Activities are carried out at a coal mining site in Balangan, South Kalimantan.

ted: Wed, March 30 2016 | 09:49 pm

Activities are carried out at a coal mining site in Balangan, South Kalimantan. (JP/R. Bertho Wedhatama)

Coal producer Indo Tambangraya Megah (ITM), controlled by Banpu Group Thailand, has transferred 99.9 percent of its profits to shareholders, instead of storing the profits in internal cash for expansion.

The company allocated 1 percent of its profits for retained earnings, despite the US$63.1 million net income booked last year. The company allocated 99.9 percent of the profits for dividends, most of which went to Banpu as the owner of 65 percent shares.

"We'€™ve already paid US$57.98 million or around Rp 752 per share as interim dividends on October 26, 2015. The remaining $5.07 million or Rp 68.6 billion will be distributed on April 21," Finance director Yulius Kurniawan Gozali told thejakartapost.com in Jakarta on Monday.

Leaving only $50,000 of profit for retained earnings, the company is not preparing for massive expansion.

The decision is in line with the Banpu situation, which requires cash to pay the group'€™s debts and investment. According to its 2015 financial statements, Banpu Plc withdrew $265.8 million in dividends from its subsidiaries, a 152 percent increase from 2014 dividends of $105.13 million.

The parent company also received $237.1 million from investment disposal in its subsidiaries'€™ power plants and mining sites. To raise more funds, Banpu plans to issue 2.58 billion new shares, eyeing $363.83 million in cash to repay debts and interest.

It requires huge investment for its solar power plant projects in Japan, China and Thailand. As reported by Bangkok Post, the 1,320 Megawatt (MW) project in China will be commercially run at the end of 2016.

In Indonesia, the company is set to close its Tandung Mayang site, which contributed 8 percent of 28.5 million tons of its total coal production in Indonesia last year. However, there are no plans to acquire a new site, as the $38.4 million capital expenditure (capex) in 2016 will be used for equipment.

"If we need to, we will take out a bank loan, or just grab it from our internal cash," said Yulius.

ITM has a cash balance of $268 million. According to Yulius, the acquisition will only use around 10 to 20 percent of the cash balance.

ITM operates five sites, namely Trubaindo, which has 7.3 million tons of coal reserve, Bharinto 2.8 million tons, Jorong 1.3 million tons, Indominco 13.3 million tons, and Embalut 1.2 million tons.

"This year we are targeting 26.9 million tons of coal production, compared to 28.5 million tons last year," Yulius said, adding that the drop in production was due to a decrease in ITM's average selling price to $56.40 per ton. (ags)