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Management Discussion & Analysis

Management Discussion & Analysis

Macroeconomic

Overview

The distribution of the COVID-19 vaccine provides a forward impetus for the global economy. Supported by the distribution of vaccines and the return of people’s normal activities, the IMF predicted that the global economy growth would reach approximately 5.9% in 2021. The World Bank’s prediction was not so far off, which is in the range of 5.5%. Along with these growth predictions, super power countries such as the United States, China and the European Union would gain significant economic growth momentum in 2021. However, due to the aftershocks of the Covid19 Omicron variant, inflation rates in these countries had to be watched out for because they could affect the economic growth of the whole world.

Indonesia’s economy throughout 2021 grew by 3.69% (c-to-c). This growth was higher than 2020 of -2.07 percent due to the Covid-19 pandemic that hit the entire world, including Indonesia. Previously, the Indonesian economy was estimated to grow by 4.43%, but there was a revision to this figure due to the increase in the delta variant of Covid-19 cases in June 2021 which suppressed economic growth.

According to data released on the official website of the Ministry of Energy and Mineral Resources (ESDM), coal prices experienced a sharp increase in 2021. This increasing trend will provide optimism for industry players in the coal sector.

The Indonesian Reference Coal Price (HBA) opened at $75.84 per tonne in January 2021. Since then, Indonesia’s HBA has experienced a significant increase every month accompanied by the amount of coal production so that in December 2021 the number of coal production in 2021 increased by 7, 2% compared to the previous year to 606.22 million tons. The highest HBA reached $215.01 per tonne in November 2021 before dropping back to $159.79 per tonne in December 2021. Overall, coal experienced an increase in price of 168.01% (y-on-y) and economic growth by 4%. The obstacle to the decline in the HBA in December accompanied by the production was caused by weather that disrupted the operation in the mining area.

Operational

Overview

In 2021, the Company recorded a Barging Volume Recapitulation amounting to 6,974,821 M/T. There was an increase of 3,442,220 M/T from the previous year which was only 3,532,601 M/T.

Operational Overview

Capital Structure and Policy of Capital Structure

The Company manages and makes adjustments to its capital structure according to economic dynamics. The Company asses the capital using gearing ratio analysis (ratio of debt to equity) by dividing net debt to total capital.

debt-to-equity ratio

Capital Investment

Capital Investment

Events after the Reporting Period

Events after the Reporting Period

Business Prospect

Coal will still be a source of energy for electricity generation and industry. Domestic coal demand can be maintained due to the Domestic Market Obligation (DMO) policy.

The coal DMO policy is stated in the 2006 Presidential Decree concerning the National Energy Policy which stipulates that by 2025, coal will contribute 35% of the national energy mix. Various regulations also contain this policy.

The coal DMO is regulated to prevent coal supply shortages to ensure coal supply for sustainable domestic energy purposes. That is why every national coal mining company is required to sell 25% of its production at a price set by the Government to domestic coal users. The application of this DMO is related to fulfill the national electricity supply target of 35,000 Mega Watts.

DMO can increase the amount of coal production in the concession area around the operating area of the Company’s Subsidiary. The area requires transportation access to the port using roads owned by the Subsidiary. This will increase the Company’s profitability.

As a consideration for the future, the Company will focus more on running the infrastructure business through its subsidiaries and is committed to always providing the best service to coal producers in South Kalimantan.

Comparison of Target/Early Projection in Book with Achieved Result

Comparison of Target/Early Projection in Book with Achieved Result

Realization Of Public Offering Funds

Statement of The Use of Initial Public Offering Fund per December 31, 2021

Public Offering