa 115921 ndash

2253421 ndash

17 POST EMPLOYMENT BENEFITS OBLIGATION

Referring to Labor Law No 132003 regarding severance payments requires companies to pay their employees termination appreciation and compensation benefits in case of employment dismissal based on the employeesrsquo number of years of services if the conditions set forth in the law are met The Company is presently evaluating the effects of the decree and had not record provision in the 2010 financial statements because the Companyrsquos employees is consider as a new employee and have less than 1 year of service

As of March 31 2010 and 2009 the Company had 24 and nil employees respectively



19

18 COMMITMENT AND CONTINGENT LIABILITIES

As of March 31 2010 and 2009 the Company had no significant commitments or contingent liabilities As of March 31 2010 and 2009 the Company has not made any provision for mine closure as it has not yet entered the production stage

19 ECONOMIC CONDITIONS The operations of the Companyrsquos have been affected and may continue to be affected by global economic conditions These conditions may negatively impact the Companyrsquos ability to achieve their profit and cash flow targets The accumulated deficit due to recurring operating losses up to March 31 2010 and 2009 were US$ 962607 and US$ 865553 respectively The Company is dependent upon the continuing financial support of its ultimate controlling stockholder The accompanying financial statements do not include the effect of any adjustments that may be required if the company cannot continue as a going concern Management considers that its ongoing plans will allow it to continue as a going concern for the foreseeable future These plans include the ability to defer payment of current liabilities to the Companyrsquos ultimate controlling stockholder which has confirmed to management that it will not recall these current liabilities to the detriment of the Company Vision to the ultimate stockholder of the Company has committed to provide funding to enable the Company to started its commercial operation and generate income on its own through shareholder loan in a form of Mandatory Convertible Bond to the stockholder of PT Duta Sarana Internusa the Company shareholder The financial statements have been prepared on going concern basis and do not include any adjustment that might results from the outcome of the uncertainties Related effects will be reported in the financial statement as they become known and can be estimated There is no events subsequent to balance sheet date until the date of this report occur that give rise to the uncertainties of the Companyrsquos going concern as an impact of the worsening current economy of Indonesia



20

20 NEW ACCOUNTING STANDARD

Indonesian Institute of Accountants has issued the following revised accounting standards

bull SFAS 1 (Revised 2009) ndash Presentation of Financial Statements (applicable for financial statements covering periods beginning on or after 1 January 2011) This standard will replace SFAS 1 (Revised 1998) ndash Presentation of Financial Statements

bull SFAS 2 (Revised 2009) ndash Cash Flow Statements applicable for financial statements covering periods beginning on or after 1 January 2011) This standard will replace SFAS 2 (Revised 1994) ndashCash Flows Statements

bull SFAS 48 (Revised 2009) ndash Impairment of Assets (applicable for financial statements covering periods beginning on or after 1 January 2011) This standard will replace SFAS 48 (Revised 1998) ndash Impairment of Assets

bull SFAS 7 (Revised 2010) ndash Disclosure of Related Parties (applicable for financial statements covering periods beginning on or after 1 January 2011) This standard will replace SFAS 7 (Revised 1994) ndash Disclosure of Related Parties

bull SFAS 10 (Revised 2010) ndash The Impact of Foreign Exchange Gain (Loss) (applicable for financial statements covering periods beginning on or after 1 January 2011) This standard will replace SFAS 10 (Revised 1994) ndash Transaction in Foreign Currency

bull SFAS 23 (Revised 2010) ndash Income (applicable for financial statements covering periods beginning on or after 1 January 2011) This standard will replace SFAS 23 (Revised 1994) ndash Income

The Company is still evaluating the possible impact of these standards on the financial statements

21 APPROVAL AND AUTHORIZATION TO ISSUE FINANCIAL STATEMENTS

The financial statements on pages 1 to 20 were approved and authorized for issue by the Companyrsquos Directors on April 28 2010

PT BARASENTOSA LESTARI BALANCE SHEETS (Continued)


1

A S S E T S Notes 2 0 1 0 2 0 0 9

US$ US$

CURRENT ASSETS Cash and cash equivalent 2c3 602611 ndash Advance payments 4 32254 ndash Prepaid rent 5 119065 ndash Other receivable 6 57901

Total current assets 811831 ndash

NON CURRENT ASSETS Plant and equipment net 2e7 816274 ndash Other receivable 6 72376 ndash Refundable deposit 2368 ndash Deferred exploration expenditures 2b8 14407304 4297168

Total non current assets 15298322 4297168

TOTAL ASSETS 16110153 4297168

LIABILITIES AND EQUITY

CURRENT LIABILITIES Accrued expense 2d1116b 2607347 ndash Taxes payable 2h9b 269499 ndash

Total current liabilities 2876846 ndash

NON CURRENT LIABILITIES Other payables 2d1016a 13218108 4185432 Deferred tax liabilities 2h9c 517 ndash

Total non current liabilities 13218625 4185432

EQUITY Capital stock Authorized issued and fully paidndashup capital 3500 shares at Rp 1000000 par

value each

12

898734

898734

Additional paid-in capital 78555 78555 Accumulated deficit 19 (962607 ) (865553 )

Total equity 14682 111736

TOTAL LIABILITIES AND EQUITY 16110153 4297168





2

Notes 2 0 1 0 2 0 0 9




Net loss (97054 ) (213 )





3









4

2 0 1 0 2 0 0 9












5

1 G E N E R A L





6









7













8









9
















10












Rupiah 178916 ndash

599055 ndash

Total 602611 ndash

4 ADVANCE PAYMENT




11



Total 119065 ndash










32018 3850 minus 35868




12







possible losses




6010969 3291018



13



8396335 1006150

Total 14407304 4297168

9 TAXATION











14




2 0 1 0 2 0 0 9 US$ US$


631341 536152




Total 269499 ndash






15






13218108 4185432




16










17



(Rp thousand) US$


3500 3500000 898734 10000

13 GENERAL RESERVE





18



(2333) ndash










2253421 ndash






19






20
















2

Notes 2 0 1 0 2 0 0 9




Net loss (97054 ) (213 )





3









4

2 0 1 0 2 0 0 9












5

1 G E N E R A L





6









7













8









9
















10












Rupiah 178916 ndash

599055 ndash

Total 602611 ndash

4 ADVANCE PAYMENT




11



Total 119065 ndash










32018 3850 minus 35868




12







possible losses




6010969 3291018



13



8396335 1006150

Total 14407304 4297168

9 TAXATION











14




2 0 1 0 2 0 0 9 US$ US$


631341 536152




Total 269499 ndash






15






13218108 4185432




16










17



(Rp thousand) US$


3500 3500000 898734 10000

13 GENERAL RESERVE





18



(2333) ndash










2253421 ndash






19






20
















3









4

2 0 1 0 2 0 0 9












5

1 G E N E R A L





6









7













8









9
















10












Rupiah 178916 ndash

599055 ndash

Total 602611 ndash

4 ADVANCE PAYMENT




11



Total 119065 ndash










32018 3850 minus 35868




12







possible losses




6010969 3291018



13



8396335 1006150

Total 14407304 4297168

9 TAXATION











14




2 0 1 0 2 0 0 9 US$ US$


631341 536152




Total 269499 ndash






15






13218108 4185432




16










17



(Rp thousand) US$


3500 3500000 898734 10000

13 GENERAL RESERVE





18



(2333) ndash










2253421 ndash






19






20
















4

2 0 1 0 2 0 0 9












5

1 G E N E R A L





6









7













8









9
















10












Rupiah 178916 ndash

599055 ndash

Total 602611 ndash

4 ADVANCE PAYMENT




11



Total 119065 ndash










32018 3850 minus 35868




12







possible losses




6010969 3291018



13



8396335 1006150

Total 14407304 4297168

9 TAXATION











14




2 0 1 0 2 0 0 9 US$ US$


631341 536152




Total 269499 ndash






15






13218108 4185432




16










17



(Rp thousand) US$


3500 3500000 898734 10000

13 GENERAL RESERVE





18



(2333) ndash










2253421 ndash






19






20














5

1 G E N E R A L





6









7













8









9
















10












Rupiah 178916 ndash

599055 ndash

Total 602611 ndash

4 ADVANCE PAYMENT




11



Total 119065 ndash










32018 3850 minus 35868




12







possible losses




6010969 3291018



13



8396335 1006150

Total 14407304 4297168

9 TAXATION











14




2 0 1 0 2 0 0 9 US$ US$


631341 536152




Total 269499 ndash






15






13218108 4185432




16










17



(Rp thousand) US$


3500 3500000 898734 10000

13 GENERAL RESERVE





18



(2333) ndash










2253421 ndash






19






20














6









7













8









9
















10












Rupiah 178916 ndash

599055 ndash

Total 602611 ndash

4 ADVANCE PAYMENT




11



Total 119065 ndash










32018 3850 minus 35868




12







possible losses




6010969 3291018



13



8396335 1006150

Total 14407304 4297168

9 TAXATION











14




2 0 1 0 2 0 0 9 US$ US$


631341 536152




Total 269499 ndash






15






13218108 4185432




16










17



(Rp thousand) US$


3500 3500000 898734 10000

13 GENERAL RESERVE





18



(2333) ndash










2253421 ndash






19






20














7













8









9
















10












Rupiah 178916 ndash

599055 ndash

Total 602611 ndash

4 ADVANCE PAYMENT




11



Total 119065 ndash










32018 3850 minus 35868




12







possible losses




6010969 3291018



13



8396335 1006150

Total 14407304 4297168

9 TAXATION











14




2 0 1 0 2 0 0 9 US$ US$


631341 536152




Total 269499 ndash






15






13218108 4185432




16










17



(Rp thousand) US$


3500 3500000 898734 10000

13 GENERAL RESERVE





18



(2333) ndash










2253421 ndash






19






20














8









9
















10












Rupiah 178916 ndash

599055 ndash

Total 602611 ndash

4 ADVANCE PAYMENT




11



Total 119065 ndash










32018 3850 minus 35868




12







possible losses




6010969 3291018



13



8396335 1006150

Total 14407304 4297168

9 TAXATION











14




2 0 1 0 2 0 0 9 US$ US$


631341 536152




Total 269499 ndash






15






13218108 4185432




16










17



(Rp thousand) US$


3500 3500000 898734 10000

13 GENERAL RESERVE





18



(2333) ndash










2253421 ndash






19






20














9
















10












Rupiah 178916 ndash

599055 ndash

Total 602611 ndash

4 ADVANCE PAYMENT




11



Total 119065 ndash










32018 3850 minus 35868




12







possible losses




6010969 3291018



13



8396335 1006150

Total 14407304 4297168

9 TAXATION











14




2 0 1 0 2 0 0 9 US$ US$


631341 536152




Total 269499 ndash






15






13218108 4185432




16










17



(Rp thousand) US$


3500 3500000 898734 10000

13 GENERAL RESERVE





18



(2333) ndash










2253421 ndash






19






20














10












Rupiah 178916 ndash

599055 ndash

Total 602611 ndash

4 ADVANCE PAYMENT




11



Total 119065 ndash










32018 3850 minus 35868




12







possible losses




6010969 3291018



13



8396335 1006150

Total 14407304 4297168

9 TAXATION











14




2 0 1 0 2 0 0 9 US$ US$


631341 536152




Total 269499 ndash






15






13218108 4185432




16










17



(Rp thousand) US$


3500 3500000 898734 10000

13 GENERAL RESERVE





18



(2333) ndash










2253421 ndash






19






20














11



Total 119065 ndash










32018 3850 minus 35868




12







possible losses




6010969 3291018



13



8396335 1006150

Total 14407304 4297168

9 TAXATION











14




2 0 1 0 2 0 0 9 US$ US$


631341 536152




Total 269499 ndash






15






13218108 4185432




16










17



(Rp thousand) US$


3500 3500000 898734 10000

13 GENERAL RESERVE





18



(2333) ndash










2253421 ndash






19






20














12







possible losses




6010969 3291018



13



8396335 1006150

Total 14407304 4297168

9 TAXATION











14




2 0 1 0 2 0 0 9 US$ US$


631341 536152




Total 269499 ndash






15






13218108 4185432




16










17



(Rp thousand) US$


3500 3500000 898734 10000

13 GENERAL RESERVE





18



(2333) ndash










2253421 ndash






19






20














13



8396335 1006150

Total 14407304 4297168

9 TAXATION











14




2 0 1 0 2 0 0 9 US$ US$


631341 536152




Total 269499 ndash






15






13218108 4185432




16










17



(Rp thousand) US$


3500 3500000 898734 10000

13 GENERAL RESERVE





18



(2333) ndash










2253421 ndash






19






20














14




2 0 1 0 2 0 0 9 US$ US$


631341 536152




Total 269499 ndash






15






13218108 4185432




16










17



(Rp thousand) US$


3500 3500000 898734 10000

13 GENERAL RESERVE





18



(2333) ndash










2253421 ndash






19






20














15






13218108 4185432




16










17



(Rp thousand) US$


3500 3500000 898734 10000

13 GENERAL RESERVE





18



(2333) ndash










2253421 ndash






19






20














16










17



(Rp thousand) US$


3500 3500000 898734 10000

13 GENERAL RESERVE





18



(2333) ndash










2253421 ndash






19






20














17



(Rp thousand) US$


3500 3500000 898734 10000

13 GENERAL RESERVE





18



(2333) ndash










2253421 ndash






19






20














18



(2333) ndash










2253421 ndash






19






20














19






20














20












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