- The document is an internal newsletter of Banpu Group that provides updates on the company's operations, projects, and employees.
- It discusses Banpu's mid-year performance review and strategic progress, a knowledge sharing session for employees on coal geology, cleaning activities at Banpu's Bangkok office and mines in Indonesia, and community support projects providing trees and farming assistance to local villages near Banpu's mining operations.
- The newsletter aims to communicate corporate policies and updates to employees to foster understanding and cooperation across departments.
- The document is an internal newsletter of Banpu Group that provides updates on the company's operations, projects, and employees.
- It discusses Banpu's mid-year performance review and strategic progress, a knowledge sharing session for employees on coal geology, cleaning activities at Banpu's Bangkok office and mines in Indonesia, and community support projects providing trees and farming assistance to local villages near Banpu's mining operations.
- The newsletter aims to communicate corporate policies and updates to employees to foster understanding and cooperation across departments.
- The document is an internal newsletter of Banpu Group that provides updates on the company's operations, projects, and employees.
- It discusses Banpu's mid-year performance review and strategic progress, a knowledge sharing session for employees on coal geology, cleaning activities at Banpu's Bangkok office and mines in Indonesia, and community support projects providing trees and farming assistance to local villages near Banpu's mining operations.
- The newsletter aims to communicate corporate policies and updates to employees to foster understanding and cooperation across departments.
Vol. 24 No. 189 Banpu People Variable Bonus Payment System of BanpuPart II CG of the Month CG VoiceHave Your Say, Make Your Voice Heard August 2013 BANPU 1 st Half Year Performance & Mid-Year Strategic Progress Review 2 / AUGUST 2013 AUGUST 2013 / 3 to the Quality Working Committee and PGA Department for reuse according to the Company's cost reduction policy. On this occasion, Banpu management led by Mr. Chanin visited all departments and provided valuable comments to help improve the activity. Later, on August 16, 2013, the QualityWorking Committee audited each departments 5S activity. The result showed that all Bangkok staf willingly complied with the 5S rules and regulations in an efective and efcient manner. Sharing Coal Knowledge for Non-Geologists at Banpu HQ On July 30, 2013, HRCorporate Culture & Knowledge Management organized a knowledge sharing session entitled Coal Geology for Non Geologistsin the meeting room 261, Bangkok Ofce. On that day, a team of Banpu geologists fromtheTechnical &Project Development Department, namely Mr. Pitak Wuttinonchai, Ms. Sujitra Sain and Ms. Suprueksa Ketmaneechairat spoke to around 60 Banpu staf introducing basic knowl- edge about origins and types of coal, coal reserves and resources, as well as coal exploration. The sharing session was conducted in an edutainment style, which meant that participants who had no geological or scientifc background could easily understand the complicated technical terms. August 2013 As usual every quarter, the Company will report its fnancial statement to the Stock Exchange of Thailand (SET), complying with SETs regulation and practice. This also demonstrates our corporate governance compliance in disclosing information in a timely manner. In addition to fnancial information disclosure, the Company will organize analyst meetings in order to communicate with local and international analysts as well as institutional investors, to update them our quarterly performance as well as business progress or movements. Furthermore, we also update our quarterly performance and business progress to individual investors through the SETs Opportunity Day also held each quarter. For the general public, the quarterly performance will be communicated through a media channel in the formof a news release or press conference/ press briefng or both. This is to make sure that all of our stakeholders receive sufcient information and obtain equal and easy access to Company information. To know more detail about our performance in the frst half year as well as the midyear strategic progress, fip to the BANPUFOCUS section. Mr. Narat Yuvanatemiya, HR Management System Manager is still with us this month to explain the other kind of variable bonus in Banpu's payment system: the management bonus. Read more in BANPUPEOPLE. CG OF THE MONTH features the twoway communication channel that welcomes all Banpu employees to give their opinion relating to corporate governance and the Code of Conduct BANPUYOUCANSHARE continues to feature CSR activities. This month, Mr. Suthiroj Mongkolsinpong, Senior SpecialistCDBKK, is sharing his impressions after joining a CSR activity held recently by Trubaindo Mine, Indonesia. Finally, lets fnd out whats been happening in all our business units in BANPU UPDATE. Contributing Editor contributor banpu people Narat Yuvanatemiya Human Resources Management System Manager BANPUINTRO editor in chief Nittaya Katkasem Corporate Communications Manager contributor banpu update china Juliana Wang Corporate Communications Supervisor BIC contributor cg of the month Suwanna Somsawasdi Corporate Governance Manager contributor banpu you can share Suthiroj Mongkolsinpong Senior Community Development Specialist contributor banpu update australia Meredith Young External Afairs CEY contributing editor Jongsurang Promwang Corporate Communications Specialist contributor banpu update indonesia Junarto Imam Prakoso Corporate Communications Ofcer ITM contributing editor Suratvadee Saithong Corporate Communications Specialist EditorialTeam Objectives 1. To update all employees on news and movement of the Company. 2. To be an internal channel to communicate corporate policies, directions or programs in order to build good understanding and cooperation from employees. 3. To open a forum for employees from all departments to share stories or useful knowledge related to work. BANPUUPDATE Thailand Knowledge Sharing Sessions at Bangkok Ofce Knowledge sharing sessions have continued in the Bangkok Ofce. On July 11, 2013, HRCorporate Culture & Knowledge Management organized another session entitled Capital Market & SET in the meeting room 261. At the event, Ms. Rattikorn Limthongsittikun, Ofcer Company Secretary, shared her knowledge about the capital and stock markets including the products of the capital market, roles of Stock Exchange of Thailand (SET), as well as investment tips. There were around 100 of Bangkok staf participating in this activity. Big Cleaning Day 2013at Banpu HQ On August 1, 2013, around 200 Banpu employees at Bangkok Ofce joined forces for the Big Cleaning Day 2013 with the theme of One Man's Trash is Another Man's Treasure. After the opening ceremony presided over by our CEO, Mr. Chanin Vongkusolkit, in the meeting room261, Banpu staf returned to their departments to do the 5S activity. Unused ofce equipment and supplies as well as the electronic waste were collected and delivered issued by : Corporate Communications Department BANPU PUBLIC COMPANY LIMITED 28 th Fl., Tanapoom Tower, Bangkok 10400 THAILAND. advisors : Khun Chanin Vongkusolkit, Khun Prachuab Trinikorn, and Khun Udomlux Olarn For feedback or suggestions, please contact us via email : [email protected] 4 / AUGUST 2013 AUGUST 2013 / 5 BANPUUPDATE Indonesia BANPUUPDATE Thailand Jorong Mine Organizes Cassava and Dragon Fruit Tree Planting Program for Villagers In cooperation with the local youth organization known as Karang Taruna, on June 28, 2013, Jorong Mine organized a cassava and dragon fruit tree planting program at Karang Rejo Village in Jorong District, Tanah Laut Regency of South Kalimantan Province. Around 100 cassava and 30 dragon fruit seedlings were provided to the villagers, along with fence materials, fertilizer, and wages for labor. This programaimed to promote peoples awareness on the economic potential of these kinds of plants for their village. Cleaning Activities at Trubaindo Mines Bunyut Camp On July 24, 2013, Trubaindo Mine staf joined in the cleaning of their Bunyut Camp. All litter was swept up and collected into a number of trash cans in front of the main ofce before being transported to the landfll. Trubaindo Mine Head, Pak Arief Pambudhi, stated that camp cleanliness was an essential part of Occupational Health and Safety Policy and that a clean work environment results in a comfortable and healthy workplace. By focusing employees attention on the importance of cleanliness in their work environment, this activity was aimed at encouraging employees to maintain clean and healthy habits wherever they were living. Sparkling BANPU Innovation #Part 2: How to Sustain Innovation in Organization On August 16, 2013, HR Department organized the Sparkling BANPU Innovation# Part 2 under the theme of How to Sustain Innovation in Organization in the meeting room 261. Around 50 staf participated in the event. After an opening speech by Mr. Somyot Ruchirawat, our DCEO, Banpu staf had the chance to learn about people management and innovation in organization from Thailand's leading HR guru Prof.Dr. Chira Hongladarom. Prof.Dr. Chira shared his insights from over 30years experience in HR management and led the workshop entitled How to Sustain Innovation in Organization. This knowledge sharing session aimed at building awareness of innovation which is one of the elements of BANPU SPIRIT among Banpu employees. As a result, the staf were encouraged to create new improvements in the workplace for more efective and efcient operations. IR Communicates the 2Q/2013 Performance to Banpu Staf at Bangkok Ofce On August 23, 2013, the Investor Relations Department organized the IR Quarterly Communications 2Q13A View from Investors session in the meeting room 261 which was attended by around 60 Bangkok Staf. Ms. Somruedee Chaimongkol, CFO and Mr. Virach Vudhidhanaseth, Investor Relations Manager presented the 2Q/2013 fnancial performance and 2H/2013 business strategies. Additionally, IRs communication message released to the public and feedback from fnancial analysts and investors were also shared. The participants were encouraged to discuss how to implement the corporate action plans most efectively, while also taking into account stakeholders interests. According to our CFO, Banpu is still in good fnancial health. The fnancial analysts and investors also believed that Banpus current assets continue to generate solid earnings. They agreed with the Companys strategy to focus on strengthening core businesses, re- ducing operational costs and improving productivity. The Companys recent measures of share buyback and par split also received positive feedback from the investor community. Trubaindo Mine Staf Provide Tree Planting and Social Services to Muara Begai Village On July 20, 2013, Trubaindo Mine staf, young Muara Begai villagers, Mulawarman University students, and elementary school pupils joined hands in planting trees along the Muara Begai Village road. Muara Begai Village is located in Muara Lawa Subdistrict of West Kutai Regency, East Kalimantan Province. Around 100 silk trees (Albiziachinensis) were planted along the road to make the area surrounding the village more pleasant. Villagers will also greatly beneft fromthe tree cover to reduce the temperature and also in terms of carbon dioxide reduction. It is expected that tree planting can raise peoples awareness of green environment in line with the government program called One Man One Tree. 6 / AUGUST 2013 AUGUST 2013 / 7 BANPUUPDATE China BANPUUPDATE Indonesia Trubaindo Mine Repairs Road Connecting Lotaq and Begai Villages As the 14kilometerlong road between Lotaq and Begai Villages was damaged so severely that neither automobiles nor motorbikes could pass, a roadworks programwas carried out for the villagers, after scrutiny byTrubaindo Mine's community development team. Assisted by the Maintenance Department who supplied excavators, graders, and compactors, the maintenance project took 3 weeks from the frst to the third week of July. With the wellrepaired road, the villagers were able to travel safer and faster and it is expected to boost economic activities in both villages. ITM Arranges Halalbihalal and Celebrates Independence Day at Once At the completion of the fasting month of Ramadan, Muslims celebrate the following month named Syawalan Arabic term meaning the Beginningby asking forgiveness and ofering pardons to one another as if starting a new life as clean as a new born baby. Known as Halalbihalal, this Indonesian PostRamadan traditional ceremony was arranged on August 16, 2013 at ITM Jakarta ofce. The Board of Directors and all Jakarta staf attended the event on that day. On the following day August 17, a modest celebration of Indonesias Independence Day was organized at the ofce where ITM staf solemnly sang the national anthem Indonesia Raya or Great Indonesia. Additionally, Mr. Pongsak Thong-Aampai, ITM President Director, and Pak Leksono Poeranto, VPCorporate Afairs, gave a speech to motivate all staf by liken- ing the meaning of Halalbihalal and Independence Day to work place dedication and loyalty. Luannan Ofcials Visit Bangkok for Trade and Investment Promotion From July 1517, 2013, the ofcials of Luannan County where BIC's Luannan Power Plant is located, visited Bangkok to promote trade and investment. The delegation was led by Mrs. Xu Xiaojuan, Luannan's Mayor. The ofcials organized aTrade and Investment Promotion Conference at the JW Marriott Hotel in which around 40 Thai entrepreneurs participated, aiming to spur invest- ment and enhance business communications. Mayor Xu stated that Luannan is endowed with broad prospects and welcomes visits from Thai investors for business opportunities as well as sightseeing. Among those who participated in the conference were Mr. Zhang Yunjiang, Vice Governor of Luannan, Mr. Dong Zhi Jiang, Director of Luannan Finance Bureau, Mr. Wang Xueguo, Director of Luannan Housing and Construction Bureau, Mr. Mao Junan, Director of Luannan Development and Reform Bureau, together with Dr. Phaichit Viboontanasarn, Commercial Minister of the Royal Thai Embassy in China and Mr. Vanchai Lertsaroj, CEO of BIC. Furthermore, meetings with the Luannan delegations were also arranged at Banpu Headquarters, CP Group, Rose Garden and Thai Frozen Foods Association. The opportunity for delegations to meet facetoface is always benefcial in promoting greater understanding and lays a good foundation for further cooperation. Intensive Physical Training at Luannan Power Plant In early July 2013, Luannan Power Plant organized intensive physical training for 250 staf. The participants were divided into fve groups to join the oneday training program, covering physical training by an external military instructor in the morning and video training onWork for Yourselfby a professional trainer in the afternoon. The training was intended not only to build team spirit and physical strength, but also to enhance selfdiscipline and work management skills. 8 / AUGUST 2013 AUGUST 2013 / 9 BANPUUPDATE China BANPUUPDATE Australia A Local Careers Day With a Diference Centennial supportedToronto High School, a local school situated near its Northern Operations in the Lake Macquarie region, in holding a careers day with a twist. While its common practice for career fairs to be large events with thousands of high school students seeking information on a wide range of career opportunities, Toronto High School applied a more boutique approach. With only 30 of 11 th Grade students invited to attend the day, Toronto High School worked in con- junction with the local Rotary Club of Toronto Sunrise and Centennial to run a series of specialized career information sessions, enabling students to beneft from the expertise of local businesses. The students elected to attend only the information sessions of interest to them and learnt from specialists working across a range of professions including policing, accounting, mining and electrical engineering, medicine, journalism, environment and law. We purposefully kept the studenttospecialist ratiolow, soas toenable eachstudent tospendmore time withthe specialist representingtheir feldof interest. This way the students had the opportunity to ask their questions in an intimate setting and gain a real insight into working life, said Trevor Connell, Toronto High School Career Advisor. The careers day was a great initiative to be a part of. There is a lot of knowledge to be shared from our club members and it was nice to be able to impart some of our wisdom to keen and interested students, said Rotary Club of Toronto Sunrise President, Vic Lewis. As part of the day, the specialists were treated to a two course sit down meal prepared by 10 th and 11 th grade students majoring in Food Technology and Hospitality who showcased their culinary skills in fne style. It was nice to speak to students who are keen to learn and who are clearly selfmotivated to make their career ambitions a reality. They asked many great questions which showed they have given their future some serious thought, said Centennial Newstans Environment and Community Coordinator, Veronica Warren. BICHR Department Organizes Training on Work Method Improvement for Power Plants During the months JulySeptember, 2013, BICHR Department organized a twoday training program on Work Method Improvement for the power plant's employees. 50 staf of the Zouping Power Plant participated in the training on July 18, 19 and 30, 2013. On August 89, 2013, training was con- ducted at the conference rooms in Luannan Power Plant while the training for Zhengding Plant will be arranged at a later date. At the training, Mr. Huang Jianqing, a senior trainer from TeachTouch Management Consulting Co., Ltd., introduced the purpose and signifcance of work method improvement, its four phases and the 22 principles of motion economy in combination with theoretical introduction, case analysis and proposal practice. Through the systematic study and practice, participants were able to grasp the basic procedures and skills of work method improve- ment, to enhance their work procedure, and apply these new methods in their daily work. BIC CEO Visits the Secretary of Binzhou Party On July 29, 2013, Mr. Zhang Guangfeng, Party Secre- tary of Binzhou City warmly hosted delegates of BIC led by Mr. Vanchai Lertsaroj, CEO. Mr. Vanchai reported on the operation and progress of the project at the Zouping Power Plant in Binzhou City and expressed appreciation for the support received from local government ofcials for the Plants development in Binzhou. He expressed the commitment that the Plant would always run business with integrity and sincerity in accordance with the law and that BIC would be willing to further contribute to local development. Party Secretary Zhang that Banpu's BIC enjoys a good image as a foreign enterprise resulting fromthe company's prominent contribution to Binzhous social and economic progress. The government issues preferential policies ofering a favorable development environment for foreign companies. Luannan Power Plant Receives Outstanding Energy Saving Award In July 2013, the Energy Saving Association of Hebei Province cordially presented the award of Outstanding Energy Saving Enter- prise 2012 to Luannan Power Plant. The Plant has greatly emphasized energy saving in recent years, making improvements in energy saving policy as well as carrying out technical innovation and equipment retroft. The capacity and availability of equipment was enhanced through projects such as the air preheater retroft and increase in heat supply by circulating water. Meanwhile, the Plant also developed energy planning, audit and utilization evaluations to further improve its energy management systems. This series of measures on energy saving refected the Plants values of innovation, spirit and care for the local environment which not only lifted operational efciency, but also followed the general trend of sustainability development to win favorable recognition from local communities. 10 / AUGUST 2013 AUGUST 2013 / 11 BANPUFOCUS BANPUFOCUS Since last year, all of us have been well aware of an excess coal supply, a trend towards shale gas and a sluggish global economy, which has led to unfavorable coal prices in the market. This has affected the performance of coal producers across the world. Banpu, along with its peers in the coal sector, has been affected by these trends. The Company, however, has taken prompt action in initiating various measures to mitigate risk on softening coal prices. The measures have been put in place across the organization since mid 2012. Lets see how we performed in the frst half of this year and what we achieved from the measures implemented. First Half -Year Performance During the frst six months of 2013, Banpu recorded a net proft of USD 52 million, a decrease of 63 percent from the same period last year. The decline in net proft was mainly caused by a decrease in the average selling price (ASP) to USD75.38 per tonne compared to USD85.13 per tonne in the same period last year. Sales revenue in the frst half 2013 was USD 1,668 million of which USD 1,590 was from coal and USD 98 million from power & steam, respectively. The gross proft margin (GMP) of coal business was 31 percent, compared to 41 percent of that in the frst six months 2012. The power business GPM was 28 percent, rising 12 percent from 16 percent in the same period last year. Meanwhile, coal production and coal sales volume in this frst half year increased to 20.7 million tonnes from around 19 million tonnes in the same period of 2012. Our CEO Mr. Chanin Vongkusolkit recently explained during both the 2Q/2013 analyst meeting and the 1H /2013 press conference and during his exclusive interviews with both domestic and international media,that coal prices were down globally. This was caused by several factors, he reasoned. Firstly, higher production, caused an excess volume of coal in the market. Secondly was an unprecedented surge in the availability of US coal for export due to the trend to gasfred power domestically (based on new shale gas supplies). And fnally this comes on top of continued supply growth from key major coal producers especially from Indonesia and Australia over the last three years when coal prices were favorable. The growth in coal demand in the frst half year, however, still maintained encouraging levels. Mr. Chanin said, The markets current coal price should bottom out, expecting to gradually recover in next year. The increase in coal price will be modest since there will still be an excess coal supply continuing into year 2014. This year, the Company has placed great emphasis on conspicuously expanding its businesses through increasing coal production from existing coal mines and coal projects in Mongolia. We are also looking for opportunities to further invest in the power business in addition to the Hongsa Power Project which has now reached 62 percent construction completion. When the Hongsa Power Plant commences its commercial operation in the third quarter of 2015, it will signifcantly help increase income fromthe power business, lifting the proportion of enterprise value stemming fromthe power business to more than 30 percent. BANPU 1 st Half Year Performance & Mid-Year Strategic Progress Review 12 / AUGUST 2013 AUGUST 2013 / 13 BANPUFOCUS BANPUFOCUS MidYear Strategic Progress Review Since middle 2012, the Company has taken various measures across the organization at both corporate and country levels to alleviate the downward trend of coal prices. These measures include: Postponement of unnecessary capital expenses and30%reduction of 2012-2015 CAPEX The reduction (fromUSD1,748 to USD1,248 million) applies to all business units in Indonesia, Australia and Mongolia. Investment capital amounting to 378 million for the Hongsa Power Project in Laos will still be maintained. For years 2012 and 2013, the Company has utilized around USD 480 millions of capital expenditure. Cost reduction: This includes reduction in operating cost as well as administrative and overhead cost. Cost Management and increasingoperation efciency in all country bases: The Company in 2013 targets a reduction in operational cost at Indonesian coal mines of 10 percent from last year to USD 63 per tonne and 57% for Australian mines to USD 50 per tonne. (In 2012, the operational cost of Indonesian mines were USD 70 per tonne. The Australian operational cost in 2012 was USD 53 per tonne. Financial Management: This includes fnancial restructuring as well as keeping debt to the right level in order to keep the Company performing well and ready to take advantage of future opportunities when the coal price improves. Also important is the ability to maintain a continuous dividend payment. To add value for shareholders, the Company launched a share buy-back program in mid March. The repurchase of 13,560,000 shares, equal to 5% of the total paidup capital was completed on 16 July. Management and BODhave agreed to manage the repurchased shares by reducing registered paidup capital. The process will be made pursuant to the relevant regulations and laws. This refects Banpus strong fundamentals and sound retained earnings. In addition, the Company recently launched the par split initiative to increase stock liquidity and enable individual investors to buy BANPU shares. This initiative received approval from shareholders at the Extraordinary General Meeting (EGM) on 9 September. The table below illustrates the progress of all measures taken during the frst half year. Country/ Business Current Strategic Initiatives 2013 Targets MidYear Review Focus for 2H/2013 Indonesia Targeting 10%reduction in overall production costs Lowering S/R at Indominco and Trubaindo Lowering administrative costs Better utilization of infrastructure Cost Reduction 10%YoY reduction in overall production costs 25% 50% 75% 100% Reduced by 11%HoH Lower S/R at Indominco and Trubaindo by 7%HoH and 19%HoH respectively Installation of IPCC equipment at mine site Plan to lower costs further through improved productivity (i.e. IPCC, coal recovery improvement at Bharinto, testing substitute products for explosive and hauling fuel) IPCC expected to start around 4Q/2013 Operational improvement Secure tonnage and price LT of of-spec through blending Optimize infrastructure and logistic efciency 25% 50% 75% 100% Achieved 14.4 Mt (50%of 2013 output targets) in 1H13 Establishment of ITMI Australia Reducing production costs further by 57%YoY Installed CMunits and longwall equipment at Mandalong and Springvale Optimising infrastructure and logistics efciencies Increasing export and export-parity sales contracts Cost reduction 57%YoY cut in production costs 25% 50% 75% 100% Cut production costs by 2%HoH Plan to lower costs further through improved productivity Operational improvement Installation of CMunits and LWequipment at Mandalong and Springvale 25% 50% 75% 100% Mandalong: Installed CMunits shorter LW move period Springvale: improved conditions and producing to budget Installation of new generation longwall at Springvale (estimate 30%production increase) 3 rd bolterminer at Mandalong China/ Mongolia Gaohe: 5Mt production target Hebi: maintain 1.2Mt output Hunnu: - Screening and product testing stage - Studying potential of coal chemicals market Project development Gaohe: 5Mt production Hunnu: Screening and product testing stage as well as studying potential of coal chemicals market 25% 50% 75% 100% Gaohe: 54%(2.7 Mt) of 2013 target Hebi: 50%of 2013 output targets Hunnu: Trial shipments of Tsant Uul coal Gaohe: on track to meet 2013 target Hunnu: continue studying coal to chemical opportunity Hunnu: more sample testing will be performed Power Target to complete 72% construction for Hongsa project in 2013 Studying new power investment opportunities Hongsa Progress Target 72%completion of overall progress by the end of 2013 25% 50% 75% 100% Overall progress approx. 62% (ahead of plan) Successfully transported heavy equipment to site in 1Q13 On track to meet the full year target Major activities are boiler structure and cooling water construction 14 / AUGUST 2013 AUGUST 2013 / 15 BANPUFOCUS BANPUPEOPLE By Mr. Narat Yuvanatemiya Human Resources Management System Manager The Management bonus is paid to the division manager level and above or employees whose job grade are 17 and above. Personnel at these levels have an important role in driving the organization toward its goals. The management bonus consists of two important components: 1. SingleYear Target: a target where the timeframe is less than one year 2. LongTermTarget: a target where the timeframe is more than one year The evaluation of singleyear and longterm targets varies from unit to unit, depending on the nature of the job and the responsibilities of a particular unit. However, both targets have to go in the same direction and support the business plans at both department and corporate levels. For example, the singleyear and long-term targets of the Human Resources Department must be in line with and support Corporate Services' and Banpus business plan. In addition, units are divided into two categories in relation to their duties and responsibilities. InThailand, these are calledBusiness UnitsandSupport Units, whereas Banpus subsidiaries overseas refer to themasOperation UnitsandSupport Units. The evaluation of both types of units is diferent. Variable Bonus Payment System of Banpu Part II In the previous issue, we learned about the frst group of variable bonus or the group pool bonus. This time around, we would like to share information about the management bonus. With sustained efort and commitment as well as well the cooperation of all levels of Banpu people fromboth corporate and country bases, the Company managed to maintain its sound performance in the frst half year. With all of us in high spirits, we believe we will pass through these difculties over time. As Mr. Chanin always says, I believe we are making good progress. We will defnitely overcome any further challenges andtake full advantage of any coal price recovery and other growth opportunities which may arise in the future. Our principle is not just to prepare for the worst and hope for the best; we are preparing deliberately both for the worst and the best. Country/ Business Current Strategic Initiatives 2013 Targets Mid-Year Review Focus for 2H/2013 Coporate Keeping overheads low Pushing debt down to intermediary and subsidiary levels HR development and training programmes Strengthening senior management team Cost reduction Keep overheads low Push debt down to intermediary and subsidiary levels 25% 50% 75% 100% $50Mannualised admin costs ( ex. personnel and depreciation) indicates >20%reduction YoY Building up creditability of subsidiaries with bank Financial Management Share Management Share repurchase programme (5%of total paid-up capital) 25% 50% 75% 100% Completed the programme on 16 July 2013 (at avg cost of Bt292/sh) BOD agreed to reduce registered paid-up capital 10 to 1 share spilt Debt Service Minimizing risks from higher fnancing cost 25% 50% 75% 100% Bond issuance to better align currency mismatch Longer debt redemption profle Fixed interest rates Derivatives Managing risks frommarkto market causing fuctuation of commodity prices as well as currency and interest rate markets 25% 50% 75% 100% Actively monitored and managed derivative activities Apply hedge accounting for CCS and Interest Rate Swaps (IRS) Communication with subsidiaries on FX management on regular basis 16 / AUGUST 2013 AUGUST 2013 / 17 BANPUPEOPLE CG OF THE MONTH When considering the management bonus, the singleyear and longterm targets must meet a certain criteria, whereas the evaluation of one target will not be linked to the other. In other words, each target is independent of the other. The management will not receive this kind of bonus if the actual performance of the group's pool bonus in their respective country is below the threshold level. In summary, the group pool bonus payment will be based on the Companys fnancial indicators. The success of the whole Banpu group will afect the bonus payments of all Banpu subsidiaries. Meanwhile, the management bonus payment will be based on the group's pool bonus in the country the management belongs to. Last year, the Human Resources Department improved the Companys variable bonus payment system to be more in line with performance-based pay and changing conditions. In conclusion, by only putting an international human resources management systemin place, Banpu will still not be able to experience sustainable growth. Success must come fromcooperation between employees in every country. Then, this success can be shared with everyone through the variable bonus payment system. CG Voice Have Your Say, Make Your Voice Heard By Ms. Suwanna Somsawasdi Corporate Governance Manager Banpu has committed to nurture corporate culture and positive attitudes towards corporate governance among staff at all levels whether they are the Board of Directors, the management or employees. Therefore, we regularly organize events and activities to encourage employees to turn whats in written our Code of Conduct into actual implementation and concrete practice. AUGUST 2013 / 19 18 / AUGUST 2013 CG OF THE MONTH BANPUYOU CAN SHARE By Mr.Suthiroj Mongkolsinpong Senior Community Development Specialist Health Is Wealth TCMs Sustainable Health and Sanitation Development Program One of the best wishes we all can hope for ourselves is good health, no matter what our nationality, age, and gender are. Health is wealth is a saying that reminds everyone to take good care of their health. When we get sick, we may have to spend a lot of money for treatment, perhaps both using our own savings as well as seeking fnancial assistance from the government. We may need other family members or relatives to take care of us during the recovery period, causing time off work and reduced earnings. If we are healthy, we will be both physically and mentally ready to live a good and happy life. Regarding Banpus work in community development, especially at its mining operations in Indonesia, health and sanitation is one of the major areas in addition to our work in employment promotion and income generation, education, social and cultural development, and environmental conservation. Our health and sanitation work covers a number of services that are provided to local people of every age and in every community. These programs include promotion of healthcare knowledge, setting up of mobile medical services, provision of medical equipment, and training of health ofcers in order to improve the efciency of the current services. Moreover, scholarships in nursing studies have been provided to young people in local communities on the condition that the recipients must serve in their home area after graduation so they will be an important force for health promotion in the future. In early 2010, I had my frst visit to all of the 20 villages around Trubaindo Mine (TCM) with the Mine's community de- velopment staf(CDTCM). I had a chance to get information from the local communities and public health ofcers in the area. I found that most people sufered fromhealth problems and lacked access to basic health facilities and services. These issues included, underweight newborn babies, lack of health knowledge among pregnant women and new mothers, and a number of infec- tious diseases such as malaria, dengue fever and tuberculosis. Meanwhile, the most common health issues in the area were hypertension, respiratory tract diseases, and diarrhea. It was also found that most elderly people did not visit health clinics until they were severely ill. Regarding clean water supply, no village was served by the governments piped water. So, in 2010, CDTCM initiated the clean water supply in two villages, namely Suakong and Dilang Puti. Being aware of the situation, CDBKK made recommen- dations to CDTCM regarding sanitation, public health services and facilities for the villages near the Mine and nearby area in Indonesia as follows: (1) to organize mobile medical services for elderly people (in addition to those dispatched to schools once a year); (2) to cooperate with local health stations to give education on mother and baby care and provide check-up programs for pregnant women, mothers with young babies, and preschool children; (3) to consider providing T his year, Banpu is focusing on employee participation to improve our corporate governance policy through an activity called CG Voice. As the name suggests, the channel allows Banpu people to make themselves heard as the CG Voice is intended to be a forum for everyone to have their say. The Corpo- rate Governance Division has posted important issues relating to CG in the CG Voice to let our colleagues say what they think. Representatives of Banpu management will also join each topic of the forum to make their voice heard as well as answer questions in a section called the Management Voice. As we intend to let the CG Voice become an open forum in which everyone can freely speak their mind, every opinion sub- mitted to the CG Voice is kept confdential. Opinions expressed in each topic will be presented to the executive responsible so that the problems will be solved in the proper and timely manners. The objective of this activity is to encourage twoway communication which hopefully will promote a better understanding leading to actual implementation of the Code of Conduct. The CG Voice has already been live in Banpu since February 2013. Five topics have been raised so far and Banpu peoples voices are heard on a monthly basis. The fve topics discussed are: 1. Appreciating and realizing that the employee is Banpus most valuable asset. 2. The CG-related grievance channel is a highlyefcient CG practice. 3. Banpu people have a very strong commitment to integrity, which is one of the core Banpu Spirit values, whether when working alone or while collaborating with others. 4. The company puts priority on a suitable workplace environment toensure the safety andsecurity of employees' health and property. 5. Banpu is committed through its policy to conduct its business with social and environmental responsibility. Since July 2013, the CG Voice has summed up stafs points of view in each topic and conveyed them to interested audiences on a monthly basis to ensure that every opinion of Banpu people refected through the channel receives a proper response to clarify any misunderstandings. The CGVoice has been set up with the goal to stimulate an environment that encourages everyone to learn and to understand what we can do and howwe must comply with the Code of Conduct. This will strengthen our corporate culture and change positive attitudes to corporate governance into real practice. We believe that real action is fundamental in making Banpu even stronger. In 2012, TCM arranged the mobile medical services to provide checkups, prescribe medicine, and give health advice to 2,181 students in 23 schools and 1,148 elderly people in eight villages located in the Ring I in Melak, Muara Lawa, Damai, and Bentian Besar SubDistricts of West Kutai Regency. The programs also provided health checkups, dietary supplements, and health advice to 680 preg- nant women and new mothers in 20 villages together with 1,538 babies and preschool children who lived around the Mine. Among this group of children, 178 or 12 percent sufered from malnutrition. The fgure was below the national average percentage at 30 percent (UNICEF Indonesia, 2012), perhaps thanks to TCM's continuous eforts on the mother and child health promotion programs. The results from medical checkups revealed that the four most prevalent diseases in students were respiratory tract diseases, skin diseases, diarrhea and the common cold, while those in elderly people were respiratory tract diseases, hypertension, high fever, and diarrhea, respectively. For 2013, TCM has planned to continue the health programs initiated in the previous year, trying to minimize the severity of diseases and health problems. The mobile medical services will be expanded to cover all of the 20 villages while basic health services and facilities will cover more clean water supply projects in Basiq and Bermai villages with the establishment of coop- eratives so that the villagers can manage their water supply facilities on their own in the long run. Additionally, CDTCM will be able to be more proactive as the most pressing issues are progressively resolved. This year and in following years, health promotion programs will focus mainly on knowledge dissemination, especially during visiting times of the mobile medical services when the mother and child health programs are being ofered. In addition, systematic health records shall be kept so that the causes of diseases can be analyzed and better solutions and more targeted health campaigns can be designed. It is inter- esting and benefcial to work together with the local communities and authorities to prepare longterm health development plans. Continuous implementation of more pro-active programs aiming at transforming peoples behaviors, developing their skills, and changing their attitude toward health care while encouraging their participation will result in healthier children who will grow up to be strong, quality citizens in the future. BANPUYOU CAN SHARE continuous health campaigns based on the data of commonly found illnesses; and (4) to provide access to clean water in villages with a focus on self-management. In late 2010, CDTCM sent out its frst mobile medical service to treat elderly people in the fostered villages in West Kutai Regency. The program received great feedback from the local people and authorities. In the following year, the mother and child health promo- tion programs were introduced. Both programs have been conducted continuously since.