Bumi plc's ("Bumi") first set of financial results includes its ownership of PT Berau Coal Energy ("PT Berau") and 25% interest in PT Bumi Resources ("PT Bumi Resources"), from 4 March 2011, when the acquisition of the two interests became effective. Since then, the group has increased its ownership in PT Berau to 85%, and in PT Bumi Resources to 29%. PT Berau has been fully consolidated as a subsidiary and PT Bumi Resources has been reported using the equity accounting method.
Bumi's operating profit for the period was $62 million, with underlying earnings of $54 million. EBITDA was $146 million. Strong demand for thermal coal, driven by increased consumption levels from Asia, particularly India, resulted in supportive demand conditions overall. Approximately 90% of total coal sales (on a gross revenue basis) went to exports, with around 10% to domestic Indonesian sales.
Average Free-On-Board (FOB) selling prices for the Group were 33% higher than the prior period, more than offsetting production costs of sales, which increased by 18%. Cost pressures were mainly due to a 13% increase in the stripping ratio, greater distances from the coal mined to the coal processing plant, higher fuel prices, and higher contractor costs.
Following the mandatory takeover offer made to PT Berau's minority shareholders, Bumi increased its holding in PT Berau from 75% to 85% for a total amount of $214 million. Group cash at 30 June 2011 was $467 million. $30 million of dividends payable to Bumi, which were declared by PT Bumi Resources in respect of 2010, were paid on 15 August 2011.
The Group is embarking on a major expansion of production at its existing mines in both PT Berau and PT Bumi Resources. Capital expenditure for 2011 is expected to be $106 million for PT Berau and $310 million for PT Bumi Resources, on a 100% basis.
For 2011, PT Berau is currently forecast to produce 20 million tonnes, an increase from 17 million tonnes in 2010 and PT Bumi Resources' operations are expected to produce 66 million tonnes, an increase from 60 million tonnes in 2010.
Performance of Berau Coal
PT Berau recorded a strong operating performance for the first half of 2011. Despite high levels of rainfall PT Berau produced 9.0 million tonnes of coal, a 41% increase over the prior period, and recorded sales of 9.6 million tonnes of coal.
PT Berau's average selling price for the period was $75/tonne. Production costs at PT Berau were $35/tonne. The increase from the prior period is mainly due to an increase in the stripping ratio, greater haulage distances (between the coal mined and the coal processing plant), higher fuel costs, and higher contractor costs. The average stripping ratio for the period was 9.5.
In terms of sales by destination, 36% of sales went to China, 16% to Taiwan, 11% to India and 21% to the rest of Asia, with the remaining 16% sold domestically into Indonesia. PT Berau's first half sales were split 77% contracted priced, 20% contracted index-linked and 3% contracted unpriced.
In terms of PT Berau's coal reserves, a new JORC report published in June 2011 showed total reserves increasing by 35% to 467 million tonnes from 346 million tonnes.
| PT Berau: Production Data | 30 June 2011 | 30 June 2010 |
| Coal mined (millions of tonnes) | 9.0 | 6.4 |
| Sales (millions of tonnes) | 9.6 | 8.2 |
| FOB average selling price ($/t) | 74.6 | 56.0 |
| Production cost of sales ($/t) | 35.4 | 30.6 |
| Stripping ratio (bcm/t)1 | 9.5 | 8.2 |
1 Bank cubic metres (bcm) of overburden removed per tonne of coal mined.
Performance of Bumi Resources
PT Bumi Resources' first half production was 30 million tonnes of coal, slightly lower than the prior period due to higher rainfall. PT Bumi Resources' average selling price for the period was $91/tonne, an increase of 36% over the prior period.
Production costs at PT Bumi Resources were $45/tonne against $36/tonne in the prior period. Higher fuel and contractor costs along with an increase in the stripping ratio were the principal reasons for the increase in production costs. The stripping ratio for PT Bumi Resources of 12.0 was 16% higher than the prior period due to the opening of additional pits at the KPC mine, as well as due to high levels of rainfall, which required a change in the mining plan. The stripping ratio is expected to fall over the rest of the year as weather conditions improve and more coal is mined.
PT Bumi Resources' first half sales were split 95% contracted priced and 5% contracted unpriced. In terms of sales by destination, 21% of coal sales went to Japan, 15% to India, 13% to China, 27% to the rest of Asia, 8% to Europe, and 16% domestically into Indonesia.
| PT Bumi Resources: Production Data
| 30 June 2011 | 30 June 2010 |
| Coal mined (millions of tonnes) | 29.9 | 30.6 |
| Sales (millions of tonnes) | 29.3 | 31.0 |
| FOB average selling price ($/t) | 91.3 | 67.1 |
| Production cost of sales ($/t) | 44.7 | 36.4 |
| Stripping ratio (bcm/t)1 | 12.0 | 10.3 |
1 Bank cubic metres (bcm) of overburden removed per tonne of coal mined.
|
PT Bumi Resources: key financials (KPC and Arutmin are proportionally consolidated) (numbers are in US$ millions, unless otherwise stated) | 4 months ended 30 June 2011
|
| Revenue | 329 |
| Operating profit | 42 |
| Profit after tax | 41 |
| Net debt | 963 |
| Debt to total capital (gearing) | 77.8% |
| Interest cover | 2.1x |
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