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Jakarta, April 30th,
2008 –
PT Antam Tbk (ASX - ATM; IDX - ANTM) announces today
its unaudited consolidated net profit decreased 37%
to Rp675 billion, and Earnings per Share (EPS) of
Rp70.81 for the first quarter of 2008, from the
Rp1,073 billion and EPS of Rp112.52 of the same
quarter of 2007. The decrease is mostly due to lower
achieved selling prices of ferronickel and lower
ferronickel sales volumes, with no increase of
nickel ore sales volumes or prices, in combination
with a 20% increase to Antam's cost of sales due to
higher fuel and ore feed prices. The decrease
occurred despite slighter higher ferronickel
production volume, signaling a good performance from
FeNi III, increased gold and silver sales volumes
and higher gold and silver achieved selling prices.
As such Antam's net margin contracted to 32% from
45%.
Antam's
President Director, Mr. Dedi Aditya Sumanagara said:
"While
our net income has decreased in the first quarter of
2008, this was not unexpected. We are pleased FeNi
III appears to have stabilized and ferronickel
production increased slightly. As well, we were
able to maintain our nickel ore prices despite
softening spot prices for nickel throughout the
quarter. Our gold division performed well in terms
of revenue growth and prices of gold increased
significantly. We are still optimistic we will
achieve our volume targets for this year. We are
also now focused on our next significant growth
investment".
Net Sales
Antam's
consolidated first quarter sales revenues dropped
12% to Rp2,092 billion from Rp2,386 billion, due to
lower ferronickel sales volume as well as lower
nickel prices. Nickel, including exports of
ferronickel and nickel ore, remains Antam's biggest
sales revenue component, accounting for 72% followed
by gold segment which accounted for 27%. The
contribution of gold segment increased from a 7%
share of sales revenue in the first quarter of 2007,
due to stronger sales from trading activities
conducted by Antam's Logam Mulia unit. However,
while these trading activities boosted revenues, the
small operating margins did not generate a similar
boost to operating income. Antam remains an export
oriented mining and metals company. In the first
quarter of 2008, exports contributed 92% of Antam's
total net sales. All of Antam's nickel products are
sold abroad while exports accounted for 73% of the
sales from Antam gold segment.
Ferronickel
In the first
quarter of 2008, sales volumes dropped 62% from
3,345 tonnes to 1,267 tonnes of contained nickel in
ferronickel and generated Rp325 billion, a 69%
decline from the Rp1,063 billion generated in the
first quarter of 2007. The decrease of sales
volumes in the first quarter of 2008 was due to
ferronickel shipments still in transit to Europe and
so were still accounted for as inventories. Total
shipments of nickel contained in ferronickel during
the March quarter amounted to 5,975 tonnes. However,
of that amount 4,708 tonnes departed at the end of
March and is expected to arrive in April. Antam
matches its ferronickel shipments with each
customer's request. During the March quarter, Antam
delivered 1,159 tonnes to a customer in Korea and
108 tonnes to a customer in Japan. Lower sales
volumes coupled with a 20% lower average achieved
selling price of US$12.69 per pound resulted in a
69% decrease of revenues to Rp325 billion. Although
only reaching 7% of the target, Antam remains
hopeful to meet its 2008 ferronickel sales target of
17,000 tonnes.
Not related to
lower sales volumes during the March quarter,
ferronickel production was relatively similar to the
first quarter of 2007, as Antam produced 4,362
tonnes of contained nickel in ferronickel compared
to 4,352 tonnes. With this result, Antam reached 26%
of the 2008 17,000 tonnes target. The operation of
FeNi III and FeNi II smelters was stable, while
production from the FeNi I smelter was reduced due
to a routine maintenance overhaul. FeNi I, FeNi II
and FeNi III produced 752 tonnes, 1,758 tonnes and
1,851 tonnes, respectively. This compares to the
same quarter of 2007 when FeNi I, FeNi II and FeNi
III produced 1,089 tonnes, 1,565 tonnes and 1,697
tonnes respectively. The production of FeNi II was
above capacity due to higher ore grades and the
maximization of the concentrates from the slag
treatment plant at the kiln.
To produce
4,362 tonnes Antam used 18,094 wmt from its own
mines at Pomalaa and Halmahera Island and 276,463
wmt from PT Inco's East Pomalaa deposit. Antam has
an agreement to source +/- 1 million wmt of ore feed
from PT Inco. Antam currently is in talks with PT
Inco to extend the agreement.
As part of the
routine maintenance of its ferronickel smelters,
Antam switched off the FeNi I smelter on February 19th.
Antam usually overhauls its smelters every 8-10
years. Antam expects the overhaul to be complete in
the middle of the second quarter of 2008. Despite
the overhaul of FeNi I smelter, Antam expects to
achieve its 2008 ferronickel production target of
17,000 tonnes. Antam last completed a routine
overhaul of FeNi I smelter at the beginning of
1999. In 2005, Antam completed an overhaul of FeNi
II smelter, which included the installation of a new
copper cooling system. However, the overhaul of
FeNi I will not include the installation of a
similar system. After having recently been repaired
following a leak that occurred in July of 2007, the
operation of FeNi III was stable and Antam
successfully increased the load of the smelter above
25 megawatts at the end of February. Despite the
current load of 30-32 MW, Antam could need to lower
the power load of the FeNi III smelter to maintain
the stability of the plant. FeNi III has a greater
capacity than FeNi II, yet only just outpaced FeNi
II due to the low power load and due to the above
average output from FeNi II.
Nickel Ore
Beginning in
2008, with regards to the marketing of its ore
products, and not the estimation of reserves and
resources, Antam began to implement a new
classification of its nickel ore. Previously, nickel
ore known as low grade saprolite ore (LGSO), with a
nickel grade between 1.5% and 2%, was included in
the classification of saprolite. It is now included
in the classification of low grade ore, which also
includes limonite ore with grades below 1.5%. Ore
grading above 2% is simply classified as high grade
ore.
The new
classification has changed Antam's annual export
targets for 2008. Rather than 5.8 million wmt of
saprolite, Antam is now targeting 3.2 million wmt of
high grade ore and 2.6 million wmt of low grade ore,
or more specifically 2.4 million wmt of LGSO and 0.2
million wmt of limonite. Antam's production target
for high grade of 3.65 million wmt is the same as
the export target plus and additional 450,000 wmt
for ore feed. Antam's production target for low
grade is the same as the sales target.
As the
reclassification of Antam's ore was only applied to
Antam's 2008 ore output, the only figures that
represent an accurate reflection of the company's
performance are the production and sales volumes,
price and revenues of total combined high grade and
low grade nickel ore. In the first quarter of 2008,
Antam's total ore production volume increased 33% to
2,313,299 wmt, while Antam's total ore sales volume
held steady at 2,005,706 wmt. The combined average
achieved selling price of all of Antam's nickel ore,
which is sold free on board (FOB) amounted to
US$63.26 per wmt, slightly higher than the US$62.76
per wmt of the same period last year. Combined
nickel ore revenue increased 6% to Rp1,173 billion
from Rp1,102 billion.
Antam's nickel
ore is sold to Japan, Eastern Europe and China, with
the high grade generally going to Japan and Eastern
Europe and low grade to China. During the first
quarter of 2008, 73% of Antam's high grade was sold
to Japan with the rest sold to Europe. Antam's ore
prices are determined according to the spot price on
the London Metal Exchange, as well as the grade,
moisture content and specified recovery rate.
Due largely to
the ore reclassification for 2008 (2007 was not
reclassified), whereas Antam had no production of
low grade in the first quarter of 2007, production
of low grade ore amounted to 1,354,770 wmt,
including 1,211,895 wmt of LGSO and 142,875 wmt of
limonite. For the same reason, production of high
grade nickel ore decreased 45% to 958,529 wmt during
the first quarter. Antam thus achieved 52% of the
low grade production target for 2008 (50% of the
LGSO target and 71% of the limonite target) and 26%
of the high grade production target.
Combined high
grade nickel ore sales amounted to 975,693 wmt, a
51% decrease compared to the first quarter of 2007,
due to the reclassification of ore in 2008. For the
same reason, consolidated high grade sales revenue
decreased 40% to Rp720 billion. Meanwhile, whereas
there were no sales in 2007, low grade nickel ore
sales of 1,030,013 wmt, including 926,476 wmt of
LGSO and 103,537 wmt of limontite, brought in sales
revenues of Rp453 billion. Antam achieved 29% of
its high grade sales volume target and 40% of its
low grade target (39% of the LGSO target and 52% of
the limonite target).
Gold and Silver
Antam's gold
production increased 21% to 935 kg, or 31% of the
2008 target of 2,980 kg. The stronger production was
due to higher gold ore production as well as higher
gold grades. Gold ore production increased to
105,952 wmt from 99,428 wmt in the first quarter of
2007 while the average gold grade was 10.80 grams
per ton (gpt) during the first quarter of 2008 or
15% higher than the 9.38 gpt achieved during the
first quarter of 2007.
Gold sales
increased by 112% in the first quarter of 2008 to
1,580 kg, or 26% of the 2008 target of 6,000 kg, as
Logam Mulia continued its extensive gold trading
that began at the beginning of last year. Antam's
trading activities mostly consist of buying scrap
gold and reprocessing it into pure gold bars for
sale. Exports accounted for 75% of gold sales in
the March quarter. Logam Mulia's .9999 fine gold
products are internationally accredited. Strong
sales volumes coupled with a 38% increase in the
average achieved selling price of gold of US$901.57
per troy ounce, increased gold revenues by 269% to
Rp528 billion compared to Rp143 billion in the first
quarter of 2007. However, Antam's materials costs
also increased significantly related to the higher
cost of using gold scrap to produce gold bars. In
the first quarter of 2008, Logam Mulia bought
1,109kg of gold compared to 56kg of gold in the same
quarter of 2007. Antam made smaller margins on its
trading activities than selling gold refined from
bullion produced by the Pongkor gold mine.
Sales of
silver increased 40% to 7,289 kg supported by the
23% increase in silver production to 7,633 kg.
Inline with higher silver sales volume as well as a
33% increase in the average achieved selling price
of silver to US$17.81 per troy ounce, revenue from
silver amounted to Rp30 billion, a 49% increase
compared to the first quarter of 2007. Exports
accounted for 69% of total silver sales. Domestic
silver sales increased 46% to Rp12 billion while
exports increased 124% to Rp26 billion.
Revenue from
the precious metals refinery services decreased 15%
to Rp6 billion. Antam's gold segment, including
gold, silver and refinery services, generated Rp575
billion, an increase of 243% from the Rp167 billion
in the first quarter of 2007.
Bauxite
Despite a 24%
higher average achieved bauxite price of US$20.41
per wmt, revenue from bauxite fell 70% to Rp14
billion. This was due to lower demand for Antam's
low quality high silica bauxite ore still remaining
at the nearly depleted Kijang bauxite mine. As
such, bauxite sales volume decreased 76% to 73,866
wmt, or 5% of the 1.5 million wmt 2008 target. In
line with lower demand, Antam's bauxite production
decreased 59% to 181,141 wmt or 12% of of the 2008
production target of 1.5 million wmt.
Cost of Sales and Production Costs
Despite a
decrease in Antam's revenue, Antam's cost of sales
increased 20% to Rp1,061 billion mainly due to
significant increases in materials costs, ore mining
fees, fuel, depreciation and labour costs. These
top five largest components of Antam's cost of sales
represented 86% of Antam's total production costs.
Materials Used
Materials
costs, the largest component of Antam's cost of
production, increased 185% to Rp570 billion
representing 36% of Antam's total cost of
production. The main cause of the increase was a
substantial increase in materials costs for Antam's
Logam Mulia precious metal refining business which
increased 2,479% to Rp307 billion and accounted for
54% of Antam's overall material costs. This is due
to Logam Mulia's increased gold and silver trading
activities. In view of the strong demand for refined
precious metals, Logam Mulia has been active in
purchasing gold and silver scraps from retailers and
jewelers and then remelting and refining them to
produce refined gold bars. Logam Mulia purchased
1,109 kg of gold in the first quarter of 2008, up
1,880% from the 56 kg purchased in the first quater
of 2007. Gold and silver inventories also increased
150% to Rp238 billion.
Another
substantial component of Antam's materials costs was
the purchase of nickel ore feedstock for ferronickel
production, which increased 45% to Rp200 billion,
representing 35% of Antam's overall material costs.
Ore was more expensive as Antam purchased higher
grades than in the first quarter of 2007. In the
first quarter of 2008, Antam used 294,557 wmt of
high grade ore to produce 4,362 tonnes of nickel in
ferronickel, resulting in a lower than normal ratio
of 67.5 tonnes of ore for each tonne of contained
nickel. About 94% of Antam's nickel feedstock was
sourced from PT Inco's East Pomalaa deposit.
By
buying ore from PT Inco, Antam preserves its own
high grade ore reserves for later development,
lowers the cost of ore mining fees and frees up ore
extraction capacity in order to increase production
of lower quality ore, which Antam does not use for
its own ferronickel production, for export to China.
In the first
quarter of 2008, Antam did not undertake toll
smelting activities for its ferronickel production.
Other
important materials are consumables such as coal and
anthracite which are used as reductors in the
furnace. Although
coal consumption decreased 5% to 25,694 tonnes its
price increased 59% to Rp830,000 per tonne which
resulted in 20% increase in total coal cost to Rp17
billion. Anthracite consumption increased 31% to
3,191 tonnes while its price remained flat at
Rp1.26 million per tonne, which resulted in 31%
increase in total cost to Rp4 billion.
Ore Mining Fees
Antam
outsources most of its mining activities to third
party mining contractors inline with Antam's plan
to move downstream, as well as to lower overhead
costs, labour costs and pension obligations. While
both largely performed by mining contractors, Antam
classifies the cost of mining of ore for exports as
ore mining fees while the cost of mining the ore for
feedstock as materials used.
Ore mining
fees increased 84% to Rp349 billion in the first
quarter of 2008 mainly due to a 33% increase of
nickel ore production and 6% increase of nickel ore
sales volumes as well as higher operating cost, such
as fuel, which are passed on to Antam by the mining
contractors. Ore mining fees was the second largest
component, or 22%, of Antam's production cost.
Nickel ore mining fees, which amounted to Rp338
billion, was the largest component of Antam's ore
mining fees and accounted for about 97%
of the
total. Bauxite mining fees stood at Rp10 billion or
3% of Antam's mining fees while gold mining fees
amounted to Rp1 billion or 0.3% of overall ore
mining fees.
Fuel
Fuel costs,
the third largest component, representing 13% of
Antam's cost of production, increased 60% to Rp208
billion. This is mainly due to higher international
oil prices. The marine fuel oil (MFO) price
increased by
77% to Rp4,708 per litre while industrial diesel
oil (IDO) price increased by 40%
to Rp6,625
per
litre. About 98% of Antam's fuel cost is attributed
to Antam's energy intensive ferronickel facilities
at Pomalaa. In first quarter of 2008, Antam used
around 37.4 million litres of fuels, of which 91%
was the less expensive MFO and 9% was the more
expensive IDO. However, although cheaper compared to
IDO, MFO is still too expensive and Antam's
ferronickel cash cost is still above the industry
average. Antam plans to lower its fuel cost further
by converting to less expensive fuels such as
natural gas, hydropower or coal.
Depreciation
Depreciation
was the fourth largest component, representing 8% of
total production costs. Depreciation increased 37%
to Rp128 billion mainly due to the depreciation of
FeNi III, which began commerical operations in early
2007. About 80% of Antam's depreciation is
attributed to depreciation at Antam's ferronickel
facilities in Pomalaa. Depreciation at Antam'gold
facilities in Pongkor contributed 19.5% of total
depreciation cost.
Labour Cost
Labour cost,
which include salaries, wages, bonus and employee
benefits, was the fifth largest component of
production costs and increased 18% to Rp122 billion
representing 8% of total production costs. Among the
largest components of labour costs were the Rp24
billion for bonuses, Rp15 billion for pension
health, Rp12 billion for business unit (remote-site)
allowances. Antam's Pomalaa nickel business unit
accounted for 63% or the largest portion of the
total labour cost. Pongkor and Kijang accounted for
22% and 8% respectively.
Transportation Cost
While not included as the five largest production
costs, transportation cost, which includes costs
associated with the shipment of ore, machinery
mobilisation, and loading and unloading logistics,
is an important component of production costs.
Despite higher fuel prices in the first quarter of
2008 and a slight increase in ore export volumes,
transportation costs decreased 38% to Rp21 billion.
The decrease is mainly due to lower loading
logistics activities. In the first quarter of 2007
ore loading amounted to Rp18 billion and accounted
for 53% of transportation cost. Meanwhile in the
first quarter of 2008 ore loading amounted to only
Rp6 billion and accounted for only 28% of
transportation cost.
Gross Profit
Antam's gross
profit decreased 31% to Rp1,031 billion due to lower
revenues and higher cost of sales. As a result,
Antam's gross profit margin decreased 22% to 49% in
the first quarter of 2008 from 63% in the first
quarter of 2007.
Operating Expenses and Operating Profit
Antam's
operating expense increased 23% to Rp94 billion
mainly due to a 39%
increase in general and administrative expenses to
Rp74 billion. The largest component of general and
administrative expenses was salaries and other
employee benefits, which increased by 52% to Rp36
billion and accounted for about 49% of the total
general and administrative expenses. Other expenses,
the second largest component of general and
administrative expenses, increased 63% to Rp16
billion in the first quarter of 2008.
Exploration
expenses and the Tokyo office's selling and
marketing activities, the other important components
of general and administrative expenses, decreased
10% to Rp19 billion and 44% to Rp1.6 billion
respectively.
Antam's
operating profit decreased by
34% to
Rp937 billion,
which resulted
in a decrease of operating margin to 45% in the
first quarter of 2008 from 60% in 2007.
Other Income and Net Income
In the first
quarter of 2008 Antam booked other income of Rp10
billion, a 91% decrease from Rp108 billion in the
first quarter of 2007. This was mainly due to the
foreign exchange losses of Rp108 billion in the
first quarter of 2008 due to the weakening of the US
dollar as opposed to Rp17 billion of foreign
exchange gain in the first quarter of 2007. Antam
also booked less one-off types of income, totalling
Rp84 billion compared to Rp98 billion in the first
quarter of 2007. The 249% increase of interest
income to Rp49 billion, due to higher interest
rates, and in particular for Antam's Rp3,646 billion
of US dollar time deposits and the 34% decrease of
interest expense to Rp15 billion due to lower
investment loans, could not offset the decrease in
other income.
Antam's profit
before income tax decreased 38% to Rp947 billion and
after the deduction of 30% corporate income tax,
Antam's net income decreased 37% to Rp675 billion.
As a result, Antam's net margin decreased 29% to 32%
in the first quarter of 2008 from 45% in the first
quarter of 2007.
Cash Cost and Cost Reduction Program
Similar to
other mining and metal companies, Antam experienced
increases in the cash costs of its products due to
among other things higher materials, labour and fuel
costs. the provisional ferronickel cash cost
increased 37% to US$6.17 per pound mainly due to
higher fuel and ore feed prices while the
provisional gold cash cost increased 6% to US$283.09
per troy ounce largely due to higher fuel prices.
Antam has
taken various measures to lower its costs such as
using less expensive but higher quality parts,
machinery and equipment and continuously conducting
employee training and workforce size reduction to
improve efficiency and productivity. Antam has also
entered into a Power Purchase Agreement with a
hydropower producer for the supply of 15 megawatts
of electricity (about 15% of its energy
requirements) at a competitive price of US$0.0565
per kilowatt hour that will commence in 2009. The
next major and most important costs reduction
exercise, however, will come when Antam converts its
main energy source from the more expensive diesel
fuel to cheaper alternative sources of energy such
as coal, hydropower or gas. Currently, coal is
considered as the “front runner” and the most
feasible source of cheaper energy for Antam's
ferronickel smelters. A study on a process called
Smart Predictive Line Controller, which would make
the use of coal suitable for the high energy needs
of Antam's ferronickel, is currently underway.
Balance Sheet
Antam's
financial structure improved as Antam's cash and
cash equivalents more than doubled while total debt
and post-retirement obligations decreased, although
accounts payable increased slightly. Lower debt in
combination with a significant increase of total
stockholders' equity reduced Antam's long term debt
to equity (end of period) to 7%. Antam's balance
sheet is ready to leverage and make growth
investments.
Total Assets
Antam's total
assets increased Rp3,826 billion, or 47%, to
Rp12,004 billion. The main reason for the increase
is the 124% increase of cash and cash equivalents.
Total assets also increased due to an 870% increase
of investments in shares of stock and despite a 10%
decrease of property, plant and equipment.
Current Assets
Antam's
current assets increased 80% to Rp7,593 billion due
to increased cash. Cash and cash equivalents
increased to Rp4,568 billion due to increased
production and higher prices in 2007. Compared to
the end of 2007 Antam's cash position decreased 4%,
due to a large income tax payment, long term
investments and the effect of foreign exchange rate
fluctuations. Antam's cash was 80% held in US
dollar time deposits and 18% held in US dollar bank
accounts, in fourteen domestic and international
banks. The range of annual interest rates on Rupiah
time deposits increased to 7.25% - 9.25%, while for
US dollar time deposits the range increased to 4.00%
- 5.50%.
Antam's third
party trade receivables net of the Rp1.3 billion
allowance for doubtful accounts held steady at Rp831
billion. Of these, 36% were current and 37% were 31
– 90 days overdue. The largest four receivables
made up 69% of the account and were owed by Antam's
agent for ferronickel sales in Europe, Avarus AG,
followed by Raznoimport Nickel (UK) Ltd, Zhejiang
Grand IMP and Mitsui & Co. Ltd.
Antam's net
inventories increased 76% to Rp1,845 billion, mostly
due to the Rp700 billion of ferronickel shipments in
transit to customers. Antam did not have
inventories in transit at the end of the first
quarter of 2007. Inventories also increased due to
the 153% increase of gold and silver inventories to
Rp238 billion, associated with the gold trading
activities conducted by Logam Mulia, Antam's
precious metals refinery. Nickel ore inventories
increased 111% to Rp186 billion, while ferronickel
inventories dropped 48% to Rp158 billion.
Non-Current Assets
Antam's
non-current assets increased 11% to Rp4,411 billion.
The increase is due to the nearly ten times increase
of investments in shares of stock to Rp485 billion
from Rp50 billion. This account includes
investments in PT Nusa Halmahera Minerals, a gold
joint venture company Antam has with Newcrest Ltd,
in PT Cibaliung Sumberdaya, a gold joint venture
company owns with Austindo, and in PT Indonesia
Chemical Alumina. In the first quarter of 2008,
Antam spent Rp430 billion to acquire a 10.72% stake
in Herald Resources Ltd, an Australian mineral
exploration and development company with which Antam
has an Indonesian lead and zinc joint venture called
PT Dairi Prima Mineral.
Non-current
assets also increased due to a 38% increase in
deferred exploration and development expenditure to
Rp527 billion and the 61% increase of deferred tax
payments to Rp330 billion. These increases offset
the 10% decrease of property, plant and equipment to
Rp2,935 billion.
Total Liabilities
Antam's total
liabilities decreased 9% to Rp2,561 billion, due to
lower taxes payable, lower debt and lower
post-retirement obligations, despite higher other
payables and accrued expenses.
Current Liabilities
Antam's
current liabilities decreased 5% to Rp1,090 billion,
due to lower taxes payable which decreased 65% to
Rp146 billion. Meanwhile the increases of current
liabilities were not enough to offset the increase
to taxes payable. Other payables increased 576% to
Rp115 billion due mostly due to Rp48 billion of cash
advances from customers. Antam's accrued expenses
increased 23% to Rp494 billion, mostly due to
purchases of nickel ore from PT Inco and for mining
and transportation services fees. Antam's trade
payables increased 21% to Rp93 billion, with the
largest amount of Rp26 billion owed to Antam's
mining services contractor PT Yudhistira Bumi
Bhakti. Antam's current maturities of long term
investment loans held steady at Rp215 billion.
Non-Current Liabilities
Antam's
non-current liabilities decreased 12% to Rp1,471
billion. The decrease is mostly due to a 23%
reduction of investment loans, net of current
maturities. Antam has two investment loans
outstanding. Net of current maturities, Antam owes
PT Bank Central Asia Rp409 billion and PT Bank
Mandiri Rp277 billion. Both investment loans had an
interest rate of 6.89%.
Antam's
pension and other post-retirement obligations
decreased 7% to Rp655 billion. The fair value of
the pension plan's assets increased at a greater
pace than the present value of funded obligations
such that obligations for pension benefits dropped
to Rp43 billion. The trend was similar for
post-employment medical benefits which saw the fair
value of the plan's assets increasing 133%, while
the present value of funded obligations decreased
16% to Rp909 billion. Meanwhile, the liability for
other post-retirement benefits, such as past-service
benefits, severance and compensation for accumulated
unused leave increased 22% to Rp152 billion.
Total Consolidated
Stockholders' Equity
Antam's total
consolidated stockholders' equity rose 76% to
Rp9,442 billion due to the 93% increase in retained
earnings to Rp8,461 billion. This amount was 9%
higher than the Rp7,785 billion at the end of 2007.
Antam had appropriated Rp2,653 billion of retained
earnings, as per the end of 2007. The significant
increase in retained earnings is due to
significantly higher net income in 2007 generated by
increasing production and higher commodity prices.
Cash Flows
Despite a
decreased average achieved selling price for
ferronickel and decreased ferronickel and bauxite
sales volumes, in combination with flat total nickel
ore sales volumes and average achieved total nickel
ore selling price, Antam was able to increase its
first quarter 2008 cash receipts from customers.
This increase was supported by higher volumes and
achieved selling prices for gold and silver.
Although a significant increase in income tax
payments caused net cash flows provided by operating
activities to fall, Antam still remained free cash
flow positive. With just Rp49 billion of capital
expenditures, Antam generated free cash flows of
Rp375 billion.
Cash Flows from Operating
Activities
Antam's cash
flows provided by operating activities dropped 65%,
or Rp775 billion, to Rp424 billion. The main reason
for the decrease was the 114% larger payments of
tax, of Rp1,033 billion, related to Antam's
substantial 230% net income increase for the year
2007. Antam pays corporate income tax at a rate of
30%. Throughout the year Antam pre-pays income tax
on a monthly basis based on forecast annual income.
In the first quarter of the 2008, as Antam's actual
2007 annual net income tax far exceeded the
forecast, Antam was required to make additional tax
payments to reconcile the difference.
Antam's cash
receipts from customers moved in the opposite
direction of net sales and increased 20%, or Rp481
billion, to Rp2,941 billion, due to the settlement
of large amounts of accounts receivables. Antam's
payments to suppliers increased 112% to Rp1,471
billion due to increased purchases of gold by Logam
Mulia, to an amount of Rp307 billion, for its gold
trading activities, as well as due to higher prices
for ore feed and for fuel. As such, Antam's net
cash receipts from operating activities decreased
14% to Rp1,422 billion. Payments to commissioners,
directors and employees meanwhile held steady at
Rp138 billion. Other receipts increased 411% to Rp91
billion, mostly due to increased cash advances from
customers.
Cash Flows from Investing
Activities
Antam's net
cash used in investing activities increased Rp439
billion, or 664%, to Rp505 billion. The main reason
for the increase is the Rp434 billion spent on long
term investments, a 311%, or Rp420 billion increase
over 2007. Antam's main long term investment was
the Rp430 billion spent on the 10.72% stake in
Herald Resources Ltd (ASX: HER), a publicly listed
Australian exploration and mining company. Antam
also spent Rp4.25 billion to acquire an additional
76% in PT Mega Citra Utama, a bauxite exploration
company. Antam (20%) and Herald (80%) have a joint
venture in Indonesia called PT Dairi Prima Mineral,
which will soon develop a large lead zinc project on
Sumatra. Together with its Chinese partner,
Shenzhen Zhongjin Lingnan Nonfemet Co. Ltd, Antam
made a joint takeover bid for Herald, for AUD2.50
per share. Antam wants to majority own PT Dairi
Prima Mineral, with Zhongjin as the operator, so as
to maximize value. Currently Antam is still in the
midst of its takeover bid.
Antam also
spent Rp63 billion on exploration and development,
an additional Rp34 billion, or 117%, over the first
quarter of 2007. Antam increased spending on
acquisitions of property, plant and equipment by 40%
to Rp49 billion, mostly for land improvements, with
Rp20 billion spent at Pongkor and Rp18 billion spent
at Pomalaa.
Antam's
dividend income increased slightly to Rp42 billion,
all of which was paid by Antam's gold joint venture
with Newcrest Ltd, PT Nusa Halmahera Minerals.
Cash Flows from Financing
Activities
Antam did not
generate any cash flows from financing activities
during the first quarter of 2008. This compares
with the same quarter of 2007 when Antam repaid
Rp247 billion of long term borrowings.
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