BANPUINSIGHT

An internal newsletter of Banpu Group

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.